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Statement of Need: This effort was initiated to examine complaints from the regulated community that the current regulatory scheme is too complex, needlessly delays projects, and unduly restricts source flexibility. The goal of this effort is to address industry's concerns without sacrificing the environmental benefits embodied in the present approach; that is, protecting and improving local air quality, and stimulating pollution prevention and advances in control technologies. In 1996, this effort was considered far enough along to be proposed for public comment, and a proposed rule was issued. Thereafter, EPOA has conducted numerous meetings with interested stakeholders. More recently, the Agency has been conducting a review of the NSR program in response to a recommendation from the President's National Energy Policy Development Group. EPA is examning the impact of the NSR regulations, including administrative interpreataion and implementation, on investment in new utility and refinery generation capacity, energy efficiency and environmental protection. EPA plans to report to the President on the impact of NSR on the three areas mentioned above. At that time we will also make recommendations on whether improvements to the NSR program are needed to provide more flexibility and certainty, while ensuring protection of the environment. Many of the approaches proposed in 1996 to improve NSR are being considered as part of review recommended by the President's National Energy Policy Development Group.

Summary of the Legal Basis: There are no applicable statutory or judicial deadlines for the NSR reform rulemaking effort. However, the rule will address three outstanding settlement agreements: CMA Exhibit B, Top-down BACT, and the applicability test for modifications at utilities (WEPCO).

Alternatives: In January 1996, EPA, as part of another regulatory streamling measure, merged portions of a separate rulemaking to implement the 1990 CAA Amendments with the Reform effort. The combined package was proposed in the Federal Register on July 23, 1996. On July 24. 1998, EPA issued another Federal Register notice seeking comment on two applicability provisions. On February 2-3, 1999, EPA convened a public meeting to listen to new stakeholder proposals for streamlining NSR applicability and control technology requirements. Stakeholder groups submitted written proposals during May and June 1999. Additionally, EPA conducted extensive stakeholder meetings as part of the NSR review recommended by the President's National Energy Policy Development Group. EPA continues to review the alternatives presented by interested stakeholders.

Anticipated Costs and Benefits: From a cost perspective, the proposed rulemaking represents a decrease in applications and recordkeeping costs to industry of at least $13 million per year, as compared to the pre-existing program, based primarily on the fact that fewer sources will need to apply for major source permits. In addition, the cost to State and local agencies will be reduced by approximately $1.4 million per year. The Federal Government should realize a savings of approximately $116,000 per year. Additional cost reductions, which are difficult to quantify, will be realized due to the streamlining effect of the rulemaking on the permitting process, for example, the opportunity costs for shorter time periods between permit application and project completion and reduced uncertainty in planning for future source growth.

Risks: This is a procedural rule applicable to a wide variety of source categories. Moreover, it applies to criteria pollutants for which NAAQS have been established. This action is considered environmentally neutral. However, any potential risks are considered in the NAAQS rulemaking from a national perspective.