Prevention of Significant Deterioration New Source Review:
Clarification/Modification to Increment Modeling Procedures

TABLE OF CONTENTS

[Note:  This TOC has been included to facilitate review and will not be
included in the signature or OFR package.  The entries are hyperlinked
to the sections; CTRL + right click on the mouse will take you to the
section.]

  TOC \o "1-3" \h \z \u    HYPERLINK \l "_Toc152996716"  I.	General
Information	  PAGEREF _Toc152996716 \h  5

  HYPERLINK \l "_Toc152996717"  A.	Does this action apply to me?
PAGEREF _Toc152996717 \h  5

  HYPERLINK \l "_Toc152996718"  B.	What should I consider as I prepare
my comments for EPA?	  PAGEREF _Toc152996718 \h  7

  HYPERLINK \l "_Toc152996719"  1.	Submitting CBI	  PAGEREF
_Toc152996719 \h  7

  HYPERLINK \l "_Toc152996720"  2.	Suggestions for preparing your
comments	  PAGEREF _Toc152996720 \h  7

  HYPERLINK \l "_Toc152996721"  C.	Where can I get a copy of this
document and other related information?	  PAGEREF _Toc152996721 \h  8

  HYPERLINK \l "_Toc152996722"  D.	How can I find information about a
possible hearing?	  PAGEREF _Toc152996722 \h  8

  HYPERLINK \l "_Toc152996723"  II.	Background	  PAGEREF _Toc152996723
\h  9

  HYPERLINK \l "_Toc152996724"  A.	What is the PSD program?	  PAGEREF
_Toc152996724 \h  9

  HYPERLINK \l "_Toc152996725"  B.	What are PSD increment analyses?
PAGEREF _Toc152996725 \h  11

  HYPERLINK \l "_Toc152996726"  1.	Framework for Increment Analyses
PAGEREF _Toc152996726 \h  11

  HYPERLINK \l "_Toc152996727"  2.	General Approach to Increment
Analyses	  PAGEREF _Toc152996727 \h  17

  HYPERLINK \l "_Toc152996728"  3. 	EPA Guidance and Specific Approaches
Used in Practice	  PAGEREF _Toc152996728 \h  18

  HYPERLINK \l "_Toc152996729"  C.	Why do we need to clarify the method
for analyzing increment consumption?	  PAGEREF _Toc152996729 \h  26

  HYPERLINK \l "_Toc152996730"  D.	What are the Clean Air Act
requirements related to increments?	  PAGEREF _Toc152996730 \h  28

  HYPERLINK \l "_Toc152996731"  III.	Summary of this Proposed Action
PAGEREF _Toc152996731 \h  33

  HYPERLINK \l "_Toc152996732"  IV.	Proposed Clarifications to Increment
Modeling Procedures	  PAGEREF _Toc152996732 \h  34

  HYPERLINK \l "_Toc152996733"  A.	How is a source with an FLM variance
treated in subsequent increment consumption modeling?	  PAGEREF
_Toc152996733 \h  34

  HYPERLINK \l "_Toc152996734"  1.	General Overview of Included Sources
 PAGEREF _Toc152996734 \h  34

  HYPERLINK \l "_Toc152996735"  2.	Treatment of Emissions from Sources
Issued an FLM Variance	  PAGEREF _Toc152996735 \h  36

  HYPERLINK \l "_Toc152996736"  B.	How are emissions estimated for
sources that consume increment?	  PAGEREF _Toc152996736 \h  51

  HYPERLINK \l "_Toc152996737"  1.	Data and Calculation Methods Used to
Establish Actual Emissions	  PAGEREF _Toc152996737 \h  53

  HYPERLINK \l "_Toc152996738"  2.	Time Period of Emissions Used to
Model Pollutant Concentrations	  PAGEREF _Toc152996738 \h  59

  HYPERLINK \l "_Toc152996739"  3.	Actual Emissions Rates Used to Model
Short-Term Increment Compliance	  PAGEREF _Toc152996739 \h  70

  HYPERLINK \l "_Toc152996740"  4. 	Use of Allowable Emissions Rates
PAGEREF _Toc152996740 \h  77

  HYPERLINK \l "_Toc152996741"  5. 	Emissions from a New or Modified
Source	  PAGEREF _Toc152996741 \h  77

  HYPERLINK \l "_Toc152996742"  C.	What meteorological models and data
should be used in increment consumption modeling?	  PAGEREF
_Toc152996742 \h  78

  HYPERLINK \l "_Toc152996743"  1.	Types of Meteorological Data and
Processing	  PAGEREF _Toc152996743 \h  78

  HYPERLINK \l "_Toc152996744"  2.	Years of Meteorological Data
PAGEREF _Toc152996744 \h  85

  HYPERLINK \l "_Toc152996745"  3. 	Evaluating the Appropriateness of
Data Years from Prognostic Meteorological Models for Modeling Worst-Case
Impacts	  PAGEREF _Toc152996745 \h  86

  HYPERLINK \l "_Toc152996746"  D.	What are my documentation and data
and software availability requirements?	  PAGEREF _Toc152996746 \h  88

  HYPERLINK \l "_Toc152996747"  V.	Implementation Issues	  PAGEREF
_Toc152996747 \h  91

  HYPERLINK \l "_Toc152996748"  A.	Is there a need for States to make
revisions to their SIPs?	  PAGEREF _Toc152996748 \h  91

  HYPERLINK \l "_Toc152996749"  B.	When would these policies be put into
effect?	  PAGEREF _Toc152996749 \h  92

  HYPERLINK \l "_Toc152996750"  VI.	Statutory and Executive Order
Reviews	  PAGEREF _Toc152996750 \h  92

  HYPERLINK \l "_Toc152996751"  A.	Executive Order 12866 - Regulatory
Planning and Review	  PAGEREF _Toc152996751 \h  92

  HYPERLINK \l "_Toc152996752"  B.	Paperwork Reduction Act	  PAGEREF
_Toc152996752 \h  93

  HYPERLINK \l "_Toc152996753"  C.	Regulatory Flexibility Analysis
PAGEREF _Toc152996753 \h  94

  HYPERLINK \l "_Toc152996754"  D.	Unfunded Mandates Reform Act
PAGEREF _Toc152996754 \h  95

  HYPERLINK \l "_Toc152996755"  E.	Executive Order 13132 - Federalism
PAGEREF _Toc152996755 \h  96

  HYPERLINK \l "_Toc152996756"  F.	Executive Order 13175 - Consultation
and Coordination with Indian Tribal Governments	  PAGEREF _Toc152996756
\h  98

  HYPERLINK \l "_Toc152996757"  G.	Executive Order 13045 - Protection of
Children from Environmental Health and Safety Risks	  PAGEREF
_Toc152996757 \h  98

  HYPERLINK \l "_Toc152996758"  H.	Executive Order 13211 - Actions That
Significantly Affect Energy Supply, Distribution, or Use	  PAGEREF
_Toc152996758 \h  99

  HYPERLINK \l "_Toc152996759"  I.	Executive Order 12898 - Federal
Actions to Address Environmental Justice in Minority Populations and
Low-income Populations	  PAGEREF _Toc152996759 \h  100

  HYPERLINK \l "_Toc152996760"  J.	National Technology Transfer and
Advancement Act	  PAGEREF _Toc152996760 \h  100

  HYPERLINK \l "_Toc152996761"  Draft Regulatory Language	  PAGEREF
_Toc152996761 \h  102

 6560-50-P

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51 and 52

[Docket ID No. EPA-HQ-OAR-2006-0888; FRL- xxxx-x]

RIN-2060-XXXX

Prevention of Significant Deterioration New Source Review:
Clarification/Modification to Increment Modeling Procedures

AGENCY:  Environmental Protection Agency (EPA).

ACTION:  Proposed rule.

SUMMARY:  Under the requirements of the Clean Air Act (Act), the New
Source Review (NSR) program includes Prevention of Significant
Deterioration (PSD) measures, which protect air quality in areas that
currently have clean air.  For some pollutants, the PSD program protects
clean air through a system of “increments.”  These increments
specify the maximum extent to which the ambient concentration of these
pollutants may be allowed to increase above the baseline concentration
in an area with clean air.  In this rulemaking, we propose to refine
several aspects of the method that may be used to calculate an increase
in concentration for increment purposes.  These refinements are intended
to clarify how States and regulated sources may calculate increases in
concentrations for the purposes of determining compliance with the PSD
increments.

DATES:  Comments.  Written comments must be received on or before
[INSERT DATE 60 DAYS FROM DATE OF PUBLICATION].  Under the Paperwork
Reduction Act, comments on the information collection provisions must be
received by OMB on or before [INSERT DATE 30 DAYS FROM DATE OF
PUBLICATION].

	Public Hearing.  If anyone contacts EPA requesting to speak at a public
hearing by [INSERT DATE 20 DAYS FROM DATE OF PUBLICATION], we will hold
a  public hearing approximately 30 days after publication in the Federal
Register.  Additional information about the hearing would be published
in a subsequent Federal Register notice.

ADDRESSES:  Comments.  Submit your comments, identified by Docket ID No.
EPA-HQ-OAR-2006-0888, by one of the following methods:

  HYPERLINK "http://www.regulations.gov"  http://www.regulations.gov :
Follow the on-line instructions for submitting comments.

E-mail<EMAIL_ADDRESS>
Fax:<PHONE_NUMBER>.

Mail:  Environmental Protection Agency, EPA Docket Center (EPA/DC), Air
and Radiation Docket, Mail Code 6102T, 1200 Pennsylvania Avenue, NW,
Washington, DC 20460.  Please include 2 copies.  In addition, please
mail a copy of your comments on the information collection provisions to
the Office of Management and Budget (OMB), Attn: Desk Officer for EPA,
725 17th St. NW, Washington, DC 20503.

Hand Delivery:  EPA Docket Center, (Air Docket), EPA/DC, EPA West, Room
3334, 1301 Constitution Ave., NW, Washington, DC.  Such deliveries are
only accepted during the Docket’s normal hours of operation, and
special arrangements should be made for deliveries of boxed information.

Instructions.  Direct your comments to Docket ID No.
EPA-HQ-OAR-2006-0888.  The EPA’s policy is that all comments received
will be included in the public docket without change and may be made
available online at   HYPERLINK "http://www.regulations.gov"
http://www.regulations.gov , including any personal information
provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute.  Do not submit information that you
consider to be CBI or otherwise protected through www.regulations.gov or
e-mail.  The   HYPERLINK "http://www.regulations.gov"
http://www.regulations.gov   website is an “anonymous access”
system, which means EPA will not know your identity or contact
information unless you provide it in the body of your comment.  If you
send an e-mail comment directly to EPA without going through   HYPERLINK
"http://www.regulations.gov"  http://www.regulations.gov , your e-mail
address will be automatically captured and included as part of the
comment that is placed in the public docket and made available on the
Internet.  If you submit an electronic comment, EPA recommends that you
include your name and other contact information in the body of your
comment and with any disk or CD-ROM you submit.  If EPA cannot read your
comment due to technical difficulties and cannot contact you for
clarification, EPA may not be able to consider your comment.  Electronic
files should avoid the use of special characters, any form of
encryption, and be free of any defects or viruses.  For additional
instructions on submitting comments, go to section I.B of the
SUPPLEMENTARY INFORMATION section of this document.

Docket.  All documents in the docket are listed in the   HYPERLINK
"http://www.regulations.gov"  http://www.regulations.gov  index.
Although listed in the index, some information is not publicly
available, i.e., CBI or other information whose disclosure is restricted
by statute.  Certain other material, such as copyrighted material, is
not placed on the Internet and will be publicly available only in hard
copy form.  Publicly-available docket materials are available either
electronically in   HYPERLINK "http://www.regulations.gov"
www.regulations.gov  or in hard copy at the Air Docket, EPA/DC, EPA
West, Room 3334, 1301 Constitution Ave., NW, Washington, DC.  The Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday,
excluding legal holidays.  The telephone number for the Public Reading
Room is<PHONE_NUMBER>, and the telephone number for the Air Docket is
(202) 566-1742.

FOR FURTHER INFORMATION CONTACT:  Ms. Jessica Montanez, New Source
Review Group, Air Quality Policy Division (C504-03), U.S. Environmental
Protection Agency, Research Triangle Park, NC  27711, telephone number:
(919) 541-3407; fax number:<PHONE_NUMBER>, or electronic mail e-mail
address:    HYPERLINK<EMAIL_ADDRESS><EMAIL_ADDRESS>.

SUPPLEMENTARY INFORMATION:

	The information presented in this preamble is organized as follows:

I.	General Information

A.	Does this action apply to me?

B.	What should I consider as I prepare my comments for the EPA?

C.	Where can I get a copy of this document and other related
information?

D.	How can I find information about a possible public hearing?

II.	Background

	A.	What is the PSD program?

	B.	What are PSD increment analyses?

	C.	What existing guidelines and guidance are available?

	D.	Why do we need to clarify the guidance?

	E.	Background on Clean Air Act Requirements

III.	Summary of this Proposed Action

IV	What increment modeling requirements are we clarifying with this
proposed action?

A.	What emission sources are included in increment consumption modeling?

	B.	How are emissions estimated for sources that consume increment?

	C.	Meteorological Data

D.	What are my documentation and data and software availability
requirements?

V.	What implementation issues are related to this proposal?

VI.	Statutory and Executive Order Reviews

A.	Executive Order 12866 – Regulatory Planning and Review

	B.	Paperwork Reduction Act

	C.	Regulatory Flexibility Analysis

	D.	Unfunded Mandates Reform Act

	E.	Executive Order 13132 – Federalism

F.	Executive Order 13175 – Consultation and Coordination with Indian
Tribal Governments

G.	Executive Order 13045 – Protection of Children from Environmental
Health and Safety Risks

H.	Executive Order 13211 – Actions that Significantly Affect Energy
Supply, Distribution or Use

	I.	National Technology Transfer and Advancement Act

	J. 	Executive Order 12898 – Federal Actions to Address Environmental
		Justice in Minority Populations and Low-income Populations

I.	General Information

A.	Does this action apply to me?

Entities potentially affected by this proposed action include owners and
operators of emission sources in all industry groups, as well as the EPA
and State, local, and tribal governments that are delegated authority to
implement these regulations.  The majority of sources potentially
affected are expected to be in the following groups:

Category

	NAICSa

Industry group

Industry

221111, 221112, 221113, 221119, 221121, 221122

Electric services

32411

Petroleum refining

325181, 32512, 325131, 325182, 211112, 325998, 331311, 325188

Industrial inorganic chemicals

32511, 325132, 325192, 325188, 325193, 32512, 325199

Industrial organic chemicals

32552, 32592, 32591, 325182, 32551

Miscellaneous chemical products

211112

Natural gas liquids

48621, 22121

Natural gas transport

32211, 322121, 322122, 32213

Pulp and paper mills

322121, 322122

Paper mills

336111, 336112, 336712, 336211, 336992, 336322, 336312, 33633, 33634,
33635, 336399, 336212, 336213

Automobile manufacturing

325411, 325412, 325413, 325414

Pharmaceuticals

Federal government

924110

Administration of Air and Water Resources and Solid Waste Management
Programs

State/local/tribal

Government

924110

Administration of Air and Water Resources and Solid Waste Management
Programs

a North American Industry Classification System.

This table is not intended to be exhaustive, but rather provides a guide
for readers regarding entities likely to be regulated by this action.
If you have any questions regarding the applicability of this action to
a particular entity, contact the person listed in the preceding FOR
FURTHER INFORMATION CONTACT section.

B.	What should I consider as I prepare my comments for EPA?

1.	Submitting CBI

Do not submit this information to EPA through http://  HYPERLINK
"http://www.regulations.gove"  www.regulations.gov   or e-mail.  Clearly
mark the part or all of the information that you claim to be CBI.  For
CBI information in a disk or CD ROM that you mail to EPA, mark the
outside of the disk or CD ROM as CBI and then identify electronically
within the disk or CD ROM the specific information claimed as CBI, a
copy of the comment that does not contain the information claimed as CBI
must be submitted for inclusion in the public docket.  Information so
marked will not be disclosed except in accordance with procedures set
forth in 40 Code of Federal Regulations (CFR) part 2.

2.	Suggestions for preparing your comments

When submitting comments, remember to:

Identify the rulemaking by docket number and other identifying
information (subject heading, Federal Register date and page number).

Follow directions.  The agency may ask you to respond to specific
questions or organize comments by referencing a CFR part or section
number.

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

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

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

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

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

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

C.	Where can I get a copy of this document and other related
information?

In addition to being available in the docket, an electronic copy of this
proposal will also be available on the WWW.  Following signature by the
EPA Administrator, a copy of this notice will be posted in the
regulations and standards section of our NSR (New Source Review) home
page located at   HYPERLINK "http://www.epa.gov/nsr"
http://www.epa.gov/nsr .

D.	How can I find information about a possible hearing?

Persons interested in presenting oral testimony should contact Ms. Maria
Sanders, New Source Review Group, Air Quality Policy Division (C504-03),
U.S. EPA, Research Triangle Park, NC 27711, telephone number (919)
541-5586 or e-mail   HYPERLINK<EMAIL_ADDRESS><EMAIL_ADDRESS>at least 2 days in advance of the public
hearing..  Persons interested in attending the public hearing should
also contact Ms. Sanders to verify the time, date, and location of the
hearing.  The public hearing will provide interested parties the
opportunity to present data, views, or arguments concerning this action.

II.	Background

A.	What is the PSD program?

	Part C of title I of the Act contains the requirements for a component
of the major NSR program known as the PSD program.  This program sets
forth procedures for the preconstruction review and permitting of new
and modified major stationary sources of air pollution locating in areas
meeting the National Ambient Air Quality Standards or “NAAQS”
(“attainment” areas) and areas for which there is insufficient
information to classify an area as either attainment or nonattainment
(“unclassifiable” areas).

	The NSR provisions of the Act are a combination of air quality planning
and air pollution control technology program requirements for new and
modified stationary sources of air pollution.  In brief, section 109 of
the Act requires us to promulgate primary NAAQS to protect public health
and secondary NAAQS to protect public welfare.  Once we have set these
standards, States must develop, adopt, and submit to us for approval a
State Implementation Plan (SIP) that contains emission limitations and
other control measures to attain and maintain the NAAQS and to meet the
other requirements of section 110(a) of the Act.  Each SIP is required
to contain a preconstruction review program for the construction and
modification of any stationary source of air pollution to assure that
the NAAQS are achieved and maintained; to protect areas of clean air; to
protect Air Quality Related Values (including visibility) in national
parks and other natural areas of special concern; to assure that
appropriate emissions controls are applied; to maximize opportunities
for economic development consistent with the preservation of clean air
resources; and to ensure that any decision to increase air pollution is
made only after full public consideration of all the consequences of
such a decision.  Most States have SIP-approved major NSR programs;
however there are some States that instead implement the Federal PSD
program at 40 CFR 52.21 through delegation.

The applicability of the PSD program to a particular source must be
determined in advance of construction and is pollutant specific.  Once a
source is determined to be subject to PSD, among other requirements, it
must undertake a series of analyses to demonstrate that it will use the
best available control technology (BACT) and will not cause or
contribute to a violation of any NAAQS or any maximum allowable ambient
pollutant concentration increase (increment).  In cases where the
source’s emissions may adversely affect an area classified as Class I,
additional review is conducted to protect the increments and special
attributes of such an area defined as “air quality related values”
(AQRVs).

  SEQ CHAPTER \h \r 1 When the reviewing authority reaches a preliminary
decision to authorize construction of a proposed new major source or
major modification, it must provide notice of the preliminary decision
and an opportunity for comment by the general public, industry, and
other persons that may be affected by the major source or major
modification.  After considering and responding to the comments, the
reviewing authority may issue a final determination on the construction
permit in accordance with the PSD regulations.

B.	What are PSD increment analyses?

	1.	Framework for Increment Analyses

Under section 165(a)(3) of the Act, a PSD permit applicant must
demonstrate that emissions from the proposed construction and operation
of a facility “will not cause, or contribute to, air pollution in
excess of any … maximum allowable increase or maximum allowable
concentration for any pollutant….”  See 42 United States Code
(U.S.C.) 7475(a)(3).   The “maximum allowable increase” of an air
pollutant that is allowed to occur above the applicable baseline
concentration for that pollutant is known as the PSD increment.  The
maximum allowable concentration is the ceiling established by adding the
PSD increment to the baseline concentration.  By establishing the
maximum allowable increase in a particular area, an increment defines
“significant deterioration.”

Increments have been established for three pollutants –  Sulfur
Dioxide (SO2), Particulate Matter (PM), and Nitrogen Dioxide (NO2) –
and for a variety of averaging periods, which correspond to the
averaging periods for the NAAQS for those pollutants.  In addition, all
attainment and unclassifiable areas are classified as Class I, Class II,
or Class III, and different increment levels apply in each type of
area.  Class I areas include national parks and other natural areas of
special concern; the smallest increments are specified for these areas.
Nearly all other areas in the United States are currently classified as
Class II, where higher increments are specified.  States and Tribes have
the authority to redesignate Class II areas to Class III (with still
higher increments) to promote development, but, to date, none have
chosen to do so.  States and Tribes also may redesignate Class II areas
to Class I to provide additional protection; some Tribes have done so.
The increments are codified at 40 CFR 51.166(c) and 52.21(c).  The
current increment values are shown below in Table 1.

Table 1.  Current Increment Values

Pollutant	Maximum allowable increase (micrograms per cubic meter)

Class I

Particulate matter:

PM-10, annual arithmetic mean

PM-10, 24-hr maximum

Sulfur dioxide:

Annual arithmetic mean

24-hr maximum

3-hr maximum

Nitrogen dioxide:

Annual arithmetic mean

4

8

2

5

25

2.5

Class II

Particulate matter:

PM-10, annual arithmetic mean

PM-10, 24-hr maximum

Sulfur dioxide:

Annual arithmetic mean

24-hr maximum

3-hr maximum

Nitrogen dioxide:

Annual arithmetic mean

17

30

20

91

512

25

Class III

Particulate matter:

PM-10, annual arithmetic mean

PM-10, 24-hr maximum

Sulfur dioxide:

Annual arithmetic mean

24-hr maximum

3-hr maximum

Nitrogen dioxide:

Annual arithmetic mean

34

60

40

182

700

50

ion increase of at least 1 μg/m3 (annual average).  See, e.g., 40 CFR
52.21(b)(15)(i).  Once the baseline area is established, subsequent
major sources undergoing PSD review, and locating in that area, must
address the fact that a portion of the available increment may already
have been consumed by previous emissions increases.

Three dates related to the PSD baseline concept are important in
calculating the amount of increment consumed by pollutant emissions from
the major source undergoing PSD review and other applicable emissions
increases and decreases in a particular baseline area.  In general, the
submittal date of the first complete PSD permit application in a
particular area is the operative “baseline date.”  On or before the
date of the first complete PSD application, most emissions are
considered to be part of the baseline concentration.  Most emissions
increases that occur after the baseline date will be counted toward the
amount of increment consumed.  Similarly, emissions decreases after the
baseline date expand the amount of increment that is available.

In actuality, there are two baseline dates that are related to the
determination of how much increment is being consumed in a particular
baseline area.  These two dates, described below, are necessary to
properly account for the emissions that are to be counted toward
increment consumed in accordance with the statutory definition of
“baseline concentration” in section 169(4) of the Act.  The
statutory definition provides that the baseline concentration of a
pollutant for a particular baseline area is generally the air quality at
the time of the first application for a PSD permit in the area.
Consequently, any increases in actual emissions occurring after that
date (with some possible exceptions that we will discuss later) would be
considered to consume the applicable PSD increment.  However, the
statutory definition also provides that “[E]missions … from any
major emitting facility on which construction commenced after January 6,
1975 shall not be included in the baseline and shall be counted in
pollutant concentrations established under this part.”

To make this distinction between the date when emissions changes in
general (i.e., from both major and minor sources) count in the increment
and the date when emissions resulting from the construction at a major
stationary source count in the increment, EPA established the terms
“minor source baseline date” and “major source baseline date,”
respectively.  See 40 CFR 51.166(b)(14); 40 CFR 52.21(b)(14).
Accordingly, the “minor source baseline date” is the date on which
the first complete application for a PSD permit is filed in a particular
area.  Any change in actual emissions after that date counts in the PSD
increment for that area.  The “major source baseline date” is thus
named because it is the date after which actual emissions associated
with construction at a major stationary source affect the available PSD
increment.  In accordance with the statutory definition of “baseline
concentration,” the PSD regulations define a fixed date to represent
the major source baseline date for each pollutant for which an increment
exists.  Congress defined the major source baseline date for the
statutory increments for PM and SO2 as January 6, 1975.  For the NO2
increments, which EPA promulgated in 1988 under its authority to
establish an increment system under section 166(a) of the Act, the major
source baseline date was selected as February 8, 1988 – the date on
which EPA proposed increments for NO2.

Finally, the PSD regulations set out the third date that is relevant to
the PSD baseline concept.  These regulations provide that the earliest
date on which the minor source baseline date can be established is the
date immediately following the “trigger date” for the
pollutant-specific increment.  See, e.g., 40 CFR 52.21(b)(14)(ii).  For
PM and SO2, Congress defined the applicable trigger date as August 7,
1977 – the date of the 1977 amendments to the Act when the original
statutory increments were established by Congress.  For NO2, EPA
selected the trigger date as February 8, 1988 – the date on which EPA
proposed increments for NO2.  See 53 FR 40656, 40658; October 17, 1988.

Under this approach, the baseline concentration is not actually
established for a PSD baseline area until after the “minor source
baseline date” is established by the submission of the first PSD
permit application for a source whose emissions would affect a given
baseline area.  Although major source emissions may consume increment
prior to this date, they are not factored into the calculation until the
minor source baseline date is triggered.

	Once the minor source baseline date associated with the first proposed
new major stationary source or major modification in an area is
established, the new emissions from that source consume a portion of the
increment in that area, as do any subsequent emissions increases that
occur from any source in the area.  When the maximum pollutant
concentration increase defined by the increment has been reached,
additional PSD permits cannot be issued until sufficient amounts of the
increment are “freed up” via emissions reductions that may occur
voluntarily, e.g., via source shutdowns, or via control requirements
imposed by the reviewing authority.  Moreover, the air quality in a
region cannot deteriorate to a level in excess of the applicable NAAQS,
even if all the increment has not been consumed.  Therefore, new or
modified sources located in areas where the air pollutant concentration
is near the level allowed by the NAAQS may not have full use of the
amount of pollutant concentration increase allowed by the increment.

	2.	General Approach to Increment Analyses

The EPA and the States have generally used an emissions inventory and
modeling approach to identify the degree to which an increment has been
consumed or will be consumed by major source construction.  Ambient
monitoring has not been used to establish baseline concentrations or to
evaluate increment consumption because ambient measurements reflect
emissions from all sources, including those that should be excluded from
the measurements.  We have not necessarily required the identification
of a specific baseline concentration but rather have focused on
measuring the change in concentration from the baseline date to the time
of the analysis.  For example, in the preamble to the 1978 PSD
regulation (43 FR 26388, 26400; June 19, 1978), we stated the following:

The regulations promulgated today no longer suggest that the baseline
concentration be formally established.  The Administrator feels that
increment consumption can be best tracked by tallying changes in
emissions levels of sources contributing to the baseline concentration
and increases in emissions due to new sources.  Data to establish
baseline air quality in an absolute sense would be needed only if
increment consumption were to be tracked using ambient measurements.
Thus, to implement the air quality increment approach, the reviewing
authority needs to verify that all changes from baseline emissions rates
(decreases or increases as appropriate) in conjunction with the
increased emissions associated with approved new source construction
will not violate an applicable increment ….

This method has made it easier to comply with the statutory provisions
(discussed below in section II.D of this preamble) excluding certain
increases in emissions at major sources from the baseline concentration
and allowing other emissions to be excluded from increment consumption.

	Even with that said, we believe that it would also be acceptable and
consistent with the Act for a State to use an approach of establishing
an actual baseline concentration using an initial baseline emissions
inventory.  The State could then calculate the consumed increment by
revising the inventory to include the relevant emissions increases and
decreases as discussed above.

3. 	EPA Guidance and Specific Approaches Used in Practice

	Over time, the Agency developed some recommended approaches that
reviewing authorities could use to determine whether changes in
emissions rates and increases in emission associated with new
construction since the baseline date have or have not increased
concentrations above the increments.  Our recommendations have generally
been described in modeling guidelines and guidance documents, while the
PSD regulations in 40 CFR 51.166 and 52.21 contained only a few basic
requirements for the increment analysis.

	Some of EPA’s recommendations for the increment analysis have been
included in the “Guideline on Air Quality Models,” which is located
in appendix W to 40 CFR part 51.  Appendix W provides modeling
guidelines for sources and reviewing authorities under a variety of
Clean Air Act programs.  The PSD regulations cite appendix W and state
that all PSD air quality modeling should be based on the “applicable
models, data bases, and other requirements” specified there.  See 40
CFR 51.166(l) and 52.21(l).  Although appendix W is incorporated by
reference in the PSD regulations, we have continued to refer to this as
a “guideline” and used language in the guideline to indicate that it
does not mandate specific procedures in all cases.  It is also important
to keep in mind that appendix W provides guidelines for other types of
regulatory applications, not just PSD increment analyses.  As a result,
not all the recommendations included in appendix W are applicable to an
analysis of increment consumption under the PSD program.  Care must be
taken to evaluate whether certain recommendations are appropriate for
the particular circumstances of each increment analysis.

We also included some suggestions for the increment analysis is the 1990
draft “New Source Review Workshop Manual” (draft NSR Manual).  This
draft document addressed many aspects of PSD permitting, including the
increment analyses.  However, we never finalized the draft NSR Manual
and accordingly never intended it as final EPA policy or interpretation.
 Nevertheless, many people have continued to look to this document for
guidance and have construed the draft NSR Manual to represent EPA
policy.  One reason for this rulemaking is to establish our preferred
approach to increment analyses and to supersede the approaches set forth
in the 1990 draft NSR Manual.

The EPA’s Environmental Appeals Board has sometimes referenced the
draft NSR Manual as a reflection of the Agency’s thinking on certain
PSD issues, but the Board has been clear that the draft NSR Manual is
not a binding Agency regulation.  See, In re: Indeck-Elwood, LLC, PSD
Permit Appeal No. 03-04, slip. op. at 10 n. 13 (Sept. 27, 2006); In re:
Prairie State Generating Company.  In these and other cases, the Board
also considered briefs filed by the Office of Air and Radiation that
provided more current information on the thinking of the EPA
headquarters program office on specific PSD issues arising in particular
cases.  Thus, the Board has looked to the draft NSR Manual as one
resource to consider in developing Agency positions through case-by-case
adjudications, while recognizing that the draft NSR Manual does not
itself contain final or binding requirements.  On subjects where an
adjudication of the Environmental Appeals Board has followed a policy or
interpretation reflected in the draft NSR Manual, the policy or
interpretation adopted by the Board is final EPA policy or
interpretation.   The EPA Administrator has delegated authority to the
Board to issue final decisions in PSD permit appeals, and the Board may
address important policy considerations in these decisions.  40 CFR
124.2 (defining Environmental Appeals Board); 40 CFR 124.19(a)(2)
(giving Board discretion to review important policy considerations).
For example, the Board has often followed aspects of the top-down BACT
process contained in the draft NSR Manual.

To avoid further misunderstandings concerning final EPA policies under
the New Source Review Program and the interpretations of EPA’s NSR
regulations, we propose in this action to rescind the 1990 draft NSR
Manual in its entirety.  To the extent this draft document is still
being relied upon by reviewing authorities and the regulated community,
we believe that in many areas the document has become outdated and
superseded by subsequent rulemakings, guidance memoranda, and
adjudications by the Administrator and Environmental Appeals Board.
Policies and interpretations reflected in the draft NSR Manual that have
been followed in more recent guidance memoranda or adjudicatory
decisions of the Environmental Appeals Board or Administrator will
remain valid.  Other guidance letters or memoranda that have addressed
increment consumption analyses are discussed in more detail below in the
context of discussion on specific issues, but we propose to establish
rules in this action that will supersede some of these documents as
well.

Based largely on prior EPA guidance, the approach that has generally
been used in States and EPA Regional Offices for increment analyses has
involved the following four steps:

Determine the 1 μg/m3 “significant impact area” for the particular
pollutant for which the new major source or major modification is
undergoing PSD review.  (If the source is subject to an increment
analysis for more than one pollutant, each analysis is carried out
independently.)

Identify the other sources in the vicinity of the new or modified source
whose emissions affect the significant impact area.

Estimate the emissions from those sources that consume increment.

Model the change in emissions to get a concentration change, and compare
that concentration change to the applicable increment.

The actual increment analysis that a proposed new or modified source
undergoing PSD review must complete will depend on the area impacted by
the source’s new emissions.

	We have provided approved air quality models and guidelines for sources
to use to project the air quality impact of each pollutant (over each
averaging period) for which an increment analysis must be done.  In
addition, we established significant impact levels for each pollutant
under the nonattainment major NSR program that have also been used under
the PSD program to identify levels below which the source’s modeled
impact is regarded as de minimis.  See 40 CFR 51.165(b) and part 51,
appendix S, section III.A.  In the event that a source’s modeled
impacts of a particular pollutant are below the applicable significant
impact level at all ambient air locations modeled, i.e., de minimis
everywhere, EPA policy provides that no further modeling analysis is
required for that pollutant.  Our policy has been that when a
preliminary screening analysis based on the significant impact level is
sufficient to demonstrate that the source’s emissions will not cause
or contribute to a violation of the increment, there is no need for a
full impacts analysis involving a cumulative evaluation of the emissions
from the proposed source and other sources affecting the area.

Within the impact area of a source that does have a significant impact,
increment consumption is calculated using the source’s proposed
emissions increase, along with other emissions increases or decreases of
the particular pollutant from sources in the area which have occurred
since the minor source baseline date established for that area.  (For
major sources, emissions increases or decreases that have occurred since
the major source baseline date consume or expand increment.)  Thus, an
emissions inventory of sources whose emissions consume or expand the
available increment in the area must be compiled.  The inventory
includes not only sources located directly in the impact area, but
sources outside the impact area that affect the air quality within the
impact area.  Section IV.A.1 of this preamble discusses the types of
sources that are to be included in the emissions inventory for increment
analyses.

	The inventory of emissions includes emissions from increment-affecting
sources at two separate time periods – the baseline date and the
current period of time.  For each source that was in existence on the
relevant baseline date (major source or minor source), the inventory
includes the source’s actual emissions on the baseline date and its
current actual emissions.  The change in emissions over these time
periods represents the emissions that consume increment (or, if
emissions have gone down, expand the available increment).  For sources
constructed since the relevant baseline date, all their current actual
emissions consume increment and are included in the inventory.

	An emissions inventory must be prepared for each averaging period for
which an increment has been specified for the pollutant under review.
In many cases, direct emissions data are not available for some or all
averaging periods, and actual emissions must be estimated.  This can be
particularly challenging for existing sources where the baseline
emissions must be determined and the baseline date is well in the past.
The approach generally used per EPA guidance has been to base the annual
emissions inventory on the actual measured emissions or actual hours of
operation, fuel usage, raw materials used, etc., while basing the
emissions inventory for shorter averaging periods on the maximum
emissions over each averaging period as determined from available data
(again, emission measurements, operating hours, fuel or materials
consumption, etc.).

When the inventory of emissions has been compiled, computer modeling is
used to determine the change in ambient concentration that will result
from these emissions when combined with the proposed emissions increase
from the new major source or major modification that is undergoing PSD
review.  The modeling has generally been guided by the “Guideline on
Air Quality Models” (40 CFR part 51, appendix W), which  includes
provisions on air quality models and the meteorological data input into
these models.

Two possible approaches have been used to predict the change in air
pollutant concentration using models.  One approach is to make a single
model run after calculating the difference in emissions from the
baseline date to the current period of time.  An alternative approach is
to make two model runs (one based on an inventory of baseline emissions
and the second based on an inventory of current actual emissions) and
calculate the difference between them.

	The model output (expressed as a change in concentration) for each
relevant averaging period is then compared to the corresponding
allowable PSD increment.  If the model results indicate that the
increment(s) will not be exceeded, the reviewing authority may issue a
PSD permit to the source.  Except as discussed below, if the modeling
shows that the source would cause or contribute to a violation of a PSD
increment, the reviewing authority may not issue the permit.  The source
may revise its permit application to reduce its proposed emissions, or
it may mitigate the impact of its emissions through obtaining offsetting
emission reductions from other sources in the emissions inventory.

	If the modeling shows only an increment violation in a Class I area,
the source has the opportunity to apply for a “variance” from the
Federal Land Manager (FLM) that has responsibility for that Class I
area.  If the source successfully demonstrates to the FLM that emissions
from the source will not have an adverse effect on the AQRVs of the
Class I area, and to the reviewing authority that the emissions will
not violate a set of higher increment levels specified in the Act
(generally equal to the Class II increments), the reviewing authority
may issue a PSD permit to the source.  The source may further appeal to
the Governor and the President in certain situations.  These variances
are discussed in greater detail in section IV.A.2 of this preamble.

C.	Why do we need to clarify the method for analyzing increment
consumption?

	We have never adopted detailed regulations establishing a specific
methodology that sources and reviewing authorities must use to calculate
an increase in concentrations for purposes of determining compliance
with the PSD increments.	Instead, increment analyses have been conducted
by States and EPA Regional Offices based on the guidelines and guidance
discussed in the previous section.  In the absence of definitive
requirements, sources and reviewing authorities have attempted to apply
the available guidance to a wide range of situations.  Differing
interpretations and approaches have resulted, along with controversy
over how binding the guidelines and guidance are on reviewing
authorities and who (EPA or the reviewing authorities) has the ultimate
discretion to determine which approaches are reasonable for a specific
increment analysis.  With this proposal, we intend to provide greater
clarity on several issues.

	One push for greater clarity has come from the Western States Air
Resources Council (WESTAR) PSD Reform Workgroup, with participants from
WESTAR States, the U.S. National Park Service, U.S. Fish and Wildlife
Service, U.S. Forest Service, and the U.S. Bureau of Land Management and
consultation by EPA.  The workgroup was formed in early 2004 to develop
recommendations to improve the effectiveness of the PSD program.  The
goal of the WESTAR effort was to propose changes to the PSD program that
would result in a more practical program, significantly reducing
constraints in the current program that they viewed as limiting State
and local agencies’ abilities to address cumulative incremental
consumption and Class I AQRV analysis and protection, some of which were
identified in a letter to EPA.  While the purpose of today’s notice is
focused on clarifying increment analysis procedures, we are considering
broader changes to the program as a separate rulemaking to address
additional concerns that WESTAR and others have raised.

	A major point raised by WESTAR is that States need to consult early and
often in order to agree in advance on modeling protocols to enable
consistency between the States in performing the analyses and to ensure
equity in application of the analysis.  WESTAR further recommended that
EPA take steps to ensure EPA Regional Offices, in partnership with
States and FLMs, operate consistently among themselves in
inter-jurisdictional contexts and develop data and methods that will
better enable inter-jurisdictional analysis.  WESTAR stressed that a
balance is needed between providing States with case-by-case,
cross-jurisdictional PSD increment analysis flexibility and providing
the national or regional standardization necessary to ensure equity
among States, simplify cross-jurisdictional analysis, and facilitate
coordination with FLMs.  The WESTAR report also noted a lack of clarity
and sometimes narrow interpretations of the definition of actual
emissions used for purposes of calculating point source emissions for
inclusion in emissions inventories for PSD analyses.  All of the WESTAR
workgroup representatives agreed that it is desirable to bring greater
clarity and consistency to approaches for conducting refined analyses,
particularly related to approaches for calculating point source
emissions.  Today’s notice is a step toward achieving that balance
between case-by-case flexibility and inter-jurisdictional consistency.

D.	What are the Clean Air Act requirements related to increments?

The PSD increments are established under sections 163 and 166 of the
Act.  In section 163 of the Act, Congress adopted specific numerical
increments for particulate matter and sulfur dioxide in each of the
three classes of PSD baseline areas (i.e., Class I, II, and III, as
described above in section II.B.1).   In 1990, Congress created section
166(f) of the Act which authorized EPA to substitute increments based on
the PM10 indicator for the original particular matter increments
contained in section 163.  Consistent with this provision, EPA
substituted PM10 increments for the increments based on total suspended
particulate matter in a 1993 rulemaking (58 FR 51622, Jun. 3, 1993).  In
section 166(a) of the Act, Congress directed and authorized EPA to
promulgate additional increments for nitrogen oxides and other
pollutants.  The EPA promulgated increments for NO2 in 1988 and
reaffirmed those increments in a 2005 rulemaking (53 FR 40656, Oct. 17,
1988; 70 FR 59582, Oct. 12, 2005).

The Act does not directly specify how to determine an increase in
concentrations for purposes of determining compliance with the PSD
increments.   Section 163(b) of the Act provides that “the maximum
allowable increase in concentrations of sulfur dioxide and particulate
matter over baseline concentration of such pollutants shall not
exceed” specified amounts for each pollutant.  See 42 U.S.C.
7473(b)(1)-(3).  The Act does not define an “increase in
concentrations” for purposes of section 163.  Likewise, section
165(a)(3) prohibits permitting a source that causes or contributes to
“air pollution in excess of any maximum allowable increase or maximum
allowable concentrations,” but does not specify how EPA is to
determine that air pollution would exceed the allowable increase or
concentration.  Section 166 of the Act directs EPA to promulgate
pollutant-specific PSD regulations which contain “specific numerical
measures against which permit applications may evaluated” and
indicates that such measures “may contain air quality increments.”
See 42 U.S.C. 7476(a), (c), (d).  However, there is no further guidance
in section 166 concerning the method to be used to measure an increase
in air pollutant concentrations for purposes of evaluation against the
PSD increments.

	EPA has found some guidance in the Act in the definition of “baseline
concentration,” which the Agency interprets to support its view that
an increase in concentration for increment purposes should be determined
on the basis of actual emissions.  Section 169(4) of the Act defines
“baseline concentration” as “the ambient concentration levels
which exist at the time of the permit application.”  The opinion of
the United States Court of Appeals for the District of Columbia Circuit
in Alabama Power v. Costle interpreted section 169(4) in a manner that
supports establishing the PSD baseline concentration using actual
emissions.  636 F.2d 323, 375-381 (D.C. Cir. 1980).   Since emissions
that consume increment are not included in the baseline, EPA has long
recognized that an increase in concentration (the consumption of
increment) is directly related to baseline concentration (45 FR 52676,
52718, Aug. 7, 1980).  In light of these considerations, EPA reached the
following conclusion:

Since the Alabama Power decision and the statute both provide that
actual air quality be used to determine baseline concentrations, but
provide no guidance on increment consumption calculations, EPA has
concluded that the most reasonable approach, consistent with the
statute, is to use actual source emissions, to the extent possible, to
calculate increment consumption or expansion.

See 45 FR 52676, 52718 (Aug. 7, 1980).  The EPA expressly incorporated
the definition of “actual emissions” into its regulatory definition
of “baseline concentration” (40 CFR 51.166(b)(13); 40 CFR
52.21(b)(13)).  In this definition of “baseline concentration,” the
term “actual emissions” is referenced both in the provision
describing how to determine the baseline concentration and in the
provision identifying emissions that affect the maximum allowable
increases (the increment).  See, e.g., 40 CFR 51.166(b)(13)(ii).  The
term “actual emissions” is itself defined in §§51.166(b)(21) and
52.21(b)(21).

The Act also provides some direction concerning the increment
consumption analysis by identifying particular sources whose emissions
are counted against the maximum allowable increases and listing
categories of sources whose emissions may be excluded from the increment
consumption analysis.   In the statutory definition of “baseline
concentration,” section 169(4) specifies that “[e]missions of sulfur
oxides and particulate matter from any major emitting facility on which
construction commenced after January 6, 1975, shall not be included in
the baseline and shall be counted against the maximum allowable
increases in pollutant concentrations established under this part.”
See 42 U.S.C. 7479(4).  This provision makes clear that emissions of
these pollutants from new or modified major sources that commence
construction between 1975 and the baseline date for a given area shall
be counted against the increments and thus are considered to
“consume” increment.  In addition, section 163(c) authorizes States
to exclude certain pollution concentrations from the increment
consumption analysis.  This provisions authorizes States to
“promulgate rules providing that for purposes of determining
compliance with the maximum allowable increases in ambient
concentrations of an air pollutant, the following concentrations of such
pollutants shall not be taken into account.”  The concentrations
identified are those attributable to (1) fuel switches required under
other laws (15 U.S.C. 792 or 16 U.S.C. 791a); (2) construction or other
temporary emission-related activities; and (3) new sources outside the
United States.  The PSD regulations reflect these provisions of sections
163(c) and 169(4) of the Act.

The existing PSD regulations reflect these specific requirements of the
Act.  As discussed earlier, we implemented the last sentence of section
169(4) by establishing two separate baseline dates – the major source
baseline date and the minor source baseline date.  See 40 CFR
51.166(b)(14) and 52.21(b)(14).  We implemented section 163(c) of the
Act by promulgating 40 CFR 51.166(f), which is discussed further below.

Within the boundaries described above, we read the Act to provide EPA
with fairly broad discretion to establish regulations concerning the
approach to be used to measure an increase in concentration for purposes
of assessing consumption of PSD increments.  Since the Act does not
define “increase in concentration” for increment purposes, we
interpret the Act to grant EPA discretion to develop a method for
measuring this increase, so long as that method is reasonable and
consistent with the limited requirements describe above.  The absence of
specific direction in the Act concerning how to calculate an increase in
concentration for increment purposes is similar to the gap in the Act
concerning how to calculate an increase in emissions for purposes of
identifying a major modification.  With respect to the latter issue, the
DC Circuit has recently observed that “In enacting the NSR program,
Congress did not specify how to calculate ‘increases’ in emission,
leaving EPA to fill that gap while balancing the economic and
environmental goals of the statute.”   New York v. EPA, 413 F.3d 3, 27
(Jan. 25, 2005).  The EPA believes Congress intended a similar result
with respect to “increases” in concentration under the increment
provisions of the PSD side of the NSR program.  As observed by the court
in Alabama Power, “Congress expected EPA to use ‘administrative good
sense’ in establishing the baseline and calculating exceedances.”
See Alabama Power, 636 F.2d at 380.  In this rulemaking, we propose to
exercise our rulemaking discretion on this topic and provide additional
guidance to States and the regulated sources on how to calculate
increases in concentrations for purposes of determining compliance with
the PSD increments.

III.	Summary of this Proposed Action

Note:  This section will ultimately include a short statement of the
proposed actions.

	This action proposes clarifications in seven areas related to increment
analyses.  They are summarized below:

Treatment of sources that have previously received an FLM variance in
subsequent increment consumption modeling.  Discussed in detail in
section IV.A; regulatory revisions in 40 CFR 51.166(f)(2) and
52.21(f)(2).

Data used to estimate emissions.  Discussed in detail in section IV.B.1;
regulatory revisions in 40 CFR 51.166(f)(1) and 52.21(f)(1).

Time period of emissions used to model pollutant concentrations.
Discussed in detail in section IV.B.2; regulatory revisions in the
definition of “actual emissions” in 40 CFR 51.166(f)(1) and
52.21(f)(1).

Actual emissions rates used to model short-term increment compliance.
Discussed in detail in section IV.B.3; regulatory revisions in 40 CFR
51.166(f)(1) and 52.21(f)(1).

Meteorological data and processing.  Discussed in detail in section
IV.C.1; no regulatory revisions.

Years of meteorological data.  Discussed in detail in section IV.C.2; no
regulatory revisions.

Documentation and data and software availability.  Discussed in detail
in section IV.D; no regulatory revisions.

IV.	Proposed Clarifications to Increment Modeling Procedures

A.	How is a source with an FLM variance treated in subsequent increment
consumption modeling?

	1.	General Overview of Included Sources

In defining “baseline concentration,” the PSD regulations also spell
out the emissions sources that must be included in an increment
analysis.  Specifically, in 40 CFR 51.166(b)(13)(ii) and
52.21(b)(13)(ii), the regulations indicate that the following emissions
are not included in the baseline concentration, but instead affect the
available increment:

Actual emissions from any major stationary source on which construction
commenced after the major source baseline date.

Actual emissions increases and decreases at any stationary source
occurring after the minor source baseline date.

Thus, the sources that affect available increment, and therefore must be
included in an increment analysis are: (1) major sources that have
increased or decreased actual emissions after the major source baseline
date as a result of construction of a new source, a physical or
operational change to an existing source, or shutdown of an existing
source; and (2) any source that has had an increase or decrease in
actual emissions since the minor source baseline date.  The latter
includes major sources, minor sources, and area sources that have been
constructed since the minor source baseline date (i.e., new sources) or
have experienced a change in actual emissions since the minor source
baseline date (i.e., existing sources that have been modified or have
changed their capacity utilization or hours of operation).

	For many years, EPA has interpreted its PSD regulations to require
increases and decreases in mobile source emissions to be included in the
increment consumption analysis.   See, e.g.,  53 FR 40656, 40662
(October 17, 1988).  However, we understand that many States have not
consistently accounted for mobile source emissions in their increment
analyses.  To make clear that mobile source emissions need to be
included in an analysis of increment consumption, we are proposing to
amend the reference to “any stationary source” in 40 CFR
51.166(b)(13)(ii)(b) and 52.21(b)(13)(ii)(b) of our regulations to make
clear that actual emissions increases or decreases that consume or
expand increment are not limited solely to stationary source emissions.

	The regulations also specify that “secondary emissions” are to be
included in an increment analysis.  See 40 CFR 51.166(k) and 52.21(k).
Secondary emissions are defined as emissions which occur as a result of
the construction or operation of a major source or modification, but do
not come from the major source itself.  They include emissions from any
offsite support facility which would not be constructed or increase
emissions except as a result of the construction of the major source or
modification that is undergoing PSD review.  Secondary emissions must be
specific, well defined, quantifiable, and impact the same general area
as the major source or modification that is under review.  See 40 CFR
51.166(b)(18) and 52.21(b)(18).

	We have also codified an exemption to these general principles in 40
CFR 51.166(f) of the PSD regulations.  This provision authorizes SIPs to
exclude from increment consumption those sources in the four categories
listed in section 163(c) of the Act.  The regulations also allow States
to exclude concentrations attributable to temporary increases in
emissions from sources affected by SIP revisions approved by EPA.  See
40 CFR 51.166(f)(1)(v).  When we promulgated increments for NO2, 40 CFR
51.166(f) became applicable to the increments for that pollutant as
well.  Thus, emissions attributable to sources or actions listed in 40
CFR 51.166(f) may not consume increment if a State has promulgated
regulations approved by EPA that exclude such emissions from the
increment consumption analysis.  We have not included a companion
provision in 40 CFR 52.21.

	2.	Treatment of Emissions from Sources Issued an FLM Variance   SEQ
CHAPTER \h \r 1

	EPA proposes to add a category of sources that may be excluded from the
increment consumption analysis in a specialized circumstance described
in the Clean Air Act.  We propose to make clear that sources that have
been permitted based in part on a variance issued by a Federal Land
Manager (FLM) for a Class I area may be excluded from the increment
consumption analysis for the Class I increment in the area for which the
variance was issued.   As discussed further below, EPA believes this
approach is permissible under the Act.

	Background.  Under section 165(d) of the Clean Air Act, when a proposed
source subject to permitting has the potential to adversely impact a
Class I area, an additional review is required to assess whether the
source will adversely impact Air Quality Related Values (AQRVs) in the
Class I area.  The AQRV review provisions of section 165(d) provide
another layer of protection against significant deterioration in Class I
areas on top of the protection provided by increments.  Although any
area may be designated to be a Class I area, such areas are generally
national parks and wilderness areas of a certain size that are required
to be Class I areas under the Act.   See 42 U.S.C. 7470(a) (section
162(a) of the Act).

	The Clean Air Act does not define AQRVs or identify specific AQRVs
other than visibility.   See 42 U.S.C. 7475(d)(1)(B).  However, AQRVs
are generally understood to encompass the purposes for which lands have
been preserved, to the extent those purposes may be affected by air
quality.  In legislative history to the Clean Air Act, AQRVs are
described as follows:

The term “air quality related values” of Federal lands designated as
class I includes the fundamental purposes for which such lands have been
established and preserved by the Congress and the responsible Federal
agency.  For example, under the 1916 Organic Act to establish the
National Park Service (16 U.S.C. 1), the purpose of such national park
lands “is to conserve the scenery and the natural and historic objects
and the wildlife therein and to provide for the enjoyment of the same in
such manner and by such means as will leave them unimpaired for the
enjoyment of future generations.”

See S. Rep. 95-127 at 36, reprinted at 3 LH at 1410.  In 1996, EPA
proposed to adopt the following definition of AQRV:

Air quality related values means visibility or a scenic, cultural,
physical, biological, ecological, or recreational resource that may be
affected by a change in air quality, as defined by the Federal Land
Manager for Federal lands, or by the applicable State or Indian
Governing Body for nonfederal lands.

See 61 FR 38250, 38332, July 23, 1996.  The EPA has not yet taken final
action to adopt this definition.

	The Act provides that the FLM charged with responsibility for managing
a Class I area has an “affirmative responsibility” to protect the
AQRVs in the area.  See 42 U.S.C. 7475(d)(2)(B).  Section 165(d)
establishes a procedure under which the FLM may object to or concur in
the issuance of a PSD permit based on the impact, or lack thereof, that
new emissions may have on any affected AQRV that the FLM has identified.
 If the proposed source’s emissions do not cause or contribute to a
violation of a Class I increment (satisfying the requirement in section
165(a)(3) of the Act), the FLM may nevertheless prevent issuance of the
permit by demonstrating to the satisfaction of the reviewing authority
that the source or modification will have an adverse impact on AQRVs.
See 42 U.S.C. 7575(d)(2)(C)(ii).  Conversely, if the proposed source
will cause or contribute to a violation of a Class I increment, the
reviewing authority may not issue the permit unless the owner or
operator demonstrates to the satisfaction of the FLM that the emissions
from the proposed facility will have no adverse impact on the AQRVs of
the Class I area.   See 42 U.S.C. 7475(d)(2)(C)(iii).  Under this
procedure, the compliance status of the increment determines whether the
FLM or the permit applicant has the burden of satisfactorily
demonstrating whether or not the proposed source’s emissions would
have an adverse impact on AQRVs.  The FLM has the burden of
demonstrating an adverse impact when the Class I increment is not
exceeded.  However, if the proposed source causes or contributes to a
violation of the Class I increment, the permit applicant must convince
the FLM to certify that the proposed source will not have an adverse
impact on AQRVs.

	This certification by the FLM is known as a “variance” under
§§51.166(p) and 52.21(p) of EPA’s regulations.  The process for
issuance of a variance was originally applied only in the context of the
statutory increments for PM and SO2 based on section 165(d) of the Act,
but EPA has, by rulemaking, extended the AQRV review procedures set
forth in §§51.166(p) and 52.21(p) to cover NO2.   See 70 FR 59583,
October 12, 2005; 53 FR 40656, October 17, 1988.

	In the case of the 24-hour and 3-hour increments for SO2, the Act
provides an additional process through which the permit applicant may
request that the Governor of a State issue a variance or appeal to the
President to issue the variance if the FLM does not concur with the
Governor’s conclusion.  See 42 U.S.C. 7475(d)(2)(D).  If the FLM does
not initially issue a variance under section 165(d)(2)(C), the Governor
may issue a variance subject to the concurrence of the FLM, if the
Governor finds, after public notice and hearing, that a facility cannot
be constructed because of a short-term increment for SO2 and that the
variance will not adversely affect AQRVs.  See 42 U.S.C.
7475(d)(2)(D)(i); see also 40 CFR 51.166(p)(5) and 52.21(p)(6).  If the
FLM does not concur with the Governor’s decision to issue the
variance, the dispute is submitted to the President for resolution.  The
President may grant the variance if he finds that a variance is in the
national interest.   See 42 U.S.C. 7475(d)(2)(D)(ii); see 40 CFR
51.166(p)(6) and 52.21(p)(7).

	Under both of these variance provisions, the variance cannot issue
unless the permit contains emissions limitations sufficient to prevent
violations of alternative increments that are established for the
specific permitting action due to the variance.  In the case of an FLM
variance issued under section 165(d)(2)(C), the alternative increments
are equal to the Class II increments in most instances.  In the unique
case of the 3-hour increment for SO2, the Act requires use of an
increment of 325 (g/m3 (a level between the Class I and Class II
increments) for SO2 for the 3-hour averaging period.  See 42 U.S.C.
7475(d)(2)(C)(iv); see 40 CFR 51.166(p)(4) and 52.21(p)(5).  The EPA
also applied this approach to NO2 by adding a cap of 25 (g/m3 (equal to
the NO2 Class II increment) to its regulations.  See 53 FR 3704; see 40
CFR 51.166(p)(4) and 52.21(p)(5).  Although the short-term Class II
increments may ordinarily be violated one time per year, the Act
suggests that when the Class II increment applies under the Class I
variance provisions in section 165(d)(2)(C), no violations of the Class
II increment are permissible.   See 42 U.S.C. 7473(a).

	 In the case of a gubernatorial or presidential variance for the short
term SO2 increments, the Act establishes another set of alternative
increments at a level between the Class I and Class II increments for
the 24-hour and 3-hour averaging periods.   See 42 U.S.C. 7475(D)(iii).
This provision includes separate alternative increments for permitting
actions receiving a variance in low and high terrain areas.  Id.  In
addition to requiring emissions limitations sufficient to assure these
alternative increments are not exceeded, this portion of the Act also
specifies that the permit must “assure that such emissions will not
cause or contribute to concentrations which exceed the otherwise
applicable maximum allowable increases for periods of exposure of 24
hours or less on more than 18 days during any annual period.”   See 42
U.S.C. 7475(d)(2)(D)(iii).  The EPA interprets the “otherwise
applicable maximum allowable increases” to describe the Class I
increments and thus understands this provision to allow 18 exceedances
of the Class I increment per year after a variance has been issued under
section 165(d)(2)(D).

	In contrast to section 165(d)(2)(D)(iii), the FLM variance provisions
in section 165(d)(C)(iv) that refers primarily to the Class II
increments does not discuss an “otherwise applicable maximum allowable
increase” or identify an allowable number of days on which such an
increment might be exceeded.  This omission leaves some ambiguity
concerning whether the Class I increment should continue to apply in the
Class I area for which a variance has been issued by the FLM under
section 165(d)(2)(C) based upon a certification that the emissions from
a proposed facility will not have an adverse impact on AQRVs.  Since
Congress has not directly spoken to this issue, EPA proposes to add
provisions to its regulations to clarify how a reviewing authority
should account for these variances when evaluating compliance with the
Class I increment when a source has previously been issued a variance.

	Proposed Rule Amendments.  To address this issue, EPA proposes to add a
new provision in §51.166(f) of its regulations stating that the
emissions of any source that was permitted after receiving a Class I
increment variance from an FLM need not be included in the consumption
analysis for the Class I increment for the area for which the variance
was issued under section 165(d)(2)(C) of the Act.  However, EPA proposes
that the emissions of such source continue to be accounted for in the
analysis of compliance with the alternative Class II increments that are
applied in the Class I area after the issuance of a variance.  As noted
above, in the case of SO2, the alternative increment is not the
Class II increment but a level between the Class I and Class II
increments.

	The EPA interprets section 165(d)(2)(C) of the Act to allow an
additional exclusion, not contained in section 163(c) of the Act, from
the increment consumption analysis for emissions that an FLM has
considered and certified to not have an adverse impact on AQRVs.
However, this is a narrow exclusion that applies only with respect to
the Class I increment in those areas for which a variance has been
issued.   EPA does not read section 165(d)(2)(C) to authorize such
emissions to be excluded from an analysis of compliance with the Class
II increments (or the alternative 3-hour SO2 increment).

	In Class I areas, the key criterion for determining whether a permit
may issue is the affect of a project on AQRVs.  The Class I increment is
important, but the terms of sections 165(d)(2)(C)(ii) and
165(d)(2)(C)(iii) make clear that AQRVs actually control whether a
permit should be issued or not.  As discussed above, the increment
determines who has the burden of demonstrating the degree of impact on
AQRVs, but ultimately the degree of impact on AQRVs is the controlling
standard in such areas.  Exceedances of the increment are allowed so
long as the source can demonstrate to the satisfaction of the FLM that a
source will not have an adverse impact on AQRVs.  An exceedance of Class
I increment creates a presumption that AQRVs within the affected impact
area will be also adversely affected, but that presumption may be
rebutted.  Likewise, the absence of an increment exceedance creates a
presumption that there is no adverse impact on AQRVs within the affected
impact area, but that presumption may also be rebutted if the FLM
provides evidence sufficient to convince the reviewing authority that
emissions from a proposed source will have an adverse impact on AQRVs.
Thus, based on the interplay of sections 165(d)(2)(C)(ii) and
165(d)(2)(C)(iii), EPA interprets the Act to establish AQRVs, rather
than the Class I increment, as the controlling standard in Class I
areas.  AQRVs are always applicable in Class I areas, regardless of the
status of the Class I increment.

	However, AQRVs are the controlling benchmark only to the extent that
AQRVs provide more protection than the Class II increments (or a lower
figure in the case 3-hour averaging time for SO2).  Section
165(d)(2)(C)(iv) indicates that, although a permit may be issued where
AQRVs are not adversely impacted, such permit must ensure that the Class
II increments are not exceeded.  The EPA interprets this provision to
mean that the Class II increment cannot ever be exceeded in a Class I
area, notwithstanding the degree of impact on AQRVs.  So, reading
sections 165(d)(2)(C)(ii)-(iv) together, EPA interprets the Act to
establish AQRVs and the Class II increments to be the air quality
standards that ultimately determine whether a permit may be issued for a
source potentially affecting a Class I area.   The Class I increment
serves to establish a presumption of harm or the absence of harm to
AQRVs, but does not ultimately control whether a permit may be issued.

	While it is clear that AQRVs and the Class II increments ultimately
control whether a particular permit may be issued, the Act does not
specify what role the Class I increment has to play on an ongoing basis
after a variance has been issued.  To obtain a variance, the applicant
must rebut the presumption that AQRVs will be adversely impacted by an
increase in concentrations in excess of the Class I increment.  Once
that presumption has been rebutted for a particular area, the Class I
increment may no longer be representative of the degree of impact on
AQRVs for that area.  If the Class I increment has been exceeded but
there is no adverse impact on AQRVs, this indicates that the Class I
increment is not a reliable predictor of adverse impacts on AQRVs in a
particular area.

	Thus, the question arises as to whether the Class I increment should
remain applicable in a Class I area after the issuance of a variance.
Section 165(d)(2)(C) does not address this issue.  Although section
165(d)(2)(D)(iii) says that the “otherwise applicable” increment may
not be exceeded more than 18 days per years in the case of a
gubernatorial or presidential variance, section 165(d)(2)(C)(iv) does
not refer to any “otherwise applicable” increment in the context of
an FLM variance.  The other parts of section 165(d)(2)(C) also fail to
address this issue.

	One approach EPA has considered is to construe the silence in section
165(d)(2)(C) as an indication that Congress did not intend to permit
violations of the Class I increment for any additional days beyond the
one day per year allowed in the case of the 24-hour and 3-hour
increments.  Under this interpretation, a variance under section
165(d)(2)(C) would be considered only to be a variance from the “cause
or contribute” standard in section 165(a)(3) of the Act for purposes
of any individual permit application.  An applicant would be relieved of
the obligation to demonstrate that a proposed source does not cause or
contribute to a violation of the Class I increment if the applicant can
demonstrate that the source will not adversely effect AQRVs.  However,
under this view, the variance would not necessarily relieve the
reviewing authority or State air quality planning agency from the
obligation to ensure that the SIP contains measures to protect the Class
I increment.   The source might receive its permit based on the variance
from section 165(a)(3) for a particular Class I area, but the State
would remain obligated to comply with §51.166(a)(3) of EPA’s
regulations and take subsequent action to amend the SIP to correct the
exceedance of the Class I increment caused by the source that received
the variance.

	The latter interpretation appears to be supported by a statement from
the D.C. Circuit’s opinion in Alabama Power v. Costle.  In this
decision, the Court upheld the language cited above (40 CFR
51.166(a)(3)) that requires a State to revise its SIP to correct a
violation of the increment.   One of the Petitioners in that case had
argued that EPA could not require a State to remedy a Class I increment
violation because section 165(d) allowed a waiver of the Class I
increment in certain circumstances.  The court reconciled the variance
provision and the language in §51.166(a)(3) as follows:

Industry petitioners also rely on those sections of the Act that provide
for waiver provisions which, conceivably, could allow increments to be
exceeded.   The waiver has vitality and recognition in that facilities
granted special consideration under these provisions are, in effect,
treated as facilities operating in compliance with the provisions of the
Act.  But the totality of facilities in compliance, as a group, may be
subject to measures necessary to cope with a condition of pollutants
exceeding the PSD maximum.

See 636 F.2d at 363.

	EPA has previously acknowledged that this may be a permissible way to
reconcile the FLM variance provision with the requirement in
§51.166(a)(3) to amend SIPs to remedy an increment exceedance.  In
correspondence sent to the State of North Dakota, the Director of
EPA’s Office of Air Quality Planning and Standards recommended the
approach suggested by the Alabama Power opinion.  The letter stated the
following:

In the case of a Class I increment violation, a source may be granted a
variance under certain conditions.  First, the source must demonstrate
to the FLM, and the FLM certify to the State, that the source will not
adversely impact any Class I AQRVs.  Second, the State must revise its
SIP to correct increment violations (CAA Section 161 and 163, 40 CFR
51.166(a)(3)).

See Letter from John Seitz, EPA/OAQPS, to Francis Schwindt, North Dakota
Dept. of Health (December 12, 2001).  The EPA Region 8 followed this
recommendation in comments submitted to North Dakota in 2002.   See EPA
Comments on North Dakota Department of Health’s Proposed Determination
Regarding the Adequacy of the SIP to Protect PSD Increments for Sulfur
Dioxide (May 24, 2002).

	Since the time of these recommendations, EPA has evaluated this issue
further and now recognizes that there may be more than one permissible
reading of the Act on this issue.  The approach suggested by EPA in 2001
(amending the SIP to eliminate the Class I increment exceedance after
the permit issues) would effectively require the source seeking the
variance to obtain offsets from other sources affecting the Class I
increment.   If section 165(d)(2)(C) is read to require that a variance
source obtain offsets, there would be no need for that proposed source
to demonstrate that its emissions would not have an adverse impact on
AQRVs.  This would render the AQRV provisions in section 165(d)(2)(C) of
the Act meaningless where the increment is exceeded because one would
not need to consider AQRVs and establish variance in the first place if
offsetting emissions reductions were obtained.  Furthermore, where a
single source consumes the entire increment but does not adversely
impact AQRVs, the issuance of a variance would have no effect because a
SIP could not be tightened to obtain reductions from any other source to
remedy the increment exceedance.   In this circumstance the State would
have no choice but to tighten or revoke the permit of the variance
source immediately after the permit was issued.  The EPA does not
believe Congress intended such a result.  In light of these
considerations, EPA is proposing to refine its interpretation of section
165(d)(2)(C) with respect to the role of the Class I increment after a
variance has been issued under section 165(d)(2)(C).

	Another possible approach would be to read section 165(d)(2)(C)(iv) to
call for the Class II increments to substitute for the Class I increment
on an ongoing basis after a variance is issued.  The EPA might construe
the absence of any discussion of an “otherwise applicable” increment
in this section of the Act to mean that Congress did not intend for the
Class I increment to have continuing effect in the area after the
variance was issued.   Since Congress did not specify the number of days
on which the “otherwise applicable” increment could be exceeded per
year (as it did in section 165(d)(2)(D)(iii)), one interpretation is
that this information was not needed because Congress did not intend for
the Class I increments to apply after it was demonstrated that the Class
I increment was not a reliable predictor of the degree of impact on
AQRVs in a particular Class I area.  Under this approach, the Class II
increments (plus the unique 3-hour SO2 increment) would continue to
provide a upper bound on emissions growth to protect the Class I area
while AQRVs remained in effect to protect against site-specific impacts
that are not adequately represented by the Class I increment.  However,
under this Class II increment substitution approach, the Class I
increment would no longer be available as tool to determine who has the
burden of proof to demonstrate the degree of impact on AQRVs.

 	In this action, EPA is proposing a compromise approach that retains
the Class I increment for the purpose of establishing the burden of
proof in the AQRV analysis but does not require a SIP to be amended to
offset the contribution of sources that have received a variance because
they do not adversely affect AQRVs.  The EPA proposes to accomplish this
effect by allowing States to exclude the emissions from sources
receiving an FLM variance from the Class I increment consumption
calculation.  The emissions of the variance source must continue to be
considered for purposes of determining compliance with the Class II
increments, but they would no longer be considered relevant to the Class
I increment assessment after a variance has been issued.   The Class I
increment would remain in effect with respect to the emissions of other
sources, and could not be exceeded on any additional days.  The
emissions of sources that have not received variance would continue to
count against the Class I increment.

	Since a variance will not be issued unless the FLM certifies that the
emissions from a proposed source will not have an adverse impact on
AQRVs, it is reasonable to omit the emission of such source from the
increment consumption analysis.  A source issued a variance does not
adversely impact AQRVs, which as discussed above, is the critical and
adaptable test Congress established for protecting site-specific
concerns in Class I areas.  Each successive source that impacts the
Class I area would still have to show that it does not harm the AQRVs to
receive permit.  The Class I increment would remain relevant as an
indicator for assessing when other sources may have an adverse impact on
AQRVs.  If sources other than the variance source cause an exceedance of
the Class I increment, the next source to apply for a permit affecting
the area will have the burden of demonstrating to the FLM that the
proposed source’s emissions do not adversely effect AQRVs.  If the
emissions of the proposed source and other sources who have not received
a variance do not consume the increment, then the FLM will bear the
burden of convincing the reviewing authority that the proposed source
will adversely impact AQRVs.

		This approach is a permissible reading of the Clean Air Act that
reconciles some apparent inconsistencies in the statutory scheme.  Even
when a variance is issued under section 165(d)(2)(C), the Act does not
expressly allow the Class I increment to be exceeded on any additional
days.   If this omission were read strictly to preclude any additional
days of violation of the increment, this would be inconsistent with
allowing a variance because the strict reading would preclude any
additional days of a Class I increment violation, even those caused by a
variance source.  The issuance of a variance would appear to require at
least a temporary variance from the Class I increment, even if the SIP
still has to be amended at a later date to correct the violation, but
that would be inconsistent with a strict reading of section
165(d)(2)(C)(iv) to preclude additional violations of the Class I
increment.  If section 165(d)(2)(C)(iv) is read to require that the
Class II increment permanently supersede the Class I increment, an
unlimited number of additional days of Class I increment violations
would be permitted and the burden shifting effect of the Class I
increment would be lost.  Excluding the emissions of variance sources
from the Class I analysis appears to be the best way to avoid
authorizing any additional days of Class I increment violations while
retaining the role of the Class I increment as a tool to determine who
has the burden in the AQRV analysis.

	Because of the differences between section 165(d)(2)(C) and
165(d)(2)(D), EPA does not propose to apply this same exclusion to
variances issued under section 165(d)(2)(D).  Instead of allowing an
exclusion from the Class I increment consumption analysis, it appears
that Congress opted in section 165(d)(2)(D) to apply the otherwise
applicable Class I increment but instead to allow that increment to be
exceeded on 18 days per year instead of the normal limit of 1 day per
year.

[Also take comment on Region 10’s approach – i.e., variant
source’s emissions are not a violation but continue to consume the
applicable increment(s), up to 100%.]

B.	How are emissions estimated for sources that consume increment?

	To model the expected change in concentration of pollutants above the
baseline, one needs to identify the emissions of those sources that are
included in the increment consumption analysis.  As noted earlier, the
PSD regulations call for this analysis to be based on the actual
emissions of sources.  The baseline concentration is generally based on
“actual emissions ... representative of sources in existence on the
applicable minor source baseline date.”  See 40 CFR
51.166(b)(13)(i)(a) and 52.21(b)(13)(i)(a).  The concentration after the
minor source baseline date is generally based on “actual emissions
increases and decreases ... at any stationary source occurring after the
minor source baseline date.”  See 40 CFR 51.166(b)(13)(i)(b) and
52.21(b)(13)(ii)(b).  There are certain exceptions to these general
principles for emissions of major sources, but the basic methodology
involves identifying the actual emissions of sources on the minor
baseline date and actual emissions increases and decreases after the
minor source baseline date at sources existing on the minor source
baseline date and increases attributable to the addition of new sources
since that time.

In practice, an assessment of increment consumption in accordance with
these requirements has generally involved compiling an actual emissions
inventory for two separate time periods.  See draft NSR Manual at C.49.
The first part of the inventory generally contains actual emissions as
of the minor source baseline, but for major sources, the emissions as of
the major source baseline date must be used.  The second part of the
inventory covers what amounts to the present day at the time of a
periodic review of increment compliance or the review of a pending PSD
permit.  In the case of a PSD permit review, the second part of the
inventory contains the projected emissions of the proposed source.  The
existing PSD regulations contain a definition of the term “actual
emissions” in 40 CFR 51.166(b)(21) and 52.21(b)(21).  This definition
is expressly incorporated into the definition of “baseline
concentration” which establishes the basic parameters described above
for determining the change in concentration since the baseline date.

	In this action, we are proposing to adopt a revised definition of
“actual emissions” that will address the methodology for quantifying
emissions as of the baseline date and emissions that consume increment.
Rather than revising the existing definition of actual emissions in 40
CFR 51.166(b)(21) and 52.21(b)(21) which may continue to be used for
other purposes under the PSD program, we propose to include a new
definition of “actual emissions” in 40 CFR 51.166(f) and 52.21(f)
that will apply only to the analysis of increment consumption.

	1.	Data and Calculation Methods Used to Establish Actual Emissions

	We propose to add language to the PSD regulations to clarify that a
reviewing authority has discretion to use its best professional judgment
when determining the actual emissions of sources as of the baseline date
and at subsequent periods of time, particularly where there is limited
data available from which to determine actual emissions.  We propose to
establish a general standard for the sufficiency of data and calculation
methods on which actual emissions may be based, but also request comment
on WESTAR’s recommendation that EPA establish a menu of permissible
data types and calculation methods from which each reviewing authority
may select.

Background.  Because direct measurement of the emissions from a stack
may not be available, the emissions of baseline and increment consuming
sources must often be derived from other data that is available.  The
current regulations applicable to increment consumption analyses specify
that “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.”  See 40 CFR
51.166(b)(21) and 52.21(b)(21).   This general requirement adopted in
EPA’s regulation in 1980 presumed the availability of reliable and
consistent records on operating hours, production rates, and materials
composition.

However, the experience of EPA and many States in implementing the PSD
program since this time has shown that the accuracy and reliability of
the available data may be questionable or may vary significantly over
the time period of the emissions estimate.  For PSD baseline dates that
are many years in the past, information on actual source operations may
be sketchy or lacking altogether.  Furthermore, the composition of raw
materials, such as the sulfur content of coal, may change over time and
might be reliably estimated for an annual average value, but may be
significantly higher during a shorter period of time within that year or
when a maximum value is determined.

	There may also be cause to choose among various calculation
methodologies for a given emissions estimate.  For example, annual
emission rates could be calculated based on continuous operation (24
hours per day, 365 days per year).  If a source does not operate
continuously, whether by design or permit limitation, the annual
emissions could be based on the limitation.  Due to scheduled shutdowns
and maintenance, sources rarely operate at design or permit limits, and
in such cases actual operating hours could be used.  However, there will
be situations when data on operating hours are not available and some
other estimate of operation must be determined.  The choice of which
data to use in a particular circumstance, particularly where there is
more than one set of data that could be used or more than one
methodology, has generated substantial uncertainty in the context of the
PSD program.  This uncertainty also extends to how gaps in the data are
handled, such as when data are unavailable or are available for only a
subset of a group of similar sources.

Other than the language quoted above from the definition of “actual
emissions” calling for emissions to be calculated based on actual
operating hours, production rates, and materials composition, the PSD
regulations have not included any criteria for reviewing authorities to
use to determine actual emissions.  We have provided more specific
guidance for demonstrations of compliance with the NAAQS under the PSD
program in table 8-2 of appendix W, but this table was not developed for
purposes of increment consumption analysis.   Section 8.1.2.i. currently
recommends only that “NAAQS compliance demonstrations in a PSD
analysis should follow the emission input data shown in Table 8-2.”
EPA does not believe its recommendations in Table 8-2 can be readily
extended to increment consumption analyses because of differences in the
increment consumption analysis.  Unlike the NAAQS analysis, increment
consumption assessments have generally focused on changes in emissions,
rather than absolute concentrations, and often must account for
emissions that occurred many years earlier on the applicable baseline
date.

	Proposed Action.  To address the uncertainty in how to determine actual
emissions for increment consumption purposes, we propose to codify a
policy that gives the reviewing authority discretion to select the data
and emissions calculation methodologies that are reliable, consistent,
and representative of actual emissions.  The cornerstone of such a
policy is that emissions estimates used to establish baseline
concentrations and increment consumption or expansion must be supported
by the available record and be rationally-based.   This policy would
give reviewing authorities the discretion to use the best available
information and to make reasonable judgments as to the reliability of
that information for determining actual emissions, particularly when
estimating emissions for baseline dates in distant years for which very
little useful data may be available.  We believe that this flexible
approach is preferable to a rigid requirement to use a specific type of
data or calculation method because of uncertainty over the exact type
and quality of data that will be available in each instance.

	We have generally given reviewing authorities substantial leeway within
the PSD program to select data and emissions calculation methodologies
that they believe are representative of actual emissions.  We recognize
that where the available data are poor, substantial judgment must be
used to estimate actual emissions.  Once the reviewing authority has
selected data and emissions calculation methodologies according to these
general guidelines, we typically have not second-guessed their choices.
In particular, we have not required reviewing authorities to select data
or methodologies that we might consider “more reasonable” or “more
representative” than those they have chosen.

	This policy is consistent with existing recommendations in appendix W
and EPA guidance.   Section 8.0.a. of appendix W currently states that
“[t]he most appropriate data available should always be selected for
use in modeling analyses.”  This approach is consistently applied
throughout appendix W wherein the reviewing authority is given
discretion to approve the selection of input data for air quality
models.

We propose to give each reviewing authority the responsibility to verify
and approve the data used, and to assure that it meets a basic standard
of reliability, consistency, and representativeness.   In light of the
fact that many recommendations in section 8.0 of appendix W are not
necessarily applicable to increment analysis, we propose to make clear
that this standard will control over the recommendations in appendix W.

	We request comment on this policy, and on the regulatory language
proposed at 40 CFR 51.166(f)(1)(iv) and 52.21(f)(1)(iv) to codify this
policy.  In addition, we request comment on whether additional guidance
or limitations should be articulated and codified for estimating
emissions that make up the baseline concentration or consume increment.

	Request for comment on WESTAR recommendation.  In its May 2005
recommendations, WESTAR expressed the view that EPA should “afford
reviewing authorities some flexibility to ensure that analyses
accommodate considerations such as data availability and accuracy.”
However, WESTAR also asked EPA “to encourage consistency,
predictability, and regulatory certainty with regard to approaches for
preparing emissions inventories for refined PSD analyses.”

	In order to achieve these goals, WESTAR recommended a two-step
approach.  The first step would be for EPA to develop a “menu” of
acceptable emissions calculation approaches for both short-term and
annual PSD analyses.  The second step would allow the reviewing
authority to select what they believed to be the most appropriate option
from the menu based on a set of guiding principles.  The reviewing
authority would be able to use calculation approaches not included in
the menu provided that they can demonstrate that the approach is
consistent with the Act and NSR regulations, as well as the principles
included in step two.  According to WESTAR’s report, this two-step
approach would help alleviate the current lack of clarity and narrow
interpretations of the definition of actual emissions used for emissions
inventories in PSD analyses.

	WESTAR’s report identifies various types of data that might be used
in the menu.  These data types are discussed in more detail below in the
context of the more specific issue of short term emissions estimates.

	WESTAR also provided guiding principles that could be used in selecting
among the menu items.   These principles are the following:

Maximize the accuracy of the method(s) in reflecting the actual status
of air quality during each time period associated with applicable
standards;

Conform to the Act, Federal PSD rules, and other applicable laws and
rules;

Ensure consistency between emissions calculation methods used for
sources in the baseline emissions inventory and the current emissions
inventory;

Ensure that selected methods are practical given the availability of
reviewing authority access to the emissions data;

Support fairness and consistency in how emissions are calculated for
various source types across and within States; and

Support key air quality management objectives that States and EPA are
seeking to achieve, such as encouraging sources’ use of CEMS and
discouraging sources from seeking more permitted air quality increment
than they need.

	EPA requests comment on WESTAR’s proposed approach.    For more
information, EPA encourages you to review the WESTAR recommendations
which can be found in the docket for this rulemaking.  We also request
comment on any other aspect of selecting data and calculation
methodologies for emissions inventories for PSD analyses.

  SEQ CHAPTER \h \r 1 2.	Time Period of Emissions Used to Model
Pollutant Concentrations

	In this action, we are also proposing amendments to clarify the time
periods to be used for emissions from sources included in the
calculation of the baseline concentration and the change in
concentration after the baseline date.  In general, EPA has called for
the modeling change in concentration to be based on the emissions rates
from increment consuming sources over the 2 years immediately preceding
a particular date.  However, there are circumstances when another period
of time may be more representative of actual emissions as of a
particular date.  This rulemaking is intended to clarify those
circumstances when it is permissible to use another period of time to
represent actual emissions as of a particular date for purposes of
calculating the change in concentration used to evaluate consumption of
PSD increments.

Background.  Since source operations are inherently variable over time,
EPA’s regulations do not require that “actual emissions” on a
particular date be based only on the emissions occurring on that single
date.  Instead, EPA regulations generally require that the baseline
concentration be based on an average of the emissions observed over the
2 years prior to the baseline date (40 CFR 51.166(b)(21)(ii); 40 CFR
52.21(b)(21)(ii)).  However, EPA has long recognized an exception to
this general rule which provides that a different period of time may be
used when another period of time is more representative of normal source
operations (40 CFR 51.166(b)(13) and (21)).

	EPA’s definition of actual emissions has been used in several
different ways under the NSR program.  In addition to being incorporated
in the definition of “baseline concentration” and thus used for
purposes of determining consumption of increment, this definition of
“actual emissions” has also been applied for the purpose of
identifying the change in emissions attributable to the modification of
a major source.  An existing major source is subject to NSR if it
engages in a major modification which is defined to mean “any physical
change in or change in the method of operation of a major stationary
source that would result in a significant emissions increase … and a
significant net emissions increase of that pollutant from the major
stationary source.”  See 40 CFR 51.166(b)(2) and 52.21(b)(2).  Prior
to 2002, the definition of “actual emissions” in 40 CFR
51.166(b)(21) and 52.21(b)(21) applied to determine the actual emissions
of the source prior to the change and after the change.

	In 2002, EPA adopted a new definition of “baseline actual
emissions” that is now used to determine actual emissions before a
change for purposes of determining whether a source is proposing a major
modification that requires a preconstruction permit.  This definition
allows non-utility units to identify pre-change emissions using any
2-year period in the 10 years preceding and requires electric utilities
to use any consecutive 2 years in the last 5 years.  The EPA adopted
this new definition to reflect the emissions levels that occur during a
normal business cycle, without requiring sources to demonstrate to the
reviewing authority that another period is more representative of normal
source operation.  See 67 FR 80191-92.  However, in that rulemaking, we
made clear that original “actual emissions” definition continues to
apply for other purposes under the PSD program.  The EPA observed that
the existing definition of actual emissions “continues to be
appropriate under the pre-existing regulation and for other NSR
purposes, such as determining a source’s ambient impact against the
PSD increments, and we continue to require its use for such purposes.”
 See 67 FR 80192, footnote 13; 67 FR 80196.

	Prior to 2002, when determining the baseline actual emissions at a
source experiencing a modification that might trigger NSR, EPA applied
the “more representative of normal source operations” exception in
§§51.666(b)(21) and 52.21(b)(21) in a narrow set of circumstances.
For example, in 1999, the Administrator addressed this issue in response
to a petition to object to issuance of a title V operating permit and
observed that EPA “has applied its discretion narrowly in assigning
representative periods other than the two years immediately preceding
the physical or operational change.”  See Order Responding to
Petitioner’s Request That Administrator Object to Issuance of State
Operating Permit, In the Matter of Monroe Electric Generating Plant
Entergy Louisiana, Petition No. 6-99-2.  [Get Date.] In a draft 1990
guidance document, the agency observed that normal source operations
“may be affected by strikes, retooling, major industrial accidents,
and other catastrophic occurrences.”  NSR Workshop Manual at A.39.
Based on these examples, EPA has sometimes looked for evidence of a
“catastrophic occurrence” before permitting an alternative period to
be used to establish the actual emissions of a source prior to a
modification.  For example, in a 1992 memorandum, the Director of the
Air Quality Management Division concluded that the exception should not
be invoked for a source that had been idle for 10 years due to economic
reasons and had not demonstrated that operations of the plant were
disrupted by catastrophic occurrences or other extraordinary
circumstances.  The director identified strikes and major industrial
accidents as examples of catastrophic occurrences.   Memo from John
Calcagni, AQMD, to David Kee, Region V (August 11, 1992).  Although EPA
has, in its discretion, applied the definition in 40 CFR 51.166(b)(21)
and 52.21(b)(21) narrowly, EPA did not amend these regulations to
restrict application of the “normal source operation” exception in
the definition of “actual emissions” to only catastrophic
occurrences.  In recent years, EPA has moved away from this approach.

	In the process of establishing the new definition of “baseline actual
emissions” for applicability purposes, EPA observed that the more
representative or normal source operation provision “has been a source
of confusion and uneven implementation.”  See 61 FR 38259, July 23,
1996.  This observation was based on EPA’s experience with identifying
increases in emissions for purposes of determining whether a source was
proposing to undergo a major modification and required a permit.  The
EPA was not concerned at that time about the application of this
exception in the context of the PSD increment analysis.  However, EPA
has since discovered that the legacy of implementing the “normal
source operation” exception in the context of NSR applicability has
had a collateral effect of fostering confusion in those circumstances,
such as PSD increment analyses, where the “actual emissions”
definition in §§51.166(b)(21) and 52.21(b)(21) continues to apply.
Recently, the question has arisen as to whether the guidance EPA
provided on the “more representative of normal source operations”
exception in the applicability context should also be applied in the
context of increment consumption analysis.  As a result of this dispute,
EPA has been reviewing the issue, and proposes to clarify its position
in this rulemaking.

EPA’s Proposed Amendments.  In this action, we are proposing to
establish a new definition of “actual emissions” (applicable only to
the increment consumption analysis) which clarifies the circumstances
when it is permissible, in the context of an increment consumption
analysis, to determine actual emissions for increment consuming sources
using a period of time other than the 2 years immediately preceding the
relevant date.  We propose to codify this element of the new definition
in 40 CFR 51.166(f)(1)(iv) and 52.21(f)(1)(iv) of the PSD regulations.

	This issue has arisen most recently in the context of determining the
actual emissions of sources as of the baseline date.  However, EPA
recognizes that this issue could also arise when seeking to establish
the “present day” inventory of emissions increases or decreases
after the baseline date.  Under existing regulations, the same
definition of actual emissions applies in each instance.  Our proposed
definition of “actual emissions” for the increment consumption
analysis is intended to apply to both sides of the ledger in order to
provide consistency.  The EPA believes the same principles should apply
when determining emissions as of the baseline date and the present day.

	The EPA’s revisions are intended to address three primary issues.
First, EPA proposes to clarify that one is not required to demonstrate
the occurrence of a catastrophic event in order to determine actual
emissions on the basis of a period other than the 2 years immediately
preceding the date in question.  Second, EPA seeks to clarify that there
can be circumstances where emissions increases occurring after the
baseline date or due to increases in hours of operation of capacity
utilization may be more representative of normal source operation.
Third, EPA is clarifying that a representative time period other than
the 2 years before the particular date must be representative of source
emissions (within an expected range of variability) as of the particular
date and cannot be based on emissions experienced because of a change in
the normal operations of that source after that date.

	With respect to the first issue (whether a “catastrophic
occurrence” must be shown), EPA has historically approached the
“normal source operation” exception differently in the context of
the PSD increment analysis.  The guidance in which EPA has looked for
evidence of “catastrophic occurrences” only addressed the subject of
baseline actual emissions prior to a modification and did not discuss
how to determine the emissions of sources on the PSD baseline date for
increment purposes.  As discussed further below, in the context of the
PSD baseline concentration, EPA has not previously limited the
application of the “normal source operation” exception to those
circumstances where a source experienced a malfunction or catastrophic
event.  In the context of increments, EPA has recognized that the
“normal source operation” exception may apply in other kinds of
circumstances where it can be shown that source emissions in the
24 months preceding the baseline date are not representative of its
normal operations at the time of the baseline date.

	The EPA does not believe it is appropriate to define “actual
emissions” as narrowly in the context of PSD increment consumption
analysis as it had been applied in the context of PSD applicability
determinations before 2002.  Although EPA has looked for evidence of
“catastrophic occurrences” to establish that another time period is
more representative of actual emissions prior to a modification, we do
not believe this fact alone justifies using a similar approach for
identifying representative periods of actual emissions in the context of
a PSD increment analysis.  The modification context in which this
approach was once used is different from the increment consumption
context.  The former involves the initial determination of whether a PSD
permit is required, and evaluates only an increase in emissions from a
single source resulting from a proposed change.  By contrast, an
increment compliance assessment is performed after it is clearly
established that a source must obtain a PSD permit (or may be done in a
periodic review when no permit is pending) and evaluates a change in air
pollutant concentration using modeling and emissions data inputs for
multiple sources.  The EPA believes the differing nature of the
increments analysis justifies a different approach.

	The EPA’s proposal to sometimes allow emissions after the baseline
date to be used to calculate the baseline concentration is consistent
with our historic interpretation of the “normal source operation”
exception in the context of the increment consumption analysis.  In our
original PSD regulations after the 1977 Amendments to the Act, EPA
considered emissions increases attributable to increases in hours of
operation or capacity utilization to be a part of the baseline
concentration (rather than increment consuming increases) if the source
was allowed to operate at that level in 1977 and could have reasonably
been expected to make those increases at the that time.  See 43 FR
26400, June 19, 1978 (emphasis added).  However, in 1980, EPA eliminated
the automatic inclusion of these emissions in the baseline
concentration.  Instead, EPA chose to address the issue on a
case-by-case basis when it could be demonstrated that emissions
attributable to increased utilization were more representative of normal
source operation under the definition of “actual emissions.”  When
EPA adopted this change, we said that “if a source can demonstrate
that its operation after the baseline date is more representative of
normal source operation than its operation preceding the baseline date,
the definition of actual emissions allows the reviewing authority to use
the more representative period to calculate the source’s actual
emissions contribution to the baseline concentration.”  See 45 FR
52714, Aug. 7, 1980 (emphasis added).  The EPA continues to view this to
be an appropriate policy and proposes regulatory language to make this
explicit in the regulations.

	Identifying “actual emissions” based on representative emissions as
of the PSD baseline date is consistent with the opinion of the D.C.
Circuit in the Alabama Power case.  In that decision, the court noted
the following:

Congress did not intend a simple measurement of air quality on a day
with atypical conditions to control calculation of the baseline.
Reasonable efforts to ascertain the actual but usual concentration
levels, as of the date of the first applicable for a permit, are
required.

See Alabama Power, 636 F.2d at 380 n. 44.  The EPA believes that the
proposed definition of “actual emissions” for increment consumption
purposes is consistent with Congressional intent, as describe by the
court.  It is reasonable to allow a showing that a period other than the
24 months prior to the baseline date are representative of the
“usual” concentration levels at the time of the baseline date where
emissions after the baseline date can be shown to  represent the
“usual” or “normal” concentration levels.  As observed by the
court in Alabama Power, “Congress expected EPA to use
‘administrative good sense’ in establishing the baseline and
calculating exceedances.”  See Alabama Power, 636 F.2d at 380.  The
EPA has considered this approach to make good sense since 1980.
Although emissions after a baseline date may sometimes be reflected in
the baseline concentration, this has historically been a narrow
exception because, in general, increases in emissions that occur after
the baseline date consume increment.  See 40 CFR 51.166(b)(13) and
52.21(b)(13); see also draft NSR Manual at C.35 and C.48.

	While EPA proposes to clarify that emissions after the baseline date
may sometimes be used to represent actual emissions as of the baseline
date, we must also emphasize that this is permissible only in limited
circumstances.  We propose to include language in our new definition
that limits the circumstances under which post-baseline date emissions
can be considered representative of normal source operations for
purposes of establishing the baseline concentration.  Such a limitation
is needed to ensure that the increment system continues to function as
intended to prevent significant deterioration from actual increases in
emissions after the baseline concentration is established.  The EPA
seeks to ensure that real increases in emissions that are outside of a
normal range of variability will continue to be regarded as consuming
increment, while recognizing that due to the normal variability in
source operations, some apparent increases in emissions are justifiably
included in the baseline where they are representative of the emissions
experienced by a source as of the baseline date.  The EPA believes that
increases in emissions that are not attributable to the normal
variability of source operations at a particular time are actual
increases that should be counted as consuming the available increment.

	Under the Act and applicable case law, it is clear that the emissions
that make up the baseline concentration must be representative of air
pollutant concentration levels at the time of the baseline date.
Section 169(4) of the Act defines baseline concentration as the
“ambient air concentration levels which exist at the time of the first
application for a permit.”  See 42 U.S.C. § 7479(4).  In the Alabama
Power decision, the court observed that the baseline concentration is
tied to first permit application because Congress intended permitting
authorities to use actual data to establish baseline or make permit
applicants collect data at the appropriate time.  See 636 F.2d at
375-76.  In its regulation defining baseline concentration, EPA has
required a baseline concentration to be based on “actual emissions ...
representative of sources in existence on applicable minor source
baseline date.”  See 40 CFR 51.166(b)(13)(i)(a).

	EPA’s proposed approach should not be construed to permit emissions
estimates as of the baseline date to be based on operations over the
entire life of a source or a period of operations that is not
representative of operations as of a particular date.  Actual emissions
as of particular date must be representative of normal operations (which
include an expected range of variability) during the applicable time
period.  For example, when estimating sulfur dioxide emissions from a
coal-fired electric generating unit, EPA does not believe it is
appropriate to use the weighted average sulfur content for coal from any
period over the life of the mine supplying the facility.  However, EPA
recognizes that there may be some variability in the sulfur content of
the coal used by a source at the time a baseline date is established.
For example, if the baseline date were some time in the 1970s, EPA
believes it would be appropriate for the emissions from this source be
based on a weighted average sulfur content for coal used by the source
in the 1970s.  However, we would not consider it appropriate for the
source to use a weighted average of sulfur content from coal used in the
1990s to represent the composition of coal combusted in the 1970s,
unless it can be shown that the composition of coal in used the 1990s is
in fact representative of the coal the source actually used in the
1970s.  The EPA’s intent is to revise its regulation to codify the
approach reflected in our Memorandum of Understanding with North Dakota
which calls for using the sulfur content of coal consumed during a
unit’s baseline normal source operations, rather than the sulfur
content averaged over the entire life of a mine or any period of
operations in the life of the source that is not representative of
operations on a particular date.

	This approach is consistent with language in the existing definition of
“actual emissions,” which provides that “[a]ctual 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.”  See 40 CFR 51.166(b)(21)(ii) and
52.21(b)(21)(ii).  The selected time period under this provision should
be either the 24 months before the particular date or an alternative
period that is shown to be more representative.

	In order to ensure consistent measurement of increases in air pollutant
concentration, EPA believes it is also appropriate to also apply the
“normal source operation” exception in the context of the emissions
inventory for the present day period.  As applied to the present day
inventory of emissions, if a source experiences lower than normal
emissions in the 2 years preceding the periodic review, more
representative emissions should also be used in the present day
inventory to avoid undercounting actual emissions increases.

	  SEQ CHAPTER \h \r 1 3.	Actual Emissions Rates Used to Model
Short-Term Increment Compliance

	The EPA also proposes in this rule to clarify how one should derive
source emissions rates of less than 1 year for sources contributing to
the baseline concentration and increment consumption when evaluating
compliance with the short-term (24-hour and 3-hour) increments for
particulate matter and sulfur dioxide.  Increments for a 24-hour
averaging time are currently in place for both particulate matter and
sulfur dioxide.  The 3-hour averaging time is only used for the sulfur
dioxide increments.  Based on recent experience and the recommendations
of WESTAR, EPA believes the agency needs to provide additional guidance
to States and regulated entities concerning how to determine actual
emissions for purposes of modeling the concentration changes over the
3-hour and 24-hour averaging times.

Background.  The EPA’s definition of actual emissions in 40 CFR
51.166(b)(21) and 52.21(b)(21) does not directly address how one is to
determine actual emissions when modeling pollutant concentrations
averaged over periods less than 1 full year.  Under the current
provision, actual emissions are identified using an annual average in
tons per year.  However, this section does not directly address how to
determine actual emissions over shorter time periods, such as the
24-hour or 3-hour averaging times that are used for the some of the PSD
increments.

	In draft guidance that EPA prepared in 1990, the Agency recommended
that sources and reviewing authorities use the “maximum actual
emissions rate” for short-term averaging periods.  See draft NSR
Manual at C.49.  The EPA indicated that “the maximum rate is the
highest occurrence for that averaging period during the previous
2 years of operation.”  Id.  The Agency recommended using this
maximum rate for both the current and the baseline time periods.  Id.
This was consistent with guidance that had been provided by at least one
EPA Regional Office as far back as 1981.  See Memorandum from Thomas W.
Devine, Region IV, to State and Local Air Directors, “Policy
Determinations Regarding PSD Questions” (July 31, 1981).

	In practice, however, EPA has since come to recognize that there is
often not sufficient data available to determine the maximum short term
emissions rate over a 2-year period.  This type of determination will
typically require CEMS.  For PSD baseline dates established in the 1970s
and 1980s, this data is especially difficult to find.  As a result of
this difficulty, some States and EPA Regional Offices have allowed
calculation of an average short-term rate using an average rate
calculated from annual emissions in situations where short-term maximum
actual emissions data are not available.

Proposed Amendments to Regulations.  The EPA proposes to promulgate a
new definition of “actual emissions” applicable to the PSD increment
analysis that specifically addresses how to derive short-term emissions
rates when modeling the change in concentration for the 24-hour and
3-hour averaging periods used in increments for some pollutants.  We
propose to add a provision that allows permitting authorities to use
their discretion to use data that promotes consistency in the analysis
and does not bias the analysis in favor of one group of sources over
another.  under this approach, an average short-term rate may be used if
the reviewing authority finds this to be the best way to promote
consistency and avoid bias.  Maximum short term-rates may continue to be
used where sufficient date are available, but need not be used in all
circumstances.

	Although we have historically called for use of maximum short-term
rates, more experience indicates that the modeled change in
concentration may be less accurate when increment consumption modeling
is based on maximum emissions rates from all sources that consume
increment.  In EPA’s experience, it is unusual for increment-consuming
sources to all be operating at their maximum short-term emissions rates
at exactly the same time.  If EPA were to require the use of maximum
emissions rates in all instances, this would mandate that PSD modeling
always be conducted using an unrealistic circumstance.  As the court
said in Alabama Power, EPA should use “reasonable efforts to ascertain
the actual but usual concentration levels” and “administrative good
sense in establishing the baseline and calculating exceedances.”  See
Alabama Power, 636 F.2d at 380, 380 n.44.  Since it is unusual for all
increment consuming sources to all be operating at their maximum
emissions rates at the same time, the Agency believes that
“administrative good sense” dictates that EPA permit average
emissions rates to be used as well.  However, EPA is not proposing to
preclude use of a maximum rate where a reviewing authority or source
wishes to conduct a more conservative screening analysis or considers a
maximum rate more appropriate under the circumstances for all sources or
just for certain sources in the inventory.

	In many cases, combining the average emissions rates of all increment
consuming sources in an emissions inventory may produce a more
representative picture of the actual pollution concentration over a
short-term period.  Although some sources may be operating at higher or
lower rates for any given short-term period, other sources will be
experiencing variability in their short-term emissions as well.  The
variability of one source will likely offset the variability in
emissions at other sources.  When average short-term rates are used in a
dispersion model in conjunction with emissions from multiple sources,
the use of an average emissions rate for one source will not necessarily
mask the peak short-term concentrations of pollutants that are actually
in the ambient air.

	In addition, fairness also dictates that EPA allow use of average
short-term emissions rates and not require use of maximum emission rates
in all cases.  If maximum emissions rates may be used when data are
available but averages are used when the data are insufficient, the
analysis may be biased against the sources that have maximum emissions
rate data.  The EPA wants to encourage the use of CEMS that have shown
to be reliable and wants to avoid a policy that inadvertently
discourages the development and use of CEMS.  Where most sources in an
area are using CEMS to track emissions, the maximum rate approach may be
more equitable, but this may not be case in all areas.  Thus, EPA
proposes to give the reviewing authority discretion to use available
data and to achieve equitable treatment across sources and consistency
in the analysis.

	The EPA believes a more representative picture of the change in
emissions can be produced by using a consistent set of data.  If actual
short-term emissions rate or hourly operations data are only available
from some sources in an inventory, the analysis could be biased by
mixing these data with averages calculated from annual operational data.
 However, if the reviewing authority derives short-term emissions rates
by averaging annual data from all sources in the inventory, this may
provide a representative depiction of the change in emissions over time.
 Likewise, if reliable and consistent maximum or short-term rate data
are available for all sources in the inventory, this could provide a
representative assessment of the change in maximum rates over time.  The
EPA is proposing to establish a standard that allows sources to select a
consistent data set and to otherwise forgo using some maximum or actual
short-term data that may be available, but is incomplete and would
potentially bias the overall analysis when combined with data of a
different type that must be used to complete the assessment.  At the
same time, we are not proposing to preclude reviewing authorities from
mixing data of different types where they consider it appropriate and
this technique produces a representative analysis.	Request for Comment
on WESTAR recommendations.  As part of its general approach of
establishing a menu of available data and calculation methodologies,
WESTAR has recommended that EPA establish a more extensive list of
permissible data sources and methods for determining short-term
emissions rates.  For calculating short-term actual emission rates where