	ENVIRONMENTAL PROTECTION AGENCY

	40 CFR Part 52

	[EPA-R03-OAR-2007-0521; FRL-        ] 

Approval and Promulgation of Air Quality Implementation Plans; Virginia;
Virginia Major New Source Review, Prevention of Significant
Deterioration (PSD)

AGENCY:  Environmental Protection Agency (EPA).

ACTION:  Proposed rule

SUMMARY: EPA is proposing limited approval of a State Implementation
Plan (SIP) revision submitted by the Commonwealth of Virginia.  This
revision pertains to amendments to Virginia’s existing new source
review permit program for owners of sources located or locating in
prevention of significant deterioration (PSD) areas which were submitted
to EPA on October 10, 2006.  EPA is proposing limited approval of these
changes to the PSD program, because while the SIP revision submitted by
the Commonwealth strengthens the SIP, it does not fully meet the current
Federal requirements for the allowable lookback period under the
definition of “baseline actual emissions”.  This action is being
taken under the Clean Air Act (CAA or the Act).  In a separate action,
EPA will address changes made by Virginia to its nonattainment new
source review (NNSR) permit program, submitted on February 12, 2007.   

DATES: Written comments must be received on or before [insert date 30
days from date of publication].  

ADDRESSES:  Submit your comments, identified by Docket ID Number
EPA-R03-OAR-2007-0521 by one of the following methods:

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

B.    E-mail:  campbell.dave@epa.gov

     C.    Mail:   EPA- R03-OAR-2007-0521, David Campbell, Chief,
Permits and Technical Assessment Branch, Mailcode 3AP11, U.S.
Environmental Protection Agency, Region III, 1650 Arch Street,
Philadelphia, Pennsylvania 19103.

     D.   Hand Delivery: At the previously-listed EPA Region III
address.  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-R03-OAR-2007-0521.  EPA's policy is that all comments received will
be included in the public docket without change, and may be made
available online at www.regulations.gov, including any personal
information provided, unless the comment includes information claimed to
be Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit information that you
consider to be CBI or otherwise protected through www.regulations.gov or
e-mail.  The 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
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.

Docket:  All documents in the electronic docket are listed in the
www.regulations.gov index. Although listed in the index, some
information is not publicly available, i.e., CBI or other information
whose disclosure is restricted by statute.  Certain other material, such
as copyrighted material, is not placed on the Internet and will be
publicly available only in hard copy form.  Publicly available docket
materials are available either electronically in www.regulations.gov or
in hard copy during normal business hours at the Air Protection
Division, U.S. Environmental Protection Agency, Region III, 1650 Arch
Street, Philadelphia, Pennsylvania 19103.  Copies of the State submittal
are available at the Virginia Department of Environmental Quality, 629
East Main Street, Richmond, Virginia, 23219.

FOR FURTHER INFORMATION CONTACT:  Sharon McCauley, (215) 814-3376, or by
e-

mail at mccauley.sharon@epa.gov.

SUPPLEMENTARY INFORMATION:  On October 10, 2006, the Commonwealth of
Virginia 

submitted a revision to its SIP for approval of amendments to
Virginia’s existing New Source 

Review permit program for owners of sources locating in PSD areas.    

I.    Background 

On December 31, 2002, the U.S. EPA published revisions to the Federal
PSD and NNSR 

regulations (67 FR 80186), effective March 3, 2003.   These changes to
the Federal 

NSR regulations were reconsidered with minor changes on November 7, 2003
(68 FR 63021) 

and collectively, these two final actions are called the “2002 New
Source Review (NSR) Reform 

Rules”.  

The 2002 NSR Reform Rules made changes to five areas of the NSR
programs.  In summary, the 

2002 Rules:  (1) Provide a new method for determining the baseline
actual emissions; (2) adopt 

an actual-to-projected actual methodology for determining whether a
major modification has 

occurred; (3) allow major stationary sources to comply with plant-wide
applicability limits to 

avoid having a significant emissions increase that triggers the
requirements of the major NSR 

program; (4) provide a new applicability provision for emissions units
that are designated clean 

units; and (5) exclude pollution control projects (PCPs) from the
definition of “physical change 

or change in the method of operation.”  The November 7, 2003 notice of
final action added a 

definition for “replacement unit” and clarified an issue regarding
the Plant-wide Applicability 

Limitation (PALs) baseline calculation procedures for newly constructed
units. 

On June 24, 2005, the United States Court of Appeals for the District of
Columbia Circuit ruled 

in New York v. EPA, 413 F.3d 3 (D.C. Cir. June 24, 2005) that EPA lacked
the authority to 

promulgate the Clean Unit provisions, and the Court requested that EPA
vacate that portion of 

the 2002 Federal regulation, codified at 40 CFR 52.21(x), as contrary to
the statute.  Also, the 

Court determined that EPA lacked the authority to create PCP exceptions
from NSR and vacated 

those parts of the 1991 and 2002 rules, codified at 40 CFR 52.21(b)(32)
and 52.21(z), as contrary 

to the statute.  

As stated in the December 31, 2002 “NSR Reform” rulemaking, State
and local permitting 

agencies were required to adopt and submit revisions to their part 51
permitting programs, 

implementing the minimum program elements of that rulemaking no later
then January 2, 2006 

(67 FR 80240).  With this submittal, Virginia requests approval of
program revisions to satisfy 

this requirement. In addition, Virginia has updated their stationary
source permit regulations in 

Chapter 50, Article 4, to conform to the new NSR regulatory program and
translated the Federal 

NSR requirements into their regulatory text in Chapter 80, Article 8 in
a manner that is 

consistent with State regulatory development procedures.  

On October 13, 2006, EPA Region III received a revision request to the
Virginia SIP from the 

Virginia Department of Environmental Quality (VADEQ).  The October 13,
2006, 2006 SIP 

revision request consisted of changes to Legislative Rule 9 VAC 5
Chapter 50 Article 4 – 

Stationary Sources, 9 VAC 5 Chapter 80 Article 6 – Permits for New and
Modified Stationary 

Sources, and 9 VAC 5 Chapter 80 Article 8 - Permits for Construction and
Major Modification 

of Major Stationary Sources of Air Pollution for the Prevention of
Significant Deterioration.  

These rules were adopted by the Commonwealth of Virginia State Air
Pollution Control Board 

on June 21, 2006 and became effective September 1, 2006.  The
Commonwealth adopted the 

regulations in order to meet the relevant plan requirements of 40 CFR
51.166.    

II. Summary of SIP Revision

What is being addressed in this document?

Virginia currently has an EPA-approved NSR program for new and modified
sources.  Today, 

EPA is proposing limited approval of the Virginia pre-construction
permitting program as 

submitted on October 10, 2006 for sources located or locating in PSD
areas.  The submittal 

consists of rules titled “Chapter 50, Article 4 – Stationary
Sources” and “Chapter 80, Article 8 – 

Permits for Construction and Major Modification of Major Stationary
Sources of Air Pollution 

for the Prevention of Significant Deterioration (PSD)” adopted June
21, 2006 and effective 

September 1, 2006.  Virginia also submitted changes to 9 VAC Chapter 80
Article 6 – Permits 

for New and Modified Stationary Sources as part of the SIP revision,
however, Article 6 has not 

previously been approved as part of the Virginia SIP and  EPA will not
be taking any rulemaking 

action on this portion of the SIP submittal at this time.  This limited
approval action will revise 

the previously-approved versions of these rules as approved into the
Virginia SIP on April 21, 

2000 (65 FR 21315) and March 23, 1998 (63 FR 13795).  

Copies of the revised Virginia rules, as well as the Technical Support
Document (TSD), can be 

obtained from the Docket as discussed in the “Docket” Section above.
 A discussion of the 

notable Virginia rule changes that are proposed for inclusion into the
SIP are included in the 

TSD and summarized below.  

What are the program changes that EPA is proposing limited approval?

In its December 2002 regulatory action, EPA dramatically changed many
aspects of the 

regulations governing the PSD and nonattainment NSR programs (together,
as “NSR”),  aimed at 

“providing much needed flexibility and regulatory certainty, and at
removing barriers and 

creating incentives for sources to improve environmental performance
through emissions 

reductions, pollution prevention, and improved energy efficiency.”  
Virginia accepted the 

conceptual framework of EPA’s NSR reform revisions but tailored the
program to their State-

specific objectives.  EPA agrees that Virginia’s regulations, while
different in some limited

respects, will not prevent companies from benefiting from most, if not
all of the goals of NSR 

reform.   In general, EPA has concluded that Virginia’s regulations,
overall, conform to the 

minimum program elements in 40 CFR 51.166 despite some variations in
their rules from the 

federal program.  These notable variations are described below and the
explanation of EPA’s 

proposed limited approval is described in Section III of this notice.  

Notable Variations in Article 8 from the Federal Program

1.  In the EPA regulations, the period used for establishing the
baseline for each pollutant can be 

different for each pollutant.  The Virginia regulations require that it
be the same for all 

pollutants, except where extenuating circumstances would allow use of
different baseline 

periods.  This variation is acceptable to EPA.  

   

2.  The EPA regulations do not specify consequences where the owner
determines there is a 

reasonable possibility that a project that is not a part of a major
modification may result in a 

significant emissions increase and does not obtain a permit.  The
Virginia regulations specify 

how the state will act should the owner fail to make an accurate
determination.    EPA believes 

that this variation from the Federal rule has no impact on approvability
or the Commonwealth’s 

ability to achieve the goals of NSR reform and is acceptable to EPA.   

Please note, the Commonwealth will soon be revising this Section of its
regulations to reflect 

changes made in the EPA final rule dated December 14, 2007 providing
improvements to EPA’s 

New Source Review program regarding “reasonable possibility” in
recordkeeping.   EPA’s final 

rule provided an explanation and more detailed criteria to clarify the
“reasonable possibility” 

recordkeeping and reporting standard of the 2002 New Source Review
Reform rule.  The 

improvements provided in the December 14, 2007 rulemaking were to
reflect the amendments 

found necessary to respond to the decision of the U.S. Court of Appeals
for the DC Circuit in 

New York v. EPA, 413 F.3d 3 (DC Cir. 2005) (New York) which remanded
this portion of the 

December 2002 regulations for EPA to provide an acceptable explanation
for its ‘‘reasonable 

possibility’’ standard or to devise an appropriately supported
alternative.   

3.  The EPA regulations exclude emission increases that could be
accommodated and are 

unrelated to the project, including demand growth, from projected actual
emissions. The Virginia 

regulations included this exclusion but have been revised in order to
clarify the intent of the 

provision and ensure consistency in its application.   This variation is
acceptable to EPA.  

4.  The EPA regulations require owners to develop and maintain
information to support their 

determination that a given project is not a part of a major modification
that may result in a 

significant emissions increase.  The Virginia regulations require
advance notification of the 

availability of the information prior to beginning actual construction
of the project.  This 

variation is acceptable to EPA.  

5.  The EPA regulations establish Plantwide Applicability Limits (PALs)
with a duration of 10 

years; the Virginia regulations contain five-year durations for PALs. 
This variation is acceptable 

to EPA.  

6.  This SIP revision also includes other non-substantive changes to
Virginia’s PSD program.  

There was a need to update regulatory citations, making consistency
revisions to the text to bring  

the regulations in the Commonwealth up to date.  EPA’s analysis has
found that these non-

substantative changes do not change any of the minimum regulatory
requirements and are 

acceptable.  

For an in-depth and full explanation of EPA’s regulatory analysis of
the Virginia PSD program, 

please review the TSD located in the Docket.  EPA’s position is that
every element of NSR 

reform is present in Virginia’s rules but some elements may be
implemented in a way that allows 

the Commonwealth more scrutiny with respect to how NSR applies to a
facility.     

III.  Limited Approval

Why is EPA proposing “limited approval” versus “full approval”
of Virginia’s 

NSR Reform regulations for PSD areas?

The Clean Air Act does not expressly provide for limited approvals,
therefore EPA is 

using its gap-filling authority under section 301 (a) of the Act in
conjunction with the section 110 

(k) (3) approval provision to interpret the Act to provide for this type
of limited approval action.    

A key aspect of these limited approval actions is that they encompass
the entire rule based on the 

fact that even with limitations, the approval of the entire rule will
strengthen the Common-

wealth’s SIP.  The primary advantage to using this limited approval is
that it will make the 

Commonwealth’s revision submittal Federally enforceable and will
increase the SIP’s potential 

to achieve additional reductions. 

The following is an explanation for the limited approval of this SIP
revision by EPA.  In 

Virginia’s regulations under 9 VAC 5-80-1615 a new definition was
added to reflect the 

necessary changes to the program found in the 2002 Federal NSR Reform
rule.     

Virginia’s definition for “baseline actual emissions” varies from
the Federal definition at 

40 CFR 51.166(b)(47) in two ways.  First, for both electric generating
units (EGUs) and non-

EGUs, Virginia’s rule allows the use of different baselines for
different pollutants if the owner 

can demonstrate to the satisfaction of the State Air Pollution Control
Board (Board) that a 

different baseline period for a different pollutant(s) is more
appropriate due to extenuating 

circumstances.  This is acceptable to EPA. However in the second
instance, for non-EGUs, the 

24-month baseline period must occur within the five-year period
preceding the date the owner 

begins actual construction or the permit application is deemed complete,
whichever is earlier, 

unless the Board allows a different time period that it deems is more
representative of normal 

source operations.  The allowance of a different or an extended time
period by the Board is 

acceptable as it allows a time period past the more limiting 5-year
period, however, the 

Commonwealth’s regulations do not further restrict the Board from
allowing a time period which 

could extend past the 10-year period currently provided in the federal
NSR Reform rule.     

The Virginia regulations, therefore, meet the general federal criteria
for expanding the 

lookback period beyond the old requirement of the most recent 24-month
period, and are thus 

equivalent to the federal requirement.  The purpose of an extended
lookback is to establish a 

period that is most representative of source operation.  Establishment
of the most representative 

operation not only enables sources to plan effective emissions control
strategies, it also provides 

Virginia with more accurate information on which to base long-term air
quality planning 

strategies.  The 5-year lookback period can be seen to be more limiting
or at times more 

restrictive than the Federal rule.  Requiring a 5-year lookback instead
of a 10-year lookback may, 

however, limit a source’s potential to find a higher baseline.  This
could in turn restrict a source’s 

ability to emit and is thus inherently more protective than the EPA
regulations.  As part of the 

October 10, 2006 SIP revision submittal, the Commonwealth provided a
more detailed 

explanation of the 5-year lookback period.   

Though it was not Virginia’s intention to exceed the 10-year lookback
period limitation, EPA’s 

decision to propose limited approval is based the Commonwealth’s
interpretation of its own 

regulations as provided in their Technical Support Document.  EPA is
relying on this 

interpretation of the regulations as noted above and in part, the basis
for our limited approval.      

Furthermore, EPA would look unfavorably upon any use of discretion by
Virginia that would 

allow for baselines that exceed a 10-year lookback period.  EPA expects
Virginia to correct the 

definition at 9 VAC 5-80-1615 by limiting the discretionary lookback
period to 10 years.  When 

Virginia makes this amendment, they will be eligible for consideration
for full approval of its 

PSD program found in Article 8.

IV. General Information Pertaining to SIP Submittals from the
Commonwealth of Virginia 

In 1995, Virginia adopted legislation that provides, subject to certain
conditions, for an environmental assessment (audit) “privilege” for
voluntary compliance evaluations performed by a regulated entity.  The
legislation further addresses the relative burden of proof for parties
either asserting the privilege or seeking disclosure of documents for
which the privilege is claimed.  Virginia's legislation also provides,
subject to certain conditions, for a penalty waiver for violations of
environmental laws when a regulated entity discovers such violations
pursuant to a voluntary compliance evaluation and voluntarily discloses
such violations to the Commonwealth and takes prompt and appropriate
measures to remedy the violations.  Virginia's Voluntary Environmental
Assessment Privilege Law, Va. Code Sec. 10.1-1198, provides a privilege
that protects from disclosure documents and information about the
content of those documents that are the product of a voluntary
environmental assessment. The Privilege Law does not extend to documents
or information (1) that are generated or developed before the
commencement of a voluntary environmental assessment; (2) that are
prepared independently of the assessment process; (3) that demonstrate a
clear, imminent and substantial danger to the public health or
environment; or (4) that are required by law.

On January 12, 1998, the Commonwealth of Virginia Office of the Attorney
General provided a legal opinion that states that the Privilege law, Va.
Code Sec. 10.1-1198, precludes granting a privilege to documents and
information “required by law”, including documents and information
(required by Federal law to maintain program delegation, authorization
or approval, since Virginia must “enforce Federally authorized
environmental programs in a manner that is no less stringent than their
Federal counterparts. . . .”   The opinion concludes that “
[r]egarding ( 10.1-1198, therefore, documents or other information
needed for civil or criminal enforcement under one of these programs
could not be privileged because such documents and information are
essential to pursuing enforcement in a manner required by Federal law to
maintain program delegation, authorization or approval.”   

Virginia's Immunity law, Va. Code Sec. 10.1-1199, provides that ([t]o
the extent consistent with requirements imposed by Federal law,( any
person making a voluntary disclosure of information to a state agency
regarding a violation of an environmental statute, regulation, permit,
or administrative order is granted immunity from administrative or civil
penalty.  The Attorney General's January 12, 1998 opinion states that
the quoted language renders this statute inapplicable to enforcement of
any Federally authorized programs, since (no immunity could be 

afforded from administrative, civil, or criminal penalties because
granting such immunity would not be consistent with Federal law, which
is one of the criteria for immunity.   

Therefore, EPA has determined that Virginia's Privilege and Immunity
statutes will not preclude the Commonwealth from enforcing its PSD
program consistent with the Federal requirements.  In any event, because
EPA has also determined that a state audit privilege and immunity law
can affect only state enforcement and cannot have any impact on Federal
enforcement authorities, EPA may at any time invoke its authority under
the Clean Air Act, including, for example, sections 113, 167, 205, 211
or 213, to enforce the requirements or prohibitions of the state plan,
independently of any state enforcement effort.  In addition, citizen
enforcement under section 304 of the Clean Air Act is likewise
unaffected by this, or any, state audit privilege or immunity law.

V.   Proposed Action

EPA has determined that the amendments to Virginia’s PSD permit
program at Articles 4 and 8, as submitted on October 10, 2006 meet the
minimum requirements of 40 CFR 51.166 and the Clean Air Act.  This
amendment is being proposed as a limited approval to the Virginia SIP. 
EPA is soliciting public comments on the issues discussed in this
document.  These comments will be considered before taking final action.

VI. Statutory and Executive Order Reviews   

Under the Clean Air Act, the Administrator is required to approve a SIP
submission that complies with the provisions of the Act and applicable
Federal regulations.  42 U.S.C. 7410(k); 40 CFR 52.02(a).  Thus, in
reviewing SIP submissions, EPA’s role is to approve state choices,
provided that they meet the criteria of the Clean Air Act.  Accordingly,
this action merely proposes to approve state law as meeting Federal
requirements and does not impose additional requirements beyond those
imposed by state law.  For that reason, this proposed action:

is not a "significant regulatory action” subject to review by the
Office of Management and Budget under Executive Order 12866 (58 FR
51735, October 4, 1993);  

does not impose an information collection burden under the provisions of
the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);

is certified as not having a significant economic impact on a
substantial number of small entities under the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.);  

does not contain any unfunded mandate or significantly or uniquely
affect small governments, as described in the Unfunded Mandates Reform
Act of 1995 (Public Law 104-4);

does not have Federalism implications as specified in Executive Order
13132 (64 FR 43255, August 10, 1999);

is not an economically significant regulatory action based on health or
safety risks subject to Executive Order 13045 (62 FR 19885, April 23,
1997); 

is not a significant regulatory action subject to Executive Order 13211
(66 FR 28355, May 22, 2001); 

is not subject to requirements of Section 12(d) of the National
Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note)
because application of those requirements would be inconsistent with the
Clean Air Act; and 

does not provide EPA with the discretionary authority to address, as
appropriate, disproportionate human health or environmental effects,
using practicable and legally permissible methods, under Executive Order
12898 (59 FR 7629, February 16, 1994).

In addition, this proposed rule for limited approval of the Virginia
Major New Source review Reform for facilities located or locating in PSD
areas does not have tribal implications as specified by Executive Order
13175 (65 FR 67249, November 9, 2000), because the SIP is not approved
to apply in Indian country located in the state, and EPA notes that it
will not impose substantial direct costs on tribal governments or
preempt tribal law.

List of Subjects in 40 CFR Part 52 

Environmental protection, Air pollution control, Carbon monoxide,
Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate
matter, Reporting and recordkeeping requirements, Sulfur oxides,
Volatile organic compounds. 



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

_________June 17, 2008______           ________/s/____________________

Dated:                                                      William T.
Wisniewski,

                                                                 Acting
Regional Administrator,

                                                                 Region
III.

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