[Federal Register Volume 80, Number 52 (Wednesday, March 18, 2015)]
[Proposed Rules]
[Pages 14044-14062]
[FR Doc No: 2015-06143]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR part 52

[EPA-R09-OAR-2015-0187; FRL-9924-48-Region 9]

Revisions to Air Plan; Arizona; Stationary Sources; New Source
Review

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing a
limited approval and limited disapproval of revisions to the Arizona
Department of Environmental Quality (ADEQ) portion of the applicable
state implementation plan (SIP) for the State of Arizona. These
revisions are primarily intended to serve as a replacement of ADEQ's
existing SIP-approved rules for the issuance of New Source Review (NSR)
permits for stationary sources, including but not limited to review and
permitting of major sources and major modifications under the Clean Air
Act (CAA or Act). After a lengthy stakeholder process, the State of
Arizona developed and submitted a NSR program for SIP approval that
satisfies most of the applicable Clean Air Act and NSR regulatory
requirements, and will significantly update ADEQ's existing SIP-
approved NSR program. It also represents an overall strengthening of
ADEQ's SIP-approved NSR program by clarifying and enhancing the NSR
permitting requirements for major and minor stationary sources. This
proposed action will update the applicable plan and set the stage for
remedying certain deficiencies in these rules. We are seeking comment
on our proposed action and plan to follow with a final action.

DATES: Any comments must arrive by April 17, 2015.

ADDRESSES: Submit comments, identified by docket number EPA-R09-OAR-
2015-0187, by one of the following methods:
    1. Federal eRulemaking Portal: www.regulations.gov. Follow the
online instructions.
    2. Email<EMAIL_ADDRESS>    3. Mail or deliver: Gerardo Rios (Air-3), U.S. Environmental
Protection Agency, Region 9, 75 Hawthorne Street, San Francisco, CA
94105-3901. Deliveries are only accepted during the Regional Office's
normal hours of operation.
    Instructions: All comments will be included in the public docket
without change and may be made available online at www.regulations.gov,
including any personal information provided, unless the comment
includes Confidential Business Information (CBI) or other information
whose disclosure is restricted by statute. Information that you
consider CBI or otherwise protected should be clearly identified as
such and should not be submitted through www.regulations.gov or email.
www.regulations.gov is an ``anonymous access'' system, and EPA will not
know your identity or contact information unless you provide it in the
body of your comment. If you send email directly to EPA, your email
address will be automatically captured and included as part of the
public comment. If EPA cannot read your comment due to technical
difficulties and cannot contact you for clarification, EPA may not be
able to consider your comment. Electronic files should avoid the use of
special characters, any form of encryption, and be free of any defects
or viruses.
    Docket: Generally, documents in the docket for this action are
available electronically at www.regulations.gov and in hard copy at EPA
Region 9, 75 Hawthorne Street, San Francisco, California. While all
documents in the docket are listed at www.regulations.gov, some
information may be publicly available only at the hard copy location
(e.g., copyrighted material, large maps), and some may not be publicly
available in either location (e.g., CBI). To inspect the hard copy
materials, please schedule an appointment during normal business hours
with the contact listed in the FOR FURTHER INFORMATION CONTACT section.

FOR FURTHER INFORMATION CONTACT: Lisa Beckham, EPA Region 9, (415) 972-
3811<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document, the terms ``we,''
``us,'' and ``our'' refer to EPA.

Table of Contents

I. The State's Submittals
    A. Which rules or statutory provisions did the State submit?
    B. Are there previous versions of the statutory provisions or
rules in the Arizona SIP?
    C. What is the purpose of this proposed rule?
II. EPA's Evaluation
    A. How is EPA evaluating the rules and statutory provisions?
    B. Do the rules meet the evaluation criteria for Minor New
Source Review?
    1. Legally Enforceable Procedures
    2. ADEQ's Program Under 40 CFR 51.160(e)
    3. Public Availability of Information
    4. Administrative Procedures
    5. Stack Height Procedures
    C. Do the rules meet the evaluation criteria for Prevention of
Significant Deterioration (PSD)?
    1. General PSD Program Requirements
    2. Restrictions on Area Classifications
    3. Redesignations
    4. Impacts on Class I Areas
    5. Public Participation
    6. Plantwide Applicability Limits
    7. Definitions
    8. PM2.5 Significant Monitoring Concentration
    9. Definition for Basic Design Parameter
    D. Do the rules meet the evaluation criteria for Nonattainment
New Source Review?
    1. General Nonattainment NSR Program Requirements
    2. Plantwide Applicability Limits
    3. Definitions
    4. Definition for Basic Design Parameter
    5. Additional Provisions for Particulate Matter Nonattainment
Areas
    E. Review of Non-NSR Related Rules and Statutory Provisions
    F. Review of Rules and Statutory Provisions Requested To Be
Removed From the SIP
    G. Do the rules meet the evaluation criteria under Sections
110(l) and 193 of the Act?
    H. Conclusion
III. Public Comment and Proposed Action
IV. Incorporation by Reference
V. Statutory and Executive Order Reviews

Definitions

    For the purpose of this document, we are giving meaning to certain
words or initials as follows:

    (i) The words or initials Act or CAA mean or refer to the Clean
Air Act, unless the context indicates otherwise.
    (ii) The initials ADEQ mean or refer to the Arizona Department
of Environmental Quality.
    (iii) The initials A.R.S. mean or refer to the Arizona Revised
Statutes.
    (iv) The initials BACT mean or refer to Best Available Control
Technology.
    (v) The initials CFR mean or refer to Code of Federal
Regulations.
    (vi) The initials CO means or refer to carbon monoxide.
    (vii) The words EPA, we, us or our mean or refer to the United
States Environmental Protection Agency.
    (viii) The initials FIP mean or refer to Federal Implementation
Plan.

    (ix) The initials GHG mean or refer to greenhouse gas.
    (x) The initials IBR mean or refer to incorporation by
reference.
    (xi) The initials LAER mean or refer to Lowest Achievable
Emissions Rate.
    (xii) The initials NAAQS mean or refer to National Ambient Air
Quality Standards.
    (xiii) The initials NA-NSR mean or refer to Nonattainment New
Source Review.
    (xiv) The initials NOX mean or refer to nitrogen
oxides.
    (xv) The initials NSR mean or refer to New Source Review.
    (xvi) The initials PAL mean or refer to Plantwide Applicability
Limits.
    (xvii) The initials PM10 mean or refer to particulate
matter with an aerodynamic diameter of less than or equal to 10
micrometers (coarse particulate matter).
    (xviii) The initials PM2.5 mean or refer to
particulate matter with an aerodynamic diameter of less than or
equal to 2.5 micrometers (fine particulate matter).
    (xix) The initials PSD mean or refer to Prevention of
Significant Deterioration.
    (xx) The initials PTE mean or refer to potential to emit.
    (xxi) The initials RACT mean or refer to reasonable available
control technology.
    (xxii) The initials SIP mean or refer to State Implementation
Plan.
    (xxiii) The initials SMC mean or refer to significant monitoring
concentration.
    (xxiv) The initials SO2 mean or refer to sulfur
dioxide.
    (xxv) The words State or Arizona mean the State of Arizona,
unless the context indicates otherwise.
    (xxvi) The initials TSD mean or refer to the technical support
document for this action.
    (xxvii) The initials VOC mean or refer to volatile organic
compound.

I. The State's Submittals

A. Which rules or statutory provisions did the State submit?

    On July 28, 2011 and October 29, 2012, ADEQ submitted revisions to
the ADEQ portion of the Arizona SIP. On May 16, 2014, ADEQ supplemented
the July 28, 2011 submittal. On September 6, 2013, July 2, 2014, and
February 16, 2015, ADEQ supplemented the October 29, 2012 submittal.
Collectively, these submittals generally comprise ADEQ's current
program for preconstruction review and permitting of new or modified
stationary sources under ADEQ's jurisdiction in Arizona (as described
below).\1\ The NSR SIP revisions that are the subject of this action,
\2\ referred to herein as the ``NSR SIP submittal'' represent a
comprehensive revision to ADEQ's preconstruction review and permitting
program and are intended to satisfy the requirements under both part C
(prevention of significant deterioration) (PSD) and part D
(nonattainment new source review) of title I of the Act as well as the
general preconstruction review requirements under section 110(a)(2)(C)
of the Act.\3\ The preconstruction review and permitting programs are
often collectively referred to as ``New Source Review'' (NSR).
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    \1\ In addition, these submittals and our current action also
address two rules and one statutory provision that are not directly
related to NSR.
    \2\ We note that portions of ADEQ's SIP-approved rule R18-2-310,
which provides affirmative defenses for excess emissions during
malfunctions (R18-2-310(B)) and for excess emissions during startup
or shutdown (R18-2-310(C)), are currently the subject of a separate
rulemaking action by EPA. In a 2013 notice of proposed rulemaking,
and a 2014 supplemental notice of proposed rulemaking that revised
certain of the findings described in the 2013 notice, EPA proposed
to find R18-2-310(B) and R18-2-310(C) substantially inadequate to
meet CAA requirements and proposed to issue a SIP call with respect
to these provisions. See 78 FR 12460, 12533-34, Feb. 22, 2013; 79 FR
55920, 55946-47, Sept. 17, 2014. ADEQ's R18-2-310 is not part of the
ADEQ SIP submittal that is under consideration in this action, and
this rule is not being evaluated or otherwise addressed by EPA as
part of our current action on ADEQ's SIP submittal.
    \3\ Rules R18-2-301 through R18-2-334 (Article 3 rules) also
contain requirements to address the CAA title V requirements for
operating permit programs, but we are not evaluating these rules for
title V purposes at this time. We will evaluate the Article 3 rules
for compliance with the requirements of title V of the Act and EPA's
implementing regulations in 40 CFR part 70 following receipt of an
official part 70 program revision submittal from ADEQ.
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    The proposed revisions to the SIP that are subject to this action
cover those areas of Arizona where ADEQ has jurisdiction. Currently,
ADEQ has permitting jurisdiction for the following stationary source
categories in all areas of Arizona: Smelting of metal ores, coal-fired
electric generating stations, petroleum refineries, Portland cement
plants, and portable sources. ADEQ also has permitting jurisdiction for
major and minor sources in the following counties: Apache, Cochise,
Coconino, Gila, Graham, Greenlee, La Paz, Mohave, Navajo, Santa Cruz,
Yavapai, and Yuma. Finally, ADEQ has permitting jurisdiction over major
sources in Pinal County \4\ and the Rosemont Copper Mine in Pima
County.
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    \4\ ADEQ has delegated implementation of the major source
program to the Pinal County Air Quality Control District.
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    Table 1 lists the rules we are proposing for approval in today's
action with the corresponding effective dates and submittal dates. The
submitted rules are from the Arizona Administrative Code, Title 18--
Environmental Quality, Chapter 2--Department of Environmental Quality--
Air Pollution Control, Articles 1, 2, 3, and 4. The submitted statutory
provision is from Title 49 of the Arizona Revised Statutes, Chapter 1,
Article 1.

                   Table 1--Submitted Statutes and Rules Proposed for Approval in This Action
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                                                                                State
              Rule or statute                              Title                effective  date     Submitted
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A.R.S Sec.   49-107.......................  Local delegation of state                08/18/1987        07/2/2014
                                             authority.
R18-2-101 [only definitions (2), (32),      Definitions.......................       08/07/2012       10/29/2014
 (87), (109), and (122)].
R18-2-217.................................  Designation and Classification of        11/15/1993       10/29/2014
                                             Attainment Areas.
R18-2-218.................................  Limitation of Pollutants in              08/07/2012       10/29/2014
                                             Classified Attainment Areas.
R18-2-301.................................  Definitions.......................       08/07/2012       10/29/2014
R18-2-302.................................  Applicability; Registration;             08/07/2012       10/29/2014
                                             Classes of Permits.
R18-2-302.01..............................  Source Registration Requirements..       08/07/2012       10/29/2014
R18-2-303.................................  Transition from Installation and         08/07/2012       10/29/2014
                                             Operating Permit Program to
                                             Unitary Permit Program;
                                             Registration transition; Minor
                                             NSR transition.
R18-2-304.................................  Permit Application Processing            08/07/2012       10/29/2014
                                             Procedures.
R18-2-306.................................  Permit Contents...................       12/20/1999       10/29/2014
R18-2-306.01..............................  Permits Containing Voluntarily           01/01/2007       10/29/2014
                                             Accepted Emission Limitations and
                                             Standards.
R18-2-306.02..............................  Establishment of an Emissions Cap.       09/22/1999       10/29/2014
R18-2-311.................................  Test Methods and Procedures.......       11/15/1993       07/28/2011

R18-2-312.................................  Performance Tests.................       11/15/1993       07/28/2011
R18-2-315.................................  Posting of Permit.................       11/15/1993       10/29/2014
R18-2-316.................................  Notice by Building Permit Agencies       05/14/1979       10/29/2014
R18-2-319.................................  Minor Permit Revisions............       08/07/2012       10/29/2014
R18-2-320.................................  Significant Permit Revisions......       08/07/2012       10/29/2014
R18-2-321.................................  Permit Reopenings; Revocation and        08/07/2012       10/29/2014
                                             Reissuance.
R18-2-323.................................  Permit Transfers..................       02/03/2007       10/29/2014
R18-2-330.................................  Public Participation..............       08/07/2012       10/29/2014
R18-2-332.................................  Stack Height Limitation...........       11/15/1993       10/29/2014
R18-2-334.................................  Minor New Source Review...........       08/07/2012       10/29/2014
R18-2-401 [excluding definition (3)]......  Definitions.......................       08/07/2012       10/29/2014
R18-2-402.................................  General...........................       08/07/2012       10/29/2014
R18-2-403.................................  Permits for Sources Located in           08/07/2012       10/29/2014
                                             Nonattainment Areas.
R18-2-404.................................  Offset Standards..................       08/07/2012       10/29/2014
R18-2-405.................................  Special Rule for Major Sources of        08/07/2012       10/29/2014
                                             VOC or Nitrogen Oxides in Ozone
                                             Nonattainment Areas Classified as
                                             Serious or Severe.
R18-2-406.................................  Permit Requirements for Sources          08/07/2012       10/29/2014
                                             Located in Attainment and
                                             Unclassifiable Areas.
R18-2-407 [excluding subsection (H)(1)(c)]  Air Quality Impact Analysis and          08/07/2012       10/29/2014
                                             Monitoring Requirements.
R18-2-409.................................  Air Quality Models................       11/15/1993       10/29/2014
R18-2-412.................................  PALs..............................       08/07/2012       10/29/2014
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    On December 28, 2012, April 29, 2013, and December 2, 2014, ADEQ's
July 28, 2011, October 29, 2012, and July 2, 2014 submittals,
respectively, were deemed complete by operation of law to meet the
completeness criteria in 40 CFR part 51, appendix V, which must be met
before formal EPA review. Each of these submittals includes evidence of
public notice and adoption of the regulation. Our technical support
document (TSD) provides additional background information on each of
the submitted rules.

B. Are there previous versions of the statutory provisions or rules in
the Arizona SIP?

    EPA has not approved significant revisions or updates to ADEQ's
SIP-approved NSR program since the 1980s. The existing SIP-approved NSR
program for new or modified stationary sources under ADEQ's
jurisdiction generally consists of the rules identified below in Table
2 that we are proposing to supersede in or delete from the Arizona SIP.
Collectively, these regulations established the NSR requirements for
both major and minor stationary sources under ADEQ jurisdiction in
Arizona, including requirements for the generation and use of emission
reduction credits in nonattainment areas.
    Consistent with ADEQ's stated intent to have the submitted NSR
rules replace the existing NSR program in the SIP, EPA's approval of
the regulations identified above in Table 1 generally would have the
effect of superseding our prior approval of the current SIP-approved
NSR program.\5\ Table 2 lists the existing rules in the Arizona SIP
that would be superseded or removed from the Arizona SIP as a result of
our proposed action. If EPA were to take final action as proposed
herein, these rules generally would be replaced in, or otherwise
deleted from, the SIP by the submitted set of rules listed in Table 1.
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    \5\ Except for certain sections that ADEQ requested that we not
remove from the SIP at this time.

                    Table 2--SIP Rules Superseded or Removed From Arizona SIP in This Action
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                                                                                Federal
              Rule or statute                              Title                  EPA Approval       Register
                                                                                date           citation
----------------------------------------------------------------------------------------------------------------
R9-3-101..................................  Definitions.......................          Various          Various
R9-3-217(B)...............................  Attainment Areas: Classification         04/23/1982      47 FR 17486
                                             and Standards.
R9-3-301, [excluding subsections (I), (K)]  Installation Permits: General.....       05/03/1983     48 FR 198879
R9-3-302..................................  Installation Permits in                  08/10/1988      53 FR 30220
                                             Nonattainment Areas.
R9-3-303..................................  Offset Standards..................       08/10/1988      53 FR 30220
R9-3-304, [excluding subsection (H)]......  Installation Permits in Attainment       05/03/1983      48 FR 19879
                                             Areas.
R9-3-305..................................  Air Quality Analysis and                 05/03/1983      48 FR 19879
                                             Monitoring Requirements.
R9-3-306..................................  Source Registration Requirements..       05/03/1983      48 FR 19879
R9-3-307..................................  Replacement.......................       05/05/1982      47 FR 19328
R9-3-308..................................  Permit Conditions.................       04/23/1982      47 FR 17485
R9-3-311..................................  Air Quality Models................       04/23/1982      47 FR 17485
R9-3-314..................................  Excess Emissions Reporting........       04/23/1982      47 FR 17485
R9-3-315..................................  Posting of Permits................       04/23/1982      47 FR 17485

R9-3-316..................................  Notice by Building Permit Agencies       04/23/1982      47 FR 17485
R9-3-317..................................  Permit Non-transferrable;                04/23/1982      47 FR 17485
                                             Exception.
R9-3-318..................................  Denial or Revocation of                  04/23/1982      47 FR 17485
                                             Installation or Operating Permit.
R8-3-319..................................  Permit Fees.......................       04/23/1982      47 FR 17485
R9-3-322..................................  Temporary Conditional Permits.....       10/19/1984      49 FR 41026
R9-3-1101.................................  Jurisdiction......................       05/03/1983      48 FR 19879
Appendix 4................................  Fee Schedule for Installation and        09/19/1977      42 FR 16926
                                             Operating Permits.
Appendix 5................................  Fee Schedule for Conditional             09/19/1977      42 FR 46926
                                             Permits.
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C. What is the purpose of this proposed rule?

    The purpose of this proposed rule is to present our evaluation
under the CAA and EPA's regulations of rules and statutory provisions
submitted by ADEQ on July 28, 2011, October 29, 2012, and July 2, 2014,
which are identified in Table 1. We provide our reasoning in general
terms below, and include our more detailed analysis in the TSD, which
is available in the docket for this proposed rulemaking.

II. EPA's Evaluation

A. How is EPA evaluating the rules and statutory provisions?

    EPA has reviewed the provisions submitted by ADEQ that are the
subject of this action, including those governing NSR for stationary
sources under ADEQ jurisdiction for compliance with the CAA's general
requirements for SIPs in CAA section 110(a)(2), EPA's regulations for
stationary source permitting programs in 40 CFR part 51, sections
51.160 through 51.166, and the CAA requirements for SIP revisions in
CAA section 110(l) and 193.\6\
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    \6\ CAA section 110(l) requires SIP revisions to be subject to
reasonable notice and public hearing prior to adoption and submittal
by States to EPA and prohibits EPA from approving any SIP revision
that would interfere with any applicable requirement concerning
attainment and reasonable further progress, or any other applicable
requirement of the CAA. CAA section 193, which was added by the CAA
Amendments of 1990, includes a savings clause that provides, in
pertinent part: ``No control requirement in effect, or required to
be adopted by an order, settlement agreement, or plan in effect
before November 15, 1990, in any area which is a nonattainment area
for any air pollutant may be modified after November 15, 1990, in
any manner unless the modification insures equivalent or greater
emission reductions of such air pollutant.''
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    With respect to procedures, CAA sections 110(a) and 110(l) require
that revisions to a SIP be adopted by the State after reasonable notice
and public hearing. EPA has promulgated specific procedural
requirements for SIP revisions in 40 CFR part 51, subpart F. These
requirements include publication of notices, by prominent advertisement
in the relevant geographic area, of a public hearing on the proposed
revisions, a public comment period of at least 30 days, and an
opportunity for a public hearing.
    Based on our review of the public process documentation included in
the July 28, 2011, October 29, 2012 and July 2, 2014 submittals, we
find that ADEQ has provided sufficient evidence of public notice and
opportunity for comment and public hearings prior to adoption and
submittal of these rules to EPA.
    With respect to substantive requirements, we have generally
reviewed the ADEQ provisions that are the subject of our current action
in accordance with the CAA and applicable regulatory requirements,
focusing primarily on those that apply to: (1) General preconstruction
review programs, including for minor sources, under section
110(a)(2)(C) of the Act; (2) PSD permit programs under part C of title
I of the Act; and (3) Nonattainment NSR permit programs under part D of
title I of the Act (NA-NSR). For the most part, ADEQ's submittal
satisfies applicable CAA requirements, specifically including the
applicable requirements for these three preconstruction review programs
and would strengthen the applicable SIP by updating the regulations and
adding requirements to address new or revised NSR permitting and other
requirements promulgated by EPA, but the submitted rules also contain
specific deficiencies that prevent full approval. Below, we discuss
generally our evaluation of ADEQ's submittal and the deficiencies that
are the basis for our proposed action on these rules. Our TSD contains
a more detailed evaluation as well as additional recommendations for
program improvements.

B. Do the rules meet the evaluation criteria for Minor New Source
Review?

    Section 110(a)(2)(C) requires each SIP to include a program for the
regulation of the modification and construction of any stationary
source within the areas covered by the plan as necessary to assure
attainment and maintenance of the National Ambient Air Quality
Standards (NAAQS). In addition to the permit programs required under
parts C and D of the CAA for PSD sources and nonattainment NSR sources,
respectively, which are discussed below, EPA's regulations at 40 CFR
51.160-51.164 provide general programmatic requirements to implement
this statutory mandate commonly referred to as the ``minor NSR
program.'' These minor NSR program regulations impose requirements for
SIP approval of State and local programs that are more general in
nature as compared with the specific statutory and regulatory
requirements for PSD and NA-NSR permitting programs. Under EPA's
regulations governing the minor NSR program, States and local air
agencies retain a level of discretion to define the types and sizes of
sources subject to the program, whereas under the PSD and nonattainment
NSR permitting programs, the sources subject to regulation are
specified by EPA regulations. The substantive requirements for the
preconstruction review and permitting of minor stationary sources under
ADEQ jurisdiction are ADEQ rules R18-2-302.01 and R18-2-334. These
rules, and other administrative rules included in the minor NSR portion
of the SIP submittal, satisfy most of the statutory and regulatory
requirements for minor NSR programs, but these rules also contain
several deficiencies that form the basis for our proposed limited
disapproval, as discussed below.
    We are proposing a limited approval and limited disapproval of
ADEQ's minor NSR program because it is not fully consistent with the
requirements of 40 CFR 51.160, 40 CFR 51.161, 40 CFR 51.163 and 40 CFR
51.164, as described below. We find that approval

of ADEQ's updated minor NSR program will substantially strengthen the
SIP overall, as the submitted minor NSR program generally has more
extensive requirements for minor sources and non-major modifications
than ADEQ's current SIP-approved program and lower permitting
thresholds that will provide additional mechanisms for protecting the
NAAQS, as well as updating the SIP with current State regulations for
minor sources and non-major modifications. However, specific provisions
of the minor NSR program submittal are inconsistent with federal minor
NSR program requirements, and these deficiencies must be addressed
before we can fully approve ADEQ's minor NSR program into the SIP. The
deficiencies that we have identified with ADEQ's minor NSR program that
provide the basis for our limited approval and limited disapproval are
described below.
1. Legally Enforceable Procedures
    40 CFR 51.160 requires that each NSR program contain certain
legally enforceable procedures. We have identified several deficiencies
with ADEQ's program as it pertains to these requirements.
    First, as required by 40 CFR 51.160(a), ADEQ's permitting
procedures are not enforceable in all instances. ADEQ's program allows
certain sources to begin construction when a ``proposed final permit''
is issued by ADEQ, rather than preventing construction until a final
permit has been issued. See R18-2-101(114), R18-2-302(G), R18-2-334(B),
R18-2-402(C). The definition for ``proposed final permit'' in R18-2-101
does not specify that such an action is a final decision for NSR
purposes. As a result, the program does not provide ADEQ with clear
authority to prevent construction or modification before it issues a
final decision on the request for authority to construct as is required
per 40 CFR 51.160(a) and (b). ADEQ has clarified that, in effect, under
ADEQ's rules, a proposed final permit is treated as a final
authorization to construct, and that it will treat proposed final
permit as a final, appealable agency action under Arizona law.\7\
Nevertheless, a revision to ADEQ's NSR program is necessary to ensure
that these types of permit actions clearly serve as a final authority
to construct in order to satisfy the federal NSR program requirement
that the agency be able to prevent construction until and unless it has
issued a final decision on the request for authority to construct.
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    \7\ ADEQ Memo--Proposed Final Permits to be Treated as
Appealable Agency Actions, dated February 10, 2015 and ADEQ's
February 23, 20157 supplement at 2.
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    Second, ADEQ's program does not contain adequate enforceable
procedures to ensure compliance by sources subject to review under its
NSR program with the NAAQS as required by 40 CFR 51.160(a)(2) and
(b)(2). Although NAAQS is a defined term in ADEQ's regulations, see
R18-2-101(85), ADEQ's NSR program generally does not refer to the NAAQS
and instead generally references the State's ambient air standards in
Article 2 of ADEQ's air program. See R18-2-302.01, R18-2-334, and R18-
2-406.\8\ Also, in some instances, ADEQ's NSR regulations simply refer
to Arizona ambient air quality standards with no specific reference to
Article 2, which makes the applicable standards ambiguous.\9\ See R18-
2-218, R18-2-406, and R18-2-407. In some instances, ADEQ's NSR program
does not ensure that a source would not interfere with attainment or
maintenance of the NAAQS in neighboring areas outside ADEQ's permitting
jurisdiction, as is required under 40 CFR 51.160(a) and (b), as the
State air standards are not generally applicable in neighboring
States,\10\ and the NSR Program submittal does not demonstrate that
they are applicable in neighboring States for purposes of ADEQ's NSR
program. See R18-2-302.01(C); R18-2-334(C)(2), (F), and (G); and R18-2-
406(A)(5)(a) and (b). Also, for minor sources subject to permitting
under R18-2-334, the rule does not meet these federal requirements as
it does not require ADEQ to evaluate whether the project under review
will interfere with attainment or maintenance of the NAAQS in all
cases, and instead allows sources to apply reasonably available control
technology (RACT) in lieu of such an evaluation and, in some cases,
appears to allow sources with lower levels of emissions to avoid both
substantive NAAQS review and RACT requirements. See R18-2-334(C)(1)(a)-
(b). ADEQ has not demonstrated that this approach ensures that all
sources subject to review under its NSR program will not interfere with
attainment or maintenance of the NAAQS. While R18-2-334(G) allows
Director's discretion to require a NAAQS analysis on a case-by-case
basis, we find this discretion too great to ensure compliance with this
requirement. Finally, R18-2-302.01(C)(4) needs to include a reference
to ``or maintenance'' of a standard, instead of just ``attainment of a
standard.''
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    \8\ ADEQ's list of state air standards does not contain the
current PM2.5 annual NAAQS of 12 [mu] g/m\3\
PM2.5. See 78 FR 3086, Jan. 13, 2013. This is not a
disapproval issue for ADEQ's minor NSR and NA-NSR programs, which
have three years to adopt programs implementing the new NAAQS.
However, the new NAAQS is applied immediately upon its effective
date to sources subject to the PSD program.
    \9\ For example, R18-2-407(B) contains ``any such pollutant for
which no Arizona ambient air quality standard exists.'' ``Arizona
ambient air quality standard'' is not a defined term in ADEQ's
regulations.
    \10\ See, for example, the definition of ``attainment area'' in
R18-2-101, limiting attainment areas to those in Arizona. A.R.S.
Sec.  49-106 provides, in relevant part: ``The rules adopted by the
department apply and shall be observed throughout this state, or as
provided by their terms, and the appropriate local officer, council
or board shall enforce them.''
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    Third, for sources subject to ADEQ's registration program at R18-2-
302.01, ADEQ has not demonstrated that its NSR program meets the
requirement to ensure that sources subject to NSR review comply with
the applicable portions of the control strategy as required by 40 CFR
51.160(b)(1).
    Fourth, ADEQ's registration program in R18-2-302.01 does not
contain enforceable procedures for the owner or operator to submit the
necessary information for ADEQ to determine whether a source will
violate the applicable control strategy or interfere with attainment or
maintenance of the NAAQS as required by 40 CFR 51.160(c). R18-2-
302.01(A)(3) requires applicants to calculate a source's uncontrolled
potential to emit, but then references provisions in another rule, R18-
2-327(C), that are used to calculate ``actual'' emissions. As such,
ADEQ's program contains conflicting procedures for calculating
potential emissions. In addition, rule R18-2-327, is not in the Arizona
SIP, and has not been submitted to EPA for SIP approval.
    Fifth, ADEQ's program does not meet the requirement that the
applicant submit information related to the nature and amounts of
emissions, for certain kinds of emissions units as required by 40 CFR
51.160(c)(1). For Class I and Class II permits, R18-2-304(E)(9) allows
sources to avoid providing emission information for ``insignificant
activities,'' as defined in R18-2-101(68). The term ``insignificant
activities'' is generally associated with the title V program. Many of
the activities listed in ADEQ's definition of insignificant activity
are activities that would not be expected to emit regulated NSR
pollutants. However, this is not true for all activities, such as those
listed under R18-2-101(68)(a-c) that include liquid storage tanks,
combustion engines, and ``low-emitting processes.''
    Sixth, for sources subject to R18-2-302.01, ADEQ's program does not
meet the requirement in 40 CFR 51.160(d) that its procedures provide
that approval of construction or modification

will not affect the responsibility of the owner or operator to comply
with applicable portions of the control strategy.
    Finally, for sources subject to ADEQ's registration program under
R18-2-302.01, ADEQ's program does not meet the requirement to use
Appendix W to 40 CFR part 51 for air quality modeling as required by 40
CFR 51.160(f)(1).
2. ADEQ's Program Under 40 CFR 51.160(e)
    40 CFR 51.160(e) requires ADEQ's submittal to provide a basis for
the types and sizes of facilities, buildings, structures, or
installations that will be subject to review under 40 CFR 51.160. Such
exclusions are appropriate so long as such sources and modifications
are not environmentally significant, consistent with the de minimis
exemption criteria set forth in Ala. Power Co. v. Costle, 636 F.2d 323,
at 360-361 (D.C. Cir. 1979). Here, we discuss our evaluation of the
basis provided by ADEQ for the types and sizes of facilities,
buildings, structures or installations it will subject to review under
its minor NSR program. Historically, ADEQ's minor NSR program required
permitting of minor sources and non-major modifications causing an
increase in potential emissions of a criteria pollutant at or above the
significant emission rates under the PSD program in 40 CFR
51.166(b)(23)(i). In a May 22, 1996 letter to ADEQ, EPA Region 9
indicated that the significant emission rates used by ADEQ for its
minor NSR permitting program did not represent an acceptable threshold
for applying the basic preconstruction requirements for minor NSR
purposes. To address EPA's concerns, ADEQ assessed other potential
permitting thresholds for its minor NSR program and selected revised
thresholds for its minor NSR program following this assessment. A
detailed analysis of ADEQ's assessment is provided in our TSD. ADEQ's
new minor NSR program established a minimum preconstruction review
threshold for new or modified stationary sources with potential
emissions or emissions increases of: 50 tons per year (tpy) of carbon
monoxide; 20 tpy of NOX, SO2, and VOC; 7.5 tpy
for PM10; 5 tpy for PM2.5; and 0.3 tpy for lead.
We find ADEQ's general approach to meeting 40 CFR 51.160(e) acceptable.
We are proposing a limited disapproval of ADEQ's minor NSR program
based in part on the following issues concerning the approach:
    First, ADEQ's submittal does not provide a clear basis for
concluding that the exemption thresholds selected by ADEQ will ensure a
sufficient percentage of minor sources are subject to review in
nonattainment areas. As ADEQ points out in its submittal, ADEQ's
analysis is based on data for Maricopa County \11\, which has lower NSR
permitting thresholds than the exemption thresholds adopted by ADEQ due
to Maricopa County's local air quality problems. In addition, (1) some
of the other permitting programs in Table 3 above have lower permitting
thresholds in nonattainment areas than those applicable in attainment
areas under their jurisdiction; (2) in looking at a similar analysis of
minor source emissions for another permitting program in Region 9,
which has local air quality problems, the permitting agency generally
set thresholds that include a larger percentage of emissions in the NSR
program than the percentage included in ADEQ's program \12\; and (3)
typically, nonattainment areas have more control requirements that
apply to smaller minor sources, as compared to attainment areas. As
such, ADEQ's basis does not clearly address how its adopted
preconstruction review exemption thresholds adequately address
nonattainment areas.\13\
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    \11\ ADEQ does not have jurisdiction for permitting of minor
sources in Maricopa County, AZ.
    \12\ See EPA's Technical Support Document for Revision of Air
Quality Implementation Plan; California; Sacramento Metropolitan Air
Quality Management District; Stationary Source Permits, 78 FR10589,
Feb. 2, 2014, at 6-7, describing the thresholds applicable in
Sacramento as generally excluding less than 5% of the emissions
inventory except for SO2.
    \13\ In addressing this deficiency, ADEQ does not necessarily
have to consider lower permitting exemption thresholds in
nonattainment areas. For example, ADEQ could provide further
analysis to demonstrate that the adopted thresholds are appropriate
for nonattainment areas or consider a different approach, such as
requiring minor sources in nonattainment areas subject to a SIP
requirement for the nonattainment pollutant, or its precursors, to
obtain a registration, if ADEQ can demonstrate that such an approach
would serve to satisfy the requirements of 40 CFR 51.160.
---------------------------------------------------------------------------

    Second, while EPA agrees that, in general, certain types of
equipment may be exempted from the minor NSR program, ADEQ must provide
a basis under 40 CFR 51.160(e) to demonstrate that regulation of the
equipment exempted in R18-2-302(C) and A.R.S. Sec.  49-426(B) is not
needed for ADEQ's program to meet federal NSR requirements for
attainment and maintenance of the NAAQS or review for compliance with
the control strategy. Such demonstration must address: (1) An
explanation of whether the regulatory exemption in R18-2-302(C) for
``agricultural equipment used in normal farm operations'' constitutes
an interpretation or refinement of the exemption for such sources in
A.R.S. Sec.  49-426(B), and how the two provisions apply to ADEQ's NSR
program; (2) Identification of the types of equipment ADEQ considers to
be ``agricultural equipment used in normal farm operations'' and
whether this type of equipment could potentially be expected to occur
at a stationary source subject to title V of the Act, 40 CFR parts 60,
61, or 63, or major NSR, and, if so, whether such equipment is subject
to NSR review at such sources; (3) ADEQ's basis for determining that
``agricultural equipment used in normal farm operations'' does not need
to be regulated as part of ADEQ's minor NSR program under 40 CFR
51.160(e); and (4) ADEQ's interpretation of the exemption for fuel
burning equipment in A.R.S. Sec.  49-426(B) and how it does, or does
not, apply in the context of its major and minor NSR programs, and, to
the extent such equipment is not subject to NSR review, ADEQ's basis
for determining that equipment exempted under this provision does not
need to be reviewed as part of ADEQ's minor NSR program under 40 CFR
51.160(e).
    Finally, ADEQ's minor NSR program sets a permitting exemption
threshold for PM2.5 of 5 tons per year, but ADEQ's analysis
does not provide a basis for this threshold.
3. Public Availability of Information
    40 CFR 51.161 requires that each NSR program contain certain
procedures related to public participation. We have identified several
deficiencies with ADEQ's program as it pertains to these requirements.
    First, ADEQ's program does not ensure that NSR review for all minor
sources regulated under ADEQ's NSR program, as ADEQ defines it pursuant
to 40 CFR 51.160(e), is subject to public notice and comment consistent
with 40 CFR 51.161(a). 40 CFR 51.161(a) requires that the program under
51.160 provide for public comment on the information submitted by
owners or operators. In addition, the public information must include
ADEQ's analysis of the effects of construction or modification on
ambient air, including ADEQ's proposed approval or disapproval. ADEQ's
program does not meet this requirement because: (1) ``modification'' of
existing sources that become subject to the registration program under
R18-2-302.01 (currently only ``construction'' of a source) are not
subject to public notice (see R18-2-302.01(B)(3)); (2) R18-2-334(G)
exempts most modifications from public notice; (3) R18-2-330 does not
clearly define which public notice requirements apply to registrations;
and (4) public participation does not appear to be

required for a proposed disapproval of an application for any portion
of ADEQ's NSR program (registration, minor NSR, or major NSR).
    Second, ADEQ's registration program at R18-2-302.01(F) does not
contain the necessary enforceable procedures for sources taking
``elective limits'' to limit their potential to emit in a manner that
allows the source to avoid the public participation requirements in 40
CFR 51.161(a), while otherwise being subject to the registration
program. See R18-2-302.01(B)(3)(b) and R18-2-302(E)(1). While ADEQ's
rule contains requirements for monitoring, recordkeeping, and reporting
of elective limits, these requirements are not sufficiently enforceable
for purposes of limiting the source's potential to emit, and thereby
avoiding public notice, as well other substantive requirements of
ADEQ's minor NSR program when issuing a registration. In order to meet
practical enforceability requirements for limiting the potential to
emit (PTE), R18-2-302.01(F) must also contain (1) a technically
accurate limitation and the portions of the source subject to the
limitation and (2) the time period for the limitations (hourly, daily,
monthly, etc.). Further, if the limitation is over a period longer than
daily, R18-2-302.01(F) must specify when to compile daily records to
show compliance with the elected limit. Additional detail on this issue
is provided in our TSD.
    Third, ADEQ's NSR program does not ensure, for all sources subject
to NSR review, the availability for public inspection, in at least one
location in the area affected, of the information submitted by the
owner or operator and of ADEQ's analysis on the effect on air quality
as required by this federal regulation. R18-2-330(D)(11) requires the
public notice to identify the nearest ADEQ office where documents can
be inspected, but there are only two department offices for ADEQ. See
40 CFR 51.161(b)(1). We do not interpret this provision as meeting the
requirement to make information available in the ``area affected.'' In
addition, the public notice requirements do not make reference to
providing ADEQ's analysis for public inspection. Potentially, this is
covered by ``all other materials available to the Director that are
relevant to the permit decision''.\14\ But it is not clear that ADEQ
would interpret this to mean the Director's own analysis.
---------------------------------------------------------------------------

    \14\ This requirement is met for ADEQ's registration program at
R18-2-302.01(B)(3)(a).
---------------------------------------------------------------------------

    Finally, ADEQ's NSR program does provide notice to the necessary
parties in 40 CFR 51.161(d) for sources required to obtain
registrations under R18-2-302.01.
4. Administrative Procedures
    40 CFR 51.163 requires each NSR program to include administrative
procedures that will be followed in making the determinations specified
in 40 CFR 51.160(a). While ADEQ's program generally meets the
requirements of this provision, ADEQ's submittal contains references to
other ADEQ rules, R18-2-317 and R18-2-317.02, which are not in the SIP
and have not been submitted for SIP approval. See R18-2-306.02(D), R18-
2-319(I), R18-2-304(J), R18-2-306(A), and R18-2-306.02(D).
5. Stack Height Procedures
    40 CFR 51.164 requires that each NSR program contain certain
provisions related to good engineering practice for stack heights. In
addition to reviewing ADEQ's submittal as compared with the NSR program
requirements of 40 CFR 51.164, we also reviewed ADEQ's submittal as it
relates to certain general SIP program requirements in 40 CFR 51.100
and 51.118. The stack height provisions in the NSR program rely on the
general stack height provisions in 40 CFR 51.118(b), which in turn
references the definitions in 40 CFR 51.100(hh) through (kk). We have
identified several deficiencies with ADEQ's program as it pertains to
these requirements.
    First, ADEQ's submittal does not meet the public hearing
requirements in 40 CFR 51.164 and 51.118(a). While R18-2-332(E)
contains a reference to holding a public hearing, when required, the
provision references ADEQ's public hearing provision in R18-1-402. R18-
1-402 is not in the SIP and has not been submitted for SIP approval.
    Second, ADEQ's submittal does not contain language that meets the
exception in 40 CFR 51.118(b): ``except where pollutants are being
emitted from such stacks or using such dispersion techniques by
sources, as defined in section 111(a)(3) of the Clean Air Act, which
were constructed, or reconstructed, or for which major modifications,
as defined in Sec. Sec.  51.165(a)(1)(v)(A), 51.166(b)(2)(i) and
52.21(b)(2)(i), were carried out after December 31, 1970.'' In
addition, R18-2-332(A)(3) incorrectly references July 1, 1975 instead
of July 1, 1957 as that date appears in 40 CFR 51.118(b).
    Third, ADEQ's submittal does not contain a requirement that owners
or operators seeking to rely on the equation in 40 CFR 51.100(ii)(2)(i)
produce evidence that the equation was actually relied on in
establishing an emission limitation. See R18-2-332(B)(2).
    Finally, ADEQ's submittal contains a provision at R18-2-332(D) that
provides additional provisions for sources ``seeking credit because of
plume impaction which results in concentrations in violation of
national ambient air quality standards or applicable maximum allowable
increases.'' This provision is not contained in the federal regulations
and appears to allow for the use of stack heights beyond GEP stack
height, as defined in 40 CFR 51.100(ii).
    In sum, while we have identified several disapproval issues with
ADEQ's minor NSR program requirements as they correspond to federal
minor NSR program requirements, compared to the existing SIP, approving
ADEQ's minor NSR program into the Arizona SIP nonetheless represents a
significant overall strengthening of ADEQ's NSR program, as discussed
above. Thus, we are proposing a limited approval and limited approval
of ADEQ's minor NSR program submittal.

C. Do the rules meet the evaluation criteria for Prevention of
Significant Deterioration (PSD)?

    Part C of title I of the Act contains the provisions for the
prevention of significant deterioration (PSD) of air quality in areas
designated ``attainment'' or ``unclassifiable'' for the NAAQS,
including preconstruction permit requirements for new major sources or
major modifications proposing to construct in such areas. EPA's
regulations for SIP-approved PSD permit programs are found in 40 CFR
51.166.
    ADEQ rules R18-2-402 and R18-2-406 contain the substantive
requirements for review and permitting of PSD sources under ADEQ's
jurisdiction. These regulations satisfy most of the statutory and
regulatory requirements for PSD permit programs, but these and other
rules in the NSR SIP submittal contain several deficiencies that form
the basis for our proposed limited disapproval, or proposed
disapprovals as discussed below.
    Although ADEQ's submittal meets most PSD program requirements, we
are proposing to disapprove two specific aspects of ADEQ's PSD program.
The ADEQ rule provisions that we are proposing to disapprove are
directly comparable to federal PSD rule provisions that have been
vacated by federal courts, and we find that they are separable from the
remainder of ADEQ's PSD program. Accordingly, we find these provisions
suitable for disapproval at this time. These provisions are described
below in Sections II.C.8 and 9.

    For the remainder of ADEQ's PSD program submittal, we are proposing
limited approval and limited disapproval. We find that approval of
ADEQ's updated PSD program, aside from the two aspects that are
separable and will be disapproved as mentioned above, will
substantially strengthen the SIP overall, particularly as the current
SIP-approved PSD program is significantly out of date when compared
with current federal PSD regulatory requirements as well as current
State regulations. See our discussion in Section G below. However,
specific provisions of the PSD SIP program submittal are inconsistent
with PSD program requirements, and these deficiencies must be addressed
before we can fully approve ADEQ's PSD program. The deficiencies that
we have identified with ADEQ's PSD program that provide the basis for
our limited disapproval are described below in Sections II.C.1 through
7.
1. General PSD Program Requirements
    First, ADEQ's submittal often refers to Articles 9 and/or 11 of
ADEQ's regulations where the federal regulations refer to 40 CFR parts
60, 61, or 63; or, similarly, sections 111 or 112 of the Act. See R18-
2-101(53)(a), (122)(b); R18-2-401(10); R18-2-402(G)(2); and R18-2-
406(A)(4). Articles 9 and 11 are where ADEQ incorporates by reference
the federal regulations in 40 CFR part 60, 61, and 63 (which EPA
implements under sections 111 and 112 of the Act). However, these
Articles are not in the SIP, have not been submitted for SIP approval,
and do not contain provisions equivalent to all of the subparts in
parts 60, 61, and 63. See 40 CFR 51.166(b)(1)(iii)(aa), (b)(12),
(b)(16)(i), (b)(17), (b)(47)(ii)(c), (b)(49)(ii), (i)(1)(ii)(aa), and
(j).
    Second, ADEQ's submittal uses the term ``increment'' or
``incremental ambient standard,'' but does not specifically define
these terms or otherwise identify what is meant by these terms. While
the PSD program does not specifically define the term ``increment''
either, the term is introduced at 40 CFR 51.166(c)--Ambient air
increments and other measures. (emphasis added) 40 CFR 51.166(c) then
goes on to identify the specific increment values as ``maximum
allowable increases.'' ADEQ appears to have taken the approach of using
the term ``maximum allowable increase'' to refer to the increments,
which is acceptable. ADEQ adopted the increments, or maximum allowable
increases, in R18-2-218--Limitation of Pollutants in Classified
Attainment Areas. However, in other rules ADEQ uses ``increment'' or
``incremental ambient standard'' where it appears the intent is to
refer to the increments established in R18-2-218 and identified in
ADEQ's rules as the ``maximum allowable increases.'' See R18-2-406(E),
R18-2-412(G)(b), R18-2-101(51), R18-2-319, R18-2-320.
    Third, on January 15, 2013, EPA issued a final rule revising the
NAAQS for PM2.5 for the annual averaging period, lowering
the level of the NAAQS from 15.0 to 12.0 mg/m\3\, effective March 18,
2013 (see 78 FR 3086). This new NAAQS is required to be implemented for
PSD sources (unless otherwise grandfathered under provisions at 40 CFR
51.166(i)(10)) beginning with the effective date of the NAAQS. However,
ADEQ's PSD program does not provide for the review of new or modified
sources for compliance with this new NAAQS as required in 40 CFR
51.166(b)(2)(iii)(i)(2), (b)(35), (d), (g)(3)(iii), (k), and (m)(1).
Instead, ADEQ's PSD program currently references state ambient air
quality standards, which are set at levels that are equivalent to all
of the current NAAQS, except for this newly adopted PM2.5
NAAQS. See R18-2-218(F)(b)(ii), R18-2-401(25), R18-2-406(A) and R18-2-
407(B). Because of the general approach used in ADEQ's NSR program with
respect to incorporating the NAAQS, i.e., the program's reference to
state air quality standards instead of the NAAQS, any changes EPA makes
to the NAAQS will not be included in ADEQ's program until ADEQ revises
its air quality standards rules to adopt the revised NAAQS as state air
quality standards. This does not relieve any owner or operator from the
requirement to comply with all NAAQS at the time a final PSD permit is
issued, including the recently revised new PM2.5 NAAQS
(unless otherwise grandfathered under 40 CFR 51.166). See CAA section
165(a)(3).
    Fourth, R18-2-406(A) contains a reference to R18-2-408, but R18-2-
408 is not in the SIP and has not been submitted for SIP approval.
    Fifth, ADEQ's submittal allows a source at R18-2-302(G) and R18-2-
402(C) to begin actual construction upon the issuance of a proposed
final permit. As previously discussed, ADEQ's program is ambiguous as
to whether a proposed final permit, as defined in R18-2-101(114),
constitutes final action by the Director. While ADEQ has issued
guidance clarifying that it treats ``proposed final permits'' as final
actions for purposes of preconstruction permitting \15\, to obtain full
PSD program approval, ADEQ's regulations must make clear that a source
may not begin actual construction before a final determination on a PSD
permit application is made by the Director.
---------------------------------------------------------------------------

    \15\ See ADEQ memo dated February 10, 2015 related to proposed
final permits, and ADEQ's February 23, 2015 Supplement at 2.
---------------------------------------------------------------------------

    Sixth, ADEQ's NSR submittal contains provisions that allow for
exclusions from increment consumption, for certain temporary emissions,
that do not conform to the requirements in the analogous federal rule.
First, ADEQ's rule at R18-2-218(F)(5) requires only the ADEQ Director's
approval for temporary emissions beyond two years, but the federal
program requirements at 40 CFR 51.166(f)(i)(v) and 51.166(f)(4) require
the Administrator's approval to allow temporary emissions that exceed
two years. In addition, ADEQ's program language does not reference a
specific time period beyond two years that it would allow for
exclusions from increment consumption, which is not consistent with the
federal regulation's requirement at 40 CFR 51.166(f)(4) that the time
for such exclusions be specified in the plan. Finally, the provision at
R18-2-218(F)(5)(b)(ii), which references the state ambient air quality
standards, must be applied to ``any'' air quality control region. As
currently written this provision does not clearly apply to areas
outside of Arizona where Arizona's standards would not generally apply.
    Seventh, ADEQ's submittal contains a provision at R18-2-406(E)
providing an exemption for certain portable stationary sources with a
prior permit that contains requirements equivalent to the PSD
requirements in 40 CFR 51.166 (j) through (r), as allowed by 40 CFR
51.166(i)(1)(iii). However, ADEQ's rule at R18-2-406(E) is worded
broadly to also allow an exemption for portable sources that have been
permitted under Article 4 of ADEQ's regulations, which also includes
nonattainment NSR permits and PAL permits. We do not interpret this
federal exemption as generally applying to such permits, as it is not
clear that such permits contain requirements ``equivalent'' to those in
40 CFR 51.166(j) through (r).
    Eight, ADEQ's submittal contains conditions generally meeting the
requirements of 40 CFR 51.166(k)(1) in rule R18-2-406(A)(5)(a).
However, R18-2-406(A)(5) contains an ``or'' between subsections (a) and
(b) that could be interpreted as allowing a source to demonstrate it
will not contribute to an

increase above the significance levels in an adjacent nonattainment
area in lieu of the demonstration required by R18-2-406(A)(5)(a). The
provisions of subsection (b) relate to requirements under a different
portion of the NSR program--specifically under 40 CFR 51.165. As such,
it is likely ADEQ would interpret subsections (a) and (b) as separate
requirements with which a source must demonstrate compliance.
Nevertheless, the potential for misinterpretation of this substantive
requirement of the PSD program provides a basis for our limited
disapproval of the PSD program submittal. In addition, R18-2-
406(A)(5)(a) requires that a person applying for a PSD permit
demonstrate that the project would not cause a violation of any maximum
allowable increase over the baseline concentration in ``any attainment
or unclassifiable area.'' However, ADEQ's definition for ``attainment
area'' in the SIP at R18-2-101(19) limits attainment areas to those
``in the state.'' In addition, as discussed previously, it is not clear
that ADEQ's references to the state's ambient air standards would apply
in areas outside of Arizona.
    Ninth, ADEQ's submittal includes R18-2-406(A)(6)(b), which
specifies that the use of a modified or substituted model must be
subject to public notice and the opportunity for public comment, but
neither the rule nor the submittal makes clear the procedures that
would be used for notice and comment for this purpose or demonstrates
that such procedures would be consistent with 40 CFR 51.102, as
required by 40 CFR 51.166(l)(2).
    Tenth, ADEQ's PSD SIP submittal does not appear to specifically
address the requirements of 40 CFR 51.166(n)(1) and (3), which require
that the SIP must require that (1) the owner or operator of a proposed
source or modification shall submit all information necessary to
perform any analysis or make any determination required under
procedures established in accordance with 40 CFR 51.166, and (2) upon
request of the state, the owner or operator shall also provide
specified information concerning air quality impacts and growth. ADEQ's
submittal at R18-2-304, R18-2-402(G) and R18-2-407 identifies the
information necessary for a complete application under this program and
requires applicants to respond to deficiencies in the application, but
these provisions do not appear to fully address the requirements of 40
CFR 51.166(n)(1) and (3).
    Eleventh, ADEQ's submittal contains an apparent typographical error
in R18-2-402(F)(1)(c), which includes a cross-reference to R18-2-
401(20)(b)(iii) rather than R18-2-401(20)(b)(iv). See 40 CFR
51.166(r)(6).
    Finally, ADEQ's submittal does not require owners or operators to
make information required under 40 CFR 51.166(r)(6) available for
review upon request by the Director or the general public pursuant to
the requirements in 40 CFR 70.4(b)(3)(viii) as is required by 40 CFR
51.166(r)(7).
2. Restrictions on Area Classifications
    40 CFR 51.166(e) contains provisions related to restrictions on
area classifications (Class I, II, or II). We have identified several
deficiencies in ADEQ's program with respect to these provisions.
    First, ADEQ's submittal contains requirements for area
classifications in R18-2-217. However, ADEQ's submittal does not
completely meet the requirements of 40 CFR 51.166(e) and section 162(a)
of the Act, which require certain areas in existence on August 7, 1977
to be designated as Class I areas. Such designations apply to any
boundary changes made to those Class I areas after August 7, 1977.
While ADEQ generally includes this requirement at R18-2-217(B), its
rule limits such boundary changes to those made prior to March 12,
1993.
    Second, ADEQ's NSR submittal at R18-2-217 does not contain a
provision consistent with the federal regulatory requirement for Class
I area redesignations prior to August 7, 1977 in rule R18-2-217 or
elsewhere as required by 40 CFR 51.166(e)(2). Even if it is the case
that there are no areas in Arizona that were redesignated Class I prior
to August 7, 1977, ADEQ's program must recognize Class I area
designations under this provision that may have been made in other
states for which sources within ADEQ may have an impact. See 40 CFR
51.166(e)(2).
    Finally, ADEQ's NSR submittal does not include a provision that is
fully consistent with 40 CFR 51.166(e)(3). While ADEQ's rules generally
meet this requirement at R18-2-217(D), this rule does not fully meet
the requirements of 40 CFR 51.166(e)(3) because (1) it is not clear
what is meant in ADEQ's rule by ``all other areas'' and (2) it does not
contain a provision that ensures that ADEQ recognizes federal
legislation that specified the area classification of a particular
area.
3. Redesignations
    40 CFR 51.166(g) contains provisions allowing certain areas
classified as Class I, II, or III to be redesignated to another
classification. We have identified several deficiencies in ADEQ's
program with these provisions.
    First, ADEQ's submittal contains provisions at R18-2-217(A)
identifying that attainment and unclassifiable areas in the State shall
be designated as Class I, II, or III. However, this portion of the PSD
program applies to all areas of the State. That is, all areas of the
State must be designated as Class I, II, or III irrespective of their
attainment designation under Section 107 of the Act. See 40 CFR
51.166(g)(1).
    Second, ADEQ's submittal contains provisions at R18-2-217(E) for
allowing the state to redesignate certain areas, but the submittal does
not adequately meet the public participation requirements specified in
the federal regulation at 40 CFR 51.166(g)(2)(i), which requires a
public hearing consistent with the procedures in 40 CFR 51.102. ADEQ's
redesignation provisions do not specify the public hearing procedures
that will be used. See 40 CFR 51.166(g)(2)(i).
    Third, ADEQ's provisions for redesignating areas to Class III do
not clearly identify which areas may be designated as Class III as
specified in 40 CFR 51.166(g)(3).
    Fourth, R18-2-217(E) allows for the redesignation to be approved by
the Governor or the Governor's designee. However, the federal program
at 40 CFR 51.166(g)(3)(ii) specifically requires the Governor's
approval and does not allow for this approval to be delegated. See 40
CFR 51.166(g)(3)(ii).
    Fifth, R18-2-217(F)(4) contains a reference to ``maximum allowable
concentration'' which appears to refer to R18-2-218(E). However, R18-2-
218(E) references the ``ambient air quality standards in this
Article.'' The state's ambient air quality standards do not generally
apply in areas outside of Arizona, and ADEQ's NSR submittal does not
demonstrate that they would apply outside of Arizona for purposes of
R18-2-217(F)(4). See 40 CFR 51.166(g)(3)(iii).
    Finally, ADEQ's provisions do not clearly require that a permit
application that can only be approved if an area is redesignated to
Class III, and material submitted as part of that application, must be
available for public inspection prior to the public hearing on the
redesignation to Class III. See 40 CFR 51.166(g)(3)(iv).
4. Impacts on Class I Areas
    40 CFR 51.166(p) contains additional requirements related to
protection of Federal Class I areas. We have identified several
deficiencies in ADEQ's program with these provisions.

    First, ADEQ's submittal does not address the requirements of 40 CFR
51.166(p)(1), but they are generally addressed by existing SIP
requirements in R9-3-304(H). However, the existing SIP only requires
application information to be submitted to the Federal Land Manager,
and does not require that this information be provided to EPA as
required by this provision. Consistent with 40 CFR 51.166(p)(2), the
Federal Land Manager works in consultation with EPA on the protection
of Class I lands.
    Second, ADEQ's submittal does not address the requirement under 40
CFR 51.166(p)(3), but it is addressed by the existing SIP requirement
in R9-3-304(H)(1). However, the existing SIP contains outdated maximum
allowable increases that must be updated. See 40 CFR 51.166(p)(3).
    Finally, ADEQ's submittal generally includes the provisions of 40
CFR 51.166(p)(4) at R18-2-406(F)(2), but contains the phrase ``no
significant adverse impacts,'' which is inconsistent with the federal
regulation which requires a demonstration of ``no adverse impacts.''
The addition of the word ``significant'' is somewhat ambiguous in this
context, but appears to allow variances under circumstances not allowed
under the analogous federal regulation.
5. Public Participation
    40 CFR 51.166(q) contains several specific public participation
requirements for issuing PSD permits. We have identified several public
participation deficiencies in ADEQ's program.
    First, ADEQ's submittal does not ensure that materials available
during the public comment period are available in each region in which
the proposed source would be constructed as required by 40 CFR
51.166(q)(2)(ii). While ADEQ's program at R18-2-330(D)(11) requires
these materials to be available at the nearest Department office, ADEQ
only has two Department offices. As such, it is not clear that in all
instances the public affected by a proposed project would have
reasonable access in their region to the materials specified in 40 CFR
51.166(q)(2)(ii).
    Second, ADEQ's submittal does not require ADEQ to notify the public
of (1) the degree of increment consumption that is expected from the
source or modification, or (2) the Director's preliminary
determination, as required by 40 CFR 51.166(q)(2)(iii).
    Third, ADEQ's submittal does not require ADEQ to make the public
comments and the written notification of its final determination
available in the same location as the preliminary documents as required
by 40 CFR 51.166(q)(2)(vi) and (viii).
    Finally, ADEQ's submittal requires the Director to take final
action on an application within one year of receipt of a complete
application--R18-2-402(I)(3). See 40 CFR 51.166(q)(2)(vii). However,
ADEQ's program also indicates that a source may begin actual
construction once a ``proposed final permit'' is obtained. See R18-2-
402(C) and R18-2-302(G). ADEQ's regulations are ambiguous as to whether
a proposed final permit, as defined in R18-2-101(114), constitutes
final action by the Director that is subject to administrative and/or
judicial review. As EPA has stated previously in the context of our
actions on other State SIP submittals, we interpret the CAA to require
an opportunity for judicial review of a decision to grant or deny a PSD
permit, whether issued by EPA or by a State under a SIP-approved or
delegated PSD program. 77 FR 65305, 65306, Oct. 26, 2012 (EPA's
approval of the San Joaquin Valley Unified Air Pollution Control
District's PSD program into the California SIP); see also 61 FR 1880,
1882. Jan. 24, 1996 (EPA's proposed disapproval of Virginia's PSD
program SIP revision due to State law standing requirements that
limited judicial review); 72 FR 72617, 72619, Dec. 21, 2007 (in
approving South Dakota's PSD program, EPA stated that it interprets the
CAA and regulations to require at minimum an opportunity for state
judicial review of PSD permits). EPA continues to interpret the
relevant provisions of the Act as described in these prior rulemaking
actions. While ADEQ has issued guidance clarifying that it treats
``proposed final permits'' as ``appealable agency actions,'' under
Arizona law,\16\ in order to obtain full PSD program approval, ADEQ's
regulations must make clear that a source may not begin actual
construction before a final determination on a PSD permit application
is made by the Director, which would be subject to administrative and/
or judicial review.
---------------------------------------------------------------------------

    \16\ See ADEQ memo dated February 10, 2015 related to proposed
final permits. ADEQ submitted this memo in its February 23, 2015
supplement.
---------------------------------------------------------------------------

6. Plantwide Applicability Limits
    ADEQ's rules contain provisions for using plantwide applicability
limits (PALs) in R18-2-412. We have identified the following
deficiencies with ADEQ's PALs provisions program as they relate to the
PSD program.
    First, neither the ADEQ regulatory provisions for PALs at R18-2-412
nor the ADEQ regulatory definitions in R18-2-401 that apply in the
context of major sources and major modifications contain a definition
for major emissions unit as is required by 40 CFR 51.166(w)(2)(iv).
(This term is also not included in the definitions at R18-2-101 or R18-
2-301 that ADEQ submitted for approval as part of this action.)
    Second, ADEQ's PAL provision for calculating baseline emissions at
R18-2-412(B)(2) does not specify that baseline actual emissions are to
include emissions associated not only with operation of the unit, but
also emissions associated with startup, shutdown and malfunction, as is
required by 40 CFR 51.166(w)(3)(ii).
    Third, ADEQ's PAL provisions at R18-2-412(H) contain an incorrect
reference to (H)(4) instead of the definition for major modification,
and R18-2-412(H)(5) uses ``eliminated'' where the federal regulation
uses ``established.'' See 40 CFR 51.166(w)(9).
    Finally, ADEQ's PAL renewal provisions at R18-2-412(I)(1) must
contain a reference to subsection (D) of R18-2-412 instead of (F). In
addition, R18-2-(I)(4)(a) must reference subsection (E) of R18-2-412.
See 40 CFR 51.166(w)(10).
7. Definitions
    ADEQ's submittal contains definitions applicable to the PSD program
that do not fully meet the requirements of 40 CFR 51.166(b)(1), which
requires each State plan to contain specific definitions for the PSD
program. Deviations from the wording are approvable if the State
specifically demonstrates that the submitted definition is more
stringent, or at least as stringent, in all respects as the
corresponding definition in 40 CFR 51.166(b). We have carefully
reviewed the definitions used in ADEQ's PSD program as compared with
the federal PSD definitions in 40 CFR 51.166(b) and have found that,
generally, ADEQ's submittal contains the definitions necessary to
implement a PSD program. However, a number of ADEQ's definitions do not
meet the requirements of 40 CFR 51.166(b)(1) because their wording
deviates from the wording in the corresponding federal regulatory
definitions in 40 CFR 51.166(b)(1) in a manner that may be less
stringent than the federal definitions, and the State has not
demonstrated otherwise.
    Major stationary source at 40 CFR 51.166(b)(1)--language from
subparagraph 40 CFR 51.166(b)(1)(i)(c) not included in the definition
at R18-2-101(75). See also discussion below of the definition of
``stationary source'' in 40 CFR 51.166(b)(5).

    Net emissions increase at 40 CFR 51.166(b)(3)--ADEQ's definition at
R18-2-101(87)(c) identifies that an increase or decrease in actual
emissions is creditable only to the extent that the Director has not
relied on it in issuing a permit. However, this definition is broader
than the definition in the PSD program, which only specifies that the
reviewing authority has not relied on the increase or decrease in
issuing a PSD permit. In some respects this makes ADEQ's definition
more stringent (decreases), but in other respects less stringent
(increases). In addition, the equivalent of paragraph 40 CFR
51.166(b)(3)(viii) is not included in ADEQ's definition at R18-2-
101(87).
    Stationary source at 40 CFR 51.166(b)(5)--the federal regulation at
40 CFR 51.166(b)(5) defines this term as ``any building, structure,
facility or installation which emits or may emit a regulated NSR
pollutant,'' with ``regulated NSR pollutant'' also being a federally
defined term at 40 CFR 51.166(b)(49), whereas ADEQ's regulation at R18-
2-101(39) defines ``stationary source'' as ``any building, structure,
facility or installation subject to regulation pursuant to A.R.S. Sec.
49-426(A) which emits or may emit any air pollutant,'' with ``air
pollutant'' being an undefined term in ADEQ's regulation. We note that
A.R.S. Sec.  49-426(A) provides a cross-reference to certain exemptions
from permitting identified in A.R.S. Sec.  49-426(B), specifically
agricultural equipment used in normal farm operations and certain fuel
burning equipment, which do not appear to be consistent with the
federal PSD definition. The federal definition for stationary source is
very broad and does not exclude these source categories. We agree that
it is acceptable for ADEQ to limit its NSR program to certain kinds of
stationary sources, as specified in 40 CFR 51.160(e), but the federal
definition for a stationary source in the context of the PSD program is
not the appropriate place for such an exclusion, as it does not allow
exclusions for certain source categories.
    Major source baseline date at 40 CFR 51.166(b)(14)--language
equivalent to paragraph 40 CFR 51.166(b)(14)(iv) is not included at
ADEQ's definition in R18-2-218(B)(1).
    Baseline area 40 CFR 51.166(b)(15)--ADEQ's definition at R18-2-
218(D) contains an incorrect reference to R18-2-217 rather than
referring to section 107(d)(1)(A)(ii) or (iii) of the Act or the
equivalent; also, language equivalent to that in paragraph 40 CFR
51.166(b)(15)(iii) is not included.
    Allowable emissions at 40 CFR 51.166(b)(16)--ADEQ's definition at
R18-2-101(13)(b) does not include the ``future compliance date''
language that is in 40 CFR 51.166(b)(16)(ii) and ADEQ has not
demonstrated that its regulatory language is at least as stringent as
the federal definition.
    Federally enforceable at 40 CFR 51.166(b)(17)--ADEQ's definition at
R18-2-101(53)(d) identifies that requirements included in permits
pursuant to R18-2-306.01 or R18-2-306.02 are included in the definition
of federally enforceable requirements, but excludes those requirements
that are identified as ``enforceable only by the state.'' With this
action, we approving R18-2-306.01 and R18-2-306.02 into the SIP, making
requirements pursuant to these rules federally enforceable. As such,
ADEQ does not have the discretion to identify some of those
requirements as only enforceable by the state.
    Complete at 40 CFR 51.166(b)(22)--ADEQ's definition at R18-2-401(4)
is missing the second sentence of the federal definition.
    Significant at 40 CFR 51.166(b)(23)- ADEQ definition at R18-2-
101(130)(e) uses ``milligrams'' instead of ``micrograms'' as required
in paragraph 40 CFR 51.166(b)(23)(iii).
    Projected actual emissions at 40 CFR 51.166(b)(40)--ADEQ's
definition at R18-2-401(20)(b)(iii) does not specifically require
inclusion of emissions from malfunctions in the determination of
projected actual emissions, and exempts emissions from a shutdown
associated with a malfunction from such determination, while the
federal definition at 40 CFR 51.166(b)(40)(ii)(b) requires that
emissions from both shutdowns and malfunctions be included.
    Subject to regulation at 40 CFR 51.166(b)(48)--this definition is
not included in ADEQ's NSR SIP submittal. ADEQ did not adopt a
definition for the term ``subject to regulation'' or include such
definition as part of the NSR SIP submittal, presumably because the
federal definition of the term contains the requirements of the
Greenhouse Gas (GHG) Tailoring Rule, and GHGs cannot be regulated under
Arizona state law.\17\ We note, however, that while the GHG program
requirements are contained as part of the definition of the term
``subject to regulation,'' the federal definition of this term also
contains non-GHG-specific program elements for determining when a
pollutant is ``subject to regulation.'' As such, ADEQ must add a
definition to its PSD regulations to address these elements of the term
``subject to regulation'' in order to obtain full program approval.
---------------------------------------------------------------------------

    \17\ ADEQ is currently subject to a Federal Implementation Plan
under the PSD program for GHGs because ADEQ did not adopt a PSD
program for the regulation of GHGs. See 40 CFR 52.37. ADEQ's NSR SIP
submittal does not attempt to correct this program deficiency, as
regulation of GHG emissions currently is not permitted under State
law. See A.R.S. Sec.  49-191.
---------------------------------------------------------------------------

    Regulated NSR pollutant at 40 CFR 51.166(b)(49)--ADEQ's regulatory
definition at R18-2-101(122) does not include the final two sentences
of 40 CFR 51.166(b)(49)(i)(a)or the language at 40 CFR
51.166(b)(49)(iv); ADEQ's definition also includes an incorrect cross-
reference to hazardous air pollutants listed under R18-2-1101 that is
not consistent with the requirements in 40 CFR 51.166(b)(49)(v); and
ADEQ's regulatory definition needs to update the July 1, 2010 date in
the cross-reference to CAA section 108.
8. PM2.5 Significant Monitoring Concentration
    On January 22, 2013, the U.S. DC Circuit Court of Appeals in Sierra
Club v. EPA, 705 F.3d 458, vacated the parts of two federal PSD rules
(40 CFR 51.166(i)(5)(i)(c) and 40 CFR 52.21(i)(5)(i)(c)) establishing a
PM2.5 significant monitoring concentration (SMC), finding
that EPA was precluded from using the PM2.5 SMC to exempt
permit applicants from the statutory requirement to compile and submit
preconstruction monitoring data as part of a complete PSD application.
On December 9, 2013, revisions to 40 CFR 51.166 and 52.21 were
published in the Federal Register to remove these vacated rule
elements, effective as of that date. See 78 FR 73698.
    ADEQ's submittal at R18-2-407(H)(1)(c) contains the equivalent of
the PM2.5 SMC that was vacated by the Court of Appeals and
which has been removed from the federal PSD regulations. As the Court
of Appeals found application of this SMC impermissible, and because
ADEQ's regulation incorporating this SMC is a separable portion of
ADEQ's PSD program, we are proposing a partial disapproval of ADEQ's
submitted PSD program, to disapprove R18-2-407(H)(1)(c).
9. Definition for Basic Design Parameter
    ADEQ's submittal contains a definition for basic design parameter
at R18-2-401(3) that reflects the definition that EPA originally
developed as part of its Equipment Replacement Provisions. See 68 FR
61248 Oct. 27, 2003. However, the definition for basic design
parameter, and other elements related to the Equipment Replacement
Provisions, were vacated by the DC Circuit Court of Appeals in State of
New York v. EPA,

443 F.3d 880 (D.C. Cir. 2006). While the federal PSD regulations still
contain a reference to ``basic design parameter,'' this term is no
longer specifically defined under the federal PSD regulations, and
application of the definition contained in the Equipment Replacement
Provisions that were vacated by the Court of Appeals is inconsistent
with federal PSD requirements. As the Court of Appeals found this
Equipment Replacement Provisions and, therefore, this definition,
impermissible, and because ADEQ's regulation incorporating this
definition is a separable portion of ADEQ's PSD program, we are
proposing a partial disapproval of ADEQ's submitted PSD program, to
disapprove R18-2-401(3).

D. Do the rules meet the evaluation criteria for Nonattainment New
Source Review?

    Part D of title I of the Act contains the general requirements for
areas designated ``nonattainment'' for the NAAQS, including
preconstruction permit requirements for new major sources or major
modifications proposing to construct in such nonattainment areas,
commonly referred to as ``Nonattainment New Source Review'' or ``NA-
NSR.'' EPA's regulations for NA-NSR permit programs are found in 40 CFR
51.165. Most areas under ADEQ's jurisdiction are currently designated
as ``attainment'' or ``unclassifiable/attainment'' for all NAAQS
pollutants. However, there are some areas under ADEQ's jurisdiction
that are nonattainment and warrant a NA-NSR program. See 40 CFR 81.303.
    R18-2-402 through 405 contain the substantive NA-NSR requirements
for review and permitting of major sources and major modifications in
nonattainment areas under ADEQ jurisdiction in Arizona. These
regulations satisfy most of the statutory and regulatory requirements
for NA-NSR permit programs, but these rules contain several
deficiencies that that do not allow us to fully approve the NA-NSR
program submittal that is the subject of this action, as discussed
below.
    Although ADEQ's NA-NSR program submittal meets most NA-NSR program
requirements, we are proposing to disapprove one specific aspect of
ADEQ's NA-NSR program relating to the definition of ``basic design
parameter.'' The ADEQ rule provision that we are proposing to
disapprove is directly comparable to a federal NA-NSR rule provision
that has been vacated by a federal court, and we find that it is
separable from the remainder of ADEQ's NA-NSR program. Accordingly, we
find this provision suitable for disapproval at this time. This issue
is described in more detail below in Section II.D.4.
    For most of the remainder of ADEQ's NA-NSR program submittal, we
are proposing limited approval and limited disapproval. We find that
approval of ADEQ's updated NA-NSR program, aside from the aspect that
is separable and is proposed for disapproval as mentioned above, will
substantially strengthen the SIP overall, particularly as the current
SIP-approved NA-NSR program is significantly out of date when compared
with current federal NA-NSR regulatory requirements as well as current
State regulations. See our discussion in Section G below. However,
specific provisions of the NA-NSR SIP program submittal are
inconsistent with NA-NSR program requirements, and these deficiencies
must be addressed before we can fully approve ADEQ's NA-NSR program
into the SIP. The deficiencies that we have identified with ADEQ's NA-
NSR program that provide the basis for our limited approval and limited
disapproval are described immediately below in Sections II.D.1 through
3.\18\
---------------------------------------------------------------------------

    \18\ For one other aspect of ADEQ's NA-NSR SIP submittal, we are
proposing limited approval at this time. We cannot determine at this
time whether ADEQ's NA-NSR SIP submittal adequately addresses all of
elements necessary to satisfy the CAA's title I, part D, subpart 4
requirements regarding NSR permitting of PM2.5 and
PM10 precursors under CAA section 189(e). This issue is
discussed in detail in Section II.D.5 below.
---------------------------------------------------------------------------

1. General Nonattainment NSR Program Requirements
    First, as discussed above with respect to ADEQ's PSD program
submittal, ADEQ's NA-NSR program submittal often refers to Articles 9
and/or 11 of ADEQ's regulations where the federal regulations refer to
40 CFR parts 60, 61, or 63; or, similarly, sections 111 or 112 of the
Act. See R18-2-101(122)(b); R18-2-401(10); R18-2-402(G)(2); and R18-2-
406(A)(4). Articles 9 and 11 are where ADEQ incorporates by reference
the federal regulations in 40 CFR parts 60, 61, and 63 (which EPA
implements under sections 111 and 112 of the Act). However, these
Articles are not in the SIP, have not been submitted for SIP approval,
and do not necessarily contain provisions equivalent to all of the
subparts in parts 60, 61, and 63. See 40 CFR 51.165(a)(1)(xiii)--lowest
achievable emission rate, (a)(1)(xxxvii)--regulated NSR pollutant, and
(a)(1)(xl)--best available control technology.
    Second, the nonattainment NSR program requirements at 40 CFR
51.165(a)(2) require each plan to have a preconstruction review program
to satisfy the requirements of sections 172(c) and 173 of the Act.
However, as previously discussed in this preamble, ADEQ's submittal
allows a source at R18-2-302(G) and R18-2-402(C) to begin actual
construction upon the issuance of a proposed final permit. ADEQ's
program is ambiguous as to whether a proposed final permit, as defined
in R18-2-101(114), constitutes final action by the Director. While ADEQ
has issued guidance clarifying that it treats ``proposed final
permits'' as final actions for purposes of preconstruction
permitting,\19\ to obtain full NA-NSR program approval, ADEQ's
regulations must make clear that a source may not begin actual
construction before a final determination on an NA-NSR permit
application is made by the Director.
---------------------------------------------------------------------------

    \19\ See ADEQ Memo dated February 10, 2015 related to proposed
final permits and ADEQ's February 23, 2015 Supplement at 2.
---------------------------------------------------------------------------

    Third, 40 CFR 51.165(a)(3)(ii)(G) requires that credit for emission
reductions can be claimed only to the extent that the reviewing
authority has not relied on it in issuing any permit under regulations
approved pursuant to 40 CFR 51 subpart I or the State has not relied on
it in demonstration of attainment or reasonable further progress.
ADEQ's NSR submittal generally addresses this requirement at R18-2-
404(H), but also needs to include references to rules R18-2-302.01 and
R18-2-334, which are to be approved as part of ADEQ's NSR regulations
under Subpart I.
    Fourth, ADEQ's submittal contains an apparent typographical error
in R18-2-402(F)(1)(c), which includes a cross-reference to R18-2-
401(20)(b)(iii) rather than R18-2-401(20)(b)(iv). This error must be
corrected to ensure that the requirement in 40 CFR 51.165(a)(6)(i)(c)
for owners and operators to document and maintain a record of certain
applicability-related information is satisfied.
    Fifth, ADEQ's submittal does not require owners or operators to
make information required under 40 CFR 51.165(a)(6) available for
review upon request by the Director or the general public pursuant to
the requirements in 40 CFR 70.4(b)(3)(viii) as is required by 40 CFR
51.165(a)(7).
    Sixth, 40 CFR 51.165(a)(9)(i) requires that increases in emissions
shall be offset by reductions in emissions using a ratio of emission
decreases to emission increases of at least 1 to 1. ADEQ's NA-NSR
submittal contains this requirement at R18-2-404(A), but could

be interpreted as establishing the ratio as increases to decreases,
instead of decreases to increases--``emission increases shall be offset
by emission decreases at a ratio of at least 1 to 1.'' In addition,
R18-2-404(A) refers to additional offset requirements in R18-2-405, but
does not refer to the offset requirement in R18-2-404(J).
    Seventh, 40 CFR 51.165(a)(11) requires emission offsets to be
obtained for the same regulated NSR pollutant, unless interprecursor
offsetting is permitted for a particular pollutant, as further
specified in the rule. ADEQ's NA-NSR SIP submittal does not address
interprecursor offsets, and it is not required to, but the submittal
does not contain a specific requirement that offsets must be for the
same regulated pollutant.
    Eighth, 40 CFR 51.165(b) requires that ADEQ have a preconstruction
program that satisfies the requirements of section 110(a)(2)(D)(i) of
the Act for any new major stationary source or major modification that
would locate in an attainment area, but would cause or contribute to a
violation of a NAAQS in any adjacent area. ADEQ's program contains
provisions for 40 CFR 51.165(b) at R18-2-406(A)(5)(a)-(b) that
generally meet this requirement. However, ADEQ's regulations at R18-2-
406(A)(5)(b) refer to the ``Arizona primary or secondary ambient air
quality standards,'' which is not a defined term, whereas the analogous
federal program provisions refer to the NAAQS. As a result, ADEQ's
program does not fully meet the requirements in 40 CFR 51.165(b)(1) and
(2) as ADEQ's regulations do not make clear which standards are being
referred to, and the submittal does not demonstrate that such standards
would apply to areas outside of Arizona for purposes of ADEQ's NSR
review. Similarly, ADEQ's regulation at R18-2-406(A)(5)(a) references
the state's ambient air quality standards in Article 2, which would not
clearly apply to areas outside of Arizona.
    Finally, Section 173(a)(4) of the Act requires that NA-NSR permit
programs shall provide that permits to construct and operate may be
issued if ``the Administrator has not determined that the applicable
implementation plan is not being adequately implemented for the
nonattainment area in which the proposed source is to be constructed or
modified.'' However, ADEQ's program does not contain a provision that
would prohibit the issuance of NA-NSR permits in areas where the
Administrator has made this determination or that requires that ADEQ
conduct a review to ensure that this requirement is met. To obtain full
program approval, ADEQ must add a provision to its NA-NSR program
requirements that ensures compliance with CAA section 173(a)(4).
2. Plantwide Applicability Limits
    ADEQ's rules contain provisions for using plantwide applicability
limits (PALs) in R18-2-412. We have identified the following
deficiencies with ADEQ's PALs provisions program as they relate to the
NA-NSR program.
    First, ADEQ's provision for PALs does not specify that
modifications under a PAL do not need approval through the
nonattainment major NSR program. Only the PSD program is mentioned.
ADEQ's submittal does not contain a definition for nonattainment major
NSR program (see 40 CFR 51.165(a)(1)(xxx)). ADEQ should either add this
definition or considering referencing R18-2-403. See 40 CFR
51.165(f)(1)(iii)(B).
    Second, neither the ADEQ regulatory provisions for PALs at R18-2-
412 nor the ADEQ regulatory definitions in R18-2-401 that apply in the
context of major sources and major modifications contain a definition
for major emissions unit as is required by 40 CFR 51.165(f)(2)(iv).
    Third, ADEQ's PAL provision for calculating baseline emissions at
R18-2-412(B)(2) does not specify that baseline actual emissions are to
include emissions associated not only with operation of the unit, but
also emissions associated with startup, shutdown and malfunction, as is
required by 40 CFR 51.165(f)(3)(ii).
    Fourth, ADEQ's PAL provisions at R18-2-412(H) contain an incorrect
reference to R18-2-412(H)(4) instead of the definition for major
modification, and R18-2-412(H)(5) uses ``eliminated'' where the federal
regulation uses ``established.'' See 40 CFR 51.165(f)(9).
    Finally, ADEQ's program contains incorrect cross-references in
meeting the requirements of 40 CFR 51.165(f)(1), as follows: ADEQ's PAL
renewal provisions at R18-2-412(I)(1) must contain a reference to
subsection (D) of R18-2-412 instead of (F), and R18-2-(I)(4)(a) must
reference subsection (E) of R18-2-412.
3. Definitions
    ADEQ's submittal contains definitions applicable to the
nonattainment NSR program that do not fully meet the requirements of 40
CFR 51.165(a)(1), which requires each State plan to contain specific
definitions for the nonattainment NSR program. Deviations from the
wording are approvable if the State specifically demonstrates that the
submitted definition is more stringent, or at least as stringent, in
all respects as the corresponding definition in 40 CFR 51.165(a)(1). We
have carefully reviewed the definitions used in ADEQ's nonattainment
NSR program as compared with the federal PSD definitions in 40 CFR
51.165(a)(1) and have found that generally, ADEQ's submittal contains
the definitions necessary to implement a NA-NSR program. However, a
number of ADEQ's definitions do not meet the requirements of 40 CFR
51.165(a)(1) because their wording deviates from the wording in the
corresponding federal regulatory definitions in 40 CFR 51.165(a)(1) in
a manner that may be less stringent than the federal definitions, and
the State has not demonstrated otherwise.
    Stationary source at 40 CFR 51.165(a)(1)(i)--the federal regulation
at 40 CFR 51.165(a)(1)(i) defines this term as ``any building,
structure, facility or installation which emits or may emit a regulated
NSR pollutant,'' with ``regulated NSR pollutant'' also being a
federally defined term at 40 CFR 51.165(a)(1)(xxxvii), whereas ADEQ's
regulation at R18-2-101(139) defines ``stationary source'' as ``any
building, structure, facility or installation subject to regulation
pursuant to A.R.S. Sec.  49-426(A) which emits or may emit any air
pollutant,'' with ``air pollutant'' being an undefined term in ADEQ's
regulation. However, A.R.S. Sec.  49-426(A) provides a cross-reference
to certain exemptions from permitting identified in A.R.S. Sec.  49-
426(B), specifically agricultural equipment used in normal farm
operations and certain fuel burning equipment, which do not appear to
be consistent with federal NA-NSR definition. The federal definition of
stationary source at 40 CFR 51.165(a)(1)(i) is very broad and does not
exclude these source categories from the definition. We agree that it
is acceptable for ADEQ to limit its NSR program to certain kinds of
stationary sources, as discussed in detail above with respect to 40 CFR
51.160(e), but the federal definition for a stationary source in the
context of the major NA-NSR program is not the appropriate place for
such an exclusion, as it does not allow exclusions for certain source
categories. ADEQ must demonstrate that its definition of stationary
source is at least as stringent as the federal definition at 40 CFR
51.165(a)(1)(i) in all respects.
    Major stationary source at 40 CFR 51.165(a)(1)(iv)--language from
subparagraph 40 CFR 51.165(a)(1)(iv)(A)(3) not included in the
definition at R18-2-101(75); also see comments above on definition of

``stationary source'' in 40 CFR 51.165(a)(1)(i).
    Net emissions increase at 40 CFR 51.165(a)(1)(vi)--The requirement
of paragraph 40 CFR 51.165(a)(1)(vi)(E)(3) is not met because not all
requirements to be approved under subpart I are listed (i.e., R18-2-
302.01) in the definition at R18-2-101(87). In addition, the equivalent
of paragraph 40 CFR 51.165(a)(1)(vi)(G) is not included in ADEQ's
definition at R18-2-101(87).
    Significant at 40 CFR 51.165(a)(1)(x)--ADEQ's definition at R18-2-
101(130)(b) refers to R18-2-405 for determining significant emissions
in serious and severe ozone nonattainment areas. The definition for
``significant'' at R18-2-405(B) does not use the term ``net emissions
increase,'' which is a term defined by the federal regulations at 40
CFR 51.165(a)(1)(vi).
    Allowable emissions at 40 CFR 51.165(a)(1)(xi)--ADEQ's definition
at R18-2-101(13)(b) does not include the ``future compliance date''
language that is in 40 CFR 51.165(a)(1)(xi)(B) and (C) and ADEQ has not
demonstrated that its regulatory language is at least as stringent as
the federal definition.
    Federally enforceable at 40 CFR 51.165(a)(1)(xiv)--ADEQ's
definition at R18-2-101(53)(d) identifies that requirements included in
permits pursuant to R18-2-306.01 or R18-2-306.02 are included in the
definition of federally enforceable requirements, but excludes those
requirements that are identified as ``enforceable only by the state.''
With this action, we are approving R18-2-306.01 and R18-2-306.02 into
the SIP, making requirements pursuant to these rules federally
enforceable. As such, ADEQ does not have the discretion to identify
some of those requirements as only enforceable by the state.
    Regulated NSR pollutant at 40 CFR 51.165(a)(1)(xxxvii)--ADEQ's
definition is missing this language from paragraph 40 CFR
51.165(a)(1)(xxxvii)(C): ``provided that such constituent or precursor
pollutant may only be regulated under NSR as part of regulation of the
general pollutant'' at R18-2-101(122)(a).
    Projected actual emissions at 40 CFR 51.165(a)(1)(xxviii)--ADEQ's
definition at R18-2-401(20)(b)(iii) does not specifically require
inclusion of emissions from malfunctions in the determination of
projected actual emissions, and exempts emissions from a shutdown
associated with a malfunction from such determination, while the
federal definition at 40 CFR 51.165(a)(1)(xxxvii)(C) requires that
emissions from both shutdowns and malfunctions be included.
4. Definition for Basic Design Parameter
    ADEQ's submittal contains a definition for basic design parameter
at R18-2-401(3) that reflects the definition that EPA originally
developed as part of its Equipment Replacement Provisions. See 68 FR
61248, Oct. 27, 2003. However, the definition for basic design
parameter, and other elements related to the Equipment Replacement
Provisions, were vacated by the DC Circuit Court of Appeals in State of
New York v. EPA, 443 F.3d 880 (D.C. Cir. 2006). While the federal NA-
NSR regulations still contain a reference to ``basic design
parameter,'' this term is no longer specifically defined under the
federal NA-NSR regulations, and application of the definition contained
in the Equipment Replacement Provisions that were vacated by the Court
of Appeals is inconsistent with federal NA-NSR requirements. As the
Court of Appeals found this Equipment Replacement Provisions and,
therefore, this definition, impermissible, and because ADEQ's
regulation incorporating this definition is a separable portion of
ADEQ's NA-NSR program, we are proposing a partial disapproval of ADEQ's
submitted NA-NSR program, to disapprove R18-2-401(3).
5. Additional Provisions for Particulate Matter Nonattainment Areas
    On January 4, 2013, the U.S. Court of Appeals for the District of
Columbia Circuit, in Natural Resources Defense Council v. EPA,\20\
issued a decision that remanded the EPA's 2007 and 2008 rules
implementing the 1997 PM2.5 NAAQS. EPA's 2008 implementation
rule addressed by the court decision, ``Implementation of New Source
Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers
(PM2.5)'' (the 2008 NSR PM2.5 Rule),\21\
promulgated NSR requirements for implementation of PM2.5 in
both nonattainment areas (under the NA-NSR program) and attainment/
unclassifiable areas (under the PSD program). The Court of Appeals
found that EPA erred in implementing the PM2.5 NAAQS in
these rules for nonattainment areas solely pursuant to the general
implementation provisions of subpart 1 of part D of title I of the CAA,
rather than pursuant to the additional implementation provisions
specific to particulate matter nonattainment areas in subpart 4. The
Court of Appeals ordered the EPA to ``repromulgate these rules pursuant
to Subpart 4 consistent with this opinion.'' 706 F.3d at 437. Although
the Court of Appeals declined to establish a deadline for EPA's
response to the remand, EPA intends to promulgate new generally
applicable implementation regulations for the PM2.5 NAAQS in
accordance with the requirements of subpart 4. In the interim, however,
states and EPA still need to proceed with implementation of the
PM2.5 NAAQS in a timely and effective fashion in order to
meet statutory obligations under the CAA and to assure the protection
of public health intended by those NAAQS.
---------------------------------------------------------------------------

    \20\ 706 F.3d 428 (D.C. Cir. 2013).
    \21\ 73 FR 28321 May 16, 2008.
---------------------------------------------------------------------------

    ADEQ's NSR SIP submittal generally includes requirements for the
PM2.5 NA-NSR program consistent with the provisions
promulgated in the 2008 NSR PM2.5 Rule. Specifically, ADEQ's
NSR SIP submittal includes the PM2.5 significant emission
rates at R18-2-101(130), regulation of certain PM2.5
precursors (SO2 and NOX) at R18-2-101(130), the
regulation of PM10 and PM2.5 condensable
emissions at R18-2-101(122)(f), and the emissions offset requirements
at R18-2-403(A)(3). Separate and aside from the issues identified above
that have resulted in our proposing limited approval and limited
disapproval of ADEQ's NA-NSR submittal, EPA has determined that it is
not prepared at this time to grant full approval to ADEQ's NSR SIP
submittal as to the PM2.5 NA-NSR program requirements, in
light of the Court's remand of the 2008 NSR PM2.5 Rule, and
for the reasons explained below.
    EPA is in the process of evaluating the requirements of subpart 4
as they pertain to NA-NSR. In particular, subpart 4 includes section
189(e) of the CAA, which requires the control of major stationary
sources of PM10 precursors (and hence under the court
decision, PM2.5 precursors) ``except where the Administrator
determines that such sources do not contribute significantly to PM-10
levels which exceed the standard in the area.'' Although ADEQ's NSR SIP
submittal does include regulation of SO2 and NOX
as PM2.5 precursors, it does not include the regulation of
VOCs or ammonia. Nor does the NSR SIP submittal include a demonstration
as to whether or not the regulation of VOCs or ammonia is necessary
under section 189(e). The evaluation of which precursors need to be
controlled to achieve the standard in a particular area is typically
conducted in the context of the state's preparing and the EPA's
reviewing an area's attainment plan SIP. In this case, there are two
designated PM2.5 nonattainment areas in Arizona, the Nogales
(portion of Santa Cruz County, AZ) and West Central Pinal (portion of
Pinal County, AZ) areas. Both are designated

nonattainment for the 2006 annual PM2.5 NAAQS. However, on
January 7, 2013 and September 4, 2013, EPA finalized determinations of
attainment for these areas, respectively (78 FR 887 and 78 FR 54394),
which suspended the requirement for the state to submit, among other
things, an attainment plan SIP for the area.\22\ Accordingly,
PM2.5 attainment plans for SIP approval are not currently
before Region 9 for these areas. As Region 9 does not have before it
the state's analysis as to which precursors need to be controlled in
these areas pursuant to section 189(e) of the Act, as would be
generally contained in an attainment plan SIP, it cannot fully approve
as complying with the CAA a nonattainment NSR SIP that only addresses a
subset of the scientific PM2.5 precursors recognized by EPA.
---------------------------------------------------------------------------

    \22\ Prior to the Court's decision, EPA would not have reviewed
PM2.5 attainment plan submittals for compliance with
Section 189.
---------------------------------------------------------------------------

    On the other hand, while ADEQ's submittal may not yet contain all
of the elements necessary to satisfy the CAA requirements when
evaluated under subpart 4, the NA-NSR SIP submittal represents a
considerable strengthening of the currently approved Arizona SIP, which
does not address NSR permitting for PM2.5 at all. Therefore,
EPA is proposing to grant limited approval to the PM2.5 NA-
NSR provisions in ADEQ's NSR submittal for the Nogales and West Central
Pinal PM2.5 nonattainment areas.
    For the reasons explained above, EPA is not evaluating at this time
whether ADEQ's NA-NSR submittal will require additional revisions
relating to PM2.5 to satisfy the subpart 4 requirements.
Once EPA re-promulgates the Federal PM2.5 regulations with
respect to NA-NSR permitting in response to the Court's remand, EPA
will consider whether a limited disapproval should also be proposed for
ADEQ's PM2.5 NA-NSR program based on this issue.
    In addition, section 189(e) of the CAA requires that ADEQ's NSR
program for PM10 nonattainment areas apply to major
stationary sources of PM10 precursors, except where the
Administrator determines that such sources do not contribute
significantly to PM10 levels which exceed the standard in
the area. As discussed below, we have identified one area under ADEQ's
jurisdiction, the West Pinal PM10 nonattainment area, for
which we are proposing a limited approval with respect to
PM10 under section 189(e) of the Act.
    On September 4, 2013, the West Pinal area was redesignated to
nonattainment for the 1987 p.m.10 standard. ADEQ's NSR SIP
submittal generally includes NA-NSR requirements for PM10
nonattainment areas such as the PM10 significant emission
rate at R18-2-101(130), the regulation of PM10 and
PM2.5 condensable emissions at R18-2-101(122)(f), and the
emissions offset requirements at R18-2-403(A)(3). However, separate and
aside from the issues identified above that have resulted in our
proposing limited approval and limited disapproval of ADEQ's NA-NSR
submittal, EPA has determined that it is not prepared at this time to
grant full approval to ADEQ's NSR SIP submittal as to the
PM10 nonattainment NSR program requirements for the West
Pinal nonattainment area. The evaluation of which precursors need to be
controlled to achieve the standard in a particular area is typically
conducted in the context of the state's preparing and the EPA's
reviewing of an area's attainment plan SIP. On February 19, 2014, ADEQ
withdrew from EPA's consideration the Arizona State Implementation Plan
Revision for the West Pinal County PM10 Nonattainment Area
(submitted on December 30, 2013). Accordingly, a PM10
attainment plan for West Pinal is not currently before Region 9. As
such, Region 9 does not have before it the state's analysis as to which
precursors need to be controlled in this area pursuant to section
189(e) of the Act, as would be generally contained in an attainment
plan SIP, and cannot fully approve as complying with the CAA a
nonattainment NSR SIP that does not address scientific PM10
precursors recognized by EPA.
    While ADEQ's submittal may not yet contain all of the elements
necessary to satisfy the CAA NA-NSR requirements when evaluated under
subpart 4, the proposed revisions to ADEQ's NA-NSR program represent a
considerable strengthening of the currently approved Arizona SIP, which
does not address NSR requirements for PM10 at all.
Therefore, EPA is proposing to grant limited approval to the
PM10 NA-NSR provisions in ADEQ's NSR submittal as they apply
to the West Pinal nonattainment area. Once ADEQ submits a new
PM10 attainment plan for this area, EPA will consider
whether a limited disapproval should also be proposed based on this
issue.

E. Review of Non-NSR Related Rules and Statutory Provisions

    In addition to ADEQ's NSR SIP submittal, we are taking action on
rules R18-2-311 and R18-2-312. These rules were submitted to EPA for
SIP approval in a separate submittal on July 28, 2011. We delayed
acting on rules R18-2-311 and R18-2-312 in a previous action, and are
therefore now evaluating and taking action on the rules. We are also
taking action on A.R.S. Sec.  49-107, an Arizona statutory provision
concerning local delegation of state authority.
    First, ADEQ's rule R18-2-311 specifies the test methods and
procedures which can be used to determine compliance with requirements
established under ADEQ's air program. On October 19, 1984, EPA approved
an earlier version of this rule into the SIP.\23\ See 49 FR 41026. The
current submittal, adopted effective November 15, 1993, renumbers the
earlier rule and expands on the previous version by listing additional
test methods that may be used to determine compliance. While the
current rule improves on the earlier version, we cannot recommend it
for full approval into the SIP. We are proposing a limited disapproval
because Section D of the rule allows the State to approve alternatives
to the applicable SIP without EPA approval, in conflict with the
requirements of CAA sections 110(a)(2)(A) and 110(i).\24\
---------------------------------------------------------------------------

    \23\ The rule was previously numbered R9-3-310.
    \24\ See, e.g., ``Guidance Document for Correcting VOC Rule
Deficiencies,'' U.S. EPA Region 9, April 1991, revised August 21,
2001 (Little Bluebook).
---------------------------------------------------------------------------

    Second, ADEQ's rule R18-2-312 requires stationary sources to
conduct a performance test within 60 days of achieving the capability
to operate at its maximum production rate, but no later than 180 days
after initial start-up. The rule also specifies that testing shall be
conducted under such conditions specified by State, including, but not
limited to appropriate test methods, notification to the State, data
reduction, records, and number of test runs. On April 23, 1982 (47 FR
17485) EPA approved a version of this rule into the SIP.\25\ The
current submittal, adopted effective November 15, 1993, renumbers the
earlier rule and expands on the previous version by including
conditions when a test may be stopped and allows compliance to be
determined with continuous emission monitoring as long as the
applicable quality assurance procedures are followed. While the current
rule improves on the earlier version, we cannot recommend it for full
approval into the SIP. We are proposing a limited disapproval because
Section B of the rule allows the State to approve the use of equivalent
and alternative test methods without EPA approval, in conflict with CAA
sections 110(a)(2)(A) and 110(i).\26\
---------------------------------------------------------------------------

    \25\ The rule was previously numbered R9-3-312.
    \26\ See, e.g., Little Bluebook.

---------------------------------------------------------------------------

    Third, A.R.S. Sec.  49-107 is the current Arizona state law that
provides ADEQ with authority to ``delegate to a local environmental
agency, county health department, public health services district or
municipality any functions, powers or duties which the director
believes can be competently, efficiently and properly performed by the
local agency if the local agency accepts the delegation and agrees to
perform the delegated functions, powers and duties according to the
standards of performance required by law and prescribed by the
director,'' and other related authorities. This statutory provision
establishes that ADEQ has clear authority to delegate various functions
under the CAA, including NSR permitting, to county and other local
government agencies and, as such, we find it to be approvable and
propose to approve it into the SIP. This provision will replace 7-1-
8.3(R9-3-803)--Delegation of Authority, an older ADEQ currently in the
SIP, which we are proposing to remove from the SIP as part of this
action.

F. Review of Rules and Statutory Provisions Requested To Be Removed
From the SIP

    In Table 2 of this preamble we identify the rules and statutory
provisions we are proposing to remove or supersede from the SIP as part
of this action. ADEQ's existing SIP-approved NSR rules are generally
outdated, as we have not acted to approve substantial revisions to
ADEQ's NSR rules since the 1980s. Further, the ADEQ NSR rules currently
in the SIP have been repealed for purposes of State law by ADEQ.
Significant changes have been made to the Act and the underlying
implementing federal NSR regulations since our last substantial action
on ADEQ's NSR SIP. Therefore, replacing the existing, outdated NSR SIP
rules with the updated ADEQ rules in this submittal that we propose to
approve into the SIP is appropriate and generally serves as an overall
strengthening of Arizona's SIP. In some cases, we approved updated
versions of these rules into the SIP in previous rulemaking actions,
and a few of the rules proposed for removal are no longer necessary for
other reasons. Our TSD provides additional detail.

G. Do the rules meet the evaluation criteria under Section 110(l) and
193 of the Act?

    CAA Section 110(l) states: ``Each revision to an implementation
plan submitted by a State under this chapter shall be adopted by such
State after reasonable notice and public hearing. The Administrator
shall not approve a revision of a plan if the revision would interfere
with any applicable requirement concerning attainment and reasonable
further progress (as defined in section 7501 of this title), or any
other applicable requirement of this chapter.''
    With respect to the procedural requirements of CAA section 110(l),
based on our review of the public process documentation included in the
July 28, 2011, October 29, 2012 and July 2, 2014 submittals, we find
that ADEQ has provided sufficient evidence of public notice and
opportunity for comment and public hearings prior to submittal of this
SIP revision and has satisfied these procedural requirements under CAA
section 110(l).
    With respect to the substantive requirements of section 110(l), as
discussed further below, we have determined that our approval of the
ADEQ NSR SIP Submittal and the other rules and statutory provisions
that we are proposing to act on in this action (including but not
limited to the rescission of numerous existing NSR SIP rules), as
described above in this preamble, would strengthen the applicable SIP
in most respects. Taken in its entirety, we find that the SIP revision
represents a strengthening of ADEQ's minor NSR, PSD, and NA-NSR
programs as compared to the existing SIP-approved NSR program for ADEQ
that was last substantially revised in the SIP in the early 1980s, and
that our approval of this SIP submittal would not interfere with any
applicable requirement concerning attainment and reasonable further
progress (RFP) or any other applicable requirement of the Act.
    First, this proposed action would correct a number of deficiencies
in ADEQ's current SIP-approved NSR program. ADEQ's existing SIP-
approved program does not currently contain these significant program
elements: (1) Implementation of NSR requirements for PM10;
(2) implementation of NSR requirements for PM2.5; (3)
regulation of NOX as a precursor to ozone; (4) inclusion of
condensable particular matter in NSR permitting for determining
PM10 and PM2.5 emissions; and (5) ensuring that
the construction or modification of certain non-major sources and non-
major modifications will (1) not interfere with attainment or
maintenance of the NAAQS and (2) comply with the applicable SIP.
    Further, ADEQ has also updated its program to provide for
additional permitting flexibilities that have been added to the federal
NSR program, such as PALs and the 2002 NSR Reforms.
    Second, most of the deficiencies identified with the ADEQ rule
provisions on which we are taking action fit into one of two
categories: (1) Deficiencies that relate to an NSR program element that
has been added since ADEQ's NSR program was approved into the SIP
(e.g., the deficiency related to the omission of the definition for
major emissions unit in the PALs provisions), or (2) deficiencies that
exist in the current SIP that were not identified as deficiencies when
the provisions were approved into the SIP (e.g., ensuring protection of
the NAAQS in areas outside of Arizona from stationary source emissions
regulated under the NSR program). Therefore, in considering whether our
proposed approval of the NSR SIP submittal will interfere with
attainment or reasonable further progress, we only consider those
deficiencies in the first category, as the deficiencies in the second
category are already a part of the current applicable requirements for
attainment and RFP in the Arizona SIP. In many cases, the deficiencies
in the second category occurred because of the numerous changes to the
NSR program since ADEQ's NSR rules were last approved into the SIP.
That is, language that may have been approvable previously is no longer
approvable.
    The most significant deficiency that we have identified, as
discussed in detail above in this notice, is the absence of provisions
that ensure protection of the 2012 PM2.5 NAAQS for the PSD
program. This deficiency is the most likely to affect the substantive
requirements of the overall application of the PSD program, compared to
other deficiencies that we do not expect would significantly affect the
review of emission impacts (e.g., administrative requirements for
permit issuance). However, the 2012 PM2.5 NAAQS came into
effect after ADEQ submitted the NSR SIP submittal to EPA. In addition,
although such standard is currently applicable in the context of the
PSD program, the implementation requirements for this standard are not
due until 2016. Accordingly, there are no applicable requirements in
the existing ADEQ SIP-approved NSR program related to this NAAQS that
would be affected by the deficiencies in the submitted NSR rules we are
approving.
    In addition, ADEQ has relaxed its definition of ``major stationary
source.'' ADEQ's previous definition applied the PSD and NA-NSR program
requirements to existing non-major sources when a project would cause
such a stationary source to become a ``major stationary source.'' ADEQ

revised its program to instead subject existing non-major sources to
the major NSR program only if the project constitutes a ``major
stationary source'' in and of itself, consistent with federal NSR
program requirements. We do not find this relaxation to interfere with
attainment or reasonable further progress because ADEQ is also
strengthening its minor NSR program to address emissions from larger
modifications that do not qualify as major modifications under ADEQ's
revised NSR program. While these modifications would no longer be
subject to the major NSR program, ADEQ's minor NSR program would
nonetheless apply and ensure the modification does not interfere with
attainment or RFP.
    In summary, we find that, on balance, the improvements ADEQ is
making to its NSR program and other portions of the SIP that are the
subject of this section outweigh the deficiencies discussed above as
compared to ADEQ's existing SIP-approved NSR program. In addition, we
are unaware of any reliance by ADEQ on the continuation of any specific
aspect of the permit-related rules currently in the ADEQ portion of the
Arizona SIP for the purpose of continued attainment or maintenance of
the NAAQS. Given all these considerations, we propose to conclude that
our approval of the ADEQ regulations and statute that are the subject
of this action into the Arizona SIP would not interfere with any
applicable requirement concerning attainment and RFP or any other
applicable requirement of the Act.\27\
---------------------------------------------------------------------------

    \27\ Our analysis and conclusion here also apply to our approval
of R18-2-311 and R18-2-312, which are not generally related to NSR
permitting. We note that these rules do not contain any substantive
changes in the procedures for performance tests or test methods as
compared with the analogous rules in the current SIP. Similarly, our
analysis and conclusion here also extends to our approval of A.R.S.
Sec.  49-107 into the SIP. The provisions in this state statute
relate specifically to local delegation of state authority and thus
would not interfere with any applicable requirement concerning
attainment and RFP or any other applicable requirement of the Act.
---------------------------------------------------------------------------

    Conclusion. For the reasons set forth above, we can approve the
ADEQ SIP revision as proposed in this action under section 110(l) of
the Act.
    Section 193 of the Act, which was added by the CAA Amendments of
1990, includes a savings clause that provides, in pertinent part: ``No
control requirement in effect, or required to be adopted by an order,
settlement agreement, or plan in effect before November 15, 1990, in
any area which is a nonattainment area for any air pollutant may be
modified after November 15, 1990, in any manner unless the modification
insures equivalent or greater emission reductions of such air
pollutant.''
    We find that the provisions included in ADEQ's NSR SIP submittal
would ensure equivalent or greater emission reductions compared to the
SIP-approved NSR program in the nonattainment areas under ADEQ's
jurisdiction. In particular, the NSR provisions in ADEQ's NSR SIP
submittal cover stationary sources in areas that are nonattainment for
the PM10, PM2.5 and 1-hr SO2 NAAQS.
ADEQ's current SIP-approved NSR program was approved prior to EPA
establishing these NAAQS and the current NSR provisions in the SIP do
not reference the current, recently SIP-approved Arizona air quality
standards that are comparable to these NAAQS. In addition, ADEQ's
updated NSR rules and our action to approve them into the SIP will
expand ADEQ's review of minor sources in nonattainment areas to require
review of smaller sources. We therefore conclude that ADEQ's NSR SIP
submittal will provide for equivalent or greater emissions reductions
as compared to the existing SIP-approved ADEQ NSR program for the
nonattainment pollutants PM10, PM2.5 and
SO2.
    Conclusion. For the reasons set forth above, we can approve the
submitted NSR program under section 193 of the Act.

H. Conclusion

    For the reasons stated above and explained further in our TSD, we
find that the submitted NSR rules satisfy most of the applicable CAA
and regulatory requirements for minor NSR, PSD, and nonattainment NSR
permit programs under CAA section 110(a)(2)(C) and parts C and D of
title I of the Act but also contain certain deficiencies that prevent
us from proposing a full approval of the NSR SIP submittal. Therefore,
we are proposing a limited approval and limited disapproval of the
submitted NSR rules. We do so based also on our finding that, while the
rules do not meet all of the applicable requirements, the rules would
represent an overall strengthening of the SIP by clarifying and
enhancing the NSR permitting requirements for major and minor
stationary sources under ADEQ's jurisdiction in Arizona. In addition,
we are also proposing to remove the existing statutes and rules listed
in Table 2 from the SIP, which are outdated and mostly being superseded
by our proposed action. As discussed above, we are proposing a partial