from very short stacks.

Two of the industry groups (0083.1, 0096.1) stated that our
justification for lowering the current significant threshold from 15 tpy
to 10 tpy uses a modeling analysis that tends to over-predict actual
representative impact levels under worst-case scenarios.

One of the industry groups (0109.1) does not support the 10 tpy as a SER
for direct PM2.5 emissions because it unclear as to what assumptions or
measurements this proposed SER is based on.  This commenter also
objected to the proposed 5 tpy SER, asserting that the concerns we have
about ambient PM2.5 from short stacks are not relevant to a majority of
sources.

Recommend SER of 15 tpy:

Eight industry and industry group commenters (0083.1, 0096.1, 0100.1,
0107.1, 0109.1, 0111.1, 0119.1, 0161) urged us to select 15 tpy as the
SER for direct PM2.5 emissions.

One industry commenter (0161) and one industry group (0107.1) stated
that by selecting 15 tpy we would maintain consistency with the PM10
SER, if not the methodology by which that rate was established (70 FR
66037-38).  These commenters indicated that given that the PM2.5 source
population differs from the PM10 source population (70 FR 66038), it is
not necessary to use identical methodology to set the SER.  The
commenters added that we could conceivably drop the direct PM2.5
emissions SER to 10 tpy after 5 years to capture additional facilities,
if a robust offset market has developed.

Two industry groups (0083.1, 0096.1) stated that our proposal to lower
the current significant threshold from 15 to 10 tpy is based on modeling
analyses using potential ambient air quality impacts from various
hypothetical major sources of PM2.5 emissions which tend to over-predict
actual representative impact levels under worst-case scenarios.
Because of this and other conservative biases introduced in the modeling
analyses, the commenters believe that the modeled upper bound level of
15 tpy should be adopted as the direct PM2.5 emissions SER.  The
commenters believe that a 15 tpy SER would be a more reliable indicator
of when increased emissions could have significant impact on ambient
PM2.5 concentrations under typical source configurations.  An industry
commenter (0111.1) similarly suggested that, since we indicate that we
used conservative modeling assumptions in developing the range of 5 to
15 tpy for the SER for direct PM2.5 emissions, we should utilize the
upper end of the range (as opposed to the middle as we suggest) in
setting major NSR significance levels.

One industry group (0119.1) supported a 15 tpy SER for direct PM2.5
emissions based on the fine particulate reductions that are expected
from Federal regulations that are in the pipeline and the relatively
small contribution of industrial sources to the remaining inventory.
The commenter indicated that a higher threshold is the best way to
balance the need for additional reductions with the burden that major
NSR places on capital improvements and investment.

One industry group (0100.1) opposed the tightening of the PM2.5 SER,
arguing that it should remain at 15 tpy or even be adjusted upwards to
reflect higher emissions levels that will be measured using our proposed
methods (which will include condensables).  A second industry group
(0109.1) questioned whether we really have the technical ability at this
time using Conditional Test Method (CTM) 40 and Reference Method 202 to
accurately measure PM2.5 condensable emissions; therefore, the commenter
supports retaining the PM10 significance level of 15 tpy as a surrogate
for fine particulate until such technical capability is available.

Recommend SER of 5 tpy:

One group of environmental commenters (0154.1) believes that using a 4
percent impact from a single source is hardly a de minimis impact,
especially in nonattainment areas, which are required to reduce
emissions as expeditiously as practicable.  The commenter asserted that
our own calculations indicate that direct emissions of PM2.5 in excess
of 5 tpy from facilities with short stacks would cause a measurable
increase in ambient PM2.5 concentrations.  Based on this information,
the commenter argued that we cannot justify choosing a level greater
than 5 tpy as de minimis.

One private citizen (0062) noted that our selection of 10 tpy as the SER
for direct emissions of PM2.5 is based on example modeling with a target
impact of 4 percent of the annual PM2.5 standard (0.6 (g/m3).  The
commenter argued that given that it is accepted that, at most, one-half
or less of monitored PM2.5 is directly emitted particulate, the
“effective” annual PM2.5 standard for directly emitted PM2.5 should
be on the order of 7.5(g/m3.  Based on this, the commenter stated that
the target impact of 4 percent should be about 0.3 (g/m3 and the SER
for direct emissions of PM2.5 should be 5 tpy or less.

Recommend Other Approaches:

One state commenter (0153) suggested that we could “split the
difference,” an option that could give states and companies some
flexibility.  Modifications increasing direct PM2.5 emissions by less
than 5 tpy could be considered de minimis; for modifications increasing
direct PM2.5 emissions by between 5 and 15 tpy, the source could choose
to either demonstrate an ambient impact of less than a 4 percent of the
NAAQS or simply be subject to major NSR; and modifications with
increases of 15 tpy or more of direct PM2.5 emissions would be subject.

One industry commenter (0119.1) requested that regulated entities be
given the opportunity to establish (through environmental modeling) that
specific projects which would increase emissions by more than the
designated SER will not result in an ambient PM2.5 increase of more than
4 percent of the NAAQS.  The commenter believes that such an
alternative would ensure adherence to our proposed generic limitation
while recognizing that it may not reflect every circumstance.  The
commenter asserted that the suggested alternative would minimize the
burden on state regulators as most sources and projects would continue
to rely on the generic significance threshold, and regulated entities
would bear the burden of demonstrating that an alternative limitation is
appropriate

Response:

As proposed, and for the reasons articulated in the proposed rule, the
final rule establishes the SER for direct PM2.5 emissions at 10 tpy.
This SER is based fundamentally on the same approach that we used in
setting the significant emissions rate for TSP and PM10.  We agree with
commenters who indicated that it was appropriate to use the same
methodology for direct PM2.5 emissions that was used to set the SER for
PM10 and TSP.  We do not agree that using the same SER level as PM10
(15 tpy) is warranted, given the substantially lower PM2.5 NAAQS in
relation to the PM10 NAAQS.

We do not agree with commenters who contend that our modeling tends to
overpredict impacts, and thus that we should raise the SER to 15 tpy.
Our analysis is intended to represent a range of sources that could
undergo changes which increase their emissions of PM2.5.  Even if
commenters could show that EPA’s analysis tends to overpredict impacts
for certain sources, some conservatism is justified when setting de
minimis levels used to determine whether a modification should be
subject to more detailed review of its air quality impacts.

Neither do we agree that a SER of 5 tpy or less is warranted solely
because a source releasing PM2.5 emissions from a short stack could
cause measurable increase in ambient PM2.5 concentrations.  As stated
in the proposal, our analysis did indicate that an emissions increase of
5 tpy at certain facilities with short stacks could cause an ambient
PM2.5 concentration increase above the target de minimis level.
However, our approach for calculating a design value to establish the
PM2.5 SER involved modeling a variety of source configurations and
downwash conditions with meteorological data from selected urban
settings.  Thus, the resulting design value is not intended to be
representative of any particular source or stack height, but instead to
represent a range of sources that could undergo changes which increase
their emissions of PM2.5.  While some conservatism is helpful when
setting a de minimis impact level, we do not believe this justifies
setting the SER based on individual source types that are not
representative of the range of sources that could increase emissions
without having a significant impact.

With regard to the comment that our procedure for rounding the SER for
PM2.5 to 10 tpy is arbitrary, we agree that a more precise threshold
would not necessarily entail more work for either regulators or
industry.  However, rounding the SER to 10 is consistent with the
approach that we have taken in setting SERs for other criteria
pollutants beginning with the 1980 PSD regulations.  In those
regulations, as mentioned above we modeled a variety of source
configurations along with other modeling assumptions in order to
calculate a representative design value based on an ambient impact of 4%
of the NAAQS, which we then rounded off to the nearest 5 tons.  See 45
FR at 52707, August 7, 1980.  Furthermore, rounding down provides some
conservatism to account for factors not reflected in our representative
source analysis, such as the potential impact of shorter stacks
discussed above.

We do not agree that inclusion of condensable emissions in future
testing and applicability determinations (see section 5) is grounds for
increasing the SER for direct PM2.5 emissions.  The results of the
modeling analyses that are the basis for the SER of 10 tpy are
affected by the quantity of the direct PM2.5 emissions used in the
model—not by the nature of the direct PM2.5 emissions (i.e.,
filterable or condensable).  The direct PM2.5 emissions used in the
model included both the filterable and condensable fractions.

We do not agree with the commenter who recommended using an
“effective” annual standard of 7.5 (g/m3 (half the PM2.5 annual
NAAQS) to calculate the SER for PM2.5.  We have stated that precursors
contribute significantly to ambient PM2.5 concentrations, producing
approximately half of the concentration nationally; however, this should
not be taken to mean that primary (or direct) PM2.5 emissions affect
only half the NAAQS.  From one location to another, ambient PM2.5
concentrations may consist of varying portions of primary and secondary
PM2.5.  The commenter did not explain why we should consider only half
the value of the standard when determining what the impact will be of a
source’s direct PM2.5 emissions.  We did not develop the PM2.5 NAAQS
based on any distinction between the individual components that make up
the total measurement.  Similarly, we would not determine a source’s
compliance with the NAAQS by comparing the impact of its direct PM2.5
emissions against half the value of the standard.

We do not agree that there should be a process whereby a source may
elect to demonstrate that the increase in direct PM2.5 emissions from a
proposed modification will have an ambient impact of less than
4 percent of the PM2.5 NAAQS.  Rather than establishing applicability
of NSR on a source-by-source basis through environmental modeling, we
believe that it is more appropriate to continue our historical method of
specifying de minimis cutoffs in terms of “emissions rate” for
source applicability purposes.  This approach is consistent with the use
of emissions rates as the criteria for determining which sources are
major and therefore subject to NSR/PSD review.  Case-by-case
determinations of NSR applicability on the basis of ambient air quality
impacts could add an unnecessary level of complexity to the review
process and could create an atmosphere of uncertainty as to whether
individual sources needed to apply for a permit or not, and could lead
to uneven application of the regulations from state to state.
Case-by-case modeling of ambient impacts is conducted within the permit
process once it has been established that a proposed modification
increases emissions in an amount that warrants review.

We disagree with the commenter’s statement that a separate proposal by
EPA to change the annual emissions test for major modifications at
electric utilities to an hourly test would completely undermine this
proposal.  The commenter is apparently referring to our proposal on the
emissions test for electric generating units (70 FR 61081, October 20,
2005).  The SER is relevant as a threshold to determine if a
significant emissions increase occurs at any type of facility—not just
power plants.  In any event, EPA will address the potential need for
another SER for power plants, if appropriate, in that particular
rulemaking.

Comments:

Two industry commenters (0107.1, 0161) requested that if we require that
ammonium chloride and other ammonia compounds that result from the use
of ammonia for NOx control be counted as direct PM2.5 as a result of
Method 202 or other testing for condensable particulate matter, we
should establish a different SER for direct PM2.5 where a source
demonstrates to the permitting authority that a net emissions increase
or PTE will equal or exceed 10 tpy (the final SER for direct PM2.5
emissions) due to the use of ammonia in its air pollution control system
for NOx control.  The commenters suggested a SER of 40 tpy of direct
PM2.5 emissions for such sources, equal to the SER for NOx.

Response:

As indicated in the Clean Air Fine Particle Implementation Rule
promulgated on April 25, 2007 (72 FR 20586), EPA has adopted a
transition period to validate test methods for measuring condensables.
Similar to that implementation rule, the final PM2.5 NSR Implementation
Rule will require major NSR programs to include condensable emissions of
PM2.5 for all purposes from the date established in the notice and
comment rulemaking promulgating validated test methods or January 1,
2011, whichever is earlier (see section 5).  Nevertheless, we do not
agree that sources generating condensable PM2.5 emissions through use of
NOx controls should be subject to a higher SER for direct PM2.5
emissions than other sources, since the total direct PM2.5 emissions
(including condensable emissions) are evaluated against the SER
regardless of the origin of the direct PM2.5 emissions.

Comment:

One state/local agency (0153) commented on the proposed regulatory
language for the SER for direct PM2.5 emissions.  The commenter
suggested adding the word “direct” to the entry for PM2.5 emissions
in the significant emissions tables in the definitions of
“significant” in 40 CFR 51.165, 51.166, and 52.21 and in appendix S
of 40 CFR part 51.

Response:

We agree with the commenter and have made this change in the final
regulatory text for the rulemaking.  See, e.g., § 52.21(b)(23)(i).
This is consistent with our proposal, since we indicated we would
propose to establish separate SERs for PM2.5 precursors.

Comments on the SERs for PM2.5 Precursors (SO2, NOx, and VOC)

At proposal, our preferred option for setting the SERs for PM2.5
precursors was to use the existing SERs for those precursors already
included in major NSR programs for most attainment and nonattainment
areas, that is, 40 tpy for SO2, NOx, and VOC.  We also requested
comment on the option of setting the SER for these precursors at the
same level as proposed for direct PM2.5 emissions, that is, 10 tpy.

Comments Supporting 40 tpy:

Seven industry commenters (0083.1, 0096.1, 0109.1, 0111.1, 0119.1, 0126,
0161) support our preferred option of utilizing the existing SO2, NOx,
and VOC SERs of 40 tpy.  Six of these industry and industry group
commenters (0083.1, 0096.1, 0111.1, 0119.1, 0126, 0161) indicated that
using the existing SERs would harmonize and streamline NAAQS attainment
and maintenance requirements and/or would be consistent with the
thresholds under the ozone NSR program.  They stated that by reducing
the complexity of requirements, it would benefit NSR applicability
determinations (including simplifying netting analyses), control
technology determinations, and air quality impact analyses.

Eight state/local agencies commenters (0079.1, 0080.1, 0124.1, 0136.2,
0145, 0158, 0165, 0168) generally support our preferred option of
defining the PM2.5 precursor SERs at 40 tpy to harmonize and streamline
the major NSR program.  Three of the commenters (0136.2, 0165, 0168)
added that a higher SER for the PM2.5 precursor emissions than for
direct PM2.5 emissions is reasonable because of the greater impact of
direct PM2.5 emissions on ambient concentrations.  For nonattainment
areas, however, these commenters suggested that the rule include a
provision that would allow individual states with nonattainment areas to
define lower precursor emission rates in their SIP demonstration,
similar to the lower SERs for ozone precursors in some ozone
nonattainment areas.

Another of the supportive state/local agency commenters (0124.1) stated
that if we adopt the 10 tpy SER for precursors, it should be founded
upon a clear need to protect the ambient standard in numerous downwind
locales.  The commenter pointed out that a 10-tpy threshold could
trigger NSR review for sources/modifications that would otherwise be
minor for those given pollutants, creating an unwarranted inconsistency
that would add confusion to the major NSR program.

Comments Opposing 40 tpy:

One state/local agency commenter (0153) stated that, though existing
SERs will provide a program that is of similar effectiveness as
currently implemented for precursors that are also criteria pollutants,
it would not be too complex to administer precursor significance levels
for SO2, NOx, and VOC at levels other than those that currently exist.
The commenter asserted that we could conduct additional modeling to
determine the impact of secondary emissions on downwind PM2.5
concentrations and construct a program based on the results of this
analysis.

One Federal agency commenter (0068) stated that given that roughly half
or more of ambient PM2.5 is derived from precursors, the commenter would
support 10 tpy as appropriate to define significance of PM2.5 precursor
emissions.

One private citizen commenter (0062) stated that he believes that the
proposed preferred SERs for PM2.5 precursors were overstated.
Regarding SO2, the commenter noted that it is commonly accepted that, in
much of the eastern United States, one-half or less of monitored PM2.5
is sulfate, which is usually considered as ammonium sulfate.  Based on
this, he stated that the “effective” annual standard for ammonium
sulfate should be on the order of 7.5 (g/m3.  The existing significant
emissions rate for SO2 of 40 tpy is related to the annual standard for
SO2 of 80 (g/m3 by the ratio of 40:80 or 0.5 tpy per (g/m3.  He stated
that, by the same ratio, the significant emissions rate for SO2 as a
precursor to PM2.5 should be 3.75 tpy, which could be rounded up to 4
tpy.  The commenter went on to argue that the situation is even more
complicated.  He noted that SO2 has a molecular weight of 64.07 while
ammonium sulfate has a molecular weight of 132.15, which means that each
ton of SO2 has the potential to be treated as 2 tons of ammonium
sulfate.  The commenter argued that even recognizing that probably not
all of the SO2 will be converted to PM2.5 and that it takes time
(equivalent to distance) for the chemical transformation to occur, it
would be prudent to establish a SER at something closer to 4 tpy than
the preferred proposal of 40 tpy.

The private citizen commenter (0062) also stated that the precursor
pollutant NOx could be considered in much the same way.  The commenter
asserted that the fraction of monitored PM2.5 that is ammonium nitrate
is more variable but could generously be approximated as one-third,
yielding an “effective” annual standard of 5.0 (g/m3.  The
commenter also pointed out that the existing SER for NOx of 40 tpy is
related to the annual standard for NO2 of 100 (g/m3 by the ratio of
40:100 or 0.4 tpy per (g/m3.  Based on the same ratio, the commenter
believes that the SER for NOx as a precursor to PM2.5 should be 2.0
tpy.

Response:

As proposed in our preferred option, we have decided to promulgate SERs
of 40 tpy for the PM2.5 precursors SO2, NOx, and VOC, which is the SER
value already used for these pollutants under the major NSR program in
most attainment and nonattainment areas.  The use of existing SERs,
where the PM2.5 precursor is also regulated under NSR for a separate
criteria pollutant, harmonizes the NSR program for PM2.5 with the NSR
programs for those other criteria pollutants.  This harmonization
enables streamlining of determinations regarding the applicable control
technology and analysis of air quality impacts into a single and
comprehensive decision-making process for both PM2.5 and other criteria
pollutants that also cover PM2.5 precursors.  As a result, the
additional burden on both the regulated industry and regulatory
authorities will be kept to a minimum for an already complex program.
This approach also follows the precedent we set when we used the
significant emission rate for NOx from the NO2 program when ozone became
a criteria pollutant.

While the burden imposed is just one factor to be considered when
setting the SERs for precursors, the process for determining the SERs
also involves taking into account the accuracy and certainty by which we
can predict the effect of the precursors on PM2.5 emissions.  Although
it is difficult to determine the ambient air quality effects that result
from a single source of emissions of PM2.5 precursors, there are
conservative screening models for predicting impacts of large NOx and
SO2 sources on ambient PM2.5 concentrations.  Therefore, we conducted a
range of modeling analyses to determine the amount of PM2.5 precursor
emissions needed to show an increase in ambient PM2.5 concentrations.
These analyses showed that precursor emissions probably have some
localized impacts, but that most impact is farther downwind as
precursors have the time to convert to PM2.5.  While we know that
precursors contribute to the formation of PM2.5 in the ambient air, the
degree to which these individual precursors contribute to PM2.5
formation in a given location is complex and variable.  There are
competing chemical reactions taking place in the atmosphere, and
meteorological conditions play a significant role in the size and
characteristics of particle formation.  For these reasons, we do not
believe that we 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 the reasons discussed above, we disagree that the SER for PM2.5
precursors should be set at the same level as the SER for direct PM2.5
emissions, that is, 10 tpy.  Adopting this value for the precursor SER
would imply that 1 ton of precursor emissions is equivalent to 1 ton of
direct PM2.5 emissions, which is not the case (see additional discussion
in section V.G.4 of the preamble to the final rule, in the context of
interpollutant trading for offsets).  We also disagree with the
commenter who urged us to establish SERs for SO2 and NOx based on the
relationship between the existing SERs for these pollutants and the
NAAQS for the pollutants.  In the first place, and as discussed above,
the ambient PM2.5 impact of precursor emissions from a single source is
uncertain and variable, and much more so than the impact of SO2 and NOx
emissions on the ambient concentrations of SO2 and NO2.  The
commenter’s suggested approach implies that 1 ton of SO2 emissions
would have the same effect on ambient PM2.5 concentrations that it would
have on ambient SO2 concentrations, and likewise for NOx emissions.  As
discussed in our analysis for interpollutant trading, this is clearly
not the case.

We note that states may define more stringent precursor SERs for
nonattainment areas as part of their attainment strategy if necessary.
Under section 116 of the Act, states retain the right to adopt any air
pollution measures that they see fit, provided they are not less
stringent than corresponding Federal regulations.  Note also that 40
CFR 51.165(a)(1) provides that a SIP may deviate from the definitions
therein (which include the SERs) if the state demonstrates that its
definition is at least as stringent as the definition in 40 CFR
51.165(a)(1).  Consequently, we do not believe that additional
regulatory language is necessary to provide this flexibility to states.

 Comments on the SER for Ammonia as a PM2.5 Precursor

Comment:

One industry commenter (0126) stated that we should not leave it to
states to set SERs for ammonia to determine applicability.  The
commenter argued that this SER should be developed by EPA scientists and
be subject to notice and comment.

Response:

In the final rule, as proposed, we are allowing those states that
determine in their SIPs that control of ammonia is necessary to set the
SER for ammonia.  The SER will be based on information presented in
each attainment demonstration.  We believe this is more appropriate
than EPA setting a single SER, because of the varying roles ammonia
plays in the formation of PM2.5 from one area to another, and also
because of our still-evolving understanding of the impact of reducing
ammonia emissions on ambient PM2.5 concentrations.  We note that the
SIP revisions that states need to make to add ammonia to their NA NSR
programs and, to set SERs for ammonia, are subject to notice and comment
rulemaking requirements.  When any state determines that control of
ammonia is necessary in a PM2.5 nonattainment area, we advise that state
to develop a SER for ammonia.  Otherwise, according to the definition
of “significant” in the PSD program, “any emissions rate” would
be considered significant.  See 40 CFR 51.166(b)(23)(ii) and
52.21(b)(23)(ii).

Comments on Including the Condensable Fraction of Direct PM2.5
Emissions for Purposes of Major NSR

Certain sources utilizing high temperature processes emit gaseous
pollutants that rapidly condense into particle form.  These
“condensable emissions” typically make up a significant fraction of
direct PM2.5 emissions.  We proposed to clarify in this rule that
condensable emissions must be included when determining whether a source
is subject to the major NSR program and in deriving emissions
limitations.

Supporting Comments:

One group of environmental commenters (0154.1), three state/local
agencies (0117.1, 0142, 0168), and two state/local agency associations
(0136.2, 0165) supported the requirement to include condensable
emissions in implementing NA NSR and PSD for PM2.5.  The group of
environmental commenters asserted that there are methods available now
that can both quantify and control condensables.

Two of the state/local agencies (0142, 0168) and one of the agency
associations (0165) favor clarifying through regulation that condensable
emissions (all condensables, including primary sulfates) must be
included when determining PM2.5 NSR applicability and required modeled
demonstration of NAAQS, PSD increments, etc.  These commenters also
urged that we finalize and recommend the stationary source PM2.5 test
method discussed in the proposal preamble.

The other supportive state/local agency association (0136.2) requested
that we define “condensables” in the final rule to include gaseous
pollutants and those that condense into particle form, such as primary
sulfates, nitrates, organic material and metals (that is, both the
“front end” and “back half” of condensables).  The commenter
urged that we identify a stationary source test method for PM2.5 that
will enable state and local agencies to accurately identify the fraction
of the condensables that is PM2.5 in order that permit limits can be
set, increments can be tracked, and ambient impacts can be evaluated.

The other supportive state/local agency commenter (0117.1) noted that
including condensable emission in determinations for when a source will
be subject to the major NSR program for PM2.5 is consistent with the
historical determinations related to condensables that have been made in
the commenter’s state.

Another state/local agency (0087.1) expressed concern about including
condensables in the rule at this time due to inaccurate test methods.
The commenter believes it is critical that EPA expeditiously develop a
more reliable test method.  In the meantime, the commenter suggested
that, for purposes of permitting and compliance, CTM 40 plus Method 202
be used so that there is consistency in these programs.

Opposing Comments:

   Seven industry and industry group commenters (0083.1, 0096.1, 0105.1,
0109.1, 0111.1, 0125.1, 0155) expressed opposition to including
condensables at this time.

One of the industry group commenters (0096.1) believes that regulation
of condensable particulate matter at this time will impede, rather than
facilitate, expeditious attainment of the PM2.5 standard.  This
commenter asserted that regulation of condensable emissions poses too
many significant technical and logistical difficulties to implement at
this time, and that regulation of condensable emissions would only be
appropriate after we have developed a workable transitional strategy
that ensures existing major sources are not placed in “NSR jeopardy”
for physical and operational changes undertaken before new test methods
and other requirements for condensables are established.

Another industry commenter (0111.1) similarly expressed concern about
the potential for retroactive application of the new test method (if and
when a reliable test method is developed) to assert violations of an
emission limit originally based on flawed testing/estimating
methodology.  The commenter pointed out that we are including
condensables for purposes of PM2.5 NSR, while simultaneously
acknowledging that we have not yet developed test methods to address
these emissions. The commenter suggested that we ensure that when test
methods are developed, sources that have made good faith applicability
decisions will not be subject to retroactive enforcement and that limits
will be revised to include the new method so that sources will not be
forced to certify deviations based on a new method.

This industry commenter (0111.1) also asserted that it is inherent in
the development of any standard that EPA prescribes how compliance will
be determined.  In the context of NSR, the commenter stated, sources
must know the standard against which to assess a project’s emissions
so they can make an informed decision on whether to proceed with that
project.  The commenter concluded by saying that, while his company
agrees that condensable emissions should be considered in the NSR
program, EPA’s final rules should clarify that they are included only
to the extent that they are quantifiable by an approved and promulgated
test method.

One of the industry group commenters (0109.1) objected to our proposal
to require condensable PM2.5 to be included in NSR analyses, given that
we acknowledge that different test methods measure condensables with
varying accuracy.  The commenter noted that we mentioned using AP-42
emissions factors for PSD and NA NSR analyses, but asserted that such
factors may not be available for PM2.5.  The commenter went on to point
out that the Emissions Factor Improvement Project has questioned the
viability of fine particulate factors for such equipment as gas
combustion, which had commonly been thought of as reliable.  Based on
this, the commenter recommended that we adopt a flexible approach that
allows states to use AP-42 emissions factors that are currently
available until new ones for fine particles are developed.

Other Comments:

 	One industry group commenter (0127.2), without expressing support or
opposition to including condensable PM emissions in the major NSR
program for PM2.5 at this time, requested that we explicitly develop the
following policies for addressing NSR-related issues in the transition
to including condensable PM:

New test methods or emissions estimation techniques will not be used as
a basis for revisiting prior NSR applicability determinations (e.g.,
used to make a retroactive adjustment to a netting calculation).

Provide explanations regarding how comparisons of baseline actual
emission to projections of future actual emission should be made when
the measurement techniques are changed between the times of the two
calculations so that the comparison will reflect comparable calculation
methods.

New test methods should only be used for new PM2.5 SIP-related standards
and that changes to emission limits or standards should not be made to
existing SIP-related and all non-SIP-related obligations.  Additionally,
the commenter requested that we specify that such limits or standards
should continue to be based on prior test methods or estimation
techniques.

Assure fairness of NSR determinations.

Response:

	Based on the number of comments expressing concern about the
variability and the accuracy of the test methods for measuring
condensable emissions, EPA has adopted a transition period to validate
and promulgate revised test methods before fully integrating
consideration of condensable emissions into the NSR program.  We
maintain the view that condensables are an important component of PM2.5
emissions that should be addressed.  Accordingly, we are finalizing our
proposal to include condensables, but we are deferring the applicability
of this requirement until the end of the transition period.  Although we
do not necessarily agree with all of the criticisms of method 202 (See,
pages 362-365, EPA-HQ-OAR-2003-0062-251), we believe that it is
important that the regulated community, states, and other stakeholders
have confidence in the testing methodologies to be used in the NSR
program.  In the near term, we think that developing confidence in the
testing methodologies outweighs the benefits of addressing condensable
emissions under the NSR program and thus justifies a temporary deferral
in accounting for the condensable fraction of particulate matter under
this program.  During the transition period, addressing only the
filterable fraction of direct PM2.5 and the regulated precursors is
likely to provide adequate protection of the PM2.5 NAAQS.  Also, some
technologies which may be selected as BACT or LAER for PM2.5 and PM10
can control condensables, even if the condensables fraction is not used
quantitatively in deriving emissions limitation and assessing compliance
with those limitations.

	During the transition period, we will not require states to establish
enforceable emissions limits that address condensable particulate matter
for either PM10 or PM2.5 in NSR permits, or to require accounting for
condensable PM when determining NSR applicability, until the completion
of the transition period.  This transition period will end January 1,
2011 unless we advance this date through the rulemaking process
described below.  However, EPA recognizes that states having the
authority to do so, may require inclusion of condensable emissions in
NSR permits at their discretion.

In the meantime, we are undertaking a collaborative testing effort with
industry, the National Association of Clean Air Agencies (NACAA), and
other stakeholders to assess and improve the effectiveness and accuracy
of the available or revised test methods.  The purpose of the
stakeholder testing projects is to collect new direct filterable and
condensable PM emissions data using methodologies that provide data more
representative of sources’ direct PM2.5 emissions.  The EPA, states,
and others will use these data to establish or improve emissions factors
and to define more accurate source emissions limits in permits.

	Upon completion of the test methods assessment, we will conduct a
notice and comment rulemaking to codify new or revised test methods.
Once these new or revised test methods are in place, states will have
the tools necessary to issue NSR permits addressing condensable
particulate matter.  Thus, as part of the test methods rulemaking, we
will consider and take comment on an earlier closing date for the
transition period in the NSR program if we complete the test methods
rule substantially before January 1, 2011.  In the meantime, however, we
are establishing January 1, 2011 as the latest possible end date for the
NSR transition period because this is also the end of the transition
period for SIP purposes as described in the Clean Air Fine Particle
Implementation Rule promulgated on April 25, 2007 (72 FR 20586).
Permits issued under PSD and NA NSR during the transition period are not
required to account for condensable emissions in PM2.5 or PM10 emissions
limits.  After January 1, 2011 (or any earlier date established in the
new or revised test methods rule), we will require that NSR permits
include limits set considering condensable emissions, as appropriate.
Prior to this date, states are not prohibited from establishing
emissions limits in NSR permits that include the condensable fraction of
PM10 or direct PM2.5 emissions.

We acknowledge the legitimate concerns raised by commenters concerning
potential exposure to retroactive enforcement, and the final rules
address this issue.  Although we have previously issued guidance
indicating that we interpreted PM10 to include condensables, such
interpretation has not been consistently applied by EPA offices and
states.  As a result, we will not revisit applicability determinations
made in good faith prior to the end of the transition period, insofar as
the quantity of condensable PM emissions is concerned, unless the
applicable implementation plan clearly required consideration of
condensable PM.  Likewise, we will interpret PM emissions limitations in
existing permits or permits issued during the transition period as not
requiring quantification of condensable PM for compliance purposes
unless such a requirement was clearly specified in the permit conditions
or the applicable implementation plan.

	After the end of the transition period (January 1, 2011 or an earlier
date established in the new or revised test methods rule), EPA will
require that all NSR applicability determinations for PM2.5 and PM10
address condensable emissions as applicable, and the source may not rely
on calculations made for previous determinations that did not include an
accurate accounting of condensables.  Additionally, compliance with
these limits must be determined using the promulgated validated test
methods that are applicable after that date.  Moreover, after that date,
we expect that condensable PM2.5 emissions will be addressed in all
other aspects of the major NSR program, such as impact analyses under
PSD and offsets under NA NSR.

	Additional support for our decision to establish a transition period
for condensable PM2.5 can be found on pages 341-371 of the Response to
Comments document for the Clean Air Fine Particle Implementation Rule
(EPA-HQ-OAR-2003-0062-251).

Comments on PM2.5 Increments, Significant Impact Levels (SILs), and
Significant Monitoring Concentration (SMC)

On November 1, 2005, we proposed a rule to implement the PM2.5 NAAQS and
to make other changes, including proposed revisions to the NSR program
(70 FR 65984).  In that proposal, we indicated our intent to propose a
separate rule for developing PM2.5 increments, SILs, and SMCs and sought
comments on general approaches for developing these values.  We proposed
PM2.5 increments, SILs, and SMCs in a rule dated September 21, 2007.  72
FR 54112.  We intend to address comments received on these components of
the PM2.5 PSD program when we finalize that proposed rule.

  HYPERLINK \l "_Toc163559646"  Comments on PSD Pre-Construction
Monitoring (PCM) Requirements for PM2.5

Under sections 165(a)(7) and 165(e) of the Act and the implementing
regulations at 40 CFR 51.166(m) and 52.21(m), sources subject to PSD
are subject to PCM requirements for any criteria pollutant emitted in
significant amounts.  If required for a particular source, PCM could add
1 year to the permitting process and increase the cost of the permit.
However, a source may use existing data in lieu of conducting its own
monitoring if it can demonstrate to the satisfaction of the reviewing
authority that the existing monitored date record is representative of
air quality in the project’s location.  In addition, under existing 40
CFR 51.166(i)(5) and 52.21(i)(5), the reviewing authority has the
discretion to exempt a source from the PCM requirement if: (1) the
maximum modeled concentration caused by the project’s emissions
increase is less than the prescribed SMC, or (2) the existing monitored
ambient concentrations are less than the SMC.  We proposed five options
for PM2.5 PCM requirements and ultimately elected to proceed with a
combination of options 1 and 3.

Option 1 – Require PCM but Allow Use of Existing Data on a
Case-By-Case Basis

Option 1, our preferred option at proposal, would require PCM for all
major sources of direct PM2.5 and precursor emissions, but, on a
case-by-case basis, allow sources to satisfy this requirement by
demonstrating that the existing PM2.5 monitoring data is sufficient,
i.e., representative.  Comments that specifically supported or opposed
this option are summarized below.

Supporting Comments:

One state/local agency (0077.1) expressly supported Option 1 and opposed
exemptions from PCM.  Two state/local agencies (0087.1, 0117.1) also
supported Option 1 because it gives regulatory agencies sufficient
latitude to address sources with unique characteristics.  One
state/local agency (0159) agreed that preconstruction monitoring should
be required only on a case-by-case basis, which should occur rarely.
Another state commenter (0137) said that the Option 1 approach has
worked well in the past.

Although generally supportive of Option 1, one state/local agency (0168)
and one state/local agency association (0165) pointed out that relying
only on existing PM2.5 data has limitations because current PM2.5
monitor locations are not only limited in spatial representativeness,
but have been sited to be specifically located away from single source
impact areas to represent regional exposure levels.  Thus, the
commenters believe that it will be difficult to base a determination of
their representativeness for specific source applicants.  Furthermore,
the commenters stated, EPA has proposed dramatic cuts in the states’
monitoring networks and a shift from PM2.5 to PM coarse monitors.  The
commenters noted that current regulations rely on SMCs for waivers of
PCM.  The commenters recommended that EPA develop a 24-hour PM2.5 SMC
similar to the PM10 value, and use that in combination with existing
PM2.5 data as a modified Option 1.  Another state/local agency
association (0136.2) supported Option 1, but expressed concern that the
monitoring network may be insufficient.

One industry group (0096.1), although also pointing out certain policy
concerns, noted several advantages inherent in Option 1 including: (1)
the proposal seeks to avoid requiring installation of new PM2.5 monitors
and redundant PCM in every case; and (2) the proposal recognizes that
PCM is unnecessary where the existing PM2.5 monitoring network is
providing sufficient information on the effects of new construction on
the PM2.5 NAAQS and increments.  The policy concerns expressed by this
commenter related to the case-by-case approach for administering the PSD
preconstruction monitoring exemption.  In particular, the commenter
opposed the requirement for the permitting authority to make an upfront
determination that there is no need for additional monitoring data.  The
commenter believes that requiring permitting authorities to make such an
upfront discretionary decision could effectively require redundant PCM
in many cases where existing monitored data are representative of
current ambient conditions

Opposing Comments:

	One state/local agency commenter (0124.1) indicated that Option 1 would
be overly burdensome until EPA develops an SMC.  The commenter noted out
that there are a number of upcoming PSD projects in the state, mostly
mines, which will be located in extremely remote areas where there are
essentially no local or regional PM2.5 emission sources.  In those
situations, the commenter believes that requiring applicants to collect
ambient PM2.5 data serves no purpose.  The commenter also pointed out
that operating a particulate monitoring program in remote areas is
expensive, especially when the only access is by air or snowmobile.  The
commenter suggested that in such cases, applicants should be granted the
opportunity to present a case to the reviewing authority as to why PCM
is not necessary if its purpose will be to largely document very low
existing concentrations, which will subsequently be of little use in
protecting the NAAQS.

	One group of environmental commenters (0154.1) stated that EPA’s
proposed Options 1 and 3, which would allow case-by-case or de minimis
exemptions from the monitoring requirements, are ill-conceived as a
matter of public policy and contradict the Act’s PSD provisions.  The
commenters pointed out that the listed purposes of the PSD program focus
on air quality protection and ensuring that decisions to allow increased
pollution are made with due care, and do not include the goal of
“streamlining” preconstruction permit requirements.  The commenters
expressed the opinion that PCM under section 165(e)(2) of the Act
represents an essential resource for ensuring that air quality is not
deteriorating, and that EPA does not have the authority to exempt any
source from the requirements of section 165(e)(2).

Response:

We are adopting a final policy that combines Options 1 and 3 from the
proposal.  We believe this final policy reflects existing procedures for
other regulated NSR pollutants, and represents the most pragmatic
approach for demonstrating compliance with the NAAQS and the Act.  That
is, we agree with the commenter that recommended combining Option 3 (the
use of a 24-hr PM2.5 SMC) with Option 1 and we are finalizing this
approach.  We proposed an SMC for PM2.5 in the rulemaking on increments,
SILs, and SMCs (72 FR 54112, September 21, 2007).  That rule has not yet
been finalized.

Our regulations at 40 CFR 51.166(i)(5) and 52.21(i)(5) have allowed the
use of an SMC as screening tool for identifying when an impact is de
minimis and there would thus be little or no value in gathering PCM
data.  The use of de minimis levels of this nature (such as SERs and
SILs) is supported by court precedent interpreting the NSR provisions of
the Act.  Alabama Power Co. v. Costle, 636 F.2d 323, 360 (D.C. Cir.
1979).  (“Unless Congress has been extraordinarily rigid, there is
likely a basis for an implication of de minimis authority to provide
[an] exemption when the burdens of regulation yield a gain of trivial or
no value.”).  We have consistently recognized for other pollutants
that collecting additional ambient air quality monitoring data is of
trivial value when the proposed new source or modification alone has a
small impact or when measured air pollutant concentrations
representative of an area are known to be very low.  Our judgment is the
same for PM2.5, and we are proposing SMCs below which we believe it is
of trivial value to require collection of preconstruction monitoring
data (72 FR 54112, September 21, 2007).

Once we finalize an SMC for PM2.5, the reviewing authority will have the
discretion to exempt a source from the PCM requirement if the projected
PM2.5 ambient impact of the source is below the PM2.5 SMC level
promulgated in our rules.  In the interim, until this value is
finalized, we believe states still have the discretion to use an SMC to
determine whether PCM for PM2.5 would yield a trivial gain.  We
interpret the SMC for particulate matter reflected in existing
regulations (10 µg/m3 of PM10 on a 24-hour average) to apply to all
forms of particulate matter.  This interim approach does not require a
change to the PCM requirements within our existing PSD regulations, and
is consistent with policy of using PM10 as a surrogate for purposes of
interim program implementation.  One of the options in the proposed rule
is to derive the SMC for PM2.5 using a ratio of the PM2.5 to PM10 NAAQS.
 See 72 FR 54141.  Furthermore, states are not precluded from developing
and applying their own SMCs for PM2.5 in the interim.  The concept of an
SMC is firmly established in existing regulations and grounded on the de
minimis principles described by the court in Alabama Power Co. v.
Costle, 636 F.2d 323, 360 (D.C. Cir. 1980).  Thus, states are not
prohibited from showing that a particular level of PM2.5 ambient impact
would make the collection of preconstruction monitoring data for PM2.5
of trivial or no value simply because EPA has not yet identified a value
by rule.  But once EPA establishes a specific SMC for PM2.5, states will
not be permitted to use a higher value or the PM10 value.

In addition, the reviewing authority may decide not to require a source
to collect additional PCM data—even when the SMC is exceeded—when
existing representative monitoring data is available for the area of
concern.

Option 2 – Exempt All Sources from PCM

Under Option 2, we proposed to exempt all sources from PCM based on a
determination that the PM2.5 monitoring network is sufficient for all
sources.  Comments that specifically supported or opposed this option
are summarized below.

Supporting Comments:

One industry commenter (0111.1) supported Option 2, but believes that
Option 5 is the most practicable.  This commenter noted that PCM is
expensive and can significantly delay a project.  The commenter stated
that it is very difficult to locate monitors for both direct PM2.5 and
precursors because precursors may transport over long distances before
transforming into PM2.5.  Thus, the commenter believes, a source could
be required to locate multiple monitors over a broad geographic area in
an attempt to satisfy the PCM requirement.  By contrast, the commenter
noted, Option 2 would rely on existing monitors.  The commenter state
that, as EPA notes, more and more, PSD PCM is based on use of existing
monitors.  The commenter opined that we have long been aware of the
problems created by the PCM requirements and that we should take steps
in this rulemaking to limit their impact rather than relying on the
existing regulations, which are already known to be problematic.

Opposing Comments:

One group of environmental commenters (0154.1) stated that EPA’s
proposed Option 2, which would determine categorically that “the
existing PM2.5 network is sufficient” (70 FR 66041), is clearly
arbitrary and capricious on its face.  The commenters pointed out that
we recognized in the proposal preamble that spatial gradients could be
significant for PM2.5, especially for primary PM2.5.  The commenters
stated that the existing monitoring network is severely limited in its
spatial coverage, most especially in attainment areas where PSD PCM
requirements apply.  The commenters asserted that to suggest that the
existing network suffices for any source, regardless of where it might
choose to locate, is patently absurd.

Response:

	We decided not to use Option 2 for our final policy because we do not
believe that the current monitoring network will be sufficient for all
sources.  As stated in the proposal preamble, we believe that the
existing PM2.5 monitoring record has the following limitations:

The PM2.5 monitoring data record would require spatial interpolation
between monitors for the determination of appropriate concentrations at
the project’s location.

Use of existing monitored data will not increase the PM2.5 monitoring
data record to confirm or contradict conventional perceptions.

The PM2.5 monitoring data record assumes that local hot spots of high
PM2.5 concentrations do not exist or are already being monitored, which
may not be true in all cases.

Automatic acceptance of existing measurements does not follow our
current policy that a case-by-case determination needs to be made to
determine whether PCM is necessary.

When used with the impact modeling, separate concentrations of direct
and precursor-formed particulate matter are needed.

Option 3 – Use an SMC to Exempt Sources from PMC

Under Option 3, we proposed to develop an SMC for PM2.5, which, as
described previously, would allow a source to receive an exemption from
PCM requirements if the modeled impact of the project’s emissions
increase or the existing ambient pollutant concentrations were less than
the SMC.  Comments that specifically supported or opposed this option
are summarized below.

Supporting Comments:

	One state/local agency commenter (0153) endorsed Option 3, noting that
this approach follows existing procedures to justify the exclusion of
PCM requirements when sufficient data exist.  The commenter pointed out
that state/Tribal/local monitoring networks were primarily designed, per
EPA guidance, to monitor neighborhood scale or greater impacts, and to
particularly conform to urban and regional scale considerations.  The
commenter stated that, while some monitoring sites were installed to
determine more localized impacts, even those have been gradually
decreasing as short-term NAAQS levels were clarified.  The commenter
noted that PSD increments are considered in a different way, and in some
instances, it would be difficult to say that current networks provide
appropriate representation for all locations in the baseline area.  The
commenter went on to state that while it is true that direct emissions
and precursors may not be monitored at the same location, that fact
should not preclude sampling, although costs may be increased.  The
commenter suggested that we should provide further guidance for
consistent application nationally.

	As noted above in section 7.1, a number of commenters favored the use
of SMCs in conjunction with Option 1.

Opposing Comments:

	One group of environmental commenters (0154.1) stated that EPA’s
proposed Options 1 and 3, which would allow case-by-case or de minimis
exemptions from the monitoring requirements, are ill-conceived as a
matter of public policy and contradict the Act’s PSD provisions.  The
commenters pointed out that the listed purposes of the PSD program focus
on air quality protection and ensuring that decisions to allow increased
pollution are made with due care, and do not include the goal of
“streamlining” preconstruction permit requirements.  The commenters
expressed the opinion that PCM under section 165(e)(2) of the Act
represents an essential resource for ensuring that air quality is not
deteriorating, and that EPA does not have the authority to exempt any
source from the requirements of section 165(e)(2).

Response:

	We agree with the commenters who expressed support for our adoption of
Option 3 because a combination of Options 1 and 3 reflects existing
procedures for other regulated NSR pollutants, and because we believe it
is the most pragmatic approach for demonstrating compliance with the
NAAQS and the Act.  As discussed previously, a de minimis exemption from
monitoring requirements is supported by court precedent interpreting the
PSD provisions of the Act.  We do not consider it sound policy to
require gathering additional data when such data is unnecessary to
demonstrate that a proposed source or modification will not adversely
impact air quality.  Further, we disagree with the commenters who
asserted that EPA does not have the authority to exempt a source from
the requirements of section 165(e)(2) under any circumstances.  We stand
by the position that we may exempt a source under de minimis
circumstance both from a policy perspective (this approach reflects
existing procedures for other regulated NSR pollutants and is also
considered to be the most  pragmatic approach for demonstrating
compliance with  the NAAQS) and legal perspective (Alabama Power Co. v.
Costle, 636 F.2d 323, 360 (D.C. Cir. 1979)(“Unless Congress has been
extraordinarily rigid, there is likely a basis for an implication of de
minimis authority to provide [an] exemption when the burdens of
regulation yield a gain of trivial or no value.”).

Option 4 – Use Existing PM10 Data

Option 4, as proposed, would allow sources to use the available large
PM10 data record, combined with the recent PM2.5 data, in lieu of
carrying out source-specific PCM.  Comments that specifically supported
or opposed this option are summarized below.

Supporting Comment:

One industry group (0109.1) opposed any requirement for PCM, which the
commenter asserted could add a year to permitting without any benefit to
the environment.  That same commenter, however, endorsed Option 4 if
nationally gathered PM2.5 data are not available because a PM2.5 network
monitor has not been placed nearby (or because it is not operating
properly), allowing the use of existing PM10 data collected at existing
monitoring station to be used for a permit application.

Opposing Comments:

One group of environmental commenters (0154.1) believes that proposed
Option 4 is illegal on its face, to the extent that it is intended as a
universally available alternative.  The commenters believe that some
sources might be able to demonstrate that PM10 monitoring could fulfill
the statutory requirements and purposes of PM2.5 monitoring in some
instances (e.g., with sufficiently protective assumptions about
PM2.5/PM10 proportions), but due to the variability in the relationship
between PM2.5 and PM10, EPA cannot categorically allow this
substitution.

One state/local agency (0168) and one state/local agency association
(0165) stated that, for the same reasons that we listed in the proposal
preamble, they consider Option 4 not to be a viable approach due to the
convoluted nature of attempting to infer PM10 to PM2.5 monitoring data
comparisons for source-specific applications.

Response:

We decided not to adopt Option 4.  As we stated in the proposal
preamble, the differences in characteristics between PM2.5, and PM10 and
our limited understanding of their relationship, are problematic.  We do
not believe that generalized factors to convert PM10 concentrations to
PM2.5 concentrations sufficiently reflect important industry-specific
and spatially-related characteristics of PM2.5.  In addition, removing
the obligation to provide pre-construction PM2.5 ambient monitoring data
would eliminate industry’s contribution to the PM2.5 data record.

Option 5 – Exempt Sources from PCM if No SMC Is Established

	Existing 40 CFR 51.166(i)(5)(iii) and 52.21(i)(5)(ii) state that a
source may be exempted from PCM requirements “if … the pollutant is
not listed in [the list of pollutants for which SMCs have been
established].”  The original rationale for this exemption was based on
the lack of adequate methods for measuring ambient concentrations of
pollutants not on the list (45 FR 52723-24).  In the proposal preamble,
we requested comment on this interpretation and any other legal or
policy rationale that could support applying these provisions under
Option 5, where we proposed to exempt sources from PCM requirements if
we chose not to define an SMC for PM2.5.

Supporting Comments:

	One industry commenter (0111.1) stated that, of the five options EPA
included in the preamble regarding how sources may satisfy PCM
requirements under the PSD program, Option 5 is the most practicable to
implement until SMCs can be established and any potential gaps in the
monitoring network can be filled.  Because of the problems, EPA has
noted regarding source-specific modeling of ambient PM2.5
concentrations, the commenter believes that it is unreasonable to impose
preconstruction monitoring requirements at this time.

Opposing Comments:

	One group of environmental commenters (0154.1) asserted that proposed
Option 5 is illegal under the Act.  Whatever may have been the case when
the current list of SMCs was adopted, the commenters believe, methods
now exist for conducting the monitoring required under section 165(e)(2)
of the Act.

	One state/local agency (0168) and one state/local agency association
(0165) consider the argument for Option 5 to be inappropriate and
legally questionable.  The state/local agency (0168) asserted that EPA
has not carried out its statutory obligation to develop PM2.5-specific
PSD guidance and regulations and cannot exempt sources from one of these
PSD requirements.  The commenter also stated that the rationale of not
having an SMC defined for PM2.5 originally, that of inadequate ambient
monitoring methods, was not valid even back in 1997 (when the PM2.5
NAAQS were originally promulgated).

Response:

	We decided not to adopt Option 5 because we agree that methods exist
for conducting PCM for PM2.5 and the earlier justification for such a
categorical exemption does not apply to PM2.5.  Because we have proposed
PM2.5 Increments, SILs and SMC rule on September 21, 2007 (72 FR 54112)
and “particulate matter” is listed in 40 CFR 51.166(i)(5)(i) and
52.21(i)(5)(i) , we do not interpret 40 CFR 51.166(i)(5)(iii) and
52.21(i)(5)(ii) to apply to PM2.5.  See the response above in section
7.1 for our recommendations for handling pre-construction monitoring for
PM2.5 in the interim until we finish the SMC for PM2.5.

Other Comments on PCM

	One group of environmental commenters (0154.1) stated that section
165(e)(2) of the Act requires that all PSD permit applications be
accompanied by a year of monitoring data; therefore, EPA does not have
authority to exempt PM2.5 sources from submitting the data under any
option.

	One state/local agency (0158.2) opposed a blanket exemption from PCM
requirements under any option.

	Three industry groups (0083.1, 0096.1, 0109.1) objected to PCM
requirements for PM2.5.  One of the commenters (0096.1) indicated that
having to provide a year of monitoring data would slow down, and in some
instances prevent, the construction of cleaner units.  Two of the
commenters (0083.1, 0096.1) suggested as an alternative that all sources
be exempt from PCM unless on a case-by-case basis the reviewing
authority determines that the existing monitoring network is inadequate.
 The third commenter (0109.1) opposed any PCM requirements if national
data are not available.

Response:

	We agree with the commenter who opposed a blanket exemption from PCM
requirements.  We disagree with the commenters who advocated a presumed
exemption unless the existing monitoring network is found to be
inadequate on a case-by-case basis, and with the commenter who suggested
that PCM should not be required if national data are not available.  As
discussed above in section 7.1, we are adopting a combination of Options
1 and 3 from the proposal, primarily because we believe that it reflects
existing procedures for other regulated NSR pollutants.  Specifically,
we are combining Option 3 (the use of a 24-hr PM2.5 SMC) with Option 1
and finalizing this approach.  We have proposed an SMC for PM2.5 (72 FR
54112, September 21, 2007).

	We do not agree with the commenter who believes that the Act entirely
precludes exemptions from PCM requirements.  As stated earlier, our
regulations at 40 CFR 51.166(i)(5) and 52.21(i)(5) have allowed the use
of an SMC as screening tool for identifying when an impact is de minimis
and consequently there is little or no value in gathering PCM data.  The
use of de minimis levels of this nature (such as SERs and SILs) is
supported by court precedent interpreting the NSR provisions of the Act.
 Alabama Power Co. v. Costle, 636 F.2d 323, 360 (D.C. Cir. 1979).
(“Unless Congress has been extraordinarily rigid, there is likely a
basis for an implication of de minimis authority to provide [an]
exemption when the burdens of regulation yield a gain of trivial or no
value.”)

Comments on Offset Requirements for NA NSR

Under section 173 of the Act, all new major sources and major
modifications at existing major sources within a nonattainment area must
obtain emissions reductions to offset any emissions increases resulting
from the project in an amount that is at least equal to the emissions
increase, and that is consistent with RFP towards attainment of the
NAAQS.  We refer to the proportional relationship between the amount of
emissions offset required and the amount of the emissions increase as
the “offset ratio.”  Under section 173 (which is in title I, part D,
subpart 1 of the Act), the required offset ratio is at least 1:1 for
all criteria pollutants except ozone.  In accordance with subpart 2, the
offset ratio in ozone nonattainment areas varies from at least 1:1 up to
1.5:1, depending on the severity of the nonattainment problem.  In the
case of ozone, the offset ratios are applied to emissions of the ozone
precursors VOC and NOx because virtually all ambient ozone results from
photochemical reactions involving these compounds rather than from
direct emissions of ozone.

 Comments on the Proposed 1:1 Offset Ratio for PM2.5 Direct Emissions

	As discussed in previous sections, we are implementing the PM2.5 NA NSR
program under subpart 1 of title I, part D of the Act.  Accordingly, we
proposed an offset ratio for direct PM2.5 emissions of at least 1:1.

Supporting Comments:

One state/local agency (0080.1) indicated that the safest approach is
for EPA to require 1:1 offsets for either direct emissions or
precursors.  Two state/local agencies (0117.1, 0168) and a state/local
agency association (0165) agreed that the offset ratio should be at
least 1:1 for direct PM2.5 emissions and that the offsets have to be
real, creditable, and enforceable.  Another state commenter (0077.1)
noted that 1:1 offset ratios do not take into account future emission
increases due to growth or potential RFP requirements, and emphasized
that the offset ratio should be at least 1:1 (emphasis in the original).

	One state/local agency (0103.1) stated that there are many gaps in our
understanding of the science of atmospheric PM.  Therefore, the
commenter believes, when there is question on how best to comply with
certain requirements of the Act, a simple and straightforward approach
is best.  The commenter indicated that, because section 173(c)(1) of the
Act requires offsets of at least a 1:1 ratio, that is the ratio at which
offsets should be obtained.

	One state/local agency association (0136.2) suggested that any offset
ratio of less than 1:1 for both direct and precursor emissions of PM2.5
should be allowed only if there is a net air quality benefit and if the
lower ratio is justified by an air quality modeling analysis.  A
state/local agency (0145) concurred in this approach.  Another
state/local agency (0142) similarly offered general support for EPA’s
proposal for a 1:1 offset ratio, but suggested that in certain limited
situations an offset ratio of less than 1:1 for direct PM2.5 emissions
should be allowed when modeling demonstrates that a net air quality
benefit will result.  The commenter indicated that such a demonstration
would be possible when a direct PM2.5 emissions increase from a tall
stack is being offset by ground-level PM2.5 emission reductions, and
noted that applying diesel retrofit technology to bus and truck fleets
is an example of how ground-level PM2.5 emission reductions could be
achieved.

	One industry group (0096.1) stated that section 173 of the Act
establishes the offset requirement for all major new or modified sources
under the NA NSR program.  According to the commenter, one key statutory
provision is the requirement of section 173(c)(1) that the increased
emissions from the proposed source “shall be offset by an equal or
greater reduction, as applicable, in the actual emissions of such air
pollutant from the same or other sources in the area.”  The commenter
noted that in the case of ozone nonattainment areas subject to the
tiered classification system under subpart 2 of part D of title I of the
Act, the statute prescribes minimum offset ratios ranging from 1:1 to
1.5:1, depending on the ozone nonattainment classification under subpart
2.  In all other cases, the commenter believes, the offset requirement
is governed by subpart 1, specifically the provisions of section 173 of
the Act.  The commenter pointed out that, in addition to the offset
requirement of section 173(c)(1) for “an equal or greater
reduction,” section 173(a)(1) requires the proposed source to obtain
offsetting emissions reductions in an amount that is consistent with
reasonable progress towards attainment.

	The commenter (0096.1) interpreted the statute to provide EPA with very
limited authority to impose minimum Federal emissions offset ratios in
excess of 1:1, asserting that the only situation where minimum offset
ratios greater than 1:1 are authorized is for ozone nonattainment areas
subject to subpart 2.  In all other nonattainment areas, including those
areas designated nonattainment for PM2.5; the commenter believes that
EPA has no authority to require any proposed source to obtain offsets
greater than 1:1, particularly when the state is meeting the RFP
requirements for the nonattainment area where the proposed source is
located.  The commenter stated that subpart 1 of part D authorizes the
imposition of a Federal minimum offset ratio of 1:1, although it allows
states to impose more stringent offset ratios when additional reductions
may be necessary to meet RFP obligations for the nonattainment area.
For these reasons, the commenter believes EPA has no choice but to adopt
an emission offset ratio of 1:1 for direct PM2.5 and any precursor
emissions, to the extent that they are subject to an offset requirement
under the NA NSR program.

	Two other industry group commenters (0107.1, 0109.1) and an industry
commenter (0161) agreed that subpart 1 of title I, part D is controlling
and that the offset ratio should be 1:1.  Two other industry groups
(0083.1, 0105.1) stated that EPA should not impose emission offset ratio
requirements greater than 1:1.  Another industry commenter (0074.1) who
favors continuing to use PM10 as a surrogate for PM2.5 in determining
necessary offsets during and after SIP development indicated that such
PM10 offsets should be obtained at a 1:1 ratio.

Opposing Comments:

	One group of environmental commenters (0154.1) noted that section 173
requires sources locating in nonattainment areas to obtain offsets to
ensure that emissions from the proposed source “will be sufficiently
less than total emissions from existing sources … so as to represent
… reasonable further progress.”  The commenters stated that this
section clearly contemplates greater than 1:1 offsets.  The commenter
believes that EPA’s rules implementing the NSR program require offsets
of greater than 1:1, and that EPA cannot lawfully or rationally adopt a
less stringent requirement for PM2.5 and its precursors – especially
given that the PM2.5 standards are intended to provide greater health
protection.  Consistent with section 182 of the Act, and given the
health risks associated with PM2.5, the commenter asserted, EPA must
require offsets of at least 1.15:1 for PM2.5 precursors in
“moderate” nonattainment areas, and must increase the offset ratio
in “serious” nonattainment areas or in areas that request extensions
of their attainment deadlines.  The commenter went on to assert that EPA
must establish even higher offset ratios for direct PM2.5 emissions, to
ensure that RFP is achieved across the nonattainment area, including
within the area close to the new source.

Response:

	As proposed, we are finalizing the offset ratio for direct PM2.5
emissions as at least 1:1 on a mass, tons per year, basis because the
PM2.5 program is being implemented under subpart 1 of title I, part D of
the Act.  See section 3 for responses addressing the applicability of
subpart 1 of part D of the Act.  Regarding whether an offset ratio of at
least 1:1 under subpart 1 represents a ceiling or a floor on the level
we can prescribe in our regulations, we interpret section 173 of the Act
to allow higher offset ratios where necessary to achieve RFP.
Accordingly, we believe states may establish higher offset ratios in
their state programs if they choose to do so, but we do not believe it
would be appropriate for us to do so for PM2.5 in national regulations
because of the variability in conditions across the country.  We do not
believe that any offset ratio less than 1:1 is permissible under subpart
1 because section 173(c)(1) specifies the offsets must ensure an
“equal or greater reduction” in actual emissions.  In addition, we
do not believe that the higher offset ratios required for ozone
precursors under subpart 2 apply in any way to direct PM2.5 emissions or
PM2.5 precursors, since, as stated above, PM2.5 offset ratios are
governed by subpart 1 of part D of the Act.

	We agree that during the period that a PM10 NA NSR program is used as a
surrogate for a PM2.5 program, PM10 offsets should be obtained in a
ratio of at least 1:1.  See section 9 for further discussion of
transition issues.

Comment:

	One industry group (0119.1) asked that we apply the offset obligation
for direct PM2.5 emissions only after improved methods for measuring
these emissions (i.e., the condensable fraction) have been developed and
approved.

Response:

	As discussed in section 5, we are not requiring condensable PM
emissions to be included in the PM2.5 NA NSR program until we have
completed a collaborative testing effort with industry, the NACAA, and
other stakeholders to assess and improve the effectiveness and accuracy
of the available or revised test methods.  In the interim, offset
requirements will apply to the filterable fraction of direct PM2.5
emissions unless the applicable SIP mandates inclusion of the
condensable fraction.

Comments on Which Precursors Should Be Subject to the Offset
Requirements

	We proposed that all precursors ultimately identified by a state or EPA
would be subject to offset requirements.

Supporting Comments:

	One industry group commenter (0107.1) and one industry commenter (0161)
agreed that only SO2 and NOx (absent an EPA finding that NOx is not
contributing to a particular PM2.5 problem) should be subject to the
offset requirement.  The commenters believe that VOCs and ammonia should
be subject only if and when a state makes a satisfactory demonstration
that one or the other should be treated as a precursor.

Opposing Comment:

	Citing NA NSR’s added costs and burdens to economic investment in
nonattainment areas, one industry group commenter (0119.1) asked that we
apply the offset obligation only to direct PM2.5 emissions, not
precursors.

Response:

	As proposed, the pollutants that are designated as PM2.5 precursors in
a particular nonattainment area are subject to the emissions offset
requirement in that area.  Accordingly, SO2 is subject to offsets in all
PM2.5 nonattainment areas.  As a “presumed-in” precursor, NOx will
be subject to offsets unless a state obtains an exemption for its NSR
program through a demonstration that NOx emissions in a particular area
do not contribute significantly to that area’s ambient PM2.5
concentrations.  As “presumed-out” precursors, VOCs and ammonia
would be subject to offsets only in areas where the state has
demonstrated that these emissions are significant contributors to the
area’s ambient PM2.5 concentrations.  We do not agree with the
commenter who opposed requiring offsets for emissions of PM2.5
precursors.  Rather, we believe that it is appropriate to offset
emissions increases of all regulated precursors, i.e., that have been
established to contribute significantly to the PM2.5 nonattainment
problem in a particular area.

Comments on the Offset Ratio for Precursors

	We proposed that, as with direct emissions of PM2.5, the minimum offset
ratio for precursors permitted under the Act would be at least 1:1.

Supporting Comments:

	Three state/local agencies (0077.1, 0117.1, 0168) agreed with “at
least” a 1:1 offset for precursors.  One of these commenters (0168)
and a state/local agency association (0165) added that the offsets must
be real, creditable, and enforceable, and the 1:1 ratio should apply for
precursors unless a larger offset is determined to be necessary to
achieve the NAAQS.  Another state/local agency (0080.1) believes that,
based on the language of the Act, the safest approach is for EPA to
require 1:1 offsets for either direct emissions or precursors.  This
commenter also indicated that emissions reductions in direct emissions
(especially diesel particulates) are more environmentally beneficial and
thus possibly could be acceptable as offsets for precursors at ratios
less than 1:1.

	One industry group commenter (0096.1) believes that section 173 of the
Act is controlling for precursors as well direct PM2.5 emissions, and
that the offset ratio should be 1:1.  Another industry group commenter
(0083.1) agreed that the offset ratio should be no greater than 1:1.  An
industry group commenter (0107.1) and an industry commenter (0161)
agreed with a 1:1 offset ratio and added that EPA should make clear in
the final rule that an increase in precursor emissions need only be
offset once, even if the increase triggers NA NSR under, for example,
both the ozone and PM2.5 programs.

	Another industry commenter (0111.1) agreed that a 1:1 offset ratio is
consistent with section 173 of the Act.  The commenter believes that,
absent any statutory direction from Congress, there is no basis for
imposing a more stringent requirement.  The commenter added that this
approach also makes sense from a policy perspective because the ability
to obtain NOx reductions in many areas is already quite limited.  Thus,
NOx reductions at a greater than 1:1 ratio may be unavailable.

	Concerning offset ratios less than 1:1, one state/local agency
association (0136.2) stated that that any offset ratio of less than 1:1
for both direct and precursor emissions of PM2.5 should be allowed only
if there is a net air quality benefit [concurrence by a state commenter
(0145)]  and if the lower ratio is justified by air quality modeling
analysis.  For PM2.5 precursors, the commenter believes, chemical
reactivity modeling demonstrations should be developed and approved that
are, at a minimum, capable of determining the impacts of the precursor
emissions on the air quality in the nonattainment area in which the
source is located.  A state/local agency (0145) also indicated that
states should have the flexibility to adjust offset ratios for direct
PM2.5 and precursor emissions as long as a net air quality benefit is
achieved.

Opposing Comments:

	One group of environmental commenters (0154.1) stated that consistent
with the statutory scheme for ozone laid out in section 182 of the Act,
and given the severity of the health risks associated with PM2.5, EPA
must require offsets of at least 1.15:1 for PM2.5 precursors in
“moderate” nonattainment areas, and must increase the offset ratio
in “serious” nonattainment areas or in areas that request extensions
of their attainment deadlines.

Response:

	As with direct PM2.5 emissions, we have determined for PM2.5 precursors
that the minimum offset ratio permitted under subpart 1 of the Act would
be at least 1:1.  Based on these requirements of the Act, we are
finalizing our proposal that an offset ratio of at least 1:1 applies
where a source seeks to offset an increase in emissions of a PM2.5
precursor with creditable reductions of the same precursor.  This offset
ratio applies for all pollutants that have been designated as regulated
PM2.5 precursors in a particular nonattainment area.  As noted
previously, we do not believe that any offset ratio less than 1:1 is
permissible under subpart 1.

	As mentioned above, we do not believe that subpart 2 of the Act (which
includes section 182) applies to PM2.5 or its precursors.  Subpart 2 is
specific to ozone.  In addition, we are implementing the PM2.5 program
under subpart 1.  Nevertheless, under the Act, we believe that a state
may require higher offset ratios if it determines that they are
necessary to achieve RFP.  Given the variability in conditions across
the country, we do not believe that it is appropriate for us to set
higher offset ratios for PM2.5 precursors on a national basis.

	We agree with the commenters who requested that we make clear in the
final rule that an increase in precursor emissions need only be offset
once, even if the increase triggers NA NSR for more than one pollutant
(e.g., both the ozone and PM2.5).  We agree that a precursor emissions
increase need to be offset only once and will clarify our intent in the
preamble to the final rule.

Comments on Interpollutant and Interprecursor Trading for Offsets

	We proposed to allow increases in emissions of direct PM2.5 to be
offset by a decrease in PM2.5 precursor emissions.  We also proposed to
allow an increase in a PM2.5 precursor to be offset by a decrease in
emissions of a different precursor or a decrease in direct PM2.5
emissions.  However, we proposed that such trades would only be
permissible if the state showed that the trade would be beneficial in
reducing overall ambient concentrations of PM2.5 and EPA approved the
trade.

Supporting Comments:

	Six industry and industry group commenters (0074.1, 0096.1, 0107.1,
0111.1, 0119.1, 0161) and two state/local agencies (0080.1, 0144)
expressed support for allowing interpollutant trading.

	One industry commenter (0074.1) supported the proposed option for an
interprecursor trading program that entails EPA reviewing individual
offset proposals as part of the major NSR permitting process.  The
commenter, who supports continuing to use PM10 as a surrogate for PM2.5,
asserted that flexible options for potential offsets should include
directly emitted PM10 or interprecursor offsets including the precursors
SO2 and NOx The commenter suggested that the final rule should allow
offsets to be obtained from any source within the entire nonattainment
area (including other counties in the Metropolitan Statistical Area and
any contiguous counties) or from a different nonattainment area that is
contributing to nonattainment within the area where the new source is
located.  Because of the number of potential precursor emissions and
emission sources potentially impacting ambient fine particulate levels,
the commenter believes that any nonattainment offset programs for new
sources should provide a variety of options.

	One of the supportive industry group commenters (0096.1) indicated that
an affirmative and clear Federal policy on interprecursor trading can
provide much-needed flexibility in meeting the Act’s goals for offsets
and RFP in the most efficient and cost-effective manner possible.  To
this end, the commenter urged EPA to allow inter-precursor trading under
the following three circumstances:

Reductions in precursor emissions to offset direct PM2.5 emissions
increases;

Emissions reductions of one precursor to offset emissions increases of
another precursor (to the extent that precursors are subject to the
offset requirement); and

Reductions in direct PM2.5 emissions to offset precursor emissions
increases (to the extent that precursors are subject to the offset
requirement).

	The commenter stated that such flexibility should provide sources with
another potential source of offset emissions in areas where availability
of offsets may otherwise be limited.  In addition, the commenter opined
that providing such flexibility is consistent with the Act’s goal
“to protect and enhance the quality of the Nation’s air resources so
as to promote the public health and welfare and the productive capacity
of its population.”  For similar reasons, the commenter believes the
rationale for allowing interprecursor trading to meet the offset
requirement also applies in the case of “netting out” of NSR using
interprecursor emissions reductions within the same source.  In both
cases, the commenter noted, the source will be obtaining reductions in
direct PM2.5 or precursor emissions that will result in an air quality
impact that is equal to or better than that which would occur in the
absence of interprecursor trading.

	Another supportive industry group commenter (0107.1) and one supportive
industry commenter (0161) believe that interprecursor trading is
essential to the ability of enterprises to be able to expand as the
PM2.5 NAAQS is implemented, especially in the program’s early years.
The commenters indicated that, while NOx offsets generally are available
because of the ozone program, SO2 and PM2.5 offsets are not.  The
commenters believe that without interprecursor trading, many business
expansion projects simply will not be able to be undertaken.  Thus, the
commenter asserted, EPA must allow interprecursor trading, as proposed.
The commenters added that EPA needs to expressly recognize the concept
of interprecursor trading in the regulatory language in the new 40 CFR
subpart Y and in 40 CFR 51.165.

	These commenters (0107.1, 0161) also encouraged EPA to extend
interprecursor flexibility to NSR netting analyses by so providing in 40
CFR 51.165, 51.166, and 52.21.  The commenters suggested that whether
this flexibility should be extended to any particular source likely
would need to be evaluated in a formal NSR applicability submission to
the state or EPA to assure that the increases and decreases of different
regulated NSR pollutants have the same or better impact on air quality.

	Another supportive industry commenter (0111.1) added that the
flexibility afforded through interprecursor trading is important.  The
commenter believes that EPA should allow states the flexibility to adopt
trading rules for approval into their SIPs and also, even without an
approved rule, to allow trading on a case-by-case basis if the trade
will lead to equivalent or better reductions in ambient PM2.5
concentrations.

	One supportive industry commenter (0119.1) also expressed concern about
flexibility under the proposed rule and supported interpollutant and
interprecursor trading.  The commenter indicated that due to the
variability in atmospheric conditions that contribute to fine particle
formation, facilities would not be able to easily discern which
precursor will always have the greatest beneficial effect when reduced.
Thus, the commenter asserted, if precursors are to be included in the
NSR offset program, the default position should allow the regulated
community the flexibility to offset anticipated increases from any of
the identified precursors.  The commenter noted that this approach would
also allow for cost-effective use of co-benefits from reducing emissions
that serve compliance in multiple programs.

	The commenter (0119.1) stated that offset ratios among precursors are
an unnecessary complication, and that all precursors should be tradable
and interchangeable to provide vital flexibility by reducing the
otherwise significant impediments that NSR imposes to modernizing steel
plants and other similar facilities.  Specifically, the commenter
believes that offset trading will allow facilities to secure
environmental benefits for less money by providing a broader range of
pollution reduction options to choose from, and that the availability of
such trading will be particularly beneficial where credits for one
particular pollutant are scarce in a given nonattainment area.  The
commenter also supported expanding this approach to netting, indicating
that similar significant benefits are available when sources can use
precursors interchangeably when determining if a project causes a
significant net emissions increase.

	One state/local agency (0080.1) supported interprecursor trading so
long as the following hierarchy is established: direct PM2.5, SO2, NOx,
ammonia, and VOC.  Under the commenters hierarchy, a pollutant would be
allowed as offsets for a pollutant ranked lower, but not the reverse
(e.g., direct PM2.5 emission reductions could be used to offset
increases in any of the listed pollutants, SO2 emissions reductions
could offset NOx increases, etc.).  The commenter suggested the
possibility that emissions reductions in direct PM2.5 emissions
(especially diesel particulates) are more environmentally beneficial and
thus could be acceptable as offsets for precursors at ratios less than
1:1.

	Another state/local agency (0144) supported interpollutant and
interprecursor trading, but recommended that such offsets only be
allowed on a case-by-case basis that would demonstrate equivalent air
quality benefits and be consistent with existing NSR provisions.  A
third state/local agency (0137.1) requested that EPA provide clear
guidance on how much SO2, NOx, VOC, or ammonia reduction would be needed
to offset a PM2.5 increase without explicitly expressing support for
interprecursor or interpollutant offset trading.

Opposing Comments:

Seven state/local agencies (0077.1, 0103.1, 0117.1, 0142, 0150.1, 0153,
0168), two state/local agency associations (0136.2, 0165), and one group
of environmental commenters (0154.1) opposed all or part of the proposal
to allow interpollutant and interprecursor trading for offsets.

One of the state/local agencies (0103.1) stated that the Act is silent
on offsetting one precursor for another, but believes that a simple
solution is best.  The commenter indicated that because we do not know,
for example, how many tons of direct PM2.5 emissions reductions are
needed to gain the same air quality improvement gained by the reduction
of 100 tons of SO2, offsets should be made for single pollutants only,
rather than allowing for interprecursor offsets.

	The group of environmental commenters (0154.1) stated that it would be
irrational for EPA to allow increased emissions of direct PM2.5 to be
offset by decreased precursor emissions.  The commenters pointed out
that, while secondary PM2.5 clearly constitutes a substantial fraction
of total PM2.5 concentrations and emissions of PM2.5 precursors must be
controlled to attain and maintain PM2.5 standards, it is also clear that
on a ton-for-ton basis, increases in direct PM2.5 emissions in
nonattainment areas have a greater impact on local exposure to PM2.5
than increases in precursor emissions, which as stated in the proposal
preamble (70 FR 66038) need time to convert to PM2.5.  The commenters
indicated that the suggestion that EPA would allow increases in direct
PM2.5 emissions to be offset by reduced precursor emissions raises
serious environmental justice concerns, since the impacts of these
pollutants are not even felt on the same spatial scales.  Moreover, the
commenters asserted, the equivalence between direct PM2.5 and precursor
emissions will vary from place to place and time to time, and this
variability would greatly complicate any determination of whether the
offset ratio for a proposed trade is sufficiently high to ensure that
the trade was “beneficial” on any scale of impact.

	The group of environmental commenters (0154.1) went on to state that
EPA also should not allow offset requirements for PM2.5 precursors to be
met by reducing emissions of other precursors because the equivalence
between precursors would vary spatially and temporally, making it
extremely difficult to assess.  The commenters also noted that
interprecursor “trading” has the further complication that PM2.5
precursors also differ in their impacts on other air pollution problems,
including direct health and welfare impacts of SO2 and NOx, formation of
ozone, acid deposition, and reactive nitrogen deposition.

	A state/local agency (0077.1) did not support interprecursor trading,
including for netting, because all precursors are not created equal,
precursors are included in other nonattainment situations, and trading
or precursors could result in unintended consequences due to inflation
of certain pollutant concentrations.  For example, the commenter noted,
sulfates are of a much greater concern in the summer, while nitrates
predominate in the winter – trading of NOx for SO2 in the summer
months and vice versa for NOx in the winter months would be
counter-productive.

	Another state/local agency (0168) and a state/local agency association
(0165) opposed interprecursor trading or trading of precursors with
direct PM2.5 emissions using either a pre-approved SIP demonstration
modeling analysis or a permit-specific analysis.  The commenters believe
that, in other than very limited cases, neither interpollutant nor
interprecursor trading for the purposes of PM2.5 emission offsets should
be allowed at this time.  The commenters’ position is based on the air
quality models currently available to perform a detailed PM2.5 formation
assessment, the complex atmospheric chemistry of secondary particulate
formation, and existing EPA emission offset guidance.  The commenters
believe that an increase in direct PM2.5 emissions or its precursors
should be offset by a corresponding decrease in the same direct PM2.5 or
precursor emissions.  The only situation in which the commenter would
favor an interpollutant offset trading is when PM2.5 precursor emission
increases at a proposed source are to be offset by direct PM2.5 emission
decreases.  However, the commenters noted, such interprecursor trading
would be difficult to administer and could not assure that ambient
levels of PM2.5 would decrease in the areas affected by the source.  The
commenters asserted that any assessment by individual states to
demonstrate such decreases from interprecursor trading would have to
consider not only the emissions from in-state sources, but also
emissions from sources, in all nearby states, that both contribute to
the formation of PM2.5 and are impacted by the state’s emissions.  The
commenters added that the situation would be even more onerous for
individual sources that attempt to make such demonstrations.

	These commenters (0165, 0168) pointed out that EPA’s nonattainment
offset requirements are given in appendix S to 40 CFR part 51 (Emissions
Offset Interpretative Rule), sections IV.A (Conditions 3 and 4) and
IV.D.  The commenters stated that the direct PM2.5 emission offsets
should comply with these regulations, and that a demonstration should be
required that these offsets provide a site-specific net air quality
benefit, which will require a modeling analysis in most instances.  The
commenters went on to state that for the PM2.5 precursors, such as SO2
and NOx, offsets should meet the requirements currently applied to the
ozone precursor emissions of NOx and VOC, which would be met by default
by obtaining precursor offsets from a source located anywhere in the
same nonattainment area as the proposed new source.  In the instance
when PM2.5 precursor emissions are being offset by an equal amount of
direct PM2.5 emissions, the commenters believe, a net air quality
benefit can be assured at least in the near-field of the proposed
source.  Otherwise, the commenters asserted, a net air quality benefit
should be confirmed through modeling.  The commenters believe that
interprecursor trading of emission offsets may be possible in the future
when our ability to model secondary sulfate, nitrate, and ammonia
compound formation improves and becomes less resource-intensive.  The
commenters indicated that at that time, EPA should provide detailed
guidance on how such an analysis should be conducted and under what
conditions a positive net air quality benefit is achieved, so that the
process would then apply to all states equitably and would not be
detrimental to the air quality of downwind states such as New York.  For
the same reasons that the commenters opposed interprecursor offset
trading, they opposed interprecursor trading in either attainment or NA
NSR netting analyses.

	The state/local agency (0168) added that the stable nature of primary
PM2.5 emissions as opposed to the complex atmospheric chemistry of the
SO2 and NOx precursor emissions makes a comparison of their relative
impacts a difficult task.  The commenter pointed out that direct PM2.5
emission will have their greatest impact in the immediate vicinity of
the source, while determining where and when precursor emissions of SO2
and NOx will have their impact as sulfate and nitrate is much more
difficult.  In most cases, the commenter noted, significant amounts SO2
and NOx will not be converted to sulfate and nitrate until the plume has
traveled for several hours – in some cases, depending on the location
of the source, the plume could be transported outside the designated
nonattainment area or attainment area before sulfate and nitrate
concentrations become of concern.  The commenter believes that
determining a positive net air quality benefit in situations where
direct PM2.5 emissions are being offset by PM2.5 precursor emissions
will be highly subjective.  The commenter suggested that in many cases,
the sulfate and nitrate will be formed outside the nonattainment area
and, consequently, no reasonable progress toward PM2.5 standards
compliance in the nonattainment area will result.  While the proposed
rule suggests that one method of showing a net air quality benefit would
be a modeling demonstration for the entire nonattainment area instead of
on a source-by-source basis, the commenter believes that this type of
regional modeling demonstration would most likely involve the use of a
sophisticated regional model, but such models only reflect regional
average levels and details on the local impact of direct PM2.5 emissions
near the stack will be lost.

	The commenter (0168) went on to state that ensuring reasonable progress
toward attainment and a net air quality benefit, by developing valid
interprecursor offset ratios between SO2 and NOx precursor emissions, is
also unrealistic at this time.  The commenter believes that many of the
problems with using regional modeling to determine interpollutant offset
trade ratios will apply to interprecursor offset trading – the results
from sophisticated models such as CMAQ with their grid averaging would
provide minimal detail, and such analyses would be resource intensive.
Another option given in the proposed rule would be for individual trades
to require modeling as part of their NSR permit application.  However,
the commenter noted, requiring each source to model their emission
trades with models such as CALPUFF would also be resource intensive, and
detailed modeling guidance on setting of offset ratios and the
demonstration of a net air quality benefit on a source-by-source basis
will be needed.  In summary, the commenter believes that it will be
extremely difficult to quantify on a short- and long-term basis to
compare the impact of SO2 emissions on an area’s PM2.5 concentration
to that of NOx emissions impacting the same area’s PM2.5
concentration.

	Another state/local agency (0153) stated that the conditions EPA
proposed to allow interprecursor trading would be very difficult to
justify.  The commenter noted that EPA has expressed concerns previously
regarding the time difference between primary emission impacts and
secondary emission impacts.  The commenter asserted that if there was
disconnect between the impact areas for primary and secondary emissions,
then there should not be any trading between primary and secondary
emissions.  The commenter did not support emissions trading for the
purposes of offsets or netting analysis for PM2.5.

	One state commenter (0142) opposed the proposed trading of PM2.5
precursor emissions to comply with the nonattainment offset
requirements.  The commenter similarly asserted that the impact of
direct PM2.5 emission increases cannot be offset with reductions in
emissions of PM2.5 precursors such as SO2 and NOx because the direct
PM2.5 increases degrade air quality locally, while the benefit from
reducing precursor emissions will primarily accrue far from where the
emission increases are occurring.  Therefore, the commenter believes
that EPA should allow direct PM2.5 emissions to be offset only with
reductions in other direct PM2.5 emissions.  However, the commenter
favors allowing direct PM2.5 emissions to offset precursor emissions
because of the higher local impacts of direct PM2.5 emissions.  The
commenter provided a detailed discussion of the atmospheric chemistry of
PM2.5 and its precursors to support her views.

	A state/local agency association (0136.2) likewise opposed
interpollutant and interprecursor trading because offsetting like
amounts of precursor and direct emissions is inherently disproportionate
and will result in greater amounts of direct PM2.5 emissions.  Rather,
the commenter supported the trading of PM2.5 direct emissions with other
PM2.5 direct emissions, and trading of SO2 and NOx precursors with the
same precursor, except that EPA should allow direct PM2.5 emission
decreases to offset increases of precursor emissions in nonattainment
areas.

	A state/local agency (0117.1) agreed that EPA should only allow direct
PM2.5 emission decreases to offset increases of precursor emissions in
nonattainment areas.  The commenter believes that allowing decreases in
PM2.5 precursors to offset increases of direct PM2.5 emissions is
potentially detrimental to air quality in nonattainment areas.  The
commenter added that current air quality models used for simulating the
transport and chemical formation of PM2.5 are too resource intensive and
not sensitive enough to accurately assess the impact on PM air quality
of individual trades.

	Concerning trading among precursors, the commenter (0117.1) stated that
the formation rate of PM2.5 is dependent upon the mix of precursors and
is likely not equal in any instance between SO2 and NOx.  The commenter
believes that air models would not be a useful tool for assessing the
impact of precursor trading on PM air quality and, therefore, that
trading precursors does not guarantee that air quality will not
deteriorate within a nonattainment area.  This commenter, as well as
another state/local agency (0142), also opposed the option of allowing
interprecursor trading on a case-by-case basis or for the purposes of
netting.

	One of the state/local agency commenters (0150.1) expressed concern
that interprecursor trading may make it difficult to ensure than ambient
PM2.5 continues to decrease, and that the resulting program may be very
staff-intensive to manage.  In addition, because of the toxicity of
PM2.5, the commenter believes that any trading program must make sure
that vulnerable populations are not adversely affected.  The commenter
stated that because precursor interactions are not fully known, trading
may have the potential to worsen an air quality problem (e.g., the
sulfate and ammonia issue as it relates to possible increased particle
and precipitation acidity).

Other Comments:

	Without stating support or opposition for the specifics of the
proposal, one state/local agency association (0164) asserted that EPA
should finalize a requirement for offsets consistent with the existing
program, or a functionally equivalent and equally protective alternative
approach (emphasis in the original).  The commenter stated that there
have been problems with the current offset program.  The commenter fully
supported the continued need to ensure that economic and emissions
growth does not adversely affect progress toward attainment.  The
commenter also believes that the offset program has been pivotal in
promoting advancement of pollution control technology.

Response:

	After considering the comments received on this issue, we have decided
to allow limited interpollutant trading for purposes of offsets under
the PM2.5 NA NSR program.  Specifically, the final rules allow
interpollutant trading only based on a trading ratio established in the
SIP as part of the attainment demonstration approved for a specific
nonattainment area, on a statewide basis, or in a regional, multi-state
program.  This final policy differs from our proposal in that the final
rules do not allow interpollutant trading on a case-by-case basis as
part of an individual NA NSR permitting process.  For the purpose of
offsets in the NA NSR program for PM2.5, the final rules allow
reductions in direct PM2.5 emissions to offset precursor emissions
increases, emissions reductions of one precursor to offset emissions
increases of another precursor, and reductions in precursor emissions to
offset direct PM2.5 emissions increases.

	We have completed a technical assessment to develop preferred
interpollutant trading ratios that may be used for the purposes of PM2.5
offsets, where appropriate.  The ratios are described in the preamble to
the final rule.  The preferred ratios were generated with a PM2.5
response surface modeling (RSM) approach based on the EPA’s CMAQ
model.  Our work here and other recent PM2.5 assessments clearly show
that the relative efficacy of emissions reductions varies across
pollutants and that a ton of direct PM2.5 is generally more effective
than a ton of precursor emissions in reducing overall PM2.5
concentrations.  The technical assessment and recommended ratios account
for regional differences and other considerations reflected in public
comments.

	We recommend that states use the EPA’s trading ratios in their
interpollutant trading programs to provide consistency and to streamline
the trading process.  If states elect to use EPA’s preferred trading
ratios, they may rely on EPA’s technical work and a presumption that
such ratios will be approvable by EPA absent a credible showing that
EPA’s preferred trading ratios are not appropriate for that location.
If states choose to develop their own hierarchies/trading ratios, they
will have to substantiate them by modeling and/or other technical
demonstrations of the net air quality benefit for PM2.5 ambient
concentrations, and such a trading program will have to be approved by
EPA.

	We have adopted this approach to capture the flexibility advantages of
interpollutant trading, while remaining mindful of the limitations of
existing air quality models.  We believe that the regional-scale models
used for area-wide attainment demonstrations have sufficient accuracy to
establish an overall equivalence ratio for a nonattainment area.
However, we do not believe that available models can accurately
determine the effects of interpollutant trades at a single source.  In
addition, permit-by-permit modeling demonstrations are extremely
resource intensive, only to yield limited results.  For these reasons,
the final rules only allow a state to develop its own interpollutant
trading rule for inclusion in its SIP, based on a technical
demonstration for a specific nonattainment area.  We will not accept
case-by-case demonstrations on an individual source permit basis.

	The flexibility provided by this policy allows sources to select the
most cost-effective manner to obtain the offsets necessary to ensure
that PM2.5 air quality improves.  This will be particularly beneficial
where offsets for one particular pollutant are scarce in a particular
area; such is often the case for direct PM2.5 emissions and SO2.

Other Comments on Offsets

Comment:

	One state/local agency (0168) pointed out that nowhere in our proposal
is there any mention of the required modeling demonstration of net air
quality benefit analysis, similarly to the limited mention of modeling
in attainment areas.  The commenter stated that this is contrary to EPA
and state regulations.  The commenter noted that sections IV.A.4 and D
of appendix S of 40 CFR part 51 provides requirements for new or
modified sources locating in designated nonattainment areas with respect
to an explicit demonstration of net air quality benefit from the
offsetting of emissions.  The commenter argued that such a requirement
is necessary for the direct emissions of PM2.5 to assure no additional
contribution or creation of nonattainment conditions in the vicinity of
the proposed source when emission offsets are obtained from distant
sources.

Response:

	The commenter is correct that the existing NA NSR regulations require a
demonstration that proposed offsets, in combination with a project’s
emissions increase, will result in a net air quality benefit, which may
require modeling in the case of direct PM emissions.  These existing
requirements apply to direct PM2.5 emissions offsets as they have in the
past to offsets for other indicators of PM.

Comments on Transition Issues

 Comments on PSD Transition Issues

	Upon promulgation of the proposed rules, states that accept delegation
of the Federal PSD program (delegated states) would implement the PM2.5
program in 40 CFR 52.21 beginning on the effective date of the rule.
However, for states that have their own approved PSD programs
(SIP-approved states), we sought comment on three options to address
implementation of the PSD program from the time that our final rules go
into effect until we approve a state’s PSD program for PM2.5.  The
comments and our responses are presented in the following paragraphs.

Option 1 – Continue Implementing the 1997 Guidance to Use the PM10
Program as a Surrogate for PM2.5

	As Option 1, we proposed that SIP-approved states that are unable to
implement a PM2.5 PSD program upon promulgation of the final rules may
continue to implement a PM10 program as a surrogate pursuant to the
guidance we issued in 1997.  However, we proposed two additional
requirements:

States must require sources to demonstrate that the project will not
cause or contribute to a violation of the PM2.5 NAAQS; and

States must include condensable PM emissions in determining major NSR
applicability and control requirements.

Supporting Comments:

Three state/local agency and agency association commenters (0080.1,
0136.2, 0167) and four industry/industry group commenters (0074.1,
0083.1, 0096.1, 0125.1) gave general support to Option 1.  A fourth
state/local agency association (0164) believes that Option 1 is a
reasonable starting point, but suggested a modified approach (discussed
further below).

One of the supportive industry commenters (0074.1) expressed the opinion
that the current guidance of using PM10 as a surrogate for PM2.5 during
the SIP development period would provide clarity and certainty to the
permitting agency and regulated community.  The commenter noted that
PM2.5 inventories and methods for estimating emission rates are
rudimentary and may even be nonexistent in some cases which would make
permitting onerous.

One of the supportive state/local agencies (0167) pointed out that any
alternative implementation plan, including an updated version of the
1997 guidance (per Option 2 below) would not be final until September
2006, meaning that states would need to concurrently implement that
alternative while revising their SIPs in accordance with the finalized
PM2.5 NSR Implementation Rule.  Shortly thereafter, the commenter noted,
states would also be required to submit SIP revisions implementing
separately promulgated PM2.5 SILs and increments, and the revised PM10
and PM2.5 NAAQS promulgated in October 2006.  The commenter believes
that such frequent changes in the regulatory requirements would create
uncertainty for sources and place increased administrative burden on
state agencies, likely resulting in permitting delays and increased
costs.  The commenter therefore requested that we adopt Option 1.

Despite generally supporting Option 1, one of the state/local agency
associations (0136.2) stated that existing source testing methods for
condensable emissions are inadequate to determine major NSR
applicability and to include in an enforceable permit.  While the
commenter believes that PM10 methods could serve as an adequate
substitute in some cases, the commenter asserted that it is necessary to
have methods that provided greater accuracy in cases where determining
major NSR applicability is close.  One of the supportive industry group
commenters (0096.1) similarly questioned and objected to our proposal to
condition the continuation of the 1997 guidance on the state’s
satisfaction of conditions, particularly the inclusion of condensable
PM.  A second supportive industry commenter (0125.1) also asserted that
EPA should abandon the proposed requirement to include condensable PM
emissions.  In contrast, one of the supportive state/local agency
associations (0080.1) specifically stated that we should require that
condensable PM be included in the applicability determinations.

One state/local agency association (0164) believes that proposed
Option 1 is a reasonable starting point (as noted above), but suggested
that because of the difficulties associated with measuring the
condensable fraction and correctly apportioning the PM2.5 emissions,
PM10 should be used as a surrogate with a default discount factor
applied (emphasis in the original).  The commenter recommended that we
use two categories with different factors that correspond to the
generally understood fine particle fraction: industrial process
emissions (combustion, etc.) and other emissions (fugitive dust, sawmill
dust, etc).

Opposing Comments:

Three state/local agency/agency association commenters (0142, 0165,
0168) specifically stated that they do not support Option 1.  The
commenters did not agree that implementing the PM10 program in the
interim period during SIP development is an appropriate surrogate for a
PM2.5 program, nor did they agree that this approach would be protective
of the PM2.5 standards or prevent air quality deterioration.  The
commenters stated that they do not see a basis to continue an outdated
policy (i.e., the 1997 NSR guidance) that essentially neglects the
requirements of a PM2.5-specific NSR program.  The commenters believe
that the PM2.5 NSR program must contain a specific set or requirements
that not only assure attainment of the PM2.5 NAAQS, but also address
mandatory PSD increments, SILs for determination of significant impacts,
and PM2.5-specific BACT guidance.

Two of these commenters (0142, 0165) went on to say that they oppose
Option 1 because it does not address the PM2.5 problem, cannot be
implemented in some states, and does not incorporate precursor
emissions.  Nevertheless, these commenters acknowledged that such an
interim measure would be necessary until the proposed rule is finalized.

Response:

After considering the comments we received on the three proposed
options, we have decide to adopt Option 1 as our final policy whereby
SIP-approved states may continue to implement a PM10 program as a
surrogate to meet the PSD program requirements for PM2.5 pursuant to the
1997 guidance.  However, we are not finalizing either of the two
additional requirements that we proposed in Option 1.

We have dropped the requirement for demonstrating compliance with the
PM2.5 NAAQS in order to maintain consistency in the application of the
existing surrogate policy for the PM2.5 PSD program during the interim
period.  Since in the final rule we are otherwise allowing SIP-approved
PSD states to continue with the existing PM10 surrogate policy to meet
the PSD requirements for PM2.5, partially implementing the PM10
surrogate policy in this manner (using PM10 analyses for BACT, AQRVs,
and the additional impacts analysis) while doing the air quality
analysis for PM2.5 would be confusing and difficult to administer.
Thus, to ensure consistent administration during the transition period,
we have elected to maintain our existing PM10 surrogate policy which
only recommends as an interim measure that sources and reviewing
authorities conduct the modeling necessary to show that PM10 emissions
will not cause a violation of the PM10 NAAQS as a surrogate for
demonstrating compliance with the PM2.5 NAAQS.  Also as discussed
previously in section 5 of this document, we are not requiring
condensable emissions to be fully integrated into the PM2.5 program
until the end of the transition period to validate test methods
discussed in section 5.

	We believe that our final rule is reasonable for the following reasons.
 First, PM10 will act as an adequate surrogate for PM2.5 in most
respects, because all new major sources and major modifications that
would trigger PSD requirements for PM2.5 would also trigger PM10
requirements because PM2.5 is a subset of PM10.  Second, both of the
precursors presumptively designated in the final rule – SO2 and NOx
(presumptively) – are already regulated under state NSR programs for
other criteria pollutants.  Thus, those precursors will be subject to
NSR through those other programs.  We do not believe that the other
options or suggestions offer significant advantages that outweigh the
utility and ease of implementation of this approach.  See the discussion
of the other proposed options below.

Option 2 – Update the 1997 NSR Guidance to Include Proposed Provisions
of this Rule or Amend 40 CFR Part 51, Appendix S to Indicate that 40 CFR
52.21 Would Apply

	Proposed Option 2 involved implementing a true PM2.5 PSD program during
the SIP development period through one of two approaches:

Updating the 1997 guidance to reflect the provisions of the final rule
and allowing states to run a PM2.5 PSD program pursuant to the updated
guidance; or

Amending 40 CFR part 51, appendix S and 40 CFR 52.24 so that the PSD
requirements of 40 CFR 52.21 would govern PSD permit issuance during the
interim period.

Under the second approach, EPA would issue the PSD permits if a state
did not believe it had the authority to issue permits under appendix S.
We also requested comment on which of these two approaches should be
used.

Supporting Comments:

	Two industry/industry group commenters (0107.1, 0161) expressed support
for the Option 2 approach involving an update the 1997 PSD guidance to
allow SIP-approved PSD states to run a PM2.5 program during the
transition period.  Given that the transition period should be
relatively short (2 years or so), the commenters believe that our
resources would be better spent updating the 1997 PSD guidance rather
than proposing and finalizing amendments to appendix S, or approving
state delegation requests.  The commenters suggested that the guidance
be updated to include PM2.5 NAAQS compliance demonstration, inclusion of
condensables, and a provision related to interprecursor netting.

	Two state/local agencies (0142, 0168) and one state/local agency
association (0165) supported the concept of revising rules, as suggested
by Option 2, to address the inadequacies so that there is no longer any
reason to rely upon outdated guidance.  The commenters urged EPA to
revise pertinent regulations as soon as possible to allow states a ready
means to implement the PM2.5 NSR program.  The commenters noted that in
several states, reference to EPA policy does not provide sufficient
basis for implementing a major program such as the PM2.5 NSR; thus they
did not support EPA merely revising and reissuing guidance for use over
a several year period.

	These commenters (0142, 0165, 0168) believe that EPA has the legal
authority and obligation to assure that, during the SIP development
process, the PM2.5 NSR program is applied equitably (i.e., in those
states that have delegated programs and would have to apply them
immediately as well as in the remaining states that will have to submit
PM2.5 SIPs).  Two of the commenters (0142, 0165) went on to assert that
EPA must make the necessary amendments to the pertinent Federal
regulations so that states can adopt them for their own programs (or, in
the event of a state refusal or inability to carry out the program in an
expeditious manner, will allow EPA to implement the PM2.5 NSR program).
The third of the commenters (0168) indicated that it is paramount that
PM2.5-specific provisions be finalized and applied as expeditiously as
possible.

All three of the commenters (0142, 0165, 0168) stated that it was
unclear as to why we proposed in Option 2 to amend appendix S (and 40
CFR 52.24), the Emission Offset Interpretative Rule for nonattainment
areas, to carry out the requirements of the PSD program in 40 CFR 52.21
or 51.166.  They argued that we did not provide reasonable specificity
regarding the proposed changes to allow meaningful public input on this
option.

Response:

	As noted above, we have decided not to adopt Option 2 in favor of
adopting Option 1.  We do not believe that Option 2 offers significant
advantages that outweigh the utility and ease of implementation of
Option 1.  As one of the commenters in favor of Option 1 pointed out,
requiring states to implement updated guidance or 40 CFR 52.21 for a
brief period during development of their own PM2.5 PSD programs,
followed by additional changes for the proposed rulemaking on PM2.5
increments, SILs, and SMCs (72 FR 54112, September 21, 2007) (when
finalized) and then for the revised PM2.5 NAAQS, would introduce
considerable complication and uncertainty into the program.  We do not
believe the benefits of slightly earlier implementation of the PM2.5 PSD
program outweigh the disbenefits of confusion and shifting requirements.

Option 3 – State Requests Delegation of 40 CFR 52.21

	As Option 3, we proposed to allow states to request delegation of just
the Federal PM2.5 PSD program, as finalized in 40 CFR 52.21.  The state
would still have the option of obtaining EPA approval of its own PSD
program for PM2.5 if it submitted a SIP revision at a later date.

Supporting Comments:

One industry commenter (0111.1) recommended that states with approved
PSD programs for other pollutants be required to obtain approval for
purposes of the PM2.5 program, and in the interim, 40 CFR 52.21
delegations should apply.

One state/local agency (0137.1) favored a variation of proposed Option 3
in which SIP-approved states would request delegation of just the new
portions of 40 CFR 52.21 that are not already part of their codified PSD
programs, then work on incorporating the new provisions on the normal
rulemaking schedule for the state.  The commenter added that if this
suggestion is not acceptable to EPA, his state would prefer Option 1.

Opposing Comments:

Two state/local agencies (0142, 0168) and one state/local agency
association (0165) specifically stated that they do not support Option 3
because it is impractical.  The commenters pointed out that many states
already have their own PSD programs and plan to modify them for the
PM2.5 NSR requirements, and that the remaining states have retained a
form of the PSD program or have returned the program to the EPA.
Therefore, the commenters stated that they did not foresee a situation
where Option 3 would be necessary or appropriate.

Response:

	We agree with the commenters who indicated that Option 3 would be
impractical.  We believe that a state PSD program consisting of the
delegated Federal program for PM2.5 and state provisions for all other
pollutants would be complicated and confusing to sources and the
implementing agency.  In addition, as noted above, we expect that the
delegation would be a short-term situation and, along with other
upcoming changes to the program, would result in an unstable and
confusing program.  We do not believe that the benefits of slightly
earlier implementation of the PM2.5 PSD program would outweigh the
disbenefits of confusion and shifting requirements.  Accordingly, we do
not believe that Option 3 offers significant advantages that outweigh
the utility and ease of implementation of Option 1.

Other PSD Transition Comments

Comment:

	One state/local agency (0124.1) stated that none of our proposed
options regarding how SIP-approved states should implement the PSD
program during the transition period are viable options for that state.
The commenter requested that we allow states to continue their existing
PM10 program as a surrogate for PM2.5 (without caveat) until their SIPs
or regulations can be updated.  The commenter explained that based on
state law, the agency would have to update the regulations before
requiring applicants to demonstrate compliance with the PM2.5 standard
(which takes 9 to 12 months), which would be required under both Options
1 and 2.  The commenter argued that Option 3 (request delegation of the
40 CFR 52.21 PM2.5 requirements) would be unmanageable as their approved
program consists of a combination of statutes, regulations, and Federal
guidance adopted by reference, and that including a partial delegation
in this mix would further complicate the program.

Response:

	As noted above, we have decided to adopt Option 1, although we have
dropped the two proposed requirements to demonstrate compliance with the
PM2.5 NAAQS and to include condensable PM emissions.  This course of
action conforms to the commenter’s suggestion.  Also as noted, we have
decided not to adopt Option 2 or 3.

Comment:

One state/local agency (0124.1) and one industry commenter (0111.1)
requested that we clarify in the final rule that air quality analyses
are not required for PM2.5 until we complete the process of issuing
SILs.  The industry commenter (0111.1) stated that this was necessary so
that projects are not delayed due to the inability to demonstrate a de
minimis impact on air quality for PM2.5.

The state/local agency (0124.1) recommended that we not require NSR
PM2.5 modeling until we complete public review on the technical details
and associated resource requirements regarding what we expect with
regards to modeling.  The commenter stated that until this is done,
sources should be allowed to demonstrate compliance with the PM10
standards as a surrogate for the PM2.5 standards.  The commenter
recommended that the following technical details be included:

The direct PM2.5 SIL;

The expected method for assessing indirect PM2.5 concentrations in a
cumulative impact assessment; and

The preferred model (if modeling is expected) for estimating indirect
PM2.5 concentrations.

	The commenter (0124.1) also suggested that the current lack of
information regarding what the modeling obligations are prior to
development of a PM2.5 SIL is troubling and that such obligations need
to be clearly stated.  The commenter asked that we address the following
questions:

Are we expecting PSD applicants to conduct a cumulative analysis for all
projects prior to development of the PM2.5 SIL?

When a cumulative analysis is required, are we expecting applicants to
also model secondary PM2.5 concentrations?

Response:

We have proposed PM2.5 increments, SILs, and SMC under a separate
rulemaking (72 FR 54112, September 21, 2007).  We do not agree with the
commenters that suggest we should not require PSD air quality analyses
for PM2.5 in delegated states or states with approved SIPs for PM2.5
that are otherwise implementing PSD for PM2.5 because EPA has not yet
completed the proposed PM2.5 increments and SILs.  A demonstration that
a source does not cause or contribute to a violation of the PM2.5 NAAQS
can be conducted, notwithstanding the absence of an increment for PM2.5.
 These analyses can be conducted independently and do not depend on each
other.  Furthermore, a SIL is not a prerequisite to conducting an air
quality analysis for PM2.5, and the absence of an EPA-promulgated SIL
does not justify an exemption from the air quality analysis if a state
has all the other regulations in place for implementing the PSD program
for PM2.5.   Among other functions, SILs can be used as a screening