[Federal Register: September 14, 2006 (Volume 71, Number 178)]
[Proposed Rules]
[Page 54235-54252]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14se06-10]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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[[Page 54235]]
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 51 and 52
[EPA-HQ-OAR-2003-0064; FRL-8219-6]
RIN 2060-AL75
Prevention of Significant Deterioration (PSD) and Nonattainment
New Source Review (NSR): Debottlenecking, Aggregation, and Project
Netting
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
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SUMMARY: The EPA proposes revisions to the regulations governing the
major NSR programs mandated by parts C and D of title I of the Clean
Air Act (CAA). These proposed changes reflect EPA's consideration of
the Agency's 2002 Report to the President and its associated
recommendations as well as discussions with various stakeholders
including representatives of environmental groups, State and local
governments, and industry. We propose to change how emissions from
emissions units upstream or downstream from the unit(s) undergoing a
physical change or change in the method of operation are included in
the calculation of an emissions increase for the project. Also, these
proposed changes would clarify and codify our policy of when emissions
increases from multiple projects are to be aggregated together to
determine NSR applicability. Finally, we are clarifying how emissions
decreases from a project may be included in the calculation to
determine if a significant emissions increase will result from a
project. We intend the proposed rules to improve implementation of the
program by articulating and codifying principles for determining major
NSR applicability that we currently address through guidance only.
We are seeking comment on all aspects of this proposed rule. This
proposal seeks public comment in accordance with section 307(d) of the
CAA and should not be used or cited in any litigation as a final
position of the Agency.
DATES: Comments. Comments must be received on or before November 13,
2006. Under the Paperwork Reduction Act, comments on the information
collection provisions must be received by OMB on or before October 16,
2006.
Public Hearing. If anyone contacts EPA requesting a public hearing
by September 28, 2006, we will hold a public hearing approximately 30
days after publication in the Federal Register.
ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2003-0064 by one of the following methods:
http://www.regulations.gov: Follow the online instructions for
submitting comments.
E-mail: a-and-r-docket@epa.gov.
Mail: Air and Radiation Docket and Information Center,
Environmental Protection Agency, Mailcode: 6102T, 1200 Pennsylvania
Ave., NW., Washington, DC 20460. In addition, please mail a copy of
your comments on the information collection provisions to the Office of
Information and Regulatory Affairs, Office of Management and Budget
(OMB), Attn: Desk Officer for EPA, 725 17th St., NW., Washington, DC
20503.
Hand Delivery: Environmental Protection Agency, EPA West
Building, Room B102, 1301 Constitution Ave., NW., Washington, DC. Such
deliveries are only accepted during the Docket's normal hours of
operation, and special arrangements should be made for deliveries of
boxed information.
Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2003-0064. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
http://www.regulations.gov, including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to
be CBI or otherwise protected through http://www.regulations.gov or e-mail.
The http://www.regulations.gov Web site is an ``anonymous access'' system,
which means EPA will not know your identity or contact information
unless you provide it in the body of your comment. If you send an e-
mail comment directly to EPA without going through http://www.regulations.gov,
your e-mail address will be automatically captured and included as part
of the comment that is placed in the public docket and made available
on the Internet. If you submit an electronic comment, EPA recommends
that you include your name and other contact information in the body of
your comment and with any disk or CD ROM you submit. If EPA cannot read
your comment due to technical difficulties and cannot contact you for
clarification, EPA may not be able to consider your comment. Electronic
files should avoid the use of special characters, avoid any form of
encryption, and be free of any defects or viruses. For additional
information about EPA's public docket, visit the EPA Docket Center
homepage at http://www.epa.gov/epahome/dockets.htm. For additional
instructions on submitting comments, go to section I.B of the
Supplementary Information section of this document.
Docket: All documents in the docket are listed in the
http://www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, is not placed on the Internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available either electronically in http://www.regulations.gov or
in hard copy at the Air and Radiation Docket and Information Center,
EPA/DC, EPA West Building, Room B102, 1301 Constitution Ave., NW.,
Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30
p.m., Monday through Friday, excluding legal holidays. The telephone
number for the Public Reading Room is (202) 566-1744, and the telephone
number for the Air and Radiation Docket and Information Center is (202)
566-1742.
Note: The EPA Docket Center suffered damage due to flooding
during the last week of June 2006. The Docket Center is continuing
to operate. However, during the cleanup, there will be temporary
changes to Docket Center telephone numbers, addresses, and hours of
operation for people who wish to make hand deliveries or visit the
Public Reading Room to view documents. Consult EPA's Federal
Register notice at 71 FR 38147
[[Page 54236]]
(July 5, 2006) or the EPA Web site at http://www.epa.gov/epahome/dockets.htm
for current information on docket operations, locations
and telephone numbers. The Docket Center's mailing address for U.S.
mail and the procedure for submitting comments to
http://www.regulations.gov are not affected by the flooding and will remain
the same.
FOR FURTHER INFORMATION CONTACT: Mr. David J. Svendsgaard, Air Quality
Policy Division, Office of Air Quality Planning and Standards (C504-
03), U.S. Environmental Protection Agency, Research Triangle Park, NC
27711, telephone (919) 541-2380, fax number (919) 541-5509, e-mail
address svendsgaard.dave@epa.gov.
SUPPLEMENTARY INFORMATION:
I. General Information
A. Does This Action Apply to Me?
Entities affected by this rule 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\ NAICS \b\
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Electric Services.................. 491 221111, 221112, 221113,
221119, 221121, 221122
Petroleum Refining................. 291 324110
Industrial Inorganic Chemicals..... 281 325181, 325120, 325131,
325182, 211112, 325998,
331311, 325188
Industrial Organic Chemicals....... 286 325110, 325132, 325192,
325188, 325193, 325120,
325199
Miscellaneous Chemical Products.... 289 325520, 325920, 325910,
325182, 325510
Natural Gas Liquids................ 132 211112
Natural Gas Transport.............. 492 486210, 221210
Pulp and Paper Mills............... 261 322110, 322121, 322122,
322130
Paper Mills........................ 262 322121, 322122
Automobile Manufacturing........... 371 336111, 336112, 336211,
336992, 336322, 336312,
336330, 336340, 336350,
336399, 336212, 336213
Pharmaceuticals.................... 283 325411, 325412, 325413,
325414
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\a\ Standard Industrial Classification.
\b\ North American Industry Classification System.
Entities affected by the rule also include States, local permitting
authorities, and Indian tribes whose lands contain new and modified
major stationary sources.
B. Where Can I Get a Copy of This Document and Other Related
Information?
In addition to being available in the docket, an electronic copy of
this proposal will also be available on the http://WWW. Following signature, a
copy of this notice will be posted in the regulations and standards
section of our NSR home page located at http://www.epa.gov.
C. What Should I Consider as I Prepare My Comments for EPA?
1. Submitting CBI. Do not submit information that you consider to
be CBI electronically through http://www.regulations.gov or e-mail. Clearly
mark the part or all of the information that you claim to be CBI. For
CBI information in a disk or CD ROM that you mail to EPA, mark the
outside of the disk or CD ROM as CBI and then identify electronically
within the disk or CD ROM the specific information that is claimed as
CBI. In addition to one complete version of the comment that includes
information claimed as CBI, a copy of the comment that does not contain
the information claimed as CBI must be submitted for inclusion in the
public docket. Information so marked will not be disclosed except in
accordance with procedures set forth in 40 CFR part 2.
2. Tips for Preparing Your Comments. When submitting comments,
remember to:
Identify the rulemaking by docket number and other
identifying information (e.g., subject heading, Federal Register
proposal publication date and reference page number(s)).
Follow directions--The EPA may ask you to respond to
specific questions or organize comments by referencing a Code of
Federal Regulations (CFR) part or section number.
Explain why you agree or disagree; suggest alternatives
and provide substitute language for your requested changes.
Describe any assumptions and provide any technical
information and/or data that you used.
If you estimate potential costs or burdens, explain how
you arrived at your estimate in sufficient detail to allow for it to be
reproduced.
Provide specific examples to illustrate your concerns, and
suggest alternatives.
Explain your views as clearly as possible, avoiding the
use of profanity or personal threats.
Make sure to submit your comments by the specified comment
period deadline.
Commenters wishing to submit proprietary information for
consideration must clearly distinguish such information from other
comments and clearly label it as CBI. Send submissions containing such
proprietary information directly to the following address, and not to
the public docket, to ensure that proprietary information is not
inadvertently placed in the docket: Attention: Mr. Roberto Morales,
U.S. Environmental Protection Agency, OAQPS Document Control Officer,
109 TW Alexander Drive, Room C404-02, Research Triangle Park, NC 27711.
The EPA will disclose information identified as CBI only to the extent
allowed by the procedures set forth in 40 CFR part 2. If no claim of
confidentiality accompanies a submission when it is received by EPA,
the information may be made available to the public without further
notice to the commenter.
D. How Can I Find Information About a Possible Hearing?
People interested in presenting oral testimony or inquiring as to
whether a hearing is to be held should contact Ms. Pam Long, Air
Quality Planning Division, Office of Air Quality Planning and Standards
(C504-03), U.S. Environmental Protection Agency, Research Triangle
Park, NC 27711, telephone (919) 541-0641, fax number (919) 541-5509, e-
mail address long.pam@epa.gov, at least 2 days in advance of the public
hearing. People interested in attending the public hearing must also
call Ms. Long to verify the time, date, and location of the hearing.
The public hearing will provide interested parties the opportunity to
present data, views, or arguments concerning the proposed action. If a
public hearing is held, it will be held at 9 a.m. in EPA's Auditorium
in Research
[[Page 54237]]
Triangle Park, North Carolina, or at an alternate site nearby.
E. How Is This Preamble Organized?
The information presented in this preamble is organized as follows:
I. General Information
A. Does This Action Apply to Me?
B. Where Can I Get a Copy of This Document and Other Related
Information?
C. What Should I Consider as I Prepare My Comments for EPA?
D. How Can I Find Information About a Possible Hearing?
E. How Is This Preamble Organized?
II. Introduction
III. Debottlenecking
A. Background
B. Overview of This Proposed Action
C. Discussion of Issues Under Proposed Debottlenecking Approach
IV. Aggregation
A. Background
B. Overview of This Proposed Action
C. Discussion of Issues Under Proposed Aggregation Approach
V. Project Netting
A. Background
B. Overview of This Proposed Action
VI. Statutory and Executive Order Reviews
A. Executive Order 12866--Regulatory Planning and Review
B. Paperwork Reduction Act
C. Regulatory Flexibility Analysis
D. Unfunded Mandates Reform Act
E. Executive Order 13132--Federalism
F. Executive Order 13175--Consultation and Coordination With Indian
Tribal Governments
G. Executive Order 13045--Protection of Children From Environmental
Health Risks and Safety Risks
H. Executive Order 13211--Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
I. National Technology Transfer and Advancement Act
VII. Statutory Authority
II. Introduction
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.\1\ The recommendation requested that we issue a report
to the President on the impact of the regulations on investment in new
utility and refinery generation capacity, energy efficiency, and
environmental protection.
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\1\ For an overview of the major NSR program, see 67 FR 80187-
80188.
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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/nsr/publications.html. We solicited public comments
on the background paper and other information relevant to the NSR 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/nsr/publications.html.
We have previously finalized responses to energy policy
recommendations on December 31, 2002 (67 FR 80186) and October 27, 2003
(68 FR 61248).\2\ These proposed regulations for ``aggregation'' and
``debottlenecking'' are a further response to the remaining
recommendations. We also are proposing a change to our past policy for
project netting. We believe that these proposed rules would provide
greater regulatory certainty while preserving the current level of
environmental protection and benefit derived from the current NSR
program.
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\2\ On March 17, 2006, the DC Circuit Court of Appeals vacated
the October 27, 2003 rule. On June 30, 2006, the Court denied EPA's
request for rehearing or, in the alternative, rehearing en banc with
respect to this decision.
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This action proposes and requests comment on 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 CAA. We also propose to include conforming changes
to 40 CFR (Code of Federal Regulations) part 51, appendix S. This
notice does not include specific regulatory language related to this
section. Nonetheless, we intend to finalize these rule provisions in
Appendix S, either at the time we finalize the remainder of these
proposed revisions, or at the time that we finalize changes to
incorporate the 2002 NSR improvements into Appendix S. We seek comment
on incorporating these changes into Appendix S through this proposed
rule, and will not seek additional comments before taking final action
on the Appendix S changes.
III. Debottlenecking
A. Background
1. NSR Improvement Rule of 2002
As noted above, EPA has already promulgated rules in response to
the 2002 recommendations. On December 31, 2002, we finalized changes to
NSR applicability for modifications at major stationary sources.
Specifically, this rule promulgated changes for how to calculate
emissions increases at sources that have undergone a physical change or
change in the method of operation, or ``project.''
As a result of the 2002 rules, the major NSR regulations now
measure an emissions increase from a project by comparing the change in
actual emissions before and after the change.\3\ Under this
methodology, the actual annual emissions before the change are compared
with the projected actual annual emissions after the change to
determine if a physical or operational change would result in a
significant increase in emissions. The major NSR regulations allow for
consideration of an emissions unit's operating capacity in determining
whether a change results in an emissions increase. Under the actual-to-
projected-actual test, a source can subtract from its post-project
emissions those emissions that the unit ``could have accommodated''
during the baseline period and that are unrelated to the change
(sometimes referred to as the ``demand growth exclusion''). That is,
the source can emit up to its current maximum capacity without
triggering major NSR under the actual-to-projected-actual test, as long
as the increase is unrelated to the physical or operational change.
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\3\ Sources are allowed to use an actual-to-potential emissions
test for NSR applicability that makes them not subject to reporting
and recordkeeping requirements that are required under the new
actual-to-projected-actual emissions test. See 67 FR 80197.
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Various governmental and nongovernmental entities sought judicial
review of many aspects of the 2002 rules. In New York v. EPA, 413 F.3d
3 (D.C. Cir. 2005) (``New York''), the Court largely upheld EPA's rules
on projecting actual emissions resulting from a change. The Court held
that the NSR modification requirement, which incorporates by reference
CAA section 111(a)(4), ``unambiguously defines `increases' in terms of
actual emissions.'' See New York, 413 F.3d at 39. The Court also upheld
excluding from projections those increases attributable to ``demand
growth.'' Id. at 33. Those emissions were increases that could have
been accommodated by the
[[Page 54238]]
source prior to the change and which were unrelated to change.
Most of the applicability test in the 2002 rule based emissions
test on historical (actual) emissions; however, EPA also promulgated
the Clean Unit exemption, which would have allowed a source to
calculate its emissions increase based on its permitted emissions.
While the Court upheld EPA on projected actual emissions, it vacated
the method of calculating emissions for Clean Units. The Court held
that EPA lacked authority to promulgate the Clean Unit provision, and
in doing so, held that ``the plain language of the CAA indicates that
Congress intended to apply NSR to changes that increase actual
emissions instead of potential or allowable emissions.'' The Court held
that the method for clean units would have impermissibly relied on a
measure of emissions that was not based on actual emissions increases
at the source.
2. What Is ``Debottlenecking''?
A major stationary source often consists of multiple emitting and
non-emitting units that comprise integrated processes at the source. As
part of the operations of the source or within a process, various
pieces of equipment may provide input to or accept output from other
equipment or units at the source. These equipment and units at the
source may have different operating capacities.
When equipment and units of different capacities operate, one unit
may constrain other units from operating at their full design capacity
or maximum output rating either by limiting inputs to those other units
or by limiting usable output. Such constraining equipment and units are
commonly called ``bottlenecks'' in a process. The constrained emissions
unit(s) can be situated in the process either in advance of the
constraining emissions unit (i.e., ``upstream'') or after it
(``downstream'').
When a constraining unit or piece of equipment is changed to
increase its capacity, another unit may increase its operations
(depending on whether some or all of the constraint was removed) to
provide input to the changed unit or use output from it. We have
historically referred to this phenomenon as ``debottlenecking.'' This
increased operation of the upstream or downstream emissions unit(s) can
contribute to increased emissions from the unit(s).
Our current regulations define a ``major modification'' as one in
which a physical change or a change in the method of operation of a
major stationary source results in a significant emissions increase of
a regulated NSR pollutant and a significant net emissions increase of
that pollutant at the source. See 40 CFR 52.21(b)(2). Based on this
current regulation, the total increase in emissions that are included
in determining if there will be a post-change significant emissions
increase includes: (1) Increases occurring at all new or modified
units, and (2) any other increases at existing emissions units not
being modified that experience emissions increases as a result of the
change.\4\ Under our current and prior rules, we have presumed that
increases in emissions at a debottlenecked unit are caused by the
project and, thus, included in determining NSR applicability for the
project.
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\4\ Note that, later in this preamble, we propose to include
decreases (along with increases) from emissions units in calculating
the emissions change that results from a project (i.e., the first
step of the NSR applicability analysis).
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The EPA's recommendation to the President directed changes to our
``debottlenecking'' rule provisions, and we recognize that there has
been confusion over our past policies for calculating emissions from
debottlenecked units and from units experiencing an ``increase in
utilization.'' While we are not defining the term ``debottlenecked
unit'' in this proposed rule, we intend for these provisions, when
finalized, to apply to any unchanged unit at a source that increases
its utilization following a change elsewhere at the source.
3. How Does EPA Currently Implement Major NSR for Debottlenecking
Changes?
As stated above, the emission calculation for a new project
includes the emission increases from all the units involved in a
project. Any new unit's emission increase that results from the project
is equal to the unit's potential to emit, or ``PTE.'' See 40 CFR
52.21(a)(2)(iv)(d). For existing units, the emission increase
associated with the project is based on the ``actual-to-projected-
actual'' test, and, under the current test, it includes increases not
only from the unit(s) undergoing the change but also increases at any
other unit at the major stationary source that are related to the
change.\5\ In the past, EPA has generally assumed that emissions from
debottlenecked units result from the proposed project.
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\5\ These emissions increase test requirements apply to sources
in delegated jurisdictions. Some SIP-approved jurisdictions have not
yet adopted EPA's rules into their SIP's, meaning that their
previous rules apply for their sources until they adopt the 2002
rules.
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Under the ``actual-to-projected-actual'' test, pre-change emissions
are determined using the procedures for ``baseline actual emissions.''
As evident in 40 CFR 52.21(b)(48), different rules apply for
determining baseline actual emissions depending on whether or not the
source is an electric utility. Except for electric utility steam
generating units, the major stationary source requesting the
modification may use any consecutive 24-month period in the past 10
years to determine the baseline actual emissions for the emissions
unit(s) involved. This 10-year ``look back'' period is limited to 5
years for electric utilities, but a different 24-month period outside
of the 5-year window can be used if it is more representative of normal
source operation. Post-change emissions are generally projected using
the emissions unit's maximum annual rate, in tons per year, at which it
is expected to emit a regulated NSR pollutant within five years
following a change, less any amount of emissions that the unit could
have accommodated during the selected 24-month baseline period and that
are unrelated to the change. This final ``projected actual'' value, in
tons per year, is the value you compare to the ``baseline actual
emissions'' in order to determine, by summing the increases at various
emissions units, whether the proposed project will result in a
``significant'' emissions increase, as defined in the first step of the
calculation. See 40 CFR 52.21(b)(23).\6\
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\6\ The EPA is developing a rule for electric generating units
(EGU) that would change the test for net emissions increase for
those units. See 70 FR 61081 (October 20, 2005).
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The actual-to-projected-actual test in the 2002 rules for existing
emissions units applies not only to the unit(s) undergoing the change
but also to any other existing emissions unit(s) at the source that
experiences a change in emissions related to the project. Thus, the
current EPA rules permit emissions increases from debottlenecked units
(and any other unit that increases its utilization as a result of the
project) to be calculated using an ``actual-to-projected-actual''
test.\7\ We believe this represents a fair reading of our current
regulatory text for ``projected actual emissions'' found at 40 CFR
52.21(b)(41).\8\
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\7\ Note that EPA does not require that sources use projected
actual emissions to calculate their emissions increases. If a source
prefers, it can calculate its emissions increases by comparing its
past actual emissions to its future potential to emit.
\8\ We note that some confusion was caused by a footnote in our
2002 rule preamble which conveyed that our debottlenecking
requirements would not change as a result of those rules and
referred readers to a future rulemaking to address debottlenecking.
This footnote has been read by some to suggest that debottlenecked
units were required to continue to calculate emissions increases as
they had under the prior rules. The intent of that footnote was not
to express a position on how emissions increases were to be
calculated at debottlenecked units but rather to make clear that the
2002 NSR Improvement Rule would not change the fact that emissions
from debottlenecked units must be included in the net emissions
increase for the project, whenever appropriate, and that an upcoming
rulemaking would, in accordance with the EPA recommendation to the
President, address future treatment of debottlenecked units.
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[[Page 54239]]
As explained above, when an emissions increase is projected at a
debottlenecked emissions unit, that increase must be added to the
increase projected at the changed unit, along with the sum of all
contemporaneous emissions increases and decreases, to determine whether
NSR applies to the source. Consequently, even when a project increases
emissions by less than a significant amount at the changed unit, the
project would trigger major NSR if: (1) It debottlenecks another unit
at the source; (2) the emissions increase \9\ (of that same pollutant)
is large enough at the debottlenecked unit that there is a significant
emissions increase resulting from the project; and (3) the
contemporaneous emissions decreases and increases (of that same
pollutant) at the source equal or exceed the levels that define a
significant net emissions increase. If NSR applies, then the source
goes through permitting, the changed unit undergoes a Best Available
Control Technology (BACT) or Lowest Achievable Emissions Rate (LAER)
analysis, and the net emissions increase is accounted for in the air
quality analysis.
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\9\ As noted in footnote 4, later in this preamble we propose to
include decreases from emissions units in calculating the emissions
change that results from a project (i.e., in step 1 of the NSR
applicability analysis).
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B. Overview of This Proposed Action
We propose to change the requirements for determining which
emissions increases from existing units that are debottlenecked by a
project elsewhere at the source must count towards NSR applicability.
The purpose of this change is to remove barriers that the NSR program
can impose that prevent owners and operators of major stationary
sources from operating their facilities in the most efficient manner.
Also, since 1992, EPA has worked to address concerns that the ``major
NSR regulations were too complex and burdensome,'' \10\ and these
proposed changes continue our efforts to simplify the process. Numerous
commenters have previously identified debottlenecking changes as a
particularly complex aspect of the NSR program. Among the improvements
to NSR called for in the 2002 recommendations paper were changes to how
these rules address debottlenecking of processes.
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\10\ See 61 FR 38250, 38252 (July 23, 1996).
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We propose to amend the relevant rules in light of not only our
2002 energy policy recommendation for debottlenecking, but also
consistent with the Court's holdings in New York. For purposes of
clarity and greater certainty for affected parties, we propose that
only those emissions increases at debottlenecked units that are
``caused'' by the physical change or change in the method of operation
be included in the modification analysis. We believe the
debottlenecking regulations can be improved if, as described below, the
causation requirement of the NSR rules is more appropriately tailored
to circumstances where emissions increases clearly result from a
proposed change.\11\ Our proposal seeks to refine the causation
requirement, which we, in accordance with the D.C. Circuit ruling in
New York, refer to as the ``but for'' causation requirement in light of
various legal, physical and economic constraints that might exist on
debottlenecked units. We are taking comment on all approaches to
causation described below and ask whether it is more appropriate to
rely on a single causation test or a combination of the tests.
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\11\ We intend for this rule to apply not only to emissions
increases from debottlenecked units but also to any unchanged unit
at a source that encounters an emissions increase after a project.
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As with our past policy, this debottlenecking rule proposal applies
on a pollutant-specific basis. For example, a raw mill expansion at a
cement plant is expected to result in a less than significant increase
in particulate matter emissions. The increased raw mill capacity may
also enable the previously constrained kiln to increase its productive
capacity, thereby increasing emissions of other pollutants, such as
nitrogen oxides (NOX). While there may not be a significant
increase of particulate matter emissions from both units, there may be
a significant increase of NOX emissions from the kiln. Since
BACT or LAER cannot be triggered at a changed emissions unit unless the
pollutant that has a significant net emissions increase is emitted by
the changed unit, BACT or LAER would not apply to the raw mill
expansion. PSD review, however, can be triggered for the source by
increases in a pollutant not emitted by the changed unit.
As noted above, we believe that it is appropriate to revisit the
causation requirements for determining when an emissions increase at a
debottlenecked unit is caused by a particular change elsewhere at the
source. We do not believe that including emissions increases from
debottlenecked units, without first establishing causation, is
consistent with Congress' intent in establishing the major NSR program.
As we explained in promulgating the demand growth exclusion, we
interpret the ``which increases'' and ``which results in'' language of
section 111(a)(4) of the modification provision of the CAA as requiring
``a causal link between the proposed change and any post-change
increase in emissions.'' See 67 FR 80203; New York, 413 F.3d at 32-33.
In New York, the Court looked favorably on the demand growth exclusion
for emissions increases that (1) Could have been accommodated prior to
the change to meet the particular level of demand; and (2) were not
caused by the change. See New York, 413 F.3d at 31-33.
The EPA's interpretation of section 111(a)(4) as requiring a causal
relationship is governed by Chevron U.S.A., Inc. v. Natural Res. Def.
Council, 467 U.S. 837 (1984) (``Chevron''). This decision was explained
in New York as follows:
As to EPA's interpretation of the CAA, we proceed under Chevron's
familiar two-step process. See 467 U.S. at 842-43. In the first step
(`Chevron Step 1'), we determine whether based on the Act's
language, legislative history, structure, and purpose, `Congress has
directly spoken to the precise question at issue.' Id. at 842. If
so, EPA must obey. But if Congress's intent is ambiguous, we proceed
to the second step (`Chevron Step 2') and consider `whether the
agency's [interpretation] is based on a permissible construction of
the statute.' Id. at 843. If so, we will give that interpretation
`controlling weight unless [it is] arbitrary, capricious, or
manifestly contrary to the statute.' Id. at 844.\12\
\12\ See New York, 413 F.3d at 18.
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The EPA believes that even if Congress failed to articulate
unambiguously that section 111(a)(4) requires a causal link between the
proposed change and any post-change increase in emissions, the agency's
approach is a reasonable interpretation of the statute and well within
the purview of administrative deference under Chevron. Below, we
describe various standards of causation that we believe are consistent
with the statutory text of section 111(a)(4). The EPA believes that not
only inferring causation under section 111(a)(4) would be entitled to
deference, but that selection of one or more of these causation
approaches would also be afforded similar deference under Chevron.
[[Page 54240]]
1. Legal Causation
The causation test that is the most straightforward to apply and
enforce for debottlenecked units would be a legal causation test in
which an emissions increase at a debottlenecked unit would not be
considered to have been caused by a physical or operational change at a
major stationary source if the debottlenecked unit's post-project
emissions were already authorized by a pre-existing air quality permit.
This would apply to any debottlenecked unit with a permit that is
enforceable as a practical matter.\13\ For example, if a unit is
debottlenecked by a change elsewhere at the source, but it had
previously been permitted (with a qualifying permit) to emit at
operating levels that could be reached but would not be exceeded after
the debottlenecking, under this legal causation test any change in
emissions at this unit actually resulted from the initial authorization
and not from the proposed change. The reasoning behind this
interpretation is especially clear when considering units with
nonattainment NSR permits, where the source must obtain offsets under
its original permit for a level of emissions that represents the
maximum operation allowed for the unit by its original permit. Thus, as
long as the post-debottlenecking operational level is within their
permitted limit, and the source has already obtained permanent offsets
for operating at the higher level, it is logical to conclude that the
change associated with the initial authorization ``caused'' the changed
level of emissions.\14\
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\13\ ``Enforceable as a practical matter'' will be achieved if a
requirement is both legally and practicably enforceable. A
requirement is ``legally enforceable'' if some authority has the
right to enforce the restriction. Under current EPA guidance,
practicable enforceability for a source-specific permit will be
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.
\14\ Here, we use nonattainment NSR as an example, but we
propose to apply this approach to other types of air quality permits
(i.e., PSD and Title V operating permits, and other permits that are
enforceable as a practical matter).
---------------------------------------------------------------------------
Under this test, the ``but for'' legal cause of the increase would
be the original new construction or modification that received the
initial emission authorization. Without this original event, and the
accompanying permit, the emissions associated with debottlenecking
could not have occurred. Accordingly, EPA believes it is the original
event, not the debottlenecking event, that is the legal cause for the
changes in emissions at the unchanged unit. Although it is possible
hypothetically to attribute the emissions to either event, the presence
of the permit is the basis on which to legally attribute the emissions
to the event that gave rise to the permit limit. The emissions unit is
legally constrained from operating at the post-change emissions rate,
if such emissions would violate a legally and practically enforceable
term or condition of any previously issued permit.
The permit status of the unchanged unit would be the key criterion
for establishing causation under this approach. For example, at a grey
iron foundry, both the casters and rolling unit downstream of a melting
tub are oversized; however, only the casting unit has a permit that is
enforceable as a practical matter (e.g., Title V operating permit
containing SIP limits). Due to a physical change to expand the capacity
of the melting unit, the casting unit can operate at a higher
throughput. If the casting unit has obtained a qualifying permit that
authorized its higher operating level, the emissions associated with
that operating level first achieved after the change at the melting
unit would be legally caused by the change that resulted in the earlier
permitting action (e.g., the original installation of the casting unit,
or some modification to it) and not by the change at the melting
unit.\15\ Conversely, for the rolling unit, which removes iron billet
out of the caster, if it operates at higher levels after the change,
but had not received authorization for its higher operating levels
through a qualifying permit, we would not, under the legal causation
approach, attribute the emissions increase to the original roller
installation because there is no enforceable permit which serves as a
basis for us to attribute the legal cause. Thus, the rolling unit's
emissions increase--based on applying the actual-to-projected-actual
test--would be attributable to the change and must be included in the
overall emissions increase resulting from the expansion project at the
melting unit.
---------------------------------------------------------------------------
\15\ In the case where a casting unit emits at a level higher
than its permitted emissions rate, then it is a change in the method
of operation and may be subject to major NSR.
---------------------------------------------------------------------------
We believe that this approach offers significant advantages to NSR
implementation with virtually no disadvantage. The ``but for'' legal
causation test would be simpler for owners and operators to apply and
for reviewing authorities to administer. It would reduce the burden of
complex source-wide emissions calculations that can involve disputes or
confusion about the physical capabilities of the design of the
unchanged unit absent the change elsewhere in the process. This burden
and confusion would be eliminated where an existing permit already
authorized the emissions increase. This approach also offers source
owners and operators certainty in designing and planning projects at
their sources, because they may rely on the air pollution decisions
already made for a given unit when planning for the future operation of
that unit. We further note that our current rules do not require BACT
or LAER at unchanged units, so this policy would not result in less
control on the unchanged unit. It may result in sources not needing
BACT/LAER review for the changed units themselves in situations where
the increase from the unchanged unit must be part of the NSR
applicability calculation in order to reach significant increase levels
for a pollutant emitted by the changed unit. However, in such cases,
the emissions increase at the changed unit necessarily would have to be
less than the de minimis significance levels, so any reduction in
pollution would also be de minimis.
While EPA believes that the legal causation approach may offer the
greatest potential for improvement in the regulatory treatment of
debottlenecking, we must address how this approach comports with the DC
Circuit's recent decision in New York concerning Clean Units. The term
``modification'' is defined by section 111(a)(4) as ``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.'' As previously stated, the agency has interpreted the ``which
increases'' and ``which results in'' language of section 111(a)(4) as
requiring a causal link between any change and any post-change increase
in emissions. The EPA used this rationale in adopting the demand growth
exclusion, and this exclusion was upheld by the court in New York.
Therefore, under section 111(a)(4), there must be (1) A physical change
or change in the method of operation, (2) that is the cause of, (3) an
increase in emissions.
[[Page 54241]]
In New York, the agency attempted to define Clean Unit status such
that a change at the unit did not ``increase'' emissions for purposes
of section 111(a)(4) as long as its status as a Clean Unit remained
intact, even if the change caused an increase in actual emissions from
the unit. See New York, 413 F.3d at 38. The court ruled that the agency
lacked the authority to promulgate the Clean Unit provision because the
term ``increases'' refers to an increase in actual emissions rather
than potential or allowable emissions. This issue does not arise in
this proposal, which focuses on the causation of the increase rather
than its measurement.
The agency believes that, with regard to debottlenecking, the CAA
and section 111(a)(4) more specifically are silent as to what type of
causation is required between the physical change or change in the
method of operation and the increase in emissions that occurs at the
debottlenecked unit. While the ``which increases'' and ``which results
in'' language from section 111(a)(4) strongly suggests a causal
relationship is required, the statutory text does not mandate nor
offers explicit guidance concerning a specific approach or standard of
causation. The EPA believes that the legal causation approach is a
reasonable interpretation and construction of section 111(a)(4) and
would therefore be subject to Chevron Step 2 deference afforded the
agency in administering the NSR program.
Under a legal causation test, we would view the original
authorization of emissions from the unit to be the cause. If the
emissions were authorized by a prior permit, then that prior
transaction would be the cause of the emissions increase. If the
emissions were not authorized previously, either because the permit
level is exceeded or the unit failed to obtain a qualifying air quality
permit, then the increase in emissions from the debottlenecked unit
would be attributable not to a prior permit but instead to the change.
Consistent with the Clean Unit portion of New York, we would count
those emissions on an actual-to-projected-actual basis.
The legal causation test addresses whether a change at one unit
causes an emissions increase at another. This issue is distinct from
the question addressed in the Clean Unit portion of New York, which
focused on how to calculate the emissions of a changed unit where
causation was not in question. A debottlenecked unit is not undergoing
a change, so we must establish a basis for causation. The legal
causation test uses as its basis the permit level authorized when the
unit was previously permitted. If this level is exceeded, or if no
prior permitting action authorized the emissions level that would
define the basis, then the cause of those emissions would be the
current change and an actual-to-projected-actual emissions analysis is
required to determine the debottlenecked unit's emissions increase that
is attributable to the change.
Under this approach, an emissions increase at a debottlenecked
emissions unit would be considered caused by the prior permitting
action, and not by the project at issue, if the following three
criteria are met:
The unit's maximum emissions levels for each of the NSR
pollutants in question is explicitly contained in a permit;
The permit contains an allowable emissions limit (or
operational limit that has the effect of constraining emissions) for
the regulated NSR pollutant that is enforceable as a practical matter
(e.g., Title V operating permit); and
The unit itself is unchanged.\16\
---------------------------------------------------------------------------
\16\ Under our existing regulations, exceeding a permit limit
could be considered a change in the method of operation. Thus, while
not physically changed, the debottlenecked unit would be
operationally changed if it plans to exceed its prior permitted
emissions limit.
---------------------------------------------------------------------------
Under this legal causation approach for units meeting the above
criteria, no future emissions increase at the debottlenecked unit is
considered to have been caused by the project for the purposes of an
NSR determination. In such circumstances, the contribution from the
debottlenecked unit to determining whether the project results in a
significant emissions increase is zero. On the other hand, if the
project is expected to cause the debottlenecked emissions unit to
increase above its permitted emissions, then its actual-to-projected-
actual emissions increase must be included in the emissions increase
calculation. In addition, its underlying permit would require a change
(i.e., to accommodate a higher permit limit), which would in most cases
trigger review by the permitting authority.
Under the legal causation test, the emissions increase from a
proposed project involving a unit undergoing a physical or operational
change and a debottlenecked unit is calculated as follows.
For new units, the emissions increase equals the unit's
potential to emit.
For an existing emissions unit undergoing a physical
change or change in the method of operation, the emissions increase is
determined under the actual-to-projected-actual test \17\ as discussed
in section III.A.3 of this preamble.
---------------------------------------------------------------------------
\17\ States with approved programs may still require that
sources use our past emissions increase test until their SIP
revisions incorporating the 2002 rules are effective and approved.
---------------------------------------------------------------------------
For a debottlenecked emissions unit that will not be
changed and that is not subject to an emission limit that is
enforceable as a practical matter, the emission increase is determined
under the actual-to-projected-actual test.
For a debottlenecked emissions unit that will not be
changed and that is subject to an emission limit that is enforceable as
a practical matter, the emissions increase is zero, unless the source
plans to exceed its permitted level, in which case the emission
increase is determined under the actual-to-projected-actual test.
Add all of the emissions increases from the project as
discussed above to determine whether there is a significant emissions
increase as a result of the proposed project.\18\
---------------------------------------------------------------------------
\18\ As noted in footnote 4, later in this preamble we propose
to include decreases from emissions units in calculating the
emissions change that results from a project (i.e., in step 1 of the
NSR applicability analysis).
---------------------------------------------------------------------------
Thus, all emissions increases that meet the causation test should
be considered in the project's total emissions increase. This applies
to all related units, even those that do not require a permit change
after the project. Regardless of whether the related units require
permit changes, under no circumstance can the source's new emissions
level cause or contribute to a violation of the National Ambient Air
Quality Standards (NAAQS) or an exceedance of the PSD increment. CAA
Section 165(a)(3).
It is important to note that the legal causation approach is not
dependent on air quality modeling; rather, it is based on the fact that
the reviewing authority has made an objective decision to authorize the
unit to emit up to a certain level. Thus, we believe that a legal
causation approach can effectively work with any unit that has a
practically enforceable permit. This is because, as noted above,
reviewing authorities have a statutory obligation to ensure that
permitting in their jurisdictions will not cause or contribute to a
violation of a NAAQS or PSD increment or adversely impact an air
quality related value (AQRV) in a Class I area. Within each issued
permit, even if it does not contain a comprehensive air quality
assessment, the reviewing authority has responsibility for considering
the totality of consequences of the source operating at the levels
within the
[[Page 54242]]
permit. These consequences include, at a minimum, performing some
screening of the local and regional impacts of the unit operating at
the maximum allowed emissions level of the permit. The reviewing
authority will make a determination based on, at a minimum, an air
quality screening, emissions inventory review, or other means to ensure
that the unit can operate up to that allowable limit and not violate
the NAAQS or exceed the PSD increment. In making objective decisions,
reviewing authorities must consider any public comment received.
Accordingly, if the public is concerned about the air quality impacts
related to a source's operation at a particular emissions level, and
they raise specific, articulated concerns to the reviewing authority,
the reviewing authority must address these concerns and ensure that no
unacceptable, adverse impacts result from allowing the source to
operate at the proposed new levels before issuing the permit.
We solicit comment on all aspects of this preferred causation
approach and on the proposed rule changes that implement this approach.
We solicit comment on our proposal to apply legal causation to all
permit limits that are enforceable as a practical matter (i.e., PSD and
nonattainment permits, minor NSR permits, and other authorizations). We
ask for comment on whether the legal causation approach may need to
account for additional factors, as described in section III.C.3 of this
preamble, such as the level of air quality or attainment modeling
associated with the original permit limit. If so, how would it be
appropriate to account for the factors? Should the legal causation
approach be limited in application when the prior permit lacked air
quality or attainment modeling?
2. Physical Causation
A second approach to the causation requirement could focus upon a
physical causation. Under this approach, the emissions increase at an
unchanged unit would result from the change at the ``bottlenecking''
unit (and its emissions would be included in the project's emissions
increase calculation) if the unchanged unit were physically incapable
of operating at a higher level absent the change at the bottlenecking
unit. An emissions unit is physically incapable of operating at the
post-change emissions rate if pre-change operations at the major
stationary source could not supply material to or accept material from
the emissions unit due to inherent capacity constraints at the major
stationary source, and there is no market from which or to which the
major stationary source could purchase or sell the material, or if
there is no other reasonable means of disposing of the material. In
such a case, arguably the unchanged unit could not have physically
accommodated its new emissions level but for the change.
To help clarify a ``but for'' physical causation test, consider the
example from above of the iron foundry that has oversized casters
downstream of a smaller-sized melting tub. A physical change to expand
the melting unit would allow the casting unit to operate at a higher
throughput. ``But for'' the change at the melting unit, the iron
casting unit could not have increased its operations because there
could be no other physical supply of molten iron from any place other
than the melting unit. Thus, increases in emissions from the
debottlenecked casting unit that are attributable to the project at the
melting tub would be assessed using an actual-to-projected-actual
emissions test.
In contrast, the ``but for'' physical causation would not exist in
the case of the rolling unit at the foundry. The rolling unit is
further downstream and removes iron billet out of the caster. However,
the rolling unit could physically accommodate billet from other
sources, since there is no physical impairment that would prevent the
source from purchasing billet from other sources and increasing
emissions from the rolling unit. Thus, a physical change at the casting
unit (or further upstream, perhaps at the melting unit) would not be
the ``but for'' cause of the emissions increase at the rolling unit and
thus the rolling unit's emissions increase would not be attributable to
the project.
For another example, assume that the smelting of recycled aluminum
at a secondary aluminum smelter and rolling mill is limited by the
capacity of the smelter. The rolling mill, however, can produce product
using aluminum ingots either from the secondary smelter or from a
nearby primary aluminum plant. The source wants to expand the capacity
of the smelter in order to utilize more recycled aluminum rather than
buying ingots from the primary aluminum plant to meet its growing
product demand. The rolling mill is not bottlenecked by the available
smelter capacity since it can use, and has in the past used, other
aluminum sources to produce its rolled aluminum products. In this case,
the ``but for'' physical causation test is not met, and increases in
emissions from the rolling mill would not be considered to be part of
the project emissions. However, increases in emissions above its
baseline emissions (highest 2 years in 10) would be contemporaneous
emissions increases included in the netting analysis if the increase in
smelter emissions were significant.
We solicit comment on this approach in general. EPA anticipates
that the emissions impacts of a physical causation approach are not
appreciably different from those of a legal causation approach, but we
anticipate that the improvements to certainty and clarity are
diminished. Having to consider the physical capabilities of all
emissions units at a source that are impacted by a project adds a
degree of complexity to the causation evaluation. Whereas the ``but
for'' legal causation boils down to whether or not the emissions
increase was previously authorized, in this case there will need to be
a technical judgment as to whether a source could have procured the
input from another source. We solicit comment on how to most
objectively determine what level an underutilized unit is physically
capable of operating at, and, in general, how to most effectively
evaluate projects using a but for physical causation test.
3. Economic Causation
As an extension of the physical causation approach, we also take
comment on whether causation should be tied to both physical and
economic realities. Under this approach, emissions increases at
debottlenecked units will not be considered to have resulted from the
change if it would have been both physically possible and economically
rational for the unchanged unit to have operated at the post-change
level. Under this approach, in addition to those increases that result
from physical causation as described above, an additional category of
emissions increases would result from the change at the
``bottlenecking'' unit (and their emissions would be included in the
project's emissions increase calculation). This category would include
units for which, although they may have been physically capable of
operating at a higher level prior to the change at the bottlenecking
unit, operating at the higher level would have been economically
irrational. An emissions unit is economically constrained from
operating at the post-change emissions rate, if a market exists from
which or to which the major stationary source could purchase or sell
the material, or if there is a reasonable means of disposing of the
material, but the cost of such a transaction is so unreasonable it
would preclude the major stationary source from engaging in the
transaction.
An example where a unit may have been able to physically
accommodate
[[Page 54243]]
higher operating levels before a change to another unit but it would
have been economically irrational to do so is an oversized boiler
supplying steam to several pulp digesters at a paper mill. Conceivably,
the boiler could have operated at higher capacity even though the
digesters and all other parts of the mill were incapable of using the
extra steam prior to making any change at any other part of the mill.
The boiler could have simply blown off steam to maximize its emissions
rate, and was physically (and possibly legally able to do so), but such
a use of resources would only be to take advantage of regulatory
provisions and would not otherwise serve an economically rational
purpose. If the mill were to add more digesters and those digesters
increased the demand for steam on the boiler, under this ``but for''
causation approach we would attribute the emissions increase to the
physical change (i.e., adding the digesters) even though the boiler was
physically capable of accommodating the increase prior to the change.
While we are soliciting comment on the economic causation approach
as an alternative, EPA believes this option offers little benefit over
the current NSR rules in reducing the complexity of permitting. We
anticipate that this test would be more difficult to administer than
either of the two options discussed above. It might result in similar
sources being treated differently, depending on location. For example,
if one fertilizer production plant were located near a rail line and
another were located in a place that was only highway-accessible, and
both sources used sulfuric acid as an input in production, this
economic criterion might suggest that the source near the rail line
might have been able to obtain acid in economic quantities from rail
cars but that the more isolated source could would not have been able
to get economic quantities from tank trucks. Thus, when each source
seeks to expand its onsite sulfuric acid plant, it might lead to the
increases from other parts of the process being added to the increases
at the source in one case and not in the other.
C. Discussion of Issues Under Proposed Debottlenecking Approach
The following provides a discussion of the key issues we considered
in developing our proposed approaches to the debottlenecking analysis
under the NSR program.
1. Why Use a ``But For'' Causation Test for Units Upstream and
Downstream of Emissions Units Undergoing a Change?
We do not believe that including emissions increases to
debottlenecked units, without first establishing causation, is
consistent with Congress's intent in establishing the major NSR
program. As we explained in promulgating the demand growth exclusion,
we interpret the ``which increases'' and ``which results in'' language
of section 111(a)(4) of the modification provision of the CAA as
requiring ``a causal link between the proposed change and any post-
change increase in emissions.'' See 67 FR at 80203.
The EPA believes that the use of an historical, actual emissions
test is sensible when determining emissions increases for emissions
units undergoing a physical or operational change. The EPA also
believes that using historical actual emissions to determine whether a
project elsewhere at the source caused an emissions increase at an
unchanged (e.g., debottlenecked) unit is appropriate under certain
circumstances. We believe, however, that our past and current policies
for evaluating emission increases from unchanged units, which arguably
have used even broader notions of causation than those outlined in this
proposal, deter companies from undertaking projects that would increase
energy efficiency and could potentially result in lower emissions per
unit of production. Thus, we believe this approach strikes the best
balance between Congress's desire to allow economic growth and the need
for environmental protection.\19\
---------------------------------------------------------------------------
\19\ While EPA maintains that our prior emissions increase test
for debottlenecked units remains a reasonable interpretation of the
CAA, we believe that the proposed approach strikes a better balance
of Congress's various goals for the NSR program and is sounder
policy.
---------------------------------------------------------------------------
The EPA believes that major NSR must still apply to any new and
existing units that debottleneck the process, if they result in a
significant net emissions increase. Further, to the extent that any
debottlenecked unit will operate above its previously permitted levels
after the change, the unit must be re-permitted to allow for the higher
emissions and to address the impacts of the higher emissions. Finally,
we believe that this change will simplify the calculation of emission
increases from a project, particularly at complex facilities like
refineries where the calculation can be an extremely complicated and
burdensome exercise. This holds especially true for the legal causation
approach.
We believe that more appropriately tailored causation principles
make sense for debottlenecked units since they are not the units
undergoing a change, and they have already been assessed to operate at
the increased level via a permit. These fundamental differences support
the use of establishing causation prior to including the debottlenecked
unit's emissions increase in the calculation of the emissions increase
for a project. We also believe that the proposed approach for
calculating emission increases from a project at a debottlenecked unit
is a reasonable interpretation of the CAA.
2. Has EPA Evaluated the Impacts of the Debottlenecking Rule on the
Environment?
We believe that the causation principles discussed above would
better identify projects for which major NSR should apply than did our
prior debottlenecking policies. Major NSR will continue to apply when
projects, consistent with the causation principles discussed above,
cause an emissions increase greater than the significance levels; thus,
EPA believes the proposed approaches are sound interpretations of the
statute and strike a better balance between Congress's desire to
promote economic growth and the need for environmental protection than
does the current approach.
Nevertheless, we recognize that the proposed emissions test for
debottlenecked units, when finalized, may result in fewer projects
undergoing major NSR than would the current actual-to-projected-actual
emissions test with its wider view of causation. The affected types of
projects are limited to those that involve changes to units that
themselves result in de minimis increases but would have triggered NSR
due to emissions increases at debottlenecked units. At the same time,
EPA believes that the universe of emissions units that are now
``available'' for debottlenecking has been reduced as a result of newer
NSR rule provisions, such as ``Plantwide Applicability Limitations''
(PALs), that were finalized in December 2002.\20\ We expect that the
various debottlenecking approaches could encourage sources to implement
environmentally beneficial projects, such as more energy-efficient or
lower-emitting processes, that would not have been undertaken under our
prior debottlenecking policy due to the consequence of triggering major
NSR review. The EPA qualitatively
[[Page 54244]]
concludes that any environmental effect of the proposed debottlenecking
approaches will be negligible.
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\20\ See 67 FR 80241 (December 31, 2002).
---------------------------------------------------------------------------
We specifically request comment on the environmental consequences
of implementing the various approaches for debottlenecking units
outlined above. Specifically, how are sources likely to be affected by
these proposed provisions? What types of projects did not go forward in
the past due to our policy? Are there projects that were deemed major
modifications due to the debottlenecking provisions that obtained
permits under our former provision and were built? What environmentally
beneficial projects will benefit from these proposed provisions? What
environmental protection benefits resulted from the old debottlenecking
policy that would not occur under the proposed new approach?
3. Is There a Need for an Air Quality Impact Analysis for
Debottlenecked Emissions Under This Approach?
Title I of the CAA largely leaves it to the State and local
reviewing authorities to attain and maintain NAAQS, protect the PSD
increment, and not interfere with another State's ability to reach
attainment. Accordingly, when a reviewing authority issues a permit to
construct or operate an emissions unit, the reviewing authority must
account for the level of emissions in the debottlenecked unit's permit
to assure that these requirements of the CAA are satisfied.
Our rules require that when a significant net emissions increase
occurs from a project, the overall emissions increase will undergo an
air quality review under PSD or be offset through emissions decreases
at another major stationary source under nonattainment NSR. These rules
also apply to projects that cause a debottlenecked unit to operate
above its permitted emissions level(s). Some reviewing authorities may
also require that sources with projects that qualify as minor NSR
perform modeling to ensure protection of the NAAQS and PSD increments.
But regardless of whether the emissions increase from a project is
significant, any change that enables a debottlenecked unit to exceed
its permitted emissions level will always require the unit to undergo a
permit modification and re-evaluation of the impacts of the new
permitted emissions level.
However, as explained in the section above, we recognize that the
proposed emissions tests for debottlenecked units, when implemented,
could result in fewer projects undergoing major NSR than would the
current debottlenecking emissions test with its broader view of
causation. Previously, we explained how having fewer major sources
subject to major NSR under our debottlenecking approach will have a
negligible environmental effect in terms of emissions impact. We ask
for comment on the environmental and economic significance of having
fewer major sources updating or conducting source-specific air quality
modeling under our proposed approach.
4. Is There a Need for States To Make Revisions to Their State
Implementation Plans?
We propose the debottlenecking approaches described in this
proposed rule as a minimum program element of our base NSR program.
Accordingly, each State must submit a revision to its SIP to
incorporate this change or provide a demonstration that an alternative
approach is at least equivalent to the Federal requirement. We propose
to require States to submit these revisions for our approval no later
than 3 years after the effective date of the final rule. However, we
are specifically seeking comment on the need for SIP revisions or any
viable alternatives for implementing the proposed changes for these
proposed debottlenecking provisions such as through an interpretation
of a State's existing regulations. The proposed change would apply in
States where the Federal PSD program applies on the effective date
established in the final rules.\21\
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\21\ On August 21, 2006 (71 FR 48695), EPA proposed a
nonattainment major NSR program that, when finalized, would apply in
Indian country until a tribe adopts a Tribal Implementation Plan
that implements major NSR. As part of today's proposal, we propose
to apply the new debottlenecking provisions in any final major NSR
rules for Indian country. If we finalize the major NSR rule for
Indian country before we finalize this proposed rule, then we will
codify changes in that rule when we finalize this rule. If, however,
we finalize this rule before we finalize the NSR rule for Indian
country, then we will codify the applicable provisions for Indian
country when we finalize that rule.
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IV. Aggregation
A. Background
1. What Is ``Aggregation''?
Currently, when undergoing a physical or operational change, a
source determines major NSR applicability through a two-step analysis
that first considers whether the increased emissions from a particular
proposed project alone are significant, followed by a calculation of
the particular project's net emissions increase considering all
contemporaneous increases and decreases at the source (i.e., source-
wide netting calculation) to determine if a major modification has
occurred. See, for example, 40 CFR 52.21(b)(2)(i). The term
``aggregation'' comes into play in the first step (Step 1), and
describes the process of grouping together multiple projects (i.e.,
physical changes or changes in the method of operation) and summing
their emissions changes for purposes of determining whether a
significant emissions increase has occurred from the combined project.
See, for example, 40 CFR 52.21(b)(40). Specifically, when undertaking
multiple projects, the source must consider whether NSR applicability
should be determined collectively or whether the emissions from each of
the projects should separately undergo a Step 1 analysis.\22\
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\22\ Even if projects are determined to be separate and subject
to an individual Step 1 analysis, the emission increases and
decreases may still be included together in the netting calculation
if the projects occur within a contemporaneous period.
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Neither the CAA nor current EPA rules specifically address the
basis upon which to aggregate projects.\23\ Instead, EPA has developed
its aggregation policy over time through statutory and regulatory
interpretation and applicability determinations. EPA's aggregation
policy aims to ensure the proper permitting of modifications that
involve multiple projects. Thus, multiple projects that are
interrelated should be grouped together and considered a single project
for the purpose of Step 1 in the NSR applicability test. When
interrelated projects are evaluated separately, they may circumvent the
purposes of NSR, which is designed to address a project(s) having a
significant net emissions increase.
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\23\ However, EPA has consistently interpreted the CAA to
require grouping of related projects when determining which
emissions changes result from the physical or operational change.
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2. What Is EPA's Aggregation Policy?
Our aggregation policy has never been spelled out in detail in a
single letter or memorandum. Rather, over the years we have applied
common sense factors to determine the relatedness of projects for
purposes of aggregation. Our aggregation policy has evolved in large
part from specific, case-by-case after-the-fact inquiries related to
the possible circumvention of NSR in existing permits. While there have
been many such letters and memoranda over the years, one of the more
important for the purposes of an aggregation policy is the letter EPA
issued in 1993 related to a research facility owned by 3M Company in
Maplewood, Minnesota. In this guidance memorandum (letter) issued to
[[Page 54245]]
3M, EPA used ``objective indicia'' to identify circumvention
situations.\24\ In the ``3M-Maplewood'' situation, the source was a
sizeable complex that conducted research for multiple companies. Over a
6-month time period, 3M submitted four synthetic minor permits, and
over an 18-month period, 3M submitted 12 synthetic minor permits. 3M
sought permits for various projects separately as minor modifications,
claiming that each project was pursued by a separate division of 3M and
therefore unrelated to the other projects. The EPA, in its response,
applied the EPA aggregation policy in determining whether projects at
the Maplewood facility should have been aggregated--i.e., whether 3M
circumvented NSR in obtaining a series of minor source permits rather
than a single major NSR permit.
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\24\ ``Applicability of New Source Review Circumvention Guidance
to 3M-Maplewood, Minnesota'' (U.S. EPA, June 17, 1993).
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While the 3M letter is not an exhaustive discussion of our
aggregation policy, it consistently applies our long-held position on
aggregating related projects. The 3M letter described the consideration
of ``application for funding or funding mechanisms.'' \25\ In the case
of two projects, if an individual project would not be funded or it
would not be economically viable if operated on an extended basis
without the other project in place, this would indicate that the
projects are part of a single project and should be reviewed as such
for NSR purposes. The 3M letter also noted, ``[t]hese emissions and
thereby modifications cannot be presumed to be independent given the
plant's overall basic purpose to support a variety of research and
development activities. Therefore, even though each research project
may have been individually conceived and separately funded, it is
appropriate to look at the overall expected research activity in
assessing NSR applicability and enforcement.''
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\25\ The 3M letter states ``[a]pplications for commercial loans
or, for public utilities, bond issues, should be scrutinized to see
if the source has treated the projects as one modification for
financial purposes. If the project would not be funded or if it
would not be economically viable if operated on an extended basis
(at least a year) without the other projects, this should be
considered evidence of circumvention.''
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There has been some confusion over the 3M letter and the use of
timing in making aggregation decisions. For example, some have read it
to suggest that timing of minor NSR permits is a decisive, stand-alone
factor in determining whether projects should be aggregated.
Specifically, some have read the letter to suggest that if, for
example, two minor NSR permits are issued on the same day for a given
source, they should be automatically aggregated. We want to make clear
that we do not believe that this would be a proper application of our
long-standing aggregation policy. Timing considered as a factor alone
is not conclusive to an analysis of whether projects are interrelated
such that they should be aggregated.
As a result of the questions and issues that the 3M letter raised
with our aggregation policy, NSR stakeholders have expressed concerns
that EPA's position on aggregation is in need of clarification. The
potential inconsistent application of the 3M letter led EPA to look
more closely at our aggregation policy and determine to improve the NSR
process by adding clarifying requirements to our rules as to when it is
appropriate to aggregate projects. This clarification would ensure that
the aggregation policy is being applied consistently by both those
considering the applicability of NSR to potential modifications, and
those conducting a case-by-case after-the-fact inquiry regarding
whether or not NSR was circumvented through the failure to aggregate
dependent projects. Therefore, in this proposal, EPA is clarifying
circumstances where emissions from particular projects should be
aggregated for purposes of Step 1 of the NSR applicability analysis.
Specifically, we are proposing that when a particular project is
technically or economically dependent upon another project, the
emissions resulting from each of the projects must be added together
for purposes of determining NSR applicability.
B. Overview of This Proposed Action
We are proposing to add our aggregation policy to our NSR
regulations to achieve greater national consistency and provide further
clarity in aggregation determinations. This proposal clarifies our
existing policy and provides specific circumstances where emissions
should be aggregated for purposes of NSR applicability. EPA proposes to
revise the regulations to state that a source must aggregate emissions
from projects that are technically or economically dependent. This same
policy would be used in EPA's case-by-case after-the-fact inquiry of
whether a source has circumvented NSR through a failure to aggregate
dependent projects. To the extent that our 3M-Maplewood letter
addresses the factors to consider in an analysis of whether projects
should be aggregated, it is consistent with our long-standing policy
that projects that are dependent on each other should be aggregated. To
clarify this, we are reiterating this policy and codifying it in rule
language.
We propose that if a source or reviewing authority determines that
a project is dependent upon another project for its technical or
economic viability, the source or reviewing authority must consider the
projects to be a single project and must aggregate all of the emissions
increases \26\ for the individual projects in Step 1 of the major NSR
applicability analysis. That is, the emissions increases from the
related projects must be summed to determine if the project(s) will
result in a significant emissions increase. If a significant emission
increase results, then the source must conduct Step 2 of the NSR
applicability test, which involves a netting calculation (Step 2) to
determine if a major modification exists.
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\26\ As noted in Footnote 4, later in this preamble we propose
to include decreases from emissions units in calculating the
emissions change that results from a project (i.e., in Step 1 of the
NSR applicability analysis).
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We believe these factors appropriately consolidate and clarify our
past guidance. Accordingly, EPA believes that, by codifying these
factors, these proposed provisions would improve implementation and
permitting of the major NSR program for States and the regulated
community. We solicit comment on all aspects of this interpretation of
our rules and request comment on other approaches that could be used to
aggregate related projects. In particular, we specifically request
comment on whether the proposed rule accurately characterizes EPA's
current aggregation practices. We also propose rule changes to address
aggregation and request comment on that language.
1. What Is Technical Dependence?
The terms ``technically dependent'' and ``technical dependence''
describe the interrelationship between projects such that one project
is incapable of performing as planned in the absence of the other
project. This means that, absent another project, the process change
cannot operate without significant impairment, or for the planned
amount of hours, or at the planned rating or production level, or that
it operates in a manner that results in a product of inferior quality.
This assessment examines, and applies reasonable engineering
assumptions to, the planned operational levels and/or specifications
that are relied upon in the company's own descriptions of and/or
justifications for the project. Thus, the technical viability of one
project is ultimately contingent on another project
[[Page 54246]]
being completed (i.e., it is technically dependent).
One indication of technical dependence is that a project cannot
operate within its maximum design parameters for an extended period of
time without the other project(s). For example, an electric utility
decides to fire its boiler unit with sub-bituminous coal rather than
bituminous coal. This requires examination of the impacts of the change
on other boiler and control systems. For example, this change may
require installation of new types of burners in the boiler to
accommodate the new fuel. Introduction of a new fuel also may
necessitate adjustments to the air flow in the boiler to reduce/
increase excess air and optimize the air-to-fuel ratio, to maintain the
efficiency of the boiler. Thus, the owner determines that, if new
burners are required, in order for the new burners to function as
intended, the air ports and ducting in the boiler may also need to be
altered (i.e., different sizing and location) to better distribute the
air throughout the boiler. While the new burners could be installed and
operational with the boiler's current air handling system, the burners
could be severely impaired in their operation if the air handling
modification was not also performed. Hence, the two projects are
technically dependent on each other.
Another indication of technical dependence is that a source cannot
achieve its maximum production without the implementation of both
projects. For example, a refinery conducts a project to increase the
capacity of its fluid catalytic cracking unit (FCCU), but does not have
adequate storage on site to reach that capacity. Then the refiner is
likely to propose a subsequent project to add storage to accommodate
the full FCCU production. While the additional storage project is not
technically dependent (although it could be economically dependent) on
the FCCU expansion, clearly the FCCU project cannot achieve the planned
capacity increase and is therefore technically dependent on the storage
expansion project. Thus, the emissions from the two projects would need
to be aggregated when determining major NSR applicability.
Another indication of dependence is if the intention for a project
is to make a new product, and absence of another project would not
allow for full production of the new product, then the projects are
technically dependent. In this case, one project must be done by virtue
of another project, or the overall project would fail to operate. For
example, an existing chemical plant has a new product that requires a
multi-staged reaction in separate vessels. The intermediate products
must remain heated between reactor stages. To achieve this, the source
will install a new holding tank and a new process heater, which will
maintain the temperature of the process fluid when exiting the reactors
and while in the holding tank. Since the installation of both the
process heater and the holding tank are essential to making the new
product, the installations are technically dependent on each other and
are a single project for NSR purposes.\27 \
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\27\ We note that many projects that are technically dependent
are also economically dependent, since their rates of returns would
likely be reduced considerably if the projects cannot properly
function independently.
---------------------------------------------------------------------------
Projects occurring in unrelated portions of a major stationary
source are generally not technically dependent. Clearly, aggregation
determinations for projects occurring within a process unit are more
difficult to assess. Using the above chemical plant example, consider
that the source wishes to take advantage of the construction outage to
add a second process heater that will utilize the same fuel piping
network as the first process heater but it will serve a variety of
heating needs elsewhere at the source. For determining NSR
applicability, should the source aggregate emissions from the second
process heater with those of the first heater and tank? Even though
these projects will be built concurrently and are dependent on each
other from a construction standpoint, timing of construction alone will
not determine technical dependence. In this case, we would view the
second process heater as not technically essential for manufacturing
the new product. Thus, the project to install the second process heater
is not technically dependent on the installation of the first heater
and holding tank, and we therefore would not aggregate them under the
provisions of this proposed rule.
We request comment on these examples and whether they arrive at
appropriate conclusions of aggregation or disaggregation based on the
technical relationship of the projects. We invite other examples of
technical dependence and independence, and other suggestions for
maximizing the clarity with which to articulate these criteria.
2. What Is Economic Dependence?
Activities are dependent on each other for their economic viability
if the economic revenues or ``Return on Investment'' (ROI) associated
with the project could not be realized without the completion of the
other project. ROI is a measure of the worth in investing and is
sometimes informally referred to as ``payback,'' which is an equivalent
concept but is a more simplistic determination of the time it takes for
savings or revenues generated from a project to equal the cost of the
project. ROI is generally expressed as a percentage linked to a time
frame (e.g., 15 percent over 3 years). In contrast to payback, ROI
takes into account the value of money over time.\28 \
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\28\ We note that, with safety projects, sources often do not
overtly consider economic revenues or ROI. Nevertheless, their
existence has an overarching economic justification and,
consequently, the viability of another activity could be
economically dependent on a safety project.
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Economic dependence is generally evidenced when a particular
project that may indeed be capable of operating technically independent
from other planned projects is nevertheless planned or integrated as
part of a larger project goal and is interrelated to such an extent
that it is not economically viable as a stand alone project because
both (or all) the projects are necessary for the larger project to
achieve the operational level that justifies the investment of the
planned project. While an argument can be made that all projects and
activities at a source are economically linked, since they all
contribute to the company's ``bottom line,'' we are clearly not
proposing such an approach. Our approach would require that a source
treat one project as economically dependent on another if it is no
longer economically viable without the completion of the other
project(s). Economic viability is measured by assessing the ROI or
payback of a project, such that a project is not economically viable if
it does not pay for itself (e.g., yield a positive expected rate of
return) in the absence of another related project.
For example, a pharmaceutical process is proposed to be modified in
order to produce a newly approved drug. The process will generate a
large volume of an unusable and harmful waste. The source could send
the waste offsite for treatment, but the source is located in a remote
area and has determined that transportation to a treatment facility is
not cost-effective. However, a modification to its waste treatment
plant would allow it to cost-effectively treat the waste chemical
onsite and would allow for profitable production of the new product. In
other words, the source would not expect to see a positive rate of
return on its investment without the modification to the waste
treatment plant. Although the two changes are technically capable of
operating independently, since the source could send the waste offsite,
the
[[Page 54247]]
ROI of the project to produce the new drug is clearly dependent on the
modification to the onsite waste treatment plant. Therefore, these two
projects are part of a single, overall project to economically produce
the new drug, and their emissions should be combined for the purposes
of evaluating NSR applicability.
Changes to a unit that are clearly sequenced or conducted in stages
are, in many cases, considered a single project for major NSR
applicability purposes.\29\ For example, an electric utility intends,
through periodic outages, to replace every piece of an entire boiler
island with new and upgraded equipment over a 6-year period. Since it
is clearly possible to have one phase of replacement projects that can
be fully operational without having to immediately follow it with
another phase of replacements, we would not consider the phases to be
inherently technically dependent. However, since the separate phases
are clearly contemplated and planned as a single project, and the
projects are integrated to such an extent that they would not yield a
positive rate of return if only an individual phase is done, all of the
project phases are economically dependent and their associated
emissions should be aggregated for determining NSR applicability.
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\29\ Nothing in this proposal is intended to amend our rules for
applying BACT or LAER to phased construction projects. See 40 CFR
52.21(j)(4) and (r)(2).
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Larger sources, having multiple, independent process lines, often
undertake numerous activities that are unrelated and are not parts of
larger projects. For example, a printing facility may have several
production lines, one of which produces glossy magazines and another of
which prints and folds black and white print newspapers. The two
production lines use different inks, papers, binding materials and
processes. The printing facility undertakes a change at the magazine
line to use a different ink solution that smudges less than its current
ink. The printing facility also, in the same month, modifies the paper
folding mechanism on its newspaper line to allow it to produce more
papers per hour. In this example, while the two activities are
improving the economic viability of the source, the magazine line and
newspaper line are clearly separate entities and have little, if any,
economic (or technical) relationship. Thus, emission increases from the
project at the magazine line should not be aggregated with the project
at the newspaper line.
We request comment on these examples and whether they arrive at
appropriate conclusions of aggregation or disaggregation based on the
economic relationship of the projects. We request other specific
examples of economic dependence and independence, and other suggestions
for maximizing the clarity with which to articulate these criteria.
We recognize that implementation of the proposed aggregation test
for economic viability may not be as straightforward as that of
technical viability. This stems from the fact that the determination of
economic dependence or viability is influenced by a range of factors
and assumptions that are based on, among other things, the
individuality of each source, its local economy and customers, other
projects being contemplated, business cycles, and interest rates. On
the other hand, the technical dependence test is based on a simpler,
more common sense evaluation of the operational relationship between
projects. Clearly, for two identical plants implementing the same set
of projects, we would expect the decision of technical dependence to
likely result in the same outcome, while the decision of economic
dependence could have a range of outcomes depending on the interaction
of the aforementioned factors, the application of various assumptions,
and differing judgments about project funding decisions. EPA is
concerned with this aspect of our proposal and requests comment on
suggestions on providing clarity for these criteria for economic
dependence. We believe an objective, bright-line approach would provide
greater regulatory certainty and efficiency and would obviate the need
for case-by-case review of aggregation determinations by permitting
authorities.
Furthermore, we note that the key consideration in deciding whether
to aggregate projects has always been a question of whether the
projects are dependent. In this proposed rule, we describe two aspects
of dependence (i.e., technical and economic) that have guided our
aggregation decisions. However, as we have already noted, projects that
are technically dependent tend to be also economically dependent.
Considering this close relationship between these two tests, as well as
the potential difficulty in implementing a test based on economic
viability (as described in the above paragraph), we request comment on
whether the economic component of our past policy is needed in making
future aggregation decisions.
3. Who Decides What Activities Should Be Aggregated?
Major NSR is a preconstruction permitting program and so existing
sources are obligated to apply for and receive a permit before
beginning construction of a major modification. Determining whether a
permit is needed necessarily requires a source to make certain
evaluations about the nature of an activity. Thus, when planning a
physical or operational change, the source should always consider the
rules and guidelines provided by EPA, and/or in the applicable SIP, in
determining whether multiple projects should be aggregated.
Nonetheless, the source's determination of the proposed project is
not the final decision; rather, the reviewing authority is responsible
for ensuring that sources in their jurisdiction abide by the applicable
rules and guidance for aggregating projects. This may require the
reviewing authority to gather facts and request specific information
from the source when further scrutiny is warranted. Sources claiming
that emissions increases from particular projects should not be
aggregated must be able to provide their reviewing authority and EPA
information sufficient to answer EPA inquiries.
C. Discussion of Issues Under Proposed Aggregation Approach
The following provides a discussion of the key issues we considered
in codifying our aggregation policy for this proposal. We specifically
solicit comment on these issues as well as any additional alternatives
to be used to determine when two or more activities should be
aggregated for NSR purposes.
1. How Is Timing a Factor in Making Aggregation Determinations?
Under our current aggregation policy, there is no presumption that
projects automatically are or are not aggregated as a result of their
proximity in time. We believe that projects that happen to occur
simultaneously at a source do not necessarily have any inherent
relationship. Certainly, if concurrent projects occur at the same
emissions unit, then there may be a greater sense of interrelationship,
but it still does not provide conclusive evidence that they are
dependent on each other. As previously stated, the technical and
economic viability of a project are the sole objective criteria that a
source and reviewing authority must consider when making an aggregation
determination. Timing of construction scheduling, or time horizons for
economic planning,
[[Page 54248]]
may weigh into a determination of economic or technical dependence, but
timing, in and of itself, is not determinative in deciding whether to
aggregate projects. The reviewing authority could, for example, review
the technical and economic relation to other projects occurring within
a short period of time (e.g., within 18 months) as they review activity
at regulated sources but would need to determine the technical and/or
economic relationship of these projects--not simply their proximity in
time--to make a determination about aggregation.
The EPA solicits comment on considering timing in aggregation
decisions. To what extent is timing relevant to a test of economic and
technical dependence? As an alternative to the policy clarification and
codification proposed above, EPA solicits comments on whether it should
change its approach and include a time-based presumption against
aggregation. Specifically, EPA solicits comments on whether it should
create a presumption in the final rule that projects separated by a
certain number of years, e.g., three, four, or five years, are
independent and not aggregated for NSR purposes. The EPA solicits
comments on whether it should create a rebuttable presumption. If such
a presumption is created, how strong should this presumption be? What
kind of evidence should be required to overcome the presumption? For
example, to overcome the presumption, would the evidence need to show
that the projects were dependent, or would there have to be a showing
that the projects were separated intentionally to circumvent NSR?
Should a presumption work in the opposite direction in favor of
aggregation? How much burden is there on the source and/or reviewing
authority if this rule does not bound the span of time for aggregating
projects? The EPA further solicits comment on the legal and policy
merits of establishing an irrebuttable presumption in the final rule
that projects that are separated by between three and five years are
per se separate and not aggregated. The EPA acknowledges that the
establishment of a presumption, rebuttable or irrebuttable, would go
beyond the codification of the status quo and would apply prospectively
only. Furthermore, before establishing such a presumption, we would
attempt to analyze its environmental effects on the NSR program. The
possibility of such an analysis, and its completeness, would be highly
dependent on whether appropriate data exist that describe past
aggregation and non-aggregation decisions, along with timing data
regarding the affected activities. If an environmental analysis is
conducted, we would notify the public by publishing a supplemental
notice of data availability in the Federal Register and seek comment on
the various aspects of the analysis and its preliminary conclusions.
2. Has EPA Evaluated the Impacts of the Aggregation Rule on the
Environment?
For the proposed aggregation provisions, we conclude that there
would be no net environmental impact associated with the changes. This
is because, as discussed in detail elsewhere in this preamble, this
proposal represents a clarification of, not a change to, our
aggregation policy. This proposed rule would codify objective criteria
when emissions increases from multiple projects at a source must be
aggregated for NSR applicability. As such, we have concluded that the
aggregation provisions of this proposed rule will have no environmental
impact.
3. Is There a Need for States To Make Revisions to Their State
Implementation Plans?
Once we finalize our rule revisions for aggregation, we intend to
encourage States to incorporate them for the sake of consistency and
clarity, and to make their SIPs consistent with the proposed rule
amendments. This would be a relatively easy task given that SIP changes
will be required for the other two parts of this rule proposal at that
same time. We believe this approach would be especially helpful since
our existing aggregation policy was never formally issued in the past.
However, we believe that, since these proposed provisions would simply
codify our existing aggregation policy, SIP changes would not be
required in order to implement them. We are specifically seeking
comment on the need for SIP revisions or any viable alternatives for
implementing the changes for these proposed aggregation provisions.
V. Project Netting
A. Background
As described briefly in section III of this preamble, a ``major
modification'' requires both a significant emissions increase of a
regulated NSR pollutant and a significant net emissions increase of
that pollutant from the major stationary source. In determining whether
an activity is a major modification, the 2002 NSR rules (67 FR 80186)
focus first on whether a physical or operational change will occur.\30\
Once the scope of the project has been identified, including
aggregation of related activities or projects, if applicable, the
source must then determine whether the project, as a whole, will result
in a significant emissions increase at the affected emissions units. If
a significant emissions increase will result at the emissions units
involved in the project, then a source-wide emissions ``netting''
analysis is required to determine if major NSR applies. ``Source-wide
netting'' or ``contemporaneous netting'' refers to the process of
considering certain previous and prospective emissions changes \31\ at
an existing major source to determine if a net emissions increase of a
pollutant will result from a proposed project. If a net emissions
increase will result at a source, major NSR applies to each pollutant's
emissions for which the net increase is significant. See 40 CFR
52.21(b)(3).
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\30\ Routine maintenance, repair and replacement and certain
other changes are excluded by regulation from the definition of
physical or operational change, per 40 CFR 52.21(b)(2)(iii).
\31\ Includes all increases and decreases, anywhere at the
source, that are contemporaneous and creditable, per 40 CFR
52.21(b)(3)(i)(b).
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The initial inquiry as to whether the project, standing alone, will
result in an increase in actual emissions is calculated by determining
the emissions increase from the particular emissions units that are
``changed'' or added and any other emissions increases resulting from
the proposed physical change or change in method of operation (e.g.,
debottlenecked units). The EPA recognizes that in the past some sources
and permitting authorities have counted decreases in emissions at the
individual units involved in the project when determining an overall
project emissions increase (i.e., Step 1 of the NSR test), while some
have not. In other words, some States allowed sources to ``project
net'' and other States only allowed project decreases to be considered
when netting on a source-wide basis (i.e., in Step 2 of the NSR test).
In past determinations, EPA has stated that only the increases
resulting from the project are considered in determining whether a
significant emissions increase has occurred in Step 1.
B. Overview of This Proposed Action
We propose to revise and change the current rules with respect to
projects that involve both increases and decreases in emissions. We are
concerned with inconsistent implementation of our past policy to
[[Page 54249]]
only consider increases in Step 1, and we frequently receive questions
related to our policy on project netting.
Our 2002 rules, in 40 CFR 52.21(a)(2)(iv)(b), provide that the
procedure for calculating a significant emissions increase depends on
the type of emissions units involved in the project. For example, for
projects that only involve existing units, 40 CFR 52.21(a)(2)(iv)(c)
provides that ``[a] significant emissions increase of a regulated NSR
pollutant is projected to occur if the sum of the difference between
the projected actual emissions * * * and the baseline actual emissions
* * * for each existing emissions unit, equals or exceeds the
significant amount for that pollutant * * *'' [emphasis added]. Use of
the phrase ``sum of the difference'' between projected and baseline
emissions indicates that one must look at the difference between the
projection and the baseline. That difference may either be a positive
number (representing a projected increase) or a negative number
(representing a projected decrease). In either case, the values must be
taken into consideration in determining the overall increase, or
decrease, in emissions resulting from the project.
When there are multiple types of emission units, the impact of the
project is determined by 40 CFR 52.21(a)(2)(i)(f), titled ``Hybrid test
for projects that involve multiple types of emissions units.'' However,
in this case, the phrase ``sum of the emissions increases for each
emissions unit'' is used, which challenges whether an emissions
increase at an individual emissions unit can be a negative number.
Because we intend for Step 1 of the NSR applicability test to represent
the true environmental impact of a project on all involved emissions
units, and the current rules reference 40 CFR 52.21(a)(2)(iv)(c) which
allows for project netting, it is reasonable to conclude that a source
can perform project netting for hybrid units as well. The current rule,
however, would not allow a source to include reductions from units that
are part of the project until Step 2 of the calculation. Thus, we
propose that all emissions changes (i.e., both increases and decreases)
that occur within the scope of a project get counted in Step 1 of the
NSR applicability test.
The net emissions from the proposed project are the sum of all
proposed creditable emissions increases and decreases resulting from
the project. The following are the steps for determining the emissions
from a project net:
Determine the increases and decreases that are to be used
in the project net by applying the appropriate emissions test for all
units involved in a proposed project. Increases and decreases must be
quantified using the procedures in 40 CFR 52.21(a)(2)(iv)(a) through
(d) and (f).
Decreases must be enforceable as a practical matter, or
there must be another procedure that will ensure the decrease actually
occurs and is maintained, and are subject to all the requirements of 40
CFR 52.21(b)(3).
Emission increases and decreases used in the project
netting analysis cannot be used again, or double-counted, in the
source-wide netting analysis.
We believe that it is sound policy to revise our rules so that
projects that have both emissions increases and decreases can consider
both the positive and negative values at affected emissions units when
determining whether a significant emissions increase results from the
project.
While the contemporaneous netting has proven to be a sometimes
difficult and controversial aspect of the major NSR program, we believe
that the project netting calculations are more straightforward. The
resulting program will allow you to receive credit for emission
reductions that are achieved as part of an overall project, without
introducing complexity into the program.
While it is conceivable that fewer projects would trigger major NSR
as a result of allowing for project netting in Step 1 of the NSR
applicability test, we do not have enough information to quantitatively
analyze if an emissions increase will result from the proposed rule
change. However, we have performed a qualitative environmental analysis
of the proposed change. Since the rule change would merely allow
emissions decrease credits from the project to be used in Step 1 rather
than Step 2 of the test, we expect that most sources that would take
advantage of project netting to avoid triggering major NSR would also
net out of review under the current approach that only allows for
netting in Step 2. In the few cases where allowing for project netting
could theoretically determine whether a project triggers major NSR, it
is possible, and perhaps very likely, that the owner or operator of the
source would choose to forego the project simply to avoid the expense
and time necessary with major NSR. Consequently, we expect that most
sources will be unaffected by this change, and of those that are
affected, the permit review will not result in further emission
reductions. For these reasons, we believe the environmental impact of
allowing for project netting will be negligible.
We seek comment and data on the impact of allowing project netting.
Specifically, do you believe that project netting can improve the
implementation of the NSR program? If so, please provide detailed
examples. What is the anticipated environmental impact from allowing
project netting? We also are proposing rule changes to address project
netting and request comment on that language.
VI. Statutory and Executive Order Reviews
A. Executive Order 12866--Regulatory Planning and Review
Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993),
this action is a ``significant regulatory action'' because it raises
policy issues arising from the President's priorities. Accordingly, EPA
submitted this action to OMB for review under EO 12866 and any changes
made in response to OMB recommendations have been documented in the
docket for this action.
B. Paperwork Reduction Act
The information collection requirements in the proposed amendments
have been submitted for approval to OMB under the Paperwork Reduction
Act, 44 U.S.C. 3501, et seq. The Information Collection Request (ICR)
document prepared by us has been assigned OMB Control Number 2060-0003
(EPA ICR No. 1230.16).
The first 3 years following promulgation of this rulemaking will
have a limited effect on sources, since it will take several years for
reviewing authorities to modify their SIPs and have them approved by
EPA. During this period, only federally controlled areas will contain
sources affected by this rule. During the period covered by this ICR
revision, we estimate this rulemaking will produce a source burden
decrease of 1,416 hours per year and a cost decrease of $212,740 per
year. For reviewing the 112 reviewing authorities, we estimate that
this rulemaking will produce a burden increase of 366 hours per year
and cost increase of $16,320 per year (or about $146 per entity per
year).
Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing
[[Page 54250]]
and providing information; adjust the existing ways to comply with any
previously applicable instructions and requirements; train personnel to
be able to respond to a collection of information; search data sources;
complete and review the collection of information; and transmit or
otherwise disclose the information.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
rules are listed in 40 CFR part 9 and 48 CFR chapter 15. To comment on
the Agency's need for this information, the accuracy of the provided
burden estimates, and any suggested methods for minimizing respondent
burden, including the use of automated collection techniques, EPA has
established a public docket for this rule, which includes this ICR,
under Docket ID number EPA-HQ-OAR-2003-0160. Submit any comments
related to the ICR for this proposed rule to EPA and OMB. See ADDRESSES
section at the beginning of this notice for where to submit comments to
EPA. Send comments to OMB at the Office of Information and Regulatory
Affairs, Office of Management and Budget, 725, 17th Street, NW.,
Washington, DC 20503, Attention: Desk Office for EPA. Since OMB is
required to make a decision concerning the ICR between 30 and 60 days
after September 14, 2006, a comment to OMB is best assured of having
its full effect if OMB receives it by October 16, 2006. The final rule
will respond to any OMB or public comments on the information
collection requirements contained in this proposal.
C. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (RFA) generally requires an agency
to prepare a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements under the Administrative
Procedure Act or any other statute unless the Agency certifies that the
rule will not have a significant economic impact on a substantial
number of small entities. Small entities include small businesses,
small organizations, and small governmental jurisdictions.
For purposes of assessing the impacts of this proposed action on
small entities, a small entity is defined as: (1) A small business as
defined by the Small Business Administration's (SBA) regulations at 13
CFR 121.201; (2) a small governmental jurisdiction that is a government
of a city, county, town, school district, or special district with a
population of less than 50,000; and (3) a small organization that is
any not-for-profit enterprise which is independently owned and operated
and is not dominant in its field.
After considering the economic impacts of this proposed action on
small entities, I certify that this action will not have a significant
economic impact on a substantial number of small entities. This
proposed rule will not impose any requirements on small entities. We
continue to be interested in the potential impacts of the proposed rule
on small entities and welcome comments on issues related to such
impacts.
D. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
1 year. Before promulgating an EPA rule for which a written statement
is needed, section 205 of the UMRA generally requires EPA to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective or least burdensome alternative
that achieves the objectives of the rule. The provisions of section 205
do not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective or least burdensome alternative if the
Administrator publishes with the final rule an explanation as to why
that alternative was not adopted. Before EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, it must have developed under
section 203 of the UMRA a small government agency plan.
The plan must provide for notifying potentially affected small
governments, enabling officials of affected small governments to have
meaningful and timely input in the development of EPA regulatory
proposals with significant Federal intergovernmental mandates, and
informing, educating, and advising small governments on compliance with
the regulatory requirements. This proposed rule contains no Federal
mandates (under the regulatory provisions of Title II of the UMRA) for
State, local, or tribal governments or the private sector.
Thus, this proposed rule is not subject to the requirements of
sections 202 and 205 of the UMRA.
E. Executive Order 13132--Federalism
Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' is defined in the
Executive Order to include regulations that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
This proposal rule does not have federalism implications. It will
not have substantial direct effects on the States, on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government,
as specified in Executive Order 13175. Thus, Executive Order 13175 does
not apply to this action.
In the spirit of Executive Order 13132, and consistent with EPA
policy to promote communications between EPA and State and local
governments, EPA is soliciting comment on this proposal from State and
local officials.
F. Executive Order 13175--Consultation and Coordination With Indian
Tribal Governments
Executive Order 13175, entitled ``Consultation and Coordination
With Indian Tribal Governments'' (65 FR 13175, November 9, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by tribal officials in the development of regulatory
policies that have tribal implications.'' This proposed rule does not
have tribal implications, as specified in Executive Order 13175. There
are no tribal authorities currently issuing major NSR and title V
permits. Thus, Executive Order 13175 does not apply to this rule.
Although Executive Order 13175 does not apply to this proposed
rule, EPA specifically solicits comment on this proposed rule from
tribal officials.
G. Executive Order 13045--Protection of Children From Environmental
Health Risks and Safety Risks
Executive Order 13045, entitled ``Protection of Children from
[[Page 54251]]
Environmental Health Risks and Safety Risks'' (62 FR 19885, April 23,
1997), applies to any rule that: (1) Is determined to be ``economically
significant'' as defined under Executive Order 12866; and (2) concerns
an environmental health or safety risk that EPA has reason to believe
may have a disproportionate effect on children. If the regulatory
action meets both criteria, the Agency must evaluate the environmental
health or safety effects of the planned rule on children, and explain
why the planned regulation is preferable to other potentially effective
and reasonably feasible alternatives considered by the Agency.
This proposed action is not subject to the Executive Order because
it is not economically significant as defined in Executive Order 12866,
and because the Agency does not have reason to believe the
environmental health or safety risks addressed by this action present a
disproportionate risk to children.
H. Executive Order 13211--Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
This proposed action is not a ``significant energy action'' as
defined in Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR
28355, May 22, 2001) because it is not likely to have a significant
adverse effect on the supply, distribution, or use of energy.
I. National Technology Transfer and Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272
note), directs EPA to use voluntary consensus standards in its
regulatory activities unless to do so would be inconsistent with
applicable law or otherwise impractical.
Voluntary consensus standards are technical standards (for example,
materials specifications, test methods, sampling procedures, and
business practices) that are developed or adopted by voluntary
consensus standards bodies. The NTTAA directs EPA to provide Congress,
through OMB, explanations when the Agency decides not to use available
and applicable voluntary consensus standards.
This proposed action does not involve technical standards.
Therefore, EPA did not consider the use of any voluntary consensus
standards.
VII. Statutory Authority
The statutory authority for this action is provided by sections
307(d)(7)(B), 101, 111, 114, 116, and 301 of the CAA as amended (42
U.S.C. 7401, 7411, 7414, 7416, and 7601). This notice is also subject
to section 307(d) of the CAA (42 U.S.C. 7407(d)).
List of Subjects
40 CFR Part 51
Environmental protection, Administrative practice and procedure,
Air pollution control, Baseline emissions, Intergovernmental relations,
Netting, Major modifications, Reporting and recordkeeping requirements.
40 CFR Part 52
Environmental protection, Administrative practice and procedure,
Air pollution control, Baseline emissions, Intergovernmental relations,
Netting, Major modifications, Reporting and recordkeeping requirements.
Dated: September 8, 2006.
Stephen L. Johnson,
Administrator.
For the reasons set out in the preamble, title 40, chapter I of the
Code of Federal Regulations is proposed to be amended as set forth
below.
PART 51--[AMENDED]
1. The authority citation for part 51 continues to read as follows:
Authority: 23 U.S.C. 101; 42 U.S.C. 7401--7671 q.
Subpart I--[Amended]
2. Section 51.165 is amended:
a. By adding paragraph (a)(1)(xxviii)(B)(5);
b. By revising paragraph (a)(1)(xxxix);
c. By revising paragraph (a)(2)(ii)(F); and
d. By adding paragraph (a)(2)(ii)(G).
The additions and revisions read as follows:
Sec. 51.165 Permit requirements.
(a) * * *
(1) * * *
(xxviii) * * *
(B) * * *
(5) For purposes of paragraph (a)(1)(xxviii)(B)(3) of this section,
an emissions increase results from a project if, before the project,
the emissions unit was legally incapable of operating at the post-
change emissions rate without violating a legally and practically
enforceable term or condition of any previously issued air quality
permit.
* * * * *
(xxxix) Project means a physical change in, or change in the method
of operation of, an existing major stationary source.
(A) Projects occurring at the same major stationary source that are
dependent on each other to be economically or technically viable are
considered a single project.
(B) For purposes of determining whether a project results in a
significant emissions increase under paragraph (a)(1)(xxvii) of this
section, include the emissions increases from:
(1) Any new emissions unit;
(2) Any emissions unit that undergoes a physical change in or
change in the method of operation; and
(3) Any emissions unit that does not undergo a physical change in
or change in the method of operation but whose emissions result from
the physical change in or change in the method of operation.
(4) For purposes of paragraph (a)(1)(xxxix)(B)(3) of this section,
emissions of a specific pollutant at an emissions unit result from the
project according to paragraph (a)(1)(xxviii)(B)(5) of this section.
* * * * *
(2) * * *
(ii) * * *
(F) Hybrid test for projects that involve multiple types of
emissions units. A significant emissions increase of a regulated NSR
pollutant is projected to occur if the sum of the difference between
the projected actual emissions and the baseline actual emissions for
each emissions unit, using the method specified in paragraphs
(a)(2)(ii)(C) through (D) of this section as applicable to each type of
emissions unit, equals or exceeds the significant amount for that
pollutant (as defined in paragraph (a)(1)(x) of this section). For
example, if a project involves both an existing emissions unit and a
new emissions unit, the projected increase is determined by summing the
values determined using the method specified in paragraph (a)(2)(iv)(C)
of this section for the existing unit and the method specified in
paragraph (a)(2)(iv)(D) of this section for the new unit.
(G) Project netting. (1) Emissions decreases resulting from a
project shall be calculated using the procedures contained in
paragraphs (a)(2)(iv)(C), (D), and (F) of this section.
(2) Decreases must be creditable according to all of the
requirements of paragraph (a)(1)(vi) of this section, or otherwise
enforceable as a practical matter.
(3) The same emissions decrease cannot be used in both project
netting and contemporaneous netting.
* * * * *
[[Page 54252]]
3. Section 51.166 is amended:
a. By revising paragraph (a)(7)(iv)(f);
b. By adding paragraph (a)(7)(iv)(g);
c. By adding paragraph (b)(40)(ii)(e); and
d. By revising paragraph (b)(51).
The revisions and additions read as follows:
Sec. 51.166 Prevention of significant deterioration of air quality.
(a) * * *
(7) * * *
(iv) * * *
(f) Hybrid test for projects that involve multiple types of
emissions units. A significant emissions increase of a regulated NSR
pollutant is projected to occur if the sum of the difference between
the projected actual emissions and the baseline actual emissions for
each emissions unit, using the method specified in paragraphs
(a)(7)(iv)(c) through (d) of this section as applicable to each type of
emissions unit, equals or exceeds the significant amount for that
pollutant (as defined in paragraph (b)(23) of this section). For
example, if a project involves both an existing emissions unit and a
new emissions unit, the projected increase is determined by summing the
values determined using the method specified in paragraph (a)(7)(iv)(c)
of this section for the existing unit and the method specified in
paragraph (a)(7)(iv)(d) of this section for the new unit.
(g) Project netting. (1) Emissions decreases resulting from a
project shall be calculated using the procedures contained in
paragraphs (a)(7)(iv)(c), (d), and (f) of this section.
(2) Decreases must be creditable according to all of the
requirements of paragraph (b)(3) of this section, or otherwise
enforceable as a practical matter.
(3) The same emissions decrease cannot be used in both project
netting and contemporaneous netting.
* * * * *
(b) * * *
(40) * * *
(ii) * * *
(e) For purposes of paragraph (b)(40)(ii)(c) of this section, an
emissions increase results from a project if, before the project, the
emissions unit was legally incapable of operating at the post-change
emissions rate without violating a legally and practically enforceable
term or condition of any previously issued air quality permit.
* * * * *
(51) Project means a physical change in, or change in the method of
operation of, an existing major stationary source.
(i) Projects occurring at the same major stationary source that are
dependent on each other to be economically or technically viable are
considered a single project.
(ii) For purposes of determining whether a project results in a
significant emissions increase under paragraph (b)(39) of this section,
include the emissions increases from:
(a) Any new emissions unit;
(b) Any emissions unit that undergoes a physical change in or
change in the method of operation; and
(c) Any emissions unit that does not undergo a physical change in
or change in the method of operation but whose emissions result from
the physical change in or change in the method of operation.
(d) For purposes of paragraph (b)(51)(ii)(c) of this section,
emissions of a specific pollutant at an emissions unit result from the
project according to paragraph (b)(40)(ii)(e) of this section.
* * * * *
PART 52--[AMENDED]
4. The authority citation for part 52 continues to read as follows:
Authority: 42 U.S.C. 7401, et seq.
Subpart A--[Amended]
5. Section 52.21 is amended:
a. By revising paragraph (a)(2)(iv)(f);
b. By adding paragraph (a)(2)(iv)(g);
c. By adding paragraph (b)(41)(ii)(e); and
d. By revising paragraph (b)(52).
The revisions and additions read as follows:
Sec. 52.21 Prevention of significant deterioration of air quality.
(a) * * *
(2) * * *
(iv) * * *
(f) Hybrid test for projects that involve multiple types of
emissions units. A significant emissions increase of a regulated NSR
pollutant is projected to occur if the sum of the difference between
the projected actual emissions and the baseline actual emissions for
each emissions unit, using the method specified in paragraphs
(a)(2)(iv)(c) through (d) of this section as applicable to each type of
emissions unit, equals or exceeds the significant amount for that
pollutant (as defined in paragraph (b)(23) of this section). For
example, if a project involves both an existing emissions unit and a
new emissions unit, the projected increase is determined by summing the
values determined using the method specified in paragraph (a)(2)(iv)(c)
of this section for the existing unit and the method specified in
paragraph (a)(2)(iv)(d) of this section for the new unit.
(g) Project netting. (1) Emissions decreases resulting from a
project shall be calculated using the procedures contained in
paragraphs (a)(2)(iv)(c), (d), and (f) of this section.
(2) Decreases must be creditable according to all of the
requirements of paragraph (b)(3) of this section, or otherwise
enforceable as a practical matter.
(3) The same emissions decrease cannot be used in both project
netting and contemporaneous netting.
* * * * *
(b) * * *
(41) * * *
(ii) * * *
(e) For purposes of paragraph (b)(41)(ii)(c) of this section, an
emissions increase results from a project if, before the project, the
emissions unit was legally incapable of operating at the post-change
emissions rate without violating a legally and practically enforceable
term or condition of any previously issued air quality permit.
* * * * *
(52) Project means a physical change in, or change in the method of
operation of, an existing major stationary source.
(i) Projects occurring at the same major stationary source that are
dependent on each other to be economically or technically viable are
considered a single project.
(ii) For purposes of determining whether a project results in a
significant emissions increase under paragraph (b)(40) of this section,
include the emissions increases from:
(a) Any new emissions unit;
(b) Any emissions unit that undergoes a physical change in or
change in the method of operation; and
(c) Any emissions unit that does not undergo a physical change in
or change in the method of operation but whose emissions result from
the physical change in or change in the method of operation.
(d) For purposes of paragraph (b)(52)(ii)(c) of this section,
emissions of a specific pollutant at an emissions unit result from the
project according to paragraph (b)(41)(ii)(e) of this section.
* * * * *
[FR Doc. E6-15248 Filed 9-13-06; 8:45 am]
BILLING CODE 6560-50-P