Review of New Sources and Modifications in Indian Country, 38748-38808 [2011-14981]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 76, Number 127 (Friday, July 1, 2011)]
[Rules and Regulations]
[Pages 38748-38808]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-14981]



[[Page 38747]]

Vol. 76

Friday,

No. 127

July 1, 2011

Part II





Environmental Protection Agency





-----------------------------------------------------------------------





40 CFR Parts 49 and 51





Review of New Sources and Modifications in Indian Country; Final Rule

Federal Register / Vol. 76 , No. 127 / Friday, July 1, 2011 / Rules 
and Regulations

[[Page 38748]]


-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 49 and 51

[EPA-HQ-OAR-2003-0076; FRL-9320-2]
RIN 2060-AH37


Review of New Sources and Modifications in Indian Country

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The EPA is finalizing a Federal Implementation Plan (FIP) 
under the Clean Air Act (CAA or Act) for Indian country. The FIP 
includes two New Source Review (NSR) regulations for the protection of 
air resources in Indian country. The first rule applies to new and 
modified minor stationary sources (minor sources) and to minor 
modifications at existing major stationary sources (major sources) 
throughout Indian country. The second rule (nonattainment major NSR 
rule) applies to new and modified major sources in areas of Indian 
country that are designated as not attaining the National Ambient Air 
Quality Standards (NAAQS). These rules will be implemented by EPA or a 
delegate Tribal agency assisting EPA with administration of the rules, 
until replaced by an EPA-approved implementation plan.

DATES: This final rule is effective on August 30, 2011.

ADDRESSES: The EPA has established a docket for this action under 
Docket ID No. EPA-HQ-OAR-2003-0076. All documents in the docket are 
listed on the https://www.regulations.gov Web site. Although listed in 
the index, some information is not publicly available, e.g., 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 https://www.regulations.gov or in hard copy at the Air and 
Radiation Docket and Information Center, EPA/DC, 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 and Radiation 
Docket and Information Center is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Ms. Jessica Monta[ntilde]ez, Air 
Quality Policy Division, Office of Air Quality Planning and Standards 
(C504-03), U.S. Environmental Protection Agency, Research Triangle 
Park, North Carolina 27711, telephone number (919) 541-3407, facsimile 
number (919) 541-5509, e-mail address: montanez.jessica@epa.gov.

SUPPLEMENTARY INFORMATION: The information in this preamble is 
organized as follows:

I. General Information
    A. Does this action apply to me?
    B. Where can I get a copy of this document and other related 
information?
II. Overview of the Final Rules
III. Background
    A. What is the New Source Review (NSR) program?
    1. What are the general requirements of the major NSR program?
    2. What are the general requirements of the minor NSR program?
    B. What is the basis for EPA's authority to implement CAA 
programs in Indian country?
    C. What is the status of the NSR air quality programs in Indian 
country?
    D. What consultation and outreach has been done with Tribal 
leaders and representatives?
IV. Final Minor NSR Program for Indian Country
    A. General Provisions Under the Minor NSR Program
    1. What is a minor source and which minor sources are subject to 
this rule?
    a. Minor Source Definition
    b. Determining Applicability for New Minor Sources
    2. What is a modification and which modifications are subject to 
this rule?
    a. Definition of ``Modification''
    b. Determining Applicability for Modifications
    3. What are the minor NSR thresholds?
    4. What emissions units and activities at minor sources are 
exempt from this rule?
    B. Site-Specific Permits
    1. What are the requirements for permit applications?
    2. What technical reviews must the reviewing authority conduct?
    a. Control Technology Review
    b. Air Quality Impacts Analysis (AQIA)
    3. What are the permit content requirements?
    a. Emissions Limitations
    b. Monitoring, Recordkeeping and Reporting
    c. Other Permit Content Requirements
    4. What are the permit issuance procedures, permit term and 
public participation requirements?
    a. Permit Issuance Process
    b. Permit Term
    c. Public Participation Requirements
    5. What are the provisions for final action on a permit, permit 
reopenings, administrative permit revisions and administrative and 
judicial review procedures?
    a. Final Action on a Permit
    b. Permit Reopenings
    c. Administrative Permit Revisions
    d. Administrative and Judicial Review Procedures
    C. General Permits
    1. What is a ``General Permit''?
    2. What is the process for issuing general permits?
    3. For what categories will general permits be issued?
    4. What are the permit content requirements for general permits?
    5. What is the process that you may use for obtaining coverage 
under a general permit?
    D. Synthetic Minor Source Permits
    E. Case-by-Case MACT Determinations Under Section 112(g) of the 
Act
    F. Treatment of Existing Minor Sources Under the Final Minor NSR 
Program
V. Final Major NSR Program for Nonattainment Areas in Indian Country
    A. What are the requirements for major source permitting?
    B. How is EPA addressing the lack of available offsets in Indian 
country?
    1. Economic Development Zone Option
    2. Appendix S, Paragraph VI Option
    C. How do I meet the statewide compliance certification 
requirement of the Act and Appendix S?
    D. What are the public participation requirements of this 
program?
    E. What are the provisions for final action on a permit, permit 
reopenings and administrative and judicial review procedures?
    1. Final Action on a Permit
    2. Permit Reopenings
    3. Administrative and Judicial Review Procedures
    F. How is EPA revising Appendix S?
VI. Legal Basis, Statutory Authority and Jurisdictional Issues
    A. What is the basis for EPA's authority to implement these NSR 
programs in Indian country?
    B. How does a Tribe receive delegation to assist EPA with 
administration of the Federal minor and major NSR rules?
    C. What happens to permits previously issued by states to 
sources in Indian country?
VII. Implementation Issues
    A. Are Tribes allowed to collect fees for NSR permitting?
    B. Who retains enforcement authority in Indian country?
    C. What is the implementation schedule for the final rules?
VIII. 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 & Safety Risks
    H. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution or Use

[[Page 38749]]

    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act
IX. Statutory Authority

I. General Information

A. Does this action apply to me?

    Entities potentially affected by this final rule include owners and 
operators of emission sources in all industry groups located in Indian 
country, EPA and Tribal governments that are delegated administrative 
authority to assist EPA with the implementation of these Federal 
regulations. Categories and entities potentially affected by this 
action are expected to include:

------------------------------------------------------------------------
                                                  Examples of regulated
             Category               NAICS \a\           entities
------------------------------------------------------------------------
Industry.........................        21111  Oil and gas production/
                                                 operations.
                                        211111  Crude petroleum and
                                                 natural gas extraction
                                        211112  Natural gas liquid
                                                 extraction.
                                        212321  Sand and gravel mining.
                                         22111  Electric power
                                                 generation.
                                        221210  Natural gas
                                                 distribution.
                                         22132  Sewage treatment
                                                 facilities.
                                         23899  Sand and shot blasting
                                                 operations.
                                        311119  Animal food
                                                 manufacturing.
                                          3116  Beef cattle complex,
                                                 slaughter house and
                                                 meat packing plant.
                                        321113  Sawmills.
                                        321212  Softwood veneer and
                                                 plywood Manufacturing.
                                         32191  Millwork (wood products
                                                 mfg).
                                        323110  Printing operations
                                                 (lithographic).
                                        324121  Asphalt hot mix.
                                          3251  Chemical preparation.
                                         32711  Clay and ceramics
                                                 operations (kilns).
                                         32732  Concrete batching plant.
                                          3279  Fiber glass operations.
                                        331511  Casting foundry (Iron).
                                          3323  Fabricated structural
                                                 metal.
                                        332812  Surface coating
                                                 operations.
                                          3329  Fabricated metal
                                                 products.
                                         33311  Machinery manufacturing.
                                         33711  Wood kitchen cabinet
                                                 manufacturing.
                                         42451  Grain elevator.
                                         42471  Gasoline bulk plant.
                                          4471  Gasoline station.
                                         54171  Professional, scientific
                                                 and technical services.
                                        562212  Solid waste landfill.
                                         72112  Other (natural gas-fired
                                                 boilers).\b\
                                        811121  Auto body refinishing.
Federal government...............       924110  Administration of Air
                                                 and Water Resources and
                                                 Solid Waste Management
                                                 Programs.
State/local/Tribal government....       924110  Administration of Air
                                                 and Water Resources and
                                                 Solid Waste Management
                                                 Programs.
------------------------------------------------------------------------
\a\ North American Industry Classification System.
\b\ Used NAICS code designated for casino hotels. However, the projected
  new and modified sources listed under ``other (natural gas-fired
  boilers)'' include not only boilers at casino hotels, but also new
  sources listed as ``boilers'' and new Tribal government facilities
  assumed to have natural gas fired boilers.

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
action. To determine whether your facility is regulated by this action, 
you should examine the applicability criteria in the final minor and 
major NSR programs for Indian country, 40 CFR 49.151 through 49.161 and 
through 49.175, respectively. If you have any questions regarding the 
applicability of this action to a particular entity, contact the person 
listed in the preceding FOR FURTHER INFORMATION CONTACT section.

B. 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 final rule will also be available on the World Wide Web. Following 
signature by the EPA Administrator, a copy of this final rule will be 
posted in the regulations and standards section of our NSR home page 
located at https://www.epa.gov/nsr and on the Tribal air home page at 
https://www.epa.gov/oar/tribal.

II. Overview of the Final Rules

    The EPA is ensuring that air resources in Indian country will be 
protected in the manner intended by the Act by establishing a 
preconstruction permitting program for new or modified minor sources, 
minor modifications at major sources, and new major sources or major 
modifications in nonattainment areas. In addition, we are establishing 
a minor source permitting mechanism for major sources that wish to 
voluntarily limit emissions to become synthetic minor sources \1\ and 
for approving case-by-case maximum achievable control technology (MACT) 
determinations.\2\ Prior to this action, there has been no

[[Page 38750]]

Federal permitting mechanism for minor sources in Indian country and 
for major sources in areas of Indian country that are designated as not 
attaining the NAAQS. These final rules will fill this regulatory gap. 
In addition, these rules will provide regulatory certainty to allow for 
environmentally sound economic growth in Indian country.
---------------------------------------------------------------------------

    \1\ Sources located within the exterior boundaries of Indian 
reservations in Idaho, Oregon and Washington can apply for a non-
title V operating permit to establish synthetic minor status under 
the FIPs applicable to those reservations until this rule becomes 
effective. See 40 CFR 49.139 and 40 CFR part 49, subpart M. However, 
after the effective date of this rule, sources seeking synthetic 
minor status within the exterior boundaries of Indian reservations 
in these three states as well as the rest of Indian country must 
apply for synthetic minor source permits under the provisions of 
this rule.
    \2\ Section 112(g)(2)(B) of the Act provides that you may not 
construct or reconstruct a major source of HAPs unless the 
appropriate permitting authority determines that MACT for new 
sources will be met. If the Administrator has not established a MACT 
standard for the source category, the Act requires that MACT be 
determined on a case-by-case basis. See Section IV.E. of this 
preamble for more information on case-by-case MACT determinations.
---------------------------------------------------------------------------

    The minor NSR rule applies to new and modified minor sources and to 
minor modifications at major sources. New minor sources with a 
potential to emit (PTE) equal to or greater than the minor NSR 
thresholds or modifications at minor sources with allowable emissions 
increases equal to or greater than the minor NSR thresholds must apply 
for and obtain a minor NSR permit prior to commencing construction of 
the new source or modification. At an existing major source, if a 
proposed modification does not qualify as a major modification (which 
would be subject to major NSR) based on the actual-to-projected-actual 
test, it is considered a minor modification and is subject to the minor 
NSR program requirements, if the net emissions increase from the 
actual-to-projected-actual test is equal to or exceeds the minor NSR 
thresholds listed in Table 1 of section IV.A.3 of this preamble. A 
major source with such a minor modification must apply for and obtain a 
minor NSR permit prior to commencing construction of the minor 
modification. In addition, these sources must install and operate 
control technology as determined by the reviewing authority on a case-
by-case basis. At the discretion of the reviewing authority, such 
sources may also be required to submit air quality impact analyses as 
part of their permit applications. For minor sources, as an alternative 
to a site-specific permit, some sources can request for coverage under 
a general permit.\3\
---------------------------------------------------------------------------

    \3\ As described in section IV.C of this preamble, a general 
permit is a preconstruction permit that may be applied to a number 
of similar emission units or sources. The purpose of a general 
permit is to simplify the permit issuance process for similar 
facilities so that a reviewing authority's limited resources need 
not be expended for site-specific permit development for such 
facilities.
---------------------------------------------------------------------------

    This rule will also allow otherwise major sources in Indian country 
to voluntarily accept emission limitations on their PTE to become 
``synthetic minor sources.'' Synthetic minor sources may include 
sources that emit regulated NSR pollutants and/or hazardous air 
pollutants (HAPs) \4\ and any limitations on PTE must be enforceable as 
a practical matter (that is, both legally and practicably enforceable) 
as defined in this regulation under 40 CFR 49.152(d). The practice of 
creating synthetic minor sources to avoid major NSR and title V is 
common under most state and local minor NSR permitting programs. 
However, outside of Idaho, Oregon and Washington, no such minor source 
permitting mechanism has been available in Federal regulations for 
Indian country, which discouraged sources that could qualify as 
synthetic minors from locating in areas of Indian country outside these 
three states. We therefore believe that inclusion of this provision in 
the final rules will significantly benefit Tribes by encouraging larger 
sources that can qualify as synthetic minors to locate in Indian 
country, thereby promoting environmentally sound economic growth.
---------------------------------------------------------------------------

    \4\ In such cases, these sources will be subject to the minor 
NSR regulations under 40 CFR 49.151-49.165 and/or the applicable 
area source regulations under 40 CFR part 63. These sources will not 
be subject to the major NSR regulations under 40 CFR 52.21 (PSD) and 
40 CFR 49.166 through 49.175 (nonattainment major NSR), the major 
source MACT regulations under 40 CFR part 63 and/or the title V 
operating permit regulations. For information on when a major HAP 
source can obtain federally enforceable limits on its potential to 
emit, see the policy memorandum titled: ``Potential to Emit for MACT 
Standards--Guidance on Timing Issues,'' John S. Seitz, EPA, May 16, 
1995.
---------------------------------------------------------------------------

    Synthetic minor sources will undergo site-specific permitting; that 
is, general permits will not be issued to synthetic minor sources. 
However, we intend to develop general permits for some common types of 
emissions units and minor sources to streamline the permitting process. 
The initial establishment of the general permit will include control 
technology review and associated emission limits. Thus, sources will 
not be required to conduct a case-by-case control technology review 
when they apply for coverage under a general permit.
    Under the nonattainment major NSR rule, affected sources are 
required to comply with the provisions of 40 CFR part 51, Appendix S, a 
transitional rule which generally applies to areas that do not have an 
approved nonattainment major NSR program for a particular pollutant in 
their State Implementation Plan (SIP). Sources subject to this rule 
must meet requirements for Lowest Achievable Emission Rate (LAER) 
control technology, emissions offsets and compliance certification.
    We are adopting these final rules after further evaluation of the 
proposed provisions and consideration of the public comments. On August 
21, 2006 (71 FR 48696), EPA proposed the ``Review of New Sources and 
Modifications in Indian Country'' (i.e., Tribal NSR rules). EPA also 
held an extensive outreach and consultation period (described in 
section III.D of this preamble), along with an extensive public comment 
period that ended on March 20, 2007. The comments provided detailed 
information specific to Indian country and the final rules incorporate 
many of the suggestions we received. We respond to many of these 
comments in explaining our rationale for the final rules, which is 
described in sections IV through VII.
    The final rules adopt many elements of the proposal, but differ 
from the proposal in several important respects. For the minor NSR 
rule, we had proposed a 30-day public comment period for the initial 
establishment of the general permit and also proposed that coverage of 
individual sources under general permits would not undergo a public 
comment period. In the final rule, to address concerns from Tribes, we 
have slightly changed the proposed notification provisions. A source 
that wants to request coverage under the general permit will be 
required to submit such request to the reviewing authority. At the same 
time, the source owner must also submit a copy of this request to the 
Tribe in the area where the source is locating. We will also post 
notice of the coverage request under a general permit on our Web site. 
During our review of your request for coverage under the general 
permit, commenters can only notify us of any concerns about the 
eligibility of your source to obtain coverage under that general permit 
and not on any other issue. For the minor NSR rule, we had also 
proposed Plantwide Applicability Limitations (PALs) and project 
netting. A minor source PAL would have been a source-wide limitation on 
allowable emissions of a regulated NSR pollutant expressed in tons per 
year (tpy) that was enforceable as a practical matter. However, we are 
not finalizing minor source PALs after consideration of the comments we 
received. At this time, we are also not finalizing project netting, the 
calculation of the total emissions increase that would result from a 
proposed modification by summing both the increases and decreases 
resulting from the modification, since we decided not to take final 
action on project netting for the major NSR program. (See Prevention of 
Significant Deterioration (PSD) and Nonattainment New Source Review 
(NSR): Aggregation and Project Netting; 74 FR 2376.)
    Regarding the proposed list of emissions units and activities that 
will be exempted from the minor NSR program, we are finalizing an 
amended list. This list takes into consideration the comments received 
and the recent

[[Page 38751]]

developments in greenhouse gas regulations. We are also committing to 
the development of a supplemental rule to determine if additional 
exempted units/activities should be added to the list.
    Furthermore, to address commenters' concerns about EPA's ability to 
issue minor NSR permits on a timely basis, we have decided to phase in 
the implementation dates of these rules. For example, we are delaying 
the implementation date of this rule for new and modified true minor 
sources by the earlier of 6 months after the general permit for a 
source category is published in the Federal Register or 36 months from 
the effective date of this rule, that is, September 2, 2014. Existing 
true minor sources will not be subject to the requirements of the minor 
NSR program until they propose a modification. However, true minor 
sources will be required to register within 18 months from the 
effective date of this rule, that is, by March 1, 2013, or within 90 
days after the source begins operation, whichever is later (see section 
VII.C of this preamble for more details on these provisions).
    For the major NSR rule, we are not finalizing the proposed Appendix 
S, paragraph VI as an option for offset \5\ waivers due to certain 
comments raising concerns with implementation of this waiver. Relative 
to the compliance certification requirement,\6\ we are finalizing a 
state-wide compliance requirement consistent with section 173(a)(3) of 
the Act.
---------------------------------------------------------------------------

    \5\ Under the CAA, emissions reductions (offsets) from existing 
sources in the area of the proposed source (whether or not under the 
same ownership) are obtained such that there will be reasonable 
progress towards attainment of the applicable NAAQS. See section 
173(a)(1) of the Act.
    \6\ Also under the CAA, a permit applicant must certify that all 
existing major sources owned or operated by the applicant (or any 
entity controlling, controlled by or under common control with the 
applicant) in the same state as the proposed source are in 
compliance with (or under a federally-enforceable compliance 
schedule for) all applicable emission limitations and standards 
under the Act. See section 173(a)(3) of the Act.
---------------------------------------------------------------------------

    We are finalizing the minor NSR and the nonattainment major NSR 
permit programs pursuant to section 110(a)(2)(C), part D of title I and 
section 301(d) of the Act.

III. Background

A. What is the New Source Review (NSR) program?

1. What are the general requirements of the major NSR program?
    The major NSR program contained in parts C and D of title I of the 
Act is a preconstruction review and permitting program applicable to 
new major sources and major modifications at such sources. In areas not 
meeting health-based NAAQS and in ozone transport regions (OTR), the 
program is implemented under the requirements of part D of title I of 
the Act. We call this program the ``nonattainment'' major NSR program. 
In areas meeting the NAAQS (``attainment'' areas) or for which there is 
insufficient information to determine whether they meet the NAAQS 
(``unclassifiable'' areas), the NSR requirements under part C of title 
I of the Act apply. We call this program the Prevention of Significant 
Deterioration (PSD) program. Collectively, we also commonly refer to 
these programs as the major NSR program. These rules are contained in 
title 40 of the Code of Federal Regulations (CFR), Sec. Sec.  51.165, 
51.166, 52.21 and 52.24 (40 CFR 51.165, 51.166, 52.21 and 52.24) and 40 
CFR part 51, Appendices S and W.
    For newly constructed, ``greenfield'' sources, the determination of 
whether a source is subject to the major NSR program is based on the 
source's PTE. The Act, as implemented by our rules, sets applicability 
thresholds for major sources in both attainment and nonattainment 
areas. For nonattainment areas, these thresholds are 100 tpy of any 
pollutant subject to regulation under the Act or smaller amounts, 
depending on the nonattainment classification. For attainment areas the 
thresholds are 100 or 250 tpy, depending on the source type.\7\ A new 
source with a PTE at or above the applicable threshold amount 
``triggers,'' or is subject to, major NSR.
---------------------------------------------------------------------------

    \7\ Sources listed in section 169(l) of the Act are subject to a 
threshold of 100 tpy (see 40 CFR 52.21(b)(1)(i)(a)). All other 
sources are subject to a 250 tpy threshold. (See 40 CFR 
52.21(b)(1)(i)(b).) In addition, under the recently finalized 
``Greenhouse Gas Tailoring Rule,'' greenhouse gases will be phased 
into the PSD program with higher applicability thresholds (75 FR 
31514).
---------------------------------------------------------------------------

    For existing major sources, major NSR applies to a major 
modification. For a modification to be major, the following three 
criteria have to be met:
    (1) A physical change in or change in the method of operation of a 
major source must occur;
    (2) The increase in emissions resulting from this change must be 
significant (equal to or above the significance levels defined in 40 
CFR 52.21(b)(23) for PSD or 40 CFR part 51, Appendix S, paragraph 
II.A.10 for nonattainment major NSR); and
    (3) The increase in emissions resulting from the change must result 
in a significant net emissions increase. In other words, when the 
increase from the project is added to other contemporaneous increases 
and decreases in actual emissions \8\ at the source, the net emissions 
increase must be significant (equal to or above the significance levels 
defined in 40 CFR 52.21(b)(23) for PSD or 40 CFR part 51, Appendix S, 
paragraph II.A.10 for nonattainment major NSR).
---------------------------------------------------------------------------

    \8\ In approximate terms, ``contemporaneous'' emissions 
increases or decreases are those that have occurred between the date 
5 years immediately preceding the proposed physical or operational 
change and the date that the increase from the change occurs. See 40 
CFR 52.21(b)(3)(ii) for PSD. For nonattainment major NSR, see, 40 
CFR part 51, Appendix S, paragraph II.A.6(ii).
---------------------------------------------------------------------------

    Major sources and major modifications subject to nonattainment 
major NSR must apply state-of-the-art emissions control technologies, 
including any pollution prevention measures, to achieve the lowest 
achievable emission rate. The lowest achievable emission rate is based 
on the most stringent emission limitation in the implementation plan of 
any state or achieved in practice, for the source category under 
review.
    Each major source subject to nonattainment major NSR must also 
offset its emissions increase by obtaining emissions reductions from 
other sources in the area or in an area of equal or higher 
nonattainment classification that contributes to nonattainment in the 
proposed major source's area. The ratio of the offset relative to the 
proposed increase must be at least one-to-one and is based on the 
severity of the area's nonattainment classification. For ozone and 
particulate matter less than or equal to 10 microns in aerodynamic 
diameter (PM10), the more polluted the air is where the 
source is locating or expanding, the greater the required offset ratio 
is. The emissions reductions to be used as offsets must be surplus (not 
otherwise required by the Act), quantifiable, Federally enforceable and 
permanent. See sections 173(a) and (c) of the Act and 40 CFR 
51.165(a)(3).
    Additionally, each nonattainment major NSR permit applicant must 
also conduct an analysis of alternative sites, sizes, production 
processes and environmental control techniques demonstrating that the 
benefits of the proposed emissions source significantly outweigh the 
environmental and social costs of its location, construction or 
modification. Moreover, each nonattainment major NSR permit applicant 
must demonstrate that all other major sources under her/his control in 
the same state are in compliance or on a schedule of compliance with 
all emission limitations and standards of the Act.

[[Page 38752]]

    Under the PSD program for attainment areas, a major source or 
modification must apply Best Available Control Technology (BACT), which 
may be based on pollution prevention techniques. In addition, the 
source must analyze the impact of the project on ambient air quality to 
assure that no violation of the NAAQS or PSD increments will result and 
must analyze impacts on soil, vegetation and visibility. Sources or 
modifications that would impact Class I areas (e.g., national parks) 
may be subject to additional requirements to protect air quality 
related values (AQRVs) that have been identified for such areas.
2. What are the general requirements of the minor NSR program?
    Section 110(a)(2)(C) of the Act requires that every SIP include a 
program to regulate the construction and modification of stationary 
sources, including a permit program as required by parts C and D of 
title I of the Act, to ensure attainment and maintenance of the NAAQS. 
Parts C and D address the major NSR program for major sources and the 
permitting program for minor sources is addressed by section 
110(a)(2)(C) of the Act. We commonly refer to the latter program as the 
minor NSR program. A minor source means a source whose PTE is lower 
than the major NSR applicability threshold for a particular pollutant 
as defined in the applicable nonattainment major NSR program or PSD 
program.
    States must develop minor NSR programs to attain and maintain the 
NAAQS and the Federal requirements for state minor NSR programs are 
outlined in 40 CFR 51.160 through 51.164. These Federal requirements 
for minor NSR programs are considerably less prescribed than those for 
major sources and as a result there is a larger variation of 
requirements in the state minor NSR programs.
    Furthermore, Section 110(a)(2)(C) of the Act provides us with a 
broad degree of discretion in developing a program to regulate new and 
modified minor source construction activities in Indian country.

B. What is the basis for EPA's authority to implement CAA programs in 
Indian country?

    The Tribal Authority Rule (TAR) authorizes eligible Indian Tribes 
to implement EPA-approved nonattainment major NSR (part D of title I of 
the Act), PSD (part C of title I of the Act) and other programs under 
the Act in the same manner as states. This is accomplished when Indian 
Tribes develop Tribal Implementation Plans (TIPs), which are plans 
similar to SIPs. If a Tribe develops a TIP to implement a CAA program, 
the TIP, once it is approved, will replace the Federal program as the 
requirement for that area of Indian country and the Tribe will become 
responsible for implementing that particular program. However, if 
Indian Tribes are unable or choose not to include a CAA program such as 
NSR in a TIP, we will implement the program under these rules.
    The Act provides us with broad authority to protect air resources 
throughout the Nation, including air resources in Indian country. See, 
for example, the preamble discussion for the proposed and final TAR (59 
FR 43956, 43958-61, August 25, 1994; 63 FR 7254, 7262-64, February 12, 
1998) and the preamble discussion for the proposed revisions to the 
part 71 Federal operating permits program for Indian country (62 FR 
13748, 13750, March 21, 1997). In the preambles to the proposed and 
final TAR, we discussed generally the legal basis under the Act for EPA 
and Tribal regulation of sources of air pollution in Indian country. We 
concluded that the Act constitutes a statutory delegation of Federal 
authority to eligible Tribes over all sources of air pollution within 
the exterior boundaries of their reservations.
    Further, under the Act, Tribes may also apply to administer Tribal 
air quality programs for non-reservation areas over which they can show 
jurisdiction.\9\ See 63 FR 7254-7259; 59 FR 43958-43960; Arizona Public 
Service Co. v. EPA, 211 F.3d 1280 (DC Cir. 2000), cert. den., 532 U.S. 
970 (2001).
---------------------------------------------------------------------------

    \9\ We believe that in the context of programs under the Act, 
states generally lack the authority to regulate air quality in 
Indian country as defined in 18 U.S.C. 1151. See Alaska v. Native 
Village of Venetie Tribal Government, 522 U.S. 520, 527 fn. 1 (1998) 
(``Generally speaking, primary jurisdiction over land that is Indian 
country rests with the Federal Government and the Indian tribe 
inhabiting it and not with the States.''), California v. Cabazon 
Band of Mission Indians, 480 U.S. 202 (1987) and HRI v. EPA, 198 
F.3d 1224 (10th Cir. 2000); see also discussion in EPA's final rule 
for the federal operating permits program (64 FR 8251-8255, February 
19, 1999). To provide additional certainty to regulated entities, we 
believe it is helpful to clarify the extent to which state NSR 
programs have force in Indian country. We interpret past approvals 
and delegations of NSR programs as not extending to Indian country 
unless the state has made an explicit demonstration of jurisdiction 
over Indian country and we have explicitly approved or delegated the 
state's program for such area. This is consistent with Congress' 
requirement that we approve state and tribal programs only where 
there is a demonstration of adequate authority. See sections 
110(a)(2)(E), 110(o) and 301(d) of the Act and 40 CFR part 49. Since 
states generally lack the authority to regulate air resources in 
Indian country, we do not believe it would be appropriate for us to 
approve state programs under the Act as covering Indian country 
where there has not been an explicit demonstration of adequate 
jurisdiction and where we have not explicitly indicated our intent 
to approve the state program for an area of Indian country. In state 
NSR program approvals and delegations, we generally were not faced 
with state assertions of authority to regulate sources in Indian 
country. However, to the extent states or others may have 
interpreted our past approvals or delegations that were not based on 
explicit demonstrations of adequate authority and did not explicitly 
grant approval in Indian country as approvals to operate NSR 
programs in Indian country, we wish to clarify any such 
misunderstanding.
---------------------------------------------------------------------------

    In the preamble to the TAR, we also concluded that the Act 
authorizes us to protect air quality throughout Indian country. See 63 
FR 7262, 59 FR 43960-43961 citing sections 101(b)(1), 301(a) and 301(d) 
of the Act.
    In addition, section 301(a) of the Act provides us broad authority 
to issue such regulations as are necessary to carry out the mandates of 
the Act. Several provisions of the Act call for Federal implementation 
of a program where, for example, a state or in this case a Tribe, fails 
to adopt a program or adopts an inadequate program. See, for example, 
sections 110(c)(1), 502(d)(3) and 502(i)(4) of the Act. These 
provisions exist in part to ensure that the benefits of the Act are 
realized throughout the United States, whether or not local governments 
choose to participate in implementing the Act. Especially in light of 
the problems associated with transport of air pollution across state 
and Tribal boundaries, it follows that Congress intended that we have 
the authority to operate a Federal program in the absence of an 
adequately implemented EPA-approved program. See, for example, 59 FR 
43958-61, August 25, 1994; 62 FR 13750, March 21, 1997 and 63 FR 7262-
64, February 12, 1998.
    This interpretation is most evident from Congress' grant of 
authority to the EPA under section 301(d)(4) of the Act. Section 
301(d)(4) authorizes the Administrator to directly administer 
provisions of the Act so as to achieve the appropriate purpose where 
Tribal implementation of those provisions is inappropriate or 
administratively infeasible. We determined that it is inappropriate to 
subject Tribes, among other things, to the mandatory submittal 
deadlines and to the related Federal oversight mechanisms in section 
110(c)(1) of the Act, which are triggered when we make a finding that 
states have failed to meet required deadlines or disapprove a state 
plan submittal. See 40 CFR 49.4(d).
    By determining that Tribes should not be treated similarly to 
states for purposes of the specific FIP obligation under section 
110(c)(1) of the Act, we are not relieved of the general obligation

[[Page 38753]]

under the Act to ensure the protection of air quality throughout the 
Nation, including throughout Indian country. Rather, consistent with 
the provisions of sections 301(a) and 301(d)(4) of the Act, we 
expressed our intent to promulgate without unreasonable delay such FIP 
provisions as are necessary or appropriate to protect air quality if 
Tribal efforts do not result in adoption and approval of Tribal plans 
or programs. See 63 FR 7265, 40 CFR 49.11.
    Under section 301(d)(4) of the Act, Congress authorized the EPA to 
maintain the territorial approach by implementing the Act in Indian 
country in the absence of an EPA-approved program. We believe that 
Congress authorized us, consistent with our Indian policy, to avoid the 
checker-boarding of Indian reservations based on land ownership by 
Federally implementing the Act over all reservation sources in the 
absence of an EPA-approved Tribal program. See S. Rep. No. 228, 101st 
Cong., 1st Sess. 79 (1989) (implementation of the Act to be in a manner 
consistent with EPA's Indian policy). In addition, section 301(d)(4) 
authorized us to implement the Act in non-reservation areas of Indian 
country in order to fill any gap in program coverage and to ensure an 
efficient and effective transition to EPA-approved programs.
    Our interpretation of section 301(d) of the Act as authorizing our 
implementation throughout Indian country is also supported by the 
legislative history. See S. Rep. No. 228, 101st Cong., 1st Sess. 80 
(1989) (noting that section 301(d) of the Act authorizes the EPA to 
implement provisions of the Act throughout ``Indian country'' when 
there is no approved Tribal program); Id. at 80 (noting that criminal 
sanctions are to be levied by the EPA, ``consistent with the Federal 
government's general authority in Indian country''); Id. at 79 (the 
purpose of section 301(d) of the Act is to ``improve the environmental 
quality of the air within Indian country in a manner consistent with 
the EPA Indian Policy'').
    Therefore, with these final rules, we will exercise our authority 
to administer the minor NSR permitting program and the nonattainment 
major NSR program in Indian country, which is generally the area over 
which a Tribe may potentially receive approval of programs under the 
Act. As noted in the final TAR, we interpret the Act as establishing a 
territorial approach to implementation of the Act within Indian country 
by delegating to eligible Tribes authority over all reservation sources 
without differentiating among the various categories of on-reservation 
lands (63 FR 7254-7258). In addition, the Act authorizes eligible 
Tribes to implement Tribal programs under the Act in non-reservation 
areas over which a Tribe has jurisdiction, generally including all 
areas of Indian country (63 FR 7258-7259).
    In order to further our commitment to use our authority under the 
Act to protect air quality throughout Indian country by directly 
implementing the Act's requirements, we are now exercising the 
rulemaking authority entrusted to us by Congress to directly implement 
the minor NSR permitting program and nonattainment major NSR permitting 
program throughout all areas of Indian country. See generally, Chevron 
USA, Inc. v. NRDC, 467 U.S. 837, 842-45 (1984).

C. What is the status of the NSR air quality programs in Indian 
country?

    No Tribe is currently administering an EPA-approved PSD program. 
Therefore, EPA has been implementing a FIP for major sources in 
attainment areas and has been issuing PSD permits in Indian country. 
See 40 CFR 52.21. For the nonattainment major NSR program or the minor 
NSR program in Indian country, no Tribes have been administering an 
EPA-approved nonattainment major NSR program and only a few Tribes have 
been administering EPA-approved minor NSR programs.\10\ In addition, 
there has been no FIP in place to implement these programs until now. 
Hence, there was a regulatory gap in Indian country. This final rule 
will allow us to address that gap and more fully implement the NSR 
program in Indian country. We are finalizing the minor NSR program at 
40 CFR 49.151 through 49.165 and the nonattainment major NSR program at 
40 CFR 49.166 through 49.175 and these programs will continue to apply 
except where we explicitly approve an implementation plan for such 
programs for a specific area in Indian country.\11\ The requirements 
finalized under these rules do not apply to State permitting programs.
---------------------------------------------------------------------------

    \10\ For example, the St. Regis Mohawk Tribe has in place an 
EPA-approved TIP that includes provisions for minor NSR and 
synthetic minor permitting (See https://www.srmtenv.org/pdf_files/airtip.pdf). In addition, the Gila River Indian Community has 
developed a TIP that includes a minor NSR program (See https://www.epa.gov/region9/air/actions/gila-river.html).
    \11\ Although many states have developed regulatory programs for 
minor sources, those programs do not apply in Indian country unless 
explicitly approved by EPA for such areas.
---------------------------------------------------------------------------

    As we stated previously, sections 301(d) and 110(o) of the Act give 
the Tribes the authority to develop their own Tribal programs and we 
encourage eligible Tribes to develop their own minor and nonattainment 
major NSR programs for incorporation into TIPs. However, we understand 
that not all Tribes have the resources to design and implement NSR 
programs; therefore, in the absence of an EPA-approved program, this 
final rulemaking provides a Federal program for implementing the minor 
NSR and the major NSR program in nonattainment areas of Indian country. 
Tribes may use this program as a model if they choose to develop their 
own Tribal Implementation plans and obtain our approval.
    Since, in most cases and in the absence of an EPA-approved program, 
it would be neither practical nor administratively feasible for us to 
develop and implement a separate program for each area of Indian 
country,; these final rules will implement a flexible FIP for Indian 
country that provides new and modified minor sources and major sources 
in nonattainment areas with procedures to demonstrate that they will be 
operating in a manner that is protective of air resources and the 
NAAQS. In addition, these rules will ensure that any economic growth 
occurring in Indian country will be in harmony with the preservation of 
Clean Air Act resources.

D. What consultation and outreach has been done with Tribal leaders and 
representatives?

    Prior to undertaking this rulemaking, we sought to include Tribes 
early in the rulemaking process. On June 24, 2002, we sent 
approximately 500 letters to Tribal leaders seeking their 
recommendations for effective consultation and their involvement in 
developing these rules.
    We received responses from 75 Tribes. Of these 75 Tribes, 69 
designated an environmental staff member to work with us on developing 
the rules. Aside from the designated staff, many Tribal leaders asked 
that we keep them informed of our progress through e-mail, meetings 
with the EPA Regional Offices, newsletters and Web sites. In addition, 
53 percent of the Tribal leaders also requested direct phone calls or 
conference calls to discuss the subject and 16 percent of the 
respondents requested face-to-face consultation. Of these, six Tribes 
requested senior EPA staff to meet with Tribal leaders.
    As a result of this feedback, we developed a consultation plan that 
included three meetings held at the reservations of the Menominee Tribe 
in Wisconsin, the Mohegan Tribe in Connecticut and the Chehalis Tribe 
in Washington. A fourth meeting was held

[[Page 38754]]

in conjunction with the Institute of Tribal Environmental 
Professionals' (ITEP) 10th anniversary meeting in Flagstaff, Arizona. 
In addition to conducting these meetings, we also visited Tribal 
environmental staff in Indian country. Over 30 Tribes attended these 
meetings. We also participated in numerous national and regional forums 
including the National Tribal Forums sponsored by the ITEP, two 
National Tribal Air Association meetings and meetings with Tribal 
consortia, such as the National Tribal Environmental Council, United 
Southern and Eastern Tribes, Inter-Tribal Environmental Council, Inter 
Tribal Council of Arizona and others.
    Although much of our effort focused on outreach to the Tribes, we 
also interacted with state and local air pollution control agencies 
during development of these rules. We had two meetings with the State 
and Territorial Air Pollution Program Administrators and the 
Association of Local Air Pollution Control Officers (STAPPA/ALAPCO) to 
present the draft rules.\12\
---------------------------------------------------------------------------

    \12\ This organization has since changed its name to the 
National Association of Clean Air Agencies (NACAA).
---------------------------------------------------------------------------

    We considered feedback from all stakeholders and proposed the 
``Review of New Sources and Modifications in Indian Country'' rules on 
August 21, 2006 (71 FR 48696). However, Tribal government 
representatives expressed concerns that the long gap between 
consultation/outreach and action by the Agency undermined the 
effectiveness of these interactions. Thus, after proposal of the rule, 
we started an extensive outreach program in the years 2006 and 2007 to 
inform and seek comments from the public, especially Tribes.
    We again sent over 500 letters to Tribal leaders to inform them 
about the proposal. We did not receive any formal responses to these 
letters and did not receive any request for formal consultation from 
the Tribes, but they contacted us either through e-mail or phone calls 
and asked to keep them informed of our progress through e-mail, 
meetings, training sessions, newsletters and/or Web sites. To enhance 
understanding of the proposal and what it would mean for Indian 
country, we supplemented the 2006 outreach efforts by holding four 
training sessions using Web conferencing not only for Tribes, but also 
for EPA Regional Offices, air program managers and Tribal 
organizations. We also held training sessions in 2006 and at the 
request of the Tribes for interested Tribal and other environmental 
professionals at the Pechanga Band of Luise[ntilde]o Indians in 
California and Salt River Pima-Maricopa Indian Community in Arizona. In 
addition, we held training sessions for all interested parties at EPA 
Region V's Tribal Air Meeting in Illinois (2006) and EPA's Region X's 
office in Washington (2007).
    We participated in numerous national and regional forums including 
the forums sponsored by the Institute of Tribal Environmental 
Professionals, the National Tribal Air Association and at meetings with 
Tribal consortia, such as the United Southern and Eastern Tribes. We 
also interacted with state and local air pollution agencies during this 
outreach period and had meetings with the NACAA.
    Furthermore, we extended and reopened the comment period for the 
proposed rules twice (from November 20, 2006 to January 19, 2007 and 
from January 19, 2007 to March 20, 2007) at the request of the Tribes. 
During this time, we also recorded and presented a webcast video for 
all interested stakeholders to train more environmental professionals 
about the NSR program and the rules themselves.
    To address the concern about the long gap between the proposal and 
finalization of the rules and to ensure that the Tribes are aware of 
the proposed rules and their provisions, we held a series of meetings 
in 2010 with the National Tribal Operations Committee, interested 
Regional Tribal Operations Committees and interested Tribal 
environmental staff. In 2011, we sent letters to all Tribes to ask them 
about their interest in an additional round of consultation and 
outreach and, based on their responses, we have conducted consultation 
and outreach meetings with several Tribes. These meetings included a 
face-to-face meeting in Denver, Colorado with a number of Tribes within 
EPA Region VIII and four conference calls with Tribes from across the 
country.
    After these rules are promulgated, we intend to conduct similar 
outreach efforts with all stakeholders, including extensive training to 
facilitate easier implementation of the rules.

IV. Final Minor NSR Program for Indian Country

    This rulemaking finalizes provisions for a minor NSR program in 
Indian country, codified at 40 CFR 49.151 through 49.165. The program 
includes requirements for preconstruction review for minor sources and 
minor modifications, general permits and synthetic minor source 
permits. The minor NSR program also serves as a mechanism for case-by-
case MACT determinations and establishes a registration system for 
existing minor sources to improve the Tribal source emission inventory.
    Our primary goal in developing this program is to ensure that air 
resources in Indian country will be protected in the manner intended by 
the Act. In addition, we seek to establish a flexible preconstruction 
permitting program for minor sources in Indian country that is 
comparable to similar programs in neighboring states in order to create 
a more level regulatory playing field for owners and operators within 
and outside of Indian country.
    This final rulemaking is not intended to establish a new set of 
minimum criteria that a Tribe or a state would need to follow in 
developing its own minor source permitting program. Rather, these rules 
simply represent how we will implement the program in Indian country in 
the absence of an EPA-approved Tribal implementation plan. However, if 
a Tribe is developing its own program, this can serve as one example of 
a program that meets the objectives and requirements of the Act. This 
final minor source permitting program addresses, on a national level, 
many environmental and regulatory issues that are specific to Indian 
country. We understand that different Tribes may face different issues 
and may therefore, like states developing SIPs, choose to develop TIPs 
tailored to their individual Tribal circumstances and needs. This rule 
will allow Tribes to develop their own TIPs, consistent with the 
overarching requirement that the Tribe ensure that the TIP will not 
interfere with any applicable requirement of the CAA.

A. General Provisions Under the Minor NSR Program

1. What is a minor source and which minor sources are subject to this 
rule?
a. Minor Source Definition
    We are finalizing under 40 CFR 49.152 that a minor source, for the 
purposes of this rule, means a source, not including the exempt 
emissions units and activities listed in Sec.  49.153(c), that has the 
potential to emit regulated NSR pollutants in amounts that are less 
than the major source thresholds in 40 CFR Sec.  49.167 or Sec.  52.21, 
as applicable, but equal to or greater than the minor NSR thresholds in 
Sec.  49.153. The potential to emit includes fugitive emissions, to the 
extent that they are quantifiable, only if the source belongs to one of 
the source categories listed in 40 CFR part 51, Appendix S, paragraph 
II.A.4(iii) or 52.21(b)(1)(iii), as applicable.

[[Page 38755]]

    A source's PTE for a pollutant is expressed in tpy and generally is 
calculated by multiplying the maximum hourly emissions rate in pounds 
per hour (lbs/hr) times 8,760 hours (which is the number of hours in a 
year) and dividing by 2,000 (which is the number of pounds in a ton). 
If a source is restricted by permit conditions that limit its emissions 
and are enforceable as a practical matter (as defined in 40 CFR 
49.152), its PTE (and allowable emissions) are calculated based on the 
permit restrictions.
    For the NSR program in Indian country, the major source thresholds 
are defined in the PSD program (see 40 CFR 52.21) and in the 
nonattainment major NSR program being finalized in this action (see 40 
CFR 49.167), as applicable. These thresholds may differ in attainment 
areas and nonattainment areas for the same pollutant. For example, in 
attainment areas the major source threshold for nitrogen oxides 
(NOX) is 250 tpy, unless the source belongs to a source 
category that is listed in the major NSR rules (see 40 CFR 
52.21(b)(1)(i)(a)), in which case the major source threshold is 100 
tpy. In contrast, the major source threshold for NOX in 
ozone nonattainment areas can vary from 10 tpy in an extreme ozone 
nonattainment area to 100 tpy in a marginal ozone nonattainment area 
(see 40 CFR part 51, Appendix S, paragraph II.A.4(i)). The final rule 
establishes minor NSR thresholds as discussed in section IV.A.3 of this 
preamble.
    This minor source definition differs from the definition in the 
proposal by providing the following clarifications. We clarified that 
de minimis exceptions (i.e., minor NSR thresholds) and insignificant 
source categories or activities being finalized under this rule are not 
considered minor sources for purposes of this rule and eliminated the 
sentence in the proposed definition that stated the term ``minor 
stationary source applies independently to each regulated NSR pollutant 
that the source has the potential to emit.''
    A few commenters asked us to accommodate in the minor source 
definition references to the de minimis exceptions (i.e., minor NSR 
thresholds) and insignificant source categories or activities being 
finalized under this rule and we believe it is appropriate to do so. In 
addition, since the source can only be a minor source if the PTE of all 
regulated NSR pollutants for that source are less than the 
corresponding major source thresholds, we deleted from the definition 
the statement that read: ``the term `minor stationary source' applies 
independently to each regulated NSR pollutant that the source has the 
potential to emit.''
    Furthermore, we have amended the minor source definition to specify 
that the PTE of a source includes fugitive emissions, to the extent 
that they are quantifiable, only if the source belongs to one of the 
source categories listed in 40 CFR 52.21(b)(1)(iii) (for PSD) and 40 
CFR part 51, Appendix S, paragraph II.A.4(iii) (for nonattainment major 
NSR) of the major NSR rules pursuant to section 302(j) of the Act. This 
action is explained further in the next section.
b. Determining Applicability for New Minor Sources
    As stated in the proposal, in all NSR applicability determinations, 
you must evaluate each regulated NSR pollutant individually because the 
area where your source is located may be attainment for some pollutants 
and nonattainment for others. For a given new source or modification, a 
particular pollutant may be subject to review under PSD, nonattainment 
major NSR or minor NSR or may not be subject to any of these programs.
    For proposed new sources, the first step is to calculate the 
potential to emit of each regulated NSR pollutant. The second step is 
to determine whether the source is subject to the applicable major NSR 
program (i.e., 40 CFR 49.167 or 40 CFR 52.21 for nonattainment and 
attainment areas, respectively) with respect to each regulated NSR 
pollutant. Under the nonattainment major NSR program, this step is 
repeated for each regulated NSR pollutant the source has the potential 
to emit. Under the PSD program, if the source's potential to emit is 
greater than the major source threshold for one pollutant, then PSD 
applies to any other regulated NSR pollutants for which the potential 
to emit is above the level defined as ``significant'' in the PSD 
regulations.\13\ The significance level is typically lower than the 
major source threshold; for example, the significance level for 
PM10 is 15 tpy while the major source threshold is 100 or 
250 tpy.
---------------------------------------------------------------------------

    \13\ The significance levels are defined in 40 CFR 52.21(b)(23).
---------------------------------------------------------------------------

    If your proposed new source is not subject to major NSR for a 
particular regulated NSR pollutant, the next step is to determine 
whether the source is subject to the requirements of this minor NSR 
rule for that pollutant, i.e., if the source's potential to emit of the 
pollutant is equal to or greater than the applicable minor NSR 
threshold listed in Table 1 of this final rule. These steps are 
repeated for every regulated NSR pollutant the source has the potential 
to emit. However, for a source to be considered a minor source, the PTE 
of all regulated NSR pollutants must be less than the corresponding 
major source threshold.
    In determining if the source's potential to emit of a pollutant is 
equal to or greater than the applicable minor NSR threshold listed in 
Table 1 of this final rule, fugitive emissions will be included to the 
extent that they are quantifiable, only if the source belongs to one of 
the source categories listed pursuant to section 302(j) of the Act 
(i.e., the source categories listed in 40 CFR part 51, Appendix S, 
paragraph II.A.4(iii) and in 40 CFR 52.21(b)(1)(iii)).
    We are finalizing this provision after seeking comment in the 
proposal as to whether in calculating the emission levels for 
applicability purposes, you should include fugitive emissions, to the 
extent they are quantifiable, for all sources or include them only for 
source categories listed pursuant to section 302(j) of the Act or 
exclude them for all sources.
    Commenters who supported the approach of including fugitive 
emissions for all sources believed that the mandate of the minor NSR 
program is based on protection of air quality throughout the nation. 
Additionally, they believed that fugitive emissions are a large 
proportion of the air pollutants in Indian country and therefore EPA 
must require fugitive emissions to be included in determining 
applicability. However, many commenters argued that fugitive emissions 
at minor sources are minuscule and a requirement to include them would 
be excessive. Some of these commenters believed that the costs for 
complying with minor NSR for fugitive emissions could potentially be 
substantial and that fugitive emissions are inherently difficult to 
quantify. In addition, one commenter added that fugitive emissions 
should only be included for source categories listed under section 
302(j) of the Act, citing an extensive analysis of the history of 
regulating fugitive emissions under NSR.
    Based on the comments received, we are finalizing provisions that 
require including fugitive emissions in the minor NSR applicability 
determination, to the extent that they are quantifiable, only if the 
source belongs to one of the source categories listed pursuant to 
section 302(j) of the Act (i.e., the source categories listed in 40 CFR 
part 51, Appendix S, paragraph II.A.4(iii) and in 40 CFR 
52.21(b)(1)(iii)), for the following reasons.
    For the source categories listed pursuant to section 302(j) we have 
historically identified these source

[[Page 38756]]

categories as having the potential to significantly degrade air quality 
and it has been demonstrated to be reasonable and cost effective for 
sources in these categories to quantify and include their fugitive 
emissions in applicability determinations. We will continue to require 
these source types to quantify fugitive emissions in determini