6560-50-P

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51 and 52

[EPA-HQ-OAR-2006-0888; FRL- xxxx-x]

RIN-2060-AO02

Prevention of Significant Deterioration New Source Review:  Refinement
of Increment Modeling Procedures

AGENCY:  Environmental Protection Agency (EPA).

ACTION:  Proposed rule.

SUMMARY:  Under the requirements of the Clean Air Act (Act), the New
Source Review (NSR) program includes Prevention of Significant
Deterioration (PSD) measures, which protect air quality in areas that
currently have clean air.  For some pollutants, the PSD program protects
clean air through a system of “increments.”  These increments
specify the maximum extent to which the ambient concentration of these
pollutants may be allowed to increase above the legally defined baseline
concentration in an area with clean air.  In this rulemaking, we propose
to refine several aspects of the method that may be used to calculate an
increase in concentration for increment purposes.  These refinements are
intended to clarify how States and regulated sources may calculate
increases in concentrations for the purposes of determining compliance
with the PSD increments.

DATES:  Comments.  Written comments must be received on or before
[INSERT DATE 60 DAYS FROM DATE OF PUBLICATION].

	Public Hearing.  If anyone contacts EPA requesting to speak at a public
hearing by [INSERT DATE 20 DAYS FROM DATE OF PUBLICATION], we will hold
a public hearing approximately 30 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-2006-0888, by one of the following methods:

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

E-mail: 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, NW,
Washington, DC 20460.  Please include 2 copies.

Hand Delivery:  EPA Docket Center, (Air Docket), EPA/DC, EPA West, Room
3334, 1301 Constitution Ave., NW, 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-2006-0888.  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" 
http://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" 
http://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
"http://www.regulations.gov"  http://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 section I.B of the
SUPPLEMENTARY INFORMATION section of this document.

Docket.  All documents in the docket are listed in the   HYPERLINK
"http://www.regulations.gov"  http://www.regulations.gov  index. 
Although listed in the index, some information is not publicly
available, i.e., CBI or other information whose disclosure is restricted
by statute.  Certain other material, such as copyrighted material, is
not placed on the Internet and will be publicly available only in hard
copy form.  Publicly-available docket materials are available either
electronically in   HYPERLINK "http://www.regulations.gov" 
www.regulations.gov  or in hard copy at the Air Docket, EPA/DC, EPA
West, Room 3334, 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:  Ms. Jessica Montanez, New Source
Review Group, Air Quality Policy Division (C504-03), U.S. Environmental
Protection Agency,  Research Triangle Park, NC  27711, telephone number:
(919) 541-3407; fax number: (919) 541-5509, or electronic mail e-mail
address:    HYPERLINK "mailto:montanez.jessica@epa.gov" 
montanez.jessica@epa.gov .

SUPPLEMENTARY INFORMATION:

	The information presented in this preamble is organized as follows:

I.	General Information

A.	Does this action apply to me?

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?	

II.	Background

	A.	What is the PSD program?

	B.	What are PSD increment analyses?

C.	Why do we need to clarify the method for analyzing increment
consumption?

	D.	What are the Clean Air Act requirements related to increments?

III.	Summary of this Proposed Action

IV.	Proposed Clarifications Regarding the Effect of the Draft New Source
Review Workshop Manual

V.	Proposed Clarifications and Changes to Increment Modeling Procedures 

A.	What kind of emissions consume or expand the PSD increment?

	B.	How are emissions estimated for sources that consume increment?

C.	What meteorological models and data should be used in increment
consumption modeling?

D.	What are my documentation and data and software availability
requirements?

VI.	Implementation Issues

A.	Is there a need for States to make revisions to their SIPs?

B.	When would these policies be put into effect?

VII.	Statutory and Executive Order Reviews

A.	Executive Order 12866 – Regulatory Planning and Review

	B.	Paperwork Reduction Act

	C.	Regulatory Flexibility Analysis

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

	J. 	National Technology Transfer and Advancement Act

VIII.	Statutory Authority

I.	General Information

A.	Does this action apply to me?

Entities potentially affected by this proposed action include owners and
operators of emission sources in all industry groups, as well as the EPA
and State, local, and tribal governments that are delegated authority to
implement these regulations.  The majority of sources potentially
affected are expected to be in the following groups:

Category	

	NAICSa	

Industry group



Industry		

221111, 221112, 221113, 221119, 221121, 221122	

Electric services



	

32411	

Petroleum refining



	

325181, 32512, 325131, 325182, 211112, 325998, 331311, 325188	

Industrial inorganic chemicals

	

32511, 325132, 325192, 325188, 325193, 32512, 325199	

Industrial organic chemicals

	

32552, 32592, 32591, 325182, 32551	

Miscellaneous chemical products

	

211112	

Natural gas liquids



	

48621, 22121	

Natural gas transport



	

32211, 322121, 322122, 32213	

Pulp and paper mills

	

322121, 322122	

Paper mills



	

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

Automobile manufacturing



	

325411, 325412, 325413, 325414	

Pharmaceuticals



Federal government		

924110	

Administration of Air and Water Resources and Solid Waste Management
Programs



State/local/tribal

Government		

924110

	

Administration of Air and Water Resources and Solid Waste Management
Programs

a North American Industry Classification System.

This table is not intended to be exhaustive, but rather provides a guide
for readers regarding entities likely to be affected by this action.  If
you have any questions regarding the applicability of this action to a
particular entity, contact the person listed in the preceding FOR
FURTHER INFORMATION CONTACT section.

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

1.	Submitting Confidential Business Information (CBI)  

Do not submit Confidential Business Information to EPA through http:// 
HYPERLINK "http://www.regulations.gove"  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
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 Code of Federal Regulations
(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 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.

C.	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 World Wide Web.  Following
signature by the EPA Administrator, a copy of this notice will be posted
in the regulations and standards section of our NSR (New Source Review)
home page located at   HYPERLINK "http://www.epa.gov/nsr" 
http://www.epa.gov/nsr .

D.	How can I find information about a possible hearing?

Persons interested in presenting oral testimony should contact Ms. Pam
Long, New Source Review Group, 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
Ms. 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 this action.

II.	Background

A.	What is the PSD program?

	Part C of title I of the Act contains the requirements for a component
of the major NSR program known as the PSD program.  This program sets
forth procedures for the preconstruction review and permitting of new
and modified major stationary sources of air pollution locating in areas
meeting the National Ambient Air Quality Standards or “NAAQS”
(“attainment” areas) and areas for which there is insufficient
information to classify an area as either attainment or nonattainment
(“unclassifiable” areas).

	The NSR provisions of the Act are a combination of air quality planning
and air pollution control technology program requirements for new and
modified stationary sources of air pollution.  In brief, section 109 of
the Act requires us to promulgate primary NAAQS to protect public health
and secondary NAAQS to protect public welfare.  Once we have set these
standards, States must develop, adopt, and submit to us for approval a
State Implementation Plan (SIP) that contains emission limitations and
other control measures to attain and maintain the NAAQS and to meet the
other requirements of section 110(a) of the Act.  Each SIP is required
to contain a preconstruction review program for the construction and
modification of any stationary source of air pollution to assure that
the NAAQS are achieved and maintained; to protect areas of clean air; to
protect Air Quality Related Values (including visibility) in certain
national parks, wilderness areas, and other natural areas of special
concern; to assure that appropriate emissions controls are applied; to
maximize opportunities for economic development consistent with the
preservation of clean air resources; and to ensure that any decision to
increase air pollution is made only after full public consideration of
all the consequences of such a decision.  Most States have SIP-approved
major NSR programs; however there are some States that instead implement
the Federal PSD program at 40 CFR 52.21 through delegation.  

The applicability of the PSD program to a particular source must be
determined in advance of construction and is pollutant specific.  Once a
source is determined to be subject to PSD, among other requirements, it
must undertake a series of analyses to demonstrate that it will use the
best available control technology (BACT) and will not cause or
contribute to a violation of any NAAQS or any maximum allowable ambient
pollutant concentration increase (increment).  In cases where the
source’s emissions may adversely affect an area classified as Class I,
additional review is conducted to protect the increments and special
attributes of such an area defined as “air quality related values”
(AQRVs).

  SEQ CHAPTER \h \r 1 When the reviewing authority reaches a preliminary
decision to authorize construction of a proposed new major source or
major modification, it must provide notice of the preliminary decision
and an opportunity for comment by the general public, industry, and
other persons that may be affected by the major source or major
modification.  After considering and responding to the comments, the
reviewing authority may issue a final determination on the construction
permit in accordance with the PSD regulations.

B.	What are PSD increment analyses?

	1.	Framework for Increment Analyses

Under section 165(a)(3) of the Act, a PSD permit applicant must
demonstrate that emissions from the proposed construction and operation
of a facility “will not cause, or contribute to, air pollution in
excess of any … maximum allowable increase or maximum allowable
concentration for any pollutant….”  The “maximum allowable
increase” of an air pollutant that is allowed to occur above the
applicable baseline concentration for that pollutant is known as the PSD
increment.  The maximum allowable concentration is the ceiling
established by adding the PSD increment to the baseline concentration. 
By establishing the maximum allowable increase in a particular area, an
increment defines “significant deterioration.”  

Increments have been established for three pollutants – Sulfur Dioxide
(SO2), Particulate Matter (PM), and Nitrogen Dioxide (NO2) – and for a
variety of averaging periods, which correspond to the averaging periods
for the NAAQS for those pollutants.  In addition, all attainment and
unclassifiable areas are classified as Class I, Class II, or Class III,
and different increment levels apply in each type of area.  Class I
areas include certain national parks, wilderness areas, and other
natural areas of special concern; the smallest increments are specified
for these areas.  Nearly all other areas in the United States are
currently classified as Class II, where higher increments are specified.
 States and Tribes have the authority to redesignate Class II areas to
Class III (with still higher increments) to promote development, but, to
date, none have chosen to do so.  States and Tribes also may redesignate
Class II areas to Class I to provide additional protection; some Tribes
have done so.  The increments are codified at 40 CFR 51.166(c) and
52.21(c).  The current increment values are shown below in Table 1.

Table 1.  Current Increment Values

Pollutant	Maximum allowable increase (micrograms per cubic meter)

Class I

Particulate matter:

PM-10, annual arithmetic mean	

PM-10, 24-hr maximum	

Sulfur dioxide:

Annual arithmetic mean	

24-hr maximum	

3-hr maximum	

Nitrogen dioxide:  

Annual arithmetic mean		

4

8

2

5

25

2.5

Class II

Particulate matter:

PM-10, annual arithmetic mean	

PM-10, 24-hr maximum	

Sulfur dioxide:

Annual arithmetic mean	

24-hr maximum	

3-hr maximum	

Nitrogen dioxide:  

Annual arithmetic mean		

17

30

20

91

512

25

Class III

Particulate matter:

PM-10, annual arithmetic mean	

PM-10, 24-hr maximum	

Sulfur dioxide:

Annual arithmetic mean	

24-hr maximum	

3-hr maximum	

Nitrogen dioxide:  

Annual arithmetic mean		

34

60

40

182

700

50



 concentration increase of at least 1 μg/m3 (annual average).  See,
e.g., 40 CFR 52.21(b)(15)(i).  Once the baseline area is established,
subsequent major sources undergoing PSD review in that area must address
the fact that a portion of the available increment may already have been
consumed by previous emissions increases.

Three dates related to the PSD baseline concept are important in
calculating the amount of increment consumed by pollutant emissions from
the major source undergoing PSD review and other applicable emissions
increases and decreases in a particular baseline area.  In general, the
submittal date of the first complete PSD permit application in a
particular area is the operative “baseline date.”  On or before the
date of the first complete PSD application, most emissions are
considered to be part of the baseline concentration.  Most emissions
increases that occur after the baseline date will be counted toward the
amount of increment consumed.  Similarly, emissions decreases after the
baseline date expand the amount of increment that is available. 

In actuality, there are two baseline dates that are related to the
determination of how much increment is being consumed in a particular
baseline area.  These two dates, described below, are necessary to
properly account for the emissions that are to be counted toward
increment consumed in accordance with the statutory definition of
“baseline concentration” in section 169(4) of the Act.  The
statutory definition provides that the baseline concentration of a
pollutant for a particular baseline area is generally the air quality at
the time of the first application for a PSD permit in the area. 
Consequently, any increases in actual emissions occurring after that
date (with some possible exceptions that we will discuss later) would be
considered to consume the applicable PSD increment.  However, the
statutory definition also provides that “[E]missions … from any
major emitting facility on which construction commenced after January 6,
1975 shall not be included in the baseline and shall be counted in
pollutant concentrations established under this part.”  

To make this distinction between the date when emissions changes in
general (i.e., from both major and minor sources) count in the increment
and the date when emissions resulting from the construction at a major
stationary source count in the increment, we established the terms
“minor source baseline date” and “major source baseline date,”
respectively.  See 40 CFR 51.166(b)(14) and 52.21(b)(14).  Accordingly,
the “minor source baseline date” is the date on which the first
complete application for a PSD permit is filed in a particular area. 
Any change in actual emissions after that date counts in the PSD
increment for that area.  The “major source baseline date” is thus
named because it is the date after which actual emissions associated
with construction at a major stationary source affect the available PSD
increment.  In accordance with the statutory definition of “baseline
concentration,” the PSD regulations define a fixed date to represent
the major source baseline date for each pollutant for which an increment
exists.  Congress defined the major source baseline date for the
statutory increments for PM and SO2 as January 6, 1975.  For the NO2
increments, which we promulgated in 1988 under our authority to
establish an increment system under section 166(a) of the Act, the major
source baseline date was selected as February 8, 1988 – the date on
which we proposed increments for NO2.

Finally, the PSD regulations set out the third date that is relevant to
the PSD baseline concept.  These regulations provide that the earliest
date on which the minor source baseline date can be established is the
date immediately following the “trigger date” for the
pollutant-specific increment.  See, e.g., 40 CFR 52.21(b)(14)(ii).  For
PM and SO2, Congress defined the applicable trigger date as August 7,
1977 – the date of the 1977 amendments to the Act when the original
statutory increments were established by Congress.  For NO2, we selected
the trigger date as February 8, 1988 – the date on which we proposed
increments for NO2.  See 53 FR 40656, 40658; October 17, 1988.

Under this approach, the baseline concentration is not actually
established for a PSD baseline area until after the “minor source
baseline date” is established by the submission of the first PSD
permit application for a source whose emissions would affect a given
baseline area.  Although major source emissions may consume increment
prior to 

this date, they are not factored into the calculation until the minor
source baseline date is triggered.

	Once the minor source baseline date associated with the first proposed
new major stationary source or major modification in an area is
established, the new emissions from that source consume a portion of the
increment in that area, as do any subsequent emissions increases that
occur from any source in the area.  When the maximum pollutant
concentration increase defined by the increment has been reached,
additional PSD permits cannot be issued until sufficient amounts of the
increment are “freed up” via emissions reductions that may occur
voluntarily, e.g., via source shutdowns, or via control requirements
imposed by the reviewing authority.  Moreover, the air quality in a
region cannot deteriorate to a level in excess of the applicable NAAQS,
even if all the increment has not been consumed.  Therefore, new or
modified sources located in areas where the air pollutant concentration
is near the level allowed by the NAAQS may not have full use of the
amount of pollutant concentration increase allowed by the increment. 

	2.	General Approach to Increment Analyses

The EPA and the States have generally used an emissions inventory and
modeling approach to identify the degree to which an increment has been
consumed or will be consumed by major source construction.  Ambient
monitoring has not been used to establish baseline concentrations or to
evaluate increment consumption because ambient measurements reflect
emissions from all sources, including those that should be excluded from
the measurements.  We have not necessarily required the identification
of a specific baseline concentration but rather have focused on
measuring the change in concentration from the legally established
baseline date to the time of the analysis.  For example, in the preamble
to the 1978 PSD regulation (43 FR 26388, 26400; June 19, 1978), we
stated the following:

The regulations promulgated today no longer suggest that the baseline
concentration be formally established.  The Administrator feels that
increment consumption can be best tracked by tallying changes in
emissions levels of sources contributing to the baseline concentration
and increases in emissions due to new sources.  Data to establish
baseline air quality in an absolute sense would be needed only if
increment consumption were to be tracked using ambient measurements. 
Thus, to implement the air quality increment approach, the reviewing
authority needs to verify that all changes from baseline emissions rates
(decreases or increases as appropriate) in conjunction with the
increased emissions associated with approved new source construction
will not violate an applicable increment ….

This method has made it easier to comply with the statutory provisions
(discussed below in section II.D of this preamble) excluding certain
increases in emissions at major sources from the baseline concentration
and allowing other emissions to be excluded from increment consumption.

	Even with that said, we believe that it would also be acceptable and
consistent with the Act for a State to use an approach of establishing
an actual baseline concentration using an initial baseline emissions
inventory.  The State could then calculate the consumed increment by
revising the inventory to include the relevant emissions increases and
decreases as discussed above.

3.	Agency Guidance and Specific Approaches Used in Practice

	Over time, the Agency developed some recommended approaches that
reviewing authorities could use to determine whether changes in
emissions rates and increases in emission associated with new
construction since the baseline date have or have not increased
concentrations above the increments.  Our recommendations have generally
been described in modeling guidelines and guidance documents, while the
PSD regulations in 40 CFR 51.166 and 52.21 contained only a few basic
requirements for the increment analysis.

	Some of our recommendations for the increment analysis have been
included in the “Guideline on Air Quality Models,” which is located
in appendix W to 40 CFR      part 51.  Appendix W provides modeling
guidelines for sources and reviewing authorities under a variety of
Clean Air Act programs.  The PSD regulations cite appendix W and state
that all PSD air quality modeling should be based on the “applicable
models, data bases, and other requirements” specified there.  See 40
CFR 51.166(l) and 52.21(l).  Although appendix W is incorporated by
reference in the PSD regulations, we have continued to refer to this as
a “guideline” and used language in the guideline to indicate that it
does not mandate specific procedures in all cases.  See, In re: Prairie
State Generating Company, PSD Permit Appeal No. 05-05, slip. op. at 132
(EAB August 24, 2006) (“Appendix W is replete with references to
‘recommendations,’ ‘guidelines,’ and reviewing authority
discretion.”)  It is also important to keep in mind that appendix W
provides guidelines for other types of regulatory applications, not just
PSD increment analyses.  As a result, not all the recommendations
included in appendix W are applicable to an analysis of increment
consumption under the PSD program.  Care must be taken to evaluate
whether certain recommendations are appropriate for the particular
circumstances of each increment analysis. 

We also included some suggestions for the increment analysis in the 1990
draft “New Source Review Workshop Manual” (draft NSR Manual).  This
draft document addressed many aspects of PSD permitting, including the
increment analyses.  However, we made clear on the very first page that
this manual was not intended to establish binding regulatory
requirements.  Draft NSR Manual at 1 (Preface).  In addition, we never
finalized the 1990 draft of the NSR Manual and accordingly never
intended for the manual itself to establish final EPA policies or
interpretations of our NSR regulations.  Nevertheless, many people have
looked to this document for guidance and have sometimes improperly
construed the draft NSR Manual to contain requirements that must be
followed. 

The EPA’s Environmental Appeals Board (“Board”) has sometimes
referenced the draft NSR Manual as a reflection of our thinking on
certain PSD issues, but the Board has been clear that the draft NSR
Manual is not a binding Agency regulation.  See, In re: Indeck-Elwood,
LLC, PSD Permit Appeal No. 03-04, slip. op. at 10 n. 13 (EAB Sept. 27,
2006); In re: Prairie State Generating Company, PSD Permit Appeal No.
05-05, slip. op. at 7 n. 7 (EAB Aug 24, 2006).  In these and other
cases, the Board also considered briefs filed on behalf of the Office of
Air and Radiation that provided more current information on the thinking
of the EPA headquarters program office on specific PSD issues arising in
particular cases.  Thus, the Board has looked to the draft NSR Manual as
one resource to consider in developing Agency positions through
case-by-case adjudications, while recognizing that the draft NSR Manual
does not itself contain binding requirements. 

Other non-binding EPA guidance letters or memoranda that have addressed
increment consumption analyses are discussed in more detail below in the
context of discussion on specific issues.

Based largely on prior EPA guidance, the approach that has generally
been used in States and EPA Regional Offices for increment analyses has
involved the following four steps:

Determine the 1 μg/m3 “significant impact area” for the particular
pollutant for which the new major source or major modification is
undergoing PSD review.  (If the source is subject to an increment
analysis for more than one pollutant, each analysis is carried out
independently.)

Identify the other sources in the vicinity of the new or modified source
whose emissions affect the significant impact area.

Estimate the emissions from those sources that consume increment.

Model the change in emissions to get a concentration change, and compare
that concentration change to the applicable increment.

The actual increment analysis that a proposed new or modified source
undergoing PSD review must complete will depend on the area impacted by
the source’s new emissions.

	We have provided approved air quality models and guidelines for sources
to use to project the air quality impact of each pollutant (over each
averaging period) for which an increment analysis must be done.  In
addition, we established significant impact levels for each pollutant
under the nonattainment major NSR program that have also been used under
the PSD program to identify levels below which the source’s modeled
impact is regarded as de minimis.  See 40 CFR 51.165(b) and part 51,
appendix S, section III.A.  In the event that a source’s modeled
impacts of a particular pollutant are below the applicable significant
impact level at all ambient air locations modeled, i.e., de minimis
everywhere, EPA policy provides that no further modeling analysis is
required for that pollutant.  Our policy has been that when a
preliminary screening analysis based on the significant impact level is
sufficient to demonstrate that the source’s emissions will not cause
or contribute to a violation of the increment, there is no need for a
full impacts analysis involving a cumulative evaluation of the emissions
from the proposed source and other sources affecting the area. 

Within the impact area of a source that does have a significant impact,
increment consumption is calculated using the source’s proposed
emissions increase, along with other emissions increases or decreases of
the particular pollutant from other sources that would consume increment
and which have occurred since the minor source baseline date established
for that area.  (For major sources, emissions increases or decreases
that have occurred since the major source baseline date consume or
expand increment.)  Thus, an emissions inventory of sources whose
emissions consume or expand the available increment in the area must be
compiled.  The inventory includes not only sources located directly in
the impact area, but sources outside the impact area that affect the air
quality within the impact area.  Section IV.A.1 of this preamble
discusses the types of sources that are to be included in the emissions
inventory for increment analyses.

	The inventory of emissions includes emissions from increment-affecting
sources at two separate time periods – the baseline date and the
current period of time.  For each source that was in existence on the
relevant baseline date (major source or minor source), the inventory
includes the source’s actual emissions on the baseline date and its
current actual emissions.  The change in emissions over these time
periods represents the emissions that consume increment (or, if
emissions have gone down, expand the available increment).  For sources
constructed since the relevant baseline date, all their current actual
emissions consume increment and are included in the inventory.  

	An emissions inventory must be prepared for each averaging period for
which an increment has been specified for the pollutant under review. 
In many cases, direct emissions data are not available for some or all
averaging periods, and actual emissions must be estimated.  This can be
particularly challenging for existing sources where the baseline
emissions must be determined and the baseline date is well in the past. 
The approach generally used per EPA guidance has been to base the annual
emissions inventory on the actual measured emissions or actual hours of
operation, fuel usage, raw materials used, etc., while basing the
emissions inventory for shorter averaging periods on the maximum
emissions over each averaging period as determined from available data
(again, emission measurements, operating hours, fuel or materials
consumption, etc.).

When the inventory of emissions has been compiled, computer modeling is
used to determine the change in ambient concentration that will result
from these emissions when combined with the proposed emissions increase
from the new major source or major modification that is undergoing PSD
review.  The modeling has generally been guided by the “Guideline on
Air Quality Models” (40 CFR part 51, appendix W), which includes
provisions on air quality models and the meteorological data input into
these models.

Two possible approaches have been used to predict the change in air
pollutant concentration using models.  One approach is to make a single
model run after calculating the difference in emissions from the
baseline date to the current period of time.  An alternative approach is
to make two model runs (one based on an inventory of baseline emissions
and the second based on an inventory of current actual emissions) and
calculate the difference between them.

	The model output (expressed as a change in concentration) for each
relevant averaging period is then compared to the corresponding
allowable PSD increment.  If the model results indicate that the
increment(s) will not be exceeded, the reviewing authority may issue a
PSD permit to the source.  Except as discussed below, if the modeling
shows that the source would cause or contribute to a violation of a PSD
increment, the reviewing authority may not issue the permit.  The source
may revise its permit application to reduce its proposed emissions, or
it may mitigate the impact of its emissions through obtaining offsetting
emission reductions from other sources in the emissions inventory.

	If the modeling shows only an increment violation in a Class I area,
the source has the opportunity to apply for a “variance” from the
Federal Land Manager (FLM) that has responsibility for that Class I
area.  If the source successfully demonstrates to the FLM that emissions
from the source will not have an adverse effect on the AQRVs of the
Class I area, and to the reviewing authority that the emissions will
not violate a set of higher increment levels specified in the Act
(generally equal to the Class II increments), the reviewing authority
may issue a PSD permit to the source.  The source may further appeal to
the Governor and the President in certain situations.  These variances
are discussed in greater detail in section IV.A.2 of this preamble.

C.	Why do we need to clarify the method for analyzing increment
consumption?

	We have never adopted detailed regulations establishing a specific
methodology that sources and reviewing authorities must use to calculate
an increase in concentrations for purposes of determining compliance
with the PSD increments.	Instead, increment analyses have been conducted
by States and EPA Regional Offices based on the guidelines and guidance
discussed in the previous section.  In the absence of definitive
requirements, sources and reviewing authorities have attempted to apply
the available guidance to a wide range of situations.  Differing
interpretations and approaches have resulted, along with controversy
over how binding the guidelines and guidance are on reviewing
authorities and who (EPA or the reviewing authorities) has the ultimate
discretion to determine which approaches are reasonable for a specific
increment analysis.  With this proposal, we intend to provide greater
clarity on several issues.

	One push for greater clarity has come from the Western States Air
Resources Council (WESTAR) PSD Reform Workgroup, with participants from
Western States, the U.S. National Park Service, U.S. Fish and Wildlife
Service, U.S. Forest Service, and the U.S. Bureau of Land Management and
consultation by EPA.  The workgroup was formed in early 2004 to develop
recommendations to improve the effectiveness of the PSD program.  The
goal of the WESTAR effort was to propose changes to the PSD program that
would result in a more practical program, significantly reducing
constraints in the current program that they viewed as limiting State
and local agencies’ abilities to address cumulative incremental
consumption and Class I AQRV analysis and protection, some of which were
identified in a letter to EPA.  While the purpose of today’s notice is
focused on clarifying increment analysis procedures, we are considering
broader changes to the program as a separate rulemaking to address
additional concerns that WESTAR and others have raised.  

	A major point raised by WESTAR is that States need to consult early and
often in order to agree in advance on modeling protocols to enable
consistency between the States in performing the analyses and to ensure
equity in application of the analysis.  WESTAR further recommended that
we take steps to ensure that EPA Regional Offices, in partnership with
States and FLMs, operate consistently among themselves in
inter-jurisdictional contexts and develop data and methods that will
better enable inter-jurisdictional analysis.  WESTAR stressed that a
balance is needed between providing States with case-by-case,
cross-jurisdictional PSD increment analysis flexibility and providing
the national or regional standardization necessary to ensure equity
among States, simplify cross-jurisdictional analysis, and facilitate
coordination with FLMs.  The WESTAR report also noted a lack of clarity
and sometimes narrow interpretations of the definition of actual
emissions used for purposes of calculating point source emissions for
inclusion in emissions inventories for PSD analyses.  All of the WESTAR
workgroup representatives agreed that it is desirable to bring greater
clarity and consistency to approaches for conducting refined analyses,
particularly related to approaches for calculating point source
emissions.  Today’s notice is a step toward achieving that balance
between case-by-case flexibility and inter-jurisdictional consistency.

D.	What are the Clean Air Act requirements related to increments?

The PSD increments are established under sections 163 and 166 of the
Act.  In section 163 of the Act, Congress adopted specific numerical
increments for particulate matter and sulfur dioxide in each of the
three classes of PSD baseline areas (i.e., Class I, II, and III, as
described above in section II.B.1).  In 1990, Congress created section
166(f) of the Act which authorized us to substitute increments based on
the PM10 indicator for the original particular matter increments
contained in section 163.  Consistent with this provision, we
substituted PM10 increments for the increments based on total suspended
particulate matter in a 1993 rulemaking (58 FR 51622, Jun. 3, 1993).  In
section 166(a) of the Act, Congress directed and authorized EPA to
promulgate additional increments for nitrogen oxides and other
pollutants.  We promulgated increments for NO2 in 1988 and reaffirmed
those increments in a 2005 rulemaking (53 FR 40656, Oct. 17, 1988; 70 FR
59582, Oct. 12, 2005). 

The Act does not directly specify how to determine an increase in
concentrations for purposes of determining compliance with the PSD
increments.  Section 163(b) of the Act provides that “the maximum
allowable increase in concentrations of sulfur dioxide and particulate
matter over baseline concentration of such pollutants shall not
exceed” specified amounts for each pollutant.  See CAA sections
163(b)(1)-(3).  The Act does not define an “increase in
concentrations” for purposes of section 163.  Likewise, section
165(a)(3) prohibits permitting a source that causes or contributes to
“air pollution in excess of any maximum allowable increase or maximum
allowable concentrations,” but does not specify how EPA is to
determine that air pollution would exceed the allowable increase or
concentration.  Section 166 of the Act directs EPA to promulgate
pollutant-specific PSD regulations which contain “specific numerical
measures against which permit applications may be evaluated” and
indicates that such measures “may contain air quality increments.” 
See CAA sections 166(a), (c), (d).  However, there is no further
guidance in section 166 concerning the method to be used to measure an
increase in air pollutant concentrations for purposes of evaluation
against the PSD increments. 

	We have found some guidance in the Act in the definition of “baseline
concentration,” which we interpret to support our view that an
increase in concentration for increment purposes should be determined on
the basis of actual emissions.  Section 169(4) of the Act defines
“baseline concentration” as “the ambient concentration levels
which exist at the time of the permit application.”  The opinion of
the United States Court of Appeals for the District of Columbia Circuit
in Alabama Power v. Costle interpreted section 169(4) in a manner that
supports establishing the PSD baseline concentration using actual
emissions.  636 F.2d 323, 375-381 (D.C. Cir. 1980).  Since emissions
that consume increment are not included in the baseline, we have long
recognized that an increase in concentration (the consumption of
increment) is directly related to baseline concentration (45 FR 52676,
52718, Aug. 7, 1980).  In light of these considerations, we reached the
following conclusion:

Since the Alabama Power decision and the statute both provide that
actual air quality be used to determine baseline concentrations, but
provide no guidance on increment consumption calculations, EPA has
concluded that the most reasonable approach, consistent with the
statute, is to use actual source emissions, to the extent possible, to
calculate increment consumption or expansion. 

See 45 FR 52676, 52718 (Aug. 7, 1980).  We expressly incorporated the
definition of “actual emissions” into the regulatory definition of
“baseline concentration” (40 CFR 51.166(b)(13) and 52.21(b)(13)). 
In this definition of “baseline concentration,” the term “actual
emissions” is referenced both in the provision describing how to
determine the baseline concentration and in the provision identifying
emissions that affect the maximum allowable increases (the increment). 
See, e.g., 40 CFR 51.166(b)(13)(ii).  The term “actual emissions” is
itself defined in 40 CFR 51.166(b)(21) and 52.21(b)(21). 

The Act also provides some direction concerning the increment
consumption analysis by identifying particular sources whose emissions
are counted against the maximum allowable increases and listing
categories of sources whose emissions may be excluded from the increment
consumption analysis.  In the statutory definition of “baseline
concentration,” section 169(4) of the Act specifies that
“[e]missions of sulfur oxides and particulate matter from any major
emitting facility on which construction commenced after January 6, 1975,
shall not be included in the baseline and shall be counted against the
maximum allowable increases in pollutant concentrations established
under this part.”  This provision makes clear that emissions of these
pollutants from new or modified major sources that commence construction
between 1975 and the baseline date for a given area shall be counted
against the increments and thus are considered to “consume”
increment.  In addition, section 163(c) authorizes States to exclude
certain pollution concentrations from the increment consumption
analysis.  This provision authorizes States to “promulgate rules
providing that for purposes of determining compliance with the maximum
allowable increases in ambient concentrations of an air pollutant, the
following concentrations of such pollutants shall not be taken into
account.”  The concentrations identified are those attributable to (1)
fuel switches required under other laws (15 U.S.C. 792 or 16 U.S.C.
791a); (2) construction or other temporary emission-related activities;
and (3) new sources outside the United States.  The PSD regulations
reflect these provisions of sections 163(c) and 169(4) of the Act.

The existing PSD regulations reflect these specific requirements of the
Act.  As discussed earlier, we implemented the last sentence of section
169(4) by establishing two separate baseline dates – the major source
baseline date and the minor source baseline date.  See 40 CFR
51.166(b)(14) and 52.21(b)(14).  We implemented section 163(c) of the
Act by promulgating 40 CFR 51.166(f), which is discussed further below.

Within the boundaries described above, we read the Act to provide EPA
with fairly broad discretion to establish regulations concerning the
approach to be used to measure an increase in concentration for purposes
of assessing consumption of PSD increments.  Since the Act does not
define “increase in concentration” for increment purposes, we
interpret the Act to grant EPA discretion to develop a method for
measuring this increase, so long as that method is reasonable and
consistent with the limited requirements describe above.  The absence of
specific direction in the Act concerning how to calculate an increase in
concentration for increment purposes is similar to the gap in the Act
concerning how to calculate an increase in emissions for purposes of
identifying a major modification.  With respect to the latter issue, the
DC Circuit has recently observed that “In enacting the NSR program,
Congress did not specify how to calculate ‘increases’ in emission,
leaving EPA to fill that gap while balancing the economic and
environmental goals of the statute.”  New York v. EPA, 413 F.3d 3, 27
(Jan. 25, 2005).  We believe Congress intended a similar result with
respect to “increases” in concentration under the increment
provisions of the PSD side of the NSR program.  As observed by the court
in Alabama Power, “Congress expected EPA to use ‘administrative good
sense’ in establishing the baseline and calculating exceedances.” 
See Alabama Power, 636 F.2d at 380.  In this rulemaking, we propose to
exercise our rulemaking discretion on this topic and provide additional
guidance to States and regulated sources on how to calculate increases
in concentrations for purposes of determining compliance with the PSD
increments. 

III.	Summary of this Proposed Action

	This action proposes clarifications in eight areas related to increment
analyses.  They are summarized below:

Effect of the 1990 draft “New Source Review Workshop Manual.” 
Discussed in detail in section IV; no regulatory revisions.

Treatment of sources that have previously received a Class I area FLM
variance in subsequent increment consumption modeling.  Discussed in
detail in section V.A; regulatory revisions in 40 CFR 51.166(f)(2) and
52.21(f)(2).

Data used to estimate emissions.  Discussed in detail in section V.B.1;
regulatory revisions in 40 CFR 51.166(f)(1) and 52.21(f)(1).

Time period of emissions used to model pollutant concentrations. 
Discussed in detail in section V.B.2; regulatory revisions in 40 CFR
51.166(f)(1) and 52.21(f)(1).

Actual emissions rates used to model short-term increment compliance. 
Discussed in detail in section V.B.3; regulatory revisions in 40 CFR
51.166(f)(1) and 52.21(f)(1).

Meteorological data and processing.  Discussed in detail in section
V.C.1; no regulatory revisions.

Years of meteorological data.  Discussed in detail in section V.C.2; no
regulatory revisions.

Documentation and data and software availability.  Discussed in detail
in section V.D; no regulatory revisions.

IV.	Proposed Clarifications Regarding the Effect of the Draft New Source
Review Workshop Manual

To avoid future misunderstandings concerning the effect of the draft
1990  New Source Review Workshop Manual (draft NSR Manual), we propose
in this action to make clear that the  draft NSR Manual is not a binding
regulation and does not by itself establish final EPA policy or
authoritative interpretations of EPA regulations under the New Source
Review Program.  As discussed above, because this document was never
finalized, we never intended for the manual to establish final agency
policy or authoritative interpretations of EPA’s NSR regulations. 
Furthermore, in many areas the positions reflected in the document have
become outdated and superseded by statutory amendments, rulemakings,
additional guidance memoranda, and adjudications by the Administrator
and the EPA Environmental Appeals Board.  

Notwithstanding this proposed clarification concerning the effect of the
draft NSR Manual, we recognize that some of the views expressed in the
draft NSR Manual may have been promulgated in EPA regulations or adopted
by the Agency as final policy statements or interpretations in other
actions taken before or after the release of the draft NSR Manual in
1990.  On some topics, the draft NSR Manual compiled pre-existing EPA
policy and interpretations, but on other matters the document expressed
proposed policies or interpretations that were never finalized by the
Agency.  To the extent EPA subsequently or previously adopted a view
expressed in the draft NSR Manual through other action that was clearly
final, those positions may have achieved the status of final policies or
interpretations, but positions that are only expressed in the draft NSR
Manual should not be considered to be a final EPA policy or
interpretation.  

With respect to the increment analysis that is the subject of this
rulemaking action, we are proposing to establish regulations that
supersede many of the recommended approaches for conducting the
increments analysis set forth in the draft NSR Manual and other EPA
guidance documents, as discussed in more detail below.  However, we are
not proposing in this action to supersede or change specific policies or
interpretations not discussed in this notice that EPA may have adopted
in final form prior to or after the development of the draft NSR Manual.
 

With respect to the draft NSR Manual as a whole, we are only proposing
to clarify that the 1990 draft of the NSR Manual does not by itself
establish final policies or interpretations of the EPA.  To the extent
such policies or interpretations are reflected in other action or
documents that were issued in a final form (such as rulemakings,
guidance memorandum, or adjudications by the Administrator or the
Environmental Appeals Board), EPA will continue to follow them unless
the Agency has otherwise indicated that it no longer adheres to such
policies or interpretations.  For example, it remains EPA’s policy to
use the five-step, top-down process to satisfy the Best Available
Control Technology (“BACT”) requirements when PSD permits are issued
by EPA and delegated permitting authorities, and we continue to
interpret the BACT requirement in the Clean Air Act and EPA regulations
to be satisfied when BACT is established using this process, as it has
been described in decisions of the Environmental Appeals Board. 
However, notwithstanding this policy and the interpretations of the BACT
requirement reflected in EPA adjudications, EPA has not established the
top-down BACT process as a binding requirement through regulation.

We request comment on this proposal to clarify that the draft NSR Manual
is not a binding regulation and does not independently reflect or
establish a final statement of EPA policy or an authoritative
interpretation of EPA regulations.

V.	Proposed Clarifications and Changes to Increment Modeling Procedures

A.	What kind of emissions consume or expand the PSD increment?

	1.	What types of sources are included in increment consumption
modeling?

In defining “baseline concentration,” the PSD regulations also spell
out the emissions sources that must be included in an increment
analysis.  Specifically, in 40 CFR 51.166(b)(13)(ii) and
52.21(b)(13)(ii), the regulations indicate that the following emissions
are not included in the baseline concentration, but instead affect the
available increment:

Actual emissions from any major stationary source on which construction
commenced after the major source baseline date.

Actual emissions increases and decreases at any stationary source
occurring after the minor source baseline date.

Thus, the sources that affect available increment, and therefore must be
included in an increment analysis are: (1) major sources that have
increased or decreased actual emissions after the major source baseline
date as a result of construction of a new source, a physical or
operational change to an existing source, or shutdown of an existing
source; and (2) any source that has had an increase or decrease in
actual emissions since the minor source baseline date.  The latter
includes major sources, minor sources, and area sources that have been
constructed since the minor source baseline date (i.e., new sources) or
have experienced a change in actual emissions since the minor source
baseline date (i.e., existing sources that have been modified or have
changed their capacity utilization or hours of operation). 

	For many years, we have interpreted the PSD regulations to require
increases and decreases in mobile source emissions to be included in the
increment consumption analysis.  See, e.g., 53 FR 40656, 40662 (October
17, 1988).  However, we understand that many States have not
consistently accounted for mobile source emissions in their increment
analyses.  To make clear that mobile source emissions need to be
included in an analysis of increment consumption, we are proposing to
amend the reference to “any stationary source” in 40 CFR
51.166(b)(13)(ii)(b) and 52.21(b)(13)(ii)(b) of our regulations to make
explicit that actual emissions increases or decreases that consume or
expand increment are not limited solely to stationary source emissions. 

	The existing regulations also specify that “secondary emissions”
are to be included in an increment analysis.  See 40 CFR 51.166(k) and
52.21(k).  Secondary emissions are defined as emissions which occur as a
result of the construction or operation of a major source or
modification, but do not come from the major source itself.  They
include emissions from any offsite support facility which would not be
constructed or increase emissions except as a result of the construction
of the major source or modification that is undergoing PSD review. 
Secondary emissions must be specific, well defined, quantifiable, and
impact the same general area as the major source or modification that is
under review.  See 40 CFR 51.166(b)(18) and 52.21(b)(18).

	We have also codified an exemption to these general principles in 40
CFR 51.166(f) of the PSD regulations.  This provision authorizes SIPs to
exclude from increment consumption those sources in the four categories
listed in section 163(c) of the Act.  The regulations also allow States
to exclude concentrations attributable to temporary increases in
emissions from sources affected by SIP revisions approved by EPA.  See
40 CFR 51.166(f)(1)(v).  When we promulgated increments for NO2, 40 CFR
51.166(f) became applicable to the increments for that pollutant as
well.  Thus, emissions attributable to sources or actions listed in 40
CFR 51.166(f) may not consume increment if a State has promulgated
regulations approved by EPA that exclude such emissions from the
increment consumption analysis.  We have not included a companion
provision in 40 CFR 52.21 because we read section 164(c) of the Act to
apply only to States with approved PSD programs in their State
implementation plans.

	2.	How is a source with a Class I area Federal Land Manager variance
treated in subsequent increment consumption modeling?   SEQ CHAPTER \h
\r 1 

	We propose to add a category of sources that may be excluded from the
increment consumption analysis in a specialized circumstance described
in the Clean Air Act.  We propose to establish that sources that have
been permitted based in part on a variance issued by a Federal Land
Manager (FLM) for a Class I area may be excluded from the increment
consumption analysis for the Class I increment in the area for which the
variance was issued. 

	Background.  Under section 165(d) of the Act, when a proposed source
subject to permitting has the potential to adversely impact a Class I
area, an additional review is required to assess whether the source will
adversely impact Air Quality Related Values (AQRVs) in the Class I area.
 The AQRV review provisions of section 165(d) provide another layer of
protection against significant deterioration in Class I areas on top of
the protection provided by increments.  Although any area may be
designated to be a Class I area, such areas are generally national parks
and wilderness areas of a certain size that are required to be Class I
areas under the Act.  See section 162(a) of the Act.

	The Act does not define AQRVs or identify specific AQRVs other than
visibility.  See section 165(d)(2)(B) of the Act.  However, AQRVs are
generally understood to encompass the purposes for which lands have been
preserved, to the extent those purposes may be affected by air quality. 
In legislative history to the Act, AQRVs are described as follows:

The term “air quality related values” of Federal lands designated as
class I includes the fundamental purposes for which such lands have been
established and preserved by the Congress and the responsible Federal
agency.  For example, under the 1916 Organic Act to establish the
National Park Service (16 U.S.C. 1), the purpose of such national park
lands “is to conserve the scenery and the natural and historic objects
and the wildlife therein and to provide for the enjoyment of the same in
such manner and by such means as will leave them unimpaired for the
enjoyment of future generations.”

See S. Rep. 95-127 at 36, reprinted at 3 LH at 1410.  In 1996, we
proposed to adopt the following definition of AQRV:

Air quality related values means visibility or a scenic, cultural,
physical, biological, ecological, or recreational resource that may be
affected by a change in air quality, as defined by the Federal Land
Manager for Federal lands, or by the applicable State or Indian
Governing Body for nonfederal lands.

See 61 FR 38250, 38332, July 23, 1996.  We have not yet taken final
action to adopt this definition. 

	The Act provides that the FLM charged with responsibility for managing
a Class I area has an “affirmative responsibility” to protect the
AQRVs in the area.  See section 165(d)(2)(B) of the Act.  Section 165(d)
establishes a procedure under which the FLM may object to or concur in
the issuance of a PSD permit based on the impact, or lack thereof, that
new emissions may have on any affected AQRV that the FLM has identified.
 If the proposed source’s emissions do not cause or contribute to a
violation of a Class I increment (satisfying the requirement in section
165(a)(3) of the Act), the FLM may nevertheless prevent issuance of the
permit by demonstrating to the satisfaction of the reviewing authority
that the source or modification will have an adverse impact on AQRVs. 
See section 165(d)(2)(C)(ii) of the Act.  Conversely, if the proposed
source will cause or contribute to a violation of a Class I increment,
the reviewing authority may not issue the permit unless the owner or
operator demonstrates to the satisfaction of the FLM that the emissions
from the proposed facility will have no adverse impact on the AQRVs of
the Class I area.  See section 165(d)(2)(C)(iii) of the Act.  Under this
procedure, the compliance status of the increment determines whether the
FLM or the permit applicant has the burden of satisfactorily
demonstrating whether or not the proposed source’s emissions would
have an adverse impact on AQRVs.  The FLM has the burden of
demonstrating an adverse impact when the Class I increment is not
exceeded.  However, if the proposed source causes or contributes to a
violation of the Class I increment, the permit applicant must convince
the FLM to certify that the proposed source will not have an adverse
impact on AQRVs. 

	This certification by the FLM is known as a “variance” under 40 CFR
51.166(p) and 52.21(p) of the PSD regulations.  The process for issuance
of a variance was originally applied only in the context of the
statutory increments for PM and SO2 based on section 165(d) of the Act,
but we have, by rulemaking, extended the AQRV review procedures set
forth in §§51.166(p) and 52.21(p) to cover NO2.  See 70 FR 59583,
October 12, 2005; 53 FR 40656, October 17, 1988. 

	In the case of the 24-hour and 3-hour increments for SO2, the Act
provides an additional process through which the permit applicant may
request that the Governor of a State issue a variance or appeal to the
President to issue the variance if the FLM does not concur with the
Governor’s conclusion.  See section 165(d)(2)(D) of the Act.  If the
FLM does not initially issue a variance under section 165(d)(2)(C), the
Governor may issue a variance subject to the concurrence of the FLM, if
the Governor finds, after public notice and hearing, that a facility
cannot be constructed because of a short-term increment for SO2 and that
the variance will not adversely affect AQRVs.  See section
165(d)(2)(D)(i) of the Act; 40 CFR 51.166(p)(5) and 52.21(p)(6).  If the
FLM does not concur with the Governor’s decision to issue the
variance, the dispute is submitted to the President for resolution.  The
President may grant the variance if he finds that a variance is in the
national interest.  See section 165(d)(2)(D)(ii) of the Act; 40 CFR
51.166(p)(6) and 52.21(p)(7).  

	Under both of these variance provisions, the variance cannot issue
unless the permit contains emissions limitations sufficient to prevent
violations of alternative increments that are established for the
specific permitting action due to the variance.  In the case of an FLM
variance issued under section 165(d)(2)(C), the alternative increments
are equal to the Class II increments in most instances.  In the unique
case of the 3-hour increment for SO2, the Act requires use of an
increment of 325 (g/m3 (a level between the Class I and Class II
increments) for SO2 for the 3-hour averaging period.  See section
165(d)(2)(C)(iv) of the Act; 40 CFR 51.166(p)(4) and 52.21(p)(5).  We
also applied this approach to NO2 by adding a cap of 25 (g/m3 (equal to
the NO2 Class II increment) to the regulations.  See 53 FR 3704; see 40
CFR 51.166(p)(4) and 52.21(p)(5).  Although the short-term Class II
increments may ordinarily be violated one time per year, the Act
suggests that when the Class II increment applies under the Class I
variance provisions in section 165(d)(2)(C), no violations of the Class
II increment are permissible.  See section 163(a) of the Act. 

	 In the case of a gubernatorial or presidential variance for the short
term SO2 increments, the Act establishes another set of alternative
increments at a level between the Class I and Class II increments for
the 24-hour and 3-hour averaging periods.  See section 165(d)(2)(D)(iii)
of the Act.  This provision includes separate alternative increments for
permitting actions receiving a variance in low and high terrain areas. 
Id.  In addition to requiring emissions limitations sufficient to assure
these alternative increments are not exceeded, this portion of the Act
also specifies that the permit must “assure that such emissions will
not cause or contribute to concentrations which exceed the otherwise
applicable maximum allowable increases for periods of exposure of 24
hours or less on more than 18 days during any annual period.”  Id.  We
interpret the “otherwise applicable maximum allowable increases” to
describe the Class I increments 

and thus understands this provision to allow 18 exceedances of the Class
I increment per year after a variance has been issued under section
165(d)(2)(D).  

	In contrast to section 165(d)(2)(D)(iii), the FLM variance provisions
in section 165(d)(C)(iv) that refers primarily to the Class II
increments does not discuss an “otherwise applicable maximum allowable
increase” or identify an allowable number of days on which such an
increment might be exceeded.  This omission leaves some ambiguity
concerning whether the Class I increment should continue to apply in the
Class I area for which a variance has been issued by the FLM under
section 165(d)(2)(C) based upon a certification that the emissions from
a proposed facility will not have an adverse impact on AQRVs.  Since
Congress has not directly spoken to this issue, we propose to add
provisions to the PSD regulations to clarify how a reviewing authority
should account for these variances when evaluating compliance with the
Class I increment when a source has previously been issued a variance.  

	Proposed Action.  To address this issue, we propose to add a new
provision in    40 CFR 51.166(f) stating that the emissions of any
source that was permitted after receiving a Class I increment variance
from an FLM need not be included in the consumption analysis for the
Class I increment for the area for which the variance was issued under
section 165(d)(2)(C) of the Act.  However, we propose that the emissions
of such source continue to be accounted for in the analysis of
compliance with the alternative Class II increments that are applied in
the Class I area after the issuance of a variance.  As noted above, in
the case of SO2, the alternative increment is not the Class II
increment but a level between the Class I and Class II increments.

	We interpret section 165(d)(2)(C) of the Act to allow an additional
exclusion, not contained in section 163(c) of the Act, from the
increment consumption analysis for emissions that an FLM has considered
and certified to not have an adverse impact on AQRVs.  However, this is
a narrow exclusion that applies only with respect to the Class I
increment in those areas for which a variance has been issued.  We do
not read section 165(d)(2)(C) to authorize such emissions to be excluded
from an analysis of compliance with the Class II increments (or the
alternative 3-hour SO2 increment). 

	In Class I areas, the key criterion for determining whether a permit
may issue is the effect of a project on AQRVs.  The Class I increment is
important, but the terms of sections 165(d)(2)(C)(ii) and
165(d)(2)(C)(iii) make clear that AQRVs actually control whether a
permit should be issued or not.  As discussed above, the increment
determines who has the burden of demonstrating the degree of impact on
AQRVs, but ultimately the degree of impact on AQRVs is the controlling
standard in such areas.  Exceedances of the increment are allowed so
long as the source can demonstrate to the satisfaction of the FLM that a
source will not have an adverse impact on AQRVs.  An exceedance of Class
I increment creates a presumption that AQRVs within the affected impact
area will be also adversely affected, but that presumption may be
rebutted.  Likewise, the absence of an increment exceedance creates a
presumption that there is no adverse impact on AQRVs within the affected
impact area, but that presumption may also be rebutted if the FLM
provides evidence sufficient to convince the reviewing authority that
emissions from a proposed source will have an adverse impact on AQRVs. 
Thus, based on the interplay of sections 165(d)(2)(C)(ii) and
165(d)(2)(C)(iii), we interpret the Act to establish AQRVs, rather than
the Class I increment, as the controlling standard in Class I areas. 
AQRVs are always applicable in Class I areas, regardless of the status
of the Class I increment. 

	However, AQRVs are the controlling benchmark only to the extent that
AQRVs provide more protection than the Class II increments (or a lower
figure in the case 3-hour averaging time for SO2).  Section
165(d)(2)(C)(iv) indicates that, although a permit may be issued where
AQRVs are not adversely impacted, such permit must ensure that the Class
II increments are not exceeded.  We interpret this provision to mean
that the Class II increment cannot ever be exceeded in a Class I area,
notwithstanding the degree of impact on AQRVs.  So, reading sections
165(d)(2)(C)(ii)-(iv) together, we interpret the Act to establish AQRVs
and the Class II increments to be the air quality standards that
ultimately determine whether a permit may be issued for a source
potentially affecting a Class I area.  The Class I increment serves to
establish a presumption of harm or the absence of harm to AQRVs, but
does not ultimately control whether a permit may be issued.

	While it is clear that AQRVs and the Class II increments ultimately
control whether a particular permit may be issued, the Act does not
specify what role the Class I increment has to play on an ongoing basis
after a variance has been issued.  To obtain a variance, the applicant
must rebut the presumption that AQRVs will be adversely impacted by an
increase in concentrations in excess of the Class I increment.  Once
that presumption has been rebutted for a particular area, the Class I
increment may no longer be representative of the degree of impact on
AQRVs for that area.  If the Class I increment has been exceeded but
there is no adverse impact on AQRVs, this indicates that the Class I
increment is not a reliable predictor of adverse impacts on AQRVs in a
particular area. 

	Thus, the question arises as to whether the Class I increment should
remain applicable in a Class I area after the issuance of a variance. 
Section 165(d)(2)(C) does not address this issue.  Although section
165(d)(2)(D)(iii) says that the “otherwise applicable” increment may
not be exceeded more than 18 days per year in the case of a
gubernatorial or presidential variance, section 165(d)(2)(C)(iv) does
not refer to any “otherwise applicable” increment in the context of
an FLM variance.  The other parts of section 165(d)(2)(C) also fail to
address this issue. 

	One approach we have considered is to construe the silence in section
165(d)(2)(C) as an indication that Congress did not intend to permit
violations of the Class I increment for any additional days beyond the
one day per year allowed in the case of the 24-hour and 3-hour
increments.  Under this interpretation, a variance under section
165(d)(2)(C) would be considered only to be a variance from the “cause
or contribute” standard in section 165(a)(3) of the Act for purposes
of any individual permit application.  An applicant would be relieved of
the obligation to demonstrate that a proposed source does not cause or
contribute to a violation of the Class I increment if the applicant can
demonstrate that the source will not adversely affect AQRVs.  However,
under this view, the variance would not necessarily relieve the
reviewing authority or State air quality planning agency from the
obligation to ensure that the SIP contains measures to protect the Class
I increment.  The source might receive its permit based on the variance
from section 165(a)(3) for a particular Class I area, but the State
would remain obligated to comply with 40 CFR 51.166(a)(3) of the PSD
regulations and take subsequent action to amend the SIP to correct the
exceedance of the Class I increment caused by the source that received
the variance.

	The latter interpretation appears to be supported by a statement from
the D.C. Circuit’s opinion in Alabama Power v. Costle.  In this
decision, the Court upheld the language cited above (40 CFR
51.166(a)(3)) that requires a State to revise its SIP to correct a
violation of the increment.  One of the Petitioners in that case had
argued that EPA could not require a State to remedy a Class I increment
violation because section 165(d) allowed a waiver of the Class I
increment in certain circumstances.  The court reconciled the variance
provision and the language in §51.166(a)(3) as follows:

Industry petitioners also rely on those sections of the Act that provide
for waiver provisions which, conceivably, could allow increments to be
exceeded.  The waiver has vitality and recognition in that facilities
granted special consideration under these provisions are, in effect,
treated as facilities operating in compliance with the provisions of the
Act.  But the totality of facilities in compliance, as a group, may be
subject to measures necessary to cope with a condition of pollutants
exceeding the PSD maximum.  

See 636 F.2d at 363. 

	We have previously acknowledged that this may be a permissible way to
reconcile the FLM variance provision with the requirement in
§51.166(a)(3) to amend SIPs to remedy an increment exceedance.  In
correspondence sent to the State of North Dakota, the Director of
EPA’s Office of Air Quality Planning and Standards recommended the
approach suggested by the Alabama Power opinion.  The letter stated the
following:

In the case of a Class I increment violation, a source may be granted a
variance under certain conditions.  First, the source must demonstrate
to the FLM, and the FLM certify to the State, that the source will not
adversely impact any Class I AQRVs.  Second, the State must revise its
SIP to correct increment violations ([Act] Section 161 and 163, 40 CFR
51.166(a)(3)).

See Letter from John Seitz, EPA/OAQPS, to Francis Schwindt, North Dakota
Dept. of Health (December 12, 2001).  EPA Region 8 followed this
recommendation in comments submitted to North Dakota in 2002.  See EPA
Comments on North Dakota Department of Health’s Proposed Determination
Regarding the Adequacy of the SIP to Protect PSD Increments for Sulfur
Dioxide (May 24, 2002).

	Since the time of these recommendations, we have evaluated this issue
further and now recognize that there may be more than one permissible
reading of the Act on this issue.  The approach that we suggested in
2001 (amending the SIP to eliminate the Class I increment exceedance
after the permit issues) would effectively require the source seeking
the variance to obtain offsets from other sources affecting the Class I
increment.  If section 165(d)(2)(C) is read to require that a variance
source obtain offsets, there would be no need for that proposed source
to demonstrate that its emissions would not have an adverse impact on
AQRVs.  This would render the AQRV provisions in section 165(d)(2)(C) of
the Act meaningless where the increment is exceeded because one would
not need to consider AQRVs and obtain the  variance in the first place
if offsetting emissions reductions were obtained.  Furthermore, where a
single source consumes the entire increment but does not adversely
impact AQRVs, the issuance of a variance would have no effect because a
SIP could not be tightened to obtain reductions from any other source to
remedy the increment exceedance.  In this circumstance the State would
have no choice but to tighten or revoke the permit of the variance
source immediately after the permit was issued.  We do not believe
Congress intended such a result.  In light of these considerations, we
are proposing to refine our interpretation of section 165(d)(2)(C) with
respect to the role of the Class I increment after a variance has been
issued under section 165(d)(2)(C).  

	Another possible approach would be to read section 165(d)(2)(C)(iv) to
call for the Class II increments to substitute for the Class I increment
on an ongoing basis after a variance is issued.  We might construe the
absence of any discussion of an “otherwise applicable” increment in
this section of the Act to mean that Congress did not intend for the
Class I increment to have continuing effect in the area after the
variance was issued.  Since Congress did not specify the number of days
on which the “otherwise applicable” increment could be exceeded per
year (as it did in section 165(d)(2)(D)(iii)), one interpretation is
that this information was not needed because Congress did not intend for
the Class I increments to apply after it was demonstrated that the Class
I increment was not a reliable predictor of the degree of impact on
AQRVs in a particular Class I area.  Under this approach, the Class II
increments (plus the unique 3-hour SO2 increment) would continue to
provide an upper bound on emissions growth to protect the Class I area
while AQRVs remained in effect to protect against site-specific impacts
that are not adequately represented by the Class I increment.  However,
under this Class II increment substitution approach, the Class I
increment would no longer be available as tool to determine who has the
burden of proof to demonstrate the degree of impact on AQRVs. 

 	In this action, we are proposing a compromise approach that retains
the Class I increment for the purpose of establishing the burden of
proof in the AQRV analysis but does not require a SIP to be amended to
offset the contribution of sources that have received a variance because
they do not adversely affect AQRVs.  We propose to accomplish this
effect by allowing States to exclude the emissions from sources
receiving an FLM variance from the Class I increment consumption
calculation.  The emissions of the variance source must continue to be
considered for purposes of determining compliance with the Class II
increments, but they would no longer be considered relevant to the Class
I increment assessment after a variance has been issued.  The Class I
increment would remain in effect with respect to the emissions of other
sources, and could not be exceeded on any additional days.  The
emissions of sources that have not received a variance would continue to
count against the Class I increment. 

For example, assume that an impact area for a proposed new source
contains four sources that currently consume the SO2 increment for the
3-hour averaging period – two of which have FLM variances and two of
which do not.  There are no other increment consuming or expanding
sources in the impact area.  For the 3-hour averaging period for SO2,
the Class I increment is 25 (g/m3 and the alternative increment that
applies after issuance of an FLM variance in this area is 325 (g/m3. 
Assume that the two sources with variances consume 4 (g/m3 each, for a
total of 8 (g/m3.  Assume that the two sources without variances consume
10 (g/m3 each, for a total of 20 (g/m3.  Under this scenario, if a new
source applies for a permit, under this proposed rule the new source
must combine its emissions with the emissions from the other two sources
without variances and not exceed, for the Class I area of impact, 25
(g/m3.  Thus, the new source can consume up to 5 (g/m3 (i.e., 25 (g/m3
minus 20 (g/m3) of the available Class I increment for SO2 without
assuming the burden of obtaining a third variance by demonstrating to
the FLM that the source will not have an adverse impact on AQRVs in the
Class I area  

Under this hypothetical example, because two sources in the area have
previously obtained variances and shown that the Class I increment is
not necessarily a reliable indicator of impacts on AQRVs, an alternative
increment of 325 mg/m3 now applies in the Class I area for all sources. 
The proposed source must combine its emissions with that of all 4
sources and not exceed a concentration increase of 325 (g/m3.  Since the
other four sources consume 28 (g/m3, the new source can consume up to
297 (g/m3 (i.e., 325 (g/m3 minus 28 (g/m3) of the available increment
for SO2. 

Furthermore, the AQRV test remains applicable to the ultimate decision
as to whether the permit may be issued for the new source.  Even though
the new source, combined with the two existing sources without
variances, may not cause or contribute to an exceedance of the Class I
increment, the permit could nevertheless be denied if the FLM convinces
the reviewing authority that the new source will have an adverse impact
on AQRVs in the affected Class I area.

	Since a variance will not be issued unless the Class I area FLM
certifies that the emissions from a proposed source will not have an
adverse impact on AQRVs, it is reasonable to omit the emission of such
source from the increment consumption analysis for the Class I increment
on an ongoing basis.  A source issued a variance does not adversely
impact AQRVs, which as discussed above, is the critical and adaptable
test Congress established for protecting site-specific concerns in Class
I areas.  Each successive source that impacts the Class I area would
still have to show that it does not harm the AQRVs to receive a permit. 
The Class I increment would remain relevant as an indicator for
assessing when other sources may have an adverse impact on AQRVs.  If
sources other than the variance source cause an exceedance of the Class
I increment, the next source to apply for a permit affecting the area
will have the burden of demonstrating to the FLM that the proposed
source’s emissions do not adversely affect AQRVs.  If the emissions of
the proposed source and other sources that have not received a variance
do not consume the Class I increment, then the FLM will bear the burden
of convincing the reviewing authority that the proposed source will
adversely impact AQRVs.  Plus, the alternative increments (generally the
Class II increments) apply to limit the overall increase in
concentrations caused by all sources affecting the Class I area. 

		This approach is a permissible reading of the Clean Air Act that
reconciles some apparent inconsistencies in the statutory scheme.  Even
when a variance is issued under section 165(d)(2)(C), the Act does not
expressly allow the Class I increment to be exceeded on any additional
days.  If this omission were read strictly to preclude any additional
days of violation of the increment, this would be inconsistent with
allowing a variance because the strict reading would preclude any
additional days of a Class I increment violation, even those caused by a
variance source.  The issuance of a variance would appear to require at
least a temporary variance from the Class I increment, even if the SIP
still has to be amended at a later date to correct the violation, but
that would be inconsistent with a strict reading of section
165(d)(2)(C)(iv) to preclude additional violations of the Class I
increment.  If section 165(d)(2)(C)(iv) is read to require that the
Class II increment permanently supersede the Class I increment, an
unlimited number of additional days of Class I increment violations
would be permitted and the burden shifting effect of the Class I
increment would be lost.  Our proposed approach of excluding the
emissions of variance sources from the Class I analysis appears to be
the best way to avoid authorizing any additional days of Class I
increment violations while retaining the role of the Class I increment
as a tool to determine who has the burden in the AQRV analysis. 

	Because of the differences between section 165(d)(2)(C) and
165(d)(2)(D), we do not propose to apply this same exclusion to
variances issued under section 165(d)(2)(D).  Instead of allowing an
exclusion from the Class I increment consumption analysis, it appears
that Congress opted in section 165(d)(2)(D) to apply the otherwise
applicable Class I increment but instead to allow that increment to be
exceeded on 18 days per year instead of the normal limit of 1 day per
year.

	We also propose to use this rule as an opportunity to correct a
typographical error in the provisions of our rules addressing the FLM
variances.  The cross references contained within 40 CFR. 51.166(p) and
52.21(p) incorrectly refer to paragraph (q) of these provisions.  We
propose to amend these provisions so they reflect the correct
cross-references to portions of paragraph (p). 

B.	How are emissions estimated for sources that consume increment?

	To model the expected change in concentration of pollutants above the
baseline, one needs to identify the emissions of those sources that are
included in the increment consumption analysis.  As noted earlier, the
PSD regulations call for this analysis to be based on the actual
emissions of sources.  The baseline concentration is generally based on
“actual emissions ... representative of sources in existence on the
applicable minor source baseline date.”  See 40 CFR
51.166(b)(13)(i)(a) and 52.21(b)(13)(i)(a).  The concentration after the
minor source baseline date is generally based on “actual emissions
increases and decreases ... at any stationary source occurring after the
minor source baseline date.”  See 40 CFR 51.166(b)(13)(i)(b) and
52.21(b)(13)(ii)(b).  There are certain exceptions to these general
principles for emissions of major sources, but the basic methodology
involves identifying the actual emissions of sources on the minor
baseline date and actual emissions increases and decreases after the
minor source baseline date at sources existing on the minor source
baseline date and increases attributable to the addition of new sources
since that time.  

In practice, an assessment of increment consumption in accordance with
these requirements has generally involved compiling an actual emissions
inventory for two separate time periods.  The first part of the
inventory generally contains actual emissions as of the minor source
baseline, but for major sources, the emissions as of the major source
baseline date must be used.  The second part of the inventory covers
what amounts to the present day at the time of a periodic review of
increment compliance or the review of a pending PSD permit.  In the case
of a PSD permit review, the second part of the inventory contains the
projected emissions of the proposed source.  The existing PSD
regulations contain a definition of the term “actual emissions” in
40 CFR 51.166(b)(21) and 52.21(b)(21).  This definition is expressly
incorporated into the definition of “baseline concentration” which
establishes the basic parameters described above for determining the
change in concentration since the baseline date. 

	In this action, we are proposing to adopt a revised definition of
“actual emissions” that will address the methodology for quantifying
emissions as of the baseline date and emissions that consume increment. 
Rather than revising the existing definition of actual emissions in 40
CFR 51.166(b)(21) and 52.21(b)(21) which may continue to be used for
other purposes under the PSD program, we propose to promulgate a new
definition of “actual emissions” in 40 CFR 51.166(f) and 52.21(f)
that will apply only to the analysis of increment consumption and be
easier to find among other provisions pertaining to the increment
consumption analysis.  We also request comment on whether we could also
repeal the existing definition of actual emissions in 40 CFR
51.166(b)(21) and 52.21(b)(21) without affecting other elements of the
PSD program.

1.	Data and Calculation Methods Used to Establish Actual Emissions

	We propose to add language to the PSD regulations to clarify that a
reviewing authority has discretion to use its best professional judgment
when determining the actual emissions of sources as of the baseline date
and at subsequent periods of time, particularly where there is limited
data available from which to determine actual emissions.  We propose to
establish a general standard for the sufficiency of data and calculation
methods on which actual emissions may be based, but also request comment
on WESTAR’s recommendation that EPA establish a menu of permissible
data types and calculation methods from which each reviewing authority
may select.

Background.  Because direct measurement of the emissions from a stack
may not be available, the emissions of baseline and increment consuming
sources must often be derived from other data that is available.  The
current regulations applicable to increment consumption analyses specify
that “actual emissions shall be calculated using the unit’s actual
operating hours, production rates, and types of materials processed,
stored, or combusted during the selected time period.”  See 40 CFR
51.166(b)(21) and 52.21(b)(21).  This general requirement adopted in the
PSD regulations in 1980 presumed the availability of reliable and
consistent records on operating hours, production rates, and materials
composition.

However, the experience of EPA and many States in implementing the PSD
program since this time has shown that the accuracy and reliability of
the available data may be questionable or may vary significantly over
the time period of the emissions estimate.  For PSD baseline dates that
are many years in the past, information on actual source operations may
be sketchy or lacking altogether.  Furthermore, the composition of raw
materials, such as the sulfur content of coal, may change over time and
might be reliably estimated for an annual average value, but may be
significantly higher during a shorter period of time within that year or
when a maximum value is determined. 

	There may also be cause to choose among various calculation
methodologies for a given emissions estimate.  For example, annual
emission rates could be calculated based on continuous operation (24
hours per day, 365 days per year).  If a source does not operate
continuously, whether by design or permit limitation, the annual
emissions could be based on the limitation.  Due to scheduled shutdowns
and maintenance, sources rarely operate at design or permit limits, and
in such cases actual operating hours could be used.  However, there will
be situations when data on operating hours are not available and some
other estimate of operation must be determined.  The choice of which
data to use in a particular circumstance, particularly where there is
more than one set of data that could be used or more than one
methodology, has generated substantial uncertainty in the context of the
PSD program.  This uncertainty also extends to how gaps in the data are
handled, such as when data are unavailable or are available for only a
subset of a group of similar sources.  

Other than the language quoted above from the definition of “actual
emissions” calling for emissions to be calculated based on actual
operating hours, production rates, and materials composition, the PSD
regulations have not included any criteria for reviewing authorities to
use to determine actual emissions.  We have provided more specific
guidance for demonstrations of compliance with the NAAQS under the PSD
program in table 8-2 of appendix W, but this table was not developed for
purposes of increment consumption analysis.  Section 8.1.2.i. currently
recommends only that “NAAQS compliance demonstrations in a PSD
analysis should follow the emission input data shown in Table 8-2.” 
We do not believe our recommendations in Table 8-2 can be readily
extended to increment consumption analyses because of differences in the
increment consumption analysis.  Unlike the NAAQS analysis, increment
consumption assessments have generally focused on changes in emissions,
rather than absolute concentrations, and often must account for
emissions that occurred many years earlier on the applicable baseline
date.

We do not necessarily read the Act to call for the same degree of
precision in the increment consumption analysis as a determination of
compliance with the NAAQS.  Under the constraints imposed by Congress,
the increment analysis is in many ways an artificial assessment because
the actual emissions as of the date of the first PSD permit application
in an area must be adjusted to account for construction-related
emissions increases at major sources in the area that occurred prior to
that date.  CAA section 169(4).  In addition, the actual emissions of
some sources may be omitted from the analysis altogether under section
164(c) of the Act.  Because Congress required or permitted these
adjustments to the calculation of baseline concentrations and
concentrations after the baseline date, we believe the method used to
determine increment consumption should endeavor to provide a
representative indication of the relative magnitude by which air quality
concentrations have changed over time, but is not necessarily required
to provide an exact prediction of the change in air quality
concentrations from one date another. 

	Proposed Action.  To address the uncertainty in how to determine actual
emissions for increment consumption purposes, we propose to codify a
policy that gives the reviewing authority discretion to select the data
and emissions calculation methodologies that are reliable, consistent,
and representative of actual emissions.  The cornerstone of such a
policy is that emissions estimates used to establish baseline
concentrations and increment consumption or expansion must be supported
by the available record and be rationally-based.  This policy would give
reviewing authorities the discretion to use the best available
information and to make reasonable judgments as to the reliability of
that information for determining actual emissions, particularly when
estimating emissions for baseline dates in distant years for which very
little useful data may be available.  In addition, this policy would
seek to ensure a reliable estimate of the change in air quality
concentrations by encouraging reviewing authorities to evaluate the
degree of change by comparing consistent data types or concentration
predictions (i.e., to conduct an “apples” to “apples” comparison
of the change in emissions or concentrations).  We believe that this
flexible approach is preferable to a rigid requirement to use a specific
type of data or calculation method because of uncertainty over the exact
type and quality of data that will be available in each instance.  

	This policy is consistent with existing recommendations in appendix W
and EPA guidance.  Section 8.0.a. of appendix W currently states that
“[t]he most appropriate data available should always be selected for
use in modeling analyses.”  This approach is consistently applied
throughout appendix W wherein the reviewing authority is given
discretion to approve the selection of input data for air quality
models.

	We have generally given reviewing authorities substantial leeway within
the PSD program to select data and emissions calculation methodologies
that they believe are representative of actual emissions.  We recognize
that where the available data are poor, substantial judgment must be
used to estimate actual emissions.  Once the reviewing authority has
selected data and emissions calculation methodologies according to
general guidelines, we typically have not second-guessed their choices. 
In particular, we have not required reviewing authorities to select data
or methodologies that we might consider “more reasonable” or “more
representative” than those they have chosen.

We propose to give each reviewing authority the responsibility to verify
and approve the data used, and to assure that it meets a basic standard
of reliability, consistency, and representativeness.  In light of the
fact that many recommendations in section 8.0 of appendix W are not
necessarily applicable to the increment analysis, we propose to make
clear that this standard will control over the recommendations in
appendix W. 

	We request comment on this policy, and on the regulatory language
proposed at 40 CFR 51.166(f)(1)(iv) and 52.21(f)(1)(iv) to codify this
policy.  In addition, we request comment on whether additional guidance
or limitations should be articulated and codified for estimating
emissions that make up the baseline concentration or consume increment.

	Request for comment on WESTAR recommendation.  In its May 2005
recommendations, WESTAR expressed the view that EPA should “afford
reviewing authorities some flexibility to ensure that analyses
accommodate considerations such as data availability and accuracy.” 
However, WESTAR also asked us “to encourage consistency,
predictability, and regulatory certainty with regard to approaches for
preparing emissions inventories for refined PSD analyses.”

	In order to achieve these goals, WESTAR recommended a two-step
approach.  The first step would be for EPA to develop a “menu” of
acceptable emissions calculation approaches for both short-term and
annual PSD analyses.  The second step would allow the reviewing
authority to select what they believed to be the most appropriate option
from the menu based on a set of guiding principles.  The reviewing
authority would be able to use calculation approaches not included in
the menu provided that they can demonstrate that the approach is
consistent with the Act and NSR regulations, as well as the principles
included in step two.  According to WESTAR’s report, this two-step
approach would help alleviate the current lack of clarity and narrow
interpretations of the definition of actual emissions used for emissions
inventories in PSD analyses.

	WESTAR’s report identifies various types of data that might be used
in the menu.  These data types are discussed in more detail below in the
context of the more specific issue of short-term emissions estimates.  

	WESTAR also provided guiding principles that could be used in selecting
among the menu items.  These principles are the following:

Maximize the accuracy of the method(s) in reflecting the actual status
of air quality during each time period associated with applicable
standards;

Conform to the Act, Federal PSD rules, and other applicable laws and
rules;

Ensure consistency between emissions calculation methods used for
sources in the baseline emissions inventory and the current emissions
inventory;

Ensure that selected methods are practical given the availability of
reviewing authority access to the emissions data;

Support fairness and consistency in how emissions are calculated for
various source types across and within States; and

Support key air quality management objectives that States and EPA are
seeking to achieve, such as encouraging sources’ use of continuous
emissions monitoring systems (CEMS) and discouraging sources from
seeking more permitted air quality increment than they need.

	We request comment on WESTAR’s proposed approach.  For more
information, we encourage you to review the WESTAR recommendations that
can be found in the docket for this rulemaking.  We also request comment
on any other aspect of selecting data and calculation methodologies for
emissions inventories for PSD analyses.

  SEQ CHAPTER \h \r 1 2.	Time Period of Emissions Used to Model
Pollutant Concentrations

	In this action, we are also proposing amendments to clarify the time
periods to be used for emissions from sources included in the
calculation of the baseline concentration and the change in
concentration after the baseline date.  In general, we have called for
the modeling change in concentration to be based on the emissions rates
from increment consuming sources over the 2 years immediately preceding
a particular date.  However, there are circumstances when another period
of time may be more representative of actual emissions as of a
particular date.  This rulemaking is intended to clarify those
circumstances when it is permissible to use another period of time to
represent actual emissions as of a particular date for purposes of
calculating the change in concentration used to evaluate consumption of
PSD increments. 

Background.  Since source operations are inherently variable over time,
the NSR regulations do not require that “actual emissions” on a
particular date be based only on the emissions occurring on that single
date.  Instead, the regulations generally require that the baseline
concentration be based on an average of the emissions observed over the 
    2 years prior to the baseline date (40 CFR 51.166(b)(21)(ii) and
52.21(b)(21)(ii)).  However, we have long recognized an exception to
this general rule, which provides that a different period of time may be
used when another period of time is more representative of normal source
operations (40 CFR 51.166(b)(13) and (21)). 

	The original definition of “actual emissions” has been used in
several different ways under the NSR program.  In addition to being
incorporated in the definition of “baseline concentration” and thus
used for purposes of determining consumption of increment, this
definition of “actual emissions” has also been applied for the
purpose of identifying the change in emissions attributable to the
modification of a major source.  An existing major source is subject to
NSR if it engages in a major modification which is defined to mean
“any physical change in or change in the method of operation of a
major stationary source that would result in a significant emissions
increase … and a significant net emissions increase of that pollutant
from the major stationary source.”  See 40 CFR 51.166(b)(2) and
52.21(b)(2).  Prior to 2002, the definition of “actual emissions” in
40 CFR 51.166(b)(21) and 52.21(b)(21) applied to determine the actual
emissions of the source prior to the change and after the change.  

	In 2002, we adopted a new definition of “baseline actual emissions”
that is now used to determine actual emissions before a change for
purposes of determining whether a source is proposing a major
modification that requires a preconstruction permit.  This definition
allows non-utility units to identify pre-change emissions using any
2-year period in the 10 years preceding and requires electric utilities
to use any consecutive        2 years in the last 5 years.  We adopted
this new definition to reflect the emissions levels that occur during a
normal business cycle, without requiring sources to demonstrate to the
reviewing authority that another period is more representative of normal
source operation.  See 67 FR 80191-92.  However, in that rulemaking, we
made clear that original “actual emissions” definition continues to
apply for other purposes under the PSD program.  We observed that the
existing definition of actual emissions “continues to be appropriate
under the pre-existing regulation and for other NSR purposes, such as
determining a source’s ambient impact against the PSD increments, and
we continue to require its use for such purposes.”  See 67 FR 80192,
footnote 13; 67 FR 80196.

	Prior to 2002, when determining the baseline actual emissions at a
source experiencing a modification that might trigger NSR, we applied
the “more representative of normal source operations” exception in
40 CFR 51.666(b)(21) and 52.21(b)(21) in a narrow set of circumstances. 
For example, in 1999, the Administrator addressed this issue in response
to a petition to object to issuance of a title V operating permit and
observed that EPA “has applied its discretion narrowly in assigning
representative periods other than the 2 years immediately preceding the
physical or operational change.”  See Order Responding to
Petitioner’s Request That Administrator Object to Issuance of State
Operating Permit, In the Matter of Monroe Electric Generating Plant
Entergy Louisiana, Petition No. 6-99-2.  In a draft 1990 guidance
document, the agency observed that normal source operations “may be
affected by strikes, retooling, major industrial accidents, and other
catastrophic occurrences.”  NSR Workshop Manual at A.39.  Based on
these examples, we have sometimes looked for evidence of a
“catastrophic occurrence” before permitting an alternative period to
be used to establish the actual emissions of a source prior to a
modification.  For example, in a 1992 memorandum, the Director of the
Air Quality Management Division (AQMD) concluded that the exception
should not be invoked for a source that had been idle for 10 years due
to economic reasons and had not demonstrated that operations of the
plant were disrupted by catastrophic occurrences or other extraordinary
circumstances.  The director identified strikes and major industrial
accidents as examples of catastrophic occurrences.  Memo from John
Calcagni, AQMD, to David Kee, Region V (August 11, 1992).  Although we
have, in our discretion, applied the definition in 40 CFR 51.166(b)(21)
and 52.21(b)(21) narrowly, we did not amend these regulations to
restrict application of the “normal source operation” exception in
the definition of “actual emissions” to only catastrophic
occurrences.  In recent years, we have moved away from this approach in
rulemaking actions.

	In the process of establishing the new definition of “baseline actual
emissions” for applicability purposes, we observed that the more
representative or normal source operation provision “has been a source
of confusion and uneven implementation.”  See 61 FR 38259, July 23,
1996.  This observation was based on our experience with identifying
increases in emissions for purposes of determining whether a source was
proposing to undergo a major modification and required a permit.  We
were not concerned at that time about the application of this exception
in the context of the PSD increment analysis.  However, we have since
discovered that the legacy of implementing the “normal source
operation” exception in the context of NSR applicability has had a
collateral effect of fostering confusion in those circumstances, such as
PSD increment analyses, where the “actual emissions” definition in
40 CFR 51.166(b)(21) and 52.21(b)(21) continues to apply.  Recently, the
question has arisen as to whether the guidance we provided on the
“more representative of normal source operations” exception in the
applicability context should also be applied in the context of increment
consumption analysis.  As a result of this question, we have been
reviewing the issue, and propose to clarify our position in this
rulemaking. 	

Proposed Action.  In this action, we are proposing to establish a new
definition of “actual emissions” (applicable only to the increment
consumption analysis) which clarifies the circumstances when it is
permissible, in the context of an increment consumption analysis, to
determine actual emissions for increment consuming sources using a
period of time other than the 2 years immediately preceding the relevant
date.  We propose to codify this element of the new definition in 40 CFR
51.166(f)(1)(iv) and 52.21(f)(1)(iv) of the PSD regulations.

	This issue has arisen most recently in the context of determining the
actual emissions of sources as of the baseline date.  However, we
recognize that this issue could also arise when seeking to establish the
“present day” inventory of emissions increases or decreases after
the baseline date.  Under existing regulations, the same definition of
actual emissions applies in each instance.  Our proposed definition of
“actual emissions” for the increment consumption analysis is
intended to apply to both sides of the ledger in order to provide
consistency.  We believe the same principles should apply when
determining emissions as of the baseline date and the present day. 

	The proposed revisions are intended to address three primary issues. 
First, we propose to clarify that one is not required to demonstrate the
occurrence of a catastrophic event in order to determine actual
emissions on the basis of a period other than the 2 years immediately
preceding the date in question.  Second, we seek to clarify that there
can be circumstances where emissions increases occurring after the
baseline date or due to increases in hours of operation or capacity
utilization may be more representative of normal source operation. 
Third, we are clarifying that a when an alternative (more
representative) time period other than the 2 years before the particular
date is used to reflect actual emissions, that alternative time period
must be representative of source emissions (within an expected range of
variability) as of the particular date and cannot be based on emissions
experienced because of a change in the normal operations of that source
after that date.

	With respect to the first issue (whether a “catastrophic
occurrence” must be shown), we have historically approached the
“normal source operation” exception differently in the context of
the PSD increment analysis.  The guidance in which we have looked for
evidence of “catastrophic occurrences” only addressed the subject of
baseline actual emissions prior to a modification and did not discuss
how to determine the emissions of sources on the PSD baseline date for
increment purposes.  As discussed further below, in the context of the
PSD baseline concentration, we have not previously limited the
application of the “normal source operation” exception to those
circumstances where a source experienced a malfunction or catastrophic
event.  In the context of increments, we have recognized that the
“normal source operation” exception may apply in other kinds of
circumstances where it can be shown that source emissions in the 24 

months preceding the baseline date are not representative of its normal
operations at the time of the baseline date. 

	We do not believe it is appropriate to define “actual emissions” as
narrowly in the context of PSD increment consumption analysis as it had
been applied in the context of PSD applicability determinations before
2002.  Although we have looked for evidence of “catastrophic
occurrences” to establish that another time period is more
representative of actual emissions prior to a modification, we do not
believe this fact alone justifies using a similar approach for
identifying representative periods of actual emissions in the context of
a PSD increment analysis.  The modification context in which this
approach was once used is different from the increment consumption
context.  The former involves the initial determination of whether a PSD
permit is required, and evaluates only an increase in emissions from a
single source resulting from a proposed change.  By contrast, an
increment compliance assessment is performed after it is clearly
established that a source must obtain a PSD permit (or may be done in a
periodic review when no permit is pending) and evaluates a change in air
pollutant concentration using modeling and 

emissions data inputs for multiple sources.  We believe the differing
nature of the increments analysis justifies a different approach.  

	As to the second issue described above, our proposal to sometimes allow
emissions after the baseline date to be used to calculate the baseline
concentration is consistent with our historic interpretation of the
“normal source operation” exception in the context of the increment
consumption analysis.  In our original PSD regulations after the 1977
Amendments to the Act, we considered emissions increases attributable to
increases in hours of operation or capacity utilization to be a part of
the baseline concentration (rather than increment consuming increases)
if the source was allowed to operate at that level in 1977 and could
have reasonably been expected to make those increases at the that time. 
See 43 FR 26400, June 19, 1978 (emphasis added).  However, in 1980, we
eliminated the automatic inclusion of these emissions in the baseline
concentration.  Instead, we chose to address the issue on a case-by-case
basis when it could be demonstrated that emissions attributable to
increased utilization were more representative of normal source
operation under the definition of “actual emissions.”  When we
adopted this change, we said that “if a source can demonstrate that
its operation after the baseline date is more representative of normal
source operation than its operation preceding the baseline date, the
definition of actual emissions allows the reviewing authority to use the
more representative period to calculate the source’s actual emissions
contribution to the baseline concentration.”  See 45 FR 52714, Aug. 7,
1980 (emphasis added).  We continue to view this to be an appropriate
policy and propose regulatory language to make this explicit in the
regulations. 

	Identifying “actual emissions” based on representative emissions as
of the PSD baseline date is consistent with the opinion of the D.C.
Circuit in the Alabama Power case.  In that decision, the court noted
the following:

Congress did not intend a simple measurement of air quality on a day
with atypical conditions to control calculation of the baseline. 
Reasonable efforts to ascertain the actual but usual concentration
levels, as of the date of the first applicable for a permit, are
required. 

See Alabama Power, 636 F.2d at 380 n. 44.  We believe that the proposed
definition of “actual emissions” for increment consumption purposes
is consistent with Congressional intent, as describe by the court.  It
is reasonable to allow a showing that a period other than the 24 months
prior to the baseline date are representative of the “usual”
concentration levels at the time of the baseline date where emissions
after the baseline date can be shown to represent the “usual” or
“normal” concentration levels.  As observed by the court in Alabama
Power, “Congress expected EPA to use ‘administrative good sense’
in establishing the baseline and calculating exceedances.”  See
Alabama Power, 636 F.2d at 380.  We have considered this approach to
make good sense since 1980.  Although emissions after a baseline date
may sometimes be reflected in the baseline concentration, this has
historically been a narrow exception because, in general, increases in
emissions that occur after the baseline date consume increment.  See 40
CFR 51.166(b)(13) and 52.21(b)(13); see also draft NSR Manual at C.35
and C.48.

	With respect to the third issue listed above, while we propose to
clarify that emissions after the baseline date may sometimes be used to
represent actual emissions as of the baseline date, we must also
emphasize that this is permissible only in limited circumstances.  We
propose to include language in our new definition that limits the
circumstances under which post-baseline date emissions can be considered
representative of normal source operations for purposes of establishing
the baseline concentration.  Such a limitation is needed to ensure that
the increment system continues to function as intended to prevent
significant deterioration from actual increases in emissions after the
baseline concentration is established.  We seek to ensure that real
increases in emissions that are outside of a normal range of variability
will continue to be regarded as consuming increment, while recognizing
that due to the normal variability in source operations, some apparent
increases in emissions are justifiably included in the baseline where
they are representative of the emissions experienced by a source as of
the baseline date.  We believe that increases in emissions that are not
attributable to the normal variability of source operations at a
particular time are actual increases that should be counted as consuming
the available increment. 

	Under the Act and applicable case law, it is clear that the emissions
that make up the baseline concentration must be representative of air
pollutant concentration levels at the time of the baseline date. 
Section 169(4) of the Act defines baseline concentration as the
“ambient air concentration levels which exist at the time of the first
application for a permit.”  In the Alabama Power decision, the court
observed that the baseline concentration is tied to first permit
application because Congress intended permitting authorities to use
actual data to establish baseline or make permit applicants collect data
at the appropriate time.  See 636 F.2d at 375-76.  In defining baseline
concentration, we have required a baseline concentration to be based on
“actual emissions ... representative of sources in existence on the
applicable minor source baseline date.”  See 40 CFR
51.166(b)(13)(i)(a). 

	Our proposed approach should not be construed to permit emissions
estimates as of the baseline date to be based on operations over the
entire life of a source or a period of operations that is not
representative of operations as of a particular date.  Actual emissions
as of particular date must be representative of normal operations (which
include an expected range of variability) during the applicable time
period.  For example, when estimating sulfur dioxide emissions from a
coal-fired electric generating unit, we do not believe it is appropriate
to use the weighted average sulfur content for coal from any period over
the life of the mine supplying the facility.  However, we recognize that
there may be some variability in the sulfur content of the coal used by
a source at the time a baseline date is established.  For example, if
the baseline date were some time in the 1970s, we believe it would be
appropriate for the emissions from this source be based on a weighted
average sulfur content for coal used by the source in the 1970s. 
However, we would not consider it appropriate for the source to use a
weighted average of sulfur content from coal used in the 1990s to
represent the composition of coal combusted in the 1970s, unless it can
be shown that the composition of coal in used the 1990s is in fact
representative of the coal the source actually used in the 1970s.  Our
intent is to revise the regulation to codify the approach reflected in
our Memorandum of Understanding with North Dakota which calls for using
the sulfur content of coal consumed during a unit’s baseline normal
source operations, rather than the sulfur content averaged over the
entire life of a mine or any period of operations in the life of the
source that is not representative of operations on a particular date.

	This approach is consistent with language in the existing definition of
“actual emissions,” which provides that “[a]ctual emissions shall
be calculated using the unit’s actual operating hours, production
rates, and types of materials processed, stored, or combusted during the
selected time period.”  See 40 CFR 51.166(b)(21)(ii) and
52.21(b)(21)(ii).  The selected time period under this provision should
be either the 24 months before the particular date or an alternative
period that is shown to be more representative.

	In order to ensure consistent measurement of increases in air pollutant
concentration, we believe it is also appropriate to also apply the
“normal source operation” exception in the context of the emissions
inventory for the present day period.  As applied to the present day
inventory of emissions, if a source experiences lower than normal
emissions in the 2 years preceding the review, more representative
emissions should also be used in the present day inventory to avoid
undercounting actual emissions increases. 

	  SEQ CHAPTER \h \r 1 3.	Actual Emissions Rates Used to Model
Short-Term Increment Compliance  

	We also propose in this rule to clarify how one should derive source
emissions rates of less than 1 year for sources contributing to the
baseline concentration and increment consumption when evaluating
compliance with the short-term (24-hour and 3-hour) increments for PM
and SO2.  Increments for a 24-hour averaging time are currently in place
for both PM and SO2.  The 3-hour averaging time is only used for the SO2
increments.  Based on recent experience and the recommendations of
WESTAR, we believe that we need to provide additional guidance to States
and regulated entities concerning how to determine actual emissions for
purposes of modeling the concentration changes over the 3-hour and
24-hour averaging times.  

Background.  The definition of actual emissions in 40 CFR 51.166(b)(21)
and 52.21(b)(21) does not directly address how one is to determine
actual emissions when modeling pollutant concentrations averaged over
periods less than 1 full year.  Under the current provision, actual
emissions are identified using an annual average in tons per year. 
However, this section does not directly address how to determine actual
emissions over shorter time periods, such as the 24-hour or 3-hour
averaging times that are used for the some of the PSD increments.

	In draft guidance prepared in 1990, we recommended that sources and
reviewing authorities use the “maximum actual emissions rate” for
short-term averaging periods.  See draft NSR Manual at C.49.  We
indicated that “the maximum rate is the highest occurrence for that
averaging period during the previous two years of operation.”  Id. 
We recommended using this maximum rate for both the current and the
baseline time periods.  Id.  This was consistent with guidance that had
been provided by at least one EPA Regional Office as far back as 1981. 
See Memorandum from Thomas W.  Devine, Region IV, to State and Local Air
Directors, “Policy Determinations Regarding PSD Questions” (July 31,
1981).

	In practice, however, we have since come to recognize that there is
often not sufficient data available to determine the maximum short-term
emissions rate over a 2-year period.  This type of determination will
typically require CEMS.  For PSD baseline dates established in the 1970s
and 1980s, these data are especially difficult to find.  As a result of
this difficulty, some States and EPA Regional Offices have allowed
calculation of an average short-term rate using an average rate
calculated from annual emissions in situations where short-term maximum
actual emissions data are not available.

Proposed Action.  We propose to promulgate a new definition of “actual
emissions” applicable to the PSD increment analysis that specifically
addresses how to derive short-term emissions rates when modeling the
change in concentration for the 24-hour and 3-hour averaging periods
used in increments for some pollutants.  We propose to add a provision
that allows permitting authorities to use their discretion to use data
that promotes consistency in the analysis and does not bias the analysis
in favor of one group of sources over another.  Under this approach, an
average short-term rate may be used if the reviewing authority finds
this to be the best way to promote consistency and avoid bias.  Maximum
short term-rates may continue to be used where sufficient date are
available, but need not be used in all circumstances.

	Although we have historically called for use of maximum short-term
rates, more experience indicates that the modeled change in
concentration may be overly conservative when increment consumption
modeling is based on maximum emissions rates from all sources that
consume increment.  In our experience, it is unusual for
increment-consuming sources to all be operating at their maximum
short-term emissions rates at exactly the same time.  If we were to
require the use of maximum emissions rates in all instances, this would
mandate that PSD modeling always be conducted using a scenario that is
not necessarily representative of actual emissions or concentrations. 
As the court said in Alabama Power, EPA should use “reasonable efforts
to ascertain the actual but usual concentration levels” and
“administrative good sense in establishing the baseline and
calculating exceedances.”  See Alabama Power, 636 F.2d at 380, 380
n.44.  Since it is unusual for all increment consuming sources to all be
operating at their maximum emissions rates at the same time, we believe
that “administrative good sense” dictates that we permit average
emissions rates to be used as well.  However, we are not proposing to
preclude use of a maximum rate where a reviewing authority or source
wishes to conduct a more conservative screening analysis or considers a
maximum rate more appropriate under the circumstances for all sources or
just for certain sources in the inventory.  In many cases, combining the
average emissions rates of all increment consuming sources in an
emissions inventory may produce a more representative picture of the
degree of change in short-term pollution concentration over time.  

	A more representative indication of the change in emissions is produced
by using a consistent set of data.  If actual short-term emissions rate
or hourly operations data are only available from some sources in an
inventory, the analysis could be biased by mixing these data with
averages calculated from annual operational data.  However, if the
reviewing authority derives short-term emissions rates by averaging
annual data from all sources in the inventory, this may provide a
representative depiction of the change in emissions over time. 
Likewise, if reliable and consistent maximum or short-term rate data are
available for all sources in the inventory, this could provide a
representative assessment of the change in maximum rates over time.  We
are proposing to establish a standard that allows sources to select a
consistent data set and to otherwise forgo using some maximum or actual
short-term data that may be available, but is incomplete and would
potentially bias the overall analysis when combined with data of a
different type that must be used to complete the assessment.  At the
same time, we are not proposing to preclude reviewing authorities from
mixing data of different types where they consider it appropriate and
this technique produces a representative analysis.

	In addition, fairness also dictates that we allow use of average
short-term emissions rates and not require use of maximum emission rates
in all cases.  If maximum emissions rates may be used when data are
available but averages are used when the data are insufficient, the
analysis may be biased against the sources that have maximum emissions
rate data.  We want to encourage the use of CEMS that have been shown to
be reliable and want to avoid a policy that inadvertently discourages
the development and use of CEMS.  Where most sources in an area are
using CEMS to track emissions, the maximum rate approach may be more
equitable, but this may not be case in all areas.  Thus, we propose to
give the reviewing authority discretion to use available data and to
achieve equitable treatment across sources and consistency in the
analysis.

	Request for Comment on WESTAR recommendations.  As part of its general
approach of establishing a menu of available data and calculation
methodologies, WESTAR has recommended that EPA establish a more
extensive list of permissible data sources and methods for determining
short-term emissions rates.  For calculating short-term actual emission
rates where CEMS data are available, WESTAR recommended that the menu
include, with no implications of a hierarchy:

Use short-term maximum emissions for the entire plant over a 2-year
period;

Determine maximum short-term emissions from each source at the facility;

Determine short-term emission rates and sort them, then determine
representative rates, such as an upper percentile, as the single
short-term emission rate for modeling;

Use CEMS data to determine actual emissions as defined by rule and
explained by EPA in the preamble to the 1980 PSD rule revisions; or

Use hour-by-hour CEMS data in the model.

In situations where CEMS data are not available, WESTAR recommended that
the menu for calculating short-term actual emission rates include, with
no implications of a hierarchy:

Average 2 years of actual annual emissions representing normal
operations surrounding the baseline date and date of analysis for
current emissions, and divide by annual operating hours;

Calculate emissions from production data for the 2 years prior to the
baseline date or date of analysis for current emissions (emissions
calculated using valid emissions factors and methods);

Use 2 years of emissions data, which may be before or after the baseline
dates, which have a similar facility configuration that would be
representative of baseline emissions; or

Use of allowable emission rates, including use of regulatory limits,
where appropriate.

We request comment on whether we should expand the proposed options for
short-term emissions rate calculation to include elements from
WESTAR’s menu.

	4. 	Use of Allowable Emissions Rates

	We have always allowed a reviewing authority or source to conduct a
more conservative screening analysis using allowable emissions rates
which are typically higher than actual emissions rates.  We propose to
preserve that option under the new definition, but we are modifying the
language from the prior definition slightly to make clear that we do not
intend to mandate the use of allowable emissions, only to permit it at
the discretion of the source or reviewing authority.  

	5. 	Emissions from a New or Modified Source

	When an increment consumption analysis is performed in the context of a
pending permit application to demonstrate that a new or modified source
will not cause or contribute to an exceedance of the increment, the
analysis must include the emissions from the new or modified source when
it begins operations after the permitted construction is complete.  In
the past, we have required such emissions to be based on the potential
to emit of the new or modified source.  However, in reforms to the NSR
program completed in 2002, we allowed modified sources to use projected
actual emissions in calculating whether the change resulted in a
significant net increase in emissions.  See 67 FR 80290 (December 31,
2002).  For the same reasons discussed in that rulemaking, we propose to
adopt revised language for purposes of the increment consumption
assessment that requires the use of projected actual emissions for a
modified source.  We propose to continue requiring the increment
assessment to be based on the potential to emit of a new source that has
not begun normal operations as of the date of the assessment. 

C.	What meteorological models and data should be used in increment
consumption modeling?

In addition to information on emissions from sources in the relevant
area, one also needs meteorological data to evaluate consumption of the
PSD increments.  Meteorological data are a necessary input to the air
quality models that are used to identify the change in concentration
from the baseline date that is compared to the increments to demonstrate
compliance.  Adequate and appropriate meteorological data are a critical
input for dispersion models, as these data are used to characterize the
state of the atmosphere in terms of the transport and diffusion of
airborne pollutants within the modeling domain.  Appendix W contains a
list of meteorological data types and meteorological processors that are
appropriate for various applications of preferred dispersion models.

Recent experience with PSD increment modeling exercises has raised
questions regarding the adequacy of the current EPA guidance to the
States and regulated community concerning the appropriateness of certain
types of meteorological data and the amount of data that should be
obtained for certain dispersion model applications, including PSD
increment analyses.  We discuss these issues below in light of existing
guidance, and seek comment on the need for modification and/or
development of additional guidance. 

1.	Types of Meteorological Data and Processing

Traditionally, dispersion model applications have utilized
meteorological inputs derived from the direct processing of National
Weather Service (NWS) observation data or meteorological data collected
as part of a site-specific measurement program.  However, tools are also
available to project meteorological conditions in order to fill gaps in
site-specific observational data.  Recent experience suggests there may
be a need for us to clarify the circumstances when it is permissible and
appropriate to use meteorological data derived from prognostic
meteorological models in dispersion model simulations such as a PSD
increment consumption analysis.  

Prognostic meteorological models use fundamental equations of momentum,
thermodynamics, and moisture to determine the evolution of specific
meteorological variables from a given initial state.  These models can
characterize meteorological conditions at times and locations where
observational data do not exist.  Photochemical grid-based air quality
models, which require consistent input parameters distributed over an
even grid in time and space, routinely utilize data output from
prognostic meteorological models.  Examples of prognostic meteorological
models are:

MM5 - Penn State University/National Center for Atmospheric Research

WRF - Weather Research and Forecasting Model, NOAA/NCAR

RUC - Rapid Update Cycle, NOAA Rapid Refresh Development Group

In addition, diagnostic processors such as CALMET can format
meteorological model output data for input into dispersion models.  In
addition, these diagnostic processors often can incorporate
meteorological observation data into the process, resulting in a field
of meteorological data that effectively blends the ground-truth of
observations with the dynamics of the meteorological model.  This data
assimilation process frequently takes place within the prognostic
meteorological models themselves.  Run-time parameters may be set in the
diagnostic processors to vary the influence observations may have on the
resulting data set.

Appendix W identifies criteria for judging the adequacy and
appropriateness of such meteorological input data for dispersion
modeling applications, including the spatial and temporal
representativeness of the data for the specific application and the
ability of the individual meteorological parameters selected to properly
characterize the transport and diffusion conditions based on the
formulations of a specific dispersion model.  Meteorological data may be
considered adequate and appropriate for a particular dispersion model or
application, but that determination does not necessarily imply the
adequacy and appropriateness of the data for other dispersion models or
other applications of the same model.  The proper judgment of adequacy
and appropriateness of meteorological data requires expert knowledge of
each of the main components - the meteorological observation data; the
meteorological processor; and the dispersion model formulations and data
requirements.

Appendix W lists specific factors to consider when determining whether
or not a set of meteorological data is representative for a particular
dispersion model application. These include the proximity of the
meteorological monitoring site to the area of interest, the complexity
of the terrain in the area, the exposure of the meteorological
monitoring site, and the period of data collected.  Additional factors
may be important depending on the requirements of specific models.  For
example, surface characteristics of the meteorological observation
location, depending on land use and land cover characteristics, as well
as terrain type and elevation, are required for input to AERMET,

 the meteorological processor for the AERMOD dispersion model.  These
surface characteristics have a significant impact on the boundary layer
parameters that are required for input into the AERMOD model, and
therefore have an impact on the resulting air quality results.  The
determination of representativeness for AERMOD therefore requires
consideration of the potential impact of differences in surface
characteristics between the meteorological monitoring site and the
surface characteristics that generally describe the area upon which the
air quality model simulation is focused. 

For long-range transport modeling assessments or assessments involving
complex winds that require non-steady-state dispersion modeling,
appendix W allows, and in fact encourages, the use of prognostic
mesoscale meteorological models to provide input data into dispersion
model simulations.  See 40 CFR part 51, appendix W, paragraph 8.3(d). 
However, proper use of output from these prognostic meteorological
models in dispersion model applications requires expert judgment, and
acceptance of such data is contingent on the concurrence of the
appropriate reviewing authorities.  Appendix W further indicates that
mesoscale meteorological fields should be used in conjunction with
available NWS or comparable meteorological observations within and near
the modeling domain.  

In this action, we are proposing to provide additional guidelines for
determining the appropriateness of prognostic meteorological model
output data for use in dispersion models.  We propose that a
determination of appropriateness would involve a process equal in rigor
to that already used to review prognostic meteorological model output
data for use in photochemical grid modeling applications at the regional
scale.  We believe that our existing guidance for photochemical grid
models provides a useful basis for the process by which the State may
allow use of certain data sets created by prognostic meteorological
models as input into dispersion model applications provided these data
sets are determined, by using this process, to be appropriate. 
Currently, acceptable quality of meteorological inputs derived from
prognostic meteorological models would be demonstrated by statistical
comparison of the prognostic model output to observations of winds at
surface-level and aloft.

When making a determination of the representativeness of meteorological
inputs derived from prognostic models, it is important to consider the
influences of observations in both the meteorological model and in any
subsequent processing of the prognostic model outputs when comparing the
output to observations as part of the evaluation.  However, it is
important to emphasize that a statistical comparison of the
meteorological observation data to the output of the diagnostic
processor, or even of the prognostic meteorological models, can only be
one part of any determination of appropriateness.  Additional technical
factors that may need to be considered in the determination of
appropriateness include:

Influence of boundary and initial conditions;

Physics options governing the meteorological calculations;

Data assimilation parameters; and

Selection of geographic domains and time periods.

Guidance for consideration of these factors can be found in “Guidance
on the Use of Models and Other Analyses for Demonstrating Attainment of
Air Quality Goals for Ozone, PM2.5, and Regional Haze,” draft version
3.2, September 2006 (referred to hereafter as “the Draft Guidance”).
 However, this guidance concerns regional-scale photochemical grid model
applications.  We request comment on how these and other factors may be
considered in a determination of appropriateness of meteorological data
derived from prognostic meteorological models for use in dispersion
modeling applications.  As explained in the Draft Guidance,
regional-scale photochemical grid model applications require the above
factors be considered with regard to prognostic meteorological model
output, and additionally require consideration of other factors specific
to photochemical grid modeling.  

While meteorological model input that has been accepted for use in
photochemical grid modeling may generally be acceptable for application
in dispersion modeling inasmuch as the specifics of the meteorological
model simulation are concerned, there are additional factors specific to
dispersion modeling that must be considered.  For example, the
particular portion of the meteorological model output used in dispersion
modeling must be considered in terms of its appropriateness for that
particular dispersion model.  Keeping in mind that the grid model is
designed to produce a consistent set of parameters covering a large
geographic area, we must consider the effects of extracting a few
geographic points, from as few as only one grid cell in the entire model
domain, and applying that very small subset of data from a greater
dataset that was designed to be used in total. 

For example, meteorological model simulations are influenced by input
data assigned to the boundary grid cells in the domain (boundary
conditions) as well as to all grid cells within the domain at the
initial time step (initial conditions).  There are appropriate
techniques that may be applied to model simulations to substantially
reduce the influence of initial and boundary conditions for
photochemical grid modeling. 

Boundary conditions, however, are input into the meteorological model at
each time step, and therefore the effect of the boundary conditions is
evident throughout the meteorological model simulation.  To reduce the
effect of these assigned boundary conditions, we propose the area of
interest be selected from an area substantially within the model
simulation domain, for example, at least six grid cells from the
boundary. 

We also propose to include in any review, a thorough description of the
techniques used to extract data from a larger grid, even if the
meteorological data have been approved for use in a photochemical grid
model application, if the extraction is 

performed using a tool or technique not listed in appendix W as part of
a preferred modeling system. 

2.	Years of Meteorological Data

 In addition to clarifying the process and guidance for determining the
circumstances under which it may be appropriate to input data from
prognostic meteorological models into dispersion modeling, we believe it
is also necessary to clarify guidance on the number of years of
prognostic meteorological model output data that are necessary for a
representative dispersion model simulation.  With respect to the number
of years of meteorological observation data  that should be used for
dispersion modeling, appendix W currently states the following:

Five years of representative NWS meteorological observation data are
required – the most recent, readily available 5-year period is
preferred. 

At least 1 year of site-specific meteorological data is required – as
many as 5 years are preferred.

See 40 CFR part 51, appendix W, paragraph 8.3.1.2(a).  However, with
respect prognostic meteorological data, appendix W states that for
long-range transport modeling and for other assessments involving
non-steady-state dispersion modeling to account for complex flows, less
than 5, but at least 3, years of data from prognostic meteorological
models may be used, and that the years need not be consecutive.  See    
             paragraph 8.3.1.2(d).

We believe that our current guidance provides adequate discretion to the
State to determine which and how many years (but no less than 3 years)
should be used with regard to meteorological model output appropriate
for the dispersion model application.  Consistent with appendix W, this
approach is integrated with the process described in the preceding
section for determining appropriateness of prognostic meteorological
model output.  When a State is developing a set of data years for
dispersion modeling, we propose to allow the State to consider any data
years that it has determined to be appropriate using the process
described above even if those data years were not produced by the same
exact meteorological model configuration and simulation.  However, we
also propose that the State must further determine that a particular set
of data years can be modeled to produce an appropriate depiction of the
air quality issue at hand. 

3. 	Evaluating the Appropriateness of Data Years from Prognostic
Meteorological Models for Modeling Worst-Case Impacts

For applications in which the modeling approach is designed to model
worst-case impacts, we propose that the State should determine whether
or not a set of years is appropriate based upon
meteorological/climatological representativeness, and additionally
determine whether or not that set of years is appropriate to simulate
the worst-case conditions required of the application.  Keeping in mind
worst-case conditions might not be discernable until simulated through a
dispersion model, the term “worst-case” does not describe a set of
worst-case meteorology, but rather a set of meteorology 

that when modeled, produces a worst-case depiction of air quality.  This
relationship may not be apparent on simple inspection of only the
meteorological data set. 

That a particular data set sufficiently represents the meteorological
observations for a given area for a given time period, based upon
statistical analyses, may not be proof enough to determine that the
particular data set is most appropriate for a dispersion application,
especially when conducting worst-case applications.  Additionally, a set
of prognostic meteorological model output might be appropriate for
dispersion modeling generally, but the portion of the data extracted for
the specific dispersion model application should still be examined for
appropriateness.  While we do not explicitly propose a three-step
process for determining appropriateness, these three individual
examinations – appropriateness of the prognostic meteorological model
output in general, appropriateness (meteorological representativeness)
of the extracted data set, and appropriateness of the data set for the
dispersion model application – are each a necessary part of the
overall determination of appropriateness, especially in replacing data
years of processed meteorological observations.  Of course, once a
particular data set/subset is determined appropriate, we do not
anticipate re-examining that data set for use in other dispersion
modeling provided the modeling applications and modeling domains are
similar. 

We also request  comment on continuing the current path, based upon
appendix W’s current guidance that previous years of meteorological
data should be added to any meteorology years modeled (if emissions
limitations were based upon modeling those previous years).  See 40 CFR
part 51, appendix W, paragraph 8.3.1.2(c).  We will also accept comments
on the use of data sets of processed observations, prognostic
meteorological model output, or combinations of both. 

D.	What are my documentation and data and software availability
requirements?

	Appendix W currently provides recommendations (see paragraph 3.1.1)
regarding documentation and software availability for preferred modeling
techniques that are listed in appendix W.  (The preferred models are
found in appendix A to appendix W, and are sometimes referred to as
“Appendix A models.”)  The purpose of these recommendations includes
fostering consistency in the application of dispersion models,
minimizing the burden on applicants related to acquiring and setting up
modeling applications, and providing transparency regarding model
formulations, model performance, and model input requirements.  These
appendix W recommendations regarding documentation and software
availability for preferred modeling techniques include that the “model
and its code cannot be proprietary.”  See paragraph 3.1.1(b)(vi) of
appendix W.

	Application of the non-proprietary requirement to data developed for
input into or use by a preferred model, or to other software used to
process input data for a preferred model, is not explicitly addressed in
appendix W.  However, a strict requirement to be non-proprietary is
currently not applied to alternative models (paragraph 3.2) that may be
selected for use on a case-by-case basis, subject to the approval of the
appropriate reviewing authority.  Rather, the focus of recommendations
related to the use of alternative models is on a demonstration and
documentation of model performance that is equivalent or superior to the
preferred model and, for cases where there is no preferred model, a
scientific peer review and documentation and demonstration of the
theoretical basis for the applicability of the alternative model.  In
addition, proprietary software interfaces to simplify the setup and
analysis of Appendix A models have been developed by several commercial
vendors, and have been in common usage for more than a decade.  Such
commercial software interfaces have not been subjected to a requirement
to make the proprietary code available to the public or the reviewing
authority.  However, demonstrations of equivalency may be, and have
been, required of such proprietary interfaces, in keeping with paragraph
3.2.2(c) of appendix W.

	With technical advances and the increased use of more sophisticated
methodologies for developing the required meteorological inputs for
preferred modeling techniques, and in particular the use of prognostic
meteorological model outputs in the development of spatial and
temporally varying meteorology for long-range transport modeling
applications with the preferred CALPUFF model, it is appropriate to
address the adequacy and appropriateness of existing guidance for these
emerging modeling technologies.  Given the critical impact that the
processed meteorological data have on such modeling applications, basic
requirements for technical documentation and performance demonstration
are certainly necessary.  However, we believe that the existing guidance
provided for alternative modeling techniques adequately addresses these
concerns.  The existing guidance implies a certain discretion and
latitude for the reviewing authority in defining the specific data and
documentation requirements necessary to make its determination of the
acceptability of an alternative modeling technique for a given
application.  However, such requirements should be technically
appropriate and avoid imposing an unnecessary burden on the applicant. 
In the case of meteorological data inputs for dispersion models, many of
the relevant issues and requirements for such data are also discussed
above in section IV.C of this preamble.  

	In the special case of proprietary data that may be used in the
development of model inputs, we believe that it is currently within the
discretion of the State to require some independent review of the
proprietary data by an oversight agency, if such a review is deemed
critical to the overall assessment of the appropriateness of data for a
particular modeling application.  Another option within the discretion
of the State would be for the State itself to conduct the review,
provided that proprietary information and trade secrets are protected
under a system that is equivalent to EPA’s rules for requesting
non-disclosure of Confidential Business Information (CBI) submitted to
the Agency.  See 40 CFR part 2.  Provided that any appropriate and
necessary reviews can be conducted by an independent body or the State
reviewing authority with protection against disclosure of CBI, we do not
believe it is necessary to require such proprietary data to be made
available to the general public or to wholly preclude reliance on the
data in regulatory modeling applications.

In the case of software, the focus of the determination of acceptability
by the reviewing authority should be on the adequacy of the technical
documentation and performance demonstrations that are required to
support the use of such software.  More specifically in the case of
proprietary software, the reproducibility of the data or model
simulation may be an important component of the documentation to ensure
confidence in the modeling results, and the applicant should facilitate
such a demonstration when required.  Additional documentation regarding
the quality assurance procedures used in the development of the
proprietary software may also be relevant to supporting the integrity
and accuracy of the results.

	We believe that the current text of appendix W adequately defines the
documentation and software availability requirements related to both
preferred and alternative modeling techniques.  We request comment on
whether additional guidance is needed to clarify these requirements as
they apply to the use of proprietary software and/or data to develop
input for an Appendix A modeling application for PSD increment
consumption.

VI.	Implementation Issues

A.	Is there a need for States to make revisions to their SIPs?

	As described in this notice, we consider the changes we are proposing
to be refinements of our existing guidance and rules addressing an air
quality analysis that is currently required under the PSD program.  With
these regulations, we are proposing to refine certain aspects of PSD
increment analyses to provide greater clarity to States and regulated
sources on how to calculate increases in concentrations for purposes of
determining compliance with the PSD increments.  Once we finalize these
proposed regulations, we intend to encourage States to incorporate them
for the sake of consistency and clarity, and to make their SIPs
consistent with the proposed rule amendments.  This would be a
relatively easy task given that SIP changes resulting from other
upcoming NSR rulemakings (e.g., rules for electric generating units
(EGUs); corn milling; potential to emit (PTE); and aggregation,
debottlenecking, and project netting) will likely be required in roughly
the same time period.  However, we believe that SIP changes would not
necessarily be required in order for reviewing authorities to begin
conducting PSD increment analyses consistent with these regulations.  We
are specifically seeking comment on the need for SIP revisions or any
viable alternatives for implementing the changes for these proposed
increment analysis provisions.

B.	When would these policies be put into effect?

	We propose to make the proposed regulations effective 60 days from
promulgation.

VII.	  SEQ CHAPTER \h \r 1 Statutory and Executive Order Reviews 

A.	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”  
SEQ CHAPTER \h \r 1 because it is likely to raise novel legal or policy
issues arising out of legal mandates, the President’s priorities, or
the principles set forth in the Executive Order.  Accordingly, EPA
submitted this action to the Office of Management and Budget (OMB) for
review under EO 12866 and any changes made in response to OMB
recommendations have been documented in the docket for this action.

B.	Paperwork Reduction Act 

	This action does not impose any new information collection burden.  We
are not proposing any new paperwork requirements (e.g., monitoring,
reporting, recordkeeping) as part of this action.  Although we are
refining our existing regulations and policy on the analysis of PSD
increment consumption, the proposed regulations do not contain new
paperwork requirements for permit applicants or reviewing authorities. 
The PSD increment analysis is already required under existing EPA
regulations.  The OMB has previously approved the information collection
requirements contained in the existing PSD program regulations (40 CFR
51.166 and 52.21) under the provisions of the Paperwork Reduction Act,
44 U.S.C. 3501 et seq. and has assigned OMB control number 2060-0003,
EPA ICR number 1230.17.  A copy of the OMB approved Information
Collection Request (ICR) may be obtained from Susan Auby, Collection
Strategies 

Division; U.S. Environmental Protection Agency (2822T); 1200
Pennsylvania Ave., NW, Washington, DC 20460 or by calling (202)
566-1672. 

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

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

C.	Regulatory Flexibility Analysis 

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

For purposes of assessing the impacts of this action on small entities,
small entity is defined as: (1) a small business as defined by the Small
Business Administration’s (SBA) regulations at 13 CFR 121.201; (2) a
small governmental jurisdiction that is a government of a city, county,
town, school district or special district with a population of less than
50,000; and (3) a small organization that is any not-for-profit
enterprise which is independently owned and operated and is not dominant
in its field. 

	After considering the economic impacts of this action on small
entities, I certify that this action will not have a significant
economic impact on a substantial number of small entities.  This action
will not impose any new requirements on small entities.  The increment
consumption analysis is already required under existing PSD regulations
and the proposed refinements to our existing regulations and policy are
not expected to increase the economic impact of this analysis on
regulated entities.  We continue to be interested in the potential
impacts of the proposed rule on small entities and welcome comments on
issues related to such impacts.

D.	Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law
104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector.  Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with “Federal mandates” that
may result in expenditures to State, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
1 year.  Before promulgating an EPA rule for which a written statement
is needed, section 205 of the UMRA generally requires EPA to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective or least burdensome alternative
that achieves the objectives of the rule.  The provisions of section 205
do not apply when they are inconsistent with applicable law.  Moreover,
section 205 allows EPA 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 as to why
that alternative was not adopted.  Before EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, it 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 EPA regulatory proposals with significant
Federal intergovernmental mandates, and informing, educating, and
advising small governments on compliance with the regulatory
requirements.  

This proposed action contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, or tribal
governments or the private sector.  The PSD increment consumption
analysis is already required under existing regulations.  In this
rulemaking, we are only proposing to refine our existing regulations and
policy on how this analysis may be conducted and are not imposing any
additional analytical requirements.  Thus, this action is not subject to
the requirements of sections 202 and 205 of the UMRA. 

In addition, we have determined that this rule contains no regulatory
requirements that might significantly or uniquely affect small
governments.  As discussed above, this proposal would not impose any new
requirements on small governments.

E.	Executive Order 13132 - Federalism 

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

	Under section 6(b) of Executive Order 13132, EPA may not issue a
regulation that has federalism implications, that imposes substantial
direct compliance costs, and that is not required by statute, unless the
Federal government provides the funds necessary to pay the direct
compliance costs incurred by State and local governments, or EPA
consults with State and local officials early in the process of
developing the proposed regulation.  Under section 6(c) of Executive
Order 13132, EPA may not issue a regulation that has federalism
implications and that preempts State law, unless the 

Agency consults with State and local officials early in the process of
developing the proposed regulation.

The EPA has concluded that this proposed rule may have federalism
implications.  The proposed rule establishes Federal standards for the
administration of the PSD program by State reviewing authorities. 
However, the proposed rule does not impose additional requirements on
State reviewing authorities because a PSD increment analysis is already
required under existing regulations.  In addition, EPA proposes in this
action to make clear that States have discretion to use their best
judgment in conducting elements of the increment consumption analysis. 
Thus, this rule will not impose substantial direct 

compliance costs on State or local governments, nor will it preempt
State law.  Thus, the requirements of sections 6(b) and 6(c) of the
Executive Order do not apply to this rule.  

Consistent with EPA policy, EPA nonetheless consulted with several State
officials and representatives of State governments early in the process
of developing the proposed regulation to permit them to have meaningful
and timely input into its development.  As discussed above, this
proposal has been informed by the recommendations of the Western States
Air Resources Council (WESTAR) PSD Reform Workgroup, which is an
organization that includes State officials who have sought greater
clarity in methodologies for evaluating consumption of the PSD
increment.  In addition, EPA has also been consulting for several years
with State officials in North Dakota about the parameters for the
increment consumption analysis.

In the spirit of Executive Order 13132, and consistent with EPA policy
to promote communications between EPA and State and local governments,
EPA specifically solicits comment on this proposed rule from State and
local officials.

F.	Executive Order 13175 - Consultation and Coordination with Indian
Tribal Governments 

Executive Order 13175, entitled “Consultation and Coordination with
Indian Tribal Governments” (65 FR 13175, November 9, 2000), requires
EPA to develop an accountable process to ensure “meaningful and timely
input by tribal officials in the development of regulatory policies that
have tribal implications.”  The EPA has concluded that this proposed
rule may have tribal implications.  However, it will neither impose
substantial direct compliance costs on tribal governments, nor preempt
Tribal law.  

The EPA’s 1984 Indian Policy directs the Agency to consider tribal
interests and consult with tribes on a government-to-government basis
for all actions or decisions that may affect tribal environments,
including actions not covered by the Executive Order.  By refining our
existing regulations and policy, this proposal may affect how reviewing
authorities determine increment consumption on the tribal lands that
have been redesignated to Class I or are in the process of being
redesignated to Class I.  For that reason, we are planning to provide an
opportunity for meaningful and timely involvement in this action by
consulting, during the period between proposal and promulgation, with
tribal officials from the six Tribes whose reservations have been
redesignated from Class II to Class I or are in the process of being so
redesignated.  In addition, EPA specifically solicits additional comment
on this proposed rule from all tribal officials. 

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

Executive Order 13045, entitled “Protection of Children from
Environmental Health Risks and Safety Risks” (62 FR 19885, April 23,
1997), applies to any rule that: (1) is determined to be “economically
significant” as defined under Executive Order 12866; and (2) concerns
an environmental health or safety risk that EPA has reason to believe
may have a disproportionate effect on children.  If the regulatory
action meets both criteria, the Agency must evaluate the environmental
health or safety effects of the planned rule on children, and explain
why the planned regulation is preferable to other potentially effective
and reasonably feasible alternatives considered by the Agency. 

	This 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.  The proposed rule does not impose
any new regulatory or analytical requirements, but simply refines
existing regulations and policy with respect to the PSD increment
consumption analysis that is currently required.  The public is invited
to submit or identify peer-reviewed studies and data, of which the
Agency may not be aware, that may be pertinent to the effect of this
proposed rule on children.

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

	This rule is not a “significant energy action” as defined in
Executive Order 13211, “Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355
(May 22, 2001)) because it is not likely to have a significant adverse
effect on the supply, distribution, or use of energy.  Further, we have
concluded that this rule is not likely to have any adverse energy
effects because it does not impose any new requirements on sources that
supply, distribute, or use energy.  The proposed rule does not establish
additional regulatory or analytical requirements, but simply refines
existing regulations and policy with respect to the PSD increment
consumption analysis that is currently required.  

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

Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes
federal executive policy on environmental justice.  Its main provision
directs Federal agencies, to the greatest extent practicable and
permitted by law, to make environmental justice part of their mission by
identifying and addressing, as appropriate, disproportionate high and
adverse human health or environmental effects of its programs, policies,
and activities on minorities and low-income populations in the United
States.

	The EPA has determined that this proposed rule would not have
disproportionately high and adverse human health or environmental
effects on minority or low-income populations because it does not affect
the level of protection provided to human health or the environment. 
The proposed rule does not establish or eliminate regulatory or
analytical requirements, but simply refines existing regulations and
policy with respect to the PSD increment consumption analysis that is
currently required.  

J.	National Technology Transfer and Advancement Act 

Section 12(d) of the National Technology Transfer and Advancement Act of
1995 (NTTAA), Public Law 104-113, 12(d) (15 U.S.C. 272 note) directs EPA
to use voluntary consensus standards in its regulatory activities unless
to do so would be inconsistent with applicable law or otherwise
impractical.  Voluntary consensus standards are technical standards (for
example, materials specifications, test methods, sampling procedures,
and business practices) that are developed or adopted by voluntary
consensus standards bodies.  The NTTAA directs EPA to provide Congress,
through OMB, explanations when the Agency decides not to use available
and applicable voluntary consensus standards. 

This proposed rulemaking does not involve technical standards. 
Therefore, EPA did not considering the use of any voluntary consensus
standards.

VIII.	Statutory Authority

The statutory authority for this action is provided by sections 163,
166, 169(4), and 301(a) of the Act as amended (42 U.S.C. 7473, 7476,
7479(4), and 7601(a)).  This notice is also subject to section 307(d) of
the CAA (42 U.S.C. 7607(d)).

List of Subjects

40 CFR Part 51

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

40 CFR Part 52

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

____________________

Dated:

_____________________

Stephen L. Johnson, 

Administrator.

For the reasons stated in the preamble, title 40, chapter I of the Code
of Federal Regulations is proposed to be amended as set forth below.

PART 51 - [Amended]

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

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

Subpart I - [Amended]

	2.  Section 51.166 is amended as follows:

	a.  By revising paragraph (b)(13);

	b.  By revising paragraph (b)(21)(i);

	c.  By revising paragraph (f);

	d.  By removing from paragraph (p)(5)(i) the cross reference to
“(q)(4)” and adding in its place “(p)(4)”;

	e.  By removing from paragraphs (p)(5)(iii) and (p)(6)(iii) the cross
reference to “(q)(7)” and adding in its place “(p)(7)”; and

	f.  By removing from paragraph (p)(7) the cross reference to
“(q)(5)” and adding in its place “(p)(5)”.

	The revisions read as follows:

§51.166  Prevention of significant deterioration of air quality.

* * * * *

	(b)  * * *

	(13)(i)  Baseline concentration means that ambient concentration level
that exists in the baseline area at the time of the applicable minor
source baseline date.  A baseline concentration is determined  for each
pollutant for which a minor source baseline date is established and
shall include:

	(a)  The actual emissions, as defined in paragraph (f)(1) of this
section, representative of sources in existence on the applicable minor
source baseline date, except as provided in paragraph (b)(13)(ii) of
this section; and

	(b)  The allowable emissions of major stationary sources that commenced
construction before the major source baseline date, but were not in
operation by the applicable minor source baseline date. 

	(ii)  The following will not be included in the baseline concentration
and will affect the applicable maximum allowable increase(s): 

	(a)  Actual emissions, as defined in paragraph (f)(1) of this section,
from any major stationary source on which construction commenced after
the major source baseline date; and

	(b)  Actual emissions increases and decreases, as defined in paragraph
(f)(1) of this section, at any source (including stationary, mobile, and
area sources) occurring after the minor source baseline date.

* * * * *

(21)(i)  Actual emissions means the actual rate of emissions of a
regulated NSR pollutant from an emissions unit, as determined in
accordance with paragraphs (b)(21)(ii) through (iv) of this section,
except that this definition shall not apply for calculating whether a
significant emissions increase has occurred, for establishing a PAL
under paragraph (w) of this section, or for determining consumption of
ambient air increments.  Instead, paragraphs (b)(40), (b)(47), and
(f)(1) of this section shall apply for those purposes.

* * * * *

	(f)  Methods for determining increment consumption.  

(1)  Actual emissions.  For purposes of determining consumption of the
ambient air increments set forth in paragraph (c) of this section, the
plan shall define “actual emissions” in accordance with paragraphs
(f)(1)(i) through (vii) of this section.

(i)  Actual emissions shall be calculated based on information that, in
the judgment of the reviewing authority, provides the most reliable,
consistent, and representative indication of the emissions from a unit
or group of units in an increment consumption analysis as of the
baseline date and on subsequent dates.  In general, actual emissions for
a specific unit should be calculated using the unit’s actual operating
hours, production rates, and types of materials processed, stored, or
combusted during the selected time period.  However, where records of
actual operating hours, production rates, and composition of materials
are not available or are incomplete, the reviewing authority shall use
its best professional judgment to estimate these parameters from
available information in accordance with the criteria in this paragraph.
 When available and consistent with the criteria in this paragraph, data
from continuous emissions monitoring systems may be used.

(ii)  In general, when evaluating consumption of an increment averaged
over an annual time period, actual emissions as of a particular date in
an increment consumption analysis (the applicable baseline date or the
current time period) shall equal the average rate, in tons per year, at
which the unit actually emitted the pollutant during a consecutive
24-month period which precedes the particular date and which is
representative of normal source operation.  

(iii)  When evaluating consumption of an increment averaged over a
period of less than 1 year (i.e., 24-hour or 3-hour averaging), actual
emissions as of a particular date in an increment consumption analysis
(the applicable baseline date or the current time) may equal the average
rate, for the applicable averaging time, at which the unit actually
emitted the pollutant during a consecutive 24-month period which
precedes the particular date.  The average rate may be calculated by
dividing an annual rate by the number of hours the unit was actually
operating over the annual period.  The reviewing authority may use an
actual maximum rate over a 24-month period when sufficient data are
available to produce a consistent, reliable, and representative analysis
of the change in emissions from baseline to the current time period. 

(iv)  The reviewing authority may allow actual emissions to be based on
a different time period than the 24 months preceding a particular date
upon a determination that such period is more representative of normal
source operation as of the particular date, based upon credible
information showing that the unit’s operations in the 24 months
preceding the date were not typical of operations as of the particular
date.  A period after the particular date may be used, but only if such
period is more representative of normal source operations as of the
particular date and is not representative of normal source operations
first occurring after the particular date.  Operations occurring prior
to a particular date are not representative of normal source operations
for a particular date if they permanently ceased more than 24 months
prior to that date.  The different time period shall be a consecutive
24-month period unless two non-consecutive 12-month periods are
demonstrated to be more representative of normal source operation as
described above.

(v)  The reviewing authority may use source-specific allowable emissions
for the unit instead of the actual emissions of the unit.

(vi)  For any modified emissions unit that has not resumed normal
operations on the date of an increment consumption analysis, the actual
emissions on the date the source begins operation shall equal the
projected actual emissions of the unit on that date.  For any new
emissions unit that has not begun normal operations on the date of an
increment consumption analysis, the actual emissions on the date the new
source begins operations shall equal the potential to emit for that
source.

	(vii)  To the extent any requirement of this paragraph (f)(1) conflicts
with a recommendation in appendix W of this part, paragraph (f)(1) shall
control.

	(2)  Exclusions from increment consumption.  

	(i)  The plan may provide that the following concentrations shall be
excluded in determining compliance with a maximum allowable increase:

	(a)  Concentrations attributable to the increase in emissions from
stationary sources which have converted from the use of petroleum
products, natural gas, or both by reason of an order in effect under
section 2(a) and (b) of the Energy Supply and Environmental Coordination
Act of 1974 (or any superseding legislation) over the emissions from
such sources before the effective date of such an order;

	(b)  Concentrations attributable to the increase in emissions from
sources which have converted from using natural gas by reason of natural
gas curtailment plan in effect pursuant to the Federal Power Act over
the emissions from such sources before the effective date of such plan;

	(c)  Concentrations of particulate matter attributable to the increase
in emissions from construction or other temporary emission-related
activities of new or modified sources;

	(d)  The increase in concentrations attributable to new sources outside
the United States over the concentrations attributable to existing
sources which are included in the baseline concentration;

	(e)  Concentrations attributable to the temporary increase in emissions
of sulfur dioxide, particulate matter, or nitrogen oxides from
stationary sources which are affected by plan revisions approved by the
Administrator as meeting the criteria specified in paragraph (f)(2)(iii)
of this section; and

	(f)  Concentrations attributable to sources that obtained a permit
based on a variance issued pursuant to paragraph (p)(4) of this section,
but only with respect to the Class I increment in the area for which the
variance was issued.  Concentrations attributable to such sources shall
continue to be included in determining compliance with the maximum
allowable increase set forth in paragraphs (p)(4).

	(ii)  If the plan provides that the concentrations to which paragraph
(f)(2)(i)(a) or (b) of this section refers shall be excluded, it shall
also provide that no exclusion of such concentrations shall apply more
than 5 years after the effective date of the order to which paragraph
(f)(2)(i)(a) of this section refers, or the plan to which paragraph
(f)(2)(i)(b) of this section refers, whichever is applicable.  If both
such order and plan are applicable, no such exclusion shall apply more
than 5 years after the later of such effective dates.

	(iii) For purposes of excluding concentrations pursuant to paragraph
(f)(2)(i)(e) of this section, the Administrator may approve a plan
revision that:

	(a)  Specifies the time over which the temporary emissions increase of
sulfur dioxide, particulate matter, or nitrogen oxides would occur. 
Such time is not to exceed 2 years in duration unless a longer time is
approved by the Administrator.

	(b)  Specifies that the time period for excluding certain contributions
in accordance with paragraph (f)(2)(iii)(a) of this section, is not
renewable;

	(c)  Allows no emissions increase from a stationary source which would:

	(1)  Impact a Class I area or an area where an applicable increment is
known to be violated; or

	(2)  Cause or contribute to the violation of a national ambient air
quality standard;

	(d)  Requires limitations to be in effect the end of the time period
specified in accordance with paragraph (f)(2)(iii)(a) of this section,
which would ensure that the emissions levels from stationary sources
affected by the plan revision would not exceed those levels occurring
from such sources before the plan revision was approved.

* * * * *

PART 52 – [Amended]

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

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

Subpart A – [Amended]

	4.  Section 52.21 is amended as follows:

	a.  By revising paragraph (b)(13);

	b.  By revising paragraph (b)(21)(i);

	c.  By adding paragraph (f);

	d.  By removing from paragraph (p)(6) the cross reference to
“(q)(4)” and adding in its place “(p)(5)”;

	e.  By removing from paragraphs (p)(6) and (p)(7) the cross reference
to “(q)(7)” and adding in its place “(p)(8)”; and

	f.  By removing from paragraph (p)(8) the cross reference to “(q)(5)
or (6)” and adding in its place “(p)(6) or (7)”.

	The addition and revisions read as follows:

§52.21  Prevention of significant deterioration of air quality.

* * * * *

	(b)  * * *

	(13)(i)  Baseline concentration means that ambient concentration level
that exists in the baseline area at the time of the applicable minor
source baseline date.  A baseline concentration is determined  for each
pollutant for which a minor source baseline date is established and
shall include:

	(a)  The actual emissions, as defined in paragraph (f)(1) of this
section, representative of sources in existence on the applicable minor
source baseline date, except as provided in paragraph (b)(13)(ii) of
this section; and

	(b)  The allowable emissions of major stationary sources that commenced
construction before the major source baseline date, but were not in
operation by the applicable minor source baseline date. 

	(ii)  The following will not be included in the baseline concentration
and will affect the applicable maximum allowable increase(s): 

	(a)  Actual emissions, as defined in paragraph (f)(1) of this section,
from any major stationary source on which construction commenced after
the major source baseline date; and

	(b)  Actual emissions increases and decreases, as defined in paragraph
(f)(1) of this section, at any source (including stationary, mobile, and
area sources) occurring after the minor source baseline date.

* * * * *

(21)(i)  Actual emissions means the actual rate of emissions of a
regulated NSR pollutant from an emissions unit, as determined in
accordance with paragraphs (b)(21)(ii) through (iv) of this section,
except that this definition shall not apply for calculating whether a
significant emissions increase has occurred, for establishing a PAL
under paragraph (aa) of this section, or for determining consumption of
ambient air increments.  Instead, paragraphs (b)(41), (b)(48), and
(f)(1) of this section shall apply for those purposes.

* * * * *

	(f)  Methods for determining increment consumption.

(1)  Actual emissions.  For purposes of determining consumption of the
ambient air increments set forth in paragraph (c) of this section, the
term “actual emissions” shall be defined in accordance with
paragraphs (f)(1)(i) through (vii) of this section. 

(i)  Actual emissions shall be calculated based on information that, in
the judgment of the Administrator, provides the most reliable,
consistent, and representative indication of the emissions from a unit
or group of units in an increment consumption analysis as of the
baseline date and on subsequent dates.  In general, actual emissions for
a specific unit should be calculated using the unit’s actual operating
hours, production rates, and types of materials processed, stored, or
combusted during the selected time period.  However, where records of
actual operating hours, production rates, and composition of materials
are not available or are incomplete, the Administrator shall use his or
her best professional judgment to estimate these parameters from
available information in accordance with the criteria in this paragraph.
 When available and consistent with the criteria in this paragraph, data
from continuous emissions monitoring systems may be used. 

(ii)  In general, when evaluating consumption of an increment averaged
over an annual time period, actual emissions as of a particular date in
an increment consumption analysis (the applicable baseline date or the
current time period) shall equal the average rate, in tons per year, at
which the unit actually emitted the pollutant during a consecutive
24-month period which precedes the particular date and which is
representative of normal source operation.  

(iii)  When evaluating consumption of an increment averaged over a
period of less than one year (i.e., 24-hour or 3-hour averaging), actual
emissions as of a particular date in an increment consumption analysis
(the applicable baseline date or the current time) may equal the average
rate, for the applicable averaging time, at which the unit actually
emitted the pollutant during a consecutive 24-month period which
precedes the particular date.  The average rate may be calculated by
dividing an annual rate by the number of hours the unit was actually
operating over the annual period.  The Administrator may use an actual
maximum rate over a 24-month period when sufficient data are available
to produce a consistent, reliable, and representative analysis of the
change in emissions from baseline to the current time period.

(iv)  The Administrator may allow actual emissions to be based on a
different time period than the 24 months preceding a particular date
upon a determination that such period is more representative of normal
source operation as of the particular date, based upon credible
information showing that the unit’s operations in the 24 months
preceding the date were not typical of operations as of the particular
date.  A period after the particular date may be used, but only if such
period is more representative of normal source operations as of the
particular date and is not representative of normal source operations
first occurring after the particular date.  Operations occurring prior
to a particular date are not representative of normal source operations
for a particular date if they permanently ceased more than 24 months
prior to that date.  The different time period shall be a consecutive
24-month period unless two non-consecutive 12-month periods are
demonstrated to be more representative of normal source operation as
described above.  

(v)  The Administrator may use source-specific allowable emissions for
the unit instead of the actual emissions of the unit.

(vi)  For any modified emissions unit that has not resumed normal
operations on the date of an increment consumption analysis, the actual
emissions on the date the source begins operation shall equal the
projected actual emissions of the unit on that date.  For any new
emissions unit that has not begun normal operations on the date of an
increment consumption analysis, the actual emissions on the date the new
source begins operations shall equal the potential to emit for that
source.

	(vii)  To the extent any requirement of this paragraph (f)(1) conflicts
with a recommendation in 40 CFR part 51, appendix W, paragraph (f)(1)
shall control.

	(2)  Exclusions from increment consumption.  In determining compliance
with the maximum allowable increase, the Administrator shall exclude
concentrations attributable to sources that obtained a permit based on a
variance issued pursuant to paragraphs (p)(5) of this section, but only
with respect to the Class I increment in the area for which the variance
was issued.  Concentrations attributable to such sources shall continue
to be included in determining compliance with the maximum allowable
increases set forth in paragraph (p)(5).

* * * * *

 Where a State does not have a SIP-approved program and chooses not to
accept delegation of the Federal PSD program, EPA implements the PSD
requirements as the reviewing authority within that jurisdiction.  In
addition, we implement the PSD program in Indian country until such time
as a Tribe elects to adopt, and we approve, a Tribal Implementation Plan
(TIP) that contains a PSD program that meets the requirements of the
Act.

 Baseline dates are pollutant specific.  That is, a complete PSD
application establishes the baseline date only for those regulated NSR
pollutants that are projected to be emitted in significant amounts (as
defined in the regulations) by the applicant’s new source or
modification.  Thus, an area may have different baseline dates for
different pollutants.

 This document is often referred to as the “Puzzle Book” due to the
depiction of jigsaw puzzle pieces on its cover.

 The cited regulations actually apply to sources located in a PSD area,
which must demonstrate that they will not cause or contribute to a
violation of the NAAQS in an adjacent nonattainment area.  This
demonstration may be made by showing that the emissions from the PSD
source alone are below the significant impact levels set forth in 40 CFR
51.165(b)(2).  Based on EPA interpretations and guidance, these
significant impact levels have also been widely used in the PSD program
to define the extent of the impact area where an increment analysis must
be performed.  We proposed to codify these significant impact levels for
use in the PSD program in 1996 as part of a comprehensive proposal to
revise the major NSR regulations.  See 61 FR 38250, 38325, July 23,
1996.  We have not yet taken final action on this proposal.

 The proposed source is deemed to “cause or contribute to” an
increment violation if the modeling shows that the impact attributable
to the source at the time and place of the violation is greater than the
relevant significant impact level.

 “Recommendations for Improving the Prevention of Significant
Deterioration Program.”  Stuart A. Clark, President, Western States
Air Resources Council, May 19, 2005.

 In addition to WESTAR’s recommendations, we received comments from
the Northeast States for Coordinated Air Use Management (NESCAUM) on the
WESTAR recommendations in a letter and attachment from Arthur N. Marin,
Executive Director of NESCAUM, October 18, 2005.

 “A second test of protection is provided in specified Federal land
areas (Class I areas), such as national parks and wilderness areas;
these areas are also subjected to a review process based on the effect
of pollution on the area's air quality related values.”  S. Rep.
95-127, at 17, 4 LH at 1401.

 “The class I increment is a test for determining where the burden of
proof lies and is an index of changes in air quality.  It is not the
final determinant for approval or disapproval of a permit
application.”  S. Rep. 95-127 at 35.

 At the time of that decision, this language was contained in
§51.24(a)(3) of EPA’s regulations.  See 636 F.2d at 361 n. 92.

 As previously noted, the 3-hour averaging period for SO2 is unique in
that the Act specifies an increment for purposes of the FLM variance
(325 (g/m3) that is different from the corresponding Class II increment
(512 (g/m3).

 The increment consumption estimates for all existing sources are based
on modeling of their actual emissions, while the consumption estimate
for the new source is based on modeling of its potential to emit (PTE).

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>r (also multiple years).  AERMOD is designed to operate in concert with
two pre-processor codes: AERMET processes meteorological data for input
to AERMOD, and AERMAP processes terrain elevation data and generates
receptor information for input to AERMOD.

 Available at
http://www.epa.gov/scram001/guidance/guide/draft_final-pm-O3-RH.pdf.

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

April 3, 2006

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

January 12, 2007

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