EPA proposes NSR "corrections"

On December 20, 2019, EPA published a proposed NSR Corrections Rule to make a number of corrections to the various NSR programs including 40 C.F.R. sections 51.165 (state SIP major source new source review requirements in nonattainment areas (also known as NNSR), 51.166 (state SIP authorized PSD programs, 52.21 (federal PSD program), and 40 C.F.R. Part 51, Appendix S (Offset Interpretive Ruling - federal stop gap NNSR program). The EPA stated that "The corrections generally address inadvertent errors and do not alter the substantive requirements of the NSR regulations. Other proposed changes simply reflect statutory changes enacted by Congress which have already been applied in practice or changes that have been necessitated by court decisions. Thus, the EPA considers the proposed rule to be administrative in nature." Comments are due January 20, 2020.

ANALYSIS

The errors that the proposed NSR Correction Rule seeks to address fall into the following categories:

1. Spelling correction.

2. Grammatical and punctuation errors.

3. Regulatory cross-reference errors.

4. Judicial vacaturs.

5. Outdated and incorrect references.

6. Changes required by the 1990 Clean Air Act Amendments not previously incorporated.

7. Removal of outdated exemptions.

While the first three categories are relatively insignificant, the later categories have greater impact upon the operation of the NSR programs.

Judicial Vacaturs

The EPA proposes to address the following judicial vacaturs in this action.

Equipment replacement provision (ERP) and replacement unit action. The equipment replacement provision was vacated by the D.C. Circuit in New York v. EPA, 443 F.3d 880 (D.C. Cir. 2006) (“New York II”). The stay, but not the vacatur, has been carried in the SIP rules at 51.165 (NNSR), 51.166 (PSD), and 52.21 (PSD FIP). The EPA now proposes to vacate both the ERP provision and stay notice. These changes are found in §§ 51.165(a)(8)(v)(C)(1), 51.165(h), 51.166(b)(2)(iii)(a), 51.166(y), 52.21(b)(2)(iii)(a), and 52.21(cc). The EPA notes, however, that part of the definition of “replacement unit” and “basic design parameters” are used for other purposes and it proposes to add these back into the NSR rules. In addition, the EPA proposes to add these definitions to Part 51, Subpart S (the Offset Interpretive Ruling) at this time to replace an omission during the earlier rulemakings. See proposed new §§ 51.165(a)(1)(xxi)(E)–(F), 51.166(b)(32)(v)–(vi), and 52.21(b)(33)(v)–(vi)

Clean unit and pollution control project exemption action. The clean unit and pollution control exemptions in 40 C.F.R. 52.21 were vacated by the D.C. Circuit in New York v. EPA, 413 F.3d 3 (D.C. Cir. 2005) (“New York I”). EPA removed the language from 52.21 (PSD FIP) and section 51.165 (NNSR) in 2007, but omitted to change 51.166 (PSD). It is now removing those provisions. The EPA is also proposing to remove references to the pollution control project exemption from the NSR regulations where it had not previously done so. See proposed §§ 51.165 (a)(2)(ii)(A), 51.166(a)(7), 51.166 (a)(7)(iv)(a), and 52.21(a)(2)(iv)(a).

Greenhouse gas regulation. EPA had proposed to regulate GHGs under the PSD program, but this was partially vacated. EPA removed the primary regulations in 2015, but is now proposing to eliminate cross-references to them, as seen in proposed §§ 51.166(b)(48)(i), 51.166(b)(48)(ii), 51.166(b)(48)(iii), 52.21(b)(49)(i), 52.21(b)(49)(ii), and 52.21(b)(49(iii).

Outdated and Incorrect References

Correction of 1980 errors in cross-reference. The EPA amended the PSD regulations in 1980 by deleting then paragraph (k) and renumbering paragraphs (l) through (s) as (k) through (r). A number of cross-references were not corrected. This change is made in proposed §§ 51.166(p)(3), 51.166(p)(5)(i), 51.166(p)(5)(iii), 51.166(p)(7), 52.21(n)(1), 52.21(p)(6), 52.21(p)(7), 52.21(p)(8), and 52.21(u)(2)(ii). In the 1980 revisions, the EPA also included a provision allowing a relaxation of a PSD limit, so long as the requirements of paragraphs 51.166(j) through (s) are met. However, the EPA has determined that paragraph (s) (innovative control technology) is discretionary and should not be part of the “mandatory” reference, so it proposes to revise 51.166(r)(2) to replace 51.166(s) with 51.166(r).

Outdated VOC list. The NNSR regulations at 51.165 and Part 51, Subpart S reference an outdated list of compounds the EPA had determined caused negligible contribution to tropospheric ozone. The EPA proposes to replace this list with the definition of “volatile organic compound” at 51.100(s) in 51.165(s)(1) and Appendix S, § IV.C.4.

References to 51.18. The EPA proposes to replace the references to the former major and minor NSR provisions in 51.18 with references to 51.165 (NNSR). This change is made primarily in Appendix S.

PALs. In the PAL section of the PSD regulations, the EPA proposes to replace a reference to the recordkeeping provisions with a reference to the monitoring provisions. This affects 51.166(w).

Reasonable Possibility. The EPA proposes to replace an incorrect reference to “paragraph 51.166(a)(6)(vi)(a)” instead of “51.155(r)(6)(vi)”. This occurred several times in the regulation.

Changes Required by the 1990 Clean Air Act Amendments

This group of changes is required to address provisions of the 1990 Clean Air Act Amendments that the EPA did not address in its initial rulemakings to implement the Amendments. Changes include:

Categorical source threshold for municipal incinerators. The Amendments changed the category threshold for municipal incinerators from “250” tons per day to “50” tons per day. The EPA proposes to make this change now to all four sets of NSR regulations at proposed §§ 51.165 (a)(1)(iv)(C)(8), 51.165 (a)(4)(viii), 51.166 (b)(1)(i)(a), 51.166 (b)(1)(iii)(h), 51.166 (i)(1)(ii)(h); part 51 Appendix S II.A.4.(iii)(h); part 51 Appendix S II.F(8); and §§ 52.21 (b)(1)(i)(a), 52.21 (b)(1)(iii)(h), and 52.21 (i)(1)(vii)(h)..

Expansion of “standards” under CAA Section 112 to include both Parts 61 and 63. The 1990 Amendments created the MACT program, which the EPA has codified under 40 C.F.R. Part 63. A number of references in the NSR regulations still reference only the Part 61 NESHAPs, which the EPA proposes to correct by adding Part 63 NESHAPs as well in proposed §§ 51.165(a)(1)(xi)(A), 51.165(a)(1)(xiv), 51.165(a)(1)(xl), 51.166(b)(12), 51.166(b)(16)(i), 51.166(b)(17), 51.166(j)(1); part 51 Appendix S II.A.11.(i), part 51 Appendix S II.A.12, part 51 Appendix S II.A.34, part 51 Appendix S II.B; and §§ 52.21(b)(12), 52.21(b)16)(i), 52.21(b)(17), and 52.21(j)(1).

Outdated Exemptions

The EPA states that the PSD regulations contain various exemptions under specific conditions. The EPA believes that many of these conditions are now outdated and proposes to strike several. However, the EPA also requested comment on whether it may have authority to retain certain ones. The list of exemptions the EPA proposes to strike from 51.166 and 52.21 include: §§ 51.166(i)(6)–(10); 52.21(i)(1)(i)–(v), 52.21(i)(viii)–(x); 52.21(i)(4), 52.21(i)(6)–(11), and 52.21(m)(1)(v), and 52.21(m)(1)(vii)– (viii).

• 51.166(i)(6) – Allowed State Plans to incorporate exemptions found in the EPA FIP at 52.21(i)(9), (10) or (m)(1)(v) in effect on that date.

• 51.166(i)(7) – Allowed State Plans to incorporate transition provisions under EPA FIP at 52.21(i)(11) and (m)(1)(vii) and (viii) for monitoring of particulate matter.

• 51.166(i)(8) – Allowed state plans to provide that (k)(1)(ii) did not apply to major sources or modifications of nitrogen oxides if the source had submitted an application under an approved state SIP program prior to the effective date of the increment taking effect as part of that plan and the state found that the application was complete.

• 51.166(i)(9) – Similar to 51.166(i)(8) but for PM10.

• 51.11(i)(10) – Similar to 51.166(i)(8) but for PM2.5.

EPA notes that it does not regard these changes as critical and thus does not propose to require states with approved programs to submit these changes within the usual statutory timeframe. Similarly, for delegated states, EPA believes that revised language should be suggested, but EPA suggests that for both groups, the changes should be submitted with the next revision otherwise required or needed.

Comments are due by January 21, 2020.

COMMENTARY

As the EPA indicates, the principal thrust of the proposed NSR Corrections Rule is to clean up left over drafting issues from prior rulemakings. It also continues the EPA's new policy of being more deferential to state permitting authorities with its determination not to require program revision by a set deadline. There are, however, a couple of more significant aspects to the rule.

The most important is the EPA’s query of whether there is authority allowing it to grandfather applications. It is likely that the EPA is taking this step in response to the D.C. Circuit’s poorly thought through decision in Murray Energy, which took the position that grandfathering is not allowed if a NAAQS or increment changes, creating a game of “roulette” for permit applicants and permitting authorities on whether an application can be processed in the intervals between statutorily-mandated NAAQS revisions. In this writer’s view, Congress did not intend that permits, regardless of their stage in the process, be upended by the change in a NAAQS, but intended to allow EPA reasonable authority to smooth the transition when it approved the practice of making such intentions.

Another significant issue is that EPA was not clear about whether its proposed elimination of 51.166(s) in the cross-reference of 51.166(r)(2) means that “innovative control technology” is prohibited in such situations or remains a discretionary outcome. In this writer’s view, EPA should clarify that innovative control technology remains a discretionary outcome.