Clean Air Act Approval and Promulgation of State Implementation Plans; Colorado; New Source Review

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CO35-1-6190, CO41-1-6826, CO40-1-6701, CO42-1-6836; FRL-5559-8]

Clean Air Act Approval and Promulgation of State Implementation

Plans; Colorado; New Source Review

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to approve the State implementation plan

(SIP) revisions submitted by the Governor of Colorado on November 12,

1993, August 25, 1994, September 29, 1994, November 17, 1994, and

January 29, 1996. These submittals revised Colorado Regulation No. 3

and the Common Provisions Regulation pertaining to the State's new

source review (NSR) permitting requirements. The submittals included

revisions to make the State's NSR rules more compatible with its title

V operating permit program, the addition of nonattainment NSR

provisions for new and modified major sources of PM-10 precursors

locating in the Denver PM-10 nonattainment area, a change from the dual

``source'' definition to the plantwide definition of ``source'' in the

State's nonattainment NSR permitting requirements, and correction of

deficiencies in the State's construction permitting rules. EPA is

proposing to approve these regulatory revisions because they provide

for consistency with the Clean Air Act (Act), as amended, and the

corresponding Federal regulations and guidance.

DATES: Comments must be received in writing on or before October 28,

1996.

ADDRESSES: Written comments should be addressed to: Vicki Stamper, 8P2-

A, Environmental Protection Agency, Region VIII, 999 18th Street, Suite

500, Denver, Colorado, 80202-2466. Copies of the State's submittals and

other information relevant to this proposed action are available for

inspection during normal business hours at the following locations: Air

Program, Environmental Protection Agency, Region VIII, 999 18th Street,

Suite 500, Denver, Colorado 80202-2405; and the Air Pollution Control

Division, Colorado Department of Public Health and Environment, 4300

Cherry Creek Drive South, Denver, Colorado 80222-1530.

FOR FURTHER INFORMATION CONTACT: Vicki Stamper at (303) 312-6445.

SUPPLEMENTARY INFORMATION: Section 110(k) of the Act sets out

provisions governing EPA's review of SIP submittals (see 57 FR 13565-

13566).

I. Procedural Background

The Act requires States to observe certain procedural requirements

in developing implementation plans and plan revisions for submission to

EPA. [See sections 110(a)(2) and 110(l) of the Act.] EPA also must

determine whether a submittal is complete and therefore warrants

further EPA review and action [see section 110(k)(1) of the Act and 57

FR 13565]. The EPA's completeness criteria for SIP submittals are set

out at 40 CFR part 51, appendix V.

To entertain public comment, the Colorado Air Quality Control

Commission (AQCC), after providing adequate notice, held public

hearings on (1) August 20, 1992 regarding changes to the definition of

``source'' in the Common Provisions Regulation and Regulation No. 3;

(2) July 15, 1993 regarding revisions to make the State's title V and

NSR programs more compatible and on the complete restructuring of

Regulation No. 3; (3) February 17, 1994 regarding PM-10 precursor NSR

provisions for the Denver moderate PM-10 nonattainment area; (4) August

18, 1994 regarding revisions to Regulation No. 3 addressing title V/SIP

deficiencies; and (5) March 16, 1995 regarding revisions to address

other deficiencies in Regulation No. 3. Following the public hearings,

the AQCC adopted the respective rule revisions. The Governor of

Colorado

[[Page 44265]]

submitted the various rule revisions with letters dated November 17,

1994, November 12, 1993, August 25, 1994, September 29, 1994, and

January 29, 1996, respectively.

The SIP revisions were reviewed by EPA to determine completeness

shortly after submittal, in accordance with the completeness criteria

referenced above. The submittals were found to be complete, and letters

dated January 19, 1995, January 28, 1994, October 20, 1994, November

25, 1994, and July 12, 1996, respectively, were forwarded to the

Governor indicating the completeness of the submittals and the next

steps to be taken.

II. This Action

EPA evaluated the State's submittals by comparing them to the

requirements of the amended Act, the Federal construction permitting

requirements in 40 CFR 51.160-166, the Federal operating permit

requirements in 40 CFR part 70 (for those provisions which the State

added to the construction permit program in order to implement specific

provisions of its operating permit program), and EPA guidance and

policy.

A. November 12, 1993, September 29, 1994, and January 29, 1996 SIP

Submittals

In July of 1993, the Colorado AQCC adopted operating permit

regulations as part of Regulation No. 3 in accordance with title V of

the amended Act and the corresponding Federal regulations for operating

permit programs in 40 CFR part 70. Concurrent with adoption of its

operating permit regulations, the State also adopted revisions to its

construction permit regulations in Regulation No. 3 in order to make

the two permit programs work together and in order to allow for

implementation of certain title V provisions. The State completely

revised and restructured Regulation No. 3, so that it is now divided

into four parts, as follows:

1. Part A contains all definitions and provisions that apply to

both the construction permit and operating permit programs. In this

part, Colorado extended the administrative permit amendment provisions

and some of the operational flexibility provisions of 40 CFR part 70 to

the construction permit program;

2. Part B contains provisions which apply only to the construction

permit program [including the nonattainment NSR and prevention of

significant deterioration (PSD) programs]. The State made revisions to

allow certain aspects of the operating permit program to also apply to

construction permits (e.g., combined permits and general permits) and

to allow certain operational flexibility provisions to be implemented

through the operating permit program without requiring construction

permits (e.g., minor modifications, SIP equivalency, and other permit

changes);

3. Part C contains provisions which apply solely to the State's

operating permit program; and

4. Part D contains the Statements of Basis and Purpose for each

revision to Regulation No. 3.

Parts A and C of Regulation No. 3 were submitted for approval as

part of the State's title V operating permit program on November 5,

1993. Parts A and B of Regulation No. 3 were submitted for approval in

the SIP on November 12, 1993.

EPA reviewed Parts A and B of Regulation No. 3 for conformance with

the applicable Federal requirements and identified several deficiencies

in the November 1993 SIP submittal. EPA informed the State of those

deficiencies in a letter dated September 19, 1994. In that letter, EPA

identified deficiencies that needed to be addressed by the State before

EPA would proceed to act on the November 1993 SIP submittal. EPA also

recommended other revisions to provide for clarity in the State's

permitting regulations.

Some of the deficiencies identified by EPA in the State's November

12, 1993 SIP submittal were also identified as deficiencies in the

State's title V operating permit program which EPA required the State

to address before EPA would proceed with interim approval of the

State's title V program. Those deficiencies included (1) The fact that

the State does not currently have a SIP-approved generic emissions

trading program under which the trading described in Section IV.B. of

Part A of Regulation No. 3 would be allowed, and (2) the allowing of

alternative emission limits to be developed in permits when Section

IV.D.1.i. of Part B of Regulation No. 3 did not adequately provide for

this flexibility. The State adopted revisions intended to address these

deficiencies (as well as to address other deficiencies in its title V

operating permit program) on August 18, 1994 and submitted these

revisions for approval in the SIP and for revision to its title V

program on September 29, 1994.

EPA's review of the September 29, 1994 submittal found that the

State adequately addressed these SIP/title V deficiencies by clarifying

that Section IV.B. of Part A could only be implemented if the SIP

included an EPA-approved trading program and by deleting Section

IV.D.1.i. of Part B. Based on this September 29, 1994 title V program

revision (which also included correction of other title V program

deficiencies), EPA granted interim approval of Colorado's operating

permit program on January 24, 1995 (60 FR 4563).

On March 16, 1995, the AQCC adopted further revisions to Regulation

No. 3 intended to address the remaining deficiencies EPA identified in

the State's November 12, 1993 SIP submittal. Those revisions were

submitted to EPA for approval on January 29, 1996 and include the

following:

1. Changes to the definitions of ``lowest achievable emission rate

(LAER)'' and ``net emissions increase'' to be consistent with the

Federal definitions in 40 CFR 51.165(a)(1)(xiii) and 40 CFR

51.165(a)(1)(vi), respectively;

2. Consolidation of the State's definitions of ``air pollution

source,'' ``stationary source,'' and ``new source'' so that only the

term ``stationary source,'' which is consistent with the Federal

definition, is used in the provisions of Regulation No. 3. The State

also retained the definition of ``air pollution source'' because it

reflects the definition found in State statute, but it is no longer

used in Regulation No. 3;

3. The addition of a requirement to the definition of ``volatile

organic compound (VOC)'' requiring EPA approval prior to use of any

test method that is not an EPA reference test method;

4. Revisions to the administrative process in Section II.D.5. of

Part A of Regulation No. 3 which allows for processing individual

requests to exempt additional sources from the State's Air Pollution

Emission Notice (APEN) requirements (and, consequently, from

construction permit requirements) to require EPA approval of any new

exemptions prior to use;

5. Revisions to the definition of ``surplus'' in Section V.C.10. of

Part A of Regulation No. 3 to be consistent with EPA's Emission Trading

Policy Statement (see 51 FR 43832, 12/4/86);

6. The addition of a provision to Section V.E. of Part A of

Regulation No. 3 to ensure that new source growth cannot interfere with

reasonable further progress towards attainment, in order to be

consistent with section 173(a)(1)(A) of the Act;

7. The addition of a reference to the State's definition of ``net

emission increase'' in Section V.I. of Part A of Regulation No. 3

(which discusses netting);

8. The addition of a requirement to Section IV.C.1. of Part B of

Regulation No. 3 requiring the opportunity for public comment on

permits for sources

[[Page 44266]]

trying to obtain Federally enforceable limits on their potential to

emit; and

9. The deletion of an exemption from nonattainment NSR requirements

for sources undergoing fuel switches due to lack of adequate fuel

supply (which is not allowed by EPA). EPA believes these regulatory

revisions adequately address the deficiencies described above.

The State addressed some of EPA's other comments with an opinion

from the State Attorney General's office dated July 3, 1995. Those

comments and the State's responses are as follows:

1. EPA recommended adding definitions to Regulation No. 3 of

``begin actual construction,'' ``necessary preconstruction approvals or

permits,'' and ``construction'' to be consistent with the Federal

definitions. The State did not add these definitions because the State

contends that its definitions of ``commenced construction,''

``construction'' in the Common Provisions Regulation, and

``modification'' made the addition of these definitions unnecessary.

After further review of the definitions referred to by the State, EPA

agrees with the State's contention; and

2. Section IV.A. of Part A of Regulation No. 3 allows for

alternative operating scenarios to be included in a construction

permit, and this provision is based on the title V provision in 40 CFR

70.6(a)(9). However, in order to approve this provision for

construction permits, EPA wanted assurances from the State that it

would require compliance with all PSD or nonattainment NSR provisions

(e.g., ambient air quality analysis or net air quality benefit) for

every scenario allowed under the permit. The State's July 3, 1995

letter included an interpretation that compliance with all PSD or

nonattainment NSR requirements (whichever was applicable) would be

ensured under the provision in Section IV.A.2. of Regulation No. 3,

which requires that the permit contain conditions to ensure each

scenario meets all applicable Federal and State requirements. This

satisfies EPA's concern.

EPA believes the comments discussed above were adequately addressed

by the State in its revisions to Regulation No. 3 adopted on March 16,

1995 and its opinion from the State Attorney General's office. In

addition, the State also addressed many of EPA's recommended revisions

to Regulation No. 3, which EPA believes will help to strengthen the

State's construction permit regulations.

EPA had also commented on Section IV.C. of Part A of Regulation No.

3, which provides for a construction permit (as well as a title V

operating permit) to contain terms and conditions allowing for the

trading of emissions decreases and increases under a permit cap, as

long as certain conditions are met. This provision is based on the

title V operating permit requirement in 40 CFR 70.4(b)(12)(iii), but

EPA had concerns with the use of this provision in construction

permitting. EPA is currently working on revisions to the Federal NSR

regulations as part of the ``NSR Reform'' rules that would allow a

source to establish a cap in its construction permit (termed a

plantwide applicability limit or PAL) for NSR applicability under which

emissions trading might be allowed. EPA proposed these NSR Reform rules

for public comment on July 23, 1996 (see 61 FR 38250). Until the final

EPA regulations are promulgated on this issue, EPA does not believe it

is appropriate to approve the State's provision allowing trading under

permit caps for construction permits, as EPA could be approving a rule

that is inconsistent with the forthcoming Federal regulations. However,

as discussed in the preamble to the July 23, 1996 rulemaking, Colorado

may be able to consider the issuance of permits with emissions caps on

a case by case basis under EPA's existing regulations (see 61 FR

38264).

EPA believes the State, in the submittals of September 29, 1994 and

January 29, 1996, has adequately addressed all of the deficiencies EPA

identified in the State's November 12, 1993 SIP submittal. Thus, these

three submittals are approvable. However, as discussed above, EPA is

not acting on Section IV.C. of Part A of Regulation No. 3 at this time.

For further details, see the Technical Support Document (TSD)

accompanying this notice.

B. August 25, 1994 SIP Submittal of Nonattainment NSR Rules for New and

Modified Sources of PM-10 Precursors

1. Background of Submittal

When the Act was amended in 1990, it included, among other things,

revised requirements for nonattainment areas which are set out in part

D of title I of the Act. It also set out specific deadlines for

submittals of SIP revisions addressing these new requirements,

including the submittal of nonattainment NSR rules for which the

deadlines varied depending on the type and designation of the

nonattainment area. In response to those requirements, the Governor of

Colorado submitted a SIP revision on January 14, 1993 to bring the

State's nonattainment NSR rules up to date with the requirements of the

amended Act. EPA acted on that submittal on August 18, 1994 (59 FR

42500). Specifically, EPA approved the State's nonattainment NSR rules

as meeting the requirements of the amended Act for the State's ozone

and carbon monoxide areas, as well as the Canon City, Pagosa Springs,

and Lamar PM-10 nonattainment areas. However, EPA only partially

approved the State's NSR submittal in that action for the Aspen,

Telluride, and Denver moderate PM-10 nonattainment areas because the

State had not submitted NSR regulations for new and modified major

sources of PM-10 precursors [as is required by section 189(e) of the

amended Act for those PM-10 nonattainment areas where such sources

contribute significantly to PM-10 national ambient air quality standard

(NAAQS) exceedances] and because, at the time of publication of the

August 18, 1994 Federal Register notice, EPA had not promulgated

findings that such sources of PM-10 precursors did not contribute

significantly to exceedances of the PM-10 NAAQS in any of these three

areas.1 (See 59 FR 42503-42504 for further details.)

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\1\ Section 189(e) of the amended Act requires that the control

requirements applicable to major stationary sources of PM-10 must

also apply to major stationary sources of PM-10 precursors, except

where the Administrator of EPA has determined that such sources do

not contribute significantly to PM-10 levels which exceed the

standard in the area. Any such determination that sources of PM10

precursors do not contribute significantly is generally made

concurrently with EPA's promulgation of an action on a SIP submittal

for a PM10 nonattainment area.

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Since that August 18, 1994 Federal Register action, EPA has

promulgated findings that sources of PM-10 precursors do not contribute

significantly to PM-10 NAAQS exceedances in the Aspen and Telluride PM-

10 nonattainment areas (see 59 FR 47092-47093, September 14, 1994, and

59 FR 47809, September 19, 1994, respectively), resulting in the

State's NSR provisions being considered fully approved for these two

PM-10 nonattainment areas. However, in the Denver moderate PM-10

nonattainment area, EPA has indicated that it does consider major

stationary sources of PM-10 precursors (specifically oxides of nitrogen

(NOx) and sulfur dioxide (SO2)) to contribute significantly

to exceedances of the PM-10 NAAQS (see 58 FR 66331, December 20, 1993).

On February 17, 1994, the State adopted nonattainment NSR

provisions for new and modified major sources of PM-10 precursors

(specifically, SO2 and NOx) in the Denver metro PM-10

nonattainment area. These Regulation No. 3 revisions were formally

submitted to EPA for approval into the SIP on August 25, 1994.

[[Page 44267]]

2. Evaluation of Submittal

To meet the requirements of section 189(e) of the Act, States must

submit rules applying all of the nonattainment NSR provisions normally

applicable to sources of PM-10 to sources of PM-10 precursors,

including the 100 ton per year threshold for defining major stationary

sources and the current significance level thresholds in 40 CFR

51.165(a)(1)(x) for each PM-10 precursor pollutant for defining major

modifications. To address these requirements, the State made the

following changes to Regulation No. 3:

(a) In the definition of ``major stationary source'' in Section

I.B.58. of Part A of Regulation No. 3, the State added provisions

clarifying that, in the Denver metro PM-10 nonattainment area, any

source that is major for SO2 or NOx (which are considered

precursors to PM-10 in the Denver area) will be considered major for

PM-10 and will be subject to the nonattainment NSR requirements.

(b) In the definition of ``major modification'' in Section

I.B.35.B. of Part A of Regulation No. 3, the State adopted a provision

stating that, in the Denver metro PM-10 nonattainment area, any net

emissions increase that is significant for SO2 or NOx shall

be considered significant for PM-10. The significance levels for these

two PM-10 precursor pollutants in Section I.B.57. of Part A of

Regulation No. 3 are set at 40 tons per year each, which is consistent

with the significance levels in 40 CFR 51.165(a)(1)(x).

(c) In Section V.F.1. of Part A of Regulation No. 3 which

identifies the criteria for approval of all emissions trading

transactions including NSR offsets, the State added provisions

explaining which interpollutant trades between PM-10 and PM-10

precursors are allowed for NSR offsets. Specifically, Section V.F.1.

provides that new or modified major sources of a PM-10 precursor can

obtain offsets from reductions in that same precursor or in PM-10,

while new or modified major sources of PM-10 can only obtain offsets

from reductions in PM-10. This is consistent with EPA's current policy

regarding offsets for PM-10.

However, the State did adopt an exception to this requirement in

Section V.H.9. of Part A of Regulation No. 3. Specifically, Section

V.H.9. allows interpollutant offsets other than those discussed in

Section V.F.1. to be approved on a case-by-case basis, provided that

the applicant demonstrates, on the basis of EPA-approved methods where

possible, that the emissions increases for the new or modified source

will not cause or contribute to a violation of the NAAQS. Section

V.H.9. further provides that the source's permit application will not

be approved by the State until written approval has been received from

the EPA. Because written approval will be required from EPA before a

permit will be issued which allows an interpollutant trade for

offsetting (other than those trades allowed in Section V.F.1.), EPA

believes that it will be able to ensure any interpollutant offsets will

meet the requirements of the Act concerning NSR. Thus, this exception

is acceptable to EPA.

The State's nonattainment NSR provisions are generally found in

Section IV.D.2. of Part B of Regulation No. 3. As discussed in EPA's

August 18, 1994 approval mentioned above, the State's nonattainment NSR

provisions, which apply in all of the State's nonattainment areas, meet

all of the general NSR requirements required by the Act and Federal

regulations (see 59 FR 42500-42506). Thus, since the State's revised

nonattainment NSR rules now subject new and modified major stationary

sources of PM-10 precursors (as well as PM-10) locating in the Denver

moderate PM-10 nonattainment area to the nonattainment NSR requirements

as required by section 189(e) of the Act, and since the State's

nonattainment NSR provisions meet all of the applicable Federal

requirements, EPA considers Colorado's nonattainment NSR rules for the

Denver moderate PM-10 nonattainment area to be fully approvable.

C. November 17, 1994 SIP Submittal Revising the Definition of

``Source''

1. Background of Submittal

On August 7, 1980, EPA promulgated rules for review of new major

sources and major modifications in nonattainment areas (45 FR 52676).

Those rules defined ``source'' as either an entire plant or an

individual piece of process equipment within the plant. This definition

precluded major sources undergoing a modification at an individual

piece of process equipment from considering other emission decreases

within the plant in determining the net emissions increase of the

modification. However, in the Federal PSD permitting regulations (which

apply to major sources and major modifications located in attainment or

unclassifiable areas), a plantwide definition of source was used, under

which only significant net emissions increases at the entire plant were

subject to permitting requirements. Thus, under the dual source

definition, a greater number of modifications at a source would be

subject to NSR permitting requirements than under the plantwide

definition of source used in the PSD regulations. EPA adopted this more

stringent definition of source for nonattainment area NSR permitting to

aid in the cleanup of the air in nonattainment areas.

However, on October 14, 1981, EPA deleted the dual source

definition from the nonattainment NSR permitting requirements and

replaced it with the plantwide definition to give States the option of

adopting the plantwide definition of source in nonattainment areas (see

46 FR 50766). In the October 1981 Federal Register notice, EPA set

forth its rationale for allowing use of the plantwide definition (46 FR

50766-50769). EPA reasoned that, since part D of the Act requires

States to adopt adequate SIPs which demonstrate attainment and

maintenance of the NAAQS, ``deletion of the dual definition increases

State flexibility without interfering with timely attainment of the

ambient standards and so is consistent with part D'' (46 FR 50767). EPA

also added that, by bringing more plant modifications into the NSR

permitting process, the dual source definition may discourage

replacement of older, dirtier processes and, hence, retard not only

economic growth but also progress toward clean air. Last, EPA pointed

out that, under the plantwide definition, new equipment would still be

subject to any applicable new source performance standard (NSPS). Thus,

EPA regarded changing to the plantwide definition as presenting, at the

very worst, environmental risks that were manageable because of the

independent impetus to create adequate part D plans and, at best, the

potential for air quality improvements driven by the marketplace. In

1984, the Supreme Court upheld EPA's action as a reasonable

accommodation of the conflicting purposes of part D of the Act and,

hence, well within EPA's broad discretion. Chevron, U.S.A., Inc. v.

NRDC, Inc., 104 S.Ct. 2778.

Consequently, on August 20, 1992, the Colorado AQCC adopted

revisions to the Common Provisions Regulation and Regulation No. 3 to

change from the dual definition of ``source'' to the plantwide

``source'' definition in its nonattainment NSR permitting requirements.

Specifically, the State revised the definitions of ``stationary

source'' and ``net emissions increase'' in the Common Provisions

Regulation to delete references to the dual source definition. In

addition, the State deleted Section V.I.4. of Colorado Regulation No.

3, which explained that the dual source definition applied in

nonattainment NSR permitting. These

[[Page 44268]]

revisions were subsequently submitted by the Governor to EPA for

approval into the SIP on November 17, 1994.

The State adopted these revisions prior to the July 1993 State

adoption of a completely restructured Regulation No. 3, which was

discussed in Section II.A. above. Before the July 1993 State action,

the State's definitions for its construction permit program were

generally found in the Common Provisions Regulation and all of its

construction permit requirements were in Regulation No. 3.

(Note: at that time, Regulation No. 3 was not divided into Parts

A, B, C, or D).

Under the new structure of Regulation No. 3, the definitions of

``stationary source'' and ``net emissions increase'' are in Sections

I.B.58. and I.B.36., respectively, in Part A of Regulation No. 3, and

the deletion of Section V.I.4. is reflected in Part B of revised

Regulation No. 3. These definitions of ``stationary source'' and ``net

emissions increase'' (as well as other definitions pertaining to the

State's construction permit program) are also still in the Common

Provisions Regulation.

2. Evaluation of Submittal

In the October 14, 1981 Federal Register discussed above in which

EPA deleted the dual source definition from the Federal nonattainment

NSR permitting requirements, EPA ruled that a State wishing to adopt a

plantwide definition generally has complete discretion to do so, and it

set only one restriction on that discretion. If a State had

specifically projected emission reductions from its NSR program as a

result of a dual source or similar definition and had relied on those

reductions in an attainment strategy that EPA later approved, then the

State needed to revise its attainment strategy as necessary to

accommodate reduced NSR permitting under the plantwide definition (see

46 FR 50767 and 50769).

This 1981 ruling allowing States to adopt a plantwide definition

assumed that nonattainment areas already had, or shortly would have,

approved part D plans in place. However, the Act was amended in 1990,

creating new requirements and deadlines for submittal of attainment

plans for areas which were not in attainment of the NAAQS. In light of

these changes, EPA will now approve adoption of the plantwide

definition into SIPs for nonattainment areas that need but lack

adequate part D attainment plans approved by EPA only if the State has

demonstrated that it is making, and will continue to make, reasonable

efforts to adopt and submit complete plans for timely attainment in

these areas.

For the majority of Colorado's nonattainment areas that are

required to have part D attainment plans, the State has EPA-approved

part D plans. The only areas for which the State does not yet have

fully approved part D attainment plans are the Denver PM-10, Denver

carbon monoxide (CO), Longmont CO, Telluride PM-10, and Steamboat

Springs PM-10 nonattainment areas. The State has submitted part D plans

for the Denver PM-10 and CO nonattainment areas, the Longmont CO

nonattainment area, and the Steamboat Springs PM-10 nonattainment area,

but EPA has not yet completed action on these submittals. For the

Telluride PM-10 nonattainment area, EPA has approved the State's

attainment demonstration (see 59 FR 47808, September 19, 1994), but the

plan has not been fully approved because it lacked quantitative

milestones to provide for maintenance of the PM-10 NAAQS through

December 31, 1997 (see 59 FR 47809). The State has subsequently

submitted additional controls to provide for maintenance of the PM-10

NAAQS in the Telluride PM-10 nonattainment area through 1997, but EPA

has not yet completed action on that submittal. Thus, EPA believes the

State has adequately demonstrated that it has made, and will continue

to make, reasonable efforts to get an approved part D attainment plan

in place for these areas.

Further, the State has certified that it did not, and will not,

rely on any emissions reductions from the operation of the NSR program

using the dual source definition in any of its nonattainment area

demonstrations of attainment. EPA's examination of the State's

attainment demonstrations confirmed the State's certification.

Therefore, EPA believes it is appropriate to approve Colorado's switch

to a plantwide definition of source in accordance with EPA's 1981

action, inasmuch as the State has demonstrated that it is making, and

will continue to make, reasonable efforts to get approved part D

attainment plans in place for all of its nonattainment areas.

III. Proposed Action

EPA is proposing to approve all of the revisions to Colorado's

construction permitting program in Regulation No. 3 submitted on

November 12, 1993, August 25, 1994, September 29, 1994, November 17,

1994, and January 29, 1996. EPA is also proposing to approve the

revisions to the Common Provisions Regulation submitted on November 17,

1994. However, for the reasons discussed above, EPA is taking no

action, at this time, on Section IV.C. of Part A of Regulation No. 3.

Nothing in this action should be construed as permitting or

allowing or establishing a precedent for any future request for

revision to any SIP. Each request for revision to a SIP shall be

considered separately in light of specific technical, economic, and

environmental factors and in relation to relevant statutory and

regulatory requirements.

IV. Administrative Requirements

A. Executive Order 12866

This action has been classified as a Table 3 action for signature

by the Regional Administrator under the procedures published in the

Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a

July 10, 1995 memorandum from Mary Nichols, Assistant Administrator for

Air and Radiation. The Office of Management and Budget (OMB) has

exempted this regulatory action from E.O. 12866 review.

B. Regulatory Flexibility Act

Under the Regulatory Flexibility Act, 5 U.S.C. 600, et seq., EPA

must prepare a regulatory flexibility analysis assessing the impact of

any proposed or final rule on small entities. 5 U.S.C. 603 and 604.

Alternatively, EPA may certify that the rule will not have a

significant economic impact on a substantial number of small entities.

Small entities include small businesses, small not-for-profit

enterprises, and government entities with jurisdiction over populations

of less than 50,000.

SIP approvals under section 110 and subchapter I, part D of the Act

do not create any new requirements, but simply approve requirements

that the State is already imposing. Therefore, because the Federal SIP-

approval does not impose any new requirements, I certify that it does

not have a significant impact on small entities affected. Moreover, due

to the nature of the Federal-state relationship under the Act,

preparation of a regulatory flexibility analysis would constitute

Federal inquiry into the economic reasonableness of state action. The

Act forbids EPA to base its actions concerning SIPs on such grounds.

Union Electric Co. v. U.S. E.P.A., 427 U.S. 246, 256-66 (1976); 42

U.S.C. 7410(a)(2).

C. Unfunded Mandates

Under section 202 of the Unfunded Mandates Reform Act of 1995

(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA

must prepare a budgetary impact statement to accompany any proposed or

final rule

[[Page 44269]]

that includes a Federal mandate that may result in estimated costs to

State, local, or tribal governments in the aggregate; or to the private

sector, of $100 million or more. Under section 205, EPA must select the

most cost-effective and least burdensome alternative that achieves the

objectives of the rule and is consistent with statutory requirements.

Section 203 requires EPA to establish a plan for informing and advising

any small governments that may be significantly or uniquely impacted by

the rule.

EPA has determined that the approval action proposed does not

include a Federal mandate that may result in estimated costs of $100

million or more to either State, local, or tribal governments in the

aggregate, or to the private sector. This Federal action approves pre-

existing requirements under State or local law, and imposes no new

Federal requirements. Accordingly, no additional costs to State, local,

or tribal governments, or to the private sector, result from this

action.

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Incorporation by

reference, Nitrogen oxides, Particulate matter, Reporting and

recordkeeping requirements, Sulfur dioxide, Volatile organic compounds.

Authority: 42 U.S.C. 7401-7671q.

Dated: August 14, 1996.

Jack W. McGraw,

Acting Regional Administrator.

[FR Doc. 96-21910 Filed 8-27-96; 8:45 am]

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