[Federal Register Volume 61, Number 168 (Wednesday, August 28, 1996)]
[Proposed Rules]
[Pages 44264-44269]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-21910]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CO35-1-6190, CO41-1-6826, CO40-1-6701, CO42-1-6836; FRL-5559-8]


Clean Air Act Approval and Promulgation of State Implementation 
Plans; Colorado; New Source Review

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to approve the State implementation plan 
(SIP) revisions submitted by the Governor of Colorado on November 12, 
1993, August 25, 1994, September 29, 1994, November 17, 1994, and 
January 29, 1996. These submittals revised Colorado Regulation No. 3 
and the Common Provisions Regulation pertaining to the State's new 
source review (NSR) permitting requirements. The submittals included 
revisions to make the State's NSR rules more compatible with its title 
V operating permit program, the addition of nonattainment NSR 
provisions for new and modified major sources of PM-10 precursors 
locating in the Denver PM-10 nonattainment area, a change from the dual 
``source'' definition to the plantwide definition of ``source'' in the 
State's nonattainment NSR permitting requirements, and correction of 
deficiencies in the State's construction permitting rules. EPA is 
proposing to approve these regulatory revisions because they provide 
for consistency with the Clean Air Act (Act), as amended, and the 
corresponding Federal regulations and guidance.

DATES: Comments must be received in writing on or before October 28, 
1996.

ADDRESSES: Written comments should be addressed to: Vicki Stamper, 8P2-
A, Environmental Protection Agency, Region VIII, 999 18th Street, Suite 
500, Denver, Colorado, 80202-2466. Copies of the State's submittals and 
other information relevant to this proposed action are available for 
inspection during normal business hours at the following locations: Air 
Program, Environmental Protection Agency, Region VIII, 999 18th Street, 
Suite 500, Denver, Colorado 80202-2405; and the Air Pollution Control 
Division, Colorado Department of Public Health and Environment, 4300 
Cherry Creek Drive South, Denver, Colorado 80222-1530.

FOR FURTHER INFORMATION CONTACT: Vicki Stamper at (303) 312-6445.

SUPPLEMENTARY INFORMATION: Section 110(k) of the Act sets out 
provisions governing EPA's review of SIP submittals (see 57 FR 13565-
13566).

I. Procedural Background

    The Act requires States to observe certain procedural requirements 
in developing implementation plans and plan revisions for submission to 
EPA. [See sections 110(a)(2) and 110(l) of the Act.] EPA also must 
determine whether a submittal is complete and therefore warrants 
further EPA review and action [see section 110(k)(1) of the Act and 57 
FR 13565]. The EPA's completeness criteria for SIP submittals are set 
out at 40 CFR part 51, appendix V.
    To entertain public comment, the Colorado Air Quality Control 
Commission (AQCC), after providing adequate notice, held public 
hearings on (1) August 20, 1992 regarding changes to the definition of 
``source'' in the Common Provisions Regulation and Regulation No. 3; 
(2) July 15, 1993 regarding revisions to make the State's title V and 
NSR programs more compatible and on the complete restructuring of 
Regulation No. 3; (3) February 17, 1994 regarding PM-10 precursor NSR 
provisions for the Denver moderate PM-10 nonattainment area; (4) August 
18, 1994 regarding revisions to Regulation No. 3 addressing title V/SIP 
deficiencies; and (5) March 16, 1995 regarding revisions to address 
other deficiencies in Regulation No. 3. Following the public hearings, 
the AQCC adopted the respective rule revisions. The Governor of 
Colorado

[[Page 44265]]

submitted the various rule revisions with letters dated November 17, 
1994, November 12, 1993, August 25, 1994, September 29, 1994, and 
January 29, 1996, respectively.
    The SIP revisions were reviewed by EPA to determine completeness 
shortly after submittal, in accordance with the completeness criteria 
referenced above. The submittals were found to be complete, and letters 
dated January 19, 1995, January 28, 1994, October 20, 1994, November 
25, 1994, and July 12, 1996, respectively, were forwarded to the 
Governor indicating the completeness of the submittals and the next 
steps to be taken.

II. This Action

    EPA evaluated the State's submittals by comparing them to the 
requirements of the amended Act, the Federal construction permitting 
requirements in 40 CFR 51.160-166, the Federal operating permit 
requirements in 40 CFR part 70 (for those provisions which the State 
added to the construction permit program in order to implement specific 
provisions of its operating permit program), and EPA guidance and 
policy.

A. November 12, 1993, September 29, 1994, and January 29, 1996 SIP 
Submittals

    In July of 1993, the Colorado AQCC adopted operating permit 
regulations as part of Regulation No. 3 in accordance with title V of 
the amended Act and the corresponding Federal regulations for operating 
permit programs in 40 CFR part 70. Concurrent with adoption of its 
operating permit regulations, the State also adopted revisions to its 
construction permit regulations in Regulation No. 3 in order to make 
the two permit programs work together and in order to allow for 
implementation of certain title V provisions. The State completely 
revised and restructured Regulation No. 3, so that it is now divided 
into four parts, as follows:
    1. Part A contains all definitions and provisions that apply to 
both the construction permit and operating permit programs. In this 
part, Colorado extended the administrative permit amendment provisions 
and some of the operational flexibility provisions of 40 CFR part 70 to 
the construction permit program;
    2. Part B contains provisions which apply only to the construction 
permit program [including the nonattainment NSR and prevention of 
significant deterioration (PSD) programs]. The State made revisions to 
allow certain aspects of the operating permit program to also apply to 
construction permits (e.g., combined permits and general permits) and 
to allow certain operational flexibility provisions to be implemented 
through the operating permit program without requiring construction 
permits (e.g., minor modifications, SIP equivalency, and other permit 
changes);
    3. Part C contains provisions which apply solely to the State's 
operating permit program; and
    4. Part D contains the Statements of Basis and Purpose for each 
revision to Regulation No. 3.
    Parts A and C of Regulation No. 3 were submitted for approval as 
part of the State's title V operating permit program on November 5, 
1993. Parts A and B of Regulation No. 3 were submitted for approval in 
the SIP on November 12, 1993.
    EPA reviewed Parts A and B of Regulation No. 3 for conformance with 
the applicable Federal requirements and identified several deficiencies 
in the November 1993 SIP submittal. EPA informed the State of those 
deficiencies in a letter dated September 19, 1994. In that letter, EPA 
identified deficiencies that needed to be addressed by the State before 
EPA would proceed to act on the November 1993 SIP submittal. EPA also 
recommended other revisions to provide for clarity in the State's 
permitting regulations.
    Some of the deficiencies identified by EPA in the State's November 
12, 1993 SIP submittal were also identified as deficiencies in the 
State's title V operating permit program which EPA required the State 
to address before EPA would proceed with interim approval of the 
State's title V program. Those deficiencies included (1) The fact that 
the State does not currently have a SIP-approved generic emissions 
trading program under which the trading described in Section IV.B. of 
Part A of Regulation No. 3 would be allowed, and (2) the allowing of 
alternative emission limits to be developed in permits when Section 
IV.D.1.i. of Part B of Regulation No. 3 did not adequately provide for 
this flexibility. The State adopted revisions intended to address these 
deficiencies (as well as to address other deficiencies in its title V 
operating permit program) on August 18, 1994 and submitted these 
revisions for approval in the SIP and for revision to its title V 
program on September 29, 1994.
    EPA's review of the September 29, 1994 submittal found that the 
State adequately addressed these SIP/title V deficiencies by clarifying 
that Section IV.B. of Part A could only be implemented if the SIP 
included an EPA-approved trading program and by deleting Section 
IV.D.1.i. of Part B. Based on this September 29, 1994 title V program 
revision (which also included correction of other title V program 
deficiencies), EPA granted interim approval of Colorado's operating 
permit program on January 24, 1995 (60 FR 4563).
    On March 16, 1995, the AQCC adopted further revisions to Regulation 
No. 3 intended to address the remaining deficiencies EPA identified in 
the State's November 12, 1993 SIP submittal. Those revisions were 
submitted to EPA for approval on January 29, 1996 and include the 
following:
    1. Changes to the definitions of ``lowest achievable emission rate 
(LAER)'' and ``net emissions increase'' to be consistent with the 
Federal definitions in 40 CFR 51.165(a)(1)(xiii) and 40 CFR 
51.165(a)(1)(vi), respectively;
    2. Consolidation of the State's definitions of ``air pollution 
source,'' ``stationary source,'' and ``new source'' so that only the 
term ``stationary source,'' which is consistent with the Federal 
definition, is used in the provisions of Regulation No. 3. The State 
also retained the definition of ``air pollution source'' because it 
reflects the definition found in State statute, but it is no longer 
used in Regulation No. 3;
    3. The addition of a requirement to the definition of ``volatile 
organic compound (VOC)'' requiring EPA approval prior to use of any 
test method that is not an EPA reference test method;
    4. Revisions to the administrative process in Section II.D.5. of 
Part A of Regulation No. 3 which allows for processing individual 
requests to exempt additional sources from the State's Air Pollution 
Emission Notice (APEN) requirements (and, consequently, from 
construction permit requirements) to require EPA approval of any new 
exemptions prior to use;
    5. Revisions to the definition of ``surplus'' in Section V.C.10. of 
Part A of Regulation No. 3 to be consistent with EPA's Emission Trading 
Policy Statement (see 51 FR 43832, 12/4/86);
    6. The addition of a provision to Section V.E. of Part A of 
Regulation No. 3 to ensure that new source growth cannot interfere with 
reasonable further progress towards attainment, in order to be 
consistent with section 173(a)(1)(A) of the Act;
    7. The addition of a reference to the State's definition of ``net 
emission increase'' in Section V.I. of Part A of Regulation No. 3 
(which discusses netting);
    8. The addition of a requirement to Section IV.C.1. of Part B of 
Regulation No. 3 requiring the opportunity for public comment on 
permits for sources

[[Page 44266]]

trying to obtain Federally enforceable limits on their potential to 
emit; and
    9. The deletion of an exemption from nonattainment NSR requirements 
for sources undergoing fuel switches due to lack of adequate fuel 
supply (which is not allowed by EPA). EPA believes these regulatory 
revisions adequately address the deficiencies described above.
    The State addressed some of EPA's other comments with an opinion 
from the State Attorney General's office dated July 3, 1995. Those 
comments and the State's responses are as follows:
    1. EPA recommended adding definitions to Regulation No. 3 of 
``begin actual construction,'' ``necessary preconstruction approvals or 
permits,'' and ``construction'' to be consistent with the Federal 
definitions. The State did not add these definitions because the State 
contends that its definitions of ``commenced construction,'' 
``construction'' in the Common Provisions Regulation, and 
``modification'' made the addition of these definitions unnecessary. 
After further review of the definitions referred to by the State, EPA 
agrees with the State's contention; and
    2. Section IV.A. of Part A of Regulation No. 3 allows for 
alternative operating scenarios to be included in a construction 
permit, and this provision is based on the title V provision in 40 CFR 
70.6(a)(9). However, in order to approve this provision for 
construction permits, EPA wanted assurances from the State that it 
would require compliance with all PSD or nonattainment NSR provisions 
(e.g., ambient air quality analysis or net air quality benefit) for 
every scenario allowed under the permit. The State's July 3, 1995 
letter included an interpretation that compliance with all PSD or 
nonattainment NSR requirements (whichever was applicable) would be 
ensured under the provision in Section IV.A.2. of Regulation No. 3, 
which requires that the permit contain conditions to ensure each 
scenario meets all applicable Federal and State requirements. This 
satisfies EPA's concern.
    EPA believes the comments discussed above were adequately addressed 
by the State in its revisions to Regulation No. 3 adopted on March 16, 
1995 and its opinion from the State Attorney General's office. In 
addition, the State also addressed many of EPA's recommended revisions 
to Regulation No. 3, which EPA believes will help to strengthen the 
State's construction permit regulations.
    EPA had also commented on Section IV.C. of Part A of Regulation No. 
3, which provides for a construction permit (as well as a title V 
operating permit) to contain terms and conditions allowing for the 
trading of emissions decreases and increases under a permit cap, as 
long as certain conditions are met. This provision is based on the 
title V operating permit requirement in 40 CFR 70.4(b)(12)(iii), but 
EPA had concerns with the use of this provision in construction 
permitting. EPA is currently working on revisions to the Federal NSR 
regulations as part of the ``NSR Reform'' rules that would allow a 
source to establish a cap in its construction permit (termed a 
plantwide applicability limit or PAL) for NSR applicability under which 
emissions trading might be allowed. EPA proposed these NSR Reform rules 
for public comment on July 23, 1996 (see 61 FR 38250). Until the final 
EPA regulations are promulgated on this issue, EPA does not believe it 
is appropriate to approve the State's provision allowing trading under 
permit caps for construction permits, as EPA could be approving a rule 
that is inconsistent with the forthcoming Federal regulations. However, 
as discussed in the preamble to the July 23, 1996 rulemaking, Colorado 
may be able to consider the issuance of permits with emissions caps on 
a case by case basis under EPA's existing regulations (see 61 FR 
38264).
    EPA believes the State, in the submittals of September 29, 1994 and 
January 29, 1996, has adequately addressed all of the deficiencies EPA 
identified in the State's November 12, 1993 SIP submittal. Thus, these 
three submittals are approvable. However, as discussed above, EPA is 
not acting on Section IV.C. of Part A of Regulation No. 3 at this time. 
For further details, see the Technical Support Document (TSD) 
accompanying this notice.

B. August 25, 1994 SIP Submittal of Nonattainment NSR Rules for New and 
Modified Sources of PM-10 Precursors

1. Background of Submittal
    When the Act was amended in 1990, it included, among other things, 
revised requirements for nonattainment areas which are set out in part 
D of title I of the Act. It also set out specific deadlines for 
submittals of SIP revisions addressing these new requirements, 
including the submittal of nonattainment NSR rules for which the 
deadlines varied depending on the type and designation of the 
nonattainment area. In response to those requirements, the Governor of 
Colorado submitted a SIP revision on January 14, 1993 to bring the 
State's nonattainment NSR rules up to date with the requirements of the 
amended Act. EPA acted on that submittal on August 18, 1994 (59 FR 
42500). Specifically, EPA approved the State's nonattainment NSR rules 
as meeting the requirements of the amended Act for the State's ozone 
and carbon monoxide areas, as well as the Canon City, Pagosa Springs, 
and Lamar PM-10 nonattainment areas. However, EPA only partially 
approved the State's NSR submittal in that action for the Aspen, 
Telluride, and Denver moderate PM-10 nonattainment areas because the 
State had not submitted NSR regulations for new and modified major 
sources of PM-10 precursors [as is required by section 189(e) of the 
amended Act for those PM-10 nonattainment areas where such sources 
contribute significantly to PM-10 national ambient air quality standard 
(NAAQS) exceedances] and because, at the time of publication of the 
August 18, 1994 Federal Register notice, EPA had not promulgated 
findings that such sources of PM-10 precursors did not contribute 
significantly to exceedances of the PM-10 NAAQS in any of these three 
areas.1 (See 59 FR 42503-42504 for further details.)
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    \1\ Section 189(e) of the amended Act requires that the control 
requirements applicable to major stationary sources of PM-10 must 
also apply to major stationary sources of PM-10 precursors, except 
where the Administrator of EPA has determined that such sources do 
not contribute significantly to PM-10 levels which exceed the 
standard in the area. Any such determination that sources of PM10 
precursors do not contribute significantly is generally made 
concurrently with EPA's promulgation of an action on a SIP submittal 
for a PM10 nonattainment area.
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    Since that August 18, 1994 Federal Register action, EPA has 
promulgated findings that sources of PM-10 precursors do not contribute 
significantly to PM-10 NAAQS exceedances in the Aspen and Telluride PM-
10 nonattainment areas (see 59 FR 47092-47093, September 14, 1994, and 
59 FR 47809, September 19, 1994, respectively), resulting in the 
State's NSR provisions being considered fully approved for these two 
PM-10 nonattainment areas. However, in the Denver moderate PM-10 
nonattainment area, EPA has indicated that it does consider major 
stationary sources of PM-10 precursors (specifically oxides of nitrogen 
(NOx) and sulfur dioxide (SO2)) to contribute significantly 
to exceedances of the PM-10 NAAQS (see 58 FR 66331, December 20, 1993).
    On February 17, 1994, the State adopted nonattainment NSR 
provisions for new and modified major sources of PM-10 precursors 
(specifically, SO2 and NOx) in the Denver metro PM-10 
nonattainment area. These Regulation No. 3 revisions were formally 
submitted to EPA for approval into the SIP on August 25, 1994.

[[Page 44267]]

2. Evaluation of Submittal
    To meet the requirements of section 189(e) of the Act, States must 
submit rules applying all of the nonattainment NSR provisions normally 
applicable to sources of PM-10 to sources of PM-10 precursors, 
including the 100 ton per year threshold for defining major stationary 
sources and the current significance level thresholds in 40 CFR 
51.165(a)(1)(x) for each PM-10 precursor pollutant for defining major 
modifications. To address these requirements, the State made the 
following changes to Regulation No. 3:
    (a) In the definition of ``major stationary source'' in Section 
I.B.58. of Part A of Regulation No. 3, the State added provisions 
clarifying that, in the Denver metro PM-10 nonattainment area, any 
source that is major for SO2 or NOx (which are considered 
precursors to PM-10 in the Denver area) will be considered major for 
PM-10 and will be subject to the nonattainment NSR requirements.
    (b) In the definition of ``major modification'' in Section 
I.B.35.B. of Part A of Regulation No. 3, the State adopted a provision 
stating that, in the Denver metro PM-10 nonattainment area, any net 
emissions increase that is significant for SO2 or NOx shall 
be considered significant for PM-10. The significance levels for these 
two PM-10 precursor pollutants in Section I.B.57. of Part A of 
Regulation No. 3 are set at 40 tons per year each, which is consistent 
with the significance levels in 40 CFR 51.165(a)(1)(x).
    (c) In Section V.F.1. of Part A of Regulation No. 3 which 
identifies the criteria for approval of all emissions trading 
transactions including NSR offsets, the State added provisions 
explaining which interpollutant trades between PM-10 and PM-10 
precursors are allowed for NSR offsets. Specifically, Section V.F.1. 
provides that new or modified major sources of a PM-10 precursor can 
obtain offsets from reductions in that same precursor or in PM-10, 
while new or modified major sources of PM-10 can only obtain offsets 
from reductions in PM-10. This is consistent with EPA's current policy 
regarding offsets for PM-10.
    However, the State did adopt an exception to this requirement in 
Section V.H.9. of Part A of Regulation No. 3. Specifically, Section 
V.H.9. allows interpollutant offsets other than those discussed in 
Section V.F.1. to be approved on a case-by-case basis, provided that 
the applicant demonstrates, on the basis of EPA-approved methods where 
possible, that the emissions increases for the new or modified source 
will not cause or contribute to a violation of the NAAQS. Section 
V.H.9. further provides that the source's permit application will not 
be approved by the State until written approval has been received from 
the EPA. Because written approval will be required from EPA before a 
permit will be issued which allows an interpollutant trade for 
offsetting (other than those trades allowed in Section V.F.1.), EPA 
believes that it will be able to ensure any interpollutant offsets will 
meet the requirements of the Act concerning NSR. Thus, this exception 
is acceptable to EPA.
    The State's nonattainment NSR provisions are generally found in 
Section IV.D.2. of Part B of Regulation No. 3. As discussed in EPA's 
August 18, 1994 approval mentioned above, the State's nonattainment NSR 
provisions, which apply in all of the State's nonattainment areas, meet 
all of the general NSR requirements required by the Act and Federal 
regulations (see 59 FR 42500-42506). Thus, since the State's revised 
nonattainment NSR rules now subject new and modified major stationary 
sources of PM-10 precursors (as well as PM-10) locating in the Denver 
moderate PM-10 nonattainment area to the nonattainment NSR requirements 
as required by section 189(e) of the Act, and since the State's 
nonattainment NSR provisions meet all of the applicable Federal 
requirements, EPA considers Colorado's nonattainment NSR rules for the 
Denver moderate PM-10 nonattainment area to be fully approvable.

C. November 17, 1994 SIP Submittal Revising the Definition of 
``Source''

1. Background of Submittal
    On August 7, 1980, EPA promulgated rules for review of new major 
sources and major modifications in nonattainment areas (45 FR 52676). 
Those rules defined ``source'' as either an entire plant or an 
individual piece of process equipment within the plant. This definition 
precluded major sources undergoing a modification at an individual 
piece of process equipment from considering other emission decreases 
within the plant in determining the net emissions increase of the 
modification. However, in the Federal PSD permitting regulations (which 
apply to major sources and major modifications located in attainment or 
unclassifiable areas), a plantwide definition of source was used, under 
which only significant net emissions increases at the entire plant were 
subject to permitting requirements. Thus, under the dual source 
definition, a greater number of modifications at a source would be 
subject to NSR permitting requirements than under the plantwide 
definition of source used in the PSD regulations. EPA adopted this more 
stringent definition of source for nonattainment area NSR permitting to 
aid in the cleanup of the air in nonattainment areas.
    However, on October 14, 1981, EPA deleted the dual source 
definition from the nonattainment NSR permitting requirements and 
replaced it with the plantwide definition to give States the option of 
adopting the plantwide definition of source in nonattainment areas (see 
46 FR 50766). In the October 1981 Federal Register notice, EPA set 
forth its rationale for allowing use of the plantwide definition (46 FR 
50766-50769). EPA reasoned that, since part D of the Act requires 
States to adopt adequate SIPs which demonstrate attainment and 
maintenance of the NAAQS, ``deletion of the dual definition increases 
State flexibility without interfering with timely attainment of the 
ambient standards and so is consistent with part D'' (46 FR 50767). EPA 
also added that, by bringing more plant modifications into the NSR 
permitting process, the dual source definition may discourage 
replacement of older, dirtier processes and, hence, retard not only 
economic growth but also progress toward clean air. Last, EPA pointed 
out that, under the plantwide definition, new equipment would still be 
subject to any applicable new source performance standard (NSPS). Thus, 
EPA regarded changing to the plantwide definition as presenting, at the 
very worst, environmental risks that were manageable because of the 
independent impetus to create adequate part D plans and, at best, the 
potential for air quality improvements driven by the marketplace. In 
1984, the Supreme Court upheld EPA's action as a reasonable 
accommodation of the conflicting purposes of part D of the Act and, 
hence, well within EPA's broad discretion. Chevron, U.S.A., Inc. v. 
NRDC, Inc., 104 S.Ct. 2778.
    Consequently, on August 20, 1992, the Colorado AQCC adopted 
revisions to the Common Provisions Regulation and Regulation No. 3 to 
change from the dual definition of ``source'' to the plantwide 
``source'' definition in its nonattainment NSR permitting requirements. 
Specifically, the State revised the definitions of ``stationary 
source'' and ``net emissions increase'' in the Common Provisions 
Regulation to delete references to the dual source definition. In 
addition, the State deleted Section V.I.4. of Colorado Regulation No. 
3, which explained that the dual source definition applied in 
nonattainment NSR permitting. These

[[Page 44268]]

revisions were subsequently submitted by the Governor to EPA for 
approval into the SIP on November 17, 1994.
    The State adopted these revisions prior to the July 1993 State 
adoption of a completely restructured Regulation No. 3, which was 
discussed in Section II.A. above. Before the July 1993 State action, 
the State's definitions for its construction permit program were 
generally found in the Common Provisions Regulation and all of its 
construction permit requirements were in Regulation No. 3.

    (Note: at that time, Regulation No. 3 was not divided into Parts 
A, B, C, or D).

    Under the new structure of Regulation No. 3, the definitions of 
``stationary source'' and ``net emissions increase'' are in Sections 
I.B.58. and I.B.36., respectively, in Part A of Regulation No. 3, and 
the deletion of Section V.I.4. is reflected in Part B of revised 
Regulation No. 3. These definitions of ``stationary source'' and ``net 
emissions increase'' (as well as other definitions pertaining to the 
State's construction permit program) are also still in the Common 
Provisions Regulation.
2. Evaluation of Submittal
    In the October 14, 1981 Federal Register discussed above in which 
EPA deleted the dual source definition from the Federal nonattainment 
NSR permitting requirements, EPA ruled that a State wishing to adopt a 
plantwide definition generally has complete discretion to do so, and it 
set only one restriction on that discretion. If a State had 
specifically projected emission reductions from its NSR program as a 
result of a dual source or similar definition and had relied on those 
reductions in an attainment strategy that EPA later approved, then the 
State needed to revise its attainment strategy as necessary to 
accommodate reduced NSR permitting under the plantwide definition (see 
46 FR 50767 and 50769).
    This 1981 ruling allowing States to adopt a plantwide definition 
assumed that nonattainment areas already had, or shortly would have, 
approved part D plans in place. However, the Act was amended in 1990, 
creating new requirements and deadlines for submittal of attainment 
plans for areas which were not in attainment of the NAAQS. In light of 
these changes, EPA will now approve adoption of the plantwide 
definition into SIPs for nonattainment areas that need but lack 
adequate part D attainment plans approved by EPA only if the State has 
demonstrated that it is making, and will continue to make, reasonable 
efforts to adopt and submit complete plans for timely attainment in 
these areas.
    For the majority of Colorado's nonattainment areas that are 
required to have part D attainment plans, the State has EPA-approved 
part D plans. The only areas for which the State does not yet have 
fully approved part D attainment plans are the Denver PM-10, Denver 
carbon monoxide (CO), Longmont CO, Telluride PM-10, and Steamboat 
Springs PM-10 nonattainment areas. The State has submitted part D plans 
for the Denver PM-10 and CO nonattainment areas, the Longmont CO 
nonattainment area, and the Steamboat Springs PM-10 nonattainment area, 
but EPA has not yet completed action on these submittals. For the 
Telluride PM-10 nonattainment area, EPA has approved the State's 
attainment demonstration (see 59 FR 47808, September 19, 1994), but the 
plan has not been fully approved because it lacked quantitative 
milestones to provide for maintenance of the PM-10 NAAQS through 
December 31, 1997 (see 59 FR 47809). The State has subsequently 
submitted additional controls to provide for maintenance of the PM-10 
NAAQS in the Telluride PM-10 nonattainment area through 1997, but EPA 
has not yet completed action on that submittal. Thus, EPA believes the 
State has adequately demonstrated that it has made, and will continue 
to make, reasonable efforts to get an approved part D attainment plan 
in place for these areas.
    Further, the State has certified that it did not, and will not, 
rely on any emissions reductions from the operation of the NSR program 
using the dual source definition in any of its nonattainment area 
demonstrations of attainment. EPA's examination of the State's 
attainment demonstrations confirmed the State's certification. 
Therefore, EPA believes it is appropriate to approve Colorado's switch 
to a plantwide definition of source in accordance with EPA's 1981 
action, inasmuch as the State has demonstrated that it is making, and 
will continue to make, reasonable efforts to get approved part D 
attainment plans in place for all of its nonattainment areas.

III. Proposed Action

    EPA is proposing to approve all of the revisions to Colorado's 
construction permitting program in Regulation No. 3 submitted on 
November 12, 1993, August 25, 1994, September 29, 1994, November 17, 
1994, and January 29, 1996. EPA is also proposing to approve the 
revisions to the Common Provisions Regulation submitted on November 17, 
1994. However, for the reasons discussed above, EPA is taking no 
action, at this time, on Section IV.C. of Part A of Regulation No. 3.
    Nothing in this action should be construed as permitting or 
allowing or establishing a precedent for any future request for 
revision to any SIP. Each request for revision to a SIP shall be 
considered separately in light of specific technical, economic, and 
environmental factors and in relation to relevant statutory and 
regulatory requirements.

IV. Administrative Requirements

A. Executive Order 12866

    This action has been classified as a Table 3 action for signature 
by the Regional Administrator under the procedures published in the 
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a 
July 10, 1995 memorandum from Mary Nichols, Assistant Administrator for 
Air and Radiation. The Office of Management and Budget (OMB) has 
exempted this regulatory action from E.O. 12866 review.

B. Regulatory Flexibility Act

    Under the Regulatory Flexibility Act, 5 U.S.C. 600, et seq., EPA 
must prepare a regulatory flexibility analysis assessing the impact of 
any proposed or final rule on small entities. 5 U.S.C. 603 and 604. 
Alternatively, EPA may certify that the rule will not have a 
significant economic impact on a substantial number of small entities. 
Small entities include small businesses, small not-for-profit 
enterprises, and government entities with jurisdiction over populations 
of less than 50,000.
    SIP approvals under section 110 and subchapter I, part D of the Act 
do not create any new requirements, but simply approve requirements 
that the State is already imposing. Therefore, because the Federal SIP-
approval does not impose any new requirements, I certify that it does 
not have a significant impact on small entities affected. Moreover, due 
to the nature of the Federal-state relationship under the Act, 
preparation of a regulatory flexibility analysis would constitute 
Federal inquiry into the economic reasonableness of state action. The 
Act forbids EPA to base its actions concerning SIPs on such grounds. 
Union Electric Co. v. U.S. E.P.A., 427 U.S. 246, 256-66 (1976); 42 
U.S.C. 7410(a)(2).

C. Unfunded Mandates

    Under section 202 of the Unfunded Mandates Reform Act of 1995 
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA 
must prepare a budgetary impact statement to accompany any proposed or 
final rule

[[Page 44269]]

that includes a Federal mandate that may result in estimated costs to 
State, local, or tribal governments in the aggregate; or to the private 
sector, of $100 million or more. Under section 205, EPA must select the 
most cost-effective and least burdensome alternative that achieves the 
objectives of the rule and is consistent with statutory requirements. 
Section 203 requires EPA to establish a plan for informing and advising 
any small governments that may be significantly or uniquely impacted by 
the rule.
    EPA has determined that the approval action proposed does not 
include a Federal mandate that may result in estimated costs of $100 
million or more to either State, local, or tribal governments in the 
aggregate, or to the private sector. This Federal action approves pre-
existing requirements under State or local law, and imposes no new 
Federal requirements. Accordingly, no additional costs to State, local, 
or tribal governments, or to the private sector, result from this 
action.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by 
reference, Nitrogen oxides, Particulate matter, Reporting and 
recordkeeping requirements, Sulfur dioxide, Volatile organic compounds.

    Authority: 42 U.S.C. 7401-7671q.

    Dated: August 14, 1996.
Jack W. McGraw,
Acting Regional Administrator.
[FR Doc. 96-21910 Filed 8-27-96; 8:45 am]
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