Operating Permit Programs and Prevention of Significant Deterioration
(PSD) and Nonattainment New Source Review (NSR); Flexible Air Permitting
Rule

Table of Contents

  TOC \h \z \t "FR Level 1,1,FR Level 2,2,FR Level 3,3,FR Level 4,4"   
HYPERLINK \l "_Toc149556874"  I.	General Information	  PAGEREF
_Toc149556874 \h  6  

  HYPERLINK \l "_Toc149556875"  A.	What are the regulated entities?	 
PAGEREF _Toc149556875 \h  6  

  HYPERLINK \l "_Toc149556876"  B.	What should I consider as I prepare
my comments for EPA?	  PAGEREF _Toc149556876 \h  7  

  HYPERLINK \l "_Toc149556877"  1. 	Submitting CBI	  PAGEREF
_Toc149556877 \h  7  

  HYPERLINK \l "_Toc149556878"  2.  	Suggestions for Preparing Your
Comments.	  PAGEREF _Toc149556878 \h  8  

  HYPERLINK \l "_Toc149556879"  C.	Where Can I get a Copy of This
Document and Other Related Information?	  PAGEREF _Toc149556879 \h  8  

  HYPERLINK \l "_Toc149556880"  D.	How Can I Find Information About a
Possible Hearing?	  PAGEREF _Toc149556880 \h  9  

  HYPERLINK \l "_Toc149556881"  E. 	How is this preamble organized?	 
PAGEREF _Toc149556881 \h  9  

  HYPERLINK \l "_Toc149556882"  II.	What is a flexible air permit and
the background related to this action?	  PAGEREF _Toc149556882 \h  11  

  HYPERLINK \l "_Toc149556883"  A.	What is a flexible air permit?	 
PAGEREF _Toc149556883 \h  11  

  HYPERLINK \l "_Toc149556884"  B.	What is the statutory background?	 
PAGEREF _Toc149556884 \h  12  

  HYPERLINK \l "_Toc149556885"  C.	What is the regulatory background
relating to the proposed revisions to parts 70 and 71?	  PAGEREF
_Toc149556885 \h  16  

  HYPERLINK \l "_Toc149556886"  D.	What is the regulatory background
relating to the proposed revisions to parts 51 and 52?	  PAGEREF
_Toc149556886 \h  19  

  HYPERLINK \l "_Toc149556887"  III.	What is the purpose of this action?
  PAGEREF _Toc149556887 \h  22  

  HYPERLINK \l "_Toc149556888"  IV.	What experience did we gain from our
12-year pilot permit program?	  PAGEREF _Toc149556888 \h  24  

  HYPERLINK \l "_Toc149556889"  A.	What were the benefits of the pilot
permits?	  PAGEREF _Toc149556889 \h  27  

  HYPERLINK \l "_Toc149556890"  1.	Environmental Improvements Achieved
Using Flexible Permits	  PAGEREF _Toc149556890 \h  27  

  HYPERLINK \l "_Toc149556891"  2.	Informational Benefits Achieved Using
Flexible Permits	  PAGEREF _Toc149556891 \h  29  

  HYPERLINK \l "_Toc149556892"  3.	Economic Benefits Achieved Using
Flexible Permits	  PAGEREF _Toc149556892 \h  30  

  HYPERLINK \l "_Toc149556893"  4.	Administrative Benefits Achieved
Using Flexible Permits	  PAGEREF _Toc149556893 \h  32  

  HYPERLINK \l "_Toc149556894"  B.	What were the conclusions of the
sources, permitting authorities, and EPA about flexible permits?	 
PAGEREF _Toc149556894 \h  33  

  HYPERLINK \l "_Toc149556895"  C.	What are EPA’s recommendations for
public participation in flexible permitting?	  PAGEREF _Toc149556895 \h 
36  

  HYPERLINK \l "_Toc149556896"  V.	What are the key elements of this
proposal?	  PAGEREF _Toc149556896 \h  37  

  HYPERLINK \l "_Toc149556897"  A.	What are the key elements of proposed
revisions to parts 70 and 71?	  PAGEREF _Toc149556897 \h  37  

  HYPERLINK \l "_Toc149556898"  B.	What are the key elements of proposed
revisions to parts 51 and 52? 	  PAGEREF _Toc149556898 \h  40  

  HYPERLINK \l "_Toc149556899"  VI.	What changes are we proposing to
parts 70 and 71?	  PAGEREF _Toc149556899 \h  41  

  HYPERLINK \l "_Toc149556900"  A.	What is our proposed definition of an
AOS, and how does it provide a source operational flexibility?	  PAGEREF
_Toc149556900 \h  41  

  HYPERLINK \l "_Toc149556901"  B.	What information is necessary in a
title V permit application to seek approval of an AOS?	  PAGEREF
_Toc149556901 \h  53  

  HYPERLINK \l "_Toc149556902"  C.	What terms and conditions must be
included in the title V permit for approved AOSs?	  PAGEREF
_Toc149556902 \h  60  

  HYPERLINK \l "_Toc149556903"  1.	Terms and Conditions to Describe
Approved AOSs	  PAGEREF _Toc149556903 \h  61  

  HYPERLINK \l "_Toc149556904"  2.	Terms and Conditions to Assure
Compliance with Applicable Requirements	  PAGEREF _Toc149556904 \h  63  

  HYPERLINK \l "_Toc149556905"  a.	Proposed Clarifications to the AOS
Provisions	  PAGEREF _Toc149556905 \h  63  

  HYPERLINK \l "_Toc149556906"  b.	Proposed Revisions for ARMs	  PAGEREF
_Toc149556906 \h  63  

  HYPERLINK \l "_Toc149556907"  3.	Terms and Conditions to Assure
Compliance with Other Part 70 Requirements	  PAGEREF _Toc149556907 \h 
72  

  HYPERLINK \l "_Toc149556908"  D.	What are some examples of how AOSs
and advance approvals can be used to provide operational flexibility?	 
PAGEREF _Toc149556908 \h  75  

  HYPERLINK \l "_Toc149556909"  E.	What is the process for adding or
revising advance approvals, AOSs, and ARMs in issued permits?	  PAGEREF
_Toc149556909 \h  86  

  HYPERLINK \l "_Toc149556910"  F.	How do the proposed AOS provisions
differ between parts 70 and 71?	  PAGEREF _Toc149556910 \h  87  

  HYPERLINK \l "_Toc149556911"  VII.	What changes are we proposing in
parts 51 and 52?	  PAGEREF _Toc149556911 \h  88  

  HYPERLINK \l "_Toc149556912"  A.	What are the benefits of Green
Groups?	  PAGEREF _Toc149556912 \h  91  

  HYPERLINK \l "_Toc149556913"  B.	What is a Green Group?	  PAGEREF
_Toc149556913 \h  93  

  HYPERLINK \l "_Toc149556914"  1.	Defining the Scope of a Green Group	 
PAGEREF _Toc149556914 \h  93  

  HYPERLINK \l "_Toc149556915"  2.	Emissions Limits for Green Groups	 
PAGEREF _Toc149556915 \h  98  

  HYPERLINK \l "_Toc149556916"  3.	Monitoring, Recordkeeping, Reporting,
and Testing (MRRT) Requirements for Green Groups	  PAGEREF _Toc149556916
\h  108  

  HYPERLINK \l "_Toc149556917"  4.	Public Participation for Green Group
Designations	  PAGEREF _Toc149556917 \h  110  

  HYPERLINK \l "_Toc149556918"  5.	Duration and Renewal of the Green
Group Designations	  PAGEREF _Toc149556918 \h  111  

  HYPERLINK \l "_Toc149556919"  6.	How are Green Groups similar to PALs?
  PAGEREF _Toc149556919 \h  117  

  HYPERLINK \l "_Toc149556920"  C.	How is a Green Group designation
incorporated into a title V permit?	  PAGEREF _Toc149556920 \h  118  

  HYPERLINK \l "_Toc149556921"  D.	What is the legal rationale for Green
Groups?	  PAGEREF _Toc149556921 \h  120  

  HYPERLINK \l "_Toc149556922"  E.	What are the conforming regulatory
changes we must make to implement the Green Group concept?	  PAGEREF
_Toc149556922 \h  127  

  HYPERLINK \l "_Toc149556923"  F.	What is an example of how a Green
Group might be used in combination with a title V permit?	  PAGEREF
_Toc149556923 \h  129  

  HYPERLINK \l "_Toc149556924"  VIII.	What is the effect of these
proposed revisions?	  PAGEREF _Toc149556924 \h  139  

  HYPERLINK \l "_Toc149556925"  A.	If these proposed revisions are
finalized, what are the implications for approved part 70 programs?	 
PAGEREF _Toc149556925 \h  139  

  HYPERLINK \l "_Toc149556926"  B.	What are the implications for NSR
programs?	  PAGEREF _Toc149556926 \h  140  

  HYPERLINK \l "_Toc149556927"  IX.	Statutory and Executive Order
Reviews	  PAGEREF _Toc149556927 \h  142  

  HYPERLINK \l "_Toc149556928"  A.	Executive Order 12866:  Regulatory
Planning and Review	  PAGEREF _Toc149556928 \h  142  

  HYPERLINK \l "_Toc149556929"  B.	Paperwork Reduction Act	  PAGEREF
_Toc149556929 \h  142  

  HYPERLINK \l "_Toc149556930"  C.	Regulatory Flexibility Act (RFA)	 
PAGEREF _Toc149556930 \h  145  

  HYPERLINK \l "_Toc149556931"  D.	Unfunded Mandates Reform Act	 
PAGEREF _Toc149556931 \h  146  

  HYPERLINK \l "_Toc149556932"  E.	Executive Order 13132:  Federalism	 
PAGEREF _Toc149556932 \h  147  

  HYPERLINK \l "_Toc149556933"  F.	Executive Order 13175:  Consultation
and Coordination with Indian Tribal Governments	  PAGEREF _Toc149556933
\h  148  

  HYPERLINK \l "_Toc149556934"  G.	Executive Order 13045:  Protection of
Children from Environmental Health and Safety Risks	  PAGEREF
_Toc149556934 \h  149  

  HYPERLINK \l "_Toc149556935"  H.	Executive Order 13211:  Actions That
Significantly Affect Energy Supply, Distribution, or Use	  PAGEREF
_Toc149556935 \h  149  

  HYPERLINK \l "_Toc149556936"  I.	National Technology Transfer and
Advancement Act	  PAGEREF _Toc149556936 \h  150  

 ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, 70, and 71

[EPA-HQ-OAR-2004-0087,  FRL-XXXX-X]

[RIN 2060-AM45]

Operating Permit Programs and Prevention of Significant Deterioration
(PSD) and Nonattainment New Source Review (NSR); Flexible Air Permitting
Rule

AGENCY:  Environmental Protection Agency (EPA).

ACTION:  Proposed rule.

SUMMARY:  We are proposing to revise the regulations governing State and
Federal operating permit programs required by title V of the Clean Air
Act (CAA or the Act) and the New Source Review (NSR) programs required
by parts C and D of title I of the Act.  These proposed actions are
based, in large part, on the lessons learned through EPA’s pilot
experience in which EPA worked closely with States and sources to
develop flexible air permitting approaches that provide greater
operational flexibility and, at the same time, ensure environmental
protection and compliance with applicable laws.  

In our pilot permits, increased flexibility is primarily achieved
through advance approvals under NSR and alternative operating scenarios
(AOSs).  The proposed revisions clarify how this can often be done in
the existing regulatory framework of the operating permit programs.  The
proposed revisions also add major NSR requirements for Green Groups,
which allow future changes to occur within a group of emissions
activities, provided that they are ducted to a common air pollution
control device which is determined to meet “best available control
technology” (BACT) or “lowest achievable emission rate” (LAER), as
applicable and that they are determined to comply with all relevant
ambient requirements. 

DATES:  Comments.  Written comments must be received on or before
[INSERT DATE 60 DAYS AFTER PUBLICATION IN THE FEDERAL REGISTER].  Under
the Paperwork Reduction Act, comments on the information collection
provisions must be received by OMB on or before [INSERT DATE 30 DAYS
AFTER PUBLICATION IN THE FEDERAL REGISTER].

Public Hearing.  If anyone contacts EPA requesting to speak at a public
hearing by [INSERT DATE 21 DAYS AFTER PUBLICATION IN THE FEDERAL
REGISTER], we will hold a public hearing on [INSERT DATE 35 DAYS AFTER
PUBLICATION IN THE FEDERAL REGISTER].  Additional information about the
hearing would be published in a subsequent Federal Register notice.

ADDRESSES:  Comments.  Submit your comments, identified by Docket ID No.
EPA-HQ-OAR-2004-0087, by one of the following methods:

http://www.regulations.gov:  Follow the on-line instructions for
submitting comments.

Email: a-and-r-Docket@epa.gov

Fax: (202) 566-1741.

Mail:  Environmental Protection Agency, EPA Docket Center (EPA/DC), Air
and Radiation Docket, Mail Code 6102T, 1200 Pennsylvania Avenue, N.W.,
Washington, DC 20460.  Please include two copies.  In addition, please
mail a copy of you comments on the information collection provisions to
the Office of Management and Budget (OMB), Attn: Desk Officer for EPA,
725 17th St. NW, Washington, DC 20503

Hand Delivery:  EPA Docket Center, (Air Docket), U.S. Environmental
Protection Agency, 1301 Constitution Ave., NW, Room: B102, Washington,
DC, Such deliveries are only accepted during the Docket(s normal hours
of operation, and special arrangements should be made for deliveries of
boxed information.

Instructions:  Direct your comments to Docket ID No.
EPA-HQ-OAR-2004-0087.  EPA's policy is that all comments received will
be included in the public docket without change and may be made
available online at   HYPERLINK "http://www.regulations.gov" 
www.regulations.gov , including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute.  Do not submit information that you consider to
be CBI or otherwise protected through www.regulations.gov or e-mail. 
The   HYPERLINK "http://www.regulations.gov"  www.regulations.gov 
website is an “anonymous access” system, which means EPA will not
know your identity or contact information unless you provide it in the
body of your comment.  If you send an e-mail comment directly to EPA
without going through   HYPERLINK "www.regulations.gov%20" 
www.regulations.gov  your e-mail address will be automatically captured
and included as part of the comment that is placed in the public docket
and made available on the Internet.  If you submit an electronic
comment, EPA recommends that you include your name and other contact
information in the body of your comment and with any disk or CD-ROM you
submit.  If EPA cannot read your comment due to technical difficulties
and cannot contact you for clarification, EPA may not be able to
consider your comment.  Electronic files should avoid the use of special
characters, any form of encryption, and be free of any defects or
viruses.  For additional instructions on submitting comments, go to I C
& D of the SUPPLEMENTARY INFORMATION section of this document.  

NOTE:  The EPA Docket Center suffered damage due to flooding during the
last week of June 2006.  The Docket Center is continuing to operate. 
However, during the cleanup, there will be temporary changes to Docket
Center telephone numbers, addresses, and hours of operation for people
who wish to make hand deliveries or visit the Public Reading Room to
view documents.  Consult EPA's Federal Register notice at 71 FR 38147
(July 5, 2006) or the EPA website at   HYPERLINK
"http://www.epa.gov/epahome/dockets.htm" 
http://www.epa.gov/epahome/dockets.htm  for current information on
docket operations, locations and telephone numbers.  The Docket
Center’s mailing address for U.S. mail and the procedure for
submitting comments to   HYPERLINK "http://www.regulations.gov" 
www.regulations.gov  are not affected by the flooding and will remain
the same.

Docket:  All documents in the docket are listed in the index at  
HYPERLINK "http://www.regulations.gov"  www.regulations.gov .  Although
listed in the index, some information is not publicly available, i.e.,
CBI or other information whose disclosure is restricted by statute. 
Certain other material, such as copyrighted material, is not placed on
the Internet and will be publicly available only in hard copy form. 
Publicly available docket materials are available either electronically
in   HYPERLINK "http://www.regulations.gov"  www.regulations.gov  or in
hard copy at the EPA Docket Center (Air Docket), EPA West, Room B102,
1301 Constitution Ave., NW, 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:  For issues concerning advance
approvals and AOSs, contact Michael Trutna, Air Quality Policy Division
(C504-01), U.S. Environmental Protection Agency, Research Triangle Park,
NC 27711; telephone (919) 541-5345, fax number (919) 541-4028; or
electronic mail at   HYPERLINK "mailto:trutna.mike@epa.gov" 
trutna.mike@epa.gov .

	For issues concerning ARMs and EPA(s pilot permits, contact David Beck,
Office of Policy, Economics, and Innovation, Innovative Pilots Division
(C304-05), U.S. Environmental Protection Agency, Research Triangle Park,
NC 27711; telephone (919) 541-5421, fax number (919) 541-2664; or
electronic mail at beck.david@epa.gov.

	For issues relating to monitoring, recordkeeping, and reporting for
flexible air permits, contact Barrett Parker, Sector Policies and
Programs Division, Measurement Policy Group (D243-03), U.S.
Environmental Protection Agency, Research Triangle Park, NC  27711;
telephone 919-541-5635, fax number (919) 541-1039; or electronic mail at
parker.barrett@epa.gov.

	For other part 70 issues, contact Ray Vogel, Operating Permits Group,
Air Quality Policy Division (C504-05), U.S. Environmental Protection
Agency, Research Triangle Park, NC 27711; telephone (919) 541-3153, fax
number (919) 541-5509; or electronic mail at vogel.ray@epa.gov.

	For issues relating to Green Groups, contact Dave Painter, New Source
Review Group, Air Quality Policy Division (C504-03), U.S. Environmental
Protection Agency, Research Triangle Park, NC 27711; telephone (919)
541-5515, fax number (919) 541-5509; or electronic mail at   HYPERLINK
"mailto:painter.david@epa.gov"  painter.david@epa.gov .

	To request a hearing or information pertaining to a hearing on this
document, please contact Pam Long, Air Quality Policy Division, U.S.
EPA, Office of Air Quality Planning and Standards (C504-03), Research
Triangle Park, North Carolina 27711, telephone number (919) 541-0641,
facsimile number (919) 541-5509; electronic mail e-mail address:   
HYPERLINK "mailto:long.pam@epa.gov"  long.pam@epa.gov .

SUPPLEMENTARY INFORMATION: 

General Information

What are the regulated entities?

Entities potentially affected by these proposed actions are facilities
currently required to obtain title V permits under State, local, tribal,
or Federal operating permits programs, and State, local, and tribal
governments that are authorized by EPA to issue such operating permits.
Other entities potentially affected by this proposed action are
facilities required to obtain major NSR permits under State, local,
tribal, or Federal major NSR programs, and State, local, and tribal
governments that issue such permits pursuant to approved part 51 major
NSR programs.  Potentially affected sources are found in a wide variety
of industry groups.  In particular, we believe based on our experience
in implementing our flexible air permit pilot program that these groups
will include, but are not limited to, the following:

Industry Group	

SICa	

NAICSb



Aerospace Manufacturing	

372	

336411, 336412, 332912, 336411, 335413



Automobile Manufacturing	

371	

336111, 336112, 336712, 336211, 336992, 336322, 336312, 33633, 33634,
33635, 336399, 336212, 336213



Industrial Organic Chemicals 	

286	

325191, 32511, 325132, 325192, 225188, 325193, 32512, 325199 



Chemical Processes	

281	

325181, 325182, 325188, 32512, 325131, 325998, 331311



Converted Paper and Paperboard Products	

267	

322221, 322222, 322223, 322224, 322226, 322231, 326111, 326112, 322299,
322291, 322232, 322233, 322211



Magnetic Tape Manufacturing	

369	

334613



Petroleum Refining	

291	

32411



Other Coating Operations	

226, 229, 251, 252, 253, 254, 267, 358, 363	

313311, 313312, 314992, 33132, 337122, 337121, 337124, 337215, 337129,
37125, 337211, 337214, 337127, 322221, 322222, 322226, 335221, 335222,
335224, 335228, 333312, 333415, 333319



Paper Mills	

262	

322121, 322122



Pharmaceutical Manufacturing	

283	

325411, 325412, 325413, 325414



Printing and Publishing	

275	

323114, 323110, 323111, 323113, 323112, 323115, 323119



Pulp and Paper Mills	

262	

32211, 322121, 322122, 32213



Semiconductors	

367	

334413



Specialty Chemical Batch Processes	

282, 283, 284, 285, 286,

287, 289, 386	

3251, 3252, 3253, 3254, 3255, 3256,

3259, except 325131 and 325181.

a	Standard Industrial Classification

b	North American Industry Classification System.

What should I consider as I prepare my comments for EPA?

1. 	Submitting CBI

	Do not submit this information to EPA through www.regulations.gov or
e-mail. Clearly mark the part or all of the information that you claim
to be CBI.  For CBI information in a disk or CD ROM that you mail to
EPA, mark the outside of the disk or CD ROM as CBI and then identify
electronically within the disk or CD ROM the specific information that
is claimed as CBI.  In addition to one complete version of the comment
that includes information claimed as CBI, a copy of the comment that
does not contain the information claimed as CBI must be submitted for
inclusion in the public docket.  Information so marked will not be
disclosed except in accordance with procedures set forth in 40 CFR part
2.

	2.  	Suggestions for Preparing Your Comments.  

	When submitting comments, remember to:

 Identify the rulemaking by docket number and other identifying
information (subject heading, Federal Register date and page number).

Follow directions.  The Agency may ask you to respond to specific
questions or organize comments by referencing a Code of Federal
Regulations (CFR) part or section number.

Explain why you agree or disagree; suggest alternatives and substitute
language for your requested changes.

Describe any assumptions and provide any technical information and/or
data that you used.

If you estimate potential costs or burdens, explain how you arrived at
your estimate in sufficient detail to allow for it to be reproduced.

Provide specific examples to illustrate your concerns, and suggest
alternatives.

Explain your views as clearly as possible, avoiding the use of profanity
or personal threats.

Make sure to submit your comments by the comment period deadline
identified.

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 proposal will also be available on the WWW.  Following signature by
the EPA Administrator, a copy of this notice will be posted in the
regulations and standards section of our NSR home page located at  
HYPERLINK "http://www.epa.gov/nsr"  http://www.epa.gov/nsr .

How Can I Find Information About a Possible Hearing?

	Persons interested in presenting oral testimony should contact Pam
Long, Air Quality Policy Division (C504-03), U.S. EPA, Research Triangle
Park, NC 27711, telephone number (919) 541-0641 or e-mail   HYPERLINK
"mailto:long.pam@epa.gov"  long.pam@epa.gov  at least 2 days  in advance
of the public hearing.  Persons interested in attending the public
hearing should also contact Pam Long to verify the time, date, and
location of the hearing.  The public hearing will provide interested
parties the opportunity to present data, views, or arguments concerning
these proposed rules.

E. 	How is this preamble organized?

The information presented in this preamble is organized as follows: 

I.	General Information 

A.	What are the regulated entities?

B.	What should I consider as I prepare my comments for EPA? 

C.  	Where Can I get a Copy of This Document and Other Related
Information?

D.	How Can I Find Information About a Possible Hearing?

E.	How is this preamble organized?

II.	What is a flexible air permit and the background related to this
action?

A.	What is a flexible air permit?

B.	What is the statutory background?

C.	What is the regulatory background relating to the proposed revisions
to parts 70 and 71?

D.	What is the regulatory background relating to the proposed revisions
to parts 51 and 52? 

III.	What is the purpose of this action?

IV.	What experience did we gain from our 12-year pilot permit
experience? 

A.	What were the benefits of the pilot permits?

B.	What were the conclusions of the sources, permitting authorities, and
EPA about flexible permits?

C.	What are EPA’s recommendations for public participation in flexible
permitting?

V.	What are the key elements of this proposal?

A.	What are the key elements of proposed revisions to parts 70 and 71?

B.	What are the key elements of proposed revisions to parts 51 and 52?

VI.	What changes are we are proposing to parts 70 and 71?

A.	What is our proposed definition of an AOS, and how does it provide a
source operational flexibility?

B.	What information is necessary in a title V permit application to seek
approval of an AOS?

C.	What terms and conditions must be included in the title V permit for
approved AOSs?

D.	What are some examples of how AOSs and advance approvals can be used
to provide operational flexibility?

E.	What is the process for adding or revising AOSs in issued permits?

F.	How do the proposed AOS provisions differ between parts 70 and 71?

VII.	What changes are we are proposing in parts 51 and 52?

A.	What are the benefits of Green Groups?

B.	What is a Green Group?

C.	How is a Green Group designation incorporated into a title V permit?

D.	What is the legal rationale for Green Groups?

E.	What are the conforming regulatory changes we must make to implement
the Green Group concept?

F.	What is an example of how a Green Group might be used in combination
with a title V permit? 

VIII.	What is the effect of these proposed revisions?  

A.	If this proposed revisions are finalized, what are the implications
for approved part 70 programs?

B.	What are the implications for NSR programs?

IX.	Statutory and Executive Order Reviews 

A.	Executive Order 12866:  Regulatory Planning and Review

B.	Paperwork Reduction Act 

C.	Regulatory Flexibility Act (RFA) 

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 

What is a flexible air permit and the background related to this action?

In this section, we first explain what is a flexible air permit.  We
then provide an overview of the relevant statutory provisions and
describe the regulatory and other actions taken over the course of the
last decade that are relevant to this proposal.

What is a flexible air permit?

A flexible air permit is a title V permit that facilitates flexible,
market-responsive operations at a source through the use of one or more
permitting approaches, while ensuring equal or greater environmental
protection as achieved by conventional permits. In particular, flexible
permitting approaches allow the source, under protection of the permit
shield, to make certain types of physical and operational changes
without further review or approval by the permitting authority.  One
approach includes, for example, obtaining advance approval for
anticipated changes (such as through a minor NSR action), incorporating
the advance approval into the title V permit, and adding terms in the
title V permit as necessary to assure compliance with all other
applicable requirements implicated by the anticipated changes.  Another
approach is to establish one or more alternative operating scenarios
(AOSs) in a title V permit to allow existing emissions units the
flexibility to operate in varying ways and/or at varying rates of
production, where such variations would be subject to different
applicable requirements but would not require prior authorization (i.e.,
advance approval). 

For more than a decade, we participated in a pilot flexible air
permitting program with sources and permitting authorities through which
we tested and evaluated various permitting approaches that afford
operational flexibility.  The lessons learned through the pilot program,
in part, served as the basis for our adoption of the plantwide
applicability limitation (PAL) provisions of the 2002 NSR Improvement
rule.  They also serve as the basis for this rule, where we seek to
build upon existing regulatory provisions that afford operational
flexibility.  We believe that the flexible permitting approaches in this
proposed rulemaking provide a path forward for sources to more
effectively and proactively manage their title V and NSR permitting
obligations, while ensuring environmental protection.

What is the statutory background? 

There are two aspects of the CAA that are relevant to this proposed
rule:  title V and parts C and D of title I of the Act.  In 1990,
Congress promulgated title V and established the operating permit
program.  That program requires certain stationary sources to obtain
operating permits as a mechanism for gathering all applicable
requirements of the Act for each affected source into one comprehensive
document.  See H.R. Conference Report No. 101-952, reprinted in
U.S.C.C.A.N. 3867, 3877 (1990).

	One of the key purposes of the title V operating permit program is to
enable the source, the State or local permitting authority, EPA, and the
public to gain a better understanding of the requirements of the Act to
which the source is subject.  The ability to assess and achieve
compliance with the law is improved by virtue of having one
comprehensive operating permit containing all applicable requirements
for a source.  The title V permit program does not impose new
substantive air quality control requirements.  It does, however, require
that fees be imposed on sources and that certain procedural measures be
followed, especially with respect to determining compliance with
applicable requirements.  See, e.g., CAA sections 502(b)(3), 503(b)(2),
and 504(a).  

The Act affirms that State and local governments have primary
responsibility for air quality.  See CAA section 101(a)(3).  Title V
vests primary responsibility for issuing operating permits with State
and local governments.  See CAA section 502.  Congress required EPA to
promulgate regulations establishing the minimum elements of a title V
operating permits program.  See CAA section 502(b) (articulating ten
minimum elements for State programs).  In establishing such minimum
elements, Congress directed that EPA develop “[a]dequate, streamlined,
and reasonable procedures” for processing and reviewing permit
applications and for the expeditious review of permit actions.  See CAA
section 502(b)(6).  

As explained below, EPA promulgated regulations establishing the minimum
requirements for a State operating permit program in 1992.  These
regulations are codified at 40 CFR part 70 and are often referenced as
“part 70.”  In addition to requiring EPA to establish the minimum
elements for the operating permits program, Congress required each State
to develop and submit to EPA for approval an operating permit program
that meets the requirements of the Act and part 70.  See CAA section
502(d)(1).  In areas that do not have an approved State, local, or
tribal title V program, EPA administers the operating permit program as
a Federal program pursuant to regulations set out in 40 CFR part 71. 
See CAA section 502(d)(3).  Title V requires that each operating permit
contain terms sufficient to assure compliance with all applicable air
requirements.  See CAA section 504(a).

The other parts of the Act relevant to this rule include part C,
entitled “Prevention of Significant Deterioration of Air Quality”
(typically referred to as “PSD”), and part D, entitled “Plan
Requirements for Nonattainment Areas” (typically referred to as
“nonattainment major NSR”), of title I of the Act.  See CAA sections
160 through169B (part C) and 171 through 193 (part D).  These parts
together are commonly referred to as the major NSR program.  This
program is a preconstruction review and permitting program applicable to
new or modified major stationary sources of air pollutants regulated
under the Act.  The implementing regulations for the program are
contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and part 51, appendix
S.

The PSD provisions apply to new major sources and to major modifications
at existing major sources for pollutants where the area in which the
source is located is in attainment or unclassifiable with the national
ambient air quality standards (NAAQS).  A source that is subject to PSD
must install BACT and perform an air quality analysis and an additional
impacts analysis, and there must be an opportunity for public
participation.  See CAA section 165(a).  The BACT is an emissions
limitation that is based on the maximum degree of control that can be
achieved, as determined on a case-by-case basis for each source
considering energy, environmental, and economic impacts.  See CAA
section 169(3);  40 CFR 51.166(b)(12), 52.21(b)(12), and
51.165(a)(1)(xl).  The source(s air quality analysis must demonstrate
that the source will not cause or contribute to a violation of any NAAQS
or any maximum allowable increase in ambient concentration either for a
Class I area or as established under the PSD program (typically referred
to as (PSD increments().  See CAA section 165(a)(3).

Nonattainment major NSR applies to new major sources and to major
modifications at existing major sources for pollutants where the area in
which the source is located is not in attainment with the NAAQS. 
Nonattainment major NSR requires the source to comply with lowest
achievable emission rate ("LAER") and to obtain sufficient emissions
offsets, and there must be an opportunity for public involvement.  See
CAA section 173(a); 40 CFR 51.161.  The LAER is determined for each
source to reflect the more stringent of the following:  (1) the most
stringent emissions limitation that is contained in any State
implementation plan (SIP) for that type of source (if achievable for the
proposed source), or (2) the most stringent emissions limitation that is
achieved in 

practice for that type of source.  See CAA section 171(3); 40 CFR
51.165(a)(1)(xiii).

In addition to a major NSR program, States are required to have (minor(
NSR programs, which apply to new and modified sources that do not meet
the emissions thresholds for major NSR.  See section 110(a)(2)(C) of the
Act.  The minor NSR program is part of a State(s implementation plan and
is designed to ensure that the construction or modification of an
affected source does not violate any portion of the SIP and does not
interfere with the attainment of the NAAQS or cause the exceedance of
any applicable PSD increments.

What is the regulatory background relating to the proposed revisions to
parts 70 and 71?

This proposed rule addresses certain permitting mechanisms for providing
operational flexibility.  The concept of operational flexibility is not
a new one.  In July 1992, under the authority of title V of the Act, we
finalized the part 70 State operating permit program regulations.  See
57 FR 32250 (July 21, 1992); 40 CFR part 70.  Those regulations include
operational flexibility provisions, one of which is the AOS provision
found at 40 CFR 70.6(a)(9).  It is this provision that is the primary
subject of these proposed revisions.  This section 40 CFR 70.6(a)(9)
generally provides that any permit issued under part 70 must include
terms and conditions for reasonably anticipated operating scenarios
approved by the permitting authority.  EPA promulgated 40 CFR 70.6(a)(9)
pursuant to the authority of section 502(b)(6) of the CAA, which directs
that operating permit programs include ([a]dequate, streamlined, and
reasonable procedures( for processing and reviewing permit applications
and for the expeditious review of permit actions.

In the final part 70 rule, we emphasized the importance of 40 CFR
70.6(a)(9), noting that a permit that contains approved AOSs (will be a
more complete representation of the operation at the permitted
facility.(  See 57 FR 32276.  We also explained that once a flexible air
permit with approved AOSs is issued, the need for additional permit
modifications will be substantially reduced since the permit will
already contain appropriate terms and conditions to accommodate the
approved operating scenarios.  In the final part 70 rule, we did not
place any restrictions on the types of operations that could qualify as
a reasonably anticipated operating scenario.  

Shortly after we finalized the part 70 State operating permit program,
we initiated a pilot title V permit program with interested States, and
our program continues to the present.  See section IV of this preamble
for more discussion.  Companies participating in the pilot program
sought to reduce the cost, time, and delays associated with a permit
revision for each operational change at a facility.  We and the States
sought to increase the sources( operational flexibility, while assuring
compliance with applicable requirements, ensuring environmental
protection, and facilitating P2.  These pilots typically allowed for
both changes to operations of existing emissions units and the addition
of entirely new emissions units, provided that the changes were
sufficiently well described in the permit application so that the
permitting authority could confirm that all applicable requirements were
identified and that the permit contained terms and conditions assuring
compliance with all applicable requirements. 

To evaluate the flexible pilot permits program, we conducted a thorough
review of six of the pilot permits for which at the time there was
significant implementation experience.  We reviewed on-site records to
track utilization of the flexible permit provisions, assessed how well
the permits worked, evaluated total emissions reductions achieved, and
analyzed the economic benefits associated with the permits.  Overall, we
found that significant environmental benefits had occurred for each of
the permits reviewed.  At the time of the evaluation, each of the
sources had achieved 25- to 80-percent reductions in actual plantwide
emissions or emissions per unit of production.  We made a series of
findings based on our evaluation of the permits.  See (Evaluation of the


Implementation Experience with Innovative Air Permits( and section IV
of this preamble, which summarizes the findings of this study.

What is the regulatory background relating to the proposed revisions to
parts 51 and 52?

Based on our pilot permit evaluation and our 1996 proposed modifications
to the major NSR program, in December 2002, we finalized the NSR
Improvement rule.  In that rule, we promulgated regulations for PALs in
response to comments received on draft White Paper Number 3.  As
explained in the preamble to the December 2002 final rule, a PAL is an
alternative approach for determining NSR applicability on a plantwide
basis.  Using PALs will allow sources (to respond rapidly to market
changes,( and will (benefit the public and the environment.(  See 67 FR
80206.  Specifically, sources with PALs can make changes without
triggering the major NSR preconstruction permitting requirements,
provided such changes remain below the limit established in their PAL
and do not otherwise violate the requirements of the PAL.  A PAL is an
important technique that is oftentimes used in tandem with flexible
permitting approaches such as advance approvals and AOSs as described
more fully in this proposal.

The major NSR program applies to (major stationary sources,( which
include sources whose emissions limits exceed certain thresholds
established in the statute, and to (major modifications( at those
sources, which are modifications that exceed certain significance levels
established in EPA(s regulations.  Under minor NSR, an owner or operator
applies for a permit to construct or modify a facility, building, or
other emissions unit, where the new construction or modification does
not meet the emissions thresholds for major NSR.  If the proposed
construction or modification is approved, the permitting authority
issues a permit that contains emissions limits and other appropriate
terms and conditions as necessary to protect the NAAQS and the
increments and to assure consistency with the SIP.   

Through our pilot experience, we found that State minor NSR requirements
are among the most important in designing a flexible air permit for
sources making frequent physical and operational changes because, absent
an up-front authorization for these changes, an individual review and
approval by the permitting authority is typically required before the
changes can be made.  Any changes authorized under minor NSR must be
incorporated into the title V permit along with permit terms as
necessary to assure compliance with all applicable requirements (for
example, a MACT standard, which would be applicable to the source in
addition to the ones addressed in the advance approval issued under
minor NSR).  The result is that the changes can be implemented, under
protection of the permit shield, without any further review or approval
by the permitting authority.  In some cases, one or more AOSs may be
used to complement an advance approval, for example where the source
anticipates varying operation of the changed existing emissions unit in
a manner that would implicate a set of applicable requirements different
from those of the minor NSR advance approval, or where a different
control approach would not be effective until and unless a particular
change would be made to an existing emissions unit.

Given the provisions of their minor NSR programs, the States in which
EPA conducted flexible permit pilots (“pilot States”) believed that
they could issue construction approval for a wide spectrum of changes
using certain boundary conditions established up front in the minor NSR
permit.  The actual conditions needed to accomplish this varied
depending upon the requirements of the different State minor NSR
programs.  A number of techniques were successfully used in pilot
permits to authorize a category of changes (i.e., a range of possible
types of changes, such as “any of various physical changes to the
rollers, drive mechanism, and other components of the coating section
within a coating line”) under minor NSR, including application of one
or more plantwide emissions caps, designation of an entire process
building or related activities as the (emissions unit( for purposes of
minor NSR, and designation of an existing state-of-the-art emissions
capture and control system as fulfilling State control technology
requirements (where they are applicable) for authorized changes
occurring over the 5-year term of the title V permit.  Pilot States, as
part of granting advance approvals under their existing minor NSR
programs, frequently required sources to send a notice to the permitting
authority contemporaneous with the operation of any entirely new
emissions unit relying upon the advance approval.

Another common technique for achieving advance approval under minor NSR
found in the pilots was the presence of one or more plantwide emissions
caps.  These caps serve to limit the maximum aggregate emissions
associated with the anticipated changes so as to protect relevant
ambient standards and increments and to facilitate an advance approval
of a wide spectrum of changes under minor NSR.  They also serve to limit
the potential to emit (PTE) of the source below certain applicability
thresholds in order to prevent implication of otherwise potentially
applicable requirements (e.g., major NSR) or to function as a PAL (in
the case of an existing major stationary source).

What is the purpose of this action?

The Agency has learned a great deal over the past decade through its
pilot permit program.  In light of that experience, the recent NSR
Improvement rule promulgated in December 2002, and the comments we
received on the proposed revisions to part 70 and draft White Paper
Number 3, we propose revising the part 70 and 71 regulations and
part 51 and 52 regulations.  

As explained further below, the proposed revisions to the operating
permit programs of parts 70 and 71 add a definition and clarify
requirements for “alternative operating scenario” (or “AOS”) and
add a definition for (approved replicable methodology( (or “ARM”). 
The proposed revisions to the major NSR program add a definition and
codify requirements for Green Groups.

The primary purpose of these revisions to parts 70 and 71 is to build
upon the existing regulatory framework and ensure that the flexible
permitting approaches with which we have experience are more readily and
widely used.  We recognize that many States( minor NSR and part 70
programs may already provide for the flexible permitting approaches
proposed and that such States are currently able to implement these
approaches.  Because of the diversity of existing State minor NSR
programs and our pilot experience indicating the ability of many
programs to advance approve categories of future changes, we are not
proposing any revisions to the rules governing State minor NSR programs
at 40 CFR 51.160 through 51.164.  By undertaking the part 70 rulemaking,
it is not our intention to preclude States from continuing to develop
and use flexible permit approaches, where their current regulatory
structure provides authority to do so.  This rulemaking is instead
intended to encourage the use of advance approvals where available and
appropriate, and to eliminate any uncertainty that may exist with
respect to AOSs and to provide a clear regulatory pathway governing
flexible air permit development in that area by clarifying our 1992 part
70 regulations.  

The proposed revisions to parts 51 and 52 affecting major NSR programs
will increase options for flexible permits under that program.  Namely,
the proposed provisions for Green Groups will offer operational
flexibility options for a defined section of a plant.  This option would
augment the plantwide strategy previously promulgated in the NSR
Improvement rule (i.e., PALs).  The proposed revisions would modify the
major NSR regulations in a limited way.  Consistent with the current NSR
requirements, we propose to clarify that the definition of emissions
unit would allow a number of emission activities, meeting certain
criteria, to be treated as a single emissions unit (i.e., a “Green
Group”).  We are proposing to change the current NSR requirements to
provide expressly for Green Groups so as to authorize in a major NSR
permit that emissions increases and changes within such a group can
occur over a 10-year period, provided the increases and changes are
authorized in advance through major NSR and the emissions activities
associated with the Green Group are controlled to the level determined
to be BACT/LAER.  Also, the requirements of 40 CFR 52.21(j)(4) and
51.166(j)(4) requiring reevaluation of BACT for phased construction
projects and of     40 CFR 52.21(r)(2) requiring continuous construction
to commence within 18 months would not apply to NSR permits involving
Green Groups.

We believe that these proposed revisions will increase operational
flexibility, while ensuring environmental protection and compliance with
applicable requirements.  Moreover, based on our pilot experience, we
anticipate that these revisions will promote improved environmental
performance, although we recognize that the nature of the improvements
will depend on the numbers and types of sources that opt to use the
flexible permitting approaches described in this document. 

What experience did we gain from our 12-year pilot permit program?

This section summarizes the benefits of the pilot permits; includes an
overview of the sources(, permitting authorities(, and our conclusions
concerning the effectiveness of the pilot permits; and presents our
recommendations regarding public participation in flexible permitting. 
Through the pilot permit program, which began in 1993, we sponsored
various projects, including projects undertaken through the Agency(s
(Pollution Prevention in Permitting Program( (P4).  The pilot program
generally involved the issuance of flexible air permits designed to
accommodate operational flexibility.  

The pilot permits facilitated operational flexibility by first obtaining
advance approval under NSR.  Frequently the authorizations involved
changes that were to occur under a PAL or other facility-wide cap on
emissions which, once approved by the relevant permitting authority,
served both to assure that major NSR would not be applicable to changes
occurring under the cap and to assure that ambient standards would be
protected consistent with the requirements of minor NSR.  These caps
were then incorporated into the title V permit with appropriate permit
terms and conditions.  In most cases, once these caps were incorporated
into a title V permit, sources did not need to seek additional approvals
from the title V permitting authority prior to implementing the changes
authorized under the caps.  As necessary, the title V permit would also
contain additional terms and conditions needed to assure compliance with
any other applicable requirements applying to such changes. 

As noted above, following issuance of the pilot permits, we conducted an
in-depth review of six of the permits.  In selecting the permits to
review, we focused our evaluation on those pilots with sufficient
implementation experience to provide a reasonable historical record of
performance, and we continue to believe that these pilots represent a
sufficiently diverse reference point from which to judge the
effectiveness of flexible air permits over a broad range of sources. 
Those reviews involved:  (1) detailed analyses of the sources( and
permitting authorities( experiences developing and implementing the
pilot permits; (2) a thorough review of information available in the
public record at the permitting authority; (3) discussions with source
personnel; (4) site visits to the source and meetings with permitting
authorities; and (5) independent verification of compliance status and
data collection and management techniques, including recordkeeping and
related requirements.  

Our analyses revealed several benefits of the flexible permitting
approaches used in the pilots, and those benefits are summarized briefly
below.  We invite comment on any similar or different experiences others
have had in piloting flexible air permits, particularly where these
experiences are relevant to this rulemaking.

What were the benefits of the pilot permits?

This section provides an overview of the environmental, informational,
economic, and administrative benefits of the flexible pilot permits. 
For additional information on these and other benefits of the pilot
program, please refer to the (Evaluation of the Implementation
Experience with Innovative Air Permits,( which documents all of our
findings concerning the six pilot permits that we evaluated.  

Environmental Improvements Achieved Using Flexible Permits

In our evaluation, we documented several environmental performance
benefits of the flexible pilot permits, including that the permits
facilitated emissions reductions and increased P2 efforts.  In
particular, as discussed further below, the emissions cap framework in
the flexible permits enabled significant reductions in actual plantwide
emissions and/or emissions per unit of production.  For example, of the
five sources that had operated under their flexible permits for 3 or
more years, all five achieved 30- to 80-percent reductions in actual
plantwide emissions and/or emissions per unit of production.  Actual
emissions from the sixth source were reduced by 27 percent in the first
year of operation under its flexible permit, but it is difficult to draw
conclusions based on a single year of data.  One company, using P2,
lowered its actual volatile organic compound (VOC) emissions by 70%
(from 190 tons per year (tpy) to 56 tpy), while increasing production. 
This allowed the facility to commit to keeping its VOC emissions below
the major source threshold (i.e., become a (synthetic minor( source) so
that it was no longer subject to major NSR.  Another company lowered its
actual VOC emissions from 1,400 tpy to less than 800 tpy, primarily
through P2 associated with vehicle coatings and plant solvent usage.  

We attribute the environmental performance improvement benefits of the
flexible permits to several factors.  First, several companies reported
that the emissions caps had a (focusing effect,( drawing company
personnel(s attention on how to manage most effectively all of the
activities within the plant, even those not subject to regulation, in an
effort to minimize total plantwide emissions.  An emissions cap also
creates incentives for companies to pursue additional emissions
reduction opportunities to increase the margin of compliance, which is
the difference between the level of the emissions cap and the source(s
actual total plantwide emissions.  Larger compliance margins typically
reduce the risk of noncompliance with an emissions cap and create room
under the cap to accommodate future emissions increases related to
production or other operational changes.  The cap on emissions from the
plant, which is set during permitting at a level judged to be
environmentally protective, ensures that such future emissions increases
together with existing emissions will not exceed this protective level. 
To obtain a sufficient margin of compliance with these caps, sources
frequently voluntarily controlled emissions on grandfathered units,
which are units that would otherwise not be subject to control, and
increased the stringency of control on regulated units.  

Additionally, we found that the use of advance approvals and AOSs
improved operational efficiency at the plants because companies knew in
advance what changes were authorized, making resource allocation more
efficient and accommodating the typically incremental, iterative nature
of industrial process improvements.  We also found that P2-related
projects became more attractive to the companies when advance approved
because such projects could be undertaken without the delay and
uncertainty of future case-by-case approvals.  In addition, P2-related
projects reduced emissions and enabled sources to comply more easily
with emissions limits such as plantwide emissions caps.  

Informational Benefits Achieved Using Flexible Permits

 We have consistently maintained that including advance approvals and
AOSs in a title V permit ensures that the permit presents a complete
representation of the operations of the permitted facility.  See 57 FR
32276; July 21, 1992.  By requiring information concerning flexible
permits as part of the permit application, EPA and the permitting
authorities are better able to assess, in aggregate, all proposed
operations and, more significantly, to determine all relevant applicable
requirements and to include in the draft permit terms and conditions for
each approved scenario to assure compliance with those applicable
requirements and the requirements of part 70.  By comparison,
conventional permitting approaches provide for a more narrow,
case-by-case view of facility modifications, soliciting comment only on
the specific change proposed and requiring individual permitting actions
in response to each request by the permittee for a change in the permit.

Our pilot experience confirmed the significant value of presenting a
comprehensive picture of a source(s operations over the term of the
title V permit.  Specifically, we found that with proposed flexible
permits involving changes under a PAL or other emissions cap, permitting
authorities were better able to understand the scope of planned changes
at the source and the maximum, cumulative environmental effects of those
changes.  In addition, the flexible permit applications provided
increased information to permitting authorities and the public in areas
such as plantwide emissions performance and P2 activities, as compared
to information typically available under conventional permit approaches.
 Likewise, permitting authorities indicated that on balance, flexible
air permits enhanced the availability of information to the public
during permit implementation.

Moreover, through the pilots, we found that early public outreach and
involvement can be very useful in situations where new permitting
techniques have not previously been used in a particular jurisdiction. 
We encourage permitting authorities to consider early outreach and
public involvement when implementing such permitting techniques until
the techniques become more widely used and public familiarity with them
increases, recognizing that other factors (e.g., permit complexity)
should factor into the permitting authority(s consideration of
supplemental public outreach efforts.

Our evaluation of the six pilot permits also revealed the importance of
reporting related to plantwide applicability limits.  The type of
reporting required in several of the flexible permits is now codified in
the PAL provisions of the December 2002 NSR Improvement rule.    

Economic Benefits Achieved Using Flexible Permits

Participating companies in the pilot program reported that a flexible
air permit significantly reduces the uncertainty and transaction costs
associated with the title V permitting process because the source
obtains approval of the changes it reasonably anticipates implementing
during the 5-year term of the permit at one time.  Based on our
evaluation of the six pilot permits, we found that the increased
certainty and reduced transaction costs improved participating
companies( ability to compete effectively in the market and enabled them
to retain, and in some cases, create jobs.  For example, one company
reported that its pilot permit allowed it to remain highly responsive to
the marketplace and thereby avoid either lost sales and/or permanent
loss of market share.  An automotive company indicated that its flexible
permit was a principal factor in the plant(s selection to manufacture an
engine model to be used in the company(s global vehicle assembly
operations, leading to the creation of 700 jobs.  The permit helped the
plant secure the engine contract because it enabled the plant to reduce
the project time line for production of the new engine to 24 months and
to accommodate future changes with minimal delay.

Several companies also indicated that obtaining authorization of
reasonably anticipated changes improved the predictability of change
implementation time frames for project planning and avoided what can be
substantial opportunity costs.  For example, one company reported that
its flexible permit likely saved hundreds of business days associated
with making operation and process changes to ramp up production for new
products, respond to market demands, and optimize production processes. 
Industry estimates of the opportunity costs of production downtime and
time delays run as high as millions of dollars in just a few days due to
lost sales and other factors.

Notwithstanding that the implementation of flexible air permits often
was associated with more production-related jobs, pilot companies also
reported that flexible air permits significantly reduced permit-related
staff time and related resource costs because there was no longer a need
to seek and process multiple case-by-case permit actions because the
changes reasonably anticipated at the facility were already included and
approved in the permit.  For example, an automotive company estimated
that it saved approximately 505 hours of staff time during its initial
flexible permit term.  Another pilot company reported permit-related
staff time savings of 1,200 to 1,600 hours per year during its initial
title V permit term.  In both cases, companies reported that the time
savings enabled environmental personnel to focus more time and attention
to other environmental management activities, including P2.  Companies
further indicated that the time necessary to record changes in operating
scenarios in the on-site log, as required by 40 CFR 70.6(a)(9), was
significantly less than the permit-related staff time necessary to
prepare permit applications under a general change-by-change permitting
approach.

Administrative Benefits Achieved Using Flexible Permits

Our pilots evaluation found that the flexible permits resulted in a net
cost savings both for the source, as noted above, and for the permitting
authority.  We specifically found that the resources permitting
authorities expended on processing permitting applications under title V
and the NSR programs were reduced under the pilot program, since the
operational flexibility provisions, like 40 CFR 70.6(a)(9), eliminated
the need to submit a permit application for each operational change. 
For example, one permitting authority estimated that each facility
change made pursuant to a flexible permit saved the permitting authority
approximately 20 to 40 hours in staff time that otherwise would have
been incurred had the facility, instead of obtaining the advance
approvals and AOS, sought title V permit modification on a
change-by-change basis.  In fact, permitting authorities reported that
the administrative cost savings during implementation of the pilot
flexible permits indicate that increased use of flexible permitting will
enable them to reduce permitting backlogs and to focus resources on
other higher priority environmental needs.  

These cost savings must be put in context of a higher front-end cost to
design an acceptable permit approach to pilot (a cost that should
decrease as more experience with flexible permits occurs in tandem with
a better defined policy).  The two participating permitting authorities
that attempted to quantify this effect believed that, even with the
higher front-end design costs associated with their pilot, the initial
experience suggested there would be a net reduction in the overall
administrative costs associated with these permits after 2-3 years of
implementation.  We believe that the administrative benefits achieved
for the evaluated pilot permits are broadly indicative of the benefits
generally available from flexible air permits.  In fact, as flexible air
permitting becomes more mainstream, we expect the front-end costs to
design such permits to be reduced, resulting in faster recouping of
these expenses and greater benefits over time.

What were the conclusions of the sources, permitting authorities, and
EPA about flexible permits? 

The sources that obtained a flexible air permit maintain that such a
permit is a valuable business asset.  These sources regularly relied
upon the operational flexibility provided in the permit to take
advantage of opportunities in the market place.  These sources also
indicated that the following circumstances heightened the need for and
benefits achieved using a flexible air permit:

Short time frames for bringing new products to market (time-to-market
needs).

Need to accommodate rapid shifts of product lines, processes, and
production levels to enable optimal asset utilization in a company(s
network of facilities.

Active advanced manufacturing programs (e.g., lean manufacturing, Six
Sigma, agile manufacturing) that require rapid and iterative changes to
operations and equipment.

Anticipated renovation or expansion projects.

Active P2 programs with continual process improvements.

The permitting authorities in the pilot program concluded that the
permits provided significant environmental performance and
administrative benefits.  They also expressed support of flexible
permitting techniques as a permitting option.  The permitting
authorities believed that flexible permits are particularly effective
when applied to sources with demonstrated operational change needs and
the operational and technical capacity to meet all relevant requirements
associated with advance approvals, AOSs, PALs, and other operational
flexibility provisions.

In general, based on our pilot experience, we believe that sources with
certain characteristics are the ones that can both meet the requirements
of operational flexibility provisions and benefit from them.  These
characteristics include: a strong compliance history, maintenance of a
well-documented and effective environmental management system,
commitment to continuous environmental improvement, attentiveness to P2,
ability to track and manage operational changes and emissions, and the
existence of good community relations.  The types of sources that
exhibit these characteristics typically include, for example, the
members of EPA(s National Environmental Performance Track Program (see
http://www.epa.gov/performancetrack/) and similar State environmental
leadership programs.  Our Performance Track program illustrates our
ongoing commitment to reward and recognize exemplary environmental
performance. 

We currently intend to allocate our implementation resources for the
final rule on a priority basis to assist Performance Track facilities
that wish to obtain flexible air permits.  More specifically, we intend
to deploy resources and tools designed to assist Performance Track
facilities in their efforts to capture the opportunities provided
through flexible air permits.  Our efforts to facilitate the
implementation of flexible permits could include, for example, education
and outreach components that would allow Performance Track members to
assess the costs and benefits of a flexible permit.  We also intend to
provide EPA technical resources and expertise through identified points
of contact to facilitate the resolution of technical and other issues
(should any arise) associated with implementing a flexible air permit at
a Performance Track facility.  We encourage State permitting authorities
to consider a similar prioritization of resources when issuing flexible
air permits to sources that are similarly situated to Performance Track
companies.

What are EPA’s recommendations for public participation in flexible
permitting?

	Based on our experience with pilot permits, we believe that flexible
permits provide at least as much environmental protection as
conventional permits and promote superior environmental performance. 
Nevertheless, we also recognize that flexible permits will contain
features, such as AOSs, ARMs, advance approval of minor NSR, or Green
Groups, that may not be familiar to the reviewing public.  For this
reason, we recommend that permitting authorities consider using their
discretion to enhance the public participation process when warranted
for a particular flexible permit.  Some ideas for doing so are described
below.

During the permitting process, permitting authorities could consider
making the permit application available to the public soon after
receipt.  We found for these pilot permits that early outreach to the
community, rather than waiting until the draft permit was prepared, was
an effective public participation strategy.  

The minimum public comment period required for a title V permit renewal
or significant permit modification is 30 days.  Where a significant
amount of a permit’s content consists of terms to incorporate
operational flexibility, we suggest that you consider expanding the
comment period to 45 days or more.  Note, however, that for some of our
pilot permits, early outreach to the public was sufficient to resolve
community questions and comments early in the process, so that by the
time of the public hearing and comment period no adverse comments were
received.

Finally, in order to ensure adequate technical support and accessibility
for the public in their efforts to understand and comment upon flexible
air permits, we suggest that States provide a principal point of contact
for responding to technical questions and ensure the availability of
draft permits, applications, and technical support documents on an
Internet web site.  We believe that any additional costs here will be
offset by the subsequent administrative cost savings to the permitting
authority resulting from the reduced need to process permit revisions
for sources with flexible permits.  

What are the key elements of this proposal? 

This section summarizes the key elements of this proposal.  A more
detailed discussion of these elements as well as other proposed
regulatory changes are provided below in sections VI and VII.  

What are the key elements of proposed revisions to parts 70 and 71?

There are several key regulatory revisions that we are proposing to
parts 70 and 71.  First, we are proposing to modify 40 CFR 70.6(a)(9)
generally to refer to (alternative operating scenarios,( as opposed to
(operating scenarios.(  In addition, we are proposing to define the term
(alternative operating scenario (AOS)” and codify certain requirements
described in this proposal for AOSs.  Specifically, we propose to define
(alternative operating scenario (AOS)” as a scenario authorized in a
part 70 permit that involves a physical or operational change at the
part 70 source for a particular emissions unit, and that subjects the
unit to one or more applicable requirements that differ from those
applicable to the emissions unit prior to implementation of the change
or renders inapplicable one or more requirements previously applicable
to the emissions unit prior to implementation of the change.

This document also discusses our proposal for (approved replicable
methodologies( (ARMs) and the way in which they may be approved into the
title V permit by the permitting authority.  We are proposing to define
an ARM as part 70 permit terms that: (1) specify a protocol which is
consistent with and implements an applicable requirement, or requirement
of part 70, such that the protocol is based on sound
scientific/mathematical principles and provides reproducible results
using the same inputs; and (2) require the results of that protocol to
be used for assuring compliance with such applicable requirement or
requirement of part 70, including where an ARM is used for determining
applicability of a specific requirement to a particular change.  An ARM,
however, cannot modify an applicable requirement in any way.  As
explained further below, an ARM can be particularly useful in
facilitating the implementation of advance approvals and AOSs, but can
also be used independent of them.

Also in this document, we are proposing that a source include in its
semi-annual monitoring reports under 40 CFR 70.6(a)(3)(iii) information
relating to any AOS and/or ARM implemented during the reporting period. 
This information should help permitting authorities remain informed as
to which AOSs and ARMs in the title V permit are being implemented at
the site and at which time.

We are not proposing revisions to any applicable requirement (other than
revisions to parts 51 and 52 providing for Green Groups – see section
VII below) in order to facilitate advance approvals.  As mentioned
above, our pilot experience confirms that obtaining advance approval
under minor NSR is often a critical element in the design of a flexible
air permit.  This experience also suggests that many State minor NSR
programs may already provide the legal authority necessary to issue
minor NSR permits that accommodate various types of operational
flexibility which can be readily incorporated into title V permits.  We
are therefore not proposing any revisions to the minor NSR regulations. 
Nonetheless, we encourage States to implement advance approvals under
their existing minor NSR programs as appropriate and to seek additional
authority where they do not currently have such discretion.  Based on
our pilot experience, we also believe that the ability to advance
approve a particular change with respect to other applicable
requirements requiring a specific authorization can often be determined
without further regulatory changes.  

Similarly, we are not proposing to revise part 70 to address how advance
approvals might be accomplished.  We believe that part 70 already
requires incorporation of the terms in a permit issued to advance
approve changes under certain applicable requirements.  For example,
permit terms contained in a State’s minor NSR permit are themselves
applicable requirements and, as such, are to be included in the title V
permit for the relevant source.  Frequently, however, the permitting
authority may need to augment the terms of NSR permits authorizing the
advance approval of certain changes in order that these changes can be
made without further review or approval.  These terms would be added as
necessary to assure compliance with other applicable requirements also
implicated by the advance approved changes which were unaddressed in the
specific authorizations obtained for them.  As would be the case for any
other applicable requirement, the part 70 permit must meet the
requirements of part 70 (e.g., monitoring, reporting, and compliance
certification) with respect to advance approvals.  When the title V
permit terms relating to advance approvals are effective, then the
changes which were advance approved would occur under protection of the
permit shield (where available and granted by the permitting authority).

What are the key elements of proposed revisions to parts 51 and 52? 

With this document, we propose adding a definition of (Green Group.(  We
also propose to add monitoring, recordkeeping, reporting, and testing
safeguards applicable to Green Groups to enhance the availability of
information and ensure that these groups function as intended.

A Green Group consists of designated emissions activities that are
ducted to one common air pollution control device that is determined to
meet BACT or LAER, as applicable, for the entire group of emissions
activities taken as a whole.  A Green Group is, by definition, a single
emissions unit for purposes of major NSR.  In addition to designated
existing emissions activities, a Green Group may include changes (e.g.,
reconfiguration and/or expansion) to these existing activities and/or
the addition of new emissions activities ducted to the control device,
either of which could result in an increase in capacity and a
significant increase in actual emissions.  To establish a Green Group,
the source must go through the major NSR permitting process and obtain a
permit.  To protect the NAAQS, PSD increments, and Class I areas, the
proposed rules require an annual emissions limit and any necessary
short-term limits for the Green Group, as well as comprehensive
monitoring, reporting, recordkeeping, and testing under NSR for Green
Groups to assure compliance with the limit(s).  

What changes are we proposing to parts 70 and 71? 

We are proposing revisions to parts 70 and 71 to build upon the existing
framework in 40 CFR 70.6(a)(9), which authorizes AOSs.  As discussed
below in section VI.A, we are proposing to add a definition for AOS and
to provide for the use of consistent terminology for AOSs.  In section
VI.B, we describe the information that the source must provide in a
title V permit application under 40 CFR 70.5(c) when seeking approval of
an AOS, and in section VI.C we discuss the terms that must be included
in a title V permit for an AOS and for an ARM.  Section VI.D presents
two examples of flexible permits using AOSs.  In section VI.E, we
address additional issues related to AOSs, and in section VI.F we detail
the minor differences between the proposed revisions for part 70 and
part 71.  

What is our proposed definition of an AOS, and how does it provide a
source operational flexibility? 

As mentioned previously, the concept of an AOS is not a new one.  Under
existing 40 CFR 70.6(a)(9), a source may request in its permit
application that the permitting authority approve reasonably anticipated
operating scenarios.  If the permitting authority determines that the
proposed operating scenarios are consistent with the requirements of
part 70 and approves them, it would include those scenarios in the
source(s part 70 permit, and the source may implement them without
further review or approval.  Fundamentally, the permitting authority
must ensure that the proposed operating scenarios are adequately
described such that all applicable requirements associated with each
scenario are identified and appropriate terms and conditions to assure
compliance with these requirements are included in the permit.  In
addition, the permitting authority must ensure that the source obtained
all specific authorizations required under any applicable requirements
(primarily those under minor NSR).  The provisions of 40 CFR 70.6(a)(9)
were promulgated consistent with section 502(b)(6) of the Act, which
mandates the streamlining of the application and permitting processes.  
 

There may be situations where a permitting authority does not approve an
AOS which has been proposed by a source for a particular emissions unit.
 For example, a permitting authority may reject an AOS proposed by a
source if it determines that the source(s description of the scenario is
insufficient to identify all applicable requirements or craft
appropriate terms and conditions to ensure compliance with applicable
requirements, or if required authorizations under applicable
requirements triggered by the AOS have not been obtained.  

To clarify our intent regarding AOSs, we propose the following
definition at 40 CFR 70.2:

Alternative operating scenario (AOS) means a scenario authorized in a
part 70 permit that involves a physical or operational change at the
part 70 source for a particular emissions unit, and that subjects the
unit to one or more applicable requirements that differ from those
applicable to the emissions unit prior to implementation of the change
or renders inapplicable one or more requirements previously applicable
to the emissions unit prior to implementation of the change.

Thus, the change at the part 70 source must be physical or operational
in nature and must either subject a particular emissions unit to at
least one new applicable requirement or eliminate at least one
requirement that applied to the unit prior to the change.  In addition,
the change, in order to be eligible for an AOS, must be allowable under
all applicable requirements.  For example, a change allowed under an
applicable MACT standard but also subject to minor NSR would not be
eligible for inclusion in an AOS until the source obtains the necessary
preconstruction approval.  We are proposing this definition not to
change the current requirements for AOSs but rather to foster a common
and consistent understanding of the types of situations that AOSs can
address.  	

The types of physical or operational changes which could trigger an AOS
can vary widely.  Such changes potentially encompass a wide spectrum of
activities undertaken by a source which cause one or more applicable
requirements to apply (or to no longer apply) to the emissions unit
undergoing the change.  Nonetheless, these changes must be consistent
with any limitations contained in applicable requirements that are
triggered.  Thus, anticipated physical and operational changes must be
described adequately to identify the applicable requirements.  

In some cases, physical or operational changes may be exempt from
certain applicable requirements but not from others.  For example, the
New Source Performance Standards (NSPS) and major NSR regulations
specifically exempt from their purview certain types of changes, such as
those that do not reach the threshold for a “modification.”  These
same changes, however, could still implicate other applicable
requirements.  For example, a switch to another fuel which a unit is
already capable of accommodating could trigger a SIP requirement or a
Maximum Achievable Control Technology (MACT) standard, while being
exempt from NSPS and major NSR.  Such SIP and MACT requirements must,
therefore, be identified as applicable requirements in an application
for an AOS governing the fuel switch.  

Under this proposal, activities that do not involve a physical or
operational change to the regulated equipment do not constitute an AOS,
even when such change is made to switch between compliance options
provided for in an applicable requirement.  For example, suppose a
source chooses to switch between the compliance options allowed under an
applicable requirement (e.g., a MACT standard or NSPS).  Under the
Printing and Publishing Industry MACT standard (40 CFR part 63, subpart
KK), a product and packaging rotogravure affected source that uses
compliant inks and coatings (i.e., inks and coatings with low HAP
content) may demonstrate compliance for each month by any one of six
compliance options set out in the  standard.  Each of the compliance
options involves slightly different applicable requirements in that
different characteristics of the inks and coatings must be tracked and
different calculations must be carried out monthly to demonstrate
compliance.  

We propose that a source may switch between such compliance options
without including AOSs for each compliance option in the its permit. 
Rather, the compliance options may simply be included in the permit as
alternative requirements of the applicable standard.  We acknowledge,
however, that this approach may raise issues regarding whether an
operational change at the source has triggered the change in the
compliance option.  For example, subpart KK also provides for compliance
options that use an add-on control device rather than compliant inks and
coatings.  If a source alternates between compliant materials (using one
of the six associated compliance options) and noncompliant materials
(complying through use of a thermal oxidizer), should this be
characterized primarily as a shift for compliance purposes that does not
require an AOS in the permit, or as an operational change requiring an
AOS?  What if the source alternates among the compliance options for
compliant inks and coatings based on the characteristics of the
materials that it uses in each month?  We request comment on the issue
of whether a switch from one compliance option to another is better
characterized as allowable under an applicable requirement or as a
physical or operational change that triggers a different applicable
requirement and therefore requires an AOS.  Regardless of the approach
ultimately adopted, we strongly recommend that permitting authorities
and sources work together to include in the permit those compliance
options allowed under the applicable requirement that a source may
reasonably anticipate using during the term of the permit.  Whether
incorporated as AOSs or simply as compliance alternatives, we believe
that a title V permit can be fashioned to allow a source to switch
between compliance options without needing a permit revision to do so.

The second criterion for a shift in operating scenario under this
proposed definition is that the triggering change must cause: (1) at
least one applicable requirement to apply which was not in effect before
the change; and/or (2) at least one applicable requirement to no longer
apply as a result of the change.  (Applicable requirement( as defined in
40 CFR 70.2 includes all the separate emissions reduction, monitoring,
recordkeeping, and reporting requirements of a particular standard or
SIP regulation and all the terms and conditions of preconstruction
permits issued pursuant to regulations approved or promulgated through
rulemaking under title I of the Act.  

As such, AOSs can be quite effective where existing units at sources
simply make physical or operational changes that do not require any
advance approval, but they nonetheless implicate one or more different
applicable requirements.  This may occur, for example, where an existing
boiler is permitted to combust different fuels, which implicate
different sets of applicable requirements.  We elaborate on this
situation below in section VI.D, Example 1.  Example 2 in that section
presents a situation where AOSs are used in conjunction with advance
approvals.

Under the second criterion above, AOSs are often separate and distinct
from advance approvals.  For example, we propose that the addition of a
new emissions unit pursuant to an advance approval does not require an
AOS, unless the particular unit, once operational, requires the
flexibility to make subsequent physical or operational changes that will
cause applicable requirements to apply that are different from those
applicable to the authorized baseline scenario for the new unit upon
operation.  We believe that construction and operation of a new unit
authorized in an advance approval does not represent a shift in
operating scenario for the unit, but rather represents beginning its
initial or baseline operation.  However, we solicit comment on whether
such new unit additions should instead be characterized as AOSs.

Similarly, incorporation in a part 70 permit of an advance approval
contained in an authorizing NSR permit for a physical or operational
change to an existing emissions unit frequently would not require an
accompanying AOS, where the terms of the NSR permit containing the
advance approval are effective for the unit upon issuance of the part 70
permit.  For example, suppose a source, in the process of renewing its
part 70 permit, obtains a minor NSR permit that advance approves a
change to an existing emissions unit, and the NSR permit includes new
requirements (such as an increased level of control and associated MRRT)
that do not currently apply to the unit in its baseline operations.  If
the source agrees to include the new NSR requirements in its part 70
permit effective upon issuance and, notably, prior to making the
authorized change, no AOS is needed to supplement the advance approval. 
This is because no applicable requirements will begin to apply, or cease
to apply, when the authorized change is subsequently implemented.  One
or more AOSs, however, would be needed in the permit if the source
wishes to build in the flexibility to make subsequent physical or
operational changes at the emissions unit that would trigger new
applicable requirements or cause existing requirements to no longer
apply.

In contrast, the proposed definition of AOS does include scenarios where
the new applicable requirements implicated by advance approved changes
at existing units are not effective until the source actually makes the
change.  For example, an advance approval might authorize modifications
to an existing process line under minor NSR, provided that the source
meets an NSPS applicable to the line upon its modification. 
Alternatively, we also propose that this situation could be
characterized as an authorized advance approval that does not require
incorporation of an AOS into the part 70 permit.  That is, no AOS would
be required where implementation of an authorized change irreversibly
triggers the new applicable requirement(s), such that the emissions unit
cannot return to its baseline status in the future.  As such, this
scenario is the creation of a new baseline scenario, analogous to the
addition of a new emissions unit.  We solicit comment on this issue and
the two approaches we have proposed.  We also solicit comment in general
on our proposal to distinguish from AOSs all advance approvals,
including those involving the addition of new units.

An advance approval that is incorporated into a part 70 permit remains
subject to all the conditions of the underlying authorization.  For
example, if an underlying minor NSR permit is contingent upon the source
commencing construction of the authorized change(s) within a certain
period, the authorization in the part 70 permit also will lapse if the
source fails to meet the required deadline.  The source is responsible
for obtaining any extensions or additional authorizations as necessary
to keep the advance approval in the part 70 permit in effect.

In addition to proposing a definition of AOS, we are also clarifying the
regulations, because the regulations use inconsistent terminology when
referring to AOSs.  See e.g., 40 CFR 70.4(d)(3)(xi) (referring to
(alternate scenarios().  For consistency purposes, we propose to use the
term (alternative operating scenarios( (or AOSs) throughout the
regulations when referring to an alternative operating scenario under 40
CFR 70.6(a)(9).  See proposed 40 CFR 70.4(d)(3)(xi) and 40 CFR
70.5(c)(2) and (7).  Note also that any specific “AOS” listed in a
permit refers to a specific operating scenario which differs importantly
from the previous scenario (also contained in the permit) in that one or
more different applicable requirements are implicated by the shift in
operating scenarios.  The scenario that reflects the current operations
and applicable requirements of the source at the time of permit issuance
is called the “baseline scenario.”  The baseline scenario
conceivably could become an AOS in the future as the source might change
initially from the baseline scenario to an AOS and back again to the
original baseline scenario, which would then qualify as an AOS.

A key objective for a source requesting an AOS is to identify and
describe in the title V permit application those changes that are
reasonably anticipated to occur for each emissions unit during the term
of the title V permit.  This proposal clarifies that AOSs can be used to
provide operational flexibility for a variety of situations, including
those ranging from a single specific anticipated alternative scenario to
multiple, somewhat less specific (but still nonetheless bounded)
scenarios.  In all situations, however, the source must describe the
proposed changes and resultant AOSs in its title V permit application
with enough specificity for the permitting authority to identify all
applicable requirements implicated by the AOS and to assure compliance
with those applicable requirements and with the requirements of part 70.

If the permitting authority approves the proposed AOSs for a particular
emissions unit, it will include in the title V permit a description of
the anticipated changes associated with each approved AOS, and for each
AOS will include associated applicable requirements and terms and
conditions that assure compliance with each identified applicable
requirement, as well as terms and conditions that assure compliance with
the related part 70 requirements relevant to the AOSs.  

Alternative operating scenarios may vary in their complexity.  At one
extreme is a simple situation where a source seeks approval for
operating scenarios that involve a very specific type and number of
changes to the defined baseline operations of the relevant emissions
unit(s) (i.e., the changes can be described exactly).  An example of
this situation is the combustion of various fuels in a boiler capable of
burning different fuels (where combustion of each type of fuel is
subject to different SIP requirements).  See Example 1 discussed below.

A more complex situation involves sources seeking approval for AOSs
encompassing a wider spectrum of reasonably anticipated changes. 
Sources here may not be able to determine precisely in advance (i.e., at
the time of permitting) which of the changes and implicated AOSs will be
implemented for the relevant emissions unit(s).  Depending on future
market behavior, the source eventually may implement all or only some of
these changes.  In all situations, however, the contemplated changes
must be described in the permit application in sufficient detail for the
relevant units such that the permitting authority can determine whether
all applicable requirements have been identified and can craft
appropriate terms and conditions to assure compliance with such 
requirements.  Where differing applicable requirements would apply to a
particular emissions unit, depending upon the nature and extent of the
change made, the permit should contain alternative terms and conditions
as needed to assure compliance with all applicable requirements under
each AOS which is reasonably anticipated to occur.

The type of detail needed to describe an AOS and the changes anticipated
to occur under it can vary.  Certainly the need for greater detail is
dependent upon what is required to determine the applicable requirements
implicated by the anticipated changes.  In many cases, the number of
applicable requirements for anticipated changes can be reduced, without
loss of flexibility, through strategic use of boundary conditions on the
AOS.  Boundary conditions help to define the relevant applicable
requirements implicated by authorized physical or operational changes,
which, in turn, enables the permitting authority to assure that all
applicable requirements and requirements of part 70 are contained in the
permit. 

Boundary conditions were primarily used in pilots to restrict the scope
of advance approvals.  These conditions typically involved restrictions
that prevented certain applicable requirements from applying to
otherwise authorized changes (e.g., PALs and PTE caps).  In some cases
operational restrictions (such as those on the type or amount of
materials combusted, processed, or stored) were used to delineate the
scope of the advance approvals and/or to identify which applicable
requirements apply under them.  For example, a source might propose to
change the coatings it uses and agree to use only coatings that do not
contain hazardous air pollutants (HAP).  In so doing, the source would
avoid the applicability of a MACT standard applying to coating
operations that are major sources of HAP.  Similarly, limitations can be
placed on the type and/or size of equipment authorized in an advanced
approval or an AOS.  A source owner also may avoid the applicability of
a certain requirement by accepting an emissions limit in the title V
permit that restricts the PTE of the source to below the threshold at
which that requirement would apply.

The approaches approved to assure compliance with applicable
requirements can also affect the implementation of anticipated AOSs and,
therefore, indirectly affect the changes approved under them.  That is,
authorized changes must not adversely impact the effectiveness of the
control devices or monitoring approaches required by an AOS approved in
the permit.  For example, changes involving substances which are not
effectively controlled by the control device required in the permit
could not be approved.  This would also be true for physical or
operational changes which would render inaccurate the monitoring
procedures approved in the permit for assuring compliance with an
applicable requirement (e.g., PTE limit).

Compliance assurance terms for advance approvals can be greatly
simplified where the applicable requirements can be streamlined (i.e.,
the compliance terms are based on the most stringent requirement
applicable to the proposed changes and are effective upon permit
issuance).  In guidance generally referred to as (White Paper Number 2,(
we interpreted our part 70 rules to allow sources to streamline multiple
applicable requirements that apply to the same emissions unit(s) into a
single set of requirements that assure compliance with all the subsumed
applicable requirements.  If all the applicable requirements that apply
to a set of changes are streamlined in the permit and the permitting
authority approves the proposed streamlining, the source need only
comply with the streamlined requirement.  This benefits the source by
simplifying compliance requirements contained in the permit.  In
addition, streamlining can benefit the environment.  For example, where
differing emissions limits apply to a group of emissions units ducted to
a common control device, the streamlined limit for the group would be
the most stringent of the applicable emissions limits, and the source
would have to comply with that limit at all times.		

It should be noted that changing between AOSs cannot be used as a
defense to circumvent applicable requirements nor to avoid an
enforcement action.  In particular, it is not a defense to enforcement
of any AOS requirements or associated permit terms and conditions that
the source could have complied under a different AOS.  For example, a
source cannot switch to a different AOS for which it is in compliance to
avoid or defend against the enforcement consequences of noncompliance
with a previous operating scenario.

What information is necessary in a title V permit application to seek
approval of an AOS? 

Because the application forms the basis for the content of the title V
permit, the discussion below is relevant to the content of a permit that
authorizes AOSs.  This section clarifies the requirements for a complete
application and discusses minor proposed revisions to these
requirements.  

The provisions of 40 CFR 70.5(c) contain the information that must be
submitted in a complete title V permit application, including
information concerning proposed AOSs.  We are proposing minor revisions
to 40 CFR 70.5(c) to clarify how certain aspects of the requirements in
that section should be addressed when a source applies for approval of
AOSs.

Under the provisions of 40 CFR 70.5(c), the source generally must
describe the emissions of all regulated air pollutants (as defined at 40
CFR 70.2) from any emissions unit, identify all applicable requirements
that apply to each emissions unit, and describe how it will meet these
applicable requirements.  The source must provide this information for
existing operations (i.e., baseline operations) and for any reasonably
anticipated changes for which an AOS is proposed.  The description of
AOSs in title V permit applications may vary depending on the situation
(as previously discussed).  However, in every case the level of detail
in the description must be sufficient for the permitting authority to
write permit terms and conditions that assure compliance with all
applicable requirements and the requirements of part 70 that will apply
to the proposed AOS.  See 40 CFR 70.5(c)(3)-(7); 40 CFR 70.6(a)(9)(iii).
 If the source adequately describes proposed AOSs in the part 70 permit
application and the permitting authority includes them in the permit
consistent with 40 CFR 70.6, the source may subsequently implement the
physical and operational changes under protection of the permit shield
(where available and granted by the permitting authority) without
triggering the permit modification provisions of 40 CFR 70.7.

Similarly, the source must meet the provisions of 40 CFR 70.5(c)
concerning advance approvals which are to be incorporated into the title
V permit.  Where a change is authorized in an NSR permit and the permit
contains terms which would be effective upon issuance of the title V
permit and would assure compliance with all applicable requirements,
then a straightforward incorporation of the terms of the NSR permit into
the title V permit is all that is necessary.  However, where the NSR
advance approval terms would be effective upon title V permit issuance
but would not address some other requirement(s) that will apply to the
NSR-authorized changes (e.g., a MACT standard), then additional
information about the changes relative to these other requirements must
be provided to the permitting authority in the part 70 application.  The
permitting authority would then develop permit terms sufficient to
assure compliance with all requirements applicable to the NSR-approved
changes as part of the title V permit issuance, modification, or renewal
process.  Use of a streamlined limit is one acceptable approach when
requested by the source.

We are proposing to revise 40 CFR 70.5(c)(2) and (7) to use the term
(AOS( in the interest of consistent terminology.  Existing 40 CFR
70.5(c)(2) uses the term (alternate scenario,( while existing 40 CFR
70.5(c)(7) uses (alternative operating scenario.(  We believe that
revising these paragraphs to use consistent terminology, along with
proposing a definition for (AOS( and conforming changes in other
sections, will improve the clarity of the affected paragraphs and reduce
any confusion.

We are also proposing to revise 40 CFR 70.5(c)(3)(iii), (c)(7), and
(c)(8) to clarify our intent regarding the information that must be
included in an application that proposes AOSs for approval by the
permitting authority.  The proposed revisions to each of these sections
are described below, along with the rationale for proposing them.

The introductory text in 40 CFR 70.5(c) states generally that the
application must include information for each emissions unit.  Existing
40 CFR 70.5(c)(3)(iii) further requires that the application provide the
emissions rate in tpy and in such terms as are necessary to establish
compliance consistent with the applicable reference test method.  We are
proposing to clarify this regulatory requirement as it applies to
sources that employ an emissions cap (e.g., PALs, PTE, Green Groups). 
In particular, we are proposing that for the operation of any emissions
unit authorized under an annual emissions cap, a source can meet 40 CFR
70.5(c)(3)(iii) by reporting the aggregate emissions associated with the
cap.  For example, a source may take a plantwide cap on its PTE so that
it will not become a major source for purposes of PSD, thereby assuring
that PSD will not apply to any changes made at the source.  For purposes
of the title V permit application and this emissions cap, the source
need not provide individual tpy figures for any new or modified
emissions units authorized under minor NSR.  Rather, emissions from such
units would be reported in the title V permit application as part of the
aggregate emissions under the PTE cap.  Additional information may,
however, be required to describe the scope of any changes authorized in
minor NSR to occur under any emissions cap or to provide additional
information relevant to other requirements applicable to these changes.

Under the proposed approach, an emissions cap can act as a constraint on
annual emissions from each emissions unit under the cap as well as on
the aggregated emissions from the group of units.  That is, in the
extreme, a unit could emit up to the full amount of the cap if all other
units under the cap had zero emissions.  Thus, for a group of emissions
units under an annual emissions cap, the 40 CFR 70.5(c)(3)(iii)
requirement for unit-by-unit tpy figures can be met by reporting in the
permit application that the emissions cap represents the upper limit on
emissions both from each unit in the group and from the entire group. 
This proposed revision to 40 CFR 70.5(c)(3)(iii) simply clarifies that
in this particular situation, more specificity is not needed.  Reporting
emissions data in the above proposed manner in the title V permit
application is permissible (including in the case of a plantwide
emissions cap), except where the permitting authority determines that
more specific tpy information is needed (e.g., where an applicable
requirement for a specific emissions unit depends on the emissions type
or level).

We are proposing to revise 40 CFR 70.5(c)(7) in two ways.  The existing
language in 40 CFR 70.5(c)(7) specifies that the application must
include (additional information as determined to be necessary by the
permitting authority to define alternative operating scenarios
identified by the source pursuant to 40 CFR 70.6(a)(9) of this part or
to define permit terms and conditions implementing 40 CFR 70.4(b)(12) or
40 CFR 70.6(a)(10) of this part.(  First, we propose to modify the
existing language to clarify that the permitting authority can require
additional information from the source not only for adequately defining
the AOS, but also, as necessary, to craft permit terms and conditions
implementing the proposed AOSs under 40 CFR 70.6(a)(9).  We believe that
this proposed revision is implicit in the existing language of 40 CFR
70.5 (e.g.,       40 CFR 70.5(c)(5)), but that a clarification is
appropriate.

Second, we propose to revise 40 CFR 70.5(c)(7) to clarify that the
application must include documentation demonstrating that the source has
obtained all specific authorizations required under the applicable
requirements relevant to any proposed advance approvals or AOSs, or a
certification that the source has submitted a complete application for
obtaining such authorizations.  Based on our pilot experience, we expect
that proposed advance approvals and certain AOSs will involve one or
more of the following applicable requirements:  minor NSR, major NSR,
and section 112(g) of the Act.  These applicable requirements all
require permits or other authorizations prior to construction or
modification of a source.  (In some cases, the overall approach might be
to avoid triggering applicable requirements that require additional
authorizations, such as by adopting a PAL or accepting a PTE limit.) 

It is important to stress that an AOS merely incorporates authorizations
given under applicable requirements and does not independently authorize
changes that are subject to review and require specific approval.  For
this reason, we are proposing the above revision in the application
requirements, along with a related revision to the AOS provisions of 40
CFR 70.6(a)(9), stating that the permitting authority cannot approve an
AOS until all of the necessary authorizations required under the
relevant applicable requirements have been obtained.  It is possible to
process the title V permit and, where needed, a corresponding NSR permit
concurrently, but the title V permit approving an AOS cannot be issued
before any necessary preconstruction approval has been obtained. 

Some applications for AOSs and advance approvals may also contain
information needed to establish one or more (approved replicable
methodologies( (ARMs).  In section VI.C.2.b of this preamble, we discuss
ARMs and their incorporation into part 70 permits.  An ARM is an
objective protocol for determining values pertaining to compliance or
applicability requirements, such as temperature or emissions.  Approved
replicable methodologies are permit terms that are consistent with and
implement an applicable requirement or requirement of part 70.  A source
that wishes to have an ARM included in its permit must provide
sufficient information in its application to define the replicable
methodology, its intended function, the instructions for its use, and
the type of data required for its implementation.  See 40 CFR
70.5(c)(5)-(c)(7).  See section VI.C.2.b for more information on ARMs.

Finally, we are proposing to revise 40 CFR 70.5(c)(8), which requires
each part 70 permit application to include a compliance plan.  The
existing paragraph addresses applicable requirements with which the
source is in compliance, applicable requirements that will become
effective during the permit term (e.g., a newly promulgated emission
standard), and applicable requirements with which the source is not in
compliance at the time of permit issuance.  We are proposing to revise
this section in two places to clarify that such plans must address AOSs
when applications include them.  This proposal would add language to
clarify that, for applicable requirements associated with an AOS, the
compliance plan must contain a statement that the source will meet such
requirements upon implementation of the AOS or, if a requirement becomes
applicable after implementation of the AOS, in a timely manner.  We
believe that this revision appropriately fills a gap in the existing
language.  See proposed 40 CFR 70.5(c)(8)(ii)(D) and (iii)(D).

We solicit comment on whether the proposed rule revisions noted above
provide sufficient clarity as to how the application requirements of 40
CFR 70.5(c) are to be applied to sources that seek approval of AOSs
and/or incorporation of advance approvals.  We also seek comment on
whether the proposed revisions are necessary or if additional revisions
are needed to ensure that permit applications contain sufficient detail
to identify all applicable requirements associated with an AOS and/or
advance approval.  If you believe that additional regulatory revisions
are needed, please identify the proposed change and explain why it is
needed.

What terms and conditions must be included in the title V permit for
approved AOSs?

Existing 40 CFR 70.6 details the required content of a title V permit,
including the requirements for reasonably anticipated operating
scenarios.  In this section of the preamble, we discuss how the existing
permit content requirements of 40 CFR 70.6 apply to AOSs and how the
rule revisions we are proposing are consistent with this intent.

To standardize the terminology in 40 CFR 70.6, we are proposing to use
the term (alternative operating scenario( (or its acronym “AOS”)
throughout 40 CFR 70.6(a)(9) as we have done in the other sections of
the rule.  The proposed revisions to 40 CFR 70.6(a)(9) also clarify that
the title V permit must contain terms and conditions to describe the
AOSs, to assure compliance with the applicable requirements implicated
by the AOSs, and to assure compliance with the requirements of part 70. 
Finally, as explained below, we are proposing to modify 40 CFR
70.6(a)(1) to clarify that ARMs are one type of operational requirement
or limitation that assures compliance with applicable requirements. 
These items are discussed below.

As previously mentioned, no AOS is needed where the changes would occur
under an advance approval contained in an authorizing permit whose terms
are incorporated in the part 70 permit, as well as any other applicable
requirements which would apply to the advance approved changes, and
those terms are effective upon issuance of the part 70 permit.  For
example, our pilot experience suggests that no additional flexibility
provisions may be needed in a title V permit beyond the incorporation of
NSR permit terms establishing an advance approval under minor NSR and a
PAL or PTE limit that prevents the applicability of major NSR.  On the
other hand, AOSs can be particularly useful either where: (1) a new or
existing unit with frequently changing operations would be subject to
certain emissions standards in different ways depending on the type of
materials used, rate of production, and type and/or amount of product
produced; or (2) an existing unit would be subject to an applicable
requirement associated with an advance approved change only upon
implementation of the authorized change.	

Terms and Conditions to Describe Approved AOSs

If the permitting authority approves an AOS, the permit must include a
description of the baseline operating scenario for each included
emissions unit, the authorized physical or operational changes included
in each AOS, and the applicable requirements that apply under each
scenario (including those requirements newly applying or not applying as
a result of the authorized changes).  Expectations for AOS descriptions
in the permit are similar to those previously identified for AOS
descriptions in complete applications.  As mentioned previously, the
type of detail in such descriptions and the need for one or more
boundary conditions can vary depending on the nature of the change and
the applicable requirements implicated by the changes.  A permit with an
AOS for a particular emissions unit normally would include a description
of the unit operating in its baseline mode of operation.  For each
approved AOS, the physical and operational changes which have been
authorized should then be identified relative to this baseline
operation.  In all cases, the description of each AOS must be adequate
to link the triggered applicable requirements to the terms which assure
compliance with them. 

We are proposing revisions to 40 CFR 70.6(a)(9) to clarify what
constitutes an acceptable description for an AOS (see proposed revision
to 40 CFR 70.6(a)(9)(iii)).  We are also proposing a revision to 40 CFR
70.6(a)(9)(iii) to make clear that the permitting authority cannot
approve an AOS until all of the necessary authorizations relevant to the
applicable requirements have been obtained, that is, until the source
has been approved to proceed by the permitting authority where such
prior authorization is required (e.g., approvals under major and minor
NSR and section 112(g) of the Act).   Finally, as mentioned, where a
source is unable to predict, at the time of permit issuance, which of
several reasonably anticipated changes it actually will make, it can
seek approval for a range of changes and applicable requirement
combinations at a particular emissions unit by including multiple AOSs. 

Terms and Conditions to Assure Compliance with Applicable Requirements

In this section, we discuss our proposal related to permit content to
assure compliance with all applicable requirements. 

Proposed Clarifications to the AOS Provisions

The provisions of 40 CFR 70.6(a)(9)(iii) require that, for each AOS for
an emissions unit, the permit must contain terms and conditions to
assure compliance with all the applicable requirements that apply to the
emissions units operating in that AOS.  This means that the permit must
include, for each relevant emissions unit, the applicable emissions
limits, compliance approaches, and monitoring, recordkeeping, reporting,
and testing (MRRT) requirements as required by the applicable
requirements as well as those required otherwise under 40 CFR 70.6(a)(3)
(e.g., periodic monitoring) for the compliance approaches.  In addition,
the permit must incorporate all advance approvals, such as those
authorized under NSR, as well as the description of changes authorized
in each AOS as described above.  For a permit containing more than one
AOS for an emissions unit, the permit must contain a clear description
of each one so that there is no confusion with respect to which AOS is
implicated at any given time.

Proposed Revisions for ARMs

As stated, title V permits are required to assure compliance with all
applicable requirements.  Sometimes, changes occur at a source that may
cause the need to recalculate/update a value used either in determining
compliance of the source with an applicable requirement or in
determining the applicability of a requirement.  An advance approval or
an AOS can incorporate flexibility in a permit, but the scope of changes
that can be authorized in them can be severely limited with respect to a
particular applicable requirement, if the changes require case-by-case
review/approval procedures and possible permit revision in order to
ensure ongoing compliance with all applicable requirements.  To
facilitate implementation of advance approvals and AOSs, and to
encourage other permitting techniques that reduce in general the need
for permit modifications (in a manner consistent with part 70), we are
proposing  the use of an ARM that has been approved by a permitting
authority and incorporated into a title V permit.

In particular, we are proposing to define (approved replicable
methodology( or (ARM( at 40 CFR 70.2 as title V permit terms that: (1)
specify a protocol which is consistent with and implements an applicable
requirement or requirement of part 70, such that the protocol is based
on sound scientific/mathematical principles and provides reproducible
results using the same inputs; and (2) require the results of that
protocol to be used for assuring compliance with such applicable
requirement or requirement of part 70, including where an ARM is used
for determining applicability of a specific requirement to a particular
change.  Within the scope of this definition, an ARM may be used to
assure that a given requirement does not apply in a particular
situation.  

The terms of an ARM must specify when the ARM is to be used, the
applicable methodology (e.g., equation or algorithm) and the purpose for
which the output obtained upon the execution of the prescribed
methodology will be used (e.g., to determine compliance with an
applicable requirement or to modify the level of the parameters used to
determine compliance in the future).  All necessary terms and conditions
must be included in the permit at the time the ARM is approved so that
no permit revision will be required in the future to implement the ARM.

It is important to emphasize that an ARM, like any provision of a part
70 permit, cannot modify, supersede, or replace an applicable
requirement, including, but not limited to, any monitoring,
recordkeeping, or reporting required under applicable requirements. 
Instead, ARMs are a strategic approach for incorporating into a title V
permit relevant applicable requirements and the requirements of part 70.
 The ARM provides a method for obtaining and updating information
consistent with the intent of applicable requirement(s) or
requirement(s) of part 70 in such a manner so as to avoid the need to
reopen or revise the permit to incorporate the updated information.  As
such, an ARM must work within and be consistent with the applicable part
70 rules that govern permit revisions.

The protocol to obtain information under an ARM must be objective and
scientifically valid and reliable – such as an EPA test method or
monitoring method (usually specified in the applicable requirement
itself.)  Note that an ARM also includes the instructions governing how
the results of the protocol are to be used.  For example, an ARM could
specify that firebox temperature measurements taken during a performance
test of a thermal oxidizer be used to revise a previously imposed
minimum firebox operating temperature of the oxidizer.

We believe that ARMs are authorized under title V of the Act and its
implementing regulations.  Section 502 sets forth the minimum elements
for a State operating permit program.  Among other things, section 502
provides that that for a State operating permit programs to be approved,
the permitting authority must have adequate authority to (issue permits
and assure compliance by all sources required to have a permit . . .
with each applicable standard, regulation or requirement( under the Act.
 See CAA section 502(b)(5)(A).  Section 504(a) of the Act also requires
that each title V permit contain (enforceable limitations and standards
. . . and such other conditions as are necessary to assure compliance
with applicable requirements of this Act, including the requirements of
the applicable implementation plan.(  The Act further provides that any
State operating permit program must include (adequate, streamlined, and
reasonable procedures . . . for expeditious review of permit actions.( 
See CAA section 502(b)(6).

The part 70 regulations implement these requirements.  Section 70.4 sets
forth the required elements for a State operating permit program.  Such
State programs must provide for the issuance of permits that contain
appropriate terms and conditions that assure compliance with all
applicable requirements and the requirements of part 70.  See generally
40 CFR 70.4(3)(i)-(ii), (v).  The threshold requirement that a part 70
permit contain terms and conditions that assure compliance with
applicable requirements and the requirements of part 70 is also
reflected in other parts of the part 70 regulations.  See, e.g., 40 CFR
70.5(c)(4)-(5), 70.6(a)(1)(i), 70.6(a)(9)(iii).  For example, 40 CFR
70.6(a)(1) provides that the permit include (those operational
requirements and limitations that assure compliance with all applicable
requirements.(  Section 70.6(a)(1)(i) further provides that the permit
shall identify the origin and authority for each term and condition. 
See 57 FR 32275  ((Section 70.6(a)(1)(i) requires that the permit
reference the authority for each term and condition of the permit. 
Including in the permit legal citations to the provisions of the Act is
critical in defining the scope of any permit shield, since the permit
shield, if granted, extends to the provisions of the Act included in the
permit.().  An ARM, as proposed now, constitutes permit terms designed
to assure compliance with applicable requirements or the requirements of
part 70 and accordingly falls squarely within the authority of title V
and its implementing regulations.  

In our pilot experience, we found that some permitting authorities
already use part 70 permit terms (similar to ARMs) that assure
compliance with applicable requirements or the requirements of part 70,
are self-implementing, and avoid the need for the source to seek
multiple permit revisions.  Based on our experience in the pilot program
with such permitting techniques and in an effort to encourage efficient
permitting techniques, we propose to define an ARM in the manner
described above. 

Under the proposed ARM definition, an ARM may be used to implement an
applicable requirement.  As an example of one type of ARM, consider a
source subject to the MACT standard for Paper and Other Web Coating (40
CFR part 63, subpart JJJJ), which requires a 95 percent reduction in HAP
emissions for existing sources.  Like many emission standards, subject
JJJJ requires the source to assess ongoing compliance with the emissions
limit by monitoring an operating parameter of the air pollution control
device.  Where a source uses a thermal oxidizer to comply with the
emissions limit, the rule requires the source to conduct a performance
test to demonstrate initial compliance and to demonstrate ongoing
compliance by continuously monitoring the combustion temperature in the
combustion chamber of the oxidizer.  To establish the minimum combustion
temperature that will serve as the basis for future compliance
determinations, subpart JJJJ requires the source to monitor the
combustion temperature throughout the performance test, and to calculate
the average combustion temperature achieved by the oxidizer during the
test.  Provided that the performance test demonstrated compliance with
subpart JJJJ, the average combustion temperature determined during the
test is established as the minimum temperature limit for the oxidizer in
the permit.  This value may change with each successive performance test
that demonstrates compliance.

A source subject to subpart JJJJ proposes to use an ARM consistent with
this standard to accommodate anticipated changes in the operating
parameter limit resulting from future performance demonstrations without
requiring a permit revision.  The ARM would consist of the test methods
and procedures specified under subpart JJJJ for demonstrating compliance
and determining the minimum oxidizer temperature which indicates
compliance with the standard (as described in the paragraph above). 
Upon approval of the ARM into the permit, the source would no longer be
required to revise the permit each time it conducted a performance
demonstration to place the most recent temperature value indicative of
compliance on the face of the permit.  Instead, the permit would require
the source to: (1) use the ARM (i.e., the test methods and procedures
required under subpart JJJJ) to determine the temperature value
indicative of compliance; (2) maintain records of this temperature; and
(3) use this temperature for all compliance monitoring and reporting
purposes dictated by subpart JJJJ, until and unless the permittee
implements the ARM again.  If the permitting authority for the source
requires regular performance tests, the schedule for such tests also
could be included in the ARM.

The MACT General Provisions (40 CFR part 63, subpart A) also apply in
part to sources subject to subpart JJJJ.  The General Provisions include
the following provisions related to conducting performance tests: 
requirements for notifications; quality assurance (including submission
of a site-specific test plan as requested by the permitting authority);
the test method audit program; conduct of tests; and data analysis,
recordkeeping, and reporting.  The ARM does not abrogate such procedural
requirements, it simply incorporates these requirements in the permit.  

A second type of ARM may be used in a part 70 permit to ensure that a
legal limit requested voluntarily by the source effectively constrains
the source’s PTE below a certain threshold so as to avoid the
applicability of certain requirements.  By complying with such PTE
limits, sources demonstrate on an ongoing basis that they are not
subject to a requirement that would otherwise be triggered at a
particular emissions threshold.  Some PTE limits are applicable
requirements (e.g., if imposed by a SIP program or as a condition of an
NSR permit).  In addition, part 70 operating permits can be used as a
legal mechanism for establishing EPA and citizens’ authority to
enforce terms and conditions limiting a source’s PTE.  See 40 CFR
70.6(b)(1).  Permitting authorities have some discretion in fashioning
such terms and conditions.  We believe that the ARM concept could be
used to establish effective PTE limits in agreement with 40 CFR
70.6(b)(1).

As an example of how the ARM concept can be used to assure compliance
with a PTE limit, consider a source in the process of renewing its title
V permit that proposes to take a PTE limit of 99 tpy on its VOC
emissions to avoid being classified as a major VOC source.  The PTE
limit, once approved and incorporated into the title V permit, has the
effect of exempting the source from major NSR requirements that only
apply to existing major VOC emitters.  To assure compliance with the 99
tpy PTE limit, the source proposes a quantification methodology to the
permitting authority by which the source would determine total VOC
emissions on an ongoing basis.  In this instance, the source will
determine VOC emissions with an equation that sums all the individual
VOC emissions from each emissions unit.  Provided that this methodology
relies on objective, repeatable protocols (i.e., the method of
calculating the individual units’ VOC emissions is clear) it can
become an ARM when approved by the permitting authority and included in
the title V permit.  The ARM would include requirements governing when
the procedures were to be used and how the values to be input into the
equation would be determined.

We found permit terms, similar to ARMs, to be useful in maintaining the
effect of the advance approvals found in the flexible permit pilots. 
Two of the pilot permits contained replicable testing procedures.  These
procedures, once implemented, determined the control device operating
parameter values that the source must monitor to demonstrate compliance
with capture and destruction efficiency requirements (i.e., the
applicable requirement).  Without the replicable testing procedures in
the permit, those values would have been included on the face of the
permit, and the source would have had to seek a permit revision each
time it repeated the testing procedures and the operating parameter
values changed.  Another pilot permit specified the process by which an
emissions factor could be updated and used to determine whether the
source’s emissions remained under a PTE cap.  By including this
process (replicable testing and/or emissions factor updating procedures)
in the permit instead of specific operating values and emissions
factors, the source could update those values and indicate compliance
based on the latest results consistent with the replicable testing
procedures in the title V  permit, and forego a permit revision each
time the values change.

In addition to proposing a definition of an ARM, we also propose
modifying 40 CFR 70.6(a)(1) to include a reference to ARMs, because
ARMs are an example of permit terms that assure compliance with
applicable requirements.  Although we do not believe that the proposed
regulatory change to 40 CFR 70.6(a)(1) is needed, given that all permits
must include terms that assure compliance with applicable requirements
and the requirements of part 70, we are proposing the change to promote
clarity.  We recognize 

that we could modify other provisions of part 70, such as 40 CFR
70.6(a)(9), to include a reference to ARMs, but given the structure and
content of the existing regulations, we do not believe the such
additional changes are needed.  We solicit comment, however, on whether
additional regulatory changes would be useful to encourage the use of
this efficient permitting technique.

Terms and Conditions to Assure Compliance with Other Part 70
Requirements 

In addition to the terms and conditions to assure compliance with all
applicable requirements, the permit must contain terms and conditions
that assure compliance with the requirements of part 70.  Section
70.6(a)(9)(i) currently requires “the source, contemporaneously with
making a change from one [AOS] to another, to record in a log at the
permitted facility a record of the [AOS] under which it is operating.”
 We are proposing to clarify this provision to identify more clearly the
information that must be included in the log and when the log must be
updated.  

Overall, we expect that the log will be clear and complete in its
description of which AOS and associated permit terms and conditions are
being implemented.  Specifically, we propose that the source be required
to maintain an on-site log that includes, for each time an AOS is
implemented at the source: the operational or physical change which
causes the shift to the AOS, the emissions unit included under the
scenario, a reference to the applicable requirement(s) (including those
newly applicable to the emissions unit as a result of the change), a
reference to the applicable permit terms and conditions which apply to
the AOS and are implemented by the source, and the dates when the source
operated under the AOS (see proposed 40 CFR 70.6(a)(9)(i)).,  A source
can cross-reference the permit in providing the information required for
the log, but the cross-reference must be clear and specific and all of
the information required for the log must be identified, including, but
not limited to, the identity of the AOS implemented and if alternative
terms and conditions are provided for such AOS, which terms and
conditions were actually implemented by the source.

We are seeking comment on whether our proposed revisions to 40 CFR
70.6(a)(9)(i) appropriately clarify the required content of the on-site
log of AOSs operated at the source.  We also seek comment on whether we
have achieved the proper balance between the need for information and
the need to minimize administrative burden in proposing that log entries
be required only when a source adopts a different AOS.  Is the proposed
log content adequate to determine which AOS is being implemented by the
source? 

Existing 40 CFR 70.6(a)(9)(ii) states that the title V permit may extend
the permit shield described in 40 CFR 70.6(f) to all terms and
conditions under each AOS.  We are not proposing to change this
paragraph, other than to adopt the term “AOS” for consistency. 
Thus, the permit shield, where provided for by the permitting authority,
may be extended to the terms and conditions of ARMs and AOSs, provided
they have been the subject of notice and comment.  See 57 FR at 32277
(July 21, 1992); see also 40 CFR 70.7(e)(2)(vi).  The contents of the
on-site implementation log, such as its description of requirements
which apply to a particular AOS, are not permit provisions for purposes
of the permit shield.  Thus, a source will not be deemed to be in
compliance with applicable requirements of the Act simply because it is
in compliance with the description of applicable requirements contained
in the log (if the description is inaccurate).  Similarly, a source
owner or operator who incorrectly applies the procedures and criteria
for an ARM contained in the permit will be considered not to be in
compliance with the terms of the permit (and therefore not in compliance
with the Act).  

Finally, we would like to clarify our expectations for how monitoring
relative to AOS implementation is to be included in the semi-annual
monitoring reports required by 40 CFR 70.6(a)(3)(iii)(A).  In general,
the semi-annual reports must identify the AOS(s) implemented during the
6-month period and include monitoring information relating to such
AOS(s).  Such monitoring information provides permitting authorities
important information on source operations.  The information also helps
inform the permitting authority as to the frequency and duration of the
AOSs actually implemented.

In addition, the semi-annual monitoring reports must identify any ARMs
implemented in the 6-month period.  For ARMs that generate values
related to parametric monitoring (e.g., an ARM used to determine the new
value of a control device operating limit after a performance test, or
an ARM used to determine compliance with a PTE limit), the source must
also include the results of the ARM used during the 6-month period in
the semi-annual report.  The report will, therefore, summarize the
monitoring data referenced to the emissions unit, emissions limit, and
ARM output.

What are some examples of how AOSs and advance approvals can be used to
provide operational flexibility? 

In this section, we present two examples to illustrate how to apply the
requirements of 40 CFR 70.5(c) and 70.6(a)(9) to AOSs.  The first
example is for an AOS that involves the use of an existing boiler with
dual fuel capability.  The second example uses a combination of advance
approvals and AOSs to add solvent storage tanks over the term of a
source’s title V permit.    

Example 1: Boiler with dual fuel capability. 

This is a simple example of an AOS, and the application and permitting
requirements are quite straightforward.  The relevant emissions unit is
an existing boiler that is authorized for and capable of burning either
distillate fuel oil or natural gas. The boiler is subject to a
pre-existing minor NSR permit which authorized its construction and
limited its subsequent total emissions, and to different SIP emissions
limits (and associated MRRT requirements) depending on which fuel is in
use.  The minor NSR permit remains in effect.  The source reasonably
anticipates that it may wish to switch fuels during the term of its
title V permit, and proposes to the permitting authority to designate
combustion of natural gas as the baseline operating scenario and address
the combustion of distillate fuel oil as an AOS.

	In this example, the minor NSR permit terms (previously used to
authorize construction of the boiler), the applicable SIP emissions
limits, and the associated MRRT requirements are the only applicable
requirements.  The boiler is not subject to any of the NSPS for “steam
generating units” (i.e., boilers) because of its size and date of
construction.  That is, it is below the size cutoff for the NSPS that
were in effect when it was built (40 CFR part 60, subparts D, Da, and
Db), and it was built prior to the cutoff date for the NSPS that does
cover boilers of its size (subpart Dc).  By virtue of its construction
date, size, and fuel, the boiler is classified as an existing large
liquid fuel unit under the MACT standard for Industrial, Commercial, and
Institutional Boilers and Process Heaters (40 CFR part 63, subpart
DDDDD).  As such, the only applicable requirement under the MACT
standard is to submit an “initial notification” to the permitting
authority, which the source has already done.

	When distillate oil is fired, the boiler is subject to limits of 10
percent opacity and 1 percent sulfur in the fuel.  No such restrictions
apply when natural gas is being fired.  Different SIP emissions limits
also apply to emissions of particulate matter, nitrogen oxides, and
carbon monoxide for each fuel.  This existing unit was constructed under
a minor NSR permit, but switching between the fuels will not trigger
minor or major NSR, an NSPS, or the MACT standard because the boiler was
designed to accommodate both fuels, and it has historically been
authorized to use both fuels in its State operating permits.  Thus, the
anticipated fuel switches are operational changes that trigger only
different SIP requirements.

	The design of the burners in the boiler, coupled with proper operation
and maintenance, is sufficient to meet the SIP limits for both fuels for
particulate matter, nitrogen oxides, and carbon monoxide, as well as
opacity when distillate oil is fired (based on performance tests).  To
meet the percent fuel sulfur requirement for distillate oil firing, the
source will purchase fuel at or below 1 percent sulfur.  In addition,
under the terms of its existing (and still effective) minor NSR permit,
the source will have to provide periodic analyses of the percent sulfur
in the fuel, as well as whenever the source changes fuel suppliers.  

	To establish the AOS, the permit would identify and describe the AOS,
in this case combustion of distillate oil, and identify all applicable
requirements which apply when distillate oil is combusted.  The permit
must also include terms and conditions that assure compliance with all
applicable requirements (as required under proposed 40 CFR
70.6(a)(9)(iii)), and include a requirement for the source to keep a
contemporaneous log that records the information required by proposed 40
CFR 70.6(a)(9)(i), including, but not limited to: the affected emissions
unit (i.e., the boiler), a reference to the applicable requirements
applying to the boiler when burning distillate oil, a reference to the
applicable permit terms which assure compliance with these requirements,
and the dates the source began and ceased combustion of distillate oil. 
Since the MRRT applicable requirements detail all the relevant
compliance procedures, there is no need for additional permit
information to be contained or cross-referenced into the log for this
purpose.

	The title V permit for the source also must require the source to
submit a semi-annual monitoring report.  See 40 CFR 70.6(a)(3)(iii)(A). 
In this example, once the facility implements the AOS (i.e., begins
combusting distillate fuel oil), the next monitoring report would
identify, for the relevant time periods, the AOS implemented and provide
monitoring information relative to that AOS.  The report would also
contain monitoring information for the baseline natural gas combustion
operations, if the source operated both in the baseline mode and under
the AOS during the 6-month reporting period.   

Example 2: Future addition of volatile organic liquid (VOL) storage
tanks. 

	A synthetic organic chemical manufacturing facility located in an ozone
attainment area seeks a title V permit renewal and intends to add VOL
storage tanks to an existing tank farm and store various VOLs at
different times in the new and existing tanks over the term of its
renewed permit.  The source will have to obtain all necessary advance
approvals in a minor NSR permit for construction of the new tanks.  In
addition, the source will apply for AOSs in its title V permit to
address future operating scenarios involving storing different VOLs at
different times in the new tanks and also its existing tanks (since
these scenarios will implicate different applicable requirements.)    

Advance approvals

In this example, the source applied for advance approvals under NSR to
authorize the construction of up to 10 new VOL storage tanks of up to
30,000 gallons in capacity.   Because the source operates under a VOC
PAL, the new tanks will not trigger major NSR for VOC.  In its minor NSR
permit application, the source proposed to the permitting authority that
this emissions cap, by limiting aggregate VOC emissions (including those
from the new tanks), would also satisfy the requirements of minor NSR
related to the protection of the NAAQS and PSD increments.  Although the
source does not know precisely the sizes or number of the new tanks or
the materials to be stored in them, it acknowledged in its minor NSR
permit application that the requirements of the NSPS for Volatile
Organic Liquid Storage Vessels (40 CFR part 60, subpart Kb) would apply
to each new tank.  In addition, the source stated that it would use a
submerged fill pipe for tanks with capacity of 2,000 gallons or more
that are not required to be controlled to comply with subpart Kb, which
is a SIP requirement for such tanks.  

The source did not address any other SIP requirements for VOL storage
tanks in its application because these requirements do not apply to
tanks with capacity below 40,000 gallons, and the source is not seeking
approval for any new tanks over 30,000 gallons in capacity.  In
addition, although it is subject to the MACT standard for the Synthetic
Organic Chemical Manufacturing Industry (typically referred to as the
“Hazardous Organic NESHAP” or the “HON,” 40 CFR part 63, subpart
G), the source did not address the requirements of this standard in its
minor NSR application because the State in which this example source is
located implements MACT standards through its title V permit program
(see below) rather than in the context of its minor NSR program.

The control requirements of subpart Kb vary with the size of the storage
tank and the maximum true vapor pressure of the stored liquid.  An
advance approval must  describe the changes that the source may
implement, which in this example consist of the reasonably anticipated
combinations of new tank size and stored liquid vapor pressure, along
with the requirements (i.e., subpart Kb and SIP provisions) that would
apply for each.  One way to do so would be to use a table such as Table
VI-1 below, which uses metric units to match the metric units used in
subpart Kb.  Note that because the source in this example sought advance
approval only for new tanks up to 30,000 gallons (114 cubic meters (m3))
in capacity, the table addresses only tanks up to this size even though
subpart Kb contains provisions specific to larger tanks.

Table VI-1.  Advance Approvals for New Tanksa

≤ V ≤114	VP < 15.0	Not applicable	Not applicable

75 ≤ V ≤ 114	15.0 ≤VP < 27.6	None	§§60.116b(a)-(e)

75 ≤ V ≤114	27.6 ≤ VP < 76.6	§60.112b(a)(1)

Fixed roof w/ internal floating roof; or	§60.113b(a)

§60.115b(a)

§§60.116b(a)-(c), (e)



§60.112b(a)(2)

External floating roof; or	§60.113b(b)

§60.115b(b)

§§60.116b(a)-(c), (e)



§60.112b(a)(3)

Closed vent system and control device ≥95% efficient	§60.113b(c) or
(d)

§60.115b(c) or (d)

§§60.116b(a), (b), (e)

75 ≤ V ≤114	76.6 ≤ VP	§60.112b(b)

Closed vent system and control device ≥95% efficient	§60.113b(c) or
(d)

§60.115b(c) or (d)

§§60.116b(a), (b), (e)    

a The source is authorized to add up to 10 new tanks, each of which is
covered by the scope of Table IV-1.  A permanent submerged fill pipe is
required for any of the 10 advance approved  tanks with capacity ≥ 7.6
m3 that is not controlled with an internal floating roof, external
floating roof, or closed vent system and 95%-efficient control device.

In this example, the permitting authority granted advance approval in a
minor NSR permit for the source to construct tanks meeting each of the
conditions described in Table VI-1.  The permitting authority determined
that no further restrictions on the proposed tanks other than SIP and
subpart Kb compliance and the major NSR PAL for VOC emissions would be
necessary in the minor NSR permit, because the maximum number of
proposed new tanks could be accommodated within the source’s VOC PAL
(due to pollution prevention (P2) initiatives undertaken by the source)
and would not cause concern with NAAQS or PSD increment protection or
Class I area impacts.  In this case, the permitting authority chose to
incorporate Table VI-1 directly into the minor NSR permit to identify
the requirements which apply to the new tanks, regardless of size, type,
and/or number.  

Title V renewal with AOSs

The source’s title V renewal application would identify both the
existing emissions units (i.e., the units currently comprising the tank
farm) and the new tanks authorized under the minor NSR permit advance
approval, and would contain any AOSs that the source wants to propose. 
The title V application must identify all applicable requirements that
are implicated by each proposed AOS.  

The source has opted to make the universe of requirements potentially
applicable to the advance approved new tanks more manageable by
accepting a boundary condition, specifically a maximum tank volume of
30,000 gallons (114 m3).  This condition does not restrict the
source’s flexibility, since only tanks at or below the 30,000 gallon
threshold are anticipated to be constructed, but it does have the effect
of precluding the applicability of the NSPS requirements that would
apply to tanks above that size.  The source also has committed to store
only materials with maximum true vapor pressure of less than 15 pounds
per square inch (psi) (103 kilopascals (kPa)).  This ceiling on vapor
pressure does not affect the applicability of control requirements, but
is necessary for calculating maximum theoretical emissions from the new
tanks and assessing the ability of existing add-on control devices to
accommodate any increased emissions.  The existing tanks are all
currently within these boundary conditions.  The source wishes to retain
the option to store materials that contain HAPs in all of the tanks,
which could implicate the requirements for storage vessels in the HON. 
In this example, the facility was originally constructed in the late
1980’s, so the existing tanks are subject to the requirements of
subpart Kb, and the source is considered an existing “affected
source” for purposes of the HON.  The applicable requirements to be
listed in the renewal application for the new and existing tanks include
the SIP emissions limitations, the requirements of subpart Kb, the
requirements of the minor NSR permit (which are identical to the
requirements of the SIP and subpart Kb as set out in the advance
approvals in Table VI-1), and the requirements of the HON.

The source has conducted a streamlining analysis of applicable
requirements related to the emissions limitations for each tank.   The
source provided supporting documentation in its permit application for
this streamlining analysis, and the permitting authority reviewed and
approved it.  The analysis shows that for new and existing tanks that
are storing materials that do not contain HAPs, compliance with the
requirements of subpart Kb also will satisfy the control requirements of
the SIP.  For tanks not storing HAPs, the SIP requirements are the most
stringent applicable requirements only when subpart Kb does not apply
(i.e., when the tank size and/or vapor pressure are below the respective
applicability limits for subpart Kb).

For tanks that are storing materials that contain HAPs and are subject
to the HON (i.e., capacity ≥ 38 m3), the HON specifies that subpart Kb
does not apply.  Tanks storing HAPs that are below the size cutoff for
HON applicability are also below the applicability cutoff for subpart Kb
(which is 75 m3); thus, at this facility subpart Kb does not apply to
new or existing tanks that store materials containing HAPs.  The
streamlining analysis provided by the source and approved by the
permitting authority shows that compliance with the requirements of the
HON will satisfy the control requirements of the SIP for both the new
and existing tanks that store HAP-containing materials.  The SIP
requirements are most stringent only for HAP-containing tanks that are
below the size and/or vapor pressure cutoffs for control under the HON. 

To maintain the flexibility to change the material stored in each tank
(an operational change), the source requested AOSs in its title V
permit.  (The source does not expect to modify the volume of any
existing storage tanks, or of any new tanks after they are initially
constructed, and therefore did not request AOSs to address such physical
changes.)  Each set of operating conditions that implicates a different
set of applicable requirements would require an AOS.  The necessary AOSs
vary depending upon the capacity of a given tank.  For example, no AOSs
are needed for a new or existing storage tank that has a capacity of
less than 7.6 m3 because no requirements apply regardless of the
characteristic of the material that is stored in the tank (tanks of this
size are below the applicability cut-offs for the SIP, subpart Kb, and
the HON).  As a result, a new or existing tank of this size has only a
baseline operating scenario, and no AOSs are necessary.  Similarly, no
AOSs are needed for tanks that are between 7.6 m3 and 38 m3 because only
the SIP requirements apply to these tanks regardless of the liquid that
is stored.  A tank that is between 38 m3 and 75 m3 needs a baseline
operating scenario and one AOS to enable switching between storing a
material that contains HAP and one that does not.  In both cases, the
SIP control requirements apply, but when HAPs are stored the source must
also maintain the records required under the HON.  That is, when HAPs
are stored, an additional applicable requirement is triggered for the
tank.

Several operating scenarios are needed for both new and existing tanks
between 75 m3 and 114 m3.  The possible scenarios for these tanks are
outlined in Table VI-2.

Table VI-2.  Authorized Operating Scenarios for New and Existing Storage
Tanks with Capacity Between 75 m3 and 114 m3

Operating scenario number	Tank size, V (m3)	Are materials with HAPs
stored?	VP or VPH, as applicable (kPa)a	Most Stringent

Applicable control requirements

1	75 ≤ V ≤ 114	No	VP < 15.0	SIP

2	75 ≤ V ≤ 114	No	15.0 ≤VP < 27.6	SIP

3	75 ≤ V ≤ 114	No	27.6 ≤ VP < 76.6	NSPS

4	75 ≤ V ≤ 114	No	76.6 ≤VP	NSPS

5	75 ≤ V ≤ 114	Yes	VPH < 13.1	SIP

6	75 ≤ V ≤ 114	Yes	13.1 ≤ VPH < 76.6	HON

7	75 ≤ V ≤ 114	Yes	76.6 ≤VPH	HON

a The following symbols are used in this column:	

	VP = stored liquid maximum true vapor pressure

	VPH = stored total HAP maximum true vapor pressure

	

As seen in Table VI-2, seven operating scenarios are approved for new
and existing storage tanks in this size range.  The source included this
table in its title V permit application, along with the details about
the applicable requirements (including control and MRRT requirements)
for each operating scenario.  For each existing tank in this size range,
the source specified the baseline operating scenario and designated the
others as AOSs.  For any new tanks in this size range, a baseline
operating scenario from the scenarios authorized in Table VI-2 either
was identified at the time of minor NSR permitting (if known), or will
be identified at the time of construction and operation.  Table VI-2
is, therefore, a convenient means to describe efficiently the individual
operating scenarios that are approved with respect to the new and
existing tanks at the source.

The title V permit containing the approved streamlined limits must also
identify the subsumed applicable requirements.  The permit also must
contain terms requiring the source to keep an on-site log recording the
use of authorized AOSs.  The log entries would include, upon shifting to
or from the storage of HAP materials or materials of different vapor
pressure which implicate different requirements, the following: the size
of the tank involved (new or existing); the maximum true vapor pressure
of the stored material (if no HAPs are stored) or the total HAP maximum
true vapor pressure (if the stored material contains HAPs); the control
option employed; the applicable requirements that apply (including
emissions limitations and MRRT requirements); and the date that the
relevant storage commenced.

After an existing tank’s initial shift from its baseline scenario, the
on-site log would identify at all times which AOS was in effect for that
tank.  For a new tank, the on-site log would be used to record the
initial baseline operating scenario and any AOSs into which that the
tank subsequently shifted.  For example, if the source switched from
storing a HAP-containing material to material with no HAPs, the source
would enter that switch into the on-site log, giving the date of the
switch, identifying the new AOS, and providing information about which
applicable requirements (permit terms and conditions) were implicated
for that AOS.

What is the process for adding or revising advance approvals, AOSs, and
ARMs in issued permits?

An advance approval, AOS, or ARM may be added to a title V permit
through permit issuance or renewal or through the permit modification
process.  When an existing permit is to be modified, the appropriate
modification track (significant or minor) depends on the nature of the
proposed advance approval, AOS, or ARM or the proposed revisions to them
and whether it would qualify as a minor permit modification.  See 40 CFR
70.7(e)(2)(i).  Note also that the permit shield, where available, can
be extended to advance approvals, AOSs, and ARMs added through a
significant permit modification, but not to those added through minor
permit modification procedures (per existing 40 CFR 70.7(e)(2)(vi)). 
See section VI.C.3 above for more on AOSs and ARMs and the permit
shield.

How do the proposed AOS provisions differ between parts 70 and 71?

Part 70 contains only the requirements for State operating permit
programs and is not divided into subparts.  Part 71 contains two
subparts.  Subpart A of part 71 contains the general Federal operating
permit program, while subpart B contains provisions for a limited,
Federal title V permit program to establish alternative emissions
limitations for early reductions sources that have demonstrated
qualifying reductions of HAP under section 112(i)(5) of the Act.  Thus,
subpart A of part 71 is analogous to the entire part 70.

A general difference between the part 71 and part 70 operating permit
programs is the identity of the permitting authority.  Under part 70,
non-federal agencies are the permitting authorities.  A part 71 permit
may be issued by EPA, where there is not an approved State program or
where a State has failed to revise a permit in response to an objection
from the Administrator, or it may be issued by a permitting authority
that has been delegated authority to issue part 71 permits on behalf of
EPA.  Currently, part 71 permits are generally issued for sources
operating in Indian country.

For the most part, the proposed revisions to the part 71 operating
permit program mirror exactly the proposed revisions to part 70.  That
is, the proposed language is identical, and the sections of the rule
that would be revised differ only by being in part 71 instead of part
70.  For example, we are proposing the same language on AOS permit
content in 40 CFR 70.6(a)(9) and 71.6(a)(9).  However, there is one
place where the structure of the part 71 operating permit program does
not parallel that of part 70, and therefore the revisions proposed are
different.

Specifically, 40 CFR 70.4(d)(3)(xi) is one of the places in part 70 that
we have proposed to substitute the term “AOSs” for purposes of
consistent terminology.  There is no analogous section in part 71, so we
are not proposing an analogous revision.  

We solicit comment on these topics and all aspects of this proposal
regarding part 70.  We also note that if a commenter believes that
additional or different regulatory revisions are needed, they should
identify the specific revisions and the basis for these revisions.

What changes are we proposing in parts 51 and 52? 

We propose to modify the major NSR regulations in a limited way. 
Specifically, we propose to allow a number of emission activities to be
treated as a single emissions unit (i.e., a “Green Group.”) 
Emissions from each of these activities would be routed to a common
emission control device meeting BACT/LAER, and future emissions and
changes within the Green Group would be approved over a 10-year period
in a major NSR permit.  In addition, we are proposing that Green Groups
not be subject to the provisions of 40 CFR 52.21 (j)(4) and 51.166(j)(4)
requiring reevaluation of BACT for phased construction projects or of 40
CFR 52.21(r)(2) requiring continuous construction to commence within 18
months.  These provisions would remain in effect for permits issued to
emissions units other than Green Groups.  We are proposing these changes
because we believe the anticipated benefits of permitting Green Groups,
similar to those studied in pilot projects and discussed in section
IV.A, warrant allowing the sources more time to construct before the
permit expires.

The approach we are proposing represents an extension of our December
2002 NSR Improvement regulations and reflects strategies that we believe
ensure environmental protection while providing additional operational
flexibility to sources.  In particular, we intend Green Groups to
complement the use of plantwide emissions caps (e.g., PALs) by providing
a flexible permitting option for a section of a plant.  Like PALs, we
propose that Green Groups would be a mandatory minimum element of a
State NSR program under which the permitting authorities retain
discretion as to when to approve individual Green Groups requested by
sources.  

Sources that need to alter their operations rapidly in response to
market pressures (including expanding production) and that have
controlled portions of their plants to BACT/LAER (either voluntarily or
as part of their efforts to meet applicable MACT or other requirements)
are good candidates for the Green Group provisions.  Such
well-controlled sources may have limited growth potential under a PAL,
especially compared to sources with less well-controlled baseline
emissions.  Other candidates for Green Groups are sources that have
severe difficulties in tracking all emissions (including fugitive
emissions to comply with a PAL), sources in which only a portion of the
facility accounts for all or nearly all anticipated changes,  or large,
complex plants with many diverse operations producing a variety of
products.  This option, for Green Groups would help provide effective
alternatives for the diverse universe of sources potentially subject to
major NSR.

The Green Group provisions proposed encourage a wide spectrum of sources
to construct specified types of changes for a 10-year period with
greater certainty and flexibility in exchange for implementing
BACT/LAER, regardless of whether or to what extent the source may have
been subject to the current major NSR regulations.  That is, the Green
Group provisions, if finalized, would provide an alternative means to
comply with major NSR and not require an evaluation of whether major NSR
would otherwise apply.  For example, a source might propose a Green
Group that would result in a net decrease in actual emissions (i.e.,
application of controls to meet BACT/LAER, as applicable, reduces actual
emissions by an amount greater than the increased emissions associated
with the changes authorized for the Green Group).  Under these
circumstances, the source voluntarily subjects to major NSR the changes
and existing operations included within the Green Group, presumably to
obtain greater flexibility and certainty in return for implementing a
BACT/LAER level of control.

What are the benefits of Green Groups? 

For several reasons, we believe that the environment and the public will
benefit from Green Groups.  First, we believe that substantial
environmental benefits will occur, because a Green Group requires all
included emissions activities to be controlled to the level of BACT or
LAER.  The BACT or LAER would apply to existing emissions activities
(which otherwise would remain uncontrolled or be subject to less
stringent control requirements), as well as to emissions activities that
are modified or added pursuant to the Green Group authorization.  In the
absence of a Green Group, existing emissions activities would not be
subject to BACT or LAER controls until such time as they were modified. 
Such modifications might not ever occur, or might occur far into the
future.  Even where a modification did occur, evaluated alone, many
modifications would likely not be subject to major NSR.  Some new
emissions activities might also not be subject to major NSR because
their emissions are below applicability thresholds or because they
“net out” of review.   tc \l2 "A.	What is a major Green Group? For
example, a VOC source might make one or more unrelated modifications,
each of which are less than significant (i.e., would result in increases
in VOC emissions of 39 tpy or less).  These modifications would
ordinarily escape NSR; however, when grouped together as a Green Group,
they would undergo NSR and be subject to BACT/LAER.

Even when individual changes are proved to be subject to major NSR, the
resulting BACT may in some cases be less stringent than that required
for a Green Group.  Considering the entire Green Group, including all
the authorized future changes, in a single major NSR action will drive a
BACT analysis toward the maximum level of control due to the economies
of scale that occur in calculating the cost effectiveness of controls. 
We believe these environmental benefits will more than offset the
possibility that a future BACT or LAER determination for new approved
expansion might be marginally more stringent than the BACT/LAER
determination at the time of the Green Group designation.

Moreover, we expect benefits to occur from the better and more frequent
type and amount of monitoring that will be required for Green Groups. 
Currently, for a typical emissions unit subject to major NSR, the
permitting authorities decide on a case-by-case basis the types of MRRT
appropriate for the permitted emissions activities, consistent with the
underlying applicable NSR requirements.  We are proposing that a Green
Group be subject to MRRT requirements that are patterned on the existing
requirements for PALs.  In addition, there are proposed safeguards to
ensure that the air pollution control device continues to function as
intended throughout the Green Group designation period.  These proposed
requirements will significantly improve the monitoring data available to
the source, the permitting authority, and the public, and thus, will
better ensure ongoing compliance. 

Green Groups will also promote greater administrative efficiency for
permitting authorities and sources, because once a group of activities
qualifies, it will have increased flexibility to make approved changes
rapidly in response to market demands without needing to undergo
additional preconstruction permitting review.  In addition, permitting
authorities benefit from increased administrative efficiency, because
the Green Group eliminates iterations of permitting processes that
produce little or no environmental benefit.

What is a Green Group?

Defining the Scope of a Green Group 

This notice proposes to define a Green Group as one emissions unit that
is composed of designated emissions activities ducted to one common air
pollution control device,, that is determined for this group to meet
BACT or LAER, as applicable.  A Green Group is a framework established
under major NSR for the advance approval of anticipated changes within
the group.  These changes can occur over a 10-year phase, as described
in the permit.  Separate Green Groups must be established for emissions
activities that are ducted to separate air pollution control devices.

In addition to current, designated emissions activities, a Green Group
may include future changes (e.g., reconfiguration and/or expansion) to
these existing activities and/or the addition of new emissions
activities.  Either of these activities could result in an increase in
emissions, if the permitting authority considers and authorizes such
future changes as part of the NSR permitting process.  We are proposing
that the NSR permit must sufficiently describe the future new and
existing emissions activities that comprise a Green Group and include
terms and conditions for them, such as annual and short-term emissions
limits.  These terms and conditions assure that the Green Group
activities will be properly operated to protect air quality as well as
to meet BACT/LAER, as applicable.  

In its permit application, the source must describe the new and existing
emissions activities to be included in a Green Group in sufficient
detail to allow the permitting authority to determine BACT or LAER (as
applicable) for the Green Group taken as a whole and to conduct an
ambient air impact analysis to safeguard relevant ambient increments and
standards (including the determination of any offsets necessary in
non-attainment areas) or any relevant Class I areas.  The application,
therefore, must provide information about the current existing emissions
activities and the types of changes to be implemented, including
specifics on emissions characteristics and the maximum total amount of
emissions that will be generated by the Green Group’s emissions
activities after fully implementing the changes.  If the source is
unable to sufficiently describe the new and existing emissions
activities that comprise the Green Group and the associated emissions,
the permitting authority will not be able to issue a major NSR permit
with a Green Group designation.

The information needed to describe the type of changes authorized is
expected to vary on a case-specific basis and will depend on the type of
control approach approved for BACT/LAER and the emissions
characteristics of the included emissions activities and of the changes
which are permitted to occur to them.  That is, certain control devices
like carbon absorbers and scrubbers may exhibit varying effectiveness in
the removal of different substances.  As a result, authorized changes
subject to a BACT/LAER determination requiring such a control device
would be constrained to exclude emissions of substances that cannot be
controlled sufficiently by the device.  Moreover, the amount of detail
needed to describe the future changes may increase where BACT is
determined to be less than the most stringent technology for the
proposed construction project(s).  Similarly, the scope of authorized
changes must be limited to ensure that they are compatible with the
relevant monitoring, recordkeeping, and testing provisions of the
permit.  In addition, there may need to be restrictions on how the
changes occur to ensure the effectiveness of the approved control
device.  For example, in certain situations, increased productive
capacity may need to be permitted to occur in a manner which would not
overload the control device for the Green Group. 

The type of detail required in a permit to describe the authorized
changes in the Green Group must also be sufficient under the proposed
approach to allow the permitting authority to determine, when a change
subsequently is implemented, whether the permitting authority
contemplated that change in the scope of the advance approval contained
in the major NSR permit.  As a minimum, we expect that changes be
described relative to the existing operations comprising the Green
Group.  That is, the permit must contain a detailed snapshot of the
existing emissions activities included in the Green Group, and any
approved changes would then be described as categories of changes to
these baseline activities that maintain their fundamental integrity. 
Such changes might include: (1) changes in products; (2) changes in raw
materials; (3) reconstruction and/or replacement of existing process
equipment; (4) increased capacity (either as changes to existing
equipment or as new equipment);  and (5) additions of new production
lines and/or new support units.  

When products or raw materials will be changed, the description should
specify what the range of new products or raw materials might be and
their compatibility to the existing emissions controls.  When equipment
will be added, reconstructed, or replaced, the permit should specify
whether capacity might be changed and to what extent.  Depending on its
potential relevance to the BACT/LAER determination, the description
might specify the maximum size and/or capacity of any changed or new
equipment.  In some situations, it might be necessary to describe the
different types of authorized changes more specifically. 

This proposed approach for describing authorized future changes is
consistent with the approaches taken in our evaluated flexible permit
pilots and with our previously mentioned recommendations for describing
AOSs in a title V permit.  Provided that all of the emissions activities
identified as part of the proposed Green Group are vented through a
common control device and approved through the major NSR permitting
process, the source would be authorized (for purpose of major NSR) to
implement over a 10-year period the changes that are advance approved in
the permit without triggering further NSR review.  For physical and
operational changes a source undertakes that are not included in a Green
Group, the applicability of NSR to those changes would be determined as
these changes occur, in accordance with existing major and minor NSR
procedures. 

An emissions activity cannot be included in a Green Group some of the
time and excluded at other times.  Stakeholders suggested allowing such
“intermittently-included” activities during pilot project
discussions to address emissions activities that are subject to
different applicable requirements depending on their operations.  For
example, a web-coating operation might be subject to the Pressure
Sensitive Tape and Labels NSPS (40 CFR part 60, subpart RR) when
manufacturing certain products, and not subject to any applicable
requirement or emissions limitation when manufacturing other products. 
Some stakeholders suggested that such a coating operation could be
included in the Green Group (and subject to the Green Group control
approach) when subject to the NSPS, but excluded (and not subject to
control) when its operations are not subject to the NSPS.  We rejected
this approach because of the increased complexity and the significant
additional recordkeeping burden.  Accordingly, after undergoing major
NSR as part of the Green Group, the emissions activity remains subject
to the requirements of the major NSR permit, including the BACT or LAER
emissions reduction requirements, regardless of changes in the
applicability of any other requirement. 

	If a source removes a particular emissions activity from an established
Green Group at any time during its 10-year duration, the removed
emissions activity will be subject to major NSR.  For example, suppose
that a Green Group consists of four emissions activities and that the
source proposes to withdraw activity No. 4 from the Green Group after
its establishment.  In order to do so, the permitting authority would
subject activity No. 4 to major NSR as if it were a new major
modification (i.e., contemporaneous BACT/LAER, as applicable, and
ambient reviews).  Simultaneously, the permitting authority (in the same
major NSR action) would adjust downward the emissions limit of the Green
Group (see discussion below) to account for the amount of emissions
previously attributed to activity No. 4 (i.e., its baseline actual
emissions and any emissions growth targeted to occur at activity No. 4).
 In addition, the permitting authority would verify that the original
BACT/LAER limit could be met as it would now be applicable to the
remaining emissions activities.

Emissions Limits for Green Groups

In general, two types of emissions limits must be set in the major NSR
permit for Green Groups: (1) an emissions limit to constrain overall
emissions for the Green Group; and (2) a limit to ensure that BACT/LAER
technology is being employed and is effective (e.g., lbs/gal, percent
reduction).  These two limits complement each other and collectively
implement the core provisions of the Green Group.  The amount of any
emissions increase from authorized changes would be limited by the
annual emissions cap and the BACT/LAER emissions limitation, both of
which would be placed in the major NSR permit.

An enforceable mass emissions limit must be determined for the pollutant
for which the Green Group is established.  We propose that the total
emissions from the Green Group be limited by the annual emissions limit
(on a monthly rolling total basis) for the Green Group pollutant.  The
annual emissions limit would be set at the actual emissions associated
with all the emissions activities included in the Green Group and
controlled to the BACT/LAER level, as applicable.  The annual emissions
limit would also include any emissions increases that result from
changes to existing emissions activities and/or changes to add new
emissions activities that are authorized by the permit.  The annual
limits and any necessary short-term limits for a Green Group must be set
at a level demonstrated to safeguard applicable ambient standards and
increments (i.e., NAAQS and PSD increments).

We propose that the annual emissions limit for a Green Group be
developed in two steps.  The first step is to calculate the group’s
baseline for actual emissions using the same methodology that is used in
setting a PAL under the existing major NSR regulations.  This baseline
would therefore equal the baseline actual emissions (as defined in the
major NSR regulations) for all the emissions activities in the group
that existed during a 24-month period selected by the source within the
10 years preceding the Green Group permit application, minus the
emissions of any of these existing activities that have been shut down
since the 24-month period, plus the PTE of any emissions activities
added within the group since the 24-month period.  Baseline actual
emissions must be adjusted downward for any non-compliant emissions
during the 24-month period and for any emissions limitations that have
become applicable since the end of the 24-month period.  That is, a
downward adjustment is necessary if any legally enforceable emissions
limitation restricts an emissions activity’s ability to emit the Green
Group pollutant or to operate at levels that existed during the selected
24-month period.  See the December 2002 preamble discussion of baseline
actual emissions at 67 FR 80195.  (Note that the definition of
“baseline actual emissions” differs somewhat for electric utility
steam generating units (EUSGUs) and other types of emissions activities.
 The preceding discussion applies to non-EUSGUs.)  In addition, these
baseline actual emissions must be adjusted downward as necessary to
reflect application of the BACT/LAER to the Green Group.

The second step in setting the annual emissions limit for a Green Group
is to calculate the emissions increase from any new emissions activities
or planned changes to existing activities that are approved as part of
the permit (i.e., an emissions increase increment to address the planned
changes over a 10-year period.)  This would be added to the baseline
actual emissions level determined in the first step.  Thus, the total
Green Group annual emissions limit should reflect the actual emissions
associated with all new and existing emissions activities included in
the Green Group, all of which are controlled to the BACT/LAER level, as
applicable.  

In an attainment area, the authorized emissions increase increment
(i.e., the difference between the baseline actual emissions and Green
Group annual emissions limit) and other relevant emissions increases at
the source, but outside the Green Group, must be used in the required
PSD air quality analyses.  In reviewing the application, the permitting
authority should weigh such factors as the available PSD increment(s) in
the area in determining whether to approve the annual limit proposed by
the source for the Green Group.  In a nonattainment area, the authorized
emissions increase increment must be offset at the ratio prescribed by
the Act or the applicable State, Tribal, or Federal implementation plan.

To the extent that they can be quantified, fugitive emissions also must
be addressed for Green Groups as required under the Act and by EPA
according to applicable major NSR regulations and requirements and
guidance.  This includes determining fugitive emissions from all
existing emissions activities in the Green Group, as well as all
increases in fugitives and maximum total fugitive emissions that will be
generated in the future by the emissions activities in the Green Group. 
Such treatment of fugitive emissions is intended to be the same approach
as that currently required for PALs.

An emissions limit or performance specification separate from the Green
Group emissions limit determined above also must be set to reflect the
application of BACT or LAER, as applicable.  The format for these limits
can vary (e.g., pounds of emissions per material input or per product
output; or a percent removal efficiency) but are typically different
from the tpy format of the limit applying to total annual emissions.  In
some cases, separate, additional BACT/LAER limits may be necessary to
govern low concentration situations (e.g., the source would be required
to meet either 98 percent removal efficiency or a 20 parts per million
(ppm) outlet concentration) and to address startup, shutdown, and
malfunction situations.

We also propose that a Green Group may meet the applicable BACT or LAER
level of control through use of P2 alternatives for component emissions
activities during some  periods of operation instead of always sending
all emissions to the common air pollution control device.  Each of the
P2 alternatives must independently qualify as achieving a BACT or LAER
level of control in the major NSR permitting process.  For example, an
emissions activity such as a paint spray booth operation would be ducted
to a common air pollution control device such as a thermal oxidizer to
control VOCs from multiple emissions activities in a Green Group.  As a
P2 alternative, BACT or LAER might be established based on the use of
compliant materials in the spray booth operation.  In this case, we
propose that each of the included emissions activities must have
ductwork extending to the common air pollution control device, but the
source would be allowed to bypass the control device during periods when
the source elects to use P2 consistent with the BACT or LAER
determination on compliant materials.  Notwithstanding, at all times,
all activities included in the Green Group would be meeting a BACT (or
LAER as applicable) level of control.

We believe that providing for a P2 alternative will encourage P2 at
sources that wish to obtain a Green Group designation and provide an
opportunity for sources that are pursuing P2 to adopt a Green Group. 
Accordingly, we are soliciting comment on whether such an option is
appropriate and should be included in the Green Group program.  We
further request comment on whether this proposal goes far enough in
encouraging P2.  In particular, we take comment on whether we should
allow a Green Group to be based on use of a P2 approach, rather a common
air pollution control device.

For the emissions activities that comprise the Green Group, we are not
proposing to require that each emissions activity that is part of the
Green Group designation be limited to a specific tons-per-year
allocation.  Instead, we propose that the annual aggregate limit is
acceptable for the emissions activities that comprise the Green Group. 
For example, if each of the five emissions activities that are part of a
Green Group contribute 50 tpy to the total annual aggregate annual limit
of 250 tpy, we are proposing that the Green Group be subject only to a
limit of 250 tpy for these emissions activities.  A permitting
authority, therefore, should not require a 50 tpy limit on each of the
five emissions activities.  This is because for PSD purposes, the source
must determine BACT based upon the total amount of annual emissions, and
the air quality impacts associated with such emissions (which all are
emitted from the stack of the common air pollution control device) are
accounted for in the NSR permitting process.  Comparable reasoning
applies for nonattainment major NSR purposes.  We solicit comment on
whether this approach is appropriate or whether there are other
considerations we should take into account.

	Changes in emissions at ancillary units not included in the Green
Group but serving it (such as storage tanks or utilities) must be
accounted for in the air quality analysis conducted to evaluate ambient
air quality and increment protection to the extent such emissions
changes are required to be considered under the existing NSR
regulations.,,  Ultimately, the permitting authority must determine the
extent to which the requested expansion will be allowed under major NSR,
taking into account the demonstrated need of the source, public comments
received, and the air quality status of the affected area.

	In some cases, a source may have previously taken an emissions limit on
a new or modified emissions unit to remain below major NSR applicability
thresholds (often referred to as an “(r)(4) limit” based on 40 CFR
52.21(r)(4)).  The major NSR rules provide that if (r)(4) limits are
relaxed, the associated emissions unit must undergo major NSR review
“as though construction had not yet commenced on the source or
modification.”  We propose to clarify, without rule revision, the
interface between (r)(4) limits and Green Groups as follows: when a unit
with an (r)(4) limit is included as one of the emissions activities in
an application for a Green Group, the (r)(4) limit no longer applies,
provided that the NSR review process considers the unit as if
construction had not yet commenced on it.  

Under the current NSR regulations, an emissions change is only
creditable to the extent the Administrator has not previously relied on
it in issuing a major NSR permit.  See 40 CFR 52.21(b)(3)(i). 
Accordingly, emissions increases and decreases that occur at the
emissions activities in a Green Group during the effective period of the
Green Group designation are not included in netting calculations to
determine whether changes that occur at the emissions units outside the
Green Group result in a major modification.  However, if the source
reduces actual emissions from the Green Group below the emissions limit
established for the Green Group in its NSR permit, the source may
generate a credit for the difference between the permitted limit that
qualified the unit as a Green Group and any new, lower emissions
limitation established, if such reductions are surplus, quantifiable,
permanent, and enforceable from a practical standpoint.  If however, an
established Green Group wishes to increase its emissions beyond its
permitted tpy limit, reductions achieved by units outside the Green
Group cannot be used to generate emissions reductions to net the Green
Group out of NSR.  If an established Green Group wishes to increase its
emissions, it must go through NSR again to establish a new limit, which
would be effective for a new 10-year timeframe.  In addition, we also
propose to add a restriction that no credit can be generated from
eliminating emissions increases that were authorized under the Green
Group permit but never realized.  Without this restriction, sources
would be allowed to generate credits for authorized expansion that never
occurred. 

In nonattainment areas, sources are required to obtain offsetting
emissions reductions for the significant emissions increases that are
authorized under a major NSR permit.  Depending on the nonattainment
pollutant and classification of the nonattainment area, the source may
be required to obtain offsets in excess of the emissions increase at a
specified ratio.  For example, in accordance with the existing NSR
requirements, in a serious ozone nonattainment area, a source must
obtain VOC offsets in an amount 1.2 times the significant VOC emissions
increase.  A source that applies for a Green Group designation in a
nonattainment area must obtain offsets for the approved increase in
emissions of the Green Group pollutant (i.e., the difference between the
level approved in the Green Group permit and the baseline actual
emissions of the group).  Under existing NSR requirements, offsets must
be federally enforceable at the time the major NSR permit designating
the Green Group is issued, in accordance with section 173(a) of the CAA,
but need not be achieved until the new or modified source commences
operation, consistent with section 173(c) of the CAA.  We propose that
for Green Groups, the offsets must be in effect by the time the first
authorized change among the activities in the Green Group (e.g.,
equipment modification or addition) commences operation.  To simplify
the process and recordkeeping, and to assure that offsets are in place
as required, we propose that the entire amount of offsets required by
the permit must be in effect at the time that the first authorized
change (modified or added emissions activity) begins operation. 
Alternatively, we seek comment on whether it is only necessary to
require the source to obtain offsetting emissions reductions in
sufficient quantity to offset: (1) the actual changes within the Green
Group as they occur; or (2) each phase of construction before its
operation.  

In some cases, a source with an established Green Group may subsequently
request the permitting authority to allow the addition of greater
emissions than are permitted by the existing annual emissions limit. 
Here, we propose that the permitting authority be able to either: (1)
establish a higher annual emissions limit to accommodate the desired new
emissions increase as part of a comprehensive major NSR process (this
process would reestablish the Green Group, including a reevaluation of
the prior BACT/LAER determination); or (2) terminate the Green Group
while retaining its emissions limits and other requirements and then
subject the emissions of new project(s) to the applicable NSR process. 
Similarly, if a source with a Green Group exceeds its Green Group
emissions limit, then the source will be subject to appropriate
enforcement action.  In addition, the source would be subject to
enforcement action for any violations of other applicable requirements
(e.g., MACT, NSPS) that would also apply to emissions activities
included in the Green Group.

Monitoring, Recordkeeping, Reporting, and Testing (MRRT) Requirements
for Green Groups 

As mentioned, the major NSR review process must also determine the level
of MRRT to assure compliance with both the control technology
requirement and the emissions limit(s).  A source must monitor all
emissions activities that comprise the Green Group to ensure compliance
with the Green Group limit.  These monitoring, recordkeeping, and
reporting requirements are incorporated into the NSR permit that
establishes the Green Group.

As explained above, in December 2002, we promulgated revisions to the
major NSR program, which included, among other things, MRRT requirements
for tracking emissions associated with a PAL.  In these proposed
regulations, the same MRRT we promulgated in December 2002 for PALs
would also be required to track a source’s compliance with the Green
Group emissions limit set forth in the major NSR permit.  Further, we
are proposing additional MRRT provisions to assure that the common air
pollution control device achieves BACT or LAER.  More specifically, the
permit must require the owner or operator to monitor and record data
sufficient to ensure that the common control device for the Green Group
accommodates emissions resulting from the emissions activities that
comprise the Green Group and that it achieves the level of emissions
reduction required under the applicable BACT or LAER requirement.  

We are not proposing to require a source to notice individual changes at
Green Groups.  However, changes which are also subject to a MACT
standard or NSPS may well be required to file a notice under the General
Provisions requirements of those programs.  State permitting authorities
may under other regulatory authorities require additional records and
notices for certain changes (e.g., notices for new units under State air
toxics program, or a notice for a new emissions unit added to the site
of a source with a title V permit under an approved off permit
procedure) to assure compliance under these other authorities.  In
addition, we propose that the source submit a semi-annual report that,
in part, contains a list of any emissions activities included in the
Green Group that were added during the preceding 6-month period.  We
encourage permitting authorities to combine this report with the 6-month
monitoring report otherwise required under part 70 (see 40 CFR
70.6(a)(3)(iii)(A)).  We request comment on this approach to
recordkeeping, reporting, and notification requirements.  In particular,
we solicit comment on the appropriateness of applying the mentioned 2002
PAL monitoring requirements to Green Group emissions limits.

Public Participation for Green Group Designations 

Because Green Groups must be established in a major NSR permitting
action, the public is assured of an opportunity to participate in the
process.  Major NSR regulations require the permitting authority to
notify the public when it makes a preliminary determination regarding a
permit application, to make the application and associated materials
available for public inspection, and to provide an opportunity for a
public hearing and for a written comment period of not less than 30
days.  In the case of a proposed Green Group permit, the annual
emissions limit that would be established for the Green Group highlights
the maximum potential annual emissions increase for public review.  The
other aspects of the proposed Green Group also would be highlighted for
comment, including the preliminary BACT/LAER determination, description
of anticipated expansion, and the proposed requirements for monitoring,
recordkeeping, and reporting.

In addition to the opportunity for public participation typically
provided consistent with our major NSR regulations, we recommend that
the permitting authority consider using their discretion to enhance the
public participation process as necessary to provide adequate review
opportunity for individual Green Group permits.  We expect that this may
be advisable when the first Green Groups in an area are being
established or when unique and/or complex issues arise in a particular
case.  See section IV.C above for additional discussion on the types of
enhanced public participation and when it might be appropriate.

Duration and Renewal of the Green Group Designations 

We propose that the Green Group designation last for a single 10-year
period.  Any emissions activities that are advance approved and
constructed during the effective period of the Green Group designation
benefit from Green Group flexibility.  At the end of the 10-year period,
the original Green Group designation ends.  

After 10 years, the source may apply for a new Green Group designation
by going through the same procedures as for the initial Green Group
designation, including going through a new major NSR permitting exercise
and a new BACT/LAER determination.  To avoid a gap between the
expiration of the initial Green Group designation and the effective date
of a new designation, we propose a renewal process similar to the
process for PALs.  Specifically, a source that wishes to reestablish its
Green Group must submit a major NSR application to the permitting
authority at least 6 months prior to, but not earlier than 18 months
from, the expiration date of the Green Group.  If the source submits a
complete application within this period, the existing Green Group
requirements would continue to be effective until the new major NSR
permit reestablishing the Green Group is issued.  We take comment on the
need to require an earlier submittal time (i.e., earlier than 6 months
prior to expiration) given that a BACT/LAER reevaluation is involved.

If the applicant does not wish to reestablish the Green Group
designation, the source would simply allow the designation to expire and
then become subject to the major NSR applicability test for future
changes.  However, the major NSR permit does not expire, and the
emissions unit defined by the Green Group would remain permanently an
emissions unit for purposes of major NSR, subject to the BACT or LAER
control requirement, annual emissions limit (and any shorter-term
limits), and MRRT requirements imposed by the Green Group permit. We
take comment whether to allow the source to divide up the Green Group
into smaller emissions units and to allocate the emissions limit
correspondingly.  

We are proposing the 10-year duration of a Green Group designation for
two reasons.  First, we believe that this time frame represents a
balance between the useful life of the emissions control system and the
time frame in which additional major NSR review is likely to result in
little, if any, added environmental benefit.

	Prior to the December 2002 NSR Improvement rulemaking, we examined the
useful life of air pollution control devices.  Based on the guidelines
for equipment life for nine commonly used emissions control
technologies,  we determined that a reasonable average equipment life is
15 years.  See 87 FR  80229.  We also looked at the incremental
improvement in control technology over time.  Over the 15-year period
that we studied (1988-2002), we did not find any data to suggest that
improvements in control technology are occurring that are of sufficient
magnitude to lead to BACT determinations requiring replacement of
control systems on existing units that are equipped with BACT.  Thus, we
believe that 15 years likely represents a reasonable balance between the
useful life of air pollution control devices and the time frame in which
a new BACT determination would require additional emissions control. 
Ten years represents a more environmentally cautious approach to
balancing these factors.

Second, a 10-year duration for a Green Group is supported by the
rationale we used in choosing a 10-year period for the duration of PALs.
 For PALs we concluded that a 10-year period was necessary to ensure
that the normal business cycle would be captured generally for any
industry.  See 67 FR 80216.  The PAL’s 10-year period also was
intended to balance the need for regulatory certainty, the
administrative burden, and a desire to align the PAL renewal with the
title V permit renewal.  See 67 FR 80219.  These reasons also apply with
equal force in guiding the selection of a similar 10-year period for
Green Groups. 

As a practical matter, we realize that the “ideal” duration for a
Green Group will vary somewhat by emissions control technology and by
pollutant; however, we believe using a single time frame will provide
simplicity in the rules.  We have chosen to propose a 10-year duration
for Green Groups to maintain consistency with PALs and to maximize the
environmental benefits of Green Groups.

We are also taking comment on a 15-year duration for a Green Group
designation.  As discussed above, we believe that air pollution control
technology typically is quite stable during this period.  In addition,
the fact that BACT/LAER is determined for the entire Green Group taken
as a whole (including authorized expansions), rather than for individual
changes piecemeal, is likely to result in more effective and more costly
controls than would be applied under mainstream major NSR permitting. 
As a result, it is even less likely that a subsequent BACT/LAER
determination at a Green Group would require a new control device within
a 15-year period.  Thus, we believe that a 15-year period could also
represent a reasonable and appropriate duration for Green Groups.  

We propose that the effective date of a Green Group designation would be
the effective date of the major NSR permit that designates the Green
Group.  We propose that the Green Group designation lasts for a period
of 10 years from the effective date. 

If construction or modification of a control device is required by the
BACT/LAER determination in the Green Group permit, no advance approved
changes in the permit are allowed to occur before that construction or
modification is completed.  That is, new and modified emissions
activities within the Green Group may not be operated until the new or
modified control device is in operation.  This will result, in effect,
in a reduction of the 10-year duration for the Green Group by the length
of time between the effective date of the permit and the beginning of
operation of this control device in order to comply with BACT/LAER.

We do not believe, however, that the unchanged, existing emissions
activities in the Green Group should be required to cease operation
while the control device is constructed or modified.  This would be the
outcome if these emissions activities were required to meet the
BACT/LAER emissions limitation(s) on the effective date of the Green
Group permit.  Accordingly, we are proposing that, where the BACT/LAER
determination requires a new or modified control device, the Green Group
permit may provide that the existing emissions activities within the
Green Group are not required to meet the BACT/LAER emissions
limitation(s) or the annual emissions cap for the Green Group until the
new or modified air pollution control device is in operation.  In the
interim, such emissions activities may continue to meet pre-existing
emissions limitations.  In contrast, where the existing control device
has been determined to represent BACT/LAER without modification, all
existing emissions activities must meet BACT/LAER upon the effective
date of the Green Group permit.

A situation that can result in termination of a major NSR permit under
the existing NSR rules is related to the timely commencement of the
program of construction authorized by the permit.  Section 52.21(r)(2)
of the existing federal PSD rules provides that approval to construct
shall become invalid if construction is not commenced within 18 months
after receipt of such approval, if construction is discontinued for a
period of 18 months or more, or if construction is not completed within
a reasonable time.  The 

Administrator may extend the 18-month period upon a satisfactory
showing that an extension is justified.  

We are proposing to exclude Green Groups from the (r)(2) provisions. 
However, we are also proposing a new safeguard for those Green Groups
that rely on a new or upgraded BACT/LAER air pollution control device. 
Although the Green Group designation becomes effective on the effective
date of the permit, the source must complete construction on the new air
pollution control device before any changes advance approved in the
permit can be operated.  See section VII.D for more discussion of the
rationale for this proposal.

We believe that Green Group activities also should be exempted from the
paragraph (j)(4) provisions of both 40 CFR 52.21 and 51.166.  Currently,
the (j)(4) provisions require for phased construction projects that the
BACT determination be reviewed and modified as appropriate at the latest
reasonable time which occurs no later than 18 months prior to
commencement of construction of each independent phase of the project. 
There is no need to evaluate the interdependence of changes since, under
the proposed Green Group approach, the Green Group is considered one
ongoing program of change over a 10-year period.  Accordingly, we
propose to remove the applicability of 40 CFR 52.21(j)(4) and
51.166(j)(4) from Green Groups.  See section VII.D for our rationale
concerning this proposal.

How are Green Groups similar to PALs?

We also take comment on whether a Green Group is a form of PAL.  As
noted previously, the Green Group establishes an actual emissions-based
limitation for a logical collection of emissions activities (i.e., all
those ducted to a common control device).  The Green Group approach
relies upon several of the same principles and techniques used in
establishing and managing growth for sources with PALs and other types
of emissions caps.  We experimented with PALs and emission caps as part
of our pilot projects and have, as a result, a significant amount of
development, implementation, and emissions tracking experience using
these approaches.  Specifically, a Green Group is established based on
the actual emissions, plus authorized emission increases associated with
the addition or modification of emissions activities.  The authorization
of additional capacity for new or modified emissions activities provides
sources with the ability to respond to market changes and eliminates
administrative burden associated with multiple permit actions.  In
exchange, the emissions associated with a Green Group are constrained by
an emissions cap for an established period of time.  It offers
substantial environmental benefits by assuring that all emissions
activities within the group are well-controlled and eliminates the
ability of the Green Group to undertake insignificant emissions
increases that could go unreviewed as separate, independent projects.  

Although the Green Group builds an emissions increase into the initial
cap, it does so in a way which complies with all the requirements that
we established for increasing a PAL.  Moreover, the approved increase in
actual emissions is allowed only if it is due to the expansion
authorized to occur within the Green Group, since the BACT/LAER
requirement prevents any backsliding in the control of existing
emissions activities in the Green Group.  Thus, subsequent changes in
the Green Group whose actual emissions (in combination with those of
existing activities included in the Green Group) do not exceed the Green
Group emissions limit and will be ducted to a control device determined
to meet BACT/LAER, as applicable, have already been regulated under
major NSR in anticipation of the changes being made.  We solicit comment
as to whether the Green Group is a permissible application of the PAL
principles as applied to a logical collection of emissions activities
that are ducted to a common control device and, if so, what increase in
emissions for existing emissions activities and/or increases for new
emissions activities can be authorized to occur under a major NSR
permit.  We also seek comment on the potential applicability of these
same PAL principles to a proposed Green Group that involves only new
emission activities ducted to a common pollution control device
authorized under major NSR. 

How is a Green Group designation incorporated into a title V permit? 

Major and minor NSR permit terms and conditions are applicable
requirements for purposes of title V.  As such, they must be
incorporated into the source’s title V permit.  These proposed major
NSR rules list the required content for a NSR permit that designates a
Green Group.  Part 70 requires that these permit terms and conditions be
incorporated into the source’s title V permit according to the
provisions of the applicable title V permit program (but no later than
when the title V permit is renewed).  One potential route for
incorporating these terms and conditions into the title V permit is
through an administrative amendment, if an “enhanced” NSR process is
used to designate the Green Group.  See 40 CFR 70.7(d)(v).  This
mechanism is available if the EPA-approved NSR program includes both
procedural requirements substantially equivalent to the requirements of
40 CFR 70.7 and 70.8 and substantive requirements substantially
equivalent to those contained in 40 CFR 70.6.  

We expect that in many cases, the emissions activities included in the
Green Group will be subject to other applicable requirements, such as
SIP requirements, NSPS, and/or MACT standards.  In such cases,
concurrently with the major or minor NSR process, as applicable, the
source can seek to modify its title V permit to include baseline
operating terms and conditions and/or AOSs (as necessary) to address and
assure compliance with all applicable requirements that apply to the
authorized emissions activities comprising the Green Group, including
any advance approvals.  Because the BACT or LAER requirement that
applies to the Green Group typically is the most stringent of the
applicable requirements, Green Groups are often good candidates for
streamlining as mentioned in section VI.A, footnote 23, and section
VII.F of this preamble.  

This proposal provides permit flexibility in that a source can obtain a
Green Group through the major NSR permit process (which constitutes the
required NSR authorization for future changes in the group) and, at the
same time, modify its title V permit to include the Green Group and
AOSs, as necessary, to address the other applicable requirements that
apply to the emissions activities in the Green Group.  The approval of
the Green Group changes with regard to all relevant permitting
requirements means that the source can implement these changes
authorized under protection of the permit shield without seeking any
further title V approvals.

What is the legal rationale for Green Groups? 

  SEQ CHAPTER \h \r 1 	The basic CAA provisions establishing permitting
requirements for attainment/unclassifiable areas (the PSD requirements)
under part C of Title I, and for nonattainment areas under part D of
title I, are the basis for this action.  With respect to the PSD
requirements, CAA section 165(a) provides, in relevant part –

No major emitting facility on which construction is commenced after the
date of the enactment of [the 1977 CAA Amendments], may be constructed
in any area to which this part applies unless–

(1) a permit has been issued for such proposed facility in accordance
with this part setting forth emission limitations for such facility
which conform to the requirements of this part …

The term “construction” is defined to refer to both construction of
a new source and “modification” of an existing source.  See CAA
section 169(2)(C).

	With respect to the nonattainment major NSR requirements, section
172(c)(5) of the Act provides that nonattainment SIP provisions “shall
require permits for the construction and operation of new or modified
major stationary sources anywhere in the nonattainment area, in
accordance with section 173.”  Section 173(a), in turn, provides that
“permits to construct and operate may be issued if [certain
requirements are met].”

	These PSD and nonattainment major NSR provisions contain no specific
requirements concerning the maximum length of time that may elapse
between the issuance of the permit and the beginning of construction,
the maximum length of time that the construction may take, whether the
construction may occur in phases, or the maximum period of time that may
elapse between any construction phases.  By comparison, other, related
major NSR provisions of the Act do contain timing requirements.  For
example, for PSD purposes, section 165(c) directs the permitting
authority to grant or deny the permit within one year after the date of
filing of the completed permit application.  As a second example, for
nonattainment major NSR purposes, section 173(a)(1)(A) directs that
emission offsets must be obtained “by the time the source is to
commence operation.”  The lack of specific timing requirements
concerning construction in the relevant provisions of sections 165(a),
169(2)(C), 172(c)(5), and 173(a) means that EPA has flexibility in
determining the circumstances under which construction timing
requirements are necessary, and in promulgating regulations to that
effect.

	By notice dated June 19, 1978, we promulgated certain requirements
concerning phased construction.  See 43 FR 26380.  Under those
requirements:

Approval to construct shall become invalid if construction is not
commenced within 18 months after receipt of such approval, if
construction is discontinued for a period of 18 months or more, or if
construction is not completed within a reasonable time.  The 
Administrator may extend the 18-month period upon a satisfactory showing
that an extension is justified.  This provision does not apply to the
time period between construction of the approved phases of a phased
construction project; each phase must commence construction within 18
months of the projected and approved commencement date.

See 40 CFR 52.21(r)(2).

For phased construction projects, the determination of best available
control technology shall be reviewed and modified as appropriate at the
latest reasonable time which occurs no later than 18 months prior to
commencement of construction of each independent phase of the project. 
At such time, the owner or operator of the applicable stationary source
may be required to demonstrate the adequacy of any previous
determination of best available control technology for the source.

See 40 CFR 52.21(j)(4) and 51.166(j)(4).

	We stated as the reason for these requirements: 

The Administrator is concerned about the issuance of permits for phased
construction projects that would have the effect of “reserving” the
increment for a single source, thereby limiting growth options in the
area.  The options are to not issue phased construction permits at all
or to limit the conditions under which a phased construction may reserve
an increment well into the future.  The Administrator intends to
implement the latter option when plans for a phased project are certain
and well-defined.  One mechanism to be used is to reassess the BACT
determination for the later phases of the project prior to construction
to ensure that the most up-to-date control technology will be used.  The
Administrator will specify at the time that the original permit is
issued which BACT determinations will be reassessed.  The Administrator
may also adopt regulations in the future to deal with this issue more
comprehensively.

See 43 FR 26396.

The EPA proposes to exclude Green Groups from the requirements of 40 CFR
52.21(r)(2), 52.21(j)(4), and 51.166(j)(4) on policy grounds.  The Green
Group designation provides a vehicle for a source willing to describe
its construction plans in its permit, as well as employ BACT/LAER
emission controls and comply with other major NSR requirements, in
return for the ability to make a variety of changes without the
burdensome process of iterative permitting actions.  We believe that
making such changes (as authorized within Green Groups) can be fairly
described as merely implementing the major NSR permits as approved. 
That is, no authorized changes over the 10-year period need to be
reevaluated as a potential new modification since those changes have
already been subjected to major NSR, including a determination of
BACT/LAER requirements and the approval of ambient air quality impacts
or the acquisition of offsets.  We believe that the exclusion of Green
Groups from these provisions is needed to provide an adequate level of
certainty and flexibility to participating sources (i.e., the certainty
that a BACT/LAER determination will last a reasonable duration).  This
proposal would ensure the basic premise of the Green Group approach
(i.e., sources are just making those changes contemplated and approved
by the permit).  It would do so by requiring the description of the
changes in the permit to be sufficiently detailed to assure compliance
with the required BACT/LAER and monitoring approaches and to distinguish
the changes from those not authorized to occur under the approved Green
Group.  We are proposing a safeguard, in that any changes advance
approved for a Green Group relying on a new or modified control device
to meet BACT/LAER could not be implemented until the control device
meets the BACT/LAER determination in the permit.  

It is within our discretion to remove Green Groups from 40 CFR
52.21(r)(2), 52.21(j)(4), and 51.166(j)(4) through rulemaking when doing
so better serves the purposes of the major NSR program.  As noted above,
the 40 CFR 52.21(r)(2) provisions were established by EPA in rulemaking
to safeguard against sources tying up increment consumption rights
without making a substantial financial investment and against sources
inappropriately avoiding the application of control technology
improvements that might have occurred since their permit was issued. 
(See 43 FR 26396, June 19, 1978.)  For several reasons, we do not
believe that these concerns apply to Green Groups as we are proposing
them.. 

First, at least in the case when a new or modified air pollution control
device is required, the source under this proposal must make substantial
financial commitment to comply with the Green Group designation.  This
type of source has every incentive to complete the construction of the
air pollution control device expeditiously because, as described above,
the remaining period for the Green Group qualification is reduced
accordingly.

Further, based on our overall pilot permit experience, sources that wish
to obtain a flexible permit approach are likely to use it for changes at
multiple emissions activities that could be constructed over several
years.  Our evaluation of the pilot permits found that the authorized
flexibilities were used extensively and frequent changes were made.

In addition, once the air pollution control technology is in operation,
we do not believe significant additional environmental benefits will be
gained by requiring the source to revisit the BACT or LAER determination
for the changes that are approved as part of the Green Group, but may
not be constructed for several years.  As noted above, we do not believe
that there will be significant incremental improvements in
state-of-the-art control technology over a 10-year period.  Moreover,
the incentive to be able to make changes within a Green Group without
further reviews or approvals can lead sources to employ BACT/LAER
emissions controls when they are not required to do so, in order to
establish a Green Group.

Finally, we believe that Green Groups are likely to involve controls
that are state-of-the-art air pollution control devices since the device
must be sized and designed to accommodate all of the emissions
associated with the emissions activities that comprise the Green Group,
including the authorized emissions increase.  We believe that the BACT
determination for a Green Group is likely to be more stringent than BACT
for the individual existing emissions activities or for the individual
authorized changes alone because it will likely be more cost effective
to control a larger amount of emissions.  The BACT or LAER selected for
the Green Group is based on the emissions associated with all of the
approved emissions activities, and the BACT or LAER level must be
achieved (at least in part) through the use of a common air pollution
control device. 

For essentially the same reasons for removing the applicability of 40
CFR 52.21(r)(2) provisions from Green Groups activities, we believe that
these activities should be exempted from the (j)(4) provisions of both
40 CFR 52.21 and 51.166.  The (j)(4) provisions currently require for
phased construction projects that the BACT determination be reviewed and
modified as appropriate at the latest reasonable time which occurs no
later than 18 months prior to commencement of construction of each
independent phase of the project.  There again is no need to evaluate
the interdependence of changes since, under the proposed Green Group
approach, a continuum of changes is likely over a 10-year period while a
change in the BACT determination is not.

On the other hand, we do not propose to exclude the provisions of 40 CFR
52.21(r)(4), 51.166(r)(2), and 51.165(a)(5)(ii) from applying to NSR
permitting actions to establish Green Group designations.  These
provisions subject a source to major NSR upon the relaxation of certain
permit terms that had allowed the source to avoid major NSR.  In the
designation of a Green Group, the emissions unit (which could include an
emissions activity to which a (r)(4) limit was attached) will undergo
major NSR review and be subject to BACT or LAER.  Thus, there is no need
to specifically exempt Green Groups from the provisions of 40 CFR
52.21(r)(4), 51.166(r)(2), and 51.165(a)(5)(ii).  	

This legal rationale for Green Groups differs from the legal rationale
for Clean Units, a provision in the 2002 NSR Improvement rules that the
U.S. Court of Appeals for the D.C. Circuit vacated in State of New York,
et al., v. U.S. EPA, June 24, 2005, 413 F.3d at 40.  As noted above, an
existing stationary source triggers NSR when it makes a
“modification,” which is defined, under CAA section 111(a)(4), as
“any physical change…. which increases the amount of any air
pollutant emitted” by the source.  The EPA based the Clean Unit
provision on the premise that the source’s construction activities
following permit approval do not constitute a “modification” under
CAA section 111(a)(4), and therefore do not trigger application of NSR,
even if they a constitute physical change, as long as the change does
not increase the source’s permit allowable emissions.  We interpreted
the term “increase[]” under CAA section 111(a)(4) to authorize an
“allowables” measurement, at least when a source meets the
requirements for Clean Units.  The D.C. Circuit vacated this provision
on grounds that in the context of section 111(a)(4), the plain language
meaning of the term “increase[]” refers to actual emissions, not
allowable emissions.  In contrast, this legal rationale for Green Groups
is based on the premise that the changes and emissions activities that
occur within a Green Group are specifically authorized to occur as a
result of undergoing, not avoiding, major NSR.  Conversely, other
changes that a source seeks to implement, but are not authorized in the
Green Group, cannot occur without first obtaining all necessary
preconstruction approvals that would apply to such changes.  The
determination of whether the newly proposed, but unauthorized changes
trigger NSR would be made using the “actual-to-projected-actual
test” upheld by the D.C. Circuit in 2005.

As noted above, the CAA permit provisions do not by their terms specify
timing requirements for phased construction.  Current regulations
authorize phased construction activities, within certain constraints,
and those constructions activities cannot be considered to be
“physical change[s]” that could amount to a “modification.”  
This proposal is based on the same legal rationale, and simply relaxes
those regulatory constraints under certain circumstances, for the policy
reasons described above.

What are the conforming regulatory changes we must make to implement the
Green Group concept? 

We are proposing regulatory language for 40 CFR 51.165, 51.166, and
52.21 to add Green Group provisions.  For Green Groups, we propose to
add new provisions at 40 CFR 51.165(i), 51.166(z), and 52.21(dd).  We
are also proposing to revise 40 CFR 52.21(j)(4) and (r)(2) and 40 CFR
51.166(j)(4) to exempt Green Groups from these provisions.

In addition, for Green Groups, we propose to amend as necessary the
existing provisions related to netting, emissions offsets, and
determining the emissions increase that will result from a proposed
project.  See this proposed regulatory language for the full range of
these changes, for example in 40 CFR 52.21(a)(2)(v).

We are also proposing to make conforming changes to the regulatory
language in appendix S of part 51, but we have not provided specific
regulatory language in this proposal.  Appendix S contains the
permitting program for major stationary sources in nonattainment areas
lacking an approved part D NSR program.  It applies for the transition
period between a new nonattainment designation and our approval of a SIP
revision to implement the nonattainment NSR requirements (i.e., 40 CFR
51.165) in the area (see 40 CFR 52.24(k)).  We have not, to date,
revised appendix S to conform to our December 2002 NSR regulations,
although we stated our intent to do so when we finalized those
provisions in 40 CFR 51.165, 51.166, and 52.21 (67 FR 80187).

If we finalize revisions to appendix S to incorporate the December 2002
regulations before we finalize the Green Group provisions that we are
proposing, we intend to finalize these proposed provisions in appendix S
at the same time that we finalize the changes to incorporate them into
40 CFR 51.165, 51.166, and 52.21.  If we finalize this Green Group
proposal prior to our revision of appendix S to incorporate the December
2002 regulations, we will either (1) include the final Green Group
provisions in appendix S at the same time that we add the December 2002
regulations, or (2) add the final Green Group provisions to appendix S
when we finalize this rule or through an additional action.  Because the
Green Group provisions would be conforming changes and the public has
the opportunity to review and comment on the conceptual framework and
regulatory language proposed, we will not solicit additional comments on
these provisions as they apply in appendix S.

What is an example of how a Green Group might be used in combination
with a title V permit?

Examples 1 and 2 in section VI.D described how AOSs and incorporation of
advance approvals in a part 70 permit could be used to provide
flexibility in certain situations.  The following example 3 describes
how Green Groups can provide operational flexibility across applicable
requirements through streamlining.

Example 3: Magnetic Tape Plant with Multiple Future Changes. 

This example illustrates a Green Group and indicates how a source and
permitting authority can streamline Green Group requirements with other
applicable emissions control requirements to craft a flexible title V
permit that authorizes a range of changes at the source while minimizing
the permit terms and conditions necessary to assure compliance with all
the associated applicable requirements.  In this example, a magnetic
tape manufacturing facility located in an attainment area consists of
two large production buildings (i.e., Buildings 1 and 2), each with
seven magnetic tape process lines.  In particular, the source has web
coating lines used in the manufacture of magnetic data storage media as
well as equipment for handling raw materials associated with coating
operations, storage of products or materials, and power boilers to
support the process activities.  

Five of the existing magnetic tape coating lines in Building 1 are
subject to the MACT standard (part 63, subpart EE), which requires a
95-percent HAP emissions reduction from the process lines and associated
solvent storage tanks, mixing vessels, solvent recovery equipment, and
waste handling devices.  Two of these five lines are also subject to the
NSPS for magnetic tape coating (part 60, subpart SSS), which requires up
to 95-percent control of VOCs from coating lines and mixing vessels. 
The other two lines are not regulated under part 60 or part 63 because
they are grandfathered from NSPS subpart SSS and do not emit any HAP. 
However, these two lines are subject to an emissions limitation under
the SIP that requires an 80-percent reduction in VOC emissions.  For
major modifications, major NSR in this PSD area would require, for this
source, application of BACT (determined on a case-by-case basis), along
with a determination that the VOC emissions increase, among other
things, will not cause or contribute to an exceedance of the ozone NAAQS
or have an adverse impact on the air quality related values of any Class
I area.  The existing storage tanks are grandfathered from the NSPS
(part 60, subpart Kb), but are subject to the MACT standard
(subpart EE) to the extent that they store HAP. 

The VOC emissions from the equipment in Building 1 are currently
controlled with a large, very efficient (96-percent control) carbon
adsorption system which the source installed at the time it became
subject to MACT subpart EE.  This resulted in voluntary over-control of
the two lines subject only to the SIP limitation.  The source adopted
this control approach so as to retire the old control devices that
previously served these two lines and to allow for flexibility in future
operations.  With the voluntary over-control of these two lines, current
total annual VOC emissions from Building 1 are 500 tpy.  The amount of
this over-control would be approximately 572 tpy, assuming that the
seven lines are equal in their contributions to the total VOC emissions
of Building 1.

The source would like the flexibility to make a range of changes within
Building 1, but the exact changes within this range will depend upon
business conditions during the permit term and, therefore, are not yet
known.  Overall, the source seeks the flexibility to make the following
changes: 

Use new raw materials in coating solutions or use an entirely new
coating solution;

Modify the existing process equipment; and/or

Add new process equipment of a similar nature to existing equipment
(including new coating lines) within this building.  This new equipment
would be limited to equipment included in the definition of “magnetic
tape manufacturing operation” in MACT subpart EE (40 CFR 63.702). 

The source may pursue a two-part approach to obtain the desired
flexibility to make changes within Building 1: (1) obtain a PSD permit
that designates Building 1 as a Green Group and advance approves the
future changes; and (2) revise the existing title V permit under the
significant modification process to incorporate all applicable
requirements, as required by part 70, for the changes that are advance
approved in Building 1 under PSD.  

	Assuming the source follows this approach, the source submits a PSD
permit application requesting a Green Group designation for Building 1. 
This permit application must include descriptions of  the types of
changes the source intends to make there over the next 10 years (as
noted above), along with emissions information associated with both the
changes, especially regarding any requested increases in emissions, and
the existing operations of Building 1.  

The PSD application must demonstrate how those changes and the
associated emissions increases in combination with existing emissions
will comply with PSD requirements for Green Groups.  In order to meet
BACT, the source in its PSD application proposes to control emissions
from Building 1, including emissions from anticipated changes, by (1)
using permanent total enclosures to capture all VOC emissions from the
building (including coating lines and associated mixing vessels, solvent
recovery equipment, and waste handling devices), and (2) venting these
enclosures and the storage tanks to the highly efficient (96-percent
efficient) carbon adsorption system currently used to control emissions
from all the equipment in Building 1.  The PSD application includes the
following BACT-related demonstrations:

(	A demonstration that the resultant 96-percent control of VOCs
qualifies as BACT; and

(	A demonstration that the existing carbon adsorption system has the
capacity to maintain 96-percent control in the face of the increased
solvent loading associated with the anticipated changes.

In addition, the application contains a proposed Green Group emissions
limit of 600 tpy VOC and all emissions information relied upon to
calculate this limit.  The proposed limit, in this case, is the sum of
the current baseline actual emissions for each existing emissions
activity comprising the group (since that baseline already reflects
application of the proposed BACT), which the source has calculated to be
500 tpy, plus a 100 tpy emissions increase increment to accommodate the
calculated, maximum emissions from any future changes for which the
source is seeking approval.  In other cases where current controls do
not reflect application of the proposed BACT, sources also would be
required to submit actual emissions information for included activities
relative to their operation before BACT would be applied.  In this
example, by subjecting the coating lines and all of the other emissions
activities in the Green Group to the BACT level of control, the source
has imposed additional control, not otherwise required, on the two lines
otherwise subject only to SIP requirements.  While the overall actual
emissions from this group may increase by 100 tpy upon approval of the
Green Group, the proposed increase would be subjected to BACT, and
overall VOC emissions would be less by 472 tpy than the actual emissions
level that would occur for the source were the Green Group level of
control not in effect for the two lines previously subject to only to
SIP requirements (i.e., 572 tpy over-control minus the 100 tpy
increase).

The PSD application also includes a demonstration that a VOC emissions
increase of 100 tpy from Building 1 will be consistent with the PSD
requirements applicable to the area.  It shows that the increase, among
other things, will not cause or contribute to ambient ozone in excess of
the ozone NAAQS or have an adverse impact on the air quality related
values associated with any Class I area.  

The application also describes, as normally required under PSD
permitting, how the source will demonstrate initial and ongoing
compliance with the BACT emissions limits.  In doing so, the source
bears in mind the requirements of the other applicable requirements
(NSPS subpart SSS, MACT subpart EE, and the SIP) with an eye toward
streamlining these requirements, as discussed further below.  For the
initial VOC BACT compliance test, the source proposes to measure the
control efficiency of the carbon adsorption system by testing at the
inlet and outlet of the system using EPA Reference Method 25A and to
verify the permanent total enclosures using EPA Reference Method 204. 
To assure ongoing compliance with the proposed BACT for VOC emissions,
the source proposes to monitor continuously the Green Group(s single
emissions outlet (the carbon adsorption system stack) with a CEMS
calibrated on the predominant VOC.  (The same CEMS currently used for
compliance purposes under the existing emissions limits.)  The operating
limit for this parameter (outlet concentration) will be established
during the initial performance test.  This monitoring system will also
serve to assure that the emissions vented to the carbon adsorber do not
exceed the capacity of the system (a Green Group requirement), which
would result in an elevated outlet concentration.  In addition, the
source proposes to continuously monitor its permanent total enclosures
using differential pressure gauges to demonstrate that these enclosures
are at the prescribed negative pressure relative to their surroundings. 
The doors into the enclosures also are equipped with contact switches
and electronic interlocks that automatically close the door after
15 seconds; the actual open time for each door is monitored and
tracked.  An operator alarm sounds if a door is open longer than
3 minutes.  These types of testing and monitoring procedures are
allowed under NSPS subpart SSS, MACT subpart EE, and the SIP as well.

To demonstrate compliance with the annual VOC emissions limit required
for a Green Group (set, in this case, at the level of baseline actual
emissions at BACT plus 100 tpy (i.e., 600 tpy VOC) as projected in the
application), the source proposes to meet the MRRT requirements for
Green Groups (discussed previously) by using the concentration data from
the VOC CEMS on the Building 1 carbon adsorber outlet coupled with data
from a volumetric flow rate CEMS.  Together these CEMS constitute a
continuous emissions rate monitoring system (CERMS), which will allow a
direct determination of mass emissions from this building.  Total VOC
emissions will be determined for each month, and the source will
calculate the rolling 12-month total for comparison to the annual VOC
emissions limit.

The source also proposes comprehensive recordkeeping and reporting in
its PSD application.  The proposed recordkeeping includes use of an
automated data acquisition and handling system (DAHS) to record CEMS and
CERMS readings at least once every 15 minutes and to make the necessary
calculations.  

After review and public comment, the permitting authority approves the
proposed BACT determination, ambient air quality analysis, and
compliance assurance measures.  The permitting authority then issues a
PSD permit to the source designating Building 1 as a Green Group.  

This PSD permit provides advance approval under major NSR for the
described changes within the Green Group.  However, this major NSR
approval does not address the requirements of the title V permitting
program.  Therefore, another step is needed to enable the source to
proceed with these changes without any further review or approval by the
permitting authority.

Under the second part of the process and (in this example) concurrent
with the PSD permit application, the source submits an application for a
significant permit modification of its part 70 permit.  Therein the
source proposes to include the advance approvals under major NSR in the
title V permit so as to assure compliance with all applicable
requirements relevant to the anticipated changes.  To do so, this
application proposes streamlined requirements to address the spectrum of
changes that could occur within Building 1 and includes a streamlining
demonstration and associated documentation.  In particular, the
application proposes a streamlined emissions limit of 96-percent control
of VOC and organic HAP emissions, to be achieved using the same control
strategy proposed as BACT.  The streamlining demonstration and
documentation show that this 96-percent reduction level will assure
compliance with all the emissions limits that could apply to any of the
existing, modified, or new equipment in Building 1 (i.e., MACT subpart
EE, NSPS subpart SSS, the SIP, and BACT).  This demonstration accounts
for the level and format of the emissions limits (all in terms of
percent reduction), the associated test methods (all are consistent),
the averaging time (all are consistent), and the collection of equipment
across which compliance is demonstrated (all require compliance for each
individual piece of equipment).  

The streamlining proposal also includes streamlined monitoring,
recordkeeping, and reporting requirements that assure compliance with
the streamlined emissions limit at least as well as the requirements of
the subsumed applicable requirements.  In this case, the monitoring
requirements associated with the BACT emissions limit are shown to
assure compliance with the streamlined emissions limit as least as well
as the monitoring applicable to each less-stringent emissions limit. 
Similarly, the recordkeeping and reporting associated with the BACT
monitoring approach are appropriate for use with the streamlined limit
and provide no less compliance assurance than would the recordkeeping
and reporting required for any of the subsumed monitoring approaches.

In this case, where the PSD application and streamlining proposal are
being prepared simultaneously, the source appropriately considered the
other, non-NSR applicable requirements in its permit application for the
BACT emissions limit and associated MRRT requirements so that as the
BACT limit (i.e., 96 percent reduction) meshed with the streamlined
requirements in the part 70 permit application.  This approach
simplified the streamlining proposal.

The part 70 application essentially incorporates the description
contained in the PSD permit which established the Green Group.  That is,
it describes the baseline configuration in Building 1, as well as the
types of changes that are anticipated (mirroring the changes approved in
the Green Group PSD permit).  The part 70 application also identifies
the streamlined requirements and all the subsumed applicable
requirements implicated by the potential changes (PSD, NSPS subpart SSS,
MACT subpart EE, and the SIP), and indicates that PSD authorization has
been received (or is being concurrently processed).  Any physical or
operational changes that implicate different sets of applicable
requirements would be identified as AOSs, as discussed previously in
Example 2.  The application proposes terms and conditions to assure
compliance with the streamlined requirements.  Focusing these terms and
conditions on the streamlined requirements simplifies both the
application and the resulting permit.

The magnitude of the authorized emissions increase under the proposed
scenario(s) is bounded by the annual VOC emissions limitation for the
Green Group established at the level of baseline actual emissions under
BACT plus the 100 tpy VOC emissions increase approved under PSD.  Thus,
the permit application proposes an aggregate total of 600 tpy VOC.  Note
that any VOC emissions within Building 1 will count against this
limitation.  For purposes of this example, we have assumed that no
debottlenecking effect occurs from emissions units that are not changed
themselves. Traditional NSR (i.e., minor or major NSR, as applicable)
continues to apply outside the Green Group.

For purposes of the Green Group (which is a single emissions unit under
the PSD regulations proposed), the aggregate total emissions figure (600
tpy) included in the part 70 application fulfills the part 70
requirement that annual emissions be provided in the application for
each emissions unit.  However, because some of the emissions activities
that are included in the Green Group are also subject to other
applicable requirements (i.e., the SIP, NSPS subpart SSS, and/or MACT
subpart EE), they may be considered emissions units for purposes of
these requirements.  As a result, the source potentially could be
required to provide the annual emissions in tpy for each of these
smaller emissions units in the part 70 permit.  Under the part 70 rule
revisions proposed (see proposed 40 CFR 70.5(c)(3)(iii)), for emissions
units that are under an emissions cap, “tpy can be reported as part of
the aggregate emissions associated with the cap, except where more
specific information is needed to determine an applicable
requirement.”  Thus, because the application already stipulates that
the emissions activities are subject to these other applicable
requirements, there is no need for the source to include annual
emissions for each of the subject emissions activities.

The source and the permitting authority then proceed through the process
for a significant permit modification that involves streamlining and the
incorporation of the Green Group permit (i.e., the advance approval
issued under major NSR).  After review and public participation, and
after addressing the comments received, the permitting authority issues
a revised title V permit which includes the streamlined requirements,
the Green Group permit terms, and a permit shield.

The source subsequently is able to make the authorized changes in the
Green Group/Building 1 without additional review or approval or permit
revisions.  Log entries are required if the source makes changes that
cause a shift to a different AOS.  Note that the notification
requirements of the NSPS and MACT General Provisions continue to apply
if the source adds a new line or modifies an affected source or facility
within the Green Group.  

What is the effect of these proposed revisions? 

If these proposed revisions are finalized, what are the implications for
approved part 70 programs?

The part 70 regulations provide, in pertinent part, that—

If part 70 is subsequently revised such that the Administrator
determines that it is necessary to require a change to an approved State
program, the required revisions to the program shall be submitted within
12 months of the final changes to part 70 or within such other period as
authorized by the Administrator.

See 40 CFR 70.4(a); see also 40 CFR 70.4(i)

The revisions to the part 70 program proposed build upon the existing
regulatory structure, as promulgated in 1992.  For the reasons discussed
above, we believe that these proposed revisions clarify the existing
part 70 regulations.  Our pilot experience – where we worked closely
with several different States – strongly suggests that these
revisions, if finalized, would likely not necessitate revisions to many
approved State programs.  Based on our pilot experience, however, we
recognize that State programs differ, and we believe that at least some
States would likely revise their current part 70 program to add
sufficient authority to implement the final rule or to make current
authority on flexible permits more explicit.  We solicit comment on our
initial position that at least some State programs would require program
revisions in response to the final rule.

We intend to work closely with States and review expeditiously any
documentation submitted regarding the adequacy of current part 70
programs and any proposed program revisions.  Nothing precludes State
and local permitting authorities from issuing flexible permits, as they
may have done in the past, but they must determine if sufficient
authority exists under their current operating permit program to do so. 
For those States that believe they lack authority under their current
part 70 programs to implement the final rule, such States should submit
proposed revisions to their title V operating permits program to their
EPA Regional Offices within 12 months of the date of publication of the
final rule in the Federal Register.  See 40 CFR 70.4(a).  For other
States, if we determine in writing that a particular part 70 program
does not provide sufficient authority to implement the final rule or is
inconsistent with the final rule, we propose that the relevant State
then have 12 months from the date of our written determination to submit
a proposed operating permit program consistent with the final rule to us
for review and approval.

What are the implications for NSR programs?  

We believe that Green Groups will have environmental and administrative
benefits like those of PALs.  Accordingly, we propose that the Green
Groups, like PALs, should be a mandatory program element.  When the
Green Group provisions are finalized, this will require revisions to
SIPs or a demonstration that adequate authority already exists.  

By “mandatory program element,” we mean that SIPs must include
provisions providing for the issuance of major NSR permits with Green
Group designations.  However, a Green Group would be an option that a
source may, or may not, choose to seek.  In addition, a permitting
authority would have discretion as to whether or not to issue a Green
Group permit based on the particulars of each individual case. 

Where States and local agencies would need implementation plan revisions
to be able to issue permits establishing Green Groups, they must adopt
and submit revisions to their part 51 permitting programs implementing
these minimum program elements no later than 3 years from the date of
publication in the Federal Register of the final Green Group regulations
in 40 CFR 51.165 and 51.166.  In any area for which we are the reviewing
authority, or for which we have delegated our authority to issue permits
to State or local permitting authorities, the changes would take effect
60 days from the date of publication in the Federal Register of the
final Green Group regulations in 40 CFR 52.21.  

	As we noted in the NSR improvements adopted in 2002, State and local
jurisdictions have significant freedom to customize their NSR programs
(67 FR 80241).  Ever since our current NSR regulations were adopted in
1980, we have taken the position that States may meet the requirements
of part 51 “with different but equivalent regulations.”  See 45 FR
52676.  

	During the interim period between this proposal and finalization of the
proposed rules, we believe that certain major NSR permits with features
similar to a Green Group designation could be approved under our
existing federal PSD regulations at 40 CFR 52.21.  Such permits would
have to abide by the existing regulations, including the restrictions at
40 CFR 52.21(r)(2) and (j)(4), which would differ from this proposal for
Green Groups.  Because of the benefits we believe Green Groups bring, we
invite States to whom we have delegated the federal PSD program, as well
as States implementing their own EPA-approved major NSR programs, to
work with us on a case-by-case basis within the constraints of existing
regulations to determine whether and to what extent Green Group-like
permits may be available in this interim period.

Statutory and Executive Order Reviews

Executive Order 12866:  Regulatory Planning and Review

	Under Executive Order (EO) 12866   SEQ CHAPTER \h \r 1 (58 FR 51735,
October 4, 1993), this action is a “significant regulatory action”
because it is likely to result in a rule that may raise novel legal or
policy issues arising out of legal mandates, the President’s
priorities, or the principles set forth in the Executive Order.   SEQ
CHAPTER \h \r 1 Accordingly, EPA submitted this action to the Office of
Management and Budget (OMB) for review under EO 12866 and any changes
made in response to OMB recommendations have been documented in the
docket for this action. 

Paperwork Reduction Act

	This proposed rule would revise several existing rules.  The current
information collection requirements of those rules are contained in
three different Information Collection Requests (ICRs).  The Office of
Management and Budget (OMB) has approved the information collection
requirements for parts 70 and 71 under the provisions of the Paperwork
Reduction Act, 44 U.S.C. 3501 et seq.  The currently approved ICR for
part 70 is assigned ICR number 1587.06 and OMB number 2060-0243; for
part 71, the ICR number is 1713.05 and the OMB number is 2060-0336. 
Similarly, OMB has approved information collection requirements for
parts 51 and 52 that govern the State and Federal programs for
preconstruction review and permitting of major new and modified sources
pursuant to part C (PSD) and part D (nonattainment major NSR) of title I
of the CAA.  The currently approved ICR for parts 51 and 52 is assigned
ICR number 1230.17 and OMB number 2060-0003.

	The information collection requirements in this proposed rule have been
submitted for approval to OMB under the Paperwork Reduction Act, 44
U.S.C. 3501 et seq.  The ICR documents prepared by EPA have been
assigned EPA ICR numbers 1587.08, 1713.07, and 1230.20.

	The total economic impact of the proposed Flexible Air Permitting Rule
over the three-year term of the ICR is estimated to be $36 million in
cost savings for sources with a burden reduction of approximately
943,000 labor hours; $19 million in cost savings for permitting
authorities with a burden reduction of approximately 514,000 labor
hours; and costs of $1.4 million with an increase in burden of
approximately 37,000 labor hours for EPA.

	Burden means the total time, effort, or financial resources expended by
persons to generate, maintain, retain, or disclose or provide
information to or for a Federal Agency.  This includes the time needed
to: (1) review instructions; (2) develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; (3) adjust the existing ways to
comply with any previously applicable instructions and requirements; (4)
train personnel to be able to respond to a collection of information;
(5) search data sources; (6) complete and review the collection of
information; and (7) transmit or otherwise disclose the information.

	An Agency may not conduct or sponsor, and a person is not required to
respond to a collection of information unless it displays a currently
valid OMB control number.  The OMB control numbers for EPA’s
regulations are listed in 40 CFR part 9 and 48 CFR Chapter 15.  

	To comment on the Agency’s need for this information, the accuracy of
the provided burden estimates, and any suggested methods for minimizing
respondent burden, including the use of automated collection techniques,
EPA has established a public docket for this rule, which includes this
ICR, under Docket ID number EPA-HQ-OAR-2004-0087.   Submit any comments
related to the ICR for this proposed rule to EPA and OMB.  See the
ADRESSES section at the beginning of this notice for where to submit
comments to EPA.  Send comments to OMB at the Office of Information and
Regulatory Affairs, Office of Management and Budget, 725 17th Street,
NW, Washington, DC 20503, Attention: Desk Office for EPA.  Since OMB is
required to make a decision concerning the ICR between 30 and 60 days
after [INSERT DATE OF PUBLICATION], a comment to OMB is best assured of
having its full effect if OMB receives it by [INSERT DATE 30 DAYS AFTER
PUBLICATION].  The final rule will respond to any OMB or public comments
on the information collection requirements contained in this proposal.

Regulatory Flexibility Act (RFA)  tc "Regulatory Flexibility Act (RFA),
as amended by the Small Business Regulatory Enforcement Fairness Act of
1996 (SBREFA), 5 U.S.C. 601 et seq " \l 2 

	The RFA generally requires an agency to prepare a regulatory
flexibility analysis of any rule subject to notice and comment
rulemaking requirements under the Administrative Procedure Act or any
other statute unless the Agency certifies that the rule will not have
“a significant economic impact on a substantial number of small
entities.”  Small entities include small businesses, small
organizations, and small government jurisdictions.

	For purposes of assessing the impacts of this proposal on small
entities, a 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.

	This proposed rule would merely clarify existing requirements and allow
regulated entities to seek additional flexibility for their Clean Air
Act permits, and would not create a new burden for regulated entities. 
We have determined there will be cost savings for small entities
associated with these proposed revisions.  After considering the
economic impact of this proposed rule on small entities, I certify that
this action will not have a significant economic impact on a substantial
number of small entities.  Therefore, a regulatory flexibility analysis
is not required.

Unfunded Mandates Reform Act 

	Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law
104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector.  Under section 202 of the UMRA, 2
U.S.C. 1532, we generally must prepare a written statement, including a
cost-benefit analysis, for any proposed or final rule that “includes
any Federal mandate that may result in the expenditure by State, local,
and tribal governments, in the aggregate, or by the private sector, of
$100 million or more ... in any one year.”  A “Federal mandate” is
defined to include a “Federal intergovernmental mandate” and a
“Federal private sector mandate.”  2 U.S.C. 658(6).  A “Federal
intergovernmental mandate,” in turn, is defined to include a
regulation that “would impose an enforceable duty upon State, local,
or tribal governments,” 2 U.S.C. 658(5)(A)(i), except for, among other
things, a duty that is “a condition of Federal assistance.”  2
U.S.C. 658(5)(A)(i)(I).  A “Federal private sector mandate” includes
a regulation that “would impose an enforceable duty upon the private
sector,” with certain exceptions [2 U.S.C. 658(7)(A)].

	Before promulgating a rule for which a written statement is needed,
section 205 of the UMRA generally requires us to identify and consider a
reasonable number of regulatory alternatives and adopt the least-costly,
most cost-effective, or least-burdensome alternative that achieves the
objectives of the rule.  The provisions of section 205 do not apply
where they are inconsistent with applicable law.  Moreover, section 205
allows us to adopt an alternative other than the least-costly, most
cost-effective, or least-burdensome alternative if the Administrator
publishes with the final rule an explanation why that alternative was
not adopted.  Before we establish any regulatory requirements that may
significantly or uniquely affect small governments, including tribal
governments, we must have developed under section 203 of the UMRA a
small government agency plan.  The plan must provide for notifying
potentially affected small governments, enabling officials of affected
small governments to have meaningful and timely input in the development
of our regulatory proposals with significant Federal intergovernmental
mandates, and informing, educating, and advising small governments on
compliance with the regulatory requirements.

	We have determined under the regulatory provisions of title II of the
UMRA that this proposed rule does not include a Federal mandate that may
result in estimated costs of $100 million or more to either State,
local, or tribal governments in the aggregate, or to the private sector.
 This proposed rule is estimated to save State, local, and tribal
permitting authorities over $5 million and to result in an
administrative burden reduction of 135,000 hours. Thus, this proposed
rule is not subject to the requirements of sections 202 or 205 of the
UMRA.

	In addition, we have determined that this proposed rule contains no
regulatory requirements that might significantly or uniquely affect
small governments. We expect any impact will act to lower overall
administrative burden to these entities.  Therefore, this proposed rule
is not subject to the requirements of section 203 of the UMRA. 

Executive Order 13132:  Federalism

	Executive Order 13132, entitled “Federalism” (64 FR 43255, August
10, 1999), requires us to develop an accountable process to ensure
“meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.”
 “Policies that have federalism implications” is defined in the
Executive Order to include regulations that have “substantial direct
effects on the States, or on the distribution of power and
responsibilities among the various levels of government.”

	This proposal 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 proposal should result in cost
savings and administrative burden reductions for States and will not
alter the overall relationship or distribution of powers between
governments for the part 70 and part 71 operating permits programs or
for the part 51 and part 51 NSR programs.  Thus, Executive Order 13132
does not apply to this proposed rule.

	In the spirit of Executive order 13132, and consistent with our policy
to promote communication between us and State and local governments, we
specifically solicit comment on this proposed rule from State and local
officials.

Executive Order 13175:  Consultation and Coordination with Indian Tribal
Governments

	Executive Order 13175, “Consultation and Coordination with Indian
Tribal Governments” (65 FR 67249, November 6, 2000), requires us to
develop an accountable process to ensure “meaningful and timely input
by tribal officials in the development of regulatory policies that have
tribal implications.”  “Policies that have tribal implications” is
defined in the Executive Order to include regulations that have
”substantial direct effects on one or more Indian tribes, on the
relationship between the Federal government and the Indian tribes, or on
the distribution of power and responsibilities between the Federal
government and Indian tribes.”

	This proposed rule revisions do not have tribal implications because
they will not have a substantial direct effect on one or more Indian
tribes, on the relationship between the Federal government and Indian
tribes, or on the distribution of power and responsibilities between the
Federal government and Indian tribes, as specified in Executive Order
13175.  This action does not significantly or uniquely affect the
communities of Indian tribal governments. Accordingly, the requirements
of Executive Order 13175 do not apply to these proposed rule revisions.
We solicit comments from Indian tribal governments on the proposed rule.

Executive Order 13045:  Protection of Children from Environmental Health
and Safety Risks

	This proposed rule is not subject to the Executive Order because it is
not economically significant as defined in Executive Order 12866, and
because the Agency does not have reason to believe the environmental
health or safety risks addressed by this action present a
disproportionate risk to children because it does not establish an
environmental standard intended to mitigate health or safety risks.

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

	This rule is not subject to Executive Order 13211, “Actions
Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use” (66 FR 28355, May 22, 2001) because it is not a
significant regulatory action under Executive Order 12866.

	This proposed rule is not a “significant energy action,” as defined
in to Executive Order 13211, because it is not likely to have a
significant adverse effect on the supply, distribution, or use of
energy.  As noted earlier, this action would simply clarify existing
requirements and would not impose any new requirements, and thus would
not affect the supply distribution, or use of energy.

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, directs us 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 bodies. 
The NTTAA directs us to provide Congress, through OMB, explanations when
the Agency decides not to use available and applicable voluntary
consensus standards.

	The NTTAA does not apply to this proposed rule because it does not
involve

technical standards.  Therefore, we did not consider the use of any
voluntary consensus standards.

List of Subjects

40 CFR Part 51

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

40 CFR Part 52

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

40 CFR Part 70

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

40 CFR Part 71

	Environmental protection, Administrative practice and procedures, Air
pollution control, Intergovernmental relations, Reporting and
recordkeeping requirement

_________________________________

Dated

_________________________________

Stephen L. Johnson,

Administrator.

 We first addressed the concept of a flexible air permit in May 1991. 
See 56 FR 21712, 21748 (May 10, 1991).  

 (Applicable requirements( is a term that is used in title V.  The EPA
has defined the term to include, among other things, State
implementation plan (SIP) rules, the terms and conditions of
preconstruction permits issued under a SIP-approved NSR program, and
requirements pursuant to the new source performance standards (NSPS),
national emission standards for hazardous air pollutants (NESHAP), and
Acid Rain Programs.  See 40 CFR 70.2.

 (Major stationary source( is defined at 40 CFR 51.165(a)(1)(iv),
51.166(b)(1), and 52.21(b)(1), and (major modification( is defined at 40
CFR 51.165(a)(1)(v), 51.166(b)(2), and 52.21(b)(2).

 This is a section 307(d) rulemaking.  See CAA section 307(d)(1)(J)
(addressing regulations under part C of Subchapter I) and 307(d)(1)(V)
(authorizing the Administrator to designate any action a 307(d)
rulemaking).

 In the 1990's, we proposed certain clarifications and modifications to
the part 70 regulations, none of which were ever finalized.  See
generally 60 FR 45529 (Aug. 31, 1995), 59 FR 44460 (Aug. 29, 1994).  In
those proposals, among other things, we discussed the concept of
(advance NSR( in relation to AOSs, and proposed a definition for
(alternative operating scenarios.(  

 The EPA included other operational flexibility provisions in the final
part 70 regulations, including 40 CFR 70.4(b)(12), (b)(14) and (b)(15),
which implement section 502(b)(10) of the Act.  This proposed rule does
not address these provisions.  

 The Federal operating permit program at part 71 addresses reasonably
anticipated operating scenarios in the same fashion as part 70.  See 40
CFR 71.6(a)(9).  These proposed revisions affect both parts 70 and 71
and the revisions that we propose to each part are virtually identical. 
For ease of reference, this preamble discussion refers to the part 70
provisions.  The discussion, of course, applies equally to the part 71
program revisions proposed.  Section numbers given for the part 70 rules
correspond directly to the analogous sections in part 71.  The term
(title V permit( refers to permits issued under either part 70 or part
71.

 In implementing the pilot projects, EPA and other permitting
authorities sometimes imposed certain constraints in the permits for
advance approvals and AOSs beyond those expressly contained in
applicable requirements or part 70.  These additional constraints varied
and were designed to provide permitting authorities the opportunity to
gain experience with different flexible permitting approaches.  Some of
these constraints were anticipated to be removed at the time of permit
renewal in the next version of the permit.

 See (Evaluation of the Implementation Experience with Innovative Air
Permits.(  A copy of this report is located in the docket for this
rulemaking, or can be accessed at
http://www.epa.gov/ttn/oarpg/t5/memoranda/iap_eier.pdf.

 In August 2000, based in large part on the experience we gained through
the pilot permit program, we issued a draft guidance document called
White Paper Number 3, on which we solicited comment.  See White Paper
Number 3, 64 FR 49803 (Aug. 15, 2000).  That draft guidance addressed
various flexible permitting approaches, including the use of the
reasonably anticipated AOS provision of 40 CFR 70.6(a)(9), Clean
Buildings, and PALs.  We received comments on the proposed rules and
draft guidance and, in fashioning this proposal, considered those
comments that addressed advance approval and AOSs as contained in 40 CFR
70.6(a)(9).  As explained further below, we propose a definition of
(alternative operating scenario( and certain other revisions to the part
70 regulations.  We also propose revisions to parts 51 and 52 that
provide for Green Groups.

 Note that other approaches to AOSs and advance approval may also be
acceptable, although they may not provide as much flexibility as the
approaches proposed.  For example, some States include in a title V
permit a type of conditional approval under which a source cannot
construct or operate otherwise approved changes until a minor NSR
approval is obtained for them.  Essentially, this approach creates in a
title V permit a structure that is a precursor to an AOS or an advance
approval.  Once the minor NSR permit is issued, the source can construct
and operate the changes under the conditional approval, but a title V
permit revision is needed to incorporate the now-available minor NSR
terms and to award the permit shield (where available from the
permitting authority).  Where an AOS is involved, this incorporation is
also needed to complete the AOS consistent with 40 CFR 70.6(a)(9).  Our
pilot permit experience suggests that in many instances changes subject
to minor NSR can be approved in advance, although the ability for a
State to provide such approvals will vary depending on the actual
provisions of individual State rules.  As a result, where advance
approval of changes subject to minor NSR is available, we encourage its
incorporation into the title V permit after or concurrent with obtaining
the necessary minor NSR approvals in order to provide a permitting
strategy with greater operational flexibility, certainty, and permitting
efficiency than does a conditional approval approach.

 Sources at the following locations participated in our pilot permit
program:  (1) 3M (St. Paul, MN); (2) Intel (Aloha, Oregon); (3) Lasco
Bathware (Yelm, WA); (4) Imation (Weatherford, OK); (5) Cytec
(Connecticut); (6) DaimlerChrysler (Newark, DE); (7) Merck (Elkton, VA);
(8) Merck (Barceloneta, PR); (9) Saturn (Spring Hill, TN); (10) BMW
(Spartanburg, SC); (11) Eli Lilly (West Lafayette, IN); (12) 3M (Nevada,
MO); and (13) Imation (Camarillo, CA).

 The VOC emissions caps used in the pilots were determined to be
adequate for purposes of safeguarding the ozone NAAQS, but for other
pollutants (e.g., air toxics) States sometimes required a replicable
modeling procedure to screen the impacts of individual emissions
increases relative to acceptable ambient toxics levels.  Here an ambient
dispersion model, complete with implementation assumptions, is approved
into the minor NSR permit to evaluate any new pollutant of concern or
increased existing pollutant emissions.  Failure of a particular change
to meet the screening levels triggered the need for case-by-base review
of that change from the permitting authority.

 The six permits that we analyzed were:  (1) Intel (Aloha, Oregon); (2)
3M (St. Paul, MN); (3) Lasco Bathware (Yelm, WA); (4) DaimlerChrysler
(Newark, DE); (5) Saturn (Spring Hill, TN); and (6) Imation
(Weatherford, OK).   

 Among other things, the report confirmed that the flexible permits are
enforceable in a practical manner by EPA and permitting authorities. 
See Report at pages 5, 20.  See footnote 9 of this preamble for
information on how you can obtain the report.

 See the pilot permit report, (Evaluation of the Implementation
Experience with Innovative Air Permits,( page 22.

 See (EPA Flexible Permit Implementation Review:  Saturn Permit Review
Report,( pages 9 and 34, which is available at   HYPERLINK
"http://www.epa.gov/ttn/oarpg/t5/memoranda/iap_sprr.pdf" 
http://www.epa.gov/ttn/oarpg/t5/memoranda/iap_sprr.pdf .

 Findings are discussed in more detail in the (Evaluation of
Implementation Experiences with Innovative Air Permits( report, under
Finding 8.

 These manufacturing concepts have been defined in various ways. 
Generally, however, lean manufacturing is defined as an initiative
focused on eliminating all waste in manufacturing processes.  Principles
of lean manufacturing include zero waiting time, zero inventory,
scheduling (internal customer pull instead of push system), batch to
flow (cut batch sizes), line balancing, and cutting actual process
times.  Six Sigma is defined as a rigorous and disciplined methodology
that utilizes data and statistical analysis to measure and improve a
company's operational performance, practices, and systems.  Six Sigma
identifies and prevents defects in manufacturing and service-related
processes.  In many organizations, it simply means a measure of quality
that strives for near perfection.  Agile manufacturing emphasizes the
ability to thrive and prosper in an environment of constant and
unpredictable change and includes the use of tools such as rapid
prototyping, rapid tooling, and reverse engineering to address customers
who require small quantities of highly custom, design-to-order products,
and where additional services and value-added benefits like product
upgrades and future reconfigurations are as important as the product
itself.

 Although we are proposing certain revisions to the major NSR program,
we are proposing no changes to any other applicable requirement, as that
term is defined in  40 CFR 70.2.

 The NAAQS and increments for some pollutants are established over
short-term periods as well as annually.  For example, annual, daily, and
3-hour NAAQS and increments are defined for sulfur dioxide. 
Accordingly, some NSR permits include emissions limits for these shorter
periods.

 If any other applicable requirements would be triggered by the change
that are not addressed by the minor NSR advance approval, they also must
be included in the part 70 permit and become applicable upon its
issuance.  Alternatively, such requirements may be prevented from
applying through limits contained in the permit (e.g., a PAL or PTE
cap(s)).

 As explained in White Paper Number 2, sources that seek to streamline
applicable requirements should submit their request as part of their
title V permit application, identifying the proposed streamlined
requirements and providing a demonstration that the streamlined
requirements assure compliance with all the underlying, subsumed
applicable requirements.  Upon approval of the streamlined requirements,
the permitting authority would place the requirements in the title V
permit.  See (White Paper Number 2 for Improved Implementation of the
Part 70 Operating Permits Program,( March, 5, 1996, for the complete
guidance on the streamlining of applicable requirements
(www.epa.gov/ttn/oarpg/t5/ memoranda/wtppr-2.pdf).  Where the source
wishes to streamline the advance approval under NSR with all other
relevant applicable requirements, the same title V permit application
can address both actions. 

 For the complete text of the elements that must be included in a title
V application, see 40 CFR 70.5(c).

 Some State, local, and Tribal air control programs include (State-only(
requirements (i.e., requirements not enforceable by EPA) that require
source owners or operators to obtain authorization prior to
construction.  In instances where the permitting authority elects to
include such requirements in the part 70 permit, there are benefits to
addressing them as part of a comprehensive permit flexibility solution. 
These requirements should, however, be labeled as (State-only(
consistent with 40 CFR 70.6(b)(2).  Options for flexible permit
conditions to address State-only applicable requirements potentially
range widely, depending on the State(s interpretation of its ability to
authorize changes in advance under these requirements.

 As needed, additional terms would be added to assure compliance with
applicable requirements beyond NSR that are implicated by the advance
approved changes. 

 Failure to anticipate and include a particular change under an AOS does
not in and of itself bar the source from implementing the change if it
can satisfy the requirements of the off-permit provisions in part 70,
such as those set forth at 40 CFR 70.4(b)(12) and (b)(14).  The permit
shield does not extend to changes made pursuant to these provisions. 
See, e.g., 40 CFR 70.4(b)(12)(i)(B), (b)(12)(ii)(B), (b)(14)(iii).  For
example, during the term of its part 70 permit, a source might obtain
approval under minor NSR to construct and operate a new emissions unit. 
Where available and granted by the permitting authority, the source can
implement the change under the off-permit provisions, assuming that the
change is not addressed or prohibited by the terms of the source’s
part 70 permit.

 Under the authority of 40 CFR 70.6(a)(3), however, the permit can also
contain additional streamlined monitoring or gap-filling periodic
monitoring as needed to assure compliance with applicable  requirements.
 An ARM can operate on the information gathered under these obligations
as well.

 Although subpart JJJJ requires only an initial performance test, many
States require periodic performance tests to verify that the control
device continues to achieve the emissions limit.  Where this is the
case, the operating limit typically is recalculated based on the
temperature during each test.  

 We have proposed in the definition of ARM that the otherwise qualifying
replicable protocol be consistent with and implement an applicable
requirement or requirement of part 70 (emphasis added).  Limits on PTE
may be established pursuant to part 70, and such a PTE limit would be a
requirement of part 70 and thus could be in part implemented through an
ARM.

 In the above PTE example, assume that the emissions determinations were
based on emissions factors derived from a stack test.  If there is a
possibility that a subsequent stack test may be performed, which would
require revision of those emissions factors in the near future, the
source or permitting authority may consider including in the permit an
ARM.  The ARM could direct the source to use emissions factors derived
from the most recent stack test, rather than listing specific factors in
the PTE equation contained in the permit, eliminating the need for a
permit revision once new factors are established.  

 Although an ARM can reduce the number of permit revisions a source must
make, it cannot modify an applicable requirement.  For example, there
are some instances where the applicable requirement requires a notice to
the permitting authority, such as where the requirement calls for notice
of a performance test or the submission of certain performance test
results.  An ARM does not abrogate these requirements.

 In pertinent part, 40 CFR 70.6(a)(9) provides that for an AOS, the part
70 permit must contain appropriate terms and conditions to ensure that
“all applicable requirement and the requirements of this part” are
met.  An ARM constitutes an example of such permit terms.

 Certain applicable requirements require that additional information be
included in an on-site log.  These data can be combined with that which
is would be required under the proposed part 70 revisions.  For example,
the Pharmaceuticals Production MACT standard (40 CFR part 63, subpart
GGG) requires the source to log considerably more information about its
(operating scenarios.(  See 40 CFR 63.1259(b)(8) and the definition of
(operating scenario( at 40 CFR 63.1251.

 A source, however, would not need to log a change to an emissions unit
unless an AOS is implicated by the change, or a source stops operating
under an AOS and returns to baseline operating conditions as a result of
the change.  In particular, no log entry is needed for a source making a
change where the change has been advance approved under minor NSR, the
title V permit contains the advance approval, and these terms are in
effect upon issuance of the title V permit (i.e., no AOS is involved).

 Under the provisions of parts 51 and 52, a major NSR PAL does not
inherently affect the applicability of minor NSR.  Some State minor NSR
rules may vary on this point, but for purposes of this example we assume
that minor NSR continues to apply beneath the major NSR PAL.

 The acronym “NESHAP” stands for National Emission Standards for
Hazardous Air Pollutants.  The NESHAP promulgated in 40 CFR part 63 are
typically referred to as MACT standards.

 The limit on tank size applies only to the advance approved tanks.  The
source retains the ability to construct tanks larger than 30,000
gallons, but would have to go through the normal preconstruction
permitting to construct a larger tank.

	 See section VI.A of this preamble and footnote 23 for more on the
streamlining of applicable requirements in a title V permit.

 The HON applies to specified organic HAPs that are a subset of the
total HAP list.  For this example, we use “HAP” to refer to those
HAPs covered by the HON.

 The companies in two of our pilots conveyed a clear desire to pursue an
approach similar to the Green Group options described in this proposal. 
One of these facilities is a synthetic minor source of VOC emissions for
purposes of PSD applicability, and is therefore not subject to major
NSR.  The source did, however, agree to meet a best technology
requirement under the State’s minor NSR program in order to authorize
a range of changes with VOC emissions conveyed to a highly efficient
carbon adsorption system.  The second facility went through major NSR to
obtain authorization for a wide spectrum of related changes anticipated
to occur in a complex of buildings all ducted to a common
state-of-the-art control technology.

 The major NSR rules refer to the (reviewing authority,( while part 70
refers to the (permitting authority.(  For purposes of consistency with
the other sections of this preamble, we use the term (permitting
authority( in this section.  In these discussions, this term is intended
to have the same meaning as (reviewing authority.(

 The source may maintain a back-up control device; however, all
emissions from the Green Group must be directed to a dedicated, common
pollution control device.

 Emissions activities are the component equipment that makes up the
Green Group.  For example, a Green Group could include multiple coating
lines, and each individual coating line could be considered an emissions
activity within the Green Group.  Note that some or even several of
these might be individually regulated under one or more other applicable
requirements but are combined into one emissions unit for purposes of
NSR.

 In order to qualify for the Green Group designation, all of the
emissions activities that are identified as part of the Green Group must
be conveyed to a common air pollution control device to meet the BACT or
LAER limit, as appropriate, depending on whether the area is designated
attainment or non-attainment for the pollutant of concern.  Although
this Green Group proposal requires that the emissions from the Green
Group be ducted to a common air pollution control device, consistent
with existing EPA policy, the source can use other control measures in
addition to the common control device to meet BACT or LAER.  Such
additional measures can include P2, work practices, or operational
standards.

 Note that additional detail to describe the new and existing activities
of a Green Group may be necessary for title V purposes.  For example,
more detail would be necessary to identify those emissions activities
included in the Green Group that are also subject to other applicable
requirements (e.g., MACT or NSPS).

 The NAAQS and increments for some pollutants are established over
short-term periods as well as annually.  For example, annual, daily, and
3-hour NAAQS and increments are defined for sulfur dioxide. 
Accordingly, some NSR permits include emissions limits for these shorter
periods.

 For surface coating operations, (compliant materials( means coatings
and solvents that are formulated to meet emissions limits without need
of add-on controls.  For example, coatings may be formulated with high
solids content and low VOC content.

 In some cases, a source may have previously taken an emissions limit on
a new or modified emissions unit to remain below major NSR applicability
thresholds (often referred to as an “(r)(4) limit” based on
§52.21(r)(4)).  Once the unit is included with a Green Group, it has
gone through major NSR and the (r)(4) limit will no longer apply. 

 Any emissions increase that occurs from debottlenecking and/or
increased utilization may in addition be subject to review before it
would occur if the permitting authority determines that NSR/PSD also
directly applies to such increases.  “Debottlenecking” refers to the
situation that arises when an emissions unit that has been unable to
operate at full capacity because of low production capacity at a second
unit in the process is able to operate at closer to full or full
capacity due to changes made to increase the capacity of the second
unit.

 The EPA has issued a Notice of Proposed Rulemaking that will address,
in part, the issues of “debottlenecking” and “increased
utilization.”  See 71 FR 54235, September 14, 2006.  In this
rulemaking, we do not intend to change current requirements related to
“debottlenecking” or “increased utilization.”

 These emissions changes, however, would not be creditable for
applicability purposes to the extent that they were considered in a
modeling analysis conducted as part of a permit issuance process under
§52.21 or 51.166.  Thus, to the extent that the emissions effects
associated with anticipated debottlenecking and/or increased utilization
of production or support units were evaluated relative to the relevant
ambient constraints (e.g., PSD increments and ambient air quality
standards) in the permit establishing the Green Group, such emissions
increases would not be creditable when they subsequently occur for
purposes of determining whether future increases occurring under the
approved Green Group would be subject to major NSR.

 Parallel requirements are found at 40 CFR 51.165(a)(5)(ii) and
51.166(r)(2).

 The baseline actual emissions for a unit with an (r)(4) limit are
calculated just as for any other emissions activity included in a Green
Group, complete with the reduction for the effect of the required
BACT/LAER control.  However, such units may be among the emissions
activities with authorized future physical or operational changes, and
emissions from such units could subsequently increase (as part of the
authorized emissions increase increment), but under BACT/LAER controls.

 Such credits in order to be used as an emissions offset must also be
federally enforceable.

 See 67 FR 80221 for a discussion of the MRRT requirements promulgated
for PALs by the Agency in December of 2002. 

 Note that BACT/LAER requirements in terms of percent reduction can be
difficult or impossible to achieve during periods of low or dilute flow.
 Where a percent reduction requirement is imposed, we recommend that the
BACT/LAER determination include an alternative concentration standard
for such periods.  For example, BACT/LAER for VOC control might be 98
percent reduction or an outlet concentration of 20 ppm by volume on a
dry basis.

 See 40 CFR part 124 for permits issued under §52.21.  See §51.161 for
permits issued under State programs approved pursuant to §§51.165 and
51.166.

 In order to streamline the process to update as necessary the
corresponding title V permit, the permitting authority might: (1)
structure the permit to retain the initial BACT limit and support
conditions unless affirmatively revised; and (2) revise the title V
permit in parallel to revising the NSR permit or use an (enhanced NSR(
process to do so in order to optimize use of comment periods and
opportunities for public hearings.

 We expect that in most cases this will be the
actual-to-projected-actual applicability test adopted in the December
2002 NSR Improvement rulemaking.  The actual-to-projected-actual test is
currently in effect in all jurisdictions where §52.21 applies,
including in States and Indian country.  For nonattainment major NSR and
SIP-approved PSD programs, States are currently in the process of
revising their SIPs to incorporate the actual-to-projected-actual test
(or some other preferred approach if they can demonstrate that it is at
least as stringent as the actual-to-projected-actual test).  Thus, the
actual-to-projected-actual test (or an approved alternative approach)
should be in effect in all jurisdictions by the time that Green Groups
begin to expire.  

 Vatavuk, William, “Part II, Factors for Estimating Capital and
Operating Costs,” Chemical Engineering, Nov. 3, 1980.

  See “Supplemental Analysis of the Environmental Impact of the 2002
Final NSR Improvement Rules,” EPA, November 21, 2002, pp. 10-11 and
Appendices C and D.  Available at
http://www.epa.gov/NSR/documents/nsr-analysis.pdf.

 The Federal PSD rules apply in jurisdictions that do not have their own
approved PSD programs, including a number of States (to which we have
delegated implementation or in which EPA directly administers the
program) and in Indian country.  Many State and local major NSR programs
include similar provisions.

 Section 70.6 describes the required elements of permits issued under
part 70 such as emissions limits, applicable requirements, permit
duration, and MRRT.  Section 70.7 describes the process for issuing,
renewing, reopening, and revising permits.  Section 70.8 describes the
process by which EPA will review permits and State programs, object to
permits, and act on public petitions.  It also requires the permitting
authority to give notice of each draft permit to any affected State and
to consider its comments.

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(ruction, even if EPA had, by regulations promulgated prior to enactment
of the PSD provisions in the 1977 Clean Air Act Amendments, attempted to
exempt the source from regulatory PSD review.  1977 House Report at __. 
For present purposes, the fact that Congress defined “commenced” to
include construction timing requirements for the narrow purpose
described above, but did not apply such requirements to construction
more broadly, further supports our view that we have discretion in
applying construction timing requirements.

 Indeed, as quoted above, 40 CFR 52.21(r)(2) explicitly provides that
“[t]he Administrator may extend the 18-month period upon a
satisfactory showing that an extension is justified.”

 As explained above in section VI.A of this preamble and footnote 23, in
White Paper Number 2 we interpreted our part 70 rules to allow sources
to streamline multiple applicable requirements that apply to the same
emissions unit(s) into a single set of requirements that assure
compliance with all the subsumed applicable requirements.  Sources that
seek to streamline applicable requirements should submit their request
as part of their title V permit application, identifying the proposed
streamlined requirements and providing a demonstration that the
streamlined requirements assure compliance with all the underlying,
subsumed applicable requirements.  Where the source wishes to streamline
the advance approval under NSR with all other relevant applicable
requirements, the same title V permit application can address both
actions.

	Does Not Represent EPA Policy

	Unreviewed Internal and Deliberative Draft - Do not quote, cite, copy
or distribute

	1/29/07

 PAGE   

 PAGE   i 

Does Not Represent EPA Policy

Unreviewed Internal and Deliberative Draft- Do not quote, cite, copy or
distribute

10/25/06

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