[Federal Register: August 21, 2006 (Volume 71, Number 161)]
[Proposed Rules]
[Page 48695-48750]
[DOCID:fr21au06-34]

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Part V

Environmental Protection Agency

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40 CFR Parts 49 and 51

 Review of New Sources and Modifications in Indian Country; Proposed
Rule

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 49 and 51

[EPA-HQ-OAR-2003-0076; FRL-8210-4]
RIN 2060-AH37

Review of New Sources and Modifications in Indian Country

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) proposes to
promulgate a Federal Implementation Plan (FIP) under the Clean Air Act
(the Act) for tribes in Indian country. The FIP would include two basic
air quality regulations for the protection of communities in Indian
country. The first rule would apply to minor stationary sources and
minor modifications at major stationary sources in Indian country
(minor NSR rule). The second rule would apply to all new major
stationary sources and major modifications located in areas of Indian
country that are designated as not attaining the National Ambient Air
Quality Standards (NAAQS) (nonattainment major NSR rule). These rules
would be implemented by EPA, or a delegate tribal agency assisting EPA
with administration of the rules, until replaced by an EPA-approved
tribal implementation plan for an area of Indian country.

DATES: Comments. Comments must be received on or before November 20,
2006. Under the Paperwork Reduction Act, comments on the information
collection provisions must be received by OMB on or before September
20, 2006.
    Public Hearing. If anyone contacts us requesting to speak at a
public hearing by September 11, 2006, we will hold a public hearing.
Additional information about the hearing would be published in a
subsequent Federal Register notice.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2003-0076, by one of the following methods:
     http://www.regulations.gov. Follow the on-line

instructions for submitting comments.
     E-mail<EMAIL_ADDRESS>     Fax:<PHONE_NUMBER>.
     Mail: Attention Docket ID No. EPA-HQ-OAR-2003-0076, U.S.
Environmental Protection Agency, EPA West (Air Docket), 1200
Pennsylvania Avenue, Northwest, Mailcode: 6102T, Washington, DC 20460.
Please include a total of 2 copies. In addition, please mail a copy of
your comments on the information collection provisions to the Office of
Information and Regulatory Affairs, Office of Management and Budget
(OMB), Attn: Desk Officer for EPA, 725 17th St., NW., Washington, DC
20503.
     Hand Delivery: U.S. Environmental Protection Agency, EPA
West (Air Docket), 1301 Constitution Avenue, Northwest, Room B-102,
Washington, DC 20004, Attention Docket ID No. EPA-HQ-OAR-2003-0076.
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-
2003-0076. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
http://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 http://www.regulations.gov or e-mail. The http://www.regulations.gov Web site

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 http://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.
    Docket: All documents in the docket are listed in the http://www.regulations.gov
 index. Although listed in the index, some

information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, will be publicly available only in hard copy.
Publicly available docket materials are available either electronically
in http://www.regulations.gov or in hard copy at the U.S. Environmental

Protection Agency, Air Docket, EPA/DC, 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 (202) 566-
1742.

FOR FURTHER INFORMATION CONTACT: For technical information, contact Raj
Rao, 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 (919)
541-5509, electronic mail e-mail address<EMAIL_ADDRESS>To request a
public hearing or information pertaining to a public hearing on this
document, contact Ms. Pamela S. 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:
<EMAIL_ADDRESS>

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does This Action Apply to Me?

    Entities potentially affected by this proposed action include
owners and operators of emission sources in all industry groups located
in Indian country, EPA, and tribal governments that are delegated
administrative authority to assist EPA with the implementation of these
Federal regulations. Categories and entities potentially affected by
this action are expected to include:

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             Category                NAICS a                     Examples of regulated entities
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Industry..........................       4471  Gasoline station storage tanks and refueling.
                                         5614  Lumber manufacturer support.
                                        21211  Coal mining.
                                        31332  Surface coating operation.
                                        33712  Furniture manufacture.
                                        56221  Medical waste incinerator.
                                       115112  Repellent and fertilizer applications.
                                       211111  Natural gas plant.
                                       211111  Oil and gas production.
                                       211112  Fractionation of natural gas liquids.
                                       212234  Copper mining and processing.
                                       212312  Stone quarrying and processing.
                                       212313  Stone quarrying and processing.
                                       212321  Sand and gravel production.
                                       221112  Power plant-coal-fired.
                                       221119  Power plant-biomass fueled.
                                       221119  Power plant-landfill gas fired.
                                       221210  Natural gas collection.
                                       221210  Natural gas pipeline.
                                       321113  Sawmill.
                                       321911  Window and door molding manufacturer.
                                       323110  Printing operations.
                                       323113  Surface coating operations.
                                       324121  Asphalt hot mix plants.
                                       325188  Elemental phosphorus plant.
                                       325188  Sulfuric acid plant.
                                       331314  Secondary aluminum production and extrusion.
                                       331492  Cobalt and tungsten recycling.
                                       332431  Surface coating operations.
                                       332812  Surface coating operations.
                                       421320  Concrete batching plant.
                                       422510  Grain elevator.
                                       422710  Crude oil storage and distribution.
                                       422710  Gasoline bulk plant.
                                       486110  Crude oil storage and distribution.
                                       486210  Natural gas compressor station.
                                       562212  Solid waste landfill.
                                       811121  Automobile refinishing shop.
                                       812320  Dry cleaner.
Federal government................     924110  Administration of Air and Water Resources and Solid Waste
                                                Management Programs.
State/local/tribal government.....     924110  Administration of Air and Water Resources and Solid Waste
                                                Management Programs.
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a North American Industry Classification System.

    This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. To determine whether your facility is regulated by this action,
you should examine the applicability criteria in the proposed minor and
major NSR programs for Indian country, proposed 40 CFR 49.153 and
49.168, respectively. If you have any questions regarding the
applicability of this action to a particular entity, contact the person
listed in the preceding FOR FURTHER INFORMATION CONTACT section.

B. What Should I Consider as I Prepare My Comments for EPA?

    1. Submitting CBI. Do not submit this information to EPA through
http://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. Send or deliver information
identified as CBI only to the following address: Roberto Morales, OAQPS
Document Control Officer (C404-02), U.S. EPA, Research Triangle Park,
NC 27711, Attention Docket ID No. EPA-HQ-OAR-2003-0076.
    2. Tips 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.

C. 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 http://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
http://www.epa.gov/nsr and on the tribal air home page at http://www
.epa.gov/oar/tribal.

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

    Persons interested in presenting oral testimony should contact Ms.
Pamela Long, New Source Review Group, Air Quality Policy Division
(C504-03), U.S. EPA, Research Triangle Park, NC 27711, telephone number
(919) 541-0641 or e-mail<EMAIL_ADDRESS>at least 2 days in advance of
the public hearing. Persons interested in attending the public hearing
should also contact Ms. 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. Overview of Rule

    In this rulemaking, we \1\ are proposing to fill a regulatory gap
that currently exists in Indian country. We are proposing two new
source review (NSR) rules under which the reviewing authority will
issue pre-construction permits for certain stationary sources of air
pollution in Indian country. These proposed rules would provide
additional regulatory tools for us to use in implementing the Act in
Indian country. The minor NSR rule would apply to new and modified
minor sources and to minor modifications at major stationary sources.
Sources subject to this rule would apply control technology, if any, as
determined by the reviewing authority on a case-by-case basis. In rare
instances at the discretion of the reviewing authority, such sources
may also be required to submit an air quality analysis as part of their
permit application. We are proposing to establish minor NSR thresholds
so that only minor sources with a potential to emit (PTE) equal to or
higher than these thresholds would be subject to this rule.
Additionally, this rule would allow otherwise major stationary sources
in Indian country to voluntarily accept emission limitations on their
PTE to become ``synthetic minor sources.'' Such synthetic minor sources
would include sources that emit hazardous air pollutants (HAP). In such
a case, they would not be subject to major source MACT regulations
under 40 CFR part 63. Any limitations on PTE must be enforceable as a
practical matter (that is, legally and practically enforceable).
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    \1\ In this proposal, the term ``we'' refers to the EPA and the
term ``you'' refers to stationary sources of air pollution and their
owners and operators.
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    Under the nonattainment major NSR rule, affected sources would be
required to comply with the provisions of 40 CFR part 51, appendix S, a
transitional rule which generally applies to areas that do not have a
State Implementation Plan (SIP). Sources subject to this rule would be
subject to requirements for Lowest Achievable Emission Rate (LAER)
control technology, emissions offsets, compliance certification, and
net air quality benefit analysis. Due to the limited number of sources
in Indian country, offsets are not generally available. We have
proposed options for addressing the lack of availability of offsets in
Indian country.
    The information presented in this preamble is organized as follows:

I. General Information
    A. Does This Action Apply to Me?
    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. Overview of Rule.
II. Purpose
III. Background
    A. The New Source Review (NSR) Program
    1. What are the general requirements of the major NSR program?
    2. What are the general requirements of the minor NSR program?
    B. Status of Air Quality Programs in Indian Country
    C. Consultation With Tribal Representatives
IV. Proposed Rules for Indian Country
    A. Minor NSR Program
    1. What is a minor source and which minor sources are subject to
this rule?
    2. What is a modification and what modifications are subject to
this rule?
    3. What are the minor NSR thresholds and how did we develop
them?
    4. Are any emissions units and activities at stationary sources
exempt from this rule?
    5. What are the permit application, control technology, and air
quality analysis requirements, and what is the permit issuance
process?
    6. When are modifications subject to this rule?
    7. Why do we believe that an allowable-to-allowable test is
appropriate for minor sources?
    8. Is your existing minor source subject to this rule?
    9. How are ``synthetic minor sources'' subject to this rule?
    10. How would section 112(g) case-by-case MACT determinations be
addressed by this rule?
    11. What are the proposed requirements for public participation
in the permitting process?
    12. What are the monitoring, recordkeeping, and reporting
requirements?
    13. What are the criteria for general permits, what source
categories generally qualify for them, and what are the permit
application requirements for a general permit?
    14. What is the administrative and judicial review process
proposed for this program?
    B. Major NSR Program in Nonattainment Areas of Indian Country
    1. What are the requirements for major source permitting under
appendix S?
    2. What are the options we are proposing to address the lack of
available offsets in Indian country?
    3. What are the proposed public participation requirements for
this program?
    4. How do I meet the statewide compliance certification
requirement of the Act?
V. Legal Basis, Statutory Authority, and Jurisdictional Issues
    A. What is the basis for our authority to implement these
programs?
    B. How does a tribe receive delegation to assist EPA with
administration of the Federal minor and major NSR rules?
    C. What happens to permits previously issued by States to
sources in Indian country?
VI. 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 & Safety Risks
    H. Executive Order 13211: Actions That Significantly Affect
Energy Supply, Distribution, or Use
    I. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
    J. National Technology Transfer Advancement Act
VII. Statutory Authority

II. Purpose

    The purpose of today's rulemaking is to ensure that air resources
in Indian country will be protected in the manner intended by the Act
as amended in 1990 by establishing a permitting program for

stationary sources in Indian country. Currently in Indian country,
there is no permitting mechanism for new or modified minor sources;
minor modifications at major sources; or new major stationary sources
or major modifications of regulated NSR pollutants in nonattainment
areas. In addition, there is no minor source permitting mechanism for
major stationary sources looking to voluntarily limit emissions to
become synthetic minor sources \2\ or for approving case-by-case
maximum achievable control technology (MACT) determinations. Today's
proposed rules will fill this regulatory gap and provide regulatory
certainty to allow for environmentally sound economic growth in Indian
country. By establishing this FIP for Indian country, we will provide
more consistency with the requirements and programs of the States and
thus create a more level regulatory playing field for owners and
operators within and outside of Indian country. We are proposing these
permit programs pursuant to section 110(a)(2)(C), part D of title I,
and section 301(d) of the Act.
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    \2\ Sources located within the exterior boundaries of Indian
reservations in Idaho, Oregon, and Washington can apply for a non-
Title V operating permit to establish synthetic minor status under
the FIP established for those reservations. See 40 CFR 49.139 and 40
CFR part 49, subpart M.
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III. Background

A. The New Source Review (NSR) Program

1. What are the general requirements of the major NSR program?
    The major NSR program contained in parts C and D of title I of the
Act is a preconstruction review and permitting program applicable to
new major stationary sources and major modifications at such sources.
In areas not meeting health-based NAAQS and in ozone transport regions
(OTR), the program is implemented under the requirements of part D of
title I of the Act. We call this program the ``nonattainment'' major
NSR program. In areas meeting the NAAQS (``attainment'' areas) or for
which there is insufficient information to determine whether they meet
the NAAQS (``unclassifiable'' areas), the NSR requirements under part C
of title I of the Act apply. We call this program the Prevention of
Significant Deterioration (PSD) program. Collectively, we also commonly
refer to these programs as the major NSR program. These rules are
contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and part 51,
appendices S and W.
    For newly constructed, ``greenfield'' sources, the determination of
whether a source is subject to the major NSR program is based on the
source's PTE. The Act, as implemented by our rules, sets applicability
thresholds for major sources in nonattainment areas. These thresholds
are 100 tons per year (tpy) of any pollutant subject to regulation
under the Act, or smaller amounts, depending on the nonattainment
classification. For attainment areas the thresholds are 100 or 250 tpy,
depending on the source type. A new source with a PTE at or above the
applicable threshold amount ``triggers,'' or is subject to, major NSR.
    For existing major sources, major NSR applies to a ``major
modification.'' For a modification to be major, the following three
criteria have to be met:
    (1) A physical change in or change in the method of operation of a
major stationary source must occur;
    (2) The increase in emissions resulting from this change must be
significant (equal to or above the significance levels defined in 40
CFR 52.21(b)(23)); and
    (3) The increase in emissions resulting from the change must be a
significant net emissions increase. In other words, when the increase
from the project is added to other contemporaneous increases or
decreases in actual emissions \3\ at the source, the net emissions
increase must be significant (equal to or above the significance levels
defined in 40 CFR 52.21(b)(23)).
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    \3\ In approximate terms, ``contemporaneous'' emissions
increases or decreases are those that have occurred between the date
5 years immediately preceding the proposed physical or operational
change and the date that the increase from the change occurs. See,
for example, 40 CFR 52.21(b)(3)(ii).
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    Major sources and major modifications subject to nonattainment
major NSR must apply state-of-the-art emissions control technologies,
including any pollution prevention measures, to achieve the LAER. The
LAER is based on the most stringent emission limitation in the
implementation plan of any State, or achieved in practice, for the
source category under review.
    Each major source subject to nonattainment major NSR must also
``offset'' its emissions increase by obtaining emissions reductions
from other sources in the area, or in an area of equal or higher
nonattainment classification that contributes to nonattainment in the
subject source's area. The ratio of the offset relative to the proposed
increase must be at least one-to-one and is based on the severity of
the area's nonattainment classification. For ozone and particulate
matter less than 10 microns in aerodynamic diameter (PM-10), the more
polluted the air is where the source is locating or expanding, the
greater is the required offset ratio. The emissions reductions to be
used as offsets must be surplus (not otherwise required by the Act),
quantifiable, federally enforceable, and permanent. See sections 173(a)
and (c) of the Act and 40 CFR 51.165(a)(3).
    Additionally, each major nonattainment NSR permit applicant must
also conduct an analysis of ``alternative sites, sizes, production
processes, and environmental control techniques demonstrating that the
benefits of the proposed emissions source significantly outweigh the
environmental and social costs of its location, construction, or
modification.'' Moreover, each major nonattainment NSR permit applicant
must demonstrate that all other major stationary sources under her/his
control in the same State are in compliance or on a schedule of
compliance with all emission limitations and standards of the Act.
    Under the PSD program for attainment areas, a major source or
modification must apply Best Available Control Technology (BACT), which
may be based on pollution prevention techniques. In addition, the
source must analyze the impact of the project on ambient air quality to
assure that no violation of the NAAQS or PSD increments will result,
and must analyze impacts on soil, vegetation, and visibility. Sources
or modifications that would impact Class I areas (e.g., national parks)
may be subject to additional requirements to protect air quality
related values (AQRVs) that have been identified for such areas.
2. What are the general requirements of the minor NSR program?
    Section 110(a)(2)(C) of the Act requires that every SIP include a
program to regulate the construction and modification of stationary
sources, including a permit program as required by parts C and D of
title I of the Act, to ensure attainment and maintenance of NAAQS.
Parts C and D address the major NSR program for major stationary
sources, and the permitting program for minor stationary sources is
addressed by section 110(a)(2)(C) of the Act. We commonly refer to the
latter program as the ``minor NSR'' program. A minor stationary source
means a source whose PTE is lower than the major source applicability
threshold for a particular pollutant as defined in the applicable
nonattainment major NSR program or PSD program.

    The Federal requirements for minor source programs are outlined 40
CFR 51.160 through 51.164. States must develop minor source programs to
attain and maintain NAAQS. The Federal regulations for minor source
programs are considerably less detailed than the requirements for major
sources. As a result, there is a wider variety of programs and
requirements for these ``nonmajor'' preconstruction activities.
    Section 110(a)(2)(C) of the Act provides us with a broad degree of
discretion in developing a program to regulate new and modified minor
stationary source construction activities in Indian country.

B. Status of Air Quality Programs in Indian Country

    As we have discussed in previous rulemaking actions which affect
Indian country, in the absence of an EPA-approved program, we are
authorized to develop a FIP to protect air quality by directly
implementing provisions of the Act throughout Indian country. See,
e.g., 59 FR 43958-61 (August 25, 1994), 63 FR 7262-64 (February 12,
1998), and 62 FR 13750 (March 21, 1997). Previously, we had already
promulgated rules establishing requirements for major stationary
sources in attainment areas and have issued PSD permits in Indian
country (See 40 CFR 52.21).
    Under the Act and the Tribal Authority Rule (TAR) (See 40 CFR part
49, subpart A), eligible tribes may seek approval of their own PSD
programs for their reservations and/or for other areas under their
jurisdiction. Currently, no tribe is administering an EPA-approved PSD
program. Therefore, we implement the PSD program in Indian country.
Unlike for the PSD program, there is currently no FIP to implement
either the nonattainment major NSR program or the minor NSR program in
Indian country. Hence, there is a regulatory gap in Indian country.
Today's proposed rule will allow us to fully implement the NSR program
in Indian country. We are proposing the minor NSR program at 40 CFR
49.151 through 49.165 and the nonattainment major NSR program at 40 CFR
49.166 through 49.175. It is important to recognize, however, that even
if we adopt a Federal program that applies in Indian country, the
tribes may still develop Tribal Implementation Plans (TIPs), similar to
SIPs, to implement these programs. If a tribe develops a TIP to
implement NSR, the TIP, once it is approved, will replace the Federal
program as the requirement for that area of Indian country and the
tribe will become the reviewing authority.
    Sources that obtain enforceable emission limitations can avoid
major source status by reducing their PTE below the applicable major
source thresholds. Such sources are commonly referred to as ``synthetic
minors.'' The practice of creating synthetic minor sources to avoid
major NSR and title V is common under most State and local minor NSR
permitting programs. However, outside of Idaho, Oregon, and Washington,
no such minor source permitting mechanism is currently available in
Federal regulations for Indian country.\4\ We therefore believe that
inclusion of this provision in the proposed rules would significantly
benefit large sources in Indian country by providing them with a means
to legally avoid more stringent major NSR rules otherwise required by
title I of the Act. We are establishing this mechanism for both
stationary sources of regulated NSR pollutants and HAPs.
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    \4\ See footnote 2 for more information on the FIP that is in
place in within the exterior boundaries of Indian reservations in
these three States.
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C. Consultation With Tribal Representatives

    Prior to undertaking this rulemaking, we sought to include tribes
early in the rulemaking process. On June 24, 2002, we sent
approximately 500 letters to tribal leaders seeking their
recommendations for effective consultation and their involvement in
developing this rule.
    We received responses from 75 tribes. Of these 75 tribes, 69
designated an environmental staff member to work with us on developing
the rules. Aside from the designated staff, many tribal leaders asked
that we keep them informed of our progress through e-mail, meetings
with the EPA Regional Offices, newsletters, and Web sites. However, 53
percent of the tribal leaders also requested direct phone calls or
conference calls to discuss the subject. Only 16 percent of the
respondents requested face-to-face consultation. Of these, only six
tribes requested senior EPA staff to meet with tribal leaders.
    As a result of this feedback, we developed a consultation plan that
included three meetings held at the reservations of the Menominee Tribe
in Wisconsin, the Mohegan Tribe in Connecticut, and the Chehalis Tribe
in Washington. A fourth meeting was held in conjunction with the
Institute of Tribal Environmental Professionals' (ITEP) 10th
anniversary meeting in Flagstaff, Arizona. In addition to conducting
these meetings, we also visited tribal environmental staff in Indian
country. Over 30 tribes attended these meetings. As part of our
outreach efforts to the tribes, we participated in numerous national
and regional forums including the National Tribal Forums sponsored by
the ITEP, two National Tribal Air Association meetings, and at meetings
with tribal consortia, such as the National Tribal Environmental
Council, United Southern and Eastern Tribes, Inter-Tribal Environmental
Council, Inter Tribal Council of Arizona, and others.
    Although much of our effort focused on outreach to the tribes, we
also interacted with State and local air pollution control agencies
during development of this rule. We had two meetings with the State and
Territorial Air Pollution Program Administrators and the Association of
Local Air Pollution Control Officers (STAPPA/ALAPCO) to present the
draft rules.

IV. Proposed Rules for Indian Country

A. Minor NSR Program

    Today's action proposes provisions for a minor NSR program in
Indian country. We propose to codify these provisions at 40 CFR 49.151
through 49.165. Our primary goal in developing this proposed rule is to
ensure that air resources in Indian country will be protected in the
manner intended by the Act. In addition, we seek to establish a
flexible preconstruction permitting program for minor stationary
sources in Indian country that is comparable to that which applies
outside of Indian country, in order to create a more level regulatory
playing field for owners and operators within and outside of Indian
country.
    It is important to note, however, that outside of Indian country
there is a great deal of variation among State minor NSR permitting
programs. As a result, it would be impossible to create a single
program that creates precisely equivalent regulations among all areas
of Indian country and the surrounding State areas. Instead, we designed
the proposed rules to ensure that stationary sources in Indian country
would operate with a reasonable level of air pollution control, if
necessary, and in such a manner to ensure that air resources in Indian
country would be protected.
    We are not attempting through this proposed rulemaking to establish
a new set of minimum criteria that an eligible tribe, or a State, would
need to follow in developing its own minor source permitting program.
Rather, this proposal simply represents how we would implement the
program in Indian country in the absence of an EPA-approved
implementation plan. However, if a tribe is developing its own program,
this can serve as one example of a program that meets the objectives

and requirements of the Act. We are proposing a minor source permitting
program that addresses, on a national level, many environmental and
regulatory issues that are specific to Indian country. We understand
that States and eligible tribes may face different issues, and may
therefore choose to develop different programs for their own State or
Tribal Implementation Plans.
1. What is a minor source and which minor sources are subject to this
rule?
    A minor source means a source whose PTE is lower than an applicable
major source threshold. For the NSR program in Indian country, the
major source thresholds are defined in the PSD program (See 40 CFR
52.21) and in today's proposed nonattainment major NSR program (see
proposed 40 CFR 49.167), as applicable, and differ for attainment areas
and nonattainment areas for the same pollutant. For example, in
attainment areas the major source threshold for Nitrogen Oxides
(NOX) for a source is 250 tpy, unless the source belongs to
a source category that is listed in the major NSR rules (See 40 CFR
52.21(b)(1)(i)(a)), in which case the major source threshold is 100
tpy. In contrast, the major source threshold for NOX in
ozone nonattainment areas can vary from 10tpy in an extreme ozone
nonattainment area to 100 tpy in a marginal ozone nonattainment area. A
source can be a major source for some pollutants and a minor source for
others.
    Today, we are proposing to establish a minor NSR threshold as
provided in section IV.A.3 of this preamble. The proposed rule would
apply to only those minor sources whose PTE is equal to or greater than
the minor NSR threshold for the regulated NSR pollutant. Such sources
would include (1) New minor sources, (2) modified minor sources, and
(3) synthetic minor sources including HAP sources. A source's PTE for a
pollutant is expressed in tpy and generally is calculated by
multiplying the maximum hourly emissions rate in pounds per hour (lbs/
hr) times 8,760 (which is the number of hours in a year) and dividing
by 2,000 (which is the number of pounds in a ton), unless the source is
restricted by permit conditions that are enforceable as a practical
matter.
    Section IV.A.6 of this preamble includes detailed flowcharts to aid
you in determining if a proposed new source would be subject to the
proposed rule. The flowcharts differentiate between attainment areas
and nonattainment areas because the applicability criteria are
different for PSD and nonattainment major NSR.
2. What is a modification and what modifications are subject to this
rule?
    For the purposes of this rule, a modification is defined at
proposed 40 CFR 49.152(d) as (any physical or operational change at a
stationary source that would cause an increase in the allowable
emissions of the affected emissions units for any regulated NSR
pollutant or that would cause the emission of any regulated NSR
pollutant not previously emitted.( The following exemptions would
apply:
     A physical or operational change does not include routine
maintenance, repair, or replacement.
     An increase in the hours of operation or in the production
rate is not considered an operational change unless such increase is
prohibited under any federally-enforceable permit condition or other
permit condition that is enforceable as a practical matter.
     A change in ownership at a stationary source is not
considered a modification.
    Note that this definition differs from the term ``modification'' as
used in the major NSR program, primarily in that it is based on an
increase in allowable emissions rather than actual emissions. Parts C
and D of title I of the Act ``the statutory basis for the major NSR
program` refer to section 111(a)(4) of the Act [the definition of
``modification'' for purposes of the new source performance standards
(NSPS) program] to define ``modification'' for purposes of the major
NSR program. In a recent decision, the D.C. Circuit Court of Appeals
ruled that, based on the wording of the definition of ``modification''
in section 111(a)(4) of the Act, the applicability of major NSR to
modifications must be based on changes in actual emissions (State of
New York, et al., v. U.S. EPA, June 24, 2005). However, because the
statutory basis for the minor NSR program is section 110(a)(2)(C) of
the Act, which does not define or refer to a definition of
``modification,'' we believe that we have discretion in defining the
term as we think it best for the minor NSR program in Indian country
that we are proposing today. We do not believe that the recent decision
of the D.C. Circuit Court of Appeals applies to minor NSR programs. We
seek comment on whether our proposed definition of modification is
appropriate for minor NSR for minor sources.
    This rule would apply to certain modifications at minor sources and
to minor modifications (not major modifications as defined in proposed
40 CFR 49.167 and in 40 CFR 52.21) at major sources. How such
modifications would be addressed under the proposed rule is explained
in section IV.A.6 of this preamble. Section IV.A.6 also includes
detailed flowcharts to aid you in determining if a proposed
modification would be subject to the proposed rule.
3. What are the minor NSR thresholds and how did we develop them?
    A review of several State minor NSR programs indicated that a
number of State programs have established cutoff levels or minor NSR
thresholds, below which sources are exempt from their minor NSR rules.
We believe that such an approach is also appropriate in Indian country.
Section 110(a) (2)(C) of the Act requires minor NSR programs to assure
that the NAAQS are attained and maintained. Applicability thresholds
are proper in this context provided that the sources and modifications
with emissions below the thresholds are inconsequential to attainment
and maintenance of the NAAQS. As discussed further, the minor NSR
thresholds that we are proposing today meet this criterion. In
addition, these thresholds will result in a more cost-effective program
and reduce the burden on sources and reviewing authorities.
    In today's rulemaking, we are proposing to adopt minor NSR
thresholds as emission rates in tpy. In setting the minor NSR
thresholds for minor sources of regulated NSR pollutants, we decided to
use emission rates, rather than air quality impacts, as the basis for
the exemption. We chose this approach because we were concerned that
applicability determinations based on projected air quality impacts
would be excessively complex and resource intensive. In addition, it is
consistent with the approach used in major NSR.
    We are proposing minor NSR thresholds that we have developed based
on a review of several State minor NSR programs. We found that there is
variation in State approaches to minor NSR applicability. Some States
do not prescribe source applicability thresholds, instead providing a
list of emission units and activities that are excluded from minor NSR.
Many of the States that do have applicability thresholds also provide a
list of excluded emission units and activities. In today's rulemaking,
we propose threshold levels that we believe are neither the most
stringent nor the least stringent of the levels found in existing State
minor NSR rules. These threshold levels represent a reasonable balance
between environmental protection and

economic growth, since we did not want them to be so high that they
were not environmentally protective or so low that they ensured
environmental protection at the cost of discouraging economic growth.
We consider the proposed thresholds to be representative of such
thresholds in State minor NSR programs, and we believe that these
limits will be appropriate for use in Indian country. The proposed
thresholds are listed in Table 1.

                                         Table 1.--Minor NSR Thresholds
----------------------------------------------------------------------------------------------------------------
                                                                Minor NSR thresholds for
                                                               nonattainment areas  (tpy)         Minor NSR
                  Regulated NSR pollutant                   --------------------------------    thresholds for
                                                              Extreme ozone                    attainment areas
                                                                  areas        Other areas          (tpy)
----------------------------------------------------------------------------------------------------------------
Carbon monoxide (CO).......................................               5               5                   10
Oxides of nitrogen (NOX)...................................               0               5                   10
Sulfur dioxide (SO2).......................................               5               5                   10
Volatile Organic Compounds (VOC)...........................               0               2                    5
PM.........................................................               5               5                   10
PM-10......................................................               1               1                    5
PM-2.5.....................................................             0.6             0.6                    3
Lead.......................................................             0.1             0.1                  0.1
Fluorides..................................................              NA              NA                    1
Sulfuric acid mist.........................................              NA              NA                    2
Hydrogen sulfide (H2S).....................................              NA              NA                    2
Total reduced sulfur (including H2S).......................              NA              NA                    2
Reduced sulfur compounds (including H2S)...................              NA              NA                    2
Municipal waste combustor emissions........................              NA              NA                    2
Municipal solid waste landfills emissions (measured as Non               NA              NA                   10
 Methane Organic Compounds)................................
----------------------------------------------------------------------------------------------------------------

    The selected minor NSR thresholds distinguish between minor
stationary sources of regulated NSR pollutants located in nonattainment
versus attainment areas and by pollutant. We believe this distinction
is important because of the different air quality goals in
nonattainment and attainment areas.
    In some cases, a tribe's area of Indian country may be divided
between a nonattainment area and an attainment area. In this situation,
the applicable threshold for a proposed source or modification would
correspond to the designation of the area where the source would be
located. If a source straddles the two areas, the more stringent
thresholds would apply.
    To evaluate how the proposed minor NSR thresholds might affect new
sources locating in Indian country, we looked at the size distribution
of existing sources across the country. Using the National Emission
Inventory (NEI), which includes the most comprehensive inventory of
existing U.S. stationary point sources that is available, we determined
how many of these sources fall below the proposed minor NSR thresholds,
how many are between the minor NSR and major NSR thresholds, and how
many are above the major NSR threshold.\5\ If we assume that the
distribution of new sources will mirror the existing source
distribution, this analysis approximates the fraction of new sources
that will be exempt from minor NSR, subject to minor NSR, and subject
to major NSR, respectively. The results of this analysis by pollutant
are summarized in Table 2.
---------------------------------------------------------------------------

    \5\ For this analysis, we used the final 1999 NEI, extrapolated
to 2001. More on the 1999 NEI can be found at http://www.epa.gov/

ttn/ chief/ net/ 1999inventory.html.

                                   Table 2.--Distribution of Sources and Emissions Under Proposed Minor NSR Thresholds
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Total facilities      Unregulated minor       Minor sources         Major sources
                                                                 ----------------------        sources       -------------------------------------------
                            Pollutant                                                  ----------------------
                                                                   No. (x10   TPY (x10     % of                  % of     % of TPY     % of     % of TPY
                                                                      3)         6)       total     % of TPY    total                 total
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO..............................................................       28.9       4.43         65        0.8         29         11          6         88
SO2.............................................................       21.2      13.90         76        0.1         16          1          8         99
PM10............................................................       33.9       1.69         65        1.3         32         22          4         76
PM2.5...........................................................       33.8       1.33         59        0.8         38         23          3         76
Ozone--VOC......................................................       43.3       1.60         42        1.1         53         41          5         58
Ozone--NOX......................................................       30.5       7.93         53        0.4         36          6         11         93
Nitrogen dioxide (NO2)..........................................       30.5       7.93         59        0.6         32          7          9         92
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As shown in Table 2, we performed the analysis for each of the
criteria pollutants except lead, including VOC and NOX
emissions as the precursors of ozone.\6\ For each pollutant, the table
gives the total number of facilities in the emission inventory for that
pollutant and the total, nationwide annual emissions of the pollutant.
The column

labeled ``unregulated minor sources'' represents the percentage of
total sources that fall below the minor NSR threshold, along with the
percentage of total annual emissions that those sources emit. The
``minor sources'' column gives the same information for sources that
fall between the minor NSR threshold and the major NSR threshold, while
the ``major sources'' column addresses sources that exceed the major
NSR threshold.
---------------------------------------------------------------------------

    \6\ For the analysis, we used the major NSR and proposed minor
NSR thresholds for each pollutant based on the attainment status and
classification of the county in which each source is located. We
made certain simplifying assumptions, including using the 250 tpy
major source threshold for all sources in attainment areas,
regardless of source category or major source status for other
pollutants. For the details of the analysis,see ``Analysis of the
Proposed Minor NSR Thresholds'' dated October 24, 2005 in the docket
for this rulemaking.
---------------------------------------------------------------------------

    We believe that Table 2 provides excellent evidence that sources
with emissions below the proposed minor NSR thresholds will be
inconsequential to attainment and maintenance of the NAAQS. For each
pollutant, only around 1 percent (or less) of total emissions would be
exempt from review under the minor NSR program. At the same time, the
proposed thresholds will promote a cost-effective program. According to
Table 2, anywhere from 42 percent to 76 percent of sources (depending
on the pollutant) would be too small to be subject to preconstruction
review.
    We believe that the proposed minor NSR thresholds provide a
reasonable approach to determining the applicability of the minor NSR
program. These thresholds would prevent stationary sources that make
negligible contributions to pollution from being regulated under this
rule. However, this would not affect the applicability of other
requirements, such as those found in an NSPS or a MACT standard. At the
same time, the limits would ensure that intermediate-sized sources
would be subject to reasonable control technology requirements. We seek
comment on our approach to selecting the proposed minor NSR thresholds,
on alternative approaches to selecting such thresholds, and on
alternative applicability provisions (such as source category
exemptions).
4. Are any emissions units and activities at stationary sources exempt
from this rule?
    Certain emissions units and activities at stationary sources either
do not emit regulated NSR pollutants to the ambient air or emit these
pollutants in negligible amounts. We propose that such activities
located at a minor source be exempt from the requirements of this rule
(See proposed 40 CFR 49.153(c)). We propose that such activities are
limited to the following:
     Air-conditioning units for comfort that are not subject to
applicable requirements under title VI of the Act and do not exhaust
air pollutants into the ambient air from any manufacturing or
industrial process;
     Ventilating units for comfort that do not exhaust air
pollutants into the ambient air from any manufacturing or other
industrial process;
     Heating units for comfort that do not provide heat for any
manufacturing or other industrial process;
     Noncommercial food preparation;
     Consumer use of office equipment and products;
     Janitorial services and consumer use of janitorial
products;
     Internal combustion engines used for landscaping purposes;
     Bench scale laboratory activities, except for laboratory
fume hoods and vents; and
     Any emissions unit or activity that does not have the
potential to emit a regulated NSR pollutant or HAP, so long as that
emissions unit or activity is not part of a process unit that emits or
has the potential to emit a regulated NSR pollutant or HAP.
5. What are the permit application, control technology, and air quality
analysis requirements, and what is the permit issuance process?
    Permit Application Requirements. Under today's proposed minor NSR
program, as the owner or operator of a proposed new minor source or a
proposed modification that is subject to this rule, you must submit a
complete application to your reviewing authority requesting a minor NSR
permit specific to your source (unless you wish to seek a ``general
permit,'' if eligible). In addition to basic information identifying
and describing your source, your application must include a list of all
affected emissions units. ``Affected emissions units'' are defined as
all the emissions units at your proposed new minor source or all the
new, modified, and replacement emissions units that comprise your
proposed modification (excluding the exempt emissions units and
activities listed in proposed 40 CFR 49.153(c)). See proposed 40 CFR
49.152(d).
    Your application also must document the increase in emissions of
regulated NSR pollutants that will result from your new source or
modification so that the reviewing authority can verify that you are
subject to this proposed minor NSR program, rather than to major NSR.
For each new emissions unit that you list, you must provide the PTE in
tpy for each regulated NSR pollutant, along with supporting
documentation. For any modified or replacement unit that you list, you
must provide the allowable emissions of each regulated NSR pollutant in
tpy both before and after the modification or replacement, along with
supporting documentation. For emissions units that do not have an
established allowable emissions level prior to the modification, you
must report the PTE. The allowable emissions for any emissions unit are
calculated considering any emission limitations that are enforceable as
a practical matter on the unit's PTE. In calculating these emission
levels for applicability purposes, we seek comment on whether you
should include fugitive emissions, to the extent that they are
quantifiable, for all sources, or include them only for source
categories listed pursuant to section 302(j) of the Act or exclude them
for all sources.
    You may include in your application proposed emission limitations
for the listed emissions units. If you do, you must account for these
limitations in your calculations of post-construction PTE and/or
allowable emissions. The application also must identify and describe
any existing air pollution control equipment and compliance monitoring
devices or activities relevant to the affected emissions units, as well
as any existing emission limitations or work practice requirements to
which any affected emissions units are subject. See proposed 40 CFR
49.154(a) for the complete requirements for your application for a
minor NSR permit.
    You may request that the reviewing authority establish an annual
minor source plantwide applicability limitation (minor source PAL) for
one or more of the regulated NSR pollutants emitted by your new or
existing minor stationary source. A minor source PAL is a source-wide
limitation on allowable emissions of a regulated NSR pollutant,
expressed in tpy, that is established under the proposed 40 CFR 49.155
and that is enforceable as a practical matter (See proposed 40 CFR
49.152(d)).
    For a new minor stationary source, you may request minor source
PALs for some or all of the regulated NSR pollutants emitted by your
source. For the other regulated NSR pollutants that your source emits
(i.e., the non-PAL pollutants), your permit will contain annual
allowable emissions limits for each emissions unit.
    You may request a minor source PAL for one or more regulated PAL
pollutants at the time that you are modifying an existing minor
stationary source. Each PAL will apply across all the emissions units
at your source, whether or not they are affected by the modification.
For the non-PAL pollutants, only the emissions units that are affected
by the modification will receive annual allowable emissions limits. If
you request one or more minor source PALs for an existing minor
stationary source at a time when no

modification is planned, each PAL will apply across all the emissions
units at your source, but your permit will include no new emission
limits for the non-PAL pollutants.
    If your source is in a source category covered by a ``general
permit'' issued under proposed 40 CFR 49.156, you may apply for the
general permit for that source category. A general permit is a permit
developed by your reviewing authority for a general category of
emissions units or stationary sources that are similar in nature, have
substantially similar emissions, and would be subject to the same or
substantially similar requirements governing operations, emissions,
monitoring, reporting, and recordkeeping. The permit application
requirements for a particular general permit will be specified in that
general permit. General permits are discussed further in section
IV.A.13 of this preamble.
    Control Technology Review. As required under section 110(a)(2)(C)
of the Act, the minor NSR permitting program that we are proposing
today is primarily designed to assure that the NAAQS are achieved, and
to prohibit any stationary source from emitting any air pollutant in
amounts that would contribute to nonattainment or interfere with
maintenance of the NAAQS. At the same time, we wish to provide
flexibility in control technology requirements for minor sources
located in Indian country to promote economic growth and development.
    Therefore, in today's proposal, we are proposing that your
reviewing authority perform a control technology review on a case-by-
case basis when issuing the permit (other than a general permit). By
``control technology,'' we mean pollution prevention techniques, add-on
pollution control equipment, design and equipment specifications, work
practices, and operational restrictions. This review would consider
local air quality needs, typical control technology used by similar
sources in surrounding areas, anticipated economic growth in the area,
and cost-effective control alternatives. At a minimum, the reviewing
authority must require control technology that assures that the NAAQS
are achieved and that each affected emissions unit will comply with all
requirements of 40 CFR parts 60, 61, and 63 that apply. The required
control technology resulting from such a review may range from
technology that is less stringent than the reasonably available control
technology (RACT) level of control (which is typically required for
existing major sources in nonattainment areas), to technology that is
the BACT level of control (which is the level required for new major
sources and major modifications in attainment areas), depending on the
air quality needs of the area, other applicable regulatory programs of
the Act, and technical and economic feasibility.
    Based on the results of the control technology review, the emission
limitations required by the reviewing authority may consist of emission
limits, pollution prevention techniques, design standards, equipment
standards, work practice standards, operational standards, or any
combination thereof. If it is technically and economically feasible,
the reviewing authority must require an emission limit (i.e., a limit
on the quantity, rate, or concentration of emissions) for each affected
emissions unit at your source.
    For a new minor source that is subject to this rule, the case-by-
case control technology review would be conducted for all emissions
units [except the exempt emissions units and activities discussed in
section IV.A.4 and listed in proposed 40 CFR 49.153(c)] that emit or
have the potential to emit the pollutant for which the source is
subject to this rule. However, for modifications, such control
technology review would apply only to the affected emissions unit(s).
    In establishing a case-by-case control technology review process to
determine an appropriate level of control for minor sources and subject
modifications in Indian country, we considered a number of factors. On
the one hand, we believe that the control technology review process
should be as flexible as possible to provide for the specific needs and
conditions of each area of Indian country, consistent with the
requirements of the Act. On the other hand, we believe that a
reasonable level of air pollution control for new minor sources and
subject modifications in Indian country is generally warranted to
ensure protection of air resources in Indian country. In addition, we
wish to ensure that Indian country not be seen as a potential
``pollution haven'' where minor stationary sources can go to escape air
pollution control requirements. At the same time, we do not want to put
tribes or owners and operators locating in Indian country at a
competitive disadvantage by requiring substantially more stringent
controls in Indian country than are required in the surrounding areas.
    We are seeking comment on the proposed case-by-case control
technology review for all new and modified sources subject to this
minor NSR program. We also request comment on whether the program
should have a control technology requirement at all. Section
110(a)(2)(C) of the Act requires a minor NSR program that assures that
the NAAQS are achieved, but does not mandate that the program include a
control technology requirement. We are seeking comment on whether a
control technology requirement is necessary to achieve the purposes of
the Act, or whether other approaches can achieve these purposes just as
well with less cost or administrative burden.
    Air Quality Impacts Analysis. Typically, for a new or modified
minor source permit application, your reviewing authority would not
require an Air Quality Impacts Analysis (AQIA). In rare instances, if
your reviewing authority has reason to be concerned that the
construction of your minor source or modification could cause or
contribute to a NAAQS or PSD increment violation, to ensure protection
of the NAAQS, we are proposing that your reviewing authority may
require you to conduct an AQIA using dispersion modeling in accordance
with 40 CFR part 51, appendix W to determine the impacts that will
result from your new source or modification. If the AQIA demonstrated
that the construction of your source or modification would cause or
contribute to a NAAQS or PSD increment violation, you would be required
to further reduce its impact before you could obtain a permit.
    Permit Issuance Process. Within 45 days after receiving your permit
application, your reviewing authority must either determine that the
permit application is complete enough to commence a technical review or
request additional information. If you do not receive a request for
additional information or a notice of complete application within 50
days of your permitting authority's receipt of your application, your
application would be deemed complete. (You should contact your
reviewing authority to find out the date that it received your
application so that you will know when this 50-day period is up.) Once
the application is complete, your reviewing authority develops a draft
permit and provides a public notice seeking comments on the draft
permit for a 30-day period. After considering all timely, relevant
comments, if your reviewing authority determines that your application
meets all applicable requirements, it would issue you a final permit.
Otherwise, the reviewing authority would send you a letter denying your
permit application with reasons for the denial. We seek comment on the
proposed permit issuance process.

    We are proposing that your reviewing authority would issue you a
permit with an allowable emissions limit in tpy for each affected
emissions unit (Option A). You have the alternative of requesting a
minor source PAL or cap in tpy (Option B), and your reviewing authority
may issue such a permit. This type of permit can provide the
flexibility to make frequent changes at your source without permit
review. If you wish, you may request a minor source PAL for some
pollutants and allowable emissions limits for each emissions unit for
other pollutants.
    Permit Term. A preconstruction permit does not expire. Your permit
remains valid as long as you commence construction of your new source
or modification within 18 months after the effective date of the
permit, you do not discontinue construction for a period of 18 months
or more, and you complete construction in a reasonable time. Your
reviewing authority may extend the 18-month period where justified. The
18-month limit does not apply to the time period between construction
of approved phases of a phased construction program; you must commence
construction of each such phase within 18 months of the approved
commencement date for that phase.
6. When are modifications subject to this rule?
    As discussed in section IV.A.2 of this preamble, for the purposes
of the minor NSR program proposed today, a modification means any
physical or operational change at a stationary source that would cause
an increase in the allowable emissions of the affected emissions units
for any regulated NSR pollutant or that would cause the emission of any
regulated NSR pollutant not previously emitted (with the exclusions
outlined in section IV.A.2 of this preamble). The proposed rule would
apply to certain modifications at your minor sources and minor
modifications at your major sources. For such modifications, you would
have to meet the application requirements and comply with any control
technology requirements as discussed in section IV.A.5 of this
preamble. In rare instances, if your reviewing authority has reason to
believe that your modification could result in a violation of the NAAQS
or PSD increment, you would be required to conduct an AQIA.
    In all NSR applicability determinations, you must evaluate each
regulated NSR pollutant individually. The area where your source is
located may be attainment for some pollutants and nonattainment for
others, which affects which pollutants are regulated as well as the
major and minor NSR applicability thresholds. For a given modification,
a particular pollutant may be subject to review under PSD,
nonattainment major NSR, or minor NSR, or may not be subject to any of
these programs.
    The first step in determining whether your proposed physical or
operational change is subject to the minor NSR program proposed today
is to determine whether the change is subject to the applicable major
NSR program (i.e., proposed 40 CFR 49.167 or 40 CFR 52.21 for
nonattainment and attainment areas, respectively). If you are changing
an existing major source, you would determine whether the change
qualifies as a major modification using the procedures in the
applicable major NSR program. If you are changing an existing minor
source, you would determine whether the change would qualify as a major
stationary source by itself under the applicable major NSR program. If
your proposed physical or operational change is subject to review under
major NSR for a regulated NSR pollutant, it is not subject to the minor
NSR program for that pollutant.
    If your proposed physical or operational change is not subject to
major NSR, the next step is to determine whether the change qualifies
as a modification under the minor NSR program. To be a modification,
the change must result in an increase in allowable emissions at your
source. Thus, the next step is to calculate whether, and by how much,
allowable emissions would increase as a result of the change. If your
minor stationary source is subject to a minor source PAL for a
regulated NSR pollutant (Option B in section IV.A.5 of this preamble),
the emissions increase for that pollutant would be the PAL level after
the physical or operational change minus the PAL level prior to the
change. For physical or operational changes at other minor stationary
sources (i.e., those with annual allowable emissions limits for each
emissions unit (Option A), those that are unpermitted, and those with a
combination of unpermitted emissions units and emissions units with
annual allowable emissions limits) and at major stationary sources, the
total increase in allowable emissions resulting from your proposed
change would be the sum of the following:
     For each new emissions unit that is to be added, the
emissions increase would be the PTE of the unit.
     For each emissions unit with an allowable emissions limit
that is to be changed or replaced, the emissions increase would be the
allowable emissions of the emissions unit after the change or
replacement minus the allowable emissions prior to the change or
replacement. This may be a negative value for an emissions unit if its
allowable emissions would be reduced as a result of the change or
replacement.
     For each unpermitted emissions unit that is to be changed
or replaced, the emissions increase would be the allowable emissions of
the unit after the change or replacement minus the PTE prior to the
change or replacement. It is necessary to use PTE since these emissions
units will not have a allowable emissions limit prior to the change.
This may be a negative value for an emissions unit if its post-change
allowable emissions would be less than its pre-change PTE.
    This process of summing the emissions increases and decreases
across all the affected emissions units is called ``project netting,''
which is discussed later in this section of the preamble.
    If your proposed physical or operational change qualifies as a
modification (i.e., causes an increase in allowable emissions), the
final step in determining whether the proposed modification is subject
to today's proposed minor NSR program is to compare the increase in
allowable emissions to the applicability criteria for the type of
source and emission limits that you have. Your modification would be
subject to the minor NSR program in the following circumstances:
     If your minor source has a permit with a minor source PAL
in tpy (Option B in section IV.A.5 of this preamble) and the
modification would result in any increase in the PAL level. To
determine if an increase in the PAL level is necessary, you must
evaluate whether your source's actual emissions after the modification
would exceed the PAL level by any amount. If you could construct and
operate the modification without your actual emissions exceeding your
minor source PAL, then no permit action would be required.
     For other minor sources, if the modification would
increase total allowable emissions from the affected emissions units by
an amount that equals or exceeds any of the minor NSR thresholds listed
in Table 1 of this preamble.
     If the minor modification at your major source would
increase total allowable emissions from the affected emissions units by
an amount that equals or exceeds any of the minor NSR thresholds listed
in Table 1 of this preamble.
     In addition, if the modification would increase allowable
emissions from any emissions unit above an

established unit-specific allowable emission permit limit, even if the
total increase for your source would be less than the corresponding
minor NSR threshold listed in Table 1 of this preamble. In this case,
the needed increase in the unit-specific allowable emissions permit
limit can be accomplished through an administrative permit revision
(See proposed 40 CFR 49.159(f)).
    In addition, a physical or operational change may be subject to
today's proposed minor NSR program even if it is not classified as a
modification (i.e., it does not increase allowable emissions of a
regulated NSR pollutant or result in emission of a pollutant not
previously emitted). For example, a proposed change might increase
allowable emissions from some emissions units and decrease emissions at
others so that, overall, emissions from the affected units would stay
the same or decrease. If the post-change emissions at any emissions
unit would exceed a permitted allowable emissions limit for that unit,
you must apply to revise the existing permit limit before you may
implement the change. The needed increase in the unit-specific
allowable emissions permit limit can be accomplished through an
administrative permit revision (See proposed 40 CFR 49.159(f)).
    Similarly, other proposed physical or operational changes that
could not be implemented within the requirements of an existing permit
would necessitate a permit revision, even if they are not otherwise
subject to major or minor NSR. We believe that this fact will serve to
ensure that the types of changes that could significantly alter the
dispersion characteristics of the air pollutants emitted by your source
will be brought to the attention of your reviewing authority. Thus, the
reviewing authority will be in the position to evaluate whether the
change has the potential to increase ambient concentrations outside the
boundaries of your source. If so, the reviewing authority can require
measures to mitigate any unacceptable air quality impacts (i.e., to
protect the NAAQS and PSD increments) as part of the permit revision
process.
    Flowcharts to aid in determining major and minor NSR applicability
are presented in Figures 1 through 6. These flowcharts illustrate the
applicability process for new sources and modifications in attainment
areas and nonattainment areas. The flowcharts should be used to
evaluate each regulated NSR pollutant individually since different flow
charts may apply to different pollutants depending on the attainment
status of the area for each pollutant.
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7. Why do we believe that an allowable-to-allowable test is appropriate
for minor sources?
    As discussed earlier, we are proposing an ``allowable-to-
allowable'' applicability test as the primary test for modifications
under this minor NSR program. We evaluated the three basic types of
applicability tests (actual-to-potential, actual-to-projected-actual,
and allowable-to-allowable) and determined that the allowable-to-
allowable test is most suitable for minor NSR in Indian country.
    We rejected the actual-to-potential test for many of the same
reasons that we have moved away from this test in the major NSR
program. In this type of system, the emissions increase that results
from a change is determined by comparing the emissions unit's PTE after
the change to its actual emissions prior to the change. If pre-change
actual emissions are well below the unit's PTE, as is generally the
case, any change will result in a large emissions increase when
calculated in this manner. To avoid triggering NSR, a source must
accept a limit on the unit's post-change PTE at a level that exceeds
pre-change actual emissions by less than the applicable NSR threshold.
    As discussed in our December 2002 NSR Improvement rulemaking, there
are numerous objections to the actual-to-potential test (67 FR 80194).
Industry has long believed that the need to take a PTE limit to avoid
NSR has the effect of unfairly confiscating the emissions unit's unused
operating capacity even though, in many cases, the changed unit as a
practical matter will function essentially as it did before the change
and emissions to the environment will not increase. In addition, the
actual-to-potential test discourages sources from making the types of
changes that improve operating efficiency, implement pollution
prevention projects, and result in other environmentally beneficial
effects.
    In the December 2002 NSR Improvement rulemaking for major NSR, we
promulgated an alternative ``actual-to-projected-actual'' test for
major modifications. However, we do not propose to adopt the same
course for the minor NSR program in Indian country. We believe that
determining emissions changes in terms of changes in allowable
emissions typically will be easier and more straightforward for the
minor sources subject to this program. In particular, the major NSR
procedures for projecting and tracking future actual emissions may be
somewhat complicated for minor sources. While we believe that this
system is within the capabilities of major sources, we believe that a
simpler system is more appropriate for the minor sources in Indian
country, many of which are unaccustomed to any type of regulation.
    We are proposing an allowable-to-allowable test for modifications
in the Indian country minor NSR program. We believe that this
relatively simple and straightforward system is most appropriate for
the minor sources found in Indian country. In addition, we believe that
it is beneficial to use allowable emissions as the currency for
attainment planning, in that they represent the worst-case post-change
emissions. This approach is consistent with section 173(a)(1)(A) of the
Act, which requires new and modified major sources to obtain offsets
based on allowable emissions. (While we are not requiring offsets for
minor sources in Indian country nonattainment areas, we believe that
the language in section 173(a)(1)(A) provides validation for our
proposed minor NSR modification test.) Finally, we understand that many
State minor NSR programs use an allowable-to-allowable test.
    As discussed in section IV.A.2 of this preamble, we believe that we
have the discretion to use an allowable-to-allowable test for this
minor NSR program because the statutory basis for minor NSR is section
110(a)(2)(C) of the Act, rather than section 111(a)(4). We seek comment
on using the proposed allowable-to-allowable test for addressing
modifications and on the alternative of using the actual-to-projected-
actual test.
    As laid out in the second step for determining if a proposed
modification is subject to minor NSR, we are proposing to allow
``project netting.'' This means that both increases and decreases in
allowable emissions are summed when determining the total emission
increase that would result from a proposed modification.
    The major NSR program uses a two-step procedure for determining
applicability. First, the emission increases from the proposed project
are summed. If the total emission increase from the project is
``significant'' (that is, equal to or greater than the major NSR
threshold), the second step in the process is ``contemporaneous
netting.''
    In contemporaneous netting, the emission increase due to the
proposed modification is summed with all other emission increases and
decreases that have occurred at the major source during the
contemporaneous period (generally 5 years). If the net emission
increase determined in this way is significant, the proposed
modification is a ``major modification'' that is subject to review
under major NSR.
    We considered including contemporaneous netting in today's minor
NSR program, but have elected not to propose it as our preferred
approach. Contemporaneous netting has proved to be a complicated aspect
of the major NSR program. While major sources are accustomed to
contemporaneous netting and have built the capacity to track emissions
changes and carry out this procedure, many minor sources that would be
covered by today's proposed minor NSR program lack such capacity. We
believe that a simpler system is more appropriate for the minor sources
in Indian country.
    Nevertheless, we believe that minor sources should be able to
receive credit for the emission decreases that would result from a
proposed modification. Hence, we are proposing to allow project netting
in today's minor NSR program.
    We believe that project netting calculations are relatively
straightforward and are within the capacity of most minor sources. For
example, an existing minor source might wish to expand by adding a
second production line to go with an existing, uncontrolled line. If
the proposed project includes adding an air pollution control device to
control emissions from both lines, it would result in an allowable
emissions increase attributable to the new line, as well as an
allowable emissions decrease from the existing, previously uncontrolled
line. Determining the overall net emission change that would result
from the proposed modification would be a straightforward exercise.
However, to validate the project net emissions increase, as in the
major NSR program, the source must take limits on allowable emissions
for both lines that are enforceable as a practical matter.
    We believe that in proposing to allow project netting, but not
contemporaneous netting, we have struck an appropriate balance for the
minor NSR program in Indian country. We believe that the resulting
program properly allows you to receive credit for emission reductions
that are achieved as part of an overall project, without introducing
too much complexity into the program. We invite comment on this
approach, as well as on other approaches that would allow minor sources
in Indian country to take credit for emission reductions.
8. Is your existing minor source subject to this rule?
    States develop, adopt, and submit to us for approval a SIP that
contains a

broad range of measures to attain and maintain the NAAQS and to meet
other requirements of section 110(a) of the Act. The SIPs typically
include some emission limitations for existing sources, even those that
do not modify their operations. Hence, a SIP provides an infrastructure
to achieve the air quality goals of attaining and maintaining the
NAAQS.
    Tribes are not required to submit implementation plans, and to
date, very few tribes have sought our approval of such plan. Consistent
with our approach to Federal implementation of the Act's requirements,
we issue FIPs for areas of Indian country as necessary or appropriate.
However, there is still a regulatory gap in relevant infrastructure in
much of Indian country. Because of this unique situation, we are
raising the question of whether it may be appropriate to regulate
existing minor sources in Indian country under this minor NSR program
to attain and maintain NAAQS. We are proposing Option 1 and soliciting
comment on Options 2, 3, and 4:
    Option 1. Exempt existing minor sources from this rule. This option
would not affect any existing sources (unless they propose a
modification) and, thus, be the least burdensome for such sources in
Indian country. Many State minor NSR rules do not apply to such
sources; hence this would be consistent with many of the areas that
surround Indian country. Under this option, we are seeking comment on
whether such an exempt minor source should be allowed to opt for a
permit under this program (without being subject to any of the
requirements) merely to establish enforceable limits and conditions
associated with a consent decree or other enforcement mechanism.
    Option 2. Require existing synthetic minor sources to become
subject to the minor NSR program requirements (including control
technology review and other requirements as provided in section IV.A.5.
of this preamble) and to submit a permit application within 1 year
after the effective date of the program. This option would draw into
the regulatory scheme the biggest minor sources and may result in large
emissions reductions in instances where the required control technology
review would result in new or more stringent controls. Option 2 would
affect relatively few existing minor sources in Indian country.
    Option 3. Require all existing minor sources to register within 1
year after the effective date of this program, but not be subject to
the permitting requirements. This option would affect all minor sources
in Indian country, but would involve very little burden to sources,
since this would be a one-time registration. Option 3 would allow your
reviewing authority to collect information on the number and size of
existing minor sources, which would assist with NAAQS maintenance and
attainment planning in Indian country.
    Option 4. Require all existing minor sources to be subject to the
minor NSR program requirements (as provided in section IV.A.5. of this
preamble). While this option would result in significant emissions
reductions, it would also require significant EPA resources and may
also be overly burdensome on minor sources in Indian country.
Additionally, we believe that subjecting all minor sources to this
program is not necessary to achieve the NAAQS, as demonstrated by state
minor NSR programs.
    We also seek comment on any other approaches for addressing
existing minor sources.
9. How are ``synthetic minor sources'' subject to this rule?
    Some sources have the potential to emit one or more pollutant in
major source amounts, but have actual emissions that are below the
major source thresholds. One of our primary objectives for this
rulemaking is to create a mechanism by which you can obtain emission
limitations for such sources that are enforceable as a practical
matter, so that they can become ``synthetic minor sources'' and avoid
major source status. We are therefore proposing to create such a
mechanism in 40 CFR 49.158 of the proposed rules. The proposed rules
allow for designation of synthetic minor sources (for regulated NSR
pollutants) and synthetic minor HAP sources. It is important to note
that although you may choose to obtain such emission limitations at
your own discretion, once you have accepted an enforceable emission
limitation, you must comply with that limitation. This is necessary to
ensure that you are legally prohibited from operating as a major
source. We are taking comment on the proposal to allow your stationary
sources to become synthetic minors in Indian country.
    Our 1999 policy memo on synthetic minor sources in Indian country
currently provides guidance on how sources that would otherwise be
major sources under section 302 or part D of title I of the Act can
become synthetic minor sources if their actual emissions remain below
50 percent of the relevant major source PTE threshold and they comply
with all other requirements of the policy memo.\7\ However, as the memo
specifies, this PTE transition policy terminates when we adopt and
implement a mechanism that you can use to limit your PTE, or we
explicitly approve a tribe's program providing such a mechanism.
Today's proposed minor NSR program would provide such a mechanism.
Therefore, upon the effective date of these rules when promulgated, the
PTE transition policy will expire and you will have to obtain a permit
under this minor NSR program for any subsequent synthetic minor
sources.
---------------------------------------------------------------------------

    \7\ John S. Seitz and Eric V. Schaeffer. Policy memo.
``Potential to Emit Transition Policy for Part 71 Implementation in
Indian Country.'' March 7, 1999.
---------------------------------------------------------------------------

    Additionally, for your existing synthetic minor sources under the
current policy, you will have 1 year from the effective date of the
final rules to apply for a permit under the proposed minor NSR program.
If you submit a permit application in accordance with the requirements
of proposed 40 CFR 49.158(c) by that date, we will continue to consider
your source a synthetic minor source until we issue a permit with
synthetic minor limits. The permit will contain monitoring,
recordkeeping, reporting, and testing requirements as needed to assure
compliance with your synthetic minor permit, but will not impose any
additional requirements. Should you fail to submit an application
within 1 year of the effective date of the final rules, your source
will no longer be considered a synthetic minor source or synthetic
minor HAP source (as applicable), and will immediately become subject
to all requirements for major sources.
10. How would section 112(g) case-by-case MACT determinations be
addressed by this rule?
    Section 112(g)(2)(B) of the Act provides that you may not construct
or reconstruct a major source of HAPs unless you install MACT. If the
Administrator has not established a MACT standard for the source
category, the Act requires that MACT must be determined on a case-by-
case basis.
    Where there is no EPA-approved program in an area of Indian
country, we are the reviewing authority for case-by-case MACT under
section 112(g)(2)(B). The requirement for a case-by-case MACT
determination prior to construction or reconstruction of a major source
of HAPs is found at 40 CFR 63.42(c). In 40 CFR 63.43(c), we provide a
number of review options for these determinations. These options

include using a title V permit, applying for and obtaining a Notice of
MACT Approval, and ``any other administrative procedures for
preconstruction review and approval established by the reviewing
authority for a State or local jurisdiction which provide for public
participation * * *.'' Currently, no tribes have an EPA-approved title
V permitting program or the ``other administrative procedures'' for
this purpose, although one tribe has been delegated authority to assist
us with implementation of the Federal part 71 operating permit program
(i.e., the Federal program for issuing title V permits). While we can
permit a section 112(g) case-by-case MACT determination through a part
71 permit or a Notice of MACT Approval, we believe that if your source
is major only for HAPs it would be administratively convenient for us
and you to combine the construction permit process for both regulated
NSR pollutants and HAPs under this proposed minor NSR program, rather
than also go through the part 71 permit or Notice of MACT Approval
process to address HAPs. Therefore, we are proposing to allow for
review of section 112(g) case-by-case MACT determinations through this
minor NSR program and seek comment on this approach. See proposed 40
CFR 49.153(a)(5) for the provisions related to section 112(g) case-by-
case MACT determinations. Note that you ultimately will have to obtain
a part 71 permit for your major source of HAPs.
11. What are the proposed requirements for public participation in the
permitting process?
    Our requirements for State preconstruction review programs at 40
CFR 51.161 require such programs to provide for public availability of
permit applications as well as the reviewing authority's analysis of
the application. In addition, State programs must provide opportunity
for public comment on permitting actions. To be consistent with these
requirements for State programs, we are proposing to require the
reviewing authority to make non-confidential information on the permit
available to the public and to provide public notice and an opportunity
to comment on the draft minor NSR permit. See proposed 40 CFR 49.157.
    Specifically, we would require that the reviewing authority prepare
a draft permit and provide adequate public notice to ensure that the
affected community and the general public have reasonable access to the
application and draft permit information. The reviewing authority must
make such information available for public inspection at the
appropriate EPA Regional Office and in at least one location in the
area affected by the source, such as the tribal environmental office or
a local library. The public notice must provide an opportunity for
public comment and a public hearing on the draft permit. The
appropriate types of notice may vary depending on the proposed project
and the area of Indian country that would be affected.
    In all cases, the proposed rule requires the reviewing authority to
mail a copy of the notice to you, the appropriate Indian governing
body, and the tribal, State, and local air pollution authorities having
jurisdiction in areas outside of the area of Indian country potentially
impacted by your source. The proposed rule lists optional approaches
that the reviewing authority may elect to use to provide public notice
as appropriate for a given situation, depending on such factors as the
nature and size of your source, local air quality considerations, and
the characteristics of the population in the affected area. The
optional methods of notifying the public include the following:
     Mailing or e-mailing a copy of the notice to persons on a
mailing list developed by the reviewing authority consisting of those
persons who have requested to be placed on such a mailing list.
     Posting the notice on its Web site.
     Publishing the notice in a newspaper of general
circulation in the area affected by the source. Where possible, the
notice may also be published in a tribal newspaper or newsletter. We do
not believe that such a notice is appropriate for every single minor
source permit application since this would require a heavy resource
commitment for the reviewing authority, while not necessarily being as
effective as some other measures.
     Providing copies of the public notice for posting at
locations in the area affected by your source. We expect that such
locations might include Post Offices, libraries, tribal environmental
offices, community centers, and other gathering places in the
community.
     Other appropriate means of notification.
    We believe that this combination of mandatory and optional
approaches to providing notice is appropriate for today's proposed
minor NSR program in Indian country. In addition, we believe that the
proposal is consistent with 40 CFR 51.161, which requires a ``notice by
prominent advertisement in the area affected,'' but does not specify a
newspaper advertisement. We believe that in many areas of Indian
country, notices posted in locations frequented by the local population
and on agency Web sites, as well as mailed or e-mailed to concerned
parties, will provide more ``prominent advertisement'' than would
publication in a newspaper.
    The reviewing authority must provide for a 30-day public comment
period on the draft permit. After considering all relevant public
comments, the reviewing authority will make a final decision to issue
or deny your permit. The public (including you, the permit applicant)
will have an opportunity to appeal the final decision under 40 CFR
49.159 of the proposed rule.
    These proposed public participation requirements would apply to
preconstruction permits, minor source PAL permits, synthetic minor
permits, and the initial issuance of general permits. We seek comment
on the proposed public participation requirements in 40 CFR 49.157.
    We are also proposing very similar public participation
requirements for the nonattainment major NSR program. See section
IV.B.3 of this preamble.
12. What are the monitoring, recordkeeping, and reporting requirements?
    Sections 110(a)(2)(A) and (C) of the Act require that a
preconstruction permitting program provide for the enforcement of
measures that include ``enforceable emission limitations'' and other
control measures, means, or techniques * * * as well as schedules and
timetables for compliance.'' Section 110(a)(2)(F) additionally requires
that a permitting program may require ``the installation, maintenance,
and replacement of equipment, and the implementation of other necessary
steps by owners and operators of stationary sources to monitor
emissions from such sources,'' as well as ``periodic reports on the
nature and amounts of emissions and emission-related data from such
sources.''
    Generally, we are proposing that all permits issued under this
minor NSR program contain emission limitations that are enforceable as
a practical matter, as well as adequate monitoring, recordkeeping, and
reporting requirements as may be necessary to assure compliance with
those limitations. The requirements for monitoring, recordkeeping, and
reporting are discussed below; See 40 CFR 49.155(a) of the proposed
rule for the complete requirements.
    Monitoring requirements. The permit must include monitoring
requirements sufficient to assure compliance with any control
technology requirements contained in the permit. Monitoring

approaches may include continuous emissions monitoring systems (CEMS),
predictive emissions monitoring systems (PEMS), continuous parameter
monitoring systems (CPMS), periodic manual logging of monitor readings,
equipment inspections, mass balances, periodic performance tests, and/
or emission factors, as appropriate for your minor source based on the
types of emissions units, magnitude of emissions, and air quality
considerations. Such monitoring shall assure use of terms, test
methods, units, and averaging periods consistent with the control
technology and emission limitations required for your source. If the
permit includes a minor source PAL for a pollutant at your minor
stationary source, it must also include monitoring to determine the
actual emissions from your source for each month and the total actual
emissions for each 12-month period, rolled monthly, for that pollutant.
    Recordkeeping requirements. The permit must include recordkeeping
requirements sufficient to assure compliance with the enforceable
emission limitations in your permit. Records of required monitoring
information must include all calculations using emissions factors, all
stack tests or sampling information including date and time of test or
sampling, the name of the company or entity that performed the
analyses, the analytical techniques or methods used, the results of
such analyses and the operating conditions existing at the time of
sampling or measurement. All such records including support information
must be retained for 5 years from the date of the record. Support
information may include all calibration and maintenance records and all
original strip-chart recordings or electronic records for continuous
monitoring instrumentation.
    Reporting requirements. You must provide annual monitoring reports
showing whether you have complied with your permit emission
limitations. You also must provide prompt reports of deviations from
permit requirements, including those attributable to upset conditions
as defined in the permit, the probable cause of such deviations, and
any corrective actions or preventive measures taken. Within a permit,
the reviewing authority must define ``prompt'' in relation to the
degree and type of deviation likely to occur.
13. What are the criteria for general permits, what source categories
generally qualify for them, and what are the permit application
requirements for a general permit?
    A ``general permit'' is a preconstruction permit that may be
applied to a number of similar emissions units or stationary sources.
The purpose of a general permit is to simplify the permit application
and issuance process for similar facilities so that a reviewing
authority's limited resources need not be expended for case-by-case
permit development for such facilities. A general permit may be written
to address a single emissions unit, a group of the same type of
emissions units, or an entire minor source.
    The minor NSR program proposed in this action would allow your
reviewing authority to issue general permits for categories of
emissions units or stationary sources that are similar in nature, have
substantially similar emissions, and would be subject to the same or
substantially similar permit requirements. ``Similar in nature'' refers
to size, processes, and operating conditions. To issue a general
permit, the reviewing authority must provide the same opportunities for
public participation and administrative and judicial review that apply
to minor NSR permits issued to a specific source under this program.
This is true with respect to all aspects of the general permit except
its applicability to an individual source. See proposed 40 CFR
49.156(b).
    Once a general permit has been issued for a source category or
category of emissions units, you may submit an application to be
covered under the general permit if your proposed new minor source or
modification qualifies for coverage under that general permit. Your
reviewing authority may grant or deny your request to construct under a
general permit without further public participation. However, when you
receive approval to be covered under a general permit, you must post a
prominent notice at your source of this approval to construct under the
general permit. Someone may seek judicial review only on the issue of
whether your source qualifies for the general permit. See proposed 40
CFR 49.156(e). We believe that general permits offer a cost-effective
means of issuing permits and provide a quicker and simpler alternative
mechanism for permitting your minor sources than the site-specific
permitting process discussed previously.
    In setting criteria for sources to be covered by general permits,
your reviewing authority would consider the following factors. First,
categories of sources or emissions units covered by a general permit
should be generally homogeneous in terms of operations, processes, and
emissions. All sources or emissions units in the category should have
essentially similar operations or processes and emit pollutants with
similar characteristics. Second, the sources or emissions units should
be expected to warrant the same or substantially similar permit
requirements governing operation, emissions, monitoring, recordkeeping,
or reporting.
    Your sources covered under a general permit would be issued a
letter approving coverage under the general permit. You must maintain
the general permit and the letter at your source location at all times
to be made available for inspection by the reviewing authority.
    General permits may be issued to cover any category of numerous
similar sources, provided that such sources meet the appropriate
criteria. For example, permits can be issued to cover small businesses
such as gas stations or dry cleaners. General permits may also, in some
circumstances, be issued to cover discrete emissions units, such as
individual solvent cleaning machines at industrial complexes. We
request comment on the use of general permits, eligible emissions units
and source categories, and the process of issuing general permits.
14. What is the administrative and judicial review process proposed for
this program?
    We are proposing and seeking comment on two options for reviewing
initial permit decisions by reviewing authorities under this program.
We will discuss these options further, but first we will present the
proposed administrative procedures that we expect to be the same
regardless of which review option we ultimately select.
    The final permit issuance procedures and related notice
requirements are proposed in 40 CFR 49.159(a). After decision on a
permit, the reviewing authority must notify you of the decision, in
writing, and if the permit is denied, of the reasons for the denial. If
the reviewing authority issues a final permit to you, it must make a
copy of the permit available at all of the locations where the draft
permit was made available. In addition, the reviewing authority must
provide adequate public notice of the final

permit decision to ensure that the affected community, general public,
and any individuals who commented on the draft permit have reasonable
access to the decision and supporting materials. Depending on the
circumstances of your permit, the reviewing authority may elect to
provide notice directly to the individuals who commented on the draft
permit and/or use any of the other methods of public notice discussed
in section IV.A.11 of this preamble (related to public notice of the
draft permit).
    We are proposing a requirement that the reviewing authority's final
decision on your permit be based on an administrative record and
requirements on what must be in that record. See proposed 40 CFR
49.159(b) and (c). The proposed rules also include provisions at 40 CFR
49.159(e) that address reopening a permit after it has been issued if
it contains a material mistake or fails to assure compliance with the
permit requirements. In addition, proposed 40 CFR 49.159(f) contains
provisions for administrative permit revisions to make minor changes in
the permit without being subject to the permit application, issuance,
public participation, or administrative and judicial review
requirements of the program.
    We are proposing two options for reviewing initial permit decisions
by reviewing authorities. In Option 1, review of minor NSR permits
would be similar to review of major PSD permits issued under 40 CFR
52.21. To challenge the terms of your permit, you or another party
would have to file a petition for review with our Environmental Appeals
Board (EAB). Decisions by the EAB could be appealed to the Federal
Court of Appeals for the tribal area. Alternatively, in Option 2, the
reviewing authority's initial permit could be appealed directly to the
appropriate Federal Court of Appeals without a requirement to appeal to
the EAB first. There are advantages and disadvantages to both
approaches. We solicit comment on which option we should adopt.
    Option 1. Under Option 1, the proposed administrative and judicial
review process for the minor NSR program parallels the process for PSD
permits issued under 40 CFR 52.21, which is found in 40 CFR part 124.
Since not all of the provisions of part 124 need to apply to this
program, rather than adding the minor NSR program to the list of
programs to which part 124 applies, in this option we are proposing to
include the desired provisions in 40 CFR 49.159. The proposed
provisions are very similar to the part 124 provisions, although they
have been modified to better suit the small sources that will be
covered under the minor NSR program.
    The major difference between Option 1 and Option 2 is that, under
Option 1, permit decisions may be appealed to the EAB within 30 days
after a final permit decision has been issued, and a final permit
typically would not become effective until 30 days after issuance. Upon
filing of a petition for review, the permit would be stayed (i.e., not
go into effect) until the EAB decides whether to review any condition
of the permit and the reviewing authority takes any action required by
the EAB. When the EAB has issued its final order on an appeal, a motion
to reconsider the final order may be filed with the EAB within 10 days.
Only after all administrative remedies under proposed 40 CFR 49.159
have been exhausted could the person(s) filing the petition seek
judicial review.
    Option 2. Option 2 has two major differences from the appeals
process we proposed in Option 1. First, we propose under Option 2 that
permits would become immediately effective upon issuance by the
reviewing authority unless a later effective date is specified. Second,
there is no requirement for seeking EAB review before filing a petition
for review in the Federal Court of Appeals with jurisdiction of the
tribal area. The final agency action for purposes of judicial review is
the issuance of the final permit by the reviewing authority. The permit
is not stayed by the filing of a petition for review. If a party
challenging a permit would like to have your permit stayed, that party
may seek a stay under the provisions of the Administrative Procedures
Act (APA), 5 U.S.C. 705.
    Because the regulatory language for Option 1 is more detailed than
would be required for Option 2, the proposed regulatory text only
addresses Option 1.
    Advantages and Disadvantages of Options 1 and 2. The different
approaches to appeals of reviewing authority decisions result from
section 704 of the APA. This section provides that an agency action
that is otherwise final is final for purposes of judicial review unless
the agency otherwise requires by rule that a party must seek review by
a superior authority within the agency and the agency's action is
meanwhile inoperative. Therefore, if we were to require administrative
review by the EAB or another part of EPA before allowing anyone to seek
judicial review of a permit, then we would be required to stay the
permit for the duration of the appeal. The two options balance the
advantages of EAB review of permits with the desire to not
unnecessarily and inappropriately delay your ability to construct or
modify a new minor source.
    On the one hand, minor NSR permits are for sources and
modifications that emit less than new major sources and major
modifications to major sources. An automatic stay would delay these
smaller projects from going ahead when there is less environmentally at
stake than in a challenge to a PSD or nonattainment major NSR permit.
In those instances where there would be irreparable harm caused by a
project proceeding under a flawed permit, there would still be
available the opportunity to seek a stay under the APA.
    On the other hand, review of permit decisions by the EAB serves as
quality control over decisions by various parts of EPA. The EAB can
ensure that the policies of the Administrator are applied consistently
and appropriately in permit decisions. This may be important when a
tribe receiving a delegation under this rule or an EPA Regional Office
acting as the reviewing authority makes an error in applying the
relevant rules.
    One important consideration would be the timeliness of any review
process. The EAB has specialized expertise in environmental issues,
unlike courts with broader case-loads. The EAB is likely to process a
petition for review faster than a Court of Appeals. Courts of Appeals
necessarily give priority criminal appeals over civil regulatory
matters and thus may delay addressing and resolving permit appeals. In
either the EAB or the Courts of Appeals, it is unlikely that review of
minor NSR permits will be expedited ahead of matters with greater
environmental impact.
    Under Option 2, you may be placed in a difficult situation of
having a permit revoked after proceeding with construction while an
appeal was pending. However, under Option 1, your project cannot
proceed so long as the EAB appeal is pending.
    We seek comment on how to balance these issues. Which option do you
prefer and why? We invite comment on whether either Option 1 or Option
2 is more appropriate for general permits than individual minor source
permits. We also ask for comment on whether there should be a short
delay of 30 days before a permit is effective under Option 1 in order
to allow for parties to seek administrative stays during
reconsideration or to obtain a judicial stay before a permit goes into
effect. Should we establish a mechanism for administrative
reconsideration though the EAB, even when a party is seeking judicial
review in the Court of Appeals? Any input on these issues with

supporting documentation will help us in structuring the final rule.

B. Major NSR Program in Nonattainment Areas of Indian Country

    In today's rulemaking, we are proposing to establish a major NSR
program for new major stationary sources and major modifications at
existing major stationary sources in nonattainment areas of Indian
country at 40 CFR 49.166 through 49.175. This program is designed to
meet the requirements of part D of title I of the Act, and sources
subject to this program would be required to comply with the
requirements of 40 CFR part 51, appendix S (appendix S).
    Appendix S is entitled ``Emission Offset Interpretative Ruling''
and sets forth preconstruction review requirements for major stationary
sources and modifications locating in nonattainment areas where the
State does not have an EPA-approved nonattainment major NSR program. In
general, appendix S is a transitional nonattainment major NSR program
that covers the period after an area has been newly designated as
nonattainment, up until the State has amended its SIP's nonattainment
major NSR program, as needed, to address the new nonattainment area.
The requirements under appendix S are essentially the same as our
requirements for State nonattainment major NSR programs at 40 CFR
51.165.
    Primarily, we believe it is appropriate to apply appendix S
provisions in Indian country for administrative convenience.
Additionally, since appendix S generally applies in nonattainment areas
where there is no approved nonattainment major NSR program, and since
no tribe currently has such a program, we believe that appendix S
should also apply in Indian country. Another reason for requiring
sources subject to this program to comply with appendix S requirements
is that the EPA Regional Offices (which will be implementing the
program until an EPA-approved implementation plan is in place) and
several major sources in Indian country are familiar with the
implementation and provisions of appendix S.
    We considered and rejected the option of amending appendix S to
extend its application to Indian country, since we believe that sources
in Indian country are more likely to look for regulations applicable to
them under part 49, which is solely dedicated to regulations that apply
in Indian country. We also considered drafting a parallel major NSR
regulation to apply to sources in Indian country, but rejected this
option since it would essentially re-propose appendix S provisions,
which have been in effect outside of Indian country for many years. We
wanted to avoid any potential confusion or possible perception that
these parallel regulation requirements would be different than the
appendix S requirements.
    It is important to keep in mind that, in this rulemaking, we are
only seeking comment on our general approach of requiring sources
subject to the major NSR program in Indian country to be subject to the
provisions of appendix S. While we will consider any compelling
rationale or justification from a commenter that a particular provision
in appendix S is not appropriate for Indian country, we will not
entertain general comments on the appendix S provisions, since this
transitional program has been implemented in States across the country
for many years.
1. What are the requirements for major source permitting under appendix
S?
    Pursuant to paragraph IV of appendix S, a reviewing authority may
issue a permit for a new major source or a major modification locating
in a nonattainment area, if it complies with the following conditions:
     The new major source or a major modification meets the
LAER for that source utilizing add-on controls or pollution prevention
measures.
     The applicant certifies that all existing major sources
owned or operated by the applicant (or any entity controlling,
controlled by, or under common control with the applicant) in the same
State as the proposed source are in compliance with (or under a
federally-enforceable compliance schedule for) all applicable emission
limitations and standards under the Act.
     Emission reductions (offsets) from existing sources in the
area of the proposed source (whether or not under the same ownership)
are obtained such that there will be reasonable progress towards
attainment of the applicable NAAQS. Only intrapollutant emission
offsets will be acceptable (e.g., NOx for NOx).
     The emission offsets provide a net air quality benefit in
the affected area.
2. What are the options we are proposing to address the lack of
available offsets in Indian country?
    Tribal representatives have repeatedly stated that requirements for
emission offsets are problematic in Indian country for the following
reasons. Many tribes believe that transport is a major cause of
pollution in Indian country. Tribes, with few exceptions, do not have
many existing sources within their area of Indian country from which
offsets can be obtained. In addition, administrative barriers may
hinder tribal access to otherwise available offsets. Therefore, tribal
representatives have advocated for additional flexibility to address
offsets, such as the provision of NSR offset set-asides (which we
expect would come from State offset pools or banks). Tribal
representatives have raised these and other concerns in discussions on
implementation of the 8-hour ozone and PM2.5 standards, and
in comments on the 8-hour ozone implementation rule.\8\
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    \8\ For example, see the letter from Bill Grantham, National
Tribal Envrionmental Council, to docket EPA-HQ-OAR-2003-0076,
providing comments on the proposed 8-hour ozone implementation rule
(66 FR 32802).
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    We recognize the unique circumstances that tribes face. Unlike
States that have a SIP, a huge industrial base with several hundred
existing sources, and a broad range of measures to attain and maintain
NAAQS, a tribe generally has neither a TIP nor many existing sources
from which to generate offsets. Under these circumstances, we are
proposing two options to address the lack of availability of offsets
for tribes: (1) The Economic Development Zone (EDZ) option and (2) the
appendix S, paragraph VI option. We also are requesting comment on
other potential options for offset relief in Indian country.
    Economic Development Zone Option. We would rely on section
173(a)(1)(B) of the Act wherein the Administrator, in consultation with
the Secretary of Housing and Urban Development (HUD), would identify
areas in Indian country as EDZs such that sources subject to major NSR
located in EDZs in Indian country would be exempt from the offset
requirement in section 173(a)(1)(A) of the Act.
    Section 173(a)(1) of the Act provides for the issuance of permits
to construct and operate a new or modified major stationary source if
the reviewing authority determines that (A) ``* * * sufficient
offsetting emissions reductions have been obtained * * *'' or (B) ``in
the case of a new or modified major stationary source which is located
in a zone (within the nonattainment area) identified by the
Administrator, in consultation with the Secretary of Housing and Urban
Development, as a zone to which economic development should be
targeted, that emissions of such pollutant resulting from the proposed
new or modified major stationary source will not cause or contribute to
emissions levels which

exceed the allowance permitted for such pollutant for such area from
new or modified major stationary sources under section 172(c).''
    Once the Administrator has identified an area that should be
targeted for economic development in consultation with HUD, major
sources that construct or modify within that area are relieved of the
offset requirement if the State/tribe can demonstrate that the new
permitted emissions are consistent with the achievement of reasonable
further progress pursuant to section 172(c)(4) of the Act, and will not
interfere with attainment of the applicable NAAQS by the applicable
attainment date.
    We understand that HUD's Initiative for Renewal Communities, Urban
Empowerment Zones, and Urban Enterprise Communities generally require
that participating communities demonstrate pervasive poverty, high
unemployment, and general distress throughout the designated area. The
U.S. Department of Agriculture requires similar eligibility criteria
for participating communities located in rural areas. We believe that
many areas of Indian country may meet these criteria and hence could
qualify for this offset relief provision. We seek comment on whether
these criteria are appropriate for use in identifying EDZs in Indian
country and if we should consider any other criteria.
    We are also proposing to have the Administrator consult with HUD
only once to develop a general set of approval criteria, such that a
consultation is not required every time a tribe applies for its area of
Indian country to be designated as an EDZ. EPA would provide assistance
as needed for a tribe to complete an EDZ designation request. Once the
Administrator approves such a request from a tribe, a new major source
or a major modification locating in that EDZ would be exempt from the
offset provisions. We seek comment on this approach for providing
offset relief.
    Appendix S, Paragraph VI Option. Paragraph VI of appendix S notes
that in some cases, the dates for attainment of the primary or
secondary NAAQS may not have passed. In such cases, appendix S provides
that a new source locating in a nonattainment area may be exempt from
the requirements of paragraph IV.A of appendix S (discussed in section
IV.B.1 of this preamble), including the offset requirement, if the
following conditions are met:
     The new source complies with the applicable implementation
plan emission limitations;
     The new source will not interfere with the attainment date
for a regulated NSR pollutant; and
     We have determined that the preceding two conditions are
satisfied and such determination is published in the Federal Register.
    Tribes would be able to use this option for offset relief for the
8-hour ozone and PM2.5 NAAQS. For instance, the attainment dates for 8-
hour ozone nonattainment areas range from 2007 for marginal areas to
2021 for severe areas. Hence, a new major source or a major
modification locating in such a nonattainment area prior to the
attainment date may be exempt from the requirements of paragraph IV of
appendix S, if the associated conditions are met.
    It is important to note that this option would provide only
temporary offset relief because it would cease to be available once the
attainment date for a pollutant has passed. For instance, this option
would not be available to marginal 8-hr ozone nonattainment areas after
2007. We seek comment on this paragraph VI option for offset relief.
    We are seeking comment on other potential options for addressing
the lack of availability of offsets in Indian country.
3. What are the proposed public participation requirements for this
program?
    We believe that the public participation requirements of 40 CFR
51.161 apply to permitting under appendix S. Additionally, for the
nonattainment major NSR program, we are proposing detailed public
notice requirements at 40 CFR 49.171. The proposed requirements for the
nonattainment major NSR program are very similar to those proposed for
the minor NSR program at 40 CFR 49.157. See section IV.A.11 for more
information on the proposed requirements.
4. How do I meet the statewide compliance certification requirement of
the Act?
    Pursuant to the statewide compliance certification requirements of
section 173(a)(3) of the Act, an owner or operator of a proposed new or
modified major stationary source must demonstrate that all other major
stationary sources under her/his control in the same State are in
compliance or on a schedule for compliance with all emission
limitations and standards of the Act. It is important to recognize that
the proposed rules will not impact this statewide compliance
certification requirement. However, in the context of Indian country,
we are seeking comments on whether this requirement should be expressed
as an Indian country-wide compliance certification or remain a
statewide certification. In other words, should you be required to
certify that all your sources in the State where your proposed source
is locating are in compliance, or that all your sources in all of
Indian country are in compliance?
    Note that we are proposing a minor change to appendix S that is
related to the ``emission limitations and standards of the Act.''