Document ID: EPA_FRDOC_0001-13148
Agency: epa
Document Type: Rule
Title: Limited Approvals and Disapprovals of Air Quality Implementation Plans: Clark County, NV; Stationary Source Permits
Posted Date: 2012-10-18T04:00Z

[Federal Register Volume 77, Number 202 (Thursday, October 18, 2012)]
[Rules and Regulations]
[Pages 64039-64050]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-25545]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2012-0566; FRL-9740-3]

Limited Approval and Disapproval of Air Quality Implementation 
Plans; Nevada; Clark County; Stationary Source Permits

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is finalizing a limited approval and limited disapproval 
of revisions to the Clark County portion of the applicable state 
implementation plan (SIP) for the State of Nevada. The submitted 
revisions include new and amended rules governing the issuance of 
permits for stationary sources, including review and permitting of 
major sources and major modifications under parts C and D of title I of 
the Clean Air Act (CAA). The effect of this limited approval and 
limited disapproval action is to update the applicable SIP with current 
Clark County permitting rules and to set the stage for remedying 
certain deficiencies in these rules. This limited disapproval action 
triggers an obligation on EPA to promulgate a Federal Implementation 
Plan unless the State of Nevada corrects the deficiencies, and EPA 
approves the related plan revisions, within two years of the final 
action, and for certain deficiencies the limited disapproval also 
triggers sanctions under section 179 of the CAA unless the State of 
Nevada submits (on behalf of Clark County) and we approve SIP revisions 
that correct the deficiencies within 18 months of final action.

DATES: Effective Date: This rule is effective on November 19, 2012.

ADDRESSES: EPA has established docket number EPA-R09-OAR-2012-0566 for 
this action. Generally, documents in the docket for this action 
available electronically at www.regulations.gov and in hard copy at EPA 
Region IX, 75 Hawthorne Street, San Francisco, California. While all 
documents in the docket are listed at www.regulations.gov, some 
information may be publicly available only at the hard copy location 
(e.g., copyrighted material), and some may not be publicly available at 
either location (e.g., CBI). To inspect the hard copy materials, please 
schedule an appointment during normal business hours with the contact 
listed in the FOR FURTHER INFORMATION CONTACT section.

FOR FURTHER INFORMATION CONTACT: Laura Yannayon, EPA Region IX, 75 
Hawthorne Street (AIR-3), San Francisco, CA 94105, phone number (415) 
972-3534, fax number (415) 947-3579, or by email at 
yannayon.laura@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document, the terms ``we,'' 
``us,'' and ``our'' refer to EPA.

Table of Contents

I. Summary of Proposed Action
II. Public Comment on Proposed Action
III. Final Action
IV. Statutory and Executive Order Reviews

I. Summary of Proposed Action

    On July 24, 2012 (77 FR 43206), EPA proposed a limited approval and 
limited disapproval of revisions to the Clark County portion of the 
Nevada State Implementation Plan (SIP). The submittals included new and 
amended regulations governing the issuance of permits for stationary 
sources under the jurisdiction of the Clark County Department of Air 
Quality (Clark or DAQ), including review and permitting

[[Page 64040]]

of major sources and major modifications under parts C and D of title I 
of the CAA. Collectively, the submitted regulations (referred to as 
``Sections'') comprise DAQ's current program for preconstruction review 
and permitting of new or modified stationary sources under DAQ 
jurisdiction in Clark County, including related definitions. These SIP 
submittals, referred to herein as the ``NSR SIP submittal'' or 
``submitted NSR rules,'' represent a comprehensive revision to Clark 
County's preconstruction review and permitting program. Specifically, 
EPA proposed a limited approval and limited disapproval of the new and 
amended Clark County regulations listed in Table 1.

                                          Table 1--Submitted NSR Rules
----------------------------------------------------------------------------------------------------------------
              Section No.                             Section title                   Adopted        Submitted
----------------------------------------------------------------------------------------------------------------
0......................................  Definitions............................          3/6/12         5/22/12
12.0...................................  Applicability, General Requirements and         11/3/09         2/11/10
                                          Transition Procedures.
12.1...................................  Permit Requirements for Minor Sources..         11/3/09         2/11/10
12.2...................................  Permit Requirements for Major Sources            3/6/12         5/22/12
                                          in Attainment Areas (Prevention of
                                          Significant Deterioration).
12.3...................................  Permit Requirements for Major Sources           5/18/10         9/01/10
                                          in Nonattainment Areas.
12.4...................................  Authority to Construct Application and          5/18/10         9/01/10
                                          Permit Requirements for Part 70
                                          Sources.
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    In our proposed rule (77 FR 43206, at 43208), we identified the 
existing Clark County SIP rules governing NSR for stationary sources as 
listed in Table 2.

 Table 2--Existing SIP Rules Governing NSR for Stationary Sources Under
                            DAQ Jurisdiction
------------------------------------------------------------------------
                                                      Fed. Reg. citation
       Section No.               Section title         and EPA approval
                                                             date
------------------------------------------------------------------------
0........................  Definitions.............  69 FR 54006, 9/7/
                                                      04.
1........................  Definitions (33 terms     46 FR 21758, 4/14/
                            retained in SIP in 69     81 and 47 FR
                            FR 54006, 9/7/04).        26620, 6/21/82.
11.......................  Ambient Air Quality       69 FR 54006, 9/7/
                            Standards.                04.
12.......................  Preconstruction Review    69 FR 54006, 9/7/
                            for New or Modified       04.
                            Stationary Sources.
16.......................  Operating Permits.......  47 FR 26386, 6/18/
                                                      82.
58.......................  Emission Reduction        69 FR 54006, 9/7/
                            Credits.                  04.
59.......................  Emission Offsets........  69 FR 54006, 9/7/
                                                      04.
NAC 445B.22083...........  Construction, major       69 FR 54006, 9/7/
                            modification or           04.
                            relocation of plants to
                            generate electricity
                            using steam produced by
                            burning of fossil
                            fuels..
------------------------------------------------------------------------

    As a result of today's final action, all of these rules except for 
Section 11, NAC section 445B.22083, and portions of Section 1, are 
replaced in, or otherwise deleted from, the Nevada SIP by the submitted 
set of rules listed in Table 1. With respect to Section 1, of the 33 
terms contained in the Nevada SIP, the following six terms are replaced 
by revised definitions contained in the submitted NSR rules: (1) ``Air 
contaminant'' (subsection 1.3); (2) ``minor source'' (subsection 1.50); 
(3) ``shutdown'' (subsection 1.78); (4) ``significant'' (unnumbered); 
(5) ``special mobile equipment'' (subsection 1.85); and (6) ``start 
up'' (subsection 1.89).\1\
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    \1\ Although our proposed rule indicated that all of the Section 
1 definitions in the SIP would be replaced by the NSR SIP submission 
(see 77 FR 43206, 43208), EPA has found that only these six 
definitions in SIP-approved Section 1 were in fact part of the 
existing SIP rules governing NSR for stationary sources under DAQ 
jurisdiction. Therefore, in this final rule, we are clarifying that 
only those Section 1 definitions that pertain to NSR for stationary 
sources under DAQ jurisdiction and that are in fact superseded, 
under state law, by revised Clark County definitions in the 
submitted NSR rules, are being replaced in the Nevada SIP.
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    The most significant deficiencies that we identified in the 
submitted NSR rules, as discussed in detail in the TSD, are generally 
as follows: (1) The absence of minor NSR provisions that ensure 
protection of the 2006 PM2.5 NAAQS and 2008 Lead (Pb) NAAQS; 
(2) minor NSR applicability provisions that do not cover stationary 
sources of PM2.5; (3) deficiencies in the definitions of 
certain terms used in PSD and Nonattainment NSR (NNSR) applicability 
determinations; (4) definition of ``regulated NSR pollutant'' that does 
not adequately address PSD and NNSR requirements for regulation of 
condensable particulate matter; (5) deficiencies in the criteria for 
assessing the quality (or ``integrity'') of emission reduction credits 
used to satisfy NNSR offset requirements; and (6) the absence of minor 
NSR or NNSR provisions to ensure that the air quality impacts of 
stationary sources are not underestimated due to stack heights that 
exceed good engineering practice or unacceptable air dispersion 
modeling techniques. We identified these as the ``most significant'' 
deficiencies because these are the most likely to affect pollutant 
emissions within Clark County, compared to other deficiencies that we 
do not expect would significantly affect emissions levels (e.g., 
administrative requirements for permit issuance).
    We proposed to approve SIP revisions that exclude certain 
insignificant/de minimis activities from minor source permitting 
requirements in the Clark County portion of the Nevada SIP. Under the 
Clark County rules that we proposed to approve, some of these 
insignificant/de minimis activities must continue to comply with many 
of the requirements that would apply to sources needing to obtain 
preconstruction permits. We received no comments on our proposed 
approvals and are finalizing those approvals as consistent with 40 CFR 
51.160(e).

II. Public Comment on Proposed Action

    EPA's proposed action provided a 30-day public comment period. 
During this period, we received two comment letters, one from the 
Nevada Division of

[[Page 64041]]

Environmental Protection (NDEP), dated September 7, 2012, and one from 
the Clark County Department of Air Quality (Clark or DAQ), dated 
September 6, 2012. We summarize and provide responses to these comments 
below.
    Comment 1: Clark County disagreed with EPA's statement that the 
applicability provisions in Section 12.1 are deficient with respect to 
regulation of PM2.5 precursor emissions and stated that 
Section 12.1 addresses each of the pollutants identified by EPA as 
PM2.5 precursors (NOX, SO2, and VOCs). 
In addition, Clark County asserted that PM2.5 emissions are 
a subset of PM10 emissions, which Section 12.1 also 
addresses. Clark County stated that ``[a]lthough defining precursors to 
PM2.5 more explicitly might clarify the rule, the county 
believes the rule currently provides sufficient authority to regulate 
sources of these pollutants * * * .''
    EPA Response: We disagree. Section 110(a)(2)(C) of the CAA 
requires, among other things, that each state have a permit program to 
provide for regulation of the construction and modification of minor 
stationary sources within the areas covered by the plan as necessary to 
assure that the NAAQS are achieved. Under EPA's implementing 
regulations in 40 CFR 51.160-51.164, these permit programs must contain 
enforceable procedures that enable the permitting authority to 
determine whether the construction or modification of a stationary 
source will result in (1) a violation of applicable portions of the 
control strategy; or (2) interference with attainment or maintenance of 
a NAAQS in the State in which the proposed source (or modification) is 
located or in a neighboring State, and procedures for preventing any 
such construction or modification. For purposes of implementing the 
1997 PM2.5 NAAQS, as explained in our TSD, States were 
required by EPA's 2008 New Source Review implementing regulations for 
the 1997 PM2.5 NAAQS (``PM2.5 NSR Implementation 
Rule'') to revise their minor source programs to include direct and 
condensable PM2.5 emissions and PM2.5 precursor 
emissions in the same manner as included for purposes of 
PM2.5 major NSR. See TSD at 16 (citing 73 FR 28321 at 28344, 
May 16, 2008).
    Clark County's minor NSR program in Section 12.1 generally defines 
``minor source'' as a stationary source that is not a major source and 
that has a potential to emit equal to or greater than specified levels 
for the following seven pollutants: PM10, CO, VOC, 
NOX, SO2, Lead (Pb), and H2S. See Section 12.1, 
subsection 12.1.1 (a) and (c) (definitions). Similarly, for purposes of 
regulating modifications at minor sources, Section 12.1 establishes 
``significant'' emission levels for these same seven pollutants and for 
Total Reduced Sulfur. Id. at subsection (g). These provisions are not 
adequate for purposes of implementing the PM2.5 NAAQS for 
three reasons.
    First, the provisions do not explicitly regulate sources of direct 
PM2.5 emissions. Second, the provisions do not address the 
condensable fraction of PM2.5 or PM10, which is 
required to be accounted for in permitting actions on or after January 
1, 2011. 73 FR 28321 at 28334 (May 16, 2008) (``Because condensable PM 
emissions exist almost entirely in the 2.5 micrometer range and 
smaller, these emissions are inherently more significant for 
PM2.5 than for prior PM standards addressing larger 
particles''); see also 75 FR 80118 (December 21, 2010) (final rule 
establishing methods for measurement of filterable and condensable 
PM10 and PM2.5 emissions from stationary 
sources). Third, the provisions do not adequately address 
PM2.5 precursors. Although we agree with Clark County that 
these applicability provisions cover sources of NOX, 
SO2, and VOCs, which pollutants the EPA has defined as 
precursors to PM2.5, those applicability provisions in 
themselves do not ensure that emissions of the appropriate pollutants 
will be addressed as PM2.5 precursors in the minor source 
program in the same manner as included for purposes of PM2.5 
major NSR.
    In response to our proposed disapproval of Section 12.1 with 
respect to the requirements for PM2.5, Clark asserted that 
the provisions governing PM10 emissions in Section 12.1 
provide sufficient authority to regulate sources of direct 
PM2.5 emissions. We disagree with this assertion, 
particularly to the extent that Clark County may be suggesting that 
PM10 is an effective surrogate for PM2.5 in all 
cases. Effective May 16, 2011, EPA ended the states' ability to use, as 
a matter of policy, evaluation of PM10 (including the 
PM10 NAAQS) as a surrogate for evaluation of 
PM2.5 in Prevention of Significant Deterioration (PSD) 
permitting actions, as had previously been allowed pursuant to a 1997 
guidance document entitled ``Interim Implementation for the New Source 
Review Requirements for PM2.5,'' October 23, 1997 
(``PM10 Surrogate Policy'').\2\ 76 FR 28646 (May 18, 2011). 
EPA terminated the use of the 1997 PM10 Surrogate Policy in 
PSD permitting programs based on the Agency's conclusion that the 
necessary technical tools to conduct PM2.5 analyses for PSD 
sources had become available and that it was therefore no longer 
appropriate to rely on the PM10 Surrogate Policy to protect 
the PM2.5 NAAQS. Id. at 28648. Thus, PSD permit applications 
must now be reviewed directly against the PM2.5 
requirements. Id. at 28647. For these same reasons, we conclude that it 
is not appropriate for Clark County to rely categorically on the 
PM10 provisions in Section 12.1 to satisfy the requirements 
of CAA section 110(a)(2)(C) with respect to the 1997 or 2006 
PM2.5 NAAQS. Consistent with EPA's end to the use of the 
PM10 Surrogate Policy for PSD permit programs, minor NSR 
permit programs under CAA section 110(a)(2)(C) must require owners and 
operators of sources and permitting authorities to conduct permit-
related PM2.5 analyses and may not allow the automatic use 
of PM10 analysis as a surrogate for satisfying 
PM2.5 requirements.
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    \2\ The preamble to EPA's PM2.5 NSR Implementation 
Rule provided that States with SIP-approved PSD programs could 
continue to implement the program for particulate matter less than 
10 micrometers (PM10) as a surrogate for meeting the PSD 
program requirements for PM2.5 pursuant to the 
PM10 Surrogate Policy. See 73 FR at 28341. As confirmed 
in a May 18, 2011 rulemaking, however, EPA has ended the use of this 
policy both under the Federal PSD program and in SIP-approved PSD 
program areas. See 76 FR 28646 (May 18, 2011).
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    In sum, Section 12.1 does not contain enforceable procedures that 
enable Clark County to determine whether the construction or 
modification of a stationary source of direct PM2.5 
emissions and any emissions of PM2.5 precursors will result 
in either a violation of an applicable control strategy or interference 
with attainment or maintenance of the 1997 or 2006 PM2.5 
NAAQS, nor does the rule contain enforceable procedures for preventing 
construction or modification of such sources, as required by CAA 
section 110(a)(2)(C) and 40 CFR 51.160-51.164. Consequently, we are 
disapproving Section 12.1 with respect to the requirement in CAA 
section 110(a)(2)(C) to regulate the construction and modification of 
stationary sources of PM2.5 emissions as necessary to assure 
that the 1997 and 2006 PM2.5 NAAQS are achieved.
    Comment 2: Clark County disagreed with EPA's proposal to disapprove 
language regarding federal enforceability in subsection 12.1.3.6(a)(5) 
and stated that it ``could find no language [in the CAA or EPA 
regulations] that explicitly prohibits an applicant from specifying or 
declaring anything it deems appropriate in the information it 
submits.'' Referencing an EPA guidance document addressing CAA title V 
(Part 70) permitting issues,

[[Page 64042]]

Clark County stated that ``EPA indicated some precedent for declaring 
which of the conditions of an `authority to construct or operate' 
permit would be federally enforceable within the context of a Part 70 
Operating Permit application.'' The County asserted that EPA's 
authority to disapprove a state's minor source program is extremely 
limited and that EPA may only disapprove such programs under CAA 
section 110(a)(2)(C) if they ``interfere with attainment of the NAAQS 
or other applicable requirements of the Act.'' Clark County stated its 
belief that ``there can be provisions and conditions in minor source 
permits that do not pertain to SIP requirements, nor otherwise relate 
to any of the requirements of the Act,'' such as requirements 
addressing noxious odors and public nuisances. Clark County stated that 
it had intended to ``separately incorporate these conditions into a 
minor source permit without submitting the conditions, nor the 
mechanism for their adoption, as part of the SIP permit program,'' and 
that such conditions should not be subject to federal enforcement or 
citizen suits under CAA section 113 or 304.
    EPA Response: We agree with the County that nothing in the CAA or 
EPA regulations prohibits a state from issuing permits for minor 
stationary sources containing requirements that are enforceable only 
under state law, and we understand that the County's intention may have 
been to use minor NSR permits issued pursuant to Section 12.1 both for 
purposes of implementing the SIP-approved minor NSR program and for 
purposes of implementing other state/local requirements not approved 
into the SIP. We are disapproving subsection 12.1.3.6(a)(5), however, 
because the current text of this provision is significantly misleading 
to the regulated community and the public with respect to EPA's 
enforcement authorities under the CAA, and because Section 12.1 as a 
whole does not provide a reliable mechanism for distinguishing between 
federally-enforceable permit conditions and state-only enforceable 
permit conditions, as explained further below.
    Under the CAA and EPA's implementing regulations, all limitations 
and conditions in a permit issued pursuant to SIP-approved regulations, 
including SIP-approved minor NSR permit programs, are federally 
enforceable under the Act. See CAA 113(a)(1), (3), 42 U.S.C. 
7413(a)(1), (3); 40 CFR 52.21(b)(17) (defining ``Federally 
enforceable'' to include ``any permit requirements established * * * 
under regulations approved pursuant to 40 CFR part 51, subpart I''); 40 
CFR 52.23 (``Failure to comply with * * * any permit condition * * * 
issued pursuant to approved or promulgated regulations for the review 
of new or modified stationary or indirect sources * * * shall render 
the person or governmental entity so failing to comply in violation of 
a requirement of an applicable implementation plan and subject to 
enforcement action under section 113 of the Clean Air Act.''); see also 
54 FR 27274, 27282 (June 28, 1989) (noting that all construction 
permits issued under regulations approved pursuant to 40 CFR 51.160-165 
are federally enforceable). Such permit conditions are also enforceable 
by citizens under CAA section 304 of the CAA. 42 U.S.C. 7604(a)(1), 
(f)(4) (authorizing citizen suit for violation of ``an emission 
standard or limitation under [the Act],'' including any ``standard, 
limitation, or schedule established under any permit issued * * * under 
any applicable State implementation plan approved by the Administrator. 
* * *''). Thus, upon EPA's approval of Section 12.1 into the Clark 
County portion of the Nevada SIP, all of the terms and conditions of a 
permit issued under Section 12.1 are enforceable by the Administrator 
under CAA section 113 and by citizens under CAA section 304.
    By contrast, title V operating permits may contain permit 
conditions that are not federally enforceable. Specifically, EPA's 
regulations to implement the operating permit program in title V of the 
CAA allow states to issue operating permits containing terms and 
conditions that are not federally enforceable, provided those terms and 
conditions are specifically identified as such in the permit. See 40 
CFR 70.6(b)(2) (``Permit content'') (``the permitting authority shall 
specifically designate as not being federally enforceable under the Act 
any terms and conditions included in the permit that are not required 
under the Act or under any of its applicable requirements''). These 
regulations in 40 CFR part 70, however, apply to state operating permit 
programs submitted to meet the requirements of title V of the CAA; they 
do not apply to preconstruction review permit programs submitted to 
meet the requirements of section 110(a)(2)(C) of the Act, which are, 
instead, subject to EPA's regulations for review of new sources and 
modifications in 40 CFR part 51, subpart I. We note that although EPA 
does not require states to submit title V operating permit programs for 
SIP approval, states may choose to do so, e.g., to provide a mechanism 
for establishing federally enforceable permit limits that enable 
otherwise major sources to avoid PSD or Nonattainment NSR (also known 
as ``synthetic minor'' permit limits). Once a state operating permit 
program is approved by EPA and incorporated into the applicable SIP 
under section 110 of the Act, all terms and conditions contained in a 
permit issued pursuant to such a program are considered federally 
enforceable. 40 CFR 52.21(b)(17) and 52.23; see also 54 FR 27274 at 
27281, 27284 (June 28, 1989).
    Subsection 12.1.3.6(a)(5) of Clark County's minor NSR rule states 
that a permit applicant may, at its option, include in its application 
``a declaration that it wants the entire permit, or specifically 
identified permit conditions or applicable requirements, to be 
federally enforceable.'' On its face, this language allows a permit 
applicant to identify those permit conditions for which the applicant 
``wants'' a federally enforceable requirement, without regard to 
whether the conditions so identified (or not identified) derive from 
SIP-approved requirements or state-only requirements. At minimum, this 
provision is misleading to the regulated community and the public 
because it suggests that an applicant may request, and that Clark 
County may issue, permit conditions limiting federal enforcement 
authority with respect to permit conditions that derive from SIP-
approved requirements in Section 12.1. Given that all conditions of a 
permit issued pursuant to a SIP-approved program are enforceable under 
sections 113 and 304 the Act, and that permit conditions deriving only 
from state law are not federally enforceable, it is not appropriate to 
suggest that permit applicants have such an undefined ``option.''
    We recognize, however, that Clark County may have intended to use 
minor NSR permits issued under Section 12.1 to implement not only the 
substantive requirements of Section 12.1, all of which are federally 
enforceable upon SIP approval, but also to implement requirements in 
other state regulations not submitted for SIP approval--e.g., 
conditions addressing noxious odors or public nuisances as defined 
under state law. To the extent that this was the County's intent, we 
recommend that the County add separate provisions to Section 12.1 that 
authorize the County to include ``state-only'' terms and conditions in 
a minor source permit issued pursuant to Section 12.1, provided those 
terms and conditions and the state/local requirements that they 
implement are specifically identified in the permit. In this case, 
Clark County may provide permit applicants the option of identifying

[[Page 64043]]

such requirements as ``state-only'' requirements, provided the rule 
clearly limits the option to those state-only requirements. For 
example, subsection 12.1.3.6(a)(5) could be revised to read as follows:

    At the option of the applicant, an application may identify for 
the Control Officer's consideration those permit conditions that do 
not derive from requirements of the Clean Air Act or regulations 
approved into the applicable Nevada SIP and that the applicant 
believes should, therefore, be identified in the permit as 
conditions enforceable only under state law.

    Comment 3: Clark County questioned EPA's proposal to disapprove the 
County's definition of ``baseline actual emissions'' (BAE) in Section 
12.2 and Section 12.3 in several respects. First, the County asserted 
that with respect to existing electric utility steam generating units 
(EUSGUs), notwithstanding its use of the phrase ``as of the particular 
date'' in its definition of BAE, its definition is at least as 
stringent as the corresponding federal regulation because EPA's 
regulations ``contain no requirement for any adjustment of compliant 
emissions whatsoever'' for EUSGUs. Second, the County recognized that 
its definition differed from EPA's definition of BAE for existing 
emission units other than EUSGUs (i.e., non-EUSGUs) but stated that 
this difference was intentional and necessary because ``EPA does not 
interpret or implement the definition [of BAE] consistent with its 
plain meaning.'' Quoting from EPA's explanation, in the preamble to 
EPA's 2002 final rule promulgating this definition (67 FR at 80197, 
December 31, 2002), of the meaning of the term ``current'' in the 
context of evaluating a contemporaneous emissions change for netting 
purposes, Clark County asserted that it ``implements its rule in the 
same manner EPA does'' and that ``rather than codifying rule language 
inconsistent with this interpretation, the county has adopted rule 
language consistent with both its own interpretation and practice and 
EPA's interpretation and practice.''
    EPA Response: We understand that Clark County's definition of BAE 
reflects an attempt to clarify the methodology for calculating BAE and, 
in response to the County's comments, we are approving the County's 
definitions of this term, with one narrow exception discussed below. We 
remain concerned, however, about ambiguities in the terms and strongly 
recommend that the County revise the definitions at the next 
opportunity to ensure that modifications at existing sources are 
subject to clear and consistent criteria for calculating BAE.
    Under EPA's PSD and NSR applicability provisions for ``major 
modifications,'' both the assessment of whether a ``significant 
emissions increase'' has occurred (step 1 of the applicability 
analysis) and the assessment of creditable emissions increases or 
decreases which occurred during a prior ``contemporaneous'' period 
(step 2 of the applicability analysis) require calculation of 
``baseline actual emissions'' (BAE). See 40 CFR 51.165(a)(2)(ii)(B) and 
51.166(a)(7)(iv)(b) (procedures for calculating emissions increases; 40 
CFR 51.165(a)(1)(vi) and 51.166(b)(3)(i) (definition of ``net emissions 
increase''). Thus, a calculation of BAE is required both for the 
project under review and for any previous (``contemporaneous'') changes 
that resulted in creditable emissions increases or decreases. In both 
cases, EPA's definition of BAE requires adjustments to the emission 
calculations to ensure that any emissions exceeding certain applicable 
requirements are not included in calculating the BAE.
    Generally, for existing emission units, BAE is defined as ``the 
average rate, in tons per year, at which the unit actually emitted [a 
regulated NSR] pollutant'' during any consecutive 24-month period 
selected by the owner or operator within a 5-year or 10-year period 
immediately preceding the date that actual construction begins, 
depending upon the type of unit being modified and with limited 
exceptions. 40 CFR 51.165(a)(1)(xxxv) and 51.166(b)(47). For any 
existing emissions unit other than an electric utility steam generating 
unit (i.e., any existing ``non-EUSGU''), EPA's definition of BAE 
requires, among other things, that the average emissions rate ``be 
adjusted downward to exclude any emissions that would have exceeded an 
emission limitation with which the major stationary source must 
currently comply, had such major stationary source been required to 
comply with such limitations during the consecutive 24-month period.'' 
40 CFR 51.165(a)(1)(xxxv)(B)(3) and 51.166(b)(47)(ii)(c). The purpose 
of this requirement is to ensure that any emissions that are not 
allowed under any legally enforceable limitations and that apply at the 
time of the project are not counted as part of BAE. See 67 FR 80186, 
80195 (December 31, 2002) (source owners/operators must ``identify the 
most current legally enforceable limits on your emissions unit'' and 
``[i]f these legally enforceable emission limitations and operating 
restrictions are more stringent than those that applied during the 24-
month period, you must adjust downward the average annual emissions 
rate that you calculated from the consecutive 24-month period to 
reflect these current restrictions''); see also 67 FR at 80201 (``The 
approach that we have adopted allows you to reference plant capacity 
that has actually been used, but not pollution levels that are not 
legally allowed at the time the modification is to occur.'').
    For the calculation of BAE in step 1 of the applicability analysis 
for a modification at an existing non-EUSGU, the reference to emission 
limitations with which the source ``must currently comply, had [the] 
source been required to comply with such limitations during the 
consecutive 24-month period,'' is in reference to only one point in 
time--i.e., when the project under review occurs. Thus, if the average 
emission rate calculated for the selected 24-month period \3\ exceeds 
an emission limitation that applies at the time the project under 
review occurs, the past emissions in excess of that current emission 
limitation must be excluded from the calculation of BAE for the project 
under review. See 67 FR 80186 at 80195, 80201.
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    \3\ For a non-EUSGU, this may be any consecutive 24-month period 
``within the 10-year period immediately preceding either the date 
the owner or operator begins actual construction of the project, or 
the date a complete permit application is received by the reviewing 
authority for a permit required either under this section or under a 
plan approved by the Administrator, whichever is earlier, except 
that the 10-year period shall not include any period earlier than 
November 15, 1990.'' 40 CFR 51.165(a)(1)(xxxv)(B) and 
51.166(b)(47)(ii).
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    For the netting methodology in step 2 (i.e., for purposes of 
calculating creditable increases and decreases in emissions from 
changes that are ``contemporaneous'' with the project under review), 
the term ``current'' may have multiple defining points, depending on 
the number of ``contemporaneous'' changes being evaluated. EPA 
explained the meaning of ``current'' in the context of a netting 
analysis for an existing non-EUSGU in the preamble to the final rule 
promulgating sections 51.165(a)(1)(xxxv)(B)(3) and 51.166(b)(47), as 
follows:

    Although we are not changing our definition of 
``contemporaneous,'' today's action allows existing [non-EUSGUs] to 
calculate the [BAE] for each contemporaneous event using the 10-year 
look back period. That is, you can select any consecutive 24-month 
period during the 10-year period immediately preceding the change 
occurring in the contemporaneous period to determine the [BAE] for 
each creditable emissions change. Generally, for each emissions unit 
at which a

[[Page 64044]]

contemporaneous emissions change has occurred, you should use the 
10-year look back period relevant to that change [footnote omitted]. 
When evaluating emissions increases from multi-unit modifications, 
if more than one emissions unit was changed as part of a single 
project during the contemporaneous period, you may select a separate 
consecutive 24-month period to represent each emissions unit that is 
part of the project. In any case, the calculated [BAE] for each 
emissions unit must be adjusted to reflect the most current emission 
limitations (including operational restrictions) applying to that 
unit. ``Current'' in the context of a contemporaneous emissions 
change refers to limitations on emissions and source operation that 
existed just prior to the date of the contemporaneous change.

67 FR 80186, 80197 (December 31, 2002).
    Thus, for each ``contemporaneous'' change that is considered in a 
netting analysis, the reference in sections 51.165(a)(1)(xxxv)(B)(3) 
and 51.166(b)(47)(ii)(c) to emission limitations with which the source 
``must currently comply, had [the] source been required to comply with 
such limitations during the consecutive 24-month period,'' is in 
reference to requirements that applied just before the date of the 
particular ``contemporaneous'' change. As with those ``current'' 
emission limits that must be reflected in the BAE for the project under 
review, those emission limits that applied to a particular unit just 
before it underwent a prior ``contemporaneous'' change (i.e., the most 
``current'' applicable requirements at the time of the change) must be 
reflected in the BAE for that particular change before any emissions 
increases or decreases associated with it may be credited in the 
netting analysis.
    Clark County's definitions of BAE for non-EUSGUs in Section 12.2 
and 12.3 require downward adjustments in average emission rates to 
exclude emissions that exceed applicable emission limitations but use 
the phrase ``the particular date'' instead of ``currently'' to define 
the point in time that governs the identification of applicable 
emission limitations. See Section 12.2, subsection 12.2.2(c)(1)(B)(i) 
and (2)(D); Section 12.3, subsection 12.3.2(c)(1)(C) and (2)(D). 
Specifically, the County's definitions of BAE require downward 
adjustments to average emission rates to ``exclude any emissions that 
would have exceeded an emission limitation with which the major 
stationary source must comply as of the particular date, had such major 
stationary source been required to comply with such limitations during 
the consecutive 24-month period.'' Id. (emphasis added).\4\ These 
definitions also contain a sentence providing further direction on the 
calculation of BAE only for contemporaneous projects, as follows: ``For 
the purposes of determining [BAE] for contemporaneous changes pursuant 
to [the definition of NEI], the particular date is the date on which 
the particular change occurred.'' Id. Although these provisions differ 
from the language in EPA's definition of BAE in 40 CFR 
51.165(a)(1)(xxxv)(B) and 51.166(b)(47)(ii), the language is generally 
consistent with EPA's interpretative statements in the preamble to the 
2002 rulemaking, as discussed above, and we understand the County 
intends to implement these provisions consistent with those EPA 
interpretations. Thus, we are approving the definitions, with one 
narrow exception for what appears to be a drafting error in the 
definition of BAE for non-EUSGUs in subsection 12.2.2(c)(2)(D), as 
discussed further below. However, we strongly encourage the County to 
clarify the meaning of the phrase ``the particular date'' for purposes 
of calculating BAE both for the project under review (step 1) and for 
any contemporaneous changes pursuant to the definition of NEI (step 2). 
We recommend that the County provide such a clarification in the 
regulatory text itself, so that the definition is clear on its face and 
consistent with EPA's interpretative statements in the preamble to the 
final rule promulgating these definitions (67 FR 80186).
---------------------------------------------------------------------------

    \4\ Subsection 12.2.2(c)(2)(D) does not contain this language 
and instead contains language tracking EPA's definition in 40 CFR 
51.166(b)(47)(ii)(c), but this appears to be a drafting error, as 
discussed further below.
---------------------------------------------------------------------------

    Alternatively, Clark County may adopt BAE definitions that track 
EPA's regulatory language in 40 CFR 51.165(a)(1)(xxxv)(B)(3) and 
51.166(b)(47)(ii)(c). Although we recognize that EPA's regulatory text 
does not specify the meaning of ``currently'' in the context of 
assessing either the project under review or prior contemporaneous 
changes, EPA provided an interpretation of this term in the preamble to 
the 2002 rulemaking (67 FR 80186).
    With respect to Clark County's definition of BAE for non-EUSGUs in 
subsection 12.2.2(c)(2)(D), we are disapproving this provision because 
the definition is internally inconsistent and confusing. Subsection 
12.2.2(c)(2)(D) uses language consistent with EPA's definition in the 
first sentence (``The average rate shall be adjusted downward to 
exclude any emissions that would have exceeded an emission limitation 
with which the major stationary source must currently comply had such 
[source] been required to comply with such limitations during the 
consecutive 24-month period''), but refers, in the second sentence, to 
language that deviates from EPA's definition without explanation (``For 
the purposes of determining the baseline actual emissions for 
contemporaneous changes pursuant to paragraph (ii)(1)(B) of the 
definition of [NEI], the particular date is the date on which the 
particular change occurred''). This internal inconsistency is 
problematic, as neither the regulatory text nor any supporting analysis 
associated with this rulemaking explains whether/how the phrase ``the 
particular date'' in the second sentence informs the phrase ``currently 
comply'' in the first sentence of subsection 12.2.2(c)(2)(D). Although 
we recognize that this may simply be a drafting error and that Clark 
County may have intended to use the phrase ``as of the particular 
date'' in this provision, we are disapproving the provision because on 
its face it is confusing and raises enforceability concerns.
    Comment 4: Clark County questioned EPA's proposal to disapprove the 
definition of ``net emissions increase'' (NEI) in Section 12.2 and 
strongly disagreed, in particular, with the statement in EPA's TSD that 
EPA's regulatory definition of NEI ``does not call for any assessment 
of actual emissions after a contemporaneous project.'' The County 
stated that the federal definition of NEI expressly requires that NEI 
be calculated using the difference between baseline actual emissions 
before a contemporaneous project and the new level of actual emissions 
resulting from that project and asserted that ``[t]he only sensible 
interpretation of the phrase `new level of actual emissions' in this 
context is `the actual emissions after the contemporaneous project.' '' 
The County suggested that EPA clarify what it means by ``does not call 
for any assessment of actual emissions after a contemporaneous 
project.''
    EPA Response: EPA agrees that our explanation of this issue in our 
TSD was not entirely accurate or clear. For example, our statement that 
EPA's definition of ``net emissions increase'' (NEI) ``does not call 
for any assessment of actual emissions after a contemporaneous 
project'' was incorrect. As the County correctly notes, for purposes of 
identifying creditable increases and decreases in emissions occurring 
prior to the particular physical or operational change under review, 
during a period that is ``contemporaneous'' with that particular

[[Page 64045]]

change, EPA's definition of NEI requires an assessment of ``baseline 
actual emissions'' before and ``actual emissions'' after the prior 
``contemporaneous'' project. See, e.g., 40 CFR 51.166(b)(3)(vi)(a) 
(``[a] decrease in actual emissions is creditable only to the extent 
that: (a) The old level of actual emissions or the old level of 
allowable emissions, whichever is lower, exceeds the new level of 
actual emissions * * *.''). However, although we understand that Clark 
County's definition of NEI reflects an attempt to clarify the term, we 
are disapproving it because the County has not demonstrated that its 
definition is more stringent than or at least as stringent in all 
respects as EPA's corresponding definition. See 40 CFR 51.165(a)(1), 
51.166(a)(7)(iv). Specifically, the definition of NEI in Section 12.2 
is deficient because it does not establish an appropriate method for 
calculating the ``actual emissions'' after a previous contemporaneous 
project, as explained further below, and the substantively identical 
definition of NEI in Section 12.3 is also deficient for the same 
reasons.
    Under EPA's PSD and NSR regulations, a determination as to whether 
a significant emissions increase is a ``major modification'' requires a 
determination as to whether the change has resulted in a significant 
``net emissions increase.'' See 40 CFR 51.165(a)(1)(v) and 51.166(b)(2) 
(defining ``major modification''); 40 CFR 51.165(a)(1)(vi) and 
51.166(b)(3) (defining NEI). EPA's definition of NEI in 40 CFR 
51.165(a)(1)(vi) and 51.166(b)(3), in turn, requires a calculation of 
all creditable increases and decreases which occurred during a previous 
period that is ``contemporaneous'' with the particular project under 
review. The definition of NEI requires that ``[b]aseline actual 
emissions for calculating increases and decreases'' associated with a 
contemporaneous project be determined as provided in EPA's definition 
of ``baseline actual emissions'' (40 CFR 51.165(a)(xxxv) and 
51.166(b)(47)), with limited exceptions. See 40 CFR 
51.165(a)(1)(vi)(A)(2) and 51.166(b)(3)(i)(b).
    EPA's definition of NEI does not specify how the actual emissions 
after (i.e., resulting from) a prior contemporaneous project must be 
calculated. Id. Importantly, however, for purposes of determining 
creditable increases and decreases in a netting evaluation, EPA's 
definition of NEI provides that paragraphs 40 CFR 51.165(a)(1)(xii)(B) 
and 51.166(b)(21)(ii) \5\ shall not apply in determining post-project 
actual emissions. Those sections define ``actual emissions'' based on 
actual operating hours, production rates, and types of materials 
processed, stored, or combusted during a previous 24-month period that 
is ``representative of normal source operation.'' See 40 CFR 
51.165(a)(1)(vi)(G) and 51.166(b)(3)(viii). Thus, only ``source-
specific allowable emissions'' or ``potential to emit'' may be used to 
calculate the actual emissions after (i.e., resulting from) a prior 
contemporaneous project in the netting analysis. See 40 CFR 
51.165(a)(1)(xii)(C), (D) and 51.166(b)(21)(iii), (iv). EPA regulations 
specifically provide that the ``actual emissions'' of an emissions unit 
that has not begun operations as of a particular date must be equal to 
its ``potential to emit'' on that date. 40 CFR 51.165(a)(1)(xii)(D) and 
51.166(b)(21)(iv) (``For any emissions unit that has not begun normal 
operations on the particular date, actual emissions shall equal the 
potential to emit of the unit on that date.'')
---------------------------------------------------------------------------

    \5\ These two provisions, which are identical, state as follows: 
In general, actual emissions as of a particular date shall equal the 
average rate, in tons per year, at which the unit actually emitted 
the pollutant during a consecutive 24-month period which precedes 
the particular date and which is representative of normal source 
operation. The reviewing authority shall allow the use of a 
different time period upon a determination that it is more 
representative of normal source operation. Actual emissions shall be 
calculated using the unit's actual operating hours, production 
rates, and types of materials processed, stored, or combusted during 
the selected time period.
    40 CFR 51.165(a)(1)(xii)(B), 51.166(b)(21)(ii).
---------------------------------------------------------------------------

    Consistent with these regulations, EPA's longstanding policy 
provides that where a ``contemporaneous'' project ``will affect the 
normal operations of an existing emissions unit (as in the case of a 
change which could result in increased use of the unit), `actual 
emissions' after the change must be assumed to be equal to `potential 
to emit.''' Memorandum dated September 18, 1989, from John Calagni, 
Director, Air Quality Management Division, to William B. Hathaway, 
Director, Air, Pesticides, and Toxics Division, ``Request for 
Clarification of Policy Regarding the `Net Emissions Increase''' (1989 
NEI Policy Memo) at 3 (quoting 40 CFR 52.21(b)(21)(iv)). Alternatively, 
where ``allowable emissions'' are the same as or less than the 
``potential to emit'' for an emissions unit, ``allowable emissions'' 
may be used to define the ``actual emissions'' of that unit after the 
change. Id.
    Finally, with respect to a decrease in actual emissions associated 
with a contemporaneous change, such decrease is creditable only when 
three specific criteria are met: (1) The old level of actual emissions 
or the old level of allowable emissions, whichever is lower, exceeds 
the new level of actual emissions; (2) it is enforceable as a practical 
matter at and after the time that actual construction on the particular 
change begins; and (3) it has approximately the same qualitative 
significance for public health and welfare as that attributed to the 
increase from the particular change. 40 CFR 51.165(a)(1)(vi)(E) and 
51.166(b)(3)(vi). The second of these three criteria essentially 
requires the use of ``allowable emissions'' or ``potential to emit'' to 
define the ``actual emissions'' of a unit after a prior 
``contemporaneous'' change in order to credit an associated emissions 
decrease in the netting evaluation.
    The three additional paragraphs contained in the Section 12.2 
definition of NEI (under subsection 12.2.2(ii)(1)(C)), which are not 
included in EPA's definition of NEI in 40 CFR 51.166(b)(3), state as 
follows:
    (i) For the purposes of calculating increases under paragraph 
(1)(B) of this definition, actual emissions after the contemporaneous 
project shall be determined as provided in the definition of actual 
emissions, except as provided in paragraph (1)(C)(iii) of this 
definition.
    (ii) For the purposes of calculating increases under paragraph 
(1)(B) of this definition, if the Control Officer determines that there 
is no sufficiently representative time period of actual emissions after 
a contemporaneous project, pursuant to Section 12.2.2(a)(1), actual 
emissions after the contemporaneous project shall be determined as 
provided in the definition of projected actual emissions.
    (iii) For the purposes of calculating decreases under paragraph 
(1)(B) of this definition, actual emissions after the contemporaneous 
project shall be determined as provided in the definition of actual 
emissions.
    Section 12.2, subsection 12.2.2(ii)(1)(C)(i)-(iii).\6\
---------------------------------------------------------------------------

    \6\ The applicable definition of ``actual emissions'' in this 
context is in subsection 12.2.2(a), which contains language 
identical to EPA's definition of ``actual emissions'' in 40 CFR 
51.166(b)(21)(ii). See Section 12.2, subsection 12.2.2 (Definitions) 
(``Unless the context otherwise requires, the following terms shall 
have the meanings set forth [in subsection 12.2.2] for the purposes 
of Section 12.2 * * * .'')
---------------------------------------------------------------------------

    These three provisions are inconsistent with EPA regulations and 
longstanding interpretations, for the following reasons.

[[Page 64046]]

    First, subsection 12.2.2(ii)(1)(C)(i) states that for the purposes 
of calculating creditable increases that are contemporaneous with a 
particular change, ``actual emissions after the contemporaneous project 
shall be determined as provided in the definition of actual emissions'' 
with limited exceptions (emphasis added), but it does not prohibit use 
of ``actual emissions'' as defined in subsection 12.2.2(a)(1) (i.e., 
using the unit's ``actual operating hours, production rates, and types 
of materials processed, stored, or combusted during'' a previous 24-
month period that is ``representative of normal source operation''). 
This is problematic because the language defining ``actual emissions'' 
in subsection 12.2.2(a)(1) is substantively identical to EPA's language 
defining ``actual emissions'' in 40 CFR 51.166(b)(21)(ii), which as 
noted above EPA's definition of BAE explicitly prohibits source owners/
operators from using for purposes of determining creditable increases 
and decreases in a netting evaluation. See 40 CFR 51.165(a)(1)(vi)(G) 
and 51.166(b)(3)(viii). For purposes of determining ``actual 
emissions'' immediately after a contemporaneous physical or operational 
change, use of this definition of ``actual emissions'' is not 
appropriate because there is no relevant data regarding operating 
hours, production rates, and types of materials processed, stored, or 
combusted. Rather, ``actual emissions'' in this context must be equal 
to the new or modified unit's ``potential to emit'' (PTE) or 
``allowable emissions,'' where allowable emissions are the same as or 
less than PTE. See 40 CFR 51.166(b)(21)(iv) and 1989 NEI Policy Memo at 
3.
    Second, subsection 12.2.2(ii)(1)(C)(ii) states that ``if the 
Control Officer determines that there is no sufficiently representative 
time period of actual emissions after a contemporaneous project, 
pursuant to Section 12.2.2(a)(1), actual emissions after the 
contemporaneous project shall be determined as provided in the 
definition of projected actual emissions.'' \7\ As discussed above, for 
purposes of a netting analysis, EPA regulations require that the 
``actual emissions'' following a contemporaneous change be calculated 
based on PTE or ``allowable emissions,'' not projected actual 
emissions. 40 CFR 51.165(a)(1)(xii)(C), (D) and 51.166(b)(21)(iii), 
(iv); see also 67 FR 80186, 80191 (December 31, 2002) (noting that the 
actual-to-projected actual applicability test should be used only for 
purposes of determining whether a proposed modification results in a 
significant emissions increase (i.e., step 1 of the applicability 
analysis) and ``should not be used when determining a source's actual 
emissions on a particular date as may be used for other NSR-related 
requirements''). As EPA explained in April 2011, EPA revised the PSD 
and NNSR rules in 2002 by adding provisions to implement the new 
``actual-to-projected-actual'' test for certain projects in step one of 
the applicability analysis but left the existing regulatory structure 
in place for implementing step two. See letter dated April 4, 2011, 
from Cheryl L. Newton, Director, Air and Radiation Division, EPA Region 
5, to Keith Baugues, Assistant Commissioner, Office of Air Quality, 
Indiana Department of Environmental Management (2011 NEI Letter) at 3 
(citing, e.g., 40 CFR 52.21(a)(2)(iv)(b)).\8\ Neither the definition of 
significant NEI in 40 CFR 51.166(b)(3) nor any of the definitions used 
to calculate a significant NEI use ``projected actual emissions.'' 2011 
NEI Letter at 3.
---------------------------------------------------------------------------

    \7\ We assume that Clark County intended here to reference the 
definition of ``projected actual emissions'' in subsection 
12.2.2(nn) of Section 12.2.
    \8\ EPA purposefully did not extend the actual-to-projected-
actual test to the netting evaluation in step two of the 
applicability test, because the Agency believed it was ``appropriate 
[for] projects that will result in a significant emissions increase 
under step one of the process, and, thus, are more likely to 
adversely impact air quality, to undergo a more conservative 
examination using the actual-to-potential methodology under step two 
of the analysis.'' 2011 NEI Letter at 3.
---------------------------------------------------------------------------

    Finally, subsection 12.2.2(ii)(1)(C)(iii) is substantively 
identical to subsection 12.2.2(ii)(1)(C)(i), except that it applies to 
calculating emission decreases instead of increases associated with a 
contemporaneous change. This provision is problematic because it calls 
for the use of ``actual emissions'' as defined in 40 CFR 
51.166(b)(21)(ii) for purposes of calculating creditable decreases in a 
netting analysis, which as discussed above is inconsistent with EPA's 
definition of NEI. See 40 CFR 51.166(b)(3)(viii). The use of ``actual 
emissions'' as defined in section 51.166(b)(21)(ii) for this purpose 
also conflicts with EPA's criteria in 40 CFR 51.166(b)(3)(vi) for 
crediting emission decreases associated with a contemporaneous change, 
because such ``actual emissions'' generally are not enforceable as a 
practical matter.
    For all of these reasons, we are disapproving subsections 
12.2.2(ii)(1)(C)(i), (ii), and (iii) in Clark County's definition of 
NEI, because these provisions are inconsistent with EPA's definition of 
NEI in 40 CFR 51.166(b)(3) and relevant policy. For the same reasons, 
we are also disapproving identical language in Clark County's 
definition of NEI in Section 12.3, subsections 12.3.2(aa)(1)(B)(ii), 
(iii), and (iv). See 40 CFR 51.165(a)(1)(vi)(E) and (G). Clark County 
may address these deficiencies by adopting language consistent with 
EPA's prohibition on use of ``actual emissions'' as defined in 
51.165(a)(1)(xii)(B) and 40 CFR 51.166(b)(21)(ii), so that the 
definitions of NEI in both Section 12.3 and Section 12.2 track EPA's 
corresponding definitions in 40 CFR 51.165(a)(1)(vi) and 51.166(b)(3). 
Alternatively, should Clark County seek to further clarify the 
methodology for calculating the emissions increases or decreases 
resulting from a contemporaneous project, we recommend that the County 
replace the three paragraphs discussed above with the following 
language:

    For the purposes of calculating emissions increases or decreases 
under paragraph (1)(B) of this definition, actual emissions after 
the contemporaneous project shall be equal to the ``potential to 
emit'' or ``allowable emissions'' of the project, whichever is 
lower.

    Comment 5: With respect to the Nevada Division of Environmental 
Protection's (NDEP) obligation to submit NSR SIP revisions meeting the 
applicable requirements of subpart 2 of part D, title I of the Act, for 
the portion of Clark County that is designated and classified as 
``marginal'' nonattainment for the 1997 8-hour ozone standard, NDEP 
expressed concern about EPA's suggestion that the State could address 
the regulatory gap by submitting a revised rule extending the existing 
construction prohibition in NAC section 445B.22083 to cover the entire 
Clark County ozone nonattainment area. NDEP stated that such an 
expansion of the existing construction prohibition is not a viable 
option given current economic conditions and stated that there are 
``two equally obvious and significantly less harmful options'' for 
addressing this requirement.
    First, NDEP emphasized that EPA has made a clean data finding for 
the 1997 8-hour ozone nonattainment area within Clark County and that 
the State is awaiting EPA action on Clark County's redesignation 
request and maintenance plan for this standard. Both NDEP and Clark 
County urged EPA to take action soon on this redesignation request and 
maintenance plan.
    Second, NDEP stated that it has nonattainment provisions in its SIP 
and that NDEP ``is not required to adopt a program if it has adequate, 
equivalent-performing regulatory provisions.'' NDEP stated that EPA has 
not provided specific guidance on the NSR

[[Page 64047]]

deficiencies but that NDEP is currently reviewing its nonattainment 
provisions.
    EPA Response: As an initial matter, we note that comments regarding 
NDEP's NSR obligations with respect to stationary sources under its 
jurisdiction within the Clark County ozone nonattainment area are 
outside the scope of today's action on Clark County's NSR SIP 
submission. Our proposed rule identified this issue not as a current 
program deficiency but rather as a courtesy to remind the State of 
upcoming NSR obligations for the 1997 8-hour ozone standard. Given our 
proposed action on Clark County's NSR SIP submission highlighted this 
upcoming obligation on NDEP's part, however, we respond below to the 
State's and Clark County's comments on this issue.
    EPA appreciates NDEP's concerns about expanding the existing 
construction prohibition in NAC section 445B.22083 and agrees that 
several other options are available to address the State's NSR 
obligations with respect to ozone precursor emissions from fossil fuel-
fired steam-powered power plants within Clark County. First, as both 
NDEP and Clark County correctly note, in April 2011 the State submitted 
a redesignation request and maintenance plan for the 1997 8-hour ozone 
standard, which became complete by operation of law in October 2011. 
EPA is currently reviewing this submission and commits to work with 
both agencies to address the State's request for redesignation to 
attainment. As NDEP correctly notes, EPA determined based on ambient 
air monitoring data that the ozone nonattainment area within Clark 
County has attained the 1997 8-hour ozone NAAQS (76 FR 17343, March 29, 
2011), which is a prerequisite to redesignation to attainment under 
section 107(d)(3)(E) of the CAA. A final rule redesignating the Clark 
County ozone nonattainment area to attainment for the 1997 8-hour ozone 
NAAQS consistent with section 107(d)(3)(E) of the CAA would eliminate 
the State's NSR obligations for purposes of the 1997 8-hour ozone 
NAAQS.
    Second, with respect to NDEP's statement that the existing Nevada 
SIP contains nonattainment provisions and that NDEP is not required to 
adopt an NSR program if it has adequate, equivalent regulatory 
provisions, we are aware of several nonattainment NSR provisions in the 
existing Nevada SIP, including certain provisions in Article 13 of the 
Nevada Air Quality Regulations (``Point Sources'') and in the Utility 
Environmental Protection Act in title 58 of the Nevada Revised 
Statutes. We stand ready to work with NDEP in evaluating the relevant 
SIP provisions to determine whether they adequately address the State's 
current NSR obligations with respect to stationary sources under NDEP 
jurisdiction for the 1997 8-hour ozone NAAQS in Clark County.

III. Final Action

    For the reasons provided in our proposed rule and above in response 
to comments, pursuant to sections 110(k) and 301(a) of the Clean Air 
Act, EPA is finalizing a limited approval and limited disapproval of 
new and amended regulations that govern applications for, and issuance 
of, permits for stationary sources under the jurisdiction of the Clark 
County Department of Air Quality. Specifically, EPA is finalizing a 
limited approval and limited disapproval of the new and amended 
regulations listed in table 1 above as a revision to Clark County 
portion of the Nevada SIP.
    EPA is taking this action because, although we find that the new 
and amended rules meet most of the applicable requirements for such NSR 
programs and that the SIP revisions improve the existing SIP, we have 
also found certain deficiencies that prevent full approval.
    Specifically, our limited disapproval of the minor NSR permit 
program in Section 12.1 is based on the following deficiencies: (1) The 
absence of a means for determining whether the construction or 
modification of a stationary source will result in a violation of 
applicable portions of the control strategy or interference with 
attainment or maintenance of the 2006 24-hour PM2.5 NAAQS 
and the 2008 Lead NAAQS; (2) inappropriate language regarding federal 
enforceability of permits issued under Section 12.1; (3) the absence of 
provisions to ensure that approval of any construction or modification 
must not affect the responsibility of the owner or operator to comply 
with applicable portions of the control strategy; (4) inappropriate 
exemptions for sources identified in a separate rule that is not SIP-
approved (Section 12.5); (5) the absence of applicability provisions 
that cover sources of PM2.5 or PM2.5 precursor 
emissions; and (6) the absence of provisions to ensure that the air 
quality impacts of stationary sources are not underestimated due to 
stack heights that exceed good engineering practice or unacceptable air 
dispersion modeling techniques.
    Our limited disapproval of the PSD permit program in Section 12.2 
is based on the following deficiencies: (1) Definitions for the terms 
``allowable emissions,'' ``baseline actual emissions,'' ``net emissions 
increase,'' ``major modification,'' and ``regulated NSR pollutant'' 
that are not entirely consistent with EPA's definitions in 40 CFR 
51.166; (2) a provision governing adjustment of PALs to incorporate 
requirements that become effective during the term of a PAL that is not 
entirely consistent with EPA's requirements; and (3) the absence of 
provisions to ensure that approval of any construction or modification 
must not affect the responsibility of the owner or operator to comply 
with applicable portions of the control strategy.
    Finally, our limited disapproval of the nonattainment NSR program 
in Section 12.3 is based on the following deficiencies: (1) Provisions 
governing offsets and calculation of emission reduction credits that do 
not ensure the integrity of offset calculations and that reference a 
separate rule that is not SIP-approved (Section 12.7) for important 
criteria governing these calculations; (2) definitions for the terms 
``net emissions increase,'' ``major modification,'' and ``regulated NSR 
pollutant'' that are not entirely consistent with EPA's definitions in 
40 CFR 51.165; (3) provisions governing interpollutant trades that do 
not satisfy EPA's criteria for approval of such trades; (4) the absence 
of provisions to ensure that the air quality impacts of stationary 
sources are not underestimated due to stack heights that exceed good 
engineering practice or unacceptable air dispersion modeling 
techniques; and (5) the absence of provisions to ensure that approval 
of any construction or modification must not affect the responsibility 
of the owner or operator to comply with applicable portions of the 
control strategy.
    The intended effect of this limited approval and limited 
disapproval action is to update the applicable state implementation 
plan with current State rules for permitting of stationary sources,\9\ 
and to set the stage for remedying deficiencies in these permitting 
rules. With respect to those deficiencies that relate to the 
nonattainment NSR requirements of part D, title I of the Act, mandatory 
sanctions will apply to the Clark County nonattainment area under 
section 179 of the Clean Air Act unless Nevada submits, and EPA 
approves, SIP revisions correcting the deficiencies within 18 months of 
the effective date of this final rule. See 40 CFR 52.31. In addition, 
this limited disapproval action

[[Page 64048]]

triggers an obligation on EPA to promulgate a Federal Implementation 
Plan addressing the deficient SIP elements unless Nevada submits, and 
EPA approves, SIP revisions correcting the deficiencies within two 
years of the effective date of this final rule. We stand ready to work 
with Clark County to ensure that its upcoming rulemaking processes 
result in permit programs that fully satisfy CAA requirements.
---------------------------------------------------------------------------

    \9\ Final approval of the rules in table 1 supersedes the rules 
listed in table 2, above, in the existing Nevada SIP.
---------------------------------------------------------------------------

IV. Statutory and Executive Order Reviews

A. Executive Order 12988, Regulatory Planning and Review

    The Office of Management and Budget (OMB) has exempted this 
regulatory action from Executive Order 128665, entitled ``Regulatory 
Planning and Review.''

B. Paperwork Reduction Act

    This action does not impose an information collection burden under 
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. 
Burden is defined at 5 CFR 1320.3(b).

C. Regulatory Reduction Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to conduct a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities. Small entities include small 
businesses, small not-for-profit enterprises, and small governmental 
jurisdictions.
    This rule will not have a significant impact on a substantial 
number of small entities because SIP approvals or disapprovals under 
section 110 of the Clean Air Act do not create any new requirements but 
simply approve or disapprove requirements that the State is already 
imposing. Therefore, because this limited approval/limited disapproval 
action does not create any new requirements, I certify that this action 
will not have a significant economic impact on a substantial number of 
small entities. Moreover, due to the nature of the Federal-State 
relationship under the Clean Air Act, preparation of flexibility 
analysis would constitute Federal inquiry into the economic 
reasonableness of State action. The Clean Air Act forbids EPA to base 
its actions concerning SIPs on such grounds. Union Electric Co., v. 
U.S. EPA, 427 U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2).

D. Unfunded Mandates Reform Act

    Under section 202 of the Unfunded Mandates Reform Act of 1995 
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA 
must prepare a budgetary impact statement to accompany any proposed or 
final rule that includes a Federal mandate that may result in estimated 
costs to State, local, or tribal governments in the aggregate; or to 
the private sector, of $100 million or more. Under section 205, EPA 
must select the most cost-effective and least burdensome alternative 
that achieves the objectives of the rule and is consistent with 
statutory requirements. Section 203 requires EPA to establish a plan 
for informing and advising any small governments that may be 
significantly or uniquely impacted by the rule.
    EPA has determined that this limited approval/limited disapproval 
action does not include a Federal mandate that may result in estimated 
costs of $100 million or more to either State, local, or tribal 
governments in the aggregate, or to the private sector. This Federal 
action takes a limited approval/limited disapproval action on pre-
existing requirements under State or local law, and imposes no new 
requirements. Accordingly, no additional costs to State, local, or 
tribal governments, or to the private sector, result from this action.

E. Executive Order 13132, Federalism

    Federalism (64 FR 43255, August 10, 1999) revokes and replaces 
Executive Orders 12612 (Federalism) and 12875 (Enhancing the 
Intergovernmental Partnership). Executive Order 13132 requires EPA to 
develop an accountable process to ensure ``meaningful and timely input 
by State and local officials in the development of regulatory policies 
that have federalism implications.'' ``Policies that have federalism 
implications'' is defined in the Executive Order to include regulations 
that have ``substantial direct effects on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government.'' Under Executive Order 13132, EPA may not issue a 
regulation that has federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments, or EPA 
consults with State and local officials early in the process of 
developing the proposed regulation. EPA also may not issue a regulation 
that has federalism implications and that preempts State law unless the 
Agency consults with State and local officials early in the process of 
developing the proposed regulation.
    This rule will not have substantial direct effects on the States, 
on the relationship between the national government and the States, or 
on the distribution of power and responsibilities among the various 
levels of government, as specified in Executive Order 13132, because it 
merely takes a limited approval/limited disapproval action on State 
rules implementing a Federal standard, and does not alter the 
relationship or the distribution of power and responsibilities 
established in the Clean Air Act. Thus, the requirements of section 6 
of the Executive Order do not apply to this rule.

F. Executive Order 13175, Coordination With Indian Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' This rule does not have 
tribal implications, as specified in Executive Order 13175. It will not 
have substantial direct effects on tribal governments, on the 
relationship between the Federal government and Indian tribes, or on 
the distribution of power and responsibilities between the Federal 
government and Indian tribes. Thus, Executive Order 13175 does not 
apply to this rule.

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

    EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) 
as applying only to those regulatory actions that concern health or 
safety risks, such that the analysis required under section 5-501 of 
the Executive Order has the potential to influence the regulation. This 
rule is not subject to Executive Order 13045, because it takes a 
limited approval/limited disapproval action on State rules implementing 
a Federal standard.

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

    This rule is not subject to Executive Order 13211, ``Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use'' (66 FR 28355, May 22, 2001) because it is not a 
significant regulatory action under Executive Order 12866.

[[Page 64049]]

I. National Technology Transfer and Advancement Act

    Section 12 of the National Technology Transfer and Advancement Act 
(NTTAA) of 1995 requires Federal agencies to evaluate existing 
technical standards when developing a new regulation. To comply with 
NTTAA, EPA must consider and use ``voluntary consensus standards'' 
(VCS) if available and applicable when developing programs and policies 
unless doing so would be inconsistent with applicable law or otherwise 
impractical.
    EPA believes that VCS are inapplicable to this action. Today's 
action does not require the public to perform activities conducive to 
the use of VCS.

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

    Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA lacks the discretionary authority to address environmental 
justice in this rulemaking. In reviewing SIP submissions, EPA's role is 
to approve or disapprove state choices, based on the criteria of the 
Clean Air Act. Accordingly, this action merely takes a limited 
approval/limited disapproval action on certain State requirements for 
inclusion into the SIP under section 110 of the Clean Air Act and will 
not in-and-of itself create any new requirements. Accordingly, it 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.

K. Congressional Review Act

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

L. Petitions for Judicial Review

    Under section 307(b)(1) of the Clean Air Act, petitions for 
judicial review of this action must be filed in the United States Court 
of Appeals for the appropriate circuit by December 17, 2012. Filing a 
petition for reconsideration by the Administrator of this final rule 
does not affect the finality of this rule for the purposes of judicial 
review nor does it extend the time within which a petition for judicial 
review may be filed, and shall not postpone the effectiveness of such 
rule or action. This action may not be challenged later in proceedings 
to enforce its requirements (see section 307(b)(2)).

List of Subjects in 40 CFR Part 52

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

    Dated: September 28, 2012.
Jared Blumenfeld,
Regional Administrator, Region IX.

    40 CFR Part 52 is amended as follows:

PART 52--[APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS]

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

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

Subpart DD--Nevada

0
2. In Sec.  52.1470 in paragraph (c), Table 3 is amended by:
0
a. Revising the entry for ``Section 0.''
0
b. Adding in numerical order entries for ``Section 12.0,'' ``Section 
12.1,'' ``Section 12.2,'' ``Section 12.3,'' and ``Section 12.4.''
0
c. Removing the entries for ``Section 1 (``Definitions''): Subsection 
1.3,'' ``Section 1 (``Definitions''): Subsection 1.50,'' ``Section 1 
(``Definitions''): Subsection 1.78,'' ``Section 1 (``Definitions''): 
[unnumbered],'' ``Section 1 (``Definitions''): Subsection 1.85,'' 
``Section 1 (``Definitions''): Subsection 1.89,'' ``Section 12 
(excluding subsections 12.2.18 and 12.2.20),'' ``Section 16: 
Subsections 16.1-16.9,'' ``Section 58'' and ``Section 59 [excluding 
subsection 59.2 (``Local Offset Requirements'']''.

Sec.  52.1470  Identification of plan.

* * * * *
    (c) * * *

                                 Table 3--EPA-Approved Clark County Regulations
----------------------------------------------------------------------------------------------------------------
                                                      County
       County citation            Title/subject     effective    EPA approval date     Additional explanation
                                                       date
----------------------------------------------------------------------------------------------------------------
Section 0....................  Definitions.......      5/18/10  [Insert Federal     Submitted on 5/22/12.
                                                                 Register page
                                                                 number where the
                                                                 document begins],
                                                                 10/18/12.
 
                                                  * * * * * * *
Section 12.0.................  Applicability,          11/3/09  [Insert Federal     Submitted on 2/11/10.
                                General                          Register page
                                Requirements and                 number where the
                                Transition                       document begins],
                                Procedures.                      10/18/12.
Section 12.1.................  Permit                  11/3/09  [Insert Federal     Submitted on 2/11/10.
                                Requirements for                 Register page
                                Minor Sources.                   number where the
                                                                 document begins],
                                                                 10/18/12.
Section 12.2.................  Permit                   3/6/12  [Insert Federal     5/22/12.
                                Requirements for                 Register page
                                Major Sources in                 number where the
                                Attainment Areas                 document begins],
                                (Prevention of                   10/18/12.
                                Significant
                                Deterioration).

[[Page 64050]]

 
Section 12.3.................  Permit                  5/18/10  [Insert Federal     Submitted on 9/01/10.
                                Requirements for                 Register page
                                Major Sources in                 number where the
                                Nonattainment                    document begins],
                                Areas.                           10/18/12.
Section 12.4.................  Authority to            5/18/10  [Insert Federal     Submitted on 9/01/10.
                                Construct                        Register page
                                Application and                  number where the
                                Permit                           document begins],
                                Requirements For                 10/18/12.
                                Part 70 Sources.
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

* * * * *
[FR Doc. 2012-25545 Filed 10-17-12; 8:45 am]
BILLING CODE 6560-50-P