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6560-50-P 

ENVIRONMENTAL PROTECTION AGENCY 

40 CFR Part 52 

[EPA-HQ-OAR-2010-1033; FRL-xxxx-x] 

Determinations Concerning Need for Error Correction, Partial 

Approval and Partial Disapproval, and Federal Implementation 

Plan Regarding Texas Prevention of Significant Deterioration 

Program 

AGENCY: Environmental Protection Agency (EPA). 

ACTION: Interim Final rule. 

SUMMARY: EPA is correcting its previous full approval of 

Texas’s Clean Air Act (CAA) Prevention of Significant 

Deterioration (PSD) program to be a partial approval and partial 

disapproval. The state did not address, or provide adequate 

legal authority for, the program’s application to all pollutants 

that would become newly subject to regulation in the future, 

including non-National Ambient Air Quality Standard (NAAQS) 

pollutants, among them greenhouse gases (GHGs). Further, EPA is 

promulgating a federal implementation plan (FIP), as required 

following the partial disapproval, to establish a PSD permitting 

program in Texas for GHG-emitting sources. EPA is taking this 

action through interim final rulemaking, effective upon 

publication, to ensure the availability of a permitting 

authority - EPA - in Texas for GHG-emitting sources when they 
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become subject to PSD on January 2, 2011. This will allow those 

sources to proceed with plans to construct or expand. This rule 

will expire on April 30, 2011. EPA is also proposing a noticeand-comment rulemaking that mirrors this rulemaking.

DATES: This action is effective on [INSERT DATE OF 

PUBLICATION]. 

ADDRESSES: EPA has established a docket for this rulemaking 

under Docket ID No. EPA-HQ-OAR-2010-1033. All documents in the 

docket are listed in the www.regulations.gov index. Although 

listed in the index, some information is not publicly available, 

e.g., CBI or other information whose disclosure is restricted by 

statute. Certain other material, such as copyrighted material, 

will be publicly available only in hard copy. Publicly 

available docket materials are available either electronically 

in www.regulations.gov or in hard copy at the U.S. Environmental 

Protection Agency, Air Docket, EPA/DC, EPA West Building, Room 

3334, 1301 Constitution Ave., NW, 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 Air Docket is (202) 566-1742. 

FOR FURTHER INFORMATION CONTACT: Mr. Peter Keller, Air Quality 
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Policy Division, Office of Air Quality Planning and Standards 

(C504-03), Environmental Protection Agency, Research Triangle 

Park, NC 27711; telephone number: (919) 541-5339; fax number: 

(919) 541-5509; e-mail address: keller.peter@epa.gov. 

SUPPLEMENTARY INFORMATION: 

I. General Information 

A. Does this action apply to me?

The only governmental entity potentially affected by this 

rule is the State of Texas. Other entities potentially affected 

by this rule include sources in all industry groups within the 

State of Texas, which have a direct obligation under the CAA to 

obtain a PSD permit for GHGs for projects that meet the 

applicability thresholds set forth in the Tailoring Rule.1 This 

independent obligation on sources is specific to PSD and derives 

from CAA section 165(a). The majority of entities potentially 

affected by this action are expected to be in the following 

groups: 

Industry Group NAICSa

Utilities (electric, natural 

gas, other systems) 

2211, 2212, 2213 

 

1

 Prevention of Significant Deterioration and Title V Greenhouse 

Gas Tailoring Rule; Final Rule. 75 FR 31514 (June 3, 2010). 

The Tailoring Rule is described in more detail later in this 

preamble. 
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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. 
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B. How is the preamble organized?

The information presented in this preamble is organized as 

follows: 

I. General Information 

A. Does this action apply to me? 

B. How is the preamble organized? 

II. Overview of Interim Final Rule 

III. Background 

A. Legal Background 

1. Requirements for SIP Submittals and EPA Action 

2. General Requirements for the PSD Program 

3. SIP PSD Requirements 

B. Regulatory Background: Texas SIP and PSD Program 

C. Regulatory Background: GHG Rules 

1. GHGs and Their Sources 

2. GHG Regulatory Actions 

3. Implementation of GHG PSD Requirements 

4. Summary of the Effect of EPA’s Implementation 

Actions in States Other Than Texas 

5. EPA’s Implementation Approach for Texas and 

Texas’s Response 

IV. Interim Final Action 

A. Determination That EPA’s Previous Approval of Texas’s 

PSD Program Was in Error 

1. Gaps in Texas’s PSD Program Concerning 

Application of PSD to Pollutants Newly Subject to 

Regulation and Concerning Assurances of Legal 

Adequacy 

2. Flaws in PSD Program 

3. EPA’s Error in Approving Texas’s PSD Program 

B. Error Correction: Conversion of Previous Approval to 

Partial Approval and Partial Disapproval 

C. Reconsideration Under CAA Section 301, Other CAA 

Provisions, and Case Law 

D. Relationship of This Action to GHG PSD SIP Call 

E. Relationship of This Rulemaking to Other States 

V. Federal Implementation Plan 

A. Authority to Promulgate a FIP 

B. Timing of FIP 

C. Substance of GHG PSD FIP 

1. Components of FIP 
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2. Dual Permitting Authorities 

D. Period for GHG PSD FIP to Remain in Place 

E. Primacy of Texas’s SIP Process 

VI. Interim Final Rule, Good Cause Exception 

VII. 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 

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 Risks and Safety Risks 

H. Executive Order 13211 – Actions Concerning Regulations 

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 LowIncome Populations 

K. Congressional Review Act 

VIII. Judicial Review 

IX. Statutory Authority 

II. Overview of Interim Final Rule

This rulemaking is intended to assure that large GHGemitting sources in Texas will be able to obtain preconstruction 

permits under the CAA New Source Review (NSR) PSD program, and 

do so when they become subject to PSD, which will occur as early 

as January 2, 2011. In this manner, this rulemaking will allow 

those sources to avoid delays in construction or modification. 

In this rulemaking, EPA is determining that it erred in 

fully approving Texas’s PSD program in 1992 because at that 

time, the program had a gap, which recent statements by Texas 
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have made particularly evident: The program did not address its 

application to, or provide assurances that it has adequate legal 

authority to apply to, all pollutants newly subject to 

regulation, including non-NAAQS pollutants, among them GHGs. As 

a result, EPA is correcting its previous full approval to be a 

partial approval and partial disapproval. EPA is taking this 

action through the error-correction mechanism provided under CAA 

section 110(k)(6). The partial disapproval requires EPA, under 

CAA section 110(c)(1)(B), to promulgate a FIP within 2 years, 

and, as part of this rulemaking, EPA is exercising its 

discretion to promulgate the FIP immediately. Under the FIP, 

EPA will become the permitting authority for, and apply federal 

PSD requirements to, large GHG-emitting sources in accordance 

with the thresholds established under what we call the Tailoring 

Rule, which EPA recently promulgated. 

By becoming the permitting authority, EPA will be able to 

process preconstruction PSD permit applications and thereby 

allow the affected sources to avoid delays in construction and 

modification. According to Texas, 167 GHG-emitting sources will 

require PSD permits during 2011. It is likely that some of 

these sources will become subject to PSD soon after January 2, 
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2011, and therefore will have a pressing need to have a 

permitting authority in place by that time. 

Although the CAA allows states to implement PSD, and Texas 

has been implementing an EPA-approved PSD program since 1992, 

Texas has recently informed EPA that it does not have the 

intention or the authority to apply PSD to GHG-emitting sources, 

and that it could very well maintain this position even if the 

D.C. Circuit upholds the GHG rules in the current litigation 

before that Court. Texas’s unwillingness to implement this 

portion of the federal PSD program leaves EPA no choice but to 

resume its role as the permitting authority for this portion, in 

order to assure that businesses in Texas are not subject to 

delays or potential legal challenges and are able to move 

forward with planned construction and expansion projects that 

will create jobs and otherwise benefit the state’s and the 

nation’s economy. It is incumbent on EPA to take action now so 

that there will be no period of time when sources are unable to 

obtain necessary PSD permits, beginning on January 2, 2011. 

As a result, EPA is taking this action, including the FIP, 

through an interim final rule that are exempt from notice-andcomment due to the “good cause” exception of the Administrative 

Procedure Act. This interim-final rule will remain in place 
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until April 30, 2011. On a parallel track, EPA is also 

initiating a proposed rulemaking that mirrors this rulemaking, 

and that EPA intends to finalize and make effective by May 1, 

2011. 

The CAA requires each state, including Texas, to adopt into 

its state implementation plan (SIP) a PSD program. CAA sections 

110(a)(2)(C), 110(a)(2)(J), 161. One of the PSD requirements is 

that PSD applies by operation of law to any pollutant as soon as 

that pollutant becomes subject to regulation under the CAA for 

the first time, and that includes non-NAAQS pollutants. CAA 

section 165(a)(1), 169(1). EPA has consistently interpreted 

these CAA provisions in that manner. The CAA further requires 

that EPA-approved PSD programs must meet all CAA requirements, 

CAA section 110(k)(3), and this includes applying PSD to all 

pollutants newly subject to regulation, including non-NAAQS 

pollutants. In addition, the CAA requires each state to adhere 

to various requirements related to SIP adoption, including that 

the state “provide ... necessary assurances that the State ... 

will have adequate ... authority under State ... law to carry 

out such implementation plan....” CAA section 110(a)(2)(E)(i). 

Once a state has made a SIP submittal, the CAA requires EPA to 

approve or disapprove the SIP revision in whole or in part, 
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depending on the extent to which the CAA requirements are met. 

If EPA disapproves, it must promulgate a FIP that addresses the 

disapproved SIP or portion of the SIP at any time within two 

years of the disapproval. In addition, the CAA authorizes EPA 

to “determine[]” if a previous action in approving a SIP 

revision was “in error,” and if so, to “revise such action as 

appropriate.” 

In 1972, EPA approved Texas’s initial SIP to attain and 

maintain the NAAQS. At that time, EPA approved the state’s 

assurances of adequate legal authority. In the early 1980s, 

following the 1977 CAA Amendments that enacted the PSD program, 

EPA, which at that time administered PSD, delegated to Texas 

partial authority to implement the PSD program. During this 

time, EPA made clear to Texas that EPA’s regulatory PSD program 

that Texas was partly administering covers non-NAAQS pollutants. 

In 1985-88, Texas developed a PSD program and in a series 

of submittals, submitted it to EPA as a SIP revision. The Texas 

program incorporated by reference much of EPA’s PSD regulations, 

40 CFR part 52, including the PSD applicability provisions in 40 

CFR part 52.21(b)(1)(i). Thus, the Texas PSD program by its 

terms applied to “any air pollutant regulated under the Clean 

Air Act.” However, Texas state law imposed limits that 
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precluded the Texas PSD program from applying automatically, as 

a matter of law, to each newly regulated pollutant. Rather, 

Texas’s program applied only to pollutants that were subject to 

regulation at the time the state adopted the SIP revision 

establishing the PSD program, so that the state would need to 

take additional action to subject subsequently regulated 

pollutants to PSD. That additional action could take the form 

of a SIP revision to update the PSD program. Texas did not, 

however, address that limitation in any manner. For example, 

Texas did not provide assurances that it would take action to 

apply its PSD program to all pollutants newly subject to 

regulation, including non-NAAQS pollutants; nor did Texas 

provide information as to the method or timing of such action. 

During the course of EPA’s consideration of Texas’s 

proposed PSD SIP revision, EPA became concerned that Texas would 

not implement EPA’s interpretation of the core PSD requirement 

that sources’ implement best available control technology 

(BACT). As a result, EPA asked for written commitments that 

Texas would implement the PSD program in accordance with EPA 

interpretations. In a September 5, 1989 letter, which we call 

the Texas PSD Commitments Letter, Texas stated that it was 

“committed to the implementation of EPA decisions regarding PSD 
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program requirements.” Separately, as for Texas’s legal 

authority to carry out the PSD program, the state, in its 

various SIP submittals, made general references to its legal 

authority for adopting and submitting SIP revisions. 

In 1992, EPA fully approved Texas’s PSD rules. In the 

preamble to this final approval, EPA did not specifically 

address the issue of how the PSD program would apply to 

pollutants newly subject to regulation, including non-NAAQS 

pollutants, or the state’s legal authority for applying PSD to 

such pollutants. EPA did state that it was basing the approval 

on (among other things) the 1989 Texas PSD Commitments Letter. 

However, EPA acknowledged questions about the scope of these 

commitments and EPA made clear that even with that letter, Texas 

retained significant discretion in implementing the PSD program. 

 Because the application of PSD to pollutants newly subject 

to regulation is a key component of the program, and because 

Texas’s PSD program, unlike that of most states, did not 

automatically apply to such pollutants, it was important that 

Texas, in its SIP submittals, address how it would apply its 

program to such pollutants. This could include providing, for 

example, assurances that its program would apply to such 

pollutants or information as to the method and timing for 
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applying its program to such pollutants. In addition, under CAA 

section 110(a)(2)(E)(i), Texas was required to provide 

assurances that it had adequate legal authority to apply its 

program to such pollutants. 

However, as noted previously, there is no indication in the 

record of Texas’s SIP submissions or EPA’s action on them that 

Texas specifically addressed its program’s application to 

pollutants newly subject to regulation. Texas did provide the 

1989 Texas PSD Commitments Letter, in which it generally 

committed “to implement EPA requirements relative to [PSD].” 

But by its terms, this 1989 letter did not commit to apply PSD 

to such pollutants and in any event, EPA, in discussing this 

letter in the preamble to the final rule, acknowledged that 

Texas retained substantial discretion in implementing PSD. 

Thus, at the time that Texas submitted and EPA approved the 

state’s PSD program, the program had important gaps. It did not 

address its application to, or provide the requisite assurance 

that it had legal authority to apply to, pollutants newly 

subject to regulation, including non-NAAQS pollutants. 

Texas has recently made statements that have made these 

gaps particularly evident. Texas has stated that it is not 

required to submit a SIP revision to apply PSD to non-NAAQS 
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pollutants, including GHGs. Texas has explained that in its 

view, the CAA is clear, under the legal doctrine that we call 

Chevron step 1, described later, that the PSD program is limited 

to NAAQS pollutants and does not apply to non-NAAQS pollutants. 

In addition, Texas has stated that it does not have the 

intention or the authority to apply PSD to GHG-emitting sources, 

and that it could very well maintain this position even if the 

D.C. Circuit upholds the GHG rules in the current litigation 

before that Court. 

Texas’s recent statements highlight the gaps in its PSD 

program concerning the application of PSD, and the legal 

authority for applying PSD, to pollutants newly subject to 

regulation, including non-NAAQS pollutants, among them GHGs. 

What’s more, Texas’s recent statements are consistent with the 

view that the state’s silence on this subject at the time it 

submitted and EPA approved its PSD SIP means that Texas did not, 

at that time, view itself as obligated to apply PSD to each 

pollutant newly subject to regulation, including non-NAAQS 

pollutants. 

Specifically, Texas’s recent statement that the CAA PSD 

provisions are clear by their terms - which is what a Chevron

step 1 interpretation means - that they do not apply to non-
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NAAQS pollutants, suggests that Texas would have interpreted the 

CAA PSD provisions the same way at the time Texas submitted its 

PSD program. But at the least, Texas’s PSD program contained a 

gap because it failed to address this issue; and that gap is 

significant because it facilitates Texas, at this time, taking 

the position that PSD does not apply to non-NAAQS pollutants.2

 

Texas’s recent statement that it does not have the authority to 

apply PSD to GHG-emitting sources highlights that Texas’s PSD 

program has a gap due to its failure to provide assurances of 

adequate legal authority. Specifically, Texas’s direct 

statement that it does not have authority to apply PSD to GHGs 

casts doubt on whether Texas, at the time it submitted the PSD 

SIP submittals, would have viewed itself as having such 

authority. There seems to be a meaningful possibility that at 

the time Texas submitted its PSD program, it considered itself 

under some legal limit or constraint in applying PSD to all 

pollutants newly subject to regulation. At the least, it is 

apparent that at the time that Texas submitted its PSD program, 

 2 It should be noted that in the past, Texas has applied its 

PSD program to non-NAAQS pollutants. Even so, Texas’s recent 

statements indicate very clearly that Texas does not consider 

itself obligated to update its PSD program to apply to all newly 

regulated non-NAAQS pollutants, but instead Texas may choose 

which non-NAAQS pollutants to which it will apply PSD. 
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Texas did not provide the “necessary assurances” that it “will 

have adequate ... authority under State ... law to carry out 

such implementation plan (and is not prohibited by any provision 

of ... State law from carrying out such implementation plan or 

portion thereof),” as required under CAA section 

110(a)(2)(E)(i). 

The gaps in Texas’s PSD SIP – its failure to address, or 

provide assurances of the requisite legal authority concerning, 

the application of PSD to all pollutants newly subject to 

regulation, including non-NAAQS pollutants - means that the PSD 

SIP was flawed at the time that EPA reviewed it for action. EPA 

did not address those flaws and instead, issued a full approval 

of the SIP. 

Therefore, EPA is, in this rulemaking, “determin[ing]” that 

EPA’s previous action fully approving Texas’s PSD program was 

“in error,” under CAA section 110(k)(6). The key terms in this 

provision, as just quoted, confer broad discretion upon EPA to 

make decisions as to when it erred in approving a SIP revision. 

This provision is clear on its face that EPA erred in approving 

the Texas PSD program in light of that program’s flaws. 

Once EPA determines that its previous approval of the Texas 

PSD SIP was in error, EPA, under CAA section 110(k)(6), “may ... 
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revise [its previous full approval] as appropriate....” In this 

rulemaking, EPA is revising its previous full approval of 

Texas’s PSD SIP to be (i) a partial approval, so that Texas’s 

SIP remains approved to the extent of the pollutants that the 

PSD program already does cover; and (ii) a partial disapproval. 

The partial disapproval is based on the Texas PSD SIP’s failure 

to apply PSD to each pollutant newly subject to regulation, 

including each non-NAAQS pollutant, among them GHGs. An 

alternative legal basis for this rulemaking is EPA’s inherent 

administrative authority to reconsider a previous action. 

It should be noted that if the general assurances that 

Texas provided in its 1989 PSD Commitments Letter or may have 

otherwise provided in the record of its PSD SIP submittal were 

read to indicate that Texas did provide assurances that it would 

implement, and had legal authority to implement, EPA’s 

interpretation that PSD applies to each pollutant newly subject 

to regulation, including non-NAAQS pollutants, then Texas’s 

recent statements to the contrary indicate that Texas now is not 

complying with those assurances. Under these circumstances, EPA 

would still be justified in determining that its prior approval 

was in error and should be converted to a partial approval and 

partial disapproval. This is because under these circumstances, 
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EPA’s prior approval should be considered to have been based on 

those assurances, so that Texas’s lack of compliance with those 

assurances would eliminate the basis for that prior approval. 

After promulgating the partial disapproval in this 

rulemaking, EPA is required to promulgate a FIP “at any time 

within 2 years,” under CAA section 110(c)(1). EPA is exercising 

its discretion to immediately promulgate the FIP, and is doing 

so as part of this rulemaking. The FIP consists of appropriate 

action to apply the PSD program to pollutants that are subject 

to the PSD program under the CAA, but that Texas has not made 

subject to Texas’s PSD program. At present, Texas has stated 

that it has neither the intention nor the authority to apply its 

PSD program to GHG-emitting sources. Therefore, the FIP applies 

to GHG-emitting sources in Texas the EPA PSD regulatory program, 

including the thresholds in what we call the Tailoring Rule that 

limit PSD to large sources. Further, the FIP commits EPA to 

take future action as appropriate with respect to any additional 

newly regulated pollutants. The FIP does not apply to any other 

currently regulated pollutants because at this point, Texas’s 

PSD program addresses all other pollutants that are subject to 

regulation under the CAA. EPA is promulgating the FIP 

immediately, as opposed to a later time within the two-year 
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period, because certain GHG-emitting sources in Texas will 

become subject to the PSD program as of January 2, 2011. 

Immediate promulgation of the FIP will allow EPA to act as the 

permitting authority in Texas for these sources as of January 2, 

2011, and thereby avoid delays in these sources’ ability to 

construct or modify. 

It should be noted that EPA has recently taken another 

action concerning Texas’s PSD program as that program relates to 

GHGs: In a final rule signed on December 1, 2010 and published 

by notice dated December 13, 2010, EPA issued what we call a SIP 

call, under CAA section 110(k)(5), requiring Texas and 12 other 

states whose SIP-approved PSD programs do not apply to GHGemitting sources to submit a corrective SIP revision; and EPA 

established a deadline for that SIP submittal for each state, 

which ranged from as early as December 22, 2010 for seven of the 

states to December 1, 2011 for Texas. In addition, EPA stated 

that if Texas or any of the other states failed to submit its 

corrective SIP revision by its deadline, EPA intended to 

promulgate a FIP immediately thereafter. 

The timing of the SIP call was driven by the fact that the 

affected states did not have authority to issue PSD permits to 

GHG-emitting sources and as a result, those sources could face 
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delays in construction and modification when they became subject 

to PSD as early as January 2, 2011. EPA designed the SIP Call 

to maximize the opportunity of each affected state to assure 

that its sources would have a permitting authority available as 

of that date. EPA did so by allowing each state flexibility for 

its SIP submittal deadline, and therefore for the date that EPA 

could impose a FIP. Each of the affected states except Texas 

responded with a plan that would assure that its sources would 

not confront permitting delays. Texas did not submit such a 

plan and as a result, its sources – according to Texas, as many 

as 167 during 2011 - do confront the possibility of permitting 

delays. In addition, it was in responding to the SIP call and 

related EPA rulemakings that Texas made the statements noted 

earlier in this preamble that made particularly evident the 

flaws in its PSD program. 

This is an important reason why EPA is proceeding with this 

error-correction/partial-disapproval rulemaking at this time. 

This rulemaking allows EPA to impose a FIP immediately, instead 

of waiting until December 1, 2011; thereby act as the permitting 

authority in Texas beginning January 2, 2011; and in that 

capacity, allow Texas sources to avoid delays in construction or 

modification. 
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Although this rulemaking and the SIP call have 

similarities, EPA is authorized to proceed with each rulemaking 

with respect to Texas at this time. EPA is authorized to 

proceed with the SIP call for reasons explained in that rule. 

Nothing in CAA section 110(k)(5), which authorizes the SIP call, 

precludes EPA from proceeding with this rulemaking, which, as 

noted earlier, is authorized under CAA section 110(k)(6). EPA 

is not, at this time, undertaking a similar error-correction 

rulemaking for any of the other states that are subject to the 

SIP call. EPA has discretion as to whether and when to 

undertake such a rulemaking, and each of the other states has 

chosen a course of action that at present appears to assure that 

its large GHG-emitting sources will have a permitting authority 

available when the sources need one, and therefore will not face 

delays in constructing or modifying. Moreover, none of these 

other states has made the type of recent statements that may 

have exposed flaws in its SIP, as Texas has done. As a result, 

EPA sees no need to inquire into whether any of these other 

states have flaws in their SIP PSD programs as Texas does. 

EPA is applying the “good cause” exemption from notice-andcomment rulemaking, authorized under Administrative Procedure 

Act section 553(b)(3)(B) to promulgate this action as an interim 
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final rulemaking that takes effect immediately upon publication 

in the Federal Register. As a result, today’s action, including 

the FIP, will take effect by January 2, 2011, when GHG-emitting 

sources become subject to the requirement to obtain a PSD 

preconstruction permit. The use of the “good cause” exemption 

is justified because the notice-and-comment process would add 

delays in issuing the final rule and therefore is impractical 

and contrary to public interest. Unless and until EPA 

promulgates this rule, Texas sources will not have available a 

permitting authority to process their PSD permit applications 

and as a result, may face delays in construction and 

modification. 

Simultaneously with issuing this interim final rulemaking, 

EPA is proposing for notice-and-comment an errorcorrection/partial-disapproval and FIP rule that mirrors this 

rule. EPA expects to complete final action on this notice-andcomment rule so that it takes effect by May 1, 2011. This 

interim final rule will stay in place until April 30, 2011, and 

then be replaced by the notice-and-comment rule. 

III. Background

EPA described the relevant background information in the 

preambles for several proposed and final rulemakings that 
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implement the PSD GHG permitting program. These include the 

Tailoring Rule,3

 75 FR at 31518-21, and the GHG PSD SIP call,4 75 

FR at 53896-98 (September 7, 2010) (proposal), or, simply, the 

SIP call. Knowledge of this background information is presumed 

and will be only briefly summarized here. 

A. Legal Background 

1. Requirements for SIP Submittals and EPA Action 

This section reviews background information concerning the 

CAA requirements for what SIPs must include, the process for 

state submittals of SIPs, requirements for EPA action on SIPs 

and SIP revisions, and FIPs. 

a. Requirements for What SIPs Must Include 

Congress enacted the NAAQS and SIP requirements in the 1970 

CAA Amendments. CAA section 110(a)(1) requires that states 

adopt and submit to EPA for approval SIPs that implement the 

 

3

 Prevention of Significant Deterioration and Title V Greenhouse 

Gas Tailoring Rule; Proposed Rule." 74 FR 55,292 (Oct. 27, 

2009) (proposed Tailoring Rule). 

4

 “Action To Ensure Authority To Issue Permits Under the 

Prevention of Significant Deterioration Program to Sources of 

Greenhouse Gas Emissions: Finding of Substantial Inadequacy and 

SIP Call; Final Rule,” 75 FR 77698 (Dec. 13, 2010) (final SIP 

call); “Action To Ensure Authority To Issue Permits Under the 

Prevention of Significant Deterioration Program to Sources of 

Greenhouse Gas Emissions: Finding of Substantial Inadequacy and 

SIP Call; Proposed Rule,” 75 FR 53,892 (proposed SIP call). 
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NAAQS. CAA section 110(a)(2) contains a detailed list of 

requirements that all SIPs must include to be approvable by EPA. 

Of particular relevance for this action, subparagraph 

(E)(i) of CAA section 110(a)(2) provides that SIPs must "provide 

... necessary assurances that the state ... will have adequate 

personnel, funding, and authority under State ... law to carry 

out such implementation plan...." As applicable to PSD 

programs, this provision means that EPA may approve the SIP PSD 

provisions only if EPA is satisfied that the state will have 

adequate legal authority under state law. 

b. EPA Action on SIP Submittals 

After a SIP or SIP revision has been submitted, EPA is 

authorized to act on it under CAA section 110(k)(3)-(4). Those 

provisions authorize a full approval or, if the SIP or SIP 

revision meets some but not all of the applicable requirements, 

a conditional approval, a partial approval and disapproval, or a 

full disapproval. If EPA disapproves a required SIP or SIP 

revision, then EPA must promulgate a FIP at any time within two 

years after the disapproval, unless the state corrects the 

deficiency within that period of time by submitting a SIP 
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revision that EPA approves. CAA §110(c)(1).5

 

c. SIP Call 

The CAA provides a mechanism for the correction of SIPs 

with certain types of inadequacies, under CAA section 110(k)(5), 

which provides: 

(5) Calls for plan revisions 

 Whenever the Administrator finds that the 

applicable implementation plan for any area is 

substantially inadequate to * * * comply with any 

requirement of this Act, the Administrator shall 

require the State to revise the plan as necessary to 

correct such inadequacies. The Administrator shall 

notify the State of the inadequacies and may establish 

reasonable deadlines (not to exceed 18 months after 

the date of such notice) for the submission of such 

plan revisions. 

This provision by its terms authorizes the Administrator to 

"find[] that [a SIP] * * * is substantially inadequate to * * * 

comply with any requirement of this Act," and, based on that 

finding, to "require the State to revise the [SIP] * * * to 

correct such inadequacies." This latter action is commonly 

referred to as a "SIP call." In addition, this provision 

authorizes EPA to establish a "reasonable deadline[] (not to 

exceed 18 months after the date of such notice)" for the 

 

5

 States are subject to sanctions for failure to submit, or for 

EPA disapproval of, SIPs for nonattainment areas, under CAA 

section 179. These sanctions provisions are not relevant for 

this rule because they do not apply to PSD SIPs. 
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submission of the corrective SIP revision. 

If EPA does not receive the corrective SIP revision by the 

deadline, CAA section 110(c) authorizes EPA to "find[] that 

[the] State has failed to make a required submission." CAA 

section 110(c)(1)(A). Once EPA makes that finding, CAA section 

110(c)(1) requires EPA to "promulgate a Federal implementation 

plan at any time within 2 years after the [finding] * * * unless 

the State corrects the deficiency, and [EPA] approves the plan 

or plan revision, before [EPA] promulgates such [FIP]." 

CAA section 110(k)(5), by its terms -- specifically, the 

use of the term "[w]henever" -- authorizes, but does not 

require, EPA to make the specified finding and does not impose 

any time constraints for EPA to do so. As a result, EPA has 

discretion in determining whether and when to make the specified 

finding. See New York Public Interest Research Group v. 

Whitman, 321 F.3d 316, 330-31 (2d Cir. 2003) (opening phrase 

"Whenever the Administrator makes a determination" in CAA 

section 502(i)(1) grants EPA "discretion whether to make a 

determination"); Her Majesty the Queen in Right of Ontario v. 

EPA, 912 F.2d 1525, 1533 (D.C. Cir. 1990) ("whenever" in CAA 

section 115(a) "impl[ied] a degree of discretion" in whether EPA 

had to make a finding). 
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d. Authority for EPA to Revise Previous Action on SIPs 

EPA has authority to revise its previous action concerning 

SIP submittals. Two mechanisms are available to EPA: the error 

correction mechanism provided under CAA section 110(k)(6), and 

EPA’s general administrative authority to reconsider its own 

actions under CAA sections 110 and 301(a), in light of case law.

(i). Error Correction Under CAA Section 110(k)(6) 

CAA section 110(k)(6) provides as follows: 

Whenever the Administrator determines that the 

Administrator’s action approving, disapproving, or 

promulgating any plan or plan revision (or part 

thereof), area designation, redesignation, 

classification, or reclassification was in error, the 

Administrator may in the same manner as the approval, 

disapproval, or promulgation revise such action as 

appropriate without requiring any further submission 

from the State. Such determination and the basis 

thereof shall be provided to the State and public. 

The key provisions for present purposes are that the 

Administrator has the authority to “determine[]” when a SIP 

approval was “in error,” and when she does so, she may then 

revise the SIP approval “as appropriate,” in the same manner as 

the approval, and without requiring any further submission from 

the state. 

As quoted previously, CAA section 110(k)(6) provides EPA 

with the authority to correct its own “error”, but nowhere does 

this provision or any other provision in the CAA define what 
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qualifies as “error.” Thus, the term should be given its plain 

language, everyday meaning, which includes all unintentional, 

incorrect or wrong actions or mistakes. 

The legislative history of CAA section 110(k)(6) is silent 

regarding the definition of error, but the timing of the 

enactment of the provision suggests a broad interpretation. The 

provision was enacted shortly after the Third Circuit decision 

in Concerned Citizens of Bridesburg v. U.S. EPA, 836 F.2d 777 

(1987). In Bridesburg, the court adopted a narrow 

interpretation of EPA’s authority to unilaterally correct 

errors. The court stated that such authority was limited to 

typographical and other similar errors, and stated that any 

other change to a SIP must be accomplished through a SIP 

revision. Id. at 786. In Bridesburg, EPA determined that it 

lacked authority to include odor regulations as part of a SIP 

unless the odor regulations had a significant relationship to 

achieving a NAAQS, and so directly acted to remove 13-year-old 

odor provisions from the Pennsylvania SIP. Id. at 779-80. EPA 

found the previous approval of the provisions to have been an 

inadvertent error, and so used its “inherent authority to 

correct an inadvertent mistake” to withdraw its prior approval 

of the odor regulations without seeking approval of the change 
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from Pennsylvania. Id. at 779-80, 785. After noting that 

Congress had not contemplated the need for revision on the 

grounds cited by EPA, Id. at 780, the court found that EPA’s 

“inherent authority to correct an inadvertent mistake” was 

limited to corrections such as “typographical errors,” and that 

instead EPA was required to use the SIP revision process to 

remove the odor provision from the SIP. Id. at 785-86. 

When the court made its determination in Bridesburg in 

1987, there was no provision explicitly addressing EPA’s error 

correction authority under the CAA. In 1990, Congress passed 

CAA section 110(k)(6), apparently for the purpose of overturning 

the Bridesburg opinion. This is apparent because CAA section 

110(k)(6) both (i) authorizes EPA to correct SIP approvals and 

other actions that were “in error,” which, as noted previously, 

broadly covers any mistake, and thereby contrasts with the 

holding in Bridesburg that EPA’s pre-section 110(k)(6) authority 

was limited to correction of typographical or similar mistakes; 

and (ii) provides that the error correction need not be 

accomplished via the SIP revision or SIP call process, which 

contrasts with the holding of Bridesburg requiring a SIP 

revision. Because Congress apparently intended CAA section 

110(k)(6) to overturn Bridesburg, the definition of “error” in 
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that provision should be sufficiently broad to encompass the 

error that EPA asserted it made in its approval action at issue 

in Bridesburg, which goes well beyond typographical or other 

similar mistakes. 

EPA has used CAA section 110(k)(6) in the past to correct 

errors of a non-technical nature. For example, EPA has used CAA 

section 110(k)(6) as authority to make substantive corrections 

to remove a variety of provisions from federally approved SIPs 

that are not related to the attainment or maintenance of NAAQS 

or any other CAA requirement. See, e.g., “Approval and 

Promulgation of Implementation Plans; Kentucky: Approval of 

Revisions to the State Implementation Plan,” 75 FR 2440 (Jan. 

15, 2010) (correcting the SIP by removing a provision, approved 

in 1982, used to address hazardous or toxic air pollutants); 

“Approval and Promulgation of Implementation Plans; New York,” 

73 FR 21,546 (April 22, 2008) (issuing a direct final rule to 

correct a prior SIP correction from 1998 that removed general 

duties from the SIP but neglected to remove a reference to 

“odor” in the definition of “air contaminant or air pollutant”); 

“Approval and Promulgation of Implementation Plans; New York,” 

63 FR 65557 (Nov. 27, 1998) (issuing direct final rule to 

correct SIP by removing a general duty “nuisance provision” that 
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had been approved in 1984); "Correction of Implementation Plans; 

American Samoa, Arizona, California, Hawaii, and Nevada State 

Implementation Plans," 63 FR 34,641 (June 27, 1997) (correcting 

five SIPs by deleting a variety of administrative provisions 

concerning variances, hearing board procedures, and fees that 

had been approved during the 1970s). 

CAA section 110(k)(6), by its terms -- specifically, the 

use of the terms "[w]henever" and “may” and the lack of any time 

constraints -- authorizes, but does not require, EPA to make the 

specified finding. As a result, EPA has discretion in 

determining whether and when to make the specified finding. See

New York Public Interest Research Group v. Whitman, 321 F.3d 

316, 330-31 (2d Cir. 2003) (opening phrase "Whenever the 

Administrator makes a determination" in CAA section 502(i)(1) 

grants EPA "discretion whether to make a determination"); Her 

Majesty the Queen in Right of Ontario v. EPA, 912 F.2d 1525, 

1533 (D.C. Cir. 1990) ("whenever" in CAA section 115(a) 

"impl[ied] a degree of discretion" in whether EPA had to make a 

finding). 

(ii) Inherent Authority to Reconsider

It is EPA’s view that the provisions in CAA section 110 

that authorize EPA to take action on a SIP revision inherently 
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authorize EPA to, on its own initiative, reconsider and revise 

that action as appropriate. The courts have found that an 

administrative agency has the inherent authority to reconsider 

its decisions, unless Congress specifically proscribes the 

agency's discretion to do so. See, e.g., Gun South, Inc. v. 

Brady, 877 F.2d 858, 862 (11th Cir. 1989) (holding that agencies 

have implied authority to reconsider and rectify errors even 

though the applicable statute and regulations do not provide 

expressly for such reconsideration); Trujillo v. General 

Electric Co., 621 F.2d 1084, 1086 (10th Cir. 1980) 

(“Administrative agencies have an inherent authority to 

reconsider their own decisions, since the power to decide in the 

first instance carries with it the power to reconsider”); see 

also New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008) (holding 

that an agency normally can change its position and reverse a 

prior decision but that Congress limited EPA’s ability to remove 

sources from the list of hazardous air pollutant source 

categories, once listed, by requiring EPA to follow the specific 

delisting process at CAA section 112(c)(9)).6

 

 

6

 For additional case law, see Belville Mining Co. V. United 

States, 999 F.2d 989, 997 (6th Cir. 1993); Dun & Bradstreet Corp. 

v. United States Postal Service, 946 F.2d 189, 193 (2d Cir. 

1991); Iowa Power & Light Co. v. United States, 712 F.2d 1292 

(8th Cir. 1983). 
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Section 301(a) of the CAA, read in conjunction with CAA 

section 110 and the case law just described, provides further 

statutory authority for EPA to reconsider its actions under CAA 

section 110. CAA section 301(a) authorizes EPA "to prescribe 

such regulations as are necessary to carry out [EPA's] 

functions" under the CAA. Reconsidering prior rulemakings, when 

necessary, is part of “[EPA’s] functions” under the CAA – in 

light of EPA’s inherent authority as recognized under the case 

law to do so – and as a result, CAA section 301(a) confers such 

authority upon EPA. 

EPA finds further support for its authority to narrow its 

approvals in APA section 553(e), which requires EPA to give 

interested persons "the right to petition for the issuance, 

amendment, or repeal of a rule," and CAA section 307(b)(1), 

which expressly contemplates that persons may file a petition 

for reconsideration under certain circumstances (at the same 

time that a rule is under judicial review). These 

authorizations for other persons to petition EPA to amend or 

repeal a rule suggest that EPA has inherent authority, on its 

own, to issue such amendment or repeal. This is because EPA may 

grant a petition from another person for an amendment to or 

repeal of a rule only if justified under the CAA, and if such an 
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amendment or repeal is justified under the CAA, then EPA should 

be considered as having inherent authority to initiate the 

process on its own, even without a petition from another person. 

EPA recently used its authority to reconsider prior actions 

and limit its prior approval of a SIP in connection with 

California conformity SIPs. See, e.g., 68 FR 15720, 15723 

(discussing prior action taken to limit approvals); 67 FR 69139 

(taking final action to amend prior approvals to limit their 

duration); 67 FR 46618 (proposing to amend prior approvals to 

limit their duration, based on CAA sections 110(k) and 301(a)). 

EPA had previously approved SIPs with emissions budgets based on 

a mobile source model that was current at the time of EPA's 

approval. Later, EPA updated the mobile source model. But, 

even though the model had been updated, emissions budgets would 

continue to be based on the older, previously approved model in 

the SIPs, rather than the updated model. To rectify this 

problem, EPA conducted a rulemaking that revised the previous 

SIP approvals so that the approvals of the emissions budgets 

would expire early, when the new ones were submitted by states 

and found adequate, rather than when a SIP revision was 

approved. This helped California more quickly adjust its 

regulations to incorporate the newer model. EPA is using its 
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authority to reconsider and limit its prior approval of SIPs 

generally in the same manner as it did in connection with 

California conformity SIPs. 

f. FIPs

 As noted previously, if the state fails to submit a 

required SIP revision, or does so but EPA then disapproves that 

SIP revision, then the CAA requires EPA to promulgate a FIP and 

thereby, in effect, federalize the part of the air pollution 

control requirements for which the state, through the required 

SIP revision, would otherwise have been responsible. 

Specifically, under CAA section 110(c)(1), EPA is required to— 

promulgate a [FIP] at any time within 2 years after 

the Administrator (A) finds that a State has failed to 

make a required submission..., or (B) disapproves a 

[SIP] submission in whole or in part, unless the State 

corrects the deficiency, and the Administrator 

approves the plan or plan revision, before the 

Administrator promulgates such [FIP]. 

Although this provision, by its terms, mandates that EPA 

promulgate a FIP under the specified circumstances, and mandates 

that EPA do so within two years of when those circumstances 

occur, the provision gives EPA discretion to promulgate the FIP 

“at any time within [that] 2 year[]” period. Thus, EPA is 

authorized to promulgate a FIP immediately after either the 

specified state failure to submit or EPA disapproval. 
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 However, CAA section 110(c)(1), as quoted earlier, further 

provides that if EPA delays promulgating a FIP until later in 

the 2-year period, and, in the meantime, the state corrects the 

deficiency by submitting an approval SIP revision that EPA 

approves, then EPA is precluded from promulgating the FIP. 

Similarly, once EPA promulgates a FIP, it stays on the books 

until the state submits an approvable SIP that EPA then 

approves. 

2. General Requirements for the PSD Program 

The PSD program is a preconstruction review and permitting 

program applicable, under EPA rules, to large new stationary 

sources and, in general, expansions of existing sources. The 

PSD program applies in areas that are designated “attainment” or 

“unclassifiable” for a NAAQS, and is contained in part C of 

 
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title I of the CAA.7

 

The applicability of PSD to a particular source must be 

determined in advance of construction or modification and is 

pollutant-specific. Sources subject to PSD cannot construct or 

modify unless they first obtain a PSD permit that, among other 

things, includes emission limitations that qualify as BACT 

(discussed later). CAA sections 165(a)(1), 165(a)(4), 169(1). 

Under the CAA, PSD applies to a stationary source that 

qualifies as a “major emitting facility,” and that newly 

constructs or undertakes a modification. A source is a “major 

emitting facility” if it emits or has the potential to emit 100 

or 250 tpy, depending on the source category, of “any air 

pollutant.” CAA section 165(a)(1), 169(1). We refer to these 

levels as the 100/250-tpy thresholds. EPA has implemented these 

requirements in its regulations, which, as discussed next, use 

somewhat different terminology for determining PSD applicability 

 7 In contrast, the "nonattainment new source review (NSR)" 

program applies in areas not in attainment of a NAAQS and in the 

Ozone Transport Region and is implemented under the requirements 

of part D of title I of the CAA. We commonly refer to the PSD 

program and the nonattainment NSR program together as the major 

NSR program. The EPA rules governing both programs 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, the 

nonattainment NSR program does not apply to GHGs. 
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and which have interpreted the term "any air pollutant" more 

narrowly so that only emissions of any pollutant subject to 

regulation under the CAA trigger PSD. 

Specifically, under EPA’s regulations, PSD applies to a 

“major stationary source” that newly constructs or that 

undertakes a “major modification.” 40 CFR 52.166(a)(7), 

(b)(1)(i), (b)(2)(i). A “major stationary source” is any source 

that emits or has the potential to emit 100 or 250 tpy or more, 

depending on the source category, of any “regulated NSR 

pollutant.” 40 CFR 51.166(b)(1)(i)(a). The regulations define 

that term to include four classes of air pollutants, including, 

as a catch-all, "any pollutant that otherwise is subject to 

regulation under the Act." 40 CFR 51.166(b)(49)(iv). As 

discussed below, the phrase “subject to regulation” will begin 

to include GHGs on January 2, 2011, under our interpretation of 

that phrase as described in the Tailoring Rule, 75 FR at 

31,580/3, and what we call the "Johnson Memo Reconsideration” 

(or the “Timing Decision”).8

 

8

 "Interpretation of Regulations that Determine Pollutants 

Covered by Clean Air Act Permitting Programs." 75 FR 17,004 

(April 2, 2010). This action finalizes EPA's response to a 

petition for reconsideration of "EPA's Interpretation of 

Regulations that Determine Pollutants Covered by Federal 

Prevention of Significant Deterioration (PSD) Permit Program" 

(commonly referred to as the "Johnson Memo"), December 18, 2008. 
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One principal PSD requirement is that a new major source or 

major modification must meet emissions limitations based on 

application of BACT, which must be determined on a case-by-case 

basis taking into account energy, environmental, and economic 

impacts, among other factors. To ensure that these criteria are 

satisfied, EPA has developed and recommends that permitting 

authorities apply a “top-down” approach for BACT review, a 

decision process that includes identification of all available 

control technologies, elimination of technically infeasible 

options, ranking of remaining options by control and 

effectiveness; evaluation (and possible elimination) of controls 

based on economic, environmental or energy impacts; and then 

selection of the remaining top-ranked option as BACT. When PSD 

applies to a source because of its emissions of a particular 

pollutant, then BACT (and other PSD requirements) apply for 

other pollutants that are subject to regulation and that exceed 

specified levels. 

3. SIP PSD Requirements 

The CAA contemplates that the PSD program be implemented by 

the states through their SIPs. CAA section 110(a)(2)(C) 

requires that: 

Each implementation plan * * * shall * * * include a 

program to provide for * * * regulation of the 
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modification and construction of any stationary source 

within the areas covered by the plan as necessary to 

assure that national ambient air quality standards are 

achieved, including a permit program as required in 

part[] C * * * of this subchapter. 

CAA section 110(a)(2)(J) requires that: 

Each implementation plan * * * shall * * * meet the 

applicable requirements of * * * part C of this 

subchapter (relating to significant deterioration of 

air quality and visibility protection). 

CAA section 161 provides that: 

Each applicable implementation plan shall contain 

emission limitations and such other measures as may be 

necessary, as determined under regulations promulgated 

under this part [C], to prevent significant 

deterioration of air quality for such region * * * 

designated * * * as attainment or unclassifiable. 

 These provisions, read in conjunction with the PSD 

applicability provisions, CAA section 165(a)(1), 169(1), mandate 

that SIPs include PSD programs that are applicable to any air 

pollutant that is subject to regulation under the CAA, 

including, as discussed later in this preamble, GHGs as of 

January 2, 2011.9

 

9

 In the Tailoring Rule, we noted that commenters argued, with 

some variations, that the PSD provisions applied only to NAAQS 

pollutants, and not GHGs, and we responded that the PSD 

provisions apply to all pollutants subject to regulation, 

including GHGs. See 75 FR 31560-62; "Prevention of Significant 

Deterioration and Title V GHG Tailoring Rule: EPA's Response to 

Public Comments," May 2010, pp.38-41. We are not reopening that 

issue in this rulemaking. 
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Most states have EPA-approved SIP PSD programs, and as a 

result, in those states, PSD permits are issued by state or 

local air pollution control agencies. In states that do not 

have EPA-approved SIP PSD programs, EPA issues PSD permits under 

its own authority, although in some cases, EPA has delegated 

such authority to the state or local agency. 

B. Regulatory Background: Texas SIP and PSD program

In 1972, shortly after the enactment of the 1970 CAA 

Amendments, Texas submitted to EPA its SIP to attain and 

maintain the NAAQS that EPA had promulgated by that time. As 

part of that SIP revision, Texas provided assurances that it had 

legal authority to carry out the SIP, in accordance with the 

predecessor to CAA section 110(a)(2)(E)(i). EPA approved 

Texas’s SIP, including the assurances of legal authority, by 

notice dated May 31, 1972. 37 FR 10842. 

In the 1977 CAA Amendments, Congress enacted the PSD 

program. In the immediate aftermath, EPA acted as the PSD 

permitting authority in the states, but EPA began to delegate to 

various state authorities all or part of EPA’s authority to 

issue PSD permits. In addition, at this time, EPA revised its 

pre-existing regulations, which had established a 

preconstruction permitting program, to conform to the 1977 CAA 
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requirements. Each state was required to adopt a PSD program 

and submit it for approval as a SIP revision, and if the PSD 

program met CAA requirements, EPA approved the program, and the 

state then became the PSD permitting authority. 

This process occurred for most of the states in the nation, 

including Texas. A brief history of Texas’s initial PSD SIP 

approval follows:10 

Beginning in 1980, when EPA was still the permitting 

authority for federally required PSD permits in Texas, the state 

requested delegation of certain aspects of the Federal PSD 

program. In a series of actions, EPA granted that authority. 

During this time, Texas also revised its state – i.e., Texas Air 

Control Board (TACB) - PSD regulations. EPA commented on a set 

of proposed revisions to TACB regulations by letter dated 

December 23, 1980 and made clear that PSD applies to non-NAAQS 

pollutants.11 EPA reiterated these statements to Texas in 1983.12

 

10 This history is described in “Approval and Promulgation of 

Implementation Plan, State of Texas; Prevention of Significant 

Deterioration – Final rulemaking, 57 FR 28,093, 28,094 (June 24, 

1992); “Approval and Promulgation of Implementation Plan, State 

of Texas; Prevention of Significant Deterioration – Proposed 

rulemaking, 54 FR 52,823, 52,824 (December 22, 1989). 

11 Letter from Jack S. Divita, U.S EPA, Region 6, to Roger 

Wallis, Texas Air Control Board (December 23, 1980), p. 2. In 

that letter, EPA objected to Texas’s proposed definitions of the 

terms “major facility/stationary source” and “major 
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During 1985-1988, Texas submitted a series of SIP revisions 

comprising its PSD program to EPA for approval. In these SIP 

revisions, Texas established key components of its PSD rules by 

incorporating by reference EPA’s PSD rules found in 40 CFR 

52.21. Of most importance for present purposes, Texas 

incorporated by reference EPA’s PSD applicability requirements 

in 52.21. Under these provisions, as then written, PSD applied 

to “any pollutant subject to regulation under the [Clean Air] 

Act.” 40 CFR 52.21(b)(1)(i)). It bears emphasis that this 

applicability provision, by its terms, applied PSD to each air 

pollutant regulated under the CAA, which, as discussed 

 

modification” on grounds they are not equivalent to the 

definition of those terms in EPA’s PSD and nonattainment NSR 

regulations because Texas’s proposed definitions – 

include only those stationary sources and 

modifications with emissions of air contaminants for 

which a [NAAQS] has been issued. Under the PSD and 

[nonattainment] NSR requirements, [Texas’s] 

definitions must include sources with emissions of 

“any air pollutant subject to regulation under the 

Act.” ... Since the proposed definitions would exclude 

PSD and [nonattainment] NSR coverage for those sources 

emitting pollutants subject to regulations under the 

Act, but for which a NAAQS has not been issued, they 

are not equivalent to the federal definitions of 

“major stationary source” and “major modification.” 

 

Id. (emphasis omitted). 

12 Environmental Protection Agency – Region 6, “EPA Review of 

Texas Revisions to the General Rules and Regulations VI,” p. 4 

(August 1983). 
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elsewhere, has been EPA’s consistent interpretation of the CAA 

section 169(1) requirement for PSD applicability. Indeed, as 

also discussed elsewhere, this was a narrowing interpretation of 

the PSD applicability requirements in CAA section 169(1), which, 

read literally, apply PSD to “any air pollutant.” 

Although, as just noted, Texas incorporated by reference 

the EPA applicability provision, Texas did not interpret that 

provision as automatically applying to each newly regulated 

pollutant. Rather, Texas interpreted that provision as applying 

to only pollutants regulated at the time Texas initially adopted 

the provision. Further, under Texas’s interpretation, Texas 

would have to adopt another SIP revision in order for the PSD 

program to apply to pollutants regulated under the CAA after 

Texas initially adopted the PSD program. That new SIP revision 

would then include in the PSD program any pollutants regulated 

between the time Texas adopted the initial PSD program and the 

new SIP revision. It appears that during the rulemaking, EPA 

was aware of Texas’s interpretation. 

The record of Texas’s PSD program makes clear that in 

adopting and submitting the PSD SIP revisions, the TACB – the 
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agency charged with taking that action - relied on its general 

legal authority to adopt and submit the SIP revisions.13

In 1989, as EPA considered Texas’s SIP revision submittal, 

EPA became concerned that a Texas official had made statements 

that lead EPA to question whether Texas would adhere to EPA’s 

interpretation that BACT must be implemented through the TopDown process.14 Accordingly, EPA advised Texas that EPA would 

not approve Texas’s PSD program unless Texas provided a letter 

assuring EPA that Texas would follow EPA requirements in 

general, and particularly with respect to the interpretation of 

BACT. Texas provided this letter, which we call the Texas PSD 

Commitments Letter, on September 5, 1989.15 In this letter, 

Texas acknowledged EPA’s concern that a Texas official had - 

indicated a lack of intent to follow federal 

interpretations of the Clean Air Act and Environmental 

Protection Agency (EPA) operating policies, most 

specifically, the “Top-Down” approach for Best 

Available Control Technology (BACT) analysis in 

reviewing PSD permit applications. 

 

13 The TACB adopted regulatory amendments through “Board 

Orders,” and then submitted them to EPA as SIP revisions. These 

Board Orders typically cited general authority under the Texas 

CAA. See, e.g., TACB Board Order No. 87-09 (July 17, 1987). 

14 Letter from Allen Eli Bell, Executive Director, Texas Air 

Control Board to Robert Layton Jr., Regional Administrator, U.S. 

EPA (September 5, 1989) 1 (Texas’s Commitments Letter). 

15 Letter from Allen Eli Bell, Executive Director, Texas Air 

Control Board to Robert Layton Jr., Regional Administrator, U.S. 

EPA (September 5, 1989) 1 (Texas’s Commitments Letter). 
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The letter went on to state: 

[Y]ou may be assured that the position of the [Texas 

Air Control Board (TACB)] is, and will continue to be, 

to implement EPA requirements relative to programs for 

which we have received State Implementation Plan 

approval, and to do so as effectively as possible.... 

Again, the TACB is committed to the implementation of 

EPA decisions regarding PSD program requirements. We 

look forward16 approval of the PSD revisions and 

believe EPA will find the management of that program 

in Texas to be capable and effective.17

 By notice dated December 22, 1989, EPA proposed to fully 

approve Texas’s PSD program.18 In this proposal, EPA focused on 

the issue of how EPA’s current and future interpretations of PSD 

statutory requirements would be reflected in the stateimplemented program. EPA stated: 

 In adopting the Clean Air Act, Congress 

designated EPA as the agency primarily responsible for 

interpreting the statutory provisions and overseeing 

their implementation by the states. The EPA must 

approve state programs that meet the requirements of 

40 CFR 51.166. Conversely, EPA cannot approve 

programs that do not meet those requirements. 

However, PSD is by nature a very complex and dynamic 

program. It would be administratively impracticable 

to include all statutory interpretations in the EPA 

regulations and the SIPs of the various states, or to 

amend the regulations and SIPs every time EPA 

interprets the statute or regulations or issues 

guidance regarding the proper implementation of the 

 

16 Sic: the word “to” should be in between “forward” and 

“approval” 

17 Id. at 1-2. 

18 54 FR 52823 
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PSD program, and the Act does not require EPA to do 

so. Rather, action by the EPA to approve this PSD 

program as part of the SIP will have the effect of 

requiring the state to follow EPA’s current and future 

interpretations of the Act’s PSD provisions and EPA 

regulations, as well as EPA’s operating policies and 

guidance (but only to the extent that such policies 

are intended to guide the implementation of approved 

state PSD programs). Similarly, EPA approval also 

will have the effect of negating any interpretations 

or policies that the state might otherwise follow to 

the extent they are at variance with EPA’s 

interpretation and applicable policies. Of course, 

any fundamental changes in the administration of PSD 

would have to be accomplished through amendments to 

the regulations in 40 CFR 52.21 and 51.166, and 

subsequent SIP revisions. 

54 FR 52,824/2-3. 

 EPA went on to state that it was basing its proposed 

approval of Texas’s PSD program on Texas’s agreement, as 

contained in the September 5, 1989 letter, that Texas would 

“implement that PSD SIP approved program in compliance with all 

of the EPA’s statutory interpretations and operating policies.” 

54 FR 82,825/2. EPA stated: 

 ... EPA’s approval of the Texas PSD SIP requires 

the state to follow EPA’s statutory interpretations 

and applicable policies[], including those concerning 

BACT].... 

 In support of the discussion above, the Executive 

Director of the TACB has submitted a letter, dated 

September 5, 1989, which commits the TACB to implement 

the PSD SIP approval program in compliance with all of 

the EPA’s statutory interpretations and operating 

policies. Specifically, the TACB’s letter states that 

(1) “... you may be assured that the position of the 
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agency is, and will continue to be, to implement EPA 

requirements relative to programs for which we have 

received [SIP] approval, and to do as effectively as 

possible...”, and (2) “... the TACB is committed to 

the implementation of the EPA decisions regarding PSD 

program requirements...”. The EPA has evaluated the 

content of this letter and has determined that the 

letter sufficiently commits the TACB to carry out the 

PSD program in accordance with the Federal 

requirements as set forth in the [CAA] applicable 

regulations, and as further clarified in the EPA’s 

statutory and regulatory interpretations, including 

the proper conduct of BACT analyses. The EPA also 

interprets this letter as committing the TACB to 

follow applicable EPA policies such as the “Top-Down” 

approach. This letter will be incorporated into the 

SIP upon the final approval action. 

54 FR 52,825/1-2. 

EPA issued a final rule to give full approval to the 

program by notice dated June 24, 1992, 57 FR 28,093. In the 

final rule, EPA indicated that it had received adverse comments 

concerning its statements in the proposal that Texas was 

required to adopt all of EPA’s interpretations of the PSD 

requirements. Accordingly, EPA refined its views. EPA stated: 

Comment 1 The commenters expressed concern with the 

preamble language in the proposal notice, suggesting 

that final approval would require that the State 

follow EPA's current and future interpretations of the 

Act's PSD provisions and EPA regulations as well as 

EPA's operating policies and guidance. The commenter 

contended that such a condition would be unlawful ... 

and would improperly limit the State's flexibility.... 

Response 1: The EPA did not intend to suggest that 

Texas is required to follow EPA's interpretations and 

guidance issued under the Act in the sense that those 
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pronouncements have independent status as enforceable 

provisions of the Texas PSD SIP, such that mere 

failure to follow such pronouncements, standing alone, 

would constitute a violation of the Act. As clarified 

herein, EPA's intent is merely to place the State and 

the public on notice of EPA's longstanding views that 

the Agency must continue to oversee the State's 

implementation of the PSD SIP.... 

... Texas and other states [have] considerable 

discretion to implement the PSD program as they see 

fit. 

... PSD-SIP approved states remain free to follow 

their own course, provided that state action is 

consistent with the letter and spirit of the SIP, when 

read in conjunction with the applicable statutory and 

regulatory provisions. 

... 

Comment 4: One commenter noted that the TACB's letter, 

dated September 5, 1989, cannot reasonably be 

interpreted as a legal requirement that the State 

follow the EPA's present and future new source review 

interpretations, policies and guidance, including the 

BACT "Top-Down" approach, because it only commits 

Texas to implement properly established EPA 

requirements and legally-binding EPA decisions. The 

commenter said that the Clean Air Act specifically 

requires that, if at all, any such change in EPA 

policy for BACT determinations be accomplished through 

notice and comment rulemaking, and that the EPA first 

prepare an economic impact assessment. 

Response 4: In certain circumstances, EPA's approval 

of a SIP revision through notice-and-comment 

rulemaking procedures can serve to adopt specific 

interpretations or decisions of the Agency. For 

example, a state may commit in writing to follow 

particular EPA interpretations or decisions in 

administering the PSD program. As part of the SIP 

revision process, EPA may incorporate that State's 

commitment into the SIP by reference. This process 
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has been followed in today's action. Of course, EPA 

agrees with the commenter that the Agency must act 

reasonably in construing the terms of a commitment 

letter, so as to avoid approving it in a manner that 

would contravene the state's intent in issuing the 

letter in the first place. Moreover, the State 

commitment must be consistent with the plain language 

of the applicable statutory or regulatory provisions 

at issue. Similarly, EPA cannot unilaterally change 

the clear meaning of any approved SIP provision by 

later guidance or policy. Rather, as stated in the 

proposed approval notice, such fundamental change must 

be accomplished through the SIP revision process. 

Consistent with the terms of the TACB letter dated 

September 5, 1989, EPA views that letter as a 

commitment on the part of the TACB to "implement EPA 

program requirements * * * as effectively as 

possible," and as a commitment "to the implementation 

of the EPA decisions regarding PSD program 

requirements." EPA agrees, however, that the TACB 

letter need not be interpreted as a specific 

commitment by the State to follow a "Top-Down" 

approach to BACT determinations. 

57 FR 28095/1-2; 28096/1. 

 As for the fact that Texas’s PSD program was limited to 

pollutants that were regulated as of the date Texas adopted the 

program as a SIP revision, but did not automatically apply to 

newly regulated pollutants, the preamble to the final rule 

alluded to this limitation: 

 The State’s regulation VI requires review and 

control of air pollution from new facility 

construction and modification and allows the TACB to 

issue permits for stationary sources subject to this 

regulation. Section 116.3(a)(13) of the TACB 

Regulation VI incorporates by reference the Federal 

PSD regulations (40 CFR 52.21) as they existed on 
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August 1, 1987, which include revisions associated 

with the July 1, 1987, promulgation of revised 

National Ambient Air Quality Standards for particular 

matter (52 FR 24872) and the visibility NSR 

requirements noted above. 

57 FR 28094. 

However, there is no indication in the preamble for the 

final rule that (i) Texas specifically addressed the requirement 

that its PSD program apply to pollutants newly subject to PSD, 

including non-NAAQS pollutants, or (ii) Texas provided 

assurances that it had adequate authority under State law to 

carry out the PSD program, including applying PSD to pollutants 

newly subject to regulation, among them non-NAAQS pollutants. 

Nor is there any indication that EPA asked Texas to do so.19

As discussed later, in 1996 EPA proposed, and in 2002 

finalized, what we call the NSR Reform Rule,20 which included a 

set of amendments to the PSD provisions that included revisions 

to conform to the 1990 CAA Amendments. See 61 FR 38250 (July 

23, 1996), 67 FR 80186 (December 31, 2002). The NSR Reform Rule 

 

19 See “Technical Support Document (TSD): State of Texas State 

Implementation Plan for Prevention of Significant Deterioration” 

(November 28, 1988). 

20 "Prevention of Significant Deterioration (PSD) and 

Nonattainment New Source Review (NNSR): Baseline Emissions 

Determination, Actual-to-Future-Actual Methodology, Plantwide 

Applicability Limitations, Clean Units, Pollution Control 

Projects – Final Rule," 67 FR 80186 (December 31, 2002) (NSR 

Reform rule). 
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revised the terminology for PSD applicability. In 2006, Texas 

submitted a SIP revision to incorporate the NSR Reform Rule into 

its PSD program, including revising its applicability 

provisions. EPA disapproved this SIP revision by notice dated 

September 15, 2010.21 Accordingly, the applicable Texas PSD 

applicability provisions remain the ones in the state’s 

currently approved SIP. 

C. Regulatory Background: GHG Rules

1. GHGs and Their Sources 

Greenhouse gases trap the Earth’s heat that would otherwise 

escape from the atmosphere into space, and form the 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 

 

21 75 FR 56,424 (September 15, 2010). 
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through human activities. As previously noted, the well-mixed 

GHGs of concern directly emitted by human activities include CO2, 

methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), 

perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). These 

six GHGs are referred to collectively as "the six well-mixed 

GHGs,” or, simply, GHGs, and together constitute the “air 

pollutant” upon which the GHG thresholds in the Tailoring Rule 

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. 
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Anthropogenic CO2 emissions released from a variety of sources, 

including fossil fuel combustion and industrial manufacturing 

processes that rely on 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, all perturb the atmospheric concentration of 

CO2 and cause readjustments in the distribution of carbon within 

different reservoirs. 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 heat-trapping 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 
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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. 

2. GHG Regulatory Actions 

Over the past year, EPA has completed four distinct actions 

related to greenhouse gases under the CAA. The result of these 

rules, in conjunction with the operation of the CAA, has been to 

trigger PSD applicability for GHG sources on and after January 

2, 2011, but to limit the scope of PSD for those sources. These 

actions include, as they are commonly called, the "Endangerment 

Finding" and "Cause or Contribute Finding," which we issued in a 

single final action;22 the Johnson Memo Reconsideration, noted 

previously; the "Light-Duty Vehicle Rule” (LDVR or Vehicle 

 

22 "Endangerment and Cause or Contribute Findings for Greenhouse 

Gases Under Section 202(a) of the Clean Air Act." 74 FR 66,496 

(December 15, 2009). 
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Rule);23 and the "Tailoring Rule," also noted previously. 

a. Endangerment Finding, Vehicle Rule, Johnson Memo 

Reconsideration 

In the Endangerment Finding, which is governed by CAA 

section 202(a), the Administrator exercised her judgment, based 

on an exhaustive review and analysis of the science, to conclude 

that “six greenhouse gases taken in combination endanger both 

the public health and the public welfare of current and future 

generations.” 74 FR at 66,496. The Administrator also found 

“that the combined emissions of these greenhouse gases from new 

motor vehicles and new motor vehicle engines contribute to the 

greenhouse gas air pollution that endangers public health and 

welfare under CAA section 202(a).” Id. 

The Endangerment Finding led directly to promulgation of 

the Vehicle Rule, also governed by CAA § 202(a), in which EPA 

set standards for the emission of greenhouse gases for new motor 

vehicles built for model years 2012-2016. 75 FR 25,324. The 

Vehicle Rule established the first controls for GHGs under the 

CAA. 

The Johnson Memo Reconsideration – as well as the Tailoring 

 

23 "Light-Duty Vehicle Greenhouse Gas Emission Standards and 

Corporate Average Fuel Economy Standards; Final Rule." 75 FR 

25,324 (May 7, 2010). 
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Rule, which we discuss later - is governed by the PSD and Title 

V provisions in the CAA. It was issued to address the automatic 

statutory triggering of the PSD and Title V programs for GHGs 

due to the Vehicle Rule establishing controls for GHGs. The 

Johnson Memo Reconsideration provided EPA’s interpretation of a 

pre-existing definition in its PSD regulations delineating the 

“pollutants” that are taken into account in determining whether 

a source must obtain a PSD permit and the pollutants each permit 

must control. The Johnson Memo Reconsideration stated that when 

the Vehicle Rule takes effect on January 2, 2011, it will, in 

conjunction with the applicable CAA requirements, trigger the 

application of PSD to GHG-emitting sources. 75 FR 17,004. 

b. Tailoring Rule 

In the Tailoring Rule, EPA limited PSD applicability, at 

the outset, to only the largest GHG-emitting sources, and to 

phase-in PSD applicability, as appropriate, to smaller sources 

over time. 75 FR 31,514. In the Tailoring Rule, EPA identified 

the air pollutant that, if emitted or potentially emitted by the 

source in excess of specified thresholds, would subject the 

source to PSD requirements, as the aggregate of six GHGs: CO2, 

CH4, N2O, HFCs, PFCs, and SF6. EPA based this identification on 

the Vehicle Rule, which included applicability provisions 
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specifying that the rule "contains standards and other 

regulations applicable to the emissions of those six greenhouse 

gases." 75 FR at 25686 (promulgating 40 CFR 86.1818-12(a)). 

The Tailoring Rule noted that it was because the Vehicle Rule 

subjected to regulation the pollutant that comprises the six 

GHGs, that PSD was triggered for that pollutant and that, as a 

result, the pollutant must be defined for PSD purposes in the 

same way as it is identified in the Vehicle Rule. 75 FR 31,527. 

The Vehicle Rule identified the pollutant as the aggregate of 

the six gases because in the Endangerment Finding, the 

Administrator found that those six gases – which she described 

as long-lived and directly emitted GHGs — may reasonably be 

anticipated to endanger public health and welfare. 

b. Scope of PSD applicability 

 In the Tailoring Rule and subsequent rulemakings, 

commenters raised an issue concerning the applicability of PSD 

to non-NAAQS pollutants. A discussion of this issue is useful 

background information for the present action, including what we 

call the automatic-updating nature of PSD requirements under the 

CAA, that is, that as soon as a pollutant becomes subject to 

regulation under another CAA provision, it becomes subject to 

PSD. 
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i. Applicability of PSD to non-NAAQS pollutants

 In the Tailoring Rule, EPA responded to a set of comments 

that PSD applies only to NAAQS pollutants, and not non-NAAQS 

pollutants such as GHGs. In brief, several commenters advanced 

the argument that primarily because the PSD provisions in CAA 

sections 161 and 165(a) limit PSD applicability to sources 

located in attainment or unclassifiable areas, PSD applicability 

should be limited to the NAAQS pollutants for which the area in 

which the source is located is attainment or unclassifiable. On 

the basis of this interpretation, the commenters urged EPA to 

conclude that PSD does not apply to GHGs. 75 FR 31,560/2-3. 

 EPA disagreed with these comments and reiterated its longheld view that PSD applies to “any pollutant subject to 

regulation under the CAA,” and that includes non-NAAQS 

pollutants. 75 FR 31,560/3. EPA explained – 

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 
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are met]. A “major emitting facility” is defined, 

under CAA section 169(1), as “any ... stationary 

source[] 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. 

Id. 

 EPA went on to discuss the statements by the D.C. Circuit 

concerning the PSD applicability provisions – which, again, 

according to their literal terms, apply PSD to “any air 

pollutant,” CAA section 165(a)(1), 169(1) – in the seminal case 

interpreting the PSD requirements: Alabama Power v. Costle, 636 

F.2d 323 (D.C. Cir. 1980). There, the D.C. Circuit noted that 

these PSD applicability provisions must be read to apply PSD 

quite broadly; indeed, the Court indicated they could apply even 

to air pollutants not yet regulated under other provisions of 
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the Act. 636 F.2d at 352-53 & n. 60.24

 EPA also emphasized that EPA’s long-standing regulations 

have interpreted this provision broadly enough to capture nonNAAQS pollutants: 

 In addition, it should not be overlooked that we 

have applied PSD to 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).... Of 

course, the basis for all these actions is PSD’s 

applicability to these non-NAAQS 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). 

75 FR 31,581/3 to 31,582/1 

 To this, it may be added that the regulatory history of the 

PSD applicability provisions supports their broad application: 

 

24 “Prevention of Significant Deterioration and Title V GHG 

Tailoring Rule: EPA’s Response to Public Comments,” p. 39. 
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EPA’s initial, 1977-78 rulemaking implementing the PSD program 

made explicit that the PSD program applied to “any pollutant 

regulated under the Clean Air 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 (D.C. 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 applied the PSD program to regulated air 

pollutants. In October 1990, EPA prepared the “New Source 

Review Workshop Manual – Prevention of Significant Deterioration 

and Nonattainment Area Permitting” (draft NSR Manual), which 

although in draft form, and not a binding rule, has often been 

referenced as a reflection of EPA's thinking on PSD permitting 

issues. See, Alaska Dept. of Conservation v. EPA, 540 U.S. 

461, 476 n. 7 (2004); In re: Indeck-Elwood, LLC, 13 E.A.D. 133 

n. 13 (EAB Sept. 27, 2006); In re: Prairie State Generating 

Company, 13 E.A.D. 6 n. 2 (EAB Aug 24, 2006). This manual states 

that PSD applies to “each pollutant regulated by the Act,” 

including “criteria and ... noncriteria” pollutants. Draft NSR 

Manual, pp. A.18. See id. at A.28, A.30. In 1996 EPA proposed, 
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and in 2002 finalized what we call the NSR Reform Rule,25 which 

included a set of amendments to the PSD provisions that included 

revisions to conform to the 1990 CAA Amendments. 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,” and by substituting that defined term for the 

phrase “pollutant 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). The explicit inclusion of Class I or II 

 

25 "Prevention of Significant Deterioration (PSD) and 

Nonattainment New Source Review (NNSR): Baseline Emissions 

Determination, Actual-to-Future-Actual Methodology, Plantwide 

Applicability Limitations, Clean Units, Pollution Control 

Projects – Final Rule," 67 FR 80186 (December 31, 2002) (NSR 

Reform rule). 
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substances regulated under CAA title VI confirms that PSD 

applies to non-NAAQS pollutants. 75 FR 31,561/3 to 31,562/1. 

 In the Tailoring Rule, EPA went on to discuss other PSD and 

CAA provisions, including their legislative history and 

interpretation in the case law, that all support applying PSD to 

any pollutant this is subject to regulation, including non-NAAQS 

pollutants. Id. 31,560/2 to 31,562/2.26

ii. Automatic Application of PSD to Newly Regulated Pollutants

Under the PSD applicability requirements, PSD applies to 

sources automatically, that is, by operation of law, as soon as 

their emissions of pollutants become subject to regulation under 

the CAA. This is because CAA section 165(a)(1) prohibits "major 

emitting facilit[ies]" from constructing or modifying without 

obtaining a permit that meets the PSD requirements, and CAA 

 

26 EPA gave additional reasons why it does not agree that PSD 

applies only to NAAQS pollutants in the record for the Tailoring 

Rule, "Prevention of Significant Deterioration and Title V GHG 

Tailoring Rule: EPA's Response to Public Comments," May 2010, 

pp.38-41; and in EPA’s court filings in defense of challenges to 

the Tailoring Rule. “EPA’s Response To Motions To Stay” 47-59 

Coalition for Responsible Regulation v. EPA, No. 09-1322 (and 

consolidated cases) (D.C. Cir. 2010), Coalition for Responsible 

Regulation v. EPA, No. 09-1073 (and consolidated cases) (D.C. 

Cir. 2010), Coalition for Responsible Regulation v. EPA, No. 09-

1092 (and consolidated cases) (D.C. Cir. 2010), Coalition for 

Responsible Regulation v. EPA, No. 09-1131 (and consolidated 

cases) (D.C. Cir. 2010) (hereafter, Coalition for Responsible 

Regulation v. EPA, No. 09-1322 (and consolidated cases)). 

 
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section 169(1) defines a "major emitting facility" as a source 

that emits a specified quantity of "any air pollutant," which, 

as noted earlier, EPA has long interpreted as any pollutant 

subject to regulation. Whenever EPA promulgates control 

requirements for a pollutant for the first time, that pollutant 

becomes subject to regulation, and any stationary source that 

emits that pollutant in sufficient quantities becomes a “major 

emitting facility” that, when it constructs or modifies, becomes 

subject to PSD without any further action from EPA or a state or 

local government. 

EPA regulations have long codified automatic PSD 

applicability. See 43 FR 26380, 26403/3, 26406 (June 19, 1978) 

(promulgating 40 CFR 51.21(b)(1)(i)) and 42 FR 57479, 57480, 

57483 (November 3, 1977) (proposing 40 CFR 51.21(b)(1)(i)) 

(applying PSD requirements to a "major stationary source" and 

defining that term to include sources that emit specified 

quantities of "any air pollutant regulated under the Clean Air 

Act"). Most recently, in the 2002 NSR Reform Rule, noted 

previously, EPA reiterated these requirements, although changing 

the terminology to "any regulated NSR pollutant." 67 FR 80,186. 

EPA stated in the preamble: “The PSD program applies 

automatically to newly regulated NSR pollutants, which would 
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include final promulgation of an NSPS applicable to a previously 

unregulated pollutant.” 67 FR at 80240/1. 

In most states with approved PSD programs, PSD does apply 

automatically. However, in a minority of states with approved 

PSD programs, it does not.27 Instead, each time EPA subjects a 

previously unregulated air pollutant to regulation, these states 

must submit a SIP revision incorporating that pollutant into its 

program. Despite the time needed for the state to submit a SIP 

revision and EPA to approve it, the pollutant-emitting sources 

in the state become subject to PSD under the CAA as soon as EPA 

first subjects that pollutant to control. Because under CAA 

section 165(a)(1) and 169(1), as interpreted by EPA, a source 

that emits specified quantities of any air pollutant subject to 

regulation cannot construct or modify unless it first receives a 

PSD permit, as a practical matter, in a state with an approved 

PSD program that does not automatically update and that has not 

been revised to include the newly regulated pollutant, the 

sources may find themselves subject to the CAA requirement to 

obtain a permit, but without a permitting authority to issue 

that permit. As discussed later, this action is needed because 

 

27 75 FR at 53,897/3 (proposed GHG PSD SIP call). 
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GHG-emitting sources in Texas would otherwise confront that 

situation. 

In a recent decision, the 7th Circuit, mistakenly citing to 

PSD provisions when the issue before the court involved the 

separate and different non-attainment provisions of CAA sections 

171-193, concluded that sources could continue to abide by 

permitting requirements in an existing SIP until amended, even 

if that SIP does not comport with the law. United States v. 

Cinergy Corp., No. 09-3344, 2010 WL 4009180 (7th Cir. Oct. 12, 

2010). In stark contrast to the nonattainment provisions 

actually at issue in Cinergy—which are not self-executing and 

must therefore be enforced through a SIP—PSD is self-executing; 

it is the statute (CAA section 165), not just the SIP, that 

prohibits a source from constructing a project without a permit 

issued in accordance with the Act. 

3. Implementation of GHG PSD Requirements

Because PSD is implemented through the SIP system, EPA has 

taken a series of actions to address the obligations of states 

(including localities and other jurisdictions, as appropriate) 

to implement PSD requirements for GHG-emitting sources. EPA has 

taken these actions through the Tailoring Rule and a series of 
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subsequent actions.28

a. Tailoring Rule 

EPA proposed the Tailoring Rule by notice dated October 27, 

2009, 74 FR 55292. In that action, EPA proposed to phase in PSD 

applicability, for GHGs, starting with a threshold of 25,000 tpy 

on a CO2e basis. This threshold was above the statutory 

thresholds of 100 or 250 tpy on a mass basis, depending on the 

 

28 A detailed description of EPA’s implementation efforts, and 

the status of state compliance with those efforts, is included 

in Declaration of Regina McCarthy, Coalition for Responsible 

Regulation v. EPA, D.C. Cir. No. 09-1322 (and consolidated 

cases) (McCarthy Declaration), including Attachment 1 (Tables 1, 

2, and 3), which can be found in the docket for this rulemaking. 
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source category, for new construction).29

EPA finalized the Tailoring Rule by notice dated June 3, 

2010. 75 FR 31514. Comments on the proposed rule had persuaded 

EPA that the proposed GHG-applicability threshold was too low to 

avoid undue administrative burdens. Accordingly, in the final 

Tailoring Rule, EPA raised those threshold levels to, depending 

on the circumstances, 75,000 and/or 100,000 tpy on a CO2e basis, 

while retaining the approach of a phase-in. EPA established the 

initial levels in the first two steps of the phase-in schedule, 

 29Even so, EPA recognized that many SIPs with approved PSD 

programs would continue to require PSD permitting of GHGemitting sources at the statutory thresholds because these SIPs 

would remain I n place even after EPA finalized the Tailoring 

Rule. Until the states revised those SIPs, sources in those 

states would remain subject to those thresholds as a matter of 

both state and federal law. This would result in the same 

problems of overwhelming administrative burdens and costs that 

EPA designed the Tailoring Rule to address. To solve these 

problems, EPA encouraged each affected state to submit a SIP 

revision that EPA would approve to raise the thresholds to 

conform to the Tailoring Rule. EPA recognized that it would 

take time for the states to develop and submit for approval such 

SIP revisions, and for EPA to approve them. Accordingly, as an 

interim measure, EPA proposed, as part of the proposed Tailoring 

Rule, to narrow its approval of the existing EPA-approved SIPs 

so that those SIPs would remain approved only to the extent they 

regulate GHG emissions at or above the Tailoring Rule 

thresholds. Specifically, EPA proposed to rescind its approval 

of the SIP permitting threshold provisions to the extent they 

required PSD permits for sources whose GHG emissions fall below 

the proposed Tailoring Rule thresholds. 74 FR at 55,340/3 to 

55,343/3 (proposed Tailoring Rule). 

 
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committed the agency to take future steps addressing smaller 

sources, and excluded the smallest sources from PSD permitting 

for GHG emissions until at least April 30, 2016. 

 In addition, in the Final Tailoring Rule, EPA incorporated 

the PSD thresholds for GHGs in the definition of the term 

“subject to regulation.” As noted previously, under EPA’s PSD 

regulations, PSD applies to a “major stationary source;” a 

“major stationary source” is defined as a source that emits 

100/250 tpy on a mass basis of a “regulated NSR pollutant;” and 

a “regulated NSR pollutant,” in turn, is defined as, among other 

things, a pollutant that is “subject to regulation” under the 

CAA.30 In the Tailoring Rule, EPA added a limitation to the term 

“subject to regulation” so that the only GHG emissions that 

would be treated as “subject to regulation” (and therefore 

subject to PSD) are those emitted at or above specified 

 

30 40 CFR 51.166(a)(7)(i), (b)(1)(i)(a), (b)(49). 
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thresholds of, depending on the circumstances, 75,000 and/or 

100,000 tpy on a CO2e basis.31 

Some states advised EPA that it is likely they would be 

able to implement the Tailoring Rule thresholds by interpreting 

the term “subject to regulation” in their SIPs, and without 

having to take further action. A state’s ability to take this 

approach would have implications for how EPA needed to implement 

the Tailoring Rule.32 Accordingly, in the Tailoring Rule, EPA 

began a process to gather more information about how states 

would implement permitting for GHG-emitting sources. 

b. 60-Day Letters 

To gather this information, EPA, in the Tailoring Rule, 

asked states to submit letters within 60 days of publication of 

 

31 Specifically, under the revised definition of “subject to 

regulation,” sources that emit at least the 75,000 and/or 

100,000 tpy CO2e threshold amount of GHGs are subject to PSD as 

long as the amount of GHG emissions also exceeds, in general, 

100/250 tpy on a mass basis for new sources and zero tpy on a 

mass basis for modifications of existing sources. 40 CFR 

51.166(b)(48), 75 FR at 31,606; see EPA Office of Air Quality 

Planning and Standards, “PSD and Title V Permitting Guidance for 

Greenhouse Gases (November 2010). 

32 Specifically, a state’s implementation of the Tailoring 

Rule in this manner prior to January 2, 2011 would obviate the 

need for EPA to narrow its approval of that state’s SIP, as EPA 

had proposed in the proposed Tailoring Rule. Thus, in the Final 

Tailoring Rule, EPA delayed final action on its narrowing 

proposal so that EPA could gather information about the process 

and time-line for states to implement the Tailoring Rule. 
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the Tailoring Rule, which we refer to as the 60-day letters, 

concerning the status of their PSD program and their legal 

authority for applying PSD program to GHG-emitting sources. 

This information would help clarify, for each state, the two 

central issues for PSD applicability to GHG-emitting sources: 

(i) whether the state has an approved PSD program that applies 

to GHG-emitting sources; and (ii) if so, what action the state 

would take to limit the applicability of its PSD program to GHGemitting sources at or above the Tailoring Rule thresholds.33

This information would assist EPA to determine what, if any, 

action it needed to take with respect to the states. 

Almost all states submitted 60-day letters, generally by 

August 4, 2010. The letters, along with other information EPA 

received through review of state requirements and further 

communications with state officials, indicate that the states, 

localities, and other jurisdictions may be divided into three 

categories, described below, for purposes of EPA’s 

implementation of the PSD program to GHG-emitting sources. 

 

33 Alternatively, a state could choose to apply its PSD program 

to sources below the Tailoring Rule thresholds and acquire 

sufficient resources to implement the program as expanded, but 

no state had indicated an intention to proceed in this manner. 
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c. The Three Categories of States and EPA’s Implementation 

Process 

The first category, which includes 7 states, 35 subsections 

of states, the District of Columbia, American Samoa, Guam, 

Puerto Rico, the U.S. Virgin Islands, and Indian Territory, does 

not have an approved SIP PSD permitting program. Instead, 

federal requirements apply. Thus, implementation of PSD for 

GHG-emitting sources in these jurisdictions is the simplest of 

all the states: GHG-emitting sources will become subject to PSD 

and the thresholds in the Tailoring Rule will apply as of 

January 2, 2011 without further action.34 

The second category includes 14 states and a number of 

districts within states that have approved PSD SIPs, but those 

SIPs do not apply the PSD program to GHG-emitting sources. This 

group includes Texas, which is the focus of this action. The 

implementation process for this category is discussed later.35 

The third category includes the remaining states, which 

have an approved SIP PSD program that applies to GHG-emitting 

sources. As for the implementation process for this category, 

some of these states have indicated that they are able to 

 

34 McCarthy Declaration, paragraphs 28-33, page 8, and Attachment 

1, Table 1. 

35 Id., paragraphs 34-55, pages 8-12, and Attachment 1, Table 2. 
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interpret their SIPs to apply PSD only to GHG emissions at or 

above the Tailoring Rule thresholds, and they do not need to 

revise their SIPs to do so. However, most indicated that they 

would need to submit SIP revisions to EPA in order to 

incorporate the Tailoring Rule thresholds. This means that in 

these states, until they do submit their SIP revisions and EPA 

approves them, sources emitting GHGs at or above the 100/250 tpy 

levels will be subject to PSD requirements as of January 2, 2011 

if they construct or modify. EPA has encouraged these states to 

submit SIP revisions adopting the Tailoring Rule thresholds as 

soon as possible and some of these states have already done so. 

Moreover, almost all of these states are proceeding to revise 

their state law to reflect the Tailoring Rule thresholds and 

will do so by January 2, 2011 or very soon thereafter. In the 

meantime, EPA has finalized the Narrowing Rule so that as of 

January 2, 2011, at least for federal purposes, PSD will apply 

to GHG-emitting sources only at the Tailoring Rule thresholds or 

 
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higher.36 As a result of these state actions and EPA’s Narrowing 

Rule, by January 2, 2011 or shortly thereafter, in all or almost 

all of these states, only GHG-emitting sources at or above the 

Tailoring Rule thresholds will be subject to PSD requirements . 37

d. SIP Call States, Including Texas 

As noted previously, the second category, which includes 

Texas, includes 14 states and some districts within states who’s 

SIPs have an approved PSD program but do not have the authority 

to apply that program to GHG-emitting sources. For most of 

these states, including Texas, the reason is that their PSD 

applicability provision applies to any "pollutant subject to 

regulation" under the CAA (or a similar term), but other 

provisions of state law preclude automatic updating. As a 

result, this applicability provision covers only pollutants — 

not including GHGs - that were subject to regulation at the time 

 

36 Specifically, for these states, EPA has stated that it intends 

to finalize its proposal in the Tailoring Rule to narrow its 

approval of their PSD applicability provisions to only the 

extent they apply PSD to GHG-emitting sources at or above the 

Tailoring Rule thresholds, which we call the Narrowing Rule. 

Id. paragraph 90, page 19. In addition, recognizing that GHGemitting sources also have permitting obligations under state 

law, EPA has strongly encouraged states to revise their state 

law as promptly as possible to eliminate the state PSD 

obligations of sources below the Tailoring Rule thresholds. Id.

paragraph 92, page 19. 

37 Id. paragraphs 62-94, pages 13-20, and Attachment 1, Table 3. 
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the state adopted the applicability provision. 

After proposing action by notice dated September 2, 2010,38 

EPA promulgated the final SIP Call for 13 states, including 

Texas, by notice signed on December 1, 2010, and published on 

December 13, 2010, 75 FR 77,698, which we call the GHG PSD SIP 

Call or, simply, the SIP Call.39 In this action, consistent with 

the requirements of CAA section 110(k)(5), EPA (i) issued a 

finding that the SIPs for 13 states (comprising 15 state and 

local programs) are "substantially inadequate to * * * comply 

with any requirement of this Act" because their PSD programs do 

not apply to GHG-emitting sources as of January 2, 2011; (ii) 

issued a SIP call requiring submission of a corrective SIP 

revision; and (iii) established a "reasonable deadline[] (not to 

exceed 18 months after the date of such notice)" for the 

submission of the corrective SIP revision. This deadline 

 

38 "Action to Ensure Authority to Issue Permits under the 

Prevention of Significant Deterioration Program to Sources of 

Greenhouse Gas Emissions: Finding of Substantial Inadequacy and 

SIP Call—Proposed Rule," 75 FR 53892 (September 2, 2010); 

"Action to Ensure Authority to Issue Permits under the 

Prevention of Significant Deterioration Program to Sources of 

Greenhouse Gas Emissions: Federal Implementation Plan – 

Proposed Rule," 75 FR 53883 (September 2, 2010). 

39 "Action to Ensure Authority to Issue Permits under the 

Prevention of Significant Deterioration Program to Sources of 

Greenhouse Gas Emissions: Finding of Substantial Inadequacy and 

SIP Call—Final Rule," 75 FR 77,698 (December 13, 2010). 
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ranges, for different states, from 3 weeks to 12 months after 

the date of the final SIP call, as discussed below. 

EPA justified its finding that the affected SIPs are 

“substantially inadequate” to comply with CAA requirements on 

grounds that (i) the CAA requires that PSD requirements apply to 

any stationary source that emits specified quantities of any air 

pollutant subject to regulation under the CAA, and those PSD 

requirements must be included in the approved SIPs; (ii) as of 

January 2, 2011, GHG-emitting sources will become subject to 

PSD; (iii) as a result, the CAA requires PSD programs to apply 

to GHG-emitting sources; and (iv) accordingly, the failure of 

any SIP PSD applicability provisions to apply to GHG-emitting 

sources means that the SIP fails to comply with these CAA 

requirements. 

In the SIP call proposal, EPA discussed in some detail the 

SIP submittal deadline under CAA section 110(k)(5). Under this 

provision, in issuing a SIP call, EPA "may establish reasonable 

deadlines (not to exceed 18 months after the date of such 

notice) for the submission of such plan revisions." EPA 

proposed to allow each of the affected states up to 12 months 

from the date of signature of the final finding of substantial 

inadequacy and SIP call within which to submit the SIP revision, 
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unless, during the comment period, the state expressly advised 

that it would not object to a shorter period - as short as 3 

weeks from the date of signature of the final rule — in which 

case EPA would establish the shorter period as the deadline. 

EPA stated that, assuming that EPA were to finalize the SIP call 

on or about December 1, 2010, as EPA said it intended to do in 

the proposal, then the earliest possible SIP submittal deadline 

would be December 22, 2010. 

EPA made clear that the purpose of establishing the shorter 

period as the deadline for any interested state is to 

accommodate states that wish to ensure that a FIP is in effect 

as a backstop to avoid any gap in PSD permitting. EPA also made 

clear that if a state did not advise EPA that it does not object 

to a shorter deadline, then the 12-month deadline would apply. 

EPA emphasized that for any state that receives a deadline after 

January 2, 2011, the affected GHG-emitting sources in that state 

may be delayed in their ability to receive a federally approved 

permit authorizing construction or modification. This is 

because after January 2, 2011, these sources may not have 

available a permitting authority to review their permit 

applications until the date that EPA either approves the SIP 

submittal or promulgates a FIP.
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EPA asked that each of the affected states write EPA a 

letter during the comment period to identify the deadline for 

SIP submission to which the state would not object if EPA 

established. We call these the 30-day letters. Each affected 

state wrote a 30-day letter to EPA, as requested. Except for 

Texas, each state identified a SIP submittal deadline, which 

differed among the states, and which ranged from three weeks to 

12 months. In the final SIP call, EPA established SIP submittal 

deadlines identified by the states, except that EPA established 

a deadline of 12 months for Texas, in accordance with EPA’s 

proposal. Except for Texas, each state explained in its 30-day 

letter and in subsequent communications with EPA, that it was 

planning on either receiving a FIP or adopting a SIP and that it 

chose a deadline that would result in having either the FIP or 

an approved SIP, as appropriate, in place by January 2, 2011 or 

soon enough thereafter so as to avoid any hardship to its 

sources. In the final SIP call, EPA justified approving this 

three-week-to-12-month time period, although expeditious, as 

meeting the CAA section 110(k)(5) requirement to be a 

"reasonable" deadline in light of: (i) the SIP development and 

submission process; (ii) the preference of the state; and (iii) 

the imperative to minimize the period when sources will be 
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subject to PSD but will not have available a PSD permitting 

authority to act on their permit application and therefore may 

face delays in constructing or modifying. 

In the final SIP call, based on the states’ 30-day letters 

and other communications, EPA established a SIP submittal 

deadline of December 22, 2010 for seven states. Each of the 

states indicated that it did not expect to submit a SIP revision 

by that date and instead expected to receive a FIP. On December 

23, 2010, for each of the seven states, EPA issued a finding of 

failure to submit its corrective SIP revision by that deadline, 

and EPA promulgated a FIP. 

Except for Texas, EPA expects each of the other states 

subject to the SIP call to adopt a SIP revision and receive EPA 

approval of it, or receive a FIP, within the first half of 2011, 

and, in most cases, substantially sooner. Although none of 

these states will have a permitting authority in place as of 

January 2, 2011, none of these states expects that gap to pose 

meaningful difficulties for sources because, depending on the 

state, the gap is brief, the state does not expect any sources 

to seek a permit during the gap, or even if the state were the 

permitting authority during the gap, it could not complete 
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processing the permits during that time.40 

As discussed later, Texas has responded to the SIP call 

differently than the other states. As a result, its GHGemitting sources do face the prospect of permitting delays. 

This rulemaking action addresses that situation. 

4. Summary of the Effect of EPA’s Implementation Actions in 

States Other Than Texas. 

EPA recently summarized the status of its implementation 

efforts, for all three categories of sources, as follows: 

Overall, EPA has received information about the 

status of 99 jurisdictions (49 states41, 4 territories, 

45 localities, and the District of Columbia), and 

included that information in Attachment 1. Of these 

jurisdictions, 94 will have, for Federal law purposes, 

a PSD permitting program for GHG emissions at the 

Tailoring Rule thresholds on Jan. 2, 2011. Of these 

94 entities, 84 will have made any necessary 

amendments to state or local law to ensure that state 

or local permits are not required for GHG emissions 

below Tailoring Rule thresholds. By the end of the 

first quarter of 2011, only one jurisdiction will not 

have authority to permit GHG sources, and that 

jurisdiction will obtain authority by July 1, 2011 and 

in the meantime, does not expect large sources seeking 

permits for their GHGs. In addition, by the end of 

the first quarter of 2011, all but one more state will 

have made any necessary amendments to state or local 

law to ensure that permits are not required for GHG 

emissions below Tailoring Rule levels. 1 program with 

GHG permitting authority at the lower statutory levels 

has not yet determined how, and on which timeline, it 

 

40 McCarthy Declaration, p. 12, paragraph 55. 

41 In California’s PSD program is administered in its entirety by 

local jurisdictions.
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will incorporate the Tailoring Rule thresholds into 

its state law.42

Thus, under EPA’s implementation program, (i) in every 

state, (a) only sources at or above the Tailoring Rule 

thresholds will be subject under federal law to obtain a PSD 

permit when they construct or modify as of January 2, 2011, and 

(b) only those same sources will be subject under state law to 

obtain a PSD permit when they construct or modify as of January 

2, 2011 or very soon thereafter; and (ii) in every state, except 

for Texas, as of January 2, 2011 or very soon thereafter, GHG 

sources that construct or modify will be able to receive permits 

when they need them, so that the sources will not face obstacles 

to constructing and modifying. Again, Texas has responded to 

EPA’s implementation program in a manner that has resulted in 

its sources facing obstacles to constructing and modifying, as 

discussed next, which this rulemaking addresses. 

 

42 McCarthy Declaration, p. 20, paragraph 98. There have been a 

few changes in the status of individual states since this time, 

but the overall picture remains the same. In no small part, the 

current state of EPA’s implementation effort is attributable to 

the fact that EPA has been in close communication with almost 

every state and many other jurisdictions, along with multi-state 

organizations such as the National Association of Clean Air 

Agencies (NACAA). In addition to the letters that states have 

sent responding to the Tailoring Rule (the 60-day letters) and 

proposed SIP Call (the 30-day letters), EPA officials, primarily 

through the Regional offices, have had numerous communications 

with their state counterparts. 
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5. EPA’s Implementation Approach for Texas and Texas’s Response 

The following describes the progress to date of 

implementing PSD for GHG emissions in Texas, based on extensive 

communications between EPA and TCEQ. It should be borne in mind, 

as noted earlier, that Texas is in the second of the three 

categories of states, that is, it has an approved PSD program 

that does not apply to GHGs-emitting sources. 

a. Texas’s 60-Day Letter 

Texas’s 60-day letter provides the state’s clearest 

articulation of its response to EPA’s efforts to implement PSD 

for GHG-emitting sources at the Tailoring Rule thresholds 

beginning January 2, 2011. As noted previously, in the preamble 

to the final Tailoring Rule, EPA asked each state to send EPA a 

letter within 60 days to, in essence,(1) identify which category 

the state was in and what action the state intended to take. 

Specifically, with regard to sources in Category 2, EPA stated: 

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 
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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 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. 

75 FR 31582/3. 

With regard to states in category 3, EPA requested that in 

the states’ 60-day 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 
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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. 

75 FR 31582/3. 

On August 2, 2011, Texas submitted its 60-day letter, 

signed by the Texas Attorney General and the Chairman of the 

Texas Commission on Environmental Quality.43 In their letter, 

the senior state officials communicated what appears to be 

Texas’s overall understanding of EPA’s approach in the Tailoring 

Rule. Specifically, Texas characterized EPA as having a “plan 

for centralized control of industrial development through the 

issuance of permits for greenhouse gases.” Texas 60-day letter, 

p. 1. Further, Texas characterized EPA’s requests for 

information through the 60-day letter variously as EPA ‘hav[ing] 

 

43 Letter from Bryan W. Shaw, Chairman, Texas Commission on 

Environmental Quality, and Greg Abbott, Attorney General of 

Texas, to Hon. Lisa Jackson, Administrator, U.S. Environmental 

Protection Agency, and Dr. Alfredo “Al” Armendariz, Regional 

Administrator, U.S. Environmental Protection Agency, Region 6 

(August 2, 2010) (Texas’s 60-day letter), included in the docket 

for this rulemaking. 
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called upon each state to declare its allegiance to the 

Environmental Protection Agency’s recently enacted greenhouse gas 

regulations,” id. p. 1., and as “EPA’s demand for a loyalty oath 

from the State of Texas.” Id. p. 5. 

 Texas went on to respond specifically to EPA’s request that 

“any state . . . that does not believe its existing SIP provides 

authority to issue PSD permits to GHG sources to notify [EPA and] 

. . . indicate whether the state intends to . . . to revise its 

rules to apply PSD to . . . GHG sources” by stating: “Texas has 

neither the authority nor the intention of interpreting, 

ignoring, or amending its laws in order to compel the permitting 

of greenhouse gas emission.” Id. p. 1. Texas offered several 

explanations for this position. First, Texas noted: 

 Texas’ stationary source permitting program 

encompasses all “federally regulated new source review 

pollutants,” including, “any pollutant that otherwise 

is subject to regulation under the [federal Clean Air 

Act].” 30 Tex. Admin. Code §116.12(14)(D). The rules 

of the Texas Commission on Environmental Quality 

(TCEQ), like the EPA’s rules, do not define the phrase 

“subject to regulation.” 

Id. p. 2. Texas then explained that it had several objections to 

interpreting the phrase “subject to regulation” to allow 

regulation of GHGs. For one thing, according to Texas, longstanding state case law precluded the term – and the PSD 

applicability provisions generally - from automatically 
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incorporating newly regulated pollutants. Specifically, Texas 

said:44

...Texas’ stationary source permitting program 

encompasses all “federally regulated new source review 

pollutants,” including “any pollutant that otherwise 

is subject to regulation under the [federal Clean air 

Act].” 30 Tex. Admin. Code §116.12(14)(D). This 

delegation of legislative authority to the EPA is 

limited solely to those pollutants regulated when 

Texas Rule 116.12 was adopted (1993) and last amended 

(2006). As the Texas Supreme Court has explained, 

“The general rule is that when a statute is adopted by 

a specific descriptive reference, the adoption takes 

the statute as it exists at that time, and the 

subsequent amendment thereof would not be within the 

terms of the adopting act.” Trimmer v. Carlton, 296 

S.W. 1070 (1927). Thus, in order for Texas Rule 

116.12 to pass constitutional muster, it must be 

limited to adopting by reference the definition of 

“subject to regulation” in existence when Rule 116.12 

was last amended in 2006. In other words, Texas Rule 

116.12 cannot delegate authority to the EPA to define 

“subject to regulation” in 2010 to include pollutants 

that were not “subject to regulation” in 2006. 

Id. at 4. 

Secondly, Texas took the position that PSD applies only to 

NAAQS pollutants, and not non-NAAQS pollutants. Texas stated: 

The only sensible interpretation of the Clean Air Act 

is one that requires the EPA to promulgate a National 

Ambient Air Quality Standard (NAAQS) for greenhouse 

gases before the EPA can require PSD permitting of 

 

44 In this explanation, Texas was referring to the PSD 

applicability provision that Texas adopted under State law in 

2006, which differed slightly from the applicability provision 

approved into the SIP in 1993. 
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greenhouse gases.... EPA, however, has not developed a 

NAAQS for greenhouse gases.... 

Id. at 4-5. 

Texas provided a more detailed exposition of its view that 

PSD applies only to NAAQS pollutants in its challenges before the 

D.C. Circuit to EPA’s GHG actions, where Texas moved to stay the 

Endangerment Finding, the Vehicle Rule, and the Johnson Memo 

Reconsideration (Texas’s Motion to Stay Three GHG Actions).45 

(In a separate motion, Texas also moved to stay the Tailoring 

Rule.46) There, Texas reiterated arguments based on the text of 

some of the CAA PSD provisions that, in Texas’s view, lead to the 

conclusion that the CAA precludes applying PSD to non-NAAQS. As 

noted previously, these arguments were raised by commenters to 

the Tailoring Rule. Texas concluded that EPA’s efforts to apply 

PSD to GHGs – 

thus violates the CAA. Moreover, [EPA’s] 

interpretation of the CAA is not entitled to deference 

 

45 “State of Texas’s Motion For A Stay Of EPA’s Endangerment 

Finding, Timing Rule, and Tailpipe Rule,” Coalition for 

Responsible Regulation v. EPA, No. 09-1322 (and consolidated 

cases) (September 15, 2010). On December 10, 2010, the D.C. 

Circuit denied Texas’, and other parties’, motions to stay. 

Order, Coalition for Responsible Regulation v. EPA, No. 09-1322 

(and consolidated cases) (December 10, 2010). 

46 “State of Texas’s Motion For A Stay Of EPA’s Greenhouse Gas 

Tailoring Rule,” Coalition for Responsible Regulation v. EPA, 

No. 09-1322 (and consolidated cases) (September 15, 2010) 

(Texas’s Motion to Stay the Tailoring Rule). 
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because the text of the statute is unambiguous. 

Chevron, U.S.A. v. NRDC, 467 U.S. 837, 842 (1984) (the 

Agency must give effect to the unambiguously expressed 

intent of Congress). Accordingly, EPA’s attempt to 

short cut the CAA’s NAAQS process in order to regulate 

GHG emissions from stationary sources through PSD and 

Title V must fail.47

At the close of its 60-day letter, Texas added, “In the 

event a court concludes EPA’s actions comport with the law, Texas 

specifically reserves and does not waive any rights under the 

federal Clean Air Act or other law with respect to the issues 

raised herein.”48 

b. Texas’s 30-Day Letter

As noted previously, in the GHG PSD SIP Call proposal, EPA 

proposed to establish, for each affected state, a deadline of 12 

months from the date of signature of the final SIP call for 

submitting the corrective SIP revision, unless the state 

expressly advised EPA in its 30-day letter that it would not 

object to a shorter period. Texas submitted a 30-day letter on 

 

47 Texas’s Motion to Stay Three GHG Actions, at 27.

48 Id. at 5. 
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October 4, 2010,49 and in that letter, voiced various objections 

to the proposed SIP call. Texas reiterated its view that PSD is 

limited to NAAQS pollutants, and therefore cannot apply to GHGs, 

and added that the SIP call is “based on an impermissible 

interpretation of the [Clean Air Act]. EPA cannot ... impose 

permitting through [the PSD] program without first setting a 

NAAQS....” Texas 30-day letter p. 2, 4. EPA responded to those 

objections in the final SIP call.50

 In its 30-day letter, Texas went on to discuss the SIP 

submission schedule and FIP that EPA proposed, but Texas 

declined EPA’s invitation to identify a specific deadline for 

the state’s SIP submission. As a result, in the final SIP call, 

EPA was obliged to establish the default SIP submission deadline 

for Texas of December 1, 2011, in accordance with EPA’s 

proposal. Because Texas has clearly stated that it does not 

intend, and in its view, does not have the authority, to adopt a 

SIP revision to apply PSD to GHG-emitting sources, EPA expects 

 

49 “Texas Commission on Environmental Quality Comments on Actions 

to Ensure Authority to Issue Permits Under the Prevention of 

Significant Deterioration Program to Sources of Greenhouse Gas 

Emissions, Finding of Substantial Inadequacy and SIP Call, 

Docket ID No. EPA-HQ-OAR-2010-0107, FRL-9190-7 Federal 

Implementation Plan (FIP), Docket ID No EPA-HQ-OAR-2010-0107, 

FRL-9190-8 (October 4, 2010) (Texas 30-day letter). 

50 Final SIP Call, 75 FR at 77706/2-3 and n. 18. 
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to promulgate a FIP to do so. But, again, because Texas did not 

identify an earlier deadline for its SIP submittal, the earliest 

that EPA could promulgate such a FIP would be December 2, 2011. 

Under this approach, due to the position Texas has taken, absent 

further action, sources in Texas could not expect to have a 

permitting authority with authority to issue preconstruction 

permits for their GHG emissions until that December 2, 2011 

date. As a result, absent further action, sources in Texas 

would face obstacles in constructing or modifying before that 

date. 

Texas’s 30-day letter indicates that Texas was well aware 

of the consequences of its decision not to identify a specific 

deadline for its SIP submission, but had several reasons for 

making that decision. These included its view, again, that PSD 

applies only to NAAQS pollutants, and also that EPA was required 

to employ a different process for requiring a SIP revision, one 

that would have provided the state with more time to adopt a SIP 

revision. Texas 30-day letter at 4-5. In addition, Texas 

asserted that there is no reason to allow EPA to promulgate an 

early FIP for the benefit of Texas’s sources because, in Texas’s 

view, for practical reasons, EPA could not issue those permits 

for the “foreseeable future” anyway. Specifically, Texas 
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explained that EPA had not issued guidance for determining BACT, 

the key element of a PSD permit for a GHG source. Texas added 

that even after EPA issued that guidance, BACT will, in Texas’s 

view, remain uncertain and contentious, and the guidance will be 

of limited usefulness until the control technology is proven. 

Id. at 5. Texas added that “[i]ndustry should be particularly 

concerned about EPA’s lack of resources and experience to issue 

these permits....” Id. at 6. Texas concluded, “The result of 

all this is that, even under a FIP, it is unlikely that 

construction of new major GHG sources or major modifications 

will commence in the foreseeable future.” Id. at 6. 

It should be noted that Texas stated in filings before the 

D.C. Circuit in which it challenged the Tailoring Rule that it 

believed 167 projects in Texas would be affected by the lack of 

a permitting authority during 2011.51 

IV. Interim Final Action

 In this action, EPA is taking the following actions on an 

interim final basis to ensure that the PSD program in Texas 

complies with the CAA. First, EPA is determining that the 

Administrator’s action approving the Texas SIP PSD program was 

in error under CAA section 110(k)(6). 

 

51 Texas’s Motion to Stay the Tailoring Rule, pp. 2, 16. 
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Second, EPA, in the same manner as its action to approve 

the Texas SIP PSD program, is revising such action as 

appropriate without requiring any further submission from 

[Texas]. Id. The appropriate revision is to convert the 

previous approval to a partial approval and a partial 

disapproval. The partial approval applies to the extent that 

Texas’s PSD program actually covers pollutants that are required 

to be included in PSD. The partial disapproval applies to the 

extent that Texas failed to address or to include assurances of 

adequate legal authority (required under CAA section 

110(a)(2)(E)(i)) for, the application of PSD to each newly 

regulated pollutant, including non-NAAQS pollutants, under the 

CAA. Note that as an alternative basis to CAA section 110(k)(6) 

for taking these first two steps, EPA relies on its inherent 

administrative authority to reconsider its previous action. 

Third, in this rulemaking, EPA is promulgating a FIP to 

apply appropriate measures to assure that EPA’s PSD regulatory 

requirements will apply to non-NAAQS pollutants that are newly 

subject to regulation under the CAA that the Texas PSD program 

does not already cover. At present, the only such pollutant is 

GHGs. Therefore, EPA’s FIP will at present apply the EPA 

regulatory PSD program to GHG-emitting sources in Texas, and EPA 
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commits to take whatever steps are appropriate if, in the 

future, Texas fails to apply PSD to another newly regulated nonNAAQS pollutant. 

In light of the immediate need of Texas’s GHG-emitting 

sources for a permitting authority to process their permit 

applications, EPA is promulgating this action immediately though 

an interim final rule, in reliance on the good cause exemption 

from notice-and-comment rulemaking under section 553(b)(3)(B) of 

the Administrative Procedures Act. At the same time, EPA is 

initiating a notice-and-comment rulemaking that mirrors this 

one. 

A. Determination that EPA’s Previous Approval of Texas’s PSD 

Program was in Error.

 In applying CAA section 110(k)(6), EPA must first 

“determine[] that the Administrator’s action approving ... [the 

Texas PSD program] was in error....” EPA has determined that 

the Texas PSD program had flaws at the time Texas submitted it 

and EPA approved it, so that EPA’s approval was in error. 

1. Gaps in Texas’s PSD Program Concerning Application of PSD to 

Pollutants Newly Subject to Regulation and Concerning Assurances 

of Legal Adequacy. 
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 Texas’s PSD program, although approved by EPA, contained 

important gaps concerning the application of PSD to pollutants 

newly subject to regulation, including non-NAAQS pollutants; and 

Texas’s legal authority for doing so. 

a. Gaps in Texas’s PSD Program Evident at the Time of EPA 

Approval 

The application of the PSD program to pollutants newly 

subject to regulation, including non-NAAQS pollutants, is a key 

component of the program. As noted earlier, it is EPA’s longstanding position that PSD applies to all such pollutants, and 

most of the states’ PSD programs do apply to such pollutants 

automatically, as soon as those pollutants become subject to 

regulation. 

In particular, as noted previously, EPA had previously made 

clear to Texas, during 1980 and again during 1983, that PSD 

applies to non-NAAQS pollutants. Because Texas’s PSD program, 

unlike that of most states, did not automatically apply to such 

pollutants, it was important that during the time when Texas 

submitted SIP revisions and EPA acted on them, 1985-1992, that 

Texas address the application of PSD to pollutants newly subject 

to regulation. Texas could have provided assurances that the 

state would apply PSD to such pollutants and information as to 
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the method and timing for doing so. The most likely method was 

through a separate SIP revision. The timing would most likely 

relate to the time necessary to adopt and submit a SIP revision. 

This timing issue is important because the sources emitting 

pollutants are subject to PSD under the CAA as soon as the 

pollutants become subject to regulation, but if the SIP PSD 

program does not automatically apply to the sources, then the 

state does not have authority to issue permits to the sources as 

soon as the sources become required to obtain the permits. 

However, there is no indication in the record of Texas’s 

SIP submissions that Texas specifically addressed this issue or 

provided any such information. Nor is there any indication in 

the record that during this 1985-92 period, EPA identified this 

issue and sought such information from Texas. 

Texas did provide the 1989 Texas PSD Commitments Letter, in 

which Texas generally committed “to implement EPA requirements 

relative to [PSD].” However, as quoted previously, this letter 

was phrased generally and did not specifically commit to apply 

PSD to pollutants newly subject to regulation, including nonNAAQS pollutants; nor did the letter identify the method and 

timing for doing so. Accordingly, we do not read this letter as 

a commitment by Texas to apply PSD to each newly regulated 
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pollutant, including non-NAAQS pollutants, whether through a SIP 

revision or some other method, or on any particular time-table. 

Moreover, although EPA approved the Texas PSD program in 

reliance on the letter, EPA indicated, in the final approval 

preamble, that the scope and binding impact of the letter were 

limited and that Texas retained discretion in implementing the 

PSD program. 

In addition, the rulemaking record for Texas’s PSD program 

does not indicate that Texas provided, as required under CAA 

§110(a)(2)(E)(i), assurances that Texas had adequate legal 

authority to carry out the PSD program, including, insofar as 

relevant for this rulemaking, applying PSD to pollutants newly 

subject to regulation, among them non-NAAQS pollutants. Some 15 

years previously, in Texas’s 1972 submission of its original 

SIP, the state had provided assurances of legal authority to 

carry out the SIP, and EPA had approved those assurances. But 

the record for the PSD SIP submission does not indicate whether, 

or how, that legal authority applied to PSD applicability to 

such pollutants. In submitting the PSD SIP program, the TACB 

provided general references to legal authority, but the TACB did 

not indicate whether PSD applies to such pollutants either. Nor 
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did the Texas PSD Commitments Letter specifically identify legal 

authority to apply PSD to such pollutants. 

Therefore, the Texas PSD SIP submittal contained gaps: It 

did not address the application of PSD to pollutants newly 

subject to regulation, including non-NAAQS pollutants; and it 

did not include any information concerning Texas’s methods or 

timing for doing so. Nor did the program provide assurances 

that the state had adequate legal authority to apply PSD to such 

pollutants. 

b. Recent Statements by Texas that Confirm the Gaps in Texas’s 

PSD Program 

Texas has recently made several statements that confirm 

that at the time EPA approved the state’s PSD program, that 

program had gaps.52 

(i). Gap Concerning Application of PSD to All Pollutants Newly 

Subject to Regulation, Including Non-NAAQS Pollutants 

 First, Texas has made clear that it is not required to 

apply PSD to non-NAAQS pollutants that are newly subject to 

regulation, including GHGs. Specifically, in its August 2, 2010 

60-day letter, Texas stated that it interprets the CAA PSD 

 

52 As noted previously, Texas has also recently confirmed, in 

Texas’60-day letter, that its PSD program does not automatically 

apply to pollutants newly subject to regulation. 
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applicability provisions to apply to only NAAQS pollutants, and 

therefore to not include non-NAAQS pollutants, among them GHGs. 

Texas asserted that “the only sensible interpretation of the 

CAA” is that PSD applies to only NAAQS pollutants. Texas 60-day 

letter, p. 4. Similarly, in its court challenge to EPA’s four 

GHG rules, Texas stated that its interpretation is mandated 

under Chevron step 1. There, Texas stated that EPA’s 

“interpretation of the CAA [that PSD applies to non-NAAQS 

pollutants] is not entitled to deference because the text of the 

statute is unambiguous. Chevron, U.S.A. v. NRDC, 467 U.S. 837, 

842 (1984) (the Agency must give effect to the unambiguously 

expressed intent of Congress).”53 As noted previously, EPA 

responded at length to this argument in the Tailoring Rule and 

in EPA’s response in the court challenge to EPA’s GHG rules. 

EPA asserts that the CAA mandates that PSD apply to non-NAAQS 

pollutants, including GHGs, once they become subject to 

regulation; and EPA is not reopening this issue on the merits in 

this rulemaking. 

 For present purposes, however, what is important is that 

Texas takes the position that under a Chevron step 1 reading of 

 

53 See Texas “Motion to Stay Three GHG Actions” 27, Coalition for 

Responsible Regulation v. EPA, No. 09-1322 (and consolidated 

cases). 
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the CAA, the PSD program does not apply to non-NAAQS pollutants. 

This position has important ramifications for how Texas must 

interpret EPA’s PSD applicability regulations and for the 

meaning of Texas’s SIP PSD applicability provisions. As noted 

previously, under EPA’s current regulations, PSD applies to “any 

pollutant that otherwise is subject to regulation under the 

[CAA]." 52.166(b)(49)(iv). These regulations have read this 

way since they were revised in EPA’s 2002 NSR Reform Rule, and 

the regulations that predated them were phrased in much the same 

way: They applied PSD to "any air pollutant regulated under the 

Clean Air Act."54 These regulations are based on the CAA PSD 

applicability requirements, and as a result, cannot apply PSD to 

any pollutants that the CAA does not itself subject to PSD. 

Accordingly, although Texas did not specifically address the 

meaning of EPA’s regulations in its 60-day letter or court 

filings, it must be that in Texas’s view, these EPA regulations 

may lawfully apply PSD to only NAAQS pollutants. 

 

54 See 43 FR 26380, 26403/3, 26406 (June 19, 1978) (promulgating 

40 CFR 51.21(b)(1)(i)) and 42 FR 57479, 57480, 57483 (November 

3, 1977) (proposing 40 CFR 51.21(b)(1)(i)) (applying PSD 

requirements to a "major stationary source" and defining that 

term to include sources that emit specified quantities of "any 

air pollutant regulated under the Clean Air Act"). 
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Texas’s SIP PSD applicability provisions, in turn, mirror 

EPA’s. As quoted earlier, Texas’s EPA-approved PSD 

applicability provisions apply PSD to "any air pollutant subject 

to regulation under the [Clean Air] Act." Although these Texas 

provisions mirror EPA’s regulatory applicability provisions – 

which, again, Texas appears to interpret as limited to applying 

PSD only to NAAQS pollutants - Texas is authorized to apply them 

more expansively than the EPA regulations. This is because a 

state must comply with CAA requirements as a minimum, but 

retains authority to impose additional or more stringent 

requirements. CAA section 116. Therefore, it is in accordance 

with Texas’s view that the CAA and EPA regulatory requirements 

for PSD applicability be limited to NAAQS pollutants, that Texas 

would nevertheless consider itself authorized – but not required 

- to apply its PSD program to particular non-NAAQS pollutants. 

This position would allow Texas, in effect, to choose which nonNAAQS pollutants to subject to PSD. 

 In fact, Texas has clearly stated that it does not consider 

itself required to apply its PSD program to one non-NAAQS 

pollutant in particular: GHGs. In its 60-day letter, Texas 

stated: “Texas has neither the authority nor the intention of 

interpreting, ignoring, or amending its laws in order to compel 
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the permitting of greenhouse gas emissions.” Texas 60-day 

letter, at 1. Texas’s letter went on to provide numerous 

reasons for why it did not believe EPA lawfully subjected GHGs 

to PSD; why, in any event, EPA was required to allow states more 

time before PSD would apply to GHG-emitting sources; and, as 

noted previously, why, in any event, Texas’s SIP does not 

automatically update to apply PSD to newly regulated pollutants. 

Texas added, “[i]n the event a court concludes EPA’s actions 

comport with the law, Texas specifically reserves and does not 

waive any rights under the federal Clean Air Act or other law 

with respect to the issues raised here.” Texas 60-day letter, 

p.5. With this statement, Texas intimated that it may not 

consider itself obligated to apply PSD to GHGs even if a Court 

dismissed all of Texas’s arguments and upheld all of EPA’s 

actions that lead to the requirement to apply PSD to GHGs. 

With these two statements - that (i) “Texas has neither the 

authority nor the intention of interpreting, ignoring, or 

amending its laws in order to compel the permitting of 

greenhouse gas emissions,” and (ii) Texas would not necessarily 

consider itself bound by EPA requirements even if those 

requirements are upheld in Court – Texas has made clear that it 

does not view itself as obligated to apply PSD to GHGs under the 
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CAA. Thus, these statements confirm Texas’s view that it is not 

obligated to apply PSD to each newly regulated non-NAAQS, 

including, of course, GHGs.55

These statements from Texas are significant because they 

confirm that Texas’s PSD program, as approved by EPA, had an 

important gap: Texas did not address the applicability of its 

PSD program to pollutants newly subject to regulation, including 

non-NAAQS pollutants, such as by providing assurances that Texas 

would take action to apply PSD to such pollutants or describing 

the methods (such as SIP revision) and timing for doing so. 

Moreover, Texas’s recent statements are consistent with the view 

that Texas’s silence on the subject at the time of the PSD SIP 

action means that Texas did not, at that time, view itself as 

obligated to apply PSD to each pollutant.56 

 

55 It should be noted that over the years, Texas has adopted SIP 

revisions to apply PSD to non-NAAQS pollutants. However, as 

noted earlier, Texas has made clear that it has no intention of 

submitting a SIP revision to apply PSD to GHGs. All this is 

consistent with the view described previously that Texas 

interprets its PSD applicability provision to authorize it to 

apply PSD to non-NAAQS pollutants at Texas’s discretion, but 

that Texas does not view itself as required to apply PSD to nonNAAQS pollutants. 

56 By the same token, we see nothing in these recent statements 

to indicate that Texas views itself as rescinding any preexisting understanding that it would apply PSD to each such 

pollutant. 
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In particular, Texas’s recent statement that the CAA PSD 

provisions are clear by their terms, as a matter of Chevron step 

1, that they do not apply to non-NAAQS pollutants, suggests that 

Texas would have viewed the CAA PSD provisions the same way at 

the time Texas submitted its PSD program. As noted earlier, the 

Texas Attorney General and the Chairman of the Texas Commission 

on Environmental Quality, who are the joint signatories of 

Texas’s 60-day letter, are of the view that “[t]he only sensible 

interpretation of the Clean Act” is that PSD applies only to 

NAAQS pollutants, and not non-NAAQS pollutants. Texas 60-day 

letter, p. 4. Texas has confirmed its reading – and clarified 

that it is based on a Chevron step 1 interpretation - in filings 

before the D.C. Circuit. The fact that these high state 

officials view this reading of the CAA as, again, “[t]he only 

sensible reading,” indicates that in the past, Texas is less 

likely to have adopted the opposite reading, which would be that 

the CAA mandates that PSD applies to non-NAAQS pollutants. 

Statutory provisions whose meaning is clear on their face, at 

least to a particular reader, would not be expected to have had 

a different or uncertain meaning to that same reader at an 

earlier point in time. By the same token, Texas’s insistence, 

noted previously, that it does not have the intention or 
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authority to apply PSD to one non-NAAQS in particular, GHGs, 

suggests that Texas could well have expressed the same view, had 

the issue arisen, at the time EPA approved Texas’s PSD program. 

We further note that Texas itself appears to take the 

position that an agency’s present interpretation of its 

regulations should be presumed to have been the agency’s past 

interpretation of those regulations, so that Texas’s current 

interpretation that its PSD program does not apply to at least 

one non-NAAQS, GHGs, should be presumed to be Texas’s 

interpretation of its PSD program in the past, including at the 

time Texas submitted its program as a SIP revision to EPA and 

EPA approved it. Specifically, in its 60-day letter, Texas 

noted that in the Tailoring Rule, EPA asked states to consider 

whether their SIPs that include the term “subject to regulation” 

can be interpreted to incorporate the Tailoring Rule thresholds 

on grounds that the state interprets that term as being 

sufficiently open-ended. 75 FR 51,581/2. Texas stated, 

 In the Tailoring Rule you have asked TCEQ to 

report to you by August 2, 2010, whether it would 

“interpret” the undefined phrase “subject to 

regulation” in TCEQ Rule 116.12 consistent with the 

newly promulgated definition in EPA Rule 51.166, in 

all its specifics and particulars. That is, you have 

effectively requested that Texas agree to regulate 

greenhouse gases in the exact manner and method 

proscribed by the EPA. 

 
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In other words, you have asked Texas to agree 

that when it promulgated its air quality permitting 

program rules for pollutants “subject to regulation” 

in 1993, that Texas really meant to define the term 

“subject to regulation” as set forth in the dozens of 

paragraphs and subparagraphs of EPA Rule 51.166, first 

promulgated in 2010. 

Texas 60-day letter, p. 3. In these statements, Texas appears 

to reveal Texas’s own understanding of the circumstances under 

which Texas can be said to give the term “subject to regulation” 

a particular interpretation, and that is if Texas interpreted 

that term that same way at the time that Texas first promulgated 

the term in 1993. By that same logic, Texas’s position, as 

stated in its 60-day letter, that it “has neither the authority 

nor the intention of interpreting, ignoring, or amending its 

laws in order to compel the permitting of greenhouse gas 

emissions” would have applied to “its laws” – including the SIP 

PSD requirements – at the time that Texas adopted those rules. 

Therefore, it seems reasonable to conclude that just as Texas 

does not currently view its PSD program as applying to all newly 

regulated non-NAAQS pollutants, Texas did not, at the time it 

submitted and EPA approved its PSD program, view its PSD program 

as applying to all newly regulated non-NAAQS pollutants. 

By the same token, Texas’s recent statements also confirm 

that the assurances Texas provided in its 1989 Texas PSD 
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Commitments Letter cannot be interpreted as having committed 

Texas to apply PSD to all pollutants newly subject to 

regulation, including non-NAAQS pollutants. The assurances, by 

their terms, were phrased generally and did not address the 

application of PSD to such pollutants; and EPA, in the preamble 

for the final approval of Texas’s PSD SIP, indicated that the 

scope and binding impact of the assurances were limited.57 

Texas’s recent direct statements that PSD does not cover nonNAAQS pollutants indicates that the generally phrased assurances 

in the letter, whatever they meant, did not mean that Texas 

would apply PSD to each newly regulated pollutant, including 

non-NAAQS pollutants. 

As a result, it stands to reason that at the time Texas 

submitted its PSD program, Texas did not view the CAA as 

mandating the application of PSD to at least certain pollutants 

newly subject to regulation, non-NAAQS pollutants. But at a 

minimum, it can be said that Texas’s PSD program contained a 

gap: EPA required that PSD apply to each pollutant newly 

subject to regulation, including non-NAAQS pollutants; Texas’s 

program applied only to pollutants already subject to regulation 

at the time Texas adopted its program, not to subsequently 

 
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regulated pollutants, including non-NAAQS; and Texas did not 

address its program’s applicability to such pollutants, 

including how or when its program would do so. This gap is 

significant because it facilitates Texas’s current position, 

with which EPA disagrees, that PSD does not apply to non-NAAQS 

pollutants. 

(ii). Gap Concerning Assurances of Adequate Legal Authority 

Texas’s recent statement that it does not have the 

authority to apply PSD to GHG-emitting sources also highlights 

that Texas’s PSD program had a gap in its failure to provide 

“necessary assurances” of adequate legal authority to carry out 

the PSD program. Although Texas’s letter described obstacles to 

applying PSD to GHG-emitting sources without first adopting a 

SIP revision, and did not describe obstacles that precluded 

Texas from adopting a SIP revision if it chose to do so, Texas’s 

direct statement that it does not have authority to apply PSD to 

GHGs at least casts doubt on whether Texas has such authority 

under any circumstances. Moreover, Texas has never indicated 

that there has been a recent change that places new limits on 

its legal authority to carry out the CAA. 

Accordingly, it is possible that at the time that Texas 

submitted its PSD program, Texas considered itself under limits 
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in its legal authority to apply PSD to each non-NAAQS pollutant. 

At a minimum, in light of Texas’s recent statement that it does 

not have authority to apply PSD to at least one newly regulated, 

non-NAAQS, GHGs, it is apparent that at the time that Texas 

submitted its PSD program, Texas did not provide the “necessary 

assurances” that it “will have adequate ... authority under 

State ... law to carry out such implementation plan (and is not 

prohibited by any provision of ... State law from carrying out 

such implementation plan or portion thereof).” CAA section 

110(a)(2)(E)(i) (emphasis added). “[C]arrying out such 

implementation plan” includes meeting all CAA requirements 

applicable to the plan and, in the case of a PSD SIP program, 

that includes applying PSD to each pollutant newly subject to 

regulation, including non-NAAQS pollutants. 

2. Flaws in PSD Program 

The Texas PSD program’s gaps – which are, again, that Texas 

did not address the applicability of PSD to all pollutants newly 

subject to regulation, including non-NAAQS pollutants; and Texas 

did not provide assurances of adequate legal authority to do so 

– mean that the state’s PSD program has flaws. These flaws were 

present at the time that EPA approved Texas’s PSD program. 

Moreover, these flaws are significant. They have figured 
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prominently into the present situation in which EPA takes the 

position that Texas is obligated under the CAA and EPA 

regulations to apply its PSD program to a newly regulated 

pollutant -- GHGs -- but Texas takes the opposite position. 

3. EPA’s Error in Approving Texas’s PSD Program 

 In this rulemaking, EPA is “determin[ing]” that EPA’s 

action fully approving Texas’s PSD program was “in error” within 

the meaning of CAA section 110(k)(6). This section contains 

EPA’s basis for that determination. 

a. CAA Section 110(k)(6) Error Correction 

Under the familiar Chevron two-step framework for 

interpreting administrative statutes, an agency must, under 

Chevron step 1, 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, under Chevron step 2, 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, 842–43 (1984). 

As noted previously, the term “error” in CAA section 

110(k)(6) is not defined and, as a result, should be given its 
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ordinary, everyday meaning. The dictionary definition of 

“error” is “a mistake” or “the state or condition of being wrong 

in conduct or judgment,” Oxford American College Dictionary 467 

(2d ed. 2007); or “1) an act, assertion, or belief that 

unintentionally deviates from what is correct, right or true 2) 

the state of having false knowledge . . . 4) a mistake . . . .” 

Webster’s II New Riverside University Dictionary 442 (Houghton 

Mifflin Co. 1988). These definitions are broad, and include all 

unintentional, incorrect or wrong actions or mistakes. 

Moreover, CAA section 110(k)(6) authorizes EPA to 

“determine[]” that its action was in error, and does not direct 

or constrain that determination in any manner. That is, the 

provision does not identify any factors that EPA must, or may 

not, consider in making the determination. This further 

indicates that this provision confers broad discretion upon EPA. 

b. Gaps in Texas PSD Program. 

As previously discussed, the Texas SIP PSD program was 

flawed because it contained gaps: Texas did not address the 

applicability of PSD to all pollutants newly subject to 

regulation, including non-NAAQS pollutants; and Texas did not 

provide assurances of adequate legal authority to do so. EPA 
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did not address these gaps in its action on Texas SIP PSD 

program and instead, EPA fully approved the PSD program. 

Therefore, EPA’s action in fully approving Texas’s SIP PSD 

program in the face of these flaws was “in error” under CAA 

section 110(k)(6), in accordance with Chevron step 1. “[E]rror” 

should be defined broadly to include any mistake, and approval 

of a flawed SIP is a mistake. Moreover, this flaw is 

significant because it affects the applicability of the PSD 

program to a pollutant and, as a result, to an entire set of 

sources. 

Even if the term “error” is not considered unambiguously to 

encompass, under Chevron step 1, the mistake that EPA made in 

approving the Texas PSD SIP, and instead is considered ambiguous 

on this question, then under Chevron step 2 EPA has sufficient 

discretion to determine that its approval action meets the 

definition of “error.” That is, under CAA section 110(k)(6), 

the breadth of the term “error” and of the authorization for EPA 

to “determine[]” when it made an error, mean that EPA has 

sufficient discretion to identify the gaps in Texas’s PSD 

program as flawed and to identify EPA’s action in approving 

Texas’s PSD SIP in the face of those flaws as an error. 

c. Alternative Basis for Error Correction 
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As explained previously, we view Texas’s recent statements 

that the CAA does not apply to non-NAAQS pollutants and that 

Texas has neither the authority nor the intention to apply PSD 

to GHGs as an indication that at the time Texas submitted its 

PSD program, Texas did not address the applicability its program 

to pollutants newly subject to regulation or provide assurances 

that it legal authority to do so. Absent specific evidence to 

the contrary, we are not inclined to conclude that at the time 

EPA approved the Texas PSD program in 1992, Texas in fact had 

filled those gaps – by, for example, providing assurances that 

it would apply PSD to each newly regulated non-NAAQS pollutants 

and had the legal authority to do so - but that more recently, 

Texas has failed to comply with those assurances. The CAA is 

based on a partnership between the states and the federal 

government, and we think it more consonant with the principles 

of that partnership to interpret the evidence as indicating that 

Texas never addressed the gap or provided the requisite 

assurances. 

However, in the alternative, if one were to conclude that 

during the course of Texas’s submittal of, and EPA’s action on, 

the state’s PSD program, Texas did in fact provide the requisite 

assurances – in particular, that the 1989 Texas PSD Commitment 
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Letter provided adequate assurances that Texas would apply PSD 

to pollutants newly subject to regulation, including non-NAAQS -

- so that no gaps in Texas’s PSD program existed at that time, 

then Texas’s recent statements would amount to failing to comply 

with, or even rescinding, those assurances. Under these 

circumstances, EPA would still consider its previous approval of 

Texas’s PSD SIP to have been in error. This is because if one 

assumes that Texas provided the appropriate assurances, then one 

should also assume that EPA’s approval would have been based on 

those assurances. In fact, EPA stated in approving the Texas 

PSD program that EPA was relying on the Commitments Letter. 

Rescinding or failing to comply with those assurances – if that 

is what Texas is considered to have done - would eliminate the 

basis for EPA’s approval. Compare CAA section 110(k)(4) 

(authorizing EPA to approve a SIP revision based on a commitment 

by the state to adopt certain measures by a date certain, but if 

the state does not do so, then the conditional approval is 

treated as a disapproval). 

B. Error Correction: Conversion of Previous Approval to 

Partial Approval and Partial Disapproval

Under CAA section 110(k)(6), once EPA determines that its 

previous action approving a SIP revision was in error, EPA “may 
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... revise such action as appropriate without requiring any 

further submission from the State. . . .” Under this provision, 

EPA may revise its previous full approval of Texas’s PSD program 

as appropriate, without requiring any submission from Texas. 

This provision offers EPA a great deal of discretion in 

revising its previous action. Indeed, the use of the term “may” 

means that this provision simply authorizes, and does not 

require, EPA to revise its previous action even after EPA has 

determined the error, and that, in turn, implies that EPA has 

discretion in determining how to revise its previous action. 

Moreover, if EPA does decide to revise its previous action, EPA 

may do so in any way that is “appropriate.” The term 

“appropriate” offers EPA significant latitude in deciding what 

type of revision to do. 

 Here, EPA is revising its previous full approval of Texas’s 

PSD program to be a partial approval and a partial disapproval. 

Specifically, EPA is retaining the approval of Texas’s PSD 

program to the extent of the pollutants that the PSD program 

already does cover. This amounts to a partial approval. In 

addition, EPA is disapproving the Texas PSD program because it 

has not provided assurances that its PSD program will apply to 

each pollutant newly subject to regulation, including non-NAAQS 
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pollutants, and because it has not provided assurances of 

adequate legal authority to do so. 

C. Reconsideration Under CAA Section 301, Other CAA Provisions, 

and Case Law

As an alternative to the error correction provision of CAA 

section 110(k)(6), EPA is using its inherent administrative 

authority to reconsider its prior approval actions as a basis 

for revising its previous full approval of the Texas PSD program 

to a partial approval and partial disapproval. This authority 

lies in CAA section 301(a), read in conjunction with CAA section 

110 and case law holding that an agency has inherent authority 

to reconsider its prior actions. 

As noted earlier, EPA approved the Texas PSD program by 

notice dated June 24, 1992, 57 FR 28,093, under the authority of 

CAA section 110(k)(3)-(4). These provisions authorize EPA to 

approve a SIP submittal “as a whole,” “approve [the SIP 

submittal] in part and disapprove [it] in part,” or issue a 

“conditional approval” of a SIP submittal. CAA section 

110(k)(3)-(4). EPA issued a full approval under CAA section 

110(k)(3). 

In its approval action under that provision, EPA retained 

inherent authority to revise that action. The courts have found 
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that an administrative agency has the inherent authority to 

reconsider its decisions, unless Congress specifically 

proscribes the agency's discretion to do so. See, e.g., Gun 

South, Inc. v. Brady, 877 F.2d 858, 862 (11th Cir. 1989) 

(holding that agencies have implied authority to reconsider and 

rectify errors even though the applicable statute and 

regulations do not provide expressly for such reconsideration); 

Trujillo v. General Electric Co., 621 F.2d 1084, 1086 (10th Cir. 

1980) (“Administrative agencies have an inherent authority to 

reconsider their own decisions, since the power to decide in the 

first instance carries with it the power to reconsider”). 

Section 301(a) of the CAA, read in conjunction with CAA 

section 110(k)(3) and the case law just described, provides 

statutory authority for EPA’s reconsideration action in this 

rulemaking. Section 301(a) authorizes EPA "to prescribe such 

regulations as are necessary to carry out [EPA's] functions" 

under the CAA. Reconsidering prior rulemakings, when necessary, 

is part of “[EPA’s] functions” under the CAA –- in light of 

EPA’s inherent authority as recognized under the case law to do 

so -– and as a result, CAA section 301(a) confers authority upon 

EPA to undertake this rulemaking. 
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EPA finds further support for its authority to narrow its 

approval in APA section 553(e), which requires EPA to give 

interested persons "the right to petition for the issuance, 

amendment, or repeal of a rule;;" and CAA section 307(b)(1), 

which expressly contemplates that persons may file a petition 

for reconsideration under certain circumstances (at the same 

time that a rule is under judicial review). These 

authorizations for other persons to petition EPA to amend or 

repeal a rule suggest that EPA has inherent authority, on its 

own, to issue such amendment or repeal. This is because EPA may 

grant a petition from another person for an amendment to or 

repeal of a rule only if justified under the CAA, and if such an 

amendment or repeal is justified under the CAA, then EPA should 

be considered as having inherent authority to initiate the 

process on its own, even without a petition from another person. 

EPA recently used its authority to reconsider prior actions 

and limit its prior approval of a SIP in connection with 

California conformity SIPs. See, e.g., 68 FR 15720, 15723 

(discussing prior action taken to limit approvals); 67 FR 69139 

(taking final action to amend prior approvals to limit their 

duration); 67 FR 46618 (proposing to amend prior approvals to 

limit their duration, based on CAA sections 110(k) and 301(a)). 
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EPA had previously approved SIPs with emissions budgets based on 

a mobile source model that was current at the time of EPA's 

approval. Later, EPA updated the mobile source model. But, 

even though the model had been updated, emissions budgets would 

continue to be based on the older, previously approved model in 

the SIPs, rather than the updated model. To rectify this 

problem, EPA conducted a rulemaking that revised the previous 

SIP approvals so that the approvals of the emissions budgets 

would expire early, when the new ones were submitted by states 

and found adequate, rather than when a SIP revision was 

approved. This helped California more quickly adjust its 

regulations to incorporate the newer model. In this rule, EPA 

is using its authority to reconsider and limit its prior 

approval of SIPs generally in the same manner as it did in 

connection with California conformity SIPs. 

EPA is relying, in the alternative, on this inherent 

authority to convert its previous approval of Texas’s PSD 

program to a partial approval and partial disapproval for the 

same reasons discussed previously in connection with the “error” 

correction provision of CAA section 110(k)(6). That is, EPA 

approved Texas’s PSD program even though that program had 

significant flaws because Texas did not provide the requisite 
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assurances that it would apply PSD to all pollutants newly 

subject to regulation, including non-NAAQS, and that Texas had 

adequate legal authority to do so. 

EPA’s inherent authority to reconsider its previous action 

also supports revising its previous action in the same manner, 

and for the same reasons, as under CAA section 110(k)(6), as 

described earlier. That is, in light of the flaws in the Texas 

PSD program, EPA is revising EPA’s previous full approval to be 

a partial approval (to the extent of the pollutants regulated 

under the CAA that are subject to Texas’s PSD program) and a 

partial disapproval (to the extent Texas’s program does not 

provide assurances that it will apply to pollutants newly 

subject to regulation, including non-NAAQS pollutants). 

D. Relationship of This Action to GHG PSD SIP Call

As noted previously, EPA has recently taken another action 

concerning Texas’s PSD program as that program relates to GHGs: 

the GHG PSD SIP call, which we published by notice dated 

December 13, 2010, 75 FR 77698 (December 13, 2010). This 

section describes the relationship of this errorcorrection/partial-disapproval/FIP action to the SIP call. For 

convenience, the background for the SIP call, although described 

in detail earlier in this preamble, is reiterated here. 
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EPA promulgated the SIP call under CAA section 110(k)(5), 

which provides: 

Whenever the Administrator finds that the 

applicable implementation plan for any area is 

substantially inadequate to ... comply with any 

requirement of [the CAA], the Administrator shall 

require the State to revise the plan as necessary to 

correct such inadequacies. The Administrator ... may 

establish reasonable deadlines (not to exceed 18 

months after [notifying the state of the inadequacies] 

for the submission of such plan revisions. 

In the SIP call, EPA made a finding that the PSD SIPs of each of 

13 states, including Texas, do not apply to GHG-emitting sources 

and therefore are “substantially inadequate to ... comply with 

[the PSD applicability] requirement[s]” of the CAA. 

Accordingly, EPA required each state, including Texas, to submit 

a corrective SIP revision. EPA established a deadline for the 

SIP submittal for each state as 12 months from the date of the 

SIP call, or December 1, 2011, unless the state indicated in its 

30-day letter that it did not object to an earlier deadline. 

Each state for which EPA would finalize the SIP call submitted a 

30-day letter, and each, except for Texas, indicated a date 

sooner than December 1, 2011. Texas did not indicate any 

particular date and, as a result, EPA established December 1, 

2011 as Texas’ deadline. In addition, EPA stated that if Texas 

or any of the other states failed to submit its corrective SIP 
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revision by its deadline, EPA intended to promulgate a FIP 

immediately thereafter. 

The timing of the SIP call – both the time that EPA 

promulgated the SIP call and the deadlines it established for 

SIP submittal - was driven by the fact that the affected states 

did not have authority to issue PSD permits to GHG-emitting 

sources and as a result, those sources could face delays in 

construction and modification when they became subject to PSD as 

early as January 2, 2011. EPA designed the SIP Call to maximize 

the opportunity of each affected state to assure that its 

sources would have a permitting authority available as of that 

date or a later date, if the state concluded that a later date 

would not leave its sources facing delays. EPA did so by 

allowing each state flexibility for its SIP submittal deadline. 

Each of the affected states except Texas responded with a 

plan that would assure that its sources would not confront 

permitting delays. Most states – seven of the 13 – indicated 

they would not object to EPA’s establishing a SIP submittal date 

of December 22, 2010, recognizing that as a practical matter, 

that meant that EPA would promulgate a FIP on December 23, 2010. 

The other five states indicated a later date, and again, one 

indicated a date as late as July 1, 2011. This means that 
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purely as a legal matter, there will be no permitting authority 

in place in those states to issue GHG permits on January 2, 

2011, when GHG-emitting sources become subject to PSD. Even so, 

the later dates were acceptable to each of the five states 

because (i) they intended to submit a SIP revision by their 

date, and (ii) they did not expect the lack of a permitting 

authority during the period before their deadline to place their 

sources at risk for delays in construction or expansion. 

Texas responded differently than the other states. In its 

30-day letter, Texas did not indicate a particular date for its 

SIP submittal, and as a result, EPA, as we had proposed, 

established Texas’ deadline at December 1, 2011. But shortly 

before submitting its 30-day letter, Texas clearly indicated it 

had no intention of submitting a SIP revision.58 This means that 

a permitting authority for GHG-emitting sources would not be in 

place until EPA promulgated a FIP, no earlier than December 2, 

2011. Importantly, Texas has indicated that this one-year delay 

in the availability of a permitting authority would, in fact, 

mean that under EPA’s interpretation of the CAA, Texas’ sources 

 

58 Texas 60-day letter, at 1. 
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would face delays in constructing and modifying.59 Moreover, 

Texas indicated that during 2011, some 167 construction or 

modification projects would be affected,60 which is significantly 

more sources than any other state. 

 Moreover, as discussed in detail earlier in this preamble, 

Texas stated, in its 60-day letter, that “Texas has neither the 

authority nor the intention of interpreting, ignoring, or 

amending its laws in order to compel the permitting of 

greenhouse gas emission.”61 Texas has never qualified this 

statement, and as a result, EPA reads this statement to indicate 

that Texas does not intend to submit a SIP revision as required 

under the SIP call. In addition, Texas has also made clear, as 

discussed earlier in this preamble, that it does not consider 

its PSD program as being required to apply to non-NAAQS 

pollutants, including GHGs. 

 These statements have cast a spotlight on underlying flaws 

in Texas’ fully approved PSD SIP, as also discussed in detail 

earlier, and that, in turn, has brought into play the error-

 

59 Texas 30-day letter, at 5, 6; Texas “Motion to Stay Three GHG 

Actions” 40-41, Coalition for Responsible Regulation v. EPA, No. 

09-1322 (and consolidated cases). 

60 See Texas “Motion to Stay Three GHG Actions” 41, Coalition for 

Responsible Regulation v. EPA, No. 09-1322 (and consolidated 

cases). 

61 Texas’ 60-day letter, p. 1. 
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correction provision in CAA section 110(k)(6). All this is 

discussed in detail earlier in this preamble, but to reiterate 

for convenience: CAA section 110(k)(6) provides, “Whenever the 

Administrator determines that the Administrator’s action 

approving ... any [SIP] ... was in error, the Administrator may 

... revise such action as appropriate....” Here, the Texas SIP 

was flawed at the time EPA approved it because it did not 

address, or assure adequate legal authority for, application of 

the PSD program to pollutants newly subject to regulation, 

including non-NAAQS pollutants. As a result, EPA has the 

authority to determine that its full approval of the SIP was “in 

error” and to convert that action to a partial approval/partial 

disapproval; and as a result of that, EPA is authorized to 

promulgate a FIP immediately. 

This is an important reason why EPA is proceeding with this 

error-correction/partial-disapproval rulemaking at this time. 

By allowing EPA to impose a FIP immediately, instead of waiting 

until December, 2011; EPA may act as the permitting authority in 

Texas beginning January 2, 2011, and in that capacity, allow 

Texas sources to avoid delays in construction or modification. 

 With the present rulemaking, EPA has both (i) promulgated a 

SIP call and imposed a SIP deadline of December 1, 2011 for 
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Texas, under CAA section 110(k)(5); and (ii) corrected its error 

in previous fully approving Texas’ PSD program by converting 

that action to a partial approval and partial disapproval, under 

CAA section 110(k)(6), and then promulgating a FIP immediately 

under CAA section 110(c)(1)(B). For the reasons just discussed, 

each of these actions is fully justified under the applicable 

CAA provisions. 

 Moreover, there is no preclusion against taking both of 

these actions with respect to Texas at this time, for the 

following reasons: First, the two actions are based on CAA 

provisions – CAA section 110(k)(5) (SIP call), and section 

110(k)(6) (error correction) - that overlap, so that it is to be 

expected that circumstances may arise in which both apply. If 

EA approves a flawed SIP, then circumstances could well arise 

under which EPA has a basis for concluding both that (i) the SIP 

is “substantially inadequate” to meet a CAA requirement, under 

CAA section 110(k)(5); and (ii) EPA’s action in approving the 

SIP was “in error,” under CAA section 110(k)(6). The same flaw 

in the SIP would be the basis for each of those actions.62

 

62 Moreover, situations could arise in which EPA has a basis for 

imposing a SIP call but not issuing an error correction because 

the SIP currently has a substantial inadequacy but was not 

flawed at the time of its submittal and approval. 
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This is case with EPA’s two actions concerning Texas. As 

EPA stated in the SIP call, the basis for the finding of 

“substantial inadequacy” was the failure of Texas’s approved SIP 

PSD program to apply to GHGs, which was rooted in the program’s 

failure to apply pollutants newly subject to regulation. As EPA 

stated earlier in this preamble, the basis for the determination 

that EPA’s previous full approval of Texas’s SIP was “in error” 

was the gap in the SIP due to the SIP’s failure to address, or 

assure that it has adequate legal authority for, the application 

to pollutants newly subject to regulation.63 

Second, each provision, by its terms, is discretionary to 

EPA, and neither provision precludes the application of the 

other. CAA section 110(k)(5) applies “[w]henever the 

Administrator finds” that the SIP is substantially inadequate. 

CAA section 110(k)(6) applies “[w]henever the Administrator 

determines” that her previous action was in error. Neither 

provision references the other. Neither provision includes any 

 

63 In this case, the substantial inadequacy for which EPA issued 

the SIP call, which was the PSD program’s failure to apply to 

GHGs, is narrower than the flaw in the SIP for which EPA is 

issuing the error correction, which is the PSD program’s failure 

to address, or assure legal authority for, application of PSD to 

all pollutants newly subject to regulation. 
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requirement or limitation that constrains the application of the 

other at any time. 

 Third, each provision serves a different purpose and when 

applied to this case – including in conjunction with the FIP 

provision in CAA section 110(c)(1) - leads to a different 

outcome, but each outcome is neither dependent on, or 

compromised by, the other outcome. CAA section 110(k)(5), as 

applied in the current case, is focused on a present problem 

with the SIP, that is, a “substantial[] inadequacy” that 

presently exists. This provision mandates that EPA require a 

corrective SIP revision to address that inadequacy, but further 

provides that EPA must allow a reasonable deadline for the state 

to submit the SIP revision. In the GHG PSD SIP call, EPA 

allowed states to, in effect, choose within a range of 

deadlines. But if the state fails to submit the required SIP 

revision by its deadline, then EPA is required to promulgate a 

FIP under CAA section 110(c)(1)(A). CAA section 110(k)(6), as 

it applies in the current case, is focused on a past problem 

with SIP, that is, a flaw that existed at the time EPA approved 

the SIP, so that EPA’s approval was “in error.” This provision 

authorizes EPA to convert the approval to a disapproval, but 

does not mandate that the State submit a new SIP revision. This 
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is because the state has already submitted a SIP revision, the 

one that is flawed, and EPA has acted on it. Instead, EPA is 

required to promulgate a FIP under CAA section 110(c)(1)(B), and 

EPA may do so immediately. 

In summary, viewing the two provisions as applied here 

together: (i) CAA section 110(k)(5) allows EPA to exercise its 

discretion to make a finding that Texas’ SIP is “substantially 

inadequate,” and then to establish a SIP submittal schedule for 

Texas, one that is consistent with whatever choice as to 

deadline Texas had available to it; and (ii) CAA section 

110(k)(6) allows EPA to exercise its discretion to convert its 

previous approval of Texas’ SIP, which EPA made “in error,” to a 

disapproval, and then to promulgate a FIP immediately. The 

requirement that Texas submit a corrective SIP revision and do 

so by a date certain – a date that Texas exercised some control 

over - serves the useful function of establishing a mechanism 

and a timeframe for Texas to address the substantial inadequacy 

in its PSD SIP.64 The immediate promulgation of a FIP serves the 

useful purpose of assuring the availability of a permitting 

authority as of January 2, 2011, so that Texas sources will not 

 

64 We recognize that Texas has indicated that it does not intend 

to submit a SIP revision, but this does not eliminate the 

utility of establishing a SIP submittal schedule. 
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face delays in their plans to construct or modify. Importantly, 

the immediate promulgation of a FIP through this rulemaking does 

not compromise in any manner the SIP submittal deadline imposed 

on Texas through the SIP call. After EPA’s promulgation of the 

FIP, Texas remains obligated to submit the corrective SIP 

revision by December 1, 2011. As soon as Texas does submit that 

SIP revision and EPA approves it, EPA will rescind the FIP. It 

is always the case that when EPA has promulgated a FIP of any 

type in a particular state, the state remains obligated to adopt 

a SIP revision. Nothing about a FIP impedes the state from 

doing so; and when the state does so and EPA approves the SIP 

revision, then EPA rescinds the FIP. 

It is true that one of the purposes of the SIP call, as 

applied here, is to allow states to in effect select an early 

FIP – by selecting an early SIP submittal date and then not 

submitting a SIP by that date – so as to assure the availability 

of a permitting authority for their sources by that early date. 

And it is further true that Texas, in its 30-day letter, chose 

not to select such an early date and, on the contrary, stated 

its opposition to a FIP; yet, in this present rulemaking, EPA is 

promulgating an immediate FIP for Texas. But this does not mean 

that the present rulemaking has compromised the SIP call or any 
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choices made available to Texas in the SIP call. The focus of 

the SIP call, as it related to Texas, was the finding of a 

substantial inadequacy in Texas’ PSD program, the imposition of 

a requirement for Texas to submit a corrective SIP revision, and 

– based on Texas’ choice - the establishment of a deadline of 

December 1, 2011 for Texas to do so. The promulgation of an 

immediate FIP through the present rulemaking does not disturb 

that. Texas remains subject to the December 1, 2011 SIP 

submittal schedule that EPA established for it, based on Texas’s 

decision not to respond directly to EPA’s request that Texas 

itself identify a deadline. Texas’s expressed opposition to a 

FIP does not preclude EPA from imposing one as justified through 

the present rulemaking. 

It is also true that, as EPA stated in the SIP call, 

“federalism principles ... underlie the SIP call process and the 

SIP system as a whole,” and that means that “in the first 

instance, it is to the state to whom falls the responsibility of 

developing pollution controls through an implementation plan.” 

75 FR 77710/2. And it is further true that the immediate 

promulgation of a FIP through the present error-correction 

action means that a FIP will be in place in Texas before the 

December 1, 2011 deadline established under the SIP call for 
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Texas to adopt its SIP. However, imposition of the FIP is fully 

justified under this error-correction action, as discussed 

previously, and is essential to assure that Texas sources will 

not face delays in construction or modification, a risk that 

Texas acknowledges will occur under EPA’s interpretation of the 

applicable CAA requirements. In any event, Texas’s statement 

that “Texas has neither the authority nor the intention of 

interpreting, ignoring, or amending its laws in order to compel 

the permitting of greenhouse gas emission,”65 as we read it, is 

tantamount to a direct statement that it does not intend to 

submit a SIP revision. Accordingly, it is difficult to see how 

it could meaningfully be claimed that an early FIP, promulgated 

through this rulemaking, could displace any prerogatives Texas 

may have under the SIP call to develop its own SIP revision 

before the imposition of a FIP. 

It is also true that under the principles of federalism 

that underlie the SIP system, states exercise some discretion 

over controls for their industry, so that a state may impose 

more stringent controls than minimum CAA requirements. CAA 

section 116. But this discretion does not mean that Texas is 

authorized to create the circumstances under which its sources 

 

65 Texas 60-day letter, p. 1. 
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face delays in constructing or modifying and EPA is precluded 

from promulgating a FIP – when justified under this rulemaking – 

for the purpose of protecting those sources against such delays. 

Absent this action, Texas sources would face delays in 

construction and modification resulting from Texas’s decision 

during the course of the SIP call to neither adopt a SIP 

promptly or facilitate an early FIP. Those delays do not result 

from Texas’s decision to impose more stringent controls than the 

CAA requires. On the contrary, Texas’s action is inconsistent 

with one of the purposes of the PSD provisions, which is “to 

insure that economic growth will occur in a manner consistent 

with the preservation of clean air resources.” CAA section 

160(3). EPA is justified in interpreting and applying CAA 

section 110(k)(6) to correct errors related to Texas’s SIP PSD 

program in order to effectuate this purpose of PSD. The D.C. 

Circuit has held that the terms of the PSD provisions should be 

interpreted with the PSD purposes in mind, New York v. EPA, 413 

F.3d 3, 23(D.C. Cir.), rehearing en banc den., 431 F.3d 801 

(2005), and the same should be true of CAA section 110(k)(5) as 

applied to PSD requirements. 

E. Relationship of This Rulemaking to Other States
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EPA is not, at this time, undertaking a similar errorcorrection rulemaking for any of the other states that are 

subject to the SIP call. EPA has discretion as to whether and 

when to undertake such a rulemaking, and each of the other 

states has chosen a course of action that at present appears to 

assure that its large GHG-emitting sources will have a 

permitting authority available when the sources need one, and 

therefore will not face delays in constructing or modifying. As 

a result, EPA has not inquired into whether any of these other 

states have flaws in their SIP PSD programs as Texas does. 

[More detail needed. This section establishes the basis 

for our argument that this is a rule of national application, 

the jurisdiction for which is in the D.C. Circuit.] 

V. Federal Implementation Plan 

A. Authority to Promulgate a FIP

In this rulemaking, EPA is promulgating a FIP to apply 

EPA’s PSD regulatory program to GHG-emitting sources in Texas 

and to commit to take action as appropriate with respect to 

pollutants that become newly subject to regulation. 

The CAA authority for EPA to promulgate a FIP is found in 

CAA section 110(c)(1), which provides – 

The Administrator shall promulgate a Federal 

implementation plan at any time within 2 years after 
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the Administrator ... (B) disapproves a State 

implementation plan submission in whole or in part, 

unless the State corrects the deficiency, and the 

Administrator approves the plan or plan revision, 

before the Administrator promulgates such [FIP]. 

 As indicated earlier in this notice, EPA is partially 

disapproving Texas’s PSD program by correcting EPA’s previous 

full approval to be a partial approval and disapproval. 

Accordingly, under CAA section 110(c)(1)(B), EPA is required to 

promulgate a PSD FIP for Texas. 

 The FIP must be designed to address the flaws in Texas’s 

PSD program. As discussed earlier in this preamble, the Texas 

PSD program contains significant gaps: It does not address, or 

provide assurances of adequate legal authority for, application 

to pollutants newly subject to regulation, including non-NAAQS 

pollutants. As a practical matter, at present, the only 

pollutant the program does not address is GHGs. Accordingly, 

the FIP applies the EPA regulatory PSD program to GHGs. In 

addition, the FIP commits to address pollutants that become 

newly subject to regulation, as appropriate. 

B. Timing of FIP

EPA is promulgating the FIP in this rulemaking, so 

that it takes effect immediately upon the partial 

disapproval. This timing for FIP promulgation is 
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authorized under CAA section 110(c)(1), which authorizes us 

to promulgate a FIP "at any time within 2 years after" EPA 

disapproves a SIP submission in whole or in part. The 

quoted phrase, by its terms, establishes a two-year period 

within which EPA must promulgate the FIP, and provides no 

further constraints on timing. Accordingly, this provision 

gives EPA discretion to promulgate the FIP at any point in 

time within that two-year period, and in this rulemaking, 

EPA is promulgating the FIP immediately. The reason is 

that an immediate FIP in Texas minimizes any period of time 

during which larger-emitting sources may be under an 

obligation to obtain PSD permits for their GHGs when they 

construct or modify, but no permitting authority is 

authorized to issue those permits. 

 The reason why we are exercising our discretion to 

promulgate the FIP immediately is to minimize any period of time 

during which larger-emitting sources in Texas may be under an 

obligation to obtain PSD permits for their GHGs when they 

construct or modify, but no permitting authority is authorized 

to issue those permits. We believe that acting immediately is 

in the best interests of the regulated community. Note that for 

similar reasons, in EPA’s recently promulgated SIP Call, EPA 
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stated that if a state failed to submit its required SIP 

revision by its deadline, EPA would immediately make a finding 

of failure to submit and immediately thereafter promulgate a 

FIP. 75 FR 53889/2. 

 The lack of constraints in CAA section 110(c)(1)(B) stands 

in contrast to other CAA provisions that do impose requirements 

for the timing of proposals. See CAA sections 109(a)(1)(A), 

111(b)(1)(B). In light of the lack of constraints, EPA was free 

to promulgate the FIP concurrently with the disapproval action. 

C. Substance of GHG PSD FIP

1. Components of FIP 

 The FIP consists of two components. The first mirrors the 

GHG PSD FIP that EPA is promulgating for seven states for which 

EPA issued the PSD GHG SIP call and, subsequently, issued a 

finding of failure to submit a required SIP submittal. Thus, 

this component of the FIP constitutes the EPA regulations found 

in 40 CFR 52.21, including the PSD applicability provisions, 

with a limitation to assure that, strictly for purposes of this 

rulemaking, the FIP applies only to GHGs. Under the PSD 

applicability provisions in 40 CFR 52.21(b)(50), the PSD program 

applies to sources that emit the requisite amounts of any 

"regulated NSR pollutant[s]," including any air pollutant 
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"subject to regulation." However, Texas’ partially approved SIP 

already applies PSD to other air pollutants. To appropriately 

limit the scope of the FIP, EPA amends 40 CFR 52.21(b)(50), as 

incorporated into the Texas FIP, to limit the applicability 

provision to GHGs. 

We adopt this FIP because, as we stated in the GHG PSD 

FIP, in quoting the proposed GHG PSD FIP – 

it would, to the greatest extent possible, mirror EPA 

regulations (as well as those of most of the states). 

In addition, this FIP would readily incorporate the 

phase-in approach for PSD applicability to GHG sources 

that EPA has developed in the Tailoring Rule and 

expects to develop further through additional 

rulemaking. As explained in the Tailoring Rule, 

incorporating this phase-in approach—including Steps 1 

and 2 of the phase-in as promulgated in the Tailoring 

Rule—can be most readily accomplished through 

interpretation of the terms in the definition 

"regulated NSR pollutant," including the term "subject 

to regulation." 

In accordance with the Tailoring Rule, ... the 

FIP would apply in Step 1 of the phase-in approach 

only to "anyway sources" (that is, sources undertaking 

construction or modification projects that are 

required to apply for PSD permits anyway due to their 

non-GHG emissions and that emit GHGs in the amount of 

at least 75,000 tpy on a CO2e basis) and would apply in 

Step 2 of the phase-in approach to both "anyway 

sources" and sources that meet the 100,000/75,000-tpy 

threshold (that is, (i) sources that newly construct 

and would not be subject to PSD on account of their 

non-GHG emissions, but that emit GHGs in the amount of 

at least 100,000 tpy CO2e, and (ii) existing sources 

that emit GHGs in the amount of at least 100,000 tpy 

CO2e, that undertake modifications that would not 

trigger PSD on the basis of their non-GHG emissions, 

but that increase GHGs by at least 75,000 tpy CO2e). 
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Under the FIP, with respect to permits for 

"anyway sources," EPA will be responsible for acting 

on permit applications for only the GHG portion of the 

permit, and the state will retain responsibility for 

the rest of the permit. Likewise, with respect to 

permits for sources that meet the 100,000/75,000-tpy 

threshold, our preferred approach—for reasons of 

consistency—is that EPA will be responsible for acting 

on permit applications for only the GHG portion of the 

permit, that the state permitting authorities will be 

responsible for the non-GHG portion of the permit, and 

EPA will coordinate with the state permitting 

authority as needed in order to fully cover any nonGHG emissions that, for example, are subject to BACT 

because they exceed the significance levels. 

75 FR 53889/3 to 53,890/1.66

This formulation of the FIP is authorized because it is part of 

the “appropriate” action EPA is authorized to take as part of 

EPA’s correction of its previous, erroneous full approval, under 

CAA section 110(k)(6). 

 The second component of the FIP consists of a commitment 

that EPA will take such action as is appropriate to ensure that 

pollutants that become newly subject to regulation are subject 

to the FIP. If a pollutant becomes newly subject to regulation 

in the future, and if Texas does not take steps to subject it to 

its PSD program, then EPA will take the appropriate action. 

2. Dual permitting authorities 

In light of comments that we received on the GHG PSD FIP 

 

66 GHG PSD FIP (signed on December 23, 2010). 
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proposal, we recognize that concerns may arise as to “how having 

EPA issue the GHG portions of a permit while allowing states 

under a FIP to continue to be responsible for issuing the nonGHG portions of a PSD permit will work in practice,” and that in 

that rulemaking, “[c]ommenters raised concerns about the 

potential for a source to be ’faced with conflicting 

requirements and the need to mediate among permit engineers 

making BACT decisions.’”67 

As we further stated in that rulemaking: 

We well recognize that dividing permitting 

responsibilities between two authorities – EPA for 

GHGs and the state for all other pollutants – will 

require close coordination between the two authorities 

to avoid duplication, conflicting determinations, and 

delays. We note that this situation is not without 

precedent. In many instances, EPA has been the PSD 

permitting authority but the state has accepted a 

delegation for parts of the PSD program, so that a 

source has had to go to both the state and EPA for its 

permit. In addition, all nonattainment areas in the 

nation are in attainment or are unclassifiable for at 

least one pollutant, so that every nonattainment area 

is also a PSD area. In some of these areas, the state 

is the permitting authority for nonattainment NSR and 

EPA is the permitting authority for PSD. As a result, 

there are instances in which a new or modifying source 

in such an area has needed a nonattainment NSR permit 

from the state and a PSD permit from EPA. 

EPA is working expeditiously to develop 

recommended approaches for EPA regions and affected 

 

67 Id. at ##__. 
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states to use in addressing the shared responsibility 

of issuing PSD permits for GHG-emitting sources.68 

In addition, we note that the concern over dual permitting 

authorities would become moot if Texas were either to submit and 

EPA approve a SIP revision that applies PSD to GHGs or request a 

delegation of permitting reasonability. If it did request and 

receive a delegation, it would be responsible for issuing both 

the GHG part and the non-GHG part of the permit, and that would 

moot concerns about split-permitting. 

D. Period for GHG PSD FIP to Remain in Place

 In the FIP proposal, we stated our intention to leave any 

promulgated FIP in place for as short a period as possible, and 

to process any corrective SIP revision submitted by the state to 

fulfill the requirements of the SIP call as expeditiously as 

possible. Specifically, we stated: 

 After we have promulgated a FIP, it must remain 

in place until the state submits a SIP revision and we 

approve that SIP revision. CAA section 110(c)(1). 

Under the present circumstances, we will act on a SIP 

revision to apply the PSD program to GHG sources as 

quickly as possible. Upon request of the state, we 

will parallel-process the SIP submittal. That is, if 

the state submits to us the draft SIP submittal for 

which the state intends to hold a hearing, we will 

propose the draft SIP submittal for approval and open 

a comment period during the same time as the state 

hearing. If the SIP submittal that the state 

 

68 Id. at ##__. 
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ultimately submits to us is substantially similar to 

the draft SIP submittal, we will proceed to take final 

action without a further proposal or comment period. 

If we approve such a SIP revision, we will at the same 

time rescind the FIP. 

75 FR 53889/2-3. 

We continue to have these same intentions. Thus, we 

reaffirm our intention to leave the GHG PSD FIP in place only as 

long as is necessary for the state to submit and for EPA to 

approve a SIP revision that includes PSD permitting for GHGemitting sources. As discussed in more detail later in this 

preamble, EPA continues to believe that the states should remain 

the primary permitting authority. 

Specifically, EPA will rescind the FIP, in full or in part, 

if (i) Texas submits, and EPA approves, a SIP revision to apply 

Texas’s PSD program to GHG-emitting sources, (ii) Texas provides 

assurances that in the future, it will apply its PSD program to 

all pollutants newly subject to regulation, including non-NAAQS 

pollutants, and (iii) Texas provides “necessary assurances” 

under CAA section 110(a)(2)(E)(ii) that it “will have adequate 

... authority under State law” to apply its PSD program to such 

pollutants. 

E. Primacy of Texas’s SIP process

This action to partially approve and partially disapprove 
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Texas’s SIP PSD program and to promulgate a FIP is secondary to 

our overarching goal, which is to assure that it will be Texas 

that will be the permitting authority. EPA continues to 

recognize that Texas is best suited to the task of permitting 

because the state and its sources have experience working 

together in the state PSD program to process permit 

applications. EPA seeks to remain solely in its primary role of 

providing guidance and acting as a resource for Texas as it 

makes the various required permitting decisions for GHG 

emissions. 

Accordingly, we are prepared to work closely with Texas to 

help it promptly develop and submit to us a SIP revision that 

extends its PSD program to GHG-emitting sources and that assures 

that the program will apply to each pollutant newly subject to 

regulation in the future. If Texas submits such a SIP revision, 

we intend to promptly act on it, and if we approve it, then we 

intend to rescind the FIP immediately. Again, EPA's goal is to 

have in place in Texas the necessary permitting authority by the 

time businesses seeking construction permits need to have their 

applications processed and the permits issued —- and to achieve 

that outcome by means of engaging with Texas directly through a 

concerted process of consultation and support. 
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EPA is taking up the additional task of partially 

disapproving Texas’s PSD program and promulgating the FIP at 

this time only because the Agency believes it is compelled to do 

so by the need to assure businesses, to the maximum extent 

possible and as promptly as possible, that a permitting 

authority is available to process PSD permit applications for 

GHG-emitting sources once they become subject to PSD 

requirements on January 2, 2011. At the same time, we invite 

Texas to accept a delegation of authority to implement the FIP, 

so that it will still be the state that processes the permit 

applications, albeit operating under federal law. 

VI. Interim Final Rule, Good Cause Exception 

EPA is issuing this action as an interim final rule. As an 

interim final rule, this action is time-limited. It will be 

effective from the date of signature until the earlier of April 

30, 2011 or the date that EPA promulgates final rules on its 

proposals for (i) a partial approval and partial disapproval of 

Texas’s PSD SIP and (ii) a FIP for Texas’s PSD program and those 

final rules take effect. 

The present rule is effective upon publication, without 

first undergoing notice and comment. Under APA section 553, a 

federal agency generally must provide for public notice and 
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comment prior to finalizing an agency rule. However, this 

obligation is excused, under APA section 553(b)(3)(B), “when the 

agency for good cause finds (and incorporates the finding and a 

brief statement of reasons therefore in the rules issued) that 

notice and public procedure thereon are impracticable, 

unnecessary, or contrary to the public interest.” While the 

good cause exception is to be narrowly construed, Utility Solid 

Waste Activities Group v. Environmental Protection Agency, 236 

F.3d 749, 754 (D.C. Cir. 2001), it is also “an important safety 

valve to be used where delay would do real harm.” U.S. Steel 

Corp. v. U.S. Environmental Protection Agency, 595 F.2d 207, 214 

(5th Cir. 1979). Notice and comment is impracticable where “an 

agency finds that due and timely execution of its functions 

would be impeded by the notice otherwise required.” Utility 

Solid Waste Activities Group, 236 F.3d at 754. Notice and 

comment is contrary to the public interest where “the interest 

of the public would be defeated by any requirement of advance 

notice.” Id. at 755. 

Notice and comment here would be contrary to the public 

interest. As discussed previously, major stationary sources of 

GHG emissions will be subject to PSD permitting requirements as 

of January 2, 2011, a date which is rapidly approaching. As of 
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that date, no major stationary source emitting GHG at or above 

the levels set in the Tailoring Rule will be able to construct 

or modify without first obtaining a permit for its GHG 

emissions. In the absence of this rule, such sources will have 

no permitting authority from which to obtain such a permit. 

Without a permitting authority in place, sources would be 

subject to delays in construction or modification, causing 

economic harm to those sources and to others secondarily 

affected. 

Specifically, the State of Texas has estimated that 167 

sources will require GHG permits in 2011.69 This is a 

substantial number of entities and the economic harm that they 

face as a result of permitting delays could affect a substantial 

number of related entities, employees, shareholders, and the 

public. 

This rule serves the necessary function of ensuring that a 

permitting authority is available to issue permits for these 

sources, and thus that large sources in Texas do not face a long 

delay in their ability to construct or modify. The public 

interest would certainly be hindered if EPA did not act now to 

 

69 “State Of Texas’s Motion For Stay Of EPA’s Endangerment 

Finding, Time Rule and Tailpipe Rule,” Coalition for Responsible 

Regulation v. EPA, No. 09-1322 (and consolidated cases) at 41. 
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ensure that economic progress is not impeded by a lack of access 

to an authorized permitting authority. 

The good cause exception also applies here because of the 

impracticability of notice and comment. EPA only recently 

became aware that no GHG PSD permitting authority would be 

authorized to issue permits to Texas sources on January 2, 2011, 

and thus had insufficient time to seek public comment before 

acting. As discussed previously, Texas submitted its 60-day 

letter to EPA on August 2, 2010; it submitted its Motion to Stay 

Three GHG Actions on September 15, 2010; and it submitted its 

30-day letter to EPA on October 4, 2010. It was only after 

having received and analyzed all of these recent documents that 

it became clear that, due to underlying flaws in the Texas SIP 

PSD program and to Texas’s position regarding amending its SIP 

or seeking a FIP, all as described earlier, no permitting 

authority had authority to issue GHG PSD permits as of January 

2, 2011, and that there was no other way besides this rulemaking 

action to ameliorate that situation in a timely manner. The 

EPA’s agency functions would be compromised if it must impose 

legal obligations on sources when sources have no legal means to 

fulfill those obligations. In light of the limited time frame 
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and the harmful effects on sources if this action is delayed, 

notice and comment is impracticable. 

 In addition, the public has had and will have some 

opportunity to comment. The public was given the opportunity to 

comment on some of the issues in this action in response to 

proposals for the Tailoring Rule and the GHG PSD SIP Call. 

Today’s rule is also only an interim rule; the public will be 

given full opportunity to comment on the permanent rule that EPA 

is concurrently proposing, which mirrors this rule. By issuing 

this rule as an interim final rule, paired with a comment period 

on the proposal for more permanent action, EPA is providing as 

much opportunity for notice and comment as possible on the 

issues presented by today’s rule, and is striving to replace 

this rule with a rule encompassing that further comment as soon 

as is reasonably possible. 

 For the same reasons cited earlier, EPA finds that there is 

good cause for this rule to take immediate effect. In addition, 

since this is not a major rule under the Congressional Review 

Act, the 60-day delay in effective date required for major rules 

under the CRA does not apply. 

EPA is taking this action to do an error correction under 

CAA section 110(k)(6) “in the same manner as [EPA’s previous] 
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approval” of the Texas PSD program. The term “in the same 

manner” is not defined by statute, and it therefore takes on its 

ordinary, everyday meaning. It is a broad term, and thus 

undergoing any proper type of rulemaking process should be 

considered to be “in the same manner” as undergoing a proper 

rulemaking process of any other type. Both the original 

approval of Texas’s SIP and this action are rulemakings, 

conducted in accordance with the rulemaking process. It is 

immaterial that the original approval underwent notice and 

comment, and this action is subject to the good cause exception, 

since both of these processes are provided for by the prescribed 

agency rulemaking process. 

VII. Statutory and Executive Order Reviews 

A. Executive Order 12866 - Regulatory Planning and Review

Under Executive Order (EO) 12866 (58 FR 51735, October 4, 

1993), this action is a "significant regulatory action" because 

it raises novel legal or policy issues. Accordingly, EPA 

submitted this action to the Office of Management and Budget 

(OMB) for review under EO 12866 and any changes made in response 

to OMB recommendations have been documented in the docket for 

this action. 

B. Paperwork Reduction Act
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This action does not impose any new information collection 

burden. The OMB has previously approved the information 

collection requirements contained in the existing regulations 

for PSD (see, e.g., 40 CFR 52.21) under the provisions of the 

Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and has assigned 

OMB control number 2060-0003. The OMB control numbers for EPA's 

regulations in 40 CFR are listed in 40 CFR part 9. 

C. Regulatory Flexibility Act 

 This interim final rule is not subject to the Regulatory 

Flexibility Act (RFA) which generally requires an agency to 

prepare a regulatory flexibility analysis for any rule that will 

have a significant economic impact on a substantial number of 

small entities. The RFA applies only to rules subject to 

notice-and-comment rulemaking requirements under the APA or any 

other statute. This rule is not subject to notice-and-comment 

requirements under the APA or any other statute because, 

although the rule is subject to the APA, the agency has invoked 

the “good cause” exemption under 5 U.S.C. 553(b); therefore, it 

is not subject to the notice and comment requirement. 

 Notwithstanding the previous conclusion, EPA is publishing 

a proposed rule in this Federal Register that mirrors this 

interim final rule, and the applicability of the RFA is 
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addressed further in that proposed rule. 

D. Unfunded Mandates Reform Act

This action contains no federal mandates under the 

provisions of Title II of the Unfunded Mandates Reform Act of 

1995 (UMRA, 2 U.S.C. 1531-1538) for state, local or tribal 

governments or the private section. The action imposes no 

enforceable duty on any state, local or tribal governments or 

the private sector. With this action, EPA is only revising its 

previous approval of the Texas PSD SIP to be a partial approval 

and partial disapproval and promulgating a FIP to address the 

deficiencies as authorized by the CAA. Thus, this rule is not 

subject to the requirements of sections 202 or 205 of UMRA. 

This action 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. 

E. Executive Order 13132 - Federalism

This action does not have federalism implications. It will 

not have substantial direct effects on Texas, on the 

relationship between the national government and Texas, or on 

the distribution of power and responsibilities among the various 

levels of government, as specified in Executive Order 13132. 
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With this action, EPA is only revising its previous approval of 

the Texas PSD SIP to be a partial approval and partial 

disapproval and promulgating a FIP to address the deficiencies 

as authorized by the CAA. 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 is specifically soliciting comment on the 

proposed rule also published in this Federal Register that 

mirrors this interim final rule. 

F. Executive Order 13175 - Consultation and Coordination with 

Indian Tribal Governments

This action does not have tribal implications, as specified 

in Executive Order 13175 (65 FR 67249, November 9, 2000). In 

this action, EPA is not addressing any tribal implementation 

plans. This action is limited to Texas’s PSD SIP. Thus, 

Executive Order 13175 does not apply to this action. 

G. Executive Order 13045 - Protection of Children from 

Environmental Health Risks and Safety Risks

EPA interprets EO 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-
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501 of the EO has the potential to influence the regulation. 

This action is not subject to EO 13045 because EPA is only 

revising its previous approval of the Texas PSD SIP to be a 

partial approval and partial disapproval and promulgating a FIP 

to address the deficiencies as authorized by the CAA. 

H. Executive Order 13211 - Actions Concerning Regulations 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. With this action, EPA 

is only revising its previous approval of the Texas PSD SIP to 

be a partial approval and partial disapproval and promulgating a 

FIP to address the deficiencies as authorized by the CAA. 

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 
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business practices) that are developed or adopted by voluntary 

consensus standards bodies. NTTAA directs EPA to provide 

Congress, through OMB, explanations when the Agency decides not 

to use available and applicable voluntary consensus standards. 

This rulemaking does not involve technical standards. 

Therefore, EPA is not considering 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, February 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 U.S. 

EPA has determined that this interim final rule will not 

have disproportionately high and adverse human health or 

environmental effects on minority or low-income populations 
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because it does not affect the level of protection provided to 

human health or the environment. With this action, EPA is only 

revising its previous approval of the Texas PSD SIP to be a 

partial approval and partial disapproval and promulgating a FIP 

to address the deficiencies as authorized by the CAA. 

K. Congressional Review Act

The Congressional Review Act, 5 U.S.C. 801, et seq., as 

added by the Small Business Regulatory Enforcement Fairness Act 

of 1996, 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. Section 

808 allows the issuing agency to make a rule effective sooner 

than otherwise provided by the CRA if the agency makes a good 

cause finding that notice and public procedure is impracticable, 

unnecessary, or contrary to the public interest. This 

determination must be supported by a brief statement, 5 U.S.C. 

808(2). As stated previously, EPA has made such a good cause 

finding, including the reasons therefore, and established an 

effective date of [INSERT DATE OF PUBLICATION IN FEDERAL 

REGISTER]. EPA will submit a report containing this rule and 

other required information to the United States Senate, the 
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United States House of Representatives, and the Comptroller 

General of the United States prior to publication of the rule in 

the Federal Register. This action is not a “major rule” as 

defined by 5 U.S.C. 804(2). 

VIII. Judicial Review 

Section 307(b)(1) of the CAA indicates which Federal Courts 

of Appeal have venue for petitions of review of final actions by 

EPA. This section provides, in part, that petitions for review 

must be filed in the Court of Appeals for the District of 

Columbia Circuit: (i) when the agency action consists of 

“nationally applicable regulations promulgated, or final actions 

taken, by the Administrator,” or (ii) when such action is 

locally or regionally applicable, if “such action is based on a 

determination of nationwide scope or effect and if in taking 

such action the Administrator finds and publishes that such 

action is based on such a determination.” 

This rule is “nationally applicable” within the meaning of 

section 307(b)(1). In addition, it is based on a determination 

of nationwide scope or effect. 

Thus, under section 307(b)(1) of the Act, judicial review 

of this final action is available by filing of a petition for 

review in the U.S. Court of Appeals for the District of Columbia 
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Circuit by [INSERT DATE 60 DAYS AFTER PUBLICATION IN THE FEDERAL 

REGISTER]. 

IX. Statutory Authority 

The statutory authority for this action is provided by 

sections 101, 110, 114, 116, and 301 of the CAA as amended (42 

U.S.C. 7401, 7410, 7414, 7416, and 7601). 
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Page 158 of 160 – Determinations Concerning Need for Error 

Correction, Partial Approval and Partial Disapproval, and 

Federal Implementation Plan Regarding Texas Prevention of 

Significant Deterioration Program 

List of Subjects in 40 CFR Part 52 

Air pollution control, Carbon dioxide, Carbon dioxide 

equivalents, Carbon monoxide, Environmental protection, 

Greenhouse gases, Hydrofluorocarbons, Intergovernmental 

relations, Lead, Methane, Nitrogen dioxide, Nitrous oxide, 

Ozone, Particulate matter, Perfluorocarbons, Reporting and 

recordkeeping requirements, Sulfur hexafluoride, Sulfur oxides, 

Volatile organic compounds. 

________________________ 

Dated: 

_________________________ 

Lisa P. Jackson, 

Administrator. 
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For the reasons set out in the preamble, title 40, chapter I of 

the Code of Federal Regulations is amended as follows: 

PART 52 - [Amended]

1. The authority citation for part 52 continues to read as 

follows: 

 Authority: 42 U.S.C. 7401 et seq. 

2. Section 52.37 is added to read as follows: 

 §52.37. What are the requirements of the Federal 

Implementation Plans (FIPs) to issue permits under the 

Prevention of Significant Deterioration requirements to sources 

that emit greenhouse gases? 

(a) The requirements of sections 160 through 165 of the Clean 

Air Act are not met to the extent the plan, as approved, of the 

states listed in paragraph (b) of this section does not apply 

with respect to emissions of the pollutant GHGs from certain 

stationary sources. Therefore, the provisions of §52.21 except 

paragraph (a)(1) are hereby made a part of the plan for each 

state listed in paragraph (b) of this section for: 

(1) Beginning January 2, 2011, the pollutant GHGs from 

stationary sources described in §52.21(b)(49)(iv), and 

[Alternative 1 for paragraph (a)(2)] 

(2) Beginning July 1, 2011, in addition to the pollutant GHGs 

from sources described under paragraph (a)(1) of this section, 

the pollutant GHGs from stationary sources described in 
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§52.21(b)(49)(v).[Alternative 2 for paragraph (a)(2)] 

(2) Beginning July 1, 2011, in addition to the pollutant GHGs 

from sources described under paragraph (a)(1) of this section, 

stationary sources described in §52.21(b)(49)(v). 

(b) Paragraph (a) of this section applies to: 

(8) Texas. 

(c) For purposes of this section, references to the "pollutant 

GHGs" refers to the pollutant GHGs, as described in 

§52.21(b)(49)(i).