May 13, 1997




Dear Stakeholder:

     Enclosed for your review and comment is a draft of the
regulations and preamble to revise the operating permits
regulations of part 70, and to revise the minor new source review
(NSR) requirements for part 51 relating to public participation. 
Revisions to part 70 were proposed on August 29, 1994 and 
August 31, 1995, and revisions to part 51 were proposed on
August 31, 1995.  We are seeking your review because of the
length of time since the August 1995 proposal, and because
several of you have asked to see the package in detail.  The
enclosed draft regulations and preamble reflect changes made as a
result of the many comments we received on the proposals.  

     There are several issues on which we would like you to focus
your comments.  These include:  (1) the provisions for minor
permit revisions; review by the Environmental Protection Agency
(EPA), affected States, and the public; and the eligibility
criteria for de minimis permit revisions; (2) the definition of
potential to emit, in response to the vacatur and remand of the
definition in Clean Air Implementation Project, et al. v. EPA
following petitioners' challenge to the definition's "Federal
enforceability" requirement; (3) the absence of a mandate for
emissions cap permits, including PAL's and advance NSR, as a
minimum element of State part 70 programs; and (4) EPA's
interpretation of the collocation procedures as applied to
unlisted sources of fugitive emissions.

     In addition, we are including for your review and comment
three alternative approaches that are designed to address
concerns that have been raised about delays caused by potential
changes to the permit revision process.  One approach provides
for post-hoc review procedures for minor permit revisions, and
two other approaches provide for expanding the criteria for de
minimis changes.  These approaches have been developed as a
result of comments from members of the Permits, New Source
Review, and Toxics Subcommittee of the Clean Air Act Advisory
Committee.  The three approaches are explained in a separate
enclosure, but the Agency has not developed regulatory or
preamble discussion for them.  Concerns associated with each
approach are identified.
Please e-mail any comments or questions to the Clean Air Act Information Network.
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We also seek your comments on our approach to the emergency defense provision. In August 1995, the Agency proposed to narrow the affirmative defense for emergencies found at section 70.6(g), limiting the defense to requirements established in the part 70 permit. In the draft final rule, the Agency has incorporated a different approach, limiting the defense to technology-based emission limits in State Implementation Plans. A question has recently been raised as to whether part 70 is the appropriate vehicle to provide for such a defense, or alternatively, whether EPA should issue guidance on how such defenses may be incorporated into SIPs. Thus, while the final draft contains a proposal for an emergency defense in part 70, we solicit your views on this issue as well. As you know, we have scheduled a stakeholders' meeting for May 28 in the Research Triangle Park, North Carolina (RTP, NC). The meeting is scheduled from 9:00 a.m. to 4:30 p.m. Additional logistics were faxed to each of you previously. At the meeting, we intend to discuss the specific issues identified above. Our goal following this meeting is to complete this rulemaking in a timely manner. We would like to receive your comments by June 12. Please send them to Ray Vogel at MD-12, EPA, RTP, NC, 27711. I look forward to receiving your comments and seeing you at the stakeholders' meeting. Sincerely, /s/ Lydia N. Wegman Deputy Director Office of Air Quality Planning and Standards Enclosures ENCLOSURE OPTIONS FOR REDUCING DELAY BACKGROUND The draft rule requires public and EPA review prior to issuance of permit revisions ("pre-hoc" review) for all changes in the minor permit revision category (also called middle tier). One of the options below allows "post-hoc" review by the public and EPA. "Post-hoc" review means a process in which the permit revision may be issued before the end of EPA and public review. In a post-hoc review process, EPA and public review must begin at least before the permit is revised. "Pre-hoc" review means that all required opportunity for review (EPA, public, and affected States) must be complete before the permit issues. In either pre-hoc or post-hoc review, review by the permit authority occurs prior to issuance of the permit revision. The minor permit revision category includes: (1) nonmajor netouts, (2) PTE limits that avoid major source requirements, and (3) other minor NSR changes that are not eligible for the de minimis category. (Nonmajor netouts mean changes that involve netting where the emission increase from the project exceeds PSD/NSR significance levels, but is less than major source thresholds.) In addition, the draft prohibits netting and PTE limits from the de minimis category. Two options below would expand the de minimis category to remove this prohibition and include certain PTE limits and netouts. ("De minimis changes" mean a category of changes that are exempt from public and EPA review and from citizen petition. State programs allowing de minimis changes must identify them in detail, demonstrate that they meet EPA criteria, and gain EPA approval.) The criteria for de minimis changes in the draft are that any de minimis change must involve either minimal judgment, or have /trivial environmental impact. The preamble discussion gives examples of minimal judgment, and both the preamble and the rule describe the showing States must make to demonstrate trivial environmental impact. The draft allows States to presume that any change that increases emissions less than 25 percent of PSD/NSR significance levels has a trivial impact, and is therefore de minimis. State programs using the presumptive 25 percent level are not required to demonstrate trivial environmental impact; however, they must address any public comments alleging that impacts at those levels are not trivial. In addition, the draft rule allows States to reduce EPA's review period to the public comment period (to be no less than 21 days) for minor permit revisions, if EPA and the public do not comment adversely during the public comment period. OPTION 1 Option 1 would expand the de minimis category to include certain PTE limits, and to include certain netting transactions in serious or severe ozone nonattainment areas. Option 1 would allow PTE limits to be de minimis, if the limit involves minimal judgment AND the limit is less than 50 percent of the relevant major source or major modification thresholds. For this purpose, minimal judgment means limiting PTE through limiting operating hours or production rates, and estimating emissions by use of: (1) materials balance; (2) emission factors with A, B or C ratings; or (3) stack-test data based on EPA test methods. We do not include as representing minimal judgment the following: -- reliance on a calculated percent reduction from a control device, capture ratio, transfer efficiency; or -- case-by-case emission factors derived from sources other than those listed above in (1), (2) or (3). In addition, Option 1 would allow netting in serious/severe nonattainment areas to be de minimis, if emissions from the project are less than 25 percent of significance levels (e.g., 6.25 tpy). OPTION 2 Option 2 would allow post-hoc review for certain PTE limits and netting transactions, as described below. Option 2 would allow post-hoc review of PTE limits, unless the both of the following criteria are met: (1) the source relies on a substantially high degree of reduction from control devices to achieve nonmajor status, and (2) the PTE limit is significantly close to relevant major source/modification thresholds. The State would select and define numbers in its program in place of the imprecise terms "substantially high" degree of reduction, and "significantly" close to relevant major source/modification thresholds. The final rule would give examples of changes that EPA believes are, and are not, eligible under the above criteria. For example, a change that requires 90 percent reduction to meet its PTE limit, and the PTE limit is set at 99 tpy for a 100 tpy threshold would meet the criteria and require prior review. Conversely, a change that requires 80 percent reduction and the PTE limit is set at 80 tpy on a 100 tpy threshold would be acceptable for post-hoc review. In addition, Option 2 would allow post-hoc review of netouts in serious/severe nonattainment areas, if emissions from the project are less than 25 tpy and emissions from the 5-year contemporaneous period are also less than 25 tpy. There are numerous concerns with option 2. First, the Act requires EPA review of title V permits prior to issuance, unless the change is de minimis. Second, post-hoc review requires the development of a new and complex process that is not provided for expressly under Title V, and that is foreign to State permit programs. Third, there are concerns about the liability issue. Some hold that under post-hoc review, if it is found during post-hoc review that the issued permit is improper, sources should be penalized only if found to be in noncompliance with the revised permit. In effect, the post-hoc process would allow a permit shield upon permit issuance, something EPA's part 70 rule has never allowed prior to EPA and public review. Finally, the post-hoc process casts significant uncertainty on the State permit until EPA and public review, and opportunity for public petition, are completed. OPTION 3 Instead of post-hoc review, Option 3 would expand the de minimis category further to include more PTE limits and netouts as described below. This option is an alternative to Option 2, to be used if Option 2 is rejected, and there is a desire to expand Option 1 beyond its current scope. The criteria for option 3 are ill-defined currently, and comments from stakeholders will be helpful in better defining the criteria. Between now and the May 28 meeting EPA will develop option 3 further and present refinements on option 3 at the meeting. Option 3 would add PTE limits to the de minimis category by including more types of minimal judgment for PTE limits or by raising the 50 percent ceiling under Option 1 to a somewhat higher level. In addition, Option 3 would add netouts to the de minimis category by including netouts if the reductions necessary to net relied on restricting PTE, and if the PTE restrictions met the expanded de minimis criteria for PTE limits. Or, Option 3 would raise the presumptive de minimis level to a higher percent of significance levels from its current 25 percent level in the draft. This change would affect netouts only in serious/serious area, though. The concern with option 3, as with any de minimis category, is the need to stay within the de minimis concept under Alabama Power. Although the criteria in option 1 represent EPA's current thinking on which PTE limits and netouts best meet the de minimis concept under Alabama Power, the Agency is willing to explore specific ways to include more changes in the de minimis category that fit within the "minimal judgment" or the trivial environmental impact criteria. Provided these alternatives are in keeping with the de minimis concept under Alabama Power, option 3 could be less risky, more legally justifiable, and significantly less complex than Option 2.