# Operating Permit Programs and Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NSR); Flexible Air Permitting Rule > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3AE7-17418 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** September 12, 2007 - **Citation:** 72 FR 52206 ## Text ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 51, 52, 70, and 71 [EPA-HQ-OAR-2004-0087, FRL-8462-9] RIN 2060-AM45 Operating Permit Programs and Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NSR); Flexible Air Permitting Rule AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: We are proposing to revise the regulations governing State and Federal operating permit programs required by title V of the Clean Air Act (CAA or the Act) and the New Source Review (NSR) programs required by parts C and D of title I of the Act. These proposed actions are based, in large part, on the lessons learned through EPA's pilot experience in which EPA worked closely with States and certain sources subject to title V permitting requirements to develop flexible air permitting approaches that provide greater operational flexibility and, at the same time, ensure environmental protection and compliance with applicable laws. In pilot permits, increased flexibility is primarily achieved through advance approvals under NSR and alternative operating scenarios (AOSs). The proposed revisions clarify how this can often be done in the existing regulatory framework of the operating permit programs. The proposed revisions also add major NSR requirements for Green Groups, which allow future changes to occur within a group of emissions activities, provided that they are ducted to a common air pollution control device which is determined to meet “best available control technology” (BACT) or “lowest achievable emission rate” (LAER), as applicable and that they are determined to comply with all relevant ambient requirements. DATES: Comments. Written comments must be received on or before November 13, 2007. Under the Paperwork Reduction Act, comments on the information collection provisions must be received by OMB on or before October 12, 2007. Public Hearing. If anyone contacts EPA requesting to speak at a public hearing by October 2, 2007, we will hold a public hearing approximately 30 days after publication in the Federal Register . Additional information about the hearing would be published in a subsequent Federal Register notice. ADDRESSES: Comments. Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2004-0087, by one of the following methods: • http://www.regulations.gov: Follow the on-line instructions for submitting comments. • E-mail: a-and-r-Docket@epa.gov. • Fax: (202) 566-9744. • Mail: Environmental Protection Agency, EPA Docket Center (EPA/DC), Air and Radiation Docket, Mail Code 2822T, 1200 Pennsylvania Avenue, NW., Washington, DC 20460. Please include two copies. In addition, please mail a copy of your comments on the information collection provisions to the Office of Management and Budget (OMB), Attn: Desk Officer for EPA, 725 17th St., NW., Washington, DC 20503. • Hand Delivery: EPA Docket Center, (Air Docket), U.S. Environmental Protection Agency, Room 3334, 1301 Constitution Ave., NW., Washington, DC. Such deliveries are only accepted during the Docket's normal hours of operation, and special arrangements should be made for deliveries of boxed information. Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-2004-0087. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at www.regulations.gov, including any personal information provided, unless the comment includes information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through www.regulations.gov or e-mail. The www.regulations.gov Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through www.regulations.gov, your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. For additional instructions on submitting comments, go to I C & D of the SUPPLEMENTARY INFORMATION section of this document. Docket: All documents in the docket are listed in the index at www.regulations.gov. Although listed in the index, some information is not publicly available, i.e., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically in www.regulations.gov or in hard copy at the EPA Docket Center (Air Docket), EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the Air Docket is (202) 566-1742. FOR FURTHER INFORMATION CONTACT: For issues concerning advance approvals and AOSs, contact Michael Trutna, Air Quality Policy Division (C504-01), U.S. Environmental Protection Agency, Research Triangle Park, NC 27711; telephone (919) 541-5345, fax number (919) 541-4028; or electronic mail at trutna.mike@epa.gov. For issues concerning ARMs and EPA's pilot permits, contact David Beck, Office of Policy, Economics, and Innovation, Innovative Pilots Division (C304-05), U.S. Environmental Protection Agency, Research Triangle Park, NC 27711; telephone (919) 541-5421, fax number (919) 541-2664; or electronic mail at beck.david@epa.gov. For issues relating to monitoring, recordkeeping, and reporting for flexible air permits, contact Barrett Parker, Sector Policies and Programs Division, Measurement Policy Group (D243-03), U.S. Environmental Protection Agency, Research Triangle Park, NC 27711; telephone 919-541-5635, fax number (919) 541-1039; or electronic mail at parker.barrett@epa.gov. For other part 70 issues, contact Juan Santiago, Operating Permits Group, Air Quality Policy Division (C504-05), U.S. Environmental Protection Agency, Research Triangle Park, NC 27711; telephone (919) 541-1084, fax number (919) 541-5509; or electronic mail at santiago.juan@epa.gov. For issues relating to Green Groups, contact Dave Painter, New Source Review Group, Air Quality Policy Division (C504-03), U.S. Environmental Protection Agency, Research Triangle Park, NC 27711; telephone (919) 541- 5515, fax number (919) 541-5509; or electronic mail at painter.david@epa.gov. To request a hearing or information pertaining to a hearing on this document, please contact Pam Long, Air Quality Policy Division, U.S. EPA, Office of Air Quality Planning and Standards (C504-03), Research Triangle Park, North Carolina 27711, telephone number (919) 541-0641, facsimile number (919) 541-5509; electronic mail e-mail address: long.pam@epa.gov. SUPPLEMENTARY INFORMATION: I. General Information A. What are the regulated entities? Entities potentially affected by these proposed actions are facilities currently required to obtain title V permits under State, local, tribal, or Federal operating permits programs, and State, local, and tribal governments that are authorized by EPA to issue such operating permits. Other entities potentially affected by this proposed action are facilities required to obtain major NSR permits under State, local, tribal, or Federal major NSR programs, and State, local, and tribal governments that issue such permits pursuant to approved part 51 major NSR programs. Potentially affected sources are found in a wide variety of industry groups. In particular, we believe based on our experience in implementing our flexible air permit pilot program that these groups will include, but are not limited to, the following: Industry group SIC a NAICS b Aerospace Manufacturing 372 336411, 336412, 332912, 336411, 335413. Automobile Manufacturing 371 336111, 336112, 336712, 336211, 336992, 336322, 336312, 33633, 33634, 33635, 336399, 336212, 336213. Industrial Organic Chemicals 286 325191, 32511, 325132, 325192, 225188, 325193, 32512, 325199. Chemical Processes 281 325181, 325182, 325188, 32512, 325131, 325998, 331311. Converted Paper and Paperboard Products 267 322221, 322222, 322223, 322224, 322226, 322231, 326111, 326112, 322299, 322291, 322232, 322233, 322211. Magnetic Tape Manufacturing 369 334613. Petroleum Refining 291 32411. Other Coating Operations 226, 229, 251, 252, 253, 254, 267, 358, 363 313311, 313312, 314992, 33132, 337122, 337121, 337124, 337215, 337129, 37125, 337211, 337214, 337127, 322221, 322222, 322226, 335221, 335222, 335224, 335228, 333312, 333415, 333319. Paper Mills 262 322121, 322122. Pharmaceutical Manufacturing 283 325411, 325412, 325413, 325414. Printing and Publishing 275 323114, 323110, 323111, 323113, 323112, 323115, 323119. Pulp and Paper Mills 262 32211, 322121, 322122, 32213. Semi-conductors 367 334413. Specialty Chemical Batch Processes 282, 283, 284, 285, 286, 287, 289, 386 3251, 3252, 3253, 3254, 3255, 3256, 3259, except 325131 and 325181. a Standard Industrial Classification b North American Industry Classification System. B. What should I consider as I prepare my comments for EPA? 1. Submitting CBI Do not submit this information to EPA through www.regulations.gov or e-mail. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. 2. Suggestions for Preparing Your Comments When submitting comments, remember to: • Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number). • Follow directions. The Agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number. • Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes. • Describe any assumptions and provide any technical information and/or data that you used. • If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced. • Provide specific examples to illustrate your concerns, and suggest alternatives. • Explain your views as clearly as possible, avoiding the use of profanity or personal threats. • Make sure to submit your comments by the comment period deadline identified. C. Where Can I Get a Copy of This Document and Other Related Information? In addition to being available in the docket, an electronic copy of this proposal will also be available on the WWW. Following signature by the EPA Administrator, a copy of this notice will be posted in the regulations and standards section of our NSR home page located at http://www.epa.gov/nsr. D. How Can I Find Information About a Possible Hearing? Persons interested in presenting oral testimony should contact Pam Long, Air Quality Policy Division (C504-03), U.S. EPA, Research Triangle Park, NC 27711, telephone number (919) 541-0641 or e-mail long.pam@epa.gov at least 2 days in advance of the public hearing. Persons interested in attending the public hearing should also contact Pam Long to verify the time, date, and location of the hearing. The public hearing will provide interested parties the opportunity to present data, views, or arguments concerning these proposed rules. E. How is this preamble organized? The information presented in this preamble is organized as follows: I. General Information A. What are the regulated entities? B. What should I consider as I prepare my comments for EPA? C. Where can I get a copy of this document and other related information? D. How can I find information about a possible hearing? E. How is this preamble organized? II. What is a flexible air permit and the background related to this action? A. What is a flexible air permit? B. What is the statutory background? C. What is the regulatory background relating to the proposed revisions to parts 70 and 71? D. What is the regulatory background relating to the proposed revisions to parts 51 and 52? III. What is the purpose of this action? IV. What experience did we gain from our 12-year pilot permit experience? A. What were the benefits of the pilot permits? B. What were the conclusions of the sources, permitting authorities, and EPA about flexible permits? C. What are EPA's recommendations for public participation in flexible permitting? V. What are the key elements of this proposal? A. What are the key elements of proposed revisions to parts 70 and 71? B. What are the key elements of proposed revisions to parts 51 and 52? VI. What changes are we are proposing to parts 70 and 71? A. What is our proposed definition of an AOS, and how does it provide a source operational flexibility? B. What information is necessary in a title V permit application to seek approval of an AOS? C. What terms and conditions must be included in the title V permit for approved AOSs? D. What are some examples of how AOSs and advance approvals can be used to provide operational flexibility? E. What is the process for adding or revising advance approvals, AOSs, and ARMs in issued permits? F. How do the proposed AOS provisions differ between parts 70 and 71? VII. What changes are we proposing in parts 51 and 52? A. What are the benefits of Green Groups? B. What is a Green Group? C. How is a Green Group designation incorporated into a title V permit? D. What is the legal rationale for Green Groups? E. What are the conforming regulatory changes we must make to implement the Green Group concept? F. What is an example of how a Green Group might be used in combination with a title V permit? VIII. What is the effect of these proposed revisions? A. If these proposed revisions are finalized, what are the implications for approved part 70 programs? B. What are the implications for NSR programs? IX. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review B. Paperwork Reduction Act C. Regulatory Flexibility Act (RFA) D. Unfunded Mandates Reform Act E. Executive Order 13132: Federalism F. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments G. Executive Order 13045: Protection of Children From Environmental Health and Safety Risks H. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use I. National Technology Transfer and Advancement Act II. What is a flexible air permit and the background related to this action? In this section, we first explain what is a flexible air permit. We then provide an overview of the relevant statutory provisions and describe the regulatory and other actions taken over the course of the last decade that are relevant to this proposal. A. What is a flexible air permit? A flexible air permit is a title V permit that facilitates flexible, market-responsive operations at a source through the use of one or more permitting approaches, while ensuring equal or greater environmental protection as achieved by conventional permits. 1 In particular, flexible permitting approaches allow the source, under protection of the permit shield, to make certain types of physical and operational changes without further review or approval by the permitting authority. One approach includes, for example, obtaining advance approval for anticipated changes (such as through a minor NSR action), incorporating the advance approval into the title V permit, and adding terms in the title V permit as necessary to assure compliance with all other applicable requirements implicated by the anticipated changes. Another approach is to establish one or more alternative operating scenarios (AOSs) in a title V permit to allow existing emissions units the flexibility to operate in varying ways and/or at varying rates of production, where such variations would be subject to different applicable requirements but would not require prior authorization (i.e., advance approval). 1 We first addressed the concept of a flexibile air permit in May 1991. See 56 FR 21712, 21748 (May 10, 1991). For more than a decade, we participated in a pilot flexible air permitting program with certain title V sources and permitting authorities through which we tested and evaluated various permitting approaches that afford operational flexibility. The lessons learned through the pilot program, in part, served as the basis for our adoption of the plantwide applicability limitation (PAL) provisions of the 2002 NSR Improvement rule. They also serve as a basis for this rule, where we seek to build upon existing regulatory provisions that afford operational flexibility. We believe that the flexible permitting approaches in this proposed rulemaking provide a path forward for sources to more effectively and proactively manage their title V and NSR permitting obligations, while ensuring environmental protection. B. What is the statutory background? There are two aspects of the CAA that are relevant to this proposed rule: title V and parts C and D of title I of the Act. In 1990, Congress promulgated title V and established the operating permit program. That program requires certain stationary sources to obtain operating permits as a mechanism for gathering all applicable requirements of the Act for each affected source into one comprehensive document. 2 See H.R. Conference Report No. 101-952, reprinted in U.S.C.C.A.N. 3867, 3877 (1990). 2 “Applicable requirements” is a term that is used in title V. The EPA has defined the term to include, among other things, State implementation plan (SIP) rules, the terms and conditions of preconstruction permits issued under a SIP-approved NSR program, and requirements pursuant to the new source performance standards (NSPS), national emission standards for hazardous air pollutants (NESHAP), and Acid Rain Programs. See 40 CFR 70.2. One of the key purposes of the title V operating permit program is to enable the source, the State or local permitting authority, EPA, and the public to gain a better understanding of the requirements of the Act to which the source is subject. The ability to assess and achieve compliance with the law is improved by virtue of having one comprehensive operating permit containing all applicable requirements for a source. The title V permit program does not impose new substantive air quality control requirements. It does, however, require that fees be imposed on sources and that certain procedural measures be followed, especially with respect to determining compliance with applicable requirements. See, e.g., CAA sections 502(b)(3), 503(b)(2), and 504(a). The Act affirms that State and local governments have primary responsibility for air quality. See CAA section 101(a)(3). Title V vests primary responsibility for issuing operating permits with State and local governments. See CAA section 502. Congress required EPA to promulgate regulations establishing the minimum elements of a title V operating permits program. See CAA section 502(b) (articulating ten minimum elements for State programs). In establishing such minimum elements, Congress directed that EPA develop “[a]dequate, streamlined, and reasonable procedures” for processing and reviewing permit applications and for the expeditious review of permit actions. See CAA section 502(b)(6). As explained below, EPA promulgated regulations establishing the minimum requirements for a State operating permit program in 1992. These regulations are codified at 40 CFR part 70 and are often referenced as “part 70.” In addition to requiring EPA to establish the minimum elements for the operating permits program, Congress required each State to develop and submit to EPA for approval an operating permit program that meets the requirements of the Act and part 70. See CAA section 502(d)(1). In areas that do not have an approved State, local, or tribal title V program, EPA administers the operating permit program as a Federal program pursuant to regulations set out in 40 CFR part 71. See CAA section 502(d)(3). Title V requires that each operating permit contain terms sufficient to assure compliance with all applicable air requirements. See CAA section 504(a). The other parts of the Act relevant to this rule include part C, entitled “Prevention of Significant Deterioration of Air Quality” (typically referred to as “PSD”), and part D, entitled “Plan Requirements for Nonattainment Areas” (typically referred to as “nonattainment major NSR”), of title I of the Act. See CAA sections 160 through 169B (part C) and 171 through 193 (part D). These parts together are commonly referred to as the major NSR program. This program is a preconstruction review and permitting program applicable to new or modified major stationary sources of air pollutants regulated under the Act. The implementing regulations for the program are contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and part 51, appendix S. The PSD provisions apply to new major sources and to major modifications at existing major sources for pollutants where the area in which the source is located is in attainment or unclassifiable with the national ambient air quality standards (NAAQS). A source that is subject to PSD must install BACT and perform an air quality analysis and an additional impacts analysis, and there must be an opportunity for public participation. See CAA section 165(a). The BACT is an emissions limitation that is based on the maximum degree of control that can be achieved, as determined on a case-by-case basis for each source considering energy, environmental, and economic impacts. See CAA section 169(3); 40 CFR 51.166(b)(12), 52.21(b)(12), and 51.165(a)(1)(xl). The source's air quality analysis must demonstrate that the source will not cause or contribute to a violation of any NAAQS or any maximum allowable increase in ambient concentration either for a Class I area or as established under the PSD program (typically referred to as “PSD increments”). See CAA section 165(a)(3). Nonattainment major NSR applies to new major sources and to major modifications at existing major sources for pollutants where the area in which the source is located is not in attainment with the NAAQS. 3 Nonattainment major NSR requires the source to comply with lowest achievable emission rate (“LAER”) and to obtain sufficient emissions offsets, and there must be an opportunity for public involvement. See CAA section 173(a); 40 CFR 51.161. The LAER is determined for each source to reflect the more stringent of the following: (1) The most stringent emissions limitation that is contained in any State implementation plan (SIP) for that type of source (if achievable for the proposed source), or (2) the most stringent emissions limitation that is achieved in practice for that type of source. See CAA section 171(3); 40 CFR 51.165(a)(1)(xiii). 4 3 “Major stationary source” is defined at 40 CFR 51.165(a)(1)(iv), 51.166(b)(1), and 52.21(b)(1), and “major modification” is defined at 40 CFR 51.165(a)(1)(v), 51.166(b)(2), and 52.21(b)(2). 4 This is a section 307(d) rulemaking. See CAA section 307(d)(1)(J) (addressing regulations under part C of Subchapter I) and 307(d)(1)(V) (authorizing the Administrator to designate any action a 307(d) rulemaking). In addition to a major NSR program, States are required to have “minor” NSR programs, which apply to new and modified sources that do not meet the emissions thresholds for major NSR. See section 110(a)(2)(C) of the Act. The minor NSR program is part of a State's implementation plan and is designed to ensure that the construction or modification of an affected source does not violate any portion of the SIP and does not interfere with the attainment of the NAAQS or cause the exceedance of any applicable PSD increments. C. What is the regulatory background relating to the proposed revisions to parts 70 and 71? This proposed rule addresses certain permitting mechanisms for providing operational flexibility. The concept of operational flexibility is not a new one. In July 1992, under the authority of title V of the Act, we finalized the part 70 State operating permit program regulations. 5 See 57 FR 32250 (July 21, 1992); 40 CFR part 70. Those regulations include operational flexibility provisions, one of which is the AOS provision found at 40 CFR 70.6(a)(9). It is this provision that is the primary subject of these proposed revisions. 6 This section 40 CFR 70.6(a)(9) generally provides that any permit issued under part 70 must include terms and conditions for reasonably anticipated operating scenarios approved by the permitting authority. EPA promulgated 40 CFR 70.6(a)(9) pursuant to the authority of section 502(b)(6) of the CAA, which directs that operating permit programs include “[a]dequate, streamlined, and reasonable procedures” for processing and reviewing permit applications and for the expeditious review of permit actions. 5 In the 1990's, we proposed certain clarifications and modifications to the part 70 regulations, none of which were ever finalized. See generally 60 FR 45529 (Aug. 31, 1995), 59 FR 44460 (Aug. 29, 1994). In those proposals, among other things, we discussed the concept of “advance NSR” in relation to AOSs, and proposed a definition for “alternative operating scenarios.” 6 The EPA included other operational flexibility provisions in the final part 70 regulations, including 40 CFR 70.4(b)(12), (b)(14) and (b)(15), which implement section 502(b)(10) of the Act. This proposed rule does not address these provisions. In the final part 70 rule, we emphasized the importance of 40 CFR 70.6(a)(9), noting that a permit that contains approved AOSs “will be a more complete representation of the operation at the permitted facility.” See 57 FR 32276. We also explained that once a flexible air permit with approved AOSs is issued, the need for additional permit modifications will be substantially reduced since the permit will already contain appropriate terms and conditions to accommodate the approved operating scenarios. In the final part 70 rule, we did not place any restrictions on the types of operations that could qualify as a reasonably anticipated operating scenario. 7 7 The Federal operating permit program at part 71 addresses reasonably anticipated operating scenarios in the same fashion as part 70. See 40 CFR 71.6(a)(9). These proposed revisions affect both parts 70 and 71 and the revisions that we propose to each part are virtually identical. For ease of reference, this preamble discussion refers to the part 70 provisions. The discussion, of course, applies equally to the part 71 program revisions proposed. Section numbers given for the part 70 rules correspond directly to the analogous sections in part 71. The term “title V permit” refers to permits issued under either part 70 or part 71. Shortly after we finalized the part 70 State operating permit program, we initiated a pilot title V permit program with interested States, and our program continues to the present. See section IV of this preamble for more discussion. Companies participating in the pilot program sought to reduce the cost, time, and delays associated with a permit revision for each operational change at a facility. We and the States sought to increase the sources' operational flexibility, while assuring compliance with applicable requirements, ensuring environmental protection, and facilitating P2. These pilots typically allowed for both changes to operations of existing emissions units and the addition of entirely new emissions units, provided that the changes were sufficiently well described in the permit application so that the permitting authority could confirm that all applicable requirements were identified and that the permit contained terms and conditions assuring compliance with all applicable requirements. 8 8 In implementing the pilot projects, EPA and other permitting authorities sometimes imposed certain constraints in the permits for advance approvals and AOSs beyond those expressly contained in applicable requirements or part 70. These additional constraints varied and were designed to provide permitting authorities the opportunity to gain experience with different flexible permitting approaches. Some of these constraints were anticipated to be removed at the time of permit renewal in the next version of the permit. To evaluate the flexible pilot permits program, we conducted a thorough review of six of the pilot permits for which at the time there was significant implementation experience. 9 We reviewed on-site records to track utilization of the flexible permit provisions, assessed how well the permits worked, evaluated total emissions reductions achieved, and analyzed the economic benefits associated with the permits. Overall, we found that significant environmental benefits had occurred for each of the permits reviewed. At the time of the evaluation, each of the sources had achieved 25- to 80-percent reductions in actual plantwide emissions or emissions per unit of production. We made a series of findings based on our evaluation of the permits. See “Evaluation of the Implementation Experience with Innovative Air Permits” and section IV of this preamble, which summarizes the findings of this study. 10 9 See “Evaluation of the Implementation Experience with Innovative Air Permits.” A copy of this report is located in the docket for this rulemaking, or can be accessed at http://www.epa.gov/ttn/oarpg/t5/memoranda/iap_eier.pdf. 10 In August 2000, based in large part on the experience we gained through the pilot permit program, we issued a draft guidance document called White Paper Number 3, on which we solicited comment. See White Paper Number 3, 64 FR 49803 (Aug. 15, 2000). That draft guidance addressed various flexible permitting approaches, including the use of the reasonably anticipated AOS provision of 40 CFR 70.6(a)(9), Clean Buildings, and PALs. We received comments on the proposed rules and draft guidance and, in fashioning this proposal, considered those comments that addressed advance approval and AOSs as contained in 40 CFR 70.6(a)(9). As explained further below, we propose a definition of “alternative operating scenario” and certain other revisions to the part 70 regulations. We also propose revisions to parts 51 and 52 that provide for Green Groups. D. What is the regulatory background relating to the proposed revisions to parts 51 and 52? Based on our pilot permit evaluation and our 1996 proposed modifications to the major NSR program, in December 2002, we finalized the NSR Improvement rule. In that rule, we promulgated regulations for PALs in response to comments received on draft White Paper Number 3. As explained in the preamble to the December 2002 final rule, a PAL is an alternative approach for determining NSR applicability on a plantwide basis. Using PALs will allow sources “to respond rapidly to market changes,” and will “benefit the public and the environment.” See 67 FR 80206. Specifically, sources with PALs can make changes without triggering the major NSR preconstruction permitting requirements, provided such changes remain below the limit established in their PAL and do not otherwise violate the requirements of the PAL. A PAL is an important technique that is oftentimes used in tandem with flexible permitting approaches such as advance approvals and AOSs as described more fully in this proposal. The major NSR program applies to “major stationary sources,” which include sources whose emissions exceed certain thresholds established in the statute, and to “major modifications” at those sources, which are modifications that exceed certain significance levels established in EPA's regulations. Under minor NSR, an owner or operator applies for a permit to construct or modify a facility, building, or other emissions unit, where the new construction or modification does not meet the emissions thresholds for major NSR. If the proposed construction or modification is approved, the permitting authority issues a permit that contains emissions limits and other appropriate terms and conditions as necessary to protect the NAAQS and the increments and to assure consistency with the SIP. Through our pilot experience, we found that State minor NSR requirements are among the most important in designing a flexible air permit for sources making frequent physical and operational changes because, absent an up-front authorization for these changes, an individual review and approval by the permitting authority is typically required before the changes can be made. Any changes authorized under minor NSR must be incorporated into the title V permit along with permit terms as necessary to assure compliance with all applicable requirements (for example, a MACT standard, which would be applicable to the source in addition to the ones addressed in the advance approval issued under minor NSR). The result is that the changes can be implemented, under protection of the permit shield, without any further review or approval by the permitting authority. In some cases, one or more AOSs may be used to complement an advance approval, for example where the source anticipates varying operation of the changed existing emissions unit in a manner that would implicate a set of applicable requirements different from those of the minor NSR advance approval, or where a different control approach would not be effective until and unless a particular change would be made to an existing emissions unit. Given the provisions of their minor NSR programs, most of the States in which EPA supported flexible permit pilots (“pilot States”) believed that they could issue construction approval for a wide spectrum of changes using certain boundary conditions established up front in the minor NSR permit. The actual conditions needed to accomplish this varied depending upon the requirements of the different State minor NSR programs. A number of techniques were successfully used in pilot permits to authorize a category of changes (i.e., a range of possible types of changes, such as “any of various physical changes to the rollers, drive mechanism, and other components of the coating section within a coating line”) under minor NSR, including application of one or more plantwide emissions caps, designation of an entire process building or related activities as the “emissions unit” for purposes of minor NSR, and designation of an existing state-of-the-art emissions capture and control system as fulfilling State control technology requirements (where they are applicable) for authorized changes occurring over the 5-year term of the title V permit. Pilot States, as part of granting advance approvals under their existing minor NSR programs, frequently required sources to send a notice to the permitting authority contemporaneous with the operation of any entirely new emissions unit relying upon the advance approval. A common technique for achieving advance approval under minor NSR found in the pilots was the presence of one or more plantwide emissions caps. These caps serve to limit the maximum aggregate emissions associated with the anticipated changes so as to protect relevant ambient standards and increments and to facilitate an advance approval of a wide spectrum of changes under minor NSR. They also serve to limit the potential to emit (PTE) of the source below certain applicability thresholds in order to prevent implication of otherwise potentially applicable requirements (e.g., major NSR) or to function as a PAL (in the case of an existing major stationary source). III. What is the purpose of this action? The Agency has learned a great deal over the past decade through its pilot permit program. In light of that experience, the recent NSR Improvement rule promulgated in December 2002, and the comments we received on the proposed revisions to part 70 and draft White Paper Number 3, we propose revising the part 70 and 71 regulations and part 51 and 52 regulations. As explained further below, the proposed revisions to the operating permit programs of parts 70 and 71 add a definition and clarify requirements for “alternative operating scenario” (or “AOS”) and add a definition for “approved replicable methodology” (or “ARM”). The proposed revisions to the major NSR program add a definition and codify requirements for Green Groups. The primary purpose of these revisions to parts 70 and 71 is to build upon the existing regulatory framework and ensure that the flexible permitting approaches with which we have experience are more readily and widely used. We recognize that many States' minor NSR and part 70 programs may already provide for the flexible permitting approaches proposed and that such States are currently able to implement these approaches. Because of the diversity of existing State minor NSR programs and our pilot experience indicating the ability of many programs to approve categories of future changes in advance of making those changes, we are not proposing any revisions to the rules governing State minor NSR programs at 40 CFR 51.160 through 51.164. By undertaking the part 70 rulemaking, it is not our intention to preclude States from continuing to develop and use flexible permit approaches, where their current regulatory structure provides authority to do so. This rulemaking is instead intended to encourage the use of advance approvals where available and appropriate, and to eliminate any uncertainty that may exist with respect to AOSs and to provide a clear regulatory pathway governing flexible air permit development in that area by clarifying our 1992 part 70 regulations. 11 11 Note that other approaches to AOSs and advance approval may also be acceptable, although they may not provide as much flexibility as the approaches proposed. For example, some States include in a title V permit a type of conditional approval under which a source cannot construct or operate otherwise approved changes until a minor NSR approval is obtained for them. Essentially, this approach creates in a title V permit a structure that is a precursor to an AOS or an advance approval. Once the minor NSR permit is issued, the source can construct and operate the changes under the conditional approval, but a title V permit revision is needed to incorporate the now-available minor NSR terms and to award the permit shield (where available from the permitting authority). Where an AOS is involved, this incorporation is also needed to complete the AOS consistent with 40 CFR 70.6(a)(9). Our pilot permit experience suggests that in many instances changes subject to minor NSR can be approved in advance, although the ability for a State to provide such approvals will vary depending on the actual provisions of individual State rules. As a result, where advance approval of changes subject to minor NSR is available, we encourage its incorporation into the title V permit after or concurrent with obtaining the necessary minor NSR approvals in order to provide a permitting strategy with greater operational flexibility, certainty, and permitting efficiency than does a conditional approval approach. The proposed revisions to parts 51 and 52 affecting major NSR programs will increase options for flexible permits under that program. Namely, the proposed provisions for Green Groups will offer operational flexibility options for a defined section of a plant. This option would augment the plantwide strategy previously promulgated in the NSR Improvement rule (i.e., PALs). The proposed revisions would modify the major NSR regulations in a limited way. Consistent with the current NSR requirements, we propose to clarify that the definition of emissions unit would allow a number of emission activities, meeting certain criteria, to be treated as a single emissions unit (i.e., a “Green Group”). We are proposing to change the current NSR requirements to provide expressly for Green Groups so as to authorize in a major NSR permit that emissions increases and changes within such a group can occur over a 10-year period, provided the increases and changes are authorized in advance through major NSR and the emissions activities associated with the Green Group are controlled to the level determined to be BACT/LAER. Also, the requirements of 40 CFR 52.21(j)(4) and 51.166(j)(4) requiring reevaluation of BACT for phased construction projects and of 40 CFR 52.21(r)(2) requiring continuous construction to commence within 18 months would not apply to NSR permits involving Green Groups. We believe that these proposed revisions will increase operational flexibility, while ensuring environmental protection and compliance with applicable requirements. Moreover, based on our pilot experience, we anticipate that these revisions will promote improved environmental performance, although we recognize that the nature of the improvements will depend on the numbers and types of sources that opt to use the flexible permitting approaches described in this document. IV. What experience did we gain from the 14-year pilot permit program? This section summarizes the benefits of the pilot permits; includes an overview of the sources', permitting authorities', and our conclusions concerning the effectiveness of the pilot permits; and presents our recommendations regarding public participation in flexible permitting. Through the pilot permit program, 12 which began in 1993, we sponsored various projects, including projects undertaken through the Agency's “Pollution Prevention in Permitting Program” (P4). The pilot program generally involved the issuance of flexible air permits designed to accommodate operational flexibility. 12 Sources at the following locations participated in our pilot permit program: (1) 3M (St. Paul, MN); (2) Intel (Aloha, OR); (3) Lasco Bathware (Yelm, WA); (4) Imation (Weatherford, OK); (5) Cytec (Connecticut); (6) DaimlerChrysler (Newark, DE); (7) Merck (Elkton, VA); (8) Merck (Barceloneta, PR); (9) Saturn (Spring Hill, TN); (10) BMW (Spartanburg, SC); (11) Eli Lilly (West Lafayette, IN); (12) 3M (Nevada, MO); and (13) Imation (Camarillo, CA). The pilot permits facilitated operational flexibility by first obtaining advance approval under NSR. Frequently the authorizations involved changes that were to occur under a PAL or other facility-wide cap on emissions which, once approved by the relevant permitting authority, served both to assure that major NSR would not be applicable to changes occurring under the cap and to assure that ambient standards would be protected consistent with the requirements of minor NSR. 13 These caps were then incorporated into the title V permit with appropriate permit terms and conditions. In most cases, once these caps were incorporated into a title V permit, sources did not need to seek additional approvals from the title V permitting authority prior to implementing the changes authorized under the caps. As necessary, the title V permit would also contain additional terms and conditions needed to assure compliance with any other applicable requirements applying to such changes. 13 The VOC emissions caps used in the pilots were determined to be adequate for purposes of safeguarding the ozone NAAQS, but for other pollutants (e.g., air toxics) States sometimes required a replicable modeling procedure to screen the impacts of individual emissions increases relative to acceptable ambient toxics levels. Here an ambient dispersion model, complete with implementation assumptions, is approved into the minor NSR permit to evaluate any new pollutant of concern or increased existing pollutant emissions. Failure of a particular change to meet the screening levels triggered the need for case-by-case review of that change from the permitting authority. As noted above, following issuance of the pilot permits, we conducted an in-depth review of six of the permits. 14 In selecting the permits to review, we focused our evaluation on those pilots with sufficient implementation experience to provide a reasonable historical record of performance, and we continue to believe that these pilots represent a sufficiently diverse reference point from which to judge the effectiveness of flexible air permits over a broad range of sources. Those reviews involved: (1) Detailed analyses of the sources' and permitting authorities' experiences developing and implementing the pilot permits; (2) a thorough review of information available in the public record at the permitting authority; (3) discussions with source personnel; (4) site visits to the source and meetings with permitting authorities; and (5) independent verification of compliance status and data collection and management techniques, including recordkeeping and related requirements. 14 The six permits that we analyzed were: (1) Intel (Aloha, OR); (2) 3M (St. Paul, MN); (3) Lasco Bathware (Yelm, WA); (4) DaimlerChrysler (Newark, DE); (5) Saturn (Spring Hill, TN); and (6) Imation (Weatherford, OK). Our analyses revealed several benefits of the flexible permitting approaches used in the pilots, and those benefits are summarized briefly below. We invite comment on any similar or different experiences others have had in piloting flexible air permits, particularly where these experiences are relevant to this rulemaking. A. What were the benefits of the pilot permits? This section provides an overview of the environmental, informational, economic, and administrative benefits of the flexible pilot permits. For additional information on these and other benefits of the pilot program, please refer to the “Evaluation of the Implementation Experience with Innovative Air Permits,” which documents all of our findings concerning the six pilot permits that we evaluated. 15 15 Among other things, the report confirmed that the flexible permits are enforceable in a practical manner by EPA and permitting authorities. See Report at pages 5, 20. See footnote 9 of this preamble for information on how you can obtain the report. 1. Environmental Improvements Achieved Using Flexible Permits In our evaluation, we documented several environmental performance benefits of the flexible pilot permits, including that the permits facilitated emissions reductions and increased P2 efforts. In particular, as discussed further below, the emissions cap framework in the flexible permits enabled significant reductions in actual plantwide emissions and/or emissions per unit of production. For example, of the five sources that had operated under their flexible permits for 3 or more years, all five achieved 30-to 80-percent reductions in actual plantwide emissions and/or emissions per unit of production. Actual emissions from the sixth source were reduced by 27 percent in the first year of operation under its flexible permit, but it is difficult to draw conclusions based on a single year of data. One company, using P2, lowered its actual volatile organic compound (VOC) emissions by 70% (from 190 tons per year (tpy) to 56 tpy), while increasing production. This allowed the facility to commit to keeping its VOC emissions below the major source threshold (i.e., become a “synthetic minor” source) so that it was no longer subject to major NSR. Another company lowered its actual VOC emissions from 1,400 tpy to less than 800 tpy, primarily through P2 associated with vehicle coatings and plant solvent usage. We attribute the environmental performance improvement benefits of the flexible permits to several factors. First, several companies reported that the emissions caps had a “focusing effect,” drawing company personnel(s attention on how to manage most effectively all of the activities within the plant, even those not subject to regulation, in an effort to minimize total plantwide emissions. 16 An emissions cap also creates incentives for companies to pursue additional emissions reduction opportunities to increase the margin of compliance, which is the difference between the level of the emissions cap and the source's actual total plantwide emissions. Larger compliance margins typically reduce the risk of noncompliance with an emissions cap and create room under the cap to accommodate future emissions increases related to production or other operational changes. The cap on emissions from the plant, which is set during permitting at a level judged to be environmentally protective, ensures that such future emissions increases together with existing emissions will not exceed this protective level. To obtain a sufficient margin of compliance with these caps, sources frequently voluntarily controlled emissions on grandfathered units, which are units that would otherwise not be subject to control, and increased the stringency of control on regulated units. 16 See the pilot permit report, “Evaluation of the Implementation Experience with Innovative Air Permits,” page 22. Additionally, we found that the use of advance approvals and AOSs improved operational efficiency at the plants because companies knew in advance what changes were authorized, making resource allocation more efficient and accommodating the typically incremental, iterative nature of industrial process improvements. We also found that P2-related projects became more attractive to the companies when advance approved because such projects could be undertaken without the delay and uncertainty of future case-by-case approvals. In addition, P2-related projects reduced emissions and enabled sources to comply more easily with emissions limits such as plantwide emissions caps. 2. Informational Benefits Achieved Using Flexible Permits We have consistently maintained that including advance approvals and AOSs in a title V permit ensures that the permit presents a complete representation of the operations of the permitted facility. See 57 FR 32276; July 21, 1992. By requiring information concerning flexible permits as part of the permit application, EPA and the permitting authorities are better able to assess, in aggregate, all proposed operations and, more significantly, to determine all relevant applicable requirements and to include in the draft permit terms and conditions for each approved scenario to assure compliance with those applicable requirements and the requirements of part 70. By comparison, conventional permitting approaches provide for a more narrow, case-by-case view of facility modifications, soliciting comment only on the specific change proposed and requiring individual permitting actions in response to each request by the permittee for a change in the permit. Our pilot experience confirmed the significant value of presenting a comprehensive picture of a source(s operations over the term of the title V permit. Specifically, we found that with proposed flexible permits involving changes under a PAL or other emissions cap, permitting authorities were better able to understand the scope of planned changes at the source and the maximum, cumulative environmental effects of those changes. In addition, the flexible permit applications provided increased information to permitting authorities and the public in areas such as plantwide emissions performance and P2 activities, as compared to information typically available under conventional permit approaches. Likewise, permitting authorities indicated that on balance, flexible air permits enhanced the availability of information to the public during permit implementation. Moreover, through the pilots, we found that early public outreach and involvement can be very useful in situations where new permitting techniques have not previously been used in a particular jurisdiction. We encourage permitting authorities to consider early outreach and public involvement when implementing such permitting techniques until the techniques become more widely used and public familiarity with them increases, recognizing that other factors (e.g., permit complexity) should factor into the permitting authority(s consideration of supplemental public outreach efforts. Our evaluation of the six pilot permits also revealed the importance of reporting related to plantwide applicability limits. The type of reporting required in several of the flexible permits is now codified in the PAL provisions of the December 2002 NSR Improvement rule. 3. Economic Benefits Achieved Using Flexible Permits Participating companies in the pilot program reported that a flexible air permit significantly reduces the uncertainty and transaction costs associated with the title V permitting process because the source obtains approval of the changes it reasonably anticipates implementing during the 5-year term of the permit at one time. Based on our evaluation of the six pilot permits, we found that the increased certainty and reduced transaction costs improved participating companies' ability to compete effectively in the market and enabled them to retain, and in some cases, create jobs. For example, one company reported that its pilot permit allowed it to remain highly responsive to the marketplace and thereby avoid either lost sales and/or permanent loss of market share. An automotive company indicated that its flexible permit was a principal factor in the plant's selection to manufacture an engine model to be used in the company's global vehicle assembly operations, leading to the creation of 700 jobs. The permit helped the plant secure the engine contract because it enabled the plant to reduce the project time line for production of the new engine to 24 months and to accommodate future changes with minimal delay. 17 17 See “EPA Flexible Permit Implementation Review: Saturn Permit Review Report,” pages 9 and 34, which is available at http://www.epa.gov/ttn/oarpg/t5/memoranda/iap_sprr.pdf. Several companies also indicated that obtaining authorization of reasonably anticipated changes improved the predictability of change implementation time frames for project planning and avoided what can be substantial opportunity costs. For example, one company reported that its flexible permit likely saved hundreds of business days associated with making operation and process changes to ramp up production for new products, respond to market demands, and optimize production processes. Industry estimates of the opportunity costs of production downtime and time delays run as high as millions of dollars in just a few days due to lost sales and other factors. 18 18 Findings are discussed in more detail in the “Evaluation of Implementation Experiences with Innovative Air Permits” report, under Finding 8. Notwithstanding that the implementation of flexible air permits often was associated with more production-related jobs, pilot companies also reported that flexible air permits significantly reduced permit-related staff time and related resource costs because there was no longer a need to seek and process multiple case-by-case permit actions because the changes reasonably anticipated at the facility were already included and approved in the permit. For example, an automotive company estimated that it saved approximately 505 hours of staff time during its initial flexible permit term. Another pilot company reported permit-related staff time savings of 1,200 to 1,600 hours per year during its initial title V permit term. In both cases, companies reported that the time savings enabled environmental personnel to focus more time and attention to other environmental management activities, including P2. Companies further indicated that the time necessary to record changes in operating scenarios in the on-site log, as required by 40 CFR 70.6(a)(9), was significantly less than the permit-related staff time necessary to prepare permit applications under a general change-by-change permitting approach. 4. Administrative Benefits Achieved Using Flexible Permits Our pilots evaluation found that the flexible permits resulted in a net cost savings both for the source, as noted above, and for the permitting authority. We specifically found that the resources permitting authorities expended on processing permitting applications under title V and the NSR programs were reduced under the pilot program, since the operational flexibility provisions, like 40 CFR 70.6(a)(9), eliminated the need to submit a permit application for each operational change. For example, one permitting authority estimated that each facility change made pursuant to a flexible permit saved the permitting authority approximately 20 to 40 hours in staff time that otherwise would have been incurred had the facility, instead of obtaining the advance approvals and AOS, sought title V permit modification on a change-by-change basis. In fact, permitting authorities reported that the administrative cost savings during implementation of the pilot flexible permits indicate that increased use of flexible permitting will enable them to reduce permitting backlogs and to focus resources on other higher priority environmental needs. These cost savings must be put in context of a higher front-end cost to design an acceptable permit approach to pilot (a cost that should decrease as more experience with flexible permits occurs in tandem with a better defined policy). The two participating permitting authorities that attempted to quantify this effect believed that, even with the higher front-end design costs associated with their pilot, the initial experience suggested there would be a net reduction in the overall administrative costs associated with these permits after 2-3 years of implementation. We believe that the administrative benefits achieved for the evaluated pilot permits are broadly indicative of the benefits generally available from flexible air permits. In fact, as flexible air permitting becomes more mainstream, we expect the front-end costs to design such permits to be reduced, resulting in faster recouping of these expenses and greater benefits over time. B. What were the conclusions of the sources, permitting authorities, and EPA about flexible permits? The sources that obtained a flexible air permit maintain that such a permit is a valuable business asset. These sources regularly relied upon the operational flexibility provided in the permit to take advantage of opportunities in the market place. These sources also indicated that the following circumstances heightened the need for and benefits achieved using a flexible air permit: • Short time frames for bringing new products to market (time-to-market needs). • Need to accommodate rapid shifts of product lines, processes, and production levels to enable optimal asset utilization in a company's network of facilities. • Active advanced manufacturing programs (e.g., lean manufacturing, Six Sigma, agile manufacturing) that require rapid and iterative changes to operations and equipment. 19 19 These manufacturing concepts have been defined in various ways. Generally, however, lean manufacturing is defined as an initiative focused on eliminating all waste in manufacturing processes. Principles of lean manufacturing include zero waiting time, zero inventory, scheduling (internal customer pull instead of push system), batch to flow (cut batch sizes), line balancing, and cutting actual process times. Six Sigma is defined as a rigorous and disciplined methodology that utilizes data and statistical analysis to measure and improve a company's operational performance, practices, and systems. Six Sigma identifies and prevents defects in manufacturing and service-related processes. In many organizations, it simply means a measure of quality that strives for near perfection. Agile manufacturing emphasizes the ability to thrive and prosper in an environment of constant and unpredictable change and includes the use of tools such as rapid prototyping, rapid tooling, and reverse engineering to address customers who require small quantities of highly custom, design-to-order products, and where additional services and value-added benefits like product upgrades and future reconfigurations are as important as the product itself. • Anticipated renovation or expansion projects. • Active P2 programs with continual process improvements. The permitting authorities in the pilot program concluded that the permits provided significant environmental performance and administrative benefits. They also expressed support of flexible permitting techniques as a permitting option. The permitting authorities believed that flexible permits are particularly effective when applied to sources with demonstrated operational change needs and the operational and technical capacity to meet all relevant requirements associated with advance approvals, AOSs, PALs, and other operational flexibility provisions. In general, based on our pilot experience, we believe that sources with certain characteristics are the ones that can both meet the requirements of operational flexibility provisions and benefit from them. These characteristics include: A strong compliance history, maintenance of a well-documented and effective environmental management system, commitment to continuous environmental improvement, attentiveness to P2, ability to track and manage operational changes and emissions, and the existence of good community relations. The types of sources that exhibit these characteristics typically include, for example, the members of EPA's National Environmental Performance Track Program ( see http://www.epa.gov/performancetrack/ ) and similar State environmental leadership programs. Our Performance Track program illustrates our ongoing commitment to reward and recognize exemplary environmental performance. We currently intend to allocate our implementation resources for the final rule on a priority basis to assist Performance Track facilities that wish to obtain flexible air permits. More specifically, we intend to deploy resources and tools designed to assist Performance Track facilities in their efforts to capture the opportunities provided through flexible air permits. Our efforts to facilitate the implementation of flexible permits could include, for example, education and outreach components that would allow Performance Track members to assess the costs and benefits of a flexible permit. We also intend to provide EPA technical resources and expertise through identified points of contact to facilitate the resolution of technical and other issues (should any arise) associated with implementing a flexible air permit at a Performance Track facility. We encourage State permitting authorities to consider a similar prioritization of resources when issuing flexible air permits to sources that are similarly situated to Performance Track companies. C. What are EPA's recommendations for public participation in flexible permitting? Based on our experience with pilot permits, we believe that flexible permits provide at least as much environmental protection as conventional permits and promote superior environmental performance. Nevertheless, we also recognize that flexible permits will contain features, such as AOSs, ARMs, advance approval of minor NSR, or Green Groups, that may not be familiar to the reviewing public. For this reason, we recommend that permitting authorities consider using their discretion to enhance the public participation process when warranted for a particular flexible permit. Some ideas for doing so are described below. During the permitting process, permitting authorities could consider making the permit application available to the public soon after receipt. We found for these pilot permits that early outreach to the community, rather than waiting until the draft permit was prepared, was an effective public participation strategy. The minimum public comment period required for a title V permit renewal or significant permit modification is 30 days. Where a significant amount of a permit's content consists of terms to incorporate operational flexibility, we suggest that you consider expanding the comment period to 45 days or more. Note, however, that for some of our pilot permits, early outreach to the public was sufficient to resolve community questions and comments early in the process, so that by the time of the public hearing and comment period no adverse comments were received. Finally, in order to ensure adequate technical support and accessibility for the public in their efforts to understand and comment upon flexible air permits, we suggest that States provide a principal point of contact for responding to technical questions and ensure the availability of draft permits, applications, and technical support documents on an Internet Web site. We believe that any additional costs here will be offset by the subsequent administrative cost savings to the permitting authority resulting from the reduced need to process permit revisions for sources with flexible permits. V. What are the key elements of this proposal? This section summarizes the key elements of this proposal. A more detailed discussion of these elements as well as other proposed regulatory changes are provided below in sections VI and VII. A. What are the key elements of proposed revisions to parts 70 and 71? There are several key regulatory revisions that we are proposing to parts 70 and 71. First, we are proposing to modify 40 CFR 70.6(a)(9) generally to refer to “alternative operating scenarios,” as opposed to “operating scenarios.” In addition, we are proposing to define the term “alternative operating scenario (AOS)” and codify certain requirements described in this proposal for AOSs. Specifically, we propose to define “alternative operating scenario (AOS)” as a scenario authorized in a part 70 permit that involves a physical or operational change at the part 70 source for a particular emissions unit, and that subjects the unit to one or more applicable requirements that differ from those applicable to the emissions unit prior to implementation of the change or renders inapplicable one or more requirements previously applicable to the emissions unit prior to implementation of the change. This document also discusses our proposal for “approved replicable methodologies” (ARMs) and the way in which they may be approved into the title V permit by the permitting authority. We are proposing to define an ARM as part 70 permit terms that: (1) Specify a protocol which is consistent with and implements an applicable requirement, or requirement of part 70, such that the protocol is based on sound scientific/mathematical principles and provides reproducible results using the same inputs; and (2) require the results of that protocol to be used for assuring compliance with such applicable requirement or requirement of part 70, including where an ARM is used for determining applicability of a specific requirement to a particular change. An ARM, however, cannot modify an applicable requirement in any way. As explained further below, an ARM can be particularly useful in facilitating the implementation of advance approvals and AOSs, but can also be used independent of them. Also in this document, we are proposing that a source include in its semi-annual monitoring reports under 40 CFR 70.6(a)(3)(iii) information relating to any AOS and/or ARM implemented during the reporting period. This information should help permitting authorities remain informed as to which AOSs and ARMs in the title V permit are being implemented at the site and at which time. We are not proposing revisions to any applicable requirement (other than revisions to parts 51 and 52 providing for Green Groups— see section VII below) in order to facilitate advance approvals. As mentioned above, our pilot experience confirms that obtaining advance approval under minor NSR is often a critical element in the design of a flexible air permit. This experience also suggests that many State minor NSR programs may already provide the legal authority necessary to issue minor NSR permits that accommodate various types of operational flexibility which can be readily incorporated into title V permits. We are therefore not proposing any revisions to the minor NSR regulations. Nonetheless, we encourage States to implement advance approvals in response to requests by sources under their existing minor NSR programs as appropriate and to seek additional authority where they do not currently have such discretion. Based on our pilot experience, we also believe that the ability to advance approve a particular change with respect to other applicable requirements requiring a specific authorization can often be determined without further regulatory changes. Similarly, we are not proposing to revise part 70 to address how advance approvals might be accomplished. We believe that part 70 already requires incorporation of the terms in a permit issued to advance approve changes under certain applicable requirements. For example, permit terms contained in a State's minor NSR permit are themselves deemed to be applicable requirements as defined in section 70.2 and, as such, are to be included in the title V permit for the relevant source. Frequently, however, the permitting authority may need to augment the terms of NSR permits authorizing the advance approval of certain changes in order that these changes can be made without further review or approval. These terms would be added as necessary to assure compliance with other applicable requirements also implicated by the advance approved changes which were unaddressed in the specific authorizations obtained for them. As would be the case for any other applicable requirement, the part 70 permit must meet the requirements of part 70 (e.g., monitoring, reporting, and compliance certification) with respect to advance approvals. When the title V permit terms relating to advance approvals are effective, then the changes which were advance approved would occur under protection of the permit shield (where available and granted by the permitting authority). B. What are the key elements of proposed revisions to parts 51 and 52? 20 20 Although we are proposing certain revisions to the major NSR program, we are proposing no changes to any other applicable requirement, as that term is defined in 40 CFR 70.2. With this document, we propose adding a definition of “Green Group.” We also propose to add monitoring, recordkeeping, reporting, and testing safeguards applicable to Green Groups to enhance the availability of information and ensure that these groups function as intended. A Green Group consists of designated emissions activities that are ducted to one common air pollution control device that is determined to meet BACT or LAER, as applicable, for the entire group of emissions activities taken as a whole. A Green Group is, by definition, a single emissions unit for purposes of major NSR. In addition to designated existing emissions activities, a Green Group may include changes (e.g., reconfiguration and/or expansion) to these existing activities and/or the addition of new emissions activities ducted to the control device, either of which could result in an increase in capacity and a significant increase in actual emissions. To establish a Green Group, the source must go through the major NSR permitting process and obtain a permit. To protect the NAAQS, PSD increments, and Class I areas, the proposed rules require an annual emissions limit and any necessary short-term limits for the Green Group, as well as comprehensive monitoring, reporting, recordkeeping, and testing under NSR for Green Groups to assure compliance with the limit(s). 21 21 The NAAQS and increments for some pollutants are established over short-term periods as well as annually. For example, annual, daily, and 3-hour NAAQS and increments are defined for sulfur dioxide. Accordingly, some NSR permits include emissions limits for these shorter periods. VI. What changes are we proposing to parts 70 and 71? We are proposing revisions to parts 70 and 71 to build upon the existing framework in 40 CFR 70.6(a)(9), which authorizes AOSs. As discussed below in section VI.A, we are proposing to add a definition for AOS and to provide for the use of consistent terminology for AOSs. In section VI.B, we describe the information that the source must provide in a title V permit application under 40 CFR 70.5(c) when seeking approval of an AOS, and in section VI.C we discuss the terms that must be included in a title V permit for an AOS and for an ARM. Section VI.D presents two examples of flexible permits using AOSs. In section VI.E, we address additional issues related to AOSs, and in section VI.F we detail the minor differences between the proposed revisions for part 70 and part 71. In the case of both AOSs and ARMs, the State must have sufficient authority to grant them if proposed by a source, but the permitting authority retains the discretion as to the appropriateness of doing so on a case-by-case basis, depending on the specific facts of the situation. A. What is our proposed definition of an AOS, and how does it provide a source operational flexibility? As mentioned previously, the concept of an AOS is not a new one. Under existing 40 CFR 70.6(a)(9), a source may request in its permit application that the permitting authority approve reasonably anticipated operating scenarios. If the permitting authority determines that the proposed operating scenarios are consistent with the requirements of part 70 and approves them, it would include those scenarios in the source's part 70 permit, and the source may implement them without further review or approval. Fundamentally, the permitting authority must ensure that the proposed operating scenarios are adequately described such that all applicable requirements associated with each scenario are identified and appropriate terms and conditions to assure compliance with these requirements are included in the permit. In addition, the permitting authority must ensure that the source obtained all specific authorizations required under any applicable requirements (primarily those under minor NSR). The provisions of 40 CFR 70.6(a)(9) were promulgated consistent with section 502(b)(6) of the Act, which mandates the streamlining of the application and permitting processes. There may be situations where a permitting authority does not approve an AOS which has been proposed by a source for a particular emissions unit. For example, a permitting authority may reject an AOS proposed by a source if it determines that the source's description of the scenario is insufficient to identify all applicable requirements or craft appropriate terms and conditions to ensure compliance with applicable requirements, or if required authorizations under applicable requirements triggered by the AOS have not been obtained. To clarify our intent regarding AOSs, we propose the following definition at 40 CFR 70.2: Alternative operating scenario (AOS) means a scenario authorized in a part 70 permit that involves a physical or operational change at the part 70 source for a particular emissions unit, and that subjects the unit to one or more applicable requirements that differ from those applicable to the emissions unit prior to implementation of the change or renders inapplicable one or more requirements previously applicable to the emissions unit prior to implementation of the change. Thus, the change at the part 70 source must be physical or operational in nature and must either subject a particular emissions unit to at least one new applicable requirement or eliminate at least one requirement that applied to the unit prior to the change. In addition, the change, in order to be eligible for an AOS, must be allowable under all applicable requirements. 22 For example, a change allowed under an applicable MACT standard but also subject to minor NSR would not be eligible for inclusion in an AOS until the source obtains the necessary preconstruction approval. That is, the source requests and obtains from the permitting authority a minor or major NSR permit, as applicable, authorizing the change to occur, and the terms of the NSR permit are then incorporated into the source's title V permit as part of an AOS. We are proposing this definition not to change the current requirements for AOSs but rather to foster a common and consistent understanding of the types of situations that AOSs can address. 22 Failure to anticipate and include a particular change under an AOS does not in and of itself bar the source from implementing the change if it can satisfy the requirements of the off-permit provisions in part 70, such as those set forth at 40 CFR 70.4(b)(12) and (b)(14). The permit shield does not extend to changes made pursuant to these provisions. See, e.g., 40 CFR 70.4(b)(12)(i)(B), (b)(12)(ii)(B), (b)(14)(iii). For example, during the term of its part 70 permit, a source might obtain approval under minor NSR to construct and operate a new emissions unit. Where available and granted by the permitting authority, the source can implement the change under the off-permit provisions, assuming that the change is not addressed or prohibited by the terms of the source's part 70 permit. The types of physical or operational changes which could trigger an AOS can vary widely. Such changes potentially encompass a wide spectrum of activities undertaken by a source which cause one or more applicable requirements to apply (or to no longer apply) to the emissions unit undergoing the change. Nonetheless, these changes must be consistent with any limitations contained in applicable requirements that are triggered. Thus, anticipated physical and operational changes must be described adequately to identify the applicable requirements. In some cases, physical or operational changes may be exempt from certain applicable requirements but not from others. For example, the New Source Performance Standards (NSPS) and major NSR regulations specifically exempt from their purview certain types of changes, such as those that do not reach the threshold for a “modification.” These same changes, however, could still implicate other applicable requirements. For example, a switch to another fuel which a unit is already capable of accommodating could trigger a SIP requirement or a Maximum Achievable Control Technology (MACT) standard, while being exempt from NSPS and major NSR. Such SIP and MACT requirements must, therefore, be identified as applicable requirements in an application for an AOS governing the fuel switch. Under this proposal, activities that do not involve a physical or operational change to the regulated equipment do not constitute an AOS, even when such change is made to switch between compliance options provided for in an applicable requirement. For example, suppose a source chooses to switch between the compliance options allowed under an applicable requirement (e.g., a MACT standard or NSPS). Under the Printing and Publishing Industry MACT standard (40 CFR part 63, subpart KK), a product and packaging rotogravure affected source that uses compliant inks and coatings (i.e., inks and coatings with low HAP content) may demonstrate compliance for each month by any one of six compliance options set out in the standard. Each of the compliance options involves slightly different applicable requirements in that different characteristics of the inks and coatings must be tracked and different calculations must be carried out monthly to demonstrate compliance. We propose that a source may switch between such compliance options without including AOSs for each compliance option in its permit. Rather, the compliance options may simply be included in the permit as alternative requirements of the applicable standard. We acknowledge, however, that this approach may raise issues regarding whether an operational change at the source has triggered the change in the compliance option. For example, subpart KK also provides for compliance options that use an add-on control device rather than compliant inks and coatings. If a source alternates between compliant materials (using one of the six associated compliance options) and noncompliant materials (complying through use of a thermal oxidizer), should this be characterized primarily as a shift for compliance purposes that does not require an AOS in the permit, or as an operational change requiring an AOS? What if the source alternates among the compliance options for compliant inks and coatings based on the characteristics of the materials that it uses in each month? We request comment on the issue of whether a switch from one compliance option to another is better characterized as allowable under an applicable requirement or as a physical or operational change that triggers a different applicable requirement and therefore requires an AOS. Regardless of the approach ultimately adopted, we strongly recommend that permitting authorities and sources work together to include in the permit those compliance options allowed under the applicable requirement that a source may reasonably anticipate using during the term of the permit. Whether incorporated as AOSs or simply as compliance alternatives, we believe that a title V permit can be fashioned to allow a source to switch between compliance options without needing a permit revision to do so. The second criterion for a shift in operating scenario under this proposed definition is that the triggering change must cause: (1) At least one applicable requirement to apply which was not in effect before the change; and/or (2) at least one applicable requirement to no longer apply as a result of the change. “Applicable requirement” as defined in 40 CFR 70.2 includes all the separate emissions reduction, monitoring, recordkeeping, and reporting requirements of a particular standard or SIP regulation and all the terms and conditions of preconstruction permits issued pursuant to regulations approved or promulgated through rulemaking under title I of the Act. As such, AOSs can be quite effective where existing units at sources simply make physical or operational changes that do not require any advance approval, but they nonetheless implicate one or more different applicable requirements. This may occur, for example, where an existing boiler is permitted to combust different fuels, which implicate different sets of applicable requirements. We elaborate on this situation below in section VI.D, Example 1. Example 2 in that section presents a situation where AOSs are used in conjunction with advance approvals. Under the second criterion above, AOSs are often separate and distinct from advance approvals. For example, we propose that the addition of a new emissions unit pursuant to an advance approval does not require an AOS, unless the particular unit, once operational, requires the flexibility to make subsequent physical or operational changes that will cause applicable requirements to apply that are different from those applicable to the authorized baseline scenario for the new unit upon operation. We believe that construction and operation of a new unit authorized in an advance approval does not represent a shift in operating scenario for the unit, but rather represents beginning its initial or baseline operation. 23 However, we solicit comment on whether such new unit additions should instead be characterized as AOSs. 23 An advance approval that is incorporated into a part 70 permit remains subject to all the conditions of the underlying authorization. For example, if an underlying minor NSR permit is contingent upon the source commencing construction of the authorized change(s) within a certain period, the authorization in the part 70 permit also will lapse if the source fails to meet the required deadline. The source is responsible for obtaining any extensions or additional authorizations as necessary to keep the advance approval in the part 70 permit in effect. Similarly, incorporation in a part 70 permit of an advance approval contained in an authorizing NSR permit for a physical or operational change to an existing emissions unit frequently would not require an accompanying AOS, where the terms of the NSR permit containing the advance approval are effective for the unit upon issuance of the part 70 permit. For example, suppose a source, in the process of renewing its part 70 permit, obtains a minor NSR permit that advance approves a change to an existing emissions unit, and the NSR permit includes new requirements (such as an increased level of control and associated MRRT) that do not currently apply to the unit in its baseline operations. If the source agrees to include the new NSR requirements in its part 70 permit effective upon issuance and, notably, prior to making the authorized change, no AOS is needed to supplement the advance approval. 24 This is because no applicable requirements will begin to apply, or cease to apply, when the authorized change is subsequently implemented. One or more AOSs, however, would be needed in the permit if the source wishes to build in the flexibility to make subsequent physical or operational changes at the emissions unit that would trigger new applicable requirements or cause existing requirements to no longer apply. 24 If any other applicable requirements would be triggered by the change that are not addressed by the minor NSR advance approval, they also must be included in the part 70 permit and become applicable upon its issuance. Alternatively, such requirements may be prevented from applying through limits contained in the permit (e.g., a PAL or PTE cap(s)). In contrast, the proposed definition of AOS does include scenarios where the new applicable requirements implicated by advance approved changes at existing units are not effective until the source actually makes the change. For example, an advance approval might authorize modifications to an existing process line under minor NSR, provided that the source meets an NSPS applicable to the line upon its modification. Alternatively, we also propose that this situation could be characterized as an authorized advance approval that does not require incorporation of an AOS into the part 70 permit. That is, no AOS would be required where implementation of an authorized change irreversibly triggers the new applicable requirement(s), such that the emissions unit cannot return to its baseline status in the future. As such, this scenario is the creation of a new baseline scenario, analogous to the addition of a new emissions unit. We solicit comment on this issue and the two approaches we have proposed. We also solicit comment in general on our proposal to distinguish from AOSs all advance approvals, including those involving the addition of new units. In addition to proposing a definition of AOS, we are also clarifying the regulations, because the regulations use inconsistent terminology when referring to AOSs. See e.g., 40 CFR 70.4(d)(3)(xi) (referring to “(alternate scenarios”). For consistency purposes, we propose to use the term “alternative operating scenarios” (or AOSs) throughout the regulations when referring to an alternative operating scenario under 40 CFR 70.6(a)(9). See proposed 40 CFR 70.4(d)(3)(xi) and 40 CFR 70.5(c)(2) and (7). Note also that any specific “AOS” listed in a permit refers to a specific operating scenario which differs importantly from the previous scenario (also contained in the permit) in that one or more different applicable requirements are implicated by the shift in operating scenarios. The scenario that reflects the current operations and applicable requirements of the source at the time of permit issuance is called the “baseline scenario.” A key objective for a source requesting an AOS is to identify and describe in the title V permit application those changes that are reasonably anticipated to occur for each emissions unit during the term of the title V permit. This proposal clarifies that AOSs can be used to provide operational flexibility for a variety of situations, ranging from a single specific anticipated alternative scenario to multiple scenarios, including somewhat less specific (but still nonetheless bounded) scenarios. In all situations, however, the contemplated changes must be described in the permit application in sufficient detail for the relevant emissions units such that the permitting authority can determine whether all applicable requirements have been identified and can craft appropriate terms and conditions to assure compliance with such requirements. Where differing applicable requirements would apply to a particular emissions unit, depending upon the nature and extent of the change made, the permit should contain alternative terms and conditions as needed to assure compliance with all applicable requirements under each AOS which is reasonably anticipated to occur. If the permitting authority approves the proposed AOSs for a particular emissions unit, it will include in the title V permit a description of the anticipated changes associated with each approved AOS, and for each AOS will include associated applicable requirements and terms and conditions that assure compliance with each identified applicable requirement, as well as terms and conditions that assure compliance with the related part 70 requirements relevant to the AOSs. Alternative operating scenarios may vary in their complexity. At one extreme is a simple situation where a source seeks approval for operating scenarios that involve a very specific type and number of changes to the defined baseline operations of the relevant emissions unit(s) (i.e., the changes can be described exactly). An example of this situation is the combustion of various fuels in a boiler capable of burning different fuels (where combustion of each type of fuel is subject to different SIP requirements). See Example 1 discussed below. A more complex situation involves sources seeking approval for AOSs encompassing a wider spectrum of reasonably anticipated changes. Sources here may not be able to determine precisely in advance (i.e., at the time of permitting) which of the changes and implicated AOSs will be implemented for the relevant emissions unit(s). Depending on future market behavior, the source eventually may implement all or only some of these changes. The type of detail needed to describe an AOS and the changes anticipated to occur under it can vary. Certainly the need for greater detail is dependent upon what is required to determine the applicable requirements implicated by the anticipated changes. In many cases, the number of applicable requirements for anticipated changes can be reduced, without loss of flexibility, through strategic use of boundary conditions on the AOS. Boundary conditions help to define the relevant applicable requirements implicated by authorized physical or operational changes, which, in turn, enables the permitting authority to assure that all applicable requirements and requirements of part 70 are contained in the permit when designing AOSs. 25 For example, operational restrictions (such as those on the type or amount of materials combusted, processed, or stored) can be used to delineate the scope of the AOS by limiting which applicable requirements apply under them. 25 Boundary conditions can also be used to restrict the scope of advance approvals. The pilots primarily used boundary conditions for this purpose. Such conditions typically involved restrictions that prevented certain different applicable requirements from applying to the changes otherwise authorized under minor NSR. For example, a source owner opted to avoid the applicability of major NSR by accepting an emissions limit that restricts the PTE of the source to below the threshold at which that requirement would apply, or, in the case of an existing major stationary source, a PAL that designates an emissions limit below which major NSR would not apply to changes made at the source. The approaches approved to assure compliance with applicable requirements can also affect the implementation of anticipated AOSs and, therefore, indirectly affect the changes approved under them. That is, authorized changes must not adversely impact the effectiveness of the control devices or monitoring approaches required by an AOS approved in the permit. For example, changes involving substances which are not effectively controlled by the control device required in the permit could not be approved. This would also be true for physical or operational changes which would render inaccurate the monitoring procedures approved in the permit for assuring compliance with an applicable requirement (e.g., PTE limit). Compliance assurance terms for AOSs and advance approvals can be greatly simplified where the applicable requirements can be streamlined (i.e., the compliance terms are based on the most stringent requirement applicable to the proposed changes and are effective upon permit issuance). In guidance generally referred to as “White Paper Number 2,” we interpreted our part 70 rules to allow sources to streamline multiple applicable requirements that apply to the same emissions unit(s) into a single set of requirements that assure compliance with all the subsumed applicable requirements. 26 If all the applicable requirements that apply to a set of changes are streamlined in the permit and the permitting authority approves the proposed streamlining, the source need only comply with the streamlined requirement. This benefits all parties by simplifying and focusing the compliance requirements contained in the permit. 26 As explained in White Paper Number 2, sources that seek to streamline applicable requirements should submit their request as part of their title V permit application, identifying the proposed streamlined requirements and providing a demonstration that the streamlined requirements assure compliance with all the underlying, subsumed applicable requirements. Upon approval of the streamlined requirements, the permitting authority would place the requirements in the title V permit. See “White Paper Number 2 for Improved Implementation of the Part 70 Operating Permits Program,” March, 5, 1996, for the complete guidance on the streamlining of applicable requirements ( http://www.epa.gov/ttn/oarpg/t5/memoranda/wtppr-2.pdf ). Where the source wishes to streamline the advance approval under NSR with all other relevant applicable requirements, the same title V permit application can address both actions. It should be noted that changing to an AOS cannot be used to circumvent applicable requirements or to avoid an enforcement action. A switch to an AOS does not affect the compliance obligations applicable to a source under its previous operations. B. What information is necessary in a title V permit application to seek approval of an AOS? Because the application forms the basis for the content of the title V permit, the discussion below is relevant to the content of a permit that authorizes AOSs. This section clarifies the requirements for a complete application and discusses minor proposed revisions to these requirements. The provisions of 40 CFR 70.5(c) contain the information that must be submitted in a complete title V permit application, including information concerning proposed AOSs. 27 We are proposing minor revisions to 40 CFR 70.5(c) to clarify how certain aspects of the requirements in that section should be addressed when a source applies for approval of AOSs. 27 For the complete text of the elements that must be included in a title V application, see 40 CFR 70.5(c). Under the provisions of 40 CFR 70.5(c), the source generally must describe the emissions of all regulated air pollutants (as defined at 40 CFR 70.2) from any emissions unit, identify all applicable requirements that apply to each emissions unit, and describe how it will meet these applicable requirements. The source must provide this information for existing operations (i.e., baseline operations) and for any reasonably anticipated changes for which an AOS is proposed. The description of AOSs in title V permit applications may vary depending on the situation (as previously discussed). However, in every case the level of detail in the description must be sufficient for the permitting authority to write permit terms and conditions that assure compliance with all applicable requirements and the requirements of part 70 that will apply to the proposed AOS. See 40 CFR 70.5(c)(3)-(7); 40 CFR 70.6(a)(9)(iii). If the source adequately describes proposed AOSs in the part 70 permit application and the permitting authority includes them in the permit consistent with 40 CFR 70.6, the source may subsequently implement the physical and operational changes under protection of the permit shield (where available and granted by the permitting authority) without triggering the permit modification provisions of 40 CFR 70.7. Similarly, the source must meet the provisions of 40 CFR 70.5(c) concerning advance approvals which are to be incorporated into the title V permit. Where a change is authorized in an NSR permit and the permit contains terms which would be effective upon issuance of the title V permit and would assure compliance with all applicable requirements, then a straightforward incorporation of the terms of the NSR permit into the title V permit is all that is necessary. However, where the NSR advance approval terms would be effective upon title V permit issuance but would not address some other requirement(s) that will apply to the NSR-authorized changes (e.g., a MACT standard), then additional information about the changes relative to these other requirements must be provided to the permitting authority in the part 70 application. The permitting authority would then develop permit terms sufficient to assure compliance with all requirements applicable to the NSR-approved changes as part of the title V permit issuance, modification, or renewal process. Use of a streamlined limit is one acceptable approach when requested by the source (see footnote 26 and example 3 below). We are proposing to revise 40 CFR 70.5(c)(2) and (7) to use the term “AOS” in the interest of consistent terminology. Existing 40 CFR 70.5(c)(2) uses the term “alternate scenario,” while existing 40 CFR 70.5(c)(7) uses “alternative operating scenario.” We believe that revising these paragraphs to use consistent terminology, along with proposing a definition for “AOS” and conforming changes in other sections, will improve the clarity of the affected paragraphs and reduce any confusion. We are also proposing to revise 40 CFR 70.5(c)(3)(iii), (c)(7), and (c)(8) to clarify our intent regarding the information that must be included in an application that proposes AOSs for approval by the permitting authority. The proposed revisions to each of these sections are described below, along with the rationale for proposing them. The introductory text in 40 CFR 70.5(c) states generally that the application must include information for each emissions unit. Existing 40 CFR 70.5(c)(3)(iii) further requires that the application provide the emissions rate in tpy and in such terms as are necessary to establish compliance consistent with the applicable reference test method. We are proposing to clarify this regulatory requirement as it applies to sources subject to title V permitting requirements that employ an emissions cap (e.g., PALs, PTE, Green Groups). In particular, we are proposing that for the operation of any emissions unit authorized under an annual emissions cap, a source can meet 40 CFR 70.5(c)(3)(iii) by reporting the aggregate emissions associated with the cap. For example, a source may take a plantwide cap on its PTE so that it will not become a major source for purposes of PSD, thereby assuring that PSD will not apply to any changes made at the source. For purposes of the title V permit application and this emissions cap, the source need not provide individual tpy figures for any new or modified emissions units authorized under minor NSR. Rather, emissions from such units would be reported in the title V permit application as part of the aggregate emissions under the PTE cap. Additional information may, however, be required to describe the scope of any changes authorized in minor NSR to occur under any emissions cap or to provide additional information relevant to other requirements applicable to these changes. Under the proposed approach, an emissions cap can act as a constraint on annual emissions from each emissions unit under the cap as well as on the aggregated emissions from the group of units. That is, in the extreme, a unit could emit up to the full amount of the cap if all other units under the cap had zero emissions. Thus, for a group of emissions units under an annual emissions cap, the 40 CFR 70.5(c)(3)(iii) requirement for unit-by-unit tpy figures can be met by reporting in the permit application that the emissions cap represents the upper limit on emissions both from each unit in the group and from the entire group. This proposed revision to 40 CFR 70.5(c)(3)(iii) simply clarifies that in this particular situation, more specificity is not needed. Reporting emissions data in the above proposed manner in the title V permit application is permissible (including in the case of a plantwide emissions cap), except where the permitting authority determines that more specific tpy information is needed (e.g., where an applicable requirement for a specific emissions unit depends on the emissions type or level). We are proposing to revise 40 CFR 70.5(c)(7) in two ways. The existing language in 40 CFR 70.5(c)(7) specifies that the application must include “additional information as determined to be necessary by the permitting authority to define alternative operating scenarios identified by the source pursuant to 40 CFR 70.6(a)(9) of this part or to define permit terms and conditions implementing 40 CFR 70.4(b)(12) or 40 CFR 70.6(a)(10) of this part.” First, we propose to modify the existing language to clarify that the permitting authority can require additional information from the source not only for adequately defining the AOS, but also, as necessary, to craft permit terms and conditions implementing the proposed AOSs under 40 CFR 70.6(a)(9). We believe that this proposed revision is implicit in the existing language of 40 CFR 70.5 (e.g., 40 CFR 70.5(c)(5)), but that a clarification is appropriate. Second, we propose to revise 40 CFR 70.5(c)(7) to clarify that the application must include documentation demonstrating that the source has obtained all specific authorizations required under the applicable requirements relevant to any proposed advance approvals or AOSs, or a certification that the source has submitted a complete application for obtaining such authorizations. Based on our pilot experience, we expect that proposed advance approvals and certain AOSs will involve one or more of the following applicable requirements: minor NSR, major NSR, and section 112(g) of the Act. These applicable requirements all require permits or other authorizations prior to construction or modification of a source. 28 (In some cases, the overall approach might be to avoid triggering applicable requirements that require additional authorizations, such as by adopting a PAL or accepting a PTE limit.) 28 Some State, local, and Tribal air control programs include “State-only” requirements (i.e., requirements not enforceable by EPA) that require source owners or operators to obtain authorization prior to construction. In instances where the permitting authority elects to include such requirements in the part 70 permit, there are benefits to addressing them as part of a comprehensive permit flexibility solution. These requirements should, however, be labeled as “State- only” consistent with 40 CFR 70.6(b)(2). Options for flexible permit conditions to address State-only applicable requirements potentially range widely, depending on the State's interpretation of its ability to authorize changes in advance under these requirements. It is important to stress that an AOS merely incorporates authorizations given under applicable requirements and does not independently authorize changes that are subject to review and require specific approval. For this reason, we are proposing the above revision in the application requirements, along with a related revision to the AOS provisions of 40 CFR 70.6(a)(9), stating that the permitting authority cannot approve an AOS until all of the necessary authorizations required under the relevant applicable requirements have been obtained. It is possible to process the title V permit and, where needed, a corresponding NSR permit concurrently, but the title V permit approving an AOS cannot be issued before any necessary preconstruction approval has been obtained. Some applications for AOSs and advance approvals may also contain information needed to establish one or more “approved replicable methodologies” (ARMs). In section VI.C.2.b of this preamble, we discuss ARMs and their incorporation into part 70 permits. An ARM is an objective protocol for determining values pertaining to compliance or applicability requirements, such as temperature or emissions. Approved replicable methodologies are permit terms that are consistent with and implement an applicable requirement or requirement of part 70. A source that wishes to have an ARM included in its permit must provide sufficient information in its application to define the replicable methodology, its intended function, the instructions for its use, and the type of data required for its implementation. See 40 CFR 70.5(c)(5)-(c)(7). See section VI.C.2.b for more information on ARMs. Finally, we are proposing to revise 40 CFR 70.5(c)(8), which requires each part 70 permit application to include a compliance plan. The existing paragraph addresses applicable requirements with which the source is in compliance, applicable requirements that will become effective during the permit term (e.g., a newly promulgated emission standard), and applicable requirements with which the source is not in compliance at the time of permit issuance. We are proposing to revise this section in two places to clarify that such plans must address AOSs when applications include them. This proposal would add language to clarify that, for applicable requirements associated with an AOS, the compliance plan must contain a statement that the source will meet such requirements upon implementation of the AOS or, if a requirement becomes applicable after implementation of the AOS, in a timely manner. We believe that this revision appropriately fills a gap in the existing language. See proposed 40 CFR 70.5(c)(8)(ii)(D) and (iii)(D). We solicit comment on whether the proposed rule revisions noted above provide sufficient clarity as to how the application requirements of 40 CFR 70.5(c) are to be applied to sources that seek approval of AOSs and/or incorporation of advance approvals. We also seek comment on whether the proposed revisions are necessary or if additional revisions are needed to ensure that permit applications contain sufficient detail to identify all applicable requirements associated with an AOS and/or advance approval. If you believe that additional regulatory revisions are needed, please identify the proposed change and explain why it is needed. C. What terms and conditions must be included in the title V permit for approved AOSs? Existing 40 CFR 70.6 details the required content of a title V permit, including the requirements for reasonably anticipated operating scenarios. In this section of the preamble, we discuss how the existing permit content requirements of 40 CFR 70.6 apply to AOSs and how the rule revisions we are proposing are consistent with this intent. To standardize the terminology in 40 CFR 70.6, we are proposing to use the term “alternative operating scenario” (or its acronym “AOS”) throughout 40 CFR 70.6(a)(9) as we have done in the other sections of the rule. The proposed revisions to 40 CFR 70.6(a)(9) also clarify that the title V permit must contain terms and conditions to describe the AOSs, to assure compliance with the applicable requirements implicated by the AOSs, and to assure compliance with the requirements of part 70. Finally, as explained below, we are proposing to modify 40 CFR 70.6(a)(1) to clarify that ARMs are one type of operational requirement or limitation that assures compliance with applicable requirements. These items are discussed below. As previously mentioned, no AOS is needed where the changes would occur under an advance approval contained in an authorizing permit whose terms are incorporated in the part 70 permit, as well as any other applicable requirements which would apply to the advance approved changes, and those terms are effective upon issuance of the part 70 permit. For example, our pilot experience suggests that no additional flexibility provisions may be needed in a title V permit beyond the incorporation of NSR permit terms establishing an advance approval under minor NSR and a PAL or PTE limit that prevents the applicability of major NSR. 29 On the other hand, AOSs can be particularly useful either where: (1) A new or existing unit with frequently changing operations would be subject to certain emissions standards in different ways depending on the type of materials used, rate of production, and type and/or amount of product produced; or (2) an existing unit would be subject to an applicable requirement associated with an advance approved change only upon implementation of the authorized change. 29 As needed, additional terms would be added to assure compliance with applicable requirements beyond NSR that are implicated by the advance approved changes. 1. Terms and Conditions To Describe Approved AOSs If the permitting authority approves an AOS, the permit must include a description of the baseline operating scenario for each included emissions unit, the authorized physical or operational changes included in each AOS, and the applicable requirements that apply under each scenario (including those requirements newly applying or not applying as a result of the authorized changes). Expectations for AOS descriptions in the permit are similar to those previously identified for AOS descriptions in complete applications. As mentioned previously, the type of detail in such descriptions and the need for one or more boundary conditions can vary depending on the nature of the change and the applicable requirements implicated by the changes. A permit with an AOS for a particular emissions unit normally would include a description of the unit operating in its baseline mode of operation. For each approved AOS, the physical and operational changes which have been authorized should then be identified relative to this baseline operation. In all cases, the description of each AOS must be adequate to link the triggered applicable requirements to the terms which assure compliance with them. We are proposing revisions to 40 CFR 70.6(a)(9) to clarify what constitutes an acceptable description for an AOS ( see proposed revision to 40 CFR 70.6(a)(9)(iii)). We are also proposing a revision to 40 CFR 70.6(a)(9)(iii) to make clear that the permitting authority cannot approve an AOS until all of the necessary authorizations relevant to the applicable requirements have been obtained, that is, until the source has been approved to proceed by the permitting authority where such prior authorization is required (e.g., approvals under major and minor NSR and section 112(g) of the Act). 30 Finally, as mentioned, where a source is unable to predict, at the time of permit issuance, which of several reasonably anticipated changes it actually will make, it can seek approval for a range of changes and applicable requirement combinations at a particular emissions unit by including multiple AOSs. 30 See footnote 22. 2. Terms and Conditions To Assure Compliance With Applicable Requirements In this section, we discuss our proposal related to permit content to assure compliance with all applicable requirements. a. Proposed Clarifications to the AOS Provisions The provisions of 40 CFR 70.6(a)(9)(iii) require that, for each AOS for an emissions unit, the permit must contain terms and conditions to assure compliance with all the applicable requirements that apply to the emissions units operating in that AOS. This means that the permit must include, for each relevant emissions unit, the applicable emissions limits, compliance approaches, and monitoring, recordkeeping, reporting, and testing (MRRT) requirements as required by the applicable requirements as well as those required otherwise under 40 CFR 70.6(a)(3) (e.g., periodic monitoring) for the compliance approaches. In addition, the permit must incorporate all advance approvals, such as those authorized under NSR, as well as the description of changes authorized in each AOS as described above. For a permit containing more than one AOS for an emissions unit, the permit must contain a clear description of each one so that there is no confusion with respect to which AOS is implicated at any given time. b. Proposed Revisions for ARMs As stated, title V permits are required to assure compliance with all applicable requirements. Sometimes, changes occur at a source that may cause the need to recalculate/update a value used either in determining compliance of the source with an applicable requirement or in determining the applicability of a requirement. An advance approval or an AOS can incorporate flexibility in a permit, but the scope of changes that can be authorized in them can be severely limited with respect to a particular applicable requirement, if the changes require case-by-case review/approval procedures and possible permit revision in order to ensure ongoing compliance with all applicable requirements. To facilitate implementation of advance approvals and AOSs, and to encourage other permitting techniques that reduce in general the need for permit modifications (in a manner consistent with part 70), we are proposing the use of an ARM that has been approved by a permitting authority and incorporated into a title V permit. In particular, we are proposing to define “approved replicable methodology” or “ARM” at 40 CFR 70.2 as title V permit terms that: (1) Specify a protocol which is consistent with and implements an applicable requirement or requirement of part 70, such that the protocol is based on sound scientific/mathematical principles and provides reproducible results using the same inputs; and (2) require the results of that protocol to be used for assuring compliance with such applicable requirement or requirement of part 70, including where an ARM is used for determining applicability of a specific requirement to a particular change. Within the scope of this definition, an ARM may be used to assure that a given requirement does not apply in a particular situation. The terms of an ARM must specify when the ARM is to be used, the applicable methodology (e.g., equation or algorithm) and the purpose for which the output obtained upon the execution of the prescribed methodology will be used (e.g., to determine compliance with an applicable requirement or to modify the level of the parameters used to determine compliance in the future). All necessary terms and conditions must be included in the permit at the time the ARM is approved so that no permit revision will be required in the future to implement the ARM. It is important to emphasize that an ARM, like any provision of a part 70 permit, cannot modify, supersede, or replace an applicable requirement, including, but not limited to, any monitoring, recordkeeping, or reporting required under applicable requirements. 31 Instead, ARMs are a strategic approach for incorporating into a title V permit relevant applicable requirements and the requirements of part 70. The ARM provides a method for obtaining and updating information consistent with the intent of applicable requirement(s) or requirement(s) of part 70 in such a manner so as to avoid the need to reopen or revise the permit to incorporate the updated information. As such, an ARM must work within and be consistent with the applicable part 70 rules that govern permit revisions. 31 Under the authority of 40 CFR 70.6(a)(3), however, the permit can also contain additional streamlined monitoring or gap-filling periodic monitoring as needed to assure compliance with applicable requirements. An ARM can operate on the information gathered under these obligations as well. The protocol to obtain information under an ARM must be objective and scientifically valid and reliable—such as an EPA test method or monitoring method (usually specified in the applicable requirement itself.) Note that an ARM also includes the instructions governing how the results of the protocol are to be used. For example, an ARM could specify that firebox temperature measurements taken during a performance test of a thermal oxidizer be used to revise a previously imposed minimum firebox operating temperature of the oxidizer. We believe that ARMs are authorized under title V of the Act and its implementing regulations. Section 502 sets forth the minimum elements for a State operating permit program. Among other things, section 502 provides that for a State operating permit program to be approved, the permitting authority must have adequate authority to “issue permits and assure compliance by all sources required to have a permit * * * with each applicable standard, regulation or requirement” under the Act. See CAA section 502(b)(5)(A). Section 504(a) of the Act also requires that each title V permit contain “enforceable limitations and standards * * * and such other conditions as are necessary to assure compliance with applicable requirements of this Act, including the requirements of the applicable implementation plan.” The Act further provides that any State operating permit program must include “adequate, streamlined, and reasonable procedures * * * for expeditious review of permit actions.” See CAA section 502(b)(6). The part 70 regulations implement these requirements. Section 70.4 sets forth the required elements for a State operating permit program. Such State prog [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3AE7-17418. Public record. Not legal advice.