ILLINOIS POLLUTION CONTROL BOARD

June

16,

1983

IN THE MATTER OF:

)

)

 R81—16

MAJOR SOURCE CONSTRUCTION

)

 DOCKET

B

AND MODIFICATION

)

PROPOSED OPINION

 SECOND NOTICE

OPINION OF THE BOARD

 (by J.

D.

 Dumelle):

With the adoption of Public Act 81-1444 on September

9,

1980

the Environmental Protection Act

 (Act) was amended to include

Section

 9.1(d), which mandates that

the

 Board adopt regulations

establishing permit programs in accordance with Sections 165

and

173

 (42 U.S.C.

 7475 and 42 U.S.C.

 7503) of the Clean Air Act

(CAA).

 Section 165 is

 found in

 Part

 C of the CAA, which encom-

passes the programs for “Prevention of Significant Deterioration

 Air Quality”

 in areas designated attainment;

 Section 173

is

found in Part D,

 “Plan Requirements for Nonattainment Areas.*

On

May

1,

 1981 the Illinois Environmental Protection Agency (Agency)

filed its proposal outlining a permit program for new and

 nod-.

ified major stationary sources

 in both attainment and nonattain-.

ment areas.

 Merit hearings were held

July 20 and 21,

 1981 in

Springfield and Chicago, respectively, and again on November 2

and 6,

 1981 in the same locales.

 Econonic hearings were held

September 20 and 27,

 1982 in Chicago and Springfield, the

Economic Impact Study having been received on August

6,

 1982.

Coincidently,

 First Notice was published in the Illinois

Register, Vol.

6,

 Issue 32, on August

6,

 1982.

 A final hearing

was held on November 16,

1982

 Chi*-~gc~

 $-~o~onsid~r cml-standing

issues, especially those arising from the District of Columbia

Appellate Court’s decision of August

17,

 1982 Natural Resource

Defense Council

v.

 Gorsuch,

 13 ERC 1225 and 1993.

At the outset of this rulemaking the subject matter was

separated into’ two dockets.

 The rules pertaining to the

Prevention of Significant Deterioration

 (PSD) permit program were

assigned to Docket

 A, while Docket B was reserved for the

permitting rules for major sources and modifications in non—

attainment areas.

 The latter are commonly referred to as New

Source Review (NSR).

 Not only does Section 9.1 of the Act

contain deadlines for adoption of the NSR rules, but Sections

It it the wish of the Board that the knowledge and concern

contributed to this proceeding by Irvin G. Goodman before his

 death,: and his legacy of inspiration

 recognized and remem-

bered.

 The Board also acknowledges the work of Marili MCFaWn,

hearing officer and administrative assistant in this matter.

52-403

11O(a)(2)(I),

 172(a)(1),

 and most specifically Section 172(b)(6)

in accordance with Section 173 of the CAA,

 require that these

rules

 be adopted as properly enforceable provisions

 of the State

Implementation Plan

 (SIP).

 If they are not,

 the United States

Environmental Protection Agency (USEPA)

 is authorized under the

CAA to impose growth sanctions.

 To avoid such action by the

(JSEPA, and in accordance with Illinois

 law, adoption of the NSR

rules is proposed separately from the PSD rules;

 this Opinion and

the accompanying Order concern only Docket B.

Where air quality is modeled or monitored to be worse than

that required by the National Ambient Air Quality Standards,

in

a

nonattainrnent areas asdefined in Section 171(2),

 the primary

objective

 is obviously to improve the region’s air quality as

soon as possible.

 One avenue already established is to require

existing sources

 to apply reasonably available control tech-

nologies, commonly known as the RACT program

 S172(b)

 of the

 CAA.

 Another approach is to control the emissions from newly

constructed and modified sources.

 Therefore,

 the NSR program

consists primarily of preconstruction rules to ensure that as

built or modified, potentially large

 sources of air pollutants do

not contribute to a region’s air quality problems. Although the

purpose of the NSR is similar to that of the RACT program,

 since

it applies to sources not yet constructed or modified, NSR

requirements are more demanding.

 These sources may only emit

nonattainment designated pollutants at the Lowest Achievable

Emission Rate

 (LAER).

 This is accomplished by applying the most

stringent control technology known, and if appropriate, limita-

tions on operating parameters.

 Furthermore,

 in accord with the

need to improve air quality to acceptable healthy levels, these

sources may also have to provide emission reductions from exist-

ing sources.

 Only if it

 is proven that these emission offsets

are unnecessary for the area’s reasonable further progress

 (RFP)

towa~dzattainment,

 can the new source forego providing them.

Lastly, assuming improvement of air quality through the pre—

construction review rules contained

 in Subparts

A,

 B and C

 three

rules are included at Subpart F to ensure the desired improvement

continues.

 Sources receiving construction permits pursuant to

NSR will be required,

 to maintain the LAER operating parameters,

to keep current any necessary emission offsets, and to monitor

emissions to establish the source’s actual effect on the region’s

reasonable further progress.

SUBPART A:

 Definitions and General Provisions

The definitions currently found at Rules

 101 and 102 of

Chapter

 2 are applicable to this Part.

 Of particular importance

to the NSR rules are the definitions of “emission source” at Rule

101, and “stationary emission source” at Rule 201. An emission

source is defined as

 “any equipment or facility of

 a type capable

of emitting specified air contaminants to the atmosphere”.

As

such,

 it provides a dual definition of a source.

 A source

is

either an entire plant or an individual piece of process equip—

52-404

3

ment within

 a plant.

 The importance of

 the dual definition

within the context of the NSR rules

 is included at the

“Significant Net Emission Increases”

 discussion.

 It should be

noted that Rule 201 contains many definitions which more specif-.

Lcally describe “equipment”,

e.

 g. degreaser,

 firebox.

 The term

“emission source” also provides a building block for “stationary

emission source”.

 A stationary emission source

 is defined as

 “an emission source which is not self-propelled.”

 Obviously when

the language

 “stationary source”

 is used in this Part, whether

not in the context of major stationary source,

 it is

 referring

to

a stationary emission source.

Four of the definitions

 found in Subpart A were adopted

verbatim in R81—20,

 Alternative Control Strategies,

on

June

2,

 1983.

 They are:

 “actual emissions”,

 “allowable

emissions”,

 “emission baseline”,

 and “potential

 to emit”.

All

four are important in the context of NSR,

 as well as

for

Alternative Control

 Strategies.* Except for “emission baseline”,

these definitions parallel

 the federal versions found at 40 CFR

51.18(j),

 and only the definition of “allowable emissions”

varies from that at 40 CFR 51.18(j)(xi).

 Generally,

 “allowable

emissions” are calculated based on a source’s maximum rated

capacity and the applicable emission limitation found in Chapter

2.

 However,

 if the source’s maximum rated capacity or emission

rate is specified as a permit condition, calculating that

source’s “allowable emissions”

 is likewise limited.

 Emission

estimates for start—ups,

 malfunctions, or breakdowns are also

included in a source’s allowable emissions

 if Rule 105 has been

complied with.

 Since Rule 105 requires that these emissions be a

part of the operating permit,

 it is appropriate that they be

included as part of the source’s allowable emissions.

 Lastly,

if

a source’s allowable emissions cannot be determined,

 or are not

established by a permit condition, then they shall be the

source’s “potential

 to emit”.

 While the federal definition of

“actual emissions” provides for this alternative, the federal

definition of “allowable emissions”

 is silent.

 In either case,

if a source’s emissions cannot be determined using the body of

the rule,

 it is logical and certainly no less stringent to allow

potential emissions to be used.

Despite the fact that the terms “commence” and “construc-

tion” are already defined in Rule 101,

 expanded definitions of

the same are proposed for Part 203.

 “Commence” now refers to

beginning actual on—site construction,

 as well as the act of

entering into binding contracts to construct or modify.

The

*Assuming that all

 four are pertinent

 to both Parts

 202 and 203,

it may prove appropriate to include them in the general

definition section of Chapter

2.

 This can be done in the course

of

 final rulemaking on R79—14, Revisions to Chapter

 2, or R81—2,

Codification of Chapter

2.

52-405

4

contractual obligation has been further qualified to mean that it

cannot be broken without substantial loss to the owner or oper-

ator.

 The definition of “construction” has been expanded to

include not only an on—site physical change such as fabrication,

erection or installation of an emission source, but also any

change, physical or operational, which causes a change

 in actual

emissions.

 As amended, the definitions

 for “commence”

and

“construction” are equivalent to those required by 40 CFR

51.18(j)(l)(xvi) and

 (xvii).

 A definition of “Begin Actual

Construction” was proposed.

 It is not included in Subpart

A,

hut

is instead incorporated at Section 203.202, Preconstruction

Permit Requirement.

 The distinction is that “commence” and

“construction” are used throughout this Part, whereas “Begin

Actual Construction” is not.

 Its meaning is limited to deter-

mining when a preconstruction permit

 is required.

The terms “available growth margin”,

 “emission offset” and

“reasonable

 further progress” are defined in Subpart

A;

 there are

no parallel federal regulations.

 All are concepts fundamental to

the entire Part,

 especially to Subpart C.

 “Secondary emissions”

is defined identically to that found in 40 CFR 51.18(j)(l)(viii).

Secondary emissions are those contaminants emitted due to the

 newly constructed or modified sources,

 but are not emitted by the

source itself.

 Emissions from off—site support facilities that

would not have, but for the new construction or modification,

increased emissions qualify as such indirect emissions.

 However,

increased emissions coming directly from mobile sources, i.e.

trains and ships, which service the new major source or modified

stationary source,

 do not.

 It should be noted that while second-

ary emissions are not included in determining a source’s poten-

tial to emit, those attributed to mobile sources are included.

Furthermore, the requirement

 to provide the lowest achievable

emission rate

 is not applicable to the secondary emission

sources unless they themselves qualify for NSR

 (c.f.

 45 FR 59878,

September 11,

 1980).

A number of terms associated with NSR were included in

the Agency’s proposal.

 They are:

 major modification, major

stationary source, net emissions,

 and significant.

 Definitions

for these words are instead included as part of the actual

 rules,

since they themselves are fundamentally determinative as to

whether NSR applies or emission offsets are necessary.

 The term

“complete application,” as proposed,

 is not included because

existing Rule

 103 provides a more sufficient outline of what and

when a permit application

 is complete.

 Lastly,

 the terms “Lowest

Achievable Emission Rate”,

 “temporary” and “non—industrial area”

are not defined, but instead are explained within the appropriate

rule,

 Sections 203.301(a),

 203.304(b) and 203.304(c), respectively,

In addition to the definitions, Subpart A includes

two

general rules.

 Section 203.114 provides that the application of

these rules is not severable, and Section 203.113 provides that

52-406

5

for each pending NSR permit, there will be notice of the same and

a period for public comment.

 To satisfy 40 CFR 51.18

 (h), public

participation should be initiated when the construction permit

application is made pursuant to Section 203.203.

 Should

applications for the preconstruction and construction permits be

simultaneously made, then the notice of the pending application

should be given once it has been determined that the project

qualifies for NSR, i.e. that a preconstructiori permit will be

issued.

SUBPART

B:

 Major Source Construction or Modification

in Nonattainment Areas

As stated above,

 the NSR rules constitute a preconstruction

review program.

 Fundamentally there are four situations that

initiate NSR,

 or more explicitly, that require a project to

comply with the Lowest Achievable Emission Rate and possibly the

offset requirements set out in Subpart

C.

 First,

 the NSR rules

apply if a major stationary emission source is to be newly con-

structed.

 Secondly, any physical change at a stationary source

which itself qualifies as a major stationary source,

 regardless

of the source’s size prior to the change,

 triggers NSR.

 Thirdly,

reconstruction of an emission source,

 if the fixed capital cost

of new components exceeds approximately half of an entirely new

emission source, will be treated as a newly constructed major

stationary source.

 Modification of a source which creates a

significant net increase in its emissions is the final situation

subjecting a project to NSR.

Permit Program

Given these

 four scenarios,

 should

 a project be likely to

qualify as

 a new major source or major modification, application

for a preconstruction permit

 is required pursuant to Section

203.202.

 Based on the information provided therein, a permit

shall

 be issued designating the proposed project as a new major

source or major modification.

 The permittee is thereby alerted

to plan to satisfy the NSR requirements before irreversible

decisions are made.

 Subsequently, but before actual work can

begin on the source,

 a construction permit must be obtained,

pursuant to Section 203.203.

 (This permit requirement is not

unlike that already found at Rule 103 of Chapter 2.)

 However, a

construction permit is also required prior to any change in the

operation of a source which has been determined to constitute a

major source or modification.

 Furthermore,

 a construction permit

issued pursuant to this Section must contain those conditions

singular to NSR.

When no separate permit process was proposed for these

projects,

 the eighteen month limitation on the construction

permit,

 Section 203.204, was too short for the larger projects.

52-407

6

(Public Comment #18).

 This bifurcated permitting process should

provide

 sufficient flexibility for long-range planning,

yet

with the advance knowledge that NSR must be satisfied.

 If the

anticipated

 length of a project,

 or individual phases of it

accommodate

 it, both permits may be simultaneously applied

 for,

thereby assuring acceptances of the planned project.

 If the

anticipated duration of the project does not allow for

 this, the

perrnittee

 is aware that ultimately the project must be designed

to only emit LAER (Section 203.301), and that RFP in the area

must be maintained through the project’s contribution of necessary

emission offsets

 (Section 203,302).

~~j~ajor_Source

 and Major

Modification

Pursuant to the combined definitions

 in current Rules

101

and 201,

 a stationary emission source may be an individual piece

of equipment or entire facility.

 In the first situation, either

the equipment or the facility to be constructed must be “major.”

Pursuant to Section 203.206(a),

 a source qualifies as “major”

if

it has the potential to emit 100 tons or more per year

 (tpy) of

the

 pol~utantfor which the area

 is designated nonattainment. The

100 t~ylimit is premised on the federal definition of major

stationary source at 40 CFR 51.18(j)(l)(iv).

 Therefore, pursuant

to Sections 203.201, 203.202 and 203.203, before building anew

a

major stationary source

 (that

 is, one which has potential

 to emit

100 tpy of the nonattainment designated pollutant),

 the applica-

tion for the proposed project must undergo preconstruction review

prior to a construction permit being

 issued.

The second project triggering NSR is a planned physical

change which itself has the potential

 to emit 100 tpy of the

pollutant for which the area is designated nonattaininent.

According to Section 203.206(b),

 it is immaterial whether the

rd(~ilii;ywhere the change will occur

 is itselt major

 (that

is,

emits more than 100 tpy).

 Therefore,

 taking subparagraphs

(a)

and

 (b) individually

 or together, •preconstruction review is

 applicable if new equipment or a new facility, either having the

capacity to emit

 100 tpy,

 is planned.

 Finally,

 in either case,

if the nonattainment designated pollutant is ozone,

 the source’s

potential to emit will

 be based on organic material emissions,

50

 CFR 51.18(j)(l)(v)(b).

 It should be noted that the NSR is

applied only to project’s potential to emit the nonattainment

designated pollutant. Potential emissions of pollutants other

than those are limited instead by New Source Performance

Standards

 (NSPS), National Emissions Standards for Hazardous

Air Pollutants

 (NESHAPS), Chapter

 2 emission limits,

 and any

desires of the applicant to secure

 future offsets.

Should reconstruction of a stationary emission source be

undertaken rather than new construction or physical change,

it

too may qualify as

 a major source,

 and thus be subject to NSR.

52-408

7

However, determination of whether the reconstruction is major

is

based on the fixed capital cost of the project, rather than the

potential emissions it will generate.

 (Otherwise, Section

203.206(b) which describes major physical changes, would

suffice.

 If the fixed capital costs of new components exceed

approximately fifty percent of the fixed capital costs of an

 entirely new stationary source,

 the project will

 be considered as

if it were new construction of a major stationary source.

 Four

criteria defining fixed capital cost and for evaluating the

emission contributed by the replaced equipment or facility are

set out

 in Section 203.206(c).

 If a source is rebuilt to the

extent outlined therein,

 it is appropriate that the activity

contribute to the area’s reasonable further progress, regardless

of whether it has the potential to emit more than 100 tpy.

The NSR rules also apply to major modifications of station-

ary emission sources.

 Modification is defined as a physical

change or change

 in the method of operation of a stationary

emission source.

 This “change” is not simply that described in

Section 203.206(b),

 which must

 be physical, and must have the

potential to cause

 100 or more tpy increase in emissions.

A

modification may be either physical or operational and to be

“major”

 it need only create a significant net emission increase

of a criteria pollutant or a substance regulated under Section

112 of the CAA, the NESHAP program.

A number of changes whicti might otherwise constitute a major

modification are listed as exempted at Section 203.207.

 The first

exception recognizes that routine maintenance is necessarily

ongoing at a facility, and as such the facility should not be

 subject to NSR for keeping equipment in operating condition.

The

next three exceptions encourage use of

 alternative fuel,

 pursuant

to federal

 law.

 Operational changes are also exempted if the

increases they cause

are

 within the

 source’s allowable emissions

pursuant to its prior permit.

 Seasonal shutdown of afterburners

pursuant to Chapter 2’s Rule 205(r)

 is also exempted, although

it

may cause a significant net emission increase.

 Lastly,

 a simple

change of ownership of a stationary source does not qualify as a

major modification.

 All but the

 exemption for seasonal shutdowns

Section

 203.207(g)

 parallel the federal exemptions listed at 40

CFR51.18(j)(l)(v)(c)(2),(3)

and

(5).

The exemptions

 for operational changes and alternative fuel

switching were formerly not allowed if such changes contradicted

representations made in previous permit applications.

 It was

argued that this was not federally mandated, and furthermore, was

unacceptable since permit applications do not constitute permit

conditions.

 (Public Comments Nos.

11,

14,

15,

16,

18,

 19 and

24).

 Both assertions are correct.

 Since Chapter

 2 emission

limits are expressed in mass emission and concentration limita-

tions, so qualifying these exemptions would impose an unforseen

“cap” on

 these sources.

 Accordingly, it has been deleted.

8

Significant Net Emission Increase

The netting concept is used only to determine whether a

modification

major,

and

therefore

subject

NSR.

Whenever

the term

“net”

iTsed,

it

represents

total

figure

after

any

applicable increases or decreases have been credited to an orig~

inal

 amount.

Net

 emission determination are calculated using

actual emissions as defined at Section 203.102.

 In this in-

stance, net emissions represent the total amount after any valid

contemporaneous increases or decreases of air pollutants emitted

from

the

equipment

have

been

added

and

subtracted.

Pursuant

Section

203.208(a),

 ‘increase or decrease

 is contemporaneous if

it has occurred due to

changes

the

 equipment’s control or

 operation within five years of the application being made for the

NSR permit at issue.

 However,

 the change must also have been made

since

thearea

was

designated

nonattaininent

 the USEPA, or

since

April24,

1979,

whichever

recent.

The

1979

date

the date the Agency originally adopted its own

HSR

rules,

which

were later vdided by the Seventh Circuit Appellate Court in

Citizens

 for a Better Environment v.

 Illinois Environmental

Protection Agency,

 649 F.2d 522

 (7th dr.,

 1981).

 Since that

time, however,’ the Illinois Legislature reinstated

 these rules

when it amended the Act with Section 9.1(e)

 and the reinstated

rules inc1ud~dthe April 24,

 1979 cutoff date for an increase/de-

crease

contemporaneous.

This

date

included,

rather

than

the date the rules were legislatively reinstated,

 or the date

Subpart ~ becomes effective,

because

provides

the

greatest

length of time for increases and decreases to

 be considered

contemporaneous.

A contemporaneous decrease/increase must also be creditable.

 It is only if

 it has not been used in another permitting process,

and then only to the extent of the difference between old and new

emission levels.

 A decrease in actual emissions

 is only credit-

able if it is enforceable and the Agency does not demonstrate

that the same decrease was already calculated into the SIP’S

demonstration

RFP.

Lastly,

the

 decrease must represent reduc-

tions in the same

pollutant

 that the modification will increase,

unless the applicant can demonstrate

 that the decrease will

provide the same or better protection of public health and wel—

flare

 in the area.

 Obviously,

 should the amount arrived at be zero

 negative figure,

 no net emission increase

 is attributable to

the modification.

 (Note,

 if a net emission decrease is proven,

that decrease could provide an offset at a later time.)

 Should

greater

than

zero,

the

step

 determine whether it

repres~nts

significant

emission

increase.

The

significant

levels

which

are

found

Section

203.209,

are

those

proposed

by

the

Agency

 ‘and listed at 40 CFR 51.18(j)(1)(x) for

CFR

61.

Four

problems

pertaining

this

 determination were raised

 public commentators.

 The USEPA cited three discrepancies

 with

9

federal requirements. Formerly the definition of “allowable

emissions”

included

 provision that the emissions creditable

to

the shutdown

source

being

replaced

similar

source

based on allowable emissions.

 This was unlike any other con—

temporaneously creditable emissions.

 The provision allowing for

shutdowns has therefore been relocated to Section 203.208(b)

where clearly any increase or decrease

 is to be premised on

actual emissions.

 Secondly, citing 40 CFR 51.18(j)(1)(xii)(h)the

USEPA suggested that the term “actual emissions” used in this

Section be qualified so that the “rate of annual emissions” he

expressed

 in “tons per year”.

 Since the definition of “actual

emissions”

 at Section 203.102 is defined as “annual” emissions,

it naturally follows that when possible,

 “actual emissions” will

 be expressed in tons per year.

 This is especially true con-

sidering that ultimately the net emission figure will

 be deter-

mined to be or not to be “significant” pursuant

 to Section

203.209, which expresses significant levels

 in tons per year.

Finally the USEPA argued that the definition of “allowable

emissions” should be amended to prevent malfunction, start—up

or

breakdown emissions from existing sources to be used in the net

emission calculation.

 However,

 since Section

203.208

only

 pro-

vides

 for use of “actual emissions”,

it

not

necessary

amend “allowable emissions” to avoid a discrepancy with federal

requirements.

For the second time commentators argued that a

“cap”

 would

imposed

 if emission reductions

 are not available because that

same decrease was already used

 to demonstate attainment or RFP.

(Public Comments Nos.

11,

 14, and 18).

 However,

 in this instance

this argument fails.

 At 40 CFR 51.18(j)(1)(vi)(e)(3)

it

is

federally mandated that for decreases

 to be creditable,

 they

 must

be

 so qualified.

 However, the federal

 language does not require

 that the Agency prove that it has used the emission reduction,

whereas the proposed language at Section 203.208(c)(4)

 does.

Thus the burden of proof is shifted to the Agency to demonstrate

that the decrease the permittee wishes

 to use

 is not available.

 light of the federal requirement, imposing the burden of proof

on the Agency is all that can be done to satisfy the commen-

tators’

 concerns.

Section 203.210, Relaxation of

 a Source—Specific Limitations

was vigorously opposed during the public comment period (Public

Comments Nos.

14,

16,

18,

19,

20,

 21 and 24)

 It provides

that

should a source be granted a relaxed emission limit pursuant to a

statutorily

required

proceeding

Chapter

mechanism

I

e.g.

Rule

204(g)

 proceeding,

 and the relief itself constitutes a

major

new

 source or modification, then the

project

implementing

the

relaxation

 subject to NSR.

 The commentators argue that

once

such

relief

awarded,

the

source

should

not

subject

to

another

review.

They

argue

that

for

instance,

requiring

the

source

granted

relief

provided

Rule

 204(g)

 (which was adopted

R80—22:

Sulfur

Dioxide

Emission

Limits)

undergo

NSR

would

~

10

prohibit fruition of the rulemaking’s statutory purpose of in-

creasing the use of Illinois coal.

 The Board must note that

although that was one statutory purpose,

 those rules were also to

be “consistent with the need to attain or maintain the National

Ambient Air Quality Standards”

 (Ill. Rev. Stat. 1981,

ch.

 111½,

pars.

1009.2,

 as amended).

 Since the purpose of NSR is also to

achieve

the

latter,

that

provide

RFP,

appropriate

that

should the relaxed limit create a “significant net increase”,

the

NSR requirements be applied as necessary.

The commentators ask that this Section be deleted.

Arguably it could be deleted, hut not for the reasons they

importune.

 Pursuant to Section 203.301 any construction, mod-

ification or change

 in operation which

 in itself constitutes a

new major source or major modification is subject to NSR,

regardless of the reasons or sanctions

 it is associated with.

Although application of these

 rules may overlay relief otherwise

granted,

 it should be

 remembered that generally air quality

impacts are assessed before source—specific relaxations are

granted.

In

 fact, under Rule 204(e),

 Rule 204(g),

 and the

Alternative Control Strategy processes air quality impacts must

be assessed.

 Thus it will

 be readily determinable whether the

change. is major and whether offsets will be required.

 LAER will

rarely be required since most relaxations will not involve

changes to equipment.

SUBPART

Requirements

For

M~j2~cpnstruction

Modification

Once

has

been

determined

that

construction

 new major

stationary

emission

source,

reconstruction

 or major modification

of

 a facility or emission unit will occur, the perrnittee must

provi~ethe following:

Lowest Achievable Emission Rate

Based on either control equipment or process measures,

the

permit application must demonstrate that each source will achieve

the lowest emission rate possible.

 Pursuant to Section 171(3)

of

the CAA and the definitions proposed at Section

203.301(a),

 this

is one of three

 things:

1)

 the lowest emission

 limit in the SIP of any other

state,

 unless demonstrated not achievable; then

2)

 the emission limit achieved in practice or

achiev-

able

 by similar stationary sources;

or

3)

 the applicable New Source Performance Standard

(Reference

Chapter

Part

IX)

Federally,

LAER

defined

§171(3)

the

CAA

and

CFR 51.18(j)l)(xiii).

 Sources subject to NSR are required to

52-412

11

achieve LAER pursuant to §173(2) of the CAA. According to the

federal definition and usage,

 the source newly constructed or

modified must achieve the more stringent of

(1)

 an emission limit

contained in any state’s SIP for such category or class of sta-

tionary source,

or

 (2) that achieved in practice by such class or

category of stationary source,

 and in no case emit more than

allowable under applicable new source standards of performance.

As proposed herein, the phrase

 “or

 is achievable”

 is in-

 cluded at the second part of this three part test.

 Thus,

if

it

represents the most stringent control sources subject to NSR are

required to implement not only the most advanced control tech-

nologies or operations already used by like sources, but also

those used by similar sources and which are reasonably trans—

ferrable.

 The federal

 interpretation of LAER includes the

concept of technology transfer (cf.

 45 FR 59875,

 September 11,

1980.)

 The phrase

 “is achievable”

 is included to clarify that

technology transfer is to be considered in the LAER deter-

mination.

 In practice it is in keeping with the technology—

forcing principle underlying LAER.

According to Section 203.301, the burden of proving which cf

the three represents LAER for the particular project rests

 on the

applicant whether it be a new major stationary source or be major

modifications.

 Subparagraphs

 (b) and

(c)

 require that the

applicant demonstrate how the chosen control equipment or oper-

ational limits will achieve LAER at the emission points of

concern.

 However, this demonstration must be supported by the

more encompassing demonstration required by subparagraph

 (d).

The applicant must also explain how the particular LAER program

was arrived upon, or in other words, which of the above three

informational resources is

 it based on,

 how expansive was the

 search, how successful

 the application of the program to the

project,

 and what are the anticipated emissions.

 Lastly, any

alternative emission limits must also be set out,

 along with any

additional

 information the Agency may reasonably require.

 Since

Section 39(f)(l) of the Act authorizes the Agency to determine

what constitutes LAER, it is appropriate that it be given the

discretion to require additional information as necessary.

Both the applicant in deciding on, and the Agency in evaluating

a LAER program, must be mindful that as

 in the case of the RACT

guidelines,

 the LAER control measures must be forward looking in

order to achieve the goal of cleaning up the area.

 However, even

more than is the case for existing sources, as explained above,

new major changes or modifications must

 planned and implemented

using technology—forcing strategies.

Reasonable Further Progress

Section l73(l)(A)

 of the CAA also requires that RFP be

demonstrated in nonattainment areas and any emission reductions

thereby required be enforceable permit conditions.

 Section 173

(l)(B) specifically requires that the new or modified sources not

52-413

12

cause or contribute to emission

ievc~1s

which exceed the allowance

permitted for such pollutant under Section

 172(b).

 Said sub-

section

(b)

 requires that

 the SIP contain an allowance

 for new or

modified sources.

 To assure that this allowance

 is there,

and

then again that the SIP’s allowance margin is not exhausted,

major construction or modification projects must provide emission

offsets,

 if possible.

 Pursuant to Section 203.302(a)(3),

 if the

applicant provides

 in the immediate vicinity

of the project

actual emission offsets at a ratio of 1.25:1 or greater,

no

modeling will

 be required to assure an air quality improvement.

However, should these offsets not be

 readily available, the

applicant may instead provide a one-to-one offset along with

acceptable modeling which demonstrates minimal to no degradation

of air quality

 Section

 203,302(a)(1)I,

 If the applicant proves

by modeling that air quality will be improved by the new con-

struction or modification, no specific offsets are required

Section

 203.302(a)(2).

 These

options are however only avail-

able to projects involving particulate matter,

 sulfur dioxide,

nitrogen oxide,

 or carbon monoxide emissions. Projects involving

organic material must provide actual

 emission offsets

in

excess

of the proposed project’s allowable emissions.

It was suggested that requiring the modeling to prove im-

 provement at every location pursuant

 to Section 203.302(a)(2),

is

too stringent (Public Comment No.

 18).

 However,

 since such a

demonstration would exempt the project from providing offsets

it

cannot be relaxed.

 Subparagraph

 (b)’s requirement that actual

emission offsets be provided for a proposed project’s allowable

volatile organic material

 emissions was considered inequitable by

the same commentator,

 However,

it

is

 intended to insure that

paper offsets are not provided,

 and that sufficient reductions

are provided to offset maximum operations.

Two changes were made at Section 203.303, Baseline and

Emission Offset Determination.

 Subparagraph

 (b)(1) requires that

the offsets be of a type with approximately the same health

implications.

 It has been rhetorically changed

 from the proposed

version to parallel the language used at Section 203.208(c)

describing those creditable emissions acceptable

 as decreases.

It should be noted that the substance of Subparagraph

 (b)(i) also

limits the practice

 of replacing hydrocarbons with those of less

reactivity in order to obtain emission offsets.

 Federally this

practice is limited to only those hydrocarbons listed at

 Table

1

of the USEPA’s “recommended Policy on Control

 of Volatile Organic

Compounds”

 as published on July

8,

 1977 at 42 FR 35314

40

CFR

51.18(j)(3)(ii)(d).

 In the Emission Offset Interpretive Ruling,

this policy is because

“.

EPA

has

 found that almost all

non—methane hydrocarbons are photochernically reactive and that

low reactivity hydrocarbons eventually

 form as much ozone as the

highly reactive hydrocarbons.”

40

 CFR App.

 S IV (c)(4).

In

implementing Section 203.303, USEPA’s

 1977 policy determination

on the reactivity of hydrocarbons shall

 serve as

 a guide in

52-414

13

determining whether or not the replacement provides emission

offsets

 because

 it is of a type with approximately the same

qualitative significance

 for public health and welfare.

 Should

this policy change be scientifically proven incorrect,

the

flexibility of Section 203.303

 (b)(1)

 shall

 likewise allow use

of replacement hydrocarbons to gain offsets.

The second change at Section 203.303 involves the use of

a

reductions achieved with the shutdown of

 a source.

 It is

qualified in accordance with 40 CFR Appendix S(IV)(C)(3). Thus

in limited situations, shutdowns are allowed as emission offsets,

just as they are permissable

 as emission credits.

 The USEPA

requested that baselines based on uncontrolled rates pursuant to

Section 203.303(c)(1) be qualified.

 As is the case with emission

credits, the USEPA wanted it demonstrated that these uncontrolled

emissions had not been previously used to demonstrate attainment

or more appropriately,

 RFP.

 (Public Comment

 #22)

 Baselines are

premised on uncontrolled emissions only when these are less than

emissions allowed by Chapter

 2 limitations.

 Thus the difference

between uncontrolled and Chapter

 2 allowable emissions is not

available for offsets.

 It is this margin which is used in SIP

demonstrations.

 For example, lime kilns were exempted from the

sulfur dioxide limitation because their uncontrolled emissions

are far less than that allowed by Rule 204

 (R80—22 Opinion at

page 16, February 24,

 1983).

 Should a source,

 such as a lime

kiln, reduce

 its uncontrolled emissions,

it

 is these reductions

which are available for offsets.

If emission offsets are not available at

the

time of appli-

cation,

 Rule 203.304(a)

 stays

 the offset requirement so

 long as

the applicant agrees to accept future permit limitations to pro—

‘Tide offsets when they become available.

 The project will

therefore initially consume part of the growth margin built into

 the SIP program,

 but eventually reestablish it.

 On the other

hand,

 if the project source

 is temporary,

 located in a clean—

pocket of the nonattainment area,

 or in

 a rural nonattainment

area for particulate matter,

 offsets are never required.

 These

exceptions are set out in Section 203.304(b),

 (c), and

 (e).

The clean—pocket exception has two specific qualifications.

First,

 it must be demonstrated either by the analysis of the

applicant or the Agency that emissions from the project located

within the clean—pocket will not significantly impact

 the area’s

air quality.

 The levels of significance, set out at 203.304(d),

are expressed in the same terms as air quality standards.

It

should be noted that these

 same levels provide the maximum impact

allowed when a project provides either equal or greater offsets

pursuant to Section 203.302(a)

and

 (c).

 Secondly, the emission

offset requirement may be lifted for the clean—pocket location if

on the date the air quality analysis is completed, no significant

impact is demonstrated and the clean—pocket

 is being federally

reviewed

 for attainment designation.

 The USEPA disagreed with

52-415

14

the offset exemptions provided for both temporary sources and

those located

 in clean-pockets.

 (Public Comment No.

 22).

 They

will be retained since both exemptions are limited to extent

necessary to protect RFP.

The non—industrial exemption for sources involving TSP,

found at subparagraph

 (e),

 lists five qualifying criteria.

However, these criteria merely delineate areas which are non

attainment

 for the TSP secondary air quality standard due to

rural fugitive sources.

 Thus, offsets from industrial

TSP

sources are not to be found and even if they were,

 they would

not help to clean up the area.

 That the project will comply

with the LAER requirements should suffice to keep the air in

these areas as healthy as possible.

Remaining Requirements

Sections 203.305 and 203,306 contain two additional require-

ments of the permit applicant.

 For all projects, the owner or

operator must provide a certificate that all other sources owned

or operated by the same are

(1)

 in compliance, or

 (2) on

 a com-

pliance program.

 This

is

required under Section 173(3)

 of the

CAA.

 Lastly,

 if the project involves emissions of organic

material or carbon monoxide, the applicant must demonstrate that

this is the proper location for the new construction or modifi-

cation.

 This too

 is required under Section 172(b)(ll)(A)

 of the

 CAA because Illinois has sought an extension of the 1982 deadline

for attainment involving these pollutants,

SUBPART

F:

 OPERATING REQUIREMENTS

As stated at the outset,

 the purpose of the NSR permitting

program is to improve air quality in nonattainment areas with

each major construction

or

major modification.

 Since the

construction or modification project is required to comply with

the LAER and emission offset requirements,

 as discussed above,

three rules have been adopted to assure that the same,

 and there-

fore the air quality improvement,

 is maintained.

 Very simply,

Sections 203.601 and 203.602 require that the LAER provisions and

the emission offsets established at the construction permit stage

must be maintained.

It

should be noted that should the original

emission offsets become unavailable for some reasons, equivalent

offsets can be substituted.

 Furthermore, after such

 a project

is

operational the Agency may require that ambient air quality

monitoring that is reasonably necessary to determine the actual

effect on

 the area (Section 203.603).

 Together these

 three

requirements should assure air quality improvement.

CONCLUSION

The NSR regulations adopted herein adequately parallel the

federal requirements to satisfy Part

 D of the Clean Air Act,

while

 also providing

 a maximum of ease and flexibility for new

52-416

source constructions and major modifications to be permitted

Illinois.

For

instance,

the

permitting

 process is structured

 allow

for

the

 initial determination of whether NSR will apply,

and

 if necessary, a sufficient lapse in

time

for

a permittee

commit

 to the specifics of actual construction.

All

 federal

exemptions for activities otherwise considered as possible major

modifications are included, as well as an exemption for seasonal

shutdowns

hydrocarbon

control

equipment.

The

exemption

for

increases

operating

hours

not

eliminated

due

permit

representations,

originally

proposed

the

Agency.

Therefore

the

associated

cost

included

the

Economic

Impact

Study

longer

factor.

Three

alternatives

are

available

for

providing

emission

offsets,

one

which

eliminates

the

need

for

offsets

modeling

demonstrates

only

improvement

air

quality.

Another

allows the project the option of providing a set ratio of offsets

avoid

modeling

and

its

 associated costs.

 Finally, five

certain

exemptions

from

the

emission

offset

requirements

are

included

the

 regulations.

 The first exemption allows the

requirement

for

offsets

deferred

until

such

time

they

are

available.

Given

the

sometime

difficulty

securing

offsets

timely

fashion,

the

rule

provides

flexibility

while

still

assuring

improved

air

quality.

The

dual

definition

source

pertains

netting

out

NSR is

currently

required

federal

law.

Nevertheless

the

appropriate

concept

for

Illinois.

The

Economic

Impact

Study found that the historical and projected impact of netting

out of review to be

significant.

 It was estimated that the

number

 of plants netting out of review may be ten times that

greater

than

 those going through review.

 However, the Economic

Impact

Study

was

based

 on six NSR permits being issued since

1977,

and

had

not

taken

into

consideration

 that

during

only

one

the

years

was

the

 plantwide definition in effect.

 Thus, the

factor

ten

must

 an overestimate.

 Furthermore, to allow

these

new

 projects to escape NSR not only may jeopardize air

quality,

but

ultimately

means

that

more

stringent

controls

 will

have to

applied

existing

sources,

 at an unspecified cost.

As a whole, the NSR regulations provide an equitable program to

insure and improve

air

 quality in those regions needing it most.

This

Opinion

and

accompanying

 Order are directed to Second

Notice.

I, ~hristanL. Moffett, Clerk of the Illinois Pollution

Control Boqrd, hereby

 ertify that the above Opinion was adopted

onthe

IL”

dayof

 ,1983byavoteof4~p

Illinois

Pollution

 Board

52-417