17004 Federal Register / Vol. 75, No. 63 / Friday, April 2, 2010 / Rules and Regulations 

1On December 15, 2009, EPA published the final 

endangerment and cause or contribute findings for 

GHGs under section 202(a) of the CAA. See 74 FR 

66495. 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Parts 50, 51, 70, and 71 

[EPA–HQ–OAR–2009–0597; FRL–9133–6] 

RIN 2060–AP87 

Reconsideration of Interpretation of 

Regulations That Determine Pollutants 

Covered by Clean Air Act Permitting 

Programs 

AGENCY: Environmental Protection 

Agency. 

ACTION: Final Action on Reconsideration 

of Interpretation. 

SUMMARY: EPA has made a final decision 

to continue applying the Agency’s 

existing interpretation of a regulation 

that determines the scope of pollutants 

subject to the Federal Prevention of 

Significant Deterioration (PSD) program 

under the Clean Air Act (CAA or Act). 

In a December 18, 2008 memorandum, 

EPA established an interpretation 

clarifying the scope of the phrase 

‘‘subject to regulation’’ found within the 

definition of the term ‘‘regulated NSR 

pollutant.’’ After considering comments 

on alternate interpretations of this term, 

EPA has decided to continue to 

interpret it to include each pollutant 

subject to either a provision in the CAA 

or regulation adopted by EPA under the 

CAA that requires actual control of 

emissions of that pollutant. Thus, this 

action explains that EPA will continue 

following the interpretation in the 

December 18, 2008 memorandum with 

one exception. EPA is refining its 

interpretation to establish that the PSD 

permitting requirements will not apply 

to a newly regulated pollutant until a 

regulatory requirement to control 

emissions of that pollutant ‘‘takes 

effect.’’ In addition, this notice addresses 

several questions regarding the 

applicability of the PSD and Title V 

permitting programs to greenhouse 

gases (GHGs) upon the anticipated 

promulgation of EPA regulations 

establishing limitations on emissions of 

GHGs from vehicles under Title II of the 

CAA. Collectively, these conclusions 

result in an EPA determination that PSD 

and Title V permitting requirements 

will not apply to GHGs until at least 

January 2, 2011. 

DATES: This final action is applicable as 

of March 29, 2010. 

FOR FURTHER INFORMATION CONTACT: Mr. 

David Svendsgaard, Air Quality Policy 

Division (C504–03), U.S. Environmental 

Protection Agency, Research Triangle 

Park, NC 27711, telephone number: 

(919) 541–2380; fax number: (919) 541– 

5509, e-mail address: 

svendsgaard.dave@epa.gov. 

SUPPLEMENTARY INFORMATION: 

I. General Information 

A. Does this action apply to me? 

Entities potentially affected by this 

action include sources in various 

industry groups and State, local, and 

tribal governments. 

B. How is this document organized? 

This document is organized as 

follows: 

I. General Information 

II. Background 

III. This Action 

A. Overview 

B. Analysis of Proposed and Alternative 

Interpretations for Subject to Regulation 

1. Actual Control Interpretation 

2. Monitoring and Reporting Interpretation 

3. State Implementation Plan (SIP) 

Interpretation 

4. Endangerment Finding Interpretation 

5. Section 209 Waiver Interpretation 

C. Other Issues on Which EPA Solicited 

Comment 

1. Prospective Codification of 

Interpretation 

2. Section 821 of the Clean Air Act 

Amendments of 1990 

3. Timing of When a Pollutant becomes 

Subject to Regulation 

IV. Application of PSD Interpretive Memo to 

Permitting for GHGs 

A. Date by Which GHGs Will Be ‘‘Subject 

to Regulation’’ 

B. Implementation Concerns 

C. Interim EPA Policy To Mitigate 

Concerns Regarding GHG Emissions 

from Construction or Modification of 

Large Stationary Sources 

D. Transition for Pending Permit 

Applications 

V. PSD Program Implementation by EPA and 

States 

VI. Application of the Title V Program to 

Sources of GHGs 

VII. Statutory Authority 

VIII. Judicial Review 

II. Background 

On December 18, 2008, then-EPA 

Administrator Stephen Johnson issued a 

memorandum setting forth EPA’s 

interpretation regarding which 

pollutants were ‘‘subject to regulation’’ 

for the purposes of the Federal PSD 

permitting program. See Memorandum 

from Stephen Johnson, EPA 

Administrator, to EPA Regional 

Administrators, RE: EPA’s Interpretation 

of Regulations that Determine Pollutants 

Covered by Federal Prevention of 

Significant Deterioration (PSD) Permit 

Program (Dec. 18, 2008) (‘‘PSD 

Interpretive Memo’’ or ‘‘Memo’’); see also 

73 FR 80300 (Dec. 31, 2008) (public 

notice of Dec. 18, 2008 memo). The 

Memo interprets the phrase ‘‘subject to 

regulation’’ to include pollutants 

‘‘subject to either a provision in the CAA 

or regulation adopted by EPA under the 

CAA that requires actual control of 

emissions of that pollutant,’’ while 

excluding pollutants ‘‘for which EPA 

regulations only require monitoring or 

reporting.’’ See Memo at 1. The Memo 

was necessary after issues were raised 

regarding the scope of pollutants that 

should be addressed in PSD permitting 

actions following the Supreme Court’s 

April 2, 2007 decision in Massachusetts 

v. EPA, 549 U.S. 497 (2007). 

In Massachusetts v. EPA, the Supreme 

Court held that GHGs, including carbon 

dioxide (CO2), fit within the definition 

of air pollutant in the CAA. The case 

arose from EPA’s denial of a petition for 

rulemaking filed by more than a dozen 

environmental, renewable energy, and 

other organizations requesting that EPA 

control emissions of GHGs from new 

motor vehicles under section 202(a) of 

the CAA. The Court found that, in 

accordance with CAA section 202(a), 

EPA was required to determine whether 

or not emissions of GHGs from new 

motor vehicles cause or contribute to air 

pollution which may reasonably be 

anticipated to endanger public health or 

welfare, or whether the science is too 

uncertain to make a reasoned decision.1

On November 13, 2008, the 

Environmental Appeals Board (EAB) 

issued a decision in a challenge to a 

PSD permit to construct a new electric 

generating unit in Bonanza, Utah. In re 

Deseret Power Electric Cooperative, PSD 

Appeal No. 07–03 (EAB Nov. 13, 2008) 

(‘‘Deseret’’). The permit was issued by 

EPA Region 8 in August 2007 and did 

not include best available control 

technology (BACT) limits for CO2. At 

the time, the Region acknowledged 

Massachusetts but found that decision 

alone did not require PSD permits to 

include limits on CO2 emissions. In 

briefs filed in the EAB case, EPA 

maintained the position that the Agency 

had a binding, historic interpretation of 

the phrase ‘‘subject to regulation’’ in the 

Federal PSD regulations that required 

PSD permit limits to apply only to those 

pollutants already subject to actual 

control of emissions under other 

provisions of the CAA. Response of EPA 

Office of Air and Radiation and Region 

8 to Briefs of Petitioner and Supporting 

Amici (filed March 21, 2008). 

Accordingly, EPA argued that the 

regulations contained in 40 CFR part 75, 

which require monitoring of CO2 at 

some sources, did not make CO2 subject 

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Federal Register / Vol. 75, No. 63 / Friday, April 2, 2010 / Rules and Regulations 17005 

2The PSD Interpretive Memo also reflects EPA’s 

interpretation of sections 165(a)(4) and 169(3) of the 

CAA, which use language similar to the EPA 

regulations that are based on these provisions of the 

statute. The Memo discusses the Agency’s 

interpretation of the CAA and concludes that the 

Agency’s interpretation of its regulations is not 

precluded by the terms of the CAA. 

3On January 15, 2009, a number of environmental 

organizations that filed this Petition for 

Reconsideration also filed a petition challenging the 

PSD Interpretive Memo in U.S. Court of Appeals for 

the District of Columbia Circuit. Sierra Club v. 

E.P.A., No. 09–1018 (D.C. Cir., filed Jan. 15, 2009). 

Thereafter, various parties moved to intervene in 

that action or filed similar petitions challenging the 

Memo. The consolidated D.C. Circuit cases have 

been held in abeyance pending this reconsideration 

process. Id., Order (filed March 9, 2009). 

4Because the grant of reconsideration directed 

the Agency to conduct this reconsideration using a 

notice and comment process, the proposal did not 

address the procedural challenge presented in the 

Petition for Reconsideration. 

to PSD regulation. The order and 

opinion issued by the EAB remanded 

the permit after finding that prior EPA 

actions were insufficient to establish a 

historic, binding interpretation that 

‘‘subject to regulation’’ for PSD purposes 

included only those pollutants subject 

to regulations that require actual control 

of emissions. However, the EAB also 

rejected arguments that the CAA 

compelled only one interpretation of the 

phrase ‘‘subject to regulation’’ and found 

‘‘no evidence of a Congressional intent 

to compel EPA to apply BACT to 

pollutants that are subject only to 

monitoring and reporting requirements.’’ 

Thus, the Board remanded the permit to 

the Region to ‘‘reconsider whether or not 

to impose a CO2 BACT limit in light of 

the ‘subject to regulation’ definition 

under the CAA.’’ The Board encouraged 

EPA to consider ‘‘addressing the 

interpretation of the phrase ‘subject to 

regulation under this Act’ in the context 

of an action of nationwide scope, rather 

than through this specific permitting 

proceeding.’’ See Deseret at 63–64. 

EPA issued the PSD Interpretive 

Memo shortly after the Deseret decision 

with the stated purpose to ‘‘establish[ ] 

an interpretation clarifying the scope of 

the EPA regulation that determines the 

pollutants subject to the Federal 

Prevention of Significant Deterioration 

(PSD) program under the Clean Air Act 

(CAA or Act)’’ by providing EPA’s 

‘‘definitive interpretation’’ of the 

definition of the term ‘‘regulated NSR 

pollutants’’ found at 40 CFR 52.21(b)(50) 

and resolving ‘‘any ambiguity in subpart 

([iv]) of that paragraph, which includes 

‘any pollutant that otherwise is subject 

to regulation under the Act.’ ’’ See Memo 

at 1. As the Memo explains, the statute 

and regulation use similar language— 

the regulation defines a regulated NSR 

pollutant to include ‘‘[a]ny pollutant 

that otherwise is subject to regulation 

under the Act’’ and requires BACT for 

‘‘each regulated NSR pollutant,’’ per 40 

CFR 52.21(b)(50) and (j), while the Act 

requires BACT for ‘‘each pollutant 

subject to regulation under this [Act],’’ 

per CAA sections 165(a)(4) and 169. The 

EAB had determined that ‘‘the meaning 

of the term ‘subject to regulation under 

this Act’ as used in [CAA] sections 165 

and 169 is not so clear and unequivocal 

as to preclude the Agency from 

exercising discretion in interpreting the 

statutory phrase’’ in implementing the 

PSD program. See Deseret at 63. 

The PSD Interpretive Memo seeks to 

resolve the ambiguity in 

implementation of the PSD program by 

stating that ‘‘EPA will interpret this 

definition of ‘regulated NSR pollutant’ 

to exclude pollutants for which EPA 

regulations only require monitoring or 

reporting but to include each pollutant 

subject to either a provision in the Clean 

Air Act or regulation adopted by EPA 

under the Clean Air Act that requires 

actual control of emissions of that 

pollutant.’’ The Memo states that ‘‘EPA 

has not previously issued a definitive 

interpretation of the definition of 

‘regulated NSR pollutant’ in section 

52.21(b)(50) or an interpretation of the 

phrase ‘subject to regulation under the 

Act’ that addressed whether monitoring 

and reporting requirements constitute 

‘regulation’ within the meaning of this 

phrase.’’ The Memo, however, explains 

that the interpretation reflects the 

‘‘considered judgment’’ of thenAdministrator Johnson regarding the 

PSD regulatory requirements and is 

consistent with both historic Agency 

practice and prior statements by Agency 

officials. See Memo at 1–2. 

The PSD Interpretive Memo is not a 

substantive rule promulgated under 

section 307(d) of the CAA, but rather an 

interpretation of the terms of a 

regulation at 40 CFR 52.21(b)(50).2 An 

interpretive document is one that 

explains or clarifies, and is consistent 

with, existing statutes or regulation. See 

National Family Planning and 

Reproductive Health Ass’n v. Sullivan, 

979 F.2d 227, 236–37 (D.C. Cir. 1992). 

The PSD Interpretive Memo explains 

and clarifies the meaning of the 

definition of ‘‘regulated NSR pollutant’’ 

in section 52.21(b)(50) of the existing 

NSR regulations, and does not alter the 

meaning of the definition in any way 

that is inconsistent with the terms of the 

regulation. As a result, EPA concluded 

that the PSD Interpretive Memo was an 

interpretive rule that could be issued 

without a notice and comment 

rulemaking process. 

However, the PSD Interpretive Memo 

observed that the adoption of an 

interpretation of a rule without a notice 

and comment process does not preclude 

subsequent action by the Agency to 

solicit public input on the 

interpretation. Indeed, given the 

significant public interest in the issue 

addressed in the December 18, 2008 

memorandum, EPA subsequently 

elected to seek public input on the 

memorandum and alternative readings 

of the regulations. 

On December 31, 2008, EPA received 

a petition for reconsideration of the 

position taken in the PSD Interpretive 

Memo from Sierra Club and 14 other 

environmental, renewable energy, and 

citizen organizations. See Petition for 

Reconsideration, In the Matter of: EPA 

Final Action Published at 73 FR 80300 

(Dec. 31, 2008), entitled ‘‘Clean Air Act 

Prevention of Significant Deterioration 

(PSD) Construction Permit Program; 

Interpretation of Regulations That 

Determine Pollutants Covered by the 

Federal PSD Permit Program.’’ 

Petitioners argued that the PSD 

Interpretive Memo ‘‘was impermissible 

as a matter of law, because it was issued 

in violation of the procedural 

requirements of the Administrative 

Procedures [sic] Act * * * and the 

Clean Air Act * * *, it directly conflicts 

with prior agency actions and 

interpretations, and it purports to 

establish an interpretation of the Act 

that conflicts with the plain language of 

the statute.’’ See Petition at 2. 

Accordingly, Petitioners requested that 

EPA reconsider and retract the PSD 

Interpretive Memo. Petitioners later 

amended their Petition for 

Reconsideration to include a request to 

stay the effect of the Memo pending the 

outcome of the reconsideration request. 

Amended Petition for Reconsideration 

(filed Jan. 6, 2009).3

On February 17, 2009, EPA granted 

the Petition for Reconsideration, on the 

basis of the authority conferred by 

section 553(e) of the Administrative 

Procedure Act (APA), and announced 

its intent to conduct a rulemaking to 

allow for public comment on the issues 

raised in the Memo and on any issues 

raised by the EAB’s Deseret opinion, to 

the extent they do not overlap with the 

issues raised in the Memo.4 Because the 

Memo was not a substantive rule 

promulgated under section 307(d) of the 

APA, the reconsideration action was not 

a reconsideration under the authority of 

section 307(d)(7)(B) of the CAA. See 

Letter from Lisa P. Jackson, EPA 

Administrator, to David Bookbinder, 

Chief Climate Counsel at Sierra Club 

(Feb. 17, 2009). EPA did not stay the 

effectiveness of the PSD Interpretive 

Memo pending reconsideration, but the 

Agency did reiterate that the Memo 

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17006 Federal Register / Vol. 75, No. 63 / Friday, April 2, 2010 / Rules and Regulations 

5On September 28, 2009, EPA proposed a rule 

establishing emissions standards for new motor 

vehicles, starting with Model Year 2012, that would 

reduce GHGs and improve fuel economy from 

motor vehicles. This proposal was a joint proposal 

by EPA and the U.S. Department of Transportation 

(DOT), with DOT proposing to adopt corporate 

average fuel economy (CAFE) standards for model 

years 2012 and after. See 74 FR 49453. 

6 In some cases, a commenter on the proposed 

reconsideration of the PSD Interpretive Memo 

addressed an issue or topic that is under 

consideration in the forthcoming PSD and Title V 

GHG Tailoring Rule. Accordingly, EPA refers the 

reader to that rulemaking for EPA responses to 

those comments. 

‘‘does not bind States issuing [PSD] 

permits under their own State 

Implementation Plans.’’ Id. at 1. 

On October 7, 2009 (74 FR 51535), 

EPA proposed a reconsideration of the 

PSD Interpretive Memo that solicited 

comment on five possible 

interpretations of the regulatory phrase 

‘‘subject to regulation’’—the ‘‘actual 

control’’ interpretation (adopted by the 

Memo); the ‘‘monitoring and reporting’’ 

interpretation (advocated by 

Petitioners); the inclusion of regulatory 

requirements for specific pollutants in 

SIPs (discussed in both the Memo and 

the Petition for Reconsideration); an 

EPA finding of endangerment 

(discussed in the Memo); and the grant 

of a section 209 waiver interpretation 

(raised by commenters in another EPA 

action). EPA also addressed, and 

requested public comment on, other 

issues raised in the PSD Interpretive 

Memo and related actions that may 

influence this reconsideration. 

Of the five interpretations described 

in the proposed reconsideration notice, 

EPA expressly favored the actual control 

interpretation, which has remained in 

effect since issuing the memorandum, 

notwithstanding the EPA’s grant of 

reconsideration. The proposal explained 

that the actual control interpretation 

best reflects EPA’s past policy and 

practice, is in keeping with the structure 

and language of the statute and 

regulations, and best allows for the 

necessary coordination of approaches to 

controlling emissions of newly 

identified pollutants. While the other 

interpretations may represent reasoned 

approaches for interpreting ‘‘subject to 

regulation,’’ no particular one is 

compelled by the statute, nor did the 

EAB determine that any one of them 

was so compelled. Because EPA had 

overarching concerns over the policy 

and practical application of each of the 

alternative interpretations, the Agency 

proposed to retain the actual control 

interpretation. Nevertheless, EPA 

requested comment on all five of the 

interpretations. 

III. This Action 

A. Overview 

EPA has made a final decision to 

continue applying (with one limited 

refinement) the Agency’s existing 

interpretation of 40 CFR 52.21(b)(50) 

that is articulated in the PSD 

Interpretive Memo. For reasons 

explained below, and addressed in 

further detail in the document 

‘‘Reconsideration of Interpretation of 

Regulations that Determine Pollutants 

Covered by Clean Air Act Permitting 

Programs: EPA’s Response to Public 

Comments’’, after reviewing the 

comments, EPA has concluded that the 

‘‘actual control interpretation’’ is a 

permissible interpretation of the CAA 

and is the most appropriate 

interpretation to apply given the policy 

implications. However, EPA is refining 

its interpretation in one respect to 

establish that PSD permitting 

requirements apply to a newly regulated 

pollutant at the time a regulatory 

requirement to control emissions of that 

pollutant ‘‘takes effect’’ (rather than 

upon promulgation or the legal effective 

date of the regulation containing such a 

requirement). In addition, this notice 

addresses several outstanding questions 

regarding the applicability of the PSD 

and Title V permitting programs to 

GHGs upon the anticipated 

promulgation of EPA regulations 

establishing limitations on emissions of 

GHGs from vehicles under Title II of the 

CAA.5

EPA received 71 comments on the 

proposed reconsideration notice 

published on October 7, 2009 (74 FR 

51535).6 Commenters represented a 

range of interests, including State 

regulatory agencies, corporations that 

may need to obtain PSD permits, trade 

associations representing various 

industrial sectors, and environmental 

and public interest groups. Commenters 

representing States and regulated 

entities generally expressed support for 

the actual control interpretation, while 

environmental and public interest 

groups generally favored the alternative 

interpretations. States and regulated 

entities also supported EPA’s proposed 

action to apply PSD requirements at the 

point in time when an actual control 

requirement becomes effective, with 

many entities specifically requesting 

that EPA interpret ‘‘effective’’ to mean 

the compliance date of a rule. 

Environmental stakeholders supported 

retaining the position in the existing 

PSD Interpretive Memo that PSD 

requirements apply to a pollutant upon 

the promulgation of the relevant 

requirement for that pollutant. 

EPA has not been persuaded that the 

Agency is compelled by the CAA, the 

terms of EPA regulations, or prior EPA 

action to apply any of the four 

alternatives to its preferred 

interpretation described in the October 

7, 2009 notice—monitoring and 

reporting requirement, EPA-approved 

SIP, endangerment finding, or CAA 

section 209 waiver. EPA has likewise 

not been persuaded that all of the 

alternative interpretations are precluded 

by the CAA. However, since Congress 

has not precisely spoken to this issue, 

EPA has the discretion to choose among 

the range of permissible interpretations 

of the statutory language. Since EPA’s 

interpretation of the regulations is not 

precluded by the statutory language, 

EPA is electing to maintain that 

interpretation on policy grounds. EPA 

has concluded that the ‘‘actual control’’ 

interpretation is not only consistent 

with decades of past practice, but 

provides the most reasonable and 

workable approach to developing an 

appropriate regulatory scheme to 

address newly identified pollutants of 

concern. Thus, except as to the one 

element that EPA proposed to modify, 

EPA is reaffirming the PSD Interpretive 

Memo and its establishment of the 

actual control interpretation as EPA’s 

definitive interpretation of the phrase 

‘‘subject to regulation’’ under the PSD 

provisions in the CAA and EPA 

regulations. 

EPA has been persuaded by public 

comments on the proposed 

reconsideration to modify the portion of 

its interpretation regarding the timing of 

when a pollutant becomes subject to 

regulation under the CAA and thus 

covered by the requirements of the PSD 

permitting program. Specifically, EPA is 

modifying its interpretation of 40 CFR 

52.21(b)(50) of its regulations, and the 

parallel provision in 40 CFR 

51.166(b)(49), to establish that the PSD 

requirements will not apply to a newly 

regulated pollutant until a regulatory 

requirement to control emissions of that 

pollutant ‘‘takes effect.’’ EPA has 

concluded that this approach is 

consistent with the CAA and a 

reasonable reading of the regulatory 

text. 

Based on these final determinations, 

EPA will continue to apply the 

interpretation reflected in the PSD 

Interpretive Memo with one refinement. 

For the reasons discussed in more detail 

below, EPA has not generally found 

cause to change the discussion or 

reasoning reflected in the Memo. As a 

result, EPA does not see a need to either 

withdraw or re-issue the Memo. 

However, this notice refines one 

paragraph of that memorandum to 

reflect EPA’s current view that a 

pollutant becomes subject to regulation 

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Federal Register / Vol. 75, No. 63 / Friday, April 2, 2010 / Rules and Regulations 17007 

7The proposed ‘‘Tailoring Rule’’ can be found at 

74 FR 55291 (Oct. 27, 2009). 

8The CAA requires BACT for ‘‘each pollutant 

subject to regulation under this Act.’’ See CAA 

165(a)(4), 169(3). The United States Code refers to 

‘‘each pollutant regulated under this chapter,’’ 

which is a reference to Chapter 85 of Title 42 of the 

Code, where the CAA is codified. See 42 U.S.C. 

7475(a)(4), 7479(3). For simplicity, this notice 

generally uses ‘‘the Act’’ and the CAA section 

numbers rather than the U.S. Code citation. 

at the time the first control requirements 

applicable to a pollutant take effect. 

Public comments raised several 

questions regarding the application of 

the PSD program and Title V permits to 

GHGs that EPA did not specifically raise 

in the October 7, 2009 proposed notice 

of reconsideration. Some of these 

comments raised significant issues that 

the Agency recognizes the need to 

address at this time to ensure the 

orderly transition to the regulation of 

GHGs under these permitting programs. 

Thus, this notice reflects additional 

interpretations and EPA statements of 

policy on topics not discussed in the 

October 7, 2009 notice. These 

interpretations and polices have been 

developed after careful consideration of 

the public comments submitted to EPA 

on this action and related matters. In 

subsequent actions, EPA may address 

additional topics raised in public 

comments on this action that the 

Agency did not consider necessary to 

address at this time. 

Regarding GHGs, EPA has concluded 

that PSD program requirements will 

apply to GHGs upon the date that the 

anticipated tailpipe standards for lightduty vehicles (known as the ‘‘LDV 

Rule’’) take effect. Based on the 

proposed LDV Rule, those standards 

will take effect when the 2012 model 

year begins, which is no earlier than 

January 2, 2011. While the LDV Rule 

will become ‘‘effective’’ for the purposes 

of planning for the upcoming model 

years as of 60 days following 

publication of the rule, the emissions 

control requirements in the rule do not 

‘‘take effect’’— i.e., requiring compliance 

through vehicular certification before 

introducing any Model Year 2012 into 

commerce—until Jan. 2, 2011, or 

approximately 9 months after the 

planned promulgation of the LDV Rule. 

Furthermore, as EPA intends to explain 

soon in detail in the final action on the 

PSD and Title V GHG Tailoring Rule 

(known as the ‘‘Tailoring Rule’’),7 in 

light of the significant administrative 

challenges presented by the application 

of the PSD and Title V requirements for 

GHGs (and considering the legislative 

intent of the PSD and Title V statutory 

provisions), it is necessary to defer 

applying the PSD and Title V provisions 

for sources that are major based only on 

emissions of GHGs until a date that 

extends beyond January 2, 2011. 

B. Analysis of Proposed and Alternative 

Interpretations for Subject to Regulation 

1. Actual Control Interpretation 

EPA has concluded that the ‘‘actual 

control’’ interpretation (as articulated in 

the PSD Interpretive Memo) is 

permissible under the CAA and is 

preferred on policy grounds. Thus, EPA 

will continue to interpret the definition 

of ‘‘regulated NSR pollutant’’ in 40 CFR 

52.21(b)(50) to exclude pollutants for 

which EPA regulations only require 

monitoring or reporting but to include 

each pollutant subject to either a 

provision in the CAA or regulation 

promulgated by EPA under the CAA 

that requires actual control of emissions 

of that pollutant. As discussed further 

below, EPA will also interpret section 

51.166(b)(49) of its regulations in this 

manner. This interpretation is 

supported by the language and structure 

of the regulations and is consistent with 

past practice in the PSD program and 

prior EPA statements regarding 

pollutants subject to the PSD program. 

The CAA is most effectively 

implemented by making PSD emissions 

limitations applicable to pollutants after 

a considered judgment by EPA (or 

Congress) that particular pollutants 

should be subject to control or 

limitation. The actual control 

interpretation promotes the orderly 

administration of the permitting 

program by allowing the Agency to first 

assess whether there is a justification for 

controlling emissions of a particular 

pollutant under relevant criteria in the 

Act before applying the requirements of 

the PSD permitting program to a 

pollutant. 

Because the term ‘‘regulation’’ is 

susceptible to more than one meaning, 

there is ambiguity in the phrase ‘‘each 

pollutant subject to regulation under the 

Act’’ 8 that is used in both sections 

165(a)(4) and 169(3) of the CAA. As 

discussed in the Memo, the term 

‘‘regulation’’ can be used to describe a 

rule contained in a legal code, such as 

the Code of Federal Regulations, or the 

act or process of controlling or 

restricting an activity. The primary 

meaning of the term ‘‘regulation’’ in 

Black’s Law Dictionary (8th Ed.) is ‘‘the 

act or process of controlling by rule or 

restriction.’’ However, an alternative 

meaning in this same dictionary defines 

the term as ‘‘a rule or order, having legal 

force, usu. issued by an administrative 

agency or local government.’’ The 

primary meaning in Webster’s 

dictionary for the term ‘‘regulation’’ is 

‘‘the act of regulating: The state of being 

regulated.’’ Merriam-Webster’s 

Collegiate Dictionary 983 (10th Ed. 

2001). Webster’s secondary meaning is 

‘‘an authoritative rule dealing with 

details of procedure’’ or ‘‘a rule or order 

issued by an executive authority or 

regulatory agency of a government and 

having the force of law.’’ Webster’s also 

defines the term ‘‘regulate’’ and the 

inflected forms ‘‘regulated’’ and 

‘‘regulating’’ (both of which are used in 

Webster’s definition of ‘‘regulation’’) as 

meaning ‘‘to govern or direct according 

to rule’’ or to ‘‘to bring under the control 

of law or constituted authority.’’ Id. 

The PSD Interpretive Memo 

reasonably applies a common meaning 

of the term ‘‘regulation’’ to support a 

permissible interpretation that the 

phrase ‘‘pollutant subject to regulation’’ 

means a pollutant subject to a provision 

in the CAA or a regulation issued by 

EPA under the Act that requires actual 

control of emissions of that pollutant. 

Public comments have not 

demonstrated the dictionary meanings 

of the term ‘‘regulation’’ described in the 

Memo are no longer accepted meanings 

of this term. In light of the different 

meanings of the term ‘‘regulation,’’ EPA 

has not been persuaded by public 

comments that the CAA plainly and 

unambiguously requires that EPA apply 

any of the other interpretations 

described in the October 7, 2009 notice. 

Moreover, the Memo carefully explains 

how the actual control interpretation is 

consistent with the overall context of 

the CAA in which sections 165(a)(4) and 

169(3) are found. After consideration of 

public comment, EPA continues to find 

this discussion persuasive. The ‘‘subject 

to regulation’’ language appears in the 

BACT provisions of the Act, which 

themselves require actual controls on 

emissions. The BACT provisions 

reference the New Source Performance 

Standards (NSPS) and other control 

requirements under the Act, which 

establish a floor for the BACT 

requirement. See 42 U.S.C. 7479(3). 

Other provisions in the CAA that 

authorize EPA to establish emissions 

limitations or controls on emissions 

provide criteria for the exercise of EPA’s 

judgment to determine which pollutants 

or source categories to regulate. Thus, it 

follows that Congress expected that 

pollutants would only be regulated for 

purposes of the PSD program after: (1) 

The EPA promulgated regulations 

requiring control of a particular 

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9See 67 FR 80186–80289. 

pollutant on the basis of considered 

judgment, taking into account the 

applicable criteria in the CAA, or (2) 

EPA promulgates regulations on the 

basis of Congressional mandate that 

EPA establish controls on emissions of 

a particular pollutant, or (3) Congress 

itself directly imposes actual controls on 

emissions of a particular pollutant. In 

addition, considering other sections in 

the Act that require reasoned decisionmaking and authorize the collection of 

emissions data prior to establishing 

controls on emissions, it is also 

consistent with the Congressional 

design to require BACT limitations for 

pollutants after a period of data 

collection and study that leads to a 

reasoned decision to establish control 

requirements. Public commenters did 

not demonstrate that it was erroneous 

for EPA to interpret the PSD provisions 

in this manner, based on the context of 

the Act. 

Furthermore, the actual control 

interpretation is consistent with the 

terms of the regulations EPA 

promulgated in 2002.9 EPA continues to 

find the reasoning of the PSD 

Interpretive Memo to be persuasive. The 

structure and language of EPA’s 

definition of ‘‘regulated NSR pollutant’’ 

at 40 CFR 52.21(b)(50) supports the 

actual control interpretation. The first 

three parts of the definition describe 

pollutants that are subject to regulatory 

requirements that mandate control or 

limitation of the emissions of those 

pollutants, which suggests that the use 

of ‘‘otherwise subject to regulation’’ in 

the fourth prong of the definition also 

intended some prerequisite act or 

process of control. The definition’s use 

of ‘‘subject to regulation’’ should be read 

in light of the primary meanings of 

‘‘regulation’’ described above, which 

each use or incorporate the concept of 

control. 

One commenter stated that EPA’s 

suggestion that its proposed 

interpretation will allow for a more 

practical approach to determining 

whether emissions of air pollutants 

endanger health and human welfare 

amounts only to a policy preference. 

The commenter argued that EPA’s 

policy preference should be subordinate 

to statutory language and Congressional 

intent. Another commenter made 

similar comments and stated that EPA 

cannot avail itself of additional, nonstatutory de facto extensions of time to 

fulfill its statutory obligations. 

Where the governing statutory 

authority is susceptible to more than 

one interpretation, it is not 

impermissible for EPA to apply policy 

preferences when determining which 

interpretation to apply, so long as the 

interpretation EPA elects to follow is a 

permissible one. The PSD Interpretive 

Memo provides a persuasive 

explanation for why the interpretation 

reflected in that memorandum is 

consistent with the terms of the CAA 

and Congressional intent. In this 

instance, EPA’s policy preferences are 

fully consistent with that intent. As 

explained above, Congress intended for 

EPA to gather data before establishing 

controls on emissions and to make 

reasoned decisions. 

EPA continues to prefer the actual 

control interpretation because it ensures 

an orderly and manageable process for 

incorporating new pollutants into the 

PSD program after an opportunity for 

public participation in the decision 

making process. Several commenters 

who supported EPA’s proposal to 

continue applying the ‘‘actual control’’ 

interpretation identified these 

considerations as important reasons that 

EPA should continue doing so. EPA 

agrees with these comments. As 

discussed persuasively in the PSD 

Interpretive Memo, under this 

interpretation, EPA may first assess 

whether there is a justification for 

controlling emissions of a particular 

pollutant under relevant criteria in the 

Act before imposing controls on a 

pollutant under the PSD program. In 

addition, this interpretation permits the 

Agency to provide notice to the public 

and an opportunity to comment when a 

new pollutant is proposed to be 

regulated under one or more programs 

in the Act. It also promotes the orderly 

administration of the permitting 

program by providing an opportunity 

for EPA to develop regulations to 

manage the incorporation of a new 

pollutant into the PSD program, for 

example, by promulgating a significant 

emissions rate (or de minimis level) for 

the pollutant when it becomes 

regulated. See 40 CFR 52.21(b)(23). 

Furthermore, this interpretation 

preserves the Agency’s ability to gather 

data on pollutant emissions to inform 

their judgment regarding the need to 

establish controls on emissions without 

automatically triggering such controls. 

This interpretation preserves EPA’s 

authority to require control of particular 

pollutants through emissions limitations 

or other restrictions under various 

provisions of the Act, which would then 

trigger the requirements of the PSD 

program for any pollutant addressed in 

such an action. 

Some commenters who opposed the 

actual control interpretation argued that 

this deliberate approach leads to 

‘‘analysis paralysis’’ and is subject to 

political manipulation. The commenter 

further noted that the case-by-case 

BACT requirement does not 

contemplate waiting years for EPA to 

conduct analyses and ‘‘develop’’ control 

options; rather, BACT must be based on 

control options that are available. Then, 

permitting agencies are to make ‘‘caseby-case’’ determinations ‘‘taking into 

account energy, environmental, and 

economic impacts and other costs,’’ 

thereby ensuring that the decision is 

informed by the available solutions, 

their efficacy and costs. 

While this analysis may sometimes 

take more time than the commenter 

would prefer, a deliberative and orderly 

approach to regulation is in the public 

interest and consistent with 

Congressional intent. It would be 

premature to impose the BACT 

requirement on a particular pollutant if 

neither EPA nor Congress has made a 

considered judgment that a particular 

pollutant is harmful to public health 

and welfare and merits control. 

Once the Agency has made a 

determination that a pollutant should be 

controlled using one or more of the 

regulatory tools provided in the CAA 

and those controls take effect, EPA 

agrees that a BACT analysis must then 

be completed based on available 

information. As the commenter points 

out, the BACT process is designed to 

determine the most effective control 

strategies achievable in each instance, 

considering energy, environmental, and 

economic impacts. Thus, EPA agrees 

that the onset of the BACT requirement 

should not be delayed in order for 

technology or control strategies to be 

developed. Furthermore, EPA agrees 

with the commenter that delaying the 

application of BACT to enable 

development of guidance on control 

strategies is not necessarily consistent 

with the BACT requirement. The BACT 

provisions clearly contemplate that the 

permitting authority will develop 

control strategies on a case-by-case 

basis. Thus, EPA is not in this final 

action relying on the need to develop 

guidance for BACT as a justification for 

choosing to continue applying the 

actual control interpretation. However, 

in the absence of guidance on control 

strategies from EPA and other regulatory 

agencies, the BACT process may be 

more time and resource intensive when 

applied to a new pollutant. Under a 

mature PSD permitting program, 

successive BACT analyses establish 

guidelines and precedents for 

subsequent BACT determinations. 

However, when a new pollutant is 

regulated, the first permit applicants 

and permitting authorities that are faced 

with determining BACT for a new 

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10Memorandum from Jonathan Z. Cannon, 

General Counsel to Carol M. Browner, 

Administrator, entitled EPA’s Authority to Regulate 

Pollutants Emitted by Electric Power Generation 

Sources (April 10, 1998). 

pollutant must invest more time and 

resources in making an assessment of 

BACT under the statutory criteria. Given 

the potentially large number of sources 

that could be subject to the BACT 

requirement when EPA regulates GHGs, 

the absence of guidance on BACT 

determinations for GHGs presents a 

unique challenge for permit applicants 

and permitting authorities. EPA intends 

to address this challenge in part by 

deferring, under the Tailoring Rule, the 

applicability of the PSD permitting 

program for sources that would become 

major based solely on GHG emissions. 

EPA is also developing guidance on 

BACT for GHGs. 

Several commenters expressed 

concern with EPA’s explanation that the 

actual control interpretation best reflects 

EPA’s past practice. One commenter 

argued that the Deseret decision rejects 

the idea that ‘‘past policy and practice’’ 

is a sufficient justification for EPA’s 

preferred interpretation. In addition, 

several commenters argued that the 

memorandum was in fact not consistent 

with past EPA practice, based on their 

interpretation of a statement made in 

the preamble to a rule which 

promulgated PSD regulations in 1978. 

While the record continues to show 

that the actual control interpretation is 

consistent with EPA’s historic practice, 

EPA agrees that continuity with past 

practice alone does not justify 

maintaining a position when there is 

good cause to change it. In this case, 

however, EPA has not found cause to 

change an interpretation that is 

consistent with Congressional intent 

and supported by the policy 

considerations described earlier. Thus, 

EPA is not retaining the actual control 

interpretation simply to maintain 

continuity with historic practice. The 

record reflects that EPA’s past practice 

was grounded in a permissible 

interpretation of the law and supported 

by rational policy considerations. 

Commenters have not otherwise 

persuaded EPA to change its historic 

practice in this area. 

A review of numerous Federal PSD 

permits shows that EPA has been 

applying the actual control 

interpretation in practice—issuing 

permits that only contained emissions 

limitations for pollutants subject to 

regulations requiring actual control of 

emissions under other portions of the 

Act. Furthermore, in 1998, well after 

promulgation of the initial CO2

monitoring regulations in 1993, EPA’s 

General Counsel concluded that CO2

would qualify as an ‘‘air pollutant’’ that 

EPA had the authority to regulate under 

the CAA, but the General Counsel also 

observed that ‘‘the Administrator has 

made no determination to date to 

exercise that authority under the 

specific criteria provided under any 

provision of the Act.’’ 10 The 1978 

Federal Register notice promulgating 

the initial PSD regulations stated that 

pollutants ‘‘subject to regulation’’ in the 

PSD program included ‘‘any pollutant 

regulated in Subchapter C of Title 40 of 

the Code of Federal Regulations.’’ 

Commenters argue this statement 

illustrates that EPA has in fact applied 

the PSD BACT requirement to any 

pollutant subject to only a monitoring 

requirement codified in this portion of 

the Code of Federal Regulations. 

However, this comment overlooked the 

discussion in the PSD Interpretive 

Memo regarding the differing meanings 

of the term ‘‘regulation’’ and ‘‘regulate.’’ 

The 1978 preamble did not amplify the 

meaning of the term ‘‘regulated in.’’ 

Thus, commenters have not 

demonstrated that EPA had concluded 

in 1978 that monitoring requirements 

equaled ‘‘regulation’’ within the meaning 

of sections 165(a)(4) and 169(3) of the 

CAA, nor have commenters provided 

any examples of permits issued by EPA 

after 1978 that demonstrate EPA’s 

interpretation was inconsistent with the 

practice described in the PSD 

Interpretive Memo. 

Therefore, EPA affirms that the actual 

control interpretation expressed in the 

PSD Interpretive Memo continues be the 

operative statement for the EPA 

interpretation of the meaning of the 

regulatory phrase ‘‘subject to regulation’’ 

within the Federal PSD rules. 

2. Monitoring and Reporting 

Interpretation 

EPA is not persuaded that the 

monitoring and reporting interpretation 

is compelled by the CAA, and the 

Agency remains concerned that 

application of this approach would lead 

to odd results and make the PSD 

program difficult to administer. EPA 

continues to find the reasoning of the 

PSD Interpretive Memo persuasive. 

The monitoring and reporting 

interpretation would make the 

substantive requirements of the PSD 

program applicable to particular 

pollutants based solely on monitoring 

and reporting requirements (contained 

in regulations established under section 

114 or other authority in the Act). This 

approach would lead to the perverse 

result of requiring emissions limitations 

under the PSD program while the 

Agency is still gathering the information 

necessary to conduct research or 

evaluate whether to establish controls 

on the pollutant under other parts of the 

Act. Such a result would frustrate the 

Agency’s ability to gather information 

using section 114 and other authority 

and make informed and reasoned 

judgments about the need to establish 

controls or limitations for particular 

pollutants. If EPA interpreted the 

requirement to establish emissions 

limitations based on BACT to apply 

solely on the basis of a regulation that 

requires collecting and reporting 

emissions data, the mere act of gathering 

information would essentially dictate 

the result of the decision that the 

information is being gathered to inform 

(whether or not to require control of a 

pollutant). Many commenters 

representing State permitting agencies 

and industry groups agree with the 

policy arguments advanced by EPA and 

others that EPA’s critical information 

gathering activities will be constrained, 

with likely adverse environmental and 

public health consequences, if 

monitoring requirements are necessarily 

associated with the potentially 

significant implementation and 

compliance costs and resource 

constraints of the PSD program. 

Commenters expressed concern that 

without the ability to gather data or 

investigate unregulated pollutants, for 

fear of triggering automatic regulation 

under the CAA, EPA will not have the 

flexibility to review the validity of 

controlling new pollutants. 

EPA agrees that a monitoring and 

reporting interpretation would hamper 

the Agency’s ability to conduct 

monitoring or reporting for investigative 

purposes to inform future rulemakings 

involving actual emissions control or 

limits. In addition, it is not always 

possible to predict when a new 

pollutant will emerge as a candidate for 

regulation. In such cases, the Memo’s 

reasoning is correct in that EPA would 

be unable to promulgate any monitoring 

or reporting rule for such a pollutant 

without triggering PSD under this 

interpretation. 

An environmental organization 

disagreed with the proposed notice of 

reconsideration, and commented that 

EPA has issued monitoring and 

reporting regulations for CO2 in 40 CFR 

part 75, promulgated pursuant to 

section 821 of the 1990 CAA 

Amendments. The commenter felt that 

these monitoring and reporting rules are 

‘‘regulation’’ in that they are contained 

in a legal code, have the force of law, 

and bring the subject matter under the 

control of law and the EPA. 

Furthermore, the commenter says that 

EPA itself has characterized these 

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monitoring and reporting requirements 

as ‘‘regulations.’’ In contrast, another 

commenter argued that an agency’s 

interpretation of a statute should focus 

first on the ordinary dictionary meaning 

of the terms used and that monitoring 

emissions does not fit within any of the 

types of activities understood to 

constitute ‘‘regulation’’ of those 

emissions in the ordinary meaning of 

that term. Each of these commenters 

focuses on only one of the two potential 

meanings of the term ‘‘regulation’’ 

described above. 

The commenter that favors the 

‘‘monitoring and reporting’’ 

interpretation appears to focus only on 

the dictionary meanings that describe a 

rule contained in a legal code. The 

commenter has not demonstrated that it 

is impermissible for EPA to construe the 

CAA on the basis of another common 

meaning of the term ‘‘regulation.’’ In the 

context of construing the Act, the EAB 

observed in the Deseret case that a plain 

meaning could not be ascertained from 

looking solely at the word ‘‘regulation.’’ 

The Board reached this conclusion after 

considering the dictionary definitions of 

the term ‘‘regulation’’ cited above. See 

Deseret slip op. at 28–29. EPA continues 

to find the reasoning of the EAB and the 

PSD Interpretive Memo to be 

persuasive. The EAB found ‘‘no 

evidence of Congressional intent to 

compel EPA to apply BACT to 

pollutants that are subject only 

monitoring and reporting requirements.’’ 

See Deseret at 63. 

Comments have not convincingly 

shown that Congress clearly intended to 

use the term ‘‘regulation’’ in section 

165(a)(4) and 169(3) to describe any 

type of rule in a legal code. Some 

commenters presented alternative 

theories of Congressional intent 

regarding the BACT provisions, but they 

have not persuasively demonstrated that 

the interpretation of Congressional 

intent based on the context of the CAA 

described in the PSD Interpretive Memo 

is erroneous. 

For example, one commenter opposed 

to EPA’s proposed action commented 

that the PSD Interpretive Memo ignores 

the Congressionally-established purpose 

of PSD to protect public health and 

welfare from actual and potential 

adverse effects. See CAA section 160(1). 

Specifically, this commenter stated that 

to limit application of BACT until after 

control requirements are in place 

following an endangerment finding 

ignores the broad, protective purpose of 

the PSD program. The commenter said 

that the emphasis on ‘‘potential adverse 

effect[s]’’ distinguishes PSD the 

requirement from the National Ambient 

Air Quality Standards (NAAQS) and 

NSPS programs, which require that EPA 

make an endangerment finding before 

establishing generally applicable 

standards such as the NSPS or motor 

vehicle emissions standards. According 

to this commenter, BACT’s case-by-case 

approach provides the dynamic 

flexibility necessary to implement an 

emission limitation appropriate to each 

particular source. This commenter feels 

that the PSD program’s ability to 

address potential adverse effects is 

hindered by the position that an 

endangerment determination and actual 

control limits must be first established. 

EPA does not agree that the terms of 

section 160 cited by the commenter 

compel EPA to read sections 165(a)(4) 

and 169(3) to apply to a pollutant before 

the Agency has established control 

requirements for the pollutant. Section 

160(1) describes PSD’s purpose to 

‘‘protect public health and welfare from 

any actual or potential adverse effect 

which in the Administrator’s judgment 

may reasonably be anticipated to occur 

from air pollution.’’ Thus, this goal 

contemplates an exercise of judgment by 

EPA to determine that an actual or 

potential adverse effect may reasonably 

be anticipated from air pollution. In that 

sense, this goal is consistent with 

NAAQS and NSPS programs, which 

contemplate that regulation of a 

pollutant will not occur until a 

considered judgment by EPA that a 

substance or source category merits 

control or restriction. The commenter 

has not persuasively established that the 

‘‘potential adverse effect’’ language in 

section 160(1) makes this provision 

markedly different than the language 

used in sections 108(a)(1)(A) and 

111(b)(1)(A). All three sections use the 

phrase ‘‘may reasonably be anticipated.’’ 

Furthermore, section 160 contains 

general goals and purposes and does not 

contain explicit regulatory 

requirements. The controlling language 

in the PSD provisions is the ‘‘subject to 

regulation’’ language in sections 

165(a)(4) and 169(3). As discussed 

earlier, the ‘‘actual control’’ 

interpretation is based on a common 

and accepted meaning of the term 

‘‘regulation.’’ To the extent the goals and 

purpose in section 160 are instructive as 

to the meaning of other provisions in 

Part C of the Act, section 160(1) is just 

one of several purposes of the PSD 

program that Congress specified. The 

Act also instructs EPA to ensure that 

economic growth occurs consistent with 

the preservation of existing clean air 

resources. See CAA section 160(3). 

EPA’s interpretation is consistent with 

this goal because it allows EPA to look 

at the larger picture by coordinating 

control of an air pollutant under the 

PSD program with control under other 

CAA provisions. 

EPA finds the logic of the PSD 

Interpretive Memo more persuasive. The 

Memo considers the full context of the 

CAA, including the health and welfare 

criteria that generally must be satisfied 

to establish control requirements under 

other parts of the Act, information 

gathering provisions that contemplate 

data collection and study before 

pollutants are controlled, and 

requirements for reasoned decision 

making. While some commenters 

presented arguments for why it might be 

possible or beneficial to apply the BACT 

requirement before a control 

requirement is established for a 

pollutant elsewhere under the Act, these 

arguments do not demonstrate that the 

contextual reading of the CAA described 

in the Memo is erroneous. Thus, the 

comments have at most provided 

another permissible reading of the Act, 

but they do not demonstrate that EPA 

must require BACT limitations for 

pollutants that are not yet controlled but 

only subject to data collection and 

study. 

EPA continues to believe that the 

monitoring and reporting interpretation 

is inconsistent with past agency practice 

because, as the Memo notes, ‘‘EPA has 

not issued PSD permits containing 

emissions limitations for pollutants that 

are only subject to monitoring and 

reporting requirements,’’ including CO2

emissions. Further, the Memo 

determines that the monitoring and 

reporting interpretation is not required 

under the 1978 preamble language, 

explaining that the preamble language 

could be interpreted in a variety of ways 

and ‘‘did not specifically address the 

issue of whether a monitoring or 

reporting requirement makes a pollutant 

‘regulated in’ [Subpart C of Title 40] of 

the Code of Federal Regulations.’’ See 

Memo at 11–12. Commenters have not 

demonstrated that the Agency 

specifically intended, through this 

statement, to apply the PSD 

requirements to pollutants that were 

covered by only a monitoring and 

reporting requirement codified in this 

part of the CFR. 

One commenter questioned EPA’s 

basis for rejecting the monitoring and 

reporting interpretation because they 

believe EPA has not identified a 

pollutant other than CO2 that would be 

affected by the monitoring and reporting 

interpretation. However, EPA’s GHG 

Reporting Rule covers six GHGs, not just 

CO2. Further, EPA has promulgated 

regulations that require monitoring of 

oxygen (O2) in the stack of a boiler 

under certain circumstances. See 40 

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CFR 60.49Da(d). These examples help 

demonstrate why monitoring and 

reporting requirements alone should not 

be interpreted to trigger PSD and BACT 

requirements. 

For the reasons discussed above, EPA 

affirms the Memo’s rejection of the 

monitoring and reporting interpretation 

for triggering PSD requirements for a 

new pollutant. 

3. State Implementation Plan (SIP) 

Interpretation 

In discussing the application of the 

actual control interpretation to specific 

actions under the CAA, the PSD 

Interpretive Memo rejects an 

interpretation of ‘‘subject to regulation’’ 

in which regulatory requirements for a 

particular pollutant in the EPAApproved State Implementation Plan 

(SIP) for a single State would ‘‘require 

regulation of that pollutant under the 

PSD program nationally.’’ (Hereinafter, 

referred to as the ‘‘SIP interpretation.’’) 

In this action, EPA affirms and 

supplements the rationale for rejecting 

the SIP interpretation provided in the 

PSD Interpretive Memo and the 

reconsideration proposal. Since the 

meaning of the term ‘‘subject to 

regulation’’ is ambiguous and 

susceptible to multiple interpretations, 

the SIP interpretation is not compelled 

by the structure and language of the Act. 

Furthermore, there would be negative 

policy implications if EPA adopted this 

interpretation. 

The Memo reasons that application of 

the SIP interpretation would convert 

EPA’s approval of regulations applicable 

only in one State into a decision to 

regulate a pollutant on a nationwide 

scale for purposes of the PSD program. 

The Memo explains that the 

establishment of SIPs is better read in 

light of the ‘‘cooperative federalism’’ 

underlying the Act, whereby Congress 

allowed individual States to create and 

apply some regulations more stringently 

than Federal regulations within its 

borders, without allowing individual 

States to set national regulations that 

would impose those requirements on all 

States. See Ellis v. Gallatin Steel Co., 

390 F.3d 461, 467 (6th Cir. 2004). In 

rejecting the SIP interpretation, the 

Memo also explains that EPA adopted a 

similar position in promulgating the 

NSR regulations for fine particulate 

matter (or ‘‘PM2.5’’), without any public 

comments opposing that position. See 

Memo at 15–16. 

EPA continues to believe that the 

CAA and EPA’s implementing 

regulations are intended to provide 

States flexibility to develop and 

implement SIPs to meet the air quality 

goals of their individual State. Each 

State’s implementation plan is a 

reflection of the air quality concerns in 

that State, allowing a State significant 

latitude in the treatment of specific 

pollutants of concern (or their 

precursors) within its borders based on 

air quality, economic, and other 

environmental concerns of that State. As 

such, pollutant emissions in one State 

may not present the same problem for 

a State a thousand miles away. As 

expressed in the PSD Interpretive 

Memo, EPA continues to have concerns 

that the SIP interpretation would 

improperly limit the flexibility of States 

to develop and implement their own air 

quality plans, because the act of one 

State to establish regulatory 

requirements for a particular pollutant 

would drive national policy. If EPA 

determined that a new pollutant 

becomes ‘‘subject to regulation’’ 

nationally within the meaning of section 

165 based solely on the provisions of an 

EPA-approved SIP, then all States 

would be required to subject the new 

pollutant to PSD permitting whether or 

not control of the air pollutant was 

relevant for improving that State’s air 

quality. Whether one State, five States, 

or 45 States make the decision that their 

air quality concerns are best addressed 

by imposing regulations on a new 

pollutant, EPA does not think those 

actions should trump the cooperative 

federalism inherent in the CAA. While 

several States may face similar air 

quality issues and may choose 

regulation as the preferred approach to 

dealing with a particular pollutant, EPA 

is concerned that allowing the 

regulatory choices of some number of 

States to impose PSD regulation on all 

other States would do just that. 

Some commenters support the SIP 

interpretation, and fault the Agency’s 

rejection of the interpretation by stating 

that neither the Act, nor the Memo, 

provides a basis for a position that 

regulation by a single State is not 

enough to constitute ‘‘regulation under 

the Act’’ on a nationwide basis for 

purpose of section 165. Petitioners and 

another commenter also assert that CO2

is already ‘‘subject to regulation under 

the Act’’ and take the position that any 

requirement EPA adopts and approves 

in an implementation plan makes the 

covered pollutant ‘‘subject to regulation 

under the Act’’ because it is approved by 

the EPA ‘‘under the Act,’’ and because it 

becomes enforceable by the State, by 

EPA and by citizens ‘‘under the Act’’ 

upon approval. 

EPA disagrees with the Petitioner and 

with this commenter that this reasoning 

necessarily means that a pollutant 

regulated in one SIP approved by EPA 

must automatically be regulated through 

the PSD program nationally. In fact, 

Congress demonstrated intent, in the 

language and structure of the Act, for 

SIP requirements to have only a local or 

regional effect. 

In section 102(a) of the CAA, Congress 

directs EPA to encourage cooperative 

activities among States, and the 

adoption of uniform State and local 

laws for the control of air pollution ‘‘as 

practicable in light of the varying 

conditions and needs.’’ This language 

informs the issue of whether SIP 

requirements have nationwide 

applicability in two ways. First, there 

would be no need for EPA to facilitate 

uniform adoption of standards in 

different air quality control regions, if 

the regulation of an air pollutant by one 

region would automatically cause that 

pollutant to be regulated in another 

region. Second, Congress bounded its 

desire to promote uniformity by 

recognizing that addressing local air 

quality concerns may preempt national 

uniformity of regulation. 

Indeed, section 116 of the CAA grants 

States the right to adopt more stringent 

standards than the uniform, minimum 

requirements set forth by EPA. See 42 

U.S.C. 7416. The legislative history of 

the 1977 CAA Amendments shows that 

Congress understood that States may 

adopt different and more stringent 

standards then the Federal minimum 

requirements. See, e.g., 122 Cong. Rec. 

S12456 (daily ed. July 26, 1976) 

(statement of Sen. Randolph) (‘‘[T]he 

States are given latitude in devising 

their own approaches to air pollution 

control within the framework of broad 

goals. * * * The State of West Virginia 

has established more stringent 

requirements than those which, through 

the Environmental Protection Agency, 

are considered as adequate * * *’’); 122 

Cong. Rec. S12458 (daily ed. July 26, 

1976) (statement of Sen. Scott) (‘‘The 

States have the right, however, to 

require higher standards, and they 

should have under the police powers.’’) 

Congress could not have intended States 

to have latitude to implement their own 

approaches to air pollution control, and 

simultaneously, require that air 

pollutants regulated by one State 

automatically apply in all other States. 

Importantly, the legislative history 

also shows that Congress intended to 

limit the EPA’s ability to disapprove a 

State’s decision to adopt more stringent 

requirements in setting forth the criteria 

for approving State submissions under 

section 110. This intent is supported by 

the following passage: 

State implementation plans usually 

contain a unified set of requirements and 

frequently do not make distinctions between 

the controls needed to achieve one kind of 

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11Notably, the legislative record refers to ‘‘State’’ 

emission limit, and makes no note of this State 

emission limitation having broader applicability. 

ambient standard or another. To try to 

separate such emission limitations and make 

judgments as to which are necessary to 

achieving the national ambient air quality 

standards assumes a greater technical 

capability in relating emissions to ambient 

air quality than actually exists. 

A federal effort to inject a judgment of this 

kind would be an unreasonable intrusion 

into protected State authority. EPA’s role is 

to determine whether or not a State’s 

limitations are adequate and that State 

implementation plans are consistent with the 

statute. Even if a State adopts limits which 

may be stricter than EPA would require, EPA 

cannot second guess the State judgment and 

must enforce the approved State emission 

limit.11

123 Cong. Rec. S9167 (daily ed. June 8, 

1977) (statement of Sen. Muskie). 

This Congressional intent is reflected 

within the statutory language. Under 

section 110(k)(3), the EPA 

Administrator ‘‘shall approve’’ a State’s 

submittal if it meets the requirements of 

the Act, and under section 110(l) ‘‘shall 

not’’ approve a plan revision ‘‘if the 

revision would interfere with any other 

applicable requirement of this Act.’’ 

Courts have similarly interpreted this 

language to limit EPA’s discretion to 

approve or disapprove SIP 

requirements. See, e.g., State of 

Connecticut v. EPA, 656 F.2d 902, 906 

(2d. Cir. 1981) (‘‘As is illustrated by 

Congress’s use of the word ‘shall,’ 

approval of an SIP revision by the EPA 

Administrator is mandatory if the 

revision has been the subject of a proper 

hearing and the plan as a whole 

continues to adhere to the requirements 

of section 110(a)(2)’’) (referencing Union 

Electric Co. v. EPA, 427 U.S. 246, 257 

(1976); and Mission Indus., Inc. v. EPA, 

547 F.2d 123 (1st Cir. 1976)). These 

provisions of the statute do not establish 

any authority or criteria for EPA to 

judge the approvability of a State’s 

submission based on the implications 

such approval would have nationally. 

The absence of such authority or criteria 

in the applicable standard argues 

against nationwide applicability of SIP 

requirements and the SIP interpretation. 

Moreover, under section 307(b) of the 

CAA, Congress assigns review of 

specific regulations promulgated by 

EPA and ‘‘any other nationally 

applicable regulations promulgated or 

final action taken, by the Administrator 

under this Act’’ only to the U.S. Court 

of Appeals for the District of Columbia 

Circuit (‘‘D.C. Circuit’’). In contrast, ‘‘the 

Administrator’s action in approving and 

promulgating any implementation plan 

under Section 110 * * * or any other 

final action of the Administrator under 

this Act * * * which is local or 

regionally applicable may be filed only 

in the United States Court of Appeals 

for the appropriate circuit.’’ 42 U.S.C. 

7607(b) (emphasis added). Thus, 

Congress set forth its intended 

applicability of these regulations in 

assigning judicial venue and clearly 

articulated that requirements in a SIP 

are generally ‘‘local or regionally 

applicable.’’ 

Even if the Act could be read to 

support EPA review of the national 

implications of State SIP submissions, 

such an approach would be undesirable 

for policy reasons. As highlighted in the 

reconsideration proposal, one practical 

effect of allowing State-specific 

concerns to create national regulation is 

that EPA’s review of SIPs would likely 

be much more time-consuming, because 

EPA would have to consider each 

nuance of the SIP as a potential 

statement of national policy. Thus, EPA 

would have heightened oversight of air 

quality actions in all States—even those 

regarding local and State issues that are 

best decided by local agencies. EPA 

approval of SIPs would be delayed, 

which would in turn, delay State’s 

progress toward improving air quality. 

And, EPA would be required to defend 

challenges to the approval of a SIP with 

national implications in the D.C. Circuit 

Court of Appeals rather than the local 

Circuit Court of Appeals. The potential 

increased burden of reviewing and 

approving SIPs to analyze the national 

implications of each SIP, and the 

associated delay in improving air 

quality, creates a compelling policy 

argument against adoption of the SIP 

interpretation. 

Petitioners also fault EPA’s reliance 

on Connecticut v. EPA, 656 F.2d 902 (2d 

Cir. 1981) and assert that this case has 

nothing to do with the issue of whether 

a pollutant is ‘‘subject to regulation 

under the Act.’’ In the PSD Interpretive 

Memo, EPA cited Connecticut to 

support the notion that while a State is 

free to adopt air quality standards more 

stringent than required by the NAAQS 

or other Federal law provisions, 

Congress precludes those stricter 

requirements from applying to other 

States. The Agency agrees with 

commenter that the circumstances 

involved in that case are not directly 

analogous, but, nevertheless, the case 

supports the inference that EPA has 

drawn from it. The Court concluded that 

‘‘[n]othing in the Act, however, indicates 

that a State must respect its neighbor’s 

air quality standards (or design its SIP 

to avoid interference therewith) if those 

standards are more stringent than the 

requirements of Federal law.’’ If a State 

is not required to respect the more 

stringent requirements of a neighboring 

State in developing its own 

implementation plan, then by inference, 

the State would also not be compelled 

to follow the more stringent standards. 

In sum, after reconsidering the legal 

and policy issues, EPA declines to adopt 

the SIP interpretation. 

4. Endangerment Finding Interpretation 

The PSD Interpretive Memo states 

that the fourth part of the regulated NSR 

pollutant definition (‘‘[a]ny pollutant 

that otherwise is subject to regulation’’) 

should not be interpreted ‘‘to apply at 

the time of an endangerment finding.’’ 

See Memo at 14 (hereinafter, referred to 

as the ‘‘endangerment finding 

interpretation.’’). After considering 

public comments, EPA is affirming the 

position expressed in the PSD 

Interpretative Memo that an 

endangerment finding alone does not 

make the requirements of the PSD 

program applicable to a pollutant. EPA 

maintains its view that the terms of 

EPA’s regulations and the relevant 

provisions of the CAA do not compel 

EPA to conclude that an air pollutant 

becomes ‘‘subject to regulation’’ when 

EPA finds that it endangers public 

health or welfare without 

contemporaneously promulgating 

control requirements for that pollutant. 

As explained in EPA’s Endangerment 

and Cause or Contribute Findings for 

GHGs under section 202(a) of the CAA, 

there are actually two separate findings 

involved in what is often referred to as 

an endangerment finding. 74 FR 66496 

(Dec. 15, 2009). The first finding 

addresses whether air pollution may 

reasonably be anticipated to endanger 

public health or welfare. The second 

finding involves an assessment of 

whether emissions of an air pollutant 

from the relevant source category cause 

or contribute to this air pollution. In this 

notice, EPA uses the phrase 

‘‘endangerment finding’’ to refer to EPA 

findings on both of these questions. The 

EPA interpretation described here 

applies to both findings regardless of 

whether they occur together or 

separately. 

As explained in the proposed 

reconsideration, an interpretation of 

‘‘subject to regulation’’ that does not 

include endangerment findings is 

consistent with the first three parts of 

the definition of ‘‘regulated NSR 

pollutant’’ in section 52.21(b)(50) of 

EPA’s regulations. Unlike the first three 

parts of the definition, an endangerment 

finding does not itself contain any 

restrictions (e.g., regarding the level of 

air pollution or emissions or use). 

Moreover, two parts of the definition 

involve actions that can occur only after 

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an endangerment finding of some sort 

has taken place. In other words, other 

parts of the definition already bypass an 

endangerment finding and apply the 

PSD trigger to a later step in the 

regulatory process. 

Specifically, under the first part of 

that definition, PSD regulation is 

triggered by promulgation of a NAAQS 

under CAA section 109. However, in 

order to promulgate NAAQS standards 

under section 109, EPA must first list, 

and issue air quality criteria for a 

pollutant under section 108, which in 

turn can only happen after EPA makes 

an endangerment finding and a version 

of a cause or contribute finding, in 

addition to meeting other requirements. 

See CAA sections 108(a)(1) and 

109(a)(2). Thus, if EPA were to conclude 

that an endangerment finding, cause or 

contribute finding, or both would make 

a pollutant ‘‘subject to regulation’’ 

within the meaning of the PSD 

provisions, this would read all meaning 

out of the first part of the ‘‘regulated 

NSR pollutant’’ definition because a 

pollutant would become subject to PSD 

permitting requirements well before the 

promulgation of the NAAQS under 

section 109. See 40 CFR 52.21(b)(50)(i). 

Similarly, the second part of the 

definition of ‘‘regulated NSR pollutant’’ 

includes any pollutant that is subject to 

a standard promulgated under section 

111 of the CAA. Section 111 requires 

the EPA Administrator to list a source 

category, if in his or her judgment, ‘‘it 

causes, or contributes significantly to, 

air pollution which may reasonably be 

anticipated to endanger public health or 

welfare.’’ See CAA section 111(b)(1)(A). 

After EPA lists a source category, it 

promulgates NSPS for that source 

category. For a source category not 

already listed, if EPA were to list it on 

the basis of its emissions of a pollutant 

that was not previously regulated, and 

such a listing made that pollutant 

‘‘subject to regulation’’ within the 

meaning of the PSD provisions, this 

chain of events would result in 

triggering PSD permitting requirements 

for that pollutant well in advance of the 

point contemplated by the second prong 

of the regulated NSR pollutant 

definition. See 40 CFR 52.21(b)(50)(ii). 

Furthermore, as discussed in the 

Memo, waiting to apply PSD 

requirements at least until the actual 

promulgation of control requirements 

that follow an endangerment finding is 

sensible. The Memo explains that when 

promulgating the final regulations 

establishing the control requirements for 

a pollutant, EPA often makes decisions 

that are also relevant to decisions that 

must be made in implementing the PSD 

program for that pollutant. See Memo at 

14. For example, EPA often does not 

make a final decision regarding how to 

identify the specific pollutant subject to 

an NSPS standard until the NSPS is 

issued, which occurs after both the 

endangerment finding and the source 

category listing. 

Public comments echoed these 

concerns. One commenter said that 

subjecting the pollutant to PSD 

requirements, including imposition of 

BACT emission limits, before the 

Agency has taken regulatory action to 

establish emission controls would turn 

the CAA process on its head. Another 

commenter indicated that triggering 

PSD review upon completion of an 

endangerment finding, but potentially 

before the specific control requirement 

that flows directly from the 

endangerment finding, clearly 

undermines the orderly process created 

by Congress for regulation of new air 

pollutants. A third commenter added 

that establishing controls without 

having a standard to be achieved leads 

to uncertainty in the permitting 

program. 

In further support of EPA’s 

interpretation that an endangerment 

finding does not make an air pollutant 

‘‘subject to regulation’’ is the fact that an 

endangerment finding is not a codified 

regulation; it does not contain any 

regulatory text. The PSD Interpretive 

Memo explains, and numerous 

commenters agree, that an 

endangerment finding should not be 

construed as ‘‘regulating’’ the air 

pollutant(s) at issue because there is no 

actual regulatory language applicable to 

the air pollutant at this time in the Code 

of Federal Regulations. Rather, the 

finding is a prerequisite to issuing 

regulatory language that imposes control 

requirements. This is true even if the 

endangerment finding is a ‘‘rule’’ for 

purposes of administrative processes; 

that does not alter the fact that there is 

no regulation or regulatory text attached 

to the endangerment finding itself. 

Since an endangerment finding does not 

establish ‘‘regulation’’ within the 

common meaning of the term applied by 

EPA, EPA does not believe the CAA 

compels EPA to apply PSD 

requirements to a pollutant on the basis 

of an endangerment finding alone. 

EPA’s interpretation is also consistent 

with the Supreme Court’s decision in 

Massachusetts. In its decision, the Court 

acknowledged that EPA ‘‘has significant 

latitude as to the manner, timing, 

content and coordination’’ of the 

regulations that would result from a 

positive endangerment finding under 

section 202(a). See 549 U.S. at 532. Just 

as EPA has discretion regarding the 

timing of the section 202(a) control 

regulations that would flow from an 

endangerment finding under that 

section, it also has some discretion 

regarding the timing of the triggering of 

PSD controls that the statute requires 

based on those section 202(a) 

regulations. EPA has reasonably 

determined that PSD controls should 

not precede any other control 

requirements. Some commenters cited 

Massachusetts in support of EPA’s 

position. 

For the foregoing reasons, EPA affirms 

that the prerequisite act of making an 

endangerment finding, a cause or 

contribute finding, or both, does not 

make a pollutant ‘‘subject to regulation’’ 

for the purposes of the PSD program. 

This interpretation applies to both steps 

of the endangerment finding—the 

finding that air pollution may 

reasonably be anticipated to endanger 

public health or welfare, and the finding 

that emissions of an air pollutant from 

a particular source category causes or 

contributes to this air pollution— 

regardless of whether the two findings 

occur together or separately. As 

explained above, EPA believes that 

there are strong legal and policy reasons 

for rejecting the endangerment finding 

interpretation. 

5. Section 209 Waiver Interpretation 

EPA is affirming its position that an 

Agency decision to grant a waiver to a 

State under section 209 of the CAA does 

not make the PSD program applicable to 

pollutants that may be regulated under 

State authority following a grant of such 

a waiver. For the reasons discussed 

below, the granting of a waiver does not 

make the pollutants that are regulated 

by a State after obtaining a section 209 

waiver into pollutants regulated under 

the CAA. Furthermore, EPA is also 

affirming the position that PSD 

requirements are not applicable to a 

pollutant in all States when a handful 

of States besides the one obtaining the 

waiver adopt identical standards under 

section 177 of the CAA that are then 

approved into State SIPs by EPA. 

As explained in the proposal, neither 

the PSD Interpretive Memo nor the 

Petition for Reconsideration raise the 

issue of whether a decision to grant a 

waiver under the section 209 of the 

CAA triggers PSD requirements for a 

pollutant regulated by a State after 

obtaining a waiver. EPA received 

comments in response to the notice of 

an application by California for a CAA 

section 209 waiver to the State of 

California to adopt and enforce GHG 

emission standards for new motor 

vehicles that suggested that arguments 

might be made that the grant of the 

waiver made GHGs subject to regulation 

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across the country for the purposes of 

PSD. See 74 FR 32744, 32783 (July 8, 

2009). Those commenters requested that 

EPA state clearly that granting the 

California Waiver did not render GHGs 

subject to regulation under the CAA, 

while others commented that the 

question of when and how GHGs should 

be addressed in the PSD program or 

otherwise regulated under the Act 

should instead be addressed in separate 

proceedings. At that time, EPA stated 

that these interpretation issues were not 

a part of the waiver decision and would 

be more appropriately addressed in 

another forum. 

In the proposed reconsideration 

notice, EPA proposed to affirm the 

following position that EPA previously 

explained to Congress: ‘‘a decision to 

grant a waiver under section 209 of the 

Act removes the preemption of State 

law otherwise imposed by the Act. Such 

a decision is fundamentally different 

from the decisions to establish 

requirements under the CAA that the 

Agency and the [EAB] have considered 

in interpreting the provisions governing 

the applicability of the PSD program.’’ 

Letter from Lisa P. Jackson, EPA 

Administrator, to Senator James M. 

Inhofe (March 17, 2009). Specifically, 

EPA proposed to find that neither the 

CAA nor the Agency’s PSD regulations 

make the PSD program applicable to 

pollutants that may be regulated by 

States after EPA has granted a waiver of 

preemption under section 209 of the 

CAA. Accordingly, EPA said that the 

Agency’s decision to grant a section 209 

waiver to the State of California to 

establish its own GHG emission 

standards for new motor vehicles does 

not trigger PSD requirements for GHGs. 

Several commenters disagreed with 

EPA’s proposed position on the section 

209 waiver provisions, and assert that 

EPA’s granting of the waiver results in 

‘‘actual control.’’ According to these 

commenters, even under EPA’s 

interpretation of ‘‘subject to regulation,’’ 

CO2 is now subject to BACT. One of 

these commenters argues that EPA’s 

granting of a waiver is an EPA 

regulatory action that ‘‘controls’’ CO2 by 

allowing California and 10 other States 

to ‘‘regulate’’ CO2 under the Act. 

Another one of these commenters states 

that 10 States used section 177 of the 

CAA to adopt the California Standards 

into their SIPs, thus making these 

provisions enforceable by both EPA and 

citizens under the CAA. See, e.g., 42 

U.S.C. 7413; 42 U.S.C. 7604(a)(1), (f)(3). 

EPA has not been persuaded to change 

its proposed position based on these 

comments. 

EPA does not disagree that the 

regulations promulgated by the State 

pursuant to the waiver will require 

control of emissions and thus constitute 

‘‘regulation’’ of GHGs under the meaning 

applied by EPA. However, the principal 

issue here is whether this regulation 

occurs under the authority of the Clean 

Air Act (i.e., ‘‘under the Act.’’). 

In the proposed reconsideration 

notice, EPA explained that a waiver 

granted under CAA section 209(b)(1) 

simply removes the prohibition found 

in section 209(a) that forbids States from 

adopting or enforcing their own 

standards relating to control of 

emissions from new motor vehicles or 

new motor vehicle engines. Thus, the 

grant of the waiver does not lead to 

regulation ‘‘under the Act’’ because it 

simply allows California to exercise the 

same authority to adopt and enforce 

State emissions standards for new motor 

vehicles that California could have 

exercised without the initial prohibition 

in section 209(a). Several other 

commenters agreed with EPA’s position 

and reasoning. They explained that a 

waiver constitutes a withdrawal of 

Federal preemption that allows a State 

to develop its own State standards to 

regulate vehicle emissions; the waiver 

does not transform these State standards 

into Federal standards. Other 

supporting commenters also assert that 

there is nothing in the legislative history 

that supports a conclusion that Congress 

intended section 209 waivers to result 

in application of PSD requirements. The 

opposing comments have not 

convincingly articulated a mechanism 

through which EPA’s action granting the 

waiver in fact requires control of 

emissions (as opposed to the States 

action under State law). If EPA granted 

the waiver alone and the State 

ultimately decided not to implement its 

regulation, there would be no control 

requirement in effect under the CAA. 

As explained in the proposed 

reconsideration notice, EPA also finds it 

instructive that enforcement of any 

emission standard by the State after EPA 

grants a section 209 waiver would occur 

pursuant to State enforcement authority, 

not Federal authority. EPA would 

continue to enforce the Federal 

emission standards EPA promulgates 

under section 202. EPA does not enforce 

the State standard. EPA only conducts 

testing to determine compliance with 

the Federal standard promulgated by 

EPA and any enforcement would be for 

violation of EPA standards, not the State 

standards. As one commenter noted, 

CAA section 209(b)(3) provides that 

where a State has adopted standards 

that have been granted a waiver 

‘‘compliance with such State standards 

shall be treated as compliance with 

applicable Federal standards for 

purposes of this subchapter,’’ but does 

not say that such State standards 

actually become the Federal standards. 

Accordingly, EPA finds the absence of 

legislative history supporting the 

contrary position, and the language in 

section 209(b)(3) instructive as Congress 

clearly recognized the co-existence of 

the Federal and State standards. This 

shows Congress did not intend that 

State regulations replace, or transform 

State standards into Federal regulations 

‘‘under the Act.’’ EPA agrees with 

supporting commenters’ conclusions 

summarized here, and is not persuaded 

to change the proposed position. 

EPA has also concluded that the 

adoption of identical standards by 

several States under section 177 does 

not make a pollutant covered by those 

standards ‘‘subject to regulation under 

the Act’’ in all States. Like section 209, 

section 177 only grants States authority 

to regulate under State authority by 

removing Federal preemption. Adoption 

of California standards by other States 

does not change the fact that those 

standards are still State standards 

enforced under State law and Federal 

law is approved in a SIP. However, EPA 

agrees that when a State adopts alternate 

vehicle standards into its SIP pursuant 

to section 177, and EPA approves the 

SIP, these standards become enforceable 

by EPA and citizens under the CAA. 

Nonetheless, EPA does not agree that 

this compels an interpretation that any 

pollutant included in an individual 

State SIP requirement becomes ‘‘subject 

to regulation’’ in all States under the 

CAA. As discussed earlier, EPA rejects 

the theory that a regulation of a 

pollutant in one or more States in an 

EPA-approved implementation plan 

necessarily makes that pollutant subject 

to regulation in all States. Such an 

approach is inconsistent with the 

fundamental principle of cooperative 

federalism embodied in the CAA. 

In summary, EPA concludes that 

neither the act of granting a section 209 

waiver of preemption for State emission 

standards nor the EPA-approval of 

standards adopted into a SIP pursuant 

to section 177 makes a pollutant 

‘‘subject to regulation under the Act’’ in 

all States for the purposes of the PSD 

program. 

C. Other Issues on Which EPA Solicited 

Comment 

1. Prospective Codification of 

Interpretation 

Through the proposed reconsideration 

notice, EPA requested comment on 

whether the Agency should codify its 

final interpretation of the ‘‘subject to 

regulation’’ in the statute and regulation 

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12See 74 FR 56259 (Oct. 30, 2009). 

13To EPA’s knowledge, no court has required a 

rulemaking procedure when the Agency seeks to 

issue or change its interpretation of a statute. 

Nevertheless, EPA has completed this notice and 

comment proceeding before deciding to adopt the 

Continued 

by amending the Federal PSD rules at 40 

CFR 52.21. EPA received a number of 

comments both in support of and 

opposing codification. 

EPA does not believe it is necessary 

to codify its interpretation in the 

regulatory text. EPA feels it is important 

to promptly communicate and apply 

these final decisions regarding the 

applicability of the PSD program in light 

of recent and upcoming actions related 

to GHGs. More specifically, EPA 

recently finalized the ‘‘Mandatory 

Reporting of Greenhouse Gases’’ rule 

(known as the ‘‘Reporting Rule’’),12

which added monitoring requirements 

for additional GHGs not covered in the 

Part 75 regulations. Further, EPA is 

poised to finalize by the end of March 

2010 the LDV Rule that will establish 

controls on GHGs that take effect in 

Model Year 2012, which starts as early 

as January 2, 2011. Thus, these actions 

make it important that EPA immediately 

apply its final interpretation of the PSD 

regulations on this issue (as refined in 

this action). Furthermore, even if EPA 

modified the text of the Federal rules, 

many States may continue to proceed 

under an interpretation of their rules. 

EPA thus believes overall 

implementation of PSD permitting 

programs is facilitated by this notice 

that describes how existing 

requirements in Federal regulations at 

40 CFR 52.21 are interpreted by EPA 

and how similar State provisions may 

be interpreted by States. 

Likewise, EPA does not believe it is 

necessary to re-issue the PSD 

Interpretive Memorandum. The Agency 

has not identified any legal requirement 

for the Agency to re-issue an 

interpretive rule after a process of 

reconsideration. No comparable 

procedure is required after the 

reconsideration of substantive rule. In 

the latter situation, a notice of final 

action is sufficient to conclude the 

reconsideration process and an Agency 

may simply decline to revise an existing 

regulation that remains in effect. EPA 

has therefore concluded that this notice 

of final action is sufficient to conclude 

the reconsideration process initiated on 

February 17, 2009 and that there is no 

need to re-issue the entire memorandum 

in order for EPA to continue applying 

the interpretation reflected therein, as 

refined in this notice. 

2. Section 821 of the Clean Air Act 

Amendments of 1990 

In the October 7, 2009 notice, EPA 

also solicited comment on the question 

of whether section 821 of the Clean Air 

Act Amendments of 1990 is part of the 

Clean Air Act. EPA indicated that the 

Agency was inclined against continuing 

to argue that section 821 was not a part 

of the CAA, as the Office of Air and 

Radiation and Region 8 had done in 

briefs submitted to the EAB in the 

Deseret matter. This question bears on 

the determination of whether the CO2

monitoring requirements in EPA’s Part 

75 regulations are requirements ‘‘under 

the Act.’’ In the proposed 

reconsideration notice, EPA explained 

that it would be necessary to resolve 

whether or not the CO2 monitoring and 

reporting regulations in Part 75 were 

promulgated ‘‘under the Act’’ if EPA 

adopted the monitoring and reporting 

interpretation. EPA received public 

comments on both sides of this issue, 

with one environmental organization 

pressing EPA to drop the position that 

section 821 is not a part of the CAA and 

several industry parties requesting that 

EPA affirm it. 

EPA has not yet made a final decision 

on this question, and it is not necessary 

for the Agency to do so at this time. 

Since EPA is not adopting the 

monitoring and reporting interpretation, 

the status of section 821 is not material 

to the question of whether and when 

CO2 is ‘‘subject to regulation under the 

Act.’’ Because there are currently no 

controls on CO2 emissions, the pollutant 

is not ‘‘subject to regulation.’’ Given that 

the provisions in Part 75 do not 

‘‘regulate’’ emissions of CO2, it is 

unnecessary determine whether such 

provisions are ‘‘under the Act’’ or not to 

determine PSD applicability. 

Furthermore, the promulgation of EPA’s 

Reporting Rule makes this issue even 

less material. In that rule, which became 

effective in December 2009 and required 

monitoring to begin in January of this 

year, EPA established monitoring and 

reporting requirements for CO2 and 

other GHGs under sections 114 and 208 

of the CAA. Thus, there can be no 

dispute that monitoring and reporting of 

CO2 (as well as other GHGs) is now 

occurring under the CAA, regardless of 

the status of section 821 of the 1990 

amendments. At this point, the section 

821 issue would only become relevant 

if a court were to find that the 

monitoring and reporting interpretation 

is compelled by the CAA and a party 

subsequently seeks to retroactively 

enforce such a finding against sources 

that had not obtained a PSD permit with 

any limit on CO2 emissions. If this 

situation were to arise, EPA will address 

the section 821 issue as necessary. 

3. Timing of When a Pollutant Becomes 

Subject to Regulation 

The October 7, 2009 notice also 

solicited comment on whether the 

interpretation of ‘‘subject to regulation’’ 

should also more clearly identify the 

specific date on which PSD regulatory 

requirements would apply. In the PSD 

Interpretive Memo, EPA states that the 

language in the definition of ‘‘regulated 

NSR pollutant’’ should be interpreted to 

mean that the fourth part of the 

definition should ‘‘apply to a pollutant 

upon promulgation of a regulation that 

requires actual control of emissions.’’ 

See Memo at 14. After evaluating the 

underlying statutory requirement in the 

CAA and the language in all parts of the 

regulatory definition more closely, EPA 

proposed to modify its interpretation of 

the fourth part of the definition with 

respect to the timing of PSD 

applicability. The Agency proposed to 

interpret the term ‘‘subject to regulation’’ 

in the statute and regulation to mean 

that PSD requirements apply when the 

regulations addressing a particular 

pollutant become final and effective. 

Based on public comments and other 

considerations raised in the proposal, 

EPA has determined that it is necessary 

to refine the portion of the PSD 

Interpretive Memo that addresses the 

precise point in time when a pollutant 

becomes subject to regulation for 

purposes of the PSD program. As a 

result, while the Memo is otherwise 

unchanged by the reconsideration 

proceeding, this final notice will adjust 

the first paragraph of section II.F of the 

Memo (bottom of page 14) to reflect 

EPA’s conclusion that it is more 

appropriate and consistent with the 

reasoning of the Memo to construe EPA 

regulations and the CAA to make a 

pollutant subject to PSD program 

requirements when the first controls on 

a pollutant take effect. This refines the 

approach proposed in the October 7, 

2009 notice. 

Like the PSD Interpretive 

Memorandum itself, the refinement to 

EPA’s interpretation described in this 

final notice is an interpretation of the 

regulation at 40 CFR 52.21 and the CAA 

provisions that provide the statutory 

foundation for EPA’s regulations. The 

refinement reflected in this notice 

explains, clarifies, and is consistent 

with existing statutes and the text of 

regulatory provisions at 40 CFR 

52.21(b)(50)(ii) through (iv). Some 

commenters argued that courts have 

limited an Agency’s ability to 

fundamentally change a long-standing, 

definitive, and authoritative 

interpretation of a regulation 13 without 

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revised interpretation of the CAA described in this 

notice. 

engaging in a notice and comment 

rulemaking. See, e.g., Alaska 

Professional Hunters Association v. 

FAA, 177 F.3d 1030, 1033–34 (D.C. Cir. 

1999); Paralyzed Veterans of America v. 

D.C. Arena L.P., 117 F.3d 579, 586 (D.C. 

Cir. 1997). Since EPA’s interpretation of 

the PSD program regulations is 

unchanged in most respects by this 

action, it is not clear that the particular 

refinement to that interpretation that 

EPA is making in this action would 

invoke the doctrine described in these 

cases. Even if this refinement is viewed 

as a fundamental change, EPA has 

completed the revision reflected in this 

action after a notice and comment 

process. Furthermore, since EPA 

initiated a process of reconsidering and 

soliciting comment on the PSD 

Interpretive Memo within three months 

of its issuance, the memorandum had 

not yet become particularly wellestablished or long-standing. See 

MetWest Inc. v. Secretary of Labor, 560 

F.3d 506, 511 n.4 (D.C. Cir. 2009). Thus, 

the doctrines reflected in these cases do 

not preclude the action EPA has taken 

here to refine its interpretation of the 

regulations. 

The regulatory language of 40 CFR 

52.21(b)(50)(iv) does not specify the 

exact time at which the PSD 

requirements should apply to pollutants 

in the fourth category of the definition 

of ‘‘regulated NSR pollutant.’’ In the PSD 

Interpretive Memo, EPA states that EPA 

interprets the language in this definition 

to mean that the fourth part of the 

definition should ‘‘apply to a pollutant 

upon promulgation of a regulation that 

requires actual control of emissions.’’ 

See Memo at 14. However, after 

continuing to consider the underlying 

statutory requirement in the CAA and 

the language in all parts of the 

regulatory definition more closely, EPA 

proposed in the October 7, 2009 notice 

to modify its interpretation of the fourth 

part of the definition with respect to the 

timing of PSD applicability. In the 

proposed notice of reconsideration, EPA 

observed that the term ‘‘subject to 

regulation’’ in the statute and regulation 

is most naturally interpreted to mean 

that PSD requirements apply when the 

regulations addressing a particular 

pollutant become final and effective. In 

addition, EPA expressed a desire to 

harmonize the application of the PSD 

requirements with the limitation in the 

Congressional Review Act (CRA) that a 

major rule cannot take effect until 60 

days after it is published in the Federal 

Register. 

In this final notice on reconsideration, 

based on information provided in public 

comments, EPA is refining its 

interpretation of the time the PSD 

requirements will apply to a newlyregulated pollutant. Under the PSD 

program, EPA will henceforth interpret 

the date that a pollutant becomes 

subject to regulation under the Act to be 

the point in time when a control or 

restriction that functions to limit 

pollutant emissions takes effect or 

becomes operative to control or restrict 

the regulated activity. As discussed 

further below, this date may vary 

depending on the nature of the first 

regulatory requirement that applies to 

control or restrict emissions of a 

pollutant. 

Several public comments observed 

that a date a control requirement 

becomes ‘‘final and effective’’ and the 

date it actually ‘‘takes effect’’ may differ. 

Some commenters supported these 

points with reference to Federal court 

decisions that suggest the date that the 

terms of a regulation become effective 

can take more than one form. In one 

case involving the Congressional 

Review Act, the United States Court of 

Appeals for the Federal Circuit observed 

that the date a regulation may ‘‘take 

effect’’ in accordance with the CRA is 

distinct from the ‘‘effective date’’ of the 

regulation. See Liesegang v. Sec’y of 

Veterans Affairs, 312 F.3d 1368, 1374– 

75 (Fed. Cir. 2002), amended on reh’g in 

part on other grounds, 65 Fed. Appx. 

717 (Fed. Cir. 2003). In this opinion, the 

court observed that ‘‘[t]he ordinary 

meaning of ‘take effect’ is ‘[t]o be in 

force; go into operation’ ’’ Id. at 1375 

(quoting Black’s Law Dictionary at 1466 

(7th ed. 1999). Based on this, the court 

reasoned that the CRA does not ‘‘change 

the date on which the regulation 

becomes effective’’ but rather ‘‘only 

affects the date when the rule becomes 

operative.’’ Id. In another case, the 

Second Circuit Court of Appeals 

described a distinction between the date 

a rule may ‘‘take effect’’ under the CRA, 

the ‘‘effective date’’ for application of the 

rule to regulated manufacturers, and the 

‘‘effective date’’ for purposes of 

modifying the Code of Federal 

Regulations. See Natural Resources 

Defense Council v. Abraham, 355 F.3d 

179, 202 (2d Cir. 2004). 

The Office of the Federal Register 

(OFR) uses the term ‘‘effective date’’ to 

describe the date that amendments in a 

rulemaking document affect the current 

Code of Federal Regulations. See 

Federal Register Document Drafting 

Handbook, at p. 2–10 (Oct. 10, 1998). 

However, OFR draws a contrast between 

such a date and the compliance or 

applicability date of a rule, which is 

described as ‘‘the date that the affected 

person must start following the rule.’’ Id. 

at 2–11. Thus, the ‘‘effective date’’ of a 

regulation is commonly used to describe 

the date by which a provision in the 

Code of Federal Regulations is enacted 

as law, but it is not necessarily the same 

as the time when provision enacted in 

the Code of Federal Regulations is 

operative on the regulated activity or 

entity. The latter may be described as 

the ‘‘compliance,’’ ‘‘applicability,’’ or 

‘‘takes effect’’ date. 

The terms of the CAA also recognize 

a similar distinction in some instances. 

CAA section 112(i)(3)(A) provides that 

‘‘after the effective date of any emissions 

standard, limitation or regulation 

promulgated under this section and 

applicable to a source, no person may 

operate such source in violation of such 

standard, limitation, or regulation 

except, in the case of an existing source, 

the Administrator shall establish a 

compliance date or dates for each 

category or subcategory of existing 

sources, which shall provide for 

compliance as expeditiously as 

practicable, but in no event later than 3 

years after the effective date of such 

standard.’’ Another example in section 

202 of the Act is discussed in more 

detail below. 

Another formulation may be found in 

Section 553(c) of the APA (5 U.S.C. 

553(c)), which provides, with some 

exceptions, that ‘‘[t]he required 

publication or service of a substantive 

rule shall be made not less than 30 days 

before its effective date.’’ The APA does 

not define the term ‘‘effective date’’ or 

make precisely clear whether it is 

referring to the date a regulation has the 

force of law or the date by which a 

regulatory requirement applies to a 

regulated entity or activity. The APA 

also separately recognizes the concept of 

finality of Agency action for purposes of 

judicial review. See 5 U.S.C. 704. 

In the October 7, 2009 notice, EPA did 

not clearly distinguish between the 

various forms of the date when a 

regulatory requirement may become 

effective. One commenter observed that 

the EPA analysis in the proposed 

reconsideration notice appeared to blur 

the distinction between the ‘‘effective 

date’’ set by EPA and the date that 

Congress allows a regulation to become 

effective under the CRA. EPA in fact 

discussed all of these concepts in its 

notice, with part of the discussion 

focused on the date a regulation 

becomes ‘‘final’’ and ‘‘effective’’ and a 

part on when a regulation may ‘‘take 

effect’’ under the CRA. EPA viewed 

these forms of the date when a 

regulation becomes ‘‘effective’’ to be 

essentially the same, but the case law 

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suggests that administrative agencies do 

not necessarily need to harmonize the 

date that regulatory requirements take 

effect with the ‘‘effective date’’ of a 

regulation, meaning the date a 

regulation has the force of law and 

amends the Code of Federal 

Regulations. Since these are distinct 

concepts, the effective date of a 

regulation for purposes of amending the 

CFR may precede the date when a 

regulatory requirement ‘‘takes effect’’ or 

when a regulated entity must comply 

with a regulatory requirement. A 

regulation may ‘‘take effect’’ subsequent 

to its stated ‘‘effective date’’ where it has 

been published in final form but does 

not require immediate implementation 

by the agency or compliance by 

regulated entities. 

The key issue raised by EPA in the 

October 7, 2009 notice was determining 

which date should be determined by 

EPA to be the date when a pollutant 

becomes ‘‘subject to regulation’’ and, 

thus, the date when the requirements of 

the PSD permitting program apply to 

that pollutant. In recognition of the 

distinction between the ‘‘effective date’’ 

of the regulation for purposes of 

amending the CFR and the point at 

which a regulatory restriction may ‘‘take 

effect,’’ EPA has considered whether it 

is permissible to construe sections 

165(a)(4) and 169(3) of the CAA to mean 

that a pollutant becomes ‘‘subject to 

regulation’’ at the point that a regulatory 

restriction or control ‘‘takes effect.’’ In 

the October notice, EPA observed that 

the use of ‘‘subject to’’ in the Act 

suggests that PSD requirements are 

intended to be triggered when those 

standards become effective for the 

pollutant. EPA also said that no party is 

required to comply with a regulation 

until it has become final and effective. 

Prior to that date, an activity covered by 

a rule is not in the ordinary sense 

‘‘subject to’’ any regulation. Regardless 

of whether one interprets regulation to 

mean monitoring or actual control of 

emissions, prior to the effective date of 

a rule there is no regulatory requirement 

to monitor or control emissions. 

The same reasoning applies to the 

date that a regulation ‘‘takes effect,’’ as 

that term is used in the judicial 

decisions described above. Regulated 

entities are not required to comply with 

a regulatory requirement until it takes 

effect. Prior to the date a regulatory 

requirement takes effect, the activity 

covered by a rule is not in the ordinary 

sense subject to any regulation. 

As discussed in the PSD Interpretive 

Memo, as used in the context of the PSD 

provisions in EPA regulations and the 

CAA, EPA interprets the term 

‘‘regulation’’ in the context of sections 

165(a)(4) and 169 of the CAA to mean 

the act or process of controlling or 

restricting an activity. This 

interpretation applies a common 

meaning of the term regulation reflected 

in dictionaries. 

Thus, EPA agrees with commenters 

that the term ‘‘subject to regulation’’ 

used in both the CAA and EPA’s 

regulations may be construed to mean 

the point at which a requirement to 

control a pollutant takes effect. The 

CAA does not necessarily preclude 

construing a pollutant to become subject 

to regulation upon the promulgation 

date or the date that a regulation 

becomes final and effective for purposes 

of amending the CFR or judicial review. 

However, EPA has been persuaded by 

public comments that the phrase 

‘‘subject to regulation’’ may also be 

interpreted to mean the date by which 

a control requirement takes effect. 

Indeed, EPA has concluded that the 

latter interpretation is more consistent 

with the actual control interpretation 

reflected in the PSD Interpretive Memo. 

As one commenter observed, a 

regulation would have to have become 

actually effective, in the sense that 

actual legal obligations created by the 

regulation have become currently 

applicable for regulated entities and are 

no longer merely prospective 

obligations, before that regulation could 

make a pollutant subject to actual 

control. Another commenter noted that 

a regulated entity has no immediate 

compliance obligations and cannot be 

held in violation of the regulation until 

a legal obligation becomes applicable to 

them on the ‘‘takes effect’’ date. Thus, 

based on this reasoning, EPA has 

decided that it will construe the point 

at which a pollutant becomes ‘‘subject to 

regulation’’ within the meaning of 

section 52.21(b)(50)(iv) of EPA’s 

regulations to be when a control or 

restriction is operative on the activity 

regulated. EPA agrees with commenters 

that there is generally no legally 

enforceable obligation to control a 

pollutant when a regulation is 

promulgated or, in some instances, even 

when a regulation becomes effective for 

some purposes. 

Thus, EPA currently interprets the 

time that a pollutant becomes a 

‘‘regulated NSR pollutant’’ under section 

52.21(b)(50)(iv) to be the time when a 

control or restriction on emissions of the 

pollutant takes effect or becomes 

operative on the regulated activity. 

Given EPA’s conclusion that this is a 

permissible interpretation of the 

‘‘subject to regulation’’ language in 

sections 165(a)(4) and 169(3) of the 

CAA, EPA will also interpret other parts 

of section 52.21(b)(50) to make a 

pollutant a regulated NSR pollutant on 

the date that a control requirement takes 

effect, provided such an interpretation 

is not inconsistent with the existing 

language of the regulations. 

EPA does not agree with several 

commenters who suggested that EPA 

determine that a pollutant does not 

become subject to regulation until the 

time that an individual source engages 

in the regulated activity. EPA does not 

believe such a reading is consistent with 

the ‘‘subject to regulation’’ language in 

the CAA. Even if no source is actually 

engaged in the activity, once a standard 

or control requirement has taken effect, 

no source may engage in the regulated 

activity without complying with the 

standard. At this point, the regulated 

activity and the emissions from that 

activity are controlled or restricted, thus 

being subject to regulation within the 

common meaning of the term regulation 

used in EPA’s regulations and section 

165(a)(4) and 169(3) of the CAA. 

Likewise, EPA does not agree with 

commenters who argued that a pollutant 

does not become subject to regulation 

until the date when a source must 

certify compliance with regulatory 

requirements or submit a compliance 

report. In some instances, a compliance 

report or certification of compliance 

may not be required until well after the 

point that a regulation operates to 

control or restrict the regulated activity. 

Thus, EPA does not feel that it would 

be appropriate as a general rule to 

establish the date when a source 

certifies compliance or submits its 

compliance report as the date that a 

pollutant becomes subject to regulation. 

Since the fourth part of the definition 

of ‘‘regulated NSR pollutant’’ functions 

as a catch-all provision, it may cover a 

variety of different types of control 

requirements established by EPA under 

the CAA. These different types of 

regulations may contain a variety of 

different mechanisms for controlling 

emissions and have varying amounts of 

lead time before controls take effect 

under the particular regulatory 

framework. Thus, whenever the Agency 

adopts controls on a new pollutant 

under a portion of the CAA covered by 

the fourth part of the definition, EPA 

anticipates that it will be helpful to 

States and regulated sources for EPA to 

identify the date when a new pollutant 

becomes subject to regulation. In section 

IV.A of this notice, EPA provides such 

an analysis for the forthcoming LDV 

Rule that is anticipated to establish the 

first controls on GHGs. 

EPA has also concluded that it is 

appropriate to extend the reasoning of 

this interpretation across all parts of the 

definition of the term ‘‘regulated NSR 

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pollutant.’’ The reasoning described 

above is equally applicable to the 

regulation of additional pollutants 

under the specific sections of the Act 

delineated in the first three parts of the 

definition of ‘‘regulated NSR pollutant.’’ 

While the date a control requirement 

may take effect could vary across 

sections 109, section 111, and Title VI, 

EPA does not see any distinction in the 

applicability of the legal reasoning 

above to these provisions of the CAA. 

There should be less variability among 

rules promulgated under the same 

statutory section, so EPA does not 

expect that it will be necessary for EPA 

to identify the date that a new pollutant 

becomes subject to regulation each time 

EPA regulates a new pollutant in a 

NAAQS or NSPS. EPA can more readily 

identify the specific dates when controls 

under such rules take effect. 

By way of example, the NSPS under 

section 111 of the Act preclude 

operation of a new source in violation 

of such a standard after the effective 

date of the standard. See 42 U.S.C. 

7411(e). Thus, the control requirements 

in an NSPS take effect on the effective 

date of the rule. Once such a standard 

takes effect and operates to preclude 

operations in violation of the standards, 

then EPA interprets the statute and 

EPA’s PSD regulations to also require 

that the BACT requirement apply to a 

pollutant that is subject to NSPS. 

Consistent with the October 7, 2009 

proposal, EPA has determined that the 

existing language in section 

52.21(b)(50)(ii) of its regulations may be 

construed to apply to a new pollutant 

upon the effective date of an NSPS. This 

part of the definition covers ‘‘[a]ny 

pollutant that is subject to any standard 

promulgated under section 111 of the 

Act.’’ See 40 CFR 52.21(b)(50)(ii). While 

the word ‘‘promulgated’’ appears in this 

part of the definition, this term modifies 

the term ‘‘standard’’ and does not 

directly address the timing of PSD 

requirements. Under the language in 

this part of the definition, the PSD 

requirements apply when a pollutant 

becomes ‘‘subject to’’ the underlying 

standard, which is ‘‘promulgated under’’ 

section 111 of the Act. Thus, this 

language can be interpreted to make an 

NSPS pollutant a regulated NSR 

pollutant upon the effective date of an 

NSPS. EPA did not receive any public 

comments that opposed reading this 

portion of the definition to invoke PSD 

requirements upon the effective date of 

an NSPS. This can logically be extended 

to be consistent with the general view 

described above that the time a 

pollutant becomes subject to regulation 

is the time when a control requirement 

‘‘takes effect.’’ As discussed above, the 

effective date of an NSPS is also that 

date when the controls in an NSPS ‘‘take 

effect.’’ 

Likewise, under section 169(a)(3) of 

the Act, a source applying for a PSD 

permit must demonstrate that it will not 

cause or contribute to a violation of the 

NAAQS in order to obtain the permit. 

Once a NAAQS is effective with respect 

to a pollutant, the standard operates 

through section 169(a)(3) of the Act and 

section 52.21(k) of EPA’s regulations to 

preclude construction of a new source 

that would cause or contribute to a 

violation of such standard. 

Using the effective date of a NAAQS 

to determine when a pollutant covered 

by a NAAQS becomes a regulated NSR 

pollutant is more consistent with EPA’s 

general approach for determining when 

a new NAAQS applies to pending 

permit applications. EPA generally 

interprets a revised NAAQS that 

establishes either a lower level for the 

standard or a new averaging time for a 

pollutant already regulated to apply 

upon the effective date of the revised 

NAAQS. Thus, unless EPA promulgates 

a grandfathering provision that allows 

pending applications to apply standards 

in effect when the application is 

complete, a final permit decision issued 

after the effective date of a NAAQS must 

consider such a NAAQS. As described 

above, the effective date of the NAAQS 

is also the date a NAAQS takes effect 

through the PSD permitting program to 

regulate construction of a new or 

modified source. 

Since a NAAQS covering a new 

pollutant would operate through the 

PSD permitting program to control 

emissions of that pollutant from the 

construction or modification of a major 

source upon the effective date of the 

NAAQS, a NAAQS covering a new 

pollutant takes effect on the effective 

date of the regulation promulgating the 

NAAQS. EPA does not agree with one 

commenter’s suggestion that such a 

NAAQS would not take effect until the 

time a State first promulgates 

limitations for the pollutant in a SIP. 

Under section 165(a)(3) of the Act and 

the Federal PSD permitting regulations 

at 52.21(k), to obtain a PSD permit, a 

major source must demonstrate that the 

proposed construction will not cause or 

contribute to a violation of a NAAQS. 

Due to these requirements, the PSD 

program operates to incorporate the 

NAAQS as a governing standard for 

permitting construction of large sources. 

Thus, under the Federal PSD program 

regulations at least, a new pollutant 

covered by a NAAQS becomes subject to 

regulation at a much earlier date. These 

PSD provisions require emissions 

limitations for the NAAQS pollutant 

before construction at a major source 

may commence and thereby function to 

protect the NAAQS from new source 

construction and modifications of 

existing major sources in the SIP 

development period before a completion 

of the planning process necessary to 

determine whether additional standards 

for a new NAAQS pollutant need to be 

developed. The timing when the 

NAAQS operates in this manner under 

SIP-approved programs is potentially 

more nuanced and depends on whether 

State laws are sufficiently open-ended 

to call for application of a new NAAQS 

as a governing standard for PSD permits 

upon the effective date. EPA believes 

that State laws that use the same 

language as in EPA’s PSD program 

regulations at 52.21(k) and 51.166(k) are 

sufficiently open-ended and allow such 

a NAAQS to ‘‘take effect’’ through the 

PSD program upon the effective date of 

the NAAQS. Notwithstanding this 

complexity in SIP-approved programs, 

the applicability of the Federal PSD 

program regulations to a new NAAQS 

pollutant upon the effective date of the 

NAAQS is sufficient to determine that a 

new pollutant is subject to regulation on 

this date. 

In the October 7, 2009 notice, EPA 

observed that one portion of its existing 

regulations was not necessarily 

consistent with this reading of the CAA. 

For the first class of pollutants 

described in the definition of ‘‘regulated 

NSR pollutant,’’ the PSD requirements 

apply once a ‘‘standard has been 

promulgated’’ for a pollutant or its 

precursors. See 40 CFR 52.21(b)(50)(i). 

The use of ‘‘has been’’ in the regulation 

indicates that a pollutant becomes a 

‘‘regulated NSR pollutant,’’ and hence 

PSD requirements for the pollutant are 

triggered, on the date a NAAQS is 

promulgated. Thus, EPA observed in the 

October 7, 2009 notice that it may not 

be possible for EPA to read the 

regulatory language in this provision to 

make PSD applicable to a NAAQS 

pollutant upon the effective date of the 

NAAQS. EPA did not propose to modify 

the language in 40 CFR 52.21(b)(50)(i) in 

the October 2009 notice because EPA 

had not yet reached a final decision to 

interpret the CAA to mean that a 

pollutant is subject to regulation on the 

date a regulatory requirement becomes 

effective. Since EPA was not proposing 

to establish a NAAQS for any additional 

pollutants, the timing of PSD 

applicability for a newly identified 

NAAQS pollutant did not appear to be 

of concern at the time. No public 

comments on the October 2009 notice 

addressed this issue. Since EPA is now 

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adopting a variation of the proposed 

interpretation with respect to the timing 

of PSD applicability, EPA believes it 

will be appropriate to propose a revision 

of the regulatory language in section 

52.21(b)(50)(i) at such time as EPA may 

consider promulgation of a NAAQS for 

an additional pollutant. Until that time, 

EPA will continue to apply the terms of 

section 52.21(b)(50)(i) of the regulation. 

This is permissible because, even 

though EPA believes the better reading 

of the Act is to apply PSD upon the date 

that a control requirement ‘‘takes effect,’’ 

the Agency has not determined in this 

action that the CAA precludes applying 

PSD requirements upon the 

promulgation of a regulation that 

establishes a control requirement (as a 

NAAQS does through the PSD 

provisions). 

IV. Application of PSD Interpretive 

Memo to PSD Permitting for GHGs 

A. Date by Which GHGs Will Be ‘‘Subject 

to Regulation’’ 

Although the PSD Interpretive Memo 

and this reconsideration reflect a broad 

consideration of the most appropriate 

legal interpretation and policy for all 

pollutants regulated under the CAA, the 

need to clarify this issue as a general 

matter has been driven by concerns over 

the effects of GHG emissions on global 

climate and the contention made by 

some parties in permit proceedings that 

EPA began regulating CO2 as early as the 

promulgation of monitoring and 

reporting requirements in EPA’s Part 75 

rules to implement section 821 of the 

CAA Amendments of 1990. The vast 

majority of public comments on the 

October 7, 2009 notice focused on the 

regulation of GHGs under the PSD 

program. As a result, EPA recognizes 

that it is critically important at this time 

for the Agency to make clear when the 

requirements of the PSD permitting 

program for stationary sources will 

apply to GHGs. For the reasons 

discussed below, GHGs will initially 

become ‘‘subject to regulation’’ under the 

CAA on January 2, 2011, assuming that 

EPA issues final GHG emissions 

standards under section 202(a) 

applicable to model year 2012 new 

motor vehicles as proposed. As a result, 

with that assumption, the PSD 

permitting program would apply to 

GHGs on that date. However, the 

Tailoring Rule, noted above, proposed 

various options for phasing in PSD 

requirements for sources emitting GHGs 

in various amounts above 100 or 250 

tons per year. Since EPA has not yet 

completed that rulemaking, today’s 

action concludes only that, under the 

approach envisioned for the vehicle 

standards, GHGs would not be 

considered ‘‘subject to regulation’’ (and 

no source would be subject to PSD 

permitting requirements for GHGs) 

earlier than January 2, 2011. The final 

Tailoring Rule will address the 

applicability of PSD requirements for 

GHG-emitting sources that are not 

presently subject to PSD permitting. 

EPA’s determination that PSD will 

begin to apply to GHGs on January 2, 

2011 is based on the following 

considerations: (1) The overall 

interpretation reflected in the PSD 

Interpretive Memo; (2) EPA’s conclusion 

in this notice that a pollutant becomes 

subject to regulation when controls 

‘‘take effect,’’ and (3) the assumption that 

the agency will establish emissions 

standards for model year 2012 vehicles 

when it completes the proposed LDV 

Rule. 

As proposed, the LDV Rule consists of 

two kinds of standards—fleet average 

standards determined by the emissions 

performance of a manufacturer’s fleet of 

various models, and separate vehicle 

standards that apply for the useful life 

of a vehicle to the various models that 

make up the manufacturer’s fleet. CAA 

section 203(a)(1) prohibits 

manufacturers from introducing a new 

motor vehicle into commerce unless the 

vehicle is covered by an EPA-issued 

certificate of conformity for the 

appropriate model year. Section 

206(a)(1) of the CAA describes the 

requirements for EPA issuance of a 

certificate of conformity, based on a 

demonstration of compliance with the 

emission standards established by EPA 

under section 202 of the Act. A 

certification demonstration requires 

emission testing, and must be done for 

each model year. 

The certificate covers both fleet 

average and vehicle standards, and the 

manufacturer has to demonstrate 

compliance with both of these standards 

for purposes of receiving a certificate of 

conformity. The demonstration for the 

fleet average is based on a projection of 

sales for the model year, and the 

demonstration for the vehicle standard 

is based on emissions testing and other 

information. 

Both the fleet average and vehicle 

standards in the LDV Rule will require 

that automakers control or limit GHG 

emissions from the tailpipes of these 

vehicles. As such, they clearly 

constitute ‘‘regulation’’ of GHGs under 

the interpretation in the PSD 

Interpretive Memo. This view is 

consistent with the position originally 

expressed by EPA in 1978 that a 

pollutant regulated in a Title II 

regulation is a pollutant subject to 

regulation. See 42 FR at 57481. 

However, the regulation of GHGs will 

not actually take effect upon 

promulgation of the LDV Rule or on the 

effective date of the LDV Rule when the 

provisions of the rule are incorporated 

into the Code of Federal Regulations. 

Under the LDV Rule, the standards for 

GHG emissions are not operative until 

the 2012 model year, which may begin 

as early as January 2, 2011. In 

accordance with the requirements of 

Title II of the CAA and associated 

regulations, vehicle manufacturers may 

not introduce a model year 2012 vehicle 

into commerce without a model year 

2012 certificate of conformity. See CAA 

section 203(a)(1). A model year 2012 

certificate only applies to vehicles 

produced during that model year, and 

the model year production period may 

begin no earlier than January 2, 2011. 

See CAA section 202(b)(3)(A) and 

implementing regulations at 40 CFR 

85.2302 through 85.2305. Thus, a 

vehicle manufacturer may not introduce 

a model year 2012 vehicle into 

commerce prior to January 2, 2011. 

There will be no controls or 

limitations on GHG emissions from 

model year 2011 vehicles. The 

obligation on an automaker for a model 

year 2012 vehicle would be to have a 

certificate of conformity showing 

compliance with the emissions 

standards for GHGs when the vehicle is 

introduced into commerce, which can 

occur on or after January 2, 2011. 

Therefore, the controls on GHG 

emissions in the Light Duty Rule will 

not take effect until the first date when 

a 2012 model year vehicle may be 

introduced into commerce. In other 

words, the compliance obligation under 

the LDV Rule does not occur until a 

manufacturer may introduce into 

commerce vehicles that are required to 

comply with GHG standards, which will 

begin with MY 2012 and will not occur 

before January 2, 2011. Since CAA 

section 203(a)(1) prohibits 

manufacturers from introducing a new 

motor vehicle into commerce unless the 

vehicle is covered by an EPA-issued 

certificate of conformity for the 

appropriate model year, as of January 2, 

2011, manufacturers will be precluded 

from introducing into commerce any 

model year 2012 vehicle that has not 

been certified to meet the applicable 

standards for GHGs. 

This interpretation of when the GHG 

controls in the LDV Rule take effect, and 

therefore, make GHGs subject to 

regulation under the Act for PSD 

purposes, is consistent with the 

statutory language in section 202(a)(2) of 

the CAA. This section provides that 

‘‘any regulation prescribed under 

paragraph (1) of this subsection (and 

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any revision thereof) shall take effect 

after such period as the Administrator 

finds necessary to permit the 

development and application of the 

requisite technology, giving appropriate 

consideration to the cost of compliance 

within such period.’’ See 42 U.S.C. 

7521(a)(2) (emphasis added). The final 

LDV Rule will apply to model years 

2012 through 2016. The time leading up 

to the introduction of model year 2012 

is the time that EPA ‘‘finds necessary to 

permit the development and application 

of the requisite technology, giving 

appropriate consideration to the cost of 

compliance within such period.’’ Model 

year 2012 is therefore when the GHG 

standards in the rule ‘‘take effect.’’ 

EPA does not agree with several 

commenters who have suggested that 

the GHG standards in the proposed LDV 

Rule would not take effect until October 

1, 2011. The latter date appears to be 

based on how the National Highway 

Traffic Safety Administration (NHTSA) 

determines the beginning of the 2012 

model year under the Energy Policy and 

Conservation Act (EPCA). Under EPCA, 

a more stringent CAFE standard must be 

prescribed by NHTSA at least 18 

months before the beginning of the 

model year. For purposes of this EPCA 

provision, NHTSA has historically 

construed the beginning of the model 

year to be October 1 of the preceding 

calendar year. See 49 U.S.C. 32902(g)(2); 

74 FR 49454, 49644 n.447 (Sep. 28, 

2009). Although EPA has endeavored to 

harmonize its section 202(a) standards 

with the NHTSA CAFE standards, EPA’s 

standards are promulgated under 

distinct legal authority in the CAA. 

Thus, the section 202(a) standards 

promulgated in the LDV Rule are not 

subject to EPCA or NHTSA’s 

interpretation of when a model year 

begins for purposes of EPCA. Under 

EPA’s planned LDV Rule, model year 

2012 vehicles may be introduced into 

commerce as early as January 2, 2011. 

Although as a practical matter, some 

U.S. automakers may not begin 

introducing model year 2012 vehicles 

into commerce until later in 2011, they 

may nevertheless do so as early as 

January 2, 2011 under EPA’s 

regulations. Consistent with the 

discussion above, EPA construes the 

phrase ‘‘subject to regulation’’ in section 

165(a)(4) and 169(3) of the Act to mean 

that the BACT requirement applies 

when controls on a pollutant first apply 

to a regulated activity, and not the point 

at which an entity first engages in the 

regulated activity. In this instance, the 

regulated activity is the introduction of 

model year 2012 vehicles into 

commerce. As of January 2, 2011, a 

manufacturer may not engage in this 

activity without complying with the 

applicable GHG standards. 

Likewise, EPA does not agree with 

commenters who argued that EPA 

should not consider the GHG controls in 

the LDV Rule to take effect until 

automakers have to demonstrate 

compliance with the fleet average 

standards at the end of the model year, 

based on actual vehicle model 

production. As discussed above, the 

LDV Rule includes both fleet average 

standards and vehicle standards that 

apply to individual vehicles throughout 

their useful lives. As discussed above, 

both of these standards for GHG 

emissions are operative on model year 

2012 vehicles introduced into 

commerce on or after January 2, 2011. 

Thus, controls on GHG emissions from 

automobiles will take effect prior to the 

date that a manufacturer must 

demonstrate compliance with the fleet 

average standards. The fact that the 

manufacturer demonstrates final 

compliance with the fleet average at a 

later date, based on production for the 

entire year, does not change the fact that 

their conduct was controlled by both the 

fleet average and the vehicle standards, 

and subject to regulation, prior to that 

date. 

B. Implementation Concerns 

A substantial number of commenters 

requested that EPA defer application of 

the PSD program requirements to GHGs 

based on various practical 

implementation considerations, and 

several of these comments argued that 

the CAA affords EPA the discretion to 

set an implementation date based on 

such concerns. EPA agrees that 

application of PSD program 

requirements to GHGs presents several 

significant implementation challenges 

for EPA, States and other entities that 

issue permits, and the sources that must 

obtain permits. Indeed, many of the 

public comments have illustrated the 

magnitude of the challenge beyond what 

is described in the proposed notice on 

reconsideration of the PSD Interpretive 

Memo and the proposed Tailoring Rule. 

In recognition of the substantial 

challenges associated with 

incorporating GHGs into the PSD 

program, EPA’s preference would be to 

establish a specific date when the PSD 

permitting requirements initially apply 

to GHGs based solely on these practical 

implementation considerations. 

However, EPA has not been persuaded 

that it has the authority to proceed in 

this manner. While EPA may have 

discretion as to the manner and time for 

regulating GHG emissions under the 

CAA, once EPA has determined to 

regulate a pollutant in some form under 

the Act and such regulation is operative 

on the regulated activity, the terms of 

the Act make clear that the PSD program 

is automatically applicable. 

Nonetheless, given the substantial 

magnitude of the PSD implementation 

challenges presented by the regulation 

of GHGs, EPA proposed in the Tailoring 

Rule to at least temporarily limit the 

scope of GHG sources covered by the 

PSD program to ensure that permitting 

authorities can effectively implement it. 

EPA based the proposal primarily on 

two legal doctrines: The ‘‘absurd results’’ 

doctrine, which EPA proposed to apply 

on the basis that Congress did not 

envision that the PSD program would 

apply to the many small sources that 

emit GHGs; and the ‘‘administrative 

necessity’’ doctrine, which EPA 

proposed to apply because of the 

extremely large administrative burdens 

that permitting authorities would 

confront in permitting the GHG sources. 

In comment on that action, as well as in 

comments on the PSD Interpretive 

Memo reconsideration proposal, EPA 

received numerous suggestions that it is 

necessary to limit the scope of sources 

covered at the time GHGs become 

subject to regulation. Commenters 

further stated that it is necessary to 

select a ‘‘trigger date’’ for GHG 

permitting that takes into account the 

time needed for permitting authorities 

to adopt any scope-limiting measures 

(including the need to amend State law), 

to secure the necessary additional 

financial and other resources, and to 

hire and train the staff needed to 

respond to the increase in permitting 

workload. These comments make clear 

that more time will be needed beyond 

January 2, 2011 before permitting of 

many GHG stationary sources can begin. 

Thus, EPA will be taking additional 

action in the near future in the context 

of the Tailoring Rule to address GHGspecific circumstances that will exist 

beyond January 2, 2011. 

C. Interim EPA Policy To Mitigate 

Concerns Regarding GHG Emissions 

From Construction or Modification of 

Large Stationary Sources 

While EPA has concluded that GHGs 

will not become subject to regulation 

(and hence the PSD BACT requirement 

will not apply to them) earlier than 

January 2, 2011, permitting authorities 

that issue permits before January 2, 2011 

are already in a position to, and should, 

use the discretion currently available 

under the BACT provisions of the PSD 

program to promote technology choices 

for control of criteria pollutants that will 

also facilitate the reduction of GHG 

emissions. More specifically, the CAA 

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14The increments for emissions of the various 

oxides of nitrogen are expressed as concentrations 

of nitrogen dioxide (NO2). 

BACT definition requires permitting 

authorities selecting BACT to consider 

the reductions available through 

application of not only control methods, 

systems, and techniques, but also 

through production processes, and 

requires them to take into account 

energy, environmental, and economic 

impacts. Thus, the statute expresses the 

need for a comprehensive review of 

available pollution control methods 

when evaluating BACT that clearly 

requires consideration of energy 

efficiency. The consideration of energy 

efficiency is important because it 

contributes to reduction of pollutants to 

which the PSD requirements currently 

apply and have historically been 

applied. Further, although BACT does 

not now apply to GHG, BACT for other 

pollutants can, through application of 

more efficient production processes, 

indirectly result in lower GHG 

emissions. 

Neither the statute nor EPA 

regulations specify precisely how to 

address energy efficiency in BACT 

determinations, nor has EPA fully 

articulated how to take climate 

considerations into account under the 

‘‘energy, environmental, and economic 

impacts’’ considerations of BACT. 

Further, while EPA’s BACT guidance for 

currently regulated pollutants has 

addressed some facets of these issues, 

EPA believes that, given the potential 

importance of the indirect GHG benefits, 

it will be useful for EPA to summarize 

this guidance and further clarify it as 

necessary in order to further illustrate 

where PSD permitting authorities 

should be using existing BACT 

authority for pollutants that are 

presently regulated in ways that can 

indirectly address concerns about GHG 

emissions from large stationary sources. 

EPA is developing such guidance and 

plans to issue it in the near future. 

D. Transition for Pending Permit 

Applications 

Some commenters requested that EPA 

address the question of how the 

application of PSD requirements to 

GHGs will affect applications for PSD 

permits that are pending on the date 

GHGs initially become ‘‘subject to 

regulation.’’ These commenters 

generally asked that EPA establish an 

exclusion for any PSD permit 

application that was submitted in 

complete form before the date on which 

PSD begins to apply to GHGs. 

In light of EPA’s conclusion that 

pollutants become subject to regulation 

for PSD purposes when control 

requirements on that pollutant take 

effect and that such requirements will 

not take effect for GHGs until January 2, 

2011 if EPA finalizes the proposed LDV 

Rule as anticipated, EPA does not see 

any grounds to establish a transition 

period for permit applications that are 

pending before GHGs become subject to 

regulation. As a general matter, 

permitting and licensing decisions of 

regulatory agencies must reflect the law 

in effect at the time the agency makes 

a final determination on a pending 

application. See Ziffrin v. United States, 

318 U.S. 73, 78 (1943); State of Alabama 

v. EPA, 557 F.2d 1101, 1110 (5th Cir. 

1977); In re: Dominion Energy Brayton 

Point, LLC, 12 E.A.D. 490, 614–616 

(EAB 2006); In re Phelps Dodge Corp., 

10 E.A.D. 460, 478 n.10 (EAB 2002). 

Thus, in the absence of an explicit 

transition or grandfathering provision in 

the applicable regulations (and 

assuming EPA finalizes the LDV Rule as 

planned), each PSD permit issued on or 

after January 2, 2011 would need to 

contain provisions that satisfy the PSD 

requirements that will apply to GHGs as 

of that date. 

Under certain circumstances, EPA has 

previously allowed proposed new major 

sources and major modifications that 

have submitted a complete PSD permit 

application before a new requirement 

becomes applicable under PSD 

regulations, but have not yet received a 

final and effective PSD permit, to 

continue relying on information already 

in the application rather than 

immediately having to amend 

applications to demonstrate compliance 

with the new PSD requirements. In such 

a way, these proposed sources and 

modifications were ‘‘grandfathered’’ or 

exempted from the new PSD 

requirements that would otherwise have 

applied to them. 

For example, EPA adopted a 

grandfathering provision when it 

changed the indicator for the particulate 

matter NAAQS from total suspended 

particulate matter (TSP) to particulate 

matter less than 10 microns (PM10). The 

Federal PSD regulations at 40 CFR 

52.21(i)(1)(x) provide that the owners or 

operators of proposed sources or 

modifications that submitted a complete 

permit application before July 31, 1987, 

but did not yet receive the PSD permit, 

are not required to meet the 

requirements for PM10, but could 

instead satisfy the requirements for TSP 

that were previously in effect. 

In addition, EPA has allowed some 

grandfathering for permit applications 

submitted before the effective date of an 

amendment to the PSD regulations 

establishing new maximum allowable 

increases in pollutant concentrations 

(also known as PSD ‘‘increments’’). The 

Federal PSD regulations at 40 CFR 

52.21(i)(10) provide that proposed 

sources or modifications that submitted 

a complete permit application before the 

effective date of the increment in the 

applicable implementation plan are not 

required to meet the increment 

requirements for PM10, but could 

instead satisfy the increment 

requirements for TSP that were 

previously in effect. Also, 40 CFR 

52.21(i)(9) provides that sources or 

modifications that submitted a complete 

permit application before the provisions 

embodying the maximum allowable 

increase for nitrogen oxides (NOX) 14

took effect, but did not yet receive a 

final and effective PSD permit, are not 

required to demonstrate compliance 

with the new increment requirements to 

be eligible to receive the permit. 

Under the particular circumstances 

presented by the forthcoming 

application of PSD requirements to 

GHGs, EPA does not see a justification 

for adopting an explicit grandfathering 

provision of the nature described above. 

Permit applications submitted prior to 

the publication of this notice should in 

most cases be issued prior to January 2, 

2011 and, thus, effectively have a 

transition period of nine months to 

complete processing before PSD 

requirements become applicable. 

Additional time for completion of action 

on applications submitted prior to the 

onset of PSD requirements for GHGs 

therefore does not appear warranted to 

ensure a smooth transition and avoid 

delays for pending applications. To the 

extent any pending permit review 

cannot otherwise be completed within 

the next nine months based on the 

requirements for pollutants other than 

GHGs, it should be feasible for 

permitting authorities to begin 

incorporating GHG considerations into 

permit reviews in parallel with the 

completion of work on other pollutants 

without adding any additional delay to 

permit processing. 

Furthermore, the circumstances 

surrounding the onset of requirements 

for GHGs are distinguishable from prior 

situations where EPA has allowed 

grandfathering of applications that were 

deemed complete prior to the 

applicability new PSD permitting 

requirements. First, this action and the 

PSD Interpretive Memo do not involve 

a revision of the PSD permitting 

regulations but rather involves 

clarifications of how EPA interprets the 

existing regulatory text. This action 

articulates what has, in most respects, 

been EPA’s longstanding practice. It has 

been EPA’s consistent position since 

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1978 that regulation of a pollutant under 

Title II triggers PSD requirements for 

such a pollutant. See 42 FR 57481. 

Thus, permitting authorities and permit 

applicants could reasonably anticipate 

that completion of the LDV Rule would 

trigger PSD and prepare for this action. 

Many commenters interpreted EPA’s 

October 7, 2009 notice as proposing to 

trigger PSD requirements within 60 days 

of the promulgation of the LDV Rule 

rather than the January 2, 2011 date that 

EPA has determined to be the date the 

controls in that rule take effect. Second, 

there are presently no regulatory 

requirements in effect for GHGs. On the 

other hand, at the time EPA moved from 

using TSP to using PM10 as the 

indicator for the particulate matter 

NAAQS, grandfathered sources were 

still required to satisfy PSD 

requirements for particulate matter 

based on the TSP indicator. Likewise, 

when EPA later updated the PSD 

increment for particulate matter to use 

the PM10 indicator, the grandfathered 

sources were still required to 

demonstrate that they would not cause 

or contribute to a violation of the 

particulate matter increment based on 

TSP. In the case of the adoption of the 

NO2 increment, grandfathered sources 

were still required to demonstrate that 

they would not cause or contribute to a 

violation of the NO2 NAAQS. In 

contrast, for GHGs, there are no 

measures currently in effect that serve to 

limit emission of GHGs from stationary 

sources. 

For these reasons, EPA does not 

intend to promulgate a transition or 

grandfathering provision that exempts 

pending permit applications from the 

onset of GHG requirements in the PSD 

program. As discussed above, in the 

absence of such a provision, PSD 

permits that are issued on or after 

January 2, 2011 (in accordance with 

limitations promulgated in the 

upcoming Tailoring Rule) will be 

required to contain provisions that 

fulfill the applicable program 

requirements for GHGs. 

V. PSD Program Implementation by 

EPA and States 

Consistent with the PSD Interpretive 

Memo, the refined interpretation 

reflected in this notice (that a pollutant 

subject to actual control becomes 

subject to regulation at the time such 

controls take effect) is an interpretation 

of the language in 40 CFR 52.21(b)(50) 

of EPA’s regulations. EPA will apply the 

PSD Interpretive Memo, with the 

refinement described above, when 

implementing the Federal permitting 

program under 40 CFR 52.21. 

Furthermore, EPA will expect that 

States that implement the Federal PSD 

permit program under delegation from 

an EPA Regional Office will do the 

same. 

In addition, EPA will apply the 

interpretation reflected in this notice 

and the PSD Interpretive Memo in its 

oversight of existing State programs and 

review and approval of new program 

submissions. Many States implement 

the PSD program pursuant to State laws 

that have been approved by EPA as part 

of the SIP, pursuant to a determination 

by EPA that such laws meet the PSD 

program criteria set forth in 40 CFR 

51.166. The EPA regulation setting forth 

PSD program requirements for SIPs also 

includes the same definition of the term 

‘‘regulated NSR pollutant’’ as the Federal 

program regulation. See 40 CFR 

51.166(b)(49). Because this regulation 

uses the same language as contained in 

40 CFR 52.21 and the same 

considerations apply to implementation 

of the PSD program under State laws, 

EPA will interpret section 51.166(b)(49) 

in the same manner as section 

52.21(b)(50). However, in doing so, EPA 

will be mindful that permitting 

authorities in SIP-approved States have 

some independent discretion to 

interpret State laws, provided those 

interpretations are consistent with 

minimum requirements under the 

Federal law. 

To the extent approved SIPs contain 

the same language as used in 40 CFR 

52.21(b)(50) or 40 CFR 51.166(b)(49), 

SIP-approved State permitting 

authorities may interpret that language 

in State regulations in the same manner 

reflected in the PSD Interpretive Memo 

and this notice. However, EPA will not 

seek to preclude actions to address 

GHGs in PSD permitting actions prior to 

January 2, 2011 where a State permitting 

authority feels it has the necessary legal 

foundation and resources to do so. 

EPA has not called on any States to 

make a SIP submission that addresses 

the interpretive issues addressed in this 

notice and the PSD Interpretive Memo. 

As long as States are applying their 

approved program regulations 

consistent with the minimum program 

elements established in 40 CFR 51.166, 

EPA does not believe it will be 

necessary to issue a SIP call for all 

States to address this issue. However, 

permitting authorities in SIP-approved 

States do not have the discretion to 

apply State laws in a manner that does 

not meet the minimum Federal 

standards in 40 CFR 51.166, as 

interpreted and applied by EPA. Thus, 

if a State is not applying the PSD 

requirements to GHGs for the required 

sources after January 2, 2011, or lacks 

the legal authority to do so, EPA will 

exercise its oversight authority as 

appropriate to call for revisions to SIPs 

and to otherwise ensure sources do not 

commence construction without permits 

that satisfy the minimum requirements 

of the Federal PSD program. 

To enable EPA to assess the 

consistency of a State’s action with any 

PSD program requirements for GHGs, 

States should ensure that the record for 

each PSD-permitting decision addresses 

whether the State has elected to follow 

EPA’s interpretation or believes it is 

appropriate to apply a different 

interpretation of State laws that is 

nonetheless consistent with the 

requirements of EPA’s PSD program 

regulations. In light of additional 

actions to be taken by EPA in the 

Tailoring Rule, States that issue permits 

in the near term may want to preserve 

the discretion to modify their approach 

after other EPA actions are finalized. In 

light of this contingency, one option 

States may consider is to establish that 

the State will not interpret its laws to 

require PSD permits for sources that are 

not required to obtain PSD permits 

under EPA regulations. 

VI. Application of the Title V Program 

to Sources of GHGs 

Although the PSD Interpretive 

Memorandum and the October 7, 2009 

proposed reconsideration notice 

addressed only PSD permitting issues, 

EPA received several comments on the 

proposed reconsideration that also 

addressed the application of Title V 

permitting requirements to GHGs. Most 

of these comments urged EPA to apply 

the same approach for determining 

major source applicability for Title V 

permitting that EPA applies to PSD. 

EPA has in fact been following the PSD 

approach in many respects. As with the 

PSD program, currently GHGs are not 

considered to be subject to regulation 

and have not been considered to trigger 

applicability under Title V. EPA 

discussed this in the preamble to the 

proposed Tailoring Rule as described 

below. See 74 FR at 55300 n.8. 

Title V requires, among other things, 

that any ‘‘major source’’—defined, as 

relevant here, under CAA sections 302(j) 

and 501(2)(b), as ‘‘any stationary facility 

or source of air pollutants which 

directly emits, or has the potential to 

emit, one hundred tons per year or more 

of any air pollutant * * *’’—apply for a 

Title V permit. EPA interprets this 

requirement to apply to sources of 

pollutants ‘‘subject to regulation’’ under 

the Act. EPA previously articulated its 

interpretation that this Title V 

permitting requirement applies to 

‘‘pollutants subject to regulation’’ in a 

1993 memorandum from EPA’s air 

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15The preamble to the proposed Tailoring Rule 

implicitly assumed that a pollutant will become 

‘‘subject to regulation’’ for PSD and Title V at the 

same time (and, in one case, suggests that time will 

be on promulgation of the LDV Rule). The latter 

statement was based on the interpretation in the 

current PSD Interpretive Memorandum, but failed 

to note that EPA had proposed to change that 

interpretation in the October 7, 2009 notice (signed 

the same day as the proposed Tailoring Rule). See 

74 FR at 55300 and 55340–41. 

16Wegman Memo at 5. 

17This date is also when EPA expects the first 

CAA control program addressing GHGs at stationary 

sources (i.e., the PSD program) to be in place. 

program. Memorandum from Lydia N. 

Wegman, Deputy Director, Office of Air 

Quality Planning and Standards, U.S. 

EPA, ‘‘Definition of Regulated Air 

Pollutant for Purposes of Title V’’ (Apr. 

26, 1993) (‘‘Wegman Memo’’). EPA 

continues to maintain this 

interpretation. The interpretation in this 

memorandum was based on: (1) EPA’s 

reading of the definitional chain for 

‘‘major source’’ under Title V, including 

the definition of ‘‘air pollutant’’ under 

section 302(g) and the definition of 

‘‘major source’’ under 302(j); (2) the view 

that Congress did not intend to require 

a variety of sources to obtain Title V 

permits if they are not otherwise 

regulated under the Act (see also CAA 

section 504(a), providing that Title V 

permits are to include and assure 

compliance with applicable 

requirements under the Act); and (3) 

consistency with the approach under 

the PSD program. While the specific 

narrow interpretation in the Wegman 

Memo of the definition of ‘‘air pollutant’’ 

in CAA section 302(g) is in question in 

light of Massachusetts (finding this 

definition to be ‘‘sweeping’’), EPA 

believes the core rationale for its 

interpretation of the applicability of 

Title V remains sound. EPA continues 

to maintain its interpretation, consistent 

with CAA sections 302(j), 501, 502 and 

504(a), that the provisions governing 

Title V applicability for ‘‘a major 

stationary source’’ can only be triggered 

by emissions of pollutants subject to 

regulation. This interpretation is based 

primarily on the purpose of Title V to 

collect all regulatory requirements 

applicable to a source and to assure 

compliance with such requirements— 

see, e.g., CAA section 504(a)—and on 

the desire to promote consistency with 

the approach under the PSD program. 

In applying this interpretation under 

Title V, the Wegman Memo also 

explains that EPA does not consider 

CO2 to be a pollutant subject to 

regulation based on the monitoring and 

reporting requirements of section 821 of 

the Clean Air Act Amendments of 1990. 

As articulated in numerous orders 

issued by EPA in response to petitions 

to object to Title V permits, EPA views 

the Title V operating permits program as 

a vehicle for ensuring that air quality 

control requirements are appropriately 

applied to facility emission units and 

that compliance with these 

requirements is assured. See, e.g., In the 

Matter of Fort James Camas Mill, 

Petition No. X–1999–1 at 3–4 (Dec. 22, 

2000); In the Matter of Cash Creek 

Generation, LLC, Petition Nos. IV–2008– 

1 & IV–2008–2 at 2 (Dec. 15, 2009). The 

Wegman Memo points out that section 

821 involves reporting and study of 

emissions, but is not related to actual 

control of emissions. Since the reporting 

requirements of section 821 have no 

connection to existing air quality 

control requirements, it is appropriate 

not to treat them as making CO2 ‘‘subject 

to regulation’’ for purposes of Title V. Cf. 

Section 504(b) (providing EPA authority 

to specify requirements for ‘‘monitoring 

and analysis of pollutants regulated 

under this Act.’’). 

EPA has not previously explicitly 

considered the question of when a 

pollutant becomes ‘‘subject to 

regulation’’ under this established 

interpretation of the Title V 

requirements.15 EPA received comments 

in this reconsideration proceeding 

specifically on the question of when a 

pollutant becomes subject to regulation 

for purposes of Title V. In light of these 

comments, and the decision to adopt a 

‘‘takes effect’’ approach for PSD, EPA 

believes it is appropriate to address this 

issue for Title V with respect to GHG. 

EPA is mindful of the different 

purposes for the PSD and Title V 

programs under the statute. While PSD 

results in substantive control 

requirements as necessary to meet air 

quality goals, Title V is focused on 

identifying, collecting, and assuring 

compliance with other Act requirements 

(including PSD), and generally does not 

itself result in new control 

requirements. Nevertheless, as reflected 

in the Wegman Memo, the two programs 

have historically followed the same 

approach for determining when a 

pollutant is ‘‘subject to regulation.’’ 16

EPA believes that a ‘‘takes effect’’ 

approach to the triggering of new 

pollutants is desirable and appropriate 

for Title V, for many of the reasons 

described above for PSD. EPA is 

therefore generally inclined to follow 

the approach adopted today for PSD, 

and concludes that GHGs are ‘‘subject to 

regulation,’’ for purposes of determining 

whether a source of GHGs is a ‘‘major 

source’’ for Title V, no earlier than the 

date on which a control requirement for 

GHGs ‘‘takes effect.’’ EPA currently 

anticipates that the LDV Rule will be the 

first control requirement for GHGs to 

take effect. Under this approach, as with 

PSD, if the LDV Rule takes effect as of 

January 2, 2011, a source that is not 

currently subject to Title V for its GHG 

emissions could become so no earlier 

than January 2, 2011.17

Finally, as with PSD, EPA expects 

that, beyond January 2, 2011, there will 

remain significant administrative and 

programmatic considerations associated 

with permitting of GHGs under Title V. 

In light of this, as discussed above with 

regard to PSD permitting, EPA will be 

further addressing in the final Tailoring 

Rule (to be promulgated in the near 

future) the manner in which sources can 

become subject to Title V as a result of 

their GHG emissions. 

VII. Statutory Authority 

The statutory authority for this action 

is provided by section 553 of the 

Administrative Procedure Act (5 U.S.C. 

553) and the Clean Air Act (CAA), as 

amended (42 U.S.C. 7401 et seq.). 

Relevant portions of the CAA include, 

but are not necessarily limited to, 

sections 101, 165, 169, 301, 302, 307, 

501, 502, and 504 (42 U.S.C. 7401, 7475, 

7479, 7601, 7602, 7607, 7661, 7661a, 

and 7661d). 

VIII. Judicial Review 

This action is a nationally applicable 

final action under section 307(b) of the 

Act. As a result, any legal challenges to 

this action must be brought to the 

United States Court of Appeals for the 

District of Columbia Circuit by June 1, 

2010. 

Dated: March 29, 2010. 

Lisa P. Jackson, 

Administrator. 

[FR Doc. 2010–7536 Filed 4–1–10; 8:45 a.m.] 

BILLING CODE 6560–50–P 

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