[Federal Register: December 31, 2002 (Volume 67, Number 251)]
[Rules and Regulations]
[Page 80185-80289]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31de02-26]
[[Page 80185]]
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Part III
Environmental Protection Agency
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40 CFR Parts 51 and 52
Prevention of Significant Deterioration (PSD) and Nonattainment New
Source Review (NSR); Final Rule and Proposed Rule
[[Page 80186]]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 51 and 52
[AD-FRL-7414-5]
RIN 2060-AE11
Prevention of Significant Deterioration (PSD) and Nonattainment
New Source Review (NSR): Baseline Emissions Determination, Actual-to-
Future-Actual Methodology, Plantwide Applicability Limitations, Clean
Units, Pollution Control Projects
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
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SUMMARY: The EPA is revising regulations governing the New Source
Review (NSR) programs mandated by parts C and D of title I of the Clean
Air Act (CAA or Act). These revisions include changes in NSR
applicability requirements for modifications to allow sources more
flexibility to respond to rapidly changing markets and to plan for
future investments in pollution control and prevention technologies.
Today's changes reflect EPA's consideration of discussions and
recommendations of the Clean Air Act Advisory Committee's (CAAAC)
Subcommittee on NSR, Permits and Toxics, comments filed by the public,
and meetings and discussions with interested stakeholders. The changes
are intended to provide greater regulatory certainty, administrative
flexibility, and permit streamlining, while ensuring the current level
of environmental protection and benefit derived from the program and,
in certain respects, resulting in greater environmental protection.
EFFECTIVE DATE: This final rule is effective on March 3, 2003.
ADDRESSES: Docket. Docket No. A-90-37, containing supporting
information used to develop the proposed rule and the final rule, is
available for public inspection and copying between 8 a.m. and 4:30
p.m., Monday through Friday (except government holidays) at the Air and
Radiation Docket and Information Center (6102T), Room B-108, EPA West
Building, 1301 Constitution Avenue, NW., Washington, DC 20460;
telephone (202) 566-1742, fax (202) 566-1741. A reasonable fee may be
charged for copying docket materials. Worldwide Web (WWW). In addition
to being available in the docket, an electronic copy of this final rule
will also be available on the WWW through the Technology Transfer
Network (TTN). Following signature, a copy of the rule will be posted
on the TTN's policy and guidance page for newly proposed or promulgated
rules: http://www.epa.gov/ttn/oarpg.
FOR FURTHER INFORMATION CONTACT: Ms. Lynn Hutchinson, Information
Transfer and Program Integration Division (C339-03), U.S. EPA Office of
Air Quality Planning and Standards, Research Triangle Park, North
Carolina 27711, telephone 919-541-5795, or electronic mail at
hutchinson.lynn@epa.gov, for general questions on this rule. For
questions on baseline emissions determination or the actual-to-
projected-actual applicability test, contact Mr. Dan DeRoeck, at the
same address, telephone 919-541-5593, or electronic mail at
deroeck.dan@epa.gov. For questions on Plantwide Applicability
Limitations (PALs), contact Mr. Raj Rao, at the same address, telephone
919-541-5344, or electronic mail at rao.raj@epa.gov. For questions on
Clean Units, contact Mr. Juan Santiago, at the same address, telephone
919-541-1084, or electronic mail at santiago.juan@epa.gov. For
questions on Pollution Control Projects (PCPs), contact Mr. Dave
Svendsgaard, at the same address, telephone 919-541-2380, or electronic
mail at svendsgaard.dave@epa.gov.
SUPPLEMENTARY INFORMATION:
Regulated Entities
Entities potentially affected by this final action include sources
in all industry groups. The majority of sources potentially affected
are expected to be in the following groups.
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Industry group SIC a NAICSb
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Electric Services................ 491 221111, 221112, 221113,
221119, 221121, 221122
Petroleum Refining............... 291 32411
Chemical Processes............... 281 325181, 32512, 325131,
325182, 211112, 325998,
331311, 325188
Natural Gas Transport............ 492 48621, 22121
Pulp and Paper Mills............. 261 32211, 322121, 322122,
32213
Paper Mills...................... 262 322121, 322122
Automobile Manufacturing......... 371 336111, 336112, 336712,
336211, 336992, 336322,
336312, 33633, 33634,
33635, 336399, 336212,
336213
Pharmaceuticals.................. 283 325411, 325412, 325413,
325414
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a Standard Industrial Classification
b North American Industry Classification System.
Entities potentially affected by this final action also include
State, local, and tribal governments that are delegated authority to
implement these regulations.
Outline. The information presented in this preamble is organized as
follows:
I. Overview of Today's Final Action
A. Background
B. Introduction
C. Overview of Final Actions
1. Determining Whether a Proposed Modification Results in a
Significant Emissions Increase
2. CMA Exhibit B
3. Plantwide Applicability Limitations (PALs)
4. Clean Units
5. Pollution Control Projects (PCPs)
6. Major NSR Applicability
7. Enforcement
8. Enforceability
II. Revisions to the Method for Determining Whether a Proposed
Modification Results in a Significant Emissions Increase
A. Introduction
B. What We Proposed and How Today's Action Compares
C. Baseline Actual Emissions For Existing Emissions Units Other
than EUSGUs
D. The Actual-to-projected-actual Applicability Test
E. Clarifying Changes to WEPCO Provisions for EUSGUs
F. The ``Hybrid'' Applicability Test
G. Legal Basis for Today's Action
H. Response to Comments and Rationale for Today's Actions
III. CMA Exhibit B
IV. Plantwide Applicability Limitations (PALs)
A. Introduction
B. Relevant Background
C. Final Regulations for Actuals PALs
D. Rationale for Today's Final Action on Actuals PALs
V. Clean Units
[[Page 80187]]
A. Introduction
B. Summary of 1996 Clean Unit Proposal
C. Final Regulations for Clean Units
D. Legal Basis for the Clean Unit Test
E. Summary of Major Comments and Responses
VI. Pollution Control Projects (PCPs)
A. Description and Purpose of This Action
B. What We Proposed and How Today's Action Compares To It
C. Legal Basis for PCP
D. Implementation
VII. Listed Hazardous Air Pollutants
VIII. Effective Date for Today's Requirements
IX. Administrative Requirements
A. Executive Order 12866--Regulatory Planning and Review
B. Executive Order 13132--Federalism
C. Executive Order 13175--Consultation and Coordination with
Indian Tribal Governments
D. Executive Order 13045--Protection of Children from
Environmental Health Risks and Safety Risks
E. Unfunded Mandates Reform Act of 1995
F. Regulatory Flexibility Act (RFA), as Amended by the Small
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5
U.S.C. 601 et seq.
G. Paperwork Reduction Act
H. National Technology Transfer and Advancement Act of 1995
I. Congressional Review Act
J. Executive Order 13211--Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
X. Statutory Authority
XI. Judicial Review
I. Overview of Today's Final Action
A. Background
We \1\ proposed revisions to the NSR rules in a notice published in
the Federal Register on July 23, 1996 (61 FR 38250). On July 24, 1998,
we published a notice (63 FR 39857) to solicit further comment on two
specific aspects of the proposed revisions. Today's Federal Register
action announces EPA's final action on the proposed revisions for
baseline emissions determinations, the actual-to-future-actual
methodology, actuals PALs, Clean Units, and PCPs. We have not made
final determinations on any other proposed changes to the regulations.
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\1\ In this preamble the term ``we'' refers to EPA and the term
``you'' refers to major stationary sources of air pollution and
their owners and operators. All other entities are referred to by
their respective names (for example, reviewing authorities.)
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Today's actions finalize these changes to the regulations for both
the approval and promulgation of implementation plans and requirements
for preparation, adoption, and submittal of implementation plans
governing the NSR programs mandated by parts C and D of title I of the
Act. We also proposed conforming changes to 40 CFR (Code of Federal
Regulations) part 51, appendix S, and part 52.24. Today we have not
included the final regulatory language for these regulations. It is our
intention to include regulatory changes that conform appendix S and 40
CFR 52.24 to today's final rules in any final regulations that set
forth an interim implementation strategy for the 8-hour ozone standard.
We intend to finalize changes to these sections precisely as we have
finalized requirements for other parts of the program. Because these
are conforming changes and the public has had an opportunity for review
and comment, we will not be soliciting additional comments before we
finalize them.
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 or modified major stationary sources of air pollutants regulated
under the Act. In areas not meeting health-based National Ambient Air
Quality Standards (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'' NSR program. In
areas meeting 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 regulations are
contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and part 51, appendix
S.
The NSR provisions of the Act are a combination of air quality
planning and air pollution control technology program requirements for
new and modified stationary sources of air pollution. In brief, section
109 of the Act requires us to promulgate primary NAAQS to protect
public health and secondary NAAQS to protect public welfare. Once we
have set these standards, States must develop, adopt, and submit to us
for approval a State Implementation Plan (SIP) that contains emission
limitations and other control measures to attain and maintain the NAAQS
and to meet the other requirements of section 110(a) of the Act.
Each SIP is required to contain a preconstruction review program
for the construction and modification of any stationary source of air
pollution to assure that the NAAQS are achieved and maintained; to
protect areas of clean air; to protect Air Quality Related Values
(AQRVs) (including visibility) in national parks and other natural
areas of special concern; to assure that appropriate emissions controls
are applied; to maximize opportunities for economic development
consistent with the preservation of clean air resources; and to ensure
that any decision to increase air pollution is made only after full
public consideration of all the consequences of such a decision.
For newly constructed, ``greenfield'' sources, the determination of
whether an activity is subject to the major NSR program is fairly
straightforward. The Act, as implemented by our regulations, sets
applicability thresholds for major sources in nonattainment areas
[potential to emit (PTE) above 100 tons per year (tpy) of any pollutant
subject to regulation under the Act, or smaller amounts, depending on
the nonattainment classification] and attainment areas (100 or 250 tpy,
depending on the source type). A new source with a PTE at or above the
applicable threshold amount ``triggers,'' or is subject to, major NSR.
The determination of what should be classified as a modification
subject to major NSR presents more difficult issues. The modification
provisions of the NSR program in parts C and D are based on the
definition of modification in section 111(a)(4) of the Act: the term
``modification'' means ``any physical change in, or change in the
method of operation of, a stationary source which increases the amount
of any air pollutant emitted by such source or which results in the
emission of any air pollutant not previously emitted.'' That definition
contemplates that, first, you will determine whether a physical or
operational change will occur. If so, then you will proceed to
determine whether the physical or operational change will result in an
emissions increase over baseline levels.
The expression ``any physical change * * * or change in the method
of operation'' in section 111(a)(4) of the Act is not defined. We have
recognized that Congress did not intend to make every activity at a
source subject to the major NSR program. As a result, we have
previously adopted several exclusions from what may constitute a
``physical or operational change.'' For instance, we have specifically
recognized that routine maintenance, repair and replacement, and
changes in hours of operation or in the production rate are not
considered a physical change or change in the method of
[[Page 80188]]
operation within the definition of major modification.\2\
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\2\ See 40 CFR 52.21(b)(2).
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We have likewise addressed the scope of the statutory definition of
modification by excluding all changes that do not result in a
``significant'' emissions increase from a major source.\3\ This
regulatory framework applies the major NSR program at existing sources
to only ``major modifications'' at major stationary sources.
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\3\ See 40 CFR 52.21(b)(23).
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One key attribute of the major NSR program in general is that you
may ``net'' modifications out of review by coupling proposed emissions
increases at your source with contemporaneous emissions reductions.
Thus, under regulations we promulgated in 1980, you may modify, or even
completely replace, or add, emissions units without obtaining a major
NSR permit, so long as ``actual emissions'' do not increase by a
significant amount over baseline levels at the plant as a whole.
Applicability of the major NSR program must be determined in
advance of construction and is pollutant-specific. In cases involving
existing sources, this requires a pollutant-by-pollutant determination
of the emissions change, if any, that will result from the physical or
operational change. Our 1980 regulations implementing the PSD and
nonattainment major NSR programs thus inquire whether the proposed
change constitutes a ``major modification,'' that is, a physical change
or change in the method of operation ``that would result in a
significant net emissions increase of any pollutant subject to
regulation under the Act.'' A ``net emissions increase'' is defined as
the increase in ``actual emissions'' from the particular physical or
operational change (taking into account the use of emissions control
technology and restrictions on hours of operation or rates of
production where such controls and restrictions are enforceable),
together with your other contemporaneous increases or decreases in
actual emissions.\4\ In order to trigger applicability of the major NSR
program, the net emissions increase must be ``significant.'' \5\
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\4\ In approximate terms, ``contemporaneous'' emissions
increases or decreases are those that have occurred between the date
5 years immediately preceding the proposed physical or operational
change and the date that the increase from the change occurs. See,
for example, Sec. 52.21(b)(3)(ii).
\5\ Once a modification is determined to be major, the PSD
requirements apply only to those specific pollutants for which there
would be a significant net emissions increase. See, for example,
Sec. 52.21(j)(3) (BACT) and Sec. 52.21(m)(1)(b) (air quality
analysis).
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Before today's changes, our regulations generally defined actual
emissions as ``the average rate, in tpy, at which the unit actually
emitted the pollutant during a 2-year period which precedes the
particular date and which is representative of normal source
operation.'' The reviewing authorities will allow use of a different
time period ``upon a determination that it is more representative of
normal source operation.'' We have historically used the 2 years
immediately preceding the proposed change to establish a source's
actual emissions. However, in some cases we have allowed use of an
earlier period.
With respect to changes at existing sources, a prediction of
whether the physical or operational change would result in a
significant net increase in your actual emissions following the change
was thus necessary. In part, this involved a straightforward and
readily predictable engineering judgment--how would the change affect
the emission factor or emissions rate of the emissions units that are
to be changed.
Before today's changes, the regulations provided that when your
emissions unit, other than an electric utility steam generating unit
(EUSGU), ``has not begun normal operations,'' actual emissions equal
the PTE of the unit. When you have not begun normal operations
following a change, you must assume that your source will operate at
its full capacity year round, that is, at its full emissions potential.
This is referred to as the actual-to-potential test. You may avoid the
need for an NSR permit by reducing your source's potential emissions
through the use of enforceable restrictions to pre-modification actual
emissions levels plus an amount that is less than ``significant''.
In 1992, we promulgated revisions to our applicability regulations
creating special rules for physical and operational changes at EUSGUs.
See 57 FR 32314 (July 21, 1992).\6\ In this rule, prompted by
litigation involving the Wisconsin Electric Power Company (WEPCO) and
commonly referred to as the ``WEPCO rule,'' we adopted an actual-to-
future-actual methodology for all changes at EUSGUs except the
construction of a new electric generating unit or the replacement of an
existing emissions unit. Under this methodology, the actual annual
emissions before the change are compared with the projected actual
emissions after the change to determine if a physical or operational
change would result in a significant increase in emissions. To ensure
that the projection is valid, the rule requires the utility to track
its emissions for the next 5 years and provide to the reviewing
authority information demonstrating that the physical or operational
change did not result in an emissions increase.
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\6\ The regulations define ``electric utility steam generating
units'' as any steam electric generating unit that is constructed
for the purpose of supplying more than one-third of its potential
electric output capacity and more than 25 megawatts (MW) of
electrical output to any utility power distribution system for sale.
See, for example, Sec. 51.166(b)(30).
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In promulgating the WEPCO rule, we also adopted a presumption that
utilities may use as baseline emissions the actual annual emissions
from any 2 consecutive years within the 5 years immediately preceding
the change.
In attainment areas, once major NSR is triggered, you must, among
other things, install best available control technology (BACT) and
conduct modeling and monitoring as necessary. If your source is located
in a nonattainment area, you must install technology that meets the
lowest achievable emissions rate (LAER), secure emissions reductions to
offset any increases above baseline emission levels, and perform other
analyses.
B. Introduction
Today's final regulations were proposed as part of a larger
regulatory package on July 23, 1996 (61 FR 38250). That package
proposed a number of changes to our existing major NSR requirements.
(Please refer to the outline of that proposed rulemaking for a complete
list of changes that were proposed to our existing regulations.) On
July 24, 1998, we published a Federal Register Notice of Availability
(NOA) that requested additional comment on three of the proposed
changes: determining baseline emissions, actual-to-future-actual
methodology, and PALs. Following the 1996 proposals, we held two public
hearings and more than 50 stakeholder meetings. Environmental groups,
industry, and State, local, and Federal agency representatives
participated in these many discussions.
In May 2001, President Bush's National Energy Policy Development
Group issued findings and key recommendations for a National Energy
Policy. This document included numerous recommendations for action,
including a recommendation that the EPA Administrator, in consultation
with the Secretary of Energy and other relevant agencies, review NSR
regulations, including administrative interpretation and
implementation. The recommendation requested that we issue a report to
the President on the impact of the regulations on investment
[[Page 80189]]
in new utility and refinery generation capacity, energy efficiency, and
environmental protection.
In response, in June 2001, we issued a background paper giving an
overview of the NSR program. This paper is available on the Internet at
http://www.epa.gov/air/nsr-review/background.html. We solicited public
comments on the background paper and other information relevant to the
New Source Review 90-day Review and Report to the President. During our
review of the NSR program, we met with more than 100 groups, held four
public meetings around the country, and received more than 130,000
written comments. Our report to the President and our recommendations
in response to the energy policy were issued on June 13, 2002. A copy
of this information is available at http://www.epa.gov/air/nsr-review/.
We expect that our recommendations in response to the energy policy
will be reflected in the future in various programs and regulatory
actions. Today's actions implement several of those recommendations.
Today, we are finalizing five actions that we previously proposed
in 1996 (three of which were re-noticed in the 1998 NOA). We are not
taking final action on any of the remaining issues in the 1996 proposal
at this time. We have not decided what final action we will take on
those issues.
C. Overview of Final Actions
Today we are taking final action on five changes to the NSR program
that will reduce burden, maximize operating flexibility, improve
environmental quality, provide additional certainty, and promote
administrative efficiency. These elements include baseline actual
emissions, actual-to-projected-actual emissions methodology, PALs,
Clean Units, and PCPs. We are also codifying our longstanding policy
regarding the calculation of baseline emissions for EUSGUs. In
addition, we are responding to comments we received on a proposal to
adopt a methodology, developed by the American Chemistry Council
(formerly known as the Chemical Manufacturers Association (CMA)) and
other industry petitioners, to determine whether a source has
undertaken a modification based on its potential emissions. We are
including a new section in today's final rules that outlines how a
major modification is determined under the various major NSR
applicability options and clarifies where you will find the provisions
in our revised rules. Finally, we have codified a new definition of
``regulated NSR pollutant'' that clarifies which pollutants are
regulated under the Act for purposes of major NSR.
This section briefly introduces each improvement. Detailed
discussions of the improvements are found in sections II through VII of
this preamble.
1. Determining Whether a Proposed Modification Results in a Significant
Emissions Increase
Today we are finalizing two changes to our existing major NSR
regulations that will affect how you calculate emissions increases to
determine whether physical changes or changes in the method of
operation trigger the major NSR requirements. First, we have a new
procedure for determining ``baseline actual emissions.'' That is, the
relevant terminology for calculating pre-change emissions for most
applications is now ``baseline actual emissions'' rather than ``actual
emissions.'' You may use any consecutive 24-month period in the past 10
years to determine your baseline actual emissions. Second, we are
supplementing the existing actual-to-potential applicability test with
an actual-to-projected-actual applicability test for determining if a
physical or operational change at an existing emissions unit will
result in an emissions increase. Notwithstanding the new test, you will
still have the ability to conduct an actual-to-potential type test
within the new actual-to-projected-actual applicability test. In this
case, you will not be subject to recordkeeping requirements that are
being established and would otherwise apply as part of the new actual-
to-projected actual applicability test.
For EUSGUs, we are making several changes to the existing
procedures and are codifying our current policy for calculating the
baseline actual emissions. That is, the baseline actual emissions for
EUSGUs is the average rate, in tpy, at which that unit actually emitted
the pollutant during a 2-year (consecutive 24-month) period within the
5-year period immediately preceding when the owner or operator begins
actual construction. We are also retaining the option that allows the
use of a different time period if the reviewing authority determines it
is more representative of normal source operation.
2. CMA Exhibit B
As described in section I.C.1 above, we have decided to adopt an
actual-to-projected-actual methodology, combined with a revised process
to determine baseline emissions, to use in determining when sources are
considered to have made a modification and are thereby subject to NSR.
We are not adopting the methodology based on potential emissions as
discussed in the CMA Exhibit B proposal. See section III of this
preamble for a discussion of the comments we received on this proposal
and our responses.
3. Plantwide Applicability Limitations
A PAL is a voluntary option that will provide you with the ability
to manage facility-wide emissions without triggering major NSR review.
We believe that the added flexibility provided under a PAL will
facilitate your ability to respond rapidly to changing market
conditions while enhancing the environmental protection afforded under
the program.
Today we are promulgating a PAL based on plantwide actual
emissions. If you keep the emissions from your facility below a
plantwide actual emissions cap (that is, an actuals PAL), then these
regulations will allow you to avoid the major NSR permitting process
when you make alterations to the facility or individual emissions
units. In return for this flexibility, you must monitor emissions from
all of your emissions units under the PAL. The benefit to you is that
you can alter your facility without first obtaining a Federal NSR
permit or going through a netting review. A PAL will allow you to make
changes quickly at your facility. If you are willing to undertake the
necessary recordkeeping, monitoring, and reporting, a PAL offers you
flexibility and regulatory certainty.
4. Clean Units
We are promulgating a new type of applicability test for emissions
units that are designated as Clean Units. The new applicability test
recognizes that when you go through major NSR review and install BACT
or LAER, you may make any changes to the Clean Unit without triggering
an additional major NSR review, if the project at a Clean Unit does not
cause the need for a change in the emission limitations or work
practice requirements in the permit for the unit that were adopted in
conjunction with BACT or LAER and the project would not alter any
physical or operational characteristics that formed the basis for the
BACT or LAER determination. If the project causes the need for a change
in the emission limitations or work practice requirements in the permit
for the unit adopted in conjunction with BACT or LAER or would alter
any physical or operational characteristics that formed the basis for
the BACT or LAER determination, you lose Clean Unit status. You may
still proceed with the project without triggering major NSR
[[Page 80190]]
review, if the increase is not a significant net emissions increase.
Emissions units that have not been through major NSR may still qualify
for Clean Unit status if they demonstrate that the emissions control
level is comparable to BACT or LAER. Clean Unit status will be valid
for up to a 10-year period. The new applicability test does not exclude
consideration of physical changes or changes in the method of operation
of Clean Units from major NSR, but rather changes the way emissions
increases are calculated for these changes. This new applicability test
therefore protects air quality, creates incentives for sources to
install state-of-the-art controls, provides flexibility for sources,
and promotes administrative efficiency.
5. Pollution Control Projects
Today's rule contains a new list of environmentally beneficial
technologies that qualify as PCPs for all types of sources.
Installation of a PCP is not subject to the major modification
provisions. An owner or operator installing a listed PCP automatically
qualifies for the exclusion if there is no adverse air quality impact--
that is, if it will not cause or contribute to a violation of NAAQS or
PSD increment, or adversely impact an AQRV (such as visibility) that
has been identified for a Federal Class I area by a Federal Land
Manager (FLM) and for which information is available to the general
public. The PCPs that are not listed in today's rules may also qualify
for the PCP Exclusion if the reviewing authority determines on a case-
specific basis that a non-listed PCP is environmentally beneficial when
used for a particular application. Also, in the future, we may add to
the listed PCPs through a rulemaking that provides for public notice
and opportunity for comment. The PCP Exclusion allows sources to
install emissions controls that are known to be environmentally
beneficial. These provisions thus offer flexibility while improving air
quality.
6. Major NSR Applicability
We have briefly described the new provisions for baseline actual
emissions, actual-to-projected-actual methodology, PALs, and Clean
Units. Sections II, IV, and V describe the new provisions in detail.
These provisions offer major new changes to NSR applicability,
especially regarding how a major modification is determined. The major
NSR applicability provisions have developed over time and therefore
have been added to the NSR rules in a piecemeal fashion. In today's
final rules we are including a new section that outlines how a major
modification is determined under the various major NSR applicability
options and clarifies where you will find the provisions in our revised
rules. For each applicability option, we describe how a major
modification is determined in detail. You'll find this new
applicability ``roadmap'' in Sec. Sec. 51.165(a)(2), 51.166(a)(7), and
52.21(a)(2). To summarize, the various provisions for major
modifications are now as follows.
[sbull] Actual-to-projected-actual applicability test for all
existing emissions units. (Including an actual-to-potential option)
[sbull] Actual-to-potential test for any new unit, including
EUSGUs.
[sbull] The Clean Unit Test for existing emissions units with Clean
Unit status.
[sbull] The hybrid test for modifications with multiple types of
emissions units. (Used when a physical or operational change affects a
combination of more than one type of unit.)
We describe actuals PALs, which are an alternative way of complying
with major NSR, in section IV of this preamble. If you have a PAL, as
long as you are complying with the PAL requirements, any physical or
operational changes are not major modifications.
We have revised the definition of major modification to clarify
what has always been our policy--that determining whether a major
modification has occurred is a two-step process. The new definition of
major modification is ``any physical change in or change in the method
of operation of a major stationary source that would result in: (1) A
significant emissions increase of a regulated NSR pollutant; and (2) a
significant net emissions increase of that pollutant from the major
stationary source.'' We have also revised the definitions of actual
emissions, emissions unit, net emissions increase, and construction. We
have deleted the word ``actual'' as related to emissions from the
definition of ``construction.'' This change was necessary because of
how the definition of ``actual emissions'' is used in the final rule,
but the deletion is not intended to change any meaning in the term
``construction.'' We have added new definitions for baseline actual
emissions, projected actual emissions, project, and significant
emissions increase. These revisions and additions implement our new
provisions for major modifications under the actual-to-projected-actual
applicability test, actual-to-potential test, Clean Unit Test, and
hybrid test. You will find a complete discussion of the Clean Unit
Test, including how modifications to Clean Units are treated, in
section V of this preamble. The other tests are discussed in section
II.
``Actual emissions,'' as the term has been historically applied,
will still be used to determine air quality impacts (for example,
compliance with NAAQS, PSD increments, and AQRVs) and to compute the
required amount of emissions offsets.
To further clarify major NSR applicability in one location, we have
moved Sec. 51.166(i)(1) through (3) and Sec. 52.21(i)(1) through (3)
into the new applicability sections at Sec. 51.166(a)(7) and Sec.
52.21(a)(2). These provisions clarify that you must obtain a permit
before you begin construction (including for major modifications), that
the provisions apply for each regulated NSR pollutant that your source
emits, and that the provisions apply to any source located in the area
designated as attainment or unclassifiable (for Sec. Sec. 51.166 and
52.21).
We have also added a new definition for reviewing authority that
clarifies who has authority to implement major NSR programs. Reviewing
authority means the State air pollution control agency, local agency,
other State agency, Indian tribe, or other agency authorized by the
Administrator to carry out a permit program under Sec. Sec. 51.165 and
51.166, or the Administrator in the case of EPA-implemented permit
programs under Sec. 52.21.
7. Enforcement
As noted above, today we are taking final action on five changes to
the NSR program that create alternative means of determining NSR
applicability for projects that begin actual construction after these
provisions become effective in your jurisdiction. If you are
subsequently determined not to have met any of the obligations of these
new alternatives (for example, failure to meet emissions or
applicability limits, properly project emissions, and/or properly
implement the PCP Exclusion or Clean Unit Test), you will be subject to
any applicable enforcement provisions (including the possibility of
citizens' suits) under the applicable sections of the Act. Sanctions
for violations of these provisions may include monetary penalties of up
to $27,500 per day of violation, as well as the possibility of
injunctive relief, which may include the requirement to install air
pollution controls.
8. Enforceability
This rule uses several terms related to enforceability of
particular provisions. A requirement is ``legally enforceable'' if some
authority has the right to enforce the restriction. Practical
enforceability for a source-specific permit will be
[[Page 80191]]
achieved if the permit's provisions specify: (1) A technically-accurate
limitation and the portions of the source subject to the limitation;
(2) the time period for the limitation (hourly, daily, monthly, and
annual limits such as rolling annual limits); and (3) the method to
determine compliance, including appropriate monitoring, recordkeeping,
and reporting. For rules and general permits that apply to categories
of sources, practicable enforceability additionally requires that the
provisions: (1) Identify the types or categories of sources that are
covered by the rule; (2) where coverage is optional, provide for notice
to the permitting authority of the source's election to be covered by
the rule; and (3) specify the enforcement consequences relevant to the
rule.\7,\ \8\ ``Enforceable as a practical matter'' will be achieved if
a requirement is both legally and practically enforceable.
---------------------------------------------------------------------------
\7\ See memorandum, ``Release of Interim Policy on Federal
Enforceability of Limitations on Potential to Emit,'' signed by John
Seitz and Robert Van Heuvelen, Jan. 22, 1996 at 5-6 and Attachment
4, available on the Web as http://www.epa.gov/rgytgrnj/programs/artd/air/title5/t5memos/pottoemi.pdf.
More detailed guidance on
practical enforceability is contained in the memorandum.
\8\ The Agency has frequently used the term ``practicably
enforceable'' and ``practical enforceability,'' interchangeably.
There is no difference in the meaning of these terms.
---------------------------------------------------------------------------
Note that we continue to require offsets to be federally
enforceable. ``Federal enforceability'' means that not only is a
requirement practically enforceable, as described above, but in
addition, ``EPA must have a direct right to enforce restrictions and
limitations imposed on a source to limit its exposure to Act
programs.'' \9\ Also note that, for computing baseline actual emissions
for use in determining major NSR applicability or for establishing a
PAL, you must consider ``legally enforceable'' requirements. A
requirement will be legally enforceable if the Administrator, State,
local or tribal air pollution control agency has the authority to
enforce the requirement irrespective of its practical enforceability.
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\9\ See generally memorandum, ``Options for Limiting the
Potential to Emit (PTE) of a Stationary Source Under Section 112 and
Title V of the Clean Air Act,'' signed by John Seitz and Robert Van
Heuvelen, Jan. 25, 1995, at 2-3.
---------------------------------------------------------------------------
In our existing regulations that are unamended by today's action,
the term ``federally enforceability'' still appears. In 1995, the court
in Chemical Manufacturers Ass'n v. EPA remanded the definition of PTE
in the major NSR program to EPA. No. 89-1514 (D.C. Cir. Sept. 150
1995). Because the court vacated the requirements in the nationwide
rules, the term federal enforceability as it relates to PTE is not in
effect (pending final rule making by the Agency) in the Federal rules.
The decision, however, did not address the term ``federally
enforceable'' as used in SIPs, because that issue was not before the
court.
II. Revisions to the Method for Determining Whether a Proposed
Modification Results in a Significant Emissions Increase
A. Introduction
Today we are finalizing two sets of amendments to our existing
major NSR regulations that provide another way in which you may
calculate emissions increases to determine whether certain types of
physical changes or changes in the method of operation (physical or
operational changes) of an existing emissions unit trigger the major
NSR requirements.\10\ The first set of amendments relates to the way in
which you will determine your baseline actual emissions for such
emissions units in accordance with a new definition of ``baseline
actual emissions.'' See, for example, new Sec. 52.21(b)(48). We will
be allowing you to use any consecutive 24-month period during the 10-
year period prior to the change to determine your baseline actual
emissions for existing emissions units (other than EUSGUs). The second
set of amendments replaces the existing actual-to-potential and actual-
to-representative-actual-annual emissions applicability tests for
existing emissions units (including EUSGUs) with an actual-to-
projected-actual applicability test for determining if a physical or
operational change will result in an emissions increase at such units.
(Notwithstanding this new test, the actual-to-potential methodology is
still available at your option under the new applicability tests.) The
new procedure for determining your pre-change baseline actual emissions
will not apply to EUSGUs.\11\ Instead, for EUSGUs we are retaining the
existing procedures for determining the baseline actual emissions.\12\
See, for example, existing Sec. 52.21(b)(33). We are also affirming
our current method used for calculating the baseline actual emissions
for EUSGUs (allowing any consecutive 2 years in the past 5 years, or
another more representative period) by codifying it in the NSR
regulations. See, for example, new Sec. 52.21(b)(48).
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\10\ By definition, the modification of an existing source is
potentially subject to major NSR only if that existing source is
``major.'' In addition, when an existing ``minor'' source makes a
physical or operational change that by itself is major, that change
constitutes a major stationary source that is subject to major NSR.
See, for example, Sec. 52.21(b)(1)(c).
\11\ For NSR purposes, the definition of ``electric utility
steam generating unit'' means any steam electric generating unit
that is constructed for the purpose of supplying more than one-third
of its potential electric output capacity and more than 25 MW
electrical output to any utility power distribution system for sale.
Any steam supplied to a steam distribution system for the purpose of
providing steam to a steam electric generator that would produce
electrical energy for sale is also considered in determining the
electrical energy output capacity of the affected facility. See, for
example, Sec. 52.21(b)(31). Reference in this notice to utility
units is meant to include all emissions units covered by this
definition.
\12\ We promulgated special applicability rules for physical and
operational changes at EUSGUs in 1992. See 57 FR 32314 (July 21,
1992).
---------------------------------------------------------------------------
For existing emissions units other than EUSGUs, the changes we are
making to the method for calculating a unit's baseline actual emissions
will apply only for the following three purposes.
[sbull] For modifications, to determine a modified unit's pre-
change baseline actual emissions as part of the new actual-to-
projected-actual applicability test.
[sbull] For netting, to determine the pre-change baseline actual
emissions of an emissions unit that underwent a physical or operational
change within the contemporaneous period.
[sbull] For PALs, to establish the PAL emissions cap.
Today's new procedures for calculating baseline actual emissions
and for the actual-to-projected-actual applicability test should not be
used when determining a source's actual emissions on a particular date
as may be used for other NSR-related requirements. Such requirements
include, but are not limited to, air quality impacts analyses (for
example, compliance with NAAQS, PSD increments, and AQRVs) and
computing the required amount of emissions offsets. For each of these
requirements, the existing definition of ``actual emissions'' continues
to apply. This is discussed in greater detail in section II.D.9.
We believe that these changes will greatly improve the major NSR
program by responding to industry concerns with our existing
methodology without compromising air quality. One common complaint
about the current emissions baseline process is that you have a limited
ability to consider the operational fluctuations associated with normal
business cycles when establishing baseline actual emissions unless your
reviewing authority agrees that another period is ``more representative
of normal source
[[Page 80192]]
operation.'' \13\ By extending the time period from which you may
establish your baseline actual emissions, the new procedures should
reflect the emissions levels that occur during a normal business cycle,
without requiring you to demonstrate to your reviewing authority that
another period is ``more representative of normal source operations.''
---------------------------------------------------------------------------
\13\ The definition of ``actual emissions'' requires that a
unit's actual emissions be based on a consecutive 24-month period
immediately preceding the particular change. Also, however, it
directs the reviewing authority to allow the use of another time
period upon a determination that it is more representative. This
procedure continues to be appropriate under the pre-existing
regulation and for other NSR purposes, such as determining a
source's ambient impact against the PSD increments, and we continue
to require its use for such purposes.
---------------------------------------------------------------------------
Commenters also believe that the current methodology requires many
changes made to existing equipment to go through major NSR, without
taking into account operating history, even when such changes will not
result in increased pollution to the environment. Our new applicability
requirements address these commenters' concerns and will focus limited
resources more effectively.
We are also modifying the way you may determine whether emissions
at existing units (including EUSGUs) will increase, by allowing you to
use projected actual emissions for purposes of this determination.
Under this approach, in circumstances where there is a reasonable
possibility that a project that is not part of a major modification may
result in a significant increase of a regulated NSR pollutant, before
beginning actual construction, you may choose to make and record a
projection of post-change emissions of that pollutant from changed
units.\14\
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\14\ Note that we plan, in the near future, to issue a Notice of
Proposed Rulemaking that will address the issue of
``debottlenecking.'' In today's rulemaking, we do not intend to
change current requirements related to ``debottlenecking.'' Use of
the term ``changed unit'' should not be interpreted as a change to
those requirements.
---------------------------------------------------------------------------
To make this projection, you must use the maximum annual rate at
which the changed units are projected to emit the pollutant in any of
the 5 calendar years following the time the unit resumes regular
operations after the project (or 10 years if the project increases the
unit's design capacity or potential to emit the regulated NSR
pollutant). You then use these projections to calculate whether the
project will result in a significant emissions increase. In making this
calculation, you could exclude any emissions that the unit could have
accommodated before the change and that are unrelated to the project.
You could also exclude emissions resulting from increased utilization
due to demand growth that the unit could have accommodated before the
change.
With respect to the covered changes, if you use this procedure, you
are required to track post-change annual emissions of the units in tpy
for the next 5 years (or 10 years if the project increases the unit's
design capacity or potential to emit the regulated NSR pollutant). At
the end of each year, if post-change annual emissions exceed the
baseline actual emissions by a significant amount, and differ from your
projections, you must submit a report to the reviewing authority with
that information within 60 days after the end of the year.
Instead of relying on projected actual emissions, you may instead
elect to use the unit's PTE, in tpy. In that case, you need not track
or report post-change emissions.
We are also revising the procedures for projecting future emissions
for EUSGUs to conform with these new procedures and consolidate the
EUSGU and non-EUSGU procedures into a single set of provisions. As a
result of our 1992 rulemaking, EUSGUs have available to them a similar
set of procedures. We believe the procedures we are implementing for
other units represent a sensible refinement of the rules we promulgated
in 1992 and that we should make these procedures available to all
existing units. We do, however, impose two requirements on EUSGUs
beyond those we impose on other units. First, with respect to covered
projects, EUSGUs that project post-change emissions will have to submit
a copy of their projections to their reviewing authority before
beginning actual construction. You will not be required to obtain any
kind of determination from the reviewing authority before proceeding
with construction. Second, we are requiring that if you project post-
change emissions for your EUSGUs, you must send a copy of your tracked
emissions to your reviewing authority, without regard to whether these
emissions have increased by a significant amount or exceed your
projections. The effect of this consolidation is that we make minor
changes to the existing procedures for EUSGUs. For example, you must
project emissions for EUSGUs on a 12-month basis, rather than the
current approach of projecting average annual emissions for the 2 years
immediately following the change. Also, you need only make and report a
projection for EUSGUs when there is a reasonable possibility that the
given project may result in a significant emissions increase.
By allowing you to use today's new version of the actual-to-
projected-actual applicability test to evaluate modified existing
emissions units, we expect that fewer projects will trigger the major
NSR permitting requirements. Nonetheless, we believe that the
environment will not be adversely affected by these changes and in some
respects will benefit from these changes. The new test will remove
disincentives that discourage sources from making the types of changes
that improve operating efficiency, implement pollution prevention
projects, and result in other environmentally beneficial changes.
Moreover, the end result is that State and local reviewing authorities
can appropriately focus their limited resources on those activities
that could cause real and significant increases in pollution.
In addition, today's changes provide benefits to the public and the
environment through the improved recordkeeping and reporting
requirements as discussed above. We believe that these added
recordkeeping and reporting measures will provide the information
necessary for reviewing authorities to assure that such changes are
made consistent with the CAA requirements. The new rule also does not
affect the way in which a source's ambient air quality impacts are
evaluated. Altogether, we believe that today's regulatory amendments
focus on the types of changes occurring at existing emissions units
that are more likely to result in significant contributions to air
pollution.
B. What We Proposed and How Today's Action Compares
1. July 23, 1996 Notice of Proposed Rulemaking (NPRM)
In 1996, we proposed to amend the NSR rules to allow States to use,
among other things, a new test as an alternative to the actual-to-
potential test for determining the applicability of the NSR
requirements when you wish to make modifications at an existing major
stationary source. The proposed test was intended to apply exclusively
to modifications of existing emissions units at major stationary
sources--not to new emissions units. As described more completely
below, the proposed test involved changes to the procedures for
calculating an emissions unit's pre-change (baseline) actual emissions
and post-change (future) actual emissions. The method would have also
required you to monitor and report future emissions from certain
modified
[[Page 80193]]
emissions units, based on the monitoring and reporting requirements
adopted under the WEPCO amendments.
Baseline actual emissions. In our 1996 NPRM, we proposed to change
the definition of baseline emissions from the average annual rate of
actual emissions during the 2-year period preceding the date of the
modification to the annual rate associated with the highest level of
utilization from any consecutive 12-month period during the 10-year
period preceding the date of the modification, adjusted for any more
stringent limits that may have been imposed since the end of the 12-
month period selected. The proposed method was intended to be used for
calculating baseline actual emissions for any existing emissions unit,
including EUSGUs, by replacing both the original method (that was part
of the actual-to-potential test) and the 2-in-5-years method (as
adopted under the WEPCO for modified EUSGUs).
As indicated above, the proposed procedure also would have required
you to take into account any legally enforceable constraints imposed on
the facility since the selected 12-month time frame, and currently in
effect. Thus, you would generally have been required to calculate the
modified emissions unit's baseline actual emissions by using the
appropriate utilization level from the selected 12-month period, in
combination with the emissions unit's current enforceable emission
factors. Such enforceable emission factors would have included current
Federal and State limits, such as RACT (Reasonably Available Control
Technology), MACT (Maximum Achievable Control Technology), BACT, LAER,
and New Source Performance Standards (NSPS), as well as enforceable
limits resulting from any voluntary reductions you may have taken (for
example, for netting, offsets, or Emission Reduction Credits (ERCs)).
Also, you would have had to consider any operational constraints that
are enforceable, such as production limits, fuel use limits, or limits
to the number of hours per day or days per year at which the unit
modified, or affected by such modification, could operate.
Finally, we indicated that it was not our intent to extend the 5-
year contemporaneous period (for considering creditable emissions
increases and decreases as part of the netting calculus), even if we
established a 10-year baseline look back period.
Post-change actual emissions. In the 1996 proposal, we proposed to
extend the availability of the actual-to-future-actual emissions
method, established under the WEPCO amendments exclusively for EUSGUs,
to predict the future actual emissions from any emissions unit
undergoing a physical or operational change. Thus, we proposed
extending availability of the definition of ``representative actual
annual emissions'' to all emissions units undergoing a physical or
operational change. This definition would have provided the basis for
you to project an emissions unit's future actual emissions, excluding
any emissions increases caused by demand growth or other independent
factors, when determining whether the change at issue will increase
emissions over the baseline levels.\15\
---------------------------------------------------------------------------
\15\ This method, as well as the WEPCO amendments as a whole,
was limited to modifications of existing EUSGUs and did not apply to
the addition of a new emissions unit or the replacement of an
existing unit.
---------------------------------------------------------------------------
The proposal also retained the WEPCO provision requiring that, for
any modified emissions unit using the actual-to-future-actual test, you
must submit annually for 5 years after the change sufficient records to
demonstrate that the change has not resulted in a significant emissions
increase over the baseline levels. As a safeguard, the WEPCO rule also
provides that this tracking period could be extended to 10 years when
the reviewing authority is concerned that the first 5 years will not be
representative of normal source operation. We sought comments on
numerous issues, including whether any changes should be made to the 5-
year tracking requirement or to the demand growth exclusion in the
event that we decided to broaden use of the actual-to-future-actual
test for modifications to any existing emissions unit.
2. July 24, 1998 Notice of Availability
In 1998, we announced that comments received on the 1996 proposal
and changed circumstances had caused us to ask whether we should
reconsider some of the aspects of the proposed changes to the ``major
modification'' applicability test. The 1998 NOA set forth for public
comment an additional applicability test. In brief, the alternative
presented for additional comment would have: (1) Retained the actual-
to-future-actual test for EUSGUs and applied it to all source
categories; (2) made binding for a 10-year period the emissions levels
used in projecting future actual emissions following the modification
for all source categories; and (3) eliminated the demand growth
exclusion for calculating a modified emissions unit's future actual
emissions.
Consistent with the 1996 NPRM, this alternative methodology would
have applied to any existing emissions unit at a major stationary
source for which you might plan a non-routine physical or operational
change. The methodology would have required you first to determine
which emissions units were being changed, or were affected by the
change, then to calculate those units' baseline actual emissions based
on the highest consecutive 12 months of source operation during the
past 10 years, adjusted to reflect current emission factors.
The second step involved the forecast of future emissions resulting
from the physical or operational change. Under this calculation of
future actual emissions, one would not have been allowed to exclude
predicted capacity utilization increases that were due to demand
growth. If the difference between the pre-change and post-change actual
emissions equaled or exceeded the significant emissions rate defined
for a particular pollutant, major NSR would have been triggered (unless
you took enforceable limits to keep the increase below significant
levels or were otherwise able to net out of review using creditable,
contemporaneous emissions increases and decreases occurring at your
facility). If the difference between baseline and future actual
emissions did not exceed the applicable significant emissions rate,
your facility would not be subject to major NSR, but you would have
been required to accept a temporary emissions cap based on the
predicted future actual emissions for each affected pollutant at the
emissions units being modified or affected by the modification.
The temporary cap would have become an enforceable condition of a
preconstruction permit. Also, the sole purpose of the temporary cap
would have been to make sure that the physical or operational change
did not result in a significant emissions increase, and the cap would
have applied to those emissions units for at least 10 years after the
changes were completed. You would also have been required to supply
information annually to demonstrate that the future actual emissions
did not exceed the applicable emissions caps during the 10-year period
following the modification.
3. Summary of Major Changes in the Final Rule
Today's action amends the existing NSR regulations to provide you
with a common applicability test for all existing emissions units--the
actual-to-projected-actual applicability test. This test has changed in
some ways from both the 1996 NPRM and the 1998 NOA. As described in
greater detail in sections
[[Page 80194]]
II.C and II.D below, the key features of the methodology are as
follows.
[sbull] If you are an existing emissions unit (other than an
EUSGU), you will determine the pre-change (baseline) actual emissions
by calculating an average annual emissions rate, in tpy, using any
consecutive 24 months during the 10-year period immediately preceding
the change. This rate must be adjusted downward to reflect any legally
enforceable emission limitations imposed after the selected baseline
period.
[sbull] We are codifying the ``2-in-5-years'' presumption for
calculating the baseline actual emissions for EUSGUs.
[sbull] If you are an existing emissions unit (including EUSGUs),
you will estimate post-change emissions (projected actual emissions),
in tpy, to reflect any increase in annual emissions that may result
from the proposed change. You should exclude, in calculating any
increase in emissions that results from the particular project, that
portion of the unit's emissions following the project that an existing
unit could have accommodated during the baseline period and that is
also unrelated to the particular project, including any increased
utilization due to product demand growth. You must make the projection
before you begin actual construction. When using this method, you must
record the projection and certain other information in circumstances
where there is a reasonable possibility that a change may result in a
significant emissions increase. In addition, EUSGUs must send a copy of
the projections and other information to your reviewing authority
before beginning actual construction.
[sbull] If, for a project at an existing emissions unit (other than
an EUSGU) at a major stationary source, you elect to project your post-
change emissions, we are also requiring you to maintain information on
these emissions, for 5 years following a physical or operational
change, or in some cases for 10 years depending on the nature of the
change. If your annual emissions exceed the baseline actual emissions
by a significant amount and also exceed your projection, you must
report this information to your reviewing authority within 60 days
after the end of the year.
[sbull] If you project post-change emissions for EUSGUs, you must
report these emissions to your reviewing authority within 60 days after
the end of the year without regard to whether such emissions exceed the
baseline actual emissions or projected actual emissions for a period of
5 years (or in some cases 10 years, depending on the nature of the
change).
[sbull] Instead of projecting your post-change emissions, for all
existing emissions units you may instead project post-change emissions
on the basis of each unit's post-change PTE. If you use this method,
you need not record your projections or track or report post-change
emissions.
As discussed earlier, our prior regulations provide that when your
emissions unit, other than an EUSGU, ``has not begun normal operations,
``actual emissions equal the PTE of the unit. There have been
considerable number issues raised with this approach. For example,
using PTE as a measure of post-change emissions automatically
attributes all possible emissions increases to the change. There are
many cases, however, where this simply is not true. Moreover, when the
actual-to-potential test is applied, it is automatically assumed that
the emissions unit has not begun normal operations after the change
period. In many such cases, however, the changed unit as a practical
matter will function essentially as it did before the change. We are,
therefore, allowing all existing emissions units to use an actual-to-
projected-actual applicability test. Accordingly, we are generally
eliminating the term ``begun normal operations'' from the determination
of whether a change results in a significant emissions increase.\16\
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\16\ We do make use of the term ``resumes regular operations''
(as opposed to ``normal operations'') in the final rule, but that
term has a very different meaning and we are using it for an
entirely different purpose. Specifically, we are not using the term
for purposes of determining whether a change results in a
significant emissions increase. Rather, we use it only to identify
the date on which the owner or operator must begin tracking
emissions of changed units when using the actual-to-projected-actual
method.
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For essentially the same reasons, while our 1992 rules did not
authorize use of projections in evaluating whether replacement of an
existing emissions unit (which we understood to require application of
the NSPS 50 percent cost threshold) constitutes a major modification,
upon reflection we have decided this exception to the availability of
the actual-to-projected-actual applicability test is also unnecessary.
In our 1980 rulemaking, we decided against applying PSD to
``reconstruction,'' even of entire sources, on the grounds that, as to
existing sources that would not otherwise be subjected to PSD review as
a major modification (i.e., such source would not cause a significant
net emissions increase), changes that had no emission consequences
should not be subject to PSD regardless of their magnitude.\17\
---------------------------------------------------------------------------
\17\ The 1980 rulemaking also discussed that ``reconstruction''
would have only been applied on a plantwide basis and EPA believed
that there would be few instances of plantwide reconstructions.
---------------------------------------------------------------------------
In addition, we now believe that, as with modified units, the fact
that replacement units are replacing similar units with a record of
historical operational data provides sufficient reasons to believe that
a projection of future actual emissions can be sufficiently reliable
that an up-front emissions cap based on PTE is unnecessary. In other
words, a source replacing a unit should be able to adequately project
and track emissions for the replacement unit based, in part, on the
operating history of the replaced unit. In contrast, sources adding
``new'' units that do not qualify as replacement units must project
that the future emissions of the new unit equal its PTE, effectively
applying the ``actual-to-potential'' test because there is no relevant
historical data that could be used to establish an actual emissions
baseline or projection of future actual emissions for such new units.
For these reasons, we have eliminated the requirement that replaced
or reconstructed units be evaluated as to whether they constitute major
modifications on an actual-to-potential basis. Instead, you may compare
an emission unit's baseline actual emissions with your projected actual
emission in measuring whether the replacement or reconstruction has
resulted in a significant emissions increase. You must treat these
emissions units as modifications only if the replacement or
reconstruction of the unit results in a signficant increase so
measured.\18\
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\18\ For simplicity, we state this rule without addressing
whether the replacement or reconstruction has resulted in a
significant net emissions increase, but under our two-step approach
for evaluating whether a change constitutes a major modification, a
significant net emissions increase would of course also be required.
We have also retained the term ``representative of normal
operations'' in the context of an EUSGU's option to seek use of a
different baseline period, but there the question whether to seek
such use is at the source's option, obviating many of the
difficulties with it in other contexts.
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[[Page 80195]]
C. Changes to the Procedures for Calculating the Pre-Change Baseline
Actual Emissions for Existing Emissions Units Other Than EUSGUs
1. Under Today's New Requirements, How Should I Calculate the Pre-
Change Baseline Actual Emissions for an Existing Emissions Unit That Is
Not an EUSGU?
When you calculate the baseline actual emissions for an existing
emissions unit (other than an EUSGU), you may select any consecutive 24
months of source operation within the past 10 years. Using the relevant
source records for that 24-month period, including such information as
the utilization rate of the equipment, fuels and raw materials used in
the operation of the equipment, and applicable emission factors, you
must be able to calculate an average annual emissions rate, in tpy, for
each pollutant emitted by the emissions unit that is modified, or is
affected by the modification.
The new requirements prohibit you from counting as part of the
baseline actual emissions any pollution levels that are not allowed
under any legally enforceable limitations and that apply at the time of
the project. Therefore, you must identify the most current legally
enforceable limits on your emissions unit. If these legally enforceable
emission limitations and operating restrictions are more stringent than
those that applied during the 24-month period, you must adjust downward
the average annual emissions rate that you calculated from the
consecutive 24-month period to reflect these current restrictions. (See
section II.C.5 of this preamble for further discussion of the
adjustment that you may need to make.)
In summary, when the average annual emissions rate that you
originally calculated is still legally achievable (see discussion
below), then your baseline actual emissions will be the same as the
average annual emissions rate calculated from the 24-month period. If
it is not, you must adjust it downward so that it does not reflect
emissions that are no longer legally allowed.
2. Can Existing Emissions Units (Other Than EUSGUs) Still Use a ``More
Representative Time Period'' for Selecting the Baseline Actual
Emissions?
No, under today's new requirements neither you nor your reviewing
authority will have the authority to select another period of time from
which to calculate your baseline actual emissions. You must select a
24-month period within the 10-year period before the physical or
operational change.
3. From What Point in Time Is the 10-Year Look Back Measured?
If you believe that you will need either a major or minor NSR
permit to proceed with your proposed physical or operational change,
then you must use the 10-year period immediately preceding the date on
which you submit a complete permit application. If, however, you
believe that the physical or operational change(s) you plan to make
will not result in either a significant emissions increase from the
project or a significant net emissions increase at your major
stationary source (that is, your project will not be a major
modification), and you are not otherwise required to obtain a minor NSR
permit before making such change, then you must use the 10-year period
that immediately precedes the date on which you begin actual
construction of the physical or operational change.
4. What if, for an Existing Emissions Unit (Other Than an EUSGU), I Do
Not Have Adequate Documentation for Its Operation for the Past 10
Years?
Your ability to use the full 10 years of the look back period will
depend upon the availability of relevant data for the consecutive 24-
month period you wish to select. The data must adequately describe the
operation and associated pollution levels for the emissions units being
changed. If you do not have the data necessary to determine the units'
actual emission factors, utilization rate, and other relevant
information needed to accurately calculate your average annual
emissions rate during that period of time, then you must select another
consecutive 24-month period within the 10-year look back period for
which you have adequate data.
5. For an Existing Unit (Other Than EUSGUs), When Must I Adjust My
Calculation of the Pre-Change Baseline Actual Emissions?
Today's amendments require you to adjust the average annual
emissions rate derived from the selected 24-month period under certain
circumstances. Specifically, you must adjust downward this average
annual rate if any legally enforceable emission limitations, including
but not limited to any State or Federal requirements such as RACT,
BACT, LAER, NSPS, and National Emission Standards for Hazardous Air
Pollutants (NESHAP), restrict the emissions unit's ability to emit a
particular pollutant or to operate at levels that existed during the
selected 24-month period from which you calculate the average annual
emissions rate. For example, assume that during the selected
consecutive 24-month period you burned fuel oil and you were subjected
to a sulfur limit of 2 percent sulfur (by weight). Today, you are only
allowed to burn fuel oil with a sulfur content of 0.5 percent or less.
Consequently, you would be required to adjust your preliminary
calculation of baseline actual emissions for sulfur dioxide
(SO2) (that is, substitute the lower sulfur limit into the
emissions calculation, yielding a 75 percent reduction in the emissions
rate from the initial calculation) to reflect the current restriction
allowing only 0.5 percent sulfur in fuel oil. The original average
annual utilization rate would not be adjusted unless a more stringent
legally enforceable operational limitation has since been imposed that
restricts that rate.
You must also adjust for legally enforceable emission limitations
you may have voluntarily agreed to, such as limits you may have taken
in your permit for netting, emissions offsets, or the creation of ERCs.
Also, you must adjust your emissions from the 24-month period if a raw
material you used during the baseline period is now prohibited. For
example, you may have used a paint with a high solvent concentration
during a portion of the consecutive 24-month period. Today, you are
prohibited from using that particular paint. You must then adjust your
emissions rate to reflect the raw material restriction.
6. How Should I Calculate the Baseline Actual Emissions for Emissions
Units (Other Than EUSGUs) That Use Multiple Fuels or Raw Materials?
For an emissions unit that is capable of burning more than one type
of fuel, you must relate the current emission factors to the fuel or
fuels that were actually used during the selected 24-month period. For
example, when calculating the baseline actual emissions for an
emissions unit that burned natural gas for a portion of the 24-month
period and fuel oil for the remainder, you must retain that fuel
apportionment (for example, natural gas to fuel oil ratio), but you
must also use the current legally enforceable emission factors for
natural gas and fuel oil, respectively, to calculate the baseline
actual emissions. If, however, you are no longer allowed or able to use
one of those fuel types, then you must make your calculations assuming
use of the currently allowed fuel for the entire 24-month period. You
must use the same approach for emissions units that use multiple
feedstock or raw materials, which may vary in use during the unit's
ongoing production process.
[[Page 80196]]
7. How Should I Calculate the Baseline Actual Emissions for
Construction Projects That Involve Multiple Units?
Today's new requirements require that you select the same single
consecutive 24-month period within the 10-year look back period to
calculate the baseline actual emissions for all existing emissions
units that will be changed. See, for example, new Sec.
52.21(b)(48)(ii)(e). The result will be that the baseline actual
emissions for each affected pollutant will be based on the same
consecutive 24-month period as well.
You will have the option to select the single 24-month period that
best represents the collective level of operation (and emissions) for
your existing emissions units.
If a particular existing emissions unit did not yet exist during
the 24-month period you select to calculate the baseline actual
emissions, you must count that emissions unit's emissions rate as zero
for that full period of time. If an emissions unit operated for only a
portion of the particular 24-month period that you select, you must
calculate its average annual emissions rate using an emissions rate of
zero for that portion of time when the unit was not in operation.
For new emissions units (a unit that has existed for less than 2
years) that will be changed by the project, the baseline actual
emissions rate is zero if you have not yet begun operation of the unit,
and is equal to the unit's PTE once it has begun to operate.
8. Am I Able To Apply Today's Changes for Calculating the Baseline
Actual Emissions to Other Major NSR Requirements?
No, as stated in section II.A, you are only allowed to use the new
baseline methodology in today's rule for three specific purposes
involving existing emissions units as follows.
[sbull] For modifications, to determine a modified unit's pre-
change baseline actual emissions as part of the new actual-to-
projected-actual applicability test
[sbull] For netting, to determine the pre-change actual emissions
of an emissions unit that underwent a physical or operational change
within the contemporaneous period. You may select separate baseline
periods for each contemporaneous increase or decrease.
[sbull] For PALs, to establish the PAL level.
If you determine that the modification of your source is a major
modification, you must revert to using the existing definition of
``actual emissions'' to determine your source's actual emissions on a
particular date to satisfy all other NSR permitting requirements,
including any air quality analyses (for example, compliance with NAAQS,
PSD increments, AQRVs) and the amount of emissions offsets required.
For example, when you must determine your source's compliance with
the PSD increments following a major modification, you must still use
the allowable emissions from each emissions unit that is modified, or
is affected by the modification. An existing source's contribution to
the amount of increment consumed should be based on that source's
actual emissions rate from the 2 years immediately preceding the date
of the change, although the reviewing authority shall allow the use of
another 2-year period if it determines that such period is more
representative of that source's normal operation. See, for example,
Sec. 52.21(b)(21)(ii).
Also, any determination of the amount of emissions offset that must
be obtained by a major modification subject to the nonattainment NSR
requirements under Sec. 51.165(a) should be based on calculations
using the existing definitions of ``actual emissions'' and ``allowable
emissions.'' See new Sec. 51.165(a)(3)(ii)(H).
D. The Actual-to-Projected-Actual Applicability Test for Physical or
Operational Changes to Existing Emissions Units Including EUSGUs
1. How are post-change actual emissions calculated under today's
revised rule?
Today, we are amending the major NSR rules to enable you to use an
applicability test that is similar to the applicability test that
currently applies to EUSGUs (that is, the actual-to-representative-
actual-annual emissions test). The new test allows you to project the
post-change emissions of all modified existing emissions units
(including EUSGUs) in the same manner. That is, under today's new
provisions for non-routine physical or operational changes to existing
emissions units, rather than basing a unit's post-change emissions on
its PTE, you may project an annual rate, in tpy, that reflects the
maximum annual emissions rate that will occur during any one of the 5
(or in some circumstances 10) years immediately after the physical or
operational change. The first year begins on the day the emissions unit
resumes regular operation following the change and includes the 12
months after this date. This projection of the unit's annual emissions
rate following the change is defined as the ``projected actual
emissions'' (see, for example, Sec. 52.21(b)(48)), and will be based
on your maximum annual rate in tons per year at which you are projected
to emit a regulated NSR pollutant, less any amount of emissions that
could have been accommodated during the selected 24-month baseline
period and is not related to the change. Accordingly, you will
calculate the unit's projected actual emissions as the product of: (1)
The hourly emissions rate, which is based on the emissions unit's
operational capabilities following the change(s), taking into account
legally enforceable restrictions that could affect the hourly emissions
rate following the change(s); and (2) the projected level of
utilization, which is based on both the emissions unit's historical
annual utilization rate and available information regarding the
emissions unit's likely post-change capacity utilization. In
calculating the projected actual emissions, you should consider both
the expected and the highest projections of the business activity that
you expect could be achieved and that are consistent with information
your company publishes for business-related purposes such as a
stockholder prospectus, or applications for business loans. From the
initial calculation, you may then make the appropriate adjustment to
subtract out any portion of the emissions increase that could have been
accommodated during the unit's 24-month baseline period and is
unrelated to the change. Once the appropriate subtractions have been
made, the final value for the projected actual emissions, in tpy, is
the value that you compare to the baseline actual emissions to
determine whether your project will result in a significant emissions
increase.
The adjustment to the projected actual emissions allows you to
exclude from your projection only the amount of the emissions increase
that is not related to the physical or operational change(s). In
comparing your projected actual emissions to the units' baseline actual
emissions, you only count emissions increases that will result from the
project. For example, as with the electric utility industry, you may be
able to attribute a portion of your emissions increase to a growth in
demand for your product if you were able to achieve this higher level
of production during the consecutive 24-month period you selected to
establish the baseline actual emissions, and the increased demand for
the product is unrelated to the change.
For Clean Units, if a given project can be constructed and operated
at a Clean Unit without causing the emissions unit
[[Page 80197]]
to lose its Clean Unit status, then no emissions increase will occur.
For new units, however, you must continue to calculate post-change
emissions on the basis of a unit's PTE.
2. Will My Projection of Projected Actual Emissions Become an
Enforceable Emission Limitation as Suggested in the 1998 NOA?
No, we did not adopt such a requirement. If you have an existing
emissions unit and your project results in an increase in annual
emissions that exceeds the baseline actual emissions by a significant
amount, and differs from your projection of post-change emissions that
you were required to calculate and maintain records of, then you must
report this increase to your reviewing authority within 60 days after
the end of the year. Since modified EUSGUs are required to report their
post-change annual emissions to the reviewing authority annually, any
occurrence of a significant increase will be covered under that report
for the affected calendar year. See section II.D.6 of this preamble for
a more detailed discussion of the reporting requirements.
3. How Do I Determine How Long My Post-Change Emissions Will Be Tracked
To Ensure That My Project Is Not a Major Modification?
Generally, your projected actual emissions must be tracked against
your facility's post-change emissions for 5 years following resumption
of regular operations whether you are an EUSGU or other type of
existing emissions unit. We will presume that any increases that occur
after 5 years are not associated with the physical or operational
changes. However, you may be required to track emissions for a longer
period of time under the following circumstances. If you are an
existing emissions unit and one of the effects of your physical or
operational change(s) is to increase a unit's design capacity or PTE,
you must track your emissions for a period of 10 years after the
completion of the project. This extended period allows for the
possibility that you could end up using the increased capacity more
than you projected and such use might lead to significant emissions
increases.
4. What Are the Reporting and Recordkeeping Requirements for Projects?
Reporting and recordkeeping for a project is required when three
criteria are met: (1) You elect to project post-change emissions rather
than use PTE; (2) there is a reasonable possibility that the project
will result in a significant emissions increase; and (3) the project
will not constitute a major modification. In such circumstances, you
must document and maintain a record of the following information: a
description of the project; an identification of emissions units whose
emissions could increase as a result of the project; the baseline
actual emissions for each emissions unit; and your projected actual
emissions, including any emissions excluded as unrelated to the change
and the reason for the exclusion. In addition, if your project increase
is significant, you must record your netting calculations if you use
emissions reductions elsewhere at your major stationary source to
conclude that the project is not a major modification. For covered
projects, you must record this information before beginning actual
construction. If you are an EUSGU, you must also send this information
to your reviewing authority before beginning actual construction. Note,
however, that if you chose to use potential emissions as your
projection of post-change emissions, you are not required to maintain a
record of this decision.
In addition, today's final rules require you to maintain emissions
data for all emissions units that are changed by the project. You must
maintain this information for 5 years, or 10 years if applicable. The
information you must maintain may include continuous emissions
monitoring data, operational levels, fuel usage data, source test
results, or any other readily available information of sufficient
accuracy for the purpose of determining an emissions unit's post-change
emissions.
If you are an EUSGU, you must report this information to your
reviewing authority within 60 days after the end of any year in which
you are required to generate such information. Other existing units
must report to the reviewing authority any increase in the post-change
annual emissions rate when that rate: (1) Exceeds the baseline actual
emissions by a significant amount, and (2) differs from the projection
that was calculated before the change. See, for example, new Sec.
52.21(r)(6)(iii).
In addition to the reporting requirements discussed above, you are
also obligated to ensure that the necessary emissions information you
are required to maintain is available for examination upon request by
the reviewing authority or the general public.
5. How Do Today's Changes Affect the Netting Methodology for Existing
Emissions Units (Other Than EUSGUs)?
If your calculations show that a significant emissions increase
will result from a modification, you have the option of taking into
consideration any contemporaneous emissions changes that may enable you
to ``net out'' of review, that is, show that the net emissions increase
at the major stationary source will not be significant. The
contemporaneous time period will not change under the Federal PSD
program as a result of today's action. That is, creditable increases
and decreases in emissions that have occurred between the date 5 years
before construction of the particular change commences and the date the
increase from that change occurs are contemporaneous. See Sec.
52.21(b)(3)(ii). States will continue to have some discretion in
defining ``contemporaneous'' for their own NSR programs.
Although we are not changing our definition of ``contemporaneous,''
today's action allows existing emissions units (other than EUSGUs) to
calculate the baseline actual emissions for each contemporaneous event
using the 10-year look back period. That is, you can select any
consecutive 24-month period during the 10-year period immediately
preceding the change occurring in the contemporaneous period to
determine the baseline actual emissions for each creditable emissions
change. Generally, for each emissions unit at which a contemporaneous
emissions change has occurred, you should use the 10-year look back
period relevant to that change.\19\ When evaluating emissions increases
from multi-unit modifications, if more than one emissions unit was
changed as part of a single project during the contemporaneous period,
you may select a separate consecutive 24-month period to represent each
emissions unit that is part of the project. In any case, the calculated
baseline actual emissions for each emissions unit must be adjusted to
reflect the most current emission limitations (including operational
restrictions) applying to that unit. ``Current'' in the context of a
contemporaneous emissions change refers to limitations on emissions and
source operation that existed just prior to the date of the
contemporaneous change.
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\19\ Your ability to use the full 10 years for calculating any
contemporaneous emissions change is contingent upon the availability
of valid and sufficient source information for the selected 24-month
period. See, for example, new Sec. 52.21(b)(48)(ii)(f).
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E. Clarifying Changes to WEPCO Provisions for EUSGUs
The method you use to calculate the baseline actual emissions for
an existing EUSGU to determine whether there is a
[[Page 80198]]
significant emissions increase from a physical or operational change at
an EUSGU, and to determine whether a significant net emissions increase
will occur at the major stationary source, will not change as a result
of today's final rulemaking. The rule provides that for an existing
EUSGU you may calculate the baseline actual emissions as the average
annual emissions (tpy) of the emissions unit using any 2-year period
out of the 5 years immediately preceding the modification. (This was
set out as a presumption in the preamble for the 1992 WEPCO
amendments.) This rule recognizes the ordinary variability in demand
for electricity. See, for example, new Sec. 52.21(b)(21)(ii).
For example, a cold winter or hot summer will result in high levels
of demand while a relatively mild year will produce lower demand. By
allowing a utility to use any consecutive 2 years within the past 5,
the rule recognizes that electricity demand and resultant utility
operations fluctuate in response to various factors such as annual
variability in climatic or economic conditions that affect demand, or
changes at other plants in the utility system that affect the dispatch
of a particular plant. By allowing utilities to use as a baseline any
consecutive 2 years in the last 5 years, these types of fluctuations in
operations can be more realistically considered.
The reviewing authority shall allow the use of a different time
period upon a determination that it is more representative of normal
source operation.
In an August 6, 2001 letter,\20\ we addressed the issue of whether
combined cycle gas turbines (the gas turbines and waste heat recovery
components) came within the definition of ``electric utility steam
generating units'' for the purpose of determining whether such units
are eligible to use the WEPCO ``applicability test.'' The letter
concluded that ``steam generating units'' include not only electric
utility plants with boilers, but also plants with combined cycle gas
turbines if the combined cycle gas turbine systems supply more than
one-third of their potential electric output capacity and more than 25
MW electrical output to any utility power distribution system for sale.
Consequently, qualifying combined cycle gas turbines must also use the
2-in-5-years baseline method.
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\20\ Letter from John S. Seitz, Director, Office of Air Quality
Planning and Standards, to Patrick M. Raher, August 6, 2001.
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Finally, today's rules provide the same method for EUSGUs that will
exist for all other existing emissions units to project post-change
emissions following a physical or operational change to a unit. In the
1996 proposal, we proposed a range of options for addressing the
applicability of changes that are made to existing emissions units,
including the option of extending the actual-to-future-actual test,
then available only to utilities, to all source categories. While we
have decided to leave the WEPCO rules intact in most respects, we
believe that it is reasonable and appropriate to establish a consistent
method for sources to use for projecting the post-change emissions that
will result from a physical or operational change to an existing
emissions unit. Therefore, under today's new rules, the current method
of basing the projection on the 2 years following the change to an
EUSGU is being replaced with the method available to all other existing
units, under which you project a unit's post-change emissions as the
maximum annual rate that the unit will emit in any one of the 5 years
following resumption of regular operations.
F. The ``Hybrid'' Applicability Test for Projects Affecting Multiple
Types of Emissions Units
1. When Does the Hybrid Applicability Test Apply to You?
The hybrid applicability test applies if you plan a project (or
series of related projects) that will affect emissions units of two or
more of the following types.
[sbull] Existing emissions units
[sbull] New emissions units
[sbull] Clean Units
2. How Do I Determine Whether My Project Will Result in a Significant
Emissions Increase Under the Hybrid Test?
For the first two types of emissions units listed above that are
affected by the project, calculate the emissions increase as we have
discussed previously in this preamble. That is, use the actual-to-
projected-actual applicability test for existing units and the actual-
to-potential test for new emissions units.
Clean Units are discussed fully in section V of this preamble. If a
given project can be constructed and operated at a Clean Unit without
causing the emissions unit to lose its Clean Unit status, no emissions
increase shall be deemed to occur at that Clean Unit. If a given
project would cause the emissions unit to lose its Clean Unit status,
then the increase in emissions should be calculated as if the emissions
unit is not a Clean Unit.
After you calculate the emissions increase for each relevant unit,
total the increases across all the emissions units of all types. If
this total emissions increase equals or exceeds the level defined as
significant for the regulated NSR pollutant in question, the project
will result in a significant emissions increase for that pollutant.
You'll find the regulatory language for determining whether a project
will result in a significant emissions increase at Sec. Sec.
51.165(a)(2)(vii)(D), 51.166(a)(7)(vi)(d), and 52.21(a)(2)(vi)(d).
In section II.C.8 of this preamble, we indicate that the baseline
actual emissions for all units that are not EUSGUs that are changed by
a project must be calculated based on the same consecutive 24-month
period within the previous 10 years. The same principle applies under
the hybrid test, but it can be slightly more complicated if both EUSGUs
and non-EUSGUs are involved. In this case, you must use the same
baseline period for all emissions units affected by the project. This
baseline period must be selected so as to meet the requirements for
both EUSGUs and non-EUSGUs. Thus, you must select a 2-year period out
of the previous 5 years for your baseline period, as required for
EUSGUs (and within the requirements for non-EUSGUs). If you wish to use
another period that you believe is more representative (as allowed for
EUSGUs), the entire period must fall within the previous 10 years (as
required for non-EUSGUs).
3. How Do I Determine the Net Emissions Increase From My Project Under
the Hybrid Test?
If you conclude that a significant emissions increase will result
from the proposed project, you have the option of taking into
consideration any contemporaneous emissions changes that may enable you
to ``net out'' of review, that is, show that the net emissions increase
at the major stationary source will not be significant. The netting
analysis is carried out under the hybrid test just as it is under the
other applicability tests. Refer to section II.D.7 of this preamble for
a discussion of netting methodology.
G. Legal Basis for Today's Action
The Act defines modification for the purposes of PSD and
nonattainment NSR through cross-reference to the NSPS definition of
``modification.'' The NSPS definition states that a modification
``means any physical change in, or change in the method of operation
of, a stationary source which increases the amount of any air
[[Page 80199]]
pollutant emitted by such source or which results in the emission of
any air pollutant not previously emitted.'' CAA section 111(a)(4), 42
U.S.C. 7411(a)(4). The Act is silent, however, on the issue of how one
is to determine whether a physical or operational change increases the
amount of any air pollutant emitted by the source.
Accordingly, EPA is exercising its discretion in interpreting and
providing clarity to this issue. We believe that the rules set forth
today are ``a permissible construction of the statute.'' Chevron
U.S.A., Inc. v. NRDC, 467 U.S. 843-4 (1984). The reviewing court should
defer to it. Id. at 837.
In the NSPS program, we determine whether there has been an
``increase in any air pollutant emitted'' by the source by comparing
its maximum hourly achievable emissions before and after the change.
EPA and the courts have recognized, however, that the NSR programs and
the NSPS programs have different goals,\21\ and thus, we have utilized
different emissions tests in the NSR programs. Prior to today, the
regulations applied an actual-to-future-actual applicability test for
EUSGUs and an actual-to-potential applicability test for all other
emissions units. Today, we are establishing a new applicability test
for calculating emissions increases for ``Clean Units'' and an actual-
to-projected-actual applicability test for all other emissions units.
We believe that establishing an actual-to-projected-actual
applicability test for all emissions units is a reasonable
interpretation of the phrase ``increase of any pollutant emitted.''
\22\
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\21\ See, for example, WEPCO Rule, 57 FR 32316 (``fundamental
distinctions between the technology-based provisions of NSPS and the
air quality-based provisions of NSR''). See also ASARCO Inc. v. EPA,
578 F.2d 319 (D.C. Cir. 1978).
\22\ The explanation of the applicability test for ``Clean
Units'' is discussed in section V.
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H. Response to Comments and Rationale for Today's Actions
We received numerous comments on our proposed rule regarding the
calculation of the baseline actual emissions and the actual-to-future-
actual test. Some of the significant comments and our responses to them
are provided below. A complete set of comments and our responses can be
found in the Technical Support Document located in the docket for this
rulemaking.
1. Why Are We Extending the Look Back Period for Determining the
Baseline Actual Emissions to 10 Years?
Most commenters generally support our proposal to allow owners and
operators to use a 10-year look back period to determine the baseline
actual emissions for modifications at any existing emissions unit.
Commenters have various reasons for supporting or opposing the proposed
approach. Many supporters agree that extending the baseline look back
period to 10 years would simplify current regulations and provide
certainty to sources who otherwise would have to demonstrate to the
reviewing authority that a period other than the 2 years immediately
preceding the proposed change was more representative of normal source
operation. Some commenters support the proposal because it would
prevent the perceived confiscation of underused capacity at sources
that have had low utilization rates for an extended period. These
commenters agree that a 10-year look back period is more likely to
afford a source a baseline actual emissions calculation that best
reflects representative source operating conditions and would also
account for fluctuations in the business cycle.
Some commenters criticize the proposed 10-year look back period as
being too long. These commenters recommend either a 5-year or 2-year
look back period. One of these commenters states that the 10-year look
back creates the opportunity for a source to increase production to the
10-year maximum, and prevents the State or local air regulators from
addressing the increase in emissions. Thus, the commenter believes that
sources would be allowed to use historic emissions levels that are
higher than current levels to establish the baseline actual emissions.
Some commenters add that the proposed change would not reduce program
complexity.
Some commenters believe that instead of extending the period for
establishing baseline actual emissions, the test for establishing
modifications should be changed. According to the commenters, the
problem is not that the current system does not go back far enough to
set a fair actual emissions baseline, but that the methodology does not
account for the fact that most emissions units are operating at an
activity level much lower than the allowed activity level. The
commenters believe that many of the real problems associated with the
current major modification applicability test would be eliminated if
the procedure was modified in an equitable manner.
A commenter also adds that EPA may also want to include provisions
that prevent a source from applying the new definition of actual
emissions in a way that would retroactively enable the source to
reverse a previous major modification determination and to eliminate
any emissions reduction previously required for that major
modification.
We continue to believe that it is reasonable and appropriate to
adopt the new method for establishing a modified unit's baseline actual
emissions. It is important to understand the difference between the
purpose of the new procedure, which uses the 10-year look back, and the
existing procedure under the pre-existing definition of ``actual
emissions'' at Sec. 52.21(b)(21(ii), which generally requires the use
of an average annual emissions rate based on the 2-year period
immediately preceding a particular date. The latter procedure is
designed to estimate a source's actual emissions at a particular time
and continues to be appropriate for such things as estimating a
source's impact on air quality for PSD increment consumption.
On the other hand, the new baseline procedure is specifically
designed to allow a source to consider a full business cycle in
determining whether there will be an emissions increase from a physical
or operational change. Generally, a source's operations over a business
cycle cover a range of operating (and emissions) levels--not simply a
single level of utilization. The new procedure recognizes that market
fluctuations are a normal occurrence in most industries, and that a
source's operating level (and emissions) does not remain constant
throughout a source's business cycle. The use of a 24-month period
within the past 10 years to establish an average annual rate is
intended to adjust for unusually high short-term peaks in utilization.
Consequently, the new procedure ensures that a source seeking to
make changes at its facility at a time when utilization may not be at
its highest can use a normal business cycle baseline by allowing the
source to identify capacity actually used in order to determine an
average annual emissions rate from which to calculate any projected
actual emissions resulting from the change.
With respect to the commenters' general concerns that a 10-year
look back period is too long, we sought to better understand what time
period best represents an industry's normal business cycle. Therefore,
we contracted for a study of several industries in 1997.\23\ This study
found that, for the
[[Page 80200]]
industries analyzed, business cycles differ markedly by industry, and
may vary greatly both in duration and intensity even within a
particular industry. Nevertheless, we concluded from the study that 10
years of data is reasonable to capture an entire industry cycle.
Comments from various industries support a conclusion that a 10-year
look back period is a fair and representative time frame for
encompassing a source's normal business cycle.
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\23\ ``Business Cycles in Major Emitting Source Industries.''
Eastern Research Group; September 25, 1997. This study examined the
business fluctuations for nine source categories described as CAA
major emitting sources. Industry business cycles were examined using
industry output data for the years 1982 to 1994 inclusive, based on
the Office of Management and Budget's SIC codes for individual
industries (OMB, 1987).
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We believe that the use of a 10-year look back period will help
provide certainty to the process and eliminate the ambiguity and
confusion that occurred when an applicant and the reviewing authority
disagreed on what time frame provides the period most representative of
normal source operation. The new requirements also provide certainty to
the look back period, since there is no opportunity to select another
period of time outside this 10-year period. (See additional discussion
in section II.E.2.) In addition, we have placed certain restrictions on
when the full 10-year look back period may be used. (See section
II.E.3.)
With regard to the concern that industry may try to apply the new
requirements retroactively to undo current restrictions on existing
sources, we want to reiterate that the new procedures do not apply
retroactively to existing NSR permits or changes that sources have made
in the past. Prior applicability determinations on major modifications
and the control requirements that currently apply to sources remain
valid and enforceable and have to be adjusted for in the calculation of
baseline actual emissions. However, as part of the transition process
for implementing the new provisions, we do intend to allow permit
applicants to withdraw any permit applications submitted for review
under the part 52 Federal PSD permit program so that they may re-
evaluate their projects in light of the new requirements. States may
allow for the same type of transition process under their own NSR
programs.
Finally, we considered whether we should change the length of the
look back period for EUSGUs for establishing the actual emissions
baseline period to be consistent with the 10-year look back period we
are adopting for other existing emissions units. The data we collected
to support the 1992 rule changes show that allowing EUSGUs to use any
2-year period out of the preceding 5 years is a sufficient period of
time to capture normal business cycles at an EUSGU. We do not believe
that any information received during the public comment period for this
final rule adequately supports a different conclusion. Thus, we have
decided to retain the 2-in-5-years baseline period for EUSGUs. However,
for consistency with the baseline period for other existing emissions
units, we have specified that the 2-year period is a consecutive 24-
month period.
2. Why Do the New Requirements Not Provide Discretion for the Reviewing
Authority To Consider Another Time Period More Representative of Normal
Operation for Non-EUSGUs?
Several commenters oppose our proposed elimination of the reviewing
authority's discretion to allow a different representative period
(outside of the 10-year period), because they argue certain sources
(for example, emissions units placed in cold reserve due to reduced
demand) require this flexibility. Some commenters say the discretion
should be given to the reviewing authority, while other commenters
wanted the discretion given directly to source owners and operators.
Instead of the discretion to use an alternate period, one commenter
prefers that all sources should be required to show that they have
selected a representative period that precedes the most recent 2-year
period.
We believe that use of a fixed 10-year look back period provides
the desired clarity and certainty to the process of selecting an
appropriate utilization/emissions level that is representative of a
source's normal operation. A bounded 10-year look back provides
certainty to the regulated community that may be undermined by an
option to allow an unbounded alternative period as well.
3. Why Are We Placing Restrictions on the Use of a 10-Year Look Back
for Setting the Baseline Actual Emissions?
Numerous commenters responded to our concern that many sources
might lack accurate records for the full 10-year look back period, and
to our request for comments on the need to condition the full use of
the 10-year period upon the accuracy and completeness of available
data, as well as the need to establish specific criteria for accuracy,
completeness, and recordkeeping when using older data. A number of
commenters generally support limiting full use of the 10-year look back
period to situations in which adequate emissions and/or capacity
utilization data are available. Some commenters also recommend that EPA
issue minimum criteria to reduce the number of case-by-case
determinations and help reviewing authorities avoid debates with
sources on what constitutes sufficient data.
On the other hand, one commenter recommends that we not adopt a
variable look back period based on the quality of the older data
because it would ``add considerable uncertainty and protracted debate
to the process. . . .'' If, however, we choose to limit the look back
period based on the quality of older data, then this commenter and
several others prefer provisions allowing for case-by-case decisions by
State or local reviewing authorities over specific criteria established
by EPA.
Today's amendments condition the full use of the new 10-year look
back period on the accuracy and completeness of your records of
emissions and capacity utilization, with respect to the 24-month period
you select, for any emissions unit that undergoes a physical or
operational change. See, for example, new Sec. 52.21(b)(48)(f). As
with all emissions calculations, accuracy and completeness are central
elements for applicability determinations. In many cases, sources
presently maintain accurate records on emissions and operations for
only 3 to 5 years. Thus, we think it is appropriate to limit use of the
full 10-year look back period when you do not have adequate data for
the time period you wish to select. However, this limitation should be
alleviated over time as sources begin to maintain records for longer
periods to accommodate the 10-year look back opportunity.
We also agree that adequacy of any given data should be left to the
case-by-case judgment of individual reviewing authorities. The type of
data necessary to determine emissions will vary drastically from source
category to source category and from process to process within a source
category. At this time, we are not able to issue generic criteria that
would apply to all types of industries.
We are further restricting your use of the 10-year look back for
emissions units that are located in nonattainment areas and OTRs. In
such cases, you are precluded from using any portion of the 10-year
look back that precedes November 15, 1990--the date of the 1990 CAA
Amendments--to establish baseline actual emissions for those units.
This limit on the use of the 10-year look back is consistent the intent
of the 1996 NPRM, which was originally proposed to apply to the use of
the 10-year look back for any modification of an existing facility in a
nonattainment
[[Page 80201]]
area or OTR. See 61 FR 38259 (July 23, 1996). However, because we are
now beyond the point where the November 15, 1990 limit is relevant to
modifications, we are only applying this limitation in the netting
context with respect to emissions units changed within the
contemporaneous period.
4. Why Were Changes Made to the Proposed Approach for Establishing
Baseline Actual Emissions Using a 10-Year Look Back?
Commenters raise specific questions about how to use the 10-year
look back to calculate an emissions unit's baseline actual emissions.
Several commenters are concerned about how the utilization rate would
be considered in the calculation. For example, some commenters support
the proposal to allow sources to use their highest capacity achieved
during any consecutive 12 months, because it provides improved
flexibility in establishing a capacity level that is representative of
normal operations. However, other commenters object to using the 12
months with the highest utilization. These commenters argue that the
use of production rates can be unworkable because there is not always a
clear relationship between production rate and emissions. In addition,
reliable records may not be available to determine the highest
production rates. As an alternative, commenters suggest using emissions
from any 12-month period in the preceding 10 years, adjusted to reflect
current rules, or allowing the source to use any 12-month period of its
choice.
A related issue raised by commenters is whether to require any
current Federal, State, or voluntary limit to be included in the
establishment of the baseline actual emissions. Some commenters say
these provisions would penalize sources that complied with other
regulatory requirements or chose to implement pollution prevention
programs. Commenters are particularly concerned that sources be given
credit for voluntary reductions. However, other commenters support
including all of these factors in the baseline to better represent
actual emissions and avoid inconsistencies between emissions units that
have permits and those that do not. Commenters also raise specific
questions about how the calculation would include the effect of other
emission limitations.
As described earlier, we have decided to require the use of a
consecutive 24-month period within the 10-year look back instead of the
proposed 12-month period to calculate the baseline actual emissions for
any emissions unit that undergoes a physical or operational change, or
is affected by such change. The longer 24-month period allows you to
reference levels of utilization achieved in the past, but also
eliminates the potential problem associated with short-term peaks that
do not truly represent the unit's normal operation. In this respect,
the use of a 24-month period is consistent with the pre-existing
approach for calculating actual emissions.
With respect to commenters' concerns about being required to use
the period of highest utilization, our reference in the proposal
preamble to selecting the period of highest utilization was based on
our general assumption that the period of maximum utilization also
represents the period of highest pollution levels for the unit of
concern. However, you are not required to select the period of highest
utilization. The choice of which consecutive 24-month period within the
10-year window to use is up to you. The two restrictions on the
selection of the appropriate consecutive 24-month period, as described
earlier, are the availability of adequate and complete source records
for the unit of concern and the limit on using dates earlier than
November 15, 1990 for contemporaneous emissions changes in
nonattainment areas and OTRs.
We agree with the concerns expressed by some commenters that the
baseline actual emissions calculated from the consecutive 24-month
period selected could yield a higher pollution level than a unit is
currently allowed to emit. We do not believe that we should allow a
source to take credit for baseline actual emissions that exceed the
current, legally allowable emissions rate. Consequently, the new
requirements require you to determine whether any legally enforceable
limitations currently exist that would prevent the affected unit from
emitting a pollutant at the levels calculated from the 24-month
baseline period. The approach that we have adopted allows you to
reference plant capacity that has actually been used, but not pollution
levels that are not legally allowed at the time the modification is to
occur. You will be required to make adjustments for voluntary
reductions that you may have taken only to the extent that the
reductions resulted from conditions that are legally enforceable
limitations.
5. How Does the Change in the Baseline Period Affect Related
Requirements Regarding Protection of Air Quality?
a. How Does the Extended Baseline Period Conform With the Special
Modification Provisions Under Sections 182(c) and (e) of the Act?
Most commenters feel the proposed extension of the look back period
fits within the design and intent of the special modification
procedures set forth in sections 182(c) and (e) of the Act, applicable
in serious, severe, and extreme ozone nonattainment areas. However, one
commenter representing State and local air pollution control agencies
considers the new requirements to be in significant conflict with the
special modification procedures contained in those sections of the Act.
The commenter indicates that this conflict could be resolved by
deferring to relevant requirements for modifications in serious,
severe, and extreme areas. The commenter adds that while NSR programs
are tools to attain and maintain compliance with the NAAQS, they should
not be available to undermine specific statutory and SIP requirements
designed to resolve nonattainment problems.
We disagree with the commenter's concern that the use of a 10-year
look back period to implement sections 182(c) and (e) of the Act for
purposes of establishing a modified unit's baseline emissions will
undermine any statutory or SIP requirements designed to address
nonattainment problems. The two sections establish special procedures
for determining whether a proposed modification of a major stationary
source of ozone in a serious, severe, or extreme ozone nonattainment
area will be subject to major NSR under part D of the Act. The Act is
silent on the issue of how one is to determine whether a physical or
operational change increases the amount of a pollutant for a changed
emissions unit. We believe, therefore, that we have the authority to
establish a regulatory procedure for making the required determinations
concerning emissions increases resulting from physical or operational
changes.
In light of the fact that the 10-year look back period may be used
for emissions units (other than EUSGUs) that are involved in
contemporaneous emissions changes (for netting purposes), it should be
noted that the new requirements prohibit the use of the look back
period earlier than November 15, 1990. Consequently, for emissions
units whose contemporaneous emissions changes occurred before November
15, 2000, the consecutive 24-month period selected
[[Page 80202]]
for calculating the baseline actual emissions relevant to the
contemporaneous emissions change cannot include a date prior to
November 15, 1990. It should be pointed out, however, that for
modifications involving emissions of volatile organic compounds (VOC)
in areas classified as ``extreme,'' the statutory language is clear
that the increase in emissions resulting from the change is not
required to be a significant increase, but rather that ``any increase''
that is projected using the new actual-to-projected-actual
applicability test will trigger the applicable NSR requirements.
b. Will the Longer Look Back Period Related to the Baseline Actual
Emissions Protect Short-term Increments and NAAQS?
Some commenters express concerns that the opportunity to take
credit for older baseline actual emissions would result in adverse
environmental consequences. One commenter specifically indicates that
the proposed baseline actual emissions determination process, involving
a 10-year look back, would allow significant increases in emissions to
escape the ambient impact review requirements otherwise required by
NSR.
Today's new rule modifies the way your NSR applicability
determinations are made for changes made to existing emissions units.
The new rule does not affect the way in which a source's ambient air
quality impacts are evaluated. Compliance with the NAAQS is
accomplished with air quality dispersion models using maximum allowable
emission limitations (or federally enforceable permit limits) combined
with operating factors, which consider either design capacity or actual
operating factors averaged over the most recent 2 years of operation,
from all modeled sources.\24\ In addition, any increase in actual
emissions, based on the existing definition of ``actual emissions,''
consumes PSD increment whether it occurs through normal source
operation or as a result of a physical or operational change. As
mentioned earlier, the existing definition of ``actual emissions''
continues to apply with regard to all NSR requirements other than the
new source applicability tests. See, for example, new Sec.
52.21(b)(21)(i). Thus, we do not believe there is a basis for
concluding that the use of a longer look back period for determining a
modified emissions unit's baseline actual emissions (for purposes of
determining whether a physical or operational change will result in a
significant emissions increase) will cause any adverse environmental
impacts.
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\24\ Guidance for modeling NAAQS compliance under the PSD
program is set forth in EPA's Guideline on Air Quality Models
contained in appendix W of 40 CFR part 51. This guidance is
incorporated by reference both in the Federal PSD regulations and in
the minimum requirements for SIPs under the part 51 PSD regulations.
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6. Why Was the Contemporaneous Period for Netting Not Also Changed to a
10-Year Look Back Period?
In the 1996 NPRM, we indicated th