[Federal Register Volume 80, Number 169 (Tuesday, September 1, 2015)]
[Proposed Rules]
[Pages 52701-52710]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-21537]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2012-0079; FRL-9933-31-Region 4]


Approval and Promulgation of Implementation Plans; Alabama: 
Nonattainment New Source Review

AGENCY: Environmental Protection Agency.

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing to 
approve portions of a revision to the Alabama State Implementation Plan 
(SIP) submitted by the Alabama Department of Environmental Management 
(ADEM) to EPA on May 2, 2011. The proposed SIP revision modifies 
Alabama's nonattainment new source review (NNSR) regulations in their 
entirety to be consistent with the federal new source review (NSR) 
regulations for the implementation of the criteria pollutant national 
ambient air quality standards (NAAQS). EPA is proposing approval of 
portions of the NNSR rule changes in Alabama's May 2, 2011, SIP 
revision because the Agency has preliminarily determined that the 
changes are consistent with the Clean Air Act (CAA or Act) and federal 
regulations regarding NNSR permitting.

DATES: Comments must be received on or before October 1, 2015.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R04-
OAR-2012-0079, by one of the following methods:
    1. www.regulations.gov: Follow the on-line instructions for 
submitting comments.
    2. Email: [email protected].

[[Page 52702]]

    3. Fax: (404) 562-9019.
    4. Mail: ``EPA-R04-OAR-2012-0079,'' Air Regulatory Management 
Section (formerly Regulatory Development Section), Air Planning and 
Implementation Branch, Air, Pesticides and Toxics Management Division, 
U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., 
Atlanta, Georgia 30303-8960.
    5. Hand Delivery or Courier: Lynorae Benjamin, Chief, Air 
Regulatory Management Section, Air Planning and Implementation Branch, 
Air, Pesticides and Toxics Management Division, U.S. Environmental 
Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia 
30303-8960. Such deliveries are only accepted during the Regional 
Office's normal hours of operation. The Regional Office's official 
hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m., 
excluding Federal holidays.
    Instructions: Direct your comments to Docket ID No. EPA-R04-OAR-
2012-0079. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
www.regulations.gov, including any personal information provided, 
unless the comment includes information claimed to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. Do not submit through www.regulations.gov or 
email, information that you consider to be CBI or otherwise protected. 
The www.regulations.gov Web site is an ``anonymous access'' system, 
which means EPA will not know your identity or contact information 
unless you provide it in the body of your comment. If you send an email 
comment directly to EPA without going through www.regulations.gov, your 
email address will be automatically captured and included as part of 
the comment that is placed in the public docket and made available on 
the Internet. If you submit an electronic comment, EPA recommends that 
you include your name and other contact information in the body of your 
comment and with any disk or CD-ROM you submit. If EPA cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment. Electronic 
files should avoid the use of special characters, any form of 
encryption, and be free of any defects or viruses. For additional 
information about EPA's public docket visit the EPA Docket Center 
homepage at http://www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the electronic docket are listed in the 
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, i.e., 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 in www.regulations.gov or 
in hard copy at the Air Regulatory Management Section, Air Planning and 
Implementation Branch, Air, Pesticides and Toxics Management Division, 
U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., 
Atlanta, Georgia 30303-8960. EPA requests that if at all possible, you 
contact the person listed in the FOR FURTHER INFORMATION CONTACT 
section to schedule your inspection. The Regional Office's official 
hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m., 
excluding Federal holidays.

FOR FURTHER INFORMATION CONTACT: For further information regarding the 
Alabama SIP, contact Mr. D. Brad Akers, Air Regulatory Management 
Section, Air Planning and Implementation Branch, Air, Pesticides and 
Toxics Management Division, U.S. Environmental Protection Agency, 
Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303-8960. Mr. Akers 
can be reached by phone at (404) 562-9089 or via electronic mail at 
[email protected]. For information regarding NSR, contact Ms. Yolanda 
Adams, Air Permits Section, at the same address above. Telephone 
number: (404) 562-9214; email address: [email protected].

SUPPLEMENTARY INFORMATION: 

I. What is EPA's proposed action for changes to Alabama's NNSR rules?

    On May 2, 2011, ADEM submitted a SIP revision to EPA for approval 
that involves changes to Alabama's regulations needed to make them 
consistent with federal requirements for general and transportation 
conformity and NSR permitting.\1\ In this action, EPA is proposing to 
approve the portion of Alabama's May 2, 2011 submission that makes 
changes to Alabama's NNSR program, set forth at ADEM Administrative 
Code, Division 3, Chapter 14, Subchapter .05 (ADEM Rule 335-3-14-.05), 
which applies to the construction and modification of any major 
stationary source in or near a nonattainment area (NAA) as required by 
part D of title I of the CAA. Alabama's NNSR regulations at ADEM Rule 
335-3-14-.05 were originally approved into the SIP on November 26, 1979 
(See 44 FR 67375), with periodic revisions approved through December 8, 
2000 (See 65 FR 76938). Subsequent revisions to Alabama's NNSR 
regulations have not yet been incorporated into Alabama's SIP. 
Alabama's May 2, 2011, SIP revision replaces the State's NNSR 
regulations in their entirety with a new version that reflects changes 
to the federal NNSR regulations at 40 Code of Federal Regulations (CFR) 
51.165,\2\ including provisions promulgated in the following federal 
rules: (1) ``Requirements for Preparation, Adoption and Submittal of 
Implementation Plans; Approval and Promulgation of Implementation 
Plans; Standards of Performance for New Stationary Sources,'' Final 
Rule, 57 FR 32314 (July 21, 1992) (hereafter referred to as the 
Wisconsin Electric Power Company (WEPCO) Rule); (2) ``Prevention of 
Significant Deterioration (PSD) and Nonattainment New Source Review 
(NSR): Baseline Emissions Determination, Actual-to-Future-Actual 
Methodology, Plantwide Applicability Limitations, Clean Units, 
Pollution Control Projects,'' Final Rule, 67 FR 80186 (December 31, 
2002) (hereafter referred to as the NSR Reform Rule); (3) ``Prevention 
of Significant Deterioration (PSD) and Non-Attainment New Source Review 
(NSR): Reconsideration,'' Final Rule, 68 FR 63021 (November 7, 2003) 
(hereafter referred to as the Reconsideration Rule); (4) ``Prevention 
of Significant Deterioration (PSD) and Non-Attainment New Source Review 
(NSR): Removal of Vacated Elements,'' Final Rule, 72 FR 32526 (June 13, 
2007) (hereafter referred to as the Vacated

[[Page 52703]]

Elements Rule); (4) ``Prevention of Significant Deterioration and 
Nonattainment New Source Review: Reasonable Possibility in 
Recordkeeping,'' Final Rule, 72 FR 72607 (December 21, 2007), 
(hereafter referred to as the Reasonable Possibility Rule); (5) ``Final 
Rule To Implement the 8-Hour Ozone National Ambient Air Quality 
Standard--Phase 2; Final Rule To Implement Certain Aspects of the 1990 
Amendments Relating to New Source Review and Prevention of Significant 
Deterioration as They Apply in Carbon Monoxide, Particulate Matter and 
Ozone NAAQS; Final Rule for Reformulated Gasoline,'' Final Rule, 70 FR 
71612 (November 29, 2005) (hereafter referred to as the Phase 2 Rule); 
(6) ``Implementation of the New Source Review (NSR) Program for 
Particulate Matter Less Than 2.5 Micrometers (PM2.5),\3\'' 
Final Rule, 73 FR 28321 (May 16, 2008) (hereafter referred to as the 
NSR PM2.5 Rule); (7) ``Prevention of Significant 
Deterioration (PSD) for Particulate Matter Less Than 2.5 Micrometers 
(PM2.5)--Increments, Significant Impact Levels (SILs) and 
Significant Monitoring Concentration (SMC),'' Final Rule, 75 FR 64864 
(October 20, 2010) (hereafter referred to as the PM2.5 PSD 
Increments-SILs-SMC Rule \4\); and (8) ``Prevention of Significant 
Deterioration (PSD) and Nonattainment New Source Review (NSR): 
Reconsideration of Inclusion of Fugitive Emissions; Interim Rule; Stay 
and Revisions'', Interim Rule, 76 FR 17548 (March 30, 2011) (hereafter 
referred to as the Fugitive Emissions Interim Rule).
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    \1\ The original submittal, found at Docket ID No. EPA-R04-OAR-
2012-0079, proposed changes to Alabama regulations pertaining to NSR 
and general and transportation conformity found at ADEM 
Administrative Code Chapter 335-3-14--Permits (including general 
permits, prevention of significant deterioration (PSD) and NNSR) and 
Chapter 335-3-17 Conformity of Federal Actions to State 
Implementation Plans, respectively. The first two portions of the 
submittal regarding conformity and PSD were acted on by EPA on 
September 26, 2012 (See 77 FR 59100).
    \2\ EPA's regulations governing the implementation of NSR 
permitting programs are contained in 40 CFR 51.160-.166; 52.21, .24; 
and part 51, appendix S. The CAA NSR program is composed of three 
separate programs: PSD, NNSR, and Minor NSR. PSD is established in 
part C of title I of the CAA and applies in areas that meet the 
NAAQS--``attainment areas''--as well as areas where there is 
insufficient information to determine if the area meets the NAAQS--
``unclassifiable areas.'' The NNSR program is established in part D 
of title I of the CAA and applies in areas that are not in 
attainment of the NAAQS--``nonattainment areas.'' The Minor NSR 
program addresses construction or modification activities that do 
not qualify as ``major'' and applies regardless of the designation 
of the area in which a source is located. Together, these programs 
are referred to as the NSR programs.
    \3\ Airborne particulate matter (PM) with a nominal aerodynamic 
diameter of 2.5 micrometers or less (a micrometer is 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. Fine particles in the atmosphere 
are made up of a complex mixture of components including sulfate; 
nitrate; 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. The 
health effects associated with exposure to PM2.5 include 
potential aggravation of respiratory and cardiovascular disease 
(i.e., lung disease, decreased lung function, asthma attacks and 
certain cardiovascular issues). On July 18, 1997, EPA revised the 
NAAQS for PM to add new standards for fine particles, using 
PM2.5 as the indicator. Previously, EPA used 
PM10 (inhalable particles smaller than or equal to 10 
micrometers in diameter) as the indicator for the PM NAAQS. EPA 
established health-based (primary) annual and 24-hour standards for 
PM2.5, setting an annual standard at a level of 15.0 
micrograms per cubic meter ([micro]g/m\3\) and a 24-hour standard at 
a level of 65 [micro]g/m\3\. See 62 FR 38652. At the time the 1997 
primary standards were established, EPA 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, EPA 
revised the primary and secondary 24-hour NAAQS for PM2.5 
to 35 [micro]g/m\3\ and retained the existing annual 
PM2.5 NAAQS of 15.0 [micro]g/m\3\. See 71 FR 61236. On 
January 15, 2013, EPA published a final rule revising the annual 
PM2.5 NAAQS to 12 [micro]g/m\3\. See 78 FR 3086.
    \4\ The D.C. Circuit vacated the portions of the 
PM2.5 PSD Increment-SILs-SMC Rule addressing the SMC and 
SILs (and remanded the SILs portion to EPA for further 
consideration) for PSD, but left the PM2.5 SILs in place 
for the NNSR program in the table in section 51.165(b)(2). See 
Sierra Club v. EPA, 705 F.3d 458 (D.C. Cir. 2013).
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    EPA is not, however, proposing to approve into the Alabama SIP ADEM 
Rule 335-3-14-.05(1)(k), which Alabama promulgated pursuant to the 
federal rule entitled ``Prevention of Significant Deterioration, 
Nonattainment New Source Review, and Title V: Treatment of Certain 
Ethanol Production Facilities Under the `Major Emitting Facility' 
Definition'', Final Rule, 72 FR 24060 (May 1, 2007) (or the Ethanol 
Rule).\5\ EPA is also not acting on the provision at Rule 335-3-
14-.05(2)(c)3 that excludes fugitive emissions from the determinion of 
creditable emission increases and decreases. (See Sections II.F. and 
III.F. of this notice for details). Finally, EPA is not proposing to 
approve ADEM's rules regarding the PM2.5 significant impact 
levels (SILs) for PSD at Rule 335-3-14-.04(8)(h)1., the NNSR 
interpollutant offset ratios at ADEM Rule 335-3-14-.05(3)(g), or the 
``actual-to-potential'' NNSR applicability test at ADEM Rule 335-3-
14-.05(1)(h), all of which ADEM withdrew from EPA's consideration 
subsequent to the May 2, 2011 submittal.
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    \5\ Alabama's changes to its NNSR regulations (at 335-3-
14-.05(1)(k)) exclude ``chemical process plants'' that produce 
ethanol through a natural fermentation process from the NSR major 
source permitting requirement as promulgated in the Ethanol Rule (as 
amended at 40 CFR 51.165). See 72 FR 24060 (May 1, 2007). However, 
due to a petition by Natural Resources Defense Council to reconsider 
the rule, EPA is not proposing to take action to approve this 
provision into the Alabama SIP at this time. Pending final 
resolution, EPA will make a final determination on action regarding 
this portion of Alabama's SIP revision.
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II. What is the background for EPA's proposed action?

    This proposed action to revise the NNSR regulations in Alabama's 
SIP relates to EPA's WEPCO Rule, 2002 NSR Reform Rule (and associated 
Reconsideration Rule and Vacated Elements Rule), Reasonable Possibility 
Rule, Phase 2 Rule, NSR PM2.5 Rule, PM2.5 PSD 
Increments-SILs-SMC Rule, and Fugitive Emissions Interim Rule. Together 
these rules address the NSR permitting requirements needed to implement 
the NAAQS in NAAs. The State's May 2, 2011, revision adopts into the 
Alabama SIP the NNSR requirements promulgated in these rules to be 
consistent with federal regulations. A brief summary of the 
abovementioned rules as well as details of Alabama's May 2, 2011, SIP 
submission is discussed below.
    Originally, Alabama included PM2.5 SILs and NNSR 
interpollutant offset ratios in the May 2, 2011, SIP submission, 
consistent with the PM2.5 PSD Increments-SILs-SMC Rule. 
However, EPA cannot act on SIL provisions for PSD due to the January 
22, 2013, decision by the D.C. Circuit vacating and remanding to EPA 
the SILs portion of the PM2.5 PSD Increments-SILs-SMC Rule 
for further consideration.\6\ See Sierra Club v. EPA, 705 F.3d 458 
(D.C. Cir. 2013). Nor can EPA approve the interpollutant offset ratios 
for PM2.5 and selected precursors included in the May 2, 
2011 submission, which adopted the EPA presumptive ratios from the May 
16, 2008, preamble to the NSR PM2.5 Implementation Rule. 
After publication, these ratios were the subject of a petition for 
reconsideration, which the Administrator granted, and are no longer 
presumptively approvable. Accordingly, ADEM has since submitted a 
letter to EPA dated October 9, 2014, requesting that the 
PM2.5 SILs provisions for PSD and the interpollutant trading 
ratios for NNSR be withdrawn from the May 2, 2011, submission; 
therefore these provisions are no longer before EPA for consideration. 
ADEM still intends to adopt the NNSR interpollutant trading policy 
itself, however, and therefore the letter only requested the withdrawal 
of the presumptive ratios. The letter can be found in Docket ID: EPA-
R04-OAR-2012-0079.
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    \6\ On January 22, 2013, D.C. Circuit granted a request from EPA 
to vacate and remand to the Agency the portions of the October 20, 
2010 rule addressing the SILs for PM2.5, except for the 
parts codifying the PM2.5 SILs in the NNSR rule at 40 CFR 
51.165(b)(2), so that the EPA could voluntarily correct an error in 
the provisions. See Sierra Club v. EPA, 705 F.3d 458 at 463-66 (D.C. 
Cir. 2013). The Court also vacated parts of the PM2.5 PSD 
Increment-SILs-SMC Rule establishing the PM2.5 SMC, 
finding that the Agency had exceeded its statutory authority with 
respect to these provisions. Id at 469. On December 9, 2013, EPA 
issued a final rulemaking to remove the vacated and remanded 
PM2.5 SILs and the vacated PM2.5 SMC 
provisions from the Federal regulations at 40 CFR 51.166 and 52.21. 
See 78 FR 73698.
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    The May 2, 2011, submittal also included an ``actual-to-potential'' 
NNSR applicability test for projects involving only existing emissions 
units at ADEM Rule 335-3-14-.05(1)(h). This test, which is not 
contained in the federal regulations, utilizes the definition of 
``actual emissions'' at ADEM Rule 335-

[[Page 52704]]

3-14-.05(2)(u) for determining whether a change to an existing 
emissions unit would result in a significant emissions increase that 
triggers NNSR applicability.\7\ To be consistent with the NNSR 
provisions at 40 CFR 51.165, ADEM submitted a letter to EPA on June 5, 
2015, withdrawing the ``actual-to-potential'' applicability test at 
ADEM Rule 335-3-14-.05(1)(h) from the May 2, 2011, SIP revision. This 
letter is included in the docket for this proposed action (Docket ID: 
EPA-R04-OAR-2012-0079).
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    \7\ The definition of ``actual emissions'' at ADEM Rule 335-3-
14-.05(2)(u) is based on the definition of ``actual emissions'' in 
the federal NNSR regulations at 40 CFR 51.165(a)(1)(xii). However, 
the federal regulations expressly state that ``this definition shall 
not apply for calculating whether a significant emissions increase 
has occurred.'' 40 CFR 51.165(a)(1)(xii)(A).
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A. WEPCO Rule

    On July 21, 1992, EPA finalized the WEPCO Rule, which put forward 
regulations arising out of the decision in the WEPCO case. See 
Wisconsin Electric Power Co. v. Reilly, 893 F.2d 901 (7th Cir. 1990). 
The WEPCO Rule made changes to the NNSR and PSD regulations found at 40 
CFR 51.165, 51.166 and 52.21. Relevant to this proposed rulemaking, EPA 
established definitions in the WEPCO Rule for electric utility steam 
generating unit (EGU), clean coal technology (CCT), CCT demonstration 
project, temporary CCT demonstration project, and repowering. In 
addition, the rule exempted CCT demonstration projects (that constitute 
repowering) from PSD or NNSR requirements (major modification), 
providing the projects do not cause an increase in potential to emit of 
a regulated NSR pollutant emitted by the unit.

B. NSR Reform and Reasonable Possibility

    On December 31, 2002 (67 FR 80186), EPA published final rule 
changes to 40 CFR parts 51 and 52 regarding the CAA's PSD and NNSR 
programs. On November 7, 2003 (68 FR 63021), EPA published a notice of 
final action on the reconsideration of the December 31, 2002, final 
rule changes. The December 31, 2002, and the November 7, 2003, final 
actions are collectively referred to as the ``2002 NSR Reform Rules.'' 
The 2002 NSR Reform Rules made changes to five areas of the NSR 
programs. In summary, the 2002 NSR Reform Rules: (1) Provide a new 
method for determining baseline actual emissions; (2) adopt an actual-
to-projected-actual methodology for determining whether a major 
modification has occurred; (3) allow major stationary sources to comply 
with plant-wide applicability limits (PALs) to avoid having a 
significant emissions increase that triggers the requirements of the 
major NSR program; (4) provide a new applicability provision for 
emissions units that are designated clean units; and (5) exclude 
pollution control projects (PCPs) from the definition of ``physical 
change or change in the method of operation.'' On November 7, 2003 (68 
FR 63021), EPA published a notice of final action on its 
reconsideration of the 2002 NSR Reform Rules, which added a definition 
for ``replacement unit'' and clarified an issue regarding PALs. For 
additional information on the 2002 NSR Reform Rules, see 67 FR 80186 
(December 31, 2002) and http://www.epa.gov/nsr/actions.html#2002.
    After the 2002 NSR Reform Rules were finalized and effective (March 
3, 2003), industry, state, and environmental petitioners challenged 
numerous aspects of the 2002 NSR Reform Rules, along with portions of 
EPA's 1980 NSR Rules. See 45 FR 52676 (August 7, 1980). On June 24, 
2005, the United States Court of Appeals for the District of Columbia 
Circuit (D.C. Circuit) issued a decision on the challenges to the 2002 
NSR Reform Rules: New York v. U.S. EPA, 413 F.3d 3 (D.C. Cir. 2005). In 
summary, the D.C. Circuit vacated portions of the rules pertaining to 
clean units and PCPs, remanded a portion of the rules regarding 
recordkeeping and the term ``reasonable possibility'' found in 40 CFR 
52.21(r)(6) and 40 CFR 51.165(a)(6) and 51.166(r)(6), and either upheld 
or did not comment on the other provisions included as part of the 2002 
NSR Reform Rules. On June 13, 2007 (72 FR 32526), EPA took final action 
to revise the 2002 NSR Reform Rules to remove from federal law all 
provisions pertaining to clean units and the PCP exemption that were 
vacated by the D.C. Circuit.
    With regard to the remanded portions of the 2002 NSR Reform Rules 
related to recordkeeping, the D.C. Circuit remanded these provisions to 
EPA either to provide an acceptable explanation for its ``reasonable 
possibility'' standard, or to devise an appropriate alternative. To 
satisfy the court, the EPA published the Reasonable Possibility Rule, 
thereby taking action to clarify that a ``reasonable possibility'' 
applies where source emissions equal or exceed 50 percent of the CAA 
NSR significance levels for any pollutant. See 72 FR 72607 (December 
21, 2007). The Reasonable Possibility Rule identified, for sources and 
reviewing authorities, the circumstances under which a major stationary 
source undergoing a modification that does not trigger major NSR must 
keep records. EPA's December 21, 2007, final rule on the recordkeeping 
and reporting provisions also explained state obligations with regard 
to the reasonable possibility-related rule changes.

C. Phase 2 Rule

    Part of Alabama's May 2, 2011, SIP submittal to revise its NNSR 
rules relates to EPA's 1997 8-Hour Ozone NAAQS Implementation Rule NSR 
Update or Phase 2 Rule. On November 29, 2005, EPA published the Phase 2 
Rule, which addressed control and planning requirements as they applied 
to areas designated nonattainment for the 1997 8-hour ozone NAAQS \8\ 
such as reasonably available control technology, reasonably available 
control measures, reasonable further progress, modeling and attainment 
demonstrations, NSR, and the impact to reformulated gas for the 1997 8-
hour ozone NAAQS transition. See 70 FR 71612. The NSR permitting 
requirements established in the rule included the following provisions: 
(1) Recognized NOX as an ozone precursor for PSD purposes; 
(2) changes to the NNSR rules establishing major stationary thresholds 
(marginal, moderate, serious, severe, and extreme NAA classifications); 
and significant emission rates for the 8-hour ozone, PM10 
and carbon monoxide NAAQS; and (3) revised the criteria for crediting 
emission reductions credits from operation shutdowns and curtailments 
as offsets, and changes to offset ratios for marginal, moderate, 
serious, severe, and extreme ozone NAA. For additional information on 
provisions in the Phase 2 Rule see the November 29, 2005, final rule 
(70 FR 71612).
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    \8\ On July 18, 1997, EPA promulgated a revised 8-hour ozone 
NAAQS of 0.08 parts per million--also referred to as the 1997 8-hour 
ozone NAAQS. On April 30, 2004, EPA designated areas as 
unclassifiable/attainment, nonattainment and unclassifiable for the 
1997 8-hour ozone NAAQS. In addition, on April 30, 2004, as part of 
the framework to implement the 1997 8-hour ozone NAAQS, EPA 
promulgated an implementation rule in two phases (Phase I and II). 
The Phase I Rule (effective on June 15, 2004), provided the 
implementation requirements for designating areas under subpart 1 
and subpart 2 of the CAA. See 69 FR 23951.
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D. NSR PM2.5 Rule

    On May 16, 2008, EPA finalized the NSR PM2.5 Rule to 
implement the PM2.5 NAAQS for the NSR permitting program. 
See 73 FR 28321. The NSR PM2.5 Rule revised the federal NSR 
program requirements to establish the framework for implementing

[[Page 52705]]

preconstruction permit review for the PM2.5 NAAQS in both 
attainment and NAA. Specifically, the NSR PM2.5 Rule 
established the following NSR provisions to implement the 
PM2.5 NAAQS: (1) Required NSR permits to address directly-
emitted PM2.5 and certain precursor pollutants; (2) 
established significant emission rates for direct PM2.5 and 
precursor pollutants (including sulfur dioxide (SO2) and 
nitrogen oxides (NOX)); (3) established NNSR 
PM2.5 emission offsets; (4) required states to account for 
gases that condense to form particles (condensables) in 
PM2.5 and PM10 applicability determinations and 
emission limits in PSD and NNSR permits; and (5) provided a 
grandfathering provision in the federal program for certain pending 
PM2.5 permit applications. Additionally, the NSR 
PM2.5 Rule authorized states to adopt provisions in their 
NNSR rules that would allow interpollutant offset trading. Alabama's 
May 2, 2011 SIP revision addresses the effective portions of the NNSR 
provisions established in EPA's May 16, 2008 NSR PM2.5 Rule. 
Two key issues described in greater detail below include the NSR 
PM2.5 litigation and interpollutant trading ratios for the 
NNSR program.
1. PM2.5 Implementation Rule(s) Litigation
    On January 4, 2013, the D.C. Circuit issued a judgment \9\ that 
remanded EPA's April 25, 2007 \10\ and May 16, 2008 PM2.5 
implementation rules implementing the 1997 PM2.5 NAAQS. See 
Natural Resources Defense Council v. EPA, 706 F.3d 428 (D.C. Cir. 
2013). The Court found that because the statutory definition of 
PM10 (see section 302(t) of the CAA) included particulate 
matter with an aerodynamic diameter less than or equal to 10 
micrometers, it necessarily includes PM2.5. EPA had 
developed the 2007 and 2008 (or NSR PM2.5 Rule) Rules 
consistent with the general NAA requirements of subpart 1 of Part D, 
title I, of the CAA. Relative to subpart 1, subpart 4 of Part D, title 
I includes additional provisions that apply to PM10 NAA and 
is more specific about what states must do to bring areas into 
attainment. In particular, subpart 4 includes section 189(e) of the 
CAA, which requires the control of major stationary sources of 
PM10 precursors (and hence under the court decision, 
PM2.5 precursors) ``except where the Administrator 
determines that such sources do not contribute significantly to 
PM10 levels which exceed the standard in the area.'' The 
court ordered EPA to repromulgate the implementation rules pursuant to 
subpart 4.
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    \9\ The Natural Resources Defense Council, Sierra Club, American 
Lung Association, and Medical Advocates for Healthy Air challenged 
before the D.C. Circuit EPA's April 25, 2007 Rule entitled ``Clean 
Air Fine Particle Implementation Rule'' (72 FR 20586), which 
established detailed implementation regulations to assist states 
with the development of SIPs to demonstrate attainment for the 1997 
annual and 24-hour PM2.5 NAAQS and the separate May 16, 
2008 NSR PM2.5 Rule (which is considered in this proposed 
rulemaking). This proposed rulemaking only pertains to the impacts 
of the Court's decision on the May 16, 2008 NSR PM2.5 
Rule and not the April 25, 2007 implementation rule as the State's 
May 2, 2011 SIP revision adopts the NSR permitting provisions 
established in the NSR PM2.5 Rule.
    \10\ This rule is entitled ``Clean Air Fine Particle 
Implementation Rule,'' Final Rule, 72 FR 20586 (hereafter referred 
to as the 2007 Rule).
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    On June 2, 2014, EPA published a final rule \11\ which, in part, 
set a December 31, 2014 deadline for states to make any remaining 
required attainment-related and NNSR SIP submissions, pursuant to and 
considering the application of subpart 4. See 79 FR 31566. Requirements 
under subpart 4 for a moderate NAA are generally comparable to subpart 
1, including: (1) CAA section 189(a)(1)(A) (NNSR permit program); (2) 
section 189(a)(1)(B) (attainment demonstration or demonstration that 
attainment by the applicable attainment date is impracticable); (3) 
section 189(a)(1)(C) (reasonably available control measures and 
reasonably available control technology (RACT); and (4) section 189(c) 
(reasonable further progress and quantitative milestones). The 
additional requirements pursuant to subpart 4 as opposed to subpart 1 
correspond to section 189(e) (precursor requirements for major 
stationary sources). Further additional SIP planning requirements are 
introduced by subpart 4 in the case that a moderate NAA is reclassified 
to a serious NAA, or in the event that the moderate NAA needs 
additional time to attain the NAAQS. The additional requirements under 
subpart 4 are not applicable for the purposes of CAA section 
107(d)(3)(E) in any area that has submitted a complete redesignation 
request prior to the due date for those requirements; therefore, EPA is 
not required to consider subpart 4 requirements for moderate NAA that 
have submitted a redesignation request prior to December 31, 2014. See 
79 FR at 31570.
---------------------------------------------------------------------------

    \11\ The rule is entitled ``Identification of Nonattainment 
Classification and Deadlines for Submission of State Implementation 
Plan (SIP) Provisions for the 1997 Fine Particle (PM2.5) 
National Ambient Air Quality Standard (NAAQS) and 2006 
PM2.5 NAAQS'', Final Rule, 79 FR 31566 (June 2, 2014). 
This final rule also identifies the initial classification of 
current 1997 and 2006 PM2.5 nonattainment areas as 
moderate and the EPA guidance and relevant rulemakings that are 
currently available regarding implementation of subpart 4 
requirements.
---------------------------------------------------------------------------

    Two areas were initially designated moderate nonattainment for the 
1997 annual PM2.5 NAAQS in Alabama: The Birmingham area and 
the Chattanooga multi-state area.\12\ On May 2, 2011, ADEM submitted a 
redesignation request for the Birmingham NAA for the 1997 annual 
PM2.5 NAAQS. This request was granted, and the area was 
redesignated on January 22, 2013. See 78 FR 4341. On December 22, 2014, 
the Jackson County, Alabama portion of the Chattanooga NAA was 
successfully redesignated to attainment for the 1997 PM2.5 
annual NAAQS based on an April 23, 2013 request for redesignation by 
ADEM.\13\ See 79 FR 76235. Because these counties in Alabama have been 
redesignated, Alabama has no other PM2.5 NAA for the annual 
1997 NAAQS, the 24-hour 1997 NAAQS, nor the 24-hour 2006 
PM2.5 NAAQS. Therefore, the additional NNSR SIP requirements 
pursuant to subpart 4 do not apply to the State.
---------------------------------------------------------------------------

    \12\ EPA designated the Birmingham multi-county area and 
Chattanooga TN-GA-AL area as nonattainment for the 1997 Annual 
PM2.5 NAAQS on January 5, 2005 (70 FR 944) as 
supplemented on April 14, 2005 (70 FR 19844).
    \13\ The Georgia portion of the Chattanooga TN-GA-AL 
nonattainment area for 1997 Annual PM2.5 NAAQS has been 
redesignated in the December 19, 2014 final rule (79 FR 75748). 
Tennessee submitted a redesignation request for the Tennessee 
portion of the Chattanooga TN-GA-AL NAA on November 11, 2014, but 
the redesignation has not yet been proposed.
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2. Interpollutant Trading Ratios
    The NSR PM2.5 Rule authorized states to adopt provisions 
in their NNSR rules that would allow major stationary sources and major 
modifications locating in areas designated nonattainment for 
PM2.5 to offset emissions increases of direct 
PM2.5 emissions or PM2.5 precursors with 
reductions of either direct PM2.5 emissions or 
PM2.5 precursors in accordance with offset ratios contained 
in the approved SIP for the applicable NAA. The inclusion, in whole or 
in part, of the interpollutant trading offset provisions for 
PM2.5 is discretionary on the part of the states. In the 
preamble to the NSR PM2.5 Rule, EPA included preferred 
offset ratios applicable to specific PM2.5 precursors that 
states may adopt in conjunction with the new interpollutant trading 
offset provisions for PM2.5, and for which the state could 
rely on the EPA's technical work to demonstrate the adequacy of the 
ratios for use in any PM2.5 NAA. Alternatively, the preamble 
indicated that states may adopt their own ratios, subject to the EPA's 
approval, that would have to be

[[Page 52706]]

substantiated by modeling or other technical demonstrations of the net 
air quality benefit for ambient PM2.5 concentrations.
    The preferred ratios were subsequently the subject of a petition 
for reconsideration which the EPA Administrator granted in 2009. As a 
result of the reconsideration, on July 21, 2011, EPA issued a 
memorandum entitled ``Revised Policy to Address Reconsideration of 
Interpollutant Trading Provisions for Fine Particles 
(PM2.5)'' (hereafter referred to as the ``Interpollutant 
Trading Memorandum''). The Interpollutant Trading Memorandum indicated 
that the existing preferred offset ratios are no longer considered 
presumptively approvable and that any precursor offset ratio submitted 
as part of the NSR SIP for a PM2.5 NAA must be accompanied 
by a technical demonstration showing the net air quality benefits of 
such ratio for the PM2.5 NAA in which it will be applied. 
Alabama's May 2, 2011, SIP revision adopts the interpollutant trading 
offset provisions, and originally adopted the preferred ratios included 
in the May 16, 2008, preamble. However, ADEM has since withdrawn these 
ratios in a letter dated October 9, 2014 (See Docket ID: EPA-R04-OAR-
2012-0079). EPA's analysis of Alabama's May 2, 2011, SIP revision 
regarding interpollutant trading is provided below in Section III.

E. PM2.5 PSD-Increment-SILs-SMC Rule

    The October 20, 2010, final rulemaking established the following: 
(1) PM2.5 increments pursuant to section 166(a) of the CAA 
to prevent significant deterioration of air quality in areas meeting 
the NAAQS; (2) PM2.5 SILs for PSD and NNSR; and (3) SMC for 
PSD purposes. See 75 FR 64864. EPA approved the provisions for 
PM2.5 PSD increments and SMC into the Alabama SIP on 
September 26, 2012 (77 FR 59100).\14\ Though ADEM had submitted 
PM2.5 SILs for PSD purposes, EPA did not take action on them 
in the September 26, 2012 rulemaking. Subsequently, in response to a 
challenge to the PM2.5 SILs and SMC provisions of the 
PM2.5 PSD-Increment-SILs-SMC Rule filed by the Sierra Club, 
the D.C. Circuit vacated and remanded to EPA for further consideration 
the portions of the rule addressing PM2.5 SILs, except for 
the PM2.5 SILs promulgated in EPA's NNSR rules at 40 CFR 
51.165(b)(2). See Sierra Club v. EPA, 705 F.3d 458, 469 (D.C. Cir. 
2013). The D.C. Circuit also vacated the parts of the rule establishing 
a PM2.5 SMC for PSD purposes. Id. EPA removed these vacated 
provisions in a December 9, 2013 final rule (78 FR 73693). In a letter 
dated October 9, 2014, ADEM withdrew the PM2.5 SILs set 
forth in Alabama's PSD regulations from EPA's consideration for 
incorporation into Alabama's SIP.
---------------------------------------------------------------------------

    \14\ Although the SMC provisions were approved into the Alabama 
SIP in a September 26, 2012, final rule (77 FR 59100), the January 
22, 2013, D.C. Circuit decision vacated the SMCs on the basis that 
EPA did not have the authority to use SMCs to exempt permit 
applicants from the statutory requirement in section 165(e)(2) of 
the CAA that ambient monitoring data for PM2.5 be 
included in all PSD permit applications. EPA accordingly removed the 
PM2.5 SMC of 4 [micro]g/m\3\ from federal PSD regulations 
on December 9, 2013 (See 78 FR 73693), and advised states to remove 
the PM2.5 provisions from their state PSD regulations and 
SIPs. For more information on states with approved SMC provisions in 
their SIPs, see the December 9, 2013, final rule.
---------------------------------------------------------------------------

    This action pertains only to the PM2.5 SILs promulgated 
in EPA's NNSR regulations at 40 CFR 51.165(b)(2), which were not 
vacated by the D.C. Circuit. Unlike the SILs promulgated in the PSD 
regulations (40 CFR 51.166, 52.21), the SILs promulgated in the NNSR 
regulations at 40 CFR 51.165(b)(2) do not serve to exempt a source from 
conducting a cumulative air quality analysis. Rather, the SILs 
promulgated at 40 CFR 51.165(b)(2) establish levels at which a proposed 
new major source or major modification locating in an area designated 
as attainment or unclassifiable for any NAAQS would be considered to 
cause or contribute to a violation of a NAAQS in any area. For this 
reason, the D.C. Circuit left the PM2.5 SILs at 40 CFR 
51.165(b)(2) in place, and EPA can consider ADEM's request that these 
SILs be approved as part of Alabama's NNSR program.

F. Fugitive Emissions Interim Rule

    On December 19, 2008, EPA issued a final rule revising the 
requirements of the NSR permitting program regarding the treatment of 
fugitive emissions. See ``Prevention of Significant Deterioration (PSD) 
and Nonattainment New Source Review (NSR): Reconsideration of Inclusion 
of Fugitive Emissions,'' Final Rule, 73 FR 77882 (the ``Fugitive 
Emissions Rule''). The final rule required fugitive emissions to be 
included in determining whether a physical or operational change 
results in a major modification only for sources in industries that 
have been designated through rulemaking under section 302(j) \15\ of 
the CAA. As a result of EPA granting the Natural Resource Defense 
Council's petition for reconsideration on the Fugitive Emissions Rule 
\16\ on March 31, 2010, EPA stayed the rule for 18 months to October 3, 
2011. The stay allowed the Agency time to propose, take comment and 
issue a final action regarding the inclusion of fugitive emissions in 
NSR applicability determinations. On March 30, 2011 (76 FR 17548), EPA 
proposed an interim rule (the ``Fugitive Emissions Interim Rule'') 
which superseded the March 31, 2010, stay and clarified and extended 
the stay of the Fugitive Emission Rule until EPA completes its 
reconsideration. The Fugitive Emissions Interim Rule simply reverts the 
CFR text back to the language that existed prior to the Fugitive 
Emissions Rule changes in the December 19, 2008, rulemaking. EPA plans 
to issue a final rule affirming the interim rule as final. The Fugitive 
Emissions Interim Rule will remain in effect until EPA completes its 
reconsideration.
---------------------------------------------------------------------------

    \15\ Pursuant to CAA section 302(j), examples of these industry 
sectors include oil refineries, Portland cement plants, and iron and 
steel mills.
    \16\ On April 24, 2009, EPA agreed to reconsider the approach to 
handling fugitive emissions and granted a 3-month administrative 
stay of the Fugitive Emissions Rule. The administrative stay of the 
Fugitive Emissions Rule became effective on September 30, 2009. EPA 
put an additional three-month stay in place from December 31, 2009, 
until March 31, 2010.
---------------------------------------------------------------------------

III. What is EPA's analysis of ADEM's SIP revision?

    Alabama currently has a SIP-approved NSR program for new and 
modified stationary sources found in ADEM regulations at Chapter 335-3-
14. ADEM's NNSR preconstruction regulations are found at Chapter 335-3-
14-.05, and apply to major stationary sources or modifications 
constructed in or impacting upon a nonattainment area as required under 
part D of title I of the CAA with respect to the NAAQS. The revisions 
to Chapter 335-3-14-.05 that EPA is now proposing to approve into the 
SIP were provided to update the existing provisions to be consistent 
with the current federal NNSR rules, including the WEPCO Rule, 2002 NSR 
Reform Rule (and associated Reconsideration Rule and Vacated Elements 
Rule), Phase 2 Rule, NSR PM2.5 Rule, PM2.5 PSD-
Increment-SILs-SMC Rule, and Fugitive Emissions Interim Rule. These 
changes to ADEM's regulations became state effective on May 23, 2011. 
EPA is proposing to approve the changes to Chapter 335-3-14-.05, with 
certain exceptions noted below, into Alabama's SIP to be consistent 
with federal NNSR regulations (at 40 CFR 51.165) and the CAA.

[[Page 52707]]

A. WEPCO Rule

    As stated in Section II, the WEPCO Rule made several changes to 
NNSR regulations located at 40 CFR 51.165. The definitions established 
in the WEPCO Rule that persist through the most recent CFR, including 
those for EGU, CCT, CCT demonstration project, temporary CCT 
demonstration project, and repowering are all included in the May 2, 
2011 ADEM SIP submittal at Chapter 335-3-14-.05. The SIP submittal also 
adopts exemptions for temporary CCT demonstration projects from NNSR 
requirements as promulgated in the WEPCO Rule. EPA has preliminarily 
determined that the May 2, 2011 submittal is consistent with the 
federal regulations for NNSR promulgated in the WEPCO Rule.

B. NSR Reform

    Some of the changes to Alabama's NNSR rules that EPA is now 
proposing to approve into the Alabama SIP were established to update 
Alabama's existing NNSR program to meet the requirements of the 2002 
NSR Reform Rule (and associated Reconsideration Rule and Vacated 
Elements Rule) and the 2007 Reasonable Possibility Rule (collectively, 
the ``NSR Reform Rules''). On May 1, 2008, EPA approved Alabama's June 
16, 2006, SIP submission to adopt PSD provisions consistent with the 
requirements of the NSR Reform Rules. See 73 FR 23957. Alabama's May 2, 
2011, SIP revision adopts NNSR changes pursuant to the NSR Reform Rules 
regarding the following definitions, revisions and provisions at 
Chapter 335-3-14 .05: Regulated NSR pollutant; major modification; net 
emissions increase; credit for increases and decreases in actual 
emissions; emissions unit; actual emissions; lowest achievable emission 
rate; construction; pollution prevention; significant emissions 
increase; projected actual emissions; major NNSR program; continuous 
emissions monitoring system; predictive emissions monitoring system; 
continuous parameter monitoring system; continuous emissions rate 
monitoring system; baseline actual emissions; project; best available 
control technology; federal land manager; PSD permit; NNSR 
applicability procedures; actual-to-projected-actual applicability 
tests; and PAL and recordkeeping provisions.
    As noted above, the submittal originally included an ``actual-to-
potential'' applicability test (ADEM Rule 335-3-14-.05(1)(h)) that was 
inconsistent with the federal rules at 40 CFR 51.165. However, on June 
5, 2015, ADEM submitted a letter to EPA formally withdrawing the 
``actual-to-potential'' applicability test from the May 2, 2011 SIP 
revision (See Docket No. EPA-R04-OAR-2012-0079). Therefore, this 
applicability test is no longer before EPA for consideration and will 
not be incorporated into Alabama's SIP.
    State agencies may meet the requirements of 40 CFR part 51, and the 
NSR Reform Rules, with different-but-equivalent regulations. More 
information on regulations developed by ADEM which are different-but-
equivalent to federal rules are included in Section III.G below. EPA 
has preliminarily determined that the proposed SIP revisions to adopt 
the NSR Reform Rules, including those which differ from the federal 
rule, are consistent with program requirements for the preparation, 
adoption and submittal of implementation plans for NNSR set forth at 40 
CFR 51.165, including the changes to the federal NNSR regulations 
promulgated in the NSR Reform Rules.

C. Phase 2 Rule

    The Phase 2 Rule established the NSR requirements needed to 
implement the 8-hour ozone NAAQS and made changes to federal NNSR 
regulations. Pursuant to these requirements, states were required to 
submit SIP revisions adopting the relevant federal requirements of the 
Phase 2 Rule (at 40 CFR 51.165 and 51.166) into their SIP no later than 
June 15, 2007.\17\ Alabama's May 2, 2011, SIP revision adopts the 
following relevant NNSR provisions promulgated in the Phase 2 Rule (at 
40 CFR 51.165) into the Alabama SIP at Chapter 335-3-14-.05 to be 
consistent with federal NNSR permitting regulations: (1) Thresholds to 
establish a major stationary source (as codified at 40 CFR 
51.165(a)(1)(iv)(A)(1)-(3); (2) provisions establishing that 
significant net increases for NOX are considered significant 
for ozone, and that significant emissions of ozone precursors include 
NOX (as codified at 40 CFR 51.165(a)(1)(v)(E) and 
(a)(1)(x)); (3) provisions that provide offset credits for shutting 
down or curtailing operation of existing sources (as codified at 40 CFR 
51.165(a)(3)(ii)(C)); (4) a provision establishing that the 
requirements applicable to major stationary sources and major 
modifications of VOC shall apply to NOX emissions from major 
stationary sources and major modifications of NOX in an 
ozone transport region or in any ozone nonattainment area (as codified 
at 40 CFR 51.165(a)(8)); and (5) a provision establishing that 
requirements applicable to major stationary sources and major 
modifications of PM10 shall apply to major stationary 
sources and major modifications of PM10 precursors (as 
codified at 40 CFR 51.165(a)(10)). EPA has preliminarily determined 
that the May 2, 2011 submittal is consistent with the federal NNSR 
regulations promulgated in the Phase 2 Rule.
---------------------------------------------------------------------------

    \17\ On June 21, 2006, Alabama submitted a SIP revision which 
adopted the PSD provisions established in the Phase 2 Rule (at 40 
CFR 51.166) recognizing NOX as an ozone precursor. EPA 
took final action to approve this SIP revision on May 1, 2008 (73 FR 
23957).
---------------------------------------------------------------------------

D. NSR PM2.5 Rule

    ADEM's May 2, 2011, SIP revision establishes that the State's 
existing NSR permitting program requirements for NNSR apply to the 
PM2.5 NAAQS and certain precursors. Specifically, the SIP 
revision adopts the following NSR PM2.5 Rule NNSR provisions 
into the Alabama SIP: (1) The requirement for NNSR permits to address 
directly emitted PM2.5 and precursor pollutants (e.g., 
SO2 and NOX, as codified at 40 CFR 
51.165(a)(1)(xxxvii)(C)); (2) the significant emission rates for direct 
PM2.5 and precursor pollutants (SO2 and 
NOX, as codified at 40 CFR 51.165(a)(1)(x)(A)); (3) 
clarification of the NNSR PM2.5 (and general criteria air 
pollutant) emission offsets (pursuant to 51.165(a)(9)); (4) the NNSR 
requirement that condensable PM10 and PM2.5 
emissions be accounted for in applicability determinations and emission 
limits for permitting (as codified at 40 CFR 51.165(a)(1)(xxxvii)(D)); 
and (5) the basic interpollutant trading policy for PM2.5 
precursors (as codified at 40 CFR 51.165(a)(11)). For the reasons 
discussed below, the EPA is proposing to approve these revisions into 
the Alabama SIP.
    ADEM's submission of revisions to its NNSR regulations at Chapter 
335-3-14-.05 identify SO2 as a PM2.5 precursor 
and NOX as a presumed PM2.5 precursor while VOCs 
and ammonia are presumed not to be PM2.5 precursors for a 
PM2.5 NAA. These revisions are consistent with the 2008 NSR 
PM2.5 Rule as developed pursuant to subpart 1 of the 
Act.\18\
---------------------------------------------------------------------------

    \18\ See Section II for a discussion of why the additional 
requirements of subpart 4 of the Act do not apply to Alabama's May 
2, 2011 SIP submittal for revisions to the NNSR program.
---------------------------------------------------------------------------

    Alabama's May 2, 2011, SIP revision originally adopted into the SIP 
at Chapter 335-3-14.05(3)(g) the elective interpollutant trading 
policy, set forth at 40 CFR 51.165(a)(11), and the preferred trading 
ratios, provided in the preamble to the NSR PM2.5 Rule, for 
the purpose of offsets under the PM2.5 NNSR

[[Page 52708]]

program. As established in EPA's July 21, 2011, Interpollutant Trading 
Memorandum, the preferred precursor trading ratios and technical 
demonstration included in the NSR PM2.5 Rule are no longer 
considered presumptively approvable. Therefore any precursor trading 
ratios submitted to EPA for approval, as part of the NSR SIP for a 
PM2.5 NAA must be accompanied by a technical demonstration 
showing the suitability of the ratios for that particular NAA. 
Consequently, prior to approving a request by a major stationary source 
or source with a major modification in Alabama to obtain offsets 
through interpollutant trading, the State of Alabama would first be 
required, pursuant to 51.165(a)(11), to revise its SIP to adopt 
appropriate trading ratios. ADEM would need to submit to EPA a 
technical demonstration showing how either the preferred ratios 
established in the NSR PM2.5 Rule or the State's own ratios 
are appropriate for the state's particular PM2.5 
nonattainment areas as well as a revision to the NSR program adopting 
the ratios into the SIP. EPA would then have to approve the 
demonstration and ratios into the Alabama SIP prior to any major 
stationary source or major modification obtaining offsets through the 
interpollutant trading policy.
    Alabama's May 2, 2011, SIP revision relied on EPA's technical 
demonstration in the NSR PM2.5 Rule for the preferred 
ratios, which, as explained above, the Agency has now deemed 
unapprovable. However, on October 9, 2014, ADEM submitted a letter to 
EPA formally withdrawing the offset ratios (or interpollutant trading 
ratios) from the May 2, 2011 SIP revision (See Docket No. EPA-R04-OAR-
2012-0079). Therefore, these ratios are no longer before EPA for 
consideration, while the interpollutant trading provisions themselves 
remain before EPA. The Agency continues to support the basic policy 
that sources may offset increases in emissions of direct 
PM2.5 or of any PM2.5 precursor in a 
PM2.5 NAA with actual emissions reductions in direct 
PM2.5 or PM2.5 precursor, respectively, in 
accordance with offset ratios as approved in the SIP for the applicable 
NAA. Alabama's adoption of the interpollutant trading policy without 
trading ratios does not in any way allow a new major stationary source 
or major modification in the state to obtain offsets through 
interpollutant trading, nor does it affect the approvability of ADEM's 
May 2, 2011, SIP revision. EPA has preliminarily determined that the 
May 2, 2011 submittal is consistent with the federal regulations for 
NNSR promulgated in the NSR PM2.5 Rule.

E. PM2.5 PSD-Increment-SILs-SMC Rule

    The only portion of the October 20, 2010, PM2.5 PSD-
Increment-SILs-SMC Rule concerning NNSR considered for this proposed 
rulemaking is the table modified to include SILs for PM2.5, 
promulgated at 40 CFR 51.165(b)(2). See 75 FR 64864. As discussed 
above, these SILs are used to determine whether a new major stationary 
source or major modification that would be located in an area 
designated as in attainment or unclassifiable would cause or contribute 
to a NAAQS violation in any locality. These SILs were not affected by 
Sierra Club v. EPA, 705 F.3d at 458, which addressed PSD SILs that 
served to exempt a source from conducting a cumulative air quality 
analysis. Accordingly, Alabama's May 2, 2011 submittal revises the 
definition of ``Significant Impact'' at ADEM Rule 335-3-14.05(2)(aaa) 
to incorporate the PM2.5 SILs from 40 CFR 51.165(b)(2). An 
additional revision to ADEM Rule 335-3-14-.05(2)(aaa)--unrelated to the 
PM2.5 PSD-Increment-SILs-SMC Rule--eliminates the annual 
PM10 SIL of 1 [micro]g/m\3\, which had previously been 
approved into the Alabama SIP. However, the annual PM10 SIL 
of 1 [micro]g/m\3\ is separately included in ADEM Rule 335-3-
14-.03(1)(g), ``Standards for Granting Permits.'' ADEM Rule 335-3-
14-.03(1)(g) incorporates the requirements of 40 CFR 51.165(b) and has 
been approved by EPA as part of Alabama's SIP. 77 FR 59101, 59105 
(Sept. 26, 2012) (identifying ADEM Rule 335-3-14-.03, State effective 
date May 23, 2011, as part of Alabama's SIP). Therefore, the removal of 
the annual PM10 SIL from ADEM Rule 335-3-14.05(2)(aaa) does 
not interfere with Alabama's compliance with 40 CFR 51.165(b). EPA 
proposes to approve the aforementioned revisions to the SILs in ADEM's 
May 2, 2011 SIP submittal.

F. Fugitive Emissions Interim Rule

    Due to the March 30, 2011, Fugitive Emissions Interim Rule (See 76 
FR 17548), the CFR has been converted back to the language that existed 
prior to the Fugitive Emissions Rule changes in the December 19, 2008, 
rulemaking. Many of the affected rules are entirely new to the ADEM 
NNSR Chapter. For example, the definition of fugitive emissions (40 CFR 
51.165(a)(ix)) is added, not revised, at Chapter 335-3-14-.05(2)(t). 
Alabama's May 2, 2011, SIP submittal, having been submitted after the 
Fugitive Emissions Interim Rule, adopts revisions regarding fugitive 
emissions that are mostly consistent with the current CFR. One 
provision included in the May 2, 2011, submittal at ADEM Rule 335-3-
14-.05(2)(c)3, regarding the exclusion of fugitive emissions from the 
determination of creditable emission increases and decreases in the 
definition of ``net emissions increase,'' was stayed indefinitely in 
the Fugitive Emissions Interim Rule. Therefore, EPA is proposing to 
approve Alabama's adoption of regulations affecting fugitive emissions 
at ADEM Rule 335-3-14-.05, except the provision at ADEM Rule 335-3-
14-.05(2)(c)3. For more background on the Fugitive Emissions Interim 
Rule, see Section II above, or the March 30, 2011, rulemaking.

G. Different-but-Equivalent Regulations

    Alabama currently has a SIP-approved nonattainment NSR program for 
new and modified stationary sources. EPA is now proposing to approve 
revisions to Alabama's existing NNSR program in the SIP. State agencies 
may meet the requirements of 40 CFR part 51, including the changes made 
by the NSR Reform Rules, with different-but-equivalent regulations. The 
May 2, 2011, submission to revise the Alabama SIP contains several 
rules that EPA has determined are different-but-equivalent regulations. 
The Agency's analysis for each of these items is included below.
1. ``Reasonable Possibility'' Provisions
    The ``reasonable possibility'' standard identifies, for sources and 
reviewing authorities, the circumstances under which a major stationary 
source undergoing a physical or operational change that is not 
projected to result in an emissions increase above NSR applicability 
thresholds must keep post-change emissions records. EPA's December 2007 
action clarified the meaning of the term ``reasonable possibility'' 
through changes to the federal rule language in 40 CFR parts 51 and 52. 
EPA's December 2007 rule also acknowledged that State and local 
authorities may adopt or maintain NSR program elements that have the 
effect of making their regulations more stringent than the federal 
rules and instructed those State and local authorities to submit notice 
to EPA to acknowledge that their regulations fulfill the requirements 
of the federal regulations. Unlike the federal rules, which only 
require those projects that have a reasonable possibility that the 
project may result in a significant emissions increase to keep records, 
ADEM's rules require all projects that use the actual-to-projected-
actual applicability test to keep records. Therefore, all projects 
undergo agency review. If ADEM

[[Page 52709]]

determines that there is a reasonable possibility that the project may 
result in a significant emissions increase, then the owner or operator 
must submit those records to the Director, must monitor and maintain a 
record of annual emissions for 5 years (or 10 years depending upon the 
specific circumstances), and must submit annual reports. These 
recordkeeping, monitoring, and reporting requirements apply to all 
facilities--EGUs and non-EGUs. Although the changes to the reasonable 
possibility provisions identified above are different than the federal 
rules, ADEM's approach is at least as stringent as the federal rules 
and is approvable.
2. PAL Provisions
    Alabama's actuals PAL provisions in ADEM Rule 335-3-14-.05(23) 
differ from the federal regulations in several ways. First, at 
subparagraph (23)(a)2., ADEM omitted the provision which allows 
facilities utilizing a PAL to remove previously set emissions 
limitations that the major stationary source used to avoid NNSR program 
applicability. Similarly, at subparagraph (23)(i)5., ADEM added the 
provision that sources must comply with any State or federal applicable 
requirements that may have applied during the PAL effective period, 
including those emission limitations that the source used to avoid NNSR 
applicability. According to Alabama's submittal, it is ADEM's intent 
that previously set limits (e.g., BACT, RACT, NSPS, synthetic minor 
limit, etc.) remain intact during the PAL effective period and after 
its expiration. EPA concludes that ADEM's approach in these regulatory 
provisions is at least as stringent as the federal regulations and 
therefore is approvable.
    ADEM's method of setting a PAL at subparagraph (23)(f) also differs 
slightly from the federal rules. The federal rules state at 40 CFR 
51.165(f)(6)(ii) that emissions from units on which actual construction 
began after the 24-month period chosen for setting the PAL ``must be 
added to the PAL level in an amount equal to the potential to emit of 
the units.'' ADEM's rule differs in that it limits inclusion of 
emissions based on a unit's potential to emit to only those units that 
began operation less than 24 months prior to the submittal of the PAL 
application. Under ADEM's rule, baseline actual emissions from units on 
which actual construction began after the beginning of the 24-month 
period and that commenced operation 24 months or more prior to the 
submittal of the PAL application must be added to the PAL based upon 
actual emissions during any 24-month period since the unit commenced 
operation. According to Alabama's SIP submittal, it is ADEM's intent 
that the PAL be based upon true actual emissions, and ADEM considers 
units that have been operating more than 24 months to be existing units 
that should be included in the PAL based on their actual emissions 
rather than their potential to emit. EPA concludes that ADEM's approach 
to this provision is at least as stringent as the federal regulations 
and is therefore approvable.
    At subparagraph (23)(n)1., ADEM has omitted the requirement in the 
federal regulations to submit a semi-annual report within 30 days of 
the end of the PAL reporting period. Because the facility's title V 
permit would require these reports to be submitted, its inclusion in 
the NNSR regulations is not necessary. EPA's concludes that ADEM's 
approach to PAL reporting requirements is at least as stringent as the 
federal rules and is approvable.
    Finally, Alabama's PAL rules differ from the federal rules in that 
they do not expressly state that a PAL permit must require that 
emissions calculations for PAL compliance purposes include 
``malfunction'' emissions. Compare ADEM Rule 335-3-14-.05(23)(g)4 to 40 
CFR 51.165(f)(7)(iv). However, EPA does not read Alabama's rules as 
authorizing sources to exclude malfunction emissions from PAL 
compliance calculations. Rather, consistent with 40 CFR 
51.165(f)(7)(iv), EPA interprets Alabama's rules to mean that startup 
and shutdown emissions must be included in emission calculations for 
PAL compliance purposes in addition to emissions that occur during 
normal operations and malfunctions. EPA Region 4 and ADEM discussed 
this issue via conference call on January 27, 2015. ADEM agreed with 
this interpretation of ADEM Rule 335-3-14-.05(23)(g)4 during the call 
and confirmed that ADEM would require sources to include malfunction 
emissions in emission calculations for PAL compliance purposes, just as 
compliance is determined with respect to other enforceable limits. In a 
document attached to an email dated February 3, 2015, ADEM provided 
written clarification of several items as a follow-up to the January 
27, 2015 conference call, including the treatment of malfunction 
emissions in nonattainment PALs. A memo summarizing the call and ADEM's 
February 3, 2015 email and attachment are in the Docket for this 
proposed rulemaking. Therefore, EPA concludes that while the wording of 
ADEM Rule 335-3-14-.05(23)(g)4 differs from the federal rule, ADEM's 
approach is at least as stringent as the federal rules and is 
approvable.
3. Emissions Associated With Malfunctions
    One notable difference from the federal rules is that the Alabama 
rules do not contain provisions accounting for ``malfunction'' 
emissions in the calculation of ``baseline actual emissions'' and 
``projected actual emissions'' (ADEM Rule 334-3-14-.05(2)(nn) and 
(uu)). Alabama states that it will rely only on quantifiable emissions 
that can be verified so as to provide a more accurate estimation of the 
emissions increases associated with a project. Because Alabama will be 
consistently applying this approach for both ``projected actual 
emissions'' and ``baseline actual emissions'' and because this approach 
will not prevent malfunctions from being considered as exceedances of 
applicable standards, EPA has determined that this difference does not 
make Alabama's NNSR program less stringent than the federal program.

IV. Incorporation by Reference

    In this action, EPA is proposing to include in a final EPA rule 
regulatory text that includes incorporation by reference. In accordance 
with requirements of 1 CFR 51.5, EPA is proposing to incorporate by 
reference portions of ADEM Regulation Chapter 335-3-14-.05 entitled 
``Air Permits Authorizing Construction in or Near Non-Attainment 
Areas,'' effective May 23, 2011, with revisions and additions to 
applicability, definitions, permitting requirements, offset rules, area 
classifications, air quality models, control technology review, air 
quality monitoring, source information, source obligation, innovative 
control technology, and actuals PALs, and with administrative changes 
throughout. EPA has made, and will continue to make, these documents 
generally available electronically through www.regulations.gov and/or 
in hard copy at the appropriate EPA office (see the ADDRESSES section 
of this preamble for more information).

V. Proposed Action

    EPA is proposing to approve the portion of Alabama's May 2, 2011 
submission that makes changes to Alabama's SIP-approved NNSR 
regulations set forth at ADEM Rule 335-3-14-.05, with the exceptions 
noted above. ADEM submitted the proposed changes to its NNSR SIP to be 
consistent with amendments to the federal regulations made by the WEPCO 
Rule, the 2002 NSR Reform Rule (and

[[Page 52710]]

associated Reconsideration Rule and Vacated Elements Rule), Phase 2 
Rule, NSR PM2.5 Rule, PM2.5 PSD Increment-SILs-
SMC Rule, and the Fugitive Emissions Interim Rule. The Agency has made 
the preliminary determination that the proposed changes to Alabama's 
NNSR SIP are approvable because they are consistent with section 110 of 
the CAA and EPA regulations.

VI. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP 
submission that complies with the provisions of the Act and applicable 
Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in 
reviewing SIP submissions, EPA's role is to approve state choices, 
provided that they meet the criteria of the CAA. Accordingly, this 
proposed action merely approves state law as meeting Federal 
requirements and does not impose additional requirements beyond those 
imposed by state law. For that reason, this proposed action:
     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Orders 
12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 
2011);
     does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
     does not contain any unfunded mandate or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4);
     does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
     is not subject to requirements of Section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the Clean Air Act; and
     does not provide EPA with the discretionary authority to 
address, as appropriate, disproportionate human health or environmental 
effects, using practicable and legally permissible methods, under 
Executive Order 12898 (59 FR 7629, February 16, 1994).
    The SIP is not approved to apply on any Indian reservation land or 
in any other area where EPA or an Indian tribe has demonstrated that a 
tribe has jurisdiction. In those areas of Indian country, the rule does 
not have tribal implications as specified by Executive Order 13175 (65 
FR 67249, November 9, 2000), nor will it impose substantial direct 
costs on tribal governments or preempt tribal law.

List of Subjects in 40 CFR Part 52

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

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

    Dated: August 20, 2015.
Heather McTeer Toney,
Regional Administrator, Region 4.
[FR Doc. 2015-21537 Filed 8-31-15; 8:45 am]
 BILLING CODE 6560-50-P