[Federal Register: January 15, 2009 (Volume 74, Number 10)]
[Rules and Regulations]
[Page 2376-2383]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15ja09-16]
=======================================================================
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 51 and 52
[EPA-HQ-OAR-2003-0064, FRL-8762-8]
RIN 2060-AL75
Prevention of Significant Deterioration (PSD) and Nonattainment
New Source Review (NSR): Aggregation and Project Netting
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final action.
-----------------------------------------------------------------------
SUMMARY: The EPA is taking final action on one part of the September
14, 2006 Federal Register proposed rule for the New Source Review (NSR)
program. The purpose of the proposed rule was to clarify for sources
and permitting authorities three aspects of the NSR program--
aggregation, debottlenecking, and project netting--that pertain to how
to determine what emissions increases and decreases to consider in
determining major NSR applicability for modified sources. This final
action addresses only aggregation.
This action retains the current rule text for aggregation and
interprets that rule text to mean that sources and permitting
authorities should combine emissions when activities are
``substantially related.'' It also adopts a rebuttable presumption that
activities at a plant can be presumed not to be substantially related
if they occur three or more years apart.
With respect to the other two components of the originally proposed
rule, the EPA is taking no action on the proposed rule for project
netting and, by way of a separate document published in the ``Proposed
Rules'' section of this Federal Register, is withdrawing the proposed
provisions for debottlenecking.
DATES: This final rule is effective on February 17, 2009.
FOR FURTHER INFORMATION CONTACT: Mr. David Svendsgaard, Air Quality
Policy Division, Office of Air Quality Planning and Standards (C504-
03), Environmental Protection Agency, Research Triangle Park, NC 27711,
telephone number: (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 potentially affected by this action include sources in all
industry groups. The majority of sources potentially affected are
expected to be in the following groups.
----------------------------------------------------------------------------------------------------------------
Industry group SIC \a\ NAICS \b\
----------------------------------------------------------------------------------------------------------------
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.
Mining.................................. 211, 212, 213........................ 21.
Agriculture, Fishing and Hunting........ 111, 112, 113, 115................... 11.
----------------------------------------------------------------------------------------------------------------
\a\ Standard Industrial Classification.
\b\ North American Industry Classification System.
Entities potentially affected by the subject rule for this proposed
action also include state, local, and tribal governments.
B. 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. How is this preamble organized?
II. Background
III. Aggregation
A. Overview
B. EPA's Policy on Aggregation
C. Retention of Current Rule Text
D. Environmental Impact
IV. Project Netting
V. 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 and Safety Risks
H. Executive Order 13211: Actions That Significantly Affect
Energy Supply, Distribution, or Use
I. National Technology Transfer and Advancement Act
J. Executive Order 12899: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
K. Congressional Review Act
L. Judicial Review
VI. Statutory Authority
II. Background
The reader is referred to 67 FR 80187-88 (December 31, 2002) for an
overview of the NSR program of the Clean Air Act (CAA) and to 71 FR
54237 (September 14, 2006) for background on this rulemaking.
[[Page 2377]]
III. Aggregation
A. Overview
1. What is ``Aggregation''?
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 change alone are significant, followed by a calculation of the
change'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, nominally-separate but related, physical changes or
changes in the method of operation into one physical or operational
change, or ``project.'' The emission increases of the nominally-
separate changes are combined for purposes of determining whether a
significant emissions increase has occurred from the project. See, for
example, 40 CFR 52.21(b)(40). In addition, when undertaking multiple
nominally-separate changes, the source must consider whether NSR
applicability should be determined collectively or whether the
emissions from each of these activities should separately undergo a
Step 1 analysis.\1\
---------------------------------------------------------------------------
\1\ Even if activities 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.
---------------------------------------------------------------------------
Neither the CAA nor current EPA rules specifically address the
basis upon which to aggregate nominally-separate changes for the
purpose of making NSR applicability determinations. Instead, we \2\
have developed our aggregation policy over time through statutory and
regulatory interpretation and applicability determinations. Our
aggregation policy aims to ensure the proper permitting of
modifications that involve multiple physical and/or operational
changes. Thus, multiple, nominally-separate activities that are
sufficiently interrelated should be grouped together and considered a
single project for the purpose of Step 1 in the NSR applicability test.
When these sorts of activities are evaluated separately, they may
circumvent the purpose of the NSR program, which is designed to address
emissions from projects that have a significant net emissions increase.
---------------------------------------------------------------------------
\2\ In this notice, the terms ``we,'' ``us,'' and ``our'' refer
to the EPA.
---------------------------------------------------------------------------
2. This Action
On September 14, 2006 (71 FR 54235), we proposed to revise the NSR
regulations in 40 CFR parts 51 and 52 to state that a source must
aggregate emissions from nominally-separate changes that are dependent
on one another to be technically or economically viable. More
specifically, we proposed that if a source or reviewing authority
determines that nominally-separate changes are dependent on each other
for their technical or economic viability, the source and reviewing
authority must consider these activities to be a single project and
must aggregate all of the emissions increases to properly evaluate
major NSR applicability. In our notice's preamble, we offered
definitions for the terms ``economic dependence'' and ``technical
dependence,'' and we discussed example scenarios to describe how the
test should work. We took comment on all aspects of the proposed
regulatory clarification for NSR Aggregation.
As we described in our 2006 proposal preamble, our aggregation
policy has never been spelled out in detail in a single letter or
memorandum. We have consistently interpreted the CAA to require the
grouping of related activities when determining which emissions changes
result from a physical or operational change at a facility. At issue is
what constitutes a ``project'' for purposes of determining NSR
applicability under the CAA. Proper characterization of this term is
important for regulated entities to understand their permitting
obligations.
Over the years, 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. The letters and
memoranda resulting from these inquiries have been, until now, the sole
resource for permitting authorities and sources to rely upon in making
aggregation decisions. However, the decision to aggregate or
disaggregate activities is highly case-dependent, such that letters and
memoranda that opine on whether to aggregate a particular set of
activities at one facility are not necessarily transferrable to a
decision to aggregate a similar set of activities but with a slightly
different set of circumstances at another plant. Our 2006 proposal
aimed to address concerns about applying our policy in such instances.
This Federal Register notice takes final action on the regulations
concerning NSR aggregation. More specifically, we are finalizing an
interpretation of the existing rule language with respect to our policy
on aggregation. This interpretation is intended to describe how to
approach aggregation under the existing NSR rules. However, elements of
this interpretation were proposed for this first time in this action,
and are being finalized as a definitive agency position for the first
time in this notice. As such, this interpretation will only apply
prospectively. As explained below, we are not adopting the amended
regulatory text in 40 CFR parts 51 and 52 that we proposed. Through
this notice we retain the current relevant regulatory text for
``project'' and provide our new interpretation of that text regarding
when emissions at a source should be aggregated into a single project
for purposes of determining major NSR applicability.
In this preamble, we enumerate several principles of our
aggregation policy that apply to the existing rule text. We explain
that activities should be aggregated for the purposes of the NSR
applicability determination only in cases where there is a substantial
relationship among the activities, either from a technical or an
economic standpoint. The determination of this relationship is based on
the relevant case-specific facts and circumstances; as such, sources
and permitting authorities should be careful to not over apply the
examples in this final notice to cases with slightly different sets of
facts and circumstances. In addition to the discussion of the technical
or economic relationship, this notice also reiterates the role of
timing in making aggregation decisions and establishes for the first
time a rebuttable timing-based presumption that permitting authorities
may rely upon to support a determination for nonaggregation.
This notice serves as final agency action with respect to our
September 2006 proposed criteria for NSR aggregation. This action
should enable the aggregation policy to be applied consistently by both
those considering the applicability of NSR to potential modifications
and those conducting an after-the-fact inquiry regarding whether or not
NSR was circumvented through the failure to aggregate dependent
physical or operational changes at a source.
B. EPA's Policy on Aggregation
1. Substantial Relationship
We received many comments on our September 2006 proposed rule for
aggregation. Comments from all stakeholder groups raised a variety of
concerns about our attempts to define
[[Page 2378]]
terms used in the proposed rule and preamble. We sought comment on how
to best define the terms ``technical dependence'' and ``economic
dependence.'' Our intent in proposing to add these terms to our
regulations was to frame them in a manner that could be universally
applied and reduce the subjective nature of the aggregation test. We
also requested comments on specific examples of dependence and
independence, and asked for other suggestions for maximizing the
clarity with which to articulate these criteria.
Many commenters, representing a variety of stakeholder groups,
expressed that our definitions and examples were too prescriptive and
would lead to increased confusion as compared to the existing policy
being applied. They raised specific concerns that our hypothetical
examples would restrict one's ability to handle cases that are similar
but that have small nuances, and could lead to aggregating physical or
operational changes that are truly independent or disaggregating
changes that are truly dependent. Commenters also asserted that
determining economic dependence would be highly site- and project-
specific, so what may prove to be sufficiently related from an economic
standpoint at one plant may not have the same level of interconnection
at another plant. For example, one commenter stated ``* * * it is
virtually impossible to craft a meaningful, easy-to-apply test for
economic dependence. EPA's proposed criteria for economic dependence
may work in some situations * * * but it will not work in the more
common situations, where the processes at a source are at least
somewhat interrelated.'' \3\ Commenters also raised similar concerns
with our efforts to define technical dependence, but to a lesser
degree.
---------------------------------------------------------------------------
\3\ Douglas J. Fulle, Oglethorpe Power Corporation, EPA-HQ-OAR-
2003-0064-0050.1.
---------------------------------------------------------------------------
We agree with many of the commenters that the proposed definitions
for economic and technical dependence/viability were overly
prescriptive, and we also agree that the decision to aggregate
activities is highly case-specific and requires consideration of
factors that are difficult to fully characterize with a bright-line
test. We recognize the challenges to precisely describe these terms,
particularly when the definitions must apply to the myriad cases that
permitting authorities encounter. We have concluded, upon considering
the comments, that the terms ``dependence'' and ``viability,'' though
used by EPA in past guidance memoranda, should not be adopted as
regulatory ``bright lines'' regarding whether to aggregate activities
under the NSR program. Although we are not adopting regulatory
language, we do note that whether a physical or operational change is
dependent on another for its viability is still a relevant factor in
assessing whether the changes should be aggregated. Technical or
economic dependence may be evidence of a substantial relationship
between changes, though projects may also be substantially related
where there is not a strict dependence of one on the other.
Activities at a source should be aggregated when they are
substantially related. To be ``substantially related,'' there should be
an apparent interconnection--either technically or economically--
between the physical and/or operational changes, or a complementary
relationship whereby a change at a plant may exist and operate
independently, however its benefit is significantly reduced without the
other activity. Two examples offered in our 2006 proposal at 71 FR
54246 present clear cases of a ``substantial relationship'' between two
physical or operational changes: (1) The installation of burners on a
utility boiler and a required modification to the air handling system
in order to avoid severe impairment when operating the new burners; and
(2) the installation of a process heater to make a new product and the
installation of a holding tank necessary to hold the new product after
its manufacture.
When there is no technical or economic relationship between
activities or where the relationship is not substantial, their
emissions need not be aggregated for NSR purposes. For example, in most
cases, activities occurring in unrelated portions of a major stationary
source (e.g., a plant that makes two separate products and has no
equipment shared among the two processing lines) will not be
substantially related. The test of a substantial relationship centers
around the interrelationship and interdependence of the activities,
such that substantially related activities are likely to be jointly
planned (i.e., part of the same capital improvement project or
engineering study), and occur close in time and at components that are
functionally interconnected. We note that these factors are not
necessarily determinative of a substantial relationship, but are merely
indicators that may suggest that two or more activities are likely to
be substantially related and, therefore, candidates for aggregation.
For example, at an automotive assembly facility, the mere fact that
the various operations at the plant ultimately produce a car does not
necessarily mean that a physical or operational change performed at the
facility's boiler house is always ``substantially related'' to any
change at the automotive coating operation. Some changes to an
industrial boiler may not be substantially related to a particular
change at a coating line, since a boiler often serves many other
operations at an automotive plant. For instance, if higher pressure
steam is needed to drive a steam pump elsewhere within the plant, the
boiler island could be retrofitted with an additional heat exchanger to
superheat the steam. Even though the boiler may provide power or may
heat the make-up air for the coating line enclosures, an expansion at
the coating line would not necessarily have a need for the new higher
pressure steam output, would probably not be related to the steam pump,
and would not necessarily operate more efficiently because of the
higher pressure steam that is required by the steam pump. Absent any
evidence demonstrating a substantial relationship between such a
retrofit at the boiler and the change at the coating line, a permitting
authority need not aggregate emissions from these physical changes. On
the other hand, if an automotive facility installs a new, larger gas-
fired cure oven to handle the increased throughput from the expanded
surface coating operation, then we would expect that a substantial
relationship between the oven and the coating line activities would
exist and these activities' emissions should be aggregated.
Furthermore, simply because a physical or operational change occurs
at the same process unit as a previous change does not automatically
establish a substantial relationship. As a commenter noted, ``[a]lmost
all plant improvements are dependent on another piece of equipment as a
technical matter. For instance, a chemical synthesis operation may
install a new process dryer or a coater may install a new dryer or oven
simply because of processes already present at a facility. The decision
to install the new dryer or oven, however, is separate because of other
factors that could include efficiency or fuel improvements, market
factors or demand for a new product or the original group of products,
or process refinements.'' \4\ We agree with this commenter that,
despite the fact that the changes occur at the same process unit, the
dryer installation could be separate from other
[[Page 2379]]
modifications to the process unit if, as suggested by the comment,
there was not a substantial technical or economic relationship among
the changes. (As noted above, however, a case-specific inquiry is
necessary to confirm this.)
---------------------------------------------------------------------------
\4\ Leslie Sue Ritts, National Environmental Development
Association's Clean Air Project, EPA-HQ-OAR-2003-0064-0066.1.
---------------------------------------------------------------------------
Finally, while examining the technical and economic relationship
among activities has always been central to aggregation decisions, we
note that a portion of one of our past letters addressing a site-
specific scenario may have been applied beyond the specific scenario it
discussed. In a memorandum issued in 1993 related to a research
facility owned by 3M Company in Maplewood, Minnesota \5\ (hereafter
``3M-Maplewood memo''), after describing different factors that could
be considered in deciding whether the source may have circumvented NSR
by not aggregating related research and development activities, we
concluded the determination by stating that modifications at plants
which are expected to modify regularly in response to consumer and
projected production demands or research needs ``cannot be presumed
independent given the plant's overall basic purpose to support a
variety of research and development activities.'' This portion of the
analysis could be taken to posit a presumption that all activities at a
facility are related for NSR purposes if they contribute to the plant's
basic business purpose. This suggestion that all changes consistent
with the basic purpose of the source can and should be aggregated is
inconsistent with the policy we are adopting in this notice that
aggregation should be based on a substantial technical or economic
relationship among the activities. Moreover, we are concerned that it
could be interpreted to imply that almost any activity is related to
any other activity at that source simply because they are both capital
investments and support the company's goal to make a profit. This
action explains that this is not our interpretation of the NSR rules,
and that a source's ``overall basic purpose'' is not a sufficient basis
for determining that activities should be aggregated.
---------------------------------------------------------------------------
\5\ ``Applicability of New Source Review Circumvention Guidance
to 3M-Maplewood, Minnesota'' (U.S. EPA, June 17, 1993).
---------------------------------------------------------------------------
Thus, we affirm that the decision to aggregate nominally-separate
changes hinges on whether they have a substantial relationship, and we
acknowledge the case-specific nature of this assessment, as well as the
multiple considerations that contribute to the assessment. We
understand that this policy stops short of providing the bright line
criteria we sought to provide in our proposal, and we acknowledge there
will continue to be gray areas that sources and permitting authorities
will ultimately have to work through in deciding whether or not to
aggregate a set of changes at a facility. Permitting authorities, as
they have long done, will continue to exercise their best judgment in
determining the technical and economic relationship of activities.
2. Timing of Activities
a. Closely-Timed Activities
Another aspect of our past aggregation policy that has at times
been unclear relates to how activities that are performed close in time
to each other should be handled in making an NSR applicability
assessment. At times, timing of construction has been used, usually in
conjunction with one or more other factors, by some permitting
authorities as a basis for aggregating or disaggregating activities for
NSR applicability. While the relative timing of two or more activities
cannot by itself be used to determine whether they have a technical or
economic relationship, it is nevertheless an objective criterion that
is simpler to apply than assessing the technical and/or economic
interaction of the physical or operational changes. As such, it has
some appeal, and may have even been used in some cases, as a surrogate
for actually establishing a relationship that serves as a basis to
aggregate activities.
We are explaining in this notice that timing, in and of itself, is
not determinative in a decision to aggregate activities. We do not
believe that timing alone should be a basis for aggregation because it
is inconsistent with our policy discussed earlier in this notice that
the appropriate basis for aggregation should be a substantial technical
and economic relationship. Aggregation based on timing alone could, in
some cases, clearly result in aggregation of activities that have no
technical or economic relationship whatsoever. There should be no
presumption that activities automatically should be aggregated as a
result of their proximity in time. Activities that happen to occur
simultaneously at different units or large integrated manufacturing
facilities do not necessarily have a substantial relationship. Even if
they occur over a short period of time, multiple activities should be
treated as a single project for NSR purposes only when a substantial
technical or economic relationship exists among the changes.
Within certain industries, it may be common practice for certain
types of activities to be done separately (though not necessarily at
separate times). A company's decision to do a series of activities at
the same time--e.g., during a conventional scheduled outage,
``turnaround'' or ``annual shutdown''--should not be viewed as evidence
of their technical or economic relatedness. In fact, absent an
evaluation of the technical or economic relationship among the
activities, the only presumption that should be gleaned from the
practice of utilities, refineries, and other types of industry to do
many activities during normally scheduled outages is that it is
efficient and cost-effective to undertake multiple activities at the
same time. Some of these activities will, in fact, be unrelated, but
are done simultaneously simply because it is easier to make these
changes at a time when the source is not operating. These activities
should not be automatically aggregated.
We recognize that there has been some confusion over the
aforementioned 3M-Maplewood memo and how it portrays the use of timing
in making aggregation decisions. While the 3M-Maplewood memo suggested
that activities that are timed within one year or eighteen months of
each other may be related, and it advises authorities to scrutinize
closely-timed minor source permit applications, it did not suggest that
such a scenario should be the sole basis for a decision to aggregate.
It simply reaffirmed our view that multiple changes over a short period
of time ``should be studied'' for treatment as one project. Hence, it
is consistent with this notice.
A state commenter observed ``[i]n certain circumstances timing may
be a relevant consideration, together with technical and economic
factors, but timing is not a conclusive factor as to whether a series
of changes should be aggregated. The staging of a project into multiple
smaller construction activities within a short time period may signal
that further inquiry into a facility's construction activities is
appropriate and under the right circumstances, timing may provide
evidence, along with other factors, that a facility has or is
attempting to circumvent NSR.'' \6\ We agree with this commenter that
knowing the timing between activities is useful solely from a
standpoint of directing resources to further scrutinize activities that
are timed closer together because these changes are generally more apt
to be substantially related as opposed to activities that are separated
by larger
[[Page 2380]]
time frames. In fact, activities that are substantially related are
often so heavily aligned or interconnected that constructing only one
of the activities at a time is technically unsound or illogical.\7\
Therefore, even though activities that occur simultaneously are not to
be presumed ``substantially related,'' it makes sense to look closer at
these activities since close timing may be one--but should not be the
only--indicator of whether a technical or economic relationship exists
and is substantial.
---------------------------------------------------------------------------
\6\ Carl Johnson, New York State Department of Environmental
Conservation, EPA-HQ-OAR-2003-0064-0035.2.
\7\ At the same time, the construction of some projects that are
substantially related may occur at entirely different times, simply
because of funding or other reasons which dictates the projects be
phased.
---------------------------------------------------------------------------
b. Time-Based Presumption for Nonaggregation
In our proposal, we also solicited comment on whether we should
change our aggregation approach and include a time-based presumption
against aggregation. We specifically solicited comments on whether we
should create a presumption in the final rule that changes separated by
a certain number of years, e.g., three, four, or five years, are
independent and not aggregated for NSR purposes. We also solicited
comments on whether we should create a rebuttable or irrebuttable
presumption.
Some commenters thought that creating a timing presumption for
nonaggregation would be beneficial, if properly bounded, since it would
streamline the decision making process and add regulatory certainty.
Others felt that it was unwarranted and would lead to incorrect
results, particularly if it was made to be irrebuttable. Some
commenters stated that if we set a timing upper bound for
nonaggregation, we should also establish a timing lower bound for
automatic aggregation.
In making aggregation decisions, we acknowledge that the
determining factor--i.e. , whether the activities are ``substantially
related''--is not always a straightforward analysis. On the other hand,
the passage of time provides a fairly objective indicator of
nonrelatedness between physical or operational changes. Specifically,
the greater the time period between activities, the less likely that a
deliberate decision was made by the source to split an otherwise
``significant'' activity into two or more smaller, non-major
activities. If there is a large timeframe between the construction and
operation of the activities, it is reasonable to conclude that they
should be treated individually and that the CAA did not expect
activities separated by large periods of time to constitute a single
event when evaluating NSR applicability and control levels.
We believe that if a previous physical or operational change has
operated for a period of three or more years, permitting authorities
may presume that a newly constructed change is not substantially
related to the earlier change. When activities are undertaken three or
more years apart, there is less of a basis that they have a substantial
technical or economic relationship because the activities are typically
part of entirely different planning and capital funding cycles. The
fact that the earlier activities were constructed and operated
independently for such a long a period of time tends to support a
determination that the latter activities are technically and
economically unrelated and independent from the other earlier
constructed activities. Even if activities are related, once three
years have passed, it is difficult to argue that they are substantially
related and constitute a single project. We note that the selection of
a 3-year timeframe is long enough to ensure a reasonable likelihood
that the presumption of independence will be valid, but is short enough
to maintain a useful separation between relevant construction cycles,
consistent with industry practice. For example, in the case of electric
utilities, a commenter explained that companies plan and schedule major
turbine outages every four to five years.\8\
---------------------------------------------------------------------------
\8\ Bridgett K. Ellis, Tennessee Valley Authority, EPA-HQ-OAR-
2003-0064-0088.1.
---------------------------------------------------------------------------
Nevertheless, we understand that there may be exceptions to the
more typical set of circumstances. Therefore, for our 3-year
presumptive timeframe that we are adopting, we are making it
rebuttable, such that an alternative decision can be made if conditions
warrant and if the changes are, in fact, substantially related. In
order to rebut the presumption of nonaggregation, there should be
evidence that demonstrates a substantial relationship between the
activities. For example, evidence that a company intends to undertake a
phased capital improvement project, consisting of enhancements to major
plant components scheduled for 2009 and 2013 that have a substantial
economic relationship would likely be sufficient to rebut the
presumption of nonaggregation.
Although some commenters requested that our presumption for
nonaggregation be irrebuttable, we have concerns that making it
irrebuttable does not fully recognize the fact that sources often
implement significant modifications in a series of phased construction
projects over a period of years. Setting an irrebuttable presumption
would therefore hamper permitting authorities of the ability to monitor
compliance with the rules in these instances. A rebuttable presumption,
on the other hand, enables the permitting agencies to retain the
authority to ensure that facility owners and operators do not engage in
a pattern of development including phasing, staging, and delaying or
engaging in incremental construction at a facility which, except for
such pattern of development, would otherwise require a permit.
While having a timeframe-based presumption for nonaggregation may
appear at odds with the previous section of this notice, in which we
reject the use of timing alone in making aggregation decisions, the two
positions are consistent because they both stem from the same principle
that aggregation is based on a technical or economic relationship. Our
primary concern with the use of timing in making aggregation decisions
has been the interpretation of the 3M-Maplewood memo that aggregates
activities occurring within 12 to 18 months of each other without also
determining whether a substantial relationship exists between the
activities. Thus, we disagree with the commenters who asserted that an
upper bound timeframe for nonaggregation should be coupled with a lower
bound presumption for aggregation. Establishing an upper bound for
timing, particularly one which can be refuted, serves to define a
reasonable threshold for what is considered not to be a substantial
relationship. Furthermore, by making the presumption rebuttable, we are
assuring that the decision is not based on timing alone but must also
consider the technical and economic relationship that could overturn
the presumption.
While we are establishing this 3-year rebuttable presumption for
nonaggregation, we are setting forth our view that activities separated
by less than three years have no presumption. If activities within this
time period are presumed aggregated, there could be numerous physical
or operational changes across a plant that are aggregated without any
substantial relationship among them. We believe that, even without a
presumption, permitting authorities will continue to be able to
aggregate activities when it determines that there is a substantial
technical or economic relationship among them. We believe that
establishing this presumption will help to streamline and provide some
added certainty to the permit decision-making
[[Page 2381]]
process. This 3-year rebuttable presumption will apply prospectively
from the effective date of this notice. At that time, we will begin
using this 3-year presumptive timeframe when reviewing activities that
postdate the effective date of this notice for aggregation.
Furthermore, permitting authorities may also adopt this presumptive
timeframe as guidance for their sources.
In applying this presumption, the time period separating physical
or operational changes should be calculated based on time of approval
(i.e., minor NSR permit issuance). If a permit has not been, or will
not be, issued for the physical or operational changes, the time period
should be based on when construction commences on the changes.
C. Retention of Current Rule Text
In our 2006 proposal, we proposed to amend our rule definition for
``project'' to provide that ``[p]rojects occurring at the same
stationary source that are dependent on each other to be economically
or technically viable are considered a single project.'' As discussed
earlier in this notice, we have concluded that the terms ``economically
viable'' and ``technically viable,'' and what is meant to be
economically or technically dependent, are difficult to define clearly
and should not be adopted as regulatory bright lines. We are,
therefore, not promulgating the proposed rule for aggregation,\9\ nor
are we adopting the descriptions of technical and economic viability
and dependence that were set forth in the 2006 proposal preamble. We
believe the statements made in this notice better explain the NSR
Aggregation policy and enable permitting authorities and sources to
better implement the current rule text without revision.
---------------------------------------------------------------------------
\9\ Proposed at Sec. Sec. 51.165(a)(1)(xxix)(A);
51.166(b)(51)(i); and 52.21(b)(52)(i).
---------------------------------------------------------------------------
D. Environmental Impact
We have determined that the aggregation policy set forth in this
notice will not significantly affect air quality and not interfere with
achievement of the purposes of the NSR program. Although this notice
aims to add certainty to some aspects of the process for making
aggregation decisions, it is very unlikely to change the aggregation
outcomes in the vast majority of instances.
For example, while this policy clearly specifies that the basis for
aggregation is a substantial technical or economic relationship, our
experience is that most prior aggregation and nonaggregation decisions
already relied on technical or economic relationships to a large degree
even if it was not clearly specified that this should be the basis, and
we expect that they would have continued to do so even absent this
action. Moreover, even allowing for the possibility that a future
aggregation or nonaggregation decision could, absent this notice,
theoretically have been expressed as relying upon factors other than
the technical or economic interrelationship of activities (e.g., on
timing alone, or the plant's overall basic purpose), it is not a given
that such an aggregation decision would have been any different if the
reviewing authority had instead examined the technical or economic
relationship.
Even under the new 3-year rebuttable presumption for
nonaggregation, we do not expect a significant difference in outcome
compared to how physical or operational changes would have been
aggregated without the presumption. We expect that there would be few
cases under the prior aggregation policy where activities divided by
three years or more would have been aggregated for purposes of NSR
unless there was a strong technical or economic linkage between them.
This outcome would be identical under this policy, which allows for the
3-year presumption to be rebutted in such cases. Thus, while the
presumption can assist permitting authorities by streamlining the
process for aggregation decisions, it is not likely to lead to
appreciably different outcomes.
Therefore, we conclude that there would be negligible environmental
impact associated with this final action on aggregation.
IV. Project Netting
In our September 14, 2006 proposal, we proposed a regulatory change
to enable emissions decreases from a project to be included in the
calculation of whether a significant emissions increase will result
from the project. We refer to this NSR concept as ``project netting.''
\10\
---------------------------------------------------------------------------
\10\ See 71 FR 54248-9 for a more complete description of
``project netting.''
---------------------------------------------------------------------------
We are not taking action on the proposal rule for project netting
at this time. We are still considering whether and how to proceed with
the project netting proposal. Until we decide on how to proceed with
the 2006 proposal for project netting, there is no change in how the
Agency views project netting. Therefore, nothing in the September 2006
proposed amendments on project netting should be taken as establishing
any change in the Agency's interpretation of its current rules, nor
should any of the statements in the 2006 preamble characterizing our
current rules be cited as demonstrating the Agency's interpretation of
our current rules.
V. Statutory and Executive Order Reviews
A. Executive Order 12866--Regulatory Planning and Review
This action is not a ``significant regulatory action'' under the
terms of Executive Order (EO) 12866 (58 FR 51735, October 4, 1993) and
is therefore not subject to review under the EO.
B. Paperwork Reduction Act
This action does not impose any new information collection burden.
We are not promulgating any new paperwork requirements (e.g.,
monitoring, reporting, recordkeeping) as part of this proposed action.
However, OMB has previously approved the information collection
requirements contained in the existing regulations (40 CFR parts 51 and
52) under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501
et seq., and has assigned OMB control number 2060-0003. The OMB control
numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9.
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 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 final action on
small entities, I certify that this action will not have a significant
economic impact on a substantial number of small entities. In
determining whether a rule has a significant economic impact on a
[[Page 2382]]
substantial number of small entities, the impact of concern is any
significant adverse economic impact on small entities, since the
primary purpose of the regulatory flexibility analyses is to identify
and address regulatory alternatives ``which minimize any significant
economic impact of the rule on small entities.'' See 5 U.S.C. 603 and
604. Thus, an agency may certify that a rule will not have a
significant economic impact on a substantial number of small entities
if the rule relieves regulatory burden, or otherwise has a positive
economic effect on all of the small entities subject to the rule.
A Regulatory Flexibility Act Screening Analysis (RFASA) developed
as part of a 1994 draft Regulatory Impact Analysis (RIA) and
incorporated into the September 1995 ICR renewal analysis, showed that
the changes to the NSR program due to the 1990 CAA Amendments would not
have an adverse impact on small entities. This analysis encompassed the
entire universe of applicable major sources that were likely to also be
small businesses (approximately 50 ``small business'' major sources).
Because the administrative burden of the NSR program is the primary
source of the NSR program's regulatory costs, the analysis estimated a
negligible ``cost to sales'' (regulatory cost divided by the business
category mean revenue) ratio for this source group. Currently, and as
reported in the current ICR, there is no economic basis for a different
conclusion.
We have therefore concluded that this notice will not increase, and
will possibly decrease, the regulatory burden for all affected small
entities.
D. Unfunded Mandates Reform Act
This action contains no Federal mandates under the provisions of
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C.
1531-1538 for state, local, or tribal governments or the private
sector. This final action is not expected to increase the burden
imposed upon reviewing authorities. In addition, we believe this notice
may actually reduce the regulatory burden associated with the major NSR
program by streamlining the NSR applicability decisionmaking process
for permitting authorities and regulated entities. Therefore, this
action is not subject to the requirements of sections 202 and 205 of
the UMRA.
This action is also not subject to the requirements of section 203
of the UMRA because it contains no regulatory requirements that might
significantly or uniquely affect small governments. As discussed above,
this final rule does not impose any new requirements on small
governments.
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 final action does not have federalism implications. It will
not have substantial direct effects on the states, on the relationship
between the national government and the states, or on the distribution
of power and responsibilities among the various levels of government,
as specified in Executive Order 13132. In addition, we believe this
final action will actually reduce the regulatory burden associated with
the major NSR program by streamlining the NSR applicability
decisionmaking process for permitting authorities and regulated
entities. Thus, Executive Order 13132 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 specifically solicited comments on the proposed rule
from state and local officials.
F. Executive Order 13175--Consultation and Coordination With Indian
Tribal Governments
This action does not have tribal implications, as specified in
Executive Order 13175 (65 FR 67249, November 9, 2000). No tribal
government currently has an approved tribal implementation plan (TIP)
under the CAA to implement the NSR program; therefore the Federal
government is currently the NSR reviewing authority in Indian country.
Thus, tribal governments should not experience added burden from this
final action, nor should their laws be affected with respect to
implementation of this action. Thus, Executive Order 13175 does not
apply to this action.
G. Executive Order 13045--Protection of Children From Environmental
Health Risks and Safety Risks
EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997)
as applying only to those regulatory actions that concern health or
safety risks, such that the analysis required under section 5-501 of
the Executive Order has the potential to influence the regulation. This
action is not subject to Executive Order 13045 because it does not
establish an environmental standard intended to mitigate health or
safety risks.
H. Executive Order 13211--Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
This action is not subject to Executive Order 13211 (66 FR 28355
(May 22, 2001)), because it is not a significant regulatory action
under Executive Order 12866.
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, 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 action does not involve technical standards. Therefore, EPA
did not consider the use of any voluntary consensus standards.
J. Executive Order 12898--Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations
Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes
Federal executive policy on environmental justice. Its main provision
directs Federal agencies, to the greatest extent practicable and
permitted by law, to make environmental justice part of their mission
by identifying and addressing, as appropriate, disproportionately high
and adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income
populations in the United States.
EPA has determined that this final action will not have
disproportionately high and adverse human health or environmental
effects on minority or
[[Page 2383]]
low-income populations because it does not affect the level of
protection provided to human health or the environment. This action, in
conjunction with other existing programs, would not relax the control
measures on sources regulated by the final action and therefore would
not cause emissions increases from these sources.
K. Congressional Review Act
The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2). This rule will be effective February 17, 2009.
L. Judicial Review
Under CAA section 307(b), judicial review of this final action is
available only by filing a petition for review in the U.S. Court of
Appeals for the District of Columbia Circuit on or before March 16,
2009. Under CAA section 307(d)(7)(B), only those objections to the
final rule that were raised with specificity during the period of
public comment may be raised during judicial review. Moreover, under
CAA section 307(b)(2), the requirements established by this final rule
may not be challenged separately in any civil or criminal proceedings
brough by EPA to enforce these requirements.
VI. 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, Aggregation, Major modifications, Reporting and recordkeeping
requirements.
40 CFR Part 52
Environmental protection, Administrative practice and procedure,
Air pollution control, Baseline emissions, Intergovernmental relations,
Netting, Aggregation, Major modifications, Reporting and recordkeeping
requirements.
Dated: January 12, 2009.
Stephen L. Johnson,
Administrator.
[FR Doc. E9-815 Filed 1-14-09; 8:45 am]
BILLING CODE 6560-50-P