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GENERAL MEMORANDUM 11-088

GENERAL MEMORANDUM 11-088
EPA Issues Final Rules for New Source Review Permits in Indian Country

On July 1, 2011, the Environmental Protection Agency (EPA) published in the FEDERAL REGISTER final rules entitled "Review of New Sources and Modifications in Indian Country", available at www.gpo.gov/fdsys/pkg/FR-2011-07-01/pdf/2011-14981.pdf. The rules constitute a Federal Implementation Plan (FIP) under the Clean Air Act (CAA) that includes two New Source Review (NSR) regulations for the protection of air resources in Indian Country.

The first rule applies to new and modified minor stationary sources of air pollutants (minor sources) and to minor modifications at existing major stationary sources (major sources) located anywhere in Indian Country. The second rule applies to new and modified major sources located in parts of Indian Country that are designated as not attaining the National Ambient Air Quality Standards (NAAQS), and is referred to as the "nonattainment major NSR rule."

New Source Review is a "preconstruction air permitting program" which requires that modern pollution control equipment be installed when a new facility is built or when an existing facility makes a change that increases emissions. For major sources located in parts of Indian Country that are attaining the NAAQS, EPA has had a preconstruction permitting requirement as a FIP since 1978 that is part of the Prevention of Significant Deterioration (PSD) program.

Minor NSR Rule

The minor NSR program applies to sources which emit lower levels of pollutants, and to minor modifications at both major and minor facilities that are located anywhere in Indian Country. Examples of smaller sources of air pollutants that will be subject to the minor NSR rule can include gas stations, petroleum and natural gas wells, and even dry cleaners. Existing facilities that qualify as a minor source will be required to register with EPA within one year after the effective date of the rule (Aug. 30, 2011). New sources that qualify as having lower emissions of pollutants will have to apply for a permit before they begin construction. However, EPA's rule recognizes that due to the significance of this new requirement and workload, it will be necessary to provide additional time for implementation. As a consequence, EPA decided to delay the implementation date of the minor NSR permitting requirement for true minor sources for a period of 36 months after the rule's effective date, until September 2, 2014.

The minor NSR rule also provides a procedure for permitting a facility to be constructed or modified and operates under the status of a "synthetic minor," which has a more immediate effective date. A synthetic minor permit applies to a source that has the potential to emit pollutants in amounts that are at or above the thresholds for major sources, but has voluntarily accepted emissions limitations so that its potential to emit is less than these thresholds. This is a technically complicated subject, and provides the flexibility that is available in most states for the construction or modification of industrial facilities without the burdens of major source NSR or Title V permitting. The implementation schedules for these rules vary depending on the type of action the facility is planning, with certain rules being effective on August 30, 2011, while others taking up to three years to be in effect.

Nonattainmnet Major NSR Rule

The new nonattainment major NSR rule now extends the requirement for preconstruction permitting to major sources located in areas of Indian Country that are not attaining the NAAQS. For some time now, EPA has been requiring major sources of air pollutants in Indian Country to obtain operating permits under Title V of the CAA, which regulates emissions from larger facilities after they are built and running, and applies in both attainment and nonattainment areas. The new rule will now complete the regulation of major sources of pollution by requiring larger industrial facilities to obtain a permit before beginning construction or making a major modification when it is located in a part of Indian Country that is not attaining the NAAQS.

Implementation

These rules offer several new options to tribes when facilities are located or planned within a reservation or area of a tribe's jurisdiction. The CAA continues to give authority to tribes to develop, and with EPA approval of a Tribal Implementation Plan (TIP), to run one or more of these programs under tribal law instead of it being run as a federal program. With these new rules, a tribe also has the choice of either letting EPA permit the major and minor facilities, or seeking delegation to the tribe of all or part of the EPA program so that the tribe would administer the federal permit program on its reservation. Delegation is to be distinguished from Treatment as a State (TAS) and approval of a TIP because tribes will not need to demonstrate congressionally-delegated authority under the CAA. Instead, a delegation agreement will describe how a tribal agency will assist EPA in implementing the federal program by administering particular activities conducted under EPA's authority in Indian Country. Under 40 C.F.R. § 49.161(b)(1)(iii)(C) and 49.173(b)(1)(iii)(C), tribes requesting delegation will only need to show that their laws provide adequate capacity and authority to carry out the delegated activities.

The process for delegation of the federal program in these rules is very much like the process that EPA established in 2005 for delegation of administrative support to tribes with reservations in Washington, Idaho, and Oregon (see 40 C.F.R. § 49.122). EPA also has well-established procedures for delegating federal authority to tribes and states for administering PSD preconstruction permits and Title V permits. (See 40 C.F.R. § 52.21(u) and 40 C.F.R. §§ 71.4(j) and 71.10) The process that is described in 40 C.F.R. § 49.161 delineates the information that a tribe must include in a delegation request and the contents of a "Delegation of Partial Administrative Authority Agreement" between the tribe and EPA. After EPA and a tribe enter into a delegation agreement, EPA will publish a notice in the FEDERAL REGISTER, publish a notice in a newspaper of general circulation in the area, and mail notice to others who are interested.

Since these are federal rules, EPA Regions will primarily be responsible for implementing them until either a tribe requests delegation of the federal program or the tribe gets approval of a TIP to run these programs under tribal law. Even after delegation of the federal program, EPA Regions will primarily be responsible for enforcing the permitting requirements of these federal rules.
The permitting authority, either EPA or a tribe, will review the application and grant or deny the air permit. Permits will be open for public notice and comment as part of the review process. While a delegated tribe would review the permit applications, issue the permit, and conduct inspections, any enforcement action for violations of the permit would be taken by EPA. EPA clarifies that it will maintain the sole authority to enforce these new rules under federal law.

The new EPA rules are clear that they do not affect the authority of a tribe to establish its own NSR rules under tribal law to replace the federal rules. The Tribal Authority Rule (TAR), which EPA promulgated February 12, 1998, authorizes eligible Indian tribes to establish EPA-approved PSD, nonattainment major NSR, minor NSR and other programs under CAA. This is accomplished after a tribe is approved for TAS and then develops a TIP for approval by EPA. When a tribe administers an approved TIP to implement a CAA program, tribal law will replace the federal program as the requirement for that area of Indian Country and the tribe will be responsible for enforcing that particular program under tribal law.

The EPA is establishing these new federal rules because only a few tribes have been administering EPA-approved minor NSR programs and no tribes have been administering EPA-approved nonattainment major NSR programs. The preambles to the proposed and final TAR generally discuss the legal basis under the CAA for EPA and tribal regulation of sources of air pollution in Indian Country. EPA concluded that the CAA constitutes a statutory delegation of federal authority to eligible tribes over all sources of air pollution within the exterior boundaries of their reservations, and a tribe can be approved to regulate areas outside of reservations that are within a tribe's jurisdiction. However, EPA has written that if an Indian tribe chooses not to include a CAA program such as NSR in a TIP, EPA has the authority to implement the program.

Additional information may be downloaded at EPA's web site (www.epa.gov/nsr). Specifically, EPA's detailed fact sheet on the rules may be downloaded at http://www.epa.gov/NSR/tribalnsr/20110613tribalnsrfs.pdf.

Please let us know if you would like additional information or assistance regarding the implementation of these new Clean Air Act rules.

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Inquiries may be directed to:
Dean Suagee (dsuagee@hobbsstraus.com) 202-822-8282 or
Rich McAllister (rmcallister@hobbsstraus.com) 206-245-5985

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