Document ID: EPA-HQ-OAR-2001-0004-0776
Agency: epa
Document Type: Rule
Title: Nonattainment New Source Review (NSR)
Posted Date: 2007-03-08T05:00Z

[Federal Register: March 8, 2007 (Volume 72, Number 45)]
[Rules and Regulations]               
[Page 10367-10380]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08mr07-21]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 51

[EPA-HQ-OAR-2001-0004; FRL-8283-9]
RIN 2060-AM59

 
Nonattainment New Source Review (NSR)

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The EPA is finalizing revisions to the regulations governing 
the nonattainment new source review (NSR) program mandated by section 
110(a)(2)(C) of the Clean Air Act (CAA or Act). These revisions 
implement changes to the preconstruction review requirements for major 
stationary sources in nonattainment areas in interim periods between 
designation of new nonattainment areas and adoption of a revised State 
Implementation Plan (SIP). The revisions conform the nonattainment 
permitting rules that apply during the SIP development period following 
nonattainment designations before SIP approval to the Federal 
permitting rules applicable to SIP-approved programs. The changes are 
intended to provide a consistent national program for permitting major 
stationary sources in nonattainment areas under section 110(a)(2)(C) 
and part D of title I of the Act. In particular, these changes conform 
the regulations to the NSR reform provisions that EPA promulgated by 
notice dated December 31, 2002, except that these changes do not 
include the NSR reform provisions for ``clean units'' or ``pollution 
control projects,'' which the U.S. Court of Appeals for the D.C. 
Circuit vacated in New York v. EPA, 413 F.3d 3 (DC Cir. 2005). In 
addition, these changes include an interim interpretation of the NSR 
reform provision for a ``reasonable possibility'' standard for 
recordkeeping and reporting requirements, in accordance with that court 
decision. This interim interpretation to the ``reasonable possibility`` 
standard applies for appendix S purposes, pending the completion of 
rulemaking to develop a more complete interpretation.

DATES: This final rule is effective on May 7, 2007.

ADDRESSES: The EPA has established a docket for this action under 
Docket ID No. EPA-HQ-OAR-2001-0004. All documents in the docket are 
listed on the http://www.regulations.gov Web site. Although listed in 

the index, some information may not be publicly available, e.g., CBI or 
other information whose disclosure is restricted by statute. Certain 
other material, such as copyrighted material, is not placed on the 
Internet and will be publicly available only in hard copy form. 
Publicly available docket materials are available either electronically 
through http://www.regulations.gov or in hard copy at the Air Docket, 

EPA/DC, EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, 
DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday 
through Friday, excluding legal holidays. The telephone number for the 
Public Reading Room is (202) 566-1744, and the telephone number for the 
Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Ms. Lisa Sutton, Air Quality Policy 
Division, Office of Air Quality Planning and Standards (C504-03), 
Environmental Protection Agency, Research Triangle Park, NC 27711; 
telephone number: (919) 541-3450; fax number: (919) 541-5509; e-mail 
address: sutton.lisa@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. General Information

A. Does This Action Apply to Me?

    Entities affected by this rule include sources in all industry 
groups. The majority of sources potentially affected are expected to be 
in the following groups:

------------------------------------------------------------------------
            Industry Group             SIC \a\          NAICS \b\
------------------------------------------------------------------------
Electric Services....................      491  221111, 221112, 221113,
                                                 221119, 221121, 221122.
Petroleum Refining...................      291  324110.
Industrial Inorganic Chemicals.......      281  325181, 325120, 325131,
                                                 325182, 211112, 325998,
                                                 331311, 325188.
Industrial Organic Chemicals.........      286  325110, 325132, 325192,
                                                 325188, 325193, 325120,
                                                 325199.
Miscellaneous Chemical Products......      289  325520, 325920, 325910,
                                                 325182, 325510.
Natural Gas Liquids..................      132  211112.
Natural Gas Transport................      492  486210, 221210.
Pulp and Paper Mills.................      261  322110, 322121, 322122,
                                                 322130.
Paper Mills..........................      262  322121, 322122.
Automobile Manufacturing.............      371  336111, 336112, 336211,
                                                 336992, 336322, 336312,
                                                 336330, 336340, 336350,
                                                 336399, 336212, 336213.
Pharmaceuticals......................      283  325411, 325412, 325413,
                                                 325414.
------------------------------------------------------------------------
\a\ Standard Industrial Classification.
\b\ North American Industry Classification System.

    Entities affected by the rule also include States, local permitting 
authorities, and Indian tribes whose lands contain new and modified 
major stationary sources.

B. Where Can I Obtain Additional Information?

    In addition to being available in the docket, an electronic copy of 
this final

[[Page 10368]]

rule is also available on the World Wide Web. Following signature by 
the EPA Administrator, a copy of this final rule will be posted on the 
EPA's NSR Web site, under Regulations & Standards, at http://www.epa.gov/nsr
.

C. How Is This Preamble Organized?

    The information presented in this preamble is organized as follows:

I. General Information
    A. Does This Action Apply to Me?
    B. Where Can I Obtain Additional Information?
    C. How Is This Preamble Organized?
II. Overview of This Final Action
III. Background
    A. The Major NSR Program
    B. What We Proposed
IV. Description of This Final Action and Legal Basis
    A. Final Changes to Appendix S
    B. Legal Basis for Changes to Appendix S
    C. Approach for ``Reasonable Possibility'' Standard
V. Summary of Major Comments and Responses
VI. Effective Date for Requirements
VII. Statutory and Executive Order Reviews
    A. Executive Order 12866--Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act (RFA)
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132--Federalism
    F. Executive Order 13175--Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045--Protection of Children From 
Environmental Health and Safety Risks
    H. Executive Order 13211--Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898--Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act
VIII. Judicial Review
IX. Statutory Authority

II. Overview of This Final Action

    In this action, we are finalizing previously proposed changes to 
the regulations that govern NSR permitting of major stationary sources 
in nonattainment areas in appendix S of 40 CFR part 51. Appendix S 
contains the permitting program for major stationary sources that are 
located either in nonattainment areas or in the Ozone Transport Region 
(OTR), in transition periods before EPA approves a SIP to implement the 
NSR requirements in part D of title I. These final rules revise 
appendix S to generally conform it to regulations at 40 CFR 51.165 for 
SIP programs for nonattainment major NSR, as those regulations were 
revised to implement NSR reform. 67 FR 80816 (December 31, 2002) (2002 
NSR reform rules). However, the U.S. Court of Appeals for the D.C. 
Circuit, in New York v. EPA, 413 F.3d 3 (DC Cir. 2005) (New York), 
vacated the Clean Unit provision and the Pollution Control Project 
(PCP) exemption in the 2002 NSR reform rules. Therefore, these final 
rules do not conform appendix S to the 2002 rules with respect to Clean 
Units or PCPs. The New York case also remanded the ``reasonable 
possibility'' recordkeeping and reporting provision of the 2002 NSR 
reform rules for the EPA either to provide an acceptable explanation or 
to devise an appropriately supported alternative. In a separate Federal 
Register notice published on this date, we are proposing clarification 
of the ``reasonable possibility'' standard to address under which 
circumstances records must be kept for projects that do not trigger 
NSR. In the interim, the ``reasonable possibility'' standard remains in 
effect in our major NSR regulations and we provide an interpretation 
that indicates one set of circumstances under which the ``reasonable 
possibility'' standard is met. States may provide different 
recordkeeping requirements provided that the recordkeeping requirements 
address the concerns noted in the Court's remand.

III. Background

A. The Major NSR Program

    The major NSR program contained in parts C and D of title I of the 
Act is a preconstruction review and permitting program applicable to 
new and modified major stationary sources of air pollutants regulated 
under the Act. In areas not meeting health-based national ambient air 
quality standards (NAAQS) and in ozone transport regions, the program 
is implemented under the requirements of section 110(a)(2)(C) and part 
D of title I of the Act. We call this program the ``nonattainment'' NSR 
program. Subpart 1 of part D of title I contains general requirements 
for nonattainment areas for any pollutant for which there is a NAAQS.
    In areas meeting the NAAQS (``attainment'' areas) or for which 
there is insufficient information to determine whether they meet the 
NAAQS (``unclassifiable'' areas), the NSR requirements under part C of 
title I of the Act apply. This program is called the Prevention of 
Significant Deterioration (PSD) program. Collectively, we also commonly 
refer to the attainment and nonattainment programs as the major NSR 
program. Regulations comprising the major NSR program are contained in 
40 CFR 51.165, 51.166, 52.21, 52.24, and part 51, appendix S. Of these, 
the nonattainment area regulations are contained in 40 CFR 51.165, 
52.24, and part 51, appendix S.
    The NSR provisions of the Act are implemented primarily through 
State preconstruction permitting programs. As provided in section 
172(c)(4) of the Act, the SIP must require permits for the construction 
and operation of new or modified major stationary sources in accordance 
with section 173 of the Act. The permitting requirements for SIPs for 
major stationary sources locating in nonattainment areas are found in 
40 CFR 51.165. 40 CFR 52.24(k) specifies that appendix S governs 
permits to construct and operate when such permits were applied for 
during the period between the date of designation as nonattainment and 
the date we approve the part D major NSR plan. Appendix S states that 
it is an interpretation of 40 CFR subpart I (including Sec.  51.165), 
and it has historically reflected substantially the same requirements 
as the part D NSR requirements. This includes the requirement to comply 
with the lowest achievable emission rate (LAER) and obtain offsetting 
emission reductions, with a limited exemption in section VI of the 
appendix that applies to sources that will not interfere with an area's 
attainment deadline and that will meet applicable SIP emissions 
limitations. Thus, consistent with section 110(a)(2)(C) of the Act, 
permitting of new and modified stationary sources in the area will be 
regulated as necessary to ensure that they do not interfere with 
attaining the NAAQS.
    As we describe further in section III.B of this preamble, these 
final regulations generally conform the regulatory language of appendix 
S to the major NSR program as revised on December 31, 2002, except for 
the provisions of that program vacated by the New York case. For a 
summary of the regulatory development process and stakeholder 
development for that rulemaking, see 67 FR 80188.

B. What We Proposed

    On July 23, 1996, we proposed changes to the major NSR program, 
including the regulations contained in 40 CFR 51.165, 51.166, 52.21, 
52.24, and part 51 appendix S (61 FR 38250). The 1996 proposal 
concerned, in part, five major changes to the NSR program-baseline 
emissions, actual-to-projected-actual methodology, Clean Units, 
Plantwide Applicability Limitations (PALs), and PCPs.

[[Page 10369]]

    On December 31, 2002 (67 FR 80187), we promulgated final changes 
concerning baseline emissions, actual-to-projected-actual methodology, 
Clean Units, PALs, and PCPs. We promulgated these changes in the 
regulations at 40 CFR 51.165, 51.166, and 52.21, and at the same time 
stated our intention to later conform the regulatory language in 
appendix S (and 40 CFR 52.24) to the final regulations.

    Today's actions finalize these changes to the regulations for 
both the approval and promulgation of implementation plans and 
requirements for preparation, adoption, and submittal of 
implementation plans governing the NSR programs mandated by parts C 
and D of title I of the Act. We also proposed conforming changes to 
40 CFR (Code of Federal Regulations) part 51, appendix S, and part 
52.24. Today we have not included the final regulatory language for 
these regulations. It is our intention to include regulatory changes 
that conform appendix S and 40 CFR 52.24 to today's final rules in 
any final regulations that set forth an interim implementation 
strategy for the 8-hour ozone standard. We intend to finalize 
changes to these sections precisely as we have finalized 
requirements for other parts of the program. Because these are 
conforming changes and the public has had an opportunity for review 
and comment, we will not be soliciting additional comments before we 
finalize them.

    We published final rules addressing implementation of the 8-hour 
ozone NAAQS, on April 30, 2004 (69 FR 23951) and November 29, 2005 (70 
FR 71612). In the November 2005 final rule, in part, we revised 
appendix S to incorporate the major stationary source thresholds, 
significant emission rates, and offset ratios for sources of ozone 
precursors pursuant to part D, subpart 1 and subpart 2 of title I of 
the 1990 CAA Amendments, but we did not at that time include the 
regulatory changes we had proposed to conform appendix S language to 
that of the NSR reform rules.

IV. Description of This Final Action and Legal Basis

A. Final Changes to Appendix S

    In this final action, we have revised appendix S as proposed to 
generally conform the regulatory language in appendix S to that of the 
NSR reform rules. Specifically, the changes proposed in 1996 concerning 
baseline emission determinations, actual-to-projected-actual 
methodology, and PALs have been incorporated in sections II and IV of 
appendix S. As indicated at 67 FR 80187, it was our intent to finalize 
the changes to appendix S precisely as we have finalized requirements 
for other parts of the program. However, subsequently, the New York 
case vacated the Clean Unit provision and the PCP exemption in the 2002 
NSR reform rules. Therefore, these final rules do not conform appendix 
S to the 2002 rule revisions relating to Clean Units and PCPs. In 
addition, as discussed later, these final rules conform appendix S to 
the ``reasonable possibility'' standard in the NSR reform rules. In a 
separate Federal Register notice published on this date, we are 
proposing clarification of the ``reasonable possibility'' standard to 
address under which circumstances records must be kept for projects 
that do not trigger NSR. We provide, in this preamble, an interim 
interpretation which addresses the issues raised by the Court in its 
remand. Table 1 shows where to find the changes being made to appendix 
S.

                Table 1.--Proposed Changes to Appendix S
------------------------------------------------------------------------
                                                           Analogous
                                     Added to Sec.      provisions have
 For the following provision * *  51.165 in December     been added to
                *                    2002 at * * *       appendix S at
                                                           paragraph
------------------------------------------------------------------------
Offsets.........................  (a)(3)(ii) (H)      IV.C.7 through 8.
                                   through (J).
Applicability test..............  (a)(2)(ii)........  IV.I.1.
Projected actual emissions        (a)(6)............  IV.J.
 (including ``reasonable
 possibility'' standard).
Clean Unit provisions for         (c)
 emissions units subject to LAER.
Clean Unit provisions for         (d)
 emissions units achieving
 emission limitation comparable
 to LAER.
PCP exclusion...................  (e)
Actuals PALs....................  (f)...............  IV.K.
Severability....................  (g)...............  IV.L.
------------------------------------------------------------------------

B. Legal Basis for Changes to Appendix S

    Appendix S provides on its face that it is an interpretation of the 
NSR permitting rules in subpart I, including (51.165. Therefore, it is 
necessary to have appendix S reflect substantially the same 
requirements as are in Sec.  51.165.\1\ Thus, we proposed to amend 
appendix S in this manner in the 1996 NSR proposal.
---------------------------------------------------------------------------

    \1\ Thus, EPA has typically conformed appendix S to the part D 
nonattainment NSR permitting provisions governing SIPs at 40 CFR 
51.165 (originally codified at Sec.  51.18) whenever those 
regulations were revised. See, for example, 45 FR 52676 (Aug. 7, 
1980); 47 FR 27554 (June 25, 1982); 49 FR 43210 (Oct. 26, 1984); 54 
FR 27274 (June 28, 1989); 57 FR 3941 (Feb. 3, 1992).
---------------------------------------------------------------------------

    The legal basis for these changes is the same as that set forth in 
the preamble to the December 31, 2002, final rule providing NSR reforms 
for the other major NSR regulations. Additionally, we believe it is 
necessary to have appendix S reflect substantially the same 
requirements as codified at 40 CFR 51.165 because appendix S is an 
interpretation of the NSR permitting rules at 40 CFR part 51 subpart I, 
including Sec.  51.165, as discussed earlier. As explained in section 
IV.A of this preamble, we are not amending appendix S to adopt the 
Clean Unit provision and PCP exemption that are in Sec.  51.165, 
because the D.C. Circuit Court of Appeals vacated those provisions in 
the New York decision.
    Section 110(a)(2)(C) of the Act does not define specific 
requirements States must follow for issuing major source permits during 
the interim period between nonattainment designation and EPA approval 
of a nonattainment NSR SIP. However, we have historically recognized 
that the SIP development period provided for in section 172(b) of the 
Act leaves a gap in part D major NSR permitting and have determined 
that this gap is to be filled with an interim major NSR program that is 
substantially similar to the requirements of part D, including the LAER 
and offset requirements from part D, subject to a limited exemption 
where the attainment deadline will be met (57 FR at 18070, 18076). This 
interim NSR program has been implemented to date through

[[Page 10370]]

appendix S.\2\ Our regulations at 40 CFR 52.24(k) require States to 
follow appendix S during the time period between the date of 
designation as nonattainment and the date the part D major NSR plan is 
approved. Additionally, in the 1977 CAA Amendments, Congress indicated 
its intent that major NSR permitting apply during the SIP development 
period. [See Pub. L. No. 95-95, Sec.  129(a), 91 Stat. 685 (1977).] 
Specifically, in 1977, when Congress enacted a moratorium on 
construction in any area lacking an approved part D NSR SIP, with a 
delayed effective date of July 1, 1979, Congress provided that appendix 
S govern permitting of sources constructing in such areas prior to that 
date, subject to a limited waiver by the Administrator. Id. 108(b), 
129(a). We subsequently codified the use of appendix S as the interim 
major NSR program in 40 CFR 52.24(k), reasoning (in the context of 
implementing a delay in the construction ban for then-recently 
designated nonattainment areas) that Congress had provided that 
appendix S would remain in effect to protect air quality while State 
plans were being designed (45 FR 91604). When Congress removed the 
construction ban (except as provided in section 110(n)(3) of the Act), 
it left in place 40 CFR 52.24(k), implementing the interim major NSR 
program under appendix S.
---------------------------------------------------------------------------

    \2\ Appendix S was originally promulgated in 1976 to address 
whether, and to what extent, new and modified sources would be 
allowed to construct in nonattainment areas whose attainment 
deadlines had already passed, in light of the regulatory requirement 
that new or modified sources be disapproved where the source would 
interfere with attainment of the NAAQS. 41 FR 55524 (Dec. 21, 1976). 
It required, inter alia, compliance with the LAER and with 
offsetting emission reductions in excess of the new source's 
emissions. At that time, part D NSR was not part of the CAA.
    When the part D NSR provisions were added in the 1977 Amendments 
to the CAA, Congress added the requirement that SIPs contain 
nonattainment NSR provisions as set forth in section 173, including 
LAER and the requirement to either offset the increase in new source 
emissions or ensure that emissions fell within a growth allowance. 
(The growth allowance provision was repealed in 1990.) Additionally, 
Congress provided that appendix S would govern preconstruction 
permitting in areas lacking approved part D SIPs before a 
construction ban went into effect, as discussed in more detail 
earlier.
---------------------------------------------------------------------------

    The continued application of appendix S through Sec.  52.24(k) is 
also supported by the purpose of the CAA, specifically, section 
101(b)(1), ``to protect and enhance the quality of the Nation's air 
resources so as to promote the public health and welfare and the 
productive capacity of its population.'' This provision was the basis 
for the original judicial finding that the Act imposed an obligation to 
prevent significant deterioration in areas that meet the NAAQS, prior 
to Congress' enactment of the PSD program at part C of the Act.\3\ This 
policy of non-degradation and promoting productive capacity applies 
with even greater force in areas that fail to meet the NAAQS. Thus, we 
believe that an interim major NSR program for the SIP development 
period--as codified at appendix S--is supported by section 
110(a)(2)(C), section 101(b)(1), Congressional intent, and our 
gapfilling authority under section 301(a) of the Act.
---------------------------------------------------------------------------

    \3\ See Alabama Power Co. v. Costle, 636 F.3d 323, 346-047 (DC 
Cir. 1980) (discussing Sierra Club v. Ruckelshaus, 344 F. Supp. 253 
(D.D.C. 1972), aff'd per curiam 4 ERC 1815 (DC Cir. 1972), aff'd by 
an equally divided court, sub nom Fri v. Sierra Club, 412 U.S. 541 
(1973).
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C. Approach for ``Reasonable Possibility'' Standard

    These appendix S rules include the ``reasonable possibility'' 
standard of the 2002 NSR reform rules. In response to the remand of 
that standard handed down by the D.C. Circuit in the New York case, EPA 
provides an interim interpretation of ``reasonable possibility'' that 
is consistent with the Court's decision. We note that in a separate 
Federal Register notice published on this date, we are proposing 
clarification of the ``reasonable possibility'' standard to address 
under which circumstances a source that does not trigger NSR may 
nonetheless still be required to keep records.
    A major stationary source in a nonattainment area (or in the OTR) 
triggers the application of NSR when it makes a ``modification,'' which 
is defined as ``any physical change * * * or change in the method of 
operation * * * which increases the amount of any air pollutant 
emitted'' for which an area is in nonattainment or results in the 
emission of any such air pollutant not previously emitted by the 
source. CAA sections 172(c)(5), 171(4), 111(a)(4). The amount of the 
increase must be significant, and EPA, through rulemaking, has 
determined significance levels for various pollutants where the Act 
does not independently specify a significance threshold. See 40 CFR 
51.165(a)(1)(x), 51.166(b)(23)(i), paragraph II.A.10 of appendix S to 
Part 51, and 52.21(b)(23)(i).
    To determine the amount of increase from the change, the NSR rules 
prior to revision by the 2002 NSR reform rules generally required a 
source other than an electric utility steam generating unit (EUSGU) to 
compare the amount of the source's actual emissions during a baseline 
period to the amount the source would emit after the change based on 
the source's potential to emit (PTE) to determine if a ``significant 
net emissions increase'' has occurred. The 2002 NSR reform rules 
provided non-EUSGU sources a choice in how to determine the post-change 
amount: these sources could continue to use the PTE amount (the 
actuals-to-potentials test), or they could use the amount of actual 
emissions the sources projected to occur (the actuals-to-projected-
actuals test). The preamble to the NSR reform rules contains a more 
detailed discussion, 67 FR at 80,187.
    For a source that elects the actuals-to-projected-actuals test and 
calculates that the amount of any increase would not exceed the 
significance levels and therefore does not trigger NSR, the NSR reform 
rules provide requirements to maintain records of the calculations and 
post-change emissions if the source determines that there is ``a 
reasonable possibility that [the change] may result in a significant 
emissions increase * * *. '' 40 CFR 52.21(r)(6).
    In the New York case, the DC Circuit remanded this provision, 
stating:

    Because EPA has failed to explain how it can ensure NSR 
compliance without the relevant data, we will remand for it either 
to provide an acceptable explanation for its ``reasonable 
possibility'' standard or to devise an appropriately supported 
alternative.

413 F.3d at 35-36.
    In a separate Federal Register notice published on this date, we 
are proposing clarification of the ``reasonable possibility'' standard 
to identify when a source must keep records despite the fact that a 
physical or operational change does not trigger NSR. The EPA intends, 
as part of that rulemaking, to revise appendix S to the extent 
necessary to conform to the results of that rulemaking.
    In the interim, until EPA completes the rulemaking, EPA announces 
that it interprets the standard so that a source may conclude there is 
no ``reasonable possibility'' that the change will result in a 
significant increase in emissions only if the change's projected actual 
emissions increase is below 50 percent of the applicable NSR 
significance level for any pollutant. This test may be termed the 
``percentage increase trigger.'' We base our conclusion on an 
assumption that the magnitude of projected actual emissions correlates 
positively to the likelihood of a significant emissions increase. The 
EPA believes that this interpretation addresses the issues identified 
by the Court in the New York case.

[[Page 10371]]

V. Summary of Major Comments and Responses

    As we noted in section III.B of this preamble, we proposed changes 
to appendix S and the other major NSR regulations in 1996. Thus, the 
comments and responses concerning the final regulations on December 31, 
2002 also apply to these final changes to appendix S. You will find the 
major comments and responses at 67 FR 80186. For a complete summary of 
the comments and responses, please see our Technical Support Document 
for the December 31, 2002 final rules, which is posted on the World 
Wide Web, on the EPA's New Source Review Web site, at http://www.epa.gov/nsr/documents/nsr-tsd_11-22-02.pdf
.

VI. Effective Date for Requirements

    These final changes to appendix S of 40 CFR part 51 will take 
effect in the NSR permitting programs for nonattainment areas on May 7, 
2007. This means that appendix S as amended in this final action will 
apply on May 7, 2007 in any nonattainment area without an approved part 
D NSR SIP that applies to major sources in the nonattainment area for 
the nonattainment pollutant.

VII. Statutory and Executive Order Reviews

A. Executive Order 12866--Regulatory Planning and Review

    Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), 
this action is a ``significant regulatory action.'' Accordingly, EPA 
submitted this action to the Office of Management and Budget (OMB) for 
review under EO 12866 and any changes made in response to OMB 
recommendations have been documented in the docket for this action.

B. Paperwork Reduction Act

    This action does not impose any new information collection burden. 
The OMB has previously approved the information collection requirements 
contained in the existing regulations (40 CFR parts 51 and 52) under 
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501, et seq., 
and has assigned OMB control number 2060-0003, EPA ICR number 1230.17. 
A copy of the OMB-approved Information Collection Request (ICR) may be 
obtained from Susan Auby, Collection Strategies Division, U.S. 
Environmental Protection Agency (2822T), 1200 Pennsylvania Ave., NW., 
Washington, DC 20460, or by calling (202) 566-1672.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act (RFA)

    The EPA has determined that it is not necessary to prepare a 
regulatory flexibility analysis in connection with this final rule. For 
purposes of assessing the impacts of this final rule on small entities, 
small entity is defined as: (1) A small business as defined by the 
Small Business Administration's (SBA) regulations at 13 CFR 121.201; 
(2) a small governmental jurisdiction that is a government of a city, 
county, town, school district or special district with a population of 
less than 50,000; or (3) a small organization that is any not-for-
profit enterprise which is independently owned and operated and is not 
dominant in its field.
    After considering the economic impacts of this final rule on small 
entities, EPA has concluded that this action will not have a 
significant economic impact on a substantial number of small entities. 
We are imposing no new requirements on small entities.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 
104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year.
    Before promulgating an EPA rule for which a written statement is 
needed, section 205 of the UMRA generally requires EPA to identify and 
consider a reasonable number of regulatory alternatives and adopt the 
least costly, most cost-effective, or least burdensome alternative that 
achieves the objectives of the rule. The provisions of section 205 do 
not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective, or least burdensome alternative if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted.
    Before EPA establishes any regulatory requirements that may 
significantly or uniquely affect small governments, including tribal 
governments, it must have developed under section 203 of the UMRA a 
small government agency plan. The plan must provide for notifying 
potentially affected small governments, enabling officials of affected 
small governments to have meaningful and timely input in the 
development of EPA regulatory proposals with significant Federal 
intergovernmental mandates, and informing, educating, and advising 
small governments on compliance with the regulatory requirements.
    As this final rule generally incorporates the December 31, 2002 
final rules into appendix S, we believe these rule changes will 
actually reduce the regulatory burden associated with the major NSR 
program by improving the operational flexibility of owners or operators 
and clarifying the requirements. Additionally, States are not required 
to revise their SIPs with respect to appendix S. The EPA will act as 
the reviewing authority where the State lacks authority to issue 
permits that meet the conditions of appendix S. Thus, this final rule 
is not subject to the requirements of sections 202 and 205 of the UMRA.
    Because we have not required any new Federal mandates, EPA has also 
determined that this rule contains no regulatory requirements that 
might significantly or uniquely affect small governments.

E. Executive Order 13132--Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include

[[Page 10372]]

regulations that have ``substantial direct effects on the States, on 
the relationship between the national government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government.''
    This final rule does not have federalism implications. 
Nevertheless, as described in section III.B of this preamble, in 
developing this rule, we consulted with affected parties and interested 
stakeholders, including State and local authorities, to enable them to 
provide timely input in the development of this rule. The rule will not 
have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
as specified in Executive Order 13132. The revisions to appendix S do 
not have substantial direct effects on State and local agencies because 
State and local agencies are not required to revise their programs with 
respect to appendix S. The EPA will act as the reviewing authority 
where the State lacks authority to issue permits that meet the 
conditions of appendix S. Moreover, this revision provides sources 
permitted by States under appendix S greater certainty in application 
of the program, which should in turn reduce the overall burden of the 
program on State and local authorities. Thus, Executive Order 13132 
does not apply to this final rule.

F. Executive Order 13175--Consultation and Coordination With Indian 
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' This final rule does not have 
tribal implications, as specified in Executive Order 13175. Thus, 
Executive Order 13175 does not apply.
    The purpose of this final rule, like that for the December 31, 2002 
rules, is to add greater flexibility to the existing major NSR 
regulations. These changes have been incorporated into appendix S. 
Appendix S affects sources located in Indian country but has no direct 
effect on Indian tribes. Although major stationary sources affected by 
this final rule could be located in or near Indian country and/or be 
owned or operated by tribal governments, such sources would not incur 
additional costs or compliance burdens as a result of this rule. 
Instead, the only effect on such sources should be the benefit of the 
added certainty and flexibility provided by the rule.
    Although Executive Order 13175 does not apply to this rule, EPA 
afforded Tribal officials the opportunity to comment on the December 
31, 2002 final rules, which were developed largely prior to issuance of 
Executive Order 13175. Two tribes submitted comments on that action. We 
recognize the importance of including tribal consultation as part of 
the rulemaking process. We will continue to consult with tribes on 
future rulemaking to assess and address tribal implications, and will 
work with tribes interested in seeking TIP approval to implement the 
NSR program to ensure consistency of tribal plans with this rule.

G. Executive Order 13045--Protection of Children From Environmental 
Health and Safety Risks

    Executive Order 13045, ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997), applies 
to any rule that: (1) As ``economically significant'' as defined under 
Executive Order 12866; and (2) concerns an environmental health or 
safety risk that EPA has reason to believe may have a disproportionate 
effect on children. If the regulatory action meets both criteria, the 
Agency must evaluate the environmental health or safety effects of the 
planned rule on children and explain why the planned regulation is 
preferable to other potentially effective and reasonably feasible 
alternatives considered by the Agency.
    This final rule is not subject to the Executive Order because it is 
not economically significant as defined in Executive Order 12866 and 
because the Agency does not have reason to believe the environmental 
health or safety risks addressed by this action present a 
disproportionate risk to children. Based on our Supplemental Analysis, 
we believe that the December 31, 2002 rules that have been incorporated 
into this final action will result in equal or better environmental 
protection than provided by the prior regulations, and do so in a more 
streamlined and effective manner.

H. Executive Order 13211--Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This rule is not a ``significant energy action'' as defined in 
Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 
28355; May 22, 2001), because it is not likely to have a significant 
adverse effect on the supply, distribution, or use of energy. This 
final rule improves the ability of sources to undertake pollution 
prevention or energy efficiency projects, switch to less polluting 
fuels or raw materials, maintain the reliability of production 
facilities, and effectively utilize and improve existing capacity. The 
rule also includes a number of provisions to streamline administrative 
and permitting processes so that facilities can quickly accommodate 
changes in supply and demand. The regulations provide several 
alternatives that are specifically designed to reduce administrative 
burden for sources that use pollution prevention or energy efficient 
projects.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), P.L. 104-113, 12(d) (15 U.S.C. 272 note), directs 
EPA to use voluntary consensus standards in its regulatory activities 
unless to do so would be inconsistent with applicable law or otherwise 
impractical. Voluntary consensus standards are technical standards 
(e.g., materials specifications, test methods, sampling procedures, and 
business practices) that are developed or adopted by voluntary 
consensus standards bodies. The NTTAA directs EPA to provide Congress, 
through OMB, explanations when the Agency decides not to use available 
and applicable voluntary consensus standards.
    Although this rule does involve the use of technical standards, it 
does not preclude the State, local, and tribal reviewing agencies from 
using voluntary consensus standards. This final rule is an improvement 
of the existing NSR permitting program. As such, it only ensures that 
promulgated technical standards are considered and appropriate controls 
are installed, prior to the construction of major sources of air 
emissions. Therefore, EPA did not consider the use of any voluntary 
consensus standards.

J. Executive Order 12898--Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898, entitled ``Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations'' (59 FR 7629, February 16, 1994), establishes federal 
executive policy on environmental justice. Its main provision directs 
federal agencies, to the greatest extent practicable and permitted by 
law, to make environmental justice part of their mission by identifying 
and addressing, as appropriate, disproportionately high

[[Page 10373]]

and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    The EPA has determined that this final rule will not have 
disproportionately high and adverse human health or environmental 
effects on minority or low-income populations. Based on our 
Supplemental Analysis, we believe that the December 31, 2002 rules that 
have been incorporated into this final action will result in equal or 
better environmental protection than provided by the prior regulations, 
and do so in a more streamlined and effective manner.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. The EPA will submit a report containing this rule and 
other required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2). This action will be effective May 7, 2007.

VIII. Judicial Review

    Under section 307(b)(1) of the CAA, petitions for judicial review 
of this action must be filed in the United States Court of Appeals for 
the appropriate circuit by May 7, 2007. 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 CAA section 307(b)(2).
    Pursuant to section 307(d)(1)(U) of the CAA, the Administrator 
determines that this action is subject to the provisions of section 
307(d). Section 307(d)(1)(U) provides that the provisions of section 
307(d) apply to ``such other actions as the Administrator may 
determine.'' This action finalizes elements of previous proposed 
actions that were determined to be subject to section 307(d)--the NSR 
rules published on December 31, 2002 (67 FR at 80244). Therefore, the 
procedural requirements of section 307(d) have been complied with for 
purposes of this action.

IX. Statutory Authority

    The statutory authority for this action is provided by sections 
101, 112, 114, 116, and 301 of the Act as amended (42 U.S.C. 7401, 
7412, 7414, 7416, and 7601). This rulemaking is also subject to section 
307(d) of the Act (42 U.S.C. 7407(d)).

Nonattainment New Source Review: Appendix S--Page 37 of 91

List of Subjects in 40 CFR Part 51

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Carbon monoxide, Intergovernmental relations, 
Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and 
recordkeeping requirements, Sulfur oxides, Transportation, Volatile 
organic compounds.

    Dated: February 28, 2007.
Stephen L. Johnson,
Administrator.

0
For the reasons set out in the preamble, title 40, chapter I of the 
Code of Federal Regulations is amended as follows:

PART 51--[AMENDED]

0
1. The authority citation for part 51 continues to read as follows:

    Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.

Appendix S to Part 51--[Amended]

0
2. Appendix S to Part 51 is amended as follows:
0
a. By revising paragraph II.A.1.
0
b. By revising paragraphs II.A.5(i) and (ii).
0
c. By adding paragraph II.A.5(vi).
0
d. By revising paragraph II.A.6(i).
0
e. By revising paragraph II.A.6(iii).
0
f. By revising paragraph II.A.6(v)(b) through (d).
0
g. By adding paragraph II.A.6(vii).
0
h. By revising paragraph II.A.7.
0
i. By revising paragraph II.A.13.
0
j. By revising paragraph II.A.14.
0
k. By revising the introductory text in paragraph II.A.18.
0
l. By adding paragraphs II.A.21 through 36.
0
m. By adding paragraphs IV. I through L.
    The revisions and additions read as follows:

Appendix S to Part 51--Emission Offset Interpretative Ruling

* * * * *
    II. * * *
    A. * * *
    1. Stationary source means any building, structure, facility, or 
installation which emits or may emit a regulated NSR pollutant.
* * * * *
    5. (i) Major modification means any physical change in or change 
in the method of operation of a major stationary source that would 
result in:
    (a) A significant emissions increase of a regulated NSR 
pollutant (as defined in paragraph II.A.31 of this Ruling); and
    (b) A significant net emissions increase of that pollutant from 
the major stationary source.
    (ii) Any significant emissions increase (as defined in paragraph 
II.A.23 of this Ruling) from any emissions units or net emissions 
increase (as defined in paragraph II.A.6 of this Ruling) at a major 
stationary source that is significant for volatile organic compounds 
shall be considered significant for ozone.
* * * * *
    (vi) This definition shall not apply with respect to a 
particular regulated NSR pollutant when the major stationary source 
is complying with the requirements under paragraph IV.K of this 
ruling for a PAL for that pollutant. Instead, the definition at 
paragraph IV.K.2(viii) of this Ruling shall apply.
    6.(i) Net emissions increase means, with respect to any 
regulated NSR pollutant emitted by a major stationary source, the 
amount by which the sum of the following exceeds zero:
    (a) The increase in emissions from a particular physical change 
or change in the method of operation at a stationary source as 
calculated pursuant to paragraph IV.J of this Ruling; and
    (b) Any other increases and decreases in actual emissions at the 
major stationary source that are contemporaneous with the particular 
change and are otherwise creditable. Baseline actual emissions for 
calculating increases and decreases under this paragraph 
II.A.6(i)(b) shall be determined as provided in paragraph II.A.30 of 
this Ruling, except that paragraphs II.A.30(i)(c) and II.A.30(ii)(d) 
of this Ruling shall not apply.
* * * * *
    (iii) An increase or decrease in actual emissions is creditable 
only if the reviewing authority has not relied on it in issuing a 
permit for the source under this Ruling, which permit is in effect 
when the increase in actual emissions from the particular change 
occurs.
* * * * *
    (v) * * *
    (b) It is enforceable as a practical matter at and after the 
time that actual construction on the particular change begins;
    (c) The reviewing authority has not relied on it in issuing any 
permit under regulations approved pursuant to 40 CFR 51.165; and
    (d) It has approximately the same qualitative significance for 
public health and

[[Page 10374]]

welfare as that attributed to the increase from the particular 
change.
* * * * *
    (vii) Paragraph II.A.13(ii) of this Ruling shall not apply for 
determining creditable increases and decreases or after a change.
    7. Emissions unit means any part of a stationary source that 
emits or would have the potential to emit any regulated NSR 
pollutant and includes an electric utility steam generating unit as 
defined in paragraph II.A.21 of this Ruling. For purposes of this 
Ruling, there are two types of emissions units as described in 
paragraphs II.A.7(i) and (ii) of this Ruling.
    (i) A new emissions unit is any emissions unit which is (or will 
be) newly constructed and which has existed for less than 2 years 
from the date such emissions unit first operated.
    (ii) An existing emissions unit is any emissions unit that does 
not meet the requirements in paragraph II.A.7(i) of this Ruling.
* * * * *
    13. (i) Actual emissions means the actual rate of emissions of a 
regulated NSR pollutant from an emissions unit, as determined in 
accordance with paragraphs II.A.13(ii) through (iv) of this Ruling, 
except that this definition shall not apply for calculating whether 
a significant emissions increase has occurred, or for establishing a 
PAL under paragraph IV.K of this Ruling. Instead, paragraphs II.A.24 
and 30 of this Ruling shall apply for those purposes.
    (ii) In general, actual emissions as of a particular date shall 
equal the average rate, in tons per year, at which the unit actually 
emitted the pollutant during a consecutive 24-month period which 
precedes the particular date and which is representative of normal 
source operation. The reviewing authority shall allow the use of a 
different time period upon a determination that it is more 
representative of normal source operation. Actual emissions shall be 
calculated using the unit's actual operating hours, production 
rates, and types of materials processed, stored, or combusted during 
the selected time period.
    (iii) The reviewing authority may presume that source-specific 
allowable emissions for the unit are equivalent to the actual 
emissions of the unit.
    (iv) For any emissions unit that has not begun normal operations 
on the particular date, actual emissions shall equal the potential 
to emit of the unit on that date.
    14. Construction means any physical change or change in the 
method of operation (including fabrication, erection, installation, 
demolition, or modification of an emissions unit) that would result 
in a change in emissions.
* * * * *
    18. Lowest achievable emission rate (LAER) means, for any 
source, the more stringent rate of emissions based on the following: 
* * *
* * * * *
    21. Electric utility steam generating unit means any steam 
electric generating unit that is constructed for the purpose of 
supplying more than one-third of its potential electric output 
capacity and more than 25 MW electrical output to any utility power 
distribution system for sale. Any steam supplied to a steam 
distribution system for the purpose of providing steam to a steam-
electric generator that would produce electrical energy for sale is 
also considered in determining the electrical energy output capacity 
of the affected facility.
    22. Pollution prevention means any activity that through process 
changes, product reformulation or redesign, or substitution of less 
polluting raw materials, eliminates or reduces the release of air 
pollutants (including fugitive emissions) and other pollutants to 
the environment prior to recycling, treatment, or disposal; it does 
not mean recycling (other than certain ``in-process recycling'' 
practices), energy recovery, treatment, or disposal.
    23. Significant emissions increase means, for a regulated NSR 
pollutant, an increase in emissions that is significant (as defined 
in paragraph II.A.10 of this Ruling) for that pollutant.
    24. (i) Projected actual emissions means, the maximum annual 
rate, in tons per year, at which an existing emissions unit is 
projected to emit a regulated NSR pollutant in any one of the 5 
years (12-month period) following the date the unit resumes regular 
operation after the project, or in any one of the 10 years following 
that date, if the project involves increasing the emissions unit's 
design capacity or its potential to emit of that regulated NSR 
pollutant and full utilization of the unit would result in a 
significant emissions increase or a significant net emissions 
increase at the major stationary source.
    (ii) In determining the projected actual emissions under 
paragraph II.A.24(i) of this Ruling before beginning actual 
construction, the owner or operator of the major stationary source:
    (a) Shall consider all relevant information, including but not 
limited to, historical operational data, the company's own 
representations, the company's expected business activity and the 
company's highest projections of business activity, the company's 
filings with the State or Federal regulatory authorities, and 
compliance plans under the approved plan; and
    (b) Shall include fugitive emissions to the extent quantifiable, 
and emissions associated with startups, shutdowns, and malfunctions; 
and
    (c) Shall exclude, in calculating any increase in emissions that 
results from the particular project, that portion of the unit's 
emissions following the project that an existing unit could have 
accommodated during the consecutive 24-month period used to 
establish the baseline actual emissions under paragraph II.A.30 of 
this Ruling and that are also unrelated to the particular project, 
including any increased utilization due to product demand growth; 
or,
    (d) In lieu of using the method set out in paragraphs 
II.A.24(ii)(a) through (c) of this Ruling, may elect to use the 
emissions unit's potential to emit, in tons per year, as defined 
under paragraph II.A.3 of this Ruling.
    25. Nonattainment major new source review (NSR) program means a 
major source preconstruction permit program that implements Sections 
I through VI of this Ruling, or a program that has been approved by 
the Administrator and incorporated into the plan to implement the 
requirements of Sec.  51.165 of this part. Any permit issued under 
such a program is a major NSR permit.
    26. Continuous emissions monitoring system (CEMS) means all of 
the equipment that may be required to meet the data acquisition and 
availability requirements of this Ruling, to sample, condition (if 
applicable), analyze, and provide a record of emissions on a 
continuous basis.
    27. Predictive emissions monitoring system (PEMS) means all of 
the equipment necessary to monitor process and control device 
operational parameters (for example, control device secondary 
voltages and electric currents) and other information (for example, 
gas flow rate, O2 or CO2 concentrations), and 
calculate and record the mass emissions rate (for example, lb/hr) on 
a continuous basis.
    28. Continuous parameter monitoring system (CPMS) means all of 
the equipment necessary to meet the data acquisition and 
availability requirements of this Ruling, to monitor process and 
control device operational parameters (for example, control device 
secondary voltages and electric currents) and other information (for 
example, gas flow rate, O2 or CO2 
concentrations), and to record average operational parameter 
value(s) on a continuous basis.
    29. Continuous emissions rate monitoring system (CERMS) means 
the total equipment required for the determination and recording of 
the pollutant mass emissions rate (in terms of mass per unit of 
time).
    30. Baseline actual emissions means the rate of emissions, in 
tons per year, of a regulated NSR pollutant, as determined in 
accordance with paragraphs II.A.30(i) through (iv) of this Ruling.
    (i) For any existing electric utility steam generating unit, 
baseline actual emissions means the average rate, in tons per year, 
at which the unit actually emitted the pollutant during any 
consecutive 24-month period selected by the owner or operator within 
the 5-year period immediately preceding when the owner or operator 
begins actual construction of the project. The reviewing authority 
shall allow the use of a different time period upon a determination 
that it is more representative of normal source operation.
    (a) The average rate shall include fugitive emissions to the 
extent quantifiable, and emissions associated with startups, 
shutdowns, and malfunctions.
    (b) The average rate shall be adjusted downward to exclude any 
non-compliant emissions that occurred while the source was operating 
above any emission limitation that was legally enforceable during 
the consecutive 24-month period.
    (c) For a regulated NSR pollutant, when a project involves 
multiple emissions units, only one consecutive 24-month period must 
be used to determine the baseline actual emissions for the emissions 
units being changed. A different consecutive 24-month period can be 
used for each regulated NSR pollutant.
    (d) The average rate shall not be based on any consecutive 24-
month period for which

[[Page 10375]]

there is inadequate information for determining annual emissions, in 
tons per year, and for adjusting this amount if required by 
paragraph II.A.30(i)(b) of this Ruling.
    (ii) For an existing emissions unit (other than an electric 
utility steam generating unit), baseline actual emissions means the 
average rate, in tons per year, at which the emissions unit actually 
emitted the pollutant during any consecutive 24-month period 
selected by the owner or operator within the 10-year period 
immediately preceding either the date the owner or operator begins 
actual construction of the project, or the date a complete permit 
application is received by the reviewing authority for a permit 
required either under this Ruling or under a plan approved by the 
Administrator, whichever is earlier, except that the 10-year period 
shall not include any period earlier than November 15, 1990.
    (a) The average rate shall include fugitive emissions to the 
extent quantifiable, and emissions associated with startups, 
shutdowns, and malfunctions.
    (b) The average rate shall be adjusted downward to exclude any 
non-compliant emissions that occurred while the source was operating 
above an emission limitation that was legally enforceable during the 
consecutive 24-month period.
    (c) The average rate shall be adjusted downward to exclude any 
emissions that would have exceeded an emission limitation with which 
the major stationary source must currently comply, had such major 
stationary source been required to comply with such limitations 
during the consecutive 24-month period. However, if an emission 
limitation is part of a maximum achievable control technology 
standard that the Administrator proposed or promulgated under part 
63 of this chapter, the baseline actual emissions need only be 
adjusted if the State has taken credit for such emissions reductions 
in an attainment demonstration or maintenance plan.
    (d) For a regulated NSR pollutant, when a project involves 
multiple emissions units, only one consecutive 24-month period must 
be used to determine the baseline actual emissions for the emissions 
units being changed. A different consecutive 24-month period can be 
used for each regulated NSR pollutant.
    (e) The average rate shall not be based on any consecutive 24-
month period for which there is inadequate information for 
determining annual emissions, in tons per year, and for adjusting 
this amount if required by paragraphs II.A.30(ii)(b) and (c) of this 
Ruling.
    (iii) For a new emissions unit, the baseline actual emissions 
for purposes of determining the emissions increase that will result 
from the initial construction and operation of such unit shall equal 
zero; and thereafter, for all other purposes, shall equal the unit's 
potential to emit.
    (iv) For a PAL for a major stationary source, the baseline 
actual emissions shall be calculated for existing electric utility 
steam generating units in accordance with the procedures contained 
in paragraph II.A.30(i) of this Ruling, for other existing emissions 
units in accordance with the procedures contained in paragraph 
II.A.30(ii) of this Ruling, and for a new emissions unit in 
accordance with the procedures contained in paragraph II.A.30(iii) 
of this Ruling.
    31. Regulated NSR pollutant, for purposes of this Ruling, means 
the following:
    (i) Nitrogen oxides or any volatile organic compounds;
    (ii) Any pollutant for which a national ambient air quality 
standard has been promulgated; or
    (iii) Any pollutant that is a constituent or precursor of a 
general pollutant listed under paragraphs II.A.31(i) or (ii) of this 
Ruling, provided that a constituent or precursor pollutant may only 
be regulated under NSR as part of regulation of the general 
pollutant.
    32. Reviewing authority means the State air pollution control 
agency, local agency, other State agency, Indian tribe, or other 
agency issuing permits under this Ruling or authorized by the 
Administrator to carry out a permit program under Sec. Sec.  51.165 
and 51.166 of this part, or the Administrator in the case of EPA-
implemented permit programs under this Ruling or under Sec.  52.21 
of this chapter.
    33. Project means a physical change in, or change in the method 
of operation of, an existing major stationary source.
    34. Best available control technology (BACT) means an emissions 
limitation (including a visible emissions standard) based on the 
maximum degree of reduction for each regulated NSR pollutant which 
would be emitted from any proposed major stationary source or major 
modification which the reviewing authority, on a case-by-case basis, 
taking into account energy, environmental, and economic impacts and 
other costs, determines is achievable for such source or 
modification through application of production processes or 
available methods, systems, and techniques, including fuel cleaning 
or treatment or innovative fuel combustion techniques for control of 
such pollutant. In no event shall application of best available 
control technology result in emissions of any pollutant which would 
exceed the emissions allowed by any applicable standard under 40 CFR 
part 60 or 61. If the reviewing authority determines that 
technological or economic limitations on the application of 
measurement methodology to a particular emissions unit would make 
the imposition of an emissions standard infeasible, a design, 
equipment, work practice, operational standard, or combination 
thereof, may be prescribed instead to satisfy the requirement for 
the application of BACT. Such standard shall, to the degree 
possible, set forth the emissions reduction achievable by 
implementation of such design, equipment, work practice or 
operation, and shall provide for compliance by means which achieve 
equivalent results.
    35. Prevention of Significant Deterioration (PSD) permit means 
any permit that is issued under a major source preconstruction 
permit program that has been approved by the Administrator and 
incorporated into the plan to implement the requirements of Sec.  
51.166 of this chapter, or under the program in Sec.  52.21 of this 
chapter.
    36. Federal Land Manager means, with respect to any lands in the 
United States, the Secretary of the department with authority over 
such lands.
* * * * *
    IV. * * *
* * * * *
    I. Applicability procedures.
    1. To determine whether a project constitutes a major 
modification, the reviewing authority shall apply the principles set 
out in paragraphs IV.I.1(i) through (v) of this Ruling.
    (i) Except as otherwise provided in paragraph IV.I.2 of this 
Ruling, and consistent with the definition of major modification 
contained in paragraph II.A.5 of this Ruling, a project is a major 
modification for a regulated NSR pollutant if it causes two types of 
emissions increases--a significant emissions increase (as defined in 
paragraph II.A.23 of this Ruling), and a significant net emissions 
increase (as defined in paragraphs II.A.6 and 10 of this Ruling). 
The project is not a major modification if it does not cause a 
significant emissions increase. If the project causes a significant 
emissions increase, then the project is a major modification only if 
it also results in a significant net emissions increase.
    (ii) The procedure for calculating (before beginning actual 
construction) whether a significant emissions increase (i.e., the 
first step of the process) will occur depends upon the type of 
emissions units being modified, according to paragraphs IV.I.1(iii) 
through (v) of this Ruling. The procedure for calculating (before 
beginning actual construction) whether a significant net emissions 
increase will occur at the major stationary source (i.e., the second 
step of the process) is contained in the definition in paragraph 
II.A.6 of this Ruling. Regardless of any such preconstruction 
projections, a major modification results if the project causes a 
significant emissions increase and a significant net emissions 
increase.
    (iii) Actual-to-projected-actual applicability test for projects 
that only involve existing emissions units. A significant emissions 
increase of a regulated NSR pollutant is projected to occur if the 
sum of the difference between the projected actual emissions (as 
defined in paragraph II.A.24 of this Ruling) and the baseline actual 
emissions (as defined in paragraphs II.A.30(i) and (ii) of this 
Ruling, as applicable), for each existing emissions unit, equals or 
exceeds the significant amount for that pollutant (as defined in 
paragraph II.A.10 of this Ruling).
    (iv) Actual-to-potential test for projects that only involve 
construction of a new emissions unit(s). A significant emissions 
increase of a regulated NSR pollutant is projected to occur if the 
sum of the difference between the potential to emit (as defined in 
paragraph II.A.3 of this Ruling) from each new emissions unit 
following completion of the project and the baseline actual 
emissions (as defined in paragraph II.A.30(iii) of this Ruling) of 
these units before the project equals or exceeds the significant 
amount for that pollutant (as defined in paragraph II.A.10 of this 
Ruling).
    (v) Hybrid test for projects that involve multiple types of 
emissions units. A significant emissions increase of a regulated NSR 
pollutant is projected to occur if the

[[Page 10376]]

sum of the emissions increases for each emissions unit, using the 
method specified in paragraphs IV.I.1(iii) through (iv) of this 
Ruling as applicable with respect to each emissions unit, for each 
type of emissions unit equals or exceeds the significant amount for 
that pollutant (as defined in paragraph II.A.10 of this Ruling).
    2. For any major stationary source for a PAL for a regulated NSR 
pollutant, the major stationary source shall comply with 
requirements under paragraph IV.K of this Ruling.
    J. Provisions for projected actual emissions. The provisions of 
this paragraph IV.J apply to projects at existing emissions units at 
a major stationary source (other than projects at a source with a 
PAL) in circumstances where there is a reasonable possibility that a 
project that is not a part of a major modification may result in a 
significant emissions increase and the owner or operator elects to 
use the method specified in paragraphs II.A.24(ii)(a) through (c) of 
this Ruling for calculating projected actual emissions.
    1. Before beginning actual construction of the project, the 
owner or operator shall document and maintain a record of the 
following information:
    (i) A description of the project;
    (ii) Identification of the emissions unit(s) whose emissions of 
a regulated NSR pollutant could be affected by the project; and
    (iii) A description of the applicability test used to determine 
that the project is not a major modification for any regulated NSR 
pollutant, including the baseline actual emissions, the projected 
actual emissions, the amount of emissions excluded under paragraph 
II.A.24(ii)(c) of this Ruling and an explanation for why such amount 
was excluded, and any netting calculations, if applicable.
    2. If the emissions unit is an existing electric utility steam 
generating unit, before beginning actual construction, the owner or 
operator shall provide a copy of the information set out in 
paragraph IV.J.1 of this Ruling to the reviewing authority. Nothing 
in this paragraph IV.J.2 shall be construed to require the owner or 
operator of such a unit to obtain any determination from the 
reviewing authority before beginning actual construction.
    3. The owner or operator shall monitor the emissions of any 
regulated NSR pollutant that could increase as a result of the 
project and that is emitted by any emissions units identified in 
paragraph IV.J.1(ii) of this Ruling; and calculate and maintain a 
record of the annual emissions, in tons per year on a calendar year 
basis, for a period of 5 years following resumption of regular 
operations after the change, or for a period of 10 years following 
resumption of regular operations after the change if the project 
increases the design capacity or potential to emit of that regulated 
NSR pollutant at such emissions unit.
    4. If the unit is an existing electric utility steam generating 
unit, the owner or operator shall submit a report to the reviewing 
authority within 60 days after the end of each year, during which 
records must be generated under paragraph IV.J.3 of this Ruling 
setting out the unit's annual emissions during the year that 
preceded submission of the report.
    5. If the unit is an existing unit other than an electric 
utility steam generating unit, the owner or operator shall submit a 
report to the reviewing authority if the annual emissions, in tons 
per year, from the project identified in paragraph IV.J.1 of this 
Ruling, exceed the baseline actual emissions (as documented and 
maintained pursuant to paragraph IV.J.1(iii) of this Ruling) by a 
significant amount (as defined in paragraph II.A.10 of this Ruling) 
for that regulated NSR pollutant, and if such emissions differ from 
the preconstruction projection as documented and maintained pursuant 
to paragraph IV.J.1(iii) of this Ruling. Such report shall be 
submitted to the reviewing authority within 60 days after the end of 
such year. The report shall contain the following:
    (i) The name, address and telephone number of the major 
stationary source;
    (ii) The annual emissions as calculated pursuant to paragraph 
IV.J.3 of this Ruling; and
    (iii) Any other information that the owner or operator wishes to 
include in the report (e.g., an explanation as to why the emissions 
differ from the preconstruction projection).
    6. [Reserved]
    7. The owner or operator of the source shall make the 
information required to be documented and maintained pursuant to 
this paragraph IV.J of this Ruling available for review upon a 
request for inspection by the reviewing authority or the general 
public pursuant to the requirements contained in Sec.  
70.4(b)(3)(viii) of this chapter.
    K. Actuals PALs. The provisions in paragraphs IV.K.1 through 15 
of this Ruling govern actuals PALs.
    1. Applicability.
    (i) The reviewing authority may approve the use of an actuals 
PAL for any existing major stationary source (except as provided in 
paragraph IV.K.1(ii) of this Ruling) if the PAL meets the 
requirements in paragraphs IV.K.1 through 15 of this Ruling. The 
term ``PAL'' shall mean ``actuals PAL'' throughout paragraph IV.K of 
this Ruling.
    (ii) The reviewing authority shall not allow an actuals PAL for 
VOC or NOX for any major stationary source located in an 
extreme ozone nonattainment area.
    (iii) Any physical change in or change in the method of 
operation of a major stationary source that maintains its total 
source-wide emissions below the PAL level, meets the requirements in 
paragraphs IV.K.1 through 15 of this Ruling, and complies with the 
PAL permit:
    (a) Is not a major modification for the PAL pollutant;
    (b) Does not have to be approved through a nonattainment major 
NSR program; and
    (c) Is not subject to the provisions in paragraph IV.F of this 
Ruling (restrictions on relaxing enforceable emission limitations 
that the major stationary source used to avoid applicability of a 
nonattainment major NSR program).
    (iv) Except as provided under paragraph IV.K.1(iii)(c) of this 
Ruling, a major stationary source shall continue to comply with all 
applicable Federal or State requirements, emission limitations, and 
work practice requirements that were established prior to the 
effective date of the PAL.
    2. Definitions. For the purposes of this paragraph IV.K, the 
definitions in paragraphs IV.K.2(i) through (xi) of this Ruling 
apply. When a term is not defined in these paragraphs, it shall have 
the meaning given in paragraph II.A of this Ruling or in the Act.
    (i) Actuals PAL for a major stationary source means a PAL based 
on the baseline actual emissions (as defined in paragraph II.A.30 of 
this Ruling) of all emissions units (as defined in paragraph II.A.7 
of this Ruling) at the source, that emit or have the potential to 
emit the PAL pollutant.
    (ii) Allowable emissions means ``allowable emissions'' as 
defined in paragraph II.A.11 of this Ruling, except as this 
definition is modified according to paragraphs IV.K.2(ii)(a) through 
(b) of this Ruling.
    (a) The allowable emissions for any emissions unit shall be 
calculated considering any emission limitations that are enforceable 
as a practical matter on the emissions unit's potential to emit.
    (b) An emissions unit's potential to emit shall be determined 
using the definition in paragraph II.A.3 of this Ruling, except that 
the words ``enforceable as a practical matter'' should be added 
after ``federally enforceable.''
    (iii) Small emissions unit means an emissions unit that emits or 
has the potential to emit the PAL pollutant in an amount less than 
the significant level for that PAL pollutant, as defined in 
paragraph II.A.10 of this Ruling or in the Act, whichever is lower.
    (iv) Major emissions unit means:
    (a) Any emissions unit that emits or has the potential to emit 
100 tons per year or more of the PAL pollutant in an attainment 
area; or
    (b) Any emissions unit that emits or has the potential to emit 
the PAL pollutant in an amount that is equal to or greater than the 
major source threshold for the PAL pollutant as defined by the Act 
for nonattainment areas. For example, in accordance with the 
definition of major stationary source in section 182(c) of the Act, 
an emissions unit would be a major emissions unit for VOC if the 
emissions unit is located in a serious ozone nonattainment area and 
it emits or has the potential to emit 50 or more tons of VOC per 
year.
    (v) Plantwide applicability limitation (PAL) means an emission 
limitation expressed in tons per year, for a pollutant at a major 
stationary source, that is enforceable as a practical matter and 
established source-wide in accordance with paragraphs IV.K.1 through 
15 of this Ruling.
    (vi) PAL effective date generally means the date of issuance of 
the PAL permit. However, the PAL effective date for an increased PAL 
is the date any emissions unit which is part of the PAL major 
modification becomes operational and begins to emit the PAL 
pollutant.
    (vii) PAL effective period means the period beginning with the 
PAL effective date and ending 10 years later.
    (viii) PAL major modification means, notwithstanding paragraphs 
II.A.5 and 6 of this Ruling (the definitions for major

[[Page 10377]]

modification and net emissions increase), any physical change in or 
change in the method of operation of the PAL source that causes it 
to emit the PAL pollutant at a level equal to or greater than the 
PAL.
    (ix) PAL permit means the permit issued under this Ruling, the 
major NSR permit, the minor NSR permit, or the State operating 
permit under a program that is approved into the plan, or the title 
V permit issued by the reviewing authority that establishes a PAL 
for a major stationary source.
    (x) PAL pollutant means the pollutant for which a PAL is 
established at a major stationary source.
    (xi) Significant emissions unit means an emissions unit that 
emits or has the potential to emit a PAL pollutant in an amount that 
is equal to or greater than the significant level (as defined in 
paragraph II.A.10 of this Ruling or in the Act, whichever is lower) 
for that PAL pollutant, but less than the amount that would qualify 
the unit as a major emissions unit as defined in paragraph 
IV.K.2(iv) of this Ruling.
    3. Permit application requirements. As part of a permit 
application requesting a PAL, the owner or operator of a major 
stationary source shall submit the following information to the 
reviewing authority for approval:
    (i) A list of all emissions units at the source designated as 
small, significant or major based on their potential to emit. In 
addition, the owner or operator of the source shall indicate which, 
if any, Federal or State applicable requirements, emission 
limitations or work practices apply to each unit.
    (ii) Calculations of the baseline actual emissions (with 
supporting documentation). Baseline actual emissions are to include 
emissions associated not only with operation of the unit, but also 
emissions associated with startup, shutdown and malfunction.
    (iii) The calculation procedures that the major stationary 
source owner or operator proposes to use to convert the monitoring 
system data to monthly emissions and annual emissions based on a 12-
month rolling total for each month as required by paragraph 
IV.K.13(i) of this Ruling.
    4. General requirements for establishing PALs.
    (i) The reviewing authority is allowed to establish a PAL at a 
major stationary source, provided that at a minimum, the 
requirements in paragraphs IV.K.4(i) (a) through (g) of this Ruling 
are met.
    (a) The PAL shall impose an annual emission limitation in tons 
per year, that is enforceable as a practical matter, for the entire 
major stationary source. For each month during the PAL effective 
period after the first 12 months of establishing a PAL, the major 
stationary source owner or operator shall show that the sum of the 
monthly emissions from each emissions unit under the PAL for the 
previous 12 consecutive months is less than the PAL (a 12-month 
average, rolled monthly). For each month during the first 11 months 
from the PAL effective date, the major stationary source owner or 
operator shall show that the sum of the preceding monthly emissions 
from the PAL effective date for each emissions unit under the PAL is 
less than the PAL.
    (b) The PAL shall be established in a PAL permit that meets the 
public participation requirements in paragraph IV.K.5 of this 
Ruling.
    (c) The PAL permit shall contain all the requirements of 
paragraph IV.K.7 of this Ruling.
    (d) The PAL shall include fugitive emissions, to the extent 
quantifiable, from all emissions units that emit or have the 
potential to emit the PAL pollutant at the major stationary source.
    (e) Each PAL shall regulate emissions of only one pollutant.
    (f) Each PAL shall have a PAL effective period of 10 years.
    (g) The owner or operator of the major stationary source with a 
PAL shall comply with the monitoring, recordkeeping, and reporting 
requirements provided in paragraphs IV.K. 12 through 14 of this 
Ruling for each emissions unit under the PAL through the PAL 
effective period.
    (ii) At no time (during or after the PAL effective period) are 
emissions reductions of a PAL pollutant, which occur during the PAL 
effective period, creditable as decreases for purposes of offsets 
under paragraph IV.C of this Ruling unless the level of the PAL is 
reduced by the amount of such emissions reductions and such 
reductions would be creditable in the absence of the PAL.
    5. Public participation requirement for PALs. PALs for existing 
major stationary sources shall be established, renewed, or increased 
through a procedure that is consistent with ((51.160 and 51.161 of 
this chapter. This includes the requirement that the reviewing 
authority provide the public with notice of the proposed approval of 
a PAL permit and at least a 30-day period for submittal of public 
comment. The reviewing authority must address all material comments 
before taking final action on the permit.
    6. Setting the 10-year actuals PAL level. The actuals PAL level 
for a major stationary source shall be established as the sum of the 
baseline actual emissions (as defined in paragraph II.A.30 of this 
Ruling) of the PAL pollutant for each emissions unit at the source; 
plus an amount equal to the applicable significant level for the PAL 
pollutant under paragraph II.A.10 of this Ruling or under the Act, 
whichever is lower. When establishing the actuals PAL level, for a 
PAL pollutant, only one consecutive 24-month period must be used to 
determine the baseline actual emissions for all existing emissions 
units. However, a different consecutive 24-month period may be used 
for each different PAL pollutant. Emissions associated with units 
that were permanently shut down after this 24-month period must be 
subtracted from the PAL level. Emissions from units on which actual 
construction began after the 24-month period must be added to the 
PAL level in an amount equal to the potential to emit of the units. 
The reviewing authority shall specify a reduced PAL level(s) (in 
tons/yr) in the PAL permit to become effective on the future 
compliance date(s) of any applicable Federal or State regulatory 
requirement(s) that the reviewing authority is aware of prior to 
issuance of the PAL permit. For instance, if the source owner or 
operator will be required to reduce emissions from industrial 
boilers in half from baseline emissions of 60 ppm NOX to 
a new rule limit of 30 ppm, then the permit shall contain a future 
effective PAL level that is equal to the current PAL level reduced 
by half of the original baseline emissions of such unit(s).
    7. Contents of the PAL permit. The PAL permit contain, at a 
minimum, the information in paragraphs IV.K.7 (i) through (x) of 
this Ruling.
    (i) The PAL pollutant and the applicable source-wide emission 
limitation in tons per year.
    (ii) The PAL permit effective date and the expiration date of 
the PAL (PAL effective period).
    (iii) Specification in the PAL permit that if a major stationary 
source owner or operator applies to renew a PAL in accordance with 
paragraph IV.K.10 of this Ruling before the end of the PAL effective 
period, then the PAL shall not expire at the end of the PAL 
effective period. It shall remain in effect until a revised PAL 
permit is issued by the reviewing authority.
    (iv) A requirement that emission calculations for compliance 
purposes include emissions from startups, shutdowns and 
malfunctions.
    (v) A requirement that, once the PAL expires, the major 
stationary source is subject to the requirements of paragraph IV.K.9 
of this Ruling.
    (vi) The calculation procedures that the major stationary source 
owner or operator shall use to convert the monitoring system data to 
monthly emissions and annual emissions based on a 12-month rolling 
total for each month as required by paragraph IV.K.13(i) of this 
Ruling.
    (vii) A requirement that the major stationary source owner or 
operator monitor all emissions units in accordance with the 
provisions under paragraph IV.K.12 of this Ruling.
    (viii) A requirement to retain the records required under 
paragraph IV.K.13 of this Ruling on site. Such records may be 
retained in an electronic format.
    (ix) A requirement to submit the reports required under 
paragraph IV.K.14 of this Ruling by the required deadlines.
    (x) Any other requirements that the reviewing authority deems 
necessary to implement and enforce the PAL.
    8. PAL effective period and reopening of the PAL permit. The 
requirements in paragraphs IV.K.8(i) and (ii) of this Ruling apply 
to actuals PALs.
    (i) PAL effective period. The reviewing authority shall specify 
a PAL effective period of 10 years.
    (ii) Reopening of the PAL permit.
    (a) During the PAL effective period, the reviewing authority 
must reopen the PAL permit to:
    (1) Correct typographical/calculation errors made in setting the 
PAL or reflect a more accurate determination of emissions used to 
establish the PAL.
    (2) Reduce the PAL if the owner or operator of the major 
stationary source creates creditable emissions reductions for use as 
offsets under paragraph IV.C of this Ruling.

[[Page 10378]]

    (3) Revise the PAL to reflect an increase in the PAL as provided 
under paragraph IV.K.11 of this Ruling.
    (b) The reviewing authority shall have discretion to reopen the 
PAL permit for the following:
    (1) Reduce the PAL to reflect newly applicable Federal 
requirements (for example, NSPS) with compliance dates after the PAL 
effective date.
    (2) Reduce the PAL consistent with any other requirement, that 
is enforceable as a practical matter, and that the State may impose 
on the major stationary source under the plan.
    (3) Reduce the PAL if the reviewing authority determines that a 
reduction is necessary to avoid causing or contributing to a NAAQS 
or PSD increment violation, or to an adverse impact on an air 
quality related value that has been identified for a Federal Class I 
area by a Federal Land Manager and for which information is 
available to the general public.
    (c) Except for the permit reopening in paragraph 
IV.K.8(ii)(a)(1) of this Ruling for the correction of typographical/
calculation errors that do not increase the PAL level, all other 
reopenings shall be carried out in accordance with the public 
participation requirements of paragraph IV.K.5 of this Ruling.
    9. Expiration of a PAL. Any PAL which is not renewed in 
accordance with the procedures in paragraph IV.K.10 of this Ruling 
shall expire at the end of the PAL effective period, and the 
requirements in paragraphs IV.K.9(i) through (v) of this Ruling 
shall apply.
    (i) Each emissions unit (or each group of emissions units) that 
existed under the PAL shall comply with an allowable emission 
limitation under a revised permit established according to the 
procedures in paragraphs IV.K.9(i)(a) through (b) of this Ruling.
    (a) Within the time frame specified for PAL renewals in 
paragraph IV.K.10(ii) of this Ruling, the major stationary source 
shall submit a proposed allowable emission limitation for each 
emissions unit (or each group of emissions units, if such a 
distribution is more appropriate as decided by the reviewing 
authority) by distributing the PAL allowable emissions for the major 
stationary source among each of the emissions units that existed 
under the PAL. If the PAL had not yet been adjusted for an 
applicable requirement that became effective during the PAL 
effective period, as required under paragraph IV.K.10(v) of this 
Ruling, such distribution shall be made as if the PAL had been 
adjusted.
    (b) The reviewing authority shall decide whether and how the PAL 
allowable emissions will be distributed and issue a revised permit 
incorporating allowable limits for each emissions unit, or each 
group of emissions units, as the reviewing authority determines is 
appropriate.
    (ii) Each emissions unit(s) shall comply with the allowable 
emission limitation on a 12-month rolling basis. The reviewing 
authority may approve the use of monitoring systems (source testing, 
emission factors, etc.) other than CEMS, CERMS, PEMS or CPMS to 
demonstrate compliance with the allowable emission limitation.
    (iii) Until the reviewing authority issues the revised permit 
incorporating allowable limits for each emissions unit, or each 
group of emissions units, as required under paragraph IV.K.9(i)(a) 
of this Ruling, the source shall continue to comply with a source-
wide, multi-unit emissions cap equivalent to the level of the PAL 
emission limitation.
    (iv) Any physical change or change in the method of operation at 
the major stationary source will be subject to the nonattainment 
major NSR requirements if such change meets the definition of major 
modification in paragraph II.A.5 of this Ruling.
    (v) The major stationary source owner or operator shall continue 
to comply with any State or Federal applicable requirements (BACT, 
RACT, NSPS, etc.) that may have applied either during the PAL 
effective period or prior to the PAL effective period except for 
those emission limitations that had been established pursuant to 
paragraph IV.F of this Ruling, but were eliminated by the PAL in 
accordance with the provisions in paragraph IV.K.1(iii)(c) of this 
Ruling.
    10. Renewal of a PAL.
    (i) The reviewing authority shall follow the procedures 
specified in paragraph IV.K.5 of this Ruling in approving any 
request to renew a PAL for a major stationary source, and shall 
provide both the proposed PAL level and a written rationale for the 
proposed PAL level to the public for review and comment. During such 
public review, any person may propose a PAL level for the source for 
consideration by the reviewing authority.
    (ii) Application deadline. The major stationary source owner or 
operator shall submit a timely application to the reviewing 
authority to request renewal of a PAL. A timely application is one 
that is submitted at least 6 months prior to, but not earlier than 
18 months from, the date of permit expiration. This deadline for 
application submittal is to ensure that the permit will not expire 
before the permit is renewed. If the owner or operator of a major 
stationary source submits a complete application to renew the PAL 
within this time period, then the PAL shall continue to be effective 
until the revised permit with the renewed PAL is issued.
    (iii) Application requirements. The application to renew a PAL 
permit shall contain the information required in paragraphs 
IV.K.10(iii)(a) through (d) of this Ruling.
    (a) The information required in paragraphs IV.K.3(i) through 
(iii) of this Ruling.
    (b) A proposed PAL level.
    (c) The sum of the potential to emit of all emissions units 
under the PAL (with supporting documentation).
    (d) Any other information the owner or operator wishes the 
reviewing authority to consider in determining the appropriate level 
for renewing the PAL.
    (iv) PAL adjustment. In determining whether and how to adjust 
the PAL, the reviewing authority shall consider the options outlined 
in paragraphs IV.K.10(iv)(a) and (b) of this Ruling. However, in no 
case may any such adjustment fail to comply with paragraph 
IV.K.10(iv)(c) of this Ruling.
    (a) If the emissions level calculated in accordance with 
paragraph IV.K.6 of this Ruling is equal to or greater than 80 
percent of the PAL level, the reviewing authority may renew the PAL 
at the same level without considering the factors set forth in 
paragraph IV.K.10(iv)(b) of this Ruling; or
    (b) The reviewing authority may set the PAL at a level that it 
determines to be more representative of the source's baseline actual 
emissions, or that it determines to be appropriate considering air 
quality needs, advances in control technology, anticipated economic 
growth in the area, desire to reward or encourage the source's 
voluntary emissions reductions, or other factors as specifically 
identified by the reviewing authority in its written rationale.
    (c) Notwithstanding paragraphs IV.K.10(iv)(a) and (b) of this 
Ruling,
    (1) If the potential to emit of the major stationary source is 
less than the PAL, the reviewing authority shall adjust the PAL to a 
level no greater than the potential to emit of the source; and
    (2) The reviewing authority shall not approve a renewed PAL 
level higher than the current PAL, unless the major stationary 
source has complied with the provisions of paragraph IV.K.11 of this 
Ruling (increasing a PAL).
    (v) If the compliance date for a State or Federal requirement 
that applies to the PAL source occurs during the PAL effective 
period, and if the reviewing authority has not already adjusted for 
such requirement, the PAL shall be adjusted at the time of PAL 
permit renewal or title V permit renewal, whichever occurs first.
    11. Increasing a PAL during the PAL effective period.
    (i) The reviewing authority may increase a PAL emission 
limitation only if the major stationary source complies with the 
provisions in paragraphs IV.K.11(i)(a) through (d) of this Ruling.
    (a) The owner or operator of the major stationary source shall 
submit a complete application to request an increase in the PAL 
limit for a PAL major modification. Such application shall identify 
the emissions unit(s) contributing to the increase in emissions so 
as to cause the major stationary source's emissions to equal or 
exceed its PAL.
    (b) As part of this application, the major stationary source 
owner or operator shall demonstrate that the sum of the baseline 
actual emissions of the small emissions units, 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 allowable emissions of the new or modified emissions unit(s) 
exceeds the PAL. The level of control that would result from BACT 
equivalent controls on each significant or major emissions unit 
shall be determined by conducting a new BACT analysis at the time 
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 10 years. In such a case, the 
assumed control level for that emissions unit shall be equal to the 
level of BACT or LAER with which that emissions unit must currently 
comply.

[[Page 10379]]

    (c) The owner or operator obtains a major NSR permit for all 
emissions unit(s) identified in paragraph IV.K.11(i)(a) of this 
Ruling, regardless of the magnitude of the emissions increase 
resulting from them (that is, no significant levels apply). These 
emissions unit(s) shall comply with any emissions requirements 
resulting from the nonattainment major NSR program process (for 
example, LAER), even though they have also become subject to the PAL 
or continue to be subject to the PAL.
    (d) The PAL permit shall require that the increased PAL level 
shall be effective on the day any emissions unit that is part of the 
PAL major modification becomes operational and begins to emit the 
PAL pollutant.
    (ii) The reviewing authority 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 as determined in accordance with paragraph 
IV.K.11(i)(b)), plus the sum of the baseline actual emissions of the 
small emissions units.
    (iii) The PAL permit shall be revised to reflect the increased 
PAL level pursuant to the public notice requirements of paragraph 
IV.K.5 of this Ruling.
    12. Monitoring requirements for PALs.
    (i) General Requirements.
    (a) Each PAL permit must contain enforceable requirements for 
the monitoring system that accurately determines plantwide emissions 
of the PAL pollutant in terms of mass per unit of time. Any 
monitoring system authorized for use in the PAL permit must be based 
on sound science and meet generally acceptable scientific procedures 
for data quality and manipulation. Additionally, the information 
generated by such system must meet minimum legal requirements for 
admissibility in a judicial proceeding to enforce the PAL permit.
    (b) The PAL monitoring system must employ one or more of the 
four general monitoring approaches meeting the minimum requirements 
set forth in paragraphs IV.K.12(ii)(a) through (d) of this Ruling 
and must be approved by the reviewing authority.
    (c) Notwithstanding paragraph IV.K.12(i)(b) of this Ruling, you 
may also employ an alternative monitoring approach that meets 
paragraph IV.K.12(i)(a) of this Ruling if approved by the reviewing 
authority.
    (d) Failure to use a monitoring system that meets the 
requirements of this Ruling renders the PAL invalid.
    (ii) Minimum Performance Requirements for Approved Monitoring 
Approaches. The following are acceptable general monitoring 
approaches when conducted in accordance with the minimum 
requirements in paragraphs IV.K.12(iii) through (ix) of this Ruling:
    (a) Mass balance calculations for activities using coatings or 
solvents;
    (b) CEMS;
    (c) CPMS or PEMS; and
    (d) Emission Factors.
    (iii) Mass Balance Calculations. An owner or operator using mass 
balance calculations to monitor PAL pollutant emissions from 
activities using coating or solvents shall meet the following 
requirements:
    (a) Provide a demonstrated means of validating the published 
content of the PAL pollutant that is contained in or created by all 
materials used in or at the emissions unit;
    (b) Assume that the emissions unit emits all of the PAL 
pollutant that is contained in or created by any raw material or 
fuel used in or at the emissions unit, if it cannot otherwise be 
accounted for in the process; and
    (c) Where the vendor of a material or fuel, which is used in or 
at the emissions unit, publishes a range of pollutant content from 
such material, the owner or operator must use the highest value of 
the range to calculate the PAL pollutant emissions unless the 
reviewing authority determines there is site-specific data or a 
site-specific monitoring program to support another content within 
the range.
    (iv) CEMS. An owner or operator using CEMS to monitor PAL 
pollutant emissions shall meet the following requirements:
    (a) CEMS must comply with applicable Performance Specifications 
found in 40 CFR part 60, appendix B; and
    (b) CEMS must sample, analyze and record data at least every 15 
minutes while the emissions unit is operating.
    (v) CPMS or PEMS. An owner or operator using CPMS or PEMS to 
monitor PAL pollutant emissions shall meet the following 
requirements:
    (a) The CPMS or the PEMS must be based on current site-specific 
data demonstrating a correlation between the monitored parameter(s) 
and the PAL pollutant emissions across the range of operation of the 
emissions unit; and
    (b) Each CPMS or PEMS must sample, analyze, and record data at 
least every 15 minutes, or at another less frequent interval 
approved by the reviewing authority, while the emissions unit is 
operating.
    (vi) Emission factors. An owner or operator using emission 
factors to monitor PAL pollutant emissions shall meet the following 
requirements:
    (a) All emission factors shall be adjusted, if appropriate, to 
account for the degree of uncertainty or limitations in the factors' 
development;
    (b) The emissions unit shall operate within the designated range 
of use for the emission factor, if applicable; and
    (c) If technically practicable, the owner or operator of a 
significant emissions unit that relies on an emission factor to 
calculate PAL pollutant emissions shall conduct validation testing 
to determine a site-specific emission factor within 6 months of PAL 
permit issuance, unless the reviewing authority determines that 
testing is not required.
    (vii) A source owner or operator must record and report maximum 
potential emissions without considering enforceable emission 
limitations or operational restrictions for an emissions unit during 
any period of time that there is no monitoring data, unless another 
method for determining emissions during such periods is specified in 
the PAL permit.
    (viii) Notwithstanding the requirements in paragraphs 
IV.K.12(iii) through (vii) of this Ruling, where an owner or 
operator of an emissions unit cannot demonstrate a correlation 
between the monitored parameter(s) and the PAL pollutant emissions 
rate at all operating points of the emissions unit, the reviewing 
authority shall, at the time of permit issuance:
    (a) Establish default value(s) for determining compliance with 
the PAL based on the highest potential emissions reasonably 
estimated at such operating point(s); or
    (b) Determine that operation of the emissions unit during 
operating conditions when there is no correlation between monitored 
parameter(s) and the PAL pollutant emissions is a violation of the 
PAL.
    (ix) Re-validation. All data used to establish the PAL pollutant 
must be re-validated through performance testing or other 
scientifically valid means approved by the reviewing authority. Such 
testing must occur at least once every 5 years after issuance of the 
PAL.
    13. Recordkeeping requirements.
    (i) The PAL permit shall require an owner or operator to retain 
a copy of all records necessary to determine compliance with any 
requirement of paragraph IV.K of this Ruling and of the PAL, 
including a determination of each emissions unit's 12-month rolling 
total emissions, for 5 years from the date of such record.
    (ii) The PAL permit shall require an owner or operator to retain 
a copy of the following records for the duration of the PAL 
effective period plus 5 years:
    (a) A copy of the PAL permit application and any applications 
for revisions to the PAL; and
    (b) Each annual certification of compliance pursuant to title V 
and the data relied on in certifying the compliance.
    14. Reporting and notification requirements. The owner or 
operator shall submit semi-annual monitoring reports and prompt 
deviation reports to the reviewing authority in accordance with the 
applicable title V operating permit program. The reports shall meet 
the requirements in paragraphs IV.K.14(i) through (iii).
    (i) Semi-Annual Report. The semi-annual report shall be 
submitted to the reviewing authority within 30 days of the end of 
each reporting period. This report shall contain the information 
required in paragraphs IV.K.14(i)(a) through (g) of this Ruling.
    (a) The identification of owner and operator and the permit 
number.
    (b) Total annual emissions (tons/year) based on a 12-month 
rolling total for each month in the reporting period recorded 
pursuant to paragraph IV.K.13(i) of this Ruling.
    (c) All data relied upon, including, but not limited to, any 
Quality Assurance or Quality Control data, in calculating the 
monthly and annual PAL pollutant emissions.
    (d) A list of any emissions units modified or added to the major 
stationary source during the preceding 6-month period.
    (e) The number, duration, and cause of any deviations or 
monitoring malfunctions (other than the time associated with zero 
and span calibration checks), and any corrective action taken.
    (f) A notification of a shutdown of any monitoring system, 
whether the shutdown

[[Page 10380]]

was permanent or temporary, the reason for the shutdown, the 
anticipated date that the monitoring system will be fully 
operational or replaced with another monitoring system, and whether 
the emissions unit monitored by the monitoring system continued to 
operate, and the calculation of the emissions of the pollutant or 
the number determined by method included in the permit, as provided 
by paragraph IV.K.12(vii) of this Ruling.
    (g) A signed statement by the responsible official (as defined 
by the applicable title V operating permit program) certifying the 
truth, accuracy, and completeness of the information provided in the 
report.
    (ii) Deviation report. The major stationary source owner or 
operator shall promptly submit reports of any deviations or 
exceedance of the PAL requirements, including periods where no 
monitoring is available. A report submitted pursuant to Sec.  
70.6(a)(3)(iii)(B) of this chapter shall satisfy this reporting 
requirement. The deviation reports shall be submitted within the 
time limits prescribed by the applicable program implementing Sec.  
70.6(a)(3)(iii)(B) of this chapter. The reports shall contain the 
following information:
    (a) The identification of owner and operator and the permit 
number;
    (b) The PAL requirement that experienced the deviation or that 
was exceeded;
    (c) Emissions resulting from the deviation or the exceedance; 
and
    (d) A signed statement by the responsible official (as defined 
by the applicable title V operating permit program) certifying the 
truth, accuracy, and completeness of the information provided in the 
report.
    (iii) Re-validation results. The owner or operator shall submit 
to the reviewing authority the results of any re-validation test or 
method within 3 months after completion of such test or method.
    15. Transition requirements.
    (i) No reviewing authority may issue a PAL that does not comply 
with the requirements in paragraphs IV.K.1 through 15 of this Ruling 
after the date that this Ruling becomes effective for the State in 
which the major stationary source is located.
    (ii) The reviewing authority may supersede any PAL which was 
established prior to the date that this Ruling becomes effective for 
the State in which the major stationary source is located with a PAL 
that complies with the requirements of paragraphs IV.K.1 through 15 
of this Ruling.
    L. Severability. If any provision of this Ruling, or the 
application of such provision to any person or circumstance, is held 
invalid, the remainder of this Ruling, or the application of such 
provision to persons or circumstances other than those as to which 
it is held invalid, shall not be affected thereby.

 [FR Doc. E7-3888 Filed 3-7-07; 8:45 am]

BILLING CODE 6560-50-P