
[Federal Register Volume 76, Number 96 (Wednesday, May 18, 2011)]
[Rules and Regulations]
[Pages 28646-28661]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-12089]


=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-HQ-OAR-2003-0062: FRL-9306-9]
RIN 2060-AP75


Implementation of the New Source Review (NSR) Program for 
Particulate Matter Less Than 2.5 Micrometers (PM2.5); Final 
Rule To Repeal Grandfather Provision

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The EPA is issuing a final rule that repeals the 
``grandfather'' provision for particulate matter less than 2.5 
micrometers (PM2.5) under the Federal Prevention of 
Significant Deterioration (PSD) permit program, which is administered 
by EPA in states that lack a PSD permit program in their approved state 
implementation plan (SIP). The grandfather provision allowed certain 
facilities under certain circumstances to satisfy the PSD permit 
program requirements for PM2.5 by meeting the requirements 
for controlling particulate matter less than 10 micrometers 
(PM10) and analyzing impacts on PM10 air quality 
as a surrogate approach based on an EPA policy known as the ``1997 
PM10 Surrogate Policy.'' In its February 11, 2010, notice of 
proposed rulemaking, EPA also proposed to end early the 1997 
PM10 Surrogate Policy in EPA-approved state PSD programs 
during the remainder of the SIP development period, which ends on May 
16, 2011. EPA is taking no final action on that aspect of the proposal.

DATES: This final rule is effective on July 18, 2011.

ADDRESSES: The EPA has established a docket for this action under 
Docket ID No. EPA-HQ-OAR-2003-0062. All documents in the docket are 
listed on the http://www.regulations.gov Web site. Although listed in 
the index, some information may not be publicly available, e.g., 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Certain other material, such as 
copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form. Publicly available docket 
materials are available either electronically through http://www.regulations.gov or in hard copy at the Air Docket, EPA/DC, EPA 
West, Room 3334, 1301 Constitution Avenue, Northwest, Washington, DC. 
The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday 
through Friday, excluding legal holidays. The telephone number for the 
Public Reading Room is (202) 566-1744, and the telephone number for the 
Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Mr. Dan deRoeck, Air Quality Policy 
Division, (C504-03), U.S. Environmental Protection Agency, Research 
Triangle Park, NC, 27711; telephone number (919) 541-5593; fax number 
(919) 541-5509; or e-mail address: deroeck.dan@epa.gov.

SUPPLEMENTARY INFORMATION: The information in this Supplementary 
Information section of this preamble is organized as follows:

I. General Information
    A. Does this action apply to me?
    B. Where can I get a copy of this document and other related 
information?
II. Overview of This Final Rule
III. Background
    A. Prevention of Significant Deterioration Program
    B. Fine PM and the NAAQS for PM2.5
    C. How is the PSD program for PM2.5 implemented?
IV. Grandfather Provision for PM2.5 in the Federal PSD 
Program
    A. What is the grandfather provision for PM2.5?
    B. Why did EPA propose to repeal the grandfather provision for 
PM2.5?
    C. Summary of Comments and Responses on the Proposed Repeal of 
the Grandfather Provision
    D. What final action is EPA taking on the grandfather provision 
for PM2.5?
V. What action is EPA taking on the 1997 PM10 Surrogate 
Policy for state PSD programs?
VI. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From 
Environmental Health and Safety Risks
    H. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act
    L. Conclusion and Determination Under Section 307(d)
VII. Judicial Review
VIII. Statutory Authority


[[Page 28647]]



I. General Information

A. Does this action apply to me?

    Entities potentially affected by this action include those proposed 
new and modified major stationary sources subject to the Federal PSD 
program that submitted a complete application for a PSD permit before 
the July 15, 2008, effective date of the final PM2.5 New 
Source Review (NSR) Implementation Rule (73 FR 28321), but have not yet 
received a final and effective permit authorizing the source to 
commence construction.
    The EPA estimates that fewer than 30 proposed new major sources or 
modifications will be affected by the repeal of the grandfather 
provision in the Federal PSD program. At least two projects known to 
have been grandfathered received final permits to construct (that are 
effective) prior to EPA taking action to stay the provision in June 
2009; EPA's final action to repeal the grandfather provision does not 
apply retroactively to such permits.
    The majority of sources potentially affected are expected to be in 
the following groups:

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

    Entities affected by this action also include state and local 
governments responsible for implementing PSD pre-construction permit 
programs for new and modified major stationary sources under the 
Federal PSD permit program (40 CFR 52.21).

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

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

II. Overview of This Final Rule

    In this final rule we \1\ are taking final action on one of the two 
actions that we proposed in a notice of proposed rulemaking on February 
11, 2010, at 75 FR 6827. We are taking final action on the proposal to 
repeal the grandfather provision for PM2.5 contained in the 
Federal PSD rules at 40 CFR 52.21(i)(1)(xi). The grandfather provision, 
applicable only to PSD source applications that were determined to be 
complete before July 15, 2008, enabled those applications to continue 
to be reviewed for PM10 (i.e., the 1997 PM10 
Surrogate Policy) in lieu of the new requirements for PM2.5, 
which became effective on July 15, 2008.
---------------------------------------------------------------------------

    \1\ In this preamble, the terms ``we,'' ``us,'' and ``our'' 
refer to the EPA.
---------------------------------------------------------------------------

    When EPA issued the PM10 Surrogate Policy in 1997, the 
policy enabled sources, EPA, and state and local permitting authorities 
to address the PSD requirements for PM2.5 simply by 
satisfying the requirements for PM10--a regulated form of 
particulate matter (PM) that includes PM2.5 as well as 
larger particles. As explained in the 1997 PM10 Surrogate 
Policy, some alternative to directly addressing PM2.5 was 
necessary at that time because of various technical problems that made 
it infeasible to estimate PM2.5 and conduct the analyses 
necessary to demonstrate compliance with the applicable 
PM2.5 requirements under the PSD program as required by 
section 165 of the Clean Air Act (CAA or Act).
    More recently, EPA has made important progress in addressing the 
technical issues that impeded a PM2.5 analysis. With the 
deployment and operation of the monitoring network for PM2.5 
beginning in 1999, ambient air quality monitoring data has become more 
abundantly available. Also, EPA has promulgated screening tools, 
including a significant emissions rate (SER), significant impact levels 
(SILs), and a significant monitoring concentration (SMC) to streamline 
the implementation of the PSD program for PM2.5. Finally, 
EPA has issued revised test methods for sampling emissions of 
PM2.5 and its condensable fraction, and issued interim 
modeling guidance for modeling PM2.5 emissions to complete a 
cumulative air quality analysis for PM2.5.
    Accordingly, in this final action, EPA will end the use of the 1997 
PM10 Surrogate Policy for PSD permits under the Federal PSD 
program (40 CFR 52.21) for sources that have been covered by the 
grandfather provision (that is, those sources for which a complete 
permit application was submitted before July 15, 2008 \2\) and that 
have not yet been issued a permit by the effective date of this final 
rule. After this final rule becomes effective, in order for those 
permits to be issued, such applications will have to be reviewed 
directly against the PM2.5 requirements or, alternatively, 
use a surrogate approach for PM2.5 (other than the 1997 
PM10 Surrogate Policy) that is consistent with the 
applicable case law. Thus, those affected PSD permit applications must 
be amended to include further analyses to demonstrate compliance with 
the PSD requirements for PM2.5. Alternatively, those 
affected PSD permit applications must show that PM10 is an 
adequate surrogate for PM2.5 for that specific project. The 
demonstration must show, at a minimum, that the source's emissions are 
controlled to a level that satisfies Best Available Control Technology 
(BACT) requirements for PM2.5 and that the emissions will 
not cause or contribute to a violation of any National Ambient Air 
Quality Standard (NAAQS or standard) for PM2.5.
---------------------------------------------------------------------------

    \2\ Sources that applied for a PSD permit under the Federal PSD 
program on or after July 15, 2008, are already excluded from using 
the 1997 PM10 Surrogate Policy as a means of satisfying 
the PSD requirements for PM2.5. See 73 FR 28321.

---------------------------------------------------------------------------

[[Page 28648]]

    We believe that it is appropriate to terminate the use of the 1997 
PM10 Surrogate Policy at this time for those PSD 
applications grandfathered under the Federal PSD program because the 
necessary technical tools to conduct PM2.5 analyses for PSD 
sources are now available. The 1997 PM10 Surrogate Policy 
was always intended as an interim measure that was to remain in effect 
only as long as needed. Over the past 13 years, EPA believes that the 
necessary technical tools and test methods required to show compliance 
with PM2.5 have been developed and, hence, we believe that 
the need for this interim approach no longer exists.
    We do not believe that the use of the 1997 PM10 
Surrogate Policy affords the same degree of protection of the 
PM2.5 NAAQS from major new and modified stationary sources 
as does the direct analysis of PM2.5 emissions. In addition 
to the fact that the original PM2.5 NAAQS promulgated in 
1997 were generally more stringent than the corresponding 
PM10 NAAQS, the strengthening of the 24-hour primary 
PM2.5 NAAQS in 2005 created a greater disparity between the 
relative stringency of the PM2.5 and PM10 
standards. Thus, now that the necessary technical tools are available, 
we believe that it is important to move as quickly as possible to 
implement fully the PSD program for PM2.5.
    We recognize that this action will in some cases increase the PSD 
permit review timeframe (although not unexpectedly) for the affected 
grandfathered sources, but we believe that the use of the 1997 
PM10 Surrogate Policy should be permanently discontinued 
under the Federal PSD program. Those grandfathered sources with pending 
permits have been on notice since June 1, 2009, (the date of our 
Federal Register notice announcing that we had agreed to reconsider the 
grandfather provision and to administratively stay the provision so 
that we could propose repealing it) that EPA was considering ending the 
grandfather provision for PM2.5 and, as noted above, now 
have additional technical tools to complete the permitting process for 
PM2.5.
    In our February 2010 proposed rule, we also proposed to end the use 
of the 1997 PM10 Surrogate Policy for permits issued under 
PSD programs implemented by states as part of their approved SIP. We 
received and have reviewed some comments that support an early end to 
the policy and some comments that oppose ending the policy earlier than 
the original May 16, 2011, sunset date. Some of the opposing comments 
also asked EPA to extend the time that the policy could be used beyond 
the original sunset date. At this time, however, we are taking no 
action on our proposal to end the use of the 1997 PM10 
Surrogate Policy or to otherwise change the time period during which 
the policy could continue to be used.
    Thus, as announced in the May 2008 rulemaking, the 1997 
PM10 Surrogate Policy may not be used for any state PSD 
permits after the 3 years allowed for SIP development (ending May 16, 
2011). With the end of the 1997 PM10 Surrogate Policy in 
SIP-approved states on May 16, 2011, and the repeal of the grandfather 
provision in this final action, the 1997 PM10 Surrogate 
Policy may not be relied on for any pending or future applications.

III. Background

A. Prevention of Significant Deterioration Program

    The NSR provisions of the Act are a combination of air quality 
planning and air pollution control technology program requirements for 
new and modified major stationary sources of air pollution. Section 109 
of the Act requires EPA to promulgate primary NAAQS to protect public 
health and secondary NAAQS to protect public welfare. Once we have set 
these standards, states must develop, adopt, and submit to us for 
approval SIPs that contain emission limitations and other control 
measures to attain and maintain the NAAQS and to meet the other 
requirements of section 110(a) of the Act.
    Part C of title I of the Act contains the requirements for a 
component of the major NSR program known as the PSD (short for 
``Prevention of Significant Deterioration'') program. The PSD program 
sets forth procedures for the preconstruction review and permitting of 
new and modified major stationary sources of air pollution locating in 
areas meeting the NAAQS (``attainment'' areas) and areas for which 
there is insufficient information to classify an area as either 
attainment or nonattainment (``unclassifiable'' areas). In most states, 
EPA has approved a PSD permit program that is part of the applicable 
SIP. The Federal PSD program at 40 CFR 52.21 applies in states that 
lack a SIP-approved PSD permit program, and in Indian country.\3\ The 
applicability of the PSD program to a new major stationary source or 
major modification must be determined in advance of construction and is 
a pollutant-specific determination. Once a major new source or major 
modification is determined to be subject to the PSD program (i.e., to 
be a ``PSD source''), among other requirements, it must undertake a 
series of analyses for each regulated NSR pollutant subject to review 
to demonstrate that it will use the BACT and will not cause or 
contribute to a violation of any NAAQS or increment. In cases where the 
source's emissions of any NSR regulated pollutant may adversely affect 
an area specially classified as ``Class I,'' such as national parks and 
wilderness areas, additional review must be conducted to protect the 
Class I area's increments and special attributes referred to as ``air 
quality related values.''
---------------------------------------------------------------------------

    \3\ We have delegated our authority to some states that lack an 
approved PSD program in their SIPs and have requested the authority 
to implement the Federal PSD program. The EPA remains the reviewing 
authority in non-delegated states lacking SIP-approved programs. The 
current status of individual state PSD programs can be found at 
EPA's Web site at http://www.epa.gov/nsr/where.html.
---------------------------------------------------------------------------

    When the reviewing authority reaches a preliminary decision to 
authorize construction of a proposed major new source or major 
modification, the authority must provide notice of the preliminary 
decision and an opportunity for comment by the general public, 
industry, and other persons that may be affected by the emissions of 
the proposed major source or major modification. After considering 
these comments, the reviewing authority issues a final determination on 
the construction permit in accordance with the PSD regulations. 
However, under EPA regulations at 40 CFR part 124 and similar state 
regulations, an administrative appeal of a permitting determination may 
prevent the permit from becoming final and effective until the appeal 
is resolved.

B. Fine PM and the NAAQS for PM2.5

    Fine particles in the atmosphere are made up of a complex mixture 
of components. Common constituents include sulfates; nitrates; 
ammonium; elemental carbon; a great variety of organic compounds; and 
inorganic material (including metals, dust, sea salt, and other trace 
elements) generally referred to as ``crustal'' material, although it 
may contain material from other sources. Airborne PM with a nominal 
aerodynamic diameter of 2.5 micrometers or less (a micrometer is one-
millionth of a meter, and 2.5 micrometers is less than one-seventh the 
average width of a human hair) is considered to be ``fine particles,'' 
and is also known as PM2.5. ``Primary'' particles are 
emitted directly into the air as solid or liquid particles (e.g., 
elemental

[[Page 28649]]

carbon from diesel engines or fire activities, or condensable organic 
particles from gasoline engines). ``Secondary'' particles (e.g., 
sulfates and nitrates) form in the atmosphere as a result of various 
chemical reactions.
    The health effects associated with exposure to PM2.5 are 
significant and well studied. Epidemiological studies have shown a 
significant correlation between elevated PM2.5 levels and 
premature mortality. Other important effects associated with 
PM2.5 exposure include aggravation of respiratory and 
cardiovascular disease (as indicated by increased hospital admissions, 
emergency room visits, absences from school or work, and restricted 
activity days), lung disease, decreased lung function, asthma attacks, 
and certain cardiovascular problems. Individuals particularly sensitive 
to PM2.5 exposure include older adults, people with heart 
and lung disease, and children.
    The EPA has established primary health-based long-term and short-
term NAAQS for PM2.5. The long-term annual average standard 
is 15 micrograms per cubic meter ([micro]g/m\3\), established in 1997. 
See 62 FR 38652. The short-term 24-hour standard is 35 [micro]g/m\3\, 
established in 2006. See 71 FR 61286. At the time we established the 
primary standards in 1997, we also established welfare-based 
(secondary) standards identical to the primary standards. The secondary 
standards are designed to protect against major environmental effects 
of PM2.5 such as visibility impairment, soiling, and 
materials damage.
    In addition, EPA has established a short-term primary and secondary 
NAAQS for PM10 as an indicator for coarse PM. The short-term 
standard for PM10 is 150 [micro]g/m\3\. See 71 FR 61236.

C. How is the PSD program for PM2.5 implemented?

    After we promulgated the NAAQS for PM2.5 in 1997, we 
issued a guidance document titled, ``Interim Implementation for the New 
Source Review Requirements for PM2.5'' (John S. Seitz, EPA, 
October 23, 1997).\4\ That guidance document, referred to throughout 
this preamble as the ``1997 PM10 Surrogate Policy,'' allows 
proposed major sources and major modifications to satisfy the PSD 
requirements for PM2.5 by meeting the requirements for 
controlling PM10 and for analyzing impacts on 
PM10 air quality as a surrogate approach. The 1997 
PM10 Surrogate Policy was designed to temporarily help 
states implement the CAA requirements for PSD pertaining to the new 
PM2.5 NAAQS and PM2.5 as a regulated pollutant. 
We intended to make the policy available until we resolved the known 
technical difficulties associated with addressing PM2.5.\5\
---------------------------------------------------------------------------

    \4\ Available in the docket for this rulemaking, ID No. EPA-HQ-
OAR-2003-0062, and at http://www.epa.gov/region07/programs/artd/air/nsr/nsrmemos/pm25.pdf.
    \5\ We identified various technical difficulties, including 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, the lack of 
PM2.5 monitoring sites, and the lack of adequate approved 
test methods.
---------------------------------------------------------------------------

    We believed the 1997 PM10 Surrogate Policy was necessary 
because section 165(a)(1) of the Act provides that no new or modified 
major source may be constructed without a PSD permit that meets all of 
the section 165(a) requirements with respect to the regulated 
pollutant. Moreover, section 165(a)(3) provides that the emissions from 
any such source may not cause or contribute to a violation of ``any 
NAAQS.'' The EPA policy for implementing the Federal PSD program 
provides that the term ``any NAAQS'' applies to any existing NAAQS, 
including new or revised NAAQS upon their effective date. Also, section 
165(a)(4) requires BACT for each pollutant subject to PSD regulation. 
PM2.5 became a regulated pollutant when EPA promulgated the 
NAAQS for PM2.5 in 1997.
    On November 1, 2005, we proposed the Clean Air Fine Particle 
Implementation Rule (PM2.5 Implementation Rule) to implement 
the 1997 PM2.5 NAAQS. See 70 FR 65984. The PM2.5 
Implementation Rule proposal described the requirements that states and 
tribes must meet in their implementation plans for attainment of the 
PM2.5 NAAQS. Among other things, that rule proposal sought 
comments on revisions to the NSR program in attainment and 
unclassifiable areas (the PSD program), and in nonattainment areas (the 
nonattainment NSR program).
    For PSD, EPA proposed to revise the existing PSD rules in several 
ways: by proposing a PSD major source threshold and SER for 
PM2.5; proposing to define applicable precursors to regulate 
under PSD and SERs for those precursors; proposing to clarify that 
condensable PM2.5 must be included in determining major 
source status; proposing options for implementing the preconstruction 
monitoring requirements for PM2.5; and proposing transition 
provisions for implementing the new PSD requirements for 
PM2.5.
    On September 21, 2007, EPA proposed additional program elements for 
the PSD program for PM2.5 that were not included in the 2005 
PM2.5 Implementation Rule proposal. The 2007 PSD proposal 
included several options for defining the PM2.5 increments, 
SILs, and an SMC for PM2.5. Increments define maximum 
allowable increases in pollutant concentrations above a baseline 
concentration for a particular area. The SILs and SMC are useful 
screening tools for effectively implementing the air quality impact 
requirements under PSD. See 72 FR 54112.
    On May 16, 2008, EPA published a final PM2.5 NSR 
Implementation Rule to complete the rulemaking for NSR based on the 
2005 PM2.5 Implementation Rule proposal. The 2008 
PM2.5 NSR Implementation Rule contains requirements for 
state and tribal plans to implement the Act's preconstruction review 
provisions for the PM2.5 NAAQS in both attainment and 
nonattainment areas. See 73 FR 28321. The 2008 PM2.5 NSR 
Implementation Rule generally requires that, as of the effective date 
of the new rule (July 15, 2008), major stationary sources seeking 
permits must begin directly satisfying the PM2.5 
requirements, rather than relying on the 1997 PM10 Surrogate 
Policy. In PM2.5 attainment (or unclassifiable) areas, the 
new PSD requirements under 40 CFR 51.166 set forth the PM2.5 
requirements for states with SIP-approved programs to include in their 
state PSD programs; similar requirements were added to 40 CFR 52.21--
the Federal PSD program--for EPA (or, where applicable, delegated state 
agencies) to use for implementing the new PM2.5 requirements 
in states lacking approved PSD programs in their SIPs.
    Although the 2008 PM2.5 NSR Implementation Rule 
generally requires states to begin implementing the new 
PM2.5 requirements upon the July 15, 2008, effective date of 
the rule, EPA provided two transition provisions within the PSD program 
under specific conditions. The first of these transition provisions, a 
grandfather provision, applied specifically to certain sources that had 
applied for PSD permits pursuant to the Federal PSD program under 40 
CFR 52.21. The second transition provision allowed states to continue 
using the 1997 PM10 Surrogate Policy on an interim basis to 
implement the PM2.5 requirements in any state PSD program 
that is part of an approved SIP. This latter exception was to apply to 
permit reviews under state PSD programs until the end of the 3-year SIP 
development period (which ends in May 2011) or until EPA approves the 
revised state program, whichever comes first.

[[Page 28650]]

IV. Grandfather Provision for PM2.5 in the Federal PSD 
Program

A. What is the grandfather provision for PM2.5?

    Under certain circumstances, EPA has allowed proposed new major 
sources and major modifications that have submitted a complete PSD 
permit application before the effective date of an amendment to the PSD 
regulations, but have not yet received a final and effective PSD 
permit, to continue relying on information already in the application 
rather than immediately having to amend applications to demonstrate 
compliance with the new PSD requirements. In such a way, these proposed 
sources and modifications were ``grandfathered'' or exempted from the 
new PSD requirements that would otherwise have applied to them. For 
example, the Federal PSD regulations at 40 CFR 52.21(i)(1)(x) provide 
that the owners or operators of proposed sources or modifications that 
submitted a complete permit application before July 31, 1987, (i.e., 
the effective date of the revisions to the Federal PSD regulations to 
implement the PM10 NAAQS) are not required to meet the 
requirements for PM10, but may instead satisfy the 
requirements for total suspended particulate matter (TSP) that were 
previously in effect.
    In addition, EPA has allowed some grandfathering for permit 
applications submitted before the effective date of an amendment to the 
PSD regulations establishing new maximum allowable increases in 
pollutant concentrations (also known as PSD increments). The Federal 
PSD regulations at 40 CFR 52.21(i)(10) provide that proposed sources or 
modifications that submitted a complete permit application before the 
effective date of the increments for PM10 in the applicable 
implementation plan are not required to meet the increment requirements 
for PM10, but may instead satisfy the increment requirements 
for TSP that were previously in effect. Also, 40 CFR 52.21(b)(i)(9) 
provides that new sources or sources making modifications that 
submitted complete permit applications before the provisions embodying 
the maximum allowable increase for nitrogen oxides (the nitrogen 
dioxide increments) took effect are not required to demonstrate 
compliance with the new increment requirements to be eligible to 
receive the permit.
    Similarly, the 2008 PM2.5 NSR Implementation Rule added 
a grandfather provision allowing permit applicants that had submitted a 
complete application under the Federal PSD program at 40 CFR 52.21 
prior to the July 15, 2008, effective date, but had not yet received 
their PSD permit by that date, to continue being reviewed using the 
1997 PM10 Surrogate Policy. The grandfather provision for 
PM2.5, added as new paragraph (xi) to 40 CFR 52.21(i)(1), 
was not proposed for notice and comment in the 2005 PM2.5 
Implementation Rule proposal. Instead, the 2005 PM2.5 
Implementation Rule proposal had provided that when we issued the final 
rule, the new PM2.5 requirements would take effect 
immediately in PSD permits issued in states where the Federal PSD 
program applies. See 70 FR 65986 at 66043.
    As described more in the discussion that follows in section IV.B of 
this preamble, EPA has twice stayed the grandfather provision for 
PM2.5, with the first of the two stays beginning on June 1, 
2009. Consequently, permits covered by the grandfather provision that 
had not already been issued by the effective date of the first stay 
could not be issued relying upon the 1997 PM10 Surrogate 
Policy as the basis for approval during the time periods that the stays 
remained in effect.\6\ Prior to the stays, the grandfather provisions 
remained in effect from July 15, 2008, until June 1, 2009, during which 
time PSD permit applications relying on the 1997 PM10 
Surrogate Policy to satisfy the PSD requirements for PM2.5 
continued to be acceptable for purposes of approving and issuing the 
PSD permits.
---------------------------------------------------------------------------

    \6\ At the time the grandfather provision for PM2.5 
was put into effect, we estimate that fewer than thirty proposed new 
or modified major stationary sources were covered. Of these, at 
least two projects subsequently received final and effective PSD 
permits after the July 15, 2008, effective date of the final rule 
and before the June 1, 2009, administrative stay took effect.
---------------------------------------------------------------------------

B. Why did EPA propose to repeal the grandfather provision for PM2.5?

    On July 15, 2008, Earthjustice, acting on behalf of the Natural 
Resources Defense Council and the Sierra Club, submitted a petition to 
the Administrator seeking reconsideration of four provisions of the 
2008 PM2.5 NSR Implementation Rule.\7\ One of the four 
challenged provisions was the grandfather provision for 
PM2.5 under the Federal PSD program. In the petition, the 
petitioners argued that ``EPA unlawfully failed to present this 
grandfather provision and accompanying rationale to the public for 
comment.'' See July 15 Petition at 6. Thus, petitioners argued, EPA had 
not given interested parties any notice of and the opportunity to 
comment on the grandfather provision that EPA adopted in 40 CFR 
52.21(i)(1)(xi) in the final rule. Moreover, with regard to the 
grandfather provision itself, the petitioners questioned EPA's 
authority to waive statutory requirements by establishing such a 
provision, and argued that Congress specifically addressed the issue of 
grandfathering in section 168(b), where it allowed for the 
grandfathering of only those sources on which construction had 
commenced before enactment of the 1977 Clean Air Act Amendments. See 
July 15 Petition at 7.
---------------------------------------------------------------------------

    \7\ Available in the docket for this rulemaking at http://www.regulations.gov, document number EPA-HQ-OAR-2003-0062-0279.1.
---------------------------------------------------------------------------

    Finally, petitioners argued that the technical difficulties 
associated with ambient monitoring, estimating emissions, and air 
quality modeling that led to the adoption of the 1997 PM10 
Surrogate Policy no longer existed. Hence, the petitioners argued that 
all sources must conduct the required analyses for PM2.5 
directly without relying on the 1997 PM10 Surrogate Policy, 
and, therefore, there was no justification for continuing to allow any 
sources to rely on the grandfather provision. See July 15 Petition at 
8. In sum, petitioners asserted that the grandfather provision in 40 
CFR 52.21(i)(1)(xi) was illegal and arbitrary, and requested that EPA 
stay the provision.
    On January 14, 2009, EPA responded in a letter to the petitioners 
that the Agency was denying all aspects of the petition for 
reconsideration. However, on February 10, 2009, the same petitioners 
submitted a second petition similar to thefirst to EPA.\8\
---------------------------------------------------------------------------

    \8\ Available in the docket for this rulemaking at http://www.regulations.gov, document number EPA-HQ-OAR-2003-0062-0281.
---------------------------------------------------------------------------

    The second petition made the same arguments that were presented in 
the July 15, 2008, petition seeking reconsideration and an 
administrative stay and sought reconsideration of both the 2008 
PM2.5 NSR Implementation Rule and the January 2009 denial of 
petitioners' first petition for reconsideration. In response to the 
second petition, the Administrator reversed the Agency's earlier 
decision and agreed to reconsider each of the four challenged 
provisions.
    In a letter dated April 24, 2009, the Administrator indicated that 
the Agency would reconsider the grandfather provision and propose to 
repeal the grandfather provision ``on the grounds that it was adopted 
without prior public notice and is no longer substantially justified in 
light of the resolution of the technical issues with respect to 
PM2.5 monitoring, emissions estimation, and air quality 
modeling that led to the PM10 Surrogate Policy in 1997.'' 
Finally, the

[[Page 28651]]

Administrator's letter announced an administrative stay of the 
grandfather provision for 3 months under the authority of section 
307(d)(7)(B) of the Act.
    The 3-month administrative stay became effective on June 1, 2009--
the date the notice announcing the stay was published in the Federal 
Register--and ended on September 1, 2009. See 74 FR 26098. In order to 
allow additional time necessary to finalize this rulemaking, EPA 
proposed and promulgated a second stay that stayed the grandfather 
provision until June 22, 2010. See 74 FR 48153, September 22, 2009. 
During the second stay, on February 11, 2010, EPA issued a notice of 
proposed rulemaking that proposed repealing the grandfather provision. 
See 75 FR 6827. The same notice also proposed to end early the use of 
the 1997 PM10 Surrogate Policy in PSD programs implemented 
by states under an approved SIP. EPA is taking no final action on the 
latter proposed action, as described further in section V of this 
preamble.

C. Summary of Comments and Responses on the Proposed Repeal of the 
Grandfather Provision

    A total of 38 commenters, including 7 commenters speaking at the 
public hearing held on February 26, 2010, responded to the 2010 notice 
of proposed rulemaking. Most of these commenters specifically addressed 
the proposed repeal of the grandfather provision for PM2.5 
in the Federal PSD rule at 40 CFR 52.21(i)(1)(xi).
    Seven commenters support the proposal to repeal the grandfather 
provision, while 20 expressly opposed it. The commenters provided 
various reasons for their positions. The following discussion 
summarizes the significant comments and our responses categorized by 
specific topics. A more detailed summary of the comments and our 
responses is contained in the Response to Comment document in the 
docket for this rulemaking.
1. Comments on Legal Concerns
    Comments on Legality of the Grandfather Provision:
    Some environmental group commenters support EPA's proposed repeal, 
in part, because of their interpretation that the grandfather provision 
is illegal. The commenters claim that EPA has no discretion to waive or 
grandfather any permits under the Federal PSD program. On the other 
hand, 12 commenters disagree that there is anything unlawful about the 
grandfather provision for PM2.5. Those commenters claim that 
EPA clearly has the authority to establish a grandfather provision as 
part of a transition procedure for implementing new requirements. Some 
of these commenters point out that EPA indicated in the 2008 
PM2.5 NSR Implementation Rule that the grandfather provision 
was consistent with existing grandfather provisions contained in 40 CFR 
52.21(i)(1)(x).
    Response:
    We disagree with the comments stating that EPA may not establish 
grandfather provisions in appropriate circumstances. Our decision to 
repeal the grandfather provision here does not reflect any conclusion 
by EPA that the grandfather provision for PM2.5, or 
grandfather provisions in general, are unlawful. See also our response 
to the following comments on statutory authority.
    Comments on Statutory Authority:
    Several commenters argue against the petitioners' claim in the 2009 
petition for reconsideration that section 168(b) of the Act restricts 
EPA's ability to grandfather sources by allowing for the grandfathering 
of only those sources on which ``construction was commenced * * * after 
June 1, 1975, and prior to the enactment of the Clean Air Act 
Amendments of 1977 * * *.'' These commenters argue that Congress' 
inclusion of a one-time grandfather provision upon enactment of the PSD 
program is clearly different from grandfathering when a new pollutant 
is identified for regulation by a NAAQS, which the Act does not 
address. These commenters urge EPA to confirm that the grandfather 
provision in section 168 (intended to ease transition upon enactment of 
the PSD statute) does not constrain the Agency with respect to offering 
reasonable transition provisions when pollutants become newly subject 
to a NAAQS. The commenters argue instead that the existence of the 
grandfather provision in section 168 generally indicates that Congress 
intended for smooth transitions to new programs under the Act.
    One of these commenters argues that in the PSD program, EPA has 
included grandfather provisions when it adopted a number of new 
permitting requirements, and that the Act gives EPA substantial 
discretion to decide on the specifics of PSD applicability. (Citing 
Envt'l Defense v. Duke Energy Corp., 127 S. Ct. 1423, 1433-34 (2007).) 
Another of the commenters claims that a repeal of the grandfather 
provision would be unfair and contrary to the Act.
    Finally, some commenters expressly call upon EPA to clarify that it 
retains the authority to issue transition policies, such as the 
grandfather provision, when new NAAQS are issued.
    Response:
    We do not agree with the petitioners' original claim that EPA lacks 
authority to adopt and implement the grandfather provision for 
PM2.5. Thus, we agree with the commenters who also question 
the petitioners' claim. In particular, we do not agree that the 
existence of certain grandfathering in section 168(b) of the Act is 
properly read to prohibit grandfathering in all other circumstances. As 
discussed previously in section IV.A of this preamble, and as pointed 
out in some of the comments, we have relied on the use of grandfather 
provisions in past NSR regulations where we believed that it was 
appropriate as part of the transition process for implementing new 
requirements. In the preamble to the 2008 PM2.5 NSR 
Implementation Rule, we stated our position that the PM2.5 
grandfather provision is consistent with the existing provision under 
40 CFR 52.21(i)(1)(x) whereby EPA grandfathered new and modified major 
stationary sources with permit applications based on PM (measured as 
TSP) from the then-new PM10 requirements established in 
1987. However, while we continue to believe that we have the discretion 
to use grandfather provisions in the PSD program where appropriate, we 
have decided to repeal the grandfather provision for PM2.5 
at 40 CFR 52.21(i)(1)(xi) on policy grounds, as discussed later in this 
preamble.
    Comments on the Section 165(c) Requirement To Issue a PSD Permit 
within 1 Year:
    One commenter points to section 165(c) of the Act as creating a 1-
year deadline for issuing a PSD permit after a complete application has 
been submitted, and argues that since most, if not all, of the permit 
applications that would be affected by the repeal of the grandfather 
provision were likely submitted more than 1 year before the initial 
(administrative) stay of the grandfather provision took effect, those 
applications are entitled to final action consistent with the 
grandfather provision and the use of PM10 as a surrogate for 
PM2.5. The commenter further argues that, in addition to 
allowing EPA or states with delegated PSD authority to continue ongoing 
violations of the section 165(c) deadline, repealing the grandfather 
provision for PM2.5 would deepen and perpetuate the 
``unlawful'' effects of the stay.
    Response:
    We do not dispute that some of the permit applications relying on 
the grandfather provision were not granted or denied within the 1-year 
period provided in section 165(c) of the Act,

[[Page 28652]]

but disagree that this is a valid justification for allowing the use of 
the grandfather provision, for all of the reasons discussed in this 
preamble. In making this comment, the commenter has not shown that the 
failure to act on those applications within 1 year can be attributed to 
the stays of the grandfather provision (which, as the commenter 
recognizes, came into effect almost 1 year after the grandfather 
provision for PM2.5 was promulgated). Indeed, the fact that 
a permit was not issued within a year during the time that the 
grandfather provision was in effect suggests that there were other 
factors that prevented the source from receiving a permit within the 1-
year period provided by CAA section 165(c). Moreover, even if the 
grandfather provision had not been stayed with respect to those pending 
applications (or if the 1997 PM10 Surrogate Policy were to 
become available to the applicant through some other mechanism in the 
future), it is not clear that the applications provided the information 
or analyses necessary under the case law to demonstrate that 
PM10 is a reasonable surrogate such that the 1997 
PM10 Surrogate Policy could be used. See, e.g., discussion 
of case law in 75 FR 6827, 6831-32 (February 11, 2010). Finally, if the 
applicant believes that it can demonstrate that surrogacy is consistent 
with the case law, then it may do so under the case law even in the 
absence of EPA's 1997 PM10 Surrogate Policy.
    Comments on the Legality of Repealing the Grandfather Provision for 
PM2.5:
    Some commenters opposing the proposed repeal of the grandfather 
provision for PM2.5 argue that the repeal, in addition to 
the second petition for reconsideration, is illegal. With regard to the 
repeal action, some commenters question EPA's alleged position that it 
must repeal the grandfather provision because there was not adequate 
notice to the public of EPA's intent to continue the use of the 1997 
PM10 Surrogate Policy. The commenters disagree with this 
position, claiming that a failure to provide for notice and comment on 
a provision of a rule cannot be a reason to repeal that provision.
    One commenter disputes that there was inadequate notice because 
technical difficulties of measuring, modeling, and monitoring 
PM2.5 have been well known since 1997 and were fully 
documented during the rulemaking. Thus, the commenter asserts that EPA 
lacked the technical basis to require sources that had complete 
applications pending at that time of the promulgation of the 2008 
PM2.5 NSR Implementation Rule to measure or predict 
PM2.5 concentration. In addition, this commenter asserts 
that EPA failed to meet the administrative requirements for terminating 
the 1997 PM10 Surrogate Policy. Specifically, the commenter 
states that EPA would have had to provide notice of the withdrawal of 
the 1997 PM10 Surrogate Policy to reverse its use by sources 
grandfathered by the final 2008 PM2.5 NSR Implementation 
Rule.\9\ Based on these assertions, the commenter contends that EPA may 
not repeal the grandfather provision retroactively.
---------------------------------------------------------------------------

    \9\ In support of this position, the commenter cites Appalachian 
Power v. EPA, 208 F.3d 1015, 1028 (D.C. Cir. 2001); Alaska 
Professional Hunters Association v. FAA, 177 F.3d 1030, 1033-34 
(D.C. Cir. 1999); and Paralyzed Veterans of America v. D.C. Arena 
L.P., 117 F.3d 579, 586 (D.C. Cir. 1997).
---------------------------------------------------------------------------

    Two commenters believe that the grandfather provision, while not 
explicitly proposed, was a logical outgrowth of the proposal. One of 
the commenters expresses the belief that EPA raised for comment, in the 
2005 PM2.5 Implementation Rule proposal, issues concerning 
appropriate means for and timing of the transition to implementation of 
PM2.5 requirements in the PSD program. The other commenter 
alleges that the 2005 PM2.5 Implementation Rule proposal 
expressly announced continued use of the 1997 PM10 Surrogate 
Policy as Option 1 at 70 FR 66044 and solicited comment on this 
approach.
    The latter commenter also argues that the 2010 proposal to repeal 
the grandfather provision for PM2.5 represents a dangerous 
procedural precedent. While acknowledging that some actions adopted in 
a final rule could clearly be outside the scope of the proposed rule, 
the commenter asserts that as an overarching rule, the determination of 
whether regulatory actions adopted by a previous Administration's final 
rule were a logical outgrowth of the proposed rule should be left for 
the courts to decide. The commenter believes that leaving such 
decisions to the courts will ensure objective and consistent 
determinations of administrative law, rather than politically-
influenced determinations that likely will shift from Administration to 
Administration. The commenter contends that the grandfather provision 
is not an instance that warrants EPA's departure from that principle.
    One commenter claims that the issue of the lawfulness of the 
grandfather provision was previously addressed and decided by EPA in 
the January 14, 2009, denial of the first petition for reconsideration 
of the final 2008 PM2.5 NSR Implementation Rule. The 
commenter contends that EPA's reliance on the second petition for 
reconsideration, filed on February 10, 2009, is contrary to section 
307(d)(7)(B) of the Act because the second petition did not contain any 
new information that would justify reconsideration and, thus, the 
second petition was untimely and unfounded.
    Response:
    We do not agree with the commenters' claim that we are repealing 
the grandfather provision because of the lack of adequate notice to the 
public. The lack of prior public notice was a basis only for granting 
reconsideration and going through a subsequent rulemaking. EPA's 
decision to repeal the grandfather provision is not based on the fact 
that the provision was not explicitly proposed in the 2005 
PM2.5 Implementation Rule proposal. EPA in this rule is not 
taking any position on whether a lack of public notice could be a basis 
for repealing a rule, or on the other issues that these comments raise 
concerning the adequacy of public notice, logical outgrowth, the 
timeliness of the second petition for reconsideration, and other 
procedural matters.
    We believe that the Act provides EPA with sufficient authority to 
issue transition policy, including grandfather provisions, as needed to 
provide for the reasonable implementation of new NSR requirements. This 
is evidenced by the fact that we have established grandfather 
provisions in the past, as described in section IV.A of this preamble. 
However, it should not be taken to mean that we have or intend to 
automatically use grandfathering as a transition mechanism for all 
changes in NSR requirements. In this case, we continue to believe that 
the technical tools needed to carry out a PM2.5 analysis are 
currently available to the degree necessary to justify requiring 
sources to comply with the PM2.5 requirements via 
PM2.5 analyses for BACT and air quality impacts. Indeed, 
this is what all other sources that are not subject to the grandfather 
provision but are located in areas subject to the Federal PSD program 
are required to do. Alternatively, sources may use an appropriate 
surrogacy demonstration in accordance with past court decisions. For 
this reason and the other substantive reasons discussed in this 
preamble, we have decided to repeal the grandfather provision for 
PM2.5.
    Finally, we wish to clarify a point made by the commenter who 
alleged that the 2005 PM2.5 Implementation Rule proposal 
expressly announced and sought comment on the continued use of the 1997 
PM10 Surrogate Policy as Option 1. That proposal actually

[[Page 28653]]

proposed to allow the continued use of the 1997 PM10 
Surrogate Policy only for states that have SIP-approved PSD programs 
and need additional time to revise their rules to address the 
PM2.5 requirements. For all other circumstances involving 
the NSR rules, we clearly stated that PSD applicants would be subject 
to the PM2.5 requirements as of the effective date of the 
final rule. See 70 FR 66043-44.
2. Comments on the Burden on Sources Resulting From Repeal of the 
Grandfather Provision
    In the 2010 proposal to repeal the grandfather provisions for 
PM2.5, EPA solicited comments on the burdens that may be 
incurred by sources affected by a repeal of the grandfather provision. 
See 75 FR 6833. Several commenters express concern that repeal of the 
grandfather provision would unfairly penalize permit applicants who 
were in the process of obtaining construction permits.
    Comment:
    One commenter states that repeal would effectively impose 
retroactive requirements on sources that relied on past EPA statements 
of the law and the effect of the Agency's regulations, which goes 
against the concepts of fundamental fairness and equity.
    Response:
    We disagree with the premise of this comment: that the repeal of 
the grandfather provision imposes new requirements. The 1997 
PM10 Surrogate Policy did not eliminate any PSD 
requirements; it simply provided an alternative means of demonstrating 
compliance with the applicable requirements that were already in the 
PSD regulations at 40 CFR 52.21 when the PM2.5 NAAQS became 
effective in 1997. Thus, the repeal of the grandfather provision does 
not impose new requirements on any source. The commenter's concern 
about the fairness of our decision is addressed in the next response.
    Comment:
    Some commenters indicate that repeal would result in ``permit 
gridlock.'' These commenters state that each regulatory change adds 
another year onto the permitting process, during which more regulations 
could change and add further delay. The commenters contend that because 
of the length of the process, the major applicable rules need to stay 
constant (in all but extraordinary circumstances) in order for the 
process to proceed in a logical and orderly fashion.
    Another commenter claims that repeal of the grandfather provision 
would arbitrarily and unreasonably penalize applicants for the delay of 
the reviewing authority in discharging its permitting responsibilities. 
The commenter provides an example where two applicants (Applicants A 
and B) submit complete applications on the same date more than a year 
before the effective date of the stay of the grandfather provision, but 
Applicant A's permit is approved and issued before the effective date 
of the stay and Applicant B's permit is not yet ready to be issued on 
the effective date of the stay. The commenter concludes that, through 
no fault of Applicant B, EPA's violation of its nondiscretionary 
statutory duty to act within 1 year would impose on the applicant the 
significant costs and delay involved in undertaking a new analysis of 
PM and, potentially, revising the permit application.
    One commenter opines that an important principle underlies all 
grandfather provisions, including this PM2.5 grandfather 
provision. This principle is that a source that relies in good faith on 
EPA's existing standards and procedures to design a construction 
project and prepare a PSD permit application based upon that design 
should have the right to rely upon those existing standards and 
procedures and should not later be penalized retroactively when the 
standards and/or procedures change and, more importantly, go into 
effect after the application was submitted.
    The same commenter goes on to point out that the issuance of a PSD 
permit under the grandfather provision would not establish any future 
waiver of compliance or long-term exemption under law or in practice 
because the Act requires all sources, including those that have 
undergone PSD review, to comply with limitations the state determines 
in its SIP are necessary to meet NAAQS (including any future revised 
NAAQS) as well as to comply with any New Source Performance Standards. 
According to the commenter, this ensures that, regardless of whether a 
source avoided direct evaluation of its PM2.5 emissions 
during NSR because of the grandfather provision, its PM2.5 
emissions will still be evaluated for compliance with the 
PM2.5 NAAQS.
    Response:
    In projecting the burdens of extended permitting time and effort, 
the commenters assume that if we did not repeal the grandfather 
provision, sources could rely on the 1997 PM10 Surrogate 
Policy without further analysis. However, as discussed in the 2010 
proposal preamble (see 75 FR 6831-32) and later in section V.C.1.b of 
this preamble, at present sources are only able to use the policy after 
completing a surrogacy demonstration consistent with the case law 
(i.e., PM10 must be shown to be a reasonable surrogate for 
PM2.5 under the circumstances of the specific permit) and 
within the limits of the policy itself (i.e., there must be continuing 
technical reasons why a PM2.5 analysis is not technically 
feasible). These key prerequisites cannot be assumed to be met 
automatically, and the commenters have not shown these prerequisites to 
be met with respect to any of the applications that would be covered by 
the grandfather provision. Thus, even if the grandfather provision were 
to remain in force, additional analysis would be required of sources 
seeking to continue using the 1997 PM10 Surrogate Policy 
under that provision.
    The EPA has considered the comments concerning how a repeal of the 
grandfather provision might impact the permitting process and allegedly 
create unfairness and inequity in some of the hypothetical 
circumstances described in the comments. We recognize that the 
commenters' concerns pertain to the fairness of our proposal to change 
the procedures for demonstrating compliance with the PM2.5 
requirements in mid-permit process for individual permits. However, we 
believe that we have an obligation to weigh those concerns and 
associated burdens against our interpretation of the Act, which 
requires that PSD sources must demonstrate that their emissions will 
not cause or contribute to a violation of the PM2.5 NAAQS, 
and such demonstration should provide adequate assurance that such 
compliance will occur. We believe that the 1997 PM10 
Surrogate Policy, which has been in effect for about 13 years, no 
longer provides an acceptable means of making the required 
demonstration in light of the availability of the technical tools 
needed to complete a PM2.5 analysis. Thus, as part of our 
obligation to evaluate the need for transition policy both initially 
and on an ongoing basis, we have concluded that such burdens are 
neither unfair nor inequitable in comparison to the benefits associated 
with having a better understanding of the impacts the source's 
emissions will have on the PM2.5 NAAQS. This conclusion is 
based on our belief that the approach set forth in the 1997 EPA policy 
memo, while necessary in the absence of the technical tools needed to 
implement the PSD program for PM2.5 directly, is 
sufficiently deficient in its ability to satisfy the PM2.5 
requirements (in that it lacks a surrogacy demonstration), particularly 
with regard to possible

[[Page 28654]]

adverse impacts on the PM2.5 NAAQS, that it should no longer 
be available as a means of meeting those requirements now that the 
necessary technical tools for a PM2.5 analysis are 
available. Case law allows the use of surrogates when properly applied. 
Hence, we point out that the use of a valid surrogate approach in 
general is not prohibited by our action in this final rule.
    Finally, we note that we did not stay the grandfather provision 
until almost 1 year following its effective date. Some permits were 
issued during the time that the grandfather provision was in effect. 
Grandfathered sources for which a PSD permit was not issued during that 
period likely had problems related to factors other than the 
PM2.5 analyses that prevented the source from receiving a 
permit.
3. Comments on the Number of Sources Affected by Repeal
    Comment:
    We did not receive any comments that either validate or dispute the 
number of sources that we estimated would be affected by the stay of 
the grandfather provision for PM2.5.\10\ One commenter 
observes that EPA has recognized that continued use of the grandfather 
provision would affect very few, if any, still-pending permits, and 
finds it hard to understand why EPA feels it necessary not only to 
discontinue the grandfather provision altogether, but also to do so 
immediately by issuing the administrative stay. This commenter believes 
that the facts presented by EPA undercut the petitioners' claim that 
grandfathering certain permit applications presents an irreparable 
harm.
---------------------------------------------------------------------------

    \10\ A state agency commenter claims that EPA's repeal of the 
grandfather provision for PM2.5 could affect up to 16 of 
the agency's pending PSD projects. However, this agency's PSD 
program is part of an EPA-approved SIP and, as such, does not appear 
to be affected by the grandfather provision. Instead, we believe 
that the affected PSD projects would be affected by the ending of 
the 1997 PM10 Surrogate Policy. Thus, we address this 
comment in the section V, where our final action on ending the 1997 
PM10 Surrogate Policy in SIP-approved PSD programs is 
addressed.
---------------------------------------------------------------------------

    Response:
    In the 2010 proposal to repeal the grandfather provision, we 
reported that we were aware of 27 sources that had submitted PSD permit 
applications under the Federal PSD program prior to July 15, 2008-- the 
effective date of the 2008 PM2.5 NSR Implementation Rule--
but did not receive their permits by that date. Thus, these 
applications fell within the scope of the grandfather provision at the 
time it was promulgated. For at least six of these applications, the 
permit was either issued or denied, or the project was cancelled, prior 
to June 1, 2009, when the administrative stay became effective. For 
most of the remaining 21 applications, it is our understanding that the 
sources have already directly addressed, or are planning to directly 
address, the applicable PM2.5 requirements in order to 
obtain a permit. At least two of the sources are reportedly planning to 
take enforceable emissions limitations on their PM2.5 
emissions in order to avoid the PSD requirements for PM2.5 
altogether.
    Although only a few remaining grandfathered sources would be 
affected by a repeal of the grandfather provision, we believe that any 
air quality assessment contained in a PSD permit should reflect as 
accurately as possible the actual impacts that could be experienced in 
the area of concern. We do not believe that an analysis of 
PM10 emissions impacts on the PM10 NAAQS 
sufficiently represents the potential impacts that a source may have on 
the PM2.5 NAAQS. We did not base our decision to repeal the 
grandfather provision on the number of sources that could ultimately 
have to submit revised analyses to satisfy the PSD requirements for 
PM2.5.
4. Comments on Retroactive Implementation
    Comment:
    Several commenters who oppose the proposed repeal of the 
grandfather provision support a position, based on a statement by EPA 
in the 2010 proposal, that a repeal of the grandfather provision would 
not impact any PSD permits that relied on the 1997 PM10 
Surrogate Policy that became final and effective before the stay of the 
provision. See 75 FR 6833. However, one commenter who supports 
repealing the grandfather provision takes exception to those opposing 
commenters' position and requests a clarification as follows:

    To the extent EPA is saying simply that the repeal does not 
change the defensibility of a source's reliance on the illegal 
policy, we agree. But EPA should clarify that it is not claiming 
that its action somehow protects past illegal permitting decisions. 
The Surrogate Policy is and always has been illegal. Reliance on 
this illegal policy is subject to challenge and cannot be protected 
by EPA preamble statements that lack any authority or force of law.

    Response:
    Neither EPA's repeal of the grandfather provision nor its ending of 
the 1997 PM10 Surrogate Policy in SIP-approved states 
changes the defensibility of a source's previous reliance on the 1997 
PM10 Surrogate Policy. Put another way, repeal of the 
grandfather provision and the ending of the 1997 PM10 
Surrogate Policy does not create a new basis for arguing that the 
permit was not properly issued. However, a challenge to a permit that 
is not based on the repeal itself (such as a challenge claiming that 
the 1997 PM10 Surrogate Policy did not provide a valid means 
of meeting the CAA requirements or that the policy was not applied 
properly to the permit being challenged) is not impacted by repealing 
the grandfather provision for PM2.5.
5. Comments on the Technical Tools Needed for a PM2.5 
Analysis
    Some of the commenters responding to the 2010 proposal to repeal 
the grandfather provision for PM2.5 agree with EPA's 
conclusion that the technical issues associated with the implementation 
of a PSD program for PM2.5 have been largely resolved. 
However, most of the commenters believe that the necessary technical 
tools for PM2.5, i.e., ambient monitoring data, emissions 
data (including emissions inventories, emissions factors, and stack 
testing methods), and air quality modeling techniques, are not yet 
sufficiently available to carry out an adequate analysis for 
PM2.5. One commenter claims that technical problems continue 
to exist and points out that even EPA has acknowledged that some 
technical issues remain to be addressed. The commenter states that this 
shows EPA has not satisfied its burden to establish that the 
PM2.5 program can be implemented by states.
    Response:
    We do not agree with the commenter's claim that because some 
technical issues remain to be addressed, we should not require 
applicants to begin carrying out a PM2.5 analysis to satisfy 
the PSD requirements. We believe that there is a sufficient technical 
basis to allow sources to begin focusing on PM2.5 emissions 
and direct demonstrations of compliance with the PM2.5 
standards without the use of surrogates. In the March 23, 2010, EPA 
modeling guidance memorandum titled, ``Modeling Procedures for 
Demonstrating Compliance with the PM2.5 NAAQS,'' we provide 
procedures that help an applicant complete both a preliminary 
significant impact analysis and a cumulative impact analysis to 
determine the impact of a PSD source or modification on the 
PM2.5 NAAQS.\11\
---------------------------------------------------------------------------

    \11\ This guidance memorandum for PM2.5 modeling can 
be found on EPA's Web site at http://www.epa.gov/ttn/scram.
---------------------------------------------------------------------------

    In addition, we have recently addressed some of the important 
components of the PSD program for

[[Page 28655]]

PM2.5 that were described by various commenters. We 
published a final rule to revise the PM test methods to measure in-
stack concentrations of PM2.5 emissions and condensables on 
December 21, 2010, at 75 FR 80118. As discussed further in section 
IV.C.6 of this preamble, we issued the final rule containing the 
PM2.5 increments, SILs, and SMC on October 20, 2010, at 75 
FR 64864. All of these documents, along with the availability of 
ambient monitoring data and the other necessary tools that we describe 
in our responses to comments that follow, provide a sound and 
sufficient technical basis for completing necessary analyses of impacts 
of proposed sources on PM2.5 ambient levels.
a. Comments on Ambient Monitoring Data
    Comment:
    One state agency commenter states that ambient air monitoring data 
may not represent ``true'' PM2.5 concentrations because the 
Federal Reference Monitors include particle sizes above 
PM2.5 in the PM2.5 particle count. The commenter 
believes that it is difficult to evaluate PSD and minor NSR permits 
without representative ambient monitoring data to verify the accuracy 
or appropriateness of emissions factors and dispersion modeling 
predictions.
    Response:
    As part of its periodic review of the NAAQS, EPA recently evaluated 
the latest available science for PM in its ``Integrated Science 
Assessment (ISA) for Particulate Matter'' (EPA, 2009). This document 
included a discussion of Federal Reference Methods (FRMs) and other PM 
test methods. Also, FRMs and Federal Equivalent Methods for PM were 
discussed in detail in the 2004 PM Air Quality Criteria Document (EPA, 
2004). These discussions document the fact that the size-selective 
nature of the FRM for PM2.5 was developed based on 
epidemiological studies which used ambient fine particle sampler 
measurements as indicators of exposure. The position and shape of the 
PM2.5 FRM's fractionation curve was specified as a means of 
separating particles contained in the fine-thoracic regime of ambient 
aerosols (e.g., those generated by combustion, coagulation, 
condensation) from those particles produced by other mechanisms (e.g., 
mechanically generated). The PM2.5 FRM was not designed nor 
intended to collect all particles less than 2.5 micrometers ([micro]m) 
aerodynamic diameter while excluding all particles greater than 2.5 
[micro]m aerodynamic diameter. Even so, the slope of the 
PM2.5 FRM's fractionation is quite sharp and only a small 
fraction of particles greater than 2.5 [micro]m are included in the 
PM2.5 mass concentration measurement. As an example, less 
than 2 percent of 3.2 [micro]m particles in the ambient air are 
included in the mass concentration measurement, and virtually all 
particles larger than this size are totally excluded from the 
PM2.5 mass concentration measurement. Therefore, concerns 
regarding potential PM2.5 mass measurement bias associated 
with large ambient particles are unfounded. As a result, the 
PM2.5 FRM provides accurate PM2.5 mass 
concentration measurements for purposes of determining compliance with 
the PM2.5 NAAQS, and for evaluating the effectiveness of 
PM2.5 control initiatives.
    Comment:
    Some commenters believe that some states may not have adequate 
ambient monitoring data to determine ambient background levels. A 
commenter claims that many states do not yet understand or have 
sufficient PM2.5 ambient data to support the regional 
modeling initiatives, which would make assessing and enforcing the 
PM2.5 NAAQS difficult and problematic for both the 
regulators and the regulated community.
    Response:
    States have been operating a large and robust network of 
PM2.5 samplers since 1999. As part of each state's required 
monitoring network, each stack is required to have a least one 
PM2.5 site to monitor for regional background and at least 
one PM2.5 site to monitor for regional transport. See 
section 4.7.3, Appendix D to 40 CFR part 58. While there is flexibility 
in the location and methods used for these sites, given the spatial 
uniformity of PM2.5 compared to PM10 and the 
large number of PM2.5 samplers operating, EPA believes there 
are sufficient PM2.5 data to support data needs such as 
modeling.
    Comment:
    Another commenter claims that there is no guidance available on how 
to determine representative (and reasonable) PM2.5 
background concentrations for air quality modeling analyses. The 
commenter contends that applying the current EPA-approved methodologies 
for determining background concentrations to PM2.5 would 
result in background concentrations of PM2.5 in excess of 80 
percent (and many cases in excess of 95 percent) of the NAAQS for 
PM2.5 for vast areas of the United States, which would leave 
a PM2.5 emission source only an allowable air quality impact 
(as determined from modeling) of 1-4 [micro]g/m\3\. According to the 
commenter, even a small (less than 25 MMBtu/hr) natural gas-fired 
boiler or a baghouse with an allowable emission limit of as little 0.2 
lb/hr will typically have an impact greater than 1-4 [mu]g/m\3\. The 
commenter believes that without additional guidance, neither of these 
types of small sources could be permitted.
    Response:
    Generally, the ambient monitoring data used as part of the 
cumulative analysis should represent concentrations from emissions from 
existing sources that are not also being modeled. However, based on 
recent guidance contained in the March 23, 2010, EPA modeling guidance 
memorandum titled, ``Modeling Procedures for Demonstrating Compliance 
with the PM2.5 NAAQS,'' \12\ we recommend a different 
approach for PM2.5, which reflects the fact that secondary 
(precursor) impacts on ambient PM2.5 concentrations from 
individual source emissions cannot adequately be estimated by 
currently-accepted modeling techniques. That is, we recommend that the 
monitoring data for PM2.5 account for the contribution of 
secondary PM2.5 formation representative of the area being 
modeled for the proposed PSD source. See March 23, 2010, Guidance, at 
pages 7-8. To the extent that accounting for precursor impacts involves 
sources from which PM2.5 emissions are also being modeled, 
the March 23, 2010, guidance states (at page 7) that the double-
counting problem generally will be of less importance for 
PM2.5 than the representativeness of the monitor for 
secondary contributions. We also intend to address separately more 
detailed guidance on the determination of representative background 
data for PM2.5.
---------------------------------------------------------------------------

    \12\ http://www.epa.gov/ttn/scram.
---------------------------------------------------------------------------

b. Comments on Emissions Factors and Emissions Inventories
    Comment:
    Several state agency and industry commenters cite continued 
problems with inadequate emissions factors and emissions inventories 
for estimating the amount of PM2.5 being emitted from a new 
project or from existing sources that must be modeled to demonstrate 
compliance with the PM2.5 NAAQS. For example, one commenter 
states that there is extremely limited information concerning emissions 
factors for PM2.5 from industrial sources, without which it 
is not possible to accurately model the impacts of PM2.5. 
Another commenter states that emissions inventory data for 
PM2.5 are in development and grossly incomplete. Another 
commenter disputes EPA's claim that emissions factors and emissions 
inventory data are

[[Page 28656]]

readily available, stating that such information is not yet readily 
available in a quality-assured format on a source-by-source and point-
by-point basis as needed for regulatory permitting analyses. Another 
commenter adds that while progress has occurred since 2008, the 
inventories are far from complete and EPA has yet to finalize a 
PM2.5 test method.
    A state agency commenter claims that representative emission 
factors are not available for the majority of industries. The commenter 
adds that EPA clearly stated in the preamble to the final 2007 
PM2.5 Implementation Rule (citing 72 FR 20654-55, April 25, 
2007) that the quality of available direct filterable and condensable 
PM2.5 national industry average emissions factors, such as 
those found in EPA's ``Compilation of Air Pollutant Emission Factors'' 
(AP-42), is often insufficient to establish effective source-specific 
emissions limits, and expected states to rely on directly measured 
emissions data.
    The same commenter recognizes the caveats related to using the 
factors in AP-42, but states that often these factors are the ``best or 
only method available for estimating emissions, in spite of their 
limitations'' (quoting from AP-42, Volume I, Fifth Edition, January 
1995, Introduction to AP-42). The commenter concludes that while EPA 
advised stakeholders of its concern related to PM2.5 
implementation in 1997, EPA has not updated many of the emissions 
factors. In addition, the commenter believes that factors for 
condensable emissions are suspect due to the use of a test method EPA 
is currently seeking to revise, and directly measured data to develop 
realistic emissions factors are not available for many industries at 
this time.
    Response:
    We believe that progress has been made in the development of 
emissions factors for PM2.5 since the time the comments were 
submitted. When EPA established a transition period for NSR purposes in 
2008 waiving the requirement that states address condensable PM in 
establishing enforceable emissions limits for either PM10 or 
PM2.5 in NSR permits, it was to provide time for sources and 
state/local reviewing authorities to improve the emissions factors for 
the filterable and condensable PM that they need for the development of 
emissions inventories, source-specific emissions, and control levels 
achievable with emissions controls. See 73 FR 28334-35 (providing a 
waiver until January 1, 2011, unless the SIP or applicable permit 
condition otherwise required their inclusion).
    The Agency knows of several states and other organizations that 
have improved their ability to accurately characterize these emissions. 
For example, the Mid-Atlantic Regional Air Management Association 
(MARAMA) conducted a study to identify emissions tests that employed 
EPA's recommended procedures under Test Method 202, promulgated in 
1990. The emissions factors developed by MARAMA are expected to be 
superior to the latest published AP-42 emissions factors even though 
both efforts attempted to eliminate tests that did not use the 
recommended options to minimize artifact formation. Also, the State of 
Pennsylvania and the San Joaquin Valley United Air Pollution Control 
District in California have performed or required the performance of 
tests using Other Test Method (OTM) 27 and/or OTM 28 to better 
characterize the emissions of PM2.5 from sources and source 
categories from which they believed improved emissions information was 
needed.\13\
---------------------------------------------------------------------------

    \13\ These OTM methods represent improved methods for measuring 
PM2.5 emissions, including condensable PM2.5. 
These and other OTM methods have not yet been subject to the Federal 
rulemaking process, but have been reviewed by EPA's Emissions 
Measurement Center staff and placed on the EPA Web site at http://www.epa.gov/ttn/emc/prelim.html.
---------------------------------------------------------------------------

    Although the final revised test methods for PM2.5 were 
only recently promulgated, on December 21, 2010, EPA has had a long 
history of supporting the use of improved procedures to perform 
particle sizing at 2.5 micrometers using modifications of Method 201A, 
to employ procedures included in the 1990 version of Method 202 for 
condensable PM, and to employ the additional changes included in OTM 28 
for condensable PM (to minimize artifact formation).
    As part of the Information Collection Requests that EPA has issued 
to sources in support of the development of standards for select source 
categories, we have required testing using OTM 27 (for PM2.5 
only) and OTM 28. These emissions data are being used by EPA in the 
rule development process. These data are also now available for sources 
and states to use in the development of improved emissions factors, 
emissions inventories, source emissions estimates, control measures 
evaluations, and development of applicable requirements.
    With regard to comments regarding the adequacy of existing 
emissions inventories, we respond that, while the National Emissions 
Inventory (NEI) and state SIP inventories are evolving, their quality 
is sufficient for permit modeling for including the emissions sources 
other than the source(s) being permitted. The NEI generally uses the 
best available information and much of that information is supplied by 
the states. States can take advantage of new data stemming from OTM 27 
and OTM 28, as mentioned previously, to further improve their inventory 
estimates in the 2009 inventory years and beyond. A preliminary version 
of the 2008 NEI has been made available to state and local agencies, 
tribes and EPA Regional Offices, and an updated version is scheduled to 
be posted on EPA's Web site for public availability in April of 2011, 
to support future modeling efforts. The NEI and state inventories will 
continue to improve as emission factors become available based on the 
new PM2.5 test method.
    The EPA also has been supplementing the inventories provided by the 
states with estimates of condensable PM emissions for many years. These 
estimates have included particle sizing at 2.5 micrometers of the 
filterable PM and the addition of CPM. We recognize that there are some 
source categories where the condensable PM emissions may be biased high 
due to artifact issues and that some source categories where the 
condensable PM emissions are biased low due to permitted adjustments to 
test data and absence of condensable PM testing. We do not think that 
these inventory uncertainties justify not using the available data to 
develop inventories; we believe that ignoring this information 
introduces greater error than using the data. The EPA believes that 
sources and states should use these data as criteria for identifying 
areas needing emissions testing to correct biases. We will respond to 
comments concerning the test methods for PM2.5 in the 
immediately following subsection.
c. Comments on the In-Stack Emissions Test Method for PM2.5
    Comment:
    Closely tied to the comments citing a lack of adequate emissions 
factors for PM2.5 are comments claiming the lack of an 
adequate test method for measuring direct PM2.5 emissions--
especially condensable PM emissions. Some commenters argue that it 
would be inappropriate for EPA to repeal the grandfather provision and 
require applicants to complete a PM2.5 analysis without the 
use of a surrogate until adequate PM2.5 emissions test 
methods are adopted by EPA.
    One commenter claims that without final rules on test methods, the 
state agency is without specific authority to require applicants to 
comply with this

[[Page 28657]]

portion of the PM2.5 requirements. An industry commenter 
expresses concern with being required to perform an emissions test to 
demonstrate compliance with a PSD permit PM2.5 emissions 
limit when there are no federally approved methods, and with 
significant remaining technical issues associated with the test methods 
for measuring PM2.5.
    Another industry commenter states that although EPA has proposed 
revisions to existing Method 201A to allow measurement of filterable 
PM2.5, the revised method is not final, and it is not 
applicable to units with entrained moisture droplets in the stack 
(e.g., units with wet stacks due to wet flue gas desulfurization 
(FGD)). Because many sources (including many large electric generating 
units) use wet FGD to control sulfur dioxide emissions and therefore 
will be unable to use proposed revised Method 201A, the commenter sees 
no justification for the conclusion that the technical issues 
associated with measuring PM2.5 have been resolved. Some 
commenters indicate that problems associated with unacceptable artifact 
levels in existing test methods can overstate the results when sampling 
for PM2.5 emissions.
    Response:
    We acknowledge the problems that some states and sources have 
experienced with sampling PM2.5 emissions. Until recently, 
EPA Federal Register test methods have been primarily used for 
determining compliance with EPA regulations published in parts 60, 61, 
and 63.\14\ We have not seen a need to publish source test methods in 
the Federal Register that are primarily for other regulatory purposes, 
such as compliance with NAAQS-related permit limits. As a result, many 
air pollutants or precursor compounds do not have a promulgated Federal 
test method. Also, the Federal Register test methods do not address all 
possible stack or pollutant release conditions. We provide test methods 
on our Emissions Measurement Center Web site \15\ that can be used to 
quantify an extended range of pollutants and an extended range of 
release conditions. While not complete, these measurement methods 
provide a resource for states to supplement the available Federal 
Register test methods.
---------------------------------------------------------------------------

    \14\ Federal Register test methods are methods that have been 
proposed in the Federal Register for public review and comment. When 
those methods are promulgated they become the official Code of 
Federal Regulations Methods, which may be used individually or in 
combination with other methods by Federal, State or local agencies 
or sources to quantify emissions cited by the regulations for which 
the methods were developed and within the limitations specified in 
the method itself without further EPA approval.
    \15\ http://www.epa.gov/ttnemc01/.
---------------------------------------------------------------------------

    We note, however, that on March 25, 2009, EPA proposed amendments 
to Methods 201A and 202--in-stack test methods for PM. See 74 FR 12970. 
For Method 201A, we proposed to add a particle-sizing device to allow 
for sampling of PM2.5. For at least 5 years prior to the 
test method proposal, EPA provided guidance addressing the majority of 
the artifact formation associated with the 1991 published version of 
that method.\16\ As mentioned previously, the final test method rule 
was promulgated on December 21, 2010, and became effective on January 
1, 2011. The amendments to Method 202 revise the sample collection and 
recovery procedures of the method to reduce the formation of reaction 
artifact levels that could lead to inaccurate and overstated 
measurements of condensable PM. The amendments to Method 202 also 
result in increased precision of the method and improve the consistency 
of measurements obtained between source tests performed under different 
regulatory authorities.
---------------------------------------------------------------------------

    \16\ EPA guidance on predecessors for Method 201A can be found 
at http://www.epa.gov/ttn/emc/prelim.html and http://www.epa.gov/ttn/emc/ctm.html.
---------------------------------------------------------------------------

    As noted by the commenters, at this time there is no recognized 
method for quantifying PM2.5 emissions from sources that 
have entrained water droplets. We have an active effort to develop a 
test method that can be used under such conditions, but at this time it 
is unclear whether a suitable test method can be developed. As provided 
in the proposed revision to Method 201A, we believe that until the test 
method development is complete, the use of EPA Method 5 provides a 
reasonable substitute for a stack condition-specific test method that 
performs particulate sizing at 2.5 micrometers.
    Even before the final test method rule revising Methods 201A and 
202 was finalized, for a number of years, we had been posting guidance 
on our Web site for measuring emissions of PM2.5, including 
the condensable fraction.\17\ The equipment, supplies, and procedures 
provided by this guidance have been improved over time by stakeholders 
who have submitted constructive comments. We believe this posted 
guidance has provided a reasonable means to quantify emissions that are 
suitable for use in developing emissions inventories; for developing 
information that is useful in developing appropriate achievable 
emissions levels for sources; and for assessing the performance of a 
source's PM controls.
---------------------------------------------------------------------------

    \17\ In addition to the Web sites identified in the earlier 
footnote, see also http://www.epa.gov/ttn/emc/methods/method202.html.
---------------------------------------------------------------------------

    We recognize that it is desirable to provide detailed documentation 
of the conduct of source test methods such that there is consistency 
between establishing the applicable requirements and the method used to 
demonstrate compliance with those requirements. We do not believe that 
sources and states should be limited to Federal Register test methods 
for developing their emissions inventories, for developing applicable 
requirements, and for demonstrating compliance with applicable 
requirements. Accordingly, we believe that it is appropriate for 
sources and states to use other test methods, even if there is a 
Federal Register test method, as long as the test method used is a 
reliable indicator of the emissions performance for the regulated 
pollutant.
d. Comments on Air Quality Models
    Comment:
    Commenters supporting EPA's proposal to repeal the grandfather 
provision generally believe that sufficient modeling tools are 
available to complete a PM2.5 analysis. One local agency 
commenter states that air quality modeling of direct PM2.5 
emissions is readily available using EPA-approved models.
    The same commenter also claims that several states (New York, New 
Jersey, Connecticut) have developed policies by which permit applicants 
use standard modeling techniques to propose permit limits on 
PM2.5 emissions that would not cause or contribute to an 
exceedance of the PM2.5 NAAQS. The commenter acknowledges 
the present difficulty in modeling secondary PM2.5 
emissions, but points out that this does not preclude a permit 
applicant from determining whether the direct emissions of 
PM2.5 from the proposed source or modification will cause or 
contribute to a violation of the NAAQS. An environmental group 
commenter similarly agrees with EPA's conclusion that the challenges 
related to modeling are not a valid basis for using PM10 as 
a surrogate.
    Other commenters, however, express concern about the lack of 
adequate modeling techniques to fully address the PM2.5 
impacts resulting from both direct PM2.5 emissions and 
PM2.5 precursors. One commenter describes current problems 
associated with trying to model the impacts of PM2.5 
precursors and expresses concern that by not including formation of 
PM2.5 from precursor emissions, the complete

[[Page 28658]]

impact cannot be assessed. Another commenter acknowledges that the air 
quality dispersion model, AERMOD, can accurately estimate the impact of 
direct PM2.5 emissions, but believes that this is inadequate 
because elevated ground level readings of PM2.5 seem to have 
little to do with local direct PM2.5 emissions, but instead 
result from several days of stagnating atmospheric conditions that lead 
to the build-up of secondary nitrates and sulfates in the air. The 
commenter points out that AERMOD does not address the chemical 
transformations that lead to the creation of these nitrates and 
sulfates from precursor emissions.
    Response:
    We agree with the commenters who indicate that our proposal to 
repeal the grandfather provision should be finalized despite the 
technical difficulties with estimating the impacts from emissions of 
PM2.5 precursors. We acknowledge that current modeling 
techniques do not adequately account for the secondarily-formed ambient 
impacts of PM2.5 caused by PM2.5 precursors. We 
are currently working on techniques to address such deficiencies in 
order to improve the ability to estimate overall impacts of 
PM2.5 against the NAAQS and upcoming increments. 
Nevertheless, models are available to model the ambient impact of 
direct PM2.5 emissions, and we believe that it is reasonable 
to carry out the required air quality impact analyses with these 
models. In a March 23, 2010, EPA modeling guidance memorandum titled, 
``Modeling Procedures for Demonstrating Compliance with 
PM2.5 NAAQS,'' we provided procedures that enable an 
applicant to complete both a preliminary significant impact analysis 
and a cumulative impact analysis to determine the impact of a PSD 
source or modification on the PM2.5 NAAQS.\18\ The guidance 
memorandum refers to the recommended procedures as a screening-level 
analysis or a ``First Tier modeling analysis'' for demonstrating 
compliance with PM2.5 NAAQS and increments. The guidance 
memorandum acknowledges that techniques for modeling the individual 
source contributions to secondary formation of PM2.5 from 
precursor emissions are not currently provided for within EPA's 
``Guideline on Air Quality Models'' (also published as Appendix W of 40 
CFR part 51). However, the March 2010 guideline memorandum provides 
procedures to account for the secondary contribution from regional and 
local sources of precursor emissions as part of the cumulative impact 
analysis for appropriate comparison to the annual and daily 
PM2.5 NAAQS through the use of monitored background ambient 
concentrations. We are planning to provide additional guidance on 
PM2.5 modeling for PSD permitting that will include more 
details on conducting such modeling, including options to enable more 
complete accounting for individual source contributions to secondary 
PM2.5 formation when their precursor emissions are 
sufficient to warrant inclusion. Therefore, we believe that the tools 
and models now available to address direct PM2.5 emissions, 
and to a lesser extent secondarily-formed PM2.5, are in 
total sufficient, along with our other reasons provided in this 
preamble, to support our conclusion that it is appropriate to repeal 
the grandfather provision for PM2.5, thereby ending the use 
of the 1997 PM10 Surrogate Policy under the Federal PSD 
program.
---------------------------------------------------------------------------

    \18\ http://www.epa.gov/ttn/scram.
---------------------------------------------------------------------------

6. Comments on the Lack of Key PM2.5 Implementation 
Requirements
    Comment:
    Several state agency, state/local agency association, private 
citizen, and industry commenters oppose EPA's proposed repeal of the 
grandfather provision because EPA has yet to take final action under 40 
CFR 51.166 and 52.21 to address key parameters needed to implement the 
PSD permit program for PM2.5. The key parameters include 
SILs, an SMC, and increments for PM2.5.
    Response:
    On October 20, 2010, we promulgated a final rule at 75 FR 64864 
that contains the PM2.5 increments, SILs, and SMC. Under 
that rule, the SILs and SMC became effective in the Federal PSD program 
as of December 20, 2010, and the PM2.5 increments will 
become effective on October 20, 2011. Thus, under the Federal program 
there is no longer cause for the commenters' concern that 
implementation of PSD for PM2.5 will be difficult and 
burdensome due to the absence of the screening levels embodied in the 
SILs and SMC.
    There will be some period after the repeal of the grandfather 
provision under this final rule before the PM2.5 increments 
become effective. However, note that in the preamble to the October 20, 
2010, final rule for PM2.5 increments, SILs, and SMC we 
stated that under that rule, sources applying for a PSD permit under 
the Federal PSD program after the major source baseline date for 
PM2.5 (i.e., after October 20, 2010), but before the 
PM2.5 increments become effective (i.e., before October 20, 
2011), will be considered to consume PM2.5 increment. (Under 
section 169(4) of the Act and the implementing regulations at 40 CFR 
52.21(b)(13) and (14), any major source that commences construction 
after the major source baseline date consumes increment, which will be 
the case for any source that receives its permit after that date.) We 
stated further that, while EPA will not require any such source to 
include a PM2.5 increment analysis as part of its initial 
PSD application, an increment analysis ultimately will be required 
before the permit may be issued if the date of issuance will occur 
after October 20, 2011 (the trigger date for the PM2.5 
increment), when the PM2.5 increments can be triggered under 
the Federal PSD program. See 74 FR 64899. Any formerly grandfathered 
source that has not yet received its final permit will be subject to 
the same transition provisions for PM2.5 increments.

D. What final action is EPA taking on the grandfather provision for 
PM2.5?

    We have decided to repeal the grandfather provision for 
PM2.5 contained in the Federal PSD program at 40 CFR 
52.21(i)(1)(xi). As the result of this final action, any PSD permit 
application previously covered by the grandfather provision that is not 
issued a final and effective PSD permit before the effective date of 
this rule will not be able to rely on the 1997 PM10 
Surrogate Policy to satisfy the PSD requirements for PM2.5. 
Unless the application includes a valid surrogacy demonstration (i.e., 
the applicant can show that meeting the requirements for 
PM10 will also meet the requirements for PM2.5), 
the application will need to contain PM2.5 data and analyses 
to meet the PM2.5 requirements to ensure that the applicable 
administrative record for the permit application is sufficient to 
demonstrate compliance with those requirements. Such requirements 
include the analyses necessary to (1) establish the appropriate BACT 
emissions limitation(s) for PM2.5 in the permit, as required 
by section 165(a)(4) of the Act, and (2) demonstrate that the emissions 
increase from the proposed new or modified major stationary source will 
not cause or contribute to a violation of the PM2.5 NAAQS, 
as required by section 165(a)(3) of the Act. For any application that 
previously was relying completely on a PM10 surrogate 
analysis based solely on the 1997 PM10 Surrogate Policy, 
additional information will be required to fulfill these requirements.
    The EPA is aware of 27 sources that had submitted PSD permit 
applications under the Federal PSD program prior to July 15, 2008--the 
effective date of the 2008 PM2.5 NSR Implementation Rule--
but did not receive their permits by that

[[Page 28659]]

date. While some of these applicants for PSD permits have already 
sought alternative means of obtaining the necessary permit, those that 
have not yet done so will be required to provide a PM2.5 
analysis that demonstrates the application of BACT and that the 
source's emissions will not cause or contribute to a violation of the 
PM2.5 NAAQS or use a surrogate approach, as long as that 
approach comports with the conditions set forth by previous court 
determinations concerning surrogacy demonstrations. This final rule 
ensures that the 1997 PM10 Surrogate Policy will no longer 
be applicable to satisfy the PSD requirements for PM2.5 
under the Federal PSD program.

V. What action is EPA taking on the 1997 PM10 Surrogate 
Policy for state PSD programs?

    On February 11, 2010, EPA proposed to end the 1997 PM10 
Surrogate Policy in SIP-approved states before May 16, 2008. In that 
notice, EPA described the current status of the 1997 PM10 
Surrogate Policy under state PSD programs that are part of an approved 
SIP, and explained why EPA was proposing to end the use of the 1997 
PM10 Surrogate Policy early. 75 FR 6833-34 (Feb. 11, 2010). 
As indicated above, EPA in this Federal Register notice is taking no 
action concerning its proposal to end early the use of the 1997 
PM10 Surrogate Policy under state PSD programs that are part 
of an approved SIP. Accordingly, the use of the 1997 PM10 
Surrogate Policy under such state programs will end on May 16, 2011, in 
accordance with the discussion in the May 16, 2008, preamble. 73 FR 
28321, at 28340-41.

VI. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

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

B. Paperwork Reduction Act

    This action does not impose any new information collection burden 
that is not already accounted for in the approved information 
collection request (ICR) for the NSR program. We are not adding any new 
paperwork requirements (e.g., monitoring, reporting, and recordkeeping) 
as part of this final action. This action amends one part of the 
regulations at 40 CFR 52.21 by repealing the grandfather provision that 
affects fewer than 30 sources. However, the approved ICR for the NSR 
program was prepared as if the 2008 PM2.5 NSR Implementation 
Rule, which added PM2.5 to the NSR program, would be fully 
implemented immediately upon the effective date of the rule without any 
phase-in period during which either the grandfather provision or 1997 
PM10 Surrogate Policy would apply. Thus, while this action 
will result in increased permitting burden for those sources who would 
have otherwise been able to use the grandfather provision or 1997 
PM10 Surrogate Policy, this burden is already included in 
the approved ICR. The OMB previously approved the information 
collection requirements contained in the existing regulations (40 CFR 
parts 51 and 52) under the provisions of the Paperwork Reduction Act, 
44 U.S.C. 3501 et seq., and assigned OMB control number 2060-0003. The 
OMB control numbers for EPA's regulations in 40 CFR are listed in 40 
CFR part 9.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act generally requires an agency to 
prepare a regulatory flexibility analysis of any rule subject to 
notice-and-comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of this final rule on small 
entities, small entity is defined as: (1) A small business as defined 
by the Small Business Administration's regulations at 13 CFR 121.201; 
(2) a small governmental jurisdiction that is a government of a city, 
county, town, school district or special district with a population of 
less than 50,000; and (3) a small organization that is any not-for-
profit enterprise which is independently owned and operated and is not 
dominant in its field.
    After considering the economic impacts of this final rule on small 
entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. This final 
rule will not impose any new requirements or burdens on small entities. 
We have determined that small entities will not incur any adverse 
impacts as a result of this action to amend the regulations at 40 CFR 
52.21 (by repealing the grandfather provision that affects fewer than 
30 sources). Small businesses and other small entities generally are 
not subject to the PSD program, which applies only to new major 
stationary sources and major modifications at existing major stationary 
sources. In addition, we do not believe that any small governments 
serve as PSD reviewing authorities.

D. Unfunded Mandates Reform Act

    This rule does not contain a Federal mandate that may result in 
expenditures of $100 million or more for state, local, and tribal 
governments, in the aggregate, or the private sector in any 1 year. 
This action only amends one part of the regulations at 40 CFR 52.21 by 
repealing the grandfather provision that affects fewer than 30 sources. 
Therefore, this action is not subject to the requirements of sections 
202 or 205 of UMRA.
    This action is also not subject to the requirements of section 203 
of UMRA because it contains no regulatory requirements that might 
significantly or uniquely affect small governments. This final rule 
applies only to new major stationary sources and to major modifications 
at existing major stationary sources, and we have no indication that 
small governments own or operate any major sources that are potentially 
affected by this action. In addition, we do not believe that any small 
governments serve as PSD reviewing authorities.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have 
substantial direct effects on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government as 
specified in Executive Order 13132. This action only amends one part of 
the regulations at 40 CFR 52.21 by repealing the grandfather provision 
for PM2.5 that affects fewer than 30 sources. Thus, 
Executive Order 13132 does not apply to this final rule.
    In the spirit of Executive Order 13132, and consistent with EPA 
policy to promote communications between EPA and state and local 
governments, EPA specifically solicited comment on the proposed rule 
from state and local officials. We received comments from 11 state/
local regulatory agency and regulatory agency association commenters 
concerning the proposed repeal of the grandfather provision under the 
Federal PSD program and the early end of the 1997 PM10 
Surrogate

[[Page 28660]]

Policy under SIP-approved state PSD programs. The comments pertaining 
to our repeal of the grandfather provision are summarized and addressed 
in this preamble and in a Technical Support Document in the Docket for 
this rulemaking.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    This action does not have tribal implications, as specified in 
Executive Order 13175 (65 FR 67249, November 9, 2000). This action will 
not impose any new obligations or enforceable duties on tribal 
governments. Thus, Executive Order 13175 does not apply to this action.

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

    The EPA interprets Executive Order 13045 (62 FR 19885, April 23, 
1997) as applying only to those regulatory actions that concern health 
or safety risks, such that the analysis required under section 5-501 of 
the Executive Order has the potential to influence the regulation. This 
action is not subject to Executive Order 13045 because it does not 
establish an environmental standard intended to mitigate health or 
safety risks. In fact, this action will help ensure that the health-
based national standards for PM2.5 are adequately protected 
against the adverse effects of PM2.5 emissions from new and 
modified sources of air pollution by ending the use of the 1997 
PM10 Surrogate Policy as a substitute approach for 
satisfying the PM2.5 requirements under the Federal PSD 
program.

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

    This action is not subject to Executive Order 13211 (66 FR 28355 
(May 22, 2001)), because it is not a significant regulatory action 
under Executive Order 12866. The EPA is amending one part of the 
regulations at 40 CFR 52.21 (expected to affect fewer than 30 regulated 
entities). Only a portion of the sources involved in the production or 
distribution of energy could be impacted.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law No. 104-113, 12(d) (15 U.S.C. 272 
note) directs EPA to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. The NTTAA directs EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards.
    This action does not involve technical standards. Therefore, EPA 
did not consider the use of any voluntary consensus standards.

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

    Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes 
Federal executive policy on environmental justice. Its main provision 
directs Federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    The EPA has concluded that this final rule does not result in 
disproportionately high and adverse human health or environmental 
effects on minority and/or low income populations. The rule only amends 
one part of the regulations at 40 CFR 52.21 by repealing the 
grandfather provision that affects fewer than 30 sources. The affected 
sources, after further analysis and data collection, may receive 
permitted emissions limits that are equally or more protective of 
public health than would be likely in the absence of this final rule.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. The EPA will submit a report containing this rule and 
other required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective on July 18, 2011.

L. Conclusion and Determination Under Section 307(d)

    Pursuant to section 307(d)(1)(J) of the CAA, this action is subject 
to the provisions of section 307(d). Further, to the extent that any 
aspects of this rule are not subject to the provisions of section 
307(d) pursuant to section 307(d)(1)(J), the Administrator determines 
that this rule is subject to the provisions of section 307(d) pursuant 
to section 307(d)(1)(V).

VII. Judicial Review

    Under section 307(b)(1) of the Act, petitions for judicial review 
of this action must be filed in the United States Court of Appeals for 
the District of Columbia Circuit by July 18, 2011. Any such judicial 
review is limited to only those objections that are raised with 
reasonable specificity in timely comments. Filing a petition for 
reconsideration by the Administrator of this final rule does not affect 
the finality of this rule for the purposes of judicial review nor does 
it extend the time within which a petition for judicial review may be 
filed, and shall not postpone the effectiveness of such rule or action. 
Under section 307(b)(2) of the Act, the requirements of this final 
action may not be challenged later in civil or criminal proceedings 
brought by us to enforce these requirements.

VIII. Statutory Authority

    The statutory authority for this action is provided by the CAA, as 
amended (42 U.S.C. 7401 et seq.). Relevant portions of the Act include, 
but are not necessarily limited to, sections 101, 110, 165, and 301 of 
the CAA as amended (42 U.S.C. 7401, 7410, 7475, and 7601). This action 
is also subject to section 307(d) of the Act (42 U.S.C. 7607(d)).

List of Subjects in 40 CFR Part 52

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

    Dated: May 10, 2011.
Lisa P. Jackson,
Administrator.

    For the reasons set out in the preamble, title 40, chapter I of the 
Code of Federal Regulations is amended as follows:

[[Page 28661]]

PART 52--[AMENDED]

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

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


Sec.  52.21  [Amended]

0
2. In Sec.  52.21, remove paragraph (i)(1)(xi).

[FR Doc. 2011-12089 Filed 5-17-11; 8:45 am]
BILLING CODE 6560-50-P


