Document ID: EPA-R06-OAR-2011-0033-0001
Agency: epa
Document Type: Proposed Rule
Title: NM044.01 Approval and Promulgation of Implementation Plans; New Mexico; Revisions to the New Source Review (NSR) State Implementation Plan (SIP); Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR) Permitting
Posted Date: 2012-10-12T04:00Z

[Federal Register Volume 77, Number 198 (Friday, October 12, 2012)]
[Proposed Rules]
[Pages 62200-62209]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-25156]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R06-OAR-2011-0033; FRL-9740-5]

Approval and Promulgation of Implementation Plans; New Mexico; 
Revisions to the New Source Review (NSR) State Implementation Plan 
(SIP); Prevention of Significant Deterioration (PSD) and Nonattainment 
New Source Review (NNSR) Permitting

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to approve revisions to the New Mexico SIP to 
update the New Mexico NNSR and PSD SIP permitting programs consistent 
with federal requirements. EPA proposes to find that these revisions to 
the New Mexico SIP meet the Federal Clean Air Act (the Act or CAA) and 
EPA regulations, and are consistent with EPA policies. New Mexico 
submitted the PSD and NNSR SIP permitting revisions in two SIP 
submittals on June 11, 2009, and May 23, 2011. EPA is proposing this 
action under section 110 and parts C and D of the Act.

DATES: Comments must be received on or before November 13, 2012.

ADDRESSES: Submit your comments, identified by Docket No. EPA-R06-

[[Page 62201]]

OAR-2011-0033, by one of the following methods:
     Federal Rulemaking Portal: http://www.regulations.gov. 
Follow the online instructions for submitting comments.
     U.S. EPA Region 6 ``Contact Us'' Web site: http://epa.gov/region6/r6comment.htm. Please click on ``6PD (Multimedia)'' and select 
``Air'' before submitting comments.
     Email: Ms. Adina Wiley at wiley.adina@epa.gov. Please also 
send a copy by email to the person listed in the FOR FURTHER 
INFORMATION CONTACT section below.
     Fax: Ms. Adina Wiley, Air Permits Section (6PD-R), at fax 
number 214-665-6762.
     Mail: Ms. Adina Wiley, Air Permits Section (6PD-R), 
Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas, 
Texas 75202-2733.
     Hand or Courier Delivery: Ms. Adina Wiley, Air Permits 
Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue, 
Suite 1200, Dallas, Texas 75202-2733. Such deliveries are accepted only 
between the hours of 8 a.m. and 4 p.m. weekdays, and not on legal 
holidays. Special arrangements should be made for deliveries of boxed 
information.
    Instructions: Direct your comments to Docket ID No. EPA-R06-OAR-
2011-0033. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
www.regulations.gov, including any personal information provided, 
unless the comment includes information claimed to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. Do not submit information that you consider to 
be CBI or otherwise protected through www.regulations.gov or email. The 
www.regulations.gov Web site is an ``anonymous access'' system, which 
means EPA will not know your identity or contact information unless you 
provide it in the body of your comment. If you send an email comment 
directly to EPA without going through www.regulations.gov, your email 
address will be automatically captured and included as part of the 
comment that is placed in the public docket and made available on the 
Internet. If you submit an electronic comment, EPA recommends that you 
include your name and other contact information in the body of your 
comment and with any disk or CD-ROM you submit. If EPA cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment. Electronic 
files should avoid the use of special characters, any form of 
encryption, and be free of any defects or viruses. For additional 
information about EPA's public docket visit the EPA Docket Center 
homepage at http://www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the docket are listed in the 
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy. 
Publicly available docket materials are available either electronically 
at www.regulations.gov or in hard copy at the Air Planning Section 
(6PD-L), Environmental Protection Agency, 1445 Ross Avenue, Suite 700, 
Dallas, Texas 75202-2733. The file will be made available by 
appointment for public inspection in the Region 6 FOIA Review Room 
between the hours of 8:30 a.m. and 4:30 p.m. weekdays except for legal 
holidays. Contact the person listed in the FOR FURTHER INFORMATION 
CONTACT paragraph below or Mr. Bill Deese at 214-665-7253 to make an 
appointment. If possible, please make the appointment at least two 
working days in advance of your visit. There will be a fee of 15 cents 
per page for making photocopies of documents. On the day of the visit, 
please check in at the EPA Region 6 reception area at 1445 Ross Avenue, 
Suite 700, Dallas, Texas 75202.
    The State submittal is also available for public inspection during 
official business hours by appointment: New Mexico Environment 
Department, Air Quality Bureau, 1301 Siler Road, Building B, Santa Fe, 
New Mexico 87502.

FOR FURTHER INFORMATION CONTACT: Ms. Adina Wiley, Air Permits Section 
(6PD-R), Environmental Protection Agency, Region 6, 1445 Ross Avenue, 
Suite 700, Dallas, Texas 75202-2733, telephone 214-665-2115; fax number 
214-665-6762; email address wiley.adina@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document, ``we,'' ``us,'' 
and ``our'' means EPA.

Table of Contents

I. Background for Our Proposed Action
II. Analysis of State Submittals
    A. Analysis of Submitted Revisions to the New Mexico Prevention 
of Significant Deterioration Permitting SIP Program
    1. NSR PM2.5 Rule
    a. What are the requirements of the NSR PM2.5 Rule 
for PSD SIP Programs?
    b. How does the May 23, 2011 New Mexico PSD submittal satisfy 
the NSR PM2.5 Rule?
    i. ``Condensables'' Provision
    2. PM2.5 PSD Increment--SILs--SMC Rule
    a. What are the requirements of the PM2.5 PSD 
Increment--SILs--SMC Rule for PSD SIP Programs?
    i. What are PSD Increments?
    ii. What are PSD SILs and SMC?
    (a) Significant Impact Levels (SILs)
    (b) Significant Monitoring Concentration (SMC)
    (c) SILs--SMC Litigation
    b. How does the May 23, 2011 New Mexico PSD submittal satisfy 
the PM2.5 PSD Increment--SILs--SMC Rule?
    3. Reasonable Possibility in Recordkeeping Rule
    a. What are the requirements of the Reasonable Possibility in 
Recordkeeping Rule for PSD SIP Programs?
    b. How does the May 23, 2011 New Mexico PSD submittal satisfy 
the Reasonable Possibility in Recordkeeping Rule?
    B. Analysis of Submitted Revisions to the New Mexico 
Nonattainment New Source Review Permitting SIP Program
    1. Phase 2 8-Hour Ozone Implementation Rule
    a. What are the requirements of the Phase 2 8-Hour Ozone 
Implementation Rule for NNSR SIP Programs?
    b. How does the June 11, 2009 New Mexico NNSR submittal satisfy 
the Phase 2 8-Hour Ozone Implementation Rule?
    2. NSR PM2.5 Rule
    a. What are the requirements of the NSR PM2.5 Rule 
for NNSR SIP Programs?
    b. How does the May 23, 2011 New Mexico NNSR submittal satisfy 
the NSR PM2.5 Rule?
    3. PM2.5 PSD Increment--SILs--SMC Rule
    a. What are the requirements of the PM2.5 PSD 
Increment--SILs--SMC Rule for NNSR SIP Programs?
    b. How does the May 23, 2011 New Mexico NNSR submittal satisfy 
the PM2.5 PSD Increment--SILs--SMC Rule?
    4. Reasonable Possibility in Recordkeeping Rule
    a. What are the requirements of the Reasonable Possibility in 
Recordkeeping Rule for NNSR SIP Programs?
    b. How does the May 23, 2011 New Mexico NNSR submittal satisfy 
the Reasonable Possibility in Recordkeeping Rule?
III. Proposed Action
IV. Statutory and Executive Order Reviews

I. Background for Our Proposed Action

    The Act at section 110(a)(2)(C) requires states to develop and 
submit to EPA for approval into the state SIP, preconstruction review 
and permitting programs applicable to certain new and modified 
stationary sources of air pollutants for attainment and nonattainment 
areas that cover both major and minor new sources and modifications, 
collectively referred to as the New Source Review (NSR) SIP. The CAA 
NSR SIP program is composed of three separate programs: PSD, NNSR, and 
Minor NSR. PSD is established in part C of title I of the CAA and 
applies in areas that meet the NAAQS--

[[Page 62202]]

``attainment areas''--as well as areas where there is insufficient 
information to determine if the area meets the NAAQS--``unclassifiable 
areas.'' The NNSR SIP program is established in part D of title I of 
the CAA and applies in areas that are not in attainment of the NAAQS--
``nonattainment areas.'' The Minor NSR SIP program addresses 
construction or modification activities that do not emit, or have the 
potential to emit, beyond certain thresholds and thus do not qualify as 
``major'' and applies regardless of the designation of the area in 
which a source is located. Together, these programs are referred to as 
the NSR program. EPA regulations governing the criteria that states 
must satisfy for EPA approval of the NSR programs as part of the SIP 
are contained in 40 CFR 51.160-51.166; 52.21, 52.24; and part 51, 
Appendix S.
    New Mexico submitted on June 11, 2009, and May 23, 2011, a 
collection of regulations for approval by EPA into the New Mexico SIP 
for PSD and NNSR permitting regulations. New Mexico adopted these 
regulations and submitted them for SIP approval to ensure consistency 
with the federal PSD and NNSR permitting requirements associated with 
two recently promulgated NAAQS for 8-hour ozone and PM2.5. 
Specifically, the June 11, 2009, and May 23, 2011, New Mexico SIP 
submittals address PSD and NNSR permitting requirements promulgated in 
EPA's Phase 2 8-hour Ozone Implementation Rule (70 FR 71612, November 
29, 2005), NSR PM2.5 Rule (73 FR 28321, May 16, 2008), 
PM2.5 PSD Increment--Significant Impact Levels (SILs)--
Significant Monitoring Concentration (SMC) Rule (75 FR 64864, October 
20, 2010) and Reasonable Possibility in Recordkeeping Rule (72 FR 
72607, December 21, 2007). Today's proposed action and the accompanying 
TSD present our rationale for proposing approval of these regulations 
as meeting the minimum federal requirements for the adoption and 
implementation of the PSD and NNSR SIP permitting programs. Because the 
PSD and NNSR SIP permitting programs are two separate, distinct 
programs under Title I of the Act, this proposed action and the 
accompanying TSD will present a review of the submitted New Mexico 
rules first for consistency with PSD SIP requirements, followed by the 
NNSR SIP requirements as applicable.

II. Analysis of State Submittals

June 11, 2009 Submittal

    In a letter dated June 11, 2009, Governor Richardson submitted 
revisions to the New Mexico SIP that were adopted by the New Mexico 
Environmental Improvement Board (NM EIB) on July 31, 2009, and became 
effective on August 31, 2009. This SIP submittal included revisions to 
the following Parts of the New Mexico Air Code (NMAC):
     Revisions to the General Definitions at 20.2.2 NMAC,
     Revisions to the New Mexico PSD Permitting Program at 
20.2.74 NMAC, and
     Revisions to the New Mexico NNSR Permitting Program at 
20.2.79 NMAC.
    Note that EPA SIP-approved the June 11, 2009 revisions to the PSD 
program at 20.2.74 NMAC on November 26, 2010 (75 FR 72688), effective 
December 27, 2010. The rulemaking docket for this action is EPA-R06-
OAR-2009-0656. EPA has taken no action to date on the June 11, 2009 
submitted revisions to 20.2.2 NMAC or 20.2.79 NMAC.
    This review will not cover the revisions to the General Definitions 
for the New Mexico SIP at 20.2.2 NMAC, submitted on June 11, 2009. 
These provisions are severable from our review of the PSD and NNSR 
program submittals because each permitting program contains program-
specific definitions used in place of the General Definitions. The 
program-specific definitions for the PSD and NNSR programs are SIP-
approved at 20.2.74.7 and 20.2.79.7 NMAC, respectively. The revisions 
to 20.2.2 NMAC submitted on June 11, 2009, remain before EPA for review 
and will be addressed in a separate action.

May 23, 2011 Submittal

    In a letter dated May 23, 2011, Governor Martinez submitted 
revisions to the New Mexico SIP that were adopted by the NM EIB on May 
3, 2011, and became effective on June 3, 2011. This SIP submittal 
included revisions to the following Parts of the New Mexico Air Code:
     Revisions to the New Mexico PSD Permitting Program at 
20.2.74 NMAC, and
     Revisions to the New Mexico NNSR Permitting Program at 
20.2.79 NMAC.

A. Analysis of Submitted Revisions to the New Mexico Prevention of 
Significant Deterioration Permitting SIP Program

    EPA's most recent approval to the New Mexico PSD SIP program was on 
July 20, 2011, at 20.2.74 NMAC, where we updated our approval of the NM 
PSD SIP to include the revisions adopted by the State on January 1, 
2011, for the permitting of greenhouse gas emissions consistent with 
EPA's Greenhouse Gas Tailoring Rule. See 76 FR 43149. Since that time, 
the State of New Mexico has adopted and submitted for EPA approval one 
revision to the PSD program on May 23, 2011, affecting the following 
sections:
     20.2.74.7 NMAC--Definitions,
     20.2.74.300 NMAC--Obligations of Owners or Operators of 
Sources,
     20.2.74.303 NMAC--Ambient Impact Requirements,
     20.2.74.306 NMAC--Monitoring Requirements,
     20.2.74.403 NMAC--Additional Requirements for Sources 
Impacting Class I Federal Areas,
     20.2.74.502 NMAC--Significant Emission Rates,
     20.2.74.503 NMAC--Significant Monitoring Concentrations,
     20.2.74.504 NMAC--Allowable PSD Increment, and
     20.2.74.505 NMAC--Maximum Allowable Increases for Class I 
Waivers.
    This revision has been submitted to adopt and implement the 
requirements for PM2.5 PSD SIPs in accordance with EPA's May 
16, 2008 and October 20, 2010 final NSR PM2.5 Rule and 
PM2.5 PSD Increments--SILs--SMC Rule and the December 21, 
2007 Reasonable Possibility in Recordkeeping Rule. The TSD for this 
rulemaking includes a detailed analysis of the submitted revision and 
demonstration of how the submittal addresses the federal requirements. 
The following is a summary of how EPA proposes to find that the May 23, 
2011 submitted revisions to the New Mexico PSD SIP meet the 
requirements of the specified final rules.
1. NSR PM2.5 Rule
a. What are the requirements of the NSR PM2.5 Rule for PSD 
SIP Programs?
    On May 16, 2008, EPA finalized the NSR PM2.5 Rule to 
implement the PM2.5 NAAQS. See 73 FR 28321. As a result of 
EPA's final NSR PM2.5 Rule, states were required to submit 
applicable SIP revisions to EPA no later than May 16, 2011, to address 
this Rule's PSD and NNSR SIP requirements. With respect to PSD 
permitting, the SIP revision submittals are required to meet the 
following PSD SIP requirements to implement the PM2.5 NAAQS: 
(1) Require PSD permits to address directly emitted PM2.5 
and precursor pollutants; (2) establish significant emission rates for 
direct PM2.5 and precursor pollutants (including sulfur 
dioxide (SO2) and NOX); and (3) account for gases 
that condense to form particles (condensables) in PM2.5 and 
PM10 emission limits in PSD permits.

[[Page 62203]]

b. How does the May 23, 2011 New Mexico PSD submittal satisfy the NSR 
PM2.5 Rule?
    New Mexico's May 23, 2011, SIP revision submittal establishes that 
the State's existing NSR permitting program requirements for PSD apply 
to the PM2.5 NAAQS and its precursors. Specifically, the SIP 
revision submittal adopts and submits for EPA approval the following 
NSR PM2.5 Rule PSD provisions: (1) the requirement for NSR 
permits to address directly emitted PM2.5 and precursor 
pollutants; (2) significant emission rates for direct PM2.5 
and precursor pollutants (SO2 and NOX) and (3) 
the requirement that condensable PM be addressed in enforceable PM, 
PM10 and PM2.5 emission limits included in PSD 
permits. EPA proposes to find that New Mexico's May 23, 2011 SIP 
revision submittal meets the NSR PM2.5 Rule for PSD and 
section 110 and part C of the CAA.
i. ``Condensables'' Provision
    In the NSR PM2.5 Rule, EPA revised the definition of 
``regulated NSR pollutant'' for PSD SIP purposes to add a paragraph 
providing that ``particulate matter (PM) emissions, PM2.5 
emissions and PM10 emissions'' shall include gaseous 
emissions from a source or activity which condense to form particulate 
matter at ambient temperatures and that on or after January 1, 2011, 
such condensable particulate matter shall be accounted for in 
applicability determinations and in establishing emissions limitations 
for PM, PM2.5 and PM10 in permits. See 40 CFR 
51.166(b)(49)(vi), 52.21(b)(50)(vi) and ``Emissions Offset 
Interpretative Ruling'' (40 CFR part 51, Appendix S). A similar 
paragraph was added to the NNSR SIP provisions of the NSR 
PM2.5 Rule but does not include ``particulate matter (PM) 
emissions.'' See 40 CFR 51.165(a)(1)(xxxvii)(D).
    On March 16, 2012, EPA proposed a rulemaking to amend the 
definition of ``regulated NSR pollutant'' promulgated in the NSR 
PM2.5 Rule regarding the PM condensable provision at 40 CFR 
51.166(b)(49)(vi), 52.21(b)(50)(i), and EPA's Emissions Offset 
Interpretative Ruling.\1\ See 77 FR 15656. The rulemaking proposes to 
remove the inadvertent requirement in the NSR PM2.5 Rule 
that the measurement of condensable ``particulate matter emissions'' be 
included as part of the measurement and regulation of ``particulate 
matter emissions.'' The term ``particulate matter emissions'' includes 
particles that are larger than PM2.5 and PM10 and 
is an indicator measured under various New Source Performance Standards 
(NSPS) (40 CFR part 60).\2\
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    \1\ The comment period for this proposed rulemaking ended May 
15, 2012.
    \2\ In addition to the NSPS for PM, it is noted that states 
regulated ``particulate matter emissions'' for many years in their 
SIPs for PM, and the same indicator has been used as a surrogate for 
determining compliance with certain standards contained in 40 CFR 
part 63, regarding National Emission Standards for Hazardous Air 
Pollutants.
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    New Mexico's May 23, 2011 SIP submittal revision includes EPA's 
definition for regulated NSR pollutant for condensables (at 40 CFR 
51.166(b)(49)(vi)), including the term ``particulate matter 
emissions,'' as inadvertently promulgated in the NSR PM2.5 
Rule. EPA is, however, proposing to approve into the New Mexico SIP 
20.2.74.7(AS)(6) NMAC, the requirement that condensable PM be accounted 
for in applicability determinations and in establishing emissions 
limitations for PM2.5 and PM10. Upon final 
approval of this proposal, New Mexico's condensable provision will be 
consistent with the federal rule until EPA finalizes its March 16, 
2012, rulemaking. Once EPA finalizes the March 16, 2012 rulemaking, the 
NMED can choose to initiate further rulemaking to ensure consistency 
with federal requirements.
2. PM2.5 PSD Increment--SILs--SMC Rule
a. What are the requirements of the PM2.5 PSD Increment--
SILs--SMC Rule for PSD SIP Programs?
    EPA finalized the PM2.5 PSD Increment--SILs--SMC Rule to 
provide additional regulatory requirements under the PSD SIP program 
regarding the implementation of the PM2.5 NAAQS for NSR. See 
75 FR 64864. As a result, the PM2.5 PSD Increment--SILs--SMC 
Rule required states to submit SIP revisions to adopt the required PSD 
increments by July 20, 2012. Specifically, the SIP rule requires a 
state's submitted PSD SIP revision to adopt and submit for EPA approval 
the PM2.5 increments pursuant to section 166(a) of the CAA 
to prevent significant deterioration of air quality in areas meeting 
the NAAQS. States could also discretionarily choose to adopt and submit 
for EPA approval SILs used as a screening tool (by a major source 
subject to PSD) to evaluate the impact a proposed major source or 
modification may have on the NAAQS or PSD increment and a SMC, (also a 
screening tool) used by a major source subject to PSD to determine the 
subsequent level of data gathering required for a PSD permit 
application for emissions of PM2.5. More detail on the 
PM2.5 PSD Increment--SILs--SMC Rule can be found in EPA's 
October 20, 2010 final rule. See 75 FR 64864.
i. What are PSD Increments?
    Under section 165(a)(3) of the CAA, a PSD permit applicant must 
demonstrate that emissions from the proposed construction and operation 
of a facility ``will not cause, or contribute to, air pollution in 
excess of any maximum allowable increase or allowable concentration for 
any pollutant.'' In other words, when a source applies for a PSD SIP 
permit to emit a regulated pollutant in an attainment or unclassifiable 
area, the permitting authority implementing the PSD SIP must determine 
if emissions of the regulated pollutant from the source will cause 
significant deterioration in air quality. Significant deterioration 
occurs when the amount of the new pollution exceeds the applicable PSD 
increment, which is the ``maximum allowable increase'' of an air 
pollutant allowed to occur above the applicable baseline concentration 
\3\ for that pollutant. PSD increments prevent air quality in 
attainment and unclassifiable areas from deteriorating to the level set 
by the NAAQS. Therefore an increment is the mechanism used to estimate 
``significant deterioration'' of air quality for a pollutant in an 
area.
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    \3\ Section 169(4) of the CAA provides that the baseline 
concentration of a pollutant for a particular baseline area is 
generally the same air quality at the time of the first application 
for a PSD permit in the area.
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    For PSD baseline purposes, a baseline area for a particular 
pollutant emitted from a source includes the attainment or 
unclassifiable/attainment area in which the source is located as well 
as any other attainment or unclassifiable/attainment area in which the 
source's emissions of that pollutant are projected (by air quality 
modeling) to result in an ambient pollutant increase of at least 1 
[mu]g/m\3\ (annual average). See 40 CFR 51.166(b)(15)(i) and (ii). 
Under EPA's existing regulations, the establishment of a baseline area 
for any PSD increment results from the submission of the first complete 
PSD permit application and is based on the location of the proposed 
source and its emissions impact on the area. Once the baseline area is 
established, subsequent PSD sources locating in that area need to 
consider that a portion of the available increment may have already 
been consumed by previous emissions increases. In general, the 
submittal date of the first complete PSD permit application in a 
particular area is the operative ``baseline

[[Page 62204]]

date.'' \4\ On or before the date of the first complete PSD 
application, emissions generally are considered to be part of the 
baseline concentration, except for certain emissions from major 
stationary sources. Most emissions increases that occur after the 
baseline date will be counted toward the amount of increment consumed. 
Similarly, emissions decreases after the baseline date restore or 
expand the amount of increment that is available. See 75 FR 64864. As 
described in the PM2.5 PSD Increment--SILs--SMC Rule, 
pursuant to the authority under section 166(a) of the CAA EPA 
promulgated numerical increments for PM2.5 as a new 
pollutant \5\ for which the NAAQS were established after August 7, 
1977,\6\ and derived 24-hour and annual PM2.5 increments for 
the three area classifications (Class I, II and III) using the 
``contingent safe harbor'' approach. See 75 FR 64864 at 64869 and table 
at 40 CFR 51.166(c)(1).
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    \4\ Baseline dates are pollutant specific. That is, a complete 
PSD application establishes the baseline date only for those 
regulated NSR pollutants that are projected to be emitted in 
significant amounts (as defined in the regulations) by the 
applicant's new source or modification. Thus, an area may have 
different baseline dates for different pollutants.
    \5\ EPA generally characterized the PM2.5 NAAQS as a 
NAAQS for a new indicator of PM. EPA did not replace the 
PM10 NAAQs with the NAAQS for PM2.5 when the 
PM2.5 NAAQS were promulgated in 1997. EPA rather retained 
the annual and 24-hour NAAQS for PM10 as if 
PM2.5 was a new pollutant even though EPA had already 
developed air quality criteria for PM generally. See 75 FR 64864 
(October 20, 2010).
    \6\ EPA interprets 166(a) to authorize EPA to promulgate 
pollutant-specific PSD regulations meeting the requirements of 
section 166(c) and 166(d) for any pollutant for which EPA 
promulgates a NAAQS after 1977.
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    In addition to PSD increments for the PM2.5 NAAQS, the 
PM2.5 PSD Increment--SILs--SMC Rule amended the definition 
at 40 CFR 51.166 and 52.21 for ``major source baseline date'' and 
``minor source baseline date'' to establish the PM2.5 NAAQS 
specific dates (including trigger dates) associated with the 
implementation of PM2.5 PSD increments. See 75 FR 64864. In 
accordance with section 166(b) of the CAA, EPA required the states to 
submit revised implementation plans adopting the PM2.5 PSD 
increments to EPA for approval within 21 months from promulgation of 
the final rule (by July 20, 2012). Each state was responsible for 
determining how increment consumption and the setting of the minor 
source baseline date for PM2.5 would occur under its own PSD 
program. Regardless of when a state begins to require PM2.5 
increment analysis and how it chooses to set the PM2.5 minor 
source baseline date, the emissions from sources subject to PSD for 
PM2.5 for which construction commenced after October 20, 
2010, (major source baseline date) consume the PM2.5 
increment and therefore should be included in the increment analyses 
occurring after the minor source baseline date is established for an 
area under the state's revised PSD SIP program. New Mexico's May 23, 
2011, submitted SIP revision adopts the PM2.5 increment 
permitting requirements promulgated in the PM2.5 PSD 
Increment--SILs--SMC Rule.
ii. What are PSD SILs and SMC?
    EPA's PM2.5 PSD Increment--SILs--SMC Rule also 
established SILs and SMC for the PM2.5 NAAQS to address air 
quality modeling and monitoring provisions for fine particle pollution 
in areas protected by the PSD program. The SILs and SMC are numerical 
values that represent thresholds of insignificant, i.e., de minimis, 
modeled source impacts or monitored (ambient) concentrations, 
respectively. The de minimis principle is grounded in a decision 
described by the court case Alabama Power Co. v. Costle, 636 F.2d 323, 
360 (D.C. Cir. 1980). In this case reviewing EPA's 1978 PSD 
regulations, the court recognized that ``there is likely a basis for an 
implication of de minimis authority to provide exemption when the 
burdens of regulation yield a gain of trivial or no value.'' 636 F.2d 
at 360. EPA established such values for PM2.5 in the 
PM2.5 PSD Increment--SILs--SMC rule to be used as screening 
tools by a major source subject to PSD to determine the subsequent 
level of analysis and data gathering required for a PSD permit 
application for emissions of PM2.5. See 75 FR 64864. As part 
of the response to comments in the PM2.5 PSD Increment--
SILs--SMC Rule final rulemaking, EPA explained that the agency 
considers that the SILs and SMC used as de minimis thresholds for the 
various pollutants are useful tools that enable permitting authorities 
and PSD applicants to screen out ``insignificant'' activities; however, 
the fact remains that these values are not required by the Act as part 
of an approvable SIP program. EPA believes that most states are likely 
to discretionarily adopt the SILs and SMC because of the useful purpose 
they serve regardless of our position that the values are not mandatory 
as a part of the PSD SIP. Alternatively, states may develop and submit 
more stringent values for EPA approval into the SIP if they desire to 
do so or not develop SILs/SMC altogether. In any case, states are not 
under any statutory SIP-related deadline for revising their PSD 
programs to add these screening tools. See 75 FR 64864, 64900.
(a) Significant Impact Levels (SILs)
    SILs are numeric values derived by EPA that may be used to evaluate 
the impact a proposed major source or modification may have on the 
NAAQS or PSD increment. The primary purpose of the SILs is to identify 
a level of ambient impact that is sufficiently low relative to the 
NAAQS or increments that such impact can be considered insignificant or 
de minimis. Although EPA has not previously incorporated every 
application of the SILs into the PSD regulations, EPA historically 
since 1980 has supported the use of the SILs as de minimis thresholds 
to determine whether the predicted ambient impact resulting from the 
emissions increase at a proposed major new stationary source or 
modification is considered to cause or contribute to a violation of the 
NAAQS. Numerous EPA statements and practices have also recognized the 
use of SILs under the PSD program to determine: (1) When a proposed 
source's ambient impacts warrants a comprehensive (cumulative) source 
impact analysis \7\ and; (2) the size of the impact area within which 
the air quality analysis is completed. See 75 FR 64864.
---------------------------------------------------------------------------

    \7\ A cumulative analysis is a modeling analysis used to show 
that the allowable emissions increase from the proposed source along 
with other emission increases from existing sources, will not result 
in a violation of either the NAAQS or increment.
---------------------------------------------------------------------------

    In the PM2.5 PSD Increment--SILs--SMC Rule, EPA 
established the SILs threshold which reflects the degree of ambient 
impact on PM2.5 concentrations that can be considered de 
minimis and would justify no further analysis or modeling of the air 
quality impact of a source in combination with other sources in the 
area because the source would not cause or contribute to an exceedance 
of the PM2.5 NAAQS or the PM2.5 increments. See 
75 FR 64864. The PM2.5 PSD Increment--SILs--SMC Rule 
established SILs to evaluate the impact that a proposed new source or 
modification may have on the PM2.5 NAAQS or increment. When 
a proposed major new source or major modification of PM2.5 
projects, through air quality modeling, an impact less than the 
PM2.5 SILs, the proposed construction or modification is 
considered to not have a significant air quality impact and would not 
need to complete a cumulative impact analysis involving an analysis of 
other sources in the area. Additionally, a source with a de minimis 
ambient impact would not be considered to cause or contribute to a 
violation of the PM2.5 NAAQS or increments.
    The PM2.5 PSD Increment--SILs--SMC Rule established the 
PM2.5 SILs at

[[Page 62205]]

EPA's existing NNSR SIP regulations at 40 CFR 51.165(b) and the PSD SIP 
regulations at 40 CFR 51.166(k)(2), 52.21(k)(2) and part 51, Appendix S 
as optional screening tools. Prior to the PM2.5 PSD 
Increment--SILs--SMC Rule, the concept of a SIL was not previously 
incorporated into the PSD SIP regulations but was present in the NNSR 
SIP regulations. The regulations in 40 CFR 51.165(b) \8\ establish the 
minimum requirements for NNSR programs in SIPs but apply specifically 
to major stationary sources and major modifications located in 
attainment or unclassifiable/attainment areas. Where a PSD source 
located in such areas may have an impact on an adjacent nonattainment 
area, the PSD source must still demonstrate that it will not cause or 
contribute to a violation of the NAAQS in the adjacent nonattainment 
area. Where emissions from a proposed PSD source or modification would 
have an ambient impact in a nonattainment area that would exceed the 
SILs, the source is considered to cause or contribute to a violation of 
the NAAQS and may not be issued a PSD permit without obtaining 
emissions reductions to compensate for its impact. See 40 CFR 
51.165(b)(2)-(3). New Mexico's May 23, 2011 SIP submittal addresses the 
PM2.5 SILS thresholds and provisions promulgated in the 
PM2.5 PSD Increment--SILs--SMC Rule at 40 CFR 51.165(b)(2) 
and 51.166(k)(2).
---------------------------------------------------------------------------

    \8\ 40 CFR 51.165(b) require states to adopt and submit for 
approval by EPA as a SIP revision, a preconstruction review permit 
program for major stationary sources and major modifications that 
wish to locate in an attainment or unclassifiable area but would 
cause or contribute to a violation of the NAAQS.
---------------------------------------------------------------------------

(b) Significant Monitoring Concentration (SMC)
    Under the CAA and EPA SIP regulations, an applicant for a PSD 
permit is required to gather preconstruction monitoring data in certain 
circumstances. Section 165(a)(7) of the Act calls for ``such monitoring 
as may be necessary to determine the effect which emissions from any 
such facility may have, or is having, on air quality in any areas which 
may be affected by emissions from such source.'' In addition, section 
165(e) requires an analysis of the air quality in areas affected by a 
proposed major facility or major modification and calls for gathering 
one year of monitoring data unless the reviewing authority determines 
that a complete and adequate analysis may be accomplished in a shorter 
period. These requirements are codified in EPA's PSD SIP regulations at 
40 CFR 51.166(m) and PSD Federal Implementation Plan regulations at 40 
CFR 52.21(m). In accordance with EPA's Guideline for Air Quality 
Modeling (40 CFR part 51, Appendix W), the preconstruction monitoring 
data is primarily used to determine background concentrations in 
modeling conducted to demonstrate that the proposed source or 
modification will not cause or contribute to a violation of the NAAQS. 
SMC are numerical values that represent thresholds of insignificant, 
i.e., de minimis, monitored (ambient) impacts on pollutant 
concentrations. In EPA's PM2.5 PSD Increment--SILs--SMC 
Rule, EPA established a SMC of 4 [micro]g/m\3\ for PM2.5 to 
be used as a screening tool by a major source subject to PSD to 
determine the subsequent level of data gathering required for a PSD 
permit application for emissions of PM2.5.
    Using the SMC as a screening tool, sources may be able to 
demonstrate that the modeled air quality impact of emissions from the 
new source or modification, or the existing air quality level in the 
area where the source would construct, is less than the SMC, i.e., de 
minimis, and may be allowed to forego the preconstruction monitoring 
requirement for a particular pollutant at the discretion of the 
reviewing authority. See 75 FR 64864, 40 CFR 51.166(i)(5) and 
52.21(i)(5). As mentioned above, SMCs are not minimum required elements 
of an approvable SIP under the CAA. This de minimis value is widely 
considered to be a useful component for implementing the PSD program, 
but is not statutorily required for EPA approval of a state's PSD SIP 
revision submittal. States can satisfy the statutory requirements for 
an approvable PSD SIP program by requiring each PSD applicant to submit 
air quality monitoring data for PM2.5 without using de 
minimis thresholds to exempt certain sources from such requirements. 
States with EPA-approved PSD SIP programs that adopt and submit for EPA 
approval the SMC for PM2.5 may use the SMC, once it is part 
of an approved SIP, to determine when it may be appropriate to exempt a 
particular major stationary source or major modification from the 
monitoring requirements under its PSD SIP program. New Mexico's May 23, 
2011 submitted SIP revision adopts the SMC threshold.
(c) SILs-SMC Litigation
    EPA's authority to promulgate the SILs and SMC for PSD purposes has 
been challenged by the Sierra Club. See Sierra Club v. EPA, Case No. 
10-1413 (D.C. Circuit Court).\9\ Specifically, Sierra Club claims that 
the SILs and SMC screening tools adopted in the October 20, 2010, rule 
are inconsistent with the CAA and EPA's de minimis authority.\10\ EPA 
responded to Sierra Club's claims in a Brief dated April 6, 2012, which 
described the Agency's authority to develop and promulgate SILs and 
SMC.\11\ A copy of EPA's April 6, 2012 Brief can be found in the docket 
for today's proposed action.
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    \9\ On April 6, 2012, EPA filed a brief with the D.C. Circuit 
court defending the Agency's authority to promulgate SILs and SMC 
for PSD purposes.
    \10\ EPA interprets section 165(a)(3) of the CAA to allow the 
use of significance levels as a means to demonstrate that a source 
will not cause or contribute to any violation of the NAAQS or 
increments. The terms ``cause or contribute to'' and ``demonstrate'' 
are ambiguous and EPA reasonably interprets the statue to allow 
sources that do not contribute significantly to ambient air 
concentrations of PM2.5 to demonstrate compliance through 
modeling of the source's impact measured against the SILs.
    \11\ Additional information on this issue can also be found in 
an April 25, 2010, comment letter from EPA Region 6 to the Louisiana 
Department of Environmental Quality regarding the SILs-SMC 
litigation. A copy of this letter can be found in the docket for 
today's rulemaking at www.regulations.gov using docket ID: EPA-R06-
OAR-2011-0033.
---------------------------------------------------------------------------

b. How does the May 23, 2011 New Mexico PSD submittal satisfy the 
PM2.5 Increment--SILs--SMC Rule?
    New Mexico's May 23, 2011 SIP revision submittal adopts the 
following PSD provisions in the PM2.5 PSD Increment--SILs--
SMC Rule: (1) PSD increments for PM2.5 annual and 24-hour 
NAAQS pursuant to section 166(a) of the CAA; (2) SILs to be used as a 
screening tool to evaluate the impact a proposed major source or 
modification may have on the NAAQS or PSD increment; and (3) SMC, also 
used as a screening tool, to determine the level of data gathering 
required of a major source in support of its PSD permit application for 
PM2.5 emissions.
    Specifically, regarding the PSD increments, the submitted SIP 
revision changes include: 1) the PM2.5 increments as 
promulgated in at 40 CFR 51.166(c)(1) and (p)(4) (for Class I 
Variances) and 2) amendments to the terms ``major source baseline 
date'' (at 40 CFR 51.166(b)(14)(i)(c)) and 52.21(b)(14)(i)(c)), ``minor 
source baseline date''(including establishment of the ``trigger date'') 
and ``baseline area'' (as amended at 40 CFR 51.166(b)(15)(i) and (ii) 
and 52.21(b)(15)(i)). These changes provide for the implementation of 
the PM2.5 PSD increments for the PM2.5 NAAQS in 
the state's PSD program. In today's action, EPA is proposing to approve 
New Mexico's May 23, 2011 submitted SIP

[[Page 62206]]

revision provisions to address the PM2.5 PSD increment 
provisions promulgated in the PM2.5 PSD Increments SILs-SMC 
Rule.
    Regarding the SILs and SMC established in the PM2.5 PSD 
Increment--SILs--SMC Rule, the Sierra Club has challenged EPA's 
authority to promulgate SILs and SMC. In a brief filed in the D.C. 
Circuit on April 6, 2012, EPA described the Agency's authority under 
the CAA to promulgate and implement the SMC and SILs de minimis 
thresholds. With respect to the SMC, New Mexico's SIP revision 
submittal includes the SMC of 4 [mu]g/m\3\ for PM2.5 NAAQS 
at rule 20.2.74.503 NMAC that was added to the existing monitoring SIP 
exemption at 40 CFR 51.166(i)(5)(i)(c). EPA is proposing to approve the 
PM2.5 SMC into the New Mexico PSD SIP as EPA believes the 
use of the SMC is a valid exercise of the Agency's de minimis 
authority. Furthermore, New Mexico's May 23, 2011 submitted SIP 
revision is consistent with EPA's current promulgated provisions in the 
PM2.5 PSD Increment--SILs--SMC Rule. However, EPA notes that 
future court action may require the adoption and submittal of 
subsequent rule revisions and SIP revisions from New Mexico.
    New Mexico's SIP revision submittal, adopting the new PSD SIP 
requirements for PM2.5 pursuant to the PM2.5 PSD 
Increment--SILs--SMC Rule also includes new regulatory text matching 
that at 40 CFR 51.166(k)(2), concerning the implementation of SILs for 
PM2.5. EPA stated in the preamble to the PM2.5 
PSD Increment--SILs--SMC Rule that we do not consider the SILs to be a 
mandatory SIP element, but regard them as discretionary on the part of 
regulating authority for use in the PSD SIP permitting process. 
Nevertheless, as mentioned previously, the PM2.5 SILs are 
currently the subject of litigation before the U.S. Court of Appeals. 
(Sierra Club v. EPA, Case No 10-1413, D.C. Circuit). In response to 
that litigation, EPA has requested that the court remand and vacate the 
regulatory text in the EPA's PSD regulations at paragraph (k)(2) so 
that EPA can make necessary rulemaking revisions to that text. In light 
of EPA's request for remand and vacatur and the agency's 
acknowledgement of the need to revise the regulatory text presently 
contained at paragraph (k)(2) of sections 40 CFR 51.166 and 52.21, EPA 
does not believe that it is appropriate at this time to act upon that 
portion of the State's SIP revision submittal that contains the 
affected regulatory text in the New Mexico PSD regulations, at 
20.2.74.303(A) NMAC. Instead, EPA is severing and taking no action at 
this time with regard to these specific provisions contained in the 
submitted SIP revision. By severing, we mean that the submitted 
portions of the SIP revision that address New Mexico's NSR permitting 
program we are proposing action on in this notice can be implemented 
independently of the portions of the submittal relating to SILs. EPA 
anticipates taking action on the PM2.5 SILs portion of New 
Mexico's May 23, 2011 PSD SIP revision in a separate rulemaking once 
the court case regarding the SILs issue has been resolved.
    The aforementioned proposed amendments to New Mexico's SIP provide 
the framework for implementation of PM2.5 NAAQS in the 
state's PSD permitting. Based on review and consideration of New 
Mexico's May 23, 2011 SIP revision submittal, EPA is finding that the 
New Mexico SIP revision submittals meet the aforementioned PSD 
permitting provisions promulgated in the NSR PM2.5 Rule and 
PM2.5 PSD Increment--SILs--SMC Rule. Consequently, EPA has 
made the preliminary determination to approve the SIP revisions 
submittals into the New Mexico SIP to implement the PSD NSR program for 
the PM2.5 NAAQS.
3. Reasonable Possibility in Recordkeeping Rule
a. What are the requirements of the Reasonable Possibility in 
Recordkeeping Rule for PSD SIP Programs?
    EPA finalized the Reasonable Possibility in Recordkeeping Rule for 
PSD and NNSR SIPs on December 21, 2007. See 72 FR 72607. As a result, 
SIP revisions meeting the rule were due to EPA on December 21, 2010. 
The final rule clarifies the ``reasonable possibility'' standard 
promulgated as part of EPA's 2002 NSR Reform rule. The ``reasonable 
possibility'' standard identifies for sources and reviewing authorities 
the criteria under which an owner or operator of a major stationary 
source undergoing a physical change or change in the method of 
operation that does not trigger major NSR permitting requirements must 
keep records. The standard also specifies the recordkeeping and 
reporting requirements on such sources. This final rule is in response 
to the decision by the U.S. Court of Appeals for the D.C. Circuit in 
New York v. EPA, 413 F.3d 3 (D.C. Cir. 2005) in which the ``reasonable 
possibility'' standard was remanded for further clarification.
b. How does the May 23, 2011 New Mexico PSD submittal satisfy the 
reasonable possibility in recordkeeping rule?
    New Mexico's May 23, 2011 SIP revision submittal adopts new 
provisions at 20.2.74.300(E) and (E)(6) NMAC to implement the 
clarifications to the ``reasonable possibility'' standard promulgated 
by EPA on December 21, 2007. The revisions submitted by New Mexico are 
consistent with federal PSD SIP requirements at 40 CFR 51.166(r)(6), 
(r)(6)(vi)(a) and (b). See 72 FR 72607, 72616. EPA therefore proposes 
full approval of these submitted new provisions.

B. Analysis of Submitted Revisions to the New Mexico Nonattainment New 
Source Review Permitting SIP Program

    EPA's most recent approval of the New Mexico NNSR SIP program was 
on September 5, 2007, where we updated our approval of the NM NNSR SIP 
program to include the revisions to address NSR Reform as adopted by 
the State on December 6, 2005. See 72 FR 50879. Since that time, the 
State of New Mexico has adopted and submitted revisions on June 11, 
2009, and May 23, 2011, to the NNSR SIP program, affecting the 
following sections:
     20.2.79.7 NMAC--Definitions (both June 11, 2009 and May 
23, 2011)
     20.2.79.109 NMAC--Applicability (both June 11, 2009 and 
May 23, 2011)
     20.2.79.115 NMAC--Emission Offsets (June 11, 2009)
     20.2.79.119 NMAC--Tables, Significant Ambient 
Concentrations (May 23, 2011)
    These revisions have been submitted for approval by EPA to the NNSR 
SIP to adopt and implement the requirements in the November 29, 2005 
Phase 2 8-hour Ozone Implementation Rule, the May 16, 2008 NSR 
PM2.5 Rule, the October 20, 2010 PM2.5 PSD 
Increments--SILs--SMC Rule, and the December 21, 2007 Reasonable 
Possibility in Recordkeeping Rule. The TSD for this rulemaking includes 
a detailed analysis of the submitted revisions and demonstration of how 
each revision addresses the federal requirements. The following is a 
summary of how EPA proposes to find the June 11, 2009 and May 23, 2011 
revisions to the New Mexico NNSR program implement the requirements of 
the specified final rules.

[[Page 62207]]

1. Phase 2 8-Hour Ozone Implementation Rule
a. What are the requirements of the Phase 2 8-Hour Ozone Implementation 
Rule for NNSR SIP Programs?
    As a result of the Phase 2 8-Hour Ozone Implementation Rule, states 
were required to submit applicable SIP revisions to EPA no later than 
June 15, 2007, to address this Rule's SIP requirements for both the PSD 
and NNSR programs. See 70 FR 71612, 71683. The SIP revision submittals 
were required by this Rule to revise the major source thresholds, 
significant emission rates, and offset ratios for ozone such that 
nitrogen oxides (NOX) are recognized as an ozone precursor. 
New Mexico's June 11, 2009 SIP submittal included revisions to the PSD 
and NNSR programs to address these 8-hour ozone permitting 
requirements. EPA previously approved the June 11, 2009 submitted 
revisions to the PSD program addressing Phase 2 8-hour ozone 
implementation as part of the New Mexico PSD SIP.\12\ Consequently, our 
action today only addresses the NNSR submitted program revisions that 
address the SIP requirements of this Phase 2 8-Hour Ozone 
Implementation Rule.
---------------------------------------------------------------------------

    \12\ See 75 FR 72688, November 26, 2010. EPA previously approved 
revisions addressing NOX as a precursor of the 1997 8-
hour ozone NAAQS in its action finding New Mexico's SIP does not 
interfere with measures required to prevent significant 
deterioration of air quality in other states for this NAAQS as per 
the third element of section 110(a)(2)(D). Approval of those 
revisions ensured New Mexico's PSD SIP included changes necessary to 
implement the 1997 8-hour ozone NAAQS within the state as 
contemplated in the August 15, 2006 ``Guidance for State 
Implementation Plan (SIP) Submissions to Meet Current Outstanding 
Obligations Under Section 110(a)(2)(D)(i) for the 8-Hour Ozone and 
PM2.5 National Ambient Air Quality Standards'' to meet 
the third element of section 110(a)(2)(D).
---------------------------------------------------------------------------

b. How does the June 11, 2009 New Mexico NNSR submittal satisfy the 
Phase 2 8-Hour Ozone Implementation Rule?
    New Mexico's June 11, 2009 SIP submission includes new provisions 
to implement the NNSR SIP requirements of the Phase 2 8-hour Ozone 
Implementation Rule as promulgated by EPA on November 29, 2005. 
Specifically, New Mexico adopted revisions to the definitions of 
``major stationary source'' and ``significant'', added new provisions 
to the source applicability requirements, and added new provisions to 
the emission offset requirements. These revisions serve to incorporate 
the major stationary source thresholds, significant emission rates and 
offset ratios pursuant to part D of title I of the CAA for the 8-hour 
ozone NAAQS, the CO NAAQS, and the PM10 NAAQS. New Mexico 
also adopted revisions to the requirements for emission reductions 
achieved through curtailments or shutdowns consistent with federal 
requirements. Based on our review and analysis available in the TSD for 
this action, we are proposing approval of the June 11, 2009 revisions 
to the New Mexico SIP that implement the NNSR SIP requirements of the 
Phase 2 8-hour ozone rule consistent with requirements at 40 CFR 
51.165.
2. NSR PM2.5 Rule
a. What are the requirements of the NSR PM2.5 Rule for NNSR 
SIP Programs?
    On May 16, 2008, EPA finalized the NSR PM2.5 Rule to 
implement the PM2.5 NAAQS. See 73 FR 28321. As a result of 
EPA's final NSR PM2.5 Rule, states were required to submit 
applicable SIP revisions to EPA no later than May 16, 2011, to address 
this Rule's PSD and NNSR SIP requirements. Specifically, the SIP 
revision submittals are required to meet the following NNSR SIP 
requirements to implement the PM2.5 NAAQS: (1) Require NNSR 
permits to address directly emitted PM2.5 and precursor 
pollutants; (2) establish significant emission rates for direct 
PM2.5 and precursor pollutants (including sulfur dioxide 
(SO2) and NOX); (3) establish PM2.5 
emission offsets; and (4) account for gases that condense to form 
particles (condensables) in PM2.5 and PM10 
emission limits in NNSR permits. Additionally, the NSR PM2.5 
Rule authorized states to adopt and submit provisions in their NNSR 
rules that would allow interpollutant offset trading.
b. How does the May 23, 2011 New Mexico NNSR submittal satisfy the NSR 
PM2.5 Rule?
    New Mexico's May 23, 2011 submission includes new provisions to 
implement the NNSR SIP requirements of the NSR PM2.5 Rule, 
as promulgated by EPA on May 16, 2008. Specifically, New Mexico adopted 
revisions to the definitions of ``regulated NSR pollutant'' and 
``significant'', added new provisions to the source applicability 
requirements, and added new provisions for emission offset 
requirements. These submitted revisions (1) Require NNSR permits to 
address directly emitted PM2.5 and precursor pollutants; (2) 
establish significant emission rates for direct PM2.5 and 
precursor pollutants (including sulfur dioxide (SO2) and 
nitrogen oxides (NOX)); (3) establish PM2.5 
emission offsets; (4) account for gases that condense to form particles 
(condensables) in PM2.5 and PM10 emission limits 
in NNSR permits; and (5) provide for interprecursor offsetting of 
direct PM2.5 emissions with emissions of identified 
PM2.5 precursors based on an approved interprecursor trading 
hierarchy and ratio in the approved plan for a particular nonattainment 
area. Note that the language adopted and submitted by the State of New 
Mexico providing for interprecursor offsetting establishes the generic 
framework only. EPA is proposing to approve the generic framework as 
part of the New Mexico SIP. Sources proposing to construct/modify in 
nonattainment areas, however, will be unable to use interprecursor 
offsetting unless and until New Mexico adopts and submits said 
hierarchies and ratios for EPA review and they are subsequently 
approved by EPA into the New Mexico SIP.
3. PM2.5 PSD Increment--SILs--SMC Rule
a. What are the requirements of the PM2.5 PSD Increment--
SILs--SMC Rule for NNSR SIP Programs?
    The PM2.5 PSD Increment--SILs--SMC Rule established the 
PM2.5 SILs at EPA's existing NNSR SIP regulations at 40 CFR 
51.165(b). The regulations in 40 CFR 51.165(b) \13\ establish the 
minimum requirements for NNSR programs in SIPs but apply specifically 
to major stationary sources and major modifications located in 
attainment or unclassifiable/attainment areas. Where a PSD source 
located in such areas may have an impact on an adjacent nonattainment 
area, the PSD source must still demonstrate that it will not cause or 
contribute to a violation of the NAAQS in the adjacent nonattainment 
area. Where emissions from a proposed PSD source or modification would 
have an ambient impact in a nonattainment area that would exceed the 
SILs, the source is considered to cause or contribute to a violation of 
the NAAQS and may not be issued a PSD permit without obtaining 
emissions reductions to compensate for its impact. See 40 CFR 
51.165(b)(2)-(3).
---------------------------------------------------------------------------

    \13\ 40 CFR 51.165(b) require states to adopt and submit for 
approval by EPA as a SIP revision, a preconstruction review permit 
program for major stationary sources and major modifications that 
wish to locate in an attainment or unclassifiable area but would 
cause or contribute to a violation of the NAAQS.

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[[Page 62208]]

b. How does the May 23, 2011 New Mexico NNSR submittal satisfy the 
PM2.5 PSD Increment--SILs--SMC Rule?
    The PM2.5 PSD Increment--SILs--SMC rule promulgated 
PM2.5 SILs thresholds in the NNSR regulations at 40 CFR 
51.165(b)(2). New Mexico's May 23, 2011 submission includes the 
PM2.5 SILs thresholds at 20.2.79.119 NMAC, consistent with 
the federal requirement to have the PM2.5 SILs in EPA's NNSR 
SIP regulations at 40 CFR 51.165(b)(2). In light of the fact that EPA 
did not request the court to remand and vacate language at 40 CFR 
51.165(b) and the agency has explained and affirmed its authority to 
develop and promulgate SILs in the brief filed with the D.C. Circuit 
Court concerning the litigation, EPA is proposing to approve New 
Mexico's adoption of the PM2.5 SILs thresholds at 
20.2.79.119 NMAC. EPA notes, however, that the SILs-SMC litigation is 
ongoing and therefore future court action may require the submittal of 
subsequent rule revisions and SIP submittals from the State of New 
Mexico.
    The aforementioned amendments to New Mexico's NNSR SIP program 
along with the revisions to the New Mexico PSD SIP program discussed in 
Section II.A of this proposed action, provide the framework for 
implementation of PM2.5 NAAQS in the state's PSD and NNSR 
SIP programs. Based on our review and analysis, EPA is finding that New 
Mexico's May 23, 2011 submitted revisions to the NNSR SIP program meet 
the NNSR permitting provisions promulgated in the NSR PM2.5 
Rule and PM2.5 PSD Increment--SILs--SMC Rule. Consequently, 
EPA has made the preliminary determination to approve the May 23, 2011 
SIP revision submittals into the New Mexico SIP to implement the NNSR 
program for the PM2.5 NAAQS.
4. Reasonable Possibility in Recordkeeping Rule
a. What are the requirements of the Reasonable Possibility in 
Recordkeeping Rule for NNSR SIP Programs?
    EPA finalized the Reasonable Possibility in Recordkeeping Rule for 
PSD and NNSR SIPs on December 21, 2007. See 72 FR 72607. As a result, 
SIP revisions meeting the rule were due to EPA on December 21, 2010. 
The final rule clarifies the ``reasonable possibility'' standard 
promulgated as part of EPA's 2002 NSR Reform rule. The ``reasonable 
possibility'' standard identifies for sources and reviewing authorities 
the criteria under which an owner or operator of a major stationary 
source undergoing a physical change or change in the method of 
operation that does not trigger major NSR permitting requirements must 
keep records. The standard also specifies the recordkeeping and 
reporting requirements on such sources. This final rule is in response 
to the decision by the U.S. Court of Appeals for the D.C. Circuit in 
New York v. EPA, 413 F.3d 3 (D.C. Cir. 2005) in which the ``reasonable 
possibility'' standard was remanded for further clarification.
b. How does the May 23, 2011 New Mexico NNSR submittal satisfy the 
Reasonable Possibility in Recordkeeping Rule?
    New Mexico's May 23, 2011 SIP revision submittal includes new 
provisions at 20.2.79.109(F) and (F)(6) NMAC to implement the 
clarifications to the ``reasonable possibility'' standard promulgated 
by EPA on December 21, 2007. See 72 FR 72607, 72616. The revisions 
submitted by New Mexico are consistent with federal NNSR permitting 
requirements at 40 CFR 51.165(a)(6), (a)(6)(vi). EPA therefore proposes 
full approval of these new provisions.

III. Proposed Action

    EPA is proposing the following actions in accordance with section 
110 and parts C and D of the Act and EPA's regulations and consistent 
with EPA guidance. EPA is proposing to approve portions of two 
revisions to the New Mexico SIP submitted by the Governor of New Mexico 
on June 11, 2009 and May 23, 2011.
    EPA is proposing to approve the following revised rules submitted 
in 2011 as meeting the PM2.5 PSD requirements under EPA's 
May 16, 2008 and October 20, 2010 final PM2.5 PSD permitting 
implementation rules and the December 21, 2007 Reasonable Possibility 
in Recordkeeping Rules.
     20.2.74.7 NMAC--Definitions,
     20.2.74.300 NMAC--Obligations of Owners or Operators of 
Sources,
     20.2.74.303 NMAC--Ambient Impact Requirements,
     20.2.74.306 NMAC- Monitoring Requirements,
     20.2.74.403 NMAC--Additional Requirements for Sources 
Impacting Class I Federal Areas,
     20.2.74.502 NMAC--Significant Emission Rates,
     20.2.74.503 NMAC--Significant Monitoring Concentrations,
     20.2.74.504 NMAC--Allowable PSD Increment, and
     20.2.74.505 NMAC--Maximum Allowable Increases for Class I 
Waivers.
    EPA is proposing to approve the following revised rules submitted 
in 2009 as meeting the EPA's November 29, 2005 Phase 2 8-hour Ozone 
Implementation Rule for nonattainment areas.
     20.2.79.7 NMAC--Definitions,
     20.2.79.109 NMAC--Applicability, and
     20.2.79.115 NMAC--Emission Offsets.
    EPA is proposing to approve the following revised rules submitted 
in 2011 as meeting EPA's PM2.5 NNSR requirements under EPA's 
May 16, 2008 and October 20, 2010 final PM2.5 NSR permitting 
implementation rules and the December 21, 2007 Reasonable Possibility 
in Recordkeeping Rules. New Mexico also made some nonsubstantive 
changes in 2011 to 20.2.79.109 NMAC as adopted and submitted in 2009, 
and we are proposing to approve these nonsubstantive changes.
     20.2.79.7 NMAC--Definitions,
     20.2.79.109 NMAC--Applicability, and
     20.2.79.119 NMAC--Tables.
    EPA is severing from this proposed action the revisions to 
20.2.74.303(A) NMAC submitted on May 23, 2011 which are equivalent to 
the provisions EPA has requested the court to remand and vacate at 40 
CFR 51.166(k)(2) that were promulgated on October 20, 2010, and 
conflict with our intentions for the use of SILs to demonstrate 
compliance with CAA section 163(a). Therefore, 20.2.74.303 NMAC as 
adopted by NMED on January 1, 2011, and SIP-approved by EPA on July 20, 
2011, remains the SIP-approved section. The NMED continues to retain 
the ability to implement the PM2.5 SILs at 20.2.79.119 NMAC 
consistent with EPA's interpretation of CAA section 163(a). Further, 
the revisions to 20.2.74.303(A) NMAC submitted on May 23, 2011, will 
remain before EPA for review. EPA will revisit these provisions after 
the court addresses EPA's request for remand with vacatur or EPA 
initiates rulemaking to revise 40 CFR 51.166(k)(2).

IV. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP 
submission that complies with the provisions of the Act and applicable 
federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in 
reviewing SIP submissions, EPA's role is to approve state choices, 
provided that they meet the criteria of the CAA. Accordingly, this 
proposed action merely approves state law as meeting federal 
requirements and does not impose additional requirements beyond those 
imposed by state law. For that reason, this proposed action:

[[Page 62209]]

     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Order 
12866 (58 FR 51735, October 4, 1993);
     Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the CAA; and
     Does not provide EPA with the discretionary authority to 
address, as appropriate, disproportionate human health or environmental 
effects, using practicable and legally permissible methods, under 
Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, this rule does not have tribal implications as 
specified by Executive Order 13175 (65 FR 67249, November 9, 2000), 
because the SIP is not approved to apply in Indian country located in 
the state, and EPA notes that it will not impose substantial direct 
costs on tribal governments or preempt tribal law.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by 
reference, Intergovernmental relations, Nitrogen oxides, Particulate 
matter, Reporting and recordkeeping requirements.

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

    Dated: September 28, 2012.
Ron Curry,
Regional Administrator, Region 6.
[FR Doc. 2012-25156 Filed 10-11-12; 8:45 am]
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