[Federal Register Volume 69, Number 126 (Thursday, July 1, 2004)]
[Rules and Regulations]
[Pages 40278-40285]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-14992]



[[Page 40277]]

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Part VIII





Environmental Protection Agency





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40 CFR Parts 51 and 52



Prevention of Significant Deterioration (PSD) and Non-Attainment New 
Source Review (NSR): Equipment Replacement Provision of the Routine 
Maintenance, Repair and Replacement Exclusion; Reconsideration; Final 
Rule

  Federal Register / Vol. 69, No. 126 / Thursday, July 1, 2004 / Rules 
and Regulations  

[[Page 40278]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51 and 52

[AD-FRL-7781-4; E-Docket ID No. OAR-2002-0068; Legacy Docket No. A-
2002-04]
RIN-2060-AK28


Prevention of Significant Deterioration (PSD) and Non-Attainment 
New Source Review (NSR): Equipment Replacement Provision of the Routine 
Maintenance, Repair and Replacement Exclusion; Reconsideration

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of reconsideration of final rule; request for public 
comment; notice of public hearing.

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SUMMARY: On October 27, 2003 and December 24, 2003, the EPA revised 
regulations governing the major New Source Review (NSR) programs 
mandated by parts C and D of title I of the Clean Air Act (CAA or Act). 
Following these two actions, the Administrator received petitions for 
reconsideration from a collection of environmental and public interest 
groups and a group of states. Today, we, the EPA, are announcing our 
reconsideration of certain issues arising from the final rules of 
October 27, 2003 and December 24, 2003. We are requesting public 
comment on three issues as to which we are granting reconsideration. 
The issues are described in section II of this notice. We plan to issue 
a final decision on these issues and other issues raised in the various 
petitions by December 28, 2004.
    We are only seeking comment on provisions of the major NSR rules as 
specifically identified in this notice. We will not respond to any 
comments addressing any other provisions of the NSR rules or program.

DATES: Comments. Comments must be received on or before August 30, 
2004. Because of the need to resolve the issues raised in this notice 
in a timely manner, we will not grant requests for extension beyond 
this date.
    Public Hearing. The public hearing will convene at 9 a.m. e.d.t. 
and will end after all registered speakers have had an opportunity to 
speak but no later than 10 p.m. e.d.t. on approximately August 2, 2004. 
We will publish a notice to announce the specific date for this 
hearing. For additional information on the public hearing and 
requesting to speak, see the SUPPLEMENTARY INFORMATION section of this 
preamble.

ADDRESSES: Comments. Comments may be submitted by mail to U.S. 
Environmental Protection Agency, EPA West (Air Docket), 1200 
Pennsylvania Ave., NW., Rooms: B108, Mail Code: 6102T, Washington, DC 
20460, Attention E-Docket ID No. OAR-2002-0068 (Legacy Docket ID No. A-
2002-04). Comments may also be submitted electronically, by facsimile, 
through hand delivery/courier, or by phone.
    Public Hearing. A public hearing will be held at a hotel near 
Research Triangle Park, North Carolina. We will publish a notice to 
announce the specific location of the hearing.

FOR FURTHER INFORMATION CONTACT: Mr. David Svendsgaard, Information 
Transfer and Program Integration Division (C339-03), U.S. Environmental 
Protection Agency, Research Triangle Park, NC 27711, telephone (919) 
541-2380, or electronic mail at [email protected].

SUPPLEMENTARY INFORMATION:

I. General Information

A. What Are the Regulated Entities?

    Entities potentially affected by the subject rule include sources 
in all industry groups. The majority of sources potentially affected 
are expected to be in the following groups. The majority of sources 
potentially affected are expected to be in the following groups.

------------------------------------------------------------------------
          Industry group              SIC a              NAICS b
------------------------------------------------------------------------
Electric Services................          491  221111, 221112, 221113,
                                                 221119, 221121, 221122.
Petroleum Refining...............          291  324110.
Industrial Inorganic Chemicals...          281  325181, 325120, 325131,
                                                 325182, 211112, 325998,
                                                 331311, 325188.
Industrial Organic Chemicals.....          286  325110, 325132, 325192,
                                                 325188, 325193, 325120,
                                                 325199.
Miscellaneous Chemical Products..          289  325520, 325920, 325910,
                                                 325182, 325510.
Natural Gas Liquids..............          132  211112.
Natural Gas Transport............          492  486210, 221210.
Pulp and Paper Mills.............          261  322110, 322121, 322122,
                                                 322130
Paper Mills......................          262  322121, 322122.
Automobile Manufacturing.........          371  336111, 336112, 336211,
                                                 336992, 336322, 336312,
                                                 336330, 336340, 336350,
                                                 336399, 336212, 336213.
Pharmaceuticals..................          283  325411, 325412, 325413,
                                                 325414.
------------------------------------------------------------------------
a Standard Industrial Classification.
b North American Industry Classification System.

Entities potentially affected by the subject rule also include State, 
local, and tribal governments that are delegated authority to implement 
these regulations.

B. How Can I Get Copies of This Document and Other Related Information?

    1. Docket. EPA has established an official public docket for this 
action under E-Docket ID No. OAR-2002-0068 (Legacy Docket ID No. A-
2002-04). The official public docket consists of the documents 
specifically referenced in this action, any public comments received, 
and other information related to this action. Although a part of the 
official docket, the public docket does not include Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. The official public docket is the collection of 
materials that is available for public viewing at the EPA Docket 
Center, (Air Docket), U.S. Environmental Protection Agency, 1301 
Constitution Ave., NW., Room: B108, Mail Code: 6102T, Washington, DC 
20460. The EPA Docket Center Public Reading Room is open from 8:30 a.m. 
to 4:30 p.m., Monday through Friday, excluding legal holidays. The 
telephone number for the Reading Room is (202) 566-1742. A reasonable 
fee may be charged for copying.
    2. Electronic Access. You may access this Federal Register document 
electronically through the EPA Internet under the ``Federal Register'' 
listings at http://www.epa.gov/fedrgstr/.
    An electronic version of a portion of the public docket is 
available through EPA's electronic public docket and comment system, 
EPA Dockets. Interested persons may use EPA Dockets at http://www.epa.gov/edocket/ to submit or view public comments, access

[[Page 40279]]

the index listing of the contents of the official public docket, and 
access those documents in the public docket that are available 
electronically. Once in the system, select ``search,'' then key in the 
appropriate docket identification number.
    Certain types of information will not be placed in the EPA Dockets. 
Information claimed as CBI and other information whose disclosure is 
restricted by statute, which is not included in the official public 
docket, will not be available for public viewing in EPA's electronic 
public docket. EPA's policy is that copyrighted material will not be 
placed in EPA's electronic public docket but will be available only in 
printed, paper form in the official public docket. To the extent 
feasible, publicly available docket materials will be made available in 
EPA's electronic public docket. When a document is selected from the 
index list in EPA Dockets, the system will identify whether the 
document is available for viewing in EPA's electronic public docket. 
Although not all docket materials may be available electronically, you 
may still access any of the publicly available docket materials through 
the docket facility identified in section I.B.1. EPA intends to work 
towards providing electronic access to all of the publicly available 
docket materials through EPA's electronic public docket.
    For public commenters, it is important to note that EPA's policy is 
that public comments, whether submitted electronically or in paper, 
will be made available for public viewing in EPA's electronic public 
docket as EPA receives them and without change, unless the comment 
contains copyrighted material, CBI, or other information whose 
disclosure is restricted by statute. When EPA identifies a comment 
containing copyrighted material, EPA will provide a reference to that 
material in the version of the comment that is placed in EPA's 
electronic public docket. The entire printed comment, including the 
copyrighted material, will be available in the public docket.
    Public comments submitted on computer disks that are mailed or 
delivered to the docket will be transferred to EPA's electronic public 
docket. Public comments that are mailed or delivered to the Docket will 
be scanned and placed in EPA's electronic public docket. Where 
practical, physical objects will be photographed, and the photograph 
will be placed in EPA's electronic public docket along with a brief 
description written by the docket staff.
    For additional information about EPA's electronic public docket 
visit EPA Dockets online or see 67 FR 38102, May 31, 2002.

C. How and to Whom Do I Submit Comments?

    You may submit comments electronically, by mail, by facsimile, 
through hand delivery/courier, or by phone. To ensure proper receipt by 
EPA, identify the appropriate docket identification number in the 
subject line on the first page of your comment. Please ensure that your 
comments are submitted within the specified comment period. Comments 
received after the close of the comment period will be marked ``late.'' 
EPA is not required to consider these late comments. If you wish to 
submit CBI or information that is otherwise protected by statute, 
please follow the instructions in section I.D. Do not use EPA Dockets 
or e-mail to submit CBI or information protected by statute.
    1. Electronically. If you submit an electronic comment as 
prescribed below, EPA recommends that you include your name, mailing 
address, and an e-mail address or other contact information in the body 
of your comment. Also include this contact information on the outside 
of any disk or CD-ROM you submit, and in any cover letter accompanying 
the disk or CD-ROM. This ensures that you can be identified as the 
submitter of the comment and allows EPA to contact you in case EPA 
cannot read your comment due to technical difficulties or needs further 
information on the substance of your comment. EPA's policy is that EPA 
will not edit your comment, and any identifying or contact information 
provided in the body of a comment will be included as part of the 
comment that is placed in the official public docket, and made 
available in EPA's electronic public docket. If EPA cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment.
    a. EPA Dockets. Your use of EPA's electronic public docket to 
submit comments to EPA electronically is EPA's preferred method for 
receiving comments. Go directly to EPA Dockets at http://www.epa.gov/edocket, and follow the online instructions for submitting comments. To 
access EPA's electronic public docket from the EPA Internet Home Page, 
select ``Information Sources,'' ``Dockets,'' and ``EPA Dockets.'' Once 
in the system, select ``search,'' and then key in either Docket ID No. 
A-2002-04 or E-Docket ID No. OAR-2002-0068 (for which A-2002-04 is now 
a legacy number). The system is an ``anonymous access'' system, which 
means EPA will not know your identity, e-mail address, or other contact 
information unless you provide it in the body of your comment.
    b. E-mail. Comments may be sent by electronic mail (e-mail) to [email protected], Attention E-Docket ID No. OAR-2002-0068 
(Legacy Docket ID No. A-2002-04). In contrast to EPA's electronic 
public docket, EPA's e-mail system is not an ``anonymous access'' 
system. If you send an e-mail comment directly to the Docket without 
going through EPA's electronic public docket, EPA's e-mail system 
automatically captures your e-mail address. E-mail addresses that are 
automatically captured by EPA's e-mail system are included as part of 
the comment that is placed in the official public docket, and made 
available in EPA's electronic public docket.
    c. Disk or CD-ROM. You may submit comments on a disk or CD-ROM that 
you mail to the mailing address identified in section I.C.2. These 
electronic submissions will be accepted in WordPerfect or ASCII file 
format. Avoid the use of special characters and any form of encryption.
    2. By Mail. Send two copies of your comments to: U.S. Environmental 
Protection Agency, EPA West (Air Docket), 1200 Pennsylvania Ave., NW., 
Room: B108, Mail Code: 6102T, Washington, DC 20460, Attention E-Docket 
ID No. OAR-2002-0068 (Legacy Docket ID No. A-2002-04).
    3. By Hand Delivery or Courier. Deliver your comments to: EPA 
Docket Center, (Air Docket), U.S. Environmental Protection Agency, 1301 
Constitution Ave., NW., Room: B108, Mail Code: 6102T, Washington, DC 
20460, Attention Docket ID No. A-2002-04. Such deliveries are only 
accepted during the Docket's normal hours of operation as identified in 
section I.B.1.
    4. By Facsimile. Fax your comments to the EPA Docket Center at 
(202) 566-1741, Attention Docket ID No. A-2002-0068 (Legacy Docket ID 
No. A-2002-04).
    5. By Phone. You may call and leave oral comments on a public 
comment phone line. The number is (919) 541-0211. EPA will log and 
place in E-Docket ID No. OAR-2002-0068 (Legacy Docket ID No. A-2002-04) 
any comments received through this phone number.

D. How Should I Submit CBI to the Agency?

    Do not submit information that you consider to be CBI 
electronically through EPA's electronic public docket

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or by e-mail. Send or deliver information identified as CBI only to the 
following address: Mr. David Svendsgaard, c/o OAQPS Document Control 
Officer (C339-03), U.S. Environmental Protection Agency, Research 
Triangle Park, NC 27711, Attention E-Docket ID No. OAR-2002-0068 
(Legacy Docket ID No. A-2002-04). You may claim information that you 
submit to EPA as CBI by marking any part or all of that information as 
CBI. (If you submit CBI on disk or CD-ROM, mark the outside of the disk 
or CD-ROM as CBI and then identify electronically within the disk or 
CD-ROM the specific information that is CBI.) Information so marked 
will not be disclosed except in accordance with procedures set forth in 
40 CFR part 2.
    In addition to one complete version of the comment that includes 
any information claimed as CBI, a copy of the comment that does not 
contain the information claimed as CBI must be submitted for inclusion 
in the public docket and EPA's electronic public docket. If you submit 
the copy that does not contain CBI on disk or CD-ROM, mark the outside 
of the disk or CD-ROM clearly that it does not contain CBI. Information 
not marked as CBI will be included in the public docket and EPA's 
electronic public docket without prior notice. If you have any 
questions about CBI or the procedures for claiming CBI, please consult 
the person identified in the FOR FURTHER INFORMATION CONTACT section.

E. What Should I Consider as I Prepare My Comments for EPA?

    You may find the following suggestions helpful for preparing your 
comments.
     Explain your views as clearly as possible.
     Describe any assumptions that you used.
     Provide any technical information and/or data you used 
that support your views.
     If you estimate potential burden or costs, explain how you 
arrived at your estimate.
     Provide specific examples to illustrate your concerns.
     Offer alternatives.
     Make sure to submit your comments by the comment period 
deadline identified.
     To ensure proper receipt by EPA, identify the appropriate 
docket identification number in the subject line on the first page of 
your response. It would also be helpful if you provided the name, date, 
and Federal Register citation related to your comments.

F. What Information Should I Know About the Public Hearing?

    The public hearing will provide interested parties the opportunity 
to present data, views, or arguments concerning the issues raised in 
this notice. Persons interested in attending or presenting oral 
testimony are encouraged to register in advance by contacting Ms. 
Chandra Kennedy, OAQPS, Integrated Implementation Group, Information 
Transfer and Program Integration Division (C339-03), U.S. Environmental 
Protection Agency, Research Triangle Park, NC 27711; telephone number 
(919) 541-5319 or e-mail [email protected] no later than July 19, 
2004. Presentations will be limited to 5 minutes each. We will assign 
speaking times to speakers who make a timely request to speak at the 
hearing. We will notify speakers of their assigned times by July 26, 
2004. We will attempt to accommodate all other persons who wish to 
speak, as time allows.
    The EPA's planned seating arrangement for the hearing is theater 
style, with seating available on a first come first served basis for 
about 250 people. Attendees should note that the use of pickets or 
other signs will not be allowed on hotel property.
    As of the date of this announcement, the Agency intends to proceed 
with the hearing as announced; however, unforeseen circumstances may 
result in a postponement. Therefore, members of the public who plan to 
attend the hearing are advised to contact Ms. Chandra Kennedy at the 
above referenced address to confirm the location and date of the 
hearing. You may also check our New Source Review Web site at http://www.epa.gov/nsr for any changes in the date or location.
    The record for this action will remain open until 30 days after the 
public hearing date, or the deadline for public comments, whichever is 
later to accommodate submittal of information related to the public 
hearing.

G. Where Can I Obtain Additional Information?

    In addition to being available in the docket, an electronic copy of 
today's notice is also available on the World Wide Web through the 
Technology Transfer Network (TTN). Following signature by the EPA 
Administrator, a copy of today's notice will be posted on the TTN's 
policy and guidance page for newly proposed or promulgated rules at 
http://www.epa.gov/ttn/oarpg. The TTN provides information and 
technology exchange in various areas of air pollution control. If more 
information regarding the TTN is needed, call the TTN HELP line at 
(919) 541-5384.

H. How Is This Preamble Organized?

    The information presented in this preamble is organized as follows:

I. General Information
    A. What Are the Regulated Entities?
    B. How Can I Get Copies of This Document and Other Related 
Information?
    1. Docket
    2. Electronic Access
    C. How and To Whom Do I Submit Comments?
    1. Electronically
    2. By Mail
    3. By Hand Delivery or Courier
    4. By Facsimile
    5. By Phone
    D. How Should I Submit CBI to the Agency?
    E. What Should I Consider as I Prepare My Comments for EPA?
    F. What Information Should I Know About the Public Hearing?
    G. Where Can I Obtain Additional Information?
    H. How is This Preamble Organized?
II. Background
    A. ERP and PSD FIP Rulemakings
    B. Reconsideration Petitions
    C. Schedule for Reconsideration
III. Discussion of Issues
    A. Legal Basis
    B. The 20 Percent Replacement Cost Threshold
    C. Revisions to the Format for Incorporating the PSD FIP Into 
State Plans
IV. Statutory and Executive Order Reviews
    A. Executive Order 12866--Regulatory Planning and Review
    B. Executive Order 13132--Federalism
    C. Executive Order 13175--Consultation and Coordination With 
Indian Tribal Governments
    D. Executive Order 13045--Protection of Children From 
Environmental Health Risks and Safety Risks
    E. Paperwork Reduction Act
    F. Regulatory Flexibility Act (RFA), as Amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 
U.S.C. 601 et seq.
    G. Unfunded Mandates Reform Act of 1995
    H. National Technology Transfer and Advancement Act of 1995
    I. Executive Order 13211--Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    J. Executive Order 12988--Civil Justice Reform
V. Statutory Authority

II. Background

A. ERP and PSD FIP Rulemakings

    On October 27, 2003, EPA published the Equipment Replacement 
Provision (``ERP'') amendments to its regulations implementing the 
major NSR requirements of the CAA. The ERP amended the exclusion from 
major NSR for ``routine maintenance, repair, and

[[Page 40281]]

replacement'' (``RMRR'') activities at existing major sources. For 
background on NSR, RMRR, and the ERP, please see the notice 
promulgating the ERP, especially sections II, ``Background,'' and 
III.A, ``Equipment Replacement Provision--Overview and Justification 
for Today's Final Action.'' 68 FR 61248, 61249--52 (Oct. 27, 2003). 
Several parties sought judicial review of the ERP in the U.S. Court of 
Appeals for the District of Columbia Circuit. See State of New York v. 
EPA, No. 03-1380 and consolidated cases (DC Cir.). As a result of a 
court order, the ERP is ``stayed'' (i.e., not in effect) until the 
court decides this case.
    On December 24, 2003, EPA published a rule amending the PSD 
provisions of state programs that did not have approved state rules for 
PSD. 68 FR 74483. In each of these states, EPA previously had made the 
area subject to the PSD rules in 40 CFR 52.21, the Federal 
Implementation Plan (``FIP'') for PSD. Please see 68 FR 74483 (December 
24, 2003), for additional background on this rule. Parties have also 
sought judicial review of this rule, and their petitions for review 
have been consolidated with the challenges to ERP.

B. Reconsideration Petitions

    On December 24, 2003, petitioners \1\ asked EPA to reconsider three 
aspects of the Equipment Replacement Provision that we published on 
October 27, 2003. Specifically, the petitioners assert that our legal 
basis for the ERP is flawed, the basis for the 20 percent ERP cost 
threshold is arbitrary and capricious, and EPA has retroactively 
applied the ERP. On January 16, 2004, a subset of the petitioners on 
the ERP rule filed a petition for reconsideration of the December 24, 
2003 rule that incorporated the ERP into the FIP portion of a State 
plan where the State does not have an approved PSD State Implementation 
Plan (SIP). This petition reiterated the issues raised in the December 
24, 2003 petition concerning the ERP. On February 23, 2004, a group of 
states and the District of Columbia filed a petition for 
reconsideration of the December 24, 2003 rule. This petition raised two 
issues. First, it asked for reconsideration on whether EPA needed to 
make a finding of deficiency for the PSD portions of each SIP before it 
amended the incorporation of the PSD FIP into the state plans. Second, 
it challenged whether EPA needed to provide an opportunity for comment 
on the revised format for incorporating the PSD FIP into state plans, 
which would automatically update the state plans whenever EPA amended 
the PSD FIP.
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    \1\ In this notice, the term ``petitioner'' refers only to those 
entities that filed petitions for reconsideration. The following 
parties filed petition for reconsideration of the October 27, 2003 
rule: Natural Resources Defense Council, Environmental Defense, 
Sierra Club, American Lung Association, Communities for a Better 
Environment, United States Public Interest Research Group, Alabama 
Environmental Council, Clean Air Council, Group Against Smog and 
Pollution, Michigan Environmental Council, The Ohio Environmental 
Council, Scenic Hudson, and Southern Alliance for Clean Energy. A 
subset of these parties filed a petition to reconsider the December 
24, 2003 rule. Several states also filed a petition for 
reconsideration of the December 24, 2003 rule. They include 
California, Illinois, Massachusetts, New Jersey, and New York, along 
with the District of Columbia.
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    We have decided to grant reconsideration and request comment on 
three issues raised by petitioners--specifically, the contentions that 
our legal basis is flawed, that our selection of 20 percent for the 
cost limit is arbitrary and capricious and lacks sufficient record, and 
that we should provide an opportunity for comment on the revised format 
for incorporating the PSD FIP into state plans. Without prejudging the 
information that will be provided in response to this notice, we note 
that, to date, petitioners have not provided information which 
persuades us that our final decisions are erroneous or inappropriate. 
While we do not agree with Petitioners' claims, we have decided to 
grant reconsideration on these issues because of the importance EPA 
attaches to ensuring that all have ample opportunity to comment. Each 
of these issues is described in detail below.

C. Schedule for Reconsideration

    Our final decision on reconsideration for all the issues in the 
petitions for reconsideration will be issued no later than the date by 
which we take final action on the issues with respect to which we have 
decided to grant reconsideration. We plan to take final action on all 
issues approximately 180 days after publication of today's notice.

III. Discussion of Issues

A. Legal Basis

    As set forth in the preamble to the final rule, we have ample legal 
authority for our final ERP rule. See 68 FR 61268-73. It is a basic 
tenet of administrative law that expert agencies have discretion to 
interpret ambiguous statutory terms. Chevron, U.S.A. Inc. v. NRDC, 467 
U.S. 837 (1984). That is exactly what we did in the ERP. NSR applies to 
new and ``modified'' sources. The CAA defines ``modification'' as ``any 
physical change in, or change in the method of operation of, a 
stationary source which increases the amount any air pollutant emitted 
from such source of which results in the emission of any air pollutant 
not previously emitted.'' CAA sec. 111(a)(4) (emphasis added); CAA sec. 
169(2)(C); CAA sec. 171(4). The CAA does not, however, define 
``change.'' We historically have understood ``change'' as not 
including, among other things, ``routine maintenance, repair, and 
replacement'' of existing sources. See 40 CFR 51.165(a)(1)(v)(C)(1); 40 
CFR 51.166(b)(2)(iii)(a); 40 CFR 52.21(b)(2)(iii)(a). But prior to our 
ERP rule, our regulations did not provide any further definition of 
RMRR. Our ERP rule was an exercise of our Chevron authority to do so 
and create a bright line to assist in determining whether certain 
activities qualify as RMRR.
    Petitioners allege that we did not afford an adequate opportunity 
to comment on the legal basis for our ERP rule. To support their claim, 
petitioners point to the difference in the length of the legal analysis 
discussion in the final rule as compared to the proposed rule. We 
disagree with petitioners' assertion, and believe that commenters had 
sufficient notice and opportunity to comment on the legal basis for the 
rule, as indicated by the many comments we actually received on the 
issue. Nevertheless, we have decided to solicit additional comments on 
this question, and refer interested persons to the preamble to the 
proposed rule and section III. N of the final rule. 68 FR 61268-73.
    We have received numerous comments regarding our legal authority to 
promulgate the ERP rule. Some commenters suggested that an ERP rule was 
justified under a ``Chevron I'' analysis, since the statute, in their 
estimation, is clear on its face that replacement of equipment with its 
functional equivalent is not a ``change.'' Others cited our de minimis 
authority, as articulated in Alabama Power Co. v. Costle, 606 F.2d 323, 
360-61 (D.C. Cir. 1979). Commenters argued that the ERP rule was within 
our recognized authority to establish ``bright lines'' to reduce 
regulatory cost or establish certainty. See Time Warner Entertainment 
Co. LP v. F.C.C., 240 F.3d 1126, 1141 (D.C. Cir. 2001). Several 
commenters questioned whether we have any authority to conclude that 
any equipment replacements are outside the scope of NSR, and indeed 
whether the RMRR exclusion itself is permissible, since in their view 
all such activities constitute ``changes'' as the term is used in the 
statutory definition of ``modification.'' We invite comment on all of 
these as well as other possible legal arguments. With respect to the 
issue of whether the modifier ``any'' in

[[Page 40282]]

the definition of modification compels the agency to adopt the broadest 
possible construction of ``physical change,'' we solicit comments on 
the recent Supreme Court case, Nixon v. Missouri Municipal League, ---- 
U.S. ----, 124 S.Ct. 1555, 1561 (2004). That case noted that Congress's 
understanding of ``any'' can differ depending upon the statutory 
setting. Id.

B. The 20 Percent Replacement Cost Threshold

    In the December 31, 2002, proposed rule, EPA solicited comments on 
the ERP approach. At that time, we solicited comments on a range of 
possible percentages of cost that could serve as one of the criteria 
that must be met to qualify for the RMRR-ERP exclusion from NSR. We 
solicited comment on percentages ranging up to 50 percent, the 
threshold for reconstruction under the NSPS program. 67 FR at 80301.
    In the final rule promulgating the ERP, we presented policy 
arguments and data analyses supporting 20 percent of replacement costs 
of a process unit as the threshold cost that would entitle an equipment 
replacement to qualify automatically as RMRR. 68 FR at 61255-58. In our 
summary of the basis of the rule, we discussed an analysis of the cost 
of replacements in six industries outside the electric generating 
sector. This analysis, which appears in Appendix C to the Regulatory 
Impact Analysis, was finalized in August of 2003 and is in the docket 
for this rule. See docket entries OAR-2002-0068-2207 to 2213. 
Additionally, we examined the cost of the activities at issue in 
Wisconsin Electric Power Company v. Reilly, 893 F.2d 901 (7th Cir. 
1990) (``WEPCO''), and found that they would have exceeded the 
threshold established by the ERP. We also considered the costs of 
installing state-of-the-art controls on existing units and the point at 
which these would likely prevent facilities from replacing equipment 
necessary to ensure the safe, reliable and efficient operation. 
Furthermore, we discussed analyses of comments provided by the Utility 
Air Regulatory Group (``UARG'') and the American Lung Association. See 
docket entries OAR-2002-0068-1150 and -1213 through -1221.
    Petitioners ask that EPA reconsider the 20 percent threshold, and 
claim that none of EPA's arguments supporting the threshold had 
appeared in the proposed rule. While the petitioners' claim is overly 
broad, we nevertheless are soliciting additional comment on the data, 
our analyses, and the policy considerations supporting the 20 percent 
threshold. Commenters should refer to section III.C, ``What Cost Limit 
Has Been Placed on the Equipment Replacement Approach?'' in our final 
rule for our discussion of the data and our analyses. We invite comment 
on the matters discussed therein, as well as on the docket entries 
cited above.
    In the course of considering how to proceed with respect to the 
reconsideration petition on this point, we also thought it might be of 
some interest to examine whether jurisdictions administering 
construction building codes use a percentage cost threshold for 
determining applicability of different requirements and if so, what 
that threshold might be. Our cursory review indicates that at least 
some jurisdictions specify a percentage cost threshold for determining 
what constitutes a building ``improvement,'' and require such 
improvements to comply with the current code. A common threshold is 50 
percent, based on cost of the improvement as compared to the market 
value of the pre-existing structure. We have placed further information 
on what we learned from our review on this topic in our docket. See 
Docket OAR-2002-0068; Document No. 2337. We solicit comment on the 
accuracy and representativeness of this information and whether it is 
appropriate to consider approaches used in building code applicability 
when establishing criteria for RMRR determinations. We also request any 
new data or approach that supports or rejects a 20 percent cost 
threshold for the ERP.

C. Revisions to the Format for Incorporating the PSD FIP Into State 
Plans

    The December 24, 2003, final rule revised the PSD provision in each 
state plan that lacked an approved state regulation concerning PSD. In 
lieu of an approved PSD SIP, each of these state plans contained a 
reference incorporating the relevant provisions of 40 CFR 52.21, the 
PSD FIP, that applied within the state. Prior to the December 24th 
rule, we incorporated the relevant paragraphs of 40 CFR 52.21 by 
referring to the range of paragraphs from the first paragraph 
incorporated to the last paragraph. For example, the March 10, 2003 
referred to the incorporated paragraphs of section 52.21 as ``(a)(2) 
and (b) to (bb).'' This format required updates every time we added 
paragraphs to section 52.21. These periodic updates introduced the 
possibility of typographical errors in the CFR and confusion during the 
period between updates. The December 24th rule adopted a different 
cross-referencing format--``40 CFR 52.21 except paragraph (a)(1).'' 
Under the new format, the cross-references would automatically update 
whenever new sections were added to the PSD FIP.
    A group of petitioners seek reconsideration of the new format. We 
seek comment on the new format for referencing the PSD FIP. We seek 
comment only on the issue of the new format and its ability to 
automatically update whenever EPA modifies the PSD FIP. At this time, 
we do not seek comment on a second issue raised in the petition for 
reconsideration, which is whether EPA must make a new finding of 
deficiency regarding the SIP before updating the state plans to reflect 
the ERP.

IV. Statutory and Executive Order Reviews

    On October 27, 2003, we finalized rule changes to the regulations 
governing the NSR programs mandated by parts C and D of title I of the 
Act. With today's action we are proposing no changes to the final 
rules, and are seeking additional comments on some of the provisions 
finalized in the October 2003 Federal Register notice (68 FR 61248). 
Accordingly, we believe that the rationale provided with the final 
rules is still applicable and sufficient.

A. Executive Order 12866--Regulatory Planning and Review

    Under Executive Order 12866 [58 FR 51735 (October 4, 1993)], we 
must determine whether the regulatory action is ``significant'' and 
therefore subject to review by the Office of Management and Budget 
(OMB) and the requirements of the Executive Order. The Executive Order 
defines ``significant regulatory action'' as one that is likely to 
result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs, or the rights and obligations of 
recipients thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of Executive Order 12866, OMB has notified us 
that

[[Page 40283]]

it considers this a ``significant regulatory action'' within the 
meaning of the Executive Order. We have submitted this action to OMB 
for review. Changes made in response to OMB suggestions or 
recommendations will be documented in the public record. All written 
comments from OMB to EPA and any written EPA response to any of those 
comments are included in the docket listed at the beginning of this 
notice under ADDRESSES.

B. Executive Order 13132--Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires us to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' are defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    Today's action does not have federalism implications. Nevertheless, 
as described in section II.C of the October 27, 2003 notice, in 
developing the ERP, we consulted with affected parties and interested 
stakeholders, including State and local authorities, to enable them to 
provide timely input in the development of this rule. Today's action 
will not have substantial direct effects on the States, on the 
relationship between the national government and the State and local 
programs, or on the distribution of power and responsibilities among 
the various levels of government, as specified in Executive Order 
13132. We expect the ERP will result in some expenditures by the 
States, we expect those expenditures to be limited to $580,000 for the 
estimated 112 affected reviewing authorities. This estimate reflects 
the small increase in burden imposed upon reviewing authorities in 
order for them to revise their State Implementation Plans (SIP). 
However, this revision provides sources permitted by the States greater 
certainty in application of the program, which should in turn reduce 
the overall burden of the program on State and local authorities. Thus, 
the requirements of Executive Order 13132 do not apply to this rule.

C. Executive Order 13175--Consultation and Coordination With Indian 
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 6, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' We believe that this rule 
does not have tribal implications as specified in Executive Order 
13175. Thus, Executive Order 13175 does not apply.
    The purpose of the ERP is to add greater flexibility to the 
existing major NSR regulations. These changes will benefit reviewing 
authorities and the regulated community, including any major source 
owned by a tribal government or located in or near tribal land, by 
providing increased certainty as to when the requirements of the major 
NSR program apply. Taken as a whole, the ERP should result in no added 
burden or compliance costs and should not substantially change the 
level of environmental performance achieved under the previous rules 
and guidance.
    We anticipate that initially these changes will result in a small 
increase in the burden imposed upon reviewing authorities in order for 
them to be included in the State's SIP. Nevertheless, these options and 
revisions will ultimately provide greater operational flexibility to 
sources permitted by the States, which will in turn reduce the overall 
burden on the program on State and local authorities by reducing the 
number of required permit modifications. In comparison, no tribal 
government currently has an approved Tribal Implementation Plan (TIP) 
under the CAA to implement the NSR program. The Federal government is 
currently the NSR reviewing authority in Indian country. Thus, tribal 
governments should not experience added burden, nor should their laws 
be affected with respect to implementation of this rule. Additionally, 
although major stationary sources affected by the ERP could be located 
in or near Indian country and/or be owned or operated by tribal 
governments, such affected sources would not incur additional costs or 
compliance burdens as a result of this rule. Instead, the only effect 
on such sources should be the benefit of the added certainty and 
flexibility provided by the rule.
    We recognize the importance of including tribal outreach as part of 
the rulemaking process. In addition to affording tribes an opportunity 
to comment on the ERP, on which two tribes did submit comments, we have 
also alerted tribes of this action through our Web site and quarterly 
newsletter. EPA specifically solicits additional comments on today's 
notice from tribal officials.

D. Executive Order 13045--Protection of Children From Environmental 
Health Risks and Safety Risks

    Executive Order 13045, ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies 
to any rule that (1) is determined to be ``economically significant'' 
as defined under Executive Order 12866, and (2) concerns an 
environmental health or safety risk that EPA has reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, we must evaluate the environmental health or 
safety effects of the planned rule on children and explain why the 
planned regulation is preferable to other potentially effective and 
reasonable alternatives that we considered.
    This notice is not subject to Executive Order 13045, because it is 
not economically significant as defined under Executive Order 12866 and 
because we do not have reason to believe the environmental health or 
safety risks addressed by this action present a disproportionate risk 
to children.

E. Paperwork Reduction Act

    This action does not impose any new information collection burden. 
We are not proposing any new paperwork (e.g., monitoring, reporting, 
recordkeeping) as part of today's notice. With this action we are 
seeking additional comments on some of the provisions finalized in two 
Federal Register notices, the ERP (68 FR 61248 (Oct. 27, 2003)), and 
the related FIP update (68 FR 74483 (Dec. 24, 2003)). However, the 
information collection requirements in the ERP have been submitted for 
approval to OMB under the requirements of the Paperwork Reduction Act, 
44 U.S.C. 3501 et seq. An ICR document has been prepared by EPA (ICR 
No. 1230.14), and a copy may be obtained from Susan Auby, U.S. 
Environmental Protection Agency, Office of Environmental Information, 
Collection Strategies Division (2822T), 1200 Pennsylvania Avenue, NW., 
Washington, DC 20460-0001, by e-mail at [email protected], or by 
calling (202) 566-1672. A copy may also be downloaded off the Internet 
at http://www.epa.gov/icr. The information requirements included in ICR 
No. 1230.14 are not enforceable until OMB approves them.
    The information that ICR No. 1230.14 covers is required for the 
submittal of a complete permit application for the construction or 
modification of all major new stationary sources of pollutants in

[[Page 40284]]

attainment and nonattainment areas, as well as for applicable minor 
stationary sources of pollutants. This information collection is 
necessary for the proper performance of EPA's functions, has practical 
utility, and is not unnecessarily duplicative of information we 
otherwise can reasonably access. We have reduced, to the extent 
practicable and appropriate, the burden on persons providing the 
information to or for EPA. In fact, we feel that this rule will result 
in less burden on industry and reviewing authorities since it 
streamlines the process of determining whether a replacement activity 
is RMRR.
    However, according to ICR No. 1230.14, we do anticipate an initial 
increase in burden for reviewing authorities as a result of the rule 
changes, to account for revising state implementation plans to 
incorporate these rule changes. As discussed above, we expect those 
one-time expenditures to be limited to $580,000 for the estimated 112 
affected reviewing authorities. For the number of respondent reviewing 
authorities, the analysis uses the 112 reviewing authorities count used 
by other permitting ICR's for the one-time tasks (for example, SIP 
revisions).
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purpose of responding to the information 
collection; adjust existing ways to comply with any previously 
applicable instructions and requirements; train personnel to respond to 
a collection of information; search existing data sources; complete and 
review the collection of information; and transmit or otherwise 
disclose the information.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations are listed in 40 CFR part 9 and 48 CFR chapter 15. We will 
continue to present OMB control numbers in a consolidated table format 
to be codified in 40 CFR part 9 of the Agency's regulations, and in 
each CFR volume containing EPA regulations. The table lists the section 
numbers with reporting and recordkeeping requirements, and the current 
OMB control numbers. This listing of the OMB control numbers and their 
subsequent codification in the CFR satisfy the requirements of the 
Paperwork Reduction Act (44 U.S.C. 3501 et seq.) and OMB's implementing 
regulations at 5 CFR part 1320.

F. Regulatory Flexibility Act (RFA), as Amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et 
seq.

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of the ERP on small entities, 
small entity is defined as: (1) Any small business employing fewer than 
500 employees; (2) a small governmental jurisdiction that is a 
government of a city, county, town, school district or special district 
with a population of less than 50,000; and (3) a small organization 
that is any not-for-profit enterprise which is independently owned and 
operated and is not dominant in its field.
    After considering the economic impacts of today's action on small 
entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. In 
determining whether a rule has a significant economic impact on a 
substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, since the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of this rule on small entities.'' 5 U.S.C. 603 and 604. 
Thus, an agency may conclude that a rule will not have a significant 
economic impact on a substantial number of small entities if the rule 
relieves regulatory burden, or otherwise has a positive economic effect 
on all of the small entities subject to the rule. The ERP will not have 
a significant economic impact on a substantial number of small entities 
because it will decrease the regulatory burden of the existing 
regulations and have a positive effect on all small entities subject to 
the rule. The ERP improves operational flexibility for owners or 
operators of major stationary sources and clarifies applicable 
requirements for determining if a change qualifies as a major 
modification. We have therefore concluded that the ERP will relieve 
regulatory burden for all small entities. We do not expect that today's 
action will change our overall assessment of regulatory burden so 
substantially as to result in a significant adverse impact on any 
source. As a result, we do not expect that today's action will result 
in a significant adverse impact on any entity.
    We continue to be interested in the potential impacts of today's 
action on small entities and welcome comments on issues related to such 
impacts.

G. Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of UMRA, we 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, and tribal governments, in 
the aggregate, or to the private sector of $100 million or more in any 
one year. Before promulgating an EPA rule for which a written statement 
is needed, section 205 of the UMRA generally requires us to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective or least burdensome alternative 
that achieves the objectives of the rule. The provisions of section 205 
do not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows us to adopt an alternative other than the least 
costly, most cost-effective, or least burdensome alternative if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted.
    Before we establish any regulatory requirements that may 
significantly or uniquely affect small governments, including tribal 
governments, we must have developed under section 203 of the UMRA a 
small government agency plan. The plan must provide for notifying 
potentially affected small governments, enabling officials of affected 
small governments to have meaningful and timely input in the 
development of our regulatory proposals with significant Federal 
intergovernmental mandates, and informing, educating, and advising 
small governments on compliance with the regulatory requirements.
    We believe the ERP will actually reduce the regulatory burden 
associated with the major NSR program by improving the operational 
flexibility of owners or operators and clarifying the

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requirements. Because we are proposing no changes to the final rule, we 
believe that the same is true for today's notice. Because the program 
changes provided in the rule are not expected to result in a 
significant increase in the expenditure by State, local, and tribal 
governments, or the private sector, we have not prepared a budgetary 
impact statement or specifically addressed the selection of the least 
costly, most cost-effective, or least burdensome alternative. Because 
small governments will not be significantly or uniquely affected by 
this rule, we are not required to develop a plan with regard to small 
governments. Therefore, this rule is not subject to the requirements of 
section 203 of the UMRA.

H. National Technology Transfer and Advancement Act of 1995

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 
note) directs us to use voluntary consensus standards (VCS) in our 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. VCS are technical standards 
(for example, materials specifications, test methods, sampling 
procedures, and business practices) that are developed or adopted by 
voluntary consensus standards bodies. The NTTAA directs us to provide 
Congress, through OMB, explanations when the Agency decides not to use 
available and applicable VCS.
    Although the ERP does involve the use of technical standards, it 
does not preclude the State, local, and tribal reviewing agencies from 
using VCS. The ERP is an improvement of the existing NSR permitting 
program. As such, it only ensures that promulgated technical standards 
are considered and appropriate controls are installed, prior to the 
construction of major sources of air emissions. Therefore, we are not 
considering the use of any VCS in the ERP.

I. Executive Order 13211--Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    This notice is not a ``significant energy action'' as defined in 
Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 28355 
(May 22, 2001)) because it is not likely to have a significant adverse 
effect on the supply, distribution or use of energy.
    The ERP improves the ability of sources to maintain the reliability 
of production facilities, and effectively utilize and improve existing 
capacity.

J. Executive Order 12988--Civil Justice Reform

    Neither the ERP nor today's action has any preemptive or 
retroactive effect. This action meets applicable standards in sections 
3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to 
minimize litigation, eliminate ambiguity, and reduce burden.

V. Statutory Authority

    The statutory authority for this action is provided by sections 
101, 111, 114, 116, and 301 of the CAA as amended (42 U.S.C. 7401, 
7411, 7414, 7416, and 7601). This rulemaking is also subject to section 
307(d) of the CAA (42 U.S.C. 7407(d)).

List of Subjects in 40 CFR Parts 51 and 52

    Environmental protection, Administrative practices and procedures, 
Air pollution control, Intergovernmental relations, Reporting and 
recordkeeping requirements.

    Dated: June 28, 2004.
Michael O. Leavitt,
Administrator.
[FR Doc. 04-14992 Filed 6-30-04; 8:45 am]
BILLING CODE 6560-50-P