Document ID: EPA-HQ-OAR-2003-0064-0011
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2006-09-14T04:00Z

Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
1
6560­
50­
P
ENVIRONMENTAL
PROTECTION
AGENCY
40
CFR
Parts
51
and
52
[
EPA­
HQ­
OAR­
2003­
0064;
FRL­
]

Prevention
of
Significant
Deterioration
(
PSD)
and
Nonattainment
New
Source
Review
(
NSR):
Debottlenecking,
Aggregation,
and
Project
Netting
AGENCY:
Environmental
Protection
Agency
(
EPA).

ACTION:
Proposed
rule.

SUMMARY:
The
EPA
proposes
revisions
to
the
regulations
governing
the
major
NSR
programs
mandated
by
parts
C
and
D
of
title
I
of
the
Clean
Air
Act
(
CAA).
These
proposed
changes
reflect
the
EPA's
consideration
of
the
EPA's
2002
Report
to
the
President
and
its
associated
recommendations
as
well
as
discussions
with
various
stakeholders
including
representatives
of
environmental
groups,
State
and
local
governments,
and
industry.
We
propose
to
change
how
emissions
from
emissions
units
upstream
or
downstream
from
those
undergoing
a
physical
change
or
change
in
the
method
of
operation
are
included
in
the
calculation
of
an
emissions
increase
for
the
project.
Also,
today=
s
proposed
changes
would
clarify
and
codify
our
policy
of
when
emissions
increases
from
multiple
projects
must
be
aggregated
together
to
determine
NSR
applicability.
Finally,
we
are
clarifying
how
emissions
decreases
from
a
project
may
be
included
in
the
calculation
to
determine
if
a
significant
emissions
increase
will
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
2
result
from
a
project.
We
intend
the
proposed
rules
to
improve
implementation
of
the
program
by
articulating
and
codifying
principles
for
determining
major
NSR
applicability
that
we
currently
address
through
guidance
only.

We
are
seeking
comment
on
all
aspects
of
this
proposed
rule.
This
proposal
seeks
public
comment
in
accordance
with
section
307(
d)
of
the
CAA
and
should
not
be
used
or
cited
in
any
litigation
as
a
final
position
of
the
Agency.

DATES:
Comments.
Comments
must
be
received
on
or
before
[
INSERT
DATE
60
DAYS
AFTER
DATE
OF
PUBLICATION
IN
THE
FEDERAL
REGISTER].

Under
the
Paperwork
Reduction
Act,
comments
on
the
information
collection
provisions
must
be
received
by
OMB
on
or
before
[
INSERT
DATE
30
DAYS
AFTER
PUBLICATION
IN
THE
FEDERAL
REGISTER].

Public
Hearing.
If
anyone
contacts
EPA
requesting
a
public
hearing
by
[
INSERT
DATE
14
DAYS
AFTER
PUBLICATION
IN
THE
FEDERAL
REGISTER],
we
will
hold
a
public
hearing
approximately
30
days
after
publication
in
the
Federal
Register.

ADDRESSES:
Submit
your
comments,
identified
by
Docket
ID
No.
EPA­
HQ­
OAR­

2003­
0064
by
one
of
the
following
methods:

 
www.
regulations.
gov:
Follow
the
online
instructions
for
submitting
comments.

 
Email:
a­
and­
r­
docket@
epa.
gov.

 
Fax:
(
202)
566­
1741.

 
Mail:
Air
and
Radiation
Docket
and
Information
Center,
Environmental
Protection
Agency,
Mailcode:
6102T,
1200
Pennsylvania
Ave.,
NW,
Washington,
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
3
DC
20460.
In
addition,
please
mail
a
copy
of
your
comments
on
the
information
collection
provisions
to
the
Office
of
Information
and
Regulatory
Affairs,
Office
of
Management
and
Budget
(
OMB),
Attn:
Desk
Officer
for
EPA,
725
17th
St.,

NW,
Washington,
DC
20503.

 
Hand
Delivery:
Environmental
Protection
Agency,
EPA
West
Building,
Room
B102,
1301
Constitution
Ave.,
NW,
Washington,
DC.
Such
deliveries
are
only
accepted
during
the
Docket's
normal
hours
of
operation,
and
special
arrangements
should
be
made
for
deliveries
of
boxed
information.

Instructions:
Direct
your
comments
to
Docket
ID
No.
EPA­
HQ­
OAR­
2003­
0064.

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
e­
mail.
The
www.
regulations.
gov
website
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
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
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
4
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,
avoid
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.
For
additional
instructions
on
submitting
comments,
go
to
section
I.
B
of
the
SUPPLEMENTARY
INFORMATION
section
of
this
document.

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,
is
not
placed
on
the
Internet
and
will
be
publicly
available
only
in
hard
copy
form.
Publicly
available
docket
materials
are
available
either
electronically
in
www.
regulations.
gov
or
in
hard
copy
at
the
Air
and
Radiation
Docket
and
Information
Center,
EPA/
DC,
EPA
West
Building,
Room
B102,
1301
Constitution
Ave.,
NW,

Washington,
DC.
The
Public
Reading
Room
is
open
from
8:
30
a.
m.
to
4:
30
p.
m.,

Monday
through
Friday,
excluding
legal
holidays.
The
telephone
number
for
the
Public
Reading
Room
is
(
202)
566­
1744,
and
the
telephone
number
for
the
Air
and
Radiation
Docket
and
Information
Center
is
(
202)
566­
1742.

Public
Hearing:
People
interested
in
presenting
oral
testimony
or
inquiring
as
to
whether
a
hearing
is
to
be
held
should
contact
Ms.
Pam
Long,
Air
Quality
Planning
Division,
Office
of
Air
Quality
Planning
and
Standards
(
C504­
03),
U.
S.
Environmental
Protection
Agency,
Research
Triangle
Park,
NC
27711,
telephone
(
919)
541­
0641,
fax
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
5
number
(
919)
541­
5509,
e­
mail
address
long.
pam@
epa.
gov,
at
least
2
days
in
advance
of
the
public
hearing
(
see
DATES).
People
interested
in
attending
the
public
hearing
must
also
call
Ms.
Long
to
verify
the
time,
date,
and
location
of
the
hearing.
The
public
hearing
will
provide
interested
parties
the
opportunity
to
present
data,
views,
or
arguments
concerning
the
proposed
action.
If
a
public
hearing
is
held,
it
will
be
held
at
9
a.
m.
in
EPA's
Auditorium
in
Research
Triangle
Park,
North
Carolina,
or
at
an
alternate
site
nearby.

FOR
FURTHER
INFORMATION
CONTACT:
Mr.
David
J.
Svendsgaard,
Air
Quality
Policy
Division,
Office
of
Air
Quality
Planning
and
Standards
(
C504­
03),
U.
S.

Environmental
Protection
Agency,
Research
Triangle
Park,
NC
27711,
telephone
(
919)

541­
2380,
fax
number
(
919)
541­
5509,
e­
mail
address
svendsgaard.
dave@
epa.
gov.

SUPPLEMENTARY
INFORMATION:

I.
General
Information
A.
Does
This
Action
Apply
To
Me?

Entities
affected
by
this
rule
include
sources
in
all
industry
groups.
The
majority
of
sources
potentially
affected
are
expected
to
be
in
the
following
groups:

Industry
Group
SICa
NAICSb
Electric
Services
491
221111,
221112,
221113,
221119,
221121,
221122
Petroleum
Refining
291
324110
Industrial
Inorganic
Chemicals
281
325181,
325120,
325131,
325182,
211112,
325998,
331311,
325188
Industrial
Organic
Chemicals
286
325110,
325132,
325192,
325188,
325193,
325120,
325199
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
6
Miscellaneous
Chemical
Products
289
325520,
325920,
325910,
325182,
325510
Natural
Gas
Liquids
132
211112
Natural
Gas
Transport
492
486210,
221210
Pulp
and
Paper
Mills
261
322110,
322121,
322122,
322130
Paper
Mills
262
322121,
322122
Automobile
Manufacturing
371
336111,
336112,
336211,
336992,
336322,
336312,
336330,
336340,
336350,
336399,
336212,
336213
Pharmaceuticals
283
325411,
325412,
325413,
325414
a
Standard
Industrial
Classification
b
North
American
Industry
Classification
System.

Entities
affected
by
the
rule
also
include
States,
local
permitting
authorities,
and
Indian
tribes
whose
lands
contain
new
and
modified
major
stationary
sources.

B.
What
Should
I
Consider
as
I
Prepare
My
Comments
for
EPA?

1.
Submitting
CBI
Do
not
submit
information
that
you
consider
to
be
CBI
electronically
through
www.
regulations.
gov
or
e­
mail.
Clearly
mark
the
part
or
all
of
the
information
that
you
claim
to
be
CBI.
For
CBI
information
in
a
disk
or
CD
ROM
that
you
mail
to
EPA,
mark
the
outside
of
the
disk
or
CD
ROM
as
CBI
and
then
identify
electronically
within
the
disk
or
CD
ROM
the
specific
information
that
is
claimed
as
CBI.
In
addition
to
one
complete
version
of
the
comment
that
includes
information
claimed
as
CBI,
a
copy
of
the
comment
that
does
not
contain
the
information
claimed
as
CBI
must
be
submitted
for
inclusion
in
the
public
docket.
Information
so
marked
will
not
be
disclosed
except
in
accordance
with
procedures
set
forth
in
40
CFR
part
2.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
7
2.
Tips
for
Preparing
Your
Comments
When
submitting
comments,
remember
to:

 
Identify
the
rulemaking
by
docket
number
and
other
identifying
information
(
e.
g.,

subject
heading,
Federal
Register
proposal
publication
date
and
reference
page
number(
s)).

 
Follow
directions
­
The
EPA
may
ask
you
to
respond
to
specific
questions
or
organize
comments
by
referencing
a
Code
of
Federal
Regulations
(
CFR)
part
or
section
number.

 
Explain
why
you
agree
or
disagree;
suggest
alternatives
and
provide
substitute
language
for
your
requested
changes.

 
Describe
any
assumptions
and
provide
any
technical
information
and/
or
data
that
you
used.

 
If
you
estimate
potential
costs
or
burdens,
explain
how
you
arrived
at
your
estimate
in
sufficient
detail
to
allow
for
it
to
be
reproduced.

 
Provide
specific
examples
to
illustrate
your
concerns,
and
suggest
alternatives.

 
Explain
your
views
as
clearly
as
possible,
avoiding
the
use
of
profanity
or
personal
threats.

 
Make
sure
to
submit
your
comments
by
the
specified
comment
period
deadline.

Commenters
wishing
to
submit
proprietary
information
for
consideration
must
clearly
distinguish
such
information
from
other
comments
and
clearly
label
it
as
CBI.

Send
submissions
containing
such
proprietary
information
directly
to
the
following
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
8
address,
and
not
to
the
public
docket,
to
ensure
that
proprietary
information
is
not
inadvertently
placed
in
the
docket:
Attention:
Mr.
Roberto
Morales,
U.
S.
Environmental
Protection
Agency,
OAQPS
Document
Control
Officer,
109
TW
Alexander
Drive,
Room
C404­
02,
Research
Triangle
Park,
NC
27711.
EPA
will
disclose
information
identified
as
CBI
only
to
the
extent
allowed
by
the
procedures
set
forth
in
40
CFR
part
2.
If
no
claim
of
confidentiality
accompanies
a
submission
when
it
is
received
by
the
EPA,
the
information
may
be
made
available
to
the
public
without
further
notice
to
the
commenter.

C.
Where
Can
I
Obtain
Additional
Information?

In
addition
to
being
available
in
the
docket,
an
electronic
copy
of
today=
s
final
rule
is
also
available
on
the
World
Wide
Web.
Following
signature
by
the
EPA
Administrator,
a
copy
of
today=
s
final
rule
will
be
posted
on
the
EPA=
s
New
Source
Review
(
NSR)
website,
under
Regulations
&
Standards,
at
http://
www.
epa.
gov/
nsr/
index.
html.

D.
How
Is
This
Preamble
Organized?

The
information
presented
in
this
preamble
is
organized
as
follows:

I.
General
Information
A.
Does
This
Action
Apply
To
Me?
B.
What
Should
I
Consider
as
I
Prepare
My
Comments
for
EPA?
C.
Where
Can
I
Obtain
Additional
Information?
D.
How
Is
This
Preamble
Organized?
II.
Introduction
III.
Debottlenecking
A.
Background
B.
Overview
of
Today's
Proposed
Action
C.
Discussion
of
Issues
Under
Proposed
Debottlenecking
Approach
IV.
Aggregation
A.
Background
B.
Overview
of
Today's
Proposed
Action
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
9
C.
Discussion
of
Issues
Under
Proposed
Aggregation
Approach
V.
Project
Netting
A.
Background
B.
Overview
of
Today's
Proposed
Action
VI.
Statutory
and
Executive
Order
Reviews
A.
Executive
Order
12866
­
Regulatory
Planning
and
Review
B.
Paperwork
Reduction
Act
C.
Regulatory
Flexibility
Analysis
(
RFA)
D.
Unfunded
Mandates
Reform
Act
E.
Executive
Order
13132
­
Federalism
F.
Executive
Order
13175
­
Consultation
and
Coordination
with
Indian
Tribal
Governments
G.
Executive
Order
13045
­
Protection
of
Children
from
Environmental
Health
Risks
and
Safety
Risks
H.
Executive
Order
13211
­
Actions
Concerning
Regulations
That
Significantly
Affect
Energy
Supply,
Distribution,
or
Use
I.
National
Technology
Transfer
and
Advancement
Act
VII.
Statutory
Authority
II.
Introduction
In
May
2001,
President
Bush=
s
National
Energy
Policy
Development
Group
issued
findings
and
key
recommendations
for
a
National
Energy
Policy.
This
document
included
numerous
recommendations
for
action,
including
a
recommendation
that
the
EPA
Administrator,
in
consultation
with
the
Secretary
of
Energy
and
other
relevant
agencies,
review
NSR
regulations,
including
administrative
interpretation
and
implementation.
1
The
recommendation
requested
that
we
issue
a
report
to
the
President
on
the
impact
of
the
regulations
on
investment
in
new
utility
and
refinery
generation
capacity,
energy
efficiency,
and
environmental
protection.

In
response,
in
June
2001,
we
issued
a
background
paper
giving
an
overview
of
the
NSR
program.
This
paper
is
available
on
the
Internet
at
1
For
an
overview
of
the
major
NSR
program,
see
67
FR
80187­
80188.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
10
http://
www.
epa.
gov/
nsr/
publications.
html.
We
solicited
public
comments
on
the
background
paper
and
other
information
relevant
to
the
NSR
90­
day
Review
and
Report
to
the
President.
During
our
review
of
the
NSR
program,
we
met
with
more
than
100
groups,
held
four
public
meetings
around
the
country,
and
received
more
than
130,000
written
comments.
Our
Report
to
the
President
and
our
recommendations
in
response
to
the
energy
policy
were
issued
on
June
13,
2002.
A
copy
of
this
information
is
available
at
http://
www.
epa.
gov/
nsr/
publications.
html.

We
have
previously
finalized
responses
to
energy
policy
recommendations
on
December
31,
2002
(
67
FR
80186)
and
October
27,
2003
(
68
FR
61248)
2.
Today=
s
proposed
regulations
for
Aaggregation@
and
Adebottlenecking@
are
a
further
response
to
the
remaining
recommendations.
We
also
are
proposing
today
a
change
to
our
past
policy
for
project
netting.
We
believe
that
today=
s
proposed
rules
would
provide
greater
regulatory
certainty
without
sacrificing
the
current
level
of
environmental
protection
and
benefit
derived
from
the
current
NSR
program.

Today's
action
proposes
and
requests
comment
on
changes
to
the
regulations
for
both
the
approval
and
promulgation
of
implementation
plans
and
requirements
for
preparation,
adoption,
and
submittal
of
implementation
plans
governing
the
NSR
programs
mandated
by
parts
C
and
D
of
title
I
of
the
CAA.
We
have
not
proposed
to
include
conforming
changes
to
40
CFR
(
Code
of
Federal
Regulations)
part
51,
appendix
2
On
March
17,
2006,
the
D.
C.
Circuit
Court
of
Appeals
vacated
the
October
27,
2003
rule.
On
May
1,
2006,
EPA
asked
the
Court
to
grant
rehearing
or,
in
the
alternative,
rehearing
en
banc
with
respect
to
this
decision.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
11
S,
since
that
section
has
not
been
updated
with
the
recently
finalized
NSR
rule
changes.

It
is
our
intention,
when
we
finalize
today's
rule
provisions,
to
include
regulatory
changes
that
conform
appendix
S
to
those
final
regulations.
Because
these
are
conforming
changes
and
the
public
has
had
an
opportunity
for
review
and
comment,
we
will
not
be
soliciting
additional
comments
before
we
finalize
them.

III.
Debottlenecking
A.
Background
1.
NSR
Improvement
Rule
of
2002
As
noted
above,
EPA
has
already
promulgated
rules
in
response
to
the
2002
recommendations.
On
December
31,
2002,
we
finalized
changes
to
NSR
applicability
for
modifications
at
major
stationary
sources.
Specifically,
this
rule
promulgated
changes
for
how
to
calculate
emissions
increases
at
sources
that
have
undergone
a
physical
change
or
change
in
the
method
of
operation,
or
"
project."

As
a
result
of
the
2002
rules,
the
major
NSR
regulations
now
measure
an
emissions
increase
from
a
project
by
comparing
the
change
in
actual
emissions
before
and
after
the
change.
3
Under
this
methodology,
the
actual
annual
emissions
before
the
change
are
compared
with
the
projected
actual
annual
emissions
after
the
change
to
determine
if
a
physical
or
operational
change
would
result
in
a
significant
increase
in
emissions.
The
major
NSR
regulations
allow
for
consideration
of
an
emissions
unit=
s
operating
capacity
in
determining
whether
a
change
results
in
an
emissions
increase.

3
Sources
are
allowed
to
use
an
actual­
to­
potential
emissions
test
for
NSR
applicability
that
makes
them
not
subject
to
reporting
and
recordkeeping
requirements
that
are
required
under
the
new
actual­
to­
projected­
actual
emissions
test.
See
67
FR
80197.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
12
Under
the
actual­
to­
projected­
actual
test,
a
source
can
subtract
from
its
post­
project
emissions
those
emissions
that
the
unit
"
could
have
accommodated"
during
the
baseline
period
and
that
are
unrelated
to
the
change
(
sometimes
referred
to
as
the
Ademand
growth
exclusion@).
That
is,
the
source
can
emit
up
to
its
current
maximum
capacity
without
triggering
major
NSR
under
the
actual­
to­
projected­
actual
test,
as
long
as
the
increase
is
unrelated
to
the
physical
or
operational
change.

Various
governmental
and
nongovernmental
entities
sought
judicial
review
of
many
aspects
of
the
2002
rules.
In
New
York
v.
EPA,
413
F.
3d
3
(
D.
C.
Cir.
2005),
the
Court
largely
upheld
EPA's
rules
on
projecting
actual
emissions
resulting
from
a
change.

The
Court
held
that
the
NSR
modification
requirement,
which
incorporates
by
reference
CAA
section
111(
a)(
4),
"
unambiguously
defines
>
increases=
in
terms
of
actual
emissions."

The
Court
also
upheld
excluding
from
projections
those
increases
attributable
to
"
demand
growth."
Those
emissions
were
increases
that
could
have
been
accommodated
by
the
source
prior
to
the
change
and
which
were
unrelated
to
change.

Most
of
the
applicability
test
in
the
2002
rule
based
emissions
test
on
historical
(
actual)
emissions;
however,
EPA
also
promulgated
the
Clean
Unit
exemption,
which
would
have
allowed
a
source
to
calculate
its
emissions
increase
based
on
its
permitted
emissions.
While
the
Court
upheld
EPA
on
projected
actual
emissions,
it
vacated
the
method
of
calculating
emissions
for
Clean
Units.
The
Court
held
that
EPA
lacked
authority
to
promulgate
the
Clean
Unit
provision,
and
in
doing
so,
held
that
"
the
plain
language
of
the
CAA
indicates
that
Congress
intended
to
apply
NSR
to
changes
that
increase
actual
emissions
instead
of
potential
or
allowable
emissions."
The
Court
held
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
13
that
the
method
for
clean
units
would
have
impermissibly
relied
on
a
measure
of
emissions
that
was
not
based
on
actual
emissions
increases
at
the
source.

2.
What
Is
"
Debottlenecking"?

A
major
stationary
source
often
consists
of
multiple
emitting
and
non­
emitting
units
that
comprise
integrated
processes
at
the
source.
As
part
of
the
operations
of
the
source
or
within
a
process,
various
pieces
of
equipment
may
provide
input
to
or
accept
output
from
other
equipment
or
units
at
the
source.
These
equipment
and
units
at
the
source
may
have
different
operating
capacities.

When
equipment
and
units
of
different
capacities
operate,
one
unit
may
constrain
other
units
from
operating
at
their
full
design
capacity
or
maximum
output
rating
either
by
limiting
inputs
to
those
other
units
or
by
limiting
usable
output.
Such
constraining
equipment
and
units
are
commonly
called
"
bottlenecks"
in
a
process.
The
constrained
emissions
unit(
s)
can
be
situated
in
the
process
either
in
advance
of
the
constraining
emissions
unit
(
i.
e.,
"
upstream")
or
after
it
("
downstream").

When
a
constraining
unit
or
piece
of
equipment
is
changed
to
increase
its
capacity,
another
unit
may
increase
its
operations
(
depending
on
whether
some
or
all
of
the
constraint
was
removed)
to
provide
input
to
the
changed
unit
or
use
output
from
it.

We
have
historically
referred
to
this
phenomenon
as
"
debottlenecking."
This
increased
operation
of
the
upstream
or
downstream
emissions
unit(
s)
can
contribute
to
increased
emissions
from
the
unit(
s).

Our
current
regulations
define
a
"
major
modification"
as
one
in
which
a
physical
change
or
a
change
in
the
method
of
operation
of
a
major
stationary
source
results
in
a
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
14
significant
emissions
increase
of
a
regulated
NSR
pollutant
and
a
significant
net
emissions
increase
of
that
pollutant
at
the
source.
See
40
CFR
52.21(
b)(
2).
Based
on
this
current
regulation,
the
total
increase
in
emissions
that
are
included
in
determining
if
there
will
be
a
post­
change
significant
emissions
increase
includes:
(
1)
increases
occurring
at
all
new
or
modified
units,
and
(
2)
any
other
increases
at
existing
emissions
units
not
being
modified
that
experience
emissions
increases
as
a
result
of
the
change.
4
Under
our
current
and
prior
rules,
we
have
presumed
that
increases
in
emissions
at
a
debottlenecked
unit
are
caused
by
the
project
and,
thus,
included
in
determining
NSR
applicability
for
the
project.

EPA's
recommendation
to
the
President
directed
changes
to
our
"
debottlenecking"
rule
provisions,
and
we
recognize
that
there
has
been
confusion
over
our
past
policies
for
calculating
emissions
from
debottlenecked
units
and
from
units
experiencing
an
"
increase
in
utilization."
While
we
are
not
defining
the
term
"
debottlenecked
units"
in
today's
proposal,
we
intend
for
these
provisions,
when
finalized,
to
apply
to
all
types
of
unchanged
units
that
increase
their
utilization
as
a
result
of
a
project(
s)
occurring
elsewhere
at
the
source.

3.
How
Does
EPA
Currently
Implement
Major
NSR
for
Debottlenecking
Changes?

As
stated
above,
the
emission
calculation
for
a
new
project
includes
the
emission
increases
from
all
the
units
involved
in
a
project.
Any
new
unit=
s
emission
increase
that
results
from
the
project
is
equal
to
the
unit's
potential
to
emit,
or
APTE.@
See
40
CFR
4
Note
that,
later
in
this
preamble,
we
propose
to
include
decreases
(
along
with
increases)
from
emissions
units
in
calculating
the
emissions
change
that
results
from
a
project.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
15
52.21(
a)(
2)(
iv)(
d).
For
existing
units,
the
emission
increase
associated
with
the
project
is
based
on
the
"
actual­
to­
projected­
actual"
test,
and,
under
the
current
test,
it
includes
increases
not
only
from
the
unit(
s)
undergoing
the
change
but
also
increases
at
any
other
unit
at
the
major
stationary
source
that
are
related
to
the
change.
5
In
the
past,
EPA
has
generally
assumed
that
emissions
from
debottlenecked
units
result
from
the
proposed
project.

Under
the
"
actual­
to­
projected­
actual"
test,
pre­
change
emissions
are
determined
using
the
procedures
for
"
baseline
actual
emissions."
As
evident
in
40
CFR
52.21(
b)(
48),

different
rules
apply
for
determining
baseline
actual
emissions
depending
on
whether
or
not
the
source
is
an
electric
utility.
Except
for
electric
utility
steam
generating
units,
the
major
stationary
source
requesting
the
modification
may
use
any
consecutive
24­
month
period
in
the
past
10
years
to
determine
the
baseline
actual
emissions
for
the
emissions
unit(
s)
involved.
This
10­
year
"
look
back"
period
is
limited
to
5
years
for
electric
utilities,
but
a
different
24­
month
period
outside
of
the
5­
year
window
can
be
used
if
it
is
more
representative
of
normal
source
operation.
Post­
change
emissions
are
generally
projected
using
the
emissions
unit=
s
maximum
annual
rate,
in
tons
per
year,
at
which
it
is
expected
to
emit
a
regulated
NSR
pollutant
within
five
years
following
a
change,
less
any
amount
of
emissions
that
the
unit
could
have
accommodated
during
the
selected
24­

month
baseline
period
and
that
are
unrelated
to
the
change.
This
final
Aprojected
actual@

5
These
emissions
increase
test
requirements
apply
to
sources
in
delegated
jurisdictions.
Some
SIP­
approved
jurisdictions
have
not
yet
adopted
EPA=
s
rules
into
their
SIP=
s,
meaning
that
their
previous
rules
apply
for
their
sources
until
they
adopt
the
2002
rules.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
16
value,
in
tons
per
year,
is
the
value
you
compare
to
the
Abaseline
actual
emissions@
in
order
to
determine,
by
summing
the
increases
at
various
emissions
units,
whether
the
proposed
project
will
result
in
a
"
significant"
emissions
increase,
as
defined
in
the
first
step
of
the
calculation.
See
40
CFR
52.21(
b)(
23).
6
The
actual­
to­
projected­
actual
test
in
the
2002
rules
for
existing
emissions
units
applies
not
only
to
the
unit(
s)
undergoing
the
change
but
also
to
any
other
existing
emissions
unit(
s)
at
the
source
that
experiences
a
change
in
emissions
related
to
the
project.
Thus,
the
current
EPA
rules
permit
emissions
increases
from
debottlenecked
units
(
and
any
other
unit
that
increases
its
utilization
as
a
result
of
the
project)
to
be
calculated
using
an
Aactual­
to­
projected­
actual@
test.
7
We
believe
this
represents
a
fair
reading
of
our
current
regulatory
text
for
"
projected
actual
emissions"
found
at
40
CFR
52.21(
b)(
41).
8
6
EPA
is
developing
a
rule
for
electric
generating
units
(
EGU)
that
would
change
the
test
for
net
emissions
increase
for
those
units.
See
70
FR
61081
(
October
20,
2005).

7
Note
that
EPA
does
not
require
that
sources
use
projected
actual
emissions
to
calculate
their
emissions
increases.
If
a
source
prefers,
it
can
calculate
its
emissions
increases
by
comparing
its
past
actual
emissions
to
its
future
potential
to
emit.

8
We
note
that
some
confusion
was
caused
by
a
footnote
in
our
2002
rule
preamble
which
conveyed
that
our
debottlenecking
requirements
would
not
change
as
a
result
of
those
rules
and
referred
readers
to
a
future
rulemaking
to
address
debottlenecking.
This
footnote
has
been
read
by
some
to
suggest
that
debottlenecked
units
were
required
to
continue
to
calculate
emissions
increases
as
they
had
under
the
prior
rules.
The
intent
of
that
footnote
was
not
to
express
a
position
on
how
emissions
increases
were
to
be
calculated
at
debottlenecked
units
but
rather
to
make
clear
that
the
2002
NSR
Improvement
Rule
would
not
change
the
fact
that
emissions
from
debottlenecked
units
must
be
included
in
the
net
emissions
increase
for
the
project,
whenever
appropriate,
and
that
an
upcoming
rulemaking
would,
in
accordance
with
the
EPA
recommendation
to
the
President,
address
future
treatment
of
debottlenecked
units.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
17
As
explained
above,
when
an
emissions
increase
is
projected
at
a
debottlenecked
emissions
unit,
that
increase
must
be
added
to
the
increase
projected
at
the
changed
unit,

along
with
the
sum
of
all
contemporaneous
emissions
increases
and
decreases,
to
determine
whether
NSR
applies
to
the
source.
Consequently,
even
when
a
project
increases
emissions
by
less
than
a
significant
amount
at
the
changed
unit,
the
project
would
trigger
major
NSR
if:
(
1)
it
debottlenecks
another
unit
at
the
source;
(
2)
the
emissions
increase9
(
of
that
same
pollutant)
is
large
enough
at
the
debottlenecked
unit
that
there
is
a
significant
emissions
increase
resulting
from
the
project;
and
(
3)
the
contemporaneous
emissions
decreases
and
increases
(
of
that
same
pollutant)
at
the
source
equal
or
exceed
the
levels
that
define
a
significant
net
emissions
increase.
If
NSR
applies,
then
the
source
goes
through
permitting,
the
changed
unit
undergoes
a
Best
Available
Control
Technology
(
BACT)
or
Lowest
Achievable
Emissions
Rate
(
LAER)

analysis,
and
the
net
emissions
increase
is
accounted
for
in
the
air
quality
analysis.

B.
Overview
of
Today's
Proposed
Action
Today,
we
propose
to
change
the
requirements
for
determining
which
emissions
increases
from
existing
units
that
are
debottlenecked
by
a
project
elsewhere
at
the
source
must
count
towards
NSR
applicability.
The
purpose
of
this
change
is
to
remove
barriers
that
the
NSR
program
can
impose
that
prevent
owners
and
operators
of
major
stationary
sources
from
operating
their
facilities
in
the
most
efficient
manner.
Also,
since
1992,

EPA
has
worked
to
address
concerns
that
the
Amajor
NSR
regulations
were
too
complex
9
As
noted
in
Footnote
4,
later
in
this
preamble,
we
propose
to
include
decreases
from
emissions
units
in
calculating
the
emissions
change
that
results
from
a
project.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
18
and
burdensome@
(
see
61
FR
38250,
38252
(
July
23,
1996)),
and
these
proposed
changes
continue
our
efforts
to
simplify
the
process.
Numerous
commenters
have
previously
identified
debottlenecking
changes
as
a
particularly
complex
aspect
of
the
NSR
program.

Among
the
improvements
to
NSR
called
for
in
the
2002
recommendations
paper
were
changes
to
how
these
rules
address
debottlenecking
of
processes.

We
propose
to
amend
the
relevant
rules
in
light
of
not
only
our
2002
energy
policy
recommendation
for
debottlenecking,
but
also
consistent
with
the
Court's
holdings
in
New
York
v.
EPA.
For
purposes
of
clarity
and
greater
certainty
for
affected
parties,
we
propose
that
only
those
emissions
increases
at
debottlenecked
units
that
are
"
caused"
by
the
physical
change
or
change
in
the
method
of
operation
be
included
in
the
modification
analysis.
We
believe
the
debottlenecking
regulations
can
be
improved
if,
as
described
below,
the
causation
requirement
of
the
NSR
rules
is
more
appropriately
tailored
to
circumstances
where
emissions
increases
clearly
result
from
a
proposed
change.
10
Our
proposal
seeks
to
refine
the
causation
requirement,
which
we,
in
accordance
with
the
D.
C.
Circuit
ruling
in
New
York
v.
EPA,
refer
to
as
the
"
but
for"
causation
requirement
in
light
of
various
legal,
physical
and
economic
constraints
that
might
exist
on
debottlenecked
units.
We
are
taking
comment
on
all
approaches
to
causation
described
below
and
ask
whether
it
is
more
appropriate
to
rely
on
a
single
causation
test
or
a
combination
of
the
tests.

10
We
intend
for
this
rule
to
apply
not
only
to
emissions
increases
from
debottlenecked
units
but
also
to
any
unchanged
unit
at
a
source
that
encounters
an
emissions
increase
after
a
project.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
19
As
with
our
past
policy,
today=
s
debottlenecking
rule
proposal
applies
on
a
pollutant­
specific
basis.
For
example,
a
raw
mill
expansion
at
a
cement
plant
is
expected
to
result
in
a
less
than
significant
increase
in
particulate
matter
emissions.
The
increased
raw
mill
capacity
may
also
enable
the
previously
constrained
kiln
to
increase
its
productive
capacity,
thereby
increasing
emissions
of
other
pollutants,
such
as
nitrogen
oxides
(
NOx).
While
there
may
not
be
a
significant
increase
of
particulate
matter
emissions
from
both
units,
there
may
be
a
significant
increase
of
NOx
emissions
from
the
kiln.
Since
BACT
or
LAER
cannot
be
triggered
at
a
changed
emissions
unit
unless
the
pollutant
that
has
a
significant
net
emissions
increase
is
emitted
by
the
changed
unit,

BACT
or
LAER
would
not
apply
to
the
raw
mill
expansion.
PSD
review,
however,
can
be
triggered
for
the
source
by
increases
in
a
pollutant
not
emitted
by
the
changed
unit.

As
noted
above,
we
believe
that
it
is
appropriate
to
revisit
the
causation
requirements
for
determining
when
an
emissions
increase
at
a
debottlenecked
unit
is
caused
by
a
particular
change
elsewhere
at
the
source.
We
do
not
believe
that
including
emissions
increases
from
debottlenecked
units,
without
first
establishing
causation,
is
consistent
with
Congress'
intent
in
establishing
the
major
NSR
program.
As
we
explained
in
promulgating
the
demand
growth
exclusion,
we
interpret
the
"
which
increases"
and
"
which
results
in"
language
of
section
111(
a)(
4)
of
the
modification
provision
of
the
CAA
as
requiring
"
a
causal
link
between
the
proposed
change
and
any
post­
change
increase
in
emissions."
See
67
FR
80203;
New
York
v.
EPA,
413
F.
3d
3,
32­

33
(
D.
C.
Cir.
2005).
In
New
York
v.
EPA,
413
F.
3d
3,
31­
33
(
D.
C.
Cir.
2005),
the
Court
looked
favorably
on
the
demand
growth
exclusion
for
emissions
increases
that
(
1)
could
Draft:
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and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
20
have
been
accommodated
prior
to
the
change
to
meet
the
particular
level
of
demand;
and
(
2)
were
not
caused
by
the
change.

EPA's
interpretation
of
section
111(
a)(
4)
as
requiring
a
causal
relationship
is
governed
by
Chevron
(
Chevron
U.
S.
A.,
Inc.
V.
Natural
Res.
Def.
Council,
467
U.
S.
837
(
1984)).
This
decision
was
recently
explained
in
New
York
v.
EPA,
413
F.
3d
3,
18
(
D.
C.

Cir.
2005)
as
follows:

As
to
EPA's
interpretation
of
the
CAA,
we
proceed
under
Chevron's
familiar
two­
step
process.
See
467
U.
S.
at
842­
43.
In
the
first
step
(`
Chevron
Step
1'),
we
determine
whether
based
on
the
Act's
language,
legislative
history,
structure,
and
purpose,
`
Congress
has
directly
spoken
to
the
precise
question
at
issue.'
Id.
at
842.
If
so,
EPA
must
obey.
But
if
Congress's
intent
is
ambiguous,
we
proceed
to
the
second
step
(`
Chevron
Step
2')
and
consider
`
whether
the
agency's
[
interpretation]
is
based
on
a
permissible
construction
of
the
statute.'
Id.
at
843.

If
so,
we
will
give
that
interpretation
`
controlling
weight
unless
[
it
is]
arbitrary,

capricious,
or
manifestly
contrary
to
the
statute.'
Id.
at
844.

EPA
believes
that
even
if
Congress
failed
to
articulate
unambiguously
that
section
111(
a)(
4)
requires
a
causal
link
between
the
proposed
change
and
any
post­
change
increase
in
emissions,
the
agency's
approach
is
a
reasonable
interpretation
of
the
statute
and
well
within
the
purview
of
administrative
deference
under
Chevron.
Below,
we
describe
various
standards
of
causation
that
we
believe
are
consistent
with
the
statutory
text
of
section
111(
a)(
4).
EPA
believes
that
not
only
inferring
causation
under
section
111(
a)(
4)
would
be
entitled
to
deference,
but
that
selection
of
one
or
more
of
these
Draft:
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and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
21
causation
approaches
would
also
be
afforded
similar
deference
under
Chevron.
We
propose
rule
changes
that
implement
these
approaches
and
request
comment
on
that
language.

1.
Legal
Causation
The
causation
test
that
is
the
most
straightforward
to
apply
and
enforce
for
debottlenecked
units
would
be
a
legal
causation
test
in
which
an
emissions
increase
at
a
debottlenecked
unit
would
not
be
considered
to
have
been
caused
by
a
physical
or
operational
change
at
a
major
stationary
source
if
the
debottlenecked
unit's
post­
project
emissions
were
already
authorized
by
a
pre­
existing
air
quality
permit.
This
would
apply
to
any
debottlenecked
unit
with
a
permit
that
is
enforceable
as
a
practical
matter.
12
For
12
AEnforceable
as
a
practical
matter@
will
be
achieved
if
a
requirement
is
both
legally
and
practicably
enforceable.
A
requirement
is
Alegally
enforceable@
if
some
authority
has
the
right
to
enforce
the
restriction.
Under
current
EPA
guidance,
practicable
enforceability
for
a
source­
specific
permit
will
be
achieved
if
the
permit=
s
provisions
specify:
(
1)
A
technically
accurate
limitation
and
the
portions
of
the
source
subject
to
the
limitation;
(
2)
the
time
period
for
the
limitation
(
hourly,
daily,
monthly,
and
annual
limits
such
as
rolling
annual
limits);
and
(
3)
the
method
to
determine
compliance,
including
appropriate
monitoring,
recordkeeping,
and
reporting.
For
rules
and
general
permits
that
apply
to
categories
of
sources,
practicable
enforceability
additionally
requires
that
the
provisions:
(
1)
identify
the
types
or
categories
of
sources
that
are
covered
by
the
rule;
(
2)
where
coverage
is
optional,
provide
for
notice
to
the
permitting
authority
of
the
source=
s
election
to
be
covered
by
the
rule;
and
(
3)
specify
the
enforcement
consequences
relevant
to
the
rule.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
22
example,
if
a
unit
is
debottlenecked
by
a
change
elsewhere
at
the
source,
but
it
had
previously
been
permitted
(
with
a
qualifying
permit)
to
emit
at
operating
levels
that
could
be
reached
but
would
not
be
exceeded
after
the
debottlenecking,
under
this
legal
causation
test
any
change
in
emissions
at
this
unit
actually
resulted
from
the
initial
authorization
and
not
from
the
proposed
change.
The
reasoning
behind
this
interpretation
is
especially
clear
when
considering
units
with
nonattainment
NSR
permits,
where
the
source
must
obtain
offsets
under
its
original
permit
for
a
level
of
emissions
that
represents
the
maximum
operation
allowed
for
the
unit
by
its
original
permit.
Thus,
as
long
the
post­
debottlenecking
operational
level
is
within
their
permitted
limit,
and
the
source
has
already
obtained
permanent
offsets
for
operating
at
the
higher
level,
it
is
logical
to
conclude
that
the
change
associated
with
the
initial
authorization
"
caused"
the
changed
level
of
emissions.
13
Under
this
test,
the
"
but
for"
legal
cause
of
the
increase
would
be
the
original
new
construction
or
modification
that
received
the
initial
emission
authorization.
Without
this
original
event,
and
the
accompanying
permit,
the
emissions
associated
with
debottlenecking
could
not
have
occurred.
Accordingly,
the
EPA
believes
it
is
the
original
event,
not
the
debottlenecking
event,
that
is
the
legal
cause
for
the
changes
in
emissions
at
the
unchanged
unit.
Although
it
is
possible
hypothetically
to
attribute
the
emissions
to
either
event,
the
presence
of
the
permit
is
the
basis
on
which
to
legally
attribute
the
13
Here,
we
use
nonattainment
NSR
as
an
example,
but
we
propose
to
apply
this
approach
to
other
types
of
air
quality
permits
(
i.
e.,
PSD
and
Title
V
operating
permits,
and
other
permits
that
are
enforceable
as
a
practical
matter).
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
23
emissions
to
the
event
that
gave
rise
to
the
permit
limit.
The
emissions
unit
is
legally
constrained
from
operating
at
the
post­
change
emissions
rate,
if
such
emissions
would
violate
a
legally
and
practically
enforceable
term
or
condition
of
any
previously
issued
permit.

The
permit
status
of
the
unchanged
unit
would
be
the
key
criterion
for
establishing
causation
under
this
approach.
For
example,
at
a
grey
iron
foundry,
both
the
casters
and
rolling
unit
downstream
of
a
melting
tub
are
oversized;
however,
the
only
the
casting
unit
has
a
permit
that
is
enforceable
as
a
practical
matter
(
e.
g.,
Title
V
operating
permit
containing
SIP
limits).
Due
to
a
physical
change
to
expand
the
capacity
of
the
melting
unit,
the
casting
unit
can
operate
at
a
higher
throughput.
If
the
casting
unit
has
obtained
a
qualifying
permit
that
authorized
its
higher
operating
level,
the
emissions
associated
with
that
operating
level
first
achieved
after
the
change
at
the
melting
unit
would
be
legally
caused
by
the
change
that
resulted
in
the
earlier
permitting
action
(
e.
g.,

the
original
installation
of
the
casting
unit,
or
some
modification
to
it)
and
not
by
the
change
at
the
melting
unit.
14
Conversely,
for
the
rolling
unit,
which
removes
iron
billet
out
of
the
caster,
if
it
operates
at
higher
levels
after
the
change,
but
had
not
received
authorization
for
its
higher
operating
levels
through
a
qualifying
permit,
we
cannot,
under
the
legal
causation
approach,
attribute
the
emissions
increase
to
the
original
roller
installation
because
there
is
no
enforceable
permit
which
serves
as
a
basis
for
us
to
attribute
the
legal
cause.
Thus,
the
rolling
unit's
emissions
increase
 
based
on
applying
14
In
the
case
where
a
casting
unit
emits
at
a
level
higher
than
its
permitted
emissions
rate,
then
it
is
a
change
in
the
method
of
operation
and
may
be
subject
to
major
NSR.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
24
the
actual­
to­
projected­
actual
test
 
would
be
attributable
to
the
change
and
must
be
included
in
the
overall
emissions
increase
resulting
from
the
expansion
project
at
the
melting
unit.

We
believe
that
this
approach
offers
significant
advantages
to
NSR
implementation
with
virtually
no
disadvantage.
The
"
but
for"
legal
causation
test
would
be
simpler
for
owners
and
operators
to
apply
and
for
reviewing
authorities
to
administer.

It
would
reduce
the
burden
of
complex
source­
wide
emissions
calculations
that
can
involve
disputes
or
confusion
about
the
physical
capabilities
of
the
design
of
the
unchanged
unit
absent
the
change
elsewhere
in
the
process.
This
burden
and
confusion
would
be
eliminated
where
an
existing
permit
already
authorized
the
emissions
increase.

This
approach
also
offers
source
owners
and
operators
certainty
in
designing
and
planning
projects
at
their
sources,
because
they
may
rely
on
the
air
pollution
decisions
already
made
for
a
given
unit
when
planning
for
the
future
operation
of
that
unit.
We
further
note
that
our
current
rules
do
not
require
BACT
or
LAER
at
unchanged
units,
so
this
policy
would
not
result
in
less
control
on
the
unchanged
unit.
It
may
result
in
sources
not
needing
BACT/
LAER
review
for
the
changed
units
themselves
in
situations
where
the
increase
from
the
unchanged
unit
must
be
part
of
the
NSR
applicability
calculation
in
order
to
reach
significant
increase
levels
for
a
pollutant
emitted
by
the
changed
unit.

However,
in
such
cases,
the
emissions
increase
at
the
changed
unit
necessarily
would
have
to
be
less
than
the
de
minimis
significance
levels,
so
any
reduction
in
pollution
would
also
be
de
minimis.

While
EPA
believes
that
the
legal
causation
approach
may
offer
the
greatest
Draft:
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quote,
or
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June
13,
2006
25
potential
for
improvement
in
the
regulatory
treatment
of
debottlenecking,
we
must
address
how
this
approach
comports
with
the
D.
C.
Circuit's
recent
decision
in
New
York
v.
EPA
concerning
Clean
Units.
The
term
"
modification"
is
defined
by
section
111(
a)(
4)

as
"
any
physical
change
in,
or
change
in
the
method
of
operation
of,
a
stationary
source
which
increases
the
amount
of
any
air
pollutant,
emitted
by
such
source
or
which
results
in
the
emission
of
any
air
pollutant
not
previously
emitted."
As
previously
stated,
the
agency
has
interpreted
the
"
which
increases"
and
"
which
results
in"
language
of
section
111(
a)(
4)
as
requiring
a
causal
link
between
any
change
and
any
post­
change
increase
in
emissions.
EPA
used
this
rationale
in
adopting
the
demand
growth
exclusion,
and
this
exclusion
was
upheld
by
the
court
in
New
York
v.
EPA.
Therefore,
under
section
111(
a)(
4),
there
must
be
(
1)
a
physical
change
or
change
in
the
method
of
operation,
(
2)

that
is
the
cause
of,
(
3)
an
increase
in
emissions.

In
New
York
v.
EPA,
the
agency
attempted
to
define
Clean
Unit
status
such
that
a
change
at
the
unit
did
not
"
increase"
emissions
for
purposes
of
section
111(
a)(
4)
as
long
as
its
status
as
a
Clean
Unit
remained
intact,
even
if
the
change
caused
an
increase
in
actual
emissions
from
the
unit.
New
York
v.
EPA,
413
F.
3d
at
38.
The
court
ruled
that
the
agency
lacked
the
authority
to
promulgate
the
Clean
Unit
provision
because
the
term
"
increases"
refers
to
an
increase
in
actual
emissions
rather
than
potential
or
allowable
emissions.
This
issue
does
not
arise
in
this
proposal,
which
focuses
on
the
causation
of
the
increase
rather
than
its
measurement.

The
agency
believes
that,
with
regard
to
debottlenecking,
the
CAA
and
section
111(
a)(
4)
more
specifically
are
silent
as
to
what
type
of
causation
is
required
between
the
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June
13,
2006
26
physical
change
or
change
in
the
method
of
operation
and
the
increase
in
emissions
that
occurs
at
the
debottlenecked
unit.
While
the
"
which
increases"
and
"
which
results
in"

language
from
section
111(
a)(
4)
strongly
suggests
a
causal
relationship
is
required,
the
statutory
text
does
not
mandate
nor
offers
explicit
explicit
guidance
concerning
a
specific
approach
or
standard
of
causation.
EPA
believes
that
the
legal
causation
approach
is
a
reasonable
interpretation
and
construction
of
section
111(
a)(
4)
and
would
therefore
be
subject
to
Chevron
Step
2
deference
afforded
the
agency
in
administering
the
NSR
program.

Under
a
legal
causation
test,
we
would
view
the
original
authorization
of
emissions
from
the
unit
to
be
the
cause.
If
the
emissions
were
authorized
by
a
prior
permit,
then
that
prior
transaction
would
be
the
cause
of
the
emissions
increase.
If
the
emissions
were
not
authorized
previously,
either
because
the
permit
level
is
exceeded
or
the
unit
failed
to
obtain
a
qualifying
air
quality
permit,
then
the
increase
in
emissions
from
the
debottlenecked
unit
would
be
attributable
not
to
a
prior
permit
but
instead
to
the
change.
Consistent
with
the
Clean
Unit
portion
of
New
York
v.
EPA,
we
would
count
those
emissions
on
an
actual­
to­
projected­
actual
basis.
However,
while
the
Clean
Unit
Test
involved
a
changed
unit,
where
causation
is
not
in
question,
a
debottlenecked
unit
is
not
undergoing
a
change,
so
we
must
establish
a
threshold
for
causation.
Once
the
threshold
is
exceeded,
or
if
a
prior
permitting
action
did
not
authorize
the
emissions
threshold,
then
causation
is
established
and
an
actual­
to­
projected­
actual
emissions
analysis
is
required
to
determine
the
debottlenecked
unit's
emissions
increase
that
is
attributable
to
the
change.
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or
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June
13,
2006
27
Under
this
approach,
an
emissions
increase
at
a
debottlenecked
emissions
unit
would
be
considered
caused
by
the
prior
permitting
action,
and
not
by
the
project
at
issue,

if
the
following
three
criteria
are
met:

 
The
unit's
maximum
emissions
levels
for
each
of
the
NSR
pollutants
in
question
is
explicitly
contained
in
a
permit;

 
the
permit
contains
an
allowable
emissions
limit
(
or
operational
limit
that
has
the
effect
of
constraining
emissions)
for
the
regulated
NSR
pollutant
that
is
enforceable
as
a
practical
matter
(
e.
g.,
Title
V
operating
permit);
and
 
the
unit
itself
is
unchanged.
16
Under
this
legal
causation
approach
for
units
meeting
the
above
criteria,
no
future
emissions
increase
at
the
debottlenecked
unit
is
considered
to
have
been
caused
by
the
project
for
the
purposes
of
an
NSR
determination.
In
such
circumstances,
the
contribution
from
the
debottlenecked
unit
to
determining
whether
the
project
results
in
a
significant
emissions
increase
is
zero.
On
the
other
hand,
if
the
project
causes
the
debottlenecked
emissions
unit
to
increase
above
its
permitted
emissions,
then
its
actualto
projected­
actual
emissions
increase
must
be
included
in
the
emissions
increase
calculation.

Under
the
legal
causation
test,
the
emissions
increase
from
a
proposed
project
16
Under
our
existing
regulations,
exceeding
a
permit
limit
could
be
considered
a
change
in
the
method
of
operation.
Thus,
while
not
physically
changed,
the
debottlenecked
unit
would
be
operationally
changed
if
it
plans
to
exceed
its
prior
permitted
emissions
limit.
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June
13,
2006
28
involving
a
unit
undergoing
a
physical
or
operational
change
and
a
debottlenecked
unit
is
calculated
as
follows.

 
For
new
units,
the
emissions
increase
equals
the
unit's
potential
to
emit.

 
For
an
existing
emissions
unit
undergoing
a
physical
change
or
change
in
the
method
of
operation,
the
emissions
increase
is
determined
under
the
actual­

toprojected
actual
test17
as
discussed
in
section
III.
A.
3
of
this
preamble.

 
For
a
debottlenecked
emissions
unit
that
will
not
be
changed
and
that
is
not
subject
to
an
emission
limit
that
is
enforceable
as
a
practical
matter,
the
emission
increase
is
determined
under
the
actual­
to­
projected­
actual
test.

 
For
a
debottlenecked
emissions
unit
that
will
not
be
changed
and
that
is
subject
to
an
emission
limit
that
is
enforceable
as
a
practical
matter,
the
emissions
increase
is
zero,
unless
the
source
plans
to
exceed
its
permitted
level,
in
which
case
the
emission
increase
is
determined
under
the
actual­
to­
projected­
actual
test.

 
Add
all
of
the
emissions
increases
from
the
project
as
discussed
above
to
determine
whether
there
is
a
significant
emissions
increase
as
a
result
of
the
proposed
project.
18
Thus,
all
emissions
increases
that
meet
the
causation
test
should
be
considered
in
the
project=
s
total
emissions
increase.
This
applies
to
all
related
units,
even
those
that
do
not
17
States
with
approved
programs
may
still
require
that
sources
use
our
past
emissions
increase
test
until
their
SIP
revisions
incorporating
the
2002
rules
are
effective
and
approved.

18
As
noted
in
Footnote
4,
later
in
this
preamble,
we
propose
to
include
decreases
from
emissions
units
in
calculating
the
emissions
change
that
results
from
a
project.
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June
13,
2006
29
require
a
permit
change
after
the
project.
Regardless
of
whether
the
related
units
require
permit
changes,
under
no
circumstance
can
the
source's
new
emissions
level
cause
or
contribute
to
a
violation
of
the
National
Ambient
Air
Quality
Standards
(
NAAQS)
or
an
exceedance
of
the
PSD
increment.
CAA
'
165(
a)(
3).

It
is
important
to
note
that
the
legal
causation
approach
is
not
dependent
on
air
quality
modeling;
rather,
it
is
based
on
the
fact
that
the
reviewing
authority
has
made
an
objective
decision
to
authorize
the
unit
to
emit
up
to
a
certain
level.
Thus,
we
believe
that
a
legal
causation
approach
can
effectively
work
with
any
unit
that
has
a
practically
enforceable
permit.
This
is
because,
as
noted
above,
reviewing
authorities
have
a
statutory
obligation
to
ensure
that
permitting
in
their
jurisdictions
will
not
cause
or
contribute
to
a
violation
of
a
NAAQS
or
PSD
increment
or
adversely
impact
an
air
quality
related
value
(
AQRV)
in
a
Class
I
area.
Within
each
issued
permit,
even
if
it
does
not
contain
a
comprehensive
air
quality
assessment,
the
reviewing
authority
has
responsibility
for
considering
the
totality
of
consequences
of
the
source
operating
at
the
levels
within
the
permit.
These
consequences
include,
at
a
minimum,
performing
some
screening
of
the
local
and
regional
impacts
of
the
unit
operating
at
the
maximum
allowed
emissions
level
of
the
permit.
The
reviewing
authority
will
make
a
determination
based
on,
at
a
minimum,
an
air
quality
screening,
emissions
inventory
review,
or
other
means
to
ensure
that
the
unit
can
operate
up
to
that
allowable
limit
and
not
violate
the
NAAQS
or
exceed
the
PSD
increment.
In
making
objective
decisions,
reviewing
authorities
must
consider
any
public
comment
received.
Accordingly,
if
the
public
is
concerned
about
the
air
quality
impacts
related
to
a
source's
operation
at
a
particular
emissions
level,
and
they
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June
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30
raise
specific,
articulated
concerns
to
the
reviewing
authority,
the
reviewing
authority
must
address
these
concerns
and
ensure
that
no
unacceptable,
adverse
impacts
result
from
allowing
the
source
to
operate
at
the
proposed
new
levels
before
issuing
the
permit.

We
solicit
comment
on
all
aspects
of
this
approach.
We
solicit
comment
on
our
proposal
to
apply
legal
causation
to
all
permit
limits
that
are
enforceable
as
a
practical
matter
(
i.
e.,
PSD
and
nonattainment
permits,
minor
NSR
permits,
and
other
authorizations).
We
ask
for
comment
on
whether
the
legal
causation
approach
may
need
to
account
for
additional
factors,
as
described
in
section
III.
C.
3
of
this
preamble,
such
as
the
level
of
air
quality
or
attainment
modeling
associated
with
the
original
permit
limit.

If
so,
how
would
it
be
appropriate
to
account
for
the
factors?
Should
the
legal
causation
approach
be
limited
in
application
when
the
prior
permit
lacked
air
quality
or
attainment
modeling?

2.
Physical
Causation
A
second
approach
to
the
causation
requirement
could
focus
upon
a
physical
causation.
Under
this
approach,
the
emissions
increase
at
an
unchanged
unit
would
result
from
the
change
at
the
"
bottlenecking"
unit
(
and
its
emissions
would
be
included
in
the
project=
s
emissions
increase
calculation)
if
the
unchanged
unit
were
physically
incapable
of
operating
at
a
higher
level
absent
the
change
at
the
bottlenecking
unit.
An
emissions
unit
is
physically
incapable
of
operating
at
the
post­
change
emissions
rate
if
pre­
change
operations
at
the
major
stationary
source
could
not
supply
material
to
or
accept
material
from
the
emissions
unit
due
to
inherent
capacity
constraints
at
the
major
stationary
source,
and
there
is
no
market
from
which
or
to
which
the
major
stationary
source
could
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June
13,
2006
31
purchase
or
sell
the
material,
or
if
there
is
no
other
reasonable
means
of
disposing
of
the
material.
In
such
a
case,
arguably
the
unchanged
unit
could
not
have
physically
accommodated
its
new
emissions
level
but
for
the
change.

To
help
clarify
a
"
but
for"
physical
causation
test,
consider
the
example
from
above
of
the
iron
foundry
that
has
oversized
casters
downstream
of
a
smaller­
sized
melting
tub.
A
physical
change
to
expand
the
melting
unit
would
allow
the
casting
unit
to
operate
at
a
higher
throughput.
"
But
for"
the
change
at
the
melting
unit,
the
iron
casting
unit
could
not
have
increased
its
operations
because
there
could
be
no
other
physical
supply
of
molten
iron
from
any
place
other
than
the
melting
unit.
Thus,

increases
in
emissions
from
the
debottlenecked
casting
unit
that
are
attributable
to
the
project
at
the
melting
tub
would
be
assessed
using
an
actual­
to­
projected­
actual
emissions
test.

In
contrast,
the
"
but
for"
physical
causation
would
not
exist
in
the
case
of
the
rolling
unit
at
the
foundry.
The
rolling
unit
is
further
downstream
and
removes
iron
billet
out
of
the
caster.
However,
the
rolling
unit
could
physically
accommodate
billet
from
other
sources,
since
there
is
no
physical
impairment
that
would
prevent
the
source
from
purchasing
billet
from
other
sources
and
increasing
emissions
from
the
rolling
unit.

Thus,
a
physical
change
at
the
casting
unit
(
or
further
upstream,
perhaps
at
the
melting
unit)
would
not
be
the
"
but
for"
cause
of
the
emissions
increase
at
the
rolling
unit
and
thus
the
rolling
unit's
emissions
increase
would
not
be
attributable
to
the
project.

For
another
example,
assume
that
the
smelting
of
recycled
aluminum
at
a
secondary
aluminum
smelter
and
rolling
mill
is
limited
by
the
capacity
of
the
smelter.
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The
rolling
mill,
however,
can
produce
product
using
aluminum
ingots
either
from
the
secondary
smelter
or
from
the
nearby
primary
aluminum
plant
(
which
it
has
actually
done
in
the
past).
The
source
wants
to
expand
the
capacity
of
the
smelter
in
order
to
utilize
more
recycled
aluminum
rather
than
buying
ingots
from
the
primary
aluminum
plant
to
meet
its
growing
product
demand.
The
rolling
mill
is
not
bottlenecked
by
the
available
smelter
capacity
since
it
can
use,
and
has
in
the
past
used,
other
aluminum
sources
to
produce
its
rolled
aluminum
products.
In
this
case,
the
"
but
for"
physical
causation
test
is
not
met,
and
increases
in
emissions
from
the
rolling
mill
would
not
be
considered
to
be
part
of
the
project
emissions.
However,
increases
in
emissions
above
its
baseline
emissions
(
highest
2
years
in
10)
would
be
contemporaneous
emissions
increases
included
in
the
netting
analysis
if
the
increase
in
smelter
emissions
were
significant.

We
solicit
comment
on
this
approach
in
general.
EPA
anticipates
that
the
emissions
impacts
of
a
physical
causation
approach
are
not
appreciably
different
from
those
of
a
legal
causation
approach,
but
we
anticipate
that
the
improvements
to
certainty
and
clarity
are
diminished.
Having
to
consider
the
physical
capabilities
of
all
emissions
unit
at
a
source
that
are
impacted
by
a
project
adds
a
degree
of
complexity
to
the
causation
evaluation.
Whereas
the
"
but
for"
legal
causation
boils
down
to
whether
or
not
the
emissions
increase
was
previously
authorized,
in
this
case
there
will
need
to
be
a
technical
judgment
as
to
whether
a
source
could
have
procured
the
input
from
another
source.
We
solicit
comment
on
how
to
most
objectively
determine
what
level
an
underutilized
unit
is
physically
capable
of
operating
at,
and,
in
general,
how
to
most
effectively
evaluate
projects
using
a
but
for
physical
causation
test.
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13,
2006
33
3.
Economic
Causation
As
an
extension
of
the
physical
causation
approach,
we
also
take
comment
on
whether
causation
should
be
tied
to
both
physical
and
economic
realities.
Under
this
approach,
emissions
increases
at
debottlenecked
units
will
not
be
considered
to
have
resulted
from
the
change
if
it
would
have
been
both
physically
possible
and
economically
rational
for
the
unchanged
unit
to
have
operated
at
the
post­
change
level.
Under
this
approach,
in
addition
to
those
increases
that
result
from
physical
causation
as
described
above,
an
additional
category
of
emissions
increases
would
result
from
the
change
at
the
"
bottlenecking"
unit
(
and
their
emissions
would
be
included
in
the
project=
s
emissions
increase
calculation).
This
category
would
include
units
for
which,
although
they
may
have
been
physically
capable
of
operating
at
a
higher
level
prior
to
the
change
at
the
bottlenecking
unit,
operating
at
the
higher
level
would
have
been
economically
irrational.

An
emissions
unit
is
economically
constrained
from
operating
at
the
post­
change
emissions
rate,
if
a
market
exists
from
which
or
to
which
the
major
stationary
source
could
purchase
or
sell
the
material,
or
if
there
is
a
reasonable
means
of
disposing
of
the
material,
but
the
cost
of
such
a
transaction
is
so
unreasonable
it
would
preclude
the
major
stationary
source
from
engaging
in
the
transaction.

An
example
where
a
unit
may
have
been
able
to
physically
accommodate
higher
operating
levels
before
a
change
to
another
unit
but
it
would
have
been
economically
irrational
to
do
so
is
an
oversized
boiler
supplying
steam
to
several
pulp
digesters
at
a
paper
mill.
Conceivably,
the
boiler
could
have
operated
at
higher
capacity
even
though
the
digesters
and
all
other
parts
of
the
mill
were
incapable
of
using
the
extra
steam
prior
Draft:
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and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
34
to
making
any
change
at
any
other
part
of
the
mill.
The
boiler
could
have
simply
blown
off
steam
to
maximize
its
emissions
rate,
and
was
physically
(
and
possibly
legally
able
to
do
so),
but
such
a
use
of
resources
would
only
be
to
take
advantage
of
regulatory
provisions
and
would
not
otherwise
serve
an
economically
rational
purpose.
If
the
mill
were
to
add
more
digesters
and
those
digesters
increased
the
demand
for
steam
on
the
boiler,
under
this
"
but
for"
causation
approach
we
would
attribute
the
emissions
increase
to
the
physical
change
(
i.
e.,
adding
the
digesters)
even
though
the
boiler
was
physically
capable
of
accommodating
the
increase
prior
to
the
change.

While
we
are
soliciting
comment
on
the
economic
causation
approach
as
an
alternative,
EPA
believes
this
option
offers
little
benefit
over
the
current
NSR
rules
in
reducing
the
complexity
of
permitting.
We
anticipate
that
this
test
would
be
more
difficult
to
administer
than
either
of
the
two
options
discussed
above.
It
might
result
in
similar
sources
being
treated
differently,
depending
on
location.
For
example,
if
one
fertilizer
production
plant
were
located
near
a
rail
line
and
another
were
located
in
a
place
that
was
only
highway­
accessible,
and
both
sources
used
sulfuric
acid
as
an
input
in
production,
this
economic
criterion
might
suggest
that
the
source
near
the
rail
line
might
have
been
able
to
obtain
acid
in
economic
quantities
from
rail
cars
but
that
the
more
isolated
source
could
would
not
have
been
able
to
get
economic
quantities
from
tank
trucks.
Thus,
when
each
source
seeks
to
expand
its
onsite
sulfuric
acid
plant,
it
might
lead
to
the
increases
from
other
parts
of
the
process
being
added
to
the
increases
at
the
source
in
one
case
and
not
in
the
other.

C.
Discussion
of
Issues
Under
Proposed
Debottlenecking
Approach
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
35
The
following
provides
a
discussion
of
the
key
issues
we
considered
in
developing
our
proposed
approaches
to
the
debottlenecking
analysis
under
the
NSR
program.

1.
Why
Use
a
"
But
For"
Causation
Test
for
Units
Upstream
and
Downstream
of
Emissions
Units
Undergoing
a
Change?

We
do
not
believe
that
including
emissions
increases
to
debottlenecked
units,

without
first
establishing
causation,
is
consistent
with
Congress=
intent
in
establishing
the
major
NSR
program.
As
we
explained
in
promulgating
the
demand
growth
exclusion,
we
interpret
the
"
which
increases"
and
"
which
results
in"
language
of
section
111(
a)(
4)
of
the
modification
provision
of
the
CAA
as
requiring
"
a
causal
link
between
the
proposed
change
and
any
post­
change
increase
in
emissions."
See
67
FR
at
80203.

EPA
believes
that
the
use
of
an
historical,
actual
emissions
test
is
sensible
when
determining
emissions
increases
for
emissions
units
undergoing
a
physical
or
operational
change.
EPA
also
believes
that
using
historical
actual
emissions
to
determine
whether
a
project
elsewhere
at
the
source
caused
an
emissions
increase
at
an
unchanged
(
e.
g.,

debottlenecked)
unit
is
appropriate
under
certain
circumstances.
We
believe,
however,

that
our
past
and
current
policies
for
evaluating
emission
increases
from
unchanged
units,

which
rely
on
broader
notions
of
causation
than
those
outlined
today,
deter
companies
from
undertaking
projects
that
would
increase
energy
efficiency
and
could
potentially
result
in
lower
emissions
per
unit
of
production.
Thus,
we
believe
this
approach
strikes
the
best
balance
between
Congress=
desire
to
allow
economic
growth
and
the
need
for
Draft:
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and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
36
environmental
protection.
19
EPA
believes
that
major
NSR
must
still
apply
to
any
new
and
existing
units
that
debottleneck
the
process,
if
they
result
in
a
significant
net
emissions
increase.
Further,
to
the
extent
that
any
debottlenecked
unit
will
operate
above
its
previously
permitted
levels
after
the
change,
the
unit
must
be
re­
permitted
to
allow
for
the
higher
emissions
and
to
address
the
impacts
of
the
higher
emissions.
Finally,
we
believe
that
this
change
will
simplify
the
calculation
of
emission
increases
from
a
project,
particularly
at
complex
facilities
like
refineries
where
the
calculation
can
be
an
extremely
complicated
and
burdensome
exercise.

We
believe
that
more
narrowly
focused
causation
principles
make
sense
for
debottlenecked
units
since
they
are
not
the
units
undergoing
a
change,
and
they
have
already
been
assessed
to
operate
at
the
increased
level
via
a
permit.
These
fundamental
differences
support
the
use
of
establishing
causation
prior
to
including
the
debottlenecked
unit=
s
emissions
increase
in
the
calculation
of
the
emissions
increase
for
a
project.
We
also
believe
that
the
proposed
approach
for
calculating
emission
increases
from
a
project
at
a
debottlenecked
unit
is
a
reasonable
interpretation
of
the
CAA.

2.
Has
EPA
Evaluated
the
Impacts
of
the
Debottlenecking
Rule
on
the
Environment?

We
believe
that
the
causation
principles
discussed
above
would
better
identify
projects
for
which
major
NSR
should
apply
than
did
our
prior
debottlenecking
policies.

19
While
EPA
maintains
that
our
prior
emissions
increase
test
for
debottlenecked
units
remains
a
reasonable
interpretation
of
the
CAA,
we
believe
that
the
proposed
approach
strikes
a
better
balance
of
Congress=
s
various
goals
for
the
NSR
program
and
is
sounder
policy.
Draft:
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and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
37
Major
NSR
will
continue
to
apply
when
projects,
consistent
with
the
causation
principles
discussed
above,
cause
an
emissions
increase
greater
than
the
significance
levels;
thus,

EPA
believes
the
proposed
approaches
are
sound
interpretations
of
the
statute
and
strike
a
better
balance
between
Congress=
desire
to
promote
economic
growth
and
the
need
for
environmental
protection
than
does
the
current
approach.

Nevertheless,
we
recognize
that
the
proposed
emissions
test
for
debottlenecked
units,
when
finalized,
may
result
in
fewer
projects
undergoing
major
NSR
than
would
the
current
actual­
to­
projected­
actual
emissions
test
with
its
wider
view
of
causation.
The
affected
types
of
projects
are
limited
to
those
that
involve
changes
to
units
that
themselves
result
in
de
minimis
increases
but
would
have
triggered
NSR
due
to
emissions
increases
at
debottlenecked
units.
At
the
same
time,
EPA
believes
that
the
universe
of
emissions
units
that
are
now
"
available"
for
debottlenecking
has
been
reduced
as
a
result
of
newer
NSR
rule
provisions,
such
as
"
actuals
PALs"
and
the
"
actual­
to­

projectedactual
test
for
nonutility
sources,
that
were
finalized
in
December
2002.20
We
expect
that
the
various
debottlenecking
approaches
could
encourage
sources
to
implement
environmentally
beneficial
projects,
such
as
more
energy­
efficient
or
lower­
emitting
processes,
that
would
not
have
been
undertaken
under
our
prior
debottlenecking
policy
due
to
the
consequence
of
triggering
major
NSR
review.
EPA
qualitatively
concludes
that
any
environmental
effect
of
the
proposed
debottlenecking
approaches
will
be
trivial.

We
specifically
request
comment
on
the
environmental
consequences
of
20
See
67
FR
80241/
3
(
December
31,
2002).
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
38
implementing
the
various
approaches
for
debottlenecking
units
outlined
above.

Specifically,
how
are
sources
likely
to
be
affected
by
these
proposed
provisions?
What
types
of
projects
did
not
go
forward
in
the
past
due
to
our
policy?
Are
there
projects
that
were
deemed
major
modifications
due
to
the
debottlenecking
provisions
that
obtained
permits
under
our
former
provision
and
were
built?
What
environmentally
beneficial
projects
will
benefit
from
these
proposed
provisions?
What
environmental
protection
benefits
resulted
from
the
old
debottlenecking
policy
that
would
not
occur
under
the
proposed
new
approach?

3.
Is
There
a
Need
For
an
Air
Quality
Impact
Analysis
for
Debottlenecked
Emissions
Under
This
Approach?

Title
I
of
the
CAA
largely
leaves
it
to
the
State
and
local
reviewing
authorities
to
attain
and
maintain
NAAQS,
protect
the
PSD
increment,
and
not
interfere
with
another
State=
s
ability
to
reach
attainment.
Accordingly,
when
a
reviewing
authority
issues
a
permit
to
construct
or
operate
an
emissions
unit,
the
reviewing
authority
must
account
for
the
level
of
emissions
in
the
debottlenecked
unit's
permit
to
assure
that
these
requirements
of
the
CAA
are
satisfied.

Our
rules
require
that
when
a
significant
net
emissions
increase
occurs
from
a
project,
the
overall
emissions
increase
will
undergo
a
full
air
quality
review
under
major
NSR
or
be
offset
through
emissions
decreases
at
another
major
stationary
source.
These
rules
also
apply
to
projects
that
cause
a
debottlenecked
unit
to
operate
above
its
permitted
emissions
level(
s).
Some
reviewing
authorities
may
also
require
that
sources
with
projects
that
qualify
as
minor
NSR
perform
modeling
to
ensure
protection
of
the
NAAQS
Draft:
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and
Privileged;
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not
cite,
quote,
or
distribute.
June
13,
2006
39
and
PSD
increments.
But
regardless
of
whether
the
emissions
increase
from
a
project
is
significant,
any
change
that
enables
a
debottlenecked
unit
to
exceed
its
permitted
emissions
level
will
always
require
the
unit
to
undergo
a
permit
modification
and
reevaluation
of
the
impacts
of
the
new
permitted
emissions
level.

However,
as
explained
in
the
section
above,
we
recognize
that
the
proposed
emissions
tests
for
debottlenecked
units,
when
implemented,
could
result
in
fewer
projects
undergoing
major
NSR
than
would
the
current
debottlenecking
emissions
test
with
its
broader
view
of
causation.
We
ask
for
comment
on
whether
there
is
a
need
for
a
PSD
air
quality
impact
analysis
for
a
project
that
would
have
had
a
significant
emissions
increase
under
our
current
debottlenecking
rules,
but
not
under
any
of
the
proposed
debottlenecking
approaches
that
are
based
on
the
causation
principle.

4.
Is
There
a
Need
for
States
to
Make
Revisions
to
Their
State
Implementation
Plans?

We
propose
the
debottlenecking
approaches
described
today
as
a
minimum
program
element
of
our
base
NSR
program.
Accordingly,
each
State
must
submit
a
revision
to
its
SIP
to
incorporate
this
change
or
provide
a
demonstration
that
an
alternative
approach
is
at
least
equivalent
to
the
Federal
requirement.
We
propose
to
require
States
to
submit
these
revisions
for
our
approval
no
later
than
3
years
after
the
effective
date
of
the
final
rule.
However,
we
are
specifically
seeking
comment
on
the
need
for
SIP
revisions
or
any
viable
alternatives
for
implementing
the
proposed
changes
for
these
proposed
debottlenecking
provisions
such
as
through
an
interpretation
of
a
State=
s
existing
regulations.
The
proposed
change
would
apply
in
States
where
the
Draft:
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and
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cite,
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June
13,
2006
40
Federal
PSD
program
applies
on
the
effective
date
established
in
the
final
rules.
21
IV.
Aggregation
A.
Background
1.
What
is
AAggregation@?

Currently,
when
undergoing
a
physical
or
operational
change,
a
source
determines
major
NSR
applicability
through
a
two­
step
analysis
that
first
considers
whether
the
increased
emissions
from
a
particular
proposed
project
alone
are
significant,
followed
by
a
calculation
of
the
particular
project=
s
net
emissions
increase
considering
all
contemporaneous
increases
and
decreases
at
the
source
(
i.
e.,
source­
wide
netting
calculation)
to
determine
if
a
major
modification
has
occurred.
See,
for
example,
40
CFR
52.21(
b)(
2)(
i).
The
term
Aaggregation@
comes
into
play
in
the
first
step
(
Step
1),
and
describes
the
process
of
grouping
together
multiple
projects
(
i.
e.,
physical
changes
or
changes
in
the
method
of
operation)
and
summing
their
emissions
changes
for
purposes
of
determining
whether
a
significant
emissions
increase
has
occurred
from
the
combined
project.
See,
for
example,
40
CFR
52.21(
b)(
40).
Specifically,
when
undertaking
multiple
projects,
the
source
must
consider
whether
NSR
applicability
should
be
determined
collectively
or
whether
the
emissions
from
each
of
the
projects
should
21
EPA
intends
to
propose
a
nonattainment
major
NSR
program
that
would
apply
in
Indian
country
until
a
tribe
adopts
a
Tribal
Implementation
Plan
that
implements
major
NSR.
As
part
of
today=
s
proposal,
we
propose
to
apply
the
new
debottlenecking
provisions
in
any
final
major
NSR
rules
for
Indian
country.
If
the
major
NSR
rule
for
Indian
country
is
finalized
before
we
finalize
today=
s
proposed
rule,
then
we
will
codify
changes
in
that
rule
when
we
finalize
today=
s
rule.
If
we
finalize
today=
s
rule
before
we
finalize
the
rule
for
Indian
country,
then
we
will
finalize
today=
s
proposal
for
Indian
country,
when
we
finalize
that
rule.
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June
13,
2006
41
separately
undergo
a
Step
1
analysis.
22
Neither
the
CAA
nor
current
EPA
rules
specifically
address
the
basis
upon
which
to
aggregate
projects.
23
Instead,
EPA
has
developed
its
aggregation
policy
over
time
through
statutory
and
regulatory
interpretation
and
applicability
determinations.
EPA=
s
aggregation
policy
aims
to
ensure
the
proper
permitting
of
modifications
that
involve
multiple
projects.
Thus,
multiple
projects
that
are
interrelated
should
be
grouped
together
and
considered
a
single
project
for
the
purpose
of
Step
1
in
the
NSR
applicability
test.

When
interrelated
projects
are
pursued
separately,
they
may
circumvent
the
purposes
of
NSR,
which
is
designed
to
address
a
project(
s)
having
a
significant
net
emissions
increase.

2.
What
is
EPA=
s
Aggregation
Policy?

Our
aggregation
policy
has
never
been
spelled
out
in
detail
in
a
single
letter
or
memorandum.
Rather,
over
the
years
we
have
applied
common
sense
factors
to
determine
the
relatedness
of
projects
for
purposes
of
aggregation.
Our
aggregation
policy
has
evolved
in
large
part
from
specific,
case­
by­
case
after­
the­
fact
inquiries
related
to
the
possible
circumvention
of
NSR
in
existing
permits.
While
there
have
been
many
such
letters
and
memoranda
over
the
years,
one
of
the
more
important
for
the
purposes
of
an
22
Even
if
projects
are
determined
to
be
separate
and
subject
to
an
individual
Step
1
analysis,
the
emission
increases
and
decreases
may
still
be
included
together
in
the
netting
calculation
if
the
projects
occur
within
a
contemporaneous
period.

23
However,
EPA
has
consistently
interpreted
the
CAA
to
require
grouping
of
related
projects
when
determining
which
emissions
changes
result
from
the
physical
or
operational
change.

26
"
Applicability
of
New
Source
Review
Circumvention
Guidance
to
3M­
Maplewood,
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
42
aggregation
policy
is
the
letter
EPA
issued
in
1993
related
to
a
research
facility
owned
by
3M
Company
in
Maplewood,
Minnesota.
In
this
guidance
memorandum
(
letter)
issued
to
3M,
EPA
used
"
objective
indicia"
to
identify
circumvention
situations.
26
In
the
"

3MMaplewood
situation,
the
source
was
a
sizeable
complex
that
conducted
research
for
multiple
companies.
Over
a
6­
month
time
period,
3M
submitted
four
synthetic
minor
permits,
and
over
an
18­
month
period,
3M
submitted
12
synthetic
minor
permits.
3M
sought
permits
for
various
projects
separately
as
minor
modifications,
claiming
that
each
project
was
pursued
by
a
separate
division
of
3M
and
therefore
unrelated
to
the
other
projects.
EPA,
in
its
response,
applied
the
EPA
aggregation
policy
in
determining
whether
projects
at
the
Maplewood
facility
should
have
been
aggregated
 
i.
e.,
whether
3M
circumvented
NSR
in
obtaining
a
series
of
minor
source
permits
rather
than
a
single
major
NSR
permit.

While
the
3M
letter
is
not
an
exhaustive
discussion
of
our
aggregation
policy,
it
consistently
applies
our
long­
held
position
on
aggregating
related
projects.
The
3M
letter
described
the
consideration
of
"
application
for
funding
or
funding
mechanisms."
27
In
the
case
of
two
projects,
if
an
individual
project
would
not
be
funded
or
it
would
not
be
Minnesota"
(
U.
S.
EPA,
June
17,
1993).

27
The
3M
letter
states
"[
a]
pplications
for
commercial
loans
or,
for
public
utilities,
bond
issues,
should
be
scrutinized
to
see
if
the
source
has
treated
the
projects
as
one
modification
for
financial
purposes.
If
the
project
would
not
be
funded
or
if
it
would
not
be
economically
viable
if
operated
on
an
extended
basis
(
at
least
a
year)
without
the
other
projects,
this
should
be
considered
evidence
of
circumvention."
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
43
economically
viable
if
operated
on
an
extended
basis
without
the
other
project
in
place,

this
would
indicate
that
the
projects
are
part
of
a
single
project
and
should
be
reviewed
as
such
for
NSR
purposes.
The
3M
letter
also
noted,
"[
t]
hese
emissions
and
thereby
modifications
cannot
be
presumed
to
be
independent
given
the
plant's
overall
basic
purpose
to
support
a
variety
of
research
and
development
activities.
Therefore,
even
though
each
research
project
may
have
been
individually
conceived
and
separately
funded,
it
is
appropriate
to
look
at
the
overall
expected
research
activity
in
assessing
NSR
applicability
and
enforcement."

There
has
been
some
confusion
over
the
3M
letter
and
the
use
of
timing
in
making
aggregation
decisions.
For
example,
some
have
read
it
to
suggest
that
timing
of
minor
NSR
permits
is
a
decisive,
stand­
alone
factor
in
determining
whether
projects
should
be
aggregated.
Specifically,
some
have
read
the
letter
to
suggest
that
if,
for
example,
two
minor
NSR
permits
are
issued
on
the
same
day
for
a
given
source,
they
should
be
automatically
aggregated.
We
want
to
make
clear
that
we
do
not
believe
that
this
would
be
a
proper
application
of
our
long­
standing
aggregation
policy.
Timing
considered
as
a
factor
alone
is
not
conclusive
to
an
analysis
of
whether
projects
are
interrelated
such
that
they
should
be
aggregated.

As
a
result
of
the
questions
and
issues
that
the
3M
letter
raised
with
our
aggregation
policy,
NSR
stakeholders
have
expressed
concerns
that
EPA's
position
on
aggregation
is
in
need
of
clarification.
The
potential
inconsistent
application
of
the
3M
letter
led
the
EPA
to
look
more
closely
at
our
aggregation
policy
and
determine
to
improve
the
NSR
process
by
adding
clarifying
requirements
to
our
rules
as
to
when
it
is
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
44
appropriate
to
aggregate
projects.
This
clarification
would
ensure
that
the
aggregation
policy
is
being
applied
consistently
by
both
those
considering
the
applicability
of
NSR
to
potential
modifications,
and
those
conducting
a
case­
by­
case
after­
the­
fact
inquiry
regarding
whether
or
not
NSR
was
circumvented
through
the
failure
to
aggregate
dependent
projects.
Therefore,
in
today's
proposal,
EPA
is
clarifying
circumstances
where
emissions
from
particular
projects
should
be
aggregated
for
purposes
of
Step
1
of
the
NSR
applicability
analysis.
Specifically,
when
a
particular
project
is
technically
or
economically
dependent
upon
another
project,
the
emissions
resulting
from
each
of
the
projects
must
be
added
together
for
purposes
of
determining
NSR
applicability.

B.
Overview
of
Today's
Proposed
Action
We
are
proposing
to
add
our
aggregation
policy
to
our
NSR
regulations
to
achieve
greater
national
consistency
and
provide
further
clarity
in
aggregation
determinations.

Today=
s
proposal
clarifies
our
existing
policy
and
provides
specific
circumstances
where
emissions
should
be
aggregated
for
purposes
of
NSR
applicability.
EPA
proposes
to
revise
the
regulations
to
state
that
a
source
must
aggregate
emissions
from
projects
that
are
technically
or
economically
dependent.
Thus,
EPA's
case­
by­
case
after­
the­
fact
inquiry
of
whether
a
source
has
circumvented
NSR
through
a
failure
to
aggregate
dependent
projects
would
be
based
on
applying
this
policy
via
the
assessment
of
these
two
factors.
To
the
extent
that
Maplewood
addresses
the
factors
to
consider
in
an
analysis
of
whether
projects
should
be
aggregated,
it
is
consistent
with
our
long­
standing
policy
that
projects
that
are
dependent
economically
or
technically
should
be
aggregated.

To
clarify
this,
we
are
reiterating
this
policy
and
codifying
it
in
rule
language.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
45
We
propose
that
if
a
source
or
reviewing
authority
determines
that
a
project
is
dependent
upon
another
project
for
its
technical
or
economic
viability,
the
source
or
reviewing
authority
must
consider
the
projects
to
be
a
single
project
and
must
aggregate
the
emissions
increases
for
the
individual
projects
in
Step
1
of
the
major
NSR
applicability
analysis.
That
is,
the
emissions
increases
from
the
related
projects
must
be
summed
to
determine
if
the
project(
s)
will
result
in
a
significant
emissions
increase.
If
a
significant
emission
increase
results,
then
the
source
must
conduct
Step
2
of
the
NSR
applicability
test,
which
involves
a
netting
calculation
(
Step
2)
to
determine
if
a
major
modification
exists.

We
believe
these
factors
appropriately
consolidate
and
clarify
our
past
guidance.

Accordingly,
EPA
believes
that,
by
codifying
these
factors,
today=
s
proposal
would
improve
implementation
and
permitting
of
the
major
NSR
program
for
States
and
the
regulated
community.
We
solicit
comment
on
all
aspects
of
this
interpretation
of
our
rules
and
request
comment
on
other
approaches
that
could
be
used
to
aggregate
related
projects.
We
also
propose
rule
changes
to
address
aggregation
and
request
comment
on
that
language.

1.
What
is
Technical
Dependence?

The
terms
"
technically
dependent"
and
"
technical
dependence"
describe
the
interrelationship
between
projects
such
that
one
project
is
incapable
of
performing
as
fully
intended
in
the
absence
of
the
other
project.
This
may
mean
that,
without
completion
of
the
other
project,
the
process
change
cannot
operate
at
all
or
for
the
intended
amount
of
hours,
or
the
process
cannot
achieve
its
maximum
design
rating
or
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
46
production
level,
or
the
product
will
be
of
inferior
quality.
Thus,
the
technical
viability
of
the
project
is
ultimately
contingent
on
another
project
being
completed.

One
indication
of
technical
dependence
is
that
a
project
cannot
operate
within
its
maximum
design
parameters
for
an
extended
period
of
time
without
the
other
project(
s).

For
example,
an
electric
utility
decides
to
fire
its
boiler
unit
with
sub­
bituminous
coal
rather
than
bituminous
coal.
This
requires
installation
of
new
types
of
burners
in
the
boiler
to
accommodate
the
new
fuel.
Introduction
of
a
new
fuel
also
necessitates
adjustments
to
the
air
flow
in
the
boiler
to
reduce
excess
air
and
optimize
the
air­
to­
fuel
ratio,
which
in
turn
increases
the
efficiency
of
the
boiler.
Thus,
the
owner
determines
that,
in
order
for
the
new
burners
to
function
as
intended,
the
air
ports
and
ducting
in
the
boiler
should
be
altered
(
i.
e.,
different
sizing
and
location)
to
better
distribute
the
air
throughout
the
boiler.
While
the
new
burners
could
be
installed
and
operational
with
the
boiler's
current
air
handling
system,
the
burners
would
be
severely
impaired
in
their
operation
if
the
air
handling
modification
was
not
also
performed.
Hence,
the
two
projects
are
technically
dependent
on
each
other.

Another
indication
of
technical
dependence
is
that
a
source
cannot
achieve
its
maximum
production
without
the
implementation
of
both
projects.
For
example,
a
refinery
conducts
a
project
to
increase
the
capacity
of
its
fluid
catalytic
cracking
unit
(
FCCU),
but
does
not
have
adequate
storage
on
site
to
reach
that
capacity.
Then
the
refiner
is
likely
to
propose
a
subsequent
project
to
add
storage
to
accommodate
the
full
FCCU
production.
While
the
additional
storage
project
is
not
technically
dependent
(
although
it
could
be
economically
dependent)
on
the
FCCU
expansion,
clearly
the
Draft:
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and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
47
technical
viability
of
the
FCCU
project
is
entirely
dependent
on
the
storage
expansion
project,
since
its
capacity
is
bottlenecked
without
the
additional
storage.
Thus,
the
emissions
from
the
two
projects
would
need
to
be
aggregated
when
determining
major
NSR
applicability.

Another
indication
of
dependence
is
if
the
intention
for
a
project
is
to
make
a
new
product,
and
absence
of
another
project
would
not
allow
for
full
production
of
the
new
product,
then
the
projects
are
technically
dependent.
In
this
case,
one
project
must
be
done
by
virtue
of
another
project,
or
the
overall
project
would
fail
to
operate.
For
example,
an
existing
chemical
plant
has
a
new
product
that
requires
a
multi­
staged
reaction
in
separate
vessels.
The
intermediate
products
must
remain
heated
between
reactor
stages.
To
achieve
this,
the
source
will
install
a
new
holding
tank
and
a
new
process
heater,
which
will
maintain
the
temperature
of
the
process
fluid
when
exiting
the
reactors
and
while
in
the
holding
tank.
Since
the
installation
of
both
the
process
heater
and
the
holding
tank
are
essential
to
making
the
new
product,
the
installations
are
technically
dependent
on
each
other
and
are
a
single
project
for
NSR
purposes.
28
Projects
occurring
in
unrelated
portions
of
a
major
stationary
source
are
generally
not
technically
dependent.
Clearly,
aggregation
determinations
for
projects
occurring
within
a
process
unit
are
more
difficult
to
assess.
Using
the
above
chemical
plant
example,
consider
that
the
source
wishes
to
take
advantage
of
the
construction
outage
to
28
We
note
that
many
projects
that
are
technically
dependent
are
also
economically
dependent,
since
their
economic
viability
is
reduced
considerably
if
the
projects
cannot
independently
function
properly.
Draft:
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and
Privileged;
do
not
cite,
quote,
or
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June
13,
2006
48
add
a
second
process
heater
that
will
utilize
the
same
fuel
piping
network
as
the
first
process
heater
but
it
will
serve
a
variety
of
heating
needs
elsewhere
at
the
source.
For
determining
NSR
applicability,
should
the
source
aggregate
emissions
from
the
second
process
heater
with
those
of
the
first
heater
and
tank?
Even
though
these
projects
will
be
built
concurrently
and
are
dependent
on
each
other
from
a
construction
standpoint,
timing
of
construction
alone
will
not
determine
technical
dependence.
In
this
case,
we
would
view
the
second
process
heater
as
not
technically
essential
for
manufacturing
the
new
product.
Thus,
the
project
to
install
the
second
process
heater
is
not
technically
dependent
on
the
installation
of
the
first
heater
and
holding
tank,
and
we
therefore
would
not
aggregate
them
under
the
provisions
of
this
proposed
rule
(
unless
they
were
economically
dependent).

We
request
comment
on
these
examples,
and
we
invite
other
examples
of
technical
dependence
and
independence,
and
other
suggestions
for
maximizing
the
clarity
with
which
to
articulate
these
criteria.

2.
What
is
Economic
Dependence?

Activities
are
dependent
on
each
other
for
their
economic
viability
if
the
economic
revenues
or
AReturn
on
Investment@
(
ROI)
associated
with
the
project
could
not
be
realized
without
the
completion
of
the
other
project.
ROI
is
a
measure
of
the
worth
in
investing
and
is
sometimes
informally
referred
to
as
"
payback,"
which
is
an
equivalent
concept
but
can
be
a
more
simplistic
determination
of
the
time
it
takes
for
savings
or
revenues
generated
from
a
project
to
equal
the
cost
of
the
project.
ROI
is
generally
expressed
as
a
percentage
linked
to
a
time
frame
(
e.
g.,
15
percent
over
3
years).
In
Draft:
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and
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do
not
cite,
quote,
or
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June
13,
2006
49
contrast
to
payback,
ROI
takes
into
account
the
value
of
money
and
inflation.
29
Economic
dependence
is
generally
evidenced
when
a
particular
project
that
may
indeed
be
capable
of
operating
technically
independent
from
other
concurrently
planned
projects
is
nevertheless
planned
or
integrated
as
part
of
a
larger
project
goal
and
is
interrelated
to
such
an
extent
that
it
is
not
economically
viable
as
a
stand
alone
project
because
both
(
or
all)
the
projects
are
necessary
for
the
larger
project
to
be
fully
operational.
While
an
argument
can
be
made
that
all
projects
and
activities
at
a
source
are
economically
linked,
since
they
all
contribute
to
the
company's
"
bottom
line,"
we
are
clearly
not
proposing
such
an
approach.
Our
approach
would
require
that
a
source
treat
one
project
as
economically
dependent
on
another
if
it
is
no
longer
economically
viable
without
the
completion
of
the
other
project(
s).
Economic
viability
is
measured
by
assessing
the
ROI
or
payback
of
a
project,
such
that
a
project
is
not
economically
viable
if
does
not
pay
for
itself,
or
takes
an
unreasonable
amount
of
time
to
pay
for
itself,
in
the
absence
of
another
related
project.

For
example,
a
pharmaceutical
process
is
proposed
to
be
modified
in
order
to
produce
a
newly
approved
drug.
The
process
will
generate
a
large
volume
of
an
unusable
and
harmful
waste.
The
source
could
send
the
waste
offsite
for
treatment,
but
the
source
is
located
in
a
remote
area
and
has
determined
that
transportation
to
a
treatment
facility
is
not
cost­
effective.
In
other
words,
the
source
would
not
see
a
return
on
its
investment
in
29
We
note
that,
with
safety
projects,
sources
often
do
not
overtly
consider
economic
revenues
or
ROI.
Nevertheless,
their
existence
has
an
overarching
economic
justification
and,
consequently,
the
viability
of
another
activity
could
be
economically
dependent
on
a
safety
project.
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and
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cite,
quote,
or
distribute.
June
13,
2006
50
an
acceptable
time
or
in
a
time
period
that
it
or
the
industry
typically
uses
but
for
the
modifications
to
the
waste
treatment
plant.
However,
a
modification
to
its
waste
treatment
plant
would
allow
it
to
cost­
effectively
treat
the
waste
chemical
onsite
and
would
allow
for
profitable
production
of
the
new
product.
Although
the
two
changes
are
technically
capable
of
operating
independently,
since
the
source
could
send
the
waste
offsite,
the
ROI
of
the
project
to
produce
the
new
drug
is
clearly
dependent
on
the
modification
to
the
onsite
waste
treatment
plant.
Therefore,
these
two
projects
are
part
of
a
single,
overall
project
to
economically
produce
the
new
drug,
and
their
emissions
should
be
combined
for
the
purposes
of
evaluating
NSR
applicability.

Changes
to
an
emissions
unit
that
are
clearly
sequenced
or
conducted
in
stages
are
considered
a
single
project
for
major
NSR
applicability
purposes.
30
For
example,
an
electric
utility
intends,
through
periodic
outages,
to
replace
every
piece
of
an
entire
boiler
island
with
new
and
upgraded
equipment
over
a
6­
year
period.
Since
it
is
clearly
possible
to
have
one
phase
of
replacement
projects
that
can
be
fully
operational
without
having
to
immediately
follow
it
with
another
phase
of
replacements,
we
would
not
consider
the
phases
to
be
inherently
technically
dependent.
However,
since
the
separate
phases
are
clearly
contemplated
and
planned
as
a
single
project,
and
the
projects
are
integrated
to
such
an
extent
that
they
are
not
viable
if
only
an
individual
phase
is
done,
all
of
the
project
phases
are
economically
dependent
and
their
associated
emissions
should
be
aggregated
for
determining
NSR
applicability.

30
Nothing
in
this
proposal
is
intended
to
amend
our
rules
for
applying
BACT
or
LAER
to
phased
construction
projects.
See
40
CFR
52.21(
j)(
4)
and
(
r)(
2).
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and
Privileged;
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not
cite,
quote,
or
distribute.
June
13,
2006
51
Larger
sources,
having
multiple,
independent
process
lines,
often
undertake
numerous
activities
that
are
unrelated
and
are
not
parts
of
larger
projects.
For
example,
a
printing
facility
may
have
several
production
lines,
one
of
which
produces
glossy
magazines
and
another
of
which
prints
and
folds
black
and
white
print
newspapers.
The
two
production
lines
use
different
inks,
papers,
binding
materials
and
processes.
The
printing
facility
undertakes
a
change
at
the
magazine
line
to
use
a
different
ink
solution
that
smudges
less
than
its
current
ink.
The
printing
facility
also,
in
the
same
month,

modifies
the
paper
folding
mechanism
on
its
newspaper
line
to
allow
it
to
produce
more
papers
per
hour.
In
this
example,
while
the
two
activities
are
improving
the
economic
viability
of
the
source,
the
magazine
line
and
newspaper
line
are
clearly
separate
entities
and
have
little,
if
any,
economic
(
or
technical)
relationship.
Thus,
emission
increases
from
the
project
at
the
magazine
line
should
not
be
aggregated
with
the
project
at
the
newspaper
line.

We
recognize
that
implementation
of
the
proposed
aggregation
test
for
economic
viability
may
not
be
as
straightforward
as
that
of
technical
viability.
This
stems
from
the
fact
that
the
determination
of
economic
dependence
or
viability
is
influenced
by
a
range
of
factors
and
assumptions
that
are
based
on,
among
other
things,
the
individuality
of
each
source,
its
local
economy
and
customers,
other
projects
being
contemplated,

business
cycles,
and
interest
rates.
On
the
other
hand,
the
technical
dependence
test
is
based
more
on
a
simpler,
more
common
sense
evaluation
of
the
operational
relationship
between
projects.
Clearly,
for
two
identical
plants
implementing
the
same
set
of
projects,

we
would
expect
the
decision
of
technical
dependence
to
likely
result
in
the
same
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June
13,
2006
52
outcome,
while
the
decision
of
economic
dependence
could
have
a
range
of
outcomes
depending
on
the
variability
of
the
aforementioned
factors
and
assumptions.
EPA
is
concerned
with
this
aspect
of
this
proposal
and
request
comment
on
other
suggestions
for
maximizing
the
clarity
with
which
to
articulate
these
criteria
for
economic
dependence.

We
believe
an
objective,
bright­
line
approach
would
provide
greater
regulatory
certainty
and
efficiency
and
would
obviate
the
need
for
case­
by­
case
review
of
aggregation
determinations
by
permitting
authorities.
We
also
request
comment
on
other
specific
examples
of
economic
dependence
and
independence.

3.
Who
Decides
What
Activities
Should
Be
Aggregated?

Major
NSR
is
a
preconstruction
permitting
program
and
so
existing
sources
are
obligated
to
apply
for
and
receive
a
permit
before
beginning
construction
of
a
major
modification.
Determining
whether
a
permit
is
needed
necessarily
requires
a
source
to
make
certain
evaluations
about
the
nature
of
an
activity.
Determining
whether
multiple
projects
should
be
aggregated
is
among
these
required
evaluations.
Thus,
when
planning
a
physical
or
operational
change,
the
source
should
always
consider
other
projects
to
aggregate,
using
the
rules
and
guidelines
provided
by
EPA
and/
or
in
the
applicable
SIP.

Nonetheless,
the
source=
s
determination
of
the
proposed
project
is
not
the
final
decision;
rather,
the
reviewing
authority
is
responsible
for
ensuring
that
sources
in
their
jurisdiction
abide
by
the
applicable
rules
and
guidance
for
aggregating
projects.
This
may
require
the
reviewing
authority
to
gather
facts
and
request
specific
information
from
the
source
when
further
scrutiny
is
warranted.
Sources
claiming
that
emissions
increases
from
particular
projects
should
not
be
aggregated
must
be
able
to
provide
their
reviewing
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June
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2006
53
authority
and
EPA
information
sufficient
to
answer
EPA
inquiries.

C.
Discussion
of
Issues
Under
Proposed
Aggregation
Approach
The
following
provides
a
discussion
of
the
key
issues
we
considered
in
codifying
our
aggregation
policy
for
today=
s
proposal.
We
specifically
solicit
comment
on
these
issues
as
well
as
any
additional
alternatives
to
be
used
to
determine
when
two
or
more
activities
should
be
aggregated
for
NSR
purposes.

1.
How
is
Timing
a
Factor
in
Making
Aggregation
Determinations?

There
is
no
presumption
that
projects
automatically
are
or
are
not
aggregated
as
a
result
of
their
proximity
in
time.
We
believe
that
projects
that
happen
to
occur
simultaneously
at
a
source
do
not
necessarily
have
any
inherent
relationship.
Certainly,
if
concurrent
projects
occur
at
the
same
emissions
unit,
then
there
may
be
a
greater
sense
of
interrelationship,
but
it
still
does
not
provide
conclusive
evidence
that
they
are
dependent
on
each
other.
As
previously
stated,
the
technical
and
economic
viability
of
a
project
are
the
sole
objective
criteria
that
a
source
and
reviewing
authority
must
consider
when
making
an
aggregation
determination.
Timing
of
construction
scheduling,
or
time
horizons
for
economic
planning,
may
weigh
into
a
determination
of
economic
or
technical
dependence,
but
timing,
in
and
of
itself,
is
not
determinative
in
deciding
whether
to
aggregate
projects.
The
reviewing
authority
could,
for
example,
review
the
technical
and
economic
relation
to
other
projects
occurring
within
a
short
period
of
time
(
e.
g.,
within
18
months)
as
they
review
activity
at
regulated
sources
but
would
need
to
determine
the
technical
and
economic
relationship
of
these
projects
 
not
simply
their
proximity
in
time
 
to
make
a
determination
about
aggregation.
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June
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2006
54
EPA
solicits
comment
on
considering
timing
in
aggregation
decisions.

Specifically,
while
we
believe
timing
of
multiple
permit
applications
should
not
be
a
factor
in
aggregating
projects,
are
there
separate
timing
considerations
in
a
test
of
economic
and
technical
dependence?
Should
a
certain
amount
of
time
compel
a
presumption
that
multiple
activities
should
or
should
not
be
aggregated
as
a
result
of
the
projects=
proximity
in
time?
For
example,
if
the
projects
are
considered
technically
or
economically
independent,
should
they
be
treated
as
separate
projects
for
major
NSR
applicability
regardless
of
how
far
apart
the
projects
occurred?
And
is
there
a
reasonable
amount
of
time
to
select
for
bounding
the
span
of
timing
for
aggregating
projects?
On
the
other
hand,
if
it
is
determined
that
the
proposed
project
is
dependent
on
another
activity,
regardless
of
project
or
construction
schedules
(
e.
g.,
to
be
completed
over
several
years),
should
the
projects
be
aggregated
for
major
NSR
applicability?
How
much
burden
is
there
on
the
source
and/
or
reviewing
authority
if
this
rule
does
not
bound
the
span
of
time
for
aggregating
projects?

2.
Has
EPA
Evaluated
the
Impacts
of
the
Aggregation
Rule
on
the
Environment?

For
the
proposed
aggregation
provisions,
we
conclude
that
there
would
be
no
net
environmental
impact
associated
with
the
changes.
This
is
because,
as
discussed
in
detail
elsewhere
in
this
preamble,
this
proposal
represents
a
clarification
of,
not
a
change
to,
our
aggregation
policy.
This
proposed
rule
would
codify
objective
criteria
when
emissions
increases
from
multiple
projects
at
a
source
must
be
aggregated
for
NSR
applicability.

As
such,
we
have
concluded
that
the
aggregation
provisions
of
this
proposed
rule
will
have
no
environmental
impact.
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and
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June
13,
2006
55
3.
Is
There
a
Need
for
States
to
Make
Revisions
to
Their
State
Implementation
Plans?

Once
we
finalize
our
rule
revisions
for
aggregation,
we
intend
to
encourage
States
to
incorporate
them
for
the
sake
of
consistency
and
clarity,
and
to
make
their
SIPs
consistent
with
the
proposed
rule
amendments.
This
would
be
a
relatively
easy
task
given
that
SIP
changes
will
be
required
for
the
other
two
parts
of
this
rule
proposal
at
that
same
time.
We
believe
this
approach
would
be
especially
helpful
since
our
existing
aggregation
policy
was
never
formally
issued
in
the
past.
However,
we
believe
that,

since
these
proposed
provisions
would
simply
codify
our
existing
aggregation
policy,
SIP
changes
would
not
be
required
in
order
to
implement
them.
We
are
specifically
seeking
comment
on
the
need
for
SIP
revisions
or
any
viable
alternatives
for
implementing
the
changes
for
these
proposed
aggregation
provisions.

V.
Project
Netting
A.
Background
As
described
briefly
in
section
III
of
this
preamble,
a
Amajor
modification@

requires
both
a
significant
emissions
increase
of
a
regulated
NSR
pollutant
and
a
significant
net
emissions
increase
of
that
pollutant
from
the
major
stationary
source.
In
determining
whether
an
activity
is
a
major
modification,
the
2002
NSR
rules
(
67
FR
80186)
focus
first
on
whether
a
physical
or
operational
change
will
occur.
31
Once
the
scope
of
the
project
has
been
identified,
including
aggregation
of
related
activities
or
31
Routine
maintenance,
repair
and
replacement
and
certain
other
changes
are
excluded
by
regulation
from
the
definition
of
physical
or
operational
change,
per
40
CFR
52.21(
b)(
2)(
iii).
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2006
56
projects,
if
applicable,
the
source
must
then
determine
whether
the
project,
as
a
whole,

will
result
in
a
significant
emissions
increase
at
the
affected
emissions
units.
If
a
significant
emissions
increase
will
result
at
the
emissions
units
involved
in
the
project,

then
a
source­
wide
emissions
Anetting@
analysis
is
required
to
determine
if
major
NSR
applies.
ASource­
wide
netting@
or
Acontemporaneous
netting@
refers
to
the
process
of
considering
certain
previous
and
prospective
emissions
changes32
at
an
existing
major
source
to
determine
if
a
Anet
emissions
increase@
of
a
pollutant
will
result
from
a
proposed
project.
If
a
net
emissions
increase
will
result
at
a
source,
major
NSR
applies
to
each
pollutant's
emissions
for
which
the
net
increase
is
significant.
See
40
CFR
52.21(
b)(
3).

The
initial
inquiry
as
to
whether
the
project,
standing
alone,
will
result
in
an
increase
in
actual
emissions
is
calculated
by
determining
the
emissions
increase
from
the
particular
emissions
units
that
is
Achanged@
or
added
and
any
other
emissions
increases
resulting
from
the
proposed
physical
change
or
change
in
method
of
operation
(
e.
g.,

debottlenecked
units).
EPA
recognizes
that
in
the
past
some
sources
and
permitting
authorities
have
counted
decreases
in
emissions
at
the
individual
units
involved
in
the
project
when
determining
an
overall
project
emissions
increase
(
i.
e.,
Step
1
of
the
NSR
test),
while
some
have
not.
In
other
words,
some
States
allowed
sources
to
Aproject
net@

and
other
States
only
allowed
project
decreases
to
be
considered
when
netting
on
a
source­
wide
basis
(
i.
e.,
in
Step
2
of
the
NSR
test).
In
past
determinations,
EPA
has
stated
32
Includes
all
increases
and
decreases,
anywhere
at
the
source,
that
are
contemporaneous
and
creditable,
per
40
CFR
52.21(
b)(
3)(
i)(
b).
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June
13,
2006
57
that
only
the
increases
resulting
from
the
project
are
considered
in
determining
whether
a
significant
emissions
increase
has
occurred
in
Step
1.

B.
Overview
of
Today's
Proposed
Action
Today,
we
propose
to
revise
and
change
the
current
rules
with
respect
to
projects
that
involve
both
increases
and
decreases
in
emissions.
We
are
concerned
with
inconsistent
implementation
of
our
past
policy
to
only
consider
increases
in
Step
1,
and
we
frequently
receive
questions
related
to
our
policy
on
project
netting.

Our
2002
rules,
in
40
CFR
52.21(
a)(
2)(
iv)(
b),
provide
that
the
procedure
for
calculating
a
significant
emissions
increase
depends
on
the
type
of
emissions
units
being
modified.
For
example,
for
projects
that
only
involve
existing
units,
40
CFR
52.21(
a)(
2)(
iv)(
c)
provides
that
A[
a]
significant
emissions
increase
of
a
regulated
NSR
pollutant
is
projected
to
occur
if
the
sum
of
the
difference
between
the
projected
actual
emissions
...
and
the
baseline
actual
emissions
...
for
each
existing
emissions
unit,
equals
or
exceeds
the
significant
amount
for
that
pollutant
...@
[
emphasis
added].
Use
of
the
phrase
Asum
of
the
difference@
between
projected
and
baseline
emissions
indicates
that
one
must
look
at
the
difference
between
the
projection
and
the
baseline.
That
difference
may
either
be
a
positive
number
(
representing
a
projected
increase)
or
a
negative
number
(
representing
a
projected
decrease).
In
either
case,
the
values
must
be
taken
into
consideration
in
determining
the
overall
increase,
or
decrease,
in
emissions
resulting
from
the
project.

When
there
are
multiple
types
of
emission
units,
the
impact
of
the
project
is
determined
by
40
CFR
52.21(
a)(
2)(
i)(
f),
titled
AHybrid
test
for
projects
that
involve
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
58
multiple
types
of
emissions
units.@
However,
in
this
case,
the
phrase
Asum
of
the
emissions
increases
for
each
emissions
unit@
is
used,
which
challenges
whether
an
emissions
increase
at
an
individual
emissions
unit
can
be
a
negative
number.
Because
we
intend
for
Step
1
of
the
NSR
applicability
test
to
represent
the
true
environmental
impact
of
a
project
on
all
involved
emissions
units,
and
the
current
rules
reference
40
CFR
52.21(
a)(
2)(
iv)(
c)
which
allows
for
project
netting,
it
is
reasonable
to
conclude
that
a
source
can
perform
project
netting
for
hybrid
units
as
well.
The
current
rule,
however,

would
not
allow
a
source
to
include
reductions
from
units
that
are
part
of
the
project
until
Step
2
of
the
calculation.
Thus,
we
propose
that
all
emissions
changes
(
i.
e.,
both
increases
and
decreases)
that
occur
within
the
scope
of
a
project
get
counted
in
Step
1
of
the
NSR
applicability
test.

The
net
emissions
from
the
proposed
project
are
the
sum
of
all
proposed
creditable
emissions
increases
and
decreases
resulting
from
the
project.
The
following
are
the
steps
for
determining
the
emissions
from
a
project
net:

 
Determine
the
increases
and
decreases
that
are
to
be
used
in
the
project
net
by
applying
the
appropriate
emissions
test
for
all
units
involved
in
a
proposed
project.
Increases
and
decreases
must
be
quantified
using
the
procedures
in
40
CFR
52.21(
a)(
2)(
iv)(
a)
through
(
d)
and
(
f).

 
Decreases
must
be
enforceable
as
a
practical
matter,
or
there
must
be
another
procedure
that
will
ensure
the
decrease
actually
occurs
and
is
maintained,
and
are
subject
to
all
the
requirements
of
40
CFR
52.21(
b)(
3).
Draft:
Deliberative
and
Privileged;
do
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cite,
quote,
or
distribute.
June
13,
2006
59
 
Emission
increases
and
decreases
used
in
the
project
netting
analysis
cannot
be
used
again,
or
double­
counted,
in
the
source­
wide
netting
analysis.

We
believe
that
it
is
sound
policy
to
revise
our
rules
so
that
projects
that
have
both
emissions
increases
and
decreases
can
consider
both
the
positive
and
negative
values
at
affected
emissions
units
when
determining
whether
a
significant
emissions
increase
results
from
the
project.

While
the
contemporaneous
netting
has
proven
to
be
a
sometimes
difficult
and
controversial
aspect
of
the
major
NSR
program,
we
believe
that
the
project
netting
calculations
are
more
straightforward.
The
resulting
program
will
allow
you
to
receive
credit
for
emission
reductions
that
are
achieved
as
part
of
an
overall
project,
without
introducing
complexity
into
the
program.

[
Insert
Here:
Discussion
of
Environmental
Analysis]

We
seek
comment
and
data
on
the
impact
of
allowing
project
netting.

Specifically,
do
you
believe
that
project
netting
can
improve
the
implementation
of
the
NSR
program?
If
so,
please
provide
detailed
examples.
What
is
the
anticipated
environmental
impact
from
allowing
project
netting?
We
also
are
proposing
rule
changes
to
address
project
netting
and
request
comment
on
that
language.

VI.
Statutory
and
Executive
Order
Reviews
A.
Executive
Order
12866
­
Regulatory
Planning
and
Review
Under
Executive
Order
12866
(
58
FR
51735,
October
4,
1993),
the
Agency
must
determine
whether
the
regulatory
action
is
"
significant"
and
therefore
subject
to
Office
of
Management
and
Budget
(
OMB)
review
and
the
requirements
of
the
Executive
Order.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
60
The
Order
defines
"
significant
regulatory
action"
as
one
that
is
likely
to
result
in
a
rule
that
may:

(
1)
Have
an
annual
effect
on
the
economy
of
$
100
million
or
more
or
adversely
affect
in
a
material
way
the
economy,
a
sector
of
the
economy,
productivity,
competition,

jobs,
the
environment,
public
health
or
safety,
or
State,
local,
or
tribal
governments
or
communities;

(
2)
Create
a
serious
inconsistency
or
otherwise
interfere
with
an
action
taken
or
planned
by
another
agency;

(
3)
Materially
alter
the
budgetary
impact
of
entitlements,
grants,
user
fees,
or
loan
programs,
or
the
rights
and
obligations
of
recipients
thereof;
or
(
4)
Raise
novel
legal
or
policy
issues
arising
out
of
legal
mandates,
the
President's
priorities,
or
the
principles
set
forth
in
the
Executive
Order.

Pursuant
to
the
terms
of
Executive
Order
12866,
it
is
determined
that
this
rule
is
a
"
significant
regulatory
action"
because
it
raises
policy
issues
arising
from
the
President's
priorities.
EPA
has
submitted
this
action
to
OMB
for
review.
Changes
made
in
response
to
OMB
suggestions
or
recommendations
will
be
documented
in
the
public
record.

B.
Paperwork
Reduction
Act
This
action
does
not
impose
any
new
information
collection
burden.
We
are
not
promulgating
any
new
paperwork
requirements
(
e.
g.,
monitoring,
reporting,

recordkeeping)
as
part
of
today=
s
proposed
action.
However,
the
Office
of
Management
and
Budget
(
OMB)
has
previously
approved
the
information
collection
requirements
contained
in
the
existing
regulations
(
40
CFR
parts
51
and
52)
under
the
provisions
of
the
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
61
Paperwork
Reduction
Act,
44
U.
S.
C.
3501
et
seq.,
and
has
assigned
OMB
control
number
2060­
0003,
EPA
ICR
number
1230.17.
A
copy
of
the
OMB
approved
Information
Collection
Request
(
ICR)
EPA
ICR
number
1230.17
may
be
obtained
from
Susan
Auby,
Collection
Strategies
Division;
U.
S.
Environmental
Protection
Agency
(
2822T);
1200
Pennsylvania
Avenue,
NW,
Washington,
DC
20460
or
by
calling
(
202)

566­
1672.

Burden
means
the
total
time,
effort,
or
financial
resources
expended
by
persons
to
generate,
maintain,
retain,
or
disclose
or
provide
information
to
or
for
a
Federal
agency.

This
includes
the
time
needed
to
review
instructions;
develop,
acquire,
install,
and
utilize
technology
and
systems
for
the
purposes
of
collecting,
validating,
and
verifying
information,
processing
and
maintaining
information,
and
disclosing
and
providing
information;
adjust
the
existing
ways
to
comply
with
any
previously
applicable
instructions
and
requirements;
train
personnel
to
be
able
to
respond
to
a
collection
of
information;
search
data
sources;
complete
and
review
the
collection
of
information;
and
transmit
or
otherwise
disclose
the
information.

An
agency
may
not
conduct
or
sponsor,
and
a
person
is
not
required
to
respond
to,

a
collection
of
information
unless
it
displays
a
currently
valid
OMB
control
number.
The
OMB
control
numbers
for
EPA's
regulations
in
40
CFR
are
listed
in
40
CFR
part
9.

C.
Regulatory
Flexibility
Analysis
(
RFA)

The
RFA
generally
requires
an
agency
to
prepare
a
regulatory
flexibility
analysis
of
any
rule
subject
to
notice
and
comment
rulemaking
requirements
under
the
Administrative
Procedure
Act
or
any
other
statute
unless
the
Agency
certifies
that
the
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
62
rule
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities.

Small
entities
include
small
businesses,
small
organizations,
and
small
governmental
jurisdictions.

For
purposes
of
assessing
the
impacts
of
today's
action
on
small
entities,
a
small
entity
is
defined
as:
(
1)
a
small
business
that
is
a
small
industrial
entity
as
defined
in
the
U.
S.
Small
Business
Administration
(
SBA)
size
standards
(
see
13
CFR
121.201);
(
2)
a
small
governmental
jurisdiction
that
is
a
government
of
a
city,
county,
town,
school
district,
or
special
district
with
a
population
of
less
than
50,000;
or
(
3)
a
small
organization
that
is
any
not­
for­
profit
enterprise
that
is
independently
owned
and
operated
and
is
not
dominant
in
its
field.

After
considering
the
economic
impacts
of
today=
s
proposed
action
on
small
entities,
I
certify
that
this
action
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities.
This
proposed
rule
will
not
impose
any
requirements
on
small
entities.
We
continue
to
be
interested
in
the
potential
impacts
of
the
proposed
rule
on
small
entities
and
welcome
comments
on
issues
related
to
such
impacts.

D.
Unfunded
Mandates
Reform
Act
Title
II
of
the
Unfunded
Mandates
Reform
Act
of
1995
(
UMRA),
Public
Law
104­
4,
establishes
requirements
for
Federal
agencies
to
assess
the
effects
of
their
regulatory
actions
on
State,
local,
and
tribal
governments
and
the
private
sector.
Under
section
202
of
the
UMRA,
EPA
generally
must
prepare
a
written
statement,
including
a
cost­
benefit
analysis,
for
proposed
and
final
rules
with
"
Federal
mandates"
that
may
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
63
result
in
expenditures
to
State,
local,
and
tribal
governments,
in
the
aggregate,
or
to
the
private
sector,
of
$
100
million
or
more
in
any
1
year.
Before
promulgating
an
EPA
rule
for
which
a
written
statement
is
needed,
section
205
of
the
UMRA
generally
requires
EPA
to
identify
and
consider
a
reasonable
number
of
regulatory
alternatives
and
adopt
the
least
costly,
most
cost­
effective
or
least
burdensome
alternative
that
achieves
the
objectives
of
the
rule.
The
provisions
of
section
205
do
not
apply
when
they
are
inconsistent
with
applicable
law.
Moreover,
section
205
allows
EPA
to
adopt
an
alternative
other
than
the
least
costly,
most
cost­
effective
or
least
burdensome
alternative
if
the
Administrator
publishes
with
the
final
rule
an
explanation
as
to
why
that
alternative
was
not
adopted.
Before
EPA
establishes
any
regulatory
requirements
that
may
significantly
or
uniquely
affect
small
governments,
including
tribal
governments,
it
must
have
developed
under
section
203
of
the
UMRA
a
small
government
agency
plan.

The
plan
must
provide
for
notifying
potentially
affected
small
governments,

enabling
officials
of
affected
small
governments
to
have
meaningful
and
timely
input
in
the
development
of
EPA
regulatory
proposals
with
significant
Federal
intergovernmental
mandates,
and
informing,
educating,
and
advising
small
governments
on
compliance
with
the
regulatory
requirements.
Today's
rule
contains
no
Federal
mandates
(
under
the
regulatory
provisions
of
Title
II
of
the
UMRA)
for
State,
local,
or
tribal
governments
or
the
private
sector.

Thus,
today's
rule
is
not
subject
to
the
requirements
of
sections
202
and
205
of
the
UMRA.

E.
Executive
Order
13132
­
Federalism
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
64
Executive
Order
13132,
entitled
"
Federalism"
(
64
FR
43255,
August
10,
1999),

requires
EPA
to
develop
an
accountable
process
to
ensure
"
meaningful
and
timely
input
by
State
and
local
officials
in
the
development
of
regulatory
policies
that
have
federalism
implications."
"
Policies
that
have
federalism
implications"
is
defined
in
the
Executive
Order
to
include
regulations
that
have
"
substantial
direct
effects
on
the
States,
on
the
relationship
between
the
national
government
and
the
States,
or
on
the
distribution
of
power
and
responsibilities
among
the
various
levels
of
government."

This
proposal
rule
does
not
have
federalism
implications.
It
will
not
have
substantial
direct
effects
on
the
States,
on
the
relationship
between
the
national
government
and
the
States,
or
on
the
distribution
of
power
and
responsibilities
among
the
various
levels
of
government,
as
specified
in
Executive
Order
13175.
Thus,
Executive
Order
13175
does
not
apply
to
this
action.

In
the
spirit
of
Executive
Order
13132,
and
consistent
with
EPA
policy
to
promote
communications
between
EPA
and
State
and
local
governments,
EPA
is
soliciting
comment
on
today=
s
proposal
from
State
and
local
officials.

F.
Executive
Order
13175
­
Consultation
and
Coordination
with
Indian
Tribal
Governments
Executive
Order
13175,
entitled
AConsultation
and
Coordination
with
Indian
Tribal
Governments@
(
65
FR
13175,
November
9,
2000),
requires
EPA
to
develop
an
accountable
process
to
ensure
Ameaningful
and
timely
input
by
tribal
officials
in
the
development
of
regulatory
policies
that
have
tribal
implications.@
This
proposed
rule
does
not
have
tribal
implications,
as
specified
in
Executive
Order
13175.
There
are
no
Draft:
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and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
65
tribal
authorities
currently
issuing
major
NSR
and
title
V
permits.
Thus,
Executive
Order
13175
does
not
apply
to
this
rule.

Although
Executive
Order
13175
does
not
apply
to
this
proposed
rule,
EPA
specifically
solicits
comment
on
this
proposed
rule
from
tribal
officials.

G.
Executive
Order
13045
­
Protection
of
Children
from
Environmental
Health
Risks
and
Safety
Risks
Executive
Order
13045,
entitled
"
Protection
of
Children
from
Environmental
Health
Risks
and
Safety
Risks"
(
62
FR
19885,
April
23,
1997),
applies
to
any
rule
that:

(
1)
is
determined
to
be
"
economically
significant"
as
defined
under
Executive
Order
12866;
and
(
2)
concerns
an
environmental
health
or
safety
risk
that
EPA
has
reason
to
believe
may
have
a
disproportionate
effect
on
children.
If
the
regulatory
action
meets
both
criteria,
the
Agency
must
evaluate
the
environmental
health
or
safety
effects
of
the
planned
rule
on
children,
and
explain
why
the
planned
regulation
is
preferable
to
other
potentially
effective
and
reasonably
feasible
alternatives
considered
by
the
Agency.

Today=
s
action
is
not
subject
to
the
Executive
Order
because
it
is
not
economically
significant
as
defined
in
Executive
Order
12866,
and
because
the
Agency
does
not
have
reason
to
believe
the
environmental
health
or
safety
risks
addressed
by
this
action
present
a
disproportionate
risk
to
children.
Today=
s
proposed
action
is
not
expected
to
present
a
disproportionate
environmental
health
or
safety
risk
for
children.

H.
Executive
Order
13211
­
Actions
Concerning
Regulations
That
Significantly
Affect
Energy
Supply,
Distribution,
or
Use
Today=
s
action
is
not
a
Asignificant
energy
action@
as
defined
in
Executive
Order
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
June
13,
2006
66
13211,
AActions
Concerning
Regulations
That
Significantly
Affect
Energy
Supply,

Distribution,
or
Use@
(
66
FR
28355,
May
22,
2001)
because
it
is
not
likely
to
have
a
significant
adverse
effect
on
the
supply,
distribution,
or
use
of
energy.

I.
National
Technology
Transfer
and
Advancement
Act
Section
12(
d)
of
the
National
Technology
Transfer
and
Advancement
Act
of
1995
(
NTTAA),
Public
Law
104­
113,
section
12(
d)
(
15
U.
S.
C.
272
note),
directs
EPA
to
use
voluntary
consensus
standards
in
its
regulatory
activities
unless
to
do
so
would
be
inconsistent
with
applicable
law
or
otherwise
impractical.

Voluntary
consensus
standards
are
technical
standards
(
for
example,
materials
specifications,
test
methods,
sampling
procedures,
and
business
practices)
that
are
developed
or
adopted
by
voluntary
consensus
standards
bodies.
The
NTTAA
directs
EPA
to
provide
Congress,
through
OMB,
explanations
when
the
Agency
decides
not
to
use
available
and
applicable
voluntary
consensus
standards.

Today=
s
action
does
not
involve
technical
standards.
Therefore,
EPA
did
not
consider
the
use
of
any
voluntary
consensus
standards.

VII.
Statutory
Authority
The
statutory
authority
for
this
action
is
provided
by
sections
307(
d)(
7)(
B),
101,

111,
114,
116,
and
301
of
the
CAA
as
amended
(
42
U.
S.
C.
7401,
7411,
7414,
7416,
and
7601).
This
notice
is
also
subject
to
section
307(
d)
of
the
CAA
(
42
U.
S.
C.
7407(
d)).
PSD
and
Nonattainment
New
Source
Review:
Aggregation,
Debottlenecking,
and
Project
Netting
Page
67
of
76
67
List
of
Subjects
in
40
CFR
Parts
51
and
52
Environmental
protection,
Administrative
practice
and
procedure,
Air
pollution
control,

Baseline
emissions,
Intergovernmental
relations,
Netting,
Major
modifications,
Reporting
and
recordkeeping
requirements.

Dated:

________________________
Stephen
L.
Johnson,
Administrator.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
March
14,
2006
68
For
the
reasons
set
out
in
the
preamble,
title
40,
chapter
I
of
the
Code
of
Federal
Regulations
is
proposed
to
be
amended
as
set
forth
below.

PART
51 [
AMENDED]

1.
The
authority
citation
for
part
51
continues
to
read
as
follows:

Authority:
23
U.
S.
C.
101;
42
U.
S.
C.
7401
 
7671
q.

Subpart
I [
Amended]

2.
Section
51.165
is
amended:

a.
By
adding
paragraph
(
a)(
1)(
xxviii)(
B)(
5);

b.
By
revising
paragraph
(
a)(
1)(
xxxix);

c.
By
revising
paragraph
(
a)(
2)(
ii)(
F);
and
d.
By
adding
paragraph
(
a)(
2)(
ii)(
G).

The
additions
and
revisions
read
as
follows:

§
51.165
Permit
requirements.

(
a)
*
*
*

(
1)
*
*
*

(
xxviii)
*
*
*

(
B)
*
*
*

(
5)
For
purposes
of
paragraph
(
a)(
1)(
xxviii)(
B)(
3)
of
this
section,
an
emissions
increase
results
from
a
project
if,
before
the
project,
the
emissions
unit
was
legally,
physically
and/
or
economically
incapable
of
operating
at
the
post­
change
emissions
rate.

(
i)
An
emissions
unit
is
legally
incapable
of
operating
at
the
post­
change
emissions
rate,

if
such
emissions
would
violate
a
legally
and
practically
enforceable
term
or
condition
of
any
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
March
14,
2006
69
previously
issued
air
quality
permit.

(
ii)
An
emissions
unit
is
physically
incapable
of
operating
at
the
post­
change
emissions
rate,
if
operations
at
the
major
stationary
source
could
not
supply
material
or
accept
material
from
the
emissions
unit
due
to
inherent
capacity
constraints
at
the
major
stationary
source,
and
there
is
no
market
from
which
or
to
which
the
major
stationary
source
could
purchase
or
sell
the
material,
or
if
there
is
no
other
reasonable
means
of
disposing
of
the
material.

(
iii)
An
emissions
unit
is
economically
incapable
of
operating
at
the
post­
change
emissions
rate,
if
a
market
exists
from
which
or
to
which
the
major
stationary
source
could
purchase
or
sell
the
material,
or
if
there
is
a
reasonable
means
of
disposing
of
the
material,
but
the
cost
of
such
a
transaction
is
so
unreasonable
that
it
would
preclude
the
major
stationary
source
from
engaging
in
the
transaction.

*
*
*
*
*

(
xxxix)
Project
means
a
physical
change
in,
or
change
in
the
method
of
operation
of,
an
existing
major
stationary
source.

(
A)
Projects
occurring
at
the
same
major
stationary
source
that
are
dependent
on
each
other
to
be
economically
or
technically
viable
are
considered
a
single
project.

(
B)
For
purposes
of
determining
whether
a
project
results
in
a
significant
emissions
increase
under
paragraph
(
a)(
1)(
xxvii)
of
this
section,
include
the
emissions
increases
from:

(
1)
Any
new
emissions
unit;

(
2)
Any
emissions
unit
that
undergoes
a
physical
change
in
or
change
in
the
method
of
operation;
and
(
3)
Any
emissions
unit
that
does
not
undergo
a
physical
change
in
or
change
in
the
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
March
14,
2006
70
method
of
operation
at
the
major
stationary
source
but
whose
emissions
result
from
the
physical
change
in
or
change
in
the
method
of
operation.

(
4)
For
purposes
of
paragraph
(
a)(
1)(
xxxix)(
B)(
3)
of
this
section,
emissions
of
a
specific
pollutant
at
an
emissions
unit
result
from
the
project
according
to
paragraph
(
a)(
1)(
xxviii)(
B)(
5)

of
this
section.

*
*
*
*
*

(
2)
*
*
*

(
ii)
*
*
*

(
F)
Hybrid
test
for
projects
that
involve
multiple
types
of
emissions
units.
A
significant
emissions
increase
of
a
regulated
NSR
pollutant
is
projected
to
occur
if
the
sum
of
the
difference
between
the
projected
actual
emissions
and
the
baseline
actual
emissions
for
each
emissions
unit,

using
the
method
specified
in
paragraphs
(
a)(
2)(
ii)(
C)
through
(
D)
of
this
section
as
applicable
to
each
type
of
emissions
unit,
equals
or
exceeds
the
significant
amount
for
that
pollutant
(
as
defined
in
paragraph
(
a)(
1)(
x)
of
this
section).
For
example,
if
a
project
involves
both
an
existing
emissions
unit
and
a
new
emissions
unit,
the
projected
increase
is
determined
by
summing
the
values
determined
using
the
method
specified
in
paragraph
(
a)(
2)(
iv)(
C)
of
this
section
for
the
existing
unit
and
the
method
specified
in
paragraph
(
a)(
2)(
iv)(
D)
of
this
section
for
the
new
unit.

(
G)
Project
netting.
(
1)
Emissions
decreases
resulting
from
a
project
shall
be
calculated
using
the
procedures
contained
in
paragraphs
(
a)(
2)(
iv)(
C),
(
D),
and
(
F)
of
this
section.

(
2)
Decreases
must
be
creditable
according
to
all
of
the
requirements
of
paragraph
(
a)(
1)(
vi)
of
this
section,
or
otherwise
enforceable
as
a
practical
matter.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
March
14,
2006
71
(
3)
Emissions
decreases
cannot
be
used
in
both
project
netting
and
contemporaneous
netting.

*
*
*
*
*

3.
Section
51.166
is
amended:

a.
By
revising
paragraph
(
a)(
7)(
iv)(
f);

b.
By
adding
paragraph
(
a)(
7)(
iv)(
g);

c.
By
adding
paragraph
(
b)(
40)(
ii)(
e);
and
d.
By
revising
paragraph
(
b)(
51).

The
revisions
and
additions
read
as
follows:

§
51.166
Prevention
of
significant
deterioration
of
air
quality.

(
a)
*
*
*

(
7)
*
*
*

(
iv)
*
*
*

(
f)
Hybrid
test
for
projects
that
involve
multiple
types
of
emissions
units.
A
significant
emissions
increase
of
a
regulated
NSR
pollutant
is
projected
to
occur
if
the
sum
of
the
difference
between
the
projected
actual
emissions
and
the
baseline
actual
emissions
for
each
emissions
unit,

using
the
method
specified
in
paragraphs
(
a)(
7)(
iv)(
c)
through
(
d)
of
this
section
as
applicable
to
each
type
of
emissions
unit,
equals
or
exceeds
the
significant
amount
for
that
pollutant
(
as
defined
in
paragraph
(
b)(
23)
of
this
section).
For
example,
if
a
project
involves
both
an
existing
emissions
unit
and
a
new
emissions
unit,
the
projected
increase
is
determined
by
summing
the
values
determined
using
the
method
specified
in
paragraph
(
a)(
7)(
iv)(
c)
of
this
section
for
the
existing
unit
and
the
method
specified
in
paragraph
(
a)(
7)(
iv)(
d)
of
this
section
for
the
new
unit.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
March
14,
2006
72
(
g)
Project
netting.
(
1)
Emissions
decreases
resulting
from
a
project
shall
be
calculated
using
the
procedures
contained
in
paragraphs
(
a)(
7)(
iv)(
c),
(
d),
and
(
f)
of
this
section.

(
2)
Decreases
must
be
creditable
according
to
all
of
the
requirements
of
paragraph
(
b)(
3)

of
this
section,
or
otherwise
enforceable
as
a
practical
matter.

(
3)
Emissions
decreases
cannot
be
used
in
both
project
netting
and
contemporaneous
netting.

*
*
*
*
*

(
b)
*
*
*

(
40)
*
*
*

(
ii)
*
*
*

(
e)
For
purposes
of
paragraph
(
b)(
40)(
ii)(
c)
of
this
section,
an
emissions
increase
results
from
a
project
if,
before
the
project,
the
emissions
unit
was
legally,
physically
and/
or
economically
incapable
of
operating
at
the
post­
change
emissions
rate.

(
1)
An
emissions
unit
is
legally
incapable
of
operating
at
the
post­
change
emissions
rate,

if
such
emissions
would
violate
a
legally
and
practically
enforceable
term
or
condition
of
any
previously
issued
air
quality
permit.

(
2)
An
emissions
unit
is
physically
incapable
of
operating
at
the
post­
change
emissions
rate,
if
operations
at
the
major
stationary
source
could
not
supply
material
or
accept
material
from
the
emissions
unit
due
to
inherent
capacity
constraints
at
the
major
stationary
source,
and
there
is
no
market
from
which
or
to
which
the
major
stationary
source
could
purchase
or
sell
the
material,
or
if
there
is
no
other
reasonable
means
of
disposing
of
the
material.

(
3)
An
emissions
unit
is
economically
incapable
of
operating
at
the
post­
change
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
March
14,
2006
73
emissions
rate,
if
a
market
exists
from
which
or
to
which
the
major
stationary
source
could
purchase
or
sell
the
material,
or
if
there
is
a
reasonable
means
of
disposing
of
the
material,
but
the
cost
of
such
a
transaction
is
so
unreasonable
that
it
would
preclude
the
major
stationary
source
from
engaging
in
the
transaction.

*
*
*
*
*

(
51)
Project
means
a
physical
change
in,
or
change
in
the
method
of
operation
of,
an
existing
major
stationary
source.

(
i)
Projects
occurring
at
the
same
major
stationary
source
that
are
dependent
on
each
other
to
be
economically
or
technically
viable
are
considered
a
single
project.

(
ii)
For
purposes
of
determining
whether
a
project
results
in
a
significant
emissions
increase
under
paragraph
(
b)(
39)
of
this
section,
include
the
emissions
increases
from:

(
a)
Any
new
emissions
unit;

(
b)
Any
emissions
unit
that
undergoes
a
physical
change
in
or
change
in
the
method
of
operation;
and
(
c)
Any
emissions
unit
that
does
not
undergo
a
physical
change
in
or
change
in
the
method
of
operation
at
the
major
stationary
source
but
whose
emissions
result
from
the
physical
change
in
or
change
in
the
method
of
operation.

(
d)
For
purposes
of
paragraph
(
b)(
51)(
ii)(
c)
of
this
section,
emissions
of
a
specific
pollutant
at
an
emissions
unit
result
from
the
project
according
to
paragraph
(
b)(
40)(
ii)(
e)
of
this
section.

*
*
*
*
*

PART
52 [
AMENDED]
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
March
14,
2006
74
4.
The
authority
citation
for
part
52
continues
to
read
as
follows:

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

Subpart
A [
Amended]

5.
Section
52.21
is
amended:

a.
By
revising
paragraph
(
a)(
2)(
iv)(
f);

b.
By
adding
paragraph
(
a)(
2)(
iv)(
g);

c.
By
adding
paragraph
(
b)(
41)(
ii)(
e);
and
d.
By
revising
paragraph
(
b)(
52).

The
revisions
and
additions
read
as
follows:

§
52.21
Prevention
of
significant
deterioration
of
air
quality.

(
a)
*
*
*

(
2)
*
*
*

(
iv)
*
*
*

(
f)
Hybrid
test
for
projects
that
involve
multiple
types
of
emissions
units.
A
significant
emissions
increase
of
a
regulated
NSR
pollutant
is
projected
to
occur
if
the
sum
of
the
difference
between
the
projected
actual
emissions
and
the
baseline
actual
emissions
for
each
emissions
unit,

using
the
method
specified
in
paragraphs
(
a)(
2)(
iv)(
c)
through
(
d)
of
this
section
as
applicable
to
each
type
of
emissions
unit,
equals
or
exceeds
the
significant
amount
for
that
pollutant
(
as
defined
in
paragraph
(
b)(
23)
of
this
section).
For
example,
if
a
project
involves
both
an
existing
emissions
unit
and
a
new
emissions
unit,
the
projected
increase
is
determined
by
summing
the
values
determined
using
the
method
specified
in
paragraph
(
a)(
2)(
iv)(
c)
of
this
section
for
the
existing
unit
and
the
method
specified
in
paragraph
(
a)(
2)(
iv)(
d)
of
this
section
for
the
new
unit.
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
March
14,
2006
75
(
g)
Project
netting.
(
1)
Emissions
decreases
resulting
from
a
project
shall
be
calculated
using
the
procedures
contained
in
paragraphs
(
a)(
2)(
iv)(
c),
(
d),
and
(
f)
of
this
section.

(
2)
Decreases
must
be
creditable
according
to
all
of
the
requirements
of
paragraph
(
b)(
3)

of
this
section,
or
otherwise
enforceable
as
a
practical
matter.

(
3)
Emissions
decreases
cannot
be
used
in
both
project
netting
and
contemporaneous
netting.

*
*
*
*
*

(
b)
*
*
*

(
41)
*
*
*

(
ii)
*
*
*

(
e)
For
purposes
of
paragraph
(
b)(
41)(
ii)(
c)
of
this
section,
an
emissions
increase
results
from
a
project
if,
before
the
project,
the
emissions
unit
was
legally,
physically
and/
or
economically
incapable
of
operating
at
the
post­
change
emissions
rate.

(
1)
An
emissions
unit
is
legally
incapable
of
operating
at
the
post­
change
emissions
rate,

if
such
emissions
would
violate
a
legally
and
practically
enforceable
term
or
condition
of
any
previously
issued
air
quality
permit.

(
2)
An
emissions
unit
is
physically
incapable
of
operating
at
the
post­
change
emissions
rate,
if
operations
at
the
major
stationary
source
could
not
supply
material
or
accept
material
from
the
emissions
unit
due
to
inherent
capacity
constraints
at
the
major
stationary
source,
and
there
is
no
market
from
which
or
to
which
the
major
stationary
source
could
purchase
or
sell
the
material,
or
if
there
is
no
other
reasonable
means
of
disposing
of
the
material.

(
3)
An
emissions
unit
is
economically
incapable
of
operating
at
the
post­
change
Draft:
Deliberative
and
Privileged;
do
not
cite,
quote,
or
distribute.
March
14,
2006
76
emissions
rate,
if
a
market
exists
from
which
or
to
which
the
major
stationary
source
could
purchase
or
sell
the
material,
or
if
there
is
a
reasonable
means
of
disposing
of
the
material,
but
the
cost
of
such
a
transaction
is
so
unreasonable
that
it
would
preclude
the
major
stationary
source
from
engaging
in
the
transaction.

*
*
*
*
*

(
52)
Project
means
a
physical
change
in,
or
change
in
the
method
of
operation
of,
an
existing
major
stationary
source.

(
i)
Projects
occurring
at
the
same
major
stationary
source
that
are
dependent
on
each
other
to
be
economically
or
technically
viable
are
considered
a
single
project.

(
ii)
For
purposes
of
determining
whether
a
project
results
in
a
significant
emissions
increase
under
paragraph
(
b)(
40)
of
this
section,
include
the
emissions
increases
from:

(
a)
Any
new
emissions
unit;

(
b)
Any
emissions
unit
that
undergoes
a
physical
change
in
or
change
in
the
method
of
operation;
and
(
c)
Any
emissions
unit
that
does
not
undergo
a
physical
change
in
or
change
in
the
method
of
operation
at
the
major
stationary
source
but
whose
emissions
result
from
the
physical
change
in
or
change
in
the
method
of
operation.

(
d)
For
purposes
of
paragraph
(
b)(
52)(
ii)(
c)
of
this
section,
emissions
of
a
specific
pollutant
at
an
emissions
unit
result
from
the
project
according
to
paragraph
(
b)(
41)(
ii)(
e)
of
this
section.

*
*
*
*
*