Thursday, 

June 3, 2010 

Part II 

Environmental 

Protection Agency 

40 CFR Parts 51, 52, 70, et al. 

Prevention of Significant Deterioration 

and Title V Greenhouse Gas Tailoring 

Rule; Final Rule 

mstockstill on DSKH9S0YB1PROD with RULES2

31514 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Parts 51, 52, 70, and 71 

[EPA–HQ–OAR–2009–0517; FRL–9152–8] 

RIN 2060–AP86 

Prevention of Significant Deterioration 

and Title V Greenhouse Gas Tailoring 

Rule 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule. 

SUMMARY: EPA is tailoring the 

applicability criteria that determine 

which stationary sources and 

modification projects become subject to 

permitting requirements for greenhouse 

gas (GHG) emissions under the 

Prevention of Significant Deterioration 

(PSD) and title V programs of the Clean 

Air Act (CAA or Act). This rulemaking 

is necessary because without it PSD and 

title V requirements would apply, as of 

January 2, 2011, at the 100 or 250 tons 

per year (tpy) levels provided under the 

CAA, greatly increasing the number of 

required permits, imposing undue costs 

on small sources, overwhelming the 

resources of permitting authorities, and 

severely impairing the functioning of 

the programs. EPA is relieving these 

resource burdens by phasing in the 

applicability of these programs to GHG 

sources, starting with the largest GHG 

emitters. This rule establishes two 

initial steps of the phase-in. The rule 

also commits the agency to take certain 

actions on future steps addressing 

smaller sources, but excludes certain 

smaller sources from PSD and title V 

permitting for GHG emissions until at 

least April 30, 2016. 

DATES: This action is effective on 

August 2, 2010. 

ADDRESSES: EPA has established a 

docket for this rulemaking under Docket 

ID No. EPA–HQ–OAR–2009–0517. All 

documents in the docket are listed in 

the http://www.regulations.gov index. 

Although listed in the index, some 

information is not publicly available, 

e.g., Confidential Business Information 

or other information whose disclosure is 

restricted by statute. Certain other 

material, such as copyrighted material, 

is not placed on the Internet and will be 

publicly available only in hard copy. 

Publicly available docket materials are 

available either electronically in http:// 

www.regulations.gov or in hard copy at 

the EPA Docket Center EPA/DC, EPA 

West, Room 3334, 1301 Constitution 

Avenue, Northwest, Washington, DC. 

The Public Reading Room is open from 

8:30 a.m. to 4:30 p.m., Monday through 

Friday, excluding legal holidays. The 

telephone number for the Public 

Reading Room is (202) 566–1744, and 

the telephone number for the EPA 

Docket Center is (202) 566–1742. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Joseph Mangino, Air Quality Policy 

Division, Office of Air Quality Planning 

and Standards (C504–03), 

Environmental Protection Agency, 

Research Triangle Park, NC 27711; 

telephone number: (919) 541–9778; fax 

number: (919) 541–5509; e-mail address: 

mangino.joseph@epa.gov. 

SUPPLEMENTARY INFORMATION: 

I. General Information 

A. Does this action apply to me? 

Entities affected by this action include 

sources in all sectors of the economy, 

including commercial and residential 

sources. Entities potentially affected by 

this action also include States, local 

permitting authorities, and tribal 

authorities. The majority of categories 

and entities potentially affected by this 

action are expected to be in the 

following groups: 

Industry group NAICSa

Agriculture, fishing, and hunting ............................................................... 11. 

Mining ....................................................................................................... 21. 

Utilities (electric, natural gas, other systems) .......................................... 2211, 2212, 2213. 

Manufacturing (food, beverages, tobacco, textiles, leather) .................... 311, 312, 313, 314, 315, 316. 

Wood product, paper manufacturing ........................................................ 321, 322. 

Petroleum and coal products manufacturing ........................................... 32411, 32412, 32419. 

Chemical manufacturing ........................................................................... 3251, 3252, 3253, 3254, 3255, 3256, 3259. 

Rubber product manufacturing ................................................................. 3261, 3262. 

Miscellaneous chemical products ............................................................. 32552, 32592, 32591, 325182, 32551.

Nonmetallic mineral product manufacturing ............................................. 3271, 3272, 3273, 3274, 3279. 

Primary and fabricated metal manufacturing ........................................... 3311, 3312, 3313, 3314, 3315, 3321, 3322, 3323, 3324, 3325, 3326, 

3327, 3328, 3329. 

Machinery manufacturing ......................................................................... 3331, 3332, 3333, 3334, 3335, 3336, 3339. 

Computer and electronic products manufacturing ................................... 3341, 3342, 3343, 3344, 3345, 4446. 

Electrical equipment, appliance, and component manufacturing ............ 3351, 3352, 3353, 3359. 

Transportation equipment manufacturing ................................................. 3361, 3362, 3363, 3364, 3365, 3366, 3366, 3369. 

Furniture and related product manufacturing ........................................... 3371, 3372, 3379. 

Miscellaneous manufacturing ................................................................... 3391, 3399. 

Waste management and remediation ...................................................... 5622, 5629. 

Hospitals/Nursing and residential care facilities ....................................... 6221, 6231, 6232, 6233, 6239. 

Personal and laundry services ................................................................. 8122, 8123. 

Residential/private households ................................................................. 8141. 

Non-Residential (Commercial) ................................................................. Not available. Codes only exist for private households, construction, 

and leasing/sales industries. 

a North American Industry Classification System. 

B. How is this preamble organized? 

The information presented in this 

preamble is organized as follows: 

Outline 

I. General Information 

A. Does this action apply to me? 

B. How is this preamble organized? 

C. Preamble Acronyms and Abbreviations 

II. Overview of the Final Rule 

III. Background 

A. What are GHGs and their sources? 

B. Endangerment Finding and the LDVR 

1. Endangerment Finding 

2. Light-Duty Vehicle Rule 

C. What are the general requirements of the 

PSD program? 

1. Overview of the PSD Program 

2. General Requirements for PSD 

D. What are the general requirements of the 

Title V operating permits program? 

1. Overview of Title V 

2. Title V Permit Requirements 

E. The Interpretive Memo 

IV. Summary of Final Actions 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31515 

A. How do you define the GHG pollutant 

for PSD and Title V purposes? 

1. GHG Pollutant Defined as the Sum-ofSix Well-Mixed GHGs 

2. What GWP values should be used for 

calculating CO2e? 

B. When will PSD and Title V applicability 

begin for GHGs and emission sources? 

1. What are the Step 1 thresholds, timing, 

and calculation methodology? 

2. What are the Step 2 thresholds, timing, 

and calculation methodology? 

3. What about Step 3? 

4. What about the proposed 6-year 

exclusion for smaller sources? 

5. When and how will EPA take further 

action on smaller sources? 

C. How do state, local, and tribal area 

programs adopt the final GHG 

applicability thresholds? 

D. How do you treat GHGs for purposes of 

Title V permit fees? 

E. Other Actions and Issues 

1. Timing for Permit Streamlining 

Techniques 

2. Guidance for BACT Determinations 

3. Requests for Higher Category-Specific 

Thresholds and Exemptions From 

Applicability 

4. Transitional Issues Including Requests 

for Grandfathering 

V. What is the legal and policy rationale for 

the final actions? 

A. Rationale for Our Approach to 

Calculating GHG Emissions for PSD and 

Title V Applicability Purposes 

1. Grouping of GHGs Into a Single 

Pollutant 

2. Identifying Which GHGs Are Included in 

the Group 

3. Use of GWP vs. Mass-Based GHG 

Thresholds 

4. Determining What GWP Values Are To 

Be Used 

5. Use of Short Tons vs. Metric Tons 

B. Rationale for Thresholds and Timing for 

PSD and Title V Applicability to GHG 

Emissions Sources 

1. Overview 

2. Data Concerning Costs to Sources and 

Administrative Burdens to Permitting 

Authorities 

3. ‘‘Absurd Results,’’ ‘‘Administrative 

Necessity,’’ and ‘‘One-Step-at-a-Time’’ 

Legal Doctrines 

4. The PSD and Title V Programs 

5. Application of the ‘‘Absurd Results’’ 

Doctrine for the PSD Program 

6. Application of the ‘‘Absurd Results’’ 

Doctrine for the Title V Program 

7. Additional Rulemaking for the PSD and 

Title V Programs 

8. Rationale for the Phase-in Schedule for 

Applying PSD and Title V to GHG 

Sources 

9. ‘‘Administrative Necessity’’ Basis for PSD 

and Title V Requirements in Tailoring 

Rule 

10. ‘‘One-Step-at-a-Time’’ Basis for 

Tailoring Rule 

C. Mechanisms for Implementing and 

Adopting the Tailoring Approach 

1. PSD Approach: Background and 

Proposal 

2. Rationale for Our Final Approach to 

Implementing PSD 

3. Other Mechanisms 

4. Codification of Interpretive Memo 

5. Delaying Limited Approvals and Request 

for Submission of Information From 

States Implementing a SIP-Approved 

PSD Program 

6. Title V Programs 

D. Rationale for Treatment of GHGs for 

Title V Permit Fees 

E. Other Actions and Issues 

1. Permit Streamlining Techniques 

2. Guidance for BACT Determinations 

3. Requests for Higher Category-Specific 

Thresholds or Exemptions From 

Applicability 

4. Transitional Issues Including Requests 

for Grandfathering 

VI. What are the economic impacts of the 

final rule? 

A. What entities are affected by this final 

rule? 

B. What are the estimated annual benefits 

to sources due to regulatory relief from 

the statutory requirements? 

1. What are annual estimated benefits or 

avoided burden costs for title V permits? 

2. What are annual benefits or avoided 

costs associated with NSR permitting 

regulatory relief? 

C. What are the economic impacts of this 

rulemaking? 

D. What are the costs of the final rule for 

society? 

E. What are the net benefits of this final 

rule? 

VII. Comments on Statutory and Executive 

Order Reviews 

A. Comments on Executive Order 12866— 

Regulatory Planning and Review 

B. Comments on the Paperwork Reduction 

Act 

C. Comments on the RFA 

D. Comments on the Unfunded Mandates 

Reform Act 

E. Comments on Executive Order 13132— 

Federalism 

F. Comments on Executive Order 13175— 

Consultation and Coordination With 

Indian Tribal Governments 

G. Comments on Executive Order 13211— 

Actions That Significantly Affect Energy 

Supply, Distribution, or Use 

VIII. Statutory and Executive Order Reviews 

A. Executive Order 12866—Regulatory 

Planning and Review 

B. Paperwork Reduction Act 

C. Regulatory Flexibility Act 

D. Unfunded Mandates Reform Act 

E. Executive Order 13132—Federalism 

F. Executive Order 13175—Consultation 

and Coordination With Indian Tribal 

Governments 

G. Executive Order 13045—Protection of 

Children From Environmental Health 

and Safety Risks 

H. Executive Order 13211—Actions That 

Significantly Affect Energy Supply, 

Distribution, or Use 

I. National Technology Transfer and 

Advancement Act 

J. Executive Order 12898—Federal Actions 

To Address Environmental Justice in 

Minority Populations and Low-Income 

Populations 

K. Congressional Review Act 

L. Judicial Review 

IX. Statutory Authority 

C. Preamble Acronyms and 

Abbreviations 

The following are abbreviations of 

terms used in this preamble. 

ANPR Advance Notice of Proposed 

Rulemaking 

APA Administrative Procedure Act 

AQRVs Air Quality Related Values 

BACT Best Available Control Technology 

Btu British thermal units 

Btu/hr British thermal units per hour 

CAA or Act Clean Air Act 

CAAAC Clean Air Act Advisory Committee 

CAFE Corporate Average Fuel Economy 

CH4 Methane 

CO Carbon Monoxide 

CO2 Carbon Dioxide 

CO2e Carbon Dioxide Equivalent 

EPA U.S. Environmental Protection Agency 

FDA Food and Drug Administration 

FIP Federal Implementation Plan 

FTEs Full-Time Equivalents 

GHG Greenhouse Gas 

GHz Gigahertz 

GWP Global Warming Potential 

HAP Hazardous Air Pollutant 

HFCs Hydrofluorocarbons 

ICR Information Collection Request 

IPCC Intergovernmental Panel on Climate 

Change 

LDVR Light-Duty Vehicle Rule 

MACT Maximum Achievable Control 

Technology 

MCL Maximum Contaminant Level 

N2O Nitrous Oxide 

NAAQS National Ambient Air Quality 

Standard 

NHTSA National Highway Traffic Safety 

Administration 

NMOC Nonmethane Organic Compounds 

NOX Nitrogen Oxides 

NPDES National Pollutant Discharge 

Elimination System 

NSPS New Source Performance Standard 

NSR New Source Review 

NTAA National Tribal Air Association 

NTTAA National Technology Transfer and 

Advancement Act 

OMB Office of Management and Budget 

PFCs Perfluorocarbons 

PM Particulate Matter 

PSD Prevention of Significant Deterioration 

PTE Potential to Emit 

RFA Regulatory Flexibility Act 

RIA Regulatory Impact Analysis 

RTC Response to Comment 

SBA Small Business Administration 

SBAR Small Business Advocacy Review 

SBREFA Small Business Regulatory 

Enforcement Fairness Act 

SF6 Sulfur Hexafluoride 

SIP State Implementation Plan 

SNPR Supplemental Notice of Proposed 

Rulemaking 

TIP Tribal Implementation Plan 

TRS Total Reduced Sulfur 

TSD Technical Support Document 

tpy Tons Per Year 

UMRA Unfunded Mandates Reform Act 

UNFCCC United Nations Framework 

Convention on Climate Change 

VOC Volatile Organic Compound 

mstockstill on DSKH9S0YB1PROD with RULES2

31516 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

1Unless otherwise indicated, references in this 

preamble to ‘‘title V,’’ ‘‘title V requirements,’’ the 

‘‘title V program,’’ and similar references are to the 

operating permit provisions in CAA sections 501– 

506, and not the ‘‘small business stationary source 

technical and environmental compliance assistance 

program’’ under CAA section 507. 

2Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 

(1984). 

II. Overview of the Final Rule 

EPA is relieving overwhelming 

permitting burdens that would, in the 

absence of this rule, fall on permitting 

authorities and sources. We accomplish 

this by tailoring the applicability criteria 

that determine which GHG emission 

sources become subject to the PSD and 

title V programs 1 of the CAA. In 

particular, EPA is establishing with this 

rulemaking a phase-in approach for PSD 

and title V applicability, and is 

establishing the first two steps of the 

phase-in for the largest emitters of 

GHGs. We also commit to certain 

follow-up actions regarding future steps 

beyond the first two, discussed in more 

detail later. Our legal basis for this rule 

is our interpretation of the PSD and title 

V applicability provisions under the 

familiar Chevron 2 two-step framework 

for interpreting administrative statutes, 

taking account of three legal doctrines, 

both separately and interdependently: 

They are what we will call (1) The 

‘‘absurd results’’ doctrine, which 

authorizes agencies to apply statutory 

requirements differently than a literal 

reading would indicate, as necessary to 

effectuate congressional intent and 

avoid absurd results, (2) the 

‘‘administrative necessity’’ doctrine, 

which authorizes agencies to apply 

statutory requirements in a way that 

avoids impossible administrative 

burdens; and (3) the ‘‘one-step-at-a-time’’ 

doctrine, which authorizes agencies to 

implement statutory requirements a step 

at a time. This legal basis justifies each 

of the actions we take with this rule— 

e.g., each of the first two steps of the 

phase-in approach—both (1) as part of 

the overall tailoring approach, and (2) 

independently of each other action we 

take with this rule. EPA also has 

authority for this Tailoring Rule under 

CAA section 301(a)(1), which authorizes 

the Administrator ‘‘to prescribe such 

regulations as are necessary to carry out 

his functions under [the CAA].’’ 

For the first step of this Tailoring 

Rule, which will begin on January 2, 

2011, PSD or title V requirements will 

apply to sources’ GHG emissions only if 

the sources are subject to PSD or title V 

anyway due to their non-GHG 

pollutants. Therefore, EPA will not 

require sources or modifications to 

evaluate whether they are subject to 

PSD or title V requirements solely on 

account of their GHG emissions. 

Specifically, for PSD, Step 1 requires 

that as of January 2, 2011, the applicable 

requirements of PSD, most notably, the 

best available control technology 

(BACT) requirement, will apply to 

projects that increase net GHG 

emissions by at least 75,000 tpy carbon 

dioxide equivalent (CO2e), but only if 

the project also significantly increases 

emissions of at least one non-GHG 

pollutant. For the title V program, only 

existing sources with, or new sources 

obtaining, title V permits for non-GHG 

pollutants will be required to address 

GHGs during this first step. 

The second step of the Tailoring Rule, 

beginning on July 1, 2011, will phase in 

additional large sources of GHG 

emissions. New sources as well as 

existing sources not already subject to 

title V that emit, or have the potential 

to emit, at least 100,000 tpy CO2e will 

become subject to the PSD and title V 

requirements. In addition, sources that 

emit or have the potential to emit at 

least 100,000 tpy CO2e and that 

undertake a modification that increases 

net emissions of GHGs by at least 75,000 

tpy CO2e will also be subject to PSD 

requirements. For both steps, we also 

note that if sources or modifications 

exceed these CO2e-adjusted GHG 

triggers, they are not covered by 

permitting requirements unless their 

GHG emissions also exceed the 

corresponding mass-based triggers 

(i.e., unadjusted for CO2e.) 

EPA believes that the costs to the 

sources and the administrative burdens 

to the permitting authorities of PSD and 

title V permitting will be manageable at 

the levels in these initial two steps, and 

that it would be administratively 

infeasible to subject additional sources 

to PSD and title V requirements at those 

times. However, we also intend to issue 

a supplemental notice of proposed 

rulemaking (SNPR) in 2011, in which 

we will propose or solicit comment on 

a third step of the phase-in that would 

include more sources, beginning by July 

1, 2013. In the same rulemaking, we 

may propose or solicit comment on a 

permanent exclusion from permitting 

for some category of sources, based on 

the doctrine of ‘‘absurd results,’’ within 

the Chevron framework. We are 

establishing an enforceable commitment 

that we will complete this rulemaking 

by July 1, 2012, which will allow for 1 

year’s notice before Step 3 would take 

effect. 

In addition, we commit to explore 

streamlining techniques that may well 

make the permitting programs much 

more efficient to administer for GHGs, 

and that therefore may allow their 

expansion to smaller sources. We expect 

that the initial streamlining techniques 

will take several years to develop and 

implement. 

We are also including in this action a 

rule that no source with emissions 

below 50,000 tpy CO2e, and no 

modification resulting in net GHG 

increases of less than 50,000 tpy CO2e, 

will be subject to PSD or title V 

permitting before at least 6 years from 

now, April 30, 2016. This is because we 

are able to conclude at the present time 

that the administrative burdens that 

would accompany permitting sources 

below this level will be so great that 

even the streamlining actions that EPA 

may be able to develop and implement 

in the next several years, and even with 

the increases in permitting resources 

that we can reasonably expect the 

permitting authorities to acquire, it will 

be impossible to administer the permit 

programs for these sources until at least 

2016. 

Further, we are establishing an 

enforceable commitment that we will (1) 

Complete a study by April 30, 2015, to 

evaluate the status of PSD and title V 

permitting for GHG-emitting sources, 

including progress in developing 

streamlining techniques; and (2) 

complete further rulemaking based on 

that study by April 30, 2016, to address 

the permitting of smaller sources. That 

rulemaking may also consider 

additional permanent exclusions based 

on the ‘‘absurd results’’ doctrine, where 

applicable. 

This Tailoring Rulemaking is 

necessary because without it, PSD and 

title V would apply to all stationary 

sources that emit or have the potential 

to emit more than 100 or 250 tons of 

GHGs per year beginning on January 2, 

2011. This is the date when EPA’s 

recently promulgated Light-Duty 

Vehicle Rule (LDVR) takes effect, 

imposing control requirements for the 

first time on carbon dioxide (CO2) and 

other GHGs. If this January 2, 2011 date 

were to pass without this Tailoring Rule 

being in effect, PSD and title V 

requirements would apply at the 

100/250 tpy applicability levels 

provided under a literal reading of the 

CAA as of that date. From that point 

forward, a source owner proposing to 

construct any new major source that 

emits at or higher than the applicability 

levels (and which therefore may be 

referred to as a ‘‘major’’ source) or 

modify any existing major source in a 

way that would increase GHG emissions 

would need to obtain a permit under the 

PSD program that addresses these 

emissions before construction or 

modification could begin. Similarly, 

title V would apply to a new or existing 

source exceeding the 100 tpy 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31517 

3Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 

842–43 (1984). 

4 In this preamble and the response to comments 

document we fully address arguments that 

commenters and others have presented about 

congressional intent and coverage of GHGs. We do 

so to be fully responsive, even though we believe 

that this is a settled matter for which the time for 

judicial review has passed. 

applicability level in the Act, if the 

source did not already have a title V 

permit. 

Under these circumstances, many 

small sources would be burdened by the 

costs of the individualized PSD control 

technology requirements and permit 

applications that the PSD provisions, 

absent streamlining, require. 

Additionally, state and local permitting 

authorities would be burdened by the 

extraordinary number of these permit 

applications, which are orders of 

magnitude greater than the current 

inventory of permits and would vastly 

exceed the current administrative 

resources of the permitting authorities. 

Permit gridlock would result with the 

permitting authorities able to issue only 

a tiny fraction of the permits requested. 

These impacts—the costs to sources 

and administrative burdens to 

permitting authorities—that would 

result from application of the PSD and 

title V programs for GHG emissions at 

the statutory levels as of January 2, 

2011, are so severe that they bring the 

judicial doctrines of ‘‘absurd results,’’ 

‘‘administrative necessity,’’ and ‘‘onestep-at-a-time’’ into the Chevron twostep analytical framework for statutes 

administered by agencies. Under the 

U.S. Supreme Court’s decision in 

Chevron, the agency must, at Step 1, 

determine whether Congress’s intent as 

to the specific matter at issue is clear, 

and, if so, the agency must give effect 

to that intent.3 If congressional intent is 

not clear, then, at Step 2, the agency has 

discretion to fashion an interpretation 

that is a reasonable construction of the 

statute. 

To determine congressional intent, 

the agency must first consider the words 

of the statutory requirements, and if 

their literal meaning answers the 

question at hand, then, in most cases, 

the agency must implement those 

requirements by their terms. However, 

under the ‘‘absurd results’’ doctrine, the 

literal meaning of statutory 

requirements should not be considered 

to indicate congressional intent if that 

literal meaning would produce a result 

that is senseless or that is otherwise 

inconsistent with—and especially one 

that undermines—underlying 

congressional purpose. In these cases, if 

congressional intent for how the 

requirements apply to the question at 

hand is clear, the agency should 

implement the statutory requirements 

not in accordance with their literal 

meaning, but rather in a manner that 

most closely effectuates congressional 

intent. If congressional intent is not 

clear, then an agency may select an 

interpretation that is reasonable under 

the statute. 

Under the ‘‘administrative necessity’’ 

doctrine, Congress is presumed, at 

Chevron Step 1, to intend that its 

statutory directives to agencies be 

administrable, and not to have intended 

to have written statutory requirements 

that are impossible to administer. 

Therefore, under this doctrine, an 

agency may depart from statutory 

requirements that, by their terms, are 

impossible to administer, but the agency 

may depart no more than necessary to 

render the requirements administrable. 

Under the ‘‘one-step-at-a-time’’ doctrine, 

Congress is presumed at Chevron Step 1 

to have intended to allow the agency to 

administer the statutory requirements 

on a step-by-step basis, as appropriate, 

when the agency remains on track to 

implement the requirements as a whole. 

Each of these doctrines supports our 

action separately, but the three also are 

intertwined and support our action in a 

comprehensive manner. 

Here, we have determined, through 

analysis of burden and emissions data 

as well as consideration of extensive 

public comment, that the costs to 

sources and administrative burdens to 

permitting authorities that would result 

from application of the PSD and title V 

programs for GHG emissions at the 

statutory levels as of January 2, 2011 

should be considered ‘‘absurd results.’’ 

Therefore, we conclude that under the 

‘‘absurd results’’ doctrine, Congress 

could not have intended that the PSD or 

title V applicability provisions—in 

particular, the threshold levels and 

timing requirements—apply literally to 

GHG sources as of that date. 

Even so, the PSD and title V 

provisions and their legislative history 

do indicate a clear congressional intent, 

under Chevron Step 1, as to whether the 

two permitting programs applied to 

GHG sources, and that the intent was in 

the affirmative, that the permitting 

programs do apply to GHG sources. Our 

previous regulatory action defining the 

applicability provisions made this clear, 

and we do not reopen this issue in this 

rulemaking. Moreover, even if this longestablished regulatory position were not 

justifiable based on Chevron Step 1—on 

the grounds that in fact, congressional 

intent on this point is not clear—then 

we believe that this position, that the 

statutory provisions to apply PSD and 

title V generally to GHG sources, was 

justified under Chevron step 2.4

As to how to apply the PSD program 

to GHG sources, congressional intent, as 

expressed in the various statutory 

provisions and statements in the 

legislative history, is clear that PSD 

should apply at least to the largest 

sources initially, at least to as many 

more sources as possible and as 

promptly as possible over time— 

consistent with streamlining actions 

that we intend to consider coupled with 

increases in permitting authority 

resources—and at least to a certain 

point. This is the approach we take in 

this Tailoring Rule, and because it is 

consistent with congressional intent, we 

believe it is required under Chevron 

Step 1. Even if congressional intent 

were not clear as to how to apply the 

PSD requirements to GHG sources, we 

would have authority under Chevron 

Step 2 to establish a reasonable 

interpretation that is consistent with the 

PSD provisions, and we believe that the 

tailoring approach so qualifies. 

As for title V, the statutory provisions 

and legislative history, which of course 

are different than those concerning the 

PSD program, do not express a clear 

intent as to how title V applies to GHG 

sources, which leads our analysis to 

Chevron Step 2, and here, again, we 

believe that the tailoring approach is a 

reasonable interpretation that is 

consistent with the title V provisions. 

For both PSD and title V, we intend 

to use the tailoring approach to address 

smaller GHG sources over time, 

consistent with Congress’s expectations 

that the programs would not impose 

undue costs to sources or undue 

administrative burdens to permitting 

authorities. However, we cannot say at 

this point how close to the statutory 

thresholds we will eventually reach. 

Because this rule establishes only the 

first two phases of the tailoring 

approach, we do not find it necessary to 

answer these questions in this rule, and 

instead we expect to resolve them 

through future rulemaking. We will 

remain mindful of the concerns that 

Congress expressed about including 

small sources in either program. We 

intend to consider the issue of the 

applicability of title V to GHG sources 

without applicable requirements (i.e., 

‘‘empty permits’’) in future steps of our 

tailoring approach. When we do so, we 

will further assess the potential for the 

approach of excluding empty permits 

from title V to relieve burden consistent 

with statutory requirements. 

In addition, because Congress can be 

said to have intended the PSD and title 

mstockstill on DSKH9S0YB1PROD with RULES2

31518 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

5The term ‘‘greenhouse gases’’ is commonly used 

to refer generally to gases that have heat-trapping 

properties. However, in this notice, unless noted 

otherwise, we use it to refer to specifically to the 

pollutant regulated in the LDVR. 

6The relevant thresholds are 100 tpy for title V, 

and 250 tpy for PSD, except for 28 categories listed 

in EPA regulations for which the PSD threshold is 

100 tpy. 

V programs to apply to GHG sources, 

the Tailoring Rule is also justifiable 

under the ‘‘administrative necessity’’ 

and ‘‘one-step-at-a-time’’ doctrines. 

The legal analysis just described 

justifies each of the actions in this rule. 

The first two steps that we promulgate 

in this rule, which take effect on January 

2, 2011 and July 1, 2011, constitute the 

most that permitting authorities can 

reasonably be expected to do by those 

times. Similarly, the 50,000 tpy floor 

that we promulgate through at least 

April 30, 2016 is reasonable because the 

information we have available now 

shows that it constitutes the most that 

permitting authorities can reasonably be 

expected to do by that date. Finally, the 

study and two additional rulemakings— 

to take effect by July 1, 2013 and April 

30, 2016—to which we commit in this 

rule establish a track for acquiring 

additional information and for taking 

further steps to address the application 

of PSD and title V more closely to the 

literal statutory levels. We intend to 

apply them as closely to those levels as 

is consistent with congressional intent 

and administrative imperatives, in light 

of the ‘‘absurd results,’’ ‘‘administrative 

necessity,’’ and ‘‘one-step-at-a-time’’ 

doctrines, although, as noted 

previously, we will consider in future 

rulemaking how closely to the statutory 

thresholds we will be able to implement 

the PSD and title V programs as well as 

what to require with respect to a 

potentially large number of sources with 

empty title V permits. 

In this rule, we are adopting 

regulatory language codifying our 

phase-in approach. As we will explain, 

many state, local and tribal area 

programs will likely be able to 

immediately implement our approach 

without rule or statutory changes by, for 

example, interpreting the term ‘‘subject 

to regulation’’ that is part of the 

applicability provisions for PSD and 

title V. We ask permitting authorities to 

confirm that they will follow this 

implementation approach for their 

programs, and if they cannot, then we 

ask them to notify us so that we can take 

appropriate follow-up action to narrow 

our federal approval of their programs 

before GHGs become subject to 

regulation for PSD and title V programs 

on January 2, 2011. Narrowing our 

approval will ensure that for federal 

purposes, GHG sources below the size 

thresholds we establish in this Tailoring 

Rule are not obligated to hold PSD or 

title V permits until the states develop 

and submit revised PSD and title V 

programs that EPA approves, either 

because they adopt our tailoring 

approach or because, if they continue to 

cover smaller GHG sources, the states 

have demonstrated that they have 

adequate resources to administer those 

programs. 

The thresholds we are establishing are 

based on CO2e for the aggregate sum of 

six greenhouse gases that constitute the 

pollutant that will be subject to 

regulation, which we refer to as GHGs.5

These gases are: CO2, methane (CH4), 

nitrous oxide (N2O), hydrofluorocarbons 

(HFCs), perfluorocarbons (PFCs), and 

sulfur hexafluoride (SF6). Thus, in this 

rule, we provide that PSD and title V 

applicability is based on the quantity 

that results when the mass emissions of 

each of these gases is multiplied by the 

Global Warming Potential (GWP) of that 

gas, and then summed for all six gases. 

However, we further provide that in 

order for a source’s GHG emissions to 

trigger PSD or title V requirements, the 

quantity of the GHGs must equal or 

exceed both the applicability thresholds 

established in this rulemaking on a 

CO2e basis and the statutory thresholds 

of 100 or 250 tpy on a mass basis.6

Similarly, in order for a source to be 

subject to the PSD modification 

requirements, the source’s net GHG 

emissions increase must exceed the 

applicable significance level on a CO2e 

basis and must also result in a net mass 

increase of the constituent gases 

combined. 

We are adopting this rule after careful 

consideration of numerous public 

comments. On October 27, 2009 (74 FR 

55292), EPA proposed the GHG 

Tailoring Rule. EPA held two public 

hearings on the proposed rule, and 

received over 400,000 written public 

comments. The public comment period 

ended on December 28, 2009. The 

comments have provided detailed 

information that has helped EPA 

understand better the issues and 

potential impacts of this rule, and the 

final rule described in this preamble 

incorporates many of the suggestions we 

received. We respond to many of these 

comments in explaining our rationale 

for the final rule, which is described in 

section V. The final rule adopts many 

elements of the proposal but differs 

from the proposal in several important 

respects. We proposed to apply PSD and 

title V to GHG sources that emit or have 

the potential to emit at least 25,000 tpy 

CO2e, and we proposed a PSD 

significance level in a range between 

10,000 and 25,000 tpy CO2e, but based 

on consideration of the additional 

information we received and our further 

analysis, we are finalizing the threshold 

levels in the amounts and on the 

schedule described previously. In 

addition, the mechanism for state, local, 

and tribal program implementation has 

been significantly changed to reflect the 

comments received that we needed to 

develop an implementation approach 

that states could adopt under state law 

more expeditiously. 

The remainder of this notice describes 

our approach and rationale in more 

detail. Following this overview, section 

III of this preamble provides background 

information on the nature of GHG 

emissions, recent regulatory 

developments that affect when and how 

GHG emissions are subject to stationary 

source permitting, and the general 

requirements of the PSD and title V 

programs. Section IV describes in detail 

the summary of the key actions being 

taken in this rule, including the 

determination of emissions, the 

thresholds and timing for the phase-in, 

our approach to implementing the 

phase-in, and the additional future 

actions we will take. Section V provides 

a more detailed description of each 

action, explaining the policy and legal 

rationale and responding to comments 

received. Section V begins with our 

decisions on how to calculate the massbased and CO2e-based emissions used in 

the phase-in. Section V then turns to our 

legal and policy rationale for the first 

two steps of the phase-in, the 50,000 tpy 

floor, and the subsequent study and 

rulemakings to determine whether and 

how smaller sources should be subject 

to permitting. This section then 

describes key implementation issues 

including the approach to state 

adoption. After describing our plans for 

follow-up on title V fee programs, the 

section concludes by describing permit 

streamlining techniques; guidance on 

BACT for the GHG sources that are 

affected under the first two steps of the 

Tailoring Rule phase-in; requests for 

exemptions; and transitional issues, 

including grandfathering. Finally, 

section VI describes the expected 

impacts that will result from the phasein approach (i.e., the narrower 

application of PSD and title V 

requirements during the phase-in 

period) and sections VII and VIII 

address administrative requirements. 

III. Background 

A. What are GHGs and their sources? 

Greenhouse gases trap the Earth’s heat 

that would otherwise escape from the 

atmosphere into space, and form the 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31519 

greenhouse effect that helps keep the 

Earth warm enough for life. Greenhouse 

gases are naturally present in the 

atmosphere and are also emitted by 

human activities. Human activities are 

intensifying the naturally occurring 

greenhouse effect by increasing the 

amount of GHGs in the atmosphere, 

which is changing the climate in a way 

that endangers human health, society, 

and the natural environment. 

Some GHGs, such as CO2, are emitted 

to the atmosphere through natural 

processes as well as human activities. 

Other gases, such as fluorinated gases, 

are created and emitted solely through 

human activities. As previously noted, 

the well-mixed GHGs of concern 

directly emitted by human activities 

include CO2, CH4, N2O, HFCs, PFCs, 

and SF6. These six GHGs will, for the 

purposes of this final rule, be referred to 

collectively as ‘‘the six well-mixed 

GHGs,’’ or, simply, GHGs, and together 

constitute the ‘‘air pollutant’’ upon 

which the GHG thresholds in this action 

are based. These six gases remain in the 

atmosphere for decades to centuries 

where they become well-mixed globally 

in the atmosphere. When they are 

emitted more quickly than natural 

processes can remove them from the 

atmosphere, their concentrations 

increase, thus increasing the greenhouse 

effect. The heating effect caused by the 

human-induced buildup of GHGs in the 

atmosphere is very likely the cause of 

most of the observed global warming 

over the last 50 years. A detailed 

explanation of greenhouse gases, 

climate change and its impact on health, 

society, and the environment is 

included in EPA’s technical support 

document (TSD) for the endangerment 

finding final rule (Docket ID No. EPA– 

HQ–OAR–2009–0472–11292). 

In the United States, the combustion 

of fossil fuels (e.g., coal, oil, gas) is the 

largest source of CO2 emissions and 

accounts for 80 percent of the total GHG 

emissions. Anthropogenic CO2

emissions released from a variety of 

sources, including through the use of 

fossil fuel combustion and cement 

production from geologically stored 

carbon (e.g., coal, oil, and natural gas) 

that is hundreds of millions of years old, 

as well as anthropogenic CO2 emissions 

from land-use changes such as 

deforestation, perturb the atmospheric 

concentration of CO2 and the 

distribution of carbon within different 

reservoirs readjusts. More than half of 

the energy related emissions come from 

large stationary sources such as power 

plants, while about a third comes from 

transportation. Of the six well-mixed 

GHGs, four (CO2, CH4, N2O, and HFCs) 

are emitted by motor vehicles. In the 

United States industrial processes (such 

as the production of cement, steel, and 

aluminum), agriculture, forestry, other 

land use, and waste management are 

also important sources of GHGs. 

Different GHGs have different heattrapping capacities. The concept of 

GWP was developed to compare the 

heat-trapping capacity and atmospheric 

lifetime of one GHG to another. The 

definition of a GWP for a particular 

GHG is the ratio of heat trapped by one 

unit mass of the GHG to that of one unit 

mass of CO2 over a specified time 

period. When quantities of the different 

GHGs are multiplied by their GWPs, the 

different GHGs can be summed and 

compared on a CO2e basis. For example, 

CH4 has a GWP of 21, meaning each ton 

of CH4 emissions would have 21 times 

as much impact on global warming over 

a 100-year time horizon as 1 ton of CO2

emissions. Thus, on the basis of heattrapping capability, 1 ton of CH4 would 

equal 21 tons of CO2e. The GWPs of the 

non-CO2 GHGs range from 21 (for CH4) 

up to 23,900 (for SF6). Aggregating all 

GHGs on a CO2e basis at the source level 

allows a facility to evaluate its total 

GHG emissions contribution based on a 

single metric. 

B. Endangerment Finding and the LDVR 

1. Endangerment Finding 

On April 2, 2007, the U.S. Supreme 

Court found that GHGs are air pollutants 

under CAA section 302(g). 

Massachusetts v. EPA, 549 U.S. 497 

(2007). As a result, the Supreme Court 

found that EPA was required to 

determine, under CAA section 202(a), 

whether (1) GHGs from new motor 

vehicles cause or contribute to air 

pollution which may reasonably be 

anticipated to endanger public health or 

welfare, or (2) the science is too 

uncertain to make a reasoned decision. 

After issuing a proposal and receiving 

comment, on December 7, 2009, the 

Administrator signed two distinct 

findings regarding GHGs under CAA 

section 202(a): 

• Endangerment Finding: The 

Administrator found that the current 

and projected atmospheric 

concentrations of the mix of six longlived and directly emitted GHGs—CO2, 

CH4, N2O, HFCs, PFCs, and SF6 (referred 

to as ‘‘well-mixed greenhouse gases’’ in 

the endangerment finding)—are 

reasonably anticipated to endanger the 

public health and welfare of current and 

future generations. 

• Cause or Contribute Finding: The 

Administrator found that the emissions 

of the single air pollutant defined as the 

aggregate group of six well-mixed 

greenhouses gases from new motor 

vehicles and new motor vehicle engines 

contributes to the GHG air pollution that 

threatens public health and welfare. 

These findings, which were published 

December 15, 2009 (74 FR 66496), do 

not themselves impose any 

requirements on industry or other 

entities. However, they were a 

prerequisite to finalizing the GHG 

standards for light-duty vehicles, 

described next. 

2. Light-Duty Vehicle Rule 

The LDVR, 75 FR 25324 (May 7, 

2010), is a joint rule between EPA and 

the Department of Transportation’s 

National Highway Traffic Safety 

Administration (NHTSA) that 

establishes a national program 

consisting of new standards for lightduty vehicles that will reduce GHG 

emissions and improve fuel economy. 

EPA finalized the national GHG 

emissions standards under the Act, and 

NHTSA finalized Corporate Average 

Fuel Economy (CAFE) standards under 

the Energy Policy and Conservation Act, 

as amended. The new standards apply 

to new passenger cars, light-duty trucks, 

and medium-duty passenger vehicles, 

starting with model year 2012. The EPA 

GHG standards are projected to result in 

an estimated combined average 

emissions level of 250 grams of CO2 per 

mile for model year 2016 vehicles. The 

standards begin with the 2012 model 

year, with standards increasing in 

stringency through model year 2016. 

The standards are a fleet average for 

each manufacturer, based on a footprint 

attribute curve, meaning that the actual 

target for a vehicle will vary depending 

on the size of the vehicle. Under the 

footprint-based standards, each 

manufacturer will have a GHG standard 

unique to its fleet, depending on the 

footprints of the vehicle models 

produced by that manufacturer. A 

manufacturer will have separate 

footprint-based standards for cars and 

for trucks. 

The endangerment and contribution 

findings described previously require 

EPA to issue standards under section 

202(a) ‘‘applicable to emission’’ of the air 

pollutant that EPA found causes or 

contributes to the air pollution that 

endangers public health and welfare. 

The final emissions standards satisfy 

this requirement for GHGs from lightduty vehicles. Under section 202(a), the 

Administrator has significant discretion 

in how to structure the standards that 

apply to the emission of the air 

pollutant at issue here, the aggregate 

group of six GHGs. EPA has the 

discretion under section 202(a) to adopt 

separate standards for each gas, a single 

mstockstill on DSKH9S0YB1PROD with RULES2

31520 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

7We note that the PSD program has historically 

operated in this fashion for all pollutants—when 

new sources or modifications are ‘‘major,’’ PSD 

applies to all pollutants that are emitted in 

significant quantities from the source or project. 

This rule does not alter that for sources or 

modifications that are major due to their GHG 

emissions. 

composite standard covering various 

gases, or any combination of these. In 

the LDVR, EPA finalized separate 

standards for N2O and CH4, and a CO2

standard that provides for credits based 

on reductions of HFCs, as the 

appropriate way to issue standards 

applicable to emission of the single air 

pollutant, the aggregate group of six 

GHGs. EPA did not set any standards for 

PFCs or SF6, as they are not emitted by 

motor vehicles. 

C. What are the general requirements of 

the PSD program? 

1. Overview of the PSD Program 

The PSD program is a preconstruction 

review and permitting program 

applicable to new major stationary 

sources and major modifications at 

existing major stationary sources. The 

PSD program applies in areas that are 

designated ‘‘attainment’’ or 

‘‘unclassifiable’’ for a National Ambient 

Air Quality Standard (NAAQS). The 

PSD program is contained in part C of 

title I of the CAA. The ‘‘nonattainment 

new source review (NSR)’’ program 

applies in areas not in attainment of a 

NAAQS or in the Ozone Transport 

Region and is implemented under the 

requirements of part D of title I of the 

CAA. Collectively, we commonly refer 

to these two programs as the major NSR 

program. The governing EPA rules are 

contained in 40 CFR 51.165, 51.166, 

52.21, 52.24, and part 51, Appendices S 

and W. There is no NAAQS for CO2 or 

any of the other well-mixed GHGs, nor 

has EPA proposed any such NAAQS; 

therefore, unless and until we take 

further such action, we do not anticipate 

that the nonattainment NSR program 

will apply to GHGs. 

The applicability of PSD to a 

particular source must be determined in 

advance of construction or modification 

and is pollutant-specific. The primary 

criterion in determining PSD 

applicability for a proposed source is 

whether the source is a ‘‘major emitting 

facility,’’ based on its predicted potential 

emissions of regulated pollutants, 

within the meaning of CAA section 

169(1) and either constructs or 

undertakes a modification. EPA has 

implemented these requirements in its 

regulations, which use somewhat 

different terminology for determining 

PSD applicability, which is whether the 

source is a ‘‘major stationary source’’ or 

whether the proposed project is a ‘‘major 

modification.’’ 

a. Major Stationary Source 

Under PSD, a ‘‘major stationary 

source’’ is any source belonging to a 

specified list of 28 source categories 

which emits or has the potential to emit 

100 tpy or more of any pollutant subject 

to regulation under the CAA, or any 

other source type which emits or has the 

potential to emit such pollutants in 

amounts equal to or greater than 250 

tpy. We refer to these levels as the 100/ 

250-tpy thresholds. A new source with 

a potential to emit (PTE) at or above the 

applicable ‘‘major stationary source 

threshold’’ is subject to major source 

NSR. These limits originate from section 

169 of the CAA, which applies PSD to 

any ‘‘major emitting facility’’ and defines 

the term to include any source that 

emits or has a PTE of 100 or 250 tpy, 

depending on the source category. Note 

that the major source definition 

incorporates the phrase ‘‘subject to 

regulation,’’ which, as described later, 

will begin to include GHGs on January 

2, 2011, under our interpretation of that 

phrase discussed in the recent 

Interpretive Memo notice. 75 FR 17004, 

April 2, 2010. 

b. Major Modifications 

PSD also applies to existing sources 

that undertake a ‘‘major modification,’’ 

which occurs: (1) When there is a 

physical change in, or change in the 

method of operation of, a ‘‘major 

stationary source;’’ (2) the change results 

in a ‘‘significant’’ emission increase of a 

pollutant subject to regulation (equal to 

or above the significance level that EPA 

has set for the pollutant in 40 CFR 

52.21(b)(23)); and (3) there is a 

‘‘significant net emissions increase’’ of a 

pollutant subject to regulation that is 

equal to or above the significance level 

(defined in 40 CFR 52.21(b)(23)). 

Significance levels, which EPA has 

promulgated for criteria pollutants and 

certain other pollutants, represent a de 

minimis contribution to air quality 

problems. When EPA has not set a 

significance level for a regulated NSR 

pollutant, PSD applies to an increase of 

the pollutant in any amount (that is, in 

effect, the significance level is treated as 

zero). 

2. General Requirements for PSD 

This section provides a very brief 

summary of the main requirements of 

the PSD program. One principal 

requirement is that a new major source 

or major modification must apply 

BACT, which is determined on a caseby-case basis taking into account, among 

other factors, the cost effectiveness of 

the control and energy and 

environmental impacts. EPA has 

developed a ‘‘top-down’’ approach for 

BACT review, which involves a 

decision process that includes 

identification of all available control 

technologies, elimination of technically 

infeasible options, ranking of remaining 

options by control and cost 

effectiveness, and then selection of 

BACT. Under PSD, once a source is 

determined to be major for any 

regulated NSR pollutant, a BACT review 

is performed for each attainment 

pollutant that exceeds its PSD 

significance level as part of new 

construction or for modification projects 

at the source, where there is a 

significant increase and a significant net 

emissions increase of such pollutant.7

In addition to performing BACT, the 

source must analyze impacts on ambient 

air quality to assure that no violation of 

any NAAQS or PSD increments will 

result, and must analyze impacts on 

soil, vegetation, and visibility. In 

addition, sources or modifications that 

would impact Class I areas (e.g., 

national parks) may be subject to 

additional requirements to protect air 

quality related values (AQRVs) that 

have been identified for such areas. 

Under PSD, if a source’s proposed 

project may impact a Class I area, the 

Federal Land Manager is notified and is 

responsible for evaluating a source’s 

projected impact on the AQRVs and 

recommending either approval or 

disapproval of the source’s permit 

application based on anticipated 

impacts. There are currently no NAAQS 

or PSD increments established for 

GHGs, and therefore these PSD 

requirements would not apply for 

GHGs, even when PSD is triggered for 

GHGs. However, if PSD is triggered for 

a GHG emissions source, all regulated 

NSR pollutants which the new source 

emits in significant amounts would be 

subject to PSD requirements. Therefore, 

if a facility triggers review for regulated 

NSR pollutants that are non-GHG 

pollutants for which there are 

established NAAQS or increments, the 

air quality, additional impacts, and 

Class I requirements would apply to 

those pollutants. 

The permitting authority must 

provide notice of its preliminary 

decision on a source’s application for a 

PSD permit, and must provide an 

opportunity for comment by the public, 

industry, and other interested persons. 

After considering and responding to 

comments, the permitting authority 

must issue a final determination on the 

construction permit. Usually NSR 

permits are issued by state or local air 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31521 

pollution control agencies, which have 

their own permit programs approved by 

EPA in their State Implementation Plans 

(SIPs). In some cases, EPA has delegated 

its authority to issue PSD permits to the 

state or local agency. In other areas, EPA 

issues the permits under its own 

authority. 

D. What are the general requirements of 

the title V operating permits program? 

1. Overview of Title V 

The operating permit requirements 

under title V are intended to improve 

sources’ compliance with other CAA 

requirements. The title V program is 

implemented through regulations 

promulgated by EPA, 40 CFR part 70, 

for programs implemented by state and 

local agencies and tribes, and 40 CFR 

part 71, for programs generally 

implemented by EPA. 

In summary, the title V program 

requires major sources (defined and 

interpreted by EPA to include sources 

that emit or have a PTE of 100 tpy of 

any pollutant subject to regulation) and 

certain other sources to apply for 

operating permits. Under EPA’s longstanding interpretation, a pollutant, 

such as a GHG, is ‘‘subject to regulation’’ 

when it is subject to a CAA requirement 

establishing actual control of emissions. 

Title V generally does not add new 

pollution control requirements, but it 

does require that each permit contain all 

pollution control requirements or 

‘‘applicable requirements’’ required by 

the CAA (e.g., New Source Performance 

Standard (NSPS), and SIP requirements, 

including PSD), and it requires that 

certain procedural requirements be 

followed, especially with respect to 

compliance with these requirements. 

‘‘Applicable requirements’’ for title V 

purposes include stationary source 

requirements, but do not include mobile 

source requirements. Other procedural 

requirements include providing review 

of permits by EPA, states, and the 

public, and requiring permit holders to 

track, report, and annually certify their 

compliance status with respect to their 

permit requirements. 

2. Title V Permit Requirements 

This section provides a brief summary 

of the requirements of the title V 

program that are most relevant to this 

action. A source generally must apply 

for a title V permit within 1 year of first 

becoming subject to permitting—for 

new sources, this is usually within 1 

year of commencing operation. The 

application must include, among other 

things, identifying information, a 

description of emissions and other 

information necessary to determine 

applicability of requirements and 

information concerning compliance 

with those requirements. The permitting 

authority uses this information to 

develop the source’s operating permit. 

Title V permits generally contain the 

following elements: (1) Emissions 

limitations and standards to assure 

compliance with all applicable 

requirements; (2) monitoring, 

recordkeeping, and reporting 

requirements, including submittal of a 

semiannual monitoring report and 

prompt reporting of deviations from 

permit terms; (3) fee payment; and 

(4) an annual certification of 

certification by a responsible official. 

The detailed requirements are set forth 

at 40 CFR 70.6. 

In addition to the permit content 

requirements, there are procedural 

requirements that must be followed in 

issuing title V permits, including 

(1) Application completeness 

determination; (2) public notice and a 

30-day public comment period, 

including an opportunity for a public 

hearing, on draft permits; (3) EPA and 

affected state review; and (4) a statement 

of the legal and factual basis of the draft 

permit. The permitting authority must 

take final action (issue or deny) on the 

permit applications within 18 months of 

receipt. EPA also has 45 days from 

receipt of a proposed permit to object to 

its issuance, and citizens have 60 days 

after that to petition EPA to object to a 

permit. Permits may also need to be 

revised or reopened if new requirements 

come into effect during the permit terms 

or if the source makes changes that 

conflict with, or necessitate changes to, 

the current permit. Permit revisions and 

re-openings follow procedural 

requirements which vary depending on 

the nature of the necessary change to the 

permit. 

E. The Interpretive Memo 

On December 18, 2008, EPA issued a 

memorandum, ‘‘EPA’s Interpretation of 

Regulations that Determine Pollutants 

Covered by Federal Prevention of 

Significant Deterioration (PSD) Permit 

Program’’ (known as the ‘‘Johnson 

Memo’’ or the ‘‘PSD Interpretive Memo,’’ 

and referred to in this preamble as the 

‘‘Interpretive Memo’’) that set forth 

EPA’s interpretation regarding which 

EPA and state actions, with respect to a 

previously unregulated pollutant, cause 

that pollutant to become ‘‘subject to 

regulation’’ under the Act. Whether a 

pollutant is ‘‘subject to regulation’’ is 

important for the purposes of 

determining whether it is covered under 

the federal PSD and title V permitting 

programs. The Interpretive Memo 

established that a pollutant is ‘‘subject to 

regulation’’ only if it is 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 (referred to as the ‘‘actual 

control interpretation’’). On February 17, 

2009, EPA granted a petition for 

reconsideration on the Interpretive 

Memo, and announced its intent to 

conduct a rulemaking to allow for 

public comment on the issues raised in 

the memorandum and on related issues. 

EPA also clarified that the Interpretive 

Memo would remain in effect pending 

reconsideration. 

On March 29, 2010, EPA signed a 

notice conveying its decision to 

continue applying (with one limited 

refinement) the Interpretive Memo’s 

interpretation of ‘‘subject to regulation’’ 

(‘‘Interpretation of Regulations that 

Determine Pollutants Covered by Clean 

Air Act Permitting Programs’’). See 75 

FR 17004. EPA concluded that the 

‘‘actual control interpretation’’ is the 

most appropriate interpretation to apply 

given the policy implications. However, 

we refined our interpretation in one 

respect: we established 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, based on the anticipated 

promulgation of the LDVR, we stated 

that the GHG requirements of the 

vehicle rule would take effect on 

January 2, 2011, because that is the 

earliest date that a 2012 model year 

vehicle may be introduced into 

commerce. In other words, the 

compliance obligation under the LDVR 

does not occur until a manufacturer may 

introduce into commerce vehicles that 

are required to comply with GHG 

standards, which will begin with model 

year 2012 and will not occur before 

January 2, 2011. We also reiterated 

EPA’s interpretation that the 100 tpy 

major source threshold for title V is 

triggered only by pollutants ‘‘subject to 

regulation’’ under the Act, and we 

defined and applied that term for title 

V purposes in the same way that we did 

for PSD purposes. That is, we stated that 

a pollutant is ‘‘subject to regulation’’ if 

it is subject to a CAA requirement 

establishing ‘‘actual control of 

emissions;’’ that a pollutant is 

considered ‘‘subject to regulation’’ for 

title V purposes when such a 

requirement ‘‘takes effect’’; and, based 

on the anticipated promulgation of the 

LDVR, that the GHG requirements of the 

mstockstill on DSKH9S0YB1PROD with RULES2

31522 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

8See 74 FR 66496, 66499, 66536–7. December 15, 

2009. 9 40 CFR 86.1818–12(a). 

10Table A–1 to subpart A of 40 CFR part 98— 

Global Warming Potentials, 74 FR 56395. 

11Although we commit to propose or solicit 

comment on lower thresholds and to take final 

action on that proposal by July 1, 2012, we cannot, 

at present, commit to promulgate lower thresholds. 

It will not be until the Step 3 rulemaking itself that 

we will gather and analyze data and receive 

comments that determine whether we have basis for 

promulgating lower thresholds. 

vehicle rule would take effect on 

January 2, 2011. 

On April 1, 2010, we finalized the 

LDVR as anticipated, confirming that 

manufacturer certification can occur no 

earlier than January 2, 2011. Thus, 

under the terms of the final notice for 

the Interpretive Memo, GHGs become 

subject to regulation on that date, and 

PSD and title V program requirements 

will also begin to apply upon that date. 

IV. Summary of Final Actions 

This section describes the specific 

actions we are taking in this final rule. 

It describes the overall tailoring 

approach for NSR and title V 

applicability, the steps we are taking to 

put it into place, and future actions that 

we commit to take. The next section, V, 

provides the legal and policy rationale 

for these actions. In that section, we 

provide a description of our rationale 

and response to comments for each 

action, presented in the same order as 

we describe the actions here. 

A. How do you define the GHG pollutant 

for PSD and title V purposes? 

1. GHG Pollutant Defined as the Sumof-Six Well-Mixed GHGs 

We are identifying the air pollutant 

for purposes of PSD and title V 

applicability to be the pollutant subject 

to regulation, which is the air pollutant 

for GHGs identified in EPA’s LDVR, as 

well as EPA’s endangerment and 

contribution findings.8 In the LDVR, 

EPA set emissions standards under 

section 202(a) that were ‘‘applicable to 

emission’’ of a single air pollutant 

defined as the aggregate sum of six 

GHGs. The six GHGs, which are wellmixed gases in the atmosphere, are CO2, 

CH4, N2O, HFCs, PFCs, and SF6. Earlier, 

EPA made the contribution finding for 

this single air pollutant. 

Furthermore, as proposed, we are 

using an emissions threshold that 

allows all six constituent gases to be 

evaluated using a common metric— 

CO2e. Thus, to determine applicability, 

a source’s GHG emissions are calculated 

on a CO2e basis by multiplying the mass 

emissions of any of the six GHGs that 

the source emits by that gas’s GWP and 

then summing the CO2e for each GHG 

emitted by the source. This sum, 

expressed in terms of tpy CO2e, is then 

compared to the applicable CO2e-based 

permitting threshold to determine 

whether the source is subject to PSD 

and title V requirements. 

In addition, because we are 

implementing this phase-in through the 

term ‘‘subject to regulation,’’ the 

regulatory language is structured such 

that the statutory mass-based thresholds 

(i.e., for PSD, 100/250 tpy for new 

construction and zero tpy for 

modifications at a major stationary 

source, and for title V, 100 tpy) continue 

to apply. As a result, stationary source 

apply and stationary sources or 

modifications that do not meet these 

thresholds are not subject to permitting 

requirements. While technically 

evaluation of the mass-based thresholds 

is the second step in the applicability 

analysis, from a practical standpoint 

most sources are likely to treat this as 

an initial screen, so that if they would 

not trigger PSD or title V on a mass 

basis, they would not proceed to 

evaluate emissions on a CO2e basis. We 

have treated evaluation of mass-based 

thresholds as the initial step in our 

descriptions. As applicable, a source 

would evaluate these mass-based 

thresholds by summing each of the six 

GHGs it emits on a mass basis (i.e., 

before applying GWP). We expect that it 

will be very rare for a new stationary 

source or modification to trigger 

permitting based on CO2e and not also 

trigger based on mass alone. 

Determining permit program 

applicability for the GHG ‘‘air pollutant’’ 

by using the sum-of-six GHGs is based 

on EPA’s interpretation that the PSD 

and title V requirements apply to each 

‘‘air pollutant’’ that is ‘‘subject to 

regulation’’ under another provision of 

the CAA. As discussed previously, the 

final LDVR for GHGs makes it clear that 

the emissions standards EPA adopted 

are standards applicable to emission of 

the single air pollutant defined as the 

aggregate mix of these six well-mixed 

GHGs. See LDVR, May 7, 2010, 75 FR 

25398–99, section III.A.2.c, and 40 CFR 

86.1818–12.9 For reasons explained in 

more detail in section V, we have 

determined it is legally required, and 

preferable from a policy standpoint, for 

EPA to use the same definition of the air 

pollutant for permitting purposes as that 

used in the rule that establishes the 

control requirements for the pollutant. 

We also believe there are 

implementation advantages for applying 

PSD and title V in this way. Thus, this 

rule establishes that a stationary source 

will use the group of six constituent 

gases for permitting applicability, rather 

than treating each gas individually. 

Similarly, you will include all six 

constituent gases because that is how 

the air pollutant is defined, even though 

motor vehicles only emit four of the six. 

2. What GWP values should be used for 

calculating CO2e? 

We are requiring that wherever you 

perform an emissions calculations 

involving CO2e for the purposes of 

determining the applicability of PSD or 

title V requirements, you use the GWP 

values codified in the EPA’s mandatory 

GHG reporting rule.10 This approach 

will assure consistency between the 

values required for calculations under 

the reporting rule and for PSD or title V. 

In addition, because any changes to 

Table A–1 of the mandatory GHG 

reporting rule regulatory text must go 

through a rulemaking, this approach 

will assure that the values used for the 

permitting programs will reflect the 

latest values adopted for usage by EPA 

after notice and comment. 

B. When will PSD and title V 

applicability begin for GHGs and 

emission sources? 

Overview 

In this action, we establish the first 

two phases of our phase-in approach, 

which we refer to as Steps 1 and 2. We 

also commit to a subsequent rulemaking 

in which we will propose or solicit 

comment on establishing a further 

phase-in, that is, a Step 3, that would 

apply PSD and title V to additional 

sources, effective July 1, 2013, and on 

which we commit to take final action, 

as supported by the record,11 by no later 

than July 1, 2012. 

We also commit to undertaking an 

assessment of sources’ and permitting 

authorities’ progress in implementing 

PSD and title V for GHG sources, and to 

complete this assessment by 2015. We 

further commit to completing another 

round of rulemaking addressing smaller 

sources by April 30, 2016. Our action in 

that rulemaking would address 

permitting requirements for smaller 

sources, taking into account the 

remaining problems concerning costs to 

sources and burdens to permitting 

authorities. Finally, we determine in 

this action that we will apply PSD or 

title V requirements to sources that emit 

GHGs, or that conduct modifications 

that result in increases in emissions of 

GHGs, in amounts of less than 50,000 

tpy CO2e any earlier than when we take 

the required further action to address 

smaller sources by April 30, 2016. 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31523 

12EPA notes, however, that many sources subject 

to title V under Steps 1 and 2 will also be subject 

to the GHG mandatory reporting rule. For these 

sources, the emissions description requirements in 

the title V regulations will generally be satisfied by 

referencing information provided under the 

reporting rule. 

Through this process, we will 

implement the phase-in approach by 

applying PSD and title V at threshold 

levels that are as close to the statutory 

levels as possible, and do so as quickly 

as possible, at least to a certain point. 

The level and timing of the thresholds 

that we promulgate in future actions 

will be based on our assessment of the 

resulting costs to sources and burdens to 

permitting authorities, and that, in turn, 

will depend on such variables as our 

progress in developing streamlining 

approaches and on permitting 

authorities’ progress in developing 

permitting expertise and acquiring more 

resources. At this time, we cannot 

foresee exactly when or in what manner 

those developments will occur. 

Therefore, we cannot promulgate more 

components of the tailoring approach 

beyond what we promulgate in this 

action. We can say only that we may 

continue the phase-in process with 

further rulemaking after 2016. 

Alternatively, we may make a definitive 

determination in one of the future 

rulemaking actions that, under the 

‘‘absurd results’’ doctrine, PSD or title V 

applies only to certain GHG sources, 

and does not apply to the remaining 

GHG sources, and with that rulemaking, 

bring this tailoring process to a close. 

1. What are the Step 1 thresholds, 

timing, and calculation methodology? 

a. PSD Permitting 

Step 1 of the Tailoring Rule phase-in 

will begin on January 2, 2011. With 

respect to the PSD program, GHG 

sources will become subject to PSD for 

their GHG emissions if they undergo 

PSD permitting anyway, either for new 

construction or for modification 

projects, based on emissions of nonGHG pollutants, in which case they will 

be subject to the PSD requirements for 

GHG if they increase GHG emissions by 

75,000 tpy CO2e or more. Under this 

step, only these sources, which we refer 

to as ‘‘anyway’’ PSD sources, will 

become subject to PSD; no sources will 

become major sources for PSD purposes 

or be treated as undertaking 

modifications that trigger PSD based 

solely on their GHG emissions. As a 

result, no additional PSD permitting 

actions will be necessary solely due to 

GHG emissions. However, existing or 

newly-constructed sources that are 

determined to be major sources based 

on non-GHG emissions are required to 

conduct a BACT review for their GHG 

emissions (from new construction) or 

emissions increases (from 

modifications), if they are subject to 

PSD due to their non-GHG emissions 

from construction or modification 

actions and each of the following 

conditions is met: 

(1) The GHG emissions (or net 

emissions increase) due to the new 

construction (or modification) project, 

calculated as the sum of the six wellmixed GHGs on a mass basis (no GWPs 

applied) exceed a value of 0 tpy; and 

(2) The GHG emissions (or net 

emissions increase) due to the new 

construction (or modification) project, 

calculated as the sum of the six wellmixed GHGs on a CO2e basis (GWPs 

applied) equal or exceed a value of 

75,000 tpy CO2e. 

The purpose of the first condition is 

to determine whether the GHG 

emissions or net emissions increase has 

resulted in an ‘‘increase in the amount’’ 

of an air pollutant as required by the 

Act. Because EPA has not defined a 

mass-based regulatory significance level 

for GHGs, that level, in effect, is treated 

as zero. See 40 CFR 52.21(b)(23)(ii) and 

51.166(b)(23)(ii). In practice, this means 

any amount of new emissions or an 

emission increase will exceed the massbased limit. We are not, at this time, 

establishing a significance level based 

on mass emissions, and instead we are 

establishing one based on CO2e that 

addresses permitting burdens. The zero 

mass-based amount applies, but only as 

an initial screen to exclude sources or 

changes that have no mass increase of 

GHGs. 

b. Title V Permitting 

Under Step 1, only sources required 

to have title V permits for non-GHG 

pollutants (i.e., ‘‘anyway’’ title V 

sources) will be required to address 

GHGs as part of their title V permitting. 

That is, no sources will become major 

for title V based solely on their GHG 

emissions. Note further, however, that 

the 75,000 tpy CO2e limit does not 

apply to title V, so that anyway title V 

sources must apply any title V 

requirements to their GHG emissions. 

Sources with title V permits must 

address GHG requirements when they 

apply for, renew, or revise their permits. 

These requirements will include any 

GHG applicable requirements (e.g., GHG 

BACT requirements from a PSD process) 

and associated monitoring, recordkeeping and reporting. When a permit 

application is otherwise required, they 

will also need to identify GHG 

emissions and other information in that 

application to the extent required under 

40 CFR 70.5(c) and 71.5(c), including 

information necessary to determine 

applicable requirements.12

2. What are the Step 2 thresholds, 

timing, and calculation methodology? 

a. PSD Permitting 

Step 2 will begin July 1, 2011. Under 

Step 2, anyway PSD sources—that is, 

sources already subject to PSD based on 

non-GHGs and covered under Step 1 

previously—will remain subject to PSD. 

In addition, sources with the potential 

to emit 100,000 tpy CO2e or more of 

GHG will be considered major sources 

for PSD permitting purposes (provided 

that they also emit GHGs or some other 

regulated NSR pollutant above the 100/ 

250 tpy (mass based) statutory 

thresholds. Additionally, any physical 

change or change in the method of 

operation at a major source (including 

one that is only major due to GHGs) 

resulting in a net GHG emissions 

increase of 75,000 tpy CO2e or more will 

be subject to PSD review and 

requirements with respect to GHGs 

(provided that it also results in an 

increase of GHG emissions on a mass 

basis). 

Specifically, for purposes of 

determining whether a GHG emission 

source, resulting from either new 

construction or a physical or operational 

change at an existing source, is 

considered a major source under PSD, 

both of the following conditions must be 

met: 

(1) The GHG emission source, which 

is not major for another pollutant, emits 

or has the potential to emit GHG in 

amounts that equal or exceed the 

following, calculated as the sum-of-six 

well-mixed GHGs on a mass basis (no 

GWPs applied): 

• 100 tpy for sources in any of the 28 

major emitting facility source categories 

listed under PSD, or 

• 250 tpy for any other stationary 

source. 

(2) The GHG emission source emits or 

has the potential to emit GHGs in 

amounts that equal or exceed 100,000 

tpy CO2e basis. 

For determining whether a 

modification project at a major 

stationary source is subject to PSD 

review, both of the following conditions 

must be met: 

(1) The net GHG emissions increase 

resulting from the project, calculated as 

the sum-of-six well-mixed GHGs on a 

mass basis (no GWPs applied) equals or 

exceeds 0 tpy. 

(2) The net GHG emissions increase 

resulting from the project, calculated as 

the sum-of-six well-mixed GHGs on a 

mstockstill on DSKH9S0YB1PROD with RULES2

31524 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

CO2e basis (GWPs applied) equals or 

exceeds 75,000 tpy CO2e. 

The purpose of the first condition in 

both of these determinations is to 

confirm whether the GHG emissions or 

emissions increase have exceeded, on a 

mass-basis, the statutory major source 

thresholds (where the source is not 

otherwise major) and mass-based 

statutory significance level for GHGs, 

which, as noted previously, is 0 tpy. See 

40 CFR 52.21(b)(23)(ii) and 

51.166(b)(23)(ii). 

As an example of how the mass-based 

test would apply, consider a 

modification project that results in a 5 

tpy increase of GHG emissions on a 

mass basis, associated with a high-GWP 

GHG gas (for example, SF6, with a GWP 

value of 23,900), but also results in a 

100 tpy reduction in CO2 emissions 

(assume no other contemporaneous 

increases or decreases of GHG). In this 

example, there would be a net decrease 

of GHG emissions on a mass basis (5 

tpy¥100 tpy = ¥95 tpy). Because there 

is no mass-based increase of GHG, this 

project does not trigger PSD, despite the 

fact that the net GWP-adjusted 

emissions increase of SF6 in this 

example would equal 119,500 tpy of 

CO2e and the project would thus exceed 

75,000 tpy CO2e. 

b. Title V Permitting 

Under Step 2, ‘‘anyway’’ title V 

sources—that is, sources already subject 

to title V based on non-GHGs and that 

are covered under Step 1 previously— 

will continue to be subject to title V. In 

addition, GHG emission sources that 

equal or exceed the 100,000 tpy CO2e 

threshold will be required to obtain a 

title V permit if they do not already 

have one. It is important to note that the 

requirement to obtain a title V permit 

will not, by itself, result in the triggering 

of additional substantive requirements 

for control of GHG. Rather, these new 

title V permits will simply incorporate 

whatever applicable CAA requirements, 

if any, apply to the source being 

permitted. Both of the following 

conditions need to be met in order for 

title V to apply under Step 2 to a GHG 

emission source: 

(1) An existing or newly constructed 

source emits or has the potential to emit 

GHGs in amounts that equal or exceed 

100 tpy calculated as the sum of the six 

well-mixed GHGs on a mass basis (no 

GWPs applied). 

(2) An existing or newly constructed 

source emits or has the potential to emit 

GHGs in amounts that equal or exceed 

100,000 tpy calculated as the sum of the 

six well-mixed GHGs on a CO2e basis 

(GWPs applied). 

3. What about Step 3? 

In this rule, EPA establishes an 

enforceable commitment to complete 

another rulemaking no later than July 1, 

2012, in which we will propose or 

solicit comment on a Step 3 of the 

phase-in and may also consider other 

approaches that may result in the 

permanent exclusion of a category of 

sources from PSD or title V 

requirements, under the Chevron 

framework, taking account of the 

‘‘absurd results’’ doctrine. 

Consistent with our phase-in 

approach, it is important for us to 

consider whether, at some point during 

the implementation of Step 2, it will 

become possible to administer GHG 

permitting programs for additional 

sources. For example, if EPA is able to 

promulgate measures that streamline 

programs to at least some extent, if 

permitting authorities increase their 

resources, or if implementation 

experience and more seasoned staff 

results in more effective use of scarce 

permitting resources, then we expect 

that we will be able to phase in the 

application of PSD and title V to more 

sources by establishing Step 3. We do 

not have enough information now to 

establish a final Step 3, particularly 

because there will be significant 

transition occurring in the GHG 

permitting programs during Steps 1 and 

2. However, we believe that it will be 

possible to develop a record on which 

to base Step 3 sometime soon after we 

begin to implement Step 2. 

Therefore, we plan to propose a rule 

in which we solicit comment on or 

propose lower thresholds for PSD and 

title V applicability, and we establish an 

enforceable commitment to finalize a 

rule in which we address those matters 

by July 1, 2012. In order to provide a 

year for permitting authorities and 

sources to prepare for any additional 

GHG permitting action in Step 3, we 

will establish that Step 3 would take 

effect on July 1, 2013. We also commit 

to explore, between now and the Step 3 

proposal, a wide range of streamlining 

options. In the proposal, we will take 

comment on streamlining approaches 

we think may be viable (except to the 

extent we will have already issued 

guidance documents concerning 

streamlining approaches), and we will 

address those options in the final rule. 

In addition, as part of the Step 3 

action, we may solicit comment on a 

permanent exclusion of certain sources 

from PSD, title V or both, based on an 

‘‘absurd results’’ rationale. For example, 

we may make a final determination that 

under the ‘‘absurd results’’ doctrine, PSD 

and/or title V do not apply to a set of 

GHG sources that, although above the 

statutory thresholds for those programs, 

are too small and relatively 

inconsequential in terms of GHG 

contribution. Another type of such 

exclusion for the title V program could 

be for sources that would otherwise be 

required to obtain an ‘‘empty permit,’’ 

that is, for example, one that would not 

contain any applicable requirements 

because there are none that apply to the 

source. If we promulgate a permanent 

exclusion, we may conclude that by that 

time, we will have brought into the PSD 

and title V programs the full set of 

sources that would be consistent with 

congressional intent (or, if congressional 

intent on that point is unclear, with a 

reasonable policy consistent with 

statutory requirements) and, under 

those circumstances, we would find that 

such a rule brings the tailoring process 

to a close. The application of the 

‘‘absurd results’’ rationale for a 

permanent exclusion is discussed in 

more detail in section V.B, later in this 

preamble. 

4. What about the proposed 6-year 

exclusion for smaller sources? 

The tailoring proposal contemplated 

at least a 6-year exclusion from 

permitting for small sources. This 

proposed exclusion was based on the 

overwhelming numbers of permitting 

actions at small sources and the need for 

time for permitting authorities to secure 

resources, hire and train staff, and gain 

experience with GHG permitting for 

new types of sources and technologies. 

It was also based on the time needed for 

EPA to develop, and for states to adopt, 

streamlining measures to reduce the 

permitting burden (e.g., concerning PTE, 

presumptive BACT, or general permits). 

We therefore proposed such an 

exclusion, and proposed that it would 

last 6 years—5 years to complete a 

required study evaluating permitting 

burden and assessing the effect of 

streamlining measures or techniques in 

reducing this burden, plus an additional 

year to complete a final rulemaking that 

would phase in additional sources as 

appropriate based on the study. 

We are finalizing the 6-year exclusion, 

and for reasons described later, are 

establishing that in no event will 

sources below 50,000 tpy CO2e be 

subject to PSD or title V permitting 

during the 6-year period, nor will 

modifications be subject to PSD unless 

they increase emissions by 50,000 tpy 

CO2e or more. The exclusion will last 

until we take the action described later 

to address smaller sources, which is 

required by April 30, 2016. The 

exclusion provides certainty that, before 

this date, EPA will not act to cover 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31525 

13 In the alternative, we also proposed to use our 

110(k)(6) error correction authority to revise SIPapproved PSD programs. 

sources and modifications below these 

thresholds, including during the 

required Step 3 rulemaking that will 

occur in 2012. In effect, this means that 

Step 3 will establish a major source 

threshold and significance level no 

lower than 50,000 tpy CO2e. This does 

not necessarily mean we will cover 

sources below this level on April 30, 

2016. It simply means that the provision 

we are adopting would assure that EPA 

does not cover such sources any sooner 

than that. 

5. When and how will EPA take further 

action on smaller sources? 

As we proposed, we are establishing 

an enforceable commitment to act 

within 5 years to complete a study 

projecting the administrative burdens 

that remain for small sources after 

permitting authorities have had time to 

secure resources, hire and train staff, 

and gain experience with GHG 

permitting for new types of sources and 

technologies, and after EPA has had 

time to develop (and states have had 

time to adopt) streamlining measures to 

reduce the permitting burden for such 

sources. We will use the results of this 

study to serve as the basis for an 

additional rulemaking that would take 

further action to address small sources. 

Similar to the enforceable commitment 

to act on Step 3, we are making an 

enforceable commitment to complete 

this rulemaking by April 30, 2016. 

We cannot predict at this time what 

form that final action will take. It could 

function as a Step 4, bringing in 

additional sources based on, for 

example, streamlining actions, 

increased permitting authority 

resources, and experienced and more 

efficient permitting staff; and it could 

further indicate that we intend to 

follow-up with a Step 5 to bring in more 

sources. Alternatively, it could also 

function as a final step excluding 

certain sources permanently based on 

our application of the Chevron 

framework, taking account of the 

‘‘absurd results’’ doctrine, and subjecting 

the remaining sources to permitting. 

However, whatever final action we take 

would explain any necessary changes to 

the Step 3 thresholds and would 

supersede the 6-year exclusion for 

sources and modifications below 50,000 

tpy CO2e. 

C. How do state, local and tribal area 

programs adopt the final GHG 

applicability thresholds? 

We are finalizing our proposed 

approach to change the definition of 

‘‘major stationary source’’ in the PSD 

implementing regulations, and the 

‘‘major source’’ definition in the title V 

implementing regulations to tailor the 

application of these permitting 

programs to GHG emissions. We are also 

finalizing a significance level for GHG 

emissions for purposes of defining a 

major modification under the PSD 

program, and add an exclusion from 

PSD and title V permitting for GHG 

emissions, until we complete a 

rulemaking required by April 30, 2016, 

for any sources that are not already 

subject to PSD and title V permitting 

and that emit less than 50,000 tpy of 

CO2e. 

As explained earlier, we are adopting 

thresholds that phase in the 

applicability of GHG permitting over a 

specified time period. In adopting 

regulatory changes to implement these 

thresholds, we follow an approach that 

is substantively the same as the 

approach proposed, but takes a different 

form for purposes of revisions to our 

PSD and title V regulations. 

Specifically, in this final rule, for our 

regulations, in conjunction with the 

definitions of ‘‘major stationary source’’ 

and ‘‘major modification’’ (for PSD) and 

‘‘major source’’ (for title V), we are 

adopting a definition of the term 

‘‘subject to regulation.’’ Moreover, we are 

defining this term so that GHG 

emissions from sources above the 

threshold are treated as subject to 

regulation, and therefore the sources 

that emit them are subject to PSD and 

title V. We are not finalizing the 

approach we proposed, which was to 

revise the numerical thresholds in the 

definitions so that GHG sources would 

have a higher threshold. Although we 

are defining the term ‘‘subject to 

regulation,’’ we recognize that from a 

substantive standpoint, our tailoring 

approach entails interpreting the 

definitions of ‘‘major emitting facility,’’ 

‘‘major modification,’’ and ‘‘major 

source’’ to phase in the applicability of 

PSD and title V, as applicable, to GHG 

sources, and it makes no difference 

whether we interpret those definitions 

through a definition of the term ‘‘subject 

to regulation,’’ revising the numerical 

thresholds, or revising other terms in 

those definitions. 

We are adopting definitions of the 

term ‘‘subject to regulation’’ to 

implement the tailoring approach 

because that will facilitate rapid 

implementation of the final rules by 

states. Under this approach, states may 

not need to undertake a regulatory or 

legislative action before implementing 

the final rule. These states would be 

able to establish their interpretations of 

the term ‘‘subject to regulation’’ used in 

existing state rules before January 2, 

2011, which is the date that the LDVR 

and permitting requirements would take 

effect, and thereby exempt sources 

below the threshold from PSD and title 

V as a matter of both federal and state 

law. We are also codifying in this 

definition EPA interpretations discussed 

in our recent action ‘‘Reconsideration of 

Interpretation of Regulations that 

Determine Pollutants Covered by Clean 

Air Act Permitting Programs’’ (75 FR 

17704) to provide a complete picture of 

the meaning of this phrase as it applies 

to all air pollutants. 

Because we are finalizing the rule in 

a manner that will allow most states to 

rapidly implement the final rule, and 

because our recent action on the 

Interpretive Memo allowed for a longer 

transition time than we anticipated at 

proposal, we are delaying final action 

on our proposal to issue limited 

approvals for SIP-approved PSD 

programs and part 70 operating permit 

programs.13 Instead, we are requesting 

that states submit information to the 

appropriate EPA Regional Administrator 

by August 2, 2010 so that we may 

determine whether it is still necessary to 

finalize any of our proposed limited 

approvals for any SIP-approved PSD 

and part 70 title V state programs. In 

that letter, states should explain 

whether they will apply the meaning of 

the term ‘‘subject to regulation’’ 

established by EPA in this action in 

implementing both their PSD and part 

70 title V permitting programs, and if so, 

whether the state intends to do so 

without undertaking a regulatory or 

legislative process. If a state must revise 

its statutes or regulations to implement 

this rule, we ask that it provide an 

estimate of the time to adopt final rules 

in its letter to the Regional 

Administrator. If a state chooses not to 

apply the approach reflected in this 

rule, the letter should address whether 

the state has alternative authority to 

implement the final rule’s tailoring 

approach or some other approach that is 

at least as stringent, but which also 

addresses the expected shortfalls in 

personnel and funding that would exist 

if the state carried out permitting at 

thresholds lower than those in the final 

rules. For any state that is unable or 

unwilling to apply the permitting 

thresholds in the final rules, and 

otherwise is unable to demonstrate 

adequate personnel and funding, or 

alternate authority to permit GHG 

emissions sources consistent with the 

final rules, EPA will move forward with 

finalizing a limited approval of the 

state’s permitting program. By the same 

token, if we do not receive a letter from 

mstockstill on DSKH9S0YB1PROD with RULES2

31526 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

a state in response to this request by 

August 2, 2010, we will be obliged to 

move forward with finalizing a 

narrowing of our approval of the 

existing SIP or title V program. 

We also ask any state that currently 

lacks authority to issue PSD or title V 

permits to any GHG emissions sources 

to notify the EPA Regional 

Administrator by letter as to whether 

the state intends to undertake 

rulemaking to revise its rules consistent 

with these applicability thresholds. For 

any state that lacks the ability to issue 

PSD or title V permits for GHG 

emissions sources consistent with the 

final rule, we intend to undertake a 

separate action to call for revisions to 

these programs. We also intend to move 

quickly to impose a Federal 

Implementation Plan (FIP) for PSD 

through 40 CFR 52.21, and use our 

federal title V authority to ensure that 

GHG sources will be permitted 

consistent with the final rules. Our 

request for information from states is 

discussed further in section V.C. 

D. How do you treat GHGs for purposes 

of title V permit fees? 

We are not amending the title V 

regulations for fees at this time, 

including any of the provisions 

specifying the presumptive minimum 

fee. We are also not, at this time, calling 

for each state, local or tribal program to 

submit new fee adequacy 

demonstrations as a result of increased 

GHG permitting workload during Steps 

1 and 2. However, as described in 

section VI.D the statutory and regulatory 

requirement to collect fees sufficient to 

cover all reasonable (direct and indirect) 

costs required to develop and 

administer title V programs still applies. 

Therefore, we are recommending that 

each program review its resource needs 

for GHG-emitting sources and determine 

if the existing fee approaches will be 

adequate. If those approaches will not 

be adequate, we suggest that state, local 

and tribal agencies should be proactive 

in raising fees to cover the direct and 

indirect costs of the program or develop 

other alternative approaches to meet the 

shortfall. We will closely monitor 

approved title V programs during 

implementation of the first two steps of 

the Tailoring Rule to ensure that the 

added workload from incorporating 

GHGs into the permit program does not 

result in fee shortfalls that imperil 

operating permit program 

implementation and enforcement. In 

developing alternative approaches, we 

note the value of approaches that do not 

require a per-ton fee for GHG and 

therefore do not require a GHG 

inventory to develop. Finally, we offer 

to work with permitting authorities that 

request our assistance with developing 

fee approaches. 

E. Other Actions and Issues 

This section describes other actions 

we intend to take in the future related 

to GHG permitting in addition to the 

actions that we are promulgating with 

this final rule. This section also 

responds to commenters’ suggestions 

that we undertake certain additional 

actions in this rule, which we decline to 

do. 

1. Timing for Permit Streamlining 

Techniques 

As described at proposal, we intend to 

develop a series of streamlining 

approaches as an integral part of our 

phase-in approach. The approaches we 

described at proposal included: (1) 

Defining PTE for various source 

categories, (2) establishing emission 

limits for various source categories that 

constitute presumptive BACT, (3) 

establishing procedures for use of 

general permits and permits-by-rule, (4) 

establishing procedures for electronic 

permitting, and (5) applying lean 

techniques to establish more efficient 

permitting processes. Taken as a whole, 

these techniques have the potential to 

obviate the applicability of PSD and title 

V requirements for some GHG-emitting 

sources; promote more efficient 

treatment of GHG-emitting sources that 

will already be subject to PSD and title 

V; and allow the expeditious expansion 

of PSD and title V applicability to more 

GHG-emitting sources while protecting 

those sources and the permitting 

authorities from undue expenses. 

As a result, we fully intend to move 

forward expeditiously with developing 

streamlining approaches. However, for 

reasons discussed in section V.E, we do 

not expect to develop and implement 

any of these approaches before Step 2 

begins. Moreover, we generally expect 

that each of the first three—which are 

the most far-reaching—will take several 

years to implement because we will 

need to undertake notice and comment 

rulemaking to develop them, and then 

the permitting authorities will need to 

adopt them through the appropriate 

state or local processes. We commit to 

explore a wide range of possible 

approaches before the Step 3 

rulemaking, and, in that rulemaking, to 

propose those that we think may be 

viable once we have had time to gather 

and review key supporting data, and 

once the states and we have key 

implementation experience that can 

inform our thinking. Because the 

streamlining approaches generally carry 

uncertainty—as demonstrated by 

comments we received raising legal and 

policy concerns, as discussed later, that 

we will have to address—we cannot 

commit with this action to adopt any 

streamlining actions in particular, nor to 

adopting them on any particular 

schedule. However, we intend to pursue 

streamlining options as expeditiously as 

possible, beginning immediately and 

proceeding throughout the phase-in 

period, and we encourage permitting 

authorities to do the same. 

2. Guidance for BACT Determinations 

Through this final rule we are not 

amending our regulations or issuing 

guidance on BACT for GHGs. As 

described in our proposal, we recognize 

the need to develop and issue technical 

and policy guidance for permitting of 

GHGs, and we plan to accomplish it 

through a separate effort that will 

involve stakeholder input. This effort is 

already underway; in addition to 

comments EPA received on the 

proposed Tailoring Rule related to GHG 

BACT guidance and information needs, 

EPA received a suite of 

recommendations from the Clean Air 

Act Advisory Committee (CAAAC) to 

which EPA is actively responding. This 

includes technical guidance and 

database tools that EPA anticipates 

issuing by June 2010, and policy 

guidance that will be issued by the end 

of 2010. Thus, this important 

information will be available to support 

permitting agencies in their BACT 

determinations at the time that the 

GHGs become a regulated NSR 

pollutant, once the LDVR takes effect in 

January 2011. EPA is confident that 

these measures will help support a 

smooth transition to permitting 

emissions of GHGs. 

3. Requests for Higher Category-Specific 

Thresholds and Exemptions From 

Applicability 

EPA has decided not to provide 

exemptions from applicability 

determinations (major source and major 

modification) under title V and PSD for 

certain GHG emission sources, emission 

activities, or types of emissions at this 

time. Commenters requested several 

applicability exemptions with respect to 

GHGs from, for example, agricultural 

sources, residential sources, small 

businesses, energy-intensive industrial 

processes (e.g., aluminum, steel, 

cement, glass, and pulp and paper 

manufacturers), lime production, 

semiconductor production, poultry 

production, solid waste landfills, 

biomass combustion/biogenic 

emissions, fugitive emissions, and 

pollution control projects. For reasons 

explained in section V.E, we have 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31527 

decided to address the need for tailoring 

through a uniform threshold-based 

approach, rather than through a 

collection of various specific exclusions. 

4. Transitional Issues Including 

Requests for Grandfathering 

For reasons explained in section V.E, 

EPA has determined that transitional 

issues for pending applications and 

permitted sources are adequately 

addressed by existing requirements and 

the amount of lead time provided before 

permitting requirements apply to GHGs 

under this rule and the March 29, 2010 

final action regarding the Interpretive 

memo. This rule does not contain any 

additional exemptions or grandfathering 

provisions addressing the transition to 

PSD and title V permitting for GHGs. 

We are not promulgating an 

exemption for PSD permit applications 

that are pending when Step 1 of the 

permitting phase-in begins for those 

sources that would otherwise need to 

obtain a PSD permit based on emissions 

of pollutants other than GHGs. Any PSD 

permits issued to such Step 1 sources on 

or after January 2, 2011 will need to 

address GHGs. This action makes no 

change to the position we expressed on 

this issue on April 2, 2010. 

Final PSD permits issued before 

January 2, 2011 need not be reopened or 

amended to incorporate requirements 

for GHGs that take effect after the permit 

is issued. A source that is authorized to 

construct under a PSD permit but has 

not yet begun actual construction on 

January 2, 2011 may begin actual 

construction after that date without 

having to amend the previously-issued 

PSD permit to incorporate GHG 

requirements, provided the permit has 

not expired. 

Sources that are not subject to PSD 

permitting requirements until Step 2 

need not obtain a PSD permit 

addressing GHGs in order to continue 

any actual construction that begins 

before July 1, 2011, when such a source 

was not a major stationary source 

required to obtain a PSD permit. 

However, Step 2 sources that begin 

actual construction in Step 2 may do so 

only after obtaining a PSD permit. 

The title V permitting regulations 

already include a robust set of 

provisions to address the incorporation 

of new applicable requirements and 

other transitional considerations. A title 

V source applying for the first time must 

submit its permit application within 12 

months after the source becomes subject 

to the operating permit program or an 

earlier time at the discretion of the 

permitting authority. Where a source is 

required to obtain a PSD permit, the 

source must apply for a title V permit 

or permit revision within 12 months of 

commencing operation or on or before 

such earlier date as the permitting 

authority may establish. Where 

additional applicable requirements 

become applicable to a source after it 

submits its permit application, but prior 

to release of a draft permit, the source 

is obligated to supplement its 

application. Permitting authorities may 

also ask for additional information 

during the processing of an application. 

In addition, where a source that already 

has a title V permit becomes subject to 

additional applicable requirements, the 

permitting authority is required to 

reopen the permit to add those 

applicable requirements if the permit 

term has 3 or more years remaining and 

the applicable requirements will be in 

effect prior to the date the permit is due 

to expire. 

V. What Is the Legal and Policy 

Rationale for the Final Actions? 

In this section, we describe the legal 

and policy rationale for our action, 

including our rationale for the 

following: (1) Our approach to 

calculating GHG emissions for PSD and 

title V applicability purposes, (2) our 

approach to establishing the thresholds 

and timing of PSD and title V 

applicability to GHG emissions sources; 

(3) how state, local, and tribal area 

programs adopt the final GHG 

applicability thresholds; (4) treatment of 

GHGs for title V permit fees; (5) future 

activities, including streamlining 

actions. We present the rationale 

description in the following five 

subsections, corresponding to the basic 

presentation of the approach in section 

IV. 

A. Rationale for Our Approach to 

Calculating GHG Emissions for PSD and 

Title V Applicability Purposes 

1. Grouping of GHGs Into a Single 

Pollutant 

In this section, we explain our 

treatment of the air pollutant at issue for 

purposes of PSD and title V, such that 

sources that emit that pollutant in the 

requisite quantities become subject to 

PSD and/or title V requirements. We 

explain our rationale for treating the 

GHG air pollutant as a combined group 

of six GHGs instead of six separate air 

pollutants defined by each individual 

GHG, and our rationale for including all 

six of the GHGs in that group. We also 

define the GHG metric to use for 

comparison to the applicability 

thresholds. 

We proposed to identify the air 

pollutant as the aggregate group of the 

six GHGs that comprise the GHG 

pollutant, and to use a GHG metric for 

the applicability thresholds based on 

CO2e. The summed CO2e emissions 

would then be compared to the 

applicable permitting threshold to 

determine whether the source is subject 

to PSD and title V requirements. 

Historically, the PSD and title V 

regulatory provisions do not, in the first 

instance, define the ‘‘air pollutant’’ to 

which they apply, but rather rely for the 

definition of the pollutant on a crossreference to the regulatory provision 

under another part of the Act that 

establishes the emission standards or 

limits for that pollutant that in turn 

causes the pollutant to be subject to 

regulation under PSD and title V 

permitting. As an example, the pollutant 

‘‘total reduced sulfur’’ (TRS) is a 

pollutant comprised of the sum of 

multiple compounds that was originally 

defined under the NSPS, subpart BB, 

Standards of Performance for Kraft Pulp 

Mills, which then caused it to be subject 

to regulation under the PSD program. 

The actual compounds that define the 

pollutant TRS are identified in the 

NSPS. The PSD program regulations did 

not introduce its own independent 

definition of TRS, but instead relied on 

the definition as contained in the Kraft 

Pulp Mills NSPS. 

However, at the time of our proposal, 

the endangerment and cause or 

contribute findings had not been 

completed and the LDVR for GHGs had 

not been finalized. Thus, there was no 

final agency action defining the ‘‘air 

pollutant’’ consisting of GHGs to be 

considered ‘‘subject to regulation.’’ 

Absent a definition of ‘‘greenhouse 

gases’’ under another regulatory 

provision that we could cross-reference, 

we proposed to define ‘‘greenhouse 

gases’’ for permitting purposes as ‘‘the 

single air pollutant that is comprised of 

the group of six GHGs, as proposed in 

the [CAA] section 202(a) endangerment 

and contribution findings.’’ 74 FR 

55329, col. 1. The six well-mixed GHGs 

identified in the proposed contribution 

finding were: CO2, CH4, N2O, SF6, HFCs, 

and PFCs. 

In the proposal, we further recognized 

that the LDVR for GHGs, as it was 

proposed, would result in reductions of 

only four of the gases, not all six, 

because only four are emitted by 

vehicles. However, we concluded that if 

the LDVR were finalized as proposed, 

then the air pollutant for purposes of 

PSD and title V applicability would be 

a single air pollutant that is the 

aggregate mix of the group of six GHGs 

because— 

[t]hese six GHGs as a class comprise the air 

pollutant that is the subject of the 

mstockstill on DSKH9S0YB1PROD with RULES2

31528 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

14By the same token, CAA section 165(a)(4) 

requires that a source subject to PSD impose best 

available control technology for ‘‘each pollutant 

subject to regulation under this chapter’’ that the 

source emits. 

15The applicability provision of the LDVR is 

found in 40 CFR 86.1818–12(a). 

endangerment finding and companion 

contribution finding and constitute the air 

pollutant that is regulated by the light-duty 

vehicle rule through measures that address 

the components of that air pollutant that are 

emitted from the mobile sources. Thus, 

although the CAA section 202(a) proposal 

establishes controls only with respect to four 

GHGs, as a legal matter, the proposal covers 

the entire set of GHGs that as a class are the 

single ‘‘air pollutant’’ in the proposed 

endangerment and contribution findings. 

74 FR 55329 col. 1. 

We also solicited comment on 

whether we should identify the GHG 

metric in a different way, such as 

addressing each GHG constituent 

compound individually or including 

(whether individually or as a group) 

only those four GHG constituent 

compounds for which reductions would 

occur through the emission standards or 

limits proposed in the LDVR. 

A minority of the comments on our 

proposal addressed this issue. Some 

commenters supported combining the 

individual GHGs as one pollutant for 

purposes of determining permitting 

applicability, and stated that it is not 

uncommon for EPA to recognize 

‘‘collective’’ air pollutants comprised of 

many individual compounds based 

upon shared threats to health and 

welfare, including such EPA-created 

group pollutants as sulfur oxides, 

nitrogen oxides, volatile organic 

compounds (VOCs), and particulate 

matter (PM). 

On the other hand, a significant 

number of commenters also raised 

concerns about grouping the individual 

GHGs into one metric. Some of these 

commenters argued that grouping GHGs 

is not appropriate because GHGs are not 

like other air pollutants that are 

comprised of numerous substances of 

concern (e.g., VOCs and PM), individual 

GHGs do not interact or combine to 

create a pollutant of concern, and EPA 

has not established a ‘‘GHG’’ NAAQS 

that supports the definition of the 

pollutant as a group. Some were 

concerned that regulating the GHGs as 

a group would increase the likelihood 

that a source will trigger permitting 

requirements, adding that this is 

unnecessary and would conflict with 

the ‘‘absurd results’’ and ‘‘administrative 

necessity’’ doctrines because it would 

lead to larger numbers of sources 

becoming subject to permitting. Some 

commenters opposing grouping 

suggested that we should explore 

regulating each of the GHG pollutants 

on an individual mass basis rather than 

collectively because in their view, it is 

reasonable and feasible to regulate and 

control emissions of each of the listed 

pollutants, other than CO2, at the 100/ 

250 tpy thresholds, or less if deemed 

necessary, in accordance with the 

established mechanisms of the Act and 

doing so would lead to a better 

environmental result. Finally, some 

commenters argued that disaggregating 

the pollutants would also allow for 

more appropriate technology review. 

After considering these comments, 

and taking into account other related 

actions that have occurred since 

proposal, we have determined that PSD 

and title V permitting program 

requirements will apply, as proposed, to 

the ‘‘single air pollutant that is 

comprised of the group of six GHGs.’’ 74 

FR 55329, col. 1. We believe that this 

approach is both compelled by the 

statute and reflects the preferable policy 

approach. 

As more fully discussed elsewhere in 

this rulemaking, the PSD requirements 

apply to a ‘‘major emitting facility’’ that 

undertakes construction or 

‘‘modification.’’ CAA sections 165(a), 

169 (2)(C). The term ‘‘major emitting 

facility’’ is defined as, in general, a 

source that emits 100 or 250 tons of ‘‘any 

air pollutant,’’ CAA section 169(1), and, 

similarly, the term ‘‘modification’’ is 

defined as a physical or operational 

change that results in the increased or 

new emissions of ‘‘any air pollutant.’’ 

CAA sections 169(2)(C), 111(a)(4). 

Through regulation, we have interpreted 

the term ‘‘any air pollutant,’’ as found in 

both the terms ‘‘major emitting facility’’ 

and ‘‘modification,’’ more narrowly to 

mean any ‘‘regulated NSR pollutant,’’ 

and we further define this term to 

include any pollutant that is ‘‘subject to 

regulation under the Act.’’ 40 CFR 

52.21(b)(50)(iv), 52.21.(b)(2).14

Similarly, as discussed elsewhere, the 

title V requirements apply to a ‘‘major 

source,’’ which is defined, in general, as 

any source that emits at least 100 tpy of 

‘‘any air pollutant.’’ CAA sections 502(a), 

501(2)(B), 302(j). EPA has interpreted 

the term ‘‘any air pollutant’’ narrowly so 

that applies only with respect to air 

pollutants that are subject to regulation 

under the CAA. 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). 

Based on these provisions, the key 

issue for present purposes in 

determining whether a source is subject 

to PSD (because it qualifies as a major 

emitting facility that undertakes 

construction or modification) or title V 

is whether the pollutant or pollutants 

that the source emits comprise the ‘‘air 

pollutant’’ that is ‘‘subject to regulation’’ 

under the Act. 

The phrase ‘‘subject to regulation 

under the Act,’’ by its terms, identifies 

the air pollutant that is subject to PSD 

and title V as the same air pollutant that 

is identified in the regulatory action 

under another provision of the Act. The 

term is a simple cross-reference. It 

carries no implication that EPA, in 

identifying the pollutant to which PSD 

or title V apply, may redefine the 

pollutant that is regulated elsewhere in 

the Act. Whatever the pollutant is that 

is regulated elsewhere, it is that 

pollutant to which PSD and title V 

apply. 

Since the time of our proposal, we 

have finalized both the contribution 

finding and the LDVR for GHGs. The 

final LDVR for GHGs specifies, in the 

rule’s applicability provisions, the air 

pollutant subject to control as the 

aggregate group of the six GHGs, 

including CO2, CH4, N2O, SF6, HFCs, 

and PFCs.15 Because it is this pollutant 

that is regulated under the LDVR, it is 

this pollutant to which PSD and title V 

apply. Specifically, the applicability 

provision in the LDVR provides a clear 

reference to the definition of the single 

pollutant comprised of the aggregate 

group of the six well-mixed GHGs, 

which makes clear PSD and title V 

applicability depends on the same sumof-six GHG construct. We must follow 

this construct of the aggregate group of 

the six gases and do not have discretion 

to interpret the GHG ‘‘air pollutant’’ 

differently for the purposes of PSD or 

title V. 

This construct of the pollutant as the 

aggregate group of the six gases is also 

consistent with the definition of the air 

pollutant in the final contribution 

finding for GHGs [see 74 FR 66496, 

66499, 66536–7 (December 15, 2009)]. 

There, the Administrator defined the air 

pollutant as the ‘‘aggregate group of the 

same six * * * greenhouse gases,’’ (74 

FR 66536), and these well-mixed GHGs 

are defined to include CO2, CH4, N2O, 

SF6, HFCs, and PFCs. 

Moreover, even if we had discretion 

to identify the GHGs air pollutant 

differently in the permitting programs 

than in the LDVR, we believe it is 

reasonable to identify the GHGs air 

pollutant through the sum-of-six 

construct for the same reasons why we 

adopted that definition in the 

contribution finding and for additional 

reasons noted below specific to the 

permit programs. The term ‘‘air 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31529 

pollutant’’ is defined under CAA section 

302(g) as ‘‘any air pollution agent or 

combination of such agents, including 

any physical, chemical, biological, 

radioactive * * * substance or matter 

which is emitted into or otherwise 

enters the ambient air.’’ Under this 

definition, EPA has broad discretion to 

identify an air pollutant, including, as 

appropriate, treating a combination of 

air pollutant agents as a single air 

pollutant. Here, we think that the six 

well-mixed gases are appropriately 

combined into a single air pollutant 

because, as noted in the contribution 

findings, they share several important 

attributes: Each of the six gases: 

• Is directly emitted (and is not 

formed by secondary processes in the 

atmosphere); 

• Is long-lived in the atmosphere after 

it is emitted; 

• Is sufficiently long-lived that it 

becomes ‘‘well-mixed,’’ which means 

that its concentration is essentially 

uniform in the atmosphere (as opposed 

to having significant local/regional 

variation); and 

• Has well understood atmospheric 

properties (e.g., radiative forcing). 

See 74 FR 66516–66518. 

In addition, treating the six GHGs as 

a single air pollutant is consistent with 

the actions of international scientific 

bodies. For example, the 

Intergovernmental Panel on Climate 

Change (IPCC) considers in various 

reports how the six gases drive humaninduced climate change and how that 

affects health, society, and the 

environment. Similarly, the United 

Nations Framework Convention on 

Climate Change (UNFCCC) requires 

reporting of these six gases and the 

commitments under the UNFCCC and 

Kyoto Protocol are based on the 

combined emissions of these six gases. 

Finally, as discussed later, it is standard 

practice to compute the ‘‘CO2

equivalency’’ of aggregate emissions 

using GWP. 

We disagree with commenters who 

argued that grouping all six GHGs is not 

appropriate because GHGs are not like 

other air pollutants that are comprised 

of numerous substances of concern (e.g., 

VOCs and PM). First, as noted 

previously, we are following the 

approach to a single air pollutant 

comprised of the aggregate of the six 

GHGs initially adopted in the 

contribution finding and followed in the 

LDVR. Many of these same comments 

have already been addressed in the 

contribution finding and Response to 

Comment (RTC) document for that 

action, and those responses apply 

equally here. 

In addition to the reasons described in 

the endangerment and contribution 

findings, there are CAA permitting 

programmatic and policy advantages to 

using the sum-of-six construct for the 

GHG air pollutant for PSD and title V 

applicability purposes. We believe now, 

as we did at proposal, that the benefits 

in using the cumulative group of GHGs 

outweigh any implementation 

advantages to using an individual-GHGbased metric. The advantages to sum-ofsix definition include that it may: (1) 

Allow significantly more flexibility to 

sources for designing and implementing 

control strategies that maximize 

reductions across multiple GHGs and 

would also likely align better with 

possible future regulations that allow for 

such flexibility; (2) more effectively 

support possible future offsets or trading 

mechanisms that involve different 

source categories and different 

compositions of GHG emissions; and (3) 

could better accommodate and 

harmonize with future regulations 

because it establishes one class of 

pollutants that includes individual 

components that may, in turn, become 

subject to specific emission standards 

under future regulatory efforts. 

We disagree with commenters who 

believe that aggregating the GHGs under 

one GHG metric for permitting 

applicability purposes would lead to an 

excessive amount of source permitting 

activity. This is because the phase-in 

approach addresses overwhelming 

permitting burdens associated with 

permitting of GHGs. It does so by 

designing our applicability thresholds to 

allow for a manageable amount of new 

permitting actions based on the 

emissions from sources using the sumof-six metric. If we based applicability 

on individual gases, (assuming, again, 

that we had authority to deviate from 

the definition of ‘‘air pollutant’’ as used 

in the LDVR), we would still need to 

determine what level of permitting is 

manageable and appropriate based on 

thresholds on an individual gas basis 

and would expect that the final rule 

would result in the same levels of 

remaining burden. Accordingly, unless 

the permitting program were being 

implemented at the statutory thresholds, 

the effect of a decision to aggregate or 

not aggregate would not reduce 

workload; rather, it would simply shift 

work from permitting facilities that 

trigger based on combined GHGs to 

those that trigger based on individual 

GHGs. Although we acknowledge that 

this may affect applicability for a 

particular source, we disagree with the 

comment that doing so would conflict 

with our conclusions based on the 

‘‘absurd results’’ or ‘‘administrative 

necessity’’ doctrines. By using a 

consolidated and weighted 

measurement, we are able to direct the 

limited administrative resources to 

those new sources and modifications 

with the greatest impact on GHG 

emissions. 

We also believe that the additional 

flexibility resulting from the sum-of-six 

GHG metric will provide substantially 

more opportunities for sources to 

address emission increases of GHGs 

than they would have had under an 

individual gas based metric, and, 

thereby, possibly reduce their 

permitting burden through multi-gas 

mitigation strategies. We disagree with 

the comment that isolating BACT 

review on sources that emit a single 

GHG necessarily leads to better 

environmental results than it would for 

sources that undergo a combined review 

for all six gases. To the contrary, given 

that Congress built in considerations of 

energy, environmental, and economic 

impacts into the BACT requirement, we 

think that allowing consideration of 

those factors across six gases will likely 

result in decisions that more 

appropriately account for those impacts 

at the source. 

2. Identifying Which GHGs Are 

Included in the Group 

As discussed previously, we proposed 

to include the combination of six wellmixed GHGs as the air pollutant that 

triggers PSD and title V applicability: 

CO2, CH4, N2O, SF6, HFCs, and PFCs. 

Some commenters supported including 

all six. They cite the proposed 

contribution findings that identify the 

pollutant through the sum-of-six 

construct, and they emphasize that EPA, 

in order to protect the public, has to 

control all the GHGs it has regulated 

and reduce the overall impact of the mix 

of six GHGs. 

However, a substantial number of 

commenters, mainly from industry 

sectors who also disagree with grouping 

the GHGs together, contend that only 

the constituent gases that are actually 

subject to controls under the LDVR 

should be included in determining 

applicability under the Tailoring Rule. 

Some of these commenters believe that 

only the three compounds (CO2, CH4, 

N2O) for which the LDVR contains 

emissions standards or caps should be 

considered in the GHG metric for 

permitting, while others would also add 

HFCs (which are included in a credit 

flexibility arrangement under the LDVR) 

for a total of four GHGs. These 

commenters argued that PSD is not 

triggered for all six GHGs by the LDVR 

because under the proposed PSD 

mstockstill on DSKH9S0YB1PROD with RULES2

31530 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

interpretation in the Interpretive Memo, 

actual emission controls under the Act 

are required to trigger PSD obligations 

for a given pollutant. They also argue 

that including all six would conflict 

with EPA’s rationale for the Tailoring 

Rule by leading to larger numbers of 

sources subject to permitting, thereby 

increasing the harm that EPA says it 

wants to avoid. They further assert that 

the EPA cannot exercise its discretion to 

widen the scope of PSD and title V 

applicability to six GHGs when it is 

relying on the judicial doctrines of 

‘‘absurd results’’ and ‘‘administrative 

necessity’’ to narrow PSD and title V 

applicability. They explain that in their 

view, those doctrines apply only when 

EPA has taken all steps possible to 

narrow the scope of PSD and title V and 

thereby avoid the administrative 

problems that force it to rely on those 

doctrines. 

There were a few comments on 

whether to include specific gases as part 

of the sum-of-six grouping. Several 

commenters representing sectors that 

have significant SF6 usage specifically 

argue that SF6 should not be included 

as a GHG, at least at this time, because 

there are no known SF6 controls, it is 

not clear how PTE would be calculated 

from such facilities, and EPA has not 

addressed the economic burden that 

regulation of these facilities would 

create. A solid waste industry 

commenter asserts that the Tailoring 

Rule should confirm that CH4 and N2O 

will not be regulated under PSD or title 

V because these pollutants are only 

emitted in miniscule amounts from 

automobiles. 

We disagree with commenters who 

suggest that because the LDVR actually 

reduces only four of the six GHGs, EPA 

may apply PSD and title V to only those 

four GHGs. It is true that the LDVR 

standard for the single air pollutant that 

is comprised of the aggregate of six 

GHGs consists of individual standards 

for only four particular constituents of 

the single air pollutant—which are 

emissions limits or caps for three GHGs 

(CO2, CH4, and N2O) and an emission 

crediting option for one GHG (HFCs)— 

but this does not dictate that only those 

four compounds are subject to 

regulation for permitting purposes. 

Although the LDVR results in 

reductions only with respect to four 

specific GHGs, as a legal matter the 

LDVR standard covers the entire set of 

GHGs that as a class are the single ‘‘air 

pollutant’’ in the contribution finding. 

Similar to our rationale for addressing 

the group of six GHGs as one pollutant 

for PSD and title V applicability 

purposes, we must adhere to the 

definition of applicability, cited 

previously, in the final LDVR for GHGs 

and include CO2, CH4, N2O, SF6, HFCs, 

and PFCs. We do not have discretion to 

select only a subset of these gases in 

defining our GHG threshold metric for 

the permitting applicability purposes. 

See LDVR, May 7, 2010, 75 FR 25398– 

99, section III.A.2.c. (discussing EPA’s 

exercise of discretion under section 

202(a) in setting emissions standards 

applicable to emission of the single air 

pollutant). 

For the same reasons, we disagree that 

this approach is inconsistent with the 

Agency’s final action in ‘‘EPA’s 

Interpretation of Regulations that 

Determine Pollutants Covered by 

Federal Prevention of Significant 

Deterioration (PSD) Permit Program.’’ 

While it is the case that only four 

constituent gases are reduced by the 

LDVR, the ‘‘air pollutant’’ that is 

controlled, and thus ‘‘subject to 

regulation,’’ is the group of six, and it is 

this ‘‘air pollutant’’ to which PSD and 

title V apply. 

We also disagree with commenters 

who suggested that including all six 

GHGs in determining permitting 

applicability would conflict with our 

‘‘absurd results’’ and ‘‘administrative 

necessity’’ rationale for the phase-in 

periods and applicability thresholds for 

GHGs. Even if we did have discretion to 

identify the air pollutant for PSD and 

title V purposes as consisting of only 

four of the six well-mixed GHGs, we do 

not believe that doing so would have 

any meaningful impact on the 

administrative burdens that are at the 

heart of our reliance on the ‘‘absurd 

results’’ and ‘‘administrative necessity’’ 

doctrines. The number of additional 

permitting actions and amount of 

additional permitting burden resulting 

from including all six GHGs, rather than 

four, is minimal. This is because the 

administrative burden of GHG 

permitting is dominated by CO2 and 

CH4 emission sources. For example, 

with a major source threshold set at 

100,000 tpy CO2e, the combined 

population of sources that would be 

major for N2O, HFCs, PFCs, and SF6

accounts for fewer than two percent of 

the GHG sources that would remain 

covered. 

For similar reasons, we disagree with 

commenters who specifically suggest 

SF6 emissions should not be included in 

the applicability metric for GHGs. As we 

have stated earlier in this section, our 

selection of the GHG metric is driven by 

the definition of the ‘‘air pollutant’’ as 

defined in the LDVR, and in 

consideration of the final GHG 

endangerment finding. SF6 is 

specifically included as one of the 

‘‘well-mixed greenhouse gases’’ in the 

definition of air pollutant in the 

contribution finding, and is included in 

the definition of the air pollutant in the 

LDVR for which that rule is applicable. 

We do not believe we have the 

discretion to define the ‘‘air pollutant’’ 

differently for PSD and title V 

applicability purposes than the 

definition of the ‘‘air pollutant’’ that is 

regulated elsewhere. In any event, 

including SF6 emissions based on the 

thresholds finalized in this rulemaking 

does not add an excessive 

administrative burden for permitting 

authorities. Based on our threshold 

evaluation study, we estimate that less 

than 40 sources of SF6 nationwide 

would exceed the 100,000 tpy CO2e 

threshold. Furthermore, SF6 is a high 

GWP gas and, as discussed elsewhere, 

we have included a mass-based trigger 

for high GWP gases that will likely have 

the effect of further reducing this count. 

For the same reasons, we disagree 

with the commenters who suggest we 

include black carbon and other shortlived climate forcers to the list of GHGs, 

as well as commenters asking for an 

exclusion of CH4 and N2O. The 

definition of the air pollutant, as cited 

in the LDVR, includes CH4 and N2O and 

does not include black carbon or other 

short-lived gases. 

3. Use of GWP vs. Mass-Based GHG 

Thresholds 

For the reasons discussed previously, 

we are determining permit program 

applicability based on the sum-of-six 

well-mixed gases that comprise the GHG 

air pollutant. This section discusses our 

use of both the CO2e metric and mass 

emissions of the GHGs for applicability 

purposes. 

Under our proposal, a source’s 

emissions of all six GHGs would be 

combined into a single metric by 

multiplying the mass of each individual 

GHG (in tpy) by its GWP value, and 

summing these products to determine 

the total emissions of the GHG pollutant 

in tpy CO2e. We received comments on 

this aspect of the proposed metric. 

Several commenters explicitly support 

the use of GWP and the CO2e metric for 

GHG emissions. These commenters 

believe EPA has the authority to select 

an appropriate metric to measure GHGs 

in the PSD program, and policy 

considerations support the choice of 

GWP. Some of them note that GWP is 

a widely-used metric which employs 

internationally-recognized conversion 

factors to compare GHGs based upon 

their climate properties, and some add 

that states and local areas that have 

climate action plans for GHG reductions 

use CO2e. Some of these commenters 

believe this metric will ensure a 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31531 

standard measure across all permitting 

agencies and will lead to a more 

effective system for permitting 

authorities and create more 

opportunities to reduce emissions over 

the full class of GHGs, rather than 

focusing on reducing individual GHGs. 

On the other hand, some commenters 

oppose the use of GWP and CO2e, 

believing that thresholds should be 

based on individual mass-based 

emissions for each GHG. Some of these 

commenters felt that EPA has no 

discretion to ignore the metric for 

regulation established by Congress for 

PSD in section 169 of the Act. Some 

commenters were also concerned that 

the use of CO2e will complicate the 

implementation of BACT because 

sources that trigger PSD will be required 

to install BACT for each regulated 

pollutant, not for CO2e. As a result, a 

source that exceeds the threshold 

primarily due to its CO2 emissions 

would be forced to install BACT for all 

other individual GHGs, regardless of 

how minor those other emissions may 

be. Finally, a commenter was concerned 

that use of GWP would complicate 

implementation because GWP values 

can sometimes change. 

In our proposal preamble discussion 

of GHG metric, EPA also raised the 

possibility of including a limitation in 

the metric to address the prospect 

(expected to occur only rarely) that 

high-GWP gases could be emitted in 

quantities less than statutory thresholds 

for PSD and title V but nevertheless 

exceed the proposed thresholds in terms 

of CO2e. Most commenters on this 

subject support a dual threshold under 

which a source would be subject to title 

V or PSD only if its GHG emissions 

exceeded both the statutory thresholds 

on an actual tonnage basis and the 

tailored thresholds on a CO2e basis. 

Commenters supporting this approach 

felt that it would be unlawful to apply 

PSD when GHGs are below the statutory 

thresholds, or when there is not a net 

emissions increase. Others added that 

the complexity of accounting for 

emissions according to both mass and 

GWP should be manageable and is not 

a reason to ignore the role of mass-based 

emission rates in determining the 

applicability of PSD requirements. 

Additionally, one commenter observed 

that a dual threshold is consistent with 

phasing in the Tailoring Rule and is an 

effective way to address the current 

uncertainty surrounding how to 

measure high-GWP gases such as SF6. In 

contrast, a few commenters stated they 

do not support a dual threshold, 

primarily on the grounds that there is no 

benefit to the added complexity. 

After considering these comments, we 

have decided to adopt applicability 

thresholds in the final rule based on a 

CO2e metric for the sum-of-six wellmixed gases, and also to adopt an 

additional mass-based threshold for the 

sum-of-six gases as discussed in the 

proposal. First, as discussed in the 

previous section, we have explained 

why the appropriate pollutant for PSD 

purposes is the single pollutant GHG, 

which is composed of the six wellmixed gases. Regarding the CO2e metric, 

we continue to believe there are a 

number of advantages, as laid out in the 

proposal, to a CO2e measure that would 

not be available if we used only a massbased metric. These include: (1) A CO2e 

metric, by incorporating the GWP 

values, best addresses the relevant 

environmental endpoint, which is 

radiative forcing of the GHGs emitted; 

(2) when combined with a sum-of-six 

gases approach, the CO2e metric best 

allows for consideration of their 

combined effects when sources emit any 

one or combination of the six wellmixed GHGs; (3) a cumulative CO2e 

metric is consistent with the metric 

used in the mandatory GHG reporting 

rule and other related rules and 

guidelines; and (4) a CO2e metric allows 

more flexibility for designing and 

implementing control strategies that 

maximize reductions across multiple 

GHGs. We recognize the tension 

between the mass-based metric in the 

statute and the CO2e-based metric we 

are adopting in this rule, but as 

discussed later, we will address this by 

also retaining the mass-based metric. 

Moreover, given our need to tailor our 

approach to covering sources of GHGs, 

we believe that the considerations 

driving our choice to also use a CO2ebased metric are appropriate for 

defining the phase-in and allow for 

permitting resources to be directed at 

those sources and modifications that 

have the greatest impact on radiative 

forcing of the GHGs emitted. 

We recognize the concern of 

commenters who stated that we cannot 

ignore the statutory thresholds based on 

the mass-based emissions of an air 

pollutant as described under CAA 

section 169(1). As we mentioned in the 

proposal, because both the PSD and title 

V statutory thresholds are expressed on 

a mass basis (i.e., tons of a pollutant 

with no weighting values applied) we 

were concerned from a legal standpoint 

that the metric proposed (CO2e) could 

have the effect of subjecting to PSD or 

title V requirements a source whose 

emissions fall below the statutory 

threshold limits on a strictly mass basis, 

but whose CO2e-based emissions exceed 

the CO2e thresholds we establish under 

the Tailoring Rule. As an example, in 

rare instances it is possible that a source 

may emit only a non-CO2 GHG in very 

small amounts, on a mass basis, but one 

that carries a very large GWP. In this 

case, it is possible that the source may 

emit the GHG in amounts that fall below 

the PSD and/or title V statutory 

applicability threshold (100 or 250 tpy, 

as applicable) on a mass basis, but 

exceed the 100,000 CO2e PSD and title 

V applicability thresholds for Step 2 

finalized in this action. Under these 

circumstances, without a mass-based 

threshold, the source would trigger PSD 

and title V for its CO2e emissions even 

though its GHG mass emissions would 

not, in fact, exceed the statutory triggers. 

Upon review of the comments 

pertaining to this issue and further 

analysis of the legal and programmatic 

implications, we are adopting a two-part 

applicability process, for both major 

source applicability determinations for 

GHGs under PSD and title V and for 

determining if a net increase has 

occurred in PSD applicability 

determinations for modifications. As 

explained in the RTC document, we 

accomplish this two-step applicability 

approach by continuing to rely on the 

existing mass-based applicability 

provisions in the current regulations, 

and by including new regulatory 

provisions that add a definition of 

‘‘subject to regulation’’ that in turn 

includes the phase-in thresholds. 

Similarly, for PSD modification reviews 

and associated netting analyses, the 

same two-step process must be used. 

Our summary in section IV.A described 

how we expect this provision to be 

implemented in practice. 

We acknowledge that the possibility 

of changing GWP values is a downside 

to the use of CO2e for the GHG metric, 

and we address this comment in the 

next section, where we discuss our plan 

to codify GWP values. By codifying 

GWP, any changes will be manageable, 

and, in our judgment, will not outweigh 

the benefits of a CO2e-based approach. 

We also acknowledge that a CO2e-based 

approach may appear to complicate the 

BACT review and implementation 

process. However, we disagree with the 

commenter’s ultimate conclusion that 

BACT will be required for each 

constituent gas rather than for the 

regulated pollutant, which is defined as 

the combination of the six well-mixed 

GHGs. To the contrary, we believe that, 

in combination with the sum-of-six 

gases approach described above, the use 

of the CO2e metric will enable the 

implementation of flexible approaches 

to design and implement mitigation and 

control strategies that look across all six 

mstockstill on DSKH9S0YB1PROD with RULES2

31532 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

16We note that our approach does not entirely 

avoid the possibility that a GWP change can occur 

while a permit is in progress although it will ensure 

advance notice of such a change. In the event that 

we plan to propose a change to GWP values, we 

will work with permitting authorities as necessary 

to provide guidance to sources on transitional 

issues. 

of the constituent gases comprising the 

air pollutant (e.g., flexibility to account 

for the benefits of certain CH4 control 

options, even though those options may 

increase CO2). Moreover, we believe that 

the CO2e metric is the best way to 

achieve this goal because it allows for 

tradeoffs among the constituent gases to 

be evaluated using a common currency. 

4. Determining What GWP Values Are 

To Be Used 

At proposal, we proposed to link the 

calculation of CO2e for GHGs to GWP 

values in EPA’s ‘‘Inventory of U.S. 

Greenhouse Gas Emissions and Sinks’’ 

(GHG Inventory). See, e.g., proposed 40 

CFR 51.166(b)(58). Numerous 

commenters expressed concerns about 

this proposal on various grounds, 

including the following: 

• The EPA should follow the proper 

notice-and-comment procedures and the 

requirements of the Information Quality 

Act for the relevant technical 

underpinnings of the proposal. The EPA 

relies upon the GWPs of the IPCC 

without providing the supporting data 

for review, and it is inappropriate to use 

this as a basis for this rule without first 

making all the raw data available for 

public inspection and comment. 

• The EPA cannot tie the definition of 

GWP to the GHG Inventory because it is 

a non-regulatory document that may be 

changed without notice-and-comment 

rulemaking. Before EPA uses a new 

GWP, that GWP must be subject to 

notice and comment to comply with the 

requirements of CAA section 307 and 

the Administrative Procedure Act 

(APA). 

• An annual update of GWP would 

create a moving target for sources 

conducting applicability determinations 

and assessing compliance with minor 

NSR and PSD emission limits. The EPA 

needs to ensure that applicability and 

compliance with limits continue to be 

based on the GWP that existed when the 

determination was made or the limit 

was established. 

• The EPA should freeze the GWP at 

the current values by incorporating 

those values into the regulation. The 

EPA could still revise the ‘‘NSR’’ GWP, 

but would have to revise the regulation 

to do so. 

Commenters added that it is 

important to ensure that all permitting 

agencies are using the same calculations 

for the determination of CO2e for GHGs. 

We agree with commenters who 

suggested we should codify, either in 

the Tailoring Rule or through reference 

to codified values in another 

rulemaking, the GWP values to be used 

in permitting analyses. We agree that 

this approach provides certainty as to 

which GWP values need to be used by 

permitting authorities and allows 

sources to plan appropriately for 

possible changes in the GWP values. As 

mentioned in the comments, 

recommended GWP values from IPCC 

can change over time. While this is 

infrequent—the last such changes were 

in 2007—when it occurs, there are 

generally significant lag times in 

universal adoption of new values 

because of inconsistencies that could be 

created in national inventories and 

emission reporting mechanisms. In a 

regulatory setting, such as in the 

permitting programs, this could 

potentially create significant 

implementation issues, such as when a 

GWP change occurs while a permit 

action is in progress.16 EPA also 

recognized similar potential 

implementation issues in developing its 

final mandatory GHG reporting rule, 

and codified in the regulatory text for 

that rule the GWP values to be used in 

reporting GHGs as part of that final 

rulemaking. 

For these reasons, we have decided to 

follow the approach in the mandatory 

GHG reporting rule and require that for 

PSD and title V permitting 

requirements, wherever emissions 

calculations are performed, that 

permitting authorities and sources use 

GWP values that are codified in EPA 

rules. We will establish the GWP values 

for PSD and title V rules based on a 

cross-reference to the values that are 

codified in the EPA’s mandatory GHG 

reporting rule. 74 FR 56395, Table A–1 

to subpart A of 40 CFR part 98—Global 

Warming Potentials. Any changes to 

Table A–1 of the mandatory GHG 

reporting rule regulatory text must go 

through an appropriate regulatory 

process. In this manner, the values used 

for the permitting programs will reflect 

the latest values adopted for usage by 

EPA after a regulatory process and will 

be consistent with those values used in 

the EPA’s mandatory GHG reporting 

rule. Furthermore, the lead time for 

adopting changes to that rule will 

provide a transition time to address 

implementation concerns raised by 

commenters. 

5. Use of Short Tons vs. Metric Tons 

We proposed that the GHG metric 

would be expressed in terms of English 

(or short) tons, rather than metric (or 

long) tons. A few commenters support 

using short tons for this purpose. Others 

prefer the use of metric tons, and most 

of them note that the mandatory GHG 

reporting rule is based on metric tons 

and believe that the Tailoring Rule 

should be consistent with that rule. 

These commenters believe that using 

different units in the two rules would be 

confusing and could result in sources 

that are not subject to the mandatory 

GHG reporting rule becoming subject to 

PSD. Some of the commenters add that 

various ‘‘cap and trade’’ legislative 

proposals also quantify GHGs in metric 

tons. A few other commenters 

recommend that EPA harmonize the 

applicability thresholds established 

under the Tailoring Rule and the 

mandatory GHG reporting rule without 

expressing a preference for short or 

metric tons. 

We are finalizing our proposal to use 

short tons because short tons are the 

standard unit of measure for both the 

PSD and title V permitting programs 

and the basis for the threshold 

evaluation to support this rulemaking. 

Calculation inputs for PSD are typically 

prepared in English units (e.g., pounds 

of fuel, British thermal units (Btu), etc.) 

which is the common convention for all 

PSD analyses and the units of the 

statutory thresholds under the Act. 

It is true that the GHG reporting rule 

uses metric tons, but this does not create 

an inconsistency between permitting 

programs and the reporting rule because 

the two rules already use different 

applicability approaches. Although we 

originally proposed 25,000 tpy as the 

major source level for permitting 

programs, which was similar to the 

threshold in the reporting rule, we 

decided to adopt substantially higher 

thresholds in the final rule. 

Furthermore, even if the numbers were 

similar, the thresholds used for the 

reporting rule are based on actual 

emissions, while the PSD and title V 

programs thresholds are based on PTE. 

Therefore, we are less persuaded by 

arguments for consistency, and believe 

it is more important for ease of permit 

program implementation to ensure that 

GHG emissions calculations for PSD and 

title V will build on the same set of 

input variables used to develop shortton based estimates for non-GHG 

pollutants. Thus, the use of short tons 

should actually facilitate the 

development of the GHG emission 

estimate. It would likely be more 

confusing to require a multi-pollutant 

PSD applicability analysis to present 

emissions information using different 

units for different pollutants, as would 

be the case if we required metric tons 

for GHG but continue to use short tons 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31533 

17 ‘‘Summary of Methodology and Data Used to 

Estimate Burden Relief and Evaluate Resource 

Continued 

for every other pollutant. Finally, we do 

not expect this choice to introduce 

additional complexity because the 

conversion between short tons and 

metric tons is a very simple calculation. 

Therefore, based on these 

considerations we are requiring that 

short tons be used as the basis for 

emission calculations used to meet PSD 

and title V permitting requirements. 

B. Rationale for Thresholds and Timing 

for PSD and Title V Applicability to 

GHG Emissions Sources 

In this subsection, we describe our 

legal and policy rationale for our 

determinations concerning PSD and title 

V applicability to GHG emissions 

sources. This subsection includes: (1) 

An overview of our rationale; (2) data 

concerning costs to sources and 

administrative burdens to permitting 

authorities; (3) a review of the Chevron 

legal framework and the ‘‘absurd 

results,’’ ‘‘administrative necessity,’’ and 

‘‘one-step-at-a-time’’ doctrines, as well as 

a review of how those doctrines fit into 

the Chevron framework; (4) an overview 

of the relevant PSD and title V 

requirements and their legislative 

history; (5) our application of the 

‘‘absurd results’’ doctrine for tailoring 

the PSD requirements; (6) our 

application of the ‘‘absurd results’’ 

doctrine for tailoring the title V 

requirements; (7) our plans to issue 

further rulemaking that will address the 

‘‘absurd results’’ basis for both PSD and 

title V requirements; (8) our rationale for 

the phase-in schedule for applying PSD 

and title V to GHG sources; (9) our 

application of the ‘‘administrative 

necessity’’ basis for tailoring the PSD 

and title V requirements; and (10) our 

application of the ‘‘one-step-at-a-time’’ 

basis for tailoring the PSD and title V 

requirements. 

1. Overview 

Under the familiar Chevron two-step 

approach to construction of agencyadministered statutes, the agency must 

first, at Chevron Step 1, determine 

whether Congress’s intent in a particular 

provision on a specific question is clear; 

and if so, then the agency must follow 

that intent. If the intent of the provision 

is not clear, then the agency may, under 

Chevron Step 2, fashion a reasonable 

interpretation of the provision. The best 

indicator of congressional intent is the 

literal meaning of the provision and 

generally, according to the case law, if 

the literal meaning addresses the 

specific question, then the agency 

should follow the literal meaning. 

However, the courts have developed 

three doctrines relevant here that 

authorize departure from a literal 

application of statutory provisions. The 

first is the ‘‘absurd results’’ doctrine, 

which authorizes such a departure if the 

literal application would produce a 

result that is inconsistent with 

congressional intent, and particularly if 

it would undermine congressional 

intent. The judicial doctrine of 

‘‘administrative necessity’’ authorizes an 

agency to depart from statutory 

requirements if the agency can 

demonstrate that the statutory 

requirements, as written, are impossible 

to administer. The ‘‘one-step-at-a-time’’ 

doctrine authorizes an agency, under 

certain circumstances, to implement a 

statutory requirement through a phased 

approach. Each of the three doctrines 

fits into the Chevron framework for 

statutory construction because each of 

the three is designed to effectuate 

congressional intent. 

To apply the statutory PSD and title 

V applicability thresholds literally to 

sources of GHG emissions would bring 

tens of thousands of small sources and 

modifications into the PSD program 

each year, and millions of small sources 

into the title V program. These 

extraordinary increases in the scope of 

the permitting programs would mean 

that the programs would become several 

hundred-fold larger than what Congress 

appeared to contemplate. Moreover, the 

great majority of additional sources 

brought into the PSD and title V 

programs would be small sources that 

Congress did not expect would need to 

undergo permitting and that, at the 

present time, in the absence of 

streamlined permit procedures, would 

face unduly high permitting costs. 

Further, again at the present time, in the 

absence of streamlined permit 

procedures the administrative strains 

would lead to multi-year backlogs in the 

issuance of PSD and title V permits, 

which would undermine the purposes 

of those programs. Sources of all types— 

whether they emit GHGs or not—would 

face long delays in receiving PSD 

permits, which Congress intended to 

allow construction or expansion. 

Similarly, sources would face long 

delays in receiving title V permits, 

which Congress intended to promote 

enforceability. For both programs, the 

addition of enormous numbers of 

additional sources would provide 

relatively little benefit compared to the 

costs to sources and the burdens to 

permitting authorities. In the case of 

PSD, the large number of small sources 

that would be subject to control 

constitute a relatively small part of the 

environmental problem. In the case of 

title V, a great many of the sources that 

would be newly subject to permit 

requirements would have ‘‘empty’’ 

permits, that is, permits that do not 

include any applicable requirements, 

and that therefore serve relatively little 

purpose. For these reasons, the ‘‘absurd 

results’’ doctrine applies to avoid a 

literal application of the thresholds at 

this time. By the same token, the 

impossibility of administering the 

permit programs brings into play the 

‘‘administrative necessity’’ doctrine. 

This doctrine also justifies not applying 

the PSD or title V applicability 

threshold provisions literally to GHG 

sources at this time. 

The situation presented here is 

exactly the kind that the ‘‘absurd 

results,’’ ‘‘administrative necessity,’’ and 

‘‘one-step-at-a-time’’ doctrines have been 

developed to address. Separately and 

interdependently, they authorize EPA 

and the permitting authorities to tailor 

the PSD and title V applicability 

provisions through a phased program as 

set forth in this rule, and to use the 

initial period of phase-in to develop 

streamlining measures, acquire 

expertise, and increase resources, all of 

which would facilitate applying PSD 

and title V on a broader scale without 

overburdening sources and permitting 

authorities. In this manner, the phased 

approach reconciles the language of the 

statutory provisions with the results of 

their application and with congressional 

intent. 

2. Data Concerning Costs to Sources and 

Administrative Burdens to Permitting 

Authorities 

This final action concerning 

applicability of PSD and title V to GHGemitting sources, including the 

decisions on timing for the selected 

permitting thresholds, is based on our 

assessments of both the costs to the 

regulated sources to comply with PSD 

and title V permitting requirements and 

the administrative burdens to the 

permitting authorities to process PSD 

and title V permit actions for GHGemitting sources. This section provides 

a summary of our cost and 

administrative burden assessments of 

permitting that would be required in the 

absence of any tailoring as well as under 

various tailoring options. 

Our estimates of costs to the sources 

and administrative burdens to the 

permitting authorities from PSD and 

title V applicability for GHG emissions 

are based on labor and cost information 

from the existing Information Collection 

Requests (ICRs) for PSD and title V 

programs.17 We apply the same basic 

mstockstill on DSKH9S0YB1PROD with RULES2

31534 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

Requirements at Alternative Greenhouse Gas (GHG) 

Permitting Thresholds;’’ Prepared by EPA Staff; 

March 2010. 

18 ‘‘Summary of Methodology and Data Used to 

Estimate Burden Relief and Evaluate Resource 

Requirements at Alternative Greenhouse Gas (GHG) 

Permitting Thresholds’’; Prepared by EPA Staff; 

March 2010. 

19 ‘‘Summary of Methodology and Data Used to 

Estimate Burden Relief and Evaluate Resource 

Requirements at Alternative Greenhouse Gas (GHG) 

Permitting Thresholds’’; Prepared by EPA Staff; 

March 2010. 

20 ‘‘Summary of Methodology and Data Used to 

Estimate Burden Relief and Evaluate Resource 

Requirements at Alternative Greenhouse Gas (GHG) 

Permitting Thresholds’’; Prepared by EPA Staff; 

March 2010. 

methodology used for the proposal, 

which incorporates information on 

numbers and types of affected sources 

and estimated permitting actions. We 

evaluate administrative burdens in 

terms of staffing needs, time for 

processing permits, and monetary costs, 

and we make some judgments about 

how those burdens would affect the 

permitting authorities’ ability to 

effectively manage and administer their 

programs with the addition of GHG 

emission sources. We present the 

administrative burden data for applying 

PSD and title V requirements at the 

literal statutory thresholds—that is, the 

100/250 tpy levels for PSD (and 0 tpy 

for modifications) and the 100 tpy level 

for title V—as well as at other 

thresholds, which range from 25,000 tpy 

CO2e to 100,000 tpy CO2e. We have 

significantly revised upwards our 

assessments of costs to sources and 

administrative burdens since proposal, 

and we summarize later our reasons for 

doing so. We also present significant 

comments concerning administrative 

burdens, and our responses to those 

comments. 

In the next section, concerning legal 

and policy rationale for our actions, we 

discuss how these data on costs to the 

sources and administrative burdens to 

the permitting authorities informed our 

decisions that PSD and title V 

requirements should not, at present, be 

applied to GHG-emitting sources under 

the literal terms of the statutory 

thresholds as well as our decisions 

concerning what thresholds to apply for 

Steps 1 and 2 of the applicability phasein approach and the applicability floor 

of 50,000 tpy CO2e. 

a. Costs to Sources 

As we did at proposal, we have 

estimated costs to the sources of 

complying with PSD and title V starting 

from the data in the ICRs. We recognize 

that the sizes of the sources, as 

measured by their emissions, that would 

be swept into the PSD and title V 

programs would vary greatly, and that 

their permitting costs would vary as 

well. For example, their PSD permitting 

costs would depend on the amount and 

types of their emissions and their 

control requirements. Accordingly, we 

have determined average costs, as 

described later. 

For PSD, at proposal, we estimated 

that on average, an industrial source 

would incur costs of $84,500 to prepare 

the PSD application and receive the 

permit, and on average, a commercial or 

residential source would incur costs of 

20 percent that amount, or $16,900. 74 

FR 55337 col. 3 to 55339 col. 3. For this 

action, we retain the same burden 

estimates for an average industrial 

source. This type of source would need 

866 hours, which would cost $84,500, to 

prepare the application and the PSD 

permit. However, based on comments 

received, we have determined that a 

more accurate estimate for an average 

commercial or residential source is 70 

percent of that amount of time that an 

industrial source would need, up from 

our proposal of 20 percent. Thus, an 

average commercial or residential 

source would need 606 hours, which 

would cost $59,000, to prepare the PSD 

application and receive the permit. We 

are increasing this time over what we 

proposed because we now recognize 

that virtually all commercial and 

residential sources will have no 

experience with the PSD permitting 

process, and therefore will face a 

significant learning curve that will 

entail more time to complete the 

application, develop control 

recommendations, and take the other 

required steps. We believe this learning 

period could extend from 2 to possibly 

4 years or more from the date that the 

sources become subject to PSD 

requirements, depending on the type 

and actual number of new sources that 

come in for permitting. In addition, we 

expect that in many cases, draft PSD 

permits for GHGs will receive comments 

from various stakeholders, from citizens 

groups to equipment vendors, who will 

seek to participate in the permit process, 

and that all this could add to the hours 

that the permittee will need to invest in 

the process.18 The actual costs to 

sources to install BACT controls, while 

still uncertain at this point, would likely 

add additional costs across a variety of 

sources in a sector not traditionally 

subject to such permitting requirements. 

For title V, at proposal, we estimated 

that on average, an industrial source 

would incur costs of approximately 

$46,400 to prepare the title V 

application and receive the permit, and 

on average, a commercial or residential 

source would incur costs of 10 percent 

that amount, or almost $5,000. 74 FR 

55338 col. 1 to 55339 col. 3. For this 

action, we retain the same burden 

estimates for an average industrial 

source. This type of source would need 

350 hours, which would cost $46,400, to 

prepare the application and the title V 

permit. However, we have determined 

that a more accurate estimate for an 

average commercial or residential 

source is 50 percent of that amount of 

time that an industrial source would 

need, up from our proposal of 10 

percent. Thus, an average commercial or 

residential source would need about 175 

hours, which would cost $23,200, to 

prepare the title V application and 

receive the permit. This increase is due 

to the same reasons as with the PSD 

program just discussed. We now 

recognize that virtually all commercial 

and residential sources will have no 

experience with the title V permitting 

process and, therefore, will face a 

significant learning curve that will 

entail more time to assess, for the first 

time, their GHG emissions (because 

such sources are not covered by EPA’s 

mandatory GHG reporting rule), 

complete the application, respond to 

permitting authority comments, meet 

other title V administrative 

requirements, and respond to interested 

stakeholders.19

b. Administrative Burdens to Permitting 

Authorities 

(1) Estimated Permitting Authority 

Burden at Proposal 

As at proposal, we estimated the 

administrative burdens to the permitting 

authorities at the various threshold 

levels for PSD or title V applicability as 

follows. First, for a particular threshold 

level, we estimated the number of GHGemitting sources that would be subject 

to PSD requirements because they 

would undertake new construction or 

modification, and the number of 

existing sources that would be subject to 

title V requirements. Second, we 

estimated the average additional 

administrative burden and cost of each 

PSD permitting action and each title V 

permitting action for the GHG-emitting 

sources. Third, we multiplied those two 

estimates, and the product is the 

additional administrative burden at the 

particular threshold level. We employed 

the same methodology for this final rule, 

but, as discussed later, and described in 

more detail in our final burden 

analysis,20 we have updated several key 

assumptions since the proposal as a 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31535 

result of our consideration of comments 

received. 

First, we present the administrative 

burdens at the statutory levels for PSD 

and title V applicability. At proposal, 

for the PSD program, we estimated the 

administrative burdens that would 

result from applying PSD at the 100/250 

tpy major emitting facility threshold 

levels in two ways, as described in this 

section. We stated that at present, 280 

sources are subject to PSD each year, 

both for new construction and 

modifications. This figure served as the 

baseline from which to calculate 

increases in administrative burdens due 

to permitting GHG-emitting sources. 

The first method that we used to 

calculate the administrative burdens to 

the permitting authorities was in terms 

of workload hours, which we then 

converted to monetary costs. To make 

the workload calculation, we first 

estimated the number of GHG-emitting 

sources that would become subject to 

PSD through new construction and 

modification. Based on our GHG 

threshold data analysis, we estimated 

that almost 41,000 new and modified 

sources per year would become subject 

to PSD review. We first calculated the 

number of new sources that would 

become subject to PSD. To do this, we 

estimated growth rates for the various 

sectors, and then applied those growth 

rates to the numbers of sources in those 

sectors. We then calculated the number 

of modifications. To do this, we first 

assumed that each year, two percent of 

sources that meet or exceed the 

threshold levels for PSD applicability 

due to their conventional pollutants 

undertake modifications. We then 

calculated the number of sources that 

would meet or exceed the threshold 

levels for PSD applicability due to their 

GHG emissions, and applied the same 

assumption that two percent of them 

would undertake modifications. In this 

manner, we estimated the number of 

modifications of GHG-emitting sources 

that would become subject to PSD. 

We noted that currently, 280 PSD 

permits are issued each year, but that 

applying PSD to GHG-emitting sources 

at the 100/250 tpy statutory threshold 

levels would cause an increase in 

permits of more than 140-fold. The 

reason for the extraordinary increase in 

PSD applicability lies simply in the fact 

that it takes a relatively large source to 

generate emissions of conventional 

pollutants in the amounts of 100/250 

tpy or more, but many sources combust 

fossil fuels for heat or electricity, and 

the combustion process for even small 

quantities of fossil fuel produces 

quantities of CO2 that are far in excess 

of the sources’ quantities of 

conventional pollutants and that, for 

even small sources, equal or exceed the 

100/250 tpy levels. 

Based on the 140-fold increase in 

permits, we then estimated the perpermit burden on permitting authorities. 

As we stated in the proposal: 

We estimated the number of workload 

hours and cost a permitting authority would 

expend on each new source and each 

modification. We based these estimates on 

the workload hours and cost for processing 

permits for new sources of non-GHG 

emissions, which we derived from labor and 

cost information from the existing ICRs for 

PSD programs. The ICRs show that 

permitting authorities expend 301 hours to 

permit a new or modified industrial source 

* * *. 

We then made assumptions for number of 

workload hours and costs for new sources of 

GHG emissions. We assumed that permitting 

new industrial GHG sources that emit in 

excess of the 250-tpy threshold would be of 

comparable complexity to permitting nonGHG emitting industrial sources that are 

subject to PSD. Thus, for these sources, we 

assumed that permitting authorities would 

expend the same number of workload hours 

and costs, on a per-permit basis, as they do 

for non-GHG emitting industrial sources. On 

the other hand, for commercial and 

residential GHG sources that emit GHGs 

above the 250-tpy threshold (and as a result 

would be subject to the requirements of the 

PSD permitting program at this threshold 

level), we assumed that the workload hours 

and cost for permitting these sources would 

be significantly less than—only 20 percent 

of—the hours and cost necessary to prepare 

and issue initial PSD permits or permit 

modifications for industrial GHG sources. 

This 20-percent estimate amounts to 60 hours 

of permitting authority time per residential or 

commercial permit. 

Based on these assumptions, the additional 

annual permitting burden for permitting 

authorities, on a national basis, is estimated 

to be 3.3 million hours at a cost of $257 

million to include all GHG emitters above the 

250-tpy threshold. 

74 FR 55301 col. 2. 

Note that at the proposal, in 

calculating the PSD administrative 

burdens that would occur each year due 

to GHG emissions, we did not undertake 

separate calculations for the 

administrative burdens associated with 

permitting obligations stemming from 

the GHG emissions of the 280 sources 

already subject to PSD permitting 

requirements due to their conventional 

pollutants. In effect, we treated these 

280 sources are part of the over 40,000 

sources that would become subject to 

PSD due to their GHG emissions. 

The second way that we evaluated the 

burden on permitting authorities was by 

reviewing a study conducted by state 

and local air permitting agencies. As we 

said in the preamble: 

In addition to conducting our burden 

analysis, we also reviewed summary 

information from state and local air 

permitting agencies regarding additional 

resources and burden considerations if GHG 

sources that emit above the 100/250-tpy 

thresholds were subjected to the PSD and 

title V programs. This information covered 43 

state and local permitting agencies, 

representing programs from different regions 

of the country and various permitting 

program sizes (in terms of geographic and 

source population coverage) * * *. This 

information showed significant burdens 

projected by permitting agencies with adding 

sources of GHG emissions in terms of 

staffing, budget, and other associated 

resource needs. Importantly, the agencies 

based their analysis on the assumption that, 

for purposes of determining whether a source 

is major, its emissions would be calculated 

on an actual emissions (‘‘actuals’’) basis, and 

not on a PTE basis. On an actuals basis, the 

agencies estimated a 10-fold increase in the 

number of permits. 

Specifically, the agencies estimated that: 

• Assuming, again, that number of permits 

was to increase by 10-fold (based on actual 

emissions), the resulting workload would 

require an average of 12 more [full-time 

equivalents (FTEs)] per permitting authority 

at an estimated cost of $1 million/year; 

• Without the additional FTEs, the average 

processing time for a permit would increase 

to 3 years, which is three times the current 

average processing time; 

• Permitting authorities would need 2 

years on average to add the necessary staff; 

• Permitting authorities would also need, 

on average, eight additional enforcement and 

judicial FTEs; 

• Ninety percent of permitting agencies 

would need to train their staff in all aspects 

of permitting for sources of GHG emissions. 

• A quarter of permitting agencies were 

currently under a hiring freeze. 

We went on to explain that this state 

survey significantly underestimated the 

administrative burdens: 

It is important to reiterate that the state and 

local permitting information on burden was 

based on the number of additional facilities 

subject to PSD because their emissions of 

GHGs exceed the 100/250-tpy thresholds at 

actual emissions rates, not PTE-based 

emissions rates. However, the PSD 

applicability requirements are based on PTE. 

By adjusting the increase in number of 

permits to account for GHG sources that 

exceed the 100/250-tpy applicability 

thresholds based on their PTE emissions, 

EPA estimated a 140-fold increase in 

numbers of PSD permits, much more than the 

10-fold increase estimated by the states based 

on actual emissions. 

74 FR 55301 col. 2–3. 

In addition to PSD, we also estimated 

title V burdens at the statutory 

threshold. At proposal, for the title V 

program, we estimated the 

administrative burdens that would 

result from applying title V 

requirements at the 100 tpy major 

mstockstill on DSKH9S0YB1PROD with RULES2

31536 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

21 ‘‘NACAA Summary on Permitting GHGs Under 

the Clean Air Act’’; Memorandum from Mary 

Stewart Douglas, National Association of Clean Air 

Agencies to Juan Santiago, EPA/OAQPS, September 

3, 2009. 

source threshold level in the same two 

ways as for PSD, as follows. The first 

method was to calculate the 

administrative burdens in terms of 

workload hours, which we then 

converted to monetary costs. To make 

the workload calculation, we first 

estimated the number of existing GHGemitting sources that would become 

subject to title V. Based on our GHG 

threshold data analysis, we estimated 

that approximately 6 million sources 

would become subject to title V. 

Compared to the 14,700 title V permits 

currently issued, this would be an 

increase in permits of more than 400- 

fold. We noted, in addition, that most of 

the 14,700 sources already subject to 

title V also emit GHGs and may be 

affected as well. 

We then described the type of work 

that the permitting authorities would 

need to do for these GHG-emitting 

sources—the six million that would 

become newly subject to title V and 

most of the 14,700 that are already 

subject to title V—as follows. Note at the 

outset that the permitting authorities’ 

workload is greater for sources newly 

subject to title V than for existing 

sources that seek a revised or renewed 

permit. As EPA noted in the preamble: 

[T]he [ ] permits [for the 6 million new 

sources] would need to include any 

requirements for non-GHGs that may apply to 

the source, such as provisions of an 

applicable SIP. For any such requirements, 

permitting authorities would also need to 

develop terms addressing the various 

compliance assurance requirements of title V, 

including monitoring, deviation reporting, 

six-month monitoring reports, and annual 

compliance certifications. 

Adding to the burden described above 

would be the burden to add GHG terms to the 

14,700 existing title V permits. While, in 

general, existing title V permits would not 

immediately need to be revised or reopened 

to incorporate GHG (because as noted above, 

there are generally not applicable 

requirements for GHGs that apply to such 

sources), permitting authorities may face 

burdens to update existing title V permits for 

GHG under two possible scenarios: (1) EPA 

promulgates or approves any applicable 

requirements for GHGs that would apply to 

such a source, which would generally require 

a permit reopening or renewal application, or 

(2) the source makes a change that would 

result in an applicable requirement for GHGs 

to newly apply to the source, such as PSD 

review, which would generally require an 

application for a permit revision. Permitting 

authorities will also need to process permit 

renewal applications, generally on a five-year 

cycle, and such renewals would need to 

assure that the permit properly addresses 

GHG. Finally they would have to process title 

V applications for new sources (including all 

the PSD sources previously discussed). 

74 FR 55302 cols. 2–3. 

In light of those demands, we 

estimated the per-permit burden on 

permitting authorities as follows. Note, 

at the outset, that as with PSD, we based 

the workload hours on information in 

ICRs for industrial sources, and we then 

assumed that the workload for 

commercial and residential sources 

would be the indicated percentage of 

the workload for industrial sources: 

As with PSD, we have quantified the extent 

of the administrative problem that would 

result in workload hours and cost on the 

basis of information concerning hours and 

costs for processing existing title V permits 

that is indicated on ICRs. However, we 

recognize that more than 97 percent of these 

new sources would be commercial and 

residential sources. We estimate that for 

permitting authorities, the average new 

commercial or residential permit would 

require 43 hours to process, which is 10 

percent of the time needed for the average 

new industrial permit. For an average 

existing permit, which permitting authorities 

would need to process through procedures 

for significant revisions and permit renewals, 

adding GHG emissions to the permit would 

result in, we estimate, 9 additional hours of 

processing time, which is 10 percent of the 

amount of time currently necessary for 

processing existing permits. We estimate that 

the total nationwide additional burden for 

permitting authorities for title V permits from 

adding GHG emissions at the 100-tpy 

threshold would be 340 million hours, which 

would cost over $15 billion. 

74 FR 55302 col. 3. 

As with PSD, the second way that we 

evaluated the burden on permitting 

authorities at the statutory threshold 

was by reviewing a study conducted by 

state and local air permitting agencies of 

the burden of applying title V to existing 

GHG-emitting sources at the 100 tpy 

statutory threshold level. As we said in 

the preamble to the proposed rule: 

[W]e also reviewed summary information 

from state and local permitting agencies, 

which showed significant burdens associated 

with adding GHGs in their title V programs 

in terms of staffing, budget, and other 

associated resource needs.21 Again, note that 

the permitting agencies based their estimates 

on numbers of permits that would be 

required from sources subject to the 100-tpy 

title V applicability threshold on an actuals— 

not PTE—basis. Based on that level, the 

agencies assumed a 40-fold increase in 

numbers of permits, and estimated that: 

• The resulting workload would require an 

average of 57 more FTEs per permitting 

agency at an estimated cost of $4.6 million/ 

year; 

• Without the additional FTEs, the average 

processing time for a permit would increase 

to almost 10 years, which is 20 times the 

current average permit processing time; 

• Permitting authorities would need 2 

years on average to add the necessary staff; 

• On average, permitting authorities would 

need 29 additional enforcement and judicial 

staff; 

• Eighty percent of permitting authorities 

would need to train their staff in all aspects 

of permitting for sources of GHG emission. 

• A quarter of permitting agencies were 

currently under a hiring freeze. 

As with PSD, we added that this state 

survey significantly underestimated the 

administrative burdens: 

It is important to reiterate that, as with 

PSD, the state and local information on 

projected permitting burden is based on the 

number of additional facilities subject to title 

V because their emissions of GHGs exceed 

the 100-tpy thresholds at actual emissions 

rates, not the PTE-based emissions rates. 

However, the title V applicability 

requirements are based on PTE. As noted 

elsewhere in this preamble, the state and 

local agencies estimated a 40-fold increase in 

numbers of title V permits based on the 

amount of GHG sources’ actual emissions. By 

adjusting the summary estimates provided by 

the state and local agencies to account for 

GHG sources that exceed the 100-tpy 

threshold based on their PTE emissions, EPA 

estimated that the average permitting 

authority would need 570 more FTEs to 

support its title V permitting program. 

74 FR 55302 col. 3—55303 col. 1. 

(2) Revisions to Proposal Estimates of 

Permitting Authority Burden 

We received numerous comments 

from state and local authorities stating 

that EPA had underestimated the 

administrative burden on the permitting 

authorities in the proposal. State and 

local authorities stated that in 

particular, EPA underestimated the 

number of modifications and the 

amount of time it would take permitting 

authorities to process permits, 

particularly for commercial and 

residential sources. Based on the 

comments and additional analysis that 

we have conducted in response, we are 

revising in several respects our 

estimates of the administrative burdens 

for applying PSD and title V at the 

statutory threshold levels. 

First we present revisions to our 

analysis regarding the burdens at the 

statutory levels. Before we present those 

changes, we want to note a revision to 

our methodology that affected our 

estimate of the number of permits 

currently issued under existing 

programs. We are revising upwards the 

number of sources that are already 

subject to PSD permitting requirements 

anyway for their conventional 

pollutants, which, as discussed 

previously, we refer to as ‘‘anyway’’ 

sources. This revision has implications 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31537 

22 ‘‘Summary of Methodology and Data Used to 

Estimate Burden Relief and Evaluate Resource 

Requirements at Alternative Greenhouse Gas (GHG) 

Permitting Thresholds’’; Prepared by EPA Staff; 

March 2010. 

both for (1) the number of sources that 

would become subject to PSD due to 

their GHG emissions; and also (2) the 

baseline number of sources already 

subject to PSD, which we use to 

compare the amount of increases in 

administrative burden due to permitting 

GHG sources. At proposal, we stated 

that 280 sources each year are subject to 

PSD due to their new construction or 

modifications. However, upon further 

analysis, we have realized that this 

figure is too low because it includes 

only sources that have emissions of one 

or more NAAQS pollutants at the 100/ 

250 tpy thresholds and that are located 

in areas of the country that are 

designated attainment or unclassifiable 

for all of those pollutants, and thus are 

not designated nonattainment for any of 

those NAAQS pollutants. We estimate 

that another 520 sources have emissions 

of one or more NAAQS pollutants at the 

100/250 tpy thresholds and are located 

in areas of the country that are 

nonattainment for at least one of those 

NAAQS pollutants. Some of these 520 

sources may also emit one or more 

pollutants at the 100/250 tpy level for 

which their area is designated 

attainment or unclassifiable, and 

therefore may be subject to PSD for 

those pollutants. Accordingly, the 

correct number of ‘‘anyway’’ sources 

subject to PSD each year is the 280 

sources that are located in areas that are 

attainment or unclassifiable for each 

pollutant that the sources emit at the 

100/250 tpy level, plus at least some of 

the 520 sources that are located in areas 

that are nonattainment for at least one 

of the NAAQS pollutants that the 

sources emit at or above the 100/250 tpy 

threshold. In the absence of data on the 

number of nonattainment NSR permits 

that do not have a PSD component, and 

because we expect this to be a small 

number, we have assumed for purposes 

of this action, that each of the 520 

sources is subject to PSD for at least one 

pollutant, so that we will consider all 

800 sources as subject to PSD. Of this 

number, we estimate that 70 percent, or 

560 sources will undergo a 

modification, while the remaining 240 

permitting actions will involve new 

construction. Of the modifications, we 

assume that 80 percent, or 448, would 

become subject to additional 

requirements due to their GHG 

emissions because those projects have 

combustion-related activities that would 

likely emit GHGs in the requisite 

quantities. Our estimate of 80 percent of 

modification activities significantly 

involving combustion activities is based 

on a review of a random sample of PSD 

permits. In total we estimate that 688 

sources, either upon new construction 

or modification, would need to add 

GHG requirements to their otherwise 

required PSD permitting action. 

We should also note that in this 

rulemaking we are justifying our 

conclusions about permitting authority 

administrative burdens on the basis of 

their PSD and title V cost as calculated 

on both a separate basis and a combined 

basis. That is, we believe that the 

administrative burdens of the PSD 

program justify our tailoring approach 

for the PSD requirements, and the 

administrative burdens of the title V 

program justify our tailoring approach 

for the title V requirements, but in 

addition, the administrative burdens of 

both programs on a combined basis 

justify the tailoring approaches. Viewing 

the administrative burdens on a 

combined basis provides a useful 

perspective because most permitting 

authorities have a single organizational 

unit that is responsible for both the PSD 

program and the title V program, and in 

many cases, the same employees work 

on both programs. In addition, in some 

jurisdictions, permitting authorities 

issue a single, merged permit that 

includes both PSD and title V 

requirements. For these reasons, 

considering administrative burdens on a 

combined PSD and title V basis, offers 

a more accurate picture of the issues 

these agencies will face in transitioning 

to GHG permitting. 

Turning to the revisions to our burden 

estimates that we made as a result of 

public comment, we begin by noting 

that many commenters believed that we 

significantly underestimated the 

administrative burdens associated with 

the proposed thresholds or that the 

administrative burden under the 

proposed thresholds would still 

overwhelm the states and result in 

significant permitting delays and 

uncertainty for sources. Many of these 

commenters indicate that our estimate 

of the number of sources that would be 

subject to permitting is too low, and 

some add that we have underestimated 

the per-permit effort required. (More 

detail on these comments is given 

elsewhere on the methodology used in 

the analysis.) Several state and local 

agencies provided estimates of the 

increased number of permits and/or 

staff that would be required under the 

thresholds we proposed that were 

higher than our original estimates. 

Specifically, commenters recommended 

that we increase the estimated 

administrative burdens for PSD permits 

by anywhere from 100 percent to over 

2,000 percent; and that we increase the 

burdens for title V permits by anywhere 

from 29 percent to 240 percent. Many 

commenters indicated that EPA has not 

adequately accounted for ‘‘synthetic 

minor’’ sources or modification projects, 

stating that many such sources and 

projects will not be able to keep GHGs 

below the proposed thresholds, and 

those who could do so may not be able 

to establish enforceable synthetic minor 

limits. Numerous commenters also 

stated that the EPA has underestimated 

the rate of major modifications for GHGs 

under PSD. Some commenters assert 

that we underestimated the number of 

permits required for specific industry 

sectors, including the oil and gas 

production industry, the natural gas 

transmission industry, the 

semiconductor industry, the wood 

products industry, the brick industry, 

and landfills. Some of the state and 

local commenters also believe that we 

have overestimated their ability to hire 

and train sufficient staff to administer 

GHG permitting. 

We are persuaded by the data and 

arguments provided by the many 

commenters who believe EPA 

underestimated the number of 

permitting actions and the burdens of 

each action, and thus the overall 

administrative burdens associated with 

permitting GHG sources. Accordingly, 

we have reevaluated our assessment of 

these administrative burdens, for both 

the PSD and title V programs. In 

conducting this reevaluation, we 

considered arguments made by the 

commenters, as well as any actual data 

they provided, and then we determined 

whether and how to modify various 

aspects of our detailed assessment of the 

burdens. Based on this consideration we 

have substantially revised upwards our 

estimate of administrative burdens, 

based on the analysis included in the 

final docket for this rulemaking.22 The 

revisions affect two elements of our 

analysis by showing: (1) A substantial 

increase in the number of PSD and title 

V permits that will occur at a given 

threshold, and (2) an increase in the 

average burden estimate for each such 

permit. 

Regarding the increase in our estimate 

of the number of projects that will 

occur, we estimated an increase in both 

PSD and title V permit actions, though 

the greatest changes were for PSD. At 

proposal, we estimated that, if PSD 

requirements were to apply to GHG 

sources at the 100/250 tpy statutory 

levels, 40,496 projects—consisting of 

3,299 projects at industrial sources and 

37,197 projects at commercial or 

mstockstill on DSKH9S0YB1PROD with RULES2

31538 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

23 ‘‘Summary of Methodology and Data Used to 

Estimate Burden Relief and Evaluate Resource 

Requirements at Alternative Greenhouse Gas (GHG) 

Permitting Thresholds’’; Prepared by EPA Staff; 

March 2010. 

residential sources—would need PSD 

permits each year. Some of these 

projects involve the construction of an 

entirely new source, but the majority of 

these are modifications. We now 

estimate that at the 100/250 tpy levels, 

81,598 projects would become subject to 

PSD each year. These projects include 

26,089 actions at industrial sources and 

55,509 at commercial and residential 

sources. We describe our calculation of 

this 81,598 amount in a TSD.23 The 

great majority of these 81,598 projects 

that would become subject to PSD are 

modifications. We base these estimates 

on the assumption that the significance 

levels would be 100 tpy regardless of 

category. 

Our estimate of the number of PSD 

modifications is where we made our 

most significant upward revisions from 

our proposal, based on comments. Our 

doubling of the estimated PSD 

permitting actions—from 40,496 at 

proposal to 81,598—results from three 

separate adjustments we made to our 

estimates at proposal of the number of 

permit actions that would result from 

applying PSD to GHG sources. Two of 

these increased the number of major 

modifications, and one of these 

increased the number of major sources 

and modifications. The most significant 

adjustment, and one that was raised by 

multiple commenters, was that we 

undercounted the number of major 

modification projects at existing major 

sources because we did not include the 

existing projects that avoid major PSD 

review by either taking ‘‘synthetic 

minor’’ limits or by netting out for 

conventional pollutants, but that would 

not be able to avoid PSD through those 

mechanisms for GHGs. 

We agree that the ability and 

procedures for sources to achieve 

reductions, or minimize increases, due 

to GHGs through adoption of 

enforceable limits or through netting out 

are not well established at this point. 

We believe that there will be numerous 

instances, particularly for combustionrelated projects, where it will not be 

possible for sources to achieve the same 

level of reductions for CO2 emissions as 

they do for emissions of nitrogen oxides 

(NOX), for example, simply because 

there are not as many proven control 

techniques that can reduce CO2

emissions to the same degree as NOX. 

Also, more research will be necessary in 

the type of emission units and processes 

resulting in GHG emissions, and how 

they operate over a wide range of 

utilization patterns at a variety of source 

categories, before permitting authorities 

will be able to establish procedures and 

rules for developing minor source 

permit limitations. Therefore, we 

adjusted our count of major 

modification permits under PSD 

upward to account for this. 

The second change to the number of 

permits concerns the general 

modification rate of 2 percent that we 

applied at proposal, based on historical 

experience across all pollutant types. 

Commenters provided information that 

suggest that this 2 percent figure is an 

underestimate for GHG sources because 

their emissions of CO2 are high and 

accumulate quickly from various 

changes involving combustion units. 

Therefore, a greater percentage of their 

physical or operational changes will 

result in GHG emissions in excess of the 

significance levels that we identified at 

proposal. In light of these comments, we 

reviewed the source populations and 

pollutant mix within the various 

populations, and determined that we 

should revise our general modification 

rate to 4 percent for GHG sources. This 

4 percent rate was obtained by dividing 

the current annual major NSR permit 

actions involving modifications by the 

14,700 existing sources. We have 

revised our burden analysis accordingly. 

Again, the burden analysis in the docket 

describes our basis for these 

calculations in more detail. 

The third adjustment to the number of 

permits involves our estimate of the 

number of sources with PTE that is 

greater than the various thresholds 

considered. This affects the number of 

major sources at the statutory 

thresholds, which we used to estimate 

the number of PSD and title V major 

sources, but also has an effect on the 

number of major modifications because 

the number of modifications depends on 

the size of the population of major 

sources. Commenters provided evidence 

that our estimates of capacity utilization 

(which, as described previously, we use 

for estimating potential-to-emit based on 

data for actual emissions) for the general 

manufacturing source category (referred 

to as ‘‘unspecified stationary 

combustion’’ in our analysis) and for the 

oil and gas industry were not accurate. 

In our proposal, our estimated range for 

capacity utilization for ‘‘unspecified 

stationary combustion’’ varied from 70 

to 90 percent depending on 

manufacturing category. For the oil and 

gas industry, our estimate was 90 

percent. We received comments 

indicating that these utilization rates are 

higher than what is normally achieved 

in real-world conditions, particularly for 

smaller manufacturing type facilities. 

Accordingly, in this action, we are using 

a 50 percent capacity utilization rate for 

both of these source categories, which 

better reflects what can be deemed 

reasonable operation under normal 

conditions for facilities in these source 

categories. This adjustment increased 

the overall number of affected facilities 

at various threshold levels and we have 

revised our burden analysis accordingly. 

A few commenters asserted that we 

underestimated the number of 

residential homes, commercial 

buildings, and retail stores that would 

be subject to permitting requirements 

because these commenters believed the 

estimate in EPA’s TSD was based on 

actual emissions from space heating 

equipment rather than PTE. We wish to 

clarify that our threshold analysis 

estimates for the number of residential 

and commercial sources (as well as all 

other sources) did use a PTE basis. To 

calculate the PTE amount for these 

sources, we extrapolated from the actual 

emissions data for the residential and 

commercial sources. Specifically, we 

assumed that a typical residential 

facility operates its fuel combustion 

sources at only 10 percent of its capacity 

and a typical commercial facility 

operates at only 15 percent of its 

capacity. Based on these assumptions, 

we multiplied residential actual 

emissions by a factor of 10, and 

commercial actual emissions by a factor 

of 6.6 to obtain PTE-based estimates. 

There is very little information available 

on the capacity utilization rates of fuel 

combustion equipment at different types 

of residential and commercial facilities, 

but we believe our methodology was 

reasonable for these types of sources 

and we did not adjust it in response to 

this comment. Information on the 

development of these estimates is 

provided in our Technical Support 

Document for Greenhouse Gas 

Emissions Thresholds Evaluation. 

The second source of upward 

revisions to our administrative burden 

estimate is that we are increasing the 

estimated average cost to permitting 

authorities of issuing each PSD and title 

V permit at the statutory thresholds. At 

proposal, we estimated that for PSD 

permits, permitting authorities would 

expend, on average, 301 hours to permit 

an industrial source of GHG emissions, 

and 20 percent of that time, or 60 hours 

to permit a commercial or residential 

source. After estimating that amount of 

workload, we went on to estimate the 

monetary cost to permitting authorities 

of that workload. Similarly, for title V 

permits, we estimated at proposal that 

permitting authorities would expend 10 

percent of the number of hours needed 

to process an industrial permit in order 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31539 

to process a commercial or residential 

permit for GHG sources. 

We received comments from both 

permitting authorities and sources 

asserting that our methodology 

underestimated the administrative 

burden on grounds that (1) Our 

methodology fails to recognize that 

when a source triggers PSD for 

conventional pollutants, additional 

labor hours would be required to issue 

BACT for GHGs; (2) our estimate of 60 

hours (versus 301 hours) to issue PSD 

permits to commercial and residential 

sources of GHGs is unrealistically low; 

(3) our estimate failed to account for the 

increase in the complexity of permits for 

criteria pollutants due to (i) increases in 

criteria pollutant emissions becoming 

newly subject to BACT at sources that 

are major only for GHGs, which will 

result in increased permitting and (ii) 

BACT controls for criteria pollutants 

(e.g., an oxidizer for VOCs) may result 

in significant GHG emissions, triggering 

an additional BACT determination; and 

(4) our methodology failed to account 

for the significant additional PSD and 

title V burdens due to sources that 

obtain federally enforceable permit 

limits on GHGs in order to become 

‘‘synthetic minors’’ and thereby avoid 

PSD (and possibly also title V). 

Based on these comments and our 

own reassessment of permitting actions 

created by the addition of GHGs, we 

have revised upwards in several ways 

our estimate of the additional perpermit costs of applying PSD and title 

V to GHG sources, including the 

following: First we have added an 

estimate of the additional permitting 

cost for adding a GHG component to 

‘‘anyway’’ PSD and title V permitting 

actions for conventional pollutants. We 

estimated this burden based on 

information in the comments together 

with our own judgment about how to 

adjust the burden numbers contained in 

the current supporting statements for 

our approved permitting ICRs. These 

adjustments are found in our revised 

burden estimate document. 

Second, we have raised the per-permit 

burden hours for commercial and 

residential sources for PSD and title V. 

At proposal, our estimates were based 

on the fact that many of these permits 

will be technically simpler due to such 

factors as a lower number of emissions 

points, simpler processes, and less 

required modeling. However, 

commenters pointed out that, until EPA 

streamlines its permitting procedures, 

there are many permitting activities that 

represent a fixed cost, such as public 

notice, hearing, and response to 

comment activities. In addition, we 

agree, as commenters pointed out, that 

many of these sources will need 

significantly more permitting authority 

staff time to assist them in the permit 

application and preparation process 

because of their lack of experience with 

these requirements. In addition, 

permitting authorities will have little, if 

any, experience in permitting 

commercial and residential sources, and 

therefore will face a learning curve that 

will entail more time to take permitting 

action. In addition, we expect that in 

many cases PSD and title V permit 

applications for GHGs will receive 

comments from various stakeholders, 

from citizens groups to equipment 

vendors, who will seek to participate in 

the permit process, and responding and 

revising permits accordingly will add to 

the hours that the permitting authority 

will spend. 

As a result, we raised the PSD perpermit hours for various steps in the 

permitting process, as described in the 

burden estimate document. While we 

continue to estimate that permitting 

authorities will expend, on average, 301 

hours to issue a PSD permit to an 

industrial source, and that this would 

cost $23,243, we now recognize that a 

permitting authority would expend 70 

percent of that time or 210 hours, to 

permit a commercial or residential 

source, which would cost $16,216. 

Similarly, for title V, while we continue 

to estimate that permitting authorities 

will expend, on average, 428 hours to 

issue a title V permit to an industrial 

source, and that this would cost 

$19,688, we now recognize that a 

permitting authority would expend 50 

percent of the time, or 214 hours, to 

permit a commercial or residential 

source, which would cost $9,844. 

We disagree with commenters who 

suggested that by basing our estimates 

on the numbers of newly constructing 

and modifying sources with high 

enough emissions to qualify as major 

emitting facilities, we failed to account 

for the costs of sources that seek 

‘‘synthetic minor’’ permits to avoid PSD, 

and possibly title V, requirements. In 

fact, our methodology includes sources 

that might take such limits as newlymajor sources for their GHG emissions; 

and therefore we count the full 

administrative burden associated with a 

PSD permit and a title V permit for 

those sources. In effect, we assume that 

such sources would go through PSD or 

title V permitting, rather than take 

‘‘synthetic minor’’ limits. We take this 

approach because although we suspect 

that there may, in fact, be significant 

synthetic minor activity, we do not have 

data that would allow us to determine 

whether, and how many of, these 

sources will be able to adopt ‘‘synthetic 

minor’’ limits or restrict their operations 

to obtain minor source permitting 

status. Nor do we have data on the 

amount of the administrative burden 

that would fall on any particular 

permitting authority to establish a 

‘‘synthetic minor’’ limit, except that we 

understand that the amount varies 

widely across states. As a result, we 

opted to include these sources in our 

analysis as sources receiving a PSD or 

title V permit. Therefore, to the extent 

that synthetic minor activity occurs, our 

estimate would already have included 

the burden for that activity. In fact, our 

estimate would have overestimated the 

burden to the extent that a permitting 

authority would have less 

administrative costs to issuing a 

‘‘synthetic minor’’ permit, as compared 

to a PSD or title V permit. 

(3) Revised Burden Estimates at 

Statutory Thresholds Based on the 

revisions just described, we estimate 

that in all, if sources that emit GHGs 

become subject to PSD at the 100/250 

tpy levels, permitting authorities across 

the country would face over $1.5 billion 

in additional PSD permitting costs each 

year. This would represent an increase 

of 130 times the current annual burden 

hours under the NSR major source 

program for permitting authorities. The 

permitting authorities would need a 

total of almost 10,000 new FTEs to 

process PSD permits for GHG emissions. 

In addition, we estimate that in all, if 

sources that emit GHGs become subject 

to title V at the 100 tpy level, permitting 

authorities across the country would 

incur about 1.4 billion additional work 

hours, which would cost $63 billion. 

We estimate that most of this work 

would be done over a 3 year period, 

which would amount to 458 million in 

additional work hours, and $21 billion 

in additional costs, on an annual basis 

over that 3-year period. 

We also note that the survey of state 

and local permitting authorities 

described in the proposed rulemaking 

continues to shed light on the extent of 

the administrative burdens, including 

staffing, budget, and other associated 

resource needs, as projected by the 

permitting authorities. As noted 

previously, that survey concluded that 

application of the PSD requirements to 

GHG-emitting sources at the level of 

100/250 tpy or more of actual emissions 

would, without additional FTEs, 

increase the average processing time for 

a PSD permit from one to 3 years. The 

survey further concluded that 

application of the title V requirements 

to GHG-emitting sources at the level of 

100 tpy or more of actual emissions 

would, without additional FTEs, 

increase the average processing time for 

mstockstill on DSKH9S0YB1PROD with RULES2

31540 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

a title V permit from 6 months to 10 

years. As we noted at proposal, this 

survey assumed a ten-fold increase in 

the number of PSD permits and a 40- 

fold increase in the number of title V 

permits due to GHG-emitting sources, 

but those assumptions were severely 

underestimated because they were 

based on actual emissions. At proposal, 

our calculations, which were based on 

potential emissions, indicated a 140- 

fold increase in PSD permits and a more 

than 400-fold increase in title V permits. 

In this rulemaking, we recognize that 

even our estimates at proposal were 

severely underestimated. We now 

recognize that the number of PSD 

permits will be about twice what we 

estimated at proposal, and the average 

processing time for both PSD and title 

V permits will be two or three times 

greater than what we estimated at 

proposal. The survey of state and local 

permitting authorities provided other 

useful information as well, including 

the fact that it would take the permitting 

authorities 2 years, on average, to hire 

the staff necessary to handle a ten-fold 

increase in PSD permits and a 40-fold 

increase in title V permits, and that 90 

percent of their staff would need 

additional training in all aspects of 

permitting for GHG sources. 

(4) Revised Estimates of Administrative 

Burdens at Various Threshold Levels 

In order to determine the appropriate 

PSD and title V applicability level for 

GHG sources, we not only estimated the 

burden at the statutory thresholds, as 

described previously, but we also 

estimated the number of sources, 

number of permitting actions, and 

amount of administrative burden at 

various applicability levels for both PSD 

and title V, based on the revised 

methodology described previously, that 

we used to estimate the administrative 

burdens of applying PSD and title V at 

the statutory levels. This information is 

summarized in Table V–1. Note that 

Table V–1 also includes, in the last 

column, the administrative burdens, 

described previously, associated with 

the 100/250 tpy thresholds. 

TABLE V–1—COVERAGE AND BURDEN INFORMATION

Current 

program 1

‘‘Anyway’’ 

source 

approach 

75k major 

mod. 

100k Major 

source 

100k major 

mod. 

100k Major 

source 

75k major 

mod. 

100k Major 

source 

50k major 

mod. 

50k Major 

source 

50k major 

mod. 

25k Major 

source 

25k major 

mod. 

100/250 

Major, 

100 mod. 

Number of Major Sources ....... 15,000 ....... 15,000 ....... 15,550 ....... 15,550 ....... 15,550 ....... 18,500 ....... 22,500 ....... 6,118,252. 

Number of Newly Major GHG 

Sources.

N/A ............ 0 ................ 550 ............ 550 ............ 550 ............ 3,500 ......... 7,500 ......... 6,105,913. 

Number of PSD New Construction Actions.240 ............ 240 ............ 242 ............ 242 ............ 242 ............ 243 ............ 250 ............ 19,889. 

Number of PSD Modification 

Actions at Covered major 

sources.

448 ............ 448 ............ 468 ............ 1,363 ......... 2,257 ......... 2,354 ......... 9,645 ......... 62,284. 

Permitting Authority Cost to 

Run PSD programs.

$12M/yr ..... $15M/yr ..... $15M/yr ..... $36M/yr ..... $57M/yr ..... $59M/yr ..... $229M/yr ... $1.5B/yr. 

Permitting Authority Work 

Hours to Run PSD programs 2.

150,795 ..... 185,195 ..... 192,055 ..... 461,450 ..... 730,544 ..... 764,781 ..... 2.97 M ...... 19.7 M. 

Permitting Authority Cost to 

Run Title V Programs.

$62M/yr ..... $63M/yr ..... $67M/yr ..... $69M/yr ..... $70M/yr ..... $88M/yr ..... $126M/yr ... $21 B/yr. 

Permitting Authority Work 

Hours to Run Title V Programs.

1.35 M ...... 1.38 M ...... 1.46 M ...... 1.49 M ...... 1.53 M ...... 1.92 M ...... 2.74 M ...... 460 M. 

Annual Total Cost to Run PSD 

and Title V Programs and 

percent increase in cost over 

current program.

$74M/yr ..... $78M/yr 

5% increase 

(once 

states 

adopt).

$82M/yr 

11% increase.

$105M/yr 

42% increase.

$127M/yr 

72% increase.

$147M/yr 

99% increase.

$355M/yr 

380% increase.

$22.5 B/yr 

30,305% 

increase. 

% GHG emissions covered 3 ... 0 ................ 65% .......... 67% .......... 67% .......... 67% .......... 70% .......... 75% .......... 78%. 

Notes: (1) As explained in the preamble, ‘‘current program’’ figures for PSD permits also reflect NSR permits in nonattainment areas that we 

assume include a PSD component for at least one pollutant. (2) Number of FTEs may be calculated as work hours divided by 2,000 hours. (3) 

Percent of national GHG stationary source emissions emitted from sources that would be considered major for GHG emissions under each 

threshold scenario. 

As described in the TSD, we 

considered several different major 

source/major modification threshold 

combinations. We chose the 

combinations to reflect representative, 

incremental steps along the possible 

range. Because it is time- and resourceintensive to develop estimates for a 

given step, we chose intervals that best 

reflect representative points within the 

range, given those time and resource 

constraints. Here, we discuss key 

observations about some of the 

combinations that we assessed. As the 

table indicates, under the current PSD 

and title V programs, approximately 

15,000 sources qualify as major PSD 

sources for at least one pollutant and 

therefore meet the applicability 

thresholds. Of these, approximately 668 

sources are subject to PSD requirements 

each year for at least one pollutant—240 

because they undertake new 

construction, and 448 because they 

undertake modifications. The permitting 

authorities’ administrative burdens for 

the NSR program are 153,795 work 

hours, and $12 million. For the title V 

program, the 15,000 sources are, for the 

most part already permitted, and 

therefore need revised permits as 

required and renewal permits on a 5- 

year schedule. The permitting 

authorities’ title V administrative 

burdens on an annual basis are 

1,349,659 work hours and $62 million. 

The first threshold Table 1 

describes—and which, as discussed 

later, we are adopting for Step 1—is the 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31541 

24Although we set out an analysis of how the 

three doctrines fit into the Chevron framework, we 

note that even if the doctrines are viewed 

independently of the Chevron framework, they 

support this action. 

‘‘anyway’’ source approach. Under this 

approach, (i) PSD applies to the GHG 

emissions from projects that are subject 

to PSD anyway as new sources or major 

modifications due to their emissions of 

non-GHG pollutants and that result in 

an increase (or, in the case of 

modifications, a net increase) of at least 

75,000 tpy CO2e; and (ii) title V applies 

to what we will call ‘‘anyway’’ title V 

sources, that is, sources that are subject 

to title V anyway due to their emissions 

of non-GHG pollutants. Under this 

approach, the number of sources subject 

to PSD each year—including new 

construction and modifications—is the 

same as under the current program, but 

the permitting authorities will need to 

address GHG emissions as part of those 

permitting actions each year and, to do 

so, will require, each year, 34,400 

additional workload hours costing an 

additional $3 million. For title V, we 

estimate that the number of title V 

sources that require permitting actions 

will, on average, be the same each year, 

but permitting authorities will need to 

address GHG requirements for some of 

them; as a result, permitting authorities 

will need, each year, 27,468 additional 

work hours costing $1 million in 

additional funding. 

Another threshold described in Table 

V–1 is the one we are adopting under 

Step 2, as described later, under which 

(i) sources will be subject to PSD on 

account of their GHG emissions if they 

newly construct and emit at least 

100,000 tpy CO2e, or if they are existing 

sources that emit at least 100,000 tpy 

CO2e of GHGs and make a modification 

that results in a net emissions increase 

of at least 75,000 tpy CO2e; and (ii) 

existing sources will be subject to title 

V due to their GHG emissions if they 

emit 100,000 tpy CO2e in GHG 

emissions. Under this approach, which 

we will call the 100,000/75,000 

approach, we estimate that each year, 

compared to current levels, the 

permitting authorities will need to issue 

GHG permits to two additional sources 

that newly construct and to 915 

additional sources that undertake 

modifications. Doing so will require 

310,655 additional workload hours 

costing an additional $24 million, 

compared to the current program. For 

title V, an additional 190 sources will 

require new title V permits each of the 

first 3 years, and the permitting 

authorities’ associated costs will be 

141,322 work hours and $7 million 

more than the current program. 

The last approach we will describe 

here may be called the 50,000/50,000 

approach, which, as discussed later, we 

adopt as the floor for thresholds during 

the first 6 years after promulgation. 

Under this approach, (i) sources will be 

subject to PSD on account of their GHG 

emissions if they newly construct and 

emit at least 50,000 tpy CO2e, or if they 

are existing sources that emit at least 

50,000 tpy CO2e of GHGs and make a 

modification that results in a net 

emissions increase of at least 50,000 tpy 

CO2e; and (ii) existing sources will be 

subject to title V on account of their 

GHG emissions if they emit 50,000 tpy 

CO2e in GHG emissions. Under this 

approach, each year, the permitting 

authorities will need to issue GHG 

permits to 3 additional sources that 

newly construct and 1,900 that 

undertake modifications above current 

permitting levels. Doing so will require 

613,986 additional workload hours 

costing $47 million, compared to the 

current program. For title V, an 

additional 1,189 sources will require 

new title V permits each of the first 3 

years and the permitting authorities’ 

associated costs will be 568,017 work 

hours and $26 million more than the 

current program. 

We present the remaining entries in 

the table to illustrate how the cost and 

burden estimates vary with increasing 

or decreasing thresholds relative to 

those selected in this rule. These 

variations are important in 

understanding how alternative 

thresholds would compare to the ones 

selected. We also include entries 

reflecting the baseline (current program 

without GHG permitting) and the 

burdens if we immediately 

implemented the full statutory 

thresholds on January 2, 2011, without 

tailoring or streamlining. 

3. ‘‘Absurd Results,’’ ‘‘Administrative 

Necessity,’’ and ‘‘One-Step-at-a-Time’’ 

Legal Doctrines 

a. Introduction and Summary 

Having described the factual 

underpinnings of our action, which are 

the costs to sources and administrative 

burdens to permitting authorities, we 

now describe the legal underpinnings. 

They involve the framework for 

analyzing agency-administered statutes, 

as established by the U.S. Supreme 

Court in Chevron U.S.A. Inc. v. NRDC, 

467 U.S. 837, 842–43 (1984). In this 

case, Chevron framework must take into 

account the ‘‘absurd results,’’ 

‘‘administrative necessity,’’ and ‘‘onestep-at-a-time’’ legal doctrines. We 

believe that each of these doctrines 

provides independent support for our 

action, but in addition, the three 

doctrines are directly intertwined and 

can be considered in a comprehensive 

and interconnected manner. Moreover, 

although each of the three doctrines predate the 1984 Chevron decision, in 

which the U.S. Supreme Court 

established the framework for 

construing agency-administered 

statutes, each fits appropriately into the 

Chevron framework.24

To reiterate, for convenience, the 

statutory provisions at issue: Congress, 

through the definition of ‘‘major 

emitting facility,’’ applied the PSD 

program to include ‘‘any * * * source 

[that] emit[s], or ha[s] the potential to 

emit, one hundred [or, depending on the 

source category two hundred fifty] tons 

per year or more of any air pollutant.’’ 

CAA sections 165(a), 169(1). In 

addition, Congress, through the 

definition of ‘‘modification,’’ applied the 

PSD program to include ‘‘any physical 

change in, or change in the method of 

operation of, a stationary source which 

increases the amount of any air 

pollutant emitted by such source or 

which results in the emission of any air 

pollutant not previously emitted.’’ CAA 

sections 165(a), 169(2)(C), 111(a)(4). 

Similarly, Congress, through the 

definition of ‘‘major source,’’ specified 

that the title V program includes ‘‘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.’’ 

CAA sections 502(a), 501(2)(B), 302(j). 

EPA, through long-established 

regulatory action, in the case of PSD, 

and long-established guidance, in the 

case of title V, has interpreted these 

definitions narrowly so that they apply 

only with respect to air pollutants that 

are subject to regulation under the CAA. 

Applying these definitions by their 

terms, as interpreted narrowly by EPA, 

to GHG sources at the present time 

would mean that the PSD and title V 

programs would apply to an 

extraordinarily large number of small 

sources, the sources would incur 

unduly high compliance costs, and 

permitting authorities would face 

overwhelming administrative burdens. 

As a result, we believe Congress did not 

intend for us to follow this literal 

reading, and instead, with this action, 

we chart a course for tailoring the 

applicability provisions of the PSD 

program and the title V program by 

phasing them in over time to the 

prescribed extent. 

For our authority to take this action, 

we rely in part on the ‘‘absurd results’’ 

doctrine, because applying the PSD and 

title V requirements literally (as 

previously interpreted narrowly by 

mstockstill on DSKH9S0YB1PROD with RULES2

31542 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

25For early cases in which the U.S. Supreme 

Court applied the ‘‘absurd results’’ doctrine, see 

Holy Trinity Church v. U.S., 143 U.S. 457, 516–17 

(1892) (‘‘any alien’’ does not include a foreign 

pastor; Court stated, ‘‘It is a familiar rule, that a 

thing may be within the letter of the statute and yet 

not within the statute, because not within its spirit, 

nor within the intention of its makers * * *. If a 

literal construction of the words be absurd, the Act 

must be construed as to avoid the absurdity’’); Chew 

Heong v. United States, 112 U.S. 536, 555 (1884) 

(rejecting a literal interpretation of treaty that would 

have prevented the re-entry of a person into the 

U.S. upon the ground that he did not possess a 

certificate which did not exist prior to his 

departure, and which could not possibly have been 

issued); Heyenfeldt v. Daney Gold Mining Co., 93 

U.S. 634, 638 (1877) (statutory language expressly 

referred to past land sales and dispositions, ‘‘but 

evidently they were not employed in this sense, for 

no lands in Nevada had been sold or disposed of 

by any act of Congress,’’ and the language of the 

statute ‘‘could not * * * apply to past sales or 

dispositions, and, to have any effect at all, must be 

held to apply to the future’’). 

EPA) would not only be inconsistent 

with congressional intent concerning 

the applicability of the PSD and title V 

programs, but in fact would severely 

undermine congressional purpose for 

those programs. We also rely on the 

‘‘administrative necessity’’ doctrine, 

which applies because construing the 

PSD and title V requirements literally 

(as previously interpreted narrowly by 

EPA) would render it impossible for 

permitting authorities to administer the 

PSD provisions. The tailoring approach 

we promulgate in this action is 

consistent with both doctrines. It is also 

consistent with a third doctrine, the 

‘‘one-step-at-a-time’’ doctrine, which 

authorizes administrative agencies 

under certain circumstances to address 

mandates through phased action. 

Our discussion of the legal bases for 

this rule is organized as follows: In this 

section V.B.3, we provide an overview 

of the three doctrines and describe how 

they fit into the Chevron framework for 

statutory construction. In section V.B.4, 

we discuss the PSD and title V 

programs, including each program’s 

relevant statutory provisions, legislative 

history, and regulatory history. In 

sections V.B.5 and V.B.6 we discuss the 

‘‘absurd results’’ approach for PSD and 

title V, respectively, that we are 

finalizing in our action. In section 

V.B.7., we discuss additional 

rulemaking in which we may consider 

exempting certain categories of sources 

from PSD and title V under the ‘‘absurd 

results’’ doctrine. In section V.B.8, we 

discuss the legal and policy rationale for 

the phase-in schedule that we are 

adopting for applying PSD and title V to 

GHG sources. In section V.B.9 we 

discuss the ‘‘administrative necessity’’ 

approach for PSD and title V, 

respectively. In section V.B.10, we 

discuss the third legal basis for our 

action, the ‘‘one-step-at-a-time’’ doctrine. 

b. The ‘‘Absurd Results’’ Doctrine 

Turning first to the ‘‘absurd results’’ 

doctrine, we note at the outset that we 

discussed the doctrine at length in the 

notice of proposed rulemaking, and we 

incorporate by reference that discussion, 

although we make some refinements to 

that discussion in this preamble. The 

starting point for EPA’s interpretation of 

the PSD and title V applicability 

provisions and reliance on the ‘‘absurd 

results’’ doctrine is the familiar Chevron 

two-step analysis. We discuss this 

analysis in greater detail later, but in 

brief, in interpreting a statutory 

provision, an agency must, under 

Chevron Step 1, determine whether 

Congress’s intent on a particular 

question is clear; if so, then the agency 

must follow that intent. If the intent of 

the provision is not clear, then the 

agency may, under Step 2, fashion a 

reasonable interpretation of the 

provision. Chevron U.S.A. Inc. v. NRDC, 

467 U.S. 837, 842–43 (1984). 

The courts consider the best indicator 

of congressional intent to be the plain 

meaning of the statute. However, the 

U.S. Supreme Court has held that the 

literal meaning of a statutory provision 

is not conclusive ‘‘in the ‘rare cases [in 

which] the literal application of a 

statute will produce a result 

demonstrably at odds with the 

intentions of the drafters’ * * * [in 

which case] the intention of the drafters, 

rather than the strict language, controls.’’ 

United States v. Ron Pair Enterprises, 

489 U.S. 235, 242 (1989). This doctrine 

of statutory interpretation may be 

termed the ‘‘absurd results’’ doctrine. 

Although, as just noted, the U.S. 

Supreme Court has described the 

‘‘absurd results’’ cases as ‘‘rare,’’ in that 

case the Court seemed to be referring to 

the small percentage of statutoryconstruction cases that are decided on 

the basis of the doctrine. The DC 

Circuit, in surveying the doctrine over 

more than a century of jurisprudence, 

characterized the body of law in 

absolute numbers as comprising 

‘‘legions of court decisions.’’ In re 

Franklyn C. Nofziger, 925 F.2d 428, 434 

(DC Cir. 1991). Indeed, there are dozens 

of cases, dating from within the past 

several years to well into the 19th 

century,25 in which the U.S. Supreme 

Court has applied the ‘‘absurd results’’ 

doctrine to avoid the literal application 

of a statute, or if not so holding, has 

nevertheless clearly acknowledged the 

validity of the doctrine. Some of the 

more recent of these cases include: 

Logan v. United States, 552 U.S. 23, 36– 

37 (2007) (‘‘[s]tatutory terms, we have 

held, may be interpreted against their 

literal meaning where the words ‘could 

not conceivably have been intended to 

apply’ to the case at hand [citation 

omitted]’’); Nixon v. Missouri Municipal 

League, 541 U.S. 125, 132–33 (2004) 

(‘‘any entity’’ includes private but not 

public entities); Raygor v. Regents of 

Univ. of Minn., 534 U.S. 533, 542–45 

(2002) (‘‘implying a narrow 

interpretation of * * * ‘any claim 

asserted’ so as to exclude certain claims 

dismissed on Eleventh Amendment 

grounds’’); United States v. X-Citement 

Video, Inc., 513 U.S. 64, 69 (1994) 

(rejecting a literal interpretation of the 

statutory term ‘‘knowingly’’ on grounds 

that Congress could not have intended 

the ‘‘positively absurd’’ results that some 

applications of such an interpretation 

would produce, ‘‘[f]or instance, a retail 

druggist who returns an uninspected 

roll of developed film to a customer 

‘‘knowingly distributes’’ a visual 

depiction and would be criminally 

liable if it were later discovered that the 

visual depiction contained images of 

children engaged in sexually explicit 

conduct’’); Rowland v. Cal. Men’s 

Colony, 506 U.S. 194, 200 (1993) 

(finding that an artificial entity such as 

an association is not a ‘‘person’’ under 

the statute, and describing the absurdity 

doctrine as a ‘‘common mandate of 

statutory construction’’); United States 

v. Ron Pair Enterprises, 489 U.S. 235, 

242 (1989) (the plain meaning of a 

statutory provision is not conclusive ‘‘in 

the ‘rare cases [in which] the literal 

application of a statute will produce a 

result demonstrably at odds with the 

intentions of the drafters’ * * * [in 

which case] the intention of the drafters, 

rather than the strict language, 

controls’’); Green v. Bock Laundry 

Machine Company, 490 U.S. 504 (1989) 

(provision in Federal Rule of Evidence 

that protects ‘‘the defendant’’ against 

potentially prejudicial evidence, but not 

the plaintiff, refers to only criminal, and 

not civil, defendants); Public Citizen v. 

United States Dep’t of Justice, 491 U.S. 

440, 453–54 (1989) (rejecting a broad, 

straightforward reading of the term 

‘‘utilize,’’ on grounds that a literal 

reading would appear to require the 

absurd result that all of FACA’s 

restrictions apply if a President consults 

with his own political party before 

picking his Cabinet, and such a reading 

‘‘was unmistakably not Congress’ 

intention’’); Watt v. Alaska, 451 U.S. 

259, 266 (1981) (rejecting reliance on 

plain statutory language and concluding 

that the term ‘‘minerals’’ in section 

401(a) of the Wildlife Refuge Revenue 

Sharing Act applies only to minerals on 

acquired refuge lands; stating ‘‘[t]he 

circumstances of the enactment of 

particular legislation may persuade a 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31543 

26For other U.S. Supreme Court cases, see Utah 

Junk Co. v. Porter, 328 U.S. 39, 44 (1946) 

(‘‘literalness may strangle meaning’’); Markham v. 

Cabell, 326 U.S. 404, 409 (1945) (‘‘The policy as 

well as the letter of the law is a guide to decision.’’); 

United States v. American Trucking Associations, 

Inc. 310 U.S. 534 (1940) (the term ‘‘employees’’ in 

the Federal Motor Carrier Act, is limited to 

employees whose activities affect safety); C.V. 

Sorrels v. U.S., 287 U.S. 435, 446–49 (1932) 

(provisions of National Prohibition Act that 

criminalize possessing and selling liquor do not 

apply if defendant is entrapped; Court declines to 

apply the ‘‘letter of the statute’’ because doing so ‘‘in 

the circumstances under consideration is foreign to 

its purpose’’); United States v. Katz, 271 U.S. 354, 

362 (1926) (holding that the statutory words ‘‘no 

person’’ refer only to persons authorized under 

other provisions of the Act to traffic alcohol, thus 

rejecting a literal application of general terms 

descriptive of a class of persons made subject to a 

criminal statute); Hawaii v. Mankichi, 190 U.S. 197, 

212–14 (1903) (refusing to adopt a literal 

application of the ‘‘Newlands resolution’’ which 

would have entitled every criminal in the State of 

Hawaii convicted of an offense between 1898–1900 

to be set at large, as ‘‘surely such a result could not 

have been within the contemplation of Congress’’). 

court that Congress did not intend 

words of common meaning to have their 

literal effect’’); Train v. Colorado Public 

Interest Research Group, Inc., 426 U.S. 

1, 23–24 (1976) (prohibition in Federal 

Water Pollution Control Act against 

discharging into navigable waters 

‘‘pollutants,’’ which are defined to 

include ‘‘radioactive materials,’’ does not 

apply to three specific types of 

radioactive materials); Jackson v. Lykes 

Bros. S.S. Co., 386 U.S. 731, 735 (1967) 

(refusing to distinguish between a 

longshoreman hired by ‘‘an independent 

stevedore company’’ and one hired by 

‘‘the shipowner * * * to do exactly the 

same kind of work,’’ despite the clear 

terms of the Act, and stating: ‘‘[w]e 

cannot hold that Congress intended any 

such incongruous, absurd, and unjust 

result in passing this Act,’’ when the Act 

was ‘‘designed to provide equal justice 

to every longshoreman similarly 

situated’’); Lynch v. Overholser, 369 U.S. 

705, 710, (1962) (statutory construction 

is not confined to the ‘‘bare words of a 

statute’’); United States v. Bryan, 339 

U.S. 323, 338 (1950) (‘‘Despite the fact 

that the literal language would 

encompass testimony elicited by the 

House Committee in its questioning of 

respondent relative to the production of 

the records of the association, the Court 

will not reach that result if it is contrary 

to the congressional intent and leads to 

absurd conclusions. And we are clearly 

of the opinion that the congressional 

purpose would be frustrated if the 

words, ‘‘in any criminal proceeding,’’ 

were read to include a prosecution for 

willful default under R.S. § 102.’’).26

The DC Circuit has also handed down 

numerous decisions that applied the 

absurd results doctrine to avoid a literal 

interpretation or application of statutory 

provisions or that have acknowledged 

the doctrine. Some of the most recent 

ones include: Arkansas Dairy 

Cooperative Ass’n, Inc., v. U.S. Dep’t of 

Agriculture, 573 F.3d 815 (DC Cir. 2009) 

(rejecting the canon of construction that 

presumes that Congress is aware of 

existing law pertinent to the legislation 

that it enacts, when in this case, the 

presumption that Congress was aware of 

the Departments definition of ‘‘hearing’’ 

would lead to ‘‘the absurd result that 

Congress intended to impose a 

requirement with which the Secretary 

could not comply;’’ stating: ‘‘Courts, ‘in 

interpreting the words of a statute, 

[have] some scope for adopting a 

restricted rather than a literal or usual 

meaning of its words where acceptance 

of that meaning would lead to absurd 

results * * * or would thwart the 

obvious purpose of the statute * * *.’ ’’ 

(quoting In re Trans Alaska Pipeline 

Rate Cases, 436 U.S. 631, (1978)); 

Buffalo Crushed Stone, Inc. v. Surface 

Transportation Board, 194 F.3d 125, 

129–30 (DC Cir. 1999) (regulation of 

Surface Transportation Board providing 

that if a notice of exemption ‘‘contains 

false or misleading information, the use 

of the exemption is void ab initio’’ does 

not apply to a notice containing false 

information when declaring the notice 

void ab initio would undermine the 

goals of the governing statute; a conflict 

between the ‘‘literal application of 

statutory language’’ and maintaining the 

integrity of the regulatory scheme 

should be resolved by construing the 

text in accordance with its purpose); 

Mova Pharm. Corp. v. Shalala, 140 F.3d 

1060, 1068–69 (DC Cir. 1998) (as 

discussed later, describes the ‘‘absurd 

results’’ doctrine in the context of the 

Chevron framework for statutory 

construction; invalidates a Food and 

Drug Administration’s (FDA) regulation 

designed to remedy what the FDA 

described as the absurd result of a literal 

application of the statutory provisions 

governing FDA approval of successive 

generic drug applications, on grounds 

that ‘‘[i]n effect, the FDA has embarked 

upon an adventurous transplant 

operation in response to blemishes in 

the statute that could have been 

alleviated with more modest corrective 

surgery;’’ states that ‘‘[t]he rule that 

statutes are to be read to avoid absurd 

results allows an agency to establish 

that seemingly clear statutory language 

does not reflect the ‘‘unambiguously 

expressed intent of Congress,’’ Chevron, 

467 U.S. at 842, and thus to overcome 

the first step of the Chevron analysis’’); 

Environmental Defense Fund v. EPA, 82 

F.3d 451, 468–69 (DC Cir. 1996) 

(although Act requires that a federal 

action conform to the SIP that is 

currently in place, EPA may instead 

require conformity to a revised 

implementation plan that state commits 

to develop; ‘‘[t]his is one of those rare 

cases * * * [that] requires a more 

flexible, purpose-oriented interpretation 

if we are to avoid ‘absurd or futile 

results.’ ’’); American Water Works Ass’n 

v. EPA, 40 F.3d 1266, 1271 (DC Cir. 

1994) (holding that EPA’s interpretation 

of the term ‘‘feasible’’ so as to require a 

treatment technique instead of a 

maximum contaminant level (MCL) for 

lead is reasonable; the court stated: 

‘‘Indeed, where a literal reading of a 

statutory term would lead to absurd 

results, the term simply ‘has no plain 

meaning * * * and is the proper subject 

of construction by the EPA and the 

courts.’ If the meaning of ‘feasible’ 

suggested by the NRDC is indeed its 

plain meaning, then this is such a case; 

for it could lead to a result squarely at 

odds with the purpose of the Safe 

Drinking Water Act.’’ (quoting Chem. 

Mfrs. Ass’n v. Natural Res. Def. Council, 

Inc., 470 U.S. 116, 126 (1985)) (citation 

omitted); In re Nofziger, 925 F.2d 428, 

434–35 (DC Cir. 1991) (provision 

authorizing payment of attorney fees to 

the subject of an investigation 

conducted by an independent counsel 

of the Department of Justice only if ‘‘no 

indictment is brought’’ against such 

individual does not preclude payment 

of attorney fees when an indictment is 

brought but is determined to be invalid). 

c. The ‘‘Administrative Necessity’’ 

Doctrine 

In the proposed rulemaking, we also 

described in detail the ‘‘administrative 

necessity’’ doctrine, 74 FR 55311 col. 3 

to 55318 col. 3, and we incorporate that 

discussion by reference into this notice. 

Under this doctrine, if a statutory 

provision, however clear on its face, is 

impossible for the agency to administer, 

then the agency is not required to follow 

the literal requirements, and instead, the 

agency may adjust the requirements in 

as refined a manner as possible to assure 

that the requirements are administrable, 

while still achieving Congress’s overall 

intent. The DC Circuit set out the 

doctrine of ‘‘administrative necessity’’ in 

a line of cases that most prominently 

includes Alabama Power v. Costle, 636 

F.2d 323 (DC Cir. 1980). The Court cited 

the doctrine most recently in New York 

v. EPA, 443 F.3d 880, 884, 888 (DC Cir. 

2006). 

As we stated in the proposed 

rulemaking, ‘‘We believe that the 

‘‘administrative necessity’’ case law 

establishes a three-step process under 

which an administrative agency may, 

under the appropriate circumstances, in 

mstockstill on DSKH9S0YB1PROD with RULES2

31544 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

effect revise statutory requirements that 

the agency demonstrates are impossible 

to administer so that they are 

administrable.’’ 74 FR 55315 col. 1. 

Specifically: 

[T]he three steps are as follows: When an 

agency has identified what it believes may be 

insurmountable burdens in administering a 

statutory requirement, the first step the 

agency must take is to evaluate how it could 

streamline administration as much as 

possible, while remaining within the 

confines of the statutory requirements. The 

second step is that the agency must 

determine whether it can justifiably conclude 

that even after whatever streamlining of 

administration of statutory requirements 

(consistent with those statutory 

requirements) it conducts, the remaining 

administrative tasks are impossible for the 

agency because they are beyond its resources, 

e.g., beyond the capacities of its personnel 

and funding. If the agency concludes with 

justification that it would be impossible to 

administer the statutory requirements, as 

streamlined, then the agency may take the 

third step, which is to phase in or otherwise 

adjust the requirements so that they are 

administrable. However, the agency must do 

so in a manner that is as refined as possible 

so that the agency may continue to 

implement as fully as possible Congressional 

intent. 

74 FR 55315 cols. 1–2. 

It should also be noted that we believe 

the administrative burdens encountered 

by the state and local permitting 

authorities are fully relevant under the 

‘‘administrative necessity’’ doctrine. 

Although the case law that discusses the 

doctrine focuses on federal agencies (see 

74 FR 55312–14), under the CAA, state 

and local agencies are EPA’s partners in 

implementing provisions of the CAA, 

and have primary responsibility for 

implementing the PSD program. They 

generally adopt EPA’s PSD requirements 

in their SIPs, as required under CAA 

section 110(a)(2)(C); and they generally 

adopt EPA’s title V requirements in 

their title V programs, as required under 

CAA section 502(d). They issue the PSD 

and title V permits and are responsible 

in the first instance for enforcing the 

terms of the permits. In all these 

respects, the law that the state and local 

permitting authorities administer is both 

federal and state law. Under certain 

circumstances, EPA may become 

responsible for permit issuance and 

enforcement in the first instance, but 

even then, EPA may, and frequently has, 

delegated those duties to a state, in 

which case, the state implements federal 

law directly. Thus, although the PSD 

and title V programs are federal 

requirements, for the most part, it is the 

states that implement those programs. 

For this reason, the administrative 

burdens that the states face in 

implementing the programs are relevant 

in determining the applicability of the 

‘‘administrative necessity’’ doctrine. 

d. ‘‘One-Step-at-a-Time’’ Doctrine 

In addition to the ‘‘absurd results’’ and 

‘‘administrative necessity’’ doctrines, 

another judicial doctrine supports at 

least part of EPA’s Tailoring Rule, and 

that is the doctrine that agencies may 

implement statutory mandates one step 

at a time, which we will call the ‘‘onestep-at-a-time’’ doctrine. In the notice of 

proposed rulemaking, we also described 

this doctrine and recent case law 

applying it. 74 FR 55319 col. 1–3. As we 

noted, that the U.S. Supreme Court 

recently described the doctrine in 

Massachusetts v. EPA, 549 U.S. 497, 524 

(2007), as follows: ‘‘Agencies, like 

legislatures, do not generally resolve 

massive problems in one fell regulatory 

swoop;’’ and instead they may 

permissibly implement such regulatory 

programs over time, ‘‘refining their 

preferred approach as circumstances 

change and as they develop a more 

nuanced understanding of how best to 

proceed.’’ We assume familiarity with 

our discussion in the proposal, but we 

expand upon it here to review the case 

law in greater detail and to highlight 

certain components of the doctrine that 

are particularly relevant to the Tailoring 

Rule. The roots of the doctrine go back 

at least to the DC Circuit’s 1979 decision 

in United States Brewers Association, 

Inc. v. EPA, 600 F.2d 974 (DC Cir. 1979). 

There, the Court considered a challenge 

to EPA’s guidelines for managing 

beverage containers, which EPA was 

required to promulgate under the 

Resource Conservation and Recovery 

Act of 1976 (RCRA). RCRA gave EPA 

one year to promulgate the guidelines. 

EPA promulgated a partial set of 

guidelines, started two others, and was 

challenged before the year was out by 

petitioners who objected to the initial 

guideline, saying it fell short of the 

statutory mandate. The Court upheld 

the initial guideline, stating: ‘‘Under 

these circumstances we think the 

question of whether the Agency has 

fully satisfied the mandate of the statute 

is not fit for judicial review at this time, 

when the Agency, still well within the 

one-year period granted by statute, is 

deeply involved in the process of 

formulating rules designed to carry out 

the congressional mandate. The Agency 

might properly take one step at a time.’’ 

States Brewers Association, Inc. v. EPA, 

600 F.2d at 982. 

The Court addressed the doctrine at 

greater length in National Association of 

Broadcasters v. FCC, 740 F.2d 1190, 

1209–14 (DC Cir. 1984). There, the 

Court noted that under certain statutory 

schemes, step-by-step agency action 

might not be authorized; but the Court 

emphasized that when it is authorized, 

it may offer significant benefits; and the 

Court went on to delineate some of the 

circumstances under which its use is 

justified. In that case, the Court held 

that Federal Communications 

Commission (FCC) acted reasonably in 

making a spectrum allocation decision 

that granted direct broadcast satellite 

service priority use of a gigahertz (GHz) 

band in 5-years time, and—although 

acknowledging that fixed service users 

that were, at that time, using that band, 

would have to relocate to other bands— 

in postponing the details of the fixed 

service relocation to future proceedings. 

The Court described in some detail 

‘‘[t]he circumstances under which * * * 

[an] agency may defer resolution of 

problems raised in a rulemaking,’’ as 

follows: 

The requisite judgment is in essence a 

pragmatic one. In an ideal world, of course, 

agencies would act only after comprehensive 

consideration of how all available 

alternatives comported with a well-defined 

policymaking objective, and in some 

circumstances, statutes indeed mandate that 

agencies proceed by only such a course 

* * *. But administrative action generally 

occurs against a shifting background in 

which facts, predictions, and policies are in 

flux and in which an agency would be 

paralyzed if all the necessary answers had to 

be in before any action at all could be taken 

* * *. We have therefore recognized the 

reasonableness of [an agency’s] decision to 

engage in incremental rulemaking and to 

defer resolution of issues raised in a 

rulemaking even when those issues are 

‘‘related’’ to the main ones being considered 

* * *. At the same time, [an agency] cannot 

‘restructure [an] entire industry on a 

piecemeal basis’ through a rule that utterly 

fails to consider how the likely future 

resolution of crucial issues will affect the 

rule’s rationale * * *. 

Drawing a line between the permissible 

and the impermissible in this area will 

generally raise two questions. First the 

agency will likely have made some 

estimation, based upon evolving economic 

and technological conditions, as to the nature 

and magnitude of the problem it will have to 

confront when it comes to resolve the 

postponed issue. With regard to this aspect 

of the agency’s decision, as long as the 

agency’s predictions about the course of 

future events are plausible and flow from the 

factual record compiled, a reviewing court 

should accept the agency’s estimation * * *. 

Second, once the nature and magnitude of 

the unresolved issue is determined, the 

relevant question is whether it was 

reasonable, in the context of the decisions 

made in the proceeding under review, for the 

agency to have deferred the issue to the 

future. With respect to that question, 

postponement will be most easily justified 

when an agency acts against a background of 

rapid technical and social change and when 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31545 

27For other cases, see Arizona Public Service Co. 

v. EPA, 562 F.3d 1116, 1125–26 (10th Cir. 2009); 

General American Transp. Corp. v. ICC, 872 F.2d 

1048, 1058 (DC Cir. 1989); Hazardous Waste 

Treatment Council v. EPA, 861 F.2d 277, 287 (DC 

Cir. 1988); Western Union International, Inc. v. 

FCC, 725 Fl2d 732, 754 (DC Cir. 1984). 

the agency’s initial decision as a practical 

matter is reversible should the future 

proceedings yield drastically unexpected 

results. In contrast, an incremental approach 

to agency decision making is least justified 

when small errors in predictive judgments 

can have catastrophic effects on the public 

welfare or when future proceedings are likely 

to be systematically defective in taking into 

account certain relevant interests * * *. 

740 F.2d at 1210–11 (citations omitted). 

In City of Las Vegas v. Lujan, 891 F.2d 

927 (DC Cir. 1989), the Court suggested 

that one component of upholding partial 

agency compliance with a statutory 

directive is evidence that the agency 

was on track for full compliance. There, 

the Court upheld the Department of 

Interior’s decision to list the population 

of desert tortoises living north and west 

of the Colorado River (the ‘‘Mojave’’ 

population) as endangered species, but 

not the nearby population living south 

and east of the river (the ‘‘Sonoran’’ 

population). The agency explained that 

the Mojave population faced certain 

threats that the Sonoran population did 

not, and the Court found nothing to 

fault in that reasoning. The Court added: 

‘‘Since agencies have great discretion to 

treat a problem partially, we would not 

strike down the listing if it were a first 

step toward a complete solution, even if 

we thought it ‘should’ have covered 

both the Mojave and Sonoran 

populations.’’ City of Las Vegas v. Lujan, 

891 F.2d 927, 935 (DC Cir. 1989) 

(footnote omitted). 

In Grand Canyon Air Tour Coalition 

v. F.A.A., 154 F.3d 455 (DC Cir. 1998), 

the DC Circuit added another 

component to the ‘‘one-step-at-a-time’’ 

doctrine: While reiterating that 

‘‘ordinarily, agencies have wide latitude 

to attack a regulatory problem in phases 

and that a phased attack often has 

substantial benefits,’’ id. at 471, the 

Court went on to uphold partial agency 

action even when that action was longdelayed. There, the relevant statute was 

the Overflights Act, which required the 

Federal Aviation Administration (FAA) 

to reduce aircraft noise from sightseeing 

tours in Grand Canyon National Park, 

and established the goal of ‘‘substantial 

restoration of natural quiet and 

experience of the park.’’ The statute 

required the agency to develop a plan to 

implement the statutory requirements 

within 120 days after enactment, and 

report to Congress within 2 years after 

the date of the plan as to the plan’s 

success. In fact, the FAA did not 

develop, through rulemaking, a plan 

until ten years after enactment, and 

when it did, it acknowledged that the 

plan was only a partial one, and that it 

would need two more rules and another 

ten years to meet the statutory goal of 

substantial restoration. Although 

recognizing that the Overflights Act did 

not establish an explicit timetable for 

meeting the statutory goal, the Court 

stated that ‘‘[t]he language of the 

Overflights Act does manifest a 

congressional concern with expeditious 

agency action,’’ and described the 

agency’s action variously as ‘‘tardy,’’ 

‘‘undeniably slow,’’ and ‘‘slow and 

faltering.’’ Id. at 476–77. Even so, the 

Court upheld the FAA’s action against 

different challenges from appellants and 

intervenors that (i) the agency acted 

unreasonably in not promulgating a 

complete plan to meet the statutory 

goal, instead of promulgating just the 

first step; and (ii) the agency acted 

unreasonably in not waiting until it had 

a complete plan before promulgating the 

first step. The Court stated: ‘‘We agree 

that it would be arbitrary and capricious 

for an agency simply to thumb its nose 

at Congress and say—without any 

explanation—that it simply does not 

intend to achieve a congressional goal 

on any timetable at all * * *,’’ but went 

on to emphasize that the FAA’s rule was 

the first of three that the agency assured 

would achieve the statutory goal. The 

Court cited City of Las Vegas v. Lujan, 

discussed previously, for the 

proposition that ‘‘a court will not strike 

down agency action ‘if it were a first 

step toward a complete solution.’ ’’ 

Grand Canyon Air Tour Coalition v. 

F.A.A., 154 F.3d 455, 477–78 (DC Cir. 

1998).27

e. Consistency of Doctrines With 

Chevron Framework 

Although the formation of the ‘‘absurd 

results,’’ ‘‘administrative necessity,’’ and 

‘‘one-step-at-a-time’’ doctrines pre-date 

the Chevron two-step analysis for 

construing statutes that Congress has 

authorized an agency to administer, we 

believe that the doctrines can be 

considered very much a part of that 

analysis, and courts have continued to 

apply them post-Chevron. Under 

Chevron Step 1, an agency must 

determine whether ‘‘Congress has 

directly spoken to the precise question 

at issue.’’ If so, ‘‘the court, as well as the 

agency, must give effect to the 

unambiguously expressed intent of 

Congress.’’ However, if ‘‘the statute is 

silent or ambiguous with respect to the 

specific issue, the question for the court 

is whether the agency’s answer is based 

on a permissible construction of the 

statute.’’ 

Chevron U.S.A. Inc. v. NRDC, 467 

U.S. 837, 842–42 (1984). 

Thus, Step 1 under Chevron calls for 

determining congressional intent for the 

relevant statutory directive on the 

specific issue presented. To determine 

Congress’s intent, the agency must look 

first to the statutory terms in question, 

and generally interpret them according 

to their literal meaning, within the 

overall statutory context, and perhaps 

with reference to the legislative history. 

If the literal meaning of the statutory 

requirements is clear then, absent 

indications to the contrary, the agency 

must take it to indicate congressional 

intent and must implement it. Even if 

the literal meaning of the statutory 

requirements is not clear, if the agency 

can otherwise find indications of clear 

congressional intent, such as in the 

legislative history, then the agency must 

implement that congressional intent. 

The DC Circuit has indicated that the 

‘‘absurd results’’ doctrine fits into the 

Chevron Step 1 analysis in the following 

way: Recall that in the cases in which 

the courts have invoked this doctrine, 

the literal meaning of the statutory 

requirements has been clear, but has led 

to absurd results. This can occur when 

the literal meaning, when applied to the 

specific question, conflicts with other 

statutory provisions, contradicts 

congressional purpose as found in the 

legislative history—and, in particular, 

undermines congressional purpose—or 

otherwise produces results so illogical 

or otherwise contrary to sensible public 

policy as to be beyond anything 

Congress would reasonably have 

intended. See United States v. Ron Pair 

Enterprises, 489 U.S. 235, 242–43 

(1989); Griffin v. Oceanic Contractors, 

Inc., 458 U.S. 564, 571 (1982). 

Under these circumstances, the 

agency must not take the literal meaning 

to indicate congressional intent. As the 

DC Circuit has explained, ‘‘where a 

literal reading of a statutory term would 

lead to absurd results, the term ‘simply 

has no plain meaning * * * and is the 

proper subject of construction by the 

EPA and the court.’ ’’ American Water 

Works Assn v. EPA, 40 F.3d 1266, 1271 

(DC Cir. 1994) (quoting Chemical 

Manufacturers’ Association v. NRDC, 

470 U.S. 116, 126 (1985)). Under these 

circumstances, if the agency can find 

other indications of clear congressional 

intent, then the agency must implement 

that intent. See United States v. Ron 

Pair Enterprises, 489 U.S. 235, 242–43 

(1989). This may mean implementing 

the statutory terms, albeit not in 

accordance with their literal meaning, 

mstockstill on DSKH9S0YB1PROD with RULES2

31546 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

28We recognize that we described the 

relationship between the Chevron framework and 

the ‘‘administrative necessity’’ doctrine somewhat 

differently in the proposal, 74 FR 55312, and that, 

after further analysis, we are refining our view of 

that relationship as described previously. 

but in a way that achieves a result that 

is as close as possible to congressional 

intent. As the DC Circuit said in Mova 

Pharm. Corp. v. Shalala, 140 F.3d 1060 

(DC Cir. 1998): 

The rule that statutes are to be read to 

avoid absurd results allows an agency to 

establish that seemingly clear statutory 

language does not reflect the ‘‘unambiguously 

expressed intent of Congress,’’ * * * and 

thus to overcome the first step of the Chevron 

analysis. But the agency does not thereby 

obtain a license to rewrite the statute. When 

the agency concludes that a literal reading of 

a statute would thwart the purposes of 

Congress, it may deviate no further from the 

statute than is needed to protect 

congressional intent * * *. [T]he agency 

might be able to show that there are multiple 

ways of avoiding a statutory anomaly, all 

equally consistent with the intentions of the 

statute’s drafters * * *. In such a case, we 

would move to the second stage of the 

Chevron analysis, and ask whether the 

agency’s choice between these options was 

‘‘based on a permissible construction of the 

statute.’’ Otherwise, however, our review of 

the agency’s deviation from the statutory text 

will occur under the first step of the Chevron 

analysis, in which we do not defer to the 

agency’s interpretation of the statute. 

Id. at 1068 (quoting Chevron U.S.A. Inc. 

v. NRDC, 467 U.S. 837, 842, 843 (1984) 

(citations omitted)). 

The ‘‘administrative necessity’’ 

doctrine is not as well developed as the 

‘‘absurd results’’ doctrine, so that the 

courts have not had occasion to 

explicitly describe how the doctrine fits 

into the Chevron analytical framework. 

However, we think that a reasonable 

approach, in line with the DC Circuit’s 

approach to the ‘‘absurd results’’ 

doctrine as just described, is as follows: 

Recall that under the ‘‘administrative 

necessity’’ doctrine, an agency is not 

required to implement a statutory 

provision in accordance with the literal 

requirements when doing so would be 

impossible, but the agency must 

nevertheless implement the provision as 

fully as possible. Placed in the context 

of the Chevron framework, we think that 

that the ‘‘administrative necessity’’ 

doctrine is based on the premise that 

inherent in the statutory design is the 

presumption that Congress does not 

intend to impose an impossible burden 

on an administrative agency. See 

Alabama Power v. Costle, 636 F.2d 323, 

357 (DC Cir. 1980) (describing the 

‘‘administrative necessity’’ approach as 

one of the ‘‘limited grounds for the 

creation of exemptions [that] are 

inherent in the administrative process, 

and their unavailability under a 

statutory scheme should not be 

presumed, save in the face of the most 

unambiguous demonstration of 

congressional intent to foreclose them’’). 

Therefore, if the literal meaning of a 

statutory directive would impose on an 

agency an impossible administrative 

burden, then that literal meaning should 

not be considered to be indicative of 

congressional intent. Rather, 

congressional intent should be 

considered to achieve as much of the 

statutory directive as possible. As a 

result, the agency must adopt an 

approach that implements the statutory 

directive as fully as possible. This is 

consistent with the DC Circuit’s holding 

in Mova Pharm. Corp that if 

congressional intent is clear, but the 

plain meaning of a statute does not 

express that intent, then the agency 

must, under Chevron Step 1, select an 

interpretation that most closely 

approximates congressional intent. 

Mova Pharm. Corp, 140 F.3d at 1068.28

The ‘‘one-step-at-a-time’’ doctrine fits 

into the Chevron framework in much 

the same manner that the 

‘‘administrative necessity’’ doctrine 

does. That is, inherent in the statutory 

design is the presumption that Congress 

intended an agency, under certain 

circumstances, to implement the 

statutory requirements in a one-step-ata-time fashion, as long as the agency 

stays on a path towards full 

implementation. 

Under all of the circumstances 

described previously, congressional 

intent is clear—whether it is indicated 

by the plain language or otherwise—and 

as a result, the agency must follow that 

intent under Chevron Step 1. On the 

other hand, the agency may determine 

that congressional intent on the specific 

issue is not clear. In these cases, the 

agencies should proceed to Chevron 

Step 2 and select an interpretation or an 

application that is a permissible 

construction of the statute. This 

situation generally occurs when the 

statutory provisions are ambiguous or 

silent as to the specific issue, and there 

are no other indications of clear 

congressional intent. In addition, in 

some cases in which the literal meaning 

of the statutory provision, when applied 

to the specific question, leads to an 

absurd result—and, therefore, the 

statutory provision should be 

considered not to have a plain 

meaning—there may be no other 

indications of clear congressional intent. 

Under all these circumstances, the 

agency is authorized, under Chevron 

Step 2, to develop and implement a 

construction of the statute that the 

courts will uphold as long as it is 

reasonable. 

As noted previously, the DC Circuit, 

has pointed out that this situation may 

also occur when the literal language 

leads to an absurd result, and, in 

attempting to implement congressional 

intent, the agency is ‘‘able to show that 

there are multiple ways of avoiding a 

statutory anomaly, all equally consistent 

with the intentions of the statute’s 

drafters * * *. In such a case, we would 

move to the second stage of the Chevron 

analysis, and ask whether the agency’s 

choice between these options was 

‘based on a permissible construction of 

the statute.’ ’’ Mova Pharm. Corp, 140 

F.3d at 1068. As the U.S. Supreme Court 

has recently said, although in a context 

different than ‘‘absurd results,’’ ‘‘In the 

end, the interpretation applied by EPA 

‘‘governs if it is a reasonable 

interpretation of the statute—not 

necessarily the only possible * * * 

interpretation, nor even the 

interpretation deemed most reasonable 

by the courts.’’ Entergy Corp. v. 

Riverkeeper, Inc., 129 S.Ct. 1498. 1505 

(2009). 

As a related matter, although the 

courts have described Chevron Step 2 as 

requiring that the agency’s policy be ‘‘a 

permissible construction of the statute,’’ 

see Mova Pharm. Corp, 140 F.3d at 1068 

(quoting Chevron, 467 U.S. at 842–43), 

if the statutory requirements cannot be 

read literally because doing so would 

produce ‘‘absurd results,’’ then the 

agency’s policy need not be completely 

consistent with those particular 

requirements. The policy must still, in 

order to be upheld, be consistent with 

Congress’s actions, but those actions 

should be considered to afford the 

agency broad discretion considering that 

both the statutory terms cannot be 

considered dispositive and underlying 

congressional intent is not clear. As the 

U.S. Supreme Court has recently said, 

although in a context different than 

‘‘absurd results,’’ In the end, the 

interpretation applied by the agency 

governs if it is a reasonable 

interpretation of the statute—not 

necessarily the only possible * * * 

interpretation, nor even the 

interpretation deemed most reasonable 

by the courts.’’ Entergy Corp. v. 

Riverkeeper, Inc., 129 S.Ct. 1498. 1505 

(2009). 

There is another aspect of the 

‘‘administrative necessity’’ doctrine 

worth noting in this context: The 

doctrine applies when (i) a literal 

application of the statutory directive to 

the case at hand is impossible for the 

agency to administer; and (ii) even so, 

either Congress clearly intended the 

statutory directive to apply to the case 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31547 

29As discussed later, EPA may, in future 

rulemaking, make a final determination that under 

the ‘‘absurd results’’ doctrine, Congress did not 

intend for EPA to apply PSD to very small sources, 

that is, those, with emissions at or near the 100/250 

tpy statutory levels. 

30A physical or operational change is treated as 

a ‘‘modification’’ that is subject to PSD if it either 

‘‘increases the amount of any air pollutant emitted’’ 

by the source or ‘‘results in the emission of any air 

pollutant not previously emitted.’’ For convenience, 

unless otherwise indicated, when we refer to 

changes that ‘‘increase[ ] the amount of any air 

pollutant emitted,’’ we mean both to those types of 

changes and changes that ‘‘result[ ] in the emission 

of any air pollutant not previously emitted.’’ 

at hand or, if Congress did not clearly 

intend that, then the agency reasonably 

construes the statute to apply the 

statutory directive to the case at hand. 

In contrast, if Congress did not intend 

the statutory directive to apply to the 

case at hand, or if congressional intent 

is uncertain and the agency considers 

another approach to be reasonable, then 

the ‘‘administrative necessity’’ doctrine 

would not apply. As a result, the agency 

would not be required to implement the 

statutory directive to the case at hand at 

all, much less in a more administrable 

fashion. 

f. Interconnectedness of the Legal 

Doctrines 

Although we believe that each of the 

‘‘absurd results,’’ ‘‘administrative 

necessity,’’ and ‘‘one-step-at-a-time’’ 

doctrines provide independent support 

for our action, we also believe that in 

this case, the three doctrines are 

intertwined and form a comprehensive 

basis for EPA’s tailoring approach. As 

just discussed, each of the three 

doctrines is tied into the Chevron 

analytical framework because each is 

designed to give effect to underlying 

intent. As discussed previously, each of 

the three doctrines comes into play in 

this case because a literal reading of the 

PSD and title V applicability provisions 

results in insurmountable 

administrative burdens. Those 

insurmountable administrative 

burdens—along with the undue costs to 

sources—must be considered ‘‘absurd 

results’’ that would undermine 

congressional purpose for the PSD and 

title V programs. Under the ‘‘absurd 

results’’ doctrine, EPA is authorized not 

to implement the applicability 

provisions literally—that is, not to 

implement them as applying on the 

January 2, 2011 date that PSD and title 

V are triggered to all GHG sources at or 

above the statutory thresholds—but 

instead to tailor them in a manner 

consistent with congressional intent. 

That means applying the PSD and title 

V requirements through a phase-in 

approach to as many sources as possible 

and as quickly as possible, starting with 

the largest sources, as EPA does with 

this Tailoring Rule,29 at least to a certain 

point. By the same token, the 

insurmountable administrative burdens 

bring into play the ‘‘administrative 

necessity’’ doctrine, under which EPA 

is, again, authorized not to implement 

the applicability provisions literally, but 

instead to apply them in a manner 

consistent with administrative 

resources. This also means phasing 

them in through the approach in the 

Tailoring Rule. Finally, the ‘‘one-step-ata-time’’ doctrine, which authorizes 

incremental action by agencies to 

implement statutory requirements under 

certain circumstances, provides further 

support for the phased tailoring 

approach in the Tailoring Rule. 

g. Application of Chevron Approach 

The Chevron analytical approach, and 

the three legal doctrines at issue here, 

apply to this action in the following 

manner: To reiterate, for convenience, 

the statutory provisions at issue: 

Congress, through the definition of 

‘‘major emitting facility,’’ applied the 

PSD program to include (i) ‘‘any * * * 

stationary sources of air pollutants 

which emit or have the potential to 

emit, one hundred [or, depending on the 

source category, two hundred fifty] tons 

per year or more of any air pollutant,’’ 

CAA sections 165(a), 169(1); and (ii) and 

such sources that undertake a physical 

or operational change that ‘‘increases the 

amount of any air pollutant emitted’’ by 

such sources, CAA sections 165(a), 

169(2)(C), 111(a)(4).30 Similarly, 

Congress, through the definition of 

‘‘major source,’’ specified that the title V 

program includes ‘‘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.’’ CAA sections 

502(a), 501(2)(B), 302(j). EPA, through 

long-established regulatory action, in 

the case of PSD, and long-established 

interpretation, in the case of title V, has 

interpreted these definitions so that they 

apply only with respect to air pollutants 

that are subject to regulation under the 

CAA. 

For each of these applicability 

provisions, the approach under Chevron 

is as follows: Under Chevron Step 1, we 

must determine whether Congress 

expressed an intention on the specific 

question, which is whether the PSD or 

title V applicability provisions apply to 

GHG sources. Said differently, the 

specific question is whether, in the case 

of PSD, Congress intended that the 

definitions of ‘‘major emitting facility’’ 

and ‘‘modification’’ apply, respectively, 

to all GHG sources that emit at least 100 

or 250 tpy or GHGs and to all physical 

or operational changes by major 

emitting facilities that ‘‘increase[ ] the 

amount’’ of GHGs; and, in the case of 

title V, whether the definition of ‘‘major 

source’’ applies to all GHG sources that 

emit at least 100 tpy GHGs. 

To determine intent, we must first 

examine the terms of the statute in light 

of their literal meaning. Here, the literal 

reading of each provision covers GHG 

sources. For PSD, a GHG source that 

emits at least 100 or 250 tpy GHGs 

literally qualifies as ‘‘stationary source 

[ ] of air pollutants which emit[s] or 

ha[s] the potential to emit, one hundred 

[or two hundred fifty] tons per year or 

more of any air pollutant [subject to 

regulation under the CAA].’’ CAA 

section 169(1). For modifications, a 

physical or operational change that 

increases the amount of GHG emissions 

qualifies as a ‘‘modification’’ because it 

‘‘increases the amount of any air 

pollutant emitted’’ by the source. 

Similarly, for title V, a GHG source that 

emits at least 100 tpy GHGs literally 

qualifies 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 [subject to regulation under 

the CAA].’’ CAA sections 502(a), 

501(2)(B), 302(j). 

Although each definition is clear that 

it applies to GHG sources as a general 

matter, applying each definition in 

accordance with its literal meaning to 

all GHG sources at the specified levels 

of emissions and at the present time— 

in advance of the development of 

streamlining methods and greater 

permitting authority expertise and 

resources—would create undue costs for 

sources and impossible administrative 

burdens for permitting authorities. 

These results are not consistent with 

other provisions of the PSD and title V 

requirements, and are inconsistent 

with—and, indeed, undermine— 

congressional purposes for the PSD and 

title V provisions. Accordingly, under 

the ‘‘absurd results’’ doctrine, neither the 

PSD definition of ‘‘major emitting 

facility’’ or ‘‘modification’’ nor the title V 

definition of ‘‘major source,’’ should be 

applied literally to all GHG sources, and 

therefore none should be considered to 

have a literal meaning with respect to its 

application to all GHG sources. 

In analyzing the provisions of each 

definition more closely, we believe that 

each has four terms, any one of which 

could be considered not to have its 

literal meaning, in this respect. 

Specifically, each provision includes (i) 

The term ‘‘any * * * source,’’ or ‘‘a 

stationary source,’’ and that term could 

be considered not to refer literally to all 

mstockstill on DSKH9S0YB1PROD with RULES2

31548 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

31We do not believe that this term is ambiguous 

with respect to the need to cover GHG sources 

under either the PSD or title V program, only with 

respect to what sources of GHG should be covered 

under the circumstances presented here. 

32 In this preamble and the response to comments 

document we fully address arguments that 

commenters and others have presented about 

congressional intent and coverage of GHGs. We do 

so to be fully responsive, even though we believe 

that this is a settled matter for which the time for 

judicial review has past. 

of the GHG sources; (ii) either the term 

‘‘two hundred fifty tons per year’’ or 

‘‘100 tons per year,’’ or the term 

‘‘increases the amount,’’ and those terms 

could be considered not to refer literally 

to the tonnage amount of emissions 

from all of the GHG sources; (iii) the 

term ‘‘any air pollutant,’’ 31 and that term 

could be considered not to refer literally 

to the emissions from all of the GHG 

sources; and (iv) the term ‘‘subject to 

regulation under the CAA’’ (which we 

have interpreted ‘‘any air pollutant’’ to 

include), and that term could be 

considered not to refer literally to the 

emissions from all of the GHG sources. 

As long as any one of those four terms 

may be considered not to have its literal 

meaning as applied to GHG sources, 

then the definition as a whole—again, 

for PSD, the terms ‘‘major emitting 

facility’’ or ‘‘modifications,’’ and for title 

V, the term ‘‘major source’’—cannot be 

considered to apply literally to GHG 

sources. Because we read the terms 

together, as integral parts of each 

definition as a whole, we do not think 

that the choice of which of those four 

terms within each definition cannot be 

considered to apply literally to GHG 

sources has substantive legal effect. In 

other words, we believe that any one of 

these terms, or all of them together as 

part of each definition as a whole, 

should be considered not to apply 

literally in the case of GHG sources. 

Having determined that each 

definition does not have a literal 

meaning with respect to the 

applicability of PSD or title V applies to 

all GHG sources, we must next inquire 

as to whether Congress has nevertheless 

expressed an intent on that question 

through other means. We discuss the 

statutory terms and legislative history of 

the PSD and title V provisions in more 

detail later, but for now it suffices to say 

that on the issue of whether PSD and 

title V apply to GHG sources, we believe 

that congressional intent is clear, and 

that is to apply PSD and title V to GHG 

sources generally. We believe that this 

intent is clear from the broad phrasing 

of the applicability provisions—as noted 

earlier, the definitions apply by their 

terms to GHG source generally, even 

though the definitions should not be 

applied literally to all GHG sources—the 

fact that the various components of the 

PSD and title V programs can be readily 

applied to GHG sources, and the fact 

that the two programs can readily 

accommodate at least some GHG 

sources. As a result, we believe that as 

a matter of Chevron Step 1, PSD and 

title V generally apply to GHG sources. 

Our previous regulatory action defining 

the applicability provisions made this 

clear, and we do not reopen this issue 

in this rulemaking. Moreover, even if 

this long-established regulatory position 

were not justifiable based on Chevron 

step 1—on the grounds that in fact, 

congressional intent on this point is not 

clear—then we believe that this 

position, that the statutory provisions to 

apply PSD and title V generally to GHG 

sources, was justified under Chevron 

step 2.32

On the issue of how to apply PSD to 

GHG sources, including the specific 

threshold levels and the timing, we 

believe that Congress could be 

considered to have expressed a clear 

intent that GHG sources be included in 

the PSD program at as close to the 

statutory thresholds as possible, and as 

quickly as possible, and at least to a 

certain point, all as consistent with the 

need to assure that the PSD program 

does not impose undue costs on sources 

or undue administrative burdens on the 

permitting authorities. Under this view, 

EPA would be required at Chevron Step 

1 to adopt the Tailoring Rule because, 

by phasing in PSD applicability, it most 

closely gives effect to Congress’s intent. 

Under these circumstances, EPA is 

authorized to exercise its expert 

judgment as to the best approach for 

phasing in the application of PSD to 

GHG sources. 

Even so, we recognize that it could be 

concluded that on the issue of how to 

apply PSD to GHG sources, 

congressional intent is unclear. Under 

these circumstances, EPA has the 

discretion at Chevron Step 2 to adopt 

the Tailoring Rule because it is a 

reasonable interpretation of the 

statutory requirements (remaining 

mindful that the applicability 

requirements cannot be applied 

literally). Under the Tailoring Rule, EPA 

seeks to include as many GHG sources 

in the permitting programs at as close to 

the statutory thresholds as possible, and 

as quickly as possible, although we 

recognize that we ultimately may stop 

the phase-in process short of the 

statutory threshold levels. 

As for title V, we believe that taken 

together, the various statutory 

requirements and statements in the 

legislative history do not evidence a 

clear congressional intent for how title 

V is to be applied to GHG sources. As 

discussed later, the relevant title V 

requirements and statements in 

legislative history differ from PSD, not 

least because they include provisions 

that concern empty permits that point in 

different directions. As a result, here, 

too, EPA has the discretion at Chevron 

Step 2 to adopt the Tailoring Rule as a 

reasonable interpretation of the 

statutory requirements. Alternatively, 

even if the statute does express a clear 

intent as to title V that, similar to PSD, 

title V requirements must be phased in 

as closely to the statutory threshold as 

possible and as quickly as possible, this 

Tailoring Rule is consistent with that 

intent. 

It should also be noted that although 

EPA has concluded that applying the 

PSD and title V applicability provisions 

literally in the case of GHG sources 

would produce ‘‘absurd results’’ and 

therefore is not required, this 

conclusion has no relevance for 

applying other CAA requirements— 

such as the requirements concerning 

endangerment and contribution findings 

under CAA section 202(a)(1) or 

emission standards for new motor 

vehicles or new motor vehicle engines 

under CAA section 202—to GHGs or 

GHG sources. EPA’s conclusions with 

respect to the PSD and title V 

applicability requirements are based on 

the specific terms of those requirements, 

other relevant PSD and title V 

provisions, and the legislative history of 

the PSD and title V programs. 

Within the context of the Chevron 

framework, the ‘‘administrative 

necessity’’ doctrine applies as follows: 

Under the doctrine, Congress is 

presumed to intend that the PSD and 

title V applicability requirements be 

administrable. Here, those applicability 

requirements, if applied to GHG sources 

in accordance with their literal 

meaning, would be impossible to 

administer. Accordingly, under Chevron 

Step 1, it is consistent with 

congressional intent that EPA and the 

permitting authorities be authorized to 

implement the applicability 

requirements in a manner that is 

administrable, that is, through the 

tailoring approach. 

As for the ‘‘one-step-at-a-time’’ 

doctrine, we believe it applies within 

the Chevron framework in conjunction 

with the ‘‘absurd results’’ and 

‘‘administrative necessity’’ doctrines. As 

we discuss elsewhere, the PSD and title 

V applicability provisions by their terms 

require that sources at or above the 100/ 

250 tpy thresholds comply with PSD 

and title V requirements at the time 

those requirements are triggered, which 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31549 

33Coverage of modifications by the PSD program 

was addressed by a technical amendment which 

added a cross reference in section 169 to section 

111. The legislative history of this provision is scant 

and there is no suggestion that Congress would 

have contemplated sweeping in large number of 

changes from smaller sources through the addition 

of this provision. 

is when GHGs become subject to 

regulation. Therefore, if the literal 

meaning of the applicability provisions 

as applied to GHG sources were 

controlling—that is, if it reflected 

congressional intent—it would foreclose 

use of the one-step-at-a-time doctrine to 

implement a phase-in approach. 

However, the literal meaning is not 

controlling because—in light of the 

absurd results, including the 

insurmountable administrative burdens, 

that would result from the literal 

meaning—congressional intent is not to 

require the application of the PSD and 

title V requirements to all GHG sources 

at or above the statutory thresholds at 

the time that GHGs become subject to 

regulation. Instead, as described 

previously, we consider congressional 

intent for the applicability provisions, 

as applied to GHG sources, either (i) to 

be clear that PSD and title V should be 

phased in for GHG sources as quickly as 

possible, or (ii) to be unclear, so that 

EPA may reasonably choose to phase 

PSD and title V in for those sources in 

that manner. Under either view, 

congressional intent for PSD and title V 

applicability to GHG sources 

accommodates the ‘‘one-step-at-a-time’’ 

approach. 

4. The PSD and Title V Programs 

Having discussed both the factual 

underpinnings and, immediately above, 

the legal underpinnings for our tailoring 

approach, we now discuss the PSD and 

title V programs themselves, including, 

for each program, the key statutory 

provisions, their legislative history, and 

the relevant regulations and guidance 

documents through which EPA has 

implemented the provisions. We start 

with the PSD program. 

a. The PSD program 

(1) PSD Provisions 

Several PSD provisions are relevant 

for present purposes because of the 

specific requirements that they establish 

and the window that they provide into 

congressional intent. These provisions 

start with the applicability provisions, 

found in CAA sections 165(a) and 

169(1), which identify the new sources 

subject to PSD, and CAA section 

111(a)(4), which describes the 

modifications of existing sources that 

are subject to PSD. CAA section 165(a) 

provides: 

No major emitting facility on which 

construction is commenced after August 7, 

1977, may be constructed in any area to 

which this part applies unless— 

(1) A permit has been issued for such 

proposed facility in accordance with this part 

setting forth emission limitations for such 

facility which conform to the requirements of 

this part; 

(2) The proposed permit has been subject 

to a review in accordance with this section 

* * *, and a public hearing has been held 

with opportunity for interested persons 

including representatives of the 

Administrator to appear and submit written 

or oral presentations on the air quality 

impact of such source, alternatives thereto, 

control technology requirements, and other 

appropriate considerations; 

* * * * * 

(4) The proposed facility is subject to the 

best available control technology for each 

pollutant subject to regulation under this 

chapter emitted from, or which results from, 

such facility * * *. 

The term ‘‘major emitting facility’’ is 

defined, under CAA section 169(1) to 

include: 

* * * stationary sources of air pollutants 

which emit, or have the potential to emit, one 

hundred tons per year or more of any air 

pollutant from [28 listed] types of stationary 

sources. * * * Such term also includes any 

other source with the potential to emit two 

hundred and fifty tons per year or more of 

any air pollutant. This term shall not include 

new or modified facilities which are 

nonprofit health or education institutions 

which have been exempted by the State. 

As for modification of existing 

sources, CAA section 169(1)(C) provides 

that the term ‘‘construction,’’ as used in 

CAA section 165(a) (the PSD 

applicability section) ‘‘includes the 

modification (as defined in section 

111(a)(4)) of any source or facility.’’ 

Section 111(a)(4), in turn, provides: 

The term ‘‘modification’’ means any 

physical change in, or change in the method 

of operation of, a stationary source which 

increases the amount of any air pollutant 

emitted by such source or which results in 

the emission of any air pollutant not 

previously emitted. 

As interpreted by EPA regulations, 

these provisions, taken together, provide 

that new stationary sources are subject 

to PSD if they emit at the 100/250–tpy 

thresholds air pollutants that are subject 

to EPA regulation, and that existing 

stationary sources that emit such air 

pollutants at the 100/250–tpy thresholds 

are subject to PSD if they undertake a 

physical or operational change that 

increases their emissions of such air 

pollutants by any amount. 

Other provisions of particular 

relevance are the requirements for 

timely issuance of permits. The 

permitting authority must ‘‘grant[ ] or 

den[y] [any completed permit 

application] not later than one year after 

the date of filing of such completed 

application.’’ CAA section 165(c). 

In addition, the PSD provisions 

articulate ‘‘the purposes of [the PSD 

program],’’ which are to balance 

environmental protection and growth. 

CAA section 160. One of the purposes, 

in subsection (1), is specifically ‘‘to 

protect public health and welfare,’’ and 

another, in subsection (3), is ‘‘to insure 

that economic growth will occur in a 

manner consistent with the 

preservations of existing clean air 

resources.’’ 

The PSD provisions also include 

detailed procedures for implementation. 

Most relevant for sources of GHG are the 

provisions that the proposed permit for 

each source must be the subject of a 

public hearing with opportunity for 

interested persons to comment, CAA 

section 165(a)(2), and each source must 

be subject to BACT, as determined by 

the permitting authority on a source-bysource basis, CAA section 165(a)(4), 

169(3). 

(2) PSD Legislative History 

The legislative history of the PSD 

provisions, enacted in the 1977 CAA 

Amendments, makes clear that Congress 

was largely focused on sources of 

criteria pollutants: primarily sulfur 

dioxide, PM, NOX, and carbon 

monoxide (CO). This focus is evident in 

the basic purpose of the PSD program, 

which is to safeguard maintenance of 

the NAAQS. See S 95–127 (95th Cong., 

1st Sess.), at 27. 

Congress designed the PSD provisions 

to impose significant regulatory 

requirements, on a source-by-source 

basis, to identify and implement BACT 

and, for criteria pollutant, to also 

undertake certain studies. Congress was 

well aware that because these 

requirements are individualized to the 

source, they are expensive. Accordingly, 

Congress designed the applicability 

provisions (i) to apply these 

requirements to industrial sources of a 

certain type and a certain size—sources 

within 28 specified source categories 

and that emit at least 100 tpy—as well 

as all other sources that emit at least 250 

tpy, and, by the same token, (ii) to 

exempt other sources from these 

requirements.33

Although Congress required that CAA 

requirements generally apply to ‘‘major 

emitting facilities,’’ defined as any 

source that emits or has the potential to 

emit 100 tpy of any pollutant, Congress 

applied PSD to only sources at 100 tpy 

or higher in 28 specified industrial 

source categories, and at 250 tpy or 

mstockstill on DSKH9S0YB1PROD with RULES2

31550 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

34Beginning in 1974, EPA implemented a 

program that required sources of certain NAAQS 

pollutants seeking to construct in attainment or 

unclassifiable areas to implement emission controls 

for the purpose of preventing deterioration in the 

ambient air quality in those areas. This program 

was the precursor to the PSD program Congress 

enacted in 1977. 

35Note that although Congress specifically 

authorized the states to exempt ‘‘nonprofit health or 

education institutions’’ from the definition of ‘‘major 

emitting facility,’’ this statement by the DC Circuit 

should be taken as the Court’s view that Congress 

did not design PSD to cover sources of the small 

size described. 

more in all other source categories. This 

distinction was deliberate: According to 

Sen. McClure, Congress selected the 28 

source categories after reviewing an EPA 

study describing 190 industrial source 

categories. 122 Cong. Rec. 24521 (July 

29, 1976) (statement by Sen. McClure). 

Congress also relied on an EPA 

memorandum that identified the range 

of industrial categories that EPA 

regulated under its regulations that 

constituted the precursor to the 

statutory PSD program,34 and listed both 

the estimated number of new sources 

constructing each year and the amount 

of pollution emitted by the ‘‘typical 

plant’’ in the category. The 

memorandum was prepared by B.J. 

Steigerwald, Director of the Office of Air 

Quality Planning and Standards and 

Roger Strelow, EPA’s Assistant 

Administrator for Air and Waste 

Management (‘‘Steigerwald-Strelow 

memorandum’’). The SteigerwaldStrelow memorandum makes clear that 

the 100 tpy cut-off for the 28 listed 

sources categories, and the 250 tpy cutoff for all other sources, was 

meaningful; that is, there were a large 

number of sources below those cut-offs 

that Congress explicitly contemplated 

would not be included in the PSD 

program. Id. at 24548–50. 

Consistent with this, the legislative 

history on the Senate side also 

specifically identified certain source 

categories that Senators believed should 

not be covered by PSD. The Senate bill 

language limited PSD to sources of 100 

tpy or more in 28 listed source 

categories, and to any other categories 

that the Administrator might add. Sen. 

Muskie stated that the Senate bill 

excluded ‘‘houses, dairies, farms, 

highways, hospitals, schools, grocery 

stores, and other such sources.’’ 123 

Cong. Rec. 18021 (June 8, 1977) 

(statement of Sen. Muskie). Sen. 

McLure’s list of excluded source 

categories were ‘‘[a] small gasoline 

jobber, or a heating plant at a 

community college, [which] could have 

the potential to emit 100 tons of 

pollution annually.’’ 122 Cong. Rec. 

24548–49 (July 29, 1976) (statement of 

Sen. McClure). The Senate Committee 

Report included a comparable list, and 

in describing it, concisely articulated 

the cost-conscious basis for the linedrawing: ‘‘[the PSD] procedure * * * 

must include an effective review-andpermit process. Such a process is 

reasonable and necessary for very large 

sources, such as new electrical 

generating plants or new steel mills. But 

the procedure would prove costly and 

potentially unreasonable if imposed on 

construction of storage facilities for a 

small gasoline jobber or on the 

construction of a new heating plant at 

a junior college, each of which may 

have the potential to emit 100 tons of 

pollution annually.’’ S. Rpt. 95–127 at 

96–97. 

The enacted legislation differs from 

the Senate bill by replacing the 

authorization to EPA to include by 

regulation source categories in addition 

to the listed 28 source categories with 

an inclusion of all other sources if they 

exceed 250 tpy, and with an 

authorization for the states to exempt 

hospitals and educational institutions. 

But Congress’s overall intention remains 

clear, as the DC Circuit described in 

Alabama Power: ‘‘Congress’s intention 

was to identify facilities which, due to 

their size, are financially able to bear the 

substantial regulatory costs imposed by 

the PSD provisions and which, as a 

group, are primarily responsible for 

emissions of the deleterious pollutants 

that befoul our nation’s air * * *. [With 

respect to] the heating plant operating in 

a large high school or in a small 

community college * * * [w]e have no 

reason to believe that Congress intended 

to define such obviously minor sources 

as ‘major’ for the purposes of the PSD 

provision.’’ 35 636 F.2d at 353–54. 

A particularly important indication of 

congressional intent to limit the PSD 

program it was designing to larger 

sources comes in considering the 

emissions profile of the small-sized 

boilers. Congress focused closely on 

identifying which sources with 

emissions in excess of 100 tpy should 

not be subject to PSD even though they 

are subject to CAA requirements 

generally. But Congress viewed a large 

set of sources as emitting below 100 tpy 

and therefore not included in the PSD 

program. Chief among these sources, in 

terms of absolute numbers of sources, 

were small boilers. The SteigerwaldStrelow memorandum identified two 

categories of these boilers, differentiated 

by size. The first ranges in size from 10 

to 250 x 10 6 Btu per hour (Btu/hr), and 

has a ‘‘typical plant’’ size of 10 7 Btu/hr, 

with ‘‘BACT emissions from typical 

plant’’ of 53 tpy, and a total of 1,446 

sources in the category. The second 

category ranges in size from 0.3 to 10 x 

10 6 Btu/hr, and has a ‘‘typical plant’’ 

size of 1.3 x 10 6 Btu/hr, with ‘‘BACT 

emissions from typical plant’’ of 2 tpy, 

and a total of 11,215 sources in the 

category. The memorandum discusses 

these two categories in the context of 

explaining which source categories 

exceed a size of 100 tpy—and therefore 

would be subject to PSD if a 100 tpy 

threshold were set—by stating, 

‘‘Fortunately, most truly small boilers 

and typical space heating operations 

would not be covered.’’ 122 Cong. Rec. 

24549 (July 29, 1976). 

The legislative history also provides a 

window into the scope of the program 

that Congress anticipated and related 

administrability concerns. According to 

the Steigerwald-Strelow memorandum, 

the number of new sources each year 

whose ‘‘BACT emissions from typical 

plant’’ exceed 100 for the 28 listed 

source categories and 250 for all other 

source categories is less than 100 per 

year. Although the Steigerwald-Strelow 

memorandum does not attempt to 

estimate the number of modifications, it 

appears that based on this information, 

Congress had reason to expect the total 

size of the PSD program to be measured 

in the hundreds or perhaps thousands of 

permits each year. A program of this 

size would be manageable by EPA and 

the permitting authorities. 

(3) PSD Regulatory History: Regulations 

Concerning the Definition of ‘‘Major 

Stationary Source’’ 

For present purposes, the regulatory 

history of the PSD program is most 

noteworthy because it shows that since 

the inception of the program following 

the 1977 CAA Amendments, EPA has 

interpreted the statutory PSD 

applicability provisions to apply more 

narrowly—to any air pollutant subject to 

regulation—than their literal meaning 

(‘‘any air pollutant’’). EPA’s initial 

rulemaking implementing the PSD 

program, which was proposed and 

finalized in 1977–1978, made explicit 

that the entire PSD program applied to 

only pollutants regulated under the Act. 

43 FR 26380, 26403, 26406 (June 19, 

1978) (promulgating 40 CFR 

51.21(b)(1)(i)). In 1979–1980, EPA 

revised the PSD program to conform to 

Alabama Power v. Costle, 636 F.2d 323 

(DC Cir. 1980). 44 FR 51924 (September 

5, 1979) (proposed rule); 45 FR 52676 

(August 7, 1980) (final rule). In this 

rulemaking, EPA did not disturb the 

pre-existing provisions that limited the 

applicability of the PSD program to 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31551 

36As noted elsewhere in this notice, in Alabama 

Power, the DC Circuit noted that the definition of 

‘‘major emitting facility’’ under CAA section 169(1) 

could apply to air pollutants not regulated under 

other provisions of the Act, and discussed the 

contrast of this broad definition to the narrower 

application of the BACT provisions. 636 F.2d at 

352–53 & n. 60. In its rulemaking notices 

responding to Alabama Power, EPA discussed at 

length certain issues, such as the applicability of 

NSR to pollutants emitted below the ‘‘major’’ 

thresholds, that are based on the reference in ‘‘major 

emitting facility’’ to ‘‘any air pollutant.’’ However, 

throughout its discussion, EPA interpreted that 

reference as ‘‘any regulated air pollutant,’’ again 

without specifically acknowledging the difference 

or without acknowledging the above-noted 

statements in Alabama Power. See 45 FR 52710– 

52711. EPA did not indicate that it had received 

comments on this issue. 

regulated air pollutants.36 In 1996 EPA 

proposed, and in 2002 finalized, a set of 

amendments to the PSD provisions that 

included revisions to conform with the 

1990 CAA Amendments, which, in 

relevant part, exempted hazardous air 

pollutants (HAPs) from PSD, under CAA 

section 112(b)(6). See 61 FR 38250 (July 

23, 1996), 67 FR 80186 (December 31, 

2002). In the preamble to the final rule, 

EPA noted that based on a request from 

a commenter, EPA was amending the 

regulations to ‘‘clarify which pollutants 

are covered under the PSD program.’’ 

EPA accomplished this by promulgating 

a definition for ‘‘regulated NSR 

pollutant,’’ which listed categories of 

pollutants regulated under the Act, and 

by substituting that defined term for the 

phrase ‘‘pollutants regulated under the 

Act’’ that was previously used in various 

parts of the PSD regulations. 67 FR 

80240. The definition of ‘‘regulated NSR 

pollutant’’ includes several categories of 

pollutants (including, in general, 

NAAQS pollutants and precursors, 

pollutants regulated under CAA section 

111 NSPS, Class I or II substances 

regulated under CAA title VI) and a 

catch-all category, ‘‘[a]ny pollutant that 

otherwise is subject to regulation under 

the Act.’’ E.g., 40 CFR 52.21(b)(50). As 

in the previous rulemakings, EPA did 

not address the difference between the 

definition of ‘‘major emitting facility’’ 

and its regulatory approach or indicate 

that it had received comments on this 

issue. While the definition of ‘‘major 

modification’’ in the PSD regulations has 

changed over time with respect to how 

emission increases are calculated, the 

regulatory history with respect to 

pollutant coverage parallels that of 

major emitting facility. 

We recount this regulatory history as 

background information. We are not 

reconsidering or reopening these 

regulations to the extent they interpret 

the definition of ‘‘major emitting 

facility’’ and ‘‘modification’’ narrowly to 

be limited to pollutants subject to 

regulation under the Act. 

b. Title V Program 

Having reviewed the key statutory 

provisions, their legislative history, and 

the relevant administrative 

interpretations for the PSD program, we 

now do the same for the title V program. 

(1) Title V Provisions 

The key title V provisions for present 

purposes start with the applicability 

provisions, which are found in CAA 

sections 502(a), 501(2)(B), and 302(j). 

These provisions provide that it is 

unlawful for any person to operate a 

‘‘major source’’ without a title V permit, 

section 502(a), and define a ‘‘major 

source’’ to include ‘‘any major 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.’’ CAA sections 

501(2)(B) and 302(j). As noted 

elsewhere, these provisions, taken 

together and as interpreted by EPA, 

provide that stationary sources are 

subject to title V if they emit at the 100- 

tpy threshold air pollutants that are 

subject to EPA regulation. 

In addition, although title V does not 

have a set of provisions describing its 

purpose, it is clear from its provisions 

and its legislative history, discussed 

later, that its key goal is to gather into 

one permitting mechanism the CAA 

requirements applicable to a source and 

impose conditions necessary to assure 

compliance with such requirements, 

and thereby promote the enforceability 

of CAA requirements applicable to the 

covered sources. Section 503(b)(1) 

requires that the source’s permit 

application contain a compliance plan 

describing how the source will ’’comply 

with all applicable requirements’’ of the 

CAA, and section 504(a) requires that 

‘‘[e]ach permit issued under [title V] 

shall include * * * such * * * 

conditions as are necessary to assure 

compliance with applicable 

requirements of [the Act].’’ See H.R. Rep. 

No. 101–490, at 351 (1990) (‘‘It should 

be emphasized that the operating permit 

to be issued under this title is intended 

by the Administration to be the single 

document or source of all of the 

requirements under the Act applicable 

to the source.’’). 

Importantly, title V is replete with 

provisions designed to make the 

permitting process as efficient and 

smooth-running as possible, including 

the expeditious processing of permit 

applications and the timely issuance of 

permits. Section 503(c) requires that 

‘‘the permitting authority shall approve 

or disapprove a completed application 

* * * and shall issue or deny the 

permit, within 18 months after the date 

of receipt thereof * * *.’’ Section 

502(b)(6) requires the permitting 

authority to develop ‘‘adequate, 

streamlined, and reasonable procedures 

for expeditiously determining when 

applications are complete, for 

processing such applications, for public 

notice * * * and for expeditious review 

of permit actions, including * * * 

judicial review in State court of the final 

permit action by [specified persons].’’ 

Section 502(b)(7) includes a ‘‘hammer’’ 

provision designed to reinforce timely 

permit issuance, which is that the 

permitting authority’s program must 

include: 

To ensure against unreasonable delay by 

the permitting authority, adequate authority 

and procedures to provide that a failure of 

such permitting authority to act on a permit 

application or permit renewal application (in 

accordance with the time periods specified in 

[CAA] section 503 * * *) shall be treated as 

a final permit action solely for purposes of 

obtaining judicial review in State court of an 

action brought by any person referred to in 

paragraph (6) to require that action be taken 

by the permitting authority on such 

application without additional delay. 

Section 502(b)(8) requires the permit 

program to include ‘‘[a]uthority and 

reasonable procedures consistent with 

the need for expeditious action by the 

permitting authority on permit 

applications and related matters, to 

make available to the public [certain 

permit-related documents]’’. Section 

502(b)(9) requires a permit revision to 

incorporate requirements promulgated 

after issuance of the permit, but only if 

the permit is for a major source and has 

a term of 3 or more years remaining. In 

addition, the revision must occur ‘‘as 

expeditiously as practicable.’’ Section 

502(b)(10) requires the permit program 

to include operational flexibility 

provisions that ‘‘allow changes within a 

permitted facility * * * without 

requiring a permit revision, if the 

changes are not modifications * * * 

and * * * do not exceed the emissions 

allowable under the permit * * *.’’ 

In addition, title V includes a 

comprehensive and finely detailed 

implementation schedule that mandates 

timely issuance of permits while 

building in EPA and affected state 

review, public participation, and timely 

compliance by the source with reporting 

requirements. Following the date that 

sources become subject to title V, they 

have 1 year to submit their permit 

applications. CAA section 503(c). As 

noted previously, the permitting 

authority then has 18 months to issue or 

deny the permit. CAA section 503(c). 

Permitting authorities must provide an 

opportunity for public comment and a 

hearing. CAA section 502(b)(6). If the 

permitting authority proposes to issue 

mstockstill on DSKH9S0YB1PROD with RULES2

31552 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

37The House Committee on Energy and 

Commerce acknowledged that it was ‘‘uncertain 

about the magnitude of permit applications likely 

to be submitted under the bill initially and 

thereafter in each State or to EPA,’’ H. Rep. 101– 

490 p. 346. 

38Title V can apply to certain small businesses 

in some circumstances. Under CAA sections 502(a) 

and 501(2)(A), title V applies to major sources of 

HAPs, which includes sources that may emit as 

little as 10 tpy of a single HAP, and which may 

include some dry cleaners and other small 

businesses. In addition, under CAA section 502(a), 

title V applies to area sources subject to standards 

under CAA sections 111 or 112 (or required to have 

a PSD or nonattainment NSR permit), unless the 

Administrator exempts those sources from title V 

because compliance would be impracticable, 

infeasible, or unnecessarily burdensome. 

the permit, the permitting authority 

must submit the permit to EPA, and 

notify affected states, for review. CAA 

section 505(a)(1). EPA then has 45 days 

to review the permit and, if EPA deems 

it appropriate, to object to the permit. 

CAA section 505(b)(1). If EPA does 

object, then the permitting authority 

must, within 90 days, revise it to meet 

the objections, or else EPA becomes 

required to issue or deny the permit. 

CAA section 505(c). If EPA does not 

object, then, within 60 days of the close 

of the 45-day review period, any person 

may petition EPA to object, and EPA 

must grant or deny the petition within 

60 days. CAA section 505(b)(2). If a 

permit is issued, it must include a 

permit compliance plan, under which 

the permittee must ‘‘submit progress 

reports to the permitting authority no 

less frequently than every 6 months,’’ 

and must ‘‘periodically (but no less 

frequently than annually) certify that 

the facility is in compliance with any 

applicable requirements of the permit, 

and [ ] promptly report any deviations 

from permit requirements to the 

permitting authority.’’ CAA section 

503(b). 

(2) Title V Legislative History 

The legislative history of title V, 

enacted by Congress in the 1990 CAA 

Amendments, indicates the scope of the 

program that Congress expected: 

Congress expected the program to cover 

some tens of thousands of sources, 

which would approximate the scope of 

the permit program under the Clean 

Water Act. The Senate Committee on 

Environment and Public Works stated: 

EPA estimates that the new permit 

requirements will cover about 8,200 major 

sources that emit 100 tons per year or more 

of criteria pollutants (which are regulated 

under SIPs). In addition, many smaller 

sources are (or, as EPA promulgates 

additional regulations, will be) covered by 

new source performance standards under 

section 111 of the Act, hazardous air 

pollutant standards under section 112 of the 

Act, and nonattainment provisions of this 

legislation. By comparison, under the Clean 

Water Act, some 70,000 sources receive 

permits, including more than 16,000 major 

sources. Although many air pollution sources 

have more emission points than water 

pollution sources, the additional workload in 

managing the air pollution permit system is 

estimated to be roughly comparable to the 

burden that States and EPA have successfully 

managed under the Clean Water Act. 

S. Rep. 101–228, at 353 (1990).37 Sen. 

Mitchell, the Senate Majority Leader, 

stated that he expected ‘‘over 10,000 

permits [to] * * * be issued under this 

program.’’ 136 Cong. Rec. S3239–03 

(March 27, 1990). Others in Congress 

had similar estimates. See, e.g., 136 

Cong. Rec. S3166 (‘‘thousands and 

thousands of permit applications * * * 

will be required to be submitted’’) 

(statement of Sen. Nickles). 

Furthermore, the legislative history 

indicates that Congress did not 

contemplate that large numbers of very 

small sources would be subject to title 

V’s requirements.38 This becomes clear 

by reviewing the legislative history of a 

companion piece of legislation to the 

operating permits provisions that 

Congress enacted into CAA section 507, 

which is the ‘‘Small business stationary 

source technical and environmental 

compliance assistance program.’’ CAA 

section 507. Under this provision, 

sources that, among other things, ‘‘are 

not major stationary source[s]’’ and that 

emit less than 50 tpy of any regulated 

pollutant, as well as less than 75 tpy or 

all regulated pollutants, are eligible for 

assistance under CAA section 507. CAA 

section 507(c)(1). The House Committee 

Report described this provision— 

including what types of sources it 

expected this provision to benefit—as 

follows: 

New section [507] is a small source/small 

business provision added by the Committee. 

It seeks to help small businesses to comply 

with the problems that are likely to occur 

under the Act as amended by this bill. For 

purposes of this section, small businesses or 

small emitters are defined as sources that are 

emitting 100 tons or less per year and that 

have a number of employees that would 

qualify them for assistance from the Small 

Business Administration (SBA). As we look 

to the future of environmental protection 

under the Act, we take special steps here to 

ensure that it is possible for these small 

businesses to comply with minimum hassle 

and in recognition of the problems that are 

unique to them. Such small businesses 

include printers, furniture makers, dry 

cleaners, and millions of other small 

businesses in this country. 

House Committee Report, H.R. 101–590, 

at 354. In this manner, the House 

Committee Report made clear that it 

expected ‘‘millions of * * * small 

businesses’’—including ‘‘printers, 

furniture makers, dry cleaners’’ and 

many others—to benefit from the CAA 

section 507 small source/small business 

program, but Congress did not expect 

them to become subject to the operating 

permit requirements of title V because 

their emissions fell below 100 tpy, 

which is, in general, the threshold for 

title V applicability as a ‘‘major source.’’ 

The legislative history of title V 

confirms that Congress viewed a 

principal purpose of title V as providing 

a vehicle to compile the requirements 

applicable to the source. As the report 

of the House Committee on Energy and 

Commerce (‘‘House Committee Report’’) 

stated, ‘‘It should be emphasized that the 

operating permit to be issued under this 

title is intended by the Administration 

to be the single document or source of 

all of the requirements under the Act 

applicable to the source.’’ H.R. Rep. No. 

101–490, at 351 (1990). Combined with 

the source’s reporting requirements, this 

compilation of applicable requirements 

would facilitate public awareness of a 

source’s obligations and compliance and 

would facilitate compliance and 

enforcement. 

On the Senate side, Sen. Chafee, one 

of the floor managers of the bill, made 

a similar point: 

The permits will serve the very useful 

function of gathering and reciting in one 

place—the permit document itself—all of the 

duties imposed by the Clean Air Act upon 

the source that holds the permit. This would 

clearly be an improvement over the present 

system, where both the source and EPA must 

search through numerous provisions of state 

implementation plans and regulations to 

assemble a complete list of requirements that 

apply to any particular plant * * *. 

Once these permits are in place, plant 

managers will be better able to understand 

and to follow the requirements of the Clean 

Air Act. At the same time, EPA will be better 

able to monitor how well each plant is 

complying with those requirements. This is 

a highly sensible approach for all concerned. 

136 Cong. Rec. S213 (January 24, 

1990) (statement of Sen. Chafee). Sen. 

Lieberman made a similar statement. 

136 Cong. Rec. 3172–73 (March 26, 

1990) (statement of Sen. Lieberman). 

Thus, a central purpose of the title V 

permit program is to compile all the 

requirements applicable to the source 

into a single place, the permit. Implicit 

in this purpose is that the sources 

subject to title V will have applicable 

requirements to be compiled. As Sen. 

Chafee directly stated, ‘‘[T]he vast 

majority of these permit applications 

will * * *, in all likelihood, only codify 

the existing requirements of the 

applicable State implementation plan.’’ 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31553 

136 Cong. Rec. S2720 (March 20, 1990) 

(statement of Sen. Chafee). 

More broadly, the legislative history 

also indicates congressional concern 

about the costs of permitting for small 

businesses, and a determination to 

minimize those costs to the extent 

possible. This concern is reflected in 

several provisions of title V. For 

example, section 502(a) authorizes EPA 

to exempt all or part of a source 

category—except for any major source 

from the title V permit program if EPA 

‘‘finds that compliance with [title V] 

requirements is impracticable, 

infeasible, or unnecessarily burdensome 

on such categories.’’ Similarly, the 

permit fee provisions include a 

presumptive minimum fee amount, but 

authorize an exemption from that 

presumptive amount upon a showing 

that a lesser amount will meet overall 

fee requirements, CAA section 

502(b)(3)(B)(iv). One of the drafters of 

this provision, Rep. Wyden, explained 

that its purpose was to preserve the 

flexibility of states to impose lower fees 

of small businesses: 

I note that the provision on fees allows 

reductions for small sources where 

appropriate. The state has some flexibility, 

under the general permit fee provisions, to 

adjust fee levels for any source so long as the 

average fee charged meets the statutory 

minimum. 

136 Cong. Rec. H12884 (Oct. 26, 1990) 

(statement of Rep. Wyden). See, e.g., 136 

Cong. Rec. H2559 (May 21, 1990) 

(statement of Rep. Wyden) (discussing 

need to ‘‘help small businesses through 

the air permit labyrinth’’). 

The legislative history also indicates 

that Congress was deeply concerned 

both about the need not to burden 

sources generally with undue costs and 

to assure the administrability of the title 

V program, and as a result, was 

determined to make the program as 

smooth-running as possible. These goals 

are reflected in many of the title V 

requirements, as discussed previously. 

See, e.g., CAA section 502(b)(6) 

(requiring ‘‘adequate, streamlined, and 

reasonable procedures for expeditiously 

determining when applications are 

complete, for processing such 

applications, for public notice * * * 

and for expeditious review of permit 

actions); CAA section 502(b)(7) 

(includes a ‘‘hammer’’ provision 

designed to reinforce timely permit 

issuance); CAA section 502(b)(9)–(10) 

(limiting circumstances under which 

permit revision is required; requiring 

revision to occur ‘‘as expeditiously as 

practicable;’’ including operational 

flexibility provisions). 

The legislative history confirms that 

these provisions were designed to 

reduce costs to sources and promote 

administrability. The ‘‘Chafee-Baucus 

Statement of Senate Managers’’ for the 

bill explained the purpose of the CAA 

section 502(b)(6) requirement for 

‘‘[a]dequate, streamlined, and reasonable 

procedures for expeditious[ ]’’ permit 

actions as follows: 

[M]uch concern has been expressed that 

this new permitting process will unduly 

delay the proper functioning of many 

sources, and we intend to mitigate any delay 

by directing that the process be expeditious. 

In addition to this general directive for 

expeditious processing, we mandate in new 

section 503 that permitting authorities 

approve or reject permit applications within 

certain specified time periods following 

filing. In this fashion, we have taken explicit 

steps to protect against undue delays. 

136 Cong. Rec. S16941 (statement of 

Sen. Chafee). The same statement 

explained that the permit revision 

procedures of CAA section 502(b)(9) 

reflect a— 

careful effort to ensure that the permit 

program works effectively and efficiently. 

Succinctly, this provision accommodates two 

competing concerns. On the one hand, it is 

important to ensure that permit requirements 

remain up-to-date as the provisions of the 

Clean Air Act are developed and new 

requirements are imposed. On the other 

hand, it also is important to be sure that we 

do not reduce the permit program to a 

shambles by requiring sources to engage in a 

continuous process of revising their permits 

as these new requirements are imposed. 

136 Cong. Rec. 16942 (Oct. 27, 1990) 

(Chafee-Baucus statement of Senate 

Managers) (statement of Sen. Chafee). 

In addition, these concerns were at 

the bottom of the following statement by 

Sen. Chafee, in which he described how 

the bill’s drafters had revised it in 

response to a concern by industry that 

an earlier version of the bill would have 

put undue costs on industry: 

We have also heard concerns from industry 

that S. 1630 would burden sources unduly by 

requiring them to submit—along with their 

permit applications—plans explaining how 

they intend to comply with all requirements 

of the Clean Air Act that apply to them. 

But, Mr. President, we emphatically do not 

intend to burden industry with preparation 

and submission of unnecessary compliance 

plans. The substitute clarifies that any 

compliance plans would address only those 

matters by which the sources would comply 

with new requirements imposed by this act 

as it is finally signed into law. These plans 

would not need to address compliance with 

any existing Clean Air Act requirements, 

unless the source is in violation of those 

requirements. 

136 Cong. Rec. S2107 (March 5, 1990) 

(statement of Sen. Chafee). 

As another indication of 

congressional concern over 

administrability, Congress recognized 

that at the beginning of the program, 

large numbers of permit applications 

might overwhelm the permitting 

authorities. To protect against this, 

Congress included in CAA section 

503(c) a phase-in schedule for 

permitting authorities to act on the 

initial set of permit applications. Under 

503(c), permitting authorities were not 

required to act on the initial set of 

permit applications within 18 months 

after it received the application, but 

rather could act on one-third of them on 

an annual basis over a 3-year period. 

Sen. Chafee, in describing an early 

version of this provision—which would 

have allowed permitting authorities to 

phase in the submission of permit 

applications—explained that its purpose 

was ‘‘to avoid a logjam of permit 

applications[,] * * * ensure that 

[regulatory] gridlock can be avoided, 

and [ensure] that the permitting process 

will work with a minimum of 

disruption and delay.’’ 136 Cong. Rec., 

S2106 (March 5, 1990) (statement of 

Sen. Chafee). 

(3) Title V Regulatory History 

As with PSD, for present purposes, 

the regulatory history of the title V 

program is most noteworthy because it 

shows that beginning shortly after the 

inception of the program following the 

1990 CAA Amendments, EPA has 

interpreted the statutory title V 

applicability provisions to apply more 

narrowly—to any air pollutant subject to 

regulation—than their literal meaning 

(‘‘any air pollutant’’). As discussed 

previously, title V applies to any ‘‘major 

source,’’ defined, as relevant here, under 

CAA sections 501(2)(B) and 302(j), 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 

* * *.’’ EPA’s regulations mirror the 

CAA definitional provisions. 40 CFR 

70.2. 

However, since 1993, EPA has 

interpreted the applicability provisions 

more narrowly. At that time, which was 

shortly after title V was enacted, EPA 

issued a guidance document making 

clear that it interprets this requirement 

to apply to sources of pollutants ‘‘subject 

to regulation’’ under the Act. 

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 Memorandum). 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 

mstockstill on DSKH9S0YB1PROD with RULES2

31554 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

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 

Memorandum of the definition of ‘‘air 

pollutant’’ in CAA section 302(g) is in 

question in light of the holding in 

Massachusetts v. EPA, 549 U.S. 497, 533 

(2007) (finding this definition to be 

‘‘capacious’’), we believe that the overall 

rationale for our 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 the Tailoring Rule notice of 

proposed rulemaking, EPA 

acknowledged the Wegman 

Memorandum and affirmed the 

memorandum’s continued viability, 

stating that ‘‘EPA continues to maintain 

this interpretation.’’ 74 FR 55300, col. 3, 

fn. 8; see also 75 FR 17022–23 

(Interpretive Memo reconsideration). 

As with PSD, we recount this 

regulatory history as background 

information, and we are not 

reconsidering or re-opening this 

interpretation of the definition of ‘‘major 

source’’ narrowly to be limited to 

pollutants subject to regulation under 

the Act. 

5. Application of the ‘‘Absurd Results’’ 

Doctrine for the PSD Program 

Having reviewed the factual 

background, legal doctrines, and the key 

components of the PSD and title V 

programs, we now turn towards 

interpreting the PSD and title V 

requirements in accordance with the 

Chevron framework, accounting for the 

applicable legal doctrines. We begin 

with the ‘‘absurd results’’ doctrine, and 

apply it first to the PSD requirements. 

In this action, we finalize, with some 

refinements, the ‘‘absurd results’’ basis 

we proposed. Specifically, we are 

revising our regulations to limit PSD 

applicability to GHG emitting sources 

by revising the regulatory term, 

‘‘regulated NSR pollutant,’’ and although 

our revised regulations do not accord 

with a literal reading of the statutory 

provisions for PSD applicability, which 

are incorporated into the definition of 

‘‘major emitting facility’’ and ‘‘major 

modification,’’ we have concluded that 

based on the ‘‘absurd results’’ doctrine, 

a literal adherence to the terms of these 

definitions is not required. Even so, we 

believe Congress did intend that PSD 

apply to GHG sources as a general 

matter. Further, we may apply PSD to 

GHG sources in a phased-in manner, as 

we do through the tailoring approach, 

because either congressional intent is 

clear on that issue and the tailoring 

approach best reflects it, or 

congressional intent is unclear and the 

tailoring approach is a reasonable 

interpretation of the statute. 

a. Congressional Purpose for the PSD 

Program 

To reiterate, for convenience, CAA 

section 169(1) defines a ‘‘major emitting 

facility’’ to include ‘‘any * * * source[] 

[that] emit[s], or ha[s] the potential to 

emit, [depending on the source 

category], one hundred [or two hundred 

fifty] tons per year or more or more of 

any air pollutant.’’ CAA section 169(1); 

and a ‘‘modification’’ as any physical or 

operational change in ‘‘a stationary 

source which increases the amount of 

any air pollutant emitted by such 

source,’’ CAA section 169(2)(C), 

111(a)(4). We also reiterate that, as 

discussed above, beginning with our 

initial rulemaking in 1977–1978 to 

implement the PSD program, we have 

interpreted these definitions more 

narrowly by reading into them the 

limitation that a source is subject to PSD 

only if the air pollutants in question are 

‘‘subject to regulation under the Act.’’ 40 

CFR 51.166(b)(49)(iv). EPA is not reopening this interpretation in this 

regulation in this action. 

Under the current interpretation of 

the PSD applicability provision, EPA’s 

recent promulgation of the LDVR will 

trigger the applicability of PSD for GHG 

sources at the 100/250 tpy threshold 

levels as of January 2, 2011. This is 

because PSD applicability hinges on the 

definition of ‘‘major emitting facility,’’ 

which, under EPA’s long-standing 

narrowing interpretation, but absent 

further tailoring, applies PSD to sources 

of any air pollutant subject that is 

subject to regulation under another 

provision of the CAA. EPA’s 

promulgation of the LDVR means that 

GHGs will become subject to regulation 

on the date that the rule takes effect, 

which will be January 2, 2011. 

But absent tailoring, the January 2, 

2011 trigger date for GHG PSD 

applicability will subject an 

extraordinarily large number of sources, 

more than 81,000, to PSD each year, an 

increase of almost 300-fold. And the 

great majority of these new sources will 

be small commercial or residential 

sources. We believe that for many 

reasons, this result is contrary to 

congressional intent for the PSD 

program, and in fact would severely 

undermine what Congress sought to 

accomplish with the program. As a 

result, under our Chevron analysis, 

accounting for the ‘‘absurd results’’ 

doctrine, the statutory definition for 

‘‘major emitting facility’’ (as interpreted 

narrowly to include ‘‘subject to 

regulation’’) should not be read to apply 

to all GHG sources at or above the 100/ 

250 tpy threshold as of the January 2, 

2011 date. Rather, the definitions of 

‘‘major emitting facility’’ and 

‘‘modification’’ should be tailored so that 

they apply to GHG sources on a phasedin basis, with the largest sources first, as 

we describe in this rule. 

As explained previously, Chevron 

Step 1 calls for a determination of 

congressional intent, and the courts 

consider the best indicator of 

congressional intent to be the plain 

meaning of the statute. However, the 

U.S. Supreme Court has held that the 

literal meaning of a statutory provision 

is not conclusive ‘‘in the ‘rare cases [in 

which] the literal application of a 

statute will produce a result 

demonstrably at odds with the 

intentions of the drafters’ * * * [in 

which case] the intention of the drafters, 

rather than the strict language, controls.’’ 

United States v. Ron Pair Enterprises, 

489 U.S. 235, 242 (1989). To determine 

whether ‘‘the intentions of the * * * 

drafters’’ differ from the result produced 

from ‘‘literal application’’ of the 

statutory provisions in question, the 

courts may examine the overall context 

of the statutory provisions, including 

whether there are related statutory 

provisions that either conflict or are 

consistent with that interpretation; and 

the legislative history to see if it exposes 

what the legislature meant by the terms 

in question. In addition, the courts may 

examine whether a literal application of 

the provisions produces a result that the 

courts characterize variously as absurd, 

futile, strange, or indeterminate, and 

therefore so illogical or otherwise 

contrary to sensible public policy as to 

be beyond anything Congress would 

reasonably have intended. In such cases, 

the literal language cannot be said to 

reflect the intention of the drafters, and 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31555 

therefore does not control. See United 

States v. Ron Pair Enterprises, 489 U.S. 

235, 242–43 (1989); Griffin v. Oceanic 

Contractors, Inc., 458 U.S. 564, 571 

(1982). 

Here, applying the definitions of 

‘‘major emitting facility’’ and 

‘‘modification’’ literally (as EPA has 

interpreted them more narrowly) at the 

present time—in the absence of 

streamlining measures or additional 

permitting authority resources, and 

without tailoring—would be contrary to 

congressional purpose for the PSD 

provisions, as found in the statutory 

provisions and legislative history, 

especially in light of the impact from 

applying those definitions literally. 

Congress established the PSD program 

in large measure because it was 

concerned that around the country, 

industrial development, which was 

confronting barriers to locating in 

nonattainment areas (that is, areas that 

do not meet the NAAQS), would 

attempt to locate in clean air areas (that 

is, attainment areas or unclassifiable 

areas), but that as a consequence, the 

clean air areas would see their air 

quality deteriorate to the point where 

they, too, would no longer meet the 

NAAQS. The end result would be the 

spread of environmental and health 

problems to those formerly clean air 

areas, as well as more barriers to further 

industrial development. With these 

concerns in mind, Congress designed 

the PSD program to require newly 

constructing or modifying sources in 

areas with air quality that meets the 

NAAQS (or that is unclassifiable) to 

analyze their emissions of NAAQS 

pollutants and to implement controls as 

needed to assure that those emissions 

do not significantly deteriorate air 

quality. Many of the PSD requirements, 

and much of the discussion in the 

legislative history, reflect these aspects 

of the PSD program. E.g., CAA sections 

162, 163, 164, 165(a)(3), 165(d)(2), 

165(e), 166; see generally H. Rep. 95– 

294, 95th Cong., 1st Sess. (1977) 103–78. 

Congress also designed the PSD 

program to impose controls on nonNAAQS pollutants, through the 

requirement under CAA section 

165(a)(4) that the source be ‘‘subject to 

the best available control technology for 

each pollutant subject to regulation 

under this chapter emitted from, or 

which results from, such facility.’’ For 

example, when Congress enacted the 

PSD provisions in 1977, sources 

emitting HAPs were required to 

implement BACT for those pollutants, 

although in the 1990 CAA 

Amendments, Congress redesigned CAA 

section 112, which includes the 

requirements for HAPs, and excluded 

HAPs from PSD. CAA section 112(b)(6). 

Congress was keenly aware that the 

PSD program needed to serve two 

purposes: Protect the environment and 

promote economic growth. Congress 

explicitly identified these two goals in 

the ‘‘purposes’’ section of the PSD 

provision, CAA section 160, and various 

PSD requirements clearly reflect them. 

For example, to protect economic 

growth, the PSD program expedites the 

permit process to include a 1-year 

limitation on the time that the 

permitting authority has act on permit 

applications. To protect the 

environment, in addition to including 

many provisions that focus on NAAQS 

pollutants, the PSD program requires 

that the preconstruction permit impose 

emission limits that reflect BACT for 

each pollutant subject to regulation 

under another CAA provision. CAA 

section 165(a)(4). This BACT provision 

also makes clear, by its terms, that 

although Congress designed the PSD 

program largely with NAAQS pollutants 

in mind, Congress also intended that 

sources subject to PSD control the 

emissions of their other pollutants as 

well. The DC Circuit has recognized the 

twin goals of environmental protection 

and economic development that 

underlie PSD, and has upheld EPA 

interpretations of the PSD program that 

reflect a balancing of those goals. See, 

e.g., New York v. EPA, 413 F.3d 3, 27 

(DC Cir.), rehearing en banc den. 431 

F.3d 801 (2005). 

Congress was also keenly aware that 

the PSD analyses and controls that it 

was mandating had to be implemented 

on a source-by-source basis, and that 

this process would be expensive for 

sources. As a result, Congress intended 

to limit the PSD program to large 

industrial sources because it was those 

sources that were the primary cause of 

the pollution problems in question and 

because those sources would have the 

resources to comply with the PSD 

requirements. Congress’s mechanism for 

limiting PSD was the 100/250 tpy 

threshold limitations. Focused as it was 

primarily on NAAQS pollutants, 

Congress considered sources that emit 

NAAQS pollutants in those quantities 

generally to be the large industrial 

sources to which it intended PSD to be 

limited. 

That Congress paid careful attention 

to the types and sizes of sources that 

would be subject to the PSD program 

and designed the thresholds deliberately 

to limit the program’s scope is evident 

from the legislative history. Several 

Senate floor statements and the 

Committee Report made clear that PSD 

should not apply to small sources. As 

discussed later, Congress scrutinized 

information that EPA provided as to 

types and sizes of sources, found largely 

in the Steigerwald-Strelow 

memorandum. Sen. Muskie stated that 

the Senate bill excluded ‘‘houses, 

dairies, farms, highways, hospitals, 

schools, grocery stores, and other such 

sources.’’ 123 Cong. Rec. 18021 (June 8, 

1977) (statement of Sen. Muskie). Sen. 

McClure stated that PSD should be 

limited to ‘‘industrial plants of 

significant impact,’’ and should exclude 

’’[a] small gasoline jobber, or a heating 

plant at a community college, [which] 

could have the potential to emit 100 

tons of pollution annually.’’ 122 Cong. 

Rec. 24548–49 (July 29, 1976) (statement 

of Sen. McClure). The Senate Committee 

Report mirrored Sen. McClure’s 

statement, and concisely articulated the 

cost-related basis for the line-drawing: 

‘‘[The PSD] procedure * * * must 

include an effective review-and-permit 

process. Such a process is reasonable 

and necessary for very large sources, 

such as new electrical generating plants 

or new steel mills. But the procedure 

would prove costly and potentially 

unreasonable if imposed on 

construction of storage facilities for a 

small gasoline jobber or on the 

construction of a new heating plant at 

a junior college, each of which may 

have the potential to emit 100 tons of 

pollution annually.’’ S. Rpt. 95–127 at 

96–97. 

The DC Circuit had occasion, in 

Alabama Power, to acknowledge this 

legislative history. ‘‘Congress’s intention 

was to identify facilities which, due to 

their size, are financially able to bear the 

substantial regulatory costs imposed by 

the PSD provisions and which, as a 

group, are primarily responsible for 

emissions of the deleterious pollutants 

that befoul our nation’s air.’’ Alabama 

Power, 636 F.2d at 353. The Court 

added, ‘‘Though the costs of compliance 

with [the PSD] requirements are 

substantial, they can reasonably be 

borne by facilities that actually emit, or 

would actually emit when operating at 

full capacity, the large tonnage 

thresholds specified in section 169(1).’’. 

Id. at 354. 

It is not too much to say that applying 

PSD requirements literally to GHG 

sources at the present time—in the 

absence of streamlining or increasing 

permitting authority resources and 

without tailoring the definition of 

‘‘major emitting facility’’ or 

‘‘modification’’—would result in a 

program that would have been 

unrecognizable to the Congress that 

designed PSD. Congress intended that 

PSD be limited to a relatively small 

number of large industrial sources. 

mstockstill on DSKH9S0YB1PROD with RULES2

31556 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

39Specifically, of the 28 source categories under 

CAA section 169(1), information available to EPA 

indicates that all of the sources in the following 

categories emit at least 100 tpy of CO2 annually: 

fossil-fuel fired steam electric plants of more than 

250 million Btu per hour heat input, Portland 

Cement plants, primary zinc smelters, iron and steel 

mill plants, primary aluminum ore reduction 

plants, municipal incinerators capable of charging 

more than 50 tons of refuse per day, nitric acid 

plants, petroleum refineries, lime plants, primary 

lead smelters, fossil-fuel boilers of more than 250 

Btus per hour heat input. In addition, all but a few 

kraft pulp mills and glass fiber processing plants 

emit at least 100 tpy CO2 annually. Our information 

is incomplete with respect to the remaining source 

categories, but with the possible exception of 

petroleum storage and transfer facilities with a 

capacity exceeding three hundred thousand barrels, 

we suspect that virtually all sources emit at least 

100 tpy CO2 annually. See ‘‘Technical Support 

Document for Greenhouse Gas Emissions 

Thresholds Evaluation’’; Office of Air Quality 

Planning and Standards; March 29, 2010. 

Without phasing in PSD and title V 

applicability to GHG sources so as to 

allow the development of streamlining 

methods and increases in permitting 

authority resources, the PSD program 

would expand by January 2, 2011, from 

the current 280 sources per year to 

almost 82,000 sources, virtually all of 

which would be smaller than the 

sources currently in the PSD program 

and most of which would be small 

commercial and residential sources. 

Until EPA could develop streamlining 

methods, all of the sources that would 

become newly subject to PSD—whether 

they be larger or smaller sources, 

whether industrial or commercial/ 

residential sources—would have to 

undergo source-specific BACT 

determinations for their GHG emissions, 

as well as their emissions of 

conventional pollutants in amounts in 

excess of the significance levels. We 

estimate that the commercial and 

residential sources—the great majority 

of which are small business—would 

each incur, on average, almost $60,000 

in PSD permitting expenses. This result 

would be contrary to Congress’s careful 

efforts to confine PSD to large industrial 

sources that could afford these costs. 

A closer look at the legislative history 

confirms the view that Congress did not 

expect PSD to apply to large numbers of 

small sources, including commercial 

and residential sources, and instead 

expected the 100/250 tpy thresholds to 

limit PSD’s applicability to larger 

sources. As noted previously, Congress 

relied on an EPA memorandum—the 

Steigerwald-Strelow memorandum— 

that identified the range of industrial 

categories that EPA regulated under its 

program that constituted the precursor 

to the statutory PSD program, and listed 

both the estimated number of new 

sources constructing each year and the 

amount of pollution emitted by the 

‘‘typical plant’’ in the category. The 

Steigerwald-Strelow memorandum 

makes clear that the 100 tpy cut-off for 

the 28 listed sources categories, and the 

250 tpy cut-off for all other sources, 

would exclude from PSD a large number 

of sources. 122 Cong. Rec. 24548–50 

(July 29, 1976). However, virtually all, if 

not all, of the sources in half the 28 

source categories emit CO2 in quantities 

that equal or exceed the 100 tpy 

threshold, and almost all of the sources 

in the remaining categories emit CO2 in 

quantities that equal or exceed the 100 

tpy threshold. Therefore, applying the 

‘‘major emitting facility’’ definition to 

GHG sources, in the absence of 

streamlining methods and without 

tailoring, would, as a practical matter, 

vitiate much of the purpose of the 100 

tpy cut-off for industrial sources.39

Most telling, in this regard, is the 

small-sized boilers, which the 

Steigerwald-Strelow memorandum 

describes, in terms of size, pollutants 

emitted, and numbers of sources, as 

follows: The memorandum identified 

two categories of these boilers, 

differentiated by size. The first ranges in 

size from 10 to 250 x 106 Btu/hr, and 

has a ‘‘typical plant’’ size of 107 Btu/hr, 

with ‘‘BACT emissions from typical 

plant’’ of 53 tpy, and a total of 1,446 

sources in that category. The second 

category ranges in size from 0.3 to 10 x 

106 Btu/hr, and has a ‘‘typical plant’’ size 

of 1.3 x 106 Btu/hr, with ‘‘BACT 

emissions from typical plant’’ of 2 tpy, 

and a total of 11,215 sources in the 

category. That memorandum makes 

clear that EPA did not believe that 

sources in these two categories—and 

especially the smallest one—would be 

subject to PSD under a 100 tpy 

threshold, by stating, ‘‘Fortunately, most 

truly small boilers and typical space 

heating operations would not be 

covered.’’ 122 Cong. Rec. 24549 (July 29, 

1976). However, these data and 

conclusions were all based on emissions 

of NAAQS pollutants, the amounts of 

which placed these boilers well below 

the PSD threshold limitations. In 

general, most boilers of these small sizes 

are fired with natural gas, and a natural 

gas boiler greater than 0.5 x 106 Btu/hr 

emits at least 250 tpy CO2. Therefore, if 

the CO2 emissions of these small boilers 

are considered—as would occur by 

applying the definition of ‘‘major 

emitting facility’’ to GHG sources 

without tailoring—then most of them 

would in fact be subject to PSD. Again, 

this result would directly contravene 

Congress’s intention to limit PSD to 

‘‘industrial plants of significant impact.’’ 

122 Cong. Rec. 24548–49 (statement of 

Sen. McClure). 

Perhaps the most compelling reason 

why applying the PSD program to GHG 

sources without tailoring, and before the 

development of streamlining methods, 

would be inconsistent with 

congressional intent, is that the 

resulting program would prove 

unadministrable. Although the 

legislative history of the PSD program 

does not reveal much explicit 

congressional focus on administrability 

issues, the Steigerwald-Strelow 

Memorandum, which identifies the 

source categories and numbers of 

sources that were before Congress as it 

considered PSD, suggests that the 

program that Congress fashioned could 

be expected to cover at most a few 

thousand sources each year. This 

appears to be approximately the size of 

the program that EPA administered 

before the 1977 CAA Amendments, so 

that it seems reasonable to assume that 

Congress expected the PSD program it 

enacted to be within EPA’s and the 

states’ administrative capacities. 

Moreover, the Alabama Power court 

stressed the importance of 

administrability concerns: Most 

importantly, the Court held that EPA, in 

interpreting the ‘‘modification’’ 

provisions that apply PSD to physical or 

operational changes by major emitting 

facilities that ‘‘increase the amount of 

any air pollutant emitted,’’ CAA section 

111(a)(4), may ‘‘exempt from PSD review 

some emission increases on grounds of 

de minimis or administrative necessity,’’ 

and went on to state that in establishing 

the exemption thresholds, ‘‘[t]he Agency 

should look at the degree of 

administrative burden posed by 

enforcement at various de minimis 

threshold levels.’’ 636 F.2d at 400,405. 

In addition, the Court based its holding 

that potential-to-emit for purposes of the 

applicability thresholds should be 

defined as emissions at full capacity 

with implementation of control 

equipment, in part on its view that with 

this definition, the number of sources 

subject to PSD would be manageable: 

Though the costs of compliance with 

section 165 requirements are substantial, 

they can reasonably be borne by facilities that 

actually emit, or would actually emit when 

operating at full capacity, the large tonnage 

thresholds specified in section 169(1). The 

numbers of sources that meet these criteria, 

as we delineate them, are reasonably in line 

with EPA’s administrative capability. 

Alabama Power, 636 F.2d at 354. 

However, applying PSD to GHG sources 

before streamlining and without 

tailoring would increase the size of the 

PSD program at least an order of 

magnitude beyond what Congress seems 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31557 

40EPA did receive a smaller number of comments 

that asserted in conclusory fashion that permitting 

authorities could administer the 100/250 tpy levels. 

to have expected, which would have 

been far beyond the ‘‘administrative 

capability’’ that Alabama Power 

described EPA as having. 

Beyond this disconnect with 

congressional expectations, what is 

most important is that the 

extraordinarily large number of permit 

applications would overwhelm 

permitting authorities and slow their 

ability to process permit applications to 

a crawl. Our best estimate at present is 

that permitting authorities would need 

to process almost 82,000 permit 

applications per year, compared to, at 

most, 800 in the current PSD program. 

The total additional workload, in work 

hours, for PSD permits would be more 

than 19.5 million more work hours, 

compared to 150,795 work hours for the 

current PSD program, and the total 

additional costs would be over $1.5 

billion, compared with $12 million for 

the current PSD program. 

At proposal, we noted that the states 

had estimated that the influx of permit 

applications that would result from 

applying the 250 tpy threshold at actual 

emissions would, without additional 

resources, result in permitting delays of 

3 years. In fact, as we noted at proposal, 

a literal reading of the PSD requirements 

would require their application at the 

250 tpy PTE level, which would result 

in ten times more permit applications 

than were assumed when the states 

made the 3-year estimate. Further, our 

current estimates of the numbers of 

sources that would be subject to PSD 

requirements are about twice what we 

estimated at proposal, as described 

elsewhere. Moreover, our estimate of the 

number of hours that permitting 

authorities would need to process a 

permit application from a source in the 

commercial or residential sector—which 

is, by far, the largest single sector—is 

three and one-half times as long as we 

estimated at proposal. And under a 

literal reading of the PSD applicability 

provisions as applied to GHG sources, 

the permitting authorities would be 

required to implement a program of this 

size beginning on January 2, 2011, less 

than 9 months from now. We received 

many comments from states and 

industry raising concerns about the cost 

to sources and administrative burdens 

of PSD permitting if the statutory 

threshold were to apply for GHG 

emissions. One commenter estimated a 

cost of over $5 billion and the 

dedication of over 17,000 FTEs to this 

effort. 

We consider it difficult to overstate 

the impact that applying PSD 

requirements literally to GHG sources as 

of January 2, 2011—before streamlining 

or increasing permitting resources and 

without tailoring—would have on 

permitting authorities and on the PSD 

program, and we are concerned that this 

impact could adversely affect national 

economic development. The number of 

PSD permits that would be required 

from such an approach is far beyond 

what the PSD program has seen to date. 

It is clear throughout the country, PSD 

permit issuance would be unable to 

keep up with the flood of incoming 

applications, resulting in delays, at the 

outset, that would be at least a decade 

or longer, and that would only grow 

worse over time as each year, the 

number of new permit applications 

would exceed permitting authority 

resources for that year. Because PSD is 

a preconstruction program, during this 

time, tens of thousands of sources each 

year would be prevented from 

constructing or modifying. In fact, it is 

reasonable to assume that many of those 

sources will be forced to abandon 

altogether plans to construct or modify. 

As a result, a literal application of the 

PSD applicability provisions to GHG 

sources would slow construction 

nationwide for years, with all of the 

adverse effects that this would have on 

economic development. 

The remedies for this scenario would 

be for permitting authorities to increase 

their PSD funding by over 100-fold, 

from $12 million to over $1.5 billion, or 

the development by EPA and the 

permitting authorities of streamlining 

techniques. But it is not possible for 

permitting authorities to increase their 

funding to those levels in the 

foreseeable future, partly because of the 

sheer magnitude of those levels and 

partly because of the financial 

challenges that states currently face. 

And, for the reasons discussed later, 

although streamlining offers genuine 

promise to improve the manageability of 

the PSD workload, streamlining cannot 

do so in the very near term and, in any 

event, the extent to which it can do so 

has not yet come into focus. 

So clear are at least the broad outlines 

of this picture that EPA did not receive 

any substantive comments arguing that 

permitting authorities could in fact 

administer the PSD program with the 

applicability requirements applied 

literally to GHG sources beginning in 

the very near future.40 Every permitting 

authority that addressed this issue in 

their comments on the proposed 

Tailoring Rule stated unequivocally that 

it could not administer the PSD program 

at the statutory levels. To cite a few 

examples (each of which considered 

both the PSD and title V programs 

together): NACAA, which represents air 

pollution control agencies in 53 states 

and territories, stated it ‘‘* * * agrees 

with the EPA that immediately 

attempting to implement the PSD and 

title V programs using the statutory 

thresholds meets the test for invoking 

the administrative necessity and absurd 

results doctrines.’’ Similarly, the 

California Air Resources Board stated 

that it ‘‘* * * concurs with the United 

States, EPA that if more appropriate 

applicability thresholds [as opposed to 

the statutory thresholds] are not set for 

GHG it will not be administratively 

possible to implement these [the PSD 

and tile V] permitting programs.’’ All 

other state and local permitting agencies 

that commented on the proposed 

tailoring provided similar comments 

that they would not have the adequate 

staff capacity or resources to be able to 

successfully administer their permitting 

programs with the addition of GHG 

emission sources at the statutory 

thresholds for PSD and title V. 

It is the many-year delays in permit 

issuance and the consequent chilling of 

economic development that provide 

perhaps the clearest indication that 

applying the PSD applicability 

provisions to GHG sources without 

tailoring produces absurd results. These 

effects would undermine one of 

Congress’s central purposes in 

establishing the PSD program, which 

was to promote development in clean 

air areas by large industrial sources (as 

long as they included environmental 

safeguards). As discussed previously, 

this goal is manifest in the structure of 

the PSD provisions, and Congress even 

went so far as to make this goal explicit 

in the purposes section of the PSD 

provisions. 

Moreover, at the present time, there is 

relatively little environmental benefit in 

subjecting large numbers of small GHG 

sources to the expensive, source-bysource PSD permitting requirements. 

They represent a relatively small share 

of the GHG inventory and the control 

options available to them, at present, are 

limited. As a result, approaches other 

than source-by-source permitting 

presently offer more promise for 

generating emissions reductions in an 

efficient manner. These approaches, 

which may be developed through both 

federal and state efforts, include 

requirements, incentives, and 

educational outreach to promote 

efficiency improvements to boilers and 

furnaces and energy efficient operations, 

including, for example, weatherization 

programs. 

For all these reasons, interpreting the 

definition of ‘‘major emitting facility’’ 

mstockstill on DSKH9S0YB1PROD with RULES2

31558 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

and ‘‘modification’’ literally—that is, as 

EPA has interpreted them more 

narrowly, but without tailoring and 

before the program requirements can be 

streamlined or permitting authority 

resources can be increased—would 

produce results that are not consonant 

with, and, in fact, would severely 

undermine, Congress’s purpose for the 

PSD program. These results may fairly 

be characterized as the type of absurd 

results that support our view that the 

literal terms of the PSD applicability 

provisions do not indicate congressional 

intent for how those provisions should 

applied to GHG sources. 

b. Congressional Intent for the 

Applicability Provisions 

(1) Congressional Intent for Whether 

and How PSD Applies to GHG Sources 

Several of the PSD provisions and 

statements in the legislative history are 

particularly important in determining 

whether and how the PSD program 

should apply to GHG sources, as 

discussed elsewhere: 

(1) The applicability provisions, 

under CAA section 165(a) and 169(1). 

These provisions are written broadly, 

and although, as we explain above, they 

cannot be read literally to apply to GHG 

sources at or above the 100/250 tpy, 

they nevertheless can be read to indicate 

that directionally, Congress intended 

that PSD be applied inclusively. 

(2) The various PSD provisions that 

identify the pollutants subject to PSD. 

Compare, e.g., CAA sections 162, 163, 

164, 165(a)(3), 165(d)(2), 165(e), and 166 

(NAAQS pollutants) with CAA sections 

165(a)(3)(C), 165(a)(4) (other pollutants). 

These provisions indicate that a major 

purpose of the PSD program is to 

control NAAQS pollutants, but that the 

program also covers non-NAAQS 

pollutants. 

(3) The requirement that permitting 

authorities act on PSD applications 

within 1 year. CAA section 165(c). This 

provision indicates that Congress 

anticipated the PSD program would be 

of a size that would allow permitting 

authorities to meet this deadline. 

(4) The purpose provision. CAA 

section 160. This provision makes clear 

that PSD is designed both to protect 

public health and welfare and to 

promote economic growth. 

(5) In addition, we consider important 

the legislative history indicating the 

Congress intended PSD to apply to large 

industrial sources because they were the 

primary source of the air pollution 

problems and they have the resources to 

manage the demands of the PSD 

permitting process; and that, by the 

same token, Congress expected that 

small sources would not be subject to 

PSD. The legislative history does not 

specifically mention GHG sources. 

Looking at these provisions and the 

legislative history together, we think 

Congress can be said to have intended 

that the PSD program apply to GHG 

sources as a general matter. The most 

important indication of congressional 

intent in this regard is the applicability 

provisions, which provide, in part, that 

PSD applies to (i) ‘‘any * * * source[ 

that] emit[s], or ha[s] the potential to 

emit [the specified quantity] of any air 

pollutant,’’ CAA section 169(1); and (ii) 

to any such source that undertakes a 

physical or operational change that 

‘‘increases the amount of any air 

pollutant emitted.’’ CAA section 

169(2)(C), 111(a)(4). These terms are 

quite broad, and should be read to 

include GHG sources and GHGs. See 

Massachusetts v. EPA, 549 U.S. 497, 533 

(2007) (‘‘Because greenhouse gases fit 

well within the Clean Air Act’s 

capacious definition of ‘air pollutant,’ 

we hold that EPA has the statutory 

authority to regulate the emission of 

such gases from new motor vehicles.’’). 

Moreover, including GHG sources— 

under certain circumstances—is 

consistent with the PSD provisions that 

refer to other pollutants, establish the 

time-frame for acting on PSD 

applications, and establish the overall 

purpose of the program. In addition, 

including GHG sources—again, under 

certain circumstances—is consistent 

with the legislative history that PSD be 

limited to sources that cause a 

meaningful part of the air pollution 

problem and have the resources to 

manage the PSD requirements. No PSD 

provision explicitly imposes any 

limitation of PSD to large industrial 

sources, and Congress’s reasoning for 

focusing on large industrial sources— 

which was that these sources are best 

suited to handle the resource -intensive 

analyses required by the PSD program— 

could extend to GHG sources under 

certain circumstances (that is, large 

sources first, and smaller sources after 

streamlining methods are developed). 

Similarly, as discussed previously, it is 

reasonable to read into Congress’s intent 

that the PSD program be limited to a 

size that permitting authorities would 

be able to administer, but it is consistent 

with that reading to recognize that the 

permitting authorities could take certain 

steps—including adoption of 

streamlining measures and ramping up 

resources—that would allow them to 

handle a higher volume of permitting. 

Finally, we find nothing in the PSD 

provisions or legislative history that 

would indicate congressional intent to 

exclude GHG sources. Accordingly, we 

believe that Congress must be said to 

have intended an affirmative response 

for whether PSD applies to sources of 

GHGs as a general matter. Our previous 

regulatory action defining the PSD 

applicability provisions made this clear, 

and we do not reopen this issue in this 

rulemaking. Moreover, even if this longestablished regulatory position were not 

justifiable based on Chevron Step 1—on 

the grounds that in fact, congressional 

intent on this point is not clear—then 

we believe that this position, that the 

statutory provisions to apply PSD to 

GHG sources in general, was justified 

under Chevron Step 2. 

As to how PSD applies to GHG 

sources, although, for reasons discussed 

previously, the 100/250 tpy threshold 

provision, which establishes the scope 

of PSD applicability, should not be read 

as applying literally to GHG sources— 

and as a result, the applicability 

provision as a whole cannot be said to 

have a plain meaning as to the scope of 

coverage of GHG sources—we believe 

that the applicability provisions and 

legislative history nevertheless indicate 

a congressional intent for how PSD 

should apply to GHG sources. That is to 

apply PSD to as many sources as 

possible as quickly as possible, at least 

to a certain point. We believe that this 

intent can be inferred from the 

inclusiveness of the applicability 

provision, combined with the legislative 

history that focuses on Congress’s desire 

to include in the PSD program sources 

that have the resources to comply with 

the requirements and, as the Court in 

Alabama Power recognized, Congress’s 

concern about administrability. That is, 

at first, PSD may apply to the largest 

GHG sources because they may be 

expected to have the resources to 

comply with PSD’s requirements and 

permitting authorities may be expected 

to accommodate those sources; and over 

time, with streamlining and increases in 

permitting authority resources, PSD may 

apply to more GHG sources. As 

discussed later, the tailoring approach is 

consistent with congressional intent in 

this regard. 

We recognize the tension between the 

applicability provisions, which are 

inclusive, and the statements in the 

legislative history that express 

Congress’s expectation that PSD be 

limited to large industrial sources. At 

least to a point, the applicability 

provisions and these statements can be 

reconciled by recognizing that the 

reason why Congress expected that PSD 

would be limited to large industrial 

sources was that Congress recognized 

that PSD applied on a source-by-source 

basis, that this would be costly to 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31559 

41Reconciling the applicability provisions with 

the statements in the legislative history in this 

manner is also consistent with the U.S. Supreme 

Court’s view that the Clean Air Act has inherent 

flexibility, as it stated in Massachusetts v. EPA, 549 

U.S. 497, 532 (2007): 

While the Congresses that drafted § 202(a)(1) 

might not have appreciated the possibility that 

burning fossil fuels could lead to global warming, 

they did understand that without regulatory 

flexibility, changing circumstances and scientific 

developments would soon render the Clean Air Act 

obsolete. The broad language of § 202(a)(1) reflects 

an intentional effort to confer the flexibility 

necessary to forestall such obsolescence. See 

Pennsylvania Dept. of Corrections v. Yeskey, 524 U. 

S. 206, 212 (1998) (‘‘[T]he fact that a statute can be 

applied in situations not expressly anticipated by 

Congress does not demonstrate ambiguity. It 

demonstrates breadth’’ (internal quotation marks 

omitted)). 

42For the reasons discussed above, we believe 

that Step 2 of the Chevron framework, which 

authorizes the exercise of agency discretion as long 

as the agency remains consistent with a reasonable 

construction of the statute, does not require a literal 

construction of the statute in a case such as this 

one, in which the ‘‘absurd results’’ doctrine applies 

so that the statutory requirements cannot be read 

literally. 

43 It should be noted that strictly speaking, we do 

not, in our drafting of the regulatory revisions that 

are part of this rulemaking, establish a significance 

level for GHG emissions based on CO2e. Rather, we 

establish an applicability criteria for determining 

whether GHGs are subject to regulation with respect 

to the particular source. We explain our approach 

in more detail in the Response to Comments 

document. Throughout this preamble, we refer to 

this action, for convenience, as a significance level. 

sources, and that only the large 

industrial sources could afford those 

costs. Taking certain actions—including 

streamlining PSD requirements—can 

render PSD more affordable and thereby 

allow its application to smaller sources 

in a more cost-effective manner. In this 

way, PSD’s inclusive applicability 

provisions can be reconciled with the 

narrower scope Congress expected, and 

this is part of the reason why we 

characterize congressional intent as 

being consistent with phasing in the 

applicability of PSD to GHG sources 

through the tailoring approach.41

On the other hand, if Congress cannot 

be said to have expressed an intent as 

to the manner and scope of PSD 

applicability to GHG sources, then, 

under Chevron Step 2, EPA may apply 

a reasonable interpretation of the 

applicability provisions to determine 

the scope of coverage of GHG sources 

that is consistent with the statutory 

requirements. The Tailoring Rule is a 

reasonable interpretation under Chevron 

Step 2. It is consistent with (1) The 

applicability provisions, recognizing 

that as we have seen, those provisions 

cannot be applied literally under these 

circumstances,42 (2) the provisions 

described above concerning which 

pollutants the PSD provisions cover and 

the timetable for permitting authority 

action on PSD applications; (3) the 

purpose provisions of PSD, and the 

accompanying legislative history, 

because it protects public health and 

welfare without inhibiting economic 

development; and (4) the legislative 

history indicating Congress intended 

that PSD be limited to sources that 

cause a meaningful part of the problem 

and can manage its requirements, 

because it will expand PSD’s 

applicability only after streamlining 

methods and greater permitting 

authority resources will allow for such 

an expansion in an orderly manner. 

(2) Criteria for Establishing Phase-in 

Schedule 

The specific phase-in schedule under 

the tailoring approach will depend on 

several things. The first is our progress 

in developing streamlining methods that 

will render the permitting authority 

workload more manageable by taking 

some sources off the table (through 

regulations or guidance interpreting 

PTE), and by allowing for more efficient 

permit processing (through general 

permits and presumptive BACT). At the 

same time, streamlining techniques will 

lower permitting costs to sources or 

even eliminate some sources’ 

obligations to obtain permits altogether. 

The second is the time that permitting 

authorities need to ramp up their 

resources in an orderly and efficient 

manner to manage the additional 

workload. The third is information we 

have as to the sources’ abilities to meet 

the requirements of the PSD program 

and the permitting authorities’ ability to 

process permits in a timely fashion. 

That information will be based on the 

real-world experience the permitting 

authorities will accumulate as they 

proceed to process permit application 

for the larger GHG sources. 

Thus, under our present approach, we 

will develop streamlining techniques, 

we expect the permitting authorities to 

ramp up resources in response to the 

additional demands placed upon them 

in the first two steps, and we will gather 

real-world information about the GHG 

permitting process; and based on all 

that, we will address expanding the PSD 

program in a step-by-step fashion to 

include more sources over time. We 

intend to follow this process to establish 

both the PSD applicability thresholds 

and, as we describe next, the 

significance levels. 

(3) Criteria for Establishing Significance 

Levels 43

The criteria for establishing the 

significance levels are the same as for 

establishing the ‘‘major emitting facility’’ 

thresholds. As noted previously, under 

the applicable CAA sections, any 

physical or operational change at a 

stationary source that ‘‘increases the 

amount of any air pollutant emitted by 

such source’’ or that results in the 

emission of a new pollutant is treated as 

a ‘‘modification’’ that is subject to PSD 

requirements. Although the CAA, by its 

terms, treats as an ‘‘increase’’ any 

amount of emissions that is greater than 

zero, the DC Circuit held in Alabama 

Power v. Costle that EPA may establish 

a threshold—called the significance 

level—on de minimis grounds for the 

amount of any particular pollutant that 

may be increased. 636 F.2d at 400. 

Of particular importance, the Court in 

Alabama Power indicated that EPA may 

rely on administrative considerations to 

establish significance levels. Id. To 

reiterate, the Court held that ‘‘EPA does 

have discretion, in administering the 

statute’s ‘modification’ provision, to 

exempt from PSD review some emission 

increases on grounds of de minimis or 

administrative necessity.’’ 636 F.2d at 

400. The Court added a more detailed 

exposition of its views in a subsequent 

part of its opinion, where it discussed 

the BACT provision, under CAA section 

165(a)(4), and the Court made clear that 

those views applied as well to the 

‘‘modification’’ provision. There, the 

Court invalidated an EPA regulation 

that established a 100- and 250-tpy 

exemption from the BACT requirement. 

Both the BACT provision and the 

modification provision apply by their 

terms to all emissions from a source, but 

the Court stated that each provision 

must be read to incorporate an 

exemption based on de minimis or 

administrative considerations, and 

explained: 

We understand that the application of 

BACT requirements to the emission of all 

pollutants from a new facility, no matter how 

miniscule some may be, could impose severe 

administrative burdens on EPA, as well as 

severe economic burdens on the construction 

of new facilities. But the proper way to 

resolve this difficulty is to define a de 

minimis standard rationally designed to 

alleviate severe administrative burdens, not 

to extend the statutory 100 or 250-ton 

threshold to a context where Congress clearly 

did not apply it. Just as for the applicability 

of PSD to modifications, the de minimis 

exemption must be designed with the 

specific administrative burdens and specific 

regulatory context in mind. This the Agency 

has failed to do. We do not hold that 100 tons 

per year necessarily exceeds a permissible de 

minimis level; only that the Agency must 

follow a rational approach to determine what 

level of emission is a de minimis amount. 

A rational approach would consider the 

administrative burden with respect to each 

statutory context: what level of emission is 

de minimis for modification, what level de 

minimis for application of BACT. Concerning 

mstockstill on DSKH9S0YB1PROD with RULES2

31560 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

the application of BACT, a rational approach 

would consider whether the de minimis 

threshold should vary depending on the 

specific pollutant and the danger posed by 

increases in its emission. The Agency should 

look at the degree of administrative burden 

posed by enforcement at various de minimis 

threshold levels. It is relevant that our 

decision requires the Agency, in its 

evaluation of emissions of facilities, to take 

into account the facility’s air pollution 

controls. It may also be relevant, though it is 

certainly not controlling, that Congress made 

a judgment in the Act that new facilities 

emitting less than 100 or 250 tons per year 

are not sizeable enough to warrant PSD 

review. 

Id. at 405. As just quoted, the Court 

acknowledged the 100 and 250 tpy 

thresholds for a major emitting facility, 

and did not indicate whether the 

modification exemption level could 

exceed those statutory levels, but 

nevertheless, the Court made clear that 

EPA may ‘‘consider the administrative 

burden’’ associated with modifications 

to establish an exemption level for 

modifications. 

EPA has established significance 

levels for various pollutants, generally 

relying on a de minimis basis. See, e.g., 

45 FR 52676, 52705–52710 (August 7, 

1980). In these actions, EPA generally 

established the level based on the 

triviality of the amount of emissions 

excluded. To this point, we have not 

attempted to determine de minimis— 

that is, trivial—levels for GHGs. Instead, 

in this rulemaking, EPA is establishing 

a phase-in schedule for significance 

levels based on the Chevron framework, 

accounting for the ‘‘absurd results,’’ 

‘‘administrative necessity,’’ and ‘‘onestep-at-a-time’’ doctrines. It is not 

necessary to establish a permanent de 

minimis level in this rulemaking. For 

one thing, the Court in Alabama Power 

explicitly authorized an administrative 

basis for significance levels. Moreover, 

were EPA to establish a de minimis 

level, that amount could be below— 

perhaps even well below—the ‘‘major 

emitting facility’’ thresholds established 

in this rulemaking on grounds of 

‘‘administrative necessity’’ and the other 

doctrines. Accordingly, at present, if we 

were to establish a permanent 

significance level on a de minimis basis, 

that level could result in too many small 

sources being required to submit permit 

applications while the phase-in is 

occurring. This would give rise to the 

same problems concerning undue costs 

to the sources and administrative 

burdens for the permitting authorities 

for which we are fashioning a remedy. 

Accordingly, the significance levels we 

establish with this action are the lowest 

levels that sources and permitting 

authorities can reasonably be expected 

to implement at the present time in light 

of the costs to the sources and the 

administrative burdens to the permitting 

authorities. 

c. Other Possible Approaches to 

Reconciling a Literal Reading of PSD 

Applicability Provisions and 

Congressional Intent 

Commenters have suggested another 

approach to reconciling the 

inconsistency between the definition of 

‘‘major emitting facility’’ and 

congressional intent. They urge that the 

‘‘major emitting facility’’ definition 

should be applied so that only sources 

that emit NAAQS pollutants, for which 

the area is designated attainment or 

unclassifiable, in the requisite quantities 

would be subject to PSD, and sources 

would not be subject to PSD based 

solely on their emissions of nonNAAQS pollutants or a NAAQS 

pollutant for which an area has been 

designated nonattainment. Some 

commenters argue that this approach is 

mandated by several of the PSD 

provisions, read together or at least that 

the relevant statutory provisions are 

ambiguous and that this approach is a 

reasonable reading of them. Under this 

approach, we would not need to phase 

in the application of PSD by lowering 

the applicability threshold for GHG 

emitters. 

Specifically, many commenters have 

questioned whether EPA has the 

authority to regulate GHGs under the 

PSD provisions. Although the specific 

lines of reasoning vary somewhat from 

one commenter to another, in general, 

they based their arguments largely on 

CAA sections 161 and 165(a). Under 

CAA section 161: 

In accordance with the policy of section 

101(b)(1), each applicable implementation 

plan shall contain emission limitations and 

such other measures as may be necessary, as 

determined under regulations promulgated 

under this part, to prevent significant 

deterioration of air quality in each region (or 

portion thereof) designated pursuant to 

section 107 as attainment or unclassifiable. 

Commenters point out that section 107 

applies only to NAAQS pollutants and 

directs that areas be designated as 

attainment, nonattainment, or 

unclassifiable on a pollutant-bypollutant basis. Under CAA section 

165(a), a ‘‘major emitting facility’’ cannot 

be constructed ‘‘in any area to which 

this part applies’’ unless it meets certain 

requirements. According to some 

commenters, these provisions, read 

together, limit PSD’s applications to 

only NAAQS pollutants that are emitted 

from sources in areas that are designated 

attainment or unclassifiable for those 

pollutants. Other comments make a 

similar point, except to state that PSD 

applies more broadly to pollutants with 

a local, ambient impact. 

Some commenters go on to take the 

position that NAAQS pollutants for 

which the area is designated attainment 

or unclassifiable are the only pollutants 

that can be regulated under any 

provision of the PSD requirements; 

while others take the position that once 

PSD is triggered for a source on the basis 

of its NAAQS pollutants, then other, 

non-NAAQS, pollutants may be 

regulated under certain PSD provisions, 

in particular, the BACT provision under 

CAA section 165(a)(4). These 

commenters agree, however, that 

emissions of GHGs, by themselves, 

cannot trigger PSD applicability. 

Finally, some commenters state that 

even if the PSD provisions cannot be 

read by their terms to preclude GHGs 

from triggering PSD, then they can be 

read to authorize EPA to determine that 

GHG emissions do not trigger PSD. 

We recognize, as we have said 

elsewhere, that a major purpose of the 

PSD provisions is to regulate emissions 

of NAAQS pollutants in an area that is 

designated attainment or unclassifiable 

for those pollutants. However, we do 

not read CAA sections 161 and the ‘‘in 

any area to which this part applies’’ 

clause in 165(a), in the context of the 

PSD applicability provisions, as limiting 

PSD applicability to those pollutants. 

The key PSD applicability provisions 

are found in sections 165(a) and 169(1). 

Section 165(a) states, ‘‘No major emitting 

facility on which construction is 

commenced after August 7, 1977, may 

be constructed in any area to which this 

part applies unless [certain 

requirements are met].’’ A ‘‘major 

emitting facility’’ is defined, under CAA 

section 169(1), as ‘‘any * * * stationary 

source[s] which emit[s], or ha[s] the 

potential to emit, one hundred [or, 

depending on the source category, two 

hundred fifty] tons per year or more of 

any air pollutant.’’ As discussed 

elsewhere, EPA has long interpreted the 

term ‘‘any air pollutant’’ to refer to ‘‘any 

air pollutant subject to regulation under 

the CAA,’’ and for present purposes, will 

continue to read the ‘‘subject to 

regulation’’ phrase into that term. 

Although section 165(a) makes clear 

that the PSD requirements apply only to 

sources located in areas designated 

attainment or unclassifiable, it does not, 

by its terms, state that the PSD 

requirements apply only to pollutants 

for which the area is designated 

attainment or unclassifiable. Rather, 

section 165(a) explicitly states that the 

PSD requirements apply more broadly 

to any pollutant that is subject to 

regulation. Moreover, another 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31561 

44We find no support for the proposition raised 

by some commenters that this provision is limited 

to ‘‘NAAQS’’ pollutants. To the contrary, ‘‘under this 

chapter’’ unambiguously signals an intent to cover 

any pollutant regulated under the Act. Had 

Congress intended a narrower focus, they would 

have specified ‘‘any NAAQS pollutant’’ or any 

pollutant subject to regulation under this Part 

(PSD). 

45 In the 1990 CAA Amendments, Congress added 

section 112(b)(6), which provides that PSD ‘‘shall 

not apply to pollutants listed under this section,’’ 

that is, HAPs. 

requirement in CAA section 165(a) also 

applies to air pollutants broadly. Under 

CAA section 165(a)(3), one of the 

requirements for securing a 

preconstruction permit is to 

demonstrate that the source’s emissions 

‘‘will not cause, or contribute to, air 

pollution in excess of any (A) maximum 

allowable increase or maximum 

allowable concentration for any 

pollutant in any area [to which the PSD 

requirements apply], (B) [NAAQS] in 

any air quality control region, or (C) any 

other applicable emission standard or 

standard of performance under this 

chapter.’’ As just quoted, subparagraph 

(C), by its terms clearly applies to nonNAAQS pollutants. This is because it 

refers to (1) ‘‘any other applicable 

emission standard,’’ which distinguishes 

it from subparagraph (B) and therefore 

from NAAQS pollutants; and (2) ‘‘any 

* * * standard of performance under 

this chapter,’’ which refers to standards 

of performance under section 111, 

several of which are for non-NAAQS 

pollutants. See, e.g., 40 CFR 60.33c(a) 

‘‘municipal solid waste landfill 

emissions.’’ By the same token, CAA 

section 110(j) specifically contemplates 

that a source required to hold a permit 

under title I of the Act, which includes 

a PSD permit, demonstrate that the 

source complies with ‘‘standards of 

performance,’’ which may include 

requirements for pollutants other than 

NAAQS. 

In addition, CAA section 163(a)(4) 

includes as a PSD requirement that ‘‘the 

proposed facility is subject to the best 

available control technology for each 

pollutant subject to regulation under 

this chapter emitted from, or which 

results from, such facility.’’ Section 

163(a)(4)’s broad reference to ‘‘each 

pollutant subject to regulation under 

this chapter’’ clearly indicates that it 

applies to non-NAAQS pollutants, as 

long as they are regulated under other 

provisions of the Act.44 The DC Circuit, 

in Alabama Power v. Costle, 636 F.2d 

323, 361 n.90 (DC Cir. 1980) indicated 

that, under the law applicable at the 

time the Court handed down the 

decision in 1980, PSD applies to 

HAPs.45

In addition, PSD requirements are 

part of SIPs, and although SIPs generally 

are limited to provisions that implement 

the NAAQS, and therefore generally are 

limited to controlling NAAQS 

pollutants (or non-NAAQS pollutants 

that affect ambient air quality), see 

generally CAA section 110, Congress 

explicitly required SIPs to include 

requirements to protect visibility, under 

CAA section 169A–B. See CAA sections 

110(a)(2)(D)(i)(II), 169A(b)(2)(A). 

Congress took much the same approach 

with the PSD program, which was to 

require that PSD requirements be 

included in the SIPs, but to explicitly 

require that PSD apply to non-NAAQS 

pollutants. 

These provisions—sections 165(a)(3), 

165(a)(4), and 110(j)—all indicate by 

their terms that PSD requirements apply 

to non-NAAQS pollutants. As such, 

they lend credence to our view that 

Congress intended the PSD applicability 

provisions to include GHG sources. At 

the very least, they demonstrate that 

Congress certainly knew how to 

specifically describe certain air 

pollutants—e.g., ‘‘air pollution in excess 

of * * * any other applicable emission 

standard or standard of performance 

under this chapter,’’ CAA section 

165(a)(3)(C)—which indicates that its 

decision not to specifically describe air 

pollutants in the applicability 

provisions suggests an intent to cover 

air pollutants broadly. 

To return to sections 161 and the ‘‘in 

any area to which this part applies’’ 

phrase in 165(a), which commenters 

rely on as the cornerstone of their 

argument, commenters in effect take the 

position that Congress intended the 

geographic references in these 

provisions—that is, the references to 

areas designated as attainment or 

unclassifiable—to limit the scope of the 

permitting provisions. We think it 

unpersuasive that Congress would have 

taken such an indirect, and silently 

implied, route to limit the scope of the 

permitting provisions. As noted 

previously, the permitting provisions 

apply broadly by their terms. Had 

Congress intended to limit PSD 

permitting in the manner urged by 

commenters, it certainly could have 

done so directly, such as by limiting 

PSD permitting to ‘‘any pollutant for 

which an area is designated attainment 

or unclassifiable.’’ Indeed, Congress did 

so in other PSD provisions, discussed 

previously. Similarly, in other sections 

of the CAA, Congress also directly 

limited the scope of pollutant 

applicability by specifying which 

pollutants are or are not subject to the 

provision. See, e.g., section 111(d) 

(performance standards for existing 

sources apply only to pollutants other 

than NAAQS or HAPs), section 112(a)(1) 

(applying air toxics requirements in 

section 112 to sources that emit above 

the specified tonnage thresholds of 

‘‘hazardous air pollutants’’). 

In addition, although section 161 

requires that SIPs contain emission 

limitations and other measures as 

necessary to prevent significant 

deterioration in areas designated as 

attainment or unclassifiable, it does not 

by its terms limit SIPs to only those 

measures. 

Most broadly, we read the PSD 

provisions and their legislative history 

to evidence Congress’s intent that PSD 

apply throughout the country to large 

sources that undertake new construction 

or modifications, and that Congress’s 

overall purpose was to assure that, as 

the industrial stock of the nation turned 

over, it would become cleaner for all air 

pollutants emitted. Greenhouse gas 

sources, as a general matter, fit readily 

into this overall vision. At the time that 

Congress enacted the PSD provisions in 

1977, every area of the nation was 

designated attainment or unclassifiable 

for at least one air pollutant, and that 

has remained the case to the present 

time. Accordingly, at all times, PSD has 

applied in every area of the country. 

The PSD requirements clearly cover all 

air pollutants emitted by the source, and 

provide a process for reviewing those 

emissions and determining BACT for 

them under CAA section 165(a)(4). It is 

true that at the time Congress adopted 

the PSD provisions, it was primarily 

concerned about the NAAQS 

pollutants—or, as some commenters 

assert, pollutants with local, ambient 

impact—because those pollutants 

represented a major component of the 

air pollution problems it was aware of 

and was addressing. But its overall 

purpose was broad enough to cover 

additional pollutants; the process it 

enacted for establishing BACT was 

broad enough to encompass additional 

pollutants; and the applicability 

provisions it established were phrased 

broadly enough to encompass additional 

pollutants, see section 169(1). As a 

result, we believe that the PSD 

applicability provisions, which, again, 

refer to, as we have interpreted them, 

‘‘any air pollutant [subject to regulation 

under the CAA],’’ should be seen as 

‘‘capacious’’ and therefore encompass 

GHG sources, in much the same manner 

as the U.S. Supreme Court viewed the 

definition of ‘‘air pollutant’’ to be 

‘‘capacious’’ and therefore encompass 

GHGs. Massachusetts v. EPA, 549 U.S. 

497, 533 (2007). 

In addition, it should not be 

overlooked that we have applied PSD to 

mstockstill on DSKH9S0YB1PROD with RULES2

31562 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

non-NAAQS pollutants since the 

inception of the program over 30 years 

ago. For example, prior to the 1990 CAA 

Amendments, PSD applied to HAPs 

regulated under CAA section 112; and 

over the years, EPA has established 

significance levels for fluorides, sulfuric 

acid mist, hydrogen sulfide, TRS, 

reduced sulfur compounds, municipal 

waste combustor organics, municipal 

waste combustor metals, municipal 

waste combustor acid gases, and 

municipal solid waste landfill 

emissions, see 40 CFR 51.166(b)(23)(i); 

and EPA has proposed a significance 

level for ozone depleting substances. 

See 61 FR 38307 (July 23, 1996). Of 

course, the basis for all these actions is 

PSD’s applicability to these nonNAAQS air pollutants. We are not aware 

that EPA’s actions in establishing 

significance levels for these pollutants 

gave rise to challenges on grounds that 

the PSD provisions do not apply to 

them. As the U.S. Supreme Court 

recently stated in upholding an EPA 

approach in another context: ‘‘While not 

conclusive, it surely tends to show that 

the EPA’s current practice is a 

reasonable and hence legitimate 

exercise of its discretion * * * that the 

agency has been proceeding in 

essentially this fashion for over 30 

years.’’ Entergy Corp. v. Riverkeeper, 

Inc., 129 S.Ct. 1498, 1509 (2009) 

(citations omitted). 

Finally, we note that excluding GHG 

sources from PSD applicability would 

create inequitable results. Consider the 

hypothetical case of two sources that 

construct in the same area, each of 

which emits the same amount of GHGs, 

and that amount is large enough to 

trigger PSD applicability. Assume that 

the first one, but not the second, also 

emits NAAQS pollutants amounts large 

enough to trigger PSD applicability. If 

GHG sources are excluded from PSD 

applicability, then the first of those 

sources, but not the second, would be 

subject to PSD requirements for its GHG 

emissions. Similarly, consider the 

hypothetical case of two sources that 

emit identical amounts of the same 

NAAQS pollutant and identical 

amounts of GHGs, all amounts of which 

are large enough to trigger PSD 

applicability requirements. Assume that 

the first source constructs in an area that 

is an attainment or unclassifiable area 

for the NAAQS pollutant that it emits, 

and that the second source constructs in 

an area that is not an attainment or 

unclassifiable area for that NAAQS 

pollutant. Here again, if GHG sources 

are excluded from PSD applicability, 

then the first of those sources, but not 

the second, would be subject to PSD 

requirements for its GHG emissions. 

These results are inequitable and would 

create an uneven playing field and for 

this reason, too, support our view that 

the PSD applicability provisions apply 

to GHG sources. 

Accordingly, we reject the argument 

that section 165 must be, or may 

reasonably be, limited in scope to 

pollutants for which an area has been 

designated as attainment or 

unclassifiable. Rather, the PSD 

applicability provision—the definition 

of ‘‘major emitting facility’’ in CAA 

section 169(1)—applies by its terms (as 

we have interpreted them narrowly 

through regulation) to sources emitting 

any air pollutant subject to regulation, 

and is not limited to any NAAQS air 

pollutant. Our research has not 

disclosed any explicit statements in the 

legislative history that Congress 

intended to limit PSD applicability to 

sources of NAAQS pollutants. 

6. Application of the ‘‘Absurd Results’’ 

Doctrine for the Title V Program 

Having discussed the application of 

the Chevron framework, taking account 

of the ‘‘absurd results’’ doctrine, for the 

PSD applicability requirements, we now 

turn towards applying the same 

approach to the title V applicability 

requirements. Because of the parallels 

between the PSD and title V 

applicability provisions, much of the 

discussion later parallels the previous 

discussion of PSD. As with PSD, we 

finalize, with some refinements, the 

‘‘absurd results’’ basis we proposed. 

Specifically, we are revising our 

regulations to limit title V applicability 

to GHG emitting sources by revising the 

regulatory term, ‘‘major source,’’ and 

although our revised regulations do not 

accord with a literal reading of the 

statutory provisions for title V 

applicability, which are incorporated 

into the statutory definition of ‘‘major 

source,’’ we have concluded that based 

on the ‘‘absurd results’’ doctrine, a literal 

adherence to the terms of this definition 

is not required. Rather, we may apply 

title V to GHG sources in a phased-in 

manner, as we do through the tailoring 

approach, because although 

congressional intent is clear that title V 

applies to GHG sources in general, 

congressional intent is unclear on the 

question of how title V applies, and the 

tailoring approach is a reasonable 

interpretation of the statute. 

To reiterate, for convenience, the title 

V applicability provisions provide that 

after the effective date of a title V 

program, it is unlawful for any person 

to operate a ‘‘major source’’ without a 

title V permit (CAA section 502(a), and 

define a ‘‘major source’’ to include ‘‘any 

major 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.’’ 

CAA sections 501(2)(B) and 302(j). 

Under the current interpretation of 

the title V applicability provisions, 

EPA’s recent promulgation of the LDVR 

will trigger the applicability of title V 

for GHG sources at the 100 tpy 

threshold levels as of January 2, 2011. 

This is because title V applicability 

hinges on the definition of ‘‘major 

source,’’ which, under EPA’s longstanding narrowing interpretation, but 

absent further tailoring, applies title V 

to sources of any air pollutant that is 

subject to regulation under another 

provision of the CAA. EPA’s 

promulgation of the LDVR means that 

GHGs will become subject to regulation 

on the date that the rule takes effect, 

which will be January 2, 2011. 

But absent tailoring, the January 2, 

2011 trigger date for GHG PSD 

applicability will see an extraordinarily 

large number of sources—some 6.1 

million—become subject to title V, an 

increase of over 400-fold over the 14,700 

sources that currently are subject to title 

V. The great majority of these will be 

small commercial or residential sources. 

We believe that for many reasons, this 

result is contrary to congressional intent 

for the title V program, and in fact 

would severely undermine what 

Congress sought to accomplish with the 

program. As a result, under Chevron, 

accounting for the ‘‘absurd results’’ 

doctrine, the statutory definition for 

‘‘major source’’ (as EPA has already 

narrowed it to refer to any air pollutant 

‘‘subject to regulation’’) should not be 

read to apply to all GHG sources at or 

above the 100 tpy threshold as of the 

January 2, 2011 date. Rather, the 

definition of ‘‘major source’’ should be 

tailored so that it applies to GHG 

sources on a phased-in basis, with the 

largest sources first, as we describe in 

this rule. 

a. Congressional Intent for the Title V 

Program 

As we said, previously, in a similar 

circumstance involving the PSD 

program, applying title V requirements 

to GHG sources without tailoring the 

definition of ‘‘major source’’—and, as 

discussed later, without streamlining 

the title V requirements or allowing for 

time for permitting authorities to ramp 

up resources—would result in a 

program unrecognizable to the Congress 

that enacted title V, and one that would 

be flatly unadministrable. Without 

tailoring, the PSD program would 

expand from the current 14,700 sources 

to some 6.1 million, with the great 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31563 

46As noted previously, the fact that some small 

sources are subject to title V because they are ‘‘major 

sources’’ of HAPs or certain area sources and 

therefore are covered under CAA sections 502(a) 

and 501(2)(A) does not alter the conclusion from 

the legislative history that Congress did not expect 

large numbers of small sources to become subject 

to title V. The fact that Congress authorized the 

Administrator to exempt area sources from the title 

V program where compliance with title V would be 

‘‘impracticable, infeasible, or unnecessarily 

burdensome’’ reinforces the conclusion that 

Congress did not intend the program to be 

‘‘impracticable, infeasible or unnecessarily 

burdensome’’ for small sources. 

majority of the sources being small 

commercial and residential sources that 

not only have never been permitted 

before, but that in many cases have no 

applicable requirements under the CAA 

to include in the permit. In the next 

several sections, we will describe some 

of the specific ways that this literal 

application of title V would not only 

differ from, but would undermine, 

congressional intent. But the big picture 

is readily drawn: The influx of millions 

of permit applications would do nothing 

less than overwhelm the program 

Congress finely crafted for thousands of 

sources, with its multi-step deadlines 

measured in days and months, its 

multiple mandates for expeditious 

permit processing, its nuanced 

limitations on the need for permit 

revisions, its efforts to save smaller 

sources permit fees. Regulatory gridlock, 

precisely what Congress strove to avoid, 

would result. 

Most visibly, interpreting the 

applicability provisions literally to 

include GHG sources at the 100 tpy 

level immediately would revise the 

program from what Congress envisioned 

in three major ways, the legislative 

history of each of which was discussed 

previously: 

• It would immediately expand the 

program to cover several-hundred-fold 

more sources than Congress anticipated. 

• It would immediately expand the 

program to cover very small sources that 

Congress expected would not be 

included in the program. 

• It would immediately expand the 

program so that a large number of 

sources have empty permits, that is, 

permits without applicable requirement, 

and undermine the implementation of 

the program for sources with applicable 

requirements. 

Revising the program in this way 

through a literal interpretation of the 

applicability provisions—without 

tailoring the applicability requirements 

and without streamlining the program 

requirements—is clearly inconsistent 

with Congress’s conception of the 

program’s scope, and these 

inconsistencies are foundational. Most 

importantly, the program that would 

result would be unduly costly to sources 

and impossible for permitting 

authorities to implement, and therefore 

would frustrate the purposes that 

Congress intended to achieve with the 

program that it did design. 

As discussed previously, Congress 

was fully aware that with the title V 

program, it was subjecting sources and 

permitting authorities to additional 

costs and administrative burdens, and it 

was fully aware of concerns that absent 

careful design, the program could 

become a formula for regulatory 

gridlock. Determined to make the 

program workable, Congress crafted the 

provisions to be efficient and workable. 

However, if title V were to apply to 

GHG sources at the 100 tpy level, until 

EPA could develop streamlining 

methods, all of these sources newly 

subject to title V would need to apply 

for permits. We estimate that the 

commercial and residential sources 

would incur, on average, expenses of 

$23,175, while an industrial source 

would incur expenses of $46,350, to 

prepare a permit application and receive 

a permit. The great majority of these 

sources would be small commercial and 

residential sources of the type that 

Congress did not expect would be 

included in title V. For example, as 

discussed above, the legislative history 

of title V, including both the permit 

program under CAA sections 501–506 

and the ‘‘small business stationary 

source technical and environmental 

compliance assistance program’’ under 

CAA section 507, indicated that 

Congress did not expect that ‘‘printers, 

furniture makers, dry cleaners, and 

millions of other small businesses’’ 

would become subject to title V. House 

Committee Report, H.R. 101–590, at 354. 

These sources generally do not have the 

potential to emit conventional 

pollutants at or above the 100 tpy 

threshold.46 However, many do have the 

potential to emit GHGs above that 

threshold. Many printers and furniture 

makers use a variety of combustion 

equipment that has the potential to emit 

at least 100 tpy CO2, and many 

commercial dry cleaners have gas-fired 

driers that have the potential to emit at 

least 100 tpy of CO2. All told, there are 

in fact ‘‘millions of * * * small 

businesses’’ that would become subject 

to title V—of the 6.1 million sources 

that would become subject to title V, the 

great majority are small businesses—if 

the title V applicability provisions are 

applied literally to GHG sources. 

Moreover, the overall cost to all 6.1 

million sources—before the 

development of streamlining methods— 

would be a staggering $49 billion per 

year over a 3 year period. Imposing 

burdens of this magnitude on these 

sources—individually and in total— 

would of course be contrary to 

Congress’s efforts to minimize the 

expenses of title V, especially to small 

sources. The magnitude of the costs is, 

in a sense, heightened because a great 

many of these sources will not have 

applicable requirements to include in 

their permits; therefore, much of the 

costs will produce relatively little 

benefit. 

Yet, the most important reason why 

applying the title V program to GHG 

sources without tailoring, and before the 

development of streamlining methods, 

would be inconsistent with 

congressional intent, is that the 

resulting program would prove 

unadministrable. Adding some 6.1 

million permit applications to the 

14,700 that permitting authorities now 

handle would completely overwhelm 

permitting authorities, and for all 

practical purposes, bring the title V 

permitting process to a standstill. 

The costs to permitting authorities of 

this multi-million-source program 

would again be staggering. On average, 

and without streamlining, a permitting 

authority would expend 214 hours, 

which would cost $9,844, to issue a 

permit to a commercial or residential 

source; and 428 hours, which would 

cost $19,688, to issue a permit to an 

industrial source. In all, permitting 

authorities would face over $21 billion 

in additional permitting costs each year 

due to GHGs, compared to the current 

program cost of $62 million each year. 

Beyond this disconnect with 

congressional expectations as to scope 

of the program, the extraordinarily large 

number of permit applications would 

overwhelm permitting authorities and 

slow their ability to process permit 

applications to a crawl. As described at 

proposal, the survey of permitting 

authorities conducted by NACAA found 

that a literal application of the title V 

applicability provisions to all GHG 

sources would result in permitting 

delays of some 10 years. However, as we 

further noted at proposal, this estimate 

was based on the assumption that the 

applicability threshold would be 100 

tpy based on actual emissions; in fact, 

the applicability threshold would be 

100 tpy based on PTE, which would 

sweep in many more sources. Moreover, 

as stated elsewhere, we currently 

estimate the amount of per-permit work 

hours for permitting authorities in 

processing title V permit applications to 

be several times higher than what we 

estimated at proposal. As with PSD, 

such a program would be beyond 

anything within our experience, and it 

is difficult to give a meaningful estimate 

mstockstill on DSKH9S0YB1PROD with RULES2

31564 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

for how long the permitting process 

would take for each permit on average. 

But it is clear that the period would be 

many years longer than even the 10 

years estimated by NACAA. 

In addition, applying title V to all 

GHG sources without tailoring would be 

in tension with a specific CAA 

requirement, that of CAA section 503(c), 

which imposes a time limit of 18 

months from the date of receipt of the 

completed permit application for the 

permitting authority to issue or deny the 

permit. It would be impossible for 

permitting authorities to meet this 

statutory requirement if their workload 

increases from some 14,700 permits to 

6.1 million, and without streamlining. 

Instead, as just noted, permit 

applications would face multi-year 

delays in obtaining their permits. 

Moreover, these delays would 

undermine the overall statutory design 

that promotes the smooth-running of the 

permitting process, and the underlying 

purpose of the title V program itself. As 

noted elsewhere, Congress intended 

through title V to facilitate sources’ 

compliance with their CAA obligations 

by establishing an operating permit 

program that requires the source to 

combine all of its CAA requirements, 

and explain how it will assure 

compliance with such requirements. 

Congress established a comprehensive 

process to implement the operating 

permit program. Through this process, 

following the date that sources become 

subject to title V, they have 1 year to 

submit their permit applications. CAA 

section 503(c). As noted, the permitting 

authority then has 18 months to issue or 

deny the permit. CAA section 503(c). 

Permitting authorities must provide an 

opportunity for public comment and a 

hearing. CAA section 502(b)(6). If the 

permitting authority proposes to issue 

the permit, the permitting authority 

must submit the permit to EPA for 

review, and notify affected states. CAA 

section 505(a)(1). EPA then has 45 days 

to review the permit and, if EPA deems 

it appropriate, to object to the permit. 

CAA section 503(b)(1). If EPA does 

object, then the permitting authority 

must, within 90 days, revise it to meet 

the objections, or else EPA becomes 

required to issue or deny the permit. 

CAA section 503(c). If EPA does not 

object, then, within 60 days of the close 

of the 45-day review period, any person 

may petition EPA to object, and EPA 

must grant or deny the petition within 

60 days. CAA section 505(b)(2). This set 

of applicant, permitting authority, and 

EPA actions and deadlines establishes 

the process for the prompt and efficient 

issuance of operating permits for the 

appropriate universe of sources. 

But at least for an initial period, until 

resources could be ramped up and 

streamlining methods could be 

developed, the extraordinary numbers 

of these permit applicants would sweep 

aside this carefully constructed 

program, and instead, backlog the 

permit authorities. This initial period 

would last for many years. As discussed 

elsewhere, it would take several years to 

develop and apply streamlining 

measures—in particular, general 

permits—and during that time, the 

permit backlog would grow so large that 

it would take many more years for 

permitting authorities to catch up by 

raising the requisite funds and hiring 

and training the necessary employees. 

What’s more, only a fraction of these 

millions of sources newly covered by 

title V will be subject to any CAA 

requirements due to their GHG 

emissions, and we suspect that a larger 

number will not be subject to any CAA 

requirements at all. As a result, for most 

of these sources, although they would 

need to apply for and receive a permit, 

there would be no applicable 

requirements to include in the permit 

and thus the exercise would not 

improve compliance. 

The picture that emerges from a literal 

application of title V’s requirements to 

all GHG sources—at the 100 tpy level, 

beginning on January 2, 2011—shows 

multi-year delays in issuance of all 

permits, for both the sources that have 

applicable requirements and that 

Congress clearly intended the program 

to cover, and for the millions of sources 

that may not be subject to any 

applicable requirements. In short, this 

literal interpretation would apply title V 

to millions of sources that Congress did 

not expect be covered, and the ensuing 

administrative burdens—at least 

initially—would impede the issuance of 

permits to the thousands or perhaps 

tens of thousands of sources that 

Congress did expect be covered. This is 

the type of ‘‘absurd results’’ from a literal 

application of statutory provisions that 

the courts have held should be avoided. 

And even beyond all that, the sheer 

magnitude of the numbers involved— 

millions of permits requiring thousands 

of FTEs at a cost to the permitting 

authorities of billions of dollars, all this 

beginning immediately at the time that 

GHGs become subject to regulation— 

makes clear that this result of a literal 

application of the title V provisions to 

GHG sources cannot be what Congress 

intended. 

b. EPA’s Reconciliation of Applicability 

Provisions With Congressional Intent 

For the reasons just described, we 

should not consider the literal meaning 

of the applicability provisions to be 

determinative of congressional intent as 

to the applicability of title V to all GHG 

sources; rather, we should examine 

other provisions of the statute and the 

legislative history to determine 

congressional intent on that question. If 

congressional intent is clear, we must 

adopt and implement an applicability 

approach that is as close as possible to 

congressional intent; and if 

congressional intent is not clear, then 

we must select an interpretation that is 

reasonable and consistent with the 

statutory requirements. This section 

explains EPA’s view of congressional 

intent for the applicability of the title V 

program to GHG sources and the 

principles and approach EPA is using 

for tailoring. In addition, we also 

respond to other approaches that were 

suggested by commenters. 

To determine congressional intent, we 

consider the statutory provisions and 

legislative history, and this analysis is 

similar to that for PSD. The most 

important title V provisions and 

legislative history for this purpose are 

the following: 

(1) The applicability provisions 

themselves, which, as we have 

interpreted them, apply title V to all 

sources that emit at least 100 tpy of any 

air pollutant subject to regulation. CAA 

sections 502(a), 501(2)(B), 302(j). 

Although we do not believe these 

provisions should be applied literally to 

GHG sources, their broad phrasing 

indicates, directionally, a congressional 

intent towards inclusiveness of sources 

in title V, including GHG sources. 

(2) The provisions for general permits, 

CAA section 504(d); and title V fees, 

CAA section 502(b)(3)(A). These 

provisions give title V an important 

measure of flexibility as to its scope. 

The explicit authorization of general 

permits means that title V may be 

applied to more sources and more 

efficiently, thereby saving costs to both 

source and permitting authority. The 

requirements for permit fees provide a 

mechanism for permitting authorities to, 

over time, develop their programs to 

cover more sources. In this sense, these 

provisions could be construed to 

indicate congressional intent to apply 

title V inclusively, to the extent that 

permitting authorities can accommodate 

additional sources through general 

permits and permit fees. 

(3) The detailed procedural 

requirements—including time periods, 

such as the 18-month time period for 

action on permit applications—for title 

V permit processing. CAA sections 503, 

505. Although these requirements are 

consistent with applying title V to GHG 

sources—in the sense that at least in 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31565 

47As with PSD, this way of reconciling the PSD 

applicability provisions with Congress’s 

expectations for a narrower PSD program is 

consistent with the U.S. Supreme Court’s view that 

the CAA should be read to include ‘‘regulatory 

flexibility, [without which] changing circumstances 

and scientific developments would soon render the 

Clean Air Act obsolete.’’ Massachusetts v. EPA, 549 

U.S. 532. 

theory, there is nothing intrinsic to GHG 

sources that would mean that permitting 

authorities could not comply with these 

requirements—these requirements cast 

doubt on whether Congress can be said 

to have intended that title V cover the 

many small GHG sources (at least 

immediately) in light of the risk that 

including all those sources in title V 

would strain the process. 

(4) The provisions and legislative 

history concerning applicable 

requirements, which indicate that a 

purpose of title V is to include sources’ 

applicable requirements in their 

permits. CAA sections 503(b)(2), 504(a). 

These provisions, and the 

accompanying legislative history, 

discussed previously, suggest an intent 

to include within title V GHG sources 

that have applicable requirements, but 

may also suggest that Congress would 

not have intended to include in title V 

the large numbers of GHG sources that 

have ‘‘empty permits,’’ at least where 

their inclusion would undermine 

implementation of the program for 

sources with applicable requirements. 

(5) The small-business-assistance 

provisions of section 507 and the 

legislative history of title V—both the 

permitting program and the smallbusiness-assistance program— 

concerning the scope of the permitting 

program and small businesses. These 

indicate that Congress intended title V 

to cover some tens of thousands of 

sources, and did not intend that title V 

apply to small businesses. These 

provisions and legislative history 

suggest that Congress did not intend for 

title V to apply to include large numbers 

of small GHG sources. 

Finally, the legislative history of title V 

does not explicitly mention GHG 

sources, which could suggest that 

Congress did not have occasion to focus 

on whether and how title V would 

apply to GHG sources. 

With all this, we believe that Congress 

had a clear intent on the question of 

whether title V generally applies to GHG 

sources, and that was that it does. As 

with PSD, the most important indication 

of congressional intent in this regard is 

the applicability provisions, which 

provide, in part, that title V applies to 

‘‘any stationary facility or source of air 

pollutants which directly emits, or has 

the potential to emit, [the requisite 

quantity] of any air pollutant.’’ CAA 

sections 502(a), 501(2)(B), 302(j). This 

term is quite broad, and should be read 

to include GHG sources. See 

Massachusetts v. EPA, 549 U.S. 497, 533 

(2007) (‘‘Because greenhouse gases fit 

well within the Clean Air Act’s 

capacious definition of ‘air pollutant,’ 

we hold that EPA has the statutory 

authority to regulate the emission of 

such gases from new motor vehicles.’’). 

Moreover, including GHG sources— 

under certain circumstances—is 

consistent with the various statutory 

provisions and statements in the 

legislative history described previously. 

In the alternative, if it is concluded 

that Congress did not express a clear 

intent on that question, then, under 

Chevron Step 2, EPA exercises its 

discretion to conclude that title V 

applies to GHG sources as a general 

matter. This is a reasonable policy 

because applying the title V program to 

at least the larger GHG sources will 

assure promote accountability and 

enforceability for those sources, which 

is a key goal of the title V program, and 

will not impose obligations that are 

beyond the resources of those sources or 

insurmountable burdens on the 

permitting authorities. This policy is a 

reasonable interpretation of the 

statutory provisions for the same 

reasons just discussed. 

As to the question of how title V 

applies to GHG sources, we believe that 

Congress cannot be said to have 

expressed a clear intent. A central 

aspect of how title V is to apply to GHG 

sources concerns ‘‘empty permits,’’ and 

on this aspect, some of the abovedescribed provisions and statements in 

the legislative history point in different 

directions. This is particularly true of, 

on the one hand the title V applicability 

provisions, which apply by their terms 

inclusively and, on the other hand, the 

requirement that sources include 

applicable CAA requirements in their 

permits, and the statements in the 

legislative history indicating that 

Congress intended title V to cover 

sources subject to other CAA 

requirements. 

Because Congress cannot be said to 

have expressed an intent as to the 

manner and scope of title V 

applicability to GHG sources, then, 

under Chevron Step 2, EPA may apply 

a reasonable interpretation of the 

applicability provision to determine the 

scope of coverage of GHG sources that 

is consistent with the statutory 

requirements. The Tailoring Rule 

qualifies as such an interpretation. The 

Tailoring Rule in effect reads the 

applicability provisions not to apply 

title V to GHG sources at or above the 

100 tpy level, but instead to apply title 

V to as many of the GHG sources at or 

above that level as possible and as 

quickly as possible, starting with the 

largest sources first, that is consistent 

with both the permitting authorities’ 

ability to administer the program and 

with a sensible imposition of costs to 

sources. This tailoring approach is 

consistent with the inclusive direction 

of the applicability provision, the 

flexibility in title V’s scope that is 

inherent in the provisions authorizing 

general permits and requiring permit 

fees, the detailed process requirements, 

and the legislative history that focuses 

on Congress’s concern about costs to 

sources and administrability. With the 

tailoring approach, over time, more 

sources may be included in title V, 

consistent with those provisions and 

legislative history. This reconciles the 

inclusiveness of the applicability 

provisions with Congress’s expectations 

of a more limited scope for the title V 

program.47 However, as part of the 

tailoring approach, we recognize that we 

may at some point determine that it is 

appropriate to exclude certain sources, 

such as the smallest of the GHG sources. 

In addition, we intend to address the 

issue of sources with ‘‘empty permits’’ in 

a later rulemaking, as discussed 

previously. 

The specific phase-in schedule will 

depend on the following: We will gather 

information about the permitting 

authorities’ ability to process permits, 

and we will develop streamlining 

techniques. Based on that information, 

we will address expanding the title V 

program in a step-by-step fashion to 

include more sources over time. Each 

step will be based on our assessment of 

the permitting authorities’ and sources’ 

ability to comply with their respective 

obligations under the title V program. 

We recognize that the availability of 

permit fees to support title V permit 

actions creates a potentially important 

source of resources, and that this has 

implications for the permitting 

authorities’ ability to implement the 

title V program for sources of GHGs. At 

least in theory, permitting authorities 

could assess and collect sufficient fees 

to support hiring and training sufficient 

personnel so that they could expand 

their programs to match the expansion 

in the number of sources covered by the 

program. 

Even so, title V fees cannot be 

considered a panacea that will resolve 

all resource problems that permitting 

authorities will have, for several 

reasons. Permitting authorities will 

likely be constrained as to the rate in 

which they can increase fees in light of 

mstockstill on DSKH9S0YB1PROD with RULES2

31566 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

the costs to sources. As indicated 

elsewhere, at least at the outset of the 

program before streamlining techniques 

have been developed, a literal 

application of the title V applicability 

provisions to GHG sources would, on 

average, cost each industrial source 

$46,400 and each commercial or 

residential source $23,200 to complete 

the permit application and take other 

associated actions; and it would cost 

each permitting authority, on average, 

$19,688 to process the industrial source 

permit and $9,844 to process the 

commercial or residential source permit. 

Particularly in light of the high costs to 

sources of applying for a permit, it is not 

likely that permitting authorities would 

be able to pass on to the sources in the 

form of fees, the entirety of the 

permitting authorities’ own high costs 

for processing those permits, at least not 

right away. Even to the extent it would 

be possible to raise permit fees, 

permitting authorities would have to 

undergo a process to assess, impose, and 

collect those fees, and then hire and 

train personnel. The survey from the 

state and local agencies described 

previously forecast a 2-year period for 

hiring and training, without counting 

time for the fee process. For these 

reasons, we do not believe that the 

authorization for fees will allow the 

permitting authorities either to 

accelerate Steps 1 or 2 of the tailoring 

schedule or to permit a larger number of 

sources at those steps. Step 1 will take 

effect on January 2, 2011, Step 2 will 

take effect on July 1, 2011, and the 

process for determining and collecting 

fees, and then hiring and training 

personnel will take at least several years 

after July 1, 2011. 

Moreover, we do not believe that the 

authorization for fees means that 

permitting authorities can reasonably be 

expected to permit title V sources at 

levels below 50,000 tpy CO2e before 

2016. The next level below 50,000 tpy 

CO2e for which we have data is 25,000 

tpy CO2e, and the costs to permitting 

authorities to run their programs at that 

level ($126 million) is more than double 

their current costs ($62 million). We do 

not consider it reasonable to expect 

permitting authorities to more than 

double their program within the first 6 

years of title V applicability to GHG 

sources. That it is not reasonable to 

expect that is made even clearer when 

the permitting authorities’ burdens in 

implementing their PSD programs are 

considered. The ability of permitting 

authorities to impose fees may have 

more important implications for 

subsequent steps, and as we address 

those subsequent steps in future 

rulemakings, we will consider the fees. 

EPA’s approach to fees in this 

rulemaking is discussed elsewhere. 

c. Other Possible Approaches to 

Reconciling Literal Reading of Title V 

Applicability Provisions and 

Congressional Intent 

Having described how the Chevron 

framework, accounting for the ‘‘absurd 

results’’ doctrine, applies to title V 

requirements in this case and why it 

supports this Tailoring Rule—under 

which we expect to apply title V to 

more sources, in a step-by-step fashion, 

over time—we turn to the last part of 

our discussion of this doctrine. Here, we 

address another possible approach 

suggested by comments, which is that 

EPA should apply the title V program 

only to sources that are subject to 

applicable requirements, so that sources 

should not be required to hold ‘‘empty 

permits’’ (e.g., permits issued to a source 

that is not subject to any applicable 

requirement for any pollutant). To the 

extent that commenters argue that the 

statute requires EPA to adopt a ‘‘noempty-permits’’ theory, we disagree. We 

believe that although various provisions 

of title V indicate that one of title V’s 

purposes is to gather a source’s 

applicable requirements into a single 

permitting mechanism, see CAA 

sections 503(b)(1), 504(a), we do not 

read those provisions as expressly 

limiting, as a matter of Chevron Step 1, 

title V to sources with applicable 

requirements. The applicability 

provisions, by their terms, include 

sources based on amount of emissions, 

and do not include any explicit limits 

to applicability based on whether the 

sources has applicable requirements. As 

described previously, we believe that 

Congress, although clearly expressing an 

intent that title V apply to GHG sources 

generally, did not express a clear intent 

as to how title V applies to GHG 

sources. The tension between these two 

sets of provisions, which we identified 

in the proposal and commenters further 

discussed, provides further support for 

that conclusion. Accordingly, we have 

discretion under Chevron Step 2 to 

determine a reasonable approach, 

consistent with the statutory 

requirements, concerning the 

application of title V to GHG sources 

with empty permits. 

We note that to date, we have issued 

permits to sources without applicable 

requirements, albeit on rare occasions. 

We have little reason to believe that the 

‘‘empty-permits’’ issue will arise in 

Steps 1 and 2 of our tailoring approach 

because we believe there will be no 

‘‘empty permits’’ in Step 1 or Step 2 or, 

if there are, that they will be very few 

in number. As stated elsewhere, we 

believe that the tailoring approach we 

adopt in this rulemaking for Steps 1 and 

2 is a reasonable approach that is 

consistent with statutory requirements. 

We need to gather more information 

concerning the potential number and 

utility of ‘‘empty permits’’ for GHG 

sources, in light of the fact that the need 

for requirements in title V permits will 

vary based on the requirements of each 

SIP, and the fact that some SIPs contain 

broadly applicable requirements. As 

stated elsewhere, we intend to consider 

the issue of the applicability of title V 

to GHG sources with ‘‘empty permits’’ in 

Step 3 of our tailoring approach. When 

we do so, we will further assess the 

potential for the approach of excluding 

empty permits from title V to relieve 

burden consistent with statutory 

requirements. 

7. Additional Rulemaking for the PSD 

and Title V Programs 

The previous sections 5 and 6 

discussed our application of the 

Chevron framework, accounting for the 

‘‘absurd results’’ doctrine, to the PSD 

and title V applicability requirements, 

respectively. As another point in this 

regard, which is relevant for both PSD 

and title V purposes, we also commit to 

subsequent rulemakings in which we 

may further address the ‘‘absurd results’’ 

doctrine. 

Specifically, we will propose or 

solicit comment on establishing a 

further phase-in, that is, a Step 3, that 

would apply PSD and title V to 

additional sources, effective July 1, 

2013, and on which we commit to take 

final action, as supported by the record, 

by no later than July 1, 2012. We further 

commit to completing another round of 

rulemaking addressing smaller sources 

by April 30, 2016. Our action in that 

rulemaking would take into account the 

severity of the remaining problems 

associated with permitting authority 

burden and source costs. 

While committing to future action, we 

do not decide in this rule when the 

phase-in process will ultimately end, or 

at what threshold level, because all that 

depends on uncertain variables such as 

our progress in developing streamlining 

approaches and on permitting 

authorities’ progress in developing 

permitting expertise and acquiring more 

resources. We may continue the phasein process with further rulemaking(s) 

after 2016. Alternatively, we may make 

a final determination through future 

rulemaking that, under the ‘‘absurd 

results’’ doctrine, PSD and/or title V do 

not apply to GHG sources that, while 

small and relatively inconsequential in 

terms of GHG contribution, are above 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31567 

the statutory tonnage thresholds for 

these programs, and thereby end the 

phase-in process. In addition, we may 

consider whether to limit title V 

applicability to GHG sources in order to 

minimize the number of GHG sources 

with ‘‘empty’’ permits. 

8. Rationale for the Phase-In Schedule 

for Applying PSD and Title V to GHG 

Sources 

Having discussed in sections V.B.5, 

V.B.6, and V.B.7 the reasons for 

tailoring the PSD and title V programs, 

we now describe our rationale for 

selecting the specific phase-in schedule 

in this rule for applying PSD and title 

V to GHG-emitting sources. To reiterate 

for convenience, under Step 1 of this 

schedule, which begins on January 2, 

2011, (1) PSD applies to the GHG 

emissions of ‘‘anyway’’ PSD sources, that 

is, sources that are subject to PSD 

anyway due to their emissions of 

conventional pollutants and that 

undertake a modification that results in 

an increase of at least 75,000 tpy CO2e; 

and (2) title V applies to ‘‘anyway’’ title 

V sources, that is, sources that are 

subject to title V anyway due to their 

emissions of conventional pollutants. 

Under Step 2, which begins on July 1, 

2011, (1) sources will be subject to PSD 

on account of their GHG emissions if 

they newly construct and emit at least 

100,000 tpy CO2e, or if they are existing 

sources that emit at least 100,000 tpy 

CO2e of GHGs and make a modification 

that results in the emission of at least 

75,000 tpy CO2e; and (2) existing and 

new sources will be subject to title V on 

account of their GHG emissions if they 

emit 100,000 tpy CO2e in GHG 

emissions. In addition, EPA intends to 

begin another round of rulemaking— 

Step 3—in 2011 and commits to 

complete it by July 1, 2012. In that 

rulemaking, we will propose or solicit 

comment on a further phase-in of GHG 

sources for PSD and title V 

applicability, and we may propose or 

solicit comment on another application 

of the ‘‘absurd results’’ doctrine that 

excludes categories of sources from PSD 

or title V. However, under this rule, in 

no event will EPA apply PSD or title V 

to sources below the 50,000 tpy CO2e 

levels in Step 3, or any other step we 

might promulgate prior to April 2016. In 

addition, EPA commits to conduct a 

study, to be concluded by April 30, 

2015, evaluating the status of PSD and 

title V applicability to GHG sources, 

and, based on the study, complete a 

rulemaking by April 30, 2016 that 

addresses another round of a phase-in. 

a. Rationale for Step 1 

In Step 1 of our tailoring approach, 

which begins on January 2, 2011, PSD 

and title V requirements will apply to 

only those sources that are subject to 

PSD or title V requirements anyway due 

to their conventional pollutants 

(‘‘anyway’’ sources) and that, in the case 

of PSD, make modifications that result 

in an increase in GHG emissions of at 

least 75,000 tpy CO2e. No sources would 

become major for PSD or title V under 

this step based on their GHG emissions 

alone. This section describes our 

proposal, comments on the proposal 

and our response to those comments, 

and our rationale for Step 1. 

(1) Proposal 

In our proposal, we proposed (1) the 

application of PSD and title V 

requirements to sources that emit at 

least 25,000 tpy CO2e, (2) a PSD 

significance level of between 10,000 and 

25,000 tpy CO2e, and (3) a commitment 

to undertake a study to be followed by 

further rulemaking after 6 years. In 

addition, we solicited comment on the 

alternative of limiting PSD and title V 

applicability to ‘‘anyway’’ sources for at 

least the first 6 years. Under this 

approach, PSD and title V applicability 

would be determined based on nonGHG pollutants, and without regard to 

GHGs, but those sources subject to PSD 

would also be subject to BACT 

requirements for GHGs if their GHG 

emissions exceeded the significance 

level established in the final rule, and 

those sources subject to title V would be 

required to include any applicable 

requirements for GHGs in their permits. 

(2) Comments 

Many commenters supported this 

‘‘anyway’’-source approach, and offered 

a variety of reasons: According to the 

commenters, (1) This approach is a 

better reading of Congress’s intent in the 

Act and is consistent with Alabama 

Power v. Costle, 636 F.2d 323 (DC Cir. 

1980); (2) this approach would reduce 

the permitting workload on sources 

currently considered minor and focus 

PSD and title V requirements on large 

sources of non-GHG pollutants, as 

intended by Congress; (3) it is 

appropriate to base PSD and title V 

applicability on non-GHG emissions 

until data on GHG emissions are 

available from the mandatory GHG 

reporting rule; (4) in the initial phase, 

this approach would be more 

straightforward to administer, would 

provide a more predictable permitting 

workload, and would prevent a flood of 

newly regulated sources from 

overburdening state agencies; (5) this 

approach would provide permitting 

agencies time to develop experience 

handling GHG sources and requirements 

under the PSD and title V programs; (6) 

this approach would provide EPA and 

the permitting agencies the time needed 

to develop streamlining techniques; (7) 

this approach is consistent with the 

‘‘absurd results’’ and ‘‘administrative 

necessity’’ doctrines because the scope 

of the permitting programs would 

remain consistent with both 

congressional intent and current 

administrative practice, but EPA and 

state agencies would still be allowed to 

begin regulating GHG emissions from 

existing PSD and title V sources; and (8) 

sources already required to obtain PSD 

permits are best equipped to work 

through BACT issues with permitting 

authorities. 

Commenters added that if BACT is 

applied for GHGs due to permit actions 

involving non-GHG pollutants, EPA 

would need to set a significance 

threshold for the application of BACT, 

without which BACT could apply to 

very small (e.g., 1 ton) GHG increases 

associated with projects that otherwise 

triggered PSD for increases of non-GHG. 

(3) Determination as to Step 1, PSD and 

Title V Applicability and PSD 

Significance Level 

After considering the administrative 

burdens from increased permitting 

actions and the need for permitting 

authorities to have sufficient time to 

develop necessary expertise and staffing 

resources to address that burden, we 

have decided in this final action to 

establish the ‘‘anyway’’ source approach 

as Step 1. Beginning on January 2, 2011, 

sources subject to PSD requirements for 

their conventional pollutants anyway 

will be required to apply BACT to their 

GHG emissions if they construct or 

modify and in so doing, emit at least 

75,000 tpy CO2e in GHGs. Similarly, 

sources subject to title V requirements 

anyway due to their conventional 

pollutants will be required to meet 

certain requirements for their GHGs, as 

described elsewhere. These 

requirements at Step 1 for PSD and title 

V will not expire. On July 1, 2011, a 

further phase-in of PSD and title V 

applicability—Step 2—will kick in. 

At Step 1, by definition, all of the 

covered sources are already subject to 

PSD and title V permitting 

requirements, and will simply be adding 

a GHG component to what would be an 

otherwise occurring permitting action 

for conventional pollutants. These 

sources include fossil fuel-fired power 

plants, petroleum refineries, cement 

plants, iron and steel plants, pulp and 

paper plants, petroleum refineries, large 

mstockstill on DSKH9S0YB1PROD with RULES2

31568 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

landfills, and other large industrial 

sources. These sources will need to 

perform some additional analysis that is 

unique to GHG emission units, 

particularly related to the BACT review 

and selection process, but they will 

likely be able to utilize information 

developed as part of other permitting 

requirements for conventional 

pollutants, such as equipment fuel 

usage and operational parameters. Also, 

because these facilities are familiar with 

the case-by-case permitting processes, 

including all the steps from the 

application to the final review process, 

they will not confront a high PSD or 

title V learning curve. 

The ‘‘anyway’’ source approach has 

particular appeal during the first step of 

the phase-in approach because it begins 

to apply key PSD and title V program 

requirements as soon as January 2, 2011 

to large sources of emissions, but 

because it applies only to sources that 

are already subject to PSD for other 

pollutants, it can be implemented 

efficiently and with an administrative 

burden that is manageable in the next 8 

months. We expect that under this 

approach, the sources and permitting 

authorities will still face substantial 

additional work to address the GHG 

emissions. In addition to the activities 

discussed elsewhere, there will be 

significant and complex policy 

questions about how BACT will be 

implemented for GHGs that must be 

resolved. These issues will include how 

to determine BACT for GHGs, how to do 

netting, and other similar issues. Even 

with EPA guidance, many case-specific 

policy issues will arise and will have to 

be resolved by the permitting authority 

in the context of a specific permit 

application. Nevertheless, with the 

‘‘anyway’’ source approach, this work 

will be manageable because the 

associated permitting burden will be 

limited to adding a GHG component to 

each existing permit action for which it 

will be required, and will avoid the 

significantly greater burdens associated 

with large numbers of new permit 

actions that would be required for 

sources and modifications that would be 

subject to PSD for the first time. Instead, 

this ‘‘anyway’’ source approach allows 

permitting authorities sufficient time to 

develop necessary expertise and staffing 

resources to address GHG BACT. 

We agree with commenters that the 

establishment of a significance level— 

which, in effect, is a BACT threshold— 

is appropriate, and we have decided to 

establish this level at 75,000 tpy CO2e 

because, for reasons discussed later, that 

is the level that will apply during Step 

2. At this level, the administrative 

burdens, described later, will be 

manageable. Importantly, we believe a 

consistent significance level between 

Steps 1 and 2, as opposed to a lower 

significance level in Step 1, will provide 

for a smoother transition and avoid the 

problems that would arise if PSD 

applied to modifications during Step 1 

that PSD would not apply to in Step 2. 

Otherwise, we would create a perverse 

incentive for companies to delay such 

projects until Step 2 to avoid BACT. 

We estimate that Step 1 will result in 

a 23 percent increase in permitting 

authority work hours and a $3 million 

increase—which amounts to a 25 

percent increase from the current 

program cost of $12 million—in their 

annual costs for running PSD programs. 

This is primarily due to the GHG BACT 

review requirements. For title V 

programs, we estimate a 2 percent 

increase in permitting authority work 

hours and a $1 million increase in the 

title V annual program costs for 

permitting authorities under Step 1 as 

compared to the current program cost of 

$62 million. These work hours and costs 

will be needed primarily to review GHG 

emissions information, add any GHGrelated requirements to title V revisions 

and renewal actions that would 

otherwise be occurring, respond to 

comments and petitions from the 

public, as well as develop fee 

requirements and make fee 

determinations associated with issuing 

new or revised title V permits that add 

GHG-related information. For both the 

PSD and title V programs on a combined 

basis, the additional costs for Step 1 will 

be $4 million, which amounts to a 5 

percent increase in the current 

combined program cost of $74 million. 

In addition to these workload and 

monetary costs, permitting authorities 

will confront additional burdens before 

and during Step 1, which we have not 

attempted to quantify. One of the most 

significant of these is training staff in 

the PSD-related areas of GHG emissions 

calculations and BACT evaluations. In 

addition, permitting staff will need to 

build staff expertise and capacity for 

addressing GHG requirements in 

preparation for Step 2, which will begin 

only 6 months after Step 1; and in 

communicating and providing outreach 

to sources addressing GHG emissions 

for the first time. Based on comments 

we received on the proposal from 

permitting authorities, we believe these 

additional training and outreach 

requirements—for both the PSD and 

title V programs—will add significantly 

to the permitting authorities’ burden 

during the initial 6-month period under 

Step 1. 

We believe that these administrative 

burdens are substantial but manageable. 

Following this action, permitting 

authorities will have only 8 months to 

prepare for Step 1, when they will need 

to increase their resources by 5 percent 

for both the PSD and title V programs 

combined, and be able to implement 

BACT requirements for GHG sources. 

During Step 1, they will need to prepare 

for Step 2, when, as discussed later, 

they will need to process over 900 

additional PSD permits each year and 

begin to process over 1,100 additional 

title V permit actions. 

We have decided to limit Step 1 to the 

‘‘anyway’’ source approach, and not 

apply PSD or title V to sources based on 

their GHG emissions, for several 

reasons. First, we believe that the 

administrative burdens described 

previously are the most that the 

permitting authorities can reasonably be 

expected to manage before and during 

Step 1. Tighter PSD and title V 

applicability requirements would mean 

greater administrative burdens. 

Second, we believe that the costs of 

GHG permitting to the sources, as 

described previously, are substantial 

and as a result, necessitate that we wait 

for the permitting authorities to develop 

the PSD and title V programs for GHG 

sources during the first 6 months of 

2011 before subjecting sources to PSD 

and title V requirements on account of 

their GHG emissions. By July 1, 2011, 

when Step 2 takes effect, the PSD and 

title V programs will be better 

developed. For example, the permitting 

authorities will have more experience 

making BACT determinations. In 

addition, by that time, sources will have 

had more time to prepare for the 

permitting processes. In addition, as 

suggested by one commenter, the 

additional time will allow sources and 

permitting authorities to address the 

current uncertainty surrounding how to 

measure high-GWP gases. 

Third, we estimate that ‘‘anyway’’ 

sources account for approximately 65 

percent of total national stationary 

source GHG emissions. As a result, 

limiting Step 1 to these sources will still 

capture a large portion of the GHG 

inventory. 

A large number of commenters urged 

us to leave this ‘‘anyway’’ source 

approach in place until such time as we 

complete an assessment and conduct 

further rulemaking, which we proposed 

would be 6 years from now. We are not 

taking this action; rather, for the reasons 

discussed next, we believe it is 

reasonable to use GHG thresholds to 

begin to phase in PSD and title V 

applicability to additional sources in 

Step 2. 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31569 

b. Rationale for Step 2 

(1) Proposal 

We proposed to establish the 

applicability level for PSD and title V to 

GHG sources at 25,000 tpy CO2e, and we 

proposed a PSD significance level in the 

range of 10,000 to 25,000 tpy CO2e. Our 

burden estimates at proposal led us to 

conclude that at those threshold levels, 

for the PSD program, ‘‘approximately 

400 additional new or modified 

facilities would be subject to PSD 

review in a given year. These include 

approximately 130 new facilities and 

approximately 270 modifications 

* * *.’’ 74 FR 55331, col. 1. We 

estimated that processing these numbers 

of additional permits, along with doing 

the additional work associated with 

GHG emissions from sources subject to 

PSD anyway due to their conventional 

emissions, would increase permitting 

authority burdens by ‘‘approximately 

112,000 staff hours at an additional cost 

of approximately $8 million. This 

workload amount represents an increase 

of about 1.3 times, or 32 percent, in the 

current burden for permitting 

authorities on a nationwide basis.’’ Id. 

col. 3. We concluded that ‘‘this 

additional burden is manageable,’’ but 

that ‘‘any threshold lower than 25,000 

tpy CO2e, would create undue 

administrative burdens.’’ Id. 

For the title V program, we estimated 

that at a 25,000-tpy CO2e permitting 

threshold, ‘‘about 13,600 existing 

facilities’’ would become subject to title 

V, and that to manage the additional 

workload associated with permitting 

those sources and with the other permit 

revisions and modifications that would 

result from the 25,000 tpy CO2e 

threshold, permitting authorities would 

require an additional 492 FTEs, which 

would be an estimated 50 percent 

increase over current title V staffing 

levels. 74 FR 55335, cols. 1–2. 

(2) Comments 

We received a significant number of 

comments from both permitting 

authorities and industry representatives 

that our proposed GHG threshold of 

25,000 tpy CO2e for major source 

applicability was too low and would 

result in an unmanageable amount of 

permitting actions in the near term. 

Many offered evidence that we severely 

underestimated both the number of 

permitting actions and the per-permit 

administrative burden, for both PSD and 

title V programs. 

Commenters also asserted that the 

proposed 25,000 tpy threshold is too 

low because it will subject small sources 

(including many small businesses) to 

PSD and title V, which is not in keeping 

with Congress’s intent to limit PSD and 

title V to large sources when Congress 

set the 100/250 tpy thresholds for the 

permitting programs. EPA, in 

collaboration with the SBA, conducted 

an outreach meeting designed to 

exchange information with small 

entities that may be interested in these 

regulations. The EPA took this small 

business outreach effort into account 

when finalizing this rule. Many 

commenters from this outreach effort 

said that there were many more small 

businesses that would become subject to 

PSD and title V due to the proposed 

permitting thresholds than EPA 

estimated at proposal. 

Many commenters recommended 

specific major source thresholds for PSD 

and title V, including levels of 25,000 

(as proposed), 40,000, 50,000, 100,000, 

150,000, 250,000, and 1,000,000 tpy 

CO2e. A majority of the commenters— 

including both industry and state 

agency commenters—recommended 

major source thresholds of 100,000 tpy 

CO2e. However, several state agency 

commenters recommended thresholds 

of 50,000 tpy CO2e. Other commenters 

recommended sector-specific 

thresholds. For example, solid waste 

industry commenters suggested 

thresholds of 820,000 tpy CO2e for PSD 

[which they calculate to be equivalent to 

the existing PSD threshold for 

‘‘municipal solid waste landfill 

emissions,’’ i.e., 250 tpy nonmethane 

organic compounds (NMOC)] and 

320,000 tpy CO2e for title V (calculated 

to be equivalent to the existing major 

source applicability threshold of 100 tpy 

NMOC). Other commenters urged EPA 

to set the GHG thresholds at levels that 

correspond to emissions of conventional 

pollutants at the 100/250 tpy level. 

Many of the commenters that 

recommended increasing the thresholds 

cited EPA’s estimates that a particular 

threshold would significantly reduce 

the number of sources subject to the rule 

while causing only a slight reduction in 

the percentage of GHGs captured. 

Several of these commenters noted that 

Table VIII–2 in the proposal preamble 

indicates that shifting the major source 

threshold for PSD from 25,000 to 

100,000 tpy CO2e would reduce the 

number of major sources from 13,661 to 

4,850 while reducing the coverage of 

U.S. stationary source GHG emissions 

by only about 4 percent. Other 

commenters referred to the regulatory 

impact analysis (RIA) for the mandatory 

GHG reporting rule to conclude that 

raising the threshold from 25,000 to 

100,000 tpy CO2e would exclude 

thousands of entities that, on a 

combined basis, emit only one percent 

of the nation’s GHG emissions. See the 

RTC document for this final rulemaking 

for more detailed description of 

comments received on our proposed 

burden assessment. 

Many commenters also recommended 

specific PSD GHG significance 

thresholds, including levels of 10,000 

(as proposed), 15,000 (within the 

proposed range), 25,000 (also as 

proposed), 40,000, 50,000, and 100,000, 

and 150,000 tpy CO2e, as well as 

suggesting sector-specific thresholds. 

These recommendations were based on 

the view that we had underestimated 

the number of modifications and that 

the burden of permitting at the proposed 

levels would therefore be much worse 

than we projected. A number of the 

commenters argued that the significance 

threshold should be no less than the 

major source threshold, at whatever 

level that is set. The largest number of 

commenters recommended a PSD 

significance threshold of 100,000 tpy 

CO2e, although significant numbers also 

support 25,000 and 50,000 tpy CO2e. 

(3) Rationale for Step 2 

Based on these comments, we 

reassessed our original burden estimates 

from our proposal. This reassessment is 

discussed at the beginning of this 

section. We decided that, once this 

adjustment is taken into account, the 

burdens at the proposed 25,000 

threshold and the proposed 10,000– 

25,000 significance levels would be 

unmanageable. We therefore evaluated 

higher thresholds ranging from a 25,000 

tpy CO2e major source applicability 

level for PSD and title V to a 50,000, 

75,000, or 100,000 tpy CO2e level, with 

associated PSD GHG significance levels 

of equal or lesser magnitude; and we 

selected the 100,000/75,000 tpy CO2e 

level. Central to our decision to 

promulgate higher thresholds than what 

we proposed is our recognition, based 

on comments and further analysis, that 

applying PSD to GHG sources at the 

statutory or any other threshold level or 

significance level that we have 

considered would result in (1) a greater 

number of sources, and significantly 

greater number of modifications than we 

first estimated becoming subject to those 

programs; and (2) a greater per-permit 

cost than we first estimated to the 

permitting authority of processing those 

permit actions. We discussed our 

revised estimates and reasoning at the 

beginning of this section. 

We now estimate that the 25,000/ 

25,000 tpy level would result in 250 

additional PSD permit actions for new 

construction (either for GHG-only 

sources or additions to otherwise 

occurring permits) and an additional 

9,200 PSD permits for modifications 

mstockstill on DSKH9S0YB1PROD with RULES2

31570 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

each year (compared to our estimate at 

proposal of 130 for new construction 

and 270 for modifications). This level of 

permitting would require an additional 

2,815,927 work hours, or 1,400 FTEs 

(compared to our estimate at proposal of 

112,000 additional work hours, or 57 

FTEs); and would cost an additional 

$217 million each year (compared to our 

estimate at proposal of an additional $8 

million). See 74 FR 55331 (proposal). 

This $217 million amount represents 

approximately a 1,800 percent increase 

over current permitting authority annual 

cost of $12 million for the major NSR 

programs. 

For title V, under our final burden 

analysis at a 25,000 tpy CO2e threshold, 

we estimate a $64 million annual 

increase in program costs to permitting 

authorities to add GHG emission 

sources, which reflects a greater than 

100 percent increase over current 

program costs of $62 million. We 

estimate that this increased burden 

would result in the need for almost 700 

new FTEs nationwide at permitting 

authorities (compared to our estimate at 

proposal of 492 additional FTEs, or 

about a 50 percent increase in existing 

program size). This increase in burden 

is due to an estimated annual increase 

of 2,500 new title V permits, over 9,500 

permit revisions, and over 2,600 permit 

renewal actions due to GHG emission 

sources. These additional title V actions 

compare to current annual program 

actions of approximately 50 new title V 

permits, 1,394 significant revisions, and 

3,267 permit renewals. 

Based on this information, we have 

decided not to finalize our proposal to 

apply a 25,000 tpy CO2e applicability 

threshold to GHG sources at the time 

that PSD and title V take effect. At that 

level, too many sources—many more 

than we thought at proposal—would be 

subject to high permitting costs. In 

addition, permitting at that level and at 

that time would not be administratively 

feasible. The resulting increase in the 

number of PSD and title V permitting 

actions and workload would create 

insurmountable resource demands for 

permitting agencies in the near term, 

which would jeopardize the functioning 

of these permitting programs. We are 

mindful that not only would the 

permitting programs have to bear the 

costs that our estimates are able to 

monetize, but they would also incur 

burdens associated with hiring and 

training staff to make and implement 

GHG BACT determinations, GHG 

emissions evaluations, and other 

evaluations required under the PSD 

program for a wide variety of formerly 

unpermitted sources, including 

significant numbers and types of small 

manufacturing and commercial or 

residential establishments. They would 

also incur burdens associated with 

reviewing applications, citizen 

comment and petitions, and the need to 

communicate and provide outreach to 

new categories of sources, including, 

again, significant numbers and types of 

small manufacturing and commercial or 

residential sources. Thus, the increased 

administrative burdens at the 25,000/ 

25,000 tpy CO2e levels are so great that 

we have concluded that they would not 

be consistent with the goals of avoiding 

absurd results that contravene 

congressional intent, including avoiding 

a permitting burden that would 

overwhelm the capacity of permitting 

authorities to effectively implement 

their programs. 

Based on our revised burden analysis, 

in this final action, we have decided to 

establish a multi-step, phase-in 

approach that contains a significantly 

higher initial threshold level. We have 

determined that a 100,000 tpy CO2e 

major source threshold level for PSD 

and title V purposes, and a 75,000 tpy 

CO2e significance level, produce a level 

of permitting activity that would 

certainly be an increase over current 

workload, but that would be 

administratively feasible by July 1, 

2011. As a result, we have decided to 

finalize these thresholds as Step 2. 

In reaching this conclusion, we 

needed to consider both the sources’ 

abilities to manage the permitting 

process and the permitting authorities’ 

capacity to address newly-major sources 

as expeditiously as possible. As to the 

former, sources subject to Step 2 will, 

for the most part, continue to include 

the ‘‘anyway’’ sources subject to Step 1. 

In addition, we estimate that Step 2 will 

include about 500 additional sources 

that are not already subject to 

permitting. Most of them will become 

subject to PSD and title V because of 

fuel burning. In order to meet the 

100,000/75,000 threshold, they will 

have to burn a significant quantity of 

fuel, and that means they will be a 

significant size. In general, these sources 

include municipal or commercial 

landfills that are large, but not large 

enough to be covered by the NSPS, pulp 

and paper facilities, electronics 

manufacturing plants, chemical 

production plants, and beverage 

producers. Although these sources have 

not been subject to PSD permitting 

before, some of them have already been 

subject to minor source permitting, and 

so will have some familiarity with the 

permitting process. In addition, in 

general, these sources are in source 

categories that have larger sources that 

are already subject to PSD and title V. 

As a result, they are in industries that 

have experience in the permitting 

process. Because of their relatively large 

size and access to knowledge about the 

permitting processes, we believe these 

sources will be able to manage the 

permitting requirements. 

As to the permitting authorities’ 

capacity to handle the Step 2 workload, 

we note first that our Step 1 approach 

does not cover newly-major sources. As 

a result, the Step 2 threshold and timing 

has to be established in a way that takes 

into account permitting authority 

challenges in addressing many sources 

and categories that would be subject to 

major source permitting for the first 

time. 

We considered the various PSD and 

title V threshold applicability and 

significance level options in our final 

burden analysis, summarized in Table 

VI–1, including levels at 50,000 CO2e 

and 100,000 CO2e. As Table VI–1 

indicates, we estimate that a 100,000 tpy 

CO2e major source applicability 

threshold would result in approximately 

550 sources becoming newly classified 

as major sources for PSD based on their 

GHG emissions, while a 50,000 tpy 

CO2e threshold would result in 3,500 

newly classified major sources. 

We then considered the impact on 

both PSD and title V programs of 

different PSD significance level options 

for GHGs. The choice of a PSD 

significance level has a direct impact on 

title V burdens because PSD permit 

requirements resulting from 

modification activities will result in 

required title V permit revisions. We 

developed PSD and title V burden 

estimates based on significance levels of 

50,000 tpy, 75,000 tpy and 100,000 tpy 

CO2e, combined with a major source 

applicability level of 100,000 tpy CO2e. 

At a 50,000 tpy CO2e significance 

level, we estimated an annual increase 

of approximately 1,800 PSD permitting 

actions and almost 2,000 additional title 

V permitting actions, as compared to 

Step 1. At a 75,000 tpy CO2e 

significance level, we estimated an 

annual increase of approximately 900 

PSD permitting actions and just over 

1,000 additional title V permitting 

actions as compared to Step 1. At a 

100,000 tpy CO2e significance level we 

estimated an annual increase of 

approximately 25 PSD permitting 

actions and 210 additional title V 

permitting actions as compared to Step 

1. For title V, under these different 

scenarios, the major source applicability 

level of 100,000 tpy CO2e results in 

approximately 200 new permits 

annually, but, as noted, the choice of 

significance levels affects the number of 

required permit revisions. 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31571 

Based on this information, we have 

decided to set our final Step 2 

thresholds at 100,000 tpy CO2e for major 

source applicability under PSD and title 

V and at a 75,000 tpy CO2e significance 

level for PSD. Overall, we estimate that 

the almost 900 additional PSD 

permitting actions (virtually all of 

which would be modifications) per year 

at these levels will result in an 

approximately $21 million increase 

(from Step 1) in states’ annual costs for 

running PSD programs. In addition, we 

estimate that the 1,000 additional title V 

permit actions will cause the total title 

V burden for permitting authorities to 

increase by $6 million annually from 

Step 1. This total increase in permit 

program burdens of $27 million 

represents a 34 percent increase over the 

$78 million in total cost of PSD and title 

V programs at Step 1. We consider this 

a substantial increase particularly 

because Step 2’s start date of July 1, 

2011, is only 6 months after Step 1’s 

start date of January 2, 2011. What’s 

more, Step 1 will entail a substantial 

increase in permitting authority 

obligations, so that adding the costs of 

Step 1 and Step 2 together—$31 

million—means that permitting 

authorities will be required to increase 

their permitting resources by 

approximately 42 percent between now 

and Step 2. In addition to the 

administrative burdens we have been 

able to monetize, we must be mindful 

that permitting authorities will incur 

other burdens, including the significant 

support and outreach activities by 

permitting staff for the many newly 

permitted sources. We believe that any 

lower thresholds in this timeframe, 

whether in the PSD and title V 

applicability levels or in the 

significance level, would give rise to 

administrative burdens that are not 

manageable by the permitting 

authorities. 

Although the burdens at the 100,000 

tpy CO2e/75,000 tpy CO2e levels are 

steep, we consider them manageable. 

Step 2 permitting for GHGs will mostly 

involve source categories in which some 

sources have traditionally been subject 

to permitting, which should render 

applying even the new GHG 

requirements more manageable. These 

source categories include fossil fuelfired power plants, petroleum refineries, 

cement plants, iron and steel plants, and 

petroleum refineries, in addition to 

other large industrial type source 

categories. A full description of the type 

of sources that we expect will have GHG 

emissions that exceed the 100,000 tpy 

CO2e threshold is provided in the 

‘‘Technical Support Document for 

Greenhouse Gas Emissions Thresholds 

Evaluation’’ located in the public docket 

for this rulemaking. In addition, because 

Step 2 does not begin until July 1, 2011, 

permitting authorities have about 14 

months to prepare for it. 

In addition, we believe that the 

sources that will become subject to PSD 

and title V requirements at the 100,000/ 

75,000 tpy CO2e levels will be able to 

accommodate the additional costs of 

permitting. For the most part, these 

sources will be of a comparable size and 

activity level as those sources that are 

already subject to those requirements. 

Because the administrative burdens at 

the 100,000/75,000 tpy CO2e level are as 

heavy as the permitting authorities can 

reasonably be expected to carry, 

adopting these threshold levels is 

consistent with our legal basis under the 

‘‘absurd results’’ doctrine. Under this 

basis, we are reconciling the statutory 

levels with congressional intent by 

requiring that the PSD and title V 

requirements be applied to GHG sources 

at levels as close as possible to the 

statutory thresholds, and as quickly as 

possible, in light of costs to sources and 

administrative burdens. 

Because the administrative burdens at 

the 100,000/75,000 tpy CO2e level are 

manageable, we do not believe that 

higher threshold levels are justifiable for 

Step 2. Specifically, at the 100,000/ 

100,000 level—which would entail a 

100,000 tpy CO2e significance level, 

rather than a 75,000 tpy CO2e level— 

permitting sources would need to 

handle only 20 additional modifications 

beyond current levels, and thus would 

not incur substantial additional costs. 

By the same token, we disagree with 

commenters who suggested that we 

needed to set permanent GHG 

permitting thresholds for major sources 

at a rate equivalent to the amount of 

GHGs that would be emitted by 

conventional pollutants at the 100 and 

250 tpy level in order to meet the legal 

bases of the ‘‘absurd results’’ and 

‘‘administrative necessity’’ doctrines. 

These levels would likely be well above 

300,000 tpy CO2e, depending on fuel 

types and assumptions regarding the 

relative emissions of GHGs compared to 

the conventional pollutants. Our data 

show that none of the levels above 

100,000/75,000 tpy CO2e would result 

in significant increases in 

administrative burdens. As a result, 

establishing these levels would not 

apply PSD or title V requirements to 

GHG sources as quickly as possible, and 

thus would not be consistent with our 

approach in the Tailoring Rule. 

We estimate that facilities meeting the 

Step 2 major source applicability 

thresholds account for approximately 67 

percent of total national stationary 

source GHG emissions. Many 

commenters felt that this should be an 

important basis for our selection of a 

threshold, stating that there is no 

significant loss in GHG emissions 

coverage of source categories at the 

100,000 tpy CO2e threshold, and in 

some cases arguing that as a result, we 

should set the level even higher. We 

agree that it is important that the 

coverage in Step 2 represents 86 percent 

of the coverage at full implementation of 

the statutory 100/250 thresholds. 

c. Rationale for EPA’s Plan Beyond Step 

2 

EPA commits that after Step 2, EPA 

will begin another rulemaking in 2011 

and complete it by July 1, 2012, and in 

that rulemaking take comment on a 

further phase-in of GHG sources for PSD 

and title V applicability (Step 3). 

However, under this rule, in no event 

will EPA apply PSD or title V to sources 

below the 50,000 tpy CO2e levels prior 

to 2016. In addition, EPA commits to 

conduct a study, to be concluded by 

April 30, 2015, evaluating the status of 

PSD and title V applicability to GHG 

sources, and, based on the study, 

complete a rulemaking by April 30, 

2016, that addresses another round of a 

phase-in. 

(1) Proposal 

In our proposal, we noted that 

following implementation of the first 

phase of PSD and title V applicability to 

GHG sources, generally at the 25,000 tpy 

CO2e threshold, additional action would 

be required over time to assure full 

compliance with the statute. We did not 

establish more steps in the schedule, but 

we did commit to conduct a study, to 

be completed by 5 years after 

promulgation, evaluating the status of 

PSD and title V applicability to GHG 

sources, and, based on the study, 

complete a rulemaking by 6 years after 

promulgation that addressed an 

additional step of the phase-in. 

(2) Comments 

A number of commenters supported 

the proposal’s overall approach to phase 

in the permitting of GHGs, mainly 

because this approach will allow 

permitting of the largest sources of 

GHGs immediately while collecting 

more information about smaller sources 

and more fully considering streamlining 

options for subsequent phases. Many of 

these commenters made clear that they 

do not support implementation of the 

statutory 100/250 tpy thresholds, even 

through a phase-in approach. On the 

other hand, one commenter asserted 

that EPA has failed to demonstrate that 

mstockstill on DSKH9S0YB1PROD with RULES2

31572 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

it needs 6 years to study and implement 

NSR and title V for sources emitting less 

than 25,000 tpy. The commenter 

contends that EPA has not analyzed, 

among other things, what combined 

effect the full implementation of its 

streamlining proposals in the 15 months 

before the due-date for title V permit 

applications would be to reduce the 

cost, complexity, and number of title V 

permit applications that would have to 

be submitted. 

(3) Rationale for Further Steps 

We agree with commenters who 

support a phased-in approach to the 

Tailoring Rule. Our final action reflects 

a multi-step process that we believe will 

facilitate a manageable expansion of 

PSD and title V applicability, as 

appropriate, to GHG-emitting sources. In 

our final action, we have established the 

initial two steps of a multi-step phasein of lower threshold applicability with 

a commitment to take further regulatory 

activity to consider adopting lower 

thresholds. We believe this process will 

provide substantial opportunity for 

permitting authorities and sources to 

establish enough experience and 

information, and to provide significant 

real-world feedback to EPA, so as to 

better inform decisions on future phasein steps. 

With this overall phase-in approach 

in mind, in this final rule, EPA includes 

an enforceable commitment to 

undertake a notice-and-comment 

rulemaking that would begin with an 

SNPR that we expect to be issued in 

2011 and that we commit will be 

finalized in 2012. The notice will 

propose or solicit comment on further 

reductions in the applicability levels. 

This rulemaking will take effect by July 

1, 2013, and therefore, in effect, 

constitute Step 3. In this action, we are 

committing to a rulemaking for Step 3, 

but are not promulgating Step 3, 

because it is important to allow EPA 

and the permitting authorities to gain 

experience permitting sources under 

Steps 1 and 2, and to allow time to 

develop streamlining methods, before 

attempting to determine what would be 

the next phase-in levels for PSD and 

title V applicability. While committing 

to future action, we do not decide in 

this rule when the phase-in process will 

ultimately end, or at what threshold 

level, because all that depends on 

uncertain variables such as our progress 

in developing streamlining approaches 

and on permitting authorities’ progress 

in developing permitting expertise and 

acquiring more resources. We may 

continue the phase-in process with 

further rulemaking(s) after 2016. 

Alternatively, we may make a final 

determination through future 

rulemaking that, under a Chevron 

analysis, accounting for the ‘‘absurd 

results’’ doctrine, PSD and/or title V do 

not apply to GHG sources that, while 

small and relatively inconsequential in 

terms of GHG contribution, are above 

the statutory tonnage thresholds for 

these programs, and thereby end the 

phase-in process. 

In addition, in this action, we are 

determining that in no event—whether 

through Step 3 or a subsequent step— 

will we apply PSD or title V to sources 

at the 50,000/50,000 tpy CO2e level or 

lower prior to May 1, 2016. We have 

several reasons for making this 

determination at this time. Most 

importantly, our examination of the 

expected burdens to the permitting 

authorities of applying PSD and title V 

to GHG sources convinces us that 

extending the permitting programs to 

sources at or below the 50,000/50,000 

tpy CO2e level within 6 years of 

promulgation would result in 

prohibitively heavy burdens. This 

threshold option would result in close 

to 2,000 additional annual PSD 

permitting actions per year over the 

current program and more than 1,000 

over Step 2, including both new 

construction and modifications. For title 

V, we estimated an increase of over 

1,000 new title V permits (all newly 

permitted sources because of GHG 

emissions) over 2,000 permit revisions 

per year over the current program, and 

about 980 new title V permits and 900 

permit revisions more than the Step 2 

amounts. 

These increases, which could occur 

between 2013 and 2016 under our 

approach depending on the outcome of 

the Step 3 rulemaking, represent very 

substantial additions to the permitting 

program. In terms of cost, we estimate 

that these additional actions would 

result in a $73 million per year increase 

in joint PSD and title V program costs 

over the current programs—which is 

almost a doubling of costs—and $42 

million annual cost increase over Step 

2 for the current programs. We believe 

that it would take permitting authorities 

some time to adjust to this workload. 

This is particularly true because at the 

50,000/50,000 tpy CO2e level, smaller 

sources—including ones not previously 

subject to permitting requirements—will 

become subject to PSD and title V. It 

will take some time for both the 

permitting authorities and the sources to 

absorb these new obligations. 

Importantly, the next lower cut-off— 

below 50,000 tpy CO2e for the major 

threshold level—is the 25,000/25,000 

tpy CO2e level. For the reasons 

discussed previously, this level is 

clearly not manageable within the first 

6 years after this action. This 

applicability level would bring in over 

7,000 sources that would be newly 

subject to title V permitting and result 

in close to 10,000 new PSD permitting 

actions. This would result in a 380 

percent increase over current program 

costs for PSD and title V to run these 

programs. Based on comments we 

received from state and local permitting 

agencies on our proposed Tailoring 

Rule, these levels of permitting 

activities would far exceed the 

administrative capabilities of the 

permitting agencies for at least the near 

future. Thus, the 6-year exclusion is 

necessary to provide these agencies and 

their permittees certainty that this will 

not occur. 

We recognize that at present, we do 

not have data that would allow us to 

compile administrative burden 

estimates for specific levels between the 

50,000/50,000 and 25,000/25,000 tpy 

CO2e levels we assessed. However, it is 

clear that the burdens begin to rise 

sharply below the 50,000/50,000 tpy 

CO2e level. To reiterate, the combined 

PSD and title V administrative burdens 

at the 50,000/50,000 tpy CO2e level cost 

almost twice as much as the current 

programs, but the burdens at the 25,000/ 

25,000 tpy CO2e level cost almost four 

times as much as the current programs. 

As a result, we conclude that dropping 

the level below 50,000/50,000 tpy CO2e 

too soon would quickly expose the 

permitting authorities to unacceptably 

high burdens. 

As a further reason for concluding 

that we will not reduce thresholds 

beyond 50,000/50,000 tpy CO2e during 

the first 6 years, we recognize that the 

PSD permitting process in particular 

carries important ramifications for the 

permitting authorities and the affected 

sources. If we have underestimated the 

permitting burden or the ability of states 

to respond to their additional workload, 

then permitting backlogs will result, and 

PSD permit issuance will be delayed, 

and sources seeking a PSD permit will 

not be able to construct or modify. If 

this were to happen on a large enough 

scale, it could have potentially serious 

consequences for the national economy. 

Moreover, we need to be mindful that 

the best information we currently have 

as to permitting authority burdens 

represents a national average, as 

described previously. Our information 

at the individual state and local level, 

where permitting occurs, is not as 

robust. Accordingly, we recognize that a 

particular state may encounter 

permitting costs that are higher than 

average, and this may result in 

permitting backlogs in that state, with 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31573 

the consequence that sources in that 

state will face long delays in 

constructing or modifying. Similarly, 

even if a particular state’s costs are in 

line with the national average, that state 

may not be able to find the additional 

resources to cover those costs as readily 

as other states. For this reason, too, 

sources in that state could face long 

delays in constructing or modifying. 

Beyond the administrative burdens to 

permitting authorities, we recognize that 

the costs of PSD and title V permitting 

to sources may be high, and we are not 

inclined to allow their imposition at this 

time on sources smaller than the 50,000/ 

50,000 tpy CO2e threshold. At that level, 

the permitting programs will apply to a 

significant number of newly permitted 

sources, including a variety of small 

manufacturing, commercial and 

residential categories. The next level 

that we have analyzed is the 25,000/ 

25,000 tpy CO2e threshold. At that level, 

more than 7,000 more sources would 

become subject to PSD each year— 

almost all due to modifications—and 

another 4,000 sources would become 

subject to title V each year. These 

sources would be even smaller than 

those that already will have become 

subject to PSD and title V due to their 

GHG emissions. We do not think it 

reasonable to subject more of those 

types of sources, and smaller ones, to 

permitting costs within the next 6 years. 

Finally, we note that moving from a 

50,000 tpy CO2e threshold to 25,000 tpy 

CO2e will increase the emissions 

coverage of GHG stationary sources from 

70 percent to 75 percent nationwide, 

which we consider to be a relatively 

small amount. 

We recognize that our progress in 

developing streamlining methods will 

be a key determinant to the ability of 

permitting authorities to administer, 

and sources to comply with, PSD and 

title V at GHG emission levels below 

50,000/50,000 tpy CO2e. Although we 

commit to pursue streamlining, we 

cannot predict our progress. This 

uncertainty may be problematic for 

stakeholders, primarily permitting 

authorities and industry. That is, 

permitting authorities will face 

uncertainty in planning the scope of 

their programs over the next few years, 

and industry will face uncertainty as to 

what new construction projects and 

modifications will be subject to PSD for 

GHGs. By determining now that for the 

next 6 years we will not impose PSD 

requirements below a floor at the 

50,000/50,000 tpy CO2e level, we add a 

measure of needed certainty. 

We also recognize that selecting a 

level that is too high or keeping a level 

for too long means that some sources 

may construct or modify without 

implementing BACT level controls, and 

this could result in additional emissions 

of GHGs. We need to be vigilant and to 

protect against this outcome. Even so, 

all things considered, we believe that 

our determination not to apply the PSD 

or title V permitting requirements to 

sources below the 50,000/50,000 tpy 

CO2e level for the first 6 years also 

represents a reasonable balancing of 

protection of the environment with 

promotion of economic development. 

This type of balancing is consistent with 

our authority under the PSD provisions. 

We also raised the issue of ‘‘hollow’’ 

or ‘‘empty’’ permits in discussing our 

rationale for why it may make sense to 

delay title V permitting under our 

proposal. We were concerned that many 

title V permits for GHG sources would 

contain no applicable requirements, and 

their issuance would therefore be of 

little value and would not be the best 

use of scarce resources. Several 

commenters agreed that implementing 

title V for GHGs will, at least initially, 

require ‘‘empty permits’’ to be issued to 

GHG sources because such sources will 

not be subject to ‘‘substantive’’ 

requirements, and that this would not 

be the best use of scarce resources. 

We believe that the amount of 

resources that would be spent on, and 

the limited value that would result 

from, ‘‘empty permits’’ does warrant 

consideration under the Chevron 

analysis, taking account of the ‘‘absurd 

results’’ doctrine. Therefore, we intend 

to consider the role of ‘‘empty permits’’ 

when we undertake future rulemaking. 

However, we believe the issue of ‘‘empty 

permits’’ has limited or no relevance to 

the first two steps of the phase-in that 

we are promulgating in this rule. During 

Step 1, permitting for GHGs is only 

required if the source is otherwise 

subject to permitting for its emissions of 

non-GHGs. Those sources very likely 

will be subject to existing substantive 

applicable requirements for non-GHGs 

(e.g., NSPS, Maximum Achievable 

Control Technology (MACT), and SIP 

requirements, including PSD). Thus, 

there should be no, or at least no 

additional, ‘‘empty permits’’ during Step 

1. For Step 2, it is possible that sources 

that become subject to title V 

requirements for GHG emissions may 

not be subject to other requirements, but 

our assessment suggests that this is very 

unlikely. We estimate that virtually all 

of the 550 newly-major sources in Step 

2 will be subject to applicable 

requirements under the CAA because 

they are from categories that have been 

traditionally subject to regulations, such 

as smaller industrial sources from 

already regulated categories, large 

landfills, and oil/gas/coal production. 

Even the approximately 50 newlysubject commercial sources in Step 2, 

which we estimate to be comprised of 

very large hospitals, are likely to be 

covered by standards for medical waste 

incinerators. In addition, we expect 

these sources may well be subject to SIP 

requirements. Thus, we do not expect 

any, or at most very few ‘‘empty 

permits’’ during Step 2. 

In later stages of implementation (e.g., 

prospective Step 3) or in the event that 

we permit smaller, non-traditional 

sources of GHGs that have never 

otherwise been subject to major source 

permitting, there would be a greater 

potential for ‘‘empty permits’’ to be 

issued under title V. Cognizant of this, 

we intend to further explore in the 

rulemaking for Step 3 ‘‘empty permit’’ 

theories under the ‘‘absurd results’’ 

rationale that may serve to permanently 

narrow the scope of title V to exclude 

sources that would potentially be 

required to obtain an ‘‘empty permit’’ 

due to GHG emissions. 

In this action, EPA is also finalizing 

its proposal to commit to conduct an 

assessment of the threshold levels—to 

be completed in 2015, 5 years after this 

action—that will examine the 

permitting authorities’ progress in 

implementing the PSD and title V 

programs for GHG sources as well as 

EPA’s and the permitting authorities’ 

progress in developing streamlining 

methods. We further commit to 

undertake another round of 

rulemaking—beginning after the 

assessment is done, and to be completed 

by April 30, 2016—to address smaller 

sources. 

We disagree with the commenter who 

asserted that we do not need 6 years to 

study and implement PSD and title V 

for smaller sources. As we discussed in 

the proposal, and reiterate in this final 

action, we do not have sufficient 

information at this time to determine 

the applicability and effectiveness of the 

various permitting streamlining 

techniques. For reasons discussed in 

more detail in section V.E.1 regarding 

streamlining, we are not now able to 

determine how such techniques will be 

implemented or whether they will prove 

viable or effective. We agree with the 

commenter that these measures may 

reduce the scope, cost, and complexity 

of these programs, but there is 

considerable uncertainty as to the extent 

of this effect. We do commit in this 

action to fully investigate, propose, and 

evaluate permit streamlining techniques 

to determine where they may have 

applications, how they would be 

applied, and whether they can 

withstand legal challenge. Even for 

mstockstill on DSKH9S0YB1PROD with RULES2

31574 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

48EPA does have pending before it ten petitions 

to reconsider the endangerment and cause or 

contribute findings. EPA is carefully evaluating 

those petitions and expects to issue its decision(s) 

on or about July 30, 2010. 

49Note, that at least one petition for 

reconsideration on the endangerment/contribution 

findings raises the same arguments related to the 

timing of decisions and absurd results. As noted 

before, EPA is carefully evaluating all the pending 

petitions for reconsideration. 

those techniques that may ultimately be 

deemed viable, there is a significant 

time period necessary for rulemaking 

and state adoption, all of which could 

take up to 3 years or more. We also note 

that we will be required to complete our 

study of the effectiveness of these 

techniques within 5 years, meaning that, 

in order to complete it in time, we will 

essentially need to begin the study as 

soon as relevant data are starting to 

become available. Finally, the sixth 

year, in which EPA must complete 

rulemaking, requires proposal and 

promulgation of a rule within 1 year, 

which is an ambitious schedule. 

Therefore we believe that 6 years is 

appropriate for this type of effort. We 

also have received a substantial number 

of comments from permitting authorities 

that agreed with our 5-year timeframe, 

or a greater timeframe, to get more 

prepared for permitting smaller sources. 

d. Other Comments on ‘‘Absurd Results’’ 

Doctrine 

We received other comments on our 

application of the ‘‘absurd results’’ 

doctrine, which we respond to in the 

RTC document. One comment was 

overarching, and so we respond to it 

here: Commenters have asserted that 

under the ‘‘absurd results’’ doctrine, EPA 

does not have authority to, or at least 

should not, promulgate the 

endangerment/cause or contribute 

findings (which we will sometimes refer 

to as the ‘‘findings’’) or the LDVR 

because doing so would trigger the PSD 

and title V requirements, which in turn 

would give rise to ‘‘absurd results’’. 

According to commenters, under the 

‘‘absurd results’’ case law, EPA is obliged 

to avoid taking any action that would 

trigger absurd results and in this case 

that means foregoing the endangerment/ 

cause or contribute findings and/or the 

LDVR, or at least deferring finalizing 

them until EPA has time to streamline 

PSD and title V requirements so as to 

avoid ‘‘absurd results’’. Commenters 

made the related comment that if we 

promulgate the LDVR, and thereby 

trigger PSD, we cannot rely on the 

‘‘absurd results’’ doctrine because it is 

our own actions—the promulgation of 

the LDVR—that will have given rise to 

the ‘‘absurd results,’’ and under those 

circumstances, the doctrine is not 

available. 

The comments that EPA had no 

authority to promulgate, or should not 

have promulgated, the endangerment/ 

cause or contribute findings or the 

LDVR at the times that EPA did are not 

relevant to this rule, the Tailoring Rule. 

EPA has already promulgated the 

findings and the LDVR, and the LDVR 

triggers PSD and title V applicability, as 

we have seen. These comments would 

have been relevant only to the proposed 

findings and LDVR, and we are not, in 

this rulemaking, revisiting or reopening 

the findings or the LDVR.48

Commenters claim that if EPA 

promulgates the LDVR, the ‘‘absurd 

results’’ doctrine will no longer apply to 

the Tailoring Rule because it will have 

been EPA’s own action—promulgation 

of the LDVR—that gives rise to the 

‘‘absurd results’’. We disagree for several 

reasons. For one thing, commenters 

have not cited case law, and our 

research has disclosed none, in which a 

court specifically addressed a similar 

situation and issued a holding along the 

lines of what commenters urge. 

Moreover, commenters’ approach would 

be punitive because the absurd results 

would occur absent this rule going final. 

Such an outcome would be counter to 

the purpose of the doctrine. That is, it 

would mean that PSD and title V would 

apply to GHG sources by their terms— 

at the statutory levels, as of January 2, 

2011—with all the adverse 

consequences described elsewhere. 

In any event, and although we are not 

obligated to respond to these comments 

on the merits, they are incorrect on the 

merits, for the reasons that follow. This 

discussion should not be viewed as 

reopening the endangerment/cause or 

contribute findings or the LDVR 

because, as stated previously, we are not 

reconsidering or reopening those two 

actions in this rule. 

In determining and implementing 

congressional intent, it is important that 

the statutory provisions at issue be 

considered together—(1) The obligation 

to make a determination on 

endangerment and contribution under 

CAA section 202(a); (2) if affirmative 

endangerment/cause or contribute 

findings are made, the obligation to 

promulgate standards applicable to the 

emission of any air pollutant from new 

motor vehicles or new motor vehicle 

engines under CAA section 202(a); and 

(3) the PSD and title V applicability 

provisions. The most appropriate 

reading, and certainly a reasonable 

reading, is that we are required to take 

the action we have taken, and are taking 

with this rule, and that is to issue the 

findings, promulgate the LDVR, and 

promulgate the Tailoring Rule. Our 

approach gives effect to as much of 

Congress’s intent for each of these 

provisions, and the CAA as a whole, as 

possible. 

With respect to the endangerment/ 

cause or contribute findings under CAA 

section 202(a), congressional intent is 

clear that, as we stated in making the 

findings and the Supreme Court held in 

Massachusetts v. EPA, we are precluded 

from considering factors other than the 

science based factors relevant to 

determining the health and welfare 

effects of the air pollution in question. 

Accordingly, EPA determined that 

under Massachusetts v. EPA, 549 U.S. 

497 (2007) we were precluded from 

deferring or foregoing the findings due 

to concern over impacts on stationary 

sources affected by PSD or title V 

requirements. See 74 FR at 66496, 

66500–01 (‘‘Taken as a whole, the 

Supreme Court’s decision clearly 

indicates that policy reasons do not 

justify the Administrator avoiding 

taking further action on the questions 

here.’’); see also Massachusetts v. EPA, 

549 U.S. at 533; see also 74 FR at 

66515–16 (December 9, 2009). (The 

Administrator ‘‘must base her decision 

about endangerment on the science, and 

not on the policy considerations about 

the repercussions or impact of such a 

finding).49 Moreover, as EPA also noted, 

‘‘EPA has the ability to fashion a 

reasonable and common-sense approach 

to address greenhouse gas emissions 

and climate change.’’ 74 FR at 66516. 

Regarding the timing of the LDVR, 

Congress’s intent was that 

endangerment/cause or contribute 

findings under section 202(a) would in 

fact lead to control of the air pollutants 

from new motor vehicles and new motor 

vehicle engines contributing to the 

harm. The primary goal of section 202(a) 

is to achieve such reductions by 

requiring that EPA adopt emissions 

standards, and as a result, proceeding 

with the LDVR is consistent with that 

goal. In contrast, deferring the LDVR 

and thereby delaying achievement of the 

public health and welfare benefits 

Congress expected and required under 

section 202(a) would run directly 

counter to what Congress intended 

under section 202(a)—EPA issuing 

emissions standards to address the 

public health and welfare problems that 

were identified, not EPA refusing to do 

so. 

Moreover, we have compelling 

reasons to proceed with the LDVR, in 

the manner that we did. As we stated in 

the LDVR, in response to similar 

comments that we were not obligated to 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31575 

conduct that rulemaking, or to conduct 

it at the time that we did: 

Some of the comments relating to the 

stationary source permitting issues suggested 

that EPA should defer setting GHG standards 

for new motor vehicles to avoid * * * 

[adverse] stationary source permitting 

impacts. EPA is issuing these final GHG 

standards for light-duty vehicles as part of its 

efforts to expeditiously respond to the 

Supreme Court’s nearly three year old ruling 

in Massachusetts v. EPA, 549 U.S. 497 

(2007). In that case, the Court held that 

greenhouse gases fit within the definition of 

air pollutant in the Clean Air Act, and that 

EPA is therefore compelled to respond to the 

rulemaking petition under section 202(a) by 

determining whether or not emissions 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. The 

Court further ruled that, in making these 

decisions, the EPA Administrator is required 

to follow the language of section 202(a) of the 

CAA. The Court stated that under section 

202(a), ‘‘[i]f EPA makes [the endangerment 

and cause or contribute findings], the Clean 

Air Act requires the agency to regulate 

emissions of the deleterious pollutant.’’ 549 

U.S. at 534. As discussed above, EPA has 

made the two findings on contribution and 

endangerment. 74 FR 66496 (December 15, 

2009). Thus, EPA is required to issue 

standards applicable to emissions of this air 

pollutant from new motor vehicles. 

The Court properly noted that EPA 

retained ‘‘significant latitude’’ as to the 

‘‘timing * * * and coordination of its 

regulations with those of other agencies’’ 

(id.). However it has now been nearly three 

years since the Court issued its opinion, and 

the time for delay has passed. In the absence 

of these final standards, there would be three 

separate federal and state regimes 

independently regulating light-duty vehicles 

to increase fuel economy and reduce GHG 

emissions: NHTSA’s CAFE standards, EPA’s 

GHG standards, and the GHG standards 

applicable in California and other states 

adopting the California standards. This joint 

EPA–NHTSA program will allow automakers 

to meet all of these requirements with a 

single national fleet because California has 

indicated that it will accept compliance with 

EPA’s GHG standards as compliance with 

California’s GHG standards. 74 FR at 49460. 

California has not indicated that it would 

accept NHTSA’s CAFE standards by 

themselves. Without EPA’s vehicle GHG 

standards, the states will not offer the federal 

program as an alternative compliance option 

to automakers and the benefits of a 

harmonized national program will be lost. 

California and several other states have 

expressed strong concern that, without 

comparable federal vehicle GHG standards, 

the states will not offer the federal program 

as an alternative compliance option to 

automakers. Letter dated February 23, 2010 

from Commissioners of California, Maine, 

New Mexico, Oregon and Washington to 

Senators Harry Reid and Mitch McConnell 

(Docket EPA–HQ–OAR–2009–0472–11400). 

The automobile industry also strongly 

supports issuance of these rules to allow 

implementation of the national program and 

avoid ‘‘a myriad of problems for the auto 

industry in terms of product planning, 

vehicle distribution, adverse economic 

impacts and, most importantly, adverse 

consequences for their dealers and 

customers.’’ Letter dated March 17, 2010 from 

Alliance of Automobile Manufacturers to 

Senators Harry Reid and Mitch McConnell, 

and Representatives Nancy Pelosi and John 

Boehner (Docket EPA–HQ–OAR–2009–0472– 

11368). Thus, without EPA’s GHG standards 

as part of a federal harmonized program, 

important GHG reductions as well as benefits 

to the automakers and to consumers would 

be lost.165 In addition, delaying the rule 

would impose significant burdens and 

uncertainty on automakers, who are already 

well into planning for production of MY 

2012 vehicles, relying on the ability to 

produce a single national fleet. Delaying the 

issuance of this final rule would very 

seriously disrupt the industry’s plans. 

Instead of delaying the LDV rule and losing 

the benefits of this rule and the harmonized 

national program, EPA is directly addressing 

concerns about stationary source permitting 

in other actions that EPA is taking with 

regard to such permitting. That is the proper 

approach to address the issue of stationary 

source permitting, as compared to delaying 

the issuance of this rule for some undefined, 

indefinite time period. 

75 FR 25,402 cols. 1–3 (May 7, 2010) 

(footnote omitted). 

With respect to both the 

endangerment/cause or contribute 

findings and the LDVR, it would require 

speculation and conjecture to defer—or, 

certainly, to forego altogether—the 

findings or LDVR until EPA completed 

streamlining the PSD and title V 

requirements on grounds that doing so 

would allow full compliance in the 

future with all PSD and title V statutory 

provisions. That is the gist of 

commenters’ argument—that EPA 

should defer or forego issuance of the 

findings and the LDVR to avoid causing 

an absurd result from implementation of 

the separate PSD and title V programs. 

Underlying this claim is the assumption 

that this would allow EPA to avoid the 

‘‘absurd results’’. As we discuss 

elsewhere in this rulemaking, there is 

no basis at this point to determine that 

streamlining will ultimately allow full 

compliance with the PSD and title V 

requirements. Rather, it is possible that 

EPA may conclude that none of the 

available streamlining techniques will 

allow all GHG sources at the statutory 

thresholds to comply with PSD and title 

V requirements in a manner that does 

not impose undue costs on the sources 

or undue administrative burdens on the 

permitting authorities. Under these 

circumstances, EPA may then 

permanently exclude GHG source 

categories from PSD or title V 

applicability under the absurd results 

doctrine. Moreover, it may well take 

many years before EPA is in a position 

to come to a conclusion about the extent 

to which streamlining will be effective 

and therefore be able to come to a 

conclusion as to whether any source 

categories should be permanently 

excluded from PSD or title V 

applicability. In our rulemaking today, 

we describe what actions we expect to 

take in the first 6 years after PSD and 

title V are triggered for GHG sources, 

and we may well be in a situation in 

which we continue to evaluate 

streamlining measures and PSD and title 

V applicability to GHG sources after this 

6-year period. 

Accordingly, deferring the 

endangerment/cause or contribute 

findings and LDVR until such time that 

PSD and title V streamlining would 

allow full implementation of these 

programs at the statutory limits would 

serve only to delay the benefits of the 

LDVR, as well as the benefits that come 

from phasing in implementation of the 

PSD program to cover larger sources 

first. It would rely on an assumption 

that is unfounded at this point, that is, 

that such full compliance will be 

required at some point in the future. 

Delaying the emissions benefits of the 

LDVR and the related emissions benefits 

from partial implementation of the PSD 

program fails to implement Congress’ 

intent that the endangerment/cause or 

contribute findings ‘‘shall’’ lead to 

emissions standards for new motor 

vehicles contributing to the 

endangerment, and related emissions 

controls for the same air pollutant under 

the PSD program. EPA need not 

determine at this time what approach 

would be appropriate if there was a 

determination that full compliance with 

PSD and title V would in fact occur at 

some point in the future. In this case, 

absent such a determination, it would 

be improper to rely on speculation of 

such a future possibility as a basis under 

section 202(a) to defer or forego 

issuance of the LDVR on the grounds 

that EPA should defer or forego the 

LDVR to avoid causing an absurd result. 

Likewise there is no basis to defer 

proceeding at this time with the 

streamlining of the PSD and title V 

programs. 

With respect to the PSD and title V 

applicability requirements, as we 

discuss elsewhere, we believe that 

Congress expressed a clear intent to 

apply PSD and title V to GHG sources 

and that the phase-in approach 

incorporated in the Tailoring Rule is 

fully appropriate. Proceeding now with 

the endangerment/contribution findings 

and LDVR, even if phasing-in of the PSD 

and title V programs is required, is 

mstockstill on DSKH9S0YB1PROD with RULES2

31576 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

50 In addition, we base our reliance on the 

‘‘administrative necessity’’ doctrine on the 

administrative burdens to the permitting authorities 

of permitting smaller GHG sources, but not on the 

relatively small amount of GHG emissions 

associated with the smaller sources. See Alabama 

Power v. Costle, 636 F.2d 323, 357 (DC Cir. 1980) 

(establishing the ‘‘administrative necessity’’ doctrine 

as ‘‘inherent in the administrative process’’ and 

presumptively available under the statutory 

scheme, absent clear congressional intent to the 

contrary; but adding that in contrast, ‘‘there exists 

no general administrative power to create 

exemptions to statutory requirements based upon 

the agency’s perceptions of costs and benefits’’). 

consistent with our interpretation of the 

PSD and title V applicability 

requirements. Delaying the 

endangerment/contribution findings or 

LDVR, and thereby delaying the 

triggering of PSD and title V 

requirements for GHG sources, would 

lead to the loss of a practicable 

opportunity to implement the PSD and 

title V requirements in important part, 

and thereby lead to the loss of important 

benefits. As discussed elsewhere, 

promulgating the LDVR and applying 

the PSD and title V requirements to the 

largest GHG sources, as we do in this 

Tailoring Rule, is practicable because 

the sources that would be affected by 

the initial implementation steps we 

promulgate in this rule are able to bear 

the costs and the permitting authorities 

are able to bear the associated 

administrative burdens. Promulgating 

the LDVR now provides important 

advantages because the sources that 

would be affected by the initial steps are 

responsible for most of the GHG 

emissions from stationary sources. 

It should also be noted that as 

discussed elsewhere in this rulemaking, 

our ability to develop appropriate 

streamlining techniques for PSD and 

title V requirements is best done within 

the context of actual implementation of 

the permitting programs, and not in 

isolation of them. That is, because the 

great majority of GHG sources have not 

been subject to PSD and title V 

requirements, we will need to rely on 

the early experience in implementing 

the permitting requirements for the very 

large sources that initially will be 

subject to those requirements in order to 

develop streamlining techniques for 

smaller sources. It is the real world 

experience gained from this initial 

phase that will allow EPA to develop 

any further modifications that might be 

necessary. This would not and could 

not occur if the LDVR were delayed 

indefinitely or permanently, so that PSD 

and title V requirements were not 

triggered. It is unrealistic to expect that 

delaying action until a future tailoring 

rule could resolve all of the problems 

identified in this rulemaking, absent any 

real world implementation experience. 

At its core, commenters’ argument is 

that EPA should delay (if not forego 

altogether) doing anything to address 

GHG emissions and the problems they 

cause until it can do so in a way that 

does not cause any implementation 

challenges, even if that delay results in 

continued endangerment to public 

health and welfare. EPA does not take 

such a myopic view of its duties and 

responsibilities under the CAA. 

Congress wrote the CAA to, among other 

things, promote the public health and 

welfare and the productive capacity of 

the population. CAA § 101(b)(1). EPA’s 

path forward does just this. Thus, 

proceeding with the endangerment/ 

cause or contribute findings, the LDVR, 

and with PSD and title V through the 

phase-in approach of the Tailoring Rule 

maximizes the ability of EPA to achieve 

the Congressional goals underlying 

sections 202(a) and the PSD and title V 

provisions, and the overarching CAA 

goal of protecting public health and 

welfare. Congress called for EPA (1) To 

determine whether emissions from new 

motor vehicles contribute to air 

pollution that endangers, (2) if that the 

determination is affirmative, to issue 

emissions standards for new motor 

vehicles to address the endangerment, 

and (3) to implement the PSD and Title 

V program to address similar emissions 

in their permitting program as another 

tool to address the air pollutant at issue. 

Delaying both the LDVR and PSD/title V 

implementation, as commenters have 

called for, would run directly counter to 

these Congressional expectations. 

Commenters’ calls for deferral or 

foregoing of the findings or LDVR are 

generally phrased in a conclusory 

fashion, and do not demonstrate how 

EPA could take the required CAA 

actions concerning GHGs while 

remaining within the requirements of 

each of the various CAA provisions, and 

achieving the overall goals of the CAA. 

As such the comments do not provide 

a valid basis for the deferral of agency 

action they suggest. 

9. ‘‘Administrative Necessity’’ Basis for 

PSD and Title V Requirements in 

Tailoring Rule 

EPA believes that the ‘‘administrative 

necessity’’ doctrine, within the Chevron 

framework, also justifies this 

rulemaking. Applying the applicability 

requirements of the PSD and title V 

programs according to a literal reading 

of their terms (as EPA has narrowed 

them in the past through interpretation) 

to GHG sources beginning on the 

January 2, 2011 date that regulation of 

GHGs takes effect would sweep so many 

sources into those programs as to render 

the programs impossible for the 

permitting authorities to administer. 

Although streamlining the PSD and title 

V programs offers some promise to 

improve the administrability of the 

programs, given the time needed to 

implement such streamlining, the stepby-step expansion of PSD and title V 

requirements to GHG sources that we 

are promulgating is the most that the 

permitting authorities can reasonably be 

expected to administer. 

This section discusses the application 

of the ‘‘administrative necessity’’ 

doctrine. Our views concerning this 

doctrine remain similar to what we said 

at proposal, except that in this 

rulemaking we place the doctrine more 

clearly in the Chevron analytical 

framework, we revise our assessment of 

the administrative burdens due to new 

analysis we have conducted and 

information we have received since 

proposal, and we make certain revisions 

to the tailoring approach.50 This 

analysis and information, as well as the 

revisions to the tailoring approach, have 

already been presented previously, in 

the discussion of the ‘‘absurd results’’ 

basis. In addition, it is not necessary to 

reiterate the lengthy discussion of the 

‘‘administrative necessity’’ doctrine that 

we included in the proposal or the 

factual data presented previously; as a 

result, this section briefly highlights the 

conclusions we have reached about the 

application of this doctrine. 

As noted previously, under the PSD 

and title V applicability provision—read 

literally, as we have long interpreted 

them—EPA’s recent promulgation of the 

LDVR will trigger the applicability of 

PSD and title V for GHG sources at the 

100/250 tpy and 100 tpy threshold 

levels, respectively, as of January 2, 

2011. This is because PSD applicability 

hinges on the definition of ‘‘major 

emitting facility’’ and title V 

applicability hinges on the definition of 

‘‘major sources,’’ and those terms, read 

literally, and under EPA’s long-standing 

narrowing interpretation, apply PSD 

and title V, respectively, to sources of 

any air pollutant that is subject to 

regulation under another provision of 

the CAA. EPA’s promulgation of the 

LDVR means that GHGs will become 

subject to regulation on the date that the 

rule takes effect, which will be January 

2, 2011. 

Absent tailoring, the January 2, 2011 

trigger date for GHG PSD applicability 

will give rise to an extraordinarily large 

number of PSD permitting actions—we 

estimate more than 81,000 per year— 

representing an increase of almost 300- 

fold over the current 280 PSD 

permitting actions each year. In 

addition, over 6 million sources will 

become subject to title V, an increase of 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31577 

51We recognize that in a few states, we are the 

permitting authority. We do not think that this 

changes the calculation of administrative burdens. 

We do not believe that we could reasonably be 

expected to adjust our budget to accommodate the 

large new permitting burdens, and even if we could, 

the administrative burdens would remain in most 

of the rest of the nation where it is the state or local 

agencies that bear permitting responsibility. 

more than 400-fold over the 14,700 

sources that currently are subject to title 

V. The permitting authorities will find 

it impossible to administer programs of 

these sizes as of that date. 

All this results from a literal 

application of the PSD and title V 

applicability provisions to GHG sources. 

However, under Chevron, we must 

interpret and apply statutory 

requirements on the basis of 

congressional intent. Although the 

literal meaning of the statutory 

provisions is the first and generally the 

best indicator of congressional intent, 

there are cases in which that is not so. 

As discussed previously, we believe that 

as a general matter, statutory directives 

should be considered to incorporate 

Congress’s intent that they be 

administrable, and we believe that this 

proposition is implicit in the 

‘‘administrative necessity’’ doctrine that 

the DC Circuit has established and that 

we believe applies here. See Alabama 

Power v. Costle, 636 F.2d 323, 356–57 

(DC Cir. 1980). This doctrine authorizes 

EPA to undertake a process for 

rendering the PSD and title V 

requirements administrable. Indeed, the 

Court in Alabama Power established 

this doctrine specifically in the context 

of the PSD provisions, including, in 

particular, the modification provision. 

As noted elsewhere, the Court held that 

EPA may ‘‘consider the administrative 

burden’’ associated with applying PSD 

for emissions increases, and establish 

significance levels designed to avoid 

‘‘severe administrative burdens on EPA, 

as well as severe economic burdens’’ on 

sources. Id. at 405. 

As we said in the proposal, we read 

the case law to establish a three-step 

approach for implementing the 

‘‘administrative necessity’’ doctrine: An 

agency is not required to adhere to 

literal statutory requirements if the 

agency, as the first step, makes every 

effort to adjust the requirements within 

the statutory constraints, but concludes 

with justification—at the second step— 

that it would be impossible to comply 

with the literal reading of the statute. 

Under those circumstances, the agency 

may—at the third step—develop what is 

in effect a compliance schedule with the 

statutory requirements, under which the 

agency will implement the statute as 

much as administratively possible and 

as quickly as administratively possible. 

See 74 FR 55315—55316. 

a. First Step of the ‘‘Administrative 

Necessity’’ Analysis: Streamlining 

In the proposed rulemaking, EPA 

discussed at length the prospect of 

streamlining both PSD and title V. EPA 

described ‘‘several potentially useful 

tools available in the streamlining 

toolbox for the PSD permitting 

threshold level, the PSD significance 

level, and the title V permitting 

threshold,’’ specifically: 

For the PSD permitting threshold level and 

significance level, there are at least three 

such tools: The first is interpreting the 

definition of ‘‘potential to emit’’ so that the 

amount of a source’s emissions that counts in 

determining whether it qualifies as a major 

source and therefore is above the permitting 

threshold requirements is closer to the 

amount of its emissions when it is in actual 

operation, rather than the amount of 

emissions that the source would emit if it 

were operating continuously. Narrowing the 

definition of PTE is a potentially extremely 

important tool in this context because 

identifying the amount of a source’s 

emissions as closer to its actual emissions in 

this manner would mean that very large 

numbers of residential and commercial 

sources would have significantly lower 

emissions and would fall below the statutory 

threshold requirements for triggering PSD. 

Second, EPA believes it may be able to 

develop programs involving general permits, 

under which large numbers of similarly 

situated sources would each be covered by 

essentially the same permit established 

through a regulatory action by the permitting 

authority. This approach could achieve 

economies of scale and thereby reduce 

administrative burden. Third, EPA believes it 

may be able to streamline the single most 

time-consuming element of the PSD permit 

program, which is the determination of 

BACT as required under CAA § 165(a)(4), by 

establishing presumptive BACT levels for 

certain source categories that comprise large 

numbers of sources. As for title V, as 

discussed below in detail, EPA believes that 

defining ‘‘potential to emit’’ to reflect more 

closely a source’s actual operation and 

developing a program of general permits 

could streamline the administration of title V 

permits. 

74 FR 55315 col. 2–3. 

At proposal we stated that we would, 

and we still commit to, vigorously 

pursue development of these 

streamlining measures, and, as 

indicated in our discussion of 

streamlining methods in section V.E.1 

and in response to comments, we have 

already begun developing those 

measures. For example, as described 

elsewhere, we have done much work— 

both with stakeholders and in-house—to 

begin to develop recommendations for 

what controls would qualify as BACT 

for various industries. This work is 

important as a foundation for 

developing presumptive BACT, which 

is a potentially efficient streamlining 

measure. 

However, it is not possible for us or 

the state and local permitting authorities 

to develop and implement streamlining 

techniques by the time that PSD and 

title V are triggered for sources emitting 

GHGs—January 2, 2011—or shortly 

thereafter. Developing streamlining 

methods would entail acquiring more 

information about the affected industry, 

may entail rulemaking, and would 

likely entail some type of public review 

of proposals for streamlining even if not 

done through rulemaking. As discussed 

in section V.E, we do not expect that we 

could complete all those steps for 

meaningful streamlining measures 

within 2 years. 

b. Second Step of the ‘‘Administrative 

Necessity’’ Analysis: Demonstration of 

Administrative Impossibility 

With no streamlining measures 

available at the time that PSD and title 

V would apply to sources of GHGs or 

shortly thereafter, under the second step 

of the ‘‘administrative necessity’’ 

analysis, we must determine whether 

implementation of the statutory 

requirements at that time would be 

administratively impossible for the 

permitting authorities. We are mindful 

that the DC Circuit has cautioned that 

this showing is a high hurdle. See 74 FR 

55317. 

Even so, we believe there is no 

question that a literal application of the 

PSD and title V programs to GHG 

sources as of January 2, 2011 would be 

flatly impossible for the state and local 

permitting authorities to administer for 

at least an initial period of time.51 The 

key facts have been recounted 

previously, and no more than a brief 

recitation is necessary here. On the PSD 

side, annual permit applications would 

increase by over 300-fold, from 280 to 

almost 82,000; costs to the permitting 

authorities would increase more than 

100-fold, from $12 million to $1.5 

billion; and the permitting authorities 

would need to hire, train, and manage 

9,772 FTEs. For title V, total permit 

applications would increase by over 

400-fold, from 14,700 to 6.1 million; 

costs to the permitting authorities 

would increase from $62 million to $21 

billion; and the permitting authorities 

would need to hire, train, and manage 

229,118 FTEs. 

We have elaborated upon these 

burdens elsewhere in this notice. They 

bespeak an impossible administrative 

task. It is not hyperbole to say that if 

these administrative responsibilities are 

not considered impossible within the 

mstockstill on DSKH9S0YB1PROD with RULES2

31578 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

meaning of the ‘‘administrative 

necessity’’ doctrine, then it is difficult to 

imagine what would be considered 

impossible. 

c. Third Step of the ‘‘Administrative 

Necessity’’ Analysis: Tailoring 

Under the third step of the 

‘‘administrative necessity’’ analysis, we 

must demonstrate that the steps we 

intend to take towards implementation 

of the statutory requirements are the 

most that can be done during the 

indicated time frames, in light of 

administrative resources. In this 

manner, we adhere most closely to the 

statutory requirements. See 74 FR 

55318. This amounts to establishing a 

schedule for phasing in PSD and title V 

applicability to GHG sources. Because 

this step is based on the administrative 

resources of the permitting authorities, 

our analysis is similar, and leads to the 

same conclusions, as we described 

previously concerning the ‘‘absurd 

results’’ basis. That is, we believe that 

our tailoring approach—including Step 

1, to be implemented as of January 2, 

2011; Step 2, to be implemented as of 

July 1, 2011; the additional rulemaking 

that we commit to finalize by July 1, 

2012, and that will address further 

threshold reductions as a Step 3; the 

study and subsequent rulemaking to 

address smaller sources by April 30, 

2016; and the determination not to 

lower the threshold below 50,000/ 

50,000 tpy CO2e before April 30, 2016 

at the earliest—is the most that we can 

do to expand the PSD and title V 

programs, based on administrative 

resources and the information we 

currently have about the prospects for 

streamlining and increasing permitting 

resources. 

As noted previously, at some point in 

the process of additional rulemaking, 

we may conclude under the ‘‘absurd 

results’’ doctrine that we will not apply 

PSD or title V to GHG sources below a 

certain size level. The same conclusion 

may be supportable under the 

‘‘administrative necessity’’ doctrine if we 

decide, based on the information 

available to us, that even with all of the 

streamlining that we are able to 

accomplish and even with a significant 

expansion of permitting resources, it 

may not be administratively feasible to 

implement PSD or title V to sources 

below that level. See Alabama Power v. 

Costle, 636 F.2d at 358 (acknowledging, 

in discussing the ‘‘administrative 

necessity’’ doctrine, that ‘‘[c]ategorical 

exemptions from the clear commands of 

a regulatory statute [are] sometimes 

permitted,’’ although emphasizing that 

such exemptions ‘‘are not favored’’). 

In addition, as noted above, in a 

subsequent rulemaking, we may 

conclude that title V should not apply 

to GHG sources with ‘‘empty permits,’’ 

under the ‘‘absurd results’’ doctrine. The 

basis for this conclusion could be a 

determination that (1) although the 

applicability provisions apply by their 

terms to sources on the basis of their 

emissions, and without regard to 

whether the sources would hold ‘‘empty 

permits,’’ those provisions cannot be 

read literally under the ‘‘absurd results’’ 

doctrine; and (2) it is not clear whether 

Congress intended that title V apply to 

such sources, and EPA has reasonably 

determined, under Chevron Step 2, that 

title V does not. If we come to that 

conclusion, then, at that point in time, 

the ‘‘administrative necessity’’ doctrine 

would remain relevant for title V 

purposes only if it is necessary, for 

administrative reasons, to phase in the 

application of title V to GHG sources 

that have applicable requirements, and 

that therefore do not have ‘‘empty 

permits.’’ This is because the 

‘‘administrative necessity’’ doctrine is 

relevant only when a statutory directive, 

read literally, imposes impossible 

administrative obligations, and Congress 

may be presumed to have intended that 

the directive be administrable. The 

‘‘administrative necessity’’ doctrine 

would not come into play if it is 

concluded either that under the ‘‘absurd 

results’’ doctrine Congress did not 

intend the statutory directive or that, 

under that doctrine, Congress’s intent 

was not clear and EPA reasonably 

decided that the directive does not 

apply. 

10. ‘‘One-Step-at-a-Time’’ Basis for 

Tailoring Rule 

In addition to the ‘‘absurd results’’ and 

‘‘administrative necessity’’ doctrines, the 

‘‘one-step-at-a-time’’ judicial doctrine, 

within the Chevron framework, supports 

EPA’s Tailoring Rule. The case law 

under this doctrine, described 

previously, indicates that the doctrine 

justifies an agency’s step-by-step 

approach under the following 

circumstances or conditions: (1) The 

agency’s ability to comply with a 

statutory directive depends on facts, 

policies, or future events that are 

uncertain; (2) the agency has estimated 

the extent of its remaining obligation; 

(3) the agency’s incremental actions are 

structured in a manner that is 

reasonable in light of the uncertainties; 

and (4) the agency is on track to full 

compliance with the statutory 

requirements. EPA’s Tailoring Rule 

fulfills each of those four. 

First, as the DC Circuit stated in 

National Association of Broadcaster v. 

FCC, 740 F.2d 1190, 1210 (DC Cir. 1984) 

(‘‘National Association of 

Broadcasters’’), incremental agency 

action is most readily justifiable ‘‘against 

a shifting background in which facts, 

predictions, and policies are in flux and 

in which an agency would be paralyzed 

if all the necessary answers had to be in 

before any action at all could be taken.’’ 

Those circumstances are present here, 

and so is that fact that the task at hand 

is extraordinarily demanding. As 

discussed previously, EPA and the 

permitting authorities’ progress in 

implementing the PSD and title V 

programs for GHG sources will depend 

in large measure on the development of 

streamlining measures and increases in 

permitting authorities’ resources, and 

those things carry some uncertainty and 

in any event, under the best of 

circumstances, cannot have much 

impact for at least several years. It will 

take EPA that long to develop 

streamlining measures, and it will take 

permitting authorities that long to begin 

to raise money and hire and train FTEs. 

Second, as the Court stated in 

National Association of Broadcasters, 

‘‘the agency [should] ma[k]e some 

estimation, based upon evolving 

economic and technological conditions, 

as to the nature and magnitude of the 

problem it will have to confront when 

it comes to [undertake the remaining 

steps]’’ and that estimation must be 

‘‘plausible and flow from the factual 

record compiled.’’ Id. at 1210. Here, EPA 

has done this by estimating the number 

of PSD and title V permits and the costs 

of issuing them, and has provided as 

much information as possible about the 

development of streamlining methods 

and permitting authority resources. 

Third, again as the Court stated in 

National Association of Broadcasters, it 

must be ‘‘reasonable, in the context of 

the decisions made in the proceeding 

under review, for the agency to have 

deferred the issue to the future. With 

respect to that question, postponement 

will be most easily justified when an 

agency acts against a background of 

rapid technical and social change and 

when the agency’s initial decision as a 

practical matter is reversible should the 

future proceedings yield drastically 

unexpected results.’’ Id. at 1211. Here, 

our tailoring approach is reasonable in 

light of changes in permitting authority 

capacity that may occur with the 

development of streamlining methods 

and increased resources. In addition, the 

first two steps that EPA promulgates 

today are reasonable initial steps that 

we expect to build on by lowering 

thresholds, as appropriate, in the future. 

We have no reason to suspect that we 

may need to reverse either of the first 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31579 

52For reasons explained elsewhere, our reference 

to the literal terms of the applicability provisions 

means the literal terms of the definition of ‘‘major 

emitting facility’’ for PSD and ‘‘major source’’ for 

title V, as EPA has narrowed those definitions to 

refer to ‘‘any pollutant’’ that is subject to regulation 

under the CAA. 

53 In the alternative, we also proposed to use our 

section 110(k)(6) error correction authority to revise 

SIP-approved PSD program. We are also delaying 

action on this proposal. 

two steps. Having received and 

analyzed extensive comment on the 

number of permitting actions to expect 

and on permitting authority resources, 

we consider it unlikely that we would 

need to establish a higher threshold 

level than what we have established in 

Steps 1 and 2. In addition, if we were 

to adopt an ‘‘empty permits’’ approach 

for title V, we would not need to reverse 

either of Steps 1 and 2, as explained 

above. 

Finally, as the DC Circuit stated in 

Grand Canyon Air Tour Coalition v. 

F.A.A., 154 F.3d 455, 477–78 (DC Cir. 

1998), the Courts will accept an initial 

step towards full compliance with a 

statutory mandate, as long as the agency 

is headed towards full compliance, and 

we believe that the doctrine is 

applicable here. EPA intends to require 

full compliance with the CAA 

applicability provisions of the PSD and 

title V programs, but we believe that in 

the case of GHG-emitting sources, by 

application of the ‘‘absurd results’’ 

doctrine or the ‘‘administrative 

necessity’’ doctrine, full compliance 

with the applicability provisions does 

not necessarily mean full compliance 

with the literal terms of those 

provisions.52 Rather, as we have 

explained elsewhere, in the case of GHG 

sources, full compliance may mean 

compliance with higher levels that are 

consistent with congressional intent, 

under the ‘‘absurd results’’ doctrine, or 

that are within the reach of permitting 

authorities in light of their 

administrative constraints, under the 

‘‘administrative necessity’’ doctrine. 

This rulemaking constitutes a package 

of initial steps towards that full 

compliance, and, seen in that light, is 

supported by the ‘‘one-step-at-a-time’’ 

doctrine. 

Even if the doctrine were found to 

apply only when an agency is 

committed to fully implementing 

statutory requirements according to 

their literal terms, we believe that the 

steps we promulgate in this notice 

would be considered valid under the 

one-step-at-a-time doctrine. This is 

because even if we are incorrect about 

the applicability of the ‘‘absurd results’’ 

and ‘‘administrative necessity’’ 

doctrines, so that GHG sources are 

required to comply with the literal 

terms of the PSD and title V 

applicability provisions, the ‘‘one-stepat-a-time’’ doctrine would allow PSD 

and title V applicability to be phased in, 

and the first two steps we promulgate in 

this notice would be upheld as 

reasonable initial steps toward full 

compliance with the literal terms of the 

CAA. As we have described elsewhere, 

there is little question but that sources 

and permitting authorities cannot 

reasonably be expected to comply with 

or implement PSD and title V 

applicability requirements in the near 

term—by January 2, 2011 and July 1, 

2011—except to the limited extent 

described under Steps 1 and 2. Nor is 

applicability of the PSD and title V 

requirements at levels below 50,000 tpy 

CO2e reasonable before 6 years from 

promulgation of this rule, as discussed 

elsewhere. If further steps resulting in 

full compliance with the literal terms of 

the applicability provisions of PSD and 

title V were required, it would be 

reasonable for those steps to occur in 

the future, as part of the rulemaking to 

be completed by the sixth year after 

promulgation, to which EPA commits 

itself as part of this action, or as part of 

subsequent actions. See Grand Canyon 

Air Tour, 891 F.2d at 476–77 (upholding 

agency action as a step towards full 

compliance with statutory mandate 

when the agency expected full 

compliance to occur some 20 years after 

the deadline in the statute). 

C. Mechanisms for Implementing and 

Adopting the Tailoring Approach 

In this section, we discuss three 

issues related to adoption of the 

tailoring approach within our 

regulations and by permitting agencies. 

The first is the regulatory mechanism 

for implementing the tailoring 

approach—that is, the specific way we 

are revising the PSD and title V 

applicability provisions to incorporate 

the tailoring approach—and our 

rationale. The second is the process by 

which state or local permitting 

authorities may incorporate the tailoring 

approach into their PSD SIP and title V 

permit programs. Finally, we discuss 

our reasons for delaying action on our 

proposal to limit approval of both SIPapproved PSD programs and title V 

programs, and we request certain 

information from states on both of their 

programs and their actions in response 

to this rule. 

In brief, we proposed to exempt 

sources emitting GHGs below certain 

threshold levels from the definition of 

the regulatory terms ‘‘major stationary 

source’’ and ‘‘major modification’’ in 

PSD programs and the definition of the 

regulatory term ‘‘major source’’ in title V 

programs. We further proposed to 

effectuate this change in SIP-approved 

PSD programs (as included in SIPs) and 

EPA-approved part 70 title V programs 

by limiting our prior approval of those 

programs to the revised applicability 

thresholds for GHGs.53 These changes 

would have the effect of putting the 

higher thresholds adopted under the 

Tailoring Rule in place in states PSD 

and title V programs as a matter of 

federal law. However, state commenters 

expressed concern that they would not 

be able to adopt the Tailoring Rule 

under state laws on an expeditious 

basis. To address this, our final action 

differs from our proposed rule in the 

way we incorporate the limitations 

promulgated in this Tailoring Rule into 

the ‘‘major stationary source,’’ ‘‘major 

modification’’ and ‘‘major source’’ 

definitions. This approach relies on 

further defining the term ‘‘subject to 

regulation’’ and although this approach 

is not substantively different in effect 

from the proposed rule, it will facilitate 

more rapid adoption and 

implementation of the Tailoring Rule by 

states through interpretation of language 

in existing state regulations. We believe 

these differences are a logical outgrowth 

of our proposed rule. We are also 

delaying action on our proposed limited 

approval of EPA-approved PSD 

programs and part 70 title programs to 

determine how each state will 

implement the final rules. 

1. PSD Approach: Background and 

Proposal 

Under CAA section 165(a), no ‘‘major 

emitting facility’’ may construct or 

modify unless it receives a 

preconstruction permit that meets the 

requirements of the PSD program. CAA 

section 169(1) defines a major emitting 

facility as ‘‘any * * * source[]’’ in one of 

28 specified source categories that 

‘‘emit[s], or ha[s] the potential to emit, 

one hundred tons per year or more of 

any air pollutant;’’ or ‘‘any other source 

with the potential to emit two hundred 

and fifty tons per year or more of any 

air pollutant.’’ EPA’s regulations replace 

the term ‘‘major emitting facility’’ with 

the term ‘‘major stationary source’’ and 

define the term as ‘‘[a]ny of * * * [28 

types of] stationary sources of air 

pollutants which emits, or has the 

potential to emit, 100 tons per year or 

more of any regulated NSR pollutant’’ or 

‘‘any stationary source which emits, or 

has the potential to emit 250 tons per 

year or more of a regulated NSR 

pollutant.’’ 40 CFR 51.166(b)(1)(i)(a)–(b). 

The term ‘‘regulated NSR pollutant’’ is 

defined to include, among other things, 

mstockstill on DSKH9S0YB1PROD with RULES2

31580 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

‘‘any * * * air pollutant that otherwise 

is subject to regulation under the Clean 

Air Act.’’ 40 CFR 51.166(b)(50). Note 

that the regulatory definition in effect 

interprets the statutory definition more 

narrowly to read ‘‘one hundred [or two 

hundred and fifty] tons per year or more 

of any air pollutant subject to regulation 

under the Clean Air Act’’ (emphasis 

added). 

Similarly, under the statute, a 

modification occurs if there is a 

physical change or change in the 

method of operation ‘‘which increases 

the amount of any air pollutant emitted 

* * * .’’ CAA section 165(a), 169(2)(c), 

and 111(a)(4). As with the major 

stationary source definition, we have 

limited coverage of the modification 

provision to physical changes or 

changes in the method of operation that 

result a significant net emissions 

increase in emissions of a ‘‘regulated 

NSR pollutant.’’ 40 CFR 51.166(b)(2)(i). 

Our proposed rule revised the 

definition of ‘‘major stationary source to 

(1) exempt GHG from the regulated NSR 

pollutants that, if emitted by a source in 

the 100 or 250 tpy quantities, would 

cause the source to qualify as a ‘‘major 

stationary source,’’ and (2) add a specific 

threshold at which a source that emits 

a specified quantity of GHGs (at 

proposal, that quantity was 25,000 tpy 

CO2e) would qualify as a ‘‘major 

stationary source.’’ 74 FR 55351, 

proposed 40 CFR 51.166(b)(1)(i)(a), (b), 

and (d). We also proposed a significance 

threshold, which is the amount of an 

increase needed to trigger PSD for a 

modification or to require BACT for a 

new source, at a level between 10,000 

and 25,000 tpy CO2e. 74 FR 55351; 40 

CFR 51.166(b)(23)(i). 

Additionally, we recognized that it 

may take some time before states could 

change their SIP-approved PSD 

programs and that as a result, absent 

additional action on our part, GHGemitting sources would remain subject 

to the 100 or 250 tpy thresholds, and 

subject to a zero significance threshold 

for major modifications as a matter of 

federal law. To address this issue, we 

proposed to narrow our previous 

approval of those SIPs. The effect of our 

proposal would be that EPA would have 

approved the SIP PSD programs only to 

the extent they apply PSD and 

requirements to GHG sources at or 

above the thresholds established in the 

Tailoring Rule (which, generally, were 

25,000 tpy CO2e), and EPA would have 

taken no action on the SIP PSD 

programs to the extent they apply PSD 

requirements to GHG sources below that 

threshold. We relied on the authority of 

the APA and the general authority of 

CAA section 301 and, in the alternative, 

on the error correction mechanism 

under CAA section 110(k)(6). Our 

limited approval would revise existing 

EPA-approved SIP PSD programs to 

authorize permitting under the CAA 

only for GHG sources at the appropriate 

levels. 

In response to our proposed approach, 

we received numerous comments from 

state and local permitting agencies 

expressing significant concern. They 

observed that our proposed approach 

could meet its objectives to avoid 

applying PSD requirements to small 

sources under federal law, but would 

not succeed in avoiding the application 

of PSD requirements to those small 

sources under state law. The 

commenters explained that, although 

EPA was changing federal PSD 

applicability thresholds; for GHGemitting sources to incorporate the 

tailoring approach, and limiting the 

scope EPA approval of SIPs consistent 

with these thresholds, the state rules 

containing the originally-approved SIP 

thresholds would continue to apply as 

a matter of state law. As commenters 

explained, for the most part, the laws 

and regulations states adopt to 

implement federal PSD programs mirror 

EPA’s regulations, so that the state laws, 

apply PSD to sources that emit air 

pollutants subject to regulation at the 

100/250 tpy threshold. Commenters 

reasoned that, until the states can 

change their state laws, the 100/250 tpy 

thresholds will continue to apply as a 

matter of state law, even though the 

higher thresholds apply as a matter of 

federal law. 

Importantly, these commenters 

emphasized, their state process requires 

that they promulgate a rulemaking, or in 

some cases, a legislative change, to 

incorporate the higher thresholds for 

GHG sources in their SIPs. These 

processes would require many months 

and in some cases as long as 2 years. As 

a result, sources that emit GHGs below 

the federally established levels in the 

final rule, but at above the 100/250 tpy 

levels in state laws and rules, would 

still be required to obtain PSD permits 

under state law. As a result, states, in 

attempting to implement state 

permitting requirements, would be 

faced with the same administrative 

difficulties that EPA recognized in the 

proposed rule as impossible. 

Commenters emphasized that this 

situation was untenable. 

In addition to the state comments just 

described, we received comments that 

took issue with our view that we were 

in effect revising the numerical 

thresholds for PSD applicability as the 

legal mechanism for the tailoring 

approach. They asserted that in fact, our 

mechanism consisted of interpreting the 

term ‘‘any source’’ to exclude small 

GHG-emitting sources. Other 

commenters objected to our proposed 

mechanism of narrowing our previous 

SIP approval, arguing that this 

mechanism was without legal basis. 

2. Rationale for Our Final Approach To 

Implementing PSD 

In response to these concerns, we are 

adding another mechanism to 

implement the tailoring approach for 

PSD, and that is to adopt a definition, 

within our PSD regulations, the phrase 

‘‘subject to regulation,’’ as found within 

the phrase ‘‘any regulated NSR 

pollutant,’’ which, in turn, is part of the 

definitions of ‘‘major stationary source’’ 

and ‘‘major modification.’’ To implement 

this mechanism, we are defining the 

phrase ‘‘subject to regulation’’ so that the 

GHGs emitted by sources that fall below 

the thresholds or scope established in 

Steps 1 and 2 are not treated as ‘‘subject 

to regulation,’’ and therefore do not 

trigger PSD for the sources that emit 

them. As discussed in section V.B.3., 

the term ‘‘subject to regulation’’ is one of 

four terms that should be considered not 

to apply literally in the case of GHG 

sources. 

To understand this approach, it is 

useful to return to the definition of 

‘‘major stationary source,’’ which, again, 

is central to PSD applicability. The 

definition, quoted previously, employs 

the term ‘‘regulated NSR pollutant,’’ 

which is a defined term. The definition 

incorporates many other elements as 

well (e.g., the 100/250 threshold 

requirements), but for convenience, we 

quote it as follows: A ‘‘major stationary 

source’’ is ‘‘[a]ny * * * source[–] of air 

pollutants, which emits, or has the 

potential to emit, [depending on the 

source category, either] 100 [or 250] tons 

per year or more of any air pollutant 

that is subject to regulation under the 

Clean Air Act.’’ 40 CFR 

51.166(b)(1)(i)(a)–(b). Applying our 

definition of ‘‘subject to regulation’’ to 

exclude GHG sources that emit below 

specified thresholds, the definition may 

now be paraphrased as follows: A 

‘‘major stationary source’’ is any source 

of air pollutants, which emits, or has the 

potential to emit, depending on the 

source category, either 100 or 250 tpy or 

more of any air pollutant subject to 

regulation under the CAA, except that 

the source’s GHGs are considered to be 

subject to regulation under the CAA 

only the extent indicated under Steps 1 

and 2 of the Tailoring Rule, e.g., for Step 

2, only if the source’s GHG emissions 

exceed the threshold established in Step 

2. We adopt the same approach for the 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31581 

definition of the regulatory term ‘‘major 

modification.’’ 

Although EPA is revising its 

regulations to apply the phrase subject 

to regulation in this manner, we have 

been advised that states may be able to 

adopt our approach without having to 

undertake a rulemaking action to revise 

their state regulations or without 

requiring an act of the state legislature. 

Instead, it is our understanding that 

states may adopt our approach by 

interpreting the term ‘‘subject to 

regulation’’ reflected in their regulations 

to have the same meaning that we are 

assigning to that term in our regulations 

in this rulemaking. This is 

particularly—although not 

exclusively—the case in a state that has 

taken the position, or determines now, 

that the state’s definition of ‘‘subject to 

regulation,’’ or, more broadly, ‘‘regulated 

NSR pollutant’’ or ‘‘major stationary 

source’’ or ‘‘major modification,’’ is 

intended to be interpreted in a way that 

tracks the meanings that EPA has 

assigned to these phrases. Such states 

can adopt the meaning of ‘‘subject to 

regulation’’ that we establish in this rule 

by January 2, 2011, and thereby avoid 

the situation in which, as a matter of 

state law, GHG-emitting sources above 

the 100 or 250 tpy thresholds become 

subject to PSD by that date. The 

following explains our basis for 

concluding that states may apply EPA’s 

approach under existing regulations that 

use the term ‘‘subject to regulation.’’ On 

December 18, 2008, EPA issued the 

Interpretive Memo, establishing EPA’s 

interpretation of the definition 

‘‘regulated NSR pollutant’’ found at 40 

CFR 52.21(b)(50). EPA intended this 

memorandum to resolve ambiguity in 

subparagraph (iv) of this definition, 

which includes ‘‘any pollutant that 

otherwise is subject to regulation under 

the Act.’’ Specifically, the memorandum 

stated that EPA will interpret the 

definition of ‘‘regulated NSR pollutant’’ 

to exclude pollutants for which EPA 

regulations only require monitoring or 

reporting but 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. 

After reconsidering this interpretation 

through a formal notice-and-comment 

process, EPA refined 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.’’ 75 FR 17704. 

Importantly, as stated previously, 

because the term ‘‘regulated NSR 

pollutant’’ is embedded within the 

definition of ‘‘major stationary source,’’ 

this interpretation effectively defines 

which major stationary sources are 

subject to PSD permitting. As a result, 

for example, EPA explained that PSD 

and title V permitting requirements for 

GHGs will not apply to GHGs until at 

least January 2, 2011, following the 

anticipated promulgation of EPA 

regulations requiring control of GHG 

emissions under title II of the CAA. Id. 

In the RTC document for EPA’s 

reconsideration of the PSD 

interpretative memorandum, we stated 

that, 

Absent a unique requirement of state law, 

EPA believes that state laws that use the 

same language that is contained in EPA’s 

PSD program regulations at 52.21(b)(50) and 

51.166(b)(50) are sufficiently open-ended to 

incorporate greenhouse gases as a regulated 

NSR pollutant at the appropriate time 

consistent with EPA’s interpretation of these 

regulations (emphasis added). (Docket ID No. 

EPA–HQ–OAR–2009–0597–0128). 

Because the state regulations that 

include EPA’s definition of the term 

‘‘subject to regulation’’ in the 

reconsideration of the Interpretive 

Memo are ‘‘sufficiently open-ended to 

incorporate greenhouse gases as a 

regulated pollutant,’’ those state 

regulations are also sufficiently openended to incorporate the further 

refinement to the meaning of the phrase 

‘‘subject to regulation’’ that we make in 

this rulemaking. 

By the same token, EPA has 

historically interpreted certain state SIPapproved programs as sufficiently openended such that the rules provide for 

the ‘‘automatic assumption for the 

responsibility for review’’ of new 

pollutants before the general deadline 

for states to revise their PSD programs. 

See, e.g., 52 FR 24682. Conversely, we 

have also read federal rules and state 

rules approved in SIPs to provide for the 

automatic removal of a pollutant when 

such pollutant is no longer ‘‘subject to 

regulation.’’ For example, the 1990 CAA 

Amendments exempted HAPs listed in 

section 112(b)(1) from the PSD 

requirements. See CAA section 

112(b)(6). Following passage of the 

amendments, EPA issued ‘‘New Source 

Review (NSR) Program Transitional 

Guidance,’’ a memorandum from John S. 

Seitz, Director, Office of Air Quality 

Planning and Standards to Regional Air 

Division Directors on March 11, 1991. In 

that guidance, EPA interpreted its PSD 

regulations to automatically cease to 

apply to listed HAPs (with some noted 

exceptions), and implicitly stated that a 

state with an open-ended SIP-approved 

PSD rule could also take the position 

that its SIP-approved rule automatically 

ceased to regulate HAPs. 

After reviewing these past practices in 

the PSD permitting program, and EPA’s 

prior statements regarding pollutants 

subject to the PSD program, we 

conclude that states with SIP-approved 

rules that contain the same language as 

used in 40 CFR 52.21(b)(50) or 40 CFR 

51.166(b)(49), or that otherwise have 

sufficiently open-ended PSD 

regulations, would be able to implement 

our Tailoring Rule approach to 

permitting by interpreting their 

regulations, and without needing to 

promulgate a regulation or seek state 

legislative action. This is particularly— 

although not exclusively—the case for 

states that take the position that they 

intend their rules to apply in the same 

manner as EPA’s counterpart rules. If 

states adopt this reading of their 

regulations, GHG sources falling below 

the specified cutoffs would not be 

emitting pollutants ‘‘subject to 

regulation’’ within the definition of 

‘‘regulated NSR pollutant’’ and therefore 

would not be subject to PSD permitting 

as a major stationary source or for 

making a major modification. 

During our consideration of this 

action, we participated in 

teleconferences with one local and six 

state agency permitting authorities to 

discuss this issue of whether they could 

implement the proposed rule without 

the need for state law or regulation 

changes or a revision of the provisions 

of state law that are a part of the SIP. 

We specifically discussed whether 

defining the phrase ‘‘subject to 

regulation’’ would better facilitate state 

incorporation of the limitations in this 

final rule. The state and local agencies 

participating in the calls generally 

agreed that defining the phrase ‘‘subject 

to regulation’’ would, compared to our 

proposed approach, better facilitate state 

incorporation of the limitations in the 

final rule in states with regulations that 

mirror the existing federal rules, or in 

states whose rules are otherwise 

sufficiently open-ended to incorporate 

the limitations in the final rule by 

interpretation. Participants from each 

agency also indicated that their rules 

contain the term ‘‘subject to regulation’’ 

and that term has not been previously 

interpreted in ways that would preclude 

application of the meaning assigned to 

the term by EPA. We therefore 

concluded it is likely the state rules are 

sufficiently open-ended to apply EPA’s 

approach by interpretation (although 

some states indicated they may elect to 

pursue rulemaking in addition to or 

instead of interpretation). Accordingly, 

we selected the ‘‘subject to regulation’’ 

regulatory approach as the mechanism 

for implementing the final rule. 

mstockstill on DSKH9S0YB1PROD with RULES2

31582 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

54We also think that this approach better clarifies 

our long standing practice of interpreting openended SIP regulations to automatically adjust for 

changes in the regulatory status of an air pollutant, 

because it appropriately assures that the Tailoring 

Rule applies to both the definition of ‘‘major 

stationary source’’ and ‘‘regulated NSR pollutant.’’ 

3. Other Mechanisms 

As just described, we selected the 

‘‘subject to regulation’’ mechanism 

because it most readily accommodated 

the needs of states to expeditiously 

revise—through interpretation or 

otherwise—their state rules. Even so, it 

is important to recognize that this 

mechanism has the same substantive 

effect as the mechanism we considered 

in the proposed rule, which was 

revising numerical thresholds in the 

definitions of major stationary source 

and major modification. Most 

importantly, although we are codifying 

the ‘‘subject to regulation’’ mechanism, 

that approach is driven by the needs of 

the states, and our action in this 

rulemaking should be interpreted to rely 

on any of several legal mechanisms to 

accomplish this result. Thus, our action 

in this rule should be understood as 

revising the meaning of several terms in 

these definitions, including: (1) The 

numerical thresholds, as we proposed; 

(2) the term, ‘‘any source,’’ which some 

commenters identified as the most 

relevant term for purposes of our 

proposal; (3) the term, ‘‘any air 

pollutant; or (4) the term, ‘‘subject to 

regulation.’’ The specific choice of 

which of these constitutes the nominal 

mechanism does not have a substantive 

legal effect because each mechanism 

involves one or another of the 

components of the terms ‘‘major 

stationary source’’—which embodies the 

statutory term, ‘‘major emitting 

facility’’—and ‘‘major modification,’’ 

which embodies the statutory term, 

‘‘modification,’’ and it is those statutory 

and regulatory terms that we are 

defining to exclude the indicated GHGemitting sources.54

4. Codification of Interpretive Memo 

As noted previously, we recently 

affirmed and refined our interpretation 

of the term ‘‘subject to regulation’’ as it 

applies broadly to the PSD program 

through a formal notice and comment 

process. ‘‘Interpretation of Regulations 

that Determine Pollutants Covered by 

Clean Air Act Permitting Programs,’’ 75 

FR 17004. In the proposal associated 

with that action, we requested comment 

on whether we should codify our 

interpretation in the regulatory text. 74 

FR 51535, 51547 (October 7, 2009). We 

elected not to codify our interpretation 

in the final action on reconsideration of 

the Interpretive Memo because we 

concluded such an action was not 

necessary and that it was important to 

apply the refined interpretation 

immediately. 75 FR 17015. However, in 

the RTC document for that action, we 

indicated that we had not ruled out the 

option of codifying our interpretation at 

a later time. Since we are otherwise 

adopting a definition of ‘‘subject to 

regulation’’ in this rule as the 

mechanism for implementing the phasein, it makes sense in this final rule to 

codify the interpretation reflected in the 

Interpretive Memo and the final action 

on reconsideration at the same time to 

bring clarity to our rules. Specifically, 

the definitions of the term ‘‘subject to 

regulation’’ contain a paragraph that 

reflects our existing interpretation of 

that term (i.e., prior to adopting the 

provisions that implement the phasein). Codification of the Interpretive 

Memo in this action makes sense to 

ensure the regulations reflect a complete 

picture of the meaning of ‘‘subject to 

regulation’’ applied by EPA. We also are 

moving existing exceptions (e.g., section 

112 HAPs) to a new paragraph within 

the definition of ‘‘subject to regulation.’’ 

This minor reorganization of these 

regulations is not intended to effect any 

change in how they are to be 

implemented, but merely simplifies and 

clarifies the regulations by clearly 

delineating different terms and 

concepts. 

This codification of this interpretation 

of ‘‘subject to regulation’’ from the 

reconsideration for the Interpretive 

Memo is not necessary to assure the 

effectiveness of the interpretation, and it 

does not disturb states’ existing 

authority to adopt the definition 

through interpretation of their existing 

rules. Codifying our existing 

interpretation in this action will ensure 

that parties reading the regulations have 

a full understanding of how EPA applies 

the PSD program requirements. Since 

the interpretation described in the 

Interpretive Memo and the April 2, 2010 

final action are otherwise applicable at 

this time, the particular time sensitivity 

discussed in the latter action is not the 

same for this final action tailoring the 

PSD requirements. 

5. Delaying Limited Approvals and 

Request for Submission of Information 

From States Implementing a SIPApproved PSD Program 

Because we now anticipate that many 

states will be able to implement our 

tailoring approach through 

interpretation of the term ‘‘subject to 

regulation,’’ and without the need to 

revise their SIPs, we are delaying further 

action on our proposal to limit our 

approval of SIPs until we better 

understand how permitting authorities 

will, in fact, implement our tailoring 

approach. For this purpose, we ask each 

state to submit a letter to the appropriate 

EPA Regional Administrator no later 

than August 2, 2010. In that letter, the 

state should explain whether it will 

apply EPA’s meaning of the term 

‘‘subject to regulation’’ and if so, 

whether the state intends to incorporate 

that meaning of the term through 

interpretation, and without undertaking 

a regulatory or legislative process. If a 

state must undertake a regulatory or 

legislative process, then the letter 

should provide an estimate of the time 

needed to adopt the final rules. If a state 

chooses not to adopt EPA’s meaning by 

interpretation, the letter should address 

whether the state has alternative 

authority to implement either our 

tailoring approach or some other 

approach that is at least as stringent, 

whether the state intends to use that 

authority. If the state does not intend to 

interpret or revise its SIP to adopt the 

tailoring approach or such other 

approach, then the letter should address 

the expected shortfalls in personnel and 

funding that will arise if the state 

attempts to carry out PSD permitting for 

GHG sources under the existing SIP and 

interpretation. 

For any state that is unable or 

unwilling to adopt the tailoring 

approach by January 2, 2011, and that 

otherwise is unable to demonstrate 

adequate personnel and funding, we 

will move forward with finalizing our 

proposal to limit our approval of the 

existing SIP. Although we received 

comments questioning our authority to 

limit approval as proposed, using our 

general rulemaking and CAA section 

110(k)(6) authorities, we are not 

responding to those comments at this 

time. We will address these comments 

in any final action we take to implement 

a limited approval. 

In our proposed rule, we also noted 

that a handful of EPA-approved SIPs fail 

to include provisions that would apply 

PSD to GHG sources at the appropriate 

time. This is generally because these 

SIPs specifically list the pollutants 

subject to the SIP PSD program 

requirements, and do not include GHGs 

in that list, rather than include a 

definition of NSR regulated pollutant 

that mirrors the federal rule, or because 

the state otherwise interprets its 

regulations to limit which pollutants the 

state may regulate. At proposal, we 

indicated that we intended to take 

separate action to identify these SIPs, 

and to take regulatory action to correct 

this SIP deficiency. 

We ask any state or local permitting 

agency that does not believe its existing 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31583 

SIP provides authority to issue PSD 

permits to GHG sources to notify the 

EPA Regional Administrator by letter, 

and to do so no later than August 2, 

2010. This letter should indicate 

whether the state intends to undertake 

rulemaking to revise its rules to apply 

PSD to the GHG sources that will be 

covered under the applicability 

thresholds in this rulemaking, or 

alternatively, whether the state believes 

it has adequate authority through other 

means to issue federally-enforceable 

PSD permits to GHG sources consistent 

with this final rule. For any state that 

lacks the ability to issue PSD permits for 

GHG sources consistent with this final 

rule, we intend to undertake a separate 

action to issue a SIP call, under CAA 

section 110(k)(5). As appropriate, we 

may also impose a FIP through 40 CFR 

52.21 to ensure that GHG sources will 

be permitted consistent with this final 

rule. 

6. Title V Programs 

Our final action also differs from the 

proposal in the specific regulatory 

mechanism by which we tailor the 

definition of ‘‘major source’’ for title V 

permit programs, but is a logical 

outgrowth of our proposed rule. EPA 

proposed to implement tailoring for 

GHGs under title V by excluding 

sources of GHGs from the general 

definition of ‘‘major source’’ under 40 

CFR 70.2 and 71.2, and adding a 

separate definition of ‘‘major source’’ 

with tailored thresholds for sources of 

GHGs. In response to comments, 

particularly from states concerned with 

implementation of the proposed 

approach under state law, EPA is 

adopting an approach in the final rule 

that (1) amends the definition of ‘‘major 

source’’ by codifying EPA’s longstanding 

interpretation that applicability for a 

‘‘major stationary source’’ under CAA 

sections 501(2)(B) and 302(j) and 40 

CFR 70.2 and 71.2 is triggered by 

sources of pollutants ‘‘subject to 

regulation,’’ and (2) adds a definition of 

‘‘subject to regulation.’’ Further, we are 

delaying our action to move forward 

with limiting our previous approval of 

existing state part 70 programs. 

We are finalizing this alternative 

approach to address concerns similar to 

those we received with respect to state 

implementation of SIP-approved PSD 

programs. Specifically, we received 

comments that the mechanism we 

proposed would not address the 

significant administrative and 

programmatic considerations associated 

with permitting GHGs under title V, 

because the 100 tpy threshold would 

continue to apply as a matter of state 

law. Commenters stated that states 

would need to undertake a regulatory 

and/or legislative process to change the 

threshold in their state laws which they 

could not complete before the laws 

would otherwise require issuance of 

operating permits to GHG sources. 

After considering the commenters’ 

concerns, we are finalizing an approach 

designed to address the state law 

concerns for states. As a result, it is 

unnecessary to move forward at this 

time with our proposed approach to 

limit approval of existing part 70 

programs in many states. 

EPA’s approach involves the 

interrelationship of terms within the 

part 70 definition of ‘‘major source’’ in 

title V and EPA’s implementing 

regulations, and EPA’s historical 

practice of interpreting the term ‘‘any air 

pollutant’’ in the ‘‘major stationary 

source’’ component of that definition. 

EPA believes the approach in the final 

rule will allow many states to adopt the 

final rule through interpretation of 

existing state laws. Specifically, 

paragraph (3) within the definition of 

‘‘major source’’ found in 40 CFR 70.2 

and 71.2 defines a major source as ‘‘a 

major stationary source of air pollutants, 

as defined in section 302 of the Act, that 

directly emits or has the potential to 

emit, 100 tpy or more of any air 

pollutant * * *.’’ The EPA previously 

articulated the Agency’s interpretation 

that the regulatory and statutory 

definitions of ‘‘major source’’ under title 

V, including the term ‘‘any air 

pollutant,’’ applies to pollutants ‘‘subject 

to regulation.’’ Memorandum. EPA 

recently re-affirmed this position in 

EPA’s Reconsideration of Interpretation 

of Regulations that Determine Pollutants 

Covered by Clean Air Act Permitting 

Programs. 75 FR 17704, 17022–23 (April 

2, 2010) (Interpretive Memo 

reconsideration final action). 

Accordingly, under our longestablished policy, states historically 

have interpreted the term ‘‘any air 

pollutant’’ under the title V definition of 

‘‘major source’’ to mean any pollutant 

‘‘subject to regulation’’ under the Act. 

Thus, as a matter of established 

interpretation, EPA and states 

effectively read the definition of ‘‘major 

source’’ under title V to include a source 

‘‘* * * that directly emits or has the 

potential to emit, 100 tpy or more of any 

air pollutant subject to regulation under 

the Act’’ (emphasis added). By 

amending our regulations to expressly 

include and define ‘‘subject to 

regulation’’ to implement our tailoring 

for GHGs under title V, we are seeking 

to enable states to adopt and implement 

this approach through a continued 

interpretation of the phrase ‘‘any air 

pollutant’’ within the ‘‘major source’’ 

definition, without the need for changes 

to state regulations or statutes. States 

may be able to track EPA’s approach to 

tailoring for GHG permitting without 

regulatory or statutory changes, for 

example, where a state has taken the 

position, or determines now, that the 

state’s interpretation of ‘‘major source,’’ 

‘‘subject to regulation’’ and/or ‘‘any air 

pollutant’’ is intended to track EPA’s 

interpretation. 

Thus, EPA is adding the phrase 

‘‘subject to regulation’’ to the definition 

of ‘‘major source’’ under 40 CFR 70.2 

and 71.2. EPA is also adding to these 

regulations a definition of ‘‘subject to 

regulation.’’ Under the part 70 and part 

71 regulatory changes adopted, the term 

‘‘subject to regulation,’’ for purposes of 

the definition of ‘‘major source,’’ has two 

components. The first component 

codifies the general approach EPA 

recently articulated in the 

‘‘Reconsideration of Interpretation of 

Regulations That Determine Pollutants 

Covered by Clean Air Act Permitting.’’ 

75 FR 17704. Under this first 

component, a pollutant ‘‘subject to 

regulation’’ is defined to mean a 

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 

and that has taken effect under the CAA. 

See id. at 17022–23; Wegman 

Memorandum at 4–5. To address 

tailoring for GHGs, EPA includes a 

second component of the definition of 

‘‘subject to regulation,’’ specifying that 

GHGs are not subject to regulation for 

purposes of defining a major source, 

unless as of July 1, 2011, the emissions 

of GHGs are from a source emitting or 

having the potential to emit 100,000 tpy 

of GHGs on a CO2e basis. 

As explained previously, we find no 

substantive difference between the 

alternative mechanisms for 

implementing GHG tailoring in the final 

rule. Whether we add GHG thresholds 

directly to the definition of ‘‘major 

source’’ (as we proposed), or 

alternatively, expressly add and define 

the term ‘‘subject to regulation,’’ both 

approaches revise the definition of 

‘‘major source’’ to implement the 

Tailoring Rule. Accordingly, we adopt 

the later approach to facilitate state 

implementation of the final rule through 

an interpretation of existing state part 70 

programs. Similar to our explanation 

previously for PSD, while we adopt the 

‘‘subject to regulation’’ mechanism for 

implementing GHG tailoring in the final 

rule, the thrust of our rulemaking is to 

apply the title V definition of ‘‘major 

source’’—which includes the statutory 

term, ‘‘major stationary source’’—to GHG 

sources by treating only GHG sources 

mstockstill on DSKH9S0YB1PROD with RULES2

31584 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

55The fee provisions are set forth in CAA section 

502(b)(3) and in our regulations at 40 CFR 70.9 and 

71.9. 

that emit at levels above the Steps 1 and 

2 thresholds as meeting that definition. 

Further, we believe that our action may 

reasonably be construed to revise any of 

several terms in that definition, 

including (1) The numerical thresholds, 

as we proposed; (2) the term ‘‘any air 

pollutant,’’ (3) the term ‘‘a major 

stationary source,’’ (4) the term ‘‘subject 

to regulation,’’ which, as discussed 

previously, our regulations graft into the 

definition of ‘‘major source.’’ We believe 

that the specific choice of which term 

constitutes the legal mechanism does 

not have a substantive legal effect 

because each mechanism involves one 

of the components of the regulatory 

term ‘‘major source’’—which embodies 

the meaning of the statutory term, 

‘‘major source’’—and it is that term that 

we are interpreting to tailor title V 

applicability for GHG-emitting sources. 

Thus, while the ‘‘subject to regulation’’ 

mechanism facilitates expeditious 

implementation by states, and we are 

therefore revising our regulations to 

adopt this approach, we otherwise find 

no substantive difference between the 

alternative mechanisms we may use to 

finalize the proposed rule. 

Further, similar to our revised 

approach for addressing state SIPapproved PSD programs, we are 

delaying our action to limit our previous 

approvals for state part 70 operating 

permit programs. In our proposed rule, 

we explained our concern that states 

lack adequate personnel and resources 

to carry out part 70 operating permit 

programs for GHG sources that emit or 

have the potential to emit 100 tpy of 

GHGs. Accordingly, we proposed to use 

our general rulemaking authority under 

section 301(a) of the CAA and APA 

section 553 to limit our prior approval 

of state operating permit programs. This 

limited approval action would have had 

the effect of applying CAA permitting 

requirements only to sources that 

exceed the permitting thresholds 

established in this rule for the phase-in, 

because only those sources would be 

covered by the federally approved part 

70 programs. 74 FR 55345. As discussed 

previously, we are proceeding with a 

slightly revised approach to address 

concerns similar to those raised with 

our proposed approach for addressing 

SIP-approved PSD permit programs. 

Because we now recognize that, like the 

PSD program, many states will be able 

to implement the final rules without the 

need to revise their existing part 70 

operating permit programs, we are 

delaying further action on our proposal 

to limit approval of existing part 70 

programs until we better understand 

how permitting authorities will 

implement our final rule. 

In addition to the information 

requested previously on SIP-approved 

PSD permit programs, we ask each state 

to submit a letter to the appropriate EPA 

Regional Administrator no later than 

August 2, 2010 detailing the state’s plan 

for permitting of GHG sources under the 

state’s part 70 program. In that letter, 

states should explain whether they will 

adopt an interpretation of the terms 

‘‘major source’’ or any of its component 

terms—‘‘a major stationary source,’’ ‘‘any 

air pollutant,’’ or ‘‘subject to regulation,’’ 

or the numerical thresholds—that is 

consistent with EPA’s regulatory 

interpretation of these terms as codified 

at 40 CFR 70.2, and whether the state 

intends to adopt the interpretation 

without undertaking a regulatory or 

legislative process. This approach may 

be available, for example, where a state 

has taken the position, or determines 

now, that the state’s interpretation of 

these terms is intended to track EPA’s 

interpretation, resulting in title V 

permitting for sources of GHGs as 

described in EPA’s regulations adopted 

in this rule. If a state must revise its title 

V regulations or statutes to implement 

the interpretation, we ask that it 

provides an estimate of the time to 

adopt final rules or statutes in its letter 

to the Regional Administrator. If a state 

chooses not to (or cannot) adopt our 

interpretation, the letter should address 

whether the state has alternative 

authority to implement the GHG 

tailoring approach or some other 

approach that is at least as stringent, but 

which also addresses the expected 

shortfalls in personnel and funding and 

delays in permitting that would exist if 

the state carried out permitting under 

part 70 program thresholds lower than 

those adopted by EPA in this final rule. 

For any state that is unable or unwilling 

to adopt the permitting thresholds in the 

final rules, and otherwise is unable to 

demonstrate adequate personnel and 

funding, EPA will move forward with 

finalizing a narrowed limited approval 

of the state’s existing part 70 program. 

If we do so, then we will respond in that 

action to comments on our proposal. 

In our proposed rule, we also noted 

that a handful of part 70 operating 

permit programs may include 

provisions that would not require 

operating permits for any source of GHG 

emissions because, for example, the 

programs may apply only to pollutants 

specifically identified in the program 

provisions, and the provisions do not 

specifically identify GHGs. In these 

cases, states may be unable to interpret 

their regulatory provisions to interpret 

the term ‘‘any pollutant’’ to include 

pollutants ‘‘subject to regulation.’’ We 

indicated that we intended to take 

separate action to identify these 

programs, and to take regulatory action 

to correct this deficiency. Accordingly, 

we ask any state or local permitting 

agency that does not believe its existing 

part 70 regulations convey authority to 

issue title V permits to GHG sources 

consistent with the final rule to notify 

the EPA Regional Administrator by 

letter as to whether the state intends to 

undertake rulemaking to revise its rules 

consistent with these applicability 

thresholds. This notification should be 

done no later than the previously 

described letter regarding adoption of 

the Tailoring Rule, and could be 

combined with similar notifications we 

request regarding the PSD program. We 

intend to undertake a separate 

regulatory action to address part 70 

programs that lack the ability to issue 

operating permits for GHG sources 

consistent with the final rule. We also 

intend to use our federal title V 

authority to ensure that GHG sources 

will be permitted consistent with the 

final rule. 

D. Rationale for Treatment of GHGs for 

Title V Permit Fees 

The title V program requires 

permitting authorities to collect fees 

‘‘sufficient to cover all reasonable (direct 

and indirect) costs required to develop 

and administer [title V] programs.’’ 55 To 

meet this requirement, permitting 

authorities either collect an amount not 

less than a minimum amount specified 

in our rules (known as the ‘‘presumptive 

minimum’’), or may collect a different 

amount (usually less than the 

presumptive minimum). We did not 

propose to change the title V fee 

regulations in our notice of proposed 

rulemaking for this action, nor did we 

propose to require new fee 

demonstrations when title V programs 

begin to address GHGs. However, we 

did recommend that each state, local or 

tribal program review its resource needs 

for GHGs and determine if the existing 

fee approaches will be adequate. If those 

approaches will not be adequate, we 

suggested that states should be proactive 

in raising fees to cover the direct and 

indirect costs of the program or develop 

other alternative approaches to meet the 

shortfall. We are retaining this proposed 

approach, and are not changing our fee 

regulations as part of this final action 

establishing Steps 1 and 2 of the phasein. However, we are offering some 

additional clarification of our fee 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31585 

approach during these steps in response 

to comments we received on this issue. 

Additional discussion of fees will be 

included as part of subsequent actions 

establishing Step 3 and beyond. 

A few state commenters suggested 

that EPA should modify part 70 to adopt 

a presumptive minimum fee (or range 

for such fee) for GHGs, some of whom 

suggested that current fees may be 

insufficient to cover the costs of their 

program. It is important to clarify that 

altering the presumptive minimum 

would only affect those states that chose 

to charge the presumptive minimum fee 

to sources. Most states—including some 

of the commenters asking EPA to raise 

the presumptive minimum—collect a 

lower amount that is not based on the 

presumptive minimum, but rather, 

relies on another fee schedule that it 

developed and EPA approved as 

adequate to cover costs. Therefore, it is 

useful to first discuss our approach to 

programs that have fee schedules 

resulting in a different amount before 

discussing our approach to the 

presumptive minimum. 

Because of the added GHG title V 

permitting workload described 

elsewhere in this notice, any state that 

will not, under its current fee structure, 

collect fees adequate to fund the 

permitting of GHG sources must alter its 

fee structure in order to meet the 

requirement that fees be adequate to 

cover costs. Changes may not be 

required in every instance; 

circumstances will vary from state to 

state. For example, a state may see 

increases in revenue from newlycovered sources (based on emissions of 

pollutants already subject to fees) that 

fully cover the state’s increased costs, or 

a state may be over-collecting fees now 

and could use the surplus to offset the 

increased costs. Nonetheless, in many 

cases, we think states will need to adjust 

their fee structures to cover the costs of 

GHG permitting in order to meet the 

requirements of the Act and our 

regulations. 

For this reason, although we are not 

calling for new fee demonstrations at 

this time, we plan to closely monitor 

state title V programs during the first 

two steps of the Tailoring Rule to ensure 

that the added workload from 

incorporating GHGs into the permit 

program does not result in fee shortfalls 

that imperil operating permit program 

implementation and enforcement, 

whatever the basis of the states’ fee 

schedule. As described in the proposal, 

such fee oversight by EPA may involve 

fee audits under the authority of 40 CFR 

70.9(b)(5) to ensure that adequate fees 

are collected in the aggregate to cover 

program costs, with emphasis on 

whether the additional GHG workload is 

being appropriately funded. Also, EPA 

retains the ability to initiate a program 

revision under 40 CFR 70.4(i)(3) or issue 

a notice of deficiency under the process 

described in 40 CFR 70.10(b) to address 

fee adequacy issues, which may be 

uncovered during a fee audit. By relying 

on existing oversight measures, we are 

ensuring that the fee requirements are 

met with a minimum of disruption to 

existing programs at a time when they 

will already be facing significant 

challenges related to GHG permitting. 

Turning to the minority of states that 

do use the presumptive minimum, we 

did not propose to change the 

presumptive minimum calculation 

method to account for GHGs. Currently 

under the statute and our rules, the 

presumptive minimum is based on a 

subset of air pollutants (i.e., VOCs, 

NAAQS pollutants except for CO, and 

pollutants regulated under the NSPS 

and MACT standards promulgated 

under sections 111 and 112 of the Act, 

respectively) that does not include 

GHGs. The amount is specified on a perton basis and changes with inflation (it 

is currently set at $43.75/ton), but does 

not apply to emissions over 4,000 tpy of 

a given pollutant from a given source. 

We noted several difficulties in 

applying the presumptive minimum to 

GHG, including the large amounts of 

GHG emissions relative to other 

pollutants and the need for better data 

to establish a GHG-specific amount. 

Noting that GHGs are not currently 

included in the Act’s list of pollutants 

to which the presumptive fee applies, 

we also invited comment on whether we 

should raise the fee for listed pollutants 

to cover the added cost of GHG 

permitting. 

A few state commenters asked us to 

set a presumptive fee for GHGs, which 

we take to mean we should add GHGs 

to the list of pollutants to which a 

presumptive fee would apply. However, 

many commenters noted that the 

current presumptive minimum fee is 

unreasonable for GHGs because GHGs 

are emitted in greater quantities than the 

pollutants currently subject to 

presumptive fees, which would result in 

excessive fees. These commenters 

believe that EPA needs to limit the fees 

that states can charge for GHGs. 

Moreover, one commenter read the 

statute to prohibit us from listing GHGs 

in the presumptive fee calculation in the 

first place. Several commenters 

disagreed with the idea of increasing the 

presumptive fee for other pollutants to 

cover the cost of regulating GHGs, some 

of whom believed that this would 

unfairly punish existing sources or 

would bring in no new revenue from 

sources triggering title V for the first 

time. 

After considering these comments, we 

remain disinclined, as we were at 

proposal, to change the presumptive fee 

calculation regulations. While there is 

some support for changing the 

regulations, the comments confirm the 

challenges in doing so. While we 

expressly rejected charging the full 

presumptive cost per ton amount for 

GHG, we also did not propose language 

to establish a different amount just for 

GHG, to establish whether a different 

tpy cap would apply, or to assess 

whether GHGs could even be added to 

the list. Thus, many commenters were 

very concerned about whether the full 

$43.75 or the 4000 tpy cap would apply 

to GHG if we listed it as a regulated 

pollutant for fee purposes. Furthermore, 

we noted at proposal, and commenters 

did not disagree, that more data would 

be needed to establish the appropriate 

basis for the GHG presumptive 

minimum. We are not taking a final 

position in this notice on whether the 

statute is amenable to including GHG in 

the presumptive fee calculation 

currently, but these comments illustrate 

some of the difficulties of such an 

approach. 

At the same time, we are not 

increasing the presumptive minimum 

for other pollutants already included in 

the fee calculation. We disagree with the 

commenter who said such an approach 

would bring in no new revenue from 

newly-subject sources. Many of the 

newly-subject sources would emit 

already-included pollutants. If new 

revenue from these pollutants were 

insufficient, and because the Act does 

not specify how the shortfall must be 

addressed, the amount of any projected 

shortfall could be made up by 

increasing fees on these pollutants. In 

fact, the projected shortfall could be 

addressed without having to inventory 

GHG emissions from title V sources, 

since the emissions of already-included 

pollutants are well-known. We also note 

that, although some commenters are 

concerned that failing to assess fees for 

GHGs directly would be unfair, the 

statute does not provide that the 

presumptive fee be proportional to each 

type of pollutant or be proportionally 

allocated to all sources. Rather, the 

presumptive fee approach provides a 

backstop for states that do not wish to 

adopt a more tailored approach. 

Nonetheless, we have decided not to 

increase the presumptive fee amounts 

for other pollutants because we lack 

information about the extent to which 

shortfalls exist due to GHG permitting, 

and which mix of sources and fees is 

appropriate for addressing any such 

mstockstill on DSKH9S0YB1PROD with RULES2

31586 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

shortfall in a state. This decision also 

provides greater flexibility to states and 

minimizes disruption to existing 

programs. 

We note that, contrary to the 

statements of some commenters, the 

CAA provisions allowing for a 

presumptive fee calculation do not 

override the basic requirement that fees 

be adequate to cover costs. As noted 

previously, we expect states to see a 

revenue increase from emissions of 

listed pollutants at newly-major sources 

for GHGs, and it is also possible that the 

presumptive minimum may currently be 

resulting in over-collection of fees in a 

state. Thus, a state continuing to use the 

presumptive minimum may not have a 

shortfall. However, if states using the 

presumptive minimum approach do 

have a revenue shortfall due to GHG 

permitting, the statute requires the 

shortfall to be addressed. The EPA has 

had, and will continue to have, the 

ability to require states that use the 

presumptive minimum to increase their 

fees if the presumptive minimum results 

in a revenue shortfall that imperils 

operating permit program 

implementation and enforcement. Thus, 

although we are not changing the 

presumptive minimum in our 

regulations, we plan to follow the same 

oversight approach for states using the 

presumptive minimum as for those 

collecting less based on a resource 

demonstration. As described previously, 

this approach may involve fee audits 

with emphasis on whether the 

additional GHG workload is being 

appropriately funded, and other 

appropriate follow-up. 

Consistent with our proposal, EPA is 

not modifying its own part 71 fee 

structure (which closely mirrors the 

presumptive minimum) in order to 

charge an additional fee for GHGs. EPA 

must revise its fee schedule if the 

schedule does not reflect the costs of 

program administration. We have not 

determined that the existing fee 

structure will be inadequate to fund the 

part 71 programs costs during the first 

two phases of permitting GHGs as set 

forth in this action. However, we are 

required to review the fee schedule 

every 2 years, and make changes to the 

fee schedule as necessary to reflect 

permit program costs. 40 CFR 71.9(n)(2). 

Thus we will continue to examine the 

increases in part 71 burden due to GHG 

permitting, the current revenue 

collection, and the increases in revenue 

from newly-subject part 71 sources, and 

will adjust the part 71 fee approach 

accordingly. 

Finally, several state and industry 

commenters asked EPA to provide 

guidance and recommendations for an 

appropriate GHG fee structure. We note 

that title V grants permitting authorities 

considerable discretion in charging fees 

to sources for title V purposes and does 

not require or prohibit fees specifically 

for GHGs, provided the states collect 

fees in the aggregate that are sufficient 

to cover all the direct and indirect 

program costs. In responding to requests 

for guidance, we do not wish to limit 

state discretion. For example, some 

commenters suggest that EPA prohibit 

emissions-based fees for GHGs or cap 

the amount that can be collected, while 

others suggest we provide a range of 

acceptable fees. We are concerned that, 

given the wide variety of fee approaches 

that states now take, providing specific 

guidance may be disruptive, rather than 

helpful, to states. 

On the other hand, we recognize that 

it will initially be difficult for states to 

establish an appropriate emissions fee 

for GHGs. As noted previously, there are 

currently limited data available for 

establishing such a fee, and, due to the 

large quantities of GHG emissions, such 

a fee may only amount to a few cents 

per ton. At the same time, as noted in 

the proposal, a number similar to that 

used for other pollutants (e.g., the 

presumptive minimum of 

approximately $45/ton of GHG) would 

be inappropriate because it would likely 

result in huge over-collection. Because 

of this challenge, we note that 40 CFR 

70.9(b)(3) allows the state to charge fees 

to individual sources on any basis (e.g., 

emission fee, application fee, servicebased fees, or others, in any 

combination). While most states use 

emissions-based fees, there is merit to 

considering all the available fee bases to 

address increased GHG workload, 

including approaches that do not 

require a GHG emissions inventory for 

fee purposes. For example, where it is 

possible to estimate a revenue shortfall 

as a percentage of fee revenue, it may be 

appropriate to simply attach a 

percentage-based surcharge to each 

source’s fee to match that shortfall. 

Similarly, where the shortfall could be 

estimated as a total dollar amount, a flat 

surcharge could be added to each 

source’s fee to address the shortfall. 

These suggestions should not be read 

to indicate that EPA prefers any 

particular approach, or that EPA rejects 

a cost per ton approach. Rather, they 

illustrate that it is possible to address a 

revenue shortfall without establishing a 

GHG per-ton fee. While the EPA is 

declining to recommend specific 

approaches in this preamble, we are 

committed to assisting states in 

implementing the fee requirements for 

GHG. Therefore, we will work with any 

state that requests assistance from EPA 

in developing a workable fee approach. 

E. Other Actions and Issues 

1. Permit Streamlining Techniques 

In our proposal, we stated that while 

we were phasing-in permitting 

requirements, we would make a 

concerted effort to assess and 

implement streamlining options, tools, 

and guidance to reduce the costs to 

sources and permitting authorities of 

GHG permitting. We recognized that the 

development and implementation of 

these techniques should be an integral 

part of our strategy during the phase-in 

period, and we stated that we would 

undertake as many streamlining actions 

as possible, as quickly as possible. We 

discussed several streamlining 

techniques in particular, including: (1) 

Defining PTE for various source 

categories, (2) establishing emission 

limits for various source categories that 

constitute presumptive BACT, (3) 

establishing procedures for use of 

general permits and permits-by-rule, (4) 

establishing procedures for electronic 

permitting, and (5) establishing ‘‘lean’’ 

techniques for permit process 

improvements. The first three of these 

approaches have the potential to have 

the greatest impact in reducing the 

numbers of sources subject to PSD or 

title V (the definition of PTE) or of 

reducing permitting costs (presumptive 

BACT and general permits or permitsby-rule). 

In our proposal, we also described the 

timing for development and 

implementation of these streamlining 

techniques. We explained that each of 

the first three techniques would 

generally take 3–4 years to develop and 

implement, and therefore would be of 

limited use in the near-term. This time 

frame is necessary because EPA will 

first need to collect and analyze small 

source data that we do not currently 

have—because these are sources that 

EPA has not traditionally regulated—in 

order to assess which of these 

techniques are viable or effective for 

such sources. In general, EPA will then 

need to conduct notice-and-comment 

rulemaking to establish the approaches, 

and that rulemaking will need to 

address various legal and policy aspects 

of these approaches. After that, the 

permitting authorities will need some 

time to adopt the streamlining 

techniques as part of their permitting 

programs. 

We received several comments on 

streamlining techniques. In general, the 

comments indicate widespread support 

for our pursuit of streamlining 

approaches, but some commenters were 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31587 

56We do not attempt to address or resolve the 

various opinions about what legal or policy 

direction we must take regarding any of these 

streamlining options. The proper forum for doing 

that will be in the action(s) where we apply a given 

option. Nonetheless, our RTC document provides 

additional detail about the options we described 

and what commenters said about our proposed 

options. In addition, the comments themselves can 

be accessed in the docket for this action. 

concerned that one or more of EPA’s 

identified streamlining options were 

complex, vague, ineffective, and 

questionable legally. Noting our 

proposal to phase in permitting, in part 

to allow more time to develop 

streamlining options for smaller 

sources, some commenters suggested 

that we should delay permitting for 

larger sources for the same reasons. We 

disagree. Such a delay is not justified 

under our legal basis for this rule. While 

implementation of Steps 1 and 2— 

which will cover larger sources—will 

pose implementation challenges, and 

some of the streamlining tools could 

assist with meeting these challenges, we 

have assessed the burdens associated 

with GHG permitting and have 

established a phase-in schedule that 

represents a manageable workload, even 

in the absence of streamlining 

techniques. On the other hand, we do 

agree with these commenters that, 

absent streamlining, applying PSD and 

title V requirements to the much larger 

number of small sources would lead to 

absurd results and administrative 

impossibility. The sources for whom the 

phase-in delays applicability are 

precisely the sources that have the 

greatest need for streamlining measures, 

and thus the greatest need for a deferral 

while we develop and implement 

streamlining options. 

In addition, commenters generally 

echoed many of our concerns about why 

it will take time to put these measures 

in place, and no commenter presented 

any information to suggest that our 3– 

4 year estimate for the PTE, presumptive 

BACT, and general permit measures was 

invalid. 

For these three techniques, we 

continue to believe that as we noted at 

proposal, we will require collection of 

significant category-specific data for 

source and emission unit types that 

have heretofore generally not been 

regulated by the CAA (e.g., furnaces, 

water heaters, etc.), which could take up 

to 1 year. Moreover, commenters had 

differences of opinion as to whether and 

how we should move forward on these 

approaches, and some raised policy and 

legal issues that we would likely want 

to explore through a notice and 

comment process in order to assess 

which of these measures are viable to 

pursue further.56 Even if a rulemaking 

were done expeditiously, it would likely 

require 1 year. Finally, unlike lean and 

electronic permitting, these approaches, 

once finalized by EPA, will likely 

require additional time of up to 2 years 

for states to adopt. Thus, it is clear that 

these approaches will not be in place in 

time to ease any burden prior to the 

planned rulemaking for Step 3. 

Some commenters did observe that 

the fourth and fifth techniques, lean and 

electronic permitting, could, at least 

theoretically, become available sooner. 

However, these commenters also noted 

that successful design and 

implementation of these approaches 

will require implementation experience 

with GHG permitting that is not now 

available. We expect that for the lean 

and electronic permitting techniques, at 

least 1 year of implementation 

experience (of the type that we will gain 

starting in 2011) would be required, 

plus at least an additional year to 

extrapolate that experience to small 

sources and put these approaches into 

effect for small source permitting. Thus, 

we do not think the lean and electronic 

permitting would be in place before the 

beginning of 2013. Moreover, a handful 

of commenters questioned whether lean 

and/or electronic permitting would 

alleviate significant burden. Thus we 

are not able, at this time, to presume 

that these approaches will ease any 

burden prior to the planned rulemaking 

for Step 3. 

It is also important to note that, as a 

practical matter, while these efforts to 

streamline the program for small 

sources are underway, EPA and states 

will also be devoting a significant 

amount of their permitting resources 

and expertise to implementing the PSD 

and title V programs for the GHGemitting sources covered under Steps 1 

and 2. We have established these steps 

in a manner that they will be feasible for 

EPA and state/local/tribal authorities, 

but even so, they will not only consume 

current permitting authority resources, 

but they will also require substantial 

additional resources. As a result, the 

efforts to develop and implement 

streamlining techniques will have to 

compete with the work necessary to 

administer existing programs. For 

example, during the remainder of 2010, 

as described elsewhere in this notice, 

EPA permitting program resources will, 

in addition to continuing to administer 

programs for non-GHG pollutants, be 

used to conduct at least the following 

GHG-related activities in addition to 

streamlining: (1) Develop BACT and 

other information and guidance for 

implementing programs for sources 

covered by Step 1, followed by 

additional guidance and information for 

sources covered by Step 2; (2) review 

and act on information we receive 

regarding state adoption of GHG 

permitting requirements, which may 

entail narrowing of previous SIP 

approvals or processing of other 

programmatic revisions; and (3) propose 

and finalize measures to address 

programs with deficiencies in GHG 

coverage. As the beginning of Step 2 

nears, we will also begin to receive and 

process the first applications for permits 

that will incorporate GHG requirements 

(i.e., those that will be issued after 

January 2, 2011). States seeking to 

implement streamlining approaches will 

face similar competition for permitting 

resources. 

These time frames and resource 

considerations for streamlining confirm 

the approach to phase-in that we are 

taking in this rule. First and foremost, 

they make clear that it will not be 

possible to have streamlining measures 

in place in time for either Step 1 or Step 

2. Therefore our selection of threshold 

for those steps is not built on 

assumptions that streamlining will 

remove some or all of the burden during 

those steps. 

Second, they make clear that, while 

no significant streamlining can be in 

place by the time we must begin to 

develop the Step 3 rule (i.e., latter half 

of 2011, to promulgate by July 2012, 

effective July 2013), it is likely that by 

that time EPA and states will have had 

an opportunity to gain implementation 

experience that could serve as the basis 

for beginning to implement streamlining 

techniques that do not require 

rulemaking or state adoption (e.g., lean 

and electronic permitting). It is also 

likely that we will have had an 

opportunity to gather technical 

information—which we have already 

begun to gather—for certain source and 

emissions unit categories that would be 

necessary to support proposal of PTE or 

presumptive BACT approaches for those 

categories. We expect that the Step 3 

rulemaking will provide an opportunity 

for us to use that experience and data to 

begin to propose streamlining 

approaches that need notice and 

comment rulemaking. We can also begin 

to take into account any burden 

reductions from possible early 

streamlining efforts—that is, through 

lean and electronic permitting—in the 

establishment of Step 3. 

Third, it is clear that the potential 

availability of streamlining measures 

does not call into question our decision 

that in no event will we broaden PSD 

and title V applicability to cover GHGemitting sources below the 50,000 tpy 

CO2e level prior to July 2016, as 

discussed elsewhere. EPA cannot now 

mstockstill on DSKH9S0YB1PROD with RULES2

31588 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

predict the resources that will be 

required to implement PSD and title V 

programs for GHG-emitting sources once 

various streamlining techniques are 

ultimately completed. This is uncertain 

not only because we need data and 

implementation experience with GHG 

permitting during Steps 1, 2, and 3 that 

we can apply to estimates for small 

sources, but also because, as comments 

indicate, there is a broad range of legal 

and policy issues to consider in crafting 

the streamlining approaches we 

ultimately adopt. We have presented an 

initial assessment of options and 

obtained views of commenters both 

supporting and opposing them, and it is 

the result of these future actions, whose 

outcomes are uncertain at this time, that 

will ultimately determine the extent to 

which streamlining approaches will 

allow for the administration of PSD and 

title V programs for numerous small 

sources. Thus, while we are optimistic 

that we can craft workable, commonsense solutions, we nonetheless, believe 

it is important to preserve our small 

source exclusion until we have not only 

had time to put the streamlining 

approaches in place, but also have had 

time to assess the burdens that remain, 

before we bring in additional sources 

below the 50,000 tpy CO2e levels. We 

believe that the 6-year timeframe will 

require a sustained intensive effort by 

EPA and states to develop, adopt, and 

implement streamlining techniques, and 

will require EPA to then evaluate those 

techniques and complete a rulemaking 

concerning PSD and title V applicability 

to small-sources based on that 

evaluation. In this manner, the 6-year 

period will give us the necessary time 

to make the best decisions about the 

actions we should take beyond Step 3. 

While comments make clear that there 

are issues to be addressed, nothing in 

the comments has persuaded us that we 

should abandon our streamlining 

efforts. To the contrary, the strong 

support for these efforts shown by many 

commenters reinforces our intention, as 

stated at proposal, to move forward with 

these approaches as an integral part of 

our phase-in approach. Moreover, 

notwithstanding the competition for 

GHG permitting resources and expertise, 

we believe it is critical that we move 

forward expeditiously. As noted 

previously, we are already taking a first 

step by initiating permitting for larger 

sources, beginning January 2011, that 

will begin to provide valuable 

implementation experience. This 

experience can be useful in allowing 

states to begin implementing early 

streamlining measures, like lean and 

electronic permitting, which do not 

require EPA action. We have also 

already begun, and will continue, 

developing data necessary to support 

possible rulemakings addressing 

approaches such as PTE, presumptive 

BACT, and/or general permits. We 

expect to be able to use these data to 

support possible rulemakings on these 

topics, as appropriate, at about the same 

time as our Step 3 rulemaking. There 

may also be available streamlining 

options that were not described in our 

proposal that warrant further 

consideration. Because of the 

uncertainty surrounding such 

approaches, we are not committing to 

finalize rules on any particular 

approach, but we do plan to explore all 

streamlining options as expeditiously as 

possible, beginning immediately and 

proceeding throughout the phase-in 

period, and we encourage permitting 

authorities to do the same. We commit 

to consider a wide array of possible 

streamlining measures, and we commit 

to propose and take comment on, in the 

Step 3 rulemaking, a set of those 

measures that we determine are viable 

to pursue further. 

2. Guidance for BACT Determinations 

The CAA requires that a PSD permit 

contain, among other things, emissions 

limits based on the BACT for each 

pollutant subject to regulation under the 

Act emitted from the source that triggers 

PSD. 42 U.S.C. 7475(a)(4); 42 U.S.C. 

7479(3). BACT is defined as follows: 

(3) The term ‘‘best available control 

technology’’ means an emission limitation 

based on the maximum degree of reduction 

of each pollutant subject to regulation under 

this Act emitted from or which results from 

any major emitting facility, which the 

permitting authority, on a case-by-case basis, 

taking into account energy, environmental, 

and economic impacts and other costs, 

determines is achievable for such facility 

through application of production processes 

and available methods, systems, and 

techniques, including fuel cleaning, clean 

fuels, or treatment or innovative fuel 

combustion techniques for control of each 

such pollutant. In no event shall application 

of ‘‘best available control technology’’ result 

in emissions of any pollutants which will 

exceed the emissions allowed by any 

applicable standard established pursuant to 

section 111 or 112 of this Act. Emissions 

from any source utilizing clean fuels, or any 

other means, to comply with this paragraph 

shall not be allowed to increase above levels 

that would have been required under this 

paragraph as it existed prior to enactment of 

the Clean Air Act Amendments of 1990. 

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

Thus, the BACT process is designed 

to determine the most effective control 

strategies achievable in each instance, 

considering energy, environmental, and 

economic impacts. However, the caseby-case nature of BACT, together with 

the range of factors and technologies 

that must be considered, presents a 

challenge in determining BACT for 

newly regulated pollutants. When a new 

pollutant is regulated, the first permit 

applicants and permitting authorities 

that are faced with determining BACT 

for a new pollutant will likely need to 

invest more time and resources in 

gathering and analyzing information 

necessary to make an assessment of 

BACT under the statutory criteria. Once 

the PSD permitting program matures 

with respect to the new pollutant, 

successive BACT analyses will establish 

precedents that can inform subsequent 

BACT determinations. While the BACT 

provisions clearly contemplate that the 

permitting authority evaluate control 

strategies on a case-by-case basis, EPA 

recognizes the need to develop and 

share policy guidance and technical 

information for sources and permitting 

authorities as they begin to permit 

sources of newly regulated pollutants, 

such as GHGs. When applied in a 

practical manner, this additional EPA 

guidance and technical information 

should reduce time and resource needs 

when evaluating BACT for newly 

regulated pollutants. 

As described in the proposed 

Tailoring Rule, EPA intends to compile 

and make available technical and 

background information on GHG 

emission factors, control technologies 

and measures, and measurement and 

monitoring methodologies for key GHG 

source categories. We expressed our 

intent to work closely with stakeholders 

in developing this supporting 

information and to ensure this 

information is available in sufficient 

time to assist permitting agencies in 

their BACT determinations. The 

proposal took comment on what other 

types of support or assistance EPA can 

provide to initially help air pollution 

control agencies with the permitting of 

GHGs. 

Commenters on the proposed 

Tailoring Rule generally supported EPA 

providing technical information and 

policy guidance for sources of GHGs. 

Several commenters specifically 

requested guidance to clarify GHGrelated issues, such as how to compute 

CO2e emissions, how to evaluate 

emissions of CO2 from biomass fuel, and 

whether an air quality analysis will be 

required for GHGs. Additionally, 

commenters requested that EPA issue 

‘‘white papers’’ and other tools that 

would provide information on a range of 

control technologies and measures for 

major stationary source categories, such 

as power plants, cement kilns, glass 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31589 

57The CAAAC is a senior-level policy committee 

established in 1990 to advise the U.S. EPA on issues 

related to implementing the CAA Amendments of 

1990. The committee is chartered under the Federal 

Advisory Committee Act and has been renewed 

every 2 years since its creation. The membership is 

approximately 40 members and experts 

representing state and local government, 

environmental and public interest groups, academic 

institutions, unions, trade associations, utilities, 

industry, and other experts. The CAAAC meets 

three times a year, normally in Washington, DC. It 

provides advice and counsel to EPA on a variety of 

important air quality policy issues. The committee 

has formed several subcommittees to provide more 

detailed discussion and advice on many technical 

issues. 

furnaces, and other sources. Many of 

these commenters further requested that 

EPA provide an opportunity for 

stakeholder input on the guidance, and 

a few commenters insisted that 

permitting for sources of GHGs should 

not begin prior to issuing final guidance. 

Consistent with our commitment at 

proposal to involve all stakeholders in 

our guidance development, EPA called 

upon the CAAAC in September 2009, to 

provide assistance and 

recommendations for what types of 

guidance and technical information 

would be helpful.57 Specifically, our 

charge to the CAAAC was ‘‘* * * to 

discuss and identify the major issues 

and potential barriers to implementing 

the PSD Program under the CAA for 

greenhouse gases * * * [and] focus 

initially on the BACT requirement, 

including information and guidance that 

would be useful for EPA to provide 

concerning the technical, economic, and 

environmental performance 

characteristics of potential BACT 

options.’’ This charge also requested the 

CAAAC to ‘‘identify and discuss 

approaches to enable state and local 

permitting authorities to apply the 

BACT criteria in a consistent, practical 

and efficient manner.’’ 

At its October 6, 2009 meeting, the 

CAAAC established a Climate Change 

Work Group, made up of 35 

representatives from a variety of 

industries, state and local governments, 

and environmental and public health 

non-profit organizations, organized 

under CAAAC’s Permits, New Source 

Review and Toxics Subcommittee. The 

Work Group initially focused its 

attention on the procedure for 

evaluating BACT and decided that the 

process and criteria for determining 

BACT for criteria pollutants represented 

a workable and acceptable framework 

for GHGs. The Work Group also 

recommended a second phase, in which 

the Work Group would consider 

member proposals regarding possible 

alternative or supplementary 

approaches to applying the PSD 

program to GHG sources. 

In February 2010, the CAAAC 

completed work on the first phase of its 

effort and sent EPA a list of 

recommendations that highlighted areas 

of the BACT determination process that 

are in need of technical and policy 

guidance. For more information, see the 

Interim Phase I Report on Issues related 

to BACT for GHGs, February 3, 2010 

that is located in the public docket for 

this rulemaking and at http:// 

www.epa.gov/air/caaac/climate/ 

2010_02_InterimPhaseIReport.pdf. In 

response, we are working on a number 

of fronts to develop technical 

information, guidance, and training to 

assist states in permitting large 

stationary sources of GHGs, including 

identifying GHG control measures for 

different industries. EPA is currently 

working with states on technical 

information and data needs related to 

BACT determinations for GHGs. This 

includes developing the EPA Office of 

Research and Development GHG 

Mitigation Strategies Database, 

enhancing the RACT/BACT/LAER 

Clearinghouse to include GHG-specific 

fields, and preparing technical 

information on sector-based GHG 

control measures. Also, EPA is actively 

developing BACT policy guidance for 

GHGs that will undergo notice and 

comment and will culminate in training 

courses for state, local, and tribal 

permitting authorities. The results of all 

of these efforts will roll out over the 

remainder of 2010. EPA currently awaits 

the Work Group’s recommendations 

from its second phase of deliberations, 

which is underway as of the date of this 

notice. 

EPA does not agree with some 

commenters’ suggestion that EPA 

should delay permitting of any sources 

until final BACT guidance is issued. As 

discussed in the final action on 

reconsideration of the Interpretive 

Memo, delaying the application of 

BACT to enable the development of 

guidance or control strategies is not 

consistent with the BACT requirements. 

63 FR 17008. Furthermore, as just 

described, EPA expects such a delay to 

be unnecessary because EPA will soon 

begin providing technical information to 

inform BACT decisions, and will 

continue to provide additional guidance 

prior to the date that GHG permitting 

begins. However, even in the absence of 

such guidance, a delay would not be 

justified under the legal doctrines of 

‘‘absurd results’’ and ‘‘administrative 

necessity.’’ While implementation of the 

BACT requirement during Steps 1 and 

2 will pose implementation challenges, 

EPA has assessed the burden associated 

with GHG permitting with consideration 

given to these challenges, and has 

established a phase-in schedule that 

represents a manageable workload. 

Thus, while BACT will remain a caseby-case assessment, as it always has 

been under the PSD program, EPA is 

confident that this guidance 

development effort will help support a 

smooth transition to permitting 

emissions of GHGs. Furthermore, EPA 

will continue to work to provide the 

most updated information and support 

tools to allow permitting authorities to 

share and access the most updated 

information on GHG BACT 

determinations as they are made once 

permitting of GHGs begins. EPA remains 

committed to involving stakeholders in 

the upcoming efforts to develop 

guidance to help permitting authorities 

in making BACT determinations for 

sources of GHGs. 

3. Requests for Higher Category-Specific 

Thresholds or Exemptions From 

Applicability 

Although we did not propose any 

categorical exemptions, many 

commenters requested exemptions from 

major source and major modification 

applicability determinations under title 

V and PSD for certain types of GHGemitting sources or certain types of GHG 

emissions as follows: 

Source Categories. Many commenters 

requested various exemptions or 

exclusions from source applicability for 

GHGs under both PSD and title V 

permitting, either during the phase-in 

period or permanently, citing 

anticipated burdens, societal costs, and 

differences in emission characteristics. 

Commenters representing nontraditional sources or source categories 

(sources that have not historically been 

required to get permits) requested 

exemptions from permitting based on 

GHG emissions, including agricultural 

sources, residential sources, and small 

businesses. In general, these 

commenters sometimes, but not always, 

cited ‘‘absurd results’’ and 

‘‘administrative necessity’’ arguments in 

their exemption requests. 

Several commenters from sectors that 

consume a great deal of energy in their 

industrial processes and that are subject 

to international competitiveness, such 

as aluminum, steel, cement, glass, pulp 

and paper, and other manufacturers, 

requested that they be exempt from 

permitting under this final rule. These 

commenters state that we have not 

carefully considered the environmental 

and economic consequences of this 

action because if we had, we would 

have exempted them for several reasons, 

including (1) other countries typically 

exempt similar sources from GHG cap 

mstockstill on DSKH9S0YB1PROD with RULES2

31590 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

and trade programs because the 

industries are making significant energy 

efficiency improvements even in the 

absence of GHG regulation, and (2) 

permitting such sources may cause 

many facilities to move to countries that 

have less regulation or no regulation for 

GHGs. 

Other industry groups cited unique 

characteristics of their emissions, or the 

quantities in which they are emitted, 

that they argued should justify 

exclusion or unique thresholds. 

Semiconductor production facilities 

asked for exemptions, arguing that 

combustion-related GHG emissions are 

different from their GHG emissions, 

which result from the use of high-GWP 

industrial gases, such as PFCs, with 

higher GWP values that are more likely 

to trigger permitting requirements at 

relatively low tpy values. One lime 

production commenter stated that EPA 

could encourage energy efficiency 

projects at its plants by excluding 

calcination and other process emissions, 

arguing that these emissions are a 

relatively small portion of the national 

inventory that will have no material 

effect on air quality and global warming. 

Another commenter requested that EPA 

exclude emissions from poultry 

production (natural bird respiration) 

from permitting consideration because 

the IPCC excludes them from its GHG 

emission estimates. Representatives of 

the landfill industry pointed to the 

relationship between current statutory 

thresholds that apply to their regulated 

emissions, primarily NMOC, and the 

equivalent amount of GHG emissions 

this corresponds to. They argued for a 

source-category specific threshold that 

is at least equivalent to their current 

NMOC threshold, or roughly 750,000 

tpy CO2e according to their estimate. 

Although the proposal for the 

Tailoring Rule generally addressed how 

the statutory requirements for major 

source applicability (100/250 tpy 

thresholds) could be phased in in ways 

that would offer relief to traditional and 

non-traditional sources, such as 

residences, farms, small business, and 

semiconductor manufacturers, it did so 

by establishing relatively high CO2e 

thresholds during the early 

implementation period and lowering the 

thresholds over time as streamlining 

mechanisms become available to reduce 

administrative burdens. We did not 

propose any permanent exemptions of 

any kind or temporary exemptions 

based on source category. Also, note 

that the proposal discussed energy 

efficiency, process efficiency 

improvements, recovery and beneficial 

use of process gases, and certain raw 

material and product changes in the 

context of short-term, low-cost means of 

achieving GHG emission reductions for 

small-scale stationary sources, but not 

in the context of exemptions. 

As discussed previously, we are still 

considering whether permanent 

exemptions from the statute are justified 

for GHG permitting based on the 

‘‘absurd results’’ legal doctrine. We do 

not have a sufficient basis to take final 

action at this time to promulgate any of 

the suggested exclusions on the 

grounds, described previously, 

suggested by the commenters. We note, 

however, that nothing in this rule 

forecloses the opportunities we may 

have to explore such options in the 

future. Therefore, we are taking no 

action in this rule on these various 

commenters’ requests for exclusions. 

Some commenters also recommended 

that we create exclusions for their 

particular source categories for the 

specific purpose of avoiding 

overwhelming permitting burdens. We 

did solicit comment on alternative 

approaches to burden relief in the 

proposal. Some commenters suggested 

that the ‘‘administrative necessity’’ or 

‘‘absurd results’’ rationale, each of which 

would be based on extraordinary 

administrative burdens, could be used 

to create at least temporary exclusions 

that would allow more sources to escape 

permitting than what we proposed. 

However, commenters have not, to date, 

provided specific information about the 

costs and administrative burdens 

associated with permitting their source 

categories. 

Regarding the specific concerns about 

the need for a small business exclusion, 

we note that the Office of Advocacy of 

the SBA made several recommendations 

on the proposal to address concerns 

about large numbers of small businesses 

becoming subject to the permit 

programs. For example they 

recommended that EPA adopt major 

source thresholds of 100,000 tpy and 

major modification thresholds of 50,000 

tpy CO2e. They also recommended that 

we adopt an interpretation of the 

effective date of the LDVR to provide 

additional time to prepare. We took 

action consistent with the latter 

recommendation in the Interpretive 

Memo, and we are taking action 

consistent with the former 

recommendation in this rule (although 

the threshold for modifications we are 

adopting is higher, for reasons 

explained previously). We are finalizing 

Steps 1 and 2 using the threshold-based 

approach, which applies the various 

legal doctrines, in the context of the 

Chevron framework, in a way that 

effectively exempts all small sources 

during this part of the phase-in, while 

assuring the administrability of the 

permitting programs for the sources that 

remain subject to them. We anticipate 

that virtually all small businesses not 

already subject to PSD and title V would 

be excluded under this approach. 

Similarly, with respect to high GWP 

gases as discussed previously, we are 

maintaining the statutory mass-based 

threshold, and this should address 

commenters’ concerns regarding the 

inclusion of those gases. Therefore, we 

reiterate that we are not finalizing any 

such exclusions in this rule and, as 

noted above, we are not taking final 

action in the commenters’ requests for 

exclusions. 

Concerning the comment that we did 

not take appropriate economic and 

environmental considerations into 

account for this rulemaking action, we 

disagree. The approach we finalize in 

this notice for Steps 1 and 2 minimizes 

economic burdens by limiting 

permitting to the largest GHG emission 

sources. We further note that the PSD 

program as applied to the sources that 

are covered in Steps 1 and 2 contains an 

express requirement to take energy, 

environmental, and economic 

considerations into account when 

making control technology (i.e., BACT) 

decisions and accordingly many of the 

concerns about control costs will be able 

to be accounted for in that analysis. 

Biomass Combustion/Biogenic 

Emissions. Several commenters request 

that EPA exempt emissions from 

biogenic activities or biomass 

combustion or oxidation activities, 

including solid waste landfills, wasteto-energy projects, fermentation 

processes, combustion of renewable 

fuels, ethanol manufacturing, biodiesel 

production, and other alternative energy 

production that uses biomass feedstocks 

(e.g., crops or trees). For example, 

commenters urged that EPA exclude 

emissions from biomass combustion in 

determining the applicability of PSD to 

GHGs based on the notion that such 

combustion is ‘‘carbon neutral’’ (i.e., that 

combustion or oxidation of such 

materials would cause no net increase 

in GHG emissions on a lifecycle basis). 

Some commenters oppose the 

exemption of biogenic/biomass 

activities, claiming the lack of a valid 

scientific basis for treating these GHG 

emissions differently than other GHG 

emissions and expressing concern that 

we should not assume all biomass 

combustion is carbon neutral. 

The proposed Tailoring Rule did not 

address this issue of exemptions for 

biomass combustion or biogenic 

emissions. We are mindful of the role 

that biomass or biogenic fuels and 

feedstocks could play in reducing 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31591 

58On June 24, 2005, the United States Court of 

Appeals for the District of Columbia Circuit vacated 

Continued 

anthropogenic GHG emissions, and we 

do not dispute the commenters’ 

observations that many state, federal, 

and international rules and policies 

treat biogenic and fossil sources of CO2

emissions differently. We note that 

EPA’s technical support document for 

the endangerment finding final rule 

(Docket ID No. EPA–HQ–OAR–2009– 

0472–11292) states that ‘‘carbon dioxide 

has a very different life cycle compared 

to the other GHGs, which have welldefined lifetimes. Instead, unlike the 

other gases, CO2 is not destroyed by 

chemical, photolytic, or other reaction 

mechanisms, but rather the carbon in 

CO2 cycles between different reservoirs 

in the atmosphere, ocean, land 

vegetation, soils, and sediments. There 

are large exchanges between these 

reservoirs, which are approximately 

balanced such that the net source or 

sink is near zero.’’ 

Nevertheless, we have determined 

that our application of the ‘‘absurd 

results,’’ ‘‘administrative necessity,’’ and 

one-step-at-a-time legal rationales that 

support this rule, which are based on 

the overwhelming permitting burdens 

described previously, does not provide 

sufficient basis to exclude emissions of 

CO2 from biogenic sources in 

determining permitting applicability 

provisions at this time. This is because 

such an exclusion alone, while reducing 

burdens for some sources, would not 

address the overwhelming permitting 

burdens described above, and a 

threshold-based approach would still be 

needed. As noted above, we have not 

examined burdens with respect to 

specific categories and thus we have not 

analyzed the administrative burden of 

permitting projects that specifically 

involve biogenic CO2 emissions taking 

account of the threshold-based 

approach, nor did the commenters 

provide information to demonstrate that 

an overwhelming permitting burden 

would still exist, justifying a temporary 

exclusion for biomass sources. 

At the same time, the decision not to 

provide this type of an exclusion at this 

time does not foreclose EPA’s ability to 

either (1) provide this type of an 

exclusion at a later time when we have 

additional information about 

overwhelming permitting burdens due 

to biomass sources, or (2) provide 

another type of exclusion or other 

treatment based on some other rationale. 

Although we do not take a final position 

here, we believe that some commenters’ 

observations about a different treatment 

of biomass combustion warrant further 

exploration as a possible rationale. 

Therefore, although we did not propose 

any sort of permanent exclusion from 

PSD or title V applicability based on 

lifecycle considerations of biogenic CO2, 

we plan to seek further comment on 

how we might address emissions of 

biogenic carbon dioxide under the PSD 

and title V programs through a future 

action, such as a separate Advance 

Notice of Proposed Rulemaking (ANPR). 

This action would seek comment on 

how to address biogenic carbon under 

PSD and title V, the legal and policy 

issues raised by options regarding 

implementation. We will provide an 

opportunity for public comment before 

adopting any final approach. 

We further note that, while we are not 

promulgating an applicability exclusion 

for biogenic emissions and biomass 

fuels or feedstocks, there is flexibility to 

apply the existing regulations and 

policies regarding BACT in ways that 

take into account their lifecycle effects 

on GHG concentrations. This topic has 

already been explored by the CAAAC 

workgroup on BACT issues related to 

GHGs that recently provided 

recommendations to EPA. These 

recommendations are located in the 

public docket for this rulemaking and at 

http://www.epa.gov/air/caaac/climate/ 

2010_02_InterimPhaseIReport.pdf. 

While that group was unable to come to 

a consensus on how biomass-based 

emissions should be treated, it provided 

us with information that we will 

consider as we issue guidance on BACT. 

As previously discussed, we plan to 

issue BACT guidance later this year, but 

are not doing so as part of this 

rulemaking. Without prejudging the 

outcome of our process to seek comment 

whether and how we might address 

emissions of biogenic carbon under the 

PSD and title V programs through a 

future action, this issue warrants further 

exploration in the BACT context as 

well, and we plan to fully explore it and 

take action if appropriate. 

Fugitive Emissions. Numerous 

commenters believe that fugitive GHG 

emissions should be excluded from 

major source determinations, citing 

difficulties in measuring or estimating 

such emissions. Others believe EPA did 

not address fugitive emissions in the 

proposal and they ask for clarification of 

the treatment of fugitive GHGs in 

applicability determinations under PSD 

and title V. Some of these commenters 

state that EPA has not undertaken a 

rulemaking under CAA section 302(j) 

for any source category of fugitive 

GHGs, so they should not be included. 

Several commenters representing the 

solid waste disposal industry requested 

exemptions for fugitive emissions for 

landfills and waste-to-energy projects, 

pointing out that current practice under 

PSD is for fugitive emissions from 

certain landfills to not be counted 

toward major source determinations. 

In the proposal, EPA did not offer any 

specific guidance or discuss exemptions 

for fugitive emissions of GHGs. 

Commenters did not suggest that a 

fugitive exemption would address the 

overwhelming permitting burdens 

described previously, or that it was 

necessary to specifically tailor GHG 

applicability through the use of a 

fugitive emissions exclusion for 

categories that would otherwise be 

required to include them. 

We do agree with commenters who 

stated that we should clarify how to 

count fugitives in determining 

applicability under this rule. In 

response, we note that we are not taking 

final action with respect to commenters’ 

request, and we are not finalizing any 

special rules for fugitive emissions 

related to GHG. Thus, EPA’s rules 

related to the treatment of fugitives 

would apply. Regarding the comment 

that a CAA section 302(j) rulemaking is 

required before fugitive emissions may 

be counted, we disagree. As we read 

section 302(j), once EPA has established 

by rule that fugitive emissions are to be 

counted for a specific source category, 

nothing in section 302(j) requires EPA to 

conduct new rulemaking to allow for 

the counting of additional pollutants 

from that category. We read section 

302(j) as imposing an obligation to 

determine if fugitive emission generally 

should be counted from a source or 

source category and not requiring that 

EPA list both source categories and 

relevant pollutants. Indeed, our practice 

in listing categories has not been to limit 

the pollutants to which the listing 

applies. Therefore, we are applying our 

existing rules and policies for fugitive 

emissions for GHG as we would any 

other pollutant. 

Pollution Control Projects. Other 

commenters request exemptions for 

pollution control projects from PSD 

major modification requirements, 

particularly projects that increase the 

efficiency or thermal performance of a 

unit or facility, resulting in emission 

reductions on a pounds/megawatt-hour 

or production basis. The current PSD 

rules do not exclude pollution control 

projects from being considered a 

physical change or change in the 

method of operation that would—if it 

resulted in a significant net emissions 

increase—constitute a major 

modification, and the case law makes 

clear that we could adopt a permanent 

exclusion in the future.58 To the extent 

mstockstill on DSKH9S0YB1PROD with RULES2

31592 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

the portions of the 2002 and 1992 NSR rules that 

pertained to pollution control projects, among other 

provisions. In response to this Court action, on June 

5, 2007, EPA removed these provisions from the 

NSR regulations. (See 72 FR 32526). These 

provisions were added as part of EPA’s NSR 

improvement rule that was issued on December 31, 

2002. 

that the commenters seek an exclusion 

for pollution control projects that relies 

solely on ‘‘absurd results’’ or 

‘‘administrative necessity’’ for reasons 

similar to those described previously for 

other requested exclusions, we take no 

action on this request in this 

rulemaking. 

4. Transitional Issues Including 

Requests for Grandfathering 

In the Tailoring Rule proposal, we did 

not discuss or specifically ask for 

comment on any provisions to address 

the transition from a permitting regime 

that does not incorporate GHGs to one 

that does, such as ‘‘grandfathering’’ 

provisions or similar approaches that 

would exempt previously issued 

permits or pending applications from 

having to incorporate requirements for 

GHGs. We nonetheless received several 

public comments that addressed a 

variety of transitional issues. One group 

of comments addresses situations prior 

to permit issuance where a PSD or title 

V application is either administratively 

complete or more generally being 

processed prior to the trigger date for 

GHG permitting (‘‘in process’’ 

applications). Another group of 

comments addresses situations where a 

PSD or title V permit is issued prior to 

the GHG trigger date and the 

commenters request that the application 

and/or permit be exempt from any 

requirements for updates related to 

GHGs after permit issuance. 

With respect to PSD, many 

commenters requested that we adopt a 

‘‘grandfathering’’ approach to 

applicability to exempt projects that 

have administratively complete PSD or 

minor NSR permit applications pending 

when the GHG permitting requirements 

go into effect. Several commenters urged 

us to promulgate transition provisions 

(without specifically using the term 

‘‘grandfathering’’), pointing out that we 

have provided transition periods for 

revising pending PSD permits, in the 

past, when new PSD rules were issued 

(e.g., in late 1970s and 1980). These 

commenters assert that GHG 

requirements will cause more 

disruption than those previous rule 

changes. Several commenters asked that 

PSD applications be evaluated on the 

basis of the PSD requirements effective 

when the application is submitted and 

if submitted prior to the trigger date, 

then the application and permit would 

not need to address GHGs. Several 

commenters also asked that PSD sources 

with a valid permit that commences 

construction within 18 months of the 

trigger date not be required to seek a 

revised PSD permit for GHGs. Similarly, 

several commenters asked that PSD 

permits issued prior to the GHG trigger 

date not be required to be reopened only 

for the purpose of addressing GHG 

emissions. Additional commenters 

asked that we clarify that sources or 

projects not be required to obtain PSD 

permits if they obtained a determination 

that PSD did not apply (a ‘‘nonapplicability’’ determination) prior to 

the GHG trigger date. Finally, many 

commenters also requested 

‘‘grandfathering’’ for title V so that 

existing title V applications and permits 

do not need to be amended, revised, or 

resubmitted to address GHGs after they 

become ‘‘subject to regulation.’’ Other 

commenters asked that transition 

provisions for title V be provided in the 

final action that would be similar to 

those requested for PSD. 

We partially addressed transitional 

issues for PSD permitting in our April 

2, 2010 final action on reconsideration 

of the Interpretive Memo. 75 FR 17021. 

This action addressed the applicability 

of PSD permitting requirements for 

GHGs to pending PSD permit 

applications that were (or will be) 

submitted prior to January 2, 2011 based 

on emissions of pollutants other than 

GHGs. However, we have not yet 

addressed the questions raised by public 

comments concerning sources that 

obtain PSD permits, minor NSR permits, 

or determinations that no such permits 

are needed prior to the Step 1 period set 

forth in this rule. We have also not yet 

addressed questions about the 

applicability of PSD permitting 

requirements for sources that are not 

currently required to submit an 

application for a PSD permit but that 

could be required to do so in Step 2 of 

the phase-in established in this action. 

In addition, our April 2, 2010 action did 

not address transitional issues 

concerning the application of the title V 

provisions to GHGs. 

a. Transition for PSD Permit 

Applications Pending When Step 1 

Begins 

In our action on April 2, 2010, EPA 

explained that the Agency did not see 

grounds to establish a transition 

provision for pending PSD permit 

applications because we had 

determined that PSD permitting 

requirements would not apply for GHGs 

for another 9 months. We explained that 

permit applications submitted prior to 

April 2, 2010 should in most cases be 

issued prior to January 2, 2011 and, 

thus, effectively have a transition period 

of 9 months to complete processing 

before PSD requirements become 

applicable to GHGs. We also observed 

that, in the case of any PSD permit 

application review that cannot 

otherwise be completed within the next 

9 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 delay to permit 

processing. Additional discussion of 

EPA’s reasons for not developing 

transition provisions for PSD permit 

applications that are pending on January 

2, 2011 are provided in the April 2, 

2010 notice. 75 FR 17021–22. 

For these same reasons, we continue 

to feel that a transition period is not 

warranted to incorporate GHG 

requirements into any PSD permit 

applications that are pending when Step 

1 of the permitting phase-in begins for 

those sources that would otherwise 

need to obtain a PSD permit based on 

emissions of pollutants other than 

GHGs. Thus, this action makes no 

change to the position we expressed on 

this particular issue in the April 2, 2010 

notice. In this final rule on tailoring the 

PSD program to address GHGs, we have 

determined that the additional burden 

of incorporating GHG requirements into 

PSD permits for the sources already 

required to obtain such permits is 

manageable in the Step 1 period. Thus, 

this rule has added no additional 

requirements or limitations that would 

justify deferring the establishment of 

pollution controls for this category of 

GHG sources once PSD permitting 

requirements are initially triggered for 

GHGs. 

While we do not provide for 

grandfathering of PSD applications, we 

do note that there are more than 7 

months left before GHG BACT 

requirements will be triggered at 

anyway sources for projects that 

increase GHG emissions by more than 

75,000 tpy CO2e and more than a year 

before the requirements would be 

triggered at sources solely because of 

emissions of GHGs (more than 100,000 

tpy of CO2e). We intend to work 

constructively and affirmatively with 

permitting authorities to use this time to 

ensure expeditious processing of 

pending permits and to further assure 

that the triggering of BACT 

requirements at such sources will not 

result in adverse impacts on pending 

projects. We have separately described 

our plans to expeditiously issue GHG 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31593 

BACT guidance, but we understand that 

for pending projects that will be 

permitted soon after January 2, 2011, an 

opportunity for earlier engagement with 

EPA on BACT issues would be 

beneficial for permitting authorities to 

issue these permits without delay. 

Therefore, following the issuance of 

this rule, we will contact permitting 

authorities that have pending PSD 

permit applications to identify those 

applications with a reasonable 

likelihood that final issuance will occur 

after January 2, 2011, and therefore will 

be required to contain GHG BACT 

limits. We will then work closely with 

those permit agencies to provide 

technical, legal, or policy assistance to 

help prepare BACT analysis and 

provide additional support as necessary 

to expedite permitting for those pending 

applications. Similarly, when EPA is the 

permitting authority, we will provide 

assistance to applicants with pending 

permits to ensure that GHG permitting 

decisions are made promptly, and that 

administrative processes move forward 

expeditiously. 

b. PSD Permits Issued Prior to Step 1 

EPA has not historically required PSD 

permits to be updated or reopened after 

they are issued in the absence of an 

action by the applicant to change the 

physical or operational characteristics of 

the source described in the permit 

application. EPA’s PSD permitting 

regulations contain no provisions that 

address the modification or amendment 

of a PSD permit or require a PSD permit 

to be reopened or modified on the basis 

of new PSD permitting requirements 

that take effect after the final permit is 

issued. Since PSD permits are 

construction permits, EPA has not 

required updates to PSD permits in the 

same manner as is typically required for 

operating permits that incorporate a 

variety of applicable requirements (such 

as title V permits and National Pollutant 

Discharge Elimination System (NPDES) 

permits under the Clean Water Act). In 

addition, unlike operating permits, PSD 

permits are not required to be renewed. 

However, if construction under a PSD 

permit is not commenced in a timely 

manner or is discontinued for an 

extended period, a PSD permit may 

expire if an extension is not requested 

or justified. See 40 CFR 52.21(r)(2); 40 

CFR 124.5(g). 

With respect to the application of PSD 

permitting requirements for GHGs 

beginning on January 2, 2011, we do not 

see any cause to deviate from our 

historical practice of not requiring PSD 

permits to be reopened or amended to 

incorporate requirements that take effect 

after the permit is issued. Thus, we are 

not promulgating any new rules or 

requirements pertaining to PSD permits 

issued prior to Step 1 of the phase-in 

described in this rule. There is no 

mandatory requirement to reopen a 

previously issued PSD permit to 

incorporate GHG requirements that were 

not applicable at the time the permit 

was issued. 

A major source that obtains a PSD 

permit prior to January 2, 2011 will not 

be required under EPA regulations to 

reopen or revise the PSD permit to 

address GHGs in order for such a source 

to begin or continue construction 

authorized under the permit. Our 

current PSD permitting regulations 

provide that ‘‘[n]o new major stationary 

source or major modification to which 

the requirements of paragraphs (j) 

through (r)(5) of this section apply shall 

begin actual construction without a 

permit that states the major stationary 

source or major modification will meet 

those requirements.’’ 40 CFR 

51.166(a)(7)(iii); 40 CFR 52.21(a)(2)(iii). 

The term ‘‘begin actual construction’’ 

generally means ‘‘initiation of physical 

onsite construction activities on an 

emissions unit which are of a 

permanent nature’’ and includes 

activities such as ‘‘installation of 

building supports and foundations, 

laying underground pipework and 

construction of permanent storage 

structures.’’ 40 CFR 51.166(b)(11); 40 

CFR 52.21(b)(11). A source that begins 

actual construction authorized under a 

PSD permit prior to January 2, 2011 will 

not be in violation of the prohibition 

described previously if it continues 

construction after that date. This portion 

of the regulation precludes only 

beginning construction without the 

appropriate preconstruction permit and 

does not require a permit to be updated 

to continue actual construction that has 

already begun. 

Furthermore, a source that is 

authorized to construct under a PSD 

permit but has not yet begun actual 

construction on January 2, 2011 may 

still begin actual construction after that 

date without having to amend the 

previously-issued PSD permit to 

incorporate GHG requirements. Sections 

51.166(a)(7)(iii) and 52.21(a)(2)(iii) 

require ‘‘a permit that states that the 

major stationary source or major 

modification will meet those 

requirement,’’ which refers to the 

‘‘requirements in paragraphs (j) through 

(r)(5)’’ referenced earlier in those 

provisions. EPA construes this language 

to describe a permit that meets the 

requirements of paragraph (j) through 

(r)(5) that are in effect at the time the 

permit is issued. Permitting and 

licensing decisions of regulatory 

agencies must generally 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, a source may begin actual 

construction on or after January 2, 2011 

under a PSD permit that authorized 

construction to begin prior to January 2, 

2011 because such a permit states that 

the source will meet the requirements of 

paragraphs (j) through (r)(5) of these 

regulations (or state equivalents) that 

were in effect at the time the permit was 

issued. However, this would not be the 

case if the permit has expired because 

the applicant has discontinued 

construction or failed to commence 

construction by the necessary date. See 

40 CFR 52.21(r)(2). 

This approach is consistent with 

EPA’s practice when the 

preconstruction permitting 

requirements change by virtue of the 

designation of an area as a 

nonattainment area after a PSD permit is 

issued. In transitional guidance issued 

by EPA in 1991, EPA explained that ‘‘the 

area designation in effect on the date of 

permit issuance by the reviewing agency 

determines which regulations (part C or 

D) apply to that permit.’’ Memorandum 

from John S. Seitz, Director OAQPS, 

New Source Review (NSR) Program 

Transitional Guidance, page 6 (March 

11, 1991). This memorandum explained 

further that ‘‘where a source receives a 

PSD or other permit prior to the date the 

area is designated as nonattainment, the 

permit remains in effect’’ as long as the 

source meets the conditions necessary 

to prevent the permit from expiring. Id. 

at 6. 

This approach does not apply if the 

source engages in a major modification 

after January 2, 2011 that is not 

authorized by the previously issued 

permit. Once Step 1 of the phase-in 

begins, if the PSD requirements for 

GHGs are applicable to a previouslypermitted source that engages in a major 

modification not covered by the permit, 

such a source will need to obtain a new 

PSD permit to authorize the 

modification and that permit may need 

to include GHG requirements depending 

on the level of increase in GHGs that 

results from the modification. 

c. Additional Sources for Which PSD 

Applies in Step 2 

In light of the terms of existing PSD 

regulations and the lead time provided 

in this action for sources that will first 

mstockstill on DSKH9S0YB1PROD with RULES2

31594 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

become subject to PSD permitting in 

Step 2, we do not believe there is 

presently a need to establish transition 

provisions for sources that will be 

required to obtain PSD permits for the 

first time in Step 2 of the phase-in. As 

described previously, under our current 

PSD permitting regulations, a new major 

stationary source or major modification 

may not begin actual construction 

without a PSD permit that meets the 

applicable preconstruction permitting 

requirements. 40 CFR 51.166(a)(7)(iii); 

40 CFR 52.21(a)(2)(iii). 

Since a permit must be obtained 

before a major source may begin actual 

construction, the major source 

preconstruction permitting 

requirements in 40 CFR 51.166 and 

52.21 of the regulation do not generally 

apply to a source that begins actual 

construction at a time when it was not 

a major source required to obtain a PSD 

permit. One exception, however, is the 

unique circumstance when a source 

becomes a major source solely by virtue 

of the relaxation of an enforceable 

limitation on the source’s PTE. 40 CFR 

51.166(r)(2); 40 CFR 52.21(r)(4). But 

absent these circumstances, PSD 

preconstruction permitting 

requirements do not generally preclude 

a source from continuing actual 

construction that began before the 

source was a source required to obtain 

a PSD permit. Thus, a source that began 

actual construction under the 

authorization of any previously required 

minor source or state construction 

permit is not required to meet any PSD 

preconstruction permitting requirement 

that becomes applicable after actual 

construction begins unless the source 

engages in a major modification after 

PSD permitting requirements are 

applicable. Likewise, a PSD permit is 

not required after a source begins actual 

construction based on a valid 

determination (by the source or the 

permitting authority) that the source 

need not obtain either a major PSD 

permitting requirements or and minor 

NSR permit. Based on these provisions 

in existing regulations, EPA will not 

require any sources to which PSD 

permitting requirements begin to apply 

in Step 2 to obtain a PSD permit to 

continue construction that actually 

begins before Step 2 begins. 

However, we will expect Step 2 

sources that begin actual construction in 

Step 2 (i.e., beginning July 1, 2011) to 

do so only after obtaining a PSD permit 

in accordance with 40 CFR 52.21 or 

51.166, or any applicable state 

regulation that meets the requirements 

of 40 CFR 51.166. We recognize the 

potential for the triggering of Step 2 to 

result in a change in status where a 

project may legally have begun actual 

construction before Step 2 but did not 

do so and would then need a PSD 

permit. However we also note that we 

are providing over a year of lead time 

before PSD permitting requirements 

become applicable to Step 2 sources. If 

projects would be adversely affected by 

this change in status, this lead time 

affords an opportunity for sources 

planning such projects to secure 

appropriate minor NSR permits (which 

generally take less than a year to issue), 

non-applicability determinations, etc. in 

time to avoid such a change in status. 

If a new or modified source that would 

become newly subject to PSD in Step 2 

plans to begin actual construction before 

Step 2, it has more than a year to obtain 

the applicable preconstruction 

approvals and begin actual construction. 

Likewise, a Step 2 source that does not 

anticipate the ability to begin actual 

construction before Step 2 begins 

should have enough lead time to submit 

a PSD permit application and obtain the 

necessary permit without significantly 

delaying the project further. Therefore, 

we do not think it is necessary or 

appropriate to promulgate a transition 

provision that would exempt Step 2 

sources from PSD permitting 

requirements that will apply based on 

construction that begins after Step 2 

takes effect. 

This approach for Step 2 sources that 

have obtained a minor source 

construction permit or non-applicability 

determination differs from the approach 

described previously for source that 

obtained a PSD permit prior to Step 1. 

As described previously, a Step 1 source 

that is authorized to begin actual 

construction before January 2, 2011 

under a previously-issued PSD permit 

may begin actual construction under 

that permit after January 2, 2011 

without modifying the PSD permit to 

address GHGs. However, a Step 2 source 

that was not required to obtain a PSD 

permit before Step 2 begins would need 

to obtain a PSD permit addressing GHGs 

if it has not yet begun actual 

construction prior to Step 2, even if the 

source had obtained any 

preconstruction approvals that were 

necessary to authorize construction 

prior to Step 2. This is because such a 

Step 2 source that begins actual 

construction after Step 2 would likely 

be doing so without having any permit 

meeting the requirements of paragraphs 

(j) through (r)(5) of 40 CFR 52.21 or 

51.166, or a state equivalent. A source 

that has obtained only a minor source 

permit prior to Step 2 but that begins 

actual construction after July 1, 2011 

would violate the requirements of 40 

CFR 52.21(a)(2)(iii) or 51.166(a)(7)(iii), 

or a state equivalent, unless the source 

took care to ensure that it was 

authorized to construct under a PSD 

permit or could demonstrate that the 

source’s minor source construction 

permit makes clear that requirement of 

paragraphs (j) through (r)(5) of 40 CFR 

52.21 or 51.166, or a state equivalent, 

would be met by the source even though 

such a permit was not nominally a PSD 

permit. This difference in approach for 

non-PSD sources is driven by the terms 

of 40 CFR 52.21(a)(2)(iii) and 

51.166(a)(7)(iii). Since we have not 

provided any prior notice that we might 

be considering revisions to 40 CFR 

52.21 and 51.166 to address this topic, 

we are unable to revise the regulations 

in this action to achieve the same result 

for non-PSD sources as for PSD sources. 

Furthermore, at the present time, we see 

no indication that this difference in 

approach is unreasonable since nonPSD sources will not trigger permitting 

for GHG until Step 2 (only anyway PSD 

source trigger in Step 1). Thus sources 

will have until July 1, 2011, an 

additional 6 months of lead time (for a 

total of more than 14 months), to 

prepare for the transition described 

here. Nevertheless, we recognize that 

the transition to the increased coverage 

of new sources and modifications that 

occurs in July will represent an unusual 

occurrence that may have unanticipated 

impacts. For this reason it is important 

to note that nothing in this rule 

forecloses our ability to further address 

such impacts, as necessary, by adopting 

rule changes or using other available 

tools. 

EPA has previously promulgated 

exemptions that have authorized some 

sources that were not previously subject 

to the PSD regulations to commence 

construction on the basis of minor 

source permits after the date new PSD 

requirements have took effect in 1978 

and 1980. See, e.g., 40 CFR 

52.21(i)(1)(iv)–(v). There is a notable 

distinction between these provisions, 

which use the term ‘‘commence 

construction,’’ and the terms of 40 CFR 

52.21(a)(2)(iii) and 51.166(a)(7)(iii), 

which use the term ‘‘begin actual 

construction.’’ ‘‘Commence 

construction’’ is defined more broadly 

than ‘‘begin actual construction’’ to 

include obtaining all necessarily 

preconstruction approvals and either 

beginning actual on-site construction or 

entering into binding contracts to 

undertake a program of actual 

construction. 40 CFR 52.21(b)(9); 40 

CFR 51.166(b)(9). The term ‘‘commence 

construction’’ is also defined in the 

CAA. 42 U.S.C. 7479(2)(A). Among 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31595 

other purposes, the term ‘‘commence 

construction’’ is generally used in the 

Act and EPA regulations to distinguish 

construction activities that are exempt 

from new PSD permitting requirements 

from those that are not. See, e.g., 42 

U.S.C. 7475(a); 40 CFR 52.21(i)(1)(i)–(v). 

In the absence an explicit exemption in 

the CAA or the PSD regulations that 

uses the term ‘‘commence construction,’’ 

we do not believe we can use the date 

a source ‘‘commences construction’’ 

under a minor source construction 

permit approval as a demarcation point 

for Step 2 sources that may continue 

ongoing construction activities without 

having to obtain a PSD permit based on 

emissions of GHGs. Since we did not 

provide prior notice of an intention to 

adopt transition provisions applicable to 

this situation, we are unable to adopt 

such an exemption in this action that 

applies the term commence 

construction in this context. 

Consequently, the approach described 

previously applies the term ‘‘begin 

actual construction’’ based on the 

language in 40 CFR 52.21(a)(2)(iii) and 

51.166(a)(7)(iii). 

d. Transitional Issues for Title V 

Permitting 

Since the title V permitting 

regulations already include a robust set 

of provisions to address the 

incorporation of new applicable 

requirements and other transitional 

considerations, we do not see grounds 

to establish unique transition or 

grandfathering provisions for GHGs in 

this action. Furthermore, since the 

purpose of title V is to collect all 

regulatory requirements applicable to a 

source and ensure compliance, we do 

not believe special exemptions for GHG 

requirements are likely to be justified. 

The existing title V rules do not provide 

any exemptions that relieve the 

obligation to incorporate all applicable 

requirements into a title V permit. 

However, the title V regulations contain 

numerous provisions that allow a 

reasonable period of time for 

incorporating new applicable 

requirements or applying for a title V 

permit that was not previously required. 

Transitional issues for incorporation of 

GHG requirements into title V 

permitting generally involve questions 

in the following categories: (1) Permit 

application requirements for sources not 

previously subject to title V that will 

become subject to title V requirements 

in Step 2 of the phase-in; (2) the need 

for updates or amendments to title V 

permit applications that are pending 

when GHGs become subject to 

regulation in Step 1 of the phase-in; and 

(3) the incorporation of new applicable 

requirements for GHGs into existing 

permits for sources currently subject to 

title V. 

With respect to the first category, a 

title V source applying for the first time 

must submit its permit application 

within 12 months after the source 

‘‘becomes subject to the [operating] 

permit program’’ or such earlier time 

that the permitting authority may 

require (see 40 CFR 70.5(a)(1)). Sources 

not otherwise subject to title V can 

become major sources subject to title V 

due to emissions of GHG no sooner than 

July 1, 2011. If a source becomes 

‘‘subject to the [operating] permit 

program’’ on July 1, 2011, then its 

permit application under the title V 

operating permit program would 

typically have to be submitted no later 

than July 1, 2012. 

There are also existing regulations 

relevant for the second category of GHG 

transition issues, where sources 

currently subject to title V have title V 

permit applications pending with a 

permitting authority as of January 2, 

2011. Where additional applicable 

requirements become applicable to a 

source after it submits its application, 

but prior to release of a draft permit, the 

source is obligated to supplement its 

permit application. See 40 CFR 70.5(b); 

71.5(b). Furthermore, title V permits are 

generally required to contain provisions 

to assure compliance with all applicable 

requirements at the time of permit 

issuance. See CAA section 504(a); 40 

CFR 70.6(a)(1) and 71.6(a)(1). If a 

permitting authority determines that 

additional information is necessary to 

evaluate or take final action on an 

application (e.g., because of uncertainty 

over whether a draft permit assures 

compliance with all applicable 

requirements), it may, and should, 

request additional information from the 

source in writing and set a reasonable 

deadline for a response. See 40 CFR 

70.5(a)(2); 71.5(a)(2). 

Likewise, the existing title V 

regulations provide sufficient transition 

for the third category of issues, where a 

source has additional GHG-related 

applicable requirements (such as the 

terms of a PSD permit) that must be 

incorporated into its existing title V 

permit. Where a source is required to 

obtain a PSD permit, the source must 

apply for a title V permit or permit 

revision within 12 months of 

commencing operation or on or before 

such earlier date as the permitting 

authority may establish (or prior to 

commencing operation if an existing 

title V permit would prohibit the 

construction or change in operation). 

See 40 CFR 70.5(a)(1)(ii); 71.5(a)(1)(ii); 

see also 40 CFR 70.7(d) and (e); 71.7(d) 

and (e) (permit modifications). In 

addition, where a source becomes 

subject to additional applicable 

requirements, the permitting authority 

is required to reopen the permit to add 

those applicable requirements if the 

permit term has three or more years 

remaining and the applicable 

requirements will be in effect prior to 

the date the permit is due to expire. See 

40 CFR 70.7(f)(1)(i); 71.7(f)(1)(i). 

Finally, EPA notes that the existing 

title V regulations require sources to 

furnish permitting authorities, within a 

reasonable time, any information the 

permitting authority may request in 

writing to determine whether cause 

exists for modifying, revoking, and 

reissuing, or terminating the permit, and 

for other reasons, and further provide 

that permitting authorities shall reopen 

and revise permits if EPA or the 

permitting authority determine that the 

permit must be revised or revoked to 

assure compliance with applicable 

requirements. See 40 CFR 70.6(a)(6)(v); 

71.6(a)(6)(v) and 70.7(f)(1)(iv); 

71.7(f)(1)(iv). 

Thus, EPA believes that the existing 

title V regulations provide an adequate 

regulatory framework for managing the 

transition to incorporating GHG 

requirements in title V permits and 

additional specific exemptions or 

transition rules for title V are not 

currently warranted. 

VI. What are the economic impacts of 

the final rule? 

This section of the preamble examines 

the economic impacts of the final rule 

including the expected benefits and 

costs for affected sources and permitting 

authorities. The final rule uses a 

phased-in approach for requiring 

sources of GHG emissions to comply 

with title V operating permit and PSD 

statutory requirements, essentially 

lifting this burden for the phase-in 

period for a large number of smaller 

sources of GHG. Thus, this rule provides 

regulatory relief rather than regulatory 

requirements for these smaller GHG 

sources. For larger sources of GHGs that 

will be required to obtain title V permits 

and/or comply on PSD requirements, 

there are no direct economic burdens or 

costs as a result of this final rule, 

because these requirements are not 

imposed as a result of this rulemaking. 

Statutory requirements to obtain a title 

V operating permit or to adhere to PSD 

requirements are already mandated by 

the CAA and by existing rules, not by 

this rule. Similarly, this rule will 

impose costs to society in the form of 

foregone environmental benefits 

resulting from GHG emission reductions 

that, absent this rule, might otherwise 

mstockstill on DSKH9S0YB1PROD with RULES2

31596 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

have occurred at sources deferred from 

permitting during the phase-in period. 

The RIA conducted for this final rule 

provides details of the benefits or 

regulatory relief that smaller GHG 

sources will experience in terms of costs 

avoided as a result of this final rule and 

the potential for social costs in terms of 

foregone environmental benefits during 

this 6-year period. Complete details of 

the RIA conducted for this final rule 

may be found in the document 

‘‘Regulatory Impact Analysis for the 

Final Prevention of Significant 

Deterioration and Title V Greenhouse 

Gas Tailoring Rule,’’ in the docket for 

this rulemaking. 

This rulemaking provides permitting 

thresholds for sources of GHG that 

exceed levels contained in the CAA, and 

these levels are phased-in steps based 

upon application of the ‘‘administrative 

necessity’’ and ‘‘absurd results’’ 

doctrines as explained in section V.B. 

For Step 1, which is effective from 

January 2, 2011, through June 30, 2011, 

only sources required to undergo title V 

or PSD permitting based upon non-GHG 

air pollutants are required to obtain an 

operating permit or PSD permit to 

include GHG emissions (referred to as 

the ‘‘anyway’’ threshold). Step 2, 

effective from July 1, 2011, until such 

time as EPA acts on a rule to amend it 

(which for reasons described previously, 

we assume is June 30, 2013, for the 

purposes of this analysis), will phase in 

title V permit requirements for larger 

sources emitting GHG above 100,000 tpy 

CO2e (if they do not already have one) 

and phase in for such sources, PSD 

requirements when they are newly 

constructed or modify in a way that 

increases emissions by more than a 

75,000 tpy CO2e significance level. Step 

2 is referred to as the 100,000 tpy CO2e 

threshold. Thereafter, EPA makes an 

enforceable commitment to consider a 

possible Step 3 to further lower 

thresholds below 100,000 tpy CO2e and/ 

or permanently exclude some sources 

from the program(s), but only after a 

regulatory process is conducted 

addressing ‘‘administrative necessity’’ 

and ‘‘absurd results’’ considerations 

based upon the actual permitting 

experiences in the first two steps of the 

phase-in. In addition, EPA provides a 

deferral of permitting until we take 

required action in April 2016 for 

sources and modifications that emit 

below 50,000 tpy CO2e. The deferral 

will end when a required study is 

conducted of the permitting process for 

sources of GHG and EPA acts, based on 

the study, to promulgate a rule that 

describes the additional GHG permitting 

requirements beyond 2016. In the 6 

years following promulgation of this 

rule, the EPA estimates that compared 

to baseline estimates that do not include 

the effects of this rule, over six million 

sources of GHG emissions in total will 

be allowed to continue to operate 

without a title V operating permit. 

During this period, tens of thousands of 

new sources or modifying sources each 

year will not be subject to PSD 

requirements for GHG. For this large 

number of smaller sources, this rule 

alleviates the regulatory burden 

associated with obtaining an operating 

or PSD permit or complying with NSR 

BACT requirements. Therefore, this 

final action may be considered 

beneficial to these small sources 

because it provides relief from 

regulation that would otherwise be 

required. 

This decision does potentially have 

environmental consequences in the 

form of higher emissions during the 6- 

year period of time (generally because 

emissions increases would have been 

lower if BACT were applied). These 

consequences are limited due to the fact 

that sources between 100/250 and 

100,000 tpy CO2e account for an 

estimated 11 percent of the six directly 

emitted GHG nationally from industrial, 

commercial, and residential source 

categories, while representing over 95 

percent of the total number of sources 

potentially requiring an operating or 

PSD permit for GHG under current 

permitting thresholds in the CAA. 

Moreover, requiring such a large 

number of small sources to obtain 

permits for the first time would overtax 

the permitting authorities’ abilities to 

process new permits and would 

therefore interfere with any such 

benefits actually being achieved. 

Moreover, reductions from these small 

sources will still be occurring, 

notwithstanding the fact that permitting 

requirements would not apply to them. 

These smaller sources of GHGs will be 

the focus of voluntary emission 

reduction programs and energy 

efficiency measures that lead to 

reductions in GHGs. We will also 

reevaluate this decision after a 6-year 

period and complete a study of the 

implications for those sources and 

permitting authorities of permitting 

smaller GHG sources beyond 2016. 

In reaching the preceding decisions 

for this final rule, we carefully 

considered comments received on the 

Tailoring Rule proposal. We received 

several comments specifically on our 

description of the impacts of this rule. 

Most of these comments disagreed with 

our assertion that the rule is a ‘‘relief’’ 

rule. Others assert that we should have 

prepared a more comprehensive RIA 

than prepared for the rule proposal. 

Those commenting contend: (1) We 

understated the burdens of the rule 

while overstating its relief at proposal; 

(2) we erroneously omitted the impacts 

for ‘‘larger sources’’ of GHGs from the 

proposal RIA and should have 

recognized the burden to ‘‘larger 

sources’’ due to other GHG actions; (3) 

the economic impacts the rule will have 

on industry and the U.S. economy and 

society in general will be burdensome, 

especially given the current state of the 

economy; and (4) we need to propose a 

full RIA or a complete estimation of 

impacts to comply with CAA section 

307(d) and the APA. 

EPA has carefully considered the 

comments addressing the issue of 

whether the Tailoring Rule is a 

regulatory ‘‘relief rule,’’ and we are not 

persuaded that we erred in concluding 

that the effect of the Tailoring Rule is to 

provide regulatory relief to a large 

number of sources of GHG for a period 

of up to 6 years. This final rule will 

provide relief from title V permitting to 

over 6 million sources of GHG in this 

country. Likewise tens of thousands of 

sources potentially subject to PSD 

permitting requirements annually for 

GHG will have regulation postponed for 

a period of up to 6 years under this rule, 

followed by an additional required rule 

addressing the period beyond 6 years. 

While larger sources of GHG may be 

required to obtain title V permits or 

modify existing permits and to comply 

with PSD requirements, these burdens 

result not from the Tailoring Rule but 

rather from the CAA requirements to 

apply PSD and title V to each pollutant 

subject to regulation, which are 

triggered when the LDVR takes effect. 

To clearly illustrate this, consider what 

would occur if EPA did not complete 

the Tailoring Rule. Sources would not 

be relieved of the requirement to obtain 

permits addressing each pollutant 

subject to regulation when they 

construct or modify, nor would they be 

relieved of their obligation to obtain title 

V permits. Instead, these requirements 

would simply apply to a much larger 

population of sources and 

modifications, and would lead to the 

absurd results and severe impairment to 

program implementation that this rule is 

designed to address. 

In response to comments asserting 

that the RIA completed for proposal of 

this rulemaking: (1) Understated the 

burdens of the rule and overstated the 

benefits, (2) did not fully recognize the 

rule will be burdensome, especially 

given the current state of the economy; 

and (3) does not consider a complete 

estimation of impacts to comply with 

the APA and CAA section 307(d) and 

needs to correct flawed or erroneous 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31597 

assumptions, EPA did make 

improvements and modifications to the 

RIA completed for this final rule. Based 

upon comments, EPA modified 

estimates of the number of sources 

affected at various threshold levels 

upward. EPA also improved the burden 

estimates associated with obtaining 

permits for sources and permitting 

authorities. 

After consideration of the burden 

imposed by the proposed rule with 

these improved estimates for affected 

sources, the EPA modified the steps of 

the phase-in period to include two 

initial steps, described in section V, that 

are higher, and therefore cover fewer 

sources and are less burdensome than 

the proposal threshold of 25,000 tpy 

CO2e emissions. EPA also increased the 

threshold below which permitting 

would not apply for 6 years from 25,000 

to 50,000 tpy CO2e. After the initial two 

step period, EPA has committed to 

consider lower thresholds but only 

down to 50,000 tpy CO2e, and only after 

a regulatory process that uses 

information gathered on actual 

permitting activity during the first two 

steps of the phase-in period. The RIA 

conducted for the final rule also 

incorporates improvements in our 

estimates of the number of sources 

affected at alternative thresholds and 

improved estimates of the costs of 

obtaining permits by sources and 

processing permits by permitting 

authorities. The EPA acknowledges that 

the regulatory relief associated with the 

control costs due to BACT requirements 

for PSD new and modifying sources is 

not included in the RIA for the final rule 

due to the lack of sufficient data about 

the nature of those requirements. 

However, it is the case that, as it relates 

to burden, those estimates would simply 

increase the amount of regulatory relief 

associated with this final rule. 

Finally, with regard to comments that 

the RIA should have been a more 

comprehensive analysis to include the 

larger sources of GHG that will be 

required to obtain permits when GHG 

are regulated, the EPA maintains as 

previously explained that there are no 

direct economic burdens or costs as a 

result of this rule for these sources. 

Requirements for larger GHG sources to 

obtain title V or PSD permits are already 

mandated by the Act and by existing 

rules and are not imposed as a result of 

the Tailoring Rule. Thus the economic 

impacts for larger sources of GHG do not 

occur because of this Tailoring Rule. To 

include these larger sources in the RIA 

would actually be an inaccurate 

assessment of how this rule affects 

sources and would ignore the fact that 

this rule provides regulatory relief. 

A. What entities are affected by this 

final rule? 

As previously stated, this final rule 

does not itself result in the application 

of permitting requirements to any 

industrial, commercial, or residential 

entities. Entities affected by this rule are 

those who experience regulatory relief 

due to the higher thresholds and 

deferred applicability set forth in this 

rule. This action increases the threshold 

to obtain a title V and PSD permitting 

from statutory CAA levels using a 

phased-in step process as previously 

discussed. As Table VI–1 shows, this 

action lifts permitting requirements for 

over six million potential title V sources 

in total and tens of thousands of 

potential PSD new sources annually that 

would be otherwise required by the 

CAA to obtain permits. Under Step 1, 

over six million title V sources in total 

and approximately 20 thousand new 

PSD sources per year will not be 

required to obtain permits. Under Step 

2, requiring sources over a 100,000 tpy 

CO2e to obtain a permit, over six million 

title V sources in total and 

approximately 19.9 thousand new PSD 

sources per year will obtain regulatory 

relief. While the threshold approach 

differs for Steps 1 and 2 of the phasein plan, the estimated number of 

sources affected does not differ greatly 

as shown in Table VI–1. Sectors 

experiencing this regulatory relief 

include electricity, industrial, energy, 

waste treatment, agriculture, 

commercial and residential. 

TABLE VI–1—ESTIMATED NUMBER OF AFFECTED SOURCES EXPERIENCING REGULATORY RELIEF 1, 2

Sector 

Number of sources experiencing regulatory relief 

Step 1 Anyway Step 2 100,000 tpy 

Title V New PSD Title V New PSD 

Electricity .......................................................................................... 285 93 285 33 

Industrial .......................................................................................... 170,910 604 170,654 599 

Energy .............................................................................................. 2,588 48 2,536 44 

Waste Treatment ............................................................................. 3,358 2 3,165 1 

Agriculture ........................................................................................ 37,351 299 37,351 299 

Commercial ...................................................................................... 1,355,921 12,041 1,355,870 12,039 

Residential ....................................................................................... 4,535,500 6,915 4,535,500 6,915 

Totals ........................................................................................ 6,105,913 20,002 6,105,361 19,930

% Emissions Covered 3 ................................................................... 13% 11% 

Notes: (1) Number of sources is determined on a PTE basis. Estimates for title V are the total number of sources expected to experience regulatory relief. PSD sources are annual estimates of newly constructed facilities and do not include modifications at existing facilities that may also 

be subject to PSD requirements. (2) See appendices to ‘‘Regulatory Impact Analysis of the Final Prevention of Significant Deterioration and Title 

V Greenhouse Gas Tailoring Rule’’ for more details of how thresholds and sources affected are developed. (3) Percentage of emissions covered 

represent estimated actual emissions from sources expected to experience regulatory relief as a percentage of total stationary source GHG 

emissions. 

B. What are the estimated annual 

benefits to sources due to regulatory 

relief from the statutory requirements? 

EPA estimated the annual benefits 

(avoided costs) to sources of GHG 

emissions and permitting authorities 

anticipated from this final rule. In 

addition, an accounting of the benefits 

from this action as measured by avoided 

permit processing costs for state, local, 

and tribal permitting authorities is 

provided. These benefits or avoided 

costs relate specifically to permit 

burden costs postponed for smaller 

sources of GHG emissions otherwise 

required to obtain an operating permit 

under title V or required to modify an 

existing permit to address GHG 

mstockstill on DSKH9S0YB1PROD with RULES2

31598 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

emissions. Avoided costs shown also 

include permit burdens for additional 

PSD permits postponed for new or 

modifying smaller sources of GHG, as 

well as the avoided costs to state, local 

and tribal permitting authorities. We are 

providing an illustrative monetary 

estimate of statutory permitting 

requirements to show the magnitude of 

the savings that hypothetically result 

from this rulemaking. While we believe 

it is impossible to implement these 

permit requirements by January 2, 2011, 

for the reasons laid out in this preamble, 

it is useful to understand the scale of 

what the burden may have been. For 

sake of simplicity, we refer to this 

illustrative monetary estimate as the 

monetized benefits of the regulatory 

relief presented by this rulemaking or 

regulatory relief benefits for brevity. 

These benefit estimates do not 

consider avoided emission control costs 

associated with PSD requirements for 

potential BACT requirements. Estimates 

for BACT are unavailable at this time 

because of the difficulty predicting the 

results of the BACT process as it would 

be applied to new pollutants and classes 

of sources for which there is no 

previous BACT experience on which to 

rely. 

1. What are annual estimated benefits or 

avoided burden costs for title V permits? 

Table VI–2 shows that the estimated 

annual title V benefits to sources and to 

permitting authorities in terms of 

avoided information collection cost 

resulting from this final action to be 

approximately $70,535 million under 

Step 1 of the phase-in. These avoided 

costs become $70,520 million annually 

under Step 2 of the phase-in. where 

permitting is required for sources at or 

above the 100,000 tpy CO2e threshold. 

Under the anyway threshold Step 1, 

approximately $49,457 million in 

regulatory relief will accrue to sources 

and approximately $21,078 million to 

permitting authorities annually in the 

form of avoided permit processing costs. 

With the 100,000 tpy CO2e threshold for 

phase-in Step 2, these annual regulatory 

relief benefits are expected to be quite 

similar at $49,447 million for sources of 

GHG emissions and $21,072 million for 

permitting authorities. Industrial 

sources permitting costs are estimated to 

be $46.4 thousand per permit for a new 

permit and $1.7 thousand for a permit 

revision. The EPA estimates that over 

tens of thousands of industrial sources 

per year will avoid incurring these 

permitting costs under Steps 1 and 2 of 

the phase-in period. The cost for a 

permit for new commercial and 

residential sources is estimated to be 

$23.2 thousand per permit with 

approximately 2 million of these 

permits avoided annually. 

State, local, and tribal permitting 

authorities will also benefit in terms of 

avoided permitting administrative costs 

of over $21 billion as a result of the 

decisions final in this action. For 

industrial sources, the cost for 

permitting authorities to process a new 

industrial title V permit is 

approximately $19.7 thousand per 

permit and $1.8 thousand for a permit 

revision. Similarly, permitting authority 

avoided permit processing costs are 

approximately $9.8 thousand per permit 

for a new commercial or residential title 

V permit. All estimates are stated in 

2007 dollars. 

TABLE VI–2—ANNUAL TITLE V REGULATORY RELIEF FOR SOURCES AND PERMITTING AUTHORITIES 1, 2

Activity Cost per permit 

(2007$) 

Step one 

anyway 

Step two 

100,000 tpy CO2e 

Number of 

permits 

Avoided costs 

(millions 2007$) 

Number of 

permits 

Avoided costs 

(millions 2007$) 

Sources: 

New Industrial ........................................... $46,350 71,829 $3,329 71,657 $3,321 

New Commercial/Residential .................... 23,175 1,985,948 46,024 1,985,930 46,024 

Permit revisions due to GHG ................... 1,677 61,836 104 60,921 102 

Source Total ...................................... ............................ 2,119,613 49,457 2,118,508 49,447 

Permitting Authority: 

New Industrial ........................................... 19,688 71,829 1,414 71,657 1,410 

New Commercial/Residential .................... 9,844 1,985,948 19,550 1,985,930 19,550 

Permit revisions due to GHG ................... 1,840 61,836 114 60,921 112 

Permitting Authority Total .................. ............................ 2,119,613 21,078 2,118,508 21,072 

Total Title V Regulatory Relief ... ............................ ............................ 70,535 ............................ 70,520 

Notes: Sums may not add due to rounding. 1Annual title V avoided costs estimates represent information collection costs for one third of the total number of title V sources obtaining regulatory relief shown in Table VI–1 potentially requiring permits or permit revisions for GHG. 2 More details on these estimated regulatory relief benefits are available in the appendices to the ‘‘Regulatory Impact Analysis for the Final Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule.’’ 

2. What are annual benefits or avoided 

costs associated with NSR permitting 

regulatory relief? 

Table VI–3 summarizes the estimated 

annual permit burden costs avoided by 

sources and permitting authorities for 

PSD permitting due to this Tailoring 

Rule. The benefits associated with 

avoided cost of compliance for BACT 

for these sources is not included in 

these estimates due to a lack of available 

data. The estimated avoided burden or 

reporting and recordkeeping cost that 

would occur absent this rule for new 

industrial sources to obtain permits is 

estimated to be $84.5 thousand for a 

modifying PSD industrial source and 

$59.2 thousand for a modifying 

commercial or multi-family residential 

source. New PSD sources will also be 

required to obtain a title V permit 

increasing these costs to $130.9 

thousand per permit for new industrial 

sources and to $82.3 thousand per 

permit for new commercial or multifamily residential sources. (Note the 

title V costs for these new PSD sources 

have been included in title V estimates 

shown in Table VI–2.) New and 

modifying sources avoid approximately 

$5.5 billion annually in PSD permitting 

costs with this rule under the phase-in 

Step 1 threshold. Under the phase-in 

Step 2, 100,000 tpy CO2e threshold and 

75,000 tpy CO2e significance level, this 

avoided PSD permitting cost estimate 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31599 

becomes $5.4 billion annually. State, 

local, and tribal permitting authorities 

are expected to avoid about $1.51 

billion annually in administrative 

expenditures associated with 

postponing PSD program requirements 

for these GHG sources under Step 1 and 

$1.49 billion under Step 2. All estimates 

are shown in 2007 dollars. 

TABLE VI–3—ANNUAL PSD REGULATORY RELIEF FOR SOURCES AND PERMITTING AUTHORITIES 1, 2

Activity Cost per permit 

(2007$) 

Step one 

anyway 

Step two 

100,000 tpy 

threshold, 75,000 

significance level 

Number of 

permits 

Avoided costs 

(millions 2007$) Number of 

permits 

Avoided costs 

(millions 2007$) 

Sources: 

New Industrial ........................................... $84,530 26,089 $2,205 25,174 $2,128 

New Commercial/Residential .................... 59,152 55,509 3,283 55,505 3,283 

Source Total ...................................... ............................ 81,598 5,489 80,679 5,411 

Permitting Authority: 

New Industrial ........................................... 23,243 26,089 606 25,174 585 

New Commercial/Residential .................... 16,216 55,509 900 55,505 900 

Permitting Authority Total .................. ............................ 81,598 1,506 80,679 1,485 

Total Title V Regulatory Relief ... ............................ ............................ 6,995 ............................ 6,896 

Notes: Sums may not add due to rounding. 1All estimates are based upon PTE. Regulatory relief shown represents annual estimates of PSD permitting costs avoided under Steps 1 and 

2 of the phase-in period. 2 More details on these estimated regulatory relief benefits are available in the appendices to the ‘‘Regulatory Impact Analysis for the Final Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule.’’ 

C. What are the economic impacts of 

this rulemaking? 

This final rulemaking does not 

impose economic burdens or costs on 

any sources or permitting authorities, 

but should be viewed as regulatory 

relief for smaller GHG emission sources 

and for permitting authorities. Although 

sources above the thresholds set in this 

rule will become subject to permitting 

on January 2, 2011, those impacts are 

not attributable to the present 

rulemaking. Rather they are mandated 

by the CAA and existing regulations and 

automatically take effect independent of 

this action. 

In addition to considering the 

regulatory relief expected for affected 

entities as a result of this final rule, the 

EPA considered the impact of this 

rulemaking to small entities (small 

businesses, governments and non-profit 

organizations) as required by the 

Regulatory Flexibility Act (RFA) and the 

Small Business Regulatory Enforcement 

Fairness Act (SBREFA). For 

informational purposes, the RIA 

includes the SBA definition of small 

entities by industry categories for 

stationary sources of GHG and potential 

regulatory relief from title V and NSR 

permitting programs for small sources of 

GHG. Since this rule does not impose 

regulatory requirements but rather 

lessens the regulatory burden of the 

CAA requirements to smaller sources of 

GHG, no economic costs are imposed 

upon small sources of GHG as a result 

of this final rule. Rather this action 

provides regulatory relief for small 

sources. These avoided costs or benefits 

accrue because small sources of GHG 

are not required to obtain a title V 

permit and new or modifying small 

sources of GHG are not required to meet 

PSD requirements. Some of the small 

sources benefitting from this action are 

small entities, and these entities will 

benefit from the regulatory relief 

finalized by this rule. For discussion of 

comments received and EPA responses 

regarding small entities impacts, see 

section VII of this preamble. 

D. What are the costs of the final rule 

for society? 

EPA examined the social costs of this 

final rule. These social costs represent 

the foregone environmental benefits that 

will occur as a result of the regulatory 

relief offered to sources of GHG 

emissions. This action is one of 

regulatory relief since it increases the 

emissions thresholds for the title V and 

PSD programs, as they apply to sources 

of GHG emissions, to levels above those 

in the CAA. In this preamble section, 

the benefits or avoided regulatory costs 

of such relief are discussed, but there is 

also a social cost imposed by such relief, 

because this rule may forego some of the 

possible benefits associated with title V 

and PSD programs for sources of GHG 

emissions below the permitting 

thresholds established. These benefits 

are those attributed to title V and PSD 

permitting programs in general. These 

benefits are based upon the relevance of 

these programs to policymaking, 

transparency issues, and market 

efficiency, and therefore are very 

difficult to quantify and monetize. For 

title V, they include the benefits of 

improved compliance with CAA 

requirements that stem from (1) 

Improved clarity regarding applicability 

of requirements, (2) discovery and 

required correction of noncompliance 

prior to receiving a permit, (3) 

improving monitoring, recordkeeping, 

and reporting concerning compliance 

status, (4) self-certification of 

compliance with applicable 

requirements initially and annually, and 

prompt reporting of deviations from 

permit requirements, (5) enhanced 

opportunity for the public to understand 

and monitor sources’ compliance 

obligations, and (6) improved ability of 

EPA, permitting authorities, and the 

public to enforce CAA requirements. 

However, it is important to remember 

that a title V permit generally does not 

add new requirements for pollution 

control itself, but rather collects all of a 

facility’s applicable requirements under 

the CAA in one permitting mechanism. 

Therefore, the compliance benefits 

above are less when title V permits 

contains few or no CAA applicable 

requirements. During the initial steps of 

the phase-in plan established under this 

action, we expect that the vast majority 

of sources excluded from title V would 

be sources that have no CAA applicable 

mstockstill on DSKH9S0YB1PROD with RULES2

31600 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

requirements for GHG emissions and 

few or no requirements for other 

pollutants because their emissions of 

those pollutants are so small. For this 

reason, while it is extremely difficult to 

measure the degree of improved 

compliance, if any, that would be 

foregone, or to quantify the social costs 

that would be imposed, we expect that 

they would be small. We will be 

evaluating this issue further during 

subsequent phases. 

For PSD, the primary social cost 

imposed by the Tailoring Rule stems 

from the foregone benefit of applying 

BACT to the tens of thousands of small 

new sources and modifications that will 

be below our final thresholds during the 

first steps of the phase-in. This social 

cost potentially weighs against the cost 

savings described previously that stem 

(in part) from avoiding the 

administrative and control costs of 

applying BACT to these sources. The 

BACT requirement assures that new and 

modified sources, when they increase 

their emissions are using state-of-the-art 

emission controls and affords the public 

an opportunity to comment on the 

control decision. It does not prohibit 

increases but it assures that such 

controls are applied. Delaying the BACT 

requirement for numerous small sources 

during the first steps of the phase-in for 

this final rule could allow increases 

from these smaller sources that are 

greater than they would be if BACT 

were applied. A detailed analysis of this 

difference is beyond the scope of this 

rule, because we do not have detailed 

information on the universe of these 

tens of thousands of small PSD actions, 

the candidate BACT technologies for 

each of them, how permitting 

authorities would make the BACT 

decisions, and how the BACT limit 

would compare to what would 

otherwise be installed absent BACT. 

It is not possible at this time to 

quantify the social costs of avoided 

BACT. However, we note that the 

universe of possible emissions that 

would be regulated by sources excluded 

under the Tailoring Rule is small 

compared to those that would remain 

subject to PSD. The sources excluded in 

these first two steps of the phase-in plan 

of this action comprise only 11 percent 

of total stationary source GHG 

emissions, while 67 percent remain 

subject to regulation. Furthermore, we 

expect the emissions differences due to 

BACT controls for such sources to be 

relatively small due to the lack of 

available capture and control 

technologies for GHG at such sources 

that are akin to those that exist for 

conventional pollutants and sources, as 

well as the likelihood that even in the 

absence of BACT such sources would 

already be installing relatively efficient 

GHG technologies to save on fuel costs. 

Thus, while potential benefits would be 

foregone by excluding smaller sources 

from the permitting programs, these 

benefits are likely to be small. Under the 

Tailoring Rule, we will be working 

during the 6-year period to greatly 

improve our understanding of both the 

administrative costs of regulating and 

the social costs of not regulating smaller 

sources under PSD and title V, and we 

will be relying on that information to 

support our future threshold analyses 

called for under the action. 

In reaching the decisions for this 

Tailoring Rule, the EPA recognizes that 

GHG emissions can remain in the 

atmosphere for decades to centuries, 

meaning that their concentrations 

become well-mixed throughout the 

global atmosphere regardless of 

emission origin, and their effects on 

climate are long lasting and significant. 

A detailed explanation of climate 

change and its impact on health, 

society, and the environment is 

included in EPA’s TSD for the 

endangerment finding action (Docket ID 

No. EPA–HQ–OAR–2009–0171). The 

EPA recognizes the importance of 

reducing climate change emissions for 

all sources of GHG emissions including 

those sources afforded regulatory relief 

in this rule and plans to address 

potential emission reductions from 

these small sources using voluntary and 

energy efficiency approaches. 

Elsewhere, we have discussed EPA’s 

interest in continuing to use regulatory 

and/or non-regulatory tools for reducing 

emissions from smaller GHG sources 

because we believe that these tools will 

likely result in more efficient and costeffective regulation than would case-bycase permitting. 

E. What are the net benefits of this final 

rule? 

The net benefits of this GHG tailoring 

rule represent the difference between 

the benefits and costs of this rule to 

society. As discussed in this preamble, 

this rule is one of regulatory relief and 

the benefits to society are estimates the 

regulatory relief (avoided permit burden 

costs) to sources and permitting 

authorities for Steps 1 and 2 of the 

phase-in period. The social costs of the 

rule are the foregone environmental 

benefits in the form of potential GHG 

emission reductions that could occur 

during the phase-in period and are 

discussed qualitatively. 

This rulemaking provides regulatory 

relief for a phase-in period to smaller 

sources of GHG by phasing in the 

statutory permitting threshold at levels 

above statutory requirements. This final 

rule establishes thresholds and PSD 

significance levels for Steps 1 and 2 of 

the phase-in period (the 2.5 year period 

between January 2, 2011 and July 1, 

2013), commits to considering a further 

Step 3, and indicates floor title V and 

PSD threshold levels from July 1, 2013 

through April 30, 2016. The net benefits 

of the final rule for Steps 1 and 2 are 

$193,598+B–C million for the 2 and onehalf year period where B denotes the 

unquantified benefits and C the 

quantified costs of this final rule. These 

unquantified benefits of this rule 

include the avoided PSD BACT costs for 

new and modifying sources. The 

unquantified costs previously discussed 

relate to the foregone environment 

benefits or GHG emission reductions 

that might be possible during the 2.5 

year Step 1 and 2 phase-in period. 

These estimates are subject to 

significant uncertainties that are 

discussed at length in the Regulatory 

Impact Analysis for the Prevention of 

Significant Deterioration and Title V 

GHG Tailoring Rule contained in the 

docket to this final rule. All dollar 

estimates shown are based upon 2007$. 

TABLE VI–4—NET BENEFITS OF THE RULE FOR STEPS 1 AND 2 OF THE PHASE-IN PERIOD

Final rule amounts 

(millions of 2007$) 

Benefits—Regulatory Relief: 

Sources 

Title V1 ............................................................................................................................................................................. $123,624 

PSD 2 ................................................................................................................................................................................ $13,567 

Total Source Regulatory Relief ................................................................................................................................. $137,190 

Permitting Authority: 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31601 

TABLE VI–4—NET BENEFITS OF THE RULE FOR STEPS 1 AND 2 OF THE PHASE-IN PERIOD—Continued 

Final rule amounts 

(millions of 2007$) 

Title V1 ............................................................................................................................................................................. $52,684 

PSD 2 ................................................................................................................................................................................ $3,724 

Total Permitting Authority .......................................................................................................................................... $56,407 

Total Regulatory Relief .............................................................................................................................................. $193,598+B 

Costs—Foregone GHG Emission Reductions 

Title V & PSD ................................................................................................................................................................... C 

Net Benefits 3 ........................................................................................................................................................................... $193,598+B–C 

Benefits represent regulatory relief for sources with the annual potential to emit below the thresholds shown. 

B—Unquantified benefits of the rule include regulatory relief from BACT requirements for PSD sources. 

C—Unquantified social costs of tailoring rule represents economic value of foregone environmental benefits (potential GHG emission reductions) during Step 1 and 2 of the phase-in period. Foregone GHG emission reductions are not known at this time. 1 Reflects estimates of regulatory relief or avoided permit burden costs for title V GHG sources and permitting authorities. 

2Shows estimates of regulatory relief or avoided permit burden costs for GHG PSD sources and permitting authorities. 

3 Includes one-half year of Step 1 (anyway threshold), 2 years of Step 2 (100,000 threshold). 

VII. Comments on Statutory and 

Executive Order Reviews 

In this section, we provide responses 

to comments we received for various 

Executive Orders. 

A. Comments on Executive Order 

12866—Regulatory Planning and 

Review 

At proposal, EPA prepared an 

analysis of the potential costs and 

benefits associated with EPA’s Tailoring 

Rule proposal in an RIA. Several 

commenters state that EPA’s failure to 

estimate the full costs of the effects of 

its interpretation of PSD applicability in 

the proposed Tailoring Rule violates 

Executive Order 12866. Some of these 

commenters maintain that Executive 

Order 12866 directs EPA to submit to 

the Office of Management and Budget 

(OMB) new significant regulations 

under consideration by the EPA. These 

commenters assert that, in the section 

202 rule, EPA failed to analyze the effect 

on stationary sources in the cost benefit 

analysis and there is no indication that 

EPA included these impacts in its 

submission to OMB. According to the 

commenters, in EPA’s proposal for this 

rulemaking, EPA has similarly failed to 

analyze the costs and benefits of 

triggering PSD for stationary sources. 

The commenters assert that without this 

key information, OMB could not fully 

review the impacts of the proposed rule. 

The commenters believe that EPA’s 

failure to account for known costs that 

will occur as a direct result of the 

promulgation of the proposed rule in 

conjunction with the section 202 rule 

violates several applicable requirements 

of Executive Order 12866, including 

sections 6(B)(ii) and 6(C)(iii), which 

require assessments of the potential 

costs and benefits of the regulatory 

action and ‘‘reasonably feasible 

alternatives to the planned regulation, 

identified by the Agencies or the public 

***’’ thereby violating both the APA 

and CAA section 307(d) because they 

deprive businesses and permitting 

authorities alike of a meaningful 

opportunity to comment on the rule. 

The EPA has prepared a revised RIA 

assessing the benefits and costs of the 

final Tailoring Rule to support this 

rulemaking in accordance with 

Executive Order 12866, as was done 

with the proposal for this rulemaking. 

Similarly, the RIA completed for this 

action is subject to review by an Interagency review panel that includes OMB, 

as was the case with the proposal RIA. 

Further, the RIA completed for this final 

rule fully assesses the known benefits 

and costs associated with the Tailoring 

Rule. This final rule is one of regulatory 

relief from statutory requirements in 

which a large number of sources of 

GHGs will be relieved of the burden of 

title V and PSD permitting for a period 

of at least 6 years. This final rule will 

provide relief from title V permitting to 

over 6 million sources of GHG in this 

country. Likewise tens of thousands of 

sources potentially subject to PSD 

permitting requirements for GHGs will 

have regulation postponed for a period 

of at least 6 years. While larger sources 

of GHG may still be required to obtain 

title V permits or modify existing 

permits and to comply with PSD 

requirements, these burdens result from 

existing statutory requirements, not 

from this final Tailoring Rule. 

B. Comments on the Paperwork 

Reduction Act 

At proposal, we stated in the 

preamble that we did not believe that 

the proposal would impose any new 

information collection burden. We 

concluded that the proposed action 

would reduce costs incurred by sources 

and permitting authorities relative to the 

costs that would be incurred if EPA did 

not revise the rule and provided 

estimates of those reduced costs. 

Further, we stated that, despite our 

estimated burden reductions, it was 

unnecessary for us to submit a new ICR 

to the OMB because the ICR contained 

in the existing regulations for PSD (see, 

e.g., 40 CFR 52.21) and title V (see 40 

CFR parts 70 and 71) had already been 

approved under the provisions of the 

Paperwork Reduction Act, 44 U.S.C. 

3501 et seq. and was assigned OMB 

control number 2060–0003 and OMB 

control number 2060–0336, 

respectively. 

However, several commenters 

disagree that it was unnecessary for us 

to submit a new ICR for the proposed 

action. These commenters believe that 

(1) prior approval of an ICR for the PSD 

and title V programs ignores the fact 

that there would be an increase in the 

paperwork burden as a result of 

applying PSD and title V permitting 

requirements; and (2) unless EPA 

resubmits the information collection 

approval request to OMB with a proper 

and fully-inclusive analysis, EPA will 

lack authority to collect information 

from stationary sources for PSD and title 

V GHG emissions permitting. 

As we stated in the proposal, this is 

a burden relief rule and as such it does 

not impose any new requirements for 

the NSR or title V programs that are not 

currently required. For that reason, we 

concluded that for purposes of this rule 

it was unnecessary for us to submit a 

new ICR to the OMB and that the ICR 

contained in the existing regulations for 

PSD (see, e.g., 40 CFR 52.21) and title 

V (see 40 CFR parts 70 and 71) that had 

already been approved under the 

provisions of the Paperwork Reduction 

Act, 44 U.S.C. 3501 et seq. and was 

assigned OMB control number 2060– 

0003 and OMB control number 2060– 

0336, respectively, still applies. 

mstockstill on DSKH9S0YB1PROD with RULES2

31602 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

Nevertheless, we understand that 

once GHGs are regulated under the PSD 

and title V programs, there might be an 

increase in the overall paperwork 

burden for these programs. EPA will 

have to assess this possible burden 

during the normal course of 3-year 

renewal ICR process. 

C. Comments on the RFA 

At proposal, EPA certified that the 

proposed rule would not have a 

significant impact on a substantial 

number of small entities and therefore 

we are not obligated to convene a formal 

Small Business Advocacy Review 

(SBAR) panel. This certification was 

based upon the fact that the proposed 

action would relieve the regulatory 

burden associated with the major PSD 

and title V operating permits programs 

for new or modified major sources that 

emit GHGs, including small businesses. 

Nevertheless, EPA was aware at 

proposal that many small entities would 

be interested in the various GHG 

rulemakings currently under 

development and might have concerns 

about the potential impacts of the 

statutory imposition of PSD 

requirements that may occur as a result 

of the group of EPA actions, 

notwithstanding the relief provided to 

small businesses by the Tailoring Rule. 

For these reasons, and in collaboration 

with the SBA, EPA conducted an 

outreach meeting designed to exchange 

information with small entities that may 

be interested in these regulations. The 

outreach effort was organized and led by 

representatives from EPA’s Office of Air 

Quality Planning and Standards within 

the Office of Air and Radiation, EPA’s 

Office of Policy Economics and 

Innovation, the Office of Information 

and Regulatory Affairs within OMB, and 

the Office of Advocacy of the SBA. This 

meeting was conducted on November 

17, 2009 in Arlington, VA, and 

documentation of this meeting, which 

includes a summary of the advice and 

recommendations received from the 

small entity representatives identified 

for the purposes of this process, can be 

obtained in the docket for this 

rulemaking. (See Docket No. EPA–HQ– 

OAR–2009–0517–19130.) 

During the comment period, several 

commenters alleged that EPA 

inappropriately limited its RIA and 

RFA/SBREFA analysis, and that had we 

done a comprehensive analysis, we 

would not have been able to certify that 

any of the proposed rules will not have 

a significant economic impact on a 

‘‘substantial number of small entities.’’ 

Thus they conclude that EPA failed to 

prepare and publicize an initial 

regulatory flexibility analysis (IRFA). 

Additional commenters stated that 

EPA’s failure to conduct an IRFA to 

assess the full costs of the effects of its 

interpretation of PSD applicability in 

the proposed Tailoring Rule violates a 

host of statutes and Executive Orders 

requiring analysis and public review of 

regulatory burdens. These commenters 

conclude that EPA should have 

convened one or more SBAR Panels. 

We are not persuaded that we should 

have taken into account effects beyond 

those caused by the Tailoring Rule 

when we made our certification of no 

significant economic impact on a 

substantial number of small entities for 

this rule. No permitting requirements 

are imposed by this final Tailoring Rule. 

Instead, this final Tailoring Rule offers 

regulatory relief to over an estimated six 

million sources of GHG emissions that 

would otherwise be required to obtain a 

title V permit and tens of thousands of 

sources of GHG emissions subject to 

PSD permitting requirements that would 

otherwise be required statutorily to 

obtain permit. The RFA does not require 

that an agency complete a regulatory 

flexibility analysis or conduct an SBAR 

panel where the rule does not have any 

negative impact on small entities. For 

more discussion of RFA issues, please 

see the RTC document. 

D. Comments on the Unfunded 

Mandates Reform Act 

At proposal, EPA asserted that the 

Tailoring Rule does not impose 

unfunded mandates on any entities 

including sources and permitting 

authorities. Since the proposed 

Tailoring Rule is one of regulatory relief, 

it alleviates the burden of adhering to 

statutorily required permitting 

thresholds and does not impose 

regulatory requirements. 

Some commenters on the proposed 

rule assert that EPA has failed to comply 

with the requirements of the Unfunded 

Mandates Reform Act (UMRA), 

pursuant to which EPA must assess the 

effects of the proposed rule on state, 

local, and tribal governments and the 

private sector. Specifically, these 

commenters state that section 202 of the 

UMRA requires EPA to prepare a 

written statement, including a costbenefit analysis, for proposed rules with 

‘‘federal mandates’’ that may result in 

expenditures to state, local, and tribal 

governments, in the aggregate, or to the 

private sector, of $100 million or more 

in any 1 year. According to the 

commenters, in concluding that ‘‘the 

revisions would ultimately reduce the 

PSD and title V program administrative 

burden that would otherwise occur in 

the absence of this rulemaking,’’ EPA 

did not account for the billions of 

dollars that permitting authorities and 

stationary sources will soon be required 

to spend once PSD is triggered for 

GHGs. Additionally, a few commenters 

contend that the EPA underestimated 

the impacts to public utilities which are 

owned/operated by local governments 

and also to state regulatory agencies. 

The EPA has carefully considered the 

comments on unfunded mandates 

expressed by commenters to the 

proposed rule. The EPA did complete a 

RIA for the final rule assessing the 

benefits and costs of the Tailoring Rule, 

including any unfunded mandates. As 

previously discussed, the Tailoring Rule 

is one of regulatory relief because it 

increases the GHG emissions threshold 

for NSR and title V permitting 

substantially above otherwise statutory 

requirements. As such, the EPA has 

determined that this Tailoring Rule does 

not impose unfunded mandates on any 

entities. This RIA of the final rule 

incorporates the extensive changes 

made in this final rule, including 

increased threshold levels for title V and 

PSD above those contained in the 

proposed rule. While we also 

incorporated improved estimates of the 

costs for sources to obtain permits and 

for permitting authorities to process 

permits, they do not change our 

conclusion that this final rule does not 

impose unfunded mandates on any 

entities. 

E. Comments on Executive Order 

13132—Federalism 

Some comments received on the 

proposed rule assert that federalism 

concerns were ignored, in violation of 

Executive Order 13132. According to 

the commenters, EPA cannot maintain 

that the Tailoring Rule ‘‘will not have a 

substantial direct effect on the states, on 

the relationship between the national 

government and the states, or on the 

distribution of power and 

responsibilities between various levels 

of government,’’ such that Executive 

Order 13132 does not apply. Some of 

these commenters assert that the 

proposed rulemaking would require 

radical changes in state laws, interjects 

GHGs into permit programs never once 

conceived for that purpose (any more 

than was EPA’s), requires massive staff 

hiring at state agencies, and rewrites 

SIPs in place for years or even decades. 

As we stated previously, this is a 

burden relief rule and as such it does 

not impose any requirements for the 

NSR or title V programs that are not 

currently required. In addition, this 

action does not interject GHGs into the 

permit programs, nor does it change 

state laws or SIPs to impose any new 

permitting requirements. Instead, this 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31603 

action will significantly reduce the 

burden and costs incurred by sources 

and permitting authorities relative to the 

burden and costs that would be incurred 

if EPA did not revise the permitting 

provisions to account for higher 

applicability thresholds for GHG 

emissions. 

However, since this rule finalizes 

burden reducing thresholds that will not 

otherwise apply to the PSD and title V 

programs, we are aware that a few states 

may have to amend their SIPs to 

incorporate these new thresholds if they 

do not incorporate federal rules by 

reference and cannot adopt our 

approach through interpretation. 

Executive Order 13132 is still not 

implicated by this rule because it 

finalizes burden reducing thresholds 

that would not otherwise apply to the 

PSD and title V programs. 

F. Comments on Executive Order 

13175—Consultation and Coordination 

With Indian Tribal Governments 

The National Tribal Air Association 

(NTAA) supports EPA’s proposed rule 

but requests that tribal air grant funding 

be increased to reflect the air qualityrelated needs of tribes across the nation, 

and to allow these tribes the 

opportunity to implement the CAA’s 

PSD and title V programs. The NTAA 

states that, not only are tribes eligible 

for section 103 grant funding to conduct 

air quality monitoring, emissions 

inventories, and other studies and 

assessments, but they may also obtain 

section 105 grant funding to implement 

CAA regulatory programs. According to 

the NTAA, tribes are facing many of the 

same air-related issues that neighboring 

state and local jurisdictions are facing, 

but are significantly underfunded to 

address such issues. 

The Agency is aware and concerned 

about the resource needs for the tribal 

air program and we are working to see 

how grant funding might be increased in 

the future. Nevertheless and for the 

purpose of the permitting programs, we 

want to clarify that tribes that develop 

Tribal Implementation Plans (TIPs) can 

charge for permits and tribes with 

delegation or authorization would 

develop permit fee programs under their 

authority (e.g., Navajo’s permit fee 

program for their delegated title V 

permit program) to fund both the NSR 

and title V programs. For these reasons, 

there are a number of ways we would 

like to work with tribes to address the 

funding concern, including encouraging 

delegation or authorization of 

permitting programs and having model 

codes available for tribes that want to do 

TIPs for NSR and title V permitting. 

G. Comments on Executive Order 

13211—Actions That Significantly 

Affect Energy Supply, Distribution, or 

Use 

Other commenters assert that EPA’s 

analysis under Executive Order 13211 is 

insufficient because it addresses only 

smaller sources. These commenters 

contend that EPA has not meaningfully 

examined the energy implications of its 

proposed actions and interpretations of 

the CAA. The commenters disagree with 

EPA’s conclusion that the imposition of 

costly PSD obligations on power plants 

would have no impact on power supply, 

distribution, or use, when those plants 

will have had no time to prepare for 

compliance and no idea what BACT 

may be for GHG emissions. Other 

commenters opine that the adoption of 

BACT for some industries newly-subject 

to PSD permitting requirements for 

GHGs could involve fuel-switching, and 

increased energy costs (due to the need 

for a source to convert from coal to 

natural gas to meet BACT). 

Again, this action is a burden relief 

rule and as such it does not create any 

new requirements for sources in the 

energy supply, distribution, or use 

sectors. For the purpose of the BACT 

determinations for GHGs, the longstanding top-down BACT selection 

process still applies. Under the CAA 

and EPA’s implementing regulations, 

BACT is still an emission limitation 

based on the maximum degree of 

emission reduction achievable through 

application of production processes and 

available methods, systems, and 

techniques that considers energy, 

environmental, and economic impacts. 

In other words, BACT determinations 

for GHGs will still have to consider 

energy, environmental and economic 

feasibility for the various control 

technologies under consideration before 

selecting a particular technology as 

BACT for a specific source. For that 

reason, what BACT may be for GHG 

emissions will vary by source, and the 

technology that is ultimately selected 

has to be one that is feasible based on 

the current energy, environmental and 

economic impacts that the planned 

technology might have. Thus, we do not 

believe that this action is likely to have 

a significant adverse effect on the 

supply, distribution, or use of energy. 

VIII. Statutory and Executive Order 

Reviews 

A. Executive Order 12866—Regulatory 

Planning and Review 

Under section 3(f)(1) of Executive 

Order 12866 (58 FR 51735, October 4, 

1993), this action is an ‘‘economically 

significant regulatory action’’ because it 

is likely to have an annual effect on the 

economy of $100 million or more. 

Accordingly, EPA submitted this action 

to the OMB for review under Executive 

Order 12866 and any changes made in 

response to OMB recommendations 

have been documented in the docket for 

this action. 

In addition, EPA prepared an analysis 

of the potential costs and benefits 

associated with this action. This 

analysis is contained in the RIA for this 

final rule. A copy of the analysis is 

available in the docket for this action 

and the analysis is briefly summarized 

in section VII of this preamble. 

This rule uses a phased-in approach 

for requiring larger sources of GHG 

emissions to comply with title V 

operating permit and PSD statutory 

requirements, essentially lifting this 

burden for a period of at least 6 years 

for a large number of sources of GHG. 

Thus, this rule provides regulatory relief 

rather than regulatory requirements for 

these GHG sources. For sources of GHG 

that will be required to obtain title V 

permits and/or comply with PSD 

requirements, there are no direct 

economic burdens or costs as a result of 

this final rule, because these 

requirements are not imposed as a result 

of this rulemaking. Statutory 

requirements to obtain a title V 

operating permit or to adhere to PSD 

requirements are already mandated by 

the CAA and by existing rules, not by 

this rule. As a result, this Tailoring Rule 

annual effect on the economy will be 

positive because it will result in billions 

of dollars of regulatory relief during the 

phase-in period. 

B. Paperwork Reduction Act 

This action does not impose any new 

information collection burden. Instead, 

this action will significantly reduce 

costs incurred by sources and 

permitting authorities relative to the 

costs that would be incurred if EPA did 

not revise the rule. Based on our revised 

GHG threshold data analysis, we 

estimate that over 80,000 new and 

modified facilities per year would be 

subject to PSD review based on applying 

a GHG emissions threshold of 100/250 

tpy using a CO2e metric. This is 

compared to 280 PSD permits currently 

issued per year, which is an increase of 

more than 280-fold. Similarly, for title 

V, we estimate that over six million new 

sources would be affected at the 100-tpy 

threshold for GHGs using the CO2e 

metric. By increasing the volume of 

permits by over 400 times, the 

administrative burden would be 

unmanageable without this rule. 

However, OMB has previously 

approved the information collection 

mstockstill on DSKH9S0YB1PROD with RULES2

31604 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

requirements contained in the existing 

regulations for PSD (see, e.g., 40 CFR 

52.21) and title V (see 40 CFR parts 70 

and 71) under the provisions of the 

Paperwork Reduction Act, 44 U.S.C. 

3501 et seq. and has assigned OMB 

control number 2060–0003 and OMB 

control number 2060–0336. The OMB 

control numbers for EPA’s regulations 

in 40 CFR are listed in 40 CFR part 9. 

C. Regulatory Flexibility Act 

The RFA generally requires an agency 

to prepare a regulatory flexibility 

analysis of any rule subject to notice 

and comment rulemaking requirements 

under the APA or any other statute 

unless the agency certifies that the rule 

will not have a significant economic 

impact on a substantial number of small 

entities. Small entities include small 

businesses, small organizations, and 

small governmental jurisdictions. 

For purposes of assessing the impacts 

of this final action on small entities, 

small entity is defined as: (1) A small 

business that is a small industrial entity 

as defined in the U.S. SBA size 

standards (see 13 CFR 121.201); (2) a 

small governmental jurisdiction that is a 

government of a city, county, town, 

school district, or special district with a 

population of less than 50,000; or (3) a 

small organization that is any not-forprofit enterprise that is independently 

owned and operated and is not 

dominant in its field. 

After considering the economic 

impacts of this final rule on small 

entities, I certify that this final action 

will not have a significant economic 

impact on a substantial number of small 

entities. In determining whether a rule 

has a significant economic impact on a 

substantial number of small entities, the 

impact of concern is any significant 

adverse economic impact on small 

entities, since the primary purpose of 

the regulatory flexibility analyses is to 

identify and address regulatory 

alternatives ‘‘which minimize any 

significant economic impact of the rule 

on small entities.’’ 5 U.S.C. 603 and 604. 

Thus, an agency may certify that a rule 

will not have a significant economic 

impact on a substantial number of small 

entities if the rule relieves regulatory 

burden, or otherwise has a positive 

economic effect on all of the small 

entities subject to the rule. 

We have therefore concluded that this 

final rule will relieve the regulatory 

burden for most affected small entities 

associated with the major PSD and title 

V operating permits programs for new or 

modified major sources that emit GHGs, 

including small businesses. This is 

because this rule raises the major source 

applicability thresholds for these 

programs for the sources that emit 

GHGs. As a result, the program changes 

provided in this rule are not expected to 

result in a significant economic impact 

on a substantial number of small 

entities. 

D. Unfunded Mandates Reform Act 

This rule does not contain a federal 

mandate that may result in expenditures 

of $100 million or more for state, local, 

and tribal governments, in the aggregate, 

or the private sector in any 1 year. Only 

those few states whose permitting 

authorities do not implement the federal 

PSD and title V rules by reference in 

their SIPs will have a small increase in 

burden. These states will have to amend 

their corresponding SIPs to incorporate 

the new applicability thresholds, since 

the burden reducing thresholds that we 

are finalizing with this rule will not 

otherwise apply to the PSD and title V 

programs. Thus, this rule is not subject 

to the requirements of sections 202 or 

205 of UMRA. 

This rule is also not subject to the 

requirements of section 203 of UMRA 

because it contains no regulatory 

requirements that might significantly or 

uniquely affect small governments. As 

discussed earlier, this rule is expected 

to result in cost savings and an 

administrative burden reduction for all 

permitting authorities and permittees, 

including small governments. 

E. Executive Order 13132—Federalism 

This action does not have federalism 

implications. It will not have substantial 

direct effects on the states, on the 

relationship between the national 

government and the states, or on the 

distribution of power and 

responsibilities among the various 

levels of government, as specified in 

Executive Order 13132. These final 

amendments will ultimately simplify 

and reduce the burden on state and 

local agencies associated with 

implementing the PSD and title V 

operating permits programs, by 

providing that a source whose GHG 

emissions are below the proposed levels 

will not have to obtain a PSD permit or 

title V permit. Thus, Executive Order 

13132 does not apply to this action. 

In the spirit of Executive Order 13132, 

and consistent with EPA policy to 

promote communications between EPA 

and state and local governments, EPA 

specifically solicited comment on the 

proposed rule from state and local 

officials. 

F. Executive Order 13175—Consultation 

and Coordination With Indian Tribal 

Governments 

Subject to the Executive Order 13175 

(65 FR 67249, November 9, 2000) EPA 

may not issue a regulation that has tribal 

implications, that imposes substantial 

direct compliance costs, and that is not 

required by statute, unless the federal 

government provides the funds 

necessary to pay the direct compliance 

costs incurred by tribal governments, or 

EPA consults with tribal officials early 

in the process of developing the 

proposed regulation and develops a 

tribal summary impact statement. 

EPA has concluded that this action 

may have tribal implications. However, 

it will neither impose substantial direct 

compliance costs on tribal governments, 

nor preempt tribal law. There are no 

tribal authorities, currently issuing 

major NSR permits; however, this may 

change in the future. 

EPA consulted with tribal officials 

early in the process of developing this 

regulation to allow them to have 

meaningful and timely input into its 

development by publishing an ANPR 

that included GHG tailoring options for 

regulating GHGs under the CAA. (73 FR 

44354, July 30, 2008) As a result of the 

ANPR, EPA received several comments 

from tribal officials on differing GHG 

tailoring options presented in the ANPR 

which were considered in the proposal 

and this final rule. Additionally, we also 

specifically solicited comment from 

tribal officials on the proposed rule (74 

FR 55292, October 27, 2009). 

G. Executive Order 13045—Protection of 

Children From Environmental Health 

and Safety Risks 

EPA interprets Executive Order 13045 

(62 FR 19885, April 23, 1997) as 

applying only to those regulatory 

actions that concern health or safety 

risks, such that the analysis required 

under section 5–501 of the Executive 

Order has the potential to influence the 

regulation. This action is not subject to 

Executive Order 13045 because it does 

not establish an environmental standard 

intended to mitigate health or safety 

risks. 

H. Executive Order 13211—Actions 

That Significantly Affect Energy Supply, 

Distribution, or Use 

This action is not a ‘‘significant energy 

action’’ as defined in Executive Order 

13211 (66 FR 28355 (May 22, 2001)), 

because it is not likely to have a 

significant adverse effect on the supply, 

distribution, or use of energy. Further, 

we have concluded that this rule is not 

likely to have any adverse energy effects 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31605 

because this action would not create any 

new requirements for sources in the 

energy supply, distribution, or use 

sectors. 

I. National Technology Transfer and 

Advancement Act 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (‘‘NTTAA’’), Public Law No. 

104–113, 12(d) (15 U.S.C. 272 note) 

directs EPA to use voluntary consensus 

standards in its regulatory activities 

unless to do so would be inconsistent 

with applicable law or otherwise 

impractical. Voluntary consensus 

standards are technical standards (e.g., 

materials specifications, test methods, 

sampling procedures, and business 

practices) that are developed or adopted 

by voluntary consensus standards 

bodies. The NTTAA directs EPA to 

provide Congress, through OMB, 

explanations when the Agency decides 

not to use available and applicable 

voluntary consensus standards. 

This action does not involve technical 

standards. Therefore, EPA did not 

consider the use of any voluntary 

consensus standards. 

J. Executive Order 12898—Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations 

Executive Order 12898 (59 FR 7629 

(Feb. 16, 1994)) establishes federal 

executive policy on environmental 

justice. Its main provision directs 

federal agencies, to the greatest extent 

practicable and permitted by law, to 

make environmental justice part of their 

mission by identifying and addressing, 

as appropriate, disproportionately high 

and adverse human health or 

environmental effects of their programs, 

policies, and activities on minority 

populations and low-income 

populations in the United States. 

EPA has concluded that it is not 

practicable to determine whether there 

would be disproportionately high and 

adverse human health or environmental 

effects on minority and/or low income 

populations from this rule. This rule is 

necessary in order to allow for the 

continued implementation of permitting 

requirements established in the statute. 

Specifically, without this rule, the CAA 

permitting programs (PSD and title V) 

would become overwhelmed and 

unmanageable by the millions of GHG 

sources that would become newly 

subject to them. This would result in 

severe impairment of the functioning of 

these programs with potentially adverse 

human health and environmental effects 

nationwide. Under this rule and the 

legal doctrines of ‘‘absurd results,’’ 

administrative necessity, and one-stepat-a-time, EPA is ensuring that the CAA 

permitting programs continue to operate 

by limiting their applicability to the 

maximum number of sources the 

programs can possibly handle. This 

approach is consistent with 

congressional intent as it allows PSD 

applicability to at least the largest 

sources initially, at least to as many 

more sources as possible, and as 

promptly as possible over time. By 

doing so, this rule allows for the 

maximum degree of environmental 

protection possible while providing 

regulatory relief for the unmanageable 

burden that would otherwise exist. 

Therefore, we believe it is not 

practicable to identify and address 

disproportionately high and adverse 

human health or environmental effects 

on minority populations and low 

income populations in the United States 

under this final rule. 

K. Congressional Review Act 

The Congressional Review Act, 5 

U.S.C. 801 et seq., as added by SBREFA, 

generally provides that before a rule 

may take effect, the agency 

promulgating the rule must submit a 

rule report, which includes a copy of 

the rule, to each House of the Congress 

and to the Comptroller General of the 

United States. EPA will submit a report 

containing this rule and other required 

information to the U.S. Senate, the U.S. 

House of Representatives, and the 

Comptroller General of the United 

States prior to publication of the rule in 

the Federal Register. A major rule 

cannot take effect until 60 days after it 

is published in the Federal Register. 

This action is a ‘‘major rule’’ as defined 

by 5 U.S.C. 804(2). This rule will be 

effective August 2, 2010. 

L. Judicial Review 

Under section 307(b)(1) of the Act, 

petitions for judicial review of this 

action must be filed in the United States 

Court of Appeals for the District of 

Columbia Circuit by August 2, 2010. 

Any such judicial review is limited to 

only those objections that are raised 

with reasonable specificity in timely 

comments. Filing a petition for 

reconsideration by the Administrator of 

this final rule does not affect the finality 

of this rule for the purposes of judicial 

review nor does it extend the time 

within which a petition for judicial 

review may be filed, and shall not 

postpone the effectiveness of such rule 

or action. Under section 307(b)(2) of the 

Act, the requirements of this final action 

may not be challenged later in civil or 

criminal proceedings brought by us to 

enforce these requirements. Pursuant to 

section 307(d)(1)(V) of the Act, the 

Administrator determines that this 

action is subject to the provisions of 

section 307(d). Section 307(d)(1)(V) 

provides that the provisions of section 

307(d) apply to ‘‘such other actions as 

the Administrator may determine.’’ This 

action finalizes some, but not all, 

elements of a previous proposed 

action—the Prevention of Significant 

Deterioration and Title V Greenhouse 

Gas Tailoring Rule Proposed Rule (74 

FR 55292, October 27, 2009). 

IX. Statutory Authority 

The statutory authority for this action 

is provided by sections 307(d)(7)(B), 

101, 111, 114, 116, and 301 of the CAA 

as amended (42 U.S.C. 7401, 7411, 7414, 

7416, and 7601). This action is also 

subject to section 307(d) of the CAA (42 

U.S.C. 7407(d)). 

List of Subjects 

40 CFR Part 51 

Environmental protection, 

Administrative practice and procedure, 

Air pollution control, Carbon dioxide, 

Carbon dioxide equivalents, Greenhouse 

gases, Hydrofluorocarbons, 

Intergovernmental relations, Methane, 

Nitrous oxide, Perfluorocarbons, 

Reporting and recordkeeping 

requirements, Sulfur hexafluoride. 

40 CFR Part 52 

Environmental protection, 

Administrative practice and procedure, 

Air pollution control, Carbon dioxide, 

Carbon dioxide equivalents, Greenhouse 

gases, Hydrofluorocarbons, 

Intergovernmental relations, Methane, 

Nitrous oxide, Perfluorocarbons, 

Reporting and recordkeeping 

requirements, Sulfur hexafluoride. 

40 CFR Part 70 

Environmental protection, 

Administrative practice and procedure, 

Air pollution control, Carbon dioxide, 

Carbon dioxide equivalents, Greenhouse 

gases, Hydrofluorocarbons, 

Intergovernmental relations, Methane, 

Nitrous oxide, Perfluorocarbons, 

Reporting and recordkeeping 

requirements, Sulfur hexafluoride. 

40 CFR Part 71 

Environmental protection, 

Administrative practice and procedure, 

Air pollution control, Carbon dioxide, 

Carbon dioxide equivalents, Greenhouse 

gases, Hydrofluorocarbons, Methane, 

Nitrous oxide, Perfluorocarbons, 

Reporting and recordkeeping 

requirements, Sulfur hexafluoride. 

mstockstill on DSKH9S0YB1PROD with RULES2

31606 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

Dated: May 13, 2010. 

Lisa P. Jackson, 

Administrator. 

■ For reasons stated in the preamble, 

title 40, chapter I of the Code of Federal 

Regulations is amended as set forth 

below. 

PART 51—[AMENDED] 

■ 1. The authority citation for part 51 

continues to read as follows: 

Authority: 23 U.S.C. 101; 42 U.S.C. 7401– 

7671q. 

Subpart I—[Amended] 

■ 2. Section 51.166 is amended: 

■ a. By adding paragraph (b)(48); 

■ b. By revising paragraph (b)(49)(iv); 

and 

■ c. By adding paragraph (b)(49)(v). 

The revisions and additions read as 

follows: 

§ 51.166 Prevention of significant 

deterioration of air quality. 

* * * * * 

(b) * * * 

(48) Subject to regulation means, for 

any air pollutant, that the pollutant is 

subject to either a provision in the Clean 

Air Act, or a nationally-applicable 

regulation codified by the Administrator 

in subchapter C of this chapter, that 

requires actual control of the quantity of 

emissions of that pollutant, and that 

such a control requirement has taken 

effect and is operative to control, limit 

or restrict the quantity of emissions of 

that pollutant released from the 

regulated activity. Except that: 

(i) Greenhouse gases (GHGs), the air 

pollutant defined in § 86.1818–12(a) of 

this chapter as the aggregate group of six 

greenhouse gases: Carbon dioxide, 

nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, 

and sulfur hexafluoride, shall not be 

subject to regulation except as provided 

in paragraphs (b)(48)(iv) through (v) of 

this section. 

(ii) For purposes of paragraphs 

(b)(48)(iii) through (v) of this section, 

the term tpy CO2 equivalent emissions 

(CO2e) shall represent an amount of 

GHGs emitted, and shall be computed as 

follows: 

(a) Multiplying the mass amount of 

emissions (tpy), for each of the six 

greenhouse gases in the pollutant GHGs, 

by the gas’s associated global warming 

potential published at Table A–1 to 

subpart A of part 98 of this chapter— 

Global Warming Potentials. 

(b) Sum the resultant value from 

paragraph (b)(48)(ii)(a) of this section 

for each gas to compute a tpy CO2e. 

(iii) The term emissions increase as 

used in paragraphs (b)(48)(iv) through 

(v) of this section shall mean that both 

a significant emissions increase (as 

calculated using the procedures in 

(a)(7)(iv) of this section) and a 

significant net emissions increase (as 

defined in paragraphs (b)(3) and (b)(23) 

of this section) occur. For the pollutant 

GHGs, an emissions increase shall be 

based on tpy CO2e, and shall be 

calculated assuming the pollutant GHGs 

is a regulated NSR pollutant, and 

‘‘significant’’ is defined as 75,000 tpy 

CO2e instead of applying the value in 

paragraph (b)(23)(ii) of this section. 

(iv) Beginning January 2, 2011, the 

pollutant GHGs is subject to regulation 

if: 

(a) The stationary source is a new 

major stationary source for a regulated 

NSR pollutant that is not GHGs, and 

also will emit or will have the potential 

to emit 75,000 tpy CO2e or more; or 

(b) The stationary source is an 

existing major stationary source for a 

regulated NSR pollutant that is not 

GHGs, and also will have an emissions 

increase of a regulated NSR pollutant, 

and an emissions increase of 75,000 tpy 

CO2e or more; and, 

(v) Beginning July 1, 2011, in addition 

to the provisions in paragraph (b)(48)(iv) 

of this section, the pollutant GHGs shall 

also be subject to regulation: 

(a) At a new stationary source that 

will emit or have the potential to emit 

100,000 tpy CO2e; or 

(b) At an existing stationary source 

that emits or has the potential to emit 

100,000 tpy CO2e, when such stationary 

source undertakes a physical change or 

change in the method of operation that 

will result in an emissions increase of 

75,000 tpy CO2e or more. 

(49) * * * 

(iv) Any pollutant that otherwise is 

subject to regulation under the Act as 

defined in paragraph (b)(48) of this 

section. 

(v) Notwithstanding paragraphs 

(b)(49)(i) through (iv) of this section, the 

term regulated NSR pollutant shall not 

include any or all hazardous air 

pollutants either listed in section 112 of 

the Act, or added to the list pursuant to 

section 112(b)(2) of the Act, and which 

have not been delisted pursuant to 

section 112(b)(3) of the Act, unless the 

listed hazardous air pollutant is also 

regulated as a constituent or precursor 

of a general pollutant listed under 

section 108 of the Act. 

* * * * * 

PART 52—[AMENDED] 

■ 3. The authority citation for part 52 

continues to read as follows: 

Authority: 42 U.S.C. 7401, et seq. 

Subpart A—[Amended] 

■ 4. Section 52.21 is amended: 

■ a. By adding paragraph (b)(49); 

■ b. By revising paragraph (b)(50)(iv); 

and 

■ c. By adding paragraph (b)(50)(v). 

The revisions and additions read as 

follows: 

§ 52.21 Prevention of significant 

deterioration of air quality. 

* * * * * 

(b) * * * 

(49) Subject to regulation means, for 

any air pollutant, that the pollutant is 

subject to either a provision in the Clean 

Air Act, or a nationally-applicable 

regulation codified by the Administrator 

in subchapter C of this chapter, that 

requires actual control of the quantity of 

emissions of that pollutant, and that 

such a control requirement has taken 

effect and is operative to control, limit 

or restrict the quantity of emissions of 

that pollutant released from the 

regulated activity. Except that: 

(i) Greenhouse gases (GHGs), the air 

pollutant defined in § 86.1818–12(a) of 

this chapter as the aggregate group of six 

greenhouse gases: Carbon dioxide, 

nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, 

and sulfur hexafluoride, shall not be 

subject to regulation except as provided 

in paragraphs (b)(49)(iv) through (v) of 

this section. 

(ii) For purposes of paragraphs 

(b)(49)(iii) through (v) of this section, 

the term tpy CO2 equivalent emissions 

(CO2e) shall represent an amount of 

GHGs emitted, and shall be computed as 

follows: 

(a) Multiplying the mass amount of 

emissions (tpy), for each of the six 

greenhouse gases in the pollutant GHGs, 

by the gas’s associated global warming 

potential published at Table A–1 to 

subpart A of part 98 of this chapter— 

Global Warming Potentials. 

(b) Sum the resultant value from 

paragraph (b)(49)(ii)(a) of this section 

for each gas to compute a tpy CO2e. 

(iii) The term emissions increase as 

used in paragraphs (b)(49)(iv) through 

(v) of this section shall mean that both 

a significant emissions increase (as 

calculated using the procedures in 

paragraph (a)(2)(iv) of this section) and 

a significant net emissions increase (as 

defined in paragraphs (b)(3) and (b)(23) 

of this section) occur. For the pollutant 

GHGs, an emissions increase shall be 

based on tpy CO2e, and shall be 

calculated assuming the pollutant GHGs 

is a regulated NSR pollutant, and 

‘‘significant’’ is defined as 75,000 tpy 

CO2e instead of applying the value in 

paragraph (b)(23)(ii) of this section. 

mstockstill on DSKH9S0YB1PROD with RULES2

Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 31607 

(iv) Beginning January 2, 2011, the 

pollutant GHGs is subject to regulation 

if: 

(a) The stationary source is a new 

major stationary source for a regulated 

NSR pollutant that is not GHGs, and 

also will emit or will have the potential 

to emit 75,000 tpy CO2e or more; or 

(b) The stationary source is an 

existing major stationary source for a 

regulated NSR pollutant that is not 

GHGs, and also will have an emissions 

increase of a regulated NSR pollutant, 

and an emissions increase of 75,000 tpy 

CO2e or more; and, 

(v) Beginning July 1, 2011, in addition 

to the provisions in paragraph (b)(49)(iv) 

of this section, the pollutant GHGs shall 

also be subject to regulation 

(a) At a new stationary source that 

will emit or have the potential to emit 

100,000 tpy CO2e; or 

(b) At an existing stationary source 

that emits or has the potential to emit 

100,000 tpy CO2e, when such stationary 

source undertakes a physical change or 

change in the method of operation that 

will result in an emissions increase of 

75,000 tpy CO2e or more. 

(50) * * * 

(iv) Any pollutant that otherwise is 

subject to regulation under the Act as 

defined in paragraph (b)(49) of this 

section. 

(v) Notwithstanding paragraphs 

(b)(50)(i) through (iv) of this section, the 

term regulated NSR pollutant shall not 

include any or all hazardous air 

pollutants either listed in section 112 of 

the Act, or added to the list pursuant to 

section 112(b)(2) of the Act, and which 

have not been delisted pursuant to 

section 112(b)(3) of the Act, unless the 

listed hazardous air pollutant is also 

regulated as a constituent or precursor 

of a general pollutant listed under 

section 108 of the Act. 

* * * * * 

■ 5. A new § 52.22 is added to read as 

follows: 

§ 52.22 Enforceable commitments for 

further actions addressing the pollutant 

greenhouse gases (GHGs). 

(a) Definitions. 

(1) Greenhouse Gases (GHGs) means 

the air pollutant as defined in 

§ 86.1818–12(a) of this chapter as the 

aggregate group of six greenhouse gases: 

Carbon dioxide, nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, 

and sulfur hexafluoride. 

(2) All other terms used in this section 

shall have the meaning given in § 52.21. 

(b) Further action to regulate GHGs 

under the PSD program. 

(1) Near term action on GHGs. The 

Administrator shall solicit comment, 

under section 307(b) of the Act, on 

promulgating lower GHGs thresholds for 

PSD applicability. Such action shall be 

finalized by July 1, 2012 and become 

effective July 1, 2013. 

(2) Further study and action on GHGs. 

(i) No later than April 30, 2015 the 

Administrator shall complete a study 

projecting the administrative burdens 

that remain with respect to stationary 

sources for which GHGs do not 

constitute a regulated NSR pollutant. 

Such study shall account, among other 

things, for permitting authorities ability 

to secure resources, hire and train staff; 

experiences associated with GHG 

permitting for new types of sources and 

technologies; and, the success of 

streamlining measures developed by 

EPA (and adopted by the states) for 

reducing the permitting burden 

associated with such stationary sources. 

(ii) Based on the results of the study 

described in paragraph (b)(2)(i) of this 

section, the Administrator shall propose 

a rule addressing the permitting 

obligations of such stationary sources 

under § 52.21 and § 51.166 of this 

chapter. The Administrator shall take 

final action on such a rule no later than 

April 30, 2016. 

(iii) Before completing the rule 

described in paragraph (b)(2)(ii) of this 

section, the Administrator shall take no 

action to make the pollutant GHGs 

subject to regulation at stationary 

sources that emit or have the potential 

to emit less than 50,000 tpy CO2e, or for 

physical changes or changes in the 

method of operations at stationary 

sources that result in an emissions 

increase of less than 50,000 tpy CO2e (as 

determined using the methodology 

described in § 52.21(b)(49)(ii).) 

PART 70—[AMENDED] 

■ 6. The authority citation for part 70 

continues to read as follows: 

Authority: 42 U.S.C. 7401, et seq. 

■ 7. Section 70.2 is amended: 

■ a. By revising the introductory text of 

paragraph (2) of the definition for ‘‘major 

source’’; and 

■ b. By adding a definition for ‘‘Subject 

to regulation’’ in alphabetical order. 

The revision and addition read as 

follows: 

§ 70.2 Definitions. 

* * * * * 

Major source * * * 

(2) A major stationary source of air 

pollutants, as defined in section 302 of 

the Act, that directly emits, or has the 

potential to emit, 100 tpy or more of any 

air pollutant subject to regulation 

(including any major source of fugitive 

emissions of any such pollutant, as 

determined by rule by the 

Administrator). The fugitive emissions 

of a stationary source shall not be 

considered in determining whether it is 

a major stationary source for the 

purposes of section 302(j) of the Act, 

unless the source belongs to one of the 

following categories of stationary 

source: 

* * * * * 

Subject to regulation means, for any 

air pollutant, that the pollutant is 

subject to either a provision in the Clean 

Air Act, or a nationally-applicable 

regulation codified by the Administrator 

in subchapter C of this chapter, that 

requires actual control of the quantity of 

emissions of that pollutant, and that 

such a control requirement has taken 

effect and is operative to control, limit 

or restrict the quantity of emissions of 

that pollutant released from the 

regulated activity. Except that: 

(1) Greenhouse gases (GHGs), the air 

pollutant defined in § 86.1818–12(a) of 

this chapter as the aggregate group of six 

greenhouse gases: carbon dioxide, 

nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, 

and sulfur hexafluoride, shall not be 

subject to regulation unless, as of July 1, 

2011, the GHG emissions are at a 

stationary source emitting or having the 

potential to emit 100,000 tpy CO2

equivalent emissions. 

(2) The term tpy CO2 equivalent 

emissions (CO2e) shall represent an 

amount of GHGs emitted, and shall be 

computed by multiplying the mass 

amount of emissions (tpy), for each of 

the six greenhouse gases in the pollutant 

GHGs, by the gas’s associated global 

warming potential published at Table 

A–1 to subpart A of part 98 of this 

chapter—Global Warming Potentials, 

and summing the resultant value for 

each to compute a tpy CO2e. 

* * * * * 

■ 8. A new § 70.12 is added to read as 

follows: 

§ 70.12 Enforceable commitments for 

further actions addressing greenhouse 

gases (GHGs). 

(a) Definitions. 

(1) Greenhouse Gases (GHGs) means 

the air pollutant as defined in 

§ 86.1818–12(a) of this chapter as the 

aggregate group of six greenhouse gases: 

carbon dioxide, nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, 

and sulfur hexafluoride. 

(2) All other terms used in this section 

shall have the meaning given in § 70.2. 

(b) Further action to regulate GHGs 

under the title V program. 

(1) Near term action on GHGs. The 

Administrator shall solicit comment, 

mstockstill on DSKH9S0YB1PROD with RULES2

31608 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules and Regulations 

under section 307(b) of the Act, on 

promulgating lower GHGs thresholds for 

applicability under § 70.2. Such action 

shall be finalized by July 1, 2012 and 

become effective July 1, 2013. 

(2) Further study and action on GHGs. 

(i) No later than April 30, 2015 the 

Administrator shall complete a study 

projecting the administrative burdens 

that remain with respect to stationary 

sources for which GHGs do not 

constitute a pollutant subject to 

regulation. Such study shall account, 

among other things, for permitting 

authorities ability to secure resources, 

hire and train staff; experiences 

associated with GHG permitting for new 

types of sources and technologies; and, 

the success of streamlining measures 

developed by EPA (and adopted by the 

states) for reducing the permitting 

burden associated with such stationary 

sources. 

(ii) Based on the results of the study 

described in paragraph (b)(2)(i) of this 

section, the Administrator shall propose 

a rule addressing the permitting 

obligations of such stationary sources 

under § 70.2. The Administrator shall 

take final action on such a rule no later 

than April 30, 2016. 

(iii) Before completing the rule 

described in paragraph (b)(2)(ii) of this 

section, the Administrator shall take no 

action to make the pollutant GHGs 

subject to regulation at stationary 

sources that emit or have the potential 

to emit less than 50,000 tpy CO2e (as 

determined using the methodology 

described in § 70.2.) 

PART 71—[AMENDED] 

■ 9. The authority citation for part 71 

continues to read as follows: 

Authority: 42 U.S.C. 7401, et seq. 

Subpart A—[AMENDED] 

■ 10. Section 71.2 is amended: 

■ a. By revising the introductory text of 

paragraph (2) of the definition for ‘‘major 

source’’; and 

■ b. By adding a definition for ‘‘Subject 

to regulation’’ in alphabetical order. 

The revision and addition read as 

follows: 

§ 71.2 Definitions. 

* * * * * 

Major source * * * 

(2) A major stationary source of air 

pollutants, as defined in section 302 of 

the Act, that directly emits or has the 

potential to emit, 100 tpy or more of any 

air pollutant subject to regulation 

(including any major source of fugitive 

emissions of any such pollutant, as 

determined by rule by the 

Administrator). The fugitive emissions 

of a stationary source shall not be 

considered in determining whether it is 

a major stationary source for the 

purposes of section 302(j) of the Act, 

unless the source belongs to one of the 

following categories of stationary 

source: 

* * * * * 

Subject to regulation means, for any 

air pollutant, that the pollutant is 

subject to either a provision in the Clean 

Air Act, or a nationally-applicable 

regulation codified by the Administrator 

in subchapter C of this chapter, that 

requires actual control of the quantity of 

emissions of that pollutant, and that 

such a control requirement has taken 

effect and is operative to control, limit 

or restrict the quantity of emissions of 

that pollutant released from the 

regulated activity. Except that: 

(1) Greenhouse gases (GHGs), the air 

pollutant defined in § 86.1818–12(a) of 

this chapter as the aggregate group of six 

greenhouse gases: carbon dioxide, 

nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, 

and sulfur hexafluoride, shall not be 

subject to regulation unless, as of July 1, 

2011, the GHG emissions are at a 

stationary source emitting or having the 

potential to emit 100,000 tpy CO2

equivalent emissions. 

(2) The term tpy CO2 equivalent 

emissions (CO2e) shall represent an 

amount of GHGs emitted, and shall be 

computed by multiplying the mass 

amount of emissions (tpy), for each of 

the six greenhouse gases in the pollutant 

GHGs, by the gas’s associated global 

warming potential published at Table 

A–1 to subpart A of part 98 of this 

chapter—Global Warming Potentials, 

and summing the resultant value for 

each to compute a tpy CO2e. 

■ 11. A new § 71.13 is added to subpart 

A to read as follows: 

§ 71.13 Enforceable commitments for 

further actions addressing Greenhouse 

Gases (GHGs) 

(a) Definitions. 

(1) Greenhouse Gases (GHGs) means 

the air pollutant as defined in 

§ 86.1818–12(a) of this chapter as the 

aggregate group of six greenhouse gases: 

carbon dioxide, nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, 

and sulfur hexafluoride. 

(2) All other terms used in this section 

shall have the meaning given in § 71.2. 

(b) Further action to regulate GHGs 

under the title V program. 

(1) Near term action on GHGs. The 

Administrator shall solicit comment, 

under section 307(b) of the Act, on 

promulgating lower GHGs thresholds for 

applicability under § 71.2. Such action 

shall be finalized by July 1, 2012 and 

become effective July 1, 2013. 

(2) Further study and action on GHGs. 

(i) No later than April 30, 2015, the 

Administrator shall complete a study 

projecting the administrative burdens 

that remain with respect to stationary 

sources for which GHGs do not 

constitute a pollutant subject to 

regulation. Such study shall account, 

among other things, for permitting 

authorities ability to secure resources, 

hire and train staff; experiences 

associated with GHG permitting for new 

types of sources and technologies; and, 

the success of streamlining measures 

developed by EPA (and adopted by the 

states) for reducing the permitting 

burden associated with such stationary 

sources. 

(ii) Based on the results of the study 

described in paragraph (b)(2)(i) of this 

section, the Administrator shall propose 

a rule addressing the permitting 

obligations of such stationary sources 

under § 71.2. The Administrator shall 

take final action on such a rule no later 

than April 30, 2016. 

(iii) Before completing the rule 

described in paragraph (b)(2)(ii) of this 

section, the Administrator shall take no 

action to make the pollutant GHGs 

subject to regulation at stationary 

sources that emit or have the potential 

to emit less than 50,000 tpy CO2e, (as 

determined using the methodology 

described in § 71.2.) 

[FR Doc. 2010–11974 Filed 6–2–10; 8:45 am] 

BILLING CODE 6560–50–P 

mstockstill on DSKH9S0YB1PROD with RULES2