[Federal Register Volume 73, Number 96 (Friday, May 16, 2008)]
[Rules and Regulations]
[Pages 28321-28350]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-10768]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51 and 52

[EPA-HQ-OAR-2003-0062; FRL-8566-1]
RIN 2060-AN86


Implementation of the New Source Review (NSR) Program for 
Particulate Matter Less Than 2.5 Micrometers (PM2.5)

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The EPA is finalizing regulations to implement the New Source 
Review (NSR) program for fine particulate matter (that is, particles 
with an aerodynamic diameter less than or equal to a nominal 2.5 
micrometers,

[[Page 28322]]

generally referred to as ``PM2.5''). The NSR program was 
created by the Clean Air Act (Act or CAA) to ensure that stationary 
sources of air pollution are constructed or modified in a manner that 
is consistent with air quality goals in the area.
    The Clean Air Fine Particle Implementation Rule, which was proposed 
in the Federal Register on November 1, 2005, included requirements and 
guidance for State and local air pollution agencies to follow in 
developing State implementation plans (SIPs) and also the NSR 
provisions. The final implementation rule that was promulgated on April 
25, 2007, included all the SIPs related provisions. In this rulemaking, 
EPA is finalizing the NSR provisions of the November 1, 2005 proposed 
rule including the major source threshold, significant emissions rate, 
and offset ratios for PM2.5, interpollutant trading for 
offsets and applicability of NSR to PM2.5 precursors.

DATES: This final rule is effective on July 15, 2008.

ADDRESSES: The EPA has established a docket for this action under 
Docket ID No. EPA-HQ-OAR-2003-0062. All documents in the docket are 
listed on the www.regulations.gov Web site. Although listed in the 
index, some information may not be publicly available, e.g., CBI or 
other information whose disclosure is restricted by statute. Certain 
other material, such as copyrighted material, is not placed on the 
Internet and will be publicly available only in hard copy form. 
Publicly available docket materials are available either electronically 
through www.regulations.gov or in hard copy at the Air Docket, EPA/DC, 
EPA West, Room 3334, 1301 Constitution Avenue, Northwest, Washington, 
DC. The 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 
Public Reading Room is (202) 566-1744, and the telephone number for the 
Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Mr. Raghavendra (Raj) Rao, Air Quality 
Policy Division, Office of Air Quality Planning and Standards (C504-
03), U.S. Environmental Protection Agency, Research Triangle Park, 
North Carolina 27711, telephone number: (919) 541-5344, facsimile 
number: (919) 541-5509, e-mail address: [email protected]; or Mr. Dan 
deRoeck, at the same address, telephone 919-541-5593, or e-mail at 
[email protected].

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

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

------------------------------------------------------------------------
             Industry group                         NAICS \a\
------------------------------------------------------------------------
Electric services......................  221111, 221112, 221113, 221119,
                                          221121, 221122
Petroleum refining.....................  32411
Industrial inorganic chemicals.........  325181, 32512, 325131, 325182,
                                          211112, 325998, 331311, 325188
Industrial organic chemicals...........  32511, 325132, 325192, 325188,
                                          325193, 32512, 325199
Miscellaneous chemical products........  32552, 32592, 32591, 325182,
                                          32551
Natural gas liquids....................  211112
Natural gas transport..................  48621, 22121
Pulp and paper mills...................  32211, 322121, 322122, 32213
Paper mills............................  322121, 322122
Automobile manufacturing...............  336111, 336112, 336712, 336211,
                                          336992, 336322, 336312, 33633,
                                          33634, 33635, 336399, 336212,
                                          336213
Pharmaceuticals........................  325411, 325412, 325413, 325414
------------------------------------------------------------------------
\a\ North American Industry Classification System.

    Entities affected by this rule also include States, local reviewing 
authorities, and Indian country with new and modified major stationary 
sources.

B. Where can I get a copy of this document and other related 
information?

    In addition to being available in the docket, an electronic copy of 
this final rule will also be available on the World Wide Web. Following 
signature by the EPA Administrator, a copy of this final rule will be 
posted in the regulations and standards section of our NSR home page 
located at http://www.epa.gov/nsr.

C. How is this preamble organized?

    The information presented in this preamble is organized as follows:

I. General Information
    A. Does this action apply to me?
    B. Where can I get a copy of this document and other related 
information?
    C. How is this preamble organized?
II. Purpose
III. Background
    A. New Source Review (NSR) Program
    B. Fine Particulate Matter and the NAAQS for PM2.5
    C. Implementation of NSR for PM2.5
IV. Overview of This Final Action
V. Rationale for Final Actions
    A. Applicability of NSR to Precursors of PM2.5 in the 
Ambient Air
    1. What is EPA's legal authority to regulate precursors?
    2. What is EPA's approach for addressing precursors?
    3. Final Action on SO2
    4. Final Action on NOX
    5. Final Action on VOC
    6. Final Action on Ammonia
    B. Major Stationary Source Threshold for PM2.5
    C. Significant Emissions Rate for Direct Emissions of 
PM2.5
    D. Significant Emissions Rates for PM2.5 Precursors
    E. Condensable PM Emissions
    F. Prevention of Significant Deterioration (PSD) Program 
Requirements
    1. How must BACT be implemented for PM2.5?
    2. How does EPA plan to address PM2.5 Increments, 
Significant Impact Levels (SILs), and Significant Monitoring 
Concentrations (SMCs)?
    3. What is the ambient air quality analysis requirement for 
PM2.5?
    4. How must the PSD preconstruction monitoring requirement be 
implemented for PM2.5?
    G. Nonattainment New Source Review (NA NSR) Requirements
    1. What is the required offset ratio for direct PM2.5 
emissions?
    2. Which precursors are subject to the offset requirement?
    3. What is the required offset ratio for PM2.5 
precursors?
    4. Is interpollutant trading allowable to comply with offset 
requirements?
    H. How will the transition to the PM2.5 PSD 
requirements occur?
    1. Background
    2. Transition for ``Delegated States''
    3. Transition for ``SIP-Approved States''
    I. How will the transition to the PM2.5 NA NSR 
requirements occur?
    1. Background
    2. Transition

[[Page 28323]]

    3. Implementation of NSR Under the ``Emissions Offset 
Interpretative Ruling'' (40 CFR part 51, appendix S) with Revisions
    J. Does major NSR apply to PM2.5 precursors during 
the SIP development period?
    K. Are there any Tribal concerns?
    L. What are the requirements for minor NSR for PM2.5?
    M. Rural Transport Areas
VI. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132--Federalism
    F. Executive Order 13175--Consultation and Coordination with 
Indian Tribal Governments
    G. Executive Order 13045--Protection of Children from 
Environmental Health and Safety Risks
    H. Executive Order 13211--Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898--Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act
    L. Petitions for Judicial Review
    M. Determination Under Section 307(d)
VII. Statutory Authority

II. Purpose

    The purpose of this rulemaking is to finalize the major NSR program 
provisions for PM2.5. This final rule supplements the final 
implementation rule for PM2.5 (excluding the NSR provisions) 
that we \1\ promulgated on April 25, 2007 at 72 FR 20586. This final 
action on the bulk of the major NSR program for PM2.5 along 
with our proposed rule on increments, SILs, and SMC, when final, will 
represent the final elements necessary to implement a PM2.5 
PSD program. When both rules are promulgated and in effect, the 
PM2.5 PSD program will no longer use a PM10 
program as a surrogate, as has been the practice under our existing 
guidance.
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    \1\ In this proposal, the terms ``we,'' ``us,'' and ``our,'' 
refer to the EPA and the terms ``you,'' and ``your,'' refer to the 
owners or operators of stationary sources of air pollution.
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III. Background

A. New Source Review (NSR) Program

    The existing regulations require both major and minor NSR programs 
to address any pollutant for which there is a National Ambient Air 
Quality Standard (NAAQS) and precursors to the formation of such 
pollutant when identified for regulation by the Administrator. This 
final rule amends the NSR regulations to establish the minimum elements 
for State, local, and Tribal agency programs implementing NSR for the 
PM2.5 NAAQS. This preamble also explains what interim 
provisions would apply with respect to PM2.5 during the 
State Implementation Plan (SIP) development period.
    The NSR program is a preconstruction permitting program that 
applies when a source is constructed or modified. The NSR program is 
composed of three different programs:
     Prevention of Significant Deterioration (PSD);
     Nonattainment NSR (NA NSR); and
     Minor NSR.
We often refer to the PSD and NA NSR programs together as the major NSR 
program because these programs regulate only major sources.\2\
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    \2\ The Act uses the terms ``major emitting facility'' to refer 
to sources subject to the PSD program, and ``major stationary 
source'' to refer to sources subject to NA NSR. See CAA sections 
165, 169, 172(c)(5), and 302(j). For ease of reference, we use the 
term ``major source'' to refer to both terms.
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    The PSD program applies when a major source that is located in an 
area that is designated as attainment or unclassifiable for any 
criteria pollutant is constructed or undergoes a major 
modification.3 4 The NA NSR program applies when a major 
source that is located in an area that is designated as nonattainment 
for any criteria pollutant is constructed or undergoes a major 
modification. The minor NSR program addresses both major and minor 
sources that undertake construction or modification activities that do 
not qualify as major, and it applies regardless of the designation of 
the area in which a source is located.
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    \3\ The term ``criteria pollutant'' means a pollutant for which 
we have set a NAAQS.
    \4\ In addition, the PSD program applies to most noncriteria 
regulated pollutants.
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    The national regulations that apply to each of these programs are 
located in the Code of Federal Regulations (CFR) as shown in the 
following table:

------------------------------------------------------------------------
                Program                       Applicable regulations
------------------------------------------------------------------------
PSD....................................  40 CFR 52.21, 40 CFR 51.166, 40
                                          CFR 51.165(b).
NA NSR.................................  40 CFR 52.24, 40 CFR 51.165, 40
                                          CFR part 51, appendix S.
Minor NSR..............................  40 CFR 51.160-164.
------------------------------------------------------------------------

    The PSD requirements include but are not limited to:
     Installation of Best Available Control Technology (BACT);
     Air quality monitoring and modeling analyses to ensure 
that a project's emissions will not cause or contribute to a violation 
of any NAAQS or maximum allowable pollutant increase (PSD increment);
     Notification of Federal Land Manager of nearby Class I 
areas; and
     Public comment on the permit.
    Nonattainment NSR requirements include but are not limited to:
     Installation of Lowest Achievable Emission Rate (LAER) 
control technology;
     Offsetting new emissions with creditable emissions 
reductions;
     Certification that all major sources owned and operated in 
the State by the same owner are in compliance with all applicable 
requirements under the Act;
     An alternative siting analysis demonstrating that the 
benefits of the proposed source significantly outweigh the 
environmental and social costs imposed as a result of its location, 
construction, or modification; and
     Public comment on the permit.
    Minor NSR programs must meet the statutory requirements in section 
110(a)(2)(C) of the Act, which requires ``* * * regulation of the 
modification and construction of any stationary source * * * as 
necessary to assure that national ambient air quality standards are 
achieved.''

B. Fine Particulate Matter and the NAAQS for PM2.5

    Fine particles in the atmosphere are made up of a complex mixture 
of components. Common constituents include sulfate (SO4); 
nitrate (NO3); ammonium; elemental carbon; a great variety 
of organic compounds; and inorganic material (including metals, dust, 
sea salt, and other trace elements) generally referred to as 
``crustal'' material, although it may contain material from other 
sources. Airborne particulate matter (PM) with a nominal aerodynamic 
diameter of 2.5 micrometers or less (a micrometer is

[[Page 28324]]

one-millionth of a meter, and 2.5 micrometers is less than one-seventh 
the average width of a human hair) are considered to be ``fine 
particles,'' and are also known as PM2.5. ``Primary'' 
particles are emitted directly into the air as a solid or liquid 
particle (e.g., elemental carbon from diesel engines or fire 
activities, or condensable organic particles from gasoline engines). 
``Secondary'' particles (e.g., sulfate and nitrate) form in the 
atmosphere as a result of various chemical reactions.
    The health effects associated with exposure to PM2.5 are 
significant. Epidemiological studies have shown a significant 
correlation between elevated PM2.5 levels and premature 
mortality. Other important effects associated with PM2.5 
exposure include aggravation of respiratory and cardiovascular disease 
(as indicated by increased hospital admissions, emergency room visits, 
absences from school or work, and restricted activity days), lung 
disease, decreased lung function, asthma attacks, and certain 
cardiovascular problems. Individuals particularly sensitive to 
PM2.5 exposure include older adults, people with heart and 
lung disease, and children.
    On July 18, 1997, we revised the NAAQS for PM to add new standards 
for fine particles, using PM2.5 as the indicator. We 
established health-based (primary) annual and 24-hour standards for 
PM2.5 (62 FR 38652). We set an annual standard at a level of 
15 micrograms per cubic meter ([mu]g/m\3\) and a 24-hour standard at a 
level of 65 [mu]g/m\3\. At the time we established the primary 
standards in 1997, we also established welfare-based (secondary) 
standards identical to the primary standards. The secondary standards 
are designed to protect against major environmental effects of 
PM2.5 such as visibility impairment, soiling, and materials 
damage.
    On October 17, 2006, we revised the primary and secondary NAAQS for 
PM2.5 and PM10. In that rulemaking, we reduced 
the 24-hour NAAQS for PM2.5 to 35 [mu]g/m\3\ and retained 
the existing annual PM2.5 NAAQS of 15 [mu]g/m\3\. In 
addition, we retained PM10 as the indicator for coarse PM, 
retained the existing PM10 24-hour NAAQS of 150 [mu]g/m\3\, 
and revoked the annual PM10 NAAQS (which had previously been 
set at 50 [mu]g/m\3\). See 71 FR 61236.

C. Implementation of NSR for PM2.5

    After we promulgated the NAAQS for PM2.5 in 1997, we 
issued a guidance document entitled ``Interim Implementation for the 
New Source Review Requirements for PM2.5'' (John S. Seitz, 
EPA, October 23, 1997).\5\ As noted in that guidance, section 165 of 
the Act suggests that PSD requirements become effective for a new NAAQS 
upon the effective date of the NAAQS. Section 165(a)(1) of the Act 
provides that no new or modified major source may be constructed 
without a PSD permit that meets all of the section 165(a) requirements 
with respect to the regulated pollutant. Moreover, section 165(a)(3) 
provides that the emissions from any such source may not cause or 
contribute to a violation of any NAAQS. Also, section 165(a)(4) 
requires BACT for each pollutant subject to PSD regulation. The 1997 
guidance stated that sources would be allowed to use implementation of 
a PM10 program as a surrogate for meeting PM2.5 
NSR requirements until certain difficulties were resolved, primarily 
the lack of necessary tools to calculate the emissions of 
PM2.5 and related precursors, the lack of adequate modeling 
techniques to project ambient impacts, and the lack of PM2.5 
monitoring sites.
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    \5\ Available in the docket for this rulemaking, ID No. EPA-HQ-
OAR-2003-0062, and at http://www.epa.gov/region07/programs/artd/air/nsr/nsrmemos/pm25.pdf.
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    On April 5, 2005, we issued a guidance document entitled 
``Implementation of New Source Review Requirements in PM-2.5 
Nonattainment Areas'' (Stephen D. Page, EPA).\6\ This memorandum 
provides guidance on the implementation of the nonattainment major NSR 
provisions in PM2.5 nonattainment areas in the interim 
period between the effective date of the PM2.5 NAAQS 
designations (April 5, 2005) and the promulgation date of the final NSR 
regulations reflected in this action. Besides affirming the 
continuation of the Seitz guidance memo in PM2.5 attainment 
areas, the April 5, 2005 memo recommends that until we promulgate the 
PM2.5 major NSR regulations, States should use a 
PM10 nonattainment major NSR program as a surrogate to 
address the requirements of nonattainment major NSR for 
PM2.5.
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    \6\ Available in the docket for this rulemaking, ID. No. EPA-HQ-
OAR-2003-0062, and at http://www.epa.gov/nsr/documents/nsrmemo.pdf.
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    On November 1, 2005, we proposed a rule to implement the 1997 
PM2.5 NAAQS, including proposed revisions to the NSR program 
(70 FR 65984). As discussed above, this action finalizes the portion of 
that proposal related to NSR. The other portions of that proposal, 
concerning attainment dates, SIP submittals, reasonable further 
progress (RFP) requirements, etc., were finalized on April 25, 2007 (72 
FR 20586).
    On September 21, 2007, we proposed additional elements for the PSD 
program for PM2.5 including PM2.5 ``increments,'' 
significant impact levels (SILs), and significant monitoring 
concentrations (SMCs) (72 FR 54112). Increments are the maximum 
allowable increases over baseline concentrations that can be permitted 
to occur when a major source is constructed or modified. This is one 
mechanism by which the PSD program prevents significant deterioration 
in air quality. A SIL defines the level of ambient air impact that is 
considered a ``significant contribution'' to air quality. If the 
modeled maximum ambient impacts of a new source or modification are 
below the SILs, the source: (1) Is presumed not to cause or contribute 
significantly to a PSD increment or NAAQS violation, and (2) is not 
required to perform the multiple-source, cumulative impacts assessments 
that are otherwise required under PSD. An SMC defines the level of 
modeled ambient air impact below which the reviewing authority may 
exempt a new or modified source from conducting the preconstruction 
monitoring that may otherwise be required under PSD. The reviewing 
authority may also exempt the source from preconstruction monitoring if 
the existing monitored ambient concentration is less than the SMC. This 
final action on the bulk of the major NSR program for PM2.5 
along with our proposed rule on increments, SILs, and SMC, when final, 
will represent the final elements necessary to implement a 
PM2.5 PSD program. When both rules are promulgated and in 
effect, the PM2.5 PSD program will no longer use a 
PM10 program as a surrogate, as has been the practice under 
our existing guidance.

IV. Overview of This Final Action

    The table below summarizes the main elements of the existing NSR 
program that this action addresses for PM2.5 as a regulated 
NSR pollutant. The table indicates our final position on an issue and 
whether our position has changed based on comments received. Our final 
action for each element, or where appropriate, explanation of 
implementation under existing

[[Page 28325]]

regulations, is addressed in detail in the referenced sections of this 
preamble.

----------------------------------------------------------------------------------------------------------------
         NSR program element                             Final action                            Section
----------------------------------------------------------------------------------------------------------------
Applicability to PM2.5 precursors....  SO2--Must be regulated as precursor, NOX--        V.A
                                        Presumed regulated, VOC--Presumed not
                                        regulated, Ammonia--Presumed not regulated.
PSD major source threshold...........  100/250 tons per year (tpy).....................  V.B
NA NSR major source threshold........  100 tpy.........................................  V.B
Significant emissions rate...........  Direct PM2.5 emissions--10 tpy, SO2 precursor--   V.C & V.D
                                        40 tpy, NOX precursor--40 tpy, if regulated.
Condensable PM2.5 emissions..........  Included in direct PM2.5 emissions for major NSR  V.E
                                        applicability determinations after the end of
                                        the transition period (changed based on
                                        comments received).
Control technology: BACT and LAER....  Applies for direct PM2.5 emissions, SO2, and      V.F.1 & V.G
                                        other precursors if regulated.
Prevention of significant              Increments, SILs and SMCs covered in a separate   V.F.2
 deterioration.                         rulemaking.
Air quality impact analysis..........  Applies for PM2.5...............................  V.F.3
Preconstruction monitoring...........  Applies for PM2.5 (finalizing options 1 & 3)....  V.F.4
NA NSR Statewide compliance and        Applies for direct PM2.5 emissions and            V.G
 alternative siting analyses.           precursors, if regulated.
NA NSR offsets.......................  Applies for direct PM2.5 emissions and            V.G.1-3
                                        precursors, if regulated.
Interpollutant offsetting............  Allowed on a regional or statewide basis; EPA is  V.G.4
                                        issuing guidance with recommended regional
                                        hierarchies and trading ratios (changed based
                                        on comments received).
Transition for PSD...................  Continues to use PM10 as a surrogate............  V.H
Transition for NA NSR................  Applies through an approved SIP or through 40     V.I
                                        CFR part 51, appendix S.
SIP development period...............  Clarifies that major NSR does not apply to        V.J
                                        precursors during the SIP development period in
                                        attainment areas (changed based on comments
                                        received).
Tribal concerns......................  Cross references to proposed NSR rules for        V.K
                                        Indian country.
Minor NSR............................  Clarifies that State and local regulatory         V.L
                                        programs must include PM2.5 requirements for
                                        minor sources.
NSR transport option.................  Transport classification not available..........  V.M
----------------------------------------------------------------------------------------------------------------

    The provisions of the PM2.5 major NSR program finalized 
in this action are codified as revisions in the previously existing 
regulatory text. The revisions to NA NSR are codified in 40 CFR 51.165 
and appendix S to 40 CFR part 51. The PSD revisions are codified in 40 
CFR 51.166 and 52.21.

V. Rationale for Final Actions

    In this section we discuss each element of our proposal for this 
rulemaking, explain our final action, discuss the rationale for our 
final action, and summarize the major public comments we received. The 
full summary of public comments on the proposal, along with our 
responses, can be found in the docket for this rulemaking.\7\
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    \7\ See ``Implementation of the New Source Review (NSR) Program 
for Particulate Matter Less Than 2.5 Micrometers in Diameter 
(PM2.5); Response to Comments,'' U.S. Environmental 
Protection Agency. It can be viewed or downloaded at 
www.regulations.gov, Docket ID No. EPA-HQ-OAR-2003-0062.
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A. Applicability of NSR to Precursors of PM2.5 in the 
Ambient Air

    Scientific research has shown that various pollutants can 
contribute to ambient PM2.5 concentrations. In addition to 
direct PM2.5 emissions, these include the following 
precursors:
     Sulfur dioxide (SO2);
     Oxides of nitrogen (NOX);
     Volatile organic compounds (VOC); and
     Ammonia.
    These gas-phase precursors undergo chemical reactions in the 
atmosphere to form secondary PM. Formation of secondary PM depends on 
numerous factors including the concentrations of precursors; the 
concentrations of other gaseous reactive species; atmospheric 
conditions including solar radiation, temperature, and relative 
humidity; and the interactions of precursors with preexisting particles 
and with cloud or fog droplets. Several atmospheric aerosol species, 
such as ammonium nitrate and certain organic compounds, are semi-
volatile and are found in both gas and particle phases. Given the 
complexity of PM formation processes, new information from the 
scientific community continues to emerge to improve our understanding 
of the relationship between sources of PM precursors and secondary 
particle formation.
    Precursors contribute significantly to ambient PM2.5 
concentrations, producing approximately half of the concentration 
nationally. In most areas of the country, PM2.5 precursor 
emissions are major contributors to ambient PM2.5 
concentrations. The relative contribution to ambient PM2.5 
concentrations from each of these pollutants varies by area. The 
relative effect of reducing emissions of these pollutants is also 
highly variable.
    Some PM2.5 precursors are already subject to major NSR 
under other NAAQS, as shown in the following table:

------------------------------------------------------------------------
                                          Existing program coverage for
            PM2.5  precursor                 major NSR applicability
------------------------------------------------------------------------
NOX....................................  NA NSR and PSD for NO2 and
                                          Ozone.
SO2....................................  NA NSR and PSD for SO2.
VOC....................................  NA NSR and PSD for Ozone.
Ammonia................................  No coverage for NSR.
------------------------------------------------------------------------

    In the subsections that follow, we first discuss our legal 
authority under the Act for regulating precursors to the formation of 
criteria pollutants, and then discuss our final action for each of the 
PM2.5 precursors.
1. What is EPA's legal authority to regulate precursors?
    As we discussed in the November 1, 2005 proposal, we interpret the 
Act to not only provide explicit authority for EPA to regulate 
precursors, but also to grant us discretion to determine how to address 
precursors for particular regulatory purposes. This reading is based on 
section 302(g) of the Act, which defines the term ``air pollutant'' to 
include ``any precursors to the formation of any air pollutant, to the 
extent the Administrator has identified such precursor or precursors 
for the particular purpose for which the term `air pollutant' is 
used.'' The first clause of this second sentence in section 302(g) 
explicitly authorizes the Administrator

[[Page 28326]]

to identify and regulate precursors as air pollutants under other parts 
of the Act. In addition, the second clause of the sentence indicates 
that the Administrator has discretion to identify which pollutants 
should be classified as precursors for particular regulatory purposes. 
Thus, we do not necessarily construe the Act to require that EPA 
identify a particular precursor as an air pollutant for all regulatory 
purposes where it can be demonstrated that various programs under the 
Act address different aspects of the air pollutant problem. Likewise, 
we do not interpret the Act to require that EPA treat all precursors of 
a particular pollutant the same under any one program when there is a 
basis to distinguish between such precursors within that program. For 
example, in a recent rule addressing PM2.5 precursors for 
purposes of the transportation conformity program, we chose to adopt a 
different approach for one precursor based on the limited emissions of 
that precursor from onroad mobile sources and the degree to which it 
contributes to PM2.5 concentrations (70 FR 24280, May 6, 
2005).
    Other provisions of the Act reinforce our reading of section 302(g) 
to mean that Congress intended precursors to NAAQS pollutants to be 
subject to the air quality planning and control requirements of the 
Act, but also recognized that there may be circumstances where it is 
not appropriate to subject precursors to certain requirements of the 
Act. Section 182 of the Act provides for the regulation of 
NOX and VOC as precursors to ozone in ozone nonattainment 
areas, but also provides in section 182(f) that major stationary 
sources of NOX (an ozone precursor) are not subject to 
emission reduction requirements for ozone where the State shows through 
modeling that NOX reductions do not decrease ozone. Section 
189(e) provides for the regulation of PM10 precursors in 
PM10 nonattainment areas, but also recognizes that there may 
be certain circumstances (e.g., if precursor emission sources do not 
significantly contribute to PM10 levels) where it is not 
appropriate to apply control requirements to PM10 
precursors. The legislative history of section 189(e) recognized the 
complexity behind the science of precursor transformation into 
PM10 ambient concentrations and the need to harmonize the 
regulation of PM10 precursors with other provisions of the 
Act:

    The Committee notes that some of these precursors may well be 
controlled under other provisions of the CAA. The Committee intends 
that * * * the Administrator will develop models, mechanisms, and 
other methodology to assess the significance of the PM10 
precursors in improving air quality and reducing PM10. 
Additionally, the Administrator should consider the impact on ozone 
levels of PM10 precursor controls. The Committee expects 
the Administrator to harmonize the PM10 reduction 
objective of this section with other applicable regulations of this 
CAA regarding PM10 precursors, such as NOX.

See H. Rpt. 101-490, Pt. 1, at 268 (May 17, 1990), reprinted in S. Prt. 
103-38, Vol. II, at 3292.
    In summary, section 302(g) of the Act clearly calls for the 
regulation of precursor pollutants, but the Act also identifies 
circumstances when it may not be appropriate to regulate precursors and 
gives the Administrator discretion to determine how to address 
particular precursors under various programs required by the Act. Due 
to the complexities associated with precursor emissions and their 
variability from location to location, we believe that in certain 
situations it may not be effective or appropriate to control a certain 
precursor under a particular regulatory program or for EPA to require 
similar control of a particular precursor in all areas of the country.
    The term ``air pollutant,'' as defined in section 302(g), is 
incorporated into the NSR provisions for various purposes. Thus, we 
interpret section 302(g) of the Act to require us to consider how to 
address precursors under the NSR program.
    With regard to PSD, section 165(a)(3) of the Act states that new or 
modified major sources must demonstrate that emissions ``will not 
cause, or contribute to, air pollution in excess of any * * * NAAQS in 
any air quality control region * * *.'' A source could not reasonably 
make this demonstration without considering precursors that EPA has 
identified for this purpose. Section 165(a)(4) of the Act states that a 
new or modified source must apply BACT ``for each pollutant subject to 
regulation under this Act emitted from, or which results from, such 
facility.'' The phrase ``emitted from, or which results from'' 
indicates that the statute is not limited to direct emissions, but 
rather extends to precursors as well.
    With regard to NA NSR, sections 172(c)(4) and 173 require States to 
demonstrate, among other things, that emissions from new or modified 
major sources are consistent with the achievement of ``reasonable 
further progress.'' Reasonable further progress is further defined as 
reductions of the relevant air pollutant, which is defined in section 
302(g) to include precursors identified by EPA as subject to regulation 
for that purpose.
2. What is EPA's approach for addressing precursors?
    As proposed, we are finalizing different approaches for addressing 
the individual precursors to PM2.5 under the Act's NSR 
provisions. Generally, where the scientific data and modeling analyses 
provide reasonable certainty that the pollutant's emissions are a 
significant contributor to ambient PM2.5 concentrations, we 
believe that pollutant should be identified as a ``regulated NSR 
pollutant'' and subject to the PM2.5 NSR provisions. 
Conversely, where the effect of a pollutant's emissions on ambient 
PM2.5 concentrations is subject to substantial uncertainty, 
such that in some circumstances the pollutant may not result in 
formation of PM2.5, or control of the pollutant may have no 
effect or may even aggravate air quality, we generally believe it is 
unreasonable to establish a nationally-applicable presumption that the 
pollutant is a regulated NSR pollutant subject to the requirements of 
NSR for PM2.5. We discuss our final action with respect to 
each of the PM2.5 precursors and the basis for that action 
in sections V.A.2 through 5.
    For those precursors that are either presumed to be regulated or 
not regulated (NOX, VOC, and ammonia), a State program need 
not follow the presumed approach if it can be demonstrated that the 
precursor in question is not, or is, a ``significant contributor'' to 
PM2.5 concentrations within the specific area. ``Significant 
contribution'' in this context is a different concept than that in 
section 110(a)(2)(D) of the Act. Section 110(a)(2)(D) of the Act 
prohibits States from emitting air pollutants in amounts which 
significantly contribute to nonattainment or other air quality problems 
in other States. Consistent with the previous discussion of sections 
189(e) and 302(g), we are clarifying that the use in this NSR 
implementation rule of the term ``significant contribution'' to the 
area's PM2.5 concentration means that a significant change 
in emissions of the precursor from sources in the area would be 
projected to provide a significant change in PM2.5 
concentrations in the area. For example, if modeling indicates that a 
reduction in an area's NOX emissions would reduce ambient 
PM2.5 levels in the area, but that a reduction in ammonia 
emissions would result in virtually no change in ambient 
PM2.5 levels, this would suggest that NOX is a 
significant contributor but that ammonia is not. We are not

[[Page 28327]]

establishing in this rule a quantitative test for determining whether 
PM2.5 levels in an area change significantly in response to 
reductions in precursor emissions in the area. However, in considering 
this question, it is relevant to consider that relatively small 
reductions in PM2.5 levels are estimated to result in 
worthwhile public health benefits.
    This approach to identifying a precursor as a regulated NSR 
pollutant reflects atmospheric chemistry conditions in the area and the 
magnitude of emissions of the precursor in the area. Assessments of 
whether it is technically feasible and cost effective to control 
particular emissions units at a source should be part of the later BACT 
determination within a permit action, and should occur after the basic 
assessment of which precursors are to be regulated NSR pollutants in an 
area is completed.
    Most commenters did not question our legal authority to identify 
and regulate PM2.5 precursors. However, some commenters 
argued, based on the language of sections 302(g) and 189(e) of the Act, 
that once we have designated a compound as a precursor, we do not have 
discretion to presumptively exclude it from NSR requirements. Other 
commenters on this issue indicated that we do have such discretion, 
based on the de minimis doctrine of the Alabama Power decision or on 
practical implementation considerations such as the uncertainty in 
measuring and modeling the effect of PM2.5 precursors.
    We do not agree with the comment that the Act does not give us 
discretion to presumptively exclude a PM2.5 precursor from 
NSR requirements. As stated previously, we believe that section 302(g) 
allows the Administrator to presumptively not require certain 
precursors to be addressed in PM2.5 NSR programs generally, 
while allowing the State or EPA to make a finding for a specific area 
to override the general presumption. In the following pollutant-
specific sections of this preamble, we find that at this time there is 
sufficient uncertainty regarding whether certain precursors 
significantly contribute to PM2.5 concentrations in all 
areas such that the policy set forth in this rule does not 
presumptively require certain precursors (ammonia, VOC) to be 
controlled in each area. However, the State or EPA may reverse the 
presumption and regulate a precursor if it provides a demonstration 
showing that the precursor is a significant contributor to 
PM2.5 concentrations in the area. In addition, if in the 
State's NSR program adoption process a commenter provides additional 
information suggesting an alternative policy for regulating a 
particular precursor, the State will need to respond to this 
information in its rulemaking action.
    Hence, we continue to believe that the Act provides us the 
authority not only to identify and regulate precursors to 
PM2.5, but also to treat precursors of the same pollutant 
differently under the same program.
3. Final Action on SO2
    Sulfur dioxide is emitted mostly from the combustion of fossil 
fuels in boilers operated by electric utilities and other industrial 
sources. Less than 20 percent of SO2 emissions nationwide 
are from other sources, mainly other industrial processes such as oil 
refining and pulp and paper production. The formation of sulfuric acid 
from the oxidation of SO2 is an important process affecting 
most areas in North America. There are three different pathways for 
this transformation.
    First, gaseous SO2 can be oxidized by the hydroxyl 
radical (OH) to create sulfuric acid. This gaseous SO2 
oxidation reaction occurs slowly and only in the daytime. Second, SO2 
can dissolve in cloud water (or fog or rainwater), and there it can be 
oxidized to sulfuric acid by a variety of oxidants, or through 
catalysis by transition metals such as manganese or iron. If ammonia is 
present and taken up by the water droplet, then ammonium sulfate will 
form as a precipitate in the water droplet. After the cloud changes and 
the droplet evaporates, the sulfuric acid or ammonium sulfate remains 
in the atmosphere as a particle. This aqueous phase production process 
involving oxidants can be very fast; in some cases all the available 
SO2 can be oxidized in less than an hour. Third, SO2 can be oxidized in 
reactions in the particle-bound water in the aerosol particles 
themselves. This process takes place continuously, but only produces 
appreciable sulfate in alkaline (dust, sea salt) coarse particles. 
Oxidation of SO2 has also been observed on the surfaces of black carbon 
and metal oxide particles. During the last 20 years, much progress has 
been made in understanding the first two major pathways, but some 
important questions still remain about the smaller third pathway. 
Models indicate that more than half of the sulfuric acid in the eastern 
United States and in the overall atmosphere is produced in clouds.
    The sulfuric acid formed from these pathways reacts readily with 
ammonia to form ammonium sulfate, (NH4)2SO4. If there is not enough 
ammonia present to fully neutralize the produced sulfuric acid (one 
molecule of sulfuric acid requires two molecules of ammonia), part of 
it exists as ammonium bisulfate; NH4HSO4 (one molecule of sulfuric acid 
and one molecule of ammonia) and the particles are more acidic than 
ammonium sulfate. In certain situations (in the absence of sufficient 
ammonia for neutralization), sulfate can exist in particles as sulfuric 
acid, H2SO4. Sulfuric acid often exists in the plumes of stacks where 
SO2, sulfur trioxide (SO3), and water vapor are in much higher 
concentrations than in the ambient atmosphere, but these concentrations 
become quite small as the plume is cooled and diluted by mixing.
    Because sulfate is a significant component (e.g., ranging from 9 
percent to 40 percent) of PM2.5 concentrations, and contributes to 
other air quality problems in all regions of the country, we proposed 
to require States to treat SO2 as a PM2.5 precursor in all areas. We 
are retaining the same approach for SO2 in this final rule. Sulfate is 
an important precursor to PM2.5 formation in all areas, and has a 
strong regional impact on PM2.5 concentrations. This approach is 
consistent with past EPA regulations, such as the Clean Air Interstate 
Rule (CAIR), the Clean Air Visibility Rule, the Acid Rain rules, and 
the Regional Haze rule, each of which require SO2 reductions to address 
fine particle pollution and related air quality problems. Finally, we 
do not believe that regulating SO2 as a precursor to PM2.5 is likely to 
add a major burden to sources, as SO2 is already regulated as part of 
the NSR program for the SO2 NAAQS.
    Most commenters who addressed this issue agreed that SO2 should be 
regulated as a PM2.5 precursor, although one only supported regulation 
of SO2 as a precursor in NA NSR, and not under PSD. Two commenters 
disagreed that SO2 acts as precursors to PM2.5 in all cases and 
indicated that it should not be regulated as an ``always-in'' 
precursor.
    We find the commenters' arguments against regulating SO2 as a 
precursor unpersuasive. Sulfate is a significant fraction of PM2.5 mass 
in all nonattainment areas currently, and although large SO2 reductions 
are projected from electric generating units with the implementation of 
the CAIR program, sulfate is still projected to be a key contributor to 
PM2.5 concentrations in the future, in both attainment and 
nonattainment areas. Sulfur dioxide emissions also lead to sulfate 
formation on both regional and local scales.

[[Page 28328]]

4. Final Action on NOX
    The sources of NOX are numerous and widespread. The combustion of 
fossil fuel generates the majority of NOX emissions, with large 
contributions from power generation and mobile sources. Nitrates are 
formed from the oxidation of NOX into nitric acid (HNO3) either during 
the daytime (reaction with OH) or during the night (reactions with 
ozone and water). Nitric acid continuously transfers between the gas 
and the condensed phases through condensation and evaporation processes 
in the atmosphere. However, unless it reacts with other species (such 
as ammonia, sea salt, or dust) to form a neutralized salt, it will 
volatilize and not be measured using standard PM2.5 measurement 
techniques. The formation of aerosol ammonium nitrate is favored by the 
availability of ammonia, low temperatures, and high relative humidity. 
Because ammonium nitrate is semivolatile and not stable in higher 
temperatures, nitrate levels are typically lower in the summer months 
and higher in the winter months. The resulting ammonium nitrate is 
usually in the sub-micrometer particle size range. Reactions with sea 
salt and dust lead to the formation of nitrates in coarse particles. 
Nitric acid may be dissolved in ambient aerosol particles.
    Based on a review of speciated monitoring data analyses, it is 
apparent that nitrate concentrations vary significantly across the 
country. For example, in some southeastern locations, annual average 
nitrate levels are in the range of 6 to 8 percent of total PM2.5 mass, 
whereas nitrate comprises 40 percent or more of PM2.5 mass in certain 
California locations. Nitrate formation is favored by the availability 
of ammonia, low temperatures, and high relative humidity. It is also 
dependent upon the relative degree of nearby SO2 emissions because 
ammonia reacts preferentially with SO2 over NOX. Reductions in NOX 
emissions are expected to reduce PM2.5 concentrations in most areas. 
However, it has been suggested that in a limited number of areas, NOX 
control would result in increased PM2.5 mass by disrupting the ozone 
cycle and leading to increased oxidation of SO2 to form sulfate 
particles, which are heavier than nitrate particles.
    Because of these factors, we are finalizing our proposed approach 
to NOX as a precursor to PM2.5 for the NSR program. Under this 
approach, NOX is presumed to be a significant contributor to ambient 
PM2.5 concentrations in all PSD and NA NSR areas. However, a State or 
EPA may rebut this presumption for a specific area if the State 
demonstrates to the Administrator's satisfaction or EPA demonstrates 
that NOX emissions in that area are not a significant contributor to 
that area's ambient PM2.5 concentrations. If a State or EPA makes such 
a demonstration, NOX would not be considered a PM2.5 precursor under 
the NSR program in that area. If a State or EPA does not make such a 
demonstration, NOX must be regulated as a precursor under the PSD, NA 
NSR, and minor source programs for PM2.5. As discussed previously, this 
``presumed-in'' approach is warranted based on the well-known 
transformation of NOX into nitrates, coupled with the fact that nitrate 
concentrations vary significantly around the country. This approach is 
consistent with other recent EPA regulations requiring NOX reductions, 
which will reduce fine particle pollution, such as the CAIR and a 
number of rules targeting onroad and nonroad engine emissions.
    We had proposed that NOX be presumed to be a precursor in any State 
that EPA has identified as a source of the PM2.5 interstate transport 
problem. In the final rule, we have dropped this requirement to be 
consistent with EPA's Clean Air Fine Particle Implementation Rule 
published on April 25, 2007. 72 FR 20586. Such a requirement is not 
necessary in this rule because States that contribute to downwind 
nonattainment for PM2.5 are otherwise required to address transported 
NOX emissions under the CAIR.
    In areas where NOX is regulated as a precursor to PM2.5, we do not 
believe that this is likely to add a major burden to sources, as NOX is 
already a regulated NSR pollutant. This is because NOX is an identified 
precursor for the ozone NAAQS and an indicator for the NO2 NAAQS.
    Several commenters agreed that NOX should be regulated under major 
NSR as a precursor to PM2.5. Some of these commenters believe that 
States should not have the opportunity to demonstrate otherwise, or 
indicated that a waiver for exclusion of NOX as a precursor should be 
allowed only if downwind States approve such a waiver. A few commenters 
stated that NOX should not be regulated as a precursor to PM2.5 in the 
major NSR program, either on grounds of scientific uncertainty 
regarding the impact of NOX emissions on ambient PM2.5 concentrations 
or on policy grounds (i.e., because NOX is already regulated under NSR 
for other NAAQS).
    We are not persuaded by the argument that NOX should not be 
regulated as a PM2.5 precursor because it is a regulated pollutant 
under other NAAQS. We do not find the degree of scientific uncertainty 
regarding PM2.5 formation from NOX to be great enough to preclude 
regulation of NOX as a precursor with an opportunity for a case-by-case 
demonstration that NOX is not a significant contributor. Furthermore, 
the fact that we regulate NOX for other NAAQS under the NSR program 
does not by itself justify declining to regulate NOX as a PM2.5 
precursor in circumstances where NOX also significantly contributes to 
PM2.5 formation. As noted earlier, the regulation of NOX as a precursor 
for PM2.5 is not expected to add a major burden to regulated sources 
that are already required to limit NOX emission to meet other NAAQS.
    We disagree with the commenters who believe that emissions of NOX 
cannot be correlated to PM2.5 formation, or that it is unclear when NOX 
acts as a precursor. As discussed previously, our decision to regulate 
NOX as a precursor to PM2.5 is based on the well-known transformation 
of NOX into nitrates. Nevertheless, nitrate concentrations vary 
significantly across the country. As a result, we believe that the 
``presumed-in'' approach is appropriate for NOX since a State can 
demonstrate that NOX should not be a precursor in a given area or 
region.
    While we recognize that NOX emissions can affect PM2.5 
concentrations in downwind areas, we disagree that approval from 
downwind States should be required for a State to exclude NOX as a 
PM2.5 precursor for a particular area. This is because States that 
contribute to downwind nonattainment for PM2.5 are otherwise required 
to address transported NOX emissions under the CAIR.
5. Final Action on VOC
    The organic component of ambient particles is a complex mixture of 
hundreds or even thousands of organic compounds. These organic 
compounds are either emitted directly from sources (i.e., primary 
organic aerosol) or can be formed by reactions in the ambient air 
(i.e., secondary organic aerosol, or SOA). Volatile organic compounds 
are key precursors in the formation processes for both SOA and ozone. 
The relative importance of organic compounds in the formation of 
secondary organic particles varies from area to area, depending upon 
local emissions sources, atmospheric chemistry, and season of the year.
    The lightest organic molecules (i.e., molecules with six or fewer 
carbon atoms) occur in the atmosphere mainly as vapors and typically do 
not directly

[[Page 28329]]

form organic particles at ambient temperatures due to the high vapor 
pressure of their products. However, they participate in atmospheric 
chemistry processes resulting in the formation of ozone and certain 
free radical compounds (such as OH) which in turn participate in 
oxidation reactions to form SOA, sulfates, and nitrates. These VOCs 
include all alkanes with up to six carbon atoms (from methane to hexane 
isomers), all alkenes with up to six carbon atoms (from ethene to 
hexene isomers), benzene, and many low-molecular weight carbonyls, 
chlorinated compounds, and oxygenated solvents.
    Intermediate weight organic molecules (i.e., compounds with 7 to 24 
carbon atoms) often exhibit a range of volatilities and can exist in 
both the gas and aerosol phase at ambient conditions. For this reason 
they are also referred to as semivolatile compounds. Semivolatile 
compounds react in the atmosphere to form SOA. These chemical reactions 
are accelerated in warmer temperatures, and studies show that SOA 
typically comprises a higher percentage of carbonaceous PM in the 
summer as opposed to the winter. The production of SOA from the 
atmospheric oxidation of a specific VOC depends on four factors: Its 
atmospheric abundance, its chemical reactivity, the availability of 
oxidants (ozone, OH, HNO3), and the volatility of its products. In 
addition, recent work suggests that the presence of acidic aerosols may 
lead to an increased rate of SOA formation. Aromatic compounds such as 
toluene, xylene, and trimethyl benzene are considered to be the most 
significant anthropogenic SOA precursors and have been estimated to be 
responsible for 50 to 70 percent of total SOA in some airsheds. Man-
made sources of aromatics gases include mobile sources, petrochemical 
manufacturing, and solvents. Some of the biogenic hydrocarbons emitted 
by trees are also considered to be important precursors of secondary 
organic PM. Terpenes (and b-pinene, limonene, carene, etc.) and the 
sesquiterpenes are expected to be major contributors to SOA in areas 
with significant vegetation cover, but isoprene is not. Terpenes are 
very prevalent in areas with pine forests, especially in the 
southeastern United States. The rest of the anthropogenic hydrocarbons 
(higher alkanes, paraffins, etc.) have been estimated to contribute 5 
to 20 percent to the SOA concentration depending on the area.
    The contribution of the primary and secondary components of organic 
aerosol to the measured organic aerosol concentrations remains a 
complex issue. Most of the research performed to date has been done in 
southern California, and more recently in central California, while 
fewer studies have been completed on other parts of North America. Many 
studies suggest that the primary and secondary contributions to total 
organic aerosol concentrations are highly variable, even on short time 
scales. Studies of pollution episodes indicate that the contribution of 
SOA to the organic PM can vary from 20 percent to 80 percent during the 
same day.
    Despite significant advances in understanding the origins and 
properties of SOA, it remains probably the least understood component 
of PM2.5. The reactions forming secondary organics are complex, and the 
number of intermediate and final compounds formed is voluminous. Some 
of the best efforts to unravel the chemical composition of ambient 
organic aerosol matter have resulted in quantifying the concentrations 
of hundreds of organic compounds representing only 10 to 20 percent of 
the total organic aerosol mass. For this reason, SOA continues to be a 
significant topic of research and investigation.
    Current scientific and technical information shows that 
carbonaceous material is a significant fraction of total PM2.5 mass in 
most areas, that certain VOC emissions are precursors to the formation 
of SOA, and that a considerable fraction of the total carbonaceous 
material originates from local as opposed to regional sources. However, 
while significant progress has been made in understanding the role of 
gaseous organic material in the formation of organic PM, this 
relationship remains complex. We recognize that further research and 
technical tools are needed to better characterize emissions inventories 
for specific VOC, and to determine the extent of the contribution of 
specific VOC to organic PM mass.
    As a result, this final rule does not, in general, require 
regulation of VOC as a precursor to PM2.5 for the NSR program. However, 
a State may demonstrate to the Administrator's satisfaction or EPA may 
demonstrate that VOC emissions in a specific area are a significant 
contributor to that area's ambient PM2.5 concentrations. After such a 
demonstration, the State would regulate VOC (or a subset of VOC) as a 
PM2.5 precursor for the NSR program in that area. That is, the State 
would need to regulate construction and modification of stationary 
sources that increase emissions of VOC in that area to assure that 
these emissions do not interfere with reasonable further progress or 
the ability of that area to attain or maintain the PM2.5 NAAQS.
    We believe that this ``presumed-out'' approach is appropriate for 
VOC because of the complexity in assessing the role of VOC in PM2.5 
formation, as discussed previously. Where the effect of a pollutant's 
emissions on ambient PM2.5 concentrations is subject to this degree of 
uncertainty, we do not have justification to establish a nationally-
applicable presumption that the pollutant is a regulated NSR pollutant 
subject to the requirements of NSR for PM2.5. Under the circumstances, 
we believe the best policy is to continue to regulate VOC under NSR as 
a precursor to ozone in all areas, which will potentially provide a co-
benefit for PM2.5 concentrations despite the uncertainty in PM2.5 
formation from VOC. As discussed previously, we do not find it 
appropriate to utilize the same approach for NOX because the scientific 
data and modeling analyses provide more certainty that NOX emissions 
are a significant contributor to ambient PM2.5 concentrations.
    Note that we intend to regulate high molecular weight VOC (with 25 
carbon atoms or more and low vapor pressure) as direct PM2.5 emissions 
because they are emitted directly as primary organic particles and 
exist primarily in the condensed phase at ambient temperatures. See 
section V.E following for more on the regulation of such 
``condensables.''
    Most commenters agreed with the ``presumed-out'' approach for VOC. 
One commenter said that the role of VOC in the formation of PM2.5 is 
sufficiently understood to recommend a ``waiver'' approach for this 
pollutant in the same way as NOX is treated for PM2.5 in the rule.
    As discussed previously, the reactions forming secondary organics 
are complex and the number of intermediate and final compounds formed 
is voluminous. Some of the best efforts to unravel the chemical 
composition of ambient organic aerosol matter have merely been able to 
quantify the concentrations of hundreds of organic compounds 
representing only 10 to 20 percent of the total organic aerosol mass. 
For this reason, SOA continues to be a significant topic of research 
and investigation. Accordingly, we do not agree with the commenter who 
suggested a waiver or ``presumed-in'' approach for VOC. We continue to 
believe that our ``presumed-out'' approach is most appropriate for VOC 
and have included this approach in the final rules.

[[Page 28330]]

6. Final Action on Ammonia
    Ammonia (NH3) is a gaseous pollutant that is emitted by natural and 
anthropogenic sources. Emissions inventories for ammonia are considered 
to be among the most uncertain of any species related to PM. Ammonia 
serves an important role in neutralizing acids in clouds, 
precipitation, and particles. In particular, ammonia neutralizes 
sulfuric acid and nitric acid, the two key contributors to acid 
deposition (acid rain). Deposited ammonia also can contribute to 
problems of eutrophication in water bodies, and deposition of ammonium 
particles may effectively result in acidification of soil as ammonia is 
taken up by plants. The NARSTO Fine Particle Assessment \8\ indicates 
that reducing ammonia emissions where sulfate concentrations are high 
may reduce PM2.5 mass concentrations, but may also increase the acidity 
of particles and precipitation. An increase in particle acidity is 
suspected to be linked with adverse human health effects and with an 
increase in the formation of secondary organic compounds. Based on this 
information and further insights gained from the NARSTO Fine Particle 
Assessment, it is apparent that the formation of particles related to 
ammonia emissions is a complex, nonlinear process.
---------------------------------------------------------------------------

    \8\ NARSTO (2004) ``Particulate Matter Assessment for Policy 
Makers: A NARSTO Assessment.'' P. McMurry, M. Shepherd, and J. 
Vickery, eds. Cambridge University Press, Cambridge, England. ISBN 0 
52 184287 5. See the docket for this rulemaking, Docket ID No. EPA-
HQ-OAR-2003-0062, or http://www.narsto.org/section.src?SID=6.
---------------------------------------------------------------------------

    Though recent studies have improved our understanding of the role 
of ammonia in aerosol formation, ongoing research is required to better 
describe the relationships between ammonia emissions, PM 
concentrations, and related impacts. The control techniques for ammonia 
and the analytical tools to quantify the impacts of reducing ammonia 
emissions on atmospheric aerosol formation are both evolving. Also, 
area-specific data are needed to evaluate the effectiveness of reducing 
ammonia emissions on reducing PM2.5 concentrations in different areas, 
and to determine where ammonia decreases may increase the acidity of 
particles and precipitation.
    Due to the considerable uncertainty related to ammonia as a 
precursor, our final rules do not require ammonia to be regulated as a 
PM2.5 precursor but do give States the option to regulate ammonia as a 
precursor to PM2.5 in nonattainment areas for purposes of NSR on a 
case-by-case basis. Consistent with our proposal, if a State 
demonstrates to the Administrator's satisfaction that ammonia emissions 
in a specific nonattainment area are a significant contributor to that 
area's ambient PM2.5 concentrations, the State would regulate ammonia 
as a PM2.5 precursor under the NSR program in that nonattainment area. 
Once this demonstration is made, ammonia would be a ``regulated NSR 
pollutant'' under NA NSR for that particular nonattainment area, and 
the State would need to regulate construction and modification of 
stationary sources that increase emissions of ammonia in that area to 
assure that these emissions do not interfere with reasonable further 
progress or the ability of that area to attain or maintain the PM2.5 
NAAQS. In all other nonattainment areas in that State and nationally, 
ammonia would not be subject to the NSR program. In addition, the 
action of any State identifying ammonia emissions as a significant 
contributor to a nonattainment area's PM2.5 concentrations, or our 
approval of a nonattainment SIP doing so, does not make ammonia a 
regulated NSR pollutant for the purposes of PSD in any attainment or 
unclassifiable areas nationally. This is consistent with our proposal 
(70 FR 66036) and no commenters took issue with the proposal. We also 
retain the ability to make a technical demonstration for any area in a 
State, if appropriate, to reverse the presumption and require ammonia 
to be addressed in that State's nonattainment area plan.
    We elected to finalize the proposed approach because of continued 
uncertainties regarding ammonia emission inventories and the effects of 
ammonia emission reductions. Ammonia emission inventories are presently 
very uncertain in most areas, complicating the task of assessing 
potential impacts of ammonia emissions reductions. In addition, data 
necessary to understand the atmospheric composition and balance of 
ammonia and nitric acid in an area are not widely available, making it 
difficult to predict the results of potential ammonia emission 
reductions. Ammonia reductions may be effective and appropriate for 
reducing PM2.5 concentrations in selected locations, but in other 
locations such reductions may lead to minimal reductions in PM2.5 
concentrations and increased atmospheric acidity. Research projects 
continue to expand our collective understanding of these issues, but at 
this time we believe this case-by-case approach for nonattainment areas 
is appropriate given that there is sufficient uncertainty regarding the 
impact of ammonia emission reductions on PM2.5 concentrations in all 
nonattainment areas. In light of these uncertainties, we encourage 
States to continue efforts to better understand the role of ammonia in 
their fine particle problem areas.
    Several commenters agreed with our ``presumed-out'' approach for 
ammonia. One of these commenters recommended that we recognize the role 
ammonia plays in PM2.5 formation and develop a policy to require the 
minimization and mitigation of known emissions of ammonia, while 
another suggested that we require States to initiate comprehensive 
ambient air monitoring networks to determine the extent of local 
effects of ammonia.
    Four commenters did not support treating ammonia as a PM2.5 
precursor under any circumstances. Three of these commenters stated 
that if EPA permits States to demonstrate that ammonia should be 
regulated as a PM2.5 precursor for NSR purposes, we should make clear 
that ammonia emissions from the operation of an air pollution control 
system to control NOX should not factor into such a demonstration.
    Two commenters preferred that we use the ``presumed-in'' approach 
for ammonia, as for NOX. One of these commenters stated that the 
``presumed-out'' approach would improperly delegate our authority to 
regulate ammonia as a PM2.5 precursor to the States and would reverse 
Congress' requirement to regulate PM precursors unless the emissions 
are not part of the problem, instead taking the approach that we will 
``not regulate unless proven to be part of the problem.''
    We continue to believe that the ``presumed-out'' approach is most 
appropriate for ammonia. As discussed previously, considerable 
uncertainties remain regarding ammonia emission inventories and the 
effects of ammonia emission reductions. As a result, we do not believe 
it advisable to adopt a ``presumed-in'' approach. However, where a 
State can gather sufficient data to demonstrate that reductions in 
ammonia emissions will decrease ambient concentrations of PM2.5 in a 
particular nonattainment area, we believe that the State should be 
allowed to regulate ammonia emissions under its PM2.5 NSR program for 
that area.
    We do not believe that this approach improperly delegates authority 
to the States. The final rule establishes a general presumption for all 
nonattainment areas through this rulemaking process, and allows for the 
presumption to be modified by the State on a case-by-case basis with 
EPA approval. Under the Clean Air Fine

[[Page 28331]]

Particle Implementation Rule (72 FR 20586, April 5, 2007) (addressing 
various nonattainment plan elements other than NSR), we still retain 
the ability to make a technical demonstration for any area if 
appropriate to reverse the presumption and require ammonia to be 
addressed in its nonattainment area plan. As discussed previously in 
section V.A.1, we interpret the Act to allow the ``presumed-out'' 
approach adopted in the final rule.
    We agree with the commenter who suggested that we continue research 
on the role of ammonia in the formation of PM2.5. We believe that it is 
prudent to continue research on ammonia control technologies and the 
ammonia-sulfate-nitrate-SOA equilibrium before undertaking a broad 
national program to reduce ammonia emissions. As we develop a greater 
understanding about the potential air quality effects of reducing 
ammonia emissions in specific nonattainment areas, it may be 
appropriate for ammonia reduction strategies to be included in future 
SIPs. At this time, however, we believe that reducing SO2 and NOX 
emissions will achieve significant reductions in ambient PM2.5 
concentrations.
    Regarding the comment related to ammonia emissions from NOX control 
systems, we believe that a State should evaluate all sources of ammonia 
emissions when determining whether to regulate ammonia under its PM2.5 
NSR program for a particular nonattainment area. However, we also 
encourage States to be mindful of the potential tradeoff in terms of 
ambient PM2.5 concentrations that may be related to reducing ammonia 
emissions from NOX control systems.

B. Major Stationary Source Threshold for PM2.5

    The major NSR program applies to construction of major stationary 
sources and major modifications at major stationary sources. A 
stationary source is a ``major source'' if its actual emissions or its 
potential to emit for a specific pollutant equals or exceeds the major 
source threshold for that pollutant established in the Act. Different 
pollutants, including precursors, are not summed to determine 
applicability.
    Sections 169 and 302(j) of the Act contain definitions of ``major 
emitting facility'' and ``major stationary source'' that apply to 
programs implemented under part C and subpart 1 of part D of the Act 
(PSD and NA NSR, respectively). Consistent with our proposal, these 
final rules follow these definitions for purposes of defining a major 
emitting facility or major stationary source that would be subject to 
major NSR. The thresholds set out in the definitions are applied to 
each relevant pollutant individually, that is, to direct PM2.5 
emissions and to emissions of each pollutant identified as a PM2.5 
precursor for the applicable NSR program. Under the final rules, the 
major source thresholds are as follows:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
PSD.................................  100 tpy for source categories
                                       listed in 40 CFR
                                       51.166(b)(1)(i)(a) and
                                       52.21(b)(1)(i)(a).
                                      250 tpy for all other source
                                       categories.
NA NSR..............................  100 tpy for all source categories.
------------------------------------------------------------------------

    No regulatory change is required to implement this approach to the 
major source thresholds for direct PM2.5 emissions and the PM2.5 
precursors. See 40 CFR 51.165(a)(1)(iv)(a), 51.166(b)(1)(i), 
52.21(b)(1)(i), and part 51, appendix S, section II.A.4.
    This approach is consistent with how we treat other criteria 
pollutants that are covered by subpart 1 of part D of the Act. 
Nonattainment NSR programs under subpart 1 do not include a tiered 
classification system such as the one required for ozone nonattainment 
areas under subpart 2 of part D. We do not interpret subpart 4 of part 
D of the Act (creating ``serious'' and ``moderate'' classifications for 
PM10 nonattainment areas) as applying to PM2.5.
    Although our approach is consistent with sections 169 and 302(j) 
and subpart 1 of part D of the Act, it results in a higher major source 
threshold in PM2.5 nonattainment areas than the major source 
threshold that applies in some PM10 nonattainment areas 
under subpart 4 of part D of the Act. This is because section 189(b) of 
the Act establishes a 70-tpy major source threshold for ``serious'' 
PM10 nonattainment areas while ``moderate'' PM10 
nonattainment areas apply a 100-tpy major source threshold based on the 
definition in section 302(j). We do not believe the Act gives us the 
discretion to promulgate a lower major source threshold for pollutants 
such as PM2.5 that are only subject to subpart 1 of part D 
of the Act.
    Our emissions inventory data do not indicate that this situation 
will adversely impact attainment of the PM2.5 NAAQS. These 
data indicate that a significant number of sources have actual 
PM2.5 emissions in the 100 to 250 tpy range. Additionally, 
our more current inventory data show that the number of sources that 
would be covered as major sources by a lower major source threshold 
would not increase substantially unless the threshold were lowered to 
20 tpy or below. Thus, even if EPA had the discretion to adopt a 70-tpy 
major source threshold for PM2.5 nonattainment areas, our 
data indicate that few additional sources would be subject to the major 
NSR program in PM2.5 nonattainment areas.\9\
---------------------------------------------------------------------------

    \9\ See ``NEI-PM2.5 Source Analysis'' in the docket 
for this rulemaking, Docket ID No. EPA-HQ-OAR-2003-0062.
---------------------------------------------------------------------------

    We believe that States should consider such information in 
developing their own SIP-approved NSR programs. For example, if 
construction of PM2.5 sources emitting 99 tpy with no major 
NSR controls and without mitigation would undermine a State's ability 
to achieve reasonable further progress or attain the PM2.5 
NAAQS, the State should consider imposing emissions controls or other 
requirements on these sources through the State's minor NSR program. 
Note that such programs are required under the existing statute and 
regulations to assure that the NAAQS are achieved. See section 
110(a)(2)(C) of the Act and 40 CFR 51.160. In addition, States may 
address such sources through other elements in their nonattainment area 
SIPs that are not statutorily bound to the definition of major source, 
as the major NSR program is. We reiterate that since we do not 
interpret subpart 4 of the Act to apply to PM2.5, we do not 
believe that we have discretion under section 302(j) of the Act to 
define a lower major source threshold for pollutants such as 
PM2.5 that are only subject to subpart 1 of part D of the 
Act.
    Some commenters indicated that State minor NSR programs would not 
be sufficient to address such sources due to interstate transport and 
the existence of interstate PM2.5 nonattainment areas. These 
commenters indicated that a lower major source threshold for 
PM2.5 sources located in designated nonattainment areas 
should be applied uniformly throughout the entire nonattainment area, 
which would not be possible when minor NSR programs are defined on a 
State-by-State basis.
    We believe, to the contrary, that States can coordinate their minor 
NSR programs to address interstate PM2.5 nonattainment 
areas, and we encourage them to do so. In addition, we note that the 
impacts of direct PM2.5 emissions are generally felt 
primarily in the local area.
    One commenter stated that in order to address the impact of high PM 
concentrations, the Act mandates EPA to define a criteria pollutant's 
NSR major threshold at levels less than 100 tpy. The commenter gave the 
example of

[[Page 28332]]

subparts 2 and 4 of part D of the Act, which define lower major source 
thresholds for certain classifications of ozone and PM10 
nonattainment areas, respectively. The commenter argued that it is 
unreasonable for us to assert that subpart 4 does not apply to this 
rule because it regulates all PM with a diameter of less than 10 
micrometers, which includes PM2.5. The commenter believes 
that we recognized as much in our proposal preamble discussion of the 
options for implementing reasonably available control technology 
(RACT), where we discussed potential approaches that ``would be 
consistent with the approach set forth in the Act in subpart 4.'' 70 FR 
66017. This commenter stated that a reasonable interpretation of the 
Act requires major sources of direct PM2.5 emissions and 
precursor emissions to be defined at a baseline level of 70 tpy, and 
adjusted further downward as appropriate considering the 
characteristics and potential impacts of the pollutants.
    We do not agree that subpart 4 of part D applies to 
PM2.5 nonattainment areas. Subpart 4 was added to the Act by 
Congress specifically to address the PM10 NAAQS. We believe 
that the PM2.5 standard should be implemented under subpart 
1 of part D, which is the general provision of the Act related to NAAQS 
implementation. Part D of title I of the Act sets forth the 
requirements for SIPs needed to attain the NAAQS. Part D also includes 
a general provision under subpart 1, which applies to all NAAQS for 
which a specific subpart does not exist. Because the PM2.5 
standards were not established until 1997, the nonattainment plan 
provisions found in section 172 of subpart 1 apply. Subpart 4 on its 
face applies only to the PM10 standard. In general, the 
emphasis in subpart 4 on reducing PM10 concentrations from 
certain sources of direct PM2.5 emissions can be somewhat 
effective in certain PM2.5 nonattainment areas but not in 
all. Contributions to PM2.5 concentrations are typically 
from a complex mix of sources of primary emissions and sources of 
precursor emissions, which form particles through reactions in the 
atmosphere. In addition, PM2.5 differs from PM10 
in terms of atmospheric dispersion characteristics, chemical 
composition, and contribution from regional transport.
    A group of environmental commenters believed that EPA should be 
consistent with the stationary source size thresholds proposed for RACT 
in option 2, see 70 FR 66019/1. In our proposal preamble discussion of 
RACT, while we discussed developing a classification system for 
PM2.5 nonattainment areas under section 172(a)(1) of subpart 
1, we did not discuss subjecting PM2.5 to the requirements 
of subpart 4. While our discussion of RACT contemplated a lower 
threshold for RACT applicability in some PM2.5 nonattainment 
areas, we did not characterize this as defining a lower major source 
threshold. Moreover, section 302(j) defines a major stationary source 
as one that emits 100 tpy or more ``except as otherwise expressly 
provided.'' Since section 172 does not expressly provide EPA with the 
authority to promulgate a major source threshold below 100 tpy, we do 
not believe we are authorized to do so under subpart 1 of part D of the 
Act.
    One commenter stated that the major source threshold for 
PM2.5 emissions should be calculated using the current 
SO2 and NOX definitions of major source and 
significant emissions rate. Specifically, the commenter suggested that 
the ratio of these values (100 tpy and 40 tpy, respectively) should be 
multiplied by the significant emissions rate for direct 
PM2.5 emissions (10 tpy; see section V.C following) to yield 
a PM2.5 major source threshold of 25 tpy.
    As previously stated, we do not believe that we have discretion 
under the Act to define a lower major source threshold under subpart 1 
of part D of the Act. In any case, the major source thresholds and 
significant emissions rates for SO2 and NOX were 
not defined in relation to one another, and therefore their 
relationship would not provide a suitable basis for developing the 
PM2.5 major source threshold from the PM2.5 
significant emissions rate. Major source thresholds are defined 
directly in the Act, while the significant emissions rates were 
codified independently in regulations through a modeling analysis of 
ambient impacts.

C. Significant Emissions Rate for Direct Emissions of PM2.5

    The determination of what should be classified as a modification 
subject to major NSR is based, in part, on a ``significant emissions 
rate.'' \10\ The major NSR regulations define this term as a rate above 
which a net emissions increase will trigger major NSR permitting 
requirements, if the increase results from a major modification. 
Sources are exempt from major NSR requirements if the emissions 
increase resulting from a modification is below this rate because EPA 
considers such lower emissions increases to be de minimis for purposes 
of the major NSR program.
---------------------------------------------------------------------------

    \10\ For additional background on EPA's interpretation of 
modification and rationale for including significant emissions rates 
in defining major modifications, see 61 FR 38253-54 (Dec. 31, 2002).
---------------------------------------------------------------------------

    The significant emissions rates for the criteria pollutants other 
than PM2.5 are given in the following table:

------------------------------------------------------------------------
      Criteria pollutant            Significant emissions rate (tpy)
------------------------------------------------------------------------
Ozone........................  VOC: Any increase up to 40 tpy (dependent
                                on NA classification).
                               NOX: Any increase up to 40 tpy (dependent
                                on NA classification).
NO2..........................  NOX: 40 tpy.
Particulate Matter...........  25 tpy, particulate matter emissions.
                               15 tpy, PM10 emissions.
CO...........................  50 or 100 tpy (dependent on NA
                                classification).
SO2..........................  40 tpy.
Lead.........................  0.6 tpy.
------------------------------------------------------------------------

Significant emissions rates for additional (non-criteria) pollutants 
that are subject to the PSD program are contained in 40 CFR 
51.166(b)(23) and 40 CFR 52.21(b)(23).
    For direct emissions of PM2.5, these final rules define 
the significant emissions rate as 10 tpy. This is the level that we 
proposed as our preferred option. This final significant emissions rate 
for direct PM2.5 emissions is based fundamentally on the 
same approach that we used in setting the previous significant 
emissions rates for PM emissions and PM10 emissions.
    Historically, the original significant emissions rate for PM (25 
tpy of PM emissions) was set using a modeling analysis to determine the 
amount of PM emissions that a source could emit that

[[Page 28333]]

would be unlikely to cause ambient impacts above 4 percent of the PM 
NAAQS (measured as total suspended particulate (TSP)).\11\ Although a 
range of source configurations can yield a wide range of impacts per 
tpy of emissions, our review of typical configurations of major PM 
sources led us to the conclusion that a major modification that 
increased PM emissions by 25 tpy or less would be unlikely to increase 
24-hour average concentrations of TSP by more than 4 percent of the 24-
hour TSP NAAQS. Subsequently, when we set the significant emissions 
rate for PM10, we adjusted the rate for PM emissions using 
the ratio of the 24-hour PM10 NAAQS to the 24-hour TSP NAAQS 
to derive the PM10 significant emissions rate of 15 tpy. We 
used the ratio of 24-hour NAAQS for this adjustment because that NAAQS 
was controlling for both PM and PM10.
---------------------------------------------------------------------------

    \11\ The EPA established the original NAAQS for PM in terms of 
ambient concentrations of TSP (40 CFR 51.100(ss)). Source 
applicability for PM was determined in terms of amounts of PM 
emissions (40 CFR 51.100(pp)) from the affected source. In 1993, at 
58 FR 31622 (see page 31629), EPA eliminated TSP as the ambient 
indicator for measuring compliance with both the NAAQS and PSD 
increments. Thus, EPA no longer considers the TSP ambient indicator 
to be a regulated NSR pollutant. The EPA is currently evaluating 
whether it remains appropriate to consider PM as a ``regulated NSR 
pollutant.'' There is no NAAQS for TSP/PM, rather the standards 
address specific size fractions of PM, namely PM10 and 
PM2.5. However, PM emissions, based on in-stack 
measurements, continue to be regulated under PSD because of the use 
of such emissions for evaluating compliance under a variety of CAA 
section 111 new source performance standards (40 CFR part 60). Given 
the regulatory changes and positions taken by EPA since 1993, EPA is 
re-evaluating the implications for PM emissions in the NSPS program 
(and other air programs) and will act accordingly to clarify this 
issue in the near-term.
---------------------------------------------------------------------------

    We used a conceptually similar methodology to derive the final 
PM2.5 significant emissions rate from the rate for 
PM10. However, because the 24-hour NAAQS is not controlling 
for PM2.5, we revised the methodology to take into account 
the annual impact of emissions. See the proposal preamble for 
additional information on the methodology we used to develop the final 
significant emissions rate for direct PM2.5 emissions (70 FR 
66038).
    Several commenters supported our approach to setting the 
significant emissions rate for direct PM2.5 emissions and 
the level (10 tpy) based on the same methodology used for PM emissions 
and PM10 emissions. Numerous other commenters believe that 
our methodology was too conservative, and suggested a significant 
emissions rate of 15 tpy. Two commenters suggested that we use 
significant emissions rate of 5 tpy or less. Another commenter 
suggested that we could ``split the difference,'' using an option that 
could give States and companies some flexibility: Modifications less 
than 5 tpy of direct PM2.5 emissions could be considered de 
minimis; modifications between 5 and 15 tpy of direct PM2.5 
emissions could choose to either demonstrate less than a 4 percent 
NAAQS increase or simply be subject; and modifications with increases 
of 15 or more tpy of direct PM2.5 emissions would be 
subject.
    We agree with commenters who indicated that we were correct in 
using the same methodology for direct PM2.5 that was used to 
set the significant emissions rate for PM10 and PM 
emissions. We do not agree that using the same level as PM10 
emissions (15 tpy) is warranted, given the demonstrated health effects 
of PM2.5. Neither do we agree that a significant emissions 
rate of 5 tpy or less is warranted. While our screening model runs 
indicated that emissions increases in this range at facilities with 
short stacks can cause measurable increases in ambient PM2.5 
levels, we do not believe that facilities at the extremes should 
dictate the program for all sources.
    We do not agree that inclusion of condensable emissions in future 
testing and applicability determinations (see section V.E) is grounds 
for increasing the SER for direct PM2.5 emissions. The 
results of the modeling analysis that is the basis for the SER of 10 
tpy is not affected by the nature of the direct PM2.5 
emissions (i.e., condensable or not).
    We also do not agree that the proportions of primary and secondary 
PM2.5 that comprise ambient PM2.5 concentrations 
is relevant to determining the appropriate SER for direct 
PM2.5 emissions. Following our historic approach for PM and 
PM10, we based our analysis on determining the size of a 
source of direct PM2.5 emissions that would be expected to 
have an ambient impact of 4 percent or more of the NAAQS. This 
relationship holds true regardless of the origin of the particles that 
make up the ambient PM2.5. The commenter's approach (i.e., 
carrying out the analysis based on one-half of the NAAQS because 
primary PM2.5 makes up only one-half of the ambient 
PM2.5) implies that an increase in ambient PM2.5 
concentrations due to an increase in direct PM2.5 emissions 
is somehow automatically matched by a like increase in the ambient 
concentration of secondary PM2.5. We do not believe that 
this is a reasonable approach.

D. Significant Emissions Rates for PM2.5 Precursors

    Consistent with the preferred option in the proposal, we are 
setting significant emissions rates for PM2.5 precursors at 
the levels for those pollutants already included in major NSR programs, 
as shown in the following table:

------------------------------------------------------------------------
                                             Significant emissions rate
             PM2.5  precursor                 (equal to or  exceeding)
------------------------------------------------------------------------
SO2.......................................  40 tpy.
NOX.......................................  40 tpy.
VOC.......................................  40 tpy.
Ammonia...................................  Adopted in SIP.
------------------------------------------------------------------------

    VOC is presumed not to be a precursor to PM2.5 in any 
attainment or unclassifiable area, unless the State demonstrates to the 
Administrator's satisfaction or EPA demonstrates that emissions of VOC 
from sources in a specific area are a significant contributor to that 
area's ambient PM2.5 concentrations. Any State making such a 
demonstration would be required to adopt the 40-tpy significant 
emissions rate unless it demonstrates that a more stringent significant 
emissions rate (lower rate) is more appropriate.
    For ammonia, States determining in their SIPs that control of 
ammonia is a necessary part of a PM2.5 control strategy in a 
particular area must set the significant emissions rate for ammonia. 
Otherwise, according to the definition of ``significant'' in the PSD 
program, ``any emissions rate'' would be considered significant. See 40 
CFR 51.166(b)(23)(ii).
    One commenter stated that we should not leave it to States to set 
significant emissions rates for ammonia. The commenter argued that 
EPA's scientists should shoulder this responsibility, and the resulting 
significant emissions rate should be subject to notice and comment.
    In the final rule, we are allowing those States that determine in 
their SIPs that control of ammonia is necessary to set the significant 
emissions rate for ammonia, based on the information developed for each 
attainment demonstration. At this time, we believe this is more 
appropriate than EPA setting a single, nationwide significant emissions 
rate because of the different role ammonia plays in the formation of 
PM2.5 from one area to another, as well as our still-
evolving understanding of the impact of reducing ammonia emissions on 
ambient PM2.5 concentrations. In addition, we note that the 
SIP revisions that States undertake to add ammonia to their NA NSR

[[Page 28334]]

programs are subject to notice and comment rulemaking procedures.
    Numerous commenters supported our proposal to set significant 
emissions rates for PM2.5 precursors at the levels already 
used for other purposes in the NSR program. One commenter indicated 
that since roughly half or more of ambient PM2.5 is derived 
from precursors, 10 tpy would be an appropriate significant emissions 
rate for PM2.5 precursor emissions. Another commenter 
suggested a significant emissions rate of 4 tpy for SO2 and 
2 tpy for NOX, based on the percentage of PM2.5 
that is typically derived from these precursors and the ratios between 
the existing significant emissions rates for these pollutants and the 
SO2 and NO2 annual NAAQS. Since the ambient 
concentrations of PM2.5 vary across the country and since 
significant emissions rates have not been developed as a ratio of the 
NAAQS, we do not believe that the suggested approach is appropriate.
    As discussed in the proposal, the use of existing significant 
emission rates where the PM2.5 precursor is also regulated 
under NSR as a separate criteria pollutant harmonizes the NSR program 
for PM2.5 with the NSR programs for those other criteria 
pollutants. This enables a source to determine the NSR impacts of 
proposed modifications by reference to a single significant emissions 
rate for each pollutant, and enables streamlining of determinations 
regarding the applicable control technology and analysis of air quality 
impacts into a single and comprehensive decision making process for 
both PM2.5 and other criteria pollutants that also cover 
PM2.5 precursors. This also follows precedent. When ozone 
became a criteria pollutant, EPA used the NOX significant 
emissions rate from the NO2 program.
    The burden imposed is not the only factor to consider when setting 
the significant emission rates for precursors--the process for 
determining the significant emission rates must also take into account 
the accuracy and certainty with which we can predict the effect of the 
precursors on PM2.5 concentrations. It is difficult to 
determine the ambient air quality effects that result from a single 
source of emissions of PM2.5 precursors. There are 
conservative screening models for predicting impacts of large 
NOX and SO2 sources on ambient PM2.5 
concentrations. We conducted a range of modeling analyses to determine 
the amount of PM2.5 precursor emissions needed to show an 
increase in ambient PM2.5 concentrations. These analyses 
showed that precursor emissions probably have some localized impacts, 
but that most impact is farther downwind as precursors have the time to 
convert to PM2.5. In addition, the modeling available at 
this time does not provide sufficient information to estimate impacts 
of emissions from individual sources of ammonia and VOC on ambient 
PM2.5 concentrations. While we know that precursors 
contribute to the formation of PM2.5 in the ambient air, the 
degree to which these individual precursors contribute to 
PM2.5 formation in a given location is complex and variable. 
There are competing chemical reactions taking place in the atmosphere, 
and meteorological conditions play a significant role in the size and 
characteristics of particle formation. For these reasons, we do not 
believe that we have adequate data on the impacts of precursor 
emissions from individual sources to override the administrative 
advantages of setting the significant emissions rates for 
SO2, NOX, and VOC for purposes of the 
PM2.5 NSR program at the same levels that are already used 
for other purposes in the major NSR program.

E. Condensable PM Emissions

    In this final NSR rule, EPA will not require that States address 
condensable PM in establishing enforceable emissions limits for either 
PM10 or PM2.5 in NSR permits until the completion 
of a transition period, as described herein. In response to significant 
comments on the variability of test methods available for measuring 
condensable emissions, we have adopted this transition period approach 
to allow us to assess the capabilities of the test methods and possibly 
revise them to improve performance. The transition period will end 
January 1, 2011 unless EPA advances this date through the rulemaking 
process described below.
    Subsequent to the completion of the test methods assessment, EPA 
will be conducting a notice and comment rulemaking to codify new or 
revised test methods. Once these new or revised test methods are in 
place, States will have the tools necessary to issue NSR permits 
addressing condensable PM. Thus, as part of the test methods 
rulemaking, we will take comment on an earlier closing date for the 
transition period in the NSR program if we are on track to meet our 
expectation to complete the test methods rule much earlier than January 
1, 2011. In the meantime, however, we are establishing January 1, 2011 
as the latest possible end date for the NSR transition period because 
this is also the end of the transition period for SIP purposes as 
described in the Clean Air Fine Particle Implementation Rule (see 
section II.L in 72 FR 20586, April 25, 2007). Prevention of Significant 
Deterioration and NA NSR permits issued after the effective date of 
this NSR implementation rule but prior to the end of the transition 
period for the NSR program are not required to account for condensable 
emissions in PM2.5 or PM10 emissions limits. 
After January 1, 2011 (or any earlier date established in the upcoming 
rulemaking codifying test methods), EPA will require that NSR permits 
include limits of condensable emissions, as appropriate. Prior to this 
date, States are not prohibited from establishing emissions limits in 
NSR permits that include the condensable fraction of direct 
PM2.5.
    As noted in the proposal preamble, certain commercial or industrial 
activities involving high temperature processes (e.g., fuel combustion, 
metal processing, and process cooking operations) emit gaseous 
pollutants into the ambient air, some of which rapidly condense into 
particle form. The constituents of these condensed particles include, 
but are not limited to, organic materials, sulfuric acid, and metals 
and metal compounds. We consider such condensable emissions to be a 
component of direct PM emissions. Specifically, direct PM emissions 
consist of both the ``filterable fraction'' which already exist in 
particle form at the elevated temperature of the exhaust stream, and 
the ``condensable fraction'' which exist in gaseous form under exhaust 
stream conditions but condenses rapidly in the ambient air.
    Because condensable PM emissions exist almost entirely in the 2.5 
micrometer range and smaller, these emissions are inherently more 
significant for PM2.5 than for prior PM standards addressing 
larger particles. Condensable PM emissions commonly make up a 
significant component of direct PM2.5 emissions. Therefore, 
we believe that it is important that the air quality management of PM 
promote a comprehensive approach to the control of condensable PM.
    We proposed on November 1, 2005 to clarify that condensable PM 
emissions must be included when determining whether a source is subject 
to the major NSR program. We noted in the proposal that our prior 
guidance \12\ had clarified that PM10 includes condensable 
PM and

[[Page 28335]]

that, where States expect condensable PM emissions to be in higher 
amounts, States should use methods that appropriately measure 
condensable PM emissions. In addition, we pointed out that the 2001 
consolidated emissions reporting rule (CERR) requires States to report 
condensable emissions in each inventory revision (see 67 FR 39602, June 
10, 2001) and that Method 202 in appendix M of 40 CFR part 51 
quantifies condensable PM. We also noted that States have not applied 
this existing guidance consistently.
---------------------------------------------------------------------------

    \12\ Leter from Thompson G. Pace, Acting Chief, Particulate 
Matter Programs Branch, to Sean Fitzsimmons, Iowa Department of 
Natural Resources (Mar. 31, 1994) (available at http://www.epa.gov/Region7/programs/artd/air/nsr.nsrmemos/cpm.pdf and in the docket for 
this rulemaking, Docket ID No. EPA-HQ-OAR-2003-0062).
---------------------------------------------------------------------------

    We received a number of comments on whether NSR programs should 
account for condensable PM emissions in light of the current state of 
knowledge of and uncertainties around the measurement of direct 
PM2.5. Several commenters supported our proposal to require 
the inclusion of condensable PM emissions in NSR applicability 
determinations. On the other hand, several other commenters expressed 
opposition to including condensables at this time and raised concerns 
about the availability and implementation of test methods and related 
issues about the uncertainties in existing data for condensable 
PM2.5. As a result of the concerns, these commenters 
believed EPA would be premature in requiring a comprehensive evaluation 
of condensable PM2.5, especially as it related to developing 
any new emissions limits for stationary sources.
    One commenter noted that regulation of condensable PM at this time 
will impede, rather than facilitate, expeditious attainment of the 
PM2.5 standard. Another commenter expressed concern about 
the potential for retroactive enforcement over applicability decisions 
made in good faith, and for retroactive application of the new test 
method to assert violations of an emission limit, where the 
applicability decision or the emission limit was originally based on 
flawed testing/estimating methodology. Several commenters raised 
serious concerns about the availability and implementation of accurate 
test methods and emissions factors for condensable PM2.5. 
They further stated that regulation of condensable PM2.5 
emissions would be appropriate only after we have developed a workable 
transitional strategy that ensures existing major sources are not 
placed in ``NSR jeopardy'' for physical and operational changes 
undertaken before new test methods and other requirements for 
condensable PM2.5 are established.
    In recognition of these concerns, both as they apply to the NSR 
program and the broader air program, we have adopted a transition 
period during which NSR permits need not address limits of condensable 
PM2.5 emissions. During this transition period, EPA will 
undertake a collaborative testing effort with industry, National 
Association of Clean Air Agencies (NACAA), and other stakeholders to 
assess and improve the effectiveness and accuracy of the available or 
revised test methods. The purpose of the stakeholder testing projects 
will be to collect new direct filterable and condensable 
PM2.5 emissions data using methodologies that provide data 
more representative of sources' direct PM2.5 emissions. The 
EPA, States, and others will use these data to establish or improve 
emissions factors and to define more representative source emissions 
limits in permits.
    The EPA acknowledges the legitimate concerns raised by commenters 
concerning potential exposure to retroactive enforcement and has 
established rules to address this issue. The EPA will not revisit 
applicability determinations made in good faith prior to the end of the 
transition period, insofar as the quantity of condensable PM emissions 
are concerned, unless the applicable implementation plan clearly 
required consideration of condensable PM. Likewise, EPA will interpret 
PM emissions limitations in existing permits or permits issued during 
the transition period as not requiring quantification of condensable 
PM2.5 for compliance purposes unless such a requirement was 
clearly specified in the permit conditions or the applicable 
implementation plan.
    After the end of the transition period (January 1, 2011 or any 
earlier date established in the upcoming rulemaking codifying test 
methods), EPA will require that all NSR applicability determinations 
for PM2.5 and PM10 address condensable emissions 
as applicable, and the source may not rely on calculations made for 
previous determinations that did not include an accurate accounting of 
condensables. Additionally, compliance with these limits must be 
determined using the promulgated validated test methods that are 
applicable after that date. Moreover, after that date, we expect that 
condensable PM emissions will be addressed in all other aspects of the 
major NSR program, such as impact analyses under PSD and offsets under 
NA NSR. See 72 FR 20586, April 25, 2007 for the discussion of the 
transition period as it applies to the other elements of the air 
program in the final Clean Air Fine Particle Implementation Rule.
    Although EPA is not requiring that State NSR programs address 
condensable emissions of PM until the end of the transition period, 
States that have developed the necessary tools are not precluded from 
acting to measure and control condensable PM emissions in NSR permit 
actions prior to the end of the transition period, especially if it is 
required in an applicable SIP. To the extent that a State has the 
supporting technical information and test methods, the State may assess 
the capabilities of current control technologies, possible 
modifications to such technologies, or new technologies as appropriate 
relative to control of condensable PM2.5 emissions. As an 
example, a specific approach for controlling condensable PM could be a 
change in control device operating temperature to improve emissions 
reductions. We also note that it is important that implementation of 
any new or revised emissions limits and test methods that account for 
condensable emissions should be prospective and clearly differentiated 
from existing NSR permit requirements. This will avoid confusion over 
the compliance status relative to existing PM emissions limits that 
were not developed considering the condensable portion.
    Notwithstanding the issues and uncertainties related to condensable 
PM, we encourage States to begin immediately to identify measures for 
reducing condensable PM emissions in major NSR permit actions, 
particularly where those emissions are expected to represent a 
significant portion of total PM emissions from a source.

F. Prevention of Significant Deterioration (PSD) Program Requirements

    To receive a permit for a new major source or a major modification, 
sources subject to PSD must:
     Install Best Available Control Technology (BACT).
     Conduct air quality modeling to ensure that the project's 
emissions will not cause or contribute to either--

--A violation of any NAAQS or maximum allowable pollutant increase (PSD 
increment); or
--An adverse impact on any Class I area ``air quality related value'' 
(AQRV).
     As required, comply with preconstruction monitoring 
requirements.

This final action regarding each of these elements is discussed in the 
following sections.

[[Page 28336]]

1. How must BACT be implemented for PM2.5?
    We are not making any change to our current regulations or policy 
for implementing BACT requirements at a major source that is subject to 
the requirements of the PSD program. Accordingly, if a new major source 
will emit, or have the potential to emit, a significant amount of a 
regulated NSR pollutant in an attainment area for that pollutant, the 
source must apply BACT for each emissions unit that emits the 
pollutant. In addition, if a physical or operational change at an 
existing major source will result in a significant emissions increase 
and a significant net emissions increase of a regulated NSR pollutant 
in an attainment area for that pollutant, the source must apply BACT to 
each proposed emissions unit experiencing a net increase in emissions 
of that pollutant as a result of the physical or operational change in 
the unit. Under the PM2.5 PSD program, these requirements 
will apply to direct PM2.5 emissions; SO2 
emissions; NOX emissions, unless a State demonstrates that 
NOX is not a significant contributor to ambient 
PM2.5 concentrations in that area; and to VOC if identified 
by a State as a precursor in the PM2.5 attainment area where 
the source is located.
2. How does EPA plan to address PM2.5 Increments, 
Significant Impact Levels (SILs), and Significant Monitoring 
Concentrations (SMCs)?
    On November 1, 2005, we proposed a rule to implement the 
PM2.5 NAAQS, including proposed revisions to the NSR program 
(70 FR 65984). In that proposal, we indicated our intent to propose a 
separate rule for developing PM2.5 increments, SILs, and 
SMCs and sought comments on general approaches for developing these 
values. We proposed PM2.5 increments, SILs, and SMCs in a 
rule dated September 21, 2007. 72 FR 54112. We intend to address 
comments received on these components of the PM2.5 PSD 
program when we finalize that proposed rule.
3. What is the ambient air quality analysis requirement for 
PM2.5?
    All sources subject to PSD review must perform an ambient air 
quality impact analysis to show that the emissions from the source will 
not cause or contribute to a PSD increment or NAAQS violation. See 
section 165(a)(3) of the CAA; 40 CFR 51.166(k) and 52.21(k). We did not 
propose, and our final rules do not contain, any changes to the 
regulations on air quality impact analyses for purposes of the 
PM2.5 NSR program. Accordingly, sources will be required to 
perform this analysis for the PM2.5 NAAQS and, when 
finalized, PM2.5 increments. Such analyses must consider how 
a source, in combination with other sources in the area, will impact 
air quality at existing PM2.5 monitor locations, as well as 
at other locations that are appropriate for comparing predicted 
PM2.5 concentrations to the NAAQS based on PM2.5 
monitor siting requirements and recommendations.
4. How must the PSD preconstruction monitoring requirement be 
implemented for PM2.5?
    Sources subject to PSD are subject to preconstruction ambient air 
quality monitoring requirements. See sections 165(a)(7) and 165(e) of 
the Act and 40 CFR 51.166(m) and 52.21(m). The PSD permitting 
requirements provide that continuous preconstruction ambient air 
quality monitoring must be conducted for any criteria pollutant emitted 
in significant amounts. Under 40 CFR 51.166(i)(5) and 52.21(i)(5), the 
reviewing authority has the discretion to exempt an applicant from this 
monitoring requirement if:
     The maximum modeled concentration for the applicable 
averaging period caused by the proposed significant emissions increase 
(or net emissions increase) is less than the prescribed SMC; or
     The existing monitored ambient concentrations are less 
than the prescribed SMC.

A source may also use existing data as a surrogate for preconstruction 
monitoring if the existing monitored data record is determined to be 
representative of the project's location.
    We proposed five options for how to address preconstruction 
monitoring for PM2.5. We are adopting a combination of 
options 1 and 3 from the proposal, primarily because we believe that it 
reflects existing procedures for other regulated NSR pollutants. The 
following sections summarize the major comments received on each option 
and explain why we are not adopting particular options.
Option 1--Require Preconstruction Monitoring for All Sources But Exempt 
on a Case-by-Case Basis
    Generally, commenters who supported option 1 believed the option 
gives regulatory agencies enough flexibility to address sources with 
unique characteristics. One commentator stated that another benefit is 
that this option would avoid unnecessary installation of new 
PM2.5 monitors and redundant preconstruction monitoring.
    Another commenter, however, believed option 1 to be overly 
burdensome until EPA develops an SMC. The commenter argued that for 
example, there are many upcoming PSD projects in their State, which 
would be located in extremely remote areas where there are no local or 
regional PM2.5 emission sources, so there would be no need 
to collect such data for these areas. Additionally, one group of 
commenters stated that option 1 appeared to be ``streamlining'' 
preconstruction permit requirements, which is not the intention of the 
Act's PSD provisions, and that EPA does not have the authority to 
exempt sources from the requirements of section 165(e)(2).
    We agree with the commenter that recommended combining option 3 
(the use of a 24-hr PM2.5 SMC) with option 1 and are 
finalizing this approach. We have proposed an SMC for PM2.5 
in the rulemaking on increments, SILs, and SMCs (72 FR 54112, September 
21, 2007). Our regulations at 40 CFR 51.166(i)(5) and 52.21(i)(5) have 
allowed the use of an SMC as screening tool for identifying when an 
impact is de minimis and there is thus little or no value in gathering 
preconstruction monitoring data The use of de minimis levels of this 
nature (such as significant emission rates and significant impact 
levels) is supported by court precedent interpreting the NSR provisions 
of the Act. Alabama Power Co. v. Costle, 636 F.2d 323, 360 (DC Cir. 
1979). (``Unless Congress has been extraordinarily rigid, there is 
likely a basis for an implication of de minimis authority to provide 
[an] exemption when the burdens of regulation yield a gain of trivial 
or no value.'')
Option 2--Exempt All Sources From Preconstruction Monitoring
    Under option 2, we proposed to exempt all PM2.5 sources 
from preconstruction monitoring through a blanket determination that 
the existing PM2.5 monitoring network is sufficient. One 
commenter who preferred option 5 (described subsequently) was also 
supportive of option 2. This commenter noted that preconstruction 
monitoring is expensive and can significantly delay a project. The 
commenter also pointed out that it is very difficult to locate monitors 
for both direct PM2.5 and precursors because precursors may 
transport over long distances before transforming into 
PM2.5. The commenter indicated that we should not rely on 
the existing regulations, which are already known to be problematic.
    One comment letter from a group of environmental advocacy 
organizations specifically opposed option 2. These

[[Page 28337]]

commenters noted that spatial gradients can be significant for 
PM2.5, especially for direct PM2.5 emissions, and 
that the existing monitoring network is severely limited in its spatial 
coverage, most especially in attainment areas where PSD preconstruction 
monitoring requirements apply. The commenters indicated that to make a 
blanket determination that the existing network suffices for any 
source, regardless of where it might choose to locate, would be absurd.
    We decided not to finalize option 2 because we do not believe that 
the current network will be sufficient for all existing and potential 
new sources. As stated in the proposal preamble, we believe that the 
existing PM2.5 monitoring record has the following 
limitations:
     The PM2.5 monitoring data record would require 
spatial interpolation between monitors for the determination of 
appropriate concentrations at the project's location.
     Use of existing monitored data will not increase the 
PM2.5 monitoring data record to confirm or contradict 
conventional perceptions.
     The PM2.5 monitoring data record assumes that 
local hot spots of high PM2.5 concentrations do not exist or 
are already being monitored, which may not be true in all cases.
     Automatic acceptance of existing measurements does not 
follow our current policy that a case-by-case determination needs to be 
made to determine whether preconstruction ambient monitoring is 
necessary.
     When used with the impact modeling, separate 
concentrations of direct and precursor-formed PM are needed.
Option 3--Use SMC's To Exempt Sources From Preconstruction Monitoring
    Several commenters supported this option adding that this approach 
follows existing procedures to justify the exclusion of preconstruction 
monitoring requirements when source impacts are less than the SMC or 
when sufficient representative data exists. One group of commenters 
stated that EPA's proposed options 1 and 3, which would allow case-by-
case or de minimis exemptions from the monitoring requirements, are 
ill-conceived as a matter of public policy and contradict the Act's PSD 
provisions.
    We agree with the commenters that support adopting option 3 because 
a combination of options 1 and 3 reflects existing procedures for other 
regulated NSR pollutants. As discussed previously, a de minimis 
exemption from monitoring requirements is supported by court precedent 
interpreting the PSD provisions of the Act. We do not consider it sound 
policy to require gathering additional data when it is unnecessary to 
demonstrate that a proposed source or modification will not adversely 
impact air quality.
Option 4--Use Existing PM10 Data
    We proposed using the available large PM10 data record 
combined with the recently acquired PM2.5 data to provide 
representative ambient measurements for most sources. One comment 
letter from an industry group opposed any requirement for 
preconstruction monitoring, and endorsed option 4 if nationally 
gathered PM2.5 data is not available. Three commenters 
specifically opposed option 4. One comment letter from an environmental 
advocacy organization stated that option 4 is illegal on its face, to 
the extent that EPA intends it as a universally available alternative. 
This comment indicated that some individual sources might be able to 
demonstrate that PM10 monitoring could fulfill the statutory 
requirements and purposes of PM2.5 monitoring (e.g., with 
sufficiently protective assumptions about PM2.5/
PM10 proportions), but due to the variability in the 
relationship between PM2.5 and PM10, EPA cannot 
categorically allow this substitution. Two other commenters stated that 
option 4 was not a viable approach due to the convoluted nature of 
attempting to infer PM2.5 concentration from PM10 
monitoring data for source-specific applications.
    We decided not to finalize option 4. As we recognized in the 
proposal preamble, the differences in characteristics between 
PM2.5 and PM10 and our limited understanding of 
their relationship are problematic for this application. We do not 
believe that generalized factors to convert PM10 
concentrations to PM2.5 concentrations sufficiently reflect 
important industry-specific and spatially-related characteristics of 
PM2.5. In addition, removing altogether the obligation to 
provide preconstruction PM2.5 ambient monitoring data would 
eliminate industry's contribution to the PM2.5 data record 
when source impacts are more than de minimis.
Option 5--Exempt Sources From Preconstruction Monitoring if No SMC Is 
Established
    We noted in the proposed rule that the existing regulations at 40 
CFR 51.166(i)(5)(iii) and 52.21(i)(5)(ii) could be interpreted to allow 
a reviewing authority to exempt an applicant from preconstruction 
monitoring for any pollutant for which we have not established an SMC. 
These provisions state that a source may be exempted from 
preconstruction monitoring ``if * * * the pollutant is not listed in'' 
the list of pollutants for which SMC have been set.\13\ The original 
rationale for this exemption is based on the lack of adequate methods 
for measuring ambient concentrations of pollutants not on the list. See 
45 FR 52709, 52723-52724. We requested comment on this interpretation 
and any other legal or policy rationale that could support applying the 
text of these provisions to exempt sources from preconstruction 
monitoring if we elected not to define an SMC for PM2.5.
---------------------------------------------------------------------------

    \13\ These sections actually cross-reference the list at 40 CFR 
51.166(i)(8)(i) and 52.21(i)(8)(i), however we renumbered those 
paragraphs to paragraph (i)(5)(i) of those provisions in the 
December 31, 2002 NSR reform rule and inadvertently overlooked 
correcting the cross-references in paragraphs (i)(5)(ii) and 
(i)(5)(iii). See 67 FR 80186. As proposed, in this final action we 
have corrected this misnumbering and others in this section.
---------------------------------------------------------------------------

    One commenter stated that option 5 is the most practicable to 
implement until an SMC can be established and any potential gaps in the 
monitoring network can be filled. Two commenters question the legality 
of option 5 under the Act. They added that whatever may have been the 
case when the existing list of SMCs was adopted, methods now exist for 
conducting the monitoring required under section 165(e)(2). We decided 
not to finalize option 5, and have proposed an SMC rule for 
PM2.5.
    In conclusion, we are finalizing a combination of options 1 and 3 
from the proposal, since we believe that it reflects existing 
procedures for other regulated NSR pollutants. Once we finalize an SMC 
for PM2.5, the reviewing authority will have the discretion 
to exempt a source from the preconstruction monitoring requirement if 
the projected PM2.5 ambient impact of the source is below 
the PM2.5 level promulgated in our rules. In addition, 
additional preconstruction monitoring data may not be necessary based 
on the availability of existing representative monitoring data in the 
area, as discussed previously.

G. Nonattainment New Source Review (NA NSR) Requirements

    To receive a permit for a new major source or a major modification, 
sources subject to NA NSR must:
     Install Lowest Achievable Emission Rate (LAER) control 
technology;
     Offset new emissions with creditable emissions reductions;

[[Page 28338]]

     Certify that all major sources owned or operated by the 
applicant in the same State are in compliance; and
     Conduct an alternative siting analysis demonstrating that 
the benefits of the proposed source significantly outweigh the 
environmental and social costs.

We did not propose, nor are we finalizing, any revisions to the first, 
third, and fourth of these requirements. Thus, these requirements apply 
for purposes of PM2.5 and its designated precursors just as 
they apply for other criteria pollutants and their designated 
precursors. In the remainder of this section G, we discuss our final 
actions related to offsets for direct PM2.5 emissions and 
emissions of PM2.5 precursors.
1. What is the required offset ratio for direct PM2.5 
emissions?
    Under section 173 of the Act, all major sources and major 
modifications at existing major sources within a nonattainment area 
must obtain emissions reductions to offset any emissions increases 
resulting from the project in an amount that is at least equal to the 
emissions increase, and that is consistent with reasonable further 
progress towards attainment. We refer to the proportional difference 
between the amount of the required offsets to the amount of emissions 
increase as the ``offset ratio.''
    The Act specifies an offset ratio for several situations. In ozone 
nonattainment areas subject to subpart 2 (of title I, part D of the 
Act), the ratio is set between 1.1:1 and 1.5:1 depending on the area's 
level of classification pursuant to subpart 2. For other nonattainment 
areas, the Act establishes a minimum offset ratio of 1:1 pursuant to 
subpart 1 of title I, part D of the Act.
    As proposed, we are finalizing the offset ratio for direct 
PM2.5 emissions as at least 1:1 on a mass basis because the 
PM2.5 program is being implemented under subpart 1 of the 
Act. The commenters on this issue generally agreed that our regulations 
should require an offset ratio of at least 1:1 pursuant to subpart 1.
    A few commenters indicated that a lower ratio could be acceptable 
on a source-specific basis if accompanied by a modeling analysis 
demonstrating a net air quality benefit. One commenter suggested that 
such a demonstration would be possible when a direct PM2.5 
emissions increase from a tall stack is being offset by ground-level 
PM2.5 emission reductions. Applying diesel retrofit 
technology to bus and truck fleets is an example of how ground-level 
PM2.5 emission reductions could be achieved. We do not 
believe that a lower offset ratio is authorized under subpart 1, which 
prescribes an offset ratio of at least 1:1, and therefore we have not 
adopted this approach in our final rules.
    Some of the commenters disagreed regarding whether an offset ratio 
of at least 1:1 under subpart 1 represents a ceiling or a floor on the 
level we can prescribe in our regulations. We interpret section 173 of 
the Act to allow higher offset ratios where necessary to achieve 
reasonable further progress. Accordingly, we believe that States may 
establish higher offset ratios in their State programs if they wish, 
but we do not believe that it would be appropriate for us to do so for 
PM2.5 in national regulations. We do not have cause to 
believe a higher ratio is necessary for PM2.5 in each area 
of the country and prefer to leave this to the discretion of States. We 
do not believe that the higher offset ratios required for ozone 
precursors under subpart 2 apply in any way to direct PM2.5 
emissions or PM2.5 precursors.
2. Which precursors are subject to the offset requirement?
    Consistent with our proposal, the pollutants that are designated as 
PM2.5 precursors in a particular area are subject to the 
offset requirement in that area. Accordingly, SO2 is subject 
to offsets in all PM2.5 nonattainment areas. As a 
``presumed-in'' precursor, NOX will be subject to offsets 
unless a State obtains an exemption for its NSR program through a 
demonstration that NOX emissions in a particular area are 
not a significant contributor to that area's ambient PM2.5 
concentrations. As ``presumed-out'' precursors, VOC and ammonia would 
be subject to offsets only in areas where the State has demonstrated 
that these emissions are significant contributors to the area's ambient 
PM2.5 concentrations. Two commenters on this issue agreed 
with this approach; one commenter recommended that we not require 
offsets for any PM2.5 precursors. We believe that it is 
appropriate to offset emissions increases of all precursors that have 
been established to contribute to the PM2.5 nonattainment 
problem in a particular area.
3. What is the required offset ratio for PM2.5 precursors?
    As discussed previously, the Act requires that a source obtain 
offsets for emissions increases that occur in a nonattainment area. As 
with PM2.5 direct emissions, the minimum offset ratio 
permitted under subpart 1 of the Act is at least 1:1. Based on these 
requirements of the Act, we are finalizing our proposal that an offset 
ratio of at least 1:1 applies where a source seeks to offset an 
increase in emissions of a PM2.5 precursor with creditable 
reductions of the same precursor. This offset ratio applies for all 
pollutants that have been designated as PM2.5 precursors in 
a particular nonattainment area.
    Most commenters agreed with this approach. A few commenters 
indicated that an offset ratio of less than 1:1 for precursor emissions 
of PM2.5 should be allowed only if there is a net air 
quality benefit and if the lower ratio is justified by air quality 
modeling analysis. They noted that for PM2.5 precursors, 
chemical reactivity modeling demonstrations should be developed and 
approved that are, at a minimum, capable of determining the impacts of 
the precursor emissions on the air quality in the nonattainment area in 
which the source is located. As noted previously, we do not believe 
that any offset ratio less than 1:1 is permissible under subpart 1.
    One commenter stated that consistent with the statutory scheme for 
ozone laid out in section 182, and given the severity of the health 
risks associated with PM2.5, EPA must require offsets of at 
least 1.15:1 for PM2.5 precursors in ``moderate'' 
nonattainment areas, and must increase the offset ratio in ``serious'' 
nonattainment areas or in areas that request extensions of their 
attainment deadlines. As mentioned previously, we do not believe that 
subpart 2 of the Act (which includes section 182) has any relevance to 
PM2.5 or its precursors. Subpart 2 is specific to ozone. In 
addition, we are implementing the PM2.5 program under 
subpart 1. Nevertheless, under the Act, we believe that a State may 
require higher offset ratios if it determines that they are necessary 
to achieve reasonable further progress. For the reasons discussed 
previously with respect to direct PM2.5, we do not believe 
that it is appropriate for us to set higher offset ratios for 
PM2.5 precursors on a national basis.
    Two commenters requested that we make clear in the final rule that 
an increase in precursor emissions need only be offset once, even if 
the increase triggers nonattainment NSR under, for example, both the 
ozone and PM2.5 programs. We agree with these commenters and 
are clarifying that a precursor emissions increase only needs to be 
offset once. A permit applicant will not, for example, need to obtain 
two sets of offsets for NOX emissions if NOX is 
regulated as a precursor both for ozone and PM2.5 in the 
area. The NOX precursor emissions need only be offset once 
in accordance with the applicable

[[Page 28339]]

ratio. To the extent a higher ratio applies for ozone under subpart 2, 
the applicant would have to obtain offsets at the higher ratio. 
However, when the offset ratios are the same, both requirements can be 
met with a single set of NOX offsets.
4. Is interpollutant trading allowable to comply with offset 
requirements?
    In this final rule, we are allowing limited interpollutant trading 
for purposes of offsets only (and not netting) under the 
PM2.5 NA NSR program. Specifically, the final rules allow 
interpollutant trading only based on a trading ratio established in the 
SIP as part of the attainment demonstration approved for a specific 
nonattainment area, on a statewide basis, or in a regional, multi-state 
program. This differs from our proposal in that the final rules do not 
allow interpollutant trading on a case-by-case basis as part of an 
individual NA NSR permitting process. For the purpose of offsets in the 
NA NSR program for PM2.5, the final rules allow reductions 
in direct PM2.5 emissions to offset precursor emissions 
increases, emissions reductions of one precursor to offset emissions 
increases of another precursor, and reductions in precursor emissions 
to offset direct PM2.5 emissions increases.
    We have completed a technical assessment to develop preferred 
interpollutant trading ratios that may be used for the purposes of 
PM2.5 offsets, where appropriate. The preferred ratios were 
generated with a PM2.5 response surface modeling (RSM) 
approach based on the EPA's Community Multi-Scale Air Quality (CMAQ) 
model. This RSM approach allows one to distinguish the impact of direct 
and precursor emissions from particular source groupings on total 
PM2.5 concentrations within nine specific urban areas and 
broadly across U.S. regions. This approach was recently applied by the 
Agency to inform development of potential PM2.5 control 
strategies as part of the Regulatory Impact Assessment (RIA) for the 
final PM2.5 NAAQS.\14\ Based on results from the RSM, we 
determined the distribution of predicted ratios for urban areas and 
regions across the country and developed the preferred ratios with a 
goal to be environmentally protective. The technical approach with 
details on data and modeling inputs are fully described in a technical 
memo to the docket, ``Details on Technical Assessment to Develop 
Interpollutant Trading Ratios for PM2.5 Offsets.'' \15\ Use 
of the preferred ratios is recommended by EPA but not mandatory, and we 
do not intend to preclude the opportunity for a local demonstration of 
trading ratios on a case-by-case basis and public input into that 
process.
---------------------------------------------------------------------------

    \14\ A full description of this approach is available in the 
technical support document at http://www.epa.gov/scram001/reports/pmnaaqs_tsd_rsm_all_021606.pdf and in the docket for this 
rulemaking, Docket ID No. EPA-HQ-OAR-2003-0062.
    \15\ Available in the docket for this rulemaking, Docket ID No. 
EPA-HQ-OAR-2003-0062.
---------------------------------------------------------------------------

    Our work here and in other recent PM2.5 assessments 
clearly show that the relative efficacy of emissions reductions varies 
across pollutants and that a ton of direct PM2.5 is 
generally more effective than a ton of precursor emissions in reducing 
overall PM2.5 concentrations. For the purposes of reporting 
information here, we define the ``East'' to be the 37 States either 
completely or in part east of 100 degrees west longitude. ``West'' 
would include the remaining 11 western-most States in the continental 
United States. We found the following relationships between pollutants 
in developing the preferred trading ratios:

    1. NOX to SO2; SO2 to 
NOX: Our assessment indicated potential disbenefits of 
reducing NOX (i.e., reducing NOX tons in urban 
areas may increase overall PM2.5 concentrations) in the 
eastern United States and urban areas in the western United States. 
Due to the possibility of these disbenefits and the high degree of 
variability in the observed NOX to SO2 ratios 
or SO2 to NOX ratios across urban areas, we 
are not defining preferred ratios involving trades between these 
precursors but will rely upon a local demonstration to determine the 
appropriate trading ratios.
    2. NOX to Primary PM2.5; Primary 
PM2.5 to NOX: Based on a local demonstration 
that NOX reductions are beneficial in reducing 
PM2.5 concentrations (i.e., no disbenefits from 
NOX reductions as noted previously), our assessment 
indicates that the preferred trading ratio is 200 to 1 
(NOX tons for PM2.5 tons) or 1 to 200 
(PM2.5 tons for NOX tons) for areas in the 
eastern United States, and 100 to 1 (NOX tons for 
PM2.5 tons) or 1 to 100 (PM2.5 tons for 
NOX tons ) for areas in the western United States.
    3. SO2 to Primary PM2.5; Primary 
PM2.5 to SO2: We have determined a nationwide 
preferred ratio of 40 to 1 (SO2 tons for PM2.5 
tons) or 1 to 40 (PM2.5 tons for SO2) for 
trades between these pollutants. We recognize there is spatial 
variability here between urban and regionally located sources of 
these pollutants that can be addressed through a local demonstration 
to determine an area-specific relationship, as appropriate.

    We recommend that States use these hierarchies and trading ratios 
in their interpollutant trading programs to provide consistency and 
streamline the trading process. As indicated by our work and findings, 
it is appropriate to establish acceptable trading ratios for 
interpollutant trading for PM2.5 NSR offsets. If States 
elect to use EPA's recommended trading ratios, they may rely on EPA's 
technical work and a presumption that such ratios will be approvable by 
EPA absent a credible showing that EPA's trading ratios are not 
appropriate for that location. If States choose to develop their own 
hierarchies/trading ratios, they will have to substantiate by modeling 
and/or other technical demonstrations of the net air quality benefit 
for PM2.5 ambient concentrations, and such a trading program 
will have to be approved by EPA.
    We acknowledge that the relationship between pollutants can vary 
across geographic areas. Thus, local demonstrations, to determine 
trading ratios, will need to address a number of local factors 
including, but not limited to, the following:

    1. The relative magnitude of emissions of direct 
PM2.5 and precursor gases (e.g., SO2 and 
NOX) within the geographic area of interest.
    2. The relative contribution to local PM2.5 
nonattainment of directly emitted PM2.5 and individual 
precursors from the various sources or source categories under 
consideration as part of a potential interpollutant trade.
    3. The meteorological conditions and topography of the area, 
which result in different source-receptor relationships across 
pollutants within the local area.


    We have adopted this approach to capture the flexibility advantages 
of interpollutant trading, while remaining mindful of the limitations 
of existing air quality models. We believe that the regional-scale 
models used for area-wide attainment demonstrations have sufficient 
accuracy to establish an overall equivalence ratio for a nonattainment 
area. However, we do not believe that available models can accurately 
determine the effects of interpollutant trades at a single source. In 
addition, permit-by-permit modeling demonstrations are extremely 
resource intensive, only to yield limited results. For these reasons, 
the final rules only allow a State to develop its own interpollutant 
trading rule for inclusion in its SIP, based on a technical 
demonstration for a specific nonattainment area. We will not accept 
case-by-case demonstrations on an individual source permit basis.
    The flexibility provided by this policy allows sources to select 
the most cost-effective manner to obtain the offsets necessary to 
ensure that PM2.5 air quality improves. This will be 
particularly beneficial where offsets for one particular pollutant are 
scarce in a particular area, as is often the case for direct 
PM2.5 emissions and SO2.

[[Page 28340]]

    We received a large number of comments on this issue representing a 
wide variety of viewpoints. Several commenters supported flexible 
interpollutant trading at ratios established either on an area-wide 
basis or permit by permit. They often pointed out the economic and 
administrative benefits of flexibility in the program, especially in 
areas where offsets for some pollutants will be difficult to obtain. 
One commenter asserted that such flexibility is essential to the 
ability of enterprises to be able to expand as the PM2.5 
NAAQS is implemented, especially in the program's early years. Another 
commenter suggested allowing such trading on an equal basis, without 
the ``unnecessary complication'' of interpollutant offset ratios.
    Many commenters argued against allowing interpollutant trading for 
offsets. These commenters commonly pointed out that direct 
PM2.5 emissions typically have a more local impact, while 
the impact of precursor emissions are farther afield. A number of 
commenters pointed out the complex atmospheric chemistry of secondary 
particulate formation and the shortcomings of the air quality models 
currently available to perform a detailed PM2.5 formation 
assessment, specifically that local-scale models are not sufficiently 
accurate and regional-scale models do not have the resolution to show 
local impacts adequately. According to two commenters, trading 
precursors for direct PM2.5 emissions raises serious 
environmental justice concerns due to the localized impacts of direct 
PM2.5 emissions. These commenters also asserted that the 
equivalence between precursors would vary spatially and temporally, 
making it extremely difficult to assess, and that PM2.5 
precursors also differ in their impacts on other air pollution 
problems, such as direct health and welfare impacts of SO2 
and NOX; and formation of ozone, acid deposition, and 
reactive nitrogen deposition.
    We also received comments opposing allowing interpollutant trading 
for netting purposes, on the basis that the resulting program would be 
very staff-intensive apart from the difficulty of demonstrating through 
modeling the net air quality benefit of a single source trade. We 
concur with these commenters and are not allowing interpollutant 
trading for netting purposes at this time.
    A number of commenters supported some types of trades, but not 
others. Most frequently, these commenters favored allowing reductions 
in direct PM2.5 emissions to offset precursor emissions 
increases. One commenter suggested a hierarchy as follows: Direct 
PM2.5 emissions, SO2, NOX, ammonia, 
and VOC. That is, a pollutant should be allowed as an offset for a 
pollutant ranked lower, but not the reverse (e.g., reductions in direct 
PM2.5 emissions could be used to offset increases in any of 
the listed pollutants, SO2 emissions reductions could offset 
NOX increases, etc.).
    As previously noted, this rule allows interpollutant and 
interprecursor trading of offsets according to a SIP-approved trading 
program. To be approved, the trading program must either adopt EPA's 
recommended trading ratios or be backed up by regional-scale modeling 
that demonstrates a net air quality benefit using appropriate overall 
offset ratios for such trades for a specified nonattainment area, 
State, or multi-State region. There is considerable uncertainty about 
the relationship of precursor and direct PM2.5 emissions to 
localized ambient PM2.5 concentration both spatially and 
temporally. Given the uncertainty as to localized adverse and 
beneficial effects, we have opted for program flexibility. We believe 
this is necessary, in part, because of the shortage of available 
offsets for some pollutants, particularly direct PM2.5 
emissions and SO2, in many areas.

H. How will the transition to the PM2.5 PSD requirements 
occur?

1. Background
    On October 23, 1997, after the NAAQS for PM2.5 was 
originally promulgated, we issued a guidance document entitled 
``Interim Implementation for the New Source Review Requirements for 
PM2.5,'' John S. Seitz, EPA. As noted in that guidance, 
section 165 of the Act suggests that PSD requirements become effective 
for a new NAAQS upon the effective date of the NAAQS. Section 165(a)(1) 
of the Act provides that no new or modified major source may be 
constructed without a PSD permit that meets all of the section 165(a) 
requirements with respect to the regulated pollutant. Moreover, section 
165(a)(3) provides that the emissions from any such source may not 
cause or contribute to a violation of any NAAQS. Also, section 
165(a)(4) requires BACT for each pollutant subject to PSD regulation.
    The 1997 guidance stated that sources should continue to use 
implementation of a PM10 program as a surrogate for meeting 
PM2.5 NSR requirements until certain difficulties were 
resolved, primarily the lack of necessary tools to calculate the 
emissions of PM2.5 and related precursors, the lack of 
adequate modeling techniques to project ambient impacts, and the lack 
of PM2.5 monitoring sites. With this final action and 
technical developments in the interim, these difficulties have largely 
been resolved.
2. Transition for ``Delegated States''
    The Federal PSD program is contained in 40 CFR 52.21. This section 
is the Federal implementation plan for areas lacking an approved PSD 
program. We implement this program in Indian country and some U.S. 
territories, but for the most part we have delegated implementation of 
40 CFR 52.21 to those States without approved PSD programs (typically 
referred to as ``delegated States''). Except as provided in the 
grandfathering provisions that follow, these final rules go into effect 
and must be implemented beginning on the effective date of this rule, 
July 15, 2008 in all areas subject to 40 CFR 52.21, including the 
delegated States.
    Consistent with 40 CFR 52.21(i)(1)(x), wherein EPA grandfathered 
sources or modifications with pending permit applications based on PM 
from the PM10 requirements established in 1987, EPA will 
allow sources or modifications who previously submitted applications in 
accordance with the PM10 surrogate policy to remain subject 
to that policy for purposes of permitting if EPA or its delegate 
reviewing authority subsequently determines the application was 
complete as submitted. This is contingent upon the completed permit 
application being consistent with the requirements pursuant to the EPA 
memorandum entitled ``Interim Implementation of New Source Review 
Requirements for PM2.5'' (Oct. 23, 1997) recommending the 
use of PM10 as a surrogate for PM2.5. 
Accordingly, we have added 40 CFR 52.21(i)(1)(xi) to reflect this 
grandfathering provision.
3. Transition for ``SIP-Approved States''
    The requirements for State PSD programs are contained in 40 CFR 
51.166. Most States have developed PSD programs according to these 
requirements, which we have approved into each State's implementation 
plan. States with PSD programs approved under 40 CFR 51.166 are called 
``SIP-approved States.''
    States with SIP-approved PSD programs that require amendments to 
incorporate these final NSR rule changes for PM2.5 will need 
time to accomplish these SIP amendments. For example, a State may need 
to amend its existing regulations to add the specific significant 
emissions rate for PM2.5 or a designated precursor. In our 
December 31, 2002 Federal Register notice

[[Page 28341]]

promulgating other changes to the NSR program, we explained that the 
Act does not specifically address the timeframe by which States must 
submit SIP revisions when we revise the PSD and NA NSR rules. We 
nonetheless looked to section 110(a)(1) to guide our decision to 
require States to adopt and submit plan revisions within 3 years from 
when we publish changes in the Federal Register. We codified this 
approach in the PSD regulations at 40 CFR 51.166(a)(6)(i) and applied 
this same timeframe to State NA NSR programs through that final rule 
action. 64 FR 80241. This rule follows our established approach for 
determining when States must adopt and submit revised SIPs following 
changes to the NSR regulations, but does not revise otherwise 
applicable SIP submittal deadlines. Accordingly, we are requiring 
States with SIP-approved PSD programs to submit revised PSD programs 
and revised NA NSR programs for PM2.5 (see section V.I.) 
within 3 years from the date of this action.\16\
---------------------------------------------------------------------------

    \16\ In our proposal, we proposed April 5, 2008 as a deadline 
for States to comply with the revised nonattainment NSR and PSD 
requirements in this rule. However, in light of the time it has 
taken to complete this final rule, expecting States to submit 
required SIP revisions consistent with this final rule by April 5, 
2008 is no longer practical or fair. Nevertheless, States are still 
currently required to implement a PSD program for PM2.5, 
and we still expect States to fulfill the SIP infrastructure 
requirements of CAA section 110(a)(2), including the PSD program 
requirements, by April 5, 2008. We believe these PSD program 
requirements are currently met by implementing the transitional PSD 
program for PM2.5 described in this preamble (a.k.a. the 
PM10 surrogate policy). In accordance with a Consent 
Decree in Environmental Defense and American Lung Ass'n v. Johnson, 
No. 1:05CV00493 (D.D.C. June 15, 2005), EPA must determine by 
October 5, 2008 whether each State has submitted the SIP revisions 
for the PM2.5 PSD program required under section 
110(a)(2) of the Act. This rulemaking does not change the specific 
guidance we previously provided to States on what they should submit 
by April 5, 2008 to comply with section 110(a)(2).
---------------------------------------------------------------------------

    During this SIP development period, the PM2.5 NAAQS must 
still be protected under the PSD program in such States. We are 
finalizing our proposed option 1 that if a SIP-approved State is unable 
to implement a PSD program for the PM2.5 NAAQS based on 
these final rules, the State may continue to implement a 
PM10 program as a surrogate to meet the PSD program 
requirements for PM2.5 pursuant to the 1997 guidance 
mentioned previously. Under option 1 for SIP-approved States, we had 
proposed two additional requirements. These were to require sources to 
demonstrate that emissions from construction or operation of the 
facility will not cause or contribute to a violation of the 
PM2.5 NAAQS and to include condensable PM emissions in 
determining major NSR applicability and control requirements. We are 
not finalizing either of these additional requirements of our proposed 
option 1. We have dropped the requirement for demonstrating compliance 
with the PM2.5 NAAQS in order to maintain consistency in the 
application of the existing surrogate policy across the PSD program 
during the interim period. Since in the final rule we are otherwise 
allowing SIP-approved States to continue with the existing 
PM10 surrogate policy to meet the PSD requirements for 
PM2.5, partially implementing the PM10 surrogate 
policy in this manner would be confusing and difficult to administer. 
Thus, to ensure consistent administration during the transition period, 
we have elected to maintain our existing PM10 surrogate 
policy which only recommends as an interim measure that sources and 
reviewing authorities conduct the modeling necessary to show that 
PM10 emissions will not cause a violation of the 
PM10 NAAQS as a surrogate for demonstrating compliance with 
the PM2.5 NAAQS. Also as discussed previously in section 
V.E, we are not requiring condensable emissions to be fully integrated 
into the PM2.5 program until the end of the transition 
period to validate test methods discussed in section V.E of this 
preamble.
    In our proposal, we offered two additional options for the SIP 
development period in States with SIP-approved PSD programs. Under 
option 2, we would have updated the 1997 guidance to reflect the 
provisions in these final rules and allowed States to run a 
PM2.5 program pursuant to this updated guidance. 
Alternatively under option 2, we would have amended appendix S and 40 
CFR 52.24 so that the PSD requirements of 40 CFR 52.21 would govern the 
issuance of major NSR permits during the SIP development period. 
Finally, under option 3, we would have allowed a State to request 
delegation of just the Federal PM2.5 PSD program in 40 CFR 
52.21 in that State. A State that otherwise had a SIP-approved PSD 
program could have requested delegation for PM2.5 by 
informing us that it did not intend to submit a PSD SIP for 
PM2.5 in the immediate future.
    We received several comments supporting option 1, although some of 
these commenters requested that we not require condensable emissions to 
be included until the concerns with test methods were resolved. One of 
these commenters favored continuing to implement the PM10 
program as a surrogate under the 1997 guidance to provide clarity and 
certainty to the permitting agency and regulated community. The 
commenter indicated that PM2.5 inventories and methods for 
estimating emission rates are rudimentary and may even be nonexistent 
in some cases, which would make permitting onerous.
    A few commenters opposed option 1. One of these commenters 
indicated that we should not continue outdated policy (i.e., the 1997 
NSR guidance) because it does not address the PM2.5 problem, 
cannot be implemented in some States, and does not incorporate 
precursor emissions.
    Four commenters expressed support for option 2. Three of these 
suggested that we issue updated guidance to incorporate these PSD 
requirements for PM2.5, while one preferred that we revise 
appendix S to point to the requirements of 40 CFR 52.21. We received 
one comment in favor of option 3 and three opposed.
    Two commenters supported approaches different from our options. One 
of these commenters requested that the interim framework should, at a 
minimum, ensure that any new or modified project that exceeds 
thresholds use BACT. The commenter also suggested that we require 
offsets for projects approved before the other protective elements of 
the full PSD program are in place to ensure that there is no 
significant deterioration in air quality. Another commenter stated that 
none of the proposed options were viable for their State. The commenter 
requested that we allow States to continue their existing PM10 program 
as a surrogate for PM2.5, without caveat.
    As noted previously, we are finalizing proposed option 1, without 
the requirement of demonstrating compliance with the PM2.5 NAAQS or the 
requirement to include condensable emissions. We believe that our final 
rule is reasonable for the following reasons. First, PM10 will act as 
an adequate surrogate for PM2.5 in most respects, because all new major 
sources and major modifications that would trigger PSD requirements for 
PM2.5 would also trigger PM10 requirements because PM2.5 is a subset of 
PM10. Second, both of the precursors designated in the final rule--SO2 
and NOX (presumptively)--are already regulated under State NSR programs 
for other criteria pollutants. Thus, those precursors will be subject 
to NSR through those other programs. We do not believe that the other 
options or suggestions offer significant advantages that outweigh the 
utility and ease of implementation of this approach.
    States may include grandfathering provisions similar to the ones 
EPA

[[Page 28342]]

included in the transition requirements for 40 CFR 52.21.

I. How will the transition to the PM2.5 NA NSR requirements occur?

1. Background
    The requirements for State NA NSR programs are contained in 40 CFR 
51.165. All States with nonattainment areas have developed NA NSR 
programs according to these requirements, which we have approved into 
each State's implementation plan. However, as noted previously, it 
takes time for a State to amend its SIP when it must make changes to 
its NA NSR program. According to the provisions of 40 CFR 52.24(k), 
during such an interim period when a State lacks an approved NA NSR 
program for a particular pollutant, appendix S of 40 CFR part 51 
applies for NA NSR permitting.
    Section 172(c)(5) of the Act requires that States issue major NSR 
permits for construction and major modifications of major stationary 
sources in any nonattainment area. Thus, since the PM2.5 nonattainment 
designations became effective on April 5, 2005, States are now required 
to issue major NSR permits that address the section 173 NA NSR 
requirements for PM2.5.
    On the date that the PM2.5 nonattainment designations took effect 
(April 5, 2005), we issued guidance to address implementation of the NA 
NSR program pending the completion of this action to develop 
implementation rules for PM2.5. See memorandum from Stephen D. Page, 
Director, Office of Air Quality Planning and Standards to Regional Air 
Directors, ``Implementation of New Source Review Requirements in PM2.5 
Nonattainment Areas'' (April 5, 2005).
    Our current guidance permits States to implement a PM10 NA NSR 
program as a surrogate to address the requirements of NA NSR for the 
PM2.5 NAAQS. A State's surrogate major NSR program in PM2.5 
nonattainment areas may consist of either the implementation of the 
State's SIP-approved NA NSR program for PM10 or implementation of a 
major NSR program for PM10 under the authority in 40 CFR part 51, 
appendix S.
2. Transition
    With this finalization of the new PM2.5 NSR implementation 
requirements under 40 CFR 51.165, States now have the necessary tools 
to implement a NA NSR program for PM2.5. After the effective date of 
the amended rule (that is, July 15, 2008, States will no longer be 
permitted to implement a NA NSR program for PM10 as a surrogate for the 
PM2.5 NA NSR requirements. Most States will then need to implement a 
transitional PM2.5 NA NSR program under appendix S (as amended in this 
rulemaking action) until EPA approves changes to a State's SIP-approved 
NA NSR program to reflect the new requirements under 40 CFR 51.165. At 
this time, we do not believe it is appropriate to allow grandfathering 
of pending permits being reviewed under the PM10 surrogate program in 
nonattainment areas, mainly because of a State's obligations to 
expedite attainment and the fact that we had not established a similar 
precedent for transitioning from PM to PM10.
    The NA NSR provisions in a State's existing SIP-approved NA NSR 
program would also apply in areas designated as nonattainment for the 
PM2.5 NAAQS if the SIP-approved regulations contain a generic 
requirement to issue part D permits in areas designated as 
nonattainment for any criteria pollutant and do not otherwise need to 
be amended to incorporate the changes finalized in this action. States 
belonging to the following categories will need to revise their NA NSR 
regulations and submit them to EPA for incorporation into the SIP 
within 3 years from the date of this action \17\:
---------------------------------------------------------------------------

    \17\ As discussed earlier, we are following the precedent we 
established in our 2002 rule for NA NSR program revisions to allow 
States adequate time to adopt these revisions. For practical and 
fairness reasons, we are not requiring the NA NSR elements of this 
rule to be submitted by April 5, 2008, as we had proposed. However, 
the States are still required to submit nonattainment plans for 
PM2.5 (including NA NSR programs) on April 5, 2008. We believe this 
requirement is satisfied by implementing the transitional NA NSR 
program for PM2.5 (a.k.a. the PM10 surrogate policy) described in 
our April 5, 2005 guidance, or, if submitted after the effective 
date of this rule, implementing Appendix S as revised in this rule. 
This rulemaking does not change the specific guidance we previously 
provided to States on what they should submit to EPA by April 5, 
2008 to comply with nonattainment area requirements under Part D.
---------------------------------------------------------------------------

     States that have nonattainment regulations which need to 
be amended to incorporate the new PM2.5 requirements.
     States that have designated nonattainment areas for PM2.5 
and their nonattainment NSR regulations specifically list the areas in 
which NA NSR applies (i.e., the list does not include the designated 
nonattainment areas for PM2.5).
     States that have not previously had nonattainment areas 
but now have nonattainment areas for PM2.5.
    These States will have to implement a transitional NA NSR 
permitting program for PM2.5 pursuant to 40 CFR 52.24(k) and appendix S 
until their existing part D SIPs are revised to meet these new PM2.5 
NSR requirements under 40 CFR 51.165.
3. Implementation of NSR Under the ``Emissions Offset Interpretative 
Ruling'' (40 CFR Part 51, Appendix S) With Revisions
    In general, appendix S requires new or modified major sources to 
meet LAER and obtain sufficient offsetting emissions reductions to 
assure that a new major source or major modification of an existing 
major source will not interfere with the area's progress toward 
attainment. Readers should refer to appendix S for a complete 
understanding of these and other appendix S requirements. In this 
action, we are finalizing our proposed revisions to appendix S to 
include provisions necessary to implement a transitional NA NSR program 
for PM2.5, including significant emissions rates applicable to major 
modifications for PM2.5 and, as appropriate, precursors. Additionally, 
since we are finalizing interpollutant trading provisions in the NSR 
rules at 40 CFR 51.165, we are also amending appendix S to allow 
interpollutant trading for PM2.5. Appendix S applies directly to new 
and modified major stationary sources. In accordance with the 
requirements of section 110(a)(2)(c) of the Act, we believe that the 
majority of States have the legal authority to issue permits consistent 
with these requirements under an existing SIP-approved permitting 
program. Nonetheless, at least one State has reported that it lacks the 
legal authority to issue permits implementing the requirements of 
appendix S under its existing permitting rules.
    If a State is unable to apply the requirements of appendix S, we 
will act as the reviewing authority for the relevant portion of the 
permit. We believe that it is appropriate for EPA to issue the 
preconstruction permits in such circumstances. Congress amended the Act 
in 1990 to remove the requirements that would have applied a 
construction ban in areas that lacked a SIP-approved part D permit 
program. Thus, we believe that it is consistent with Congressional 
intent that either the State or EPA issues construction permits for 
those projects meeting the applicable criteria during the interim 
period. See the preamble of the proposal for this rule for more detail 
on the legal basis for requiring States to issue NA NSR permits 
pursuant to appendix S during the SIP development period (70 FR 66045-
46).
    We received three comments supporting the issuance of NA NSR 
permits under appendix S during the SIP development period. Two of 
these

[[Page 28343]]

commenters expected States generally to be able to do so, while one 
suggested that EPA issue such permits because States will lack the 
authority to do so without protracted rule revisions. One of these 
commenters also suggested that we revise appendix S to authorize 
interprecursor trading during the transition period, believing that the 
paucity of existing direct PM2.5 emissions and SO2 offsets likely will 
make business expansion in PM2.5 nonattainment areas from now until at 
least April 2008 impossible unless this is done. One commenter 
suggested that we suspend the 2005 PM2.5 NSR guidance which allows use 
of PM10 emissions as a surrogate for PM2.5 emissions in PM2.5 
nonattainment areas when we adopt the final PM2.5 implementation rules, 
while three other commenters requested continued implementation of that 
guidance during the interim period.
    As noted previously, this final action will require States to amend 
their NA NSR programs consistent with the amended rules at 40 CFR 
51.165. During the SIP development period, where they have legal 
authority to do so, States must issue NA NSR permits under appendix S 
(as revised for purposes of the PM2.5 program). To address one of the 
points raised by commenters, we are amending appendix S to allow 
interpollutant trading for PM2.5 in this final rule. Where a State 
determines that it does not have legal authority to issue such permits, 
we will act as the reviewing authority. As of the effective date of 
this action, the 2005 PM2.5 NSR guidance on use of PM10 emissions as a 
surrogate for PM2.5 emissions will remain in effect only for PSD in the 
SIP-approved States during the SIP development period. In the delegated 
PSD States and in nonattainment areas, the new PM2.5 requirements will 
apply immediately on the effective date of this final action.

J. Does major NSR apply to PM2.5 precursors during the SIP development 
period?

    As discussed previously in section V.A, we have taken final action 
on NSR applicability for PM2.5 precursors. Specifically, we have 
designated SO2 as a national precursor to PM2.5 in all areas, NOX as a 
``presumed-in'' precursor in all areas, VOC as a ``presumed-out'' 
precursor in all areas, and ammonia as a ``presumed-out'' precursor. 
Thus, States have the option of excluding NOX as a precursor by 
demonstrating that NOX emissions are not a significant contributor to 
ambient PM2.5 concentrations in a particular area. In addition, States 
have the option of identifying VOC and/or ammonia as precursor(s) by 
demonstrating that emissions of VOC and/or ammonia are a significant 
contributor in an area, and thus should be subject to major NSR.
    In the proposal, during the SIP development period, we proposed 
that SO2 should be treated as a regulated PM2.5 precursor as of the 
effective date of this final rule since there is no doubt about its 
status as such in any area and proposed to defer NSR applicability for 
NOX until a State SIP submittal so that if a State elected to submit 
information to rebut the presumption that NOX is a regulated PM2.5 
precursor, the State would have an opportunity to do so in its SIP 
submittal. We also proposed that VOCs and ammonia would not be treated 
as PM2.5 precursors during the interim period because they are presumed 
not to be precursors until they have been demonstrated to be through a 
State's SIP submittal.
    A few commenters supported staying the applicability of NSR to all 
precursors during the interim period. However, two of these supporters 
suggested that EPA establish mechanisms for interpollutant trading for 
offsets during the interim period so that increases in direct PM2.5 
emissions can be offset with SO2 or NOX emissions reductions. Another 
supporter noted that their State cannot impose obligations on NSR 
applicants until those obligations are established in State regulations 
or statutes. Another indicated that this delay would allow States the 
time to develop experience and knowledge in establishing local 
photochemical models and to performance test their accuracy.
    Two commenters opposed staying NSR applicability for any 
precursors. They believe that this would make attainment more 
difficult. One commenter suggested that SO2 should be designated as a 
precursor during the interim period, and another suggested the same for 
SO2 and NOX.
    Based on the comments, we have been persuaded that SIP-approved PSD 
States will not have the authority to regulate PM2.5 precursors before 
they have amended their SIPs to incorporate these requirements in 
attainment areas. Thus, in order to allow time for these States to 
revise their regulations to incorporate such requirements, this final 
action does not require regulation of SO2 or NOX as precursors to PM2.5 
under PSD until the SIP development period ends. In addition, we are 
allowing SIP-approved PSD States to continue with the existing PM10 
surrogate policy to meet the PSD requirements for PM2.5. However, for 
delegated PSD States, SO2 and NOX are regulated as precursors from the 
effective date of this rule. However, these States or EPA have the 
option of excluding NOX as a precursor by demonstrating that NOX 
emissions are not a significant contributor to ambient PM2.5 
concentrations in a particular area.
    For nonattainment areas, the transitional program pursuant to 
appendix S will apply on the effective date of this action. Under 
appendix S, SO2 will be regulated as a precursor in all nonattainment 
areas for PM2.5. However, unlike in the proposal, NOX will not be 
regulated as a precursor for PM2.5 because we believe it is appropriate 
to give States the opportunity to determine whether NOX emissions are a 
significant contributor to the ambient PM2.5 problem, and to make the 
appropriate demonstration in their SIP. Finally, for States determining 
that VOC and/or ammonia are PM2.5 precursors under their SIPs, we will 
approve their definition of ``significant emissions rate'' for each 
precursor based on an appropriate demonstration.

K. Are there any Tribal concerns?

    Some Tribal areas may be designated as nonattainment, in part 
because of pollution that is transported from surrounding State lands. 
Tribal representatives have advocated for additional flexibility to 
address nonattainment problems caused by transported pollution, such as 
a pool of available NSR offset set-asides (which we expect would come 
from State offset pools or banks), because they have limited ability to 
generate offsets on their own. Tribal representatives have raised these 
and other concerns in discussions on implementation of the 8-hour ozone 
and PM2.5 standards, and in comments on the 8-hour ozone implementation 
rule. We requested comment on whether emissions offset set-asides, 
possibly generated by innovative measures to promote additional 
emissions reductions, are an appropriate method to help level the 
playing field for the Tribes and support economic development in Tribal 
areas. We also requested comment on ways in which States may help 
provide the Tribes access to offsets from non-Tribal areas. We received 
no comments on these issues.
    We recently proposed Tribal NSR rules. See 71 FR 48696, August 21, 
2006. They include a NA NSR rule, which refers to appendix S for its 
substantive requirements, and a minor NSR rule. In recognition of the 
concerns mentioned above, we have proposed and sought comments on 
options for obtaining offset relief in that proposal.

[[Page 28344]]

We will address these issues in the context of that rule.

L. What are the requirements for minor NSR for PM2.5?

    Pursuant to section 110(a)(2)(C) of the Act, States must have a 
minor source permitting program. This applies to new and modified 
stationary sources that are not considered major for a criteria 
pollutant or a precursor for a criteria pollutant. Prior to this 
action, States were required to include the following pollutants in 
their minor NSR program:
     VOC,
     SO2,
     NOX,
     CO,
     PM10, and
     Lead (Pb).
    Based on this action, States must now amend their minor source 
programs to include direct PM2.5 emissions and precursor emissions in 
the same manner as included for purposes of PM2.5 major NSR.

M. Rural Transport Areas

    In the proposal for the Clean Air Fine Particle Implementation Rule 
and this NSR implementation rule for PM2.5, we considered the option of 
classifying some nonattainment areas as transport areas that suffer 
from overwhelming transport, and of developing NA NSR rules specific to 
such areas. However, the final implementation rule does not include the 
rural transport classification. Consequently, no NA NSR rules have been 
developed or finalized in this rule.

VI. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), 
this action is a ``significant regulatory action'' because it is likely 
to raise novel legal or policy issues arising out of legal mandates, 
the President's priorities, or the principles set forth in the 
Executive Order. Accordingly, EPA submitted this action to the Office 
of Management and Budget (OMB) for review under EO 12866 and any 
changes made in response to OMB recommendations have been documented in 
the docket for this action.

B. Paperwork Reduction Act

    The information collection requirements in this rule have been 
submitted for approval to the OMB under the Paperwork Reduction Act, 44 
U.S.C. 3501 et seq. The information collection requirements are not 
enforceable until OMB approves them. The Information Collection Request 
(ICR) document prepared by EPA has been assigned OMB Control Number 
2060-0003 (EPA ICR No. 1230.21).
    To achieve the purposes of the major NSR program, certain records 
and reports are necessary for the State or local agency (or the EPA 
Administrator in non-delegated States), for example, to: (1) Confirm 
the compliance of status of stationary sources, identify any stationary 
sources not subject to the rules, and identify stationary sources 
subject to the rules; and (2) ensure that the stationary source control 
requirements are being achieved. The information would be used by EPA 
or State enforcement personnel to (1) identify stationary sources 
subject to the rules, (2) ensure that appropriate control technology is 
being properly applied, and (3) ensure that the emission control 
devices are being properly operated and maintained on a continuous 
basis.
    This final NSR rule does not create new information collection 
requirements, but rather expands the coverage of the existing 
requirements of the major NSR program. Specifically, the rule changes 
finalized in this action add PM2.5 to the list of air pollutants that 
must be addressed in the major NSR program, and the companion proposal 
adds certain elements that are necessary for a complete PM2.5 NSR 
program. This change is unlikely to increase significantly the number 
of NSR permits that must be issued, but may add to the analyses that 
sources and Federal, State, and local reviewing authorities must 
conduct as part of the construction permit application and review 
process.
    We expect the rule changes finalized in this action to increase the 
burden associated with major NSR permitting for tracking new emissions 
of PM2.5 against increments; collecting ambient air quality monitoring 
data for existing PM2.5 concentrations; reviewing the effects of PM2.5 
emissions on soils and vegetation, as well as on air quality related 
values in Class I areas; determining the appropriate best available 
control technology or lowest achievable emission rate; and/or obtaining 
offsets. At the same time, there would be a reduction in burden 
directly associated with the revocation of the annual increment for 
PM10, which is proposed in the proposed rule.
    Over the 3-year period covered by the ICR, we estimate an average 
annual burden increase of about 39,000 hours (about 8 percent) and $4.3 
million (about 10 percent) for all industry entities that would be 
affected by this final NSR rule. For the same reasons, we also expect 
the final rule to increase burden for the State and local authorities 
reviewing permit applications when fully implemented. In addition, 
there would be additional burden for State and local agencies to revise 
their SIPs to incorporate the proposed changes. We estimate the 
combined increase in burden to average about 16,000 hours and $700,000 
annually for all State and local reviewing authorities, which is less 
than 13 percent.
    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 purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search 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 in 40 CFR are listed in 40 CFR part 9. When this ICR is 
approved by OMB, the Agency will publish a technical amendment to 40 
CFR part 9 in the Federal Register to display the OMB control number 
for the approved information collection requirements contained in this 
final rule.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the Agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of this proposed rule on 
small entities, ``small entity'' is defined as: (1) A small business as 
defined by the Small Business Administration's regulations at 13 CFR 
121.201; (2) a small governmental jurisdiction that is a government or 
a city, county, town,

[[Page 28345]]

school district or special district with a population of less than 
50,000; and (3) a small organization that is any not-for-profit 
enterprise which is independently owned and operated and is not 
dominant in its field.
    After considering the economic impacts of this final rule on small 
entities, I certify that this rule will not have a significant economic 
impact on a substantial number of small entities. The requirements of 
this final rule apply only to new major stationary sources or major 
modifications of existing major stationary sources. This final rule 
does not create any new requirements under the major NSR program, but 
simply expands the program to cover an additional pollutant, referred 
to as PM2.5. There is no reason to expect that the rule will 
significantly or uniquely affect small businesses, organizations, or 
governments (few, if any, of which act as reviewing authorities 
pursuant to this final rule).

D. Unfunded Mandates Reform Act

    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 the 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 
aggregate, or to the private sector, of $100 million or more in any 1 
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 of 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 have determined that this rule does not contain a Federal 
mandate that may result in expenditures of $100 million or more for 
State, local, and tribal governments, in the aggregate, or the private 
sector in any 1 year. The final rule does not add any new requirements 
to the NSR program; it simply expands the program to cover 
PM2.5 in addition to the several other pollutants already 
defined as regulated NSR pollutants. (Technically, the rule also 
subjects the precursors to PM2.5 to the NSR program. 
However, these precursors (SO2, NOX, and VOC) are 
already subject to the existing NSR program.) As discussed previously 
in section VI.B on the Paperwork Reduction Act, the expansion of the 
NSR program to cover PM2.5 will only marginally increase the 
expenditures of State, local, and tribal governments and the private 
sector on the program. Thus, this action is not subject to the 
requirements of sections 202 and 205 of the UMRA.
    The EPA has determined that this rule contains no regulatory 
requirements that might significantly or uniquely affect small 
governments. As noted previously, this rule does not create any new 
requirements under the major NSR program, but simply expands the 
program to cover an additional pollutant (PM2.5). There is 
no reason to expect that the rule will significantly or uniquely affect 
small governments, few if any of which act as reviewing authorities.

E. 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'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    This final rule does not have federalism implications. It will not 
have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
as specified in Executive Order 13132. Pursuant to the terms of 
Executive Order 13132, it has been determined that this proposed rule 
does not have ``federalism implications'' because it does not meet the 
necessary criteria. Thus, the requirements of section 6 of the 
Executive Order do not apply to this proposed rule.
    In the spirit of Executive Order 13132, however, and consistent 
with our policy to promote communications between us and State and 
local governments, we specifically solicited comment on the proposed 
rule from State and local officials.

F. 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 9, 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.'' This final rule does not have 
``Tribal implications'' as defined in Executive Order 13175. This rule 
concerns the NSR requirements for State and tribal implementation 
plans. The CAA provides for States to develop plans to regulate 
emissions of air pollutants within their jurisdictions. The Tribal Air 
Rule (TAR) under the CAA gives Tribes the opportunity to develop and 
implement CAA programs such as programs to attain and maintain the 
PM2.5 NAAQS, but it leaves to the discretion of the Tribe 
the decision of whether to develop these programs and which programs, 
or appropriate elements of a program, they will adopt.
    Although Executive Order 13175 does not apply to this rule, EPA did 
reach out to Tribal leaders and environmental staff in developing this 
rule. From 2001-2004, the EPA supported a National Designations 
Workgroup to provide a forum for tribal professionals to give input to 
the designations process. In 2006, EPA supported a national ``Tribal 
Air call'' which provides an open forum for all Tribes to voice 
concerns to EPA about the NAAQS implementation process, including the 
PM2.5 NAAQS. In these meetings, EPA briefed call 
participants and Tribal environmental professionals gave input as the 
rule was under development. Furthermore, in December 2005, EPA sent 
individualized letters to all federally recognized Tribes about the 
proposal to give Tribal leaders the opportunity for consultation.
    This final rule does not have Tribal implications as defined by 
Executive

[[Page 28346]]

Order 13175. It does not have a substantial direct effect on one or 
more Indian Tribes, since no Tribe has implemented a CAA program to 
attain the PM2.5 NAAQS at this time. The EPA notes that even 
if a Tribe were implementing such a plan at this time, while the rule 
might have Tribal implications with respect to that Tribe, it would not 
impose substantial direct costs upon it, nor would it preempt Tribal 
law.
    Furthermore, this rule does not affect the relationship or 
distribution of power and responsibilities between the Federal 
government and Indian Tribes. The CAA and the TAR establish the 
relationship of the Federal government and Tribes in developing plans 
to attain the NAAQS, and this rule does nothing to modify that 
relationship. As this rule does not have Tribal implications, Executive 
Order 13175 does not apply.

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

    Executive Order 13045, entitled ``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 we have reason to believe 
may have a disproportionate effect on children. If the regulatory 
action meets both criteria, the Agency 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 reasonably feasible alternatives considered by the Agency.
    This final rule is not subject to the Executive Order because it is 
not economically significant as defined in Executive Order 12866, and 
because the Agency does not have reason to believe the environmental 
health or safety risks addressed by this action present a 
disproportionate risk to children. This rule does not impose any new 
requirements under the NSR program. However, in expanding the major NSR 
program to address PM2.5, we believe that this rule will 
serve to reduce environmental health risks to all citizens, including 
children, because one of the basic requirements of the major NSR 
program is that new and modified major stationary sources must not 
cause or contribute to air quality in violation of the NAAQS.

H. Executive Order 13211--Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This rule 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 final rule 
does not add any new requirements to the major NSR program; it simply 
expands the program to cover PM2.5 in addition to the 
several other pollutants already defined as regulated NSR pollutants. 
Although the major NSR program may apply to energy supply and 
distribution companies that build or significantly modify major sources 
of regulated NSR pollutants, we believe that any increase in 
expenditures for obtaining NSR permits that may result from this rule 
will be marginal rather than significant.

I. National Technology Transfer and Advancement Act

    As noted in the proposed rule, section 12(d) of the National 
Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law No. 
104-113, 12(d) (15 U.S.C. 272 note) directs us to use voluntary 
consensus standards (VCS) in our regulatory and procurement activities 
unless to do so would be inconsistent with applicable law or otherwise 
impractical. The VCS are technical standards (e.g., materials 
specifications, test methods, sampling procedures, and business 
practices) developed or adopted by one or more voluntary consensus 
bodies. The NTTAA directs us to provide Congress, through annual 
reports to OMB, with explanations when we do not use available and 
applicable VCS.
    This final rule does not involve technical standards. Therefore, we 
did not consider the use of any VCS.

J. Executive Order 12898--Federal Actions to Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes 
Federal executive policy on environmental justice. Its main provision 
directs Federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of its programs, 
policies, and activities on minorities and low-income populations in 
the United States.
    The EPA has determined that this final rule will not have 
disproportionately high and adverse human health or environmental 
effects on minority or low-income populations because it will have the 
effect of improving air quality. While it does not impose any new 
requirements under the major NSR program, we believe that this rule, in 
expanding the NSR program to address PM2.5, will serve to 
reduce adverse human health and environmental effects for all citizens, 
including minorities and low-income populations.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. The 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). The rules affected by this action will be effective July 15, 
2008.

L. Petitions for Judicial Review

    Under section 307(b)(1) of the Act, petitions for judicial review 
of this action must be filed in the United States Court of Appeals for 
the District of Columbia Circuit by July 15, 2008. 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 Act section 307(b)(2).

M. Determination Under Section 307(d)

    The PSD portions of this rulemaking, which implements part C of 
title I of the Act, are subject to the procedural requirements in 
section 307(d) of the Act. See section 307(d)(1)(J). In addition, 
pursuant to section 307(d)(1)(V) of the Act, the Administrator 
determines that the NA

[[Page 28347]]

NSR portions of this action should also be subject to the provisions of 
section 307(d) to ensure consistency. All of the procedural 
requirements of section 307(d), e.g., docketing, hearing, and comment 
periods, have been complied with during the course of this rulemaking.

VII. Statutory Authority

    The statutory authority for this action is provided by sections 
101, 110, 165, 169, 172, 173, 301, and 302 of the Act as amended (42 
U.S.C. 7401, 7410, 7475, 7479, 7502, 7503, 7601, and 7602). This 
rulemaking is also subject to section 307(d) of the Act (42 U.S.C. 
7407(d)).

List of Subjects

40 CFR Part 51

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

40 CFR Part 52

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

    Dated: May 8, 2008.
Stephen L. Johnson,
Administrator.


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

PART 51--[AMENDED]

0
1. The authority citation for part 51 continues to read as follows:

    Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.

Subpart I--[Amended]

0
2. Section 51.165 is amended as follows:
0
a. By revising paragraph (a)(1)(x)(A);
0
b. By removing the word ``or'' at the end of paragraph 
(a)(1)(xxxvii)(B);
0
c. By revising paragraph (a)(1)(xxxvii)(C);
0
d. By adding paragraph (a)(1)(xxxvii)(D);
0
e. By redesignating paragraphs (a)(9)(i) through (iii) as paragraphs 
(a)(9)(ii) through (iv), respectively, and adding new paragraph 
(a)(9)(i);
0
f. By removing from newly redesignated paragraph (a)(9)(iii) the 
reference to ``paragraph (a)(9)(i)'' and adding in its place 
``paragraph (a)(9)(ii)''; and
0
g. By adding paragraph (a)(11).


Sec.  51.165  Permit requirements.

    (a) * * *
    (1) * * *
    (x)(A) Significant means, in reference to a net emissions increase 
or the potential of a source to emit any of the following pollutants, a 
rate of emissions that would equal or exceed any of the following 
rates:

Pollutant Emission Rate

Carbon monoxide: 100 tons per year (tpy)
Nitrogen oxides: 40 tpy
Sulfur dioxide: 40 tpy
Ozone: 40 tpy of volatile organic compounds or nitrogen oxides
Lead: 0.6 tpy
PM10: 15 tpy
PM2.5: 10 tpy of direct PM2.5 emissions; 40 tpy 
of sulfur dioxide emissions; 40 tpy of nitrogen oxide emissions unless 
demonstrated not to be a PM2.5 precursor under paragraph 
(a)(1)(xxxvii) of this section
* * * * *
    (xxxvii) * * *
    (C) Any pollutant that is identified under this paragraph 
(a)(1)(xxxvii)(C) as a constituent or precursor of a general pollutant 
listed under paragraph (a)(1)(xxxvii)(A) or (B) of this section, 
provided that such constituent or precursor pollutant may only be 
regulated under NSR as part of regulation of the general pollutant. 
Precursors identified by the Administrator for purposes of NSR are the 
following:
    (1) Volatile organic compounds and nitrogen oxides are precursors 
to ozone in all ozone nonattainment areas.
    (2) Sulfur dioxide is a precursor to PM2.5 in all 
PM2.5 nonattainment areas.
    (3) Nitrogen oxides are presumed to be precursors to 
PM2.5 in all PM2.5 nonattainment areas, unless 
the State demonstrates to the Administrator's satisfaction or EPA 
demonstrates that emissions of nitrogen oxides from sources in a 
specific area are not a significant contributor to that area's ambient 
PM2.5 concentrations.
    (4) Volatile organic compounds and ammonia are presumed not to be 
precursors to PM2.5 in any PM2.5 nonattainment 
area, unless the State demonstrates to the Administrator's satisfaction 
or EPA demonstrates that emissions of volatile organic compounds or 
ammonia from sources in a specific area are a significant contributor 
to that area's ambient PM2.5 concentrations; or
    (D) PM2.5 emissions and PM10 emissions shall 
include gaseous emissions from a source or activity which condense to 
form particulate matter at ambient temperatures. On or after January 1, 
2011 (or any earlier date established in the upcoming rulemaking 
codifying test methods), such condensable particulate matter shall be 
accounted for in applicability determinations and in establishing 
emissions limitations for PM2.5 and PM10 in 
nonattainment major NSR permits. Compliance with emissions limitations 
for PM2.5 and PM10 issued prior to this date 
shall not be based on condensable particulate matter unless required by 
the terms and conditions of the permit or the applicable implementation 
plan. Applicability determinations made prior to this date without 
accounting for condensable particulate matter shall not be considered 
in violation of this section unless the applicable implementation plan 
required condensable particulate matter to be included.
* * * * *
    (9)(i) The plan shall require that in meeting the emissions offset 
requirements of paragraph (a)(3) of this section, the ratio of total 
actual emissions reductions to the emissions increase shall be at least 
1:1 unless an alternative ratio is provided for the applicable 
nonattainment area in paragraphs (a)(9)(ii) through (a)(9)(iv) of this 
section.
* * * * *
    (11) The plan shall require that in meeting the emissions offset 
requirements of paragraph (a)(3) of this section, the emissions offsets 
obtained shall be for the same regulated NSR pollutant unless 
interprecursor offsetting is permitted for a particular pollutant as 
specified in this paragraph. The plan may allow the offset requirements 
in paragraph (a)(3) of this section for direct PM2.5 
emissions or emissions of precursors of PM2.5 to be 
satisfied by offsetting reductions in direct PM2.5 emissions 
or emissions of any PM2.5 precursor identified under 
paragraph (a)(1)(xxxvii)(C) of this section if such offsets comply with 
the interprecursor trading hierarchy and ratio established in the 
approved plan for a particular nonattainment area.
* * * * *

0
3. Section 51.166 is amended as follows:
0
a. By revising paragraphs (b)(23)(i) and (b)(49)(i);
0
b. By removing the word ``or'' at the end of paragraph (b)(49)(iii);
0
c. By adding and reserving paragraph (b)(49)(v);
0
d. By adding paragraph (b)(49)(vi); and
0
e. By revising paragraphs (i)(5)(ii) and (i)(5)(iii).

[[Page 28348]]

Sec.  51.166  Prevention of significant deterioration of air quality.

* * * * *
    (b) * * *
    (23)(i) Significant means, in reference to a net emissions increase 
or the potential of a source to emit any of the following pollutants, a 
rate of emissions that would equal or exceed any of the following 
rates:

Pollutant and Emissions Rate

Carbon monoxide: 100 tons per year (tpy)
Nitrogen oxides: 40 tpy
Sulfur dioxide: 40 tpy
Particulate matter: 25 tpy of particulate matter emissions. 15 tpy of 
PM10 emissions
PM2.5: 10 tpy of direct PM2.5 emissions; 40 tpy 
of sulfur dioxide emissions; 40 tpy of nitrogen oxide emissions unless 
demonstrated not to be a PM2.5 precursor under paragraph 
(b)(49) of this section
Ozone: 40 tpy of volatile organic compounds or nitrogen oxides
Lead: 0.6 tpy
Fluorides: 3 tpy
Sulfuric acid mist: 7 tpy
Hydrogen sulfide (H2S): 10 tpy
Total reduced sulfur (including H2S): 10 tpy
Reduced sulfur compounds (including H2S): 10 tpy
Municipal waste combustor organics (measured as total tetra-through 
octa-chlorinated dibenzo-p-dioxins and dibenzofurans): 3.2 x 10-
-6 megagrams per year (3.5 x 10-6 tons per year)
Municipal waste combustor metals (measured as particulate matter): 14 
megagrams per year (15 tons per year)
Municipal waste combustor acid gases (measured as sulfur dioxide and 
hydrogen chloride): 36 megagrams per year (40 tons per year)
Municipal solid waste landfill emissions (measured as nonmethane 
organic compounds): 45 megagrams per year (50 tons per year)
* * * * *
    (49) * * *
    (i) Any pollutant for which a national ambient air quality standard 
has been promulgated and any pollutant identified under this paragraph 
(b)(49)(i) as a constituent or precursor to such pollutant. Precursors 
identified by the Administrator for purposes of NSR are the following:
    (a) Volatile organic compounds and nitrogen oxides are precursors 
to ozone in all attainment and unclassifiable areas.
    (b) Sulfur dioxide is a precursor to PM2.5 in all 
attainment and unclassifiable areas.
    (c) Nitrogen oxides are presumed to be precursors to 
PM2.5 in all attainment and unclassifiable areas, unless the 
State demonstrates to the Administrator's satisfaction or EPA 
demonstrates that emissions of nitrogen oxides from sources in a 
specific area are not a significant contributor to that area's ambient 
PM2.5 concentrations.
    (d) Volatile organic compounds are presumed not to be precursors to 
PM2.5 in any attainment or unclassifiable area, unless the 
State demonstrates to the Administrator's satisfaction or EPA 
demonstrates that emissions of volatile organic compounds from sources 
in a specific area are a significant contributor to that area's ambient 
PM2.5 concentrations.
* * * * *
    (v) [Reserved.]
    (vi) Particulate matter (PM) emissions, PM2.5 emissions, 
and PM10 emissions shall include gaseous emissions from a 
source or activity which condense to form particulate matter at ambient 
temperatures. On or after January 1, 2011 (or any earlier date 
established in the upcoming rulemaking codifying test methods), such 
condensable particulate matter shall be accounted for in applicability 
determinations and in establishing emissions limitations for PM, 
PM2.5 and PM10 in PSD permits. Compliance with 
emissions limitations for PM, PM2.5 and PM10 
issued prior to this date shall not be based on condensable particular 
matter unless required by the terms and conditions of the permit or the 
applicable implementation plan. Applicability determinations made prior 
to this date without accounting for condensable particular matter shall 
not be considered in violation of this section unless the applicable 
implementation plan required condensable particular matter to be 
included.
* * * * *
    (i) * * *
    (5) * * *
    (ii) The concentrations of the pollutant in the area that the 
source or modification would affect are less than the concentrations 
listed in paragraph (i)(5)(i) of this section; or
    (iii) The pollutant is not listed in paragraph (i)(5)(i) of this 
section.
* * * * *

0
4. Appendix S to Part 51 is amended as follows:
0
a. By revising paragraphs II.A.10(i) and II.A.31;
0
b. By revising paragraph IV.A, Condition 3;
0
c. By redesignating paragraphs IV.G.1 through IV.G.3 as paragraphs 
IV.G.2 through IV.G.4, respectively, and adding new paragraph IV.G.1;
0
d. By removing from newly redesignated paragraph IV.G.3 the reference 
to ``paragraph IV.G.1'' and adding in its place ``paragraph IV.G.2''; 
and
0
e. By adding paragraph IV.G.5.

Appendix S to Part 51--Emission Offset Interpretative Ruling

* * * * *
    II. * * *
    A. * * *
    10. (i) Significant means, in reference to a net emissions 
increase or the potential of a source to emit any of the following 
pollutants, a rate of emissions that would equal or exceed any of 
the following rates:

Pollutant and Emissions Rate

Carbon monoxide: 100 tons per year (tpy)
Nitrogen oxides: 40 tpy
Sulfur dioxide: 40 tpy
Ozone: 40 tpy of volatile organic compounds or nitrogen oxides
Lead: 0.6 tpy
Particulate matter: 25 tpy of particulate matter emissions
PM10: 15 tpy
PM2.5: 10 tpy of direct PM2.5 emissions; 40 
tpy of sulfur dioxide emissions
* * * * *
    31. Regulated NSR pollutant, for purposes of this Ruling, means 
the following:
    (i) Nitrogen oxides or any volatile organic compounds;
    (ii) Any pollutant for which a national ambient air quality 
standard has been promulgated;
    (iii) Any pollutant that is identified under this paragraph 
II.A.31(iii) as a constituent or precursor of a general pollutant 
listed under paragraph II.A.31(i) or (ii) of this Ruling, provided 
that such constituent or precursor pollutant may only be regulated 
under NSR as part of regulation of the general pollutant. Precursors 
identified by the Administrator for purposes of NSR are the 
following:
    (a) Volatile organic compounds and nitrogen oxides are 
precursors to ozone in all ozone nonattainment areas.
    (b) Sulfur dioxide is a precursor to PM2.5 in all 
PM2.5 nonattainment areas; or
    (iv) Particulate matter (PM) emissions, PM2.5 
emissions and PM10 emissions shall include gaseous 
emissions from a source or activity which condense to form 
particulate matter at ambient temperatures. On or after January 1, 
2011 (or any earlier date established in the upcoming rulemaking 
codifying test methods), such condensable particulate matter shall 
be accounted for in applicability determinations and in establishing 
emissions limitations for PM, PM2.5 and PM10 
in permits issued under this ruling. Compliance with emissions 
limitations for PM, PM2.5 and PM10 issued 
prior to this date shall not be based on condensable particulate 
matter unless required by the terms and conditions of the permit or 
the applicable implementation plan. Applicability determinations 
made prior to this date without accounting for condensable 
particulate matter shall not be

[[Page 28349]]

considered in violation of this section unless the applicable 
implementation plan required condensable particulate matter to be 
included.
* * * * *
    IV. * * *
    A. * * *
    Condition 3. Emission reductions (offsets) from existing sources 
\5\ in the area of the proposed source (whether or not under the 
same ownership) are required such that there will be reasonable 
progress toward attainment of the applicable NAAQS.\6\ Except as 
provided in paragraph IV.G.5 of this Ruling (addressing 
PM2.5 and its precursors), only intrapollutant emission 
offsets will be acceptable (e.g., hydrocarbon increases may not be 
offset against SO2 reductions).
    \5\ Subject to the provisions of paragraph IV.C of this Ruling.
    \6\ The discussion in this paragraph is a proposal, but 
represents EPA's interim policy until final rulemaking is completed.
* * * * *
    G. Offset ratios.
    1. In meeting the emissions offset requirements of paragraph 
IV.A, Condition 3 of this Ruling, the ratio of total actual 
emissions reductions to the emissions increase shall be at least 1:1 
unless an alternative ratio is provided for the applicable 
nonattainment area in paragraphs IV.G.2 through IV.G.4.
* * * * *
    5. Interpollutant offsetting. In meeting the emissions offset 
requirements of paragraph IV.A, Condition 3 of this Ruling, the 
emissions offsets obtained shall be for the same regulated NSR 
pollutant unless interpollutant offsetting is permitted for a 
particular pollutant as specified in this paragraph IV.G.5. The 
offset requirements of paragraph IV.A, Condition 3 of this Ruling 
for direct PM2.5 emissions or emissions of precursors of 
PM2.5 may be satisfied by offsetting reductions of direct 
PM2.5 emissions or emissions of any PM2.5 
precursor identified under paragraph II.A.31 (iii) of this Ruling if 
such offsets comply with an interprecursor trading hierarchy and 
ratio approved by the Administrator.
* * * * *

PART 52--[AMENDED]

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

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

Subpart A--[Amended]

0
6. Section 52.21 is amended as follows:
0
a. By revising paragraphs (b)(23)(i) and (b)(50)(i);
0
b. By removing the word ``or'' at the end of paragraph (b)(50)(iii);
0
c. By adding and reserving paragraph (b)(50)(v);
0
d. By adding paragraphs (b)(50)(vi) and (i)(1)(xi);
0
e. By revising paragraph (i)(5)(ii); and
0
f. By adding paragraph (i)(5)(iii).


Sec.  52.21  Prevention of significant deterioration of air quality.

* * * * *
    (b) * * *
    (23)(i) Significant means, in reference to a net emissions increase 
or the potential of a source to emit any of the following pollutants, a 
rate of emissions that would equal or exceed any of the following 
rates:

Pollutant and Emissions Rate

Carbon monoxide: 100 tons per year (tpy)
Nitrogen oxides: 40 tpy
Sulfur dioxide: 40 tpy
Particulate matter: 25 tpy of particulate matter emissions
PM10: 15 tpy
PM2.5: 10 tpy of direct PM2.5 emissions; 40 tpy 
of sulfur dioxide emissions; 40 tpy of nitrogen oxide emissions unless 
demonstrated not to be a PM2.5 precursor under paragraph 
(b)(50) of this section
Ozone: 40 tpy of volatile organic compounds or nitrogen oxides
Lead: 0.6 tpy
Fluorides: 3 tpy
Sulfuric acid mist: 7 tpy
Hydrogen sulfide (H2S): 10 tpy
Total reduced sulfur (including H2S): 10 tpy
Reduced sulfur compounds (including H2S): 10 tpy
Municipal waste combustor organics (measured as total tetra-through 
octa-chlorinated dibenzo-p-dioxins and dibenzofurans): 3.2 x 10 \-6\ 
megagrams per year (3.5 x 10 \-6\ tons per year)
Municipal waste combustor metals (measured as particulate matter): 14 
megagrams per year (15 tons per year)
Municipal waste combustor acid gases (measured as sulfur dioxide and 
hydrogen chloride): 36 megagrams per year (40 tons per year)
Municipal solid waste landfills emissions (measured as nonmethane 
organic compounds): 45 megagrams per year (50 tons per year)
* * * * *
    (50) * * *
    (i) Any pollutant for which a national ambient air quality standard 
has been promulgated and any pollutant identified under this paragraph 
(b)(50)(i) as a constituent or precursor for such pollutant. Precursors 
identified by the Administrator for purposes of NSR are the following:
    (a) Volatile organic compounds and nitrogen oxides are precursors 
to ozone in all attainment and unclassifiable areas.
    (b) Sulfur dioxide is a precursor to PM2.5 in all 
attainment and unclassifiable areas.
    (c) Nitrogen oxides are presumed to be precursors to 
PM2.5 in all attainment and unclassifiable areas, unless the 
State demonstrates to the Administrator's satisfaction or EPA 
demonstrates that emissions of nitrogen oxides from sources in a 
specific area are not a significant contributor to that area's ambient 
PM2.5 concentrations.
    (d) Volatile organic compounds are presumed not to be precursors to 
PM2.5 in any attainment or unclassifiable area, unless the 
State demonstrates to the Administrator's satisfaction or EPA 
demonstrates that emissions of volatile organic compounds from sources 
in a specific area are a significant contributor to that area's ambient 
PM2.5 concentrations.
* * * * *
    (v) [Reserved.]
    (vi) Particulate matter (PM) emissions, PM2.5 emissions 
and PM10 emissions shall include gaseous emissions from a 
source or activity which condense to form particulate matter at ambient 
temperatures. On or after January 1, 2011 (or any earlier date 
established in the upcoming rulemaking codifying test methods), such 
condensable particulate matter shall be accounted for in applicability 
determinations and in establishing emissions limitations for PM, 
PM2.5 and PM10 in PSD permits. Compliance with 
emissions limitations for PM, PM2.5 and PM10 
issued prior to this date shall not be based on condensable particular 
matter unless required by the terms and conditions of the permit or the 
applicable implementation plan. Applicability determinations made prior 
to this date without accounting for condensable particular matter shall 
not be considered in violation of this section unless the applicable 
implementation plan required condensable particular matter to be 
included.
* * * * *
    (i) * * *
    (1) * * *
    (xi) The source or modification was subject to 40 CFR 52.21, with 
respect to PM2.5, as in effect before July 15, 2008, and the 
owner or operator submitted an application for a permit under this 
section before that date consistent with EPA recommendations to use 
PM10 as a surrogate for PM2.5, and the 
Administrator subsequently determines that the application as submitted 
was complete with respect to the PM2.5 requirements then in 
effect, as interpreted in the EPA memorandum entitled ``Interim 
Implementation of New Source Review Requirements for PM2.5'' 
(October 23, 1997). Instead, the requirements of paragraphs (j) through

[[Page 28350]]

(r) of this section, as interpreted in the aforementioned memorandum, 
that were in effect before July 15, 2008 shall apply to such source or 
modification.
* * * * *
    (5) * * *
    (ii) The concentrations of the pollutant in the area that the 
source or modification would affect are less than the concentrations 
listed in paragraph (i)(5)(i) of this section; or
    (iii) The pollutant is not listed in paragraph (i)(5)(i) of this 
section.
* * * * *
[FR Doc. E8-10768 Filed 5-15-08; 8:45 am]
BILLING CODE 6560-50-P