Approval and Promulgation of Air Quality Implementation Plans; Pennsylvania; New Source Review and Emissions Registry Regulation

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[PA 042-4055; FRL-5820-4]

Approval and Promulgation of Air Quality Implementation Plans;

Pennsylvania; New Source Review and Emissions Registry Regulation

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to grant limited approval of a State

Implementation Plan (SIP) revision submitted by the Commonwealth of

Pennsylvania pursuant to the requirements of the Clean Air Act (CAA).

This revision requires major new and modified sources of volatile

organic compounds (VOCs), nitrogen oxides (NOX), particulate

matter (PM), particulate matter with an aerodynamic diameter of less

than 10 microns (PM-10), PM-10 precursors, sulfur oxides

(SOX), carbon monoxide (CO), or lead (Pb) to meet certain

new source review permitting requirements if they are proposing to

locate in a designated nonattainment area. These requirements also

apply to major new and modified sources of VOCs and for NOX

proposing to locate in the ozone transport region (OTR). This action is

being taken under section 110 of the Clean Air Act (CAA).

DATES: Comments must be received on or before June 2, 1997.

ADDRESSES: Comments may be mailed to Kathleen Henry, Chief, Permit

Programs Section, Mailcode 3AT23, U.S. Environmental Protection Agency,

Region III, 841 Chestnut Building, Philadelphia, Pennsylvania 19107.

Copies of the documents relevant to this action are available for

public inspection during normal business hours at the Air, Radiation,

and Toxics Division, U.S. Environmental Protection Agency, Region III,

841 Chestnut Building, Philadelphia, Pennsylvania 19107, and the

Pennsylvania Department of Environmental Protection, Bureau of Air

Quality, P.O. Box 8468, 400 Market Street, Harrisburg, Pennsylvania

17105.

FOR FURTHER INFORMATION CONTACT: Michael H. Markowski, 3AT23, U.S.

Environmental Protection Agency, Region III, 841 Chestnut Building,

Philadelphia, Pennsylvania, 19107, (215) 566-2063.

SUPPLEMENTARY INFORMATION:

I. Background

A. New Source Requirements and Pennsylvania's Submittal

The CAA requires that all states submit to EPA, by November 15,

1992, a revision to their state implementation plans (SIPs) requiring

major new and major modified sources to meet certain new source review

(NSR) requirements if those sources are being located in areas

designated nonattainment for a pollutant, are expected to emit

pollutants in quantities likely to significantly impact such areas, or,

in the case of VOC or NOX sources, if they are being located

in the OTR. This requirement for a SIP revision applies to

Pennsylvania, which currently has areas designated nonattainment for

ozone (a pollutant formed under certain meteorological conditions from

precursor VOC and NOX emissions), CO, SO2 and PM-

10.

Pennsylvania submitted a revision to its SIP, on February 4, 1994,

requiring major new and modified sources of VOCs, NOX, PM,

PM-10, PM-10 precursors, SOX, CO, or Pb to meet certain NSR

requirements if they are being located in a designated nonattainment

area, if they are expected to emit these pollutants in quantities

sufficient to significantly impact a nonattainment area, or, in the

case of VOC and NOX sources, if they are being located in

the OTR. The NSR requirements include installing Lowest Achievable

Emission Rate (LAER) technology and obtaining emission offsets. The

submittal included associated emissions banking requirements and an

emissions reduction credit (ERC) registry. Pennsylvania's submittal

adds these new provisions in Subchapter E, Sections 127.201 through

127.217 of the Pennsylvania Code, and removes the older provisions,

which were found in Subchapter C., Sections 127.61 through 127.73 (it

reserves those regulation numbers).

B. Federal Requirements

According to section 172(c)(5) of the CAA, SIPs must require

permits for the construction and operation of new or modified major

stationary sources in nonattainment areas. The statutory permit

requirements for ozone nonattainment areas are generally contained in

revised section 173 of the CAA, and in subpart 2 of part D. Further, on

July 23, 1996, EPA published in the Federal Register a comprehensive

rulemaking which proposed significant changes to the current Prevention

of Significant Deterioration (PSD) and nonattainment NSR rules. See 61

FR 38311 (1996). That rulemaking proposed to revise regulations for the

approval and promulgation of SIPs and the requirements for preparation,

adoption, and submittal of implementation plans governing the NSR

programs mandated by Parts C and D of Title I of the CAA. Upon EPA

promulgation of the final rulemaking at a later date, all states,

including Pennsylvania, will be expected to evaluate their new source

review regulations in accordance with the new requirements and to

revise such regulations accordingly.

Important CAA requirements for new sources in nonattainment areas

are found under sections 172, 173, 182, and 184 of the CAA. These

requirements are summarized below.

a. According to section 173(a)(1) of the CAA, the state regulation

must assure that calculations of emissions offsets are based on the

same emissions baseline used in the demonstration of reasonable further

progress (RFP).

b. According to section 173(c)(1) of the CAA, the state regulation

may include provisions which allow offsets to be obtained in another

nonattainment area if that area has an equal or higher nonattainment

classification and emissions from the other nonattainment area

contribute to a NAAQS violation in the area in which the source would

construct.

c. According to section 173(c)(1) of the CAA, the state regulation

must provide that any emissions offsets obtained in conjunction with

the issuance of a permit to a new or modified source must be in effect

and enforceable by the time the new or modified source commences

operation.

[[Page 24061]]

This statutory condition for offsets augments the existing requirement

under section 173 that provides that offsets must be federally-

enforceable before permit issuance, although the required emissions

reductions need not occur until the date on which the new or modified

source commences operations.

d. According to section 173(c)(1) of the CAA, provisions of the

state regulation must assure that emissions increases from new or

modified sources will be offset by real reductions in actual emissions.

EPA's initial guidance interpreting general sections of the CAA is

contained in the Title I General Preamble published in the Federal

Register on April 16, 1992 (57 FR 13498). In the General Preamble, EPA

reiterated that emission increases and decreases for netting are to be

determined consistent with EPA's current new source rules and the

December 4, 1986 emissions trading policy statement (51 FR 43823). In

addition, pre-enactment reductions are expected to be treated as new

source growth, even though, for applicability purposes, the source's

net emissions change is de minimis. EPA's current new source rules

state that a decrease in emissions is only creditable if, among other

requirements, the decrease has not been relied upon by the state for

any permit, attainment demonstration, or reasonable further progress.

Therefore, emission reductions made because of RACT or other

requirements that have been taken into account in the state's

demonstration of reasonable further progress or attainment

demonstration are not creditable for netting purposes.

e. According to section 173(c)(2) of the CAA, the state rules must

prevent emission reductions otherwise required by the CAA from being

credited for purposes of part D offset requirements.

f. According to section 173(a)(5) of the CAA, the state regulation

must require that prior to any part D permit being issued there be an

analysis of alternative sites, sizes, production processes, and

environmental control techniques for proposed sources that demonstrates

that the benefits of the proposed source significantly outweigh the

environmental and social costs imposed as a result of its location,

construction, or modification.

g. According to section 328 of the CAA, the state regulation must

assure that sources located on the Outer Continental Shelf (OCS) are

subject to the same requirements applicable if the source were located

in the corresponding onshore area.

h. Section 173(a)(3) of the CAA requires that the state regulation

must assure that owners or operators of each proposed new or modified

major stationary source demonstrate that all of their other major

stationary sources in the state are in compliance.

i. The state regulation must define major new and major modified

sources in accordance with the area's nonattainment classification

under section 181 for ozone and section 186 for CO.

j. The state regulation must require emission offsets for major new

and major modified sources in accordance with the area's nonattainment

classification under section 181 for ozone and section 186 for CO.

k. The state regulation must require all applicable new source

requirements to be met by sources locating in the OTR. For a severe or

extreme ozone nonattainment area located in the transport region, the

major stationary source size thresholds applicable to those areas apply

for VOC and, presumptively, for NOX. These provisions must

also ensure that new or modified major stationary sources obtain VOC

and, presumptively, NOX offsets at a ratio of at least 1.15

to 1 in order to obtain a NSR permit. Higher offset ratios apply in

areas classified as serious or above under section 184 of the CAA.

l. The state regulation must ensure that any new or modified major

stationary source of NOX satisfies the requirements

applicable to any new or modified major stationary source of VOC,

unless a special NOX exemption is granted by the

Administrator under section 182(f) of the CAA.

m. State plans must, for serious and severe ozone nonattainment

areas, implement sections 182(c) (6), (7) and (8) of the CAA with

regard to modifications.

C. Nonattainment Area Requirements Pertaining to Pennsylvania

The CAA defines sources as major at various specified levels of

emissions, depending on the attainment/nonattainment status of the area

where the source is located, the severity of the nonattainment, and on

whether or not the source is located in an OTR. Pennsylvania has areas

designated nonattainment for ozone, for PM-10, for SO2, and

for CO.

With respect to ozone, section 182(d) of the CAA defines sources of

VOCs located in severe ozone nonattainment areas as major when they

have the potential to emit 25 tons per year (TPY) or more of VOCs. In

Pennsylvania there is one severe ozone nonattainment area, the

Philadelphia area (including Philadelphia, Bucks, Chester, Delaware,

and Montgomery Counties) where the 25 TPY major source threshold for

VOCs applies. Per section 182(f) of the CAA, NOX sources

located in severe ozone nonattainment areas must also be considered

major at the same threshold levels as VOC sources. Thus, in the

Philadelphia area sources are considered major when they have the

potential to emit 25 TPY or more of NOX.

For the remainder of Pennsylvania, there are moderate areas to

consider as well as the fact that the entire Commonwealth is part of

the OTR. This is the key factor establishing the level of VOC or

NOX emissions that trigger major NSR applicability. Per

section 184 of the CAA, stationary VOC and NOX sources

located in areas of Pennsylvania that are designated marginal, moderate

or attainment for ozone which are also located in the OTR are subject

to the same requirements as those applicable to such sources located in

moderate ozone nonattainment areas. Therefore, sources located in the

OTR are defined as major when they have the potential to emit 50 TPY or

more of VOC, and sources located within the OTR are defined as major

when they have the potential to emit 100 TPY or more of NOX.

Pennsylvania also has nonattainment areas for PM-10 and CO in

portions of Allegheny County, and for SO2 in portions of

Allegheny, Armstrong, and Warren Counties. In all of these areas, a new

source is considered major when it has the potential to emit 100 TPY or

more of the pollutant for which the area is designated nonattainment.

Major modifications are defined by significant emissions increases in

accordance with federal rules.

II. EPA Analysis of Pennsylvania's Submittal

A. Pennsylvania's Definitions of Major Source, Significant Emissions

Increases, and Significant Air Quality Impacts

The Commonwealth's proposed changes to Pennsylvania Regulations,

Sections 127.201 through 127.204 pertain to the definitions of major

source and major modified source (modification to an existing major

source) for each of the affected pollutants: VOC, NOX, PM-

10, PM-10 precursors, PM, SOX, CO, and Pb. Pennsylvania's

definitions of major source thresholds are consistent with federal

requirements, as are Pennsylvania's definitions of significant

emissions increases, and its definitions of ``significant'' air quality

impacts.

In severe ozone nonattainment areas (the Philadelphia area) a major

source of

[[Page 24062]]

VOCs or of NOX is defined as one which has the potential to

emit at least 25 TPY VOC or 25 TPY NOX. In serious ozone

nonattainment areas (which Pennsylvania does not have at this time), a

major source is defined as one that has the potential to emit at least

50 TPY VOC or 50 TPY NOX. Pennsylvania's regulation also

includes certain special modification provisions, at Section 127.203(c)

(discussed below at II. B.), for determining applicability in severe or

serious ozone nonattainment areas.

In severe ozone nonattainment areas the regulation applies to

either ``[a] new facility with the potential to emit 25 tons or more

per year of NOX or VOCs,'' or to ``[a] modification to an

existing facility with the potential to emit 25 tons or more per year

of NOX or VOC, or a new source at an existing facility

resulting in an increase in the potential to emit either VOC or

NOX which, when aggregated with the other emissions

increases determined in accordance with subsection (c)(1), results in

an increase of 25 tons per year or 1,000 pounds per day or 100 pounds

per hour of VOC or NOX, or more, whichever is more

restrictive.'' Section 127.203(b)(3).1

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\1\ Subsection (c)(1) refers to certain special rules for

modifications to VOC or NOX facilities located in serious

and severe nonattainment areas for ozone.

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In serious ozone nonattainment areas the regulation applies to

either ``[a] new facility with the potential to emit 50 tons or more

per year of NOX or VOCs,'' or to ``[a] modification to an

existing facility with the potential to emit 50 tons or more per year

of VOC or NOX, or a new source at an existing facility

resulting in an increase in the potential to emit either VOC or

NOX which, when aggregated with the other emissions

increases determined in accordance with subsection (c)(1), results in

an increase of 25 tons per year, 1,000 pounds per day or 100 pounds per

hour of VOC or NOX, or more, whichever is more

restrictive.'' Section 127.203(b)(2). There are currently no areas in

Pennsylvania that have been classified as serious nonattainment for

ozone.

All areas in Pennsylvania other than the Philadelphia severe ozone

nonattainment area are treated as moderate ozone nonattainment areas

because they are classified as moderate or because the entire

Commonwealth is in the OTR. In these areas the Pennsylvania regulation

applies to either ``[a] new facility with the potential to emit 100

tons or more per year of NOX or 50 tons or more per year of

VOCs,'' or to ``[a] modification to an existing facility with the

potential to emit 100 tons or more per year of NOX or 50

tons or more per year of VOCs, or a new source at an existing facility

resulting in an increase in the potential to emit either VOC or

NOX which, when aggregated with the other emissions

increases determined in accordance with Section 127.211, results in an

increase of 40 tons per year, 1,000 pounds per day or 100 pounds per

hour of VOC or NOX, or more, whichever is more

restrictive.'' Section 127.203(b)(1).

The major source size threshold for new sources of PM-10, PM-10

precursors, and PM is 100 TPY. A major modification is defined as a

modification of a major source resulting in a significant increase in

emissions. A significant increase in emissions is defined as an

increase (aggregated with other applicable increases over a specified

period of years, in accordance with Section 127.211) in the potential

to emit PM-10 of 15 TPY, of PM of 25 TPY, or of PM or PM-10 of 1000

pounds per day or 100 pounds per hour, whichever is more restrictive.

The significant air quality impact levels for PM-10, PM-10 precursors

and PM are 1.00 microgram/cubic meter (microgram/m\3\) on an annual and

5.00 micrograms/m\3\ on an 24-hour average.

The major source size threshold for new sources of PM-10, PM-10

precursors, and PM is 100 TPY. A major modification is defined as a

modification of a major source resulting in a significant increase in

emissions. A significant increase in emissions is defined as an

increase (aggregated with other applicable increases over a specified

period of years, in accordance with Section 127.211) in the potential

to emit PM-10 of 15 TPY, of PM of 25 TPY, or of PM or PM-10 of 1000

pounds per day or 100 pounds per hour, whichever is more restrictive.

The significant air quality impact levels for PM-10, PM-10 precursors

and PM are 1.00 microgram/cubic meter (microgram/m\3\) on an annual and

5.00 micrograms/m\3\ on an 24-hour average.

The major source size threshold for new SOX sources is

100 TPY. A major modification is defined as a modification of a major

source resulting in a significant increase in emissions. A significant

increase in emissions is defined as an increase in the potential to

emit SOX (aggregated with other applicable increases over a

specified period of years, in accordance with Section 127.211) of 40

TPY, 1000 pounds per day or 100 pounds of SOX per hour,

whichever is more restrictive. The significant air quality impact

levels for SOX are 1.00 microgram/m\3\ on an annual average,

5.00 micrograms/m\3\ on a 24-hour average, and 25.00 micrograms/m\3\ on

a 3-hour average.

The major source size threshold for new CO sources is 100 TPY. A

major modification is defined as a modification to a major source

resulting in a significant emissions increase. A significant increase

in emissions is defined as an aggregated increased potential to emit CO

of at least 50 TPY, 1000 pounds per day or 100 pounds per hour,

whichever is more restrictive. The significant air quality impact

levels for CO are 0.5 milligrams/cubic meter (milligrams/m\3\)on an 8-

hour average and 2.0 milligrams/m\3\ on a 1-hour average.

For new Pb sources, the major source size threshold for NSR

applicability is 100 TPY. A significant increase in emissions is

defined as an aggregated increased potential to emit Pb of 0.6 TPY, 10

pounds per day or 1 pound per hour, whichever is more restrictive. The

significant air quality impact level is 0.1 micrograms/m\3\ on a 24-

hour average.

B. Special Modification Provisions

The special modification provisions in the CAA at section 182(c)

(6) through (8) are incorporated into the Pennsylvania regulation in

Section 127.203(c) (1) through (3). These provisions are applicable to

VOC or NOX sources locating in serious or severe ozone

nonattainment areas. Currently there are no serious areas in

Pennsylvania. Section 127.203(c)(1) specifies that sources are to

aggregate their potential emissions over a consecutive 5-year period in

order to determine whether the de minimis level of 25 TPY, 1000 pounds

per day or 100 pounds per hour is exceeded. This provision further

specifies that the 5-year contemporaneous period cannot extend back

beyond January 1, 1991 or the design year of the most recent attainment

demonstration, whichever is more recent. Section 127.203(c)(2) applies

to facilities with potential emissions of VOC or NOX of less

than 100 TPY where the modification results in an other than de minimis

increase in emissions. The owner or operator may choose to offset the

emissions of the proposed source with those elsewhere in the same

facility at a ratio of at least 1.3 to 1 in order to avoid having the

proposed source being considered an applicable modification under these

regulations. If the facility does not offset at the required ratio, the

change shall be considered an applicable modification, but the facility

would be required to install BACT instead of LAER, and to meet

Pennsylvania's BAT requirements. Section 127.203(c)(3) applies to

facilities whose potential emissions of

[[Page 24063]]

VOC or NOX are greater than or equal to 100 TPY. The source

may choose to offset the emissions from the proposed source with

emission reductions elsewhere in the same facility at an internal

offset ratio of 1.3 to 1 in order to avoid installing LAER. The source

is still required to install technology to meet Pennsylvania's BAT

requirements. Pennsylvania's regulations pertaining to the special

modification provisions are consistent with the CAA's requirements.

C. Provisions for Emission Reduction Credits

Section 127.211 of the Pennsylvania regulation states the

applicability criteria for determining whether a source is subject to

the new source regulations. Included in these criteria is a requirement

that all sources determined to be major (new or modified) must have

emission reduction credits certified by Pennsylvania through the

emission reduction credit (ERC) registry, established in Sections

127.206 through 127.210. Pennsylvania requires that ERCs be generated

after January 1, 1991, which is consistent with the baseline that will

be used in Pennsylvania's rate of progress demonstrations and

demonstrations of attainment.

All ERCs are required to be made federally enforceable in the plan

approval, which will specify that the emissions decrease is federally

enforceable on or before the commence construction date. Detailed

information required to accompany a source's application to register

ERCs is provided in Section 127.207. Pennsylvania retains control over

all ERCs deposited into the registry and all ERCs withdrawn for use

from the registry. All Pennsylvania sources requiring emission offsets

must obtain their ERCs through the Pennsylvania ERC registry. Out-of-

state sources may deposit ERCs into the Pennsylvania registry or trade

ERCs provided there is reciprocity between Pennsylvania and the other

state and only upon approval through SIP approved rules and procedures,

including an EPA approved SIP revision.

The registry listing the ERCs available, along with other pertinent

information, will be published in the Pennsylvania Bulletin on a

quarterly basis. ERCs generated through the curtailment or shutdown of

a source, and which are not included in a plan approval and used as

offsets expire for use as offsets 10 years after the date the facility

ceased emitting those emissions. ERCs used for netting have a shorter

lifetime, as specified in Section 127.211. The offset ratios, based on

an area's nonattainment classification or location in the OTR, are

located in Section 127.210. Pennsylvania requires that fugitive VOC

emissions, regardless of the location of the source in the

Commonwealth, be offset by at least a 1.3:1 ratio. The offset ratios

are consistent with those required in the CAA.

For ERCs banked prior to January 1, 1991, Section 127.208(6)

prohibits the use of ERCs in an area with a higher nonattainment

classification than the one in which they were generated. Section

127.205(2) requires proposed new source applicants to demonstrate that

all other facilities under their operation or ownership are in

compliance or on a schedule for compliance approved by Pennsylvania.

Section 127.205(5) requires proposed new or modified source owners or

operators to conduct alternative sites and benefits analyses to

demonstrate that the benefits of the proposed source significantly

outweigh the environmental and social costs imposed on the Commonwealth

as a result of the proposed source's location, construction or

modification. Section 127.206(I) clearly prohibits use of ERCs to

achieve compliance with Reasonably Available Control Technology (RACT),

Best Available Technology (BAT), New Source Performance Standards

(NSPS), Best Available Control Technology (BACT), Lowest Achievable

Emission Reductions (LAER) or other emissions limitations required by

the CAA or Pennsylvania's Clean Air Act.

D. Prior Shutdown Credits

An issue associated with this proposed rulemaking action is that

Pennsylvania's regulations allow sources located in nonattainment areas

which lack approved attainment demonstrations to take credit for

emission reductions obtained from shutdowns or curtailments of

production or operating hours in cases where the reductions took place

prior to the source's application for a new source review permit.

Current EPA regulations, developed prior to the CAA Amendments of 1990,

provide that states having nonattainment areas without EPA approved

attainment demonstrations may allow sources located in those areas to

take credit for emission reductions resulting from shutdowns or

curtailments of production or operating hours only if the reductions

occurred on or after the date the new proposed source or modification

files a permit application, or, if the applicant can establish that the

proposed new source is a replacement for the shutdown or curtailed

source. See 40 CFR part 51.165(a)(3)(ii)(C)(2). Thus, under current EPA

regulations, states are prohibited from crediting emission reductions

which occurred prior to the date the new proposed source or

modification files a permit application (prior shutdown or curtailment

credits). It is important to note that Pennsylvania's current SIP

regulations do not contain this so called ``shutdown prohibition.''

Pennsylvania's revised NSR regulations, 25 Pa. Code Chapter 127,

Subchapter E, affirmatively allow sources to take credit for emission

reductions resulting from shutdowns or curtailments of production or

operating hours which occurred after January 1, 1991, or the design

year of the most recent attainment demonstration, whichever is more

recent. Because Pennsylvania's regulation would allow sources located

in nonattainment areas lacking approved attainment plans to take credit

for shutdowns or curtailments which occurred prior to the date a new

proposed source or modification files a permit application,

Pennsylvania's regulation appears not to conform with the existing EPA

regulatory prohibition on the use of prior shutdown or curtailment

credits found at 40 CFR part 51.165(a)(3)(ii)(C)(2).

However, as explained above, on July 23, 1996, EPA published in the

Federal Register a comprehensive rulemaking which proposed significant

changes to the current PSD and nonattainment NSR rules. This proposed

rulemaking is hereinafter referred to as the ``NSR Reform Rulemaking.''

See 61 FR 38311. The NSR Reform Rulemaking proposes to revise

regulations for the approval and promulgation of SIPs and the

requirements for preparation, adoption, and submittal of implementation

plans governing the NSR programs mandated by Parts C and D of Title I

of the CAA. Specifically, section VII.A of EPA's NSR Reform Rulemaking,

entitled ``Emissions Credits Resulting From Source Shutdowns and

Curtailments'', proposes to eliminate the current restrictions on

crediting of emissions reductions from source shutdowns and

curtailments that occurred after 1990. In the NSR Reform Rulemaking,

EPA proposes two different alternatives for eliminating the prior

shutdown prohibition. The second of these alternatives, entitled

``Shutdown Alternative 2'', generally lifts the current offset

restriction applicable to emissions reductions from source shutdowns

and source curtailments for all nonattainment areas and all pollutants

where such reductions occur after the baseyear of the emissions

[[Page 24064]]

inventory used (or to be used) to meet the applicable provisions of

Part D of the CAA. See proposed Section 51.165(a)(3)(ii)(C)(5)

[Alternative 2], 61 FR 38314. Under this alternative, states could

allow emissions reductions from source shutdowns or curtailments to be

used as offsets in all nonattainment areas and for all pollutants

provided such reductions occurred after the baseyear of the emissions

inventory used by the state to meet the applicable provisions of Part D

of the CAA.

As explained above, Pennsylvania's NSR regulation allows sources to

take credit for emission reductions resulting from shutdowns or

curtailments of production or operating hours which occurred after

January 1, 1991, or the design year of the most recent attainment

demonstration, whichever is more recent. Because of this regulatory

language, Pennsylvania would not have to modify its NSR rule if, in the

future, an attainment demonstration were required to be based on a more

recent design year. Currently, the earliest date by which emissions

reductions from source shutdowns or curtailments would be creditable

towards offsets under Pennsylvania's NSR rule is on or after January 1,

1991. This is because 1990 is the base year required to be used to

satisfy the Part D progress and attainment demonstration requirements

of the CAA. That date would move forward to the new design year of any

subsequent attainment demonstration required to be done by

Pennsylvania. Thus, EPA believes that Pennsylvania's NSR regulation is

generally consistent with ``Shutdown Alternative 2'' as described in

EPA's proposed NSR Reform Rulemaking since both the Pennsylvania rule

and Alternative 2 allow sources to take credit only for emissions

reductions from shutdowns or curtailments occurring after January 1,

1991. Because Pennsylvania's NSR regulation is consistent with

Alternative 2 of EPA's proposed NSR Reform Rulemaking (as discussed

above), and because approval of the revised version of Pennsylvania's

NSR regulation submitted on February 4, 1994 would strengthen the SIP

to be consistent with the CAA's provisions for NSR, EPA believes that

Pennsylvania's NSR revised regulation warrants limited approval. If EPA

promulgates Alternative 2, this limited approval would convert to a

full approval.

The alternative shutdown-related alternative set forth in EPA's NSR

Reform Rulemaking proposal is entitled ``Shutdown Alternative 1.'' This

alternative proposes, for ozone nonattainment areas, to lift the

current offset restriction applicable to emissions reductions from

source shutdowns and curtailments in such areas without EPA-approved

attainment demonstrations, provided the emissions reductions occur

after November 15, 1990 and the area has kept current with the CAA's

scheduled Part D ozone nonattainment planning requirements. See

proposed Section 51.165(a)(3)(ii)(C) (5) and (6) [Alternative 1].

EPA acknowledges that either Alternative 1 or 2 may be eventually

incorporated into the final NSR Reform Rulemaking upon its final

promulgation. It is also noted that while EPA is with this rulemaking

action proposing to grant limited approval of Pennsylvania's NSR

regulation based on the rule's consistency with Shutdown Alternative 2

in EPA's NSR Reform Rulemaking, the Commonwealth may need to amend its

NSR regulation if Shutdown Alternative 1 rather than Shutdown

Alternative 2 is promulgated. If Alternative 1 is promulgated, EPA

would determine the status of Pennsylvania's conformance with Part D

ozone planning requirements. If Pennsylvania's SIP was not current with

the Part D ozone planning requirements for any nonattainment area, EPA

would make a SIP call for Pennsylvania to amend its NSR rule to conform

with Alternative 1 as provided in EPA's final NSR Reform Rulemaking.

III. Proposed Action

EPA is proposing limited approval of the revisions to the

Pennsylvania SIP NSR regulations submitted on February 4, 1994 because

such approval would strengthen the SIP so that it meets the NSR

requirements of the CAA as discussed herein. EPA is soliciting public

comments on the issues discussed in this document or on other relevant

matters. These comments will be considered before taking final action.

Interested parties may participate in the Federal rulemaking procedure

by submitting written comments to the EPA Regional Office listed in the

Addresses section of this document.

Nothing in this action should be construed as permitting or

allowing or establishing a precedent for any future request for

revision to any state implementation plan. Each request for revision to

the state implementation plan 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 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

Clean Air 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, the

Administrator certifies that it does not have a significant impact on

any small entities affected. Moreover, due to the nature of the

Federal-state relationship under the CAA, preparation of a flexibility

analysis would constitute Federal inquiry into the economic

reasonableness of state action. The Clean Air Act forbids EPA to base

its actions concerning SIPs on such grounds. Union Electric Co. v. U.S.

EPA, 427 U.S. 246, 255-66 (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 that includes a Federal mandate that may result in estimated

costs to state, local, or tribal governments in the aggregate; or to

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

[[Page 24065]]

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

requirements. Accordingly, no additional costs to state, local, or

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

The Administrator's decision to approve or disapprove

Pennsylvania's NSR SIP revision will be based on whether it meets the

requirements of section 110(a)(2)(A)-(K) and part D of the Clean Air

Act, as amended, and EPA regulations in 40 CFR Part 51.

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Carbon monoxide,

Hydrocarbons, Incorporation by reference, Intergovernmental relations,

Nitrogen dioxide, Ozone, Particulate matter, Reporting and

recordkeeping requirements, Sulfur oxides.

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

Dated: April 22, 1997.

Stanley L. Laskowski,

Acting Regional Administrator, Region III.

[FR Doc. 97-11492 Filed 5-1-97; 8:45 am]

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