Document ID: EPA-R05-OAR-2006-0609-0007
Agency: epa
Document Type: Rule
Title: Final Approval of Wisconsin's NSR Reform Regulations, Rule AM-06-04
Posted Date: 2008-12-17T05:00Z

[Federal Register: December 17, 2008 (Volume 73, Number 243)]
[Rules and Regulations]               
[Page 76560-76567]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17de08-10]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R05-OAR-2006-0609; FRL-8748-9]

 
Approval and Promulgation of Air Quality Implementation Plans; 
Wisconsin; NSR Reform Regulations, Rule AM-06-04

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is approving certain revisions to Wisconsin's prevention 
of significant deterioration (PSD) and non-attainment new source review 
(NANSR) construction permit programs, which Wisconsin submitted on May 
25, 2006. The Wisconsin Department of Natural Resources (WDNR) is 
seeking approval of rule AM-06-04 to implement the

[[Page 76561]]

NSR Reform provisions that were not vacated by the United States Court 
of Appeals for the District of Columbia (D.C. Circuit) in New York v. 
EPA. EPA proposed approval of these rules on April 20, 2007 and 
received adverse comments. In this action, EPA responds to these 
comments and announces EPA's final rulemaking action. This action 
affects major stationary sources in Wisconsin that are subject to or 
potentially subject to the PSD and NANSR construction permit programs.

DATES: This final rule is effective on January 16, 2009.

ADDRESSES: EPA has established a docket for this action under Docket ID 
No. EPA-R05-OAR-2006-0609. 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 
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 Danny Marcus, 
Environmental Engineer, at (312) 353-8781 before visiting the Region 5 
office.

FOR FURTHER INFORMATION CONTACT: Danny Marcus, Environmental Engineer, 
Air Permits Section, Air Programs Branch (AR-18J), EPA Region 5, 77 
West Jackson Boulevard, Chicago, Illinois 60604, (312) 353-8781, 
marcus.danny@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. What is being addressed by this document?
II. What sections of Wisconsin's rules are we approving in this 
action?
III. How has this rulemaking been affected by the December 21, 2007 
rulemaking which clarifies the ``reasonable possibility'' provision?
IV. What are EPA's responses to adverse comments?
V. What action is EPA taking?
VI. Statutory and Executive Order Reviews

I. What is being addressed by this document?

    We are approving rule AM-06-04 as a revision to the PSD and NANSR 
construction permit programs for the State of Wisconsin. EPA granted 
final approval to Wisconsin's NANSR program on January 18, 1995 (60 FR 
3538) and the approval became effective on February 17, 1995. EPA 
granted final approval to Wisconsin's PSD program on May 27, 1999 (64 
FR 28745), which became effective on June 28, 1999.
    On December 31, 2002, EPA published revisions to the Federal PSD 
and NANSR regulations in 40 CFR Parts 51 and 52 (67 FR 80186). These 
revisions are commonly referred to as the New Source Review (NSR) 
Reform Rule and became effective on March 3, 2003. These regulatory 
revisions included provisions for establishing Plant-wide Applicability 
Limits (PALs), Clean Units and Pollution Control Projects (PCPs), for 
determining baseline actual emissions, and for promulgating the actual-
to-future-actual methodology. As stated in the December 31, 2002, EPA 
rulemaking, state and local permitting agencies were required to adopt 
and submit revisions to their part 51 permitting programs implementing 
the minimum program elements of that rulemaking no later than January 
2, 2006 (67 FR 80240). With this action, we are approving WDNR's 
program revisions that satisfy this requirement.
    WDNR originally prepared rule changes to adopt a version of the 
Federal rule revisions, which were subsequently authorized by the 
Wisconsin Natural Resources Board for public hearing in December 2003. 
On June 24, 2005, the DC Circuit issued its ruling on challenges to the 
December 2002 NSR Reform Rule. New York v. EPA, 413 F.3d 3 (DC. Cir 
2005). Although the court upheld most of EPA's rules, it vacated both 
the Clean Unit and the PCP provisions. In addition, the court remanded 
to EPA the ``reasonable possibility'' provision for reporting and 
recordkeeping. In response, on December 21, 2007, EPA published a rule 
that clarifies the recordkeeping and reporting standards of the 2002 
rule.
    After the DC Circuit ruled on the challenges to the Federal NSR 
Reform Rule, WDNR adopted those portions of the Reform Rule that the 
court upheld, and modified the portion that the court remanded to EPA 
in accordance with the court's instructions. WDNR submitted the 
revisions to EPA on May 25, 2006. These revisions are consistent with 
the current provisions of the NSR Reform Rule following the ruling of 
the DC Circuit.

II. What sections of Wisconsin's rules are we approving in this action?

    We are approving amendments to provisions of the PSD and NANSR 
construction permit programs in the Wisconsin State Implementation Plan 
(SIP). Please refer to the proposed rule of this action which includes 
a detailed explanation of the provisions that are being approved. This 
final action amends the following provisions within NR 405, NR 408, and 
NR 484: NR 405.01(1) and (2), NR 405.02(1), NR 405.02(1)(d), NR 
405.02(2m), NR 405.02(8) and (11), NR 405.02(11c), (11e) and (11j), NR 
405.02(12), NR 405.02(20m), NR 405.02(21) and (24), NR 405.02(24j), NR 
405.02(24m), NR 405.02(25b), (25d), (25e), (25f) and (25i), NR 
405.02(27)(a)8., 17., and 18., NR 405.02(27m), NR 405.025, NR 405.16(3) 
and (4), NR 405.18(1) to (15), NR 408.02(1), NR 408.02(2m), NR 
408.02(4), (5), and (11), NR 408.02(11e), (11m) and (11s), NR 
408.02(13), NR 408.02(13m), NR 408.02(20), NR 408.02(21)(a)1.(intro), 
NR 408.02(23), NR 408.02(24m) and (25s), NR 408.02(27), NR 408.02(28e), 
(28j), (28m), (28s), (29m), and (32m), NR 408.025, NR 408.06(10), NR 
408.10(5) and (6), NR 408.11(1) to (15), NR 484.04(21), and NR 
484.04(27m).

III. How has this rulemaking been affected by the December 21, 2007 
rulemaking which clarifies the ``reasonable possibility'' provision?

    As part of its ruling on challenges to the December 2002 NSR Reform 
Rule, the DC Circuit remanded to EPA the ``reasonable possibility'' 
provision regarding reporting and recordkeeping. New York v. EPA, 413 
F.3d at 35-36. In response, on December 21, 2007, EPA published a rule 
(72 FR 72607) that clarifies the recordkeeping and reporting standards 
of the 2002 rule. The rule adds further clarification to the criteria 
determining whether a source experiencing a physical change or change 
in the method of operation that does not trigger major NSR permitting 
requirements must keep records. The standard also specifies the 
recordkeeping requirements for such sources.
    WDNR requires any facility that chooses to use the ``past-actual-
to-future-actual'' provision to satisfy the recordkeeping and reporting 
standards. NR 405.16(3) and NR 408.10(5) are more stringent than the 
criteria established by EPA to determine whether a facility is subject 
to the recordkeeping and reporting requirements. See 40 CFR 
51.165(a)(6) and 40 CFR 51.166(r)(6).
    The preamble to the December 21, 2007, rule states that state and 
local authorities have the option of making their regulations more 
stringent than these rules. The preamble also states that state and 
local authorities that have regulations within their SIP, which they

[[Page 76562]]

believe fulfills the minimum criteria of the December 21, 2007, 
rulemaking, must submit notice acknowledging that their rules are at 
least as stringent as the Federal rules within three years of December 
21, 2007. We have concluded that the revisions that we are approving 
today into Wisconsin's SIP are consistent with the December 21, 2007 
rulemaking.

IV. What are EPA's responses to adverse comments?

    EPA received comments both in support of and in opposition to 
Wisconsin's rules. The Sierra Club provided adverse comments on EPA's 
April 20, 2007, proposed rule approval. EPA responded to these adverse 
comments in a document that can be found in the official docket for 
this action. The document is titled, ``Response to Comments by the 
Sierra Club on NSR Reform Regulations.'' Below are EPA's responses to 
each of the Sierra Club's comments, which are set forth in full in the 
aforementioned document:
    Comment I: The Proposed Modifications to Wisconsin's SIP are an 
Impermissible Backslide.
    Response: The Federal NSR Reform Rule was upheld by the DC Circuit 
in New York v. EPA, 413 F.3d 3 (DC Cir. 2005), with the exception of 
the Pollution Control Project, Clean Unit, and ``reasonable 
possibility'' provisions. Therefore, with the exceptions noted, the 
revisions to Wisconsin's NSR rules, which are based on the Federal NSR 
Reform Rule, have already withstood judicial scrutiny and are lawful. 
EPA addresses the commenter's specific points as follows:
    a. As addressed in the national Rulemaking, the proposed NSR Reform 
Rule of 1996, 61 FR 38250 (July 23, 1996) addressed the provision for 
the actual-to-future-actual method of determining whether or not a 
source is subject to major NSR. Thus, the appropriate time to have 
commented on this provision was prior to October 21, 1996, the close of 
the public comment period. EPA has found that while the actual-to-
projected-actual test would reduce the number of sources that would 
need to take permit limits, the environmental benefit of these permit 
limits is preserved, because any source projecting no significant net 
emissions increase must stay within that projection or comply with NSR. 
Furthermore, in Wisconsin, a minor increase in emissions, even if small 
enough not to trigger major NSR, is still required to meet the criteria 
of NR 406.04(1k) of WDNR's SIP. Facilities that are able to net out of 
permit review under the actual-to-actual provision are still required 
to ensure that the modifications do not cause or exacerbate an air 
quality increment or air quality standard.
     b. The test developed in Wisconsin Electric Power Company v. 
Reilly, 893 F.2d 901, 904 (7th Cir. 1990), as a result of the NSR 
Reform Rule, applies to all facilities and not just power plants. EPA 
found that the ten-year look back period promotes economic growth and 
administrative efficiency by affording sources the flexibility to 
respond rapidly to market changes, focusing limited regulatory 
resources on changes most likely to harm the environment. The DC 
Circuit upheld the ten-year look back period, stating, ``* * * we 
conclude that petitioner's challenges to the ten-year look back period 
fail to overcome the presumption of validity afforded to EPA 
regulations under the [Clean Air Act (CAA or Act)].'' New York v. EPA, 
413 F.3d at 22. The court found that EPA's decision regarding this 
provision was supported with ``detailed and reasoned'' analysis based 
on EPA's own experience and expertise. New York v. EPA, 413 F.3d at 24.
    c. Other than the change that applies the ten-year look back period 
to all sources, EPA's policy of determining ``actual'' emissions from 
two years of operating data has not changed. EPA's policy is to have 
all of the appropriate operating data that can prove what a facility's 
emissions were during that particular time period to identify the 
``actual'' emissions.
    d. A source's ability to use the full ten-year look back period 
will depend upon the availability of relevant data for the consecutive 
24-month period that a source chooses. The data must adequately 
describe the operation and associated pollution levels for the 
emissions units being changed. In the event that a source does not have 
the data necessary to determine the unit's actual emission factors, 
utilization rate, and other relevant information needed to accurately 
calculate its average annual emissions rate during that period of time, 
the source must chose another consecutive 24-month period within the 
ten-year look back period for which it has adequate data. ``Non-
compliant emissions'' are not allowed to be considered as part of the 
baseline actual emissions. This is to be determined by the permitting 
authority after reviewing adequate files and working with the source to 
determine the true baseline actual emissions based on the available 
data and considering all applicable regulations and emission 
limitations.
    e. EPA received comments both in favor of and in opposition to 
making the demand growth exclusion available to all source categories. 
EPA decided to extend the demand growth exclusion because it captures 
periods of time where increased operations respond to independent 
factors, such as system-wide demand growth, which would have occurred 
and affected the unit's operations even in the absence of a physical or 
operational change. The ten-year look back period allows a facility to 
identify a consecutive 24-month time frame when the facility was 
operating at its true capacity, and calculate the emissions that 
resulted during that period. Instead of duplication, the provisions 
serve distinct purposes. In cases where the source experiences full 
capacity utilization, the source will not have a basis for attributing 
part of its post-change emissions increase to market demand. However, 
if the source still has the ability to increase production to meet 
projected market demand without making a physical or operational 
change, the source may consider product demand growth.
    f. EPA has taken the position that replacement units may be 
considered to be modified units, since the replacement unit is 
replacing a similar emissions unit with a record of historical 
operational data. Since the replacement unit is very similar to the 
unit that is being replaced, a source replacing a unit should be able 
to adequately project and track emissions for the replacement unit 
based on the operating history of the replaced unit. Therefore, the 
projection of future actual emissions can be sufficiently reliable and 
an up-front emissions cap based on Potential to Emit (PTE) is 
unnecessary. See revised definition of ``emissions unit,'' 68 FR 63021 
(November 7, 2003), clarifying that a replacement unit is considered an 
existing emissions unit and, therefore, is eligible for the actual-to-
projected-actual test for major NSR applicability determinations.
    g. In New York v. EPA, 413 F.3d at 36-38, the DC Circuit held that 
the environmental petitioners had failed to demonstrate that PALs are 
based on an impermissible statutory interpretation or are otherwise 
arbitrary and capricious. As part of an Environmental Impact Analysis, 
EPA examined six pilot projects that implemented flexible permits 
similar to PALs. The participants in these pilot projects reduced their 
emissions by 27% to 83% below their PAL levels, and, based on these 
results, EPA concluded that PALs encourage sources to reduce their 
emissions voluntarily in order to ``create enough headroom for future 
expansions'' during the PAL term. See New York v. EPA, 413 F.3d at 37.

[[Page 76563]]

    h. In New York v. EPA, the DC Circuit addressed the environmental 
petitioners' comment that a ten-year look back period allows facilities 
to set their PALs high enough to accommodate future increases without 
any initial decreases. It examined EPA's conclusion that the ten-year 
look back period affects only a small percentage of sources, and that 
most sources would set their PALs equal to recent baseline actual 
emissions, thereby reducing emissions by 10% to 33% below their PAL 
levels. The court found that state intervenors' experience confirmed 
EPA's conclusions. See New York v. EPA, 413 F.3d at 38.
    i. PALs are designed to cap a facility's emissions for a criteria 
pollutant, and thus allow facilities to operate within a cap without 
triggering NSR. Additional necessary recordkeeping, monitoring, and 
reporting are required for facilities to obtain a PAL, and compliance 
must be demonstrated through the additional monitoring activities 
required. The commenter asserts that PALs replace operational 
limitations that are never restored after a PAL limit expires. We 
disagree. Once a PAL expires, the facility loses the ability to operate 
particular emission units unrestricted within the facility-wide cap. 
Sources that have existing permits with limitations that are subject to 
state or Federal requirements such as Best Available Control Technology 
(BACT), Reasonably Available Control Technology (RACT), and New Source 
Performance Standards (NSPS), and they must still comply with those 
particular requirements throughout the use of the PAL, as well as after 
the expiration of a PAL. The reviewing authority maintains the 
discretion to determine how to distribute any remaining allowable 
emissions after a PAL's expiration. This may require a source to take 
emission limits even more stringent than the original emission/
operating limits that originally applied to an emission unit, or 
require that unit to undergo a PSD/NANSR analysis.
    The commenter points to a 2003 WDNR prepared analysis, which they 
describe as concluding that specific emissions increases would result 
if the elements of NSR Reform were approved into Wisconsin's SIP. 
Unfortunately, the commenter did not include the 2003 analysis with the 
comments. The analysis that the commenter attached to the comments is a 
presentation file that does not contain an explanation describing how 
WDNR arrived at the increases that the commenter references in the 
comments.
    EPA has made several attempts to obtain any existing supporting 
documentation for the analysis the commenter describes. WDNR has not 
been able to provide us with any documentation in support of the 2003 
conclusions to which the commenter refers. However, as a result of our 
efforts to obtain this documentation, we did obtain from WDNR a 
document entitled ``Report to Legislature,'' (hand-dated March 10, 
2006, and received by EPA on October 7, 2008). This 2006 report 
contains, among other things, a description of WDNR's 2003 position 
regarding the analysis. In the report, WDNR states that its 2003 
conclusion was that the NSR reform rules would lead to emissions 
increases because fewer projects would be required to undergo major 
source NSR, but that this conclusion was flawed because WDNR did not 
examine other changes at a facility that would reduce allowable 
emissions. Further, the 2006 report acknowledges that the State of 
Michigan has been implementing the elements of the Federal NSR Reform 
Rule since March 3, 2003, and that Michigan has not seen a decrease in 
PSD permit applications. According to the 2006 report, Michigan and 
Wisconsin have issued a similar number of PSD permits annually and have 
a comparable number of sources subject to the major source NSR program. 
Because WDNR has, itself, disavowed its own former predictions, and EPA 
never received supporting documentation for the predictions, EPA does 
not find the comments based on WDNR's 2003 analysis to be persuasive.
    Finally, any analysis done in 2003 would have been done prior to 
New York v. EPA, the 2005 DC Circuit decision that vacated the Clean 
Unit and Pollution Control Projects provisions of the rule. Such 
analysis would be based on the NSR Reform Rule prior to the changes 
made as a result of the decision, and so the analysis could not have 
considered the rules that are in effect today.
    The commenter also points to a report entitled, ``Reform or 
Rollback? How EPA's Changes to New Source Review Affect Air Pollution 
in 12 States.'' The report was prepared by the Environmental Integrity 
Project (EIP) and the Council of State Governments/Eastern Regional 
Conference. The draft report claims that the change to a ``two-in-ten'' 
baseline could allow emissions from 1,273 major sources to increase 
emissions in 12 states. However, EPA disagrees that the EIP report 
supports this conclusion. EPA has found the analysis to be overly 
simplistic and erroneous in its interpretation of NSR. These failures 
undermine the plausibility of the report's conclusions, including its 
emissions estimates. EPA notes, in particular, the following problems 
with the report:
     The approach EIP used looks at plant-wide emissions 
inventories at facilities where emissions have been lower in the recent 
two years than in the past. The plant-wide inventory approach 
completely avoids consideration of why these emissions went down.
     The report incorrectly used plant-wide emissions inventory 
changes as a crude estimate of emissions increases allowed under the 
rule.
     The EIP analysis did not consider the fact that major 
source NSR is only triggered when a physical change or change in the 
method of operation of a source results in a significant net emissions 
increase.
     The EIP analysis ignored netting. Even if a project 
results in a significant increase, it does not trigger major source NSR 
if there are decreases during the contemporaneous period that offset 
the increases during that period (including the project increase).
     The EIP analysis purported to measure the ``potential'' 
for increases under the rule revisions. Notwithstanding all the other 
flaws of the analysis, EIP made no assessment of whether this 
``potential'' will actually be realized.
    Industry has complained that it is often expected to surrender 
capacity under the current approach, because it is not being utilized 
in the two-year period immediately preceding the change. The purpose of 
the new baseline provision is to enable sources with an existing unit 
undergoing modification to select as a baseline a level of operation 
that more accurately represents that unit's actual operating history. 
EPA has determined that it is reasonable for a source to determine its 
baseline emissions in this manner, so long as it is done in compliance 
with the applicable regulations. First, a source must have adequate 
information to calculate an average annual emissions rate, in tons per 
year, for the specific 24-month period selected to represent the unit's 
representative operation. Second, a source will be required to make 
downward adjustments in the baseline emissions calculations to account 
for any enforceable emissions factors and operating restrictions that 
have been imposed since the representative baseline period and are more 
stringent than the original limits. This adjustment ensures that the 
source cannot take credit for an emissions level that is no longer 
allowed for the unit if it were

[[Page 76564]]

operating at its representative level today. Third, the new rule for 
determining baseline emissions does not affect new sources and new 
units at existing sources, nor does it affect electric utility steam 
generating units, for which the five-year look back period is still 
required. There will be no change in baseline for sources with recent 
high levels of emissions or consistent emissions levels over ten-year 
periods. Finally, under the existing regulations, states have always 
had the flexibility to define a different contemporaneous period under 
SIP-approved NSR programs. The new rules will help simplify the process 
of determining the appropriate baseline period, and eliminate the 
delays associated with the previous approach.

Section 110(l)

    The commenter contends that the requested rule revisions would 
relax the existing safeguards in the current NSR rules, and thereby 
violate section 110(l) of the CAA. Section 110(l) states that ``[t]he 
Administrator shall not approve a revision of a plan if the revision 
would interfere with any applicable requirement concerning attainment 
and reasonable further progress * * * or any other applicable 
requirement of this chapter.'' 42 U.S.C. 7410(l).
    In ``Approval and Promulgation of Implementation Plans; New Source 
Review; State of Nevada, Clark County Department of Air Quality and 
Environmental Management,'' 69 FR 54006 (Sept. 7, 2004), the EPA stated 
that section 110(l) does not preclude SIP relaxations. The Agency 
stated that section 110(l) only requires that the ``relaxations not 
interfere with specified requirements of the Act including requirements 
for attainment and reasonable further progress,'' and that, therefore, 
a state can relax its SIP provisions if it is able to show that it can 
``attain or maintain the [National Ambient Air Quality Standards 
(NAAQS)] and meet any applicable reasonable further progress goals or 
other specific requirements.'' 69 FR 54011-54012.
    The Wisconsin-requested NSR revisions track the Federal NSR Reform 
Rule, and EPA has already determined that the implementation of the 
Federal NSR Reform Rule will be environmentally beneficial. See 68 FR 
44620 (July 30, 2003) and 68 FR 63021. EPA's Supplemental Analysis for 
the Federal NSR Reform Rule estimated that there are likely to be 
reductions in emissions of volatile organic compounds (VOC) due to the 
use of PALs. A quantitative methodology was applied in the Supplemental 
Analysis to three industrial categories, concluding that 3,400 to 
17,000 tons of VOC emission reduction per year was likely nationwide in 
just these categories. The three industrial categories selected were 
Automobile Manufacturing (SIC 3711), Pharmaceutical Manufacturing (SIC 
2834), and Semiconductor Manufacturing (SIC 3674). These were chosen 
based on the Flexible Permit Pilot Evaluation Report.\1\ The report 
concluded that facilities in these source categories were likely to 
adopt a PAL because of frequent operational, time-sensitive changes, 
and because of opportunities for economical air pollution control 
measures. The Supplemental Analysis determined that 50% to 75% of the 
facilities under these categories would seek a PAL and each facility 
would reduce its emissions by 10% to 33%.
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    \1\ The full reports, ``Evaluation of Implementation Experiences 
with Innovative Air Permits,'' is included in the Supplemental 
Analysis as Appendix A.
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    We have found seven facilities that fall under these categories 
within Wisconsin. Six are automobile manufacturing facilities and one 
is a pharmaceutical manufacturing facility. These facilities may take 
advantage of the PAL option under the Federal NSR Reform Rule. The 
following tables evaluate the potential effects of PALs in Wisconsin 
from these sources.\2\
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    \2\ Emissions based on 2002 National Emission Inventory 
Database.

------------------------------------------------------------------------
                                                          VOC (tons per
                     Facility name                       year (TPY)) \2\
------------------------------------------------------------------------
Oshkosh Truck Corp--West Plant........................            123.8
Oshkosh Truck Corp--Main Plant........................             78.97
FWD Corporation.......................................             16.28
Western Products......................................              2.33
Scientific Protein Labs...............................             75.74
GM--NAO Janesville--Truck Platform....................           1103.56
Oshkosh Truck Corp--South Plant.......................              0.50
------------------------------------------------------------------------

------------------------------------------------------------------------

------------------------------------------------------------------------
                If 75% of the facilities above take a PAL
------------------------------------------------------------------------
10% VOC Reduction......................  105.1 TPY of VOC.
33% VOC Reduction......................  346.8 TPY of VOC.
¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
                      If 50% of sources take a PAL
------------------------------------------------------------------------
10% VOC Reduction......................  70.1 TPY of VOC.
33% VOC Reduction......................  231.2 TPY of VOC.
10% VOC reduction at largest single      110.3 TPY of VOC.
 source.
33% VOC reduction at largest single      364.2 TPY of VOC.
 source.
------------------------------------------------------------------------

    Using the same methodology used in the Supplemental Analysis to 
assess the emissions benefits of Wisconsin's NSR reform revisions in 
Wisconsin as EPA used to assess the benefits nationally, we conclude 
that the PAL option would result in a net reduction of between 70.1 and 
364.2 tons of VOC per year.
    EPA's Supplemental Analysis for the Federal NSR Reform Rule 
mentions that, since PALs are voluntary, it is extremely difficult to 
model how many and which particular sources will take PALs. It is 
assumed that the source categories more likely to apply for a PAL are 
those sources that are making frequent operational changes.
    In Wisconsin, facilities, like the paper mills, frequently apply 
for PSD permits in order to modify their mills, which result in 
relatively large increases in emissions. An analysis of the National 
Emissions Inventory found that Wisconsin has about 73 major sources 
that belong to SIC group 26, paper and allied products. These sources 
emit about 8,358 tons of VOC per year. Even if a conservative 10% of 
these sources were to take a PAL for a conservative decrease in 
emissions between 10% and 33%, that would result in a total decrease in 
emissions between about 83.5 tons to 275.8 tons of VOC per year.
    It is more difficult to assess the environmental impacts of the 
actual-to-projected-actual test and the ``two-in-ten'' baseline 
provisions. The Supplemental Analysis determined that there is a slight 
national environmental benefit brought about by these NSR reform 
provisions. Additionally, in Wisconsin, sources undergoing 
construction, which are not subject to the best available control 
technology or

[[Page 76565]]

lowest achievable emission reduction NSR requirements, will need to 
assure WDNR that any increases will not cause or exacerbate an air 
quality increment or air quality standard.
    Overall, we expect changes in air quality as a result of 
implementing PALs, the actual-to-projected-actual test and the ``two-
in-ten'' baseline provisions in Wisconsin to provide somewhere between 
a neutral and modest contribution to reasonable further progress. 
Accordingly, EPA determines that these changes will not interfere with 
any applicable requirement concerning attainment and reasonable further 
progress or any other applicable requirement of the CAA.

Section 193

    The commenter contends that WDNR's NSR Reform revision does not 
``demonstrate[] that the NAAQS/PSD Increment/RFP [reasonable further 
progress] demonstration/visibility will be protected if the revision is 
approved and implemented,'' and that WDNR did not ``quantify the 
changes in SIP-allowable emissions and estimate or quantify the changes 
in actual emissions from affected sources.'' This failure to 
demonstrate protection of the NAAQS, the commenter argues, constitutes 
backsliding, in violation of section 193 of the CAA.
    As the commenter points out, section 193 of the CAA provides in 
part that ``No control requirement in effect * * * before November 15, 
1990, in any area which is a non-attainment area for any air pollutant 
may be modified after November 15, 1990, in any manner unless the 
modification insures equivalent or greater emission reductions of such 
air pollutant.'' 42 U.S.C. 7515.
    Assuming that section 193 applies to NSR, section 193 does not 
require additional emission reductions before this SIP revision is 
approved. Wisconsin did not have a major source NANSR program 
consistent with the requirements of the CAA. Although the program that 
was in effect as of November 15, 1990, included a preconstruction 
permitting program, that program did not require any offsets for any 
sources. In the proposed rules, major sources are subject to permitting 
requirements consistent with CAA requirements.
    Thus, assuming that section 193 applies in some fashion to the 
permitting program in the SIP, as of November 15, 1990, as it applied 
to major sources, that program did not require any ``emission 
reductions'' from major sources because it did not require offsets for 
any sources. Absent offsets, a source subject to the permitting program 
would not be required to reduce emissions. It follows that if there 
were no emission reductions generated by the 1990 permitting program, 
then the section 193 requirement to provide ``equivalent or greater 
emission reductions'' of any air pollutant as part of this SIP revision 
would be satisfied with no additional reductions. Furthermore, for the 
reasons discussed above with respect to section 110(l), EPA has found 
that the net effect of these changes will be neutral to environmentally 
beneficial.
    Comment II: The Proposed Modifications Violate the Anti-Backsliding 
Provisions of Section 172(e).
    Response: As discussed above, EPA has concluded that the NSR Reform 
Rule is not a ``relaxation'' or weakening of the existing NSR rules. 
EPA has assessed the impact of NSR Reform on the State of Wisconsin and 
has concluded that approving these revisions into the Wisconsin SIP 
will result in somewhere between a neutral effect on the environment 
and a modest environmental benefit. Thus, approving the NSR Reform Rule 
into the Wisconsin SIP will not result in controls that are ``less 
stringent'' than the previous controls. In addition, the changes to the 
existing NSR rules are not being undertaken in the context of a NAAQS 
relaxation. Thus, section 172(e) does not apply on its face. Nor are 
these changes undertaken in the context of strengthening a NAAQS. 
Therefore, the decision of the DC Circuit in South Coast Air Quality 
Management District v. Environmental Protection Agency, 472 F.3d 882 
(D.C. Cir. 2006), does not apply in this context.
    Comment III: The Proposed Modifications Cannot Be Adopted Unless 
and Until EPA Consults with the Fish and Wildlife Service Pursuant to 
the Endangered Species Act (ESA).
    Response: Under relevant CAA provisions, states are entitled to 
administer their own approved NSR programs, and EPA is required to 
approve a state's program or revisions to its program that satisfy 
applicable requirements of the CAA. The CAA SIP approval authority does 
not provide the Agency with the discretion to refrain from approving 
Wisconsin's SIP revisions if the revisions to its NSR program meet all 
applicable CAA requirements. Accordingly, and as confirmed by recent 
Supreme Court precedent, the ESA requirements cited in the comments do 
not apply to EPA's decision to approve revisions to Wisconsin's NSR 
program into the SIP. See 50 CFR 402.03; National Ass'n of Home 
Builders v. Defenders of Wildlife, 127 S. Ct. 2518 (2007) (Defenders of 
Wildlife).
    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 the Defenders of Wildlife 
case, the 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. Defenders of Wildlife, 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 is 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).

[[Page 76566]]

The CAA provides a list of SIP submittal criteria in section 110. See 
42 U.S.C. 7410(a)(2).
    Section 110(l), governing SIP revisions, states that each revision 
``shall be adopted'' after reasonable public notice and public hearing, 
as long as the revision does not interfere with any applicable 
requirement concerning attainment and reasonable further progress or 
any other applicable requirement of the CAA.
    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. Further, Title I, Parts C and D, of the 
CAA do not explicitly state that consideration of the impacts on listed 
species is a required factor in SIP approval decisions. EPA has 
interpreted sections 169(3) and 165(e)(3)(B) of the CAA as providing 
EPA with the relevant discretion to carry out ESA section 7(a)(2) 
obligations during its review of individual applications for Federally 
issued PSD permits under section 165. See In re Indeck-Elwood, LLC, PSD 
appeal No. 03-04 (EAB Sept. 27, 2006), slip op. at 108 (holding EPA has 
discretion to consider impacts on listed species in BACT and soils and 
vegetation analyses). However, this discretion in PSD permitting 
decisions does not provide EPA similar discretion in its SIP approval 
decisions under section 110.
    In issuing individual PSD permits, EPA is required to complete an 
environmental impacts analysis in the BACT determination of CAA section 
169(3) and an additional impacts analysis, including impacts on soils 
and vegetation, under section 165(e)(3)(B) of the CAA. In carrying out 
these analyses, EPA has interpreted these provisions as affording the 
Agency discretion to determine whether listed species are impacted by 
individual Federal PSD permitting decisions. In contrast, EPA's action 
on state SIP submittals is governed by section 110 of the CAA, which 
unequivocally directs EPA to approve state plans meeting applicable CAA 
requirements.
    Section 110 does not provide for similar impact analyses in 
reviewing SIP submittals. An ESA obligation triggered by one provision 
of the statute-consideration of ESA in individual Federal PSD 
permitting decisions cannot be bootstrapped to raise that obligation in 
another provision-approval of the revision to a SIP that does not 
provide EPA with similar discretion. See, generally, Defenders of 
Wildlife (finding that while EPA undertakes ESA consultation when 
issuing individual Federal National Pollutant Discharge Environmental 
System (NPDES) permits, it was not required to do so in approving state 
NPDES permitting programs).
    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 WDNR has submitted a SIP 
revision to incorporate the NSR Reform Rule 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 conditionally 
approve Wisconsin's SIP revision request based on concerns for listed 
species, and the ESA requirements cited by the commenter are thus 
inapplicable to this approval action.
    Comment IV: The Proposed Rules do not Reference 40 CFR 52.21 in 
Order to Encompass Permits Issued by EPA and/or WDNR Under a Delegated 
Program.
    Response: EPA has considered the comment regarding the differences 
in citations used with respect to the fuel use prohibition that is part 
of the definition of a major modification. This provision was part of 
Wisconsin's SIP prior to the requested change and is unaffected by 
Wisconsin's requested revisions. It is, therefore, not before EPA for 
approval. Moreover, this issue was never brought to WDNR's attention 
during the public comment period during which WDNR sought approval by 
the Wisconsin Natural Resources Board. Nevertheless, EPA has considered 
this comment and agrees with the commenter that certain permits that 
have been issued to sources within Wisconsin, to the extent that they 
exist, may not be covered by the language in NR 405.02(21)(b)(5) and NR 
408.02(20)(e)(5), which refers to permits that have established fuel 
prohibiting conditions. Wisconsin's PSD program was approved into its 
SIP on May 27, 1999. The rules cited above failed to incorporate 
language that would include sources with construction permits issued 
prior to that approval, either directly by EPA or by WDNR under a 
delegated agreement in accordance with 40 CFR 52.21.
    We have been in contact with WDNR on this matter, and plan to work 
with WDNR to revise the language as appropriate. However, this 
amendment is not required for EPA's approval of Wisconsin's requested 
revisions, which did not include the omission of language referencing 
40 CFR 52.21 and 40 CFR 51.166.
    With respect to the commenter's contention that ``WDNR has 
sometimes taken the position that the Mandatory Operating Permits 
(MOPs) are not federally enforceable,'' it is EPA's understanding that 
WDNR does not consider its MOP program to be federally enforceable. 
Although WDNR submitted the MOP program to EPA as a SIP revision on 
April 22, 1985, by letter dated June 20, 1990, WDNR withdrew that 
request for approval, prior to EPA approving the program.

V. What action is EPA taking?

    EPA is approving revisions to the PSD and NANSR construction permit 
programs for the State of Wisconsin which Wisconsin submitted to EPA on 
May 25, 2006. These revisions meet the minimum program requirements of 
the December 31, 2002, EPA NSR Reform rulemaking, consistent with 
subsequent changes to that rule, as set forth in New York v. EPA, and 
the resulting December 21, 2007 rule concerning recordkeeping and 
reporting standards.

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 CAA and applicable 
Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). 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);

[[Page 76567]]

     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 
note) 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.
    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 February 17, 2009. 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, and shall not postpone the effectiveness of such rule or 
action. This action may not be challenged later in proceedings to 
enforce its requirements. (See section 307(b)(2).)

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.

    Dated: December 8, 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 YY--Wisconsin

0
2. Section 52.2570 is amended by adding paragraph (c)(119) to read as 
follows:

Sec.  52.2570  Identification of plan.

* * * * *
    (c) * * *
    (119) On May 25, 2006, Wisconsin submitted for EPA approval into 
the Wisconsin SIP a revision relating to changes to chs. NR 405 and 408 
for incorporation of Federal changes to the air permitting program. The 
rule revision being approved in this action has been created to approve 
rule AM-06-04, the NSR Reform provisions that were not vacated by the 
DC Circuit Court in New York v. EPA, 413 F.3d 3 (DC Cir. 2005). The 
rule revision also repeals NR 405.02(1)(d), (24m), (27)(a)8., 17 and 18 
and 408.02(27). EPA has determined that this revision is approvable 
under the Clean Air Act.
    (i) Incorporation by reference. The following sections of the 
Wisconsin Administrative Code are incorporated by reference:
    (A) NR 405.01 Applicability; purpose. NR 405.01(1) and (2), as 
published in the Wisconsin Administrative Register, June 30, 2007, No. 
618, effective July 1, 2007.
    (B) NR 405.02 Definitions. NR 405.02(1), (2m), (8), (11), (11c), 
(11e), (11j), (12), (20m), (21), (24), (24j), (25b), (25d), (25e), 
(25f), (25i), and (27m) as published in the Wisconsin Administrative 
Register, June 30, 2007, No. 618, effective July 1, 2007.
    (C) NR 405.025 Methods for calculation of increases in actual 
emissions, as published in the Wisconsin Administrative Register, June 
30, 2007, No. 618, effective July 1, 2007.
    (D) NR 405.16 Source obligation. NR 405.16(3) and (4) as published 
in the Wisconsin Administrative Register, June 30, 2007, No. 618, 
effective July 1, 2007.
    (E) NR 405.18 Plant-wide applicability limitations (PALs), as 
published in the Wisconsin Administrative Register, June 30, 2007, No. 
618, effective July 1, 2007.
    (F) NR 408.02 Definitions. NR 408.02(1), (2m), (4), (5), (11), 
(11e), (11m), (11s), (13), (13m), (20), (21)(a)1.(intro), (23), (24m), 
(25s), (28e), (28j), (28m), (28s), (29m), and (32m) as published in the 
Wisconsin Administrative Register, June 30, 2007, No. 618, effective 
July 1, 2007.
    (G) NR 408.025 Methods for calculation of increases in actual 
emissions, as published in the Wisconsin Administrative Register, June 
30, 2007, No. 618, effective July 1, 2007.
    (H) NR 408.06 Emissions offsets. NR 408.06(10), as published in the 
Wisconsin Administrative Register, June 30, 2007, No. 618, effective 
July 1, 2007.
    (I) NR 408.10 Source obligation. NR 408.10(5) and (6), as published 
in the Wisconsin Administrative Register, June 30, 2007, No. 618, 
effective July 1, 2007.
    (J) NR 408.11 Plant-wide applicability limitations (PALs), as 
published in the Wisconsin Administrative Register, June 30, 2007, No. 
618, effective July 1, 2007.
    (ii) Additional material.
    (A) NR 484.04 Code of federal regulations appendices. NR 
484.04(21), and (27m) as published in the Wisconsin Administrative 
Register, June 30, 2007, No. 618, effective July 1, 2007.
* * * * *
[FR Doc. E8-29820 Filed 12-16-08; 8:45 am]

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