permitted facility a record of the [AOS] under which it is operating.”
 We are proposing to clarify this provision to identify more clearly the
information that must be included in the log and when the log must be
updated.

Overall, we expect that the log will be clear and complete in its
description of which AOS and associated permit terms and conditions are
being implemented.  Specifically, we propose that the source be required
to maintain an on-site log that includes, for each time an AOS is
implemented at the source: the operational or physical change which
causes the shift to the AOS, the emissions unit included under the
scenario, a reference to the applicable requirement(s) (including those
newly applicable to the emissions unit as a result of the change), a
reference to the applicable permit terms and conditions which apply to
the AOS and are implemented by the source, and the dates when the source
operated under the AOS (see proposed 40 CFR 70.6(a)(9)(i)).,  A source
can cross-reference the permit in providing the information required for
the log, but the cross-reference must be clear and specific and all of
the information required for the log must be identified, including, but
not limited to, the identity of the AOS implemented and if alternative
terms and conditions are provided for such AOS, which terms and
conditions were actually implemented by the source.

We are seeking comment on whether our proposed revisions to 40 CFR
70.6(a)(9)(i) appropriately clarify the required content of the on-site
log of AOSs operated at the source.  We also seek comment on whether we
have achieved the proper balance between the need for information and
the need to minimize administrative burden in proposing that log entries
be required only when a source adopts a different AOS.  Is the proposed
log content adequate to determine which AOS is being implemented by the
source?

Existing 40 CFR 70.6(a)(9)(ii) states that the title V permit may extend
the permit shield described in 40 CFR 70.6(f) to all terms and
conditions under each AOS.  We are not proposing to change this
paragraph, other than to adopt the term “AOS” for consistency.
Thus, the permit shield, where provided for by the permitting authority,
may be extended to the terms and conditions of ARMs and AOSs, provided
they have been the subject of notice and comment.  See 57 FR at 32277
(July 21, 1992); see also 40 CFR 70.7(e)(2)(vi).  The contents of the
on-site implementation log, such as its description of requirements
which apply to a particular AOS, are not permit provisions for purposes
of the permit shield.  Thus, a source will not be deemed to be in
compliance with applicable requirements of the Act simply because it is
in compliance with the description of applicable requirements contained
in the log (if the description is inaccurate).  Similarly, a source
owner or operator who incorrectly applies the procedures and criteria
for an ARM contained in the permit will be considered not to be in
compliance with the terms of the permit (and therefore not in compliance
with the Act).

Finally, we would like to clarify our expectations for how monitoring
relative to AOS implementation is to be included in the semi-annual
monitoring reports required by 40 CFR 70.6(a)(3)(iii)(A).  In general,
the semi-annual reports must identify the AOS(s) implemented during the
6-month period and include monitoring information relating to such
AOS(s).  Such monitoring information provides permitting authorities
important information on source operations.  The information also helps
inform the permitting authority as to the frequency and duration of the
AOSs actually implemented.

In addition, the semi-annual monitoring reports must identify any ARMs
implemented in the 6-month period.  For ARMs that generate values
related to parametric monitoring (e.g., an ARM used to determine the new
value of a control device operating limit after a performance test, or
an ARM used to determine compliance with a PTE limit), the source must
also include the results of the ARM used during the 6-month period in
the semi-annual report.  The report will, therefore, summarize the
monitoring data referenced to the emissions unit, emissions limit, and
ARM output.

What are some examples of how AOSs and advance approvals can be used to
provide operational flexibility?

In this section, we present two examples to illustrate how to apply the
requirements of 40 CFR 70.5(c) and 70.6(a)(9) to AOSs.  The first
example is for an AOS that involves the use of an existing boiler with
dual fuel capability.  The second example uses a combination of advance
approvals and AOSs to add solvent storage tanks over the term of a
source’s title V permit.

Example 1: Boiler with dual fuel capability.

This is a simple example of an AOS, and the application and permitting
requirements are quite straightforward.  The relevant emissions unit is
an existing boiler that is authorized for and capable of burning either
distillate fuel oil or natural gas. The boiler is subject to a
pre-existing minor NSR permit which authorized its construction and
limited its subsequent total emissions, and to different SIP emissions
limits (and associated MRRT requirements) depending on which fuel is in
use.  The minor NSR permit remains in effect.  The source reasonably
anticipates that it may wish to switch fuels during the term of its
title V permit, and proposes to the permitting authority to designate
combustion of natural gas as the baseline operating scenario and address
the combustion of distillate fuel oil as an AOS.

	In this example, the minor NSR permit terms (previously used to
authorize construction of the boiler), the applicable SIP emissions
limits, and the associated MRRT requirements are the only applicable
requirements.  The boiler is not subject to any of the NSPS for “steam
generating units” (i.e., boilers) because of its size and date of
construction.  That is, it is below the size cutoff for the NSPS that
were in effect when it was built (40 CFR part 60, subparts D, Da, and
Db), and it was built prior to the cutoff date for the NSPS that does
cover boilers of its size (subpart Dc).  By virtue of its construction
date, size, and fuel, the boiler is classified as an existing large
liquid fuel unit under the MACT standard for Industrial, Commercial, and
Institutional Boilers and Process Heaters (40 CFR part 63, subpart
DDDDD).  As such, the only applicable requirement under the MACT
standard is to submit an “initial notification” to the permitting
authority, which the source has already done.

	When distillate oil is fired, the boiler is subject to limits of 10
percent opacity and 1 percent sulfur in the fuel.  No such restrictions
apply when natural gas is being fired.  Different SIP emissions limits
also apply to emissions of particulate matter, nitrogen oxides, and
carbon monoxide for each fuel.  This existing unit was constructed under
a minor NSR permit, but switching between the fuels will not trigger
minor or major NSR, an NSPS, or the MACT standard because the boiler was
designed to accommodate both fuels, and it has historically been
authorized to use both fuels in its State operating permits.  Thus, the
anticipated fuel switches are operational changes that trigger only
different SIP requirements.

	The design of the burners in the boiler, coupled with proper operation
and maintenance, is sufficient to meet the SIP limits for both fuels for
particulate matter, nitrogen oxides, and carbon monoxide, as well as
opacity when distillate oil is fired (based on performance tests).  To
meet the percent fuel sulfur requirement for distillate oil firing, the
source will purchase fuel at or below 1 percent sulfur.  In addition,
under the terms of its existing (and still effective) minor NSR permit,
the source will have to provide periodic analyses of the percent sulfur
in the fuel, as well as whenever the source changes fuel suppliers.

	To establish the AOS, the permit would identify and describe the AOS,
in this case combustion of distillate oil, and identify all applicable
requirements which apply when distillate oil is combusted.  The permit
must also include terms and conditions that assure compliance with all
applicable requirements (as required under proposed 40 CFR
70.6(a)(9)(iii)), and include a requirement for the source to keep a
contemporaneous log that records the information required by proposed 40
CFR 70.6(a)(9)(i), including, but not limited to: the affected emissions
unit (i.e., the boiler), a reference to the applicable requirements
applying to the boiler when burning distillate oil, a reference to the
applicable permit terms which assure compliance with these requirements,
and the dates the source began and ceased combustion of distillate oil.
Since the MRRT applicable requirements detail all the relevant
compliance procedures, there is no need for additional permit
information to be contained or cross-referenced into the log for this
purpose.

	The title V permit for the source also must require the source to
submit a semi-annual monitoring report.  See 40 CFR 70.6(a)(3)(iii)(A).
In this example, once the facility implements the AOS (i.e., begins
combusting distillate fuel oil), the next monitoring report would
identify, for the relevant time periods, the AOS implemented and provide
monitoring information relative to that AOS.  The report would also
contain monitoring information for the baseline natural gas combustion
operations, if the source operated both in the baseline mode and under
the AOS during the 6-month reporting period.

Example 2: Future addition of volatile organic liquid (VOL) storage
tanks.

	A synthetic organic chemical manufacturing facility located in an ozone
attainment area seeks a title V permit renewal and intends to add VOL
storage tanks to an existing tank farm and store various VOLs at
different times in the new and existing tanks over the term of its
renewed permit.  The source will have to obtain all necessary advance
approvals in a minor NSR permit for construction of the new tanks.  In
addition, the source will apply for AOSs in its title V permit to
address future operating scenarios involving storing different VOLs at
different times in the new tanks and also its existing tanks (since
these scenarios will implicate different applicable requirements.)

Advance approvals

In this example, the source applied for advance approvals under NSR to
authorize the construction of up to 10 new VOL storage tanks of up to
30,000 gallons in capacity.   Because the source operates under a VOC
PAL, the new tanks will not trigger major NSR for VOC.  In its minor NSR
permit application, the source proposed to the permitting authority that
this emissions cap, by limiting aggregate VOC emissions (including those
from the new tanks), would also satisfy the requirements of minor NSR
related to the protection of the NAAQS and PSD increments.  Although the
source does not know precisely the sizes or number of the new tanks or
the materials to be stored in them, it acknowledged in its minor NSR
permit application that the requirements of the NSPS for Volatile
Organic Liquid Storage Vessels (40 CFR part 60, subpart Kb) would apply
to each new tank.  In addition, the source stated that it would use a
submerged fill pipe for tanks with capacity of 2,000 gallons or more
that are not required to be controlled to comply with subpart Kb, which
is a SIP requirement for such tanks.

The source did not address any other SIP requirements for VOL storage
tanks in its application because these requirements do not apply to
tanks with capacity below 40,000 gallons, and the source is not seeking
approval for any new tanks over 30,000 gallons in capacity.  In
addition, although it is subject to the MACT standard for the Synthetic
Organic Chemical Manufacturing Industry (typically referred to as the
“Hazardous Organic NESHAP” or the “HON,” 40 CFR part 63, subpart
G), the source did not address the requirements of this standard in its
minor NSR application because the State in which this example source is
located implements MACT standards through its title V permit program
(see below) rather than in the context of its minor NSR program.

The control requirements of subpart Kb vary with the size of the storage
tank and the maximum true vapor pressure of the stored liquid.  An
advance approval must  describe the changes that the source may
implement, which in this example consist of the reasonably anticipated
combinations of new tank size and stored liquid vapor pressure, along
with the requirements (i.e., subpart Kb and SIP provisions) that would
apply for each.  One way to do so would be to use a table such as Table
VI-1 below, which uses metric units to match the metric units used in
subpart Kb.  Note that because the source in this example sought advance
approval only for new tanks up to 30,000 gallons (114 cubic meters (m3))
in capacity, the table addresses only tanks up to this size even though
subpart Kb contains provisions specific to larger tanks.

Table VI-1.  Advance Approvals for New Tanksa

≤ V ≤114	VP < 15.0	Not applicable	Not applicable

75 ≤ V ≤ 114	15.0 ≤VP < 27.6	None	§§60.116b(a)-(e)

75 ≤ V ≤114	27.6 ≤ VP < 76.6	§60.112b(a)(1)

Fixed roof w/ internal floating roof; or	§60.113b(a)

§60.115b(a)

§§60.116b(a)-(c), (e)

§60.112b(a)(2)

External floating roof; or	§60.113b(b)

§60.115b(b)

§§60.116b(a)-(c), (e)

§60.112b(a)(3)

Closed vent system and control device ≥95% efficient	§60.113b(c) or
(d)

§60.115b(c) or (d)

§§60.116b(a), (b), (e)

75 ≤ V ≤114	76.6 ≤ VP	§60.112b(b)

Closed vent system and control device ≥95% efficient	§60.113b(c) or
(d)

§60.115b(c) or (d)

§§60.116b(a), (b), (e)

a The source is authorized to add up to 10 new tanks, each of which is
covered by the scope of Table IV-1.  A permanent submerged fill pipe is
required for any of the 10 advance approved  tanks with capacity ≥ 7.6
m3 that is not controlled with an internal floating roof, external
floating roof, or closed vent system and 95%-efficient control device.

In this example, the permitting authority granted advance approval in a
minor NSR permit for the source to construct tanks meeting each of the
conditions described in Table VI-1.  The permitting authority determined
that no further restrictions on the proposed tanks other than SIP and
subpart Kb compliance and the major NSR PAL for VOC emissions would be
necessary in the minor NSR permit, because the maximum number of
proposed new tanks could be accommodated within the source’s VOC PAL
(due to pollution prevention (P2) initiatives undertaken by the source)
and would not cause concern with NAAQS or PSD increment protection or
Class I area impacts.  In this case, the permitting authority chose to
incorporate Table VI-1 directly into the minor NSR permit to identify
the requirements which apply to the new tanks, regardless of size, type,
and/or number.

Title V renewal with AOSs

The source’s title V renewal application would identify both the
existing emissions units (i.e., the units currently comprising the tank
farm) and the new tanks authorized under the minor NSR permit advance
approval, and would contain any AOSs that the source wants to propose.
The title V application must identify all applicable requirements that
are implicated by each proposed AOS.

The source has opted to make the universe of requirements potentially
applicable to the advance approved new tanks more manageable by
accepting a boundary condition, specifically a maximum tank volume of
30,000 gallons (114 m3).  This condition does not restrict the
source’s flexibility, since only tanks at or below the 30,000 gallon
threshold are anticipated to be constructed, but it does have the effect
of precluding the applicability of the NSPS requirements that would
apply to tanks above that size.  The source also has committed to store
only materials with maximum true vapor pressure of less than 15 pounds
per square inch (psi) (103 kilopascals (kPa)).  This ceiling on vapor
pressure does not affect the applicability of control requirements, but
is necessary for calculating maximum theoretical emissions from the new
tanks and assessing the ability of existing add-on control devices to
accommodate any increased emissions.  The existing tanks are all
currently within these boundary conditions.  The source wishes to retain
the option to store materials that contain HAPs in all of the tanks,
which could implicate the requirements for storage vessels in the HON.
In this example, the facility was originally constructed in the late
1980’s, so the existing tanks are subject to the requirements of
subpart Kb, and the source is considered an existing “affected
source” for purposes of the HON.  The applicable requirements to be
listed in the renewal application for the new and existing tanks include
the SIP emissions limitations, the requirements of subpart Kb, the
requirements of the minor NSR permit (which are identical to the
requirements of the SIP and subpart Kb as set out in the advance
approvals in Table VI-1), and the requirements of the HON.

The source has conducted a streamlining analysis of applicable
requirements related to the emissions limitations for each tank.   The
source provided supporting documentation in its permit application for
this streamlining analysis, and the permitting authority reviewed and
approved it.  The analysis shows that for new and existing tanks that
are storing materials that do not contain HAPs, compliance with the
requirements of subpart Kb also will satisfy the control requirements of
the SIP.  For tanks not storing HAPs, the SIP requirements are the most
stringent applicable requirements only when subpart Kb does not apply
(i.e., when the tank size and/or vapor pressure are below the respective
applicability limits for subpart Kb).

For tanks that are storing materials that contain HAPs and are subject
to the HON (i.e., capacity ≥ 38 m3), the HON specifies that subpart Kb
does not apply.  Tanks storing HAPs that are below the size cutoff for
HON applicability are also below the applicability cutoff for subpart Kb
(which is 75 m3); thus, at this facility subpart Kb does not apply to
new or existing tanks that store materials containing HAPs.  The
streamlining analysis provided by the source and approved by the
permitting authority shows that compliance with the requirements of the
HON will satisfy the control requirements of the SIP for both the new
and existing tanks that store HAP-containing materials.  The SIP
requirements are most stringent only for HAP-containing tanks that are
below the size and/or vapor pressure cutoffs for control under the HON.

To maintain the flexibility to change the material stored in each tank
(an operational change), the source requested AOSs in its title V
permit.  (The source does not expect to modify the volume of any
existing storage tanks, or of any new tanks after they are initially
constructed, and therefore did not request AOSs to address such physical
changes.)  Each set of operating conditions that implicates a different
set of applicable requirements would require an AOS.  The necessary AOSs
vary depending upon the capacity of a given tank.  For example, no AOSs
are needed for a new or existing storage tank that has a capacity of
less than 7.6 m3 because no requirements apply regardless of the
characteristic of the material that is stored in the tank (tanks of this
size are below the applicability cut-offs for the SIP, subpart Kb, and
the HON).  As a result, a new or existing tank of this size has only a
baseline operating scenario, and no AOSs are necessary.  Similarly, no
AOSs are needed for tanks that are between 7.6 m3 and 38 m3 because only
the SIP requirements apply to these tanks regardless of the liquid that
is stored.  A tank that is between 38 m3 and 75 m3 needs a baseline
operating scenario and one AOS to enable switching between storing a
material that contains HAP and one that does not.  In both cases, the
SIP control requirements apply, but when HAPs are stored the source must
also maintain the records required under the HON.  That is, when HAPs
are stored, an additional applicable requirement is triggered for the
tank.

Several operating scenarios are needed for both new and existing tanks
between 75 m3 and 114 m3.  The possible scenarios for these tanks are
outlined in Table VI-2.

Table VI-2.  Authorized Operating Scenarios for New and Existing Storage
Tanks with Capacity Between 75 m3 and 114 m3

Operating scenario number	Tank size, V (m3)	Are materials with HAPs
stored?	VP or VPH, as applicable (kPa)a	Most Stringent

Applicable control requirements

1	75 ≤ V ≤ 114	No	VP < 15.0	SIP

2	75 ≤ V ≤ 114	No	15.0 ≤VP < 27.6	SIP

3	75 ≤ V ≤ 114	No	27.6 ≤ VP < 76.6	NSPS

4	75 ≤ V ≤ 114	No	76.6 ≤VP	NSPS

5	75 ≤ V ≤ 114	Yes	VPH < 13.1	SIP

6	75 ≤ V ≤ 114	Yes	13.1 ≤ VPH < 76.6	HON

7	75 ≤ V ≤ 114	Yes	76.6 ≤VPH	HON

a The following symbols are used in this column:

	VP = stored liquid maximum true vapor pressure

	VPH = stored total HAP maximum true vapor pressure

As seen in Table VI-2, seven operating scenarios are approved for new
and existing storage tanks in this size range.  The source included this
table in its title V permit application, along with the details about
the applicable requirements (including control and MRRT requirements)
for each operating scenario.  For each existing tank in this size range,
the source specified the baseline operating scenario and designated the
others as AOSs.  For any new tanks in this size range, a baseline
operating scenario from the scenarios authorized in Table VI-2 either
was identified at the time of minor NSR permitting (if known), or will
be identified at the time of construction and operation.  Table VI-2
is, therefore, a convenient means to describe efficiently the individual
operating scenarios that are approved with respect to the new and
existing tanks at the source.

The title V permit containing the approved streamlined limits must also
identify the subsumed applicable requirements.  The permit also must
contain terms requiring the source to keep an on-site log recording the
use of authorized AOSs.  The log entries would include, upon shifting to
or from the storage of HAP materials or materials of different vapor
pressure which implicate different requirements, the following: the size
of the tank involved (new or existing); the maximum true vapor pressure
of the stored material (if no HAPs are stored) or the total HAP maximum
true vapor pressure (if the stored material contains HAPs); the control
option employed; the applicable requirements that apply (including
emissions limitations and MRRT requirements); and the date that the
relevant storage commenced.

After an existing tank’s initial shift from its baseline scenario, the
on-site log would identify at all times which AOS was in effect for that
tank.  For a new tank, the on-site log would be used to record the
initial baseline operating scenario and any AOSs into which that the
tank subsequently shifted.  For example, if the source switched from
storing a HAP-containing material to material with no HAPs, the source
would enter that switch into the on-site log, giving the date of the
switch, identifying the new AOS, and providing information about which
applicable requirements (permit terms and conditions) were implicated
for that AOS.

What is the process for adding or revising advance approvals, AOSs, and
ARMs in issued permits?

An advance approval, AOS, or ARM may be added to a title V permit
through permit issuance or renewal or through the permit modification
process.  When an existing permit is to be modified, the appropriate
modification track (significant or minor) depends on the nature of the
proposed advance approval, AOS, or ARM or the proposed revisions to them
and whether it would qualify as a minor permit modification.  See 40 CFR
70.7(e)(2)(i).  Note also that the permit shield, where available, can
be extended to advance approvals, AOSs, and ARMs added through a
significant permit modification, but not to those added through minor
permit modification procedures (per existing 40 CFR 70.7(e)(2)(vi)).
See section VI.C.3 above for more on AOSs and ARMs and the permit
shield.

How do the proposed AOS provisions differ between parts 70 and 71?

Part 70 contains only the requirements for State operating permit
programs and is not divided into subparts.  Part 71 contains two
subparts.  Subpart A of part 71 contains the general Federal operating
permit program, while subpart B contains provisions for a limited,
Federal title V permit program to establish alternative emissions
limitations for early reductions sources that have demonstrated
qualifying reductions of HAP under section 112(i)(5) of the Act.  Thus,
subpart A of part 71 is analogous to the entire part 70.

A general difference between the part 71 and part 70 operating permit
programs is the identity of the permitting authority.  Under part 70,
non-federal agencies are the permitting authorities.  A part 71 permit
may be issued by EPA, where there is not an approved State program or
where a State has failed to revise a permit in response to an objection
from the Administrator, or it may be issued by a permitting authority
that has been delegated authority to issue part 71 permits on behalf of
EPA.  Currently, part 71 permits are generally issued for sources
operating in Indian country.

For the most part, the proposed revisions to the part 71 operating
permit program mirror exactly the proposed revisions to part 70.  That
is, the proposed language is identical, and the sections of the rule
that would be revised differ only by being in part 71 instead of part
70.  For example, we are proposing the same language on AOS permit
content in 40 CFR 70.6(a)(9) and 71.6(a)(9).  However, there is one
place where the structure of the part 71 operating permit program does
not parallel that of part 70, and therefore the revisions proposed are
different.

Specifically, 40 CFR 70.4(d)(3)(xi) is one of the places in part 70 that
we have proposed to substitute the term “AOSs” for purposes of
consistent terminology.  There is no analogous section in part 71, so we
are not proposing an analogous revision.

We solicit comment on these topics and all aspects of this proposal
regarding part 70.  We also note that if a commenter believes that
additional or different regulatory revisions are needed, they should
identify the specific revisions and the basis for these revisions.

What changes are we proposing in parts 51 and 52?

We propose to modify the major NSR regulations in a limited way.
Specifically, we propose to allow a number of emission activities to be
treated as a single emissions unit (i.e., a “Green Group.”)
Emissions from each of these activities would be routed to a common
emission control device meeting BACT/LAER, and future emissions and
changes within the Green Group would be approved over a 10-year period
in a major NSR permit.  In addition, we are proposing that Green Groups
not be subject to the provisions of 40 CFR 52.21 (j)(4) and 51.166(j)(4)
requiring reevaluation of BACT for phased construction projects or of 40
CFR 52.21(r)(2) requiring continuous construction to commence within 18
months.  These provisions would remain in effect for permits issued to
emissions units other than Green Groups.  We are proposing these changes
because we believe the anticipated benefits of permitting Green Groups,
similar to those studied in pilot projects and discussed in section
IV.A, warrant allowing the sources more time to construct before the
permit expires.

The approach we are proposing represents an extension of our December
2002 NSR Improvement regulations and reflects strategies that we believe
ensure environmental protection while providing additional operational
flexibility to sources.  In particular, we intend Green Groups to
complement the use of plantwide emissions caps (e.g., PALs) by providing
a flexible permitting option for a section of a plant.  Like PALs, we
propose that Green Groups would be a mandatory minimum element of a
State NSR program under which the permitting authorities retain
discretion as to when to approve individual Green Groups requested by
sources.

Sources that need to alter their operations rapidly in response to
market pressures (including expanding production) and that have
controlled portions of their plants to BACT/LAER (either voluntarily or
as part of their efforts to meet applicable MACT or other requirements)
are good candidates for the Green Group provisions.  Such
well-controlled sources may have limited growth potential under a PAL,
especially compared to sources with less well-controlled baseline
emissions.  Other candidates for Green Groups are sources that have
severe difficulties in tracking all emissions (including fugitive
emissions to comply with a PAL), sources in which only a portion of the
facility accounts for all or nearly all anticipated changes,  or large,
complex plants with many diverse operations producing a variety of
products.  This option, for Green Groups would help provide effective
alternatives for the diverse universe of sources potentially subject to
major NSR.

The Green Group provisions proposed encourage a wide spectrum of sources
to construct specified types of changes for a 10-year period with
greater certainty and flexibility in exchange for implementing
BACT/LAER, regardless of whether or to what extent the source may have
been subject to the current major NSR regulations.  That is, the Green
Group provisions, if finalized, would provide an alternative means to
comply with major NSR and not require an evaluation of whether major NSR
would otherwise apply.  For example, a source might propose a Green
Group that would result in a net decrease in actual emissions (i.e.,
application of controls to meet BACT/LAER, as applicable, reduces actual
emissions by an amount greater than the increased emissions associated
with the changes authorized for the Green Group).  Under these
circumstances, the source voluntarily subjects to major NSR the changes
and existing operations included within the Green Group, presumably to
obtain greater flexibility and certainty in return for implementing a
BACT/LAER level of control.

What are the benefits of Green Groups?

For several reasons, we believe that the environment and the public will
benefit from Green Groups.  First, we believe that substantial
environmental benefits will occur, because a Green Group requires all
included emissions activities to be controlled to the level of BACT or
LAER.  The BACT or LAER would apply to existing emissions activities
(which otherwise would remain uncontrolled or be subject to less
stringent control requirements), as well as to emissions activities that
are modified or added pursuant to the Green Group authorization.  In the
absence of a Green Group, existing emissions activities would not be
subject to BACT or LAER controls until such time as they were modified.
Such modifications might not ever occur, or might occur far into the
future.  Even where a modification did occur, evaluated alone, many
modifications would likely not be subject to major NSR.  Some new
emissions activities might also not be subject to major NSR because
their emissions are below applicability thresholds or because they
“net out” of review.   tc \l2 "A.	What is a major Green Group? For
example, a VOC source might make one or more unrelated modifications,
each of which are less than significant (i.e., would result in increases
in VOC emissions of 39 tpy or less).  These modifications would
ordinarily escape NSR; however, when grouped together as a Green Group,
they would undergo NSR and be subject to BACT/LAER.

Even when individual changes are proved to be subject to major NSR, the
resulting BACT may in some cases be less stringent than that required
for a Green Group.  Considering the entire Green Group, including all
the authorized future changes, in a single major NSR action will drive a
BACT analysis toward the maximum level of control due to the economies
of scale that occur in calculating the cost effectiveness of controls.
We believe these environmental benefits will more than offset the
possibility that a future BACT or LAER determination for new approved
expansion might be marginally more stringent than the BACT/LAER
determination at the time of the Green Group designation.

Moreover, we expect benefits to occur from the better and more frequent
type and amount of monitoring that will be required for Green Groups.
Currently, for a typical emissions unit subject to major NSR, the
permitting authorities decide on a case-by-case basis the types of MRRT
appropriate for the permitted emissions activities, consistent with the
underlying applicable NSR requirements.  We are proposing that a Green
Group be subject to MRRT requirements that are patterned on the existing
requirements for PALs.  In addition, there are proposed safeguards to
ensure that the air pollution control device continues to function as
intended throughout the Green Group designation period.  These proposed
requirements will significantly improve the monitoring data available to
the source, the permitting authority, and the public, and thus, will
better ensure ongoing compliance.

Green Groups will also promote greater administrative efficiency for
permitting authorities and sources, because once a group of activities
qualifies, it will have increased flexibility to make approved changes
rapidly in response to market demands without needing to undergo
additional preconstruction permitting review.  In addition, permitting
authorities benefit from increased administrative efficiency, because
the Green Group eliminates iterations of permitting processes that
produce little or no environmental benefit.

What is a Green Group?

Defining the Scope of a Green Group

This notice proposes to define a Green Group as one emissions unit that
is composed of designated emissions activities ducted to one common air
pollution control device,, that is determined for this group to meet
BACT or LAER, as applicable.  A Green Group is a framework established
under major NSR for the advance approval of anticipated changes within
the group.  These changes can occur over a 10-year phase, as described
in the permit.  Separate Green Groups must be established for emissions
activities that are ducted to separate air pollution control devices.

In addition to current, designated emissions activities, a Green Group
may include future changes (e.g., reconfiguration and/or expansion) to
these existing activities and/or the addition of new emissions
activities.  Either of these activities could result in an increase in
emissions, if the permitting authority considers and authorizes such
future changes as part of the NSR permitting process.  We are proposing
that the NSR permit must sufficiently describe the future new and
existing emissions activities that comprise a Green Group and include
terms and conditions for them, such as annual and short-term emissions
limits.  These terms and conditions assure that the Green Group
activities will be properly operated to protect air quality as well as
to meet BACT/LAER, as applicable.

In its permit application, the source must describe the new and existing
emissions activities to be included in a Green Group in sufficient
detail to allow the permitting authority to determine BACT or LAER (as
applicable) for the Green Group taken as a whole and to conduct an
ambient air impact analysis to safeguard relevant ambient increments and
standards (including the determination of any offsets necessary in
non-attainment areas) or any relevant Class I areas.  The application,
therefore, must provide information about the current existing emissions
activities and the types of changes to be implemented, including
specifics on emissions characteristics and the maximum total amount of
emissions that will be generated by the Green Group’s emissions
activities after fully implementing the changes.  If the source is
unable to sufficiently describe the new and existing emissions
activities that comprise the Green Group and the associated emissions,
the permitting authority will not be able to issue a major NSR permit
with a Green Group designation.

The information needed to describe the type of changes authorized is
expected to vary on a case-specific basis and will depend on the type of
control approach approved for BACT/LAER and the emissions
characteristics of the included emissions activities and of the changes
which are permitted to occur to them.  That is, certain control devices
like carbon absorbers and scrubbers may exhibit varying effectiveness in
the removal of different substances.  As a result, authorized changes
subject to a BACT/LAER determination requiring such a control device
would be constrained to exclude emissions of substances that cannot be
controlled sufficiently by the device.  Moreover, the amount of detail
needed to describe the future changes may increase where BACT is
determined to be less than the most stringent technology for the
proposed construction project(s).  Similarly, the scope of authorized
changes must be limited to ensure that they are compatible with the
relevant monitoring, recordkeeping, and testing provisions of the
permit.  In addition, there may need to be restrictions on how the
changes occur to ensure the effectiveness of the approved control
device.  For example, in certain situations, increased productive
capacity may need to be permitted to occur in a manner which would not
overload the control device for the Green Group.

The type of detail required in a permit to describe the authorized
changes in the Green Group must also be sufficient under the proposed
approach to allow the permitting authority to determine, when a change
subsequently is implemented, whether the permitting authority
contemplated that change in the scope of the advance approval contained
in the major NSR permit.  As a minimum, we expect that changes be
described relative to the existing operations comprising the Green
Group.  That is, the permit must contain a detailed snapshot of the
existing emissions activities included in the Green Group, and any
approved changes would then be described as categories of changes to
these baseline activities that maintain their fundamental integrity.
Such changes might include: (1) changes in products; (2) changes in raw
materials; (3) reconstruction and/or replacement of existing process
equipment; (4) increased capacity (either as changes to existing
equipment or as new equipment);  and (5) additions of new production
lines and/or new support units.

When products or raw materials will be changed, the description should
specify what the range of new products or raw materials might be and
their compatibility to the existing emissions controls.  When equipment
will be added, reconstructed, or replaced, the permit should specify
whether capacity might be changed and to what extent.  Depending on its
potential relevance to the BACT/LAER determination, the description
might specify the maximum size and/or capacity of any changed or new
equipment.  In some situations, it might be necessary to describe the
different types of authorized changes more specifically.

This proposed approach for describing authorized future changes is
consistent with the approaches taken in our evaluated flexible permit
pilots and with our previously mentioned recommendations for describing
AOSs in a title V permit.  Provided that all of the emissions activities
identified as part of the proposed Green Group are vented through a
common control device and approved through the major NSR permitting
process, the source would be authorized (for purpose of major NSR) to
implement over a 10-year period the changes that are advance approved in
the permit without triggering further NSR review.  For physical and
operational changes a source undertakes that are not included in a Green
Group, the applicability of NSR to those changes would be determined as
these changes occur, in accordance with existing major and minor NSR
procedures.

An emissions activity cannot be included in a Green Group some of the
time and excluded at other times.  Stakeholders suggested allowing such
“intermittently-included” activities during pilot project
discussions to address emissions activities that are subject to
different applicable requirements depending on their operations.  For
example, a web-coating operation might be subject to the Pressure
Sensitive Tape and Labels NSPS (40 CFR part 60, subpart RR) when
manufacturing certain products, and not subject to any applicable
requirement or emissions limitation when manufacturing other products.
Some stakeholders suggested that such a coating operation could be
included in the Green Group (and subject to the Green Group control
approach) when subject to the NSPS, but excluded (and not subject to
control) when its operations are not subject to the NSPS.  We rejected
this approach because of the increased complexity and the significant
additional recordkeeping burden.  Accordingly, after undergoing major
NSR as part of the Green Group, the emissions activity remains subject
to the requirements of the major NSR permit, including the BACT or LAER
emissions reduction requirements, regardless of changes in the
applicability of any other requirement.

	If a source removes a particular emissions activity from an established
Green Group at any time during its 10-year duration, the removed
emissions activity will be subject to major NSR.  For example, suppose
that a Green Group consists of four emissions activities and that the
source proposes to withdraw activity No. 4 from the Green Group after
its establishment.  In order to do so, the permitting authority would
subject activity No. 4 to major NSR as if it were a new major
modification (i.e., contemporaneous BACT/LAER, as applicable, and
ambient reviews).  Simultaneously, the permitting authority (in the same
major NSR action) would adjust downward the emissions limit of the Green
Group (see discussion below) to account for the amount of emissions
previously attributed to activity No. 4 (i.e., its baseline actual
emissions and any emissions growth targeted to occur at activity No. 4).
 In addition, the permitting authority would verify that the original
BACT/LAER limit could be met as it would now be applicable to the
remaining emissions activities.

Emissions Limits for Green Groups

In general, two types of emissions limits must be set in the major NSR
permit for Green Groups: (1) an emissions limit to constrain overall
emissions for the Green Group; and (2) a limit to ensure that BACT/LAER
technology is being employed and is effective (e.g., lbs/gal, percent
reduction).  These two limits complement each other and collectively
implement the core provisions of the Green Group.  The amount of any
emissions increase from authorized changes would be limited by the
annual emissions cap and the BACT/LAER emissions limitation, both of
which would be placed in the major NSR permit.

An enforceable mass emissions limit must be determined for the pollutant
for which the Green Group is established.  We propose that the total
emissions from the Green Group be limited by the annual emissions limit
(on a monthly rolling total basis) for the Green Group pollutant.  The
annual emissions limit would be set at the actual emissions associated
with all the emissions activities included in the Green Group and
controlled to the BACT/LAER level, as applicable.  The annual emissions
limit would also include any emissions increases that result from
changes to existing emissions activities and/or changes to add new
emissions activities that are authorized by the permit.  The annual
limits and any necessary short-term limits for a Green Group must be set
at a level demonstrated to safeguard applicable ambient standards and
increments (i.e., NAAQS and PSD increments).

We propose that the annual emissions limit for a Green Group be
developed in two steps.  The first step is to calculate the group’s
baseline for actual emissions using the same methodology that is used in
setting a PAL under the existing major NSR regulations.  This baseline
would therefore equal the baseline actual emissions (as defined in the
major NSR regulations) for all the emissions activities in the group
that existed during a 24-month period selected by the source within the
10 years preceding the Green Group permit application, minus the
emissions of any of these existing activities that have been shut down
since the 24-month period, plus the PTE of any emissions activities
added within the group since the 24-month period.  Baseline actual
emissions must be adjusted downward for any non-compliant emissions
during the 24-month period and for any emissions limitations that have
become applicable since the end of the 24-month period.  That is, a
downward adjustment is necessary if any legally enforceable emissions
limitation restricts an emissions activity’s ability to emit the Green
Group pollutant or to operate at levels that existed during the selected
24-month period.  See the December 2002 preamble discussion of baseline
actual emissions at 67 FR 80195.  (Note that the definition of
“baseline actual emissions” differs somewhat for electric utility
steam generating units (EUSGUs) and other types of emissions activities.
 The preceding discussion applies to non-EUSGUs.)  In addition, these
baseline actual emissions must be adjusted downward as necessary to
reflect application of the BACT/LAER to the Green Group.

The second step in setting the annual emissions limit for a Green Group
is to calculate the emissions increase from any new emissions activities
or planned changes to existing activities that are approved as part of
the permit (i.e., an emissions increase increment to address the planned
changes over a 10-year period.)  This would be added to the baseline
actual emissions level determined in the first step.  Thus, the total
Green Group annual emissions limit should reflect the actual emissions
associated with all new and existing emissions activities included in
the Green Group, all of which are controlled to the BACT/LAER level, as
applicable.

In an attainment area, the authorized emissions increase increment
(i.e., the difference between the baseline actual emissions and Green
Group annual emissions limit) and other relevant emissions increases at
the source, but outside the Green Group, must be used in the required
PSD air quality analyses.  In reviewing the application, the permitting
authority should weigh such factors as the available PSD increment(s) in
the area in determining whether to approve the annual limit proposed by
the source for the Green Group.  In a nonattainment area, the authorized
emissions increase increment must be offset at the ratio prescribed by
the Act or the applicable State, Tribal, or Federal implementation plan.

To the extent that they can be quantified, fugitive emissions also must
be addressed for Green Groups as required under the Act and by EPA
according to applicable major NSR regulations and requirements and
guidance.  This includes determining fugitive emissions from all
existing emissions activities in the Green Group, as well as all
increases in fugitives and maximum total fugitive emissions that will be
generated in the future by the emissions activities in the Green Group.
Such treatment of fugitive emissions is intended to be the same approach
as that currently required for PALs.

An emissions limit or performance specification separate from the Green
Group emissions limit determined above also must be set to reflect the
application of BACT or LAER, as applicable.  The format for these limits
can vary (e.g., pounds of emissions per material input or per product
output; or a percent removal efficiency) but are typically different
from the tpy format of the limit applying to total annual emissions.  In
some cases, separate, additional BACT/LAER limits may be necessary to
govern low concentration situations (e.g., the source would be required
to meet either 98 percent removal efficiency or a 20 parts per million
(ppm) outlet concentration) and to address startup, shutdown, and
malfunction situations.

We also propose that a Green Group may meet the applicable BACT or LAER
level of control through use of P2 alternatives for component emissions
activities during some  periods of operation instead of always sending
all emissions to the common air pollution control device.  Each of the
P2 alternatives must independently qualify as achieving a BACT or LAER
level of control in the major NSR permitting process.  For example, an
emissions activity such as a paint spray booth operation would be ducted
to a common air pollution control device such as a thermal oxidizer to
control VOCs from multiple emissions activities in a Green Group.  As a
P2 alternative, BACT or LAER might be established based on the use of
compliant materials in the spray booth operation.  In this case, we
propose that each of the included emissions activities must have
ductwork extending to the common air pollution control device, but the
source would be allowed to bypass the control device during periods when
the source elects to use P2 consistent with the BACT or LAER
determination on compliant materials.  Notwithstanding, at all times,
all activities included in the Green Group would be meeting a BACT (or
LAER as applicable) level of control.

We believe that providing for a P2 alternative will encourage P2 at
sources that wish to obtain a Green Group designation and provide an
opportunity for sources that are pursuing P2 to adopt a Green Group.
Accordingly, we are soliciting comment on whether such an option is
appropriate and should be included in the Green Group program.  We
further request comment on whether this proposal goes far enough in
encouraging P2.  In particular, we take comment on whether we should
allow a Green Group to be based on use of a P2 approach, rather a common
air pollution control device.

For the emissions activities that comprise the Green Group, we are not
proposing to require that each emissions activity that is part of the
Green Group designation be limited to a specific tons-per-year
allocation.  Instead, we propose that the annual aggregate limit is
acceptable for the emissions activities that comprise the Green Group.
For example, if each of the five emissions activities that are part of a
Green Group contribute 50 tpy to the total annual aggregate annual limit
of 250 tpy, we are proposing that the Green Group be subject only to a
limit of 250 tpy for these emissions activities.  A permitting
authority, therefore, should not require a 50 tpy limit on each of the
five emissions activities.  This is because for PSD purposes, the source
must determine BACT based upon the total amount of annual emissions, and
the air quality impacts associated with such emissions (which all are
emitted from the stack of the common air pollution control device) are
accounted for in the NSR permitting process.  Comparable reasoning
applies for nonattainment major NSR purposes.  We solicit comment on
whether this approach is appropriate or whether there are other
considerations we should take into account.

	Changes in emissions at ancillary units not included in the Green
Group but serving it (such as storage tanks or utilities) must be
accounted for in the air quality analysis conducted to evaluate ambient
air quality and increment protection to the extent such emissions
changes are required to be considered under the existing NSR
regulations.,,  Ultimately, the permitting authority must determine the
extent to which the requested expansion will be allowed under major NSR,
taking into account the demonstrated need of the source, public comments
received, and the air quality status of the affected area.

	In some cases, a source may have previously taken an emissions limit on
a new or modified emissions unit to remain below major NSR applicability
thresholds (often referred to as an “(r)(4) limit” based on 40 CFR
52.21(r)(4)).  The major NSR rules provide that if (r)(4) limits are
relaxed, the associated emissions unit must undergo major NSR review
“as though construction had not yet commenced on the source or
modification.”  We propose to clarify, without rule revision, the
interface between (r)(4) limits and Green Groups as follows: when a unit
with an (r)(4) limit is included as one of the emissions activities in
an application for a Green Group, the (r)(4) limit no longer applies,
provided that the NSR review process considers the unit as if
construction had not yet commenced on it.

Under the current NSR regulations, an emissions change is only
creditable to the extent the Administrator has not previously relied on
it in issuing a major NSR permit.  See 40 CFR 52.21(b)(3)(i).
Accordingly, emissions increases and decreases that occur at the
emissions activities in a Green Group during the effective period of the
Green Group designation are not included in netting calculations to
determine whether changes that occur at the emissions units outside the
Green Group result in a major modification.  However, if the source
reduces actual emissions from the Green Group below the emissions limit
established for the Green Group in its NSR permit, the source may
generate a credit for the difference between the permitted limit that
qualified the unit as a Green Group and any new, lower emissions
limitation established, if such reductions are surplus, quantifiable,
permanent, and enforceable from a practical standpoint.  If however, an
established Green Group wishes to increase its emissions beyond its
permitted tpy limit, reductions achieved by units outside the Green
Group cannot be used to generate emissions reductions to net the Green
Group out of NSR.  If an established Green Group wishes to increase its
emissions, it must go through NSR again to establish a new limit, which
would be effective for a new 10-year timeframe.  In addition, we also
propose to add a restriction that no credit can be generated from
eliminating emissions increases that were authorized under the Green
Group permit but never realized.  Without this restriction, sources
would be allowed to generate credits for authorized expansion that never
occurred.

In nonattainment areas, sources are required to obtain offsetting
emissions reductions for the significant emissions increases that are
authorized under a major NSR permit.  Depending on the nonattainment
pollutant and classification of the nonattainment area, the source may
be required to obtain offsets in excess of the emissions increase at a
specified ratio.  For example, in accordance with the existing NSR
requirements, in a serious ozone nonattainment area, a source must
obtain VOC offsets in an amount 1.2 times the significant VOC emissions
increase.  A source that applies for a Green Group designation in a
nonattainment area must obtain offsets for the approved increase in
emissions of the Green Group pollutant (i.e., the difference between the
level approved in the Green Group permit and the baseline actual
emissions of the group).  Under existing NSR requirements, offsets must
be federally enforceable at the time the major NSR permit designating
the Green Group is issued, in accordance with section 173(a) of the CAA,
but need not be achieved until the new or modified source commences
operation, consistent with section 173(c) of the CAA.  We propose that
for Green Groups, the offsets must be in effect by the time the first
authorized change among the activities in the Green Group (e.g.,
equipment modification or addition) commences operation.  To simplify
the process and recordkeeping, and to assure that offsets are in place
as required, we propose that the entire amount of offsets required by
the permit must be in effect at the time that the first authorized
change (modified or added emissions activity) begins operation.
Alternatively, we seek comment on whether it is only necessary to
require the source to obtain offsetting emissions reductions in
sufficient quantity to offset: (1) the actual changes within the Green
Group as they occur; or (2) each phase of construction before its
operation.

In some cases, a source with an established Green Group may subsequently
request the permitting authority to allow the addition of greater
emissions than are permitted by the existing annual emissions limit.
Here, we propose that the permitting authority be able to either: (1)
establish a higher annual emissions limit to accommodate the desired new
emissions increase as part of a comprehensive major NSR process (this
process would reestablish the Green Group, including a reevaluation of
the prior BACT/LAER determination); or (2) terminate the Green Group
while retaining its emissions limits and other requirements and then
subject the emissions of new project(s) to the applicable NSR process.
Similarly, if a source with a Green Group exceeds its Green Group
emissions limit, then the source will be subject to appropriate
enforcement action.  In addition, the source would be subject to
enforcement action for any violations of other applicable requirements
(e.g., MACT, NSPS) that would also apply to emissions activities
included in the Green Group.

Monitoring, Recordkeeping, Reporting, and Testing (MRRT) Requirements
for Green Groups

As mentioned, the major NSR review process must also determine the level
of MRRT to assure compliance with both the control technology
requirement and the emissions limit(s).  A source must monitor all
emissions activities that comprise the Green Group to ensure compliance
with the Green Group limit.  These monitoring, recordkeeping, and
reporting requirements are incorporated into the NSR permit that
establishes the Green Group.

As explained above, in December 2002, we promulgated revisions to the
major NSR program, which included, among other things, MRRT requirements
for tracking emissions associated with a PAL.  In these proposed
regulations, the same MRRT we promulgated in December 2002 for PALs
would also be required to track a source’s compliance with the Green
Group emissions limit set forth in the major NSR permit.  Further, we
are proposing additional MRRT provisions to assure that the common air
pollution control device achieves BACT or LAER.  More specifically, the
permit must require the owner or operator to monitor and record data
sufficient to ensure that the common control device for the Green Group
accommodates emissions resulting from the emissions activities that
comprise the Green Group and that it achieves the level of emissions
reduction required under the applicable BACT or LAER requirement.

We are not proposing to require a source to notice individual changes at
Green Groups.  However, changes which are also subject to a MACT
standard or NSPS may well be required to file a notice under the General
Provisions requirements of those programs.  State permitting authorities
may under other regulatory authorities require additional records and
notices for certain changes (e.g., notices for new units under State air
toxics program, or a notice for a new emissions unit added to the site
of a source with a title V permit under an approved off permit
procedure) to assure compliance under these other authorities.  In
addition, we propose that the source submit a semi-annual report that,
in part, contains a list of any emissions activities included in the
Green Group that were added during the preceding 6-month period.  We
encourage permitting authorities to combine this report with the 6-month
monitoring report otherwise required under part 70 (see 40 CFR
70.6(a)(3)(iii)(A)).  We request comment on this approach to
recordkeeping, reporting, and notification requirements.  In particular,
we solicit comment on the appropriateness of applying the mentioned 2002
PAL monitoring requirements to Green Group emissions limits.

Public Participation for Green Group Designations

Because Green Groups must be established in a major NSR permitting
action, the public is assured of an opportunity to participate in the
process.  Major NSR regulations require the permitting authority to
notify the public when it makes a preliminary determination regarding a
permit application, to make the application and associated materials
available for public inspection, and to provide an opportunity for a
public hearing and for a written comment period of not less than 30
days.  In the case of a proposed Green Group permit, the annual
emissions limit that would be established for the Green Group highlights
the maximum potential annual emissions increase for public review.  The
other aspects of the proposed Green Group also would be highlighted for
comment, including the preliminary BACT/LAER determination, description
of anticipated expansion, and the proposed requirements for monitoring,
recordkeeping, and reporting.

In addition to the opportunity for public participation typically
provided consistent with our major NSR regulations, we recommend that
the permitting authority consider using their discretion to enhance the
public participation process as necessary to provide adequate review
opportunity for individual Green Group permits.  We expect that this may
be advisable when the first Green Groups in an area are being
established or when unique and/or complex issues arise in a particular
case.  See section IV.C above for additional discussion on the types of
enhanced public participation and when it might be appropriate.

Duration and Renewal of the Green Group Designations

We propose that the Green Group designation last for a single 10-year
period.  Any emissions activities that are advance approved and
constructed during the effective period of the Green Group designation
benefit from Green Group flexibility.  At the end of the 10-year period,
the original Green Group designation ends.

After 10 years, the source may apply for a new Green Group designation
by going through the same procedures as for the initial Green Group
designation, including going through a new major NSR permitting exercise
and a new BACT/LAER determination.  To avoid a gap between the
expiration of the initial Green Group designation and the effective date
of a new designation, we propose a renewal process similar to the
process for PALs.  Specifically, a source that wishes to reestablish its
Green Group must submit a major NSR application to the permitting
authority at least 6 months prior to, but not earlier than 18 months
from, the expiration date of the Green Group.  If the source submits a
complete application within this period, the existing Green Group
requirements would continue to be effective until the new major NSR
permit reestablishing the Green Group is issued.  We take comment on the
need to require an earlier submittal time (i.e., earlier than 6 months
prior to expiration) given that a BACT/LAER reevaluation is involved.

If the applicant does not wish to reestablish the Green Group
designation, the source would simply allow the designation to expire and
then become subject to the major NSR applicability test for future
changes.  However, the major NSR permit does not expire, and the
emissions unit defined by the Green Group would remain permanently an
emissions unit for purposes of major NSR, subject to the BACT or LAER
control requirement, annual emissions limit (and any shorter-term
limits), and MRRT requirements imposed by the Green Group permit. We
take comment whether to allow the source to divide up the Green Group
into smaller emissions units and to allocate the emissions limit
correspondingly.

We are proposing the 10-year duration of a Green Group designation for
two reasons.  First, we believe that this time frame represents a
balance between the useful life of the emissions control system and the
time frame in which additional major NSR review is likely to result in
little, if any, added environmental benefit.

	Prior to the December 2002 NSR Improvement rulemaking, we examined the
useful life of air pollution control devices.  Based on the guidelines
for equipment life for nine commonly used emissions control
technologies,  we determined that a reasonable average equipment life is
15 years.  See 87 FR  80229.  We also looked at the incremental
improvement in control technology over time.  Over the 15-year period
that we studied (1988-2002), we did not find any data to suggest that
improvements in control technology are occurring that are of sufficient
magnitude to lead to BACT determinations requiring replacement of
control systems on existing units that are equipped with BACT.  Thus, we
believe that 15 years likely represents a reasonable balance between the
useful life of air pollution control devices and the time frame in which
a new BACT determination would require additional emissions control.
Ten years represents a more environmentally cautious approach to
balancing these factors.

Second, a 10-year duration for a Green Group is supported by the
rationale we used in choosing a 10-year period for the duration of PALs.
 For PALs we concluded that a 10-year period was necessary to ensure
that the normal business cycle would be captured generally for any
industry.  See 67 FR 80216.  The PAL’s 10-year period also was
intended to balance the need for regulatory certainty, the
administrative burden, and a desire to align the PAL renewal with the
title V permit renewal.  See 67 FR 80219.  These reasons also apply with
equal force in guiding the selection of a similar 10-year period for
Green Groups.

As a practical matter, we realize that the “ideal” duration for a
Green Group will vary somewhat by emissions control technology and by
pollutant; however, we believe using a single time frame will provide
simplicity in the rules.  We have chosen to propose a 10-year duration
for Green Groups to maintain consistency with PALs and to maximize the
environmental benefits of Green Groups.

We are also taking comment on a 15-year duration for a Green Group
designation.  As discussed above, we believe that air pollution control
technology typically is quite stable during this period.  In addition,
the fact that BACT/LAER is determined for the entire Green Group taken
as a whole (including authorized expansions), rather than for individual
changes piecemeal, is likely to result in more effective and more costly
controls than would be applied under mainstream major NSR permitting.
As a result, it is even less likely that a subsequent BACT/LAER
determination at a Green Group would require a new control device within
a 15-year period.  Thus, we believe that a 15-year period could also
represent a reasonable and appropriate duration for Green Groups.

We propose that the effective date of a Green Group designation would be
the effective date of the major NSR permit that designates the Green
Group.  We propose that the Green Group designation lasts for a period
of 10 years from the effective date.

If construction or modification of a control device is required by the
BACT/LAER determination in the Green Group permit, no advance approved
changes in the permit are allowed to occur before that construction or
modification is completed.  That is, new and modified emissions
activities within the Green Group may not be operated until the new or
modified control device is in operation.  This will result, in effect,
in a reduction of the 10-year duration for the Green Group by the length
of time between the effective date of the permit and the beginning of
operation of this control device in order to comply with BACT/LAER.

We do not believe, however, that the unchanged, existing emissions
activities in the Green Group should be required to cease operation
while the control device is constructed or modified.  This would be the
outcome if these emissions activities were required to meet the
BACT/LAER emissions limitation(s) on the effective date of the Green
Group permit.  Accordingly, we are proposing that, where the BACT/LAER
determination requires a new or modified control device, the Green Group
permit may provide that the existing emissions activities within the
Green Group are not required to meet the BACT/LAER emissions
limitation(s) or the annual emissions cap for the Green Group until the
new or modified air pollution control device is in operation.  In the
interim, such emissions activities may continue to meet pre-existing
emissions limitations.  In contrast, where the existing control device
has been determined to represent BACT/LAER without modification, all
existing emissions activities must meet BACT/LAER upon the effective
date of the Green Group permit.

A situation that can result in termination of a major NSR permit under
the existing NSR rules is related to the timely commencement of the
program of construction authorized by the permit.  Section 52.21(r)(2)
of the existing federal PSD rules provides that approval to construct
shall become invalid if construction is not commenced within 18 months
after receipt of such approval, if construction is discontinued for a
period of 18 months or more, or if construction is not completed within
a reasonable time.  The

Administrator may extend the 18-month period upon a satisfactory
showing that an extension is justified.

We are proposing to exclude Green Groups from the (r)(2) provisions.
However, we are also proposing a new safeguard for those Green Groups
that rely on a new or upgraded BACT/LAER air pollution control device.
Although the Green Group designation becomes effective on the effective
date of the permit, the source must complete construction on the new air
pollution control device before any changes advance approved in the
permit can be operated.  See section VII.D for more discussion of the
rationale for this proposal.

We believe that Green Group activities also should be exempted from the
paragraph (j)(4) provisions of both 40 CFR 52.21 and 51.166.  Currently,
the (j)(4) provisions require for phased construction projects that the
BACT determination be reviewed and modified as appropriate at the latest
reasonable time which occurs no later than 18 months prior to
commencement of construction of each independent phase of the project.
There is no need to evaluate the interdependence of changes since, under
the proposed Green Group approach, the Green Group is considered one
ongoing program of change over a 10-year period.  Accordingly, we
propose to remove the applicability of 40 CFR 52.21(j)(4) and
51.166(j)(4) from Green Groups.  See section VII.D for our rationale
concerning this proposal.

How are Green Groups similar to PALs?

We also take comment on whether a Green Group is a form of PAL.  As
noted previously, the Green Group establishes an actual emissions-based
limitation for a logical collection of emissions activities (i.e., all
those ducted to a common control device).  The Green Group approach
relies upon several of the same principles and techniques used in
establishing and managing growth for sources with PALs and other types
of emissions caps.  We experimented with PALs and emission caps as part
of our pilot projects and have, as a result, a significant amount of
development, implementation, and emissions tracking experience using
these approaches.  Specifically, a Green Group is established based on
the actual emissions, plus authorized emission increases associated with
the addition or modification of emissions activities.  The authorization
of additional capacity for new or modified emissions activities provides
sources with the ability to respond to market changes and eliminates
administrative burden associated with multiple permit actions.  In
exchange, the emissions associated with a Green Group are constrained by
an emissions cap for an established period of time.  It offers
substantial environmental benefits by assuring that all emissions
activities within the group are well-controlled and eliminates the
ability of the Green Group to undertake insignificant emissions
increases that could go unreviewed as separate, independent projects.

Although the Green Group builds an emissions increase into the initial
cap, it does so in a way which complies with all the requirements that
we established for increasing a PAL.  Moreover, the approved increase in
actual emissions is allowed only if it is due to the expansion
authorized to occur within the Green Group, since the BACT/LAER
requirement prevents any backsliding in the control of existing
emissions activities in the Green Group.  Thus, subsequent changes in
the Green Group whose actual emissions (in combination with those of
existing activities included in the Green Group) do not exceed the Green
Group emissions limit and will be ducted to a control device determined
to meet BACT/LAER, as applicable, have already been regulated under
major NSR in anticipation of the changes being made.  We solicit comment
as to whether the Green Group is a permissible application of the PAL
principles as applied to a logical collection of emissions activities
that are ducted to a common control device and, if so, what increase in
emissions for existing emissions activities and/or increases for new
emissions activities can be authorized to occur under a major NSR
permit.  We also seek comment on the potential applicability of these
same PAL principles to a proposed Green Group that involves only new
emission activities ducted to a common pollution control device
authorized under major NSR.

How is a Green Group designation incorporated into a title V permit?

Major and minor NSR permit terms and conditions are applicable
requirements for purposes of title V.  As such, they must be
incorporated into the source’s title V permit.  These proposed major
NSR rules list the required content for a NSR permit that designates a
Green Group.  Part 70 requires that these permit terms and conditions be
incorporated into the source’s title V permit according to the
provisions of the applicable title V permit program (but no later than
when the title V permit is renewed).  One potential route for
incorporating these terms and conditions into the title V permit is
through an administrative amendment, if an “enhanced” NSR process is
used to designate the Green Group.  See 40 CFR 70.7(d)(v).  This
mechanism is available if the EPA-approved NSR program includes both
procedural requirements substantially equivalent to the requirements of
40 CFR 70.7 and 70.8 and substantive requirements substantially
equivalent to those contained in 40 CFR 70.6.

We expect that in many cases, the emissions activities included in the
Green Group will be subject to other applicable requirements, such as
SIP requirements, NSPS, and/or MACT standards.  In such cases,
concurrently with the major or minor NSR process, as applicable, the
source can seek to modify its title V permit to include baseline
operating terms and conditions and/or AOSs (as necessary) to address and
assure compliance with all applicable requirements that apply to the
authorized emissions activities comprising the Green Group, including
any advance approvals.  Because the BACT or LAER requirement that
applies to the Green Group typically is the most stringent of the
applicable requirements, Green Groups are often good candidates for
streamlining as mentioned in section VI.A, footnote 23, and section
VII.F of this preamble.

This proposal provides permit flexibility in that a source can obtain a
Green Group through the major NSR permit process (which constitutes the
required NSR authorization for future changes in the group) and, at the
same time, modify its title V permit to include the Green Group and
AOSs, as necessary, to address the other applicable requirements that
apply to the emissions activities in the Green Group.  The approval of
the Green Group changes with regard to all relevant permitting
requirements means that the source can implement these changes
authorized under protection of the permit shield without seeking any
further title V approvals.

What is the legal rationale for Green Groups?

  SEQ CHAPTER \h \r 1 	The basic CAA provisions establishing permitting
requirements for attainment/unclassifiable areas (the PSD requirements)
under part C of Title I, and for nonattainment areas under part D of
title I, are the basis for this action.  With respect to the PSD
requirements, CAA section 165(a) provides, in relevant part –

No major emitting facility on which construction is commenced after the
date of the enactment of [the 1977 CAA Amendments], may be constructed
in any area to which this part applies unless–

(1) a permit has been issued for such proposed facility in accordance
with this part setting forth emission limitations for such facility
which conform to the requirements of this part …

The term “construction” is defined to refer to both construction of
a new source and “modification” of an existing source.  See CAA
section 169(2)(C).

	With respect to the nonattainment major NSR requirements, section
172(c)(5) of the Act provides that nonattainment SIP provisions “shall
require permits for the construction and operation of new or modified
major stationary sources anywhere in the nonattainment area, in
accordance with section 173.”  Section 173(a), in turn, provides that
“permits to construct and operate may be issued if [certain
requirements are met].”

	These PSD and nonattainment major NSR provisions contain no specific
requirements concerning the maximum length of time that may elapse
between the issuance of the permit and the beginning of construction,
the maximum length of time that the construction may take, whether the
construction may occur in phases, or the maximum period of time that may
elapse between any construction phases.  By comparison, other, related
major NSR provisions of the Act do contain timing requirements.  For
example, for PSD purposes, section 165(c) directs the permitting
authority to grant or deny the permit within one year after the date of
filing of the completed permit application.  As a second example, for
nonattainment major NSR purposes, section 173(a)(1)(A) directs that
emission offsets must be obtained “by the time the source is to
commence operation.”  The lack of specific timing requirements
concerning construction in the relevant provisions of sections 165(a),
169(2)(C), 172(c)(5), and 173(a) means that EPA has flexibility in
determining the circumstances under which construction timing
requirements are necessary, and in promulgating regulations to that
effect.

	By notice dated June 19, 1978, we promulgated certain requirements
concerning phased construction.  See 43 FR 26380.  Under those
requirements:

Approval to construct shall become invalid if construction is not
commenced within 18 months after receipt of such approval, if
construction is discontinued for a period of 18 months or more, or if
construction is not completed within a reasonable time.  The
Administrator may extend the 18-month period upon a satisfactory showing
that an extension is justified.  This provision does not apply to the
time period between construction of the approved phases of a phased
construction project; each phase must commence construction within 18
months of the projected and approved commencement date.

See 40 CFR 52.21(r)(2).

For phased construction projects, the determination of best available
control technology shall be reviewed and modified as appropriate at the
latest reasonable time which occurs no later than 18 months prior to
commencement of construction of each independent phase of the project.
At such time, the owner or operator of the applicable stationary source
may be required to demonstrate the adequacy of any previous
determination of best available control technology for the source.

See 40 CFR 52.21(j)(4) and 51.166(j)(4).

	We stated as the reason for these requirements:

The Administrator is concerned about the issuance of permits for phased
construction projects that would have the effect of “reserving” the
increment for a single source, thereby limiting growth options in the
area.  The options are to not issue phased construction permits at all
or to limit the conditions under which a phased construction may reserve
an increment well into the future.  The Administrator intends to
implement the latter option when plans for a phased project are certain
and well-defined.  One mechanism to be used is to reassess the BACT
determination for the later phases of the project prior to construction
to ensure that the most up-to-date control technology will be used.  The
Administrator will specify at the time that the original permit is
issued which BACT determinations will be reassessed.  The Administrator
may also adopt regulations in the future to deal with this issue more
comprehensively.

See 43 FR 26396.

The EPA proposes to exclude Green Groups from the requirements of 40 CFR
52.21(r)(2), 52.21(j)(4), and 51.166(j)(4) on policy grounds.  The Green
Group designation provides a vehicle for a source willing to describe
its construction plans in its permit, as well as employ BACT/LAER
emission controls and comply with other major NSR requirements, in
return for the ability to make a variety of changes without the
burdensome process of iterative permitting actions.  We believe that
making such changes (as authorized within Green Groups) can be fairly
described as merely implementing the major NSR permits as approved.
That is, no authorized changes over the 10-year period need to be
reevaluated as a potential new modification since those changes have
already been subjected to major NSR, including a determination of
BACT/LAER requirements and the approval of ambient air quality impacts
or the acquisition of offsets.  We believe that the exclusion of Green
Groups from these provisions is needed to provide an adequate level of
certainty and flexibility to participating sources (i.e., the certainty
that a BACT/LAER determination will last a reasonable duration).  This
proposal would ensure the basic premise of the Green Group approach
(i.e., sources are just making those changes contemplated and approved
by the permit).  It would do so by requiring the description of the
changes in the permit to be sufficiently detailed to assure compliance
with the required BACT/LAER and monitoring approaches and to distinguish
the changes from those not authorized to occur under the approved Green
Group.  We are proposing a safeguard, in that any changes advance
approved for a Green Group relying on a new or modified control device
to meet BACT/LAER could not be implemented until the control device
meets the BACT/LAER determination in the permit.

It is within our discretion to remove Green Groups from 40 CFR
52.21(r)(2), 52.21(j)(4), and 51.166(j)(4) through rulemaking when doing
so better serves the purposes of the major NSR program.  As noted above,
the 40 CFR 52.21(r)(2) provisions were established by EPA in rulemaking
to safeguard against sources tying up increment consumption rights
without making a substantial financial investment and against sources
inappropriately avoiding the application of control technology
improvements that might have occurred since their permit was issued.
(See 43 FR 26396, June 19, 1978.)  For several reasons, we do not
believe that these concerns apply to Green Groups as we are proposing
them..

First, at least in the case when a new or modified air pollution control
device is required, the source under this proposal must make substantial
financial commitment to comply with the Green Group designation.  This
type of source has every incentive to complete the construction of the
air pollution control device expeditiously because, as described above,
the remaining period for the Green Group qualification is reduced
accordingly.

Further, based on our overall pilot permit experience, sources that wish
to obtain a flexible permit approach are likely to use it for changes at
multiple emissions activities that could be constructed over several
years.  Our evaluation of the pilot permits found that the authorized
flexibilities were used extensively and frequent changes were made.

In addition, once the air pollution control technology is in operation,
we do not believe significant additional environmental benefits will be
gained by requiring the source to revisit the BACT or LAER determination
for the changes that are approved as part of the Green Group, but may
not be constructed for several years.  As noted above, we do not believe
that there will be significant incremental improvements in
state-of-the-art control technology over a 10-year period.  Moreover,
the incentive to be able to make changes within a Green Group without
further reviews or approvals can lead sources to employ BACT/LAER
emissions controls when they are not required to do so, in order to
establish a Green Group.

Finally, we believe that Green Groups are likely to involve controls
that are state-of-the-art air pollution control devices since the device
must be sized and designed to accommodate all of the emissions
associated with the emissions activities that comprise the Green Group,
including the authorized emissions increase.  We believe that the BACT
determination for a Green Group is likely to be more stringent than BACT
for the individual existing emissions activities or for the individual
authorized changes alone because it will likely be more cost effective
to control a larger amount of emissions.  The BACT or LAER selected for
the Green Group is based on the emissions associated with all of the
approved emissions activities, and the BACT or LAER level must be
achieved (at least in part) through the use of a common air pollution
control device.

For essentially the same reasons for removing the applicability of 40
CFR 52.21(r)(2) provisions from Green Groups activities, we believe that
these activities should be exempted from the (j)(4) provisions of both
40 CFR 52.21 and 51.166.  The (j)(4) provisions currently require for
phased construction projects that the BACT determination be reviewed and
modified as appropriate at the latest reasonable time which occurs no
later than 18 months prior to commencement of construction of each
independent phase of the project.  There again is no need to evaluate
the interdependence of changes since, under the proposed Green Group
approach, a continuum of changes is likely over a 10-year period while a
change in the BACT determination is not.

On the other hand, we do not propose to exclude the provisions of 40 CFR
52.21(r)(4), 51.166(r)(2), and 51.165(a)(5)(ii) from applying to NSR
permitting actions to establish Green Group designations.  These
provisions subject a source to major NSR upon the relaxation of certain
permit terms that had allowed the source to avoid major NSR.  In the
designation of a Green Group, the emissions unit (which could include an
emissions activity to which a (r)(4) limit was attached) will undergo
major NSR review and be subject to BACT or LAER.  Thus, there is no need
to specifically exempt Green Groups from the provisions of 40 CFR
52.21(r)(4), 51.166(r)(2), and 51.165(a)(5)(ii).

This legal rationale for Green Groups differs from the legal rationale
for Clean Units, a provision in the 2002 NSR Improvement rules that the
U.S. Court of Appeals for the D.C. Circuit vacated in State of New York,
et al., v. U.S. EPA, June 24, 2005, 413 F.3d at 40.  As noted above, an
existing stationary source triggers NSR when it makes a
“modification,” which is defined, under CAA section 111(a)(4), as
“any physical change…. which increases the amount of any air
pollutant emitted” by the source.  The EPA based the Clean Unit
provision on the premise that the source’s construction activities
following permit approval do not constitute a “modification” under
CAA section 111(a)(4), and therefore do not trigger application of NSR,
even if they a constitute physical change, as long as the change does
not increase the source’s permit allowable emissions.  We interpreted
the term “increase[]” under CAA section 111(a)(4) to authorize an
“allowables” measurement, at least when a source meets the
requirements for Clean Units.  The D.C. Circuit vacated this provision
on grounds that in the context of section 111(a)(4), the plain language
meaning of the term “increase[]” refers to actual emissions, not
allowable emissions.  In contrast, this legal rationale for Green Groups
is based on the premise that the changes and emissions activities that
occur within a Green Group are specifically authorized to occur as a
result of undergoing, not avoiding, major NSR.  Conversely, other
changes that a source seeks to implement, but are not authorized in the
Green Group, cannot occur without first obtaining all necessary
preconstruction approvals that would apply to such changes.  The
determination of whether the newly proposed, but unauthorized changes
trigger NSR would be made using the “actual-to-projected-actual
test” upheld by the D.C. Circuit in 2005.

As noted above, the CAA permit provisions do not by their terms specify
timing requirements for phased construction.  Current regulations
authorize phased construction activities, within certain constraints,
and those constructions activities cannot be considered to be
“physical change[s]” that could amount to a “modification.”
This proposal is based on the same legal rationale, and simply relaxes
those regulatory constraints under certain circumstances, for the policy
reasons described above.

What are the conforming regulatory changes we must make to implement the
Green Group concept?

We are proposing regulatory language for 40 CFR 51.165, 51.166, and
52.21 to add Green Group provisions.  For Green Groups, we propose to
add new provisions at 40 CFR 51.165(i), 51.166(z), and 52.21(dd).  We
are also proposing to revise 40 CFR 52.21(j)(4) and (r)(2) and 40 CFR
51.166(j)(4) to exempt Green Groups from these provisions.

In addition, for Green Groups, we propose to amend as necessary the
existing provisions related to netting, emissions offsets, and
determining the emissions increase that will result from a proposed
project.  See this proposed regulatory language for the full range of
these changes, for example in 40 CFR 52.21(a)(2)(v).

We are also proposing to make conforming changes to the regulatory
language in appendix S of part 51, but we have not provided specific
regulatory language in this proposal.  Appendix S contains the
permitting program for major stationary sources in nonattainment areas
lacking an approved part D NSR program.  It applies for the transition
period between a new nonattainment designation and our approval of a SIP
revision to implement the nonattainment NSR requirements (i.e., 40 CFR
51.165) in the area (see 40 CFR 52.24(k)).  We have not, to date,
revised appendix S to conform to our December 2002 NSR regulations,
although we stated our intent to do so when we finalized those
provisions in 40 CFR 51.165, 51.166, and 52.21 (67 FR 80187).

If we finalize revisions to appendix S to incorporate the December 2002
regulations before we finalize the Green Group provisions that we are
proposing, we intend to finalize these proposed provisions in appendix S
at the same time that we finalize the changes to incorporate them into
40 CFR 51.165, 51.166, and 52.21.  If we finalize this Green Group
proposal prior to our revision of appendix S to incorporate the December
2002 regulations, we will either (1) include the final Green Group
provisions in appendix S at the same time that we add the December 2002
regulations, or (2) add the final Green Group provisions to appendix S
when we finalize this rule or through an additional action.  Because the
Green Group provisions would be conforming changes and the public has
the opportunity to review and comment on the conceptual framework and
regulatory language proposed, we will not solicit additional comments on
these provisions as they apply in appendix S.

What is an example of how a Green Group might be used in combination
with a title V permit?

Examples 1 and 2 in section VI.D described how AOSs and incorporation of
advance approvals in a part 70 permit could be used to provide
flexibility in certain situations.  The following example 3 describes
how Green Groups can provide operational flexibility across applicable
requirements through streamlining.

Example 3: Magnetic Tape Plant with Multiple Future Changes.

This example illustrates a Green Group and indicates how a source and
permitting authority can streamline Green Group requirements with other
applicable emissions control requirements to craft a flexible title V
permit that authorizes a range of changes at the source while minimizing
the permit terms and conditions necessary to assure compliance with all
the associated applicable requirements.  In this example, a magnetic
tape manufacturing facility located in an attainment area consists of
two large production buildings (i.e., Buildings 1 and 2), each with
seven magnetic tape process lines.  In particular, the source has web
coating lines used in the manufacture of magnetic data storage media as
well as equipment for handling raw materials associated with coating
operations, storage of products or materials, and power boilers to
support the process activities.

Five of the existing magnetic tape coating lines in Building 1 are
subject to the MACT standard (part 63, subpart EE), which requires a
95-percent HAP emissions reduction from the process lines and associated
solvent storage tanks, mixing vessels, solvent recovery equipment, and
waste handling devices.  Two of these five lines are also subject to the
NSPS for magnetic tape coating (part 60, subpart SSS), which requires up
to 95-percent control of VOCs from coating lines and mixing vessels.
The other two lines are not regulated under part 60 or part 63 because
they are grandfathered from NSPS subpart SSS and do not emit any HAP.
However, these two lines are subject to an emissions limitation under
the SIP that requires an 80-percent reduction in VOC emissions.  For
major modifications, major NSR in this PSD area would require, for this
source, application of BACT (determined on a case-by-case basis), along
with a determination that the VOC emissions increase, among other
things, will not cause or contribute to an exceedance of the ozone NAAQS
or have an adverse impact on the air quality related values of any Class
I area.  The existing storage tanks are grandfathered from the NSPS
(part 60, subpart Kb), but are subject to the MACT standard
(subpart EE) to the extent that they store HAP.

The VOC emissions from the equipment in Building 1 are currently
controlled with a large, very efficient (96-percent control) carbon
adsorption system which the source installed at the time it became
subject to MACT subpart EE.  This resulted in voluntary over-control of
the two lines subject only to the SIP limitation.  The source adopted
this control approach so as to retire the old control devices that
previously served these two lines and to allow for flexibility in future
operations.  With the voluntary over-control of these two lines, current
total annual VOC emissions from Building 1 are 500 tpy.  The amount of
this over-control would be approximately 572 tpy, assuming that the
seven lines are equal in their contributions to the total VOC emissions
of Building 1.

The source would like the flexibility to make a range of changes within
Building 1, but the exact changes within this range will depend upon
business conditions during the permit term and, therefore, are not yet
known.  Overall, the source seeks the flexibility to make the following
changes:

Use new raw materials in coating solutions or use an entirely new
coating solution;

Modify the existing process equipment; and/or

Add new process equipment of a similar nature to existing equipment
(including new coating lines) within this building.  This new equipment
would be limited to equipment included in the definition of “magnetic
tape manufacturing operation” in MACT subpart EE (40 CFR 63.702).

The source may pursue a two-part approach to obtain the desired
flexibility to make changes within Building 1: (1) obtain a PSD permit
that designates Building 1 as a Green Group and advance approves the
future changes; and (2) revise the existing title V permit under the
significant modification process to incorporate all applicable
requirements, as required by part 70, for the changes that are advance
approved in Building 1 under PSD.

	Assuming the source follows this approach, the source submits a PSD
permit application requesting a Green Group designation for Building 1.
This permit application must include descriptions of  the types of
changes the source intends to make there over the next 10 years (as
noted above), along with emissions information associated with both the
changes, especially regarding any requested increases in emissions, and
the existing operations of Building 1.

The PSD application must demonstrate how those changes and the
associated emissions increases in combination with existing emissions
will comply with PSD requirements for Green Groups.  In order to meet
BACT, the source in its PSD application proposes to control emissions
from Building 1, including emissions from anticipated changes, by (1)
using permanent total enclosures to capture all VOC emissions from the
building (including coating lines and associated mixing vessels, solvent
recovery equipment, and waste handling devices), and (2) venting these
enclosures and the storage tanks to the highly efficient (96-percent
efficient) carbon adsorption system currently used to control emissions
from all the equipment in Building 1.  The PSD application includes the
following BACT-related demonstrations:

(	A demonstration that the resultant 96-percent control of VOCs
qualifies as BACT; and

(	A demonstration that the existing carbon adsorption system has the
capacity to maintain 96-percent control in the face of the increased
solvent loading associated with the anticipated changes.

In addition, the application contains a proposed Green Group emissions
limit of 600 tpy VOC and all emissions information relied upon to
calculate this limit.  The proposed limit, in this case, is the sum of
the current baseline actual emissions for each existing emissions
activity comprising the group (since that baseline already reflects
application of the proposed BACT), which the source has calculated to be
500 tpy, plus a 100 tpy emissions increase increment to accommodate the
calculated, maximum emissions from any future changes for which the
source is seeking approval.  In other cases where current controls do
not reflect application of the proposed BACT, sources also would be
required to submit actual emissions information for included activities
relative to their operation before BACT would be applied.  In this
example, by subjecting the coating lines and all of the other emissions
activities in the Green Group to the BACT level of control, the source
has imposed additional control, not otherwise required, on the two lines
otherwise subject only to SIP requirements.  While the overall actual
emissions from this group may increase by 100 tpy upon approval of the
Green Group, the proposed increase would be subjected to BACT, and
overall VOC emissions would be less by 472 tpy than the actual emissions
level that would occur for the source were the Green Group level of
control not in effect for the two lines previously subject to only to
SIP requirements (i.e., 572 tpy over-control minus the 100 tpy
increase).

The PSD application also includes a demonstration that a VOC emissions
increase of 100 tpy from Building 1 will be consistent with the PSD
requirements applicable to the area.  It shows that the increase, among
other things, will not cause or contribute to ambient ozone in excess of
the ozone NAAQS or have an adverse impact on the air quality related
values associated with any Class I area.

The application also describes, as normally required under PSD
permitting, how the source will demonstrate initial and ongoing
compliance with the BACT emissions limits.  In doing so, the source
bears in mind the requirements of the other applicable requirements
(NSPS subpart SSS, MACT subpart EE, and the SIP) with an eye toward
streamlining these requirements, as discussed further below.  For the
initial VOC BACT compliance test, the source proposes to measure the
control efficiency of the carbon adsorption system by testing at the
inlet and outlet of the system using EPA Reference Method 25A and to
verify the permanent total enclosures using EPA Reference Method 204.
To assure ongoing compliance with the proposed BACT for VOC emissions,
the source proposes to monitor continuously the Green Group(s single
emissions outlet (the carbon adsorption system stack) with a CEMS
calibrated on the predominant VOC.  (The same CEMS currently used for
compliance purposes under the existing emissions limits.)  The operating
limit for this parameter (outlet concentration) will be established
during the initial performance test.  This monitoring system will also
serve to assure that the emissions vented to the carbon adsorber do not
exceed the capacity of the system (a Green Group requirement), which
would result in an elevated outlet concentration.  In addition, the
source proposes to continuously monitor its permanent total enclosures
using differential pressure gauges to demonstrate that these enclosures
are at the prescribed negative pressure relative to their surroundings.
The doors into the enclosures also are equipped with contact switches
and electronic interlocks that automatically close the door after
15 seconds; the actual open time for each door is monitored and
tracked.  An operator alarm sounds if a door is open longer than
3 minutes.  These types of testing and monitoring procedures are
allowed under NSPS subpart SSS, MACT subpart EE, and the SIP as well.

To demonstrate compliance with the annual VOC emissions limit required
for a Green Group (set, in this case, at the level of baseline actual
emissions at BACT plus 100 tpy (i.e., 600 tpy VOC) as projected in the
application), the source proposes to meet the MRRT requirements for
Green Groups (discussed previously) by using the concentration data from
the VOC CEMS on the Building 1 carbon adsorber outlet coupled with data
from a volumetric flow rate CEMS.  Together these CEMS constitute a
continuous emissions rate monitoring system (CERMS), which will allow a
direct determination of mass emissions from this building.  Total VOC
emissions will be determined for each month, and the source will
calculate the rolling 12-month total for comparison to the annual VOC
emissions limit.

The source also proposes comprehensive recordkeeping and reporting in
its PSD application.  The proposed recordkeeping includes use of an
automated data acquisition and handling system (DAHS) to record CEMS and
CERMS readings at least once every 15 minutes and to make the necessary
calculations.

After review and public comment, the permitting authority approves the
proposed BACT determination, ambient air quality analysis, and
compliance assurance measures.  The permitting authority then issues a
PSD permit to the source designating Building 1 as a Green Group.

This PSD permit provides advance approval under major NSR for the
described changes within the Green Group.  However, this major NSR
approval does not address the requirements of the title V permitting
program.  Therefore, another step is needed to enable the source to
proceed with these changes without any further review or approval by the
permitting authority.

Under the second part of the process and (in this example) concurrent
with the PSD permit application, the source submits an application for a
significant permit modification of its part 70 permit.  Therein the
source proposes to include the advance approvals under major NSR in the
title V permit so as to assure compliance with all applicable
requirements relevant to the anticipated changes.  To do so, this
application proposes streamlined requirements to address the spectrum of
changes that could occur within Building 1 and includes a streamlining
demonstration and associated documentation.  In particular, the
application proposes a streamlined emissions limit of 96-percent control
of VOC and organic HAP emissions, to be achieved using the same control
strategy proposed as BACT.  The streamlining demonstration and
documentation show that this 96-percent reduction level will assure
compliance with all the emissions limits that could apply to any of the
existing, modified, or new equipment in Building 1 (i.e., MACT subpart
EE, NSPS subpart SSS, the SIP, and BACT).  This demonstration accounts
for the level and format of the emissions limits (all in terms of
percent reduction), the associated test methods (all are consistent),
the averaging time (all are consistent), and the collection of equipment
across which compliance is demonstrated (all require compliance for each
individual piece of equipment).

The streamlining proposal also includes streamlined monitoring,
recordkeeping, and reporting requirements that assure compliance with
the streamlined emissions limit at least as well as the requirements of
the subsumed applicable requirements.  In this case, the monitoring
requirements associated with the BACT emissions limit are shown to
assure compliance with the streamlined emissions limit as least as well
as the monitoring applicable to each less-stringent emissions limit.
Similarly, the recordkeeping and reporting associated with the BACT
monitoring approach are appropriate for use with the streamlined limit
and provide no less compliance assurance than would the recordkeeping
and reporting required for any of the subsumed monitoring approaches.

In this case, where the PSD application and streamlining proposal are
being prepared simultaneously, the source appropriately considered the
other, non-NSR applicable requirements in its permit application for the
BACT emissions limit and associated MRRT requirements so that as the
BACT limit (i.e., 96 percent reduction) meshed with the streamlined
requirements in the part 70 permit application.  This approach
simplified the streamlining proposal.

The part 70 application essentially incorporates the description
contained in the PSD permit which established the Green Group.  That is,
it describes the baseline configuration in Building 1, as well as the
types of changes that are anticipated (mirroring the changes approved in
the Green Group PSD permit).  The part 70 application also identifies
the streamlined requirements and all the subsumed applicable
requirements implicated by the potential changes (PSD, NSPS subpart SSS,
MACT subpart EE, and the SIP), and indicates that PSD authorization has
been received (or is being concurrently processed).  Any physical or
operational changes that implicate different sets of applicable
requirements would be identified as AOSs, as discussed previously in
Example 2.  The application proposes terms and conditions to assure
compliance with the streamlined requirements.  Focusing these terms and
conditions on the streamlined requirements simplifies both the
application and the resulting permit.

The magnitude of the authorized emissions increase under the proposed
scenario(s) is bounded by the annual VOC emissions limitation for the
Green Group established at the level of baseline actual emissions under
BACT plus the 100 tpy VOC emissions increase approved under PSD.  Thus,
the permit application proposes an aggregate total of 600 tpy VOC.  Note
that any VOC emissions within Building 1 will count against this
limitation.  For purposes of this example, we have assumed that no
debottlenecking effect occurs from emissions units that are not changed
themselves. Traditional NSR (i.e., minor or major NSR, as applicable)
continues to apply outside the Green Group.

For purposes of the Green Group (which is a single emissions unit under
the PSD regulations proposed), the aggregate total emissions figure (600
tpy) included in the part 70 application fulfills the part 70
requirement that annual emissions be provided in the application for
each emissions unit.  However, because some of the emissions activities
that are included in the Green Group are also subject to other
applicable requirements (i.e., the SIP, NSPS subpart SSS, and/or MACT
subpart EE), they may be considered emissions units for purposes of
these requirements.  As a result, the source potentially could be
required to provide the annual emissions in tpy for each of these
smaller emissions units in the part 70 permit.  Under the part 70 rule
revisions proposed (see proposed 40 CFR 70.5(c)(3)(iii)), for emissions
units that are under an emissions cap, “tpy can be reported as part of
the aggregate emissions associated with the cap, except where more
specific information is needed to determine an applicable
requirement.”  Thus, because the application already stipulates that
the emissions activities are subject to these other applicable
requirements, there is no need for the source to include annual
emissions for each of the subject emissions activities.

The source and the permitting authority then proceed through the process
for a significant permit modification that involves streamlining and the
incorporation of the Green Group permit (i.e., the advance approval
issued under major NSR).  After review and public participation, and
after addressing the comments received, the permitting authority issues
a revised title V permit which includes the streamlined requirements,
the Green Group permit terms, and a permit shield.

The source subsequently is able to make the authorized changes in the
Green Group/Building 1 without additional review or approval or permit
revisions.  Log entries are required if the source makes changes that
cause a shift to a different AOS.  Note that the notification
requirements of the NSPS and MACT General Provisions continue to apply
if the source adds a new line or modifies an affected source or facility
within the Green Group.

What is the effect of these proposed revisions?

If these proposed revisions are finalized, what are the implications for
approved part 70 programs?

The part 70 regulations provide, in pertinent part, that—

If part 70 is subsequently revised such that the Administrator
determines that it is necessary to require a change to an approved State
program, the required revisions to the program shall be submitted within
12 months of the final changes to part 70 or within such other period as
authorized by the Administrator.

See 40 CFR 70.4(a); see also 40 CFR 70.4(i)

The revisions to the part 70 program proposed build upon the existing
regulatory structure, as promulgated in 1992.  For the reasons discussed
above, we believe that these proposed revisions clarify the existing
part 70 regulations.  Our pilot experience – where we worked closely
with several different States – strongly suggests that these
revisions, if finalized, would likely not necessitate revisions to many
approved State programs.  Based on our pilot experience, however, we
recognize that State programs differ, and we believe that at least some
States would likely revise their current part 70 program to add
sufficient authority to implement the final rule or to make current
authority on flexible permits more explicit.  We solicit comment on our
initial position that at least some State programs would require program
revisions in response to the final rule.

We intend to work closely with States and review expeditiously any
documentation submitted regarding the adequacy of current part 70
programs and any proposed program revisions.  Nothing precludes State
and local permitting authorities from issuing flexible permits, as they
may have done in the past, but they must determine if sufficient
authority exists under their current operating permit program to do so.
For those States that believe they lack authority under their current
part 70 programs to implement the final rule, such States should submit
proposed revisions to their title V operating permits program to their
EPA Regional Offices within 12 months of the date of publication of the
final rule in the Federal Register.  See 40 CFR 70.4(a).  For other
States, if we determine in writing that a particular part 70 program
does not provide sufficient authority to implement the final rule or is
inconsistent with the final rule, we propose that the relevant State
then have 12 months from the date of our written determination to submit
a proposed operating permit program consistent with the final rule to us
for review and approval.

What are the implications for NSR programs?

We believe that Green Groups will have environmental and administrative
benefits like those of PALs.  Accordingly, we propose that the Green
Groups, like PALs, should be a mandatory program element.  When the
Green Group provisions are finalized, this will require revisions to
SIPs or a demonstration that adequate authority already exists.

By “mandatory program element,” we mean that SIPs must include
provisions providing for the issuance of major NSR permits with Green
Group designations.  However, a Green Group would be an option that a
source may, or may not, choose to seek.  In addition, a permitting
authority would have discretion as to whether or not to issue a Green
Group permit based on the particulars of each individual case.

Where States and local agencies would need implementation plan revisions
to be able to issue permits establishing Green Groups, they must adopt
and submit revisions to their part 51 permitting programs implementing
these minimum program elements no later than 3 years from the date of
publication in the Federal Register of the final Green Group regulations
in 40 CFR 51.165 and 51.166.  In any area for which we are the reviewing
authority, or for which we have delegated our authority to issue permits
to State or local permitting authorities, the changes would take effect
60 days from the date of publication in the Federal Register of the
final Green Group regulations in 40 CFR 52.21.

	As we noted in the NSR improvements adopted in 2002, State and local
jurisdictions have significant freedom to customize their NSR programs
(67 FR 80241).  Ever since our current NSR regulations were adopted in
1980, we have taken the position that States may meet the requirements
of part 51 “with different but equivalent regulations.”  See 45 FR
52676.

	During the interim period between this proposal and finalization of the
proposed rules, we believe that certain major NSR permits with features
similar to a Green Group designation could be approved under our
existing federal PSD regulations at 40 CFR 52.21.  Such permits would
have to abide by the existing regulations, including the restrictions at
40 CFR 52.21(r)(2) and (j)(4), which would differ from this proposal for
Green Groups.  Because of the benefits we believe Green Groups bring, we
invite States to whom we have delegated the federal PSD program, as well
as States implementing their own EPA-approved major NSR programs, to
work with us on a case-by-case basis within the constraints of existing
regulations to determine whether and to what extent Green Group-like
permits may be available in this interim period.

Statutory and Executive Order Reviews

Executive Order 12866:  Regulatory Planning and Review

	Under Executive Order (EO) 12866   SEQ CHAPTER \h \r 1 (58 FR 51735,
October 4, 1993), this action is a “significant regulatory action”
because it is likely to result in a rule that may raise novel legal or
policy issues arising out of legal mandates, the President’s
priorities, or the principles set forth in the Executive Order.   SEQ
CHAPTER \h \r 1 Accordingly, EPA submitted this action to the Office of
Management and Budget (OMB) for review under EO 12866 and any changes
made in response to OMB recommendations have been documented in the
docket for this action.

Paperwork Reduction Act

	This proposed rule would revise several existing rules.  The current
information collection requirements of those rules are contained in
three different Information Collection Requests (ICRs).  The Office of
Management and Budget (OMB) has approved the information collection
requirements for parts 70 and 71 under the provisions of the Paperwork
Reduction Act, 44 U.S.C. 3501 et seq.  The currently approved ICR for
part 70 is assigned ICR number 1587.06 and OMB number 2060-0243; for
part 71, the ICR number is 1713.05 and the OMB number is 2060-0336.
Similarly, OMB has approved information collection requirements for
parts 51 and 52 that govern the State and Federal programs for
preconstruction review and permitting of major new and modified sources
pursuant to part C (PSD) and part D (nonattainment major NSR) of title I
of the CAA.  The currently approved ICR for parts 51 and 52 is assigned
ICR number 1230.17 and OMB number 2060-0003.

	The information collection requirements in this proposed rule have been
submitted for approval to OMB under the Paperwork Reduction Act, 44
U.S.C. 3501 et seq.  The ICR documents prepared by EPA have been
assigned EPA ICR numbers 1587.08, 1713.07, and 1230.20.

	The total economic impact of the proposed Flexible Air Permitting Rule
over the three-year term of the ICR is estimated to be $36 million in
cost savings for sources with a burden reduction of approximately
943,000 labor hours; $19 million in cost savings for permitting
authorities with a burden reduction of approximately 514,000 labor
hours; and costs of $1.4 million with an increase in burden of
approximately 37,000 labor hours for EPA.

	Burden means the total time, effort, or financial resources expended by
persons to generate, maintain, retain, or disclose or provide
information to or for a Federal Agency.  This includes the time needed
to: (1) review instructions; (2) develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; (3) adjust the existing ways to
comply with any previously applicable instructions and requirements; (4)
train personnel to be able to respond to a collection of information;
(5) search data sources; (6) complete and review the collection of
information; and (7) transmit or otherwise disclose the information.

	An Agency may not conduct or sponsor, and a person is not required to
respond to a collection of information unless it displays a currently
valid OMB control number.  The OMB control numbers for EPA’s
regulations are listed in 40 CFR part 9 and 48 CFR Chapter 15.

	To comment on the Agency’s need for this information, the accuracy of
the provided burden estimates, and any suggested methods for minimizing
respondent burden, including the use of automated collection techniques,
EPA has established a public docket for this rule, which includes this
ICR, under Docket ID number EPA-HQ-OAR-2004-0087.   Submit any comments
related to the ICR for this proposed rule to EPA and OMB.  See the
ADRESSES section at the beginning of this notice for where to submit
comments to EPA.  Send comments to OMB at the Office of Information and
Regulatory Affairs, Office of Management and Budget, 725 17th Street,
NW, Washington, DC 20503, Attention: Desk Office for EPA.  Since OMB is
required to make a decision concerning the ICR between 30 and 60 days
after [INSERT DATE OF PUBLICATION], a comment to OMB is best assured of
having its full effect if OMB receives it by [INSERT DATE 30 DAYS AFTER
PUBLICATION].  The final rule will respond to any OMB or public comments
on the information collection requirements contained in this proposal.

Regulatory Flexibility Act (RFA)  tc "Regulatory Flexibility Act (RFA),
as amended by the Small Business Regulatory Enforcement Fairness Act of
1996 (SBREFA), 5 U.S.C. 601 et seq " \l 2

	The RFA generally requires an agency to prepare a regulatory
flexibility analysis of any rule subject to notice and comment
rulemaking requirements under the Administrative Procedure Act or any
other statute unless the Agency certifies that the rule will not have
“a significant economic impact on a substantial number of small
entities.”  Small entities include small businesses, small
organizations, and small government jurisdictions.

	For purposes of assessing the impacts of this proposal on small
entities, a small entity is defined as:  (1) A small business as defined
by the Small Business Administration’s regulations at 13 CFR 121.201;
(2) a small governmental jurisdiction that is a government of a city,
county, town, school district or special district with a population of
less than 50,000; and (3) a small organization that is any
not-for-profit enterprise which is independently owned and operated and
is not dominant in its field.

	This proposed rule would merely clarify existing requirements and allow
regulated entities to seek additional flexibility for their Clean Air
Act permits, and would not create a new burden for regulated entities.
We have determined there will be cost savings for small entities
associated with these proposed revisions.  After considering the
economic impact of this proposed rule on small entities, I certify that
this action will not have a significant economic impact on a substantial
number of small entities.  Therefore, a regulatory flexibility analysis
is not required.

Unfunded Mandates Reform Act

	Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law
104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector.  Under section 202 of the UMRA, 2
U.S.C. 1532, we generally must prepare a written statement, including a
cost-benefit analysis, for any proposed or final rule that “includes
any Federal mandate that may result in the expenditure by State, local,
and tribal governments, in the aggregate, or by the private sector, of
$100 million or more ... in any one year.”  A “Federal mandate” is
defined to include a “Federal intergovernmental mandate” and a
“Federal private sector mandate.”  2 U.S.C. 658(6).  A “Federal
intergovernmental mandate,” in turn, is defined to include a
regulation that “would impose an enforceable duty upon State, local,
or tribal governments,” 2 U.S.C. 658(5)(A)(i), except for, among other
things, a duty that is “a condition of Federal assistance.”  2
U.S.C. 658(5)(A)(i)(I).  A “Federal private sector mandate” includes
a regulation that “would impose an enforceable duty upon the private
sector,” with certain exceptions [2 U.S.C. 658(7)(A)].

	Before promulgating a rule for which a written statement is needed,
section 205 of the UMRA generally requires us to identify and consider a
reasonable number of regulatory alternatives and adopt the least-costly,
most cost-effective, or least-burdensome alternative that achieves the
objectives of the rule.  The provisions of section 205 do not apply
where they are inconsistent with applicable law.  Moreover, section 205
allows us to adopt an alternative other than the least-costly, most
cost-effective, or least-burdensome alternative if the Administrator
publishes with the final rule an explanation why that alternative was
not adopted.  Before we establish any regulatory requirements that may
significantly or uniquely affect small governments, including tribal
governments, we must have developed under section 203 of the UMRA a
small government agency plan.  The plan must provide for notifying
potentially affected small governments, enabling officials of affected
small governments to have meaningful and timely input in the development
of our regulatory proposals with significant Federal intergovernmental
mandates, and informing, educating, and advising small governments on
compliance with the regulatory requirements.

	We have determined under the regulatory provisions of title II of the
UMRA that this proposed rule does not include a Federal mandate that may
result in estimated costs of $100 million or more to either State,
local, or tribal governments in the aggregate, or to the private sector.
 This proposed rule is estimated to save State, local, and tribal
permitting authorities over $5 million and to result in an
administrative burden reduction of 135,000 hours. Thus, this proposed
rule is not subject to the requirements of sections 202 or 205 of the
UMRA.

	In addition, we have determined that this proposed rule contains no
regulatory requirements that might significantly or uniquely affect
small governments. We expect any impact will act to lower overall
administrative burden to these entities.  Therefore, this proposed rule
is not subject to the requirements of section 203 of the UMRA.

Executive Order 13132:  Federalism

	Executive Order 13132, entitled “Federalism” (64 FR 43255, August
10, 1999), requires us to develop an accountable process to ensure
“meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.”
 “Policies that have federalism implications” is defined in the
Executive Order to include regulations that have “substantial direct
effects on the States, or on the distribution of power and
responsibilities among the various levels of government.”

	This proposal does not have federalism implications.  It will not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132.  This proposal should result in cost
savings and administrative burden reductions for States and will not
alter the overall relationship or distribution of powers between
governments for the part 70 and part 71 operating permits programs or
for the part 51 and part 51 NSR programs.  Thus, Executive Order 13132
does not apply to this proposed rule.

	In the spirit of Executive order 13132, and consistent with our policy
to promote communication between us and State and local governments, we
specifically solicit comment on this proposed rule from State and local
officials.

Executive Order 13175:  Consultation and Coordination with Indian Tribal
Governments

	Executive Order 13175, “Consultation and Coordination with Indian
Tribal Governments” (65 FR 67249, November 6, 2000), requires us to
develop an accountable process to ensure “meaningful and timely input
by tribal officials in the development of regulatory policies that have
tribal implications.”  “Policies that have tribal implications” is
defined in the Executive Order to include regulations that have
”substantial direct effects on one or more Indian tribes, on the
relationship between the Federal government and the Indian tribes, or on
the distribution of power and responsibilities between the Federal
government and Indian tribes.”