[Federal Register Volume 68, Number 92 (Tuesday, May 13, 2003)]
[Rules and Regulations]
[Pages 25504-25507]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-11749]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[IL 184-1a; FRL-7481-3]


Approval and Promulgation of Implementation Plan; Illinois New 
Source Review Amendments

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is approving a requested revision to the Illinois State 
Implementation Plan (SIP), affecting air permit rules, submitted on 
August 31, 1998. The submittal revises provisions for major 
modifications to stationary sources to align more closely with the 
Clean Air Act (CAA).

DATES: This rule is effective on July 14, 2003, without further notice, 
unless EPA receives written adverse comments by June 12, 2003. If 
adverse comment is received, EPA will publish a timely withdrawal of 
this direct final rule in the Federal Register and inform the public 
that the rule will not take effect.

ADDRESSES: Copies of the State's submittal and other supporting 
information used in developing the proposed approval are available for 
inspection during normal business hours at the following location: EPA 
Region 5, 77 West Jackson Boulevard, AR-18J, Chicago, Illinois 60604. 
Please contact Steve Marquardt at (312) 353-3214 to arrange a time to 
inspect the submittal.



FOR FURTHER INFORMATION CONTACT: Steve Marquardt, AR-18J, 77 West 
Jackson Boulevard, Chicago, Illinois 60604, Telephone Number: (312) 
353-3214, E-Mail Address: [email protected].

SUPPLEMENTARY INFORMATION: This section addresses the following 
questions:

    What does this document address?
    What is the legal basis of the changes that EPA is approving?
    What is the impact of these changes on the Emission Reductions 
Market System (ERMS)?
    What is involved in this final action?

What Does This Document Address?

    Illinois' rules for nonattainment New Source Review (NSR), 35 Ill. 
Adm. Code 203, are designed to ensure that the

[[Page 25505]]

construction of a major new source of air pollution or a large increase 
of emissions at an existing source does not interfere with the 
attainment demonstration and does not delay timely achievement of the 
ambient air quality standards. There are four substantive requirements 
imposed upon owners or operators of major projects, as set forth in 
part 203. The first of these is the imposition of Lowest Achievable 
Emission Rate (LAER) or for certain existing sources, Best Available 
Control Technology (BACT) on emissions of the nonattainment pollutant 
from the major project. Appropriate limits are established on a case by 
case basis in the permitting process. The second requirement is that 
the emissions of the nonattainment pollutant from a major project must 
be accompanied by emission offsets from other sources in the 
nonattainment area. This assures that the total emissions of the 
nonattainment pollutant will remain within the levels accommodated by 
the State's attainment demonstration. The third requirement is 
compliance by other sources in the State which are under common 
ownership or control with the person proposing the project. The final 
requirement is an analysis of alternatives to the particular project, 
to determine whether the benefits of the project outweigh the 
environmental and social costs.
    The amendments to 35 Ill. Adm. Code 203 are intended to better 
track the language of sections 182(c)(6), (7), and (8) of the CAA, and 
to make other revisions consistent with this effort. These changes deal 
with how one determines whether a proposed change at a source is a 
major modification. Tracking the language of these sections more 
closely allows Illinois to better accommodate EPA guidance on 
interpretation of these provisions of the CAA. In particular, Illinois 
has amended part 203 so that it does not conflict with EPA's ``Notice 
of Proposed Rulemaking, Prevention of Significant Deterioration (PSD) 
and Nonattainment New Source Review (NSR),'' 61 FR 38249 (July 23, 
1996). One topic addressed by EPA in this 1996 proposed rulemaking was 
sections 182(c)(6), (7) and (8) of the CAA (61 FR 38298-38302).
    When the EPA finalizes its NSR rulemaking establishing guidance on 
these sections of the CAA, Illinois' NSR rules will have to be 
reevaluated. The Illinois EPA has committed to undertaking such a 
review of Illinois' NSR rules upon final EPA NSR rulemaking (Illinois 
EPA comments filed to the Pollution Control Board, November 6, 1997).

What Is the Legal Basis of the Changes That EPA Is Approving?

    The statutory basis for the changes to part 203 is sections 
182(c)(6), (7) and (8) of the CAA. These provisions establish criteria 
for determining the applicability of nonattainment NSR for 
modifications in serious and severe ozone nonattainment areas.

The De Minimis Rule: Section 182(c)(6) of the CAA

    The ``de minimis rule,'' section 182(c)(6) of the CAA, specifies 
the basic approach for determining whether proposed modifications in 
serious and severe ozone nonattainment areas are subject to 
nonattainment NSR. In these areas, the determination whether a project 
at a source is a major modification must consider other projects at the 
source over the last five calendar years. If the sum of the particular 
projects' emissions of an ozone precursor, (e.g., volatile organic 
material), and increases and decreases in emissions from other 
``contemporaneous'' projects is significant, i.e., more than a ``de 
minimis'' threshold of 25 tons per year, the particular project is 
major and subject to the requirements of NSR. The State of Illinois has 
adopted this provision and is making no changes to it. (Refer to 35 
Ill. Adm. Code 203.209(b)).
    In addition, Illinois had adopted NSR rules that restricted the 
role of contemporaneous emission decreases at a source in certain 
circumstances. In particular, Illinois' NSR rules allowed applicability 
of NSR to be triggered for a discrete operation, unit or other 
pollutant emitting activity irrespective of decreases elsewhere at the 
source, if a proposed project would result in a significant increase in 
emissions at such operation or unit. For this purpose, other emission 
increases and decreases at the discrete operation or unit during the 
contemporaneous time period could be considered, but not decreases 
elsewhere at the source. As a result, projects with significant 
increases in emissions at individual units or operations could trigger 
nonattainment NSR even if the overall net change in emissions at a 
source was not significant. This was a consequence of Illinois' 
historic interpretation of the language of sections 182(c)(7) and (8) 
of the CAA.
    The various amendments to 35 Ill. Adm. Code part 203, which EPA is 
approving, remove provisions that could trigger NSR applicability for 
individual units or operations in the manner explained above. The 
amendments also make related changes to the rules. These amendments 
allow Illinois to follow the proposed interpretation of section 
182(c)(6), (7) and (8) of the CAA published by EPA in the Federal 
Register in July 1996. By making the language of 35 Ill. Adm. Code part 
203 more consistent with the language of the CAA, Illinois can 
accommodate EPA's published interpretation. As stated above, the 
Illinois EPA has committed to reevaluate part 203 upon EPA finalization 
of its federal rules establishing guidance on these sections of the 
CAA.

Special Rules for Modifications: Sections 182(c)(7) and (8) of the CAA

    Section 182(c)(7) and (8) of the CAA are the ``Special Rule for 
Modifications of Sources Emitting Less Than 100 Tons'' and the 
``Special Rule for Modifications of Sources Emitting 100 Tons or 
More.'' These provisions contain additional applicability provisions 
for major modifications in serious and severe ozone nonattainment 
areas. In general, they provide that a discrete operation, unit, or 
other pollutant emitting activity at a source with a significant 
emission increase (i.e., more than a de minimis increase) shall be 
considered a major modification unless the owner or operator of the 
source elects to offset the emissions from other operations, units, or 
activities within the source at an internal offset ratio of 1.3 to 1. 
If a source elects to provide internal offsets, a proposed modification 
may be excused from some or all of the NSR requirements. Illinois' NSR 
rules at 35 Ill. Adm. Code 203.207 and 203.301 generally provided and 
continue to provide the relief offered by sections 182(c)(7) and (8) of 
the CAA. However, as explained above, provisions were also included in 
Illinois' NSR rules that allowed a major modification to be triggered 
by proposed increases in emissions at an individual emission unit.
    The interpretation of section 182(c)(7) and (8) of the CAA 
published by EPA in 1996 recognizes that a source may not have enough 
emissions decreases to internally ``net out'' an entire proposed 
modification to 25 tons or less so that the modification is de minimis. 
However, where a proposed modification involves more than one discrete 
unit, the source may have sufficient creditable internal decreases that 
could be applied at a 1.3 to 1 offset ratio against the emissions 
increase at particular units. In such circumstances, sections 182(c)(7) 
and (8) of the CAA function to allow a source to use creditable 
internal decreases that are

[[Page 25506]]

insufficient to avoid nonattainment NSR for an entire project to still 
avoid NSR requirements for certain units involved in a major 
modification. Illinois has made changes to its NSR rules so as to be 
able to follow this interpretation.

Review of Individual Amendments to Illinois' NSR Rules

    The first change made by Illinois was to revise 35 Ill. Adm. Code 
203.207(d), the applicability criteria for major modifications in 
serious and severe ozone nonattainment areas. The amendment better 
follows the wording of section 182(c)(6) of the CAA. Accordingly, 35 
Ill. Adm. Code 203.207(d) no longer provides that changes at a discrete 
operation or unit can be subject to NSR when the source as a whole 
would not experience a de minimis increase in emissions as a result of 
the proposed modification.
    A related change was made to 35 Ill. Adm. Code 203.206(d), a 
provision in the applicability criteria for major sources dealing with 
reconstruction of a source. Illinois deleted this provision, which 
allowed reconstruction of a source to be treated as a major new source. 
This provision applied in Illinois when changes at an individual 
operation or unit could trigger nonattainment NSR independent of 
emission decreases elsewhere at the source. This provision is no longer 
considered relevant by Illinois under the amended NSR rules with 
source-wide netting of contemporaneous emissions increases and 
decreases available to determine whether a proposed project would be a 
major modification.
    Illinois also made a related change to 35 Ill. Adm. Code 
203.207(c)(1), in the applicability criteria for major modifications. 
Illinois deleted the specific exclusion for replacements since the term 
reconstruction was no longer available to govern this exclusion.
    Illinois added 35 Ill. Adm. Code 203.207(e) and revised 35 Ill. 
Adm. Code 203.301(e) to better follow the language of section 182(c)(7) 
of the CAA, the ``Special Rule for Modifications of Sources Emitting 
Less Than 100 Tons.'' As allowed by this special rule for modifications 
at smaller sources, Illinois' NSR rules do not apply the requirements 
of nonattainment NSR to a discrete operation or unit involved in a 
major modification for which the source elects and is able to provide 
internal offsets at a ratio of 1.3 to 1. In addition, major 
modifications at these smaller major sources are only required to 
comply with Best Available Control Technology, rather than the Lowest 
Achievable Emission Rate.
    Finally, Illinois added 35 Ill. Adm. Code 203.301(f), replacing 
previous 35 Ill. Adm. Code 203.301(e)(2), to better follow the language 
of section 182(c)(8) of the CAA, the ``Special Rule for Modifications 
of Sources Emitting 100 Tons or More.'' As allowed by this special 
rule, for modifications at larger major sources, Illinois' NSR rules do 
not apply the LAER requirement of nonattainment NSR to a discrete 
operation or unit involved in a major modification for which the source 
elects and is able to provide internal offsets at a ratio of 1.3 to 1.

What Is the Impact of These Changes on the Emissions Reductions Market 
System (ERMS)?

    The ERMS, which is codified in 35 Ill. Adm. Code Part 205, is a 
program adopted by Illinois for the Northeastern Illinois ozone 
nonattainment area to reduce emissions of volatile organic material 
(VOM) from major stationary sources. Illinois' amendments to 35 Ill. 
Adm. Code 203 may have an effect on the calculation of certain sources' 
baselines and allocations of allotment trading units (ATUs) under the 
ERMS. ERMS required subject sources to determine their baseline levels 
of volatile organic material emissions. Generally, sources receive 
annual allotments of ATUs equivalent to their baseline emissions less 
12%. At the end of each calendar year, sources ``turn in'' ATUs in an 
amount not less that their volatile organic material emissions during 
the preceding ozone season. When a sources' emissions exceed its 
allotment of ATUs, the source must buy ATUs from other sources that 
have been able to reduce their emissions below their allotments.
    Under the amendments to 35 Ill. Adm. Code 203, a source that has a 
modification to a discrete unit would have the option to net out on a 
source-wide basis which would mean that the modification would not be 
subject to requirements of NSR. This would allow sources to potentially 
have a larger baseline under ERMS because they are now subject to less 
stringent requirements pursuant to nonattainment NSR.
    This final rule is not anticipated to significantly effect the ERMS 
baselines that have already been set. Those baselines were set 
generally using the average of the two seasonal allotments periods with 
the highest VOM emissions during 1994, 1995, and 1996. The sources that 
set their baselines under this requirement did so prior to the approval 
of this rule change and were processed according to the rules that 
applied at that time. Any change requested by a source to its baseline 
would entail a significant revision to the source's CAAPP permit and 
can be evaluated on an individual basis.

What Is Involved in This Final Action?

    EPA is approving a requested revision to Illinois SIP affecting the 
nonattainment NSR rules at 35 Ill. Adm. Code 203, submitted on August 
31, 1998. The amendments to 35 Ill. Adm. Code 203 are intended to 
better track the language of sections 182(c)(6), (7) and (8) of the 
CAA, and to make other revisions consistent with this effort. Tracking 
of these sections more closely allows Illinois to accommodate EPA 
guidance these provisions of the CAA.

Statutory and Executive Order Reviews

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this 
action is not a ``significant regulatory action'' and therefore is not 
subject to review by the Office of Management and Budget. For this 
reason, this action is also not subject to Executive Order 13211, 
``Actions Concerning Regulations That Significantly Affect Energy 
Supply, Distribution, or Use'' (66 FR 28355, May 22, 2001). This action 
merely approves state law as meeting Federal requirements and imposes 
no additional requirements beyond those imposed by state law. 
Accordingly, the Administrator certifies that this rule will not have a 
significant economic impact on a substantial number of small entities 
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Because 
this rule approves pre-existing requirements under state law and does 
not impose any additional enforceable duty beyond that required by 
state law, it does not contain any unfunded mandate or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4).
    This rule also does not have tribal implications because it will 
not have a substantial direct effect on one or more Indian tribes, on 
the relationship between the Federal government and Indian tribes, or 
on the distribution of power and responsibilities between the Federal 
government and Indian tribes, as specified by Executive Order 13175 (65 
FR 67249, November 9, 2000). This action also does not have federalism 
implications because it does 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

[[Page 25507]]

Executive Order 13132 (64 FR 43255, August 10, 1999). This action 
merely approves a State rule implementing a Federal standard, and does 
not alter the relationship or the distribution of power and 
responsibilities established in the Clean Air Act. This rule also is 
not subject to Executive Order 13045 ``Protection of Children from 
Environmental Health Risks and Safety Risks'' (62 FR 19885, April 23, 
1997), because it is not economically significant.
    In reviewing SIP submissions, EPA's role is to approve state 
choices, provided that they meet the criteria of the Clean Air Act. In 
this context, in the absence of a prior existing requirement for the 
State to use voluntary consensus standards (VCS), EPA has no authority 
to disapprove a SIP submission for failure to use VCS. It would thus be 
inconsistent with applicable law for EPA, when it reviews a SIP 
submission, to use VCS in place of a SIP submission that otherwise 
satisfies the provisions of the Clean Air Act. Thus, the requirements 
of section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not 
impose an information collection burden under the provisions of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
    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).
    Under section 307(b)(1) of the Clean Air Act, petitions for 
judicial review of this action must be filed in the United States Court 
of Appeals for the appropriate circuit by July 14, 2003. Filing a 
petition for reconsideration by the Administrator of this final rule 
does not affect the finality of this rule for the purposes of judicial 
review nor does it extend the time within which a petition for judicial 
review may be filed, and shall not postpone the effectiveness of such 
rule or action. This action may not be challenged later in proceedings 
to enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Air pollution control, Environmental protection, Incorporation by 
reference, Carbon monoxide, Intergovernmental relations, Lead, Nitrogen 
dioxide, Ozone, Particulate matter, Sulfur oxides, Volatile organic 
compounds.

    Dated: April 2, 2003.
Bharat Mathur,
Acting Regional Administrator, Region 5.

0
For the reasons stated in the preamble, part 52, chapter I, title 40 of 
the Code of Federal Regulations is amended as follows:

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart O--Illinois

0
2. Section 52.720 is amended by adding paragraph (c)(167) to read as 
follows:


Sec.  52.720  Identification of plan.

* * * * *
    (c) * * *
    (167) On August 31, 1998, Illinois submitted revisions to its major 
stationary sources construction and modification rules (NSR Rules) as a 
State Implementation Plan revision request. These revisions apply only 
in areas in Illinois that have been designated as being in serious or 
severe nonattainment with the national ambient air quality standards 
for ozone.
    (i) Incorporation by reference. Illinois Administrative Code, Title 
35: Environmental Protection, Subtitle B: Air Pollution, Chapter I: 
Pollution Control Board, Subchapter A: Permits and General Provisions, 
Part 203 Major Stationary Sources Construction and Modification, 
Subpart B: Major Stationary Sources in Nonattainment Areas, Section 
203.206 Major Stationary Source and Section 203.207 Major Modification 
of a Source; and, Subpart C: Requirements for Major Stationary Sources 
in Nonattainment Areas, Section 203.301 Lowest Achievable Emissions 
Rate. Amended in R98-10 at 22 Ill. Reg. 5674, effective March 10, 1998.

[FR Doc. 03-11749 Filed 5-12-03; 8:45 am]
BILLING CODE 6560-50-P