for its proposed project. Under Step 2, the source owner or operator
would be required to consider all other contemporaneous emissions
increases and decreases from the project, usually within a five-year
time period, even though the project itself would have already resulted
in a decrease in the actual emissions from the facility. Therefore, a
source may decide to forgo transitioning to a lesser-emitting fuel to
avoid going through some of the complexities of Step 2 contemporaneous
netting or potentially having to receive a major NSR permit for a
project that decreases emissions. The Response to Comments document for
this final action contains more details about these projects.\110\
---------------------------------------------------------------------------

    \110\ These comments can be found in Section 4.0 and 5.0 of the
Response to Comments document for this action.
---------------------------------------------------------------------------

    Based on the information and examples provided, the EPA believes
that considering the full scope of the impact of a project ensures that
congressional intent for the NSR program, to ensure environmental
protection while allowing for economic growth, is met. That is to say,
this rule provides more clarity to sources and reviewing authorities
applying the NSR applicability test and potentially reduces the
permitting burden for sources undertaking economically-beneficial
projects that do not produce a greater than de minimis increase in
emissions. The EPA has provided a more complete discussion of the
potential environmental impacts of the rule as well as the difficulties
of accurately projecting such impacts in the Environmental Justice
Considerations Section of this preamble and the same analysis is
provided in the Response to Comments document for this final action.

IV. Environmental Justice Considerations

    In the proposal, the EPA stated that we did not believe that the
proposed revisions to the NSR major modification applicability
regulations would have any effect on environmental justice communities
because the EPA's NSR regulations in place since the 2002 NSR Reform
Rule was finalized to allow project emissions accounting. As such, the
EPA expected no increase in the permitting burden for sources,
reviewing authorities or environmental justice communities after
finalization of the proposed rule revisions.
    Nevertheless, one commenter argued that because the proposed
revisions would alter how major modifications are determined under the
NSR program, they would result in fewer modifications being subject to
major NSR and, therefore, the environmental justice impacts of the rule
must be considered accordingly. The commenter added that it is clear
that the intention of this rulemaking is to reduce the number of
projects that are considered major modifications under NSR and this
will reduce public health and welfare protection. According to the
commenter, this is because fewer facilities will be required to ensure
that the changes they are making are protective of ambient air quality
and fewer facilities will be required to install pollution controls on
new or modified units because their changes will not trigger NSR.
Moreover, the commenter stated that environmental justice initiatives
stem from the fact that facilities with the worst environmental impact
are more likely to be located in areas with higher poverty rates,
communities of color, or tribal lands.
    We continue to believe that these rule revisions will not impact
environmental justice communities in a manner that is different than
any impact this rule might have in any other area of the country. As we
explained in the proposal preamble, and as stated elsewhere in this
preamble, we interpret our regulations to already allow for

project emissions accounting even in the absence of this rule. This
rulemaking will only serve to provide greater clarity with respect to
the major NSR applicability procedures and, thus, will incentivize
states to implement project emissions accounting at their discretion.
This improved clarity itself confers potential benefits to
environmental justice communities by removing a disincentive to the
implementation of energy efficiency improvements and other
environmentally beneficial projects at industrial sources for sources
that might have forgone these projects due to the complexity of the
Step 2 contemporaneous netting analysis.
    However, to aid stakeholders in their assessment of the potential
impacts of this action and to be responsive to the comments received,
we did perform a qualitative analysis of a few examples of actual
projects that may reduce air emissions due to the availability of
project emissions accounting at Step 1 of the NSR major modification
applicability test. These examples are based on the comments received
during the public comment period for this final action, are included as
part of the Response to Comments document for this final action and are
also summarized in the next few paragraphs of this section of the
preamble. This analysis, however, does not provide a qualitative
estimate of the potential environmental impacts of accounting for
emissions decreases at Step 1 of the NSR major modification
applicability test since the commenters did not provide information of
any potential emissions increases or decreases that would have occurred
in these examples based on the availability of project emissions
accounting at Step 1.\111\
---------------------------------------------------------------------------

    \111\ In its preamble to the proposal, the EPA also highlighted
an example of a source that could have saved four additional months
of the overall permitting process timeline and $80,000 had it had
the opportunity to use project emissions accounting, but there were
no emissions implications tied to this example. Thus, it is
conceivable that the permitted source was not beholden to BACT/LAER
emissions reductions or that the source, had it been able to
institute the project earlier, could have instituted emissions
reductions to offset any emissions reductions that may have been
attributed to the resulting BACT/LAER requirements (assuming such
requirements were imposed on the source), while reducing the
permitting time burden and avoiding triggering the major NSR
permitting requirements.
---------------------------------------------------------------------------

    Examples of replacement projects: A source may forgo, the
installation of an end-of-life replacement to avoid NSR permitting
since the emissions would appear as an emissions increase in Step 1 of
the applicability determination even when the replacement would have
reduced the potential emissions. While the new unit in general may be
larger in capacity, their design and material changes generally entail
increased efficiency and lower emissions. Newer units may also
generally contain inherent emissions controls (e.g., heaters equipped
with low NOX burners) that also lower the source's overall
emissions. If the source can count emissions decreases from this
project under project emissions accounting, then the source may be more
likely to undertake the project, or the source owner might expedite it.
However, the project may be foregone if the emission decreases could
only be considered as part of a more complex Step 2 contemporaneous
netting analysis.
    Examples of projects involving the installation of emissions
control equipment: Proposing a project (e.g. expansion that results in
increased tank throughput and cooling capacity) may also include the
installation of emissions control equipment such as installing a
geodesic dome to an external floating roof tank to control volatile
organic content (VOC) emissions, retrofitting a cooling water tower
with drift eliminators to reduce particulate matter emissions; and/or
installing dual-seal pumps to reduce fugitive VOC emissions. If the
consideration of emissions decreases as part of project emissions
accounting at Step 1 were not available, a project that also involves
the installation of emissions control equipment that reduces overall
emissions could be foregone due to the complexities of Step 2
contemporaneous netting.
    Examples of projects involving fuel changes: Project emissions
accounting may also expedite the environmental benefits associated with
converting a unit to a lesser-emitting fuel source. For example, when
emissions decreases are considered at Step 1, a source owner or
operator proposing a project that replaces existing oil-fired boilers
with lesser-emitting natural gas boilers might not trigger permitting
at Step 1, but it would reduce its overall emissions. If project
emissions accounting were not available, the source would likely
trigger Step 1 and also undergo the Step 2 analysis to determine if it
needs a major modification permit for its proposed project. Under Step
2, the source owner or operator would be required to consider all other
contemporaneous emissions increases and decreases from the project,
usually within a five-year time period, even though the project itself
would have already resulted in a decrease in the actual emissions from
the facility. Therefore, a source may decide to forgo transitioning to
a lesser-emitting fuel to avoid going through some of the complexities
of Step 2 contemporaneous netting or potentially having to receive a
major NSR permit for a project that decreases emissions.
    While this rule may allow projects that produce an overall de
minimis increase in emissions to forgo the major NSR permitting
process, the EPA believes that it is equally conceivable that the rule
will create an incentive for sources to adopt emissions-reducing
processes and technology (that may represent control beyond what would
be required for BACT or LAER) that they would not have otherwise
adopted if project emissions accounting were not available. At the very
least, the final rule may expedite efficiency-enhancing projects that
would have otherwise require a more complex and potentially burdensome
Step 2 analysis to determine that the efficiency-enhancing projects
would have ``netted out'' or not be subject to major NSR permitting.
These efficiency improvements may have collateral benefits.
    The EPA also notes that projects at existing major stationary
sources that are determined not to trigger major NSR permitting
requirements, will, in many or most cases, be subject to minor NSR
permitting requirements, regardless of the accounting procedures used
in determining major NSR applicability. Minor NSR permit actions
require the opportunity for public comment,\112\ which provides an
opportunity for stakeholders to raise potential environmental justice
concerns based on the characteristics of the project and the location
of the project relative to any environmental justice communities within
the vicinity of the source.
---------------------------------------------------------------------------

    \112\ 40 CFR 51.161.
---------------------------------------------------------------------------

    Furthermore, while the EPA shares the commenter's concerns
regarding the potential impacts of air pollution on environmental
justice communities, the EPA notes that the NSR program is but one of
many programs that address air pollution under the Clean Air Act.
    In addition, and as noted elsewhere in this preamble and in the
Response to Comments document for this final action, the EPA views
project emissions accounting as being fully consistent with the Act and
the 2002 NSR Reform Rule. Allowing for project emissions accounting
will ensure that a project that itself results in a de minimis increase
in emissions, or even a decrease in emissions, will not be subject to
major NSR. As stated previously, the NSR program was designed to ensure
environmental protection while allowing for economic

growth by managing increases in emissions from economic development.
The EPA believes that project emissions accounting properly balances
those interests. In addition, as noted elsewhere, reviewing authorities
have the discretion to not allow project emissions accounting and to
create or maintain requirements under their SIPs that are at least as
stringent as the requirements specified in the EPA's regulations.
    Finally, current analytical tools and methods do not allow for a
more quantitative analysis of environmental and economic costs
associated with the NSR applicability test at this time. However, the
EPA will consider whether any newly developed analytical tools or
methods would allow for such a quantitative analysis in connection with
some future NSR regulatory action.

V. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive
Order 13563: Improving Regulation and Regulatory Review

    This action is a significant regulatory action that was submitted
to the Office of Management and Budget (OMB) for review since it raises
policy issues arising from the President's priorities. Any changes made
in response to OMB recommendations have been documented in the docket
as required by section 6(a)(3)(E) of Executive Order 12866.

B. Executive Order 13771: Reducing Regulations and Controlling
Regulatory Costs

    This action is considered an Executive Order 13771 deregulatory
action. Before completing this rule, the EPA interpreted its NSR
regulations to allow for project emissions accounting. To the extent
the clarifications included in this rule influence the actions of
sources and reviewing authorities to increase the use of project
emissions accounting, this final rule will provide burden reduction.

C. Paperwork Reduction Act (PRA)

    This action does not impose any new information collection burden
under the PRA. OMB has previously approved the information collection
activities contained in the existing regulations and has assigned OMB
control numbers 2060-0003 for the PSD and NNSR permit programs. The
burden associated with obtaining an NSR permit for a major stationary
source undergoing a major modification is already accounted for under
the approved information collection requests.

D. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic
impact on a substantial number of small entities under the RFA. This
action will not impose any requirements on small entities. Before this
rule was finalized, the EPA interpreted its NSR regulations to allow
for project emissions accounting and, as such, no increased or
decreased burden is expected for sources or reviewing authorities after
the finalization of the clarifications included in this rule.
Furthermore, the EPA is not making the regulatory changes in this final
rule mandatory for adoption and, as such, only major stationary sources
located in areas where reviewing authorities decide to newly implement
project emissions accounting might see a burden reduction if the
consideration of emissions increases and decreases in Step 1 does not
trigger further permitting requirements that may have otherwise
required these major stationary sources to obtain a major NSR permit.

E. Unfunded Mandates Reform Act (UMRA)

    This action does not contain any unfunded federal mandate as
described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or
uniquely affect small governments. The action imposes no enforceable
duty on any state, local or tribal governments or the private sector.

F. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have
substantial direct effects on the states, on the relationship between
the national government and the states, or on the distribution of power
and responsibilities among the various levels of government.

G. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments

    This action does not have tribal implications as specified in
Executive Order 13175. The EPA's NSR major modification applicability
regulations in place after the 2002 NSR Reform Rule allow for the
consideration of emissions increases and decreases in Step 1 of the NSR
major modification applicability test and, as such, the clarifying
revisions being proposed in this rule will not have exclusive tribal
implications. Furthermore, the EPA is currently the reviewing authority
for PSD and NNSR permits issued in tribal lands and, as such, the
clarifying revisions being proposed will not impose direct burdens on
tribal authorities. Thus, Executive Order 13175 does not apply to this
action.

H. Executive Order 13045: Protection of Children From Environmental
Health and Safety Risks

    The EPA interprets Executive Order 13045 as applying only to those
regulatory actions that concern environmental health or safety risks
that the EPA has reason to believe may disproportionately affect
children, per the definition of ``covered regulatory action'' in
section 2-202 of the Executive Order. This action is not subject to
Executive Order 13045 because it does not concern an environmental
health risk or safety risk.

I. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use

    This action is not a ``significant energy action'' because it is
not likely to have a significant adverse effect on the supply,
distribution or use of energy. In addition, and before this rule was
finalized, the EPA interpreted its NSR regulations to allow for project
emissions accounting and, as such, no increased burden is expected for
sources or reviewing authorities after the finalization of the
clarifications included in this rule. Furthermore, the EPA is not
making the regulatory changes in this final rule mandatory for adoption
and, as such, only major stationary sources located in areas where
state and local reviewing authorities decide to newly implement project
emissions accounting might see a burden reduction if the consideration
of emissions increases and decreases in Step 1 does not trigger further
permitting requirements that may have otherwise required these major
stationary sources to obtain a major NSR permit.

J. National Technology Transfer and Advancement Act

    This rulemaking does not involve technical standards.

K. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations

    The EPA believes that this action does not have disproportionately
high and adverse human health or environmental effects on minority
populations, low-income populations and/or indigenous peoples, as
specified in Executive Order 12898 (59 FR 7629, February 16, 1994).

Before this rule was finalized, the EPA interpreted its NSR regulations
to allow for project emissions accounting and this action only
finalized clarifying revisions to the NSR major modification
applicability regulations. Further information on the Environmental
Justice considerations are included in Section IV of this final
action's preamble.

L. Congressional Review Act (CRA)

    This action is subject to the CRA, and the EPA will submit a rule
report to each House of the Congress and to the Comptroller General of
the United States. This action is not a ``major rule'' as defined by 5
U.S.C. 804(2).

M. Judicial Review

    Under CAA section 307(b)(1), petitions for judicial review of any
nationally applicable regulation, or any action the Administrator
``finds and publishes'' as based on a determination of nationwide scope
or effect must be filed in the United States Court of Appeals for the
District of Columbia Circuit within 60 days of the date the
promulgation, approval, or action appears in the Federal Register.\113\
This action is nationally applicable, as it clarifies the applicability
provisions that apply to Step 1 of the NSR major modification
applicability test in 40 CFR 51.165, 51.166, 52, and appendix S to part
51. As a result, petitions for review of this final action must be
filed in the United States Court of Appeals for the District of
Columbia Circuit by January 25, 2021. Filing a petition for
reconsideration by the Administrator of this final action does not
affect the finality of this action for the purposes of judicial review
nor does it extend the time within which a petition for judicial review
must be filed and shall not postpone the effectiveness of this
action.\114\
---------------------------------------------------------------------------

    \113\ 42 U.S.C. 7607(b)(1).
    \114\ 42 U.S.C. 7607(d)(7)(B).
---------------------------------------------------------------------------

VI. Statutory Authority

    The statutory authority for this action is provided by 42 U.S.C.
7401, et seq.

List of Subjects

40 CFR Part 51

    Environmental protection, Air pollution control.

40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by
reference.

Andrew Wheeler,
Administrator.

    For the reasons stated in the preamble, title 40, chapter I of the
Code of Federal Regulations is amended as follows:

PART 51--REQUIREMENTS FOR PREPARATION, ADOPTION, AND SUBMITTAL OF
IMPLEMENTATION PLANS

0
1. The authority citation for part 51 continues to read as follows:

    Authority:  23 U.S.C. 101; 42 U.S.C. 7401-7671q.

Subpart I--Review of New Sources and Modifications

0
2. Section 51.165 is amended by revising paragraph (a)(2)(ii)(F) and
adding paragraph (G) to read as follows:

Sec.  51.165  Permit requirements.

    (a) * * *
    (2) * * *
    (ii) * * *
    (F) Hybrid test for projects that involve multiple types of
emissions units. A significant emissions increase of a regulated NSR
pollutant is projected to occur if the sum of the difference for all
emissions units, using the method specified in paragraphs (a)(2)(ii)(C)
through (D) of this section as applicable with respect to each
emissions unit, equals or exceeds the significant amount for that
pollutant (as defined in paragraph (a)(1)(x) of this section).
    (G) The ``sum of the difference'' as used in paragraphs (C), (D)
and (F) of this section shall include both increases and decreases in
emissions calculated in accordance with those paragraphs.
* * * * *

0
3. Section 51.166 is amended by revising paragraph (a)(7)(iv)(f) and
adding paragraph (g) to read as follows:

Sec.  51.166  Prevention of significant deterioration of air quality.

    (a) * * *
    (7) * * *
    (iv) * * *
    (f) Hybrid test for projects that involve multiple types of
emissions units. A significant emissions increase of a regulated NSR
pollutant is projected to occur if the sum of the difference for all
emissions units, using the method specified in paragraphs (a)(7)(iv)(c)
through (d) of this section as applicable with respect to each
emissions unit, equals or exceeds the significant amount for that
pollutant (as defined in paragraph (b)(23) of this section).
    (g) The ``sum of the difference'' as used in paragraphs (c), (d)
and (f) of this section shall include both increases and decreases in
emissions calculated in accordance with those paragraphs.
* * * * *

Subpart CC--Provisions for Implementation of the 2015 Ozone
National Ambient Air Quality Standards

0
4. Appendix S to part 51 is amended by revising section IV.I.1.(v) and
adding paragraph (vi) to read as follows:

Appendix S to Part 51--Emission Offset Interpretative Ruling

* * * * *

IV. Sources That Would Locate in a Designated Nonattainment Area

* * * * *
    I. Applicability procedures.
    1. * * *
    (v) Hybrid test for projects that involve multiple types of
emissions units. A significant emissions increase of a regulated NSR
pollutant is projected to occur if the sum of the difference for all
emissions units, using the method specified in paragraphs
IV.I.1(iii) through (iv) of this Ruling as applicable with respect
to each emissions unit, equals or exceeds the significant amount for
that pollutant (as defined in paragraph II.A.10 of this Ruling).
    (vi) The ``sum of the difference'' as used in paragraphs (iii),
(iv) and (v) of this section shall include both increases and
decreases in emissions calculated in accordance with those
paragraphs.
* * * * *

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
5. The authority citation for part 52 continues to read as follows:

    Authority:  42 U.S.C. 7401 et seq.

Subpart A--General Provisions

0
6. Section 52.21 is amended by revising paragraph (a)(2)(iv)(f) and
adding paragraph (g) to read as follows:

Sec.  52.21  Prevention of significant deterioration of air quality.

    (a) * * *
    (2) * * *
    (iv) * * *
    (f) Hybrid test for projects that involve multiple types of
emissions units. A significant emissions increase of a regulated NSR
pollutant is projected to occur if the sum of the difference for all
emissions units, using the method specified in paragraphs (a)(2)(iv)(c)

through (d) of this section as applicable with respect to each
emissions unit, equals or exceeds the significant amount for that
pollutant (as defined in paragraph (b)(23) of this section).
    (g) The ``sum of the difference'' as used in paragraphs (c), (d)
and (f) of this section shall include both increases and decreases in
emissions calculated in accordance with those paragraphs.
* * * * *
[FR Doc. 2020-23784 Filed 11-23-20; 8:45 am]
BILLING CODE 6560-50-P