Prevention of Significant Deterioration of Air Quality (PSD) Program: Permit Review Procedures for Sources That May Adversely Affect Air Quality in Non-Federal Class I Areas

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51 and 52

[FRL-5826-5]

RIN 2060-AH01

Prevention of Significant Deterioration of Air Quality (PSD)

Program: Permit Review Procedures for Sources That May Adversely Affect

Air Quality in Non-Federal Class I Areas

AGENCY: Environmental Protection Agency (EPA).

ACTION: Advance Notice of Proposed Rulemaking (ANPR).

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SUMMARY: Under the Clean Air Act's PSD program, States and Tribes may,

with EPA approval, redesignate their lands as ``Class I'' areas to

enhance protection of their air quality resources. This notice requests

early public input on preliminary issues in clarifying the PSD permit

review procedures for new and modified major stationary sources that

may have an adverse effect on the air quality of these non-Federal

Class I areas. EPA seeks to develop clarifying PSD permit procedures

that are effective, efficient and equitable.

DATES: Comments. All public comments must be received by August 14,

1997.

Public Workshops. EPA will hold public workshops on this

rulemaking. A Federal Register notice announcing the dates of these

workshops will be published at least 30 days prior to the workshop.

ADDRESSES: Comments. Comments on this notice should be mailed (in

duplicate if possible) to: U.S. EPA, Air Docket Section, Air Docket A-

96-53; 401 M Street, S.W., Washington, D.C. 20460.

Public Workshops. EPA will hold public workshops in Phoenix,

Arizona and in Chicago, Illinois. A Federal Register notice announcing

the dates of these workshops will be published at least 30 days prior

to the workshops. Please contact the EPA official listed under FOR

FURTHER INFORMATION CONTACT if you are interested in participating in

the public workshops.

Public Docket. Supporting information for this rulemaking is

contained in Docket No. A-96-53. This docket is available for public

review and copying between 8:00 a.m. and 5:30 p.m., Monday through

Friday at the EPA's Air Docket Section, 401 M Street, S.W., Washington,

D.C.; Room M-1500. A reasonable fee may be charged for copying.

FOR FURTHER INFORMATION CONTACT: David LaRoche, U.S. EPA, Office of Air

and Radiation (6102), 401 M Street, S.W., Washington, D.C. 20460, (202)

260-7652.

SUPPLEMENTARY INFORMATION:

I. Overview

The PSD program authorizes States and Tribes to request

redesignation of their lands as ``Class I'' areas. Over the past twenty

years, only federally-recognized Tribes have sought redesignation under

this authority. EPA has approved Class I redesignations for the

Northern Cheyenne Indian Reservation, the Flathead Indian Reservation,

the Fort Peck Indian Reservation, and the Spokane Indian Reservation.

See 40 CFR 52.1382(c) and 52.2497(c). Recently, EPA approved Class I

redesignation of the Yavapai-Apache Reservation, located in the State

of Arizona. See 61 FR 56461 (Nov. 1, 1996) (to be codified at 40 CFR

52.150). EPA has proposed approval of the Forest County Potawatomi

Community request for redesignation located in the State of Wisconsin.

See 60 FR 33779 (June 29, 1995). EPA will provide opportunity for

public comment and hold a public hearing before it makes a final

decision on this proposed action.

During EPA's review of the Yavapai-Apache and Forest County

Potawatomi redesignation requests, nearby States submitted formal

objections to EPA. A common concern has been confusion about the PSD

permit review procedures that would apply in these States in the event

a Class I redesignation request is granted, and what EPA's specific

role would be in resolving any intergovernmental disputes that arise

over proposed permits for PSD sources that may adversely affect non-

federal Class I areas. In response to these concerns, EPA has initiated

this rulemaking to clarify the PSD permit review and dispute resolution

procedures for proposed new and modified major stationary sources

locating near non-Federal Class I areas.

The new procedures established in this rulemaking would apply for

any State or Tribal lands redesignated as Class I. Thus, the rulemaking

is intended to clarify PSD permit review procedures for proposed PSD

sources that may adversely affect the air quality of any State or

Tribal non-Federal Class I area, and would set forth more specific

procedures for EPA's resolution of any intergovernmental permit

disputes which may arise.

The discussion in part II below contains an overview of the PSD

program to help provide context and further understanding of the issues

presented in this notice. Part III of this notice examines preliminary

issues on which EPA seeks early public input. Part IV describes the

workshops EPA will hold to facilitate public input.

II. The PSD Program

The central purpose of the PSD program is to protect clean air

resources. Thus, the PSD program is an important air pollution

prevention program. The genesis of the program was a lawsuit to enjoin

EPA's approval of state implementation plans that allowed air quality

degradation in areas having air quality better than the national

ambient air quality standards. Sierra Club v. Ruckelshaus, 344 F.Supp.

253 (D.D.C. 1972), aff'd per curiam, 4 Env't Rep. Cases 1815 (D.C. Cir.

1972), aff'd by an equally divided court, sub. nom. Fri v. Sierra Club,

412 U.S. 541 (1973). The court granted the injunction reasoning that

the congressionally-declared purpose of the Clean Air Act to ``protect

and enhance'' the quality of the nation's air resources embodied a non-

degradation policy. Sierra Club, 344 F.Supp. at 255-56.

In response to the Sierra Club decision EPA adopted a PSD program.

See 39 FR 42510 (Dec. 5, 1974). The administrative program was

superseded by a congressionally-crafted program in the 1977 amendments

to the Clean Air Act. Public Law 95-95, 91 Stat. 685. EPA presently has

two sets of regulations implementing the 1977 statutory PSD program:

(1) 40 CFR 51.166 establishes the requirements for State-administered

PSD programs, and (2) 40 CFR 52.21 provides for Federal implementation

of PSD requirements in States not having approved programs and for

federally-recognized Indian Tribes.1

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\1\ The 1990 amendments to the Clean Air Act made relatively

minor revisions to the PSD program. Pub. L. 101-549, 104 Stat. 2399.

Conforming changes have not been made to the implementing

regulations. Also, EPA has proposed rules under section 301(d) of

the Clean Air Act that would treat Federally-recognized Indian

Tribes in the same manner as States for purposes of numerous Clean

Air Act programs including the PSD program. 59 FR 43 956 (Aug. 25,

1994). Depending on their final form, these rules may allow Tribes

to administer Federally-approved PSD permit review programs in the

same way that States do.

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A. PSD Areas

Areas nationwide are ``designated'' based on their air quality

status relative to the national ambient air quality standards (NAAQS).

The PSD program applies to areas designated ``attainment'' and

``unclassifiable'' under section 107 of the CAA, 42 U.S.C. Sec. 7407;

these are areas that meet the NAAQS, or areas that cannot be determined

on the basis

[[Page 27159]]

of available information as meeting or not meeting the NAAQS.

PSD areas are further categorized as Class I, II or III. The

classification of an area determines the maximum increase in pollutant

concentrations, or ``increment'' of air quality deterioration, allowed

over a baseline air quality concentration. Class I areas have the

smallest increments and therefore allow the least amount of air quality

deterioration. Conversely, Class III areas have the largest air quality

increments and allow the greatest deterioration. In all instances, the

NAAQS are the overarching air pollution concentration ceilings. That

is, regardless of the size of the increment, the NAAQS may not be

violated in a PSD area.

There are PSD increments for particulate matter, sulfur dioxide and

nitrogen dioxide. EPA's PSD regulations establish the incremental

amount of air quality deterioration allowed for these pollutants in

Class I, II and III areas. 40 CFR 51.166(c) and 52.21(c).

When Congress enacted the PSD program in 1977 it provided that

specified Federal lands, including certain national parks and

wilderness areas, must be designated as Class I areas and may not be

redesignated to another classification. Because they may not be

redesignated, these Federal areas are called mandatory Class I areas.

CAA Secs. 162 and 163, 42 U.S.C. Secs. 7472 and 7473.

The statute also carried forward as Class I areas any areas

redesignated as Class I under EPA's pre-1977 regulations. CAA Sec.

162(a). The Northern Cheyenne reservation was the only redesignated

Class I area affected by this provision. See Nance v. EPA, 645 F.2d 701

(9th Cir. 1981), cert denied, Crow Tribe of Indians v. EPA, 454 U.S.

1081 (1981).

All other PSD areas of the country were designated as Class II

areas under the 1977 Clean Air Act amendments. CAA Sec. 162(b). At the

same time, States and Tribes were authorized to seek redesignation of

their Class II areas as Class I or Class III. CAA Sec. 164, 42 U.S.C.

Sec. 7474. As noted, several Tribes have sought a Class I air quality

designation. Currently, there are no Class III areas.

B. PSD Sources

The PSD preconstruction review permit program applies to new and

modified major stationary sources. Construction, or subsequent

operation, of new major stationary sources and major modifications to

existing major stationary sources are prohibited unless the source

obtains a permit meeting PSD requirements.

Major stationary sources generally include sources that have the

potential to emit at least 250 tons of air pollution annually. 40 CFR

51.166(b)(1)(i)(b) and 52.21(b)(1)(i)(b). Major stationary sources also

include specific ``listed'' sources that have the potential to emit at

least 100 tons per year of air pollution. 40 CFR 51.166(b)(1)(i)(a) and

52.21(b)(1)(i)(a). The listed sources include, among other facilities,

coal-fired power plants (with more than 250 million British thermal

units per hour heat input), primary zinc and copper smelters, and

portland cement plants. Thus, the PSD program applies to relatively

large stationary sources.

Major modifications to existing major stationary sources are also

subject to the PSD preconstruction review permit program. Major

modifications include a physical or operational change at a major

stationary source that would result in a significant net emissions

increase in any regulated air pollutant. 40 CFR 51.166(b)(2) and

52.21(b)(2).

C. General PSD Preconstruction Review Permit Requirements

In broad overview, the PSD preconstruction review permit program

requires the owner or operator of a proposed source to adopt the best

available control technology (BACT) and analyze the air quality impacts

associated with the source. CAA Sec. 165(a), 42 U.S.C. Sec. 7475(a).

BACT is defined in section 169(3) of the CAA, 42 U.S.C. Sec. 7479(3) as

an emission limitation based on the maximum degree of pollutant

reduction that is achievable taking into account energy, environmental

and economic impacts.

The PSD air quality impact assessment involves several

considerations. Generally, the owner or operator of the proposed source

must demonstrate that it will not contribute to air pollution that

violates any NAAQS or PSD increment. CAA Sec. 165(a)(3). The source

must also analyze the ambient air quality, climate and meteorology,

terrain, soils and vegetation, and visibility at the site and in the

area potentially affected by its emission. CAA Sec. 165(e).

D. Special PSD Program Protection for Class I Areas

There are additional, special protections under the PSD program

that apply for Class I areas. As examined in more detail below, the

statute appears to distinguish between the preconstruction review

permit procedures that apply for Federal Class I areas and non-Federal

Class I areas. As a necessary prerequisite, the discussion below first

explores in more detail the delineation between Federal and non-Federal

Class I areas.

1. Federal Class I Areas

a. Mandatory Federal Class I Areas

The Clean Air Act provides two ways for Federal lands to be

designated as Class I--either by congressional mandate, or by EPA

approval of a State or Tribal request to redesignate Federal lands.

Congress specified certain Federal lands as mandatory Class I areas.

National parks larger than 6000 acres, national memorial parks and

national wilderness areas larger than 5000 acres, and international

parks that were in existence on August 7, 1977 are designated by

statute as mandatory Class I areas. CAA Sec. 162(a). These areas cannot

be redesignated.

b. Other Federal Class I Areas

Congress also authorized States and Tribes to seek redesignation of

other Federal public lands within their boundaries as Class I. These

are lands currently designated as Class II. To inform such

redesignation decisions, Congress directed the Federal Land Managers

(FLM) to review all national monuments, primitive areas and national

preserves and to recommend the areas having important air quality

related values (AQRVs) be redesignated as Class I. CAA Sec. 164(d). The

FLM is defined as the Secretary of the Federal Department with

authority over the lands.2 CAA Sec. 302(i), 42 U.S.C. Sec.

7602(i). The recommendations have not resulted in the redesignation of

any Federal lands from Class II to Class I. The only Federal Class I

areas that presently exist are the original mandatory areas.

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\2\ The FLM authority has been delegated to other officials

within these Departments. For example, the Assistant Secretary for

Fish and Wildlife and Parks is the FLM for areas under the

jurisdiction of the National Park Service and the U.S. Fish and

Wildlife Service.

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2. Non-Federal Class I Areas

Class I areas may also be created if EPA approves a State or Tribal

request to redesignate its own lands as Class I. The resulting areas

would be non-Federal Class I areas. The PSD permit review procedures

that apply to new or modified PSD sources that may adversely affect

these non-Federal Class I areas are the central focus of this notice.

As noted in part I, a few Tribes have exercised their discretion to

seek heightened air quality protection status under the PSD program by

requesting redesignation of lands within reservation boundaries as

Class I areas. States may similarly request

[[Page 27160]]

redesignation of their lands as Class I in accordance with the

procedures outlined at 40 CFR 51.166(g) and 52.21(g). Thus, the permit

review procedures developed in this rulemaking would apply equally for

all non-Federal Class I areas--State or Tribal.

It is important to understand the differences implied by the use of

the terms ``Federal'' and ``non-Federal'' areas. The PSD program treats

as ``Federal'' lands various national public lands that the Federal

government owns and for which it has stewardship responsibility. These

public lands include the following: national parks, national memorial

parks, national wilderness areas, national monuments, national

lakeshores and seashores, national primitive areas, national preserves,

national recreation areas, national wild and scenic rivers, national

wildlife refuges, and other similar national public lands. See, e.g.,

CAA Secs. 160(2), 162(a) and 164(a), (d). The term ``non-Federal''

refers to State lands or to lands within the boundaries of an Indian

reservation that are not Federal lands within the meaning of the CAA's

PSD program. See, e.g., CAA Sec. 164(c). For example, the legislative

history distinguishes between the ``Federal lands'' which the Federal

government manages as a ``property owner * * * under the stewardship of

various Federal agencies'' and tribal lands. Senate Comm. on

Environment and Public Works, 95th Cong., 2d Sess., A Legislative

History of the Clean Air Act Amendments of 1977 724 (Comm. Print 1978)

(statement of Senator Muskie).

In a recent proposal to reform the PSD program, EPA explained that

lands within reservation boundaries may or may not be Federal lands

within the meaning of the PSD program. In fulfilling its fiduciary

responsibility toward federally-recognized Indian Tribes, the Federal

government holds some Tribal lands in ``trust'' for the benefit of the

Tribe. Such lands may have a federal feature under Federal Indian law

but are not ``Federal'' lands within the meaning of the PSD program.

However, national public lands within reservation boundaries, such as

national monuments, are included within the term ``Federal'' lands. See

61 FR 38250, 38293, n. 71 (July 23, 1996). Thus, the PSD permit review

procedures for State lands and lands within Indian reservation

boundaries that are non-Federal or non-public lands and redesignated as

Class I are the subject of this notice.

3. PSD Permit Review Provisions for Federal and Non-Federal Class I

Areas

A congressionally-declared purpose of the PSD program is to

preserve, protect, and enhance the air quality in national parks,

national wilderness areas, national monuments, national seashores, and

other areas of special national or regional natural, recreational,

scenic, or historic value. CAA Sec. 160(2). To this end, Congress

established special PSD permit review procedures that apply to proposed

PSD sources whose emissions may adversely impact Federal Class I areas.

Based on the statutory text, statutory structure and legislative

history it appears that these special permit review procedures, set out

at section 165(d) of the CAA, are intended to apply only to Federal

lands originally designated, or subsequently redesignated, as Class I

areas. The legislative history indicates that these special

requirements were intended ``to provide additional protection for air

quality in areas where the Federal Government has a special stewardship

to protect the natural values of a national resource. Such areas are

the federally-owned class I areas under the bill.'' S. Rep. No. 127,

95th Cong., 1st Sess. at 34 (1977) (emphasis added).

The central focus of the permit review procedures for Federal Class

I areas is to protect the air quality related values (AQRVs) of these

areas. The Clean Air Act specifies that AQRVs include visibility. CAA

Sec. 165(d). The legislative history further provides that for Federal

Class I areas the term AQRVs includes ``the fundamental purposes for

which such lands have been established and preserved by the Congress

and the responsible Federal agency. For example, under the 1916 Organic

Act to establish the National Park Service (16 U.S.C. 1), the purpose

of such national park lands `is to conserve the scenery and the natural

and historic objects and the wildlife therein and to provide for the

enjoyment of the same in such manner and by such means as will leave

them unimpaired for the enjoyment of future generations.' '' S. Rep.

No. 127, 95th Cong., 1st Sess. 36 (1977).

Specifically, for Federal Class I areas, the statute places an

``affirmative responsibility'' on the FLM to protect the air quality

related values of Federal lands. CAA Sec. 165(d)(2)(B).

The FLMs protect AQRVs through a prescribed statutory role. If the

proposed source will cause or contribute to a violation of a Class I

increment, then the owner or operator must demonstrate to the

satisfaction of the FLM that the emissions will not adversely impact

AQRVs. If the FLM so certifies, then the permit may be issued.

Conversely, even if a proposed source will not cause or contribute to a

violation of a Class I increment, the FLM may nevertheless demonstrate

to the satisfaction of the permitting authority that the source will

have an adverse impact on AQRVs. If so demonstrated, then the permit

shall not be issued. CAA Sec. 165(d)(2)(C). Thus, compliance with the

Class I increments determines the burden of proof for demonstrating the

presence or absence of an adverse impact on AQRVs.

EPA recently proposed significant changes to its PSD and

nonattainment New Source Review (NSR) program. The proposal includes

revisions to the PSD permit review procedures for sources that may

adversely impact Federal Class I areas. See 61 FR 38250, 38282-38295

(July 23, 1996). The proposed revisions are intended to improve

coordination and cooperation, and clarify relative responsibilities

among FLMs, proposed sources, and permitting agencies.

Part III below examines whether EPA's permit review procedures for

non-Federal Class I areas should be similar to EPA's recent proposal

for Federal Class I areas in all respects or whether some differences

must or should exist. While, as noted above, section 165(d) contains

specific permit review procedures for Federal Class I areas, the Clean

Air Act does not contain such specific provisions for non-Federal Class

I areas. However, the CAA does contain provisions aimed at protecting

air quality in non-Federal Class I areas when a dispute arises between

affected States or Tribes. The Clean Air Act recognizes that a PSD

source proposing to locate in one jurisdiction can have adverse effects

on the air quality of another jurisdiction. By contrast with the

provisions that give the FLM responsibility for protecting Federal

Class I areas, any State or Tribal government, concerned that a

proposed source outside its jurisdiction may adversely impact the air

quality of a non-Federal Class I area, may seek to protect such area.

The Clean Air Act establishes a special dispute resolution process to

address such intergovernmental disagreements.

The Clean Air Act provides that the Governor of an affected State

or the Indian ruling body of an affected Indian Tribe may request the

EPA Administrator to enter negotiations with the parties involved to

resolve the dispute. If the parties are unable to reach agreement, the

Clean Air Act makes EPA the ultimate arbiter of the intergovernmental

dispute. Section 164(e) of the CAA establishes the special process for

resolving these

[[Page 27161]]

intergovernmental disputes, and reads in relevant part as follows:

[I]f a permit is proposed to be issued for any new major

emitting facility proposed for construction in any State which the

Governor of an affected State or governing body of an affected

Indian tribe determines will cause or contribute to a cumulative

change in air quality in excess of that allowed in this part within

the affected State or tribal reservation, the Governor or Indian

ruling body may request the Administrator to enter into negotiations

with the parties involved to resolve such dispute. If requested by

any State or Indian tribe involved, the Administrator shall make a

recommendation to resolve the dispute and protect the air quality

related values of the lands involved. If the parties involved do not

reach agreement, the Administrator shall resolve the dispute and his

determination, or the results of agreements reached through other

means, shall become part of the applicable plan and shall be

enforceable as part of such plan.

Thus, the broad contours of this provision include (but are not

limited to) intergovernmental PSD permit disputes over potential

impacts on non-Federal Class I areas.3 This provision is

codified in 40 CFR 52.21(t).

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\3\ Further, several additional provisions of the Clean Air Act

and PSD program are aimed at curbing interjurisdictional air

pollution transport. A purpose of the PSD program is to assure that

emissions from a source in one jurisdiction do not interfere with

PSD in another jurisdiction. CAA Sec. 160(4). State air quality

management plans are required to contain provisions that prohibit

in-State emissions from interfering with PSD measures in another

State. CAA Sec. 110(a)(2)(D). The interstate pollution abatement

provisions of the CAA direct State Implementation Plans (SIPs) to

require PSD sources to notify nearby States whose air pollution

levels may be affected by the source. CAA Sec. 126.

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In this rulemaking, EPA endeavors to clarify the PSD permit review

procedures in a manner that will facilitate amicable resolution of

intergovernmental disputes about potential impacts on non-Federal Class

I areas without the need for recourse to EPA. Additionally, EPA will

examine the methods EPA should consider and the procedures it should

employ in the event it is necessary for EPA to resolve an

intergovernmental PSD permit dispute. In resolving any

intergovernmental permit disputes EPA will act consistent with its

trust responsibilities toward Tribes.

III. Preliminary Issues

The overall objective of the rulemaking revisions addressed in this

notice is to clarify and improve the PSD permit review procedures

applicable to proposed sources that may adversely affect non-Federal

Class I areas.4 In developing these rules EPA will be guided

by the core purposes of the Clean Air Act and the PSD program. As

noted, the genesis of the PSD program was the non-degradation policy

embodied in section 101(b)(1) to ``protect and enhance'' air quality

resources to ``promote the public health and welfare.'' The

congressionally declared objectives of the PSD program include ensuring

that ``economic growth will occur in a manner consistent with the

preservation of existing clean air resources'' and ensuring that ``any

decision to permit increased air pollution'' is made ``only after

careful evaluation of all the consequences * * * and after adequate

procedural opportunities for informed public participation.'' CAA Sec.

160 (3) and (5), 42 U.S.C. 7470 (3) and (5). EPA seeks to develop

workable rules that consider preservation of existing clean air

resources and potential impacts on economic growth. EPA intends to

fashion rules that are clear, sensible and improve the PSD permit

process.

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\4\ EPA is not proposing to modify its rules on the PSD

redesignation process itself. The statute clearly prescribes the

process and the implementing regulations (i.e., 40 CFR 51.166(g) and

52.21(g)) provide adequate guidelines.

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EPA seeks public input on the following preliminary issues for use

in developing proposed revisions to its PSD permit review procedures at

40 CFR 51.166 and 52.21. EPA's public workshops, discussed in Part IV

of this document, will focus on these preliminary issues and other

issues raised by members of the public. EPA also encourages public

commenters to address the issues in their written submissions to the

Agency.

A. Scope of New Rulemaking Initiative

EPA seeks public input on the appropriate scope of this regulatory

initiative. Currently, after more than 20 years of authority to

redesignate, there are five non-Federal Class I areas. By contrast,

there are more than 150 mandatory Federal Class I areas. Thus, non-

Federal Class I areas are not nationally prevalent in the same manner

as Federal Class I areas.

EPA already has detailed PSD permit review procedures in place. In

addition, EPA's recent proposal to reform its PSD rules includes

proposed revisions related to permit review procedures for Federal and

non-Federal Class I areas. 61 FR 38282-38295. For example, EPA proposed

to define the term ``air quality related value'' for both Federal and

non-Federal Class I areas as ``a scenic, cultural, physical,

biological, ecological, or recreational resource which may be affected

by a change in air quality, as defined by the FLM for Federal lands and

as defined by a State or Indian Governing Body for non-Federal lands

within their respective jurisdictions.'' 61 FR 38283-38284.

EPA has also proposed significance levels for all Class I areas. 61

FR 38291-38292. Under the proposal, PSD sources with a predicted

(modeled) air quality impact below the significance levels would be

excluded from the requirement to conduct a full Class I increment

analysis. EPA indicated that permitting authorities could use the

finding of an insignificant impact to determine that the source's

emissions would not contribute to an increment violation. However, an

impact below the significance level of the PSD increments would not

necessarily indicate that the proposed source also has an insignificant

impact on AQRVs.

In the pending rulemaking to reform the PSD program, EPA also

clarified the PSD requirements applicable to non-Federal lands

redesignated as Class I areas. 61 FR 38293-38295. EPA explained that

States and Tribes with non-Federal Class I areas may identify AQRVs for

their lands and may pursue protection of the AQRVs through the

intergovernmental dispute resolution provisions under section 164(e) of

the CAA. EPA proposed to adopt a regulation at 40 CFR 51.166(t) to

implement section 164(e), as a companion to the regulation currently in

place at 40 CFR 52.21(t). 61 FR 38293-38295. EPA also proposed to

define ``Federal Class I areas'' to clarify the distinctions between

Federal and non-Federal Class I areas. 61 FR 38293-38295.

As noted, section 164(e) provides that a State or Tribe may request

intergovernmental dispute resolution if a State or Tribe determines

that emissions from a proposed PSD source ``will cause or contribute to

a cumulative change in air quality in excess of that allowed in [the

PSD program] within the affected State or tribal reservation.'' Section

164(e) further provides that if requested by the State or Tribe

involved, EPA shall make a recommendation to resolve the dispute and

``protect the air quality related values of the lands involved.'' If

the parties do not reach agreement, EPA shall resolve the dispute and

its determination shall become part of the applicable plan. Because

section 164(e) specifically provides for protection of AQRVs, EPA has

previously explained its view that States and Tribes may seek

protection of AQRVs through these intergovernmental dispute resolution

provisions. [Letter to George Meyer, Wisconsin Department of Natural

Resources, from Valdas Adamkus, EPA

[[Page 27162]]

Regional Administrator for Region V (July 27, 1994).]

In the PSD reform proposal, EPA explained its interpretation of the

language authorizing intergovernmental dispute resolution if a proposed

source ``will cause or contribute to a cumulative change in air quality

in excess of that allowed in [the PSD program].'' EPA stated that a

State or Tribe may request intergovernmental dispute resolution when a

State or Tribe determines that a proposed source will cause or

contribute to a violation of the NAAQS or PSD increment or will harm

AQRVs identified by the State or Tribe. 61 FR 38294.

EPA believes its interpretation is supported by the plain language

of the statute and statutory structure. The statutory language at issue

is expansive--referring generally to ``changes in air quality.'' The

increments are a central limit on air quality deterioration established

under the PSD program and well within the ambit of this language. At

the same time, increments are explicitly referred to elsewhere in the

PSD provisions as ``maximum allowable increases'' and ``maximum

allowable concentrations'' of pollutants. CAA Secs. 163 & 165(a)(3)(A).

Thus, EPA believes that the language in section 164(e)is not confined

to PSD increments. The statutory text also appears to encompass adverse

impacts on AQRVs due to ``changes in air quality.'' EPA believes AQRVs

are properly a basis for initiating dispute resolution since their

protection is a stated purpose of the provision. 61 FR 38294. In other

words, to allow states or tribes to initiate intergovernmental dispute

resolution because of adverse impacts on AQRVs is consistent with the

statutory language in section 164(e) that calls for EPA to ``make a

recommendation to resolve the dispute and protect the air quality

related values of the land involved.'' Today, EPA seeks further public

comment on this interpretation.

The proposed revisions to reform the PSD program are the outgrowth

of extensive discussions with representatives of State and local

governments, regulated industry, Federal Land Managers, and

environmental organizations. EPA held a public hearing in September

1996 and has provided abundant opportunity for public comment. Except

for interpretation of section 164(e) discussed immediately above,

regarding the basis for initiating intergovernmental disputes, EPA does

not intend to reopen in this rulemaking the proposals advanced in the

separate rulemaking to reform the PSD program published on July 23,

1996 (61 FR 38250).

Thus, the question for this new rulemaking initiative is what

additional changes to the PSD permit program are needed to clarify and

improve the permit review procedures for proposed sources that may

adversely affect air quality in non-Federal Class I areas. EPA requests

public input on the appropriate scope of this rulemaking, considering

the previously proposed revisions to improve the PSD program and the

relatively small number of non-Federal Class I areas.

B. Improving Coordination Between Permitting Authorities and States or

Tribes With Non-Federal Class I Areas

The July 1996 proposed rules to reform the PSD program contained

provisions to address concerns about the PSD permit review procedures

for Federal Class I areas. 61 FR 38282-38295. The proposal is intended

to reduce delays and disputes associated with permitting near Federal

Class I areas by facilitating coordination between the FLM, the permit

applicant and the permit authority, and clarifying the relative roles

and responsibilities of the involved parties. A central goal of

improved coordination is to help identify potential disagreements early

in the permit process, when it is less disruptive. Roles are clarified

to ensure that responsibilities are reasonably, and mutually,

allocated.

EPA seeks public comment on whether some of the basic policy

concerns reflected in EPA's recent proposal to revise the PSD rules for

Federal Class I areas are also concerns that should be addressed when

developing proposed programmatic improvements for non-Federal Class I

areas. These basic policy concerns, as they apply to non-Federal Class

I areas, are outlined below. 5

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\5\ As noted, this notice does not seek public comment on EPA's

proposed revisions to the permit review procedures for Federal Class

I areas published on July 23, 1996 and already subjected to public

comment.

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1. Permit Application Coordination

A State or Tribe with a non-Federal Class I area will be aware of

sources proposing to locate within its jurisdiction and can work with

the permitting authority to review and resolve potential impacts on

non-Federal Class I areas. However, if the source is located in another

jurisdiction, a State or Tribe can only effectively protect its non-

Federal Class I area from potentially adverse effects if it knows about

the proposed source.

In its July 1996 proposed revisions to the PSD rules, EPA generally

proposed to require submittal of permit applications to the FLMs for

sources locating within 100 kilometers (km) of a Federal Class I area.

EPA also proposed to require basic source information concerning

sources locating more than 100 km from a Federal Class I area to be

input into an electronic database in lieu of transmitting entire permit

applications to the FLMs. The database enables the FLMs to review

information about proposed PSD sources and determine whether further

information about the project is needed. 61 FR 38287-38288.

EPA's current regulations generally require State-administered PSD

programs to send the public notice of PSD permits to any State or

Indian Governing Body whose lands may be affected by emissions from the

source or modification. 40 CFR 51.166(q)(2)(iv). The public notice

includes the following information: indicates that a PSD permit

application has been received, states the permitting authority's

preliminary determination to approve or deny the permit, describes the

degree of increment consumption that is expected, and addresses the

opportunity for comment at a public hearing as well as written public

comment.

EPA requests public comment on whether EPA should clarify when a

permit authority must provide an affected State or Tribe with a copy of

the public notice. EPA also requests comment addressing whether, when a

non-Federal Class I area may be affected, EPA should also require

permit authorities to provide affected States or Tribes with copies of

the permit application or other advance notice before the permit

authority makes a preliminary determination to grant or deny the

permit.

For example, commenters should address whether EPA should establish

standard procedures for permit application notification of sources that

may adversely affect non-Federal Class I areas, and how such

notification could be effectively and efficiently accomplished. Using

the distance between the proposed source and non-Federal Class I area

as a basis for determining whether coordination is necessary is

simplistic and clear. However, rigid distances alone can be over- and

under-inclusive. For example, if States or Tribes with non-Federal

Class I areas were required to be notified of all proposed sources

within 100 km of the Class I area, then this may place a burden on some

sources that do not threaten the area and exclude some

[[Page 27163]]

large sources that may impact the area. EPA seeks suggestions on how to

ensure that States and Tribes with non-Federal Class I areas receive

adequate information about proposed sources that may affect the areas

without placing undue burdens on PSD permit applicants and permit

agencies.

EPA also requests public comment on how to facilitate

intergovernmental coordination during the permit review process to

avoid the need for EPA to resolve disputes over potential impacts on

non-Federal Class I areas. EPA's July 1996 proposal contained several

potential revisions to the PSD rules that call for consultation between

the permitting authority and FLM at various key stages of the permit

process. 61 FR 38283-38295. Intergovernmental consultation may

facilitate resolution of concerns. Further, the earlier all parties are

aware of potential concerns, then the sooner the concerns can be

resolved and constructive discourse can begin. EPA requests public

comment addressing consultation and other measures that can be taken to

help resolve intergovernmental permit disputes at an early stage in the

permit process. Commenters should address whether consultation would be

productive, what alternative measures would be appropriate, and what

stages in the permit process consultation should be formalized.

2. Identifying and Disseminating Information About Air Quality Related

Values

As noted, EPA's July 1996 proposed PSD revisions define ``AQRVs''

for Federal and non-Federal lands as visibility or a scenic, cultural,

physical, biological, ecological, or recreational resource that may be

affected by a change in air quality, as defined by the Federal Land

Manager for Federal lands and as defined by the applicable State or

Indian Governing Body for non-Federal lands. 61 FR 38284. EPA's July

1996 notice sought public comment on this proposed definition and EPA

is not seeking further comment in today's notice.

However, EPA does request public input on measures to encourage

identification and dissemination of information about the AQRVs for

non-Federal lands. EPA's July 1996 proposal included provisions for the

public dissemination of information about the AQRVs for Federal lands.

61 FR 38283-86. EPA proposed to place responsibility on the FLM to

ensure that permit applicants and permit agencies have adequate

information about any AQRV which the FLM has identified. Public

commenters should address reasonable steps that can be taken by States

or Tribes with AQRVs to inform PSD permit agencies and applicants about

the AQRVs. Commenters should also suggest the type of information that

would be useful to potential permit applicants and permit agencies.

A related issue is the level of technical support that should

accompany identification of AQRVs. Technical or scientific information

about AQRVs may be necessary for a neighboring permit agency and permit

applicant to understand and address potential concerns. EPA requests

comments on whether EPA should propose rules addressing the technical

support information for AQRVs identified by a State or Tribe, and seeks

input on approaches that may be appropriate.

3. No Affirmative Responsibility to Protect AQRVs of Non-Federal Lands

As noted, the Clean Air Act places an affirmative responsibility on

FLMs to protect the AQRVs of Federal Class I areas. Thus, the FLM has a

special duty under Federal law to protect the air quality related

resources of Federal Class I areas.

However, it does not seem appropriate for a State or Tribe with a

non-Federal Class I area to be under a similar responsibility to

protect AQRVs. This is an area where a departure between Federal and

non-Federal lands seems appropriate. Because a decision by a State or

Tribe to seek redesignation of its lands as a Class I area is entirely

discretionary, EPA believes that it would be inappropriate to place an

affirmative responsibility on a State or Tribe to challenge permit

applications from proposed sources locating in other jurisdictions.

Thus, EPA is disinclined in this rulemaking to place any duty on an

affected State or Tribe to invoke the intergovernmental dispute

resolution process and intends to leave this entirely within the

State's or Tribe's discretion. EPA solicits public comment on this

proposed approach.

C. EPA Resolution of Intergovernmental Permit Disputes

When a State or Tribe does elect to invoke the dispute resolution

process, section 164(e) of the CAA makes EPA the arbiter of

intergovernmental PSD permit disputes. Section 164(e) of the CAA

provides that if the Governing Body of an affected Indian Tribe or the

Governor of an affected State determines that a proposed PSD source

``will cause or contribute to a cumulative change in air quality in

excess of that allowed [under the PSD program],'' the Tribe or State

may request EPA to enter into negotiations with the parties involved to

resolve the dispute. Then, if requested by a State or Tribe, EPA will

make a recommendation to resolve the dispute and protect the AQRV's of

the lands involved. If that does not lead to resolution, EPA is

ultimately called upon to resolve such disputes regardless of whether

the proposed permit is being reviewed under a State, Tribal, or

Federally administered program. EPA seeks public input on the issues

outlined below related to EPA's resolution of permit disputes about

potential air pollution impacts on non-Federal Class I areas.

1. EPA's Discretion to Fashion Reasonable Solutions

EPA has broad discretion in crafting solutions to intergovernmental

permit disputes under section 164(e) of the CAA. The key statutory text

in section 164(e) provides as follows:

If requested by any State or Indian tribe involved, the

Administrator shall make a recommendation to resolve the dispute and

protect the air quality related values of the lands involved. If the

parties involved do not reach agreement, the Administrator shall

resolve the dispute and his determination, or the results of

agreements reached through other means, shall become part of the

applicable plan and shall be enforceable as part of such plan.

Thus, Congress has directed EPA to ``make a recommendation to

resolve the dispute and protect the air quality related values of the

lands involved.'' If the parties cannot reach agreement, EPA is

authorized to ``resolve the dispute.'' The statute does not specify or

constrain the measures or methods EPA may employ to resolve the

dispute.

EPA's discretion to resolve disputes may mean that EPA draws from a

variety of methods in resolving any particular PSD permit dispute. This

will enable EPA to tailor a solution to the circumstances and issues

presented. For example, in the event that EPA is requested to resolve a

dispute involving a proposed source's potential impacts on AQRVs and

the affected governments disagree about the nature of the projected

effects, EPA may need to explore and resolve underlying technical and

scientific issues. EPA seeks comment on whether it should elaborate how

it might evaluate such technical or scientific disagreements.

Post-construction monitoring may be an effective way to resolve

some disputes conditionally. Where there are irreconcilable disputes

over the potential impact of a proposed source, post-construction

monitoring and subsequent evaluation provides a means

[[Page 27164]]

to ascertain actual source impacts and assess the need for any further

action.

EPA also requests comment on whether it should address measures

that could be employed to mitigate effects on AQRVs. In the July 1996

PSD rulemaking proposal, EPA explored methods to mitigate adverse

impacts on the AQRVs of Federal Class I areas to allow permitting of

sources that would otherwise face permit modification or denial. 61 FR

38290-38291. Similarly, if resolution of an intergovernmental permit

dispute necessitated permit modification or denial to protect the AQRVs

of non-Federal Class I areas, mitigation of source impacts through

emissions offsets from other sources or other mitigation techniques may

present a means to avoid harsher results.

It is also possible that a proposed source may not adversely impact

AQRVs but still exceed Class I increments. If that is the case, EPA may

consider whether, in certain circumstances and consistent with its

trust responsibilities toward tribes, it is within EPA's discretion

under section 164(e) to allow issuance of a permit that exceeds Class I

increments. It is unclear whether section 164(e) would authorize such

action by EPA. This issue is examined in more detail below.

As noted, the Class I increments are the most stringent PSD

increments. Therefore, it is conceivable that a proposed source could

exceed a Class I increment and yet not adversely impact AQRVs. The

Clean Air Act expressly recognizes this situation for Federal Class I

areas. As noted, under the specific statutory provisions for Federal

Class I areas at section 165(d)(2) of the CAA, a source's contribution

to the Class I increments determines who bears the burden of proof for

demonstrating the presence or absence of an adverse impact on AQRVs and

is not decisive of whether a permit may be issued. If a proposed source

will contribute to a Class I increment violation in a Federal Class I

area, then the owner or operator may nevertheless demonstrate to the

satisfaction of the FLM that the source will not adversely impact

AQRVs. Therefore, the FLM may conclude that AQRVs are not threatened

despite the Class I increment violation. If the FLM certifies that no

adverse impact will occur despite the source's violation of the Class I

increment, the permitting authority may issue a PSD permit provided the

source demonstrates compliance with the Class II increments (as well as

a more stringent three-hour sulfur dioxide concentration

level).6 CAA Sec. 165(d)(2)(C)(iv), 40 CFR 51.166(p)(4) and

52.21(p)(5). Thus, in limited circumstances for Federal Class I areas,

the Clean Air Act contemplates that a PSD permit could be issued for a

source that exceeds the Class I increments.

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\6\ The source must demonstrate compliance with a concentration

level for sulfur dioxide measured over three hours that is more

stringent than the Class II increment but less stringent than the

Class I increment. CAA Sec. 165(d)(2)(C)(iv), 40 CFR 51.166(p)(4)

and 52.21(p)(5). If the FLM declines to certify that no adverse

impact will occur, the permit must be denied or modified. If the

proposed source may not be constructed because of the sulfur dioxide

increment for periods of twenty-four hours or less, the Governor may

grant a variance of the increment if doing so will not adversely

affect AQRVs and the FLM concurs. If the Governor and FLM do not

agree, their respective recommendations may be transmitted to the

President who may grant the variance if it is in the national

interest and the facility meets specific limits on its sulfur

dioxide concentrations. CAA Sec. 165(d)(2)(D), 40 CFR 51.166 (p)(5)

through (p)(7) & 52.21 (p)(6) through (p)(8).

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However, section 164(e) does not contain a similar express

exemption of the Class I increments for non-Federal lands. Further,

other provisions of the Clean Air Act specify that a proposed source

must comply with increments to qualify for a PSD permit. For example,

as underscored, section 163 establishes the Class I increments

providing that ``the maximum allowable increase in concentrations of

sulfur dioxide and particulate matter shall not exceed'' certain

prescribed amounts. See also 40 CFR 51.166(c) and 52.21(c). Further,

section 165(a) directs PSD sources to demonstrate that emissions will

not contribute to an increment exceedance more than one time per year.

Thus, the absence of an explicit statutory exemption to the Class I

increments for non-Federal Class I areas would suggest that section

164(e) should not be construed to provide one.

Additionally, for non-Federal Class I areas, the Class I increments

appear to have relevance independent of AQRVs. The intergovernmental

dispute resolution provisions for non-Federal lands provide that a

State or Tribe may object to a proposed PSD permit if it determines

that emissions ``will cause or contribute to a cumulative change in air

quality in excess of that allowed [under Part C of the Act--the PSD

program] within the affected State or tribal reservation.'' CAA Sec.

164(e). As noted, EPA has previously proposed to interpret excess air

quality changes to include a proposed source's contribution to a NAAQS

violation, PSD increment violation or AQRV impact. 61 FR 38294. Thus,

EPA interprets this provision to direct EPA mediation, at the request

of a State or Tribe, when a State or Tribe determines that a proposed

source will cause or contribute to a violation of a NAAQS or increment,

or contribute to AQRV impacts. The bases for invoking the PSD

intergovernmental dispute provisions arguably suggest that Class I

increments should be among the concerns protected in resolving

disputes.

Further, for non-Federal Class I areas, there are additional

reasons to give the Class I increments consideration independent of

AQRVs. Because Congress gave States and Tribes broad latitude to seek

redesignation of non-Federal lands as Class I areas, States and Tribes

could seek redesignation to prevent incremental air quality

deterioration without regard to protection of AQRVs. In such a

situation, compliance with Class I increments enables States and Tribes

to advance public health and welfare concerns associated with air

quality degradation independent of AQRVs. Thus, EPA may be requested to

resolve a dispute involving only a PSD increment, where no AQRV has

been defined. In that case, it could be argued that EPA should never

waive a PSD increment in a non-Federal Class I area because the State's

or Tribe's goal in redesignating the area to Class I may have been

solely the protection of the increments.

At the same time, the section 164(e) dispute resolution provisions

direct EPA to ``make a recommendation to resolve the dispute and

protect the air quality related values of the lands involved.'' This

might suggest that AQRVs, not increments, are the principal focus of

protection under section 164(e). But, relying on the objective of

protecting AQRVs in section 164(e) as a basis for a Class I increment

exemption could be very broad since this explanation could conceivably

justify an exemption of the Class II or III increments. Perhaps in

exercising its administrative discretion under section 164(e) EPA would

be confined to a Class I increment exemption, by direct analogy to the

statutory exemption provisions for Federal Class I areas.

EPA requests comment on whether EPA should explore in this

rulemaking EPA's discretion to waive the Class I increments for non-

Federal Class I areas in resolving permit disputes under section 164(e)

of the CAA. While it is clear that such action is impermissible unless

AQRVs will also be protected, there may nevertheless be circumstances

when Class I increment violations occur that do not threaten AQRVs. EPA

also seeks comment on the circumstances under which it might be

appropriate for EPA to consider providing an exemption for a Class I

[[Page 27165]]

increment. EPA also requests comment on how to weigh competing concerns

in determining whether a Class I increment exclusion may be

appropriate. For example, if a State or Tribe with a Class I area was

very concerned about increases in direct particulate matter pollution,

perhaps it would be appropriate for EPA to consider an exclusion from

the short-term sulfur dioxide increment but not from PM-10.

In sum, EPA requests public comment on whether EPA should address

in this rulemaking some of the potential measures and tools that may be

employed to resolve intergovernmental disputes and, if so, what

approaches may be appropriate. Alternatively, it may be appropriate for

EPA to adopt very general rules that enable EPA to take any number of

actions depending upon the circumstances.

2. Dispute Resolution Procedures

EPA also seeks input on whether and to what extent EPA should

prescribe the procedures to be followed in resolving intergovernmental

permit disputes under section 164(e). For example, EPA is interested in

the public's views about whether EPA should establish a particular

dispute resolution process. Further, EPA requests comment on whether

EPA should address how the dispute resolution process relates to the

permit proceeding and how the resulting solution is implemented.

3. Incentives for Amicable Dispute Resolution

Ideally, intergovernmental permit disputes could be amicably

resolved without recourse to EPA. EPA seeks public comment on

incentives EPA could create for governments to resolve their concerns

amicably.

D. Miscellaneous Changes

EPA also seeks public input on any clarifying, administrative

changes EPA should make to its existing PSD regulations in light of the

distinctions between Federal and non-Federal Class I areas. Comments

regarding consistent use of terminology would be appropriate. For

example, the existing rules may generally refer to Class I areas where

the context implies that Federal Class I areas is the intended meaning.

Technical revisions may help avoid any confusion.

The public should also comment on whether EPA should make any

conforming regulatory changes to the Guideline on Air Quality Modeling

to clarify and improve the PSD permit procedures for non-Federal Class

I areas. The Guideline prescribes the air quality models employed to

estimate the air quality impacts of proposed PSD sources and is

codified at 40 CFR part 51, Appendix W.

E. Summary of the Principal Issues

To facilitate public input, EPA has summarized the issues raised

for comment in this notice.

1. Scope of Rulemaking. What regulatory changes should EPA consider

in this rulemaking beyond the PSD programmatic revisions proposed in

EPA's July 23, 1996 Federal Register notice (61 FR 38250)?

2. Analogy to Federal Class I Area Issues. To what extent should

EPA draw from the PSD permit review procedures proposed for Federal

Class I areas in the July 23, 1996 notice in considering rule changes

for non-Federal Class I?

3. Permit Application Notification. What effective, and efficient,

measures should EPA consider to ensure that States and Tribes with non-

Federal Class I areas receive adequate information about proposed

sources that may adversely impact such areas?

4. Intergovernmental Coordination. How can EPA facilitate

intergovernmental consultation and coordination during the permit

review process in a manner that helps avoid intergovernmental disputes?

5. Identifying AQRVs. What guidance, if any, should EPA provide

about the technical support that should accompany identification of

AQRVs by States and Tribes?

6. Disseminating Information about AQRVs. What methods should EPA

consider to ensure that States and Tribes with AQRVs provide adequate,

timely information about their AQRVs to permit applicants and permit

agencies?

7. Responsibility to protect AQRV. Should non-Federal land managers

have the same affirmative responsibility as Federal land managers to

protect AQRVs?

8. EPA Resolution of Intergovernmental Disputes. Should EPA specify

the procedures, measures and techniques that might be employed in

resolving intergovernmental permit disputes under section 164(e) and,

if so, which of these might be appropriate?

9. Waiver of Class I Increments. Should EPA explore in this

rulemaking EPA's discretion to waive the Class I increments for non-

Federal Class I areas in resolving permit disputes?

10. Dispute Resolution Procedures. What rules, if any, should EPA

consider to govern the manner in which EPA will conduct resolution of

intergovernmental permit disputes under section 164(e)?

11. Incentive for Amicable Intergovernmental Dispute Resolution.

How can EPA create incentives for amicable resolution of

intergovernmental permit disputes?

12. Additional Clarifying Regulatory Changes. What regulatory

revisions are necessary to clarify the distinction between Federal and

non-Federal Class I areas?

13. Regulatory Flexibility Act. What steps can EPA take in this

rulemaking to facilitate public participation by any small entities

that may be adversely affected and to mitigate any such impacts?

14. Paperwork Reduction Act. What steps can EPA take in this

rulemaking initiative to ensure that any informational requirements are

necessary and of practical utility, and to minimize the burden of any

information requirements?

IV. Public Workshops

EPA recognizes the complexities of the issues surrounding the PSD

permit application process. EPA seeks input from all interested members

of the public in formulating a reasonable, workable approach to the PSD

permit review procedures for sources potentially impacting non-Federal

Class I areas.

The preceding discussion has attempted to identify some major

issues in developing an approach to this rulemaking. However, these are

only preliminary ideas that do not necessarily exhaust all possible

issues and approaches regarding the PSD permit review process. EPA

wishes to engage in a public discussion about the PSD permit review

process and intends to hold public workshops that will provide

opportunity for interested members of the public to address the issues

raised in this notice and suggest additional approaches.

The first of these public workshops will be held in Phoenix,

Arizona and in Chicago, Illinois. A Federal Register notice announcing

specific dates, times, and locations of these workshops will be

published at least 30 days prior to the workshops. If there is public

interest, additional public workshops will be announced in the Federal

Register.

V. Additional Information

A. Public Docket

This rulemaking action involves promulgation or revision of PSD

regulations. Thus, the rulemaking is subject to the procedures in

section 307(d) of the CAA, 42 U.S.C. Sec. 7607(d), in accordance with

section 307(d)(1)(J). The public docket for this rulemaking action is

A-96-53. The docket is a file of information relied on by EPA in the

development of

[[Page 27166]]

regulations. All written comments and accompanying materials received

in response to this notice will be placed in the public docket. The

docket is available for public review and copying at EPA's Air Docket,

as indicated in the ADDRESSES section at the beginning of this

document.

B. Executive Order (EO) 12866

Section 3(f) of EO 12866 defines ``significant regulatory action''

for purposes of centralized regulatory review by the Office of

Management and Budget (OMB) to mean any regulatory action that is

likely to result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more or

adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local or tribal governments or communities;

(2) Create a serious inconsistency or otherwise interfere with an

action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlements, grants,

user fees, or loan programs or the rights and obligations of recipients

thereof; or

(4) Raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

this Executive Order.

A draft of this ANPR and associated materials were reviewed by OMB

prior to publication. Information related to OMB's review of this ANPR

has been placed in the public docket referenced at the beginning of

this notice, including: (1) Materials provided to OMB in conjunction

with OMB's review of this ANPR; and (2) Materials that identify

substantive changes made between the submittal of a draft ANPR to OMB

and this notice, and that identify the changes that were made at the

suggestion or recommendation of OMB.

C. Regulatory Flexibility Act as Amended by the Small Business

Regulatory Enforcement Fairness Act of 1996

Under the RFA, 5 U.S.C. 601-612, EPA must prepare an initial

Regulatory Flexibility Analyses to accompany notices of proposed

rulemaking that assess the impact of proposed rules on small entities.

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

enterprises and government entities with jurisdiction over populations

of less than 50,000. However, the requirement of preparing such

analyses is inapplicable if the Administrator certifies that the rule

will not, if promulgated, have a significant economic impact on a

substantial number of small entities. 5 U.S.C. 605(b).

The regulatory revisions that are being considered in this

rulemaking initiative would affect the PSD permit review procedures for

new major stationary sources and major modifications to existing major

stationary sources. This regulatory initiative is also intended to

clarify and improve the existing rules. It is unclear at this stage of

the rulemaking process whether this rulemaking initiative may have a

significant adverse impact on a substantial number of small entities.

Nevertheless, EPA seeks public comment on steps EPA can take in this

rulemaking to facilitate public participation by any small entities

that may be adversely affected and to mitigate any such impacts.

D. Paperwork Reduction Act

EPA requests public comments on steps EPA can take in this

rulemaking initiative to ensure that any informational requirements are

necessary and of practical utility, and to minimize the burden of any

information requirements.

Dated: May 8, 1997.

Mary D. Nichols,

Assistant Administrator for Air and Radiation.

[FR Doc. 97-12918 Filed 5-15-97; 8:45 am]

BILLING CODE 6560-50-P