Document ID: EPA-R05-OAR-2006-0609-0009
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2009-02-17T05:00Z

Response to Comments by the Sierra Club on new source review (NSR)
Reform Regulations

	On May 21, 2007, the Sierra Club submitted adverse comments to the
proposed rulemaking (76 FR 19829) issued on April 20, 2007, which
proposes approval of the Federal NSR Reform regulations into WDNR’s
State Implementation Plan (SIP).	The Sierra Club’s comments primarily
address the changes that were made to the Federal NSR rule, which became
effective on March 3, 2003, rather than Wisconsin’s adoption of the
Federal requirements into its SIP.  The more appropriate venue for these
comments would have been when EPA public noticed the rule changes.
Nevertheless, we respond below to the Sierra Club’s comments. Comment
I, because of its breadth and complexity, is quoted in its entirety
below:

COMMENT I.

I.  The Proposed Modifications to Wisconsin’s SIP are an Impermissible
Backslide.

The existing Wisconsin SIP limits increases in air pollution. The NSR
program requires

aging factories and power plants to invest in modern pollution controls
when such facilities undertake major modifications. When a company
installs new pollution controls at a facility in Wisconsin, it produces
cleaner air and family-supporting jobs. Wisconsin Governor, Jim Doyle,
concluded that the Wisconsin Department of Natural Resources’
(“WDNR”) analysis for the proposed SIP changes at issue here will
likely increase air pollution from new or modified air pollution
sources. See Press Release, Governor Authorizes Attorney General to
Fight Weakening of Clean Air Act, (Feb. 27, 2003).

The resulting increase in air pollution due to the proposed SIP
revisions are a result of the

following:

a. The use of future actual rather than future potential to emit will

lead to many fewer modifications being subject to NSR, many fewer limits
on emissions and hence more pollution.

b. All facilities not subject to the WEPCO test can backslide to the

worst two years of pollution over the past ten years, artificially
inflating pollution above current levels.

c. The baseline can be artificially inflated by including emissions

from start up, shut downs, upsets and malfunctions, and in many cases
these temporary, uncontrolled emissions can be very large, typically
constituting the highest emission rates.  Additionally, since sources
rarely test during these worst-case periods, emissions during these
periods must be estimated with little actual emission data. This allows
significant padding by an applicant—inflating the historical baseline
beyond the already inflated 2 worst years.

d. The proposed revisions purport to require sources to exclude

non-compliant emissions from the historic baseline. However, there is no
meaningful process in the rules for determining noncompliance emissions.
Sources have and will continue to take the position that
“non-compliant” means “adjudged unlawful by a court,” or at the
least, “subject to a notice of violation issued by a government
authority.” Therefore, except in the very few cases where EPA or the
State takes enforcement action, sources can inflate their historic
baseline through excess emissions.

e. The proffered basis for a 10-year-look-back is to account for a
business cycle—to ensure that a temporary period of lower emissions
due to a business downturn is accounted for. However, this is not
necessary when combined with a “load

growth exclusion,” (sic) which provides that increased operations due
to increased demand for the source’s product is not a modification.
Therefore, these two concepts—load growth exclusion and
10-year-look-back-- both purport to address the same issue. When
combined, however, they provide unnecessary duplication that has the
effect of excluding too much—and allowing sources to increase
emissions without installing the

pollution controls that Congress intended.

f. WEPCO did not permit facilities to use the actual-to-future actual

methodology for replacement units. The Proposed Rule allows WEPCO and
other sources to apply the actual-to-future actual methodology to
determine whether NSR applies to replacement units. This expansion of
the WEPCO rule provides

yet another way for facilities to avoid NSR review and the requirement
to install modern pollution controls. The approach is improper because,
as noted by EPA in 1991, there is no relevant operating history for
wholly new units and replaced units. As a result, “it is not possible
to reasonably project postchange utilization for these units, and hence,
their future level of ‘representative annual actual emissions.’”
56 Fed. Reg. 27630,

27636 (June 14, 1991).

g. The exemption for PALs that enables older (and newer) facilities to
make changes without triggering BACT/LAER. The design features of the
PAL allow industry to deny the reality of present pollution increases by
claiming offsetting changes that are not even remotely contemporaneous
with the pollution increase, thereby denying the possibility of the PSD
program’s evaluation of pollution consequences.

h. Additionally, the ten-year look back (for non-WEPCO facilities) and
use of potential emissions creates an artificially high PAL level,
resulting in an actual increase in emissions. The public is also not
told that establishment of a PAL is a decision to permit increased air
pollution in the area-- the PAL is falsely characterized as an
environmentally beneficial instrument and a cap on pollution.
Furthermore, the complexity of  PALs make it virtually certain that EPA
and the State will not detect many

violations, and will not enforce in the few instances where a violation
is detected. 

i. PALs replace and eliminate all operational or emission limits that an
owner previously accepted to avoid NSR review. These limits are never
restored, even after the PAL expires. These provisions thus enable an
owner to prevent a change that causes a

significant emissions increase from ever necessitating preconstruction
review, as long as the owner puts off using all of the new capacity
resulting from the change long enough to receive a PAL. 

The WDNR prepared an analysis looking at the pollution increases
associated with

adopting the EPA’s NSR rules. In that analysis the agency reviewed 24
permits that the

agency has issued (sic) in 2002 and compared the emission differences
between existing NSR rules and the proposed EPA. The agency’s
conclusion demonstrated that, in Wisconsin, adopting the new rules would
increase air pollution at a wide variety of industries. 

According to a WDNR analysis these changes would increase air pollution
in Wisconsin,

adding to our skies every year, 990 tons of nitrogen oxides and 809 tons
of volatile

organic compounds, both of which cause smog, as well as 992 tons of soot
(PM-10).2

WDNR made the following findings associated with the proposed rules:

• 78 tons per year of VOC increase for a printing facility upgrade

• 330 tons per year of VOC increase for a paper machine upgrade

• 266 tons per year increase for a foundry upgrade

• 771 tons per year increase for a power plant upgrade

• 675 tons per year of particulate matter increase for a wood fired
boiler upgrade.

In short, WDNR’s 2003 analyses determined that pollution would
increase if NSR

program revisions were made similar to those proposed by EPA to be
adopted into

Wisconsin’s SIP. The question is whether sources that would have
otherwise been

subject to NSR permitting, and the pollution reduction required (BACT or
LAER),

escape that requirement under the proposed revisions. WDNR’s analysis
answered this

in the affirmative: sources that would have gone through NSR permitting
would be

exempt under the revised rules. In its response to comments, WDNR
attempts to avoid

its own analysis through a non sequitur. WDNR states that the State of
Michigan

implemented the same NSR program revisions being proposed in the
Wisconsin SIP

revision here, without a decrease in overall NSR permit applications.
Comparing number of applications, however, compares the number of
sources applying. It does not answer the relevant question of the number
of sources that would have applied—and therefore been subject to lower
pollution limits (BACT/LAER)—which did not apply under the revised
rules. WDNR made no attempt to determine whether this occurred. However,
the evidence in this rulemaking record demonstrates that it has or will.

An October, 2003, report prepared by the Environmental Integrity Project
and the

Council of State Governments/Eastern Regional Conference demonstrates,
that the ten-year look back will result in significant emissions
increases.3 In fact, in an assessment of 1,273 major sources, this
report found that the “ten-year look back” in the proposed SIP
revisions would increase air pollution by nearly 1.4 million tons
annually. This finding was reviewed and condoned by the non-partisan
National Academy of Public

Administration’s NSR panel:

[This] study presents an appropriate, reasonable, and fair method for
determining the environmental impacts of the new 10-year-look-back rule.
The Panel also finds that EIPCSG/ ERC’s methodology and analysis
support the report’s

conclusions that the new rule could allow significant increases in
emissions, which will often not be limited by other federal programs
absent NSR.

The ten-year-look-back baseline calculation will enable older, dirty
facilities to avoid

installing Best Available Control Technology (BACT) or Lowest Achievable
Emission

Rates (LAER) by inflating the baseline. The baseline is used to
determine whether a

modification will increase emissions over current levels and trigger
NSR. Therefore, the

inflated baseline will enable major sources to escape updating pollution
controls when

they modify their facilities and significantly increase their pollution.
The new rules will

allow a facility to falsely present a project as at most a minor
increase not subject to NSR,

even when a project will lead to a significant increase in pollution
above current levels.

The net effect of these changes is to increase the baseline for many
sources, so that

sources will be able to make many changes without triggering the
requirement to install

state-of-the-art technologies, even where facilities have no or poor
controls on current

emissions.

It should also be noted that the WDNR’s prior determination that the
NSR program

revisions at issue will result in increased pollution, above, is the
only such determination

in this docket. WDNR’s submittal to EPA for the SIP modification at
issue in this docket

states that it did not “demonstrate[] that the NAAQS/PSD Increment/RFP

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,” in
the submittal. See

WDNR May 22, 2006, Submittal, Attachment A, p. 3.

The fact that WDNR and others determined that the proposed SIP revisions
would

increase air pollution is significant. The Clean Air Act (CAA) prohibits
states from backsliding on key clean air safeguards. Section 193 of the
CAA states, in part, that:

[n]o control requirement in effect, or required to be adopted by a[] …
plan 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. Wisconsin’s non-attainment NSR rules are pollution
control

requirements that have been in effect, or were required to be adopted,
before November

15, 1990. Therefore, the State’s non-attainment NSR rule may not be
relaxed during any

subsequent period as long as the area remains a non-attainment area.

Similarly, because the proposed rules would relax the clean air
safeguards contained in

the existing NSR rules the proposed rules would also violate Section
110(l) of the Act.

That provision states, in part:

The Administrator shall not approve a revision of a plan if the revision
would

interfere with any applicable requirement concerning attainment and
reasonable

further progress (as defined by Section 7501 of this title, or any
applicable

requirement of this chapter.

Id. at 7410(l). The State’s NSR rules are a part of the State’s SIP
and “concern[] attainment and reasonable further progress.” See e.g.
42 U.S.C. § 7503(a)(1)(A) (requiring offsets as a non-attainment
preconstruction permitting

requirement in order to ensure “reasonable further progress (as
defined in Section 7501 of

this title)”). Therefore, the proposed rules would also “interfere
with any applicable

requirement concerning attainment and reasonable further progress.” 42
U.S.C. §

7401(l)—violating Section 110(l).

RESPONSE I.

The Federal NSR Reform Rule was upheld by the D.C. Circuit in New York
v. U.S. EPA, 413 F.3d 3 (D.C. 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.2d901,904 (7th Cir. 1990), as a result of the NSR Reform Rule,
applies to all facilities and not just power plants.  EPA has found that
the 10-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 D.C. Circuit upheld this provision,
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 CAA.” New York v. EPA, supra, 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.  413 F.3d at 24.

c.  Other than the change that applies the 10-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 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 10-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 10-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.  Similar comments were received during the public comment period for
the proposed rule, 61 FR 38250 and EPA requested further comments in the
Notice of Availability on July 24, 1998, 63 FR 39857.  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
10-year look back period allows a facility to identify a period of time
when the facility was operating at its true capacity and calculate the
emissions that resulted during those consecutive 24 months.  Instead of
duplication, the provisions serve distinct purposes.  In those 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.  Similar comments were raised during the public comment period for
the proposed rule.  

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 D.C. 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.

h.  In New York v. EPA, supra, the D.C. Circuit addressed the
environmental petitioners’ comment that a 10-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 10-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), New Source
Performance Standards (NSPS), etc., 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/non-attainment new source review (NSR) 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 provide the 2003 analysis with
their 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 to us 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 the
2005 D.C. Circuit decision that vacated the clean unit and pollution
control projects provisions of the rule.  New York v. EPA, supra.  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 and the Council of State Governments/Eastern Regional
Conference.  The draft report claims that the change to a 2-in-10
baseline could allow emissions from 1,273 major sources to increase
emissions in 12 states.  However, EPA disagrees that the EIP draft
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 plantwide emissions inventories at
facilities where emissions have been lower in the recent two years than
in the past. The plantwide inventory approach completely avoids
consideration of why these emissions went down.  

The report incorrectly used plantwide emissions inventory changes as a
crude estimate of emissions increases allowed under the rule.

The EIP analysis does 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 ignores 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 purports to measure the “potential” for increases
under the rule revisions.  Notwithstanding all the other flaws of the
analysis, EIP makes 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 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 is still required.  There will be no change in baseline for sources
with recent high levels of emissions or consistent emissions levels over
10-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 rules 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 at 54011-12.  

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 at 44620
and 63021.  The 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 to17,000 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 that 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 50-75% of the facilities under these categories would
seek a PAL and each facility would reduce its emissions by 10-33%.    

We have found seven facilities that fall under these categories within
Wisconsin.  Six are automobile manufacturing facilities and 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.

Facility Name	VOC (TPY) 

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% reduction at largest single source	

110.3 TPY of VOC

33% reduction at largest single source	

364.2 TPY of VOC

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.  

The 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 Emission 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 “2 in 10” 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 lowest achievable emission reduction NSR requirements,
will need to assure that the 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, actual-to-projected-actual test and the “2 in 10” 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 Act.

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.

II.  The Proposed Modifications Violate the Anti-Backsliding Provisions
of Section 172(e).

The commenter cites to the D.C. Circuit’s decision in South Coast Air
Quality Management District v. Environmental Protection Agency, 472 F.3d
882 (D.C. Cir. 2006), which held that certain controls required in an
area under the one-hour ozone standard, including NSR requirements, must
remain in place pursuant to EPA’s conclusion that while the
anti-backsliding provisions of Section 172(e) were not directly
applicable to the strengthening of the ozone NAAQS, Congress would have
intended that such controls not be weakened in that scenario. Therefore,
the commenter argues, for the southwestern area of Wisconsin that was
redesignated to moderate from severe under the 8 hour standard, the NSR
Reform Rule would violate the anti-backsliding provisions of Section
172(e). 

RESPONSE II.

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 D.C. 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.

III.  The Proposed Modifications Cannot Be Adopted Unless and Until EPA
Consults with the Fish and Wildlife Service Pursuant to the Endangered
Species Act.

The commenter states that there are several listed endangered or
threatened species in Wisconsin and other downwind states, and that,
therefore, EPA cannot approve Wisconsin’s NSR program revisions into
the SIP without consulting with U.S. Fish and Wildlife Services (FWS),
pursuant to Section 7 of the Endangered Species Act (ESA).  The
commenter notes that Section 7(a)(2) of the ESA imposes a substantive
duty on Federal agencies to ensure that none of their actions, including
actions “authorized, funded, or carried out by such agency” do not
jeopardize listed species, and further notes that “a decision by US
EPA to approve the proposed SIP revisions for Wisconsin is an action
‘authorized’ by US EPA,” as well as funded by EPA, because EPA
provides funding for states, including Wisconsin, to administer its NSR
permitting program.  Therefore, the commenter contends, EPA must
determine whether the proposed approval may affect a listed species,
and, if so, consult with FWS.

RESPONSE III.

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   SEQ CHAPTER \h \r 1 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 C.F.R. § 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 C.F.R. § 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.  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 C.F.R. § 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).   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, and 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 Best Available Control Technology
(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 Act,
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
C.F.R. § 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.

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.

As the commenter notes, 40 C.F.R. § 52.21(b)(2)(iii)(e)1 and 2 place
the following conditions on the fuel change exemption to the definition
of “major stationary source:”  

 The source was capable of accommodating before January 6, 1975, unless
such change would be prohibited under any federally enforceable permit
condition which was established after January 6, 1975 pursuant to 40 CFR
52.21 or under regulations approved pursuant to 40 CFR [part 51],subpart
I, or 40 CFR 51.166; or

The source is approved to use [the fuel] under any permit issued under
40 CFR

52.21 or under regulations approved pursuant to 40 CFR 51.166.

 The Wisconsin regulations being proposed set out the conditions for the
fuel-change exemption as follows:

The source was capable of accommodating the alternative fuel or raw
material before January 6, 1975, unless the change would be prohibited
under any federally enforceable permit condition which was established
after January 6,

1975 pursuant to this chapter or ch. NR 406 or 408 or under an operation
permit

issued pursuant to ch. NR 407.

 [Or, t]he source is approved to use the alternative fuel or raw
material under any

permit issued under this chapter or ch. NR 406, 407, or 408.

See proposed NR 405.02(21)(b)5.

The Wisconsin rule is similar to the Federal rule, but differs by
substituting references to Wisconsin Administrative Code Sections,
rather than the EPA’s phrase “pursuant to 40 CFR 52.21 or under
regulations approved pursuant to 40 CFR [part 51], subpart I, or 40 CFR
51.166.” The commenter objects that, “there are a number of sources
in Wisconsin that are subject to federally enforceable permits issued by
US EPA (or Wisconsin DNR under a delegation from US EPA), pursuant to 40
CFR 52.21 prior to US EPA adopting Wisconsin PSD program into the
Wisconsin SIP. These permits are not included in the phrase used by
WDNR: ’pursuant to this chapter or ch. NR 406 or 408 or under an
operation permit issued pursuant to ch. NR 407.’”

 The commenter further contends that EPA approved Wisconsin’s
Mandatory Operating Permit (MOP) Program “pursuant to 40 CFR [part
51], subpart I, or 40 CFR 51.166,” and that WDNR “has sometimes
taken the position” that the MOPs are not Federally enforceable.
Therefore, the commenter argues, EPA should also clarify that the
conditions on fuel exemptions contained in MOPs, as well as Federally
enforceable NSR permits issued pursuant to the Federal regulations, are
not exempt from the definition of “major modification.”

RESPONSE IV.

Region 5 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 State 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 June
28, 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 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.

 The full report, “Evaluation of Implementation Experiences with
Innovative Air Permits,” is included in the Supplemental Analysis as
Appendix A.

 Emissions based on 2002 National Emission Inventory Database.

 PAGE   

 PAGE   4