Document ID: EPA-R05-OAR-2007-1043-0013
Agency: epa
Document Type: Rule
Title: Final Conditional Approval of Revision to Michigan PSD Regulations
Posted Date: 2008-09-16T04:00Z

[Federal Register: September 16, 2008 (Volume 73, Number 180)]
[Rules and Regulations]               
[Page 53366-53373]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16se08-5]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R05-OAR-2007-1043; FRL-8714-1]

 
Approval and Promulgation of Air Quality Implementation Plans; 
Michigan; PSD Regulations

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is conditionally approving into Michigan's State 
Implementation Plan (SIP) specified revisions to add the prevention of 
significant deterioration (PSD) construction permit program for the 
purpose of meeting the requirements of the Clean Air Act (CAA) with 
regard to new source review in areas attaining the National Ambient Air 
Quality Standards. The Michigan Department of Environmental Quality 
(MDEQ) submitted these rules to EPA for approval and inclusion into the 
Michigan SIP on December 21, 2006. In addition, in a separate action in 
today's Federal Register, EPA is proposing to partially disapprove the 
portion of Michigan's SIP revision submission consisting of Michigan 
Rule R 336.2816. The PSD SIP revision affects major stationary sources 
in Michigan that are subject to, or potentially subject to, the PSD 
construction permit program.

DATES: This final rule is effective on October 16, 2008.

ADDRESSES: EPA has established a docket for this action under Docket ID 
No. EPA-R05-OAR-2007-1043. All documents in the docket are listed on 
the www.regulations.gov Web site. Although listed in the index, some 
information is not publicly available, i.e., Confidential Business 
Information (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 www.regulations.gov or in hard copy at the U.S. 
Environmental Protection Agency, Region 5, Air and Radiation Division, 
77 West Jackson Boulevard, Chicago, Illinois 60604. This facility is 
open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding 
Federal holidays. We recommend that you telephone Laura Cossa, 
Environmental Engineer, at (312) 886-0661 before visiting the Region 5 
office.

FOR FURTHER INFORMATION CONTACT: Laura Cossa, Environmental Engineer, 
Air Permits Section, Air Programs Branch (AR-18J), U.S. Environmental 
Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, 
Illinois 60604, (312) 886-0661, cossa.laura@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document whenever ``we,'' 
``us,'' or ``our'' is used, we mean EPA. This supplementary information 
section is arranged as follows:

I. What Is Being Addressed in This Document?
II. What Proposed Revisions Are Included in the Conditional 
Approval?
III. What Proposed Revisions Are Not Included in Today's Conditional 
Approval?
IV. What Were the Comments Received and EPA's Response to Comments?
V. What Action Is EPA Taking?
VI. Statutory and Executive Order Reviews

I. What Is Being Addressed in This Document?

    MDEQ submitted Michigan Air Pollution Control Rules, Part 18, Rules 
R 336.2801 to R 336.2819 and R 336.2823(1) to (14) (``Part 18'') to EPA 
on December 21, 2006, for EPA approval and inclusion into the Michigan 
SIP. Part 18 relates to Michigan's PSD permit program. Michigan adopted 
revisions to Part 18 on December 4, 2006. Prior to approval of 
Michigan's submitted PSD program, EPA delegated to Michigan the 
authority to issue PSD permits through the Federal PSD rules at 40 CFR 
52.21 (via delegation letter dated September 26, 1988).
    On January 9, 2008, EPA proposed to conditionally approve 
Michigan's PSD SIP rules under section 110 of the CAA. (73 FR 1570, 
January 9, 2008). EPA received a number of comments on our proposal 
(see discussion in Section IV below). After considering the comments 
received, EPA is finalizing most of our proposed conditional approval 
of Michigan Air Pollution Control Rules, Part 18, Rules R 336.2801 to R 
336.2819 and R 336.2823(1) to (14) (with one exception discussed in 
more detail below). Under section 110(k)(4) of the CAA, EPA may 
conditionally approve a SIP revision based on a commitment from the 
State to adopt specific enforceable measures by a date certain that is 
no more than twelve months from the date of the conditional approval.
    In addition, in a separate action also published today, EPA is 
proposing to disapprove Michigan Rule R 336.2816, which is also 
included in the State's December 21, 2006, PSD program submission. This 
rule sets out the mechanisms which facilitate the participation of the 
Federal Land Manager (FLM) in the State's permitting process for 
purposes of protecting either the increment or the Air Quality Related 
Values (AQRVs) associated with a Class I area from potential impacts 
from a proposed major source or major modification. Michigan will 
retain its Federal delegation of authority under 40 CFR 52.21(p) until 
such time as the State submits promulgated rules equivalent to 40 CFR 
51.166(p) and those rules are approved into its SIP. Under section 
110(k)(3), EPA may disapprove a part of a SIP revision if the partial 
disapproval meets certain conditions discussed in Section III, below.
    Further, EPA is proposing to approve in the alternative a revised 
Michigan Rule R 336.2816 once the State submits and EPA approves 
promulgated rules equivalent to 40 CFR 51.166(p), which the State has 
committed to do.
    Michigan is not authorized to carry out its Federally approved air 
program in ``Indian Country,'' as defined in 18 U.S.C. 1151. Indian 
Country includes: 1. All lands within the exterior boundaries of Indian 
reservations within the State of Michigan; 2. Any land held in trust by 
the U.S. for an Indian tribe; and 3. Any other land, whether on or off 
an Indian reservation that qualifies as Indian Country. Therefore, EPA 
retains the authority to implement and administer the CAA program in 
Indian Country.

II. What Proposed Revisions Are Included in the Conditional Approval?

    EPA is conditionally approving the following sections of ``Part 18, 
Prevention of Significant Deterioration of Air Quality'' of Michigan's 
Air Pollution Control Rules, (a detailed discussion of the reasons for 
the conditional approval is available in 73 FR 1043, January 9, 2008):

R 336.2801 Definitions (a) through (tt) [except for R 336.2801 (j) 
and (ff), reserved in original rule];
R 336.2802 Applicability;
R 336.2803 Ambient Air Increments;
R 336.2804 Ambient Air Ceilings;

[[Page 53367]]

R 336.2805 Restrictions on Area Classifications;
R 336.2806 Exclusions from Increment Consumption;
R 336.2807 Redesignation;
R 336.2808 Stack Heights;
R 336.2809 Exemptions;
R 336.2810 Control Technology Review;
R 336.2811 Source Impact Analysis;
R 336.2812 Air Quality Models;
R 336.2813 Air Quality Analysis;
R 336.2814 Source Information;
R 336.2815 Additional Impact Analyses;
R 336.2817 Public Participation;
R 336.2818 Source Obligation;
R 336.2819 Innovative Control Technology; and,
R 336.2823 Actuals Plantwide Applicability Limits (PALs) (1) through 
(14).

III. What Proposed Revisions Are Not Included in Today's Conditional 
Approval?

    Today's action does not extend conditional approval to Michigan 
Rule R 336.2816, ``Sources Impacting Federal Class I Areas--Additional 
Requirements.'' EPA determined that Michigan Rule R 336.2816 is not 
consistent with 40 CFR 51.166(p), which sets out the mechanisms which 
facilitate the participation of the FLM in the State's permitting 
process for purposes of protecting either the increment or the AQRVs 
associated with a Class I area from potential impacts from a proposed 
major source or major modification.
    As further discussed below, commenters raised concerns that, 
insofar as Michigan Rule R 336.2816 does not fully provide this 
mechanism, EPA should act to ensure that the SIP contains these 
requirements. On November 30, 2007, in a letter from Steven Chester, 
Director, MDEQ, to Mary Gade, Regional Administrator, Michigan 
committed, among other things, to making changes to Michigan Rule R 
336.2816 consistent with the requirements at 40 CFR 51.166(p).
    Because Michigan currently implements the Federal PSD program under 
EPA's delegation of 40 CFR 52.21, EPA's conditional approval of 
Michigan Rule R 336.2816 would have made the Michigan SIP less 
stringent than the currently applicable, Federally delegated program. 
Therefore, in a separate action published today, EPA is proposing to 
disapprove Michigan's submittal as it relates to Michigan Rule R 
336.2816. Michigan will retain its Federal delegation of authority 
under 40 CFR 52.21(p) to administer Michigan Rule R 336.2816 until such 
time as the State submits promulgated rules equivalent to 40 CFR 
51.166(p) for approval, and these rules are approved into its SIP.

IV. What Were the Comments Received and EPA's Response to Comments?

    The public comment period for our proposed conditional approval 
began on January 9, 2008 (73 FR 1570, January 9, 2008). During the 
public comment period, EPA received both supportive and adverse 
comments in response to our proposed rulemaking. EPA received comments 
in support of our proposed action from the Alliance of Automobile 
Manufacturers and Marathon Petroleum Company on February 7, 2008, and 
from Consumers Energy Company on March 11, 2008 (Comment 1, discussed 
below). EPA received adverse consolidated comments, dated March 11, 
2008, from Clean Water Action, Environmental Law and Policy Center, 
Michigan Energy Alternatives, Michigan Land Use Institute, Midland 
Cares, Natural Resources Defense Council and Sierra Club 
((``Consolidated Commenters'') Comment 2, discussed below). EPA also 
received three requests, from Sidley and Austin LLP, Alliance of 
Automobile Manufacturers and Marathon Petroleum Company, on January 8, 
February 7, and March 11, 2008, respectively, to terminate the PSD 
delegation agreement between MDEQ and EPA when the approval of PSD 
program is issued (Comment 3, discussed below). One commenter 
(Consumers Energy Company) requested that EPA explicitly state in this 
notice the appropriate appeal procedures once the SIP is conditionally 
approved (Comment 4, discussed below). One commenter (Alliance of 
Automobile Manufacturers) expressed concern that Michigan's definition 
of ``net emission increase'' was more stringent than the Federal 
definition. As described in 40 CFR 51.166(b), states can use 
definitions that are more stringent than the corresponding definitions 
listed in 40 CFR 51.166(b)(1) to (56). However, in a letter dated May 
17, 2007, Michigan stated that it did not intend to implement a more 
stringent definition, and stated that the definition of ``net emissions 
increase'' is being rewritten under a State rulemaking, so that it will 
follow the same requirements as the Federal rule. Michigan indicates 
that the definition of ``net emissions increase'' as currently set 
forth in Michigan Rule R 336.2801(ee) will be applied until the state 
rules are revised. The same commenter (Alliance of Automobile 
Manufacturers) expressed concern that the requirements of Michigan Rule 
R 336.2818 (Source Obligation) are more stringent than the Federal 
requirements (Comment 5, discussed below).
    On January 25, 2008, EPA received a request from the Consolidated 
Commenters to extend the public comment period an additional 30 days 
from the original closing date of February 8, 2008. Despite one comment 
to the contrary, EPA reopened the public comment period for an 
additional 30 days until March 10, 2008 (73 FR 8250, February 13, 
2008).
    EPA has considered the comments received and, with the exception of 
the proposed disapproval of Michigan Rule R 336.2816, has finalized our 
action as proposed. Presented below is a summary of the comments and 
our responses.
    Comment 1: Three commenters supported the approval of Michigan's 
PSD Rules into the Michigan SIP and requested that EPA make the rule 
effective immediately upon publication.
    Response: EPA acknowledges receipt of the comments and for reasons 
set forth in this Notice is proceeding with a conditional approval of 
the specified PSD rules (along with the proposed disapproval of 
Michigan Rule R 336.2816). Pursuant to section 110(k)(4) of the CAA, 
EPA may conditionally approve a portion of a SIP revision based on a 
commitment from the State to adopt specific, enforceable measures, no 
later than twelve months from the date of final conditional approval. 
The State must provide the corrected promulgated rules, not a new SIP 
submittal, to EPA for approval. If the State fails to actually make the 
changes within the twelve month period, EPA would subsequently publish 
a notice in the Federal Register providing notice and details of such 
disapproval. EPA is not required to propose the finding of disapproval. 
If Michigan submits final and effective rule revisions correcting the 
deficiencies, as discussed above, within one year from this conditional 
approval becoming final and effective, EPA will publish a subsequent 
notice in the Federal Register to acknowledge that Michigan has met the 
criteria of a conditional approval and to inform the public about the 
conversion from a conditional approval to a full approval.
    Federal regulations at 40 CFR 51.166 set forth the criteria for a 
PSD program approval that EPA applies. With the exception of several 
deficiencies that need to be corrected, EPA has determined that 
Michigan's PSD rules meet these criteria. These deficiencies are 
explained below, in Part IV of this document, entitled ``What Action Is 
EPA Taking.'' Therefore, EPA is conditionally approving a revision to 
the SIP that includes specified sections of Michigan's PSD construction 
permit program, with the exception of the proposed disapproval of 
Michigan Rule R 336.2816.

[[Page 53368]]

    The requirement to provide at least 30 days notice before a rule 
becomes effective comes from the Administrative Procedures Act (APA), 
which governs all Federal rulemaking, not just EPA rulemaking. Section 
553(d) of the APA provides that set

    [T]he required publication or service of a substantive rule 
shall be made not less than 30 days before its effective date, 
except--
    (1) A substantive rule which grants or recognizes an exemption 
or relieves a restriction;
    (2) Interpretative rules and statements of policy; or
    (3) As otherwise provided by the agency for good cause found and 
published with the rule.

5 U.S.C. 553(d)(1)-(3).
    In rulemaking, exemptions from APA requirements are to be 
interpreted narrowly, not broadly. The commenters have not shown ``good 
cause,'' which, in this case, would be a demonstration of what actual 
hardship they would face as a result of a 30-day effective date. In the 
context of adoption of a State program, such as this, which essentially 
mirrors a Federal program, it is difficult to conceive of situations 
that would actually present such good cause. Arguments for rushing the 
new program into place imply that the new program is less stringent 
than the existing Federal rules, and undercut the rationale for 
approving it. Considerations supporting the 30 day notice period 
include: Providing advance notice to the regulated community and the 
public of the legal and practical requirements under the regulations, 
giving MDEQ time to get ready to implement the program, giving EPA time 
to work out the protocol of reviewing the State permits, and giving 
Michigan sources advance notice of which rules will apply and where 
their applications should be submitted. We find that the reasons listed 
by the commenters do not constitute a ``good cause'' to deviate from 
the general rule of section 553 of the APA. Therefore, the effective 
date of this rule is 30 days after the publication. Additionally, the 
commenter urges EPA to adopt an effective date concurrent with 
signature because this approach was followed by EPA in its conditional 
approval of the Ohio PSD SIP (66 FR 51570, October 10, 2001). The 
commenter is mistaken. In the case of the Ohio PSD SIP, the approval 
was not effective until the conditions were actually determined to be 
fulfilled, which would have taken more than 30 days.
    Comment 2: One group of commenters requested that EPA deny approval 
of Michigan's current PSD SIP revision, require the State to resubmit a 
revision with materials addressing the comments made, and impose 
appropriate conditions on any subsequent approval.
    Response: EPA acknowledges receipt of the comments and has 
addressed them specifically below (Comments A through F). As explained 
in EPA's response to Comment D.2, in a separate action EPA is proposing 
disapproval of Michigan Rule R 336.2816 (Sources Impacting Federal 
Class I Areas--additional requirements).
    Comment A: The commenters requested that EPA should make explicit 
in its approval that provisions in the Michigan SIP concerning best 
available control technology (``BACT'') analysis and air quality 
analysis, 40 CFR 51.166(j) and (m), apply to construction of any new 
major stationary source or major modification that would result in any 
emissions of particulate matter of less than or equal to 2.5 
micrometers in diameter (PM2.5), carbon dioxide, and/or other 
greenhouse gases (GHG), based on the definitions of ``significant'' and 
``regulated New Source Review (NSR) pollutant'' contained in the 
Federal regulations.
    Response: The minimum program requirements at 40 CFR 51.166 do not 
require States to designate individual pollutants as being covered by 
their PSD programs. As long as States adopt regulations that meet the 
requirements of 40 CFR 51.166 and their regulations include the 
pollutants covered by our definition of ``regulated NSR pollutant'' at 
40 CFR 51.166(b)(49), then the State has satisfied the requirements for 
SIP approval. The definition of ``regulated NSR pollutant'' in Michigan 
Rule R 336.2801(nn) follows the Federal definition.
    The BACT requirement set forth in 40 CFR 51.166(j) applies to each 
regulated NSR pollutant covered by the definition at 40 CFR 
51.166(b)(49), and Michigan's submission is consistent with the 
requirement. In addition, EPA construes the air quality analysis 
requirement set forth in 40 CFR 51.166(m) to apply only to regulated 
NSR pollutants. The regulation at 40 CFR 51.166(m)(1)(a)-(b) indicates 
that the air quality analysis needs to cover the pollutants that a new 
major source would have the potential to emit in significant amounts 
and each pollutant for which a major modification would result in a net 
significant emissions increase. EPA's definition of ``major stationary 
source,'' ``major modification,'' ``net emissions increase'' and 
``significant,'' each refer to emissions of regulated NSR pollutants. 
40 CFR 51.166(b)(1), (2), (3), and (23). Since the applicability of 40 
CFR 51.166(m) cannot be determined without reference to these other 
definitions, we construe 40 CFR 51.166(m) to apply to regulated NSR 
pollutants as well. Michigan's program satisfies the requirements of 40 
CFR 51.166(m), as interpreted by the Agency.
    On May 16, 2008, EPA finalized a specific regulation addressing 
implementation of the NSR program for PM2.5, which became effective on 
July 15, 2008. (73 FR 28321, May 16, 2008). Section V.H. of the 
preamble to the regulation discusses the process for transitioning 
State PSD programs to address PM2.5. (73 FR 28340, May 16, 2008). 
Michigan submitted its PSD program for approval to EPA prior to the 
publication of the implementation rule on May 16, 2008. The SIP 
revision that we are conditionally approving today does not 
specifically address the EPA PM2.5 rulemaking that became effective on 
July 15, 2008. Michigan has assured us that it has the authority under 
its SIP provisions to implement the PSD program for PM2.5, and that it 
intends to do so. Michigan is currently drafting revised regulations to 
address the PM2.5 rulemaking. EPA will act on those revisions when the 
State formally submits them as SIP revisions.
    Comment B: The commenters requested that EPA should not approve the 
SIP revision until it undertakes the Section 7 consultation under the 
Endangered Species Act (``ESA'') to determine whether the proposed 
approval of major changes to the State's PSD permit program may affect 
any listed species. In addition, these commenters request that EPA 
retain its ESA oversight obligations under the Act.
    Response: EPA disagrees with the commenters. Recent Supreme Court 
precedent has confirmed that the ESA requirements cited in the comments 
do not apply to EPA's decision to approve the PSD rules into a State's 
Federally authorized CAA program.
    Section 7(a)(2) of the ESA generally requires Federal agencies to 
consult with the relevant Federal wildlife agencies to ensure that 
actions they authorize, fund, or carry out are not likely to jeopardize 
the continued existence of Federally listed endangered or threatened 
species, or result in the destruction or adverse modification of 
designated critical habitat of such species. 16 U.S.C. 1536(a)(2). In 
accordance with relevant ESA implementing regulations, this requirement 
applies only to actions in which there is discretionary Federal 
involvement or control. 50 CFR 402.03. In National Ass'n of Home 
Builders v. Defenders of Wildlife, 127 S. Ct. 2518 (2007) (Defenders of 
Wildlife), the

[[Page 53369]]

Supreme Court examined these provisions in the context of EPA's 
decision to approve a State permitting program under the Clean Water 
Act (CWA). In that case, the Court held that when a Federal agency is 
required by statute to undertake a particular action once certain 
specified triggering events have occurred, there is no relevant agency 
discretion, and thus the requirements of ESA Section 7(a)(2) do not 
apply. 127 S. Ct. at 2536.
    With regard to EPA's transfer of CWA permitting authority to a 
State, the Court found that the relevant CWA provision mandated that 
EPA ``shall approve'' a state permitting program if a list of CWA 
statutory criteria are met. Therefore, EPA lacked the discretion to 
deny a transfer application that satisfied those criteria. Id. at 2531-
32. The Court also found that the relevant CWA program approval 
criteria did not include consideration of endangered or threatened 
species, and stated that ``[n]othing in the text of [the relevant CWA 
provision] authorizes EPA to consider the protection of threatened or 
endangered species as an end in itself when evaluating [an] 
application'' to transfer a permitting program to a State. Id. at 2537. 
Accordingly, the Court held that the CWA required EPA to approve the 
state's permitting program if the statutory criteria were met; those 
criteria did not include the consideration of ESA-protected species; 
and thus, consistent with 50 CFR 402.03, the non-discretionary action 
to transfer CWA permitting authority to the state did not trigger 
relevant ESA Section 7 requirements.
    Similar to the CWA program approval provision at issue in Defenders 
of Wildlife, section 110(k)(3) of the CAA mandates that EPA ``shall 
approve'' a SIP submittal that meets applicable CAA requirements. 42 
U.S.C. 7410(k)(3). The CAA provides a list of SIP submittal criteria in 
section 110. See 42 U.S.C. 7410(a)(2). As was the case with the CWA 
requirements in Defenders of Wildlife, the SIP requirements contained 
in section 110 of the CAA do not include protection of listed species, 
and Title I, Part C of the CAA does not explicitly state that 
consideration of the impacts on listed species is a required factor in 
SIP approval decisions. EPA's action on State SIP submittals is 
governed by section 110 of the Act, which unequivocally directs EPA to 
approve State plans meeting applicable CAA requirements.
    EPA recognizes that it exercises some judgment when evaluating 
whether a SIP submittal meets specific statutory criteria. However, as 
the Supreme Court held in Defenders of Wildlife, the use of such 
judgment does not allow the Agency ``the discretion to add another 
entirely separate prerequisite''--such as the ESA Section 7(a)(2) 
consultation requirements--to the list of required criteria EPA 
considers when determining whether it ``shall approve'' a SIP revision 
request. 127 S. Ct. at 2537. Applying the reasoning of Defenders of 
Wildlife, the SIP approval criteria contained in the CAA do not provide 
EPA with the discretionary authority to consider whether approval of 
SIP revisions may affect any listed species. EPA has determined that 
MDEQ has submitted a SIP revision request to incorporate the PSD rules 
that satisfies all of the applicable SIP requirements contained in 
section 110 of the CAA. Thus, given the Supreme Court precedent and 
applicable regulations (see 50 CFR 402.03), EPA is without discretion 
to disapprove or condition the State's SIP revision request based on 
concerns for listed species, and the ESA requirements cited by the 
commenters are thus inapplicable to this approval action.
    Comment C: Some commenters requested assurance that EPA's approval 
of the PSD revisions would not diminish Federal authority pursuant to 
Title V of the CAA to review, object to, or deny issuing an operating 
permit where the state has issued a permit under its federally approved 
SIP.
    Response: Following approval of the Michigan's PSD revisions, EPA 
retains its authorities and obligations under Title V.
    Comment D: Some commenters expressed concern over MDEQ's 
commitments made in its November 30, 2007, letter to EPA. Specifically, 
the concerns are related to the definitions of ``replacement unit'' and 
``potential to emit,'' and the mechanism by which the FLM may present 
to a State a demonstration of impacts of air quality-related values 
from proposed sources or modifications. The responses to these two 
comments follow (Response D:1 and Response D:2).
    Response D.1: Regarding the missing definition of ``replacement 
unit,'' Michigan committed in a letter to EPA, dated May 17, 2007, to 
follow the Federal definition of ``replacement unit'' (40 CFR 
51.166(b)) in its implementation of these rules, and to add the 
definition to the state rules in a future rulemaking.
    Regarding the definition of the terms ``potential to emit'' and 
``legally enforceable'' in the Michigan SIP rules, commenters requested 
that MDEQ provide to EPA a clear definition of these terms. EPA agrees 
with the commenters.
    The MDEQ's definition of ``potential to emit'' (Michigan Rule R 
336.2801(hh)) follows the Federal definition, except instead of 
``federally enforceable'' the Michigan rules use the more general term 
``legally enforceable.'' Michigan has committed, in its letter to EPA, 
dated September 11, 2007, to define the term ``legally enforceable'' to 
mean ``legally and practically enforceable by the Administrator, a 
state or local air pollution agency,'' consistent with the Interim 
Policy dated January 22, 1996, and to revise the rule to make it 
consistent with this definition. In a subsequent letter to EPA, dated 
November 30, 2007, MDEQ committed to add this definition to its rules 
no later than one year after EPA's conditional approval of the State's 
PSD SIP. A final approval relies on MDEQ's commitment to submit a clear 
definition of ``legally enforceable.''
    Comment D.2: The Consolidated Commenters requested that EPA deny 
approval of Michigan's current PSD SIP revision until the State 
promulgates rule corrections to ensure that its regulations 
implementing the special requirements for sources impacting Class I 
areas are consistent with Federal requirements found at 40 CFR 
51.166(p). The commenters assert that Michigan's current regulation to 
implement this provision (found at Michigan Rule R 336.2816) diminishes 
the role of the FLM in the State's permitting process. The commenters 
urge EPA to ensure that the State program provides, at a minimum, that: 
The FLM will receive timely written notice of proposed PSD permits that 
may affect the FLM's Class I area; the FLM will be provided with all 
relevant information to assess anticipated impacts to the Class I area; 
and the State will consult with the FLM regarding potential adverse 
impacts, and providing public notice and opportunity to comment on any 
FLM adverse impact findings and the State's response.
    Response D.2: EPA agrees that a federally approved SIP must meet 
the minimum requirements set forth in 40 CFR 51.166(p) which: Requires 
that a PSD permitting authority transmits to EPA copies of permit 
applications and related documents for major sources and major 
modifications; provides for a process by which a FLM may present his or 
her comments, findings, and certifications relating to such draft 
permit applications to the State; and provides for a process by which 
the State consults with such FLM. The State has committed to 
incorporating the requirements of 40 CFR 51.166(p) into its PSD SIP 
rules via letter to EPA, dated November 30, 2007. In order to keep the 
Federally delegated requirements under

[[Page 53370]]

40 CFR 51.166(p) in place until Michigan has revised its rules to add 
these requirements and EPA has approved them into the SIP, EPA is 
proposing, in a separate notice, disapproval of Michigan Rule R 
336.2816. In that same proposed disapproval notice, EPA is also 
proposing in the alternative to approve such rules once they are 
properly promulgated and submitted.
    40 CFR 51.166(p) sets out those requirements that apply to major 
sources or major modifications that will affect Class I areas. This 
section contains both requirements for State plans and optional 
provisions. Pursuant to 40 CFR 51.166(p)(3), the State plan must 
provide a mechanism whereby the FLM may

    present to the State * * * a demonstration that the emissions 
from the proposed source or modification would have an adverse 
impact on the air quality-related values (including visibility) of 
any Federal mandatory Class I lands, notwithstanding that the change 
in air quality resulting from emissions from such source or 
modification would not cause or contribute to concentrations which 
would exceed the maximum allowable increases for a Class I area. If 
the State concurs with such demonstration, the reviewing authority 
shall not issue the permit. 40 CFR 51.166(p)(3).

    As submitted, Michigan's Rule R 336.2816 did not contain an 
equivalent to this required provision. Additionally, EPA sought 
clarification from the State as to how it planned to implement certain 
State rules corresponding to the variance provisions contained in 40 
CFR 51.166(p)(4), (5), and (6).
    On November 30, 2007, Michigan provided suggested rule 
clarification language to address both the lack of an equivalent to 40 
CFR 51.166(p)(3) and how the State intends to implement the variance 
provisions in 40 CFR 51.166(p)(4), (5), and (6). Michigan also provided 
its commitment to promulgate these changes into its PSD regulations 
within one year of EPA's action on Michigan's PSD SIP submittal.
    Because the State program currently lacks a functional equivalent 
to 40 CFR 51.166(p)(3), EPA cannot conditionally approve Michigan's 
Rule R 336.2816 without creating a regulatory gap. Therefore, by 
separate notice today, EPA is disapproving Michigan's Rule R 336.2816, 
and Michigan will retain federal delegation of this provision until 
such time as the State promulgates and EPA has approved the corrective 
rules it has proposed in its November 30, 2007 letter. Retention of the 
delegated program until such time as Michigan promulgates a corrective 
rule will ensure that the provisions of 40 CFR 51.166(p) will continue 
to apply, thereby avoiding any regulatory gap, and ensuring full 
participation of the FLM, as appropriate, in State permitting 
decisions.
    The commenters also request that EPA provide public notice and 
opportunity for comment on any adverse finding made by an FLM, in 
addition to making public the State's decision on such finding. EPA's 
responsibilities regarding State permit actions that may impact Class I 
areas are set forth in Section 165(d) of the CAA, 42 U.S.C. 7475(d). 
EPA's functions include providing notice to FLMs of permit 
applications, consulting with FLMs regarding the potential impact of a 
proposed source on AQRVs, and coordinating with the State regarding 
issuance (or non-issuance) of permits. Information developed during 
this process is part of the public docket for permit issuance, and as 
such would be available to the public. Additionally, the regulations 
require public notice and comment, and the opportunity for a public 
hearing, on State proposed permits. Together these provisions enable 
fully informed public participation in State permit issuance. These 
provisions apply nationwide, and commenters have not shown why more 
should be required from Michigan here.
    Comment E: The commenters asked EPA not to approve the PSD SIP 
until MDEQ demonstrates that the current fiscal situation of the State 
government and its agencies will not hinder the implementation of the 
PSD program. These commenters provide examples of current State funding 
problems, including the small portion of the State's overall budget 
that is devoted to environmental protection, the sunset of State 
environmental fee programs, and projected shortfalls in the State's 
ability to fund environmental programs.
    Response: EPA agrees that the CAA requires the States to provide 
the ``necessary assurances'' that they are able to carry out the 
implementation of SIP requirements through adequate staffing and 
funding. 42 U.S.C. 7410(a)(2)(E), CAA section 110(a)(2)(E). MDEQ 
already implements the federal PSD program within the State. EPA finds 
that a demonstration of current fiscal capabilities is not necessary. 
There is no evidence that MDEQ has encountered financial difficulties 
in carrying out the PSD program. Moreover, because MDEQ is already 
implementing the program based on the Federal delegation of authority, 
these rules are not expected to result in additional costs for MDEQ.
    The Consolidated Commenters enclosed a copy of a September 2007 
Report by the Southeast Michigan Council of Governments titled 
``Funding Environmental Protection in Michigan: The Need for Change,'' 
which, among other things, describes how funding sources for 
environmental protection programs in Michigan have shifted their 
priorities. Nevertheless, the overall funds available to MDEQ, as 
portrayed in this report, appear to have increased slightly. While EPA 
is aware that environmental regulators at the State level must make 
many difficult decisions between competing priorities in the allocation 
of available resources, EPA cannot conclude on the basis of this 
comment that Michigan is unable to fund its PSD program.
    Comment F: The commenters request a shorter deadline for State 
adoption of SIP Rules meeting the terms of conditional approval 
(namely, 6 months instead of 1 year).
    Response: EPA disagrees with the comment. Under section 110(k)(4) 
of the CAA, EPA may conditionally approve a SIP revision based on a 
commitment from the State to adopt specific enforceable measures by a 
date certain that is no more than one year from the date of conditional 
approval. According to Michigan's rulemaking process, the rules have to 
go through several State agencies, such as the Michigan Legislature's 
Joint Committee on Administrative Rules and the State Office of 
Administrative Hearings and Rules, and be open for public comments for 
at least 30 days; then after the public comment period closes, the 
state must respond to comments. This procedure reasonably would take 
more than 6 months. In a letter dated November 30, 2007, MDEQ committed 
to adopt the revised rules, subject to the conditional approval, no 
later than one year after EPA's conditional approval of the State's PSD 
SIP. This one year commitment is reasonable here and the final approval 
relies on this commitment.
    Comment 3: Some commenters requested that the PSD delegation 
agreement between MDEQ and EPA be terminated when EPA issues the final 
approval of PSD program.
    Response: EPA agrees with the commenters, with one exception 
(relating to Michigan Rule R 336.2816). 40 CFR 52.02 and 40 CFR 
52.21(a)(1) provide that EPA's delegation will not apply at such time 
as when the State's SIP is approved. In a similar situation to 
Michigan's, EPA's recent approval of South Dakota's PSD SIP (72 FR 
72617, December 21, 2007) also includes a clear statement rescinding 
the prior delegation agreement. The one exception to the termination of 
EPA's

[[Page 53371]]

delegation of the PSD program in Michigan is, as discussed elsewhere in 
this notice, the Federal delegation for the requirements at 40 CFR 
51.166(p), which is to remain in place until an equivalent State 
provision is approved into the Michigan SIP.
    Comment 4: One commenter requested that EPA explicitly state in 
this notice that parties seeking to appeal PSD permits issued by the 
State under a Federally approved program must go through procedures 
contained in Michigan's laws and rules, and not appeal through 
Environmental Appeal Board (EAB).
    Response: EPA agrees with the commenter, with the exception of 
those provisions Michigan will continue to retain as a Federally 
delegated program (See proposed partial disapproval of Michigan Rule R 
336.2816 pursuant to a separate notice published today). For permits 
issued by the State under the rules covered by this conditional 
approval, appeals will not be made to the EAB; rather, such appeals 
will be subject to the opportunity for review and appeal procedures 
provided under the State law. Michigan's Rule R 336.2830 is intended to 
provide a parallel appeal procedure to the procedure that is currently 
in place for the Federal PSD program in Michigan under the regulation 
at 40 CFR part 124. The rule creates a right to an administrative 
hearing before a state administrative law judge that is similar to the 
current appeal rights under the Federal PSD permitting program. This 
rule was not submitted as part of Michigan's PSD SIP. Therefore, EPA is 
not taking action on Michigan Rule R 336.2830. However, EPA finds the 
State appeal process sufficient to conditionally approve the specified 
parts of the PSD program as submitted. An appeal of any permit 
requirement(s) under 40 CFR 51.166(p) would still need to be brought 
before the EAB until a replacement State regulation is approved into 
the SIP. Depending on other permit issues on appeal, the EAB can decide 
how to best structure such appeal.
    Comment 5: One commenter expressed concern that the requirements of 
Michigan Rule R 336.2818 (Source Obligation) are more stringent than 
the Federal requirements, and requested that EPA allow MDEQ to review 
its rules and adopt the new rule in its next submittal. The commenter 
also suggested EPA issue a direct final rule to approve this aspect of 
the regulation.
    Response: Michigan Rule R 336.2818 places specified requirements 
upon the PSD permit applicant, including recordkeeping requirements for 
applicants using certain methods for determining if a project results 
in a significant emissions increase.
    On December 31, 2002, EPA published revisions to the Federal PSD 
and non-attainment NSR regulations. These revisions are commonly 
referred to as ``NSR Reform'' regulations and became effective on March 
3, 2003. These regulatory revisions include provisions which require a 
source to follow the recordkeeping and reporting requirements in this 
section if there is a ``reasonable possibility'' that a source may 
exceed the projected actual emissions (40 CFR 51.166(r)(6)). The 
``reasonable possibility'' clause of this provision of the Federal rule 
was remanded to EPA in the June 24, 2005, D.C. Circuit Court ruling in 
State of New York et al. v. EPA, 413 F.3d 3 (D.C. Cir. 2005). At the 
time of Michigan's PSD SIP submittal, EPA had responded to the remand 
order. However, the MDEQ's minor source permitting program--Michigan 
Rule R 336.201--requires this information to be submitted for all 
sources as part of a complete Permit To Install application before 
beginning actual construction on the proposed project (not just where 
there is a ``reasonable possibility'' that the source may exceed the 
projected actual emissions). Because this is more stringent than the 
Federal requirement, we approve this approach. All other requirements 
of Michigan Rule R 336.2818 are consistent with 40 CFR 51.166(r). At 
this time Michigan has made no request to adopt different language than 
what the state already requires for this rule.

V. What Action Is EPA Taking?

    EPA is conditionally approving specified revisions to Michigan's 
SIP to include the State's PSD construction permit program.

What Is the Effect of Conditional Approval?

    Pursuant to section 110(k)(4) of the CAA, EPA may conditionally 
approve a portion of a SIP revision based on a commitment from the 
State to adopt specific, enforceable measures no later than twelve 
months from the date of final conditional approval. The State must only 
provide the rule changes, not a new SIP submittal to EPA for approval. 
If the State fails to commit to undertake the necessary changes, or 
fails to actually make the changes within the twelve month period, EPA 
would subsequently publish a notice in the Federal Register providing 
notice and details of such disapproval. EPA is not required to 
separately propose a finding of disapproval. If Michigan submits final 
and effective rule revisions correcting the deficiencies, as discussed 
above, within one year from this conditional approval becoming final 
and effective, EPA will publish a subsequent notice in the Federal 
Register to acknowledge conversion of the conditional approval to a 
full approval.

What Is Our Basis for Conditional Approval of Michigan's Rules?

    EPA has identified several deficiencies that need to be corrected 
in Michigan's rules so that the rules are approvable. The deficiencies 
referenced above are summarized below.
    Issues regarding definitions: In its May 17, 2007, letter to EPA, 
Michigan committed to follow the Federal definition of ``replacement 
unit'' (40 CFR 51.166(b)(7)) in its implementation of these rules, and 
to add the definition to the state rules in a future rulemaking. For 
the definition of ``potential to emit'' (Michigan Rule R 336.2801(hh)), 
Michigan follows the Federal definition, except instead of ``federally 
enforceable,'' the Michigan rules use the more general term ``legally 
enforceable.'' Michigan has committed, in its September 11, 2007 letter 
to EPA, to define the term ``legally enforceable'' to mean ``legally 
and practically enforceable by the Administrator, a State or local air 
pollution agency,'' consistent with the Interim Policy dated January 
22, 1996.
    Issues regarding FLM authority: The State's current Michigan Rule R 
336.2816 does not include an equivalent State provision to 40 CFR 
51.166(p), which sets out the mechanisms which facilitate the 
participation of the FLM in the State's permitting process for purposes 
of protecting either the increment or the AQRVs associated with a Class 
I area from potential impacts from a proposed major source or major 
modification. Therefore, this provision of the State rule is subject to 
the proposed partial disapproval set forth in a separate rulemaking 
notice. A partial disapproval of this section would keep the Federal 
delegation to Michigan in place to implement 40 CFR 51.166(p) until an 
equivalent State provision is approved into the SIP. The deficiencies 
being addressed in this rulemaking are described in more detail in Part 
III of 73 FR 1570, January 9, 2008.

VI. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP 
submission that complies with the provisions of the Act and applicable 
Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a).

[[Page 53372]]

Thus, in reviewing SIP submissions, EPA's role is to approve state 
choices, provided that they meet the criteria of the CAA. Accordingly, 
this action merely approves State law as meeting Federal requirements 
and does not impose additional requirements beyond those imposed by 
State law. For that reason, this action:
     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Order 
12866 (58 FR 51735, October 4, 1993);
     Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate, or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 
272) because application of those requirements would be inconsistent 
with the CAA; and
     Does not provide EPA with the discretionary authority to 
address, as appropriate, disproportionate human health or environmental 
effects, using practicable and legally permissible methods, under 
Executive Order 12898 (59 FR 7629, February 16, 1994).

    In addition, this rule does not have tribal implications as 
specified by Executive Order 13175 (65 FR 67249, November 9, 2000), 
because the SIP is not approved to apply in Indian Country located in 
the State, and EPA notes that it will not impose substantial direct 
costs on tribal governments or preempt tribal law. Nevertheless, EPA 
notified Michigan tribal environmental staff for the respective 
Michigan tribes of the proposed conditional approval via email message 
of November 29, 2007, and invited them to seek more information and to 
submit comments during the public notice and comment period for the 
proposed conditional approval.
    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. EPA will submit a report containing this action 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).
    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 November 17, 2008. Filing a petition for 
reconsideration by the Administrator of this final rule does not affect 
the finality of this action for the purposes of judicial review nor 
does it extend the time within which a petition for judicial review, 
may be filed, nor will it postpone the effectiveness of such rule or 
action. This action may not be challenged later in proceedings to 
enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide, 
Incorporation by reference, Intergovernmental relations, Lead, Nitrogen 
dioxide, Ozone, Particulate matter, Reporting and recordkeeping 
requirements, Sulfur oxides, Volatile organic compounds.

    Date: August 25, 2008.
Lynn Buhl,
Regional Administrator, Region 5.

0
40 CFR part 52 is amended as follows:

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

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

Subpart X--Michigan

0
2. A new Sec.  52.1188 is added to read as follows:

Sec.  52.1188  Conditional approval.

    The plan commitments listed below were submitted on the dates 
specified.
    (a) On December 21, 2006, the State of Michigan submitted to EPA 
Michigan Air Pollution Control Rules, Part 18, Rules R 336.2801 [(a) 
through (tt) [except for (j) and (ff)] to R 336.2819 and R 336.2823(1) 
to (14) (``Part 18''), for inclusion in the SIP. Part 18 relates to the 
PSD permit program of the state of Michigan. Revisions to Part 18 were 
adopted by MDEQ on December 4, 2006. On January 9, 2008, EPA proposed 
to conditionally approve the PSD SIP rules under section 110 of the 
CAA. On September 16, 2008 EPA conditionally approved the revisions to 
Part 18.
    (b) The conditional approval is based on the commitment from the 
State to adopt specific enforceable measures by a date certain that is 
no more than twelve months from the date of the conditional approval. 
The deficiencies that need to be corrected in Michigan's rule so that 
the rule is approvable include two missing definitions. In a separate 
action also published September 16, 2008, EPA is proposing to 
disapprove Michigan Rule R 336.2816, which is also included in the 
State's December 21, 2006, PSD program submission. This rule sets out 
the mechanisms which facilitate the participation of the FLM in the 
State's permitting process for purposes of protecting either the 
increment or the AQRVs associated with a Class I area from potential 
impacts from a proposed major source or major modification. Michigan 
will retain its Federal delegation of authority under 40 CFR 52.21(p) 
until such time as the State submits promulgated rules equivalent to 40 
CFR 51.166(p) and those rules are approved into its SIP.
    (c) In its May 17, 2007, letter to EPA, Michigan committed to 
follow the Federal definition of ``replacement unit'' (40 CFR 
51.166(b)(7)) in its implementation of these rules, and to add the 
definition to the state rules in a future rulemaking. For the 
definition of ``potential to emit'' (Michigan Rule R 336.2801(hh)), 
Michigan follows the Federal definition, except instead of ``federally 
enforceable,'' the Michigan rules use the more general term ``legally 
enforceable.'' Michigan has committed in its September 11, 2007, letter 
to EPA, to define the term ``legally enforceable'' to mean ``legally 
and practically enforceable by the Administrator, a state or local air 
pollution agency,'' consistent with the Interim Policy dated January 
22, 1996.
    (d) The State must only provide the rule changes, not a new SIP 
submittal to EPA for approval. If the State fails to actually make the 
changes within the twelve month period, EPA would subsequently publish 
a notice in the Federal Register providing notice and details of such 
disapproval. If Michigan submits final and effective rule revisions 
correcting the deficiencies, as

[[Page 53373]]

discussed above, within one year from this conditional approval 
becoming final and effective, EPA will publish a subsequent notice in 
the Federal Register to acknowledge that Michigan has met the criteria 
of the conditional approval and to inform the public about the 
conversion of the conditional approval to a full approval.

 [FR Doc. E8-21209 Filed 9-15-08; 8:45 am]

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