[Federal Register Volume 62, Number 85 (Friday, May 2, 1997)]
[Proposed Rules]
[Pages 24060-24065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11492]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 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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 

  Federal Register / Vol. 62, No. 85 / Friday, May 2, 1997 / Proposed 
Rules  

[[Page 24060]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[PA 042-4055; FRL-5820-4]


Approval and Promulgation of Air Quality Implementation Plans; 
Pennsylvania; New Source Review and Emissions Registry Regulation

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to grant limited approval of a State 
Implementation Plan (SIP) revision submitted by the Commonwealth of 
Pennsylvania pursuant to the requirements of the Clean Air Act (CAA). 
This revision requires major new and modified sources of volatile 
organic compounds (VOCs), nitrogen oxides (NOX), particulate 
matter (PM), particulate matter with an aerodynamic diameter of less 
than 10 microns (PM-10), PM-10 precursors, sulfur oxides 
(SOX), carbon monoxide (CO), or lead (Pb) to meet certain 
new source review permitting requirements if they are proposing to 
locate in a designated nonattainment area. These requirements also 
apply to major new and modified sources of VOCs and for NOX 
proposing to locate in the ozone transport region (OTR). This action is 
being taken under section 110 of the Clean Air Act (CAA).

DATES: Comments must be received on or before June 2, 1997.

ADDRESSES: Comments may be mailed to Kathleen Henry, Chief, Permit 
Programs Section, Mailcode 3AT23, U.S. Environmental Protection Agency, 
Region III, 841 Chestnut Building, Philadelphia, Pennsylvania 19107. 
Copies of the documents relevant to this action are available for 
public inspection during normal business hours at the Air, Radiation, 
and Toxics Division, U.S. Environmental Protection Agency, Region III, 
841 Chestnut Building, Philadelphia, Pennsylvania 19107, and the 
Pennsylvania Department of Environmental Protection, Bureau of Air 
Quality, P.O. Box 8468, 400 Market Street, Harrisburg, Pennsylvania 
17105.

FOR FURTHER INFORMATION CONTACT: Michael H. Markowski, 3AT23, U.S. 
Environmental Protection Agency, Region III, 841 Chestnut Building, 
Philadelphia, Pennsylvania, 19107, (215) 566-2063.

SUPPLEMENTARY INFORMATION:

I. Background

A. New Source Requirements and Pennsylvania's Submittal

    The CAA requires that all states submit to EPA, by November 15, 
1992, a revision to their state implementation plans (SIPs) requiring 
major new and major modified sources to meet certain new source review 
(NSR) requirements if those sources are being located in areas 
designated nonattainment for a pollutant, are expected to emit 
pollutants in quantities likely to significantly impact such areas, or, 
in the case of VOC or NOX sources, if they are being located 
in the OTR. This requirement for a SIP revision applies to 
Pennsylvania, which currently has areas designated nonattainment for 
ozone (a pollutant formed under certain meteorological conditions from 
precursor VOC and NOX emissions), CO, SO2 and PM-
10.
    Pennsylvania submitted a revision to its SIP, on February 4, 1994, 
requiring major new and modified sources of VOCs, NOX, PM, 
PM-10, PM-10 precursors, SOX, CO, or Pb to meet certain NSR 
requirements if they are being located in a designated nonattainment 
area, if they are expected to emit these pollutants in quantities 
sufficient to significantly impact a nonattainment area, or, in the 
case of VOC and NOX sources, if they are being located in 
the OTR. The NSR requirements include installing Lowest Achievable 
Emission Rate (LAER) technology and obtaining emission offsets. The 
submittal included associated emissions banking requirements and an 
emissions reduction credit (ERC) registry. Pennsylvania's submittal 
adds these new provisions in Subchapter E, Sections 127.201 through 
127.217 of the Pennsylvania Code, and removes the older provisions, 
which were found in Subchapter C., Sections 127.61 through 127.73 (it 
reserves those regulation numbers).

B. Federal Requirements

    According to section 172(c)(5) of the CAA, SIPs must require 
permits for the construction and operation of new or modified major 
stationary sources in nonattainment areas. The statutory permit 
requirements for ozone nonattainment areas are generally contained in 
revised section 173 of the CAA, and in subpart 2 of part D. Further, on 
July 23, 1996, EPA published in the Federal Register a comprehensive 
rulemaking which proposed significant changes to the current Prevention 
of Significant Deterioration (PSD) and nonattainment NSR rules. See 61 
FR 38311 (1996). That rulemaking proposed to revise regulations for the 
approval and promulgation of SIPs and the 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. Upon EPA 
promulgation of the final rulemaking at a later date, all states, 
including Pennsylvania, will be expected to evaluate their new source 
review regulations in accordance with the new requirements and to 
revise such regulations accordingly.
    Important CAA requirements for new sources in nonattainment areas 
are found under sections 172, 173, 182, and 184 of the CAA. These 
requirements are summarized below.
    a. According to section 173(a)(1) of the CAA, the state regulation 
must assure that calculations of emissions offsets are based on the 
same emissions baseline used in the demonstration of reasonable further 
progress (RFP).
    b. According to section 173(c)(1) of the CAA, the state regulation 
may include provisions which allow offsets to be obtained in another 
nonattainment area if that area has an equal or higher nonattainment 
classification and emissions from the other nonattainment area 
contribute to a NAAQS violation in the area in which the source would 
construct.
    c. According to section 173(c)(1) of the CAA, the state regulation 
must provide that any emissions offsets obtained in conjunction with 
the issuance of a permit to a new or modified source must be in effect 
and enforceable by the time the new or modified source commences 
operation.

[[Page 24061]]

This statutory condition for offsets augments the existing requirement 
under section 173 that provides that offsets must be federally-
enforceable before permit issuance, although the required emissions 
reductions need not occur until the date on which the new or modified 
source commences operations.
    d. According to section 173(c)(1) of the CAA, provisions of the 
state regulation must assure that emissions increases from new or 
modified sources will be offset by real reductions in actual emissions. 
EPA's initial guidance interpreting general sections of the CAA is 
contained in the Title I General Preamble published in the Federal 
Register on April 16, 1992 (57 FR 13498). In the General Preamble, EPA 
reiterated that emission increases and decreases for netting are to be 
determined consistent with EPA's current new source rules and the 
December 4, 1986 emissions trading policy statement (51 FR 43823). In 
addition, pre-enactment reductions are expected to be treated as new 
source growth, even though, for applicability purposes, the source's 
net emissions change is de minimis. EPA's current new source rules 
state that a decrease in emissions is only creditable if, among other 
requirements, the decrease has not been relied upon by the state for 
any permit, attainment demonstration, or reasonable further progress. 
Therefore, emission reductions made because of RACT or other 
requirements that have been taken into account in the state's 
demonstration of reasonable further progress or attainment 
demonstration are not creditable for netting purposes.
    e. According to section 173(c)(2) of the CAA, the state rules must 
prevent emission reductions otherwise required by the CAA from being 
credited for purposes of part D offset requirements.
    f. According to section 173(a)(5) of the CAA, the state regulation 
must require that prior to any part D permit being issued there be an 
analysis of alternative sites, sizes, production processes, and 
environmental control techniques for proposed sources that demonstrates 
that the benefits of the proposed source significantly outweigh the 
environmental and social costs imposed as a result of its location, 
construction, or modification.
    g. According to section 328 of the CAA, the state regulation must 
assure that sources located on the Outer Continental Shelf (OCS) are 
subject to the same requirements applicable if the source were located 
in the corresponding onshore area.
    h. Section 173(a)(3) of the CAA requires that the state regulation 
must assure that owners or operators of each proposed new or modified 
major stationary source demonstrate that all of their other major 
stationary sources in the state are in compliance.
    i. The state regulation must define major new and major modified 
sources in accordance with the area's nonattainment classification 
under section 181 for ozone and section 186 for CO.
    j. The state regulation must require emission offsets for major new 
and major modified sources in accordance with the area's nonattainment 
classification under section 181 for ozone and section 186 for CO.
    k. The state regulation must require all applicable new source 
requirements to be met by sources locating in the OTR. For a severe or 
extreme ozone nonattainment area located in the transport region, the 
major stationary source size thresholds applicable to those areas apply 
for VOC and, presumptively, for NOX. These provisions must 
also ensure that new or modified major stationary sources obtain VOC 
and, presumptively, NOX offsets at a ratio of at least 1.15 
to 1 in order to obtain a NSR permit. Higher offset ratios apply in 
areas classified as serious or above under section 184 of the CAA.
    l. The state regulation must ensure that any new or modified major 
stationary source of NOX satisfies the requirements 
applicable to any new or modified major stationary source of VOC, 
unless a special NOX exemption is granted by the 
Administrator under section 182(f) of the CAA.
    m. State plans must, for serious and severe ozone nonattainment 
areas, implement sections 182(c) (6), (7) and (8) of the CAA with 
regard to modifications.

C. Nonattainment Area Requirements Pertaining to Pennsylvania

    The CAA defines sources as major at various specified levels of 
emissions, depending on the attainment/nonattainment status of the area 
where the source is located, the severity of the nonattainment, and on 
whether or not the source is located in an OTR. Pennsylvania has areas 
designated nonattainment for ozone, for PM-10, for SO2, and 
for CO.
    With respect to ozone, section 182(d) of the CAA defines sources of 
VOCs located in severe ozone nonattainment areas as major when they 
have the potential to emit 25 tons per year (TPY) or more of VOCs. In 
Pennsylvania there is one severe ozone nonattainment area, the 
Philadelphia area (including Philadelphia, Bucks, Chester, Delaware, 
and Montgomery Counties) where the 25 TPY major source threshold for 
VOCs applies. Per section 182(f) of the CAA, NOX sources 
located in severe ozone nonattainment areas must also be considered 
major at the same threshold levels as VOC sources. Thus, in the 
Philadelphia area sources are considered major when they have the 
potential to emit 25 TPY or more of NOX.
    For the remainder of Pennsylvania, there are moderate areas to 
consider as well as the fact that the entire Commonwealth is part of 
the OTR. This is the key factor establishing the level of VOC or 
NOX emissions that trigger major NSR applicability. Per 
section 184 of the CAA, stationary VOC and NOX sources 
located in areas of Pennsylvania that are designated marginal, moderate 
or attainment for ozone which are also located in the OTR are subject 
to the same requirements as those applicable to such sources located in 
moderate ozone nonattainment areas. Therefore, sources located in the 
OTR are defined as major when they have the potential to emit 50 TPY or 
more of VOC, and sources located within the OTR are defined as major 
when they have the potential to emit 100 TPY or more of NOX.
    Pennsylvania also has nonattainment areas for PM-10 and CO in 
portions of Allegheny County, and for SO2 in portions of 
Allegheny, Armstrong, and Warren Counties. In all of these areas, a new 
source is considered major when it has the potential to emit 100 TPY or 
more of the pollutant for which the area is designated nonattainment. 
Major modifications are defined by significant emissions increases in 
accordance with federal rules.

II. EPA Analysis of Pennsylvania's Submittal

A. Pennsylvania's Definitions of Major Source, Significant Emissions 
Increases, and Significant Air Quality Impacts

    The Commonwealth's proposed changes to Pennsylvania Regulations, 
Sections 127.201 through 127.204 pertain to the definitions of major 
source and major modified source (modification to an existing major 
source) for each of the affected pollutants: VOC, NOX, PM-
10, PM-10 precursors, PM, SOX, CO, and Pb. Pennsylvania's 
definitions of major source thresholds are consistent with federal 
requirements, as are Pennsylvania's definitions of significant 
emissions increases, and its definitions of ``significant'' air quality 
impacts.
    In severe ozone nonattainment areas (the Philadelphia area) a major 
source of

[[Page 24062]]

VOCs or of NOX is defined as one which has the potential to 
emit at least 25 TPY VOC or 25 TPY NOX. In serious ozone 
nonattainment areas (which Pennsylvania does not have at this time), a 
major source is defined as one that has the potential to emit at least 
50 TPY VOC or 50 TPY NOX. Pennsylvania's regulation also 
includes certain special modification provisions, at Section 127.203(c) 
(discussed below at II. B.), for determining applicability in severe or 
serious ozone nonattainment areas.
    In severe ozone nonattainment areas the regulation applies to 
either ``[a] new facility with the potential to emit 25 tons or more 
per year of NOX or VOCs,'' or to ``[a] modification to an 
existing facility with the potential to emit 25 tons or more per year 
of NOX or VOC, or a new source at an existing facility 
resulting in an increase in the potential to emit either VOC or 
NOX which, when aggregated with the other emissions 
increases determined in accordance with subsection (c)(1), results in 
an increase of 25 tons per year or 1,000 pounds per day or 100 pounds 
per hour of VOC or NOX, or more, whichever is more 
restrictive.'' Section 127.203(b)(3).1
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    \1\  Subsection (c)(1) refers to certain special rules for 
modifications to VOC or NOX facilities located in serious 
and severe nonattainment areas for ozone.
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    In serious ozone nonattainment areas the regulation applies to 
either ``[a] new facility with the potential to emit 50 tons or more 
per year of NOX or VOCs,'' or to ``[a] modification to an 
existing facility with the potential to emit 50 tons or more per year 
of VOC or NOX, or a new source at an existing facility 
resulting in an increase in the potential to emit either VOC or 
NOX which, when aggregated with the other emissions 
increases determined in accordance with subsection (c)(1), results in 
an increase of 25 tons per year, 1,000 pounds per day or 100 pounds per 
hour of VOC or NOX, or more, whichever is more 
restrictive.'' Section 127.203(b)(2). There are currently no areas in 
Pennsylvania that have been classified as serious nonattainment for 
ozone.
    All areas in Pennsylvania other than the Philadelphia severe ozone 
nonattainment area are treated as moderate ozone nonattainment areas 
because they are classified as moderate or because the entire 
Commonwealth is in the OTR. In these areas the Pennsylvania regulation 
applies to either ``[a] new facility with the potential to emit 100 
tons or more per year of NOX or 50 tons or more per year of 
VOCs,'' or to ``[a] modification to an existing facility with the 
potential to emit 100 tons or more per year of NOX or 50 
tons or more per year of VOCs, or a new source at an existing facility 
resulting in an increase in the potential to emit either VOC or 
NOX which, when aggregated with the other emissions 
increases determined in accordance with Section 127.211, results in an 
increase of 40 tons per year, 1,000 pounds per day or 100 pounds per 
hour of VOC or NOX, or more, whichever is more 
restrictive.'' Section 127.203(b)(1).
    The major source size threshold for new sources of PM-10, PM-10 
precursors, and PM is 100 TPY. A major modification is defined as a 
modification of a major source resulting in a significant increase in 
emissions. A significant increase in emissions is defined as an 
increase (aggregated with other applicable increases over a specified 
period of years, in accordance with Section 127.211) in the potential 
to emit PM-10 of 15 TPY, of PM of 25 TPY, or of PM or PM-10 of 1000 
pounds per day or 100 pounds per hour, whichever is more restrictive. 
The significant air quality impact levels for PM-10, PM-10 precursors 
and PM are 1.00 microgram/cubic meter (microgram/m\3\) on an annual and 
5.00 micrograms/m\3\ on an 24-hour average.
    The major source size threshold for new sources of PM-10, PM-10 
precursors, and PM is 100 TPY. A major modification is defined as a 
modification of a major source resulting in a significant increase in 
emissions. A significant increase in emissions is defined as an 
increase (aggregated with other applicable increases over a specified 
period of years, in accordance with Section 127.211) in the potential 
to emit PM-10 of 15 TPY, of PM of 25 TPY, or of PM or PM-10 of 1000 
pounds per day or 100 pounds per hour, whichever is more restrictive. 
The significant air quality impact levels for PM-10, PM-10 precursors 
and PM are 1.00 microgram/cubic meter (microgram/m\3\) on an annual and 
5.00 micrograms/m\3\ on an 24-hour average.
    The major source size threshold for new SOX sources is 
100 TPY. A major modification is defined as a modification of a major 
source resulting in a significant increase in emissions. A significant 
increase in emissions is defined as an increase in the potential to 
emit SOX (aggregated with other applicable increases over a 
specified period of years, in accordance with Section 127.211) of 40 
TPY, 1000 pounds per day or 100 pounds of SOX per hour, 
whichever is more restrictive. The significant air quality impact 
levels for SOX are 1.00 microgram/m\3\ on an annual average, 
5.00 micrograms/m\3\ on a 24-hour average, and 25.00 micrograms/m\3\ on 
a 3-hour average.
    The major source size threshold for new CO sources is 100 TPY. A 
major modification is defined as a modification to a major source 
resulting in a significant emissions increase. A significant increase 
in emissions is defined as an aggregated increased potential to emit CO 
of at least 50 TPY, 1000 pounds per day or 100 pounds per hour, 
whichever is more restrictive. The significant air quality impact 
levels for CO are 0.5 milligrams/cubic meter (milligrams/m\3\)on an 8-
hour average and 2.0 milligrams/m\3\ on a 1-hour average.
    For new Pb sources, the major source size threshold for NSR 
applicability is 100 TPY. A significant increase in emissions is 
defined as an aggregated increased potential to emit Pb of 0.6 TPY, 10 
pounds per day or 1 pound per hour, whichever is more restrictive. The 
significant air quality impact level is 0.1 micrograms/m\3\ on a 24-
hour average.

B. Special Modification Provisions

    The special modification provisions in the CAA at section 182(c) 
(6) through (8) are incorporated into the Pennsylvania regulation in 
Section 127.203(c) (1) through (3). These provisions are applicable to 
VOC or NOX sources locating in serious or severe ozone 
nonattainment areas. Currently there are no serious areas in 
Pennsylvania. Section 127.203(c)(1) specifies that sources are to 
aggregate their potential emissions over a consecutive 5-year period in 
order to determine whether the de minimis level of 25 TPY, 1000 pounds 
per day or 100 pounds per hour is exceeded. This provision further 
specifies that the 5-year contemporaneous period cannot extend back 
beyond January 1, 1991 or the design year of the most recent attainment 
demonstration, whichever is more recent. Section 127.203(c)(2) applies 
to facilities with potential emissions of VOC or NOX of less 
than 100 TPY where the modification results in an other than de minimis 
increase in emissions. The owner or operator may choose to offset the 
emissions of the proposed source with those elsewhere in the same 
facility at a ratio of at least 1.3 to 1 in order to avoid having the 
proposed source being considered an applicable modification under these 
regulations. If the facility does not offset at the required ratio, the 
change shall be considered an applicable modification, but the facility 
would be required to install BACT instead of LAER, and to meet 
Pennsylvania's BAT requirements. Section 127.203(c)(3) applies to 
facilities whose potential emissions of

[[Page 24063]]

VOC or NOX are greater than or equal to 100 TPY. The source 
may choose to offset the emissions from the proposed source with 
emission reductions elsewhere in the same facility at an internal 
offset ratio of 1.3 to 1 in order to avoid installing LAER. The source 
is still required to install technology to meet Pennsylvania's BAT 
requirements. Pennsylvania's regulations pertaining to the special 
modification provisions are consistent with the CAA's requirements.

C. Provisions for Emission Reduction Credits

    Section 127.211 of the Pennsylvania regulation states the 
applicability criteria for determining whether a source is subject to 
the new source regulations. Included in these criteria is a requirement 
that all sources determined to be major (new or modified) must have 
emission reduction credits certified by Pennsylvania through the 
emission reduction credit (ERC) registry, established in Sections 
127.206 through 127.210. Pennsylvania requires that ERCs be generated 
after January 1, 1991, which is consistent with the baseline that will 
be used in Pennsylvania's rate of progress demonstrations and 
demonstrations of attainment.
    All ERCs are required to be made federally enforceable in the plan 
approval, which will specify that the emissions decrease is federally 
enforceable on or before the commence construction date. Detailed 
information required to accompany a source's application to register 
ERCs is provided in Section 127.207. Pennsylvania retains control over 
all ERCs deposited into the registry and all ERCs withdrawn for use 
from the registry. All Pennsylvania sources requiring emission offsets 
must obtain their ERCs through the Pennsylvania ERC registry. Out-of-
state sources may deposit ERCs into the Pennsylvania registry or trade 
ERCs provided there is reciprocity between Pennsylvania and the other 
state and only upon approval through SIP approved rules and procedures, 
including an EPA approved SIP revision.
    The registry listing the ERCs available, along with other pertinent 
information, will be published in the Pennsylvania Bulletin on a 
quarterly basis. ERCs generated through the curtailment or shutdown of 
a source, and which are not included in a plan approval and used as 
offsets expire for use as offsets 10 years after the date the facility 
ceased emitting those emissions. ERCs used for netting have a shorter 
lifetime, as specified in Section 127.211. The offset ratios, based on 
an area's nonattainment classification or location in the OTR, are 
located in Section 127.210. Pennsylvania requires that fugitive VOC 
emissions, regardless of the location of the source in the 
Commonwealth, be offset by at least a 1.3:1 ratio. The offset ratios 
are consistent with those required in the CAA.
    For ERCs banked prior to January 1, 1991, Section 127.208(6) 
prohibits the use of ERCs in an area with a higher nonattainment 
classification than the one in which they were generated. Section 
127.205(2) requires proposed new source applicants to demonstrate that 
all other facilities under their operation or ownership are in 
compliance or on a schedule for compliance approved by Pennsylvania. 
Section 127.205(5) requires proposed new or modified source owners or 
operators to conduct alternative sites and benefits analyses to 
demonstrate that the benefits of the proposed source significantly 
outweigh the environmental and social costs imposed on the Commonwealth 
as a result of the proposed source's location, construction or 
modification. Section 127.206(I) clearly prohibits use of ERCs to 
achieve compliance with Reasonably Available Control Technology (RACT), 
Best Available Technology (BAT), New Source Performance Standards 
(NSPS), Best Available Control Technology (BACT), Lowest Achievable 
Emission Reductions (LAER) or other emissions limitations required by 
the CAA or Pennsylvania's Clean Air Act.

D. Prior Shutdown Credits

    An issue associated with this proposed rulemaking action is that 
Pennsylvania's regulations allow sources located in nonattainment areas 
which lack approved attainment demonstrations to take credit for 
emission reductions obtained from shutdowns or curtailments of 
production or operating hours in cases where the reductions took place 
prior to the source's application for a new source review permit. 
Current EPA regulations, developed prior to the CAA Amendments of 1990, 
provide that states having nonattainment areas without EPA approved 
attainment demonstrations may allow sources located in those areas to 
take credit for emission reductions resulting from shutdowns or 
curtailments of production or operating hours only if the reductions 
occurred on or after the date the new proposed source or modification 
files a permit application, or, if the applicant can establish that the 
proposed new source is a replacement for the shutdown or curtailed 
source. See 40 CFR part 51.165(a)(3)(ii)(C)(2). Thus, under current EPA 
regulations, states are prohibited from crediting emission reductions 
which occurred prior to the date the new proposed source or 
modification files a permit application (prior shutdown or curtailment 
credits). It is important to note that Pennsylvania's current SIP 
regulations do not contain this so called ``shutdown prohibition.''
    Pennsylvania's revised NSR regulations, 25 Pa. Code Chapter 127, 
Subchapter E, affirmatively allow sources to take credit for emission 
reductions resulting from shutdowns or curtailments of production or 
operating hours which occurred after January 1, 1991, or the design 
year of the most recent attainment demonstration, whichever is more 
recent. Because Pennsylvania's regulation would allow sources located 
in nonattainment areas lacking approved attainment plans to take credit 
for shutdowns or curtailments which occurred prior to the date a new 
proposed source or modification files a permit application, 
Pennsylvania's regulation appears not to conform with the existing EPA 
regulatory prohibition on the use of prior shutdown or curtailment 
credits found at 40 CFR part 51.165(a)(3)(ii)(C)(2).
    However, as explained above, on July 23, 1996, EPA published in the 
Federal Register a comprehensive rulemaking which proposed significant 
changes to the current PSD and nonattainment NSR rules. This proposed 
rulemaking is hereinafter referred to as the ``NSR Reform Rulemaking.'' 
See 61 FR 38311. The NSR Reform Rulemaking proposes to revise 
regulations for the approval and promulgation of SIPs and the 
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. Specifically, section VII.A of EPA's NSR Reform Rulemaking, 
entitled ``Emissions Credits Resulting From Source Shutdowns and 
Curtailments'', proposes to eliminate the current restrictions on 
crediting of emissions reductions from source shutdowns and 
curtailments that occurred after 1990. In the NSR Reform Rulemaking, 
EPA proposes two different alternatives for eliminating the prior 
shutdown prohibition. The second of these alternatives, entitled 
``Shutdown Alternative 2'', generally lifts the current offset 
restriction applicable to emissions reductions from source shutdowns 
and source curtailments for all nonattainment areas and all pollutants 
where such reductions occur after the baseyear of the emissions

[[Page 24064]]

inventory used (or to be used) to meet the applicable provisions of 
Part D of the CAA. See proposed Section 51.165(a)(3)(ii)(C)(5) 
[Alternative 2], 61 FR 38314. Under this alternative, states could 
allow emissions reductions from source shutdowns or curtailments to be 
used as offsets in all nonattainment areas and for all pollutants 
provided such reductions occurred after the baseyear of the emissions 
inventory used by the state to meet the applicable provisions of Part D 
of the CAA.
    As explained above, Pennsylvania's NSR regulation allows sources to 
take credit for emission reductions resulting from shutdowns or 
curtailments of production or operating hours which occurred after 
January 1, 1991, or the design year of the most recent attainment 
demonstration, whichever is more recent. Because of this regulatory 
language, Pennsylvania would not have to modify its NSR rule if, in the 
future, an attainment demonstration were required to be based on a more 
recent design year. Currently, the earliest date by which emissions 
reductions from source shutdowns or curtailments would be creditable 
towards offsets under Pennsylvania's NSR rule is on or after January 1, 
1991. This is because 1990 is the base year required to be used to 
satisfy the Part D progress and attainment demonstration requirements 
of the CAA. That date would move forward to the new design year of any 
subsequent attainment demonstration required to be done by 
Pennsylvania. Thus, EPA believes that Pennsylvania's NSR regulation is 
generally consistent with ``Shutdown Alternative 2'' as described in 
EPA's proposed NSR Reform Rulemaking since both the Pennsylvania rule 
and Alternative 2 allow sources to take credit only for emissions 
reductions from shutdowns or curtailments occurring after January 1, 
1991. Because Pennsylvania's NSR regulation is consistent with 
Alternative 2 of EPA's proposed NSR Reform Rulemaking (as discussed 
above), and because approval of the revised version of Pennsylvania's 
NSR regulation submitted on February 4, 1994 would strengthen the SIP 
to be consistent with the CAA's provisions for NSR, EPA believes that 
Pennsylvania's NSR revised regulation warrants limited approval. If EPA 
promulgates Alternative 2, this limited approval would convert to a 
full approval.
    The alternative shutdown-related alternative set forth in EPA's NSR 
Reform Rulemaking proposal is entitled ``Shutdown Alternative 1.'' This 
alternative proposes, for ozone nonattainment areas, to lift the 
current offset restriction applicable to emissions reductions from 
source shutdowns and curtailments in such areas without EPA-approved 
attainment demonstrations, provided the emissions reductions occur 
after November 15, 1990 and the area has kept current with the CAA's 
scheduled Part D ozone nonattainment planning requirements. See 
proposed Section 51.165(a)(3)(ii)(C) (5) and (6) [Alternative 1].
    EPA acknowledges that either Alternative 1 or 2 may be eventually 
incorporated into the final NSR Reform Rulemaking upon its final 
promulgation. It is also noted that while EPA is with this rulemaking 
action proposing to grant limited approval of Pennsylvania's NSR 
regulation based on the rule's consistency with Shutdown Alternative 2 
in EPA's NSR Reform Rulemaking, the Commonwealth may need to amend its 
NSR regulation if Shutdown Alternative 1 rather than Shutdown 
Alternative 2 is promulgated. If Alternative 1 is promulgated, EPA 
would determine the status of Pennsylvania's conformance with Part D 
ozone planning requirements. If Pennsylvania's SIP was not current with 
the Part D ozone planning requirements for any nonattainment area, EPA 
would make a SIP call for Pennsylvania to amend its NSR rule to conform 
with Alternative 1 as provided in EPA's final NSR Reform Rulemaking.

III. Proposed Action

    EPA is proposing limited approval of the revisions to the 
Pennsylvania SIP NSR regulations submitted on February 4, 1994 because 
such approval would strengthen the SIP so that it meets the NSR 
requirements of the CAA as discussed herein. EPA is soliciting public 
comments on the issues discussed in this document or on other relevant 
matters. These comments will be considered before taking final action. 
Interested parties may participate in the Federal rulemaking procedure 
by submitting written comments to the EPA Regional Office listed in the 
Addresses section of this document.
    Nothing in this action should be construed as permitting or 
allowing or establishing a precedent for any future request for 
revision to any state implementation plan. Each request for revision to 
the state implementation plan 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 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 
Clean Air 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, the 
Administrator certifies that it does not have a significant impact on 
any small entities affected. Moreover, due to the nature of the 
Federal-state relationship under the CAA, preparation of a flexibility 
analysis would constitute Federal inquiry into the economic 
reasonableness of state action. The Clean Air Act forbids EPA to base 
its actions concerning SIPs on such grounds. Union Electric Co. v. U.S. 
EPA, 427 U.S. 246, 255-66 (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 that includes a Federal mandate that may result in estimated 
costs to state, local, or tribal governments in the aggregate; or to 
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

[[Page 24065]]

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 
requirements. Accordingly, no additional costs to state, local, or 
tribal governments, or to the private sector, result from this action.
    The Administrator's decision to approve or disapprove 
Pennsylvania's NSR SIP revision will be based on whether it meets the 
requirements of section 110(a)(2)(A)-(K) and part D of the Clean Air 
Act, as amended, and EPA regulations in 40 CFR Part 51.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide, 
Hydrocarbons, Incorporation by reference, Intergovernmental relations, 
Nitrogen dioxide, Ozone, Particulate matter, Reporting and 
recordkeeping requirements, Sulfur oxides.

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

    Dated: April 22, 1997.

Stanley L. Laskowski,
Acting Regional Administrator, Region III.
[FR Doc. 97-11492 Filed 5-1-97; 8:45 am]
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