
[Federal Register: June 27, 2008 (Volume 73, Number 125)]
[Proposed Rules]               
[Page 36477-36481]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27jn08-23]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R03-OAR-2007-0522; FRL-8686-1]

 
Approval and Promulgation of Air Quality Implementation Plans; 
Virginia; Virginia Major New Source Review for Nonattainment Areas

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule

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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 
Nonattainment areas which were submitted to EPA on February 12, 2007. 
EPA is proposing limited approval of these changes to the nonattainment 
new source review 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''. EPA is also proposing 
full approval of a related SIP revision submitted by the Commonwealth 
on December 16, 2003, pertaining to amendments made to Virginia's 
existing nonattainment new source review permit program at that time. 
This action is being taken under the Clean Air Act (CAA or the Act). In 
a separate action, EPA has addressed changes made by Virginia to its 
prevention of significant deterioration (PSD) new source review rules 
which were previously submitted on October 10, 2006.

DATES: Written comments must be received on or before July 28, 2008.

ADDRESSES: Submit your comments, identified by Docket ID Number EPA-
R03-OAR-2007-0522 by one of the following methods:
    A. www.regulations.gov. Follow the on-line instructions for 
submitting comments.
    B. E-mail: campbell.dave@epa.gov.
    C. Mail: EPA-R03-OAR-2007-0522, 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-
2007-0522. 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 Web site 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 December 16, 2003 and February 12, 2007, 
the Commonwealth of Virginia

[[Page 36478]]

submitted revisions to its SIP for approval of amendments to Virginia's 
existing new source review (NSR) permit program for owners of sources 
locating in nonattainment areas.

I. Background

    On December 31, 2002, the U.S. EPA published revisions to the 
Federal PSD and nonattainment new source review (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 (DC 
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 than 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 9 in a manner that is consistent with State regulatory 
development procedures.
    On February 14, 2007, EPA Region III received a revision request to 
the Virginia SIP from the Virginia Department of Environmental Quality 
(VADEQ). The February 14, 2007 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 9--Permits for 
Construction and Major Modification of Major Stationary Sources of Air 
Pollution which Cause or Contribute to Nonattainment. 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 51.165.

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 February 
12, 2007 for facilities located or locating in nonattainment areas. 
This revision submittal consists of rules titled ``Chapter 50, Article 
4--Stationary Sources'', and ``Chapter 80, Article 9--Permits for 
Construction and Major Modification of Major Stationary Sources of Air 
Pollution Which Cause or Contribute to Nonattainment'' 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.
    Additionally, on December 16, 2003, Virginia submitted a revision 
to Chapter 80, Article 9 that made a number of changes to comply with 
the 1990 Amendments to the CAA, the primary of which was to redefine 
the offset ratio requirements to accommodate the requirements of 
Subpart I of Part C of Title I of the Act. EPA is proposing full 
approval of the December 16, 2003 revision submittal.
    Today's action will revise the previously approved versions of 
these rules as approved into the Virginia SIP on April 21, 2000 (65 FR 
21315) and September 21, 1999 (64 FR 51047), respectively.
    Copies of the revised Virginia rules and submittal packages, as 
well as the Technical Support Document (TSD), can be obtained from the 
Docket as discussed in the ``Docket'' Section above. A discussion of 
notable Virginia rule changes that are proposed for inclusion into the 
SIP are included in the TSD and also 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 51.165 despite some variations in their 
rules from the federal program. It is EPA's position that every element 
of NSR reform is present in Virginia's rules but these elements may be 
implemented in a way that allows the Commonwealth more scrutiny with 
respect to how NSR applies to a facility. The Virginia NSR regulations 
for nonattainment areas, effective September 1, 2006 are being proposed 
for limited approval today. The following describes areas within these 
regulations that vary from the Federal program.
Notable Variations in Article 9 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

[[Page 36479]]

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. This 
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 Nonattainment New Source Review 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.
    Once again, the TSD, (located in the Docket), can be reviewed for 
an in-depth and full explanation of EPA's regulatory analysis of the 
Virginia Nonattainment New Source Review program.

III. Limited Approval

Why is EPA proposing ``limited approval'' versus ``full approval'' of 
Virginia's NSR regulations, effective September 1, 2006 for 
Nonattainment NSR 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 Commonwealth'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 this limited approval of the 
SIP revision by EPA. In Virginia's regulations under 9 VAC 5-80-2010 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 
February 12, 2007 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 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 5-80-2010 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 Nonattainment NSR 
program found in Article 9.

[[Page 36480]]

IV. Full Approval

What is EPA proposing full approval of in this action?

    On December 16, 2003, the Commonwealth of Virginia submitted a SIP 
revision submittal for Chapter 80, Article 9 that made a number of 
changes to comply with the 1990 Amendments to the CAA, the primary of 
which was to redefine the offset ratio requirements to accommodate the 
requirements of subpart I of part C of title I of the Act. 
Additionally, administrative permit processing provisions were also 
clarified further within this submission. EPA is proposing full 
approval of the December 16, 2003 revision submittal.

V. 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 Sec.  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 Section 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 
NSR 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.

VI. Proposed Action

    EPA has determined that the amendments to Virginia's nonattainment 
new source review permit program at Articles 4 and 9, as submitted on 
February 12, 2007 meet the minimum requirements of 40 CFR 51.165 and 
the Clean Air Act. This amendment is being proposed as a limited 
approval as described in Section III above, as a revision to the 
Virginia SIP. EPA is also proposing full approval of changes submitted 
to the nonattainment new source review permit program at Article 9, as 
submitted on December 16, 2003 and as described in Section IV above as 
a revision 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.

VII. 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 (Pub. L. 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

[[Page 36481]]

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 SIP 
revision submitted on February 12, 2007 and the full approval of the 
SIP revision submitted on December 16, 2003 for facilities located or 
locating in nonattainment areas for Virginia nonattainment new source 
review 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.

    Dated: June 17, 2008.
William T. Wisniewski,
Acting Regional Administrator, Region III.
[FR Doc. E8-14625 Filed 6-26-08; 8:45 am]

BILLING CODE 6560-50-P
