Implementation of the New Source Review

(NSR)  Program for Particulate Matter Less

Than 2.5 Micrometers in Diameter (PM2.5)

Response to Comments 

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

Response to Comments

New Source Review Group

Air Quality Policy Division

Office of Air Quality Policy and Standards

U. S. Environmental Protection Agency

Research Triangle Park, NC  27711

March 2008TABLE OF CONTENTS

  TOC \o "1-3" \h \z \u    HYPERLINK \l "_Toc198031117"  LIST OF
ACRONYMS AND ABBREVIATIONS	  PAGEREF _Toc198031117 \h  iii  

  HYPERLINK \l "_Toc198031118"  LIST OF UNITS	  PAGEREF _Toc198031118 \h
 iv  

  HYPERLINK \l "_Toc198031119"  1	Introduction	  PAGEREF _Toc198031119
\h  1  

  HYPERLINK \l "_Toc198031120"  1.1	Background	  PAGEREF _Toc198031120
\h  1  

  HYPERLINK \l "_Toc198031121"  1.2	The Commenters	  PAGEREF
_Toc198031121 \h  1  

  HYPERLINK \l "_Toc198031122"  1.3	Organization of This Document	 
PAGEREF _Toc198031122 \h  1  

  HYPERLINK \l "_Toc198031123"  2	Comments on the Regulation of
Precursors to PM2.5 under Major NSR	  PAGEREF _Toc198031123 \h  6  

  HYPERLINK \l "_Toc198031124"  2.1	General Comments on the Regulation
of Precursors	  PAGEREF _Toc198031124 \h  6  

  HYPERLINK \l "_Toc198031125"  2.2	Comments on EPA’s Authority to
Regulate PM2.5 Precursors	  PAGEREF _Toc198031125 \h  7  

  HYPERLINK \l "_Toc198031126"  2.3	Comments Specific to Regulating SO2
as a Precursor	  PAGEREF _Toc198031126 \h  12  

  HYPERLINK \l "_Toc198031127"  2.4	Comments Specific to Regulating NOx
as a Presumed-in Precursor	  PAGEREF _Toc198031127 \h  13  

  HYPERLINK \l "_Toc198031128"  2.5	Comments Specific to Regulating VOC
as a Presumed-out Precursor	  PAGEREF _Toc198031128 \h  16  

  HYPERLINK \l "_Toc198031129"  2.6	Comments Specific to Regulating
Ammonia as a Presumed-out Precursor	  PAGEREF _Toc198031129 \h  18  

  HYPERLINK \l "_Toc198031130"  2.7	Other Comments on Precursors	 
PAGEREF _Toc198031130 \h  21  

  HYPERLINK \l "_Toc198031131"  3	Comments on Major Source Thresholds
for Direct PM2.5 and Precursor Emissions under Major NSR	  PAGEREF
_Toc198031131 \h  22  

  HYPERLINK \l "_Toc198031132"  3.1	Comments on EPA’s Authority to
Deviate from the Statutory Definitions of Major Source	  PAGEREF
_Toc198031132 \h  22  

  HYPERLINK \l "_Toc198031133"  3.1.1	Definition of Major Source for the
PSD Program	  PAGEREF _Toc198031133 \h  22  

  HYPERLINK \l "_Toc198031134"  3.1.2	Definition of Major Source for the
NA NSR Program	  PAGEREF _Toc198031134 \h  23  

  HYPERLINK \l "_Toc198031135"  3.2	Comments on the Appropriate Major
Source Thresholds for Direct PM2.5 Emissions	  PAGEREF _Toc198031135 \h 
27  

  HYPERLINK \l "_Toc198031136"  3.2.1	Prevention of Significant
Deterioration Major Source Threshold	  PAGEREF _Toc198031136 \h  27  

  HYPERLINK \l "_Toc198031137"  3.2.2	Nonattainment NSR Major Source
Threshold	  PAGEREF _Toc198031137 \h  28  

  HYPERLINK \l "_Toc198031138"  3.2.3	Comments on Relationship of the
NSR Major Source Threshold to RACT Thresholds	  PAGEREF _Toc198031138 \h
 34  

  HYPERLINK \l "_Toc198031139"  3.3	Comments on the Appropriate Major
Source Thresholds for Precursor Emissions	  PAGEREF _Toc198031139 \h  35
 

  HYPERLINK \l "_Toc198031140"  3.4	Comments on the Supplementary Role
of Minor NSR	  PAGEREF _Toc198031140 \h  35  

  HYPERLINK \l "_Toc198031141"  3.5	Comments on Establishing Independent
Thresholds for LAER and Offsets	  PAGEREF _Toc198031141 \h  37  

  HYPERLINK \l "_Toc198031142"  3.6	Other Comments on Major Source
Thresholds	  PAGEREF _Toc198031142 \h  38  

  HYPERLINK \l "_Toc198031143"  4	Comments on Significant Emissions
Rates (SERs) for Direct PM2.5 and Precursor Emissions	  PAGEREF
_Toc198031143 \h  39  

  HYPERLINK \l "_Toc198031144"  4.1	Comments on the SER for Direct PM2.5
Emissions	  PAGEREF _Toc198031144 \h  39  

  HYPERLINK \l "_Toc198031145"  4.2	Comments on the SERs for PM2.5
Precursors (SO2, NOx, and VOC)	  PAGEREF _Toc198031145 \h  44  

  HYPERLINK \l "_Toc198031146"  4.3	Comments on the SER for Ammonia as a
PM2.5 Precursor	  PAGEREF _Toc198031146 \h  47  

  HYPERLINK \l "_Toc198031147"  5	Comments on Including the Condensable
Fraction of Direct PM2.5 Emissions for Purposes of Major NSR	  PAGEREF
_Toc198031147 \h  48  

  HYPERLINK \l "_Toc198031148"  6	Comments on PM2.5 Increments,
Significant Impact Levels (SILs), and Significant Monitoring
Concentration (SMC)	  PAGEREF _Toc198031148 \h  53  

  HYPERLINK \l "_Toc198031149"  7	Comments on PSD Pre-Construction
Monitoring (PCM) Requirements for PM2.5	  PAGEREF _Toc198031149 \h  54  

  HYPERLINK \l "_Toc198031150"  7.1	Option 1 – Require PCM but Allow
Use of Existing Data on a Case-By-Case Basis	  PAGEREF _Toc198031150 \h 
54  

  HYPERLINK \l "_Toc198031151"  7.2	Option 2 – Exempt All Sources from
PCM	  PAGEREF _Toc198031151 \h  56  

  HYPERLINK \l "_Toc198031152"  7.3	Option 3 – Use an SMC to Exempt
Sources from PMC	  PAGEREF _Toc198031152 \h  58  

  HYPERLINK \l "_Toc198031153"  7.4	Option 4 – Use Existing PM10 Data	
 PAGEREF _Toc198031153 \h  59  

  HYPERLINK \l "_Toc198031154"  7.5	Option 5 – Exempt Sources from PCM
if No SMC Is Established	  PAGEREF _Toc198031154 \h  60  

  HYPERLINK \l "_Toc198031155"  7.6	Other Comments on PCM	  PAGEREF
_Toc198031155 \h  61  

  HYPERLINK \l "_Toc198031156"  8	Comments on Offset Requirements for NA
NSR	  PAGEREF _Toc198031156 \h  62  

  HYPERLINK \l "_Toc198031157"  8.1	Comments on the Proposed 1:1 Offset
Ratio for PM2.5 Direct Emissions	  PAGEREF _Toc198031157 \h  62  

  HYPERLINK \l "_Toc198031158"  8.2	Comments on Which Precursors Should
Be Subject to the Offset Requirements	  PAGEREF _Toc198031158 \h  65  

  HYPERLINK \l "_Toc198031159"  8.3	Comments on the Offset Ratio for
Precursors	  PAGEREF _Toc198031159 \h  65  

  HYPERLINK \l "_Toc198031160"  8.4	Comments on Interpollutant and
Interprecursor Trading for Offsets	  PAGEREF _Toc198031160 \h  67  

  HYPERLINK \l "_Toc198031161"  8.5	Other Comments on Offsets	  PAGEREF
_Toc198031161 \h  74  

  HYPERLINK \l "_Toc198031162"  9	Comments on Transition Issues	 
PAGEREF _Toc198031162 \h  76  

  HYPERLINK \l "_Toc198031163"  9.1	Comments on PSD Transition Issues	 
PAGEREF _Toc198031163 \h  76  

  HYPERLINK \l "_Toc198031164"  9.1.1	Option 1 – Continue Implementing
the 1997 Guidance to Use the PM10 Program as a Surrogate for PM2.5	 
PAGEREF _Toc198031164 \h  76  

  HYPERLINK \l "_Toc198031165"  9.1.2	Option 2 – Update the 1997 NSR
Guidance to Include Proposed Provisions of this Rule or Amend 40 CFR
Part 51, Appendix S to Indicate that 40 CFR 52.21 Would Apply	  PAGEREF
_Toc198031165 \h  78  

  HYPERLINK \l "_Toc198031166"  9.1.3	Option 3 – State Requests
Delegation of 40 CFR 52.21	  PAGEREF _Toc198031166 \h  80  

  HYPERLINK \l "_Toc198031167"  9.1.4	Other PSD Transition Comments	 
PAGEREF _Toc198031167 \h  81  

  HYPERLINK \l "_Toc198031168"  9.2	Comments on NA NSR Transition Issues
  PAGEREF _Toc198031168 \h  83  

  HYPERLINK \l "_Toc198031169"  9.3	Comments on NSR Transition for PM2.5
Precursors	  PAGEREF _Toc198031169 \h  85  

  HYPERLINK \l "_Toc198031170"  9.4	Other Comments on NSR Transition	 
PAGEREF _Toc198031170 \h  87  

  HYPERLINK \l "_Toc198031171"  10	Comments on Minor NSR Programs for
PM2.5	  PAGEREF _Toc198031171 \h  89  

  HYPERLINK \l "_Toc198031172"  11	Other Comments on Major NSR for PM2.5
  PAGEREF _Toc198031172 \h  90  

 

LIST OF ACRONYMS AND ABBREVIATIONS



Act	Clean Air Act (42 U.S.C. 7401 - 7671q)

BACT	Best Available Control Technology

CAA	Clean Air Act (42 U.S.C. 7401 - 7671q)

CAIR	Clean Air Interstate Rule

CFR	Code of Federal Regulations

CMAQ	Community Multi-Scale Air Quality 

CTM	Conditional Test Method

D.C. Cir. 	D.C. Circuit Court of Appeals

ERC	Emission Reduction Credit

FR	Federal Register

LAER	Lowest Achievable Emission Rate

NAAQS	National Ambient Air Quality Standards 

NACAA	National Association of Clean Air Agencies

NA NSR	Nonattainment Major New Source Review

NOx	Nitrogen Oxides

NSR	New Source Review

PCM	Pre-Construction Monitoring 

PM	Particulate Matter

PM10	Particulate Matter with an aerodynamic diameter less than or equal
to a nominal 10 (m

PM2.5	Particulate Matter with an aerodynamic diameter less than or equal
to a nominal 2.5 (m

PSD	Prevention of Significant Deterioration

PTE	Potential To Emit

RACT	Reasonably Available Control Technology

RFP	Reasonable Further Progress

SER	Significant Emissions Rate

SIL	Significant Impact Level

SIP	State Implementation Plan

SMC	Significant Monitoring Concentration

SNCR	Selective Non-Catalytic Reduction 

SO2	Sulfur Dioxide

SOA	Secondary Organic Aerosol

TSP	Total Suspended Particulate 

U.S.C.	United States Code

VOC	Volatile Organic Compound



LIST OF UNITS



tpy	Tons per year

(m	Micrometer (one-millionth of a meter)

(g/m3	Microgram per cubic meter

Introduction	

Background 

“Particulate matter” (PM) is the general term used to describe a
mixture of solid particles and liquid droplets found in air.  The term
“PM2.5” describes “fine particles” that are less than or equal
to 2.5 micrometers ((m) in diameter.

In 1997, EPA (we) set National Ambient Air Quality Standards (NAAQS) for
PM2.5.  After delays related to litigation over the NAAQS, we issued the
“Proposed Rule to Implement the Fine Particle National Ambient Air
Quality Standards” (70 FR 65984) on November 1, 2005.  The proposal
package included a preamble section describing our proposal (and
proposed options) for revising the major New Source Review (NSR) program
to address PM2.5, as well as proposed revisions to the major NSR rules.

After proposal, we decided to separate the elements of the rulemaking
related to major NSR from the rest of the PM2.5 implementation rule. 
The non-NSR portions of the rulemaking were finalized on April 25, 2007
in the “Clean Air Fine Particle Implementation Rule” (72 FR 20586).

This document presents a summary of the public comments related to NSR
that we received on the November 1, 2005 proposal, along with our
responses to those comments.  The document supports the “Final Rule
for Implementation of the New Source Review (NSR) Program for
Particulate Matter Less Than 2.5 Micrometers (PM2.5).”  We refer to
this rulemaking as the “PM2.5 NSR Implementation Rule” in the
remainder of this document.

The Commenters  

The public comment period ended on January 31, 2006, and we received a
total of 46 unique comments (i.e., not including duplicates) specific
to the NSR program revisions.  The NSR commenters can be broken down by
general type as follows: 24 state/local regulatory agencies or
regulatory agency associations, 16 industry or industry group
commenters, 3 environmental advocacy groups, 2 Federal government
agencies, and 1 private citizen.  The commenters are listed in Table 1,
which appears at the end of this section.  

Organization of This Document

After this introductory section, this document is divided into 10
additional sections that group the comments primarily by the major
topics addressed in the proposal preamble.  The sections address the
following topics: 

     Section 2 – PM2.5 Precursors.

     Section 3 – Major Source Thresholds.

     Section 4 – Significant Emissions Rates (SERs). 

     Section 5 – Condensable Fraction. 

     Section 6 – PM2.5 Increments, Significant Impact Levels
(SILs), and Significant Monitoring Concentration (SMC). 

     Section 7 – Prevention of Significant Deterioration (PSD)
Pre-Construction   Monitoring (PCM) Requirements. 

     Section 8 – Offset Requirements for Nonattainment Major
NSR (NA NSR). 

     Section 9 – Transition Issues.

     Section 10 – Minor NSR Programs for PM2.5. 

     Section 11 – Additional PM2.5 Comments.



	Table 1.  List of Commenters

	DOCKET ID a, b 	COMMENT DESCRIPTION	TYPE OF COMMENTER

0062	Comment submitted by S. Bear 	Private Citizen

0068	Comment submitted by Christine Shaver, Chief, Air Resources
Division, U.S. Department of the Interior National Park Service	Federal
Agency

0074	Comment and attachment submitted by John McManus, Vice President of
Environmental Services, American Electric Power Service Corporation
Industry

0077	Comment and attachment submitted by Ali Mirzakhalili, P.E.,
Administrator, State of Delaware, Department of Natural Resources and
Environmental Control - Air Quality Management Section	State/Local

0078 

(Duplicate of 0077)	Comment and attachment submitted by Ali
Mirzakhalili, Administrator, State of Delaware, Department of Natural
Resources & Environmental Control, Division of Air and Waste Management
State/Local



0079	Comment and attachment submitted by J. David Thornton, Minnesota
Pollution Control Agency	State/Local

0080	Comment and attachment submitted by Regional Air Pollution Control
Agency	State/Local

0081 	Comment and attachment submitted by Kathleen McGinty, Secretary,
Pennsylvania Department of Environmental Protection	State/Local

0083	Comment and attachment submitted by Terrance Rucker, Assistant,
Broadband Services, American Public Power Association (APPA)	Industry

0084	Comment and attachment submitted by Anne R. Gobin, Chief, Bureau of
Air Management, the Connecticut Department of Environmental Protection
(CTDEP)	State/Local

0087	Comment and attachment submitted by Steven E. Chester, Director,
Michigan Department of Environmental Quality (MDEQ)	State/Local

0095	Comment and attachment submitted by Timothy P. Mallan Chairman, Air
Subcommittee, Environment Committee, West Virginia Chamber of Commerce 
Industry 

0096	Comment and attachment submitted by The PM Group	Industry

0100	Comment and attachment submitted by Robert D. Bessette, President,
The Council of Industrial Boiler Owners (CIBO)	Industry 

0103	Comment and attachment submitted by Joanne M. Alexandrovich,
Vanderburgh County Ozone Officer, Vanderburgh County Department of
Health	State/Local

0105	Comment and attachment submitted by Norbert Dee, Director,
Environment & Safety, National Petrochemical & Refiners Association
Industry

0106	Comment and attachment submitted by Marily Nixon, Senior Attorney,
Southern Environmental Law Center	Environmental 

0107	Comment and attachment submitted by Ted Michaels, President,
Integrated Waste Services Association	Industry

0108

(Duplicate of 0154)	Comment and attachment submitted by Jonathan Lewis,
Clean Air Task Force on behalf of American Bottom Conservancy et.al
Environmental

0109	Comment and attachment submitted by Leslie S. Ritts, Counsel,
National Environmental Development Association's Clean Air Project
(NEDA/CAP)	Industry

0111	Comment and attachment submitted by Robert M. Nolan, ExxonMobil
Industry

0113	Comment and attachment submitted by Brent Newell, Staff Attorney,
Center on Race, Poverty, & the Environment on behalf of the Association
of Irritated Residents (AIR)	Environmental

0116	Comment and attachment submitted by Richard Sprott, State of Utah,
Department of Environmental Quality, Division of Air Quality	State/Local

0117	Comment and attachment submitted by Laurel L. Kroack, Chief, Bureau
of Air, Illinois Environmental Protection Agency	State/Local

0118

(Duplicate of 0159)	Comment and attachment submitted by Marc D. Machlin,
Attorney, Pepper Hamilton LLP, on behalf of Oakland County, Michigan
State/Local 

0119	Comment and attachment submitted by Douglas A. McWilliams, Counsel,
Squire Sanders & Dempsey LLP, on behalf of Ohio Steel Group	Industry

0124	Comment submitted by Tom Chapple, Director, Alaska Department of
Environmental Conservation (ADEC)	State/Local

0125	Comment and attachment submitted by Leonard Dupuis, Manager,
Environmental Policy, Dominion	Industry

0126	Comment submitted by Mark Dopp. Senior Vice President, Regulatory
Affairs and General Counsel, American Meat Institute (AMI)	Industry 

0127	Comment and attachment submitted by American Petroleum Institute
(API)	Industry

0131	Comment attachment submitted by James D. Warner, Executive
Director, Lancaster County Solid Waste Management (LCSWMA)	Industry
(publicly owned)

0136	Comment and attachment submitted by Eddie Terrill, President,
STAPPA and John A. Paul, President, ALAPCO	State/Local

0137	Comment and attachment submitted by Stuart A. Clark, Air Quality
Program, State of Washington Department of Ecology	State/Local

0140	Comment submitted by Amy J. Blankenbiller, Washington
Representative, American Foundry Society (AFS)	Industry

0142	Comment submitted by Lisa P. Jackson, Acting Commissioner, State of
New Jersey Department of Environmental Protection	State/Local

0144	Comment submitted by Barry R. Wallerstein, Executive Officer, South
Coast Air Quality Management District (SCAQMD)	State/Local

0145	Comment submitted by B. Keith Overcash, P.E., North Carolina
Department of Environment and Natural Resources Division of Air Quality
State/Local

0147

(Duplicate of 0095)	Comment submitted by Timothy P. Mallan, Chairman,
Air SubCommittee, Environment Committee, West Virginia chamber of
Commerce	Industry 

0150	Comment and attachment submitted by Kendl P. Philbrick, Secretary,
Maryland Department of the Environment (MDE)	State/Local

0151	Comment submitted by Ron Heavner, Natural Resources Conservation
Service, United States Department of Agriculture (USDA/NRCS)	Federal
Agency

0152 (Duplicate of 0154)	Comment submitted by Clean Air Task Force,
Earthjustice and Environmental Defense on behalf of American Bottom
Conservancy	Environmental 

0153	Comment submitted by James L. Kavanaugh, Director, State of
Missouri Department of Natural Resources 	State/Local

0154	Comment and attachment submitted by Jonathan Lewis, Staff Attorney,
Clean Air Task Force et al.	Environmental



0156

(Duplicate of 0084)	Comment submitted by Anne R. Gobin, Chief, Bureau of
Air Management, State of Connecticut Department of Environmental
Protection	State/Local

0157	Comment submitted by Joseph P. Koncelik, Director, Ohio EPA
State/Local

0158	Comment and attachment submitted by David Schanbacher, P.E., Chief
Engineer, Texas Commission on Environmental Quality (TCEQ)	State/Local

0159	Comment submitted by Pepper Hamilton LLP on behalf of Oakland
County, Michigan	State/Local 



0161	Comment submitted by Brian Bahor, Director, Environmental
Engineering, Covanta Energy Corporation 	Industry

0164	Comment submitted by Barbara A. Lee, President, California Air
Pollution Control Officers Association (CAPCOA)	State/Local

0165	Comment submitted by Arthur N. Marin, Executive Director, Northeast
States for Coordinated Air Use Management (NESCAUM)	State/Local



0166

(Duplicate of 0165)	Comment and attachment submitted by Arthur N. Marin,
Executive Director, Northeast States for Coordinated Air Use Management
(NESCAUM)	State/Local

0167	Comment submitted by Margie Perkins, Director, Air Pollution
Control Division, Colorado Department of Public Health and Environment,
State of Colorado	State/Local

0168	Comment submitted by David J. Shaw, Director, Division of Air
Resources, New York State Department of Environmental Conservation
State/Local  

0169

(Duplicate of 0157)	Comment submitted by Joseph P. Koncelik, Director,
Ohio EPA	State/Local



a  Docket ID identifies comments found in Docket No.
EPA-HQ-OAR-2003-0062 by document number.

b  Documents submitted to the docket together appear in the docket as
multiple documents with the same 4-digit “root number” followed by a
unique extension.  For example, comments received via email are
generally assigned two numbers.  First, the email message itself is
assigned the root number (e.g., 0137).  Second, the attached comment
document is assigned an extended number based on the root number (e.g.,
0137.1).  Additional attachments, if any, would follow the same pattern
(e.g., 0137.2, 0137.3, etc.).  For the purposes of this table, we list
all related documents under the root number (e.g., 0137).  In the text
of the comment summary, we identify the source by the entire document
number (e.g., 0137.1).

Comments on the Regulation of Precursors to PM2.5 under Major NSR

General Comments on the Regulation of Precursors

Supporting Comments:

Fourteen commenters (0077.1, 0080.1, 0087.1, 0103.1, 0113.1, 0117.1,
0125.1, 0136.2, 0142, 0145, 0154.1, 0153, 0158.2, 0168) expressed
general support of the proposal to regulate precursors in addition to
direct PM2.5 emissions under the NSR program.

One state/local agency commenter (0168) provided that the ability of
states to achieve the PM2.5 standards would be greatly hampered if
precursors of PM2.5 formation are not strictly controlled by NSR.  The
commenter believes that this is especially the case in the Northeast
States, which are downwind from major emitters of PM2.5 precursors. 
The commenter went on to say that EPA’s own information in the
proposal preamble demonstrates that precursor formation is a significant
fraction of observed PM2.5 levels in many parts of the Northeast and the
country

One state/local agency commenter (0153) opposed excluding a pollutant as
a precursor under the NSR program when the pollutant is identified as a
precursor under other programs.  The commenter explained that it would
create a serious discontinuity between other provisions of the Clean Air
Act (“CAA” or “the Act”) and the permitting provisions. 

Another state/local agency commenter (0142) stated that the scientific
data support the importance of PM2.5 precursors in contributing to
ambient PM2.5 concentrations.

Opposing Comments:

Four industry commenters (0109.1, 0111.1, 0119.1, 0127.2) opposed the
regulation of precursors under major NSR at this time, or in the future.

One of the industry commenters (0109.1) asserted that regulating
precursors will cause hardship and would be a significant deterrent for
new projects.  The commenter supported applying the 1997 and 2005 PM2.5
PSD/NSR policies until reliable measurement and modeling protocols can
be developed.  This commenter also stated that the regional nature and
atmospheric chemistry of the formation of precursors to PM2.5 are
difficult to predict due to atmospheric variables and residence times,
making predictive analysis of short range or long range impacts of new
sources of PM2.5 invalid. 

Another industry commenter (0127.2) stated that we should establish a
PSD program only for direct PM2.5 emissions, and not for PM2.5
precursors.  The commenter argued that establishment of a PSD program
for PM2.5 precursors would accomplish almost no benefit and would create
significant implementation problems.  The commenter noted that either
the NA NSR or PSD programs in all areas of the country currently
regulate sulfur dioxide (SO2) and nitrogen oxides (NOx), and asserted
that extending the PSD program to PM2.5 precursors would result in
problems in conducting necessary pre-construction monitoring and pre-
and post-construction modeling.

Other Comments:

One state/local agency association commenter (0164) did not specifically
support or oppose the regulation of precursors under NSR but
acknowledged that the complex relationship of precursors to PM2.5
concentration is a difficult determination to make.

One industry commenter (0074.1) and one state/local agency commenter
(0116.1) supported allowing states and/or Tribes to determine whether to
regulate precursors under major NSR.  The industry commenter (0074.1)
recommended that the final PM2.5 NSR Implementation Rule presumptively
exclude precursors from major NSR and that states be afforded the option
of determining if and how to address precursor emissions in their
individual state implementation plans (SIPs). 

Response:

As discussed further below, we have decided to regulate PM2.5 precursors
as proposed, with some changes.  Our position regarding EPA’s
authority to regulate precursors, as well as our rationale for the
treatment of each pollutant under the NSR program, are discussed
individually in the following sections.  Additional support for our
decisions with respect to precursors can be found on pages 25-75 of the
Response to Comments document for the Clean Air Fine Particle
Implementation Rule (EPA-HQ-OAR-2003-0062-251). 

Comments on EPA’s Authority to Regulate PM2.5 Precursors

We received multiple comments on the subject of EPA’s authority to
regulate precursors.  In the proposal preamble, we discussed our
interpretation of the Act as regards our authority to regulate
precursors and our discretion under that authority.  Specifically, we
interpreted the Act to provide EPA with the authority to regulate
precursors and to grant the Administrator discretion to determine how to
address precursors for particular regulatory purposes.  Further, we
explained our view that EPA may treat precursors of the same pollutant
(in this case PM2.5) differently under the same program.  See 70 FR
65998, 66035-36.

Supporting Comments:

We did not receive any comments arguing that we lack the authority under
the Act to regulate PM2.5 precursors, but we did receive comments both
supporting and disputing our interpretation of the Act to provide us
with the discretion to regulate precursors for particular regulatory
purposes.  Comments disputing our authority in this regard are
summarized below under “Opposing Comments.”

One state/local agency (0142) agreed that we have the authority to
regulate precursor emissions of PM2.5 and that the scientific data
support the importance of precursors in contributing to ambient PM2.5
concentrations.  This commenter did not address the issue of EPA’s
authority to exercise discretion in this context.

One industry commenter (0111.1) asserted that section 302(g) of the Act
supports excluding a pollutant based on practical considerations such as
measurement uncertainty, or staying NSR provisions for precursors until
modeling and measurement tools can reasonably and accurately predict a
pollutant’s impact on ambient PM2.5 concentration.  The commenter
suggested that we define the term “air pollutant” in a manner
consistent with what can be measured and implemented “for the purposes
of the NSR program.”

Another industry group commenter (0127.2) asserted that we have the
authority to exempt precursors from the PSD program under the Alabama
Power de minimis doctrine because there would be a “trivial gain”
from their inclusion.

Opposing Comments:

We received three comments (0103.1, 0113.1, 0154.1) arguing that PM2.5
precursors, once identified, must be regulated under the NSR program. 
One state/local agency (0103.1) did not concur with our interpretation
of the Congressional intent as it relates to the definition of “air
pollutant” in section 302(g) of the Act.  The commenter argued that
we used “... to the extent the Administrator has identified such
precursor or precursors for the particular purpose for which the term
‘air pollutant’ is used” and specific regulatory exemptions in
other portions of the Act to avoid regulating known precursors.  The
commenter interpreted the definition of “air pollutant” to require
the regulation of identified precursors and stated that the second
clause of the definition was added specifically to insure that
precursors would be regulated under the Act.  The commenter believed
that if precursors were meant to be exempt, these exceptions would be
spelled out in the law.  The commenter pointed out that we have not
denied that certain condensable, gaseous organic compounds, ammonia, and
NOx (as well as SO2) are precursors to the criteria pollutant PM2.5. 
In addition, the commenter argued that we have not supplied conclusive
evidence nor proposed adequate tests of proof to show that the emission
of these precursors from various sources do not contribute to violations
of the NAAQS.  Therefore, the commenter concluded that these precursor
emissions must be addressed in plans and programs designed to mitigate
the health and environmental effects of PM2.5. 

One environmental group (0113.1) provided that section 302(g) of the Act
does not allow EPA unfettered discretion to abandon regulation of PM2.5
precursors in nonattainment area plans or for NSR.  The commenter
asserted that section 189(e) of the Act should govern PM2.5 regulation
because PM2.5, by definition, is a subset of PM10.  The commenter
stated that the plain language of section 189(e) requires states to
control sources of PM10 precursors except where EPA “determines that
such sources [of precursors] do not significantly contribute to PM-10
levels which exceed the standard in the area.”  The commenter argued
that this default language requires EPA to regulate particulate matter
precursors unless we find that a given precursor is not part of the
problem (emphasis in the original).  

One group of environmental commenters (0154.1) argued that we do not
have the legal authority to presumptively exclude precursors from NSR
requirements.  They noted that large stationary sources are important
sources of precursor emissions (including ammonia) and they are all
contributors to a host of other air pollution problems, in addition to
their contribution to PM2.5 emissions.  The commenters further stated
that our concerns regarding the “complexity in assessing the role of
volatile organic compound (VOC) in PM2.5 formation” and “evolving”
understanding of ammonia emissions and their role are not dispositive as
VOCs and ammonia are known precursors of PM2.5.

Response:

Scientific research shows that precursors may contribute significantly
to ambient PM2.5 concentrations, producing approximately half of the
concentration and that in most areas of the country PM2.5 precursor
emissions are the major contributors to ambient PM2.5 concentrations. 
For these reasons, EPA believes precursors warrant regulation, as a
general matter.  However, because it is technically difficult to
determine impacts of source-specific precursor emissions on ambient air
quality levels, and also because the relative contribution to ambient
PM2.5 concentrations from each of the pollutants addressed in the rule
varies by area, we do not believe a one-size-fits-all approach is
appropriate.  We note, however, that some commenters disagree with this
view and assert that EPA does not have the discretion to regulate some,
but not all, identified precursors.  After carefully considering these
comments, we are not persuaded that our interpretation of the Act is
incorrect.  Rather, we stand by our interpretation as set forth in the
proposed rule and below.

As explained in the proposed rule, 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 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).  For the reasons
identified above, we are not persuaded by the assertion by some
commenters that we do not have the authority to determine how to address
precursors for particular regulatory purposes. 

Furthermore, other provisions of the Act reinforce our interpretation of
section 302(g) 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 VOCs 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 reductions 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 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.  To interpret otherwise and apply
a blanket approach, as suggested by one commenter (i.e., to regulate all
identified precursors in all cases), would be contrary to the language
and intent of the Act.  Further, due to the complexities associated
with precursor emissions and their variability from location to
location, we believe that in some 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.  For these reasons, we do not agree with
the comment that the Act does not give us discretion to presumptively
exclude a designated PM2.5 precursor from NSR requirements.  As stated
above, 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. 
Further, given the term “air pollutant,” as defined in
section 302(g), is incorporated into the NSR provisions for various
purposes, 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 best achievable control technology
(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.

Additionally, 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 (RFP).”  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.

Generally, where the scientific data and modeling analyses provide
reasonable certainty that a pollutant’s emissions are a significant
contributor to ambient PM2.5 concentrations, we believe that such a
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.  For these reasons, we believe it appropriate to
adopt differing approaches (i.e., presumed-in and presumed-out) for
different precursors.

In response to comments asserting, in effect, that the presumed-in and
presumed-out approaches for NOx, ammonia, and VOCs, are not sufficiently
protective from a PM2.5 contribution perspective, it is important to
understand that a state program need not exclude a precursor under the
presumed-out approach if it can show that the precursor at issue is, in
fact, a “significant contributor” to PM2.5 concentrations in the
subject area.  Likewise, a state need not include a precursor, where
the presumed-in approach is applicable, when it can demonstrate that the
precursor at issue is not a significant contributor to PM2.5 in the
subject area.  This being the case, the presumed-in and presumed-out
approaches are intended to provide for the regulation of NOx, ammonia,
and VOCs as the specific circumstances in a particular area warrant. 
Further, states must consider any relevant information brought forward
by interested parties in the SIP planning and development process and,
therefore, if a commenter provides information suggesting or
demonstrating that NOx, ammonia, or VOC emissions are not a significant
contributor to PM2.5 concentrations, then the state will need to respond
to this information in its rulemaking action.

It is also important to recognize that “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 discussion of sections 189(e) and 302(g) above, we
clarify that the use in the PM2.5 NSR Implementation Rule of the term
“significant contribution” to an area’s PM2.5 concentration means
that a significant change in emissions of the precursor from sources in
that area would be projected to provide a significant change in PM2.5
concentrations in the area.  For example, if modeling were to indicate
that a reduction in an area’s NOx emissions would reduce ambient PM2.5
levels in that area, but that a reduction in ammonia emissions would
result in virtually no change in ambient PM2.5 levels in that same area,
then this would suggest that NOx is a significant contributor while
ammonia is not.  Note that we are not proposing the establishment of 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, when contemplating this question, we do believe it is
relevant to consider whether 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 is
designed to reflect both the atmospheric chemistry conditions in an area
as well as the magnitude of emissions of the precursor in that same
area.  Assessments of whether particular emissions units at a source
are technically feasible and cost effective to control should be part of
the later BACT or lowest achievable emission rate (LAER) determination
within a permit action, to occur after the basic assessment as to which
precursors are to be regulated NSR pollutants in an area is completed. 
For these and the other reasons previously articulated, 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, contrary to the assertions
of some commenters.  Also, while EPA agrees that, pursuant to the
Alabama Power de minimis doctrine we would have the authority to exempt
precursors from the PSD program if we believed that regulating them
would result in “trivial gain,” we do not believe that the doctrine
applies here given scientific research sufficiently shows that certain
precursors “significantly contribute” to  ambient PM2.5
concentrations.  This being the case, we disagree with the commenter
who asserts that the Alabama Power de minimis exception applies in this
context.  

Comments Specific to Regulating SO2 as a Precursor

We proposed to regulate SO2 as a precursor for PM2.5 for purposes of NSR
in all areas designated attainment, unclassifiable, and nonattainment
for PM2.5.  

Supporting Comments:

Four state/local agency commenters ((0077.1, 0142, 0153, 0168), two
industry commenters (0111.1, 0127.2), and one state/local agency
association (0136.2) agreed that SO2 should be regulated as a PM2.5
precursor.  However, one of these commenters (0127.2) only supported
regulation of SO2 as a precursor in NA NSR, and not under PSD.  

One of the state/local agency commenters (0077.1) who supported
regulating SO2 as a precursor stated that receptor modeling and STN data
confirm sulfate as the largest PM2.5 component and provided a supporting
document.

Opposing Comments:

One industry commenter (0109.1) believes it was ill-advised to regulate
SO2 as a precursor given our inability to directly correlate these
emissions to the formation of PM2.5.  The commenter believes that
without this certainty, we would be establishing a requirement for NSR
impact analysis that would potentially impede projects, without any
environmental benefit.  The commenter added that even without the
proposed rule, the permitting authority would be capable of looking at
fine particle formation under general environmental and ecological
effects requirements required by section 172 of the Act until the tools
for predicting and measuring fine particulate accurately are available. 
In addition, the commenter argued that there is no reason to regulate
SO2 and NOx as PSD/NA NSR pollutants because they are already defined as
“regulated pollutants” under other NAAQS.

One state/local agency commenter (0116.1) disagreed with our proposed
position that SO2 acts as a precursor to PM2.5 in all cases.  The
commenter stated that any conclusions in that regard should be left to
the states and Tribes, to be addressed in individual implementation
plans. 

Response:

Sulfate is a significant contributor (e.g., ranging from 9 percent to 40
percent) to PM2.5 concentrations in all areas and to other air quality
problems in all regions of the country.  This being the case, we
proposed that states be required to treat SO2 as a PM2.5 precursor in
all areas.  After carefully considering the comments received on this
subject, we continue to support this approach which 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, that require SO2 reductions to address fine particle pollution and
related air quality problems.  Although large SO2 reductions are
projected from electric generating units with the implementation of the
CAIR, sulfate is still projected to be a key contributor to PM2.5
concentrations in the future.  

We find the commenters’ arguments for not regulating SO2 as a
precursor unpersuasive.  As explained in the preamble to the proposed
rule, there exist three pathways by which sulfuric acid is formed in the
atmosphere through the oxidation of SO2.  The sulfuric acid then
typically reacts with ammonia to form ammonium sulfate or ammonium
bisulfate.  Emissions of SO2 lead to sulfate formation on both regional
and local scales.  These processes are well known and there is little
uncertainty regarding their contribution to PM2.5 emissions.  Thus, the
comment that we should delay regulating SO2 as a precursor because of an
inability to correlate SO2 emissions to the formation of PM2.5 is
unfounded.

We also find unpersuasive the argument that SO2 should not be regulated
as a precursor because it is a regulated pollutant under other NAAQS. 
As detailed above, there is sufficient scientific certainty that SO2
significantly contributes to PM2.5 formation.  

Comments Specific to Regulating NOx as a Presumed-in Precursor 

We proposed to regulate NOx as a “presumed-in” precursor to PM2.5
for purposes of NSR in all attainment, unclassifiable, and nonattainment
areas.  That is, NOx would be a regulated NSR pollutant in all areas
unless a state demonstrated to the Administrator’s satisfaction that
NOx emissions from stationary sources in that area do not contribute
significantly to that area’s ambient PM2.5 concentrations.

Supporting Comments:

A number of commenters supported some or all of our proposed approach to
NOx, although some had reservations about some aspects.  One
state/local agency (0142), one industry commenter (0111.1), and one
state/local agency association (0136.2) supported the approach as
proposed.  The state/local agency association (0136.2) added that for
NOx to be removed in an area, the state or EPA should be required to
include an assessment of the impact of this action on other
nonattainment areas, and that downwind states should have the
opportunity to comment on removing NOx (as well as the opportunity to
request an upwind state to add a precursor).

One industry commenter (0127.2) supported the proposed approach for NA
NSR, but does not believe that NOx should be a regulated pollutant for
purposes of PSD.  The commenter asserted that extending the PSD program
to NOx and other PM2.5 precursors would result in problems conducting
necessary pre-construction monitoring and pre- and post-construction
modeling.  The commenter also noted that either NA NSR or PSD programs
in all areas of the country already regulate NOx.

One state/local agency (0077.1) asserted that NOx should be a regulated
NSR pollutant, but was silent about whether exemptions should be
available.  This commenter stated that receptor modeling and STN data
confirm nitrates as the second largest PM2.5 component and provided a
supporting document.

One state/local agency commenter (0153) believes that allowing states to
demonstrate that NOx emissions are not significant early on in the SIP
preparation process is a mistake.  This commenter noted that this
demonstration would need to be extremely thorough in any state to allow
EPA to make a favorable finding.  The commenter added that any
demonstration, by its very nature, is time sensitive, so that what may
be determined insignificant today may be significant tomorrow.

Two state/local agency commenters (0117.1, 0168) did not agree that
states should be allowed to receive an exemption for NOx based on a
demonstration that NOx emissions are not a significant contributor to
the area’s ambient PM2.5 concentration, because NOx emissions
contribute to regional emissions and nonattainment in other areas.  One
of these commenters (0117.1) believes that a waiver for exclusion of NOx
as a precursor should be allowed only if it is approved by downwind
states.  The second commenter (0168) indicated that if NOx exemptions
are allowed, they should be subject to strict requirements, which
consider the regional interaction and contribution of emissions from
other states.

Opposing Comments:

One industry commenter (0109.1) believes it would be ill-advised to
regulate NOx as a presumptive precursor given our inability to directly
correlate these emissions to the formation of PM2.5.  The commenter
believes that without this certainty, we would be establishing the
requirement for NSR impact analysis that would potentially impede
projects without any environmental benefit.  The commenter added that
even without the proposed rule the permitting authority would be capable
of looking at fine particle formation under general environmental and
ecological effects requirements required by section 172 of the Act until
such time that the tools for predicting and measuring fine particulate
accurately are available.  In addition, the commenter argued that there
is no reason to regulate NOx as a PSD/NA NSR pollutant as it is already
defined as a “regulated pollutant” under other NAAQS.

One state/local agency commenter (0116.1) disagreed with our proposed
position that NOx acts as a precursor to PM2.5 in all cases.  The
commenter stated that any conclusions in that regard should be left to
the states and Tribes, to be addressed in individual implementation
plans. 

Response:

We are not persuaded by the argument that NOx should not be regulated as
a 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 PM2.5 precursor in circumstances
where NOx also significantly contributes to PM2.5  formation.  We
note, however, that the regulation of NOx as 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 standards.  

We also 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.  In the preamble to the proposed rule, we
explained that our decision to regulate NOx as a precursor to PM2.5 was
based on the well-known transformation of NOx into nitrates.  Nitrates
are formed from the oxidation of NOx into nitric acid either during the
daytime (reaction with OH) or during the night (reaction with ozone and
water) and are a significant component of PM2.5 mass in northern
regions, such as the Midwest and East Coast, and are a major contributor
to urban PM2.5 in California.  

Nevertheless, speciated data monitoring analyses indicate 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. 
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.  

Given the factors detailed above, we continue to support the
“presumed-in” approach for NOx set forth in the proposed rule. 
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 may rebut this presumption for a specific area by demonstrating to
the Administrator’s satisfaction that NOx emissions in that area are
not a significant contributor to that area’s ambient PM2.5
concentrations.  If a state makes such a demonstration, NOx would not
be considered a PM2.5 precursor under the NSR program for that area. 
If a state 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.  This approach is consistent with other recent EPA regulations
requiring NOx reductions to reduce fine particle pollution, such as the
CAIR and a number of rules targeting onroad and nonroad engine
emissions.

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 since states that contribute to downwind nonattainment
for PM2.5 are otherwise required to address transported NOx emissions
under the CAIR rule.

 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, as indicated above, states that
contribute to downwind nonattainment for PM2.5 are otherwise required to
address transported NOx emissions under the CAIR.  

Comments Specific to Regulating VOC as a Presumed-out Precursor

We proposed, in general, not to regulate VOC as a precursor to PM2.5 for
purposes of NSR.  However, VOC could be designated as a regulated NSR
pollutant under PSD or NA NSR where a state demonstrates to the
satisfaction of the Administrator that VOC emissions from stationary
sources in a specific area contribute significantly to that area’s
ambient PM2.5 concentrations. 

Supporting Comments:

Seven commenters (0077.1, 0109.1, 0111.1, 0117, 0127.2, 0142, 0168)
specifically agreed with our proposal not to regulate VOCs as PM2.5
precursors under NSR.  

One state/local agency commenter (0117) concurred with our proposal to
regulate VOC as a precursor to PM2.5 under the NSR program only if a
state/local agency explicitly includes VOC emissions from stationary
sources as part of a control program within the PM2.5 attainment
demonstration.  An industry commenter (0127.2) agreed that VOC should be
regulated only if a state makes a determination of need on a
case-by-case basis.

One state/local agency commenter (0142) believes that the atmospheric
chemistry involved in the PM2.5 formation from VOC emissions is not as
well understood as the SO2 and NOx chemistry.  The commenter stated
that unless demonstrated otherwise by the state, VOC should not be
regulated as a precursor under PM2.5 NSR.  Another state/local agency
commenter (0168) believes that it is reasonable not to regulate certain
VOCs as PM2.5 precursors as long as portions of the condensable VOC are
required to be accounted for in the determination of direct PM2.5
emissions.  

Opposing Comment:

One state commenter (0153) 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
proposed rule.  

Response:

Volatile organic compounds are key precursors in the formation of
secondary organic aerosol (SOA).  However, despite significant advances
in understanding the origins and properties of SOA, VOCs remain 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 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.

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 is
likely 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 is
complex and is yet to be fully understood.  We recognize that further
research and technical tools are needed to better characterize emissions
inventories for specific VOC compounds, and to determine the extent of
the contribution of specific VOC compounds to organic PM mass. 

As proposed, EPA believes that a “presumed-out” approach is
appropriate to address VOCs as a precursor to PM2.5 for the NSR
program.  Pursuant to this approach, a state may demonstrate to the
Administrator’s satisfaction that VOC emissions in a specific area
contribute significantly to that area’s ambient PM2.5
concentrations.  After making such a demonstration, the state may then
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 RFP 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 of assessing the role of VOC in PM2.5
formation and, therefore, are not persuaded by the commenter who
suggested that a “waiver” or “presumed-in” approach for VOCs
would be appropriate.  Where the effect of a pollutant’s emissions on
ambient PM2.5 concentrations are subject to such a 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
VOCs 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 VOCs.  As discussed above, 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.  

Comments Specific to Regulating Ammonia as a Presumed-out Precursor

For purposes of NA NSR, we proposed that ammonia would only be
identified as a precursor on a case-by-case basis, that is, when a
state/local agency demonstrates to the Administrator’s satisfaction
that ammonia emissions from stationary sources in a specific
nonattainment area are a significant contributor to that area’s
ambient PM2.5 concentrations.

Supporting Comments:

Nine commenters (0077.1, 0107.1, 0117.1, 0111.1, 0142, 0151, 0158.2,
0161, 0168) supported our proposal for ammonia.

One state/local agency commenter (0077.1) believes that ammonia has an
uncertain impact on the formation of PM2.5 and did not recommend it be
considering it as a regulated NSR pollutant.  Another state/local agency
commenter (0117.1) concurred that we should not regulate ammonia as a
precursor to PM2.5 for the NSR program unless the state explicitly
includes emissions of ammonia from stationary sources as part of a
control program within the PM2.5 attainment demonstration.

One state/local agency commenter (0142) stated that the atmospheric
chemistry involved in the PM2.5 formation from ammonia emissions is not
as well understood as the SO2 and NOx chemistry.  The commenter
believes that unless demonstrated otherwise by the state, ammonia
emissions should not be regulated as a precursor under PM2.5 NSR.

One state/local agency commenter (0168), although they support not
regulating ammonia as a “default” precursor at this time, urged us
to continue research on PM2.5 formation from ammonia since ammonia has
already been demonstrated by current research to be a precursor to PM2.5
concentrations.  The commenter 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.

Opposing Comments:

One environmental group commenter (0113.1) believes that we improperly
delegated our authority to regulate ammonia as a PM2.5 precursor by
requiring a “technical demonstration that ammonia emissions from
sources in the state significantly contribute to the PM2.5 problem in a
given nonattainment area or to other downwind air quality concerns.” 
The commenter asserts that such an approach reverses Congress’
requirement to regulate particulate matter precursors unless the
emissions are not part of the problem, and instead takes the approach
that we will “not regulate unless proven to be part of the problem.”


One state/local agency commenter (0080.1) preferred that we treat
ammonia precursor emissions the same as NOx precursor emissions.  The
commenter’s concern was based on the growing number of concentrated
animal feed operations and the corresponding ammonia emissions, which
the commenter believes should be addressed in the NSR process if they
are above a certain emissions cutoff.  

One state/local agency commenter (0153) agreed that the role of ammonia
in PM2.5 formation is not well understood.  However, the commenter
believes that instead of disregarding the role of ammonia, we should
require states to initiate comprehensive ambient air monitoring networks
to determine the extent of local affects of ammonia.  The commenter
recommended that we revisit designating ammonia as a regulated air
pollutant (precursor) after sufficient data are collected.

Other Comments:

Three commenters (0107.1, 0131.1, 0161) stated that if we permit 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.  The commenters based this view on
our focus on NOx as one of the two principal PM2.5 precursors and the
role of significant non-catalytic reduction (SNCR) and similar systems
in avoiding significant NOx emissions.  One commenter (0131.1)
indicated that the amount of NOx reduced versus ammonia emitted is
approximately 50:1.  

Response:

We agree with the commenters who noted that the formation of particles
related to ammonia emissions is not well understood.  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, particulate matter
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 still evolving. 
In addition, 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 RFP 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 contributing significantly 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, if appropriate,
to reverse the presumption and require ammonia to be addressed in its
nonattainment area plan.

Given the continued uncertainties regarding ammonia emission inventories
and the effects of ammonia emission reductions we are not persuaded by
the commenter who asserted that ammonia precursor emissions should be
treated the same as NOx emissions.  As discussed previously, data and
modeling analyses provide much more certainty that NOx emissions are a
significant contributor to ambient PM2.5 concentrations.  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 continue to believe a 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.  As a result, we do not view
the adoption of a “presumed-in” approach to be appropriate. 
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.  In the meantime, in light of the uncertainties
related to ammonia, we encourage states to continue efforts to better
understand the role of ammonia in their fine particle problem areas.  

Additionally, and for the reasons stated earlier, we disagree with the
commenter who asserts that the “presumed-out” approach for ammonia
constitutes an improper delegation of authority by EPA to the states. 
Under the general Clean Air Fine Particle Implementation Rule, we retain
the ability to make a technical demonstration supporting a reversal of a
presumption regarding ammonia for a particular area thus resulting in
ammonia being addressed in the nonattainment area plan.  

Further, although we agree with the commenter who suggested that we
continue research on the role of ammonia in the formation of PM2.5, we
disagree with the comment that we should hold off regulating ammonia as
a PM2.5 precursor until “sufficient data” are collected.  Although
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, we
believe that there exists enough data on ammonia as a PM2.5 precursor to
support the adoption of the presumed-out approach.  However, 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.  

Regarding the comment related to ammonia emissions from NOx control
systems, we disagree that such emissions should be excluded from a
state’s demonstration that ammonia should be regulated as a PM2.5
precursor.  Rather, 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.  At the same
time, 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. 

Other Comments on Precursors

Comment:

One state/local agency (0137.1) asserted that sections (c) and (d) of 40
CFR 52.21(b)(50)(i) “should be very clear” regarding “how EPA
intends to implement the PSD program where it is the permitting
authority.”  The commenter stated that the rule should allow for
little or no direction from the state to EPA given it is EPA’s
decision and responsibility to implement the PSD program as opposed to
that of the state (or Tribe) that chose not to implement its own PSD
program under the requirements of 40 CFR 51.166. 

Response: 

The EPA agrees with the commenter that it is EPA’s decision and
responsibility to implement these sections (c) and (d) of 40 CFR
52.21(b)(50)(i) as opposed to that of the state or Tribe.  This is not
to say, however, that EPA could not consider information provided by
another party (e.g., state) in making its determination, if it concluded
that such information was relevant and warranted consideration.

NOTE:  For additional general and specific information regarding our
regulation of precursors to PM2.5, please see sections II.A.2 though
II.A.6 of the preamble to the final Clean Air Fine Particle
Implementation Rule (72 FR 20586). 

Comments on Major Source Thresholds for Direct PM2.5 and Precursor
Emissions under Major NSR

The Act contains definitions of “major emitting facility” and
“major stationary source” that apply to PSD and NA NSR programs,
respectively.  For convenience, we use the term “major source” to
refer to both.  A stationary source is a “major source” if its’
actual emissions or its potential to emit (PTE) for a specific pollutant
equals or exceeds the major source threshold for that pollutant. 
Different pollutants, including precursors, are not summed to determine
applicability. 

Comments on EPA’s Authority to Deviate from the Statutory Definitions
of Major Source

In title I of the Act, part C sets forth the requirements for PSD
programs.  Section 169(1) of part C provides the major source definition
for the PSD program.  It specifies that the major source threshold for
PSD is 100 tons per year (tpy) for specifically-listed source
categories and 250 tpy for all other types of sources.

Part D of title I of the Act sets forth the requirements for
nonattainment areas, including NA NSR programs.  Subpart 1 of part D
applies generally to nonattainment areas, while subpart 4 sets out
additional requirements for PM10 nonattainment areas.  Under subpart 1,
the major source definition found at section 302(j) of the Act, which
specifies a threshold of 100 tpy, is applicable.  Subpart 4 sets up a
classification system for PM10 nonattainment areas based on the severity
of the nonattainment problem.  Under this system, the major source
threshold for moderate PM10 nonattainment areas is 100 tpy [the default
definition under section 302(j)], while the threshold for severe PM10
nonattainment areas is 70 tpy [as defined under section 189(b)(3)].

We proposed to follow the definition of major source in section 169 of
the Act for the PSD program, setting a major source threshold of 100 or
250 tpy for PM2.5 and its precursors depending on the source category. 
We proposed to implement the NA NSR program under subpart 1 of part D,
based on our interpretation that subpart 4 of part D does not apply to
PM2.5.  Thus, we proposed that section 302(j) of the Act is controlling
for the PM2.5 NA NSR program, with a 100 tpy major source threshold for
PM2.5 and its precursors.

Definition of Major Source for the PSD Program

Supporting Comments:

One industry commenter (0111.1) and one industry group commenter
(0096.1) supported our proposal to follow the definition in sections
169(1) for purposes of defining major sources subject to the PSD program
in attainment or unclassifiable areas.  The industry commenter (0111.1)
indicated that the proposed PSD threshold is based on clear statutory
language and should be adopted in the final rule.  The industry group
commenter (0096.1) stated that EPA has no discretion to deviate from the
major source threshold that Congress prescribed by statute for the PSD
program.  This commenter believes that to do so would be contrary to a
clear statutory mandate as set forth under part C and subpart 1 of the
Act.  The commenter noted that these statutory thresholds are defined
with precise annual tonnage levels and Congress has expressly identified
particular criteria pollutants (e.g., ozone and PM10) and specific
nonattainment circumstances as the only situations where these major
source thresholds are lowered by specific amounts.  The commenter went
on to state that apart from these instances, Congress has conveyed no
authority to adopt different major source thresholds and, as a result,
EPA must adopt the current 250 tpy and 100 tpy thresholds that apply
under part C for PSD. 

Opposing Comments:

A coalition of environmental organizations (0154.1) argued that EPA
should use a lower threshold for PSD than the one set forth in section
169(1).  As support for this approach, these commenters cited the
general PSD goal in section 160(1) to “protect public health and
welfare” and the provision in section 166(c) pertaining to the content
of pollutant-specific PSD regulations.

Response:

We agree with the comments supporting the position that section 169(1)
is controlling for PM2.5 and that, consequently, the PM2.5 major source
threshold for the PSD permit program must be 100 tpy for listed source
categories and 250 tpy for unlisted categories.  The EPA has proposed
(72 FR 54112) and will promulgate an additional regulation containing
PSD increments of PM2.5, which will address the requirements of section
166(c) and the incorporated goals and purposes in section 160 of the
Act.  We do not interpret the general goal to “protect health and
welfare” to supersede the clear definition in section 169(1) of a
major emitting facility subject to PSD permit requirements.  Although
section 166 authorizes EPA to promulgate additional measures to prevent
significant deterioration, nothing in section 160 or 166 gives EPA the
authority to set aside the statutory requirements pertaining to the size
of sources subject to the preconstruction permitting program for major
sources under subpart C of title I of the Act.

Definition of Major Source for the NA NSR Program

Supporting Comments:

One industry commenter (0111.1) and one industry group commenter
(0096.1) supported our proposal that the definition in section 302(j) of
the Act is controlling for purposes of defining major sources for the NA
NSR program for PM2.5.  The industry commenter (0111.1) indicated that
the proposed major source threshold for NA NSR is based on clear
statutory language and should be adopted in the final rule.  The
industry group commenter (0096.1) stated that EPA has no discretion to
deviate from the major source thresholds that Congress prescribed by
statute for the NA NSR program.  This commenter believes that to do so
would be contrary to a clear statutory mandate under subpart 1 of part D
of the Act.  The commenter noted that these statutory thresholds are
defined with precise annual tonnage levels and Congress has expressly
identified particular criteria pollutants (e.g., ozone and PM10) and
specific nonattainment circumstances as the only situations where these
major source thresholds are lowered by specific amounts.  The commenter
went on to state that apart from these instances, Congress has conveyed
no authority to adopt different major source thresholds and, as a
result, EPA must adopt the 100 tpy threshold that applies under subpart
1 of part D for NA NSR. 

Another industry group commenter (0109.1) stated that since the 1997
PM2.5 NAAQS were added after promulgation of the 1990 Amendments, EPA
should implement the PM2.5 NAAQS under subpart 1 and not subpart 2 of
part D, title I of the Act.  Thus, the commenter asserted, the
applicability levels already defined in 40 CFR part 51, appendix S
should continue to apply.

Opposing Comments:

Two state/local agency commenters (0142, 0168), one state/local agency
association commenter (0136.2), and one group of environmental
commenters (0154.1) argued that EPA is not bound by section 302(j) of
the Act in defining the major source thresholds for the NA NSR program
for PM2.5.  The state/local agency association (0136.2) believes that
EPA has ample authority under section 171 of the Act to develop more
protective thresholds that will result in expeditious attainment.  The
commenter noted that section 171 states that “[t]he term ‘reasonable
further progress’ means such annual incremental reductions in
emissions of the relevant air pollutant as are required by this part or
may reasonably be required by the Administrator for the purpose of
ensuring attainment of the applicable national ambient air quality
standard by the applicable date.”  Thus, the commenter believes,
Congress gave the Administrator the flexibility to require emissions
reductions that will ensure attainment of the NAAQS.  The commenter
stated that more stringent major NSR thresholds for direct PM2.5
emissions would assist states in achieving prompt attainment of the
PM2.5 NAAQS.

One state/local agency commenter (0142) stated that in order to address
the impact of high particulate concentrations, the Act mandates EPA to
define a criteria pollutant’s major NSR threshold at levels less than
100 tpy.  The commenter pointed out that subparts 2 and 4 of part D of
the Act define lower major source thresholds.  The commenter believes
that it is unreasonable for EPA to assert that subpart 4 does not apply
to PM2.5.  The commenter asserted that subpart 4, which regulates all PM
with a diameter of less than 10 (m, is directly applicable to the
proposed rule on PM2.5.  The commenter stated that we recognized as much
in section III.I.5 of the proposal preamble, which specifically asserted
that our options for implementing reasonably available control
technology (RACT) “would be consistent with the approach set forth in
the CAA in subpart 4” (70 FR 66017).  In fact, EPA also noted the
similarities between PM10 and PM2.5 in justifying “comparable RACT
approach[es]” for the pollutants (70 FR 66018).  The commenter
asserted that our later statement in the NSR context that subpart 4
does not apply to PM2.5 is therefore disingenuous and unsupported by the
Act, and that a reasonable interpretation of the Act requires major
sources of direct PM2.5 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.

The second state/local agency commenter (0168) similarly stated that in
order to address the impact of high particulate concentrations, the Act
allows EPA to define a criteria pollutant’s major NSR threshold at
levels less than 100 tpy, as evidenced by the fact that subparts 2 and 4
of part D of the Act define lower major source thresholds.  The
commenter asserted that the physical properties, atmospheric chemistry,
and health effects of PM2.5 closely match those of PM10.  Noting that
subpart 4 classifies major PM10 sources in “serious” PM10
nonattainment areas as 70 tpy or greater, the commenter suggested that
this value could be used as a basis for defining the PM2.5 major source
threshold based on the same logic applied when calculating a PM2.5 SER
from the existing PM10 SER.  The commenter stated that when this
methodology is applied, a major source located in a “serious” PM2.5
nonattainment area is defined as 45 tpy or greater, and if subpart 2 of
part D is used as a guide, either the “serious” major source
threshold of 50 tpy or the “severe” major threshold of 25 tpy could
be used to define a major source of direct PM2.5 emissions.

The group of environmental commenters (0154.1) stated that EPA must use
a major source definition threshold lower than the one listed in section
302(j) for NA NSR.  At a minimum, the commenters stated, EPA must apply
the major source definition found in section 189(b)(3) of 70 tpy as the
nonattainment area NSR threshold for PM2.5 emissions.

Response: 

We disagree with the commenters who believe the CAA gives EPA authority
to establish a major source threshold for PM2.5 lower than 100 tpy in NA
NSR programs.  We continue to read the  language of section 302(j) of
the Act to be controlling in this situation and that, consequently, we
are not authorized under subpart 1 to establish a mandatory NA NSR major
source threshold for PM2.5 other than 100 tpy.  We emphasize here, as we
did in the preamble to the proposed rule, that this approach for NA NSR
is consistent with how we treat other criteria pollutants that are
covered by subpart 1 of part D of title I of the Act, and thus are not
subject to a tiered classification system such as the one required for
ozone nonattainment areas under subpart 2 of part D.  We disagree with
the commenters who stated that we must establish a lower threshold based
on the provisions in subparts 2 and 4 of part D of the Act.

Under section 172(c)(5) of the Act, the mandatory NA NSR permitting
requirements are applicable to “major stationary sources.” 
Section 302(j) of the Act defines a “major stationary source” as
one that emits 100 tpy or more “except as otherwise expressly
provided.”  Since neither section 172 or any other provision in
subpart 1 expressly provides EPA with authority to define a major
stationary source differently and subparts 2 and 4 are not applicable to
PM2.5, we do not believe we are authorized to promulgate a major source
threshold lower than 100 tpy for PM2.5 under subpart 1 of part D of
title I of the Act.

 

As discussed in more detail in EPA’s Clean Air Fine Particle
Implementation Rule (72 FR 20586) and the supporting record, we do not
agree that EPA must apply subpart 4 of part D of the Act in PM2.5
nonattainment areas.  See pp. 9-14, Responses to Significant Comments on
2005 Proposed Rule to Implement the Fine Particle NAAQS
(EPA-HQ-OAR-2003-0062-251).  We believe that the Act is permissibly
construed to allow EPA to implement the PM2.5 standard under only
subpart I of part D, which contains the general provisions 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 that apply are found in section 172 of subpart 1.  Subpart 4
was added to the Act by Congress in 1990 to establish a specific set of
mandatory measures for areas that were not yet in attainment with the
PM10 NAAQS, which was promulgated in 1987 as a substitute for the
particulate matter NAAQS that had existed for much longer.  Thus, it is
reasonable to conclude that Congress intended for the particularized
elements of subpart 4 to apply to PM10 nonattainment areas.  Congress
also did not intend to constrain EPA and state discretion with respect
to the implementation of a new NAAQS and a new set of nonattainment
areas that would not be identified until after subpart 4 was created. 
Thus, we believe it is permissible to read subpart 4 on its face to
apply only to the PM10 standard.

In general, the emphasis in subpart 4 on reducing PM10 concentrations
from certain sources can be somewhat effective in certain PM2.5
nonattainment areas, but not in all.  Contributions to PM2.5
concentrations typically are from a complex mix of sources of primary
(direct) PM2.5 emissions and sources of precursor emissions which form
particles through reactions in the atmosphere.  Ambient PM2.5 also
differs from PM10 in terms of atmospheric dispersion characteristics,
chemical composition, and contribution from regional transport.

To the extent that EPA may have proposed in other parts of its Clean Air
Fine Particle Implementation Rule to implement certain CAA requirements
consistent with the requirements of subpart 4, that does not constitute
an interpretation that it is mandatory that EPA apply the particular
requirements for PM10 in subpart 4 to PM2.5.  The EPA has been
consistent in stating that it does not interpret subpart 4 to apply to
PM2.5, notwithstanding any proposal by EPA under other CAA programs to
follow an element in subpart 4 where EPA has discretion to do so.  

We realize that this approach 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.  However, this scenario is not one that we have the authority
to correct under subpart 1.  Section 189(b) of the Act establishes a 70
tpy major source threshold for “serious” PM10 nonattainment areas. 
Section 302(j) provides that we must use a 100 tpy threshold for PM2.5
except as expressly provided elsewhere in the Act.  Since the Act
contains no express authority to establish a different threshold for
PM2.5, we are applying a 100 tpy major source threshold to all PM2.5
nonattainment areas based on the definition in section 302(j).  

EPA does not agree with the commenter who suggested we use the major
source thresholds in subpart 2 as a guide for a PM2.5 major source
threshold.  It is clear that these thresholds for ozone nonattainment
areas under subpart 2 of the Act are not applicable to particulate
matter of any size.  Furthermore, subpart 2 establishes major source
threshold for an ozone precursor (VOCs) rather than ozone itself.  In
light of the different chemistry involved in the formation of ozone and
PM2.5 and our determination that there is not a sufficient basis to
regulate VOCs as a PM2.5 precursor, it would not be technically sound to
look to the major source thresholds in subpart 2 as a guide in the
development of a major source threshold for direct PM2.5 emissions.

Although the courts have concluded subpart 2 applies for purposes of
implementing the 8-hour ozone NAAQS in at least some 8-hour ozone
nonattainment areas, the rationale applied by the court in drawing this
conclusion does not result in the same conclusion regarding the
applicability of subpart 4 to a PM2.5 NAAQS.  As EPA explained in full
in the Response to Comment document for the Clean Air Fine Particle
Implementation Rule, subpart 4 speaks exclusively to a PM10 standard,
while subpart 2 speaks more generally to any “ozone” standard.  We
also note that, unlike the situation for PM, where both a PM10 standard
(which continues to be implemented under subpart 4) and a PM2.5 standard
are in place, the 8-hour ozone NAAQS was promulgated as a replacement
for the 1-hour ozone NAAQS.  In contrast, EPA promulgated the PM2.5
NAAQS as an additional standard that did not replace the PM10 NAAQS. 
See pp. 9-12, Responses to Significant Comments on 2005 Proposed Rule to
Implement the Fine Particle NAAQS (EPA-HQ-OAR-2003-0062-251).  

We do not agree with the commenters who asserted that EPA could
establish a lower major source threshold based on the definition of
“reasonable further progress” in section 171 of the Act.  The term
“reasonable further progress” is used in the NA NSR provisions of
the Act in conjunction with the offset requirement in section
173(a)(1)(A).  Section 171 does not contain a definition of major source
and the controlling definition of “major source” in section 302(j)
does not indicate that it is modified by the “reasonable further
progress” requirement of the Act.  Thus, Congress made clear that
offsets issued under the NA NSR should be consistent with “reasonable
further progress” but did not specify than any other aspect of the
major NSR program, including the population of sources subject to the
program, was modified by the reasonable further progress requirement. 
Nothing in this rulemaking precludes states from subjecting sources
emitting less than 100 tons of PM2.5 from meeting requirements similar
to those in section 173 of the Act if they believe this is necessary to
ensure RFP.  However, the Act does not authorize EPA to adopt a
different major source threshold for PM2.5 than the one set forth in the
Act (under either subpart 1 or subpart 4) in order to direct states how
to achieve RFP under section 171 of the Act.  

While we do not believe that EPA is authorized to establish a lower
major source threshold for PM2.5, the Act does not preclude a state from
using lower major source thresholds within its major NA NSR program if
it so determines.  Under Section 116 of the Act, states retain the
authority to adopt any air pollution measures that they deem
appropriate, provided such measures are not less stringent than
corresponding Federal regulations.

Comments on the Appropriate Major Source Thresholds for Direct PM2.5
Emissions

As noted above, we proposed to set the major source threshold for PSD at
100 or 250 tpy for PM2.5 direct emissions, depending on the source
category.  We proposed to set the major source threshold for NA NSR at
100 tpy for PM2.5 direct.

Prevention of Significant Deterioration Major Source Threshold

Comments:

Two industry commenters (0083.1, 0140) and one industry group commenter
(0096.1) believed that EPA should establish the PSD applicability levels
for PM2.5 at the current 100/250 tpy thresholds.  Two of these
commenters (0096.1, 0140) added that changing these applicability levels
for PM2.5 would add more complexity to the rule with little benefit. 
One commenter (0096.1) said that retaining the existing threshold levels
will avoid having different levels for the same criteria pollutant,
whether it is PM or other precursor emissions that may be regulated
under the NSR program.

A coalition of environmental organizations (0154.1) argued that EPA
should use a lower threshold for PSD than the one set forth in section
169(1) to protect public health and welfare notwithstanding compliance
with the NAAQS. 

Response:

As described above, EPA believes section 169(1) of CAA is controlling
for PM2.5 and thus the PSD threshold for this pollutant must be 100 tpy
for listed source categories and 250 tpy for unlisted categories.  If
EPA had the authority to selected different thresholds for PM2.5, we
agree that having different major threshold for this pollutant would add
more complexity to the PSD regulations.  As stated earlier, EPA  has
proposed a separate PSD regulation containing increments for PM2.5  that
are intended to fulfill the “health and welfare goal” cited by the
opposing commenter.  Once the minor source baseline date for a pollutant
is triggered in an area, the increments for that pollutant are consumed
by subsequent emissions increases at all sources (regardless of whether
they are classified as major or minor).  

Nonattainment NSR Major Source Threshold

Supporting Comments:

One state/local agency (0117.1) supported EPA’s recommendation of
setting the major source threshold for PM2.5 at 100 tpy under NA NSR.

Two industry commenters (0083.1, 0140) believe that EPA should allow the
NA NSR threshold to remain set at 100 tpy.  One of the industry
commenters (0140) added that changing this applicability level would add
more complexity to the rule with little benefit.

One group of industry commenters (0096.1) believes that there are strong
policy reasons for retaining the current major source threshold.  The
commenters stated that one important consideration is the minimal
environmental gains of lowering the major source threshold for PM2.5,
and indicated that lowering the threshold from 100 tpy to 70 tpy in
PM2.5 nonattainment areas, for example, would not increase significantly
the number of sources covered under the NA NSR program.  The commenters
added that lowering the threshold would just add regulatory complexity
with marginal benefit to air quality, at most.  Among other things, the
commenters noted that retaining the existing threshold level would avoid
having different levels for the same criteria pollutant, whether it is
PM or other precursor emissions that may be regulated under the NSR
program.

Opposing Comments:

Six state/local agency commenters (0079.1, 0080.1, 0084.1, 0142, 0164,
0168) and two state/local agency association commenters (0136.2, 0165)
did not agree with the proposed major source threshold of 100 tpy for
direct PM2.5 emissions under NA NSR.  

One state/local agency commenter (0153) believes that EPA did not
provide an adequate technical defense of its selection of the major
source thresholds for PSD and NA NSR and cannot support any level
without a sufficient defense.  The commenter indicated that common sense
would dictate that a fraction of PM would have lower equivalent
thresholds, noting that this principle was demonstrated in the levels of
NAAQS with each smaller PM fraction having a lower NAAQS.  Another of
the state/local agency commenters (0164) pointed out that PM2.5 is a
subset of PM10 and should have correspondingly lower thresholds.

Other state/local agency commenters stated that lower major source
thresholds were justified on the basis of the significant number of
sources with PM2.5 emissions between 25-99 tpy and the potential for a
source with this level of emissions to cause a significant impact on
ambient PM2.5 concentrations and public health.  (We discuss these
particular justifications in more detail in our response, below.)

A coalition of environmental groups commented that, since EPA has
repeatedly found PM2.5 to be at least as potent, if not more potent, in
terms of mass concentration than PM10, it would be arbitrary for EPA to
not at least adopt the 70 tpy major source threshold in
section 189(b)(3) for all PM2.5 nonattainment areas. 

One Federal agency commenter (0068) supported an NSR policy on PM2.5
components and precursors that is consistent with the nonattainment area
plan requirements.  As to what constitutes appropriate major source
thresholds of PM2.5 or precursor emissions for the purpose of the major
NSR program, the commenter encouraged EPA to look at all relevant parts
of the Act for guidance on developing its policy.  If EPA were not
constrained from considering provisions of the act that may help ensure
attainment and maintenance of the PM2.5 NAAQS, such as the more
stringent emissions thresholds Congress required in subpart 4 for PM10
nonattainment areas, then the commenter would support that approach. 
The commenter indicated that the increased risk of adverse health
effects from fine PM, generally, as well as consideration for other
well-documented pollutant effects that would need to meet requirements
of section 110(a)(2)(D) of the Act, may help justify the use of lower
thresholds for direct PM2.5 and PM2.5 precursors emissions. 

Response:

Although we have considered the technical merit of the 100 tpy major
source threshold for PM2.5 in nonattainment areas, as discussed above,
we do not interpret the CAA to give the Administrator the authority to
establish a lower threshold for PM2.5 based on technical considerations.
 Since Congress established the major source thresholds for the NA NSR
permitting program in the Act, it is ultimately not material whether
there is an adequate technical justification for the levels because we
are not authorized to establish an alternative level for PM2.5 based on
technical considerations.  Section 302(j) is explicit that “except as
otherwise expressly provided,” the term major source, means a source
that has the PTE 100 tpy.  Even if subpart 4 were applicable to PM2.5,
this would at most give us the authority to establish a major source
threshold of 70 tpy in only serious nonattainment areas.  No other
provision of the CAA expressly provides EPA with the discretion to
establish a major source threshold for PM2.5 in the range of 25-50 tpy
for nonattainment areas. 

We agree that the greater health risk posed by PM2.5 and the fact that
PM2.5  is a fraction of total PM both justify lower air quality
standards for PM2.5, but we do not agree that these facts necessarily
require EPA to establish a lower major source threshold under the NA NSR
program to achieve attainment or RFP.  The major source threshold serves
a different function than the NAAQS.  The major source definition
determines which large sources are subject to the mandatory
preconstruction permitting program under subpart D of the Act.  Congress
made the judgment that those sources emitting greater than the major
source level in the Act should be subject to a mandatory permitting
programs with specific requirements.  For sources with emissions below
the statutory level, Congress left the states with the discretion to
define the requirements needed for a construction permitting program (or
other measures) in order to reach attainment with the NAAQS and to
achieve RFP toward the same.  Thus, the major source threshold is simply
a level that determines the sources subject to the mandatory permitting
requirements and this does not necessarily mean that there will not
otherwise be sufficient measures in place to protect air quality. 
Furthermore, since PM2.5 particles have distinct health and welfare
impacts from PM10, we do not interpret subpart 4 of the CAA to apply to
PM2.5   simply because PM2.5   is a subset of the particles that make up
PM10.  The EPA’s interpretation is explained more fully on pages 12-14
of EPA’s Response to Comments document for the Clean Air Fine Particle
Implementation Rule (EPA-HQ-OAR-2003-0062-251).

We do not believe that using 100 tpy for the NA NSR program for PM2.5
will adversely affect attainment of the PM2.5 NAAQS.  Data from EPA’s
emissions inventory indicate that a significant number of sources have
actual direct PM2.5 emissions greater than 100 tpy range.  Thus, the
mandatory permitting requirements for major sources will have an impact
and hold down emissions increases from new or modified sources with
emissions of PM2.5 above the 100 tpy level.  Furthermore, the exclusion
of sources with PM2.5 emissions below 100 tpy from the NA NSR program
does not preclude states from taking other measures to address the PM2.5
emissions from these sources if necessary to achieve attainment or RFP. 
As we discuss elsewhere in this document, states that believe such
sources should be subject to requirements similar to those in section
173 have the discretion to establish such requirements in
preconstruction permit programs for minor sources.  

If EPA had the authority to select different thresholds for PM2.5, we
agree that having a major threshold for PM2.5  other than 100 tpy would
add more complexity to the NA NSR regulations. 

Comments:

Several state agency and association commenters (0136.2, 0142, 0165,
0168) disagreed with our analysis in the proposed rule that “the more
current inventory data shows 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” (70 FR 66037).  These commenters referred to state analyses,
which they argue supports a contrary conclusion that a lowered major
threshold level in the 25-50 tpy range would significantly increase
(i.e., essentially double) the number of sources subject to major NSR
review.  One of these commenters (0136.2) said that a number of state
agencies reviewed their emission inventories and found a significant
number of sources that emit at levels between 45-99 tpy.  However, the
commenter did not identify the specific states.  The other commenters
(0142, 0165, 0168) all cited to a single analysis performed by the State
of New Jersey.  Based on a review of its emissions inventory, New Jersey
concluded that there are approximately 26 facilities in New Jersey with
allowable PM10 emissions greater than 100 tpy and approximately 56
facilities within this state with allowable PM10 emissions between 45-99
tpy. 

Response:

Commenters have not provided sufficient information to persuade us that
our analysis is not reliable.  The EPA’s analysis was based on a
nationwide inventory and used PM2.5 emissions, whereas most commenters
rely on an analysis from a single state based on an inventory of PM10 
emissions.  The use of PM10 emissions tends to bias the New Jersey
analysis upwards, increasing the number of sources in the 45-99 ton per
year range, and decreasing the number of sources below this range.  The
EPA’s  national inventory data for PM2.5 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 PM2.5 threshold
were lowered to 20 tpy or below.  Thus, even if EPA had the authority to
adopt a 25-50 tpy major source threshold for PM2.5 nonattainment areas,
we still do not believe that many additional sources would be subject to
the major NSR program in PM2.5  nonattainment areas, notwithstanding the
analysis cited by the commenters.  The commenters that cursorily refer
to analyses in more than one state did not provide enough information
about such analyses to enable EPA to evaluate these assessments or
compare the results with EPA’s assessment.  

	

Even if the commenters could show that a 25 tpy cutoff would double the
number of sources subject to major NSR across the country, we do not
believe that our lack of authority to adopt such a major source
threshold for PM2.5 will have significant adverse impact on attainment
of the PM2.5 NAAQS.  Section 110(a)(2)(C) of the Act and 40 CFR
51.160(b)(2) require state minor NSR programs to assure compliance with
the NAAQS, and these programs can be implemented to prevent attainment
problems that might be caused by source actions that are not subject to
the major NSR program.  In addition, as previously noted, the Act does
not constrain states from setting lower major source thresholds for
PM2.5 in their major NSR programs.  States also may develop other SIP
provisions to regulate direct PM2.5 and precursor emissions from sources
with lower emissions. 

Comments:

Three state/local agency and association commenters (0142, 0165, 0168)
believe that a lower major source threshold is justified by the
potential of sources with direct PM2.5 emissions of 25 to 99 tpy to
cause high ambient PM2.5 impacts.  These commenters said this impact
justifies a lower major source threshold to avoid adverse health effects
caused by relatively low ambient concentrations of PM2.5 and to ensure
RFP toward attainment of the PM2.5 NAAQS in nonattainment areas. 

According to two of these commenters (0142, 0165), section III.M.5.b of
EPA’s proposal (70 FR 66038) describes a modeling analysis conducted
by EPA to compare PM2.5 stack emissions to the resulting ambient impact.
 Based on the results of this modeling [15 tpy of PM10 emissions results
in up to 0.8 microgram per cubic meter ((g/m3) annual PM10
concentration], one can conclude that a 99 tpy source of direct PM2.5
could have up to a 5.3 (g/m3 annual PM2.5 impact.  This represents 35
percent of the current PM2.5 annual NAAQS of 15 (g/m3.  A similar
problem is found for short-term PM2.5 impacts, when scaling the results
of the 24-hour modeling presented in section III.M.5.b (70 FR 66038).  A
99 tpy PM2.5 source could have up to a 39.6 (g/m3 24-hour PM2.5 impact. 
This concentration is approximately 61 percent of the current PM2.5
24-hour NAAQS of 65 (g/m3.  The issue becomes even more problematic if
the standards are lowered in the future.  Under the recently proposed
PM2.5 24-hour NAAQS of 35 (g/m3, emissions from a 99 tpy PM2.5 source
could violate the 24-hour NAAQS.  

Response:   

The potential for a source emitting less than 100 tpy of PM2.5 to cause
high ambient PM2.5 impacts provides a justification for the state to
address the construction of such a source through its minor source
permitting program or other measures in its SIP.  However, it does not
necessarily require mandatory application of the NA NSR requirements
under the CAA.  As discussed above, EPA does not read the Act to
authorize the agency to lower the major source threshold for PM2.5 on
the basis of the potential for a source less than 100 tpy to have a high
ambient impact on PM2.5.  We do not see any provision in the Act (under
either subpart 1 or subpart 4) that gives EPA the authority to lower the
major source threshold on the basis of the potential ambient air impact
of a source emitting less than 100 tpy of PM2.5.  

With respect to the health impacts, EPA has established the PM2.5 NAAQS
at a level requisite to protect health with an adequate margin of
safety.  States are obligated to submit implementation plans to achieve
attainment with the NAAQS and to achieve RFP toward attainment.  Public
health is protected by states complying with these requirements of the
Act and meeting the NAAQS.  To the extent implementation of the NA NSR
program, using the major source threshold reflected in the Act, is
insufficient to attain the NAAQS, it is incumbent upon states to develop
additional measures to attain the NAAQS.  Congress did not authorize EPA
to lower the 100 tpy major source level for NA NSR to make up for a
failure of states to include such measure in their plans.  To the extent
that commenters are concerned about transport from other states that do
not have measures as effective as their own, EPA has established the
CAIR to ensure that states control their contribution to downwind
nonattainment of the PM2.5 NAAQS. 

As discussed above, for major NSR in nonattainment areas, the RFP
requirement is integrated with the offset requirement in section
173(a)(1)(A) of the Act.  In light of the way Congress defined “major
source” under the CAA, EPA does not have the authority to lower the
major source threshold for NA NSR on the basis of concerns about RFP. 
States have the obligation to establish additional measures in their
SIPs (including the minor NSR program) where such measures are necessary
to achieve RFP.  The EPA does not read the Act to give it the authority
to mandate major NSR permitting requirements for source below 100 tpy
based on concerns regarding RFP. 

Comment:

One of the state/local agency commenters (0142) believes that an
appropriate major source threshold for PM2.5 emissions can be calculated
using the current SO2 and NOx definitions of major source and SER.  The
commenter suggested that the ratio of these values (100 tpy and 40 tpy)
can be multiplied by the proposed PM2.5 SER of 10 tpy (see section 4
below for more on the PM2.5 SER), resulting in a PM2.5 major source
threshold of 25 tpy.  The commenter indicated that this 25 tpy major
source value would provide consistency with those of the PM2.5
precursors SO2 and NOx.  The commenter pointed out that EPA has
recognized the need to define a PM2.5 SER at a lower level than those of
SO2 and NOx, and suggested that common sense would dictate that the same
logic be used to define a PM2.5 major source at a lower level than 100
tpy.  The commenter (0142) noted that the levels of PM2.5 that produce
adverse health effects are much lower than most other criteria
pollutants regulated by us under NA NSR.

Response:

We reiterate that we do not believe that the Act gives EPA the authority
to establish a lower PM2.5 major source threshold for NA NSR, whether
such level is based on the SO2 and NOx thresholds and SERs or some other
methodology.  In any case, the major source thresholds and SERs 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 SER.  Major source thresholds are
defined in the Act, while the significant emissions rates were codified
independently in regulations based on an analysis of ambient impacts
relative to the applicable NAAQS.

Comment: 

One state/local agency association (0136.2) recommended a major source
threshold in the range of 25-50 tpy of direct PM2.5 in areas that are
likely to attain the PM2.5 NAAQS within 5 years, and a level of 10-25
tpy in areas that are likely to take more than 5 years to achieve the
NAAQS.  One of the state/local agency commenters (0080.1) recommended
direct PM2.5 emission thresholds of 25 tpy for nonattainment areas
showing attainment within 5 years and 15 tpy for areas showing
attainment beyond 5 years.  Another state/local agency commenter
(0079.1) suggested a direct PM2.5 emission threshold of between 25 and
50 tpy.

Response:  

For reasons similar to those discussed above, we do not interpret
subpart 1 of the CAA to provide EPA with the authority to require that
all states use different major source thresholds on the basis of the
projected time it will take for an area to achieve attainment.  However,
states that choose to do so have the discretion to include provisions in
their SIPs that establish requirements modeled on the major NSR program
for sources of this size based on the time projected for each area to
reach attainment. 

Comments on Relationship of the NSR Major Source Threshold to RACT
Thresholds  

Comments:

The group of environmental commenters (0154.1) stated that EPA must use
major source thresholds consistent with the stationary source size
thresholds proposed for RACT in option 2.  The commenters indicated that
NSR requirements should be applied to any source located in a
nonattainment area that has the PTE more than 50 tpy of direct PM2.5
emissions or of any precursor to PM2.5.  The commenters believe that
doing so is justified by the seriousness of the health risks posed by
PM2.5 and would help advance attainment by bringing more sources under
the NSR requirements.  At a minimum, the commenters stated, EPA must
apply the major source definition found in section 189(b)(3) of the Act
(i.e., 70 tpy) as the nonattainment area NSR threshold for PM2.5
emissions.  

Response:

We disagree that the discussion of RACT alternatives has bearing on the
major NSR threshold.  In our proposal preamble discussion of RACT we
discussed developing a classification system for PM2.5 nonattainment
areas under section 172(a)(1) of subpart 1, but we did not discuss
subjecting PM2.5 to the requirements of subpart 4.  (We ultimately
decided not to use a PM2.5 classification system.)  While our discussion
of RACT contemplated a lower threshold for RACT applicability in some or
all PM2.5 nonattainment areas, we did not characterize this as defining
a lower major source threshold.  Finally, in section III.I.5 of the
proposal preamble 

(70 FR 66017-20), we pointed to the RACT approach adopted in both
subpart 2 (ozone nonattainment areas) and subpart 4 (PM10 nonattainment
areas) as a potential model for the approach to PM2.5 RACT, but we also
discussed other approaches.  We believe it is a mischaracterization of
the discussion to imply that we tied RACT for PM2.5 to the approach for
PM10 in subpart 4.  In fact, in the final Clean Air Fine Particle
Implementation Rule we elected not to use the approach to RACT found in
subparts 2 and 4. 

Furthermore, the applicability of RACT is not governed by the major
source definition in section 302(j) of the Act.  As discussed elsewhere
in this section, we believe the language in section 302(j) is
controlling for PM2.5 and does not authorize EPA to establish a PM2.5
major source threshold other than 100 tpy for the NA NSR program.  In
contrast, the Act does not establish any specific applicability
thresholds for RACT or identify the size of sources that should be
subject to this requirement.  Thus, although we may have recognized the
authority to consider different size threshold for application of RACT
to PM2.5, we do not have the authority to consider lower major source
thresholds for PM2.5 under the NA NSR program. 

Comments on the Appropriate Major Source Thresholds for Precursor
Emissions

As noted above, we proposed to set the major source threshold for PSD at
100 or 250 tpy for PM2.5 precursors, depending on the source category. 
We proposed to set the major source threshold for NA NSR at 100 tpy for
PM2.5 precursors.

Comments:

One state/local agency association (0136.2) and one state/local agency
(0080.1) agreed with the 100 tpy threshold under NA NSR for precursors.
 No commenters opposed EPA’s proposal to use the statutory major
source thresholds for PM2.5 precursors.

Response: 

EPA is adopting the proposed major source thresholds for PM2.5
precursors.  No change in the existing text of the regulations is
required. 

Comments on the Supplementary Role of Minor NSR

Comments:

Two state/local agency commenters (0142, 0168) and one state/local
agency association (0165) disagreed with EPA’s assessment that states
can mitigate sources emitting less than 100 tpy of PM2.5 through their
minor NSR programs because of 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
interstate nonattainment areas should be applied uniformly throughout
the entire nonattainment area, but that this would not be possible when
minor NSR programs are defined on a state-by-state basis.

Another state/local agency commenter (0153) stated that the purpose of
the minor NSR program is not to clean up problems found due to issues
within the major NSR program.  However, the commenter supported the
ability of states to develop rules for specific problem areas that are
upwind of nonattainment areas.  Ideally, the commenter added, EPA would
establish some guidelines for determination of upwind source
contribution to delay or interfere with attainment of the PM2.5 NAAQS
(significance levels to be used for PM2.5 precursors).  The commenter
believes that this would allow for a meaningful discussion of impact on
downwind nonattainment areas and provide for consistent treatment of
sources in different states with downwind impact on the same area.

This commenter (0153) also noted that the concept of placing permitting
restrictions or control requirements on minor sources could help improve
air quality, but stated that instead of implementing this approach at
the nonattainment area level it should be instituted on a nationwide
basis.  The commenter indicated that it is important that equity between
nonattainment areas of similar classification is maintained, believing
that otherwise industry will “shop” for nonattainment areas with
lesser requirements.  The commenter did not suggest that states should
not have the flexibility to include minor source permitting controls in
their SIPs, but believes that for this approach to be utilized by more
than a few areas it will have to be mandated at the Federal level.

Response:

We do not agree with the commenters who indicated that minor NSR
programs are not sufficient to address sources below the 100 tpy major
source threshold in interstate PM2.5 nonattainment areas due to
interstate transport of direct PM2.5 emissions.  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 fact, states also have the option of coordinating their NA NSR
programs to include a lower major source threshold in an interstate
PM2.5 nonattainment area, if they so choose.  

Furthermore, the impacts of direct PM2.5 emissions are generally felt
primarily in the local area.  Interstate transport is more likely to be
an issue with PM2.5 precursors.  The EPA has directed states to address
the interstate transport of PM2.5 precursors through the CAIR.  Lowering
the major source threshold for PM2.5 and subjecting more sources to NSR
in upwind states will not necessarily address the commenters concern
regarding upwind contributions to nonattainment.  In the CAIR, we
identified the amount of NOx and SOx emissions that are contributing to
downwind nonattainment and required states to reduce emissions to
address this transport.  This direct approach of reducing these
emissions across those states contributing to downwind nonattainment
will be more effective for achieving attainment than lowering the major
source threshold for every PM2.5 nonattainment area.  The CAIR calls for
these reductions across the entire region to which it is applicable,
which includes both attainment and nonattainment areas.  A lower major
source threshold for PM2.5 would only impact sources within a
nonattainment area and would not do anything to address transport of
PM2.5 precursors from upwind areas that may be in attainment. 
Furthermore, CAIR provides incentive to reduce emissions from existing
sources, whereas a lower major source threshold for sources subject to
NA NSR would only serve to reduce the potential increases in emissions
(through application of LAER) and offset emissions increases from new
sources or existing source that undertake a major modification.

We agree with the commenter who indicated that states have the ability
to develop rules for specific problem areas that are upwind of
nonattainment areas, and we believe that such rules could include minor
NSR rules as well as other measures.  We do not agree, however, that we
should develop general guidelines (such as emissions thresholds) for
determining when upwind sources delay or interfere with attainment of
the PM2.5 NAAQS.  Ambient concentrations of PM2.5 are the result of a
complex set of factors, and each PM2.5 nonattainment area represents a
unique combination of these factors.  Consequently, we do not believe
that it is appropriate to develop one-size-fits-all emissions thresholds
for minor NSR programs in areas upwind of PM2.5 nonattainment areas.

We disagree with the suggestion that we should mandate specific minor
NSR requirements in PM2.5 nonattainment areas.  Section 110(a)(2)(C) of
the Act and 40 CFR 51.160(b)(2) require state minor NSR programs to
assure compliance with the NAAQS, and it is incumbent upon states to
ensure that their programs do so.  However, we have traditionally
allowed states flexibility in how they structure their minor NSR
programs, and we see no overarching reason to do otherwise at this time.


Comments on Establishing Independent Thresholds for LAER and Offsets

Comments:

A group of environmental commenters (0154.1) said that even if EPA
finally concludes that it has no discretion to establish a more
stringent threshold for defining major sources, it should still require
LAER and offsets for sources that emit more than 50 tpy of direct PM2.5
or any PM2.5 precursor.  The commenter indicated that nothing in section
172 or 173 of the Act prevents EPA from applying the LAER and offset
requirements to sources that emit less than 100 tpy.  The commenter
believes that the provisions in sections 172(c)(5) and 173 of the Act
define the minimum universe of sources that must be covered by the NSR
requirements.  The commenter stated that requiring smaller sources to
meet the LAER and offset requirements is consistent with the approach
outlined in subpart 4 of part D and is reasonable given the more serious
health effects associated with fine particulates.  The commenter averred
that EPA cannot simply point to the definition of major stationary
source in section 302(j) to limit the sources that will be subject to
the requirements of section 173, and must provide a rational basis for
exempting smaller sources from the LAER and offset requirements of
section 173.

Response:

We do not agree that EPA should require states to apply LAER or offsets
to sources smaller than 100 tpy, but we will not preclude states from
electing to do so as part of a minor NSR permit program or some other
program if they consider it necessary to meet the NAAQS.  The
requirements for LAER and offsets are the core elements of the NA NSR
permit program that must be adopted as part of each SIP pursuant to
sections 172(c)(5) and 173 of the CAA.  As such, the Act only makes the
satisfaction of these requirements mandatory in order to issue a
preconstruction permit to a major source, as defined in section 302(j),
in a nonattainment area.  Thus, we do not believe it is permissible for
EPA to disassociate section 173 from the governing definition of major
source and impose the LAER and offset requirements on sources that are
not major or not otherwise subject to the NA NSR program. 

The CAA establishes a clear division of authority between EPA and the
states.  The EPA establishes the NAAQS and the states develop the
implementation plans necessary to satisfy those requirements.  Except
where Congress established specific programs such as major NSR and the
more detailed requirements of subparts 2-4, Congress gave the states
discretion to determine the measures necessary to comply with the NAAQS
and the requirements of section 110 of the Act.  The EPA has
established specific state mandates such as CAIR where necessary to
address the problem of interstate transport, but we have otherwise not
interpreted the Act to allow EPA to specify precisely how states are to
achieve attainment of the NAAQS.  It would be inconsistent with this
established system of cooperative federalism for EPA to mandate that all
states apply LAER and offsets for sources not subject to major source
NSR permitting requirements.  Furthermore, since EPA has adopted a
mandate in the CAIR rule directing states to address interstate
transport resulting in PM2.5 nonattainment, we do not find it necessary
to also impose LAER and offsets on source less than 100 tpy to address
the interstate transport contribution to PM2.5 nonattainment.  However,
EPA’s regulations do not preclude states from choosing in a minor NSR
program or some other vehicle to apply the LAER and offset requirements
in the Act, or some variant of the same, to sources that are not
governed by the major NA NSR program.  	

Other Comments on Major Source Thresholds

Comment:

One state/local agency commenter (0124.1) stated that the proposal
preamble was not clear as to whether the major source threshold applies
to each individual pollutant (direct PM2.5 emissions and each precursor)
or to the sum of these pollutants.  The commenter suggested that the
threshold should apply to each individual pollutant in order to provide
consistency with the existing NSR program, as well as avoiding
reclassifying minor sources as major.

Response: 

We agree with the commenter that the major source threshold should apply
individually to direct emissions of PM2.5 and to each designated
precursor.  If we were not clear on this point in the proposal preamble,
we wish to clarify this point at this time for the final rule.

Comments on Significant Emissions Rates (SERs) for Direct PM2.5 and
Precursor Emissions 

Comments on the SER for Direct PM2.5 Emissions

For direct PM2.5 emissions, we proposed a SER of 10 tpy as our preferred
option.  We derived this level using fundamentally the same approach
that we used in setting the SER for total suspended particulate (TSP)
and then PM10, that is, by determining the magnitude of emissions
increase that would be unlikely to cause impacts above 4 percent of the
NAAQS.  The analysis used to derive the PM2.5 SER was summarized in the
proposal preamble (70 FR 66038-39).  We also requested comment on a
range of potential SERs for direct PM2.5 emissions from 5 tpy to
15 tpy.

Comments Supporting 10 tpy: 

Four state/local agency commenters (0079.1, 0080.1, 0142, 0168), two
state/local agency association commenters (0136.2, 0165), and one
Federal agency commenter (0068) supported our preferred option of a
10 tpy SER for direct PM2.5 emissions.  Three of these commenters
(0142, 0168, 0165) agreed that using the same methodology that was used
to set the SER for PM10 and TSP for setting the SER for direct PM2.5
emissions is warranted.  Another of the state/local agency commenters
(0136.2) opined that the methods that we used to arrive at a significant
emissions rate of 10 tpy for direct PM2.5 emissions were acceptable
(namely, using ISCST3 model with meteorological data from Pittsburg and
Oklahoma City to assess the impact of emissions increases on ambient
PM2.5 concentrations). 

One of the supportive state/local agency commenters (0080.1) stated that
a separate proposal by EPA to change the annual emissions test for major
modifications at electric utilities to an hourly test would completely
undermine this proposal.  

Comments Opposing 10 tpy:

A number of industry, industry group, state/local agency, state/local
agency association, private citizen, and environmental group commenters
submitted comments that directly opposed a 10 tpy SER for direct PM2.5
emissions and/or proposed other levels or approaches.  These comments
are summarized below.

Four industry groups (0083.1, 0096.1, 0109.1, 0119.1) directly opposed
our preferred proposal of 10 tpy.  One of the industry groups (0119.1)
believes that our preferred approach is flawed.  The commenter argued
that we should not arbitrarily reduce the rate threshold by rounding
down.  The commenter noted that our methodology of using a ratio
between anticipated PM2.5 impacts and the prior assessment of PM10
emissions leads to a SER of ¾ of 15 tpy (70 FR 66038).  The commenter
stated that this results in a SER of 11.25 tpy, which we arbitrarily
changed to 10 tpy by “rounding the result.”  The commenter argued
that providing a more precise threshold would not entail more work for
regulators, create any environmental problems, or impose a greater
burden on industry.  In addition, the commenter suggested that we rely
on a typical configuration of PM2.5 sources rather than on outlier
sources modeled to emit significant amounts of direct PM2.5 emissions
from very short stacks. 

Two of the industry groups (0083.1, 0096.1) stated that our
justification for lowering the current significant threshold from 15 tpy
to 10 tpy uses a modeling analysis that tends to over-predict actual
representative impact levels under worst-case scenarios.  

One of the industry groups (0109.1) does not support the 10 tpy as a SER
for direct PM2.5 emissions because it unclear as to what assumptions or
measurements this proposed SER is based on.  This commenter also
objected to the proposed 5 tpy SER, asserting that the concerns we have
about ambient PM2.5 from short stacks are not relevant to a majority of
sources. 

Recommend SER of 15 tpy:

Eight industry and industry group commenters (0083.1, 0096.1, 0100.1,
0107.1, 0109.1, 0111.1, 0119.1, 0161) urged us to select 15 tpy as the
SER for direct PM2.5 emissions.

One industry commenter (0161) and one industry group (0107.1) stated
that by selecting 15 tpy we would maintain consistency with the PM10
SER, if not the methodology by which that rate was established (70 FR
66037-38).  These commenters indicated that given that the PM2.5 source
population differs from the PM10 source population (70 FR 66038), it is
not necessary to use identical methodology to set the SER.  The
commenters added that we could conceivably drop the direct PM2.5
emissions SER to 10 tpy after 5 years to capture additional facilities,
if a robust offset market has developed.  

Two industry groups (0083.1, 0096.1) stated that our proposal to lower
the current significant threshold from 15 to 10 tpy is based on modeling
analyses using potential ambient air quality impacts from various
hypothetical major sources of PM2.5 emissions which tend to over-predict
actual representative impact levels under worst-case scenarios. 
Because of this and other conservative biases introduced in the modeling
analyses, the commenters believe that the modeled upper bound level of
15 tpy should be adopted as the direct PM2.5 emissions SER.  The
commenters believe that a 15 tpy SER would be a more reliable indicator
of when increased emissions could have significant impact on ambient
PM2.5 concentrations under typical source configurations.  An industry
commenter (0111.1) similarly suggested that, since we indicate that we
used conservative modeling assumptions in developing the range of 5 to
15 tpy for the SER for direct PM2.5 emissions, we should utilize the
upper end of the range (as opposed to the middle as we suggest) in
setting major NSR significance levels.

One industry group (0119.1) supported a 15 tpy SER for direct PM2.5
emissions based on the fine particulate reductions that are expected
from Federal regulations that are in the pipeline and the relatively
small contribution of industrial sources to the remaining inventory. 
The commenter indicated that a higher threshold is the best way to
balance the need for additional reductions with the burden that major
NSR places on capital improvements and investment. 

One industry group (0100.1) opposed the tightening of the PM2.5 SER,
arguing that it should remain at 15 tpy or even be adjusted upwards to
reflect higher emissions levels that will be measured using our proposed
methods (which will include condensables).  A second industry group
(0109.1) questioned whether we really have the technical ability at this
time using Conditional Test Method (CTM) 40 and Reference Method 202 to
accurately measure PM2.5 condensable emissions; therefore, the commenter
supports retaining the PM10 significance level of 15 tpy as a surrogate
for fine particulate until such technical capability is available.  

Recommend SER of 5 tpy:

One group of environmental commenters (0154.1) believes that using a 4
percent impact from a single source is hardly a de minimis impact,
especially in nonattainment areas, which are required to reduce
emissions as expeditiously as practicable.  The commenter asserted that
our own calculations indicate that direct emissions of PM2.5 in excess
of 5 tpy from facilities with short stacks would cause a measurable
increase in ambient PM2.5 concentrations.  Based on this information,
the commenter argued that we cannot justify choosing a level greater
than 5 tpy as de minimis.  

One private citizen (0062) noted that our selection of 10 tpy as the SER
for direct emissions of PM2.5 is based on example modeling with a target
impact of 4 percent of the annual PM2.5 standard (0.6 (g/m3).  The
commenter argued that given that it is accepted that, at most, one-half
or less of monitored PM2.5 is directly emitted particulate, the
“effective” annual PM2.5 standard for directly emitted PM2.5 should
be on the order of 7.5(g/m3.  Based on this, the commenter stated that
the target impact of 4 percent should be about 0.3 (g/m3 and the SER
for direct emissions of PM2.5 should be 5 tpy or less.  

Recommend Other Approaches:

One state commenter (0153) suggested that we could “split the
difference,” an option that could give states and companies some
flexibility.  Modifications increasing direct PM2.5 emissions by less
than 5 tpy could be considered de minimis; for modifications increasing
direct PM2.5 emissions by between 5 and 15 tpy, the source could choose
to either demonstrate an ambient impact of less than a 4 percent of the
NAAQS or simply be subject to major NSR; and modifications with
increases of 15 tpy or more of direct PM2.5 emissions would be subject. 

One industry commenter (0119.1) requested that regulated entities be
given the opportunity to establish (through environmental modeling) that
specific projects which would increase emissions by more than the
designated SER will not result in an ambient PM2.5 increase of more than
4 percent of the NAAQS.  The commenter believes that such an
alternative would ensure adherence to our proposed generic limitation
while recognizing that it may not reflect every circumstance.  The
commenter asserted that the suggested alternative would minimize the
burden on state regulators as most sources and projects would continue
to rely on the generic significance threshold, and regulated entities
would bear the burden of demonstrating that an alternative limitation is
appropriate

Response:

As proposed, and for the reasons articulated in the proposed rule, the
final rule establishes the SER for direct PM2.5 emissions at 10 tpy. 
This SER is based fundamentally on the same approach that we used in
setting the significant emissions rate for TSP and PM10.  We agree with
commenters who indicated that it was appropriate to use the same
methodology for direct PM2.5 emissions that was used to set the SER for
PM10 and TSP.  We do not agree that using the same SER level as PM10
(15 tpy) is warranted, given the substantially lower PM2.5 NAAQS in
relation to the PM10 NAAQS.  

We do not agree with commenters who contend that our modeling tends to
overpredict impacts, and thus that we should raise the SER to 15 tpy. 
Our analysis is intended to represent a range of sources that could
undergo changes which increase their emissions of PM2.5.  Even if
commenters could show that EPA’s analysis tends to overpredict impacts
for certain sources, some conservatism is justified when setting de
minimis levels used to determine whether a modification should be
subject to more detailed review of its air quality impacts. 

Neither do we agree that a SER of 5 tpy or less is warranted solely
because a source releasing PM2.5 emissions from a short stack could
cause measurable increase in ambient PM2.5 concentrations.  As stated
in the proposal, our analysis did indicate that an emissions increase of
5 tpy at certain facilities with short stacks could cause an ambient
PM2.5 concentration increase above the target de minimis level. 
However, our approach for calculating a design value to establish the
PM2.5 SER involved modeling a variety of source configurations and
downwash conditions with meteorological data from selected urban
settings.  Thus, the resulting design value is not intended to be
representative of any particular source or stack height, but instead to
represent a range of sources that could undergo changes which increase
their emissions of PM2.5.  While some conservatism is helpful when
setting a de minimis impact level, we do not believe this justifies
setting the SER based on individual source types that are not
representative of the range of sources that could increase emissions
without having a significant impact. 

With regard to the comment that our procedure for rounding the SER for
PM2.5 to 10 tpy is arbitrary, we agree that a more precise threshold
would not necessarily entail more work for either regulators or
industry.  However, rounding the SER to 10 is consistent with the
approach that we have taken in setting SERs for other criteria
pollutants beginning with the 1980 PSD regulations.  In those
regulations, as mentioned above we modeled a variety of source
configurations along with other modeling assumptions in order to
calculate a representative design value based on an ambient impact of 4%
of the NAAQS, which we then rounded off to the nearest 5 tons.  See 45
FR at 52707, August 7, 1980.  Furthermore, rounding down provides some
conservatism to account for factors not reflected in our representative
source analysis, such as the potential impact of shorter stacks
discussed above.  

We do not agree that inclusion of condensable emissions in future
testing and applicability determinations (see section 5) is grounds for
increasing the SER for direct PM2.5 emissions.  The results of the
modeling analyses that are the basis for the SER of 10 tpy are 
affected by the quantity of the direct PM2.5 emissions used in the
model—not by the nature of the direct PM2.5 emissions (i.e.,
filterable or condensable).  The direct PM2.5 emissions used in the
model included both the filterable and condensable fractions.  

We do not agree with the commenter who recommended using an
“effective” annual standard of 7.5 (g/m3 (half the PM2.5 annual
NAAQS) to calculate the SER for PM2.5.  We have stated that precursors
contribute significantly to ambient PM2.5 concentrations, producing
approximately half of the concentration nationally; however, this should
not be taken to mean that primary (or direct) PM2.5 emissions affect
only half the NAAQS.  From one location to another, ambient PM2.5
concentrations may consist of varying portions of primary and secondary
PM2.5.  The commenter did not explain why we should consider only half
the value of the standard when determining what the impact will be of a
source’s direct PM2.5 emissions.  We did not develop the PM2.5 NAAQS
based on any distinction between the individual components that make up
the total measurement.  Similarly, we would not determine a source’s
compliance with the NAAQS by comparing the impact of its direct PM2.5
emissions against half the value of the standard.  

We do not agree that there should be a process whereby a source may
elect to demonstrate that the increase in direct PM2.5 emissions from a
proposed modification will have an ambient impact of less than
4 percent of the PM2.5 NAAQS.  Rather than establishing applicability
of NSR on a source-by-source basis through environmental modeling, we
believe that it is more appropriate to continue our historical method of
specifying de minimis cutoffs in terms of “emissions rate” for
source applicability purposes.  This approach is consistent with the use
of emissions rates as the criteria for determining which sources are
major and therefore subject to NSR/PSD review.  Case-by-case
determinations of NSR applicability on the basis of ambient air quality
impacts could add an unnecessary level of complexity to the review
process and could create an atmosphere of uncertainty as to whether
individual sources needed to apply for a permit or not, and could lead
to uneven application of the regulations from state to state. 
Case-by-case modeling of ambient impacts is conducted within the permit
process once it has been established that a proposed modification
increases emissions in an amount that warrants review.  

We disagree with the commenter’s statement that a separate proposal by
EPA to change the annual emissions test for major modifications at
electric utilities to an hourly test would completely undermine this
proposal.  The commenter is apparently referring to our proposal on the
emissions test for electric generating units (70 FR 61081, October 20,
2005).  The SER is relevant as a threshold to determine if a
significant emissions increase occurs at any type of facility—not just
power plants.  In any event, EPA will address the potential need for
another SER for power plants, if appropriate, in that particular
rulemaking. 

Comments:

Two industry commenters (0107.1, 0161) requested that if we require that
ammonium chloride and other ammonia compounds that result from the use
of ammonia for NOx control be counted as direct PM2.5 as a result of
Method 202 or other testing for condensable particulate matter, we
should establish a different SER for direct PM2.5 where a source
demonstrates to the permitting authority that a net emissions increase
or PTE will equal or exceed 10 tpy (the final SER for direct PM2.5
emissions) due to the use of ammonia in its air pollution control system
for NOx control.  The commenters suggested a SER of 40 tpy of direct
PM2.5 emissions for such sources, equal to the SER for NOx.

Response:

As indicated in the Clean Air Fine Particle Implementation Rule
promulgated on April 25, 2007 (72 FR 20586), EPA has adopted a
transition period to validate test methods for measuring condensables. 
Similar to that implementation rule, the final PM2.5 NSR Implementation
Rule will require major NSR programs to include condensable emissions of
PM2.5 for all purposes from the date established in the notice and
comment rulemaking promulgating validated test methods or January 1,
2011, whichever is earlier (see section 5).  Nevertheless, we do not
agree that sources generating condensable PM2.5 emissions through use of
NOx controls should be subject to a higher SER for direct PM2.5
emissions than other sources, since the total direct PM2.5 emissions
(including condensable emissions) are evaluated against the SER
regardless of the origin of the direct PM2.5 emissions.  

Comment:

One state/local agency (0153) commented on the proposed regulatory
language for the SER for direct PM2.5 emissions.  The commenter
suggested adding the word “direct” to the entry for PM2.5 emissions
in the significant emissions tables in the definitions of
“significant” in 40 CFR 51.165, 51.166, and 52.21 and in appendix S
of 40 CFR part 51.

Response:

We agree with the commenter and have made this change in the final
regulatory text for the rulemaking.  See, e.g., § 52.21(b)(23)(i). 
This is consistent with our proposal, since we indicated we would
propose to establish separate SERs for PM2.5 precursors.

Comments on the SERs for PM2.5 Precursors (SO2, NOx, and VOC)

At proposal, our preferred option for setting the SERs for PM2.5
precursors was to use the existing SERs for those precursors already
included in major NSR programs for most attainment and nonattainment
areas, that is, 40 tpy for SO2, NOx, and VOC.  We also requested
comment on the option of setting the SER for these precursors at the
same level as proposed for direct PM2.5 emissions, that is, 10 tpy.

Comments Supporting 40 tpy: 

Seven industry commenters (0083.1, 0096.1, 0109.1, 0111.1, 0119.1, 0126,
0161) support our preferred option of utilizing the existing SO2, NOx,
and VOC SERs of 40 tpy.  Six of these industry and industry group
commenters (0083.1, 0096.1, 0111.1, 0119.1, 0126, 0161) indicated that
using the existing SERs would harmonize and streamline NAAQS attainment
and maintenance requirements and/or would be consistent with the
thresholds under the ozone NSR program.  They stated that by reducing
the complexity of requirements, it would benefit NSR applicability
determinations (including simplifying netting analyses), control
technology determinations, and air quality impact analyses.

Eight state/local agencies commenters (0079.1, 0080.1, 0124.1, 0136.2,
0145, 0158, 0165, 0168) generally support our preferred option of
defining the PM2.5 precursor SERs at 40 tpy to harmonize and streamline
the major NSR program.  Three of the commenters (0136.2, 0165, 0168)
added that a higher SER for the PM2.5 precursor emissions than for
direct PM2.5 emissions is reasonable because of the greater impact of
direct PM2.5 emissions on ambient concentrations.  For nonattainment
areas, however, these commenters suggested that the rule include a
provision that would allow individual states with nonattainment areas to
define lower precursor emission rates in their SIP demonstration,
similar to the lower SERs for ozone precursors in some ozone
nonattainment areas.  

Another of the supportive state/local agency commenters (0124.1) stated
that if we adopt the 10 tpy SER for precursors, it should be founded
upon a clear need to protect the ambient standard in numerous downwind
locales.  The commenter pointed out that a 10-tpy threshold could
trigger NSR review for sources/modifications that would otherwise be
minor for those given pollutants, creating an unwarranted inconsistency
that would add confusion to the major NSR program.

Comments Opposing 40 tpy:

One state/local agency commenter (0153) stated that, though existing
SERs will provide a program that is of similar effectiveness as
currently implemented for precursors that are also criteria pollutants,
it would not be too complex to administer precursor significance levels
for SO2, NOx, and VOC at levels other than those that currently exist. 
The commenter asserted that we could conduct additional modeling to
determine the impact of secondary emissions on downwind PM2.5
concentrations and construct a program based on the results of this
analysis.

One Federal agency commenter (0068) stated that given that roughly half
or more of ambient PM2.5 is derived from precursors, the commenter would
support 10 tpy as appropriate to define significance of PM2.5 precursor
emissions.

One private citizen commenter (0062) stated that he believes that the
proposed preferred SERs for PM2.5 precursors were overstated. 
Regarding SO2, the commenter noted that it is commonly accepted that, in
much of the eastern United States, one-half or less of monitored PM2.5
is sulfate, which is usually considered as ammonium sulfate.  Based on
this, he stated that the “effective” annual standard for ammonium
sulfate should be on the order of 7.5 (g/m3.  The existing significant
emissions rate for SO2 of 40 tpy is related to the annual standard for
SO2 of 80 (g/m3 by the ratio of 40:80 or 0.5 tpy per (g/m3.  He stated
that, by the same ratio, the significant emissions rate for SO2 as a
precursor to PM2.5 should be 3.75 tpy, which could be rounded up to 4
tpy.  The commenter went on to argue that the situation is even more
complicated.  He noted that SO2 has a molecular weight of 64.07 while
ammonium sulfate has a molecular weight of 132.15, which means that each
ton of SO2 has the potential to be treated as 2 tons of ammonium
sulfate.  The commenter argued that even recognizing that probably not
all of the SO2 will be converted to PM2.5 and that it takes time
(equivalent to distance) for the chemical transformation to occur, it
would be prudent to establish a SER at something closer to 4 tpy than
the preferred proposal of 40 tpy.  

The private citizen commenter (0062) also stated that the precursor
pollutant NOx could be considered in much the same way.  The commenter
asserted that the fraction of monitored PM2.5 that is ammonium nitrate
is more variable but could generously be approximated as one-third,
yielding an “effective” annual standard of 5.0 (g/m3.  The
commenter also pointed out that the existing SER for NOx of 40 tpy is
related to the annual standard for NO2 of 100 (g/m3 by the ratio of
40:100 or 0.4 tpy per (g/m3.  Based on the same ratio, the commenter
believes that the SER for NOx as a precursor to PM2.5 should be 2.0
tpy.  

Response:

As proposed in our preferred option, we have decided to promulgate SERs
of 40 tpy for the PM2.5 precursors SO2, NOx, and VOC, which is the SER
value already used for these pollutants under the major NSR program in
most attainment and nonattainment areas.  The use of existing SERs,
where the PM2.5 precursor is also regulated under NSR for a separate
criteria pollutant, harmonizes the NSR program for PM2.5 with the NSR
programs for those other criteria pollutants.  This harmonization
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.  As a result, the
additional burden on both the regulated industry and regulatory
authorities will be kept to a minimum for an already complex program. 
This approach also follows the precedent we set when we used the
significant emission rate for NOx from the NO2 program when ozone became
a criteria pollutant.

While the burden imposed is just one factor to be considered when
setting the SERs for precursors, the process for determining the SERs
also involves taking into account the accuracy and certainty by which we
can predict the effect of the precursors on PM2.5 emissions.  Although
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.  Therefore, 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.  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.

For the reasons discussed above, we disagree that the SER for PM2.5
precursors should be set at the same level as the SER for direct PM2.5
emissions, that is, 10 tpy.  Adopting this value for the precursor SER
would imply that 1 ton of precursor emissions is equivalent to 1 ton of
direct PM2.5 emissions, which is not the case (see additional discussion
in section V.G.4 of the preamble to the final rule, in the context of
interpollutant trading for offsets).  We also disagree with the
commenter who urged us to establish SERs for SO2 and NOx based on the
relationship between the existing SERs for these pollutants and the
NAAQS for the pollutants.  In the first place, and as discussed above,
the ambient PM2.5 impact of precursor emissions from a single source is
uncertain and variable, and much more so than the impact of SO2 and NOx
emissions on the ambient concentrations of SO2 and NO2.  The
commenter’s suggested approach implies that 1 ton of SO2 emissions
would have the same effect on ambient PM2.5 concentrations that it would
have on ambient SO2 concentrations, and likewise for NOx emissions.  As
discussed in our analysis for interpollutant trading, this is clearly
not the case.

 

We note that states may define more stringent precursor SERs for
nonattainment areas as part of their attainment strategy if necessary. 
Under section 116 of the Act, states retain the right to adopt any air
pollution measures that they see fit, provided they are not less
stringent than corresponding Federal regulations.  Note also that 40
CFR 51.165(a)(1) provides that a SIP may deviate from the definitions
therein (which include the SERs) if the state demonstrates that its
definition is at least as stringent as the definition in 40 CFR
51.165(a)(1).  Consequently, we do not believe that additional
regulatory language is necessary to provide this flexibility to states. 

 Comments on the SER for Ammonia as a PM2.5 Precursor

Comment:

One industry commenter (0126) stated that we should not leave it to
states to set SERs for ammonia to determine applicability.  The
commenter argued that this SER should be developed by EPA scientists and
be subject to notice and comment.

Response:

In the final rule, as proposed, we are allowing those states that
determine in their SIPs that control of ammonia is necessary to set the
SER for ammonia.  The SER will be based on information presented in
each attainment demonstration.  We believe this is more appropriate
than EPA setting a single SER, because of the varying roles ammonia
plays in the formation of PM2.5 from one area to another, and also
because of our still-evolving understanding of the impact of reducing
ammonia emissions on ambient PM2.5 concentrations.  We note that the
SIP revisions that states need to make to add ammonia to their NA NSR
programs and, to set SERs for ammonia, are subject to notice and comment
rulemaking requirements.  When any state determines that control of
ammonia is necessary in a PM2.5 nonattainment area, we advise that state
to develop a SER 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) and
52.21(b)(23)(ii).  

Comments on Including the Condensable Fraction of Direct PM2.5
Emissions for Purposes of Major NSR

Certain sources utilizing high temperature processes emit gaseous
pollutants that rapidly condense into particle form.  These
“condensable emissions” typically make up a significant fraction of
direct PM2.5 emissions.  We proposed to clarify in this rule that
condensable emissions must be included when determining whether a source
is subject to the major NSR program and in deriving emissions
limitations.

Supporting Comments: 

One group of environmental commenters (0154.1), three state/local
agencies (0117.1, 0142, 0168), and two state/local agency associations
(0136.2, 0165) supported the requirement to include condensable
emissions in implementing NA NSR and PSD for PM2.5.  The group of
environmental commenters asserted that there are methods available now
that can both quantify and control condensables.

Two of the state/local agencies (0142, 0168) and one of the agency
associations (0165) favor clarifying through regulation that condensable
emissions (all condensables, including primary sulfates) must be
included when determining PM2.5 NSR applicability and required modeled
demonstration of NAAQS, PSD increments, etc.  These commenters also
urged that we finalize and recommend the stationary source PM2.5 test
method discussed in the proposal preamble.

The other supportive state/local agency association (0136.2) requested
that we define “condensables” in the final rule to include gaseous
pollutants and those that condense into particle form, such as primary
sulfates, nitrates, organic material and metals (that is, both the
“front end” and “back half” of condensables).  The commenter
urged that we identify a stationary source test method for PM2.5 that
will enable state and local agencies to accurately identify the fraction
of the condensables that is PM2.5 in order that permit limits can be
set, increments can be tracked, and ambient impacts can be evaluated.

The other supportive state/local agency commenter (0117.1) noted that
including condensable emission in determinations for when a source will
be subject to the major NSR program for PM2.5 is consistent with the
historical determinations related to condensables that have been made in
the commenter’s state.

Another state/local agency (0087.1) expressed concern about including
condensables in the rule at this time due to inaccurate test methods. 
The commenter believes it is critical that EPA expeditiously develop a
more reliable test method.  In the meantime, the commenter suggested
that, for purposes of permitting and compliance, CTM 40 plus Method 202
be used so that there is consistency in these programs. 

Opposing Comments:

   Seven industry and industry group commenters (0083.1, 0096.1, 0105.1,
0109.1, 0111.1, 0125.1, 0155) expressed opposition to including
condensables at this time.  

One of the industry group commenters (0096.1) believes that regulation
of condensable particulate matter at this time will impede, rather than
facilitate, expeditious attainment of the PM2.5 standard.  This
commenter asserted that regulation of condensable emissions poses too
many significant technical and logistical difficulties to implement at
this time, and that regulation of condensable emissions would only be
appropriate 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 condensables are established.

Another industry commenter (0111.1) similarly expressed concern about
the potential for retroactive application of the new test method (if and
when a reliable test method is developed) to assert violations of an
emission limit originally based on flawed testing/estimating
methodology.  The commenter pointed out that we are including
condensables for purposes of PM2.5 NSR, while simultaneously
acknowledging that we have not yet developed test methods to address
these emissions. The commenter suggested that we ensure that when test
methods are developed, sources that have made good faith applicability
decisions will not be subject to retroactive enforcement and that limits
will be revised to include the new method so that sources will not be
forced to certify deviations based on a new method. 

This industry commenter (0111.1) also asserted that it is inherent in
the development of any standard that EPA prescribes how compliance will
be determined.  In the context of NSR, the commenter stated, sources
must know the standard against which to assess a project’s emissions
so they can make an informed decision on whether to proceed with that
project.  The commenter concluded by saying that, while his company
agrees that condensable emissions should be considered in the NSR
program, EPA’s final rules should clarify that they are included only
to the extent that they are quantifiable by an approved and promulgated
test method.

One of the industry group commenters (0109.1) objected to our proposal
to require condensable PM2.5 to be included in NSR analyses, given that
we acknowledge that different test methods measure condensables with
varying accuracy.  The commenter noted that we mentioned using AP-42
emissions factors for PSD and NA NSR analyses, but asserted that such
factors may not be available for PM2.5.  The commenter went on to point
out that the Emissions Factor Improvement Project has questioned the
viability of fine particulate factors for such equipment as gas
combustion, which had commonly been thought of as reliable.  Based on
this, the commenter recommended that we adopt a flexible approach that
allows states to use AP-42 emissions factors that are currently
available until new ones for fine particles are developed.

Other Comments:

 	One industry group commenter (0127.2), without expressing support or
opposition to including condensable PM emissions in the major NSR
program for PM2.5 at this time, requested that we explicitly develop the
following policies for addressing NSR-related issues in the transition
to including condensable PM: 

New test methods or emissions estimation techniques will not be used as
a basis for revisiting prior NSR applicability determinations (e.g.,
used to make a retroactive adjustment to a netting calculation).

Provide explanations regarding how comparisons of baseline actual
emission to projections of future actual emission should be made when
the measurement techniques are changed between the times of the two
calculations so that the comparison will reflect comparable calculation
methods.

New test methods should only be used for new PM2.5 SIP-related standards
and that changes to emission limits or standards should not be made to
existing SIP-related and all non-SIP-related obligations.  Additionally,
the commenter requested that we specify that such limits or standards
should continue to be based on prior test methods or estimation
techniques.

Assure fairness of NSR determinations. 

Response: 

	Based on the number of comments expressing concern about the
variability and the accuracy of the test methods for measuring
condensable emissions, EPA has adopted a transition period to validate
and promulgate revised test methods before fully integrating
consideration of condensable emissions into the NSR program.  We
maintain the view that condensables are an important component of PM2.5
emissions that should be addressed.  Accordingly, we are finalizing our
proposal to include condensables, but we are deferring the applicability
of this requirement until the end of the transition period.  Although we
do not necessarily agree with all of the criticisms of method 202 (See,
pages 362-365, EPA-HQ-OAR-2003-0062-251), we believe that it is
important that the regulated community, states, and other stakeholders
have confidence in the testing methodologies to be used in the NSR
program.  In the near term, we think that developing confidence in the
testing methodologies outweighs the benefits of addressing condensable
emissions under the NSR program and thus justifies a temporary deferral
in accounting for the condensable fraction of particulate matter under
this program.  During the transition period, addressing only the
filterable fraction of direct PM2.5 and the regulated precursors is
likely to provide adequate protection of the PM2.5 NAAQS.  Also, some
technologies which may be selected as BACT or LAER for PM2.5 and PM10
can control condensables, even if the condensables fraction is not used
quantitatively in deriving emissions limitation and assessing compliance
with those limitations.  

	During the transition period, we will not require states to establish
enforceable emissions limits that address condensable particulate matter
for either PM10 or PM2.5 in NSR permits, or to require accounting for
condensable PM when determining NSR applicability, until the completion
of the transition period.  This transition period will end January 1,
2011 unless we advance this date through the rulemaking process
described below.  However, EPA recognizes that states having the
authority to do so, may require inclusion of condensable emissions in
NSR permits at their discretion.

In the meantime, we are undertaking a collaborative testing effort with
industry, the 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 is to collect new direct filterable and
condensable PM 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 accurate source emissions limits in permits.

	Upon completion of the test methods assessment, we will conduct 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
particulate matter.  Thus, as part of the test methods rulemaking, we
will consider and take comment on an earlier closing date for the
transition period in the NSR program if we complete the test methods
rule substantially before 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 promulgated on April 25, 2007 (72 FR 20586). 
Permits issued under PSD and NA NSR during the transition period 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
new or revised test methods rule), we will require that NSR permits
include limits set considering 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
PM10 or direct PM2.5 emissions.

We acknowledge the legitimate concerns raised by commenters concerning
potential exposure to retroactive enforcement, and the final rules
address this issue.  Although we have previously issued guidance
indicating that we interpreted PM10 to include condensables, such
interpretation has not been consistently applied by EPA offices and
states.  As a result, we 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 is concerned, unless the
applicable implementation plan clearly required consideration of
condensable PM.  Likewise, we will interpret PM emissions limitations in
existing permits or permits issued during the transition period as not
requiring quantification of condensable PM 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 an earlier
date established in the new or revised test methods rule), 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 PM2.5 emissions will be addressed in all
other aspects of the major NSR program, such as impact analyses under
PSD and offsets under NA NSR.

	Additional support for our decision to establish a transition period
for condensable PM2.5 can be found on pages 341-371 of the Response to
Comments document for the Clean Air Fine Particle Implementation Rule
(EPA-HQ-OAR-2003-0062-251). 

Comments on PM2.5 Increments, Significant Impact Levels (SILs), and
Significant Monitoring Concentration (SMC)

On November 1, 2005, we proposed a rule to implement the PM2.5 NAAQS and
to make other changes, 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.



  HYPERLINK \l "_Toc163559646"  Comments on PSD Pre-Construction
Monitoring (PCM) Requirements for PM2.5	 

Under sections 165(a)(7) and 165(e) of the Act and the implementing
regulations at 40 CFR 51.166(m) and 52.21(m), sources subject to PSD
are subject to PCM requirements for any criteria pollutant emitted in
significant amounts.  If required for a particular source, PCM could add
1 year to the permitting process and increase the cost of the permit. 
However, a source may use existing data in lieu of conducting its own
monitoring if it can demonstrate to the satisfaction of the reviewing
authority that the existing monitored date record is representative of
air quality in the project’s location.  In addition, under existing 40
CFR 51.166(i)(5) and 52.21(i)(5), the reviewing authority has the
discretion to exempt a source from the PCM requirement if: (1) the
maximum modeled concentration caused by the project’s emissions
increase is less than the prescribed SMC, or (2) the existing monitored
ambient concentrations are less than the SMC.  We proposed five options
for PM2.5 PCM requirements and ultimately elected to proceed with a
combination of options 1 and 3.

Option 1 – Require PCM but Allow Use of Existing Data on a
Case-By-Case Basis

Option 1, our preferred option at proposal, would require PCM for all
major sources of direct PM2.5 and precursor emissions, but, on a
case-by-case basis, allow sources to satisfy this requirement by
demonstrating that the existing PM2.5 monitoring data is sufficient,
i.e., representative.  Comments that specifically supported or opposed
this option are summarized below.

Supporting Comments:

One state/local agency (0077.1) expressly supported Option 1 and opposed
exemptions from PCM.  Two state/local agencies (0087.1, 0117.1) also
supported Option 1 because it gives regulatory agencies sufficient
latitude to address sources with unique characteristics.  One
state/local agency (0159) agreed that preconstruction monitoring should
be required only on a case-by-case basis, which should occur rarely. 
Another state commenter (0137) said that the Option 1 approach has
worked well in the past.

Although generally supportive of Option 1, one state/local agency (0168)
and one state/local agency association (0165) pointed out that relying
only on existing PM2.5 data has limitations because current PM2.5
monitor locations are not only limited in spatial representativeness,
but have been sited to be specifically located away from single source
impact areas to represent regional exposure levels.  Thus, the
commenters believe that it will be difficult to base a determination of
their representativeness for specific source applicants.  Furthermore,
the commenters stated, EPA has proposed dramatic cuts in the states’
monitoring networks and a shift from PM2.5 to PM coarse monitors.  The
commenters noted that current regulations rely on SMCs for waivers of
PCM.  The commenters recommended that EPA develop a 24-hour PM2.5 SMC
similar to the PM10 value, and use that in combination with existing
PM2.5 data as a modified Option 1.  Another state/local agency
association (0136.2) supported Option 1, but expressed concern that the
monitoring network may be insufficient.

One industry group (0096.1), although also pointing out certain policy
concerns, noted several advantages inherent in Option 1 including: (1)
the proposal seeks to avoid requiring installation of new PM2.5 monitors
and redundant PCM in every case; and (2) the proposal recognizes that
PCM is unnecessary where the existing PM2.5 monitoring network is
providing sufficient information on the effects of new construction on
the PM2.5 NAAQS and increments.  The policy concerns expressed by this
commenter related to the case-by-case approach for administering the PSD
preconstruction monitoring exemption.  In particular, the commenter
opposed the requirement for the permitting authority to make an upfront
determination that there is no need for additional monitoring data.  The
commenter believes that requiring permitting authorities to make such an
upfront discretionary decision could effectively require redundant PCM
in many cases where existing monitored data are representative of
current ambient conditions

Opposing Comments:

	One state/local agency commenter (0124.1) indicated that Option 1 would
be overly burdensome until EPA develops an SMC.  The commenter noted out
that there are a number of upcoming PSD projects in the state, mostly
mines, which will be located in extremely remote areas where there are
essentially no local or regional PM2.5 emission sources.  In those
situations, the commenter believes that requiring applicants to collect
ambient PM2.5 data serves no purpose.  The commenter also pointed out
that operating a particulate monitoring program in remote areas is
expensive, especially when the only access is by air or snowmobile.  The
commenter suggested that in such cases, applicants should be granted the
opportunity to present a case to the reviewing authority as to why PCM
is not necessary if its purpose will be to largely document very low
existing concentrations, which will subsequently be of little use in
protecting the NAAQS.

	One group of environmental commenters (0154.1) 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.  The
commenters pointed out that the listed purposes of the PSD program focus
on air quality protection and ensuring that decisions to allow increased
pollution are made with due care, and do not include the goal of
“streamlining” preconstruction permit requirements.  The commenters
expressed the opinion that PCM under section 165(e)(2) of the Act
represents an essential resource for ensuring that air quality is not
deteriorating, and that EPA does not have the authority to exempt any
source from the requirements of section 165(e)(2).

Response: 

We are adopting a final policy that combines Options 1 and 3 from the
proposal.  We believe this final policy reflects existing procedures for
other regulated NSR pollutants, and represents the most pragmatic
approach for demonstrating compliance with the NAAQS and the Act.  That
is, we agree with the commenter that recommended combining Option 3 (the
use of a 24-hr PM2.5 SMC) with Option 1 and we are finalizing this
approach.  We proposed an SMC for PM2.5 in the rulemaking on increments,
SILs, and SMCs (72 FR 54112, September 21, 2007).  That rule has not yet
been finalized. 

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 would thus be little or no value in gathering PCM
data.  The use of de minimis levels of this nature (such as SERs and
SILs) is supported by court precedent interpreting the NSR provisions of
the Act.  Alabama Power Co. v. Costle, 636 F.2d 323, 360 (D.C. 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.”).  We have consistently recognized for other pollutants
that collecting additional ambient air quality monitoring data is of
trivial value when the proposed new source or modification alone has a
small impact or when measured air pollutant concentrations
representative of an area are known to be very low.  Our judgment is the
same for PM2.5, and we are proposing SMCs below which we believe it is
of trivial value to require collection of preconstruction monitoring
data (72 FR 54112, September 21, 2007).  

Once we finalize an SMC for PM2.5, the reviewing authority will have the
discretion to exempt a source from the PCM requirement if the projected
PM2.5 ambient impact of the source is below the PM2.5 SMC level
promulgated in our rules.  In the interim, until this value is
finalized, we believe states still have the discretion to use an SMC to
determine whether PCM for PM2.5 would yield a trivial gain.  We
interpret the SMC for particulate matter reflected in existing
regulations (10 µg/m3 of PM10 on a 24-hour average) to apply to all
forms of particulate matter.  This interim approach does not require a
change to the PCM requirements within our existing PSD regulations, and
is consistent with policy of using PM10 as a surrogate for purposes of
interim program implementation.  One of the options in the proposed rule
is to derive the SMC for PM2.5 using a ratio of the PM2.5 to PM10 NAAQS.
 See 72 FR 54141.  Furthermore, states are not precluded from developing
and applying their own SMCs for PM2.5 in the interim.  The concept of an
SMC is firmly established in existing regulations and grounded on the de
minimis principles described by the court in Alabama Power Co. v.
Costle, 636 F.2d 323, 360 (D.C. Cir. 1980).  Thus, states are not
prohibited from showing that a particular level of PM2.5 ambient impact
would make the collection of preconstruction monitoring data for PM2.5
of trivial or no value simply because EPA has not yet identified a value
by rule.  But once EPA establishes a specific SMC for PM2.5, states will
not be permitted to use a higher value or the PM10 value.  

In addition, the reviewing authority may decide not to require a source
to collect additional PCM data—even when the SMC is exceeded—when
existing representative monitoring data is available for the area of
concern.

Option 2 – Exempt All Sources from PCM

Under Option 2, we proposed to exempt all sources from PCM based on a
determination that the PM2.5 monitoring network is sufficient for all
sources.  Comments that specifically supported or opposed this option
are summarized below.

Supporting Comments:

One industry commenter (0111.1) supported Option 2, but believes that
Option 5 is the most practicable.  This commenter noted that PCM is
expensive and can significantly delay a project.  The commenter stated
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.  Thus, the commenter believes, a source could
be required to locate multiple monitors over a broad geographic area in
an attempt to satisfy the PCM requirement.  By contrast, the commenter
noted, Option 2 would rely on existing monitors.  The commenter state
that, as EPA notes, more and more, PSD PCM is based on use of existing
monitors.  The commenter opined that we have long been aware of the
problems created by the PCM requirements and that we should take steps
in this rulemaking to limit their impact rather than relying on the
existing regulations, which are already known to be problematic.

Opposing Comments:

One group of environmental commenters (0154.1) stated that EPA’s
proposed Option 2, which would determine categorically that “the
existing PM2.5 network is sufficient” (70 FR 66041), is clearly
arbitrary and capricious on its face.  The commenters pointed out that
we recognized in the proposal preamble that spatial gradients could be
significant for PM2.5, especially for primary PM2.5.  The commenters
stated that the existing monitoring network is severely limited in its
spatial coverage, most especially in attainment areas where PSD PCM
requirements apply.  The commenters asserted that to suggest that the
existing network suffices for any source, regardless of where it might
choose to locate, is patently absurd.

Response: 

	We decided not to use Option 2 for our final policy because we do not
believe that the current monitoring network will be sufficient for all
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 PCM is necessary.

When used with the impact modeling, separate concentrations of direct
and precursor-formed particulate matter are needed.

Option 3 – Use an SMC to Exempt Sources from PMC

Under Option 3, we proposed to develop an SMC for PM2.5, which, as
described previously, would allow a source to receive an exemption from
PCM requirements if the modeled impact of the project’s emissions
increase or the existing ambient pollutant concentrations were less than
the SMC.  Comments that specifically supported or opposed this option
are summarized below.

Supporting Comments:

	One state/local agency commenter (0153) endorsed Option 3, noting that
this approach follows existing procedures to justify the exclusion of
PCM requirements when sufficient data exist.  The commenter pointed out
that state/Tribal/local monitoring networks were primarily designed, per
EPA guidance, to monitor neighborhood scale or greater impacts, and to
particularly conform to urban and regional scale considerations.  The
commenter stated that, while some monitoring sites were installed to
determine more localized impacts, even those have been gradually
decreasing as short-term NAAQS levels were clarified.  The commenter
noted that PSD increments are considered in a different way, and in some
instances, it would be difficult to say that current networks provide
appropriate representation for all locations in the baseline area.  The
commenter went on to state that while it is true that direct emissions
and precursors may not be monitored at the same location, that fact
should not preclude sampling, although costs may be increased.  The
commenter suggested that we should provide further guidance for
consistent application nationally.  

	As noted above in section 7.1, a number of commenters favored the use
of SMCs in conjunction with Option 1.

Opposing Comments:

	One group of environmental commenters (0154.1) 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.  The
commenters pointed out that the listed purposes of the PSD program focus
on air quality protection and ensuring that decisions to allow increased
pollution are made with due care, and do not include the goal of
“streamlining” preconstruction permit requirements.  The commenters
expressed the opinion that PCM under section 165(e)(2) of the Act
represents an essential resource for ensuring that air quality is not
deteriorating, and that EPA does not have the authority to exempt any
source from the requirements of section 165(e)(2).

Response: 

	We agree with the commenters who expressed support for our adoption of
Option 3 because a combination of Options 1 and 3 reflects existing
procedures for other regulated NSR pollutants, and because we believe it
is the most pragmatic approach for demonstrating compliance with the
NAAQS and the Act.  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 such data is unnecessary to
demonstrate that a proposed source or modification will not adversely
impact air quality.  Further, we disagree with the commenters who
asserted that EPA does not have the authority to exempt a source from
the requirements of section 165(e)(2) under any circumstances.  We stand
by the position that we may exempt a source under de minimis
circumstance both from a policy perspective (this approach reflects
existing procedures for other regulated NSR pollutants and is also
considered to be the most  pragmatic approach for demonstrating
compliance with  the NAAQS) and legal perspective (Alabama Power Co. v.
Costle, 636 F.2d 323, 360 (D.C. 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 4 – Use Existing PM10 Data

Option 4, as proposed, would allow sources to use the available large
PM10 data record, combined with the recent PM2.5 data, in lieu of
carrying out source-specific PCM.  Comments that specifically supported
or opposed this option are summarized below.

Supporting Comment:

One industry group (0109.1) opposed any requirement for PCM, which the
commenter asserted could add a year to permitting without any benefit to
the environment.  That same commenter, however, endorsed Option 4 if
nationally gathered PM2.5 data are not available because a PM2.5 network
monitor has not been placed nearby (or because it is not operating
properly), allowing the use of existing PM10 data collected at existing
monitoring station to be used for a permit application.

Opposing Comments:

One group of environmental commenters (0154.1) believes that proposed
Option 4 is illegal on its face, to the extent that it is intended as a
universally available alternative.  The commenters believe that some
sources might be able to demonstrate that PM10 monitoring could fulfill
the statutory requirements and purposes of PM2.5 monitoring in some
instances (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.

One state/local agency (0168) and one state/local agency association
(0165) stated that, for the same reasons that we listed in the proposal
preamble, they consider Option 4 not to be a viable approach due to the
convoluted nature of attempting to infer PM10 to PM2.5 monitoring data
comparisons for source-specific applications.

Response: 

We decided not to adopt Option 4.  As we stated in the proposal
preamble, the differences in characteristics between PM2.5, and PM10 and
our limited understanding of their relationship, are problematic.  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
the obligation to provide pre-construction PM2.5 ambient monitoring data
would eliminate industry’s contribution to the PM2.5 data record.

Option 5 – Exempt Sources from PCM if No SMC Is Established

	Existing 40 CFR 51.166(i)(5)(iii) and 52.21(i)(5)(ii) state that a
source may be exempted from PCM requirements “if … the pollutant is
not listed in [the list of pollutants for which SMCs have been
established].”  The original rationale for this exemption was based on
the lack of adequate methods for measuring ambient concentrations of
pollutants not on the list (45 FR 52723-24).  In the proposal preamble,
we requested comment on this interpretation and any other legal or
policy rationale that could support applying these provisions under
Option 5, where we proposed to exempt sources from PCM requirements if
we chose not to define an SMC for PM2.5.

Supporting Comments:

	One industry commenter (0111.1) stated that, of the five options EPA
included in the preamble regarding how sources may satisfy PCM
requirements under the PSD program, Option 5 is the most practicable to
implement until SMCs can be established and any potential gaps in the
monitoring network can be filled.  Because of the problems, EPA has
noted regarding source-specific modeling of ambient PM2.5
concentrations, the commenter believes that it is unreasonable to impose
preconstruction monitoring requirements at this time.

Opposing Comments:

	One group of environmental commenters (0154.1) asserted that proposed
Option 5 is illegal under the Act.  Whatever may have been the case when
the current list of SMCs was adopted, the commenters believe, methods
now exist for conducting the monitoring required under section 165(e)(2)
of the Act.

	One state/local agency (0168) and one state/local agency association
(0165) consider the argument for Option 5 to be inappropriate and
legally questionable.  The state/local agency (0168) asserted that EPA
has not carried out its statutory obligation to develop PM2.5-specific
PSD guidance and regulations and cannot exempt sources from one of these
PSD requirements.  The commenter also stated that the rationale of not
having an SMC defined for PM2.5 originally, that of inadequate ambient
monitoring methods, was not valid even back in 1997 (when the PM2.5
NAAQS were originally promulgated).

Response: 

	We decided not to adopt Option 5 because we agree that methods exist
for conducting PCM for PM2.5 and the earlier justification for such a
categorical exemption does not apply to PM2.5.  Because we have proposed
PM2.5 Increments, SILs and SMC rule on September 21, 2007 (72 FR 54112)
and “particulate matter” is listed in 40 CFR 51.166(i)(5)(i) and
52.21(i)(5)(i) , we do not interpret 40 CFR 51.166(i)(5)(iii) and
52.21(i)(5)(ii) to apply to PM2.5.  See the response above in section
7.1 for our recommendations for handling pre-construction monitoring for
PM2.5 in the interim until we finish the SMC for PM2.5.

Other Comments on PCM

	One group of environmental commenters (0154.1) stated that section
165(e)(2) of the Act requires that all PSD permit applications be
accompanied by a year of monitoring data; therefore, EPA does not have
authority to exempt PM2.5 sources from submitting the data under any
option.

	One state/local agency (0158.2) opposed a blanket exemption from PCM
requirements under any option.

	Three industry groups (0083.1, 0096.1, 0109.1) objected to PCM
requirements for PM2.5.  One of the commenters (0096.1) indicated that
having to provide a year of monitoring data would slow down, and in some
instances prevent, the construction of cleaner units.  Two of the
commenters (0083.1, 0096.1) suggested as an alternative that all sources
be exempt from PCM unless on a case-by-case basis the reviewing
authority determines that the existing monitoring network is inadequate.
 The third commenter (0109.1) opposed any PCM requirements if national
data are not available.

Response:

	We agree with the commenter who opposed a blanket exemption from PCM
requirements.  We disagree with the commenters who advocated a presumed
exemption unless the existing monitoring network is found to be
inadequate on a case-by-case basis, and with the commenter who suggested
that PCM should not be required if national data are not available.  As
discussed above in section 7.1, 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.  Specifically,
we are combining Option 3 (the use of a 24-hr PM2.5 SMC) with Option 1
and finalizing this approach.  We have proposed an SMC for PM2.5 (72 FR 
54112, September 21, 2007).  

	We do not agree with the commenter who believes that the Act entirely
precludes exemptions from PCM requirements.  As stated earlier, 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 consequently there is little or no value in gathering PCM data.  The
use of de minimis levels of this nature (such as SERs and SILs) is
supported by court precedent interpreting the NSR provisions of the Act.
 Alabama Power Co. v. Costle, 636 F.2d 323, 360 (D.C. 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.”) 

Comments on Offset Requirements for NA NSR

Under section 173 of the Act, all new 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 RFP towards attainment of the
NAAQS.  We refer to the proportional relationship between the amount of
emissions offset required and the amount of the emissions increase as
the “offset ratio.”  Under section 173 (which is in title I, part D,
subpart 1 of the Act), the required offset ratio is at least 1:1 for
all criteria pollutants except ozone.  In accordance with subpart 2, the
offset ratio in ozone nonattainment areas varies from at least 1:1 up to
1.5:1, depending on the severity of the nonattainment problem.  In the
case of ozone, the offset ratios are applied to emissions of the ozone
precursors VOC and NOx because virtually all ambient ozone results from
photochemical reactions involving these compounds rather than from
direct emissions of ozone. 

 Comments on the Proposed 1:1 Offset Ratio for PM2.5 Direct Emissions

	As discussed in previous sections, we are implementing the PM2.5 NA NSR
program under subpart 1 of title I, part D of the Act.  Accordingly, we
proposed an offset ratio for direct PM2.5 emissions of at least 1:1.

Supporting Comments:

One state/local agency (0080.1) indicated that the safest approach is
for EPA to require 1:1 offsets for either direct emissions or
precursors.  Two state/local agencies (0117.1, 0168) and a state/local
agency association (0165) agreed that the offset ratio should be at
least 1:1 for direct PM2.5 emissions and that the offsets have to be
real, creditable, and enforceable.  Another state commenter (0077.1)
noted that 1:1 offset ratios do not take into account future emission
increases due to growth or potential RFP requirements, and emphasized
that the offset ratio should be at least 1:1 (emphasis in the original).

	One state/local agency (0103.1) stated that there are many gaps in our
understanding of the science of atmospheric PM.  Therefore, the
commenter believes, when there is question on how best to comply with
certain requirements of the Act, a simple and straightforward approach
is best.  The commenter indicated that, because section 173(c)(1) of the
Act requires offsets of at least a 1:1 ratio, that is the ratio at which
offsets should be obtained.

	One state/local agency association (0136.2) suggested that any offset
ratio of less than 1:1 for both direct and 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 an air quality modeling analysis.  A
state/local agency (0145) concurred in this approach.  Another
state/local agency (0142) similarly offered general support for EPA’s
proposal for a 1:1 offset ratio, but suggested that in certain limited
situations an offset ratio of less than 1:1 for direct PM2.5 emissions
should be allowed when modeling demonstrates that a net air quality
benefit will result.  The commenter indicated 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, and
noted that applying diesel retrofit technology to bus and truck fleets
is an example of how ground-level PM2.5 emission reductions could be
achieved.

	One industry group (0096.1) stated that section 173 of the Act
establishes the offset requirement for all major new or modified sources
under the NA NSR program.  According to the commenter, one key statutory
provision is the requirement of section 173(c)(1) that the increased
emissions from the proposed source “shall be offset by an equal or
greater reduction, as applicable, in the actual emissions of such air
pollutant from the same or other sources in the area.”  The commenter
noted that in the case of ozone nonattainment areas subject to the
tiered classification system under subpart 2 of part D of title I of the
Act, the statute prescribes minimum offset ratios ranging from 1:1 to
1.5:1, depending on the ozone nonattainment classification under subpart
2.  In all other cases, the commenter believes, the offset requirement
is governed by subpart 1, specifically the provisions of section 173 of
the Act.  The commenter pointed out that, in addition to the offset
requirement of section 173(c)(1) for “an equal or greater
reduction,” section 173(a)(1) requires the proposed source to obtain
offsetting emissions reductions in an amount that is consistent with
reasonable progress towards attainment.

	The commenter (0096.1) interpreted the statute to provide EPA with very
limited authority to impose minimum Federal emissions offset ratios in
excess of 1:1, asserting that the only situation where minimum offset
ratios greater than 1:1 are authorized is for ozone nonattainment areas
subject to subpart 2.  In all other nonattainment areas, including those
areas designated nonattainment for PM2.5; the commenter believes that
EPA has no authority to require any proposed source to obtain offsets
greater than 1:1, particularly when the state is meeting the RFP
requirements for the nonattainment area where the proposed source is
located.  The commenter stated that subpart 1 of part D authorizes the
imposition of a Federal minimum offset ratio of 1:1, although it allows
states to impose more stringent offset ratios when additional reductions
may be necessary to meet RFP obligations for the nonattainment area. 
For these reasons, the commenter believes EPA has no choice but to adopt
an emission offset ratio of 1:1 for direct PM2.5 and any precursor
emissions, to the extent that they are subject to an offset requirement
under the NA NSR program.

	Two other industry group commenters (0107.1, 0109.1) and an industry
commenter (0161) agreed that subpart 1 of title I, part D is controlling
and that the offset ratio should be 1:1.  Two other industry groups
(0083.1, 0105.1) stated that EPA should not impose emission offset ratio
requirements greater than 1:1.  Another industry commenter (0074.1) who
favors continuing to use PM10 as a surrogate for PM2.5 in determining
necessary offsets during and after SIP development indicated that such
PM10 offsets should be obtained at a 1:1 ratio.

Opposing Comments:

	One group of environmental commenters (0154.1) noted that section 173
requires sources locating in nonattainment areas to obtain offsets to
ensure that emissions from the proposed source “will be sufficiently
less than total emissions from existing sources … so as to represent
… reasonable further progress.”  The commenters stated that this
section clearly contemplates greater than 1:1 offsets.  The commenter
believes that EPA’s rules implementing the NSR program require offsets
of greater than 1:1, and that EPA cannot lawfully or rationally adopt a
less stringent requirement for PM2.5 and its precursors – especially
given that the PM2.5 standards are intended to provide greater health
protection.  Consistent with section 182 of the Act, and given the
health risks associated with PM2.5, the commenter asserted, 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.  The commenter went on to assert that EPA
must establish even higher offset ratios for direct PM2.5 emissions, to
ensure that RFP is achieved across the nonattainment area, including
within the area close to the new source.

Response: 

	As proposed, we are finalizing the offset ratio for direct PM2.5
emissions as at least 1:1 on a mass, tons per year, basis because the
PM2.5 program is being implemented under subpart 1 of title I, part D of
the Act.  See section 3 for responses addressing the applicability of
subpart 1 of part D of the Act.  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 RFP. 
Accordingly, we believe states may establish higher offset ratios in
their state programs if they choose to do so, but we do not believe it
would be appropriate for us to do so for PM2.5 in national regulations
because of the variability in conditions across the country.  We do not
believe that any offset ratio less than 1:1 is permissible under subpart
1 because section 173(c)(1) specifies the offsets must ensure an
“equal or greater reduction” in actual emissions.  In addition, 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, since, as stated above, PM2.5 offset ratios are
governed by subpart 1 of part D of the Act.

	We agree that during the period that a PM10 NA NSR program is used as a
surrogate for a PM2.5 program, PM10 offsets should be obtained in a
ratio of at least 1:1.  See section 9 for further discussion of
transition issues.

Comment:

	One industry group (0119.1) asked that we apply the offset obligation
for direct PM2.5 emissions only after improved methods for measuring
these emissions (i.e., the condensable fraction) have been developed and
approved.

Response:

	As discussed in section 5, we are not requiring condensable PM
emissions to be included in the PM2.5 NA NSR program until we have
completed a collaborative testing effort with industry, the NACAA, and
other stakeholders to assess and improve the effectiveness and accuracy
of the available or revised test methods.  In the interim, offset
requirements will apply to the filterable fraction of direct PM2.5
emissions unless the applicable SIP mandates inclusion of the
condensable fraction.

Comments on Which Precursors Should Be Subject to the Offset
Requirements

	We proposed that all precursors ultimately identified by a state or EPA
would be subject to offset requirements.

Supporting Comments:

	One industry group commenter (0107.1) and one industry commenter (0161)
agreed that only SO2 and NOx (absent an EPA finding that NOx is not
contributing to a particular PM2.5 problem) should be subject to the
offset requirement.  The commenters believe that VOCs and ammonia should
be subject only if and when a state makes a satisfactory demonstration
that one or the other should be treated as a precursor.

Opposing Comment:

	Citing NA NSR’s added costs and burdens to economic investment in
nonattainment areas, one industry group commenter (0119.1) asked that we
apply the offset obligation only to direct PM2.5 emissions, not
precursors.

Response:

	As proposed, the pollutants that are designated as PM2.5 precursors in
a particular nonattainment area are subject to the emissions 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
do not contribute significantly to that area’s ambient PM2.5
concentrations.  As “presumed-out” precursors, VOCs 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.  We do not agree with the
commenter who opposed requiring offsets for emissions of PM2.5
precursors.  Rather, we believe that it is appropriate to offset
emissions increases of all regulated precursors, i.e., that have been
established to contribute significantly to the PM2.5 nonattainment
problem in a particular area.

Comments on the Offset Ratio for Precursors

	We proposed that, as with direct emissions of PM2.5, the minimum offset
ratio for precursors permitted under the Act would be at least 1:1.  

Supporting Comments:

	Three state/local agencies (0077.1, 0117.1, 0168) agreed with “at
least” a 1:1 offset for precursors.  One of these commenters (0168)
and a state/local agency association (0165) added that the offsets must
be real, creditable, and enforceable, and the 1:1 ratio should apply for
precursors unless a larger offset is determined to be necessary to
achieve the NAAQS.  Another state/local agency (0080.1) believes that,
based on the language of the Act, the safest approach is for EPA to
require 1:1 offsets for either direct emissions or precursors.  This
commenter also indicated that emissions reductions in direct emissions
(especially diesel particulates) are more environmentally beneficial and
thus possibly could be acceptable as offsets for precursors at ratios
less than 1:1.

	One industry group commenter (0096.1) believes that section 173 of the
Act is controlling for precursors as well direct PM2.5 emissions, and
that the offset ratio should be 1:1.  Another industry group commenter
(0083.1) agreed that the offset ratio should be no greater than 1:1.  An
industry group commenter (0107.1) and an industry commenter (0161)
agreed with a 1:1 offset ratio and added that EPA should make clear in
the final rule that an increase in precursor emissions need only be
offset once, even if the increase triggers NA NSR under, for example,
both the ozone and PM2.5 programs.

	Another industry commenter (0111.1) agreed that a 1:1 offset ratio is
consistent with section 173 of the Act.  The commenter believes that,
absent any statutory direction from Congress, there is no basis for
imposing a more stringent requirement.  The commenter added that this
approach also makes sense from a policy perspective because the ability
to obtain NOx reductions in many areas is already quite limited.  Thus,
NOx reductions at a greater than 1:1 ratio may be unavailable.

	Concerning offset ratios less than 1:1, one state/local agency
association (0136.2) stated that that any offset ratio of less than 1:1
for both direct and precursor emissions of PM2.5 should be allowed only
if there is a net air quality benefit [concurrence by a state commenter
(0145)]  and if the lower ratio is justified by air quality modeling
analysis.  For PM2.5 precursors, the commenter believes, 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.  A state/local agency (0145) also indicated that
states should have the flexibility to adjust offset ratios for direct
PM2.5 and precursor emissions as long as a net air quality benefit is
achieved.

Opposing Comments:

	One group of environmental commenters (0154.1) stated that consistent
with the statutory scheme for ozone laid out in section 182 of the Act,
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.

Response:

	As with direct PM2.5 emissions, we have determined for PM2.5 precursors
that the minimum offset ratio permitted under subpart 1 of the Act would
be 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 regulated
PM2.5 precursors in a particular nonattainment area.  As noted
previously, we do not believe that any offset ratio less than 1:1 is
permissible under subpart 1.

	As mentioned above, we do not believe that subpart 2 of the Act (which
includes section 182) applies 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 RFP.  Given the variability in conditions across
the country, we do not believe that it is appropriate for us to set
higher offset ratios for PM2.5 precursors on a national basis.

	We agree with the commenters who 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 NA NSR for more than one pollutant
(e.g., both the ozone and PM2.5).  We agree that a precursor emissions
increase need to be offset only once and will clarify our intent in the
preamble to the final rule.

Comments on Interpollutant and Interprecursor Trading for Offsets 

	We proposed to allow increases in emissions of direct PM2.5 to be
offset by a decrease in PM2.5 precursor emissions.  We also proposed to
allow an increase in a PM2.5 precursor to be offset by a decrease in
emissions of a different precursor or a decrease in direct PM2.5
emissions.  However, we proposed that such trades would only be
permissible if the state showed that the trade would be beneficial in
reducing overall ambient concentrations of PM2.5 and EPA approved the
trade.

Supporting Comments:

	Six industry and industry group commenters (0074.1, 0096.1, 0107.1,
0111.1, 0119.1, 0161) and two state/local agencies (0080.1, 0144)
expressed support for allowing interpollutant trading.

	One industry commenter (0074.1) supported the proposed option for an
interprecursor trading program that entails EPA reviewing individual
offset proposals as part of the major NSR permitting process.  The
commenter, who supports continuing to use PM10 as a surrogate for PM2.5,
asserted that flexible options for potential offsets should include
directly emitted PM10 or interprecursor offsets including the precursors
SO2 and NOx The commenter suggested that the final rule should allow
offsets to be obtained from any source within the entire nonattainment
area (including other counties in the Metropolitan Statistical Area and
any contiguous counties) or from a different nonattainment area that is
contributing to nonattainment within the area where the new source is
located.  Because of the number of potential precursor emissions and
emission sources potentially impacting ambient fine particulate levels,
the commenter believes that any nonattainment offset programs for new
sources should provide a variety of options.

	One of the supportive industry group commenters (0096.1) indicated that
an affirmative and clear Federal policy on interprecursor trading can
provide much-needed flexibility in meeting the Act’s goals for offsets
and RFP in the most efficient and cost-effective manner possible.  To
this end, the commenter urged EPA to allow inter-precursor trading under
the following three circumstances:

Reductions in precursor emissions to offset direct PM2.5 emissions
increases;

Emissions reductions of one precursor to offset emissions increases of
another precursor (to the extent that precursors are subject to the
offset requirement); and

Reductions in direct PM2.5 emissions to offset precursor emissions
increases (to the extent that precursors are subject to the offset
requirement).

	The commenter stated that such flexibility should provide sources with
another potential source of offset emissions in areas where availability
of offsets may otherwise be limited.  In addition, the commenter opined
that providing such flexibility is consistent with the Act’s goal
“to protect and enhance the quality of the Nation’s air resources so
as to promote the public health and welfare and the productive capacity
of its population.”  For similar reasons, the commenter believes the
rationale for allowing interprecursor trading to meet the offset
requirement also applies in the case of “netting out” of NSR using
interprecursor emissions reductions within the same source.  In both
cases, the commenter noted, the source will be obtaining reductions in
direct PM2.5 or precursor emissions that will result in an air quality
impact that is equal to or better than that which would occur in the
absence of interprecursor trading.

	Another supportive industry group commenter (0107.1) and one supportive
industry commenter (0161) believe that interprecursor trading 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. 
The commenters indicated that, while NOx offsets generally are available
because of the ozone program, SO2 and PM2.5 offsets are not.  The
commenters believe that without interprecursor trading, many business
expansion projects simply will not be able to be undertaken.  Thus, the
commenter asserted, EPA must allow interprecursor trading, as proposed. 
The commenters added that EPA needs to expressly recognize the concept
of interprecursor trading in the regulatory language in the new 40 CFR
subpart Y and in 40 CFR 51.165.

	These commenters (0107.1, 0161) also encouraged EPA to extend
interprecursor flexibility to NSR netting analyses by so providing in 40
CFR 51.165, 51.166, and 52.21.  The commenters suggested that whether
this flexibility should be extended to any particular source likely
would need to be evaluated in a formal NSR applicability submission to
the state or EPA to assure that the increases and decreases of different
regulated NSR pollutants have the same or better impact on air quality. 

	Another supportive industry commenter (0111.1) added that the
flexibility afforded through interprecursor trading is important.  The
commenter believes that EPA should allow states the flexibility to adopt
trading rules for approval into their SIPs and also, even without an
approved rule, to allow trading on a case-by-case basis if the trade
will lead to equivalent or better reductions in ambient PM2.5
concentrations.

	One supportive industry commenter (0119.1) also expressed concern about
flexibility under the proposed rule and supported interpollutant and
interprecursor trading.  The commenter indicated that due to the
variability in atmospheric conditions that contribute to fine particle
formation, facilities would not be able to easily discern which
precursor will always have the greatest beneficial effect when reduced. 
Thus, the commenter asserted, if precursors are to be included in the
NSR offset program, the default position should allow the regulated
community the flexibility to offset anticipated increases from any of
the identified precursors.  The commenter noted that this approach would
also allow for cost-effective use of co-benefits from reducing emissions
that serve compliance in multiple programs.

	The commenter (0119.1) stated that offset ratios among precursors are
an unnecessary complication, and that all precursors should be tradable
and interchangeable to provide vital flexibility by reducing the
otherwise significant impediments that NSR imposes to modernizing steel
plants and other similar facilities.  Specifically, the commenter
believes that offset trading will allow facilities to secure
environmental benefits for less money by providing a broader range of
pollution reduction options to choose from, and that the availability of
such trading will be particularly beneficial where credits for one
particular pollutant are scarce in a given nonattainment area.  The
commenter also supported expanding this approach to netting, indicating
that similar significant benefits are available when sources can use
precursors interchangeably when determining if a project causes a
significant net emissions increase.

	One state/local agency (0080.1) supported interprecursor trading so
long as the following hierarchy is established: direct PM2.5, SO2, NOx,
ammonia, and VOC.  Under the commenters hierarchy, a pollutant would be
allowed as offsets for a pollutant ranked lower, but not the reverse
(e.g., direct PM2.5 emission reductions could be used to offset
increases in any of the listed pollutants, SO2 emissions reductions
could offset NOx increases, etc.).  The commenter suggested the
possibility that emissions reductions in direct PM2.5 emissions
(especially diesel particulates) are more environmentally beneficial and
thus could be acceptable as offsets for precursors at ratios less than
1:1.  

	Another state/local agency (0144) supported interpollutant and
interprecursor trading, but recommended that such offsets only be
allowed on a case-by-case basis that would demonstrate equivalent air
quality benefits and be consistent with existing NSR provisions.  A
third state/local agency (0137.1) requested that EPA provide clear
guidance on how much SO2, NOx, VOC, or ammonia reduction would be needed
to offset a PM2.5 increase without explicitly expressing support for
interprecursor or interpollutant offset trading.

Opposing Comments:

Seven state/local agencies (0077.1, 0103.1, 0117.1, 0142, 0150.1, 0153,
0168), two state/local agency associations (0136.2, 0165), and one group
of environmental commenters (0154.1) opposed all or part of the proposal
to allow interpollutant and interprecursor trading for offsets.

One of the state/local agencies (0103.1) stated that the Act is silent
on offsetting one precursor for another, but believes that a simple
solution is best.  The commenter indicated that because we do not know,
for example, how many tons of direct PM2.5 emissions reductions are
needed to gain the same air quality improvement gained by the reduction
of 100 tons of SO2, offsets should be made for single pollutants only,
rather than allowing for interprecursor offsets. 

	The group of environmental commenters (0154.1) stated that it would be
irrational for EPA to allow increased emissions of direct PM2.5 to be
offset by decreased precursor emissions.  The commenters pointed out
that, while secondary PM2.5 clearly constitutes a substantial fraction
of total PM2.5 concentrations and emissions of PM2.5 precursors must be
controlled to attain and maintain PM2.5 standards, it is also clear that
on a ton-for-ton basis, increases in direct PM2.5 emissions in
nonattainment areas have a greater impact on local exposure to PM2.5
than increases in precursor emissions, which as stated in the proposal
preamble (70 FR 66038) need time to convert to PM2.5.  The commenters
indicated that the suggestion that EPA would allow increases in direct
PM2.5 emissions to be offset by reduced precursor emissions raises
serious environmental justice concerns, since the impacts of these
pollutants are not even felt on the same spatial scales.  Moreover, the
commenters asserted, the equivalence between direct PM2.5 and precursor
emissions will vary from place to place and time to time, and this
variability would greatly complicate any determination of whether the
offset ratio for a proposed trade is sufficiently high to ensure that
the trade was “beneficial” on any scale of impact.

	The group of environmental commenters (0154.1) went on to state that
EPA also should not allow offset requirements for PM2.5 precursors to be
met by reducing emissions of other precursors because the equivalence
between precursors would vary spatially and temporally, making it
extremely difficult to assess.  The commenters also noted that
interprecursor “trading” has the further complication that PM2.5
precursors also differ in their impacts on other air pollution problems,
including direct health and welfare impacts of SO2 and NOx, formation of
ozone, acid deposition, and reactive nitrogen deposition.

	A state/local agency (0077.1) did not support interprecursor trading,
including for netting, because all precursors are not created equal,
precursors are included in other nonattainment situations, and trading
or precursors could result in unintended consequences due to inflation
of certain pollutant concentrations.  For example, the commenter noted,
sulfates are of a much greater concern in the summer, while nitrates
predominate in the winter – trading of NOx for SO2 in the summer
months and vice versa for NOx in the winter months would be
counter-productive.  

	Another state/local agency (0168) and a state/local agency association
(0165) opposed interprecursor trading or trading of precursors with
direct PM2.5 emissions using either a pre-approved SIP demonstration
modeling analysis or a permit-specific analysis.  The commenters believe
that, in other than very limited cases, neither interpollutant nor
interprecursor trading for the purposes of PM2.5 emission offsets should
be allowed at this time.  The commenters’ position is based on the air
quality models currently available to perform a detailed PM2.5 formation
assessment, the complex atmospheric chemistry of secondary particulate
formation, and existing EPA emission offset guidance.  The commenters
believe that an increase in direct PM2.5 emissions or its precursors
should be offset by a corresponding decrease in the same direct PM2.5 or
precursor emissions.  The only situation in which the commenter would
favor an interpollutant offset trading is when PM2.5 precursor emission
increases at a proposed source are to be offset by direct PM2.5 emission
decreases.  However, the commenters noted, such interprecursor trading
would be difficult to administer and could not assure that ambient
levels of PM2.5 would decrease in the areas affected by the source.  The
commenters asserted that any assessment by individual states to
demonstrate such decreases from interprecursor trading would have to
consider not only the emissions from in-state sources, but also
emissions from sources, in all nearby states, that both contribute to
the formation of PM2.5 and are impacted by the state’s emissions.  The
commenters added that the situation would be even more onerous for
individual sources that attempt to make such demonstrations.

	These commenters (0165, 0168) pointed out that EPA’s nonattainment
offset requirements are given in appendix S to 40 CFR part 51 (Emissions
Offset Interpretative Rule), sections IV.A (Conditions 3 and 4) and
IV.D.  The commenters stated that the direct PM2.5 emission offsets
should comply with these regulations, and that a demonstration should be
required that these offsets provide a site-specific net air quality
benefit, which will require a modeling analysis in most instances.  The
commenters went on to state that for the PM2.5 precursors, such as SO2
and NOx, offsets should meet the requirements currently applied to the
ozone precursor emissions of NOx and VOC, which would be met by default
by obtaining precursor offsets from a source located anywhere in the
same nonattainment area as the proposed new source.  In the instance
when PM2.5 precursor emissions are being offset by an equal amount of
direct PM2.5 emissions, the commenters believe, a net air quality
benefit can be assured at least in the near-field of the proposed
source.  Otherwise, the commenters asserted, a net air quality benefit
should be confirmed through modeling.  The commenters believe that
interprecursor trading of emission offsets may be possible in the future
when our ability to model secondary sulfate, nitrate, and ammonia
compound formation improves and becomes less resource-intensive.  The
commenters indicated that at that time, EPA should provide detailed
guidance on how such an analysis should be conducted and under what
conditions a positive net air quality benefit is achieved, so that the
process would then apply to all states equitably and would not be
detrimental to the air quality of downwind states such as New York.  For
the same reasons that the commenters opposed interprecursor offset
trading, they opposed interprecursor trading in either attainment or NA
NSR netting analyses.

	The state/local agency (0168) added that the stable nature of primary
PM2.5 emissions as opposed to the complex atmospheric chemistry of the
SO2 and NOx precursor emissions makes a comparison of their relative
impacts a difficult task.  The commenter pointed out that direct PM2.5
emission will have their greatest impact in the immediate vicinity of
the source, while determining where and when precursor emissions of SO2
and NOx will have their impact as sulfate and nitrate is much more
difficult.  In most cases, the commenter noted, significant amounts SO2
and NOx will not be converted to sulfate and nitrate until the plume has
traveled for several hours – in some cases, depending on the location
of the source, the plume could be transported outside the designated
nonattainment area or attainment area before sulfate and nitrate
concentrations become of concern.  The commenter believes that
determining a positive net air quality benefit in situations where
direct PM2.5 emissions are being offset by PM2.5 precursor emissions
will be highly subjective.  The commenter suggested that in many cases,
the sulfate and nitrate will be formed outside the nonattainment area
and, consequently, no reasonable progress toward PM2.5 standards
compliance in the nonattainment area will result.  While the proposed
rule suggests that one method of showing a net air quality benefit would
be a modeling demonstration for the entire nonattainment area instead of
on a source-by-source basis, the commenter believes that this type of
regional modeling demonstration would most likely involve the use of a
sophisticated regional model, but such models only reflect regional
average levels and details on the local impact of direct PM2.5 emissions
near the stack will be lost.

	The commenter (0168) went on to state that ensuring reasonable progress
toward attainment and a net air quality benefit, by developing valid
interprecursor offset ratios between SO2 and NOx precursor emissions, is
also unrealistic at this time.  The commenter believes that many of the
problems with using regional modeling to determine interpollutant offset
trade ratios will apply to interprecursor offset trading – the results
from sophisticated models such as CMAQ with their grid averaging would
provide minimal detail, and such analyses would be resource intensive. 
Another option given in the proposed rule would be for individual trades
to require modeling as part of their NSR permit application.  However,
the commenter noted, requiring each source to model their emission
trades with models such as CALPUFF would also be resource intensive, and
detailed modeling guidance on setting of offset ratios and the
demonstration of a net air quality benefit on a source-by-source basis
will be needed.  In summary, the commenter believes that it will be
extremely difficult to quantify on a short- and long-term basis to
compare the impact of SO2 emissions on an area’s PM2.5 concentration
to that of NOx emissions impacting the same area’s PM2.5
concentration.

	Another state/local agency (0153) stated that the conditions EPA
proposed to allow interprecursor trading would be very difficult to
justify.  The commenter noted that EPA has expressed concerns previously
regarding the time difference between primary emission impacts and
secondary emission impacts.  The commenter asserted that if there was
disconnect between the impact areas for primary and secondary emissions,
then there should not be any trading between primary and secondary
emissions.  The commenter did not support emissions trading for the
purposes of offsets or netting analysis for PM2.5.

	One state commenter (0142) opposed the proposed trading of PM2.5
precursor emissions to comply with the nonattainment offset
requirements.  The commenter similarly asserted that the impact of
direct PM2.5 emission increases cannot be offset with reductions in
emissions of PM2.5 precursors such as SO2 and NOx because the direct
PM2.5 increases degrade air quality locally, while the benefit from
reducing precursor emissions will primarily accrue far from where the
emission increases are occurring.  Therefore, the commenter believes
that EPA should allow direct PM2.5 emissions to be offset only with
reductions in other direct PM2.5 emissions.  However, the commenter
favors allowing direct PM2.5 emissions to offset precursor emissions
because of the higher local impacts of direct PM2.5 emissions.  The
commenter provided a detailed discussion of the atmospheric chemistry of
PM2.5 and its precursors to support her views.

	A state/local agency association (0136.2) likewise opposed
interpollutant and interprecursor trading because offsetting like
amounts of precursor and direct emissions is inherently disproportionate
and will result in greater amounts of direct PM2.5 emissions.  Rather,
the commenter supported the trading of PM2.5 direct emissions with other
PM2.5 direct emissions, and trading of SO2 and NOx precursors with the
same precursor, except that EPA should allow direct PM2.5 emission
decreases to offset increases of precursor emissions in nonattainment
areas.

	A state/local agency (0117.1) agreed that EPA should only allow direct
PM2.5 emission decreases to offset increases of precursor emissions in
nonattainment areas.  The commenter believes that allowing decreases in
PM2.5 precursors to offset increases of direct PM2.5 emissions is
potentially detrimental to air quality in nonattainment areas.  The
commenter added that current air quality models used for simulating the
transport and chemical formation of PM2.5 are too resource intensive and
not sensitive enough to accurately assess the impact on PM air quality
of individual trades.

	Concerning trading among precursors, the commenter (0117.1) stated that
the formation rate of PM2.5 is dependent upon the mix of precursors and
is likely not equal in any instance between SO2 and NOx.  The commenter
believes that air models would not be a useful tool for assessing the
impact of precursor trading on PM air quality and, therefore, that
trading precursors does not guarantee that air quality will not
deteriorate within a nonattainment area.  This commenter, as well as
another state/local agency (0142), also opposed the option of allowing
interprecursor trading on a case-by-case basis or for the purposes of
netting.

	One of the state/local agency commenters (0150.1) expressed concern
that interprecursor trading may make it difficult to ensure than ambient
PM2.5 continues to decrease, and that the resulting program may be very
staff-intensive to manage.  In addition, because of the toxicity of
PM2.5, the commenter believes that any trading program must make sure
that vulnerable populations are not adversely affected.  The commenter
stated that because precursor interactions are not fully known, trading
may have the potential to worsen an air quality problem (e.g., the
sulfate and ammonia issue as it relates to possible increased particle
and precipitation acidity).

Other Comments:

	Without stating support or opposition for the specifics of the
proposal, one state/local agency association (0164) asserted that EPA
should finalize a requirement for offsets consistent with the existing
program, or a functionally equivalent and equally protective alternative
approach (emphasis in the original).  The commenter stated that there
have been problems with the current offset program.  The commenter fully
supported the continued need to ensure that economic and emissions
growth does not adversely affect progress toward attainment.  The
commenter also believes that the offset program has been pivotal in
promoting advancement of pollution control technology. 

Response: 

	After considering the comments received on this issue, we have decided
to allow limited interpollutant trading for purposes of offsets 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 final policy 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 ratios are described in the preamble to
the final rule.  The preferred ratios were generated with a PM2.5
response surface modeling (RSM) approach based on the EPA’s CMAQ
model.  Our work here and 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.  The technical assessment and recommended ratios account
for regional differences and other considerations reflected in public
comments.

	We recommend that states use the EPA’s trading ratios in their
interpollutant trading programs to provide consistency and to streamline
the trading process.  If states elect to use EPA’s preferred 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 preferred trading ratios are not appropriate for that location. 
If states choose to develop their own hierarchies/trading ratios, they
will have to substantiate them 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 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; such is often the case for direct PM2.5 emissions and SO2.

Other Comments on Offsets

Comment:

	One state/local agency (0168) pointed out that nowhere in our proposal
is there any mention of the required modeling demonstration of net air
quality benefit analysis, similarly to the limited mention of modeling
in attainment areas.  The commenter stated that this is contrary to EPA
and state regulations.  The commenter noted that sections IV.A.4 and D
of appendix S of 40 CFR part 51 provides requirements for new or
modified sources locating in designated nonattainment areas with respect
to an explicit demonstration of net air quality benefit from the
offsetting of emissions.  The commenter argued that such a requirement
is necessary for the direct emissions of PM2.5 to assure no additional
contribution or creation of nonattainment conditions in the vicinity of
the proposed source when emission offsets are obtained from distant
sources.  

Response:

	The commenter is correct that the existing NA NSR regulations require a
demonstration that proposed offsets, in combination with a project’s
emissions increase, will result in a net air quality benefit, which may
require modeling in the case of direct PM emissions.  These existing
requirements apply to direct PM2.5 emissions offsets as they have in the
past to offsets for other indicators of PM.

Comments on Transition Issues 

 Comments on PSD Transition Issues

	Upon promulgation of the proposed rules, states that accept delegation
of the Federal PSD program (delegated states) would implement the PM2.5
program in 40 CFR 52.21 beginning on the effective date of the rule. 
However, for states that have their own approved PSD programs
(SIP-approved states), we sought comment on three options to address
implementation of the PSD program from the time that our final rules go
into effect until we approve a state’s PSD program for PM2.5.  The
comments and our responses are presented in the following paragraphs.

Option 1 – Continue Implementing the 1997 Guidance to Use the PM10
Program as a Surrogate for PM2.5

	As Option 1, we proposed that SIP-approved states that are unable to
implement a PM2.5 PSD program upon promulgation of the final rules may
continue to implement a PM10 program as a surrogate pursuant to the
guidance we issued in 1997.  However, we proposed two additional
requirements:

States must require sources to demonstrate that the project will not
cause or contribute to a violation of the PM2.5 NAAQS; and

States must include condensable PM emissions in determining major NSR
applicability and control requirements.

Supporting Comments:

Three state/local agency and agency association commenters (0080.1,
0136.2, 0167) and four industry/industry group commenters (0074.1,
0083.1, 0096.1, 0125.1) gave general support to Option 1.  A fourth
state/local agency association (0164) believes that Option 1 is a
reasonable starting point, but suggested a modified approach (discussed
further below).

One of the supportive industry commenters (0074.1) expressed the opinion
that the current guidance of using PM10 as a surrogate for PM2.5 during
the SIP development period would provide clarity and certainty to the
permitting agency and regulated community.  The commenter noted 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. 

One of the supportive state/local agencies (0167) pointed out that any
alternative implementation plan, including an updated version of the
1997 guidance (per Option 2 below) would not be final until September
2006, meaning that states would need to concurrently implement that
alternative while revising their SIPs in accordance with the finalized
PM2.5 NSR Implementation Rule.  Shortly thereafter, the commenter noted,
states would also be required to submit SIP revisions implementing
separately promulgated PM2.5 SILs and increments, and the revised PM10
and PM2.5 NAAQS promulgated in October 2006.  The commenter believes
that such frequent changes in the regulatory requirements would create
uncertainty for sources and place increased administrative burden on
state agencies, likely resulting in permitting delays and increased
costs.  The commenter therefore requested that we adopt Option 1.

Despite generally supporting Option 1, one of the state/local agency
associations (0136.2) stated that existing source testing methods for
condensable emissions are inadequate to determine major NSR
applicability and to include in an enforceable permit.  While the
commenter believes that PM10 methods could serve as an adequate
substitute in some cases, the commenter asserted that it is necessary to
have methods that provided greater accuracy in cases where determining
major NSR applicability is close.  One of the supportive industry group
commenters (0096.1) similarly questioned and objected to our proposal to
condition the continuation of the 1997 guidance on the state’s
satisfaction of conditions, particularly the inclusion of condensable
PM.  A second supportive industry commenter (0125.1) also asserted that
EPA should abandon the proposed requirement to include condensable PM
emissions.  In contrast, one of the supportive state/local agency
associations (0080.1) specifically stated that we should require that
condensable PM be included in the applicability determinations.

One state/local agency association (0164) believes that proposed
Option 1 is a reasonable starting point (as noted above), but suggested
that because of the difficulties associated with measuring the
condensable fraction and correctly apportioning the PM2.5 emissions,
PM10 should be used as a surrogate with a default discount factor
applied (emphasis in the original).  The commenter recommended that we
use two categories with different factors that correspond to the
generally understood fine particle fraction: industrial process
emissions (combustion, etc.) and other emissions (fugitive dust, sawmill
dust, etc).

Opposing Comments:

Three state/local agency/agency association commenters (0142, 0165,
0168) specifically stated that they do not support Option 1.  The
commenters did not agree that implementing the PM10 program in the
interim period during SIP development is an appropriate surrogate for a
PM2.5 program, nor did they agree that this approach would be protective
of the PM2.5 standards or prevent air quality deterioration.  The
commenters stated that they do not see a basis to continue an outdated
policy (i.e., the 1997 NSR guidance) that essentially neglects the
requirements of a PM2.5-specific NSR program.  The commenters believe
that the PM2.5 NSR program must contain a specific set or requirements
that not only assure attainment of the PM2.5 NAAQS, but also address
mandatory PSD increments, SILs for determination of significant impacts,
and PM2.5-specific BACT guidance.

Two of these commenters (0142, 0165) went on to say that they oppose
Option 1 because it does not address the PM2.5 problem, cannot be
implemented in some states, and does not incorporate precursor
emissions.  Nevertheless, these commenters acknowledged that such an
interim measure would be necessary until the proposed rule is finalized.

Response:

After considering the comments we received on the three proposed
options, we have decide to adopt Option 1 as our final policy whereby
SIP-approved states may continue to implement a PM10 program as a
surrogate to meet the PSD program requirements for PM2.5 pursuant to the
1997 guidance.  However, we are not finalizing either of the two
additional requirements that we proposed in 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 for the PM2.5 PSD program during the interim
period.  Since in the final rule we are otherwise allowing SIP-approved
PSD 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 (using PM10 analyses for BACT, AQRVs,
and the additional impacts analysis) while doing the air quality
analysis for PM2.5 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 5 of this document, 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 5.

	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 presumptively 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.  See the discussion
of the other proposed options below.

Option 2 – Update the 1997 NSR Guidance to Include Proposed Provisions
of this Rule or Amend 40 CFR Part 51, Appendix S to Indicate that 40 CFR
52.21 Would Apply

	Proposed Option 2 involved implementing a true PM2.5 PSD program during
the SIP development period through one of two approaches:

Updating the 1997 guidance to reflect the provisions of the final rule
and allowing states to run a PM2.5 PSD program pursuant to the updated
guidance; or

Amending 40 CFR part 51, appendix S and 40 CFR 52.24 so that the PSD
requirements of 40 CFR 52.21 would govern PSD permit issuance during the
interim period.

Under the second approach, EPA would issue the PSD permits if a state
did not believe it had the authority to issue permits under appendix S. 
We also requested comment on which of these two approaches should be
used.

Supporting Comments:

	Two industry/industry group commenters (0107.1, 0161) expressed support
for the Option 2 approach involving an update the 1997 PSD guidance to
allow SIP-approved PSD states to run a PM2.5 program during the
transition period.  Given that the transition period should be
relatively short (2 years or so), the commenters believe that our
resources would be better spent updating the 1997 PSD guidance rather
than proposing and finalizing amendments to appendix S, or approving
state delegation requests.  The commenters suggested that the guidance
be updated to include PM2.5 NAAQS compliance demonstration, inclusion of
condensables, and a provision related to interprecursor netting.  

	

	Two state/local agencies (0142, 0168) and one state/local agency
association (0165) supported the concept of revising rules, as suggested
by Option 2, to address the inadequacies so that there is no longer any
reason to rely upon outdated guidance.  The commenters urged EPA to
revise pertinent regulations as soon as possible to allow states a ready
means to implement the PM2.5 NSR program.  The commenters noted that in
several states, reference to EPA policy does not provide sufficient
basis for implementing a major program such as the PM2.5 NSR; thus they
did not support EPA merely revising and reissuing guidance for use over
a several year period.

	These commenters (0142, 0165, 0168) believe that EPA has the legal
authority and obligation to assure that, during the SIP development
process, the PM2.5 NSR program is applied equitably (i.e., in those
states that have delegated programs and would have to apply them
immediately as well as in the remaining states that will have to submit
PM2.5 SIPs).  Two of the commenters (0142, 0165) went on to assert that
EPA must make the necessary amendments to the pertinent Federal
regulations so that states can adopt them for their own programs (or, in
the event of a state refusal or inability to carry out the program in an
expeditious manner, will allow EPA to implement the PM2.5 NSR program). 
The third of the commenters (0168) indicated that it is paramount that
PM2.5-specific provisions be finalized and applied as expeditiously as
possible.

All three of the commenters (0142, 0165, 0168) stated that it was
unclear as to why we proposed in Option 2 to amend appendix S (and 40
CFR 52.24), the Emission Offset Interpretative Rule for nonattainment
areas, to carry out the requirements of the PSD program in 40 CFR 52.21
or 51.166.  They argued that we did not provide reasonable specificity
regarding the proposed changes to allow meaningful public input on this
option.

Response:

	As noted above, we have decided not to adopt Option 2 in favor of
adopting Option 1.  We do not believe that Option 2 offers significant
advantages that outweigh the utility and ease of implementation of
Option 1.  As one of the commenters in favor of Option 1 pointed out,
requiring states to implement updated guidance or 40 CFR 52.21 for a
brief period during development of their own PM2.5 PSD programs,
followed by additional changes for the proposed rulemaking on PM2.5
increments, SILs, and SMCs (72 FR 54112, September 21, 2007) (when
finalized) and then for the revised PM2.5 NAAQS, would introduce
considerable complication and uncertainty into the program.  We do not
believe the benefits of slightly earlier implementation of the PM2.5 PSD
program outweigh the disbenefits of confusion and shifting requirements.

Option 3 – State Requests Delegation of 40 CFR 52.21 

	As Option 3, we proposed to allow states to request delegation of just
the Federal PM2.5 PSD program, as finalized in 40 CFR 52.21.  The state
would still have the option of obtaining EPA approval of its own PSD
program for PM2.5 if it submitted a SIP revision at a later date.

Supporting Comments:

One industry commenter (0111.1) recommended that states with approved
PSD programs for other pollutants be required to obtain approval for
purposes of the PM2.5 program, and in the interim, 40 CFR 52.21
delegations should apply.

One state/local agency (0137.1) favored a variation of proposed Option 3
in which SIP-approved states would request delegation of just the new
portions of 40 CFR 52.21 that are not already part of their codified PSD
programs, then work on incorporating the new provisions on the normal
rulemaking schedule for the state.  The commenter added that if this
suggestion is not acceptable to EPA, his state would prefer Option 1.

Opposing Comments:

Two state/local agencies (0142, 0168) and one state/local agency
association (0165) specifically stated that they do not support Option 3
because it is impractical.  The commenters pointed out that many states
already have their own PSD programs and plan to modify them for the
PM2.5 NSR requirements, and that the remaining states have retained a
form of the PSD program or have returned the program to the EPA. 
Therefore, the commenters stated that they did not foresee a situation
where Option 3 would be necessary or appropriate.

Response:

	We agree with the commenters who indicated that Option 3 would be
impractical.  We believe that a state PSD program consisting of the
delegated Federal program for PM2.5 and state provisions for all other
pollutants would be complicated and confusing to sources and the
implementing agency.  In addition, as noted above, we expect that the
delegation would be a short-term situation and, along with other
upcoming changes to the program, would result in an unstable and
confusing program.  We do not believe that the benefits of slightly
earlier implementation of the PM2.5 PSD program would outweigh the
disbenefits of confusion and shifting requirements.  Accordingly, we do
not believe that Option 3 offers significant advantages that outweigh
the utility and ease of implementation of Option 1.

Other PSD Transition Comments  

Comment:

	One state/local agency (0124.1) stated that none of our proposed
options regarding how SIP-approved states should implement the PSD
program during the transition period are viable options for that state. 
The commenter requested that we allow states to continue their existing
PM10 program as a surrogate for PM2.5 (without caveat) until their SIPs
or regulations can be updated.  The commenter explained that based on
state law, the agency would have to update the regulations before
requiring applicants to demonstrate compliance with the PM2.5 standard
(which takes 9 to 12 months), which would be required under both Options
1 and 2.  The commenter argued that Option 3 (request delegation of the
40 CFR 52.21 PM2.5 requirements) would be unmanageable as their approved
program consists of a combination of statutes, regulations, and Federal
guidance adopted by reference, and that including a partial delegation
in this mix would further complicate the program.

Response:

	As noted above, we have decided to adopt Option 1, although we have
dropped the two proposed requirements to demonstrate compliance with the
PM2.5 NAAQS and to include condensable PM emissions.  This course of
action conforms to the commenter’s suggestion.  Also as noted, we have
decided not to adopt Option 2 or 3.

Comment:

One state/local agency (0124.1) and one industry commenter (0111.1)
requested that we clarify in the final rule that air quality analyses
are not required for PM2.5 until we complete the process of issuing
SILs.  The industry commenter (0111.1) stated that this was necessary so
that projects are not delayed due to the inability to demonstrate a de
minimis impact on air quality for PM2.5.

The state/local agency (0124.1) recommended that we not require NSR
PM2.5 modeling until we complete public review on the technical details
and associated resource requirements regarding what we expect with
regards to modeling.  The commenter stated that until this is done,
sources should be allowed to demonstrate compliance with the PM10
standards as a surrogate for the PM2.5 standards.  The commenter
recommended that the following technical details be included:

The direct PM2.5 SIL;

The expected method for assessing indirect PM2.5 concentrations in a
cumulative impact assessment; and 

The preferred model (if modeling is expected) for estimating indirect
PM2.5 concentrations.

	The commenter (0124.1) also suggested that the current lack of
information regarding what the modeling obligations are prior to
development of a PM2.5 SIL is troubling and that such obligations need
to be clearly stated.  The commenter asked that we address the following
questions:

Are we expecting PSD applicants to conduct a cumulative analysis for all
projects prior to development of the PM2.5 SIL?

When a cumulative analysis is required, are we expecting applicants to
also model secondary PM2.5 concentrations?

Response:

We have proposed PM2.5 increments, SILs, and SMC under a separate
rulemaking (72 FR 54112, September 21, 2007).  We do not agree with the
commenters that suggest we should not require PSD air quality analyses
for PM2.5 in delegated states or states with approved SIPs for PM2.5
that are otherwise implementing PSD for PM2.5 because EPA has not yet
completed the proposed PM2.5 increments and SILs.  A demonstration that
a source does not cause or contribute to a violation of the PM2.5 NAAQS
can be conducted, notwithstanding the absence of an increment for PM2.5.
 These analyses can be conducted independently and do not depend on each
other.  Furthermore, a SIL is not a prerequisite to conducting an air
quality analysis for PM2.5, and the absence of an EPA-promulgated SIL
does not justify an exemption from the air quality analysis if a state
has all the other regulations in place for implementing the PSD program
for PM2.5.   Among other functions, SILs can be used as a screening
device that enables one to forgo a cumulative analysis if that analysis
would yield no benefit, but the absence of that level in EPA rules does
not justify a complete exemption from conducting an air quality analysis
for PM2.5.  Also, states are not precluded from developing and applying
their own SILs for PM2.5 in the interim and demonstrating that a
cumulative analysis would yield trivial gain.  The concept of a SIL is
grounded on the de minimis principles described by the court in Alabama
Power Co. v. Costle, 636 F.2d 323, 360 (D.C. Cir. 1980).  

Comment:

	One state/local agency (0164) believes that additional guidance is
needed for implementation of PSD, including increment use and tracking,
netting, modeling, SILs, pre-construction monitoring, and other
procedural and administrative elements.  The commenter urged EPA to
develop this guidance quickly, and to provide a simple but protective
interim framework for use by EPA and by delegated states until such
final guidance is available.  The commenter suggested that this interim
framework should, at a minimum, ensure that any new or modified project
that exceeds the PSD 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.  (The commenter
noted that there will be a transition period while EPA develops the
suggested guidance and states modify rules and develop implementation
plans and, as discussed above, supported Option 1 as a reasonable
starting point for that period.)  A second state/local agency (0079.1)
similarly indicated that delegated states will need PSD increments and
guidance for BACT review, netting analyses, and dispersion modeling to
properly implement the rule and assign resources.

Response:

	As noted above, we have proposed PM2.5 increments, SILs, and SMCs (72
FR 54112, September 21, 2007), which will address a number of the areas
mentioned by the commenters.  We believe that the proposed rule, when
final, along with this final PM2.5 NSR Implementation Rule, will
establish the necessary elements for a complete PM2.5 PSD program.  In
addition, the existing PM10 surrogate policy and other guidance for the
PSD program will continue to apply.  We believe that the PSD transition
approach discussed above appropriately addresses the interim periods
that will occur.  As a result, we do not believe that additional
guidance is necessary at this time.

Comments on NA NSR Transition Issues

	Our prior guidance permitted states to implement a PM10 NA NSR program
as a surrogate to address the requirements of NA NSR for the PM2.5
NAAQS.  However, we proposed that upon promulgation of the final PM2.5
NSR Implementation Rule (for which this document was prepared), states
would no longer be permitted to implement a PM10 NA NSR program as a
surrogate for a PM2.5 program.  Instead, most states would need to
implement a transitional PM2.5 NA NSR program under 40 CFR part 51,
appendix S (as amended by the final rulemaking action) until we approve
changes to a state’s SIP-approved NA NSR program to reflect the
requirements of the rule.  (It is possible that some states would be
able to continue to implement their existing NA NSR programs if the
regulations are written generally enough to apply to PM2.5 and to the
newly designated PM2.5 nonattainment areas.)  We proposed to revise
appendix S to include provisions necessary to implement a transitional
major NSR program for PM2.5.  We also noted that if a state is unable to
apply the requirements of appendix S (e.g., lacks the legal authority),
EPA will act as the reviewing authority for the relevant portion of the
permit.  Comments received on our proposal are summarized in the
following paragraphs.

Supporting Comments:

One industry commenter (0161) and one industry group commenter (0107.1)
agreed that, pursuant to 40 CFR 52.24(k), appendix S to 40 CFR part 51
applies to state NA NSR permitting during the transition period.  They
endorsed our proposal that we issue NA NSR permits during this
transition where a state asserts that it lacks the legal ability to
apply the requirements of appendix S.  The commenters added that if we
continue to endorse interprecursor trading for NA NSR emission offsets,
the final rule must revise appendix S to authorize interprecursor
trading during the transition period.  The commenters believe that with
the paucity of existing direct PM2.5 and SO2 offsets, business expansion
in PM2.5 nonattainment areas from now until at least April 2008 likely
will be impossible unless this is done.

	One industry commenter (0111.1) expressed that we should amend appendix
S for purposes of NA NSR and should clarify that states that have not
specifically adopted a PM2.5 NA NSR program must utilize appendix S in
the interim.

	Without specifically mentioning appendix S or endorsing our proposal,
one state/local agency (0168) and one state/local agency association
(0165) urged EPA to make the necessary regulatory changes to allow
either states or EPA to implement immediately the PM2.5 NA NSR program
upon finalization of the PM2.5 NSR Implementation Rule.  The state/local
agency association (0165) went on to say that states that must revise
their regulations and SIPs for the PM2.5 program should not be given any
deference in either doing so expeditiously or having EPA implement the
program in those states.

	Another state/local agency (0142) urged us to make the necessary
amendments to the pertinent Federal regulations so that states can adopt
them for their own programs or, in the event of a state refusal or
inability to carry out the program in an expeditious manner, allow EPA
to implement the PM2.5 NSR program.  The commenter suggested that the
2005 PM2.5 NSR guidance on use of PM10 emissions as surrogate for PM2.5
emissions in PM2.5 nonattainment areas should be suspended by the final
PM2.5 NSR Implementation Rule.

Opposing Comments:

	Three industry commenters (0074.1, 0096.1, 0125.1) requested continued
implementation of the 2005 PM2.5 NSR guidance that allows the use of
PM10 as a surrogate for the PM2.5 NA NSR program during the transition
period and beyond.  One of these industry commenters (0074.1) believes
that the current guidance of using PM10 as a surrogate for PM2.5 would
provide clarity and certainty to the permitting agency and regulated
community.  The commenter noted 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 and challenging for
agencies attempting to quantify offsets and define LAER provisions in
the period until PM2.5 SIPs are revised.  On the other hand, the
commenter stated, PM10 emission sources and potential emission rates are
well established due to historic regulation of the pollutant.  On this
basis, the commenter asserted that PM10 should continue to be a
surrogate for PM2.5 in major NSR evaluations not only during SIP
development, but also as an ongoing practice if a state determines that
further refinement of methodologies and additional information
collection are necessary to support a robust PM2.5 SIP.

Response:

We have decided to finalize the rules as proposed.  That is, after the
effective date of this rule, states will no longer be permitted to
implement a NA NSR program for PM10 as a surrogate for the PM2.5 NA NSR
program.  Most states will then need to implement a transitional PM2.5
NA NSR program under appendix S to 40 CFR part 51 (as amended in this
rulemaking action) until EPA approves changes to a state’s
SIP-approved NA NSR program to reflect the requirements of this rule.

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 SERs applicable to major modifications for
PM2.5 and, as appropriate, precursors.  Additionally, since we have
decided to allow limited interpollutant trading for purposes of offsets
under the PM2.5 NA NSR program (as discussed above in section 9.4 of
this document), we are amending appendix S to allow interpollutant
trading at least for PM2.5 in this final rule.  

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 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 it is consistent with congressional intent that either the state
or EPA issue permits to construct 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).

Our 2005 PM2.5 NSR guidance provided that states should use their
approved PM10 NA NSR program as a surrogate for a PM2.5 program until we
promulgate a final PM2.5 NSR implementation rule.  The guidance also
reiterated that states should continue to follow our 1997 guidance for
PSD requirements.  Accordingly, as of the effective date of the final
PM2.5 NSR Implementation Rule, the 2005 PM2.5 NSR guidance will no
longer apply in PM2.5 nonattainment areas.  As discussed above in
section 9.1, the 1997 guidance will remain in effect for PSD in the
SIP-approved states during the SIP development period, while 40 CFR
52.21 will apply immediately for PSD in the delegated states.

Comments on NSR Transition for PM2.5 Precursors

The proposal preamble stated that we were considering whether NSR
applicability to precursors should be stayed for one or more precursors
during the SIP development period.  We solicited comments on the
applicability of NSR to precursors during the SIP development period. 
The following paragraphs present a summary of the comments received.

Comments Favoring a Stay:

One state/local agency (0124.1) supported staying the Federal NSR
applicability to precursors because its state cannot impose obligations
on NSR applicants until those obligations are established in state
regulations or statute law.  The commenter further stated that the
presence of a Federal requirement prior to adoption of the state
requirement creates legal difficulties for applicants who rely primarily
on the state’s NSR program as fulfilling all Federal requirements.

Four industry/industry group commenters (0096.1, 0107.1, 0111.1, 0161)
supported waiving the regulation of all PM2.5 precursors during the
transition period.  One of these industry commenters (0111.1) stated
that staying the regulation of precursors during transition allows
states the time to develop experience and knowledge in establishing
local photochemical models and to performance test their accuracy.  The
commenter argued that regulating precursors at this time would pose PSD
preconstruction monitoring requirement problems as time is needed for
states to refine their monitoring networks and modeling protocols.

Two of these commenters (0107.1, 0161) supported waiving the regulation
of PM2.5 precursors during the transition period provided appendix S,
the 1997 guidance, and 40 CFR 52.21 include language that allows
interprecursor trading and netting so that direct PM2.5 emissions
increases can be offset or netted with SO2 and NOx decreases.

Three industry/industry group commenters (0105.1, 0111.1, 0119)
supported staying NSR applicability for NOx under this rulemaking until
the SIP submission deadline.  They stated that sources operating in
nonattainment areas would otherwise be subject to NOx NSR standards that
may lack scientific and legal support.

Comments Opposing a Stay:

One state/local agency (0142) requested that SO2 precursor emissions be
included in NSR in the time period from adoption of the PM2.5 NSR
Implementation Rule until the SIP development period ends (up to April
2008).  The commenter asserted that since SO2 will be considered a PM2.5
precursor nationwide, states will not be able to opt out of including
these emissions in PM2.5 NSR; therefore, they should be included in the
interim period.

One state/local agency (0168) and one agency association (0165) believe
that all applicable provisions of NSR should be applied to the default
precursors SO2 and NOx, as they do not believe it would hamper a
state’s ability to demonstrate that NOx could be exempted as a
precursor.  The state/local agency association (0165) went on to state
that if we determine that ammonia and VOC are to be regulated as
precursors, the commenter would support that such a determination should
await the SIP development process.

One environmental group commenter (0154.1) stated that it would be a
mistake to stay applicability to precursors because precursors are as
significant to PM2.5 as VOC and NOx are to ozone.  The commenter went on
to assert that EPA has no authority to waive regulation of PM2.5
precursors, either during or after the SIP development period.  The
commenter argued that doing so would allow major new sources to
substantially increase emissions and worsen an area’s PM2.5 problem
before the area has even developed a plan for reducing existing
pollution levels sufficiently to meet RFP and attainment requirements.

Another environmental group commenter (0106.1) believes that exempting
precursors from NSR until the April 2008 SIP submittal date would delay
pollution cleanups in nonattainment areas, making attainment of the
PM2.5 standard more difficult.

Response:

As discussed in section 2, we are taking final action on NSR
applicability for PM2.5 precursors in the final PM2.5 NSR Implementation
Rule.  Specifically, we are designating SO2 as a national precursor to
PM2.5 in all areas, NOx as a “presumed-in” precursor in all areas,
and VOC and ammonia as “presumed-out” precursors in all areas. 
Thus, states have the option of excluding NOx as a precursor by
demonstrating that NOx emissions do not contribute significantly 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 contribute
significantly in an area, and thus should be subject to major NSR.

However, based on the comments, we have been persuaded that SIP-approved
states will not have the authority to regulate PM2.5 precursors before
they have amended their SIPs and state law to incorporate these
requirements.  Thus, in order to allow time for states to revise their
regulations to incorporate such requirements, the final rule does not
require regulation of SO2 or NOx as precursors to PM2.5 under NSR until
states revise their SIPs.  At that time, SO2 will become a precursor in
all areas by default.  The same is true for NOx, barring an approved
demonstration to the contrary for a particular area.  Ammonia and VOC
are considered not to be precursors until an approved demonstration that
they should be treated as such for a particular area.

Other Comments on NSR Transition 

Comment:

	Five industry and industry group commenters (0074.1, 0089, 0095.1,
0109.1, 0111.1) asserted that a PM10 major NSR program should continue
to be used as a surrogate for a PM2.5 program (both PSD and NA NSR)
until difficulties with various aspects of the PM2.5 program are
overcome.  

	One of the industry commenters (0074.1) supported the continued use of
PM10 as a surrogate for PM2.5 not only during the SIP development
process, but also as an ongoing practice if a state determines that
further refinement of methodologies and additional information
collection are necessary to support a robust PM2.5 SIP.  This commenter
noted 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 and challenging for agencies.

	One of the industry group commenters (0109.1) stated that, as a
practical matter, until technical issues of measuring fine particulate
(i.e., filterable and condensable portions) and predicting through
modeling fine particulate formation are resolved, EPA should continue to
implement PM2.5 NSR for fine particulate utilizing the PM10 NSR program
per the 1997 and 2005 PM2.5 NSR Transition Policies.

	Another of the industry commenters (0111.1) noted that the proposal
preamble indicated we were relying on the 1997 guidance 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.”  The commenter disagreed with our assessment
that these problems have been resolved in most respects, and asserted
that the most significant of the problems have not been resolved – the
lack of necessary tools to measure or calculate emissions of PM2.5 and
to adequately model the transformation of SO2 and NOx emissions into
PM2.5 for predicting single source impacts on ambient air quality.  The
commenter favored continued implementation of the 1997 guidance until
such time as test methods are promulgated, which will also allow
additional modeling data to be developed, monitoring sites to be
installed, and ambient data to be collected.

Response:

	As discussed above, the final PM2.5 NSR Implementation Rule provides
that after the effective date of this rule, states will no longer be
permitted to implement a NA NSR program for PM10 as a surrogate for the
PM2.5 NA NSR program.  For purposes of PSD, SIP-approved states may
continue to implement a PM10 program pursuant to the 1997 guidance as a
surrogate to meet the PSD program requirements for PM2.5 during their
SIP development process.  Delegated states must implement the PM2.5 PSD
program found in the revised 40 CFR 52.21 beginning on the effective
date of the final rule.

	We do not believe it is necessary to provide transition periods longer
than these for the overall PM2.5 major NSR program.  One of the primary
causes of uncertainty in the PM2.5 program is the measurement of the
condensable fraction of emissions.  As discussed above in section 5, we
are providing an extended transition period for the inclusion of
condensable PM emissions while we work on improving measurement
methodologies.  In addition, we have proposed PM2.5 increments, SILs,
and SMCs (72 FR 54112, September 21, 2007).  In that proposed
rulemaking, we have proposed that increments, SILs, and SMCs and related
analyses for the PM2.5 PSD program be based on direct PM2.5 emissions
only, without consideration of PM2.5 precursors.

Comments on Minor NSR Programs for PM2.5

	In the proposal preamble, we stated that states must have minor NSR
programs pursuant to section 110(a)(2)(C) of the Act.  We asserted that
states must amend these programs to reflect the final rule, that is, to
include direct PM2.5 emissions and precursor emissions as included in
the major NSR program for PM2.5.

Comment:

	One industry group commenter (0109.1) asserted that states are not
required by the Act to adopt minor NSR programs for PM2.5.  The
commenter stated that the Act refers to minor NSR as merely one option a
state has for implementing a NAAQS, but does not mandate such a program.
 The commenter quoted section 110(a)(2)(C) of the Act to require
“regulation ... as necessary to assure that the [NAAQS] are
achieved.”  The commenter indicated that since relatively few areas
need to adopt local measures to achieve the standard, minor NSR programs
would not “be necessary” to achieve the NAAQS.

Response:

	Section 110(a)(2)(C) requires each SIP to include “regulation of the
modification and construction of any stationary source within the areas
covered by the plan as necessary to assure that [NAAQS] are achieved,
including a permit program as required in parts C and D.”  We have
always interpreted this section to require states to establish a minor
NSR program for all pollutants for which there is a NAAQS (along with
any designated precursors).  Accordingly, the implementing regulations
at 40 CFR 51.160 – 51.164 require such a program.  Thus, we have
determined by regulation that a minor source construction permit program
is necessary to assure the NAAQS are achieved. 

Other Comments on Major NSR for PM2.5

	

Comment:

One industry commenter (0119.1) requested that we designate areas that
will achieve attainment without further regulatory development as
conditional attainment areas for which NSR is suspended.  The commenter
explained that there are areas for which modeling indicates attainment
will be achieved with the implementation of the CAIR rule and other
regulations in the “pipeline” and that EPA should not impose NSR for
particulate emissions in these areas.

Response:

	Part D of title I of the Act requires a NA NSR program in all
nonattainment areas.  We do not believe that we have discretion to
exempt any nonattainment area from the NA NSR requirements.  In any
case, with the uncertainties inherent in modeling, we believe on policy
grounds that it is prudent to move forward with NA NSR programs in the
areas described by the commenter.  It should also be noted that such
areas would not long be subject to NA NSR.  Upon redesignation to
attainment for PM2.5, such areas would fall under PSD for PM2.5.

Comment:

	One state/local agency (0081.1) pointed out a potential issue with
double counting of emissions reductions where the CAIR regulations
overlap with the use of emission reduction credits (ERCs) under NSR.  As
background, the commenter noted that the Act specifies that offsetting
emission reductions taken together with all other emission increases and
decreases in a nonattainment area must provide for RFP, which is defined
as an annual incremental improvement towards attainment of the NAAQS. 
The commenter pointed out that, as a result of inclusion of large power
stations in rural nonattainment areas, many areas may see no RFP if
controls are not installed on these plants – in order to allow new
sources in the area, controls will have to be installed.  The commenter
indicated that all of the reductions may not, however, be surplus to the
SIP if the state has already taken credit for CAIR reductions at such
power stations.

	The commenter (0081.1) explained the overlap as follows:

Typically the planning emission inventory “credits” an allowance
program (e.g., CAIR) by setting the projected emissions from budget
program-covered sources equal to their allocated allowances, which are
usually less than the source’s base year actual emissions.  

If the source installs controls, it cannot take NSR offset credit for
the reduction down to the allocation level since the SIP already took
this credit.  

If the source reduces its emissions below the SIP credit level it could
generate NSR credit (i.e., ERCs) but in order to fulfill the SIP budget
obligations, an equivalent amount of allowances must be surrendered for
any new emissions that are allowed by the offset credit.  Otherwise, the
emission reductions are being counted and used twice.  

If the new source is subject to the budget program, this will be
satisfied automatically; if not, allowances equal to the allowable
emissions from the new source need to be retired.

	The commenter (0081.1) stated that since EPA’s CAIR and NSR
regulations do not address this issue, and because of the overlapping
complexity inherent to the NSR and CAIR requirements, it is virtually
guaranteed that double counting may occur if the issue is not addressed
in the final rule.  The commenter believes that the simplistic general
NSR requirement that credits be “surplus to the SIP” is inadequate
to prevent double counting from occurring.  The commenter noted that
Pennsylvania has adopted NSR and interstate ozone transport NOx Budget
Trading Program provisions that remedy this defect at 25 Pa. Code
Chapter 145, Section 145.90, and provided the language of these
provisions.  The commenter indicated that the Pennsylvania provisions
address the multiple aspects of ERC and allowance interactions and fully
prevent double counting without constraining the proper functioning of
either program, and also do not allow non-ozone season ERC reductions to
allow ozone season emissions growth.  The commenter recommended that
these provisions be tailored as necessary to integrate with individual
state emission credit transfer mechanisms, and be included in each
state’s NSR and allowance-based trading program regulations.  The
commenter further recommended that the PM2.5 NSR Implementation Rule
include similar provisions.

Response:

	While the commenter has presented some valid arguments for preventing
double counting of emissions reductions in general, we did not address
this topic in the November 2005 proposal.  Thus, we are unable to
address this subject in this final action.

 Section 110(a)(2)(D) of the Act requires SIPs to include provisions
prohibiting sources from contributing significantly to nonattainment in
another State or interfering with another State’s measures for PSD or
to protect visibility. 

 On October 17, 2006 (after these comments were submitted), we finalized
our proposal to lower the 24-hour NAAQS for PM2.5 to 35 (g/m3.

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0 citation given by the commenters (70 FR 66019, column 1), we believe
that they were referring to what we designated as sub-option 2 under our
first proposed alternative approach to RACT in PM2.5 nonattainment
areas.  Under sub-option 2, we would have required States to require
RACT controls on all sources with PTE of 50 tpy or greater.

 See “Interim Implementation for New Source Review Requirements for
PM2.5,” J. Seitz, EPA, October 23, 1997.

 See “Implementation of New Source Review Requirements in PM-2.5
Nonattainment Areas,” Stephen D. Page, EPA, April 5, 2005.

 We have revised appendix S to incorporate the 2002 NSR reform changes
(72 FR 10367, March 8, 2007).

 PAGE   

  PAGE  iv 

  PAGE  34 

