Janet G. McCabe, Assistant Commissioner
Office of Air Quality
Indiana Department of Environmental Management
100 North Senate Avenue
P.O. Box 6015
Indianapolis, Indiana 46206-6015

Dear Ms. McCabe:

This is in response to your January 12, 2004, letter regarding the implementation of New Source Review (NSR) in areas that will be designated as nonattainment for the new 8-hour ozone standard. We appreciate the work that your office has done to formulate and raise to us the questions below. We also understand that the States are under a narrow time frame to get answers before the designations for the new ozone standards go into effect. The following are your questions and our response.

1. When will the new designations be considered effective? Upon issuance of final letters to the Governors (expected on April 15, 2004)?

2. When will nonattainment new source review be required in newly designated counties? Please explain the legal basis setting forth the requirements.

3. If an application is filed before the effective date of designations but the permit is issued after that date, which permitting rules apply, attainment or nonattainment? Again, cites to appropriate sections of the Clean Air Act (the Act) or regulations would be helpful.

4. Does the United States Environmental Protection Agency (EPA) Region V have any record of Indiana addressing or committing to apply the requirements in 40 CFR part 51, appendix S, as an element of its State Implementation Plan (SIP)? We are researching our records, but thought it would be helpful if your staff could investigate this as well, since it would have happened several decades ago, if at all.
5. Could you please confirm the thresholds that will apply for new sources and modifications in nonattainment areas? Will it be 100 tons per year for new sources and 40 tons per year for modifications designated under Subpart 1 or marginal or moderate under Subpart 2?
6. For the designated ozone nonattainment areas, will it be necessary for major new sources (or major modifications) of nitrogen oxides (NOx) to obtain emission offsets for NOx, given that the States are now operating under a NOx budget pursuant to the NOx SIP Call? If yes, will the waiver procedure still be available to States upon a demonstration that NOx reductions in a particular area will be counterproductive?

7. What will be the baseline date for offsets for NSR permitting in new nonattainment areas?

8. If a source has gotten a permit under the Prevention of Significant Deterioration (PSD) program and does not construct within 18 months, what permitting rules will apply if the county has now been designated nonattainment?

9. In the alternative site analysis required in nonattainment NSR, how does EPA interpret the phrase “significantly outweigh the environmental and social costs imposed as a result of a source’s location, construction or modification”? How is this measured? Is it still a case by case evaluation?

10. Does EPA intend to revise or update appendix S and what is the agency’s timeframe?
www.epa.gov/ttn/naaqs/ozone/o3imp8hr/documents/proprule/reg_text_073103.pdf. At this time, we are unable to provide a time frame for this action.

We appreciate Indiana's efforts to transition to the new 8-hour ozone standard. We will continue to work with your staff to address NSR implementation issues. If you have any questions, please contact Sam Portanova, of my staff, at (312) 886-3189.

Sincerely yours,


Stephen Rothblatt, Director
Air and Radiation Division

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