[Federal Register: March 8, 2007 (Volume 72, Number 45)]
[Rules and Regulations]
[Page 10367-10380]
[DOCID:fr08mr07-21]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 51

[EPA-HQ-OAR-2001-0004; FRL-8283-9]
RIN 2060-AM59

Nonattainment New Source Review (NSR)

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The EPA is finalizing revisions to the regulations governing
the nonattainment new source review (NSR) program mandated by section
110(a)(2)(C) of the Clean Air Act (CAA or Act). These revisions
implement changes to the preconstruction review requirements for major
stationary sources in nonattainment areas in interim periods between
designation of new nonattainment areas and adoption of a revised State
Implementation Plan (SIP). The revisions conform the nonattainment
permitting rules that apply during the SIP development period following
nonattainment designations before SIP approval to the Federal
permitting rules applicable to SIP-approved programs. The changes are
intended to provide a consistent national program for permitting major
stationary sources in nonattainment areas under section 110(a)(2)(C)
and part D of title I of the Act. In particular, these changes conform
the regulations to the NSR reform provisions that EPA promulgated by
notice dated December 31, 2002, except that these changes do not
include the NSR reform provisions for ``clean units'' or ``pollution
control projects,'' which the U.S. Court of Appeals for the D.C.
Circuit vacated in New York v. EPA, 413 F.3d 3 (DC Cir. 2005). In
addition, these changes include an interim interpretation of the NSR
reform provision for a ``reasonable possibility'' standard for
recordkeeping and reporting requirements, in accordance with that court
decision. This interim interpretation to the ``reasonable possibility``
standard applies for appendix S purposes, pending the completion of
rulemaking to develop a more complete interpretation.

DATES: This final rule is effective on May 7, 2007.

ADDRESSES: The EPA has established a docket for this action under
Docket ID No. EPA-HQ-OAR-2001-0004. All documents in the docket are
listed on the http://www.regulations.gov Web site. Although listed in

the index, some information may not be 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
through http://www.regulations.gov or in hard copy at the Air Docket,

EPA/DC, EPA West, Room 3334, 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<PHONE_NUMBER>, and the telephone number for the
Air Docket is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Ms. Lisa Sutton, Air Quality Policy
Division, Office of Air Quality Planning and Standards (C504-03),
Environmental Protection Agency, Research Triangle Park, NC 27711;
telephone number:<PHONE_NUMBER>; fax number:<PHONE_NUMBER>; e-mail
address<EMAIL_ADDRESS>
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             SIC \a\          NAICS \b\
------------------------------------------------------------------------
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.
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. Where Can I Obtain Additional Information?

    In addition to being available in the docket, an electronic copy of
this final

rule is also available on the World Wide Web. Following signature by
the EPA Administrator, a copy of this final rule will be posted on the
EPA's NSR Web site, under Regulations & Standards, at http://www.epa.gov/nsr
.

C. 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. Where Can I Obtain Additional Information?
    C. How Is This Preamble Organized?
II. Overview of This Final Action
III. Background
    A. The Major NSR Program
    B. What We Proposed
IV. Description of This Final Action and Legal Basis
    A. Final Changes to Appendix S
    B. Legal Basis for Changes to Appendix S
    C. Approach for ``Reasonable Possibility'' Standard
V. Summary of Major Comments and Responses
VI. Effective Date for Requirements
VII. Statutory and Executive Order Reviews
    A. Executive Order 12866--Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act (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 and Safety Risks
    H. Executive Order 13211--Actions That Significantly Affect
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898--Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
    K. Congressional Review Act
VIII. Judicial Review
IX. Statutory Authority

II. Overview of This Final Action

    In this action, we are finalizing previously proposed changes to
the regulations that govern NSR permitting of major stationary sources
in nonattainment areas in appendix S of 40 CFR part 51. Appendix S
contains the permitting program for major stationary sources that are
located either in nonattainment areas or in the Ozone Transport Region
(OTR), in transition periods before EPA approves a SIP to implement the
NSR requirements in part D of title I. These final rules revise
appendix S to generally conform it to regulations at 40 CFR 51.165 for
SIP programs for nonattainment major NSR, as those regulations were
revised to implement NSR reform. 67 FR 80816 (December 31, 2002) (2002
NSR reform rules). However, the U.S. Court of Appeals for the D.C.
Circuit, in New York v. EPA, 413 F.3d 3 (DC Cir. 2005) (New York),
vacated the Clean Unit provision and the Pollution Control Project
(PCP) exemption in the 2002 NSR reform rules. Therefore, these final
rules do not conform appendix S to the 2002 rules with respect to Clean
Units or PCPs. The New York case also remanded the ``reasonable
possibility'' recordkeeping and reporting provision of the 2002 NSR
reform rules for the EPA either to provide an acceptable explanation or
to devise an appropriately supported alternative. In a separate Federal
Register notice published on this date, we are proposing clarification
of the ``reasonable possibility'' standard to address under which
circumstances records must be kept for projects that do not trigger
NSR. In the interim, the ``reasonable possibility'' standard remains in
effect in our major NSR regulations and we provide an interpretation
that indicates one set of circumstances under which the ``reasonable
possibility'' standard is met. States may provide different
recordkeeping requirements provided that the recordkeeping requirements
address the concerns noted in the Court's remand.

III. Background

A. The Major NSR Program

    The major NSR program contained in parts C and D of title I of the
Act is a preconstruction review and permitting program applicable to
new and modified major stationary sources of air pollutants regulated
under the Act. In areas not meeting health-based national ambient air
quality standards (NAAQS) and in ozone transport regions, the program
is implemented under the requirements of section 110(a)(2)(C) and part
D of title I of the Act. We call this program the ``nonattainment'' NSR
program. Subpart 1 of part D of title I contains general requirements
for nonattainment areas for any pollutant for which there is a NAAQS.
    In areas meeting the NAAQS (``attainment'' areas) or for which
there is insufficient information to determine whether they meet the
NAAQS (``unclassifiable'' areas), the NSR requirements under part C of
title I of the Act apply. This program is called the Prevention of
Significant Deterioration (PSD) program. Collectively, we also commonly
refer to the attainment and nonattainment programs as the major NSR
program. Regulations comprising the major NSR program are contained in
40 CFR 51.165, 51.166, 52.21, 52.24, and part 51, appendix S. Of these,
the nonattainment area regulations are contained in 40 CFR 51.165,
52.24, and part 51, appendix S.
    The NSR provisions of the Act are implemented primarily through
State preconstruction permitting programs. As provided in section
172(c)(4) of the Act, the SIP must require permits for the construction
and operation of new or modified major stationary sources in accordance
with section 173 of the Act. The permitting requirements for SIPs for
major stationary sources locating in nonattainment areas are found in
40 CFR 51.165. 40 CFR 52.24(k) specifies that appendix S governs
permits to construct and operate when such permits were applied for
during the period between the date of designation as nonattainment and
the date we approve the part D major NSR plan. Appendix S states that
it is an interpretation of 40 CFR subpart I (including Sec.  51.165),
and it has historically reflected substantially the same requirements
as the part D NSR requirements. This includes the requirement to comply
with the lowest achievable emission rate (LAER) and obtain offsetting
emission reductions, with a limited exemption in section VI of the
appendix that applies to sources that will not interfere with an area's
attainment deadline and that will meet applicable SIP emissions
limitations. Thus, consistent with section 110(a)(2)(C) of the Act,
permitting of new and modified stationary sources in the area will be
regulated as necessary to ensure that they do not interfere with
attaining the NAAQS.
    As we describe further in section III.B of this preamble, these
final regulations generally conform the regulatory language of appendix
S to the major NSR program as revised on December 31, 2002, except for
the provisions of that program vacated by the New York case. For a
summary of the regulatory development process and stakeholder
development for that rulemaking, see 67 FR 80188.

B. What We Proposed

    On July 23, 1996, we proposed changes to the major NSR program,
including the regulations contained in 40 CFR 51.165, 51.166, 52.21,
52.24, and part 51 appendix S (61 FR 38250). The 1996 proposal
concerned, in part, five major changes to the NSR program-baseline
emissions, actual-to-projected-actual methodology, Clean Units,
Plantwide Applicability Limitations (PALs), and PCPs.

    On December 31, 2002 (67 FR 80187), we promulgated final changes
concerning baseline emissions, actual-to-projected-actual methodology,
Clean Units, PALs, and PCPs. We promulgated these changes in the
regulations at 40 CFR 51.165, 51.166, and 52.21, and at the same time
stated our intention to later conform the regulatory language in
appendix S (and 40 CFR 52.24) to the final regulations.

    Today's actions finalize these 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 Act. We also proposed conforming changes to
40 CFR (Code of Federal Regulations) part 51, appendix S, and part
52.24. Today we have not included the final regulatory language for
these regulations. It is our intention to include regulatory changes
that conform appendix S and 40 CFR 52.24 to today's final rules in
any final regulations that set forth an interim implementation
strategy for the 8-hour ozone standard. We intend to finalize
changes to these sections precisely as we have finalized
requirements for other parts of the program. 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.

    We published final rules addressing implementation of the 8-hour
ozone NAAQS, on April 30, 2004 (69 FR 23951) and November 29, 2005 (70
FR 71612). In the November 2005 final rule, in part, we revised
appendix S to incorporate the major stationary source thresholds,
significant emission rates, and offset ratios for sources of ozone
precursors pursuant to part D, subpart 1 and subpart 2 of title I of
the 1990 CAA Amendments, but we did not at that time include the
regulatory changes we had proposed to conform appendix S language to
that of the NSR reform rules.

IV. Description of This Final Action and Legal Basis

A. Final Changes to Appendix S

    In this final action, we have revised appendix S as proposed to
generally conform the regulatory language in appendix S to that of the
NSR reform rules. Specifically, the changes proposed in 1996 concerning
baseline emission determinations, actual-to-projected-actual
methodology, and PALs have been incorporated in sections II and IV of
appendix S. As indicated at 67 FR 80187, it was our intent to finalize
the changes to appendix S precisely as we have finalized requirements
for other parts of the program. However, subsequently, the New York
case vacated the Clean Unit provision and the PCP exemption in the 2002
NSR reform rules. Therefore, these final rules do not conform appendix
S to the 2002 rule revisions relating to Clean Units and PCPs. In
addition, as discussed later, these final rules conform appendix S to
the ``reasonable possibility'' standard in the NSR reform rules. In a
separate Federal Register notice published on this date, we are
proposing clarification of the ``reasonable possibility'' standard to
address under which circumstances records must be kept for projects
that do not trigger NSR. We provide, in this preamble, an interim
interpretation which addresses the issues raised by the Court in its
remand. Table 1 shows where to find the changes being made to appendix
S.

                Table 1.--Proposed Changes to Appendix S
------------------------------------------------------------------------
                                                           Analogous
                                     Added to Sec.      provisions have
 For the following provision * *  51.165 in December     been added to
                *                    2002 at * * *       appendix S at
                                                           paragraph
------------------------------------------------------------------------
Offsets.........................  (a)(3)(ii) (H)      IV.C.7 through 8.
                                   through (J).
Applicability test..............  (a)(2)(ii)........  IV.I.1.
Projected actual emissions        (a)(6)............  IV.J.
 (including ``reasonable
 possibility'' standard).
Clean Unit provisions for         (c)
 emissions units subject to LAER.
Clean Unit provisions for         (d)
 emissions units achieving
 emission limitation comparable
 to LAER.
PCP exclusion...................  (e)
Actuals PALs....................  (f)...............  IV.K.
Severability....................  (g)...............  IV.L.
------------------------------------------------------------------------

B. Legal Basis for Changes to Appendix S

    Appendix S provides on its face that it is an interpretation of the
NSR permitting rules in subpart I, including (51.165. Therefore, it is
necessary to have appendix S reflect substantially the same
requirements as are in Sec.  51.165.\1\ Thus, we proposed to amend
appendix S in this manner in the 1996 NSR proposal.
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    \1\ Thus, EPA has typically conformed appendix S to the part D
nonattainment NSR permitting provisions governing SIPs at 40 CFR
51.165 (originally codified at Sec.  51.18) whenever those
regulations were revised. See, for example, 45 FR 52676 (Aug. 7,
1980); 47 FR 27554 (June 25, 1982); 49 FR 43210 (Oct. 26, 1984); 54
FR 27274 (June 28, 1989); 57 FR 3941 (Feb. 3, 1992).
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    The legal basis for these changes is the same as that set forth in
the preamble to the December 31, 2002, final rule providing NSR reforms
for the other major NSR regulations. Additionally, we believe it is
necessary to have appendix S reflect substantially the same
requirements as codified at 40 CFR 51.165 because appendix S is an
interpretation of the NSR permitting rules at 40 CFR part 51 subpart I,
including Sec.  51.165, as discussed earlier. As explained in section
IV.A of this preamble, we are not amending appendix S to adopt the
Clean Unit provision and PCP exemption that are in Sec.  51.165,
because the D.C. Circuit Court of Appeals vacated those provisions in
the New York decision.
    Section 110(a)(2)(C) of the Act does not define specific
requirements States must follow for issuing major source permits during
the interim period between nonattainment designation and EPA approval
of a nonattainment NSR SIP. However, we have historically recognized
that the SIP development period provided for in section 172(b) of the
Act leaves a gap in part D major NSR permitting and have determined
that this gap is to be filled with an interim major NSR program that is
substantially similar to the requirements of part D, including the LAER
and offset requirements from part D, subject to a limited exemption
where the attainment deadline will be met (57 FR at 18070, 18076). This
interim NSR program has been implemented to date through

appendix S.\2\ Our regulations at 40 CFR 52.24(k) require States to
follow appendix S during the time period between the date of
designation as nonattainment and the date the part D major NSR plan is
approved. Additionally, in the 1977 CAA Amendments, Congress indicated
its intent that major NSR permitting apply during the SIP development
period. [See Pub. L. No. 95-95, Sec.  129(a), 91 Stat. 685 (1977).]
Specifically, in 1977, when Congress enacted a moratorium on
construction in any area lacking an approved part D NSR SIP, with a
delayed effective date of July 1, 1979, Congress provided that appendix
S govern permitting of sources constructing in such areas prior to that
date, subject to a limited waiver by the Administrator. Id. 108(b),
129(a). We subsequently codified the use of appendix S as the interim
major NSR program in 40 CFR 52.24(k), reasoning (in the context of
implementing a delay in the construction ban for then-recently
designated nonattainment areas) that Congress had provided that
appendix S would remain in effect to protect air quality while State
plans were being designed (45 FR 91604). When Congress removed the
construction ban (except as provided in section 110(n)(3) of the Act),
it left in place 40 CFR 52.24(k), implementing the interim major NSR
program under appendix S.
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    \2\ Appendix S was originally promulgated in 1976 to address
whether, and to what extent, new and modified sources would be
allowed to construct in nonattainment areas whose attainment
deadlines had already passed, in light of the regulatory requirement
that new or modified sources be disapproved where the source would
interfere with attainment of the NAAQS. 41 FR 55524 (Dec. 21, 1976).
It required, inter alia, compliance with the LAER and with
offsetting emission reductions in excess of the new source's
emissions. At that time, part D NSR was not part of the CAA.
    When the part D NSR provisions were added in the 1977 Amendments
to the CAA, Congress added the requirement that SIPs contain
nonattainment NSR provisions as set forth in section 173, including
LAER and the requirement to either offset the increase in new source
emissions or ensure that emissions fell within a growth allowance.
(The growth allowance provision was repealed in 1990.) Additionally,
Congress provided that appendix S would govern preconstruction
permitting in areas lacking approved part D SIPs before a
construction ban went into effect, as discussed in more detail
earlier.
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    The continued application of appendix S through Sec.  52.24(k) is
also supported by the purpose of the CAA, specifically, section
101(b)(1), ``to protect and enhance the quality of the Nation's air
resources so as to promote the public health and welfare and the
productive capacity of its population.'' This provision was the basis
for the original judicial finding that the Act imposed an obligation to
prevent significant deterioration in areas that meet the NAAQS, prior
to Congress' enactment of the PSD program at part C of the Act.\3\ This
policy of non-degradation and promoting productive capacity applies
with even greater force in areas that fail to meet the NAAQS. Thus, we
believe that an interim major NSR program for the SIP development
period--as codified at appendix S--is supported by section
110(a)(2)(C), section 101(b)(1), Congressional intent, and our
gapfilling authority under section 301(a) of the Act.
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    \3\ See Alabama Power Co. v. Costle, 636 F.3d 323, 346-047 (DC
Cir. 1980) (discussing Sierra Club v. Ruckelshaus, 344 F. Supp. 253
(D.D.C. 1972), aff'd per curiam 4 ERC 1815 (DC Cir. 1972), aff'd by
an equally divided court, sub nom Fri v. Sierra Club, 412 U.S. 541
(1973).
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C. Approach for ``Reasonable Possibility'' Standard

    These appendix S rules include the ``reasonable possibility''
standard of the 2002 NSR reform rules. In response to the remand of
that standard handed down by the D.C. Circuit in the New York case, EPA
provides an interim interpretation of ``reasonable possibility'' that
is consistent with the Court's decision. We note that in a separate
Federal Register notice published on this date, we are proposing
clarification of the ``reasonable possibility'' standard to address
under which circumstances a source that does not trigger NSR may
nonetheless still be required to keep records.
    A major stationary source in a nonattainment area (or in the OTR)
triggers the application of NSR when it makes a ``modification,'' which
is defined as ``any physical change * * * or change in the method of
operation * * * which increases the amount of any air pollutant
emitted'' for which an area is in nonattainment or results in the
emission of any such air pollutant not previously emitted by the
source. CAA sections 172(c)(5), 171(4), 111(a)(4). The amount of the
increase must be significant, and EPA, through rulemaking, has
determined significance levels for various pollutants where the Act
does not independently specify a significance threshold. See 40 CFR
51.165(a)(1)(x), 51.166(b)(23)(i), paragraph II.A.10 of appendix S to
Part 51, and 52.21(b)(23)(i).
    To determine the amount of increase from the change, the NSR rules
prior to revision by the 2002 NSR reform rules generally required a
source other than an electric utility steam generating unit (EUSGU) to
compare the amount of the source's actual emissions during a baseline
period to the amount the source would emit after the change based on
the source's potential to emit (PTE) to determine if a ``significant
net emissions increase'' has occurred. The 2002 NSR reform rules
provided non-EUSGU sources a choice in how to determine the post-change
amount: these sources could continue to use the PTE amount (the
actuals-to-potentials test), or they could use the amount of actual
emissions the sources projected to occur (the actuals-to-projected-
actuals test). The preamble to the NSR reform rules contains a more
detailed discussion, 67 FR at 80,187.
    For a source that elects the actuals-to-projected-actuals test and
calculates that the amount of any increase would not exceed the
significance levels and therefore does not trigger NSR, the NSR reform
rules provide requirements to maintain records of the calculations and
post-change emissions if the source determines that there is ``a
reasonable possibility that [the change] may result in a significant
emissions increase * * *. '' 40 CFR 52.21(r)(6).
    In the New York case, the DC Circuit remanded this provision,
stating:

    Because EPA has failed to explain how it can ensure NSR
compliance without the relevant data, we will remand for it either
to provide an acceptable explanation for its ``reasonable
possibility'' standard or to devise an appropriately supported
alternative.

413 F.3d at 35-36.
    In a separate Federal Register notice published on this date, we
are proposing clarification of the ``reasonable possibility'' standard
to identify when a source must keep records despite the fact that a
physical or operational change does not trigger NSR. The EPA intends,
as part of that rulemaking, to revise appendix S to the extent
necessary to conform to the results of that rulemaking.
    In the interim, until EPA completes the rulemaking, EPA announces
that it interprets the standard so that a source may conclude there is
no ``reasonable possibility'' that the change will result in a
significant increase in emissions only if the change's projected actual
emissions increase is below 50 percent of the applicable NSR
significance level for any pollutant. This test may be termed the
``percentage increase trigger.'' We base our conclusion on an
assumption that the magnitude of projected actual emissions correlates
positively to the likelihood of a significant emissions increase. The
EPA believes that this interpretation addresses the issues identified
by the Court in the New York case.

V. Summary of Major Comments and Responses

    As we noted in section III.B of this preamble, we proposed changes
to appendix S and the other major NSR regulations in 1996. Thus, the
comments and responses concerning the final regulations on December 31,
2002 also apply to these final changes to appendix S. You will find the
major comments and responses at 67 FR 80186. For a complete summary of
the comments and responses, please see our Technical Support Document
for the December 31, 2002 final rules, which is posted on the World
Wide Web, on the EPA's New Source Review Web site, at http://www.epa.gov/nsr/documents/nsr-tsd_11-22-02.pdf
.

VI. Effective Date for Requirements

    These final changes to appendix S of 40 CFR part 51 will take
effect in the NSR permitting programs for nonattainment areas on May 7,
2007. This means that appendix S as amended in this final action will
apply on May 7, 2007 in any nonattainment area without an approved part
D NSR SIP that applies to major sources in the nonattainment area for
the nonattainment pollutant.

VII. Statutory and Executive Order Reviews

A. Executive Order 12866--Regulatory Planning and Review

    Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993),
this action is a ``significant regulatory action.'' Accordingly, EPA
submitted this action to the Office of Management and Budget (OMB) for
review under EO 12866 and any changes made in response to OMB
recommendations have been documented in the docket for this action.

B. Paperwork Reduction Act

    This action does not impose any new information collection burden.
The OMB has previously approved the information collection requirements
contained in the existing regulations (40 CFR parts 51 and 52) under
the provisions of the 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) may be
obtained from Susan Auby, Collection Strategies Division, U.S.
Environmental Protection Agency (2822T), 1200 Pennsylvania Ave., NW.,
Washington, DC 20460, or by calling<PHONE_NUMBER>.
    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 Act (RFA)

    The EPA has determined that it is not necessary to prepare a
regulatory flexibility analysis in connection with this final rule. For
purposes of assessing the impacts of this final rule on small entities,
small entity is defined as: (1) A small business as defined by the
Small Business Administration's (SBA) regulations at 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 which is independently owned and operated and is not
dominant in its field.
    After considering the economic impacts of this final rule on small
entities, EPA has concluded that this action will not have a
significant economic impact on a substantial number of small entities.
We are imposing no new requirements on small entities.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L.
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 result in expenditures to State, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one 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 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.
    As this final rule generally incorporates the December 31, 2002
final rules into appendix S, we believe these rule changes will
actually reduce the regulatory burden associated with the major NSR
program by improving the operational flexibility of owners or operators
and clarifying the requirements. Additionally, States are not required
to revise their SIPs with respect to appendix S. The EPA will act as
the reviewing authority where the State lacks authority to issue
permits that meet the conditions of appendix S. Thus, this final rule
is not subject to the requirements of sections 202 and 205 of the UMRA.
    Because we have not required any new Federal mandates, EPA has also
determined that this rule contains no regulatory requirements that
might significantly or uniquely affect small governments.

E. Executive Order 13132--Federalism

    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 final rule does not have federalism implications.
Nevertheless, as described in section III.B of this preamble, in
developing this rule, we consulted with affected parties and interested
stakeholders, including State and local authorities, to enable them to
provide timely input in the development of this rule. The rule will not
have substantial direct effects on the States, on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government,
as specified in Executive Order 13132. The revisions to appendix S do
not have substantial direct effects on State and local agencies because
State and local agencies are not required to revise their programs with
respect to appendix S. The EPA will act as the reviewing authority
where the State lacks authority to issue permits that meet the
conditions of appendix S. Moreover, this revision provides sources
permitted by States under appendix S greater certainty in application
of the program, which should in turn reduce the overall burden of the
program on State and local authorities. Thus, Executive Order 13132
does not apply to this final rule.

F. Executive Order 13175--Consultation and Coordination With Indian
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by tribal officials in the development of regulatory
policies that have tribal implications.'' This final rule does not have
tribal implications, as specified in Executive Order 13175. Thus,
Executive Order 13175 does not apply.
    The purpose of this final rule, like that for the December 31, 2002
rules, is to add greater flexibility to the existing major NSR
regulations. These changes have been incorporated into appendix S.
Appendix S affects sources located in Indian country but has no direct
effect on Indian tribes. Although major stationary sources affected by
this final rule could be located in or near Indian country and/or be
owned or operated by tribal governments, such sources would not incur
additional costs or compliance burdens as a result of this rule.
Instead, the only effect on such sources should be the benefit of the
added certainty and flexibility provided by the rule.
    Although Executive Order 13175 does not apply to this rule, EPA
afforded Tribal officials the opportunity to comment on the December
31, 2002 final rules, which were developed largely prior to issuance of
Executive Order 13175. Two tribes submitted comments on that action. We
recognize the importance of including tribal consultation as part of
the rulemaking process. We will continue to consult with tribes on
future rulemaking to assess and address tribal implications, and will
work with tribes interested in seeking TIP approval to implement the
NSR program to ensure consistency of tribal plans with this rule.

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

    Executive Order 13045, ``Protection of Children from Environmental
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997), applies
to any rule that: (1) As ``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.
    This final rule 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. Based on our Supplemental Analysis,
we believe that the December 31, 2002 rules that have been incorporated
into this final action will result in equal or better environmental
protection than provided by the prior regulations, and do so in a more
streamlined and effective manner.

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

    This rule is not a ``significant energy action'' as defined in
Executive Order 13211, ``Actions 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. This
final rule improves the ability of sources to undertake pollution
prevention or energy efficiency projects, switch to less polluting
fuels or raw materials, maintain the reliability of production
facilities, and effectively utilize and improve existing capacity. The
rule also includes a number of provisions to streamline administrative
and permitting processes so that facilities can quickly accommodate
changes in supply and demand. The regulations provide several
alternatives that are specifically designed to reduce administrative
burden for sources that use pollution prevention or energy efficient
projects.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), P.L. 104-113, 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
(e.g., 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.
    Although this rule does involve the use of technical standards, it
does not preclude the State, local, and tribal reviewing agencies from
using voluntary consensus standards. This final rule is an improvement
of the existing NSR permitting program. As such, it only ensures that
promulgated technical standards are considered and appropriate controls
are installed, prior to the construction of major sources of air
emissions. Therefore, EPA did not consider the use of any voluntary
consensus standards.

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

    Executive Order 12898, entitled ``Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income
Populations'' (59 FR 7629, February 16, 1994), establishes federal
executive policy on environmental justice. Its main provision directs
federal agencies, to the greatest extent practicable and permitted by
law, to make environmental justice part of their mission by identifying
and addressing, as appropriate, disproportionately high

and adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income
populations in the United States.
    The EPA has determined that this final rule will not have
disproportionately high and adverse human health or environmental
effects on minority or low-income populations. Based on our
Supplemental Analysis, we believe that the December 31, 2002 rules that
have been incorporated into this final action will result in equal or
better environmental protection than provided by the prior regulations,
and do so in a more streamlined and effective manner.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. The EPA will submit a report containing this rule and
other required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2). This action will be effective May 7, 2007.

VIII. Judicial Review

    Under section 307(b)(1) of the CAA, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by May 7, 2007. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this rule for the purposes of judicial review, nor does
it extend the time within which a petition for judicial review may be
filed, and shall not postpone the effectiveness of such rule or action.
This action may not be challenged later in proceedings to enforce its
requirements. See CAA section 307(b)(2).
    Pursuant to section 307(d)(1)(U) of the CAA, the Administrator
determines that this action is subject to the provisions of section
307(d). Section 307(d)(1)(U) provides that the provisions of section
307(d) apply to ``such other actions as the Administrator may
determine.'' This action finalizes elements of previous proposed
actions that were determined to be subject to section 307(d)--the NSR
rules published on December 31, 2002 (67 FR at 80244). Therefore, the
procedural requirements of section 307(d) have been complied with for
purposes of this action.

IX. Statutory Authority

    The statutory authority for this action is provided by sections
101, 112, 114, 116, and 301 of the Act as amended (42 U.S.C. 7401,
7412, 7414, 7416, and 7601). This rulemaking is also subject to section
307(d) of the Act (42 U.S.C. 7407(d)).

Nonattainment New Source Review: Appendix S--Page 37 of 91

List of Subjects in 40 CFR Part 51

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

    Dated: February 28, 2007.
Stephen L. Johnson,
Administrator.

0
For the reasons set out in the preamble, title 40, chapter I of the
Code of Federal Regulations is amended as follows:

PART 51--[AMENDED]

0
1. The authority citation for part 51 continues to read as follows:

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

Appendix S to Part 51--[Amended]

0
2. Appendix S to Part 51 is amended as follows:
0
a. By revising paragraph II.A.1.
0
b. By revising paragraphs II.A.5(i) and (ii).
0
c. By adding paragraph II.A.5(vi).
0
d. By revising paragraph II.A.6(i).
0
e. By revising paragraph II.A.6(iii).
0
f. By revising paragraph II.A.6(v)(b) through (d).
0
g. By adding paragraph II.A.6(vii).
0
h. By revising paragraph II.A.7.
0
i. By revising paragraph II.A.13.
0
j. By revising paragraph II.A.14.
0
k. By revising the introductory text in paragraph II.A.18.
0
l. By adding paragraphs II.A.21 through 36.
0
m. By adding paragraphs IV. I through L.
    The revisions and additions read as follows:

Appendix S to Part 51--Emission Offset Interpretative Ruling

* * * * *
    II. * * *
    A. * * *
    1. Stationary source means any building, structure, facility, or
installation which emits or may emit a regulated NSR pollutant.
* * * * *
    5. (i) Major modification means any physical change in or change
in the method of operation of a major stationary source that would
result in:
    (a) A significant emissions increase of a regulated NSR
pollutant (as defined in paragraph II.A.31 of this Ruling); and
    (b) A significant net emissions increase of that pollutant from
the major stationary source.
    (ii) Any significant emissions increase (as defined in paragraph
II.A.23 of this Ruling) from any emissions units or net emissions
increase (as defined in paragraph II.A.6 of this Ruling) at a major
stationary source that is significant for volatile organic compounds
shall be considered significant for ozone.
* * * * *
    (vi) This definition shall not apply with respect to a
particular regulated NSR pollutant when the major stationary source
is complying with the requirements under paragraph IV.K of this
ruling for a PAL for that pollutant. Instead, the definition at
paragraph IV.K.2(viii) of this Ruling shall apply.
    6.(i) Net emissions increase means, with respect to any
regulated NSR pollutant emitted by a major stationary source, the
amount by which the sum of the following exceeds zero:
    (a) The increase in emissions from a particular physical change
or change in the method of operation at a stationary source as
calculated pursuant to paragraph IV.J of this Ruling; and
    (b) Any other increases and decreases in actual emissions at the
major stationary source that are contemporaneous with the particular
change and are otherwise creditable. Baseline actual emissions for
calculating increases and decreases under this paragraph
II.A.6(i)(b) shall be determined as provided in paragraph II.A.30 of
this Ruling, except that paragraphs II.A.30(i)(c) and II.A.30(ii)(d)
of this Ruling shall not apply.
* * * * *
    (iii) An increase or decrease in actual emissions is creditable
only if the reviewing authority has not relied on it in issuing a
permit for the source under this Ruling, which permit is in effect
when the increase in actual emissions from the particular change
occurs.
* * * * *
    (v) * * *
    (b) It is enforceable as a practical matter at and after the
time that actual construction on the particular change begins;
    (c) The reviewing authority has not relied on it in issuing any
permit under regulations approved pursuant to 40 CFR 51.165; and
    (d) It has approximately the same qualitative significance for
public health and

welfare as that attributed to the increase from the particular
change.
* * * * *
    (vii) Paragraph II.A.13(ii) of this Ruling shall not apply for
determining creditable increases and decreases or after a change.
    7. Emissions unit means any part of a stationary source that
emits or would have the potential to emit any regulated NSR
pollutant and includes an electric utility steam generating unit as
defined in paragraph II.A.21 of this Ruling. For purposes of this
Ruling, there are two types of emissions units as described in
paragraphs II.A.7(i) and (ii) of this Ruling.
    (i) A new emissions unit is any emissions unit which is (or will
be) newly constructed and which has existed for less than 2 years
from the date such emissions unit first operated.
    (ii) An existing emissions unit is any emissions unit that does
not meet the requirements in paragraph II.A.7(i) of this Ruling.
* * * * *
    13. (i) Actual emissions means the actual rate of emissions of a
regulated NSR pollutant from an emissions unit, as determined in
accordance with paragraphs II.A.13(ii) through (iv) of this Ruling,
except that this definition shall not apply for calculating whether
a significant emissions increase has occurred, or for establishing a
PAL under paragraph IV.K of this Ruling. Instead, paragraphs II.A.24
and 30 of this Ruling shall apply for those purposes.
    (ii) In general, actual emissions as of a particular date shall
equal the average rate, in tons per year, at which the unit actually
emitted the pollutant during a consecutive 24-month period which
precedes the particular date and which is representative of normal
source operation. The reviewing authority shall allow the use of a
different time period upon a determination that it is more
representative of normal source operation. Actual emissions shall be
calculated using the unit's actual operating hours, production
rates, and types of materials processed, stored, or combusted during
the selected time period.
    (iii) The reviewing authority may presume that source-specific
allowable emissions for the unit are equivalent to the actual
emissions of the unit.
    (iv) For any emissions unit that has not begun normal operations
on the particular date, actual emissions shall equal the potential
to emit of the unit on that date.
    14. Construction means any physical change or change in the
method of operation (including fabrication, erection, installation,
demolition, or modification of an emissions unit) that would result
in a change in emissions.
* * * * *
    18. Lowest achievable emission rate (LAER) means, for any
source, the more stringent rate of emissions based on the following:
* * *
* * * * *
    21. Electric utility steam generating unit means any steam
electric generating unit that is constructed for the purpose of
supplying more than one-third of its potential electric output
capacity and more than 25 MW electrical output to any utility power
distribution system for sale. Any steam supplied to a steam
distribution system for the purpose of providing steam to a steam-
electric generator that would produce electrical energy for sale is
also considered in determining the electrical energy output capacity
of the affected facility.
    22. Pollution prevention means any activity that through process
changes, product reformulation or redesign, or substitution of less
polluting raw materials, eliminates or reduces the release of air
pollutants (including fugitive emissions) and other pollutants to
the environment prior to recycling, treatment, or disposal; it does
not mean recycling (other than certain ``in-process recycling''
practices), energy recovery, treatment, or disposal.
    23. Significant emissions increase means, for a regulated NSR
pollutant, an increase in emissions that is significant (as defined
in paragraph II.A.10 of this Ruling) for that pollutant.
    24. (i) Projected actual emissions means, the maximum annual
rate, in tons per year, at which an existing emissions unit is
projected to emit a regulated NSR pollutant in any one of the 5
years (12-month period) following the date the unit resumes regular
operation after the project, or in any one of the 10 years following
that date, if the project involves increasing the emissions unit's
design capacity or its potential to emit of that regulated NSR
pollutant and full utilization of the unit would result in a
significant emissions increase or a significant net emissions
increase at the major stationary source.
    (ii) In determining the projected actual emissions under
paragraph II.A.24(i) of this Ruling before beginning actual
construction, the owner or operator of the major stationary source:
    (a) Shall consider all relevant information, including but not
limited to, historical operational data, the company's own
representations, the company's expected business activity and the
company's highest projections of business activity, the company's
filings with the State or Federal regulatory authorities, and
compliance plans under the approved plan; and
    (b) Shall include fugitive emissions to the extent quantifiable,
and emissions associated with startups, shutdowns, and malfunctions;
and
    (c) Shall exclude, in calculating any increase in emissions that
results from the particular project, that portion of the unit's
emissions following the project that an existing unit could have
accommodated during the consecutive 24-month period used to
establish the baseline actual emissions under paragraph II.A.30 of
this Ruling and that are also unrelated to the particular project,
including any increased utilization due to product demand growth;
or,
    (d) In lieu of using the method set out in paragraphs
II.A.24(ii)(a) through (c) of this Ruling, may elect to use the
emissions unit's potential to emit, in tons per year, as defined
under paragraph II.A.3 of this Ruling.
    25. Nonattainment major new source review (NSR) program means a
major source preconstruction permit program that implements Sections
I through VI of this Ruling, or a program that has been approved by
the Administrator and incorporated into the plan to implement the
requirements of Sec.  51.165 of this part. Any permit issued under
such a program is a major NSR permit.
    26. Continuous emissions monitoring system (CEMS) means all of
the equipment that may be required to meet the data acquisition and
availability requirements of this Ruling, to sample, condition (if
applicable), analyze, and provide a record of emissions on a
continuous basis.
    27. Predictive emissions monitoring system (PEMS) means all of
the equipment necessary to monitor process and control device
operational parameters (for example, control device secondary
voltages and electric currents) and other information (for example,
gas flow rate, O2 or CO2 concentrations), and
calculate and record the mass emissions rate (for example, lb/hr) on
a continuous basis.
    28. Continuous parameter monitoring system (CPMS) means all of
the equipment necessary to meet the data acquisition and
availability requirements of this Ruling, to monitor process and
control device operational parameters (for example, control device
secondary voltages and electric currents) and other information (for
example, gas flow rate, O2 or CO2
concentrations), and to record average operational parameter
value(s) on a continuous basis.
    29. Continuous emissions rate monitoring system (CERMS) means
the total equipment required for the determination and recording of
the pollutant mass emissions rate (in terms of mass per unit of
time).
    30. Baseline actual emissions means the rate of emissions, in
tons per year, of a regulated NSR pollutant, as determined in
accordance with paragraphs II.A.30(i) through (iv) of this Ruling.
    (i) For any existing electric utility steam generating unit,
baseline actual emissions means the average rate, in tons per year,
at which the unit actually emitted the pollutant during any
consecutive 24-month period selected by the owner or operator within
the 5-year period immediately preceding when the owner or operator
begins actual construction of the project. The reviewing authority
shall allow the use of a different time period upon a determination
that it is more representative of normal source operation.
    (a) The average rate shall include fugitive emissions to the
extent quantifiable, and emissions associated with startups,
shutdowns, and malfunctions.
    (b) The average rate shall be adjusted downward to exclude any
non-compliant emissions that occurred while the source was operating
above any emission limitation that was legally enforceable during
the consecutive 24-month period.
    (c) For a regulated NSR pollutant, when a project involves
multiple emissions units, only one consecutive 24-month period must
be used to determine the baseline actual emissions for the emissions
units being changed. A different consecutive 24-month period can be
used for each regulated NSR pollutant.
    (d) The average rate shall not be based on any consecutive 24-
month period for which

there is inadequate information for determining annual emissions, in
tons per year, and for adjusting this amount if required by
paragraph II.A.30(i)(b) of this Ruling.
    (ii) For an existing emissions unit (other than an electric
utility steam generating unit), baseline actual emissions means the
average rate, in tons per year, at which the emissions unit actually
emitted the pollutant during any consecutive 24-month period
selected by the owner or operator within the 10-year period
immediately preceding either the date the owner or operator begins
actual construction of the project, or the date a complete permit
application is received by the reviewing authority for a permit
required either under this Ruling or under a plan approved by the
Administrator, whichever is earlier, except that the 10-year period
shall not include any period earlier than November 15, 1990.
    (a) The average rate shall include fugitive emissions to the
extent quantifiable, and emissions associated with startups,
shutdowns, and malfunctions.
    (b) The average rate shall be adjusted downward to exclude any
non-compliant emissions that occurred while the source was operating
above an emission limitation that was legally enforceable during the
consecutive 24-month period.
    (c) The average rate shall be adjusted downward to exclude any
emissions that would have exceeded an emission limitation with which
the major stationary source must currently comply, had such major
stationary source been required to comply with such limitations
during the consecutive 24-month period. However, if an emission
limitation is part of a maximum achievable control technology
standard that the Administrator proposed or promulgated under part
63 of this chapter, the baseline actual emissions need only be
adjusted if the State has taken credit for such emissions reductions
in an attainment demonstration or maintenance plan.
    (d) For a regulated NSR pollutant, when a project involves
multiple emissions units, only one consecutive 24-month period must
be used to determine the baseline actual emissions for the emissions
units being changed. A different consecutive 24-month period can be
used for each regulated NSR pollutant.
    (e) The average rate shall not be based on any consecutive 24-
month period for which there is inadequate information for
determining annual emissions, in tons per year, and for adjusting
this amount if required by paragraphs II.A.30(ii)(b) and (c) of this
Ruling.
    (iii) For a new emissions unit, the baseline actual emissions
for purposes of determining the emissions increase that will result
from the initial construction and operation of such unit shall equal
zero; and thereafter, for all other purposes, shall equal the unit's
potential to emit.
    (iv) For a PAL for a major stationary source, the baseline
actual emissions shall be calculated for existing electric utility
steam generating units in accordance with the procedures contained
in paragraph II.A.30(i) of this Ruling, for other existing emissions
units in accordance with the procedures contained in paragraph
II.A.30(ii) of this Ruling, and for a new emissions unit in
accordance with the procedures contained in paragraph II.A.30(iii)
of this Ruling.
    31. Regulated NSR pollutant, for purposes of this Ruling, means
the following:
    (i) Nitrogen oxides or any volatile organic compounds;
    (ii) Any pollutant for which a national ambient air quality
standard has been promulgated; or
    (iii) Any pollutant that is a constituent or precursor of a
general pollutant listed under paragraphs II.A.31(i) or (ii) of this
Ruling, provided that a constituent or precursor pollutant may only
be regulated under NSR as part of regulation of the general
pollutant.
    32. Reviewing authority means the State air pollution control
agency, local agency, other State agency, Indian tribe, or other
agency issuing permits under this Ruling or authorized by the
Administrator to carry out a permit program under Sec. Sec.  51.165
and 51.166 of this part, or the Administrator in the case of EPA-
implemented permit programs under this Ruling or under Sec.  52.21
of this chapter.
    33. Project means a physical change in, or change in the method
of operation of, an existing major stationary source.
    34. Best available control technology (BACT) means an emissions
limitation (including a visible emissions standard) based on the
maximum degree of reduction for each regulated NSR pollutant which
would be emitted from any proposed major stationary source or major
modification which the reviewing authority, on a case-by-case basis,
taking into account energy, environmental, and economic impacts and
other costs, determines is achievable for such source or
modification through application of production processes or
available methods, systems, and techniques, including fuel cleaning
or treatment or innovative fuel combustion techniques for control of
such pollutant. In no event shall application of best available
control technology result in emissions of any pollutant which would
exceed the emissions allowed by any applicable standard under 40 CFR
part 60 or 61. If the reviewing authority determines that
technological or economic limitations on the application of
measurement methodology to a particular emissions unit would make
the imposition of an emissions standard infeasible, a design,
equipment, work practice, operational standard, or combination
thereof, may be prescribed instead to satisfy the requirement for
the application of BACT. Such standard shall, to the degree
possible, set forth the emissions reduction achievable by
implementation of such design, equipment, work practice or
operation, and shall provide for compliance by means which achieve
equivalent results.
    35. Prevention of Significant Deterioration (PSD) permit means
any permit that is issued under a major source preconstruction
permit program that has been approved by the Administrator and
incorporated into the plan to implement the requirements of Sec.
51.166 of this chapter, or under the program in Sec.  52.21 of this
chapter.
    36. Federal Land Manager means, with respect to any lands in the
United States, the Secretary of the department with authority over
such lands.
* * * * *
    IV. * * *
* * * * *
    I. Applicability procedures.
    1. To determine whether a project constitutes a major
modification, the reviewing authority shall apply the principles set
out in paragraphs IV.I.1(i) through (v) of this Ruling.
    (i) Except as otherwise provided in paragraph IV.I.2 of this
Ruling, and consistent with the definition of major modification
contained in paragraph II.A.5 of this Ruling, a project is a major
modification for a regulated NSR pollutant if it causes two types of
emissions increases--a significant emissions increase (as defined in
paragraph II.A.23 of this Ruling), and a significant net emissions
increase (as defined in paragraphs II.A.6 and 10 of this Ruling).
The project is not a major modification if it does not cause a
significant emissions increase. If the project causes a significant
emissions increase, then the project is a major modification only if
it also results in a significant net emissions increase.
    (ii) The procedure for calculating (before beginning actual
construction) whether a significant emissions increase (i.e., the
first step of the process) will occur depends upon the type of
emissions units being modified, according to paragraphs IV.I.1(iii)
through (v) of this Ruling. The procedure for calculating (before
beginning actual construction) whether a significant net emissions
increase will occur at the major stationary source (i.e., the second
step of the process) is contained in the definition in paragraph
II.A.6 of this Ruling. Regardless of any such preconstruction
projections, a major modification results if the project causes a
significant emissions increase and a significant net emissions
increase.
    (iii) Actual-to-projected-actual applicability test for projects
that only involve existing 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 (as
defined in paragraph II.A.24 of this Ruling) and the baseline actual
emissions (as defined in paragraphs II.A.30(i) and (ii) of this
Ruling, as applicable), for each existing emissions unit, equals or
exceeds the significant amount for that pollutant (as defined in
paragraph II.A.10 of this Ruling).
    (iv) Actual-to-potential test for projects that only involve
construction of a new emissions unit(s). A significant emissions
increase of a regulated NSR pollutant is projected to occur if the
sum of the difference between the potential to emit (as defined in
paragraph II.A.3 of this Ruling) from each new emissions unit
following completion of the project and the baseline actual
emissions (as defined in paragraph II.A.30(iii) of this Ruling) of
these units before the project equals or exceeds the significant
amount for that pollutant (as defined in paragraph II.A.10 of this
Ruling).
    (v) 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 emissions increases for each emissions unit, using the
method specified in paragraphs IV.I.1(iii) through (iv) of this
Ruling as applicable with respect to each emissions unit, for each
type of emissions unit equals or exceeds the significant amount for
that pollutant (as defined in paragraph II.A.10 of this Ruling).
    2. For any major stationary source for a PAL for a regulated NSR
pollutant, the major stationary source shall comply with
requirements under paragraph IV.K of this Ruling.
    J. Provisions for projected actual emissions. The provisions of
this paragraph IV.J apply to projects at existing emissions units at
a major stationary source (other than projects at a source with a
PAL) in circumstances where there is a reasonable possibility that a
project that is not a part of a major modification may result in a
significant emissions increase and the owner or operator elects to
use the method specified in paragraphs II.A.24(ii)(a) through (c) of
this Ruling for calculating projected actual emissions.
    1. Before beginning actual construction of the project, the
owner or operator shall document and maintain a record of the
following information:
    (i) A description of the project;
    (ii) Identification of the emissions unit(s) whose emissions of
a regulated NSR pollutant could be affected by the project; and
    (iii) A description of the applicability test used to determine
that the project is not a major modification for any regulated NSR
pollutant, including the baseline actual emissions, the projected
actual emissions, the amount of emissions excluded under paragraph
II.A.24(ii)(c) of this Ruling and an explanation for why such amount
was excluded, and any netting calculations, if applicable.
    2. If the emissions unit is an existing electric utility steam
generating unit, before beginning actual construction, the owner or
operator shall provide a copy of the information set out in
paragraph IV.J.1 of this Ruling to the reviewing authority. Nothing
in this paragraph IV.J.2 shall be construed to require the owner or
operator of such a unit to obtain any determination from the
reviewing authority before beginning actual construction.
    3. The owner or operator shall monitor the emissions of any
regulated NSR pollutant that could increase as a result of the
project and that is emitted by any emissions units identified in
paragraph IV.J.1(ii) of this Ruling; and calculate and maintain a
record of the annual emissions, in tons per year on a calendar year
basis, for a period of 5 years following resumption of regular
operations after the change, or for a period of 10 years following
resumption of regular operations after the change if the project
increases the design capacity or potential to emit of that regulated
NSR pollutant at such emissions unit.
    4. If the unit is an existing electric utility steam generating
unit, the owner or operator shall submit a report to the reviewing
authority within 60 days after the end of each year, during which
records must be generated under paragraph IV.J.3 of this Ruling
setting out the unit's annual emissions during the year that
preceded submission of the report.
    5. If the unit is an existing unit other than an electric
utility steam generating unit, the owner or operator shall submit a
report to the reviewing authority if the annual emissions, in tons
per year, from the project identified in paragraph IV.J.1 of this
Ruling, exceed the baseline actual emissions (as documented and
maintained pursuant to paragraph IV.J.1(iii) of this Ruling) by a
significant amount (as defined in paragraph II.A.10 of this Ruling)
for that regulated NSR pollutant, and if such emissions differ from
the preconstruction projection as documented and maintained pursuant
to paragraph IV.J.1(iii) of this Ruling. Such report shall be
submitted to the reviewing authority within 60 days after the end of
such year. The report shall contain the following:
    (i) The name, address and telephone number of the major
stationary source;
    (ii) The annual emissions as calculated pursuant to paragraph
IV.J.3 of this Ruling; and
    (iii) Any other information that the owner or operator wishes to
include in the report (e.g., an explanation as to why the emissions
differ from the preconstruction projection).
    6. [Reserved]
    7. The owner or operator of the source shall make the
information required to be documented and maintained pursuant to
this paragraph IV.J of this Ruling available for review upon a
request for inspection by the reviewing authority or the general
public pursuant to the requirements contained in Sec.
70.4(b)(3)(viii) of this chapter.
    K. Actuals PALs. The provisions in paragraphs IV.K.1 through 15
of this Ruling govern actuals PALs.
    1. Applicability.
    (i) The reviewing authority may approve the use of an actuals
PAL for any existing major stationary source (except as provided in
paragraph IV.K.1(ii) of this Ruling) if the PAL meets the
requirements in paragraphs IV.K.1 through 15 of this Ruling. The
term ``PAL'' shall mean ``actuals PAL'' throughout paragraph IV.K of
this Ruling.
    (ii) The reviewing authority shall not allow an actuals PAL for
VOC or NOX for any major stationary source located in an
extreme ozone nonattainment area.
    (iii) Any physical change in or change in the method of
operation of a major stationary source that maintains its total
source-wide emissions below the PAL level, meets the requirements in
paragraphs IV.K.1 through 15 of this Ruling, and complies with the
PAL permit:
    (a) Is not a major modification for the PAL pollutant;
    (b) Does not have to be approved through a nonattainment major
NSR program; and
    (c) Is not subject to the provisions in paragraph IV.F of this
Ruling (restrictions on relaxing enforceable emission limitations
that the major stationary source used to avoid applicability of a
nonattainment major NSR program).
    (iv) Except as provided under paragraph IV.K.1(iii)(c) of this
Ruling, a major stationary source shall continue to comply with all
applicable Federal or State requirements, emission limitations, and
work practice requirements that were established prior to the
effective date of the PAL.
    2. Definitions. For the purposes of this paragraph IV.K, the
definitions in paragraphs IV.K.2(i) through (xi) of this Ruling
apply. When a term is not defined in these paragraphs, it shall have
the meaning given in paragraph II.A of this Ruling or in the Act.
    (i) Actuals PAL for a major stationary source means a PAL based
on the baseline actual emissions (as defined in paragraph II.A.30 of
this Ruling) of all emissions units (as defined in paragraph II.A.7
of this Ruling) at the source, that emit or have the potential to
emit the PAL pollutant.
    (ii) Allowable emissions means ``allowable emissions'' as
defined in paragraph II.A.11 of this Ruling, except as this
definition is modified according to paragraphs IV.K.2(ii)(a) through
(b) of this Ruling.
    (a) The allowable emissions for any emissions unit shall be
calculated considering any emission limitations that are enforceable
as a practical matter on the emissions unit's potential to emit.
    (b) An emissions unit's potential to emit shall be determined
using the definition in paragraph II.A.3 of this Ruling, except that
the words ``enforceable as a practical matter'' should be added
after ``federally enforceable.''
    (iii) Small emissions unit means an emissions unit that emits or
has the potential to emit the PAL pollutant in an amount less than
the significant level for that PAL pollutant, as defined in
paragraph II.A.10 of this Ruling or in the Act, whichever is lower.
    (iv) Major emissions unit means:
    (a) Any emissions unit that emits or has the potential to emit
100 tons per year or more of the PAL pollutant in an attainment
area; or
    (b) Any emissions unit that emits or has the potential to emit
the PAL pollutant in an amount that is equal to or greater than the
major source threshold for the PAL pollutant as defined by the Act
for nonattainment areas. For example, in accordance with the
definition of major stationary source in section 182(c) of the Act,
an emissions unit would be a major emissions unit for VOC if the
emissions unit is located in a serious ozone nonattainment area and
it emits or has the potential to emit 50 or more tons of VOC per
year.
    (v) Plantwide applicability limitation (PAL) means an emission
limitation expressed in tons per year, for a pollutant at a major
stationary source, that is enforceable as a practical matter and
established source-wide in accordance with paragraphs IV.K.1 through
15 of this Ruling.
    (vi) PAL effective date generally means the date of issuance of
the PAL permit. However, the PAL effective date for an increased PAL
is the date any emissions unit which is part of the PAL major
modification becomes operational and begins to emit the PAL
pollutant.
    (vii) PAL effective period means the period beginning with the
PAL effective date and ending 10 years later.
    (viii) PAL major modification means, notwithstanding paragraphs
II.A.5 and 6 of this Ruling (the definitions for major

modification and net emissions increase), any physical change in or
change in the method of operation of the PAL source that causes it
to emit the PAL pollutant at a level equal to or greater than the
PAL.
    (ix) PAL permit means the permit issued under this Ruling, the
major NSR permit, the minor NSR permit, or the State operating
permit under a program that is approved into the plan, or the title
V permit issued by the reviewing authority that establishes a PAL
for a major stationary source.
    (x) PAL pollutant means the pollutant for which a PAL is
established at a major stationary source.
    (xi) Significant emissions unit means an emissions unit that
emits or has the potential to emit a PAL pollutant in an amount that
is equal to or greater than the significant level (as defined in
paragraph II.A.10 of this Ruling or in the Act, whichever is lower)
for that PAL pollutant, but less than the amount that would qualify
the unit as a major emissions unit as defined in paragraph
IV.K.2(iv) of this Ruling.
    3. Permit application requirements. As part of a permit
application requesting a PAL, the owner or operator of a major
stationary source shall submit the following information to the
reviewing authority for approval:
    (i) A list of all emissions units at the source designated as
small, significant or major based on their potential to emit. In
addition, the owner or operator of the source shall indicate which,
if any, Federal or State applicable requirements, emission
limitations or work practices apply to each unit.
    (ii) Calculations of the baseline actual emissions (with
supporting documentation). Baseline actual emissions are to include
emissions associated not only with operation of the unit, but also
emissions associated with startup, shutdown and malfunction.
    (iii) The calculation procedures that the major stationary
source owner or operator proposes to use to convert the monitoring
system data to monthly emissions and annual emissions based on a 12-
month rolling total for each month as required by paragraph
IV.K.13(i) of this Ruling.
    4. General requirements for establishing PALs.
    (i) The reviewing authority is allowed to establish a PAL at a
major stationary source, provided that at a minimum, the
requirements in paragraphs IV.K.4(i) (a) through (g) of this Ruling
are met.
    (a) The PAL shall impose an annual emission limitation in tons
per year, that is enforceable as a practical matter, for the entire
major stationary source. For each month during the PAL effective
period after the first 12 months of establishing a PAL, the major
stationary source owner or operator shall show that the sum of the
monthly emissions from each emissions unit under the PAL for the
previous 12 consecutive months is less than the PAL (a 12-month
average, rolled monthly). For each month during the first 11 months
from the PAL effective date, the major stationary source owner or
operator shall show that the sum of the preceding monthly emissions
from the PAL effective date for each emissions unit under the PAL is
less than the PAL.
    (b) The PAL shall be established in a PAL permit that meets the
public participation requirements in paragraph IV.K.5 of this
Ruling.
    (c) The PAL permit shall contain all the requirements of
paragraph IV.K.7 of this Ruling.
    (d) The PAL shall include fugitive emissions, to the extent
quantifiable, from all emissions units that emit or have the
potential to emit the PAL pollutant at the major stationary source.
    (e) Each PAL shall regulate emissions of only one pollutant.
    (f) Each PAL shall have a PAL effective period of 10 years.
    (g) The owner or operator of the major stationary source with a
PAL shall comply with the monitoring, recordkeeping, and reporting
requirements provided in paragraphs IV.K. 12 through 14 of this
Ruling for each emissions unit under the PAL through the PAL
effective period.
    (ii) At no time (during or after the PAL effective period) are
emissions reductions of a PAL pollutant, which occur during the PAL
effective period, creditable as decreases for purposes of offsets
under paragraph IV.C of this Ruling unless the level of the PAL is
reduced by the amount of such emissions reductions and such
reductions would be creditable in the absence of the PAL.
    5. Public participation requirement for PALs. PALs for existing
major stationary sources shall be established, renewed, or increased
through a procedure that is consistent with ((51.160 and 51.161 of
this chapter. This includes the requirement that the reviewing
authority provide the public with notice of the proposed approval of
a PAL permit and at least a 30-day period for submittal of public
comment. The reviewing authority must address all material comments
before taking final action on the permit.
    6. Setting the 10-year actuals PAL level. The actuals PAL level
for a major stationary source shall be established as the sum of the
baseline actual emissions (as defined in paragraph II.A.30 of this
Ruling) of the PAL pollutant for each emissions unit at the source;
plus an amount equal to the applicable significant level for the PAL
pollutant under paragraph II.A.10 of this Ruling or under the Act,
whichever is lower. When establishing the actuals PAL level, for a
PAL pollutant, only one consecutive 24-month period must be used to
determine the baseline actual emissions for all existing emissions
units. However, a different consecutive 24-month period may be used
for each different PAL pollutant. Emissions associated with units
that were permanently shut down after this 24-month period must be
subtracted from the PAL level. Emissions from units on which actual
construction began after the 24-month period must be added to the
PAL level in an amount equal to the potential to emit of the units.
The reviewing authority shall specify a reduced PAL level(s) (in
tons/yr) in the PAL permit to become effective on the future
compliance date(s) of any applicable Federal or State regulatory
requirement(s) that the reviewing authority is aware of prior to
issuance of the PAL permit. For instance, if the source owner or
operator will be required to reduce emissions from industrial
boilers in half from baseline emissions of 60 ppm NOX to
a new rule limit of 30 ppm, then the permit shall contain a future
effective PAL level that is equal to the current PAL level reduced
by half of the original baseline emissions of such unit(s).
    7. Contents of the PAL permit. The PAL permit contain, at a
minimum, the information in paragraphs IV.K.7 (i) through (x) of
this Ruling.
    (i) The PAL pollutant and the applicable source-wide emission
limitation in tons per year.
    (ii) The PAL permit effective date and the expiration date of
the PAL (PAL effective period).
    (iii) Specification in the PAL permit that if a major stationary
source owner or operator applies to renew a PAL in accordance with
paragraph IV.K.10 of this Ruling before the end of the PAL effective
period, then the PAL shall not expire at the end of the PAL
effective period. It shall remain in effect until a revised PAL
permit is issued by the reviewing authority.
    (iv) A requirement that emission calculations for compliance
purposes include emissions from startups, shutdowns and
malfunctions.
    (v) A requirement that, once the PAL expires, the major
stationary source is subject to the requirements of paragraph IV.K.9
of this Ruling.
    (vi) The calculation procedures that the major stationary source
owner or operator shall use to convert the monitoring system data to
monthly emissions and annual emissions based on a 12-month rolling
total for each month as required by paragraph IV.K.13(i) of this
Ruling.
    (vii) A requirement that the major stationary source owner or
operator monitor all emissions units in accordance with the
provisions under paragraph IV.K.12 of this Ruling.
    (viii) A requirement to retain the records required under
paragraph IV.K.13 of this Ruling on site. Such records may be
retained in an electronic format.
    (ix) A requirement to submit the reports required under
paragraph IV.K.14 of this Ruling by the required deadlines.
    (x) Any other requirements that the reviewing authority deems
necessary to implement and enforce the PAL.
    8. PAL effective period and reopening of the PAL permit. The
requirements in paragraphs IV.K.8(i) and (ii) of this Ruling apply
to actuals PALs.
    (i) PAL effective period. The reviewing authority shall specify
a PAL effective period of 10 years.
    (ii) Reopening of the PAL permit.
    (a) During the PAL effective period, the reviewing authority
must reopen the PAL permit to:
    (1) Correct typographical/calculation errors made in setting the
PAL or reflect a more accurate determination of emissions used to
establish the PAL.
    (2) Reduce the PAL if the owner or operator of the major
stationary source creates creditable emissions reductions for use as
offsets under paragraph IV.C of this Ruling.

    (3) Revise the PAL to reflect an increase in the PAL as provided
under paragraph IV.K.11 of this Ruling.
    (b) The reviewing authority shall have discretion to reopen the
PAL permit for the following:
    (1) Reduce the PAL to reflect newly applicable Federal
requirements (for example, NSPS) with compliance dates after the PAL
effective date.
    (2) Reduce the PAL consistent with any other requirement, that
is enforceable as a practical matter, and that the State may impose
on the major stationary source under the plan.
    (3) Reduce the PAL if the reviewing authority determines that a
reduction is necessary to avoid causing or contributing to a NAAQS
or PSD increment violation, or to an adverse impact on an air
quality related value that has been identified for a Federal Class I
area by a Federal Land Manager and for which information is
available to the general public.
    (c) Except for the permit reopening in paragraph
IV.K.8(ii)(a)(1) of this Ruling for the correction of typographical/
calculation errors that do not increase the PAL level, all other
reopenings shall be carried out in accordance with the public
participation requirements of paragraph IV.K.5 of this Ruling.
    9. Expiration of a PAL. Any PAL which is not renewed in
accordance with the procedures in paragraph IV.K.10 of this Ruling
shall expire at the end of the PAL effective period, and the
requirements in paragraphs IV.K.9(i) through (v) of this Ruling
shall apply.
    (i) Each emissions unit (or each group of emissions units) that
existed under the PAL shall comply with an allowable emission
limitation under a revised permit established according to the
procedures in paragraphs IV.K.9(i)(a) through (b) of this Ruling.
    (a) Within the time frame specified for PAL renewals in
paragraph IV.K.10(ii) of this Ruling, the major stationary source
shall submit a proposed allowable emission limitation for each
emissions unit (or each group of emissions units, if such a
distribution is more appropriate as decided by the reviewing
authority) by distributing the PAL allowable emissions for the major
stationary source among each of the emissions units that existed
under the PAL. If the PAL had not yet been adjusted for an
applicable requirement that became effective during the PAL
effective period, as required under paragraph IV.K.10(v) of this
Ruling, such distribution shall be made as if the PAL had been
adjusted.
    (b) The reviewing authority shall decide whether and how the PAL
allowable emissions will be distributed and issue a revised permit
incorporating allowable limits for each emissions unit, or each
group of emissions units, as the reviewing authority determines is
appropriate.
    (ii) Each emissions unit(s) shall comply with the allowable
emission limitation on a 12-month rolling basis. The reviewing
authority may approve the use of monitoring systems (source testing,
emission factors, etc.) other than CEMS, CERMS, PEMS or CPMS to
demonstrate compliance with the allowable emission limitation.
    (iii) Until the reviewing authority issues the revised permit
incorporating allowable limits for each emissions unit, or each
group of emissions units, as required under paragraph IV.K.9(i)(a)
of this Ruling, the source shall continue to comply with a source-
wide, multi-unit emissions cap equivalent to the level of the PAL
emission limitation.
    (iv) Any physical change or change in the method of operation at
the major stationary source will be subject to the nonattainment
major NSR requirements if such change meets the definition of major
modification in paragraph II.A.5 of this Ruling.
    (v) The major stationary source owner or operator shall continue
to comply with any State or Federal applicable requirements (BACT,
RACT, NSPS, etc.) that may have applied either during the PAL
effective period or prior to the PAL effective period except for
those emission limitations that had been established pursuant to
paragraph IV.F of this Ruling, but were eliminated by the PAL in
accordance with the provisions in paragraph IV.K.1(iii)(c) of this
Ruling.
    10. Renewal of a PAL.
    (i) The reviewing authority shall follow the procedures
specified in paragraph IV.K.5 of this Ruling in approving any
request to renew a PAL for a major stationary source, and shall
provide both the proposed PAL level and a written rationale for the
proposed PAL level to the public for review and comment. During such
public review, any person may propose a PAL level for the source for
consideration by the reviewing authority.
    (ii) Application deadline. The major stationary source owner or
operator shall submit a timely application to the reviewing
authority to request renewal of a PAL. A timely application is one
that is submitted at least 6 months prior to, but not earlier than
18 months from, the date of permit expiration. This deadline for
application submittal is to ensure that the permit will not expire
before the permit is renewed. If the owner or operator of a major
stationary source submits a complete application to renew the PAL
within this time period, then the PAL shall continue to be effective
until the revised permit with the renewed PAL is issued.
    (iii) Application requirements. The application to renew a PAL
permit shall contain the information required in paragraphs
IV.K.10(iii)(a) through (d) of this Ruling.
    (a) The information required in paragraphs IV.K.3(i) through
(iii) of this Ruling.
    (b) A proposed PAL level.
    (c) The sum of the potential to emit of all emissions units
under the PAL (with supporting documentation).
    (d) Any other information the owner or operator wishes the
reviewing authority to consider in determining the appropriate level
for renewing the PAL.
    (iv) PAL adjustment. In determining whether and how to adjust
the PAL, the reviewing authority shall consider the options outlined
in paragraphs IV.K.10(iv)(a) and (b) of this Ruling. However, in no
case may any such adjustment fail to comply with paragraph
IV.K.10(iv)(c) of this Ruling.
    (a) If the emissions level calculated in accordance with
paragraph IV.K.6 of this Ruling is equal to or greater than 80
percent of the PAL level, the reviewing authority may renew the PAL
at the same level without considering the factors set forth in
paragraph IV.K.10(iv)(b) of this Ruling; or
    (b) The reviewing authority may set the PAL at a level that it
determines to be more representative of the source's baseline actual
emissions, or that it determines to be appropriate considering air
quality needs, advances in control technology, anticipated economic
growth in the area, desire to reward or encourage the source's
voluntary emissions reductions, or other factors as specifically
identified by the reviewing authority in its written rationale.
    (c) Notwithstanding paragraphs IV.K.10(iv)(a) and (b) of this
Ruling,
    (1) If the potential to emit of the major stationary source is
less than the PAL, the reviewing authority shall adjust the PAL to a
level no greater than the potential to emit of the source; and
    (2) The reviewing authority shall not approve a renewed PAL
level higher than the current PAL, unless the major stationary
source has complied with the provisions of paragraph IV.K.11 of this
Ruling (increasing a PAL).
    (v) If the compliance date for a State or Federal requirement
that applies to the PAL source occurs during the PAL effective
period, and if the reviewing authority has not already adjusted for
such requirement, the PAL shall be adjusted at the time of PAL
permit renewal or title V permit renewal, whichever occurs first.
    11. Increasing a PAL during the PAL effective period.
    (i) The reviewing authority may increase a PAL emission
limitation only if the major stationary source complies with the
provisions in paragraphs IV.K.11(i)(a) through (d) of this Ruling.
    (a) The owner or operator of the major stationary source shall
submit a complete application to request an increase in the PAL
limit for a PAL major modification. Such application shall identify
the emissions unit(s) contributing to the increase in emissions so
as to cause the major stationary source's emissions to equal or
exceed its PAL.
    (b) As part of this application, the major stationary source
owner or operator shall demonstrate that the sum of the baseline
actual emissions of the small emissions units, plus the sum of the
baseline actual emissions of the significant and major emissions
units assuming application of BACT equivalent controls, plus the sum
of the allowable emissions of the new or modified emissions unit(s)
exceeds the PAL. The level of control that would result from BACT
equivalent controls on each significant or major emissions unit
shall be determined by conducting a new BACT analysis at the time
the application is submitted, unless the emissions unit is currently
required to comply with a BACT or LAER requirement that was
established within the preceding 10 years. In such a case, the
assumed control level for that emissions unit shall be equal to the
level of BACT or LAER with which that emissions unit must currently
comply.

    (c) The owner or operator obtains a major NSR permit for all
emissions unit(s) identified in paragraph IV.K.11(i)(a) of this
Ruling, regardless of the magnitude of the emissions increase
resulting from them (that is, no significant levels apply). These
emissions unit(s) shall comply with any emissions requirements
resulting from the nonattainment major NSR program process (for
example, LAER), even though they have also become subject to the PAL
or continue to be subject to the PAL.
    (d) The PAL permit shall require that the increased PAL level
shall be effective on the day any emissions unit that is part of the
PAL major modification becomes operational and begins to emit the
PAL pollutant.
    (ii) The reviewing authority shall calculate the new PAL as the
sum of the allowable emissions for each modified or new emissions
unit, plus the sum of the baseline actual emissions of the
significant and major emissions units (assuming application of BACT
equivalent controls as determined in accordance with paragraph
IV.K.11(i)(b)), plus the sum of the baseline actual emissions of the
small emissions units.
    (iii) The PAL permit shall be revised to reflect the increased
PAL level pursuant to the public notice requirements of paragraph
IV.K.5 of this Ruling.
    12. Monitoring requirements for PALs.
    (i) General Requirements.
    (a) Each PAL permit must contain enforceable requirements for
the monitoring system that accurately determines plantwide emissions
of the PAL pollutant in terms of mass per unit of time. Any
monitoring system authorized for use in the PAL permit must be based
on sound science and meet generally acceptable scientific procedures
for data quality and manipulation. Additionally, the information
generated by such system must meet minimum legal requirements for
admissibility in a judicial proceeding to enforce the PAL permit.
    (b) The PAL monitoring system must employ one or more of the
four general monitoring approaches meeting the minimum requirements
set forth in paragraphs IV.K.12(ii)(a) through (d) of this Ruling
and must be approved by the reviewing authority.
    (c) Notwithstanding paragraph IV.K.12(i)(b) of this Ruling, you
may also employ an alternative monitoring approach that meets
paragraph IV.K.12(i)(a) of this Ruling if approved by the reviewing
authority.
    (d) Failure to use a monitoring system that meets the
requirements of this Ruling renders the PAL invalid.
    (ii) Minimum Performance Requirements for Approved Monitoring
Approaches. The following are acceptable general monitoring
approaches when conducted in accordance with the minimum
requirements in paragraphs IV.K.12(iii) through (ix) of this Ruling:
    (a) Mass balance calculations for activities using coatings or
solvents;
    (b) CEMS;
    (c) CPMS or PEMS; and
    (d) Emission Factors.
    (iii) Mass Balance Calculations. An owner or operator using mass
balance calculations to monitor PAL pollutant emissions from
activities using coating or solvents shall meet the following
requirements:
    (a) Provide a demonstrated means of validating the published
content of the PAL pollutant that is contained in or created by all
materials used in or at the emissions unit;
    (b) Assume that the emissions unit emits all of the PAL
pollutant that is contained in or created by any raw material or
fuel used in or at the emissions unit, if it cannot otherwise be
accounted for in the process; and
    (c) Where the vendor of a material or fuel, which is used in or
at the emissions unit, publishes a range of pollutant content from
such material, the owner or operator must use the highest value of
the range to calculate the PAL pollutant emissions unless the
reviewing authority determines there is site-specific data or a
site-specific monitoring program to support another content within
the range.
    (iv) CEMS. An owner or operator using CEMS to monitor PAL
pollutant emissions shall meet the following requirements:
    (a) CEMS must comply with applicable Performance Specifications
found in 40 CFR part 60, appendix B; and
    (b) CEMS must sample, analyze and record data at least every 15
minutes while the emissions unit is operating.
    (v) CPMS or PEMS. An owner or operator using CPMS or PEMS to
monitor PAL pollutant emissions shall meet the following
requirements:
    (a) The CPMS or the PEMS must be based on current site-specific
data demonstrating a correlation between the monitored parameter(s)
and the PAL pollutant emissions across the range of operation of the
emissions unit; and
    (b) Each CPMS or PEMS must sample, analyze, and record data at
least every 15 minutes, or at another less frequent interval
approved by the reviewing authority, while the emissions unit is
operating.
    (vi) Emission factors. An owner or operator using emission
factors to monitor PAL pollutant emissions shall meet the following
requirements:
    (a) All emission factors shall be adjusted, if appropriate, to
account for the degree of uncertainty or limitations in the factors'
development;
    (b) The emissions unit shall operate within the designated range
of use for the emission factor, if applicable; and
    (c) If technically practicable, the owner or operator of a
significant emissions unit that relies on an emission factor to
calculate PAL pollutant emissions shall conduct validation testing
to determine a site-specific emission factor within 6 months of PAL
permit issuance, unless the reviewing authority determines that
testing is not required.
    (vii) A source owner or operator must record and report maximum
potential emissions without considering enforceable emission
limitations or operational restrictions for an emissions unit during
any period of time that there is no monitoring data, unless another
method for determining emissions during such periods is specified in
the PAL permit.
    (viii) Notwithstanding the requirements in paragraphs
IV.K.12(iii) through (vii) of this Ruling, where an owner or
operator of an emissions unit cannot demonstrate a correlation
between the monitored parameter(s) and the PAL pollutant emissions
rate at all operating points of the emissions unit, the reviewing
authority shall, at the time of permit issuance:
    (a) Establish default value(s) for determining compliance with
the PAL based on the highest potential emissions reasonably
estimated at such operating point(s); or
    (b) Determine that operation of the emissions unit during
operating conditions when there is no correlation between monitored
parameter(s) and the PAL pollutant emissions is a violation of the
PAL.
    (ix) Re-validation. All data used to establish the PAL pollutant
must be re-validated through performance testing or other
scientifically valid means approved by the reviewing authority. Such
testing must occur at least once every 5 years after issuance of the
PAL.
    13. Recordkeeping requirements.
    (i) The PAL permit shall require an owner or operator to retain
a copy of all records necessary to determine compliance with any
requirement of paragraph IV.K of this Ruling and of the PAL,
including a determination of each emissions unit's 12-month rolling
total emissions, for 5 years from the date of such record.
    (ii) The PAL permit shall require an owner or operator to retain
a copy of the following records for the duration of the PAL
effective period plus 5 years:
    (a) A copy of the PAL permit application and any applications
for revisions to the PAL; and
    (b) Each annual certification of compliance pursuant to title V
and the data relied on in certifying the compliance.
    14. Reporting and notification requirements. The owner or
operator shall submit semi-annual monitoring reports and prompt
deviation reports to the reviewing authority in accordance with the
applicable title V operating permit program. The reports shall meet
the requirements in paragraphs IV.K.14(i) through (iii).
    (i) Semi-Annual Report. The semi-annual report shall be
submitted to the reviewing authority within 30 days of the end of
each reporting period. This report shall contain the information
required in paragraphs IV.K.14(i)(a) through (g) of this Ruling.
    (a) The identification of owner and operator and the permit
number.
    (b) Total annual emissions (tons/year) based on a 12-month
rolling total for each month in the reporting period recorded
pursuant to paragraph IV.K.13(i) of this Ruling.
    (c) All data relied upon, including, but not limited to, any
Quality Assurance or Quality Control data, in calculating the
monthly and annual PAL pollutant emissions.
    (d) A list of any emissions units modified or added to the major
stationary source during the preceding 6-month period.
    (e) The number, duration, and cause of any deviations or
monitoring malfunctions (other than the time associated with zero
and span calibration checks), and any corrective action taken.
    (f) A notification of a shutdown of any monitoring system,
whether the shutdown

was permanent or temporary, the reason for the shutdown, the
anticipated date that the monitoring system will be fully
operational or replaced with another monitoring system, and whether
the emissions unit monitored by the monitoring system continued to
operate, and the calculation of the emissions of the pollutant or
the number determined by method included in the permit, as provided
by paragraph IV.K.12(vii) of this Ruling.
    (g) A signed statement by the responsible official (as defined
by the applicable title V operating permit program) certifying the
truth, accuracy, and completeness of the information provided in the
report.
    (ii) Deviation report. The major stationary source owner or
operator shall promptly submit reports of any deviations or
exceedance of the PAL requirements, including periods where no
monitoring is available. A report submitted pursuant to Sec.
70.6(a)(3)(iii)(B) of this chapter shall satisfy this reporting
requirement. The deviation reports shall be submitted within the
time limits prescribed by the applicable program implementing Sec.
70.6(a)(3)(iii)(B) of this chapter. The reports shall contain the
following information:
    (a) The identification of owner and operator and the permit
number;
    (b) The PAL requirement that experienced the deviation or that
was exceeded;
    (c) Emissions resulting from the deviation or the exceedance;
and
    (d) A signed statement by the responsible official (as defined
by the applicable title V operating permit program) certifying the
truth, accuracy, and completeness of the information provided in the
report.
    (iii) Re-validation results. The owner or operator shall submit
to the reviewing authority the results of any re-validation test or
method within 3 months after completion of such test or method.
    15. Transition requirements.
    (i) No reviewing authority may issue a PAL that does not comply
with the requirements in paragraphs IV.K.1 through 15 of this Ruling
after the date that this Ruling becomes effective for the State in
which the major stationary source is located.
    (ii) The reviewing authority may supersede any PAL which was
established prior to the date that this Ruling becomes effective for
the State in which the major stationary source is located with a PAL
that complies with the requirements of paragraphs IV.K.1 through 15
of this Ruling.
    L. Severability. If any provision of this Ruling, or the
application of such provision to any person or circumstance, is held
invalid, the remainder of this Ruling, or the application of such
provision to persons or circumstances other than those as to which
it is held invalid, shall not be affected thereby.

 [FR Doc. E7-3888 Filed 3-7-07; 8:45 am]

BILLING CODE 6560-50-P