Approval and Promulgation of Air Quality Implementation Plans; Colorado; Revisions to New Source Review Rules

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Final rule.

SUMMARY:

EPA is approving those revisions adopted by the State of Colorado on April 16, 2004 to Regulation No. 3 (Stationary Source Permitting and Air Pollutant Emission Notice Requirements) that incorporate EPA's December 31, 2002 NSR Reforms. Colorado submitted the request for approval of these rule revisions into the State Implementation Plan (SIP) on July 11, 2005 and supplemented its request on October 25, 2005. EPA is approving only the portions of Colorado's revisions to Regulation Number 3 that relate to the prevention of significant deterioration (PSD) and non-attainment new source review (NSR) construction permit programs of the State of Colorado. Other revisions, renumberings, additions, or deletions to Regulation No. 3 made by Colorado as part of the April 16, 2004 final rulemaking are being acted on by EPA in a separate final action related to Colorado's Interstate Transport SIP (see proposed action at 76 FR 21835, April 19, 2011). Colorado has a federally approved NSR program for new and modified sources impacting attainment and non-attainment areas in the State. This action is being taken under section 110 of the Clean Air Act (CAA).

DATES:

Effective Date: This final rule is effective May 10, 2012.

ADDRESSES:

EPA has established a docket for this action under Docket ID No. EPA-R08-OAR-2005-CO-0003. All documents in the docket are listed on the www.regulations.gov Web site. Although listed in the index, some information is not publicly available, e.g., Confidential Business Information (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 through www.regulations.gov or in hard copy at the Air Program, Environmental Protection Agency (EPA), Region 8, 1595 Wynkoop Street, Denver, Colorado 80202-1129. EPA requests that if at all possible, you contact the individual listed in the FOR FURTHER INFORMATION CONTACT section to view the hard copy of the docket. You may view the hard copy of the docket Monday through Friday, 8 a.m. to 4 p.m., excluding Federal holidays.

FOR FURTHER INFORMATION CONTACT:

Scott Jackson, Air Program, U.S. Environmental Protection Agency, Region 8, Mailcode 8P-AR, 1595 Wynkoop Street, Denver, Colorado 80202-1129, (303) 312-6107, jackson.scott@epa.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background for This Action

A. What revisions to the Colorado SIP does this action address?

II. Response to Comments

III. Final Action

IV. Statutory and Executive Order Reviews

Definitions

For the purpose of this document, we are giving meaning to certain words or initials as follows:

(i) The words or initials Act or CAA mean or refer to the Clean Air Act, unless the context indicates otherwise.

(ii) The words EPA, we, us or our mean or refer to the United States Environmental Protection Agency.

(iii) The initials SIP mean or refer to State Implementation Plan.

(iv) The words State or Colorado mean the State of Colorado, unless the context indicates otherwise.

I. Background for This Action

On December 7, 2005 (70 FR 72744), EPA published a notice of proposed rulemaking (NPR) for the State of Colorado. The NPR proposed approval of portions of Colorado's revisions to the Stationary Source Permitting and Air Pollutant Emission Notice Requirements (Regulation No. 3) that incorporate EPA's December 31, 2002 NSR Reforms. The State of Colorado submitted the formal SIP revision on July 11, 2005 followed by a supplemental submittal on October 25, 2005. This final action updates the federally approved SIP to reflect changes made by Colorado that were reviewed and deemed approvable into the Colorado SIP (Code of Federal Regulations part 52, subpart G).

On December 31, 2002, EPA published revisions to the federal PSD and non-attainment NSR regulations. These revisions are commonly referred to as “NSR Reform” regulations and became effective nationally in areas not covered by a SIP on March 3, 2003. These regulatory revisions included provisions for baseline emissions determinations, actual-to-future actual methodology, plantwide applicability limits (PALs), clean units, and pollution control projects (PCPs). On November 7, 2003, EPA published a reconsideration of the NSR Reform regulations that clarified two provisions in the regulations. On June 24, 2005, the United States Court of Appeals for the District of Columbia Circuit issued its ruling on challenges to the December 2002 NSR Reform revisions. Although the Court upheld most of EPA's rules, it vacated both the Clean Unit and the Pollution Control Project provisions and remanded back to EPA the “reasonable possibility” standard for when a source must keep certain project related records.

Colorado's July 11, 2005 submittal and October 25, 2005 supplemental submittal request approval for its regulations to implement the NSR Reform provisions that were not vacated or remanded by the June 24, 2005, court decision.

A. What revisions to the Colorado SIP does this action address?

EPA is approving those revisions adopted by Colorado on April 16, 2004 to Regulation No. 3 (Stationary Source Permitting and Air Pollutant Emission Notice Requirements) that incorporate EPA's December 30, 2002 NSR Reforms (with the exceptions noted in the table below). EPA is also approving revisions Colorado made to Regulation No. 3 prior to the April 16, 2004 final rulemaking that incorporate the revisions EPA made to the federal NSR rules on July 21, 1992 (with the exceptions noted in the table below). These revisions are referred to as the WEPCO rule (for the Wisconsin Electric Power Company court ruling) and added definitions and provisions that have been incorporated into the April 16, 2004 version of Regulation No. 3.

In addition to incorporating the NSR Reforms into the April 16, 2004 Regulation No. 3 revision, Colorado also restructured Regulation No. 3, including adding a new Part D titled Concerning Major Stationary Source New Source Review and Prevention of Significant Deterioration. The new Part D contains most of the NSR/PSD definitions, provisions, and sections that were revised or newly created by the NSR Reform rule. In addition, numerous Regulation No. 3 Part A and Part B NSR/PSD definitions, provisions, and sections not revised by the NSR Reform rule, but already approved into the SIP, have been moved into the new Part D. EPA is approving the revisions to Regulation No. 3 creating the new Part D with the exceptions noted in the table below.

The revisions adopted by Colorado on April 16, 2004 have structured Regulation No. 3 as follows: Part A now contains general provisions applicable to reporting and permitting, Part B addresses construction permits; Part C (not a part of the SIP) includes the operating permit program; and Part D deals with the Nonattainment NSR and PSD programs for major stationary sources. Minor sources will only be subject to Parts A and B; major sources (as defined for the Operating Permit program) are governed by Parts A, B and C. Major stationary sources must comply with Parts A, B, C and D. In particular, this reorganization separated the major stationary source NSR provisions from the construction permit requirements applicable to all sources.

Part A Changes. EPA is approving changes Colorado made to Part A where the NSR Reform rule added or changed specific language used in this Part (as specified in the table below). In addition, EPA is approving changes Colorado made in Part A that moved the provisions applying to major NSR to Part D (as specified in the table below). EPA is not taking action, in this document, on any other revisions, renumberings, additions, or deletions to Part A made by Colorado as part of the April 16, 2004 final rulemaking action. These other changes are being acted on by EPA in a separate final action related to Colorado's Interstate Transport SIP (see proposed action at 76 FR 21835, April 19, 2011) and are noted in the table below.

Part B Changes. EPA is approving only the NSR Reform rule conforming changes Colorado made in Part B, which moved the provisions applying to major NSR to Part D (as specified in the table below). In this document, EPA is not taking action on any other revisions, renumberings, additions, or deletions to Part B made by Colorado as part of the April 16, 2004 final rulemaking action. These other changes are being acted on by EPA in a separate final action related to Colorado's Interstate Transport SIP (see proposed action at 76 FR 21835, April 19, 2011) and are noted in the table below.

Part D Changes. Colorado created Regulation No. 3 Part D in order to make Colorado's air quality program consistent with the EPA NSR Reform rules. The references to NSR requirements in Part D include both the nonattainment NSR and PSD programs. EPA is approving the new Part D except for the specific provisions noted in the table below.

The following table specifies provisions of Regulation No. 3 that Colorado revised/renumbered or newly added in order to incorporate EPA's NSR Reform and WEPCO rules and to create a separate NSR/PSD major stationary source part (Part D). In addition, some of the provisions that were proposed for approval in the notice of proposed rulemaking that EPA published on December 7, 2005 are being acted on by EPA in a separate final action related to Colorado's Interstate Transport SIP (see proposed action at 76 FR 21835, April 19, 2011) and are noted in the table below.

II. Response to Comments

Environment Colorado and the Rocky Mountain Office of Environmental Defense jointly commented on our December 2005 proposed action. We have carefully considered the comments, and, as part of that consideration, have obtained information from the Colorado Department of Public Health and Environment (CDPHE) in order to assist us in deciding how to address certain comments. Below we provide summaries of, and our responses to, the significant adverse comments. Nothing in them has caused us to change our action from what we proposed.

Comment No. 1: The commenters assert that “[t]he 2002 NSR Reform Rule provisions that were not vacated by the D.C. Circuit in New York v. EPA [citation omitted] allow previously-prohibited emissions-increases to occur.” Comments at 4. In their main comment letter and in attached materials, the commenters argue that Colorado's SIP revision will allow for increased air pollution, and they focus on three main aspects of Colorado's revised Regulation 3: (1) Revisions to the method of calculating baseline actual emissions for existing sources; (2) revisions to the applicability test for existing sources; and (3) the plantwide applicability limitation (PAL) provisions. The commenters assert that approval of Colorado's proposed SIP revision would violate section 110(l) of the CAA, because “EPA cannot make a finding that revising Colorado's permit provisions so that they track the non-vacated provisions of the 2002 rule `would not interfere with attainment or other applicable requirements.' ” Comments at 5.

EPA Response No. 1: Section 110(l) of the CAA states that “[t]he Administrator shall not approve a revision of a plan if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress or any other applicable requirement of this chapter.” 42 U.S.C. 7410(l).

EPA does not interpret section 110(l) to require a full attainment or maintenance demonstration before any changes to a SIP may be approved. Generally, a SIP revision may be approved under section 110(l) if EPA finds it will at least preserve status quo air quality. See Kentucky Resources Council, Inc. v. EPA, 467 F.3d 986 (6th Cir. 2006); GHASP v. EPA, No. 06-61030 (5th Cir. Aug. 13, 2008); see also, e.g., 70 FR 53 (Jan. 3, 2005), 70 FR 28429 (May 18, 2005) (proposed and final rules, upheld in Kentucky Resources, which discuss EPA's interpretation of section 110(l)).

EPA has determined that Colorado's SIP revision will not “interfere with any applicable requirement concerning attainment and reasonable further progress * * * or any other applicable requirement of [the CAA]” in violation of section 110(l) of the CAA because, as explained below, the revision will result in effects on air quality that are neutral or beneficial. The Colorado SIP revision tracks the Federal 2002 NSR Reform Rules that were not vacated by the Court of Appeals in New York v. EPA, 413 F.3d 3, 21-31 (D.C. Cir. 2005) (per curiam). Overall, EPA expects that changes in air quality as a result of implementing Colorado's rules will be consistent with EPA's analysis of the Federal 2002 NSR Reform Rules—that the effects will be somewhere between neutral and providing modest contribution to reasonable further progress when the 2002 NSR Reform Rules are compared to the pre-Reform provisions. EPA's analysis for the environmental impacts of these three components of the 2002 NSR Reform Rules is informative of how Colorado's adoption of NSR Reform (based on the federal rules) will affect emissions. See generally Supplemental Analysis of the Environmental Impact of the 2002 Final NSR Improvement Rules (Nov. 21, 2002) (“Supplemental Analysis”).

EPA's conclusion rests primarily on the national-scale analysis that EPA conducted in support of the 2002 NSR Reform Rules. This national analysis indicates that the non-vacated provisions of the NSR Reform Rules will have a neutral or beneficial impact. The three significant changes in the 2002 NSR Reform Rules (that were not vacated by the court) were: (1) Plantwide applicability limits (PALs); (2) the 2-in-10 baseline (also known as the ten-year lookback); and (3) the actual-to-projected actual emission test. EPA's Supplemental Analysis discussed each of these three changes individually, and addresses many of the issues raised by commenters.

The environmental impacts of NSR Reform in Colorado will not be substantially different from those discussed in the Supplemental Analysis. Furthermore, with limited exceptions discussed below, the commenters do not raise Colorado-specific arguments or provide Colorado-specific data to suggest that the results of the NSR Reform in Colorado will be substantially different from those discussed in the Supplemental Analysis. Where the commenters have relied on generic or national arguments against NSR Reform, we have relied on the analyses conducted in support of the 2002 NSR Reform rules for our response.

It is worth emphasizing that, while the comments focus exclusively on how Colorado's SIP revision may allow certain facilities to increase emissions without undergoing NSR, the NSR process does not prohibit emissions increases. Nor does it regulate facilities that simply increase their hours of operation or production rate over what has occurred in recent years, resulting in increased annual emissions. Rather, NSR regulates construction of new major sources, and of physical or operational changes at existing major sources that result in significant emissions increases, and requires the new source or modification to control its emissions using stringent technology-based standards, as well as meet other requirements. In some cases (e.g., a modification at an already well-controlled unit) the benefits of the NSR program may be small. See Supplemental Analysis at 5. At the same time, avoidance of an NSR permitting process does not necessarily mean that emissions increase, since facilities may be discouraged by the permitting process itself from undertaking environmentally beneficial projects. See id. at 5. Finally, the NSR program can lead to changes in source behavior that have environmental effects (including potentially beneficial effects) even for sources that do not get an NSR permit, and permitting data tell us little about these effects. See id. at 5-6.

For these reasons, focusing entirely on hypothetical emissions increases that might avoid NSR misstates the overall effect of the NSR revisions that Colorado and other states have adopted. The question is not simply whether the SIP revision would theoretically allow certain sources to make emissions-increasing changes that might be subject to NSR under the current SIP but would not be subject to NSR in the revised SIP. Rather, the question is whether the SIP revision, as a whole, would interfere with applicable CAA requirements. Since the focus of this analysis is on the SIP as a whole, and since NSR Reform is expected to lead to overall emissions reductions even though emissions at some individual sources may increase, the commenters' arguments (arguing that certain individual sources' emissions may increase) do not show that the SIP revision as a whole would interfere with applicable CAA requirements. That said, we respond in detail below to the commenters' significant adverse comments regarding specific alleged emissions increases that would avoid NSR under Colorado's SIP revision.

1. Baseline Actual Emissions.

The commenters argue that revisions to Regulation No. 3's method of calculating baseline actual emissions for existing sources will allow those sources to “inflate” baseline actual emissions, and thereby substantially increase emissions without undergoing NSR. Specifically, the commenters argue that (1) the rule's definition of baseline actual emissions enables facilities to choose the highest consecutive two-year period over the prior ten years, thus treating high emissions that may not have been emitted for many years as “baseline” emissions; (2) the regulation allows sources to select a different two-year period for each pollutant, thus creating a “baseline” that is higher than actual emissions of the facility in any actual two-year period over the last decade; and (3) the regulation calculation “rewards” facilities for malfunctions, upsets and unusual emissions during start-up and shut-downs by allowing facilities to inflate the baseline with those emissions. We disagree that these changes will result in substantial emissions increases, and discuss each in turn.

First, with regard to the 2-in-10 baseline, EPA concluded in the context of the NSR Reform regulation that “the environmental impact from the change in baseline * * * will not result in any significant change in benefits derived from the NSR program.” Supplemental Analysis at 13. As we explained in the Supplemental Analysis, the rule change will not alter the baseline at all for many sources. See Supplemental Analysis at 13. Furthermore, for other instances, EPA explained:

[F]or the remaining case, where recent emissions are low compared to the past, a source cannot qualify for a significantly higher baseline emissions level if the present emissions are lower as a result of enforceable controls or other enforceable limitations that have gone into effect since that time—which is true an estimated 70 percent of the time. Indeed, such sources could face more stringent baselines under the current rule if controls are applied toward the end of the baseline period. This leaves only the case where emissions are lower as a result of decreased utilization due to decreased market demand, some kind of outage, or other circumstance. Even in this case, it is not clear that a different baseline would always result, because the source is eligible, under current rules, to request a more representative baseline than the previous two years.

Id. at 13. Additional information regarding the 2-in-10 baseline change is available in the Supplemental Analysis, Appendix F. See also 67 FR 80186, 80199-80200 (Dec. 31, 2002); New York, 413 F.3d at 21-31 (explaining why EPA's selection of ten-year lookback period is reasonable).

The commenters also provided Colorado-specific emissions data to support their hypothesis that allowing a 2-in-10 baseline calculation could lead to significant emissions increases in Colorado. EPA has evaluated this analysis and concluded that the commenters overlooked other important factors involved with the baseline calculation and oversimplified interpretation of the baseline calculation changes. The commenters also failed to present any rationale that allowing a 2-in-10 baseline calculation will, in fact, cause actual emission increases in Colorado that would not occur absent the Reform rule. Applicability of NSR is determined on a project-specific basis. Commenters have not explained why there should be reason to believe that more projects will actually occur, or that higher-emitting projects will actually occur, as a result of a 2-in-10 calculation, rather than the baseline calculation specified in pre-Reform NSR rules. Appendix F of the Supplemental Analysis provides a number of reasons why the majority of sources will not be affected by the change in baseline calculation. The following circumstances at particular sources would not result in a change in baseline: new sources and new units at existing sources, electric utility steam generating units, sources with recent high levels of emissions, and sources with recent emissions comparable to the past. The Supplemental Analysis explains that NSR Reform requires “use of current emission limits that account for enforceable pollution control measures that have been put into place.” Supplemental Analysis at F-4. While the commenters did remove electric utility steam generating units from their analysis, they did not evaluate the change in baseline calculation with respect to the other circumstances described above. In particular, they acknowledge that they did not evaluate other provisions of state and federal law that could limit pollution increases (comment 0020.21 in docket). In lieu of doing this evaluation for Colorado, the commenters cite an October 2003 report that looked at the impact of non-NSR provisions in relation to the 2-in-10 baseline calculation in 12 states, of which Colorado was not one. EPA has previously noted that this report is “overly simplistic and erroneous in its interpretation of NSR.” 73 FR 76563 (Dec. 17, 2008).

Furthermore, it is overly simplistic to assume that sources would be able to increase their emissions by simply relying on a higher baseline calculation that a 10-year lookback may (or may not) afford, for at least four reasons.

1. As mentioned above, there are several circumstances that the commenters overlooked, such as the existing rules' provision to select an alternate representative baseline period, and enforceable controls or other enforceable limitations, that factor into the ability to take a higher baseline by looking back 10 years as opposed to 2 years. With respect to the existing rules' provision allowing for a source to request an alternate representative baseline period, CDPHE has informed EPA that, even under its current NSR rules, it has approved at least four requests for a more representative baseline other than the most recent two years. The commenters did not take this into account when calculating the hypothetical emissions increases that might occur under the 2-in-10 baseline calculation.

2. The commenters have attempted to show that a 10-year lookback can yield a higher facility-wide baseline, but NSR applicability is determined for a particular project affecting particular emissions units. For existing emissions units, the source would likely use the actual-to-projected-actual applicability test, which compares projected actual emissions to the baseline actual emissions for that emissions unit. See Regulation No. 4, Part D, section I.B.1. The project's overall NSR applicability is determined by summing this difference across all emissions units involved in the project. See id. The possibility that an emissions unit not involved in the project (i.e. not having an emissions increase from the project) might have a high baseline actual emissions is irrelevant in this context.

3. The prospect that the ten-year lookback might allow certain sources to use a higher baseline and therefore increase emissions (as compared to a two-year-lookback) does not mean that sources will actually do so. See Natural Resources Defense Council v. Jackson, 650 F.3d 662, 666 (7th Cir. 2011) (“The two-in-ten rule, for example, might allow a business to increase average emissions, but does it? So far, we have no answer to that question, either from actual experience in adopting states or through efforts to test a model by retrodiction.”) (emphases in original). As explained in depth in the Supplemental Analysis, EPA has concluded that any emissions increases made possible by the ten-year lookback will be balanced by emissions reductions elsewhere as part of the overall NSR Reform.

4. Any source modification that, because of the changes to the baseline calculation, would avoid major NSR would nevertheless be evaluated on a case-by-case basis under the minor source permitting program in Colorado that is in place to maintain or make progress towards attainment of the National Ambient Air Quality Standards (NAAQS). While it is true that Colorado's minor source permitting program does not require Best Available Control Technology (BACT), in actual practice Colorado has a track record of progress towards attainment of the NAAQS given that it currently attains all NAAQS except ozone. Furthermore, within the ozone nonattainment area, the minor source permitting program in Colorado requires Reasonably Available Control Technology (RACT) for stationary sources. The commenters' failure to consider this RACT requirement in their analysis of the 2-in-10 baseline calculation contributes to an unrealistically inflated hypothetical emissions increase due to the revised baseline calculation.

With respect to the fact that a facility may select a different two-year baseline period for each pollutant, NSR applicability has long been evaluated on a pollutant-by-pollutant basis, and the NSR Reform rule did not change this. Whether a modification results in a net emissions increase exceeding significance thresholds is determined on a pollutant-by-pollutant basis, and BACT (or, where appropriate, Lowest Achievable Emission Rate (LAER)) is determined on a pollutant-by-pollutant basis. Different pollutants may be generated by different equipment or production processes within a facility. When comparing emissions from different years, it is not unusual for a facility to have a higher level of one pollutant than another in a given year, and then the reverse relationship in a subsequent year. In many such cases, the reason is simply that the facility operates several different processes (e.g., associated with several different products or operations) with different emissions characteristics, and, due to variations in product cycles, the facility runs different processes or production lines more in some years than others. Moreover, the facility may use entirely different control technologies to control different pollutants. It is therefore not unreasonable to calculate a facility's emissions increase and net emissions increase for a particular pollutant with respect to the baseline actual emissions for that pollutant, even if the variability of emissions of that pollutant differs from that of another pollutant emitted at the same facility. Moreover, the commenters have not provided any specific data suggesting that allowing a facility to select its baseline period on a pollutant-by-pollutant basis, rather than requiring a facility to use a single two-year baseline period for all regulated NSR pollutants, will actually result in emissions increases in Colorado.

Finally, with respect to startup, shutdown, and malfunction, Regulation No. 3, in accordance with the federal regulation, defines “Projected Actual Emissions” as including “emissions associated with startups, shutdowns, and malfunctions.” See Regulation No. 3, Part D, Paragraph II.A.36.b.(ii). Thus, startup, shutdown, and malfunction are included in both the calculation of both baseline actual emissions and projected actual emissions. With respect to the exclusion for “non-compliant emissions that occurred while the source was operating above any emission limitation,” the application of this exclusion is straightforward. The calculation of baseline actual emissions cannot include periods of time when those emissions exceed an emissions limitation. Whether enforcement action has been taken is irrelevant for purposes of calculating the baseline actual emissions.

2. Revised Applicability Test

The commenters argue that the revised applicability test would allow existing sources to substantially increase emissions without undergoing NSR. Specifically, the commenters object to (1) extending the actual-to-projected-actual test to all sources, and (2) excluding emissions associated with increased demand (so long as the facility could have accommodated that growth before the modification).

We disagree that these changes will result in substantial emissions increases. The commenters provide no Colorado-specific information in support of these arguments, and consequently our response relies on the NSR Reform rulemaking record.

With regard to the actual-to-projected actual test, EPA concluded that “the environmental impacts of the switch to the actual-to-projected actual test are likely to be environmentally beneficial. However, as with the change to the baseline, the vast majority of sources, including new sources, new units, electric utility steam generating units, and units that actually increase emissions as a result of a change, will be unaffected by this change. Thus, the overall impacts of the NSR changes are likely to be environmentally beneficial, but only to a small extent.” Supplemental Analysis at 14, Appendix G; see also 67 FR 80186, 80196.

With regard to the demand growth exclusion, the commenters' arguments have been addressed in the NSR Reform rulemaking. See 67 FR 80186, 80202-03; see also New York, 413 F.3d at 31-33.

3. Plantwide Applicability Limits

The commenters argue that the PAL provisions would allow existing sources to substantially increase emissions without undergoing NSR.

We disagree that the PAL provisions will result in substantial emissions increases. The commenters provide no Colorado-specific information in support of these arguments, only a Colorado-specific example to illustrate the non-controversial statement that potential-to-emit can be larger than actual emissions. (comment 0020.18 in docket). Consequently, our response relies on the NSR Reform rulemaking record.

The Supplemental Analysis explained that “EPA expects that the adoption of PAL provisions will result in a net environmental benefit. Our experience to date is that the emissions caps found in PAL-type permits result in real emissions reductions, as well as other benefits.” Supplemental Analysis at 6. EPA further explained that:

Although it is impossible to predict how many and which sources will take PALs, and what actual reductions those sources will achieve for what pollutants, we believe that, on a nationwide basis, PALs are certain to lead to tens of thousands of tons of reductions of VOC from source categories where frequent operational changes are made, where these changes are time sensitive, and where there are opportunities for economical air pollution control measures. These reductions occur because of the incentives that the PAL creates to control existing and new units in order to provide room under the cap to make necessary operational changes over the life of the PAL.

Supplemental Analysis at 7. The Supplemental Analysis, and particularly Appendix B, provides additional details regarding EPA's analysis of PALs and anticipated associated emissions decreases. See also 67 FR 80186, 80214-22; New York, 413 F.3d at 36-38.

Comment No. 2: EPA's proposed approval contravenes the CAA's General Savings Clause set forth in section 193 of the Act.

EPA Response No. 2: EPA's response to the section 193 issues raised by the commenters involves many of the same elements of the response above to the section 110(l) comments, which is also incorporated by reference here. Section 193 states (in relevant part) that “[n]o control requirement in effect, or required to be adopted by an order, settlement agreement, or plan in effect before November 15, 1990, in any area which is a nonattainment area for any air pollutant may be modified after November 15, 1990, in any manner unless the modification insures equivalent or greater emission reductions of such air pollutant.” 42 U.S.C. 7515.

Assuming for purposes of this discussion that section 193 does apply to the instant action, as discussed earlier in this notice, EPA has previously determined and explained in the Supplemental Analysis that implementation of the 2002 NSR Reform Rule provisions still in effect (that is, those not vacated by the DC Circuit) are expected to have at least a neutral environmental effect. EPA has no information indicating that findings associated with EPA's Supplemental Analysis would not apply in Colorado—that is, that Colorado's SIP revisions would not have at least a neutral (and possibly a modest beneficial) environmental effect.

Therefore, even if section 193 does apply to this action, EPA does not agree with the commenters' assertions that the SIP revisions approved in this action raise a section 193 concern. EPA is simply approving Colorado's SIP revisions that adopt rules equivalent to the federal rules, and, as discussed earlier in this notice, the Supplemental Analysis that EPA developed to support adoption of the federal rules suggests that the effects of the revised rules will be at least neutral. The Colorado SIP will continue to operate with the full suite of NSR-related elements, including a comprehensive minor source program.

Comment No. 3: EPA's proposed approval will interfere with the ozone attainment demonstration (with respect to the 1997 8-hour ozone standard) for the Denver Metro area and interfere with the Early Action Compact (EAC).

EPA Response No. 3: These comments are no longer relevant since much has changed regarding the EAC and Denver's ozone attainment status between now and when the EPA first proposed approval of NSR Reform for Colorado.

Denver failed to meet the requirements of the EAC and, as of November 2007, was designated nonattainment for the 1997 8-hour ozone standard. Since that time, EPA has approved a SIP revision (76 FR 47443) for the State of Colorado that includes an attainment demonstration by November 2010 for the Denver Metro Area. Ambient air monitoring data also supports the attainment demonstration, with no ozone monitors in the Denver Metro Area showing a violation of the 1997 8-hour ozone standard using design values from 2007-2009 (82 ppb) or from 2008-2010 (78 ppb). Preliminary data from 2009-2011 also shows attainment with respect to the 1997 8-hour ozone standard.

Comment No. 4: Colorado is preparing to make substantial revisions to its Inspection & Maintenance (I/M) program that will further undermine the ozone attainment demonstration for the Denver Metro Area.

EPA Response No. 4: The comment is outside the scope of this action since EPA did not propose to take any action with respect to Colorado's I/M program. Furthermore, many aspects of the I/M program in the Denver Metro Area/North Front Range have changed since this comment was originally made. On September 25, 2006, the State of Colorado submitted a SIP submittal for the CAA section 175A(b) second 10-year carbon monoxide (CO) maintenance plans for the Denver metropolitan and Longmont areas. This SIP submittal also included revisions to Colorado's Regulation Number 11 which included the removal of the I/M program in both carbon monoxide maintenance areas. EPA approved these second 10-year maintenance plan SIP revisions on August 17, 2007 (see 72 FR 46148). However, in our August 17, 2007 action, we drew special attention to the point that the I/M program would continue in both areas for purposes of the ozone element of the SIP: “* * * the removal of the I/M program from Denver's revised CO maintenance plan does not mean the I/M program is eliminated. The State relies on the I/M program in the Denver's 1-hour ozone maintenance plan and Denver's 8-hour ozone Early Action Compact (EAC). Therefore, the motor vehicle I/M program will remain intact in the Denver-metro area.” (72 FR 46155, August 17, 2007). We also note that we had previously approved Fort Collins' and Greeley's revised CO maintenance plans which also involved the removal of the Basic I/M program from the SIP for both areas (see 68 FR 43316, July 22, 2003 and 70 FR 48650, August 19, 2005, respectively). Those actions effectively eliminated Basic I/M in Larimer and Weld Counties; however, we note that those basic I/M programs had only been in place for purposes of CO emission reductions.

Colorado has submitted two other SIP revisions, after our August 17, 2007 Federal Register action, that involve amendments to Regulation Number 11. Those revisions involve a low emitter index (LEI) of vehicles with respect to the Clean Screen element of Regulation Number 11 and to eliminate obsolete provisions for gasoline filter neck inspections and CFC (refrigerant) leak checks. The latter submittal has since been withdrawn by the State and we have not acted on the LEI submittal yet. However, we do note that since our most recent action to Federally approve revisions to Colorado's Regulation Number 11 (see 72 FR 46148, August 17, 2007), Colorado has reinstated the I/M programs in Larimer and Weld Counties for the purpose of reducing ozone precursor emissions. These I/M programs contain State-only enforceable provisions and the re-implementation of the I/M programs began on November 1, 2010. These State-only I/M expansion provisions for Larimer and Weld Counties appear in Colorado's Regulation Number 11, Motor Vehicle Emissions Inspection Program, 5 CCR 1001-13, current as State-adopted on January 20, 2011; State-effective on March 2, 2011. We note that EPA has approved an attainment demonstration of the 1997 8-hour ozone NAAQS for the Denver Metro Area/North Front Range (76 FR 47443, August 5, 2011) and this attainment demonstration included ozone precursor emission reductions from the continued implementation of Colorado's Federally-approved I/M program. Furthermore, as stated above, ambient data shows attaining monitors using design values from 2007-2009 (82 ppb) and from 2008-2010 (78 ppb). Preliminary data from 2009-2011 also shows attainment with respect to the 1997 8-hour ozone standard.

Comment No. 5: Title 1, Part C, Section 160 of the CAA states that air quality in national parks must be protected. It is contrary to this CAA section for EPA to approve a rule revision that would increase air pollution in Colorado's Class I areas. Section 110(l) is proof that such a SIP revision should not be approved.

EPA Response No. 5: EPA's response to the air quality in national parks issue raised by the commenters involves many of the same elements of the response above to the section 110(l) comments, which is also incorporated by reference here. EPA's national analysis in support of the 2002 NSR Reform Rules indicates that the non-vacated provisions of the NSR Reform Rules will have a neutral or beneficial impact.

The primary issue raised by the commenters was the impact of nitrogen deposition in Rocky Mountain National Park (RMNP) which resides fully within the boundaries of Colorado. The commenters incorporate by reference a September 1, 2004 petition to the Department of Interior (DOI) from Colorado Trout Unlimited and Environmental Defense. The petition asks DOI to “[c]all for the EPA and the State of Colorado to fulfill their legal responsibilities to lower NO_X and Ammonia to protect human health, plants and ecosystems, and scenic vistas at Rocky Mountain National Park and to fully mitigate nitrogen deposition above the identified critical load.” Partly in response to this petition, a Memorandum of Understanding was signed by the National Park Service, EPA, and the CDPHE to form the RMNP Initiative. The agencies agreed to pursue a more in-depth review of the issues related to nitrogen deposition in RMNP and a course of action to address them. As a result, the Initiative formulated the “Nitrogen Deposition Reduction Contingency Plan” which was endorsed by the Colorado Air Quality Control Commission (AQCC) on June 17, 2010. The plan includes goals for reducing nitrogen deposition incrementally over 5 year periods with contingencies in place should these goals not be reached.

In addition to the contingency measures adopted by the multi-agency plan, it is expected that current and future ozone planning in Colorado should positively impact nitrogen deposition in RMNP. Reduction in ozone precursors (e.g. NO_X) that result from the control measures adopted in Colorado's recent federally approved ozone attainment demonstration SIP will also contribute to a reduction of nitrogen deposition in RMNP.

Furthermore, Colorado is subject to the Protection of Visibility requirements at 40 CFR part 51, subpart P, including the Reasonably Attributable Visibility Impairment (RAVI) requirements, the Regional Haze requirements, and the Grand Canyon Visibility Transport Commission requirements. Each of these programs requires Colorado to achieve a variety of emissions reductions aimed at protecting visibility in national parks and other Class I areas. In particular, EPA expects that Colorado's SIP revision submission to meet the Regional Haze requirements, including both the Best Available Retrofit Technology (BART) controls and the long-term strategy for regional haze, will provide NO_X reductions that will reduce the nitrogen deposition in RMNP.

III. Final Action

EPA is approving portions of Colorado's revisions to Regulation No. 3, submitted by Colorado on July 11, 2005 and October 25, 2005, that relate to the PSD and NSR construction permits program. These revisions meet the minimum program requirements of the December 31, 2002, EPA NSR Reform rulemaking. Several of the remaining revisions made by Colorado to Regulation No. 3 as adopted on April 16, 2004 by the Colorado AQCC are being acted on by EPA in a separate final action related to Colorado's Interstate Transport SIP (see proposed action at 76 FR 21835, April 19, 2011).

IV. Statutory and Executive Order Reviews

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it approves a state rule implementing a Federal standard.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

The Congressional Review Act, 5 U.S.C. section 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A major rule cannot take effect until 60 days after it is published in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. section 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by June 11, 2012. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

• Environmental protection
• Air pollution control
• Carbon monoxide
• Incorporation by reference
• Intergovernmental relations
• Lead
• Nitrogen dioxide
• Ozone
• Particulate

40 CFR part 52 is amended as follows:

PART 52—[AMENDED]

1. The authority citation for part 52 continues to read as follows:

Authority: 42 U.S.C. 7401 et seq.

Subpart G—Colorado

2. Section 52.320 is amended by adding paragraph (c)(122) to read as follows: