Operating Permit Programs and Prevention of Significant Deterioration
(PSD) and Nonattainment New Source Review (NSR); Flexible Air Permitting
Rule

Table of Contents

  TOC \h \z \t "FR Level 1,1,FR Level 2,2,FR Level 3,3,FR Level 4,4"
HYPERLINK \l "_Toc149556874"  I.	General Information	  PAGEREF
_Toc149556874 \h  6

  HYPERLINK \l "_Toc149556875"  A.	What are the regulated entities?
PAGEREF _Toc149556875 \h  6

  HYPERLINK \l "_Toc149556876"  B.	What should I consider as I prepare
my comments for EPA?	  PAGEREF _Toc149556876 \h  7

  HYPERLINK \l "_Toc149556877"  1. 	Submitting CBI	  PAGEREF
_Toc149556877 \h  7

  HYPERLINK \l "_Toc149556878"  2.  	Suggestions for Preparing Your
Comments.	  PAGEREF _Toc149556878 \h  8

  HYPERLINK \l "_Toc149556879"  C.	Where Can I get a Copy of This
Document and Other Related Information?	  PAGEREF _Toc149556879 \h  8

  HYPERLINK \l "_Toc149556880"  D.	How Can I Find Information About a
Possible Hearing?	  PAGEREF _Toc149556880 \h  9

  HYPERLINK \l "_Toc149556881"  E. 	How is this preamble organized?
PAGEREF _Toc149556881 \h  9

  HYPERLINK \l "_Toc149556882"  II.	What is a flexible air permit and
the background related to this action?	  PAGEREF _Toc149556882 \h  11

  HYPERLINK \l "_Toc149556883"  A.	What is a flexible air permit?
PAGEREF _Toc149556883 \h  11

  HYPERLINK \l "_Toc149556884"  B.	What is the statutory background?
PAGEREF _Toc149556884 \h  12

  HYPERLINK \l "_Toc149556885"  C.	What is the regulatory background
relating to the proposed revisions to parts 70 and 71?	  PAGEREF
_Toc149556885 \h  16

  HYPERLINK \l "_Toc149556886"  D.	What is the regulatory background
relating to the proposed revisions to parts 51 and 52?	  PAGEREF
_Toc149556886 \h  19

  HYPERLINK \l "_Toc149556887"  III.	What is the purpose of this action?
  PAGEREF _Toc149556887 \h  22

  HYPERLINK \l "_Toc149556888"  IV.	What experience did we gain from our
12-year pilot permit program?	  PAGEREF _Toc149556888 \h  24

  HYPERLINK \l "_Toc149556889"  A.	What were the benefits of the pilot
permits?	  PAGEREF _Toc149556889 \h  27

  HYPERLINK \l "_Toc149556890"  1.	Environmental Improvements Achieved
Using Flexible Permits	  PAGEREF _Toc149556890 \h  27

  HYPERLINK \l "_Toc149556891"  2.	Informational Benefits Achieved Using
Flexible Permits	  PAGEREF _Toc149556891 \h  29

  HYPERLINK \l "_Toc149556892"  3.	Economic Benefits Achieved Using
Flexible Permits	  PAGEREF _Toc149556892 \h  30

  HYPERLINK \l "_Toc149556893"  4.	Administrative Benefits Achieved
Using Flexible Permits	  PAGEREF _Toc149556893 \h  32

  HYPERLINK \l "_Toc149556894"  B.	What were the conclusions of the
sources, permitting authorities, and EPA about flexible permits?
PAGEREF _Toc149556894 \h  33

  HYPERLINK \l "_Toc149556895"  C.	What are EPA’s recommendations for
public participation in flexible permitting?	  PAGEREF _Toc149556895 \h
36

  HYPERLINK \l "_Toc149556896"  V.	What are the key elements of this
proposal?	  PAGEREF _Toc149556896 \h  37

  HYPERLINK \l "_Toc149556897"  A.	What are the key elements of proposed
revisions to parts 70 and 71?	  PAGEREF _Toc149556897 \h  37

  HYPERLINK \l "_Toc149556898"  B.	What are the key elements of proposed
revisions to parts 51 and 52? 	  PAGEREF _Toc149556898 \h  40

  HYPERLINK \l "_Toc149556899"  VI.	What changes are we proposing to
parts 70 and 71?	  PAGEREF _Toc149556899 \h  41

  HYPERLINK \l "_Toc149556900"  A.	What is our proposed definition of an
AOS, and how does it provide a source operational flexibility?	  PAGEREF
_Toc149556900 \h  41

  HYPERLINK \l "_Toc149556901"  B.	What information is necessary in a
title V permit application to seek approval of an AOS?	  PAGEREF
_Toc149556901 \h  53

  HYPERLINK \l "_Toc149556902"  C.	What terms and conditions must be
included in the title V permit for approved AOSs?	  PAGEREF
_Toc149556902 \h  60

  HYPERLINK \l "_Toc149556903"  1.	Terms and Conditions to Describe
Approved AOSs	  PAGEREF _Toc149556903 \h  61

  HYPERLINK \l "_Toc149556904"  2.	Terms and Conditions to Assure
Compliance with Applicable Requirements	  PAGEREF _Toc149556904 \h  63

  HYPERLINK \l "_Toc149556905"  a.	Proposed Clarifications to the AOS
Provisions	  PAGEREF _Toc149556905 \h  63

  HYPERLINK \l "_Toc149556906"  b.	Proposed Revisions for ARMs	  PAGEREF
_Toc149556906 \h  63

  HYPERLINK \l "_Toc149556907"  3.	Terms and Conditions to Assure
Compliance with Other Part 70 Requirements	  PAGEREF _Toc149556907 \h
72

  HYPERLINK \l "_Toc149556908"  D.	What are some examples of how AOSs
and advance approvals can be used to provide operational flexibility?
PAGEREF _Toc149556908 \h  75

  HYPERLINK \l "_Toc149556909"  E.	What is the process for adding or
revising advance approvals, AOSs, and ARMs in issued permits?	  PAGEREF
_Toc149556909 \h  86

  HYPERLINK \l "_Toc149556910"  F.	How do the proposed AOS provisions
differ between parts 70 and 71?	  PAGEREF _Toc149556910 \h  87

  HYPERLINK \l "_Toc149556911"  VII.	What changes are we proposing in
parts 51 and 52?	  PAGEREF _Toc149556911 \h  88

  HYPERLINK \l "_Toc149556912"  A.	What are the benefits of Green
Groups?	  PAGEREF _Toc149556912 \h  91

  HYPERLINK \l "_Toc149556913"  B.	What is a Green Group?	  PAGEREF
_Toc149556913 \h  93

  HYPERLINK \l "_Toc149556914"  1.	Defining the Scope of a Green Group
PAGEREF _Toc149556914 \h  93

  HYPERLINK \l "_Toc149556915"  2.	Emissions Limits for Green Groups
PAGEREF _Toc149556915 \h  98

  HYPERLINK \l "_Toc149556916"  3.	Monitoring, Recordkeeping, Reporting,
and Testing (MRRT) Requirements for Green Groups	  PAGEREF _Toc149556916
\h  108

  HYPERLINK \l "_Toc149556917"  4.	Public Participation for Green Group
Designations	  PAGEREF _Toc149556917 \h  110

  HYPERLINK \l "_Toc149556918"  5.	Duration and Renewal of the Green
Group Designations	  PAGEREF _Toc149556918 \h  111

  HYPERLINK \l "_Toc149556919"  6.	How are Green Groups similar to PALs?
  PAGEREF _Toc149556919 \h  117

  HYPERLINK \l "_Toc149556920"  C.	How is a Green Group designation
incorporated into a title V permit?	  PAGEREF _Toc149556920 \h  118

  HYPERLINK \l "_Toc149556921"  D.	What is the legal rationale for Green
Groups?	  PAGEREF _Toc149556921 \h  120

  HYPERLINK \l "_Toc149556922"  E.	What are the conforming regulatory
changes we must make to implement the Green Group concept?	  PAGEREF
_Toc149556922 \h  127

  HYPERLINK \l "_Toc149556923"  F.	What is an example of how a Green
Group might be used in combination with a title V permit?	  PAGEREF
_Toc149556923 \h  129

  HYPERLINK \l "_Toc149556924"  VIII.	What is the effect of these
proposed revisions?	  PAGEREF _Toc149556924 \h  139

  HYPERLINK \l "_Toc149556925"  A.	If these proposed revisions are
finalized, what are the implications for approved part 70 programs?
PAGEREF _Toc149556925 \h  139

  HYPERLINK \l "_Toc149556926"  B.	What are the implications for NSR
programs?	  PAGEREF _Toc149556926 \h  140

  HYPERLINK \l "_Toc149556927"  IX.	Statutory and Executive Order
Reviews	  PAGEREF _Toc149556927 \h  142

  HYPERLINK \l "_Toc149556928"  A.	Executive Order 12866:  Regulatory
Planning and Review	  PAGEREF _Toc149556928 \h  142

  HYPERLINK \l "_Toc149556929"  B.	Paperwork Reduction Act	  PAGEREF
_Toc149556929 \h  142

  HYPERLINK \l "_Toc149556930"  C.	Regulatory Flexibility Act (RFA)
PAGEREF _Toc149556930 \h  145

  HYPERLINK \l "_Toc149556931"  D.	Unfunded Mandates Reform Act
PAGEREF _Toc149556931 \h  146

  HYPERLINK \l "_Toc149556932"  E.	Executive Order 13132:  Federalism
PAGEREF _Toc149556932 \h  147

  HYPERLINK \l "_Toc149556933"  F.	Executive Order 13175:  Consultation
and Coordination with Indian Tribal Governments	  PAGEREF _Toc149556933
\h  148

  HYPERLINK \l "_Toc149556934"  G.	Executive Order 13045:  Protection of
Children from Environmental Health and Safety Risks	  PAGEREF
_Toc149556934 \h  149

  HYPERLINK \l "_Toc149556935"  H.	Executive Order 13211:  Actions That
Significantly Affect Energy Supply, Distribution, or Use	  PAGEREF
_Toc149556935 \h  149

  HYPERLINK \l "_Toc149556936"  I.	National Technology Transfer and
Advancement Act	  PAGEREF _Toc149556936 \h  150

 ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, 70, and 71

[EPA-HQ-OAR-2004-0087,  FRL-XXXX-X]

[RIN 2060-AM45]

Operating Permit Programs and Prevention of Significant Deterioration
(PSD) and Nonattainment New Source Review (NSR); Flexible Air Permitting
Rule

AGENCY:  Environmental Protection Agency (EPA).

ACTION:  Proposed rule.

SUMMARY:  We are proposing to revise the regulations governing State and
Federal operating permit programs required by title V of the Clean Air
Act (CAA or the Act) and the New Source Review (NSR) programs required
by parts C and D of title I of the Act.  These proposed actions are
based, in large part, on the lessons learned through EPA’s pilot
experience in which EPA worked closely with States and sources to
develop flexible air permitting approaches that provide greater
operational flexibility and, at the same time, ensure environmental
protection and compliance with applicable laws.

In our pilot permits, increased flexibility is primarily achieved
through advance approvals under NSR and alternative operating scenarios
(AOSs).  The proposed revisions clarify how this can often be done in
the existing regulatory framework of the operating permit programs.  The
proposed revisions also add major NSR requirements for Green Groups,
which allow future changes to occur within a group of emissions
activities, provided that they are ducted to a common air pollution
control device which is determined to meet “best available control
technology” (BACT) or “lowest achievable emission rate” (LAER), as
applicable and that they are determined to comply with all relevant
ambient requirements.

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

Public Hearing.  If anyone contacts EPA requesting to speak at a public
hearing by [INSERT DATE 21 DAYS AFTER PUBLICATION IN THE FEDERAL
REGISTER], we will hold a public hearing on [INSERT DATE 35 DAYS AFTER
PUBLICATION IN THE FEDERAL REGISTER].  Additional information about the
hearing would be published in a subsequent Federal Register notice.

ADDRESSES:  Comments.  Submit your comments, identified by Docket ID No.
EPA-HQ-OAR-2004-0087, by one of the following methods:

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

Email<EMAIL_ADDRESS>
Fax:<PHONE_NUMBER>.

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

Hand Delivery:  EPA Docket Center, (Air Docket), U.S. Environmental
Protection Agency, 1301 Constitution Ave., NW, Room: B102, Washington,
DC, Such deliveries are only accepted during the Docket(s normal hours
of operation, and special arrangements should be made for deliveries of
boxed information.

Instructions:  Direct your comments to Docket ID No.
EPA-HQ-OAR-2004-0087.  EPA's policy is that all comments received will
be included in the public docket without change and may be made
available online at   HYPERLINK "http://www.regulations.gov"
www.regulations.gov , including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute.  Do not submit information that you consider to
be CBI or otherwise protected through www.regulations.gov or e-mail.
The   HYPERLINK "http://www.regulations.gov"  www.regulations.gov
website is an “anonymous access” system, which means EPA will not
know your identity or contact information unless you provide it in the
body of your comment.  If you send an e-mail comment directly to EPA
without going through   HYPERLINK "www.regulations.gov%20"
www.regulations.gov  your e-mail address will be automatically captured
and included as part of the comment that is placed in the public docket
and made available on the Internet.  If you submit an electronic
comment, EPA recommends that you include your name and other contact
information in the body of your comment and with any disk or CD-ROM you
submit.  If EPA cannot read your comment due to technical difficulties
and cannot contact you for clarification, EPA may not be able to
consider your comment.  Electronic files should avoid the use of special
characters, any form of encryption, and be free of any defects or
viruses.  For additional instructions on submitting comments, go to I C
& D of the SUPPLEMENTARY INFORMATION section of this document.

NOTE:  The EPA Docket Center suffered damage due to flooding during the
last week of June 2006.  The Docket Center is continuing to operate.
However, during the cleanup, there will be temporary changes to Docket
Center telephone numbers, addresses, and hours of operation for people
who wish to make hand deliveries or visit the Public Reading Room to
view documents.  Consult EPA's Federal Register notice at 71 FR 38147
(July 5, 2006) or the EPA website at   HYPERLINK
"http://www.epa.gov/epahome/dockets.htm"
http://www.epa.gov/epahome/dockets.htm  for current information on
docket operations, locations and telephone numbers.  The Docket
Center’s mailing address for U.S. mail and the procedure for
submitting comments to   HYPERLINK "http://www.regulations.gov"
www.regulations.gov  are not affected by the flooding and will remain
the same.

Docket:  All documents in the docket are listed in the index at
HYPERLINK "http://www.regulations.gov"  www.regulations.gov .  Although
listed in the index, some information is not publicly available, i.e.,
CBI or other information whose disclosure is restricted by statute.
Certain other material, such as copyrighted material, is not placed on
the Internet and will be publicly available only in hard copy form.
Publicly available docket materials are available either electronically
in   HYPERLINK "http://www.regulations.gov"  www.regulations.gov  or in
hard copy at the EPA Docket Center (Air Docket), EPA West, Room B102,
1301 Constitution Ave., NW, Washington, DC.  The Public Reading Room is
open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal
holidays.  The telephone number for the Public Reading Room is (202)
566-1744, and the telephone number for the Air Docket is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT:  For issues concerning advance
approvals and AOSs, contact Michael Trutna, Air Quality Policy Division
(C504-01), U.S. Environmental Protection Agency, Research Triangle Park,
NC 27711; telephone<PHONE_NUMBER>, fax number<PHONE_NUMBER>; or
electronic mail at   HYPERLINK<EMAIL_ADDRESS><EMAIL_ADDRESS>.

	For issues concerning ARMs and EPA(s pilot permits, contact David Beck,
Office of Policy, Economics, and Innovation, Innovative Pilots Division
(C304-05), U.S. Environmental Protection Agency, Research Triangle Park,
NC 27711; telephone<PHONE_NUMBER>, fax number<PHONE_NUMBER>; or
electronic mail at<EMAIL_ADDRESS>
	For issues relating to monitoring, recordkeeping, and reporting for
flexible air permits, contact Barrett Parker, Sector Policies and
Programs Division, Measurement Policy Group (D243-03), U.S.
Environmental Protection Agency, Research Triangle Park, NC  27711;
telephone<PHONE_NUMBER>, fax number<PHONE_NUMBER>; or electronic mail at
<EMAIL_ADDRESS>
	For other part 70 issues, contact Ray Vogel, Operating Permits Group,
Air Quality Policy Division (C504-05), U.S. Environmental Protection
Agency, Research Triangle Park, NC 27711; telephone<PHONE_NUMBER>, fax
number<PHONE_NUMBER>; or electronic mail at<EMAIL_ADDRESS>
	For issues relating to Green Groups, contact Dave Painter, New Source
Review Group, Air Quality Policy Division (C504-03), U.S. Environmental
Protection Agency, Research Triangle Park, NC 27711; telephone (919)
541-5515, fax number<PHONE_NUMBER>; or electronic mail at   HYPERLINK
<EMAIL_ADDRESS><EMAIL_ADDRESS>.

	To request a hearing or information pertaining to a hearing on this
document, please contact Pam Long, Air Quality Policy Division, U.S.
EPA, Office of Air Quality Planning and Standards (C504-03), Research
Triangle Park, North Carolina 27711, telephone number<PHONE_NUMBER>,
facsimile number<PHONE_NUMBER>; electronic mail e-mail address:
HYPERLINK<EMAIL_ADDRESS><EMAIL_ADDRESS>.

SUPPLEMENTARY INFORMATION:

General Information

What are the regulated entities?

Entities potentially affected by these proposed actions are facilities
currently required to obtain title V permits under State, local, tribal,
or Federal operating permits programs, and State, local, and tribal
governments that are authorized by EPA to issue such operating permits.
Other entities potentially affected by this proposed action are
facilities required to obtain major NSR permits under State, local,
tribal, or Federal major NSR programs, and State, local, and tribal
governments that issue such permits pursuant to approved part 51 major
NSR programs.  Potentially affected sources are found in a wide variety
of industry groups.  In particular, we believe based on our experience
in implementing our flexible air permit pilot program that these groups
will include, but are not limited to, the following:

Industry Group

SICa

NAICSb

Aerospace Manufacturing

372

336411, 336412, 332912, 336411, 335413

Automobile Manufacturing

371

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

Industrial Organic Chemicals

286

325191, 32511, 325132, 325192, 225188, 325193, 32512, 325199

Chemical Processes

281

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

Converted Paper and Paperboard Products

267

322221, 322222, 322223, 322224, 322226, 322231, 326111, 326112, 322299,
322291, 322232, 322233, 322211

Magnetic Tape Manufacturing

369

334613

Petroleum Refining

291

32411

Other Coating Operations

226, 229, 251, 252, 253, 254, 267, 358, 363

313311, 313312, 314992, 33132, 337122, 337121, 337124, 337215, 337129,
37125, 337211, 337214, 337127, 322221, 322222, 322226, 335221, 335222,
335224, 335228, 333312, 333415, 333319

Paper Mills

262

322121, 322122

Pharmaceutical Manufacturing

283

325411, 325412, 325413, 325414

Printing and Publishing

275

323114, 323110, 323111, 323113, 323112, 323115, 323119

Pulp and Paper Mills

262

32211, 322121, 322122, 32213

Semiconductors

367

334413

Specialty Chemical Batch Processes

282, 283, 284, 285, 286,

287, 289, 386

3251, 3252, 3253, 3254, 3255, 3256,

3259, except 325131 and 325181.

a	Standard Industrial Classification

b	North American Industry Classification System.

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

1. 	Submitting CBI

	Do not submit this information to EPA through www.regulations.gov or
e-mail. Clearly mark the part or all of the information that you claim
to be CBI.  For CBI information in a disk or CD ROM that you mail to
EPA, mark the outside of the disk or CD ROM as CBI and then identify
electronically within the disk or CD ROM the specific information that
is claimed as CBI.  In addition to one complete version of the comment
that includes information claimed as CBI, a copy of the comment that
does not contain the information claimed as CBI must be submitted for
inclusion in the public docket.  Information so marked will not be
disclosed except in accordance with procedures set forth in 40 CFR part
2.

	2.  	Suggestions for Preparing Your Comments.

	When submitting comments, remember to:

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

Follow directions.  The Agency may ask you to respond to specific
questions or organize comments by referencing a Code of Federal
Regulations (CFR) part or section number.

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

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

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

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

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

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

Where Can I get a Copy of This Document and Other Related Information?

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

How Can I Find Information About a Possible Hearing?

	Persons interested in presenting oral testimony should contact Pam
Long, Air Quality Policy Division (C504-03), U.S. EPA, Research Triangle
Park, NC 27711, telephone number<PHONE_NUMBER> or e-mail   HYPERLINK
<EMAIL_ADDRESS><EMAIL_ADDRESS>at least 2 days  in advance
of the public hearing.  Persons interested in attending the public
hearing should also contact Pam Long to verify the time, date, and
location of the hearing.  The public hearing will provide interested
parties the opportunity to present data, views, or arguments concerning
these proposed rules.

E. 	How is this preamble organized?

The information presented in this preamble is organized as follows:

I.	General Information

A.	What are the regulated entities?

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

C.  	Where Can I get a Copy of This Document and Other Related
Information?

D.	How Can I Find Information About a Possible Hearing?

E.	How is this preamble organized?

II.	What is a flexible air permit and the background related to this
action?

A.	What is a flexible air permit?

B.	What is the statutory background?

C.	What is the regulatory background relating to the proposed revisions
to parts 70 and 71?

D.	What is the regulatory background relating to the proposed revisions
to parts 51 and 52?

III.	What is the purpose of this action?

IV.	What experience did we gain from our 12-year pilot permit
experience?

A.	What were the benefits of the pilot permits?

B.	What were the conclusions of the sources, permitting authorities, and
EPA about flexible permits?

C.	What are EPA’s recommendations for public participation in flexible
permitting?

V.	What are the key elements of this proposal?

A.	What are the key elements of proposed revisions to parts 70 and 71?

B.	What are the key elements of proposed revisions to parts 51 and 52?

VI.	What changes are we are proposing to parts 70 and 71?

A.	What is our proposed definition of an AOS, and how does it provide a
source operational flexibility?

B.	What information is necessary in a title V permit application to seek
approval of an AOS?

C.	What terms and conditions must be included in the title V permit for
approved AOSs?

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

E.	What is the process for adding or revising AOSs in issued permits?

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

VII.	What changes are we are proposing in parts 51 and 52?

A.	What are the benefits of Green Groups?

B.	What is a Green Group?

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

D.	What is the legal rationale for Green Groups?

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

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

VIII.	What is the effect of these proposed revisions?

A.	If this proposed revisions are finalized, what are the implications
for approved part 70 programs?

B.	What are the implications for NSR programs?

IX.	Statutory and Executive Order Reviews

A.	Executive Order 12866:  Regulatory Planning and Review

B.	Paperwork Reduction Act

C.	Regulatory Flexibility Act (RFA)

D.	Unfunded Mandates Reform Act

E.	Executive Order 13132:  Federalism

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

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

H.	Executive Order 13211:  Actions That Significantly Affect Energy
Supply, Distribution, or Use

I.	National Technology Transfer and Advancement Act

What is a flexible air permit and the background related to this action?

In this section, we first explain what is a flexible air permit.  We
then provide an overview of the relevant statutory provisions and
describe the regulatory and other actions taken over the course of the
last decade that are relevant to this proposal.

What is a flexible air permit?

A flexible air permit is a title V permit that facilitates flexible,
market-responsive operations at a source through the use of one or more
permitting approaches, while ensuring equal or greater environmental
protection as achieved by conventional permits. In particular, flexible
permitting approaches allow the source, under protection of the permit
shield, to make certain types of physical and operational changes
without further review or approval by the permitting authority.  One
approach includes, for example, obtaining advance approval for
anticipated changes (such as through a minor NSR action), incorporating
the advance approval into the title V permit, and adding terms in the
title V permit as necessary to assure compliance with all other
applicable requirements implicated by the anticipated changes.  Another
approach is to establish one or more alternative operating scenarios
(AOSs) in a title V permit to allow existing emissions units the
flexibility to operate in varying ways and/or at varying rates of
production, where such variations would be subject to different
applicable requirements but would not require prior authorization (i.e.,
advance approval).

For more than a decade, we participated in a pilot flexible air
permitting program with sources and permitting authorities through which
we tested and evaluated various permitting approaches that afford
operational flexibility.  The lessons learned through the pilot program,
in part, served as the basis for our adoption of the plantwide
applicability limitation (PAL) provisions of the 2002 NSR Improvement
rule.  They also serve as the basis for this rule, where we seek to
build upon existing regulatory provisions that afford operational
flexibility.  We believe that the flexible permitting approaches in this
proposed rulemaking provide a path forward for sources to more
effectively and proactively manage their title V and NSR permitting
obligations, while ensuring environmental protection.

What is the statutory background?

There are two aspects of the CAA that are relevant to this proposed
rule:  title V and parts C and D of title I of the Act.  In 1990,
Congress promulgated title V and established the operating permit
program.  That program requires certain stationary sources to obtain
operating permits as a mechanism for gathering all applicable
requirements of the Act for each affected source into one comprehensive
document.  See H.R. Conference Report No. 101-952, reprinted in
U.S.C.C.A.N. 3867, 3877 (1990).

	One of the key purposes of the title V operating permit program is to
enable the source, the State or local permitting authority, EPA, and the
public to gain a better understanding of the requirements of the Act to
which the source is subject.  The ability to assess and achieve
compliance with the law is improved by virtue of having one
comprehensive operating permit containing all applicable requirements
for a source.  The title V permit program does not impose new
substantive air quality control requirements.  It does, however, require
that fees be imposed on sources and that certain procedural measures be
followed, especially with respect to determining compliance with
applicable requirements.  See, e.g., CAA sections 502(b)(3), 503(b)(2),
and 504(a).

The Act affirms that State and local governments have primary
responsibility for air quality.  See CAA section 101(a)(3).  Title V
vests primary responsibility for issuing operating permits with State
and local governments.  See CAA section 502.  Congress required EPA to
promulgate regulations establishing the minimum elements of a title V
operating permits program.  See CAA section 502(b) (articulating ten
minimum elements for State programs).  In establishing such minimum
elements, Congress directed that EPA develop “[a]dequate, streamlined,
and reasonable procedures” for processing and reviewing permit
applications and for the expeditious review of permit actions.  See CAA
section 502(b)(6).

As explained below, EPA promulgated regulations establishing the minimum
requirements for a State operating permit program in 1992.  These
regulations are codified at 40 CFR part 70 and are often referenced as
“part 70.”  In addition to requiring EPA to establish the minimum
elements for the operating permits program, Congress required each State
to develop and submit to EPA for approval an operating permit program
that meets the requirements of the Act and part 70.  See CAA section
502(d)(1).  In areas that do not have an approved State, local, or
tribal title V program, EPA administers the operating permit program as
a Federal program pursuant to regulations set out in 40 CFR part 71.
See CAA section 502(d)(3).  Title V requires that each operating permit
contain terms sufficient to assure compliance with all applicable air
requirements.  See CAA section 504(a).

The other parts of the Act relevant to this rule include part C,
entitled “Prevention of Significant Deterioration of Air Quality”
(typically referred to as “PSD”), and part D, entitled “Plan
Requirements for Nonattainment Areas” (typically referred to as
“nonattainment major NSR”), of title I of the Act.  See CAA sections
160 through169B (part C) and 171 through 193 (part D).  These parts
together are commonly referred to as the major NSR program.  This
program is a preconstruction review and permitting program applicable to
new or modified major stationary sources of air pollutants regulated
under the Act.  The implementing regulations for the program are
contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and part 51, appendix
S.

The PSD provisions apply to new major sources and to major modifications
at existing major sources for pollutants where the area in which the
source is located is in attainment or unclassifiable with the national
ambient air quality standards (NAAQS).  A source that is subject to PSD
must install BACT and perform an air quality analysis and an additional
impacts analysis, and there must be an opportunity for public
participation.  See CAA section 165(a).  The BACT is an emissions
limitation that is based on the maximum degree of control that can be
achieved, as determined on a case-by-case basis for each source
considering energy, environmental, and economic impacts.  See CAA
section 169(3);  40 CFR 51.166(b)(12), 52.21(b)(12), and
51.165(a)(1)(xl).  The source(s air quality analysis must demonstrate
that the source will not cause or contribute to a violation of any NAAQS
or any maximum allowable increase in ambient concentration either for a
Class I area or as established under the PSD program (typically referred
to as (PSD increments().  See CAA section 165(a)(3).

Nonattainment major NSR applies to new major sources and to major
modifications at existing major sources for pollutants where the area in
which the source is located is not in attainment with the NAAQS.
Nonattainment major NSR requires the source to comply with lowest
achievable emission rate ("LAER") and to obtain sufficient emissions
offsets, and there must be an opportunity for public involvement.  See
CAA section 173(a); 40 CFR 51.161.  The LAER is determined for each
source to reflect the more stringent of the following:  (1) the most
stringent emissions limitation that is contained in any State
implementation plan (SIP) for that type of source (if achievable for the
proposed source), or (2) the most stringent emissions limitation that is
achieved in

practice for that type of source.  See CAA section 171(3); 40 CFR
51.165(a)(1)(xiii).

In addition to a major NSR program, States are required to have (minor(
NSR programs, which apply to new and modified sources that do not meet
the emissions thresholds for major NSR.  See section 110(a)(2)(C) of the
Act.  The minor NSR program is part of a State(s implementation plan and
is designed to ensure that the construction or modification of an
affected source does not violate any portion of the SIP and does not
interfere with the attainment of the NAAQS or cause the exceedance of
any applicable PSD increments.

What is the regulatory background relating to the proposed revisions to
parts 70 and 71?

This proposed rule addresses certain permitting mechanisms for providing
operational flexibility.  The concept of operational flexibility is not
a new one.  In July 1992, under the authority of title V of the Act, we
finalized the part 70 State operating permit program regulations.  See
57 FR 32250 (July 21, 1992); 40 CFR part 70.  Those regulations include
operational flexibility provisions, one of which is the AOS provision
found at 40 CFR 70.6(a)(9).  It is this provision that is the primary
subject of these proposed revisions.  This section 40 CFR 70.6(a)(9)
generally provides that any permit issued under part 70 must include
terms and conditions for reasonably anticipated operating scenarios
approved by the permitting authority.  EPA promulgated 40 CFR 70.6(a)(9)
pursuant to the authority of section 502(b)(6) of the CAA, which directs
that operating permit programs include ([a]dequate, streamlined, and
reasonable procedures( for processing and reviewing permit applications
and for the expeditious review of permit actions.

In the final part 70 rule, we emphasized the importance of 40 CFR
70.6(a)(9), noting that a permit that contains approved AOSs (will be a
more complete representation of the operation at the permitted
facility.(  See 57 FR 32276.  We also explained that once a flexible air
permit with approved AOSs is issued, the need for additional permit
modifications will be substantially reduced since the permit will
already contain appropriate terms and conditions to accommodate the
approved operating scenarios.  In the final part 70 rule, we did not
place any restrictions on the types of operations that could qualify as
a reasonably anticipated operating scenario.

Shortly after we finalized the part 70 State operating permit program,
we initiated a pilot title V permit program with interested States, and
our program continues to the present.  See section IV of this preamble
for more discussion.  Companies participating in the pilot program
sought to reduce the cost, time, and delays associated with a permit
revision for each operational change at a facility.  We and the States
sought to increase the sources( operational flexibility, while assuring
compliance with applicable requirements, ensuring environmental
protection, and facilitating P2.  These pilots typically allowed for
both changes to operations of existing emissions units and the addition
of entirely new emissions units, provided that the changes were
sufficiently well described in the permit application so that the
permitting authority could confirm that all applicable requirements were
identified and that the permit contained terms and conditions assuring
compliance with all applicable requirements.

To evaluate the flexible pilot permits program, we conducted a thorough
review of six of the pilot permits for which at the time there was
significant implementation experience.  We reviewed on-site records to
track utilization of the flexible permit provisions, assessed how well
the permits worked, evaluated total emissions reductions achieved, and
analyzed the economic benefits associated with the permits.  Overall, we
found that significant environmental benefits had occurred for each of
the permits reviewed.  At the time of the evaluation, each of the
sources had achieved 25- to 80-percent reductions in actual plantwide
emissions or emissions per unit of production.  We made a series of
findings based on our evaluation of the permits.  See (Evaluation of the

Implementation Experience with Innovative Air Permits( and section IV
of this preamble, which summarizes the findings of this study.

What is the regulatory background relating to the proposed revisions to
parts 51 and 52?

Based on our pilot permit evaluation and our 1996 proposed modifications
to the major NSR program, in December 2002, we finalized the NSR
Improvement rule.  In that rule, we promulgated regulations for PALs in
response to comments received on draft White Paper Number 3.  As
explained in the preamble to the December 2002 final rule, a PAL is an
alternative approach for determining NSR applicability on a plantwide
basis.  Using PALs will allow sources (to respond rapidly to market
changes,( and will (benefit the public and the environment.(  See 67 FR
80206.  Specifically, sources with PALs can make changes without
triggering the major NSR preconstruction permitting requirements,
provided such changes remain below the limit established in their PAL
and do not otherwise violate the requirements of the PAL.  A PAL is an
important technique that is oftentimes used in tandem with flexible
permitting approaches such as advance approvals and AOSs as described
more fully in this proposal.

The major NSR program applies to (major stationary sources,( which
include sources whose emissions limits exceed certain thresholds
established in the statute, and to (major modifications( at those
sources, which are modifications that exceed certain significance levels
established in EPA(s regulations.  Under minor NSR, an owner or operator
applies for a permit to construct or modify a facility, building, or
other emissions unit, where the new construction or modification does
not meet the emissions thresholds for major NSR.  If the proposed
construction or modification is approved, the permitting authority
issues a permit that contains emissions limits and other appropriate
terms and conditions as necessary to protect the NAAQS and the
increments and to assure consistency with the SIP.

Through our pilot experience, we found that State minor NSR requirements
are among the most important in designing a flexible air permit for
sources making frequent physical and operational changes because, absent
an up-front authorization for these changes, an individual review and
approval by the permitting authority is typically required before the
changes can be made.  Any changes authorized under minor NSR must be
incorporated into the title V permit along with permit terms as
necessary to assure compliance with all applicable requirements (for
example, a MACT standard, which would be applicable to the source in
addition to the ones addressed in the advance approval issued under
minor NSR).  The result is that the changes can be implemented, under
protection of the permit shield, without any further review or approval
by the permitting authority.  In some cases, one or more AOSs may be
used to complement an advance approval, for example where the source
anticipates varying operation of the changed existing emissions unit in
a manner that would implicate a set of applicable requirements different
from those of the minor NSR advance approval, or where a different
control approach would not be effective until and unless a particular
change would be made to an existing emissions unit.

Given the provisions of their minor NSR programs, the States in which
EPA conducted flexible permit pilots (“pilot States”) believed that
they could issue construction approval for a wide spectrum of changes
using certain boundary conditions established up front in the minor NSR
permit.  The actual conditions needed to accomplish this varied
depending upon the requirements of the different State minor NSR
programs.  A number of techniques were successfully used in pilot
permits to authorize a category of changes (i.e., a range of possible
types of changes, such as “any of various physical changes to the
rollers, drive mechanism, and other components of the coating section
within a coating line”) under minor NSR, including application of one
or more plantwide emissions caps, designation of an entire process
building or related activities as the (emissions unit( for purposes of
minor NSR, and designation of an existing state-of-the-art emissions
capture and control system as fulfilling State control technology
requirements (where they are applicable) for authorized changes
occurring over the 5-year term of the title V permit.  Pilot States, as
part of granting advance approvals under their existing minor NSR
programs, frequently required sources to send a notice to the permitting
authority contemporaneous with the operation of any entirely new
emissions unit relying upon the advance approval.

Another common technique for achieving advance approval under minor NSR
found in the pilots was the presence of one or more plantwide emissions
caps.  These caps serve to limit the maximum aggregate emissions
associated with the anticipated changes so as to protect relevant
ambient standards and increments and to facilitate an advance approval
of a wide spectrum of changes under minor NSR.  They also serve to limit
the potential to emit (PTE) of the source below certain applicability
thresholds in order to prevent implication of otherwise potentially
applicable requirements (e.g., major NSR) or to function as a PAL (in
the case of an existing major stationary source).

What is the purpose of this action?

The Agency has learned a great deal over the past decade through its
pilot permit program.  In light of that experience, the recent NSR
Improvement rule promulgated in December 2002, and the comments we
received on the proposed revisions to part 70 and draft White Paper
Number 3, we propose revising the part 70 and 71 regulations and
part 51 and 52 regulations.

As explained further below, the proposed revisions to the operating
permit programs of parts 70 and 71 add a definition and clarify
requirements for “alternative operating scenario” (or “AOS”) and
add a definition for (approved replicable methodology( (or “ARM”).
The proposed revisions to the major NSR program add a definition and
codify requirements for Green Groups.

The primary purpose of these revisions to parts 70 and 71 is to build
upon the existing regulatory framework and ensure that the flexible
permitting approaches with which we have experience are more readily and
widely used.  We recognize that many States( minor NSR and part 70
programs may already provide for the flexible permitting approaches
proposed and that such States are currently able to implement these
approaches.  Because of the diversity of existing State minor NSR
programs and our pilot experience indicating the ability of many
programs to advance approve categories of future changes, we are not
proposing any revisions to the rules governing State minor NSR programs
at 40 CFR 51.160 through 51.164.  By undertaking the part 70 rulemaking,
it is not our intention to preclude States from continuing to develop
and use flexible permit approaches, where their current regulatory
structure provides authority to do so.  This rulemaking is instead
intended to encourage the use of advance approvals where available and
appropriate, and to eliminate any uncertainty that may exist with
respect to AOSs and to provide a clear regulatory pathway governing
flexible air permit development in that area by clarifying our 1992 part
70 regulations.

The proposed revisions to parts 51 and 52 affecting major NSR programs
will increase options for flexible permits under that program.  Namely,
the proposed provisions for Green Groups will offer operational
flexibility options for a defined section of a plant.  This option would
augment the plantwide strategy previously promulgated in the NSR
Improvement rule (i.e., PALs).  The proposed revisions would modify the
major NSR regulations in a limited way.  Consistent with the current NSR
requirements, we propose to clarify that the definition of emissions
unit would allow a number of emission activities, meeting certain
criteria, to be treated as a single emissions unit (i.e., a “Green
Group”).  We are proposing to change the current NSR requirements to
provide expressly for Green Groups so as to authorize in a major NSR
permit that emissions increases and changes within such a group can
occur over a 10-year period, provided the increases and changes are
authorized in advance through major NSR and the emissions activities
associated with the Green Group are controlled to the level determined
to be BACT/LAER.  Also, the requirements of 40 CFR 52.21(j)(4) and
51.166(j)(4) requiring reevaluation of BACT for phased construction
projects and of     40 CFR 52.21(r)(2) requiring continuous construction
to commence within 18 months would not apply to NSR permits involving
Green Groups.

We believe that these proposed revisions will increase operational
flexibility, while ensuring environmental protection and compliance with
applicable requirements.  Moreover, based on our pilot experience, we
anticipate that these revisions will promote improved environmental
performance, although we recognize that the nature of the improvements
will depend on the numbers and types of sources that opt to use the
flexible permitting approaches described in this document.

What experience did we gain from our 12-year pilot permit program?

This section summarizes the benefits of the pilot permits; includes an
overview of the sources(, permitting authorities(, and our conclusions
concerning the effectiveness of the pilot permits; and presents our
recommendations regarding public participation in flexible permitting.
Through the pilot permit program, which began in 1993, we sponsored
various projects, including projects undertaken through the Agency(s
(Pollution Prevention in Permitting Program( (P4).  The pilot program
generally involved the issuance of flexible air permits designed to
accommodate operational flexibility.

The pilot permits facilitated operational flexibility by first obtaining
advance approval under NSR.  Frequently the authorizations involved
changes that were to occur under a PAL or other facility-wide cap on
emissions which, once approved by the relevant permitting authority,
served both to assure that major NSR would not be applicable to changes
occurring under the cap and to assure that ambient standards would be
protected consistent with the requirements of minor NSR.  These caps
were then incorporated into the title V permit with appropriate permit
terms and conditions.  In most cases, once these caps were incorporated
into a title V permit, sources did not need to seek additional approvals
from the title V permitting authority prior to implementing the changes
authorized under the caps.  As necessary, the title V permit would also
contain additional terms and conditions needed to assure compliance with
any other applicable requirements applying to such changes.

As noted above, following issuance of the pilot permits, we conducted an
in-depth review of six of the permits.  In selecting the permits to
review, we focused our evaluation on those pilots with sufficient
implementation experience to provide a reasonable historical record of
performance, and we continue to believe that these pilots represent a
sufficiently diverse reference point from which to judge the
effectiveness of flexible air permits over a broad range of sources.
Those reviews involved:  (1) detailed analyses of the sources( and
permitting authorities( experiences developing and implementing the
pilot permits; (2) a thorough review of information available in the
public record at the permitting authority; (3) discussions with source
personnel; (4) site visits to the source and meetings with permitting
authorities; and (5) independent verification of compliance status and
data collection and management techniques, including recordkeeping and
related requirements.

Our analyses revealed several benefits of the flexible permitting
approaches used in the pilots, and those benefits are summarized briefly
below.  We invite comment on any similar or different experiences others
have had in piloting flexible air permits, particularly where these
experiences are relevant to this rulemaking.

What were the benefits of the pilot permits?

This section provides an overview of the environmental, informational,
economic, and administrative benefits of the flexible pilot permits.
For additional information on these and other benefits of the pilot
program, please refer to the (Evaluation of the Implementation
Experience with Innovative Air Permits,( which documents all of our
findings concerning the six pilot permits that we evaluated.

Environmental Improvements Achieved Using Flexible Permits

In our evaluation, we documented several environmental performance
benefits of the flexible pilot permits, including that the permits
facilitated emissions reductions and increased P2 efforts.  In
particular, as discussed further below, the emissions cap framework in
the flexible permits enabled significant reductions in actual plantwide
emissions and/or emissions per unit of production.  For example, of the
five sources that had operated under their flexible permits for 3 or
more years, all five achieved 30- to 80-percent reductions in actual
plantwide emissions and/or emissions per unit of production.  Actual
emissions from the sixth source were reduced by 27 percent in the first
year of operation under its flexible permit, but it is difficult to draw
conclusions based on a single year of data.  One company, using P2,
lowered its actual volatile organic compound (VOC) emissions by 70%
(from 190 tons per year (tpy) to 56 tpy), while increasing production.
This allowed the facility to commit to keeping its VOC emissions below
the major source threshold (i.e., become a (synthetic minor( source) so
that it was no longer subject to major NSR.  Another company lowered its
actual VOC emissions from 1,400 tpy to less than 800 tpy, primarily
through P2 associated with vehicle coatings and plant solvent usage.

We attribute the environmental performance improvement benefits of the
flexible permits to several factors.  First, several companies reported
that the emissions caps had a (focusing effect,( drawing company
personnel(s attention on how to manage most effectively all of the
activities within the plant, even those not subject to regulation, in an
effort to minimize total plantwide emissions.  An emissions cap also
creates incentives for companies to pursue additional emissions
reduction opportunities to increase the margin of compliance, which is
the difference between the level of the emissions cap and the source(s
actual total plantwide emissions.  Larger compliance margins typically
reduce the risk of noncompliance with an emissions cap and create room
under the cap to accommodate future emissions increases related to
production or other operational changes.  The cap on emissions from the
plant, which is set during permitting at a level judged to be
environmentally protective, ensures that such future emissions increases
together with existing emissions will not exceed this protective level.
To obtain a sufficient margin of compliance with these caps, sources
frequently voluntarily controlled emissions on grandfathered units,
which are units that would otherwise not be subject to control, and
increased the stringency of control on regulated units.

Additionally, we found that the use of advance approvals and AOSs
improved operational efficiency at the plants because companies knew in
advance what changes were authorized, making resource allocation more
efficient and accommodating the typically incremental, iterative nature
of industrial process improvements.  We also found that P2-related
projects became more attractive to the companies when advance approved
because such projects could be undertaken without the delay and
uncertainty of future case-by-case approvals.  In addition, P2-related
projects reduced emissions and enabled sources to comply more easily
with emissions limits such as plantwide emissions caps.

Informational Benefits Achieved Using Flexible Permits

 We have consistently maintained that including advance approvals and
AOSs in a title V permit ensures that the permit presents a complete
representation of the operations of the permitted facility.  See 57 FR
32276; July 21, 1992.  By requiring information concerning flexible
permits as part of the permit application, EPA and the permitting
authorities are better able to assess, in aggregate, all proposed
operations and, more significantly, to determine all relevant applicable
requirements and to include in the draft permit terms and conditions for
each approved scenario to assure compliance with those applicable
requirements and the requirements of part 70.  By comparison,
conventional permitting approaches provide for a more narrow,
case-by-case view of facility modifications, soliciting comment only on
the specific change proposed and requiring individual permitting actions
in response to each request by the permittee for a change in the permit.

Our pilot experience confirmed the significant value of presenting a
comprehensive picture of a source(s operations over the term of the
title V permit.  Specifically, we found that with proposed flexible
permits involving changes under a PAL or other emissions cap, permitting
authorities were better able to understand the scope of planned changes
at the source and the maximum, cumulative environmental effects of those
changes.  In addition, the flexible permit applications provided
increased information to permitting authorities and the public in areas
such as plantwide emissions performance and P2 activities, as compared
to information typically available under conventional permit approaches.
 Likewise, permitting authorities indicated that on balance, flexible
air permits enhanced the availability of information to the public
during permit implementation.

Moreover, through the pilots, we found that early public outreach and
involvement can be very useful in situations where new permitting
techniques have not previously been used in a particular jurisdiction.
We encourage permitting authorities to consider early outreach and
public involvement when implementing such permitting techniques until
the techniques become more widely used and public familiarity with them
increases, recognizing that other factors (e.g., permit complexity)
should factor into the permitting authority(s consideration of
supplemental public outreach efforts.

Our evaluation of the six pilot permits also revealed the importance of
reporting related to plantwide applicability limits.  The type of
reporting required in several of the flexible permits is now codified in
the PAL provisions of the December 2002 NSR Improvement rule.

Economic Benefits Achieved Using Flexible Permits

Participating companies in the pilot program reported that a flexible
air permit significantly reduces the uncertainty and transaction costs
associated with the title V permitting process because the source
obtains approval of the changes it reasonably anticipates implementing
during the 5-year term of the permit at one time.  Based on our
evaluation of the six pilot permits, we found that the increased
certainty and reduced transaction costs improved participating
companies( ability to compete effectively in the market and enabled them
to retain, and in some cases, create jobs.  For example, one company
reported that its pilot permit allowed it to remain highly responsive to
the marketplace and thereby avoid either lost sales and/or permanent
loss of market share.  An automotive company indicated that its flexible
permit was a principal factor in the plant(s selection to manufacture an
engine model to be used in the company(s global vehicle assembly
operations, leading to the creation of 700 jobs.  The permit helped the
plant secure the engine contract because it enabled the plant to reduce
the project time line for production of the new engine to 24 months and
to accommodate future changes with minimal delay.

Several companies also indicated that obtaining authorization of
reasonably anticipated changes improved the predictability of change
implementation time frames for project planning and avoided what can be
substantial opportunity costs.  For example, one company reported that
its flexible permit likely saved hundreds of business days associated
with making operation and process changes to ramp up production for new
products, respond to market demands, and optimize production processes.
Industry estimates of the opportunity costs of production downtime and
time delays run as high as millions of dollars in just a few days due to
lost sales and other factors.

Notwithstanding that the implementation of flexible air permits often
was associated with more production-related jobs, pilot companies also
reported that flexible air permits significantly reduced permit-related
staff time and related resource costs because there was no longer a need
to seek and process multiple case-by-case permit actions because the
changes reasonably anticipated at the facility were already included and
approved in the permit.  For example, an automotive company estimated
that it saved approximately 505 hours of staff time during its initial
flexible permit term.  Another pilot company reported permit-related
staff time savings of 1,200 to 1,600 hours per year during its initial
title V permit term.  In both cases, companies reported that the time
savings enabled environmental personnel to focus more time and attention
to other environmental management activities, including P2.  Companies
further indicated that the time necessary to record changes in operating
scenarios in the on-site log, as required by 40 CFR 70.6(a)(9), was
significantly less than the permit-related staff time necessary to
prepare permit applications under a general change-by-change permitting
approach.

Administrative Benefits Achieved Using Flexible Permits

Our pilots evaluation found that the flexible permits resulted in a net
cost savings both for the source, as noted above, and for the permitting
authority.  We specifically found that the resources permitting
authorities expended on processing permitting applications under title V
and the NSR programs were reduced under the pilot program, since the
operational flexibility provisions, like 40 CFR 70.6(a)(9), eliminated
the need to submit a permit application for each operational change.
For example, one permitting authority estimated that each facility
change made pursuant to a flexible permit saved the permitting authority
approximately 20 to 40 hours in staff time that otherwise would have
been incurred had the facility, instead of obtaining the advance
approvals and AOS, sought title V permit modification on a
change-by-change basis.  In fact, permitting authorities reported that
the administrative cost savings during implementation of the pilot
flexible permits indicate that increased use of flexible permitting will
enable them to reduce permitting backlogs and to focus resources on
other higher priority environmental needs.

These cost savings must be put in context of a higher front-end cost to
design an acceptable permit approach to pilot (a cost that should
decrease as more experience with flexible permits occurs in tandem with
a better defined policy).  The two participating permitting authorities
that attempted to quantify this effect believed that, even with the
higher front-end design costs associated with their pilot, the initial
experience suggested there would be a net reduction in the overall
administrative costs associated with these permits after 2-3 years of
implementation.  We believe that the administrative benefits achieved
for the evaluated pilot permits are broadly indicative of the benefits
generally available from flexible air permits.  In fact, as flexible air
permitting becomes more mainstream, we expect the front-end costs to
design such permits to be reduced, resulting in faster recouping of
these expenses and greater benefits over time.

What were the conclusions of the sources, permitting authorities, and
EPA about flexible permits?

The sources that obtained a flexible air permit maintain that such a
permit is a valuable business asset.  These sources regularly relied
upon the operational flexibility provided in the permit to take
advantage of opportunities in the market place.  These sources also
indicated that the following circumstances heightened the need for and
benefits achieved using a flexible air permit:

Short time frames for bringing new products to market (time-to-market
needs).

Need to accommodate rapid shifts of product lines, processes, and
production levels to enable optimal asset utilization in a company(s
network of facilities.

Active advanced manufacturing programs (e.g., lean manufacturing, Six
Sigma, agile manufacturing) that require rapid and iterative changes to
operations and equipment.

Anticipated renovation or expansion projects.

Active P2 programs with continual process improvements.

The permitting authorities in the pilot program concluded that the
permits provided significant environmental performance and
administrative benefits.  They also expressed support of flexible
permitting techniques as a permitting option.  The permitting
authorities believed that flexible permits are particularly effective
when applied to sources with demonstrated operational change needs and
the operational and technical capacity to meet all relevant requirements
associated with advance approvals, AOSs, PALs, and other operational
flexibility provisions.

In general, based on our pilot experience, we believe that sources with
certain characteristics are the ones that can both meet the requirements
of operational flexibility provisions and benefit from them.  These
characteristics include: a strong compliance history, maintenance of a
well-documented and effective environmental management system,
commitment to continuous environmental improvement, attentiveness to P2,
ability to track and manage operational changes and emissions, and the
existence of good community relations.  The types of sources that
exhibit these characteristics typically include, for example, the
members of EPA(s National Environmental Performance Track Program (see
http://www.epa.gov/performancetrack/) and similar State environmental
leadership programs.  Our Performance Track program illustrates our
ongoing commitment to reward and recognize exemplary environmental
performance.

We currently intend to allocate our implementation resources for the
final rule on a priority basis to assist Performance Track facilities
that wish to obtain flexible air permits.  More specifically, we intend
to deploy resources and tools designed to assist Performance Track
facilities in their efforts to capture the opportunities provided
through flexible air permits.  Our efforts to facilitate the
implementation of flexible permits could include, for example, education
and outreach components that would allow Performance Track members to
assess the costs and benefits of a flexible permit.  We also intend to
provide EPA technical resources and expertise through identified points
of contact to facilitate the resolution of technical and other issues
(should any arise) associated with implementing a flexible air permit at
a Performance Track facility.  We encourage State permitting authorities
to consider a similar prioritization of resources when issuing flexible
air permits to sources that are similarly situated to Performance Track
companies.

What are EPA’s recommendations for public participation in flexible
permitting?

	Based on our experience with pilot permits, we believe that flexible
permits provide at least as much environmental protection as
conventional permits and promote superior environmental performance.
Nevertheless, we also recognize that flexible permits will contain
features, such as AOSs, ARMs, advance approval of minor NSR, or Green
Groups, that may not be familiar to the reviewing public.  For this
reason, we recommend that permitting authorities consider using their
discretion to enhance the public participation process when warranted
for a particular flexible permit.  Some ideas for doing so are described
below.

During the permitting process, permitting authorities could consider
making the permit application available to the public soon after
receipt.  We found for these pilot permits that early outreach to the
community, rather than waiting until the draft permit was prepared, was
an effective public participation strategy.

The minimum public comment period required for a title V permit renewal
or significant permit modification is 30 days.  Where a significant
amount of a permit’s content consists of terms to incorporate
operational flexibility, we suggest that you consider expanding the
comment period to 45 days or more.  Note, however, that for some of our
pilot permits, early outreach to the public was sufficient to resolve
community questions and comments early in the process, so that by the
time of the public hearing and comment period no adverse comments were
received.

Finally, in order to ensure adequate technical support and accessibility
for the public in their efforts to understand and comment upon flexible
air permits, we suggest that States provide a principal point of contact
for responding to technical questions and ensure the availability of
draft permits, applications, and technical support documents on an
Internet web site.  We believe that any additional costs here will be
offset by the subsequent administrative cost savings to the permitting
authority resulting from the reduced need to process permit revisions
for sources with flexible permits.

What are the key elements of this proposal?

This section summarizes the key elements of this proposal.  A more
detailed discussion of these elements as well as other proposed
regulatory changes are provided below in sections VI and VII.

What are the key elements of proposed revisions to parts 70 and 71?

There are several key regulatory revisions that we are proposing to
parts 70 and 71.  First, we are proposing to modify 40 CFR 70.6(a)(9)
generally to refer to (alternative operating scenarios,( as opposed to
(operating scenarios.(  In addition, we are proposing to define the term
(alternative operating scenario (AOS)” and codify certain requirements
described in this proposal for AOSs.  Specifically, we propose to define
(alternative operating scenario (AOS)” as a scenario authorized in a
part 70 permit that involves a physical or operational change at the
part 70 source for a particular emissions unit, and that subjects the
unit to one or more applicable requirements that differ from those
applicable to the emissions unit prior to implementation of the change
or renders inapplicable one or more requirements previously applicable
to the emissions unit prior to implementation of the change.

This document also discusses our proposal for (approved replicable
methodologies( (ARMs) and the way in which they may be approved into the
title V permit by the permitting authority.  We are proposing to define
an ARM as part 70 permit terms that: (1) specify a protocol which is
consistent with and implements an applicable requirement, or requirement
of part 70, such that the protocol is based on sound
scientific/mathematical principles and provides reproducible results
using the same inputs; and (2) require the results of that protocol to
be used for assuring compliance with such applicable requirement or
requirement of part 70, including where an ARM is used for determining
applicability of a specific requirement to a particular change.  An ARM,
however, cannot modify an applicable requirement in any way.  As
explained further below, an ARM can be particularly useful in
facilitating the implementation of advance approvals and AOSs, but can
also be used independent of them.

Also in this document, we are proposing that a source include in its
semi-annual monitoring reports under 40 CFR 70.6(a)(3)(iii) information
relating to any AOS and/or ARM implemented during the reporting period.
This information should help permitting authorities remain informed as
to which AOSs and ARMs in the title V permit are being implemented at
the site and at which time.

We are not proposing revisions to any applicable requirement (other than
revisions to parts 51 and 52 providing for Green Groups – see section
VII below) in order to facilitate advance approvals.  As mentioned
above, our pilot experience confirms that obtaining advance approval
under minor NSR is often a critical element in the design of a flexible
air permit.  This experience also suggests that many State minor NSR
programs may already provide the legal authority necessary to issue
minor NSR permits that accommodate various types of operational
flexibility which can be readily incorporated into title V permits.  We
are therefore not proposing any revisions to the minor NSR regulations.
Nonetheless, we encourage States to implement advance approvals under
their existing minor NSR programs as appropriate and to seek additional
authority where they do not currently have such discretion.  Based on
our pilot experience, we also believe that the ability to advance
approve a particular change with respect to other applicable
requirements requiring a specific authorization can often be determined
without further regulatory changes.

Similarly, we are not proposing to revise part 70 to address how advance
approvals might be accomplished.  We believe that part 70 already
requires incorporation of the terms in a permit issued to advance
approve changes under certain applicable requirements.  For example,
permit terms contained in a State’s minor NSR permit are themselves
applicable requirements and, as such, are to be included in the title V
permit for the relevant source.  Frequently, however, the permitting
authority may need to augment the terms of NSR permits authorizing the
advance approval of certain changes in order that these changes can be
made without further review or approval.  These terms would be added as
necessary to assure compliance with other applicable requirements also
implicated by the advance approved changes which were unaddressed in the
specific authorizations obtained for them.  As would be the case for any
other applicable requirement, the part 70 permit must meet the
requirements of part 70 (e.g., monitoring, reporting, and compliance
certification) with respect to advance approvals.  When the title V
permit terms relating to advance approvals are effective, then the
changes which were advance approved would occur under protection of the
permit shield (where available and granted by the permitting authority).

What are the key elements of proposed revisions to parts 51 and 52?

With this document, we propose adding a definition of (Green Group.(  We
also propose to add monitoring, recordkeeping, reporting, and testing
safeguards applicable to Green Groups to enhance the availability of
information and ensure that these groups function as intended.

A Green Group consists of designated emissions activities that are
ducted to one common air pollution control device that is determined to
meet BACT or LAER, as applicable, for the entire group of emissions
activities taken as a whole.  A Green Group is, by definition, a single
emissions unit for purposes of major NSR.  In addition to designated
existing emissions activities, a Green Group may include changes (e.g.,
reconfiguration and/or expansion) to these existing activities and/or
the addition of new emissions activities ducted to the control device,
either of which could result in an increase in capacity and a
significant increase in actual emissions.  To establish a Green Group,
the source must go through the major NSR permitting process and obtain a
permit.  To protect the NAAQS, PSD increments, and Class I areas, the
proposed rules require an annual emissions limit and any necessary
short-term limits for the Green Group, as well as comprehensive
monitoring, reporting, recordkeeping, and testing under NSR for Green
Groups to assure compliance with the limit(s).

What changes are we proposing to parts 70 and 71?

We are proposing revisions to parts 70 and 71 to build upon the existing
framework in 40 CFR 70.6(a)(9), which authorizes AOSs.  As discussed
below in section VI.A, we are proposing to add a definition for AOS and
to provide for the use of consistent terminology for AOSs.  In section
VI.B, we describe the information that the source must provide in a
title V permit application under 40 CFR 70.5(c) when seeking approval of
an AOS, and in section VI.C we discuss the terms that must be included
in a title V permit for an AOS and for an ARM.  Section VI.D presents
two examples of flexible permits using AOSs.  In section VI.E, we
address additional issues related to AOSs, and in section VI.F we detail
the minor differences between the proposed revisions for part 70 and
part 71.

What is our proposed definition of an AOS, and how does it provide a
source operational flexibility?

As mentioned previously, the concept of an AOS is not a new one.  Under
existing 40 CFR 70.6(a)(9), a source may request in its permit
application that the permitting authority approve reasonably anticipated
operating scenarios.  If the permitting authority determines that the
proposed operating scenarios are consistent with the requirements of
part 70 and approves them, it would include those scenarios in the
source(s part 70 permit, and the source may implement them without
further review or approval.  Fundamentally, the permitting authority
must ensure that the proposed operating scenarios are adequately
described such that all applicable requirements associated with each
scenario are identified and appropriate terms and conditions to assure
compliance with these requirements are included in the permit.  In
addition, the permitting authority must ensure that the source obtained
all specific authorizations required under any applicable requirements
(primarily those under minor NSR).  The provisions of 40 CFR 70.6(a)(9)
were promulgated consistent with section 502(b)(6) of the Act, which
mandates the streamlining of the application and permitting processes.

There may be situations where a permitting authority does not approve an
AOS which has been proposed by a source for a particular emissions unit.
 For example, a permitting authority may reject an AOS proposed by a
source if it determines that the source(s description of the scenario is
insufficient to identify all applicable requirements or craft
appropriate terms and conditions to ensure compliance with applicable
requirements, or if required authorizations under applicable
requirements triggered by the AOS have not been obtained.

To clarify our intent regarding AOSs, we propose the following
definition at 40 CFR 70.2:

Alternative operating scenario (AOS) means a scenario authorized in a
part 70 permit that involves a physical or operational change at the
part 70 source for a particular emissions unit, and that subjects the
unit to one or more applicable requirements that differ from those
applicable to the emissions unit prior to implementation of the change
or renders inapplicable one or more requirements previously applicable
to the emissions unit prior to implementation of the change.

Thus, the change at the part 70 source must be physical or operational
in nature and must either subject a particular emissions unit to at
least one new applicable requirement or eliminate at least one
requirement that applied to the unit prior to the change.  In addition,
the change, in order to be eligible for an AOS, must be allowable under
all applicable requirements.  For example, a change allowed under an
applicable MACT standard but also subject to minor NSR would not be
eligible for inclusion in an AOS until the source obtains the necessary
preconstruction approval.  We are proposing this definition not to
change the current requirements for AOSs but rather to foster a common
and consistent understanding of the types of situations that AOSs can
address.

The types of physical or operational changes which could trigger an AOS
can vary widely.  Such changes potentially encompass a wide spectrum of
activities undertaken by a source which cause one or more applicable
requirements to apply (or to no longer apply) to the emissions unit
undergoing the change.  Nonetheless, these changes must be consistent
with any limitations contained in applicable requirements that are
triggered.  Thus, anticipated physical and operational changes must be
described adequately to identify the applicable requirements.

In some cases, physical or operational changes may be exempt from
certain applicable requirements but not from others.  For example, the
New Source Performance Standards (NSPS) and major NSR regulations
specifically exempt from their purview certain types of changes, such as
those that do not reach the threshold for a “modification.”  These
same changes, however, could still implicate other applicable
requirements.  For example, a switch to another fuel which a unit is
already capable of accommodating could trigger a SIP requirement or a
Maximum Achievable Control Technology (MACT) standard, while being
exempt from NSPS and major NSR.  Such SIP and MACT requirements must,
therefore, be identified as applicable requirements in an application
for an AOS governing the fuel switch.

Under this proposal, activities that do not involve a physical or
operational change to the regulated equipment do not constitute an AOS,
even when such change is made to switch between compliance options
provided for in an applicable requirement.  For example, suppose a
source chooses to switch between the compliance options allowed under an
applicable requirement (e.g., a MACT standard or NSPS).  Under the
Printing and Publishing Industry MACT standard (40 CFR part 63, subpart
KK), a product and packaging rotogravure affected source that uses
compliant inks and coatings (i.e., inks and coatings with low HAP
content) may demonstrate compliance for each month by any one of six
compliance options set out in the  standard.  Each of the compliance
options involves slightly different applicable requirements in that
different characteristics of the inks and coatings must be tracked and
different calculations must be carried out monthly to demonstrate
compliance.

We propose that a source may switch between such compliance options
without including AOSs for each compliance option in the its permit.
Rather, the compliance options may simply be included in the permit as
alternative requirements of the applicable standard.  We acknowledge,
however, that this approach may raise issues regarding whether an
operational change at the source has triggered the change in the
compliance option.  For example, subpart KK also provides for compliance
options that use an add-on control device rather than compliant inks and
coatings.  If a source alternates between compliant materials (using one
of the six associated compliance options) and noncompliant materials
(complying through use of a thermal oxidizer), should this be
characterized primarily as a shift for compliance purposes that does not
require an AOS in the permit, or as an operational change requiring an
AOS?  What if the source alternates among the compliance options for
compliant inks and coatings based on the characteristics of the
materials that it uses in each month?  We request comment on the issue
of whether a switch from one compliance option to another is better
characterized as allowable under an applicable requirement or as a
physical or operational change that triggers a different applicable
requirement and therefore requires an AOS.  Regardless of the approach
ultimately adopted, we strongly recommend that permitting authorities
and sources work together to include in the permit those compliance
options allowed under the applicable requirement that a source may
reasonably anticipate using during the term of the permit.  Whether
incorporated as AOSs or simply as compliance alternatives, we believe
that a title V permit can be fashioned to allow a source to switch
between compliance options without needing a permit revision to do so.

The second criterion for a shift in operating scenario under this
proposed definition is that the triggering change must cause: (1) at
least one applicable requirement to apply which was not in effect before
the change; and/or (2) at least one applicable requirement to no longer
apply as a result of the change.  (Applicable requirement( as defined in
40 CFR 70.2 includes all the separate emissions reduction, monitoring,
recordkeeping, and reporting requirements of a particular standard or
SIP regulation and all the terms and conditions of preconstruction
permits issued pursuant to regulations approved or promulgated through
rulemaking under title I of the Act.

As such, AOSs can be quite effective where existing units at sources
simply make physical or operational changes that do not require any
advance approval, but they nonetheless implicate one or more different
applicable requirements.  This may occur, for example, where an existing
boiler is permitted to combust different fuels, which implicate
different sets of applicable requirements.  We elaborate on this
situation below in section VI.D, Example 1.  Example 2 in that section
presents a situation where AOSs are used in conjunction with advance
approvals.

Under the second criterion above, AOSs are often separate and distinct
from advance approvals.  For example, we propose that the addition of a
new emissions unit pursuant to an advance approval does not require an
AOS, unless the particular unit, once operational, requires the
flexibility to make subsequent physical or operational changes that will
cause applicable requirements to apply that are different from those
applicable to the authorized baseline scenario for the new unit upon
operation.  We believe that construction and operation of a new unit
authorized in an advance approval does not represent a shift in
operating scenario for the unit, but rather represents beginning its
initial or baseline operation.  However, we solicit comment on whether
such new unit additions should instead be characterized as AOSs.

Similarly, incorporation in a part 70 permit of an advance approval
contained in an authorizing NSR permit for a physical or operational
change to an existing emissions unit frequently would not require an
accompanying AOS, where the terms of the NSR permit containing the
advance approval are effective for the unit upon issuance of the part 70
permit.  For example, suppose a source, in the process of renewing its
part 70 permit, obtains a minor NSR permit that advance approves a
change to an existing emissions unit, and the NSR permit includes new
requirements (such as an increased level of control and associated MRRT)
that do not currently apply to the unit in its baseline operations.  If
the source agrees to include the new NSR requirements in its part 70
permit effective upon issuance and, notably, prior to making the
authorized change, no AOS is needed to supplement the advance approval.
This is because no applicable requirements will begin to apply, or cease
to apply, when the authorized change is subsequently implemented.  One
or more AOSs, however, would be needed in the permit if the source
wishes to build in the flexibility to make subsequent physical or
operational changes at the emissions unit that would trigger new
applicable requirements or cause existing requirements to no longer
apply.

In contrast, the proposed definition of AOS does include scenarios where
the new applicable requirements implicated by advance approved changes
at existing units are not effective until the source actually makes the
change.  For example, an advance approval might authorize modifications
to an existing process line under minor NSR, provided that the source
meets an NSPS applicable to the line upon its modification.
Alternatively, we also propose that this situation could be
characterized as an authorized advance approval that does not require
incorporation of an AOS into the part 70 permit.  That is, no AOS would
be required where implementation of an authorized change irreversibly
triggers the new applicable requirement(s), such that the emissions unit
cannot return to its baseline status in the future.  As such, this
scenario is the creation of a new baseline scenario, analogous to the
addition of a new emissions unit.  We solicit comment on this issue and
the two approaches we have proposed.  We also solicit comment in general
on our proposal to distinguish from AOSs all advance approvals,
including those involving the addition of new units.

An advance approval that is incorporated into a part 70 permit remains
subject to all the conditions of the underlying authorization.  For
example, if an underlying minor NSR permit is contingent upon the source
commencing construction of the authorized change(s) within a certain
period, the authorization in the part 70 permit also will lapse if the
source fails to meet the required deadline.  The source is responsible
for obtaining any extensions or additional authorizations as necessary
to keep the advance approval in the part 70 permit in effect.

In addition to proposing a definition of AOS, we are also clarifying the
regulations, because the regulations use inconsistent terminology when
referring to AOSs.  See e.g., 40 CFR 70.4(d)(3)(xi) (referring to
(alternate scenarios().  For consistency purposes, we propose to use the
term (alternative operating scenarios( (or AOSs) throughout the
regulations when referring to an alternative operating scenario under 40
CFR 70.6(a)(9).  See proposed 40 CFR 70.4(d)(3)(xi) and 40 CFR
70.5(c)(2) and (7).  Note also that any specific “AOS” listed in a
permit refers to a specific operating scenario which differs importantly
from the previous scenario (also contained in the permit) in that one or
more different applicable requirements are implicated by the shift in
operating scenarios.  The scenario that reflects the current operations
and applicable requirements of the source at the time of permit issuance
is called the “baseline scenario.”  The baseline scenario
conceivably could become an AOS in the future as the source might change
initially from the baseline scenario to an AOS and back again to the
original baseline scenario, which would then qualify as an AOS.

A key objective for a source requesting an AOS is to identify and
describe in the title V permit application those changes that are
reasonably anticipated to occur for each emissions unit during the term
of the title V permit.  This proposal clarifies that AOSs can be used to
provide operational flexibility for a variety of situations, including
those ranging from a single specific anticipated alternative scenario to
multiple, somewhat less specific (but still nonetheless bounded)
scenarios.  In all situations, however, the source must describe the
proposed changes and resultant AOSs in its title V permit application
with enough specificity for the permitting authority to identify all
applicable requirements implicated by the AOS and to assure compliance
with those applicable requirements and with the requirements of part 70.

If the permitting authority approves the proposed AOSs for a particular
emissions unit, it will include in the title V permit a description of
the anticipated changes associated with each approved AOS, and for each
AOS will include associated applicable requirements and terms and
conditions that assure compliance with each identified applicable
requirement, as well as terms and conditions that assure compliance with
the related part 70 requirements relevant to the AOSs.

Alternative operating scenarios may vary in their complexity.  At one
extreme is a simple situation where a source seeks approval for
operating scenarios that involve a very specific type and number of
changes to the defined baseline operations of the relevant emissions
unit(s) (i.e., the changes can be described exactly).  An example of
this situation is the combustion of various fuels in a boiler capable of
burning different fuels (where combustion of each type of fuel is
subject to different SIP requirements).  See Example 1 discussed below.

A more complex situation involves sources seeking approval for AOSs
encompassing a wider spectrum of reasonably anticipated changes.
Sources here may not be able to determine precisely in advance (i.e., at
the time of permitting) which of the changes and implicated AOSs will be
implemented for the relevant emissions unit(s).  Depending on future
market behavior, the source eventually may implement all or only some of
these changes.  In all situations, however, the contemplated changes
must be described in the permit application in sufficient detail for the
relevant units such that the permitting authority can determine whether
all applicable requirements have been identified and can craft
appropriate terms and conditions to assure compliance with such
requirements.  Where differing applicable requirements would apply to a
particular emissions unit, depending upon the nature and extent of the
change made, the permit should contain alternative terms and conditions
as needed to assure compliance with all applicable requirements under
each AOS which is reasonably anticipated to occur.

The type of detail needed to describe an AOS and the changes anticipated
to occur under it can vary.  Certainly the need for greater detail is
dependent upon what is required to determine the applicable requirements
implicated by the anticipated changes.  In many cases, the number of
applicable requirements for anticipated changes can be reduced, without
loss of flexibility, through strategic use of boundary conditions on the
AOS.  Boundary conditions help to define the relevant applicable
requirements implicated by authorized physical or operational changes,
which, in turn, enables the permitting authority to assure that all
applicable requirements and requirements of part 70 are contained in the
permit.

Boundary conditions were primarily used in pilots to restrict the scope
of advance approvals.  These conditions typically involved restrictions
that prevented certain applicable requirements from applying to
otherwise authorized changes (e.g., PALs and PTE caps).  In some cases
operational restrictions (such as those on the type or amount of
materials combusted, processed, or stored) were used to delineate the
scope of the advance approvals and/or to identify which applicable
requirements apply under them.  For example, a source might propose to
change the coatings it uses and agree to use only coatings that do not
contain hazardous air pollutants (HAP).  In so doing, the source would
avoid the applicability of a MACT standard applying to coating
operations that are major sources of HAP.  Similarly, limitations can be
placed on the type and/or size of equipment authorized in an advanced
approval or an AOS.  A source owner also may avoid the applicability of
a certain requirement by accepting an emissions limit in the title V
permit that restricts the PTE of the source to below the threshold at
which that requirement would apply.

The approaches approved to assure compliance with applicable
requirements can also affect the implementation of anticipated AOSs and,
therefore, indirectly affect the changes approved under them.  That is,
authorized changes must not adversely impact the effectiveness of the
control devices or monitoring approaches required by an AOS approved in
the permit.  For example, changes involving substances which are not
effectively controlled by the control device required in the permit
could not be approved.  This would also be true for physical or
operational changes which would render inaccurate the monitoring
procedures approved in the permit for assuring compliance with an
applicable requirement (e.g., PTE limit).

Compliance assurance terms for advance approvals can be greatly
simplified where the applicable requirements can be streamlined (i.e.,
the compliance terms are based on the most stringent requirement
applicable to the proposed changes and are effective upon permit
issuance).  In guidance generally referred to as (White Paper Number 2,(
we interpreted our part 70 rules to allow sources to streamline multiple
applicable requirements that apply to the same emissions unit(s) into a
single set of requirements that assure compliance with all the subsumed
applicable requirements.  If all the applicable requirements that apply
to a set of changes are streamlined in the permit and the permitting
authority approves the proposed streamlining, the source need only
comply with the streamlined requirement.  This benefits the source by
simplifying compliance requirements contained in the permit.  In
addition, streamlining can benefit the environment.  For example, where
differing emissions limits apply to a group of emissions units ducted to
a common control device, the streamlined limit for the group would be
the most stringent of the applicable emissions limits, and the source
would have to comply with that limit at all times.

It should be noted that changing between AOSs cannot be used as a
defense to circumvent applicable requirements nor to avoid an
enforcement action.  In particular, it is not a defense to enforcement
of any AOS requirements or associated permit terms and conditions that
the source could have complied under a different AOS.  For example, a
source cannot switch to a different AOS for which it is in compliance to
avoid or defend against the enforcement consequences of noncompliance
with a previous operating scenario.

What information is necessary in a title V permit application to seek
approval of an AOS?

Because the application forms the basis for the content of the title V
permit, the discussion below is relevant to the content of a permit that
authorizes AOSs.  This section clarifies the requirements for a complete
application and discusses minor proposed revisions to these
requirements.

The provisions of 40 CFR 70.5(c) contain the information that must be
submitted in a complete title V permit application, including
information concerning proposed AOSs.  We are proposing minor revisions
to 40 CFR 70.5(c) to clarify how certain aspects of the requirements in
that section should be addressed when a source applies for approval of
AOSs.

Under the provisions of 40 CFR 70.5(c), the source generally must
describe the emissions of all regulated air pollutants (as defined at 40
CFR 70.2) from any emissions unit, identify all applicable requirements
that apply to each emissions unit, and describe how it will meet these
applicable requirements.  The source must provide this information for
existing operations (i.e., baseline operations) and for any reasonably
anticipated changes for which an AOS is proposed.  The description of
AOSs in title V permit applications may vary depending on the situation
(as previously discussed).  However, in every case the level of detail
in the description must be sufficient for the permitting authority to
write permit terms and conditions that assure compliance with all
applicable requirements and the requirements of part 70 that will apply
to the proposed AOS.  See 40 CFR 70.5(c)(3)-(7); 40 CFR 70.6(a)(9)(iii).
 If the source adequately describes proposed AOSs in the part 70 permit
application and the permitting authority includes them in the permit
consistent with 40 CFR 70.6, the source may subsequently implement the
physical and operational changes under protection of the permit shield
(where available and granted by the permitting authority) without
triggering the permit modification provisions of 40 CFR 70.7.

Similarly, the source must meet the provisions of 40 CFR 70.5(c)
concerning advance approvals which are to be incorporated into the title
V permit.  Where a change is authorized in an NSR permit and the permit
contains terms which would be effective upon issuance of the title V
permit and would assure compliance with all applicable requirements,
then a straightforward incorporation of the terms of the NSR permit into
the title V permit is all that is necessary.  However, where the NSR
advance approval terms would be effective upon title V permit issuance
but would not address some other requirement(s) that will apply to the
NSR-authorized changes (e.g., a MACT standard), then additional
information about the changes relative to these other requirements must
be provided to the permitting authority in the part 70 application.  The
permitting authority would then develop permit terms sufficient to
assure compliance with all requirements applicable to the NSR-approved
changes as part of the title V permit issuance, modification, or renewal
process.  Use of a streamlined limit is one acceptable approach when
requested by the source.

We are proposing to revise 40 CFR 70.5(c)(2) and (7) to use the term
(AOS( in the interest of consistent terminology.  Existing 40 CFR
70.5(c)(2) uses the term (alternate scenario,( while existing 40 CFR
70.5(c)(7) uses (alternative operating scenario.(  We believe that
revising these paragraphs to use consistent terminology, along with
proposing a definition for (AOS( and conforming changes in other
sections, will improve the clarity of the affected paragraphs and reduce
any confusion.

We are also proposing to revise 40 CFR 70.5(c)(3)(iii), (c)(7), and
(c)(8) to clarify our intent regarding the information that must be
included in an application that proposes AOSs for approval by the
permitting authority.  The proposed revisions to each of these sections
are described below, along with the rationale for proposing them.

The introductory text in 40 CFR 70.5(c) states generally that the
application must include information for each emissions unit.  Existing
40 CFR 70.5(c)(3)(iii) further requires that the application provide the
emissions rate in tpy and in such terms as are necessary to establish
compliance consistent with the applicable reference test method.  We are
proposing to clarify this regulatory requirement as it applies to
sources that employ an emissions cap (e.g., PALs, PTE, Green Groups).
In particular, we are proposing that for the operation of any emissions
unit authorized under an annual emissions cap, a source can meet 40 CFR
70.5(c)(3)(iii) by reporting the aggregate emissions associated with the
cap.  For example, a source may take a plantwide cap on its PTE so that
it will not become a major source for purposes of PSD, thereby assuring
that PSD will not apply to any changes made at the source.  For purposes
of the title V permit application and this emissions cap, the source
need not provide individual tpy figures for any new or modified
emissions units authorized under minor NSR.  Rather, emissions from such
units would be reported in the title V permit application as part of the
aggregate emissions under the PTE cap.  Additional information may,
however, be required to describe the scope of any changes authorized in
minor NSR to occur under any emissions cap or to provide additional
information relevant to other requirements applicable to these changes.

Under the proposed approach, an emissions cap can act as a constraint on
annual emissions from each emissions unit under the cap as well as on
the aggregated emissions from the group of units.  That is, in the
extreme, a unit could emit up to the full amount of the cap if all other
units under the cap had zero emissions.  Thus, for a group of emissions
units under an annual emissions cap, the 40 CFR 70.5(c)(3)(iii)
requirement for unit-by-unit tpy figures can be met by reporting in the
permit application that the emissions cap represents the upper limit on
emissions both from each unit in the group and from the entire group.
This proposed revision to 40 CFR 70.5(c)(3)(iii) simply clarifies that
in this particular situation, more specificity is not needed.  Reporting
emissions data in the above proposed manner in the title V permit
application is permissible (including in the case of a plantwide
emissions cap), except where the permitting authority determines that
more specific tpy information is needed (e.g., where an applicable
requirement for a specific emissions unit depends on the emissions type
or level).

We are proposing to revise 40 CFR 70.5(c)(7) in two ways.  The existing
language in 40 CFR 70.5(c)(7) specifies that the application must
include (additional information as determined to be necessary by the
permitting authority to define alternative operating scenarios
identified by the source pursuant to 40 CFR 70.6(a)(9) of this part or
to define permit terms and conditions implementing 40 CFR 70.4(b)(12) or
40 CFR 70.6(a)(10) of this part.(  First, we propose to modify the
existing language to clarify that the permitting authority can require
additional information from the source not only for adequately defining
the AOS, but also, as necessary, to craft permit terms and conditions
implementing the proposed AOSs under 40 CFR 70.6(a)(9).  We believe that
this proposed revision is implicit in the existing language of 40 CFR
70.5 (e.g.,       40 CFR 70.5(c)(5)), but that a clarification is
appropriate.

Second, we propose to revise 40 CFR 70.5(c)(7) to clarify that the
application must include documentation demonstrating that the source has
obtained all specific authorizations required under the applicable
requirements relevant to any proposed advance approvals or AOSs, or a
certification that the source has submitted a complete application for
obtaining such authorizations.  Based on our pilot experience, we expect
that proposed advance approvals and certain AOSs will involve one or
more of the following applicable requirements:  minor NSR, major NSR,
and section 112(g) of the Act.  These applicable requirements all
require permits or other authorizations prior to construction or
modification of a source.  (In some cases, the overall approach might be
to avoid triggering applicable requirements that require additional
authorizations, such as by adopting a PAL or accepting a PTE limit.)

It is important to stress that an AOS merely incorporates authorizations
given under applicable requirements and does not independently authorize
changes that are subject to review and require specific approval.  For
this reason, we are proposing the above revision in the application
requirements, along with a related revision to the AOS provisions of 40
CFR 70.6(a)(9), stating that the permitting authority cannot approve an
AOS until all of the necessary authorizations required under the
relevant applicable requirements have been obtained.  It is possible to
process the title V permit and, where needed, a corresponding NSR permit
concurrently, but the title V permit approving an AOS cannot be issued
before any necessary preconstruction approval has been obtained.

Some applications for AOSs and advance approvals may also contain
information needed to establish one or more (approved replicable
methodologies( (ARMs).  In section VI.C.2.b of this preamble, we discuss
ARMs and their incorporation into part 70 permits.  An ARM is an
objective protocol for determining values pertaining to compliance or
applicability requirements, such as temperature or emissions.  Approved
replicable methodologies are permit terms that are consistent with and
implement an applicable requirement or requirement of part 70.  A source
that wishes to have an ARM included in its permit must provide
sufficient information in its application to define the replicable
methodology, its intended function, the instructions for its use, and
the type of data required for its implementation.  See 40 CFR
70.5(c)(5)-(c)(7).  See section VI.C.2.b for more information on ARMs.

Finally, we are proposing to revise 40 CFR 70.5(c)(8), which requires
each part 70 permit application to include a compliance plan.  The
existing paragraph addresses applicable requirements with which the
source is in compliance, applicable requirements that will become
effective during the permit term (e.g., a newly promulgated emission
standard), and applicable requirements with which the source is not in
compliance at the time of permit issuance.  We are proposing to revise
this section in two places to clarify that such plans must address AOSs
when applications include them.  This proposal would add language to
clarify that, for applicable requirements associated with an AOS, the
compliance plan must contain a statement that the source will meet such
requirements upon implementation of the AOS or, if a requirement becomes
applicable after implementation of the AOS, in a timely manner.  We
believe that this revision appropriately fills a gap in the existing
language.  See proposed 40 CFR 70.5(c)(8)(ii)(D) and (iii)(D).

We solicit comment on whether the proposed rule revisions noted above
provide sufficient clarity as to how the application requirements of 40
CFR 70.5(c) are to be applied to sources that seek approval of AOSs
and/or incorporation of advance approvals.  We also seek comment on
whether the proposed revisions are necessary or if additional revisions
are needed to ensure that permit applications contain sufficient detail
to identify all applicable requirements associated with an AOS and/or
advance approval.  If you believe that additional regulatory revisions
are needed, please identify the proposed change and explain why it is
needed.

What terms and conditions must be included in the title V permit for
approved AOSs?

Existing 40 CFR 70.6 details the required content of a title V permit,
including the requirements for reasonably anticipated operating
scenarios.  In this section of the preamble, we discuss how the existing
permit content requirements of 40 CFR 70.6 apply to AOSs and how the
rule revisions we are proposing are consistent with this intent.

To standardize the terminology in 40 CFR 70.6, we are proposing to use
the term (alternative operating scenario( (or its acronym “AOS”)
throughout 40 CFR 70.6(a)(9) as we have done in the other sections of
the rule.  The proposed revisions to 40 CFR 70.6(a)(9) also clarify that
the title V permit must contain terms and conditions to describe the
AOSs, to assure compliance with the applicable requirements implicated
by the AOSs, and to assure compliance with the requirements of part 70.
Finally, as explained below, we are proposing to modify 40 CFR
70.6(a)(1) to clarify that ARMs are one type of operational requirement
or limitation that assures compliance with applicable requirements.
These items are discussed below.

As previously mentioned, no AOS is needed where the changes would occur
under an advance approval contained in an authorizing permit whose terms
are incorporated in the part 70 permit, as well as any other applicable
requirements which would apply to the advance approved changes, and
those terms are effective upon issuance of the part 70 permit.  For
example, our pilot experience suggests that no additional flexibility
provisions may be needed in a title V permit beyond the incorporation of
NSR permit terms establishing an advance approval under minor NSR and a
PAL or PTE limit that prevents the applicability of major NSR.  On the
other hand, AOSs can be particularly useful either where: (1) a new or
existing unit with frequently changing operations would be subject to
certain emissions standards in different ways depending on the type of
materials used, rate of production, and type and/or amount of product
produced; or (2) an existing unit would be subject to an applicable
requirement associated with an advance approved change only upon
implementation of the authorized change.

Terms and Conditions to Describe Approved AOSs

If the permitting authority approves an AOS, the permit must include a
description of the baseline operating scenario for each included
emissions unit, the authorized physical or operational changes included
in each AOS, and the applicable requirements that apply under each
scenario (including those requirements newly applying or not applying as
a result of the authorized changes).  Expectations for AOS descriptions
in the permit are similar to those previously identified for AOS
descriptions in complete applications.  As mentioned previously, the
type of detail in such descriptions and the need for one or more
boundary conditions can vary depending on the nature of the change and
the applicable requirements implicated by the changes.  A permit with an
AOS for a particular emissions unit normally would include a description
of the unit operating in its baseline mode of operation.  For each
approved AOS, the physical and operational changes which have been
authorized should then be identified relative to this baseline
operation.  In all cases, the description of each AOS must be adequate
to link the triggered applicable requirements to the terms which assure
compliance with them.

We are proposing revisions to 40 CFR 70.6(a)(9) to clarify what
constitutes an acceptable description for an AOS (see proposed revision
to 40 CFR 70.6(a)(9)(iii)).  We are also proposing a revision to 40 CFR
70.6(a)(9)(iii) to make clear that the permitting authority cannot
approve an AOS until all of the necessary authorizations relevant to the
applicable requirements have been obtained, that is, until the source
has been approved to proceed by the permitting authority where such
prior authorization is required (e.g., approvals under major and minor
NSR and section 112(g) of the Act).   Finally, as mentioned, where a
source is unable to predict, at the time of permit issuance, which of
several reasonably anticipated changes it actually will make, it can
seek approval for a range of changes and applicable requirement
combinations at a particular emissions unit by including multiple AOSs.

Terms and Conditions to Assure Compliance with Applicable Requirements

In this section, we discuss our proposal related to permit content to
assure compliance with all applicable requirements.

Proposed Clarifications to the AOS Provisions

The provisions of 40 CFR 70.6(a)(9)(iii) require that, for each AOS for
an emissions unit, the permit must contain terms and conditions to
assure compliance with all the applicable requirements that apply to the
emissions units operating in that AOS.  This means that the permit must
include, for each relevant emissions unit, the applicable emissions
limits, compliance approaches, and monitoring, recordkeeping, reporting,
and testing (MRRT) requirements as required by the applicable
requirements as well as those required otherwise under 40 CFR 70.6(a)(3)
(e.g., periodic monitoring) for the compliance approaches.  In addition,
the permit must incorporate all advance approvals, such as those
authorized under NSR, as well as the description of changes authorized
in each AOS as described above.  For a permit containing more than one
AOS for an emissions unit, the permit must contain a clear description
of each one so that there is no confusion with respect to which AOS is
implicated at any given time.

Proposed Revisions for ARMs

As stated, title V permits are required to assure compliance with all
applicable requirements.  Sometimes, changes occur at a source that may
cause the need to recalculate/update a value used either in determining
compliance of the source with an applicable requirement or in
determining the applicability of a requirement.  An advance approval or
an AOS can incorporate flexibility in a permit, but the scope of changes
that can be authorized in them can be severely limited with respect to a
particular applicable requirement, if the changes require case-by-case
review/approval procedures and possible permit revision in order to
ensure ongoing compliance with all applicable requirements.  To
facilitate implementation of advance approvals and AOSs, and to
encourage other permitting techniques that reduce in general the need
for permit modifications (in a manner consistent with part 70), we are
proposing  the use of an ARM that has been approved by a permitting
authority and incorporated into a title V permit.

In particular, we are proposing to define (approved replicable
methodology( or (ARM( at 40 CFR 70.2 as title V permit terms that: (1)
specify a protocol which is consistent with and implements an applicable
requirement or requirement of part 70, such that the protocol is based
on sound scientific/mathematical principles and provides reproducible
results using the same inputs; and (2) require the results of that
protocol to be used for assuring compliance with such applicable
requirement or requirement of part 70, including where an ARM is used
for determining applicability of a specific requirement to a particular
change.  Within the scope of this definition, an ARM may be used to
assure that a given requirement does not apply in a particular
situation.

The terms of an ARM must specify when the ARM is to be used, the
applicable methodology (e.g., equation or algorithm) and the purpose for
which the output obtained upon the execution of the prescribed
methodology will be used (e.g., to determine compliance with an
applicable requirement or to modify the level of the parameters used to
determine compliance in the future).  All necessary terms and conditions
must be included in the permit at the time the ARM is approved so that
no permit revision will be required in the future to implement the ARM.

It is important to emphasize that an ARM, like any provision of a part
70 permit, cannot modify, supersede, or replace an applicable
requirement, including, but not limited to, any monitoring,
recordkeeping, or reporting required under applicable requirements.
Instead, ARMs are a strategic approach for incorporating into a title V
permit relevant applicable requirements and the requirements of part 70.
 The ARM provides a method for obtaining and updating information
consistent with the intent of applicable requirement(s) or
requirement(s) of part 70 in such a manner so as to avoid the need to
reopen or revise the permit to incorporate the updated information.  As
such, an ARM must work within and be consistent with the applicable part
70 rules that govern permit revisions.

The protocol to obtain information under an ARM must be objective and
scientifically valid and reliable – such as an EPA test method or
monitoring method (usually specified in the applicable requirement
itself.)  Note that an ARM also includes the instructions governing how
the results of the protocol are to be used.  For example, an ARM could
specify that firebox temperature measurements taken during a performance
test of a thermal oxidizer be used to revise a previously imposed
minimum firebox operating temperature of the oxidizer.

We believe that ARMs are authorized under title V of the Act and its
implementing regulations.  Section 502 sets forth the minimum elements
for a State operating permit program.  Among other things, section 502
provides that that for a State operating permit programs to be approved,
the permitting authority must have adequate authority to (issue permits
and assure compliance by all sources required to have a permit . . .
with each applicable standard, regulation or requirement( under the Act.
 See CAA section 502(b)(5)(A).  Section 504(a) of the Act also requires
that each title V permit contain (enforceable limitations and standards
. . . and such other conditions as are necessary to assure compliance
with applicable requirements of this Act, including the requirements of
the applicable implementation plan.(  The Act further provides that any
State operating permit program must include (adequate, streamlined, and
reasonable procedures . . . for expeditious review of permit actions.(
See CAA section 502(b)(6).

The part 70 regulations implement these requirements.  Section 70.4 sets
forth the required elements for a State operating permit program.  Such
State programs must provide for the issuance of permits that contain
appropriate terms and conditions that assure compliance with all
applicable requirements and the requirements of part 70.  See generally
40 CFR 70.4(3)(i)-(ii), (v).  The threshold requirement that a part 70
permit contain terms and conditions that assure compliance with
applicable requirements and the requirements of part 70 is also
reflected in other parts of the part 70 regulations.  See, e.g., 40 CFR
70.5(c)(4)-(5), 70.6(a)(1)(i), 70.6(a)(9)(iii).  For example, 40 CFR
70.6(a)(1) provides that the permit include (those operational
requirements and limitations that assure compliance with all applicable
requirements.(  Section 70.6(a)(1)(i) further provides that the permit
shall identify the origin and authority for each term and condition.
See 57 FR 32275  ((Section 70.6(a)(1)(i) requires that the permit
reference the authority for each term and condition of the permit.
Including in the permit legal citations to the provisions of the Act is
critical in defining the scope of any permit shield, since the permit
shield, if granted, extends to the provisions of the Act included in the
permit.().  An ARM, as proposed now, constitutes permit terms designed
to assure compliance with applicable requirements or the requirements of
part 70 and accordingly falls squarely within the authority of title V
and its implementing regulations.

In our pilot experience, we found that some permitting authorities
already use part 70 permit terms (similar to ARMs) that assure
compliance with applicable requirements or the requirements of part 70,
are self-implementing, and avoid the need for the source to seek
multiple permit revisions.  Based on our experience in the pilot program
with such permitting techniques and in an effort to encourage efficient
permitting techniques, we propose to define an ARM in the manner
described above.

Under the proposed ARM definition, an ARM may be used to implement an
applicable requirement.  As an example of one type of ARM, consider a
source subject to the MACT standard for Paper and Other Web Coating (40
CFR part 63, subpart JJJJ), which requires a 95 percent reduction in HAP
emissions for existing sources.  Like many emission standards, subject
JJJJ requires the source to assess ongoing compliance with the emissions
limit by monitoring an operating parameter of the air pollution control
device.  Where a source uses a thermal oxidizer to comply with the
emissions limit, the rule requires the source to conduct a performance
test to demonstrate initial compliance and to demonstrate ongoing
compliance by continuously monitoring the combustion temperature in the
combustion chamber of the oxidizer.  To establish the minimum combustion
temperature that will serve as the basis for future compliance
determinations, subpart JJJJ requires the source to monitor the
combustion temperature throughout the performance test, and to calculate
the average combustion temperature achieved by the oxidizer during the
test.  Provided that the performance test demonstrated compliance with
subpart JJJJ, the average combustion temperature determined during the
test is established as the minimum temperature limit for the oxidizer in
the permit.  This value may change with each successive performance test
that demonstrates compliance.

A source subject to subpart JJJJ proposes to use an ARM consistent with
this standard to accommodate anticipated changes in the operating
parameter limit resulting from future performance demonstrations without
requiring a permit revision.  The ARM would consist of the test methods
and procedures specified under subpart JJJJ for demonstrating compliance
and determining the minimum oxidizer temperature which indicates
compliance with the standard (as described in the paragraph above).
Upon approval of the ARM into the permit, the source would no longer be
required to revise the permit each time it conducted a performance
demonstration to place the most recent temperature value indicative of
compliance on the face of the permit.  Instead, the permit would require
the source to: (1) use the ARM (i.e., the test methods and procedures
required under subpart JJJJ) to determine the temperature value
indicative of compliance; (2) maintain records of this temperature; and
(3) use this temperature for all compliance monitoring and reporting
purposes dictated by subpart JJJJ, until and unless the permittee
implements the ARM again.  If the permitting authority for the source
requires regular performance tests, the schedule for such tests also
could be included in the ARM.

The MACT General Provisions (40 CFR part 63, subpart A) also apply in
part to sources subject to subpart JJJJ.  The General Provisions include
the following provisions related to conducting performance tests:
requirements for notifications; quality assurance (including submission
of a site-specific test plan as requested by the permitting authority);
the test method audit program; conduct of tests; and data analysis,
recordkeeping, and reporting.  The ARM does not abrogate such procedural
requirements, it simply incorporates these requirements in the permit.

A second type of ARM may be used in a part 70 permit to ensure that a
legal limit requested voluntarily by the source effectively constrains
the source’s PTE below a certain threshold so as to avoid the
applicability of certain requirements.  By complying with such PTE
limits, sources demonstrate on an ongoing basis that they are not
subject to a requirement that would otherwise be triggered at a
particular emissions threshold.  Some PTE limits are applicable
requirements (e.g., if imposed by a SIP program or as a condition of an
NSR permit).  In addition, part 70 operating permits can be used as a
legal mechanism for establishing EPA and citizens’ authority to
enforce terms and conditions limiting a source’s PTE.  See 40 CFR
70.6(b)(1).  Permitting authorities have some discretion in fashioning
such terms and conditions.  We believe that the ARM concept could be
used to establish effective PTE limits in agreement with 40 CFR
70.6(b)(1).

As an example of how the ARM concept can be used to assure compliance
with a PTE limit, consider a source in the process of renewing its title
V permit that proposes to take a PTE limit of 99 tpy on its VOC
emissions to avoid being classified as a major VOC source.  The PTE
limit, once approved and incorporated into the title V permit, has the
effect of exempting the source from major NSR requirements that only
apply to existing major VOC emitters.  To assure compliance with the 99
tpy PTE limit, the source proposes a quantification methodology to the
permitting authority by which the source would determine total VOC
emissions on an ongoing basis.  In this instance, the source will
determine VOC emissions with an equation that sums all the individual
VOC emissions from each emissions unit.  Provided that this methodology
relies on objective, repeatable protocols (i.e., the method of
calculating the individual units’ VOC emissions is clear) it can
become an ARM when approved by the permitting authority and included in
the title V permit.  The ARM would include requirements governing when
the procedures were to be used and how the values to be input into the
equation would be determined.

We found permit terms, similar to ARMs, to be useful in maintaining the
effect of the advance approvals found in the flexible permit pilots.
Two of the pilot permits contained replicable testing procedures.  These
procedures, once implemented, determined the control device operating
parameter values that the source must monitor to demonstrate compliance
with capture and destruction efficiency requirements (i.e., the
applicable requirement).  Without the replicable testing procedures in
the permit, those values would have been included on the face of the
permit, and the source would have had to seek a permit revision each
time it repeated the testing procedures and the operating parameter
values changed.  Another pilot permit specified the process by which an
emissions factor could be updated and used to determine whether the
source’s emissions remained under a PTE cap.  By including this
process (replicable testing and/or emissions factor updating procedures)
in the permit instead of specific operating values and emissions
factors, the source could update those values and indicate compliance
based on the latest results consistent with the replicable testing
procedures in the title V  permit, and forego a permit revision each
time the values change.

In addition to proposing a definition of an ARM, we also propose
modifying 40 CFR 70.6(a)(1) to include a reference to ARMs, because
ARMs are an example of permit terms that assure compliance with
applicable requirements.  Although we do not believe that the proposed
regulatory change to 40 CFR 70.6(a)(1) is needed, given that all permits
must include terms that assure compliance with applicable requirements
and the requirements of part 70, we are proposing the change to promote
clarity.  We recognize

that we could modify other provisions of part 70, such as 40 CFR
70.6(a)(9), to include a reference to ARMs, but given the structure and
content of the existing regulations, we do not believe the such
additional changes are needed.  We solicit comment, however, on whether
additional regulatory changes would be useful to encourage the use of
this efficient permitting technique.

Terms and Conditions to Assure Compliance with Other Part 70
Requirements

In addition to the terms and conditions to assure compliance with all
applicable requirements, the permit must contain terms and conditions
that assure compliance with the requirements of part 70.  Section
70.6(a)(9)(i) currently requires “the source, contemporaneously with
making a change from one [AOS] to another, to record in a log at the