[Federal Register Volume 76, Number 127 (Friday, July 1, 2011)]
[Rules and Regulations]
[Pages 38748-38808]
[FR Doc No: 2011-14981]

Vol. 76

Friday,

No. 127

July 1, 2011

Part II

Environmental Protection Agency

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40 CFR Parts 49 and 51

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

Federal Register / Vol. 76 , No. 127 / Friday, July 1, 2011 / Rules
and Regulations

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 49 and 51

[EPA-HQ-OAR-2003-0076; FRL-9320-2]
RIN 2060-AH37

Review of New Sources and Modifications in Indian Country

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The EPA is finalizing a Federal Implementation Plan (FIP)
under the Clean Air Act (CAA or Act) for Indian country. The FIP
includes two New Source Review (NSR) regulations for the protection of
air resources in Indian country. The first rule applies to new and
modified minor stationary sources (minor sources) and to minor
modifications at existing major stationary sources (major sources)
throughout Indian country. The second rule (nonattainment major NSR
rule) applies to new and modified major sources in areas of Indian
country that are designated as not attaining the National Ambient Air
Quality Standards (NAAQS). These rules will be implemented by EPA or a
delegate Tribal agency assisting EPA with administration of the rules,
until replaced by an EPA-approved implementation plan.

DATES: This final rule is effective on August 30, 2011.

ADDRESSES: The EPA has established a docket for this action under
Docket ID No. EPA-HQ-OAR-2003-0076. All documents in the docket are
listed on the http://www.regulations.gov Web site. 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, is not placed on the
Internet and will be publicly available only in hard copy form.
Publicly available docket materials are available either electronically
through http://www.regulations.gov or in hard copy at the Air and
Radiation Docket and Information Center, EPA/DC, EPA West, Room 3334,
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 and Radiation
Docket and Information Center is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Ms. Jessica Monta[ntilde]ez, Air
Quality Policy Division, Office of Air Quality Planning and Standards
(C504-03), U.S. Environmental Protection Agency, Research Triangle
Park, North Carolina 27711, telephone number<PHONE_NUMBER>, facsimile
number<PHONE_NUMBER>, e-mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: The information in this preamble is
organized as follows:

I. General Information
    A. Does this action apply to me?
    B. Where can I get a copy of this document and other related
information?
II. Overview of the Final Rules
III. Background
    A. What is 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. What is the basis for EPA's authority to implement CAA
programs in Indian country?
    C. What is the status of the NSR air quality programs in Indian
country?
    D. What consultation and outreach has been done with Tribal
leaders and representatives?
IV. Final Minor NSR Program for Indian Country
    A. General Provisions Under the Minor NSR Program
    1. What is a minor source and which minor sources are subject to
this rule?
    a. Minor Source Definition
    b. Determining Applicability for New Minor Sources
    2. What is a modification and which modifications are subject to
this rule?
    a. Definition of ``Modification''
    b. Determining Applicability for Modifications
    3. What are the minor NSR thresholds?
    4. What emissions units and activities at minor sources are
exempt from this rule?
    B. Site-Specific Permits
    1. What are the requirements for permit applications?
    2. What technical reviews must the reviewing authority conduct?
    a. Control Technology Review
    b. Air Quality Impacts Analysis (AQIA)
    3. What are the permit content requirements?
    a. Emissions Limitations
    b. Monitoring, Recordkeeping and Reporting
    c. Other Permit Content Requirements
    4. What are the permit issuance procedures, permit term and
public participation requirements?
    a. Permit Issuance Process
    b. Permit Term
    c. Public Participation Requirements
    5. What are the provisions for final action on a permit, permit
reopenings, administrative permit revisions and administrative and
judicial review procedures?
    a. Final Action on a Permit
    b. Permit Reopenings
    c. Administrative Permit Revisions
    d. Administrative and Judicial Review Procedures
    C. General Permits
    1. What is a ``General Permit''?
    2. What is the process for issuing general permits?
    3. For what categories will general permits be issued?
    4. What are the permit content requirements for general permits?
    5. What is the process that you may use for obtaining coverage
under a general permit?
    D. Synthetic Minor Source Permits
    E. Case-by-Case MACT Determinations Under Section 112(g) of the
Act
    F. Treatment of Existing Minor Sources Under the Final Minor NSR
Program
V. Final Major NSR Program for Nonattainment Areas in Indian Country
    A. What are the requirements for major source permitting?
    B. How is EPA addressing the lack of available offsets in Indian
country?
    1. Economic Development Zone Option
    2. Appendix S, Paragraph VI Option
    C. How do I meet the statewide compliance certification
requirement of the Act and Appendix S?
    D. What are the public participation requirements of this
program?
    E. What are the provisions for final action on a permit, permit
reopenings and administrative and judicial review procedures?
    1. Final Action on a Permit
    2. Permit Reopenings
    3. Administrative and Judicial Review Procedures
    F. How is EPA revising Appendix S?
VI. Legal Basis, Statutory Authority and Jurisdictional Issues
    A. What is the basis for EPA's authority to implement these NSR
programs in Indian country?
    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?
VII. Implementation Issues
    A. Are Tribes allowed to collect fees for NSR permitting?
    B. Who retains enforcement authority in Indian country?
    C. What is the implementation schedule for the final rules?
VIII. 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. National Technology Transfer and Advancement Act
    J. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
    K. Congressional Review Act
IX. Statutory Authority

I. General Information

A. Does this action apply to me?

    Entities potentially affected by this final rule 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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                                                  Examples of regulated
             Category               NAICS \a\           entities
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Industry.........................        21111  Oil and gas production/
                                                 operations.
                                        211111  Crude petroleum and
                                                 natural gas extraction
                                        211112  Natural gas liquid
                                                 extraction.
                                        212321  Sand and gravel mining.
                                         22111  Electric power
                                                 generation.
                                        221210  Natural gas
                                                 distribution.
                                         22132  Sewage treatment
                                                 facilities.
                                         23899  Sand and shot blasting
                                                 operations.
                                        311119  Animal food
                                                 manufacturing.
                                          3116  Beef cattle complex,
                                                 slaughter house and
                                                 meat packing plant.
                                        321113  Sawmills.
                                        321212  Softwood veneer and
                                                 plywood Manufacturing.
                                         32191  Millwork (wood products
                                                 mfg).
                                        323110  Printing operations
                                                 (lithographic).
                                        324121  Asphalt hot mix.
                                          3251  Chemical preparation.
                                         32711  Clay and ceramics
                                                 operations (kilns).
                                         32732  Concrete batching plant.
                                          3279  Fiber glass operations.
                                        331511  Casting foundry (Iron).
                                          3323  Fabricated structural
                                                 metal.
                                        332812  Surface coating
                                                 operations.
                                          3329  Fabricated metal
                                                 products.
                                         33311  Machinery manufacturing.
                                         33711  Wood kitchen cabinet
                                                 manufacturing.
                                         42451  Grain elevator.
                                         42471  Gasoline bulk plant.
                                          4471  Gasoline station.
                                         54171  Professional, scientific
                                                 and technical services.
                                        562212  Solid waste landfill.
                                         72112  Other (natural gas-fired
                                                 boilers).\b\
                                        811121  Auto body refinishing.
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.
------------------------------------------------------------------------
\a\ North American Industry Classification System.
\b\ Used NAICS code designated for casino hotels. However, the projected
  new and modified sources listed under ``other (natural gas-fired
  boilers)'' include not only boilers at casino hotels, but also new
  sources listed as ``boilers'' and new Tribal government facilities
  assumed to have natural gas fired boilers.

    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 final minor and
major NSR programs for Indian country, 40 CFR 49.151 through 49.161 and
through 49.175, 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. 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 final rule will also be available on the World Wide Web. Following
signature by the EPA Administrator, a copy of this final rule 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.

II. Overview of the Final Rules

    The EPA is ensuring that air resources in Indian country will be
protected in the manner intended by the Act by establishing a
preconstruction permitting program for new or modified minor sources,
minor modifications at major sources, and new major sources or major
modifications in nonattainment areas. In addition, we are establishing
a minor source permitting mechanism for major sources that wish to
voluntarily limit emissions to become synthetic minor sources \1\ and
for approving case-by-case maximum achievable control technology (MACT)
determinations.\2\ Prior to this action, there has been no

Federal permitting mechanism for minor sources in Indian country and
for major sources in areas of Indian country that are designated as not
attaining the NAAQS. These final rules will fill this regulatory gap.
In addition, these rules will provide regulatory certainty to allow for
environmentally sound economic growth in Indian country.
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    \1\ 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 FIPs applicable to those reservations until this rule becomes
effective. See 40 CFR 49.139 and 40 CFR part 49, subpart M. However,
after the effective date of this rule, sources seeking synthetic
minor status within the exterior boundaries of Indian reservations
in these three states as well as the rest of Indian country must
apply for synthetic minor source permits under the provisions of
this rule.
    \2\ Section 112(g)(2)(B) of the Act provides that you may not
construct or reconstruct a major source of HAPs unless the
appropriate permitting authority determines that MACT for new
sources will be met. If the Administrator has not established a MACT
standard for the source category, the Act requires that MACT be
determined on a case-by-case basis. See Section IV.E. of this
preamble for more information on case-by-case MACT determinations.
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    The minor NSR rule applies to new and modified minor sources and to
minor modifications at major sources. New minor sources with a
potential to emit (PTE) equal to or greater than the minor NSR
thresholds or modifications at minor sources with allowable emissions
increases equal to or greater than the minor NSR thresholds must apply
for and obtain a minor NSR permit prior to commencing construction of
the new source or modification. At an existing major source, if a
proposed modification does not qualify as a major modification (which
would be subject to major NSR) based on the actual-to-projected-actual
test, it is considered a minor modification and is subject to the minor
NSR program requirements, if the net emissions increase from the
actual-to-projected-actual test is equal to or exceeds the minor NSR
thresholds listed in Table 1 of section IV.A.3 of this preamble. A
major source with such a minor modification must apply for and obtain a
minor NSR permit prior to commencing construction of the minor
modification. In addition, these sources must install and operate
control technology as determined by the reviewing authority on a case-
by-case basis. At the discretion of the reviewing authority, such
sources may also be required to submit air quality impact analyses as
part of their permit applications. For minor sources, as an alternative
to a site-specific permit, some sources can request for coverage under
a general permit.\3\
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    \3\ As described in section IV.C of this preamble, a general
permit is a preconstruction permit that may be applied to a number
of similar emission units or sources. The purpose of a general
permit is to simplify the permit issuance process for similar
facilities so that a reviewing authority's limited resources need
not be expended for site-specific permit development for such
facilities.
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    This rule will also allow otherwise major sources in Indian country
to voluntarily accept emission limitations on their PTE to become
``synthetic minor sources.'' Synthetic minor sources may include
sources that emit regulated NSR pollutants and/or hazardous air
pollutants (HAPs) \4\ and any limitations on PTE must be enforceable as
a practical matter (that is, both legally and practicably enforceable)
as defined in this regulation under 40 CFR 49.152(d). 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 has been available in Federal regulations for
Indian country, which discouraged sources that could qualify as
synthetic minors from locating in areas of Indian country outside these
three states. We therefore believe that inclusion of this provision in
the final rules will significantly benefit Tribes by encouraging larger
sources that can qualify as synthetic minors to locate in Indian
country, thereby promoting environmentally sound economic growth.
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    \4\ In such cases, these sources will be subject to the minor
NSR regulations under 40 CFR 49.151-49.165 and/or the applicable
area source regulations under 40 CFR part 63. These sources will not
be subject to the major NSR regulations under 40 CFR 52.21 (PSD) and
40 CFR 49.166 through 49.175 (nonattainment major NSR), the major
source MACT regulations under 40 CFR part 63 and/or the title V
operating permit regulations. For information on when a major HAP
source can obtain federally enforceable limits on its potential to
emit, see the policy memorandum titled: ``Potential to Emit for MACT
Standards--Guidance on Timing Issues,'' John S. Seitz, EPA, May 16,
1995.
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    Synthetic minor sources will undergo site-specific permitting; that
is, general permits will not be issued to synthetic minor sources.
However, we intend to develop general permits for some common types of
emissions units and minor sources to streamline the permitting process.
The initial establishment of the general permit will include control
technology review and associated emission limits. Thus, sources will
not be required to conduct a case-by-case control technology review
when they apply for coverage under a general permit.
    Under the nonattainment major NSR rule, affected sources are
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 an
approved nonattainment major NSR program for a particular pollutant in
their State Implementation Plan (SIP). Sources subject to this rule
must meet requirements for Lowest Achievable Emission Rate (LAER)
control technology, emissions offsets and compliance certification.
    We are adopting these final rules after further evaluation of the
proposed provisions and consideration of the public comments. On August
21, 2006 (71 FR 48696), EPA proposed the ``Review of New Sources and
Modifications in Indian Country'' (i.e., Tribal NSR rules). EPA also
held an extensive outreach and consultation period (described in
section III.D of this preamble), along with an extensive public comment
period that ended on March 20, 2007. The comments provided detailed
information specific to Indian country and the final rules incorporate
many of the suggestions we received. We respond to many of these
comments in explaining our rationale for the final rules, which is
described in sections IV through VII.
    The final rules adopt many elements of the proposal, but differ
from the proposal in several important respects. For the minor NSR
rule, we had proposed a 30-day public comment period for the initial
establishment of the general permit and also proposed that coverage of
individual sources under general permits would not undergo a public
comment period. In the final rule, to address concerns from Tribes, we
have slightly changed the proposed notification provisions. A source
that wants to request coverage under the general permit will be
required to submit such request to the reviewing authority. At the same
time, the source owner must also submit a copy of this request to the
Tribe in the area where the source is locating. We will also post
notice of the coverage request under a general permit on our Web site.
During our review of your request for coverage under the general
permit, commenters can only notify us of any concerns about the
eligibility of your source to obtain coverage under that general permit
and not on any other issue. For the minor NSR rule, we had also
proposed Plantwide Applicability Limitations (PALs) and project
netting. A minor source PAL would have been a source-wide limitation on
allowable emissions of a regulated NSR pollutant expressed in tons per
year (tpy) that was enforceable as a practical matter. However, we are
not finalizing minor source PALs after consideration of the comments we
received. At this time, we are also not finalizing project netting, the
calculation of the total emissions increase that would result from a
proposed modification by summing both the increases and decreases
resulting from the modification, since we decided not to take final
action on project netting for the major NSR program. (See Prevention of
Significant Deterioration (PSD) and Nonattainment New Source Review
(NSR): Aggregation and Project Netting; 74 FR 2376.)
    Regarding the proposed list of emissions units and activities that
will be exempted from the minor NSR program, we are finalizing an
amended list. This list takes into consideration the comments received
and the recent

developments in greenhouse gas regulations. We are also committing to
the development of a supplemental rule to determine if additional
exempted units/activities should be added to the list.
    Furthermore, to address commenters' concerns about EPA's ability to
issue minor NSR permits on a timely basis, we have decided to phase in
the implementation dates of these rules. For example, we are delaying
the implementation date of this rule for new and modified true minor
sources by the earlier of 6 months after the general permit for a
source category is published in the Federal Register or 36 months from
the effective date of this rule, that is, September 2, 2014. Existing
true minor sources will not be subject to the requirements of the minor
NSR program until they propose a modification. However, true minor
sources will be required to register within 18 months from the
effective date of this rule, that is, by March 1, 2013, or within 90
days after the source begins operation, whichever is later (see section
VII.C of this preamble for more details on these provisions).
    For the major NSR rule, we are not finalizing the proposed Appendix
S, paragraph VI as an option for offset \5\ waivers due to certain
comments raising concerns with implementation of this waiver. Relative
to the compliance certification requirement,\6\ we are finalizing a
state-wide compliance requirement consistent with section 173(a)(3) of
the Act.
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    \5\ Under the CAA, emissions 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. See section
173(a)(1) of the Act.
    \6\ Also under the CAA, a permit applicant must certify 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. See section 173(a)(3) of the Act.
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    We are finalizing the minor NSR and the nonattainment major NSR
permit programs pursuant to section 110(a)(2)(C), part D of title I and
section 301(d) of the Act.

III. Background

A. What is 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 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
title 40 of the Code of Federal Regulations (CFR), Sec. Sec.  51.165,
51.166, 52.21 and 52.24 (40 CFR 51.165, 51.166, 52.21 and 52.24) and 40
CFR 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 both attainment and nonattainment
areas. For nonattainment areas, these thresholds are 100 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.\7\ A new
source with a PTE at or above the applicable threshold amount
``triggers,'' or is subject to, major NSR.
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    \7\ Sources listed in section 169(l) of the Act are subject to a
threshold of 100 tpy (see 40 CFR 52.21(b)(1)(i)(a)). All other
sources are subject to a 250 tpy threshold. (See 40 CFR
52.21(b)(1)(i)(b).) In addition, under the recently finalized
``Greenhouse Gas Tailoring Rule,'' greenhouse gases will be phased
into the PSD program with higher applicability thresholds (75 FR
31514).
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    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 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) for PSD or 40 CFR part 51, Appendix S, paragraph
II.A.10 for nonattainment major NSR); and
    (3) The increase in emissions resulting from the change must result
in a significant net emissions increase. In other words, when the
increase from the project is added to other contemporaneous increases
and decreases in actual emissions \8\ 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) for PSD or 40 CFR part 51, Appendix S,
paragraph II.A.10 for nonattainment major NSR).
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    \8\ 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 40
CFR 52.21(b)(3)(ii) for PSD. For nonattainment major NSR, see, 40
CFR part 51, Appendix S, paragraph II.A.6(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 lowest
achievable emission rate. The lowest achievable emission rate 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
proposed major 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 or equal to 10 microns in aerodynamic
diameter (PM10), the more polluted the air is where the
source is locating or expanding, the greater the required offset ratio
is. 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 nonattainment major 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 nonattainment major NSR permit applicant
must demonstrate that all other major 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 the NAAQS.
Parts C and D address the major NSR program for major sources and the
permitting program for minor 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 source means a source whose PTE is lower
than the major NSR applicability threshold for a particular pollutant
as defined in the applicable nonattainment major NSR program or PSD
program.
    States must develop minor NSR programs to attain and maintain the
NAAQS and the Federal requirements for state minor NSR programs are
outlined in 40 CFR 51.160 through 51.164. These Federal requirements
for minor NSR programs are considerably less prescribed than those for
major sources and as a result there is a larger variation of
requirements in the state minor NSR programs.
    Furthermore, 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 source construction activities in Indian country.

B. What is the basis for EPA's authority to implement CAA programs in
Indian country?

    The Tribal Authority Rule (TAR) authorizes eligible Indian Tribes
to implement EPA-approved nonattainment major NSR (part D of title I of
the Act), PSD (part C of title I of the Act) and other programs under
the Act in the same manner as states. This is accomplished when Indian
Tribes develop Tribal Implementation Plans (TIPs), which are plans
similar to SIPs. If a Tribe develops a TIP to implement a CAA program,
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
responsible for implementing that particular program. However, if
Indian Tribes are unable or choose not to include a CAA program such as
NSR in a TIP, we will implement the program under these rules.
    The Act provides us with broad authority to protect air resources
throughout the Nation, including air resources in Indian country. See,
for example, the preamble discussion for the proposed and final TAR (59
FR 43956, 43958-61, August 25, 1994; 63 FR 7254, 7262-64, February 12,
1998) and the preamble discussion for the proposed revisions to the
part 71 Federal operating permits program for Indian country (62 FR
13748, 13750, March 21, 1997). In the preambles to the proposed and
final TAR, we discussed generally the legal basis under the Act for EPA
and Tribal regulation of sources of air pollution in Indian country. We
concluded that the Act constitutes a statutory delegation of Federal
authority to eligible Tribes over all sources of air pollution within
the exterior boundaries of their reservations.
    Further, under the Act, Tribes may also apply to administer Tribal
air quality programs for non-reservation areas over which they can show
jurisdiction.\9\ See 63 FR 7254-7259; 59 FR 43958-43960; Arizona Public
Service Co. v. EPA, 211 F.3d 1280 (DC Cir. 2000), cert. den., 532 U.S.
970 (2001).
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    \9\ We believe that in the context of programs under the Act,
states generally lack the authority to regulate air quality in
Indian country as defined in 18 U.S.C. 1151. See Alaska v. Native
Village of Venetie Tribal Government, 522 U.S. 520, 527 fn. 1 (1998)
(``Generally speaking, primary jurisdiction over land that is Indian
country rests with the Federal Government and the Indian tribe
inhabiting it and not with the States.''), California v. Cabazon
Band of Mission Indians, 480 U.S. 202 (1987) and HRI v. EPA, 198
F.3d 1224 (10th Cir. 2000); see also discussion in EPA's final rule
for the federal operating permits program (64 FR 8251-8255, February
19, 1999). To provide additional certainty to regulated entities, we
believe it is helpful to clarify the extent to which state NSR
programs have force in Indian country. We interpret past approvals
and delegations of NSR programs as not extending to Indian country
unless the state has made an explicit demonstration of jurisdiction
over Indian country and we have explicitly approved or delegated the
state's program for such area. This is consistent with Congress'
requirement that we approve state and tribal programs only where
there is a demonstration of adequate authority. See sections
110(a)(2)(E), 110(o) and 301(d) of the Act and 40 CFR part 49. Since
states generally lack the authority to regulate air resources in
Indian country, we do not believe it would be appropriate for us to
approve state programs under the Act as covering Indian country
where there has not been an explicit demonstration of adequate
jurisdiction and where we have not explicitly indicated our intent
to approve the state program for an area of Indian country. In state
NSR program approvals and delegations, we generally were not faced
with state assertions of authority to regulate sources in Indian
country. However, to the extent states or others may have
interpreted our past approvals or delegations that were not based on
explicit demonstrations of adequate authority and did not explicitly
grant approval in Indian country as approvals to operate NSR
programs in Indian country, we wish to clarify any such
misunderstanding.
---------------------------------------------------------------------------

    In the preamble to the TAR, we also concluded that the Act
authorizes us to protect air quality throughout Indian country. See 63
FR 7262, 59 FR 43960-43961 citing sections 101(b)(1), 301(a) and 301(d)
of the Act.
    In addition, section 301(a) of the Act provides us broad authority
to issue such regulations as are necessary to carry out the mandates of
the Act. Several provisions of the Act call for Federal implementation
of a program where, for example, a state or in this case a Tribe, fails
to adopt a program or adopts an inadequate program. See, for example,
sections 110(c)(1), 502(d)(3) and 502(i)(4) of the Act. These
provisions exist in part to ensure that the benefits of the Act are
realized throughout the United States, whether or not local governments
choose to participate in implementing the Act. Especially in light of
the problems associated with transport of air pollution across state
and Tribal boundaries, it follows that Congress intended that we have
the authority to operate a Federal program in the absence of an
adequately implemented EPA-approved program. See, for example, 59 FR
43958-61, August 25, 1994; 62 FR 13750, March 21, 1997 and 63 FR 7262-
64, February 12, 1998.
    This interpretation is most evident from Congress' grant of
authority to the EPA under section 301(d)(4) of the Act. Section
301(d)(4) authorizes the Administrator to directly administer
provisions of the Act so as to achieve the appropriate purpose where
Tribal implementation of those provisions is inappropriate or
administratively infeasible. We determined that it is inappropriate to
subject Tribes, among other things, to the mandatory submittal
deadlines and to the related Federal oversight mechanisms in section
110(c)(1) of the Act, which are triggered when we make a finding that
states have failed to meet required deadlines or disapprove a state
plan submittal. See 40 CFR 49.4(d).
    By determining that Tribes should not be treated similarly to
states for purposes of the specific FIP obligation under section
110(c)(1) of the Act, we are not relieved of the general obligation

under the Act to ensure the protection of air quality throughout the
Nation, including throughout Indian country. Rather, consistent with
the provisions of sections 301(a) and 301(d)(4) of the Act, we
expressed our intent to promulgate without unreasonable delay such FIP
provisions as are necessary or appropriate to protect air quality if
Tribal efforts do not result in adoption and approval of Tribal plans
or programs. See 63 FR 7265, 40 CFR 49.11.
    Under section 301(d)(4) of the Act, Congress authorized the EPA to
maintain the territorial approach by implementing the Act in Indian
country in the absence of an EPA-approved program. We believe that
Congress authorized us, consistent with our Indian policy, to avoid the
checker-boarding of Indian reservations based on land ownership by
Federally implementing the Act over all reservation sources in the
absence of an EPA-approved Tribal program. See S. Rep. No. 228, 101st
Cong., 1st Sess. 79 (1989) (implementation of the Act to be in a manner
consistent with EPA's Indian policy). In addition, section 301(d)(4)
authorized us to implement the Act in non-reservation areas of Indian
country in order to fill any gap in program coverage and to ensure an
efficient and effective transition to EPA-approved programs.
    Our interpretation of section 301(d) of the Act as authorizing our
implementation throughout Indian country is also supported by the
legislative history. See S. Rep. No. 228, 101st Cong., 1st Sess. 80
(1989) (noting that section 301(d) of the Act authorizes the EPA to
implement provisions of the Act throughout ``Indian country'' when
there is no approved Tribal program); Id. at 80 (noting that criminal
sanctions are to be levied by the EPA, ``consistent with the Federal
government's general authority in Indian country''); Id. at 79 (the
purpose of section 301(d) of the Act is to ``improve the environmental
quality of the air within Indian country in a manner consistent with
the EPA Indian Policy'').
    Therefore, with these final rules, we will exercise our authority
to administer the minor NSR permitting program and the nonattainment
major NSR program in Indian country, which is generally the area over
which a Tribe may potentially receive approval of programs under the
Act. As noted in the final TAR, we interpret the Act as establishing a
territorial approach to implementation of the Act within Indian country
by delegating to eligible Tribes authority over all reservation sources
without differentiating among the various categories of on-reservation
lands (63 FR 7254-7258). In addition, the Act authorizes eligible
Tribes to implement Tribal programs under the Act in non-reservation
areas over which a Tribe has jurisdiction, generally including all
areas of Indian country (63 FR 7258-7259).
    In order to further our commitment to use our authority under the
Act to protect air quality throughout Indian country by directly
implementing the Act's requirements, we are now exercising the
rulemaking authority entrusted to us by Congress to directly implement
the minor NSR permitting program and nonattainment major NSR permitting
program throughout all areas of Indian country. See generally, Chevron
USA, Inc. v. NRDC, 467 U.S. 837, 842-45 (1984).

C. What is the status of the NSR air quality programs in Indian
country?

    No Tribe is currently administering an EPA-approved PSD program.
Therefore, EPA has been implementing a FIP for major sources in
attainment areas and has been issuing PSD permits in Indian country.
See 40 CFR 52.21. For the nonattainment major NSR program or the minor
NSR program in Indian country, no Tribes have been administering an
EPA-approved nonattainment major NSR program and only a few Tribes have
been administering EPA-approved minor NSR programs.\10\ In addition,
there has been no FIP in place to implement these programs until now.
Hence, there was a regulatory gap in Indian country. This final rule
will allow us to address that gap and more fully implement the NSR
program in Indian country. We are finalizing 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 and these programs will continue to apply
except where we explicitly approve an implementation plan for such
programs for a specific area in Indian country.\11\ The requirements
finalized under these rules do not apply to State permitting programs.
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    \10\ For example, the St. Regis Mohawk Tribe has in place an
EPA-approved TIP that includes provisions for minor NSR and
synthetic minor permitting (See http://www.srmtenv.org/pdf_files/airtip.pdf). In addition, the Gila River Indian Community has
developed a TIP that includes a minor NSR program (See http://www.epa.gov/region9/air/actions/gila-river.html).
    \11\ Although many states have developed regulatory programs for
minor sources, those programs do not apply in Indian country unless
explicitly approved by EPA for such areas.
---------------------------------------------------------------------------

    As we stated previously, sections 301(d) and 110(o) of the Act give
the Tribes the authority to develop their own Tribal programs and we
encourage eligible Tribes to develop their own minor and nonattainment
major NSR programs for incorporation into TIPs. However, we understand
that not all Tribes have the resources to design and implement NSR
programs; therefore, in the absence of an EPA-approved program, this
final rulemaking provides a Federal program for implementing the minor
NSR and the major NSR program in nonattainment areas of Indian country.
Tribes may use this program as a model if they choose to develop their
own Tribal Implementation plans and obtain our approval.
    Since, in most cases and in the absence of an EPA-approved program,
it would be neither practical nor administratively feasible for us to
develop and implement a separate program for each area of Indian
country,; these final rules will implement a flexible FIP for Indian
country that provides new and modified minor sources and major sources
in nonattainment areas with procedures to demonstrate that they will be
operating in a manner that is protective of air resources and the
NAAQS. In addition, these rules will ensure that any economic growth
occurring in Indian country will be in harmony with the preservation of
Clean Air Act resources.

D. What consultation and outreach has been done with Tribal leaders and
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 these rules.
    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. In addition,
53 percent of the Tribal leaders also requested direct phone calls or
conference calls to discuss the subject and 16 percent of the
respondents requested face-to-face consultation. Of these, 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. We also participated in numerous national and regional forums
including the National Tribal Forums sponsored by the ITEP, two
National Tribal Air Association meetings and 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 these rules. 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.\12\
---------------------------------------------------------------------------

    \12\ This organization has since changed its name to the
National Association of Clean Air Agencies (NACAA).
---------------------------------------------------------------------------

    We considered feedback from all stakeholders and proposed the
``Review of New Sources and Modifications in Indian Country'' rules on
August 21, 2006 (71 FR 48696). However, Tribal government
representatives expressed concerns that the long gap between
consultation/outreach and action by the Agency undermined the
effectiveness of these interactions. Thus, after proposal of the rule,
we started an extensive outreach program in the years 2006 and 2007 to
inform and seek comments from the public, especially Tribes.
    We again sent over 500 letters to Tribal leaders to inform them
about the proposal. We did not receive any formal responses to these
letters and did not receive any request for formal consultation from
the Tribes, but they contacted us either through e-mail or phone calls
and asked to keep them informed of our progress through e-mail,
meetings, training sessions, newsletters and/or Web sites. To enhance
understanding of the proposal and what it would mean for Indian
country, we supplemented the 2006 outreach efforts by holding four
training sessions using Web conferencing not only for Tribes, but also
for EPA Regional Offices, air program managers and Tribal
organizations. We also held training sessions in 2006 and at the
request of the Tribes for interested Tribal and other environmental
professionals at the Pechanga Band of Luise[ntilde]o Indians in
California and Salt River Pima-Maricopa Indian Community in Arizona. In
addition, we held training sessions for all interested parties at EPA
Region V's Tribal Air Meeting in Illinois (2006) and EPA's Region X's
office in Washington (2007).
    We participated in numerous national and regional forums including
the forums sponsored by the Institute of Tribal Environmental
Professionals, the National Tribal Air Association and at meetings with
Tribal consortia, such as the United Southern and Eastern Tribes. We
also interacted with state and local air pollution agencies during this
outreach period and had meetings with the NACAA.
    Furthermore, we extended and reopened the comment period for the
proposed rules twice (from November 20, 2006 to January 19, 2007 and
from January 19, 2007 to March 20, 2007) at the request of the Tribes.
During this time, we also recorded and presented a webcast video for
all interested stakeholders to train more environmental professionals
about the NSR program and the rules themselves.
    To address the concern about the long gap between the proposal and
finalization of the rules and to ensure that the Tribes are aware of
the proposed rules and their provisions, we held a series of meetings
in 2010 with the National Tribal Operations Committee, interested
Regional Tribal Operations Committees and interested Tribal
environmental staff. In 2011, we sent letters to all Tribes to ask them
about their interest in an additional round of consultation and
outreach and, based on their responses, we have conducted consultation
and outreach meetings with several Tribes. These meetings included a
face-to-face meeting in Denver, Colorado with a number of Tribes within
EPA Region VIII and four conference calls with Tribes from across the
country.
    After these rules are promulgated, we intend to conduct similar
outreach efforts with all stakeholders, including extensive training to
facilitate easier implementation of the rules.

IV. Final Minor NSR Program for Indian Country

    This rulemaking finalizes provisions for a minor NSR program in
Indian country, codified at 40 CFR 49.151 through 49.165. The program
includes requirements for preconstruction review for minor sources and
minor modifications, general permits and synthetic minor source
permits. The minor NSR program also serves as a mechanism for case-by-
case MACT determinations and establishes a registration system for
existing minor sources to improve the Tribal source emission inventory.
    Our primary goal in developing this program 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 sources in Indian country that is
comparable to similar programs in neighboring states in order to create
a more level regulatory playing field for owners and operators within
and outside of Indian country.
    This final rulemaking is not intended to establish a new set of
minimum criteria that a Tribe or a state would need to follow in
developing its own minor source permitting program. Rather, these rules
simply represent how we will implement the program in Indian country in
the absence of an EPA-approved Tribal 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. This
final minor source permitting program addresses, on a national level,
many environmental and regulatory issues that are specific to Indian
country. We understand that different Tribes may face different issues
and may therefore, like states developing SIPs, choose to develop TIPs
tailored to their individual Tribal circumstances and needs. This rule
will allow Tribes to develop their own TIPs, consistent with the
overarching requirement that the Tribe ensure that the TIP will not
interfere with any applicable requirement of the CAA.

A. General Provisions Under the Minor NSR Program

1. What is a minor source and which minor sources are subject to this
rule?
a. Minor Source Definition
    We are finalizing under 40 CFR 49.152 that a minor source, for the
purposes of this rule, means a source, not including the exempt
emissions units and activities listed in Sec.  49.153(c), that has the
potential to emit regulated NSR pollutants in amounts that are less
than the major source thresholds in 40 CFR Sec.  49.167 or Sec.  52.21,
as applicable, but equal to or greater than the minor NSR thresholds in
Sec.  49.153. The potential to emit includes fugitive emissions, to the
extent that they are quantifiable, only if the source belongs to one of
the source categories listed in 40 CFR part 51, Appendix S, paragraph
II.A.4(iii) or 52.21(b)(1)(iii), as applicable.

    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 hours (which is the number of hours in a
year) and dividing by 2,000 (which is the number of pounds in a ton).
If a source is restricted by permit conditions that limit its emissions
and are enforceable as a practical matter (as defined in 40 CFR
49.152), its PTE (and allowable emissions) are calculated based on the
permit restrictions.
    For the NSR program in Indian country, the major source thresholds
are defined in the PSD program (see 40 CFR 52.21) and in the
nonattainment major NSR program being finalized in this action (see 40
CFR 49.167), as applicable. These thresholds may differ in attainment
areas and nonattainment areas for the same pollutant. For example, in
attainment areas the major source threshold for nitrogen oxides
(NOX) 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 10 tpy in an extreme ozone
nonattainment area to 100 tpy in a marginal ozone nonattainment area
(see 40 CFR part 51, Appendix S, paragraph II.A.4(i)). The final rule
establishes minor NSR thresholds as discussed in section IV.A.3 of this
preamble.
    This minor source definition differs from the definition in the
proposal by providing the following clarifications. We clarified that
de minimis exceptions (i.e., minor NSR thresholds) and insignificant
source categories or activities being finalized under this rule are not
considered minor sources for purposes of this rule and eliminated the
sentence in the proposed definition that stated the term ``minor
stationary source applies independently to each regulated NSR pollutant
that the source has the potential to emit.''
    A few commenters asked us to accommodate in the minor source
definition references to the de minimis exceptions (i.e., minor NSR
thresholds) and insignificant source categories or activities being
finalized under this rule and we believe it is appropriate to do so. In
addition, since the source can only be a minor source if the PTE of all
regulated NSR pollutants for that source are less than the
corresponding major source thresholds, we deleted from the definition
the statement that read: ``the term `minor stationary source' applies
independently to each regulated NSR pollutant that the source has the
potential to emit.''
    Furthermore, we have amended the minor source definition to specify
that the PTE of a source includes fugitive emissions, to the extent
that they are quantifiable, only if the source belongs to one of the
source categories listed in 40 CFR 52.21(b)(1)(iii) (for PSD) and 40
CFR part 51, Appendix S, paragraph II.A.4(iii) (for nonattainment major
NSR) of the major NSR rules pursuant to section 302(j) of the Act. This
action is explained further in the next section.
b. Determining Applicability for New Minor Sources
    As stated in the proposal, in all NSR applicability determinations,
you must evaluate each regulated NSR pollutant individually because the
area where your source is located may be attainment for some pollutants
and nonattainment for others. For a given new source or 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.
    For proposed new sources, the first step is to calculate the
potential to emit of each regulated NSR pollutant. The second step is
to determine whether the source is subject to the applicable major NSR
program (i.e., 40 CFR 49.167 or 40 CFR 52.21 for nonattainment and
attainment areas, respectively) with respect to each regulated NSR
pollutant. Under the nonattainment major NSR program, this step is
repeated for each regulated NSR pollutant the source has the potential
to emit. Under the PSD program, if the source's potential to emit is
greater than the major source threshold for one pollutant, then PSD
applies to any other regulated NSR pollutants for which the potential
to emit is above the level defined as ``significant'' in the PSD
regulations.\13\ The significance level is typically lower than the
major source threshold; for example, the significance level for
PM10 is 15 tpy while the major source threshold is 100 or
250 tpy.
---------------------------------------------------------------------------

    \13\ The significance levels are defined in 40 CFR 52.21(b)(23).
---------------------------------------------------------------------------

    If your proposed new source is not subject to major NSR for a
particular regulated NSR pollutant, the next step is to determine
whether the source is subject to the requirements of this minor NSR
rule for that pollutant, i.e., if the source's potential to emit of the
pollutant is equal to or greater than the applicable minor NSR
threshold listed in Table 1 of this final rule. These steps are
repeated for every regulated NSR pollutant the source has the potential
to emit. However, for a source to be considered a minor source, the PTE
of all regulated NSR pollutants must be less than the corresponding
major source threshold.
    In determining if the source's potential to emit of a pollutant is
equal to or greater than the applicable minor NSR threshold listed in
Table 1 of this final rule, fugitive emissions will be included to the
extent that they are quantifiable, only if the source belongs to one of
the source categories listed pursuant to section 302(j) of the Act
(i.e., the source categories listed in 40 CFR part 51, Appendix S,
paragraph II.A.4(iii) and in 40 CFR 52.21(b)(1)(iii)).
    We are finalizing this provision after seeking comment in the
proposal as to whether in calculating the emission levels for
applicability purposes, you should include fugitive emissions, to the
extent 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.
    Commenters who supported the approach of including fugitive
emissions for all sources believed that the mandate of the minor NSR
program is based on protection of air quality throughout the nation.
Additionally, they believed that fugitive emissions are a large
proportion of the air pollutants in Indian country and therefore EPA
must require fugitive emissions to be included in determining
applicability. However, many commenters argued that fugitive emissions
at minor sources are minuscule and a requirement to include them would
be excessive. Some of these commenters believed that the costs for
complying with minor NSR for fugitive emissions could potentially be
substantial and that fugitive emissions are inherently difficult to
quantify. In addition, one commenter added that fugitive emissions
should only be included for source categories listed under section
302(j) of the Act, citing an extensive analysis of the history of
regulating fugitive emissions under NSR.
    Based on the comments received, we are finalizing provisions that
require including fugitive emissions in the minor NSR applicability
determination, to the extent that they are quantifiable, only if the
source belongs to one of the source categories listed pursuant to
section 302(j) of the Act (i.e., the source categories listed in 40 CFR
part 51, Appendix S, paragraph II.A.4(iii) and in 40 CFR
52.21(b)(1)(iii)), for the following reasons.
    For the source categories listed pursuant to section 302(j) we have
historically identified these source

categories as having the potential to significantly degrade air quality
and it has been demonstrated to be reasonable and cost effective for
sources in these categories to quantify and include their fugitive
emissions in applicability determinations. We will continue to require
these source types to quantify fugitive emissions in determining
applicability of minor NSR. While some other source categories also
contribute significantly to air pollution, we have thus far not
required counting their fugitive emissions in determining applicability
because of unreasonable economic costs associated with doing so (See 54
FR 48879).
    We have the discretion under CAA section 110(a)(2)(c) to follow a
similar approach in the minor source program as long as the NAAQS are
protected and we are using that discretion because we believe it would
be unreasonably cumbersome and costly to expect the wide variety of
minor source types not on the section 302(j) list to be able to
quantify their fugitive emissions.
    Without discounting the fact that fugitive emissions from
individual sources or source categories may be significant contributors
to air pollution, we believe that, as a whole, the air quality impacts
of emissions from the number of sources that would likely be excluded
from minor NSR because of exclusion of their fugitive emissions are
likely to be small and therefore not commensurate with the regulatory
and economic burden we would impose on minor sources in Indian country
if we were to require the estimation of fugitive emissions for all
minor sources and subject them to permitting based on those emissions.
This is especially the case since we are developing a program that
applies generically to sources in Indian country regardless of whether
fugitive emissions from major or minor sources are a significant source
of air pollution in a specific location. Given this diversity and the
potential costs, our approach strikes a reasonable balance.
    Finally, this approach in our final rule is consistent with how
fugitive emissions are treated in some state minor source programs.
Therefore, we are finalizing the new minor source applicability
requirements mainly as proposed and under 40 CFR 49.153(a).
2. What is a modification and which modifications are subject to this
rule?
a. Definition of ``Modification''
    Under this final rule, a modification means any physical or
operational change that would cause an increase in the allowable
emissions of a minor source or an increase in the actual emissions
(based on the applicable test under the major NSR program) of a major
source for any regulated NSR pollutant or that would cause the emission
of any regulated NSR pollutant not previously emitted. Allowable
emissions of a minor source include fugitive emissions, to the extent
that they are quantifiable, only if the source belongs to one of the
source categories listed in 40 CFR 52.21(b)(1)(iii) for PSD and 40 CFR
part 51, Appendix S, paragraph II.A.4(iii) for nonattainment major NSR.
The following exemptions apply:
     A physical or operational change does not include routine
maintenance, repair or replacement.\14\
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    \14\ ``For over two decades,'' EPA has interpreted ``the RMRR
exclusion as limited to de minimis circumstances.'' New York v. EPA,
443 F.3d 880, 884 (DC Cir. 2006), cert. denied 127 S. Ct.2127 (2007)
(citing Alabama Pow. Co, v. Costle, 636 F.2d 323 (DC Cir 1980)).
EPA's historic policy is that ``in determining whether proposed work
at an existing facility is `routine,' EPA makes a case-by-case
determination by weighting the nature, extent, purpose, frequency
and cost of the work, as well as other relevant factors, to arrive
at a common-sense finding.'' Memorandum from Don R. Clay, Acting
Assistant Administrator, Office of Air and Radiation, U.S. EPA,
``Applicability of Prevention of Significant Deterioration (PSD) and
New Source Performance Standards (NSPS) Requirements to the
Wisconsin Electric Power Company (WEPCO) Port Washington Life
Extension Project'' (Sep. 9, 1988) (http://www.epa.gov/region07/air/nsr/nsrmemos/wpco2.pdf). EPA further explained these factors in
letter dated May 23, 2000 from Francis X. Lyons, Regional
Administrator, Region V, U.S. EPA, to Henry Nickel, Counsel for the
Detroit Edison Company, Hunton & Williams (http://www.epa.gov/region07/air/nsr/nsrmemos/detedisn.pdf).
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     An increase in the hours of operation or in the production
rate is not considered an operational change unless such change is
prohibited under any permit condition that is enforceable as a
practical matter (as defined in 40 CFR 49.152).
     A change in ownership at a stationary source.
     The emissions units and activities listed in 40 CFR
49.153(c).
    We are finalizing this definition under 40 CFR 49.152 after
requesting comments as to whether the term modification should be based
on an increase in allowable emissions or actual emissions.
    Commenters who supported our proposal to adopt a definition of the
term ``modification'' based on an increase in allowable emissions
(allowable-to-allowable test) believed that this test would be a
simpler test than the actual-to-projected-actual test that applies to
the major NSR program; it will be less costly, less time consuming and
less complicated for Tribal minor sources and it is legal under the CAA
and consistent with some state and local minor NSR programs that we
have approved in SIPs pursuant to section 110 of the Act. On the other
hand, commenters who opposed the allowable emissions test believed that
this test is less stringent than the alternative tests and/or it is
contrary to the Act and recent court decisions. They also believed that
the allowable-to-allowable test will be inconsistent with the major NSR
program and it does not ensure that the NAAQS are achieved (i.e., it
could lead to unreviewed increases in emissions that would be
detrimental to air quality). Furthermore, some of these commenters
believed that an allowable-to-allowable test will not capture those
sources that escape major NSR review and suggested the use of an
actual-emissions-based test which could include an actual-to-potential,
actual-to-projected-actual or an actual-to-future-actual test.
    For the most part, we agree with those commenters that endorsed the
concept of defining the term modification for the minor NSR program as
a change in allowable emissions. As we stated in the proposal (71 FR
48696), 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 the
most suitable for Indian country because, apart from being a simple
test, it will help with implementation of the program for the minor
sources in Indian country that, to date, have little experience with
air regulations. Since minor sources in Indian country have been
unregulated until now, many of these sources have not kept track of
actual emissions data, making the initial application of any test based
on actual emissions virtually impossible. In addition, we understand
that some state minor NSR programs use an allowable-to-allowable test
which would make this program for Indian country consistent with the
programs in these states.
    In addition and as we discussed in the proposal 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. By contrast, parts C and D of
title I of the Act provide the statutory basis for the major NSR
program and refer to section 111(a)(4) of the Act (the definition of
``modification'' for purposes of the new source performance standards
(NSPS)) in defining ``modification'' for purposes of the major NSR
program. The DC Circuit Court of Appeals has 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 v. U.S. EPA, 413 F. 3d 3 (DC Cir. 2005). However,
that reasoning based on the definition in section 111 of the Act does
not apply to minor source permitting 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.'' Thus, we
believe that we have discretion in defining the term for the minor NSR
program in Indian country and we do not believe that the decision of
the DC Circuit Court of Appeals applies to the minor NSR program.
    To address the concerns of those commenters who expressed that the
allowable-to-allowable test is less stringent than an actual-emissions-
based test or that this test is at odds with section 110(a)(2)(C) of
the Act, we commit to conducting a study to collect actual emissions
data for a period of 5 years from the minor source registration program
\15\ we are finalizing with this rule to assess the feasibility of
implementing an actual-emissions-based test. If our study concludes
that adequate actual emissions data are available for minor sources, we
will consider undertaking a rulemaking to adopt an actual-emissions-
based test within 2 years from the end of the 5-year study period.
---------------------------------------------------------------------------

    \15\ We are requiring minor sources to register within 18 months
from the effective date of this rule. See section IV.F of this
preamble for more details about the registration program.
---------------------------------------------------------------------------

    Furthermore, because of our concern that some minor modifications
at major sources might escape review under the minor NSR program as
proposed, we are finalizing that the applicability of the minor NSR
program to minor modifications at major sources be based on the actual-
to-projected-actual test used in the applicable major NSR program.
Thus, in the final rule, if a proposed modification at an existing
major source does not qualify as a major modification (which would be
subject to major NSR) based on the actual-to-projected-actual test, it
is considered a minor modification and is subject to the minor NSR
program if the net emissions increase from the actual-to-projected-
actual test is equal to or exceeds the minor NSR thresholds listed in
Table 1 in section IV.A.3 of this preamble. The rationale for using an
allowable-to-allowable test for modifications at minor sources in
Indian country--that actual emissions data are not available for minor
sources and an actual-emissions-based test would be beyond the
capabilities of many minor sources--does not apply to modifications at
major sources. We believe this approach will be simpler and more
efficient than an approach requiring the use of a second, allowable-to-
allowable test for the minor NSR program. Hence, we are revising the
definition of modification under 40 CFR 49.152 accordingly.
    We are also making a change to the definition of modification
related to the treatment of fugitive emissions. Now this definition
includes provisions to account for fugitive emissions, to the extent
they are quantifiable, only if the source belongs to one of the source
categories listed pursuant to section 302(j) of the Act (see previous
section for details on why we are including fugitive emissions in the
minor NSR applicability determinations).
b. Determining Applicability for Modifications
    To determine if your proposed physical or operational change is
subject to the minor NSR program (see final 49.153(a)(1)(ii) and
49.153(b)), you must first determine whether the change is subject to
the applicable major NSR program (i.e., 40 CFR part 51, Appendix S or
40 CFR 52.21 for nonattainment and attainment areas, respectively). For
physical or operational changes at your existing major source, you
would determine whether the modification qualifies as a major
modification using the procedures in the applicable major NSR program
(i.e., the actual-to-projected-actual applicability test). In addition
and as discussed in the previous section, if the change does not
qualify as a major modification under that test, it is considered a
minor modification if the net emissions increase from the actual-to-
projected-actual test is equal to or greater than the minor NSR
thresholds listed in Table 1 of section IV.A.3 of this preamble. A
major source with such a minor modification must apply for and obtain a
minor NSR permit prior to commencing construction of the minor
modification.
    For a physical or operational change at your existing minor source,
you will first determine if the change qualifies as a major source by
itself (e.g., when a source owner adds one or more large emissions
units to his minor source) using the provisions of the applicable major
NSR program (see, e.g., 40 CFR 52.21(b)(1)(i)(c)). If it is, then the
change is subject to the applicable major NSR program.
    For modifications at existing minor sources that do not qualify as
major sources by themselves, the total increase in allowable emissions
resulting from the proposed change at your source, including fugitive
emissions to the extent they are quantifiable, only if the source
belongs to one of source categories listed pursuant to section 302(j)
of the Act, would be the sum of the following:
     For each new emissions unit that is to be added, the
emissions increase would be the potential to emit 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. However, this may not be a negative value. If the
allowable emissions of an emissions unit would be reduced as a result
of the change or replacement, use zero in the calculation.
     For each unpermitted emissions unit (i.e., a unit without
any enforceable permit conditions) that is to be changed or replaced,
the emissions increase would be the allowable emissions of the unit
after the change or replacement \16\ minus the potential to emit prior
to the change or replacement.\17\ However, this may not be a negative
value. If the allowable emissions of an emissions unit would be reduced
as a result of the change or replacement, use zero in the calculation.
---------------------------------------------------------------------------

    \16\ The minor NSR permit for the modification must include an
annual allowable emissions limit for each affected emissions unit
per final 40 CFR 49.155(a)(2). The post-change allowable emissions
limit can be the uncontrolled potential to emit or can be lower
depending on the outcome of the reviewing authority's control
technology review as well as any other restrictions that you propose
for the emissions unit (e.g., for purposes of NSR applicability).
    \17\ It is necessary to use potential to emit since these
emissions units will not have an allowable emissions limit prior to
the change.
---------------------------------------------------------------------------

    If the total increase in allowable emissions resulting from your
proposed modification at your minor source causes an increase in
allowable emissions for one or more regulated NSR pollutants above the
applicable minor NSR threshold (see Table 1 in section IV.A.3 of this
preamble), the modification is subject to this program. See final 40
CFR 49.153(b).
    If the total allowable emissions increase from your modification is
less than the corresponding minor NSR threshold listed in Table 1, the
modification is not subject to this minor NSR rule. Under this
scenario, if a permitted allowable emissions limit of one or more
emissions units increases, you must apply for an administrative permit
revision to amend the allowable

emissions limit for that emissions unit(s). See section IV.B.5 of this
preamble or final 40 CFR 49.153(a)(2) and 49.159(f) for more
information on administrative permit revisions.
    At proposal, we asked for comments as to whether minor sources in
Indian country should be allowed to take credit for concurrent
emissions reductions that would result from a proposed modification
under the concept commonly known as ``project netting.'' \18\
---------------------------------------------------------------------------

    \18\ As proposed, ``project netting'' means that both increases
and decreases in allowable emissions are summed when determining the
total emission increase that would result from a proposed
modification.
---------------------------------------------------------------------------

    Several commenters supported our proposal to allow ``project
netting'' in the minor NSR program for determining whether a proposed
project qualifies as a modification. However, we are not finalizing the
``project netting'' concept at this time to be consistent with our
position in the major NSR program (See final rule titled: ``Prevention
of Significant Deterioration (PSD) and Nonattainment New Source Review
(NSR): Aggregation and Project Netting'' January 15, 2009 (74 FR
2376)).
3. What are the minor NSR thresholds?
    As proposed, the ``minor NSR thresholds'' in this final rule
establish cutoff levels for which sources with emissions lower than the
thresholds would typically be exempt from the minor NSR rules (see
Table 1 and final 40 CFR 49.153).
    Various commenters supported the development of thresholds and no
comments were received against this concept. However, some commenters
wanted us to finalize less [e.g., volatile organic compounds (VOC) and
carbon monoxide (CO)] or more stringent thresholds (for minor
modifications) while other commenters expressed concern that the source
distribution analysis that we used to support the proposed thresholds
did not accurately reflect the number of sources currently in existence
in Indian country.

                    Table 1--Minor NSR Thresholds \a\
------------------------------------------------------------------------
                                             Minor NSR       Minor NSR
                                          thresholds for  thresholds for
         Regulated NSR pollutant           nonattainment    attainment
                                            areas (tpy)     areas (tpy)
------------------------------------------------------------------------
Carbon monoxide (CO)....................               5              10
Nitrogen oxides (NOX)...................           5 \b\              10
Sulfur dioxide (SO2)....................               5              10
Volatile Organic Compounds (VOC)........           2 \b\               5
PM......................................               5              10
PM10....................................               1               5
PM2.5...................................             0.6               3
Lead....................................             0.1             0.1
Fluorides...............................              NA               1
Sulfuric acid mist......................              NA               2
Hydrogen sulfide (H2S)..................              NA               2
Total reduced sulfur (including H2S)....              NA               2
Reduced sulfur compounds (including H2S)              NA               2
Municipal waste combustor emissions.....              NA               2
Municipal solid waste landfill emissions              NA              10
 (measured as nonmethane organic
 compounds).............................
------------------------------------------------------------------------
\a\ If part of a Tribe's area of Indian country is designated as
  attainment and another part as nonattainment, the applicable threshold
  for a proposed source or modification is determined based on the
  designation where the source would be located. If the source straddles
  the two areas, the more stringent thresholds apply.
\b\ In extreme ozone nonattainment areas, section 182(e)(2) of the Act
  requires any change at a major source that results in any increase in
  emissions to be subject to major NSR permitting. In other words, any
  changes to existing major sources in extreme ozone nonattainment areas
  are subject to a ``0'' tpy threshold, but that threshold does not
  apply to minor sources.

    After consideration of comments received and further evaluation of
the proposed thresholds, we are finalizing the minor NSR thresholds as
proposed, except for the NOX and VOC thresholds in extreme
ozone nonattainment areas. We are amending the proposed ``0'' tpy
NOX and VOC thresholds for the minor NSR program in extreme
ozone nonattainment areas because we believe that these thresholds,
while required under section 182(e)(2) of the Act and appropriate as
significance levels for major sources located in extreme ozone
nonattainment areas, are not appropriate for minor sources. Therefore,
we are finalizing minor NSR thresholds for NOX and VOC in
extreme nonattainment areas as 5 and 2 tpy respectively. We also want
to clarify, as one commenter suggested, that the PM2.5
threshold applies to direct PM2.5 emissions and does not
represent the contribution of its precursors (e.g., SO2 or
NOX).
    Furthermore, we continue to believe that the sources with emissions
below the thresholds will be inconsequential to attainment or
maintenance of the NAAQS because the national source distribution
analysis in the proposal (71 FR 48702) applied to the national source
distribution at the time (sources inside and outside of Indian country)
and not only to estimates of the possible number of existing sources in
Indian country. For each pollutant, we found that only around 1 percent
(or less) of total emissions would be exempt from review under the
minor NSR program. At the same time, the thresholds would promote an
effective balance between environmental protection and source burden
because anywhere from 42 percent to 76 percent of sources (depending on
the pollutant) would be too small to be subject to preconstruction
review.
    In addition, we believe that such thresholds are included in many
of the minor NSR programs in surrounding states, which will allow us to
begin leveling the playing field with the surrounding state programs
and will result in a more cost-effective program by reducing the burden
on sources and reviewing authorities.
    These thresholds, however, are neither the most stringent nor the
least stringent of the levels found in existing state minor NSR rules
since they represent a reasonable balance between environmental
protection and economic

growth. We did not want the thresholds 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. Nevertheless,
to address any concerns about the stringency of the thresholds, we will
evaluate the information we collect as part of the registration
provisions for minor sources we are finalizing under this rule (see
section IV.F of this preamble for more information) and will consider
changing the minor NSR thresholds as appropriate.\19\
---------------------------------------------------------------------------

    \19\ We might also consider proposing thresholds for greenhouse
gases and in accordance with any future rulemakings to address small
greenhouse gas sources as outlined in the rule titled: ``Prevention
of Significant Deterioration and Title V Greenhouse Gas Tailoring
Rule'' (75 FR 31514).
---------------------------------------------------------------------------

4. What emissions units and activities at minor sources are exempt from
this rule?
    Certain emissions units and activities at minor sources either do
not emit regulated NSR pollutants to the ambient air or emit these
pollutants in negligible amounts. Therefore, under 40 CFR 49.153(c), we
are finalizing a list of units and activities at minor sources that are
exempt from this rule:
    1. Mobile sources;
    2. Ventilating units for comfort that do not exhaust air pollutants
into the ambient air from any manufacturing of other industrial
processes;
    3. Noncommercial food preparation;
    4. Consumer use of office equipment and products;
    5. Janitorial services and consumer use of janitorial products;
    6. Internal combustion engines used for landscaping purposes; and
    7. Bench scale laboratory activities, except for laboratory fume
hoods and vents.
    This list we have finalized is an amended list from the exempted
units and activities we proposed since we are not exempting air-
conditioning units for comfort and heating units for comfort until we
can study the implications of the new rules for greenhouse gases (see
Prevention of Significant Deterioration and Title V Greenhouse Gas
Tailoring Rule, 75 FR 31514) on these units. In addition and also in
light of a comment received, we are deleting the last exemption in the
proposed list of exemptions (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) because we agree with the commenter that argued that this
exemption can be confusing and redundant.
    Furthermore, we would like to clarify that the list of exemptions
included in the proposal's regulatory text included mobile sources,
although mobile sources were inadvertently left out of the exempted
units and activities discussion in the proposal's preamble. Therefore,
we have added mobile sources to the list in this preamble and have
decided to keep mobile sources in the list of exempted units and
activities in this final rule because we continue to believe that it is
not appropriate to include mobile sources in a stationary source
permitting program and we did not receive any comments suggesting that
mobile sources should be removed from the list of exemptions.
    Nevertheless, many commenters noted that state and local agencies
often exempt many more types of emissions units and activities and
suggested that we should expand the exemptions included in the final
minor NSR rule. Some of these commenters also argued that failure to
expand the list of exemptions will significantly burden operators of
minor sources wishing to locate in Indian country, especially the oil
and gas industry and will thereby disadvantage Tribes.
    In light of the comments received, we agree that the list of
exempted units and activities might need to be expanded. Therefore, we
intend to propose and finalize a separate rule to seek public comment
on the issue of whether additional units or activities should be
exempted from the minor NSR program.

B. Site-Specific Permits

1. What are the requirements for permit applications?
    As the owner or operator of a proposed new minor source or a
proposed modification that is subject to the rule (see 40 CFR 49.154),
you must submit a complete application to the reviewing authority
requesting a minor NSR permit specific to your source (unless you are
seeking a ``general permit''). 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)).
    Your application must also 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 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 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 provide
the pre-change PTE. For the post-change allowable emissions for these
units, you may provide the unrestricted post-change PTE or may propose
a lower level of allowable emissions. The allowable emissions for any
emissions unit are calculated considering any emissions limitations
that are enforceable as a practical matter on the unit's PTE. In
calculating these emissions levels for applicability purposes you
should include fugitive emissions, to the extent they are quantifiable,
only for source categories listed pursuant to section 302(j) of the Act
(and as described in sections IV.A.1 and IV.A.2 of this preamble).
    Furthermore, 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 for 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 emissions limitations or work practice requirements to which
any affected emissions units are subject.
    No commenters expressed concern with the proposed permit
application requirements described above except for the concept of
PAL.\20\ One commenter believed such provisions will not ensure
compliance with the statutory mandates applicable to minor NSR programs
under section 110(a)(2)(C) of the Act to ensure that NAAQS are attained
and maintained. Further, the commenter maintained that such limits
would likely be unenforceable as a practical

matter at most sources and offered extensive arguments for his
position. On the other hand, a couple of commenters expressed support
for minor source PALs, with one of these commenters believing that it
is very important that aspects of permitting programs at the Federal
and state levels outside of Indian country that provide operator
flexibility, including the creation of PALs, should also be afforded to
operators currently in or wishing to locate in Indian country.
---------------------------------------------------------------------------

    \20\ A minor source PAL determination is a sourcewide limitation
on allowable emissions of a regulated NSR pollutant, expressed in
tpy, that is enforceable as a practical matter and we had proposed
that you may request that the reviewing authority establish an
annual minor source PAL for one or more of the regulated NSR
pollutants emitted by your new or existing minor source.
---------------------------------------------------------------------------

    Based on the comments received, we are finalizing the permit
application requirements mainly as proposed, with only two exceptions.
See final 40 CFR 49.154. First, we are not finalizing the minor source
PAL provisions at this time because we agree with the opposing
commenter that stated, for example, that finalizing the PAL provisions
without more specific criteria, including provisions for extensive
monitoring, would not be enforceable. Second and as we explained in
sections IV.A.1 and IV.A.2, we are finalizing provisions that will
require you, the source owner, to include fugitive emissions in the
minor NSR applicability determinations, to the extent they are
quantifiable, only for those source categories listed pursuant to
section 302(j) of the Act.
    In addition, we would like to clarify that 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 instead of a site-specific permit. The permit application
requirements for a particular general permit will be specified in that
general permit. General permits, including the comments we received
about them, are discussed further in section IV.C of this preamble.
2. What technical reviews must the reviewing authority conduct?
    After determining that your application is complete (see section
IV.B.4 for more information about this process), the reviewing
authority must do 2 types of technical reviews--a control technology
review and a review of the probable impact on air quality of the
proposed new source or modification. These reviews are discussed
further in the following subsections.
a. Control Technology Review
    As required under section 110(a)(2)(C) of the Act, this minor NSR
permitting program for Indian country is primarily designed to assure
that the NAAQS are achieved and to prohibit any minor source from
emitting any air pollutant in amounts that would contribute to
nonattainment or interfere with maintenance of the NAAQS. Therefore,
with this single program applicable to all areas of Indian country
where there is no EPA-approved implementation plan, we are trying to
ensure the NAAQS protection required by the CAA, while still allowing
sufficient flexibility in control technology requirements for minor
sources located in Indian country. By control technology, we mean
pollution prevention techniques; add-on pollution control equipment;
design and equipment specifications; work practices and operational
restrictions.
    For this review, the reviewing authority will 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 no
control technology, to control 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). The control technology chosen would
depend on the air quality needs of the area, other applicable
regulatory programs of the Act and technical and economic feasibility.
    Furthermore and based on the results of the control technology
review, the emission limitations required by the reviewing authority
may consist of numerical limits on the quantity, rate or concentration
of emissions; 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 a numerical 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 the final 40 CFR 49.153(c)) that emit or
have the potential to emit the pollutant(s) for which the source is
subject to this rule. For a modification, such control technology
review would apply only to the affected emissions unit(s) at your
source.
    At proposal, we sought comment on the proposed case-by-case control
technology review for all new and modified sources subject to this
minor NSR program. Therefore, we sought 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 and administrative burden.
    Several commenters supported the case-by-case control technology
review. These commenters believed that a case-by-case control
technology review would allow and promote economic growth and
development that is tailored to the needs in Indian country, while one
of these commenters added that having no capacity to impose controls on
minor sources would seem to defeat the purpose of a permitting process
for such facilities because a paper permit that could not impose any
controls adds nothing to existing regulation or protection of public
health and the environment. Furthermore, several commenters supported a
clearly defined, standardized method for determining the required level
of control, while one commenter stated that a system that requires a
single set of controls for all minor sources across Indian country does
not provide the needed flexibility to adapt regulation to the needs of
individual areas of Indian country or to take into account the benefit
of a level playing field with the surrounding areas.
    On the other hand, other commenters opposed any control technology
requirement. These commenters believed that a Federal program is likely
to be applied inconsistently, resulting in a competitive disadvantage
for sources located in certain areas; EPA has no authority to impose a
control technology requirement under section 110(A)(2)(C) of the Act
and a separate control technology review process under minor NSR is
unnecessary when the threat of PSD review will otherwise accomplish the
ultimate objective--protection of air resources (i.e., the PSD review
is generally so complex, time-consuming and expensive, that most
sources will design their projects to remain below the applicable PSD
thresholds, even if that means installing more efficient controls,
switching to cleaner fuel or restricting production or operating
hours).

    We disagree with commenters that oppose any control technology
requirement or who suggested that we have no authority to require such
controls. Section 110(a)(2)(c) requires us to assure that the NAAQS are
achieved and we believe that requiring control technologies when
necessary will ensure the NAAQS are protected as established in this
section. Furthermore, section 110(a)(2)(c) does not preclude us from
requiring additional provisions that will further the goal of NAAQS
protection and the fact that the statutory language requires a control
technology review under some statutory provisions does not mean that
the statute prohibits EPA from requiring it under other provisions.
    We also disagree with those commenters that would like us to
implement consistent control technologies across the nation. As we
stated in the proposal, it would be impossible to create a single
program that creates precisely equivalent regulations among all areas
of Indian country. We wish to ensure that Indian country is not seen as
a potential ``pollution haven'' where minor sources can go to escape
air pollution control requirements and we also 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 a particular area of Indian country than are required in
the surrounding areas. Therefore, a case-by-case control technology
review provides the reviewing authority with the flexibility to create
requirements that protect public health and environment, but also takes
into consideration the needs of the area in question based on its
current air quality situation, the potential air quality impacts from
the growth associated with the source and the technological and
economic feasibility of the control technology as well as the control
technologies in use in the surrounding states.
    Therefore, we are finalizing the case-by-case control technology
review requirements as proposed. The final rules require your reviewing
authority to perform a control technology review on a case-by-case
basis when issuing a site-specific minor NSR permit. See the final 40
CFR 49.154(c). For general permits, the control technology review will
be performed at the time when the general permit is developed. More
details on general permits are provided in section IV.C of this
preamble.
b. Air Quality Impacts Analysis (AQIA)
    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, 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
demonstrates 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.
    Various commenters supported requiring an AQIA and added that they
would like us to develop guidance on when and how an AQIA analysis
should be performed. On the other hand, several commenters believed
that AQIAs would be excessive, very costly and time consuming for small
businesses.
    Based on the comments received, we are finalizing the AQIA
provisions as proposed at 40 CFR 49.154(d). We continue to believe that
allowing reviewing authority discretion for when an AQIA might be
required ensures that construction of new minor sources or
modifications at existing minor sources do not cause or contribute to a
NAAQS or PSD increment violation when needed, but limits overburdening
all minor sources in Indian country with these types of air quality
analysis. Nevertheless, to aid the reviewing authorities in the
determination of when an AQIA might be needed for minor NSR sources in
Indian country and to address the commenters' suggestions, we intend to
develop guidance on the scope of the AQIA that will consider the
suggestions presented by these commenters. We are also eliminating the
language in the proposal preamble that stated (71 FR 48704) that AQIAs
will be required ``[i]n rare instances.'' Since the reviewing authority
has the discretion to require an AQIA, it is difficult to predict that
such AQIAs will be required only in rare instances.
3. What are the permit content requirements?
    The requirements for permits issued pursuant to site-specific
preconstruction review include the following (see 40 CFR 49.155):
     The effective date of the permit and the date by which you
must commence construction on your approved project in order for your
permit to remain valid (i.e., 18 months after the permit effective
date).
     The emissions units subject to the permit and their
associated emissions limitations.
     Monitoring, recordkeeping, reporting and testing
requirements to assure compliance with the emission limitations.
    In addition, the permit should include a number of standard permit
terms. These include emission limitations, monitoring recordkeeping and
reporting requirements as well as terms such as a severability clause
(to ensure the continued validity of the other portions of the permit
in the event of a challenge to a portion of the permit), a requirement
to comply with all conditions of the permit, a requirement that the
permitted source does not cause or contribute to a NAAQS violation and
inspection and entry provisions requiring that you allow
representatives of the reviewing authority to enter and inspect your
source.
a. Emissions Limitations
    Your permit must include 2 types of emission limitations:
     The emissions limitations for each affected emissions unit
determined by the reviewing authority based on the case-by-case
technology review discussed previously in section IV.B.2 of this
preamble.
     Limits on annual allowable emissions in tpy.
    Emission limitation, as defined in 40 CFR 49.152, means a
requirement established by the reviewing authority that limits the
quantity, rate or concentration of emissions of air pollutants on a
continuous basis, including any requirement relating to the operation
or maintenance of a source to assure continuous emissions reduction and
any design standard, equipment standard, work practice, operational
standard or pollution prevention technique. Allowable emissions (also
as defined under 40 CFR 49.152) means ``allowable emissions'' as
defined in 40 CFR 52.21(b)(16), except that the allowable emissions for
any emissions unit are calculated considering any emissions limitations
that are enforceable as a practical matter on the emissions units'
potential to emit. Once established in the permit, annual allowable
emissions become the basis for determining whether a later change at
your source will result in an increase in allowable emissions subject
to permitting under this program.
    We did not specifically receive comments on these two types of
emissions limitations that must be included in your permit. Therefore
we are finalizing these emissions limitations at 40 CFR 49.155(a)(2) as
proposed.
    Additionally, we would like to clarify, as some commenters
requested, a couple

of terms or conditions. One commenter interpreted the proposal to only
require annual emissions limits in the minor source permits, while one
commenter asked us to clarify if the term ``on a continuous basis'' in
the definition of emissions limitation implies that every emission
limitation must be complied with on an instantaneous time period and
accompanied by a continuous emission monitoring system (CEMS).
    Therefore, we want to clarify that the reviewing authority may not
only require annual emissions limits in the minor NSR permits, but also
short-term limits as necessary. Short-term emission limits may also be
required as part of any enforceable emission limitation and, if
applicable, depending on the relevant ambient air quality standard
associated with the regulated pollutant.
    Furthermore, the term ``on a continuous basis'' in the definition
of emission limitation does not imply that every emission limitation
must be complied with on an instantaneous time period and accompanied
by a CEMS. The term ``on a continuous basis,'' as the commenter
suggests, means that the limitation applies ``at all times,'' but not
that the emission limitation has to be accompanied by a CEMS. There are
various ways to monitor compliance with limitations that apply on a
continuous basis as we mention in the next section.
b. Monitoring, Recordkeeping and Reporting
    The monitoring, recordkeeping and reporting requirements have been
finalized under 40 CFR 49.155. Specifically, the final monitoring
requirements are under 40 CFR 49.155(a)(3), the final recordkeeping
requirements under 49.155(a)(4) and the final reporting requirements
under 40 CFR 49.155(a)(5).
    (1) Monitoring requirements. The permit must include monitoring
requirements sufficient to assure compliance with any emissions
limitations contained in the permit. Monitoring approaches may include
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.
    (2) 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.
    (3) 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.
    We did not receive any specific comments regarding the monitoring
and recordkeeping requirements, but several commenters commented on the
reporting requirements. Some of these commenters specifically asserted
that requiring annual monitoring reports for minor sources is overly
burdensome, while another commenter would like us to require monitoring
reports to be submitted at least annually, to give the reviewing
authority flexibility to require semiannual monitoring reports and in
accordance with the title V reporting schedule. Other commenters
recommended that for reporting deviations the word ``prompt'' should be
defined within the regulation.
    We disagree with those commenters that state that the monitoring,
recordkeeping and reporting requirements are too burdensome because, as
stated in the proposal, sections 110(a)(2)(A) and 110(a)(2)(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 time-tables for compliance.'' In addition, section
110(a)(2)(F) 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 emissions-
related data from such sources. Therefore, we believe that, for
example, annual reporting requirements will ensure that sources are
complying with their annual emissions limits as well as any other
limits determined by the reviewing authority.
    However, we do not believe that requiring monitoring reports more
frequently than annually, as one commenter suggested, would be
appropriate for minor sources. Minor sources are typically much smaller
than the title V sources the commenter is referring to and therefore
requiring monitoring reports more frequently than annually might be
overly burdensome for these sources. However, we encourage reviewing
authorities to develop annual monitoring schedules in accordance with
title V permit monitoring schedules if that facilitates the reporting
of emissions to the reviewing authority.
    We also disagree with the commenters that would like us to define
the word ``prompt'' for the reporting of deviations. We continue to
believe that deferring the definition of this term to the reviewing
authority is more appropriate to ensure that the respective permits are
protective of the NAAQS while also ensuring that the particular needs
of the area where the source is being permitted are considered. For
example, if a source is locating in a particular area of Indian
country, the reviewing authority might define this term by considering
the provisions of the state and/or the air quality control districts
surrounding the area of Indian country where the source is locating as
well as technical and economical feasibility. Therefore, we are
finalizing the monitoring, recordkeeping and reporting requirements as
proposed and these requirements will be included in each permit as
necessary to assure compliance with the source's emission limitations.
c. Other Permit Content Requirements
    Under 40 CFR 49.155(a)(7), we have finalized other permit
requirements. Specifically, these requirements include inspection and
entry provisions under 40 CFR 49.155(a)(7)(vii) that state that upon
presentation of proper credentials, you, as the permittee, must allow a

representative of the reviewing authority to:
     Enter upon your premises where a source is located or
emissions-related activity is conducted or where records are required
to be kept under the conditions of the permit;
     Have access to and copy, at reasonable times, any records
that are required to be kept under the conditions of the permit;
     Inspect, during normal business hours or while the source
is in operation, any facilities, equipment (including monitoring and
air pollution control equipment), practices or operations regulated or
required under the permit;
     Sample or monitor, at reasonable times, substances or
parameters for the purpose of assuring compliance with the permit or
other applicable requirements; and
     Record any inspection by use of written, electronic,
magnetic and photographic media.
    Commenters on these requirements wanted us to clarify that as the
reviewing authority representative enters the source premises for any
inspection, the reviewing authority ``must comply with the safety
requirements of the permittee.'' Upon further evaluation of these
provisions, we do believe that the representative of the reviewing
authority should follow standard safety requirements identical to the
ones that apply to the permittee's employees.
4. What are the permit issuance procedures, permit term and public
participation requirements?
a. Permit Issuance Process
    Under 40 CFR 49.154(b), we have finalized definite timelines for
the overall minor source permit issuance process that vary depending on
the type of source being regulated under the minor NSR program. The
timelines are described as follows:
     For minor sources seeking a site-specific permit, the
permit issuance process timeline includes a period of 45 days for the
application completeness review as well as a 30-day public comment
period. Any site-specific permit will be granted or denied no later
than 135 days after the date the application is deemed complete and all
additional information necessary to make an informed decision has been
provided.
     For minor modifications at major sources seeking coverage
under a site-specific permit, the permit issuance process timeline
includes a period of 60 days for the application completeness review as
well as a 30-day public comment period. Any site-specific permit will
be granted or denied no later than 1 year after the date the
application is deemed complete and all additional information necessary
to make an informed decision has been provided.
     For minor sources seeking coverage under a general permit
(discussed in section IV.C of this preamble and under 40 CFR 49.156),
the permit issuance process timeline includes a completeness review
period of 45 days. Any request for coverage by individual sources under
a general permit will be granted or denied within 90 days of the
receipt of such request for coverage by the reviewing authority. We
believe that since the general permit requirements have been subject to
public notice when the general permit was developed, a shorter permit
issuance process is warranted for determining whether a source is
eligible for coverage under the general permit.
     For synthetic minor sources (discussed in section IV.D of
this preamble and under 40 CFR 49.158), the permit issuance process
timeline includes, as proposed, a period of 60 days for the application
completeness review as well as a 30-day public comment period. Any
synthetic minor permit will be granted or denied no later than 1 year
after the date the application is deemed complete and all additional
information necessary to make an informed decision has been provided.
    The application for a permit under this program will be reviewed by
the reviewing authority within 45 days of its receipt for site-specific
permits (60 days from its receipt for synthetic minor permits and minor
modification at major sources) to determine whether the application
contains all the information necessary for processing the application.
If the reviewing authority determines that the application is not
complete, it will request additional information as necessary to
process the application. If the reviewing authority determines that the
application is complete, it will notify you in writing. The reviewing
authority's completeness determination or request for additional
information should be postmarked within 45 days of receipt of the
permit application by the reviewing authority for site-specific permits
(60 days of receipt of the permit application by the reviewing
authority for synthetic minor permits and minor modifications at major
sources). If you do not receive a request for additional information or
a notice of complete application postmarked within 45 days of receipt
of the permit application by the reviewing authority for site-specific
permits (60 days for synthetic minor permits and minor modification at
major sources), your application will be deemed complete. Once the
application is complete, your reviewing authority will develop a draft
permit and provide 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 new source or
modification meets all applicable requirements, it will issue you a
final permit. Otherwise, the reviewing authority will send you a letter
denying your permit application with reasons for the denial.
    We decided to finalize a definite timeline for the overall minor
source permit issuance process that varies depending on the type of
source being regulated under the minor NSR program because we agree
with those commenters who believed that this timeline will provide
regulatory certainty for the regulated community and the public, as
well as time for the regulated community and the reviewing authority to
plan for the permit issuance process. Specifically, commenters believed
that the proposed permit issuance process was too lengthy and/or too
uncertain for minor sources. They argued that state minor NSR programs
are bound by shorter and more definite time lines. In addition, a few
commenters believed that the proposed language could allow a permit
application to be held without a final decision for an unreasonable
period, resulting in serious financial burden, lost business
opportunities, a delay in the project and even cancellation of the
project.
    Furthermore, we have amended our proposed completeness review
procedures, as suggested by some commenters and we will no longer
require that if the source has not received a notice of completeness or
a request for additional information in 50 days, that the application
would be deemed complete. We agree with those commenters that expressed
concerns that this provision can be confusing. Therefore and as we
stated previously, if you do not receive a request for additional
information or a notice of complete application postmarked within 45
days of receipt of the permit application by the reviewing authority
for site-specific permits (60 days for synthetic minor permits and
minor modification at major sources), your application will be deemed
complete. The permit issuance procedures for general permits are
discussed in section IV.C.5 of this preamble.

b. Permit Term
    Under 40 CFR 49.155(b), we have finalized provisions that state
that your permit remains valid as long as you commence construction on
your project 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. The reviewing
authority may extend the 18-month period where justified and that 18-
month limit does not apply to the time period between construction of
approved phases of a phased construction program. In those cases, you
must commence construction of each such phase within 18 months of the
approved commencement date for that phase.
    We received only one comment about the permit term provisions. This
commenter had concerns about the proposal preamble language that stated
that: ``a preconstruction permit does not expire.'' Specifically, this
commenter stated that it may be appropriate to specify that the permit
does expire after a specified period, subject to renewal for a
specified period upon showing of diligence by the source. If a
preconstruction permit does not expire, the commenter argues that the
permit term provisions may be administratively impractical to
implement.
    Upon further review of these provisions, we have noticed that the
language we used in the proposal preamble was not consistent with the
provisions we proposed under 40 CFR 49.155(b). Under 40 CFR 49.155(b),
we proposed provisions for when permits become invalid and did not
state that ``a preconstruction permit does not expire.'' Therefore, we
have eliminated the proposal preamble language that stated that permits
do not expire and we are finalizing the proposed provisions as stated
under 40 CFR 49.155(b).
    In addition, we would like to clarify that permits under this
program would not be revoked at the source's request when there is a
rapid decrease in production, as a few commenters recommended. In such
a case, the limits of these permits might be revised appropriately to
account for the reduction, but the permit would not be revoked. Permits
will be revoked only if the source officially shuts down its operation
and notifies the reviewing authority about the business closure.
c. Public Participation Requirements
    We have finalized our public participation requirements under 40
CFR 49.157 for site-specific permits, minor modification at major
sources, synthetic minor sources and the initial development of a
general permit for a source category. Pursuant to these requirements,