RULES AND REGULATIONS

ENVIRONMENTAL QUALITY BOARD

[ 25 PA. CODE CHS. 121 AND 127 ]

New Source Review

[41 Pa.B. 4761]
[Saturday, September 3, 2011]

 The Environmental Quality Board (Board) amends Chapters 121 and 127 (relating to general provisions; and construction, modification, reactivation and operation of sources) to read as set forth in Annex A.

 This order was adopted by the Board at its meeting of May 18, 2011.

A. Effective Date

 This final-form rulemaking is effective upon publication in the Pennsylvania Bulletin.

 This final-form rulemaking will be submitted to the United States Environmental Protection Agency (EPA) as a revision to the Pennsylvania State Implementation Plan (SIP) upon publication.

B. Contact Persons

 For further information, contact Krishnan Rama- murthy, Chief, Division of Permits, Bureau of Air Quality, 12th Floor, Rachel Carson State Office Building, P. O. Box 8468, Harrisburg, PA 17105-8468, (717) 783-9476; or Robert ''Bo'' Reiley, Assistant Counsel, Bureau of Regulatory Counsel, 9th Floor, Rachel Carson State Office Building, P. O. Box 8464, Harrisburg, PA 17105-8464, (717) 787-7060. Persons with a disability may use the Pennsylvania AT&T Relay Service, (800) 654-5984 (TDD users) or (800) 654-5988 (voice users). This final-form rulemaking is available electronically through the Department of Environmental Protection's (Department) web site at www.depweb.state.pa.us (Keyword: Public Participation).

C. Statutory Authority

 This final-form rulemaking is being made under the authority of section 5(a)(1) of the Air Pollution Control Act (APCA) (35 P. S. § 4005(a)(1)), which grants to the Board the authority to adopt regulations for the prevention, control, reduction and abatement of air pollution.

D. Background and Summary

 On July 18, 1997, the EPA revised the National Ambient Air Quality Standard (NAAQS) for particulate matter (PM) to add a new standard for fine particles, using fine particulates equal to and less than 2.5 micrometers in diameter (PM_2.5) as the indicator. The EPA set the health-based (primary) and welfare-based (secondary) PM_2.5 annual standard at a level of 15 micrograms per cubic meter (µg/m³) and the 24-hour standard at a level of 65 µg/m³ at 62 FR 38652 (July 18, 1997). The health-based primary standard is designed to protect human health from elevated levels of PM_2.5, which have been linked to premature mortality and other important health effects. The secondary standard is designed to protect against major environmental effects of PM_2.5 such as visibility impairment, soiling and materials damage. In December 2004, the EPA designated all or portions of the following counties in this Commonwealth as nonattainment areas for the 1997 fine PM annual NAAQS: Allegheny (partial), Armstrong (partial), Beaver, Berks, Bucks, Butler, Cambria, Chester, Cumberland, Dauphin, Delaware, Greene (partial), Indiana (partial), Lancaster, Lawrence (partial), Lebanon, Montgomery, Philadelphia, Pittsburgh/Liberty-Clairton (partial), Washington, Westmoreland and York. See 70 FR 944, 999 (January 5, 2005). No counties were designated nonattainment for the 1997 24-hour standard.

 Subsequently, at 71 FR 61144 (October 17, 2006), the EPA lowered the primary and secondary 24-hour NAAQS for PM_2.5 to 35 µg/m³ from 65 µg/m³. The following counties or portions thereof have been designated by the EPA as nonattainment for the 2006 fine PM 24-hour NAAQS: Allegheny (partial), Armstrong (partial), Beaver, Bucks, Butler, Cambria, Chester, Cumberland, Dauphin, Delaware, Greene (partial), Indiana (partial), Lancaster, Lawrence (partial), Lebanon, Lehigh, Montgomery, Northampton, Philadelphia, Pittsburgh/Liberty-Clairton (partial), Washington, Westmoreland and York. See 74 FR 58688, 58758 (November 13, 2009).

 The EPA published its final rule for the ''Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (PM_2.5)'' at 73 FR 28321 (May 16, 2008). This Federal regulation requires states with PM_2.5 nonattainment areas to submit revised nonattainment NSR programs to the EPA for SIP approval within 3 years from the date of publication of the final rule or by May 16, 2011.

 Scientific research has shown that various precursor pollutants participate in secondary particle formation and contribute significantly to ambient PM_2.5 concentrations, producing approximately half of the PM_2.5 concentration Nationally. Precursor pollutants to particle formation include the following: sulfur dioxide (SO₂); nitrogen oxides (NO_x); volatile organic compounds (VOC); and ammonia. Given the complexity of PM formation processes, new information from the scientific community continues to emerge to improve our understanding of the relationship between sources of PM precursors and secondary particle formation. The final Federal rule requires that SO₂ be regulated as a PM_2.5 precursor; NO_x is presumed regulated; VOC and ammonia are presumed not regulated. See 73 FR 28321, 28325. This final-form State rulemaking is consistent with the Federal rule in how these pollutants are to be treated.

 Section 173 of the Clean Air Act (CAA) (42 U.S.C.A. § 7503) subjects major stationary sources located in nonattainment areas to the NSR permit program, which the Commonwealth is responsible for implementing through its SIP. The NSR special permit requirements include emission offsets for proposed emission increases and a demonstration that the new source will comply with the ''lowest achievable emission rate'' (LAER) for each regulated pollutant.

 The final-form rulemaking, which limits the emissions of PM_2.5 and precursors including SO₂ and NOx for new or modified major sources in nonattainment areas, amends the existing nonattainment NSR requirements in Chapter 127, Subchapter E (relating to new source review) to incorporate the EPA's May 2008 requirements for PM_2.5 and precursor emissions. Clarifying amendments for Chapter 127 are also made in the final-form rulemaking.

 The final-form rulemaking applies to construction of major stationary sources and major modifications at major stationary sources. A stationary source is a ''major source'' if its actual emissions or its potential to emit (PTE) for a specific pollutant equals or exceeds the major source threshold for that pollutant. The PM_2.5 threshold for new sources is 100 tons per year (TPY) of PM_2.5. The PM_2.5 threshold for major modifications at existing sources is 10 TPY of PM_2.5.

 The final-form rulemaking assures that the citizens and environment of this Commonwealth will benefit from reduced PM and precursor emissions from regulated sources. The health effects associated with exposure to elevated levels of PM_2.5 are significant. Epidemiological studies have shown a significant correlation between elevated PM_2.5 levels and premature mortality. Other important health effects associated with exposure to particle pollution include aggravation of respiratory and cardiovascular disease (as indicated by increased hospital admissions, emergency room visits, absences from school or work and restricted activity days), lung disease, decreased lung function, asthma attacks and certain cardiovascular problems. Individuals particularly sensitive to PM_2.5 exposure include older adults, people with heart and lung disease and children. Environmental effects of particle pollution include visibility impairment, soiling and materials damage. Attaining and maintaining levels of PM_2.5 below the health- and welfare-based NAAQS is important to reduce premature mortality and other health and environmental effects associated with PM_2.5 exposure. This control measure is reasonably necessary to attain and maintain the 1997 annual and 2006 24-hour PM_2.5 NAAQS.

 The owners and operators of new or modified major facilities will be affected by the final-form rulemaking. There are approximately 887 major facilities in this Commonwealth that may be subject to the existing NSR rules if major modifications to those facilities are proposed. The majority of those facilities affected by this final-form rulemaking are already subject to the existing NSR provisions in Chapter 127, Subchapter E and also to the requirements in 40 CFR Part 51, Appendix S (relating to emission offset interpretative ruling). This final-form rulemaking will provide increased flexibility for the owners and operators of affected facilities by allowing exchanges of interpollutant offsets.

 Under section 4.2(b) of the APCA (35 P. S. § 4004.2(b)), control measures, in general, shall be no more stringent than those required under the CAA unless the Board determines that those measures are reasonably necessary to achieve or maintain ambient air quality standards. The final-form rulemaking is more stringent than Federal regulations since it includes fugitive emissions for certain pollutants, including PM_2.5, from all sources when determining whether a source is defined as a ''major facility'' under § 121.1.

 The major facility definition was included in the final-form rulemaking published at 24 Pa.B. 443 (January 15, 1994). The 1994 final-form rulemaking was approved by the EPA as a revision to the SIP at 62 FR 64722 (December 9, 1997), and is codified in 40 CFR 52.2020 (relating to identification of plan), regarding the Pennsylvania SIP. The SIP-approved major facility provision includes fugitive emissions from all sources when determining the status of a major facility, rather than considering fugitives for just the 28 source categories listed in the Federal definition of ''major stationary source'' in 40 CFR 51.165(a)(1)(iv)(A) (relating to permit requirements).

 Another area of difference between the existing EPA and Commonwealth nonattainment NSR programs relates to the treatment of projected actual emissions related to a project. Under the EPA's approach, owners or operators of a facility shall track their projected actual emissions against the facility's post-change emissions for 5 years following resumption of regular operations. The EPA presumes that any increases that occur after 5 years are not associated with the physical or operational changes. Under the Commonwealth's approach specified in § 127.203a(a)(5)(iii)(A) (relating to applicability determination) of the final-form NSR amendments published at 37 Pa.B. 2365 (May 19, 2007), the projected actual emissions for the regulated NSR pollutant, including PM_2.5, must be incorporated into the required plan approval or operating permit as an emission limit. According to the Board findings in the final-form rulemaking, the May 2007 NSR amendments are ''necessary to achieve and maintain ambient air quality standards and to satisfy related CAA requirements.'' The Board also found that ''the final-form rulemaking is necessary for the Commonwealth to avoid sanctions under the CAA.''

 To attain and maintain the NAAQS in this Commonwealth, as required under the CAA, the Board has relied on the 1994 and 2007 rulemakings. The only change being made in this final-form rulemaking is to include PM_2.5 as a regulated NSR pollutant. Consequently, the ''no more stringent than'' provision under section 4.2(b) of the APCA is satisfied because the Board has determined that this approach is reasonably required to achieve or maintain the PM_2.5 NAAQS. Moreover, these provisions must be maintained to satisfy the antibacksliding provisions in sections 110 and 193 of the CAA (42 U.S.C.A. §§ 7410 and 7515).

 The Department met with the Air Quality Technical Advisory Committee (AQTAC) on September 15, 2010, and the Citizens Advisory Council (CAC) Air Committee on October 18, 2010, to discuss the final-form rulemaking. The AQTAC and CAC both concurred with the Department's recommendation to move the final-form rulemaking forward to the Board.

E. Summary of Comments and Responses

 A commentator understands that the proposed rulemaking would amend the existing requirements in Chapter 127, Subchapter E to incorporate recently promulgated Federal requirements for PM_2.5 and PM_2.5 precursors and insists that the proposed changes mirror the new Federal requirements to the extent practicable. The Board agrees with the commentator that there should be consistency between the Federal requirements and the Commonwealth's regulations.

 A commentator believes that a fundamental difficulty with the proposed NSR amendments is the Board's attempt to meet the requirements of the Federal NSR PM_2.5 rule by applying the Commonwealth's existing NSR provisions to PM_2.5. Because the Commonwealth's existing NSR rules were developed specifically to address particular issues regarding the ozone nonattainment areas in this Commonwealth and have been amended many times over many years, the rules are not suited in many respects to also address PM_2.5. The Board clarifies that it did not propose amendments at 40 Pa.B. 703 (February 6, 2010) to many existing provisions of the NSR requirements in Chapter 127, Subchapter E, which were published at 24 Pa.B. 443. The 1994 final-form rulemaking was approved by the EPA as a revision to the SIP published at 62 FR 64722 and codified in 40 CFR 52.2020. Subsequent to the 1994 final-form rulemaking, the EPA initiated a number of changes to the Federal requirements for NSR which are discussed in the preamble to the Board's final-form rulemaking published at 37 Pa.B. 2365. Amendments to Chapter 127, Subchapter E published at 37 Pa.B. 2365 were effective May 19, 2007. The 2007 amendments were submitted to the EPA on August 9, 2007, as an equivalency demonstration and revision to the SIP. However, in light of the concerns raised during the public comment period about the aggregation of de minimis emissions for PM_2.5 and PM_2.5 precursors and the limited availability of PM_2.5 emission reduction credits (ERCs) for emission offsets for new or modified major source projects, this final-form rulemaking does not require the aggregation of de minimis emissions for PM_2.5 and PM_2.5 precursors. Section 127.203a(a)(2) is revised in the final-form rulemaking to specifically exclude PM_2.5 and PM_2.5 precursors.

 The Independent Regulatory Review Commission (IRRC) stated that there appears to be some inconsistency between the Regulatory Analysis Form and preamble of the proposed rulemaking as to whether the proposed regulation is consistent with or more stringent than Federal regulations. The Board clarifies that the proposed rulemaking is more stringent than Federal regulations in three ways—de minimis aggregation, fugitive emissions and the contemporaneous period provisions which were approved by the EPA as a revision to the SIP and implemented by the Department for at least 15 years. As a result, the preamble to the proposed rulemaking is correct. The final-form rulemaking deletes the de minimis aggregation provision for PM_2.5 and precursor emissions.

 IRRC commented further that the information in the preamble to the proposed rulemaking and the accompanying materials did not provide information on whether the Department has identified areas where NO_x emissions are not a significant contributor to PM_2.5 concentrations. IRRC requested that this information be provided with the final-form rulemaking. To this end, the Board responds that the final-form rulemaking definition of ''regulated NSR pollutant'' has been amended as follows: ''Nitrogen oxides are presumed to be precursors to PM_2.5 in PM_2.5 nonattainment areas unless the Department demonstrates to the satisfaction of the Administrator of the EPA or the Administrator of the EPA determines that NO_x emissions from a source in a specific area are not a significant contributor to that area's ambient PM_2.5 concentrations.'' The Department has not done a study to identify areas where NO_x emissions are not a significant contributor to PM_2.5 concentrations.

 IRRC is concerned about the impact the final rule will have on Commonwealth industry with respect to competitiveness with industry in neighboring states. The Board responds that the Department conferred with neighboring states in April and November, 2010 concerning the status of their NSR PM_2.5 rulemakings. A number of neighboring states are still working on PM_2.5 amendments to their NSR programs to meet the Federal PM_2.5 requirements and develop SIP revisions by May 2011. West Virginia finalized NSR requirements for PM_2.5 on June 1, 2010. Delaware expects to propose its rulemaking by May 1, 2011, and finalize its rulemaking by July 1, 2011. All states must submit SIP revisions that, at a minimum, will implement the EPA's PM_2.5 requirements for nonattainment areas. It is not anticipated that the final-form rulemaking will place the owners of affected sources in this Commonwealth at a competitive disadvantage; the final-form rulemaking does not include PM_2.5 de minimis aggregation requirements because of the limited availability of emission offsets.

 A commentator questioned the testing procedures and listed offset ratio relationships and wondered how it was calculated, where the ratios came from and exact dates for early ERC credit calculations. The Board responds that EPA-established trading ratios for PM_2.5 and PM_2.5 precursors for nonattainment NSR PM_2.5 emissions were specified in the proposed rulemaking and these ratios are retained in the final-form rulemaking. The Board did not propose to amend the existing requirements in § 127.207(1) (relating to creditable emissions decrease or ERC generation and creation).

 A commentator stated that enactment of the proposed rulemaking would result in two distinct and different sets of definitions for some parameters of interest (for example, two different definitions for a ''regulated NSR pollutant'' and ''significant,'' with the definitions depending on the attainment status of the pollutant of interest). The Board responds that the definitions and requirements for the state-specific NSR and prevention of significant deterioration (PSD) programs mirror the applicable Federal NSR and PSD regulations.

 The commentator requested that the Department's definition of ''significant'' in § 121.1 (relating to definitions) be consistent and verbatim with the EPA's definition of the term in 40 CFR 52.21(b)(23) (relating to prevention of significant deterioration of air quality). The Board disagrees. The EPA's definition of ''significant'' in 40 CFR 52.21(b)(23) applies to PSD requirements for attainment and unclassifiable areas, not to nonattainment NSR, and is adopted by reference under Chapter 127, Subchapter D (relating to prevention of significant deterioration of air quality) to support the Department's PSD program. The definition of ''significant'' in § 121.1 supports existing requirements in Chapter 127, Subchapter E for nonattainment NSR and is consistent with the EPA's definition of the term ''significant'' in 40 CFR 51.165(a)(1)(x)(A) for nonattainment NSR programs.

 A commentator requested that the Department's definition of ''regulated NSR pollutant'' in § 121.1 be consistent and verbatim with the EPA's definition in 40 CFR 52.21(b)(50). The Board disagrees. The EPA's definition of ''regulated NSR pollutant'' in 40 CFR 52.21(b)(50) applies to PSD requirements for attainment and unclassifiable areas, not to nonattainment NSR, and is adopted by reference under Chapter 127, Subchapter D to support the Department's PSD program. The definition of ''regulated NSR pollutant'' in § 121.1 supports existing requirements in Chapter 127, Subchapter E for nonattainment NSR and is consistent with the EPA's definition of ''regulated NSR pollutant'' in 40 CFR 51.165(a)(1)(xxxvii) for nonattainment NSR programs.

 A commentator stated that the proposed NSR amendments require clarification with respect to the manner in which NSR will be applied to PM_2.5 and its precursors. The Board clarifies that the definitions of the terms ''major facility'' and ''net emissions increase'' in § 121.1 are similar to the EPA's definition of the term ''major stationary source'' in 40 CFR 51.165(a)(1)(iv)(A). During the implementation of the NSR PM_2.5 provisions, the Department will follow the EPA's policies and interpretations provided for nonattainment NSR for regulating emissions of PM_2.5 and its precursors SO₂ and NO_x.

 A commentator stated that the definition of ''maximum allowable emissions'' should be verbatim with the definition of the term ''allowable emissions'' in 40 CFR 52.21(b)(16), regarding PSD of air quality. The Board proposed deletion of the term ''maximum allowable emissions'' and its definition, as denoted by bold brackets and text in the proposed rulemaking, since the term is no longer used to support existing regulations and this term is not used in the Federal NSR regulations under 40 CFR 51.165. This deletion is retained in the final-form rulemaking.

 Several commentators stipulated that the aggregation of de minimis emission increases is inappropriate for PM_2.5, indicating that the proposed amendments would make de minimis emissions of PM_2.5 subject to the 10-year aggregation provisions in § 127.203a and potentially to the provisions in § 127.203 (relating to facilities subject to special permit requirements). The final-form rulemaking does not require de minimis aggregation for PM_2.5 and precursor emissions.

 A commentator stated that the rule should clearly indicate that offsets shall be provided only once for a particular pollutant. For example, a facility located in the Ozone Transport Region that triggers NSR for NO_x and PM_2.5 should only provide offsets for either NO_x or NO_x as a precursor for PM_2.5, but not for both. The Board agrees with the commentator. Emissions only need to be offset once. Therefore, if NO_x emissions offsets are provided as an ozone precursor, these offsets can also serve as PM_2.5 precursor offsets.

 A commentator expressed concern that § 127.210 (relating to offset ratios) does not recognize the interpollutant trading that has already been approved by the EPA for NO_x and VOC ERCs in the five-county Philadelphia area. These NSR regulations should be amended to either include this interpollutant trading or as to not exclude this approved ERC trading mechanism. The Board is not changing the EPA's previously approved interpollutant trading of VOC ERCs for NO_x ERCs using a substitution ratio in the Philadelphia ozone nonattainment area. However, due to concerns raised by the commentators, the Board is clarifying § 127.206(o) (relating to ERC general requirements) in the final-form rulemaking as follows: ''Except as provided under § 127.210 (relating to offset ratios), an ERC created for a regulated criteria pollutant shall only be used for offsetting or netting an emissions increase involving the same criteria pollutant unless approved in writing by the Department and the EPA.''

 Three commentators suggested that the proposed NSR amendments should be revised to exclude fugitive emissions in the context of major source determinations for PM_2.5, except for source categories specifically listed in the Federal regulations. Further, the Department should follow the Federal rule (as it continues to be developed) with respect to the consideration of fugitive emissions in the evaluation of emission increases caused by modification projects. The Board did not propose amendments at 40 Pa.B. 703 to amend the aggregation of de minimis emissions of VOCs and NO_x specified in § 127.203(b)(1). In January 1994, the Board adopted, at 24 Pa.B. 443, a major facility provision for new source review (NSR) purposes that includes fugitive emissions from all sources when determining NSR applicability for a major facility, rather than considering fugitives for just the 28 source categories listed in the Federal definition of ''major stationary source'' in 40 CFR 51.165(a)(1)(iv)(A). The more stringent than provisions were determined by the Board to be reasonably necessary to attain and maintain the NAAQS. To attain and maintain the NAAQS, the Department has relied since January 15, 1994, on these SIP-approved requirements for the inclusion of fugitive emissions of all criteria pollutants, including PM, CO and ozone and its precursors, VOC and NO_x, from all sources for major facility determinations. These provisions shall be maintained to satisfy the anti-backsliding provisions of sections 110 and 193 of the CAA.

 Two commentators indicated that the proposed language in § 127.203(b)(2) and (3) would add ambiguous language that could render these provisions more stringent than the present requirements. The Board agrees. The final-form rulemaking deletes the proposed clarifying language, ''including the emissions from the proposed project,'' in § 127.203(b)(2) and (3). However, the emissions from the proposed project must be included with the existing facility PTE to determine whether the facility emissions are more than 100 TPY for consideration of the applicability of control technology requirements such as best available control technology or LAER under § 127.203(b)(2) and (3).

 Two commentators stated that the proposed NSR amendments would add a sentence to § 127.203(b)(1)(i) stating that ''the aggregated VOC or NO_x emissions must meet the applicability requirements of paragraph (2) or (3).'' The commentators indicated that when evaluated in the context of subparagraphs (2) and (3), use of the phrase ''aggregated emissions'' is ambiguous, especially in light of the language previously discussed regarding inclusion of the ''emissions of the proposed project'' in the source's PTE. The Board disagrees. This language clarifies that the applicant needs to use the provisions in § 127.203(b)(2) or (3) for a determination of control technology requirements when the net emissions increase is equal to or exceeds the applicable emissions rate that is significant (25 TPY of NO_x or VOCs). Section 127.203(b) (2) and (3) does not require aggregation of emissions; therefore, there is no double-counting of emissions toward the source's PTE as indicated by the commentators. The final-form rulemaking retains the proposed language.

 A commentator stated that the Board should clarify the provisions in § 127.203(b)(1) that 5-year contemporaneous aggregation is required only for proposed emission increases that exceed the significant emission rate for a pollutant and that 10-year contemporaneous aggregation is required only for proposed emission increases that are de minimis. The Board disagrees. The Board did not propose amendments to § 127.203(b)(1) at 40 Pa.B. 703. The current requirements in § 127.203 were published at 37 Pa.B. 2365. The 2007 amendments were submitted to the EPA on August 9, 2007, as an equivalency demonstration and revision to the SIP. The requirements in § 127.203(b)(1)(i) and (ii) specify that the net emissions increase be calculated using 5-year and 10-year contemporaneous aggregation provisions. First, the owner or operator needs to calculate the net emissions increase using 5-year contemporaneous aggregation provisions in § 127.203(b)(1)(i). If the net emissions increase is equal to or exceeds the applicable emissions rate that is significant (25 TPY of NO_x or VOCs), the owner or operator needs to use the provisions in § 127.203(b)(2) or (3) for the applicability of control technology requirements. If the emissions increase due to the project does not exceed the listed applicable rate, then the owner or operator needs to use the de minimis emissions increase calculation for the 10-year period aggregation of § 127.203(b)(1)(ii) to calculate the net emissions increase.

 The commentator requested that the Department issue guidance or amend the language in § 127.203a(a)(5)(iii) that if the projected actual emissions for a regulated NSR pollutant are in excess of the baseline actual emissions and the project results in a net emissions increase which equals or exceeds the applicable significant emissions rate, then the projected actual emissions for the regulated NSR pollutant must be incorporated into the required plan approval or the operating permit as an emission limit. The Board clarifies in the final-form rulemaking that the projected actual emissions are incorporated as a permit limit when the projected actual emissions minus the excludable emissions (emissions following completion of the project that the existing unit could have accounted for prior to the change and that are also unrelated to the change) exceed the baseline actual emissions.

 The commentator requested that § 127.201(g) (relating to general requirements) be deleted or suggested that the requirements be modified for consistency with the Federal regulation. The Board amended § 127.201(g) to include condensable emissions in determining whether a source is subject to the major source NSR program beginning January 1, 2011, or earlier date established by the EPA. After January 1, 2011, all sources need to include PM_2.5 condensable emissions in applicability determinations.

F. Summary of Final-form Rulemaking and Changes from Proposed to Final-form Rulemaking

Summary of Final-form Rulemaking

 The final-form rulemaking amends § 121.1 to add a definition of ''PM_2.5'' and amend the definitions of existing terms ''regulated NSR pollutant'' and ''significant'' to include the requirements for PM_2.5 to support the amendments to Chapter 127. The final-form rulemaking deletes the definition of ''maximum allowable emissions'' because this term is no longer needed to support the existing requirements in Chapter 127, Subchapter E and this term is not used in the Federal NSR rules under 40 CFR 51.165

 Section 127.201 is amended to add subsection (g). Under subsection (g), gaseous emissions that condense to form PM at ambient temperatures will be included in PM_2.5 and PM-10 emissions in accordance with the following requirements: beginning January 1, 2011, or earlier date established by the Administrator, condensable PM shall be accounted for in applicability determinations for PM_2.5 and PM-10 emission limitations established in a plan approval or operating permit issued under this chapter; compliance with emissions limitations for PM_2.5 and PM-10 issued prior to January 1, 2011, or earlier date established by the Administrator, shall not be based on condensable PM unless required by the terms and conditions of a plan approval, operating permit or the SIP; and applicability determinations made prior to January 1, 2011, or earlier date established by the Administrator, without accounting for condensable PM shall not be considered in violation of this subchapter unless the applicable plan approval, operating permit or SIP includes requirements for condensable PM.

 Section 127.201a (relating to measurements, abbreviations and acronyms) is amended to include ''PM_2.5'' and ''PM-10.'' In addition, other minor editorial changes are finalized for this section.

 Section 127.202 (relating to effective date) is amended to include references to PM_2.5.

 Section 127.203(b)(1)(i) is amended to provide that the aggregated VOC or NO_x emissions shall meet the applicability requirements in paragraph (2) or (3).

 Section 127.203a is amended to include the following requirements under subsection (a): the owner or operator of the facility shall include in the plan approval application the estimate of an emissions increase in a regulated NSR pollutant from the project; the owner or operator shall calculate an emissions increase in a regulated NSR pollutant from a project in accordance with paragraph (1); if the emissions increase from a project equals or exceeds the applicable emissions rate that is significant, the owner or operator shall calculate a net emissions increase in accordance with paragraph (1)(ii); and if the emissions increase from a project does not exceed the listed applicable emissions rate that is significant, the owner or operator shall calculate the net emissions increase in accordance with paragraph (2). In addition, minor editorial changes are finalized for this section as well.

 Section 127.204 (relating to emissions subject to this subchapter) is amended to include some minor editorial changes.

 Section 127.206(o) is amended to provide that except as provided under § 127.210, an ERC created for a regulated criteria pollutant shall only be used for offsetting or netting an emissions increase involving the same criteria pollutant unless approved in writing by the Department and the EPA. The ''amnesty period'' dates under § 127.206(r) regarding when emission reductions may be used to generate ERCs are amended to specify that emission reductions occurring at a facility after April 5, 2005, but prior to September 3, 2011, may be used to generate ERCs in accordance with this subchapter, if a complete ERC registry application is submitted to the Department by September 3, 2012. In addition, minor editorial changes are finalized for this section.

 Section 127.210 is amended to remove interpollutant trading for PM_2.5 and PM_2.5 precursors in the final-form rulemaking due to the EPA's reconsideration of specific provisions of the final rule published at 73 FR 28321. Among other things, the amended provision provides that the Department may, based on a technical assessment, establish interpollutant trading ratios for offsetting PM_2.5 emissions or PM_2.5 precursor emissions in a specific nonattainment area or geographic area in this Commonwealth. The interpollutant trading ratios shall be subject to public review and comment for at least 30 days prior to submission to the EPA for approval as a SIP revision. Section 127.210 of the final-form rulemaking is further amended to provide that if the EPA promulgates PM_2.5 interpollutant trading ratios in 40 CFR Part 51 (relating to requirements for preparation, adoption, and submittal of implementation plans), the ratios shall be adopted and incorporated in the final-form regulation by reference.

Changes from Proposed to Final-form Rulemaking

 In final-form § 121.1, the definition of ''regulated NSR pollutant'' has been modified between proposed and final-form rulemaking to add subparagraph (iii)(C) to provide that NO_x are presumed to be precursors to PM_2.5 in PM_2.5 nonattainment areas unless the Department demonstrates to the satisfaction of the Administrator of the EPA or the Administrator of the EPA determines that NO_x emissions from a source in a specific area are not a significant contributor to that area's ambient PM_2.5 concentrations.

 The definition of ''significant'' has been modified between proposed and final-form rulemaking under PM_2.5 emission rate to provide that 10 TPY of PM_2.5, 40 TPY of SO₂ and 40 TPY of NO_x are the applicable rates unless the Department demonstrates to the EPA's satisfaction or the EPA determines that the NO_x emissions are not a significant contributor to PM_2.5 nonattainment in the area.

 Final-form § 127.201(g)(1) was modified between proposed and final-form rulemaking to provide that beginning January 1, 2011, or earlier date established by the Administrator, condensable PM shall be accounted for in applicability determinations for PM_2.5 and PM-10 emission limitations established in a plan approval or operating permit issued under Chapter 127.

 Final-form §§ 127.201a and 127.202 were not changed between proposed and final-form rulemaking.

 Final-form § 127.203 was modified between proposed and final-form rulemaking to delete the proposed phrase ''including the emissions from the proposed project'' in subsection (b)(2) and (3).

 Final-form § 127.203a(a)(2) was modified between proposed and final-form rulemaking to provide that as part of the plan approval application for a proposed de minimis emission increase, the owner or operator of the facility shall use subparagraphs (i) and (ii) to calculate the net emissions increase for a regulated NSR pollutant except PM_2.5 and PM_2.5 precursors.

 Final-form § 127.204 was not changed between proposed and final-form rulemaking.

 Final-form § 127.206(o) was modified between proposed and final-form rulemaking to provide that except as provided under § 127.210, an ERC created for a regulated criteria pollutant shall only be used for offsetting or netting an emissions increase involving the same criteria pollutant unless approved in writing by the Department and the EPA.

 Section 127.210 is amended to remove interpollutant trading for PM_2.5 and PM_2.5 precursors in the final-form rulemaking due to the EPA's reconsideration of specific provisions of the final rule published at 73 FR 28321. On July 15, 2008, the Natural Resources Defense Council and the Sierra Club petitioned the EPA to reconsider and administratively stay specific parts of to the final rule, ''Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (PM_2.5),'' published at 73 FR 28321. The petition objected to four parts of the final rule, including allowing states to use EPA-recommended PM_2.5 precursor trading ratios to offset PM_2.5 emissions increases in PM_2.5 nonattainment areas. On January 16, 2009, the EPA denied the July 2008 petition. On February 10, 2009, the same petitioners submitted a second reconsideration request for the same four issues and another request for administrative stay. They also requested reconsideration of the January 16, 2009, denial letter.

 The EPA granted the February 10, 2009, petition for reconsideration to allow for public comment on each of the four issues raised, including allowing states to use EPA-recommended PM_2.5 precursor trading ratios to offset PM_2.5 emissions increases in PM_2.5 nonattainment areas. The EPA agreed to reconsider the trading ratios and granted the reconsideration of this policy on the grounds that the EPA failed to propose for public comment the EPA-recommended offset ratios in the preamble to the final rule published at 73 FR 28321. As a result, the existing ''preferred'' precursor offset ratios will no longer be considered presumptively approvable. That is, any precursor offset ratio submitted as part of the NSR SIP for a PM_2.5 nonattainment area must be accompanied by a technical demonstration showing the suitability of the ratio for that particular nonattainment area. Therefore, the Board developed language for the final-form rulemaking that mirrors the EPA's intent.

 This language removes interpollutant trading for PM_2.5 and PM_2.5 precursors in the final-form rulemaking and amends § 127.210 to provide that the Department may, based on a technical assessment, establish interpollutant trading ratios for offsetting PM_2.5 emissions or PM_2.5 precursor emissions in a specific nonattainment area or geographic area in this Commonwealth. The interpollutant trading ratios shall be subject to public review and comment for at least 30 days prior to submission to the EPA for approval as a SIP revision. Section 127.210 of the final-form rulemaking is further amended to provide that if the EPA promulgates PM_2.5 interpollutant trading ratios in 40 CFR Part 51, the ratios shall be adopted and incorporated in the final-form regulation by reference.

G. Benefits, Costs and Compliance

Benefits

 Overall, the citizens of this Commonwealth will benefit from this final-form rulemaking because it will help to reduce emissions of PM_2.5 from major stationary sources. Attaining and maintaining levels of PM_2.5 below the health- and welfare-based NAAQS are important to reduce premature mortality and other health effects associated with PM_2.5 exposure. Reductions in ambient levels of PM_2.5 will also promote improved animal health and welfare, improved visibility, decreased soiling and materials damage and decreased damage to plants and trees.

Compliance Costs

 The final-form rulemaking should not impose additional costs on the regulated community. If a facility triggers NSR for a regulated pollutant or precursor, the owner or operator of the facility shall demonstrate compliance by procuring emission offsets and achieving the LAER. Compliance costs will vary depending on the type of controls installed to satisfy the control technology requirements and the cost of emission offsets.

Compliance Assistance Plan

 The Department plans to educate and assist the public and regulated community in understanding the newly revised requirements and how to comply with them. This will be accomplished through the Department's ongoing compliance assistance program.

Paperwork Requirements

 There are no additional paperwork requirements associated with this final-form rulemaking with which industry will need to comply.

H. Pollution Prevention

 The Pollution Prevention Act of 1990 (42 U.S.C.A. §§ 13101—13109) established a National policy that promotes pollution prevention as the preferred means for achieving state environmental protection goals. The Department encourages pollution prevention, which is the reduction or elimination of pollution at its source, through the substitution of environmentally friendly materials, more efficient use of raw materials and the incorporation of energy efficiency strategies. Pollution prevention practices can provide greater environmental protection with greater efficiency because they can result in significant cost savings to facilities that permanently achieve or move beyond compliance. The final-form rulemaking does not directly promote a multimedia approach. The reduced levels of PM_2.5, however, will benefit water quality through reduced soiling and quantities of sediment that may run off into waterways. Reduced levels of PM_2.5 will therefore promote improved aquatic life and biodiversity, as well as improved human, animal and plant life on land.

I. Sunset Review

 These regulations will be reviewed in accordance with the sunset review schedule published by the Department to determine whether the regulations effectively fulfill the goals for which they were intended.

J. Regulatory Review

 Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on February 6, 2010, the Department submitted a copy of the notice of proposed rulemaking, published at 40 Pa.B. 703, to IRRC and the Chairpersons of the House and Senate Environmental Resources and Energy Committees for review and comment.

 Under section 5(c) of the Regulatory Review Act, IRRC and the House and Senate Committees were provided with copies of the comments received during the public comment period, as well as other documents when requested. In preparing the final-form rulemaking, the Department has considered all comments from IRRC, the House and Senate Committees and the public.

 Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on July 20, 2011, the final-form rulemaking was deemed approved by the House and Senate Committees. Under section 5.1(e) of the Regulatory Review Act, IRRC met on July 21, 2011, and approved the final-form rulemaking.

K. Findings

 The Board finds that:

 (1) Public notice of proposed rulemaking was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and regulations promulgated thereunder, 1 Pa. Code §§ 7.1 and 7.2.

 (2) At least a 60-day public comment period was provided as required by law and all comments were considered.

 (3) This final-form rulemaking does not enlarge the purpose of the proposed rulemaking published at 40 Pa.B. 703.

 (4) These regulations are necessary and appropriate for administration and enforcement of the authorizing acts identified in Section C of this preamble.

 (5) These regulations are reasonably necessary to attain and maintain the PM_2.5 NAAQS.

L. Order

 The Board, acting under the authorizing statutes, orders that:

 (a) The regulations of the Department, 25 Pa. Code, Chapters 121 and 127 are amended by amending §§ 121.1, 127.201, 127.201a, 127.202, 127.203, 127.203a, 127.204, 127.206 and 127.210 to read as set forth in Annex A, with ellipses referring to existing text of the regulations.

 (b) The Chairperson of the Board shall submit this order and Annex A to the Office of General Counsel and the Office of Attorney General for review and approval as to legality and form as required by law.

 (c) The Chairperson of the Board shall submit this order and Annex A to IRRC and the House and Senate Committees as required by the Regulatory Review Act.

 (d) The Chairperson of the Board shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.

 (e) This final-form rulemaking will be submitted to the EPA as an amendment to the Pennsylvania SIP.

 (f) This order shall take effect immediately upon publication in the Pennsylvania Bulletin.

MICHAEL L. KRANCER, 
Chairperson

 (Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 41 Pa.B. 4265 (August 6, 2011).)

 Fiscal Note: Fiscal Note 7-450 remains valid for the final adoption of the subject regulations.

Annex A

TITLE 25. ENVIRONMENTAL PROTECTION

PART I. DEPARTMENT OF ENVIRONMENTAL PROTECTION

Subpart C. PROTECTION OF NATURAL RESOURCES

ARTICLE III. AIR RESOURCES

CHAPTER 121. GENERAL PROVISIONS

§ 121.1. Definitions.

 The definitions in section 3 of the act (35 P. S. § 4003) apply to this article. In addition, the following words and terms, when used in this article, have the following meanings, unless the context clearly indicates otherwise:

*  *  *  *  *

 Marine deck sealant or marine deck sealant primer—A sealant or sealant primer labeled for application to wooden marine decks.

 Maximum heat input capacity—The maximum steady state heat input under which a source may be operated as determined by its physical design and characteristics. Maximum heat input capacity is expressed in millions of British Thermal Units (MMBtu) per unit of time.

*  *  *  *  *

 PEMS—Predictive emissions monitoring system—For purposes of Chapter 127, Subchapter E, all of the equipment necessary to monitor process and control device operational parameters including control device secondary voltages and electric currents, other information including gas flow rate, O₂ or CO₂ concentrations, and calculate and record the mass emissions rate in terms of mass per unit time, like lb/hr, on a continuous basis.

 PM_2.5—Particulate matter with an aerodynamic diameter of less than or equal to a nominal 2.5 micrometer body as measured by the applicable reference method or an equivalent method.

 PM-10—Particulate matter with an effective aerodynamic diameter of less than or equal to a nominal 10 micrometer body as measured by the applicable reference method or an equal method.

*  *  *  *  *

 Regulated NSR pollutant—

 (i) NO_x or VOCs.

 (ii) A pollutant for which the EPA has promulgated a NAAQS.

 (iii) A pollutant that is a constituent or precursor of a pollutant listed under subparagraph (i) or (ii), if the constituent or precursor pollutant may only be regulated under NSR as part of regulation of the pollutant listed under subparagraph (i) or (ii). Precursors identified by the Administrator of the EPA for purposes of NSR are the following:

 (A) VOCs and NO_x are precursors to ozone in all ozone nonattainment areas.

 (B) SO₂ is a precursor to PM_2.5 in all PM_2.5 nonattainment areas.

 (C) Nitrogen oxides are presumed to be precursors to PM_2.5 in PM_2.5 nonattainment areas unless the Department demonstrates to the satisfaction of the Administrator of the EPA or the Administrator of the EPA determines that NO_x emissions from a source in a specific area are not a significant contributor to that area's ambient PM_2.5 concentrations.

 (iv) PM_2.5 and PM-10 emissions, including gaseous emissions from a facility or activity that condense to form particulate matter at ambient temperatures, as specified in § 127.201(g) (relating to general requirements).

*  *  *  *  *

 Significant—

 (i) In reference to a net emissions increase or the potential of a facility to emit one of the following pollutants at a rate of emissions that would equal or exceed the following emissions rates except as specified in subparagraphs (ii)—(v):

Pollutant	Emissions Rate
Carbon monoxide (CO):	100 TPY
Nitrogen oxides (NOx):	40 TPY
Sulfur oxides (SOx):	40 TPY
Ozone:	40 TPY of VOCs or 40 TPY of NOx
Lead:	0.6 TPY
PM-10:	15 TPY
PM2.5:	10 TPY of PM2.5; 40 TPY of SO2; 40 TPY of NOx, unless the Department demonstrates to the EPA's satisfaction or the EPA determines that the NOx emissions are not a significant contributor to PM2.5 nonattainment in the area.

 (ii) The emissions rate that is significant for VOCs in a serious or severe ozone nonattainment area is 25 TPY.

 (iii) For purposes of applying Chapter 127, Subchapter E to the owner or operator of modifications at a major facility located in an ozone nonattainment area or in an ozone transport region that emits or has the potential to emit NO_x, the emissions rate that is significant and other requirements for VOCs in subparagraphs (i) and (ii) apply to NO_x emissions.

 (iv) The emissions rate that is significant for CO in a serious nonattainment area is 50 TPY if the EPA has determined that the affected facility contributes significantly to CO levels in that area.

 (v) The emissions rate that is significant for VOCs in an extreme nonattainment area for ozone is any amount above zero.

*  *  *  *  *

CHAPTER 127. CONSTRUCTION, MODIFICATION, REACTIVATION AND OPERATION OF SOURCES

Subchapter E. NEW SOURCE REVIEW

§ 127.201. General requirements.

 (a) A person may not cause or permit the construction or modification of an air contamination facility in a nonattainment area or having an impact on a nonattainment area unless the Department or an approved local air pollution control agency has determined that the requirements of this subchapter have been met.

 (b) The nonattainment area classification that applies for offset trading and offset ratio selection shall be the highest classification designated by the EPA Administrator in 40 CFR 81.339 (relating to Pennsylvania) or by operation of law.

 (c) The NSR requirements of this subchapter also apply to a facility located in an attainment area for ozone and within an ozone transport region that emits or has the potential to emit at least 50 TPY of VOC or 100 TPY of NO_x. A facility within either an unclassifiable/attainment area for ozone or within a marginal or incomplete data nonattainment area for ozone or within a basic nonattainment area for ozone and located within an ozone transport region will be considered a major facility and shall be subject to the requirements applicable to a major facility located in a moderate nonattainment area.

 (d) The NSR requirements of this subchapter apply to an owner or operator of a facility at which a net emissions increase that is significant would occur as determined in accordance with § 127.203a (relating to applicability determination). If an emissions increase meets or exceeds the applicable emissions rate that is significant as defined in § 121.1 (relating to definitions), the facility is subject to the permitting requirements under § 127.205 (relating to special permit requirements). An emissions increase subject to this subchapter must also be offset through the use of ERCs at the offset ratios specified in § 127.210 (relating to offset ratios). The generation, use, transfer and registration requirements for ERCs are listed in § § 127.206—127.209.

 (e) In the event of an inconsistency between this rule and any other rule promulgated by the Department, the inconsistency must be resolved by the application of the more stringent provision, term, condition, method or rule.

 (f) A facility located in Bucks, Chester, Delaware, Montgomery or Philadelphia Counties that emits or has the potential to emit at least 25 TPY of VOC or NO_x will be considered a major facility and shall be subject to the requirements applicable to a major facility located in a severe nonattainment area for ozone.

 (g) PM_2.5 and PM-10 emissions include gaseous emissions from a facility or activity that condense to form PM at ambient temperatures, if present, in accordance with the following requirements:

 (1) Beginning January 1, 2011, or an earlier date established by the Administrator of the EPA, condensable PM shall be accounted for in applicability determinations and for PM_2.5 and PM-10 emission limitations established in a plan approval or operating permit issued under this chapter.

 (2) Compliance with emissions limitations for PM_2.5 and PM-10 issued prior to January 1, 2011, or an earlier date established by the Administrator, may not be based on condensable PM unless required by the terms and conditions of a plan approval, operating permit or the SIP.

 (3) Applicability determinations made prior to January 1, 2011, or an earlier date established by the Administrator, without accounting for condensable PM may not be considered in violation of this subchapter unless the applicable plan approval, operating permit or SIP includes requirements for condensable PM.

§ 127.201a. Measurements, abbreviations and acronyms.

 Measurements, abbreviations and acronyms used in this subchapter are defined as follows:

 BACT—Best available control technology

 BAT—Best available technology

 CEMS—Continuous emissions monitoring system

 CERMS—Continuous emissions rate monitoring system

 CO—Carbon monoxide

 CPMS—Continuous parametric monitoring system

 ERC—Emission reduction credit

 LAER—Lowest achievable emission rate

 lb—Pounds

 MACT—Maximum achievable control technology

 MERC—Mobile emission reduction credit

 µg/m³—Micrograms per cubic meter

 mg/m³—Milligrams per cubic meter

 NO_x—Nitrogen oxides

 NSPS—New source performance standard

 NSR—New source review

 O₂—Oxygen

 PAL—Plantwide Applicability Limit

 PEMS—Predictive emissions monitoring system

 PM—Particulate matter

 PM_2.5—Particulate matter less than or equal to 2.5 micrometers

 PM-10—Particulate matter less than or equal to 10 micrometers

 RACT—Reasonably available control technology

 SO_x—Sulfur oxides

 TPY—Tons per year

 VOC—Volatile organic compound

§ 127.202. Effective date.

 (a) The special permit requirements in this subchapter apply to an owner or operator of a facility to which a plan approval will be issued by the Department after May 19, 2007, except for PM_2.5, which will apply after September 3, 2011.

 (b) For SOx, PM_2.5, PM-10, lead and CO, this subchapter applies until a given nonattainment area is redesignated as an unclassifiable or attainment area. After a redesignation, special permit conditions remain effective until the Department approves a permit modification request and modifies the permit.

§ 127.203. Facilities subject to special permit requirements.

 (a) This subchapter applies to the construction of a new major facility or modification at an existing major facility located in a nonattainment area, an ozone transport region or an attainment or unclassifiable area which impacts a nonattainment area in excess of the following significance levels:

Pollutant	Averaging time
	Annual	24 (hours)	8 (hours)	3 (hours)	1 (hours)
SO2	1.0 µg/m3	5 µg/m3	-	25 µg/m3	-
PM-10	1.0 µg/m3	5 µg/m3	-	-	-
CO	-	-	0.5 mg/m3	-	2 mg/m3
Lead	-	0.1 µg/m3	-	-	-

 (b) The following provisions apply to an owner or operator of a facility located in Bucks, Chester, Delaware, Montgomery or Philadelphia County or an area classified as a serious or severe ozone nonattainment area:

 (1) The applicability requirements in § 127.203a (relating to applicability determination) apply except as provided by this subsection. The requirements of this subchapter apply if the aggregated emissions determined according to subparagraph (i) or (ii) exceed 25 TPY of NO_x or VOCs.

 (i) The proposed increases and decreases in emissions are aggregated with the other increases in net emissions occurring over a consecutive 5 calendar-year period, which includes the calendar year of the modification or addition which results in the emissions increase. The aggregated VOC or NO_x emissions must meet the applicability requirements in paragraph (2) or (3).

 (ii) The proposed increases and decreases in emissions are aggregated with other increases and decreases which occurred within 10 years prior to the date of submission of a complete plan approval application. If the aggregated emissions increase calculated using this subparagraph meets or exceeds the emissions rate that is significant, only the emissions offset requirements in § 127.205(3) (relating to special permit requirements) apply to the aggregated emissions.

 (2) An increase in emissions of VOCs or NO_x, other than a de minimis emission increase, from a discrete operation, unit or other pollutant emitting activity at a facility with a potential to emit less than 100 TPY of VOCs or NO_x, is considered a modification unless the owner or operator elects to offset the increase by a greater reduction in emissions of VOCs or NO_x from other operations, units or activities within the facility at an internal offset ratio of at least 1.3 to 1. If the owner or operator does not elect to offset at the required ratio, the increase is considered a modification and the BACT requirement is substituted for LAER. The owner or operator of the facility shall comply with all applicable requirements including the BAT requirement.

 (3) An increase in emissions of VOCs or NO_x, other than a de minimis emission increase, from a discrete operation, unit or other pollutant emitting activity at a facility with a potential to emit of 100 TPY or more, is considered a modification unless the owner or operator elects to offset the increase by a greater reduction in emissions of VOCs or NO_x from other operations, units or activities within the facility at an internal offset ratio of at least 1.3 to 1. If the owner or operator elects to offset at the required ratio, the LAER requirement does not apply. The owner or operator of the facility shall comply with the applicable requirements including the BAT requirement.

 (c) The NSR requirements of this subchapter apply to an owner or operator of:

 (1) A facility at which the net emissions increase as determined under this subchapter meets or exceeds the applicable emissions rate that is significant. A decrease in a facility's emissions will not qualify as a decrease for purposes of this subchapter unless the ERC provisions in § 127.207(1) and (3)—(7) (relating to creditable emissions decrease or ERC generation and creation) are met.

 (2) A major facility subject to this subchapter which was deactivated for a period in excess of 1 year and is not in compliance with the reactivation requirements of § 127.215 (relating to reactivation).

 (d) The requirements of this subchapter which apply to VOC emissions from major facilities and major modifications apply to NO_x emissions from major facilities and major modifications in an ozone transport region or an ozone nonattainment area classified as marginal, basic, moderate, serious, severe or extreme, except in areas which the EPA has determined that additional reductions of NO_x will not produce net air quality benefits.

 (e) The following provisions apply to an owner or operator of a major facility subject to this subchapter:

 (1) Approval to construct or modify an air contamination source or facility does not relieve an owner or operator of the responsibility to comply fully with applicable provisions of the SIP and other requirements under local, State or Federal law.

 (2) If a particular source or modification becomes a major facility or major modification solely by virtue of a relaxation in an enforcement limitation which was established after August 7, 1980, on the capacity of the source or modification to emit a pollutant including a restriction on hours of operation, the requirements of this subchapter also apply to the source or modification as though construction had not yet commenced on the source or modification.

 (f) The NSR requirements of this subchapter do not apply to an owner or operator of a major facility at which:

 (1) A physical change or change in the method of operation still maintains its total facility-wide emissions below the PAL, meets the requirements in § 127.218 (relating to PALs) and complies with the PAL permit.

 (2) A project results in a net emissions increase which does not meet or exceed the applicable emissions rate that is significant.

 (3) A proposed de minimis increase results in a net emissions increase calculated using emissions increases and decreases which occurred within 10 years prior to the date of submission of a complete plan approval application, which does not meet or exceed the emissions rate that is significant.

 (4) Construction of a new facility or a project at an existing major facility located in an attainment or unclassifiable area does not impact a nonattainment area for the applicable pollutant in excess of the significance level specified in § 127.203a.

§ 127.203a. Applicability determination.

 (a) The Department will conduct an applicability determination during its review of a plan approval application for the construction of a new major facility or modification at an existing major facility under this section. The owner or operator of the facility shall include in the plan approval application the estimate of an emissions increase in a regulated NSR pollutant from the project. The owner or operator shall calculate an emissions increase in a regulated NSR pollutant from a project in accordance with paragraph (1). The owner or operator shall calculate a net emissions increase in accordance with paragraph (1)(ii), if the emissions increase from a project equals or exceeds the applicable emissions rate that is ''significant'' as defined in § 121.1 (relating to definitions). If the emissions increase from a project does not exceed the listed applicable emissions rate that is significant, the owner or operator shall calculate the net emissions increase in accordance with paragraph (2).

 (1) As part of the plan approval application, the owner or operator of the facility shall calculate whether a significant emissions increase and a significant net emissions increase will occur as a result of a physical change or change in the method of operation. The owner or operator of the facility shall use the procedures in subparagraph (i) to calculate the emissions increase in a regulated NSR pollutant due to the project, and the procedures in subparagraph (ii) to calculate the net emissions increase in a regulated NSR pollutant. A project is a major modification for a regulated NSR pollutant if it causes two types of emissions increases—a significant emissions increase and a significant net emissions increase. If the project causes a significant emissions increase, the project is a major modification if it also results in a significant net emissions increase.

 (i) The emissions increase in a regulated NSR pollutant due to the project will be the sum of the following:

 (A) For existing emissions units, an emissions increase of a regulated NSR pollutant is the difference between the projected actual emissions and the baseline actual emissions for each unit, as determined in paragraphs (4) and (5). When calculating an increase in emissions that results from the particular project, exclude that portion of the unit's emissions following completion of the project that existing units could have accommodated during the consecutive 24-month period used to establish the baseline actual emissions and that is also unrelated to the particular project, including all increased utilization due to product demand growth as specified in paragraph (5)(i)(C).

 (B) For new emissions units, the emissions increase of a regulated NSR pollutant will be the potential to emit from each new emissions unit.

 (ii) The net emissions increase for a regulated NSR pollutant emitted by a major facility will be the amount by which the sum of the following exceeds zero:

 (A) The increase in emissions from a physical change or change in the method of operation at a major facility as calculated under subparagraph (i).

 (B) Other increases and decreases in actual emissions at the major facility that are contemporaneous with the project and are otherwise creditable.

 (I) An increase or decrease in actual emissions is contemporaneous with the increase from the particular change only if it occurs between the date 5 years before construction on the project commences and the date that construction on the project is completed.

 (II) Baseline actual emissions for calculating increases are determined as specified under paragraph (4), except that paragraph (4)(i)(D) does not apply.

 (2) As part of the plan approval application for a proposed de minimis emission increase, the owner or operator of the facility shall use subparagraphs (i) and (ii) to calculate the net emissions increase for a regulated NSR pollutant except PM_2.5 and PM_2.5 precursors. For a proposed de minimis increase in which the net emissions increase calculated using subparagraphs (i) and (ii) meets or exceeds the emissions rate that is significant, only the emissions offset requirements in this subchapter apply to the net emissions increase.

 (i) The net emissions increase is the sum of the proposed de minimis increase due to the project and the previously determined increases in potential emissions or actual emissions and decreases in actual emissions that are contemporaneous with the project.

 (ii) An increase or decrease is contemporaneous if it occurred within 10 years prior to the date of the Department's receipt of a complete plan approval application.

*  *  *  *  *

§ 127.204. Emissions subject to this subchapter.

 (a) In determining whether a project exceeds the emission rate that is significant or the significance levels specified in § 127.203 (relating to facilities subject to special permit requirements), the potential to emit, actual emissions and actual emissions increase shall be determined by aggregating the emissions or emissions increases from contiguous or adjacent properties under the common control of a person or entity. The aggregation must include emissions resulting from the following: flue emissions, stack and additional fugitive emissions, material transfer, use of parking lots and paved and unpaved roads on the facility property, storage piles and other emission generating activities resulting from operation of the new or modified facility.

 (b) Secondary emissions may not be considered in determining whether a facility meets the requirements of this subchapter. If a facility is subject to this subchapter on the basis of the direct emissions from the facility, the conditions of § 127.205 (relating to special permit requirements) shall also be met for secondary emissions.

§ 127.206. ERC general requirements.

*  *  *  *  *

 (o) Except as provided under § 127.210 (relating to offset ratios), an ERC created for a regulated criteria pollutant shall only be used for offsetting or netting an emissions increase involving the same criteria pollutant unless approved in writing by the Department and the EPA.

 (p) The owner or operator of a source or facility which has registered ERCs with the Department may not exceed the emissions limitation or violate other permit conditions established in generating the ERCs.

 (q) ERCs may not be generated for emissions in excess of those previously identified in required emission statements and for which applicable emission fees have been paid.

 (r) Emission reductions occurring at a facility after April 5, 2005, but prior to September 3, 2011, may be used to generate ERCs in accordance with this subchapter, if a complete ERC registry application is submitted to the Department by September 3, 2012.

§ 127.210. Offset ratios.

 (a) The emissions offset ratios for NSR purposes and ERC transactions subject to the requirements of this subchapter must be in an amount equal to or greater than the ratios specified in the following table:

Required Emission Offsets For Existing Sources, Expressed in Tons per Year

Pollutant/Area	Flue Emissions	Fugitive Emissions
PM-10 and SOx	1.3:1	5:1
Volatile Organic Compounds
Ozone Classification Areas
Severe Areas Serious Areas Moderate Areas Marginal/Incomplete Data Areas Transport Region	1.3:1 1.2:1 1.15:1 1.15:1 1.15:1	1.3:1 1.3:1 1.3:1 1.3:1 1.3:1
NOx
Ozone Classification Areas
Severe Areas Serious Areas Moderate Areas Marginal/Incomplete Data Areas Transport Region	1.3:1 1.2:1 1.15:1 1.15:1 1.15:1	1.3:1 1.2:1 1.15:1 1.15:1 1.15:1
Carbon Monoxide
Primary Nonattainment Areas	1.1:1	1.1:1
Lead	1.1:1	1.1:1
PM2.5  PM2.5 Nonattainment Area
PM2.5	1:1	1:1
PM2.5 Precursors
SO2	1:1	1:1
NOx	1:1	1:1

 (b) In complying with the emissions offset requirements of this subchapter, the emission offsets obtained shall be of the same NSR regulated pollutant unless interpollutant offsetting is authorized for a particular pollutant in accordance with subsection (c).

 (c) The Department may, based on a technical assessment, establish interpollutant trading ratios for offsetting PM_2.5 emissions or PM_2.5 precursor emissions in a specific nonattainment area or geographic area in this Commonwealth. The interpollutant trading ratios shall be subject to public review and comment for at least 30 days prior to submission to the EPA for approval as a SIP revision.

 (d) If the EPA promulgates PM_2.5 interpollutant trading ratios in 40 CFR Part 51 (relating to requirements for preparation, adoption, and submittal of implementation plans), the ratios will be adopted and incorporated by reference.

[Pa.B. Doc. No. 11-1502. Filed for public inspection September 2, 2011, 9:00 a.m.]

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