6560-50-P

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 51

[EPA-HQ-OAR-2001-0004; FRL-XXXX-X]

RIN 2060-AM59

Nonattainment New Source Review (NSR)

AGENCY:  Environmental Protection Agency (EPA).

ACTION:  Final rule.

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 (D.C. 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.

EFFECTIVE DATE:  This final rule is effective on [INSERT DATE 60 DAYS
AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER].

ADDRESSES:  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
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
www.regulations.gov or in hard copy at the Air Docket, EPA West, Room
B102, 1301 Constitution Ave., NW, Washington, DC.  The Public Reading
Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday,
excluding legal holidays.  The telephone number for the Public Reading
Room is<PHONE_NUMBER>, and the telephone number for the Air Docket is
(202) 566-1742.

FOR FURTHER INFORMATION CONTACT:  Ms. Lisa Sutton, Air Quality Policy
Division, Office of Air Quality Planning and Standards (C504-03), U.S.
EPA, Research Triangle Park, NC 27711, telephone<PHONE_NUMBER>, fax
number<PHONE_NUMBER>, e-mail address   HYPERLINK
<EMAIL_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	SICa	NAICSb

Electric Services	491	221111, 221112, 221113, 221119, 221121, 221122

Petroleum Refining	291	324110

Industrial Inorganic Chemicals	281

	325181, 325120, 325131, 325182, 211112, 325998, 331311, 325188

Industrial Organic Chemicals	286

	325110, 325132, 325192, 325188, 325193, 325120, 325199

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
today(s final rule is also available on the World Wide Web.  Following
signature by the EPA Administrator, a copy of today(s final rule will be
posted on the EPA(s New Source Review (NSR) website, under Regulations &
Standards, at   HYPERLINK "http://www.epa.gov/nsr"
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 Today(s 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.  Congressional Review Act

VIII.  Judicial Review

IX.  Statutory Authority

II.  Overview of This Final Action

	In today(s 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.  Today(s 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 (D.C. Cir. 2005) (New York),
vacated the Clean Unit provision and the Pollution Control Project (PCP)
exemption in the 2002 NSR reform rules.  Therefore, today(s 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 today(s action, in
section IV.C of this preamble, we acknowledge our intent to undertake a
rulemaking in the near future 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 (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, today(s 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 today(s 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, today(s final rules do not conform
appendix S to the 2002 rule revisions relating to Clean Units and PCPs.
In addition, as discussed below, today’s final rules conform appendix
S to the “reasonable possibility” standard in the NSR reform rules.
While we note that we intend to undertake a separate rulemaking to
address under which circumstances records must be kept where a project
does not trigger NSR, we provide, in today’s 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 today to
appendix S.

TABLE 1. – Proposed Changes to Appendix S

For the following provision...

Added to (51.165 in December 2002 at...

Analogous provisions have been added to appendix S at paragraph

Offsets

(a)(3)(ii)(H) through (J)

IV.C.7 through 8

Applicability test

(a)(2)(ii)

IV.I.1

Projected actual emissions (including “reasonable possibility”
standard)

(a)(6)

IV.J

Clean Unit provisions for emissions units subject to LAER

(c)

--

Clean Unit provisions for emissions units achieving emission limitation
comparable to LAER

(d)

--

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 (51.165.  Thus, we proposed to amend appendix S in this manner
in the 1996 NSR proposal.

	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 (51.165,
as discussed above.  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 (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.
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 Clean Air Act Amendments, Congress indicated its intent that
major NSR permitting apply during the SIP development period.  [See Pub.
L. No. 95-95, ( 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.

	The continued application of appendix S through (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.  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.

C.  Approach for (Reasonable Possibility( Standard

	The appendix S rules promulgated today include the “reasonable
possibility” standard of the 2002 NSR reform rules.  In response to
However, in light of the remand of that standard handed down by the D.C.
Circuit in the New York case, EPA provides today an interim
interpretation of "reasonable possibility"the standard that is
consistent with the Court’s decision, and we note our intent to
undertake a broader rulemaking addressing 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. 40 CFR 51.165(a)(1)(x).

	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 D.C. 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.

	EPA intends to undertake a notice-and-comment rulemaking in the near
future to identify when a source must keep records despite the fact that
a physical or operational change does not trigger NSR.  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 today
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.  EPA believes
that this interpretation addresses the issues identified by the Court in
the New York case.  EPA reiterates that it intends promptly to conduct
notice-and-comment rulemaking concerning the “reasonable
possibility” standard.

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 today(s 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 Today(s Requirements

	These final changes to appendix S of 40 CFR part 51 will take effect in
the NSR permitting programs for nonattainment areas on [INSERT DATE 60
DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER].  This means
that appendix S as amended in today(s final action will apply on [INSERT
DATE 60 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER] 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   SEQ CHAPTER \h \r 1 (58 FR 51735,
October 4, 1993), this action is a "significant regulatory action.”
SEQ CHAPTER \h \r 1  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
Office of Management and Budget (OMB) has previously approved the
information collection requirements contained in the existing
regulations (40 CFR parts 51 and 52) under the provisions of the
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)

	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 today(s 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 today(s 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.  EPA will act as the
reviewing authority where the State lacks authority to issue permits
that meet the conditions of appendix S.  Thus, today(s 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.  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 today(s 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
today(s 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) is (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 today(s final
action will result in equal or better environmental protection than
currently 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.  Today's 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.  Today(s 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.  Congressional Review Act

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

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 [INSERT DATE 60 DAYS AFTER PUBLICATION IN THE
FEDERAL REGISTER].  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)).

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:

________________________

Stephen L. Johnson,

Administrator.

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]

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

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

Appendix S to Part 51 - [Amended]

	2.  Appendix S to Part 51 is amended as follows:

	a.  By revising paragraph II.A.1.

	b.  By revising paragraphs II.A.5(i) and (ii).

	c.  By adding paragraph II.A.5(vi).

	d.  By revising paragraph II.A.6(i).

	e.  By revising paragraph II.A.6(iii).

	f.  By revising paragraph II.A.6(v)(b) through (d).

	g.  By adding paragraph II.A.6(vii).

	h.  By revising paragraph II.A.7.

	i.  By revising paragraph II.A.13.

	j.  By revising paragraph II.A.14.

	k.  By revising the introductory text in paragraph II.A.18.

	l.  By adding paragraphs II.A.21 through 36.

	m.  By adding paragraphs IV.I through L.

The revisions and additions read as follows:

Appendix S to Part 51—Emission Offset Interpretative Ruling  TC
"Appendix S to Part 51(Emission Offset Interpretative Ruling" \f C \l
"1"  .

* * * * *

	II.  * * *  TC "II.  * * *" \f C \l "2"

	A.  * * *  TC "A.  * * *" \f C \l "3"

	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 (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 ((51.165 and 51.166 of this part, or the
Administrator in the case of EPA-implemented permit programs under this
Ruling or under (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 (51.166 of this chapter,
or under the program in (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.

* * * * *

	I.  Applicability procedures  TC "I.  Applicability procedures" \f C \l
"3"  .

	1.  To determine whether a project constitutes a major modification,
the reviewing authority shall apply the principles set out below 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  TC "J.  Provisions for
projected actual emissions" \f C \l "3"  .  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 (70.4(b)(3)(viii) of this chapter.

	K.  Actuals PALs  TC "K.  Actuals PALs" \f C \l "3"  .  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
(or 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 (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 (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  TC "L.  Severability" \f C \l "3"  .  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.

 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 (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).

 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 above.

 See Alabama Power Co. v. Costle, 636 F.3d 323, 346-047 (D.C. Cir. 1980)
(discussing Sierra Club v. Ruckelshaus, 344 F. Supp. 253 (D.D.C. 1972),
aff(d per curiam 4 ERC 1815 (D.C. Cir. 1972), aff(d by an equally
divided court, sub nom Fri v. Sierra Club, 412 U.S. 541 (1973).

 PAGE

 PAGE   60

Nonattainment New Source Review:

Appendix S – Page   PAGE  36  of   NUMPAGES  89

Internal and Deliberative Draft - Do not Quote, Cite, Copy, or
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February 17, 2006