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per year are subject to PSD review. For non-NSPS sources, a BACT review document is prepared in the preconstruction review.

The 1974 Guidelines on PSD and the Clean Air Amendments of 1977 established the protocol for new sources and proposed modifications to major sources in attainment areas where they would be subjected to a new source review and would have to meet certain PSD requirements. This review requires that dispersion modeling be conducted of the proposed emissions from the sources to ensure that the emissions from the proposed facility would not exceed the increments listed in Table 4-2 or cause an exceedance of the NAAQS. In concept, sources are allowed to use some fraction of the increment, as determined by the state or local agency and based on dispersion modeling. The PSD increment can only be used to the extent that it does not cause the ambient concentration to exceed the NAAQS. Another important issue is the extent to which any single source would be allowed to use the available increment and the ramifications on long-term growth if a single source was allowed to use it all. Some state and local agencies address this on a case-by-case basis, while others have taken the approach of allowing only a certain fraction of the increment, or the remaining increment, to be used in a single PSD application [4].

Nonattainment Areas

There was concern that no industrial growth could occur in nonattainment areas, as these areas are in violation of one or more NAAQSs and, because PSD does not apply in these areas, no increments are available. This was remedied on December 21, 1976, with the Offsets Policy Interpretive Ruling, which pertained to the preconstruction review requirements for all new or modified stationary sources of air pollution in nonattainmant areas [4]. This ruling, also known as the emission offset policy, requires that three conditions be met: (1) the source must meet the lowest achievable emission rate (LAER), defined as being more stringent than BACT; (2) all existing sources owned by the applicant in the same region must be in compliance or under an approved schedule to achieve compliance; and (3) the source must provide an offset or reduction of emissions from other sources greater than the proposed emissions that the source would contribute such that there is a net improvement in air quality.

The Clean Air Act Amendments of 1977 also provided for the banking of offsets. If the offsets achieved are considerably greater than the new source's emissions, a portion of this excess emission reduction (also known as emission reduction credits) can be banked by the source for use in future growth or traded to another source, depending on each state's offset/trading policy.

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