require the state to perform air quality modeling in order to evaluate,
for each of the various source categories included in the emissions
inventory for the area, the impact on PM2.5 concentrations
in excess of the applicable NAAQS in order to determine which
categories are significant for the purposes of adopting MSM. Those
source categories for which such modeling indicates potential control
measures collectively would have only a de minimis effect on advancing
the attainment date for the area could be eliminated from further
consideration. In the context of the EPA's action to approve the
Maricopa County PM10 Serious area attainment plan and
attainment date extension request, the agency finalized an approach for
judging what constitutes a de minimis source category for MSM by
applying a test of whether MSM controls on the allegedly de minimis
sources would result in more expeditious attainment, rather than
applying a test of whether or not requiring the application of controls
for such sources would make the difference between attainment and
nonattainment by the statutory Serious area deadline, as the latter
test implicitly would be met through the controls chosen for
demonstrating attainment by the alternate attainment date for the area.
In the agency's explanation of the proposed approach, the EPA explained
that ``Our responsibility under section 188(e) . . . is to grant the
shortest practicable extension of the attainment date by assuring the
plan provides for attainment as expeditiously as practicable. Thus, one
means of determining an appropriate de minimis level is to determine if
applying MSM to the proposed de minimis source categories would
meaningfully expedite attainment. If it did, then the de minimis level
is too high, and if it did not, then the de minimis level is
appropriate.'' \216\ The EPA thus proposes to determine whether any
source categories should be eliminated from MSM controls through a de
minimis exemption based on a demonstration that collectively applying
MSM controls to such source categories would not advance attainment of
the NAAQS in the area by at least 1 year. This test would presumably
result in a more stringent threshold for what is considered a de
minimis source category for MSM as compared to the threshold for de
minimis source categories for BACM and BACT as described in the EPA's
proposed Option 1 for BACM and BACT determination criteria (see Section
VI.D of this preamble). The EPA proposes and seeks comment on this test
for determining whether any source categories could be found to be de
minimis and thus not subject to MSM controls.
---------------------------------------------------------------------------

    \216\ Maricopa County PM10 Serious area attainment
date extension proposal, 65 FR 19964
    (April 13, 2000), at page 19969.
---------------------------------------------------------------------------

    The third step in the EPA's first proposed approach to determining
MSM for a Serious nonattainment area would involve identifying the
potentially most stringent measures in other implementation plans for
PM2.5 or other NAAQS, or used in practice in other states
for controlling emissions from each of the remaining source categories
listed in the emissions inventory that were not determined to be de
minimis. For each measure, the state would be required to determine its
technological and economic feasibility for sources in the area. The EPA
proposes generally to apply more stringent criteria for determining the
feasibility of potential MSM than that described for BACM and BACT in
Section VI.D. In some situations, MSM could involve increasing the
coverage of measures that were already adopted and implemented as BACM
and BACT (for example, changing out an even greater percentage of
woodstoves in an area, or paving even more roads, if such source
categories were major contributors to the air quality problem in the
nonattainment area).
    However, because BACM and BACT represent the ``best'' level of
control feasible for an area, it would be possible for the MSM
requirement to result in no more controls and no more emissions
reductions in an area than result from the implementation of BACM and
BACT. Stated another way, there may be sources or categories for which
no other feasible controls exist beyond what a state has already
adopted as BACM or BACT. Given the strategy in the nonattainment
provisions of the CAA to offset longer attainment timeframes with more
stringent control requirements, the EPA therefore proposes to interpret
the MSM provision in order to increase the potential that it will
result in additional controls beyond the set of measures adopted as
BACM and BACT by requiring a state to reanalyze any measures that were
rejected during the state's BACM and BACT analysis for the area to see
if they are now feasible for the area given the potentially longer
attainment date (up to 5 years after the statutory Serious area
attainment date) or given the changes that have occurred in the interim
that improve the feasibility of previously rejected measures.
    The fourth step of this first proposed approach would require the
state to compare the potential MSM for each non-de minimis source
category against the measures, if any, already adopted for that source
category in the Serious nonattainment area to determine if such MSM
would provide any additional reductions.
    The fifth step would then require that the plan provide for the
adoption and expeditious implementation of any MSM that is more
stringent than existing measures or, in lieu of adoption, provide a
reasoned justification for rejecting the potential MSM, i.e., provide
an explanation as to why such measures cannot be feasibly implemented
in the area.

    As noted earlier, the EPA expects that this first proposed approach
to determining MSM would be most compatible with the agency's proposed
Option 2 for determining BACM and BACT, described in Section VI.D.
Under proposed Option 2 for BACM and BACT determinations, a state would
be required to implement only those ``best'' control measures necessary
to bring a Serious nonattainment area into attainment expeditiously.
Such an approach to BACM and BACT determinations would not incorporate
an explicit step in the process for a state to exempt de minimis source
categories from consideration for potential control measures. However,
it would allow a state to eliminate any potential BACM or BACT or
additional feasible measures that are not needed to bring a Serious
area into attainment by the statutory attainment date and that cannot,
collectively, advance the attainment date for the area by at least 1
year. Proposed Option 2 for determining BACM and BACT for an area is
thus similar to the proposed approach to MSM described above, in which
a state could eliminate from further consideration those source
categories for which potential control measures collectively would have
only a de minimis effect on advancing the attainment date for the area
(see proposed step 2).
    The EPA's proposed Option 1 for BACM and BACT determinations would
include an explicit step in the process for exempting de minimis source
categories from further consideration for potential control measures.
However, under such approach, a state would need to assess whether
emissions of a particular pollutant from a given source category
contributed significantly to PM2.5 concentrations in the
nonattainment area. If the state determined that the source category
contributed only a de minimis amount of emissions, then the state could
exempt the source category from further consideration for potential
control measures. Thus, while it incorporates a step to identify de
minimis source categories, the EPA's proposed Option 1 for BACM and
BACT determinations is not wholly consistent with the agency's proposed
approach #1 for determining MSM.
    Therefore, the EPA is also proposing an alternative approach for
determining MSM for a Serious nonattainment area that would be more
compatible with the EPA's proposed approach #1 for determining BACM and
BACT. Under this alternative proposed approach for determining MSM, a
state could exempt de minimis source categories from further
consideration, but de minimis source categories would be identified by
virtue of their lack of significant contribution to PM2.5
levels in the area, not by virtue of whether controlling such sources
categories collectively could expedite attainment of the relevant
NAAQS. In this way, de minimis source categories for MSM would be
defined in a similar way, or subject to a similar ``significant
contribution'' test, as de minimis source categories for BACM and BACT
determinations under proposed Option 1. Thus under proposed approach #2
for MSM, the steps described for determining MSM would generally be the
same as under proposed approach #1, with the exception of step 2.
Rather, the EPA proposes an alternative step 2 in the MSM determination
process in which a state could identify de minimis source categories to
exempt from further control based on an analysis of the particular
contribution made by a given source category to ambient
PM2.5 levels in the nonattainment area. The EPA believes
that defining de minimis source categories and ``significant
contribution'' for determining de minimis source categories would be
equally challenging in the context of MSM determinations as in the
context of BACM and BACT determinations.\217\ However, in the event the
agency finalizes proposed Option 1 for BACM and BACT determinations,
the EPA believes it would be appropriate to finalize proposed approach
#2 for MSM, and would require that a state seeking to exempt from MSM
sources in a given source category apply more stringent criteria for
evaluating whether a certain source category's contributions to the
area's PM2.5 concentrations are indeed de minimis.
---------------------------------------------------------------------------

    \217\ See the discussion of de minimis source categories in
Section VI.D in this preamble.
---------------------------------------------------------------------------

    The EPA believes that either of these proposed approaches for
determining MSM for a Serious nonattainment area would be consistent
with the EPA's guidance in the Addendum to define MSM as those measures
that can ``feasibly be implemented in the relevant area from among
those which are either included in any other SIP or have been achieved
in practice by any other state.'' One of the key features of this
guidance relates to identifying control measures implemented elsewhere,
which is also a key feature of the EPA's proposed process for
identifying RACM and RACT and additional reasonable measures (and BACM
and BACT and additional feasible measures, if necessary) for a
PM2.5 nonattainment area. For these processes, the EPA is
proposing that a state identify potential measures for consideration as
RACM or RACT or additional reasonable measures (or BACM or BACT or
additional feasible measures) by looking at measures implemented by
other states to meet PM2.5 NAAQS or other NAAQS. Thus, a
state seeking to identify MSM should be able to start its process using
with the work already undertaken for the nonattainment area's RACM and
BACM determinations and to make updates to the list of potential
control measures accordingly.
    The EPA notes that section 188(e) does not identify a deadline for
a state to implement MSM, while elsewhere the statute establishes a
deadline for implementing RACM and RACT and BACM and BACT (see CAA
sections 189(a)(1)(C) and 189(b)(1)(A), respectively). However, because
the clear intent of section 188(e) is to minimize the length of a
Serious area attainment date extension, the EPA proposes that the
implementation of MSM must be as expeditious as practicable but no
later than 1 year prior to the alternative Serious area attainment date
identified by the state in its extension request.
    The EPA seeks comment on whether the two proposed approaches to
determine MSM are sufficiently consistent with the agency's respective
proposed approaches to BACM and BACT determination. The agency also
seeks comment on whether considerations regarding its MSM approach
should influence the final selection of a BACM and BACT approach.
    Step 4: Demonstrate attainment by the most expeditious alternative
date practicable. Section 189(b)(1)(A) requires that a Serious area
plan demonstrate attainment, using air quality modeling, by the most
expeditious date practicable after the statutory Serious area
attainment date. This demonstration is the final criterion that must be
met before the EPA may consider granting an extension. The agency's
determination of whether the plan provides for attainment by the most
expeditious date practicable would depend on whether the plan provides
for implementation of BACM and BACT by the statutory implementation
deadline and MSM as expeditiously as practicable. In no case would a
state be able to seek an extension of a Serious area attainment date to
a date more than 5 years past the statutory attainment date for Serious
areas. Section VI.E of this preamble describes the EPA's proposed
requirements for attainment

demonstration modeling for Serious area attainment plans.
    Step 5: Apply for an attainment date extension. The state would
have to apply to the EPA for any extension of a Serious area attainment
date. The request would have to accompany an attainment plan submission
containing an attainment demonstration showing attainment by the most
expeditious alternative date practicable, and the state would need to
submit modeling as part of the attainment demonstration in accordance
with Section VI.E. Furthermore, the state would have to provide the
public reasonable notice and a public hearing on the attainment date
extension request before submitting it to the EPA, as the EPA would
consider it an integral part of the attainment demonstration and part
of the revised SIP submission which is subject to the requirements of
the CAA and federal regulations for public notice and hearing on SIP
revisions.
3. Timing of Extension Request Submittal
    The EPA believes that a state may submit a request for an extension
of the Serious area attainment date either at the time the original
Serious area attainment plan is submitted following reclassification of
the area or at a point in time closer to the Serious area attainment
date. In the first case, when taken together with language under
section 189(b)(1)(A)(ii) which describes the possibility of including
an impracticability demonstration in a Serious area attainment plan
that parallels the impracticability demonstration for a Moderate area
attainment plan, section 188(e) appears to set an expectation that a
state may request an extension of the attainment date for a Serious
area when the state initially submits its Serious area plan. Therefore,
the EPA would deem such a request as timely and appropriate.
    On the other hand, the EPA also recognizes that a state may prepare
and fully implement a timely Serious area plan that includes modeling
demonstrating attainment no later than the statutory Serious area
attainment date (the end of the tenth calendar year following
designation), and yet may see as the attainment date nears that the
Serious area will in fact fail to attain by its projected attainment
date. While the statute provides a remedy to be instituted immediately
upon failure of a Serious area to attain the standard (through
contingency measures and other measures stipulated in section 189(d)),
the EPA also believes that the criteria of section 188(e) could be
applied after a state submits a Serious area attainment plan but prior
to the area failing to attain, as long as the area had not already been
granted a prior Serious area attainment date extension under section
188(e). In such a case, the EPA believes that it would be acceptable
for a state to submit a Serious area attainment date extension request
similar to that described above (for submissions made simultaneous with
initial Serious area attainment plans) together with a new Serious area
attainment plan meeting all of the statutory requirements that apply to
such plans. In this case, the complete submission would have to be made
in a timely way such that the EPA could fully review the new attainment
plan for the area and the accompanying attainment date extension
request, including the status of compliance with all requirements and
commitments in the Moderate area attainment plan for the area, the
justification for the selection of the alternate attainment date, and
provisions for the implementation of MSM, prior to making its
determination of failure of the area to timely attain the relevant
NAAQS.
    The EPA seeks comment on this option, particularly with respect to
whether the criteria proposed above are appropriate in a situation in
which a state seeks a Serious area attainment date extension after
submitting a Serious area attainment plan that initially demonstrated
attainment by the statutory Serious area attainment date. For example,
the EPA seeks comment in particular on whether it would be appropriate
to interpret the section 188(e) requirement for a state to have
``complied with all requirements and commitments pertaining to that
area in the implementation plan'' as referencing those requirements and
commitments contained in the area's Moderate area plan (as proposed
above for areas seeking a Serious area attainment date extension
simultaneous with submittal of their Serious area plan) or whether, for
areas that already submitted Serious area plans demonstrating
attainment, it is more appropriate that the state must have complied
with all requirements and commitments pertaining to the area in the
area's original Serious area attainment plan. The EPA believes this
second interpretation is the more appropriate interpretation as it
pertains to Serious areas seeking an extension of their attainment date
as they approach their statutory Serious area attainment date, and
therefore the agency is proposing and seeking comment on this approach.
The EPA believes that this second interpretation is especially
preferable if the EPA finalizes its proposal that interprets the SIP
compliance requirement for areas seeking an attainment date extension
simultaneous with their Serious area attainment plan submittal to mean
that the state need only have implemented the control measures in the
SIP revisions it has submitted to the EPA to address the CAA
requirements in section 189 (i.e., to mean that the area need not have
a fully approved attainment plan that meets the CAA's requirements for
Serious areas).
    The EPA seeks comment on these proposed options for interpreting
and implementing the statutory language at section 188(e) for Serious
area attainment date extensions.

VII. What are the EPA's proposed requirements for attainment plans
under CAA section 189(d) for Serious areas that fail to attain the
NAAQS by the applicable attainment date?

    In the event that a Serious area fails to attain the
PM2.5 NAAQS by the applicable attainment date, section
189(d) requires that ``the state in which such area is located shall,
after notice and opportunity for public comment, submit within 12
months after the applicable attainment date, plan revisions which
provide for attainment of the . . . standard and, from the date of such
submission until attainment, for an annual reduction in PM10
or PM10 precursor emissions within the area of not less than
5 percent of the amount of such emissions as reported in the most
recent inventory prepared for such area.''
    A state with a Serious nonattainment area subject to section 189(d)
must submit to the EPA its plan to meet the requirements of section
189(d) in the form of a complete attainment plan submission that
contains the following elements: (i) An attainment demonstration and
provisions for the implementation of measures that will achieve annual
emissions reductions of not less than 5 percent from the most recent
emissions inventory for the area for each year until attainment
(section 189(d)); (ii) quantitative milestones that will be used to
measure compliance with the RFP requirement (section 189(c)); and,
(iii) regulation of PM2.5 precursors (in general to meet
attainment and control strategy requirements and as specifically
required for major stationary sources by section 189(e)). Subpart 1
requirements that apply to Serious PM2.5 nonattainment areas
also subject to the requirements of section 189(d) include the
following: (i) A description of the expected annual incremental
reductions

in emissions that will demonstrate RFP (section 172(c)(2)); (ii)
emissions inventories (section 172(c)(3)); and, (iii) contingency
measures (section 172(c)(9)). A state with a Serious PM2.5
nonattainment area that fails to attain the NAAQS by the applicable
Serious area attainment date must also address any statutory
requirements relevant to Moderate nonattainment areas and Serious
nonattainment areas under sections 172 and 189 of the CAA that have not
already been satisfied. In addition, the EPA must approve a new
attainment date for the area under sections 172(a)(2) and 179(d)(3).
    The remainder of this section presents the EPA's proposed
requirements for attainment plan submissions under section 189(d).

A. Plan Due Dates

    Section 189(d) requires a state with a Serious PM10
nonattainment area that failed to attain the NAAQS by the applicable
Serious area attainment date to submit a new attainment plan submission
for the area within 12 months after the missed attainment date.
Therefore a state with a nonattainment area subject to section 189(d)
must submit a new attainment plan for the area--with all required
elements of the attainment plan--within 12 months after the missed
attainment date.

B. Emissions Inventory Requirements

    As with all other attainment plan submissions required for Moderate
and Serious PM2.5 nonattainment areas, a state must develop
its submission to meet section 189(d) based on ``the most recent
emissions inventory prepared for such [nonattainment] area.'' This
inventory must meet the same requirements that would apply to any other
emissions inventory submitted for a PM2.5 nonattainment area
to meet the requirements of section 172(c)(3), which requires ``a
comprehensive, accurate, and current inventory of actual emissions of
the relevant pollutants'' in the nonattainment area. Therefore the EPA
proposes that the inventory submitted with an attainment plan to meet
section 189(d) requirements must also meet the EPA's proposed
regulatory requirements for such emissions inventories as described
earlier in this preamble under Section IV.B (for Moderate area
attainment plans) and Section VI.B (for Serious area attainment plans).
    One important aspect of the emissions inventory required to be
submitted with an attainment plan under section 189(d) is its role as
the basis for calculating the emissions reductions of direct
PM2.5 and PM2.5 precursors necessary to satisfy
the 5 percent annual reduction criteria of section 189(d). For this
reason, the EPA proposes that the ``most recent inventory'' for the
area must not only meet the criteria as that described for a base year
inventory submitted pursuant to section 172(c)(3) and in Section VI.B
of this preamble, but also must fully account for emissions reductions
achieved to date through the implementation of all RACM and RACT, BACM
and BACT and additional reasonable and feasible measures submitted with
the Moderate and original Serious area attainment plans for the area.
In this way, the state will calculate the additional reductions that
the nonattainment area will need beyond those already required in order
to fulfill the requirements of section 189(d) and bring the area into
attainment as expeditiously as practicable.
    In order to ensure that the ``most recent inventory'' is
representative of the nonattainment problem in the area current at the
time of the section 189(d) submission, the EPA proposes that the
inventory year must be one of the 3 years from which monitored data was
used to determine that the area failed to attain the PM2.5
NAAQS by the applicable Serious area attainment date. The EPA believes
that associating the inventory with one of these 3 years is reasonable
in light of the fact that some BACM and BACT controls and additional
feasible controls (required under section 172(c)(6)) for sources in the
area may not be implemented until the beginning of the attainment year.
Thus, requiring that a state use an emissions inventory for one of
those 3 years will help ensure that the inventory adequately captures
the emissions reductions already achieved through the prior
implementation of BACM and BACT and additional feasible measures.
    The EPA recognizes the additional level of effort that may be
needed to produce an up-to-date emissions inventory for a nonattainment
area, and therefore is proposing and seeking comment on an alternative
approach that would allow a state to select an inventory year earlier
than one of the 3 years from which monitored data were used to
determine that the area failed to attain the NAAQS by the applicable
attainment date. Under this alternative proposed approach, another
inventory year may be included in the plan under specific circumstances
with the submission of a written justification for selecting the
earlier year and in consultation with the appropriate EPA Regional
Office. At a minimum, the state would need to demonstrate that the
inventory for the alternative year adequately incorporates emissions
reductions projected to be achieved through the implementation of BACM
and BACT and additional feasible control measures submitted with the
original Serious area attainment plan for the area. The EPA proposes
that modification of an older inventory to incorporate those emissions
reductions would be an acceptable way to meet this requirement. In
considering use of this option, states could be obligated to achieve a
larger annual reduction than 5 percent if the older inventory has
higher emissions levels than the ``most recent inventory'' for the
area.
    The EPA seeks comment on these proposed criteria and options for
emissions inventories to be submitted as part of the attainment plan
due for a Serious area under section 189(d).

C. Pollutants To Be Addressed in the Plan

    Section 189(d) requires states to develop a new attainment plan for
an area that failed to attain by the applicable Serious area attainment
date that provides for ``an annual reduction in PM10 or
PM10 precursor emissions within the area of not less than 5
percent of the amount of such emissions'' reported in the latest
emissions inventory for the area. In Section III of this preamble, the
EPA is proposing several options on how a state may evaluate which
PM2.5 precursors to control for purposes of attaining the
NAAQS in a particular nonattainment area. The EPA interprets the
requirements of the CAA generally to allow an air agency to provide a
``precursor demonstration'' that can support a determination that one
or more precursors need not be subject to control requirements in a
given nonattainment area, even if the area has failed to attain the
relevant NAAQS by the applicable Serious area attainment date.
    Section III presents three options describing different proposed
approaches to such precursor demonstrations, and requests comment on
each. The discussion for each option describes how states and the EPA
should address precursors for Moderate areas and for Serious areas,
including Serious areas that fail to attain the PM2.5 NAAQS
by the applicable attainment date. This section describes, for each of
the three options, how the given precursor approach would apply to
plans required to be submitted where the area has failed to attain by
the Serious area attainment date.
     Option 1: Two independent analyses: (a) An attainment
planning

analysis demonstrating that control measures for a particular precursor
are not needed for expeditious attainment, meaning that the precursor
can be excluded from measures needed to attain as expeditiously as
practicable for all types of sources; and (b) a section 189(e)
technical demonstration showing that major stationary sources of a
particular precursor do not contribute significantly to levels that
exceed the PM2.5 standard, meaning that the precursor can be
excluded from control requirements for major sources and from NNSR
permitting. Consistent with this approach, for an area subject to the
requirements of section 189(d), the state would need to evaluate
control measures to identify those needed to achieve a minimum 5
percent reduction in emissions of direct PM2.5 or precursors
on an annual basis, and identify those control measures for direct
PM2.5 and all precursors that would bring the area into
attainment as expeditiously as practicable.
     Option 2: Single analysis demonstrating that all emissions
of a particular precursor from within the area do not significantly
contribute to PM2.5 levels that exceed the standard, meaning
that control requirements for emissions of the precursor from major
stationary and area sources, as well as mobile sources, would not be
required for expeditious attainment, control requirements for major
sources, or for NNSR permitting. For an area subject to section 189(d)
requirements for which a precursor had previously been demonstrated not
to significantly contribute to PM2.5 levels that exceed the
standard, the air agency would be required to update the precursor
demonstration taking into account any relevant information or technical
tools that had been developed since the demonstration was approved.
Consistent with this approach, if, upon failure to attain, the state
continued to demonstrate that the precursor did not contribute
significantly to PM2.5 concentrations in the area, then the
state would not need to identify or implement any measures to control
that precursor's emissions.
     Option 3: An attainment planning analysis demonstrating
that control measures for all types of sources of a particular
precursor are not needed for expeditious attainment also would be
deemed to meet the section 189(e) technical demonstration requirement,
meaning that the state would not need to regulate emissions of the
particular precursor from major stationary sources under the NNSR
permitting program or other control requirements for major stationary
sources. Consistent with this approach, for an area subject to the
requirements of section 189(d), the state would need to evaluate
control measures to identify those needed to achieve a minimum 5
percent reduction in emissions of direct PM2.5 or precursors
on an annual basis, and identify those control measures for direct
PM2.5 and all precursors that would bring the area into
attainment as expeditiously as practicable.
    The EPA will finalize its approach to PM2.5 precursors
and clarify the implications for states conducting analyses to identify
measures to satisfy the requirements of section 189(d) after
considering public comment received on this proposal.

D. Attainment Plan Control Strategy

    The control strategy to be developed for the attainment plan
submission for a Serious area subject to section 189(d) should place
particular emphasis on control measures that can be implemented
quickly, in order to ensure that the area attains the PM2.5
NAAQS as expeditiously as practicable. The control strategy would need
to include any additional measures that are beyond those already
adopted for the area as RACM and RACT and additional reasonable
measures, or BACM and BACT and additional feasible measures, and that
are necessary to achieve annual reductions in emissions of direct
PM2.5 and PM2.5 precursors from sources in the
area of at least 5 percent of the amount of such emissions reported in
the most recent emissions inventory for the area. The EPA is proposing
to interpret section 189(d) in this way to address the ambiguity of how
the statutory language should apply to the PM2.5 NAAQS, as
section 189(d) requires ``an annual reduction in PM10 or
PM10 precursor emissions . . . as reported in the most
recent inventory prepared for such area.''
1. Proposed Approach
    The EPA believes that in light of the important role that
PM2.5 precursors play in the formation of PM2.5,
it is appropriate to require a state to implement control measures for
all types of sources in a Serious nonattainment area subject to section
189(d) to achieve the requisite 5 percent annual reduction in emissions
of both direct PM2.5 and PM2.5 precursors from
sources in that area. Accordingly, the EPA is proposing that, for
direct PM2.5 and for PM2.5 precursors that the
state and the EPA have determined are necessary to be controlled for
purposes of attainment in the area, the attainment plan required by
section 189(d) would have to include control measures that will achieve
at least 5 percent reductions from the latest emissions inventory of
each such pollutant on an annual basis until the area attains the
relevant PM2.5 NAAQS. The EPA believes this is an
appropriate interpretation of the 5 percent requirement of section
189(d) and seeks comment on this proposed approach.
    The EPA also proposes and seeks comment on an alternative reading
of the statute that would require a state to achieve 5 percent
reductions of inventoried emissions of either direct PM2.5
or of any relevant PM2.5 precursors. This approach, while
consistent with past guidance on how to interpret section 189(d)
requirements for PM10 NAAQS implementation, could
potentially allow a state to delay the implementation of measures to
control the relevant pollutants. However, paired with the requirement
for the area to reach attainment of the NAAQS as expeditiously as
practicable, the EPA believes that such an interpretation may be
reasonable and seeks comment on this approach.
    It is important to note that under implementation of either of the
options presented above, and as described more fully in Section III of
this preamble, the EPA is proposing that in the event that a state has
demonstrated and can continue to demonstrate that emissions of a given
precursor from all sources in a nonattainment area do not contribute
significantly to PM2.5 concentrations in the area, then the
state would not need to achieve 5 percent reductions in emissions of
that precursor even if the nonattainment area becomes subject to the
requirements of section 189(d).
    The statute requires that the requisite minimum 5 percent emissions
reductions must be calculated from the total emissions for each
precursor and for direct PM2.5 contained in the most recent
inventory for the area, as described earlier in this section. In
addition, the EPA proposes that these required reductions must then be
achieved every year between the section 189(d) plan submission date and
the new projected attainment date for the area. For example, assume it
is 2025, and a Serious area has failed to attain the 2012
PM2.5 NAAQS within 10 years of designation. Assume also that
the most recent inventory available for an area subject to section
189(d) is for the year 2023. This inventory would serve as the base
inventory for determining the emissions reduction requirement under
section 189(d). If the most recent inventory indicates that emissions
of direct PM2.5 from all sources in the area are 100 tons/
day, then the area would need to reduce emissions of direct
PM2.5

by 5 percent of the base inventory (in this example, 5 percent of the
2023 base inventory, or 5 tons/day) each year until the area attains
the NAAQS. Thus, in the first year following submission of the section
189(d) plan for the area, emissions of direct PM2.5 could
not exceed 95 tons/day; in the second year, emissions could not exceed
90 tons/day; and so forth.
    Although section 189(d) requires that a state develop measures that
will obtain annual emissions reductions of ``not less than 5 percent''
from the most recent inventory, the EPA interprets this language to
authorize states to elect to front-load emissions reductions in earlier
years and still meet the 5 percent per year requirement. The EPA notes
that interpreting the statute in this way will encourage states to
implement measures earlier, where possible, rather than delay
implementation of measures merely to assure that the 5 percent
requirement can be met in later years. Thus, using the example
described above, the annual reduction requirement for the area would be
5 tons/day from a base year emissions level of 100 tons/day. The
required level after year 1 would be 95 tons/day, after year 2 the
level would be 90 tons/day, and so on. If the area reached a level of
81 tons/day by the end of year 3, then by the end of year 4 it would
only need to reduce emissions by 1 ton/day to yield an emissions level
of 80 tons/day. Consistent with its past action to approve a Serious
area attainment plan for the San Joaquin Valley (CA) PM10
nonattainment area under section 189(d), the EPA therefore proposes and
seeks comment on an approach to allow states to carry forward any
emissions reductions beyond the required minimum 5 percent in a given
year to the next year as a means to encourage states to achieve
emissions reductions as quickly as possible.\218\
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    \218\ 69 FR 30006 (May 26, 2004).
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    The EPA also proposes to clarify its interpretation of the
statutory language under section 189(d) that requires a state to submit
a new attainment plan to achieve annual reductions ``from the date of
such submission until attainment,'' to mean annual reductions beginning
from the due date of such submission until the new projected attainment
date for the area based on the new or additional control measures
identified to achieve at least 5 percent emissions reductions annually.
This proposed clarification is intended to make clear that even if a
state is late in submitting its section 189(d) plan, the area must
still achieve its annual 5 percent emissions reductions beginning from
the past due date for the section 189(d) plan submission. Because
attainment dates for PM2.5 nonattainment areas established
under subpart 4 occur at the end of the calendar year, any section
189(d) plan, which is required within 12 months of the missed
attainment date for the area, would also be due by the end of the
calendar year.
2. Additional Guidance on Section 189(d) Control Measures
    The EPA believes that an appropriate starting point for a state to
identify measures to achieve the requisite minimum 5 percent annual
emissions reductions of direct PM2.5 and PM2.5
precursors is the list of potential control measures initially required
as part of the RACM and RACT determination for the area, then updated
as part of the required BACM and BACT determination for the area. The
EPA anticipates that a state should be able to rely on much of the work
it previously undertook to develop this list of potential control
measures and analyze their technological and economic feasibility, and
the time required to implement them. However, for purposes of meeting
the requirements of section 189(d), the EPA recommends that the state
first identify any additional potential measures not previously
identified for the area, and then analyze any new or additional
measures that the state has not already adopted in a previous
attainment plan for the area. The EPA expects that such an analysis to
identify new control measures would necessarily take into account
recent technological advances in control technologies, the possibility
of a greater availability of funding to expand implementation of
control measures for area sources, and the additional time the area
will have to attain the PM2.5 NAAQS under sections 189(d)
and 179(d)(3).
    In addition, a state may include in the section 189(d) plan control
strategy for the area any control measures triggered as contingency
measures upon the EPA's determination that area failed to attain the
PM2.5 NAAQS by the applicable attainment date. In order to
be included as control measures that will help the area meet its
requisite minimum 5 percent reductions in direct PM2.5 and
PM2.5 precursor emissions, such measures would have to meet
the same requirements as all other approvable control measures for
being quantifiable, enforceable, replicable and accountable. The EPA
believes that reliance on such measures is appropriate given the short
timeline provided for in the statute for states to revise and submit
their SIP revisions (12 months from the missed attainment date) and the
fact that the contingency measures included in the prior attainment
plan for the area under section 172(c)(9) must be activated once the
EPA publishes its finding of the area's failure to attain the NAAQS by
the applicable attainment date. If contingency measures from the
Serious area attainment plan are relied on in the new attainment
demonstration as part of the control strategy, the state will need to
submit additional contingency measures for the section 189(d)
attainment plan submission.
3. Control Strategy Submission Requirements
    To ensure that attainment plan submissions contain the necessary
supporting information for the EPA to review and approve the state's
new control strategy to achieve at least 5 percent reductions in
emissions of direct PM2.5 and significant PM2.5
precursors, the EPA proposes to require under the authority of section
301(a) that a state must submit the following information as part of
its section 189(d) plan submission:
     A list of all emissions source categories, sources and
activities in the nonattainment area (for multi-state nonattainment
areas, this would include source categories, sources and activities
from all states which make up the area);
     For each source category, source or activity in the
nonattainment area, an inventory of direct PM2.5 and all
PM2.5 precursor emissions;
     For each source category, source or activity in the
nonattainment area, a comprehensive list of potential control measures
considered by the state for those sources in the nonattainment area;
\219\
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    \219\ Menu of Control Measures document available at http://www.epa.gov/air/criteria.html.
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     For each potential control measure considered by the state
but eliminated from further consideration due to a determination by the
state that the control measure or technology was not technologically
feasible, a narrative explanation and quantitative or qualitative
supporting documentation to justify the state's conclusion;
     For each technologically feasible emission control measure
or technology, the state must provide the following information
relevant to economic feasibility: (i) the control efficiency by
pollutant; (ii) the possible emission reductions by pollutant; (iii)
the estimated cost per ton of pollutant reduced; and, (iv) a
determination of whether the measure is economically

feasible, with narrative explanation and quantitative supporting
documentation to justify the state's conclusion;
     For each technologically and economically feasible
emission control measure or technology, the date by which the
technology or measure could be implemented.
    As with other PM2.5 attainment plan submissions, the EPA
believes that it is incumbent on the state to ensure that the
information needed for the EPA to evaluate the state's analysis of new
control measures needed to achieve annual 5 percent reductions is
presented separately as part of the control strategy analysis and in a
format that provides transparency, consistency and the ability for
another party to evaluate the state's analysis effectively and to
duplicate the state's results. For this reason, the EPA is including
the section 189(d) plan base year emissions inventory information as a
necessary part of the control strategy submittal and as one element of
the state's section 189(d) plan due 12 months after the missed
attainment date for the area. In addition, the EPA proposes that the
state must provide information as part of any attainment plan submitted
to meet the requirements of section 189(d) consistent with the criteria
described in Section VI.D.5 of this preamble to ensure that a state
adopts effective regulations to implement the control measures
identified as being needed to meet those requirements. Specifically,
all control measures must be quantifiable, enforceable, replicable and
accountable.
    The section 189(d) requirement to reduce emissions by 5 percent per
year is in effect a fixed level of RFP to be achieved annually.
Accordingly, just as quantitative milestones are used to track progress
with RFP requirements, the EPA proposes that the state would be
required to submit quantitative milestone reports to describe the
area's progress in meeting the 5 percent annual emissions reduction
requirement under section 189(d). See Section VII.G of this preamble
for more details.

E. Modeling for Attainment Demonstrations

    Section 189(d) requires a state with a Serious nonattainment area
that failed to attain the relevant NAAQS by the applicable Serious area
attainment date to submit a new attainment plan for such area within 12
months after the missed attainment date. The EPA is proposing that the
same general requirements for attainment demonstrations and modeling
that apply to Moderate area plans and Serious area plans due under
sections 189(a) and 189(b) should also apply to section 189(d)
attainment plans. However, the EPA is proposing additional requirements
specific to plans states submitted pursuant to section 189(d) as
described below.
1. Attainment Demonstrations for Serious Areas That Fail To Attain the
NAAQS by the Applicable Attainment Date
    The EPA is proposing that the attainment demonstration for Serious
areas subject to section 189(d) requirements must consist of: (i)
technical analyses such as base year and future year modeling of
emissions which identify sources and quantify their emissions that are
contributing to violations of the PM2.5 NAAQS; and, (ii)
analyses of future year projected emissions reductions and air quality
improvement resulting from national, regional and local programs
already implemented as part of previous Moderate and/or Serious area
attainment plans for the area (including reasonable control measures,
BACM and BACT and additional feasible measures), and additional
measures needed for expeditious attainment, including measures needed
to achieve 5 percent emissions reductions on an annual basis. Each
state with a nonattainment area subject to the requirements of section
189(d) must submit an attainment plan with an attainment demonstration
that includes analyses supporting the state's determination of its
proposed new attainment date. In all cases, the state must show that
the area will attain the NAAQS as expeditiously as practicable.
2. What modeling is required?
    The EPA proposes that states are required to submit air quality
modeling in support of an attainment demonstration for a nonattainment
area subject to the requirements of section 189(d). The modeling
demonstration must show how and when the area will attain the NAAQS.
Other than the timing of plan submissions and requirement to achieve 5
percent emissions reductions in direct PM2.5 and
PM2.5 precursors, the relevant air quality modeling
procedures and guidance for all PM2.5 nonattainment area
plans are the same. See Sections IV.E. and VI.E of this preamble for
more details on proposed modeling requirements and guidance for
Moderate and Serious PM2.5 nonattainment areas,
respectively.
3. What future year(s) should be modeled in attainment demonstrations?
    As discussed more fully in Section VII.I of this preamble, the EPA
must establish a new attainment date for a PM2.5
nonattainment area subject to section 189(d) and must do so according
to the provisions of sections 179(d)(3) and 172(a)(2), which require
that the new attainment date must be as expeditious as practicable, but
no later than 5 years from the date of publication in the Federal
Register of the EPA's determination that the area failed to attain the
relevant NAAQS. The EPA may extend the attainment date by up to 5
additional years (thus to 10 years from the date of publication of the
notice of finding of failure to attain by the applicable attainment
date for the area) if the agency deems it appropriate ``considering the
severity of nonattainment and the availability and feasibility of
pollution control measures.''
    For purposes of determining the attainment date that is as
expeditious as practicable, the state must conduct future year modeling
which takes into account emissions growth, known controls (including
any controls that were previously determined to be RACM or RACT or
additional reasonable measures, or BACM or BACT or additional feasible
measures for the area), the 5 percent per year emissions reductions
required by section 189(d), plus any other emissions controls that are
needed for expeditious attainment of the NAAQS. A state performing a
modeling analysis for a plan submitted under section 189(d) must select
a future modeling year such that all emissions control measures relied
on for attainment will have been implemented by the beginning of that
year. To demonstrate attainment, the modeling results for the
nonattainment area must predict that emissions reductions implemented
by the beginning of the last calendar year preceding the attainment
date will result in PM2.5 concentrations that meet the level
of the standard.\220\
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    \220\ Note that for purposes of the PM2.5 NAAQS, a
determination of attainment (or failure to attain), which the EPA is
required to make after the attainment date has passed, is based on
an average of the most recent 3 years of ambient data prior to the
area's attainment date.
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    For a PM2.5 nonattainment area subject to section
189(d), the EPA expects that the state will adopt any control measures
necessary to demonstrate expeditious attainment within 5 years of the
area failing to attain the NAAQS by the applicable Serious area
attainment date.
4. Attainment Year Motor Vehicle Emissions Budgets
    As with all other PM2.5 NAAQS attainment plans, the
transportation

conformity rule requires that attainment plans for areas subject to
section 189(d) establish motor vehicle emissions budgets for the area's
attainment year. Therefore, for such an area, the state would first
determine the new attainment date as described in Section VII.I of this
preamble. Once an area's attainment date has been established, the
state would establish motor vehicle emissions budgets for direct
PM2.5 and any relevant PM2.5 precursor for the
attainment year.\221\ A motor vehicle emissions budget for the purposes
of a PM2.5 attainment plan is that portion of the total
allowable emissions within the nonattainment area allocated to on-road
sources as defined in the submitted attainment plan.\222\ Such motor
vehicle emissions budgets would be calculated using the latest planning
assumptions and the latest approved motor vehicle emissions model
available at the time that the attainment plan is developed.\223\
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    \221\ For more information on PM2.5 precursor
requirements, see section 93.102(b)(2)(iv) and (v) of the
transportation conformity rule. See also the May 6, 2005, final
transportation conformity rule that addressed requirements for
PM2.5 precursors. (70 FR 24280).
    \222\ A state would also establish motor vehicle emissions
budgets for an area's attainment year. Those budgets would be the
motor vehicle emissions that the SIP establishes as being necessary
to attain the NAAQS.
    \223\ If an area includes re-entrained road dust in the motor
vehicle emissions budget, the latest approved version of AP-42
should be used unless the EPA has approved an alternative model for
the area.
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    The EPA seeks comment on these proposed attainment demonstration
and modeling requirements for new attainment plans due for Serious
areas subject to section 189(d).

F. RFP Requirements

    As with other PM2.5 attainment plans, a plan submitted
to meet the requirements of section 189(d) must provide for RFP as
required under sections 172(c)(2) and 189(c)(1). Section 171(1) defines
RFP as ``such annual incremental reductions in emissions of the
relevant air pollution as are required by this part or may reasonably
be required by the Administrator for the purpose of ensuring attainment
of the applicable [NAAQS] by the applicable attainment date.'' The
purpose of RFP requirements is to assure that a state is making
progress towards attainment on an annual basis through the attainment
plan, rather than deferring emissions reductions until just before the
attainment date for the area. This requirement is similar to, though
less prescriptive than, the requirement under section 189(d) for 5
percent emissions reductions of direct PM2.5 or
PM2.5 precursors from the most recent emissions inventory on
an annual basis until the area attains. Therefore, the EPA proposes to
determine that a state has satisfied the RFP requirement if the state
submits an approvable control strategy under section 189(d) that
demonstrates that the state will achieve at least 5 percent reductions
in direct PM2.5 and PM2.5 precursor emissions
from sources in the area annually until attainment.
    The EPA proposes that motor vehicle emissions budgets must also be
established as part of any RFP plan for direct PM2.5 and for
any relevant PM2.5 precursor using the latest planning
assumptions and the latest approved motor vehicle emissions model
available at the time that the plan is developed for a Serious area
subject to 189(d).\224\
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    \224\ If an area includes re-entrained road dust in the motor
vehicle emissions budget, the latest approved version of AP-42
should be used unless the EPA has approved an alternative model for
the area.
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    The EPA seeks comment on this proposed approach related to RFP
requirements for new attainment plans due under section 189(d).

G. Quantitative Milestones

    The revised attainment plan for any Serious nonattainment area that
fails to attain the relevant PM2.5 NAAQS by the applicable
attainment date must include quantitative milestones pursuant to
section 189(c). These quantitative milestones would be additional to
those previously identified in the Moderate area and original Serious
area attainment plans, and would need to reflect the projected
emissions reductions or air quality improvements expected through the
implementation of specific control measures identified to achieve the
minimum 5 percent annual reductions required under section 189(d). Such
milestones would need to be achieved every 3 years until the area
attains the relevant NAAQS, such that the EPA proposes that, at a
minimum, quantitative milestones selected for an attainment plan
submitted under section 189(d) would need to demonstrate a reduction of
at least 15 percent in emissions of direct PM2.5 and
significant precursors below those emissions reported in the most
recent inventory for the area.
    The section 189(d) plan for an area that failed to attain the
standard by the applicable Serious area attainment date would have to
contain quantitative milestones to be achieved by 13.5 years from the
area's date of designation and every 3 years thereafter until the
area's new projected attainment date. In the event a state is
developing a revised attainment plan pursuant to section 189(d) that
will be due sometime after 13.5 years following designation of the
area, the EPA proposes to allow the state to submit quantitative
milestones beginning for the year 16.5 from designation and every 3
years thereafter until the area's projected attainment date.
    The EPA believes that its proposed requirements for quantitative
milestones, described in Sections IV.G and VI.G of this preamble,
should also apply to quantitative milestones submitted with any revised
attainment plan pursuant to section 189(d), and thus proposes and seeks
comment on the agency's proposed milestone requirements for application
to attainment plans due under section 189(d).

H. Contingency Measures

    All PM2.5 attainment plans, including plans for areas
subject to section 189(d), must contain contingency measures that are
consistent with section 172(c)(9). Section VI.H of this preamble
describes the EPA's proposed criteria for contingency measures for a
Serious area attainment plan, and the agency proposes that contingency
measures for a section 189(d) plan must meet the same criteria. The EPA
proposes that the emissions reductions associated with contingency
measures for section 189(d) plans must be at least 5 percent of direct
PM2.5 and significant PM2.5 precursor emissions
as reported in the most recent inventory for the area. The EPA believes
this requirement would appropriately align the proposed requirement for
selecting contingency measures with the agency's proposed approach to
RFP for these areas. In other words, if RFP for an area is equivalent
to about 1 year's worth of emissions reductions, or 5 percent emissions
reductions in direct PM2.5 and PM2.5 precursors,
then the adopted contingency measures should likewise achieve about 1
year's worth of emissions reductions, or 5 percent emissions reductions
in direct PM2.5 and PM2.5 precursors.
    The EPA recognizes that identifying contingency measures for a
Serious PM2.5 nonattainment area that failed to attain the
relevant NAAQS by the applicable attainment date may be challenging for
a state that should already have fully implemented all control measures
identified as ``reasonable'' and ``best,'' and potentially ``most
stringent,'' in addition to identifying new control measures to achieve
the requisite minimum 5 percent reductions in direct PM2.5
and significant PM2.5 precursor emissions

necessary for expeditious attainment. Nonetheless, given the statutory
language of section 172(c)(9), the EPA seeks comment on applying the
same proposed requirements for contingency measures for section 189(d)
plans, and on the agency's proposed approach for calculating the
emissions reductions that such measures must be able to achieve.

I. Attainment Dates

    As previously discussed, section 189(d) requires a minimum 5
percent annual reduction in emissions of direct PM2.5 and
PM2.5 precursors until the area attains the relevant NAAQS.
However, neither section 189(d) nor other sections in subpart 4
explicitly establish or provide the authority to establish a new
attainment date for the area; other subpart 4 attainment date
provisions for Moderate or Serious areas are likewise not applicable to
areas in this situation. Therefore, once an area is beyond the
attainment dates that Congress specified in subpart 4 for the
PM10 NAAQS, the EPA must look to the existing provisions of
the CAA to provide authority for a new attainment date. Sections
179(d)(3) and 172(a)(2) provide generally applicable attainment dates
that fill the gap in the statute left for areas subject to the
requirements of section 189(d). Thus, for a PM2.5
nonattainment area subject to section 189(d) requirements, the EPA must
establish a new attainment date, and must do so according to the
provisions of section 179(d)(3) and 172(a)(2). The EPA has followed
this same approach in the past for PM10 nonattainment areas
governed by subpart 4 nonattainment requirements.\225\
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    \225\ For example, see the Federal Register notice from June 6,
2007 (72 FR 31183) in which the EPA found that the Phoenix
PM10 Serious nonattainment area failed to attain the
standard by the 2006 attainment date.
---------------------------------------------------------------------------

    The new attainment date must be as expeditious as practicable, but
no later than 5 years from the date of publication in the Federal
Register of the EPA's determination that the area failed to attain the
relevant NAAQS. The EPA may extend the attainment date by up to 5
additional years (thus to 10 years from the date of publication of the
notice of finding of failure to attain by the applicable attainment
date for the area) if the agency deems it appropriate ``considering the
severity of nonattainment and the availability and feasibility of
pollution control measures.'' For a PM2.5 nonattainment area
subject to section 189(d), the EPA expects that the state will adopt
any control measures necessary to demonstrate expeditious attainment
within 5 years of the area failing to attain the NAAQS by the
applicable Serious area attainment date.
    As discussed earlier in this section, the EPA will consider the
state's attainment demonstration and proposed attainment date for the
area, in addition to the state's revised control strategy and the
relevant facts and circumstances, in order to identify the most
expeditious attainment date practicable for the area.
    The EPA seeks comment on this proposal for interpreting the
statutory requirements under section 189(d) for a Serious area that
fails to attain the PM2.5 NAAQS by the applicable attainment
date.

VIII. What are the EPA's proposed NNSR permitting requirements?

A. Statutory Requirements for NSR

    Section 110(a)(2)(C) of the CAA requires states to include in their
SIPs a preconstruction review permitting program that regulates the
construction and modification of stationary sources as necessary to
ensure that NAAQS are achieved. To address the regulation of the larger
pollutant-emitting sources (defined as major stationary sources),
Congress provided specific permitting requirements in the CAA in parts
C and D of title I. The requirements for preconstruction permits under
parts C and D of the CAA are commonly known collectively as the major
NSR program because they apply specifically to the preconstruction
review and permitting of new major stationary sources, and major
modifications at existing sources. As explained in Sections VIII.A.1
and 2 of this preamble, the preconstruction review of each new and
modified major stationary source generally is carried out on a
pollutant-specific basis and the requirements with regard to each
pollutant apply based on whether the area in which the proposed major
source or major modification would locate is designated attainment (or
unclassifiable) or nonattainment for that pollutant at the time the
permit is issued.
1. PSD
    Part C of title I of the CAA (hereafter referred to simply as part
C) contains implementation plan requirements that apply to new major
stationary sources and major modifications in areas designated
attainment or unclassifiable for any NAAQS. These requirements
constitute the PSD program. Pursuant to part C, the EPA has adopted PSD
regulations at 40 CFR 51.166 (minimum requirements for an approvable
state PSD program in the SIP) and 40 CFR 52.21 (the federal PSD
program, applicable in areas where the state does not have an EPA-
approved PSD program in its SIP). The EPA last amended the PSD
regulations for PM2.5 on January 15, 2013, in the final rule
revising the PM2.5 NAAQS.\226\ This proposal does not relate
to the PSD program, nor does it propose further changes to the PSD
regulations. Any future revisions to the PSD regulations for
PM2.5 would be done through a separate notice-and-comment
rulemaking.
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    \226\ More information on the PSD requirements for
PM2.5 as well as the public comments and the EPA's
responses to those comments and the related issues for which
comments were received is contained in the January 15, 2013 Federal
Register document (78 FR 3086, beginning at page 3251).
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2. NNSR
    Part D of title I of the CAA (hereafter referred to as part D)
contains implementation plan requirements for nonattainment areas,
which include the requirements for permitting new major stationary
sources and major modifications in designated nonattainment areas,
referred to as the NNSR program. As noted earlier, part D contains
several subparts that include various requirements for addressing
nonattainment areas. Subpart 1 addresses plan requirements for
nonattainment areas generally, including section 172(c)(5) which
requires preconstruction and operating permits for new major stationary
sources and major modifications in nonattainment areas. Section 173
outlines the minimum statutory requirements for a state's NNSR permit
program and serves as the basis for the EPA's NNSR regulations for
PM2.5 as promulgated in the 2008 PM2.5 NSR Rule.
Subpart 4 was added to part D as part of the 1990 CAA Amendments and
includes additional plan provisions for designated PM10
nonattainment areas. Relevant here, section 189(a)(1)(A) of subpart 4
requires states to include in their implementation plan a permit
program addressing major stationary sources of PM10 that
meets the requirements under section 173 of subpart 1. Subpart 4 also
includes some additional preconstruction review requirements for which,
to date, the EPA has promulgated NSR regulations applying only to major
stationary sources of PM10 in PM10 nonattainment
areas. The specific NNSR requirements contained in both subparts 1 and
4 are described below including the changes to the NNSR regulations
needed to address PM2.5 specifically that the EPA is
proposing in this notice.

B. Federal NNSR Regulations

    Federal regulations pertaining to the preconstruction permitting of
new major stationary sources and major modifications in areas
designated nonattainment are contained at 40 CFR 51.165; part 51,
appendix S; and, Sec.  52.24. An approved NNSR program in a state's
implementation plan must, at a minimum, meet the program requirements
set forth in the federal NNSR requirements at 40 CFR 51.165, which for
PM2.5 are currently based on changes made under the 2008
PM2.5 NSR Rule. States are required to adopt regulations
consistent with those plan requirements and submit them to the EPA for
approval as part of their SIP within a period of time consistent with
the schedule prescribed by the CAA.
    The EPA interprets the requirement established under section
110(a)(2)(C) of the CAA for states to regulate the construction and
modification of sources to apply in nonattainment areas as of the
effective date of a new nonattainment area designation.\227\ Although
section 110(a)(2)(C) does not contain specific requirements a state
must follow for issuing major source permits during the interim period
between effective date of designation and the date when a state has an
EPA-approved NNSR program, the EPA regulation at 40 CFR 52.24(k)
authorizes states to apply 40 CFR part 51, Appendix S, known as the
Emission Offset Interpretative Ruling, during the interim period.
228 229
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    \227\ See the Federal Register published on November 29, 2005
(70 FR 71612, 71677 and 71678).
    \228\ States with designated PM2.5 nonattainment
areas were required to submit SIPs satisfying the requirements of
the 2008 PM2.5 NSR Implementation Rule by May 16, 2011, 3
years from the date of publication of that rule. See 73 FR 28321
(May 16, 2008), at page 28342. Such approved state programs can
continue to be implemented to issue permits to new major stationary
sources and major modifications until the state's revised program
containing the subpart 4 NNSR provisions promulgated in this
rulemaking is approved under the applicable SIP.
    \229\ Appendix S was originally promulgated in 1976 to address
whether, and to what extent, new and modified sources would be
allowed to construct in nonattainment areas whose attainment
deadlines had already passed, in light of the regulatory requirement
that new or modified sources be disapproved where the source would
interfere with attainment of the NAAQS (41 FR 55524 (December 21
1976)). When Congress added the part D provisions in the 1977 CAA
Amendments, it also added the requirement that SIPs contain NNSR
provisions as set forth in Part D. Additionally, Congress provided
that Appendix S would govern preconstruction permitting in
nonattainment areas lacking approved part D SIPs before a
construction ban went into effect. When Congress removed the
construction ban via the 1990 CAA Amendments (except as provided for
in section 110(n)(3)) it left in place the use of the interim NNSR
program under Appendix S.
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    Accordingly, states with newly designated nonattainment areas for
the revised primary PM2.5 NAAQS have two possible means by
which they can implement NNSR requirements for PM2.5
following the effective date of designations and until the EPA approves
a SIP submission meeting the NNSR requirements for PM2.5
promulgated in this rule under subpart 4. First, any state that has an
approved NNSR program for PM2.5 can continue to apply those
permitting requirements in the interim. Second, states that lack any
approved NNSR program for PM2.5 may rely upon the NNSR
provisions in Appendix S until the EPA approves a SIP submission from
the state to address PM2.5 in order to ensure that proposed
new major stationary sources and major modifications for
PM2.5 in newly designated PM2.5 nonattainment
areas undergo the appropriate type of preconstruction review in the
interim.
1. General Applicability
    New major stationary sources are subject to the NNSR requirements
when they are major for the pollutant for which an area is designated
nonattainment. See 40 CFR 51.165(a)(2)(i). With regard to major
modifications, NNSR applies to proposed physical changes or changes in
the method of operation of an existing stationary source that (1) is
major for the nonattainment pollutant (or a precursor for that
pollutant) and (2) results in both a significant emissions increase and
a significant net emissions increase of that nonattainment pollutant
(or a precursor for that pollutant).\230\
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    \230\ As will be explained in ensuing discussions, the
nonattainment pollutant and any applicable precursors for that
pollutant are considered separately for NNSR applicability purposes.
See 40 CFR 51.165(a)(1)(v)(A), (a)(2)(ii)A).
---------------------------------------------------------------------------

    For each proposed major new source and major modification, the
general NNSR requirements that are required to be included in a state's
SIP include: (i) the installation and continuous operation of pollution
control technology that complies with the LAER; (ii) the acquisition of
creditable emissions reductions to adequately offset the proposed
emissions increase of the nonattainment pollutant; and, (iii) a
demonstration of compliance with other analyses as required under
section 173 of the CAA.\231\ These NNSR requirements must be satisfied
by a major new source or major modification as a prerequisite for
receipt of a construction permit and apply as of the effective date of
designation of an area as nonattainment for the pollutant.
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    \231\ The basic NNSR requirements are set forth in section 173
of subpart 1. Subpart 4 adds a more stringent definition of ``major
source'' for PM10 sources in PM10
nonattainment areas classified as Serious and sets forth provisions
for the regulation and potential exemption of major sources of
PM10 precursors in PM10 nonattainment areas.
Until the decision in NRDC v. EPA was issued, the additional subpart
4 requirements had not been directly applied with regard to
PM2.5.
---------------------------------------------------------------------------

2. Historical Overview of NNSR for PM10 and PM2.5
NAAQS
    Following the adoption of new PM NAAQS based on the PM10
indicator in 1987 (replacing the original Total Suspended Particulate
indicator), the EPA announced that it did not intend to designate areas
as nonattainment for PM10. As a result, the EPA initially
determined that part D, which at that point consisted only of generally
applicable requirements, did not apply to the PM10
NAAQS.\232\ Thus, nonattainment area requirements, including the NNSR
program, did not initially apply with respect to PM10.
Consequently, all new major stationary sources and major modifications
of PM10 were required to undergo PSD review as a
prerequisite for construction or modification.
---------------------------------------------------------------------------

    \232\ At the time the EPA promulgated the new PM10
NAAQS, part D of the CAA did not include subpart 4. See 52 FR 24672
(July 1, 1987).
---------------------------------------------------------------------------

    The approach for implementing the NNSR program for PM changed when
in 1990 Congress established a new subpart 4 specifically to address
implementation plan requirements for PM10 nonattainment
areas, including new preconstruction permit requirements for major
stationary sources and major modifications with respect to
PM10 and PM10 precursors. Moreover, Congress
created new PM10 nonattainment areas through designations
that became effective upon enactment of the 1990 Amendments on November
15, 1990.\233\ In section 189(a)(2)(A), Congress also required states
to submit the necessary NNSR permit program SIP revisions for these
areas to the EPA by June 30, 1992.
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    \233\ See section 107(d)(4)(B) of the CAA. The EPA subsequently
published a list of the statutorily created PM10 areas in
a Federal Register document at 55 FR 45799 (October 31, 1990).
---------------------------------------------------------------------------

    In a letter to its Regional Offices dated March 11, 1991,\234\ the
EPA initially indicated that states should implement such new
requirements by operation of law, without the need for formal
rulemaking by the EPA to establish the necessary requirements for
states to adopt. In the General Preamble, the EPA offered states
additional guidance and described the EPA's preliminary views on how
the states and the EPA should interpret various provisions of the 1990

Amendments, primarily those provisions concerning planning and control
measure requirements for the attainment of the NAAQS in nonattainment
areas. In a 2005 final rule, the EPA formally amended the NNSR
regulations to incorporate the requirements contained in subpart 4 of
part D of the 1990 CAA Amendments concerning PM10
nonattainment areas. \235\
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    \234\ The EPA memorandum titled ``New Source Review (NSR)
Program Transition Guidance,'' signed by John S. Seitz, Director,
Office of Air Quality Planning & Standards.
    \235\ See ``Final Rule to Implement Certain Aspects of the 1990
Amendments Relating to New Source Review and Prevention of
Significant Deterioration as They Apply in Carbon Monoxide,
Particulate Matter and Ozone NAAQS.'' 70 FR 71611 (November 29,
2005).
---------------------------------------------------------------------------

    The EPA revised the PM NAAQS in 1997, establishing new annual and
24-hour NAAQS using PM2.5 particles as a new indicator,
while retaining the NAAQS for PM10.\236\ In 2006, the EPA
again revised the suite of PM NAAQS by tightening the 24-hour
PM2.5 standards and retaining the level of the annual
PM2.5 standards.\237\ In 2008, the EPA issued the
PM2.5 NSR Rule that established various provisions ensuring
that proposed new major stationary sources or major modifications of
sources of direct PM2.5 emissions or emissions of applicable
PM2.5 precursors would be required to undergo
preconstruction review.\238\ The EPA included specific provisions in
the 2008 PM2.5 NSR Rule to apply when such sources are
located in a designated PM2.5 nonattainment area. Unlike the
NNSR requirements for PM10 developed under subpart 4, the
EPA determined that the applicable implementation requirements for the
PM2.5 NAAQS were contained in the general nonattainment
provisions under subpart 1.
---------------------------------------------------------------------------

    \236\ See 62 FR 38652 (July 18, 1997).
    \237\ See 71 FR 61144 (October 17, 2006).
    \238\ See 73 FR 28321 (May 16, 2008).
---------------------------------------------------------------------------

    With regard to NSR applicability for PM2.5 precursors in
the 2008 PM2.5 NSR Rule, the EPA recognized NOX,
SO2, VOC and ammonia as precursors of PM2.5 in
the scientific sense (because those pollutants under the appropriate
conditions can contribute to the formation of PM2.5 in the
ambient air) but did not require that states subject all of these
precursors to control as part of the attainment plan or NSR permitting
requirements applicable to a given nonattainment area.\239\ Instead,
based on the authority in section 302(g) of the CAA, the EPA
established the initial presumptions for nonattainment areas that
SO2 and NOX should be regulated precursors for
PM2.5, but VOC and ammonia need not be regulated precursors.
The EPA or the states could rebut the initial presumptions regarding
NOX, VOC or ammonia on an area-by-area basis with a
demonstration approved by the Administrator and thus reverse any of
those presumptions in the state's implementation plan for that
area.\240\
---------------------------------------------------------------------------

    \239\ See 72 FR 20589.
    \240\ In the 2008 PM2.5 NSR Rule, the EPA concluded
that SO2 should be regulated as a precursor for
PM2.5 in all areas. See 73 FR 28327.
---------------------------------------------------------------------------

    As described above in Section II.C of this preamble, in January
2013 the court in NRDC v. EPA held that the EPA erred in implementing
the PM2.5 NAAQS pursuant only to the general implementation
requirements in subpart 1, rather than also to the implementation
requirements specific to particulate matter in subpart 4. Accordingly,
the court directed the EPA to comply with the requirements of subpart 4
when developing implementing regulations for PM2.5
nonattainment areas.
    The court decision, requiring that the EPA implement the
PM2.5 NAAQS consistent with the requirements of subpart 4,
clearly has specific implications for implementing the NNSR program for
PM2.5. Two provisions of subpart 4 impose additional
requirements on the existing NNSR program requirements for
PM2.5. The first relates to the definition of ``major
stationary source.'' Section 188(b) provides that some areas initially
designated as Moderate areas for PM10 subsequently may be
reclassified as Serious areas. For any PM10 nonattainment
area reclassified as a Serious area, section 189(b)(3) provides that a
major stationary source of PM10 be defined to include any
stationary source or group of stationary sources located within a
contiguous area and under common control that emits or has the
potential to emit at least 70 tpy of PM10. In accordance
with the statute, the EPA is proposing to establish a major source
emissions threshold for stationary sources of PM2.5 that
satisfies the intent of section 189(b)(3).
    The second relevant subpart 4 provision governs the treatment of
major sources of PM10 precursors. As previously explained in
Section III.A of this preamble, the court specifically criticized the
EPA's prior establishment of the rebuttable presumptions for addressing
PM2.5 precursors, specifically citing the requirement of
section 189(e). Section 189(e) requires that the control requirements
in the plan applicable to major stationary sources of PM10
must also apply to major stationary sources of PM10
precursors. Section 189(e) also provides that states may elect not to
impose control requirements on major stationary sources of
PM10 precursor emissions if such emissions do not contribute
significantly to ambient PM10 concentrations that exceed the
standard in the PM10 nonattainment area. Section 189(e)
requires that the EPA must make this determination, and thus the EPA
must approve the decisions of a state that elects to use this provision
to exempt any major stationary sources of PM2.5 precursors
from controls in its attainment plan or NNSR program.
    The court's observation that the EPA's prior presumptions regarding
precursors were inconsistent with the explicit requirements of section
189(e) that major sources of all PM2.5 precursors are
subject to control requirements thus necessitates that the agency
revise the NNSR regulations governing precursors for PM2.5.
As explained in greater detail later in this section, the EPA is
proposing different potential options to make the necessary changes to
the NNSR regulations in order to address the precursor requirements
contained in subpart 4.

C. What are the changes the EPA is proposing for NNSR for PM2.5
nonattainment areas?

    In this section, the EPA presents for comment certain proposed
revisions to the NNSR regulations as well as alternative approaches for
incorporating the subpart 4 requirements into the NNSR regulations for
PM2.5. The proposed changes would affect the existing
regulations at 40 CFR 51.165 and part 51 Appendix S. The agency does
not intend to propose any changes to the regulations at 40 CFR 52.24,
which provide the authorization for states to issue NNSR permits to
major new sources and major modifications ``during the period between
the date of designation as nonattainment and the date the NSR permit
program meeting the requirements of part D is approved.''
1. What are the changes the EPA is proposing for the NNSR requirements
for PM2.5 at 40 CFR 51.165?
    As explained above, the existing NNSR regulations applicable to
PM2.5 are based solely on the permit requirements contained
in section 173 of subpart 1. In subpart 4, section 189(a)(1)(A)
requires states to include in their SIPs for PM10
nonattainment areas a permit program meeting the requirements of
section 173; however, other provisions in subpart 4 add additional
requirements for the NNSR permit program. Those additional provisions
concern (i) the definition of ``major stationary source'' in
nonattainment areas classified as Serious areas, and (ii) control

requirements for applicable major stationary sources of PM10
precursors. While those particular requirements in subpart 4 refer
specifically to PM10, the EPA is proposing to add similar
requirements for PM2.5 in accordance with the court's
holding in NRDC v. EPA that subpart 4 also governs implementation of
the PM2.5 NAAQS.
    a. Definition of ``major stationary source'' in Serious PM2.5
nonattainment areas. In Section III.A of this preamble, the EPA
indicated its intention to propose new provisions based on the
requirements in subpart 4 for reclassifying certain PM2.5
nonattainment areas as Serious areas. Because the NNSR regulations for
PM2.5 set forth in the 2008 PM2.5 NSR Rule were
developed pursuant to subpart 1, which does not provide for the
classification of designated nonattainment areas, the EPA has not yet
developed regulations to address subpart 4 requirements concerning
nonattainment areas classified as Serious. With respect to NNSR,
section 189(b)(3) provides that, for any PM10 nonattainment
area classified as Serious, the major source threshold with regard to
the terms ``major source'' and ``major stationary source'' shall be 70
tpy of PM10. Accordingly, the EPA is proposing to amend the
NNSR regulations at 40 CFR 51.165 consistent with this provision to
establish a major source threshold for new major stationary sources and
major modifications in PM2.5 nonattainment areas classified
as Serious consistent with subpart 4. The EPA is proposing to set the
major source threshold for direct PM2.5 emissions at 70 tpy.
See proposed 40 CFR 51.165(a)(1)(iv)(A)(1)(vii).
    While the court decision did not mandate that the EPA define
``major source'' and ``major stationary source'' for PM2.5
at a threshold of 70 tpy of PM2.5 emissions for areas
reclassified as Serious, the most straightforward and consistent
application of section 189(b)(3) to PM2.5 nonattainment
areas is to establish the same numerical threshold for Serious
PM2.5 nonattainment areas as that which applies to Serious
PM10 nonattainment areas. Moderate nonattainment areas for
both PM10 and PM2.5 are already subject to the
same major source thresholds by statute, so the EPA believes that it is
also reasonable to establish the threshold for PM2.5 in
Serious areas at the same level as the threshold that applies to
PM10 in Serious areas. For the reasons explained below, the
EPA believes that potential alternative approaches to setting the major
source threshold for Serious PM2.5 nonattainment areas could
have significant drawbacks. Nevertheless, the EPA is proposing and
requesting comments on other possible thresholds for Serious areas.
    A possible alternative approach would be to promulgate a
PM2.5 major source threshold lower than 70 tpy of
PM2.5 emissions, recognizing that PM2.5 is a
subset of PM10. Generally, any source's PM2.5
emissions will be a fraction of that source's PM10
emissions. However, determining the appropriate major source emissions
threshold for PM2.5 that would be equivalent to 70 tpy of
PM10 on a national basis is problematic because, while
PM2.5 is generally a subset of PM10, there is not
a consistent ratio of PM2.5 to PM10 emissions for
all stationary sources. Combustion sources, such as industrial and
commercial boilers that burn fossil fuels, and selected industrial
processes emit primarily finer particles within the PM2.5
size range, while other industrial processes--typically involving
crushing and grinding operations--tend to emit more coarse particles in
the PM10 size range. While the PM10:
PM2.5 ratio for most sources decreases when the overall
emissions of PM are controlled, the quantitative difference between
PM2.5 emissions and PM10 emissions from specific
sources can still be significant, thus making a national
PM2.5 major source threshold based on a single ratio
difficult to define. The EPA seeks comments on possible ways in which a
PM2.5 emissions rate different from the statutory 70 tpy
rate for PM10 emissions can be established, taking into
account variations in the PM10: PM2.5 ratio for
different source categories and activities.
    Accordingly, while the EPA seeks comment on this alternative
approach, because of the associated limitations just described, the
first option (i.e., a major source threshold of 70 tpy of
PM2.5 emissions for stationary sources proposing to
construct or modify in PM2.5 nonattainment areas
reclassified as Serious) represents the agency's preferred approach.
    b. Control requirements for new major stationary sources and major
modifications of PM2.5 precursors. The second key provision contained
in subpart 4 that is not contained in subpart 1 relates to the control
of major stationary sources and major modifications of precursor
pollutants. Section 189(e) provides that, with respect to NNSR, the
control requirements applicable to major stationary sources of
PM10 also apply to major stationary sources of
PM10 precursors, except that major stationary sources of a
particular precursor may be exempt from the control requirements that
apply to major stationary sources of PM10 if the state can
demonstrate (based on guidance provided by the EPA) that the precursor
emissions from those sources do not contribute significantly to ambient
PM10 concentrations that exceed the standard in the
nonattainment area.
    The specific ``control requirements'' for new or modified major
stationary sources of PM2.5 are contained in section 173 of
the CAA (outlining requirements for the state permit program required
to be submitted in a state plan under section 189(a)(1)(A)) and
189(b)(3) (establishing a major source threshold for sources in Serious
areas). Consistent with these requirements, the EPA is proposing a
series of revisions to address PM2.5 precursors in the NNSR
regulations at 40 CFR 51.165, including: Revision of the definition of
``regulated NSR pollutant'' to require regulation under the permitting
program of all PM2.5 precursors; the establishment of major
stationary source thresholds (for both Moderate areas and Serious
areas) for all PM2.5 precursors; and, a provision for an
exemption from the NNSR requirements, pursuant to section 189(e) of the
CAA, for major stationary sources of any PM2.5 precursor
where such sources do not contribute significantly to ambient
concentrations of PM2.5 that exceed the standard in a
particular nonattainment area. As described in greater detail below,
the EPA is not at this time proposing any new significant emissions
rates for the PM2.5 precursors.
    As described in Section VIII.A.2.b of this preamble, the NNSR
regulations at 40 CFR 51.165 currently require states to regulate new
major stationary sources and major modifications of SO2 and
NOX as precursors under the NNSR requirements for
PM2.5.\241\ Optionally, a state may avoid regulating new
major stationary sources and major modifications of NOX
under the NNSR requirements for PM2.5 if that state
demonstrates to the satisfaction of the EPA that NOX is not
a significant contributor to PM2.5 concentrations in a
particular PM2.5 nonattainment area. Similarly, the existing
regulations provide that a state may opt to regulate new major
stationary sources and major modifications of VOC or ammonia under the
NNSR requirements for PM2.5 if that state demonstrates to
the satisfaction of the EPA that VOC or ammonia are precursors for
PM2.5 that need to be controlled in a particular

PM2.5 nonattainment area.\242\ In accordance with the
court's statement that section 189(e) requires all PM2.5
precursors to be addressed, the EPA is proposing to revise the NNSR
regulations to require that new major stationary sources and major
modifications of SO2, NOX, VOC and ammonia meet
the NNSR requirements for PM2.5 in PM2.5
nonattainment areas. In doing so, the EPA believes that it is necessary
to propose several revisions to 40 CFR 51.165 to ensure that the NNSR
requirements for PM2.5 adequately address the regulated
precursors consistent with the requirements of subpart 4.
---------------------------------------------------------------------------

    \241\ See the definition of ``regulated NSR pollutant'' at
existing 40 CFR 51.165(a)(1)(xxxvii)(C)(2) and (3).
    \242\ Ibid at (a)(1)(xxxvii)(C)(3) and (4).
---------------------------------------------------------------------------

    First, the EPA is proposing to revise the regulations at 40 CFR
51.165 to ensure that new major stationary sources and major
modifications of the four scientific precursors for PM2.5
are subject to the same requirements under the NNSR regulations that
apply to new major stationary sources and major modifications of direct
PM2.5 emissions. As explained earlier in this preamble, the
court decision in NRDC vs. EPA concluded that section 189(e)
``expressly governs precursor presumptions'' and thus necessitates that
the EPA revise its existing provisions in the NNSR rules that indicate
that VOC and ammonia are not regulated PM2.5 precursors. The
EPA is thus proposing to revise the NNSR definition of ``regulated NSR
pollutant'' to ensure that the NNSR regulations are consistent in
establishing that SO2, NOX, VOC and ammonia are
all regulated PM2.5 precursors for purposes of NNSR
requirements, except under certain conditions explained below. See
proposed 40 CFR 51.165(a)(1)(xxxvii)(C)(2).
    While section 189(e) generally requires that major stationary
sources of PM2.5 precursors must apply the control
requirements (including those for NNSR) for major stationary sources of
direct PM2.5 emissions, the section also provides for an
exemption from such requirements for any precursor for which ``the
Administrator determines that such sources do not contribute
significantly'' to the levels of PM2.5 that exceed the
standard in the nonattainment area. Section 189(e) further authorizes
the EPA to issue guidelines concerning the application of the exemption
process.
    In Section III of this preamble, the EPA described the agency's
proposed approaches for interpreting requirements for states to control
PM2.5 precursors in their attainment plans for the
PM2.5 NAAQS, which includes several proposed options to
enable states to exempt a precursor from the attainment plan control
requirements (including NNSR) for a particular PM2.5
nonattainment area with the appropriate factual and analytical basis.
In summary, the options included: (i) Separate analyses to determine
which precursors are subject to the control requirements for attainment
plans and which precursors are subject to the control requirements for
NNSR for PM2.5; (ii) a technical demonstration showing that
all sources of a particular precursor do not significantly contribute
to the PM2.5 levels that exceed the standard in an area,
thus exempting the precursor from control under both the attainment
plan and NNSR programs; and, (iii) one analysis to determine whether
control measures for a precursor are not needed for expeditious
attainment for purposes of the attainment plan, which would also define
the precursors that should be addressed for NNSR for PM2.5.
Accompanying the description of each of the above options, Section
III.C of this preamble discusses the potential analytical requirements
for any proposed demonstration that any particular precursor should be
exempted from the control requirements for PM2.5 in a given
nonattainment area. The EPA is requesting comments on the three
precursor options and the technical approaches for requesting a
precursor exemption. Any comments received will be considered in
developing the agency's final policy for addressing PM2.5
precursors under the NNSR program for PM2.5.
    The second proposed change with regard to the nonattainment area
control requirements for PM2.5 precursors involves the
definition of ``major stationary source'' as it relates specifically to
precursors. The EPA is proposing to revise the definition of ``major
stationary source'' contained in the NNSR regulations to ensure that
new sources that emit major amounts of any PM2.5 precursor
that the state is regulating in the attainment plan for the area are
appropriately considered major stationary sources subject to the NNSR
requirements for PM2.5. See proposed 40 CFR
51.165(a)(1)(iv)(A)(1). The proposed change concerning the regulation
of precursors for PM2.5 is being accomplished by adding to
the term ``regulated NSR pollutant'' the phrase ``(as defined in
paragraph (a)(1)(xxxvii) of this section).'' It should be noted that
the definition of ``major modification'' already contains this phrase.
As described above, the EPA is also proposing to revise the definition
of ``regulated NSR pollutant'' to clarify that four precursors are
being regulated for PM2.5 in nonattainment areas for
PM2.5. The EPA is proposing to set the major source
threshold for each PM2.5 precursor (SO2,
NOX, VOC and ammonia) at 100 tpy of each precursor for
sources locating in Moderate areas, and 70 tpy of any precursor for
sources locating in Serious areas. See proposed 40 CFR
51.165(a)(1)(iv)(A)(1) and (a)(1)(viii), respectively. For example, in
order to be a major source for purposes of the PM2.5 NAAQS,
the source would need to emit at least 100 tpy of PM2.5
emissions or at least 100 tpy of any individual PM2.5
precursor that is a regulated precursor in a Moderate PM2.5
nonattainment area. The individual treatment of pollutants and
precursors for applicability purposes is consistent with the EPA's
policy as explained in previous rulemakings.\243\
---------------------------------------------------------------------------

    \243\ ``Different pollutants, including precursors, are not
summed to determine applicability.'' See 73 FR 28231 (May 16, 2008),
at page 28331.
---------------------------------------------------------------------------

    In proposing to set the major source threshold for each
PM2.5 precursor at 100 tpy for Moderate areas, the EPA is
following the precedent established in the 2008 PM2.5 NSR
Rule in which the agency set the same 100 tpy major source threshold
for PM2.5 and each of its precursors (at that time
SO2 and NOX).\244\ As the EPA stated in that 2008
notice, sections 169 and 302(j) of the CAA contain definitions of
``major emitting facility'' and ``major stationary source'' that apply
to programs implemented under subpart 1, which contain the PSD and NNSR
program requirements, respectively.\245\ Those definitions also apply
to programs implemented under subpart 4 to the extent that they
regulate areas classified as Moderate PM2.5 nonattainment
areas, as subpart 4 does not establish a different threshold for such
areas. This proposal to set the same 100 tpy major source thresholds
for sources of PM2.5 emissions and applicable
PM2.5 precursor emissions is also consistent with the
requirements of section 189(e), which make the control requirements
applicable to major stationary sources of PM10 also
applicable to major stationary sources of applicable PM10
precursors.\246\
---------------------------------------------------------------------------

    \244\ Ibid.
    \245\ Ibid.
    \246\ See 57 FR 13498 (April 16, 1992), at page 13538.
---------------------------------------------------------------------------

    As noted above, section 189(b)(3) sets a lower major source
threshold of 70 tpy of PM10 emissions for sources locating
in PM10 nonattainment areas reclassified as Serious. Because
subpart 4 NNSR requirements must be applied to PM2.5, the
EPA must set a lower major source

threshold for PM2.5, pursuant to section 189(b)(3), in
PM2.5 nonattainment areas that are reclassified as Serious
areas. Thus, the EPA's preferred approach proposed above is to set a
major source threshold of 70 tpy of PM2.5 emissions for
sources in PM2.5 nonattainment areas reclassified as
Serious.
    Consistent with this proposal, the EPA is also proposing to set the
major source threshold for Serious areas for each precursor at 70 tpy
of that particular precursor. As noted above, section 189(e) makes the
control requirements for major stationary sources of PM10
also applicable to major stationary sources of PM10
precursors; thus, in accordance with the provision of the statute, the
control requirements applicable to major stationary sources of
PM2.5 emissions are also applicable to major stationary
sources of PM2.5 precursors. Accordingly, the EPA must
develop a major source threshold for PM2.5 precursors that
is consistent with the threshold for direct PM2.5 that will
apply in PM2.5 nonattainment areas reclassified as Serious.
See proposed 40 CFR 51.165(a)(1)(iv)(1)(viii).
    The EPA's proposal to set a major source threshold of 70 tpy for
Serious areas for each PM2.5 precursor is also consistent
with the approach the EPA has taken for establishing a major source
threshold for each PM10 precursor under subpart 4. In the
Addendum to the General Preamble offering guidance as to how to apply
the new subpart 4 requirements in Serious areas, the EPA indicated that
it interpreted the statute as applying the 70 tpy threshold to sources
of PM10 precursors.\247\
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    \247\ See Addendum to the General Preamble, 59 FR 41998 (August
16, 1994), at page 42012 (defining major point sources in Serious
areas as ``sources with the potential to emit at least 70 tons per
year of PM10 (or PM10 precursors) as required
in sections 189(b)(3) and 189(e) of the Act'').
---------------------------------------------------------------------------

    The EPA also solicits comments on the appropriateness of setting
the precursor major source thresholds at a different rate, particularly
if, as alternatively proposed above, the agency defines ``major
stationary source'' for sources of direct PM2.5 in Serious
PM2.5 nonattainment areas at a rate lower than 70 tpy of
PM2.5 emissions. For example, if the agency sets the major
source threshold at 60 tpy of PM2.5 emissions in Serious
PM2.5 nonattainment areas, the agency would also consider
setting the major source threshold for each PM2.5 precursor
at 60 tpy of that particular precursor.
    Moreover, the EPA believes that a reasonable argument can be made
that whatever threshold is set for PM2.5 emissions, the same
level would be too low to be regarded as ``major'' for each precursor
when considering the effects that such precursor sources could have on
ambient PM2.5 concentrations. The EPA previously analyzed
the relationship between emissions of SO2 and NOX
and the formation of secondary PM2.5 in the ambient air
expressly for purposes of determining an appropriate ratio for allowing
interprecursor offsets for PM2.5. Those studies resulted in
the EPA providing in the 2008 PM2.5 NSR Rule ``preferred''
ratios for both SO2 and NOX, whereby a source
could obtain reductions of a PM2.5 precursor to offset an
increase of direct PM2.5 emissions or another
PM2.5 precursor based on the ``preferred'' offset
ratios.\248\ In brief, the preferred ratios were as follows: For
NOX-to-primary PM2.5: 200 to 1 (NOX
tons to PM2.5 tons) for areas in the eastern U.S, and 100 to
1 for areas in the western U.S.; and for SO2-to-primary
PM2.5: 40 to 1 (SO2 tons for PM2.5
tons). In each case, the ratio illustrates that it requires
considerably more precursor emissions than direct PM2.5
emissions to result in a particular ambient concentration of
PM2.5. It should be noted that at that time the EPA did not
consider using the preferred ratios for the purpose of adjusting the
major source thresholds or significant emissions rates for
SO2 and NOX when regulating them as
PM2.5 precursors.
---------------------------------------------------------------------------

    \248\ The technical assessment, with details on data and
modeling inputs, was fully described in a technical memo titled
``Details on Technical Assessment to Develop Interpollutant Trading
Ratios for PM2.5 Offsets,'' which was placed in the
docket to the 2008 final rule. See also 73 FR 28321 (May 16, 2008),
at page 28339.
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    The preferred ratios as presented in the 2008 notice were later
challenged in a petition for reconsideration and the EPA withdrew them
via an EPA memorandum issued in 2011.\249\ In withdrawing the preferred
ratios, the EPA cited several concerns. First, it was determined that
the preferred ratios were not sufficiently conservative to be
representative of conditions in all areas of the country. Second, the
EPA determined that the preferred ratios were not adequate for
addressing the precursor relationship to ambient PM2.5
concentrations for the short-term (daily) averaging period.\250\ In
addition, the EPA believes that the overall analysis conducted for the
2008 notice generally illustrates that the threshold for defining
``major'' for either SO2 or NOX as precursors for
PM2.5 could reasonably be set at an emissions rate
considerably higher than 70 tpy of that particular precursor and be
equally protective of air quality as the 70 tpy threshold applied to
PM2.5 emissions.
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    \249\ Memorandum from Gina McCarthy, then EPA Assistant
Administrator, dated July 21, 2011, titled ``Revised Policy to
Address Reconsideration of Interpollutant Trading Provisions for
Fine Particles (PM2.5)'' and sent to Regional Air
Division Directors.
    \250\ Nevertheless, while the ratios are no longer considered
appropriate to use presumptively to meet the NNSR requirements for
emissions offsets, a state may still conduct its own analysis and
propose area-specific ratios for EPA approval on a case-by-case
basis for interpollutant offset trading.
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    Although the statutory definition at section 189(b)(3) applicable
to PM10 does not explicitly apply to other pollutants, the
EPA is considering the possibility that it may not have the legal
authority to set a higher major source threshold for PM2.5
precursors, even if it were technically justified. As previously noted,
section 189(e), as interpreted in light of the court decision in NRDC
v. EPA, requires that the same control requirements applicable to major
stationary sources of PM2.5 also apply to major stationary
sources of PM2.5 precursors. Courts have determined in other
contexts that the term ``controls'' under the CAA includes NSR
requirements, and in particular includes major source thresholds as
specified in the statute.\251\ Thus, if the holding of South Coast
directs the EPA's actions, section 189(e) must be read to require the
same major source threshold be applied to PM2.5 precursors
as applies to direct emissions of PM2.5.
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    \251\ See South Coast Air Quality Management District v. EPA,
472 F.3d 882, 900-902 (D.C. Cir. 2006) (holding that ``controls'' in
section 172(e) anti-backsliding provision include NSR requirements
such as LAER, offset ratios, and major source thresholds).
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    This conclusion is also consistent with the limited legislative
history on this issue. A House (of Representatives) Report accompanying
the 1990 amendments to the CAA described the effects of adding section
189(b)(3) to include the requirement that ``new or modified sources
emitting 70 tons or more per year of VOC will be subject to new source
review requirements.'' \252\ Thus, Congress seems to have contemplated
that the same major source threshold would apply to sources of
PM2.5 emissions and PM2.5 precursors in Serious
areas.
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    \252\ H.R. Rep. 101-490.
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    The EPA does not believe that a sufficient technical basis exists
at this time to enable the agency to propose specific higher major
source thresholds for any of the four PM2.5 precursors
presumptively regulated in PM2.5 nonattainment areas. The
EPA intends to continue its analysis of the relationship between each
precursor and ambient PM2.5 concentrations with the
possibility that higher major source thresholds for specific precursors
could be established in the future. In the meantime, the agency
solicits comments

on the general appropriateness of setting higher major source
thresholds for one or more PM2.5 precursors in
PM2.5 nonattainment areas, as well as legal and technical
considerations that should be made as part the EPA's future analysis of
NNSR requirements with respect to PM2.5 precursors.
    c. Significant emissions rates for PM2.5 precursors. As explained
above, a modification to an existing major stationary source of a
nonattainment pollutant such as PM2.5 is a major
modification and subject to the NNSR requirements for that pollutant
when the source proposes to make a physical or operational change that
results in both a significant emissions increase and a significant net
emissions increase of that nonattainment pollutant. With regard to
PM2.5 precursors, a modification to a major stationary
source of any such precursor is likewise a major modification subject
to the NNSR requirements for PM2.5 when the source proposes
a physical or operational change resulting in a significant net
emissions increase of that precursor. The EPA defined ``significant''
for SO2 and NOX as PM2.5 precursors in
the 2008 PM2.5 NSR Rule. For both precursors, the EPA set
the significant emissions rate for each pollutant when it is regulated
as a precursor to PM2.5 at 40 tpy, the same level as the
existing significant emissions rate for the pollutant as independently
regulated as a criteria pollutant for purposes of the SO2
and NO2 NAAQS.\253\ Also, in the preamble to the 2008
PM2.5 NSR Rule, the EPA indicated that it would consider 40
tpy for VOC as a PM2.5 precursor; however, that rate was not
codified in any of the NSR regulations because the regulations provided
that VOC was generally presumed not to be a precursor to
PM2.5. Instead, the agency explained that any state making a
demonstration that VOC should be treated as a PM2.5
precursor in a particular nonattainment area ``would be required to
adopt the 40-tpy significant emissions rate unless it demonstrated that
a more stringent significant emissions rate (lower rate) is more
appropriate.'' \254\
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    \253\ See the Federal Register published on May 16, 2008 (73 FR
28321, 28333 and 28334); and existing 40 CFR 51.165(a)(1)(x)(A).
    \254\ See the Federal Register published on May 16, 2008 (73 FR
28321 and 28333).
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    The 2008 PM2.5 NSR Rule codified the presumption that
ammonia, like VOC, need not be regulated as a PM2.5
precursor and the EPA did not set a significant emissions rate for
ammonia. Instead, the agency indicated that it was allowing states that
determine that ammonia significantly contributes to PM2.5
concentrations in a given PM2.5 nonattainment area to set
the significant emissions rate for ammonia based on information
developed for each individual attainment plan.\255\
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    \255\ Ibid.
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    As explained in the 2008 PM2.5 NSR Rule, the EPA set the
significant emissions rates for the presumed PM2.5
precursors at the levels for those pollutants already included in NSR
programs. The EPA explained that the use of the existing rates where
the PM2.5 precursor is also regulated as a separate criteria
pollutant harmonizes the NSR program for PM2.5 with the NSR
programs for those other criteria pollutants. The agency further
explained that this approach for setting the significant emissions
rates for PM2.5 precursors follows the precedent for setting
the significant emissions rate for NOX as a precursor to
ozone, where the same 40 tpy threshold was used for NOX
emissions as both a criteria pollutant (NO2) and a precursor
for ozone.\256\
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    \256\ See 73 FR 28321 (May 16, 2008), at page 28334.
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    Nevertheless, the EPA gave some consideration in the development of
the 2008 PM2.5 NSR Rule to setting the significant emissions
rates for the individual PM2.5 precursors at different
levels based on the effect of each precursor on ambient
PM2.5 concentrations. The EPA concluded that it did not have
adequate data on the impacts of precursor emissions from individual
sources to override the administrative advantages of setting the
significant emissions rates for SO2, NOX and VOC
for purposes of the PM2.5 NSR program at the same levels
that are already used for other purposes in the major NSR program for
other NAAQS. The EPA continues to believe, however, that when more data
are available, these data could provide a reasonable basis for
considering subsequent changes to the significant emissions rates for
each PM2.5 precursor for purposes of implementing the
PM2.5 NAAQS, whereby the significant emissions rates for the
individual PM2.5 precursors could more realistically reflect
the effect that each precursor has on ambient PM2.5
concentrations.
    The EPA is currently undertaking a separate rulemaking for both
NNSR and PSD in which it intends to include a technical analysis of
each PM2.5 precursor to better understand the relationship
of emissions of each precursor to ambient PM2.5
concentrations. The agency intends to consider the results of that
analysis and other factors and may propose new significant emissions
rates accordingly for SO2 and NOX as
PM2.5 precursors. The EPA also intends to propose individual
significant emissions rates for VOC and ammonia as PM2.5
precursors at that time. Thus, the EPA is not proposing any changes to
the existing significant emissions rates for SO2 and
NOX as PM2.5 precursors in this document.
    It is the EPA's expectation that any new or revised significant
emissions rates for the individual PM2.5 precursors will
become effective in that separate rulemaking not long after the date of
that final rule, allowing states to adopt and use them in their own
NNSR regulations once the EPA approves their individual SIPs. However,
in the event that the timing of that rule does not allow ample time for
states to rely on it to adopt any new or revised significant emissions
rates in their rules, it was explained earlier that individual
significant emissions rates already exist for SO2 and
NOX at 40 tpy. Additionally, the significant emissions rate
for VOC was identified as 40 tpy in the 2008 PM2.5 NSR Rule
notice (though not in the final regulations), but the EPA is proposing
to add that precursor and emissions rate to the list of
PM2.5 precursors. See proposed 40 CFR 51.165(a)(1)(x)(A).
Hence, only the ammonia significant emissions rate would remain to be
defined by each state that needs to control major stationary sources of
ammonia as part of their NNSR program.
    d. Transition provisions for PM2.5. The CAA requires proposed major
stationary sources and major modifications to meet major NSR permitting
requirements that apply on the basis of the area's attainment
designation.\257\ Accordingly, the EPA's longstanding interpretation of
the CAA is that a proposed new major stationary source or major
modification must satisfy the appropriate major NSR requirements (PSD
vs. NNSR) for a particular pollutant that are in effect on the date
that a permit is issued to the source, rather than the requirements
that may have been applicable when the permit application was
submitted.\258\
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    \257\ Compare CAA section 165(a) (permitting requirements for
sources locating in attainment and unclassifiable areas) with
sections 172(c)(5) and 173 (permitting requirements for sources
locating in nonattainment areas).
    \258\ See Memorandum from John S. Seitz, Director, EPA Office of
Air Quality Planning and Standards, on March 11, 1991, titled ``New
Source Review (NSR) Transitional Guidance,'' Attachment p. 6, sent
to Regional Air Division Directors.
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    In the final 2012 PM NAAQS rule, the EPA established a
grandfathering provision that would enable some proposed new and
modified sources

that had already submitted a PSD application prior to the effective
date of the revised primary annual PM2.5 NAAQS to continue
being reviewed under the pre-existing PSD requirements for
PM2.5. This provision applies where the PSD program
continues to be the applicable set of major NSR requirements for the
area of concern. In response to the EPA's proposal to add this
grandfathering provision for certain PSD permit applications pending
upon the effective date of the new NAAQS, the EPA received comments
concerning the need for a transition period for implementing the NNSR
requirements in newly designated PM2.5 nonattainment areas
as a result of the tightening of the primary annual PM2.5
NAAQS.\259\ The commenters recommended that the EPA establish a
grandfathering provision to enable pending permit applications to
continue under review for the pre-existing requirements. A subset of
the commenters recommended that grandfathering be accomplished by
establishing an effective date for designations 1 year after initial
publication in the Federal Register. Presumably, these commenters
believed that by delaying the effective date of any new nonattainment
designations for the primary annual PM2.5 NAAQS, sources
with pending PSD permit applications could continue to be reviewed
under the PSD permitting requirements rather than the NNSR requirements
for PM2.5.
---------------------------------------------------------------------------

    \259\ See 78 FR 3086 (January 15, 2013), at page 3263.
---------------------------------------------------------------------------

    In the final 2012 PM NAAQS rule, the EPA expressed its disagreement
with those commenters, explaining that the obligation to adopt new
provisions under a state's NNSR program will not apply with regard to
the revised NAAQS until such time as an area is designated
nonattainment, and beginning on the effective date of the new area
designations for PM2.5 proposed new and modified major
sources would be required to meet the applicable NNSR requirements for
PM2.5.\260\ However, the EPA further indicated that it would
continue to consider the need to establish a grandfathering provision
under the NNSR program for PM2.5, and would propose such
provision, if appropriate, as part of a subsequent NSR implementation
rulemaking with additional opportunity for public comment.\261\
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    \260\ The applicable NNSR requirements would be either the NNSR
requirements for PM2.5 in the state's existing SIP or the
requirements found at 40 CFR part 51 Appendix S, where a state's SIP
does not currently include NNSR requirements for PM2.5.
States will be required to submit to the EPA for approval SIP
revisions containing the amended NNSR program requirements for
PM2.5 contained in the final PM2.5 NAAQS
implementation rule being proposed in this notice, but those
additional requirements will not apply in states with SIPs that
include NNSR requirements for PM2.5 until the EPA
approves the SIP revision. See ibid.
    \261\ Ibid.
---------------------------------------------------------------------------

    After further considering the issue during the development of this
proposal, the EPA has decided not to propose a grandfathering provision
that would apply to pending PSD permit applications that were submitted
but not approved prior to the effective date of the new nonattainment
designations for the 2012 primary annual PM2.5 NAAQS. The
EPA does not believe it would be acceptable for the EPA or a state to
issue a PSD permit, instead of a NNSR permit, with regard to a
particular pollutant for which an area is designated nonattainment on
the date the permit is to be issued. Instead, if the PSD permit has not
been issued by the effective date of the new nonattainment designation,
then the applicant should be required to withdraw that part of the
permit application that addresses the nonattainment pollutant and
submit an application that satisfies the applicable NNSR or minor NSR
requirements in effect in the implementation plan on the date the
permit will be issued. Given adverse conditions that already exist in a
nonattainment area and the congressional directive to reach attainment
as expeditiously as practicable, construction at a major stationary
source that significantly increases emissions in such an area should be
expected to address NNSR requirements, even if this could cause delay
to the permit applicant.
    As explained in Section VIII.D of this preamble, states will have
18 months from the date of the new nonattainment designations to revise
their existing NNSR programs or establish new programs in accordance
with the applicable requirements under subpart 4. Where the area was
already designated nonattainment for any prior PM2.5 NAAQS
before the effective date of designations for the 2012 NAAQS, the state
should continue to apply the NNSR requirements contained in the
approved SIP to issue the final permit addressing all PM2.5
NAAQS until the new SIP revisions required by this rule are approved.
In areas already designated nonattainment for any PM2.5
NAAQS but lacking an approved NNSR program that applies to
PM2.5, the requirements of Appendix S may continue to be
applied for issuing permits in that area. However, any changes to the
Appendix S requirements that the EPA may make via this rulemaking must
be implemented in any area that applies Appendix S once these revisions
become effective. Section VIII.C.2 that follows discusses the possible
changes to the NNSR requirements in Appendix S that the agency is
proposing in this action.
    The EPA is not proposing to add any grandfathering provisions that
would apply to changes in NNSR permitting requirements in areas that
the EPA may already have designated nonattainment for PM2.5
at the time the source submitted a permit application. For reasons
similar to those identified above in cases where an area designation
changes, the EPA generally believes that major sources that would
contribute to the air quality in an area that is not meeting the NAAQS
for a particular pollutant should be expected to address the most
current requirements that apply in the nonattainment area. The agency
acknowledges it is possible that a proposed new or modified source may
need to address additional precursor control requirements that did not
apply when a permit application was submitted once the EPA's final rule
is promulgated and the appropriate revisions are approved into a
state's NNSR SIP. However, based on the terms of section 189(e) of the
CAA, the EPA generally believes that those requirements should be
addressed in pending permit applications unless the air agency has
determined, and the EPA has approved such demonstration, that major
stationary sources of that precursor do not contribute significantly to
PM2.5 levels in the nonattainment area. Nevertheless, the
agency recognizes that there may be certain circumstances where
proposed construction might be delayed and an applicant may feel
fundamental fairness would support exempting a particular pending
permit from newly established requirements; therefore, the EPA seeks
comment on what circumstances, if any, would justify a grandfathering
provision for pending nonattainment NSR permits similar to the
grandfathering provision promulgated in the final 2012 PM NAAQS Rule
for PSD permitting purposes. See 40 CFR 51.166(i)(10) 52.21(i)(11). In
addition, the EPA requests comment on how such a grandfathering
provision would be consistent with the relevant provisions of the CAA.
The EPA does not believe the statutory deadline in section 165(c) that
forms part of the EPA's basis for grandfathering in the PSD context is
applicable to NNSR permit decisions.
2. What are the changes the EPA is proposing in Appendix S?
    As described above, 40 CFR 52.24(k) provides that the Emission
Offset

Interpretative Ruling, 50 CFR part 51, Appendix S, shall govern permits
to construct and operate for which a NNSR permit application is
submitted between the effective date of designation as nonattainment
and the date a state's NSR permit program meeting the requirements of
part D is approved and effective. The EPA is considering a range of
options concerning how and whether to address the proposed subpart 4
requirements in the interim NNSR program requirements contained in
Appendix S.
    Permitting requirements for new major stationary sources and major
modifications in PM2.5 nonattainment areas were originally
added to Appendix S in the 2008 PM2.5 NSR Rule. The
amendments generally followed the NNSR requirement contained in subpart
1 of part D. However, in the 2008 PM2.5 NSR Rule, the EPA
determined that, in light of the transitional function of Appendix S,
it would be appropriate to regulate PM2.5 precursors under
Appendix S in a manner that differed slightly from the regulatory
approach taken in 40 CFR 51.165.
    As explained in Section VIII.B.2 of this preamble, under the
existing requirements for NNSR plans at 40 CFR 51.165, SO2
is regulated as a PM2.5 precursor, NOX is
presumed to be a regulated PM2.5 precursor, and VOC and
ammonia are presumed not to be regulated precursors (with either states
or the EPA having authority to rebut any such presumption for a
particular nonattainment area). However, in developing Appendix S, the
EPA determined that it would be premature to presume that
NOX is a regulated PM2.5 precursor in all
PM2.5 nonattainment areas that proposed new major sources
and major modifications in those areas should be required to address as
a prerequisite to obtaining a NNSR permit, while at the same time the
states were in the process of determining whether in fact
NOX emissions contribute significantly to ambient
PM2.5 concentrations in those areas. Accordingly, the EPA
decided to delay implementing any control requirements for
NOX as a PM2.5 precursor until the states