Document ID: EPA-R04-OAR-2005-SC-0004-0001
Agency: epa
Document Type: Proposed Rule
Title: Approval and Promulgation of Implementation Plans; South Carolina; Prevention of Significant Deterioration and Nonattainment New Source Review Rules
Posted Date: 2007-09-12T04:00Z

[Federal Register: September 12, 2007 (Volume 72, Number 176)]
[Proposed Rules]               
[Page 52031-52038]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12se07-21]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2005-SC-0004-200735; FRL-8466-3]

 
Approval and Promulgation of Implementation Plans; South 
Carolina; Prevention of Significant Deterioration and Nonattainment New 
Source Review Rules

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed conditional approval.

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SUMMARY: EPA is proposing to partially approve, disapprove, and 
conditionally approve specific portions of the proposed revisions to 
the South Carolina State Implementation Plan (SIP) submitted by the 
State of South Carolina on July 1, 2005. The proposed revisions modify 
South Carolina's Prevention of Significant Deterioration (PSD) program 
and provide for a new Nonattainment New Source Review (NNSR) program to 
be incorporated into the SIP. EPA's proposal to partially approve and 
disapprove certain portions of the July 1, 2005, SIP submittal is 
consistent with section 110(k)(3) of the Clean Air Act (CAA). EPA's 
proposal to conditionally approve other portions of the July 1, 2005, 
SIP submittal is consistent with section 110(k)(4) of the CAA. As part 
of the conditional approval, which applies only to the NNSR program, 
South Carolina will have twelve months from the date of EPA's final 
conditional approval of the SIP revisions in which to revise its NNSR 
rules, as described herein, to be consistent with existing federal law.
    In addition to the conditional approval of the NNSR program, EPA is 
proposing to approve one provision of South Carolina's minor source 
permitting program, partially approve South Carolina's PSD program, and 
disapprove two elements of South Carolina's PSD and NNSR rules that 
relate to provisions that were vacated from the federal program by the 
United States Court of Appeals for the District of Columbia Circuit 
(D.C. Circuit Court) on June 24, 2005. The two elements vacated from 
the federal rules pertain to pollution control projects (PCPs) and 
clean units. These elements exist in the South Carolina rules in both 
the PSD and NNSR programs, and all references to PCPs and clean units 
in both programs are being proposed for disapproval. As part of the 
conditional approval of South Carolina's NNSR program, South Carolina 
must commit to revise its rules to include

[[Page 52032]]

requirements for calculating emissions reductions that will be used for 
offsets and ensure those reductions are surplus to other federal 
requirements. In the interim, until the State NNSR program changes are 
in effect, as part of the conditional approval, the State must commit 
to utilize the provisions of 40 Code of Federal Regulations (CFR) part 
51, Appendix S to supplement its NNSR program until it is both State-
effective and approved by EPA into the South Carolina SIP.
    Changes to the federal new source review (NSR) regulations were 
promulgated by EPA on December 31, 2002, and reconsidered with minor 
changes on November 7, 2003, (collectively, these two final actions are 
called the ``2002 NSR Reform Rules''). EPA's 2002 NSR Reform Rules, now 
proposed for inclusion in the South Carolina SIP, contain provisions 
for baseline emissions calculations, an actual-to-projected-actual 
methodology for calculating emissions changes, options for plantwide 
applicability limits (PALs), and recordkeeping and reporting 
requirements.

DATES: Comments must be received on or before October 12, 2007.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R04-
OAR-2005-SC-0004, by one of the following methods:
    1. http://www.regulations.gov: Follow the on-line instructions for 

submitting comments.
    2. E-mail: fortin.kelly@epa.gov.
    3. Fax: 404-562-9019.
    4. Mail: (Docket ID No. EPA-R04-OAR-2005-SC-0004), Air Planning 
Branch, Air, Pesticides and Toxics Management Division, U.S. 
Environmental Protection Agency, Region 4, 61 Forsyth Street, SW, 
Atlanta, Georgia 30303-8960.
    5. Hand Delivery: Deliver your comments to: Ms. Kelly Fortin, Air 
Planning Branch, Air, Pesticides and Toxics Management Division, U.S. 
Environmental Protection Agency Region 4, 61 Forsyth Street, SW., 
Atlanta, Georgia 30303-8960. Such deliveries are only accepted during 
the Regional Office's normal hours of operation. The Regional Office's 
official hours of business are Monday through Friday, 8:30 to 4:30, 
excluding federal holidays.
    Instructions: Direct your comments to Docket ID No. EPA-R04-OAR-
2005-SC-0004. EPA's policy is that all comments received will be 
included in the public docket without change and may be made available 
online at http://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 http://www.regulations.gov 

or e-mail. The http://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 e-mail comment directly to EPA without going through 
http://www.regulations.gov, your e-mail 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 
http://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 http://www.regulations.gov or in hard copy at the Regulatory Development 

Section, Air Planning Branch, Air, Pesticides and Toxics Management 
Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth 
Street, SW., Atlanta, Georgia 30303-8960. EPA requests that if at all 
possible, you contact the person listed in the FOR FURTHER INFORMATION 
CONTACT section to schedule your inspection. The Regional Office's 
official business hours are Monday through Friday, 8:30 to 4:30, 
excluding federal holidays.

FOR FURTHER INFORMATION CONTACT: For information regarding the South 
Carolina State Implementation Plan, contact Ms. Nacosta Ward, 
Regulatory Development Section, Air Planning Branch, Air, Pesticides 
and Toxics Management Division, U.S. Environmental Protection Agency 
Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303-8960. Telephone 
number: (404) 562-9140; e-mail address: ward.nacosta@epa.gov. For 
information regarding New Source Review, contact Ms. Kelly Fortin, Air 
Permits Section, at the same address above. Telephone number: (404) 
562-9117; e-mail address: fortin.kelly@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document, references to 
``EPA,'' ``we,'' ``us,'' or ``our,'' are intended to mean the U.S. 
Environmental Protection Agency. The supplementary information is 
arranged as follows:

I. What Action Is EPA Proposing?
II. Why Is EPA Proposing this Action?
III. What Is EPA's Analysis of South Carolina's NSR Rule Revisions?
    A. Definitions and General Standards; South Carolina Regulation 
61-62.1
    B. Prevention of Significant Deterioration; South Carolina 
Regulation 61-62.5, Standard No. 7
    C. Nonattainment New Source Review; South Carolina Regulation 
61-62.5, StandarI No. 7.1
IV. What Action Is EPA Proposing to Take?
V. Statutory and Executive Order Reviews

I. What Action Is EPA Proposing?

    On July 1, 2005, the State of South Carolina, through the South 
Carolina Department of Health and Environmental Control (DHEC), 
submitted revisions to the South Carolina SIP. The SIP submittal 
consists of changes to the South Carolina Air Pollution Control 
Regulations and Standards (South Carolina Regulations). Specifically, 
the proposed SIP revisions include changes to South Carolina Regulation 
61-62.1 entitled ``Definitions and General Standards;'' Regulation 61-
62.5, Standard No. 7 entitled ``Prevention of Significant 
Deterioration;'' and Regulation 61-62.5, Standard No. 7.1 entitled 
``Nonattainment New Source Review.'' DHEC submitted this SIP revision 
in response to EPA's December 31, 2002, changes to the Federal NSR 
program. EPA is proposing to partially approve and disapprove certain 
portions of the July 1, 2005, SIP submittal, consistent with section 
110(k)(3) of the CAA. EPA is also proposing to conditionally approve 
provisions of the July 1, 2005, SIP submittal consistent with section 
110(k)(4) of the CAA. As part of the conditional approval, South 
Carolina will have twelve months from the date of EPA's final 
conditional approval of the SIP revisions in which to further revise 
its NNSR rules, as described herein, to be consistent with existing 
Federal law.

[[Page 52033]]

    Consistent with section 110(k)(3) of the CAA, EPA may partially 
approve and disapprove portions of a SIP revision that meet all the 
applicable requirements and are severable from the remainder of the 
revision that is being disapproved or conditionally approved. Pursuant 
to section 110(k)(3), EPA is proposing to (1) approve one provision of 
South Carolina's minor source permitting program (discussed more fully 
below); (2) partially approve South Carolina's PSD program; and (3) 
disapprove all references to PCPs and clean units in South Carolina's 
PSD and NNSR programs. The PCP and clean unit references are all 
severable from the other provisions of South Carolina's PSD and NNSR 
programs. EPA is not approving any portion of South Carolina's rules 
regarding PCPs and clean units. Further, any use by South Carolina of 
its State rules on PCPs and clean units is, according to a Federal 
appeals court, contrary to the CAA.
    Pursuant to section 110(k)(4) of the CAA, EPA may conditionally 
approve a portion of a SIP revision based on a commitment from the 
State to adopt specific, enforceable measures no later than twelve 
months from the approval date of final conditional approval. If the 
State fails to commit to undertake the necessary changes, or fails to 
actually make the changes within the twelve month period, EPA will 
issue a finding of disapproval. EPA is not required to propose the 
finding of disapproval.
    The necessary revisions to the South Carolina SIP will materially 
alter the existing SIP-approved rule. As a result, the State must also 
make a new SIP submittal to EPA for approval that includes the rule 
changes within twelve months from the date of EPA's final action 
conditionally approving South Carolina's NNSR program. As with any SIP 
revision, South Carolina must undergo public notice and comment, and 
allow for a public hearing (and any other procedures required by State 
law), on the proposed changes to its rules. If South Carolina fails to 
adopt and submit the specified measures by the end of one year (from 
the final conditional approval), or fails to make a SIP submittal to 
EPA within twelve months following the final conditional approval, EPA 
will issue a finding of disapproval. If South Carolina timely revises 
its rules and submits the revised SIP submittal, EPA will process that 
SIP revision consistent with the CAA.
    More specifically, with regard to the conditional approval of the 
NNSR program, South Carolina must revise its rules to include a 
methodology for calculating emissions reductions to be used as offsets 
that includes a baseline for determining credit for emissions offsets 
that, at a minimum, meets the requirements set out in 40 CFR 
51.165(a)(3)(i) and Appendix S section IV.C. The emission offsets 
provisions must also specify that the reductions must be surplus and 
cannot be used for offsets if they are otherwise required by the South 
Carolina SIP or other Federal standards, such as the New Source 
Performance Standards (NSPS) and National Emissions Standards for 
Hazardous Air Pollutants (NESHAP), including the Maximum Achievable 
Control Technology (MACT) standards. As part of the conditional 
approval, South Carolina must commit to make these changes within the 
twelve month timeframe. Further, in the interim, until the required 
State NNSR program changes are in effect, South Carolina must commit to 
utilize the requirements of the Federal NNSR program outlined in 40 CFR 
part 51, Appendix S.

II. Why Is EPA Proposing This Action?

    On December 31, 2002 (67 FR 80186), EPA published final rule 
changes to title 40 CFR parts 51 and 52, regarding the CAA's PSD and 
NNSR programs. On November 7, 2003 (68 FR 63021), EPA published a 
notice of final action on the reconsideration of the December 31, 2002, 
final rule changes. In that November 7, 2003, final action, EPA added 
the definition of ``replacement unit,'' and clarified an issue 
regarding PALs. The December 31, 2002, and the November 7, 2003, final 
actions are collectively referred to as the ``2002 NSR Reform Rules.'' 
The purpose of this action is to propose to partially approve, 
disapprove and conditionally approve certain portions of the SIP 
submittal from the State of South Carolina, which includes the 
provisions of EPA's 2002 NSR Reform Rules.
    The 2002 NSR Reform Rules are part of EPA's implementation of Parts 
C and D of title I of the CAA, 42 U.S.C. 7470-7515. Part C of title I 
of the CAA, 42 U.S.C. 7470-7492, is the PSD program, which applies in 
areas that meet the National Ambient Air Quality Standards (NAAQS)--
``attainment'' areas--as well as in areas for which there is 
insufficient information to determine whether the area meets the 
NAAQS--``unclassifiable'' areas. Part D of title I of the CAA, 42 
U.S.C. 7501-7515, is the NNSR program, which applies in areas that are 
not in attainment of the NAAQS--``nonattainment'' areas. Collectively, 
the PSD and NNSR programs are referred to as the ``New Source Review'' 
or NSR programs. EPA regulations implementing these programs are 
contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and part 51, Appendix 
S.
    The CAA's NSR programs are preconstruction review and permitting 
programs applicable to new and modified stationary sources of air 
pollutants regulated under the CAA. The NSR programs of the CAA include 
a combination of air quality planning and air pollution control 
technology program requirements. Briefly, section 109 of the CAA, 42 
U.S.C. 7409, requires EPA to promulgate primary NAAQS to protect public 
health and secondary NAAQS to protect public welfare. Once EPA sets 
those standards, states must develop, adopt, and submit to EPA for 
approval, a SIP that contains emissions limitations and other control 
measures to attain and maintain the NAAQS. Each SIP is required to 
contain a preconstruction review program for the construction and 
modification of any stationary source of air pollution to assure that 
the NAAQS are achieved and maintained; to protect areas of clean air; 
to protect air quality related values (such as visibility) in national 
parks and other areas; to assure that appropriate emissions controls 
are applied; to maximize opportunities for economic development 
consistent with the preservation of clean air resources; and to ensure 
that any decision to increase air pollution is made only after full 
public consideration of the consequences of the decision.
    The 2002 NSR Reform Rules made changes to five areas of the NSR 
programs. In summary, the 2002 Rules: (1) Provided a new method for 
determining baseline actual emissions; (2) adopted an actual-to-
projected-actual methodology for determining whether a major 
modification has occurred; (3) allowed major stationary sources to 
comply with PALs to avoid having a significant emissions increase that 
triggers the requirements of the major NSR program; (4) provided a new 
applicability provision for emissions units that are designated clean 
units; and (5) excluded PCPs from the definition of ``physical change 
or change in the method of operation.'' On November 7, 2003 (68 FR 
63021), EPA published a notice of final action on its reconsideration 
of the 2002 NSR Reform Rules, which added a definition for 
``replacement unit'' and clarified an issue regarding PALs. For 
additional information on the 2002 NSR Reform Rules, see, 67 FR 80186 
(December 31, 2002), and http://www.epa.gov/nsr.

    After the 2002 NSR Reform Rules were finalized and effective (March 
3, 2003), industry, state, and environmental petitioners challenged 
numerous aspects of the 2002 NSR

[[Page 52034]]

Reform Rules, along with portions of EPA's 1980 NSR Rules (45 FR 52676, 
August 7, 1980). On June 24, 2005, the D.C. Circuit Court issued a 
decision on the challenges to the 2002 NSR Reform Rules. New York v. 
United States, 413 F.3d 3 (D.C. Cir. 2005). In summary, the D.C. 
Circuit Court vacated portions of the rules pertaining to clean units 
and PCPs, remanded a portion of the rules regarding recordkeeping, 40 
CFR 52.21(r)(6) and 40 CFR 51.166(r)(6), and either upheld or did not 
comment on the other provisions included as part of the 2002 NSR Reform 
Rules. On June 13, 2007 (72 FR 32526), EPA took final action to revise 
the 2002 NSR Reform Rules to remove from the CFR all provisions 
pertaining to clean units and the PCP exemption that were vacated by 
the D.C. Circuit Court. These proposed actions are consistent with the 
D.C. Circuit Court's decision because the vacated portions of the 
Federal rules will not be approved as part of the South Carolina SIP. 
Further, EPA notes that use of any PCP and clean unit rules has been 
deemed contrary to the CAA by a Federal appeals court.
    With regard to the remanded portions of the 2002 NSR Reform Rules 
related to recordkeeping, on March 8, 2007 (45 FR 10445), EPA responded 
to the D.C. Circuit Court's remand by proposing two alternative options 
to clarify what constitutes ``reasonable possibility'' and when the 
``reasonable possibility'' recordkeeping requirements apply. The 
``reasonable possibility'' provision identifies for sources and 
reviewing authorities the circumstances under which a major stationary 
source undergoing a modification that does not trigger major NSR must 
keep records. South Carolina's SIP revisions are approvable at this 
time because the South Carolina rules are at least as stringent as the 
current Federal rules (see, e.g., South Carolina Regulation 61-62.5, 
Standard No. 7). If EPA adopts recordkeeping criteria that are more 
stringent than the current South Carolina rules on recordkeeping, the 
State's rules may need to be revised to be at least as stringent as the 
Federal requirements.
    The 2002 NSR Reform Rules require that state agencies adopt and 
submit revisions to their SIP permitting programs implementing the 
minimum program elements of the 2002 NSR Reform Rules no later than 
January 2, 2006. (Consistent with changes to 40 CFR 51.166(a)(6)(i), 
state agencies are now required to adopt and submit SIP revisions 
within three years after new amendments are published in the Federal 
Register.) State agencies may meet the requirements of 40 CFR part 51 
and the 2002 NSR Reform Rules with different but equivalent 
regulations. However, if a state decides not to implement any of the 
new applicability provisions, that state is required to, among other 
things, demonstrate that its existing program is at least as stringent 
as the federal program.
    On July 1, 2005, DHEC submitted a SIP revision for the purpose of 
revising the State's NSR permitting provisions. These changes were made 
primarily to adopt EPA's 2002 NSR Reform Rules. As discussed in further 
detail below, EPA believes the revisions contained in the South 
Carolina submittal are approvable for inclusion into the South Carolina 
SIP so long as the specific changes described below are made within 
twelve months of the date of EPA's final conditional approval. As a 
result, EPA is proposing to partially approve and disapprove, and 
conditionally approve the South Carolina SIP revisions, consistent with 
sections 110(k)(3) and 110(k)(4) of the CAA. As part of the conditional 
approval South Carolina must commit to utilize the provisions of 40 CFR 
part 51, Appendix S, for its NNSR program until the specified changes 
to that program are in effect and approved into the SIP by EPA.

III. What Is EPA's Analysis of South Carolina's NSR Rule Revisions?

    South Carolina currently has a SIP-approved NSR program for new and 
modified stationary sources. Today, EPA is proposing to partially 
approve, disapprove, and conditionally approve revisions to South 
Carolina's existing NSR program. South Carolina's proposed revisions 
became State-effective on June 24, 2005, and were submitted to EPA on 
July 1, 2005. Copies of the revised rules, as well as the State's 
Technical Support Document, can be obtained from the Docket, as 
discussed in the ADDRESSES section above. A discussion of the specific 
changes to South Carolina's rules comprising the SIP revision, as well 
as the additional changes to be made by South Carolina to its rules as 
part of the conditional approval, follows.

A. Definitions and General Standards; South Carolina Regulation 61-62.1

    EPA is proposing to approve Section II of South Carolina Regulation 
61-62.1 regarding general permit requirements. South Carolina revised 
Section II, paragraph H.1, of its regulations to allow for synthetic 
minor permits in nonattainment areas. On April 30, 2004 (69 FR 23858), 
one area in South Carolina was designated nonattainment for the 8-hour 
ozone NAAQS, which prompted the changes to Section II. The proposed SIP 
revision recognizes that South Carolina now has a nonattainment area 
and Section II includes the appropriate requirements for synthetic 
minor source permits in nonattainment areas. Since the only South 
Carolina area previously designated as nonattainment prior to the April 
2004 designation was redesignated to attainment prior to the due date 
for NNSR rules, South Carolina's rules only allowed for a major source 
or major modification, as defined by Regulation 61-62.5, Standard No. 7 
(PSD), to request federally enforceable permit conditions to limit a 
source's potential to emit and become a synthetic minor source. EPA is 
proposing to approve South Carolinas's revisions to Regulation 61-62.1 
to allow synthetic minor sources to obtain preconstruction permits in 
nonattainment as well as attainment areas. This portion of South 
Carolina's NSR program is severable from the NNSR rules subject to the 
proposed conditional approval and will not be affected by EPA's 
proposed disapproval. If South Carolina does not submit the required 
changes to its NNSR program within the specified time period, and EPA 
takes action to disapprove the conditionally approved portions of the 
NNSR program, Regulation 61-62.1 will not be affected because it is 
being proposed for approval today.

B. Prevention of Significant Deterioration; South Carolina Regulation 
61-62.5, Standard No. 7

    South Carolina Regulation 61.62.5, Standard No. 7, contains the 
preconstruction review program that provides for the prevention of 
significant deterioration of ambient air quality as required under Part 
C of title I of the CAA (the PSD program). The PSD program applies to 
sources that are major stationary sources or undergoing major 
modifications in areas that are designated as attainment or 
unclassifiable with regard to any NAAQS. South Carolina's PSD program 
was originally approved into the SIP by EPA on February 10, 1982, and 
has been revised several times since then in order to remain consistent 
with federal rule changes. The current changes to Standard No. 7, which 
EPA is now proposing to partially disapprove and partially approve into 
the South Carolina SIP, were submitted to update the existing South 
Carolina Regulation to be consistent with the current federal PSD 
rules, including the 2002 NSR Reform Rules. The SIP revision addresses 
baseline actual emissions, actual-to-projected actual applicability

[[Page 52035]]

tests, and PALs. South Carolina's SIP revision also includes two 
portions of EPA's 2002 NSR Reform Rules that were vacated by the D.C. 
Circuit Court--PCPs and clean units. As a result, EPA is proposing to 
partially approve the PSD portion of the South Carolina SIP revision 
with the exception of references to PCPs and clean units which EPA is 
proposing to disapprove (similar references also exist in South 
Carolina's NNSR program). The PCP and clean unit references are 
severable from the PSD and NNSR programs. EPA is disapproving all rules 
and/or rule sections in the South Carolina PSD rules (and NNSR rules, 
discussed later in this notice) referencing clean units or PCPs. 
Specifically, the following South Carolina rules are being proposed for 
disapproval.

                                                       Table 1.--PSD PCP and Clean Unit References
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Corresponding vacated
South Carolina regulation 61-62.5,   federal provision 40                                             Subject
            standard 7                    CFR 52.21
--------------------------------------------------------------------------------------------------------------------------------------------------------
(a)(2)(iv)(e).....................  (a)(2)(iv)(e)........  Clean unit applicability.
(a)(2)(iv)(f)--Second sentence....  (a)(2)(iv)(f)--Second  Entire second sentence (``For example * * *'') Reference to clean unit.
                                     sentence.
(a)(2)(vi)........................  (a)(2)(vi)...........  PCP provision.
(b)(12)...........................  (b)(42)..............  Clean unit definition.
(b)(30)(iii)(h)...................  (b)(2)(iii)(h).......  PCP provision.
(b)(34)(iii)(b)...................  (b)(3)(iii)(b).......  Clean unit provision.
(b)(34)(vi)(d)....................  (b)(3)(vi)(d)........  Clean unit and PCP provisions.
(b)(35)...........................  (b)(32)..............  PCP definition.
(r)(6) \1\........................  (r)(6)...............  Reference to clean unit.
(r)(7) \1\........................  NA...................  Reference to clean unit.
(x)...............................  (x)..................  Clean unit provision.
(y)...............................  (y)..................  Clean unit provision.
(z)...............................  (z)..................  PCP provision.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Only the reference to the term ``clean unit'' is being proposed for disapproval. The remainder of this regulatory provision is being proposed for
  approval.

    In addition to EPA's proposal to disapprove the South Carolina PSD 
and NNSR rules regarding PCPs and clean units, EPA notes that any use 
of such rules has been deemed contrary to the CAA by a Federal appeals 
court.
    As part of its evaluation of the South Carolina SIP submittal, EPA 
performed a line-by-line comparison of the proposed revisions to the 
federal requirements. During this review it was noted that a 
typographical error exists in paragraph (b)(41)(ii)(d) of Standard No. 
7, South Carolina Regulation 61-62.5, where there is a reference to 
paragraph (a)(41)(ii)(a). This reference should be to paragraph 
(b)(41)(ii)(a). Although this is a minor issue that does not affect the 
approvability of this portion of the SIP revision, South Carolina 
should correct this error the next time this rule is revised.
    As a general matter, state agencies may meet the requirements of 40 
CFR part 51, and the 2002 NSR Reform Rules, with different but 
equivalent regulations. However, if a state decides not to implement 
any of the new applicability provisions, that state is required to 
demonstrate that its existing program is at least as stringent as the 
federal program. As part of its SIP submittal, South Carolina (through 
DHEC) provided EPA with an ``equivalency demonstration'' regarding two 
differences from the federal rules.
    One difference relates to the removal of the word ``malfunction'' 
from the definitions of ``baseline actual emissions'' at paragraph 
(b)(4)(i)(a) and ``projected actual emissions'' at paragraph 
(b)(41)(ii)(b) in Standard No. 7, South Carolina Regulation 61-62.5. In 
justifying the change, DHEC notes the difficulty of predicting 
malfunction emissions as part of the projected actual emissions. In 
addition, DHEC is concerned about the possibility that including 
malfunction emissions may result in the unintended rewarding of the 
source's poor operation and maintenance by allowing malfunction 
emissions to be included in baseline emissions that will be used to 
calculate emissions changes and emissions credits.
    A second difference involves the inclusion of language in the 
definition of baseline actual emissions at paragraph (b)(4)(ii) in 
Standard No. 7, South Carolina Regulation 61-62.5, which provides DHEC 
with the authority to determine if the 24-month look-back period 
selected by the source is appropriate. In its equivalency 
determination, DHEC states that it is simply asserting its authority to 
review the source's calculations, if necessary, to ensure that the time 
period selected is appropriate. EPA agrees that DHEC may explicitly 
retain such authority, consistent with EPA's 2002 NSR Reform Rules. EPA 
concurs with the State that neither this change, nor the difference 
regarding ``malfunctions,'' lessens the stringency of South Carolina's 
NSR program. Therefore, South Carolina's PSD program may be partially 
approved, with the exception of the PCP and clean unit references, 
which are subject to disapproval. Notably, EPA has not yet taken final 
action in response to the D.C. Circuit Court's remand of the 
recordkeeping provisions of EPA's 2002 NSR Reform Rules. South 
Carolina's rule contains recordkeeping requirements that are at least 
as stringent as the federal rule. While final action by EPA with regard 
to the remand may require South Carolina to take action to revise their 
rules, at this time, the South Carolina rules are consistent with 
federal requirements.
    After conducting the line-by-line evaluation and reviewing the 
equivalency determinations for certain portions of South Carolina 
Regulation 61-62.5, Standard No. 7, EPA has determined that the 
proposed SIP revisions are consistent with the federal program 
requirements for the preparation, adoption and submittal of 
implementation plans for the Prevention of Significant Deterioration of 
Air Quality, set forth at 40 CFR 51.166, with the exception of the PCP 
and clean unit provisions. Therefore, EPA is now proposing to partially 
approve and disapprove, pursuant to section 110(k)(3), the PSD portion 
of the July 1, 2005, SIP revision.

C. Nonattainment New Source Review; South Carolina Regulation 61-62.5, 
Standard No. 7.1

    South Carolina's NNSR program, which provides permitting 
requirements for major sources in or impacting upon nonattainment 
areas, is set forth at Regulation 61-62.5, Standard No. 7.1.

[[Page 52036]]

Effective June 15, 2004, one area in South Carolina was designated 
nonattainment for the 8-hour ozone NAAQS. Since the only area in South 
Carolina previously designated as nonattainment was redesignated to 
attainment prior to the due date for the NNSR rules, South Carolina's 
rules did not contain any provisions for the permitting of sources in 
nonattainment areas.
    South Carolina's NNSR program applies to the construction and 
modification of any major stationary source of air pollution in a 
nonattainment area, as required by Part D of title I of the CAA. To 
receive approval to construct, a source that is subject to South 
Carolina Regulation 61-62.5, Standard No. 7.1 must show that it will 
not cause a net increase in pollution, will not create a delay in the 
area attaining the NAAQS, and will install and use control technology 
that achieves the lowest achievable emissions rate. The provisions in 
the South Carolina rules were established to meet the current federal 
nonattainment rule, including the 2002 NSR Reform Rules, which are 
found at 40 CFR 51.160-51.165, and part 51, Appendix S.
    As part of its evaluation of the South Carolina submittal, EPA 
performed a line-by-line review of the proposed revisions, as well as 
reviewing the equivalency determinations. EPA has determined that South 
Carolina's NNSR program is not entirely consistent with the program 
requirements for the preparation, adoption and submittal of 
implementation plans for NSR, set forth at 40 CFR 51.160-51.165, and 
that revisions are necessary for full approval. The required changes 
relate to requirements for emission reductions that facilities will use 
to ``offset'' proposed emissions increases. Consistent with section 
110(k)(4), EPA may conditionally approve South Carolina's SIP revision 
based on the State's commitment to adopt specific, enforceable measures 
by a date certain, not to exceed one year after the date of the 
conditional approval.
    The CAA prohibits the use of emission reductions ``otherwise 
required'' by CAA requirements as creditable emission reductions for 
the purpose of NSR offsets. See CAA section 173(c)(2). In addition, the 
federal regulations require that emission reductions used for offsets 
must be ``surplus.'' See 40 CFR 51.165(a)(3)(ii)(C)(1)(i). The 
corresponding State language at 7.1(d)(1)(C)(iii)(a) indicates that 
reductions may be generally credited if they are permanent, 
quantifiable, and federally enforceable, but does not specifically 
address the ``surplus'' provision of the federal rules. The State 
regulation also indicates that reductions can be claimed for use as 
offsets to the extent the DHEC has not relied upon them for the 
issuance of permits under regulations approved pursuant to 40 CFR part 
51, subpart I or in demonstrating attainment or reasonable further 
progress. See Standard 7.1(d)(viii). EPA believes this provision could 
be interpreted to allow the use of emissions reductions that have been 
required by NESHAP or NSPS requirements or may have been required by 
other SIP provisions not used towards reasonable further progress or in 
the demonstration of attainment. Hence, it is EPA's determination that 
the State rule does not explicitly meet the CAA and federal 
requirements set out at 40 CFR 51.165.
    The State nonattainment regulations also do not specifically 
address how the emission reductions used for offsets will be 
calculated. The federal regulations require each plan to provide that 
the ``offset baseline'' shall be the actual emissions of the source 
from which offset credit is obtained. See 40 CFR 51.165(a)(3)(i). The 
Emissions Offset Interpretive Ruling, 40 CFR part 51, Appendix S, sets 
forth the conditions upon which a major source or modification would be 
allowed to construct in a nonattainment area and includes provisions 
for establishing the baseline for calculating emissions offsets. See 40 
CFR part 51, Appendix S section IV.C. At a minimum, the State rule 
should contain the baseline provisions for calculating offsets that 
meet the requirements of Appendix S. EPA is proposing to conditionally 
approve the South Carolina SIP revision including the NNSR program and 
provide South Carolina with twelve months after EPA's final conditional 
approval in which to effectuate the changes necessary for EPA to 
approve South Carolina's NNSR program.
    As discussed earlier, EPA is proposing to disapprove two provisions 
of South Carolina's NNSR program that relate to provisions that were 
vacated from the federal program by the D.C. Circuit Court. The two 
provisions vacated from the federal rules pertain to PCPs and clean 
units. The PCP and clean unit references are severable from the 
remainder of the NNSR program. Specifically, the following South 
Carolina rules are being proposed for disapproval.

                                                      Table 2.--NNSR PCP and Clean Unit References
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Corresponding vacated
South Carolina regulation 61-62.5,   federal provision 40                                             Subject
           standard 7.1                   CFR 51.165
--------------------------------------------------------------------------------------------------------------------------------------------------------
(b)(5)............................  (a)(2)(ii)(E)........  Clean unit applicability.
(b)(6)--Second Sentence...........  (a)(2)(ii)(F)--Second   Entire second sentence (``For example * * *'') Reference to clean unit.
                                     sentence.
(b)(8)............................   (a)(2)(iv)..........  PCP provision.
(c)(4)............................  (a)(1)(xxix).........  Clean unit definition.
(c)(6)(C)(viii)...................  (a)(1)(v)(C)(8)......  PCP provision.
(c)(8)(C)(iii)....................  (a)(1)(vi)(C)(3).....  Clean unit provision.
(c)(8)(E)(v)......................  (a)(1)(vi)(E)(5).....  Clean unit and PCP provisions.
(c)(10)...........................  (a)(1)(xxv)..........  PCP definition.
(d)(1)(C)(ix).....................  (a)(3)(ii)(H)........  Clean unit and PCP provisions.
(d)(1)(C)(x)......................  (a)(3)(ii)(I)........  Clean unit and PCP provisions.
(d)(3) \1\........................  (a)(6)...............  Reference to clean unit.
(d)(4) \1\........................  NA...................  Reference to clean unit.
(f)...............................  (c)..................  Clean unit provision.
(g)...............................  (d)..................  Clean unit provision.
(h)...............................  (e)..................  PCP provision.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Only the reference to the term ``clean unit'' is being proposed for disapproval. The remainder of this regulatory provision is being proposed for
  approval.

[[Page 52037]]

    In addition to EPA's proposal to disapprove the South Carolina PSD 
and NNSR rules referencing PCPs and clean units, EPA notes that any use 
of such rules has been deemed contrary to the CAA by a Federal appeals 
court.
    As discussed above, South Carolina provided EPA with an equivalency 
demonstration to show that its program is at least as stringent as the 
federal program. The two differences from the federal rule for which 
the State is proposing equivalency are the same as those identified in 
the State's PSD program. These deviations from the federal rule are 
acceptable, and may be retained in South Carolina's final NNSR program 
proposed as part of this conditional approval.
    The first difference regards the removal of the word 
``malfunction'' from the definitions of ``baseline actual emissions'' 
at paragraph (c)(2)(B)(ii) and ``projected actual emissions'' at 
paragraph (c)(11)(B)(ii) in Regulation 61-62.5, Standard No. 7.1. In 
justifying the difference, DHEC notes the difficulty of predicting 
malfunction emissions as part of the projected actual emissions. In 
addition DHEC is concerned about the possibility that including 
malfunction emissions may result in the unintended rewarding of the 
source's poor operation and maintenance by allowing malfunction 
emissions to be included in baseline emissions that will be used to 
calculate emissions changes and emissions credits.
    The second difference involves the inclusion of language in the 
definition of baseline actual emissions at paragraph (c)(2)(B) in 
Regulation 61-62.5, Standard No. 7.1, to indicate that DHEC reserves 
the right to determine if the 24-month look-back period selected by the 
source is appropriate. In its equivalency determination, DHEC states 
that it is simply asserting its authority to review the source's 
calculations, if necessary, to ensure that the time period selected is 
appropriate. EPA agrees that DHEC may explicitly retain such authority, 
consistent with EPA's 2002 NSR Reform Rules. EPA believes neither of 
these differences lessens the stringency of South Carolina's NNSR 
program.
    In summary, EPA is proposing to disapprove two elements of South 
Carolina's new NNSR rules that pertain to PCPs and clean units and 
which were vacated from the federal program by the D.C. Circuit Court. 
These two elements include various rules which are listed in Table 2, 
above. In addition, EPA is proposing to conditionally approve the 
remainder of South Carolinas's new NNSR program into the SIP. As part 
of the conditional approval mechanism, within twelve months of EPA's 
final action on the conditional approval, the State must: (1) Revise 
the NNSR program to include a provision that emission reductions are 
surplus and are not to be used as offsets if they are otherwise 
required by the SIP, NSPS, NESHAP, including MACT, standards or other 
federal requirements; (2) revise its rule to include a methodology for 
the calculation of emissions reductions that includes a baseline for 
determining credit for emissions offsets that, at a minimum, meet the 
requirements set out in 40 CFR part 51, Appendix S section IV.C.; and 
(3) implement the provisions found in 40 CFR part 51, Appendix S until 
its revised NNSR program is in effect and approved into the SIP by EPA. 
If South Carolina fails to comply with the substantive requirements in 
the specified period of time, EPA will issue a finding of disapproval.

IV. What Action Is EPA Proposing To Take?

    EPA is proposing to partially approve, disapprove, and 
conditionally approve revisions to the South Carolina SIP (Regulation 
61-62.1, Regulation 61-62.5 Standard No. 7, and Regulation 61-62.5 
Standard No. 7.1) submitted by DHEC on July 1, 2005, which include 
changes to South Carolina's PSD and NNSR programs. As part of the 
partial approval, EPA is approving the entirety of South Carolina's PSD 
program with the exception of any references to PCPs and clean units, 
which are proposed for disapproval (see Table 1). EPA is also approving 
Regulation 61-61.2 regarding synthetic minor sources that is part of 
the minor source permitting program. As part of the disapproval, EPA is 
disapproving all rules referencing clean units and PCPs in South 
Carolina's NNSR program (see Table 2). As part of the conditional 
approval, South Carolina must (1) revise the NNSR program to include a 
provision that emission reductions must be surplus and are not to be 
used as offsets if they are otherwise required by the SIP, NSPS, 
NESHAP, including MACT, standards or other federal requirements and 
submit to EPA a SIP revision within twelve months with the revised 
rule; (2) revise its NNSR program to include a methodology for 
calculating offsets, and submit to EPA a SIP revision within twelve 
months with the revised rule; and (3) utilize the provisions of 40 CFR 
part 51, Appendix S to supplement its NNSR program until South 
Carolina's NNSR program is approved by EPA. Consistent with section 
110(k), EPA is now proposing to partially approve, disapprove and 
conditionally approve the July 1, 2005, SIP revision from South 
Carolina.

V. Statutory and Executive Order Reviews

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this 
proposed action is not a ``significant regulatory action'' and 
therefore is not subject to review by the Office of Management and 
Budget. For this reason, this action is also not subject to Executive 
Order 13211, ``Actions Concerning Regulations That Significantly Affect 
Energy Supply, Distribution, or Use'' (66 FR 28355, May 22, 2001). This 
proposed action merely proposes to approve state law as meeting federal 
requirements and imposes no additional requirements beyond those 
imposed by state law. Accordingly, the Administrator certifies that 
this proposed rule will not have a significant economic impact on a 
substantial number of small entities under the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.). Because this rule proposes to approve pre-
existing requirements under state law and does not impose any 
additional enforceable duty beyond that required by state law, it 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).
    This proposed rule also does not have tribal implications because 
it will not have a substantial direct effect on one or more Indian 
tribes, 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, as specified by Executive 
Order 13175 (65 FR 67249, November 9, 2000). This action also does not 
have Federalism implications because it does 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 (64 FR 43255, August 10, 1999). This proposed 
action merely proposes to approve state law as meeting federal 
requirements and imposes no additional requirements beyond those 
imposed by state law. As a result, it does not alter the relationship 
or the distribution of power and responsibilities established in the 
Clean Air Act. This proposed rule also is not subject to Executive 
Order 13045 ``Protection of Children from Environmental Health Risks 
and Safety Risks'' (62 FR 19885, April 23, 1997), because it is not 
economically significant.

[[Page 52038]]

    In reviewing SIP submissions, EPA's role is to approve state 
choices, provided that they meet the criteria of the Clean Air Act. In 
this context, in the absence of a prior existing requirement for the 
State to use voluntary consensus standards (VCS), EPA has no authority 
to disapprove a SIP submission for failure to use VCS. It would thus be 
inconsistent with applicable law for EPA, when it reviews a SIP 
submission, to use VCS in place of a SIP submission that otherwise 
satisfies the provisions of the Clean Air Act. Thus, the requirements 
of section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (15 U.S.C. 272 note) do not apply. This proposed rule does 
not impose an information collection burden under the provisions of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

List of Subjects in 40 CFR Part 52

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

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

    Dated: September 5, 2007.
J.I. Palmer, Jr.,
Regional Administrator, Region 4.
[FR Doc. E7-17979 Filed 9-11-07; 8:45 am]

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