May 2010



# Prevention of Significant Deterioration and Title V GHG Tailoring Rule : EPA’s Response to Public Comments

U.S. Environmental Protection Agency Office of Air Quality Planning and Standards Air Quality Policy Division Research T riangle Park, NC[This page intentionally left blank.]i 

## Foreword This document provides responses to public comments on the U.S. Environmental Protection Agency ’s (EPA’s) proposed “Prevention of Significant Deterioration and Title V Greenhous e Gas Tailoring Rule.” EPA received comments on this proposal via mail, e

- mail, facsimile, and the web site at http://regulations.gov. Additionally, EPA conducted two public hearings to allow the public to provide oral testimony on the proposed rule. Co pies of the public hearing transcripts and all comment letters submitted to the docket are available at the EPA Docket Center Public Reading Room, or electronically through http://www.regulations.gov by searching Docket ID EPA

- HQ

- OAR

- 2009

- 0517. In light o f the very

large number of comments received and the significant overlap between many comments, this document does not respond to each comment individually . Rather, EPA summarizes and provides a single response to each significant argument, assertion, and question contained within the totality of comments. Within each comment summary, EPA provides in parentheses one or more Docket ID numbers for commenters who raised particular issues. However, the list of commenter ID numbers is not meant to be exhausti ve. EPA does not individually

identify each and every

commenter who made a certain point in all instances, particularl y in cases where multiple commenters express essentially identical arguments. Although portions of the preamble to the final rule are paraphrased in this document, to the extent any

ambiguity

is introduced by

this paraphrasing, the preamble itself remains the definitive statement of the rationale for the final rule. The primary

contact regarding questions or comments on this document is: Joseph Mangino Air Quality

Policy Division Office of Air Quality

Planning and Standards Mail Code C504

- 03 Environmental Protection Agency Research Triangle Park, NC 27711 e - mail: mangino.joseph@epa.govii [This page intentionally

lef t blank.]iii 

## Table of Contents
Foreword

................................ ................................ ................................ ................................ .......... i Table of Contents

................................ ................................ ................................ ........................... iii Acron ym s and Abbreviations

................................ ................................ ................................ ........ vi Chapter 1. Introduction

................................ ............................... Error! Bookmark not defined. 1 Chapter 2. Public Hearing, Form Letters, and General Comments Related to GHG

- Related Rules and the Proposed Tailoring Rule

................................ ................................ ................................ .... 3 2.1 Public Hearings

................................ ................................ ..... Error! Bookmark not defined. 3 2.2 Small Business Outreach Meeting

................................ ................................ ........................... 4 2.3 Meeting with Semiconductor Industry Association

................................ ................................ . 5 2.4 Form Letters and General Comments Received on GHGs Regulation and the Proposed Tailoring Rule

................................ ................................ ................................ ................................ . 5 2.5 General Comments on the Tailoring Rule and Comments on Other GHG Regulations

......... 9 2.5.1 Regulation of GHGs Under the CAA and The Proposed Tailoring Rule

........ Error! Bookmark not defined. 10 2.5.2 Endangerment Finding Under Section 202 of the CAA

................................ ......... 17 2.5.3 L ight Dut y Vehicle Rule (LDVR)

................................ ................................ ........ 20 3 2.5.4 Reconsideration of Interpretation of Regulations that Determine Pollutants Covered by CAA Permitting Programs (“CAA Interpretation Reconsideration Rulemaking”)

............... 28 7 Cha pter 3. Comments on the Legal Basis for the Proposed Rule

................................ ................ 30 3.1 Comments on Regulation of GHGs under the CAA

................................ .............................. 30 3.1.1 Comments on Regulation of GHGs under the CAA in General

............................. 30 3.1.2 Comments on Regulation of GHGs under the PSD Program

............................... 33 3 3.1.3 Comments on Regulation of GHGs under the Title V Program

........................... 38 9 3.2 Comments on the Administrative Necessit y Doctrine

................................ ........................... 42 3.3 Comments on the Absurd Results Doctrine

................................ ................................ ........... 49 3.4 Comments on the Step

- by

- Step Process

................................ ................................ ................ 54 3.5 Comments on Implementation through Retroactivel y Li miting Approval of SIPs and Title V Programs

................................ ................................ ................................ ................................ ....... 54 Chapter 4. Comments on Streamlining Options and Tools To Address the Administrative Burdens of PSD and Title V for GHGs

................................ ................................ ........................ 58 4.1 General Comments on Permit Streamlining Options for PSD and Title V

........................... 58 4.2 Redefining “Potential to Emit”

................................ ................................ .............................. 62 4.3 Pr esumptive BACT

................................ ................................ ................................ ................ 65 4.4 General Permits and Permits

- by

- Rule

................................ ................................ ................... 77 4.5 Electronic Permitting

................................ ................................ ................................ ............. 81 4.6 “Lean” Techniques for Permit Process Improvement

................................ ........................... 82 Chapter 5. Comments on the Proposed Definition of the GHG Pollutant

................................ ... 84 5.1 Comments on the Compounds Included in the Definition of the GHG Pollutant

................. 84 5.2 Comments on Use of GWP and the CO 2 e Metric

................................ ................................ .. 90 5.2.1 General Support and Opposition to the CO 2 e Metric

................................ ............. 90 5.2.2 Comments on Combining the Six GHGs into a Single Metric

............................... 94 5.2.3 Comments on L inking the Definition of CO 2 e to EPA’s “Inventory of U.S. Greenhouse Gas Emissions and Sinks”

................................ ................................ ........................ 98iv

5.2.4 Comments on the Use of Dual Thresholds for Pollutants that Do Not Exceed the Statutory Thresholds but Do Exceed the CO 2 e Thresholds

................................ ........................ 101 5.2.5 Comments on the Use of English versus Metric Tons for GHG Metric

............... 103 Chapter 6. Comments on Permitting Thresholds

................................ ................................ ....... 104 6.1 Comments on Administrative Burden and Sources Impacted under the Statutory Thresholds

................................ ................................ ................................ ................................ ..................... 104 6.2 Comments on the Administrative Burden and Sources Impacted under the Proposed Thresholds

................................ ................................ ................................ ................................ ... 107 6.3 Comments on the Methodology Used to Evaluate Burden

................................ .................. 115 6.4 Comments on Recommended Thresholds

................................ ................................ ........... 124 6.4.1 Comments Recommending a Non

- GHG Trigger

................................ ............................. 12 4 6.4.2 Comments Recommending Specific Thresholds

................................ .............................. 127 6.4.3 Comments on the PTE Basis for Thresholds

................................ ................................ .... 145 6.4.4 Comments Recommending Alternative Approac hes to Applicability

.............................. 146 6.4.5 Comments on the Proposed Phasing of the Thresholds

................................ .................... 148 Chapter 7. Comments on the Economic Impacts of the Proposed Rule

................................ .... 153 7.1 Economic/Societal Impacts and the Regulatory Impacts Anal ys is of the Rule

................... 153 7.2 Regulatory

Flexibility

Analy sis

................................ ................................ ........................... 164 Chapter 8. Implementation I ssues
................................ ................................ .............................. 172 8.1 Comments on EPA’s Mechanism for Implementing and Adopting the Tailoring Approach

................................ ................................ ................................ ................................ ..................... 172 8.2 Transitional I ssues
................................ ................................ ................................ ............... 182 8.2.1 Requests for “Grandfathering” and for Exemptions fr om Revision, Reopening or Update Requirements for Application and Permits

................................ ................................ .... 182 8.2.2 Requests for Delays in Implementation

................................ ................................ 192 8.3 Requests for Specific Exemptions/Deferrals from Applicab ility

................................ ........ 202 8.3.1 Source Categories

................................ ................................ ................................ . 202 8.3.2 Biogenic Emissions and Combustion of Biomass

................................ ................ 208 8.3.3 Fugitive Emissions

................................ ................................ ................................ 213 8.3.4 Pollution Control Projects

................................ ................................ ..................... 216 8.3.5 Indirect Emissions

................................ ................................ ................................ . 218 8.4 PSD and Title V Permitting Implementation Issues and Questions

................................ .... 218 8.4.1 Ge neral Suggestions, Comments, or Questions

................................ .................... 218 8.4.2 General Requests for Guidance

................................ ................................ ............ 221 8.4.3 General Suggestions or Comments for Specific Sectors

................................ ...... 224 8.4 .4 General Suggestions or Comments on Emissions Monitoring, Public Participation, and Funding

................................ ................................ ................................ ................................ 226 8.4.5 PSD

- Specific Implementation Issues

................................ ................................ .... 228 8.4.6 Title V

- Specific Implementation I ssu es
................................ ............................ 233 33 Chapter 9. Comments on Statutory and Executive Order Reviews

................................ ....... 242 42 9.1 General Comment

................................ ................................ ................................ ............ 242 42 9.2 Executive Order 12866

– Regulatory Planning and Review

................................ ........... 242 42 9.3 Paperwork Reduction Act

................................ ................................ ................................ 243 43 9.4 Regulatory

Flexibility

Act

................................ ................................ ............................... 244 44 9.5 Unfunded Mandates Reform Act

................................ ................................ ..................... 244 44 9.6 Executive Order 13132

– Federalism

................................ ................................ .............. 245 45v

9.7 Executive Order 13175

– Consultation and Coordination with Indian Tribal Governments

................................ ................................ ................................ ................................ ................. 246 46 9.8 Executive Order 13211

– Actions That Significantly Affect Energy

Supply , Distribution, or Use

................................ ................................ ................................ ................................ .......... 246 46 Chapter 10. Miscellaneous Comments

................................ ................................ .................. 248 48
Appendix A Appendix Bvi 

## Acrony ms and Abbreviations Acronym/ Abbreviation Definition ANPR Advance Notice of Proposed Rulemaking APA Administrative Procedure Act BACT Best Available Control Technology BMP Best Management Practice(s) Btu British Thermal Unit CAA or Act Clean Air Ac t CAAAC Clean Air Act Advisory Committee CAFE Corporate Average Fuel Economy CAIR Clean Air Interstate Rule CAM Compliance Assurance Monitoring CARB California Air Resources Board CCS Carbon Capture and Sequestration CFR Code of Federal Regulations CH 4 Methane CO Carbon Monoxide CO 2 Carbon Dioxide CO 2 e Carbon Dioxide Equivalent CREDO Chaplains Religious Enrichment Development Operation CRU Climate Research Institute CTG Control Techniques Guidelines CWA Clean Water Act D.C. Circuit District Court Circuit DOE Department of Energy DOT Department of Transportation EAB Environmental Appeals Board EI TE Energy

- Intensive Trade

- Exposed EO Executive Order EPA Environmental Protection Agency FERC Federal Energy Regulatory

Commission FR or Fed. Reg. Federal Register GHG Greenhouse Gas GSP Gross State Product GWP Global Warming Potential HAP Hazardous Air Pollutants HFC Hydrofl uo rocarbon H.R. House of Representatives HVAC Heating, Ventilation, & Air Conditioning HQ Headquarters ICR In for

mation Collection Requestvii

Acronym/ Abbreviation Definition IGCC Integrated Gasification Combined Cycle IL Illinois IPCC Intergovernmental Panel on Climate Change Lbs Pounds LAER Lowest Achievable Emission Rate LFG Landfill Gas LDVR Li ght

- Dut y Vehicle Rule MMBtu Million British The rmal Units MSW Municipal Solid Waste MW Megawatt MWh Megawatt Hours MY Model Year N 2 O Nitrous Oxide NAAQS National Ambient Air Quality Standard(s) NESHAP National Emission Standards for Hazardous Air Pollutants NG Natural Gas NHTSA National Highwa y Traffic Safet y Administration NMOC Non

- Methane Organic Compound NOD Notice of Determination NOx Nitrogen Oxides NRC Nuclear Regulatory Commission NRDC Natural Resources Defense Council NSPS New Source Performance Standard NSR New Source Review NT TAA National Technology Transfer and Advancement Act OA Office of Advocacy OAR Office of Air and Radiation ODS Ozone Depleting Substances OIRA Office of Information and Regulatory Affairs OMB Office of Management and Budget OPEI Office of Policy , Eco nomics, and Innovation PAL Plantwide Applicability L imit PFC Perfluorocarbons PM Particulate Matter POTW Publicly

Owned Treatment Works p pm Parts per Million ppmv Parts per Million by Volume PRA Paperwork Reduction Act PSD Prevention of Significant Deterioration PTE Potential to Emit RACT Reasonabl y Available Control Technology R&D Research and Development RFA Regulatory

Flexibility

Actviii

Acronym/ Abbreviation Definition RIA Regulatory

Impact Analyses RMRR Routine Maintenance, Repair, Replacement SBA Small Business Administrat ion SBARP Small Business Advocacy Review Panel SBREFA Small Business Regulatory Enforcement Fairness Act SER Small Entity

Representative SF 6 Sulfur H exafluoride SIA Semiconductor Industry Association SIP State Implementation Plan SO 2 Sulfur Dioxide T&D Transmission and Distribution TDF Tire

- Derived Fuel TIP Tribal Implementation Plan tpy /TPY Tons Per Year TSD Technical Support Document UMRA Unfunded Mandates Reform Act UNFCCC United Nations Framework Convention on Climate Change U.S.C. United States Code USDA United States Department of Agriculture U.S. or U.S.A. United States of America VA Virginia VOC Volatile Organic Compound1 

## Chapter 1. Introduction On October 27, 2009, we proposed to tailor the major source applicability threshol ds for greenhouse gas ( GHG ) emissions under the Prevention of Significant Deterioration ( PSD ) and title V programs of the Clean Air Act ( CAA or Act) by setting first

- phase applicability threshold levels under both programs, setting a first

- phase PSD signif icance level for GHG emissions, undertaking efforts to streamline the administration of the programs, and committing to an assessment of the administration of the programs within 5 y ears and a second

- phase rulemaking within 6 y ears. ( See 74 Federal Register [ FR ] 55292, October 27, 2009). As the first phase, we proposed to establish applicability thresholds for both the PSD and title V programs at the level of 25,000 tons per ye ar ( tpy) carbon dioxide equivalent ( CO 2 e ) and to establish a PSD significance l evel of between 10,000 and 25,000 tpy CO 2 e. In addition, we proposed to commit that, within 5 y ears of promulgating the first phase, we would conduct a study of the permitting authorities' ability

to administer the programs going forward, and then, within a y ear, conduct a rulemaking for the second phase of the program. This second phase would either confirm the first

- phase permitting levels, or establish revised levels or other streamlining techniques. We proposed to identify

the GHG metric as the gro up of six GHGs, on a CO 2 e basis. A source’s emissions for any of the six primary

GHGs that are “subject to regulation” under the CAA, and therefore considered “regulated NSR pollutants,” are summed on a CO 2 e basis using their global warming potential ( GWP ) values. The summed CO 2 e emissions would then be compared to the applicable permitting threshold to determine whether the source is subject to PSD and title V requirements. Moreover, we also proposed a process, consisting of several components, for co nforming the EPA

- approved State Implementation Plans ( SI Ps ) and title V programs to reflect the GHG threshold levels. As part of the proposed Tailoring Rule, we proposed to limit our approval of previously

approved SIPs and title V programs to the extent that they would require permitting for sources below the GHG permitting thresholds. In addition, we explained our intention to undertake a separate rulemaking to resolve issues related to the definition of the pollutants covered under the permitting progr ams in certain approved SIPs and title V programs. In conjunction with the first phase of our proposed action to tailor the GHG permitting thresholds, we committed to a concurrent effort to investigate, evaluate, and support the implementation of streamli ning techniques to address GHG sources. In addition to developing permit streamlining techniques, we also proposed plans to compile and make available technical and background information on GHG emission factors, control technologies, strategies and measurement and monitoring methodologies for key GHG source categories. We also stated that we would pursue using this information to develop presumptive Best Available Control Technology

( BACT ) levels for selected source categories, focusing our support effor t on the largest emitting GHG source categories. A key objective of this support effort is to help permitting authorities find cost effective way s to achieve GHG controls under the BACT requirement.2

The docket for this proposed rulemaking contains 19,1 23 public submission items that represent over 446,000 public comments received during the public comment period for the proposed rule. The docket also contains the transcripts for two public hearings conducted for the proposed rule (see Docket I d. No. EP A

- HQ

- OAR

- 2009

- 0517

- 5319 for the transcript of the November 18, 2010 public hearing in Arlington, VA, and Docket Id. No. EPA

- HQ

- OAR

- 2009

- 0517

- 3412 for the transcript of the November 19, 2010 public hearing in Rosemont, IL. Appendix A to this document prese nts the list of publi c submissions (by Docket ID No.) with a description of the t ype of comment and the organization/individual submitting the comment. Specific and general comments received at the public hearings and during the public comment period for the proposal are summarized in this document, organized under the following Chapters:

 Chapter 2

– Public Hearing, Mass Campaign Letters/Form Letters, and General Comments Related to GHG

- Related Rules and the Proposed Tailoring Rule
 Chapter 3

– Comments on the Legal Basis for the Proposed Rule
 Chapter 4

– Comments on Streamlining Options and Tools To Address the Administrative Burdens of PSD and Title V for GHGs
 Chapter 5

– Comments on the Proposed Definition of the GHG Pollutant
 Chapter 6

– Comments on Per mitting Thresholds
 Chapter 7

– Comments on the Economic Impacts of the Proposed Rule
 Chapter 8

– Comments on Implementation I ssues  Chapter 9

– Comments on Statutory and Executive Order Reviews
 Chapter 10

– Miscellaneous Comments3



## Chapter 2. Public Hearin g, Form Letters, and General Comments Related to GHG
- Related Rules and the Proposed Tailoring Rule The proposal preamble for the Tailoring Rule provided background information on GHG regulation under the CAA, the current (at that time) and proposed treatment of GHG emissions under the title V and PSD programs and what future actions may change that treatment. The proposal also announced that we would conduct a public hearing if one was requested and provided numerous avenues that the public could use to comment on the proposed Tailoring Rule. A public hearing was requested and two public hearings were held, and hundreds of thousands of comments were received on the proposal through various avenues. An overview of the public hearings, mass campaign lette rs/form letters and general comments related to the proposed Tailoring Rule are presented in this Chapter. Section 2.1 of this Chapter presents an overview of the public hearings; section 2.2 summarizes the form letters as well as the general support and opposition comments related to the proposal; and section 2.3 summarizes examples of the general comments received on the regulation of GHGs under the CAA, the proposed Tailoring Rule, and other CAA GHG

- related rules. 2.1 Public Hearings On November 1 8 and November 19, 2009, EPA conducted public hearings on the proposed PSD and title V GHG Tailoring Rule in Arlington, Virginia ( VA ) and Rosemont, Illinois ( IL ) , respectivel y. There were 128 attendees and 49 speakers at the Arlington, VA hearing, and 157 attendees and 77 speakers at the Rosemont, IL hearing. Transcripts for these hearings can be found in the docket for this rulemaking (see EPA Docket No. EPA

- HQ

- OAR

2009

- 0517

- 5319 for the Arlington, VA public hearing transcript, and EPA

- HQ

- OAR

- 2009

- 0517

- 3 412 for the Rosemont, IL public hearing transcript). Each of the public hearings conducted for the PSD and title V proposed GHG Tailoring Rule included an introduction which included an overview of the proposed rule, and proce dures for the hearing by

the EPA. Comments received at both of these hearings parallel comments received during the public comment period. Some of the more unique comments not received during the public comment period were about the use of nuclear power and/or use of clean coal t echnology , and/or the vegan lifestyle as being necessary or desired in reducing carbon dioxide ( CO 2 ) and other GHG emissions, and were not specificall y germane to the proposed Tailoring Rule rulemaking. One commenter (representing the Nongovernmental Inte rnational Panel on Climate Change) raised extensive arguments against the scientific basis EPA is using to support regulation of GHGs and provided cop yri ghted material that is in opposition to EPA’s position/conclusions (which is available for viewing at the Air Docket; see EPA Docket No. EPA

- HQ

- OAR

- 2009

- 0517

- 5319.2 for further information). Several commenters support EPA regulating GHG emissions (focusing on support for reductions from coal and/or other industries), while others opposed the regulation of GHG emissions on an economic or scientific basis. Oral testimonies at public hearings from differing industries/environmental groups raise parallel arguments to those submitted in greater detail during the public comment period. The more

detailed comment s submitted during the public comment period that are representative of those presented at the public hearings are represented and responded to in this document.4

2.2 Small Business Outreach Meeting The EPA, in collaboration with the Small Business Admin istration ( SBA ) and OMB , conducted an outreach meeting designed to exchange information with small entities that may be affected b y various rulemakings that EPA is developing for GHGs. The meeting focused, in particular, on the proposed Tailoring Rule. S mall entity representatives (SERs) participating in person and via conference call were briefed on the rulemaking proposal and given the opportunity

to provide input that the EPA considered while developing the final rule

. The meeting took place in Arlington, Virginia on November 17, 2009, and included representatives from EPA, SBA, OMB, as well as small entity representatives. The outreach effort was organized and led b y representatives from EPA’s OAQPS within the Office of Air and Radiation ( OAR) , EPA’s Office of Policy , Economics, and Innovation ( OPEI ) , the Office of Information and Regulatory

Affairs ( OIRA ) within the OMB, and the Office of Advocacy ( OA ) of the SBA. D ocumentation of this meeting, which includes a summary of the advice and recommendati ons received from the SERs identified for the purposes of this process can be obtained in the docket for this rulemaking. ( See Docket No. EPA

- HQ

- OAR

- 2009

- 0517

- 19130). Comment: Comments received from small entity representatives are generally reflected by comments submitted during the public comment period and are addressed elsewhere in the RTC

. One of the more unique comments not generall y provided in written comments during the public comment period was provided by an agriculture representative (Farm Bureau). This commenter stated that s ection 424 of the Interior and Environment Appropriations Act states that, notwithstanding an y other provision of law, none of the funds made available in this Act or any other Act may

be used to promulgate or impleme nt any regulation requiring the issuance of permits under title V of the CAA for CO 2 , nitrous oxide (N 2 O ) , water vapor or methane (CH 4 ) emissions resulting from biological processes associated with livestock production. The Farm Bureau representative was concerned that the Li ght Duty Vehicle Rule ( LDVR) will trigger title V permits for livestock operations involving biological processes. Response: The appropri ations provision states that “ [n]otwithstanding an y other provision of law, none of the funds made available in this Act or any other Act may

be used to promulgate or implement any

regulation requiring the issuance of permits un der title V of the CAA (42 United States Code [ U.S.C. ] 7661 et seq.) for carbon dioxide, nitrous oxide, water vapor, o r methane emissions resulting from biological processes associated with livestock production.” Section 424 of the FY 2010 Interior

- Environment Appropriations Act. This language does not prohibit EPA from spending funds on the Tailoring Rule because the T ailoring Rule does not require the issuance of permit s under title V for certain emissions from biological processes associated with livestock production. Rather, the statute would require title V permits (to the extent title V does apply to these emissio ns) in the absence of the Tailoring Rule. In other words, if we do not finalize this Tailoring Rule then, pursuant to the terms of the CAA , sources of GHG emissions in excess of the 100 tpy

would be subject to title V permitting as of January 2, 2010. T he Tailoring Rule relieves certain sources of the obligation to apply for title V permits, and thus its5

promulgation is not prohibited by section 424 of the Interior and Environment Appropriations Act for Fiscal Year 2010.
Moreove r, the LDVR also was not prohibited by this provision because the regulations in the LDVR do not require issuance of permits under title V for emissions from biological processes associated with livestock. The regulatory requirements in the LDVR are directed at automobile manuf

acturers and the vehicles they produce, and would not address or require issuance of an y permits under t itle V. EPA does not interpret the provision to prohibit the Agency from promulgating or implementing regulations that do not establish title V permitting requirements for certain emissions from biological processes associated with livestock. For example, EPA does not interpret the provision to prohibit the Agency from promulgating or implementing a non

- title V regulation that, by operation of the CAA , could make a pollutant “subject to regulation” under the Act, potentiall y triggering title V. Such a regulation would not itself establish (or implement) an y requirements under title V. Further, a mobile source regulation such as the Light Dut y Vehic le Rule, would not establish any requirements with regard to GHG emissions from livestock. This interpretation is consistent with the legislative history of this provision, which states that the provision "[p]rohibits EPA from regulating certain livestock emissions under the Clean Air Act," S. Rep. No. 111

- 38 at 95 (2 009), and described this “ a provision ... regarding greenhouse gas reporting requirements associated with livestock production.” House Rep. No. 111

- 316 (2009). 2.3 Meeting with Semiconductor Industry Association The EPA met with the Semiconductor Industry Association (SIA) on February 3, 2010 to listen to comments they

had on the proposed Tailoring Rule. Documentation for this meeting can be found in the docket for this rulemaking. ( See D ocket No. EPA

- HQ

- OAR

- 2009

- 0517) Comments received from SIA at the meeting parallel their written comments on the proposal and are addressed in this RTC. 2.4 Form Letters and General Comments Received on GHGs Regulation and the Proposed Tailoring Rule Co mment: Hundreds of thousands (over 400,000) of form letters were received during the public comment period for the proposed Tailoring Rule. In addition, thousands of commenters submitted e

- mails providing statements of general support or opposition to th e proposed Tailoring Rule and regulation of GHGs. Examples of the comments submitted are presented in this subsection of the RTC, and examples of many of the “base” form letters cited in these examples (in italics) are included in Appendix B of this docum ent. Note that many of the form letters are similar in content and often even adopt phrases used in another letter. Where substantive additional comment was provided with a form letter, we have addressed the comment or parallel comment in the appropriate Chapter of this document.6

Many commenters support regulation of GHGs because:
 Regulation of GHGs is the right thing to do ( Chaplains Religious Enrichment Development Operation [ CREDO ] Action, over 34,500 commenters). (8909)
 They support EPA’s goal of controlling GHG emissions (over 7,200 commenters).
 They support the overall plan to limit global warming pollution emitted by coal plants and other big polluters through the CAA ( Form Letter 9, over 8,300 commenters).
 They support EPA’s recognition that GHGs must be regulated to protect human health and the environment (

Form Letter 11 , over 80 commenters).
 They generall y support EPA in reducing GHG emissions and using regulations to control emissions (

Form Letter 17 , over 200 commenters). Other commenters oppose regulation of GHGs because:
 They generall y oppose EPA’s regulation of GHGs (over 150 commenters).
 They assert that regulating GHGs under the CAA will cripple the country ’s econom y and that EPA’s rationale for the proposed Tailoring Rule, by cla iming “absurd results” and “administrative necessity,” is flawed given that the EPA is applying the law that produces the “absurd results” (

Form Letter 5, over 18,500 commenters). The commenters urge EPA to defer to Congress to decide how to regulate GHGs

. In regards to the Tailoring Rule, m an y commenters support the proposed r ule. Some of these commenters (over 280 commenters) use a form letter to expr ess their support (only provide comments that are several lines in length), while o ther commenters use form letters to express their support . Form letter supporters believe that:
 The biggest polluters should be regulated and prevented from passing on the costs associated with their pollution to the public. They add that the public that is most exposed an d vulnerable to these big polluters are the undeserved and people in poverty ( Form Letter 6, over 30 commenters).
 The proposed rule and EPA’s efforts to address GHG emissions will ensure substantial capital investments in the largest sources of GHGs are in s ync with efforts to reduce GHGs, avoiding costly

retrofits in the future (

Form Letter 7 , over 600 commenters) The commenters also support the use of the 25,000 ton threshold to shield small sources.
 EPA should regulate GHGs from “mega

- polluters” ( Fo rm Letter 8 , a couple of commenters).
 The rule targets the worst offenders and that it will create the largest emissions reductions while helping the economy grow ( Form Letter 10 , over 10 commenters).
 EPA should “finalize a strong rule to require big smo kestack industries to meet modern pollution standards for carbon emissions” ( Form Letter 12 , over 550 commenters). They also generally

support EPA’s goal of controlling GHG emissions.
 EPA should “finalize a strong rule to require big smokestack industries to meet modern pollution standards for global warming pollution” (Form Letter 13, o ver 49,900 commenters). The letter also urges EPA to investigate various renewable resources such as wind and solar power to further reduce global warming pollution and tr ansition to clean energy

sources.
 EPA should finalize a strong rule to hold industry sources accountable (

Form Letter 14, over 9,700 commenters). The letter asserts that EPA's proposed new rule would use the7

CAA to curb pollution from these large source s, while at the same time assuring small sources (like millions of mom and pop businesses) that they will not be regulated.
 EPA should require America’s largest industrial fa cilities to obtain CAA Permits ( Form Letter 15 , over 5,900 commenters).
 This pro posal is an essential step that will help reduce GHG pollution and address climate change (Form Letter 16, over 180 commenters).
 The proposed rule is a major step to holding “mega

- polluters” accountable for GHG emissions, and this strategy will ensure th at GHG emissions are cut quickl y while maintaining economic growth ( Form Letter 18 , over 38,600 commenters).
 A strong rule b y the EPA requiring heav y polluters to meet modern emission standards when expanding or building new facilities is a critical firs t step in cutting America’s emissions (

Form Letter 19 , over 5,400 commenters). The letter also requests that a reporting s ys tem be created to provide businesses the necessary data to compare and control emissions as well as inform federal strategies on national emissions reduction.
 EPA’s rule will limit GHGs from the largest sources of U.S. global warming pollution sources (Form Letter 20 , over 39,500 commenters).
 Regulation of “big polluters” and the reduction of GHG emissions from coal plants under th e CAA is the right thing to do. ( Form Letters 21 through 24, over 190,000 commenters).
 EPA should require mitigating global warming pollution by transitioning to clean energy sources that do not har

m the environment, never run out, and create new, local j obs ( Form Letter 25 , over 170 commenters) . The postcard asserts that mitigation of global warming pollution will only succeed if we require coal

- fired power plants

- America' s largest single source of global warming pollution

- and other big polluters to redu ce their GHG emissions

. Nevertheless, man y commenters oppose the proposed rule because they believe that:
 The rule is based upon “faulty and discredited science” and would raise energy prices ( Form Letter 1 , over 800 commenters).
 The CAA is not designe d to regulate GHGs and that regulating GHGs under the CAA will lead to economic hardship and few environmental benefits ( Form Letter 2, over 20 commenters). Moreover, the letter cites A Regulatory Burden: The Compliance Dimension of Regulating CO2 as a Po llutant” which provides a breakdown of the millions of businesses that have the potential to emit ( PTE ) 250 tpy or more.
 The proposed rule will have unintended adverse consequences ( Form Letter 3, over 500 commenters). Consequences cited b y the letter in clude permitting delay s, and the prevention of energy

sector projects from moving forward. The letter also advocates that a market

- based mechanism be employ ed for addressing GHGs, although no specifics are provided.
 Congress (not EPA) should address the climate change issue. ( Form Letter 4 , over 800 commenters). The letter asserts that the proposed rule opens the door for regulation of GHGs emitted from many small businesses and even homes. The letter also states that the proposed rule will cost jobs and undermine America’s ability to remain globall y competitive.8

Other commenters provide general comments, ranging from topics on health care to wh y coal is a good or bad energy source, and on various ty pes of renewable resources that should be used fo r energy

independence (over 580 commenters). Response: We agree with those commenters that support EPA’s efforts to regulate GHGs. As we state in the final r

ule titled: “ Endangerment and Cause or Contribute Findings for Greenhouse Gases Under S ectio n 202(a) of the Clean Air Act” (74 FR 66496), the Agency has found that GHG s in the atmosphere may reasonably be anticipated to endange r both public health and public welfare. The Agency reached this determination after considering an extensive amount of data on both observed and projected effects of GHGs in the atmosphere, their effect on climate, and the public health and welfare risks and impacts associated with such climate change not only in the U.S., but also in the world. See 74 FR 66496 for more i nformation. Furthermore, even if some of the data that the Agency considered to reach this conclusion were erroneous, as some of these commenters claim, the overall evidence that the EPA looked at provides compelling support that GHG s endanger the public health and public welfare of both current and future generations. In addition, the risk and the severity of adverse impacts on public health and welfare are expected to increase over time. However, regardless of whether the CAA is the preferred mechanis m for GHG regulation and as we state in the final action titled: “Reconsideration of Interpretation of Regulations That Determine Pollutants Covered b y Clean Air Act Permitting Programs (75 FR 17004) , the U.S. Supreme Court determined that GHGs fit within the definition of air pollutant in the Act and directed EPA to take actions in accordance with that determination. EPA is responding to the Court’s decision by

following the statutory

requirements of the CAA. Accordingl y, EPA finalized its endangerment and cause and contribute findings for GHGs under section 202(a) of the CAA and finalized corresponding GHG controls for light duty vehicles. Inaddition, the final vehicle rule will trigger PSD requirements for GHGs because EPA has decided to interpret the phrase “subject to regulation” found within the definition of the term “regulated NSR pollutant” to include each pollutant subject to either a provision in the CAA or regulation adopted by EPA under the CAA that requires actual control of emission of a po llutant when the regulatory requirement to control emissions of that pollutant “ takes effect

. ” Thus, EPA is taking appropriate action in the “Reconsideration of Interpretation of Regulations that Determine Pollutants covered b y Clean Air Act Permitting Pr ograms” (s ee 75 FR 17004) and this rule to ensure a common sense and efficient approach to GHG regulation. For these reasons, this rule is not the appropriate forum for addressing whether the CAA is suited to GHG regulation or opining on potential Congres sional action with regard to GHG regulation. We also agree with those commenters that support the Tailoring Rule because without it, and as we state in the preamble of this rule, PSD and title V requirements would apply , as of January 2, 2011, at the 100 or 250 tpy levels provided under the CAA, greatly increasing the number of required permits, overwhelming the resources of permitting authorities, and severel y impairing the functioning of the programs. EPA is relieving these resource burdens by phasing

in the applicability

of these programs to GHG sources.9

The Tailoring Rule establishes two initial steps of the phase

- in. Step 1 begins on January 2, 2011, and covers only

sources and modifications that would otherwise undergo PSD or title V permitting based on emissions of non

- GHG pollutants. Step 2 begins on July 1, 2011, and covers large sources of GHG emissions that emit or have the potential to emit 100,000 tpy CO 2 e or more, and modifications at those sources that increase net GHG emissions by 75,0 00 tpy

CO 2 e or more, provided those sources or modifications also have GHG mass emissions that exceed the relevant mass

- based applicability thresholds. This rule also requires EPA to promulgate b y July 1, 2012, a step 3 rule that will consider phasing

- in additional sources. EPA excludes from PSD and title V permitting for GHG emissions, until at least April 30, 2016, sources that are not alread y subject and that emit less than 50,000 tpy of CO 2 e, as well as modifications that do not increase net GHG emiss ions by 50,000 tpy

CO 2 e, or more. EPA will use this time to streamline the programs for those sources and must complete a study by April 30, 2015, to assess improvements in administrability of the programs for such sources, and must complete a rule by April 30, 2016, addressing additional such sources based on this study

. Thus, we disagree with the commenters that believe that the proposed rule will have unintended adverse consequences including permitting delays and the prevention of energy sector projec ts from moving forward since we are phasing

- in th e applicability of the PSD and t itle V programs to GHG sources as described here and in more detail in the preamble of this rule. EPA’s legal basis for this Tailoring Rule is its interpretation of the PSD a nd title V applicability

provisions under the familiar Chevron two

- step framework for interpreting administrative statutes, taking account of the legal doctrines authorizing agencies to apply statutory requirements in way

that avoids absurd results or admi nistrative impossibility and authorizing agencies to implement statutory requirements a step at a time . Details on wh y we disagree wi th those commenters that oppose the use of the “administrative results” and “administrative necessity” doctrine are includ ed in the fin al preamble of this rule under s ection V.B. 2.5 General Comments on the Tailoring Rule and Comments on Other GHG Regulations 2.5.1 Regulation of GHGs Under the CAA and the Proposed Tailoring Rule Comment: Several commenters (0480, 0600, 4631, 5184, 8071) explicitly state that they

generall y support EPA’s mission in regards to climate change. However, one of these commenters also states that c limate change is a global problem and requires a global solution. It is imperative that the U.S . re - establish itself as a world leader in solving the complex challenges posed by climate change. Strong U.S. emission reduction commitments will enable a wide range of developing economies to take more ambitious domestic actions and create new markets t o grow the global green econom y from which we will all benefit (0600). Various commenters (0480, 0600, 3916, 3918, 3998, 4154, 4238, 4239, 4518, 4694, 4742, 4746, 4778, 4860, 4863, 4903, 4988, 5039, 5052, 5057, 5081, 5305, 5314, 5528, 5745, 6665, 7935, 8025, 8607, 8803, 8685, 9613), including four commenters (5122, 5306, 5311, 5448) representing 12 environmental advocacy groups, generall y support the regulation of GHGs10

and the use of the CAA to regulate GHGs. One commenter adds that in the absence of co mprehensive climate change legislation, EPA must act under its authority in the CAA (3918), while another commenter opines that the CAA is necessary and appropriate as a critical bridge towards comprehensive federal legislation, and can be a valuable compo nent of comprehensive federal climate policy

in the future (7935). Other commenters (0033, 0041, 0410, 3741, 5140, 5258, 5278, 5136, 5452, 5603, 5606, 5784, 6712, 7133, 7295, 7961, 8014, 17451) explicitly state that they

generally oppose EPA regulating CO 2 /GHG emissions while several other comments (0040, 0331, 2504, 2797, 2832, 3277, 3278, 3512, 3513, 3607, 3720, 3741, 3858, 3906, 3915, 3917, 4020, 4095, 4106, 4108, 4113, 4118,4119, 4120, 4123, 4208, 4209, 4228, 4298, 4302, 4504, 4512, 4514, 4515, 4519, 4 521, 4522, 4525, 4544, 4554, 4567, 4630, 4667, 4691, 4745, 4749, 4794, 4801, 4851, 4859, 4862, 4863, 4866, 4871, 4903, 4904, 4949, 4990, 4991, 5004, 5038, 5040, 5045, 5052, 5056, 5058, 5062, 5063, 5064, 5073, 5074, 5079, 5082, 5083, 5085, 5104, 5109, 5111, 5112, 5113, 5120, 5123, 5124, 5125, 5129, 5130, 5135, 5136, 5137, 5140, 5142, 5144, 5145, 5179, 5182, 5183, 5198, 5199, 5205, 5214, 5235, 5236, 5245, 5257, 5274, 5275, 5276, 5278, 5279, 5280, 5300, 5301, 5305, 5307, 5310, 5312, 5313, 5315, 5316, 5317, 531 8, 5328, 5335, 5336, 5340, 5342, 5344, 5347, 5367, 5391, 5392, 5417, 5425, 5444, 5449, 5525, 5603, 5605, 5607, 5676, 5706, 5708, 5712, 5714, 5715, 5725, 5740, 5743, 5744, 5768, 5769, 5770, 5771, 5773, 5784, 5787, 5789, 5800, 5801, 5803, 5808, 5809, 5844, 5 884, 5885, 5886, 5922, 5939, 6201, 6202, 6270, 6460, 6491, 6609, 6880, 7026, 7125, 7126, 7130, 7131, 7134, 7192, 7193, 7203, 7204, 7212, 7217, 7294, 7961, 7986, 8014, 8015, 8071, 8273, 8283, 8300, 8303, 8459, 8460, 8513, 8514, 8521, 8533, 8583, 8584, 8585, 8691, 9269, 10432, 14697, 14710, 16411, 17451, 18025, 19129) oppose the use of the CAA to regulate GHGs. The reasons for their opposition include:
 The CAA is not the tool or is ill

- suited for addressing GHG emissions (0040, 2797, 2832, 3512, 3917, 4020 , 4118, 4119, 4120, 4123, 4208, 4209, 4228, 4243, 4302, 4514, 4521, 4525, 4630, 4667, 4801, 4851, 4862, 4863, 4866, 4903, 4990, 5040, 5056, 5062, 5064, 5073, 5074, 5082, 5085, 5130, 5136, 5140, 5142, 5144, 5199, 5214, 5236, 5275, 5278, 5280, 5300, 5301, 53 05, 5307, 5312, 5313, 5315, 5316, 5317, 5318, 5328, 5335, 5336, 5340, 5347, 5367, 5444, 5740, 5769, 5770, 5773, 5784, 5808, 6202, 6270, 6460, 6609, 7126, 7193, 8300, 8513, 8691, 10432, 14697, 17451, 18025, 19129), and have problems with the legal/congressi onal intent and scientific basis for using the CAA to regulated GHGs (2797, 3512, 3513, 3858, 4095, 4106, 4243, 4298, 4515, 4554, 4691, 4741, 4745, 4851, 4871/5063/5605, 4949, 5004, 5058, 5074, 5082, 5111, 5124, 5137, 5183, 5199, 5275, 5318, 5391, 5706, 57 44, 5787, 5844, 5922, 7193, 7961, 8014, 8459, 8460, 10432, 14697, 17451, 18025, 19129).

 Attempting to implement a comprehensive federal climate policy by means of the decades

- old CAA achieves none of EPA’s objectives. The CAA was not designed to address global climate issues. Even though EPA attempts to avoid “absurd results” b y proposing the Tailoring Rule, all the Tailoring Rule does is highlight the legal and practical problems of attempting to regulate stationary source GHG emissions under the CAA. (4862, 8513)

 Forcing GHG regulation under the CAA is inappropriate. For example, by regulating GHGs through PSD requirements triggered b y finalizing the motor vehicle rule, EPA will11

in effect preclude permitting authorities and regulated entities alike f rom needed time to adequatel y anal yz e emissions and available controls and otherwise prepare for source

specific regulation. (5315)
 The differences of GHGs relative to NAAQS pollutants are so substantial that EPA, working closel y with Congress, should b e evaluating more appropriate solutions to regulating GHG rather than force fitting them into existing CAA programs not designed to regulate GHGs (3917, 4209, 4243, 4302, 4863, 4866, 5040, 5064, 5074, 5145, 5199, 5214, 5275, 5280, 5305, 5307, 5335, 5336, 5 525, 5886, 8691). They believe or state that: o EPA has spent decades developing health

- based NAAQS and no such standard exists for CO 2 e. (5305) o The CAA is clearly

not designed to address pollutants that are distributed on a global scale and remain in th e atmosphere (4243, 8691). The CAA

– designed for regulating pollutants from specific sources and measuring impacts on specific areas

– mandates EPA to designate areas as either attainment or nonattainment (4243). Due to the global nature of GHGs and the ir associated atmospheric lifetime properties, EPA would likely

have to assess air quality on a national scale, and thus designate the entire country

as either attainment or nonattainment (4243). o The impacts of conventionally

- regulated pollutants under the CAA (e.g., criteria pollutants) are more local and regional as opposed to well

- mixed and dispersed GHG. (5040, 5145, 5199, 5275, 5280, 5886); o CO 2 creates different effects on human health (which has secondary non - direct effects) than conventional pollut ants regulated under the CAA (e.g., hazardous air pollutant [ HAP ] and criteria pollutants which have primary direct and secondary

non direct effects), and therefore, the EPA is attempting to regulate the secondary effects of a pollutant (CO 2 ) rather than the pollutant itself. (5214) o The CAA is in large part a statutory structure for regulating localized air emissions based upon empirical health and environmental based standards, and therefore not designed for the regulation of global GHGs

- much of which originate outside the U.S. and for which there are no empirical standards. (4209, 5525) o The fate of criteria pollutants in the atmosphere are well understood while current global climate models are ty pically long term, macroscopic overviews. (5305) o Control technologies for criteria pollutants have an established track record, whereas control and measurement of GHG are more tenuous. (5305) o Federal regulatory

thresholds have been developed around criteria pollutants which are more ty

pically emitted at the p arts per million concentration level, as opposed to GHG which are t ypically emitted at the percent levels. CO 2 , for example, is emitted at levels that are completely different from the currently regulated pollutants (4302, 5214) and the health effects l evels are also completely different (4302).
 The CAA fails to encourage innovation to reduce emissions beyond its scope through such critical projects as emissions mitigation programs in agriculture, forestry , greenscaping, and beyond. (8691). Opposing commenters (3278, 3512, 3513, 4095, 4020, 4106, 4118, 4504, 4667, 5275, 5317, 5335, 5715, 5743, 5787, 6457, 8691) also provide suggestions, including:
 Prior to developing an y GHG air permitting regulation that is intended to address climate change concern s; an overall air quality assessment needs to be completed by EPA. This12

assessment must include: 1) An overall emissions inventory which includes all GHG emissions from all source categories (mobile, off

- road mobile, area, stationary sources); 2) A climat e change assessment to determine the relative impact of each source category (climate change models could be used to conduct this assessment) and; 3) A GHG reduction strategy

focusing on the largest emitting sources. Specific regulations or permit require ments should not be developed until this assessment is completed. (5787)
 EPA has available to it several means of avoiding the need for an y tailoring, all of which are consistent with the CAA. (5715) o EPA should have declined to find that GHG emissions endanger public health and welfare. The Supreme Court has left EPA with the option of declining to make an endangerment finding on the basis of such prudential considerations as the CAA unsuitability

for regulating GHGs, itself established by the very pr oposal under consideration. o Under the clear terms of the CAA, EPA can determine that GHGs do not contribute to climate change or EPA can provide some reasonable explanation as to why it cannot or will not exercise its discretion to determine whether they do. o A reviewing court surel y would accept as a reasonable explanation "economic and bureaucratic collapse resulting from application of CAA programs to control a vanishingl y small fraction of total emissions of a 'pollutant' that is a natural, trace con stituent of the global atmosphere with no known or knowable 'safe' or 'unsafe levels,' the presence in the atmosphere of which possibly leads to variations in temperature that yield costs and benefits far beyond human capacity to meaningfull y quantify ." And so Massachusetts leaves EPA to the best option of all: Decline further action until Congress actuall y enacts a law intended to control GHGs without all of the unintended consequences of trying to do so under the CAA. o If EPA were correct that the adopti on of mobile source standards ineluctably leads to regulation of GHG emissions from stationary sources, and to the untenable costs and administrative burdens that it then seeks to avoid with the Tailoring Rule, it should indefinitely

postpone those burdens by declining to adopt the vehicle emissions rules. EPA's proposed GHG emission standards for motor vehicles are onl y 4 percent more stringent in effect than the fuel efficiency standards proposed b y the Department of Transportat i on ( DOT )

. o Even if EPA wer e to press its finding that mobile source GHG emissions endanger public health and welfare, and to adopt tailpipe standards and fuel efficiency standards accordingl y, it is not at all inevitable that GHG's then become a "regulated pollutant" for purposes o f CAA permitting programs intended for stationary sources. In fact, quite the contrary, Congress did not mandate the nonsensical result that a decision to regulate mobile source emissions of a pollutant should somehow change the requirements for issuing p ermits to stationary sources. o The CAA is the wrong tool to use to reduce GHG emissions. I f nonetheless EPA decides to proceed with the PSD Tailoring Rule, neither the statute nor the Supreme Court ruling compels the approach proposed b y EPA. EPA must ex ercise more flexibility than proposed and take into account the nature of GHG emissions (compared to conventional pollutants); the relative contribution from each industry to the total global emissions that EPA claims is causing the endangerment, and the f acts and circumstances applicable to each industry . (5335)13

 An effective climate change program will be market

- based, comprehensive, and would preempt state law

– and it should come from Congress. The commenter recommends that any econom y - wide climate c hange program should have flexible approaches to establish a price signal for carbon. The commenter suggests such approaches may vary by economic sector and could include, depending on the sector, market

- based incentives; cap and trade; tax reform; perfor mance standards; and incentives for technology research, development, and deplo yment. (3512)
 A market

- based program to regulate GHG emissions would work (4120, 4504, 4667, 8691). Cap

- and

- trade has the added benefit of harmonizing with similar programs a lread y in place and under consideration globall y (5743, 8691). Another commenter added that market

- based approaches achieved through new legislation should properl y consider energy , emissions, allowances and costs, including legislation that coordinates e nergy efficiencies and emission reductions, and that provides compliance options and cost management through provisions such as cap

- and

- trade, prevention of GHG leakage to overseas from unequal impacts on energy intensive and trade exposed industry in the U.S., and provisions for cost

- effective GHG offsets (4667). Commenter 4020 prefers a legislative solution to this issue, and favors a market

- based cap and trade program tailored to address issues of emission reductions and allocations, credits for earl y p erformance and alternative measures to reduce GHG’s, such as through expanded recycling.
 Emissions offsets provide critical cost

- containment and price stability , whether under federal cap

- and

- trade legislation or existing CAA authority , by providing flex ibility

to regulated industries to find the lowest

- cost emissions reductions across a range of options. GHG reduction opportunities are diverse and spread across the entire econom y, and offset trading is the best means to tap these opportunities and creat e real change b y overcoming market barriers, serving investment needs, and correcting misaligned incentives. Numerous studies have concluded that use of market

- based offset approaches can reduce air pollution compliance costs in the range of 70

- 90 percent . In addition to providing cost

- containment and price moderation, by energizing innovation and market forces, offset projects provide an essential bridge to a transformative low

- carbon econom y. Offset projects are already providing jobs and opportunity f or the U.S. econom y through a robust voluntary market. (6457)
 Future legislation should not impose a carbon tax. The commenter states that federal regulations that would result in federal or state program fees or taxes on the livestock industry will impo se a significant added cost that almost always cannot be absorbed or passed on to consumers. (5743) Several commenters (3512, 3917, 3954, 4106, 4554, 4667, 4691, 4862, 4866, 4990, 5052, 5056, 5062, 5085, 5086, 5123, 5124, 5140, 5182, 5245, 5257, 5258, 5274, 5275, 5278, 5279, 5301, 5307, 5315, 5318, 5328, 5336, 5347, 5367, 5451, 5607, 5744, 5769, 5922, 6491, 7134, 7203, 7204, 7212, 7217, 8014, 8015, 8071, 8300, 8401, 8405, 8513, 8585, 8691, 10432, 14710, 16411) also opine that GHGs regulations should be developed b y Congress or established under a single national program. Some of these commenters made the following points:
 New regulations should be determined b y Congress

- not by the EPA (3512, 4667, 5086, 5140, 5182, 5245, 5258, 5275, 5278, 5279, 5336, 5 451, 5607, 5769, 5922, 6491, 7134, 7212, 7217, 8014, 8015, 8071, 8585).14

 The cap

- and

- trade program that Congress is considering to limit GHG emissions may have duplicative, contradictory , or overlapping requirements with this rule. (5336)
 GHG regulati on is beyond the authority of just the EPA (4554, 5124, 5182, 5318, 5607, 6491, 7134, 7212, 8071).
 EPA’s recent GHG

- related rulemakings are not compelled under the CAA, and the EPA should exercise its discretion under the statute in deference to Congress’ primary role in establishing this new and sweeping policy framework. (5086)
 The best way

to arrive at the right climate change solution is to develop a single national program, scientifically

based and purposefull y designed to deal with the issue of clim ate change, and addressing as well the interrelated issues of energy policy , (8015)
 EPA should not regulate GHG emissions from stationary sources using existing CAA authority unless and until Congress has had an opportunity to consider the policy

and ec onomic implications of taking this step. (5123)
 Regulating GHGs under the CAA should be addressed through the legislative or regulatory

process. (3917, 4667, 4691, 4862, 4990, 5056, 5062, 5085, 5140, 5274, 5278, 5328, 5367, 8513)
 EPA has voluntarily

el ected to establish a national GHG emission limit as part of the LDVR before the CAA was read y to regulate GHG emissions effectively and before Congress has had an opportunity to pass comprehensive climate change legislation. (5245)
 New legislation (5052 ) and international agreements are needed to address the GHG emissions not only

in the U.S. but worldwide (4106, 4866, 5257, 5307, 5315, 5336, 8691). Climate change is a global issue best addressed on a worldwide basis.
 EPA should develop a single natio nal program to deal with the issue of climate change, and address the interrelated issues of energy policy . The commenter notes it is essential that climate change regulatory policy promote the health and welfare of Americans by not causing severe adverse economic impacts domestically and placing U.S. industry at a severe international competitive disadvantage. (16411)
 Congress continues to debate market approaches such as a cap

- and

- trade s ystem for reducing GHG emissions, a command and control regulato ry scheme under the CAA will only complicate the regulation of GHGs

– resulting in a maze of partiall y developed regulatory

permitting regulations that will be in direct conflict with Congressional legislative language and intent. Because GHG reduction te chnologies are in the research and development ( R& D ) stage, the commenter believes that unproven technologies will complicate and delay

BACT determinations, whereas a market

- based legislative solution would allow reductions at the lowest cost to society. The commenter is also concerned about the impact of the PSD program on the ability to use offsets, such as landfill and coal mine waste

- to

- energy projects, under a future market

- based program

– without a clear signal of a future for these offset projects, incentives for reductions from these projects would wither. (5301) Various commenters (0600, 3916, 3918, 3998, 4154, 4238, 4239, 4518, 4694, 4746, 4778, 4860, 4863, 4903, 5039, 5052, 5057, 5081, 5305, 5314, 5528, 5740, 5745, 5808, 7935, 8025, 8607, 8803 , 9613), including four commenters (5122, 5306, 5311, 5448) representing 12 environmental advocacy

groups, generally

support the use of the CAA to regulate GHGs and the proposed Tailoring Rule. These commenters often made the following points:15

 The rule is a significant step forward in the national effort to develop a clear regulatory structure for addressing GHG emissions in the U.S. (4860, 3918).
 Adoption of the rule will allow their state to focus on the largest sources of GHGs (3916).
 With the impl ementation of the rule, impacts on some of the sensitive lands of Indian Country may be diminished. (4778, 8803)
 The applicability

thresholds governing the traditional criteria pollutants are not appropriate for facilities that emit CO 2 and other GHGs and must be increased in order to provide a workable and reasonable regulatory structure

- and to avoid the “absurd results” that EPA discusses ( 3998) . In addition, various commenters that do not necessarily agree with EPA’s legal interpretation of when PS D and title V permitting requirements would be triggered, do agree that a "tailoring" of the thresholds for each of these programs must be performed to avoid the unintended consequence of subjecting a large number of small sources to the regimens of PSD an d title V (4746, 4863, 4903, 5052, 5740, 5808, and 5305).
 The rule: o Proposes a regulatory method that has been proven as an effective means of achieving pollution reduction. EPA analy sis has found the CAA has achieved cost

- effective reductions in sulfur d ioxide ( SO 2 ), nitrogen oxides (NOx ) , and particulate matter ( PM ) with an economic benefit demonstrated to be 42 times greater than the costs of compliance. Therefore, applying BACT standards under the CAA to GHG emissions continues the legacy of a demonstrabl y successful program to now meet the threats of global climate change and energy independence. (0600) o Establishes an equitable framework, b y s etting a regulatory threshold that holds the largest polluters accountable while protecting the nation’s scho ols, farms, and small businesses. This arrangement would most fairly assign responsibility

to the small handful of big polluters who account for a majority of the nation’s global warming pollution. This allows the EPA to achieve the greatest impact with the fewest agency

resources in the short timeframe needed to protect the public from the risks to health and welfare posed b y climate change. (0600) o Facilitates a sustainable energy strategy for the country ’s future. By appl yi ng NSR standards for GHG emi ssions, the EPA sends a strong signal of support for the clean energy

industry. No longer will fossil

- fuel facilities reap the unfair advantage of being financially unaccountable for the costs of their pollution. Such signals are necessary to drive inves tment in low

- carbon technologies that will spur sustainable growth and create valuable jobs. (0600) Other commenters (2504, 2797, 3278, 3512, 3858, 3278, 3607, 3720, 3741, 3915, 4020, 4118, 4120, 4123, 4298, 4512, 4519, 4521, 4554, 4768, 4866, 4871/5063 /5605, 4903, 4949, 4990, 5045, 5056, 5062, 5073, 5074, 5082, 5085, 5111, 5135, 5140, 5142, 5276, 5278, 5307, 5308, 5312, 5315, 5318, 5328, 5336, 5340, 5417, 5706, 5769, 5773, 5800, 5922, 7026, 7986, 8585) oppose the issuance of the Tailoring Rule because they believe that:
 The rule is unnecessary . The LDVR does not need to trigger PSD and title V (5312) ( See comments on the LDVR rulemaking and the “subject to regulation” reconsideration rulemaking in this section for further comments regarding applicabi lity trigger dates for GHG PSD and title V requirements).16

 The Tailoring R

ule should not be finalized under the authority of CAA section 202. (4118). EPA should delay or withdraw the rule and lay a statutory

groundwork that will enable a reasonable and or derl y transition for incorporation of GHG emissions into the existing PSD and title V programs. (3278)
 EPA should conclude that PSD and title V permitting are not meant to apply based on a source’s CO 2 or GHG emissions, and cite Congressional, legislati ve history , and legal support for their position. (3512, 3720, 4298, 5082, 5111, 5318, 5800, 5922)
 EPA must realize that it is unreasonable and unnecessary to interpret the CAA to impose PSD requirements suddenly upon issuance of a wholly separate regul ation such as the LDVR. (4871/5063/5605)
 The proposal will precipitate costly legal challenges and more time is needed to study the environmental and economic impacts that would be associated with regulating GHGs. (8585)
 The rule is not an efficient use of taxpay er money and represents duplicity of regulation for no apparent reason. (4554) Response: Most of the above comments are not relevant to the proposed rule at issue in this rulemaking. This rulemaking is not about whether and/or when EPA should determine, under section 202(a), th at emissions of GHGs from new motor vehicles cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare, and if so when EPA should or should not establish emissions stan dards under sec tion 202(a) of the CAA

. Rather, this proposed rule was about developing a reasonable implementation plan for the PSD and title V permitting programs in the event they are triggered for GHGs. Thus, for example, comments questioning the timi ng of a final section 202(a) endangerment finding, opining about the timing of regulations under section 202(a), discussing generally the appropriateness of using the CAA to address GHGs, arguing that GHGs require a global approach, noting a preference for legislation generall y and/or a preference for a particular regulatory or legislative approach, and otherwise arguing against CAA act ions to address GHGs are outside the scope of the specific questions and issues raised and addressed in the proposed Tailoring Rule. Therefore, we are not responding to them in this RTC. We note that many of these comments have been raised and addressed in other GHG rulemakings. See, e.g. , Final Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Secti on 202(a) of the Clean Air Act, 74 FR 66496, 66500 (Dec. 15, 2009) (responding to comments regarding timing of endangerment finding). As noted above, comments that are relevant to the specific issue of how to implement the title V and PSD programs for GHG s are addressed in Chapter 8 of this RTC (Implementation I ssues)

. Importantly , because EPA has finalized the endangerment finding and the LDV rule, we must move forward with the Tailoring Rule. Thus, we also agree with those commenters that support the Tailoring Rule because without it, and as we state in the preamble of this rule, PSD and title V requirements would apply , as of January 2, 2011, at the 100 or 250 tpy levels provided under the CAA, greatl y increasing the number of required permits, ove rwhelming the resources of permitting authorities, and severely impairing the functioning of the programs. EPA is relieving these resource burdens b y phasing

- in the applicability of these programs to GHG17

sources as we explained above and as explained in m ore detail in the preamble of this final action. EPA’s legal basis for this Tailoring Rule is its interpretation of the PSD and title V applicability

provisions under the familiar Chevron two

- step framework for interpreting administrative statutes, taki ng account of the legal doctrines authorizing agencies to apply statutory requirements in way

that avoids absurd results or administrative impossibility and authorizing agencies to implement statutory requirements a step at a time. Details on wh y we disagree with those commenters that oppose the use of the “absurd results” and “administrative necessit y” doctrine as well as our responses to the comments received on how this Tailoring Rule fits into the CAA (e.g., details on our interpretation of the concept that a NAAQS should be established before GHGs can be regulated under the PSD program) are included under Section V.B. under the final preamble of this rule. We note that for the reasons presented in those sections we disagree that we are required, or al lowed, to undertake the rulemakings and other regulatory

actions ( e.g ., inventory

development) that commenters suggest are needed prior to subjecting a pollutant to PSD review. See also 75 FR 17400 (April 2, 2010). 2.5 .2 Endangerment Finding Under Secti on 202 of the CAA Comment: Two commenters representing eight environmental groups, support the endangerment finding under section 202 of the CAA. (5306, 5311) Other commenters (3720, 3954, 4095, 4118, 4542, 4630, 4631, 4693, 4741, 4851, 4867, 4871, 5 005, 5045, 5063, 5082, 5110, 5120, 5129, 5137, 5140, 5142, 5184, 5235, 5278, 5309, 5310, 5317, 5328, 5605, 5607. 5712, 5715, 5718, 5800, 6712, 7204, 8015, 8459, 10432, 14697) express or imply

that they oppose the endangerment finding under section 202 of the CAA. Other commenters argue that EPA is under no obligation to issue these rules at the prese nt time, and that the Supreme Court noted in Massachusetts v. EPA that the EPA has administrative discretion regarding the timing and form of issuing rules (0523 , 3720, 5110, 5120, 5235, 5800, 8015, 16411). Several other commenters (4542, 4851, 5142, 5235, 5712, 8459) state that the science does not support an endangerment finding, while other commenters (e.g., 15054) request clarification/evidence and qu antification of the effects of global warming that they believe EPA had not sufficientl y provided to support an endangerment finding because:
 Data from the Intergovernmental Panel on Climate Change ( IPCC ) has been found to be suspect. The IPCC relied on i nformation from the Climate Research Institute ( CRU ) at the University

of East Anglia in England. More than 61 megaby tes of CRU e

- mails and documents that were made public has cast serious doubt of the reliability of this information and its ability to me et the requirements of the IQA. The publicly

- available e

mails suggest that CRU scientists have been suppressing, possibly destroying and misstating data. Public review needs to be held to determine if raw data was deleted, doctored or otherwise withheld that would have changed an y of the GWPs prior to18

relying on the values referenced to the IP CC SAR. There must be an opportunity to determine if a correction is needed and, if so, then time needed to propose the correction. The commenter asserts that EPA ’s proposal to define, by reference, the GWPs of EPA's Inventory of U.S. Greenhouse Gas Emissions and Sinks also violates the CAA 307(d) rulemaking requirements, as well as regulations of the Director of the Federal Register

. (8459)
 EPA's finding that high concentrations of GHGs are "very likel y" the cause of increased global temperatures ignores strong evidence that global temperatures have stopped rising

. As recently

as November 20, 2009 Der Spiegel reported that climatologists are "puzzled as to why av erage global temperatures have stopped rising over the last 10 years." ( 5235 )
 The article cites a recent study completed b y Great Britain's Hadley Centre for Climate Prediction and Research questioning the IPCC's figures pertaining to an increase in glo bal climate temperatures. According to the Hadley Centre, the “world grew warmer by .07 degrees Celsius from 1999 to 2008 and not by the .2 degrees Celsius assumed by the United Nations Intergovernmental Panel on Climate Change." Furthermore, the Hadley Center attributes the .07 degree increase to natur ally occurring phenomena, El Niño and La Niñ a.  Recently

released confidential documents from the Universit y of East Anglia's Climate Research Unit, strongl y s uggest that key IPCC scientists have improperl y manipulated evidence to support the theory of anthropogenic global warming. (4542, 4851) A couple of commenters believe EPA misstates the regulatory ramifications of the Supreme Court's decision in Massachusetts vs. EPA (5082) or EPA could have determi ned that a policy

- based reason prevents EPA from making a reasoned decision on endangerment (5110) because:
 EPA could provide some reasonable explanation as to why it cannot or will not exercise its discretion to determine whether GHG emissions from new m otor vehicles or new motor vehicle engines contribute to air pollution that may reasonabl y be anticipated to endanger public health or welfare. The commenter believes that EPA can meet this standard, and respond to the remand in Massachusetts on the groun d that an endangerment finding under section 202 will directly lead to the trigger of NAAQS, NSPS, PSD and title V, which the commenter believes were never intended to cover such emissions, and triggering these provisions will have a devastating effect on the alread y fragile econom y. (5082)

 The Court did not require that EPA’ s "reasonable explanation" not to undertake the endangerment process be wholly science

- based. Instead, the commenter believes that a decision by

EPA not to undertake the process for f inding endangerment, on the basis that such a finding will trigger a regulatory cascade and cause economic chaos

- of the precise ty pe contemplated b y the Tailoring Rule itself

- constitutes a "reasonable explanation" as required b y the ruling in the cited case. (5110) The commenter cites the statement made by the Supreme Court that states: "[u]nder the clear terms of the CAA, EPA can avoid taking further action only if it determines that GHGs do not contribute to climate change19

or if it provides some re asonable explanation as to why it cannot or will not exercise its discretion to determine whether they do." Other commenters argue that:
 By moving several separate, near

- simultaneous packages to initiate and define the regulation of GHGs under authority of the CAA, EPA has obscured fundamental issues of how and when EPA should proceed to respond to the Supreme Court’s decision in Massachusetts v. EPA . (4095)
 EPA did not allow for comment on the affect the findings of endangerment and the promulgation of mobile source rules under section 202 had on the implementation of PSD or other title Irequirements on stationary sources, saying it was unrelated. Under the Tailoring Rule, EPA is proposing regulations on stationary sources without discussion or elic itation of comment on how the other requirements of title Iunder the CAA are affected b y these coordinated rulemakings. EPA must analy ze and describe how the other provisions of title Iwill be affected by its coordinated rulemakings for GHGs before fina lizing an y GHG Endangerment Finding or rulemakings under the Act. (5082) Finally , some commenters believe EPA should withdraw or revoke the Endangerment Finding and/or proposed Tailoring Rule because:
 EPA should defer to sound science, Congress, and wor ld organizations to address policy on the issue of manmade climate change. (5607, 5712)

 T he Tailoring Rule will have a devastating effect on their state’s economy

. (4871/5063/5605) Response: As noted earlier, comments regarding the section 202(a) enda ngerment and cause or contribute findings, and the Supreme Court’s decision in Massachusetts v. EPA , are outside the scope of this rulemaking. Indeed, many of these same issues were raised in the comment period on the findings or on pending petitions for reconsideration on the findings. Thus, they have either alread y been responded to in the final findings, to the extent relevant, or are pending before EPA in petitions for reconsideration and will be addressed in EPA’s response to those petitions. They

are not, however, within the scope of this rulemaking. We disagree with commenters who argue that EPA has obscured fundamental issues of how it should respond to the Supreme Court’s decision or the effect of regulating GHGs under the CAA through the promulgation of several rules addressing GHGs. EPA has been moving forward in careful, thoughtful manner to address this complicated issue. This rule, which addresses implementation issues regarding the PSD and title V programs is a key part of that overall process. We further note that withdrawing the Tailoring Rule would be counter

- productive to solving the problems that commenters argue flow from the e ndangerment finding and LDVR . The Tailoring Rule will provide relief and establish a reasonable path for ward for implementing the PSD and title V programs. See section 6.1 of this RTC

.20

2.5 .3 L ight Dut y Vehicle Rule (LDVR) Comment: Several commenters (5306, 5311) support the promulgation of the LDVR under section 202 of the CAA, at least in the near t erm. One commenter (4524), while not necessarily supporting or opposing the rule, states that EPA should take steps to allow for sufficient time for states to revise their own title V and PSD programs before GHGs become regulated pollutants triggering PS D and title V requirements b y either delaying the adoption of its portion of the LDVR or by adopting an effective date of its portion of the rule that gives a sufficient time for states to revise their own title V and PSD programs. Several other commenter s (3513, 3720, 3858, 4016, 4095, 4021, 4106, 4113, 4118, 4122, 4123, 4243, 4318, 4519, 4522, 4523, 4631, 4741, 4851, 4862, 4870, 4952, 4992, 5005, 5038, 5052, 5080, 5083, 5088, 5089, 5113, 5114, 5120, 5123, 5128, 5137, 5140, 5141, 5143, 5184, 5214, 5224, 5 245, 5278, 5310, 5316, 5317, 5327, 5328, 5342, 5345, 5346, 5390, 5451, 5601, 5712, 5713, 5714, 5715, 5741, 5768, 5773, 5800, 5886, 6141, 6414, 6459, 6880, 7217, 8015, 8071, 8273 , 8301, 8303, 8533, 8545, 8581, 16411 ) oppose the promulgation or support delaying promulgation of the LDVR under section 202 of the CAA because:
 EPA is not required b y the CAA or judicial decisions to regulate GHGs from motor vehicles under CAA section 202/statute by a particular deadline. (3513, 3720, 4095, 4519, 5005, 5120, 5245, 5310, 5316, 5317, 5328 , 5452, 5800 ) o While EPA is now required to set standards for vehicles under CAA section 202 by virtue of its December 6, 2009 final Endangerment Determination, the Supreme Court’s opinion in Massachusetts v. EPA indicated clearl y that EPA has significant discretion with regard to the time, manner, and form of its regulations (4095)

. o EPA was not forced to propose a LDVR that needs to be promulgated by March 31, 2010 to ensure that this requirement applies to 2012 MY vehicles. Becaus e of its own proposed action, EPA has created the very “absurd result” from which it now seeks relief in the proposed GHG Tailoring Rule. (5245, 5452) o EPA as a policy

decision could decide not to establish GHG emission limits under section 202(a) of the CAA at this time (4519, 5317). One commenter added that a decision not to regulate under the CAA would be consistent with the text of the CAA and the Supreme Court’s decision in Massachusetts v. EPA , 549 U.S. 497 (2007), which emphasizes that the Court “ h[e]ld only that EPA must ground its reasons for action or inaction in the statute.” Id. at 535 (emphases added) (5317). In other words, section 202(a) imposes no deadline for promulgating regulations.
 EPA’s section 202 rule should be withdrawn or re

- pro posed since it violates several statutes and EOs. (4095, 5607)
 The proposed rules: (1) are not projected b y EPA to prevent, to an y meaningful or discernible extent, risks to public health and welfare (5317); and (2) are, with respect to the small reductio ns of those risks that those rules are projected to produce, essentially duplicative of NHTSA’s proposed Corporate Average Fuel Econom y (CAFÉ) standards21

( 3720, 4016, 4095, 4106, 4113, 4118, 4123, 4870, 5184, 5245, 5245, 5317, 5328, 5451, 5713, 5800, 6880, 8071, 8303, 8533, 8581 ). Commenters who support delaying the promulgation of the LDVR (if not forego promulgation altogether) (3720, 3858, 4095, 4113, 4118, 4122, 4318, 4522, 4523, 4952, 4992, 5038, 5080, 5089, 5114, 5128, 5245, 5317, 5327, 5601, 5741, 5 768, 5800, 6459, 6880, 8273, 8301, 8303, 8533, 8581) added that:
 EPA could use this time to pursue streamlining of PSD and title V requirements for GHGs, to allow states time to prepare, and to avert negative economic impacts (3720, 4095, 4524, 5800).
 Del aying the GHG tailpipe rule would provide states with sufficient time to update their SIPs to mirror EPA's proposed Tailoring Rule and otherwise hire sufficient staff to deal with the onslaught of stationary source permits that will result from the regulat ion of GHGs. (3720, 5800)
 A delay

of 5 to 6 ye ars will allow: (1) NHTSA’s new CAFE standards to reduce vehicle emissions, (2) states to “ramp up” administrative resources as necessary to address PSD and title V permit applications, and (3) EPA and states to develop an y appropriate and lawful “streamlining” techniques for permits and permit processing. The commenter adds that this approach would obviate (or defer) any need to deviate from the clear text of the CAA and would also allow EPA to engage the regulated communit y and other members of the public in meaningful discussion about how GHG emissions might be addressed in a cost

- effective way , to the extent GHG regulation may occur under the Act, thereb y allowing time and opportunity for development of rea sonable approaches to regulatory

decision

- making. (5317)
 EPA could address GHGs through climate change legislation

. T he LDVR requirements being proposed overlap with the fuel efficiency standards proposed by

the NHTSA. In addition, opposing commenter s (3513, 3720, 4016, 4106, 4118, 4119, 4122, 4243, 4318, 4519, 4522, 4523, 4684, 4741, 4862, 4952, 4992, 5038, 5080, 5083, 5088, 5089, 5114, 5120, 5123, 5128, 5137, 5140, 5141, 5143, 5214, 5245, 5278, 5317, 5327, 5328, 5345, 5390, 5601, 5711, 5714, 5715, 5 741, 5770, 5773, 5800, 6141, 6414, 6459, 7126, 7217, 8301, 8545, 16411) provide the following suggestions :
 GHG emissions from automobiles can be regulated without using section 202, which would eliminate the need for the Tailoring Rule (5214). For examp le, one commenter stated that EPA could limit the scope of the rulemaking for light

- dut y vehicles to fuel efficiency (CAFÉ) standards while deferring regulatory action on tailpipe GHG standards. (4106)
 EPA should decouple the upcoming final vehicle emissi ons rule from impacts on stationary sources in order to obviate the need for the proposed Tailoring Rule (5317, 5844, 6141). One commenter added that EPA can make a determination that the LDVR does not trigger PSD (or, by extension, title V) requirements f or CO 2, even if the LDVR is promulgated under section 202(a). (5317)
 EPA and NHTSA should establish fuel econom y s tandards that accomplish the desired goals of substantial reductions in GHG emissions and improvements in fuel economy. If this was done, the other sections of the CAA (specifically title V permitting and PSD permitting) will not be triggered. (4519)22

 EPA should work together with the Administration and Congress to agree on an interim legislative directive so that EPA could move forward on the pending LDVR in a manner that would not trigger stationary source controls. (4016) Automotive GHG emissions will be reduced through new fuel efficiency regulations established by the U.S. DOT. (5444, 5770) and EPA could work through existing platfor ms, like those outlined by the Department of Transportation ( DOT ) for light duty vehicles, to better control GHG emissions and thus avoid radicall y altering the regulations. (7126)
 EPA should withdraw the GHG emissions limits from the LDVR, avoid the administrative problem that is created through the applicability of PSD and title V permit requirements for sources emitting small amounts of GHGs, and allow Congress to address this issue with climate change legislation. (5088, 5245, 7217)

. Response : The comments that EPA had no authority to promulgate, or should not have promulgated, the endangerment/cause or contribute findings or the LDVR at the times that EPA did are not relevant to this rule, the Tailoring Rule. EPA has already promulgated th e findings and the LDVR, and the LDVR triggers PSD and title V applicability , as we have seen. These comments would have been relevant only to the proposed findings and LDVR, and we are not, in this rulemaking, revisiting or reopening the findings or the LD VR. EPA does have pending before it ten petitions to reconsider the endangerment and cause or contribute findings. EPA is carefull y evaluating those petitions and expects to issue its decision(s) on or about July 30, 2010. Commenters claim that if EPA promulgates the LDVR, the “absurd results” doctrine will no longer appl y to the Tailoring Rule because it will have been EPA’s own action

– promulgation of the LDVR

– that gives rise to the “absurd results”. We disagree for several reasons. For one thin g, commenters have not cited case law, and our research has disclosed none, in which a court specificall y addressed a similar situation and issued a holding along the lines of what commenters urge. Moreover, commenters’ approach would be punitive because the absurd results would occur absent this rule going final. Such an outcome would be counter to the purpose of the doctrine. That is, it would mean that PSD and title V would apply to GHG sources b y their terms

– at the statutory levels, as of January

2 , 2011

– with all the adverse consequences described elsewhere. In an y event, and although we are not obligated to respond to these comments on the merits, they are incorrect on the merits, for the reasons that follow. This discussion should not be view ed as reopening the endangerment/cause or contribute findings or the LDVR because, as stated previously , we are not reconsidering or reopening those two actions in this rule. In determining and implementing congressional intent, it is important that the statutory provisions at issue be considered together

– (1) the obligation to make a determination on endangerment and contribution under CAA section 202(a); (2) if affirmative endangerment/cause or contribute findings are made, the obligation to promulgate standards applicable to the emission of an y air pollutant from new motor vehicles or new motor vehicle engines under CAA section 202(a); and (3) the PSD and title V applicability provisions. The most appropriate reading, and certainly a reasonable read ing, is that we are required to take the action we have taken, and are taking with this rule, and that is to issue the findings, promulgate23

the LDVR, and promulgate the Tailoring Rule. Our approach gives effect to as much of Congress’s intent for each of these provisions, and the CAA as whole, as possible. With respect to the endangerment/cause or contribute findings under CAA section 202(a), congressional intent is clear that, as we stated in making the findings and the Supreme Court held in Massachuse tts v. EPA , we are precluded from considering factors other than the science based factors relevant to determining the health and welfare effects of the air pollution in question. Accordingl y, EPA determined that under Massachusetts v. EPA , 549 U.S. 497 (2007) we were precluded from deferring or foregoing the findings due to concern over impacts on stationary sources affected b y PSD or title V requirements. See 74 FR at 66496, 66500

- 01 (“Taken as a whole, the Supreme Court’s decision clearly indicates th at policy

reasons do not justify

the Administrator avoiding taking further action on the questions here.”); see also Massachusetts v. EPA , 549 U.S. at 533; see also 74 FR at 66515

- 16 (December 9, 2009). (The Administrator “must base her decision about end angerment on the science, and not on the policy considerations about the repercussions or impact of such a finding). 1 Moreover, as EPA also noted, “EPA has the ability

to fashion a reasonable and common

- sense approach to address greenhouse gas emissions and climate change.” 74 FR at 66516. Regarding the timing of the LDVR, Congress’s intent was that endangerment/cause or contribute findings under section 202(a) would in fact lead to control of the air pollutants from new motor vehicles and new motor vehi cle engines contributing to the harm. The primary goal of section 202(a) is to achieve such reductions by requiring that EPA adopt emissions standards, and as a result, proceeding with the LDVR is consistent with that goal. In contrast, deferring the LDV R and thereby

delaying achievement of the public health and welfare benefits Congress expected and required under section 202(a) would run directl y counter to what Congress intended under section 202(a)

- EPA issuing emissions standards to address the publ ic health and welfare problems that were identified, not EPA refusing to do so. Moreover, we have compelling reasons to proceed with the LDVR, in the manner that we did. As we stated in the LDVR, in response to similar comments that we were not obligated to conduct that rulemaking, or to conduct it at the time that we did:

Some of the comments relating to the stationary source permitting issues suggested that EPA should defer setting GHG standards for new motor vehicles to avoid ... [adverse] stationary s ource permitting impacts. EPA is issuing these final GHG standards for light

- dut y vehicles as part of its efforts to expeditiously respond to the Supreme Court’s nearl y three ye ar old ruling in Massachusetts v. EPA , 549 U.S. 497 (2007). In that case, the Court held that GHGs fit within the definition of ai r pollutant in the Clean Air Act , and that EPA is therefore compelled to respond to the rulemaking petition under section 202(a) b y determining whether or not emissions from new motor vehicles cause or c ontribute to air pollution which may reasonabl y be anticipated to endanger public health or welfare, or whether the science is too uncertain to make a

1 Note, that at least one petition for reconsideration on the endangerment/contribution findings raises the same arguments related to the timing of decisions and absurd results . As noted before, EPA is carefully evaluating all the pending petitions for reconsideration.24

reasoned decision. The Court further ruled that, in making these decisions, the EPA Administrator is req uired to follow the language of section 202(a) of the CAA. The Court stated that under section 202(a), "[i]f EPA makes [the endangerment and cause or contribute findings], the Clean Air Act requires the agency to regulate emissions of the deleterious poll utant." 549 U.S. at 534. As discussed above, EPA has made the two findings on contribution and endangerment. 74 FR 66496 (December 15, 2009). Thus, EPA is required to issue standards applicable to emissions of this air pollutant from new motor vehicles

. The Court properl y noted that EPA retained "significant latitude" as to the "timing ... and coordination of its regulations with those of other agencies" (id.). However it has now been nearl y three ye ars since the Court issued its opinion, and the ti me for delay

has passed. In the absence of these final standards, there would be three separate federal and state regimes independentl y regulating light

duty vehicles to increase fuel econom y and reduce GHG emissions: NHTSA’s CAFE standards, EPA’s GHG standards, and the GHG standards applicable in California and other states adopting the California standards. This joint EPA

NHTSA program will allow automakers to meet all of these requirements with a single national fleet because California has indicated t hat it will accept compliance with EPA’s GHG standards as compliance with California's GHG standards. 74 FR at 49460. California has not indicated that it would accept NHTSA’s CAFE standards by themselves. Without EPA’s vehicle GHG standards, the states will not offer the federal program as an alternative compliance option to automakers and the benefits of a harmonized national program will be lost. California and several other states have expressed strong concern that, without comparable federal vehicl e GHG standards, the states will not offer the federal program as an alternative compliance option to automakers. Letter dated February

23, 2010 from Commissioners of California, Maine, New Mexico, Oregon and Washington to Senators Harry Reid and Mitch Mc Connell (Docket EPA

- HQ

- OAR

- 2009

- 0472

- 11400). The automobile industry also strongl y supports issuance of these rules to allow implementation of the national program and avoid “a m yriad of problems for the auto industry in terms of product planning, vehicle distribution, adverse economic impacts and, most importantly , adverse consequences for their dealers and customers.” Letter dated March 17, 2010 from Alliance of Automobile Manufacturers to Senators Harry Reid and Mitch McConnell, and Representatives Nan cy Pelosi and John Boehner (Docket EPA

- HQ

- OAR

- 2009

- 0472

- 11368). Thus, without EPA’s GHG standards as part of a federal harmonized program, important GHG reductions as well as benefits to the automakers and to consumers would be lost. Inaddition, delayin g the rule would impose significant burdens and uncertainty on automakers, who are already well into planning for production of MY 2012 vehicles, rel yi ng on the ability to produce a single national fleet. Delaying the issuance of this final rule would very seriousl y disrupt the industry ’s plans

.25

Instead of delaying the LDVR and losing the benefits of this rule and the harmonized national program, EPA is directl y addressing concerns about stationary source permitting in other actions that EPA is taking wi th regard to such permitting. That is the proper approach to address the issue of stationary source permitting, as compared to delaying the issuance of this rule for some undefined, indefinite time period. 75 FR 25,402 cols. 1

- 3 (May 7, 2010) (footnote o mitted). With respect to both the endangerment/cause or contribute findings and the LDVR, it would require speculation and conjecture to defer

– or, certainly , to forego altogether

- the findings or LDVR until EPA completed streamlining the PSD and title V requirements on grounds that doing so would allow full compliance in the future with all PSD and title V statutory provisions. That is the gist of commenters’ argument

– that EPA should defer or forego issuance of the findings and the LDVR to avoid caus ing an absurd result from implementation of the separate PSD and title V programs. Underl yi ng this claim is the assumption that this would allow EPA to avoid the “absurd results”. As we discuss elsewhere in this rulemaking, there is no basis at this point to determine that streamlining will ultimately allow full compliance with the PSD and title V requirements. Rather, it is possible that EPA may conclude that none of the available streamlining techniques will allow all GHG sources at the statutory thres holds to comply with PSD and title V requirements in a manner that does not impose undue costs on the sources or undue administrative burdens on the permitting authorities. Under these circumstances, EPA may then permanentl y exclude GHG source categories from PSD or title V applicability

under the absurd results doctrine. Moreover, it may well take many

y ears before EPA is in a position to come to a conclusion about the extent to which streamlining will be effective and therefore be able to come to a conc lusion as to whether any source categories should be permanentl y excluded from PSD or title V applicabilit y. In this final rulemaking , we describe what actions we expect to take in the first 6 y ears after PSD and title V are triggered for GHG sources, and we may well be in a situation in which we continue to evaluate streamlining measures and PSD and title V applicability to GHG sources after this 6

- ye ar period. Accordingl y, deferring the endangerment/cause or contribute findings and LDVR until such tim e that PSD and title V streamlining would allow full implementation of these programs at the statutory

limits would serve onl y to delay the benefits of the LDVR, as well as the benefits that come from phasing in implementation of the PSD program to cover l arger sources first. It would rel y on an assumption that is unfounded at this point, that is, that such full compliance will be required at some point in the future. Delaying the emissions benefits of the LDVR and the related emissions benefits from part ial implementation of the PSD program fails to implement Congress’ intent that the endangerment/cause or contribute findings “shall” lead to emissions standards for new motor vehicles contributing to the endangerment, and related emissions controls for the same air pollutant under the PSD program. EPA need not determine at this time what approach would be appropriate if there was a determination that full compliance with PSD and title V would in fact occur at some point in the future. In this case, absent such a determination, it would be improper to rel y on speculation of such a future possibility as a basis under section 202(a) to defer or forego issuance of the LDVR on the grounds that EPA should26

defer or forego the LDVR to avoid causing an absurd resul t. L ikewise there is no basis to defer proceeding at this time with the streamlining of the PSD and title V programs. With respect to the PSD and title V applicability requirements, as we discuss elsewhere, we believe that Congress expressed a clear inte nt to apply PSD and title V to GHG sources and that the phase

- in approach incorporated in the Tailoring Rule is full y appropriate. Proceeding now with the endangerment/contribution findings and LDVR, even if phasing

- in of the PSD and title V programs is r equired, is consistent with our interpretation of the PSD and title V applicability

requirements. Delayingthe endangerment/contribution findings or LDVR, and thereb y dela yi ng the triggering of PSD and title V requirements for GHG sources, would lead to the loss of a practicable opportunity to implement the PSD and title V requirements in important part, and thereb y lead to the loss of important benefits. As discussed elsewhere, promulgating the LDVR and appl yi ng the PSD and title V requirements to the largest GHG sources, as we do in this Tailoring Rule, is practicable because the sources that would be affected b y the initial implementation steps we promulgate in this rule are able to bear the costs and the permitting authorities are able to bear the asso ciated administrative burdens. Promulgating the LDVR now provides important advantages because the sources that would be affected by the initial steps are responsible for most of the GHG emissions from stationary sources. It should also be noted that a s discussed elsewhere in this rulemaking, our ability to develop appropriate streamlining techniques for PSD and title V requirements is best done within the context of actual implementation of the permitting programs, and not in isolation of them. That i s, because the great majority of GHG sources have not been subject to PSD and title V requirements, we will need to rel y on the earl y experience in implementing the permitting requirements for the very large sources that initially will be subject to those requirements in order to develop streamlining techniques for smaller sources. It is the real world experience gained from this initial phase that will allow EPA to develop an y further modifications that might be necessary . This would not and could not oc cur if the LDVR were delay ed indefinitel y or permanently , so that PSD and title V requirements were not triggered. It is unrealistic to expect that delaying action unt il a future Tailoring R ule could resolve all of the problems identified in this rulemaki ng, absent an y real world implementation experience. At its core, commenters’ argument is that EPA should delay (if not forego altogether) doing anything to address GHG emissions and the problems they cause until it can do so in a way that does not caus e any

implementation challenges, even if that delay results in continued endangerment to public health and welfare. EPA does not take such a m yo pic view of its duties and responsibilities under the CAA. Congress wrote the CAA to, among other things, prom ote the public health and welfare and the productive ca pacit y of the population. CAA section 101(b)(1). EPA’s path forward does just this. Thus, proceeding with the endangerment/cause or contribute findings, the LDVR, and with PSD and title V through th e phase

- in approach of the Tailoring Rule maximizes the ability of EPA to achieve the Congressional goals underl yi ng sections 202(a) and the PSD and title V provisions, and the overarching CAA goal of protecting public health and welfare. Congress called for EPA (1) to determine whether emissions from new motor vehicles contribute to air pollution that endangers, (2) if that the determination is affirmative, to issue emissions standards for new motor vehicles to address the endangerment, an d (3) to impleme nt the PSD and t itle V program to address similar emissions in their27

permitting program as another tool to address the air pollutant at issue. Delaying both the LDVR and PSD/title V implementation, as commenters have called for, would run directly counter to these Congressional expectations. Commenters’ calls for deferral or foregoing of the findings or LDVR are generally

phrased in a conclusory

fashion, and do not demonstrate how EPA could take the required CAA actions concerning GHGs while remaining within the requirements of each of the various CAA provisions, and achieving the overall goals of the CAA. As such the comments do not provide a valid basis for the deferral of agency action they suggest.28

2.5 .4 Reconsideration of Interpretation of Regulat ions that Determine Pollutants Covered by CAA Permitting Programs (“CAA Interpretation Reconsideration Rulemaking”) Comment: Three commenters, representing nine environmental advocacy groups, support EPA’s “Reconsideration of Interpretation of Regulatio ns that Determine Pollutants Covered b y Clean Air Act Permitting Programs” proposal . (5139, 5306, 5311) Other commenters (4095, 4118, 4119, 4243, 4298, 4515, 4567, 4691, 4741, 4746, 4862, 4863, 4871/5063/5605, 4903, 5052, 5062, 5073, 5082, 5083, 5084, 50 88, 5111, 5120, 5123, 5133, 5137, 5138, 5140, 5141, 5143, 5145, 5147, 5199, 5224, 5278, 5305, 5317, 5328, 5345, 5390, 5714, 5715, 5740, 5800, 5808, 5886, 6414, 7026, 8460, 8513, 8545, 16411) on the “Reconsideration of Interpretation of Regulations that Det ermine Pollutants Covered b y CAA Permitting Programs” proposed rulemaking express that EPA should use its discretion to find that issuance of the title II LDVR will never trigger PSD and title V permitting. Other commenters add that they disagree with EPA ’s conclusion that the title II LDVR triggers PSD/title V (4095, 4903 5062, 5083, 5120, 5800, 5317, 5714, 5773). A few commenters (4118, 4741, 5062, 5082, 5084, 5199) suggest that we can interpret the CAA such that:
 It does not apply

to a pollutant under PSD until “actual controls” are required to be implemented (5082, 5084) or, alternatively , until EPA designates a pollutant as regulated under the provisions of title Ias detailed in the provisions and requirements of title I section 108. However, one of these commenters adds that the provisions in the Johnson Memorandum are not sufficient to provide an orderly interpretation of GHG regulations under the PSD and title V programs. (5084)
 (1) PSD requirements should not be considered to apply to emission s of a pollutant before an emission control regulation for that pollutant has become effective (in this case the motor vehicle rule), and (2) that to be "effective" a regulation must have become applicable in a real

- world sense, such that the new requireme nts imposed by the regulation have actuall y become applicable for regulated sources and are no longer merel y prospective obligations. (5062, 5199)
 The phrase “pollutants subject to regulation” excludes GHGs. This simple and straightforward approach aga in provides EPA a way to avoid "absurd results" without stretching the "administrative necessity " doctrine further than it can lawfully reach. (4118, 4741) Various commenters state that EPA should clarify under the Tailoring Rule that the trigger date fo r GHGs being a “pollutant subject to regulation” is no earlier than the date of compliance with the section 202 rule ( 3720, 4016, 4118, 4119, 4298, 4567, 4684, 4903, 5062, 5073, 5111, 5133, 5138, 5147, 5714, 5800, 7026, 8460) or no earlier than the date o n which the final motor vehicle GHG rules “take effect” or actual controls are required (3720, 4118, 4120, 4122, 4243, 4318, 4522, 4523, 4691, 4952, 4992, 5038, 5062, 5080, 5089, 5114, 5128, 5317, 5327, 5328, 5601, 5711, 5741, 5800, 6459, 8301). PSD requ irements should not be triggered29

when a rule controlling GHGs pollutants is promulgated (4120, 4691, 5062, 5088). In addition, some commenters assert that this date is:
 No sooner than the date on which a 2012 model year vehicle can be produced and is subj ect to “actual controls.” ( 3720, 4016, 4106, 4118, 4119, 4298, 4684, 5111, 5800, 7026)
 When EPA certifies that the first 2012 model vehicles meet the GHG limits in the vehicle rule. (5133)
 The date on which such rules would become operative and create current, legall y binding obligations, which would be no earlier than October 1, 2011 and could be as late as in January 2011, or sometime in 2012. (3720, 4120, 4122, 4243, 4318, 4522, 4523, 4952, 4992, 5038, 5080, 5089, 5114, 5128, 5317, 5327, 5328, 5601, 5711, 5741, 5800, 6459, 8301). A few commenters added that this date should not be the date when the Tailoring Rule goes into effect, since the proposed Tailoring Rule appears to be written so that GHG emissions above the thresholds would trigger PSD and title V applicability as soon as the Tailoring Rule goes into effect. See , e.g., proposed 40 C.F.R. 52.21(b)(1)(i)( d )). That would be inconsistent with EPA’s claim of statutory authority to appl y these permitting programs to GHGs. (4903, 5062 , 5317 ) One commenter requests that EPA clarify when each of the six GHGs become “subject to regulation” under the CAA. (5922) Other commenters argue that PSD is triggered only after a NAAQS has been established for those pollutants and where a source’s locati on is in attainment with a NAAQS. (3513, 4095, 4118, 4243, 4862, 5123, 5141, 5143, 5181, 5277, 8513, 16411). Some commenters add that:
 GHG emissions occurring as part of a construction or reconstruction or modification cannot independently

trigger PSD permitting, but rather PSD can be triggered by emissions of a NAAQS pollutant, and then a BACT determination could potentially extend to GHG emissions units if emissions are over established thresholds and if the specific GHGs being emitted by the source h ave been subject to actual control at stationary sources under the CAA. (8513).
 EPA should interpret PSD as being triggered only upon a significant net emissions increase of a criteria pollutant. Under this interpretation, only those major sources that otherwise trigger PSD for a criteria pollutant would have to compl y with BACT for GHGs (4095, 4298). Sources that are major onl y for GHGs, or that undergo a change that increases only

GHG emissions should not be subject to PSD ( 4095) . The commenter (409 5) asserts that this interpretation of when PSD would be triggered would largel y eliminate the “absurd results” EPA cites as justification for the Tailoring Rule.
 Section 116 of the CAA mandates the promulgation of PSD regulations within 2 y ears of estab lishing a new NAAQS and provides that the effective date for such regulations is to occur one ye ar later. Thus, PSD applicability is never “triggered” by

a new pollutant becoming “subject to regulation” under the CAA, only by the establishment of a new NAAQS pursuant to sections 108 and 109 of the CAA and the designation of new areas for that NAAQS under section 107. (4095)30

Commenter 4871 asks whether it is EPA’s position that GHGs will be “subject to regulation” upon promulgation of EPA’s LDVR (i.e., the date the final rule appears in the Federal Register), or upon the effective date of this rule, which is ty pically 60 day s after publication. Response: EPA addressed these topics in detail in the April 2, 2010 final action (75 FR 17400) and the assoc iated RTC document located in the docket for that action. EPA incorporates those documents by

reference as its response to the comments on these topics submitted to the docket for this action. Additional responses to comments arguing that a NAAQS should be established before GHGs can be regulated under the PSD program are found in the preamble of this final rule under section V.B.31



## Chapter 3. Comments on the Legal Basis for the Proposed Rule In this chapter we summarize and respond to the significant comments related to the legal basis for the proposed rule. In the first section we discuss regulation of GHGs under the CAA. While we did not discuss this topic at length in the proposal preamble, we received numerous comments on this subject which we a ddress in section 3.1. In sections 3.2 through 3.4, we address the comments received on the legal bases we proposed for phasing in the applicability thresholds for PSD and title V: the “administrative necessit y” and “absurd results” doctrines, as well a s the line of cases that establishes, in certain situations, the acceptability of a “step

- by

- step process” for implementing a statutory requirement. We do not summarize and directly respond to the numerous comments we received that stated, without specifi c reference to an y of these three potential legal bases, that it is legall y impermissible to alter the unambiguous numeric thresholds in the CAA. We believe that our responses to the more specific comments on the potential legal bases for the rule serve t o respond to these more general legal concerns as well. In addition, we received numerous comments on the legal basis for our proposal to retroactively

limit our approval of the PSD provisions in SIPs and of title V programs. These comments are addresse d in section 3.5. 3.1 Comments on Regulation of GHGs under the CAA We received man y comments questioning EPA’s interpretation that GHGs can, and should, be regulated under the CAA. However, many of these comments pertain to the related developments that triggered the Tailoring Rule proposal (i.e., the Massachusetts v. EPA decision, the section 202(a) Endangerment Finding, the LDVR, and the reconsideration of the PSD Interpretive Memorandum) and are not, therefore, germane to this rulemaking. Such comments, which were also submitted for consideration under the related actions, are properl y addressed in those actions. Here we address only those comments that pertain more directly to the Tailoring Rule. Section 3.1.1 addresses general comments regardin g regulation of GHGs under the CAA, comments on regulating GHGs under the PSD program are addressed in section 3.1.2, and in section 3.1.3 we address comments on regulating GHGs under the title V program. 3.1.1 Comments on Regulation of GHGs under the CAA in General In our recent actions, we have announced our intention to begin regulating GHGs under various portions of the CAA and have begun to follow through on that intention. We have finalized an Endangerment Finding for GHGs under section 202(a) of the CAA and have f inalize d the LDVR. In addition, we have finalized our interpretation of when an air pollutant becomes subject to regulation for purposes of the PSD and title V programs. We received numerous comments on the general topic of regulating GHGs under the CAA.32

Comment: Many state government (4209, 4771, 5258, 5318, 5451, 5525, 5607, 5784, 6491, 7134, 7212, 7217, 8071), industry ( 4095, 4118, 4243, 4298, 4691, 4851, 4862, 4903, 5004, 5041, 5111, 5136, 5182, 5199, 5275, 5301, 5312, 5315, 53 17, 5922, 6609, 6880, 8015, 8303, 8533, 8545), and state/local air agency (2797, 3858, 4871/5063/5605, 4949) commenters argue that the CAA was never intended b y C ongress or is ill

- suited to address GHGs. These commenters often cite the development of the CAA over time, the language and structure of the CAA, and the legislative history

to assert that EPA cannot and should not go forward with regulation of GHGs under the CAA. These commenters often made the following points:
 Congress enacted the CAA of 1970 and subsequent amendments, including those in 1990, with an explicit focus on large sources and certain categories of pollutants that have direct effects on public health in the U.S. (which does not include GHGs). (5111, 8545)
 The CAA is intended to addr ess pollutants with direct impacts and control alternatives on a local, state, or regional level, but GHGs are global pollutants that produce indirect impacts on a global level. (4209, 4243, 4851, 5136, 5199, 6315, 5525, 8545)
 The need for the Tailoring R ule demonstrates that the CAA is not structured to address global pollutants. (4298, 4862, 5111, 5784)
 Regulating GHG under the Act is not consistent with the intent of the Act as expressed in section 101(b) because their inclusion will do little to “prot ect and enhance the quality of the Nation’s air resources” y et will significantl y weaken the “productive capacit y of [the U.S.] population.” (5138, 5301)
 The issue of global climate change resulting from the emissions of GHGs should be addressed through comprehensive federal legislation, full public debate, and U.S. political consensus, rather than through unilateral EPA action. (5182, 5258, 5275, 5312, 5451, 5607, 6491, 7212, 7217, 7134, 8015, 8071)
 Congress declined to give EPA clear authorit y to regu late GHGs in the CAA. For EPA to seize such authority

is an affront to rule by

consent of the governed. (5784)
 The CAA does not allow EPA to deliver the regulatory relief it theorizes will occur (i.e., thresholds higher than the 100/250 tpy prescribed under the CAA) and thus this rule is unnecessary , ineffective and/or unlawful (4095, 4118, 4903, 5004, 6609, 6880, 8303, 8533). On the other hand, numerous state/local air agency (3916, 3918, 4154, 4238, 4239, 4694, 4778, 4860, 5039, 5057, 5081, 5314, 552 8, 7935, 8025, 8803), state government (0600, 4518), and environmental (5122, 5306, 5311, 5448) commenters support the use of the CAA to regulate GHGs. These commenters ty pically believe it is important to begin regulation of the largest sources of GHGs n ow, pending comprehensive climate change legislation. Some of these commenters indicate that the CAA can be a valuable component of comprehensive federal climate policy

in the future. One industry

commenter (5110) believes that CAA section 115 (Internat ional Air Pollution) and section 179B (International Border Areas) are the logical place to start to address global GHG pollution under the current CAA. According to the commenter, section 115 has not been used to regulate domestic emissions that are conn ected to international air pollution, but33

only because each time its use was considered Congress enacted legislation to address the problem (i.e., for the acid rain and stratospheric ozone programs). Section 179B would appl y only if a NAAQS for GHGs is pr omulgated. One industry

commenter (5143) suggests EPA should consider invoking other CAA authorities such as NSPS and section 111(d) in lieu of PSD/title V permitting. Under this approach, EPA would have the ability to set emissions performance standards for existing sources, and thereb y avoid many of the difficulties under the PSD and title V permitting regimes. Regulation under section 111(d) offers additional advantages, including flexibility in determining the scope of sources to be regulated, the ty pe and stringency

of standards and guidelines and the timing of their implementation, and the ability to weigh the costs and benefits. Response: Comments that the CAA was never intended b y C ongress to address GHGs are not relevant to this tailoring rulem aking. In an y event, the U.S. Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007) , which held that GHGs are an “air pollutant” under the CAA, made clear that the requirements of CAA section 202(a) appl y to GHGs if EPA makes the endanger

ment and contribution findings. As a result, this decision makes clear that the CAA does appl y to GHGs, notwithstanding the commenters’ concerns. In addition, in EPA’s recently pro mulgated LDVR for GHGs, EPA promulgated requirements for GHGs under CAA se ction 202(a), and we explained our basis for doing so.

“ Li ght

- Duty

Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Econom y Standards; Final Rule,” p. 151 (promulgated on April 1, 2010), http://www.epa.gov/otaq/climate/regulations/ldv

- ghg

- final

- rule.pdf In that rule, we also responded to some of the same arguments made b y commenters in this rule that EPA does not have authorit y under the CAA to regulate GHGs. See “ Li ght

- Dut y Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards, EPA Response to Comments Document for Joint Rulemaking,” p. 1

- 67, http://www.epa.gov/otaq/climate/regulations/420r10012a.pdf

. The comments concerning sections 115 and 111(d) are not relevant to this rulemaking. In the preamble for this rule we state a reason why the PSD and title V requirements appl y to GHG sources. These requirements are not vitiated by the possible applicability of, or benefits of, other sections of the CAA to GHGs, such as sections 115 and 111(d), as raised by the commenters. It is the position of the agency that comprehensive climate change leg islation is a more effective way

to address GHGs than through the CAA, but that does not mean that the CAA does not apply to GHGs.34

3.1.2 Comments on Regulation of GHGs under the PSD Program We proposed the Tailoring Rule based on our interpretation that GHG sources would become subject to the PSD and title V permitting programs upon finalization of the LDVR. In this section, we address the numerous comments that we received on the legal aspects of regulating GHGs under PSD. Comment: Many state (4871) and industry (3512, 3513, 4095, 4106, 4522, 4745, 4771, 4870, 4952, 5052, 5058, 5083, 5110, 5112, 5137, 5138, 5140, 5169, 5179, 5183, 5275, 5278, 5345, 5417, 5446, 5800, 5844, 5922, 5935, 8089, 16411) commenters believe that, based on the language of the CAA, PSD applicability can be triggered onl y by

pollutants for which there is a NAAQS. Several of the commenters submitted one or more points of the following argument: The EPA bases applicability of the PSD program solely on the scope of “pollutants subject to regulation” under CAA section 165(a)(4). While this language is relevant to PSD applicability

because it determines the applicability of the BACT requirement, EPA must take into consideration the statutory provisions that act to constrain the app licability of the PSD program at the outset. The text of the statute is more naturally read to limit PSD applicability to sources that are major for a NAAQS [criteria] pollutant only . Once PSD is triggered by a major source for a NAAQS pollutant, the statute would impose BACT on pollutants “subject to regulation.” The EPA’s approach

– which first asks what pollutants are “subject to regulation” and then bases all applicability determinations of the PSD program solel y on this criterion

– is inconsistent w ith the statutory language because it by

passes the core applicability provisions and renders their inclusion in the statute superfluous. Indeed, the text of sections 161 and 165(a) limit application of PSD to certain areas

– those designated attainment o r unclassifiable pursuant to section 107 of the CAA. Section 107 is applicable onl y to NAAQS pollutants. Only section 165(a)(4) (which simply establishes the requirement to appl y BACT) uses the phrase “pollutants subject to regulation.” The EPA has not effectuated the applicability limitation in section 161 and 165(a) b y interpreting that language as mere surplusage. Specifically , under EPA’s historical interpretation of the statutory provisions, the location limiting language would simply require that a source be located in an area that is attainment for any pollutant. But that is no limitation at all since every area of the country

is and alway s has been in attainment with at least one criteria pollutant. Congress must be presumed to have been aware of this fact when it enacted the PSD provisions, making EPA’s construction inconsistent with canons of statutory construction requiring all words in the statute to be given meaning. The NAAQS prerequisite requirement of the CAA is also consistent with th e holding in Alabama Power Co. v. Costle (636 F.2d 323 (D.C. Cir. 1979) , where the court found that location is the key

determinant for PSD applicability and rejected EPA’s contention that PSD should apply

in all areas of the country , regardless of attainm ent status. The court stated: “The plain meaning of the inclusion in [42 U.S.C. § 7475] of the words ‘an y area to which this part35

applies’ is that Congress intended location to be the key determinant of the applicability of the PSD review requirements.” (636 F.2d 365 (D.C. Cir. 1979)) In its regulatory

response to the Alabama Power decision, EPA gave this ruling only grudging effect b y an interpretation of PSD requirements in the preamble to the 1980 PSD regulations. (45 FR 52675, 52676, August 7, 198 0) The 1980 Preamble provides that PSD requirements still apply

to any area that is “designated ... as ‘attainment’ or ‘unclassifiable’ for any pollutant for which a national ambient air quality standard exists.” This is inconsistent with the CAA, but attr acted little scrutiny because, to date, it has had very little practical impact. But now, this incorrect interpretation could trigger a host of absurd results that contravene Congressional intent. Accordingl y, to give effect to unambiguous terms of the s tatute (and regulations), EPA cannot require a source to undergo PSD permitting solel y on the basis of emissions of a pollutant for which there is no NAAQS. [ Chevron, U.S.A. v. Natural Resources Defense Council (

NRDC ) , 467 U.S. 837, 842 (1984) (agency mus t give effect to the unambiguousl y expressed intent of Congress)]. Because EPA’s improper interpretation appears only in the preamble to the 1980 PSD rules and the regulatory

language in 40 Code of Federal Regulations ( CFR) 52.21(a)(2) properl y includes the location limitation of the statutory provisions, the only

change that is needed for EPA to properl y limit the scope of PSD applicability consistent with the statute is to announce its interpretation in the Federal Register . Since EPA has solicited comment on the effect of this proposed rule regarding PSD applicability , not only in the LDVR but also in the reconsideration of the PSD Interpretive Memorandum, it is a logical outgrowth of these actions for the Agency to announce that in response to comment s it is adopting the proper scope of applicability for the PSD program. Some industry

commenters (4095, 4745, 4870, 4952, 5052, 5137) also argue that this interpretation (that PSD applicability is based only

on NAAQS pollutants) is further supported by the presence of section 166 in the CAA, which sets forth the process and time line to regulate “other pollutants” under PSD . These commenters make the following points:
 Section 166 mandates the promulgation of PSD regulations within 2 y ears of establishing a NAAQS for a new pollutant, provides that the effective date for such regulations is to occur 1 ye ar later, and requires EPA to approve plan revisions for the new regulations within 25 months of their promulgation. (4095, 4745, 4870, 4952, 5137)
 An endangerment finding is merely the first step in establishing a NAAQS for CO 2 and other GHGs under section 109 and, unless and until a NAAQS is established and the steps set out in section 166 are subsequently followed, EPA has no legal authority regulate GHGs under the PSD/NSR provisions of the CAA. (4095, 4870, 5137)
 It seems inconceivable that the statutory structure of the PSD program could be interpreted to provide for near

- immediate triggering of PSD applicability for GHGs upon becoming subject to regulation when section 166 provides for 2 ye ars to promulgate new PSD regulations for new NAAQS and another 25 months for EPA to act on plan submissions related to the new NAAQS. Instead, the interplay of sections 166 and 165 of the CAA bespeak of a clear stat utory scheme that PSD applicability is never “triggered” by a new pollutant becoming “subject to regulation” under the CAA, onl y by the establishment of a new NAAQS pursuant to sections 108 and 109 of the CAA and the36

designation of new areas for that NAAQS under section 107. (4745, 4952) The CAA clearl y requires EPA to first establish a National Ambient Air Quality Standard (NAAQS) for GHGs before the Agency has the legal ability

under the CAA to require PSD solely

on the basis of increases in GHG emissio ns. (4095, 5183, 5844, 5922) Since EPA is not establishing a NAAQS for GHGs, the PSD program should not be made applicable to GHG emissions (3513, 4106, 5183, 5275).
 Now that EPA has announced that it believes that there is a public health and welfare effect from GHGs, EPA must establish a NAAQS to determine the level at which public health and welfare need to be protected. This would allow the full PSD program to be implemented for GHGs, including the CAA’s requirements for an impact analy sis and PSD increments (PSD provisions that are currently meaningless for GHGs in the absence of a NAAQS) (5052) . Another commenter report s that they would not support the establishment of a NAAQS for GHGs, as an “attainment” or “nonattainment” status for the entire U.S. given the global nature of GHGs. (4106) Some industry

(5111, 5278, 5140, 5715) commenters base comments on the language of section 110(a)(2)(C) of the CAA, which requires SIPs to include PSD permit programs “as necessary” to assure that the NAAQS are achieved:
 Industry

commenters 5278, 5140 infer from the language of section 110 (a)(2)(C) that the purpose of the PSD program is to assure the NAAQS are achieved. The commenters contend that it is inconsistent with this language to apply PSD based on e missions of pollutants such as GHGs for which there is no NAAQS. In addition, these commenters point out that CAA section 163(b)(4) specifies that the maximum allowable concentration of “an y ai r pollutant” in “an y area” to which part C applies shall not e xceed the NAAQS, further indicating that the PSD program is focused on attaining the NAAQS and is not applicable to non

- NAAQS pollutants such as GHGs.
 Industry

commenters (5111, 5715) state that parts A and C of title Iplainly indicate that the PSD program is implemented solel y through SIPs, and that while states’ SIPs must include PSD permit programs “as necessary” to assure that the NAAQS are achieved, the CAA cannot be read to authorize, much less require, SIPs (including their PSD programs) to include provisions that are not necessary for the achievement of the NAAQS

– such as the regulation of sources based on emissions on a non

- NAAQS pollutant like GHGs. The commenter adds that EPA has often refused to approve the inclusion of provisions of a state’s air qualit y rules into SIPs because they are not related to the attainment or maintenance of the NAAQS. A number of industry

(4630, 4801, 4870, 5052, 5082, 5112, 5446) and state (4521) commenters also assert that the language and legislative history o f the PSD provisions of the Act make it clear that Congress never intended PSD to apply to such pollutants as GHGs. These commenters state the PSD program was clearl y intended to address ground

- level pollution threats to local air quality, such that pollution controls on major sources can affect local and regional ambient air quality . The commenters point out that GHGs are present in the global atmosphere at uniform concentrations which do not pose a direct threat to human health and, thus, are not intend ed to be covered by PSD. Some specific comments include the following:
 It is clear that PSD is designed to prevent significant deterioration to the “ambient air” for NAAQS pollutants, and it would be reasonable for EPA to interpret “ambient air” to37

exclud e regulating the climate and the stratosphere (which would not preclude EPA from regulating GHGs in the future when the EPA has examined the technologies for controlling GHGs from specific industries). (5052)
 Regulation of GHGs under the CAA will constrai n an expressed intent of the PSD program under section 160(c) which states that one purpose of the PSD program is to "insure that economic growth will occur consistent with the preservation of existing clean air resources. (5082)
 The original 28 source categories listed by Congress constitute the sources EPA regarded as posing the greatest potential for air quality degradation due to conventional pollutants. The 100 tpy

threshold for these source categories makes sense onl y in terms of conventional pollut ants. (4870, 5112, 5446)
 The air qualit y monitoring and impact anal ys is provisions of CAA sections 165(a) and (e) focus on local and regional impacts. For example, section 165(e)(1) requires an anal ys is of “the ambient air quality at the proposed site and in areas which may be affected b y emissions from [the proposed] facility for each pollutant subject to regulation under the [CAA] which will be emitted from such facility .” (4522, 4870, 5112, 5446)
 The legislative history of sections 165(a) and 169(l) under the 1977 CAA amendments makes clear that Congress had only conventional pollutants in mind when creating those provisions. Both the Senate and the House were engaged primaril y in continuing the work that a prior Congress had begun, through the 1970 CAA, to rid the Nation, especiall y urban areas, of unhealthy levels of smog, particulates, sulfur dioxide, and other conventional pollutants. The air qualit y problems of concern to the 95th Congress in 1977 did not include global warming. (4870)
 The EPA has assumed, without any analy sis, that the “any

pollutant” component of the phrase “an y pollutant subject to regulation” has no bounds and therefore can include GHGs. However, the 100/250 tpy statutory thresholds are an equall y integral part of the statutory fabric and cannot be reconciled with an unbounded reading of the phrase “any pollutant subject to regulation.” (4870)
 Without a NAAQS, PSD increments, or proven control devices in practice, regulating GHG emissions under the PSD program at this time will lead to a paperwork exercise of “empty” or “hollow” permits. (4521) In addition, some industry (4522, 5125, 5345) and state (4871) commenters note that the CAA provides separate and distinct treatment for stationary sources pursuant to title Iand for mobile sources pursuant to title II, including providing for a separate finding of endangerment pursuant to the two titles. These commenters believe that the Endangerment Finding made pursuant to section 202 of the CAA is a predicate only for the pro mulgation of standards for mobile sources pursuant to title II, and GHGs cannot be considered “subject to regulation” for purposes of title I of the CAA on the basis of actions under title II. In particular, industry

commenter 5345 states that the struc ture of the Act assumes that title Iaction precedes title II action in that the authorities and responsibilities to investigate the impacts of pollutants on public health and welfare are set forth in title I (e.g., sections 103, 104 (specifically

addressi ng fuels and vehicles), 105 (grants), 107 (states’ responsibility for air quality), 108 (including section 108(e) which requires EPA to include emissions from mobile sources in anal ys es of pollutant impacts)), while any evaluation required under title II are38

dependent upon anal ys es performed under title I or are directl y related to mobile sources and fuels. The commenter contends that there is no evident intent that requirements under title II should activate stationary source programs

– to the contrary th e most recent Congressional action on the Act (Energy

Investment and Security

Act of 2007, P.L . 110

- 140) shows that Congress could intentionally

address a mobile source issue without it spilling over to title I stationary sources. Contrary to the comment ers discussed above, some commenters agree with EPA that GHGs will become subject to PSD when the control requirements of the final L DVR go into effect. While few commenters make an explicit statement to this effect, many commenters acknowledge that this regulatory action will render GHGs “subject to regulation,” and, therefore, subject to PSD. Response: In these comments, commenters argue that at least the applicability provisions of the PSD program should be limited to emissions by a source in an att ainment or unclassifiable area of NAAQS pollutants for which the area is attainment or unclassifiable. We will refer to this as the “NAAQS Approach.” We responded to man y of these comments in the preamble, section V.B.5.c. We provide the following addit ional responses: We disagree with commenters who assert that we improperl y base PSD applicability on the BACT provision, CAA section 165(a)(4), which applies requirements to air pollutants that are “subject to regulation.” While we believe that PSD appl ies to sources of air pollutants that are subject to regulation, this is because, as explained in the preamble, we have long read the term “subject to regulation” into the term “an y air pollutant” as found in CAA section 169(1), which is the PSD applicabil ity provision. We disagree that the provision in CAA section 165(a) (flush language at beginning) that refers to “an y area to which this part applies” means that the PSD program is applicable only to a source that emits NAAQS pollutants for which the area in which the source is located is attainment or unclassifiable, for the reasons we stated in the preamble. In essence, in the 1977 Clean Air Act Amendments, Congress divided the nation into two ty pes of air quality

basins, which could overlap: nonatt ainment areas and attainment/unclassifiable areas. Congress designed the provisions for nonattainment areas, found in Part D of title I , to include stringent control requirements for sources that emit NAAQS pollutants for which the area is nonattainment. Congress designed the provisions for attainment areas, found in Part C of title I , to include control requirements for sources that emit NAAQS pollutants for which the area is in attainment or unclassifiable. However, Congress also designed the part C pr ovisions to cover non - NAAQS pollutants, as is clear from the broadly phrased applicability

provision, CAA section 169(1), which, as we have interpreted it, applies to “any air pollutant [subject to regulation];” and the BACT provision, CAA section 165(a)(4 ), which similarly applies to “any pollutant subject to regulation.” Thus, Congress in effect divided the nation into two, sometimes overlapping, geographic “boxes,” one for nonattainment areas, and one for attainment/unclassifiable areas, but the latter “box” was large enough to include the non

- NAAQS pollutants. Through this approach, Congress applied the relevant requirements of the PSD39

process to non

- NAAQS pollutants, including, most importantly , the source

- by

- source BACT requirement. As we discussed in the preamble, the PSD process, with its stringent, source

- by

source review requirements, serves important environmental benefits, and it is for this reason that Congress designed the PSD provisions to cover non

- NAAQS pollutants. The inclusion of the phrase “an y area to which this part applies” in CAA section 165(a) has the effect of designating the relevant “box”

– the attainment/unclassifiable one, and not the nonattainment one

– but does not restrict the PSD requirements to NAAQS pollutants for which the area is attainment or unclassifiable. The phrase also makes clear that certain of the PSD requirements, such as the CAA section 165(a)(2) requirements for certain anal ys is and a hearing, as well as the CAA section 165(a)(4) requirement for BACT

-- whi ch by their terms are broad enough to appl y to even a source in a nonattainment area that emits a NAAQS pollutant for which the area is nonattainment

-- appl y only in areas designated attainment or unclassifiable, and not in nonattainment areas. The D.C. Circuit’s decision in Alabama Power v. Costle supports this anal ys is because it stated, as a background explanation, that the PSD applicability provision under CAA §169(1) applies by its terms to all pollutants, 636 F.2d at 352, but it held that because of the limiting phrase, “any area to which this part applies” under CAA §169(a), PSD requirements do not apply to sources constructing in nonattainment areas

. Id. at 365. Evidently , the Court recognized that the existence in the CAA of the nonattainment pr ovisions in Part D means that NAAQS pollutants in nonattainment areas are to be governed by those provisions, leaving the PSD provisions to cover both NAAQS pollutants in attainment areas and non

NAAQS pollutants. We disagree with commenters who state th at we could adopt the NAAQS Approach in this final action as a logical outgrowth of our solicitation of comment on the effect of the proposed rule regarding PSD applicability . We do not believe that our general solicitation of comment can be said to have alerted the public to the possibility of adoption of the NAAQS Approach. In addition, the NAAQS approach would amount to a fundamental change in our long

- standing regulatory

approach. Accordingly , were we inclined to consider the NAAQS approach further, we would need to propose it.
We disagree with commenters who state that CAA § 166 acts to limit the scope of the PSD program to NAAQS pollutants. In Alabama Power v. Costle , 636 F.2 d 323, 405

- 406 (D.C. Cir. 1980), the D.C. Circuit rejected a similar argument. There, industry petitioners argued that a pollutant did not become covered b y the PSD program until EPA promulgated a NAAQS and finalized a rulemaking under 166 for such pollutant. The Court reject ed this argument as being "contradicted b y the p la in language of section 165.” Id

. at 406. The Court upheld EPA’s regulations, which the Court described as “appl[ying] PSD and BACT immediately to each t ype of pollutant regulated for any purpose under any

provision of the Act ....” Id. at 403. We concur w ith the Court ’ s anal ys is an d similarly reject this claim. By

the same token, we disagree with commenters who state that GHGs cannot be considered “subject to regulation” by virtue of their regulation by

the LDVR on ground that the LDVR is promulgated unde r title II of the CAA. We disagree with commenters who state that because certain provisions in Part C are clearl y directed towards NAAQS pollutants, that indicates that part C as a whole is limited to NAAQS pollutants, or that the applicability provis ions of part C are limited to NAAQS pollutants. We recognize that a major focus of the PSD provisions was NAAQS pollutants for40

which the area was attainment or unclassifiable, and this is clear from many of the provisions in the PSD program and the legisl ative history . However, as we have discussed elsewhere, other provisions in part C clearly appl y to both NAAQS and non

- NAAQS pollutants, and as a result, we cannot conclude that the PSD program as a whole, or its applicability provisions, applies to only NAAQS pollutants for which the area is attainment or unclassifiable. Further in this regard, we disagree with commenters who state that the purpose provisions of CAA section160 are limited to pollutants for which the area is designated attainment or uncla ssifiable. We believe that the purpose provisions can be read more broadly to refer to non

- NAAQS pollutants as well. This reading of the purpose provisions is consistent with the other provisions in the PSD program that concern both NAAQS and non

- NAAQS p ollutants. We disagree with commenters that either our regulations or the CAA provisions compel, or permit, a view that the PSD program is limited to ground level pollution threats to local air quality

. While we agree with the commenters that a major foc us of the PSD program is on local air quality , we reject the view that the program is solely concerned with local air qualit y . As an initial matter , we note that this position is inconsistent with the plain language of our regulatory applicability

provis ions

– the definition of " r egulated NSR pollutant"

– which we promulgated, as we discuss in the preamble, many y ears ago, so that the time for challenge of which has long since pas sed . Specifically , we note that the definition of “regulated NSR pollutant” by its terms covers ozone depleting substances, which are regulated due to their effects on the stratosphere, and not b ecause of local effects or even effects on ambient air. CAA section 165(a) (3) requires that before a permit may

issue , the owner or op erator must demonstrate that the facility will not "cause, or contribute to, a violation of an y . . . national ambient air quality standard in an y air quality control region." By

its terms, this requirement is not limited to the attainment area in which the source is located . Instead, this requirement covers non - localized effects. Indeed for some NAAQS, such as ozone, the PSD program primarily serves to address air quality impacts outside of the attainment area in which the source is locating (even if th e transport is to areas hundreds of miles away). Similarly , the requirement to ensure protection of air qualit y related values addresses impacts outside of the attainment area in which the source is locating. Most importantly , however, without a clear de monstration that Congress's sole focus

– as opposed to a major focus

-- was to address localized air quality impact s, the provisions cited by commenters fail to overcome the plain language of Act. Specifically , none of the provision s identified by comme nters demo nstrates a congressional intent to not give literal meaning to the requirement to apply PSD to “an y pollutant [subject to regulation],” under CAA section 169(1) (as we interpret it), or "each pollutant subject to regulation under this chapter." CAA section 165(a)(4). As discuss ed more full y in the preamble, Congress certainly knew how to express a narrower pollutant coverage , such as that urged by petitioners

. For example, in CAA section 166(e) , Congress provided that area classification plans would not be required for "any air pollutant for which a national ambient air quality standard is established." We disagree with commenters that the phrase establishing the 100/250 tpy statutory thresholds should be interpreted to narrow the meaning of the phrase, as we have interpreted it, “an y air pollutant [subject to regulation]” in the applicability provisions. There is nothing inherent in the 100/250 tpy statutory threshold that limits the “air pollutant [subject to regulation]” to certain pollutants and not others.41

We disagree with commenters that without a NAAQS, PSD increments, or proven control devices in practice, regulating GHG emissions under the PSD program at this time will lead to a paperwork exercise of “empty” permits. GHG sources th at are subject to PSD will become subject to the BACT requirement, which will be a case

- by

- case determination and may well lead to, for example, energy

efficiency

measures, which would be reflected in their permits. We disagree with commenters who state that because EPA has the authority to interpret the applicability

provisions narrowl y

– that is, to read into the phrase “any air pollutant” in CAA §169(1) the qualifier “subject to regulation”

– we have authorit y to interpret those provisions more narrowl y still, to be limited to NAAQS pollutants or pollutants that have local air quality impacts. Our interpretation that reads in the qualifier “subject to regulation”

– which, as we state elsewhere, we promulgated man y years ago and are not now re

- opening

– was a justifiable interpretation under the principles of statutory construction, and we do not believe that the same is true of the NAAQS Approach or a similar approach limiting PSD to pollutants with local air quality impacts. 3.1.3 Comments on Regulat ion of GHGs under the Title V Program As noted previousl y, we proposed the Tailoring Rule based on our interpretation that GHG sources would become subject to the PSD and title V permitting programs upon finalization of the LDVR. In this section, we ad dress the comments that we received on the legal aspects of regulating GHGs under title V. Comment: Some industry

(5140, 5181, 5278, 5317, 5800, 16411) and state (3278, 4019) commenters believe that Congress never intended the title V program to cover GHGs, and that EPA need not interpret GHGs to be a regulated pollutant subject to title V. The following represent ty

pical reasons for this position:
 Title V permits are intended to compile applicable requirements for major sources. Because there are no a

pplicable requirements that require control of GHGs, title V should not apply . (5317)
 EPA should conclude that PSD and title V permitting are not meant to apply based on a source’s CO 2 or GHG emissions, and cite Congressional, legislative history , and leg al support for their position. (3512, 3720, 4298, 5082, 5111, 5318, 5800, 5922)
 The legislative history shows that Congress did not intend for title V to apply to the t ypes of sources that will be covered based on GHG emissions at the statutory level. (5317)
 Congress’ understanding of the scope of the title V program is evidenced b y the fact that the costs of the program were considered so modest that they were not broken out in the anal ys es of the 1990 CAA Amendments. This would not have been the case if Congress had envisioned that GHGs could be pollutants for which applicability could be considered at a level of 100 tpy . (5140, 5181, 5278)
 The EPA has long exercised discretion with respect to the title V provisions under the CAA, narrowing applicabi lity from the statutory

“any air pollutant” to only those pollutants that are regulated under the CAA (e.g., the Wegman memo). (5140, 5278, 5317)42

 GHGs are not a regulated pollutant per 40 CFR 70.2 until a source becomes subject to PSD. Thus, there is no requirement for a source that would be subject to title V only for GHGs to appl y for a title V permit within a year if it is not subject to PSD. (3278)
 Per the intent of title V, no title V application should be required if the resulting permit would be a “hollow” permit. In addition, existing title V permits need not be revised for GHGs if there are no emissions limits or standards that apply to GHGs. (5317)
 The EPA should interpret the CAA as requiring only sources that otherwise trigger title V for criteria pollutants to be required to obtain permits for their GHG emissions. (5800) Industry commenter 5715 notes that the title V permit program is meant for implementation by

each state. According to the commenter, title V is intended solely to codify a stationary source’s otherwise applicable requirements, but no such requirements are created by EPA’s decision to regulate mobile source GHG emissions. The commenter concludes that EPA lacks authorit y under the Act to compel an y state title V program to govern GHGs. Response: EPA has addressed man y of these comments in the preamble to the final rule, particularl y in section V.B. As discussed in the preamble, although we agree that various provisions of title V indicate that a purpose of title V is to gather a source’s applicable requirements into a single permit, see CAA sections 503(b)(1), 504(a), we do not read those provisions as expressly limiting title V to sources with applica ble requirements. The applicability provisions, by

their terms, includ e sources based on amount of emissions, and do not include any explicit limits to applicability

based on whether the sources has applicable requirements. As described in the preamble, we believe that Congress, although clearly expressing an intent that ti tle V apply to GHG sources generall y, did not express a clear intent as to how title V applies to GHG sources. The tension between these two sets of provisions, which we identified in the proposal and commenters further discussed, provides further support for that conclusion. Accordingl y, we have discretion under Chevron step 2 to determine a reasonable approach, consistent with the statutory requirements, concerning the application of title V to GHG sources with empty permits. We note that to date, we h ave issued permits to sources without applicable requirements, albeit on rare occasions. We have little reason to believe that the “empty

- permits” issue will arise in steps 1 and 2 of our tailoring approach because we believe there will be no “empty permi ts” in step 1 or step 2 or, if there are, that they will be very

few in number. As stated in the preamble, we believe that the tailoring approach we adopt in this rulemaking for steps 1 and 2 is a reasonable approach that is consistent with statutory requ irements. We need to gather more information concerning the potential number and utility of “empty permits” for GHG sources, in light of the fact that the need for requirements in title V permits will vary

based on the requirements of each SIP, and the fact that some SIPs contain broadly applicable requirements. As stated in the preamble, we intend to consider the issue of the applicability

of title V to GHG sources with “empty permits” in step 3 of our tailoring approach. When we do so, we will furthe r assess the potential for the approach of excluding empty permits from title V to relieve burden consistent with statutory requirements.43

The preamble also contains an extensive discussion of evidence of Congressional intent about the size, scope, and ti melines for permitting under the title V program. EPA agrees that subjecting all sources that emit at least 100 tpy of GHG to title V permitting as of January 2011 would be inconsistent with Congressional intent. For the reasons described in the preamble , w e believe that the tailoring approach we adopt in this rulemaking best reconciles the statutory provisions with congressional intent. EPA disagrees with the comment that suggests that sources with GHG emissions in excess of the major source threshold ( or the threshold as tailored by this rule) would not be required to appl y for title V permits as a result of GHG emissions until the source triggered PSD. Although it is true that GHG are not specified in the definition of “regulated air pollutant” in 40 CFR 70.2, any

“major source” is subject to title V permitting, see 40 CFR 70.3, and the definition of “major source” in 40 CFR 70.2 refers to “any air pollutant,” not simply regulated air pollutants. See also CAA section 501, 502, 302. The EPA has consis tently interpreted the regulatory

and statutory

definitions of “major source” under title V, including the term “any air pollutant ” , as applying to pollutants “subject to regulation.” Memorandum from Lydia N.Wegman, Deput y Director, Office of Air Quality Planning and Standards, U.S. EPA, to Air Division Directors, “Definition of Regulated Air Pollutant for Purposes of Title V” (Apr. 26, 1993)(Wegman Memo). EPA recentl y re - affirmed this position in EPA’s Reconsideration of Interpretation of Regulations that Determine Pollutants Covered b y Clean Air Act Permitting Programs. 75 FR 17704, 17022

- 23 (April 2, 2010)(Interpretive Memorandum Reconsideration Final Action). We do not interpret the Act to give EPA discretion to exclude categoricall y major sources of certain pollutants subject to regulation (such as those that are not criteria pollutants) from the requirements of title V. Thus, when GHG become subject to regulation, sources which emit GHGs in excess of the major source threshold (or the threshold as tailored by this rule) are subject to the obligation to undergo title V permitting. EPA notes that this approach is based on its interpretation of sections 302, 501, and 502 of the Act. Thus, EPA believes that such sources are required b y the Act to app ly for title V permits, and EPA is authorized to ensure that approved title V programs issue permits to such sources. EPA agrees with the comment that where a source has previousl y been issued a title V permit, the permit need not be revised solel y as a r esult of GHG becoming subject to regulation if the source is not subject to any additional applicable requirements. Transition issues related to title V permits are discussed in more detail in section V.E.4 of the preamble. 3.2 Comments on the Administrative Necessit y Doctrine Many state (4519, 4864, 4871), industry (3512, 4095, 4118, 4302, 4741, 4749, 4841, 4870, 4871, 4905, 5086, 5088, 5104, 5110, 5125, 5140, 5169, 5179, 5181, 5276, 5278, 5312, 5317, 5328, 5343, 5390, 5676, 5715, 5789, 5939, 8283, 85 45), environmental (5139), and agricultural (3953, 3953, 5062, 5168, 5743) commenters believe that EPA’s invocation of the administrative necessit y doctrine is legall y uncertain and could (or should) to be struck down upon review, which would lead to reins tatement of the statutory thresholds for PSD and title V44

and the permitting overload and paral ys is that EPA hoped to avoid. Commenters give a number of reasons for this belief, including the following:
 The EPA misstates the nature and availability of the administrative necessity doctrine. (5317, 5676)
 The administrative necessity doctrine applies where Congress intended regulation but it cannot be carried out. (5169, 5317) Commenter 5317 believes that the administrative necessit y doctrine fails on this count because, as the proposal preamble demonstrates, Congress never intended GHG sources to be regulated under PSD or title V. Commenter 5169 believes that the doctrine fails on this count because EPA cannot demonstrate that the statute clearl y intends f or GHGs to be “subject to regulation” as evidenced b y the contentious debate surrounding this issue (e.g., the controvers y over the Endangerment Finding, the PSD Interpretive Memo, etc.).
 The administrative necessity doctrine is a narrow and limited doctri ne that cannot support such a wide departure from the statute. It is not a delegation to rewrite the CAA. (3512, 4118, 4905, 5168, 5181, 5343, 5676, 5743, 8283)
 The EPA cannot use the administrative necessit y doctrine in this case because it has created the situation though its own discretionary actions which it now seeks to remedy using this doctrine. Where there is a statutory alternative that would eliminate the administrative necessit y, EPA must use it. (3512, 3953, 4118, 4302, 4741, 4905, 5062, 516 9, 5179, 5317, 5328, 5715)
 According to the Alabama Power decision, the administrative necessity doctrine does not create a general ability

to vary from the statute based on a determination that the costs outweigh the benefits. The EPA is attempting to do just that. (4243, 4870, 5139)
 The Alabama Power court noted that there is a particularly high burden of proof when attempting to invoke this doctrine prospectively , which is what EPA is trying to do here. (4095, 4741, 4870, 5104, 5139, 5140, 5278)
 The A labama Power court indicated that categorical exemptions from clear statutory language, such as EPA is attempting, are not favored under this doctrine. (4870, 5104, 5140, 5278)
 The administrative necessity doctrine was not upheld in any of the six cases c ited by

EPA in the proposal preamble. Contrary to EPA’s assertion, the facts in this case are not more supportive than in the unsuccessful cases. (3953, 4741, 4870, 5110, 5139, 5140, 5278, 5317, 5343, 5676)
 Even if the conditions for the administrative n ecessity doctrine exist, EPA has not met the burden of proof that the doctrine is justified. (4095)
 The EPA’s claim of administrative necessit y is unfounded for a variet y of reasons related to the achievability

of the permitting requirements and EPA’s pas t regulatory practices. (5312, 5715)
 The administrative necessity doctrine is legall y vulnerable because the Tailoring Rule will be ineffective

– state laws with thresholds at the 100/250 tpy levels will continue to apply . (4095)
 The “administrative nece ssity” doctrine was not available because EPA has not moved expeditiously

to initiate streamlining. (4095)
 The “administrative necessity” doctrine was not available because EPA has not explained the amount of time that it needed to conduct streamlining m easures. (4095)45

 A commenter also asserted that EPA has not established that it faces a shortage of funds, time, or technical personnel, and that for this reason, too, the “administrative necessity” doctrine is not available. (4095)
 The title V fee pr ovisions (which require states to collect fees sufficient to fund the program) undercut the administrative necessity doctrine for that program. (3953) Some industry

(4298, 5052, 5104, 5111, 5143) and state (3918, 4694, 4860, 5057, 5314) commenters agree with EPA’s proposed use of the administrative necessit y doctrine, if EPA proceeds with applying PSD and title V to GHGs. The commenters make the following additional points:
 This situation meets the requirements for the administrative necessity doctrine b ased on the shortage of funds, time, and personnel needed to administer the programs. (5143)
 The administrative necessity doctrine will face a lower burden given that EPA intends to phase in the statutory

thresholds. (5052)
 The EPA is correct in its anal ys is that the Tailoring Rule does not represent a permanent exemption based on cost/benefit considerations. (5052)
 The EPA’s 3

- step process for implementing the administrative necessity doctrine is correctly formulated. (5052, 5111)
 The administrative ne cessity doctrine and the absurd results doctrine are independent precedents

– one may

prevail even if the other does not. (5052) However, some of these supportive commenters (5052, 5143) believe that EPA must take additional steps to improve the administrability of the PSD and title V programs through other means so as to deviate as little from the statute as possible in order to prevail in court. One such supportive commenter (5052) believed such additional steps include “further steps to streamline the application of PSD by delaying for another y ear its applicability date, by redefining critical applicability

requirements (at least temporarily), and by adjusting the definition of ‘major source’ in the first phase of the program to avoid initially [ sic .] applicability

to small businesses....” Another supportive commenter (5143) believes that the administrative necessity doctrine is justified, but EPA’s anal ys is is deficient because a s ys tematic, sector

- based evaluation is needed with full anal ys is of, and measures to mitigate, the serious regulatory , technical, and economic consequences. Some of the industry

commenters (5140, 5181, 5278) who believe that the administrative necessit y doctrine will fail for the PSD program believe that it is more legally de fensible for the title V program. These commenters believe it is clear that Congress clearl y did not intend for over 6 million sources to be covered b y the title V program. The commenters add that when the title V regulations were first issued, the quest ion of whether CO 2 was required to be considered in determining title V applicability was raised and the Agency issued a determination that CO 2 was not considered an air pollutant that could trigger title V applicability

. One environmental commenter (53 06) supports the use of onl y the administrative necessit y doctrine (and not the absurd results doctrine) for the first phase of the Tailoring Rule. This commenter believes that EPA should defer any decisions on whether application of the statutory thresho lds would constitute an absurd result until it has completed the further46

proceedings contemplated in the proposal to streamline implementations of the PSD and title V programs. In addition, a few commenters (5139, 5315) argue that the resource constraints and administrative challenges at the heart of the Tailoring Rule have been caused in large part b y the agency ’s lengthy

delay in addressing GHGs under the CAA

. Response: Having reviewed the comments, we continue to believe that the “administrative nece ssit y” doctrine supports our rulemaking in the manner that we describe in the preamble. We believe that we have accuratel y stated the nature and availability of the doctrine, which we set out at length in the proposal, including summarizing in detail all of the D.C. Circuit case law. We believe that the doctrine applies because, as we discuss in the preamble, Congress intended that PSD and title V apply to GHG sources in general, but that a literal reading of the PSD and title V applicability

provisions c reates administrative burdens that are impossible for the permitting authorities to carry

. Some commenters argued that the administrative necessit y doctrine is not available to EPA under the present circumstances, which are that the need to appl y the do ctrine

– which render the PSD and title V requirements administrable

-- result from an action that EPA itself took, which is promulgating the LDVR and thereby triggering PSD and title V applicability. That is, according to these comments, EPA created this situation through its own discretionary actions and, for that reason, cannot avail itself of the “administrative necessity” doctrine. We do not find any

thing in the “administrative necessity” caselaw, and commenters have not pointed to any

thing, that li mits the availability of the doctrine in the manner suggested b y the comm enters. Once PSD and title V are triggered, the administrative burdens will become overwhelming, and that scenario brings into play the “administrative necessity” doctrine. Preclusi on of the use of the doctrine for this rule, the Tailoring Rule, as suggested b y commenters, would not be appropriate because that would, in effect, punish the EPA, permitting authorities, and the regulated community for EPA’s action in another rule, the LDVR. We believe that commenters’ argument that the doctrine is not available for use in the Tailoring Rule are in effect arguing that EPA should not, or is not authorized to, proceed with the LDVR because doing so would trigger PSD and title V applicabili ty and that, in turn, would give rise to absurd results and administrative impossibilities. Several commenters do directly make that comment as well. We respond to that comment elsewhere. To the commenter who argues that Congress did not intend that GH Gs become “subject to regulation” under other provisions of the CAA, we respond that once we regulate GHGs under another provision of the CAA, then, under our reconsideration of the interpretive memo, GHGs are “subject to regulation” for purposes of PSD an d title V. Any comments that GHGs should not have been regulated under the other CAA provision may be relevant fo r that rulemaking, but not the Tailoring R

ule; and any

comments that the interpretive memo reconsideration was incorrect may

be relevant for the interpretive memo recons ideration, but, again, not the Tailoring R ule.47

The comments that th e “ administrative necessit y” doctrine is a narrow and limited doctrine that cannot support such a wide departure from the statute because i t is not a delegation to rewrite the CAA are, in general, linked to the comments that EPA cannot use the administrative necessit y doctrine in this case because it has created the situation though its own discretionary

actions which it now seeks to remedy using this doctrine. T hese commenters add that there alternative ways to interpret the statutory requirements that would eliminate the administrative necessit y , such as interpreting the PSD provisions to apply only to sources that emit NAAQS pollutants for which the area is des ignated attainment or unclassifiable (or some variation of that argument), or interpreting the term “subject to regulation” to exclude GHGs. According to these commenters, EPA must use one of those alternatives. Our response to these comments is that for the reasons discussed in the preamble, we believe that the “administrative necessity” doctrine provides a basis for the Tailoring Rule. As we stated in the preamble, the PSD provisions and their legislative history and the title V provisions and their le gislative history indicate a clear congressional intent, under Chevron step 1, on the issue of whether PSD and title V, respectively , appl y to GHG sources, and that is in the affirmative, that PSD and title V do apply to GHG sources. In the preamble, we f urther discuss congressional intent as to how PSD and title V apply to GHG sources, and we conclude that the Tailoring Rule is appropriate un der that anal yt ical approach. As we further discuss, the “administrative necessity” doctrine is consistent with th is approach. Because Congress intended that PSD and title V apply to GHG sources, but a literal application of the PSD and title V applicability

provisions to GHG sources would be impossible to administer, then, under the “administrative necessity” doctri ne, PSD and titl e V applicability may be phased

- in for GHG sources. We disagree with commenters that under the “administrative necessity” doctrine, we must construe the PSD and title V requirements as commenters have suggested, e.g ., for PSD, to limit PS D to sources that emit a NAAQS pollutant for which the area is attainment or unclassifiable, and for PSD and title V, by construing the term “subject to regulation” to exclude GHGS

-- in order to avoid creating an administrative impossibility . Under our anal yt ical approach

– the key

to which is that Congress expressed a clear intent that PSD and title V apply to GHG sources

– PSD and title V must be applied to GHG sources, and the “administrative necessit y” doctrine authorizes a mechanism to do so. That m echanism is a phase

- in approach. The alternative anal yt ical constructions suggested by commenters are not justifiable because they are not consistent with congressional intent, which is, as we have said, to apply PSD and title V to GHG sources. EPA disa grees with commenters that EPA is required to adopt the alternative constructions recommended by commenters on grounds that those constructions are reasonabl y consistent with the PSD and title V provisions by their terms and avoid the problems of administr ative impossibility . As discussed in the preamble, the PSD and title V provisions, by their terms, read literall y, clearl y appl y to GHG sources. The alternative constructions recommended b y commenters, which exempt GHG sources from PSD and title V, canno t be considered to be constructions that are reasonabl y consistent with the terms of the statutory provisions. We discuss elsewhere wh y interpreting the PSD provisions to apply onl y to sources48

that emit NAAQS pollutants for which the area is attainment or unclassifiable is not valid. Although we adopt an interpretation of “subject to regulation” under the Tailoring Rule

– under which GHGs emitted from certain sources are considered to be subject to regulation and GHGs emitted from other sources are not, at present

– we recognize that this interpretation is not consistent with the literal meaning of the term “subject to regulation.” Rather, under a literal meaning, as we have said in the preamble, once GHGs are regulated under the LDVR, then all GHGs are considered to be subject to regulation in a literal sense. However, our construction is acceptable in the context of our anal yt ical approach. Therefore, although the alternative constructions do obviate the problem of administrative impossibility , simply because they exempt GHG sources from PSD and title V, their inconsistency with the literal terms of the provisions and with clear congressional intent to apply PSD and title V to GHG sources means that EPA cannot adopt them. As for certain aspects of th e “administrative necessity” doctrine raised b y commenters, we disagree that we are conducting the t ype of cost

- benefit analy sis that the D.C. Circuit, in Alabama Power v. Costle, 636 F.2d 323 (D.C. Cir. 1980) said could not be use d, as we say in the preamble. In addition, we state in the preamble that we recognize, as commenters emphasize, that the “administrative necessit y” doctrine carries a particularly high burden of proof when the agency is attempting to invoke the doctrine prospectivel y, but we beli eve that the facts in this case are compelling and therefore that we meet that burden of proof. We also recognize that the Court in Alabama Power indicated that categorical exemptions are not favored under the “administrative necessity” doctrine. We read the opinion to leave the door open to categorical exemptions, although cautioning that they are disfavored, based on a strong factual showing. We are not, in this rule, promulgating an y categorical exemptions, although we note that we may address them in future rulemaking. We also recognize, as commenters pointed out, that the administrative necessit y doctrine was not upheld in any of the cases cited by

EPA in the proposal preamble. We disagree with commenters that the facts in this case are not more su pportive than in the unsuccessful cases. Inthe proposal, we compared the facts of the present case to those in the cases decided b y the D.C. Circuit, and explained wh y the facts in the present case are more compelling than the facts in the other cases. For reasons discussed in the preamble to this final Tailoring Rule, since we published the proposed rulemaking, we have improved our understanding of the facts, and we now recognize that the facts are even more compelling than we understood them to be at p roposal. As for the comment that the “ administrative necessity” doctrine is legally vulnerable because the Tailoring Rule will be ineffective

– state laws with thresholds at the 100/250 tpy levels will continue to apply

– we have revised our proposal to a ddress the state legal problem that the commenter identifes. As discussed in the final rule, if some s tates are not able to take advantage of our mechanism, we intend to promptly take additional action. Even if state law problems remain for some period o f time

– that is, even if in certain states, GHG sources at the 100/250 tpy

level and higher remain subject to PSD as a matter of s tate law for some period of time

– we do not believe that this jeopardizes the applicability of the “administrative necessit y” doctrine, as the commenter asserts. Nothing in the case law concerning the “administrative necessit y” doctrine suggests that the doctrine is available only to the extent it allows the agency to fashion a remed y that will solve the administrative problem in total, to the satisfaction of every affected part y. Even with some remaining state law problem, the Tailoring Rule49

ameliorates adminis trative burdens resulting from f ederal law requirements and shows promise to ameliorate at least a meaningful amount of th e administrative burdens under state law. A commenter also asserted that the “administrative necessity” doctrine was not available because EPA has not moved expeditiously to initiate streamlining. (4095) The commenter emphasized that EPA had rais ed the issue of administrative burdens attendant to PSD and title V applicability

to GHGs in the advance notice of proposed rulemaking (ANPR) concerning regulating GHGs under the CAA, which EPA published by notice dated July

30, 2008, 73 FR 44354, and asse rted that EPA has had plent y of time since then to complete at least some streamlining actions, particularly , ac tion involving PTE

. We disagree with the commenter. As discussed in the preamble, we believe that under the “administrative necessity” doctrine, the agency must, as the first step, make every effort to adjust the applicable requirements within the statutory constraints, and it is only if, after the agency does so, that if the agency determines that an impossible administrative burden remains, then the agency

is authorized to adjust the statutory constr aints themselves. We believe that in the present context, this means appl yi ng whatever streamlining opportunities are presentl y authorized and available to GHG sources, and then determining wheth er the remaining administrative burdens are impossible to m anage. However, we do not think that this means that the availability of the “administrative necessity” doctrine is conditioned on our taking streamlining action prior to finalizing the Tailoring Rule. Resources are scarce, and as a result, it is difficult for an agency

to expend resources (in this case, by conducting rulemaking on streamlining measures) prior to taking the action that confirms the need to expend the resources (in this case, b y co mpleting the Tailoring Rule). Certainly , we see no basis to the commenter’s assertion that, in effect, the “clock began running” immediately after publication of the ANPR. In an y event, as explained in the preamble to this rule, we have taken important s teps since publication of the proposal for the Tailoring Rule to begin streamlining actions. The commenter also stated that the “administrative necessity” doctrine was not available because EPA has not explained the amount of time that it needed to conduc t streamlining measures. We have provided that information in the preamble. A commenter also asserted that EPA has not established that it faces a shortage of funds, time, or technical personnel, and that for this reason, too, the “administrative necessi ty” doctrine is not available. We disagree. We describe in the preamble the extraordinary increase in numbers of sources that will become subject to PSD and title V permitting requirements, immediately

after GHGs become subject to regulation on January 2 , 2011 , absent tailoring. We also de scribe the numbers of hours and FTEs, and the attendant financial cost, to permitting authorities, and we compare that information with the amounts that permitting authorities currentl y spend on PSD and title V permitti ng. These figures make clear the enormous increase in permitting authority

obligations absent the Tailoring Rule. With respect to the comment that the title V fee provisions (which require states to collect fees sufficient to fund the program) undercut the administrative necessity doctrine for that program , we have discussed in the preamble for the final rule the significance of title V fees for the “administrative necessity” rationale.50

With respect to the comment that EPA must take “further steps to str eamline the application of PSD by

delaying for another ye ar its applicability date, b y redefining critical applicability

requirements (at least temporarily), and by adjusting the definition of ‘major source’ in the first phase of the program to avoid initi ally [ sic.] applic ability to small businesses...,” the tailoring schedule we have established, as described and justified in the preamble addresses these concerns b y limiting PSD and title V to the largest GHG sources in the near term, but in a manner that i s practicable for the stakeholders, and establishes an appropriate process for addressing expansion of the program to smaller sources, so that there is no need to delay applicability

by a year. We note that many

commenters generall y agreed with our appro ach at proposal, and we appreciate those comments. One supportive commenter stated that EPA should rely on onl y the administrative necessit y doctrine (and not the absurd results doctrine) for the first phase of the Tailoring Rule because EPA should defer an y decisions on whether application of the statutory thresholds would constitute an absurd result until it has completed the further proceedings contemplated in the proposal to streamline implementations of the PSD and title V programs. We are not promul gating any permanent exemption from PSD or title V applicability with this rule, although we may

address such exemptions in future rulemaking. We believe that the “absurd results” doctrine supports our action in this rulemaking because we believe the doctrine may be applied whenever a statutory requirement of any

ty pe, if applied literall y, would produce an absurd result. Thus, we believe that the “absurd results” doctrines applies even to statutory provisions related to timing and can therefore justify a delay or phase

- in, as we do in this case. As explained in the preamble, we believe that the doctrines we cite

– the “absurd results,” “one

step

- at

- a - time,” and “one

- step

- at

- a - time”

– support our action today both independentl y of each other and in an inte grated fashion. 3.3 Comments on the Absurd Results Doctrine As with the administrative necessity doctrine, many

state (4519, 4864, 4871), industry (3512, 4118, 4243, 4630, 4741, 4749, 4841, 4870, 4871, 4905, 5086, 5088, 5110, 5125, 5129, 5140, 5169, 5 179, 5181, 5199, 5236, 5245, 5278, 5312, 5317, 5328, 5343, 5390, 5676, 5715, 5789, 5939, 8545), environmental (5139), and agricultural (3953, 5062, 5168, 5743) commenters believe that EPA’s invocation of the absurd results doctrine is legally uncertain and could (or should) be struck down upon review, which would lead to reinstatement of the statutory thresholds for PSD and title V and the permitting overload and paral ys is that EPA hoped to avoid. Commenters give a number of reasons for this belief (some o f which are the same as for the administrative necessity doctrine), including the following:
 The absurd result doctrine is a narrow and limited doctrine that cannot support such a wide departure from the statute. (4118, 4871, 4905, 5110, 5125, 5140, 5168, 5181, 5199, 5278, 5343, 5743)
 The EPA cannot use the absurd result doctrine in this case because it has created the situation though its own discretionary actions which it now seeks to remedy using this doctrine. (3512, 3953, 4118, 4243, 4741, 4905, 5062 , 5169, 5199, 5236, 5245, 5317, 5328)51

 The EPA cannot use the absurd result doctrine in this case because a Chevron anal ys is in this case stops at step 1

– unambiguous statutory meaning. (4741, 5139, 5179, 5715)
 The absurd result doctrine allows a court to read a statute in a way that is not the most ordinary reading, but is a permissible reading, to avoid an absurdity . That is, it allows interpretation to narrow the meaning of a vague term (or, more rarely , broaden the meaning of a vague term), but it cannot be used as a basis to rewrite the clear meaning of a statute. The broad term in this situation is “pollutant,” not the thresholds. Thus, “pollutant” should be interpreted to exclude GHGs in the PSD and title V contexts to avoid the absurdit y. (5676)
 The absurd result doctrine requires a perverse outcome that is demonstrably at odds with Congressional intent, not excessive fulfillment of that intent. If EPA is correct to assume that Congress intended GHGs to be regulated under CAA permitting programs , it must also assume that Congress intended the application of BACT, title V permitting, etc. There is nothing inherently absurd about appl yi ng beneficial programs to the widest array of sources, particularl y when Congress set the thresholds. (5715)
 Und er the absurd result doctrine, one must construe the statutory language to avoid a “literal” interpretation that would frustrate Congressional intent. Because EPA established in the proposal preamble that Congress never intended to subject sources to PSD and title V due to GHGs, it must construe the CAA to avoid this outcome rather than rewrite the plain language of the Act. (3953, 4870, 5140, 5181, 5278, 5317)
 According to Griffin v. Oceanic Contractors, Inc. , where a statute can be interpreted to avoid absurd results, it must be so interpreted rather than relying on judicially created exceptions. The EPA should consider alternative approaches (no endangerment finding, no PSD without a NAAQS, excluding GHGs from "regulated NSP pollutant" classification, use of CAA sections 115 and 179B) to avoid the absurd result in this case. (5110, 5140, 5278)
 The EPA’s anal ys is of related cases misapplies the absurd result doctrine. The application of this doctrine in this way is not supported by

case law. (4741, 48 70, 5140, 5278, 5312, 5343, 5715)
 The absurd result doctrine cannot be applied temporaril y, so the temporary exemption provided b y the Tailoring Rule has greater legal vulnerability than would a permanent exemption. (3953, 5104)
 It is the province of the courts to declare that results are “absurd,” it is not for EPA to decide. (3512)
 EPA should conclude that PSD and title V permitting are not meant to apply based on a source’s CO 2 or GHG emissions, and cite Congressional, legislative history , and legal su pport for their position. (3512, 3720, 4298, 5082, 5111, 5318, 5800, 5922) While not entirely

opposed to the use of the absurd result doctrine, one environmental commenter (5306) cautions that it would be advisable for EPA to defer an y decision on whe ther to invoke that doctrine until after the first phase of implementation is complete. (The commenter supported using the administrative necessit y doctrine to justify the first phase.) The commenter notes that Congress did not restrict the PSD or title V programs to a closed category of sources or pollutants

– here, as elsewhere, the CAA provides flexibility to respond to new, or newly recognized, threats to public health and welfare. The commenter states that EPA should be hesitant to conclude that the application of the CAA’s structure to newl y identified problems

–52

even when awkward and challenging

– is “demonstrably at odds” with Congressional intent until reasonable means of accommodation have been rigorousl y examined. Some industry

(3998, 4298, 5 052, 5104, 5111, 5143) and state (3858, 4860, 5057, 5314) commenters agree with EPA’s proposed use of the absurd result doctrine (if EPA proceeds with applying PSD and title V to GHGs) on the basis that the statutory thresholds would cause an absurd result . The commenters make the following additional points:
 The absurd result doctrine can apply when a challenged statutory application: (1) was unanticipated or unresolved by the legislature; (2) would not advance the statute’s substantive goals; and (3) wou ld lead to a harsh or problematic result. The commenter believes that this situation clearl y applies in this case. (5143)
 The administrative necessity doctrine and the absurd results doctrine are independent precedents

– one may

prevail even if the other does not. (5052)
 The absurd results doctrine will face a lower burden given that EPA intends to phase in the statutory

thresholds. (5052)
 It is correct to apply

the absurd result doctrine in this case, but EPA should exempt GHGs from coverage under this doctrine rather than raise the thresholds. (5104) However, some of these supportive commenters (3858, 4298, 5052, 5111) believe that EPA must take additional steps to improve the administrability of the PSD and title V programs through other means so a s to deviate as little from the statute as possible in order to prevail in court. Response: Commenters assert that the “absurd results” doctrine is available onl y to construe a statutory term in a way

that may not be its ordinary

meaning but that nevertheless is a permissible reading, and that the doctrine is not available when the literal meaning of a statutory provision is unambiguous. We do not believe that the “absurd results” doctrine is limited to the circumstances described by the commenters, and our reading of the caselaw is that in fact, Courts have emplo yed the doctrine to construe terms differently than their literal meaning would provide. In the preamble, we cite examples. More broadl y, we believe that our application of the “absurd result s” doctrine to the PSD and title V applicability

provisions is fully

consistent with the way

that many

of the cases have applied the doctrine. Many of the cases have applied the doctrine to a statutory provision that imposes a requirement or a constraint on a specified group or entity , and, by its terms, describes or defines the group or entity in broad terms. In these cases, the Courts have determined that a literal reading of the description or definition of the group or entity would sweep in some compo nent, but that applying the requirement or constraint to that component would be an absurd result. Accordingly , the Court interpreted the statutory provision that describes or defines the group or entit y narrowly

– even though not in accordance with the p rovision’s literal meaning

– to exclude that component. See, e.g., Nixon v. Missouri Municipal League , 541 U.S. 125, 132

- 33 (2004) (“an y entity” includes private but not public entities); Raygor v. Regents of Univ. of Minn., 534 U.S. 533, 542

- 45 (2002) (“implying a narrow interpretation of ... ‘any claim asserted’ so as to exclude certain claims dismissed on Eleventh Amendment grounds”); Rowland53

v. Cal. Men’s Colony , 506 U.S. 194, 200 (1993) (finding that an artificial entity su ch as an association is not a “person” under the statute, and describing the absurdity doctrine as a “common mandate of statutory construction”); Green v. Bock Laundry Machine Company , 490 U.S. 504 (1989) (provision in Federal Rule of Evidence that protect s “the defendant” against potentially

prejudicial evidence, but not the plaintiff, refers to onl y criminal, and not civil, defendants); Watt v. Alaska , 451 U.S. 259, 266 (1981) (rejecting reliance on plain statutory language and concluding that the term “m inerals” in § 401(a) of the Wildlife Refuge Revenue Sharing Act applies onl y to minerals on acquired refuge lands; stating “[t]he circumstances of the enactment of particular legislation may persuade a court that Congress did not intend words of common meaning to have their literal effect”); Train v. Colorado Public Interest Research Group, Inc. , 426 U.S. 1, 23

- 24 (1976) (prohibition in Federal Water Pollution Control Act against discharging into navigable waters “pollutants,” which are defined to include “radioactive materials,” does not apply to three specific ty pes of radioactive materials). Here, the CAA imposes requirements, which are PSD or title V permitting obligations, on certain entities, which are, for PSD purposes, a “major emitting facility ,” including one that undertakes a “modification,” and, for title V purposes, a “major source.” The CAA defines those terms broadl y, and those definitions, by their literal meaning, (i) include all GHG sources that emit above specified thresholds or, in the case of a “modification,” all such sources that make a phy sical or operational change that results in GHG emissions above a certain threshold, and (ii) include such GHG sources immediately after GHGs become subject to regulation under any other CAA provis ion. (As discussed in the preamble, EPA has incorporated these statutory definitions into its regulations.) However, subjecting all those GHG sources at that time to PSD and title V requirements produces absurd results. Accordingl y, EPA may interpret th ose terms narrowl y to exclude, at least temporaril y, some GHG sources from the terms “major emitting facility , “modification,” and “major source” (and their counterpart regulatory terms). As EPA explains in the preamble for this rulemaking, each of “maj or emitting facility ,” “modification,” and “major source” includes, as part of its definition, four terms, and an y one or all four of those terms may be interpreted

– that is, used as the legal mechanism, or “hook”

-- to achieve the overall result of inte rpreting “major emitting facility ,” “modification,” or “major source” more narrowl y t o exclude, at least temporaril y, some of the GHG sources. Specificall y, each provision includes (i) the term “an y ... source,” or “a stationary source,” and that term could be considered not to refer literall y to all of the GHG sources; (ii) either the term “two hundred fift y tons per ye ar” or “100 tons per ye ar,” or the term “increases the amount,” and those terms could be considered not to refer literally to the tonnage am ount of emissions from all of the GHG sources; (iii) the term “an y air pollutant,” 2 and that term could be considered not to refer literally to the emissions from all of the GHG sources; and (iv) the term “subject to regulation under the CAA” (which we hav e interpreted “an y air pollutant” to include), and that term could be considered not to refer literally to the emissions from all of the GHG sources. As long as an y one of those four terms may be considered not to have its literal meaning as applied to GH G sources, then the definition as a whole

– again, for PSD, the terms “major emitting facility” or

2 We do not believe that this term is ambiguous with respect to the need to cover GHG sources under either the PSD or title V program, only with respect to what sources of GHG should be covered under the circumstances presented here.54

“modifications,” and for title V, the term “major source”

– cannot be considered to appl y to all GHG sources, at least, not for an initial period of time. As a result, regardless of the specific legal mechanism, or “hook,” the end result should be the same as in the many other cases, a few of which are cited above, in which the courts have considered a similar problem, and that is that these broadly written definitions of a group or entity (“major emitting facility ,” “modification,” or “major source”) that is subject to a requirement or constraint (PSD or title V requirements) should be interpreted narrowl y

– even though not in accordance with the literal me aning of the definition

– to exclude some component (smaller GHG sources, at least temporaril y) when necessary to avoid absurd results. We reiterate that in the present case, the absurd result is the enormous increase in permitting actions that would be required as of the January 2, 2011 “take

- effect” date for the LDVR, which increase would, by overwhelming the PSD and title V permitting processes and thereb y impeding the orderly issuance of both types of permits, undermine Congress’s goals for both the P SD program (to issue permits that allow large industrial sources to construct or expand, with environmental safeguard) and the operating permit program (to issue permits that promote accountability

and enforceability). This result occurs because of the li teral application of the PSD and title V applicability provisions to GHG sources, and, for this reason, this case falls well within the caselaw in which the courts have applied the “absurd results” doctrine. In those cases, the courts have declined to int erpret or appl y statutory provisions in accordance with their literal meaning when doing so would undermine the intent of the statute or lead to absurd or futile results. Because our application of the “absurd results” doctrine in this case is consistent with the caselaw in the manner just described, we disagree with commenters who state that under the caselaw, we misappl y the “absurd results” doctrine. In addition, we disagree with commenters who state that the “absurd results” doctrine is not availabl e in this case because it was our own action

– promulgation of the endangerment/cause or contribute findings and the light dut y vehicle rule

– that, by triggering PSD, created the absurd results. We respond to this comment in the preamble. We also disagr ee with those who say

the doctrine cannot be applied temporaril y; we believe the doctrine may potentially

be applied in any

circumstance in which a statutory requirement, read literally , produces a result that undermines the purposes of the provision, whether that result is temporary or not. We also disagree with commenters who say that the “absurd results” doctrine does not apply to this case because Congress’s intent was to apply the PSD and title V programs to the widest array

of sources; rather, as we discuss in the preamble, although Congress did intend that PSD and title V apply

to GHG sources in general, Congress cannot be said to have intended the literal application of the statutory provisions to GHG sources

– that is, the 100/250 tpy thresholds

-- because that would bring in man y sources during the initial period than the permitting authorities could handle. For the same reason, we also disagree with commenters who read the proposal to state that Congress did not intend to apply PSD or title V to GHG sources. We disagree with commenters who state that only the courts may

appl y the “absurd results” doctrine; we believe that the doctrine is one of the precepts of statutory construction and EPA should apply the precepts of statutory

construction to i nterpret the CAA. We also disagree with commenters who argue that interpreting the PSD provisions as being limited to sources that emit pollutants for which the area in which they are located is designated as attainment or55

unclassifiable resolves the “abs urd results.” For the reasons discussed elsewhere, we disagree that the PSD provisions can or should be interpreted in that manner. 3.4 Comments on the Step

- by

- Step Process In the proposal preamble we took comment on a third potential justification for our proposal

– a line of cases that establishes, in certain situations, the acceptability of a “step

- by

step process” for implementing a statutory requirement. 74 FR 55319. We received a few comments on this topic. Comment: An environmental commenter (5122) and an industry commenter (4298) support the use of the case

- by

- case justification. The environmental commenter (5122) stresses that EPA should make clear that it is not seeking to avoid its statutory obligations by

providing far greater detail on its future plans for the step

- by

- step regulation of GHGs. This commenter provides additional case citations to support the viability of this approach. A state commenter (2797) does not concur with EPA’s interpretation of case law. This commenter be lieves that EPA stretches the U.S. Supreme Court opinion related to first steps. An industry

commenter (5676) states that the cases cited by EPA stand for a different legal principle than EPA advances to justify the Tailoring Rule. The commenter believe s that the relevant analogy

to these cases would be EPA deciding to regulate GHG only under some CAA programs because it believed that these would be sufficient to achieve its goals

– in neither case did the Court excuse compliance with specific statutory criteria for a limited period. Response: We have discussed the “one

- step

- at

- a - time” doctrine in greater detail, including more extensive discussion of the caselaw, in the preamble for the final rule than we did at proposal. In addition, we discussed in more detail in the preamble for the final rule our future plans for addressing GHG sources under the PSD and title V programs. For the reasons stated in the preamble, we believe that the Tailoring Rule is fully consistent with the “one

- step

- at

- a - time” doc trine. 3.5 Comments on Implementation through Retroactivel y Li miting Approval of SIPs and Title V Programs In the proposal preamble, we discussed our proposal to implement the PSD thresholds for GHGs b y limiting our approval of the PSD permitting thre shold level provisions and the significance level provisions in the previously fully approved SIPs of those states with SIP

approved PSD programs. 74 FR 55342. We proposed to take this action under authorit y of CAA section 301(a), which incorporates the inherent authority of an agency

to reconsider its actions, and Administrative Procedure Act ( APA ) section 553. In the alternative, we proposed to limit our approval of PSD SIPs through the error correction provisions of CAA section56

110(k)(6). Similarly , we proposed to limit our approval of the title V permitting threshold level provisions in the previously full y approved state title v programs, again based on CAA section 301(a) and APA section 553. 74 FR 55345. Comment: Several industry

commenters (4 095, 4106, 4118, 4691, 4870, 5083, 5058, 5131, 5133, 5137, 5140, 5179, 5181, 5278, 5317, 5713, 6414, 16411) and state (2729, 4019, 4866, 4989, 5039, 5084) commenters object to our proposal to limit our approval of previously fully approved SIPs. The argum ents against the proposed approach include the following:
 The EPA has overstated its authority under CAA section 301(a). The District Court Circuit ( D.C. Circuit ) has observed that section 301(a)(1) “does not provide the Administrator with carte blanche a uthorit y to promulgate an y rules, on any matter relating to the CAA, in any manner that the Administrator wishes.” Where the CAA includes express provisions

– such as section 110(k)(5) (the SIP call provision)

– EPA is required to follow those provisions. If there was a mistake in prior SIP approvals as EPA contends, section 110(k)(5) is EPA’s sole and exclusive mechanism for seeking to correct a SIP that has been determined to be inadequate. (4019, 4866, 4870, 5058, 5083, 5131, 5140, 5181, 5278, 5317, 5 714)
 The EPA’s invocation of 5 U.S.C. 553(e) is legally indefensible. The EPA has mentioned no outstanding petition for EPA to revisit its PSD SIP approvals, so section 553(e) appears to be inapposite. In addition, CAA section 307(d)(1)(B) and the penult imate sentence of section 307(d)(1) expressly state that the provisions of section 553 do not apply

to “the promulgation or revision of an implementation plan by the Administrator” under CAA section 110(c), which, in practical effect, is the action EPA pro poses here. Even where section 553(e) applies, it merely directs agencies to allow parties to seek revisions of rules; it plainly does not permit agencies to disregard procedural requirements

– whether under the APA or under organic statutes such as the C AA

– that agencies must follow in effecting an y such revisions. (5317, 5714)
 The EPA’s CAA section 110(k)(6) justification is flawed because section 110(k)(6) authority is limited to the correction of technical or clerical errors made in a SIP approval an d does not allow an y unilateral revision b y EPA of substantive provisions or an y changes to the nature or terms of a SIP that EPA has approved in the past. (2797, 4019, 4866, 4870, 4989, 5039, 5083, 5133, 5131, 5140, 5179, 5181, 5279, 5317, 6414)
 The ty

pe of action EPA wishes to undertake can only be taken through a SIP call under section 110(k)(5) of the CAA, although that section is not applicable in this situation because SIPs that incorporate the CAA applicability thresholds are not inadequate to “comp ly with any requirement of the Act.” (4106, 4691, 4870, 5058, 5140, 5181, 5278, 5317, 6414)
 If EPA wishes to pursue its current regulatory strategy , it could amend the minimum PSD SIP elements in 40 CFR 51.166 and allow states to develop and submit SIP re visions in accordance with those new provisions. (5182, 5317)
 The EPA’s retroactive limitation on its prior approval of the SIPs is not being done to correct a mistake

– even EPA does not claim its approvals were in error at the time it promulgated them. Rather, the Agency is trying to change the SIPs now to avoid57

substantive and timing problems it has created b y i ts own deliberate actions. (4870, 5058, 5131, 5140, 5181, 5278, 5317, 6414)
 The EPA is not proposing to correct an y “error” “in the same manne r” as it made its approval. The p roposed Tailoring Rule in effect proposes a blanket limitation on all past approvals; EPA is not issuing an individualized new proposed approval (or disapproval) action for each SIP that had been the subject of an individu al EPA notice

- and

- comment SIP approval proceeding. A SIP call is the proper procedure to address any alleged inadequacies in state resources. (2797, 4989, 5181, 5317)
 In Concerned Citizens of Bridesburg v. EPA , 836 F.2d 777 (3d Cir. 1987), the court held that EPA’s attempt to rescind SIP revisions that EPA had approved 13 y ears earlier because EPA claimed its original approval was in error, when in fact the SIP provisions were no longer consistent with EPA policy due to an intervening change in that polic y, was not an inadvertent mistake that would justify a unilateral change in disregard of procedural requirements for SIP revisions. (This case took place before enactment of section 110(k) of the CAA.) See also Detroit Edison Co. v. EPA , 496 F.2d 244, 24 8

- 49 (6th Cir. 1974) (a proposed clarification by EPA of a SIP several months after promulgation was not in fact a clarification but a revision because it effected substantive change). (4870, 5080, 5140, 5181, 5278, 5317)
 The EPA’s invocation of section 1 10(k)(6) establishes a troubling precedent that undermines the role of states under the CAA. The EPA’s approach is unguided by any standards, criteria, or precedent. States and regulated sources would no longer have confidence that they

could rely

on app roved SIPs, safe from EPA’s revision of those SIPs whenever the Agency

decides

– on an y grounds it chooses or no grounds at all

– that its prior approval had been an “error.” Under this interpretation of section 110(k)(6), EPA could dispense entirel y with SIP calls under section 110(k)(5) and the states’ role in SIP revisions, which was clearly not what Congress had in mind when it enacted section 110(k). The EPA’s approach seriousl y undermines the carefull y crafted federal

- state partnership the CAA creat es, which assigns states the primary role in designing SIPs, while giving EPA a more limited, reviewing role. (4870, 5039, 5140, 5181, 5278, 5317)
 The EPA's approach to ask states to quickly revise their SIPs to comport with the increased significance thr esholds is likely to be challenged by

activist groups citing the CAA's anti

- backsliding provisions, which limit relaxation in certain rules. Under EPA’s interpretation of PSD applicability , once the section 202 rule requires PSD to apply to GHGs, the exis ting thresholds contained in SIPs could be alleged by activist groups to become binding on GHGs under the anti

- backsliding arguments that these groups are currentl y advancing in various court cases. Thus, even if a state wanted to revise its regulations s imilar to the federal Tailoring Rule and, thereb y, relax the threshold, the anti

- backsliding provision might prevent it. (5140, 5181, 5278, 5713)
 The EPA should exercise all available legal authority to ensure that SIPs come into conformity

with the Tailo ring Rule. Instead of taking no action other than to limit approval of SIPs, EPA should mandate or strongl y encourage states to revise their PSD rules to reflect the higher thresholds. This could be accomplished through an expedited SIP call or b y condit ioning section 105 grant funding on appropriate revisions to the PSD rules in SIP

- approved states. (4691)
 The EPA is ignoring the fact that it will take time for the states to amend their laws and regulations to accommodate the revised applicability thres holds. It will be of little help58

for EPA to quickly

amend the SIP because states will still be bound to implement their underlying programs until corrections can be made. For sources, this means no relief from the statutory

thresholds for a lengthy

time after GHGs become regulated. (4019, 4095, 4866, 5080, 5083, 5084, 5131, 5133, 5140, 5179, 5278, 5317, 16411) An industry

commenter (4298) supports EPA’s efforts to limit or conform its prior approvals through CAA sections 301(a)(1) and 110(k)(6) with re spect to applicability thresholds. However, the commenter believes EPA should take affirmative steps to ensure that states immediately

either revise their regulations to raise existing lower thresholds or demonstrate that they have adequate resources and funding to manage their programs utilizing those existing lower thresholds. An environmental commenter (5306) believes that EPA and the states should collaborate on an expeditious, smooth transition in carrying out obligat ions to address GHGs under the P SD and title V programs. The commenter believes it is reasonable for EPA to call for a SIP revision under section 110(k)(5) with an expeditious deadline for states to submit corrective plan revisions. Further, according to the commenter, EPA can ease state adoption of PSD permit program revisions and expedite EPA’s own review and approval of the states’ adjustments by adopting model guidelines to help inform state rulemaking. The commenter recommends that EPA should promptly

start the process with the ai m to complete it by the end of 2010. The same basic framework and timelines can appl y to the title V permit program and state administration of corrective adjustments. See 42 U.S.C. § 7661a(i). Many commenters (4019, 5083, 5140, 5179, 5181, 5278, 5317, 5714) raised the same objections to our proposed use of CAA section 301(a) and APA section 553 authorities to limit our approval of previously fully approved title V programs as were summarized above in relation to the proposed use of these authorities to limit our approval of SIPs. They also expressed the same concerns related to the timing of changes to state title V laws and regulations. The comments on SIPs related to CAA section 110(k)(6) do not apply to the proposed action on title V programs.
Res ponse: We appreciate these comments. As explained in the preamble to this final rule, we are not finalizing our proposal to narrow our approval of the PSD SIPs or federally approved title V programs . Instead, it is our understanding that many s tates wil l be able to interpret their PSD SIPs and title V programs to accommodat e the Tailoring Rule. If some s tates are not able to do so, then we may , in the future, take action to finalize narrowing our approval of SIPs and/or title V programs . As a result, w e will not respond to these comments in this rulemaking, but if, in the future, we consider taking action to narrow our approval of PSD SIPs or title V programs as we proposed, then, in that action, we would respond to these comments.59



## Chapter 4. Commen ts on Streamlining Options and Tools To Address the Administrative Burdens of PSD and Title V for GHGs 4.1 General Comments on Permit Streamlining Options for PSD and Title V Section VII of the proposal preamble for the Tailoring Rule presents several PSD and title V permitting streamlining options/tools. Though we acknowledged that these techniques could not be fully

developed in the near

- term, we committed to aggressively pursuing the development of these streamlining techniques in the first step of our overall PSD and title V GHG permitting strategy and solicited comment on our proposed streamlining techniques as well as other techniques that could be employ ed. This subsection presents the general comments received on the use of streamlining techniq ues to mitigate potential PSD and title V permitting burdens that would be associated with regulating GHGs under these permitting programs. Comment: Several commenters (2369, 2504, 2797, 3003, 4515, 4691, 4746, 4767, 4800, 5052, 5056, 5079, 5083, 5086, 5131, 5143, 5280, 5301, 5313, 5346, 5347, 5391, 5417, 5740, 8461) support the use of streamlining options and tools to address the administrative burdens of the PSD and title V programs for GHGs . Some supporting commenters gave suggestions about possible streamlining techniques and/or options, while others expressed concerns, or provided comments on the timing of our proposed streamlining options. Examples of these comments are provided below. General Support

 EPA should consider an y and all streamlinin g including the use of general permits, permits by

rule, electronic permitting, workshops, on

- line electronic compliance tools, and other streamlining options. (2369, 5056, 5086, 5391)
 A public process should be developed to address permit streamlining ap proaches to include general permits, permit by rule, and presumptive BACT for GHGs. (5301)
 The Agency

should continue to pursue efforts to streamline title V and NSR permitting, including BACT determinations. (5083) General Concerns

 While streamlining options contemplated b y EPA may provide limited relief, there is still a very real concern that the Tailoring Rule will significantly increase regulatory

and administrative burden (putting U.S. facilities at a competitive disadvantage) without a correspond ing reduction in emissions. (5236)
 The streamlining approaches are vague: (1) there is no mechanism described in the rule for how they

will be implemented, and (2) they have not been proven to work in practice. For these reasons, the commenter believes the streamlining options should be evaluated before the rule is promulgated to determine which approaches are feasible, after which the satisfactory

options can be promulgated through rulemaking. (5788)60

 While EPA has indicated that it intends to reevaluate the requirements for smaller sources and consider streamlined permitting options such as general permits, an y s uch options for sources with less than 25,000 tons of GHG emissions will most likely impose substantial regulatory

burdens with little, if any , environmental benefits. (5236)
 The other NSR Reform flexibility mechanisms designed to lessen the burden of PSD will not be available to streamline GHG permitting because they have not been fully

adopted into many SIPs and were not designed with GHGs in mind. (5143) Many commenters made suggestions on the mechanisms and timing to put streamlining techniques in place. Examples of these comments are provided below. Mechanisms

 EPA should implement these options by rule and not guidance as many states cannot implement EPA guidance (2504).
 EPA should provide equipment specific permitting templates as models for monitoring, recordkeeping, and reporting requirements. (4154)
 EPA should develop streamlining techniques for common combustion sources, such as a boilers and turbines using natural gas fuel to minimize the amount of application preparation time and agency review time associated with obtaining permits for these ty pes of sources. (5130) EPA should identify emission units fired with fuels with b road cross - sector applicabilit y as priority sources for information compilation and publication. For example, boiler, process heaters, reciprocating engines, and combustion turbines should be considered as high priorit y sources. EPA should also identify priority sources based on fuel t ype and emission units

– e.g., coal, oil and natural gas for boilers, natural gas for combustion turbines, diesel and natural gas for reciprocating engines. (4515, 4691) Timing

 EPA’s proposed streamlining techniques would not be in place in time to avoid the potentially

devastating impact on their U.S. operations. (4632, 5417) One of these commenters added that these techniques will be less effective than establishing thresholds at more appropriate levels. (4632)
 EPA must provide a more detailed explanation of possible “streamlining” approaches before using them as part of the justification for adopting the Tailoring Rule. The streamlining approaches proposed b y EPA are complex and likely to be controversial, thus, if EPA intends to pursue such ideas it must do so in a more deliberate an d sy stematic way

and in light of previous rulemakings, remands, and vacaturs. (5058, 4863, 5064, 5305)
 EPA should have all streamlining techniques finalized by the start of the progr am (i.e., before sources are regulated for GHG). (2797, 4746, 5086, 5347, 5391)
 EPA should expeditiously finalize its streamlining options. (2504, 2797, 8405)
 EPA should allow more time to resolve critical implementation issues. (5417).
 EPA should ins tall measures to expedite permitting, such as pre

- approving certain equipment or processes. (3003)61

 EPA should make clear that the intent of its proposed approach is to impose, over time, some ty pe of BACT requirement on all GHG stationary sources in the U.S. that emit or have the potential to emit GHGs above 250 tp y

– that EPA’s streamlining approaches do not offer a complete or permanent solution to the problems associated with regulating multitudes of sources under PSD and making even more such sources subject to title V requirements. (5317)
 EPA should structure a first phase program with minimal impact to the regulated community , allowing reasonable time for the regulatory environment surrounding climate change to mature, and during this period, EPA s hould work with state and other regulators to eliminate patchwork regulations, and create a greater focus on cost

- effective and consistent programs to regulate GHG emissions. (4746, 4951)
 EPA should develop a first

- phase threshold that reflects a true maj or source, but allows enough sources to enter the program so EPA can evaluate the "pros and cons" of bringing GHG into the PSD and title V programs is needed. (4863, 5064, 5305)
 EPA should phase in title V requirements over the 5

- ye ar renewal process to e ven out the workload. (4154) Legality of Our Proposed Streamlining Techniques Many commenters made general comments about the legality of our proposed streamlining techniques. Examples of these comments are given below.
 The "streamlining" procedures that EPA is considering are of questionable legality and effectiveness (5129, 5179, 5417, 5317) or conflict with the plain language of the CAA. (4118, 5140, 5278, 5317)
 One of these commenters adds that, as a minimum, EPA should postpone any actions that m ay trigger PSD and title V requirements for GHGs until it has invested the time necessary to conduct a more thorough assessment of the workability and defensibility of its proposals. (5317)
 Redefining PTE to mean actual emissions would allow many sources to avoid the classification as "major" emitting facilities, but the statute specifically defines the PSD and title V applicability

thresholds in terms of PTE. (5129)
 There is no explicit authority in the CAA's PSD provisions for "general permits" or "pr esumptive BACT" determinations. In fact, as EPA acknowledges, these options would appear to conflict with the CAA section 165, which requires a "public hearing" on each PSD permit (5140, 5278, 5129), and section 169, which requires BACT to be determined f

or each major source on a "case

- by

- case" basis (5140, 5278, 5129, 5317). Two of these commenters also added that the proposed streamlining methods conflict with the CAA’s air quality monitoring requirements. (5140, 5278)
 It is ironic that EPA proposed in the Tailoring Rule the utilization of standard permits (i.e., general permits) and permits

- by

- rule as streamlining options for PSD and title V permitting considering that EPA recently proposed to disapprove various aspects of the Texas air permitting pr ogram because EPA was adamantly opposed to the notion of using standard permits and PBRs to permit major source emissions. (5179)
 The only

possibility

of streamlining requires extensive and significant changes to the actual regulatory

framework. (8025)62

Response: We agree with those commenters who support using streamlining techniques to mitigate the potential PSD and title V permitting burdens. Nothing in the opposing comments has persuaded us that we should abandon our streamlining ef forts. T o the c ontrary

, the strong support for these ef

forts shown by

man y commenters reinforces our intention, as stated in the proposal, to move forward with the approaches as an integral part of our phase

- in approach. However, because the uncertaint y surrounding the streamlining approaches and the concerns expressed by

some commenters, we are not committing to finalize rules on any particular approach, but we do plan to explore all streamlining options as expeditiously as possible, beginning immediatel y and proceeding throughout the phase

- in period, and we encourage permitting authorities to do the same. W e commit to consider a wide array of possible streamlining measures, and we commit to propose and take comment on, in the step 3 rulemaking, a set of those measures that we determine are viable to pursue further

. For these reasons and since we will need to collect significant category

- specific data for source and emission unit ty pes that have heretofore generally not been regulated by

the CAA (e.g., furnaces, water heaters, etc.), we are not making a conclusion as to whether any streamlining options will or will not be feasible for an y sources, especially smaller sources, and/or if a particular option will be available at a certain time. We disagree , however, w ith the commenter that suggested that “while streamlining options contemplated by

EPA may

provide limited relief, there is still a very real concern that the Tailoring Rule will significantly increase regulatory

and administrative burden” because while imp lementation of steps 1 and 2

– which will cover larger sources

-- will pose implementation challenges, and some of the streamlining tools could assist with meeting these challenges, we have assessed the burdens associated with GHG permitting and have estab lished a phase

- in schedule that represents a manageable workload, even in the absence of streamlining techniques. In addition, no so urces under 50,000 tp y CO 2 e will be regulated before April 30, 2016. Thus, we also disagree with the commenter that stated that “ EPA should make clear that the intent of its proposed approach is to impose, over time, some type of BACT requirement on all GHG stationary sources in the U.S. that em it or have the PTE GHGs above 250 tpy .” Consistent with our phase

- in approach, it is important for us to consider whether, at some point during the implementation of step 2, it will become possible to administer GHG permitting programs for additional sources. For example, if EPA is able to promulgate measures that streamline program s to at least some extent, if permitting authorities increase their resources, or if implementation experience and more seasoned staff results in more effective use of scarce permitting resources, then we expect that we will be able to phase

- in the application of PSD and title V to more sources by establishing step 3. We do not have enough information now to establish a final step 3, particularl y because there will be significant transition occurring in the GHG permitting programs during steps 1 and 2. Ho wever, we believe that it will be possible to develop a record on which to base step 3 sometime soon after we begin to implement step 2.63

Therefore, we plan to propose a rule in which we solicit comment on or propose lower thresholds for PSD and title V applicability , and we establish an enforceable commitment to finalize a rule in which we address those matters by Jul y 1, 2012. In order to provide a ye ar for permitting authorities and sources to prepare for any additional GHG permitting action in Step 3 , we will establish that s tep 3 would take effect on July 1, 2013. We also commit to explore, between now and the step 3 proposal, a wide range of streamlining options. In the proposal, we will take comment on streamlining approaches we think may be viab le (except to the extent we will have alread y issued guidance documents concerning streamlining approaches), and we will address those options in the final rule. In addition, as part of the step 3 action, we may solicit comment on a permanent exclusion o f certain sources from PSD, title V or both, based on an “absurd results” rationale. For example, we may

make a final determination that under the “absurd results” doctrine, PSD and/or title V do not apply to a set of GHG sources that, although above the statutory thresholds for those programs, are too small and relativel y inconsequential in terms of GHG contribution. Another ty

pe of such exclusion for the title V program could be for sources that would otherwise be required to obtain an “empty permit,” that is, for example, one that would not contain an y applicable requirements because there are none that apply to the source. If we promulgate a permanent exclusion, we may conclude that by

that time, we will have brought into the PSD and title V programs the full set of sources that would be consistent with congressional intent (or, if congressional intent on that point is unclear, with a reasonable policy consistent with statutory requirements), and, under those circumstances, we would find that such a ru le brings the tailoring process to a close. The application of the “absurd results” rationale for a permanent exclusion is discussed in more detail in section V.B. of the final rule preamble

. Regarding those comments about other possible streamlining tec hniques that were not part of this proposal, such as NSR reform mechanisms, we are not making a decision about f inalizing these options at this time. We would likely want to explore, through a notice and comment process, which of these measures is viable to pursue further. These comments, including an y opinions about the legal and policy direction we must take regarding these streamlining options, will be addressed in the action(s) where we might apply them. 4.2 Redefining “Potential to Emit” At propos al, we proposed an approach to establish PTE calculation methods (and redefining PTE) for various categories of sources that emit GHGs. Potential to emit, or PTE, is defined as the maximum capacity of a source to emit any

air pollutant under the source’s phy sical and operational design, including legal limitations on emissions or hours of operation. Many sources have no legal limitations on operational conditions that affect their PTE calculation, such as their hours of operation, and as a result, they ar e treated as if they

operate continuously

(24 hours per day , 7 day s per week, totaling 8,760 hours per year), even when they do not actually

do so. As a result, basing the applicability thresholds on PTE rather than actual emissions has the potential of s weeping enormous numbers of sources into permitting programs that would otherwise not actuall y emit close to the applicability thresholds. Thus, many GHG emission sources will find that they can establish legally

and practicall y enforceable limits on thei r operational parameters to limit their PTE, that will allow them to avoid major source status,64

and thus major source permitting. Sources that do not operate an yw here near the 8,760 hours per ye ar t ypicall y assumed in PTE calculations and whose actual emi ssions are below major source applicability

thresholds would be candidates for such PTE limits. We requested specific comments on experience with limiting PTE by rule rather than through individual permits, considerations in phasing

- in this approach, and identification of categories that might benefit from the use of rules limiting PTE. Comments received are presented in this subsection. Comment : Several commenters (4298, 4513, 4696, 5078, 5079, 5111, 5130, 5183, 5224, 5711, 7026, 8461) support the idea of redefining “potential to emit.” The reasons for their support include:
 The option to limit GHG PTE by rule rather than through individual permits is a good idea. (5130) Voluntarily limiting PTE would limit the PSD and title V programs to sources wh ose actual emissions are likely to be greater than the major source threshold for CO 2 e. (4691, 5078, 5079)
 Allowing sources to refine facilities' PTE to be closer to expected actual emissions is a good idea, particularl y for sources where actual emissions are demonstrated to be substantially

lower than a traditional calculation of PTE would indicate. (4696, 5079 , 5111 , 5711 ) This approach will be consistent with EPA’s GHG Mandatory Reporting Rule (4696, 8461) and s ome of the source categories that could benefit from this approach could be residential and commercial furnaces. (5711).
 If “actual” historical emissions are not used, EPA should reinstate historic policies for both the PSD and title V programs that allow sources and states to presume “sy ntheti c minor” status for sources whose historic emissions are less than 50 percent of “major source” levels. A previous title V interpretation allowed a transition period for permitting title V sources whose historic actual emissions were less than 50 percent of major source thresholds to be treated as minor sources, regardless of their PTE. [ See ,e.g., J. Seitz and R. Van Heuvlin, “Options for L imiting the Potential to Emit (PTE) of a Stationary Source Under Section 112 and Title V of the Clean Air Act” (Jan. 16, 1995); J. Seitz, Calculating PTE for Emergency

Generators (Jan. 16, 1995); J. Seitz, Calculating Potential to Emit (PTE) and Other Guidance for Grain Handling Facilities) (Nov. 14, 1 995)]. The commenter argues that these policies remain sound for bot h PSD and title V permitting, are within EPA’s discretion, and will reduce burdens significantl y during the earl y phases of title V and PSD permitting of GHG sources. (5111, 5470)
 EPA should evaluate opportunities to interpret and define PTE for GHG emiss ions such that they approach, if are not equal to, actual emissions, similar to EPA’s approach to estimating PTE for emergency generators which recognizes inherent limitations in how such equipment is intended to be operated. (5224)
 EPA could establish a rule or policy establishing PTE for GHGs based on actual emissions, where sources that can demonstrate that their GHG emissions are below 75 percent of the major source thresholds could be treated as s ynthetic minor sources. (5224)
 In crafting PTE definit ions, it will be important to allow for the entry of new technologies. Taking a functional approach should help in this regard. (5711)65

 For certain equipment, a commenter supports the proposal to develop “prohibitory rules” that would preclude operation during a certain number of day s per y ear, and allowing flexibility by offering a streamlined method to allow a source to operate for longer hours upon request to the permitting agency . (5711)
 One commenter supports the proposal to define furnaces and sim ilar heating equipment to include the thermostat to which they are attached, which constrains them from operating in warmer weather. The commenter also suggests that a similar definition could be used for natural gas

- fired water heaters, both conventional and tankless models, to recognize their intermittent operation. Tankless natural gas water heaters operated in conjunction with solar water heating could be defined to recognize the operational constraint that keeps the natural gas heater from turning on during a certain percentage of the time (based on minimum number of sunn y da ys for example). (5711)
 Any redefinition of PTE should include provisions for crediting existing facility offsets of GHGs, especially

CO 2 . (5183) Various commenters (3278, 451 5, 4691, 5073, 5135, 5198) did not explicitly support or oppose the idea of redefining “potential to emit,” but provide suggestions for “redefining PTE.” These suggestions include:
 EPA should clarify

that the proposed Tailoring Rule does not preclude a so urce from pursuing a source

- specific PTE limitation, as opposed to general or sector

- wide PTE limitations. I f sector

- specific PTE is defined or needs to be defined, EPA could consider average utilization profiles, especially for the natural gas industry

. (4515, 4691)
 Restrictions based on expected “real

- world” operating conditions may be helpful to some industries, but do not appear to be applicable to natural gas transmission facilities. Federal Energy

Regulatory

Commission ( FERC ) requires pipelines to build and operate sy stems that are capable of meeting peak demand day s, and thus have the potential to emit far more GHGs than are emitted in practice. For that reason, FERC requirements could prevent pipelines from accepting facility

- specific operationa l limitations, as suggested b y EPA, in order to reduce PTE. In addition, with the increased use of natural gas as both a heating and cooling fuel source, natural gas providers are less able than other industries to take on seasonal limitations. (4515, 46 91) Several commenters (3916, 4120, 4238, 4239, 4696, 4860, 4949, 5129, 5306) oppose the idea of redefining “potential to emit.” The reasons for their opposition include:
 The statute specifically defines the PSD and title V applicability thresholds in terms of PTE (4949, 5129, 5306) and an y future efforts to reduce the scope of PSD and title V through re

- defining PTE risk running afoul of the text of the CAA. (5306)
 Alterations to the current practice for calculating PTE will upset longstanding polici es and procedures in NSR permitting guidance and will affect all of the regulated NSR pollutants. (3916, 4238, 4239, 4860, 4949)
 EPA’s proposal of limiting PTE b y undertaking federall y enforceable restrictions on operating hours or design operating parame ters could potentially affect natural gas facilities by

contradicting compressor station’s obligations to its customers under the FERC certificate. FERC regulations require compressor stations to be “available” to meet peak demand as defined in its certif icate to ensure that construction and operation of natural gas facilities are in the “public convenience and necessity” and are in compliance66

with all applicable regulations. Therefore, the commenter concludes that, unless EPA has an explicit exemption fo r such natural gas facilities to exceed its “redefined” PTE to meet FERC requirements, the EPA tailoring proposal to redefine the PTE will not be a functional option. (4120) Response: We are not making an y final decisions on redefining PTE at this ti me. We will take the se comments into account during the development of any streamlining techniques during step 3 of our phase

- in approach

. 4.3 Presumptive BACT The proposal preamble informs that CAA section 165(a)(4) requires that sources subject to PSD implement BACT for each pollutant subject to regulation under the CAA, and that CAA section 169(3) requires that BACT emissions limits be determined on a case

- by

- case basis that reflects the use of state

- of

- the

- art demonstrated control technology at the time of the permit action. We acknowledge that determining BACT for a particular source can often be a complicated, resource

- intensive, time

- consuming, and sometimes contentious process. In order to streamline the BACT process for GHG sources that wil l be brought into the PSD program, we proposed a s ys tem under which permitting authorities can make BACT determinations for common ty

pes of equipment and sources, where they can apply

those determinations to individual permits with little to no additional revisions or anal ys is, known as “presumptive BACT.” The proposal preamble solicited comment on the use of presumptive BACT limits with the PSD program, including our authority to do so, whether there is a need or value for such an approach, and suggestion s for how such limits could be established, updated, and used consistently

within the requirements of the CAA, or by departing as little as possible from those requirements. This subsection presents comments received on the “presumptive BACT” approach as an option to streamline the BACT determination requirement under PSD for GHG emission sources. Comment: Several commenters (3858, 3919, 4120, 4140, 4154, 4238, 4239, 4512, 4521, 4526, 4747, 4860, 4749, 4767, 4800, 4866, 4949, 4989, 5039, 5052, 5058, 506 1, 5078, 5079, 5084, 5113, 5130, 5131, 5135, 5198, 5224, 5276, 5280, 5301, 5313, 5338, 5346, 5391, 5711, 5742, 5714, 5922, 6458, 6681, and 7935 ) support the use of presumptive BACT as a streamlining option. The reasons for their support include:
 Presumpti ve BACT could be a helpful approach to ensuring consistency in the application of PSD to stationary sources of GHGs. (5276)
 The use of presumptive BACT would be helpful for common combustion sources such as boilers, process heaters, and combustion turbine s (5130).
 The use of presumptive BACT is justified for the natural gas combustion sector because of the clean and efficient characteristics of natural gas and the unavailability of “add

- on” control technologies to mitigate GHGs. (5058)67

 Presumptive BAC T for GHG emissions from combustion sources should be temporaril y defined while EPA takes the time to develop essential GHG guidance through rulemaking. This will allow states time to make adjustments to their state rules. (4521) Supporting commenters a lso offer suggestions for implementing the presumptive BACT streamlining technique or for moving forward with regulating GHGs without presumptive BACT. Their suggestions include:
 EPA should pursue p resumptive BACT determinations b y source category (4747, 4860). One of the commenter adds that some of the source categories to include are: emergency units and seasonal combustion sources such as furnaces. (4747)
 EPA should establish fuel

- and technology

- specific performance based ( i.e. , carbon intensity) pre sumptive BACT standards for each category of anticipated major sources. (EPA has used a similar approach to establish “presumptive Reasonabl y Available Control Technology

[ RACT ] ” standards under the Control Techniques Guidelines [ CTG ] program under the st atute). Further, the commenter adds that sources should have the option of applying presumptive BACT or case

- by

- case BACT. Under such a program, consistent with its precedent, EPA should evaluate a source as it is proposed and should not require a source to change fuels or alter the basic engineering design as a BACT control option or alternative. EPA would retain the authority to update any

presumptive BACT standard as it gains information. Any future changes in BACT standards should not apply to sourc es with applications deemed complete prior to an y changes in the standard. (4298)
 BACT for GHG emissions should be commercially

- accepted, presently in use, and technologicall y complete. The commenter recommends that BACT appl y at the specific source lev el (i.e., industrial boilers). Requiring facilities to install BACT for major modifications at the facility level would create unnecessary burdens on industrial facilities. (5236)
 The approach should be flexible enough such that the owner can still make a case - by

- case BACT demonstration for a given project if needed (4140, 5113, 5130, 5131, 5313, 5714, 5922) or more stringent controls are warranted (4694, 5314). Two commenters add that sources must continue to be allowed the opportunity to address enviro nmental, energy , and economic considerations. (5113, 5714)
 EPA should recognize and accommodate inherent differences in GHG emissions from sources within a source category due to different designs, technologies, and source configurations. (5224)
 EPA shou ld wait until it has obtained sufficient data from the final GHG Mandatory Reporting Rule to decide which sectors EPA should prioritize in regards to presumptive BACT. Presumptive BACT for GHGs and the traditional BACT review process should rely on the us e of sound data to determine which industrial sources are the largest emitters for GHGs, for which EPA should prioritize. (5922)
 EPA should apply

cost

- effectiveness criteria for GHG emissions in a manner that reflects commerciall y available technologies and that is consistent with carbon prices in existing markets and expected under currentl y pending federal legislation. The commenter believes that, at the present time, a carbon reduction cost

- effectiveness in the range of approximately

$10/ton CO 2 e woul d be a reasonable benchmark. The cost

- effectiveness range should be updated on an ongoing basis as market prices change, and EPA obtains68

information regarding the cost of various carbon reduction strategies and the commercial feasibility of technology

opt ions. Furthermore, EPA should provide by regulation that the cost effectiveness range is to be applied b y permitting authorities in evaluating BACT on a case - by

- case basis and that control costs exceeding that range would be presumptively

economically

inf easible. (4298)
 EPA should set each BACT standard (whether presumptive or case b y - case) on a pollutant

- specific basis. The commenter adds that the applicability and BACT

- setting functions will establish the performance expectations of each source. Once the permit’s performance requirements are so established, then the commenter recognizes that there may be both economic and environmental benefits of providing the source the option of meeting the permit requirement by averaging (or trading) across the ful l range of GHGs and, as appropriate, across or outside the facilit y. The commenter adds that providing such compliance flexibility would provide EPA with valuable experience in a transition to a national emissions trading program because it would develop the necessary accounting protocols and enforcement tools to underpin such a program. (4298)
 C ompliance flexibility will be critical to the success of the BACT program (whether presumptive or case

- by

- case) . The commenter believes that any facility with equipment subject to BACT should have the option of demonstrating compliance with the presumptive BACT standard at the affected equipment on an annual average performance basis. The commenter adds that EPA can make a formal finding, subject to notice and co mment, that available offsets exist to provide sufficient cost containment, and the facility should have the option of purchasing compliance credits from an EPA

administered reserve credit pool at a predetermined price that reflects EPA’s upper bound cost

- effectiveness for BACT determinations. (4298)
 Any presumptive BACT mechanism must be subject to an open and transparent process with ample opportunities for public review and comment. (5742)
 The BACT determination must include consideration of the intend ed purpose and use of a facilit y. For example, a facilit y being constructed or modified that is intended to serve as a peaking facilit y will have different emissions and economic constraints than a baseload facility , and those factors must be considered i n the BACT determination process. (5079)
 Imposing even “streamlined” individual PSD permits and BACT on natural gas equipment changes but not on electric resistance equipment would effectively create a perverse incentive for customers to switch from natur al gas to electric equipment. To the extent this occurs, there would cause an overall increase in GHG emissions, contrary to congressional intent to decrease emissions. (5711)
 Fuel

- switching should not be considered as a control technology during BACT re view with regard to new electricity generation facilities. A company proposing to build a new natural gas

- fired combined cycle facilit y should not be required to consider wind generation in a BACT analy sis. (5079)
 EPA should coordinate its thinking on BA CT with the U.S. Department of Energy ( DOE ) on energy efficiency

requirements for various kinds of energy consuming equipment. (5338)
 Landfills are particularl y suited to presumptive BACT, and BACT for new sources should be congruent with the applicable NSPS subpart WWW requirements (5276, 5391) and for existing sources congruent with the Emission Guideline standards (5276).69

 BACT should not be used as a means to drive technology development. (5079).
 EPA and the states must make sure that presumptive BAC T determinations do not become dated, and then the burden would shift to owners and operators that did not elect one of the presumptive BACT technologies to demonstrate why none were technically feasible or economicall y available. (5052)
 EPA should slow d own the promulgation of the rule to allow carbon capture/storage technology

to develop. (5789)
 Because BACT for calcination emissions will be demonstrated to be “no additional controls,” the onl y wa y a lime plant could avoid PSD review would be to make le ss lime, thereb y eliminating the incentive to invest in energy efficiency projects. (5133) The proposed rule fails to address emissions from industries that emit CO 2 as a by product of the chemical reaction inherent in the process. Failure to address the se process emissions is significant as more than one

- half of GHG emissions from lime plants come from calcining limestone. If calcination emissions are subject to the PSD program, then lime plants will be discouraged from undertaking energy efficiency pro jects that would otherwise reduce GHG emissions. Energy efficiency

projects reduce fuel consumption, GHG combustion emissions, and emissions of other criteria pollutants. However, some of these very

same energy

efficiency

projects present the potential t o increase lime production and, therefore, increase related calcination emissions.
 EPA can guide the anal ysis of BACT b y providing information that EPA currentl y collects in the RACT/BACT/ lowest achievable emission rate ( LAER) clearinghouse ( RBLC) (such as t ype of facility, size, other pollutants, process constraints, region of the country , fuels, etc.), and sources will have to select one of the presumptive technologies or demonstrate that none is effective through the customary case - by

case anal ys is that is currently performed. (5052) EPA should update the RBL C that is the basis for most (if not all) BACT determinations. (4238, 5084)
 Consistent with existing policy and regulations, BACT for GHGs should be limited to the new or modified emission units. (5079)
 Natural gas is not an option for man y large sections of the country because of the absence of infrastructure to deliver natural gas. (Commenter provides detailed rationale for this position). (5052)
 BACT reviews should use thermal efficiency as a comparable metric because it will encourage GHG reductions. However, man y factors affect thermal efficiency , and all plants experience some degradation in thermal efficiency over the life of the plant.
 At the current time , Integrated Gasification Comb ined Cycle ( IGCC ) is not y et available as a broad and commerciall y - demonstrated retrofit BACT technology

. (4749, 5052, 5079, 5301)
 Carbon Capture and Sequestration ( CCS ) is not BACT. (5052, 5224) Another commenter agrees that CCS is not BACT currently , although it might be in the future if it is demonstrated to be technicall y - feasible. (5079)
 Presumptive energy

efficient BACT measures should include the following (the commenter appended very extensive information on efficiency projects): (1) Energy Aud its, (2) ENERGY STAR© Products, (3) Weatherization, (4) Variable Speed/High Efficiency

Motors, (5) LED Traffic Lighting for Municipalities. (5052)70

 Some maintenance measures should be exempt from PSD (5052, 5078, 5079). One of these commenters adds that, at a minimum, EPA must identify a list of activities at power plants that would be presumed to be routine maintenance, repair, and replacement ( RMRR) unless unique conditions demonstrate otherwise. (5078)
 The tradeoffs between regulating GHGs and criteri a pollutants should be addressed. For that reason, EPA’s presumptive BACT determinations must include guidance on the impacts of GHG mitigation on conventional pollutant levels. (4515, 4691, 4989, 6458)
 BACT should be allowed the flexibility to obtain emission reductions from all equipment at the facility

as well as from beyond the fenceline (e.g., compliance on a generating fleet basis, use of emissions offsets, etc.). (5078)
 To satisfy

the public notice requirements for PSD permits: (1) EPA can pub lish BACT guidance and periodic BACT updates in the Federal Register pursuant to the administrative procedures in section 307 of the CAA for notice

- and

- comment rulemaking, (2) permitting authorities can publish in the newspaper or on their websites lists o f sources in the state that have applied for construction (or title V) permits and/or revisions, as is currentl y done b y m ost states, and (3) EPA can publish model permits which have these BACT alternatives imbedded through notice

- and

- comment rulemaking, and sources could opt into the permits by rule just as current sources utilize general storm water permits and other general permits under the Clean Water Act ( CWA ) . (5052) Another commenter (5078) adds that presumptive BACT can be developed through notic e - and

- comment rulemaking, but permitting authorities should allow public comment on individual permits as to whether there are significant case

- specific impacts that would require adjustment of BACT for that particular source.
 S hould there be no presumpt ive BACT established, the EPA should issue the permit without consideration of a full BACT anal ys is. (4120) The commenter points out that this does not mean the facility would propose older and inefficient equipment, rather, it would base presumptive BAC T on existing operational and environmental considerations. For the natural gas sector, for example, a permit could be issued without a full BACT anal ys is as follows: o BACT for CO 2 emissions = Good Combustion Controls.

 Considering there are no pilot or commercial demonstration of end

- of

- stack CO 2 controls (including CCS) for turbines in natural gas pipeline operations, the BACT for the unit will be good combustion practices that optimize NO x and carbon monoxide ( CO ) (which are b y - products of incomplete comb ustion) with CO 2 (which is a product of complete combustion). Good Combustion Control Practices involve parametric monitoring and controlling the operating parameters of the turbine to ensure the unit continually operates as close to optimum (minimum emis sion) conditions as feasible. o BACT for CH 4 emissions = Best Management Practices (BMPs) under EPA Gas Star or compan y specific programs.

 Due to measurement concerns related to fugitive and vented CH 4 emissions, the commenter urges the EPA not to prescribe quantitative PSD limits or standards related to CH 4 - related emissions. The commenter suggests that EPA could instead issue the PSD permit considering work practice programs. For CH 471 emissions, these could be the compan y’s operating practice of reducing G HG emissions through application of BMPs related to reducing fugitive and vented CH 4 emissions or the industry

- wide work practices as outlined in the Natural Gas Star program. o Domestic U.S. Offsets = BACT for sources without presumptive BACT.

 The comment er supports the use of offsets and the use of domestic U.S. GHG offsets as a “transitional” solution under the Tailoring Rule till EPA finalizes presumptive BACT for sources. Offsets are supported as part of the nonattainment NSR program and for control o f air pollution from the outer continental shelf activities. In addition, the commenter states that using offsets as BACT would produce the same environmental result at less cost to regulated facilities, because offset projects can provide lower cost emis sion reductions than many of the mitigation options otherwise applicable to large sources. Some commenters (2504, 2731, 2797, 3306, 3512, 3916, 3858, 3916, 4019, 4106, 4118, 4241, 4512, 4515, 4519, 4555, 4691, 4746, 4749, 4863, 4864, 4866, 4871, 4949, 495 1, 4989, 4990, 5041, 5056, 5058, 5059, 5061, 5064, 5073, 5079, 5084, 5085, 5110, 5113, 5123, 5124, 5133, 5139, 5147, 5236, 5301, 5305, 5339, 5340, 5443, 5714, 5742, 5863, 6203, 6458, 6681, 7935, 8025, 8691, 16411 ) did not explicitly support or oppose the u se of presumptive BACT as a streamlining option, but they did offer suggestions about the use of BACT and/or presumptive BACT in general. Examples of the ty pes of general comments received on presumptive BACT streamlining options are included in the follo wing bullets:
 The preamble does not provide enough detail for meaningful comment on presumptive BACT. (5113, 5714) The commenters support a public and transparent process to address BACT issues generall y and presumptive BACT specificall y and would encour age EPA to provide an opportunity for this public discussion.
 Though the commenter acknowledges that there is an internal workgroup working on BACT options for industry , the proposed rulemaking does not address how to establish BACT for sources subject to PSD permitting requirements for GHG emissions. The commenter asserts that it is difficult to assess the economic impacts of the rule without more - detailed information on what would constitute BACT for the metal casting industry

. (5236)
 Even though the us e of presumptive BACT is supported, it is an insufficient streamlining tool. The commenter questions whether EPA will be able to make presumptive BACT determinations in a timely manner (especiall y within the next 1

- 2 y ears), and is concerned that presumpt ive BACT standards will be vulnerable to legal challenge and resulting delay s and uncertainty . In addition, presumptive BACT would not alleviate other time

- consuming aspects of the PSD permitting process, such as the requirement for public notice and comm ent. Ultimately , the hope that presumptive BACT will eventually make the PSD program feasible to administer is no substitute for reasonable limits on the initial scope of the PSD program. (4515, 4691)
 The EPA should adhere to the time

- tested policies and procedures for determining BACT and, thus, avoid an y requirement to redefine sources in the industry. (5131)
 Statements about “presumptive BACT” in the preamble seem inconsistent with the fact that BACT is by

statute supposed to be a case

- by

- case anal ys is, rather than the imposition of national emission standards. (16411)72

 The application of BACT under this rule should not be expanded beyond the historical definition and interpretation of the "affected source" (4106, 5124). BACT anal ys is should be lim ited to only

those sources or units which are being installed or modified under a permit. (4106)
 EPA seems to be suggesting that it could be appropriate, under the rubric of determining BACT, to tell a source what ty pe of combustion unit it must build, o r what ty pe of fuel it may use, or how it must engineer its manufacturing operations to reduce demand for the thermal energy

or electricity

that the combustion unit will generate. Such expansion of the statutory requirement to assure that the BACT is used for a particular project, into an inquiry by the permitting authority

into whether a plant can be designed or operated more efficientl y, or whether it might be environmentally preferable for the plant to be proposing a different kind of project, would be inconsistent with EPA’s statutory authority , long

- standing EPA interpretations and policy , and judicial and Environmental Appeals Board ( EAB ) decisions. (4749)
 EPA should temporarily assume the role of establishing “technical feasibility” for GHG control technologies until commercial availability becomes a decided issue. The EPA has held that technically

feasible BACT is technology which is “available” and “applicable and the states should not assume this role initially to avoid a patchwork of regulations . (4106)
 Some commenters ( 4989, 5301, 6681) strongl y support the consideration of energy efficiency improvements as BACT for GHGs and other pollutants to avoid disincentives for efficiency

improvements, especiall y at power plants. Presumptive BACT consid erations should also include biomass projects, energy efficiency

projects, and offset projects. (5301)
 EPA should consider how PSD BACT requirements might be applied and streamlined for sources subject to regional or state GHG controls and cap and trade programs. (4118, 4863, 5064, 5305)
 It is incorrect to claim that insufficient information exists to at least estimate costs and streamlining efficiencies of BACT. (5139)
 BACT development should be a priorit y for the Tailoring Rule (4951). EPA “recogni ze[s] that considerable work will be needed to determine what options exist for controlling GHG emissions from different source categories and the various ty pes of emitting equipment they

use. (6203)” If no BACT definition is provided, it will be difficu lt to plan for and budget for projects if a potentially significant expense is unknown. (4241)
 Other commenters point out that the fundamental question is, "What is BACT for GHGs?" The commenters are conce rned that, to date, there is no answer to this question (3306, 4515, 4691, 4871, 5110, 5137), including both combustion and non

- combustion sources. In addition, there are no effective or commonly used add

- on controls for removing GHG emissions. (4515, 4691, 5123)
 Presumptive BACT should not include CO 2 requirements (and CO 2 should be specifically excluded from presumptive BACT requirements), because there is no BACT for CO 2 . (5183) Examples of the ty

pes of comments received presumptive BACT streamlining options for particular industry

sectors are provided in the following bullets:73

 Thermal destruction technology and combined heat and power should be exempt from all PSD and title V requirements. (5041)
 EPA should be consistent in its encouragement of the use of biomass as a fuel source. If EPA does not specifically exempt the carbon neutral emissions from these processes from the applicability

determination, it is likely that fuel switching projects to biomass could trigger PSD review for CO 2 , when EPA has been otherwise promoting the use of renewab le fuels. (4749, 5073, 5313)
 EPA should consider net reductions (i.e. life

- cycle anal ys is) of GHG emissions when establishing a presumptive BACT for waste

- to

- energy operations. (5305, 5742) One commenter contends that the direct emissions from waste

- to

- energy facilities are more than offset b y the overall GHG reductions that waste

- to

- energy provides through three separate mechanisms: 1) by generating electrical power or steam, waste

- to

- energy avoids CO 2 emissions from fossil fuel

- based electrical gener ation; 2) combustion of waste in waste

- to

- energy

facilities eliminates the need for landfill of those wastes and effectivel y avoids landfill CH 4 emissions; and 3) the recovery of ferrous and nonferrous metals from municipal solid waste at waste

- to

- energy f acilities is more energy

efficient than production from raw materials. (5305) Another commenter (6458) added that treatment of waste

- to

- energy

as a source of GHG emissions would be inconsistent with internationally

accepted science and accounting procedures (commenter cited various examples of where this idea has been embraced).
 EPA should provide special considerations for the oil & gas production and chemical and refining industries through separate rulemakings with opportunity for notice and comment, i n lieu of the PSD permit

- by

- permit BACT approach. (4106)
 There is considerable uncertaint y as to what constitutes BACT for the manufacturing sector. For example, what viable technology exists for GHG control? Would BACT have to be developed for each of the GHGs or would it require a net certain percentage reduction? The commenter welcomes the opportunity to work with other interested stakeholders in establishing BACT for their industry to advocate the following: (1) Ensuring GHG BACT requirements are te chnically feasible and cost effective ; (2) Maintaining current source definitions; (3) BACT is equipment/project specific and not facility

- wide; (4) Allowing netting

- out provision, including ability to use offsite "offsets;" (5) Modified "top

- down" BACT an al ys is; (6) Expedited development of GHG Presumptive

- BACT standards; and (7) PSD GHG trigger/permit applicability based on current conventional pollutant PSD Program. (8691)
 Modern NG facilities should be presumed to comply with BACT or should be exempt f rom BACT anal ys is. (4515, 4691, 4749) Natural gas pipeline combustion units minimize GHG emissions to the greatest extent feasible, and therefore already satisfy BACT standards. (4515, 4691) Gas

- fired engines, such as those used in pipeline compressor stations, are designed to operate at an optimal level of efficiency given other engineering and regulatory constraints that appl y t o pipelines. (4515, 4691) Altering the horsepower of these engines could upset a delicate balance between pipe size and compression levels that allow interstate pipelines to operate cost

- effectivel y. (4515, 4691) Requiring a PSD permitting process for GHGs would not yield any significant environmental benefit because there is no available add

- on control technology (e.g., CCS technology

is still y ears from being widely available), using electric pumps would result in higher emissions in most parts of the country , and firing with biogas is technicall y74

infeasible (4515, 4691, 4749). Moreover, consideration of these alternatives would lead permitting authorities to engage in dubious second

- guessing of natural gas pipeline design and engine selection, potentially leading to redefinition of the source in a way that is inconsistent with the language of the CAA and past practice in P SD proceedings. (4515, 4691)
 One of these commenters adds that BACT for GHGs must take into account the demands of the marketplace for flexible power generation. This would include: (1) Flexible technologies that can start up and be brought online quickly where peak demand is unpredictable; (2) trade

- offs between criteria pollutants and GHG control; and (3) development of new technology such as the use of IGCC (or an y other technology) when coal has been selected as the fuel for a source. (5147)
 Presumptive BACT or general permits for fossil

- fired generating units should provide for, and focus on, measures that only address CO 2 , and not all six of the GHGs (which would require a wide range of reduction measures). (5313)
 Implementation of GHG emission controls at small installation sites of engines and gas turbines with a multitude of unique application requirements is a function of two aspects (3512): (1) efficiency

of the work performed at each unique site, and (2) the fuel used. To try to address th is GHG BACT issue for these small sites, the commenter makes following general comments and observations concerning GHG BACT related issues: o The local/state GHG BACT review should not redefine the t ype of source being permitted or prime mover technology be ing proposed. A control technology must be feasible within the design elements and process configuration proposed, including the prime technology

and fuel ty

pes chosen by

the permittee. o Not all biofuels are created equall y when it comes to GHG impact. EP A’s recent “Renewable Fuel Standard 2” clearly showed significant differences in the GHG impacts of various renewable fuels based on the lifecycle anal ys is completed. o If the agency

chooses to institute presumptive BACT analy sis for GHG emissions from ethan ol production facilities, the creation of an agency /industry advisory group to identify

and develop realistic and cost

- effective tools for the implementation is absolutely

needed. (4555) o EPA should establish a collaborative process in developing BACT for CO 2 management, for entities which are already engaged in “best practice” management of CO 2 . (4990) In addition, the impact of the application of BACT to facilities that currentl y sell certain off

- gas streams to processors that remove and purify the CO 2 and place it into commercial applications should be addressed. (4990) o Streamlining should be developed for landfills. EPA should carefull y develop presumptive BACT that initially aligns with current regulations, citing in particular, the NSPS for landfil ls that was carefull y developed to reduce non - methane organic compound(s) (NMOC [ s ]) , but also effectivel y reduces CH 4 emissions. Commenter continues that at a later date, presumptive BACT can be updated as EPA's re

evaluation of the landfill NSPS is compl eted and any resultant rulemaking finalized and asserts this approach should minimize unnecessary impacts to the landfill industry . (4863) Examples of particular presumptive BACT streamlining mechanism suggestions submitted by

commenters include the fol lowing:75

 In the absence of a GHG technologies database, EPA should develop industry

- specific BACT guidelines along with the rule. (2731, 4989)
 EPA should develop BACT templates at least for larger sources to streamline the permitting process. (5147)
 Gui ding principles should be developed to frame the development of GHG BACT and these principles should consider and/or state that: o Limiting the definition of the affected source such that unaffected sources/operations are not subject to BACT. Barring downs tream/debottlenecking effects, increases of GHGs at a single source within a unit should not subject an entire unit to BACT review. This approach is identical to that already employ ed for other criteria pollutants (5124). o Fundamental redesign of a unit sh ould not be an option under BACT. BACT is the application of a control technology . The redesign of a unit to utilize different fuels or to require a different process design falls outside of the scope of a control technology

. For example, BACT reviews s hould not force utilities and other combustion sources to “fuel switch” from coal to natural gas, which would have significant economic impacts throughout the country . EPA should continue to defer to regulatory and operational considerations in determinin g BACT for GHGs. (4515, 4691, 5058, 5079, 5085 5124, 5123, 5224) o Questions such as "wh y does this unit need to be built?" and "wh y does the design capacity need to be at X level?" are not within the purview of the BACT analy sis (5124). For example, it s hould not be appropriate for EPA , under the rubric of determining BACT, to tell a source what ty pe of combustion unit it must build, or what ty pe of fuel it may

use, or how it must engineer its operations to reduce demand for the thermal energy

or electric ity

that the combustion unit will generate. (16411) Commenters believe that such expansion of the statutory requirement to assure that BACT is used for a particular project, into an inquiry by the permitting authority

into whether a plant can be designed or operated more efficientl y, or whether it might be environmentally

- preferable for the plant to be proposing a different kind of project, would be inconsistent with EPA’s statutory authority , long

- standing EPA interpretations and policy, and judicial and EAB decisions. o Energy

efficiency

will be central to BACT. At this time, there are virtually no "end

of

- pipe" control technologies for GHGs. BACT requirements should not force unproven or uneconomical technology , such as CCS. (5124) Various commenters (2797, 4860, 5062, 5081, 5141, 5143, 5306, 5082, 5143, 5337, 7935, 8015) oppose the use of presumptive BACT as a streamlining option. Examples of general reasons provided b y commenters for opposing presumptive BACT as a streamlining option include the fol lowing:
 Presumptive BACT may not be an effective means to address permitting burden concerns because the insufficientl y flexible permitting scheme requires a flexible BACT anal ys is, appropriate to the particulars of a specific tool and process configuratio ns and technologies. For that reason, it is unlikely that presumptive BACT could play a constructive role in addressing these deep and fundamental concerns, at least in the near term. (5143)76

 EPA should not decide the BACT absent a notice

- and

- comment rule making. In the proposed rulemaking EPA does not address how to set the BACT for sources subject to the PSD and permitting requirements. (5062)
 EPA statements in the rule preamble about "presumptive BACT" seem inconsistent with the fact that BACT is by statute supposed to be a case

- by

- case anal ys is, rather than the imposition of national emission standards. (5141, 5306, 8015) Case

- by

- case BACT determination affords flexibility to consider a range of case

- specific factors, such as available control opti ons and collateral cost, energy , and environmental impacts. (5141) The diversity

of process technologies within industry creates a range of case

- specific factors that would likel y interfere with identification of a presumptive BACT approach that would ac hieve the desired streamlining and permit efficiency . (5141) One of commenters is also concerned that EPA seems to be suggesting that it could be appropriate, under the rubric of determining BACT, to tell a source what type of combustion unit it must bui ld, or what ty pe of fuel it may

use, which would be inconsistent with EPA's statutory authority , longstanding EPA interpretations and policy , and judicial and EAB decisions. (8015) One of these commenters added that presumptive BACT may

therefore onl y be imposed on the basis of source

- and pollutant

specific demonstrations of necessit y such that: (1) The PSD provisions do not contemplate the use of presumptive BACT; and (2) presumptive BACT is considered only under limited circumstances. (5306)
 Establi shing presumptive BACT raises various concerns (5082): o Would the presumptive BACT undergo public scrutiny? o How would presumptive BACT be established for a pollutant with no currently available feasible control technology options? o How would you establish BACT for combustion devices when reducing CO 2 and reducing CO (another PSD pollutant) are mutuall y exclusive? o How will EPA reconcile PSD permits where BACT for CO is catal yt ic conversion, which consequently

causes increases in CO 2 emissions and cannot b y d efinition be BACT for CO 2 ? o How will EPA resolve BACT for energy efficiency

projects at single combustion sources which necessarily mean increases in CO 2 because to increase energy efficiency requires more efficient combustion resulting in more CO 2 emission s per hour than inefficient combustion? o Under PSD, would we have to consider inefficient combustion as a means of reducing CO 2 from a combustion source because that would result in the lowest emissions limitation achievable in practice? o It will dampen the technology forcing aspects of case

- by

- case BACT determinations. (4860, 5081, 7935) o It does not address the largest sources that would be brought under the Tailoring Rule. (2797) Examples of the ty

pe of comments received on particular industry secto r presumptive BACT streamlining concerns submitted by commenters include the following:
 The use of presumptive BACT may cause several problems for the semiconductor industry :77

o To date, there are no BACT determinations for GHGs for the semiconductor industry

. Moreover, even if in the near future there are BACT determinations for combustion sources, it is unlikely

that there will be an y near term BACT determinations for control of PFCs used in manufacturing. Because the semiconductor industry ’s use of PFCs i s unique, the determination of BACT for PFCs will likely be slow and time consuming, at least at first. (5143) o It is impossible for the fast moving semiconductor manufacturing industry to plan ahead and design the necessary controls when it is unknown if those controls will later be deemed to be compliant with BACT standards. Since BACT would be determined case

- by

- case, it is also not feasible for the semiconductor industry association to identify

common BACT solutions for all of its operations, since th e BACT review would be performed b y different state and local agencies for semiconductor industry

association member companies’ different locations. (5143) o Since the actions to reduce PFC emissions in the semiconductor industry have been voluntary , the ab atement devices are not incorporated into local or state air permits; therefore, they

would not be federall y “enforceable” to limit the potential to emit of these GHGs. (5143) o Most of the abatement devices used to control PFCs are point

- of

- use devices ( e.g., burn boxes) which are connected b y interlocks into each separate manufacturing tool. As such, not only

are there potentially

hundreds of tools that will be replaced numerous times over a 5

- ye ar period, but there are a similar number of abatement dev ices in use. Because the devices are connected to each tool, and hundreds are spread throughout the manufacturing facility , the application of periodic or compliance assurance monitoring ( CAM ) to these devices under title V would be a huge administrative burden. Similarly , compliance testing would be problematic and expensive because these devices are neither designed, nor manufactured, with traditional sampling locations or ports. Finally , because the devices are connected to the tools they

support, as the tools are changed out, the control devices also will be changed frequently . As such, it will be challenging for permitting agencies to respond to changes of this nature. (5143)
 The use of presumptive BACT could be tremendously damaging to the Energy

- Intensive Trade

- Exposed ( EI TE ) industry

. Process emissions are inherent in the underlying chemical reactions, and by and large they can onl y be changed b y a change in the process itself

– in which case the operation becomes a different type of operation. EI TEs have powerful economic incentives to manage energy and emissions using things like recycled materials, cogeneration or combined heat and power s ys tems, process improvements, and fuel switching. The use of the most efficient production processes, an d maximizing energy efficiencies are already an integral part of the production processes in the EITE industry , and should not be addressed through a regulation which includes presumptive BACT. (5337) Opposing commenters (4238, 4239, 4860) also gave su ggestions about how to address presumptive BACT. These suggestions include:
 If EPA is to pursue presumptive BACT determinations, a commenter (4860) recommends that: (1) presumptive BACT determinations should be limited to a small number of source categori es; 2) timely guidance regarding presumptive BACT b y source category78

should be issued by

EPA; and (3) that BACT determinations should be revisited by EPA on a predefined schedule of not more than 5 ye ars.  I f EPA believes that predefining the technology is the best approach, then EPA should develop a NSPS instead. (4238, 4239) Response: Since many

commenters had differences of opinion as to whether and how we should move forward on the use of “presumptive BACT” as a streamlining option, including poli cy and legal concerns, we are not f inalizing this option at this time. We would likely want to explore, through a notice and comment process, if this measure is viable to pursue further. These comments, including as any concerns expressed by

commenters a

bout this approach, will be addressed in the action(s) where we might apply this streamlining option. Nevertheless, we want to clarify that while the BACT provisions clearl y contemplate that the permitting authorit y evaluate control strategies on a case

- b y - case basis, EPA recognizes the need to develop and share policy guidance and technical information for sources and permitting authorities as they

begin to permit sources of newly regulated pollutants, such as GHGs. When applied in a practical matter, th is additional EPA guidance and technical information should reduce the time and resource needs when evaluating BACT for newl y regulated pollutants. For that reason, section IV.E.2 of the final rule preamble discusses details of the current efforts underwa y to issue BACT guidance. Thus, while BACT will remain a case - by

- case assessment, as it alway s has been under the PSD program , EPA is confident that this guidance development effort will help support a smooth transition to permitting emissions of GHGs. Furthermore, EPA will continue to work to provide the most updated information and support tools to allow permitting authorities to share and access the most updated information on GHG BACT determinations as they are made once permitting of GHGs begins. EPA remains committed to involving stakeholders in the upcoming efforts to develop guidance to help to permitting authorities in making BACT determinations for sources of GHGs. 4.4 General Permits and Permits

- by

- Rule The proposal preamble notes that we have limited experience in developing general permits and permits

- by

- rule under the PSD program because of the predominance of the case

- by

case BACT determination process. In contrast, we note that, in the title V program, general permits are specifica lly

authorized under CAA section 504(d) and are widely

- used. 40 CFR 70.6(d) specificall y authorizes the use of general permits covering numerous similar sources under the title V program, and 40 CFR 70.7(h) stipulates the public participation requirements

. We acknowledged that the process for a general permit can take an yw here from 2 to 3 y ears to be fully developed. Additionally , at proposal, we sought comment on the use of general permits within the PSD and title V programs. Comments received on the u se of general permits/permits

by

- rule to streamline permitting under PSD and title V are presented in this subsection.79

Comment: Various commenters (2997, 3278, 4154, 4298, 4515, 4526, 4691, 4860, 4863, 4940, 5078, 5079, 5111, 5130, 5135, 5198, 5280, 530 6, 5313, 5329, 5711, 7026, 7935) support the use of general permits and/or permits

- by

- rule to streamline the permitting process. Some of the reasons for their support include:
 The general permits and/or a permit

- by

- rule option would serve to streamline th e process and reduce both administrative burden and potential permitting delay . ( 4154, 4515, 4691, 4863, 5130, 5 329, 5711, 7026, 7935) Some of these commenters added that this would be particularly

helpful for semiconductor facilities (5329) and common t yp es of control devices such as boilers, process heaters, and combustion turbines (4154, 5130) as well as commercial and residential natural gas appliances and equipment (5711)

.  General permits and permits

- by

- rule are adequate streamlining options, but cas e - by

- case review and the development of a site

- specific permit, even if there is a general permit that would cover the site in question, should alway s remain an option. (4940, 5079)
 EPA should issue a standard general PSD permit for very small GHG emissio n sources that will effectivel y allow these permits to be issued within 30 to 90 days. (5417)

.  General permits may

prove useful in administration of a title V program for sources subject to title V solely

by virtue of their GHG emissions. (4515, 4691, 53 06) C ommenters (3278, 4298, 4515, 4526, 4691, 4860, 4863, 4990, 5111, 5313, 5711) also provide comments on and suggestions for developing general permits and/or permits

- by

- rule. These suggestions include:
 Use of general permits should be limited to a sm all list of source categories and that these general permits should contain output based emission limitations wherever possible. (4860)
 Using PTE limits and/or permits by rule for smaller or limited

- use sources, such as emergency

generators or Heating, Ventilation, & Air Conditioning (HVAC) equipment where there are practical and/or legal limitations on hours of operation or other key factors in determining a facility ’s true PTE. (5078, 5079)
 These general rules could take the form of operational limitations, provided such limitations provide a streamlined method to allow a source to operate for longer hours or at a greater throughput upon request to the permitting agency , and provided such limitations do not apply

to energy efficiency

and pollution control improvements. (4298)
 Recognizing that a sector

- by

- sector general permit would take time to develop, perhaps in the first 3 y ears of the first phase, a general PSD permit for GHG can simply have a few requirements, such as mimicking an y requirements fr om EPA's mandatory reporting program, a listing of Class INational Parks with distances from the facilit y, and a generalized discussion of BACT (4863). The commenter adds that at this stage, BACT can be efficiency

measures used by

the project to reduce e nergy . (4863)
 For a limited period, initiate blanket use of general permits for “urgent” (necessary to avoid a material adverse affect on health and safety) and “small” (less than 100,000 metric tpy CO 2 e) projects, and a moratorium on GHG permits for all other projects. This would maximize streamlining, diminish adverse economic impacts (and reduce the likelihood of litigation from permitted sources), and allow more time for the Clean Air80

Act Advisory

Committee ( CAAAC ) Climate Change Work Group to formulate a legall y robust and administratively streamlined set of procedures. (4526)
 General permits will violate the text of the CAA if we move from a case

- by

- case BACT determination basis to a presumptive BACT s ys tem. For that reason, this commenter would li ke general permits to only be imposed on the basis of source

- and pollutant

specific demonstrations of necessit y such that: (1) the PSD provisions do not contemplate the use of general permits, and (2) general permits are considered onl y under limited circ umstances. (5306, 5711) One of the commenters adds that for gas - burning sources, general permits should only be applied to those sources that could not be excluded from the PSD program under EPA's proposed approach. Even then, it should serve simply as a checklist of generall y accepted technology that sources should consult to make sure they were not behind the times. (5711)
 P ermits

- by

- rule should be allowed to exempt sources from NSR pollutant requirements for PSD because small sources captured in the program under the initial definition and subjected to PSD/title V permitting requirements might not later be considered a PSD/title V source with a revision of the definition for PTE. (3278)
 General permits could easily be developed for different categori es of landfills, which should ease the burden on smaller sites that are currentl y not in the title V program. (4863)
 The EPA should develop an affirmative designation for sources that use administrative controls to remain below the “major source” threshol d, e.g. a facility that has the potential to emit enough CO 2 to be required to obtain a permit, but sets limits on operating hours or other controls to ensure that the facilit y sta ys below the permitting threshold. Such an affirmation of administrative co ntrol could either be in the form of a general permit, permit

- by

- rule, or as a self

- declaration kept on record at the affected site. (4990)
 Allow for a variance from a general permit on a case

- by

- case basis where an alternate standard is warranted. (53 13)
 Employing general permits would require a fundamental change to the PSD program (4515, 4691) because: o General permits, while well

- established, have t ypi cally been used for minor source NSR permits and a limited number of title V operating permits, not PSD, mainly because the CAA’s PSD provisions require case

- by

- case determinations of BACT. o States would need to revise their SIPs to adopt this more expedient process for PSD. o General permits must also include presumptive BACT, which could take years t o develop. o The paucit y of technical and economic data and other supporting information related to GHG BACT will result in a significant number of challenges during the required public review process. Such legal challenges could delay permits for months or ye ars.  EPA should consider issuing national model PSD permits for GHG sources that contain a menu of options of potential BACT measures that sources can adopt to streamline permitting. If a source elects one of these options, then it can forgo case

- by

- case BACT review b y adopting a presumptive BACT that already has been subject to public participation, thereb y alleviating the burden of public comment on its decision. Because such general permits already will have been subject to public comment upon ad option of81

the general permit into a state’s law, additional public comment will not be required and the burden to regulators and the regulated community would be reduced. (5111)
 In order to streamline permit issuance by eliminating case

- by

- case public participation requirements, the commenter urges EPA to immediately commence rulemaking on a national general permit for title V sources pursuant to which an affected entity would provide notice of applicability of the general permit to its operations and oper ate under that national permit. Since title V fees do not apply by law to pollutants other than pollutants regulated under a NAAQS, NSPS or National Emission Standards for Hazardous Air Pollutants (NESHAPs ) , pursuant to section 502(b) (3) (B) (ii) of the CAA, state and local authorities would be relieved of the considerable burden of issuing title V permits to entities for whom they would have no authority to levy permitting fees, and the notices would provide national and local authorities the ability to track major sources of GHGs. (5111) Some commenters (4863, 5139, 6414) did not explicitly support or oppose the use of general permits and/or permits by rule as a streamlining option. However, these commenters had comments on the use of general permits and/or permits by rule, including:
 EPA’s argument that it should be allowed to redefine “potential to emit” as “actuall y emitting” is not justified in this instance, as the permits themselves could be streamlined by including legall y and practicall y enfor ceable general limits on operational parameters. (5139)
 EPA has proposed to disapprove elements of the commenter’s state’s air permitting program where a key

component of the minor source permitting program is the use of general permits or permits

- by

- rule , because of the assumption that these minor source programs have sy stematically been utilized inappropriately to authorize major sources and circumvent major NSR requirements. The commenter believes that EPA now proposing to use these very same mechanism s to authorize major sources will be confusing to some, but perhaps a signal that a more rational policy has been adopted by others. (6414) Some commenters (5082, 7935) oppose the use of general permits and/or permits by rule as a permitting streamlining option. Their reasons for opposition include:
 If GHGs were to become subject to control requirements, many sources would be applying for title V permits at the same time. As a result, permitting authorities would face unrealistic title V permit processi ng demands. Such demands would likely make it impossible for authorities to act on title V applications within 18 months, as generall y required, which could ignite a wave of litigation over missed deadlines. (5082)
 General permits cannot substitute for the case

- by

- case anal ys es required under PSD provisions because general permits do not allow for facility - specific conditions. (7935) Response: Since commenters echoed many of our concerns about why it will take time to put these measures in place and many commenters had differences of opinion as to whether and how we should move forward on these approaches, including policy and legal concerns, we are not f inalizing the general permits and permits

- by

- rule streamlining options at this time. We would82

lik ely want to explore, through a notice and comment process, which of these measures is viable to pursue further. These comments, including an y opinions about the legal and policy direction we must take regarding these streamlining options, will be addresse d in the action(s) where we might appl y them. 4.5 Electronic Permitting The proposal preamble for the Tailoring Rule acknowledges that the use of electronic permitting is growing across the U.S. as more states implement new or upgraded s ys tems. We bel ieve that the use of electronic permitting (in addition to the use of general permits) could assist in addressing some of the administrative burdens that may occur due to GHG emission sources being added to the PSD and title V programs. Comments received on electronic permitting as an option to streamline the PSD and title V permitting process are presented in this subsection. Comment: Some commenters (5079, 5711) support the use of electronic permitting as a streamlining option. These commenters state that electronic permitting could:
 Help streamline the PSD program for sources already considered major sources for conventional pollutants, as well as those that would be brought into the program for GHG emissions by

reducing the time, cost and resources expended by permitting agencies and applicants to obtain a PSD permit. (5711)
 Help where data entry may be used for multiple compliance programs, such as a consistent data platform between PSD and GHG Mandatory Reporting Rule requirements. (5711) Variou s commenters (2504, 4238, 4239, 5082, 5135, 5198) oppose the use of electronic permitting as a streamlining option. The reasons for their opposition include:
 EPA should not address electronic permitting as part of the Tailoring Rule. EPA should do so in a separate rulemaking and only after a careful evaluation of how such rules impact individual states. (2504)
 Electronic permitting approaches would not be helpful until states have gained some experience implementing the new requirements into their PSD and title V permitting programs. (4238, 4239)
 The commenters’ states attempted the use of electronic permitting and that the effort was unsuccessful and resulted in a significant loss of money and time. (5135, 5198)
 EPA has not demonstrated how electroni c permitting of major sources of GHG will reduce the amount of time required for permitting or how it "streamlines" the permitting process. Therefore, the commenter states that EPA should not rely on this "potential" streamlining" method to mitigate the a bsurdities that will result from EPA's regulation of GHGs. (5082)83

Response: Even though electronic permitting is a streamlining approach that does not require rulemaking or state adoption, this approach will require implementation experience with GHG that is not now available. We expect that at least 1 y ear of implementation experience (of the ty pe we will gain starting in 2011) would be required, plus at least an additional y ear to extrapolate that experience to small sources and put this approach i nto effect. For that reason, we are not able, at this time, to presume that this approach will ease an y burden prior to the planned rulemaking for step 3 (i.e., later half of 2011, to promulgate b y July 2012, effective July 2013). These comments, includi ng as any concerns expressed by

commenters about this approach, will be addressed in the action(s) where we might appl y this streamlining option. 4.6 “Lean” Techniques for Permit Process Improvement The proposal preamble describes “lean” techniques as referring to a collection of process improvement principles, methods, and tools designed to help organizations identify and eliminate non

- value

- added activity (“waste”), in order to meet customer needs better, more quickly , and more efficiently . In the co ntext of air permitting, we assert that “lean” improvement events ty pically focus on eliminating administrative process waste (e.g., backlogs in permitting, document errors, unnecessary rework on documents, delay s associated with transmission of documents between various parties that develop and approve them). We acknowledge that man y states employ

“lean” techniques to improve air permitting and other agency processes and believe that similar and improved “lean” techniques could be emplo yed as a streamlini ng option/tool for GHG PSD and title V permitting purposes. This subsection presents comments on the use of “lean” techniques as a streamlining option/tool for GHG PSD and title V permitting. Comment: One commenter (5711) expresses explicit support for the use of “lean” techniques for permit process improvement. The commenter believes that lean permitting may reduce procedural waste b y reducing or eliminating permit backlogs, errors, unnecessary redrafting of documents, and delay s due to transmitting do cuments among the parties that develop and approve them. (5711) A few commenters (2504, 4238, 4239) oppose the use of “lean” techniques for permit process improvement. The reasons for their opposition include:
 EPA should not address “lean” as part of th e Tailoring Rule. EPA should do so in a separate rulemaking and only after a careful evaluation of how such rules impact individual states. (2504)
 “Lean” approaches would not be helpful until states have gained some experience implementing the new requ irements into their PSD and title V permitting programs. (4238, 4239)84

Response: Even though “lean” permitting is another streamlining approach that does not require rulemaking or state adoption, this approach will require implementation experience wi th GHG that is not now available. We expect that at least 1 y ear of implementation experience (of the ty pe we will gain starting in 2011) would be required, plus at least an additional y ear to extrapolate that experience to small sources and put this appr oach into effect. For that reason, we are not able, at this time, to presume that this approach will ease an y burden prior to the planned rulemaking for step 3 (i.e., later half of 2011, to promulgate b y July 2012, effective July 2013). These comments, i ncluding as any concerns expressed by

commenters about this approach, will be addressed in the action(s) where we might appl y this streamlining option.85



## Chapter 5. Comments on the Proposed Definition of the GHG Pollutant 5.1 Comments on the Compounds Included in the Definition of the GHG Pollutant We proposed to identify

the GHG metric to be used for determining PSD and title V permitting applicabilit y as the group of six GHGs summed on a CO 2 e basis. The six constituent GHGs included in the proposed metric were CO 2 , CH 4 , N 2 O, SF 6 , HFCs, and PFCs. Absent a definition of “greenhouse gases” under another regulatory provision that we could cross

reference, we proposed to define “greenhouse gases” for permitting purposes as “the single air pollutant that is comprised of the group of six GHGs, as proposed in the [CAA] section 202(a) endangerment and contribution findings.” 74 FR 55329. The six well

- mixed GHGs identified in the proposed contribution finding were CO 2 , CH 4 , N 2 O, SF 6 , HFCs, and PFCs. In the proposal, we further recognized that the LDVR for GHGs, as it was proposed, would result in reductions of only four of the gases, not all six, because onl y four are emitted b y vehicles. However, we concluded that if the endangerment and cause and contrib ute findings and LDVR were finalized as proposed, then the air pollutant for purposes of PSD and title V applicability would be a single air pollutant that is the aggregate mix of the group of six GHGs. It is worth noting overall that a majority of the p roposal comments did not speak to or show a preference for or against the proposed GHG metric for the purposes of determining applicability

under the PSD and title V programs. Below we summarize our responses to those comments that specifically showed sup port for or opposition to the proposed metric. For more information regarding the rationale for the GHG metric, see s ection V.A. of the preamble to the rule. Comment: Various state commenters (4239, 4860, 7935, 8025, 4866) and public advocacy groups (5 306) express support for listing the six compounds identified by EPA as GHGs. Generall y, commenters in support of including all six of the well

- mixed GHGs in the threshold metric cite the same reasons they

provided in support of grouping the individu al GH Gs together: namel y, the contribution findings that identify the pollutant as “the combined mix of six key , directl y emitted, long

- lived and well

- mixed GHGs .” See 74 FR 66496, 66516, 66536 (December 15, 2009). They

also emphasize that EPA, in order to p rotect the public, has to control all the GHGs it has regulated and reduce the overall impact of the mix of six GHGs . One fuels sector commenter (2369) generally agrees with EPA’s proposed GHG metric to define the “air pollutant” as the class of six GHGs. A significant number of industrial commenters contend that only the GHGs actually subject to controls under the LDVR should be defined as GHGs under the Tailoring Rule. Some of these commenters (4122, 4298, 4318, 4522, 4523, 4952, 4992, 5038, 5052, 508 0, 5089, 5111, 5114, 5128, 5137, 5257, 5317, 5327, 5328, 5601, 5741, 5788, 6459, 8301) believe that onl y the three compounds (CO 2 , N 2 O, and CH 4 ) for which the LDVR contains limits should be considered GHGs, while others (3306, 4020, 4095, 4106, 4118, 5058, 5059, 5140, 5181, 5278,86

5714, 5276) would also add HFCs (which are included in a credit flexibility arrangement under the LDVR) for a total of four GHGs. The commenters present some or all of the following arguments for reducing the number of compounds included in the definition of GHG:
 PSD is not triggered for all six GHGs by the LDVR, even under EPA’s theory of the statute, because under the proposed PSD Interpretation, actual emission controls under the CAA

– not simply

an endangerment finding

– are required to trigger PSD obligations for a given pollutant (citing 74 FR 51535, 51539

- 51541, 51544). (4122, 4318, 4522, 4523, 4952, 4992, 5038, 5080, 5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741, 6459, 8301)
 In cluding all six would conflict with the “abs urd results” and “administrative necessity” doctrines because it would lead to larger numbers of sources subject to permitting, increasing the harm that EPA say s it wants to avoid. The EPA cannot both widen the scope of the applicability to six GHGs at it s discretion and rely on these judicial doctrines, which appl y only where the EPA has availed itself of all reasonable discretion to minimize the harm. (4122, 4318, 4522, 4523, 4952, 4992, 5038, 5080, 5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741, 6459, 8301)
 The LDVR must dictate how the subject GHGs are regulated and an y other result is arbitrary and, therefore, does not pass muster under section 307(d) of the Act. (4118) An operator of waste

- to

- energy facilities (2371) recommends that the Tailoring Rule require the measurement of the same emissions as the GHG Mandatory Reporting Rule (40 CFR part 98) in determining which of the six GHGs to measure for specific source categories. T he commenter also suggests that the Tailoring Rule state that emissio ns should be determined according to the methods of GHG Mandatory Reporting Rule, or an equivalent method, in order to avoid unintentional noncompliance. State commenters 4521 and 5338 also recommend that chemicals listed as GHGs should be consistent with those listed in the GHG Mandatory Reporting Rule. Some commenters raise the issue of regulating black carbon or similar short

- lived climate forcers as GHGs subject to permitting:
 One environmental commenter (5311) agrees with EPA’s decision to exclude black carbon for purposes of the Endangerment Finding for now but would like EPA to move forward expeditiously

to list black carbon as a GHG and establish appropriate regulation in the near future because: o Black carbon is a potent, short

- lived climate forc er that contributes significantly to climate change. o Reducing these emissions is among the most effective strategies to mitigate global warming in the immediate future, particularl y for slowing Arctic warming. o Scientific evidence makes clear that black c arbon meets all of the requirements of the endangerment and contribution tests under section 202(a) of the CAA.
 Some state commenters (4239, 4860, 7935) also encourage EPA to consider adding black carbon and other short

- lived climate forcers to the list of GHGs.87

One fuels sector commenter (2369) (who generally agrees with EPA’s proposal to define the “air pollutant” as the class of six GHGs) also suggests the alternative of defining the regulated pollutants in the LDVR as “GHG emissions from L ight Dut y V ehicles,” similar to the approach taken for municipal solid waste ( MSW ) landfills where the pollutant defined for the NSPS is “emissions from MSW landfills.” The commenter believes this approach would prevent triggering PSD and title V requirements for st ationary sources as a result of the LDVR. A solid waste industry

commenter (5276) asserts that the Tailoring Rule should confirm that CH 4 and N 2 O will not be regulated under PSD or title V because these pollutants are onl y emitted in miniscule amounts fr om automobiles. The commenter believes that EPA’s failure to consider the significance of each automobile GHG individually is inconsistent with purpose of the CAA requirement to determine whether an air pollutant contributes to an air pollution concern be fore regulating it. At a minimum, the commenter asks EPA to consider using the Tailoring Rule to avoid the PSD and title V regulation of CH 4 and N 2 O emissions from landfills until it can address the emission of those pollutants from stationary sources more directl y through notice and comment rulemaking. One commenter (6457) notes that EPA has previously stated that the “single designated pollutant” at MSW landfills is landfill gas (LFG), and not individual GHG components. For that reason, the commenter believes that emissions from municipal solid waste landfills would not be separately regulated under the NSR/PSD or title V programs solel y on the basis of the individual components of LFG consisting of CH 4 or CO 2 . Because the pollutant emitted from landf ills is not considered to be an y one of the gases subject to the Tailoring Rule (or the Endangerment Finding), the commenter does not read either of these rules as foreclosing voluntary reductions of LFG at non

- NSPS regulated landfills (often undertaken to generate carbon offsets for sale). Response: We appreciate the commenters’ responses and support for the GHG metric we proposed. After considering these comments, and taking into account other related actions that have occurred since proposal, we hav e determined that PSD and title V permitting program requirements will appl y, as proposed, to the “single air pollutant that is comprised of the group of six GHGs.” 74 FR 55329. We believe that this approach is both compelled by the statute and reflects the preferable policy approach. We describe in full our rationale for this approach in section V.A of the preamble for the final rulemaking. We disagree with commenters who suggest that because the LDVR actuall y regulates only four of the six GHGs, EPA may appl y PSD and title V to only those four GHGs. It is true that the LDVR for the single air pollutant that is comprised of the aggregate of six GHGs consists of individual standards for onl y four particular constituents of the single air pollutant

— whi ch are emissions limits or caps for three GHGs (CO 2 , CH 4 , and N 2 O) and an emission crediting option for one GHG (HFCs)

– but it does not dictate that only those four compounds are subject to regulation for permitting purposes. Although the LDVR results in reductions only with respect to four specific GHGs, as a legal matter the LDVR standard covers the entire set of GHGs that as a class are the single “air pollutant” in the contribution finding.88

EPA’s conclusion that the pollutant subject to regulation i s the single pollutant comprised of the six individual gases, and not the four individual constituents, is dictated by the interrelationship between the endangerment and contribution findings and the requirement to set standards under section 202(a), and n ot the endangerment finding itself. We agree with commenters that the endangerment and contribution findings do not b y themselves define the pollutant or make GHGs subject to regulation. Specificall y, as detailed below, our conclusion on as to what pollutant is subject to regulation is dictated b y our obligation to regulate under section 202(a) the air pollutant for which EPA made the cause or contribute finding. The Administrator found that emissions from new motor vehicles and new motor vehicle engine s of the single air pollutant defined as the aggregate group of these same six GHGs contribute to the air pollution and hence to the threat of climate change. These findings require EPA to issue standards under section 202 (a) “applicable to emission” of the “air pollutant” that EPA found causes or contributes to the air pollution that endangers public health and welfare. The final emissions standards satisfy this requir ement for GHGs from light

- duty vehicles

– in the LDVR, EPA determined that the final e missions standards in that rule are “standards applicable to the emission” of the single “air pollutant” defined as the aggregate group of six GHGs. EPA also interpreted section 202(a) as providing the Administrator with significant discretion in how to s tructure the standards that apply

to the emissio n of the air pollutant at issue , the aggregate group of six GHGs

. EPA has the discretion under section 202(a) to adopt separate standards for each gas, a single composite standard covering various gases, or any combination of these. In th e LDVR rulemaking EPA finalized separate standards for N 2 O and CH 4 , and a C O 2 standard that provides for credits based on reductions of HFCs, as the appropriate way to issue standards applicable to emission s of the single ai r pollutant, the aggregate group of six GHGs

. EPA did not set any standards for perfluorocarbons (PFCs) or sulfur hexafluoride (SF 6 ) as they are not emitted by motor vehicles. EPA determined that this combination of standards satisfied its obligation to set emissions standards applicable to emission s of the single air pollutant for this group of motor vehicles. In addition, EPA did not define the regulated pollutants in the LDVR as “GHG emissions from L ight Duty Vehicles,” similar to the approach taken f or MSW landfills where the pollutant defined for the NSPS is “emissions from MSW landfills,” because the definition of pollutants in the LDVR is out of the scope of this rulemaking. The fact that EPA exercised its discretion in how to structure the standards for the aggregate group of six GHGs does not change that the standards are applicable to emission of the single air pollutant defined as the aggregate group of the six GHGs

. [ See 75 FR 25398 (May

7, 2010). ] As explained in the preamble to this final rule, we must adhere to the definition of air pollutant as established in the endangerment finding and the final LDVR for GHGs, which includes CO 2 , CH 4 , N 2 O, HFCs, PFCs, and SF 6 . We do not have discretion to select only a subset of these gases in definin g o ur GHG threshold metric for permitting applicability purposes. For the same reasons, we disagree that this approach is inconsistent with the Agency ’s final action in “EPA’s Interpretation of Regulations that Determine Pollutants Covered b y Federal Pr evention of Significant Deterioration (PSD) Permit Program.” While it is the case, that only four constituent gases are reduced b y the LDVR, the ‘air pollutant” that is controlled, and thus “subject to regulation,” is the group of six, and it is this “air pollutant” to which PSD and title V apply

.89

We also disagree with commenters who suggested that including all six GHGs in determining permitting applicability would conflict with our “absurd results” and “administrative necessit y” rationale for the ph ase - in periods and applicability thresholds for GHGs. Even if we did have discretion to identify the air pollutant for PSD and title V purposes as consisting of onl y four of the six well

- mixed GHGs, we do not believe that doing so would have an y meaningfu l impact on the administrative burdens that are at the heart of our reliance on the “ absurd results ” and “administrative necessity” doctrines. The number of additional permitting actions and amount of additional permitting burden resulting from including all six GHGs, rather than four, in the definition is minimal. This is because the administrative burden of GHG permitting is dominated by

CO 2 and CH 4 emission sources. For example, with a major source threshold set at 100,000 tpy

CO 2 e, the combined popul ation of sources that would be major for N 2 O, HFCs, PFCs, and SF 6 accounts for fewer than two percent of the GHG sources that would remain covered. In regards to the few commenters that suggested the Tailoring Rule should only include the GHGs for source categories that are required to be reported under the EPA’s Mandatory Reporting Rule for GHGs , we also disagree

. The Tailoring Rule addresses the permitting requirements under PSD and title V programs for GHGs and, as described above, these requirements must address the single pollutant subject to regulation as defined in the LDVR. We cannot identify

different subsets of individual GHGs for different source categories, and there are no categorical exclusions under the final Tailoring Rule that would exempt specific emission sources (see section V.E.3 of the preamble to the final rule for EPA’s rationale regarding requests for exemptions). Also, it is worth noting that the Mandatory Reporting Rule for GHGs generall y does indeed require the reporting of al l six of the primary GHGs

– as well as other fluorinated gases

– that are included in the sum

- of

- six GHG metric used in the Tailoring Rule; however, in some cases the rule identifies where the current lack of a spe cific GHG measurement technique may

result in some specific GHGs not being reported b y a specific source category

. The GHG Tailoring Rule does not establish the GHG measurement techniques for determining the amount of GHG emissions released at a source ; sources will need to verify what GHG measur ement techniques are acceptable for use by contacting their applicable permitting authority . It is likel y that the same or similar techniques as identified in the GHG Mandatory Reporting Rule will be required, but this should be confirmed with the applica ble permitting authority

. We disagree with the commenters who suggest we include black carbon and other short

lived climate forcers to the list of GHGs as well as with those asking for an exclusion of CH 4 and N 2 O. The definition of the air pollutant, as cited in the LDVR, includes CH 4 and N 2 O and does not include black carbon or other short

- lived gases. We also disagree with the commenter who states that we should have defined the air pollutant as “GHG emissions from LDVs,” similar to the approach take n for municipal solid waste (MSW) landfills where the pollutant defined for the NSPS is “emissions from MSW landfills.” In addition to the reasons noted above, including the definition of the air pollutant being outside the scope of this rulemaking, we fi nd our action on landfills not to be instructive (56 FR 24468, 24473; May 30, 1991). As we explained in that action, EPA found that the complex mixture of the constituent gases which emanated from landfills endangered public90

health and welfare based on a number of concerns. Under section 111(b)(1)(A), we determined that this category

of sources

– MSW landfills

- caused or contributed significantly to air pollution which may

reasonably

be anticipated to endanger public health or welfare. The term “air pol lution” as used in section 111 and various other CAA provision generall y refers to an ambient concentration of some compound or set of compounds. In most cases the ambient concentrations of a compound are the result of emissions from a variety of sources, and can include both anthropogenic and non

- anthropogenic sources of emissions. For example, ambient concentrations of PM are a form of air pollution, and the PM in the ambient air results from emissions from many different source categories. For MSW lan dfills, the air pollution at issue was unique in that it was defined as the emissions from MSW landfills, making the air pollution at issue a source specific definition. This was done because the impacts on public health or welfare were in part tied to th ese specific emissions (e.g. welfare effects were tied to landfill odors and off

- site explosions from pollutant migration), not simply

a broader air pollution where MSW emissions play ed just one part. 56 FR 24468, 24473 (May

30, 1991). 3 Since the air pol lution was defined this way , the category clearly caused or significantly

contributed to this air pollution. It was the unique, source specific nature of the definition of the air pollution that led to the result that the air pollutant emitted by the MSW landfills was also defined as emissions from MSW landfills. Accordingl y, it was the specific mixture, which emanates solel y from landfills, that we were concerned about. As discussed above, the endangerment finding here is of a different nature. Specif icall y, the Administrator determined that the air pollution was atmospheric levels of the combination of six GHGs . This air pollution was not limited to any one source of GHGs, but was defined as the atmospheric concentrations of these gases, irrespective of sources. Unlike MSW landfills, EPA did not define the air pollution in terms of emissions from a specific source category , but instead defined it in terms of the atmospheric concentrations irrespective of an y one source category

. See 74 FR 66496, 6651 6

- 523 (December 15, 2009). The endangerment to public health and welfare came from this total atmospheric concentration of GHGs, not from a subset reflecting just emissions from one source category . EPA rejected suggestions that it should define the air pollution in terms of a subset of the GHGs in the atmosphere, such as the emissions from new motor vehicles. Id at 66521, and Endangerment RTC Volume 9, at p.16. The air pollutant was defined in the same manner as the air pollution, irrespective of sour ce category , and was not limited to emissions from new motor vehicles. Id . at 66536

- 41. Of course, EPA focused on the emissions of this air pollutant coming from new motor vehicles, as that was required to determine whether emissions from these sources c aused or contributed to the atmospheric air pollution. However the air pollutant was defined in the same way as the air pollution, without reference to an y specific source. Thus, the GHG endangerment and contribution findings did not follow the somewhat unique approach to defining the air pollution that was used in listing MSW

3 While it is the case that the section 111 listing was based in part on ozone impacts from the VOCs emitted by landfills, VOCs were already regulated under the CAA. This is because the ozone precursors found in landfill gases are already covered by the regulated NSR pollutant VOC. Therefore, EPA's designation of the problem as the source specific emissions from landfills did not result in other sources of VOCs, which impacted ozone generally, to be unregulated. However, if we w ere to define the GHG air pollutant as only those gases emitted by LDVs, as the commenter sugge s ts, this would resul t in other sources of GHGs being unregulated.91

landfills under section 111, and the agency decisions in the MSW landfill listing does not provide a basis for defining air pollutant here different than the air pollutant and the a ir pollution defined in the GHG endangerment and contribution findings. Moreover, the proposed approach would appear to circumvent the requirement that an air pollutant regulated under the CAA be subject to PSD permitting as it would give the Agency authority to avoid this result simply by issuing source specific definitions of a pollutant even where the air pollutant is of general concern. With respect to landfills, we also disagree with commenters that because we designated the pollutant in the land fills NSPS as LFG s that the only regulated NSR pollutant emi tted from them is LFGs . Nothing in that rulemaking suggests that other pollutants meeting the definition of regulated NSR pollutant (e.g. NOx from flaring) would not also be covered. Arguments that certain individual constituents should not have been included under the LDVR (CH 4 and N 2 O) because they are emitted in small amounts are beyond the scope of this rulemaking. Rather their inclusion was the subject of the endangerment and cause or contribute finding and the LDVR and are properl y addressed there. Questions as to the impact that the LDVR has on the availability of reductions of GHGs at landfills for use as offsets or credits is also beyond the scope of this rulemaking and we are not addressing those issues at this time. 5.2 Comments on Use of GWP and the CO 2 e Metric As noted previousl y, we proposed to identify the GHG metric as the group of the six GHGs, on a CO 2 e basis. Specificall y, this means that a source’s emissions of all si x GHGs would be combined into a single metric b y multiplying the mass of each individual GHG (in tpy) by its GWP value, and summing these products to determine the total emissions of the GHG pollutant expressed in terms of tpy CO 2 e. We received comments o n many aspects of the proposed metric. In our proposal preamble discussion of GHG metric, EPA also raised the possibility

of including a limitation in the metric to address the prospect (expected to occur onl y rarel y) that high

- GWP gases could be emitted in quantities less than statutory thresholds for PSD and title V but nevertheless exceed the proposed thresholds in terms of CO 2 e. 5.2.1 General Support and Opposition to the CO 2 e Metric Comment: Several commenters (3916, 4154, 4518, 4747, 4886, 5306, 5311, 5347, 5922, 8025) explicitly support the use of GWP and the CO 2 e metric for GHG emissions. These commenters make the following points in support:
 The EPA has the discretion and authority to select an appropriate metric to measure GHGs in the PSD pr ogram, and policy considerations support the choice of GWP. (5306)
 The GWP is a widely

- used metric which employ s internationally

- recognized conversion factors to compare GHGs based upon their climate properties. (4518, 5306, 5347)92

 This approach provides for an inherent balancing among the GHGs, possibly minimizing PSD reviews. (3916)
 This will lead to a more effective s ys tem for permitting authorities and create more opportunities to reduce emissions over the full class of GHGs, rather than focusing on r educing individual GHGs. (4866)
 States and local areas that have climate action plans for GHG reductions use CO 2 e. (4518, 5347)
 The use of CO 2 e ensures a standard measure across all permitting agencies. (4518) However, even though one commenter agrees that using GWPs sensibly focuses on the characteristic that endangers the public health and welfare (i.e., the potenti al to cause global warming), this state commenter (4742) believes that there is no reason that EPA should select carbon dioxide equivalenc y over another metric. The commenter recommends that EPA consider adopting a unit of measurement that would eliminate the need to adjust the numeric thresholds in the statute. In addition, another supportive commenter (4518) believes that the proposal un derestimates CH 4 ’s heat

- trapping potency relative to the other GHGs. Because CH 4 has an atmospheric lifetime of approximately one decade instead of 100 y ears like other GHGs, its GWP value (which is derived base d on a warming potential over 100 y ears per the IP CC methodology) is relatively lower than the more persistent GHGs. The commenter believes that this is a missed opportunity to get significant, near

- term emissions reductions. Several state (4519, 4864, 5081) and industrial commenters (4020, 4095 , 4747, 5082, 5086, 5183, 5276, 5391, 6457) oppose the use of GWP and CO 2 e in setting the thresholds for GHGs, and most of these believe that thresholds should be based on individual mass

- based emissions for each GHG. Specific reasons for this opposition include the following:
 Two industry

commenters (4095, 5082) do not believe EPA has any discretion to ignore the metric for regulation established by Congress for PSD in section 169 of the Act.
 A state commenter (5081) suggests that regulating each of the GHGs individually on a mass basis provides a better, more immediate environmental result and is a more appropriate approach under the administrative necessity doctrine.
 An industry

commenter (5183) states that facilities will face enough challenges without introducing requirements to consider intensity multipliers or other factors beyond the simple NSR threshold levels, and that a facility which emits less than an established threshold level should not trigger PSD or title V requirements, regardless of the ty pe and intensity of the emission.
 Two solid waste industry commenters (5086, 5391) state that an individual mass

- based emissions metric without GWP would be consistent with the GHG Mandatory Reporting Rule and the current landfill

- specific PSD regulatio n based on NMOC.
 Some state (4864), solid waste industry (5391), and semiconductor industry (5143, 5417) commenters are concerned that the CO 2 e metric relies on GWP assumptions that could change with periodic updates to the scientific literature. Commenter 5391 adds that GWP is therefore a variable, and EPA cannot grant permits that include variables. (See additional comments on this topic below.)
 An industry

commenter (5276) contends that the use of CO 2 e will complicate the implementation of BACT becau se sources that trigger PSD will be required to install BACT for each regulated pollutant, not for CO 2 e. As a result, a source that exceeds the93

threshold primarily

due to its CO 2 emissions would be forced to install BACT for all other individual GHGs, reg ardless of how minor those other emissions may be. The commenter states that EPA should provide further anal ys is on how the single GHG

- based metric approach is representative and equitable for all sources impacted b y the proposed rule.
 One commenter (6457 ) supports elevated thresholds, but believes that these thresholds as applied to CH 4 should be expressed on a mass basis because a 25,000 tpy threshold on a CO 2 e basis would effectively lower the threshold for CH 4 emissions to approximately 1,000 tpy , whic h would potentially extend PSD and title V requirements to hundreds of small facilities such as landfills, farm manure digesters, coal mine fugitive emissions, non - uniform oil/gas s ys tem components, and small wastewater treatment facilities that could not afford the administrative and compliance costs. This permitting need would overwhelm state and local permitting authorities. Some industry

commenters (4298, 5111, 7026) recommend using a combination approach based on the mass emissions of each s yn thetic GHG (PFC, HFC, and SF 6 ) and the CO 2 e or other equivalent emissions of each naturally occurring GHG (CO 2 , CH 4 , and N 2 O). Industry commenters 4298 and 5111 argue that for sources of PFC, HFC, and SF 6 , which each have low mass emissions, there is no justific ation under the avoidance of “absurd results” and “administrative necessity” doctrines to group these pollutants or use an equivalency metric to evaluate title V and PSD applicability because they

would rarel y trigger applicability based on their mass emis sions at the statutory thresholds. Without necessarily

opposing the use of GWP, state commenters 4239 and 7935 recommend that EPA consider using a mass basis for individual GHGs because it may be feasible to regulate and control emissions of each GHG, other than CO 2 , at the 100/250 tpy thresholds (or less if deemed necessary) according to the established mechanisms of the CAA. An industry

commenter (4298) suggested that an alternative approach for calculating global warming equivalency could be based o n N 2 O ( i.e. , N 2 Oe), which would yield emission ranges that would fall far closer to the statutory threshold levels than if a CO 2 e approach is used. The commenter notes that an N 2 Oe approach applied to a major source threshold of 100 tpy would be only

slightly less stringent than the proposed threshold of 25,000 tpy CO 2 e ( i.e

. , 100 tpy N 2 O is equivalent to 29,600 tpy CO 2 ). The commenter adds that, to the extent that an N 2 Oe approach would exclude sources from PSD that EPA feels should be subject to GHG standards, EPA has the option to pr omulgate NSPS for such sources. Response: After considering these comments, we have decided to adopt applicability thresholds based on a CO 2 e metric for the sum

- of

- six well

- mixed gases, and also to adopt an additional ma ss - based threshold for the sum

- of

- six gases as discussed in the proposal. First, as discussed in the previous section, we have explained wh y the appropriate pollutant for PSD purposes is the single pollutant GHG, which is co mposed of the six well

- mixed ga ses. Regarding the CO 2 e metric, we continue to believe there are a number of advantages , as laid out in the proposal, to a CO 2 e measure that would not be available if we used only a mass - based metric. These include:94

(1) a CO 2 e metric, b y incorporating the GWP values, best addresses the relevant environmental endpoint, which is radiative forcing of the GHGs emitted; (2) when combined with a sum

- of

- six gases approach, the CO 2 e metric best allows for consideration of their combined effects when sources emit an y one or combination of the six well

- mixed GHGs ; (3) a cumulative CO 2 e metric is consistent with the applicability metric used in the mandatory reporting rule and other related rules and guidelines ; and (4) a CO 2 e metric allows more flexibility for desi gning and implementing control strategies that maximize reductions across multiple GHGs . We recognize the tension between the mass

- based metric in the statute and the CO 2 e - based metric we are adopting in this rule, but as discussed later, we will address this by also retaining the mass

- based metric. Moreover, given our need to tailor our approach f o r covering sources of GHGs, we believe that the considerations driving our choice to also use a CO 2 e - based metric are appropriate for defining the phase

- in and allow for permitting resources to be directed at those sources and modifications that have the greatest impact on radiative forcing of the GHGs emitted.
We recognize the concern of commenters who stated that we cannot ignore the statutory thresholds b ased on the mass

- based emissions of an air pollutant as described under CAA section 169 (1). As we mentioned in the proposal, because both the PSD and title V statutory thresholds are expressed on a mass basis

—i.e., tons of a pollutant with no weighting va lues applied

— we were concerned from a legal standpoint that the metric proposed (CO 2 e) could have the effect of subjecting to PSD or title V requirements a source whose emissions fall below the statutory threshold limits on a strictly mass basis, but whose CO 2 e - based emissions exceed the CO 2 e thresholds we establish under the Tailoring R ule. As an example, in rare instances it is possible that a source may

emit only

a non - CO 2 GHG in very

small amounts, on a mass basis, but one that carries a very

large GWP . In this case, it is possible that the source may emit the GHG in amounts that fall below the PSD and/or title V statutory applicability

threshold (100 or 250 tpy , as applicable) on a mass basis, but exceed the 100,000 CO 2 e PSD and title V applicability thresholds for step 2 in this action. Under these circumstances, without a mass

- based threshold, the source would trigger PSD and title V for its CO 2 e emissions even though its GHG mass emissions would not, in fact, exceed the statutory triggers. Upon review of the comments pertaining to this issue and further analy sis of the legal and programmatic implications, we are adopting a two

- part applicability process, for both major source applicability

determinations for GHGs under PSD and title V and for det ermining if a net increase has occurred in PSD applicability determinations for modifications. W e accomplish this two

- step applicability

approach by

continuing to rely

on the existing mass

- based applicabilit y provisions in the current regulations, and b y including new regulatory provisions that add a definition of "subject to regulation" that in turn includes the phase

- in thresholds. Similarly , for PSD modification reviews and associated netting analy ses, the same two

- step process must be used. Our summary

in section IV.A of the preamble describes how we expect this provision to be implemented in practice. Regarding concerns raised by one commenter that applying a CO 2 e - based threshold to methane sources will create an overwhelming permitting burden, we have carefully considered the impact of our final GHG threshold selection under step 2 of the phase

- in on the administrative permitting burden that is created, including specificall y the inclusion of the applicable methane sources mentioned in the comment. As discussed in more detail in Section95

V.B of the preamble to the final rule, we have decided upon a higher GHG threshold than was proposed, 100,000 tpy

CO 2 e instead of 25,000 tpy CO 2 e for major source applicability , and we believe that there will not be an overwhelming permitting burden created for states as result of our step 2 thresholds, inclusive of an y CH 4 sources affected at the step 2 threshold. While, there may be some newl y permitted CH 4 sources under step 2, such as additional landfills and un derground coal mines, we believe that these additional sources, which we estimate at less than 300 total, will not result in a number of permitting actions that will overwhelm permitting authorities. We acknowledge that the possibility of changing GWP v alues is a downside to the use of CO 2 e for the GHG metric, and we address this comment later in this chapter , where we discuss our plan to codify

GWP values. By

codifying GWP, any

changes will be manageable, and, in our judgment, will not outweigh the ben efits of a CO 2 e - based approach. We also acknowledge that a CO 2 e - based approach may appear to complicate the BACT review and implementation process. However, we disagree with the commenter’s ultimate conclusion that BACT will be required for each constitu ent gas rather than for the regulated pollutant, which is defined as the combination of the six well

- mixed GHGs. To the contrary , we believe that , in combination with the sum

- of

- six gases approach described above, the use of the CO 2 e metric will enable th e implementation of flexible approaches to design and implement mitigation and control strategies that look across all six of the constituent gases comprising the air pollutant (e.g., flexibility to account for the benefits of certain CH 4 control options, even though those options may increase CO 2 ). Moreover, we believe that the CO 2 e metric is the best way to achieve this goal because it allows for tradeoffs among the constituent gases to be evaluated using a common currency

. We also note that an y BACT an al ys is conducted at a facility would have to take into account the cost of control and accordingly disagree that grouping the constituent gases into a single pollutant will lead to the imposition of controls that are not cost effective. We do not agree also with the commenter who suggested an N 2 O

- based equivalent metric. There is little evidence of this approach being used any where in formal national GHG emissions reporting mechanisms, GHG emission trading regimes, or state and local GHG reporting programs. However, CO 2 e is a universally recognized and utilized metric for estimating and reporting GHG emissions, with well established protocols for applying GWP values based on CO 2 equivalency . We find no reason to divert from this well

- established metri c for permitting purposes. Similarly , we have chosen to follow the same GWP values that are adopted in EPA’s final GHG Mandatory Reporting Rule, which are based on the 100

- year time horizon; these GWP values are well established in international and natio nal GHG reporting mechanisms and we see no reason to divert from those values for permitting program purposes either

. 5.2.2 Comments on Combining the Six GHGs into a Single Metric Comment: Most commenters who submitted comments during the public comme nt period did not speak to or show a preference for or against the combination of the six GHGs into a single metric, and there were some who agreed with the metric we proposed. Of those commenters that96

specificall y support the combining of the individual GHGs as one pollutant for purposes of determining permitting applicability , they stated that it is not uncommon for EPA to recognize ‘collective’ air pollutants comprised of man y individual compounds based upon shared threats to health and welfare, includi ng such EPA

- created group pollutants as sulfur oxides, nitrogen oxides, volatile organic compounds ( VOCs ) , and PM. One state commenter (4742) agrees that EPA has substantial discretion to regulate pollutants collectively , and believes that this seems part icularl y appropriate with respect to GHGs. A smaller number of commenters (man y who also oppose including all six of the proposed GHGs) (2797, 4122, 4298, 4318, 4522, 4523, 4952, 4992, 5038, 5052, 5080, 5089, 5111, 5114, 5128, 5143, 5257, 5317, 5327, 5328 , 5601, 5741, 6459, 7026, 8301) specifically oppose the proposal to combine all six GHGs into a single metric for permitting purposes, for some of the same reasons:
 Regulating all six GHG as a group will increase the likelihood that a source will trigger p ermitting requirements. The LDVR dictates how these GHGs will be regulated, and an y other result is arbitrary

and, therefore, does not pass muster under section 307(d) of the Act. (4118)
 Grouping all six GHGs is not appropriate because GHGs are not like other air pollutants that are comprised of numerous substances of concern (e.g., VOCs and PM). Since GHGs do not interact or combine to create a pollutant of concern, and EPA has not established a GHG NAAQS, GHGs should be regulated individually and treated in the same way as under the LDVR. (2797, 5328)
 The EPA should not regulate CO 2 the same as the other GHGs because the other gases have higher GWP and are more potent. (2797)
 Defining the six GHGs as a single pollutant is unnecessary and would expand the scope of the statute. (7026) Response: After considering these comments, and taking into account other related actions that have occurred since proposal, we have determined that PSD and title V permitting program requirements will appl y, as propos ed, to the “single air pollutant that is comprised of the group of six GHGs.” 74 FR 55329. See the discussion under section 5.1 regarding which compounds are included in the definition of the GHG pollutant. We believe that this approach is both compelle d by the statute and reflects the preferable policy approach. As more full y discussed in the preamble, under the plain language of section 169(1) a PSD major emitting facility is one that emits 100 or 250 tpy

of “any air pollutant.” Through regulation we have reasonably limited the scope to this provision to those tonnages of an y “regulated NSR pollutant,” which includes an y pollutant that is “subject to regulation under the Act.” 40 CFR 52.21(b)(50)(iv). This same limitation exists in the definitions o f major modification and BACT. 40 CFR 52.21(b)(2) and (b)(12). This regulatory

limitation reflects the statutory directive that BACT is required for “each pollutant subject to regulation under this chapter.” 42 U.S.C. 7475(a)(4). Based on these provi sions, the sole question in determining what a BACT analy sis must cover is what pollutant is “subject to regulation.” This phrase carries with it no suggestion that the Agency

may subdivide or otherwise change a pollutant that is regulated elsewhere in th e Act.97

Instead, it carries with it a dictate that BACT be applied to the air pollutant which the Administrator has determined elsewhere to regulate. As described below, this air pollutant, in the case of GHGs, is the aggregate mix of the six constituent gases identified in the contribution finding which led to the promulgation of the LDVR, and is the air pollutant that the various LDVR emission standards address. This same logic regarding the definition of a pollutant “subject to regulation” applies to the determination of whether a source is a major stationary source of a “regulated NSR pollutant.” Thus, we also read the definition of major emitting facility at CAA section 169 to be guided by the same requirement to define the “regulated NSR pollutant” that is “otherwise subject to regulation” to be the same air pollutant that is actually regulated elsewhere under the Act. If, as here, that regulation considers the aggregate emissions of several compounds to be a single air pollutant, the same single ai r pollutant is a regulated NSR pollutant. As noted above, the statutory definition of major emitting facility covers “an y pollutant.” As the LDVR and associated contribution finding have defined the aggregate group of the six GHGs to be the single “air p ollutant,” they must be considered as such in determining if “an y pollutant” is emitted above the provided thresholds. Si milar to our discussion in section 5.1 above, si nce the time of our proposal, we have finalized both the Contribution Finding and the LDVR for GHGs. The final LDVR for GHGs specifies, in the rule’s applicability provisions, the air pollutant subject to control as the aggregate group of the six GHGs, including CO 2 , N 2 O, CH 4 , HFCs, PFCs, and SF 6 . 4 Because it is this pollutant that is r egulated under the LDVR, it is this pollutant that to which PSD and title V apply . Specificall y, the applicability provision in the LDVR provides a clear reference to the definition of the single pollutant comprised of the aggregate group of the six well

- mixed GHGs , which makes clear PSD and title V applicability depends on the same sum - of

- six GHG construct. We must follow this construct of the aggregate group of the six gases and do not have discretion to interpret the GHG “air pollutant” differentl y for the purposes of PSD or title V. We note that many of the comments opposed to aggregating the six GHGs in this rule were already addressed in the final Contribution Finding. See , e.g., 74 FR 66541. Of course, because the LDVR follows the Contribution Fi nding, this construct of the pollutant as the aggregate group of the six gases is also consistent with the definition of the air pollutant in the final Contribution Finding for GHGs (see 74 FR 66496, 66499, 66536

- 7, December 15, 2009). There, the Adminis trator defined the air pollutant as the “a ggregate group of the same six... greenhouse gases” (see, specifically , 74 FR 66536) , and these well

- mixed GHGs are defined to include CO 2 , CH 4 , N 2 O, HFCs, PFCs, and SF 6 . Moreover, even if we had discretion to identify the GHGs air pollutant differentl y in the permitting programs than in the LDVR , we believe it is reasonable to identify the GHGs air pollutant through the sum

- of

- six construct for the same reasons wh y we adopted that definition in the contribution fin ding and for additional reasons noted below specific to the permit programs. The term “air pollutant” is defined under CAA section 302(g) as “any air pollution

4 See 40 CFR 86.1818

- 12(a) Greenhouse gas e mission standards for light

- duty vehicles, light

- duty trucks, and medium

- duty

passenger vehicles. (“Applicability. This section contains standards and other regulations applicable to the emission of the air pollutant defined as the aggregate group of six greenhouse gases: carbon dioxide, nitrous oxide, methane, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.”).98

agent or combination of such agents, including an y physical, chemical, biologi cal, radioactive

... substance or matter which is emitted into or otherwise enters the ambient air.” Under this definition, EPA has broad discretion to identify an air pollutant, including, as appropriate , treating a combination of air pollutant agents as a single air pollut ant. Here, we think that the six well

- mixed gases are appropriatel y combined into a single air pollutant because, as noted in the contribution findings, they share several important attributes: Each of the six gases

--  Is directl y emitted ( and is not fo rmed b y secondary processes in the atmosphere)
 Is long

- lived in the atmosphere after it is emitted
 Is sufficientl y long

- lived that it becomes “well

- mixed,” which means that its concentration is essentially uniform in the atmosphere (as opposed to having s ignificant local/regional variation ); and
 Has well understood atmospheric properties ( e.g., radiative forcing). See 74 FR 66516

- 66518. In addition, treating the six GHGs as a single air pollutant is consistent with the actions of international scientific bodies. For example, the In tergovernmental Panel on Climate Change ( IP CC ) considers in various reports how the six gases drive human

- induced climate change and how that affects health, society , and the environment. Similarly , the United Nations Framework Convention on Climate Change (UNFCCC) requires reporting of these six gases and the commitments under the UNFCCC and Kyoto Protocol are based on the combined emissions of these six gases. Finally , as discussed later, it is standard practice to compute the “carbon dioxide (CO 2 ) equivalency” of aggregate emissions using GWP. We disagree with commenters who argued that grouping all six GHGs is not appropriate because GHGs are not like other air pollutants that are comprised of numerous substances of conc ern (e.g., VOCs and PM). First, as noted previously , we are following the approach to a single air pollutant comprised of the aggregate of the six GHGs initially adopted in the Contribution F inding and followed in the LDVR. We note that many of the comme nts opposed to aggregating the six GHGs in this rule were already addressed in the final Contribution Finding. See , e.g., 74 FR 66541. In addition to the reasons described in the endangerment and contribution findings , there are CAA permitting programmat ic and policy advantages to using the sum - of

- six construct for the GHG air pollutant for PSD and title V applicability purposes . We believe now, as we did at proposal, that the benefits in using the cumulative group of GHGs outweigh any implementation adv antages to using an individual

- GHG

- based metric. The advantages to sum

- of

- six definition include that it may

-- (1) allow significantly more flexibility

to sources for designing and implementing control strategies that maximize reductions across multiple GHGs and would also likely align better with possible future regulations that allow for such flexibility ; (2) more effectivel y support possible future offsets or trading mechanisms that involve different source categories and different compositions of GHG emissions; and (3) could better accommodate and harmonize with future regulations because it establishes one class of pollutants that includes individual components that may , in turn, become subject to specific emission standards under future regulatory

ef forts.99

We also disagree with commenters who believe that aggregating the GHGs under one GHG metric for permitting applicability purposes would lead to an excessive amount of source permitting activit y or would increase the likelihood for a source to tri gger applicability . This is because the phase

- in approach addresses the overwhelming permitting burdens associated with permitting of GHGs. It does so by designing our applicability thresholds to allow for a manageable amount of new permitting actions ba sed on the emissions from sources using the sum - of

- six metric. I f we based applicabilit y on individual gases, (assuming, again, that we have authority to deviate from the definition of “air pollutant” as used in the LDVR), we would still need to determine what level of permitting is manageable and appropriate based on thresholds on an individual gas basis and would expect that the final rule would result in the same levels of remaining burden. Accordingl y, unless the permitting program were being implemented at the statutory thresholds, the effect of a decision to aggregate or not aggregate would not reduce workload; it would simply shift work from permitting facilities that trigger based on combined GHGs to those that trigger based on individual GHGs. Al though we acknowledge that this may affect applicability

for a particular source, we disagree with the commenter that doing so would conflict with our conclusions based on the “absurd results” or “administrative necessity” doctrines. By

using a consolidat ed and weighted measurement, we are able to direct the limited administrative resources to those new sources and modifications with the greatest impact on GHG emissions. 5.2.3 Comments on L inking the Definition of CO2e to EPA’s “Inventory of U.S. Greenh ouse Gas Emissions and Sinks” Comment: Numerous commenters express concerns about the proposal to link the definition of CO 2 e [see, e.g., proposed 40 CFR 51.166(b)(58)] to EPA’s “Inventory of U.S. Greenhouse Gas Emissions and Sinks” because that document may change from y ear to y ear. This document includes information about applicable GWPs and guidance on calculating emissions in terms of CO 2 e. Representative comments include the following:
 One commenter (4518) believes it is important to ensure that all permitting agencies are using the same calculations for the determination of CO 2 e for GHGs. The commenter notes that EPA’s document, which is updated annually , should address this issue, provided this information is provided in annual guidelines for pe rmitting agencies.
 One fuels industry

commenter (8459) states that EPA should follow the proper notice and comment procedures and the requirements of the IQA for the relevant technical underpinnings of the proposal. The EPA relies upon the GWPs of the IPC C without providing the supporting data for review, and it is inappropriate to use this as a basis for this rule without first making all the raw data available for public inspection and comment.
 A utility

and natural gas industry

commenter (4749) asserts that EPA cannot tie the definition to a non

- regulatory document that may

be changed without notice and comment rulemaking. This and other industry commenters (4106, 5140, 5181, 5278) contend that before EPA utilizes a new GWP, that GWP must be subject to notice and comment to comply

with the requirements of CAA section 307 and the APA.100

 Two solid waste industry commenters (5086, 5391) state that EPA should include guidelines in the rule for how the Agency will evaluate and adopt or reject changes to the int ernational GWP standard and how it will appl y the standard to PSD and title V permits.
 A number of commenters (4020, 4120, 4515, 4691, 5073, 5140, 5141, 5181, 5278, 5417) are concerned that an annual update of GWP would create a moving target for sources c onducting applicability

determinations and assessing compliance with minor NSR and PSD emission limits. According to the commenters, this ty pe of enforcement jeopard y creates substantial uncertainty and will chill investment in more efficient technologies

. The commenters assert that, at a minimum, EPA needs to ensure that applicability and compliance with limits continues to be based on the GWP that existed when the determination was made or the limit was established. One of the commenters provides two a lternatives to address the issue of changing GWPs, along with several GHG calculation scenarios: 1. “Freeze” the GWP at the current values b y incorporating those values into the regulation. The EPA could still revise the “NSR” GWP, but would have to revise t he regulation to do so. 2. Allow the GWP to change as more research becomes available, but ensure that the new values are not used retroactivel y. This policy requires: a. A date on which a revised GWP becomes effective (e.g., 30 days after the date the new Inve ntory

is issued). b. A transition discussion in the preamble to the final rule and, as needed, transition language in the final rule. The transition would ensure that the new GWP: i. Would not apply

to an y complete applications submitted prior to the effective date of the revised GWP. ii. Would not be used to revisit past applicability determinations. iii. Would be used for future applicability determinations, including recalculation of past emissions increases and decreases as part of determining the net emissions incre ase.
 Some commenters (5143, 5417) have concerns about complications arising from fluctuating GWPs and the fact that new materials may be added to the IP CC list when it is revised, creating a change in a compan y’s emissions even if its operations did not ch ange. This is a particular concern to semiconductor manufacturers because they use fluorinated materials (currently unlisted), which are a key focus in GHG regulation and likely to be listed in the future.
 One energy

sector commenter (5742) believes that current GWPs reflecting the current scientific consensus should be used in calculating CO 2 e, specificall y the GWPs specified in the IPCC Fourth Assessment Report (AR4). Using outdated factors strictly for consistency

with a soon

- to

- expire international agreement to which the U.S. is not even a party results in incorrect emissions projections, which is particularl y problematic in a GHG regulatory

scheme where investment decisions with potentially long

- term consequences will be made based on outdated science

.  One commenter (4948) suggests that EPA revise the definition of CO 2 e to reference the GHG Mandatory

Reporting Rule for methods of calculating GHG emissions. The commenter indicates that if the GHG Mandatory Reporting Rule does not address a101

facility ’s G HG emissions, then the inventory and sinks document could be used as the reference. Response: We agree with commenters who suggested we should codify , either in the Tailoring Rule or through reference to codified values in another rulemaking, the GWP v alues to be used in permitting anal ys es. We agree that this approach provides certainty as to which GWP values need to be used and permitting authorities and sources can plan appropriately for possible changes in the GWP values. As mentioned in the comme nts, recommended GWP values from IPCC can change over time. While this is infrequent

– the last such changes were in 2007

– when it occurs, there are generall y significant lag times in universal adoption of new values because of inconsistencies that could be created in national inventories and emission reporting mechanisms. In a regulatory setting, such as in the permitting programs, this could potentially create significant implementation issues, such as when a GWP change occurs while a permit action is in progress. 5 EPA also recognized similar potential implementation issues in developing its final Mandatory Reporting Rule for GHGs, and codified in the regulatory text for that rule the GWP values to be used in reporting GHGs as part of that final rulemaking. For the s e reason s , we have decided to follow the approach in the GHG Mandatory Reporting Rule and require that for PSD and title V permitting requirements, wherever emissions calculations are performed, that permitting authorities and sources use GW P values that are codified in EPA rules. W e will establish the GWP values for PSD and title V rules based on a cross - reference to the values that are codified in the EPA’s GHG Mandatory Reporting Rule [Reference: Table A

- 1 to Subpart A of 40 CFR part 98

– Global Warming Potentials, 74 FR 56395]. Any

changes to Table A

- 1 of the GHG Mandatory Reporting Rule regulatory text must go through a notice

- and

- comment regulatory process. In this manner, the values used for the permitting programs will reflect the latest values adopted for usage b y EPA after a formal regulatory

process and will be consistent with those values used in the EPA’s GHG Mandatory Reporting Rule. Furthermore, the lead time for adopting changes to that rule will provide a transition time t o address implementation concerns raised b y commenters. As noted above, we have decided to follow the approach in the EPA’s final GHG Mandatory

Reporting Rule and require that for PSD and title V permitting requirements, wherever emissions calculations ar e performed, permitting authorities and sources use GWP values that are codified in that rule. We believe that maintaining consistency with the GHG Mandatory

Reporting Rule in terms of what GWP values to use will provide a necessary level of certaint y for both sources and permitting authorities. We also disagree with commenters who believe that , by up dating the GWP values, this will necessaril y result in shifting compliance obligations. Permitting authorities should be able to write BACT limits refere ncing the regulations in effect at the time.

5 We note that our approach does not entirely avoid the possibility that a GWP change can occur while a permit is in progress alth ough it will ensure advance notice of such a change . In the event that we propose a change to GWP values, we will work with permitting authorities as necessary to provide guidance to sources on transitional issues.10 2

5.2.4 Comments on the Use of Dual Thresholds for Pollutants that Do Not Exceed the Statutory Thresholds but Do Exceed the CO 2 e Thresholds Comment: In our proposal preamble discussion of GHG metric, EPA raise d the possibility of including a limitation in the metric to address the prospect (expected to occur only rarel y) that high

- GWP gases could be emitted in quantities less than statutory thresholds for PSD and title V but nevertheless exceed the proposed thr esholds in terms of CO 2 e. Most commenters (2369, 4120, 4122, 4298, 4318, 4515, 4523, 4691, 4747, 4952, 4992, 5038, 5078, 5079, 5080, 5089, 5111, 5114, 5128, 5236, 5257, 5280, 5317, 5327, 5601, 5741, 6459, 8301, 8545) on this subject support a dual thresh old under which a source would be subject to title V or PSD only if its GHG emissions exceeded both the statutory thresholds on an actual tonnage basis and the tailored thresholds on a CO 2 e basis. Specific comments include the following:
 It would be unlaw ful to apply PSD when GHGs are below the statutory thresholds. With respect to netting, a source should not trigger PSD requirements unless there is a net emissions increase. (4122, 4318, 4523, 4952, 4992, 5038, 5080, 5089, 5114, 5128, 5236, 5257, 5317, 5327, 5601, 5741, 6459, 8301)
 The complexity

of accounting for emissions according to both mass and GWP should be manageable, and is not a reason to ignore the role of mass

- based emission rates in determining the applicability of PSD requirements. (4120, 4515, 4691)
 A dual threshold is consistent with the phasing in of the Tailoring Rule and is an effective way to address the current uncertaint y surrounding how to measure high

- GWP gases. The commenters recommend that SF 6 and other high

- GWP gases not trigg er PSD in such small quantities during the first phase because measurement is too uncertain and SF 6 ’s high GWP will magnify

potential measurement errors. (5078, 5079)
 For modifications to be considered major under PSD, the net emissions increase would hav e to be greater than 100 tpy on a mass emissions basis (for each individual GHG) and greater than 25,000 tp y CO 2 e of combined GHG emissions. (2369) State commenter 8025 does not support a dual threshold trigger that incorporates the actual mass tonnage and the GHG GWP thresholds, believing that there is no benefit to the added complexity

. Response: As discussed in more depth in section V.A of the preamble, we recognize the concern of comme nters who stated that we cannot ignore the statutory threshold s based on the mass

- based emissions of an air pollutant as described under section 169 of the Act. As we mentioned in the proposal, because the PSD and title V statutory thresholds are expressed on a mass basis

– i.e., straight tons of a pollutant with no weighting values applied

– we were concerned from a legal standpoint that the metric proposed (CO 2 e) could have the effect of subjecting to PSD or title V requirements a source whose emissions fall below the statutory threshold limits on a strictly mass b asis, but whose CO 2 e - based emissions exceed the CO 2 e thresholds we establish under the Tailoring Rule. Although we feel this hy pothetical situation would rarel y occur, mainl y in103

instances where a source emits only a non - CO 2 GHG with a high GWP value in ve ry small amounts, we believe we are required to address this occurrence in the final rule. Upon review of the comments pertaining to this issue and further analy sis of the legal and programmatic implications, we are now requiring a two

- part applicability process, for both major source applicability

determinations for GHGs under PSD and title V and for determining if significance levels have been exceeded in the PSD applicability determinations. While the regulation we are promulgating today does not conta in tonnage thresholds on a mass basis for GHGs, b y implementing this tailoring approach through the term "subject to regulation" we achieve the result described above, that is that to be a major stationary source a source must emit 100/250 tpy on a mass ba sis of some regulated pollutant and for a major modification to occur there must be an emissions increase on a mass basis. The rule achieves this result because all that the CO 2 e based thresholds do is determine if GHGs are "subject to regulation" at a specific source. If GHGs are determined to be subject to regulation at a specific source then GHGs would be considered "regulated NSR pollutants" within the meaning of 51.166(b) (49) or 52.21(b)(50). Assuming that GHGs are determined to be a regulated N SR pollutant, this does not mean that PSD automatically

applies. Rather, the remaining regulatory structure, which is unaffected by this action, would then come into play

. This includes the definition of "major stationary source" at 52.21 (b)(1) and 51 .166(b)(1), which requires that a source emits 100/250 tpy (on a mass basis) of a "regulated NSR pollutant" before a source is a major stationary source. It also include s the definition of "major modification" at 52.21(b)(2) and 51.166(b)(2) which requir es that before a modification occur s there be a "significant net emissions increase", also determined on a mass basis. By way of example, assume that a new source wanting to construct after July 1, 2011 will have the potential to emit 10tpy of sulfur he xafluoride (SF6) but have no other emissions. First the source would determine if it emitted a "regulated NSR pollutant" by using the formula specified in 51.166(b)(48) or 51.21(b)(49) (as applicable). In this case b y using the specified formula we wou ld determine that the source emits 239,000 tons of CO 2 e ((10 ton SF 6 ) x 23,900 (GWP of SF 6 ) )

. Because this exceeds the 100,000 tpy (CO 2 e) threshold for new sources after July 1, 2011 specified in the regulation, GHGs would be "subject to regulation" for this source and would constitute a "regulated NSR pollutant." The source, however, would not be a major stationary source, and thus not subject to PSD. This is because the source onl y emits 10 tpy (mass basis) of a regulated NSR pollutant (GHGs) which i s below the major source threshold of 100/250 tpy (mass basis). Both determinations would be based on the sum

- of

- six GHGs. Additional explanation of how to implement this approach is provided in section IV.A of the preamble.104

5.2.5 Comments on the Use o f English versus Metric Tons for GHG Metric Comment: We proposed that the GHG metric would be expressed in terms of English (or short) tons, rather than metric (or long) tons. The existing applicability thresholds for PSD and title V are in terms of E nglish tons. Some state commenters (4238, 4239) support using English tons rather than metric tons, but several commenters (4513, 4526, 4864, 4951, 5130, 5147, 5224, 5314, 5305, 5338, 5351, 8461, 8546) prefer metric tons for this purpose. Most of the latter commenters note that the GHG Mandatory

Reporting Rule is based on metric tons and believe that the Tailoring Rule should be consistent. Specific comments include:
 Use of the same units will avoid confusion. (5305).
 In addition to the GHG Mandatory Reporting Rule, various “cap and trade” legislative proposals quantify

GHGs in metric tons. The 10 percent difference between short tons and metric tons will cause significant confusion, complexity , and burden for states and sources. (4106 and 5040).
 If the difference between the units of the Tailoring Rule and the GHG Mandatory Reporting Rule is retained, a site that would not be subject to the GHG Mandatory Reporting Rule could be subject to PSD, which is not in keeping with EPA’s intent to apply the Ta iloring Rule only

to “major sources.” (4951)
 The EPA should be consistent and use the same units (i.e., metric tpy CO 2 e) in this rule and for all future GHG rules. (5351)
 The proposed rule is not clear as to whether it is based on English or metric tons. (8546) Other state (4521, 4989, 5061), industry (4298, 4801), and military (4747) commenters say that EPA should harmonize the applicability thresholds established under the proposed Tailoring Rule and the GHG Mandatory Reporting Rule to utilize the sam e units (i.e., either English tons or metric tons). An industry

commenter (5922) recommends that EPA change the GHG Mandatory Reporting Rule to require that data be collected in English tons to promote consistency

. Response: Short tons are the standard unit of measure for both the PSD and title V permitting programs and the basis for the threshold evaluation to support this rulemaking. Calculation inputs for PSD are ty

pically prepared in English units (e.g., pounds [ lbs ] of fuel, million B ritish therma l units [ MMBtu’s ] , etc.) which is the common convention for all PSD anal ys es and the units of the statutory

thresholds under the Act. It is true that the GHG Mandatory Reporting Rule uses metric tons, but this does not create an inconsistency

between pe rmitting programs and the GHG Mandatory Reporting R

ule because the two rules alread y use different applicability approaches. Although we originally proposed 25,000 tpy

as the major source level for permitting programs, which was similar to the105

threshold i n the GHG Mandatory Reporting Rule, we decided to adopt substantially higher thresholds in the final rule. Furthermore, even if the numbers were simila r, the thresholds used for the GHG Mandatory

Reporting Rule are based on actual emissions, while the PSD and title V programs are based on potential to emit. Therefore, we are less persuaded by arguments for consistency , and believe it is more important for ease of permit program implementation to ensure that GHG emissions calculations for PSD and title V w ill build on the same set of input variables used to develop short ton

- based estimates for non

- GHG pollutants. Thus, the use of short tons should actually facilitate the development of the GHG emission estimate. It would likely be more confusing to requi re a multi

- pollutant PSD applicability analy sis to present emissions information using different units for different pollutants, as would be the case if we required metric tons for GHG but continue to use short tons for every other pollutant. Finally , we do not expect this choice to introduce additional complexity because the conversion between short tons and metric tons is a very simple calculation. Therefore, based on these considerations we are requiring that short tons be used as the basis for emissio n calculations used to meet PSD and title V permitting requirements.106



## Chapter 6. Comments on Permitting Thresholds 6.1 Comments on Administrative Burden and Sources Impacted under the Statutory Thresholds At proposal, we discussed the impacts that we projected would occur if the PSD and title V programs were implemented for GHGs at the statutory thresholds of 100/250 tpy . We received man y comments on these projected impacts, which are addressed below. Comment: Most commenters, including industria l (3512, 3513, 3906, 4020, 4123, 4741, 4794, 4870, 4903, 5088, 5104, 5110, 6201, 8545, 16411), agricultural (3917, 4572, 5245, 5602, 5743), state (4522), and other (3277, 5342) commenters, agree with EPA that the immediate imposition of the statutory

major source thresholds for PSD and title V would overwhelm both programs, to the detriment of facilities; federal, state, and local permitting authorities; and the nation as a whole. Some of these commenters (4020, 4522, 4903, 5104, 6201) also believe that we underestimated the number of sources that would be subject to these programs at the statutory thresholds, asserting for example that many more residential homes, commercial buildings, and retail stores than estimated would be subject because the estimate in EPA’s Technical Support Document ( TSD ) was based on actual emissions from space heating equipment rather than PTE. Some agricultural sector commenters (5245, 5602) provided examples of the ty pes of small agricultural operations (with no experience in air permitting) that would be subject at the statutory thresholds. Numerous commenters believe that the statutory thresholds will become applicable, despite the Tailoring Rule, if EPA goes forward with regulation of stationary sources of GHGs under the A ct. These commenters give one or more of the following reasons:
 States will require time to revise their laws and regulations to reflect the Tailoring Rule. Thus, the statutory

thresholds will apply

immediately

and remain applicable during this interim p eriod. Some states may choose not to conform their programs to the Tailoring Rule thresholds . (3720, 3953, 4019, 4095, 4515, 4524, 4691, 4864, 4866, 4903, 5058, 5084, 5113, 5123, 5143, 5168, 5181, 5276, 5343, 5714, 5800, 7935, 8015, 8459, 16411)
 The Tail oring Rule is legally uncertain and thresholds may revert to the statutory

levels. (3277, 3513, 4095, 4123, 4864, 5074, 5342, 5743 , 8400 )
 The thresholds will return to the statutory levels after the initial phase of tailored thresholds, development of str eamlining approaches, and EPA study . (3917, 3953, 4572, 5056, 5186, 5245, 5602, 5743, 5789, 8521)
 Three state commenters state that the additional workload and backlog will significantl y delay or jeopardize economically critical PSD programs in their stat es. (2504, 4312, 4871 )
 One state commenter argues that it is very likel y that their permitting programs will grind to a halt because they

will not have state authorit y to issue permits addressing GHGs but will be required to by

federal statute. (4949)
 One state commenter opines that their state will be in jeopardy of not meeting its statutorily

imposed time frame for the issuance of title V and PSD permits under the proposed rule. (5307)107

 The proposed rule would negativel y impact their state government , because their state constitution requires a balanced budget. The recession has resulted in diminished revenues and increased needs for social services and implementing the proposed rule could further undermine critical state programs. (3906)
 It is un acceptable that regulating GHGs under the CAA will render it impossible for permitting authorities to meet the CAA section 165(c) requirement to process PSD permit applications within 12 months. EPA must do more to lessen the impact of PSD on state agenc ies and stationary

sources under the proposal. (5082) Response: We agree with the man y commenters indicating that applying permitting requirements to GHG sources at the statutory thresholds in the near term would be an overwhelming administrative burde n for permitting authorities. In this final action we address this situation through a common sense, phased

- in approach to GHG applicability that makes the permitting process for GHG sources administratively feasible. The legal and policy rationale for this approach to burden in the final rule is described in detail in section V.B. of the final preamble. We disagree with commenters who stated we underestimated the number of residential and/or commercial facilities that would be subject at the statutory thresholds of 100 and 250 tpy because we based those emissions on an ‘actuals’ basis instead of a PTE basis. In fact, our threshold anal ys is estimates for the residential and commercial sectors (as well as all other sectors) are based on a PTE basis. We u sed a significant adjustment to reflect PTE in the residential and commercial sectors, assuming that a residential facility operates its fue l combustion sources only

at 10 percent of capacit y and commercial facilities only at 15 percent of their capacity

. Based on these assumptions, we adjusted residential actual emissions upward by a factor of 10, and commercial actual emissions by a factor of 6.6 to obtain PTE

- based estimates in order to determine the number of buildings in these sectors that would excee d a particular GHG threshold. There is very little information available on the capacit y utilization rates of fuel combustion equipment at different t ypes of residential and commercial facilities, but we be lieve our estimate is within a reasonable range o f what would be expected at these ty pes of facilities. In formation on the development of these estimates is provided in our Technical Support Document for Greenhouse Gas Emissions Thresholds Evaluation. In this final action we have addressed the concer ns raised by

some of the commenters on the time period necessary for states and local permitting authorities to amend or revise their laws and regulations, and the uncertain prospect of the st atutory thresholds coming into e ffect if the state and local per

mitting authorities did not have time to make those changes. There will be no permitting requirements for GHG stationary sources prior to January 2, 2011 as a result of the final reconsideration of the PSD Interpretive Memo’s interpretation of “sub ject to regulation .” After this date , based on the actions established through this final Tailoring R ule, we are a requiring a multi

- step, phased

- in approach for permitting GHGs at stationary sources utilizing an implementation mechanism for states and local age ncies that allows them to rely on EPA’s interpretation of the “subject to regulation” language codified under this final action. By utilizing this mechanism, we believe most states will be able to readil y implement the phased

- in approach to GHG permitting required b y this rulemaking, which does not allow the GHG108

threshold levels for permitting applicability to drop below 50,000 tpy CO 2 e at least until April 30, 2016. We ask permitting authorities to confirm that they will follow this implementation approa ch for their programs, and if they cannot, then we will ask them to notify us so that we can take appropriate follow

- up action to narrow our federal approval of their programs before GHGs become subject to regulation for PSD and title V programs on January 2, 2011. This will ensure that our approvals do not federally obligate states to implement these programs for GHG until they demonstrate that they

have adequate resources to do so by undertaking necessary programmatic, statutory , and /or regulatory

change s at the state, local or tribal level. We have also stated in this final action that there will not be an automatic sunset provision to the statutory threshold levels at the end of an y of the phase

- in steps and a general exclusion for sources less than 50 ,000 tpy CO 2 e will not end until such time as EPA undertakes rulemaking action in 2016 to reflect the 5

- year implementation study results. We believe this action provides certaint y to both permitting authorities and sources as they plan ahead to address G HG permitting requirements. We are confident in the legal basis for the final Tailoring R ule, which is described in more detail in section V of the preamble to the final rule and in our response to comments on the legal basis for the final rule summarized in Chapter 3 of the this RTC. 6.2 Comments on the Administrative Burden and Sources Impacted under the Proposed Thresholds At proposal, we estimated the administrative burden that would result from regulation of GHGs under the PSD and title V programs at the proposed thresholds. We received numerous comments on these estimated burdens and the t ypes of sources that would be impacted, which are addressed below. Comment: Many commenters provided comments on the administrative burden that would result from the proposed thresholds for PSD and title V major sources and PSD significance. Many commenters address these thresholds generall y, while some gave specific comments on one or more of the thresholds individually

. One state commenter agrees with th e EPA’s administrative burden estimates. (8803) Numerous state commenters (2504, 2797, 3858, 3915, 3916, 3918, 4154, 4238, 4512, 4521, 4694, 4864, 4871/ 5063, 4949, 4989, 5039, 5061, 5084, 5135, 5198, 5307, 5314, 5339, 5524, 7935 , 19144 ) indicate that th e administrative burden at the proposed thresholds will be excessive, and man y of these commenters (2504, 2797, 3916, 3918, 4154, 4512, 4864, 4949, 4989, 5307, 5313, 5314, 5339 , 5672, 5744 ) believe that EPA has significantly underestimated these administrative burdens. According to some state commenters (3858, 3916, 4521, 4531), EPA also has overestimated permitting authorities’ ability to hire and train sufficient staff to implement GHG permitting. These commenters state that they do not have the staff c urrentl y, nor do they

have the budget to hire additional staff to shoulder the increased burden.109

A number of state commenters provide estimates of the impact on their permitting programs that would occur under the proposed thresholds:
 Approximately

130 new PSD major sources and 90 new title V sources. (4019)
 Coal

- fired units, natural gas

- fired units, Nos. 1

- 4 fuel oil units, Nos. 5

- 6 fuel oil units, and wood

- fired units will be substantially smaller than what has historicall y been subject to major sour ce permitting. (4519)
 Current list of approximately 150 operating permit sources would increase by approximately

360 to a total of 510 sources, and a title V threshold of 50,000 tons of CO 2 e would result in approximately 180 new sources. (4860)
 There cou ld be over 30 new title V permits issued in one source category (natural gas compressors) alone. (5061)
 The number of new or modified PSD sources projected to be over the proposed 25,000 tpy CO 2 e annuall y would be approximately 20. The number of new titl e V permits under the proposed threshold would be approximately 165. (19144)
 The number of facilities subject to title V would increase by 45 percent to 115 percent, adding from 66 to 163 new facilities to their current roster of 142 title V sources, and PSD actions would increase from 3

- 4 per y ear to 70 per y ear. (6681)
 Thirty additional permitting FTEs would be needed for the oil and gas industry alone for title V permits due to GHGs, with this estimate only including permitting staff and not taking int o account other agency staff needed. At least 150 FTEs would be needed to handle PSD permitting with a significance level of 10,000 tpy . (2797)
 T he state would need to issue new title V permits to 50 additional facilities, which is a substantial administrative task. (4154)
 Ninety percent (283) of 314 currentl y permitted title V sources would need modification and 522 of the 2,448 s ynthetic minor and small permitted sources that are currentl y not title V sources would trigger the major source threshold (w ith 48 of these needing title V permits and the other 474 able to become s ynthetic minors) (4864) . The commenter believes that there may

be many other sources that currentl y do not have permits that would be above the major source threshold for title V, s uch as 75

- 115 active landfills and hundreds of inactive landfills. Regarding PSD permitting, the commenter estimates that, in addition to about 6 PSD permits per ye ar presently , a significance level of 25,000 tpy would result in 28 NSR actions for title V sources and 96 NSR actions for sy nthetic minor and small permitted sources, with an unknown number for currently unpermitted sources.
 T here will be 578 permit actions in the state as a result of the Tailoring Rule and of these actions, 119 would be major stationary source permit actions. (4949)
 T here will be a doubling of PSD work and an increase of 69 percent for title V work. (5339)
 The increase in t itle V permit workload should be close to EPA's estimate of a factor of two and that an additional eight projects per ye ar will trigger PSD permit requirements due to GHG emissions, which represents an increase in workload of about a factor of four. (8747)
 T itle V sources in their state will increase from the current level of 685 to 942 (38 percent increase ) based on PTE, and from 685 to 784 (14 perce nt increase) based on allowable emissions (5135/5198) . The commenter estimates current staffing levels for operating110

permits would need to increase b y at least 50 percent. The commenter also estimated a 600

- 63 8 percent increase in PSD permits per y ear, with current staffing levels needed to increase at least 6

- fold, adding an additional 42 FTE employees.
 A doubling and possibl y a tripling of the number of PSD permits the state issues per year will occur

. (55 28)
 T he number of regulated sources will increase at least two

- fold and perhaps more. (5307)
 W orkload and costs will be two to three times higher than that estimated by EPA. (4512)
 A 29 percent increase in the title V permitting workload as well as an in crease in sy nthetic minor permitting will occur because many of the sources newl y subject to title V and PSD will seek sy

nthetic minor permit limits to reduce their PTE instead of submitting a title V application. (3916)
 T here will be at least 75 new tit le V sources at a threshold of 25,000 tpy CO 2 e and at least 15 new title V sources at 50,000 tpy CO 2 e. (5039) Numerous industry

( 3512, 3859, 3998, 4018, 4106, 4113, 4241, 4298, 4368, 4515, 4632, 4691, 4692, 4749, 4865, 4370, 4903, 5052, 5056, 5059, 5073 , 5083, 5085, 5086, 5111, 5133, 5136, 5140, 5141, 5143, 5181, 5275, 5278, 5303, 5328, 5329, 5351, 5391, 5417, 5425, 5708, 5711, 5729, 5740, 5770, 5773, 5787, 6141, 7125, 7213, 8015, 8283, 8303, 8396, 8459, 8581, 8584, 16411), agricultural (8013), government agency (5367), and other (5346, 5444) commenters also contend that EPA significantl y underestimated the administrative burden associated with the proposed thresholds (some providing data) and/or that the administrative burden under the proposed threshold s would still overwhelm the states and result in significant permitting delay s and uncertaint y for sources. Many of these commenters indicate that our estimate of the number of sources that would be subject to permitting is too low, and some add that we h ave underestimated the per

- permit effort required. (More detail on these comments is given in section 6.3 on the methodology used in the anal ys is.) Representative comments include the following:
 The proposed thresholds would not make PSD requirements for GHGs administratively feasible or cure the absurd results because EPA has underestimated the number of affected sources. (4749)
 Even if EPA's estimates are correct these figures still represent a significantly increased permitting burden for the states. (5328, 8013)
 The EPA’s underestimation means that the proposed thresholds are not at “the level closest to the statutory

levels that permitting authorities can reasonabl y administer during this initial phase.” (4515, 4691)
 The manpower demand for the GH G regulatory requirements along with the strict state hiring practices and training requirements would slow the permitting process, thus stifling construction and much needed investments at a time when the econom y is struggling to recover and unemploy

ment rates continue to rise. (5328, 5367, 8015)
 The EPA should revisit the justification for the proposed thresholds on the basis of more detailed sector

- by

- sector data. (4515, 4691)
 Projects that actuall y improve energy efficiency could be delayed because of the way calculations must be carried out to determine whether a significant emissions increase will result from the project. For example, if there is a project that would reduce CO 2 emissions overall, but the project involves a new emissions unit (as def ined in the111

regulations), then the significance threshold may be exceeded based on the potential emissions of the new unit, and the project would be delay ed due to PSD permitting. (4241)
 Although plantwide applicability limits ( PAL s ) might be useful in so me cases, it is likely that many routine changes would still trigger permit revision requirements. (5143, 5417)
 The proposed thresholds would cause man y small and possibly closed landfills to be newly subject to PSD requirements and would also adversel y i nfluence potential plans by existing landfills to convert landfill flares into landfill

- gas - to

- renewable

- energy projects. (5086, 5391)
 The proposed thresholds and associated permitting delay s will impede the ability of the natural gas (NG ) sector to build the infrastructure necessary to support the anticipated increase in demand, which will be particularl y problematic in the rapidl y - developing Appalachian region where the coal industry is expected to be negativel y impacted b y GHG regulation. (4749, 6141)
 The semiconductor manufacturing industry ’s business depends upon developing and bringing new products to market regularl y and quickly, often requiring modifications to existing factories to do so. There will be a tremendous risk that many of the permits w ould not be issued rapidly enough to allow for these changes. Clearl y, such a situation provides a competitive advantage to facilities located outside the U.S. that are able to make rapid changes without delay . (5141, 5143, 5329, 5417)
 Some commenters in dicate that EPA underestimated the number permits required for specific industry

sectors (often providing data), including the oil and gas production industry (4749), the NG transmission industry (4515, 4691, 6141), the semiconductor industry ( 5141, 5143, 5329, 5417), the wood products industry (4903), the brick industry (5073), and landfills (4368, 5086, 5391). Response: We agree with the man y commenters that believe EPA underestimated the permitting actions, and thus the administrative burden, associate d with the proposed thresholds. Since the proposal, we have reevaluated our assessment of the potential permitting actions and administrative burdens related to the inclusion of GHG emission sources, both for the PSD and title V programs, at the proposed thresholds and for other options. Based on this re

- evaluation , which is described i n detail in the TSD contained in the public docket for this final rulemaking , “ Summary

of Methodology

and Data Used to Estimate Burden Relief and Evaluate Resource Requirem ents at Alternative Greenhouse Gas (GHG) Permitting Thresholds, ” we determined a number of reasons for our underestimate of permitting actions in the proposal and have substantially

revised our estimate of permitting actions accordingl y. Based on these re visions, we are now finalizing significantly higher applicability

thresholds than what was in our proposal, occurring in a multi

- step phase in process. We identified three main reasons for our underestimate of permitting activity under the proposed GHG thresholds. (Please refer to section V.B.2 of the preamble for the final rule and the burden analy sis TSD mentioned in the previous paragraph above for further explanation of our final burden assumptions and changes from the proposal.) The most significant reason for underestimation , and raised by multipl e commenters, was that we did not fully account for the112

number of major modification projects at existing major sources because we did not capture the number of existing projects that avoid major PSD revie w (b y either taking limits

— sy nthetic based modifications

— or by netting out) for existing pollutants but that would not be able to avoid PSD for GHGs (at either the 10,000 or 25,000 tpy CO 2 e significance levels). Currentl y we estimate the population of the se t ypes of minor modifications at about 23,000, almost 9,000 of which we now estimate under our revised burden analy sis would be subject to major PSD review at the proposed 25, 000 CO 2 e PSD significance levels. In comparison, this is significantl y higher than our original estimate of 273 modifications under PSD due to GHG emissions in the proposal. Second, our proposed general modification rate (2 percent of major source population) used to estimate modifications at newly major GHG sources does not ap pear to have caught the extent to which facility

level changes may

quickly surpass the proposed significance levels for CO 2 (e.g., multiple changes involving combustion units can aggregate to a 10,000 or 25,000 CO 2 e significance level threshold fairl y quic kl y). In reassessing this modification rate, we determined that we had n ot fully accounted for all PSD modifications relative to the major source population in calculating this modification rate. Based on this reassessment we have revised our general mod ific ation rate to 4 percent which is used to estimate the annual modification activity

at newly major GHG sources. Third, we believe our estimate of capacity utilization used for estimating PTE

- based emissions for the genera l manufacturing source category ( referred to as ‘unspecified stationary combustion’ in the GHG threshold anal ys is TSD) and the oil and gas industry was not accurate. In our proposal, the range for capacity utilization for ‘unspecified stationary combustion’ varied from 70 to 90 percent depending on manufacturing category , and for the oil and gas industry we used 90 percent. Based on comments received indicating that these utilization rates are higher than what is normally

achieved in real

- world conditions, particularly for smaller manufacturing ty pe facilities, we used a 50 percent capacity utilization rate for both of these source categories. We believe that these assumptions better reflect what can be deemed reasonable operation under normal conditions for facilities in these source categories. We recognize commenter concerns on the potential for serious delay s in the permitting process as a result of a possible excessive influx of permitting actions due to newly permitting GHG emission sources at our proposed thresholds. One of our goals in selecting the proposed thresholds for GHG permitting was to ensure that the PSD and title V permitting programs were not severel y disrupted to the point they were not operating effectivel y and in a timely basis due to the addition of GHG permitt ing requirements. For our finalization of this rule we have addressed these concerns through both our reassessment of the burden as described above (and the resulting GHG applicability thresholds selected for the final rule) and through now appl yi ng a mul ti

- step phase

- in process. See section IV of the preamble for the final rule for a full explanation of the steps in the phase

- in approach and the final applicability thresholds that are to be used in each step. The end result of the adjustment to our bur den estimates described above is that our estimate s of PSD and title V permitting actions increased significantl y at the proposed GHG threshold levels, to a level that we believe our proposed GHG thresholds for applicability are not113

consistent with the go al of avoiding a permitting burden that would overwhelm the capacity of permitting authorities to effectivel y implement their programs. Therefore, for this final action we are establishing a multi

- step, ph ase - in approach that contains significantly higher GHG starting point threshold level s (i.e., a 100,000 tp y CO 2 e major source threshold for PSD and title V and a 75,000 tp y CO 2 e PSD significance level in step 2). In addition to establishing higher GHG applicability thresholds for step 2 of the Tailorin g R ule phase

- in, we have defined a step 1 to the phase

- in process that applies only to sources that currentl y have, or would otherwise be subject to, PSD or title V permitting requirements under the CAA for other non

- GHG pollutants. That is, no source und er the step 1 phase, which extends from January

2, 2011 to June 30, 2011, would trigger permitting requirements for PSD or title V solely based on their GHG emissions. We believe the combined effect of the GHG applicability triggers and the phased

- in sche dule for their implementation finalized in steps 1 and 2 of the final rule will result in an administrative and permitting burden that is manageable for both permitting authorities and sources in this near term and that will address concerns of commenters regarding excessive delay s in permitting due to the permitting of GHG emission sources. We appreciate the comments by individual states in which they describe the increases in their workload that they

anticipate. This information generall y confirmed that our proposal underestimated the amount of administrative burden, and proved useful to us in recalculating the amount of the burden. Data on a nationwide basis was the comprehensive that was available because we did not have a full set of data from eac h state, and as a result, we made the final burden estimates on a nation

- wide basis, as opposed to attempting to do so on a state

- by

- state basis. Comment: A number of commenters (3512, 4123, 4368, 4746, 4863, 4903, 4951, 5052, 5064, 5073, 5086, 5104, 51 37, 5140, 5181, 5236, 5245, 5276, 5278, 5305, 5342, 5391, 5712, 6201, 6457, 7129, 8283, 8459, 16411) believe the proposed 25,000 tpy CO 2 e threshold is too low, representing smaller sources, rather than larger sources, which is not in keeping with congressi onal intent. Comments include the following:
 A CO 2 emissions rate of 25,000 tpy corresponds to a relativel y small combustion source, perhaps as low as a 4 megawatt ( MW ) boiler or engine. If BACT is applied, the corresponding NOx emission levels may be as low as 2 tpy , far below the 100/250 tpy levels in PSD or title V. (4746, 4863, 5064, 5276, 5305)
 The proposed threshold of 25,000 tpy would still capture many small businesses. A California Air Resources Board ( CARB ) list of businesses and other entitie s that have the PTE over 25,000 tpy

of CO 2 e includes dairies, breweries, wineries, landfills, universities, food production plants and packing companies, water pollution control plants, paper plants, pharmaceutical factories, military installations, irrigation facilities, and farms, among others. (5140, 5181, 5278, 7129)
 The thresholds should be set at levels that correspond to Congressional intent to impose regulation only

on sources that are “major,” i.e., of a size in the range of 100/250 tpy of convent ional pollutants such as NOx, VOCs, and particulate matter. (3512, 4746, 4863,114

4903, 5086, 5276, 5305, 5342, 5391, 6457) Some commenters add the following rationale: o This approach would obviate the need for the administrative necessit y argument since per mitting authorities would not be overwhelmed. (3512, 4746) o This approach could be used in EPA’s planned first phase to evaluate the pros and cons of bringing GHGs into the PSD and title V programs, and the thresholds could be changed later if necessary to capture more sources or CO 2 e . (4746) o This approach would be consistent with the doctrines of administrative necessity and absurd results, which require EPA to remain as true to original Congressional intent as possible. (5276)
 The D.C. Circuit, in rejec ting an approach to PSD applicability under which the heating plant of a large high school or a small community college would be subjected to PSD, stated: “We have no reason to believe that Congress intended to define such obviously minor sources as “majo r” for the purposes of the PSD provision.” Alabama Power , 636 F.2d at 354. There simply is no basis for EPA’s assertion that small boilers and other small sources are the t yp e of facilities that Congress intended to be addressed through the PSD program. This commenter provides Congressional Record citations to support this position. (4903)
 The threshold should be consistent with existing clean air standards, such as NSPS and NESHAP. (4951)
 The E PA should establish appropriate sector

- speci fic thres holds , including much higher thresholds for landfills which will be disproportionately impacted by

the proposed thresholds. The EPA alread y has established unique, landfill

- specific PSD thresholds for NMOC, and should establish GHG thresholds for landfills that are consistent with the current PSD thresholds and regulate a comparable portion of the solid waste management sector. (4368, 5086, 5305, 5391)
 A 10 tpy

NOx source (which is major in extreme nonattainment areas) roughl y equates to 100,000 tpy

CO 2 e (4746 ) . Commenter 4903 presents several calculations relating NOx and CO emissions to CO 2 e emissions from boilers (NG and wood

- fired) and lime kilns, along with the major modification implications of these differences (i.e., that the proposed GHG thresholds wo uld bring much smaller sources into the s ys tem than under the current sy stem based on criteria pollutants).
 M ore than 90 percent of public power s ys tems (i.e., not

- for

- profit municipal and other state and local community

- owned electric utilities) qualify a s small businesses under the Small Business Act and Small Business Regulatory Enforcement Fairness Act ( SBREFA ) , yet approximately 88 percent of the association’s more than 2,000 members with generation facilities will be subject to the PSD during the firs t phase of the proposed rule. (5052)
 A large turkey

or broiler operation could be subject to permitting at a 25,000 tpy threshold, and man y medium

- sized operations would be subject at a threshold of 10,000 tpy . (5254)
 The threshold levels should be low e nough to cover the vast majorit y of public utility power generation sites, the medium and larger petroleum refineries, and the medium and larger industrial sites; but high enough to not include the man y inconsequential gas compression, landfill, petroleum drilling and production, and small power generation sites.115

Response: Based on these comments, we reassessed our original burden estimates from our proposal. This reassessment is discussed in our previous response. After all adjustments were factored in , we determined the burdens at the proposed 25,000 threshold and the proposed 10,000

- 25,000 significance levels would be unmanageable. For example, our reassessment of PSD program burden to the permitting authorities at the 25,000 tpy CO 2 e major source/si gnificance level shows an annual increase of $217 million (thi s is approximately a 1,800 perc e nt increase over current permitting authority annual burden for the major NSR program). For title V, the estimated increase under our final burden anal ys is at a 25,000 tpy CO 2 e represents an approximate 100 percent increase ($64 million annually) in annual program costs to permitting authorities. At that level, too many sources

– man y m ore than we thought at proposal

– would be subject to high permitting costs. Therefore, in this final action we address this situation through a common sense, phased

in approach to GHG applicability that makes the permitting process for GHG sources administratively

feasible. The first step of the phase

- in approach, involving “an ywa y” sources, applies key

PSD and title V program requirements as soon as January 2, 2011 to large sources of emissions, but because it applies only to sources that are already regulated under the CAA for other pollutants, it can be implemented efficientl y and with an administrative burden that is manageable within the first half of 2011. Limiting step 1 to these sources will still capture a large portion of the GHG inventory . See section IV of the final preamble for more detail on the implementation pro cess for step 1. For step 2, we evaluated higher thresholds ranging from a 25,000 tp y CO 2 e major source applicability

level for PSD and title V to a 50,000, 75,000, or 100,000 tpy CO 2 e level, with associated PSD GHG significance levels of equal or lesser magnitude; we selected the 100,000/75,000 tpy

CO 2 e level. We believe that the sources that will become subject to PSD and title V requirements at the 100,000/75,000 tpy CO 2 levels will be able to accommodate the additional costs of permitting. For the mo st part, these sources will be of a comparable size and activity level as those sources that are already subject to those requirements. These source categories include fossil fuel

- fired power plants, petroleum refineries, cement plants, iron and steel plants, and petroleum refineries, in addition to other large industrial type source categories. A full description of the ty pe of sources that we expect will have GHG emissions that exceed the 100,000 tpy

CO 2 threshold is provided in the “Technical Support D ocument for Greenhouse Gas Emissions Thresholds Evaluation” located in the public docket for this rulemaking. We are not acting on commenters’ requests for special thresholds fo r particular industries for the same reasons that we are not acting on request s for exemptions from permitting requirements for particular industries, as discussed in the preamble.116

6.3 Comments on the Methodology Used to Evaluate Burden Comment: A number of commenters fundamentall y disagree with the methodology EPA used to dev elop the proposed thresholds, often stating that EPA’s proposal was arbitrary and capricious. These comments include the following:
 One agricultural commenter asserts that the way EPA has set the thresholds is scientifically

uncertain, based on practical concerns and speculation rather than competent evidence; thus, they are arbitrary

and capricious. The EPA must obtain, review, and anal yz e the data from the GHG Mandatory Reporting Rule (which does not take effect for over a ye ar) to determine if the prop osed thresholds are rational and reasonabl y related to a regulatory purpose. (5062)
 One fuels sector commenter maintains that the proposed GHG emission thresholds are not supported by

an adequate anal ys is of the effects that GHG emissions at the proposed threshold levels would have on the environment; that is, the record does not demonstrate that the substantial additional burdens and costs associated with such a rule would be justified by

the environmental benefits that might be realized through impositio n of the rule. (5199)
 Other fuels sector commenters state that EPA’s proposed thresholds are arbitrary and capricious because there is no health and/or welfare basis for the cut

- offs. On a global scale, U.S. sources with 25,000 tpy of GHG emissions are j ust as de minimis as sources with 250 tpy

of GHG emissions. Further, EPA has not justified why it selected a 25,000 tpy CO 2 e threshold when a threshold such as 150,000 tpy level would exclude significantl y more sources from the programs while reducing emi ssions coverage b y onl y a very small percentage. Finally , the proposal’s assumption of a 2 percent modification rate, which underlies its selection of the proposed significance level, is arbitrary and capricious because it is merel y assumed without reason able explanation. (4870, 5058)
 Industry

groups make many

of the same points, adding that EPA has not provided a rational basis for selecting a 25,000 tp y major source threshold as compared with higher thresholds, and that EPA has not provided sufficient i nformation on the analy sis performed for the public to meaningfull y comment. (5140, 5181, 5278)
 A utility

industry commenter states that the Administrator made the Endangerment Finding based on science as required b y the CAA, but no scientific studies wer e cited as to why the proposed thresholds are appropriate. Nowhere in the Act is EPA specifically authorized to consider the administrative implications, as was done in this case. In addition, EPA acknowledges that the 25,000 tp y l evel may not be adequat e to achieve the necessary reduction goals, and the rule will be modified after 6 y ears of study to determine what the appropriate level should be, which is an unprecedented approach for a substance that has been found to endanger public health and welfare . (5312)
 An industry

commenter is concerned that (1) EPA has performed no analy sis of the ty pes of sources affected b y the categorical exemption created b y the proposed thresholds, (2) EPA provides no anal ys is indicating that sources that emit over 25,000 tpy of GHGs are more financially

able to address such emissions or that sources below such a threshold level are less financiall y able to address GHG emissions, and (3) EPA has not analyzed whether sources over 25,000 tpy are technicall y capable of emissi on reductions and those117

under this limit are not technicall y capable

- or that certain technologies are more available at various threshold levels. (4095)
 An industry

commenter claims that it is arbitrary for EPA to choose the higher thresholds it has pro posed based almost entirely on Agency

resource constraints, without consideration of costs and impacts on industry and the broader econom y. (3512)
 An environmental group asserts that the analy ses EPA used to set the significance thresholds in the proposal violate the administrative precedents for setting “de minimis” thresholds that were used to set the significance thresholds for other pollutants. (5139)
 EPA has provided no authority within the statute for arbitrarily raising the “major source” definitio n which is clearly, unambiguousl y and plainly stated b y Congress in CAA section 302(j). (2997)
 A commenter questions whether the proposed thresholds were influenced by similar thresholds established or suggested b y other federal, state, and/or regional GH G initiatives, usually

in the context of GHG reporting rather than actual controls. The commenter states that such other programs should not have an y bearing on the objective of this rulemaking, which is to avoid unmanageable workload increases and permitting gridlock. (4515, 4691) Response: We disagree with commenters that the basis for the thresholds is based merely on practical concerns and speculation rather than evidence. We discuss at length our basis, from both a legal and policy

perspective, fo r establishing the GHG thresholds, for both major sources and significance levels, in section V of the preamble, including wh y we did not use the de minimis basis for setting GHG significance levels. We believe through our burden anal ys is and consideratio n of different threshold options we have collected a substantial amount of evidence to undertake the tailoring steps outlined in this action. We generall y considered costs to sources, and we have concluded that sources that will be subject to our Tailorin g Rule steps 1 and 2 are alread y subject to PSD or title V, or are of similar size or close in size to sources that are already subject to PSD or title V, and that as a result, those sources can be expected to bear the costs of permitting. We also conside red administrative burdens to permitting authorities. Please refer to the RIA for the final rulemaking, contained in the public docket, for more detail on the assessment of impacts of this rulemaking. We have also made significant improvements to the an al ys is from our proposal, based in large part in response to comments received on the proposal, and believe we have a strong technical basis for threshold selection. However, we recognize that currently there is limited information available on facility

- le vel GHG emissions nationwide, particularly on smaller sources that have not been subject to permitting requirements for conventional pollutants, and that data obtained from the EPA’s GHG Mandatory Reporting Rule may

provide additional information that coul d help inform us on decisions for threshold development for step 3 of the phase

- in period. We will be carefull y analyzing information that results from the GHG Mandatory

Reporting Rule as it becomes available for this purpose. Regarding comments that we did not consider environmental benefits relative to imposed burdens of the PSD and title V programs due to GHG permitting, it is important to note that the118

basis of this action is to reli eve excessive and unmanageable administrative burden from permitti ng authorities so that these programs can continue to function properly and effectivel y, and, as appropriate, costs to sources. There are no environmental performance standards attached to the selection of the applicability thresholds required by

this rul emaking, and as such, there is no cost

- benefit criteria involved. Similarly , there is no health or welfare basis for the selection of the applicability thresholds since the basis for the threshold selections is based on legal concepts involving program administration , and, as appropriate, costs to sources. In addition, we did not consider environmental benefits in or “absurd results” anal ys is

. We disagree with commenters that we should have considered the costs to reduce emissions by

sources at differ ent thresholds. Decisions on reasonable and available reduction strategies and controls are part of the actual BACT review process under PSD. Th e Tailoring Rule does not impose costs related to emission reduction requirements and thus we did not differentiate between such costs and threshold options as it relates to developing the final GHG applicability

thresholds

. We did consider whether the sources that will become subject to PSD and title V re quirements will be able to accommodate the additional cost s of permitting , and concluded that, f

or the most part, these sources that will become subject to PSD and title V at Tailoring Rule steps 1 and 2 will be of a comparable size and activity level , or close to the size and activity

level, as those sources that are already subject to PSD and title V, and therefore can be expected to manage those costs. We will continue to monitor permitting costs to sources and administrative burdens on permitting authorities in future rulemakings under the tailoring approach. Comment: Numerous industry

( 4298, 4515, 4567, 4691, 4749, 4870, 4903, 5052, 5086, 5110, 5111, 5133, 5140, 5181, 5278, 5417, 5711, 5740, 5773, 5787, 16411), state (3278, 3916, 4989, 5328, 5528, 8025) and other (10432) commenters are critical of specific aspects of EPA's methodology , asserting that the methodology and assumptions underestimated the administrative burden associated with GHG permitting. While these comments t ypicall y were directed to the proposed thresholds, they could apply

more generally to the anal ys is at any threshold level. The following comments are representative of those asserting that methodology underestim ated the administrative burden:
 The EPA’s estimate of 60 hours to process a new major source PSD permit for GHGs in the commer cial and residential category is extremely

low. (4989, 5417, 5711, 8025) o Even for PSD permits issued for criteria pollutants, it is not uncommon for a permit to require a thousand or more hours of processing time and s ynthetic minor permits to take betw een 300 and 500 hours. (4989) o The commercial and residential category PSD permits may

require 20 percent less technical time for review than the industrial source category , but these sources will also draw significantl y m ore public comment and debate than the industrial category because they

are located where people live. There will be no time savings when the public participation process and local politics are factored in. (8025) o Because state and local permitting authorities would be making the complex determinations necessary in any PSD permitting action for GHG sources for the first time, it is likely

that there would be a substantial increase in processing time. (5417)119

 Because state and local authorities have no experience permitting sources of GHGs (particularl y BACT), it is not reasonable to assume that the workload hours for PSD permitting of industrial GHG sources would be comparable to that of non

- GHG industrial sources. (4515, 4691, 4749, 5328, 5417) o Commenters 4515, 4691 and 4749 add that es tablishing BACT for GHGs on a case

by

- case basis is likely

to be contentious and time consuming given the lack of precedent, the keen interest, and the need to collect supporting economic and operational data. In addition, the initial PSD permits for GHGs will be heavily litigated b y both applicants and third parties. o Commenter 5417 notes that EPA recognized the difficulties and complexities inherent in quantifying GHG emissions in the electronics industry when it elected to postpone finalizing the electronics portion of the GHG Mandatory Reporting R

ule. As a result, there are currentl y no agreed

- upon methods for quantifying emissions from semiconductor and other electronics sources. Forcing state and local authorities to make these determinations in th e first instance for purposes of determining threshold questions of permit applicability and demonstrating compliance via monitoring, recordkeeping, and reporting will add substantially more delay to the permitting process.
 Commercial and residential categ ory title V permits will not experience a 90 percent savings of time over industrial sources because the title V program has certain standard time requirements (i.e., preparation of the permit, administrative overhead, newspaper publication, etc.) that are required regardless of the size or ty pe of source. Even though the sources may

be simpler, they

will be in areas where more people live so there will greater public participation and local political processes (i.e. zoning, district disputes, etc.). In a ddition, most permitting authorities have streamlined their permitting process such that there is no more efficiency to be gained in the sy stem. (8025)
 The EPA incorrectl y concludes that when a source triggers PSD for conventional pollutants, no additiona l work would be required to cover GHGs as well. ( 5110, 5711)
 There will be an increase in non

- PSD permitting work and an increase in the number and complexity

of permits for criteria pollutants because: (1) increases in criteria pollutant emissions that w ould not have been subject to PSD BACT will now become subject to BACT because the source will be major for GHGs, and (2) man y BACT decisions result in a greater use of energy to power control devices and as a result, applicants may propose less stringent controls for criteria pollutants because of potential GHG emissions. (5528)
 The EPA underestimated the administrative burden associated with GHG permitting because BACT controls for criteria pollutants (e.g., an oxidizer for VOC) may result in significant GHG emissions, triggering an additional BACT determination. (3278)
 The EPA has not accounted for the burden of PSD review for other CAA pollutants “subject to regulation” (such as criteria pollutants) once a source becomes a major source due solely

to GH G emissions. (4298, 5111, 5367, 5740)
 The EPA did not account for the additional recordkeeping s ys tems that would be needed to record applicability

analy ses and determinations that PSD is not triggered (e.g., “reasonable possibility” anal ys es and recordke eping). (4298, 5110, 5111)
 The EPA has not accounted for the costs due to delay s in permitting due to depleted state, local, and tribal resources. (5740)120

 The EPA has not accounted for the burden for complying with BACT. (5110)
 The EPA does n ot consider the permit fee for a PSD permit. (10432)
 The EPA does not adequately account for many

previously

“minor facilities” that would become major under the rule. (4515, 4691)
 The EPA has not considered existing “s ynthetic minor” sources. Man y such sources wi ll not be able to keep GHGs below the proposed thresholds, and those who could do so may not be able to establish enforceable s ynthetic minor limits because GHGs are not yet defined as “pollutants” in many permitting regulations. (5417)
 Commenter 8461 inquires whether sources will have the option of operating under a sy nthetic minor permit if they agree to permit conditions that limit emissions. (8461)
 The EPA has not accounted for the significant title V burden for sources that want to obtain sy nthetic m inor source status to avoid PSD (and possibly also title V) by

assuming federally enforceable permit limits on GHGs. (3916, 5052)
 The EPA's anal ys is omitted the impact from increased demands for “minor source” NSR permits to restrict emissions below major source/modification levels. (4749, 4903)
 The EPA has failed to account for sources that will be required to consider GHGs in minor NSR permitting. ( 5140, 5181, 5278, 5773)
 The EPA has underestimated the rate of major modifications for GHGs under PSD. T he EPA has provided no justification for the assumed 2 percent modification rate, and current modification rates for criteria pollutants are an inappropriate basis for estimation. Some commenters provide sector

- specific data. (4515, 4567, 4691, 4749, 505 2, 5133, 5140, 5181, 5278) o While few new major utility plants are expected, the demand for electricity is predicted to grow, and thus, significant modifications will become necessary . (5052) o Most power plant changes will increase the efficiency of facilit ies to produce power and those changes could lead to increased utilization and increases in GHGs. (5052) o Most industrial sources are specificall y designed to ensure that current PSD thresholds are not exceeded by using add

- on control technologies, netting , or other compliance strategies. Since these approaches are difficult to apply to GHG emissions and add another as yet untested variable in the engineering design anal ys is, the rate at which facilities become subject to PSD is likely to be much higher fo r GHGs than for non

- GHG pollutants. (4515, 4691, 4749 ) o Essentially

an y project that directl y or indirectly affects generation would trigger PSD requirements for coal

- fired electric generating units and large industrial facilities. For example, at an 800 MW coal

- fired electric generating unit with an 85 percent capacity factor, a 0.0035 percent increase in generation would cause a “significant” emissions increase at the proposed level of 25,000 tp y. (5328) o Because combustion sources are t ypicall y replaced more often than process lines, and given EPA’s narrow interpretation of the routine maintenance, repair, and replacement exclusion, it is likely that a significantly

higher rate of modification would apply

when considering GHG emissions. (5140, 5181, 527 8) o The Regulatory

Impact Analy ses ( RIA ) does not add any rationale or transparency to EPA’s use of a 2 percent modification rate. The RIA addresses onl y new sources using an approach based on growth rates for various industry sectors, which does not account for the variety

and ty pes of modifications that routinely require permit121 anal ys is and would easily be more frequent than the assumed growth rate. (5140, 5181, 5278)
 Indirect costs such as modification and approval of SIPs are not covered. (5787) Some industry

commenters (5140, 5278) provide comprehensive lists of the component burdens that they believe EPA is required to estimate in order to determine the burdens caused b y applicability of PSD based solely

on GHG em issions :
 The number of major source s that will exist based solely on GHG emissions. (4870, 5140, 5181, 5278)
 The number of new major sources that will be built or otherwise created each y ear (e.g., through expansion), including the burdens associated with PSD permitting for GHGs and for an y other PSD pollutant the source emits above significance levels. (4870, 5140, 5181, 5278)
 The number of major modifications that will trigger PSD based on another pollutant but will now require BACT for significant GHG emissions increases and the associated burden of BACT determination and installation. (4870, 5140, 5181, 5278)
 The number of major modifications at sites that would be major only due to GHGs, but that now will be subject to PSD review and BACT for projects causing significant increases in criteria pollutants. (4870, 5181)
 The number of major modifications that will trigger PSD based on GHG emissions increases alone, including the burdens associated with obtaining PSD permits for GHGs and for an y other PSD pollutant the source emits in significant amounts. (4870, 5140, 5181, 5278)
 The number of sources that must accept permit limits or otherwise restrict operations to avoid triggering PSD, including the cost of obtaining and the ongoing administrative burdens associated with these minor NS R permits. (4870, 5140, 5181, 5278)
 The number of sources that would trigger the requirement to keep 5 or 10 ye ars of emissions records because, although PSD is not triggered, there is a reasonable possibility

that PSD could be triggered. (4870, 5140, 51 81, 5278) One solid waste industry

commenter (5086) believes the TSD is inadequate because it lacks applicable data on landfills and its calculations of emissions from landfills are not transparent. The commenter alleged the following specific inadequaci es:
 Tables are missing for MSW landfills and onsite industrial landfills showing the impact a 25,000 CO 2 e will have on the industry and the number of facilities affected by the proposed rule.
 The TSD is not transparent with respect to the assumptions use d by EPA in evaluating the impacts on landfills, e.g., EPA states that landfill covers are capable of oxidizing CH 4 without qualifying the degree of oxidation that occurs or how the Agency derived a value.
 The EPA does not provide or explain the values u sed in calculating the amount of emissions assumed to be biogenic, and in addition, EPA should explain how each of these assumptions relates to the way that these emissions will actually be treated for GHG emissions calculations under the PSD program.122

 Th e only

data that can be evaluated are the 2008 U.S. GHG Inventory data; however these data were not collected by landfills and submitted to EPA, but were calculated by the Agency

from waste generation data from other government entities that may or may not represent the industry

. Based on these perceived inadequacies in the TSD, the commenter believes EPA does not have adequate data to determine the regulatory impact of the GHG Tailoring Rule on landfills specificall y or the solid waste industry sector in general. The commenter contends that such data must be collected, published, and subjected to industry comment before EPA can establish viable threshold limits for landfills. Response: Based on comments received from both permitting authorities and aff ected sources, and our own reassessment of permitting actions created by the addition of GHGs, we have made a number of improvements to our permitting burden assessment to support the final rulemaking. Please refer to the final burden anal ys is TSD referen ced earlier in this Chapter for a full description of our final assessment and assumptions for determining the burden associated with PSD and title permitting actions due to GHGs. The basis for the burden anal ys is is administrative costs for permitting authorities and sources, and while based on the I CR

- based average costs for permitting conventional pollutants under the PSD and title V programs, we believe that this approach provides our best estimate of costs associated with permitting GHGs. We recogn ize, as many of the commenters do above, that there are significant uncertainties in predicting the costs associated with permitting GHGs, since there is no historical record to refer to. In reality , administrative costs may end up being lower or higher, depending on the particular source, the complexity of the emission units involved, the amount of public review involved, and other variables that arise on a case

- by

- case basis. However, b y using the ICR costs, we believe we included all key elements of th e administrative cost component of the permit process, which in turn allowed us to evaluate the relative burden of different thresholds considered for the final rule. In response to comments that we need to account for a possible BACT GHG review for permi ts that would otherwise be undergoing BACT review for conventional pollutants, in our final burden anal ys is w e have now added specific line item burdens for permitting actions related to adding a GHG component to otherwise occurring PSD and title V permitt ing actions for conventional pollutants. In our proposal we had not explicitly associated an additional burden with these occurrences. We have also raised the per

- permit burden hours for commercial and residential sources for PSD and title V to reflec t numerous comments from permitting authorities that we had significantl y underestimated the amount of effort that would be required for these newl y permitted source categories. Specificall y, we raised the PSD per

- permit hours from 60 hrs to 210 hrs for n ew commercial and residential sources, and for title V we raised the per

- permit hours from 43 hours to 214 hours. We agree with commenters that man y of these sources will need significantl y more permitting authorit y staff time to assist them with the perm it application and preparation process because of their lack of experience with these requirements and also to123

respond to public review and comment on these permits as one of the commenter’s suggested. The complete description of the basis for these revis ions is included in the burden anal ys is TSD contained in the public docket. EPA

- HQ

- OAR

- 2009

- 0517. We appreciate the various comments pointing out particular way s in which our estimates at proposal were underestimated. These comments justify

our overall conclusion about the need to raise our burden estimates. We believe it is appropriate to conduct the burden estimate on the basis of nationwide average costs, based on the information in the I CRs, because this approach affords a comprehensive assessment o f costs for all sources in all areas. We also agree with commenters who believe our proposal estimate of modifications did not fully address the numbers of modification projects that may become subject to PSD review under various thresholds. As mentioned in a previous response, one the most significant improvements to our burden anal ys is was that we developed a better assessment of the number of existing projects that avoid major PSD review (by either taking limits

— syn thetic based modifications

— or by

nett ing out) for existing pollutants but that would not be able to avoid PSD for GHGs

. In addition, based on our reassessment of burden for the final analy sis, we have revised our general modification rate to 4 percent to estimate the annual modification acti vity at newly major GHG sources. We recognize this modification rate is still based on projects involving conventional pollutants, but we believe through the applicability steps defined for GHG permitting in this final action, large sources similar to tho se undergoing permitting now will be most affected and that the 4 percent modification rate represents a reasonable estimate of the annual occurrences of modifications. The basis for these improvements to our estimates of modifications is explained in the burden anal ys is TSD contained in the public docket. EPA

- HQ

OAR

- 2009

- 0517. We disagree with the commenters that suggest we did not include PSD review costs for non - GHG pollutants that may become subject to PSD review because a source becomes major solel y for its GHG emissions. The average cost for new PSD permits that we used in our burden anal ys is represents an average across permits that include different numbers and combinations of covered pollutants. Therefore, we believe this estimate provides a r easonable representation of the multi

- pollutant PSD reviews that may result when a source becomes major solely for GHGs. We did not include a specific permit fee as part of our estimate of source burden in estimating burden relief as part of the RIA pr epared for the final rule. There is no regulatory requirement that sets these fees and their use and amount varies across permitting authorities. Because of the inconsistency in its use, we did not have sufficient basis to determine the incremental addi tional burden relief that would come from sources that did not have to pay these fees because they

would not be subject to PSD review. We disagree with commenters who suggested that by basing our estimates on the numbers of newl y constructing and modi fying sources with high enough emissions to qualify as major emitting facilities, we failed to account for the costs of sources that seek “s ynthetic minor” permits to avoid PSD, and possibly title V, requirements. In fact, our methodology includes sources that might take such limits as newly

- major sources for their GHG emissions; therefore we count the full administrative burden associated with a PSD permit and a title V permit for those sources. In effect, we assume that such sources would go through PSD or title V124

permitting, rather than take “s ynthetic minor” limits. We take this approach because although we suspect that there may, in fact, be significant synthetic minor activity , we do not have data that would allow us to determine whether, and how many of, these sources will be able to adopt “sy nthetic minor” limits or restrict their operations to obtain minor source permitting status. Nor do we have data on the amount of the administrative burden that would fall on any particular permitting authorit y to establish a “synthetic minor” limit, except that we understand that the amount varies widel y across states. As a result, we opted to include these sources in our anal ys is as sources receiving a PSD or title V permit. Therefore, to the extent that sy nthetic minor activity occurs, our estimate would already have included the burden for that activity . In fact, our estimate would have overestimated the burden to the extent that a permitting authority would have less administrative costs issuing a “s ynth etic minor” permit, than issuing a PSD or title V permit. We did not, as one commenter indicated, include indirect costs to permitting authorities such as modification and approval of SIPs. However, we believe that with the implementation process as revi sed from proposal and as described in detail in s ection V.C of the preamble, that the final process will facilitate more rapid adoption and implementation of the Tailoring Rule b y states through interpretation of language in existing state regulations. Th erefore substantial changes to SIPs will not likely be necessary

for many permitting authorities. Refer to the preamble section V.C for further explanation on the implementation process and how it will work for PSD and title V programs. As noted in the RIA for the final rule, and as raised by commenters on the proposal, we did not estimate burdens for compl yi ng with BACT, such as the costs for controls or mitigation strategies to reduce GHG emissions. Control costs are not part of the administrative bur den to permitting authorities which was a key consideration in the determination of final threshold levels for applicability

. In addition, it was not necessary to consider the relevance of BACT control costs for sources for purposes of this rule. We esta blished the levels of steps 1 and 2 of this rule based on administrative burdens to permitting authorities, coupled with a general sense that affected sources could comply with the costs because they are generally

of about the same size, or close to the same size, as sources alread y s ubject to PSD. Further, if BACT control costs are relevant, then they

must be considered in establishing the appropriate level of BACT controls. In an y event, BACT control costs are unknown at this point, as there has been no experience in permitting GHG sources to date, and we do not have sufficient information to determine what these costs may be based on a case

- by

- case PSD review basis. However, as the RIA states, this rulemaking does not impose new economic impacts on an y sources, but instead is a regulatory

relief for smaller GHG emission sources. The lack information on BACT control costs therefore actually

discounts the amount of relief that is estimated in the RIA. With respect to the suggestion by some commenter s that we account for the costs to sources resulting from permitting delay due, in turn, to depleted state, local and tribal resources, we would like to clarify that we have not attempted to quantify these costs and in fact,, we do not have an y informati on about what those costs might be. However, we have recognized that the likelihood of long permitting delay s absent tailoring will be damaging to sources and potentially

to the national economy

and this is a key

reason why

the “absurd results” doctrine applies and justifies the Tailoring Rule.125

With respect to the number of sources that would trigger the requirement to keep 5 or 10 ye ars of emissions records because there is a reasonable possibility that PSD could be triggered, we currentl y do not have sufficient information to determine how man y sources might have a reasonable possibility

to trigger PSD based on GHG permitting. However, as we have stated previously

and in the RIA for this rule, this rulemaking does not impose new economic impacts on any sources, but instead is a regulatory relief for smaller GHG emission sources. In response to the solid waste industry commenter, we have corrected the Technical Support Document for Greenhouse Gas Emissions Thresholds Evaluation , included in the public docket to the final rule, to include the summary tables showing the landfill totals at the different emission threshold levels evaluated. The proposal contained the facility counts for landfills in the appendix A to the original threshold study; however, they were not summarized in the upfront portions of the TSD. The threshold TSD is based on the landfill emissions data that was used in support of the EPA’s GHG Mandatory Reporting Rule and references the applicable supporting documents from the docket fo r that rulemaking. We believe the GHG Mandatory Reporting Rule dataset represents the most comprehensive national statistics on landfill generation rates available, and provides our best assessment of the number of landfills that would exceed different G HG emission thresholds based on the potential to generated CH 4 emissions. In addition, the proposed rule solicited comments specificall y on our assessment of permitting burden, including any quantified data that could be used to better evaluate our estimates of affected facilities. We believe this request provided adequate notice and opportunity for affected sectors of the economy , including the waste sector, to provide alternative data for us to consider. 6.4 Comments on Recommended Thresholds 6.4.1 Comments Recommending a Non

- GHG Trigger Comment: Many state (3858, 4519, 4694, 8025, 8471), industry (3512, 3998, 4106, 4118, 4120, 4122, 4298, 4318, 4515, 4523, 4555, 4632, 4691, 4749, 4870, 4903, 4934, 4992, 5038, 5052, 5058, 5059, 5078, 5079, 5080, 5086, 5089, 5111, 5112, 5113, 5114, 5124, 5128, 5130, 5131, 5138, 5140, 5180, 5199, 5224, 5257, 5275, 5276, 5278, 5301, 5327, 5345, 5391 5601, 5714, 5741, 5774, 5939, 6459, 8301, 8545), and agricultural (5062, 5183) commenters support basing PSD and title V applicability on emissions of non

- GHG pollutants, at least during the first phase of the GHG permitting program. Under this approach, PSD and title V applicability would be determined as it is now, without regard to GHGs. However, sources subject to P SD as a result of non - GHG emissions would be subject to BACT requirements for GHGs if their GHG emissions exceed the significance level established in the final rule, and sources subject to title V based on non - GHG emissions would be required to include any applicable requirements for GHGs in their permits (although some of these commenters argue that no PSD or title V requirements should apply to GHGs under any

circumstances). The following are representative comments in support of this approach:126

 This is a better (or onl y l egally permissible) reading of the Congress’s intent in the Act and is consistent with Alabama Power v. Costle . (4120, 4515, 4691, 4870, 4903, 4934, 5052, 5058, 5078, 5086, 5111, 5112, 5113, 5138, 5140, 5180, 5199, 5278, 5345, 5391, 571 4, 5939, 8471, 8545)
 EPA should define “source” for purposes of the proposed rule and the first phase as being limited to those facilities that are or become subject to title V or PSD requirements under the existing 100/250 tpy

for criteria pollutants. ( 5183)
 This would reduce the permitting workload on sources currentl y considered minor and focus PSD on large sources of non

- GHG pollutants as intended by Congress. (3998, 4515, 4691, 4749, 5391)
 This approach is preferable because EPA has underestimated the number of sources that may be subject to PSD based on GHGs (e.g., in the oil and natural gas industry), so the proposed approach would have greater impacts than EPA predicted. (4749)
 EPA should wait for data from the GHG Mandatory Reporting Rule and, i n the meantime, use non

- GHG emissions as the trigger for PSD. (4106, 4120)
 A non

- GHG trigger would provide time to study the impacts of non

- CO 2 GHGs and to develop specific thresholds. (4694)
 In the initial phase, this would be more straightforward to ad minister, would provide a more predictable permitting workload, and would prevent a flood of newl y regulated sources from overburdening state agencies. (2369, 3858, 4120, 4515, 4519, 4691, 5058, 5086, 5391)
 This can be used as a permanent approach to prev ent an unmanageable broadening of the scope of the PSD program and to streamline and add clarit y to the PSD and Title V permitting processes. (4298, 5078, 5131, 5714, 5774, 8545)
 This would provide permitting agencies time to develop experience handling GHGs under the PSD and title V programs. (4515, 4691, 5058, 5276)
 This would provide EPA and the permitting agencies an opportunity to develop streamlining techniques. (4515, 4691, 5058)
 This is an effective way to address the current uncertainty about ho w to measure high

GWP gases such as SF 6 (and the fact that high GWP will magnify potential measurement errors). (5079)
 This satisfies the administrative necessity and absurd results doctrines because the scope of the program would remain consistent with b oth Congressional intent and current administrative practice, but still allow EPA and state agencies to begin regulating GHG emissions from existing PSD and title V sources . (4515, 4691, 5276)
 This would remove the need to invoke the doctrines of absurd r esults and administrative necessit y. (4118, 4120, 4515, 4691, 5180)
 This would capture most major GHG emitters without adding a large administrative burden on permitting agencies. (5180, 5301)
 Sources alread y required to obtain PSD permits are best equip ped to work through BACT issues with permitting authorities. (5180)
 U.S. fuel ethanol plants should only become subject to the PSD or title V program if the facility is also subject to that program for non

- GHG regulated pollutants. (4555)127

Some commenter s (5278, 5140) note that even if EPA adopts the NAAQS prerequisite requirement for PSD applicability , EPA would still need to establish a significance level for GHGs to define the level of emissions at which the requirement to appl y BACT for GHGs would bec ome applicable. Without a defined significance level, any increase in GHG emissions would be subject to BACT. The commenters believe that EPA could set a significance level for GHGs without reference to the statutory major source thresholds, as they woul d no longer be relevant because the sources for which a GHG BACT analy sis would be conducted would by definition be “major emitting facilities” by virtue of their emissions of a NAAQS pollutant. Response: We agree with commenters who suggest that in ord er to effectively address administrative necessit y concerns and transitional issues related to GHG permitting that we conside r an initial step in the final Tailoring R ule that would focus primarily on the largest sources of GHGs that alread y have or would be otherwise be coming in for PSD and title V permits for conventional pollutants. See section V.B. of the preamble to the final rule for a comprehensive discussion on our final legal and policy rationale for establishing this initial phase

- in step. Afte r considering the increased permitting actions based on our final burden anal ys es and the need for permitting authorities and sources to have sufficient time to develop necessary expertise and staffing resources to address that burden, we have decided in the final action to establish a first step in the tailoring approach

– referred to as “Step 1” in the preamble

- that would limit GHG applicability to only those sources that would otherwise be coming in for PSD and title V permits for conventional pollutants, or what we refer to in the preamble as “an ywa y” sources. No sources would become major for PSD or title V under this step based solely on their GHG emissions alone. A full description and our rationale for establishing this initial phase

- in step in p rovided in section V of the final preamble. This “an ywa y” source approach has particular appeal during this, the first step of the phase

- in approach because it begins to appl y ke y PSD and title V program requirements as soon as January

2, 201 1 to large s ources of emissions. B ecause it applies onl y t o sources that are alread y regulated under the CAA for other pollutants, it can be implemented efficientl y and with an administrative burden that is manageable in the next eight months. Under this approach, the sources and permitting authorities will still face substantial additional work due to the GHG emissions. We agree with commenters that the establishment of a GHG significance level under the PSD program

– which, in effect, is a BACT review threshold

-- is appropriate for this initial step, and we have decided to establish this level at 75,000 tpy CO 2 e. At this level, the administrative burdens will be man ageable and very small increases in GHG emissions, such as those that might result from very

minor increases in fuel consumption at a facility , will not be subject to BACT review. Importantly , we believe a consistent significance level between steps 1 and 2, as opposed to a lower significance level in step 1, will provide for a smoother transition and avoid the problems that would arise if PSD applied to modifications during step 1 that PSD would not apply to in step 2.128

Additionally , we estimate that facilities meeting the non

- GHG applicability threshold account for approximately 65 percent of total national stationary source GHG emissions. 6.4.2 Comments Recommending Specific Thresholds Numerous commenters suggest specific levels for the GHG thresholds, if EPA goes ahead with regulating GHGs under the CAA. In some cases, the comments address the thresholds together, while other comments address a specific threshold. In this section, we first address comments on PSD and title V applicability thresholds (along with PSD significance levels where the commenters combined comments on these threshol ds), then address specific comments on PSD significance levels. Comments on Applicability Thresholds: We proposed major source GHG applicability thresholds of 25,000 tpy

CO 2 e for both the PSD and title V programs and a possible range for the PSD GHG significance level of between 10,000 and 25,000 tpy

CO 2 e. We provided our rational for these preferences in the proposal, but we also asked for comments for alte r nativel y higher or lower thresholds than these levels. Commenters recommended specific major source thresholds for PSD and title V, including levels ranging from 25,000 tpy CO 2 e (as proposed) up to 1,000,000 tpy CO 2 e. A majority

of the commenters recommended major source thresholds of 100,000 tpy CO 2 e, including both industry and state agency

co mmenters. However, several state agency commenters recommended thresholds of 50,000 tpy

CO 2 e. Other commenters recommended sector

- specific thresholds. Overall, we received many comments recommending higher thresholds for these programs due to increased permitting burdens, which are summarized below with our responses. Lower than 10,000 tp y. In response to EPA’s request for comments on the lower ends of the applicability thresholds that w ere evaluated for the proposal (74 FR 55332), one refinery indus try trade association commenter (3757, 3968), who states general opposition to th e proposed T ailoring R ule, report s that lowering the major source threshold below 10,000 tpy CO 2 e would have minimal effect on its members because even a small furnace in a re finery has a PTE greater than 10,000 tpy , although lowering it would ease the burden indirectl y b y spreading the responsibility for achieving GHG emission cuts across a larger population of sources . The same commenter also states that lowering the signi fi cance level would have a large impact on refiners, since very small projects could trigger PSD for CO 2 e, while remaining very far beneath the significance level for other criteria pollutants. The same commenter questions wh y thresholds are being determined at this time since there will be more information in about a y ear or so as a result of EPA’s GHG Mandatory

Reporting Rule. 25,000 tpy

.

 Citizen commenter 5455 supports EPA setting the level at 25,000 tpy CO 2 e.  State commenter 5338 suggests that EPA set the level at 25,000 tpy for both a major stationary source and as the emission rate for an emissions increase triggering PSD.129

 State commenter 8803 agrees with the thresholds proposed b y EPA.
 State commenter 5314 supports EPA’s proposed 25,000 tpy thr eshold, but only

if current PSD requirements are streamlined and onl y if EPA authorizes a phase

- in of implementation over period of 5 y ears. If EPA is not willing to implement a 5 y ear phase

- in period, then this commenter supports a significantly higher threshold.
 One fuels sector commenter (2369) agrees that the permitting threshold should be the same for title V and PSD permitting so as not to burden the title V program with additional "hollow" permits and that threshold should be no less than 25,000 tpy

.  Two agricultural commenters (4572, 5168) agree with EPA that a threshold level of 25,000 tpy

for permitting would reduce the adverse impacts on agriculture over the statutory thresholds (although they are troubled that thresholds may revert to the statutory levels after the first phase of the program).
 An industry

group, 5120, generall y supports an increase to 25,000 tpy for PSD and title V requirements.
 Utility

industry commenter 5078 supports a temporary applicability

threshold for PSD and title V of a minimum of 25,000 tpy CO 2 e, and preferabl y higher, in order to avoid the overwhelming the administrative capacity of permitting agencies, avoid delay s in the issuance of permits to all sources, and avoid the applicability to thousands or millions of rel ativel y small sources.
 Utility

industry commenter 5180 supports finalizing the applicability threshold for title V at 25,000 tpy

CO 2 e. The commenter believes that the absurd results and administrative necessit y doctrines are more compelling for title V (w ith over 6 million sources newly subject at the statutory

threshold) than for PSD (for which the absurdity and administrative burden can be avoided b y interpreting PSD to be triggered only b y NAAQS pollutants). The commenter asserts that Congress clearly did not intend for title V to be the exercise in futility that would result from so many “hollow” permits.
 A military

commenter (4747) recommends that the major source threshold for GHGs in the title V program be set at a level consistent with the GHG Mand atory Reporting Rule, in this case, that would be 25,000 metric tons CO 2 e or 27,550 short tons CO 2 e. Higher, but unspecified, level Some state commenters (2504, 3918) believe EPA underestimated the workload associated with the proposed thresholds and sh ould consider setting the thresholds at a higher level in the first phase and later phase in the proposed levels

. One government agency

commenter (5367) suggests that EPA consider setting the applicability

thresholds at a higher level at the beginning of the program with a schedule to phase in a 50,000 tpy

CO 2 e (actual emissions not potential) threshold. The commenter suggests that setting the earl y PSD and title V programs at a level that that would correspond to the number of sources that are currentl y subject to title V or PSD under the current CAA regulated air pollutant thresholds would provide time for compliance assistance providers and permitting agencies to gear up for an increased workload and provide time for source and staff education. In addition, the commenter questions basing the permitting programs on the same applicability level as the GHG Mandatory Reporting Rule because until the required reports are filed and anal yz ed from130

these sources, no one knows the real impact of these levels as applicability levels for PSD and title V. Industry

commenters 3998, 4801, and 5041 recommend that EPA consider a much higher limit than 25,000 tpy

that is based on a more realistic determination of the number of current and future small facilities that w ill be potentially affected by

any GHG regulations. 40,000 tpy A fuels sector commenter (5705) recommends raising GHG applicability threshold to 40,000 tpy

so that the number of [PSD] permits remains similar to the recent 280 permits. Based on extra polating EPA data, the commenter believes that a 40,000 tpy threshold would still represent 66.5 percent of GHG emissions, or only 1.5 percent less than EPA's proposed 25,000 tpy

threshold. 50,000 tpy

 A few industry

commenters (3720, 4298, 5800) sugges t EPA consider a step

- down approach for phasing in permitting, starting at 50,000 tpy of CO 2 e to reduce the workload during the first y ear following promulgation and help states issue permits within required time frames. They

cite EPA estimates that the d ifference in GHG emissions captured between the 25,000 and 50,000 tpy CO 2 e thresholds is only

3 percent, but twice as many facilities would be permitted at 25,000 tpy , including commercial facilities and hospitals. (Commenter 5277 also cites these figures .) Also, they think the threshold could be lowered to 25,000 tp y once streamlining techniques have been developed and implemented.
 State commenters 2797, 4238, 4694, 4860, 5039, 5084, 7935 support an initial threshold level of 50,000 tpy

because it will r esult in a sustainable workload. According to these state commenters, the technical and administrative costs would be enormous at 25,000 tpy , and a higher threshold level would decrease the administrative burden. Some of these commenters add that the thr esholds could be tightened in later y ears if warranted.
 Some industry

commenters (5040, 5130, 5277, 5303, 5922) believe the thresholds should be at least 50,000 tpy

CO 2 e to offer regulatory

relief to smaller sources (including residential and commercial) and reduce administrative burdens on permitting authorities. Commenter 5277 believes that EPA must adopt a higher threshold to comport with CAA section 160(3), which say s that a purpose of PSD is to “insure that economic growth will occur in a manner consi stent with the preservation of existing clean air resources.” Commenter 5130 recommends that the major source threshold (and the major modification threshold) be raised to 50,000 metric tpy based on emissions of 40 tpy of NO x from a well

- designed boiler that achieves NO x emissions of 0.08 lbs/MMBtu heat input.
 Utility

commenter 7026 recommends PSD major source and significance thresholds for naturally

- occurring GHG pollutants (CO 2 , N 2 O and CH 4 ) of 50,000 tpy CO 2 e for each individual pollutant because this would only minimally

reduce the percentage of GHG emissions covered while substantially reducing the number of affected sources and the131

overall administrative burden. (For title V, the commenter recommends a threshold of 100,000 tpy

CO 2 e for each of the three pollutants.)
 One manufacturing commenter (4241) prefers major source thresholds matching the GHG Mandatory Reporting Rule, i.e., 25,000 tpy of CO 2 e actual emissions in the prior calendar year, but, if the threshold must be based on PTE, the commenter requests thresholds of 50,000 tpy

CO 2 e. 100,000 tpy

 Numerous state commenters recommend a threshold of 100,000 tpy or higher (3858, 3915, 4019, 4512, 4519, 4521, 4866, 4989, 5336, 6681). These state commenters think only a small fraction of covered ent ities would be lost over the proposed approach. Some of these commenters recommended approaches for subsequentl y adjusting the threshold: o The EPA should review the threshold after 3 ye ars to see if it should be changed based on the information obtained under the GHG Mandatory Reporting Rule and after reviewing state and local programs progress in implementing the programs. (4989 and 5336) o The EPA should raise the threshold level to 100,000 tpy CO 2 e for all sources until the ye ar 2015, and then lower it. (4866)
 An SBA commenter (4867) recommends that EPA raise the applicability threshold to 100,000 tpy

and the significance threshold to 50,000 tpy . The commenter also suggests that EPA consider longer phase

- in periods for these applicability and significance thresholds to apply

. Industry commenter (4794) agrees with these SBA recommendations.
 One commenter (5346) notes that increasing the threshold and significance levels from 25,000 tpy

to 100,000 tpy

CO 2 e would do a lot to reduce the administrative burd en while achieving nearl y equivalent environmental benefits.
 Utilities/utility

groups (4122, 4318, 4523, 4952, 4992, 5038, 5080, 5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741, 5773, 6459, 8301) assert that the major source (and significance) thresholds sh ould be no lower than 100,000 tpy for the following reasons: o There is no bright

- line threshold level above which permitting would become clearl y un - administrable and below which it would be clearly administrable. o The EPA could easil y have determined that raising the major

- source threshold to 100,000 tpy

and the significance level above 25,000 tpy would involve no significant impact to the environment but would avoid burdening thousands of sources. o The EPA could have set higher thresholds and not “lose” an y of the large power plants or most of the large manufacturing facilities. o Commenter (5317) adds that, had EPA conducted even a limited cost

- benefit anal ys is, it would have concluded that a 25,000

- tpy threshold (as compared to a higher threshold such as 100,000 tpy) will impose significant costs on power companies, manufacturing industries, and the economy y et produce no significant increased coverage in emissions. Based on information in the proposal preamble, a threshold of 100,000 tpy

would reduce the number of permits by two thirds while reducing the percentage of GHGs regulated b y only 4 percent. (Other commenters who cited these same preamble figures: 4298, 4903, 5169, 5300, 5367, 5742, 8283, 8545, 16411)132

 Other utility

commenters (4567, 5113, 5773) who support a 100,000 tpy threshold for the same basic reasons as the previous commenters, cite the RIA for the GHG Mandatory Reporting Rule and conclude that the difference between the 25,000 tp y and 100,000 tpy thresholds is thousands of entities that c ombined emit only 1 percent of the nation’s GHG emissions. Commenter 5773 thinks the 100,000 tpy threshold will lower the number of minor sources that will have to get enforceable restrictions to lower their PTE.
 Utility

commenter 5809 believes that a thr eshold of 100,000 tpy will further streamline the process.
 Another utility

industry commenter (4745) believes that 100,000 tpy for new and modified sources is closer to a threshold that would remove smaller sources from unnecessary

regulatory

review, but E PA should take the time necessary to study this issue in detail. This commenter notes that at proposed thresholds: o Small sources of conventional pollutants would have to conduct BACT reviews for these conventional pollutants because they are major for GHG

. o Existing minor sources such as NG peaking combustion turbines and NG boilers in commercial buildings would be major based on PTE so that no additional combustion sources could be installed at these sources without GHG BACT review.
 One utility

group comm enter (5052) provides aggregate calculations for the predicted effect of 100,000 tp y and 50,000 tpy for the public utilities sector ( i.e., not

- for

- profit municipal and other state and local community

- owned electric utilities) : o 100,000 tpy

– total CO 2 PTE n ot covered at this threshold would be 5 percent of 2007 emissions from public utilities and 263 facilities would be below threshold (out of total of more than 2,000 facilities in sector) o 50,000 tpy

– total CO 2 PTE not covered would be less than 2 percent of 2007 emissions and 150 facilities would be below the threshold
 One industry

commenter (4106) states that the major source and PSD significance levels should be established at 100,000 metric tons per y ear or higher.
 Some commenters (5145, 5224, 5886) be lieve that setting a threshold level for GHGs at 100,000 tpy

would do little detriment to EPA’s objectives and would protect more entities from the burden of regulation.
 Some industry

commenters (8015, 16411) recommend an initial threshold for GHGs of at l east 100,000 tpy , which would still pull in many fossil

- fuel combustion sources that would not be considered major for an y other pollutant.
 One fuels sector commenter (5351) suggests that using either PTE of not less than 100,000 metric tons CO 2 e or 25,000 metric tons CO 2 e of actual emissions as the threshold for regulation under this rule would achieve appropriate balance between protecting human health and the environment and the economic health of business and industry and their ability

to sustain and gr ow jobs in this nation.
 One commenter 4513 suggests that if EPA must use PTE, it should finalize a threshold not less than 100,000 metric tons CO 2 e. (4513)
 An industry

commenter (6458) recommends EPA consider alternative major source and significance leve ls for different source categories, starting at 100,000 tpy . The commenter thinks this will significantl y reduce administrative burden with minor impact on the number of sources covered. The commenter does not believe these levels should be set at the GH G Mandatory Reporting Rule levels (25,000 tpy), as PSD has substantially

more beneficial environmental impact than simply reporting emissions.133

 One fuels sector commenter (5711) believes a more appropriate PSD threshold level would be 100,000 tpy

PTE for al l natural gas combustion sources, in particular for sources that use natural gas for space heating. The commenter gives the following reasons: o The threshold should not be influenced b y pending legislation (i.e., the Waxman

Markey bill, House of Representatives [ H.R. ] 2454), which is legall y irrelevant to the question of which emission level is most consistent with the purposes of the PSD program as adjusted b y the doctrine of absurd results. Further, the 25,000 threshold in the pending legislation is in m etric tons and based on actual emissions. o The EPA’s estimates of the difference in the number of permits and percentage of GHG emissions covered at 100,000 tpy and 25,000 tpy

fail to establish an y clear justification for setting an emissions threshold at 2 5,000 tons and thereb y i ncreasing the workload of an already overburdened program. o The proposed threshold is too restrictive for sources that burn natural gas and in particular for commercial and residential facilities because: (1) Use of PTE grossl y overe stimates the actual emissions of commercial and residential facilities that burn gas for space heating; and (2) Requiring residential and commercial NG users to obtain PSD and title V permits and to apply as y et undetermined BACT will likely cause these cu stomers to switch to electric equipment and appliances, which will cause an overall net increase in emissions. A life

- cycle or source energy analy sis demonstrates that it takes at least double the amount of NG combusted at a power plant to serve the same load that can be served by combusting natural gas directly at the customer’s site. Emissions of N 2 O, SO 2 , and CO 2 will be even higher if the regional mix of generation includes coal

- fired power plants.
 Utility

commenter 7026 recommends that title V permitting be triggered only if a new source’s emissions for CO 2 e from CO 2 , N 2 O, and CH 4 exceed 100,000 tpy . The commenter opposes requiring sources to submit a title V renewal application that accounts for GHG emissions unless and until the sources are subject to GHG emissions standards through stationary source regulations or PSD permit conditions. The commenter adds that monitoring and reporting requirements are already defined in the GHG Mandatory

Reporting R

ule. The commenter adds that increasing the thre shold from 25,000 tpy

to 100,000 tpy

minimally

reduces the percentage of GHG emissions covered b y the program, while substantially reducing the administrative burden. (For PSD major source and significance thresholds, the commenter recommends a threshold of 50,000 tpy

CO 2 e for each of the three pollutants.)
 Some industry

(4630, 5111, 5335, 5740) and government agency (5367) commenters state that thresholds should be no lower than or be equal to 100,000 tpy

.  Energy

sector commenter 5742 suggests 100,000 tpy because EPA should not establish the threshold and significance level at the same level as that set by the GHG Mandatory Reporting Rule (25,000 tpy), as PSD would involve substantially more than simply reporting emissions.
 Industry

commenter 5300 states that if EPA adopts a 25,000 tpy threshold, which is roughl y equivalent to only 40 tp y of NO x , manufacturers who have worked hard to achieve and maintain non

- major source status under both the PSD and title V programs will lose their non

- major source status and become subject to the PSD provisions for134

major modifications and the requirement to obtain the title V permit they worked so hard to legitimately

avoid.
 Industry

commenter 5147 contends that a threshold of 100,000 tpy or greater should be applied per emissions unit to allow for common efficiency improvement projects to move forward without triggering PSD, while ensuring that when significant investments are made in energy

producing equipment, there is review for BACT.
 Industry

commenter 4298 supports 1 00,000 tpy title V major source thresholds for CO 2 , CH 4 and N 2 O because the empty nature of the title V requirement itself

– in the absence of actual applicable requirements to control GHG emissions

– provides EPA with a sound argument for avoiding the abs urd, costl y, and time

- consuming result of a paperwork requirement that has no corresponding environmental benefit. The commenter adds that there is no reason for consistency between the title V and PSD thresholds.
 One ceramics industry commenter (5077) pr oposes that the title V major source applicability

threshold should be set at 100,000 tons CO 2 e because almost all stationary sources that emit 100,000 tons CO 2 e or greater would alread y be subject to the title V permitting program, thereby reducing the re gulatory

burden on the regulated community as well as permitting agencies.
 Industry

commenter 5169 believes that a threshold of 100,000 tpy would be in line with the intent of the PSD program in 1977

– to cover major emitters that are financiall y able to b ear the regulatory

costs and are collectivel y responsible for most of the nation’s air pollution. 100,000 to 150,000 tpy A utility and natural gas industry

commenter (4749) recommends that EPA increase the major source threshold to between 100,000 and 1 50,000 tpy (and the PSD significance level to higher than 25,000 tpy

and up to 50,000 tpy). The commenter (4749) notes that EPA’s emission data show that these thresholds would still cause the PSD program to appl y to the facilities responsible for the maj ority of GHG emissions and still capture more facilities than are currently subject to PSD, but the additional facilities represent a more manageable permitting workload than at the proposed levels. One fuels sector commenter (5056) states the proposed thresholds are too low to successfull y implement a PSD and a title V permitting program without creating burdensome requirements on state regulatory agencies and the regulated communit y. The commenter encourages EPA to raise the applicability threshold to b etween 50,000 and 100,000 tpy until the EPA has a better understanding of the real impacts to states and the regulated community

. 150,000 tpy Some commenters (4691, 5059, 5181, 5199 , 19139 ) state that the PSD and title V emission threshold for new sourc es should be no less than 150,000 tpy (and the significance level for modifications should be no less than 50,000 tpy or 75,000 tp y [19139] ). One or more of these commenters make the following points:135

 These thresholds are based on the relative size of cap acity upgrades that trigger PSD under the current program and the number of affected facilities at different thresholds in this industry

sector.
 Higher alternative thresholds achieve the objective of defining thresholds that are at a “level closest to th e statutory levels that permitting authorities can reasonably administer during this initial phase.”
 These thresholds would include the largest sources, capture a significant amount of the national GHG inventory , and include additional sources not otherw ise subject to PSD

– while minimizing the potential for a significant and administratively infeasible surge in PSD permitting workload for the initial phase. Commenter 4691 provides calculations to support these numbers.
 An additional factor for the NG in dustry is that EPA has announced that it will strictly interpret source aggregation rules, which will force more aggregation and result in higher emission counts.
 Setting lower threshold levels likely will adversely

impact the maintenance and development o f natural gas pipeline infrastructure, which is inconsistent with the intent of the GHG Tailoring Rule

– lowering the total emissions of GHGs into the atmosphere. (19139)
 A 25,000 tpy

threshold would have a crippling effect on the NG industry

. Other in dustry

commenters (5073, 5712) contend that the threshold level for PSD should be 150,000 tpy

(with significance level between 50,000 and 100,000 tpy) to avoid regulating sources that should not be regulated. Commenter 5073 believes that these thresholds would include the largest sources, capture a significant amount of the national GHG inventory , and still likely include some additional sources not otherwise subject to PSD, while minimizing the potential for a significant and administratively infeasible s urge in PSD permitting workload for the initial phase. 100,000

– 250,000 tpy One state commenter (6183) suggests that the first level be from 100,000 to 250,000 tpy , then decreased ye arl y b y 25,000 tpy so that the fiscal impact of GHG regulation can be minimized. 250,000 tpy An electric and NG utility (5082) believes that the title V and PSD major source level for CO 2 should be set at no less than 250,000 tpy based on the PTE for CO 2 of a 250 MMBtu/hr fossil fuel

- fired boiler, which is a listed source under section 169 of the CAA as a major source when it meets the lower PSD threshold of 100 tpy. An industry

commenter (5077) proposes that the PSD major source applicability threshold should be set at 250,000 tpy CO 2 e. The commenter states that most s tationary sources that emit 250,000 tpy

CO 2 e or more would alread y be subject to the PSD program for criteria pollutants, and raising the threshold to this level would reduce the regulatory burden on industry136

and permitting agencies alike while at the same time target the largest and most pertinent sources for emission reductions through the implementation of BACT as appropriate. Another industry

commenter (5712) recommends that the threshold start at 250,000 tpy (150,000 tpy

significance level) for the f irst phase, which should be implemented over a 5

- ye ar timeframe while information is obtained to determine whether a second phase is needed. If the second phase is proven to be needed, then a threshold level of 150,000 tpy (100,000 tpy significance level) could be used. 1,000,000 tpy One utility

group (4567) believes that a threshold level of 1 million tpy CO 2 e would be the most appropriate major source threshold for GHGs. However, since EPA did not propose thresholds as high as this, they support 100, 000 tpy

CO 2 e instead. One industry

commenter (5111) believes it may be necessary

during the first phase to only appl y PSD to sources that emit 1,000,000 tons of GHGs per year. One state commenter (4786) requests that EPA stage thresholds in such a way that only sources that are trul y “m ajor” trigger PSD and title V initially , which they assert would require that EPA establish an initial applicability threshold much higher than 25,000 tpy CO 2 e. They suggest that the first y ear start with a 1,000,000 tpy CO 2 e threshold, where after 2 ye ars, it could be cut in half to 500 tpy

CO 2 e, and then after another 2 years, could be cut again to 250,000 tpy CO 2 e or lower. (4786) Sector

- Specific Thresholds Some commenters suggest different thresholds for the 28 so urce categories listed in section 169(1) of the CAA (which have a PSD major source threshold of 100 tpy) and the unlisted source categories (which have a PSD threshold of 250 tpy):
 One environmental group (5311) suggests that EPA apply the statutory

100 t py applicability

threshold to the 28 listed source categories, while maintaining its proposed 25,000 tpy

CO 2 e applicability

threshold for all other sources during the first phase of implementation.
 Industry

commenter 4801 recommends that EPA establish a PS D GHG emissions threshold of 25,000 metric tons for the 28 listed source categories and 60,000 metric tons for other sources because this is consistent with the ratio of the 100/250 ton threshold established by

the CAA for the listed 28 source categories and all other sources. Solid waste industry

commenters (4863, 5305, 5391) note that EPA already has established unique, landfill

- specific PSD thresholds for “municipal solid waste landfill emissions,” measured as NMOC, and contend that EPA should estab lish GHG thresholds for landfills that are consistent with the current PSD thresholds and regulate a comparable portion of the solid waste management sector. The commenters provide calculations and suggest the following GHG thresholds:137

 A PSD major source applicability threshold of 820,000 tpy CO 2 e (4863, 5391) or 745,080 metric tpy

CO 2 e (5305) to be consistent with 250 tpy NMOC.
 A PSD major modification significance threshold of 160,000 tpy CO 2 e (5391) or 149,016 metric tpy

CO 2 e (5305) to be consistent with 50 tpy NMOC as specified in existing PSD regulations.
 A title V major source threshold of 320,000 tp y CO 2 e to be consistent with 100 tpy NMOC (or 160,000 tp y CO 2 e to be consistent with 50 tpy NMOC based on the NSPS for MSW landfills). (5391)
 In addition , commenter 5391 contends that higher thresholds for landfills are particularly important because of the role that landfills can play in developing renewable e nergy projects from LFG , and because it has been recognized that landfills can provide indirect G HG emission reduction benefits. Lower thresholds could have the effect of discouraging existing permitted landfills from applying for permits to convert from flare

based s ys tems to gas

- to

- energy s ys tems for fear of triggering lengthy , burdensome, expensiv e, and uncertain PSD major source or major modification review. Some other commenters suggest a similar approach for determining GHG thresholds that correspond to existing thresholds:
 Use a combustion device, such as a boiler, and determine its CO 2 leve l when operating at the criteria pollutant major source threshold (100 tpy) for NOx. Using this approach, a boiler operating at a level of 12 parts per million ( ppm ) NO x (at the high end of BACT) and fueled with natural gas, would yield CO 2 emissions of a pproximately

777,000 tpy

.  Establish a CO 2 level that would be equivalent to the title V extreme nonattainment area major source threshold of 10 tpy . The NO x 10 tpy level roughly equates to about 100,000 tpy

CO 2 .  Establish a threshold at 300,000 tpy of CO 2 based on the amount of heat input (fuel) required to emit 250 tons of NO x from natural gas turbine sy stems. If the threshold were based on comparability

with SO 2 emissions, the appropriate CO 2 threshold would be more than 1 million tons of CO 2 . (3512) A glass industry

commenter (4771) states that EPA should tailor the threshold to the circumstances of each industry . For the flat glass industry , the commenter suggests 300,000 tpy or higher (based on additional anal ys is), or alternatively that flat glas s plants that use natural gas should be excluded from GHG regulation. The commenter indicates that a threshold of 300,000 tpy

would ensure that EPA is targeting the large sources of CO 2 and other regulated pollutants. The commenter recommends that EPA re evaluate the impact on the number of sources covered at higher thresholds up to 300,000 tpy using updated, industry

specific information. Response: Based on numerous comments from both state and local permitting authorities , small business representative s, and industry commenters, we have reassessed our original burden estimates from our proposal and have decided to finalize higher GHG permitting thresholds than the 25,000 tpy

CO 2 e major source threshold identified in the proposal (see response above regarding burden reassessment at 25,000 tpy CO 2 e threshold). In section V.B of the preamble to138

the final rule, we discuss at length our basis, from both a legal and policy perspective, for establishing the GHG thresholds in the final rule, for both major sour ces and significance levels. In addition, as mentioned in response to general comments on burden above, we describe the basis and assumptions for our final permitting burden estimates, which ultimately informed our decisions on GHG threshold selection, in the burden anal ys is TSD contained in the public docket for the final rule ( Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate Resource Requirements at Alternative Greenhouse Gas (GHG) Permitting Thresholds ). Following are some key points from discussion relevant to the comments above. After step 1, which involves a non

- GHG permit prerequisite (where a major GHG threshold does not apply), we determined that a 100,000 tpy CO 2 e major source threshold level, and a 75,000 tp y CO 2 signi ficance level, produce a level of permitting activity at step 2 in the tailoring process that is administratively feasible. We further concluded and are finalizing with this action that the GHG threshold for both PSD and title V programs should be no less than 50,000 tpy

CO 2 , at least through to April 30, 2016 at which time a follow

- up rulemaking will be finalized to establish any

further reductions or changes to the GHG permitting thresholds. Based on our final burden anal ys is, we have decided to set our final s tep 2 thresholds at 100,000 tpy

CO 2 e for major source applicability under PSD and title V and at a 75,000 tpy CO 2 significance level for PSD. Overall, we estimate that the almost 900 additional PSD permitting actions (virtually

all of which would be modifications) per ye ar at these levels will result in an approximatel y a $21 million increase (from s tep 1) in states’ annual costs for running PSD programs. In addition, we estimate that the 1,000 additional title V permit actions will cause the tot al title V burden for permitting authorities to increa se b y $6 million annually from s tep 1. This total increase in permit program burdens of $27 million represents a 34 percent increase over the $78 million in total cost of PSD and title V programs at s t ep 1. We consider this a substantial increase particularl y because s tep 2’s start date of July 1, 2011 is only

6 months aft er s tep 1’s start date of January 2, 2011. What’s more, s tep 1 will entail a substantial increase in permitting authorit y obligatio n s, so that adding the costs of step 1 and s tep 2 together

-- $31 million

– means that permitting authorities will be required to increase their permitting resources by approximat ely

42 percent between now and s tep 2. In addition to the administrative bur dens we have been able to monetize, we must be mindful that permitting authorities will incur other burdens, including the significant support and outreach activities by permitting staff for the many newly permitted sources. We believe that any lower thre sholds in this timeframe, whether in the PSD and title V applicability levels or in the significance level, would give rise to administrative burdens that are not manageable b y the permitting authorities. Additionally , although not a basis for our decisio n on the step 2 phase

- in levels, we estimate that facilities meeting the step 2 major source applicability

thresholds account for approximately 67 percent of total national stationary source GHG emissions. Central to our decision to promulgate higher thr esholds than what we proposed is our recognition, based on comments and further analy sis, that appl yi ng PSD to GHG sources at the statutory or any other threshold level or significance level that we considered would result in (i) a greater number of source s, and significantly greater number of modifications than we first estimated becoming subject to those programs; and (ii) a greater per

- permit cost than we first estimated to the permitting authorit y of processing those permit actions. A detailed discussi on of139

our revised estimates and reasoning for our final threshold selections is provided in Section V of the preamble to the final rule. Similarly , because the administrative burdens at the 100,000/75,000 level are manageable, we do not believe that highe r threshold levels are justifiable for step 2. Specificall y, at the 100,000/100,000 level

– which would entail a 100,000 tpy CO 2 e significance level, rather than a 75,000 tpy CO 2 e level

– permitting sources would need to handle only

20 additional modifications beyond current levels, and thus would not incur substantial additional costs. EPA has decided not to take final action on requests for exemptions from applicability determinations (major source and major modification) under title V and PSD for cer tain GHG emission sources, emission activities, or ty pes of emissions at this time. For similar reasons, we have decided not to take final action on requests to establish categorical

- specific applicability thresholds as requested by some of the commenters above. Although some commenters requested several applicability exemptions with respect to GHGs, we have decided to address the need for tailoring through a uniform threshold

- based approach, rather than through a collection of various specific exclusions

. O ur uniform threshold approach achieves the same result

—i.e., permitting programs that are not overwhelmed due to the influx of GHG permitting

— and does so in a way

that will be simpler to administer, covering all key GHG source categories, while achievi ng the program objectives. In establishing our thresholds, we generally took into account the same factors

– including costs to sources and administrative burdens to sources, amount of GHG emissions from sources

– covered at various levels

– as the commenters used as the basis for their suggestions. We recognize the concern of commenters who believe that, under our proposed applicability

threshold, a large number of ‘hollow’ permits might be created under title V for GHG. During step 1, permitting for GH Gs is onl y required if the source is otherwise subject to permitting for its emissions of non

- GHGs, meaning that those sources will be subject to existing substantive applicable requirements for non

- GHGs (e.g., NSPS, MACT, and SIP requirements, including P SD). Thus, there should be no, or at least no additional, “empty permits” during step 1. For step 2, it is possible that sources that become subject to title V requirements for GHG emissions may

not be subject to other requirements, but our assessment s uggests that this is very unlikely . We estimate that virtually all of the 550 newly

- major sources in step 2 will be subject to applicable requirements under the CAA because they are from categories that have been traditionally

subject to regulations, such as smaller industrial sources from already regulated categories, large landfills, and oil/gas/coal production. Even the approximately 50 newly

- subject commercial sources in step 2, which we estimate to be comprised of very large hospitals, are likely to be covered b y standards for medical waste incinerators. In addition, we expect these sources may

well be subject to SIP requirements. Thus we do not expect any , or at most very few, “empty

permits” during step 2. Comments on the Significance Level: W e proposed a PSD significance level range for consideration and comment of 10,000 to 25,000 tpy

CO 2 e. We received man y comments recommending specific significance levels, ranging from 10,000 tp y to 150,000 tpy CO 2 e, which are summarized below.140

No level s pecified In response to an EPA inquiry (74 FR 55334), one refinery industry commenter (3757, 3968) indicates that lowering the significance level would have a very large impact through increased permitting fees, consulting costs, and the high cost of co ntrol devices. One commenter (4518) does not believe that there is a clear basis for the proposed significance level. The commenter makes the following points:
 The EPA stated that it normally uses 20 percent of NSPS in the establishment of a significan ce level, but the proposed significance level (10,000 to 25,000 tpy) is 40

- 100 percent of NSPS.
 With the proposed significance level, a modification that results in a 10,000 tpy increase in GHG would trigger permitting requirements, but a new facility th at emits 10,000 tpy would not.
 Since the EPA has no health data on which to base significance levels for GHG emissions, different options need to be weighed.
 The EPA could not set a significance level for the initial phase, so the default significance level of 0 would appl y.  In selecting a significance level the EPA should be careful not to make it easier for a facility to get around the permitting rules by simply choosing a permit for a new operation rather than a modification permit. It is not clear if permitting agencies will have the personnel to investigate if a new permit application is applied to a new operation or modification of an existing one.
 There should be a modification permit option for stationary sources that uses technology and/or best practices to reduce GHGs below the 25,000 tpy threshold. 10,000 tpy One state commenter (3916) indicates that the PSD threshold should be set at 10,000 tpy CO 2 e. The commenter reasons that if the significance level were set at 25,000 tpy , an exis ting source with a PTE of greater than 25,000 tp y could add another 24,999 tp y of potential emissions without triggering a PSD review. Citizen commenter 5455 supports EPA setting the significance level for GHGs at 10,000 tpy CO 2 e. 15,000 metric tpy An industry

commenter (4801) urges EPA to establish the GHG significance level at 15,000 metric tons because the amount of natural gas combustion needed to achieve this level of GHG emissions would be consistent with the established significance level of 40 tpy of NO x emissions. 20,000 tpy141

Commenter 4526 supports a significance level of 20,000 metric tons of CO 2 e per ye ar during the 5

- year phase 1 period to distinguish it from the major source applicability threshold. 25,000 tpy Some state (2792, 423 8, 4239, 5338), industry (2369, 4241, 4555, 6203), and union (5342) commenters suggest adoption of a 25,000

- tpy significance level:
 The EPA could revisit this level at the 5

- ye ar review period and establish a lower threshold if the original estimates are f ound to be accurate. (4238, 4239)
 State commenter 2797 notes that this would be the same as the major source threshold, which would avoid PSD permitting for GHGs at sources that are major for a conventional pollutant but minor for GHGs.
 State commenter 27 97 indicates that a significance threshold level of 10,000 tpy is too low and would force schools and apartment buildings that would not otherwise be considered major to be subject to major source permitting.
 Fuels sector commenter 2369 adds that if EPA determines during the proposed 5

- year evaluation period that a 10,000 tpy significance level is appropriate, sources should have at least 18 months advanced notice to plan for these changes.
 Industry

commenter 6203 suggests 25,000 tpy to preserve jobs. Al ternatively , if EPA sets the significance level at a lower amount, EPA could set a much higher significance level for industries manufacturing energy efficiency

products because energy efficiency will play a critical role in addressing climate change and r eduction of GHGs.
 Union commenter 5342 supports a 25,000 tpy significance level because there is merit in maintaining consistency

on the ty pe and size of facilities covered b y the PSD and title V permit requirements. A 25,000 tpy significance level appear s more than adequate to provide effective GHG management without creating unwieldy new permitting requirements for man y s mall sources. Other industry

commenters (2371, 4020, 4112, 4632, 5079, 5124, 5133, 5180, 5236, 5277, 5300, 5303, 5345, 5347) recommen d a significance level of at least 25,000 tpy , but would prefer a higher level:
 Commenter 4112 believes that the PSD significance level for GHGs should be no lower than 25,000 tpy

.  A utility

group (5079) recommends a significant emissions rate of at least 25,000 tpy and preferabl y higher. The commenter included three examples (with calculations) of situations where PSD permitting at the 25,000 tpy level could discourage energy efficiency upgrades and investments at fossil fuel

- fired power plants: o A NG comb ined cycle facility that undergoes a steam turbine upgrade to improve efficiency . Based on a pre

- modification utilization rate of 50 percent, a post

modification increase in utilization of 4 percent would trigger the 25,000 tpy CO 2 e threshold, while being well below the thresholds for NO x and CO (< 3 tpy combined). Utilization would have to increase to over 80 percent to reach the NO x threshold. (Utilization may

increase as a result of improved efficiency , and grid

- wide GHG emissions would be expected to go down.) o Efficiency

upgrades at a number of turbines will increase the capacity of the units,, which will increase total fuel consumption per unit by almost 500,000 million British142 Thermal Unit ( Btu ) per year at a constant utilization rate but reduce G HG emissions per megawatt hour ( MWh ) . Example calculations for a 200 MW turbine unit at 94 percent utilization show an increase of over 25,000 tpy CO 2 e, but only

2 tpy NO x and 1.3 tpy CO. o The California Energy Commission is considering an application to r epower a portion of an aging NG

- fired plant to more

- efficient combined cycle generation, which will significantl y reduce GHG emissions per MWh. However, with the significant increase in utilization that would likely occur as this plant displaces generatio n at less efficient plants, GHG emissions from the facility could go up very

significantly (while reducing grid

- wide GHG emissions) without reaching the threshold for NO x .  A utility

industry commenter (5180) recommends a significance level of at least 25,0 00 tpy , but based on the de minimis principle rather than absurd results or administrative necessit y. (The commenter couples this with interpreting PSD to be triggered onl y b y an increase in emissions of a NAAQS pollutant.) The commenter cites the exampl es provided by Commenter 5079 and the potential for such beneficial projects to be foregone due to the uncertaint y surrounding BACT for GHGs to suggest a substantially

higher significance level (e.g., 100,000 tpy).
 A utility

industry commenter (5345) and f

uels sector commenter (5124) believe that the significance level should be set no lower than 25,000 metric tpy

.  An industry

commenter (5277) believes the significance threshold should be at least 25,000 tpy

to avoid permitting gridlock that would threaten to indefinitel y delay needed business investment, and additional anal ys is is required to determine whether a higher limit is necessary

.  An operator of waste

- to

- energy facilities (2371) supports a significance threshold of no less than 25,000 tpy in Phase I of the program , given that the financial impact of the rule on industry

has yet to be determined, as the technology that plants triggering the PSD threshold will have to install is not y et been specified.
 An aluminum association commenter (4020) believes that, at the very least, EPA should make the thresholds for PSD significance equivalent to the proposed major stationary source threshold of 25,000 tpy CO 2 e to help mitigate the impacts of the proposed rule. The commenter would prefer a higher threshold o f 100,000 tpy CO 2 e to further relieve the administrative burden caused b y regulation of GHG under the CAA.
 An industry

commenter (5133) asserts that if the significance level is less than 25,000 tpy , EPA is likely

to capture thousands of additional minor a ctivities that the PSD program was not intended to regulate. For example, a lime plant that performs routine maintenance b y adjusting the burner flame could exceed a CO 2 significance level of 10,000 tpy . Increased permitting likely to flow from a lower s ignificance threshold will further delay

the permitting time, impose excessive costs on industry and permitting agencies, and delay

or preclude environmentally beneficial projects.
 An industry

commenter (5300) believes the significance level for triggering PSD requirements for modifications at existing major stationary sources should be no less than 25,000 tpy

because there is a rough parit y between 25,000 tpy CO 2 emissions and 40 tpy NO x emissions from natural gas

- fired combustion units.
 A coating industry commenter (5347) reports that a 10,000 tpy CO 2 e significance level could potentially

increase the number of coating facilities impacted by 35 percent based on actual emissions. If EPA requires emissions be based on a facilities’ PTE, this143

estimate would be higher. Because EPA did not perform an anal ys is on the 15,000 tpy CO 2 e or even the 20,000 tpy CO 2 e level, this commenter believes EPA’s proposed range of 10,000

– 25,000 tpy

CO 2 e is arbitrary . The commenter opines that EPA should set the threshold at no less than 25,000 tpy CO 2 e and perhaps higher and that the threshold be based on actual emissions. (5347) No lower than major source threshold (no level specified) One state commenter (4864) and one fuels sector commenter (5711) state that EPA should set the significance level equal to the applicability thresholds for new sources. The fuels sector commenter (5711) believes that no other result is legally defensible under the doctrine of absurd results, particularly because EPA’s anal ys is shows that th e administrative burden for permitting a modification would be the same as for permitting a new source, but (because existing sources have less design and construction freedom) BACT would be expected to be less stringent and result in less environmental be nefit. In addition, this commenter notes that there is precedence for this approach

– EPA set the significance level for CO equal to the major source threshold. 40,000 tpy A fuels sector commenter (5705) who recommends a major source threshold of 40, 000 tpy

also recommends that the significance level for PSD be raised to the same level to be consistent. If EPA retains the 25,000 tpy major source thresholds for PSD and title V, the commenter recommends that the significance level be 25,000 tpy as well

. 50,000 tpy

 Some fuels sector commenters (4515, 4691, 5059, 5181, 5199) state that the significance level for modifications should be no less than 50,000 tpy (and the PSD and title V emission threshold for new sources should be no less than 150,000 tpy).
 A utility

and natural gas industry

commenter (4749) recommends a PSD significance level of greater than 25,000 tpy up to 50,000 tpy

(and a major source threshold between 100,000 and 150,000 tpy).
 A utility

industry commenter (5301) states that 50,000 tpy significance threshold would be more in line with the current PSD significance thresholds for other regulated pollutants (e.g., NO x ) for natural gas

- fired RICE and combustion turbines used for electrical generation peak shaving and natural gas transmi ssion and storage, while lower significance levels could potentially trigger PSD for modifications of existing RICE and combustion turbines. In dustry commenter 5130 similarly recommends that the major modification thresholds (and the major source threshol d) be raised to 50,000 metric tpy based on emissions of 40 tpy of NO x from a well

- designed boiler that achieves NO x emissions of 0.08 lbs/MMBtu heat input.
 An electric and NG utility (5082) believes the PSD significance level should be 50,000 tpy , based on 20 percent of the commenter’s suggested major source level of at least 250,000 tpy

.144

 Utility

commenter 7026 recommends PSD significance (and major source) thresholds for naturally

- occurring GHG pollutants (CO 2 , N 2 O and CH 4 ) of 50,000 tpy CO 2 e for each indi vidual pollutant because this would only minimally

reduce the percentage of GHG emissions covered while substantially reducing the number of affected sources and the overall administrative burden.
 An SBA commenter (4867) recommends that EPA raise the signi ficance threshold to 50,000 tpy

(and the applicability

threshold to 100,000 tpy). The commenter also suggests that EPA consider longer phase

- in periods for these applicability and significance thresholds to apply

. Industry commenter (4794) agrees with th ese SBA recommendations.
 Industry

commenters 4771 and 5922 recommend a significance level of 50,000 tpy

. Between 50,000 to 100,000 tpy An industry

commenter (5073) say s that the PSD significance level should be 50,000 to 100,000 tpy , which (along with an major source threshold of 150,000 tpy) would include the largest sources, capture a significant amount of the national GHG inventory, and still likely include some additional sources not otherwise subject to PSD, while minimizing the potential for a sign ificant and administratively infeasible surge in PSD permitting workload for the initial phase. 100,000 tpy Several commenters (4567, 4745, 4903, 5052, 5077, 5113, 5335, 5367, 5712, 5742, 5809, 16411) assert that the PSD significance level should be no lower than 100,000 tpy . Their rationale included the following points:
 A utility

group (4567) contends that at 25,000 tpy , challenges from citizen groups could bring corporate maintenance programs to a halt.
 Utility

commenter 4745 suggests 100,000 tpy , but requests that EPA take time to study what the appropriate level should be.
 Utilities 5052 and 5113 believe the major source thresholds should be 100,000 tpy and assert that there is no policy rationale to support a lower significance level, while a highe r level will reduce the number of facilities that must apply for a PSD permit and help to alleviate some of the burden. Government agency commenter 5367 similarly believes that this higher significance level would prevent the unintended consequences and e conomic burden of the rule as written.
 Commenter 5052 adds that a lower significance level would achieve no environmental benefit because there is no available retrofit BACT for GHG modifications.
 Energy

sector commenter 5742 suggests 100,000 tpy because E PA should not establish the threshold and significance level at the same level as that set by the GHG Mandatory Reporting Rule (25,000 tpy), as PSD would involve substantially more than simply reporting emissions.
 Steel industry

commenter 5712 contends that the significance level should be 100,000 tpy (with threshold level for PSD of 150,000 tpy) to avoid regulating sources that should not be regulated.145

 Ceramics industry

commenter 5077 believes that selecting this significance level would reduce the regulat ory

burden on industry

and permitting agencies alike while at the same time target the largest and most pertinent sources for emission reductions. 150,000 An industry

commenter (5712) recommends that the significance level start at 150,000 tpy

(250,000 tpy

applicability

threshold) for the first phase, which should be implemented over a 5

- ye ar timeframe while information is obtained to determine whether a second phase is needed. If the second phase is proven to be needed, then a significance level of 10 0,000 tpy

(150,000 tp y applicability threshold) could be used. Higher, but unspecified, level

 State commenter 7935 recommends a PSD significance level that would not expand the number of sources subject to PSD requirements beyond current levels, noting that the 10,000 tpy

PSD significance threshold would cause too many administrative burdens for them.
 State commenter 3278 believes the proposed thresholds would cause conflicts with criteria pollutant BACT requirements for certain ty pes of sources. For example, if a source modifies with a 50 tons VOC increase, BACT for that VOC increase is a thermal oxidizer, resulting in a significant increase in GHG and an additional BACT requirement. The commenter recommends the PSD significance level for GHGs be set hi gher than 25,000 tpy

or else exemptions be provided for industries using combustion techniques for controlling regulated NSR Pollutants. Response: As mentioned in our responses above regarding general applicability thresholds, our reassessment of PSD mod ification actions was the primary basis for choosing a higher significance level in this final action than was proposed. We describe the rationale behind selecting the GHG significance level in more detail in section V.B of the preamble to the final rule. As that description makes clear, in establishing the significance levels, we generall y considered the same factors that commenters suggested. Our final burden anal ys is describing the impacts of different possible significance levels considered, and upon which our final rationale is based, is contained in the public docket for the final rulemaking (see Docket No. EPA

- HQ

- OAR

2009

- 0517). As noted above, we made a number of corrections to our estimates of modification, the most significant being the conside ration of minor modification activities for conventional pollutants that would become major PSD actions for GHGs. In addition, we received numerous comments from both permitting authorities and industry indicating that we underestimated the burdens associ ated with the proposed significance level range of 10,000 to 25,000 tpy CO 2 e. For this final action, we have established the PSD GHG significance level at 75,000 tpy CO 2 e, for both steps 1 and 2, to avoid creating excessive and unmanageable burden on the permitting authorities.146

6.4.3 Comments on the PTE Basis for Thresholds Consistent with the PSD and title V statutes and implementing regulations, we proposed that the major source and significance thresholds would be based on a source’s PTE for GHGs. We received several comments on this basis for the thresholds, which are summarized below. Comment: A number of industry

(3720, 4020, 4119, 4298, 4524, 4632, 4684, 5052, 5056, 5111, 5236, 5280, 5351, 5705, 5712, 5714, 5800, 16411), agricultural (3917, 5062, 5074, 5245), and government agency

(4867, 5367) commenters express or imply concern that using PTE for determining applicability will bring in man y sources that have actual emissions well below the thresholds. These commenters t ypicall y prefer the u se of actual emissions, which would be consistent with the GHG Mandatory Reporting Rule, spare thousands of smaller sources from PSD and title V permitting, and eliminate regulatory burden for both source and permitting authority . Representative comments include the following:
 Space heating applications in commercial buildings and other seasonal activities may become subject to permitting based on PTE even though actual emissions are significantl y lower than the threshold. The TSD suggests that commercial buildings operate at 15 percent of capacit y. (3720, 4524, 5705, 5800)
 As it did for the residential and commercial sectors, EPA needs to make an upward adjustment for industrial sectors to convert actual emissions to PTE because combustion equipment is s ized to satisfy short

- term demand due to the variability in weather and production. (5140, 5278)
 Farms use propane or natural gas

- fired heaters, as well as small motors and engines, which are often used intermittently or onl y during emergencies. Thus PTE is ill

- suited for farms, and EPA should define PTE consistent with actual emissions from normal and customary

use of equipment. The EPA should work with USDA and livestock producers to develop a meaning for PTE for such equipment. (5074)
 Applicability

s hould be consistent with the GHG Mandatory Reporting Rule. Many sources are below the 25,000 metric ton actual emission threshold in the GHG Mandatory Reporting Rule but over the English ton/PTE level proposed in the Tailoring Rule, which is exacerbated b y the fact that the GHG Mandatory Reporting Rule includes GHG emissions only

from combustion units, while the proposed Tailoring Rule includes GHGs from all emitting activities at a source. (4632, 4684, 4867, 5052, 5236, 5245, 5351)
 Sources with actual em issions below 75

- 90 percent of the major source threshold should have significantl y more than 1 year to submit their significant minor applications, which would allow permitting authorities to use their scarce resources to address the largest emitters firs t, and to make sure these sources are appropriatel y permitted before moving on to smaller sources. (4298) Response: In section III of the preamble, we discuss the basic requirement for using PTE in applicability

determinations for both PSD and title V p rograms. Under PSD, a "major stationary source" is an y source belonging to a specified list of 28 source categories which emits or has a147

PTE 100 tpy

or more of any

pollutant subject to regulation under the CAA, or any other source ty pe which emits or has the PTE such pollutants in amounts equal to or greater than 250 tpy

. Likewise, the title v program defines “major source” to be “any stationary

facility or source of air pollutants which directly emits, or has the PTE, one hundred tp y or more of any air p ollutant.” Therefore, we based our emission estimates, and thus the resultant number of affected facilities at different GHG emissions thresholds, for all sectors (not just residential an d commercial) on a PTE basis. The basis for the PTE estimates is de scribed in the Technical Support Document for Greenhouse Gas Emissions Thresholds Evaluation contained in the public docket. We do agree with commenters that there may be source categories and emission unit ty pes, such as space heating units that only op erate seasonall y, that lend themselves to consideration of redefining PTE. However, as we stated in the proposal, any such determinations will need to be done through a careful review of specific source categories and emission units, and likely through ru lemaking actions. As described in greater detail in section V

. E.1 of the preamble , we intend to assess streamlining options, tools, and guidance , including possibly alternative definitions of PTE for some categories, to reduce the costs to sources and per mitting authorities of GHG permitting. T he development and implementation of these techniques will be an integral part of our strategy during the phase

- in period, and we plan to undertake streamlining actions as quickly as possible. Technical information gathered during steps 1 and 2 will impact our step 3 rulemaking, which will provide an opportunity for us to use that experience and data to begin to propose streamlining approaches that need notice and comment rulemaking. Inaddition, it may be possible for some sources to adopt federally enforceable limits that more closel y represent their operational limits and actual emission levels, similar to such limits taken now for minor source permitting actions related to conventional, non

GHG pollutants. Howe ver, these actions will need to be developed through consultation with the applicable permitting authority

. 6.4.4 Comments Recommending Alternative Approaches to Applicability Comment: Several commenters suggested alternative approaches to applicabil ity as summarized below:
 A utility

commenter (5052) supports using the historic “s ynthetic minor policy” under which it was presumed that sources with actual emissions less than 50 percent of major source thresholds are minor sources. The commenter believ es this policy significantl y assisted states by

removing the need to permit thousands of sources.
 One state commenter (3915) recommends that EPA consider limiting GHG applicability to a smaller group, perhaps by performing a study to identify who the actual big polluters are and tailoring the numbers so as to only capture the main offenders.
 State commenter 4866 recommends two alternative approaches: o A two

- step approach, first looking at a source’s criteria pollutants for the 100/250 tpy threshold. Only if a source is considered major for criteria pollutants would GHG emissions be reviewed for PSD/title V applicability

.148

o A two

- tiered approach based on a source’s GHG emissions. Sources that fall under the 40 CFR 98.2(a)(1) of the GHG Mandatory Reporting R

ule Requirements would trigger PSD with 25,000 tons of CO 2 e and all other source categories would trigger PSD with 100,000 tons of CO 2 e.
 State commenter 3278 recommends the inclusion of additional tiers of applicability , with different emission levels f or establishing a title V major source and a PSD major source.
 A utility

and natural gas industry

commenter (4749) suggests that EPA consider a phased implementation that would apply to new sources initially

and address existing sources later, which woul d allow permitting authorities to ramp up resources and allow time to develop and provide to states guidance on GHG PSD for existing sources. The commenter (4749) points out that this approach has been used in EPA’s regulatory process for section 316(b) o f the CWA.
 Several commenters (4208, 4228, 4514, 4525, 5144, 5706, 6202, 6270, 6460) recommend that EPA separate criteria pollutant (and other non

- GHG pollutants) applicability

under PSD from applicability for GHGs, such that exceeding the threshold for GH Gs would not trigger PSD for criteria pollutants. The commenters suggest that the same approach could be applied to title V, whereby GHG emissions alone would not cause a facility

to be a regulated entity

under title V.
 State commenters 4864 and 5339 sugg est that EPA treat GHGs similarly to 112(r) pollutants and not require title V permits solely based on GHG emissions. [Section 112(r) establishes the program to prevent accidental release of hazardous substances, under which EPA has created the list of su bstances subject to the program (i.e., “section 112(r) pollutants”).]
 Industry

commenter 5147 suggests that EPA set the significance level based on the emissions per unit of power or steam produced, not based on a pure tons per year level. This is appropriate for GHG emissions because the overall goal is to reduce emissions per unit of power or steam generated. If EPA adopts this approach, there would be a level playing field for all utilities and industrial sources creating incentives to produce power on the lowest CO 2 basis.
 Industry

commenter 5340 urges EPA to allow offset credits submitted by a facility to be counted in determining the GHG emissions of a source for purposes of the PSD and title V programs. Under this approach, new facilities will be a ble to obtain and submit offset credits to avoid triggering the PSD and title V applicability thresholds. In addition, existing facilities will be able to submit offset credits to avoid triggering the PSD significance level when undergoing a modification, i.e., by applying the reductions represented b y the offset credits against emissions associated with the modification.
 Some semiconductor industry commenters (5141, 5143) opine that different triggering thresholds should be established for combustion gas GHG emissions and non

- combustion gas GHG emissions, especially for the PFCs emitted in small volumes as part of a dy namically evolving toolset and process configuration. The commenters do not suggest specific thresholds. Response: We agree with commente rs who suggested alternatives on the general basis of a phased approach, initiall y causing onl y the largest sources of GHG emissions to become subject to PSD149

and title V permitting requirements, because it would be more successfully implemented. We recogn ized that, on the basis of these programs being administrativel y feasible to implement, a phased approach that results in a manageable number of permitting actions was necessary

. Therefore, as part of this final action we have adopted a 2

- step approach fo r the initial phases of the tailoring process as described earlier in this RTC and at greater length in section V of the final preamble for the rule. We believe this 2

- step process addresses man y of the concerns raised by commenters regarding perceived pe rmitting burdens and at the same time includes program coverage of the largest GHG emitting sources.
We do agree with the commenter that suggests there may be opportunities to establish minor source permits for GHG emission sources, and nothing in this r ulemaking precludes consideration and application of existing minor source permitting process. However, we believe more research will be necessary on the ty pe of emission units and processes resulting in GHG emissions, and how they

operate over a wide range of utilization patterns at a variet y of source categories, before permitting authorities will be able to establish procedures and rules for developing minor source permit limitations. Many of the specific alternatives for applicability determination s mentioned by commenters, however, are not viable options from both a legal or programmatic standpoint. For example, sources that would be required to apply for title V permits solely as a result of being subject to requirements under section 112(r) are not required to appl y for such permits because CAA section 112(r)(F)(7) contains an explicit exemption from title V applicability for such sources. There is no comparable exclusion in the Act for GHG sources from title V applicability

. Alternatives that differentiate applicability by source category

t ype, either based on the GHG Mandatory

Reporting Rule or other criteria, were not considered consistent with the objective of establishing uniform applicability criteria based on the legal concepts of adminis trative necessity and absurd results as described in section V of the final rule preamble. We also disagree with a suggested alternative that only affects new sources initially , since this would in effect exclude GHG review of an y PSD actions, such as mod ification activity , at existing sources and any revisions to existing title V permits based on GHG

- related requirements. The concepts of applying offset credits from unrelated or offsite projects, and the use of emission indices instead of straight tonnag e amounts for applicability determinations, are currentl y not allowed under the PSD regulations and were not considered as a means to address administrative necessity concerns under this rulemaking. 6.4.5 Comments on the Proposed Phasing of the Thresho lds We proposed the Tailoring Rule as a phased program to bring GHGs into the PSD and title V permitting programs. The higher thresholds for GHGs discussed above are the first phase of our tailoring program. We also committed to evaluate the effectiven ess of this first phase and take other steps to improve the administrability of the permitting programs for GHGs within 5 ye ars from the effective date of the final Tailoring Rule. Finally , we proposed to promulgate within 6 years a follow

- up rulemaking that will establish a second phase of the tailoring program, i.e., either to confirm the continued use of the GHG permitting thresholds implemented in the first phase, or promulgate alternative GHG permitting thresholds or other streamlining150

techniques. We received some comments on our proposed phasing of the thresholds, which are addressed below. Comment: A number of state (4238, 4239, 8025, 8803), industry (2371, 4950, 5052, 5280, 5712), environmental (5139, 5306, 5448), and union (5342) commenters giv e at least qualified support to EPA’s proposal to phase in GHG regulation by subjecting the onl y largest sources to regulation in the initial phase. Examples of specific comments on EPA’s proposed phasing in of the proposed thresholds include the followin g:
 Some state commenters (4238, 4239, 8025, 8803) support EPA’s approach to provide a first phase of five years with a sixth year to complete additional rulemaking. o One of the state commenters (8025) adds that 3 y ears is too short a period as it may take regulatory

or legislative action to accomplish any streamlining efforts and that would not be enough time to determine whether the rule has provided an y benefit

– it may be that streamlining will produce nothing new, and it would be irresponsible at that point to continue on toward the statutory thresholds. o State commenters 4238, 4239, and 8025 do not support the alternative option of a “step down” approach in which thresholds are reduced in regular predetermined step

down levels, because this is an uncer tain and potentially

arbitrary exercise.
 A union commenter (5342) supports the intent and purpose of EPA’s proposal to evaluate the effectiveness of the PSD Tailoring R ule over a 5

- ye ar period, and will then make recommendations for potential changes to ap plicability thresholds.
 One industry

commenter opines that EPA will need time to implement its proposed streamlining approaches and that 3 y ears would not allow EPA sufficient time to do that. The commenter states that, even if EPA finalizes higher GHG ti tle V and PSD applicability

thresholds than proposed, EPA will still have a difficult time to complete all of the activities required for the implementation and evaluation of the initial phase of the GHG program within 5 years. (5280)
 One environmental gr oup (5306) supports the phased approach on the basis of “administrative necessity” because it will allow EPA to begin regulating the largest sources of GHGs quickl y, while collecting more information about smaller sources, as well as more full y considering streamlining options for subsequent phases.
 Two environmental group commenters (5139, 5448) support EPA’s stated intent to ensure that NSR is fully

- implemented immediately for the largest polluters in order to maximize pollution reductions.
 One fuels sect or commenter (5711) supports a phased

- in approach, but not if it leads to imposing the statutory

100/250 tpy

thresholds

– or thresholds lower than 25,000 tpy

– on residential and commercial natural gas custome rs. The commenter states that p hase 2 should s till use higher thresholds for residential and commercial customers, depending on results of the s treamlining tools developed in p hase 1.
 One fuels sector commenter (2369) supports the 5

- ye ar time frame, but suggests that to avoid overburdening regulatory agencies and sources during the 5

- ye ar evaluation period, permitting should be required only for those sources that would be required to permit without consideration of GHG emissions.151

 An operator of waste

- to

- energy facilities (2371) supports the phased app roach, given that the financial impact of the rule on industry has yetto be determined because the technology

that plants triggering the PSD threshold will have to install is not y et been specified. This commenter adds that EPA will be able to adjust the PSD significance threshold, as needed, based on more accurate information such as the results of Phase I, and the results of other GHG control regulations and legislation.
 One industry

commenter (4950) agrees that onl y large emitters should have to meet the permitting requirements in the initial phase, but is concerned about the impact the cost of large emitters’ compliance will have on downstream end users, such as the retail industry

.  An industry

commenter (5712) states that only currently regulated PSD facilities should be regulated at first to maintain the current status quo. Other larger facilities should be considered after 5 ye ars at lower triggers and onl y after every thing is validated related to the need to regulate.
 An industry

commenter (5052) b elieves that the history of the CAA demonstrates a phasing of regulations b y pollutants and by industry , which is consistent with the approach that EPA has proposed for GHGs. The commenter presents an extensive history of air pollution laws in the U.S. fr om 1955 forward and of the implementation of ozone depleting substances ( ODS ) controls to illustrate that air pollution control has alway s been incremental and pragmatic. An environmental group commenter (5139) (who supports the intent to implement NSR i mmediately

for the larges sources) states that EPA has failed to demonstrate that 6 years are necessary to study and implement NSR for sources emitting less than 25,000 tpy . The commenter states that while EPA discusses predictions of the effect of implem enting individual streamlining measures and maintains that none of them alone would be sufficient to overcome the claimed administrative logjam, EPA never analy zes why it cannot administer the permitting programs as required if all of its proposals are imp lemented simultaneously . The commenter makes the following points in support of this position:
 Under title V of the Act, major facilities are not required to submit title V permits until 1 ye ar after they

become subject to the permitting program. The EP A’s analy sis is flawed because it has not anal yz ed what combined effect the full implementation of its streamlining proposals during that period would have to reduce the cost, complexity , and number of title V permits that would have to be submitted at that time.
 The issue of BACT for GHGs has been in the forefront of EPA consideration since the Massachusetts v. EPA decision (i.e., since April 2007), and EPA has made considerable progress on this issue aided by thousands of public comments. While the def inition and application of BACT for GHGs will be significantly refined and expanded in coming ye ars (as is the case for all other air pollutants as well), EPA is incorrect to claim that insufficient information exists to at least estimate costs and streaml ining efficiencies of BACT and/or general permitting requirements.
 The EPA suggests that calculations of GHG emissions from commercial and residential sources should be based on actual usage rather than their PTE, but EPA’s argument that it should be all owed to redefine PTE as “actuall y emitting” is not justified because the permits themselves could be streamlined b y including legall y and practically enforceable general limits on operational parameters. But regardless of whether streamlining occurs throu gh general rulemaking or a simplified permit process, EPA fails to explain why the152

cost and time savings that could be achieved if such measures were adopted and combined with other streamlining procedures cannot work together so that NSR for GHGs can be i mplemented for all sources as required by law. The commenter asserts that EPA should not adopt a 6

- ye ar time frame for sources below 25,000 tpy , but rather should move as expeditiously as possible to full y implement the NSR program to achieve all availabl e pollution reductions as the statute and common sense require. A state commenter (4521) recommends that EPA to delay GHG permitting until there is accurate monitoring and reporting data available. The commenter believes that states should be given addi tional time (at least 1 y ear after March 2011, but more appropriately , 3 y ears for which there is ample precedent) to assess the reporting data and plan for an y additional permitting needs. One commenter (4518) states that the basis of the 5 y ear period is unclear

– it is not clear if all operating permits expire after 5 years and then need to be renewed, or if permits are simpl y reviewed every

5 y ears. The commenter believes that if permits expire after 5 years, and then undergo a speed y renewal process , then a 5

- year period for the first phase is sufficient since all operating permits will either be newly issued or renewed within the period. However, the commenter is concerned that many permitting agencies have delay s in their permitting process and th at permitting agencies would need to hire a significant number of permit engineers in order to meet the permitting requirements, which could take up to 2 years. The commenter (4518) also believes that EPA should explain what kind of oversight will be ong oing within the initial phase. The commenter notes that EPA may need to work closel y with permitting agencies to monitor the permit process within each permitting agency to determine compliance with standard procedures as established by the EPA, and fundi ng will be an important issue, particularly within the initial phase of the process. The EPA has indicated a willingness to assist permitting agencies with the establishment of e

- permitting applications and other means of streamlining the permit applicati on process, which the commenter believes should prove useful. Although facilities will have to supply information on estimates of GHG emissions for renewal of permits, the commenter contends that it is not clear if the rules for calculating estimates will change, or if there will be less deviation allowed for these estimates. The commenter believes that this could prove to be a critical point regarding the significance level, and for new facilities and modifications that result in GHG emissions that are c lose to the threshold. Response: We agree with commenters who support the phased

- in approach of the GHG Tailoring Rule. Our final action reflects a multi

- step process that we believe will create a manageable workload for the increase in permitting actio ns that will occur due to the regulation of GHG emission sources under the PSD and title V programs. In our final action we do not include any automatic reversion to the statutory thresholds for GHGs; instead, we have established the initial steps of a mu lti

- step phase

- in of lower applicability thresholds with a commitment for further regulatory

activity and review for an y lower GHG threshold adoption. We believe this process will provide substantial opportunity for permitting authorities and sources to e stablish enough153

experience and information, and to provide significant real

- world feedback to EPA, so as to better inform decisions on future phase

- in steps. For complete discussion of the legal and policy rationale behind our phased

- in approach, includin g the basis for the chosen thresholds and time periods under s teps 1 and 2 and the need for further study on the implications of adding smaller GHG sources , please refer to s ection V.B of the preamble. We disagree with the one commenter that does not bel ieve that our proposed five

- ye ar evaluation study

is necessary

to evaluate implementation issues for smaller sources. We believe, as we did at proposal, that this time is necessary to adequatel y examine the permitting authorities’ progress in implementing the PSD and title V programs for GHG sources as well as EPA’s and the permitting authorities’ progress in developing streamlining methods. As we discussed in the proposal, and reiterate in this final action, we do not have sufficient information at this time to determine the applicability , effectiveness and legal viability of the various permitting streamlining techniques proposed. For reasons discussed in more detail in section V.E.1 of the final preamble regarding streamlining, we are not now able to d etermine how such techniques will be implemented or whether they will prove viable or effective. We agree with the commenter that these measures may reduce the scope, cost, and complexity of these programs, but there is considerable uncertainty as to the extent of this effect. EPA will first need to collect and anal yze small source data that we do not currently have

– because these are sources that EPA has not tradit ionally regulated

– in order to assess which of these techniques are viable or effective f

or such sources. In general, EPA will then need to conduct notice

- and

comment rulemaking to establish the approaches, and that rulemaking will need to address various legal and policy

aspects of these approaches. After that, the permitting authorities wi ll need some time to adopt the streamlining techniques as part of their permitting programs

. Throughout this entire phase

- in process, EPA will be interacting with permitting authorities to obtain feedback on the real

- world implementation. As we proposed , we are establishing in the final rule an enforceable commitment to act within 5 y ears to complete a study projecting the administrative burdens that remain for small sources after permitting authorities have had time to secure resources, hire and train s taff, and gain experience with GHG permitting for new t yp es of sources and technologies, and after EPA has had time to develop (and states have had time to adopt) streamlining measures to reduce the permitting burden for such sources. We will use this stu dy to serve as the basis for an additional rulemaking that would take further action to address small sources. And to clarify for the commenter that suggested that the 5 y ear study period is linked somehow to the operating permit expiration and renewal pr ocess, we did not consider the operating permit cycle as a basis for the 5 y ear study

period.154



## Chapter 7. Comments on the Economic Impacts of the Proposed Rule 7.1 Economic/Societal Impacts and the Regulatory Impacts Anal ys is of the Rule Section IX of the proposal preamble (74 FR 55337, October 27, 2009) presents EPA’s assessment of the economic impacts of the proposed rule, including the expected benefits and costs of the proposed rule on affected entities. At proposal, we concluded that the pro posed rule lifts, for a period of 6 ye ars, the burden to obtain a title V operating permit required by the CAA for smaller sources of GHGs and the burden of PSD requirements for smaller new or modifying sources of GHGs. We also concluded that, for larger GHG sources, there are no direct economic burdens or costs as a result of the proposed rule, because requirements to obtain a title V operating permit or to adhere to PSD requirements of the CAA are already mandated b y the CAA and b y existing rules and are not imposed as a result of the proposal. At proposal, we conducted an RIA that provided the details of the benefits o f regulatory relief that smaller GHG sources will experience in terms of costs avoided as a result of the proposal and the potential for social costs in terms of foregone environmental benefits during this 6

- ye ar period. We concluded that the proposal would provide relief to small entities (as defined by industry category for stationary

sources by

the SBA definition). We also assessed the social costs of the proposal. The social costs represent the foregone environmental benefits that would occur if regulatory relief were offered to small sources of GHG emission sources, as proposed. These benefits are those attributed to title V and PSD permitting programs in general. We acknowledged at proposal that it was not possible at the time to quantify

these social costs, but stated that the universe of possible emissions that would be regulated b y sources excluded under the Tailoring Rule i s small compared to those that would remain subject to title V and PSD permitting. We also expressed our interest in continuing to use regulatory

and non

- regulatory

tools for reducing emissions from smaller GHG sources because we believe that these tools will likely result in more efficient and cost

- effective regulation than would case

- by

- case permitting. Comments received on the economic and societal impacts of the proposed rule and our RIA are presented in this subsection. Comment: Several commenters ( 2504, 2797, 3278, 3512, 3607, 3741, 3858, 3859, 3860, 3906, 3915, 3916, 3998, 4020, 4021,4106, 4122, 4123, 4123, 4154, 4209, 4210, 4238, 4241, 4318, 4512, 4519, 4521, 4522, 4523, 4555, 4574, 4632, 4667, 4745, 4747, 4749, 4770, 4771, 5169, 4794, 4859, 486 2, 4864, 4865, 4866, 4867, 4868, 4871/5063/5605, 4903, 4949, 4950, 4952, 4953, 4989, 4991, 4992, 5005, 5038, 5045, 5056, 5059, 5073, 5080, 5082, 5083, 5089, 5104, 5110, 5114, 5128, 5135, 5136, 5140, 5141, 5142, 5143, 5148, 5179, 5184, 5198, 5215, 5224, 523 6, 5243, 5245, 5257, 5258, 5276, 5277, 5278, 5279, 5280, 5304, 5307, 5315, 5317, 5327, 5328, 5329, 5336, 5337, 5339, 5340, 5343, 5344, 5346, 5347, 5351, 5367, 5392, 5411, 5417, 5444,155

5449, 5451, 5452, 5453, 5454, 5504, 5525, 5573, 5601, 5602, 5603, 5605, 5 606, 5607, 5708, 5712, 5713, 5729, 5741, 5743, 5767, 5769, 5771, 5784, 5785, 5787, 5789, 5803, 5808, 5844, 5884, 5885, 5922, 6141, 6201, 6203, 6359, 6491 7125, 7127, 7128, 7130, 7131, 7132, 7133, 7134, 7136, 7192, 7203, 7204, 7212, 7294, 7295, 7295, 7935, 7961, 7986, 7993, 8015, 8071, 8089, 8212, 8272, 8300, 8301, 8303, 8322, 8396, 8400, 8401, 8405, 8521, 8533, 8581, 8584, 8585, 8803, 10432, 14710, 15050, 15051, 16411) express concern about the economic impacts of the proposed rule on industry and the overa ll U.S. economy /societ y (including costs passed on to the general public). These commenters state that EPA’s effort to regulate GHG emissions will impose too great a burden on businesses in America, given the status of our econom y (especiall y if regulated under the CAA). Specific impacts listed by commenters include added costs (including increased energy costs) and permitting delay s that hamper the business sector’s ability to create jobs, grow, and modify , thus delaying recovery from the recession. Sev eral commenters believe that job s will be lost. Other commenters express concern that businesses wi ll be forced to relocate oversea s (causing leakage of jobs and emissions), which would ultimately

negativel y affect the environment because they would be re locating to countries that do not have the restrictions and requirements found in the United States. Some commenters contend that the proposed rule will not deliver regulatory relief to small entities as intended as sources will still be subject to state laws and minor NSR. Several of these commenters express concern over the proposed rule’s impact on industry and the econom y as a whole. A sample of representative comments is presented in the following bullets:
 The commercial/industrial community may no t remain economicall y viable if it must absorb another costly

and complex lay er of environmental regulation, especiall y in this period of economic hardship when man y firms are barel y holding on. Jobs could be lost and local economies could suffer. (5351, 5573, 5767, 7128) Regulation of GHGs is an unfunded mandate that will cause prices to rise b y approximately 17 percent for U.S. firms, making U.S. goods uncompetitive and costing jobs. (5712)
 The requirements would slow down or stop many proposed new bu sinesses or the expansion of existing ones and impose a heav y, costly blanket of regulation at this particularl y ill

- chosen time. The inability for industries to increase production by adding more equipment in a short time would hinder their ability to me et customer needs and would stifle productivity

and true job growth. (3860, 4770, 5712, 5713, 5789) Economic growth will be stifled because of the delay associated with: o Permitting for sources/modifications that previously were not subject to PSD (up to 12 to 18 months). (4241, 5329) o The backlog of permits at state agencies overwhelmed by the increased permitting load. (4770, 5343, 5524, 5573, 5672, 5713, 5744, 5884) Alternativel y, the government will have to expand, throwing our country further into d ebt. (5573) o Litigation over permits. (7131)
 Regulation of GHGs puts U.S. businesses at an economic disadvantage with no demonstrated environmental benefit. (3915, 4521, 4667, 4864, 4871/5063/5605, 5179, 5789, 7986) Controlling GHGs in the manner propos ed by EPA may

have some beneficial effects on air quality , but will have little to no measurable effects on climate, and great detrimental effects on the econom y and our standard of living. (5307)
 Regulating GHG emissions will increase energy costs (espec iall y natural gas), hurting all156

industry sectors. (5179, 5607, 5729, 6491)
 Companies will be forced to redirect resources

– that could have been used for growth and investment

– for regulatory compliance efforts. Additionally , these regulations will resu lt in production cuts, reduced consumer spending, increased unemplo yment, higher energy costs, and ultimately

a much slower economy . (5789)
 Changing the emissions standards is an expensive proposition for businesses. This is a time of extreme economic un certainty and many

companies cannot afford to alter their internal sy stems or make costly operational modifications in order to comply with drastic rule changes. (4209)
 Many facilities below the 25,000 tpy threshold will nevertheless be affected, as sourc es over the Tailoring Rule‘s thresholds and significance levels will likely pass their compliance costs through to end users through increased prices. For man y end users, increased costs, including energy costs, could be the difference between stayingin business and closing up shop. (4950, 5110, 7128) The proposed regulation will cost American consumers a staggering amount of money . (5136)
 Title V permitting entails significant costs and paperwork but does little, if any thing, to reduce CO 2 and GHG emi ssions. (3915, 4521, 4632, 4864, 4871/5063/5605, 7986)
 Uncertaint y is a significant impediment to economic recovery right now, and the proposed GHG rule onl y adds to this sense of uncertainty . (4123, 5884) The rule will certainl y be challenged in court, adding to uncertainty around business expansion. (5713)
 The proposed PSD/title V GHG Tailoring Rule would result in economic disruption and subject regulated industries to significant business investment and legal compliance risks. (4106)
 Regulation of GHGs under the CAA will discourage projects meant to improve efficiency or otherwise make current businesses more environmentally

- friendl y. (4667, 5344, 16411)
 Even if new green jobs are created, they would be more than offset by job losses in the traditi onal energy

sector and across all existing sectors. (3860, 5729) Several commenters (0331, 3953, 4512, 4632, 4749, 4771, 4786, 4871/5063/5605, 5038, 5073, 5142, 5245, 5411, 5602, 5743, 5785, 5922, 6141, 7295) express concerns regarding the economic impac t that they believe the proposed Tailoring Rule would have on specific industries/affected entities. Representative comments are presented in the following bullets:
 Agricultural sector: o Permitting costs, “citizen suits,” and the uncertainty associated w ith the proposed rule are very concerning. Many

local economies rel y heavily on the livestock industry

. (4632, 5245, 5602, 5743) o Some agricultural commenters (3953, 4512, 5602) include the following footnote to their concerns regarding the burden their i ndustry would face if title V fees were imposed on emissions of GHGs from livestock: “Section 424 of the FY 2010 Interior

- Environment Appropriations Act prohibits the expenditure of funds to promulgate or implement any regulation requiring title V permits based on biological processes from livestock. Thus, for at least FY 2010, livestock producers will not be required to obtain title V permits based on emissions from livestock.”
 Oil and gas industry : The industry and associated jobs will move overseas wh ere emission restrictions are significantl y less stringent or do not exist, therefore resulting in157

a net increase in global GHG emissions and an increase in our country ’s dependence on foreign oil. (4871/5063/5605)
 Refining, production, and energy industry as a whole: The proposed rule would have a major impact on energy

supply , fuel prices, and energy security for the entire country

. (7295) It will increase the country ’s reliance on imported energy . (5607)
 Natural gas industry : The demand for natural gas is expected to increase due to GHG regulations, and the natural gas industry will need to significantl y expand its transmission infrastructure, especiall y in the Appalachian region. The proposed PSD provisions would affect the construction and modifi cation of interstate natural gas pipelines and supporting facilities, and the title V provisions would affect a number of existing natural gas pipeline facilities and potentially

affect the smaller facilities associated with the well heads and gathering pi pelines. Permitting delay s and uncertainty could worsen an already ailing econom y in the region, which will be facing major negative economic impacts from the expected effect of GHG regulation on the coal industry in Appalachia. In addition, permitting d elay s may

discourage the use of larger compressor stations in favor of smaller ones, with the result that the economies of aggregation would be lost and a far larger environmental footprint and greater GHG emissions would result. (4749, 6141)
 Rural electric cooperatives: Because they are not

- for

- profit, cooperatives will be forced to pass along all costs of meeting an y new requirements to their consumer

- owners. Such increased costs for electric power, particularl y in rural areas served b y cooperatives, h ave negative impacts on economic development and jobs. (4122, 4318, 4523, 4992, 5038, 5080, 5089, 5114, 5128, 5327, 5601, 5741, 6459, 8301) Because cooperatives have a disproportionate amount of fossil

- fuel fired generation when compared to the electric utility industry as a whole, these negative impacts could be disproportionatel y higher for rural electric cooperatives and their consumer

- owners. (5038)
 Ethanol industry : The 25,000 tpy GHG emissions threshold would force every commercial

- scale ethanol p lant in I owa to obtain a title V permit, adding economic and regulatory

burden to ethanol producers following one of the most challenging periods in the 30

- ye ar history

of the modern ethanol industry. Because of their low emissions of conventional pollutants, the vast majority of today’s ethanol plants qualify for a s ynthetic minor source permit, not the more burdensome title V permit. (5142)
 Rubber and tire manufacturing industry : Growth will be stifled, which is contrary to the intent of the statute. The tire manufacturing industry is a trade sensitive industry , and the cost (direct transactional costs, the cost of delay , the regulatory uncertainty and its affect on the compan y’s abilit y to raise capital, and the cost of BACT) would increase at U.S. pl ants relative to foreign competitors in the global rubber manufacturing industry

. Such competitive disadvantage would move production from the United States to other countries which have less stringent GHG controls, resulting in carbon “leakage” such that total global emissions will increase. (5922)
 Flat glass industry : The industry alread y employ s many

methods to increase fuel burning efficiency and optimize the use of scrap glass which helps to reduce the GHG emissions from the glass melting furnace (4 771). Increased costs at U.S. plants (as listed in the previous bullet) will result in carbon leakage and an increase in net global GHG emissions. (4771, 5169)
 Semiconductor manufacturing: The United States will lose jobs in this sector, and become mo re dependent on non

- U.S. semiconductor suppliers for the chips that are the158

‘building blocks" of the electronics industry . These chips help enable new and greener technologies and support the creation of green technology and green energy

jobs. (5411) Th e industry

must be able to predict potential regulatory requirements in order to effectivel y design future processes and controls (which are developed over a 10

- ye ar period or longer) to meet its regulatory obligations and remain a leader in the highl y competitive semiconductor industry . The proposed regulation of GHGs would be potentially

devastating to U.S. operations due to the inherent delay and regulatory uncertaint y and the reversal of years of planning and extensive resources devoted to managing regulatory

obligations. (5417)
 Brick manufacturing: An expensive and length y major NSR permitting process will further damage the industry ’s potential to recover during these difficult economic times. (5073)
 Commercial real estate sector: The Tailoring Ru le will affect property values and operating costs. (5785)
 Homebuilding sector: The cost to homebuilders of raw materials, commodities (such as concrete and glass), and energy will increase substantially because the industries that supply the housing ind

ustry will be subject to these CAA permitting obligations. (4794, 5104, 6201, 6203) One of the commenters (5104) provides several pages explaining the impact of the proposed rule on the ability of individuals to afford to buy homes and the impact on home energy

costs. The commenter estimates that between 337,000 and 1.57 million households would be priced out of the home buying market, and an increase in energy costs of from about $200 a y ear to about $1,200 a y ear.
 California’s transformation of the ele ctric generator sy stem to greater reliance on renewable generation: The federal permit gridlock that could result from the proposed rule has the potential to interfere with California’s transformation, which could retard, rather than facilitate, reduction s in GHG emissions from the electricity sector. (4786)
 Low

- income households: Higher energy prices fall disproportionately on low

- income households since they

spend a larger percentage of their income on energy . (5789) Several commenters express concern about the “leakage” of jobs and GHG emissions to outside the United States, resulting in a net increase in GHG emissions (4667, 4771, 4859, 4871/5063/5605, 5082 , 5169, 5224, 5302, 5337, 5922, 7134, 8089, 8303, 8581, 10432 ) . As set out in the bullets abov e, this concern was specifically noted for the oil and gas industry (4871/5063/5605), the tire manufacturing industry (5922), and the flat glass industry ( 4771, 5169 ). One commenter (5337) opines that the implications of leakage are complex and reach beyo nd the immediate economic harm to the regulating country , and that such leakage also presents a threat to international trade relations and to international agreements on limiting GHGs. The commenter cites an interagency report ( The Effects of H.R. 2454 o n International Competitiveness and Emission Leakage in Energy

-Intensive Trade

-Exposed Industries (December 2, 2009)) which was completed as part of the consideration of proposed cap and trade legislation, and notes that it identifies which industrial sect ors are most vulnerable to leakage. The commenter suggests that this report provides a workable and well supported list of industries that should be exempted from PSD regulation of GHGs, which should be supplemented with an “individual showing” process fo r additional sectors to qualify for a leakage

- protecting exemption. This commenter strongly encourages EPA to exempt the entire industrial sector from GHG regulation under PSD. Another commenter (5169) provides a figure illustrating a detailed159

rebate s ys tem included in the Waxman

- Markey and Boxer

- Kerry bills to prevent leakage for energy - intensive industries (Waxman

- Markey ; S. 1733, Boxer

- Kerry). Several state commenters address the economic impacts of the rule. All of these state commenters are concern ed over the increased costs that would result to their states. (2797, 3858, 3916, 4154, 4238, 4521, 4786, 4989, 4871/5063/560 5, 5135, 5148, 5198, 5339, 7935, 8803) According to state commenters, at a time when state budgets are being cut and fee revenue is down, agencies are laying off staff, implementing furloughs, reducing salaries, enacting hiring freezes, and taking other cost

- reducing measures, the ability to increase staff and obtain additional resources simply does not exist and will not exist for the foreseeable future. (4989, 5135, 5198 , 19144 ) Several other commenters (5179, 5258, 5346, 7961) express concern that the proposed Tailoring Rule will have an adverse affect on a specific state’s econom y (sometimes disproportionately

to other states). One commenter (5258) states that the proposed changes will severel y affect the manufacturing industry , specifically in New Hampshire. Similarly , another commenter (7961) is concerned that Kansas, which is fuel intensive and reliant on agriculture and it s complements, would find itself disproportionately harmed by

the proposed GHG regulations. Three commenters (5140, 5179, 5278) address potential effects on Texas. An industry group representing refining, petroleum, and electric generation industries in Texas (5278) indicates that if GHGs are addressed in the permit

- by

- permit manner EPA proposes in the Tailoring Rule, these industries, and Texas industry overall, will be disproportionately affected because of Texas’ status as a major energy and chemical p roducer. Another commenter (5179) notes regulation of GHG emissions under the CAA would significantly harm the Texas chemical industry and Texas manufacturing as a whole. The commenter asserts that chemicals are the number one export from Texas with over $30 billion annually and are the top Texas manufacturing sector, and account for 60 percent of the U.S. chemical production. A third commenter (5140) indicates that it would not be economically viable to spend the approximately $4.6 billion necessary

to permit newly

subject sources pursuant to regulation under the CAA in Texas. The group feels that to the extent that industry does not leave the state to avoid permitting costs, the costs of regulation may be passed on to consumers in the form of increased energy costs. The commenter estimates that, in Texas alone, increased energy costs will result in a loss of $12 to $16.6 billion in Gross State Product ( GSP ) per year b y 2020 and $44.3 to $52.2 billion by 2030. [Texas Advisory

Panel on Federal Environme ntal Regulations, Comments on the Environmental Protection Agency ’s Proposed Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act (June 23, 2009) at p. 21] Several commenters (5124, 5140, 5181, 5191 , 5278, 6609) assert that EPA’s proposed rule offers no relief to regulated entities obligated to comply with state law and minor NSR permitting requirements. Implementation

- related comments from these commenters and other160

commenters, and EPA’s response to implementation

- related concerns, are presented in Chapter 8 of this document. Many commenters (2371, 3512, 3858, 4095, 4106, 4122, 4298, 4318, 4319, 4521, 4522, 4523, 4684, 4745, 4747, 4770, 4862, 4865,8545, 4952, 4992, 5038, 5062, 5063/5605, 5073, 5080, 5082, 5083, 5085, 5086, 5089, 5110, 5111, 5114, 5124, 5128, 5133, 5137, 5139, 5140, 5141, 5143, 5179, 5181, 5183, 5224, 5257, 5277, 5278, 5279, 5280, 5317, 5327, 5337, 5339, 5342, 5343, 5347, 5367, 5390, 5417, 5601, 5718, 5741, 5773, 5787, 5858, 5886 , 6459, 8015, 8283, 8301, 8400, 8459, 10432) believe that EPA’s RIA understates the impact of the proposed rule or that EPA’s analy sis is insufficient or flawed. Comments on specific aspects of EPA’s methodology

for estimating the burden of the proposed r ule are addressed in section 6.3 of this document. Examples of the broader comments on the RIA are presented below. Numerous commenters contend (2371, 3858, 4095, 4106, 4122, 4318, 4521, 4522, 4523, 4745, 4770, 4862, 4870, 4952, 4992, 5038, 5062, 5063/56 05, 5073, 5080, 5082, 5083, 5085, 5089, 5110, 5114, 5140, 5128, 5133, 5137, 5143, 5179, 5181, 5257, 5277, 5278, 5317, 5324, 5327, 5337, 5342, 5343, 5367, 5390, 5601, 5741, 5787, 5886, 6459, 8283, 8301, 8459, 8545) that EPA has not fulfilled its requirement to fully evaluate the impacts of regulating GHGs under the CAA, which necessitates a full RIA of the burden on regulated entities (and state permitting authorities), and an opportunity for the public to comment on such anal ys is. The commenters believe th at the proposed rule fails to provide a comprehensive anal ys is of the regulatory burdens created b y PSD and title V for GHGs in that the RIA solely focuses on the avoided permitting costs for sources of GHG emissions when compared to statutory thresholds and does not evaluate the newl y imposed costs for sources above the proposed thresholds and significance levels. In addition, they

assert that the RIA is inadequate because it contains no assessment of the policy or economic consequences of regulating the remaining sources under PSD and title V. Representative comments enlarging on this theme are summarized below:
 The RIA is incorrect in stating that “larger sources” of GHGs will not be economically impacted because requirements to obtain a title V operati ng permit or to adhere to PSD requirements are alread y mandated b y existing rules and are not imposed as a result of this proposed rulemaking. (5083, 5110) The EPA's assertion that larger sources will not experience an impact stands in contrast to its st atement in the section 202 proposed rule that the regulatory

impacts of the PSD and title V obligations would be addressed in the Proposed Tailoring Rule. (5083)
 The EPA has provided no assessment of the implications of its actions for large stationary so urces, such as power plants and manufacturing facilities, or for the nation’s econom y. Such an impact anal ys is is required because EPA could have chosen not to regulate GHGs at all. (2371, 3858, 4095, 4122, 4318, 4521, 4522, 4523, 4745, 4862, 4870, 4952, 4992, 5038, 5080, 5082, 5085, 5089, 5110, 5114, 5128, 5137, 5179, 5181, 5257, 5277, 5317, 5327, 5337, 5342, 5343, 5601, 5741, 6459, 8301, 8545) This violates section 307(d) of the Act and the APA. (4870, 5181) Because EPA did not anal yz e these impacts for the LDVR, it must do so under the T ailoring R ule. (5181)
 The EPA has failed to satisfy its obligations under the CAA and administrative law to assess and solicit comment on the full range of impacts of its proposed regulation of GHG emissions under th e CAA. This is more than a procedural flaw in EPA’s rulemaking process

– it is a failure to assess the true impacts of its actions and to consider161

less burdensome and costly alternatives to regulating GHGs under the CAA. (4122, 4318, 4522, 4523, 4952, 49 92, 5038, 5080, 5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741, 6459, 8301) The EPA must not regulate in an arbitrary way , something it does when it fails to “consider all of the relevant factors and demonstrate a reasonable connection between the facts o n the record and the resulting policy choice.” Small Refiner Lead Phase

-Down Task Force v. EPA, 705 F.2d 506, 519 (D.C. Cir. 1983) (quoting Sierra Club v. Costle , 647 F.2d 298, 323 (D.C. Cir. 1981)). The EPA’s assessment of the impacts of regulating GHGs under the CAA is so clearl y deficient that there is no question that it is arbitrary under the CAA and basic principles of administrative law. (5317)
 A comprehensive RIA is needed to determine the economic impact on mid

- sized and small businesses with pr ocess emissions that would otherwise avoid the PSD program. (5083, 5133, 5143, 5367)
 The EPA has failed to assess costs and benefits associated with “leakage” of jobs and GHGs emissions. (5337, 8459)
 EPA’s anal ys is must address individual industrial sect ors that would be impacted by regulation of GHGs under the CAA. (5143)
 The anal ys is should include the impact of appl yi ng minor NSR to GHGs. As written, SIP

- approved minor NSR programs will be affected by the proposed regulation. While, as EPA states in the proposal, it is true that the CAA does not require minor NSR programs to address non

- NAAQS pollutants, the facts are that states have adopted applicability

provisions identical to the PSD program for minor NSR. The EPA has approved those programs as part of SIPs

– SIPs that EPA deemed “necessary to attain and maintain” a NAAQS pursuant to section 110. Given this approval and federalizing of the state regulations, EPA cannot now claim that minor NSR implications are irrelevant to this action. To the extent EPA interprets the Act and its PSD regulations to require that PSD be triggered based on a non

- NAAQS pollutant, EPA cannot ignore the implications for SIP

- approved minor NSR programs using the same language. As a practical matter, EPA needs to addr ess and resolve the enormous and unreasonable burden imposed b y regulating GHGs under state minor NSR programs. (5140, 5181, 5278)
 The costs for a PSD permit (in actual fees, consulting fees, and cost of lost time) should be included in an y assessment and EPA should justify that each cost (and the total cost) is reasonable, based on environmental benefit. (5073)
 The EPA has a dut y to conduct an RIA of the e ffect the proposed revisions to 40 CFR 51 and 52 have on stationary sources of GHGs as required in s ection 317(2) (sic) of the CAA (but it has failed to meet this obligation. (5082) [Note: Section 317(a)(4) would apply to this PSD rulemaking.]
 The proposed Tailoring Rule fails to recognize a source’s regulatory costs and burdens. Sources must spend co nsiderable time and resources on planning, anal ys is, design, maintenance and operational plans, training, standard operating procedures, etc. to manage ongoing regulatory obligations in addition to monitoring, recordkeeping, and reporting requirements typi cally specified in permits to demonstrate compliance. Similar expenditures and resources are necessary to ensure compliance with potential regulatory requirements for continuing changes in equipment and operations. Even newly permitted title V sources of GHGs, which EPA erroneously states “would be issued permits that do162

not include an y applicable requirements,” would be subject to burdensome title V requirements (e.g., compliance certification, deviation reporting, annual or semi

- annual monitoring report ing) and more stringent monitoring (including CAM) under 40 C.F.R. part 64), recordkeeping, and reporting than would otherwise be required to demonstrate compliance with non

- GHG applicable requirements under existing minor source permits. (5417)
 If EPA el ects to interpret CAA section 165 to automatically require PSD permits for GHGs, then it must fully

consider all the costs that stem from that interpretation. Absent full consideration of those costs, the Tailoring Rule (and EPA's related LDVR and Reconsi deration Rule) will be arbitrary and capricious. See American Iron & Steel Inst. v. EPA , 115 F.3d 979, 997 (D.C. Cir. 1997) (remanding because EPA "adopted a cost estimate that can onl y be described as fanciful" and "failed to address whether the measure is cost

- justified"). (5277)
 The EPA is effectivel y playing a shell game with respect to its statutory obligation to provide a thorough RIA to accompan y its proposal. The EPA’s strategy will render such a rule vulnerable to legal challenge. A rule that f ails to address relevant comments may be held arbitrary

and capricious (

American Mining Congress v. EPA ). (4862)
 EPA needs to quantify the costs to federal, state, and local governments and the regulated community , assess the benefits associated with redu ction of GHG emissions, and show that the benefits to U.S. citizens of such regulations outweigh the costs. (5063/5605) One commenter (5139) believes that EPA’s cost

- benefit anal ys is is seriously flawed because EPA generally

characterizes the foregone b enefits of reducing GHGs as negligible, while the savings achieved through eliminating compliance with the CAA for sources below the proposed thresholds are extremely large. Even though EPA acknowledges the numerous, significant uncertainties involved in its assumptions throughout this rulemaking, it is somehow able to set precise price tags on the administrative burdens purportedl y avoided by “small” sources that would be exempted from compliance by the Tailoring Rule. EPA claims that these sources would save some $52 billion and $1.15 billion, respectivel y, in title V and PSD permitting costs. Yet, EPA say s that it simply cannot estimate the other side of the coin: “It is not possible at this time to quantify the social costs of avoided BACT.” The EPA compounds the error b y combining this assertion with contradictory claims that the allegedl y unquantifiable benefits of compliance “are likel y to be small,” and that, “while it is extremely difficult to measure the degree of improved compliance, if any , th at would be foregone [by not requiring title V permits], we expect that they would be negligible.” Some commenters (4770, 5328, 5390, 8015, 8283, 8400) believe that EPA should perform a thorough anal ysis of the potential cost and economic impacts of appl yi ng PSD and title V to GHGs at the statutory thresholds. Some of these commenters believe this is necessary because if the Tailoring Rule does not survive legal scrutiny , the statutory thresholds for PSD and title V must be implemented (4770, 5328, 5390, 8015, 8400). A commenter (5390) indicates that this analy sis should encompass the significant adverse consequences that will be faced by industry , including, in particular, potentially millions of newl y regulated sources that are small businesses with sm all capital improvement budgets, small profit margins, and almost no tolerance for increased regulatory costs.163

Response: Some of the comments discussed above disagree with the assertion that the proposed Tailoring R

ule provides “regulatory

relief”. Other comments contend that the Tailoring Rule as proposed: (1) has a significant economic burden on industry , the U.S. economy , and society , (2) hampers businesses ability to create, grow, and modify operations delaying recovery from the recession, (3) may

res ult in movement of industry overseas contributing to leakage of jobs and emissions, and (4) negatively impacts specific domestic industry , commercial, agriculture, waste, and energy

sectors significantly

and some business sectors disproportionately . Numer ous comments outlined above assert that the RIA completed for proposal was inadequate for the following reasons: (1) the RIA did not consider impacts to large sources that will be required to comply with title V and NSR permitting when GHG emissions are re gulated, (2) the RIA underestimated the number of sources affected at the proposal threshold/significance levels of <25,000 CO 2 equivalent (CO 2 e), (3) the RIA failed to estimate or underestimated the costs for sources to obtain permits and to comply with NSR BACT requirements and for permitting authorities to process permits, and (4) the RIA overstates the benefits of regulating sources of GHGs. A number of comments state that EPA must analyze the full impacts of the Tailoring Rule to comply

with CAA sect ion 307(d) and the APA

. EPA has carefull y considered the comments addressing the issue of whether the Tailoring Rule is a “regulatory

relief” rule, and we are not persuaded that we erred in concluding that the effect of the Tailoring Rule is to provide regulatory relief to a large number of sources of GHG for a period of up to six y ears. This final rule will provide relief from title V permitting to over 6 million sources of GHG in this country in total. L ikewise tens of thousands of sources potentiall y subject to PSD permitting requirements annually for GHG will have regulation postponed for a period of up to 6 y ears under this rule, followed by an additional required rule addressing the period beyond 6 y ears. While larger sources of GHG may be requir ed to obtain title V permits or modify existing permits and to comply with PSD requirements, these burdens res ult not from the T ailoring Rule but rather from the CAA requirement to apply PSD to each pollutant subject to regulation, which is triggered when the Light Duty Vehicle Rule takes effect. To clearl y illustrate this, consider what would occur if EPA did not complete the Tailoring Rule. Sources would not be relieved of the requirement to obtain permits addressing each pollutant subject to regulation when they construct or modify , nor would they be relieved of their obligation to obtain title V permits. Instead, these requirements would simply appl y to a much larger population of sources and modifications, and would lead to the absurd results and sev ere impairment to program implementation that this rule is designed to address. In response to comments that the Tailoring Rule will: (1) have a significant economic burden on industry , the U.S. economy , and society , (2) hamper businesses ability to creat e, grow, and modify

operations delaying recovery from the recession, (3) may result in movement of industry overseas contributing to leakage of jobs and emissions and (4) negatively impact specific domestic industry , commercial, agriculture, waste, and ene rgy sectors significantly

and some sectors disproportionately , the EPA responds that this Tailoring Rule does not impose regulatory

burdens on any

entities. This Tailoring Rule lifts the burden of title V and PSD permitting for over six million title V so urces in total and tens of thousands of new and modifying PSD sources annually . This rule does not impose regulatory requirements on an y164

entities, but rather provides regulatory relief to sources of GHG and permitting authorities. This final rule provides permitting thresholds for sources of GHG that exceed levels contained in the CAA and these levels are phased in steps based upon application of the administrative necessity and absurd results doctrines as explained in the preamble for the rule section V.B . The EPA carefully considered comments provided in setting the threshold levels for the final rule that exceed the levels proposed. For step 1 that is effective from January 2, 2011 through June 30, 2011, only

sources required to undergo title V or PSD permitting based upon non

- GHG air pollutants are required to obtain an operating permit or PSD permit to include GHG emissions. Step 2, effective from July 1, 2011 until such time as EPA acts on a rule to amend it (which for reasons described above, we a ssume is June 30, 2013 for the purposes of this analy sis), requires larger sources emitting GHG above 100,000 CO 2 e tpy to obtain a title V permit (if they do not alread y have one) and to comply with PSD requirements when they are newly

constructed or modif y in a way

that increases emissions by more than a 75,000 CO 2 e tpy significance level. Thereafter, EPA makes an enforceable commitment to consider a possible step 3 to further lower thresholds below 100,000 CO 2 e tpy and/or permanently

exclude some source s from the program(s), but onl y after a regulatory process is conducted addressing administrative necessity and absurd results considerations based upon the actual permitting experiences in the first two steps of the phase

- in. In addition, EPA provides a d eferral of permitting until we take required action in April 2016 for sources and modifications that emit below 50,000 CO 2 e tpy . The deferral will end when a required stud y is conducted of the permitting process for sources of GHG and EPA acts, based on the study , to promulgate a rule that describes the additional GHG permitting requirements beyond 2016. The EPA notes that the threshold/significance levels established in the final rule substantially exceed those proposed. In the 6 years following promulg ation of this rule, the EPA estimates that compared to baseline estimates that do not include the effects of this rule, over six million sources of GHG emissions in total will be allowed to continue to operate without a title V operating permit. During th is period, tens of thousands of new sources or modifying sources each y ear will not be subject to PSD requirements for GHG. For this large number of smaller sources, this rule alleviates the regulatory

burden associated with obtaining an operating or PSD permit or complying with NSR BACT requirements. Therefore, this final action may be considered beneficial to these small sources because it provides relief from regulation that would otherwise be required. With regards to comments received that the RIA should have been a more comprehensive anal ys is to include the larger sources of GHG that will be required to obtain permits when GHG are regulated, the EPA maintains as previousl y explained that there are no direct economic burdens or costs as a result of this rule for these sources. Requirements for larger GHG sources to obtain title V or PSD permits are already mandated by the Act and by

existing rules and are not imposed as a result of the Tailoring Rule. Thus the economic impacts for larger sources o f GHG do not occur because of this Tailoring Rule. To include these larger sources in the RIA would actuall y be an inaccurate assessment of how this rule affects sources and would ignore the fact that this rule is regulatory relief. Regarding comments th at EPA underestimated the number of sources affected at the proposal threshold/significance levels of 25,000 CO 2 e, failed to estimate or underestimated the costs for sources to obtain permits and to comply with NSR BACT requirements and for permitting auth orities to process permits and overstated the benefits of regulating sources of165

GHGs, the EPA did make improvements and modifications to the RIA completed for this final rule. As previousl y discussed the threshold levels finalized in this rule were revise d substantially upward. Based upon comments, EPA modified estimates of the number of sources affected at various threshold levels upward. EPA also improved the burden estimates associated with obtaining permits for sources and permitting authorities in r esponse to comments. After consideration of the burden imposed by the proposed rule with these improved estimates for affected sources, the EPA modified the steps of the phase

- in period to include two initial steps, described previously

that are higher, and therefore cover fewer sources and are less burdensome than the proposal threshold of 25,000 CO 2 e tpy emissions. EPA also increased the threshold below which permitting would not apply for six y ears from 25,000 to 50,000 tpy CO 2 e. After the initial two step period, EPA has committed to consider lower thresholds but only down to 50,000 tpy CO 2 e, and onl y after a regulatory process that uses information gathered on actual permitting activity during the first two steps of the phase

- in period. The RIA cond ucted for the final rule also incorporates improvements in our estimates of the number of sources affected at alternative thresholds and improved estimates of the costs of obtaining permits b y sources and processing permits by

permitting authorities. The E PA acknowledges that the regulatory relief associated with the control costs due to BACT requirements for PSD new and modifying sources is not included in the RIA for the final rule due to the lack of sufficient data about the nature of those requirements. However, it is the case that, as it relates to burden, those estimates would simply increase the amount of regulatory relief associated with this final rule. For more information about the economic analy sis conducted for the final rule, see the “Regulat ory Impact Analy sis for the Final Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule” EPA 452/R

- 10

- 003 included in the docket for this rulemaking. 7.2 Regulatory

Flexibility

Analy sis The Regulatory

Flexibility

Act ( RF A ) generall y requires an agency to prepare a RFA of any rule subject to notice and comment rulemaking requirements under the APA or any other statute unless an agency

certifies that the rule will not have a significant economic impact on a substantial numb er of small entities. After considering the economic impacts of our Tailoring Rule proposal, we certified that it would not have a significant economic impact on a substantial number of small entities. We concluded at proposal that, since our proposal re lieves the regulatory

burden on small entities, it will not have a significant impact on a substantial number of small entities under both the title V and PSD permitting programs. At proposal, and as noted previously , EPA certified that the proposed rul e would not have a significant impact on a substantial number of small entities and therefore we concluded that we were not obligated to convene a formal Small Business Advocacy Review Panel ( SBARP )

. Nonetheless, because we were, and are, aware that many small entities may be interested in the various GHG rulemakings that were under development and the potential impacts of the statutory imposition of PSD requirements that may occur as a result of these rulemakings, we, in collaboration with the SBA, conduc ted an outreach meeting designed to exchange information with small entities. The outreach effort was organized and led by representatives from EPA’s OAQPS within the OAR, EPA’s OPEI , the OIRA within the OMB, and the OA of the SBA. Documentation of this meeting, which includes a summary of the advice and recommendations166

received from the SERs identified for the purposes of this process can be obtained in the docket for this rulemaking. (See Docket No. EPA

- HQ

- OAR

- 2009

- 0517

- 19130). Comments received o n RFA SBREFA requirements and the small business impacts anticipated b y the proposed Tailoring Rule are presented in this subsection. Comment: Several commenters (3513, 3698, 3720, 3757, 3859, 3906, 4095, 4630, 4632, 4684, 4693, 4865, 4867, 4870, 4950, 50 52, 5056, 5058, 5073, 5083, 5085, 5088, 5104, 5110, 5111, 5136, 5140, 5145, 5181, 5183, 5184, 5236, 5277, 5278, 5236, 5279, 5343, 5344, 5367, 5449, 5705, 5715, 5771, 5801, 5886, 6201, 6880, 7127, 7134, 7961, 8015, 8071, 8322, 8400, 14710) state that regulation of GHGs under the CAA will result in additional and significant regulatory burden on man y small businesses and sources. Additionally , several of these commenters express that EPA failed to conduct an adequate analy sis of the effects that the proposed Tailoring Rule will have on small entities as required under RFA SBREFA (including EPA’s failure to conduct the required SBARP) and other statutes and EOs. Some of these commenters specifically comment on the adverse effect that regulation of GHGs unde r the CAA will have on small facilities/entities, with and without the Tailoring Rule. Examples of the ty

pes of comments received are summarized below. Some commenters indicate that certain industrial sectors include many small businesses that would be a dversel y impacted even at the thresholds of the proposed Tailoring Rule. These include companies that explore and produce domestic oil and gas (5056), the baking industry (5303), small refiners (3757, 3968, 5705), concrete paver producers (5088), the hous ing industry (5104/6201), more than 100 small brick manufacturers (4867), 400

- 500 small foundries (4867), 150 small pulp and paper mills (4867), over 100 small coal mines (4867), 80 small lime manufacturers (4867), 350 small municipal utilities (4867), mo re than 40 small electric cooperatives (4867), and at least 16 small petroleum refineries (4867). Some of these 1,200+ small entities report that they will be required to obtain title V permits for the first time solely because of their GHG emissions. (4 867) A number of commenters note that the Tailoring Rule defers small source regulation, but does not permanentl y exempt small sources from permitting requirements. The commenters are concerned about the impacts on small entities that will occur when the temporary thresholds under the Tailoring Rule revert to the statutory levels (if that ultimately

occurs). (3906, 4684, 4870, 5104/6201, 5110, 5236, 5343) Some of the commenters elaborated as follows:
 Expanding the PSD and title V programs b y reverting t o the statutory thresholds will result in precisel y the same "absurd results" that led EPA to promulgate the Tailoring Rule. The 2008 report, A Regulatory Burden: The Compliance Dimension of Regulating CO2 as a Pollutant indicates that 1.2 million or more buildings would be subject to PSD at the 250 tpy

threshold level, many

of which are previously

- unregulated establishments (e.g., office buildings, warehouses, health care facilities). Permitting under PSD could cost these newl y - regulated buildings an ave rage of $125,120 (using EPA estimates from the In formation Collection Request [ IC R ] for the proposed rule), and that is before factoring in the cost of installing BACT equipment. (5110)167

 One industry

commenter (5104/6201) provides several pages of examples of how the building industry

has already

implemented a number of voluntary initiatives to reduce the overall GHG emission contributions associated with energy use, such as improving energy efficiency

and incorporating green building practices into the mai nstream. The Tailoring Rule responds to the commenter’s concerns and gives a measure of criticall y needed relief to the homebuilding industry from the repercussions of PSD and title V permitting. However, the commenter expresses concern that this relief be made as permanent as possible. Other representative comments related to the impacts of GHG regulation under the CAA and the Tailoring Rule include the following:
 Any attempt to require PSD permitting for GHGs would impose significant costs on regulated entities, not relieve them. EPA repeatedly asserts that the Proposed Rule would "lift" costs on small entities and impose no new costs on large entities. That theory is incorrect with respect to PSD permitting. (5277)
 Despite EPA’s intention, the propo sed threshold for the GHG Tailoring R ule will include substantially

more small sources of GHG emissions than will be included in the 25,000 ton threshold for EPA’s recently promulgated GHG reporting rule. (4632)
 Even with the raised 25,000

- ton threshold, a large number of small businesses will be ensnared. According to comments submitted by the SBA (4867), over 1,200 small businesses will not be provided relief b y the Tailoring Rule from the "absurd results" created b y EPA‘s efforts to regulate GHGs under the CAA. (5110)
 EPA is giving inadequate consideration to the significant resource burdens on small business owners and regulatory agencies, absent evidence that there will be a corresponding environmental benefit. The commenter does not agree that a program that will potentially

subject new small business sources to PSD and title V requirements in the short

- term is the same as "providing regulatory relief." The "cost saving" noted by EPA is similarly

incorrect. The direct economic impacts will be felt by the businesses throughout the U.S., both small and large. (5367)
 The proposed rule will have a negative effect on the “economic resurgence” of small businesses through the triggering of regulation of millions of stationary sources. (8400)
 Regulatory approval is alread y a serious hurdle for small businesses, and this ruling would put in even greater burden on them. (5771)
 Based on the language of the CAA, small businesses with GHG emissions from 250 to 25,000 tpy

could find themselves trying to figure out what compliance and enforcement regulations appl y. (3859) Even though the EPA and larger environmental groups state that they will not press for expansion of federal power over small manufacturers through the court s ys tem, smaller sources will have significant exposure to civil liability . (3513)
 Sources such as agricultural, residential, and small businesses (as defined by the SBA) should be exempted from this rule during the first 5

- 7 y ears to allow EPA and permitting authorities time to gain experience with the program. Man y small businesses do not have the money

or resources to spend on environmental consultants to assist them in calculating their GHG emissions and do all the other cumbersome paperwork that will be required under this proposal, i ncluding determining BACT, doing the modeling required for the NAAQS, as well as the increment modeling. Small businesses and service providers must be provided with education, resources, and tools to help them understand168

whether and how they

will be impa cted b y the rule and how they can report and comply. Without this time and resource consideration, implementation of this rule as written will cause undue hardships for small businesses. (5367)
 The estimated costs for a title V permit are undul y burdenso me for small businesses subject to the rule. This is particularl y true because the title V permit does not necessarily

ensure reduction of GHG emissions or provide any additional environmental benefit. (5236) As noted above, several commenters provide th at EPA, in considering the economic impacts, failed to conduct an adequate anal ys is of the effects that the proposed Tailoring Rule will have on small entities as required under RFA SBREFA (including EPA’s failure to conduct the required SBARP). Examples of the ty pes of comments received are presented below. Several commenters contend that EPA has not met the requirements of the RFA b y not conducting an adequate analy sis of the impacts of the proposed rule on small businesses and/or by not convening an S BARP for the proposed Tailoring Rule (or for the other related GHG rulemakings). (3757, 3968, 4095, 4630, 4632, 4648, 4684, 4693, 4867, 4870, 5052, 5062, 5073, 5085, 5088, 5111, 5140, 5145, 5181, 5236, 5278, 5343, 5705, 5715, 5886)
 It is clear that the LD VR directly triggers regulatory

impacts for small entities. If this were not true, EPA would not need the GHG Tailoring Rule. (4630, 4867, 4870, 5181) Nevertheless, EPA declined to take comment on the potential impacts of the LVDVR on small businesses, and directed comment on this issue to the Tailoring Rule. Now, EPA deflects an y substantive consideration of the issue by concluding that the Tailoring Rule relieves regulatory

burden. Thus, EPA has deflected its obligations under sections 603 and 604 of the RFA. (4630) The EPA cannot state on the one hand that it was not obligated to address the PSD burdens raised in the LDVR and on the other claim that it is not required to conduct an RFA in this rule because it “relieves” the burdens on small entitie s. (4870, 5181)
 EPA has no legal basis to avoid conducting a SBAR panel. Although there are rare situations where an agency may have a legitimate reason for not conducting the small business impact anal ys is required b y the RFA (which in this case would i nclude a SBAR panel), none of those situations are present here. (4867)
 The EPA should have convened as man y as four separate SBARPs to evaluate the impact of the GHG rulemakings on small entities, including SBARPs for the Endangerment Finding, the LDVR, the Tailoring Rule, and (even if for none of the individual rules) for the combined GHG rulemakings. This new regulatory program should not have been launched without the benefit of a thorough review of the potential small entity impacts, as required b y the RFA. (4648, 4693, 5145, 5715, 5886)
 The EPA should initiate a SBARP to examine the economic impact in detail before a final rule is published. (3757, 3968)
 The EPA should convene a separate SBAR panel for each primary industry sector likel y to be affe cted b y GHG regulation. (4684)
 By not convening an SBARP, EPA has lost its best opportunity to learn how its new GHG rules would actually affect small businesses, small communities, and small non

profit associations. (5088)
 Although EPA has undertaken so me outreach efforts in lieu of convening an SBARP(s),169

these efforts are insufficient to meet the requirements of the RFA or to estimate the economic impact of this rule on small businesses, which will be significant in many cases. (3757, 3968, 4867, 5052, 5073, 5140, 5278) The EPA's use of section 609(c) of the RFA to justify

consultation with Office of Management and Budget ( OMB ) and SBA, with input from outreach to small entities, instead of convening an SBARP is a misreading of the RFA. (4867)
 Although the Tailoring Rule defers small

- source regulation, it does not exempt small sources from regulation. Since EPA has now legally committed itself to small

- source regulation under PSD and title V, it is obligated to examine the effects on small sources now , not at some point in the future. The commenter states that the fact that EPA does not know the precise character of small

- source regulation at this point is no defense. EPA could conduct an evaluation of various alternative regulatory scenarios. (5343 ) Some commenters specifically indicate that EPA was incorrect in certifying under the RFA that regulating GHGs under the CAA will not have “a significant economic impact on a substantial number of small entities.” These commenters sometimes referred to the proposed Tailoring Rule, sometimes to the LDVR, sometimes to the Endangerment Finding, and sometimes to the combination of these rulemakings which EPA has advanced in coordination. (3757, 3968, 4867, 5073, 5088, 5133, 5181, 5705) Some commenters ela borated on this point as follows:
 The EPA has offered little or no information to support this certification with respect to small business refiners. The commenter disagrees with EPA’s certification and suggests that such a peremptory

dismissal of possibl e economic impact is primarily intended to obviate the need for a SBARP that would otherwise be required under SBREFA. (3757, 3968, 5705)
 The EPA’s RFA certifications for the three GHG rule proposals lack a factual basis and are improper. It is clear that the GHG rules are likely to have a significant economic impact on a large number of small entities, including small businesses, small communities, and small non

- profit associations who will be affected either immediately or in the near

- term. Over 1,200 small entities and their representatives have informed the SBA that their anticipated GHG emissions will exceed the 25,000 tp y CO 2 e threshold; accordingl y, they will immediately become subject to PSD and title V permitting requirements for GHGs. Some of these 1,200+ small entities (e.g., brick manufacturers) report that they

will be required to obtain title V permits for the first time solely because of their GHG emissions. The EPA estimates the cost of obtaining a first

- time title V permit for industrial facilities at $46,350 per permit, and new PSD permits are estimated to cost $84,530 per permit. These estimates do not include the costs of project delay s and potential operational modifications required b y permitting authorities. In total, these costs may exceed 3 percent of annual operating expenditures for some small entities (e.g., electrical distribution cooperatives). Under EPA’s RFA Guidance, rules with 3 percent or greater economic impact on more than 1,000 small entities are presumed to be inel igible for certification under the RFA. Had EPA thoroughl y analyzed the potential reach of the GHG permitting requirements on small entities, it would have learned that the GHG Tailoring Rule will not benefit a substantial number (over 1,200) of small ent ities. (4867)170

 The EPA’s RFA certification for the LDVR states that the SBREFA review of the potential impacts on small entities of regulating GHG emissions under the PSD program would occur in the context of the Tailoring Rule. However, the Tailoring Ru le lacks an y anal ys is of the costs of regulating GHGs under the PSD program and the impact of those costs on small businesses. Instead, the anal ys is in the rule focuses exclusively on avoided costs. (5133)
 The EPA neglected to consider the millions of sm all businesses, hospitals, schools, small government entities, and others that will be dramatically impacted by

the rule’s unprecedented and direct effect on small entities, because the rule imposes these burdens in the first instance (as a result of the L DVR), is ineffective to change state law, and will inevitably be struck down by

the courts. Moreover, even at the 25,000 tpy threshold level, numerous small businesses will be affected by this rule. (4870, 5181) Response: The RFA generally

requires an agency

to prepare a regulatory

flexibility

analy sis of any rule subject to notice and comment rulemaking requirements under the APA or an y other statute unless the agency

certifies that the rule will not have a significant economic impact on a substantial number of small entities subject to the rule. If a covered agency, such as EPA, is unable to certify

a rule at proposal, they

must conduct a SBAR panel. If an agency

certifies that the rule at issue does not have a significant impact on a substantial number of small entities (SI SNOSE), the agency is not required to undertake an y regulatory

flexibility

analy ses or conduct a SBAR panel. 5 U.S.C. section 605(b). EPA disagrees with commenters that assert EPA must undergo an SBAR panel to determine how much more relief EPA could potentially give. The SBAR panel is required onl y when EPA is unable to certify no SI SNOSE. EPA’s certification of this action is fully supported by the RFA, and accordingl y EPA was not required to undertake RFA analy ses such as th e SBAR panel or regulatory flexibility anal ys es. Agencies can properl y certify a rule when the rule does not impose burdens on regulated entities, as the “relevant economic impact [is] the impact of compliance with the proposed rule on regulated small ent ities.” Mid

- Tex Elec. Co

- Op., Inc. v. FERC, 773 F.2d 327, 342

- 343 (D.C. Cir. 1985) (emphases added). Courts have refused to “convert every rulemaking process into a massive exercise in economic modeling” b y requiring a full RFA analysis. Cement Kiln Rec ycling Coalition v. EPA , 255 F.3d 855, 869 (D.C. Cir. 2001). This rule does not impose an y new regulatory requirements or burdens on any small entities. Instead, this rule is designed to relieve potential burdens associated with applying for title V and PSD permits. Because there is no new impact associated with this rule, EPA is able to certify that there is no SI SNOSE for this rule. Contrary to the assertions of some commenters, the RFA does not require that EPA consider multiple rules in the context of an RFA anal ys is for an individual rule, as to do so would require the t ype of “massive exercise in economic modeling” that courts have rejected. EPA is only require to consider the new impacts of the171

specific rule in question on the small entities subject to regulatory requirements of the rule under consideration. Although the RFA does not apply to this action, EPA recognized that some small entities were concerned about the potential indirect impacts of the statutory imposition of PSD requirements that may

occur given the various EPA rulemakings concerning GHG emissions. In the interest of providing small entities a forum to express their concerns in addition to the opportunity

provided in the notice and comment process, EPA used the discretion aff orded to it under section 609(c) of the RFA to consult with OMB and SBA, with input from outreach to small entities, regarding the potential impacts of PSD regulatory requirements on small entities that might occur as EPA considers regulations of GHGs.
E PA, in collaboration with the SBA, conducted an outreach meeting designed to exchange information with small entities that may be interested in these regulations. The outreach effort was organized and led by representatives from EPA’s OAQPS within the OAR , EPA’s OPEI , the OIRA within the OMB, and the Office of Advocacy of the SBA. D ocumentation of this meeting, which includes a summary of the advice and recommendations received from the SERs identified for the purposes of this process, can be obtained in the docket for this rulemaking. (See Docket No. EPA

- HQ

- OAR

- 2009

- 0517

- 19130). The EPA took this small business outreach effort into account when finalizing this rule. Many commenters from this outreach effort said that there were many more small busines ses that would subject to PSD and title V due to the proposed permitting thresholds than EPA estimated at proposal. Based upon these comments and others received regarding the threshold, the EPA increased the threshold and significance levels from the pro posal levels to levels at or above those recommended b y SBA . The final Tailoring Rule provides permitting thresholds for sources of GHG that exceed levels contained in the CAA and these levels are phased in steps based upon application of the administrati ve necessity and absurd results doctrines as explained in the preamble for the rule in preamble section V.B. For step 1 that is effective from January 2, 2011 through June 30, 2011, only sources required to undergo title V or PSD permitting based upon non - GHG air pollutants are required to obtain an operating permit or PSD permit to include GHG emissions. Step 2, effective from July 1, 2011 until such time as EPA acts on a rule to amend it (which for reasons described above, we assume is June 30, 2013 for the purposes of this anal ys is), requires larger sources emitting GHG above 100,000 CO 2 e tpy to obtain a title V permit (if they

do not already

have one) and to comply with PSD requirements when they are newly constructed or modify

in a way that increases emissions by more than a 75,000 CO 2 e tpy significance level. Thereafter, EPA makes an enforceable commitment to consider a possible step 3 to further lower thresholds below 100,000 CO 2 e tpy and/or permanently

exclude some sources from the program(s), but only after a regulatory

process is conducted addressing administrative necessit y and absurd results considerations based upon the actual permitting experiences in the first two steps of the phase

- in. In addition, EPA provides a deferral of permitting unti l we take required action in April 2016 for sources and modifications that emit below 50,000 CO 2 e tpy . The deferral will end when a required study is conducted of the permitting process for sources of GHG and EPA acts, based on the study, to promulgate a rule that describes the additional GHG permitting requirements beyond 2016. In the 6 y ears following promulgation of this rule, the EPA estimates that compared to baseline estimates that do not include the effects of this rule, over six million sources of GHG emissions in total will be172

allowed to continue to operate without a title V operating permit. During this period, tens of thousands of new sources or modifying sources each y ear will not be subject to PSD requirements for GHG.

. During this period, tens of thousands of new sources or modifying sources each ye ar will not be subject to PSD requirements for GHG. For this large number of smaller GHG sources

– some of which are small businesses, governments or other small entities

– this rule, this rule alleviates the regulatory burden associated with obtaining an operating or PSD permit or complying with NSR BACT requirements. Therefore, this final action should be considered beneficial to these small sources that are small entities because it provides relief from regulation that would otherwise be required. Section 609(c) of the RFA allows agencies to, in their discretion, appl y the provisions of the RFA that address SBAR panels to a rule that “the agency intends to certify ... but the agency believes may have a greater than de minimis impact on a substantial number of small entities.” 5 U.S.C. § 609(c) (emphasis added). EPA does not believe that the use of this discretion requires a rigid application of the entirety of section 609(c). Instead, agencies may pick and choose elements of the SBAR panel process to appl y as they deem appropriate for the rule at issue. EPA believes that section 609(c) of the RFA authorizes agencies to engage in outreach similar to that of a formal SBAR panel where, as in thi s action, the RFA would not otherwise apply due to the certification of the rule. 6 EPA maintains that this action does not create new significant impacts for small entities, and EPA’s use of 609(c) does not indicate otherwise. As indicated b y the word “m ay ,” an agency has discretion to invoke this provision in a variet y of circumstance and is not limited to those situations where it is certain that a rule has a greater than de minimis impact. EPA is not required to take into account effects beyond those caused b y the Tailoring Rule for the purposes of the RFA. No permitting requirements are imposed by this final Tailoring Rule. Instead, this final Tailoring Rule offers regulatory relief to over an estimated six million sources of GHG emissions that woul d otherwise be required to obtain a title V permit and tens of thousands of sources of GHG emissions subject to PSD permitting requirements that would otherwise be required statutorily to obtain permit. The RFA does not require that an agency complete a r egulatory

flexibility

anal ys is or conduct an SBAR panel where the rule does not have an y negative impact on small entities subject to the rule. Accordingl y, EPA maintains that it has fully complied with the requirements of the Regulatory

Flexibility

Act i n this action. Because this rule does not create new significant impacts for a substantial number of small entities, EPA has statutory authority to certify this rule under the RFA. Thus, EPA was not required to conduct an SBAR panel or any regulatory fle xibility anal ys es for this action

.

6 EPA does not believe that section 60 9(c) of the RFA offers agencies a chance to circumvent the panel process where they do not intend to certify that the rule does not have a SISNOSE, and EPA remains committed to holding SBAR panels where contemplated by the RFA.173 

## Chapter 8. Implementation Issues
8.1 Comments on EPA’s Mechanism for Implementing and Adopting the Tailoring Approach This section concerns comments received on the proposal’s approach to adopting the Tailoring Ru le within our regulations and by state, local and tribal permitting authorities. Comment: Many commenters argue that EPA has not addressed the need for states to adopt the Tailoring Rule into state regulations before it can take effect. Before the Tai loring Rule could apply , states will need time to amend their SIPs from the 100 or 250 tpy statutory thresholds to the thresholds in the Tailoring Rule (4118, 4243, 4298, 4515, 4691, 4903, 5084, 5140, 5143, 5276, 5278, 5317, 5417, 5789, 6414, 7935, 8015, 1 6411). In addition, s tates run the risk of being sued if they

issue permits to sources that emit more than 100/250 tpy of GHGs before the state law and regulations are amended for this purpose (5133). Similarly, sources that emit more than 100/250 tpy

of GHGs may

be subject to state enforcement actions or third

- part y suits, which would produce inequality in treatment of sources in SIP

- approved states versus other states (4243)

. Other commenters add that the Tailoring Rule adjustments of emissions thresho lds will directly conflict with their state’s existing laws and implementation plans (5085, 7294). Thus, some of these commenters suggest that:
 EPA should clarify

whether the current statutory thresholds for PSD and title V appl y until the SIP is revised. (5063)
 EPA could modify

the Tailoring Rule to assure that state programs do not apply to the smaller sources of GHGs. (16411)
 EPA should disapprove state SIPs that require PSD permits for sources/modifications below the Tailoring Rule thresholds ( 5922 , 8015). One commenter adds that EPA has enough information to conclude that states would not have adequate resources to implement their state PSD programs if the threshold for GHGs is 100/250 tpy . Thus, EPA can disapprove state SIPs to the extent they r equire PSD permits for sources/modifications below the thresholds established in the Tailoring Rule. Failure to disapprove such SIPs would create great confusion for sources and generate permitting gridlock (and “absurd results”) that EPA is trying to avo id (5922).
 EPA should issue a Notice of Deficiency (NOD), under CAA section 502(i)(1), and a SIP call, under CAA section 110(k)(5), to all states concurrent with the final Tailoring Rule, unless a state can demonstrate that it has commenced and is committe d to finalizing any changes necessary

under state law to make it consistent with the Tailoring Rule (4298). Issuing a NOD and a SIP call in this manner is necessary to maintain an even playing field among the states. The commenter believes that EPA shoul d not finalize any action that would trigger GHG permitting until each state program has been amended (4298). In addition, one commenter (4515/4691) supports the use of a SIP call under section 110(k)(5) of the CAA or the conditioning of section 105 grant funding to force appropriate revisions in SIP approved states.
 EPA should use every available legal tool to ensure that the Tailoring Rule requirements are incorporated into SIPs (4196). One commenter adds that EPA should establish an expeditious deadl ine for states to submit corrective plan revisions (5306). According to174

the commenter, EPA can ease state adoption of PSD permit program revisions and expedite EPA review and approval of the states’ adjustments by adopting model guidelines to help inform state rulemaking, and EPA should complete this process b y the end of 2010. The same basic framework and timelines can appl y to the title V permit program and state administration of corrective adjustments. Here, too, EPA can promptl y issue a notice of de ficiency and call for expeditious corrective action. See 42 U.S.C. 7661a(i). (5306).
 EPA must defer regulating GHGs until states have time to amend their rules and laws and submit amended SIPs to EPA, and EPA has finalized approval of the SIP revisions ( 3720, 4106, 4118, 4524, 4903, 5800 ) . D eferring application of PSD to GHGs until SIPs are revised, one commenter adds (4903), would be consistent with Congress’s intent in the CAA Amendments of 1977, where EPA was given two y ears “to propose regulations fo r increments or other means for preventing significant deterioration” for four criteria pollutants (pollutants subject to NAAQS) for which the legislation did not supply increments. Those regulations then would not go into effect for another year. Then at that point, “revision of SIPs would begin.” Additionally , PSD “[r]egulations for new ambient air quality

standards are to be followed within two y ears b y m easures to prevent significant deterioration.” H.R. Rep. 95

- 564 at 151. Other commenters state that while EPA has proposed to essentially change the meaning and application of federal law, EPA cannot amend the statutes and rules in effect at the state level (3720, 4524, 5133, 5317, 5743, 5789, 5800, 6414, 8283, 16411) as EPA proposed. Sources will still be subject to state

- specific regulations (4243, 5343, 16411) and by specificall y using the proposed Tailoring Rule’s revised thresholds a state will be in violation of its own SIP and thus the CAA (4631, 5318, 6491, 7961). In addition, the Tailoring Rule does not require states to change laws or regulations to conform to the thresholds set by the rule (3935, 4095, 5743). Some states could conclude, based on their own individual legal opinion, that they cannot follow the same "administrative necessit y" approach that EPA is adopting (5789, 6414, 8283) because they feel that EPA is relaxing the statutory thresholds without appropriate authority (7961). Moreover, one commenter argues the state law issues mentioned above make the Tailoring Rule ineffecti ve practicall y and thus legall y vulnerable because the “administrative necessity” doctrine cannot be justified (4095). Other commenters argue EPA’s proposal is likely to encourage a confusing patchwork of inharmonious federal and state regulations, sinc e states have the authority to be more stringent than the EPA and thus to decide not to change their state regulations to implement the Tailoring Rule (3720, 3935, 4518, 4524, 5140, 5168, 5278, 5743, 5789, 5800, 6414, 8015, 8283, 16411 ) or may wait to revi se their laws until it becomes clear that whatever final rule emerges has survived judicial review (5317). One commenter adds, however, that it is important for states to strive for GHG emissions reductions and that this can be achieved by offering incentives to institute best practices and technologies to reduce GHG emissions to levels that are below the 25,000 tpy CO 2 e threshold (4518). ). Another commenter said the proposed rule lacks an appropriate coordinating plan with state governments regarding their respective SIPs for the PSD program. (4555 )175

Response: In response to these concerns, we are adding another mechanism to implement the tailoring approach for PSD, and that is to adopt a definition within our PSD regulations, of the phrase “subject to regulation,” as found within the phrase “any regulated NSR pollutant,” which, in turn, is part of the definitions of “major stationary source” and “major modification.” To implement this mechanism, we are defining the phrase “subject to regulation” so that the GHGs emitted by

sources that fall below the thresholds or scope established in steps 1 and 2 are not treated as “subject to regulation,” and therefore do not trigger PSD for the sources that emit them. As discussed in section V.B.3. of the preamble to the final rule published in the Federal Register , the term “subject to regulation” is one of four terms that should be considered not to apply literally in the case of GHG sources. To understand this approach, it is useful to return to the definit ion of “major stationary source,” which, again, is central to PSD applicability . The definition, quoted previously , employ s the term “regulated NSR pollutant,” which is a defined term. The definition incorporates man y other elements as well ( e.g. , the 10 0/250 threshold requirements), but for convenience, we quote it as follows: a “major stationary source” is “[a]ny

... source[] of air pollutants, which emits, or has the potential to emit, [depending on the source category , either] 100 [or 250] tons per y ear or more of an y air pollutant that is subject to regulation under the Clean Air Act.” 40 CFR 51.166(b)(1)(i(a)

- (b). Applying our definition of “subject to regulation” to exclude GHG sources that emit below specified thresholds, the definition may now be paraphrased as follows: A “major stationary source” is any

source of air pollutants, which emits, or has the potential to emit, depending on the source category , either 100 or 250 tp y or more of an y air pollutant subject to regulation under the CAA, except that the source’s GHGs are considered to be subject to regulation under the CAA only to the extent indicated under steps 1 and 2 of the Tailoring Rule, e.g., for step 2, only if the source’s GHG emissions exceed the threshold established in step 2. We adopt the same approach for the definition of the regulatory term “major modification.” Although EPA is codifying its regulations to apply the phrase “subject to regulation” in this manner, we have been advised that states may be able to adopt our approa ch without having to undertake a rulemaking action to revise their SIP regulations or without requiring an act of the state legislature. Instead, it is our understanding that states may adopt our approach b y interpreting the term “subject to regulation” r eflected in their regulations to have the same meaning that we are assigning to that term in our regulations in this rulemaking. This is particularl y

– although not exclusively

-- the case in a state that has taken the position, or determines now, that th e state’s definition of “subject to regulation,” or, more broadl y, “regulated NSR pollutant” or “major stationary source” or “major modification, is intended to be interpreted in a way

that tracks the meanings that EPA has assigned to these phrases. Such states can adopt the meaning of “subject to regulation” that we establish in this rule by January 2, 2011, and thereb y avoid the situation in which, as a matter of state law, GHG

- emitting sources above the 100 or 250 tpy

thresholds become subject to PSD by that date. The following explains our basis for concluding that states may appl y EPA’s approach under existing regulations that use the term “subject to regulation.”176

On December 18, 2008, EPA issued the Interpretive Memorandum, establishing EPA’s inter pretation of the definition “regulated NSR pollutant” found at 40 CFR 52.21(b)(50). EPA intended this memorandum to resolve ambiguit y i n subpart (iv) of this definition, which includes “an y pollutant that otherwise is subject to regulation under the Act.” Specifically , the memorandum stated that EPA will interpret the definition of “regulated NSR pollutant” to exclude pollutants for which EPA regulations only require monitoring or reporting but to include pollutants subject to either a provision in the CA A or regulation adopted by EPA under the CAA that requires actual control of emissions of that pollutant. After reconsidering this interpretation through a formal notice

- and

- comment process, EPA refined its interpretation to establish that the PSD permi tting requirements will not apply to a newl y regulated pollutant until a regulatory requirement to control emissions of that pollutant “takes effect.” 75 FR 17704. Importantly , as stated previousl y, because the term “regulated NSR pollutant” is embedded within the definition of “major stationary source,” this interpretation effectivel y defines which major stationary sources are subject to PSD permitting. As a result, for example, EPA explained that PSD and title V permitting requirements for GHGs will no t apply

to GHGs until at least January 2, 2011, following the anticipated promulgation of EPA regulations requiring control of GHG emissions under title II of the CAA. Id

. In the RTC document for EPA’s reconsideration of the PSD interpretative memorandum, we stated that, Absent a unique requirement of state law, EPA believes that state laws that use the same language that is contained in EPA’s PSD program regulations at 52.21(b)(50) and 51.166(b)(50) are sufficiently open - ended to incorporate greenh ouse gases as a regulated NSR pollutant at the appropriate time consistent with EPA’s interpretation of these regulations (emphasis added). (Docket ID No. EPA

- HQ

- OAR

- 2009

- 0597

- 0128). Because the state regulations that include EPA’s definition of the ter m “subject to regulation” in the reconsideration of the PSD interpretive memorandum are “sufficiently open - ended to incorporate greenhouse gases as a regulated pollutant,” those state regulations are also sufficiently

open - ended to incorporate the further refinement to the meaning of the phrase “subject to regulation” that we make in this rulemaking. By the same token, EPA has historically interpreted certain state SIP

- approved programs as sufficientl y open - ended such that the rules provide for the “auto matic assumption for the responsibility

for review” of new pollutants before the general deadline for states to revise their PSD programs. See, e.g., 5 2 FR at 24682. Conversely , we have also read federal rules and state rules approved in SIPs to provide for the automatic removal of a pollutant when such pollutant is no longer “subject to regulation.” For example, the 1990 CAA amendments exempted HAPs listed in Section 112(b)(1) from the PSD requirements. See CAA section 112(b)(6). Following passage of the amendments, EPA issued “New Source Review (NSR) Program Transitional Guidance“, a memorandum from John S. Seitz, Director, Office of Air Quality Planning and Standards to Regional Air Division Directors on March 11, 1991. In that guidance, EPA interpr eted its PSD regulations to automatically cease to appl y to listed HAPs (with some noted exceptions), and implicitly stated that a state with an open

- ended SIP

- approved PSD rule could also take the position that its SIP

- approved rule automatically ceased t o regulate HAPs.177

After reviewing these past practices in the PSD permitting program, and EPA’s prior statements regarding pollutants subject to the PSD program, we conclude that states with SIP

approved rules that contain the same language as used in 40 CFR 52.21(b)(50) or 40 CFR 51.166(b)(49), or that otherwise have sufficiently open - ended PSD regulations, would be able to implement our Tailoring Rule approach to permitting b y interpreting their regulations, and without needing to promulgate a regulat ion or seek state legislative action. This is particularly

– although not exclusively

-- the case for states that take the position that they intend their rules to apply in the same manner as EPA's counterpart rules. If states adopt this reading of their regulations, GHG sources falling below the specified cutoffs would not be emitting pollutants “subject to regulation” within the definition of “regulated NSR pollutant” and therefore would not be subject to PSD permitting as a major stationary source or f

or making a major modification. During our consideration of this action, we participated in teleconferences with one local and six state permitting authorities to discuss this issue of whether they could implement the proposed rule without the need for state law or regulation changes or a revision of the provisions of state law that are a part of the SIP. We specifically discussed whether defining the phrase “subject to regulation” would better facilitate state incorporation of the limitations in this f inal rule. The state and local agencies participating in the calls generally agreed that defining the phrase “subject to regulation” would, compared to our proposed approach, better facilitate state incorporation of the limitations in the final rule in st ates with regulations that mirror the existing federal rules, or in states whose rules are otherwise sufficientl y open - ended to incorporate the limitations in the final rule by interpretation. Participants from each agency also indicated that their rules contain the term “subject to regulation” and that term has not been previousl y interpreted in way s that would preclude application of the meaning assigned to the term by EPA. We therefore concluded it is likely the state rules are sufficiently open - ended to apply

EPA’s approach b y interpretation (although some states indicated they may elect to pursue rulemaking in addition to or instead of interpretation). Accordingl y, we selected the “subject to regulation” regulatory

approach as the mechanism for imple menting the final rule. As just described, we selected the “subject to regulation” mechanism because it most readil y accommodated the needs of States to expeditiously revise

– through interpretation or otherwise

-- their state rules. Even so, it is important to recognize that this mechanism has the same substantive effect as the mechanism we considered in the proposed rule, which was revising numerical thresholds in the definitions of major stationary source and major modification. Most importantly , a lthough we are codifying the “subject to regulation” mechanism, that approach is driven by the needs of the states, and our action in this rulemaking should be interpreted to rely on any of several legal mechanisms to accomplish this result. Thus, our act ion in this rule should be understood as revising the meaning of several terms in these definitions, including: (i) the numerical thresholds, as we proposed; (ii) the term, “any source,” which some commenters identified as the most relevant term for purpo ses of our proposal; (iii) the te rm, “an y air pollutant; or (iv) the term, “subject to regulation.” The specific choice of which of these constitutes the nominal mechanism does not have a substantive legal effect because each mechanism involves one or ano ther of the components of the terms “major stationary source”

-- which embodies the statutory term, “major emitting facility”

-- and “major178

modification,” which embodies the statutory term, “modification,” and it is those statutory and regulatory

terms that we are defining to exclude the indicated GHG

- emitting sources. 7 Our final action also differs from the proposal in the specific regulatory mechanism by which we tailor the definition of “major source” for title V permit programs, but is a logical outgr owth of our proposed rule. EPA proposed to implement tailoring for GHGs under title V by excluding sources of GHGs from the general definition of “major source” under 40 CFR 70.2 and 71.2, and adding a separate definition of “major source” with tailored thresholds for sources of GHGs. In response to comments, particularl y from states concerned with implementation of the proposed approach under state law, EPA is adopting an approach in the final rule that 1) amends the definition of “major source” b y codif ying EPA’s longstanding interpretation that applicability

for a “major stationary

source” under CAA sections 501(2)(B) and 302(j) and 40 CFR 70.2 and 71.2 is triggered b y sources of pollutants “subject to regulation,” and 2) adding a definition of “subject to regulation.” Further, we are delaying our action to move forward with limiting our previous approval of existing state part 70 programs. We finalize this alternative approach to address concerns similar to those we received with respect to state implementation of SIP

- approved PSD programs. Specificall y, we received comments that the mechanism we proposed would not address the significant administrative and programmatic considerations associated with permitting GHGs under title V, because the 100 tp y threshold would continue to apply as a matter of state law. Commenters stated that states would need to undertake a regulatory and/or legislative process to change the threshold in their state laws which they

could not complete before the laws would oth erwise require issuance of operating permits to GHGs sources. After considering the commenters’ concerns, we are finalizing an approach designed to address the state law concerns for states. As a result, it is unnecessary

to move forward at this time with our proposed approach to limit approval of existing part 70 programs in many states. EPA’s approach involves the interrelationship of terms within the part 70 definition of “major source” in title V and EPA’s implementing regulations, and EPA’s histo rical practice of interpreting the term “any air pollutant” in the “major stationary source” component of that definition. EPA believes the approach in the final rule will allow many states to adopt the final rule through interpretation of existing state laws. Specificall y, paragraph (3) within the definition of “major source” found in 40 CFR 70.2 and 71.2 defines a major source as a “a major stationary source of air pollutants, as defined in section 302 of the Act, that directly emits or has the potentia l to emit, 100 tpy or more of an y air pollutant...” The EPA previously articulated the Agency ’s interpretation that the regulatory and statutory

definitions of “major source” under title V, including the term “any air pollutant,” applies to pollutants “subj ect to regulation.” 8 EPA recentl y re - affirmed this position in EPA’s Reconsideration of Interpretation of Regulations that

7 We also think that this ap proach better clarifies our long standing practice of interpreting open

- ended SIP regulations to automatically adjust for changes in the regulatory status of an air pollutant, because it appropriately assures that the Tailoring R ule applies to both the def inition of “major stationary source” and “regulated NSR pollutant.”

8 Memorandum from Lydia N. Wegman, Deputy Director, Office of Air Quality Planning and Standards , U.S. EPA, to Air Division Directors, “Definition of Regulated Air Pollutant for Purposes of Title V” (April 26, 1993) (Wegman Memo).179

Determine Pollutants Covered b y Clean Air Act Permitting Programs. 75 FR 17704, 17022

- 23 (April 2, 2010), the Interpretive Memorand um Reconsideration Final Action. Accordingl y, under our long

- established policy , states historically have interpreted the term “an y ai r pollutant” under the title V definition of “major source” to mean any pollutant “subject to regulation” under the A ct. Thus, as a matter of established interpretation, EPA and states effectivel y read the definition of “major source” under title V to include a source “...that directly emits or has the potential to emit, 100 tpy or more of an y air pollutant subject to regulation under the Act” [emphasis added]. By amending our regulations to expressly include and define “subject to regulation” to implement our tailoring for GHGs under title V, we are seeking to enable states to adopt and implement this approach through a continued interpretation of the phrase “an y air pollutant” within the “major source” definition, without the need for changes to state regulations or statutes. States may be able to track EPA’s approach to tailoring for GHG permitting without regulatory or statutory changes, for example, where a state has taken the position, or determines now, that the state’s interpretation of “major source,” “subject to regulation” and/or “an y air pollutant” is intended to track EPA’s interpretation. Thus, EPA is ad ding the phrase “subject to regulation” to the definition of “major source” under 40 CFR 70.2 and 71.2. EPA is also adding to these regulations a definition of “subject to regulation.” Under the part 70 and part 71 regulatory changes adopted, the term “s ubject to regulation,” for purposes of the definition of “major source,” has two components. The first component codifies the general approach EPA recently articulated in the “ Reconsideration of Interpretation of Regulations That Determine Pollutants Cove red b y Clean Air Act Permitting .” 75 FR 17704. Under this first component, a pollutant “subject to regulation” is defined to mean a pollutant subject to either a provision in the CAA or regulation adopted by EPA under the CAA that requires actual control of emissions of that pollutant and that has taken effect under the CAA. See id. at 17022

- 23; Wegman Memo at 4

- 5. To address tailoring for GHGs, EPA includes a second component of the definition of “subject to regulation,” specifying that GHGs are not su bject to regulation for purposes of defining a major source, unless as of July 1, 2011, the emissions of GHGs are from a source emitting or having the potential to emit 100,000 tpy of GHGs on a CO 2 e basis. As explained previously , we find no substantive difference between the alternative mechanisms for implementing GHG tailoring in the final rule. Whether we add GHG thresholds directly to the definition of “major source” (as we proposed), or alternatively , expressl y add and define the term “subject to r egulation,” both approaches revise the definition of “major source” to implement the GHG Tailoring Rule. Accordingly , we adopt the later approach to facilitate state implementation of the final rule through an interpretation of existing state part 70 programs. Similar to our explanation previously for PSD, while we adopt the “subject to regulation” mechanism for implementing GHG tailoring in the final rule, the thrust of our rulemaking is to apply the title V definition of “major source”

– which includes the statutory term, “major stationary source”

- to GHG sources b y treating only GHG sources that emit at levels above the steps 1 and 2 thresholds as meeting that definition. Further, we believe that our action may reasonabl y be construed to revise an y of several terms in that definition, including (i) the numerical thresholds, as we proposed; (ii) the term “an y air pollutant,” (iii) the term “a major stationary source,” (iv) the term “subject to regulation,” which, as discussed previously , our180

regulations graft into the definition of “major source.” We believe that the specific choice of which term constitutes the legal mechanism does not have a substantive legal effect because each mechanism involves one of the components of the regulatory term “major so urce”

– which embodies the meaning of the statutory term, “major source”

-- and it is that term that we are interpreting to tailor title V applicability for GHG

- emitting sources. Thus, while the “subject to regulation” mechanism facilitates expeditious implementation by states, and we are therefore revising our regulations to adopt this approach, we otherwise find no substantive difference between the alternative mechanisms we may use to finalize the proposed rule. Further, similar to our revised approach for addressing state SIP

- approved PSD programs, we are delaying our action to limit our previous approvals for state part 70 operating permit programs. In our proposed rule, we explained our concern that states lack adequate personnel and resources to carry out part 70 operating permit programs for GHG sources that emit or have the potential to emit 100 tpy of GHGs. Accordingl y, we proposed to use our general rulemaking authority under section 301(a) of the CAA and APA section 553 to limit our prior appr oval of state operating permit programs. This limited approval action would have had the effect of appl yi ng CAA permitting requirements only to sources that exceed the permitting thresholds established in this rule for the phase

- in, because onl y those sources would be covered by the federall y approved part 70 programs. 74 FR at 55345. As discussed previously, we are proceeding with a slightly revised approach to address concerns similar to those raised with our proposed approach for addressing SIP

- approv ed PSD permit programs. Because we now recognize that, like the PSD program, man y states will be able to implement the final rules without the need to revise their existing part 70 operating permit programs, we are delaying further action on our proposal to limit approval of existing part 70 programs until we better understand how permitting authorities will implement our final rule. In addition to the information requested previously on SIP

- approved PSD permit programs, we ask each state to submit a le tter to the appropriate EPA Regional Administrator no later than 60 day s after promulgation detailing the state’s plan for permitting of GHG sources under the state’s part 70 program. In that letter, states should explain whether they will adopt an interp retation of the terms “major source” or an y of its component terms

– “a major stationary source,” “an y air pollutant,” or “subject to regulation,” or the numeral thresholds

-- that is consistent with EPA’s regulatory interpretation of the these terms as co dified at 40 CFR 70.2, and whether the state intends to adopt the interpretation without undertaking a regulatory or legislative process. This approach may be available, for example, where a state has taken the position, or determines now, that the state’ s interpretation of these terms is intended to track EPA’s interpretation, resulting in title V permitting for sources of GHGs as described in EPA’s regulations adopted in this rule. If a state must revise its title V regulations or statutes to implement the interpretation, we ask that it provides an estimate of the time to adopt final rules or statutes in its letter to the EPA Regional Administrator. If a state chooses not to (or cannot) adopt our interpretation, the letter should address whether the state has alternative authorit y to implement the GHG tailoring approach or some other approach that is at least as stringent, but which also addresses the expected shortfalls in personnel and funding and delay s in permitting that would exist if the state carried out permitting under part 70 program thresholds lower than those adopted b y EPA in this final rule. For an y state that is unable or unwilling to adopt the permitting thresholds in the final rules, and otherwise is unable to demonstrate adequate181

personnel and funding, EPA will move forward with finalizing a narrowed limited approval of the state’s existing part 70 program. If we do so, then we will respond in that action to comments on our proposal. In our proposed rule, we also noted that a handful of part 70 operating permit programs may include provisions that would not require operating permits for any source of GHG emissions because, for example, the programs may apply onl y to pollutants specificall y identified in the program provisions, and the provisions do not specifically identify GHGs. In these cases, states may

be unable to interpret their regulatory provisions to interpret the term “an y pollutant” to include pollutants “subject to regulation.” We indicated that we intended to take separate action to identify these programs, and to take regulatory action to correct this deficiency . Accordingly , we ask an y state or local permitting agency that does not believe its existing part 70 regulations convey authorit y to issue title V permits to GH G sources consistent with the final rule to notify the EPA Regional Administrator by letter as to whether the state intends to undertake rulemaking to revise its rules consistent with these applicability thresholds. This notification should be done no lat er than the previously described letter regarding adoption of the Tailoring Rule, and could be combined with similar notifications we request regarding the PSD program. We intend to undertake a separate regulatory action to address part 70 programs that l ack the ability

to issue operating permits for GHG sources consistent with the final rule. We also intend to use our federal title V authority to ensure that GHG sources will be permitted consistent with the final rule

. Also, while EPA does not believe N OD s , auth o ri zed under section 502(i) of the Act and § 70.10(b), are needed at this time, EPA will review the information submitted by

states in response to this final rule, work with them to adopt the tailoring rule, and undertake oversight actions , if appr opriate, which may include issuing NODs

. Comment : Several commenters question the legal merits of EPA’s “retroactive” reinterpretation of SIPs (3720, 4524, 5083, 5133, 5140, 5181, 5278, 5800). For example, courts may not agree that EPA may circumvent th e procedural requirements of SIP calls and public notice and comment by withdrawing prior approvals of an y GHG threshold below EPA’s 25,000 tpy (5133) and even if EPA could rel y on the SIP “correction” provision in section 110(k), there is no similar provi sion for EPA to “correct” an error in its original approval of a title V program (5140, 5181, 5278). In addition, this plan disrupts the normal, orderl y process of revision of state programs (5133) and this contravenes settled law on the roles of EPA and the states in SIP planning (5181). Furthermore, if a state wanted to fix its SIP after the fact, relaxing the CAA rules would fall under the CAA’s “antibacksliding” provision (4631, 5318, 6491, 7961). Such a retroactive effort would call into question th e validity of permits issued and invite litigation . Two commenters (5140, 5278) also contend that EPA’s proposed approach to program revisions is problematic because the requirement to obtain a permit is a source obligation , so if EPA’s approach is invali d, the sources will be liable for failure to obtain a permit. Sources are also at risk of citizen suits under federal law for failure to hold required permits. While a source may raise the proposed rule as a defense to a citizen suit, a court that believ es EPA was not authorized to retroactively

revise its SIP approvals could similarly disregard the proposed rule. EPA’s proposed rule thus puts sources at an unacceptable risk of enforcement through citizen suits.182

Response: Because we now anticipate th at many states will be able to implement our tailoring approach through interpretation of the term “subject to regulation,” and without the need to revise their SIPs, we are delaying further action on our proposal to limit our approval of SIPs until we better understand how permitting authorities will, in fact, implement our tailoring approach. For this purpose, we ask each state to submit a letter to the appropriate EPA Regional Administrator no later than 60 day s after publication of this rule in the Fed eral Register. In that letter, the state should explain whether it will apply EPA’s meaning of the term “subject to regulation” and if so, whether the state intends to incorporate that meaning of the term through interpretation, and without undertaking a regulatory or legislative process. If a state must undertake a regulatory

or legislative process, then the letter should provide an estimate of the time needed to adopt the final rules. If a state chooses not to adopt EPA’s meaning b y interpretation, the letter should address whether the state has alternative authority to implement either our tailoring approach or some other approach that is at least as stringent, whether the state intends to use that authority . If the state does not intend to interpret or revise its SIP to adopt the tailoring approach or such other approach, then the letter should address the expected shortfalls in personnel and funding that will arise if the state attempts to carry out PSD permitting for GHG sources under the existing S IP and interpretation.
For an y state that is unable or unwilling to adopt the tailoring approach b y January 2, 2011, and that otherwise is unable to demonstrate adequate personnel and funding, we will move forward with finalizing our proposal to limit o ur approval of the existing SIP. Although we received comments questioning our authorit y to limit approval as proposed, using our general rulemaking and section 110(k)(6) authorities, we are not responding to those comments at this time. We will address these comments in an y final action we take to implement a limited approval. In our proposed rule, we also noted that a handful of EPA

- approved SIPs fail to include provisions that would apply PSD to GHG sources at the appropriate time. This is generall y because these SIPs specifically list the pollutants subject to the SIP PSD program requirements, and do not include GHGs in that list, rather than include a definition of NSR regulated pollutant that mirrors the federal rule, or because the state otherwise interprets its regulations to limit which pollutants the state may regulate. At proposal, we indicated that we intended to take separate action to identify these SIPs, and to take regulatory action to correct this SIP deficiency

. We ask any

state or l ocal 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 60 day s after publication of this rule in the Federal Regist er. This letter should indicate whether the state intends to undertake rulemaking to revise its rules to appl y PSD to the GHG sources that will be covered under the applicability thresholds in this rulemaking, or alternativel y, whether the state believes it has adequate authority through other means to issue federall y - enforceable PSD permits to GHG sources consistent with this final rule. For an y State that lacks the ability to issue PSD permits for GHG sources consistent with this final rule, we intend t o undertake a separate action to issue a SIP183

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. 8.2 Transitional I ssues This se ction involves comments concerning transitional issues, including commenter requests for grandfathering exemptions f rom GHG permitting requirements; commenter requests for clarification on whether and when permits and applications must be revised, reopened or otherwise updated to address GHG emissions after the Tailoring R ule takes effect; and commenter requests for delay s in the effective “trigger” date of the Tailoring Rule. 8.2.1 Requests for “Grandfathering” and for Exemptions from Revision, Reopening or Update Requirements for Application and Permits Comment: Several commenters ask that existing permits be exempted from having to consider GHG emissions in PSD and title V permitting after the Tailoring Rule is finalized. They suggest that EPA not re quire sources with valid PSD (5079) or title V (4120, 5059, 5079, 5224) permits to seek revised permits for GHGs. Several commenters would also like us to grandfather sources that have no permits at the time the new GHGs requirements come into effect. T hey recommend that facilities that have been determined not to need PSD permits before the effective date of GHG regulation and that exceed the thresholds for GHG emissions, but not for criteria pollutants, not be required to appl y for PSD permits (5113). Another commenter thinks that EPA should grandfather facilities that may not be title V facilities now, but would become subject to title V due to GHG thresholds. (3282) Other commenters would like us to grandfather permit applications that were subm itted prior to the effective date (or when GHG emissions are first subject to regulation) of the Tailoring Rule from an y requirement to address GHGs in the application, and by extension, the permit (because the application is the basis for the permit). Th ey believe it would be unduly burdensome and impose unreasonable additional costs and delay to reopen PSD and title V permit applications already submitted to address GHG emissions if the sources are working in good faith under the existing regulatory proc ess (4515, 4691, 4786, 5147, 5224, 5277, 5341, 5711, 5742, 6458). Some of these commenters ( 4208, 4228, 4514, 4525, 4903, 5144, 5706, 5742, 5773, 6202, 6270, 6458 , 6460 ) add that there is no information currently available as to what BACT will look like f or GHG emissions, while one commenter (5277) adds that this would slow PSD and other permitting to a crawl due to low staff numbers, hiring freezes, and lack of training opportunit y for permitting staff. For these reasons, some of these commenters recomme nd that:
 EPA require sources that have already submitted a complete PSD permit application before the applicable PSD triggering date for GHGs (and irrespective of when an y completeness determination is made) to have the application evaluated, and its permi t issued, on the basis of the PSD requirements in effect at the time the application was184

submitted. ( 4122, 4318, 4522, 4523, 4749, 4992, 5038, 5080, 5089, 5113, 5114, 5128, 5257, 5317, 5327, 5601, 5741, 6459, 8025, 8301 ). Some of these commenters believe this approach would be consistent with the administrative law principle that legislative rules cannot have retroactive effect unless expressly authorized by

Congress [citing, e.g. , Bowen v. Georgetown Univ. Hosp. , 488 U.S. 204, 208

- 09 (1988)].
 EPA shoul d add that neither the application nor the final permit would need to address GHGs (5317) and that the permit applications would be final and should not be reopened to address GHG emissions. (5113)
 EPA should clarify

that GHG permitting is not required f or applications received before the effective date of the Tailoring Rule, assuming the permit has not been issued, and that EPA should delay

permitting until at least October 1, 2011. (5341)
 Facilities should be grandfathered (4515, 4691, 4770, 5180, 51 99, 5277, 5301, 5711, 6458) because EPA has provided similar exclusions in the past when the rules of the NSR program changed (4515, 4691, 5180, 5277, 5711) (e.g., comment 5277 cites the PM

- 10 surrogate policy , 40 CFR 52.21(i)(1)(x) and two guidance docume nts as examples of past practices EPA has used for grandfathering) and EPA could use the “administrative necessit y” doctrine to confirm that only new permit applications are impacted. If a PSD or title V permit application is submitted and is administrati vely complete before the date on which PSD or title V begins to appl y to a pollutant, then that application should not be subject to any

requirements for that pollutant nor should the application be considered as incomplete on the ground that it did not ad dress that pollutant (5199) Various commenters ask EPA to clarify that if a source with a final PSD permit has not commenced construction by the time GHGs become subject to regulation, they should not be required to submit new permit applications to addre ss the new GHGs requirements. They recommend that EPA allow permitted sources that commence construction within 18 months from the date when GHGs become subject to regulation (or an y earlier date required b y the SIP) not be required to seek a revised PSD permit for GHGs (5078, 5079) or be required to obtain a PSD permit solely

due to their GHGs emissions (5180). One commenter (5224) requests that EPA confirm that construction projects that have not commenced when the LDVR goes into effect, where all the a

pplicable permitting has been initiated/completed, are exempt from having to revise their PSD permit application. Other commenters would like us to grandfather minor sources from the new GHG requirements ( 4122, 4318, 4522, 4523, 4691, 4749, 4992, 5038, 5080, 5089, 5114, 5128, 5257, 5301, 5317, 5327, 5601, 5741, 6459, 8301 ). They recommend that EPA provide that an y source that is not “major” and that has submitted a complete “minor NSR” application before the applicable PSD triggering date for GHGs have that application evaluated, and its permit issued, on the basis of the minor NSR requirements in effect at the time the application was submitted ( 4122, 4318, 4522, 4523, 4691, 4749, 4992, 5038, 5080, 5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741, 6459, 8301 ). One commenter adds that this would be consistent with, for example, the 1980 PSD Regulations, which exempted all sources not subject to the pre

- existing PSD regulations if they

obtained all permits required by the applicable SIP before the date of promulgation of the new PSD regulations (and commenced construction within 18 months of the date of promulgation) (4691).185

One commenter, 4298, requests that EPA implement a generous transition policy for sources with actual emissions below the PTE thres holds. The commenter adds that any “state

enforceable limits that are enforceable as a practical matter” should be explicitly recognized as limiting PTE, without the need to eventually upgrade such requirements to “federal enfo rceability” in a permit. Many commenters request, in general, that EPA clarify transitional and timing issues associated with the Tailoring Rule.
 EPA must adopt reasonable transition provisions and this is consistent with EPA past practice. ( 4122, 4318, 4522, 4523, 4749, 4992, 5038, 5080, 5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741, 6459, 8301 ) The commenters provide man y examples where EPA has provided such transition considerations in the past.
 At a minimum, any

new GHG rules should provide a transition period and allow greater phase

- in to reduce economic disruption and ease state administration of permits, suggesting the transition should extend to March 2012. (4106) General comments and questions , specific to the transition for the PSD program:
 EPA should consider pr ovisions in the final rule that would allow an orderly transition of GHG regulation under the PSD program (4120, 4749). If not, the Tailoring Rule might still yield an unworkable program.
 The final Tailoring Rule should clarify at which stage ongoing proj ects' PSD reviews must consider GHGs. (5079)
 EPA should consider not requiring approval of PSD permits between approval of the Tailoring Rule and the date the state approves the GHG thresholds in their rules (5338) to allow time for the state to incorporate the new thresholds into their rules.
 What will the requirement be for a facility that has a PSD permit underway with the appropriate regulatory

authority? Must the PSD application be rewritten to include a review of GHG emissions from the proposed proj ect and then resubmitted to the regulator for review (4747)? General comments, specific to the transition for the title V program:
 For sources with existing title V permits: o In corporate GHG references and the GHG monitoring rule requirements into their title V permits at the time the permit is normally up for renewal. (2797, 5084, 5443, 5528, 6681) o In corporate the GHG provisions when their permit is up for renewal, but not before the first y ear of GHG reporting data for y ear 2010 is submitted in early 2011. The data will be better and will avoid the need for companies to prepare the data twice. (5705) o Permits should not be required to address GHGs before renewals even if they undergo a modification. (4749) o How must a source amend the permit to incorp orate GHGs? Should the source assume that the provisions for “reopening for cause” at 40 CFR 70.7(f)(1)(i) apply ? o Permits should not be required to comply with the new GHGs provisions until the source undertakes a PSD modification or consider a phased

- i n approach with a higher major source threshold for title V initially than that for PSD. The same186 "administrative necessit y" and "absurd results" legal doctrines that EPA relies on for the proposal as a whole would also apply to these ty

pes of title V

- spe cific tailoring approaches. (7935) o GHGs limits (and an y associated monitoring, recordkeeping, reporting, or testing requirements) should not be included in title V permits because there are no applicable requirements that place limits or require control s of GHGs in the CAA. (4749)
 For sources that become subject to title V for the first time: o Require application submittal one y ear after they become subject to regulation. (2797, 5084, 5443, 5528, 6681) o Sources subject under step 2 should submit applicat ions one y ear after the effective date of step 2. (2797, 5084, 5443, 5528, 6681) o Where title V permitting for GHGs is required EPA should eliminate states’ discretion to require permit applications any sooner than 1 y ear after commencing operation. (42 98) o EPA should clarify

that sources in states with merged PSD and title V permit programs should appl y for the permit prior to construction. (4298) o Authority

should be given to the states to call for 20 percent of the new required title V applications f

or sources over 25,000 tpy CO 2 e every

y ear over a 5

- ye ar period. If not, all of the renewal applications will be due together 5 ye ars later, and every 5 ye ars thereafter. (8747) o EPA should provide the maximum legall y defensible amount of time to pass b etween the issuance of the LDVR and the date GHGs become regulated pollutants. (5338) Response: We partially

addressed transitional issues for PSD permitting in our April 2, 2010 final action on reconsideration of the Interpretive Memo. 75 FR 17021. This action addressed the applicability

of PSD permitting requirements for GHGs to pending PSD permit applications that were (or will be) submitted prior to January 2, 2011 based on emissions of pollutants other than GHGs . However, we have not y et address ed the questions raised b y public comments concerning sources that obtain PSD permits, minor NSR permits, or determinations that no such permits are needed prior to the step 1 period set forth in this rule. We have also not y et addressed questions about the applicability of PSD permitting requirements for sources that are not currentl y required to submit an application for a PSD permit but that could be required to do so in step 2 of the phase

- in established in this action. In addition, our April 2, 2010 action did not address transitional issues concerning the application of the title V provisions to GHGs

. 1. Transition for PSD Permit Applications Pending When Step 1 Begins In our action on April 2, 2010, EPA explained that the Agency did not see groun ds to establish a transition provision for pending PSD permit applications because we had determined that PSD permitting requirements would not apply for GHGs for another 9 months. We explained that permit applications submitted prior to April 2, 2010 sho uld in most cases be issued prior to January

2, 2011 and, thus, effectively have a transition period of 9 months to complete processing before PSD requirements become applicable to GHGs. We also observed that, in the case of an y PSD permit application rev iew that cannot otherwise be completed within187

the next 9 months based on the requirements for pollutants other than GHGs, it should be feasible for permitting authorities to begin incorporating GHG considerations into permit reviews in parallel with the co mpletion of work on other pollutants without adding delay to permit processing. Additional discussion of EPA’s reasons for not developing transition provisions for PSD permit applications that are pending on January 2, 2011 are provided in the April 2, 20 10 notice. 75 FR 17021

- 22. For these same reasons, we continue to feel that a transition period is not warranted to incorporate GHG requirements into any PSD permit applications that are pending when step 1 of the permitting phase

- in begins for those sources that would otherwise need to obtain a PSD permit based on emissions of pollut ants other than GHGs . Thus, this action makes no change to the position we expressed on this particular issue in the April 2, 2010 notice. In this final rule on tailoring the PSD program to address GHGs, we have determined that the additional burden of incorporating GHG requirements into PSD permits for the sources already required to obtain such permits is manageable in the step 1 period. Thus, this rule has added no addit ional requirements or limitations that would justify deferring the establishment of pollution controls for this category

of GHG sources once PSD permitting requirements are initially triggered for GHGs. 2. PSD Permits I ssued Prior to Step 1 EPA has not historically

required PSD permits to be updated or reopened after they are issued in the absence of an action by the applicant to change the phy sical or operational characteristics of the source described in the permit application. EPA’s PSD permitting r egulations contain no provisions that address the modification or amendment of a PSD permit or require a PSD permit to be reopened or modified on the basis of new PSD permitting requirements that take effect after the final permit is issued. Since PSD permits are construction permits, EPA has not required updates to PSD permits in the same manner as is ty picall y required for operating permits that incorporate a variety of applicable requirements (such as title V permits and NPDES permits under the CWA). In addition, unlike operating permits, PSD permits are not required to be renewed. However, if construction under a PSD permit is not commenced in a timel y manner or is discontinued for an extended period, a PSD permit may expire if an extension is not req uested or justified. See , 40 CFR 52.21(r)(2); 40 CFR 124.5(g). With respect to the application of PSD permitting requirements for GHGs beginning on January 2, 2011, we do not see any cause to deviate from our historical practice of not requiring PSD perm its to be reopened or amended to incorporate requirements that take effect after the permit is issued. Thus, we are not promulgating any new rules or requirements pertaining to PSD permits issued prior to Step 1 of the phase

- in described in this rule. Th ere is no mandatory requirement to reopen a previously issued PSD permit to incorporate GHG requirements that were not applicable at the time the permit was issued. A major source that obtains a PSD permit prior to January 2, 2011 will not be required under EPA regulations to reopen or revise the PSD pe rmit to address GHGs in order for such a source to begin or continue construction authorized under the permit. Our current PSD permitting regulations provide that “[n]o new major stationary source or majo r modification to188

which the requirements of paragraphs (j) through (r)(5) of this section apply shall begin actual construction without a permit that states the major stationary source or major modification will meet those requirements.” 40 CFR 51.166(a)( 7)(iii); 40 CFR 52.21(a)(2)(iii). The term “begin actual construction” generally means “initiation of phy sical onsite construction activities on an emissions unit which are of a permanent nature” and includes activities such as “installation of building s upports and foundations, laying underground pipework and construction of permanent storage structures.” 40 CFR 51.166(b)(11); 40 CFR 52.21(b)(11). A source that begins actual construction authorized under a PSD permit prior to January 2, 2011 will not be in violation of the prohibition described previously if it continues construction after that date. This portion of the regulation precludes only beginning construction without the appropriate preconstruction permit and does not require a permit to be upd ated to continue actual construction that has alread y begun. Furthermore, a source that is authorized to construct under a PSD permit but has not y et begun actual construction on January 2, 2011 may

still begin actual construction after that date without having to amend the previously

- issued PSD permit to incorporate GHG requirements. Sections 51.166(a)(7)(iii) and 52.21(a)(2)(iii) require “a permit that states that the major stationary source or major modification will meet those requirement,” which re fers to the “requirements in paragraphs (j) through (r)(5)” referenced earlier in those provisions. EPA construes this language to describe a permit that meets the requirements of paragraph (j) through (r)(5) that are in effect at the time the permit is i ssued. P ermitting and licensing decisions of regulatory

agencies must generall y reflect the law in effect at the time the agency makes a final determination on a pending application. See Ziffrin v. United States , 318 U.S. 73, 78 (1943); State of Alabama v. EPA , 557 F.2d 1101, 1110 (5 th Cir. 1977); In re: Dominion Energy Brayton Point, LLC, 12 E.A.D. 490, 614

- 616 (EAB 2006); In re Phelps Dodge Corp., 10 E.A.D. 460, 478 n. 10 (EAB 2002). Thus, a source may

begin actual construction on or after January 2 , 2011 under a PSD permit that authorized construction to begin prior to January 2, 2011 because such a permit states that the source will meet the requirements of paragraphs (j) through (r)(5) of these regulations (or state equivalents) that were in effec t at the time the permit was issued. However, this would not be the case if the permit has expired because the applicant has discontinued construction or failed to commence construction by the necessary

date. See , 40 CFR 52.21(r)(2). This approach is c onsistent with EPA’s practice when the preconstruction permitting requirements change b y virtue of the designation of an area as a nonattainment area after a PSD permit is in issued. In transitional guidance issued by EPA in 1991, EPA explained that “the area designation in effect on the date of permit issuance b y the reviewing agency determines which regulations (part C or D) appl y to that permit.” Memorandum from John S. Seitz, Director OAQPS, New Source Review (NSR) Program Transitional Guidance, page 6 (Mar. 11, 1991). This memorandum explained further that “where a source receives a PSD or other permit prior to the date the area is designated as nonattainment, the permit remains in effect” as long as the sources meets the conditions necessary to prev ent the permit from expiring. Id. at 6. This approach does not apply if the source engages in a major modification after January 2, 2011 that is not authorized by the previousl y issued permit. Once step 1 of the phase

- in189

begins, if the PSD requirement s for GHGs are applicable to a previousl y - permitted source that engages in a major modification not covered b y the permit, such a source will need obtain a new PSD permit to authorize the modification and that permit may need to include GHG requirements depending on the level of increase in GHGs that results from the modification. 3. Additional Sources for Which PSD Applies in Step 2 In light of the terms of existing PSD regulations and the lead time provided in this action for sources that will first b ecome subject to PSD permitting in step 2, we do not believe there is presentl y a need to establish transition provisions for sources that will be required to obtain PSD permits for the first time in step 2 of the phase

- in. As described previousl y, under our current PSD permitting regulations, a new major stationary source or major modification may not begin actual construction without a PSD permit that meets the applicable preconstruction permitting requirements. 40 CFR 51.166(a)(7)(iii); 40 CFR 52.21(a) (2)(iii). Since a permit must be obtained before a major source may begin actual construction, the major source preconstruction permitting requirements in sections 51.166 and 52.21 of the regulation do not generally appl y to a source that begins actual co nstruction at a time when it was not a major source required to obtain a PSD permit. One exception, however, is the unique circumstance when a source becomes a major source solel y b y virtue of the relaxation of an enforceable limitation on the source’s po tential to emit. 40 CFR 51.166(r)(2); 40 CFR 52.21(r)(4). But absent these circumstances, PSD preconstruction permitting requirements do not generall y preclude a source from continuing actual construction that began before the source was a source require d to obtain a PSD permit. Thus, a source that began actual construction under the authorization of an y previousl y required minor source or state construction permit is not required to meet an y PSD preconstruction permitting requirement that becomes applic able after actual construction begins unless the source engages in a major modification after PSD permitting requirements are applicable. Likewise, a PSD permit is not required after a source begins actual construction based on a valid determination (by the source or the permitting authority) that the source need not obtain either a major PSD permitting requirements or and minor NSR permit. Based on these provisions in existing regulations, EPA will not require any sources to which PSD permitting requirem ents begin to appl y in step 2 to obtain a PSD permit to continue construction that actually begins before step 2 begins. However, we will expect phase 2 sources that begin actual construction in phase 2 (i.e., beginning July

1, 2011) to do so only

after o btaining a PSD permit in accordance with sections 52.21, 51.166, or an y applicable state regulation that meets the requirements of section 51.166. We recognize the potential for the triggering of step 2 to result in a change in status where a project may legall y have begun actual construction before step 2 but did not do so and would then need a PSD permit. However we also note that we are providing over a year of lead time before PSD permitting requirements become applicable to step 2 sources. If projec ts would be adversel y affected b y this change in status, this lead time affords an opportunity for sources planning such projects to secure appropriate minor NSR permits (which generall y take less than a y ear to issue), non

- applicability determinations, et c. in time to avoid such a change in status. If a new or modified source that would become newly subject to PSD in step 2 plans to begin actual construction before step 2, it has more than a year to obtain the applicable preconstruction190

approvals and begi n actual construction. L ikewise, a step 2 source that does not anticipate the ability to begin actual construction before step 2 begins should have enough lead time to submit a PSD permit application and obtain the necessary permit without significantly d elaying the project further. Therefore, we do not think it is necessary or appropriate to promulgate a transition provision that would exempt step 2 sources from PSD permitting requirements that will apply

based on construction that begins after step 2 takes effect. This approach for step 2 sources that have obtained a minor source construction permit or non - applicability

determination differs from the approach described previously for source that obtained a PSD permit prior to step 1. As described previ ously , a step 1 source that is authorized to begin actual construction before January 2, 2011 under a previously

- issued PSD permit may begin actual construction under that permit after January 2, 2011 without modifying the PSD permit to address GHGs. Howe ver, a step 2 source that was not required to obtain a PSD permit before Step 2 begins would need to obtain a PSD permit addressing GHGs if it has not y et begun actual construction prior to step 2, even if the source had obtained an y preconstruction approv als that were necessary

to authorize construction prior to step 2. This is because such a step 2 source that begins actual construction after step 2 would likely be doing so without having any permit meeting the requirements of paragraphs (j) through (r)( 5) of section 52.21, 51.166, or a state equivalent. A source that has obtained only a minor source permit prior to step 2 but that begins actual construction after July 1, 2011 would violate the requirements of section 52.21(a)(2)(iii), 51.166(a)(7)(iii), or a state equivalent, unless the source took care to ensure that it was authorized to construct under a PSD permit or could demonstrate that the source’s minor source construction permit makes clear that requirement of paragraphs (j) through (r)(5) of se ctions 52.21, 51.166, or a state equivalent would be met by the source even though such a permit was not nominally

a PSD permit. This difference in approach for non

- PSD sources is driven b y the terms of sections 52.21(a)(2)(iii) and 51.166(a)(7)(iii). Si nce we have not provided an y prior notice that we might be considering revisions to sections 52.21 and 51.166 to address this topic, we are unable to revise the regulations in this action to achieve the same result for non

- PSD sources as for PSD sources. Furthermore, this difference in approach is not unreasonable since non - PSD sources will not trigger permitting for GHG until step 2 (only an ywa y PSD source trigger in step 1). Thus sources will have until July 1, 2010, an additional 6 months of lead time, to prepare for the transition described here. EPA has previously

promulgated exemptions that have authorized some sources that were not previously

subject to the PSD regulations to commence construction on the basis of minor source permits after the date new PSD requirements have took effect in 1978 and 1980. See e.g., 40 CFR 52.21(i)(1)(iv)

- (v). There is a notable distinction between these provisions, which use the term “commence construction,” and the terms of sections 52.21(a)(2)(iii) and 51.166(a) (7)(iii), which use the term “begin actual construction.” Commence construction is defined more broadl y than begin actual construction to include obtaining all necessaril y preconstruction approvals and either beginning actual on

- site construction or entering into binding contracts to undertake a program of actual construction. 40 CFR 52.21(b)(9); 40 CFR 51.166(b)(9). The term commence construction is also defined in the CAA. 42 USC 7479(2)(A). Among other purposes, the term “commence construction” is g enerall y used in the Act and EPA regulations to distinguish construction activities that are exempt from new PSD permitting requirements from those that are not. See e.g

. , 42 USC 7475(a); 40 CFR191

52.21(i)(1)(i)

- (v). In the absence an explicit exemption in the CAA or the PSD regulations that uses the term “commence construction,” we do not believe we can use the date a source “commences construction” under a minor source construction permit approval as a demarcation point for step 2 sources that may continu e ongoing construction activities without having to obtain a PSD permit based on emissions of GHGs. Since we did not provide prior notice of an intention to adopt transition provisions applicable to this situation, we are unable to adopt such an exemption in this action that applies the term commence construction in this context. Consequently , the approach described previousl y applies the term “begin actual construction” based on the language in sections 52.21(a)(2)(iii) and 51.166(a)(7)(iii). 4. Transi tional I ssues for Title V Permitting Since the title V permitting regulations already include a robust set of provisions to address the incorporation of new applicable requirements and other transitional considerations, we do not see grounds to establish unique transition or grandfathering provisions for GHGs in this action. Furthermore, since the purpose of title V is to collect all regulatory requirements applicable to a source and ensure compliance, we do not believe special exemptions for GHG require ments are likel y t o be justified. The existing title V rules do not provide an y exemptions that relieve the obligation to incorporate all applicable requirements into a title V permit. However, the title V regulations contain numerous provisions that all ow a reasonable period of time for incorporating new applicable requirements or applying for a title V permit that was not previously

required. Transitional issues for incorporation of GHG requirements into title V permitting generall y involve questions i n the following categories: (1) permit application requirements for sources not previously subject to title V that will become subject to title V requirements in step 2 of the phase

- in; (2) the need for updates or amendments to title V permit applications that are pending when GHGs become subject to regulation in step 1 of the phase

- in; and (3) the incorporation of new applicable requirements for GHGs into existing permits for sources currentl y subject to title V. With respect to the first category , a t itle V source applying for the first time must submit its permit application within 12 months after the source “becomes subject to the [operating] permit program” or such earlier time that the permitting authority may require (see section 70.5(a)(1)). Sources not otherwise subject to title V can become major sources subject to title V due to emissions of GHG no sooner than July 1, 2011. If a source becomes “subject to the [operating] permit program” on July 1, 2011, then its permit application under the t itle V operating permit program would ty picall y have to be submitted no later than July 1, 2012. The title V program has traditionally provided significant flexibility to state programs in setting deadlines for permit application submittal, consistent with the statutory requirements, and EPA does not believe, as several commenters suggested, that it is appropriate or necessary to limit state discretion in this regard in this action, provided the state’s deadlines are consistent with the statutory requireme nts. Also in this final rule, EPA has reduced the number of sources that will potentially

be subject to title V as a result of GHG emissions in step 2, compared to the proposal, because we believe permitting additional sources in step 2 would overwhelm th e permitting process and be contrary

to congressional intent, thus, helping states to manage the transition to permitting GHG sources. In the prospective step 3 rulemaking, we will continue to consider192

approaches to phasing

- in title V applicability for so urces of GHG emissions, which will also potentially

help states with transitional issues, consistent with congressional intent. There are also existing regulations relevant for the second category of GHG transition issues, where sources currently subject to title V have title V permit applications pending with a permitting authorit y as of January 2, 2011. Where additional applicable requirements become applicable to a source after it submits its application, but prior to release of a draft permit, the so urce is obligated to supplement its permit application. See 40 CFR 70.5(b); 71.5(b). Furthermore, title V permits are generally required to contain provisions to assure compliance with all applicable requirements at the time of permit issuance. See CAA section 504(a); 40 CFR 70.6(a)(1); 71.6(a)(1). If a permitting authority determines that additional information is necessary to evaluate or take final action on an application (e.g., because of uncertainty over whether a draft permit assures compliance wi th all applicable requirements), it may , and should, request additional information from the source in writing and set a reasonable deadline for a response. See 40 CFR 70.5(a)(2); 71.5(a)(2). Likewise, the existing title V regulations provide sufficient transition for the third category of issues, where a source has additional GHG

- related applicable requirements (such as the terms of a PSD permit) that must be incorporated into its existing title V permit. Where a source is required to obtain a PSD permit, the source must apply for a title V permit or permit revision within 12 months of commencing operation or on or before such earlier date as the permitting authorit y ma y establish (or prior to commencing operation if an existing title V permit would pr ohibit the construction or change in operation). See 40 CFR 70.5(a)(1)(ii); 71.5(a)(1)(ii); see also sections 70.7(d) and (e); 71.7(d) and (e) (permit modifications) . In addition, where a source becomes subject to additional applicable requirements, the permitting authority is required to reopen the permit to add those applicable requirements if the permit term has three or more ye ars remaining and the applicable requirements will be in effect prior to the date the permit is due to expire. See 40 CFR 70. 7(f)(1)(i); 71.7(f)(1)(i). Finally , EPA notes that the existing title V regulations require sources to furnish permitting authorities, within a reasonable time, any information the permitting authority may request in writing to determine whether cause e xists for modifying, revoking, and reissuing, or terminating the permit, and for other reasons, and further provide that permitting authorities shall reopen and revise permits if EPA or the permitting authorit y determine that the permit must be revised or revoked to assure compliance with applicable requirements . See sections 70.6(a)(6)(v);71.6(a)(6)(v) and sections 70.7(f)(1)(iv); 71.7(f)(1)(iv). Thus, EPA believes that the existing title V regulations provide an adequate regulatory framework for managin g the transition to incorporating GHG requirements in title V permits and additional specific exemptions or transition rules for title V are not currently warranted.193

8.2.2 Requests for Delays in Implementation Comment : Several commenters assert that E PA has discretion to delay the implementation of GHG permitting as described in the proposal in various way s using various mechanisms under the “absurd results” and “administrative necessity” doctrines. Examples of the ty pes of comments received include the following:
 If EPA has the legal authority to defer regulation for sources emitting equal to or less than 25,000 tpy

of GHGs, then by

implication, EPA also would have the authority to exempt sources above 25,000 tpy of GHG emissions, if it is necessary t o do so to avoid “absurd results” (4771, 4863, 5305, 5922) and “administrative infeasibility .” (4771, 5922)
 EPA should delay

promulgation of the final automotive emission CO 2 rule, now scheduled for March 2010, to ensure that EPA’s proposed BACT guidance is available for public comment, and that states are in position to implement PSD and BACT reviews pursuant to EPA’s final guidance. In the mean time, the companion CAFE rule that will be issued by

NHTSA in March 2010 will require equivalent CO 2 emission limits on new automobiles as the final automotive emission CO 2 rule. (5342) o EPA can finalize just the CAFE standards to allow time to formulate an efficient approach to stationary

source regulation without sacrificing expected light

- duty vehicle efficienc y improvements. (5714) o EPA should delay

promulgation of the GHG emission standards portion of the Motor Vehicle GHG rule until mitigating measures are lawfully in place. There is little environmental benefit from regulating GHGs under this rule and the fact that the timing of the Motor Vehicle GHG Rule is discretionary means that the PSD Tailoring Rule cannot be justified under the “absurd results” or “administrative necessity” doctrine. (4870)
 EPA has an obligation to respond to the remand from Massa chusetts v. EPA 9 , but EPA retains significant discretion on taking action concerning regulation of GHGs under the CAA (4771, 5131, 5183, 5300, 5343, 6414, 7131, 8283) and regarding timing of rules based on this remand (4870, 5318, 6414, 8283). Two comment ers add that the Court of Appeals for the District of Columbia (“D.C. Circuit”) has already denied a petition to compel EPA action in response to Massachusetts v. EPA 10 (5278, 5140). For that reason: o EPA has clear legal authority to defer promulgation of section 202 GHG emission standards and thereb y avoid the need for the PSD Tailoring Rule altogether, even now that the Agency

has proceeded to finalize the endangerment and cause or contribute findings under CAA section 202 (4870). One commenter (5318) ad ds that EPA needs to conduct further evaluation of the numerous legal questions surrounding the Tailoring Rule and evaluate the impact on state and local permitting authorities in order to insure that the Unfunded Mandates Reform Act ( UMRA ) of 2005 is not violated.

9 See 549 U.S. 497, 533 (2007). 10 See Commonwealth of Mass. v EPA, No. 03

- 1361 (D.C. Cir. Jun. 26, 2008)194

o EPA is well

-

justified in deferring action on a CAA GHG regulatory program to provide a reasonable period of time for EPA, states, and regulated entities to prepare for such a program, given the enormous difficulties of regulating GHGs under the C AA (5131), and to ensure that its regulatory program in fact will not create more problems than it solves (5343). One commenter adds that EPA should take the time to gather adequate public input on this plan and carefull y examine all of the consequences o f this action (7131). o EPA should simply

defer regulating GHG emissions under the PSD and title V programs to allow Congress the time and opportunity to develop a GHG regulatory mechanism outside the CAA. Congress never contemplated, and certainl y never intended, that GHG emissions be regulated under the CAA. (5300) Various commenters state that a delay is necessary

to evaluate legal questions and to accommodate inevitable legal challenges because the court s ys tem needs to test the legality of the Tailori ng Rule (5184, 5504, 5524, 5606, 5785, 8015) and the endangerment finding, and as such, EPA should consider suspending implementation of this proposed rule (4555). Several commenters believe that a delay is also necessary

to give everyone time to prepare for the new GHGs requirements because:
 EPA has not given the states suff icient time to revise their SIPs for GHG permitting (2504, 3278, 3858, 3916, 3918, 4019, 4238, 4239, 4515, 4519, 4521, 4630, 4694, 4691, 4860, 4864, 4866, 4871, 4989, 5061, 5063, 5073 , 5081, 5084, 5142, 5304, 5314, 5338, 5339, 5343, 5443, 5528, 6679, 7296, 7935, 8747, 16411).
 EPA must delay the rule at least for more than six months (2504, 3278, 3918, 4019, 4238, 4239, 4860, 4864, 4866, 4871, 4989, 5061, 5081, 5084, 5314, 5339, 5443, 5528, 6679, 6681, 7296, 7935) until more programmatic s ys tems have been developed (4555, 5143) and to give states sufficient time to: (1) revise their regulations (3307, 4515, 4524, 4691, 5134, 5711, 16411), (2) contribute to the development of BACT (5342 ) or any other guidance (4863, 5276 , 5305 ), (3) train personnel about the new PSD and BACT requirements (4515, 4691, 5342), (4) prepare for the massive influx in permit requests (4863, 5184, 5305, 5504, 5606, 5785, 8015), and (5) allow for an orderly trans ition and avoid economic disruption (4749, 5276, 5301, 16411).
 EPA must allow for enough time to resolve all implementation issues. ( 3858, 5143)
 A deferral of 4

- 5 y ears is necessary to resolve implementation issues. (16411)
 It can take up to 2 y ears to change state rules, hire, and train new people (4154, 4519, 4521, 5061, 5135, 5443, 5711, 7296) and SIP approval of a state rule takes between 12 to 20 months. (3858)
 EPA’s suggestion to use emergency rulemaking procedures is unworkable because there must be an imminent threat to public health, safet y, or the environment (4521), adjustments to thresholds and fees under this rule do not rise to that threat level, and such rules can onl y sta y in place for 90 day s and can be renewed only once. (4521)
 Sources will need sufficient time to collect CO 2 emissions data for title V renewal applications that may

be due shortly

after this rule takes effect. (3757, 3968)
 The lack of BACT guidance remains a massive obstacle to successful implementation of this rule no matter what applicability thresholds are adopted. (3282)195

Thus, concerning timing, some of these commenters recommend that:
 EPA should allow states 12 months before this rule applies to major PSD sources. (4863, 5228, 5305 )
 EPA should allow for a 1

- (5314) to 2

- ye ar (4515/4691) extension of the implementation of these requirements, starting from the date that the vehicle GHG standards become effective. (4515, 4691, 5314)
 EPA should extend the applicability date for both programs to no sooner than 1 y ear after the effective date of an y rule making GHGs a regulated NSR pollutant. (4767, 4800)
 EPA should phase

- in the title V program over 5 ye ars. (4767, 4800)
 EPA should delay

applicability

for GHGs other than CO 2 for at least another year from whe n the vehicle GHG standards become effective to allow EPA and the states to further understand the workload and title V applicability to pollutants with high GWP. (5134)
 EPA should wait until the GHG Mandatory Reporting Rule data is available in order to perform a more thorough evaluation of the impacted universe (4903, 5339) and to minimize the burden on firms seeking permits (4513).
 EPA should allow the implementation of this rule to begin with certification of MY 2012 vehicles. (3918, 4019, 4238, 4864, 4866, 5057, 5084, 6681), providing 15 months for states to take the necessary actions to implement the rule.
 EPA should postpone any actions that may trigger PSD and title V until it has conducted a thorough assessment of the workability and defensibili ty

of the proposed streamlining techniques (5317) or has developed an effective means of streamlining implementation (4862, 4903, 5142, 5183, 5773, 16411). For example, EPA stated in the preamble of the Tailoring Rule that it would take 3 to 4 years to de velop and implement the various potential techniques needed to “streamline” and reduce the burden of PSD and title V permitting (16411).
 EPA must provide an implementation timeframe for the establishment of control technologies for reducing CO 2 emissions . (5142)
 EPA should allow a 3

- to 5

- ye ar phase

- in of the Tailoring Rule to allow sources the time necessary to make emissions reductions and avoid PSD applicability . (3278)
 At a minimum, a title V application for a major sources of GHG emissions (but a minor source of criteria and HAPs) should not be due any earlier than one y ear after the first substantive compliance date of an y GHG requirement applicable to that source (e.g., NSPS). (4871)
 EPA clearl y has not mapped out a process for implementation that will foster a climate of investment and regulatory certaint y. It is not clear the control technology for BACT for GHG is commercially

- viable, and the interrelation of other EPA regulations, such as the GHG Mandatory

Reporting Rule, and companion provi sions within the proposed Tailoring Rule, are unclear. (4862) Other commenters request a delay in order to develop an adequate impact assessment:
 EPA needs to conduct an adequate impact evaluation (0331, 4018, 4123, 5145, 5318, 5451, 5744, 5787, 5886, 7 136, 8585, 15050), including the economic consequences (8272), and the burdens and unforeseen consequences of these rules (2831).
 EPA needs to further evaluate the impact on state and local permitting authorities in order to insure that UMRA of 2005 is n ot violated. (5304, 5524)196

 EPA should conduct a comprehensive anal ys is (including convening a SBAR panel) of the impacts of this rule (5088, 5771, 5789, 5236) as well as the other GHG rules (including the endangerment finding) on all small businesses (4867 ).
 Members of Congress and agency officials should evaluate the effect that the proposed regulation will have on local environmental and economic initiatives (4768) because there are alternative approaches that would be less expensive, less burdensome, and more economicall y sound. Various commenters believe EPA should delay or stop implementation of GHG regulation until Congress completes their current debate on GHG regulation because:
 Curbing GHG pollution should be fully debated by Congress and, theref ore, the rulemaking should be delay ed until impact projections can be made (7128) or it is determined that it is the policy of the U.S. to regulate GHGs (5784).
 The CAA is not the appropriate tool for addressing the regulation of GHG emissions and that the Agency

should delay

long enough to allow Congress to take action. (4771, 5169, 5573, 14710)
 EPA should withdraw the proposed rule and publish a Federal Register notice announcing (what they

feel is) more reasonable interpretation of the overall applic ability of the PSD program that excludes GHGs. (5140, 5278)
 EPA should abandon or defer the Tailoring Rule and GHG regulation under the CAA. (4990, 5056, 5074, 5085, 5142).
 Congress can use this delay to: (1) consider necessary and meaningful climate le gislation/public policy

(3307, 3607, 4021, 4903, 5088, 5141, 5258, 5525, 5713, 5803, 8071), (2) alleviate the burden of this regulation on EPA (3607), (3) develop an implementation plan that can be agreed upon (5072). One commenter recommends that EPA sho uld withdraw and re

- propose the Tailoring Rule after Congress fully considers the policy and economic implications of the Tailoring Rule (5141).
 EPA should withdraw the Tailoring Rule as it is conceived on a legall y precarious theory and agriculture will inevitably be subject to CAA permitting. At the very least, EPA should delay

action until Congress finishes work on GHG regulation. (5303)
 It should be Congress, not the Agency that develops such a “breathtaking” scope of regulation. (4861)
 Congress is alread y considering climate change legislation and will provide a more comprehensive response to climate change and GHG emissions. (5076, 5103)
 Congress can pass compromise climate legislation alleviating the burden on the EPA. (5803) One commenter (7 295) did not request a delay , but did state that changes this significant should , at a minimum , be debated b y Congress and should not be decided unilaterally b y EPA. Another commenter that did not specificall y request a delay or hold on the rule opines th at, if EPA implements the NSR and title V programs for GHGs, the applicability of these programs should only

be considered interim and should “sunset” upon the commencement of a GHG program enacted b y Congress (7076). Several commenters believe that a de lay is needed to allow time (1) for the American public to review the Tailoring Rule proposal (3741, 4123, 4209, 4631, 4953, 5184, 5454, 5767,197

5784, 7131), (2) for EPA to clarify wh y the Tailoring Rule is needed, and (3) for EPA to clearl y and accuratel y e xplain its costs (5784). Various commenters believe delay s are necessary to give Congress, scientists, and the public time to evaluate the science behind these rulemakings.
 Appropriate scientific and regulatory documentation of the environmental or clim ate change benefits is needed to support the Tailoring Rule and Congress needs to enact a law allowing what we proposed . (5787)
 EPA should consider scientific facts regarding GHGs on the health of our citizens and the effect on global warming . (4120)
 The recent allegations of bias and lack of peer

- reviewed science on the part of the IPCC mean that all underl yi ng data supporting the findings in the IPCC report should be available for review b y EPA and the science community . (5607) Response : Many of th e changes we have made to the Tailoring Rule since proposal, discussed in this and other sections of the RTC and in the preamble for the final rule, address many of the specific concerns that prompted the commenters’ to request delays in implementation (e. g., we increased the GHG applicability

threshold for step 2 from 25,000 to 100,000 tpy CO 2 e and made other changes with respect to GHG applicabilit y, compared to proposal, which effectivel y limits the number of sources potentially subject to permitting during the earl y stages of implementation). With respect to the endangerment/cause or contribute findings under CAA section 202(a), congressional intent is clear that, as we stated in making the findings and the Supreme Court held in Massachusetts v. EPA , we are precluded from considering factors other than the science based factors relevant to determining the health and welfare effects of the air pollution in question. Accordingl y, EPA determined that under Massachusetts v. EPA, 549 U.S. 497 (2007) we were precluded from deferring or foregoing the findings due to concern over impacts on stationary sources affected b y PSD or title V requirements. See 74 FR at 66496, 66500

- 01 (“Taken as a whole, the Supreme Court’s decision clearly indicates that policy

rea sons do not justify

the Administrator avoiding taking further action on the questions here.”); see also Massachusetts v. EPA , 549 U.S. at 533; see also 74 FR at 66515

- 16 (December 9, 2009). (The Administrator “must base her decision about endangerment on the science, and not on the policy considerations about the repercussions or impact of such a finding). 11 Moreover, as EPA also noted, “EPA has the ability

to fashion a reasonable and common

- sense approach to address greenhouse gas emissions and climate ch ange.” 74 FR at 66516. Regarding the timing of the LDVR, Congress’s intent was that endangerment/cause or contribute findings under section 202(a) would in fact lead to control of the air pollutants from new motor vehicles and new motor vehicle engines contributing to the harm. The primary goal of section 202(a) is to achieve such reductions by requiring that EPA adopt emissions standards, and as a result, proceeding with the LDVR is consistent with that goal. In contrast, deferring the

11 Note, that at least one petition for reconsideration on the endangerment/contribution findings raises the same arguments related to the timing of decisions and absurd results. As noted before, EPA is carefully evaluating all the pending petitions for reconsideration.198

LDVR and thereb y dela ying achievement of the public health and welfare benefits Congress expected and required under section 202(a) would run directl y counter to what Congress intended under section 202(a)

-- EPA issuing emissions standards to address the public health and welfare problems that were identified, not EPA refusing to do so. Moreover, we have compelling reasons to proceed with the LDVR, in the manner that we did. As we stated in the LDVR, in response to similar comments that we were not obligated to conduct that rulemaking, or to conduct it at the time that we did:

Some of the comments relating to the stationary source permitting issues suggested that EPA should defer setting GHG standards for new motor vehicles to avoid ... [adverse] stationary source perm itting impacts. EPA is issuing these final GHG standards for light

- dut y vehicles as part of its efforts to expeditiously respond to the Supreme Court’s nearl y three ye ar old ruling in Massachusetts v. EPA, 549 U.S. 497 (2007). In that case, the Court hel d that greenhouse gases fit within the definition of air pollutant in the Clean Air Act, and that EPA is therefore compelled to respond to the rulemaking petition under section 202(a) b y determining whether or not emissions from new motor vehicles cause or contribute to air pollution which may reasonabl y be anticipated to endanger public health or welfare, or whether the science is too uncertain to make a reasoned decision. The Court further ruled that, in making these decisions, the EPA Administrator is r equired to follow the language of section 202(a) of the CAA. The Court stated that under section 202(a), "[i]f EPA makes [the endangerment and cause or contribute findings], the Clean Air Act requires the agency to regulate emissions of the deleterious po llutant." 549 U.S. at 534. As discussed above, EPA has made the two findings on contribution and endangerment. 74 FR 66496 (December 15, 2009). Thus, EPA is required to issue standards applicable to emissions of this air pollutant from new motor vehicle s. The Court properl y noted that EPA retained "significant latitude" as to the "timing ... and coordination of its regulations with those of other agencies" ( id .). However it has now been nearl y three ye ars since the Court issued its opinion, and the t ime for delay

has passed. In the absence of these final standards, there would be three separate federal and state regimes independentl y regulating light

duty vehicles to increase fuel econom y and reduce GHG emissions: NHTSA’s CAFE standards, EPA’s GHG st andards, and the GHG standards applicable in California and other states adopting the California standards. This joint EPA

NHTSA program will allow automakers to meet all of these requirements with a single national fleet because California has indicated t hat it will accept compliance with EPA’s GHG standards as compliance with California's GHG standards. 74 FR at 49460. California has not indicated that it would accept NHTSA’s CAFE standards by themselves. Without EPA’s vehicle GHG standards, the states will not offer the federal program as an alternative compliance option to automakers and the benefits of a harmonized national program will be lost. California and several other states have expressed strong199

concern that, without comparable federal vehicl e GHG standards, the states will not offer the federal program as an alternative compliance option to automakers. Letter dated February

23, 2010 from Commissioners of California, Maine, New Mexico, Oregon and Washington to Senators Harry Reid and Mitch Mc Connell (Docket EPA

- HQ

- OAR

- 2009

- 0472

- 11400). The automobile industry also strongl y supports issuance of these rules to allow implementation of the national program and avoid “a m yriad of problems for the auto industry in terms of product planning, vehicle distribution, adverse economic impacts and, most importantly , adverse consequences for their dealers and customers.” Letter dated March 17, 2010 from Alliance of Automobile Manufacturers to Senators Harry Reid and Mitch McConnell, and Representatives Nan cy Pelosi and John Boehner (Docket EPA

- HQ

- OAR

- 2009

- 0472

- 11368). Thus, without EPA’s GHG standards as part of a federal harmonized program, important GHG reductions as well as benefits to the automakers and to consumers would be lost.165 In addition, delaying the rule would impose significant burdens and uncertainty on automakers, who are already well into planning for production of MY 2012 vehicles, rel yi ng on the ability to produce a single national fleet. Delaying the issuance of this final rule would v ery seriousl y disrupt the industry ’s plans 75 FR 25,402 cols. 1

- 3 (May 7, 2010) (footnote omitted). With respect to both the endangerment/cause or contribute findings and the LDVR, it would require speculation and conjecture to defer

– or, certainly , to forego altogether

-- the findings or LDVR until EPA completed streamlining the PSD and title V requirements on grounds that doing so would allow full compliance in the future with all PSD and Title V statutory provisions. That is the gist of commenters argument

– that EPA should defer or forego issuance of the findings and the LDVR to avoid causing an absurd result from implementation of the separate PSD and title V programs. Underl yi ng this claim is the assumption that this would allow EPA to avoid th e absurd results. As we discuss elsewhere in this rulemaking, there is no basis at this point to determine that streamlining will ultimately allow full compliance with the PSD and title V requirements. Rather, it is possible that EPA may conclude that no ne of the available streamlining techniques will allow all GHG sources at the statutory thresholds to comply with PSD and title V requirements in a manner that does not impose undue costs on the sources or undue administrative burdens on the permitting authorities. Under these circumstances, EPA may then permanentl y exclude GHG source categories from PSD or title V applicability

under the absurd results doctrine. Moreover, it may well take many

y ears before EPA is in a position to come to a conclusion abo ut the extent to which streamlining will be effective and therefore be able to come to a conclusion as to whether an y s ource categories should be permanentl y excluded from PSD or title V applicabilit y. In our rulemaking today, we describe what actions we expect to take in the first six years after PSD and title V are triggered for GHG sources, and we may well be in a situation in which we continue to evaluate streamlining measures and PSD and title V applicability to GHG sources after this six

- year period. Accordingl y, deferring the endangerment/cause or contribute findings and LDVR until such time that PSD and title V streamlining would allow full implementation of these programs200

at the statutory

limits would serve onl y to delay the benefits of the LDV R, as well as the benefits that come from phasing in implementation of the PSD program to cover larger sources first. It would rel y on an assumption that is unfounded at this point, that is, that such full compliance will be required at some point in the f uture. Delaying the emissions benefits of the LDVR and the related emissions benefits from partial implementation of the PSD program fails to implement Congress’ intent that the endangerment/cause or contribute findings “shall” lead to emissions standards for new motor vehicles contributing to the endangerment, and related emissions controls for the same air pollutant under the PSD program. EPA need not determine at this time what approach would be appropriate if there was a determination that full compli ance with PSD and Title V would in fact occur at some point in the future. In this case, absent such a determination, it would be improper to rel y on speculation of such a future possibility as a basis under section 202(a) to defer or forego issuance of the LDVR on the grounds that EPA should defer or forego the LDVR to avoid causing an absurd result. L ikewise there is no basis to defer proceeding at this time with the streamlining of the PSD and t itle V programs. With respect to the PSD and title V appl icability requirements, as we discuss elsewhere, we believe that Congress expressed a clear intent to apply PSD and title V to GHG sources and that the phase

- in approach incorporated in the Tailoring Rule is full y appropriate. Proceeding now with the endangerment/contribution findings and LDVR, even if phasing

- in of the PSD and title V programs is required, is consistent with our interpretation of the PSD and title V applicability

requirements. Delayingthe endangerment/contribution findings or LDVR, and thereb y dela yi ng the triggering of PSD and title V requirements for GHG sources, would lead to the loss of a practicable opportunity to implement the PSD and title V requirements in important part, and thereb y lead to the loss of important benefits. As di scussed elsewhere, promulgating the LDVR and appl yi ng the PSD and title V requirements to the largest GHG sources, as we do in this Tailoring Rule, is practicable because the sources that would be affected b y the initial implementation steps we promulgate in this rule are able to bear the costs and the permitting authorities are able to bear the associated administrative burdens. Promulgating the LDVR now provides important advantages because the sources that would be affected by the initial steps are resp onsible for most of the GHG emissions from stationary sources. It should also be noted that as discussed elsewhere in this rulemaking, our ability to develop appropriate streamlining techniques for PSD and title V requirements is best done within the co ntext of actual implementation of the permitting programs, and not in isolation of them. That is, because the great majority of GHG sources have not been subject to PSD and title V requirements, we will need to rel y on the earl y experience in implementing the permitting requirements for the very large sources that initially will be subject to those requirements in order to develop streamlining techniques for smaller sources. It is the real world experience gained from this initial phase that will allow EP A to develop an y further modifications that might be necessary . This would not and could not occur if the LDVR were delay ed indefinitel y or permanently , so that PSD and title V requirements were not triggered. It is unrealistic to expect that delaying ac tion unt il a future Tailoring R ule could resolve all of the problems identified in this rulemaking, absent an y real world implementation experience. At its core, commenters’ argument is that EPA should delay (if not forego altogether) doing anything to address GHG emissions and the problems they cause until it can do so in a201

way that does not cause any

implementation challenges, even if that delay results in continued endangerment to public health and welfare. EPA does not take such a m yo pic view of its duties and responsi bilities under the CAA . Congress wrote the CAA to, among other things, promote the public health and welfare and the productive capacity of the population. CAA section 101(b)(1). EPA’s path forward does just this. Thus, proceeding wi th the endangerment/cause or contribute findings, the LDVR, and with PSD and title V through the phase

- in approach of the Tailoring Rule maximizes the ability of EPA to achieve the Congressional goals underl yi ng sections 202(a) and the PSD and title V prov isions, and the overarching CAA goal of protecting public health and welfare. Congress called for EPA (1) to determine whether emissions from new motor vehicles contribute to air pollution that endangers, (2) if that the determination is affirmative, to i ssue emissions standards for new motor vehicles to address the endangerment, and (3) to implement the PSD and t itle V program to address similar emissions in their permitting program as another tool to address the air pollutant at issue. Delaying both the LDVR and PSD/title V implementation, as commenters have called for, would run directly counter to these Congressional expectations. Commenters’ calls for deferral or foregoing of the findings or LDVR are generally

phrased in a conclusory

fashion, and do not demonstrate how EPA could take the required CAA actions concerning GHGs while remaining within the requirements of each of the various CAA provisions, and achieving the ov erall goals of the CAA . As such the comments do not provide a valid basis for th e deferral of agency action they suggest. Comment: Some commenters contend EPA has the discretion to choose a date besides the “effective date” of the rule as the date where a pollutant becomes “subject to regulation” or on which compliance requirements would apply (5088, 5124). This date can be the “first compliance date” instead of the “effective date” of the rule because: (1) neither the statute, nor its accompanyi ng regulations, mandate the specific trigger date(s) and the long

- held judicial doctrin es of absurd results and administrative necessity support even agency

action that would deviate from statutory language, if such action is necessary to avoid results contrary

to Congressional intent or due to administrative necessit y (4298), (2) it is reas onable for EPA to interpret the timing of “subject to regulation” (based on section 165(a)(4) of the CAA ( 5143, 5147)) to start at the time emission control requirements are actuall y applied to a regulated entity (4862, 5058, 5110, 5111, 5134, 5181, 5236, 5390, 5922) and (3) the complexity of adapting the existing permitting programs to GHGs justifies this definition (4693, 4867, 5180). For these reasons, some commenters have different recommendations on what the “first compliance date” should be for regul ating GHGs under the PSD and title V programs. They suggest:
 January

2, 2011 (the first date on which a 2012 model y ear vehicle can be produced) because onl y after the “first substantive compliance date” would the new standard be enforceable in a manner that “actually controls” and reduces emissions of GHGs (4298, 5180). One commenter adds that no automobile will be subject to control before January 2, 2001, and compliance certification will not be needed until March 2013 for the 2012 MY. (5111)
 Octobe r 1, 2011 (the start date of the first model year to which the rules apply) because, if EPA does go ahead with the LDVR (which most of these commenters do not support), EPA should recognize that PSD and title V would not be triggered until the LDVR “takes202

effect.” (4122, 4318, 4522, 4523, 4952, 4992, 5038, 5058, 5080, 5089, 5114, 5128, 5317, 5327, 5342, 5601, 5741, 5922, 6459, 8301)
 No specific date, but they say that "actual control" of GHGs under the section 202 rule does not occur until: (1) such time a s model y ear 2012 vehicles are certified (4693, 4867), (2) the date when manufacturer fleets must comply with the attribute

- based standard created b y the regulation for the control of CO 2 (5134), or (3) the point in time at which compliance with other MY 2 012 GHG standards is considered to occur. (4862, 5110, 5134, 5181, 5236, 5390) Response: On December 18, 2008, EPA issued a memorandum, "EPA's Interpretation of Regulations that Determine Pollutants Covered by Federal Prevention of Significant Deterior ation (PSD) Permit Program" (known as the “Johnson Memo” or the “PSD Interpretiv e Memo,” and referred to in the preamble of this final rule as the “Interpretive Memo”) that set forth EPA’s interpretation regarding which EPA and state actions, with respect to a previousl y unregulated pollutant, cause that pollutant to become “subject to regulation” under the Act. Whether a pollutant is “subject to regulation” is important for the purposes of determining whether it is covered under the federal PSD and title V permitting programs. The Interpretive Memo established that a pollutant is “subject to regulation” onl y if it is subject to either a provision in the CAA or regulation adopted b y EP A under the CAA that requires actual control of emissions of that pollut ant (referred to as the “actual control interpretation”). On February 17, 2009, EPA granted a petition for reconsideration on the Interpretive Memo, and announced its intent to conduct a rulemaking to allow for public comment on the issues raised in the m emorandum and on related issues. EPA also clarified that the Interpretive Memo would remain in effect pending reconsideration. On March 29, 2010, EPA signed a notice conveying its decision to continue applying (with one limited refinement) the Interpreti ve Memo’s interpretation of “subject to regulation” (“Interpretation of Regulations that Determine Pollutants Covered by Clean Air Act Permitting Programs“). See 75 FR 17004. EPA concluded that the “actual control interpretation” is the most appropriate interpretation to apply given the policy

implications. However, we refined our interpretation in one respect: we established that PSD permitting requirements apply to a newly regulated pollutant at the time a regulatory requirement to control emissions of that pollutant “takes effect” (rather than upon promulgation or the legal effective date of the regulation containing such a requirement). In addition, based on the anticipated promulgation of the LDVR, we stated that the GHG requirements of the vehicle rule would take effect on January 2, 2011, because that is the earl iest date that a 2012 MY vehicle may be introduced into commerce. In other words, the compliance obligation under the LDVR does not occur until a manufacturer may introduce into commerce v ehicles that are required to comply with GHG standards, which will begin with MY 2012 and will not occur before January 2, 2011. We also reiterated EPA’s interpretation that the 100 tpy major source threshold for title V is triggered only by pollutants “s ubject to regulation” under the Act, and we defined and applied that term for title V purposes in the same way

that we did for PSD purposes. That is, we stated that a pollutant is “subject to regulation” if it is subject to a CAA requirement establishing “actual control of emissions;” that a pollutant is considered “subject to regulation” for title V purposes when such a requirement203

“takes effect”; and, based on the anticipated promulgation of the LDVR, that the GHG requirements of the vehicle rule would t ake effect on January 2, 2011. On April 1, 2010, we finalized the LDVR as anticipated, confirming that manufacturer certification can occur no earlier than January 2, 2011. Thus, under the terms of the final notice for the Interpretive Memo, GHGs become subject to regulation on that date, and PSD and title V program requirements will also begin to appl y upon that date. 8.3 Requests for Specific Exemptions/Deferrals from Applicability Although we did not propose an y categorical exemptions, many comment ers request exemptions from major source and major modification applicability determinations under title V and PSD for certain ty

pes of GHG

- emitting sources or certain ty pes of GHG emissions. 8.3.1 Source Categories Comment: Many commenters request c omplete and permanent exemptions from the applicability or other requirements of the permitting rules with respect to GHG emissions as set forth in the proposal with respect to a wide variety of sources, source categories, and ty pes of emissions. Requests for exemptions for small sources, such as farms, homes, and other residential or commercial buildings:
 Smaller sources such as residential homes (4522), commercial buildings (4522), retail stores (4522), small space heaters (4522), and pool houses (4522) should be exempt from GHG permitting. Another commenter believes that sources such as agricultural, residential, and small businesses (as defined b y the SBA) should be exempted from this rule during the first 5

- 7 years to allow EPA and permitting authorit ies time to gain experience with the program (5367). In addition, small businesses and service providers must be provided with education, resources, and tools to help small business owners understand whether and how they will be impacted by

the rule and h ow they

can report and comply

(5367).
 Four commenters (3953, 4572, 5168, 5743) state that EPA anticipates at some future date to require the “absurd results” of having entities emitting more than 100 or 250 tpy of GHG to comply

with PSD and title V permitt ing requirements. Thus, under the Tailoring Rule, it presumably

is not a question of if permitting will be applied to farms, ranches and other small entities, but a question of when such requirements will be applied. The distinction between exemption and deferral for such entities becomes important when considering that PSD is a pre

- construction program because exempt entities can begin building, but deferred entities may not be on as solid legal ground. Thus, small entities like farms and ranches will n ot escape PSD or title V requirements, even with the Tailoring Rule. The semiconductor industry should be exempt (5141, 5143), including solar and LED (8640); or at least defer action on the semiconductor industry pending further study

of alternatives fo r this industry (8460) because:204

 PSD is ill

- suited to regulate GHG from the semiconductor industry. (8640)
 These sources have a small contribution to the total GHG inventory , comprising onl y 0.1 percent of the total U.S. inventory of GHG. (5141, 5143, 86 40)
 The industry

is making substantial efforts to reduce GHG emissions under a partnership with EPA. (5143)
 Significant competitiveness issues for this industry to be permitted (5141, 5143, 8640). It is not realistic for this industry to be subject to PS D permitting considering the substantial lead time needed to conduct monitoring and prepare an application (8640).
 The high GWP factors for the GHGs emitted b y this industry will burden them with permitting. (5141, 5143) For the semiconductor industry , s hort of an outright exemption, one commenter (5141) urges EPA to adopt other approaches to minimize burdens. At a minimum, such approaches should include a deferral until streamlining mechanisms become available, or a separate regulatory

regime for the hi gh GWP emissions, and d ifferent thresholds, especiall y for PFCs, which may

trigger permitting at low volumes. Energy

- intensive trade

- exposed (EI TE) industries, industries that consume a great deal of energy and that are subject to intense international co mpetitiveness should be exempted pending further anal ys is of the impacts on those industries, and pending international agreements covering industrial GHG emissions (4771, 5169, 5737). If not exempted, regulation of the manufacturing/industrial sector, or at least the EI TE producers should be delay ed until the “second phase” of regulation, after 6 ye ars (5737). EPA has not carefully considered the environmental and economic consequences of this action because if we had, we would have exempted them for sev eral reasons, including that other countries t ypicall y exempt similar sources from GHG cap and trade programs because the industries are making significant energy efficiency improvements absent GHG regulation, and because permitting such sources may cause man y facilities to move to countries that have less regulation or no regulation for GHGs. Regulation of the glass manufacturing industry will not achieve CO 2 emission reductions for the foreseeable future. Process emissions account for 20

- 30 percent of emissions, but there are no substitute raw materials to reduce emissions. Glass manufacturers already use low

- carbon fuels and recycle scrap glass to the extent possible. (4771, 5169) In addition, glass products (e.g., windows and windshields) are ofte n used to meet specified energy efficiency

standards, and are used in solar cells. (4771) The PSD program should exclude calcination emissions to encourage energy efficiency projects (5133). Itis pointless to subject process emissions to the PSD program because it is alread y known that BACT for calcination emissions is no additional controls and fuel costs alone are sufficient to ensure that new and modified kilns will utilize the most energy efficient designs that are economicall y and technologicall y available. In addition, because less than 5 percent of the U.S.’s GHG emissions are from industrial process emissions, exclusion of calcination emissions from the PSD program will not have a material effect on air quality or global warming.205

Commenter 4112 requests that EPA exclude from the PSD significance analy sis those GHG emissions resulting from incidental combustion where the process creates heat and the emissions are de minimis . The commenter states that their operations include carbon activation an d reactivation processes that are conducted in heated units where the primary fuel is natural gas and the carbon being processed, or in the case of regeneration, a combination of natural gas and the adsorbates on the spent carbon. In the activation proces s it is necessary to burn some of the carbon to activate it. The fact that the process creates heat t hat is used in the activation is not controllable from a GHG reduction perspective. Commenter 4112 requests that EPA exclude process

- based emissions simi lar to the GHG Mandatory

Reporting Rule. The GHG Mandatory Reporting Rule does not require sources within the general stationary fuel combustion source category to monitor and report process

based emissions because EPA recognized that such process emissio ns are negligible. See 40 CFR 98, subpart C. Natural respiration from poul try should be excluded from GHG regulation applicability determinations because: (1) the U.S. agricultural sector was responsible for less than 6 percent of total U.S.GHG emissio ns and less than a tenth of that 6 percent (7.6 percent) was attributable to poultry production, (2) approximately 90

- 93 percent of GHG emissions from poultry farms are attributable to natural bird respiration or breathing (only 7

- 10 percent is associated with poultry litter) and the IPCC itself has excluded natural respirations from consideration in its methodology

for estimating GHG emissions (5245). EPA should clarify

how it will address GHG emissions from the solid waste management sector, such as fugi tive emissions, biogenic emissions, and "common control” (5391). EPA should be consistent with NSPS applicability determinations that exclude landfills that closed prior to November 8, 1987 (4951). The 25,000

- tpy threshold will cause many old closed land fills to be brought into this rule, while the GHG Mandatory Reporting Rule exempts landfills that were closed prior to 1980 (4951). Commenter 8461 inquires whether EPA is planning on exemptions for GHGs used or emitted from military , warfare, and securit y operations. Small electric generating units should not become subject to PSD or title V ( 4122, 4318, 4523, 4992, 5080, 5038, 5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741, 5788, 6459, 8301 ). EPA did not seriously

consider the impacts on small entities that emit above the 25,000

- tpy threshold, which may

include, among many

others, small municipal electric utilities, small rural electric cooperative generators, automobile service centers, and small diesel generators in rural or remote areas. These smalle r facilities have more in common with commercial establishments EPA proposes defer over the long term, also citing SBA concerns over small entities that emit more than 25,000 tpy

of CO 2 . Emergency

generators should be exempt or EPA should increase the ap plicability thresholds sufficientl y to ensure that they do not become subject to the GHG requirements because:206

 Some generators may feel the need to accept a limit on hours of operation to avoid PSD or title V requirements, and that could impair communities ’ ability to obtain a reliable supply of electricit y in emergency situations. ( 4122, 4318, 4523, 4749, 4770, 4992, 5080, 5038, 5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741, 6459, 8301 )
 Emissions from these emergency generation units are trul y negligible including those generating units that meet the “black start” definition except where those units run more than 1,000 hours. ( 4122, 4318, 4523, 4992, 5038, 5052, 5080, 5089, 5114, 5128, 5257, 5327, 5601, 5741, 6459, 8301 )
 Becoming subject to PSD and BACT requirements could jeopardize their ability to meet the Nuclear Regulatory

Commission (NRC ) Reliability and Availability

requirements, which would place nuclear power plants at risk of not being able to perform in emergency

situations and thus not complyin g with their NRC

- required Emergency and Security Plans. (5788) Research and development facilities, including national labs involved in defense and home land securit y should be exempt from the GHG requirements, especially minor GHG emissions from resear ch activities, to avoid confusion with EPA’s GHG Mandatory Reporting Rule. (8546) The EPA should defer regulation of SF 6 in the transmission of electricity until the second phase of the PSD permit program because there are no known SF 6 controls and SF 6 i s used to prevent arcing and death. If SF 6 is regulated, it should be controlled through BMPs

– possession stewardship and good tank recycling practices for SF 6 delivery , use, and return of tanks
. (5052) Response: Although the proposal for the Tailorin g Rule generally addressed how the statutory requirements for major source applicability (100/250 thresholds) could be phased

- in in way s that would offer relief to traditional and non

- traditional sources, such as residences, farms, small business, and semi conductor manufacturers, it did so by establishing relatively

high CO 2 e thresholds during the early implementation period and lowering the thresholds over time as streamlining mechanisms become available to reduce administrative burdens. We did not propos e an y permanent exemptions of any kind or temporary

exemption based on source category . Also, note that the proposal discussed energy efficiency , process efficiency improvements, recovery

and beneficial use of process gases, and certain raw material and p roduct changes in the context of short

- term, low

- cost means of achieving GHG emission reductions for small

- scale stationary sources, but not in the context of exemptions. As discussed previousl y, we are still considering whether permanent exemptions fro m the statute are justified for GHG permitting based on the “absurd results” legal doctri ne. However, we do not have a sufficient basis to take final action at this time to promulgate any of the suggested exclusions on the grounds, described previously , suggested b y the commenters. We did not propose an y sort of permanent exclusion based on an interpretation of the statutory provisions of PSD or title V. Regardless of an y arguments about the legality and advisability from a policy

or economic standpoint of such exclusions, we would need to propose a PSD and/or title V specific legal and policy rationale that fits within the CAA, to specify details207

regarding our implementation approach, and to provide an opportunity for public comment before adopting an y such exclusion. Therefore we are not doing so here. We note, however, that nothing in this rule forecloses the opportunities we may have to explore such options in the future. Therefore, we are taking no action in this rule on these various commenters’ requests for exclusions. Some commenters also recommended that we create exclusions for their particular source categories for the specific purpose of avoiding overwhelming permitting burdens. We did solicit comment on alternative approaches to burden r elief in the proposal. Some commenters suggested that the “administrative necessit y” or “absurd results” rationale, each of which would be based on extraordinary administrative burdens, could be used to create at least temporary exclusions that would allo w more sources to escape permitting than what we proposed. However, commenters have not, to date, provided specific information about the costs and administrative burdens associated with permitting their source categories. In addition, we have finalized steps 1 and 2 using the threshold

- based approach, which applies the various legal doctrines, in the context of the Chevron framework, in a way that effectively

exempts all small sources during this part of the phase

- in, while assuring the administrability of the permitting programs for the sources that remain subject to them. Furthermore, specifically with respect to high GWP gases as discussed previously , we are maintaining the statutory mass

- based threshold, and this should address commenters’ concerns r egarding the inclusion of those gases. Therefore, we reiterate that we are not finalizing any such exclusions in this rule and, as noted above, we are not taking final action in the commenters’ requests for exclusions. Concerning the comment that we did not take appropriate economic and environmental considerations into account for this rulemaking action, we disagree. The approach we finalize in this notice for steps 1 and 2 minimizes economic burdens b y limiting permitting to the largest GHG emission s ources. We further note that the PSD program as applied to the sources that are covered in steps 1 and 2 contains an express requirement to take energy , environmental, and economic considerations into account when making control technology (i.e., BACT) de cisions and accordingly

many of the concerns about control costs will be able to be accounted for in that anal ys is

. Also, EPA, in collaboration with the SBA, conducted an outreach meeting with small entities to brief them on the T ailorin g R ule and its env ironmental and economic impacts and to seek advice and recommendations from them on the proposal. ( See Docket No. EPA

- HQ

- OAR

2009

- 0517

- 19130). Several commenters were concerned that the proposal defers, rather than exempts, permitting at the statutory thresholds (100/250 tpy), and thus, that small sources will eventually be subject to pe rmitting that those thresholds. In response, we do not have adequate information at this time to conclude that the statutory thresholds will ever be administrable for permitting GHG sources, so the commenters are premature in assuming that the statutory thresholds will apply to an y particular source categories, or an yone, in the future. We explain in the preamble for the final rule how we will address smaller sources i n a future rulemaking based on the 5

- ye ar study

– we explain that in no event will sources below 50,000 tpy CO 2 e be subject to PSD or title V permitting, nor will PSD modification be triggered for emission increases below 50,000 tpy CO 2 e, during the 6

- ye ar period ending April 30, 2016, which is the date b y which we have committed to complete a rulemaking action based on the 5

- year study to determine exemptions208

or appropriate thresholds for GHG permitting after step 3. See section IV.B.2.b.5 of the preamble for the final rule. We are not prepared at this time to exempt closed landfills, as one commenters suggested, for the same reasons we have not decided to exempt open landfills, or other source categories, at this time. Landfills continue to generate GHG s after they stop accepting new solid waste, and thus, they continue to be stationary sources potentially

subject to permitting under the applicability

provisions of title V. Also, the higher GHG thresholds for step 2 in the final rule

– we proposed 25,00 0 tpy

CO 2 e and finalize 100,000 tpy CO 2 e

– will potentially

result in fewer landfills needing permits during step 2, including less potential for closed landfills to meet the applicability

thresholds. 8.3.2 Biogenic Emissions and Combustion of Biomass S everal commenters request that EPA exempt emissions from biogenic activities or biomass combustion or oxidation activities from PSD or title V applicability determinations. Comment: Biogenic CO 2 emissions should be exempted from the PSD program (2371, 47 70, 8015, 8283) or not be counted towards the applicability thresholds for PSD and title V permitting requirements (4122, 4241, 4318, 4523, 4667, 4749, 4951, 4992, 5038, 5070, 5075, 5080, 5089, 5114, 5124, 5126, 5128, 5257, 5279, 5280, 5300, 5303, 5317, 53 27, 5335, 5346, 5601, 5741, 5742, 5922, 6459, 8301, 8283, 8395 ) because:
 GHG emissions that result from biogenic activities are "carbon neutral" ( 4122, 4241, 4318, 4523, 4667, 4749, 4951, 4992, 5038, 5040, 5070, 5080, 5089, 5114, 5128, 5257, 5280, 5300, 53 01, 5303, 5317, 5327, 5601, 5741, 6459, 8015, 8283, 8301, 16411 ) or should be considered (5124) “carbon neutral” and thus outside the scope and intent of the PSD and title V programs. This approach: o Has been widel y accepted by scientists and regulators in both the U.S. and Europe (4667, 5070, 5303, 16411). Commenter 4667 cites various domestic and international policies. o Would create an important incentive for companies to try to use biomass

- based fuels where possible, with the dual benefits of reducing atmospheric GHG loadings as compared to fossil

- fuel combustion and increasing the use of renewable energy

. (5335, 16411) o Is clearl y aligned with the agency 's policy goals of promoting renewable/sustainable industrial operations with low

- carbon or carbon n eutral footprints and "biogenic activities" should encompass every thing from fermentation processes to the combustion of renewable fuels, including ethanol manufacturing, biodiesel production, and other alternative energy production based on biomass feedst ocks. (5124) o Would not be arbitrary and capricious for EPA to do (5040), because EPA would not be imposing PSD on a source’s CO 2 emissions if those emissions do not have the potential to degrade air quality (i.e., increase atmospheric CO 2 concentrations). (5335, 5040)209

 EPA has acknowledged that the guidance on how to calculate a source’s GHG emissions in tpy CO 2 e and referenced directl y b y the proposed rule language, excludes CO 2 emitted from the CO 2 neutral biomass. (4667, 5303)
 Only anthropogenic stat ionary emissions should count towards the major source or significance thresholds (4863, 5064, 5276, 5305, 6458). If EPA does not differentiate between biogenic and anthropogenic CO 2 emissions, sources whose CO 2 emissions are largel y biogenic, such as lan dfills (e.g., landfills that generate le ss than 300 scfm of LFG ) and publicly

owned treatment works ( POTWs ) , would easily trigger any

threshold, regardless of the facility 's size (4746, 5064, 5276, 5305, 6458).
 If landfills must count CO 2 in determining whether PSD or title V is triggered, it would discourage efforts b y landfills to either flare CH 4 or combust it to produce electricit y

– projects that reduce GHG emissions overall. (5276)
 Several commenters add that: (1) this approach is consistent with b oth proposed federal and state regulations for reducing GHGs (they cite various examples) (4746, 4863), (2) in the RIA of the Tailoring Rule, EPA recognizes that CO 2 emissions from landfills an d the combustion of LFG do not constitute anthropogenic GHG emi ssions and these emissions were not counted in the study that formed the basis of the proposed rule (5276), (3) biogenic CO 2 emissions are not included in national and international inventories (5276, 6458), (4) the Clean Development Mechanism of the Kyoto Protocol does not include CO 2 from biogenic sources as an emission (6458), (5) inclusion of biogenic emissions may adversely

affect efforts to develop new renewable resources (4746), (6) it would be premature to regulate process CO 2 e emissions from wastew ater treatment since they are not well understood (4746).
 The inclusion of biogenic GHGs in the PSD program is contradictory to the objectives of climate change control and requiring additional title V permits and BACT measures for net GHG reducers such as waste

- to

- energy sources will discourage the expansion of renewable sources. The contribution of waste

- to

- energy facilities to GHG reductions should be recognized as it is in climate change legislation such as House Bill 2454 and Senate Bill 1733. (237 1)
 In cluding biogenic emissions in the applicability determination would dramatically increase the number of facilities subject to regulation (5742), especially for PSD in the forest products industry

(4667, 8015) and will potentially undermine the biofuel s and bioenergy industries, widely

recognized as having a key role to play

in a low carbon future (4667, 5742). In addition, c ombustion of biomass may be discouraged if shifting to renewable or low

- carbon fuels (or installation of equipment necessary to b urn such fuels) could be deemed to trigger PSD requirements (4122, 4318, 4523, 4749, 4992, 5038, 5080, 5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741, 6459, 8301). One commenter adds that fossil carbon and anthropogenic emissions of CH 4 are the primary drivers behind global increases in atmospheric CO 2 concentrations and thus these emissions should be the focus of an y GHG regulation. (5742)
 Emissions from y east fermentation during bread making are carbon

- neutral and should not be counted as industrial emi ssions for purposes of GHG regulation. (5303)
 Sugarcane is an annual crop and bagasse is a b y - product of the sugarcane harvest. Thus, bagasse is a renewable biomass fuel and as a fuel, it is carbon

- neutral. (5280)
 Biogenic CO2 should be exempt from perm itting because there is a precedent under the PSD program for EPA to exclude a class of compounds that would otherwise be210

regulated (4667, 8283). For example, EPA has logically determined PSD applicability on a functional basis when: (1) EPA, b y regulatio n excluded certain compounds, which are in fact "volatile" and "organic," from the definition of VOCs for purposes of applying the PSD regulations, including applicability thresholds, (2) faced with the fact that ambient air quality

standards (and therefor e attainment areas) are defined for ozone, whereas it is the emission of ozone precursors, especiall y VOCs that can cause nonattainment of the ozone NAAQS, EPA applied the major

- source thresholds to VOC emissions rather than to ozone emissions. (8283)
 T he GHG Mandatory Reporting Regulation excludes biogenic emissions from basic threshold criteria for report applicability , except where they are captured and sold for commercial use. (4241, 4122, 4318, 4523, 4749, 4992, 5038, 5080, 5089, 5114, 5124, 5128, 5257, 5280, 5317, 5327, 5346. 5601, 5741, 6459, 8301, 8395).
 Excluding these emissions is consistent with domestic and international standards (4122, 4318, 4523, 4667, 4749, 4992, 5038, 5080, 5089, 5114, 5128, 5257, 5303, 5317, 5327, 5335, 5601, 5741, 6459 , 8301). One commenter adds source owners should be allowed to consider net GHG emissions from biomass fuels when determining a facility 's PTE for PSD/title V applicability purposes (5279). In addition, EPA could require the GWP of biomass CO 2 emission s to be zero due to CO 2 neutrality (4667). If biogenic CO 2 emissions are not excluded or GWP considered zero then EPA should: (1) allow public comment on an y revised “Inventory of U.S. Greenhouse Gas Emissions and Sinks, ” since this guidance affects the c alculation of these thresholds (5126) and (2) give CO 2 e credit against a source’s baseline CO 2 emissions for those facilities that convert and use CH 4 emissions from landfills as an energy source in the production of renewable fuels (5075). Furthermore, two commenters would like us to exempt renewable energy facilities: (1) that do not trigger the PSD thresholds for criteria pollutants (3918) to further align this concept with EPA's policy

goals of promoting alternative/renewable energy (5124). Providin g an exemption from GHG PSD would give industry more regulatory

certaint y under which to plan and execute projects, provide more stability to the market, and reduce industry 's burden in meeting regulatory

GHG obligations (5124). Nevertheless, several comm enters would like EPA to clarify in the final Tailoring Rule that biogenic CO 2 emissions trigger the BACT statutory requirements (5311) or are not exempt from the Tailoring Rule (4860, 5519, 6673, 10376) because:
 There is scientific evidence refuting the n otion that biomass combustion is categorically carbon neutral (5311, 6673, 10376) and thus exempting biogenic CO 2 emissions from BACT would violate the Act (5311). For example, the DOE reports that CO 2 emissions from biomass burning were at least 7000 mil lion tpy in 2002 and so EPA must regulate power plants that burn biomass (10376). In addition, the projected growth in CO 2 emissions from biomass burning is at least 700 million tpy by 2020 (about 11 percent of total U.S. GHG emissions) (6673).211

 There is n o valid scientific basis for differentiating CO 2 emissions from biomass combustion from CO 2 emissions from other forms of electric power production (6673). EPA’s exemption of biomass combustion CO 2 from the GHG Mandatory Reporting Rule is based on an outd ated and unsupportable “assumption” that this activity is “carbon neutral (4860, 6673).” The “carbon neutral” m yth stems in part from a “critical accounting error” in the Kyoto protocols. This error has been incorporated into the structure of EPA’s GHG M andatory Reporting Rule and wholly undermines efforts to curb GHG emissions from power production. In fact, it promotes biomass power production and makes climate change worse. For these reasons, the Tailoring Rule should not compound this error b y exemp ting biogenic CO 2 emissions form applicability determinations.
 The IPCC recommended that biomass burning be exempt because those emissions may be double

- counted in both the land

- use category as well as the energy

category (5519, 10376). However, regulat ory s ys tems do not take into account land

- use and thus biomass

- burning emissions should not be exempt (5519, 10376). For these reasons a commenter recommends that:
 Facilities should be required to calculate emissions of biogenic CO 2 in accordance with the GHG Mandatory

Reporting Rule (5311).
 EPA, either in regulations or in a guidance document, should develop a policy addressing when biomass may

constitute a “clean fuel” within the meaning of BACT, since biomass may play an important role in combating c limate change (5311). Several other commenters simply asked for clarification:
 EPA should clarify

whether biogenic CO 2 is a GHG, provide a clear definition of biogenic CO 2 , and indicate how, if all, it is counted in CO 2 e determinations (4239, 4860, 4864).
 EPA should clarify

its treatment of emissions from the combustion of biomass (5338). Another asks if emissions from fermentation are included in the PSD and title V applicability

determinations (3916)? Response: The proposed Tailoring Rule did not address this issue of exemptions for biomass combustion or biogenic emissions. We are mindful of the role that biomass or biogenic fuels and feedstocks could play

in reducing anthropogenic GHG emissions, and we do not dispute the commenters’ observations that many state, federal, and international rules and policies treat biogenic and fossil sources of CO 2 emissions differently

. Nevertheless, we have determined that our application of the “absurd results,” “administrative necessity,” and one

- step

- at

- a - time legal rationales that support this rule, which are based on the overwhelming permitting burdens described previously , does not provide sufficient basis to exclude emissions of CO 2 from biogenic sources in determining permitting applicability

provisions at this time. This is because such an exclusion alone, while reducing burdens for some sources, would not address the overwhelming permitting burdens described above, and a threshold

- based approach would still be needed. As noted above, we have not212

examine d burdens with respect to specific categories and thus we have not anal yz ed the administrative burden of permitting projects that specificall y involve biogenic CO 2 emissions taking account of the threshold

- based approach, nor did the commenters provide inf ormation to demonstrate that an overwhelming permitting burden would still exist, justifying a temporary exclusion for biomass sources. At the same time, the decision not to provide this type of an exclusion at this time does not foreclose EPA’s ability to either (1) provide this ty pe of an exclusion at a later time when we have additional information about overwhelming permitting burdens due to biomass sources, or (2) provide another t ype of exclusion or other treatment based on some other rationale. Al though we do not take a final position here, we believe that some commenters’ observations about a different treatment of biomass combustion warrant further exploration as a possible rationale. Therefore, although we did not propose an y sort of permanent exclusion from PSD or title V applicability

based on lifecycle considerations of biogenic CO 2 , we plan to seek further comment on how we might address emissions of biogenic carbon dioxide under the PSD and title V programs through a future act ion, such as a separate ANPR . This action would seek comment on how to address biogenic carbon under PSD and title V, the legal and policy issues raised b y options regarding implementation. We will provide an opportunity for public comment before adopting an y final a

pproach. We further note that, while we are not promulgating an applicability exclusion for biogenic emissions and biomass fuels or feedstocks, there is flexibility to apply the existing regulations and policies regarding BACT in way s that take into acco unt their lifecycle effects on GHG concentrations. This topic has alread y been explored by the CAAAC workgroup on BACT issues related to GHGs that recently provided recommendations to EPA. These recommendations are located in the public docket for this r ulemaking and at http://www.epa.gov/air/caaac/climate/2010_02_InterimPhaseIReport.pdf

. While that group was unable to come to a consensus on how biomass

- based emissions should be treated, it provided us with information that we will consider as we issue guidance on BACT. As previously

discussed, we plan to issue BACT guidance later this y ear, but are not doing so as part of this rulemaking. Without prejudging the outcom e of our process to seek comment whether and how we might address emissions of biogenic carbon under the PSD and title V programs through a future action, this issue warrants further exploration in the BACT context as well, and we plan to full y explore it and take action if appropriate. 8.3.3 Fugitive Emissions Comment : EPA has provided no clarity as to how fugitive emissions of GHGs are to be measured or considered in applicability threshold calculations (4106, 4122, 4317, 4318, 4523, 4770, 4992, 50 38, 5080, 5089, 5137, 5114, 5128, 5183, 5257, 5317, 5327, 5343, 5601, 5715, 5741, 6459, 8301 ). Fugitive emissions present unique problems of measurement, quantification and control (5145, 5715). In addition, even though difficult to quantify , fugitive em issions of GHGs with large GWP may

be significant in determining whether the applicabilit y threshold has been met (4122, 4318, 4523, 4770, 4992, 5038, 5080, 5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741,213

6459, 8301 ). For these reasons, some commenters su ggest that EPA exclude fugitive emissions of GHGs for all sources (4298, 4903, 4951, 5052, 5111, 5224, 5715) or sources that have to do a PSD applicability

determination (4122, 4318, 4523, 4770, 4992, 5038, 5080, 5089, 5114, 5128, 5257, 5317, 5327, 5601, 5 741, 6459, 8301) because:
 Excluding fugitive emissions would: (1) reduce the burden on regulators and regulated entities (4298, 5111, 5715), (2) have little, if an y, environmental impact (4298, 5111), (3) serve the purpose of the Tailoring Rule (5715). If fugitive emissions are included in applicability

determinations, the proposed GHG thresholds would be rendered meaningless (5715). In addition, EPA currently exempts a major source or a major modification form PSD if it would be major only for fugitive e missions, to the extent quantifiable, and if the stationary source or modification does not belong to any [of the listed] categories (5715).
 The source categories listed in 40 CFR 52.21(b)(1)(iii) and (i)(vii) and 40 CFR 70.2 (definition of major source) ( subsection (2)) may present a limited exception to this rule (4298, 5111) . Since EPA has not undertaken rulemaking under section 302(j) for any source category

of fugitive GHG emissions, EPA should not count fugitive GHG emissions until there has been a r ulemaking to determine the feasibility and advantages of doing so. (5111, 5224)
 In the July

2008 ANPR, EPA acknowledges that fugitive emissions do not count toward determining if a source is a major source. (4106) Concerning fugitive emissions, EPA sh ould clarify:
 Whether, and in which cases, fugitive emissions of GHGs are to be included to determine PSD applicability

for those categories of sources listed under 40 CFR 52.21(b)(1)(iii). ( 4122, 4318, 4523, 4770, 4992, 5080, 5038, 5089, 5114, 5128, 5257 , 5317, 5327, 5601, 5741, 6459, 8301 )
 EPA should not consider fugitive emissions for non

- listed source categories. (5343 8545)
 The treatment of emissions from the combustion of fugitive emissions. In the absence of clarity , this state assumes that the ex isting guidance on fugitives applies to GHG emissions. (5338)
 Which GHG emission sources are covered in a facility ’s PTE for GHG with regards to stack

- level emissions versus fugitives and in terms of source categories and size. (4864) Fugitive CH 4 emiss ions should be exempted because:
 Fugitive CH 4 emissions pose a conflict with pending climate change legislation that provides for emission offsets from the reduction of CH 4 from underground coal mining. Application of BACT requirements would eliminate th is potentially large source of domestic emission offsets. (5342)
 Fugitives are difficult, and potentially impossible to account for. If EPA reconsiders the Fugitive Emissions Rule, coal mine fugitives may need to be counted in determining a significant e missions increase and, as EPA has determined in other rulemakings, CH 4 emissions from post

- mining operations cannot be accurately measured and would be similarly difficult to control. (5145)
 Until EPA identifies a standard measurement methodology for fugi tive CH 4 emissions (4691) it will be impossible to ensure that PSD permits for fugitive and vented CH 4214

emissions are consistently enforced or based on accurate data. Commenters (4120, 4749, 5301) add that this is especiall y true for emissions from Oil & G as sy stems and that the GHG Mandatory

Reporting Rule does not require measurement of such emissions because of the significant challenge in monitoring and measuring such emissions. I f EPA rejects this recommendation and decides that fugitive and CH 4 emiss ions should be considered in the initial phase of PSD for GHGs, commenter (4691) urges EPA to issue guidance for proper quantification of these emissions for purposes of determining applicability

and establishing BACT, and that this guidance should be prov ided before the requirements take effect (4691)

. Fugitive emissions from natural gas transmission, storage, and distribution should not count toward the PSD major source applicability threshold because they

are not part of the 28 listed PSD source categories (4120, 5711). Onl y combustion related CO 2 e emissions should be considered in the threshold determination (4120). Fugitive emissions from landfills should be excluded from major source determinations (4863, 5276, 5305) because:
 EPA (in a 1994 memorand um) has previousl y made a determination that if a landfill Gas Collection and Control System (GCCS) could be reasonabl y designed to collect the landfill's gas emissions, then the emissions are not fugitive and should not be counted toward regulatory

compli ance, such as major source status. (5305)
 Existing federal regulations for MSW landfills do not count fugitive emissions (i.e., CH 4 , non - CH 4 organic compounds, and VOC) for applicability purposes and the GHG Tailoring Rule should do the same to maintain consistency . (5086) However, o ne commenter (4951) opines that the Tailoring Rule appears to count fugitive emissions when determining applicability (with proposed thresholds which correspond to as little as 200 scfm of LFG), and adds that while this is consistent with the GHG Mandatory Reporting Rule, it is unclear how the Tailoring Rule would quantify these emissions because:
 The Landfill Gas Emission Model (LandGEM) that the GHG Mandatory Reporting Rule used to estimate landfills gas (LFG) generation h as an EPA acknowledged error of 30 to 400 percent and that this level of error is unacceptable when the model results are applied to possible PSD and title V applicability . The commenter adds that the error for closed landfills could be even higher (4951)

.  MSW landfills are not included in the source categories where fugitive emissions must be counted and were not subject to an NSPS or NESHAPS as of August 7, 1980, and as such, fugitive emissions of regulated criteria pollutants from MSW landfills, which i nclude NMOCs and VOCs from LFG, would not be counted toward PSD and title V applicability

thresholds (4951). Response: In the proposal, EPA did not offer an y specific guidance or discuss exemptions for fugitive emissions of GHGs. Commenters did not sugg est that a fugitive exemption would address the overwhelming permitting burdens described previously , or that it was necessary to215

specificall y tailor GHG applicability through the use of a fugitive emissions exclusion for categories that would otherwise be required to include them. We do agree with commenters who stated that we should clarify how to count fugitives in determining applicability under this rule. In response, we note that we are not taking final action with respect to commenters’ request, and we are not finalizing any special rules for fugitive emissions related to GHG. Thus, EPA's rules related to the treatment of fugitives would continue to apply

to GHG, the same as they apply to other air pollutants. Despite multiply

requests for imp lementation guidance, including guidance on measurement of fugitive GHG for various industries, we are not including such guidance in the final rule at this time. Such guidance is beyond the scope of this rulemaking, which concerns adopting GHG applicabil ity thresholds that mitigate untenable administrative burdens that would apply at the statutory

thresholds that apply

absent this rulemaking, rather than about gathering detailed technical information on measurement techniques for particular source categories or finalizing other implementation guidance relevant to those source categories. The Mandatory GHG reporting rules rule sought to establish measurement requirements applicable to many of these source categories, or may do so in the future (e.g., that rule is being revised to address GHG from underground mining and a few other source categories at this time) but that was never the primary

intent of this rulemaking action. See section 8.4 of this RTC for more on emission calculation requests for guidanc e on implementation issues, including monitoring and emission calculation. Regarding the comment that a section 302(j) rulemaking is required before fugitive emissions may

be counted, we disagree. As we read section 302(j), once EPA has established by ru le that fugitive emissions are to be counted for a specific source category , nothing in section 302(j) requires EPA to conduct new rulemaking to allow for the counting of additional pollutants from that category . We read section 302(j) as imposing an obli gation to determine if fugitive emission generall y should be counted from a source or source category and not requiring that EPA list both source categories and relevant pollutants. Indeed, our practice in listing categories has not been to limit the poll utants to which the listing applies. Therefore, we are appl yi ng our existing rules and policies for fugitive emissions for GHG as we would an y other pollutant. 8.3.4 Pollution Control Projects Comment: Many commenters request exemptions or deferr als (temporary exemptions) from major source determinations for GHG emissions that would result in emissions reductions for GHGs or for other regulated air pollutants, including pollution control projects, energy efficiency projects, and generally , the ins tallation of control devices or use of cleaner fuels:
 EPA should not discourage installation of control devices that may be used to lower conventional pollutants even if collateral GHG emission increases result. ( 4122, 4318, 4523, 4745, 4749, 4770, 4992 , 5080, 5038, 5089, 5114, 5128, 5224, 5257, 5301, 5317, 5327, 5601, 5741, 6459, 8301 )216

 If EPA does not exempt or defer from major source determinations, projects that would result in emissions reduction for GHGs or other regulated air pollutants, such as po llution control projects, EPA may create an untenable situation of "control devices that require control devices" (5124)
 EPA should evaluate whether energy efficiency

projects should trigger PSD permitting for GHGs. Some energy

efficiency

projects will b enefit the environment by reducing overall GHG emissions, but still trigger PSD permitting for GHGs due to direct, unit

level emissions. EPA can promote energy efficiency

and reduce administrative permitting burdens b y allowing permitting agencies to cons ider the overall GHG emissions impact of energy efficiency

projects. This makes sense for because it makes no environmental difference where GHG emissions (or reductions) occur

– whether at the same unit, the same facility or even in the same state. (527 7)
 EPA should exempt projects from BACT (without imposing operational limits) that: (1) improve efficiency

or thermal performance and deliver net emission reductions when measured on an output basis (e.g., production level or electricity generated), or (2) control GHG or criteria pollutant emissions. A similar exemption for emission controls is provided under the NSPS regulations at 40 CFR 60.14(e)(5). If EPA declines to follow this approach, at a minimum, EPA should state that: (1) any increases in crite ria pollutants from GHG control devices are presumed to be so minimal that it would not be cost effective to control them, and thus, additional controls to capture criteria pollutants are presumptively

unnecessary , and (2) it is presumed that it would not be cost

- effective to control any

increase in GHG emissions resulting from criteria pollutant controls, and thus, additional controls to capture GHGs are presumptively unnecessary . (4298) Furthermore, if a project: o In creases the efficiency or thermal perfo rmance of a unit or facilit y, such that the resulting intensity

of all emissions is reduced on a pounds per gross megawatt hour or production basis, then that project should not trigger the “major modification” provisions of PSD. o Is specifically

for the collection of a GHG, then a “control project exemption” should apply and exempt any

ancillary emissions from the implementation of the control project from triggering PSD on the grounds that it provides a “net environmental benefit.” A carbon control exemption will also be necessary to encourage investment in carbon capture and sequestration projects at existing units. To the extent EPA determines that such exemptions cannot be provided under the existing CAA, the commenter urges EPA to encourage Congress to enact appropriate authorizing legislation.
 EPA should defer GHG permitting for sources already subject to state climate programs, to offshore oil and gas development, and to clean fuel projects. EPA should provide special consideration for the energ y intensive and trade exposed refining and chemical industries, as well as the onshore oil & gas production industry by developing alternative regulatory

approaches in lieu of the PSD/title V GHG Tailoring Rule. (4106)
 Emissions from the combustion of tir e - derived fuel (TDF) (or at least the natural rubber portion of TDF) should not be counted towards applicability because TDF is used in lieu of alternatives that emit higher levels of GHG emissions. TDF is primarily used in biomass boilers in order to sta bilize the combustion process or in cement kilns, pulp and217

paper mill boilers and electric utility boilers in lieu of other traditional fuels, which are likely to emit more GHG emissions. (5922) Response: The current PSD rules do not exclude polluti on control or similar projects from being considered a ph ys ical change or change in the method of operation that would

– if it resulted in a significant net emissions increase

-- constitute a major modification, nor does case law suggest that we could adop t a permanent exclusion in the future. 12 To the extent that the commenters seek an exclusion for pollution control or similar projects that relies solel y on “absurd results” or “administrative necessity” for reasons similar to those described previousl y fo r other requested exclusions, we take no action on this request in this rulemaking. Although such an exclusion may have positive features, it would not address the overwhelming permitting burdens that justify the tailoring approach. 8.3.5 Indirect Emiss ions Comment: EPA should specificall y state that indirect GHGs emissions, such as transportation or off

site electricit y generation, are not evaluated as a part of the PSD major source/major modification process or for title V major source thresholds (51 24, 16411). As with the existing PSD program, indirect emissions should be analyzed and addressed during the permitting process for projects related directl y to these sources (5124). Lacking state preemption, states may include such emissions in their de terminations (5124). The regulation of indirect GHG emission has not been considered in the context of BACT, offsets, etc., and consequentl y cannot be allowed unless and until EPA has done a thorough anal ys is of the consequences of this approach (5124). Response: The CAA requires that PSD review includes a detailed air qualit y impact assessment to determine if there is a violation of a NAAQS or of a PSD increment, and this may involve secondary emissions (sometimes called “indirect emissions”) in limit ed cases, but the CAA does not require an y s econdary emissions to count for applicability purposes. See 40 CFR 52.21(k) and 52.21(b)(18). In the proposed Tailoring Rule, EPA explained that since there are no NAAQS or PSD increments for GHGs, ambient impa ct assessment would not be a requirement for GHG, and we have not changed this policy in the final rule. 13 Also, the Act generally does not require mobile source emissions to count for PSD or title V applicability determinations and we have not revised an y provisions that address such requirements as part of this rulemaking action.

12 On June 24, 2005, the United States Court of Appeals for the District of Columbia Circu it vacated the portions of the 2002 and 1992 NSR rules that pertained to PCP, among other provisions. In response to this Court action, on June 5, 2007, EPA removed these provisions from the NSR regulations. ( See 72 FR 32526). These provisions were adde d as part of EPA’s NSR improvement rule that was issued on December 31, 2002

.

13 See page 55298 of the October 27, 2009 proposed Tailoring Rule.218

8.4 PSD and Title V Permitting Implementation Issues and Questions 8.4.1 General Suggestions, Comments, or Questions Comment: Various commenters provide suggestions or comm ents regarding implementation of the Tailoring Rule. They

state that:
 EPA’s methodology

for determining GHG emissions in the Tailoring Rule does not take into account that not all fuel gas use is associated with combustion. The commenter has a proprietary carbon manufacturing process that scavenges carbon from flammable gases and incorporates the carbon into their product. This process is actuall y a form of carbon sequestration according to the commenter; however, the Tailoring Rule would incorrectl y inc lude all carbon that is incorporated in their product as CO 2 emissions to the atmosphere. (4859)
 EPA should acknowledge (under the Tailoring Rule) the importance of lifecycle anal ys is in achieving GHG management objectives b y encouraging and not discourag ing the production of recycled and used fuel sources . Commenter makes some suggestions on how EPA could do that (e.g., b y crediting re

- refiners with the emissions reduced as a result of not burning the product as a fuel source, exempt recycling facilities ). (5066)
 EPA should clarify

that the definitions of “facility” under the GHG Mandatory Reporting Rule and the Tailoring Rule differ and the GHG Mandatory Reporting Rule definition should not be precedential for purposes of interpreting the scope of “stat ionary source” under PSD and title V. (5224)
 EPA should do a one source determination for school districts, residential and commercial buildings, and portable concrete, asphalt, and aggregate crushing plants. (3916)
 EPA should clarify

that motor vehicle, nonroad engines, and nonroad vehicle emissions do not need to be accounted for in assessing major source status under PSD or title V. (5224)
 EPA should consider a waiver of penalties for first

- time mistakes that are made in calculating a threshold. (468 4)
 EPA implementation support should address source ty pes or emission units that cut across sectors, e.g., boilers, process heaters, reciprocating engines, and combustion turbines by

fuel ty pe, rather than specific sectors or source categories. (4691)
 E PA should create a website for the Tailoring Rule similar to the website for the GHG Mandatory

Reporting Rule. (3916)
 EPA should promulgate a list of projects that it considers to be routine or non

- routine (4866). One government agency (4867) states that EPA needs to explain more clearl y how it will apply

the GHG significance threshold to routine operational changes and clarify how PSD modifications could be triggered by such operational changes.
 EPA should address what triggers PSD for utilities. (4866 )
 EPA should make clear in the final rulemaking that PSD and title V are not subject to the “once in, alway s in” policy that has been applied to sources regulated under section 112 of the CAA. (4749, 4515/4691, 3917)219

 EPA should allow offset credits to be counted in determining the GHG emissions for purposes of the PSD and title V programs. Under this approach, new facilities would be able to obtain and submit offset credits to avoid triggering the PSD and title V applicability

thresholds. In addition, ex isting facilities would be able to submit offset credits to avoid triggering the PSD significance level when undergoing a modification. (5340)
 EPA must answer the following questions about GHG BACT determination: (1) Will fuel switching be considered part of BACT, such as requiring a coal power plant to consider natural gas alternatives or co

- firing?; (2) Will BACT determination include “redefining the source” such as evaluating Integrated Gasification Combined Cycle as an alternative to traditional coal p ower plants?; (3) How does one consider tradeoffs in pollutant controls, such as an SO 2 scrubber reducing the efficiency of a coal power plant and thus requiring more CO 2 emissions pe r unit of power produced?; and (4) What is an acceptable CO 2 ambient air impact for PSD evaluation and how will one evaluate other impacts of CO 2 as required by PSD rules. (5061)
 Before PSD applies to GHGs, EPA needs to address the unique characteristics of GHGs which, in some cases, will create a direct conflict with other po llutants when making BACT determinations. (4515, 4691, 5059, 6681) For example, increasing the efficiency of an engine can have the unintended consequence of increasing emissions of conventional pollutants, such as NO x . (4515, 4691) One commenter added that EPA must include a broad review of identified GHG BACT for the various industries to ensure it will not directly

conflict with other criteria pollutants being emitted by the same source. (4515, 4691, 5056) For these reasons, EPA should weigh this d ifficult technical issue as a factor that favors a more limited scope for the PSD and title V programs (either through higher thresholds or the use of non

- GHG pollutants as a “trigger” for PSD requirements for GHGs). (4515, 4691)
 EPA should authorize i nvestment in offset credits as a means of compliance with BACT requirements. (5340) Under this approach, offset credits could contribute to reducing a source’s emissions to the level of the required BACT emissions limitation. (5340) One commenter added that EPA should allow offset credits to be considered part of the “source” for purposes of applicability and significance determinations as well as BACT requirements under the PSD program. The definition of “source” should be interpreted to include an y G HG offsets held by the source. This will increase demand for offset credits, which will drive investment into low

- carbon technology and efficient carbon

- reduction projects throughout the economy . Moreover, offsets would produce the same environmental res ult at lower cost. (4749)
 Several commenters believe that EPA should determine, under the CAA, that NSPS in the short

- term represents BACT until GHG technologies are developed (2504, 3916, 4019, 4512, 4521, 4864, 5084, 5339, 5443, 7935, 8025). Some of th ese commenters state that: (1) this will prevent hollow permits at the outset and the approach will result in researched controls established by industry group. (5339) Another commenter (7935) added that we should implement this approach b y focusing on the source categories with the highest levels of GHG emissions. In addition, several commenters request clarification for the following implementation issues and questions (3003, 4747, 15947):220

 Has BACT or LAER been determined? (3003)
 What will be the n ature of the secondary impact analy sis required under PSD for GHGs? (4866)
 Will CO 2 e offsets be required and will they be limited to the immediate air basin? (3003)
 How will visibility

impact anal ys es, required in PSD, be conducted? (4863)
 Will an air quality

anal ys is be required for GHGs and what will it look like? (4866)
 How GHG emissions are calculated? (3916)
 Will CEMS be required for major CO 2 e emission sources? I f so, what is the maximum emission level in parts per million by volume (ppmv ) for these units? (3003)
 Is the R&D facility

definition in the proposed rule the same as in the CAA? (8691)
 Under the current PSD and title V program, engine testing emissions are treated as stationary sources. Will they

receive the R&D exclusion as in 40 CFR 98.2(a) (5)? (8691)
 Are refrigerants included in facility

- wide title V considerations? (8691)
 One military

commenter states that under PSD, there is a significance level for fluorides of 3 tpy but there is no discussion in the proposed Tailoring Rule ab out whether fluorinated GHGs are covered in this threshold. (4747)
 What are the permit conditions regarding GHG emissions that will need to be added to a title V permit renewal if the facilit y has not made a significant modification requiring a GHG BACT anal ys is? (3916)
 How are agricultural operations handled under this rule? (4866)
 Can districts phase

- in over a 3

- to 5

- ye ar period the title V permit submissions for newl y captured facilities and major sources? (3003) Response : EPA appreciates the su ggestions and general comments as to what parts of the PSD and title V permitting programs should be clarified before permitting of GHGs commences. Several of the requests for clarification or questions are specificall y addressed in the preamble to the fi nal Tailoring Rule or in the BACT guidance, Source Category Exemptions, or other sections of this RTC. Other of these comments are requests for specific guidance or determinations that are beyond the scope of the Tailoring Rule (e.g., source

- specific dete rminations, appropriate monitoring, emission calculations for particular GHG sources). Furthermore, since these issues were not specificall y addressed in the proposal of the Tailoring Rule, we do not have a sufficient record upon which to make such decisi ons at this time. However, a few clarifications may be helpful:
 EPA is currentl y preparing PSD technical and policy guidance for GHG and expects to issue it by

the end of 2010.
 As explained in the proposed Tailoring Rule, LAER does not apply to GHGs.
 No “ once - in alway s - in” policies with respect to title V or PSD applicability are addressed with respect to GHGs in this final rule.
 The use of CO 2 offsets in PSD programs are not addressed in this final rule.
 Q uestions about how to determine GHG emissions for permitting applicability purposes with respect to specific categories of GHG sources are beyond the scope of this rule

. However, the proposal clarified that s u ch calculations must be based on a source’s PTE221

and that implementation of the Mandatory GHG rep orting Rule will produce information, including facility

- level GHG emissions data, that will help permitting authorities to address GHG emissions for specific source categories in their programs. Also, see section 8.4.4 of this RTC for more on monitoring and other methods of calculating emissions

.  We are not finalizing an y exemption for PSD or title V for R&D emissions for engine testing or for an y other source category.
 The categories of HFCs and PFCs are fluorinated GHGs, included in the group of six p ollutants regulated under this final Tailoring Rule; these fluorinated GHGs are contained in many refrigerants in common usage today

.  Fluorinated GHGs are GHGs covered under the Tailoring Rule, while fluorides are a separate category

of regulated NSR pol lutants not addressed b y the Tailoring Rule.
 The title V permit conditions that will be included in any particular permit are source

specific and determined by the permitting authority

at the time the permit is issued.
 The CAA requires all operating perm itting programs in existence for three y ears or more to issue all permits within 18 months of submittal of a timely and complete permit application and we are not finalizing any variation from this requirement for GHG sources in this final rule. 8.4.2 Ge neral Requests for Guidance Comment: Several commenters ask EPA to provide guidance on various issues related to GHG permitting. They

request that:
 EPA provide guidance on identifying and quantifyingsources covered b y t itle V, similar to the general and sector

- specific applicability guidance provided with the Mandatory Reporting of Greenhouse Gases Rule . (5079)
 EPA issue guidance to permitting authorities on title V general permits to ensure a manageable, consistent, and efficient program. (4515, 4691)
 EPA provide guidance for industries that do not have specific emission factors for GHG s
. (3278, 5073) One of these commenters recommends delaying implementation for industries for which emission factors are not available to allow time to develop th ese emission factors. (3278)
 EPA provide guidance to the states. (4747, 4860, 5063, 5336, 5338) This guidance should include or be for:

◦ Standardized general permits for certain source categories. (4747, 4860)

◦ Permits

- by

- Rule language. (4860)

◦ How stat es should fund the program through fees and on seeking federal funding for state and local agencies under section 105 or 103 of the CAA. (4860)

◦ How facilities should calculate their GHG emissions to determine if they fall under PSD and title V programs. (5336)

◦ How to handle PSD permit applications that are in process when the Tailoring Rule becomes effective. (5338)222

 EPA immediately

commence work on a PSD and additional title V “white paper” guidance to handle GHG aspects of permitting including provisi ons for a one

- time listing of annual emission targets for title V facilities under cap and trade, as well as the permit revision routes to be followed for title V permit modifications dealing with GHG, etc. 4863)
 EPA issue specific guidance to potential s ources and permitting authorities of when administrative limitations to PTE are appropriate. (5078, 5079)
 EPA produce a guide that explains how the 25,000 tpy threshold calculation is done, and the ty pes of businesses that would likely be covered or not covered. (4684)
 EPA establish a toll

- free phone number for small businesses to call and inquire whether they are covered or not (without fear of enforcement). (4684)
 EPA specify

a calculation method for determining GHG emissions for PSD and title V per mits; BACT guidance (including applicability triggering of BACT); and permit transition considerations. (8461)
 EPA (1) publish a Case Study for each permit example for source categories expected to trigger PSD and title V requirements for GHGs in phase 1 (which could be included on their website); (2) hold Case Study review seminars in each EPA Region for state regulatory

staff on a semi

- annual, then annual basis; (3) advertise the notice and comment period for select permit applications on EPA’s website, including the EPA implementation assistance and support material, and invite comments from interested parties. (4526)
 EPA’s BACT guidance development process should involve all stakeholders and should be more transparent. (4512, 4515, 4691, 4866, 4951 , 4691, 5110, 5863, 6681, 16411 )
 GHG BACT guidance is needed since GHG do not have well established industrial BACT beyond efficiency improvements. In addition, the BACT refinement effort is further complicated b y the use of a single CO 2 e pseudo

- pollutant which is really six different constituents that could possibly lead to six different BACT determinations for a single source. (4519, 4746, 4863, 4949, 5064, 5305) One of these commenters requests clarification on how a BACT evaluation will be done for a stack emitting multiple GHGs and whether the applicant should do one BACT analy sis using CO 2 e, or would they do separate BACT anal ys es for each of the individual GHGs? (4519)
 Additional time provided to develop BACT guidance that is necessary to fully evaluate the economic impact of regulating GHG emissions under the PSD and title V programs. Currently , the CAAAC’s Climate Change Workgroup is struggling to develop BACT guidance for source categories that emit the most GHG emissions. According to the c ommenter, onl y after BACT is evaluated will EPA have information necessary to fully anal yz e the economic impact of the rule. (5133)
 The CAAAC’s BACT guidance document should, at a minimum, include the following criteria: (1) BACT requirements that are eq uipment and project specific; (2) BACT requirements should be based on what is available at the time of permit issuance; (3) BACT must be cost

- effective and technically feasible; and (4) EPA must ensure that permit issuance is not delayed. (5346)
 EPA’s BA CT procedures summarized by the Climate Chang e Workgroup provide for the evaluation of innovative technologies

– th ey believe that th ere is a bias against innovative technology

built in to the current process because it eliminates all but “demonstrated” te chnologies a s being feasible control options under BACT. (5728)223

 EPA provide sector

- specific guidance on BACT which includes finalizing a document that addresses BACT determinations entitled "New Source Review Workshop Manual: Prevention of Significant Det erioration and Nonattainment Permitting (Draft, October 1990)." (5078, 5079) One commenter adds that EPA should evaluate the applicability of the current “top

- down BACT” approach many states currentl y follow for criteria pollutants (and their precursors) and provide initial guidance to states on how such an approach would be applicable to BACT determination for emissions of GHGs. (4239)
 EPA develop practical guidance on BACT standards (3858, 4512, 4154, 4238, 4239, 4521, 4866, 4949, 4989, 5039, 5061, 50 84, 5135, 5198, 6681, 7935), with the opportunity for stakeholder input if not formal comments, prior to implementation of this rule in earl y - to

- mid 2010 (5079)

.  EPA’s BACT guidance include thermal efficiency degradation factors when establishing the BAC T limit. (5079)
 EPA prepare white papers that provide guidance on a range of control technologies and measures that can be applied in a cost

- effective manner for major stationary source categories, such as power plants, cement kilns, glass furnaces, and o ther sources. (4512, 6681)
 EPA issue a white paper to define real world potential for boilers in high schools and hospitals so that permits are reviewed and issued based on realistic emission estimates. ( 4512)
 EPA provide guidance for computing GHG emi ssions for an y sources that are not in EPA’s GHG Mandatory

Reporting Rule but are covered in the PTE calculation. (4864)
 EPA provide timely

and sufficient guidance to states to assist them in implementing comprehensive PSD and title V GHG permitting progr ams. (4238, 4239)
 EPA address ties to other CAA programs, such as the CAM Rule. (4691) In addition, several commenters would like EPA to harmonize the Tailoring Rule with the GHG Mandatory

Reporting Rule (2371, 3306, 4862, 4951):
 Because the GHG Mandat ory Reporting Rule does not impose reporting requirements on combustion of biomass but the PSD does, there is ambiguit y over whether biomass combustion is regulated under the Tailoring Rule. If EPA does not harmonize the PSD program and the GHG Mandatory Reporting Rule, regulators will run the risk of reversing established policies, which will increase regulatory uncertaint y, and force regulation of stationary

sources for which they

lack comprehensive reporting. (4862)
 EPA should reference the methodologi es contained in the GHG Mandatory Reporting Rule (74 FR 56259) for calculation methods in the Tailoring Rule. This would eliminate any potential inconsistencies between the two rulemakings. (3306)
 EPA can link the schedule for enforcements under the GH G Tailoring Rule to the schedule for the GHG Mandatory Reporting Rule by

waiving enforcement action for sources that fail to comply with the rule prior to the March 2011 initial reporting deadline under 40 CFR part 98. (2371) Response: In general, th ese comments raise implementation issues that are beyond the scope of this rule, which is generall y limited to tailoring the PSD and title V applicability requirements. EPA224

will address the issues raised in these comments as it moves forward with implementing PSD and title V for GHG sources. Concerning the request for harmonizing the Tailoring Rule with the GHG Mandatory Reporting Rule, we have harmonized them in this final rule to some extent, in that both rules adopt the same group of six GHGs. Howeve r, this action does not preclude us from further harmonizing this rule in the future after a notice and comment process. For more on BACT guidance, see section 8.4.5 of this RTC; for more on Biomass, see section 8.3.2 of this RTC; for more on methodologie s for calculating emissions, including those required by the Mandatory GHG Reporting Rule, see section 8.4.4. Concerning the interplay

between the Tailoring Rule and the CAM rule, EPA did not propose an y revisions to any regulations to treat GHGs an y dif ferentl y than any other regulated air pollutants for purposes of CAM and that approach is the approach of the final rule. The CAM rule , under 40 CFR part 64, adds monitoring designed to provide a reasonable assurance of compliance in cases where underl yi n g monitoring (e.g., monitoring imposed through a PSD permit) for an active control device (e.g., a scrubber) does not meet certain CAM monitoring criteria. Also, CAM applies on a pollutant

- specific basis at each emission unit located at a major source that has a title V permit and provided certain emission thresholds at met or exceeded. CAM is normally

determined as part of a title V permitting action, including during initial permit issuance or as part of a significant permit revision. A more

- detailed e xplanation of CAM is beyond the scope of this rulemaking. Lastl y, EPA did not propose to link any sched ules for enforcement under the T a iloring R ule to suc h schedules under the GHG Mandatory Reporting Rule, and we are not specifically addressing this iss ue in the final rule because it is beyond the scope of the rule. However, because the final rule d elay s the applicability of the Tailoring R

ule until January

2, 2011, the final rule will likely

mitigate the commenter’s concern to some extent, compared to the proposal, which would have triggered applicabilit y upon the promulgation of the final rule. 8.4.3 General Suggestions or Comments for Specific Sectors Comment: Various commenters offer suggestions and comments for specific sectors potentially subj ect to the Tailoring Rule. They state that:
 For the semiconductor and other electronics facilities : Itwould be especially difficult for a facilit y to operate under title V and PSD programs, which require close tracking of emission levels to determine if permit thresholds are exceeded, when EPA and state regulatory

agencies have not determined the relevant emission measurement and quantification methods for semiconductor and other electronics facilities. Even EPA recognized the difficulties and complexit ies inherent in quantifying GHG emissions in the semiconductor manufacturing industry when it elected to postpone finalizing the electronics portion of the GHG Mandatory Reporting Rule. (5329)
 For the Public Owned Treatment Works (POTWs) Facilities EPA co uld achieve better results for limiting GHG emissions at POTWs by providing incentives for utilities to225

increase energy

efficiency , to reuse bio

- solids and biogas generated through the wastewater treatment process as fuel, and to adjust treatment processes when viable, rather than instituting PSD permit requirements. (5336)
 For Landfills o EPA should clarify

and streamline the common control determination process for landfi lls associated with LFG energy production (4154, 5391). One commenter adds that separately

- owned LFG control and or treatment operations should not be considered to be under "common control" of the landfill owner/operator for purposes of PSD and title V permitting, and emphasizes that this is particularly true when the landfill can operat e independently from a renewable energy recovery project. According to this commenter, EPA should, among other things, (1) define a separate class of parties engaged in the treatment a nd/or combustion of LFG , either on

- site or off

- site, that will bear compliance responsibility under the Landfill NSPS; and (2) create an option b y which a landfill owner/operator may transfer compliance responsibilities to a collection, control or treatment sy stem owner/operator, consistent with the parties' contractual provi sions, through a certification procedure. Finally , this commenter also believes EPA should narrowly prescribe the circumstances under which compliance responsibility may transfer to a third party

under the NSPS for landfills, so that landfill owners/operators would have meaningful opportunities and flexibility to maximize the value of beneficial use projects involving LFG (5391). o EPA should reconsider the allowable amounts for CH 4 oxidation for older, closed landfills. Because these sites generate such lo w quantities of LFG, the capacity for the cover soils to oxidize the CH 4 is significantly higher than for active or recentl y closed facilities. For landfills that have been closed for more than 20 years, CH 4 oxidation of up to 100 percent should be allowe d, and more recentl y closed facilities should be allowed a sliding scale. (4951) o In addition to generating CH 4 through breakdown of waste in a landfill, a portion of the carbon is stored in the landfill and thus, landfilling provides storage capacity for carbon through this sequestration. This quantity of sequestered carbon should be considered as GHG regulations progress. At a minimum, sequestration of other biogenic carbon should be allowed as part of the net calculations that landfills use to determin e their contribution of GHG to the environment. (4951)
 For Electric Utilities and Transmission and Distribution (T&D) Facilities : o EPA should clarify

that it does not intend to regulate mobile sources of emissions from electric utilities (i.e., fleet vehic les, customer service vehicles, service vehicles, and emergency

or outage management vehicles). (5052) o EPA should clarify

that it does not intend to regulate emissions from the office buildings of Transmission and Distribution (“T&D”) utilities which do n ot burn fossil fuels (coal or gas) directly . The commenter notes that the final rule on GHG reporting did not cover fleet vehicles or T& D facilities with no generation by excluding the reporting of SF 6 emissions, and believes that the same decision shoul d be made for the Tailoring Rule. I f not, EPA should at least delay or determine as de minimis electric utility

office buildings without generation such as, but not limited to, bill paying centers, customer relations buildings, or storage areas with trans mission equipment that might contain SF 6 canisters or tanks that function as true storage areas. The commenter believes that regulation of these de minimis sources of non

-226 CO 2 GHGs should be postponed until phase 2 or 3 of the PSD and title V permitting pr ograms since no control technology has been identified and the NAAQS process has not been established. (5052) o EPA should delay

PSD and title V for any

extraneous GHGs (e.g., nitric acid, water vapor, or an y other de minimis GHGs) at power plants. (5052) o EPA should not require additional CO reduction controls if a 250

- ton threshold triggers PSD CO regulation (5052). This commenter considers CO as an extraneous de minimis GHG that should not be regulated in the future (5052). Response: Many of the reques ts for special consideration for these source categories were considered b y EPA in the context of our response to request for deferrals, exemptions, or particular major source thresholds for the categories, and we decided not to take final action on any su ch special treatment at this time. Instead, we have decided to adopt higher applicability thresholds that will apply to all source categories and phase

- in the permitting requirements such that only the largest sources in any category will be permitted fir st. Nevertheless, we have committed to further consider which sources should be permitted or exempted in the prospective step 3 rulemaking or the rulemaking associated with the 5

- ye ar stud y. Also, several of questions raised b y the commenters are directl y or indirectly addressed in the preamble to the final rule or elsewhere in this response to comments (e.g., treatment of biogenic emissions for landfills, secondary or indirect emissions from electrical generation)
. 8.4.4 General Suggestions or Comments on Emissions Monitoring, Public Participation, and Funding Comment: Two commenters provide specific suggestions or comments regarding emissions monitoring in response to the Tailoring Rule. They state that:
 EPA should establish monitoring exemptions to address GHG emissions monitoring, including compliance issues arising under the CAM rule. (4515/4691)
 T o determine emissions: (1) ph ys ical measurements rather than onl y using empirical determinations should be allowed; (2) temperature, pressure, or vari ations in gravity which use mass and weight should also be allowed since the metric related calculations seem to be oversimplified, (3) the most efficient engines should be supported regardless of the emissions produced, instead than supporting various fue ls and combustion techniques, (4) EPA should clarify whether it supports the development of higher efficiency engines; and (5) emissions should be based on the optimal ratio of CO and CO 2 produced during combustion, rather than using raw quantities. An y e xemptions to CO emissions that currently exist should also apply

to CO 2 emissions. (15947) Concerning public participation, one commenter suggests that i n order to ensure technical support documents are based on the most complete and substantial informat ion from sources as possible, operators and industry stakeholders should be included in the development and review of support documents, and technical and cost information should be peer

- reviewed and based on227

technicall y supportable references. The commenter is especially concerned that limited information (e.g., projections on technology performance or cost) provided by one or two sources could result in biased support documents. (4515/4691) Several commenters request funding assistance from the federa l government to assist state and tribal governments. They state that:
 Even with the Tailoring Rule there is likely to be a significant increase in workload for permitting authorities (3919). Consequently , EPA should seek federal funding assistance for pe rmitting authorities, at least as a stop

- gap measure as states work to develop new regulations and seek the needed additional resources (3919). Another commenter adds EPA should provide the states with additional funds to implement the Tailoring Rule, inc luding increased funds in the first y ear of implementation to cover the cost of sy nthetic minor permitting. They

request that funding be sufficient to support new staff, training, and outreach (3916).
 EPA should provide funding for inspection and enforc ement or this rule would be another unfunded mandate. (5063, 6681)
 EPA should increase CAA section 105 program funding and provide for the collection of title V fees for GHGs. (7935)
 The final rule should include CO 2 presumptive emission fees that are l ower than the fees for criteria pollutants, since source emissions of CO 2 are ty picall y 100 to 1000 times higher than emissions of criteria pollutants from the same source. (4154)
 T ribal air grant funding should be increased to more accuratel y reflect th e air quality

related needs of tribes across the nation, and allow these same tribes the opportunity to implement the Act’s PSD and title V programs. (8803) Response: EPA would like to thank the commenters for their suggestions and general comments and we may consider them in our future deliberations

.  Concerning monitoring and other methods for calculating GHG emissions, the establishment of monitoring requirements or exemptions is beyond the scope of this rule. We note that the GHG Mandatory Reporting Rule contains GHG monitoring requirements and detailed GHG emission calculation protocols for man y different source categories. [ See , e.g., 40 CFR part 98, Subpart C

– General Stationary Fuel Combustion Sources]. In addition, the GHG Mandatory Reporting Rule may

be amended in the future to add monitoring requirements and emission calculation protocols for additional source categories. If the GHG Mandatory Reporting Rule does not specify particular monitoring or emission calculation methods for your proc esses, then state and local permitting authorities will take the lead in authorizing appropriate calculation methods as part of the permitting process. Also, under PSD and title V, permitting authorities retain authority to require monitoring or other app roaches for calculating emissions for compliance purposes, and EPA takes no action in this rule on commenter’s request to exempt GHG sources from such requirements.
 In the proposal, EPA explained that we support energy efficiency

or other measures to redu ce GHG emissions, and we continue to do so.
 Concerning public participation, EPA has conducted public outreach in the development228

of this rule and has to

- date sought the input of the public, including industry , environmental groups, and state and local age ncies, and others. We remain committed to meeting all statutory

requirements for public participation, including the requirements of the APA, and to conducting other outreach as may be appropriate to help inform our decisions.
 Concerning funding issues, i ssues related to an y grants EPA may issue to state and local or tribal agencies are beyond the scope of this rule, but we appreciate the feedback nevertheless. EPA also directs the commenters to our response on issues related to title V fees below, which are an important mechanism for funding air quality permitting programs under the CAA. 8.4.5 PSD

- Specific Implementation Issues Comment: Various commenters provide suggestions or comments regarding implementation issues related to the PSD program. The y state that:
 EPA needs to make every effort to modify or clarify its regulations and policy concerning the determination of a source’s “potential to emit” GHGs. According to the commenter, EPA has asserted in the past that it has substantial discretion i n determining such details of the PSD program, and the courts have agreed. Additionally , the commenter believes that it is clear from existing regulations, that EPA also should reinforce explicitly that the GHG emissions to be assessed are those from the source itself, and not those from activities like transportation or off

- site electricit y generation that have some connection with the source. (4903)
 EPA should not consider GHGs in determining if a modification at an existing source is a major modificati on and therefore subject to PSD review (6458). According to this commenter, if “significant’ increases in GHGs are used to determine if a change at an existing facility

is a major modification, existing plants will not be able to make modifications or changes that, for instance, improve energy /operational efficiency , increase electrical generation capacit y or reduce maintenance without the change being considered a major modification because there are no GHG limits that could be lowered to net out of PSD r eview and that this would effectively foreclose existing plants from make an y substantial improvements. If this is not possible, a commenter suggests that EPA should clearl y indicate in the regulations how “contemporaneous” increases and decreases of GHGs will be addressed with respect to changes in GHG emissions that took place before they

became regulated under the PSD rules (4903).
 EPA should consider a major modification under PSD to occur when the net emissions increase would be greater than 100 tpy on a mass emission basis for the individual gas (e.g., CO 2 , HFCs, N 2 O, and CH 4 ) and greater than 25,000 tpy CO 2 e of combined GHG emissions. EPA could evaluate the need to move back to the currentl y proposed significance level and provide a basis for the p roposed value based on the 5 y ears of gathering information/review. (3306)
 EPA should clarify

if sources can be excluded from PSD, under existing regulations, due to changes at a facility

that merel y result in the increased utilization of a unit or increa sed fuel burning or burning of an alternative fuel, provided the unit was capable of229

accommodating that change (4903, 16411). See 40 CFR 52.21(b)(2)(iii) (e)

- (f ) . Since EPA has identified combustion sources like boilers as the primary units that will be affected b y or will trigger PSD permitting for GHGs, see 74 FR 55,334, there will be an increased number of questions about whether increases in fuel consumption or fuel

switching at those units are exempted from being a PSD major modification (4903). Th e commenter (4903) encourages EPA to reinforce the interpretation it applied to those exemptions from the definition of modification soon after they were promulgated so that, so long as a unit itself (not including peripheral equipment) is capable of burni ng a fuel, or is capable of burning greater quantities of a fuel, the increased emissions associated with fuel switching or increased utilization are not counted in determining a “net emissions increase,” regardless of whether other changes at a facilit y m ade the fuel switching or increased rate of operation necessary or more desirable.
 EPA needs to clarify

how debottlenecking projects will be treated and how projects must be aggregated for PSD applicability purposes. (4903, 16411)
 EPA should develop a s tandard evaluation process to determine if best practices and technologies have been incorporated in the case

- by

- case review of new or modified facilities that trigger PSD permitting requirements, otherwise there may be wide variations between permitting a gencies, even agencies located in the same state. It might be better to have streamlined standard reviews b y source categories. (4518, 8531)
 EPA should clarify

whether PSD requirements for GHG sources trigger additional environmental impact and air qua lity anal ys es. (4691)
 EPA should clarify

how GHG emissions thresholds apply to routine operational changes that may trigger PSD major modification procedures (4867). Another asks how major modification is determined for GHGs (5124)?
 EPA should exclude GH G emissions from that portion of the PSD definition of “significant” that defines a 1 μg/m 3 impact within a Class Iarea as significant, because GHGs are emitted from combustion sources in amounts orders of magnitude higher than criteria pollutant emission s (see 40 CFR 52.21(b)(23)(iii)) (4692). For sources located within 10 km of a Class 1 area, this criterion would require a PSD permit for combustion sources so small they

are exempt from both minor permit NSR and title V permits (4692). o Since GHGs are gl obal pollutants, EPA should (6457): o Recognize “carbon offsets” from off

- site reduction, destruction, avoidance or sequestration of GHG as a legitimate method of netting on

- site GHG from regulated major emitting facilities for purposes of PSD/NSR (or title V) applicabilit y, thresholds, or emissions anal ys is. Under current law, the federal CAA does not prevent EPA from doing so. o Create a trading s ys tem for GHG emissions, which can be readil y distinguished from the trading programs in the Clean Air Interstate Rule ( CAIR ) and NOx SIP Call that were recently

invalidated by

federal courts on the grounds that those programs failed to adequatel y account for inter

- airshed transfers and resulting concentrations of pollutants in upwind airsheds, which may have posed a localized risk to health and welfare. o Consider on

- or off

- site carbon reduction projects in determining the appropriate technology

standard (BACT, LAER, RACT, etc.) applicable to regulated stationary sources under various provisions of the CAA.230

 EPA sho uld be explicit on how the PSD major modification threshold is determined. For ubiquitous industrial emissions sources such as process heaters, and in light of the very low GHG thresholds EPA has proposed, the commenter supports the current regulatory pra ctice of determining changes in emissions as "actual to future actual" and not "actual to potential.” The commenter supports the "actual to future actual" regulations as the more reasoned approach to applying NSR to GHG emissions and requests EPA to speci ficall y document this approach in the final regulations. (5124) Response : EPA appreciates these comments. They are beyond the scope of this rule, which is generall y limited to tailoring the PSD and title V applicability requirements. EPA will address the issues raised in these comments as it moves forward with implementation of PSD requirements for GHG sources.
Because man y of the comments concerned BACT, it should be noted that the CAA requires that a PSD permit contain, among other things, emission s limits based on the BACT for each pollutant subject to regulation under the Act emitted from the source that triggers PSD. 42 U.S.C. section 7475(a)(4); 42 U.S.C. section 7479(3). BACT is defined as follows: (3) The term "best available control techno logy " means an emission limitation based on the maximum degree of reduction of each pollutant subject to regulation under this Act emitted from or which results from any major emitting facilit y, which the permitting authority , on a case - by

- case basis, taki ng into account energy , environmental, and economic impacts and other costs, determines is achievable for such facility through application of production processes and available methods, sy stems, and techniques, including fuel cleaning, clean fuels, or tre atment or innovative fuel combustion techniques for control of each such pollutant. In no event shall application of "best available control technology " result in emissions of any pollutants which will exceed the emissions allowed by

any applicable standard established pursuant to section 111 or 112 of this Act. Emissions from any source utilizing clean fuels, or any other means, to comply with this paragraph shall not be allowed to increase above levels that would have been required under this paragraph as it existed prior to enactment of the Clean Air Act Amendments of 1990. 42 U.S.C. § 7479(3). Thus, the BACT process is designed to determine the most effective control strategies achievable in each instance, considering energy , environmental, and economi c impacts. However, the case

- by

- case nature of BACT, together with the range of factors and technologies that must be considered, presents a challenge in determining BACT for newly regulated pollutants. When a new pollutant is regulated, the first permit applicants and permitting authorities that are faced with determining BACT for a new pollutant will likely need to invest more time and resources in gathering and analyzing information necessary to make an assessment of BACT under the statutory criteria. Once the PSD permitting program matures with respect to the new pollutant, successive BACT anal ys es will establish precedents that can inform subsequent BACT determinations. While the BACT provisions clearly contemplate that231

the permitting authorit y eval uate control strategies on a case

- by

- case basis, EPA recognizes the need to develop and share policy guidance and technical information for sources and permitting authorities as they

begin to permit sources of newly regulated pollutants, such as of GHGs. When applied in a practical manner, this additional EPA guidance and technical information should reduce time and resource needs when evaluating BACT for newl y regulated pollutants. As described in the proposed GHG Tailoring Rule, EPA intends to compile an d make available technical and background information on GHG emission factors, control technologies and measures, and measurement and monitoring methodologies for key GHG source categories. We expressed our intent to work closel y with stakeholders in deve loping this supporting information and to ensure this information is available in sufficient time to assist permitting agencies in their BACT determinations. The proposal took comment on what other types of support or assistance EPA can provide to initial ly help air pollution control agencies with the permitting of GHGs. Commenters on the proposed GHG Tailoring Rule generally supported EPA providing technical information and policy guidance for sources of GHGs. Several commenters specificall y requested guidance to clarify GHG

- related issues, such as how to compute CO 2 e emissions, how to evaluate emissions of CO 2 from biomass fuel, and whether an air quality anal ys is will be required for GHGs. Additionall y, commenters requested that EPA issue “white paper s” and other tools that would provide information on a range of control technologies and measures for major stationary source categories, such as power plants, cement kilns, glass furnaces, and other sources. Man y of these commenters further requested that EPA provide an opportunity

for stakeholder input on the guidance, and a few commenters insisted that permitting for sources of GHGs should not begin prior to issuing final guidance. Consistent with our commitment at proposal to involve all stakeholders in our guidance development, EPA called upon the CAAAC in September 2009, to provide assistance and recommendations for what ty pes of guidance and technical information would be helpful. 14 Specificall y, our charge to the CAAAC was “... to discuss and identif y the major issues and potential barriers to implementing the PSD Program under the CAA for greenhouse gases ... [and] focus initially

on the BACT requirement, including information and guidance that would be useful for EPA to provide concerning the technica l, economic, and environmental performance characteristics of potential BACT options.” This charge also requested the CAAAC to “identify

and discuss approaches to enable state and local permitting authorities to apply the BACT criteria in a consistent, pr actical and efficient manner.” At its October 6, 2009 meeting, the CAAAC established a Climate Change Work Group, made up of 35 representatives from a variety of industries, state and local governments, and

14 The CAAAC is a senior

- level policy committee established in 1990 to advise the U.S. EPA on issues related to implementing the CAA Amendments of 1990. The committee is chartered under the Federal Advisory Committee Act and has been renewed every 2 years since its creation. The membership is approximately 40 members and experts representing state and local government, environmental and public interest groups, academic institutions, unions, trade associations, utilities, industry, and other experts. The CAAAC meets 3 times a year, norm ally in Washington, D.C. It provides advice and counsel to EPA on a variety of im portant air quality policy issues. The committee has formed several subcommittees to provide more detailed discussion and advice on many technical issues.232

environmental and public health non

- profit organi zations, organized under CAAAC’s Permits, New Source Review and Toxics Subcommittee. The Work Group initially focused its attention on the procedure for evaluating BACT and decided that the process and criteria for determining BACT for criteria pollutants represented a workable and acceptable framework for GHGs. The Work Group also recommended a second phase, in which the Work Group would consider member proposals regarding possible alternative or supplementary approaches to applying the PSD program to GH G sources. In February

2010, the CAAAC completed work on the first phase of its effort and sent EPA a list of recommendations that highlighted areas of the BACT determination process that are in need of technical and policy guidance. For more information , see the Interim Phase I Report on I ssues related to BACT for GHGs, February 3, 2010 that is located in the public docket for this rulemaking and at http://www.epa.gov/air

/caaac/climate/2010_02_InterimPhaseIReport.pdf . In response we are working on a number of fronts to develop technical information, guidance, and training to assist states in permitting large stationary sources of GHGs, including identifying GHG control m easures for different industries. EPA is currently working with states on technical information and data needs related to BACT determinations for GHGs. This includes developing the EPA Office of Research and Development GHG Mitigation Strategies Database , enhancing the RACT/BACT/LAER Clearinghouse to include GHG

- specific fields, and preparing technical information on sector

- based GHG control measures. Also, EPA is actively developing BACT policy guidance for GHGs that will undergo notice and comment and will culminate in training courses for state, local and tribal permitting authorities. The results of all of these efforts will roll out over the remainder of 2010. EPA currently awaits the Work Group’s recommendations from its second phase of deliberati ons, which is underway as of the date of this notice. EPA does not agree with some commenters’ suggestion that EPA should delay permitting of an y sources until final BACT guidance is issued. As discussed in the final action on reconsideration of the Inter pretive Memo, delaying the application of BACT to enable the development of guidance or control strategies is not consistent with the BACT requirements. 63 FR at 17008. Furthermore, as just described, EPA expects such a delay to be unnecessary because EP A will soon begin providing technical information to inform BACT decisions, and will continue to provide additional guidance prior to the date that GHG permitting begins. However, even in the absence of such guidance, a delay would not be justified under the legal doctrines of “absurd results” and “administrative necessit y.” While implementation of the BACT requirement during steps 1 and 2 will pose implementation challenges, EPA has assessed the burden associated with GHG permitting with consideration gi ven to these challenges, and has established a phase

- in schedule that represents a manageable workload. Thus, while BACT is a case - by

- case assessment, EPA is confident that this guidance development effort will help support a smooth transition to permittin g emissions of GHGs. Furthermore, EPA will continue to work to provide the most updated information and support tools to allow permitting authorities to share and access the most updated information on GHG BACT determinations as they are made once permitt ing of GHGs begins. EPA remains committed to involving stakeholders in the upcoming efforts to develop guidance to help to permitting authorities in making BACT determinations for sources of GHGs.233

8.4.6 Title V

- Specific Implementation I ssues 8.4.6.1 General Comments or Suggestions
Comment: EPA should clarify

the status of facilities with existing title V permits, whether:
 The requirement to obtain a title V permit where none was previously needed would require the newl y permitted facilit y to include all pollutants into a title V permit or whether the minor sources could remain outside of the title V permit. (4990).
 Will the GHG requirements be added to existing permits or will they be required to be in a new and separate permit. The commenter recommends that EPA make the new requirements additions to existing permits, rather than a separate permit. (4990) Response: We did not propose to revise the title V regulations to treat GHGs an y differently within title V permits and we are not finalizing any such changes at this time. Concerning the scope of the permit, the current rules specify that when any regulated air pollutants, including GHGs, trigger major source status, all emission units and all regulated air pollutants at those emissions units must be included in the permit application. Also, permits for major sources must include all applicable requirements at all emissions units, while certain permits for minor sources may be limited in scope with respect to applicable requirements. See 40 CF R 70.5(c)(3)(i) and 70.3(c)(1). In the preamble to the final rule we discussed the future consideration of certain “hollow permit” theories for limiting the applicability for the permitting rules in the future but we are taking no action on that approach at th is time. See more on this under section 8.4.6.2

. Concerning the comment that EPA allows permitting authorities to add new GHG permit requirements as additions to permits, rather than as a separate permit, we are not requiring such an approach at thi s time. The permit rules allow permitting authorities to either issue a single permit or multiple permits to a single major source provided all the applicable requirements at the facility

are covered by

the permit or collection of permits, and we are not changing this discretion for permitting authorities at this time. 8.4.6.2 Hollow Permits
Comment: Several commenters assert that permitting agencies would spend a lot of time and money to process the permits of applicants (3858) who have essentiall y nothing to report, because there are no applicable GHGs requirements under the CAA ( 4692, 5143, 5179, 5417, 5808, 8545) and these sources have no other obligations under the Act (5129). For that reason, it would seem that the D.C. Circuit might be recepti ve to EPA's adopting a scheme to provide relief from title V for these sources (8545). However, if “hollow” permits are created or would be created, two commenters suggest that EPA could: (1) include the GHG Mandatory Reporting Rule as an applicable requi rement under title V to prevent this from happening (4747), or (2) provide model234

permit language for the first round of title V permits (5338) to facility the issuance of all the new permits. One commenter has concerns about how compliance assurance me asures would be established in title V permits for the semiconductor industry given that there are no applicable requirements. Even the GHG Mandatory Reporting Rule has been deferred for semiconductor manufacturers, and the commenter contends that establi shment of reporting and monitoring requirements outside of the GHG Mandatory Reporting Rule on a patchwork basis through state

administered title V permitting programs would undermine the Tailoring Rule and also the efforts b y the semiconductor industry to establish voluntary GHG emissions reporting and reduction goals on a worldwide basis through the World Semiconductor Council. (5143) Response: Many commenters argued that EPA should apply the title V program onl y to sources that are subject to applic able requirements, so that sources should not be required to hold empty permits (i.e., permits issued to a source that is not subject to any applicable requirement for any pollutant). To the extent that commenters argue that the statute requires EPA to ad opt a “no

empty

– permits” theory , we disagree. We believe that although various provisions of title V indicate that one of title V’s purposes is to gather a source’s applicable requirements into a single permit, see CAA sections 503(b)(1), 504(a), we do no t read those provisions as expressly limiting title V to sources with applicable requirements. We also note that to date, we have issued permits to sources without applicable requirements, albeit on rare occasions. We believe that the tailoring approach we adopt in this rulemaking best reconciles the statutory provisions with congressional intent. We also raised the issue of “hollow” or “empt y” permits in discussing our rationale for why it may make sense to delay

title V permitting under our proposal. We were concerned that many title V permits for GHG sources would contain no applicable requirements, and their issuance would therefore be of little value and would not be the best use of scarce resources. Several commenters agreed that implementing titl e V for GHG will, at least initially , require “empty permits” to be issued to GHG sources because such sources will not be subject to “substantive” requirements, and that this would not be the best use of scarce resources. We believe that the amount of resources that would be spent on, and the limited value that would result from, “empty permits” does warrant consideration under the Chevron anal ys is, taking account of the “absurd results” doctrine. Therefore, we intend to consider the role of “empty pe rmits” when we undertake future rulemaking. However we believe the issue of “empty permits” has limited or no relevance to the first two steps of the phase in that we are promulgating in this rule. During step 1, permitting for GHGs is onl y required if the source is otherwise subject to permitting for its emissions of non

- GHGs. Those sources very likely will be subject to existing substantive applicable requirements for non

- GHGs ( e.g., NSPS, MACT, and SIP requirements, including PSD). Thus, there should be no, or at least no addition al , “empty permits” during step 1. For step 2, it is possible that sources that become subject to title V requirements for GHG emissions may not be subject to other requirements, but our assessment suggests that this is very unlikely . We estimate that virtually all of the 550 newly

- major sources235

in step 2 will be subject to applicable requirements under the CAA because they are from categories that have been traditionally subject to regulations, such as smaller industrial so urces from alread y regulated categories, large landfills, and oil/gas/coal production. Even the approximately

50 newl y - subject commercial sources in step 2, which we estimate to be comprised of very

large hospitals, are likely to be covered by

standards f

or medical waste incinerators. In addition, we expect these sources may well be subject to SIP requirements. Thus, we do not expect any , or at most very few “empty

permits” during step 2. In later stages of implementation ( e.g., prospective step 3) or i n the event that we permit smaller, non

- traditional sources of GHGs that have never otherwise been subject to major source permitting, there would be a greater potential for “empty permits” to be issued under title V. Cognizant of this, we intend to furth er explore in the rulemaking for step 3 “empty permit” theories under the “absurd results” rationale that may serve to permanently narrow the scope of title V to exclude sources that would potentially be required to obtain an “empty permit” due to GHG emis sions. Concerning the request for EPA to develop model language for hollow permits, EPA reiterates that it does not expect many , if any , such permits to be issued under the approach of this final rule and further notes that no title V permit, even a “holl ow” one, would be a completely

blank slate. Each title V permit must include the title V administrative requirements, such as fee pay

ment requirements, title V’s recordkeeping, reporting and monitoring requirements, and procedures of appl yi ng for permit r evisions or permit renewals. Because each state, local or tribal title V program is unique, permit language would depend on the requirements of the EPA

- approved title V program. As such, the state, local, or tribal agency would be in the best position to develop such model language based on the specific requirements of their approved permit program, if such language is deemed necessary

. 8.4.6.3 Application Shield
Comment: Several commenters request that EPA address the issue of the title V Application Shield in the proposed rulemaking (3003, 4298, 4860) because section 502 of the CAA states that it is unlawful for a source to operate except in compliance with an operating permit (4860) and upon triggering GHG applicability , all the sources that become subject to operating permit requirements will not have the required permit pursuant to the CAA or state regulations. Therefore, they

will not be shielded from enforcement or be able to certify compliance. For these reasons, two commenters ask EPA to:
 Clarify

whether “shields” would be granted to newly captured facilities even if a title V permit application is determined to be incomplete? (3003)
 Implement a uniform national policy , with respect to the treatment of s ynthetic minor permit applications that extends permit shield protections afforded to major sources that have applied for title V permits to sources that have applied for s ynthetic minor status. In the event a s ynthetic minor permit is not ultimately issued, sources should have at least six mo nths to submit an administratively complete title V permit application without penalty . (4298)236

Response: The title V regulations offer two t ypes of “shields” for sources, an application shield and a permit shield. Application shields protect sources from a violation for operating without a permit, provided they

submit a timely

and complete permit application by the applicable deadline; this is a mandatory element of state title V program. See 40 CFR 70.7(b) and section 503(d) of the Act. The title V regulations generall y provide that a permitting authorit y must determine that an application is incomplete with 60 day s following receipt or the application will be deemed complete. See 40 CFR 70.5(a)(2). Where a permitting authorit y seeks additional in formation regarding an application previously determined or deemed complete, the application shield continues to apply so long as the source meets any deadlines set by the permitting authority

for submission of additional information. See 40 CFR 70.5(a)(2 ); 70.7(b). Permit shields protect sources from a violation for not meeting the terms of an applicable requirement, provided the source meets the terms and conditions of the applicable requirement that are included in the permit; this provision is an opti onal element for state title V programs. See 40 CFR 70.6(f)(1)(i) and section 504(f) of the Act. The EPA did not propose to revise the title V regulations with respect to these shields as part of the proposal for the Tailoring Rule and we have not finali zed any such provisions. Thus, these shields are available in permitting for GHGs to the same extent that they are available with respect to other pollutant s
. 8.4.6 . 4 Title V Fees
Comment: A few commenters support EPA’s position that it is not nece ssary to amend the federal regulations to establish presumptive fees that account for GHG emissions or to mandate revisions to fee regulations in states that did not adopt the presumptive fee approach because:
 Current fees on traditional “regulated polluta nts” emitted from sources newly covered b y title V should suffice to cover the costs of permitting. In fact, they believe that EPA should go further than it proposes and prohibit presumptive and/or supplementary fees for GHG emissions. (4298)
 Applying th e current "presumptive fee" of $43.75/ton for GHG emissions would impose an insurmountable financial burden on a large number of companies (5300) and thus EPA should eliminate or severely limit the title V fees that states can collect for GHG emissions (47 45, 5300, 5773). However, they assert that EPA should not leave this to state discretion (4745, 5300) since this will cause an unsatisfactory patchwork of state approaches (5300).
 EPA has used its discretion under section 502(b)(3) of the CAA to establis h presumptive fees for GHGs and has left the fee adequacy requirement to each state. (4120) Other commenters disagree with EPA’s suggestion that states should not charge for GHG emissions and/or increase the fees of other pollutants to cover the cost of regulating GHG emissions because:
 This approach unfairl y punishes existing sources and brings in no additional revenue from new sources triggering PSD and title V permitting for the first time. These new237

sources will continue to need permit modifications and renewals after the first permit issuance, and states and local agencies will need to continue to cover the cost of these permit actions over time. (4521)
 EPA lacks an y credible support for its assumption that a 50 percent increase in resources is nee ded and achievable to fund the expanded resources required b y state permitting authorities. (4630) Several commenters state that any effort to increase fees for GHGs will be contentious because:
 Many regulated sources such as coal

- fired power plants an d refineries in their state alread y pay

the maximum title V fee. (5135)
 Many states are subject to statutory limitations on title V fee increases and existing fees are likel y to be insufficient to address the increasing workload. (4691, 5063)
 Pending f

ederal GHG legislation would potentially negate the need for such an increase. (5135)
 Many states are prohibited from collecting fees for CO 2 e by their authorizing legislation or it could take, like in this state, 3 y ears to get fee change authorization . (8025)
 Given the status of the economy , certain states will not be able to raise fees on businesses. (5301)
 T he potential that states can charge a fee for administering the program could significantl y impact the economics of regulated sources. (3757)
 The CAA is very

clear in section 502(b)(3)(B)(ii) that permitting authorities may not levy title V permit fees on an y regulated pollutant for which a NAAQS, NSPS, or NESHAP has not been established (5052). The commenter (5052) also notes that this sect ion also caps permit fees at 4,000 tpy of that regulated pollutant.
 Given that legislative and regulatory changes are needed, the timing of the influx of permit applications will precede their state’s ability to collect fees and obtain additional resources . (4238, 5135) For these reasons, several commenters ask EPA to:
 Clearly

detail permitting agencies' authority to collect fees under this program (7935), and provide such agencies with general guidance and recommendations for fee structure ( 4555, 5056, 7 935). One commenter adds that EPA should develop a range of recommended fees for the title V program so that the states do not have to develop an independent cost analy sis (4866).
 Clarify

if there will be a separate fee in $/ton for GHG and criteria pol lutants. (2493, 2505)
 Modify

its part 70 rules to adopt presumptive title V fees that are tailored to the GHG program. (4864, 5057, 5084)
 Establish a presumptive minimum title V fee that includes the additional cost related to the inclusion of GHGs in title V permits to ensure that adequate funding is available to implement this rule. (3278, 4989)
 Monitor closely

state GHG programs to ensure fees are reasonable, appropriate and dedicated to the GHG program (4106, 4120, 4238, 4555, 4691, 5056). Fees sh ould not be used for general revenues by the states (4106, 4120).
 Ensure that an y relief given for fees should appl y t o all sources regardless of size. (5082)238

 Clarify

for CO 2 if there will be a cap on fees per pollutant similar to the acid rain rule. (24 93, 2505) Response: The title V program requires permitting authorities to collect fees “sufficient to cover all reasonable (direct and indirect) costs required to develop and administer [title V] programs.” 15 To meet this requirement, permitting autho rities either collect an amount not less than a minimum amount specified in our rules (known as the “presumptive minimum”), or may collect a different amount (usually less than the presumptive minimum). We did not propose to change the title V fee regulat ions in our notice of proposed rulemaking for this action, nor did we propose to require new fee demonstrations when title V programs begin to address GHGs. However, we did recommend that each state, local or tribal program review its resource needs for G HG and determine if the existing fee approaches will be adequate. If those approaches will not be adequate, we suggested that states should be proactive in raising fees to cover the direct and indirect costs of the program or develop other alternative app roaches to meet the shortfall. We are retaining this proposed approach, and are not changing our fee regulations as part of this final action establishing steps 1 and 2 of the phase

- in. However, we are offering some additional clarification of our fee ap proach during these steps in response to comments we received on this issue. Additional discussion of fees will be included as part of subsequent actions establishing step 3 and beyond. A few state commenters suggested that EPA should modify part 70 to adopt a presumptive minimum fee (or range for such fee) for GHGs, some of whom suggested that current fees may

be insufficient to cover the costs of their program. It is important to clarify that altering the presumptive minimum would only affect those st ates that chose to charge the presumptive minimum fee to sources. Most states

– including some of the commenters asking EPA to raise the presumptive minimum

-- collect a lower amount that is not based on the presumptive minimum, but rather, relies on another fee schedule that it developed and EPA approved as adequate to cover costs. Therefore, it is useful to first discuss our approach to programs that have fee schedules resulting in a different amount before discussing our approach to the presumptive min imum. Because of the added GHG title V permitting workload described elsewhere in this notice, an y state that will not, under its current fee structure, collect fees adequate to fund the permitting of GHG sources must alter its fee structure in order to m eet the requirement that fees be adequate to cover costs. Changes may not be required in every

instance; circumstances will vary from state to state. For example a state may see increases in revenue from newl y - covered sources (based on emissions of pollutants alread y subject to fees) that fully cover the state’s increased costs, or a state may be over

- collecting fees now and could use the surplus to offset the increased costs. Nonetheless, in many cases, we think states will need to adjust their fee stru ctures to cover the costs of GHG permitting in order to meet the requirements of the Act and our regulations.

15 The fee provisions are set forth in CAA section 502(b)(3) and in our regulations at 40 CFR 70.9 and 71.9.239

For this reason, although we are not calling for new fee demonstrations at this time, we plan to closely

monitor state title V programs during the first two steps of the Tailoring Rule to ensure that the added workload from incorporating GHGs into the permit program does not result in fee shortfalls that imperil operating permit program implementation and enforcement, whatever the basis of the states’ fee schedule. As described in the proposal, such fee oversight by EPA may

involve fee audits under the authority of section70.9(b)(5) to ensure that adequate fees are collected in the aggregate to cover program costs, with emphasis on whether the add itional GHG workload is being appropriatel y funded. Also, EPA retains the ability to initiate a program revision under section70.4(i)(3) or issue a notice of deficiency under the process described in section70.10(b) to address fee adequacy issues, which m ay

be uncovered during a fee audit. By

rel yi ng on existing oversight measures, we are ensuring that the fee requirements are met with a minimum of disruption to existing programs at a time when they will already

be facing significant challenges related to GHG permitting. Turning to the minorit y of states that do use the presumptive minimum, we did not propose to change the presumptive minimum calculation method to account for GHG. Currently under the statute and our rules, the presumptive minimum is base d on a subset of air pollutants (i.e., VOC, NAAQS pollutants except for CO, and pollutants regulated under the NSPS and MACT standards promulgated under sections 111 and 112 of the Act, respectively) that does not include GHGs. The amount is specified on a per - ton basis and changes with inflation (it is currentl y set at $43.75/ton), but does not apply to emissions over 4,000 tpy of a given pollutant from a given source. We noted several difficulties in applying the presumptive minimum to GHG, including th e large amounts of GHG emissions relative to other pollutants and the need for better data to establish a GHG

- specific amount. Noting that GHGs are not currentl y included in the Act’s list of pollutants to which the presumptive fee applies, we also invite d comment on whether we should raise the fee for listed pollutants to cover the added cost of GHG permitting. A few state commenters asked us to set a presumptive fee for GHGs, which we take to mean we should add GHGs to the list of pollutants to which a presumptive fee would apply

. However, man y commenters noted that the current presumptive minimum fee is unreasonable for GHGs because GHGs are emitted in greater quantities than the pollutants currentl y subject to presumptive fees, which would result in e xcessive fees. These commenters believe that EPA needs to limit the fees that states can charge for GHGs. Moreover, one commenter read the statute to prohibit us from listing GHGs in the presumptive fee calculation in the first place. Several commenters disagreed with the idea of instead increasing the presumptive fee for other pollutants to cover the cost of regulating GHGs, some of whom believed that this would unfairly punish existing sources or would bring in no new revenue from sources triggering ti tle V for the first time. After considering these comments, we remain disinclined, as we were at proposal, to change the presumptive fee calculation regulations. While there is some support for changing the regulations, the comments confirm the challenge s in doing so. While we expressly rejected charging the full presumptive cost per ton amount for GHG, we also did not propose language to establish a different amount just for GHG, to establish whether a different tpy cap would appl y, or to assess whether GHGs could even be added to the list. Thus, many commenters were very concerned about whether the full $43.75 or the 4000 tpy cap would appl y t o GHG if we listed it240

as a regulated pollutant for fee purposes. Furthermore, we noted at proposal, and commenters did not disagree, that more data would be needed to establish the appropriate basis for the GHG presumptive minimum. We are not taking a final position in this notice on whether the statute is amenable to including GHG in the presumptive fee calculat ion currentl y, but these comments illustrate some of the difficulties of such an approach. At the same time, we are not increasing the presumptive minimum for other pollutants alread y included in the fee calculation. We disagree with the commenter who said such an approach would bring in no new revenue from newly

- subject sources. Many of the newl y subject sources would emit already - included pollutants. I f new revenue from these pollutants were insufficient, and because the Act does not specify how the shortfall must be addressed, the amount of an y projected shortfall could be made up by increasing fees on these pollutants. In fact, the projected shortfall could be addressed without having to inventory GHG emissions from title V sources, since the emis sions of alread y - included pollutants are well

- known. We also note that, although some commenters are concerned that failing to assess fees for GHGs directly would be unfair, the statute does not provide that the presumptive fee be proportional to each ty p e of pollutant or be proportionally allocated to all sources. Rather, the presumptive fee approach provides a backstop for states that do not wish to adopt a more tailored approach. Nonetheless, we have decided not to increase the presumptive fee amounts for other pollutants because we lack information about the extent to which shortfalls exist due to GHG permitting, and which mix of sources and fees is appropriate for addressing an y such shortfall in a state. This decision also provides greater flexibil ity to states and minimizes disruption to existing programs. We note that, contrary

to the statements of some commenters, the CAA provisions allowing for a presumptive fee calculation do not override the basic requirement that fees be adequate to cover c osts. As noted previousl y, we expect states to see a revenue increase from emissions of listed pollutants at newl y - major sources for GHG, and it is also possible that the presumptive minimum may currently be resulting in over

- collection of fees in a state . Thus, a state continuing to use the presumptive minimum may not have a shortfall. However, if states using the presumptive minimum approach do have a revenue shortfall due to GHG permitting, the statute requires the shortfall to be addressed. The EPA has had, and will continue to have, the ability

to require states that use the presumptive minimum to increase their fees if the presumptive minimum results in a revenue shortfall that imperils operating permit program implementation and enforcement. Thus , although we are not changing the presumptive minimum in our regulations, we plan to follow the same oversight approach for states using the presumptive minimum as for those collecting less based on a resource demonstration. As described previously , this approach may involve fee audits with emphasis on whether the additional GHG workload is being appropriatel y funded, and other appropriate follow

- up. Consistent with our proposal, EPA is not modifying its own part 71 fee structure (which closely mirrors the presumptive minimum) in order to charge an additional fee for GHG. EPA must revise its fee schedule if the schedule does not reflect the costs of program administration. We have not determined that the existing fee structure will be inadequate to fun d the part 71 programs costs during the first two phases of permitting GHGs as set forth in this action. However, we are required to review the fee schedule every 2 y ears, and make changes to the fee241

schedule as necessary

to reflect permit program costs. 40 CFR 71.9(n)(2). Thus we will continue to examine the increases in part 71 burden due to GHG permitting, the current revenue collection, and the increases in revenue from newly

- subject part 71 sources, and will adjust the part 71 fee approach according ly

. Finally , several state and industry commenters asked EPA to provide guidance and recommendations for an appropriate GHG fee structure. We note that title V grants permitting authorities considerable discretion in charging fees to sources for title V purposes and does not require or prohibit fees specificall y for GHGs, provided the states collect fees in the aggregate that are sufficient to cover all the direct and indirect program costs. In responding to requests for guidance, we do not wish to limit state discretion. For example, some commenters suggest that EPA prohibit emissions

- based fees for GHG or cap the amount that can be collected, while others suggest we provide a range of acceptable fees. We are concerned that, given the wide variet y of f

ee approaches that states now take, providing specific guidance may be disruptive, rather than helpful, to states. On the other hand, we recognize that it will initially be difficult for states to establish an appropriate emissions fee for GHG. As noted previously , there are currently limited data available for establishing such a fee, and, due to the large quantities of GHG emissions, such a fee may onl y amount to a few cents per ton. At the same time, as noted in the proposal, a number similar to that used for other pollutants (e.g., the presumptive minimum of approximately

$45/ton of GHG) would be inappropriate because it would likely result in huge over - collection. Because of this challenge, we note that section 70.9(b)(3) allows the state to charge fees to individual sources on an y basis (e.g., emission fee, application fee, service

- based fees, or others, in an y combination). While most states use emissions

- based fees, there is merit to considering all the available fee bases to address increased GH G workload, including approaches that do not require a GHG emissions inventory for fee purposes. For example, where it is possible to estimate a revenue shortfall as a percentage of fee revenue, it may be appropriate to simply attach a percentage

- based surcharge to each source’s fee to match that shortfall. Similarly , where the shortfall could be estimated as a total dollar amount, a flat surcharge could be added to each source’s fee to address the shortfall. These suggestions should not be read to ind icate that EPA prefers an y particular approach, or that EPA rejects a cost per ton approach. Rather, they illustrate that it is possible to address a revenue shortfall without establishing a GHG per

- ton fee. While the EPA is declining to recommend specif

ic approache s in the preamble of this final rule , we are committed to assisting states in implementing the fee requirements for GHG. Therefore, we will work with any state that requests assistance from EPA in developing a workable fee approach. EPA recognizes that states need time to adopt new fee structures, collect fees, and hire additional permitting staff, and has taken these issues into consideration in adopting this final rule.242



## Chapter 9. Comments on Statutory and Executive Order Reviews
Section XIof the proposal preamble for the Tailoring Rule sets out EPA’s obligations under EOs 12866, 13045, 13132, 13175, 13211, and 12898; the PRA; the RFA; the UMRA; and the National Technology

Transfer and Advancement Act (NTTAA ) ; and EPA’s conclusions and a ctions performed (where necessary) to meet those obligations for the proposed Tailoring Rule. Comments received on EPA’s obligations under these statutory and Executive Order ( EO ) reviews and EPA’s actions in response to those obligations are presented in this Chapter. Specific comments related to RFA SBREFA are presented in Chapter 7, section 7.2. 9.1 General Comment Comment: One commenter (5052) notes that it filed comments with EPA and SBA on December 1, 2009 to help provide data on small business implications and asks that these comments be considered under S BREFA, UMRA, and EO 12866. (These comments are in the docket for this action, Docket ID No. EPA

- HQ

- OAR

- 2009

- 0517

- 5052.8.) Response: We have considered all comments on the proposed action f or this final rule. 9.2 Executive Order 12866

– Regulatory Planning and Review Comment: Several commenters state that EPA’s failure to estimate the full costs of the effects of its interpretation of PSD applicability in the proposed Tailoring Rule vi olates EO 12866 (3513, 4095, 4862, 4870, 5052, 5058, 5062, 5083, 5110, 5140, 5181, 5183 , 5278, 5279, 5317, 5343, 5886, 8015, 8513) . Some of these commenters (4095, 5052, 5083, 5181, 5317) maintain that EO 12866 directs EPA to submit to OMB new significant regulations under consideration by the EPA. These commenters assert that, in the section 202 rule, EPA failed to analyze the effect on stationary sources in the cost benefit analy sis and there is no indication that EPA included these impacts in its submi ssion to OMB. According to the commenters, in EPA’s proposal for this rulemaking, EPA has similarly failed to anal yz e the costs and benefits of triggering PSD for stationary sources. The commenters assert that without this key information, OMB could not fully review the impacts of the proposed rul e. According to one commenter (4095), EPA’s failure to account for known costs that will occur as a direct result of the promulgation of the proposed rule in conjunction with the section 202 rule violates severa l applicable requirements of EO 12866, including sections 6(B)(ii) and 6(C)(iii), which require assessments of the potential costs and benefits of the regulatory action and “reasonably

feasible alternatives to the planned regulation, identified b y the Agen cies or the public . . .” thereb y violating both the APA and CAA section 307(d) because they deprive businesses and permitting authorities alike of a meaningful opportunity

to comment on the rule.243

Response: The EPA has prepared a revised RIA assessing the b enefits and costs of the final Tailoring R

ule to support this rulemaking in accordance with E O 12866 as was done with the proposal for this rulemaking. Similarly , the RIA completed for this action is subject to review b y an i nter

- agency

review panel that includes the President’s OMB as was the case with the proposal RIA. Further, the RIA completed for this final rule full y assesses the known benefits and costs associated with the tailoring rulemaking. This final rule is one of regulatory relief from statutory

requirements in which a large number of sources of GHGs will be relieved of the burden of title V and PSD permitting for a period of at least six y ears. This final rule will provide relief from title V permitting to over 6 million sources of GHG in this country

. Likewise , tens of thousands of sources potentiall y subject to PSD permitting requirements for GHGs will have regulation postponed for a period of at least 6 ye ars. While larger sources of GHG may

still be required to obtain title V perm its or modify existing permits and to comply with PSD requirements, these burdens result from existing statutory requirements, not from this fi nal Tailoring R

ule. 9.3 Paperwork Reduction Act Comment: Some commenters (4095, 4870, 5058, 5083, 5140, 5181, 5183, 5278, 16411) believe EPA has failed to comply with its obligations under the PRA. Although EPA asserts that the PRA’s requirement for creation and OMB review and approval of an ICR does not apply because of prior approval of an ICR for the PSD program, this ignores the fact that there would be a huge increase in the paperwork burden as a result of applying PSD and title V permitting requirements to sources that are “major” only because of their GHG emissions. One commenter (5181) maintains that the Paperwork Reduction Act ( PRA ) requires the EPA to seek approval from the OMB prior to engaging in rulemaking that will involve information collection requirements. EPA may not “conduct or sponsor the collection of information unless in advance of the ado ption or revision of the collection of information... The Director [of OMB] has approved the proposed collection of information.” Contrary to the PRA’s clear mandate, the EPA neglected to submit this proposed rule to OMB for approval on the basis that “thi s action does not impose any new information collection burden.” Rather, EPA claims that “this proposed action would significantl y reduce costs incurred b y sources and permitting authorities relative to the costs that would be incurred if EPA did not revi se the rule.” Finall y, according to the commenter, it is not an answer that EPA has previously submitted the PSD and title V regulations to OMB under the PRA and has received approval based on existing criteria pollutant emissions. Those approvals were b ased on the burdens created at that time, not the dramatic expansion of the program that EPA proposes in this rulemaking (even with the lower thresholds, doubling the number of title V subject sources). According to the commenter (5181), unless EPA resubm its the information collection approval request to OMB with a proper and fully inclusive anal ysis, EPA will lack authority to collect information from stationary sources for PSD and title V GHG emissions permitting.244

Response: As we stated in the propo sal, this is a burden relief rule and as such it does not impose any new requirements for the NSR or title V programs that are not currently required. For that reason, we concluded that for purposes of this rule it was unnecessary for us to submit a new ICR to the OMB and that the I CR contained in the existing regulations for PSD (see, e.g., 40 CFR 52.21) and title V (see 40 CFR parts 70 and 71) that had alread y been approved under the provisions of the PRA , 44 U.S.C. 3501 et seq. and was assigned OMB control number 2060 0 003 and OMB control number 2060 0336, respectively , still applies. Nevertheless, we understand that once GHGs are regulated under the PSD and title V programs, there might be an increase in the overall paperwork burden for these programs. EPA will have to assess this possible burden during the normal course of 3

- ye ar renewal I CR process. 9.4 Regulatory

Flexibility

Act For discussion of RFA issues, please see section 7 .2 of this RTC. 9.5 Unfunded Mandates Reform Act Comment: Some co mmenters (4095, 4512, 4870, 5052, 5058, 5083, 5110, 5140, 5181, 5278, 5312 , 10432 ) on the proposed rule assert that EPA has failed to comply with the requirements of UMRA, pursuant to which EPA must assess the effects of the Proposed Rule on state, local, and tribal governments and the private sector. Specifically , these commenters state that section 202 of the UMRA requires EPA to prepare a written statement, including a cost

- benefit analy sis, for proposed rules with “federal mandates” that may result in expenditures to state, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in an y one ye ar. According to the commenters, in concluding that “the revisions would ultimately reduce the PSD and title V program a dministrative burden that would otherwise occur in the absence o f this rulemaking,” EPA completely failed to account for the billions of dollars that permitting authorities and stationary sources will soon be required to spend once PSD is triggered for GHG s. On e commenter (5052) asserts that EPA failed to adequatel y stud y the proposed rules costs and operational impacts on unfunded mandates as required b y UMRA. The commenter contends that the EPA grossly underestimated the impacts to public utilities whic h are owned/operated b y local governments and also to state regulatory agencies. One commenter (5312) alleges that implementation of PSD and title V at the statutory thresholds would generate permit fees at levels adequate to support those programs. If, however, EPA imposes a threshold of 25,000 tpy

for the first 5 y ears, this will wall off new sources of revenue from smaller emitters and, essentiall y, impose an unfunded mandate on the various state air agencies because the they will not be able to attrac t, hire, train, and utilize the additional staff necessary to carry out the rule. Commenters 5304 and 5524 opine that EPA needs to further evaluate the impact on state and local permitting authorities in order to insure that UMRA of 2005 is not violated.245

Response: The EPA has carefully

considered the comments on unfunded mandates expressed by commenters to the proposed rule. The EPA did complete a RIA for the final rule assessing the benefits and costs of the Tailoring R ule, including any

unfunded mandates. As previously discussed, the Tailoring R ule is one of regulatory

relief because it increases the GHG emissions threshold for NSR and title V permitting substantially above otherwise statutory requirements. As such, the EPA asserts this Tailoring R ule does not impose unfunded mandates on any entities. This RIA of the final rule incorporates the extensive changes made in this final rule, including increased threshold levels for title V and PSD above those contained in the proposed rule. While we a lso incorporated improved estimates of the costs for sources to obtain permits and for permitting authorities to process permits, they do not change our conclusion that this final rule does not impose unfunded mandates on an y entities. 9.6 Executive Or der 13132

– Federalism Comment: Some comments (4095, 5058, 5083, 5715) received on the proposed rule assert that federalism concerns were ignored, in violation of EO No. 13132. According to the commenters, EPA cannot maintain that the Tailoring Rule "wi ll not have a substantial direct effect on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities between various levels of governm ent," such that EO No. 13132 does not apply . S ome of these commenters assert that the proposed rulemaking would require radical changes in state laws, interjects GHGs into permit programs never once conceived for that purpose (an y more than was EPA's), requires massive staff hiring at state agencies, and rewrites SIPs in place for y ears or even decades. Response: As we stated previously , this is a burden relief rule and as such it does not impose any requirements for the NSR or title V programs that are not currentl y required. In addition, this acti on does not interject GHGs into the permit programs, nor does it change state laws or SIPs to impose any

new permitting requirements. Instead, this action will significantly reduce the burden and costs incurred by sources and permitting authorities relati ve to the burden and costs that would be incurred if EPA did not revise the permitting provisions to account for higher applicability

thresholds for GHG emissions. While we are aware that a few states will have to amend their SIPs to incorporate these new thresholds if they do not implement the federal PSD and title V rules b y reference in their SIPs , EO 13132 is still not implicated by this rule because it finalizes burd en reducing thresholds that would not otherwise appl y to the PSD and title V programs.246

9.7 Executive Order 13175

– Consultation and Coordination with Indian Tribal Governments Comment: A commenter assert s that the proposed rule violates E O 13175 (5058 ). Another commenter (8803 ) supports EPA’s proposed rule but requests that tribal air grant funding be increased to reflect the air quality

- related needs of tribes across the nation, and to allow these tribes the opportunity

to implement the CAA’s PSD and title V programs. The commenter states that, not only

are tribes eligible for se ction 103 grant funding to conduct air quality monitoring, emissions inventories, and other studies and assessments, but they may also obtain section 105 grant funding to implement CAA regulatory programs. According to the commenter , tribes are facing man y of the same air

- related issues that neighboring state and local jurisdictions are facing, but are significantly underfunded to address such issues. Response: The Agency

is aware and concerned ab out the resource needs for the tribal air program and we are working to see how grant funding might be increased in the future. Nevertheless and for the purpose of the permitting programs, we want to clarify that tribes that devel op Tribal Implementation Plans ( TIPs ) can charge for permits and tribes with deleg ation or authorization would develop permit fee programs under their authority (e.g., Navajo’s permit fee program for their delegated title V permit program) to fund both the NSR and title V programs. For these reasons, there are a number of way s we would like to work to address the funding concern, including encouraging delegation or authorization of permitting programs and having model codes available for tribes that want to do TIPs for NSR and title V permitting. 9.8 Executive Order 13211

– Actions Th at Significantly Affect Energy

Supply , Distribution, or Use Comment: A few commenters assert that the proposed rule violates E O 13211 . (5058, 5317) One commenter (5317) assert s that EPA’ s anal ys is under EO 13211 is insufficient because it addres ses onl y smaller sources. The commenter contend s that EPA has not meaningfully examined the energy

implications of its proposed actions and interpretations of the CAA. The commenters disagree with EPA’s conclusion that the imposition of costly PSD obligations o n power plants would have no impact on power supply , distribution, or use, when those plants will have had no time to prepare for compliance and no idea what BACT may be for GHG emissions. Other commenters opine that the adoption of BACT for some industri es newly

- subject to PSD permitting requirements for GHGs could involve fuel

- switching, and increased energy costs ( e.g., due to the need for a source to convert from coal to natural gas to meet BACT). ( 4515, 4691, 5058, 5079, 5085 5123, 5124, 5179, 5607, 5729, 6491)247

Response: Again, this action is a burden relief rule and as such it does not create an y new requirements for sources in the energy suppl y, distribution, or use sectors. For the purpose of the BACT determinations for GHGs, the long

- standing top

- down BACT selection process still applies. Under the CAA and EPA’s implementing regulations, BACT is still an emission limitation based on the maximum degree of emission reduction achievable through application of production processes and available me thods, s ys tems, and techniques that considers energy , environmental, and economic impacts. Inother words, BACT determinations for GHGs will still have to consider energy , environmental and economic feasibility for the various control technologies under c onsideration before selecting a particular technology as BACT for a particular source. For that reason, what BACT may be for GHG emissions will vary by source, and the technology

that is ultimately

selected has to be one that is feasible based on the curr ent energy , environmental and economic impacts that the planned technology might have. Thus, we do not believe that this action is likely to have a significant adverse effect on the supply , distribution, or use of energy

.248 

## Chapter 10. Miscellaneous Comme nts
This Chapter of the document contains comments that are relevant but not specificall y germane to what was proposed for the Tailoring Rule and/or do not fit under Chapters 2 through 9 of this document. Comment: The United States Department of Agricul ture ( USDA ) should take the lead in addressing GHG issues related to agriculture. This commenter provides several reasons for their position (e.g., knowledge, agriculture regulation experience). (5074) Response: The purpose of this rulemaking is to tai lor the applicability criteria that determine which stationary sources and modification projects become subject to permitting requirements for GHG emissions under the PSD and title V programs of the CAA. For that reason, EPA is the lead on any GHG issues related to the CAA. Nevertheless, any GHG issues related to a specific sector, such as the agriculture sector, will likely be addressed through notice and comment rulemaking and the USDA, as well as all other stakeholders, will be involved in this process

. Comment: A utility representative and utility group (5113, 5714) notes that, in the Tailoring Rule proposal preamble, EPA states that “sources covered by the Acid Rain program have been required to monitor and report CO 2 emissions pursuant to the CAA ” (citing 74 FR 55300). The commenter (5113) points out that the monitoring and reporting requirements that EPA refers to are required b y s ection 821 of Public L aw Number 101

- 549, which is not part of the CAA. The commenter (5113) requests that in the fi nal rule, when EPA refers to section 821 monitoring and reporting requirements, it should clarify that these requirements are not part of the CAA. Response: We have not referenced the Acid Rain program monitoring provisions in the final rule. In additi on, we have not made a final decision whether section 821 of the CAA Amendments of 1 990 is part of the CAA . As we stated in the final rule titled: “Reconsideration of Interpretation of Regulations to Determine Pollutants Covered by Clean Air Act Permitti ng Programs (75 FR 17004), in the October 7, 2009 proposal notice of this rule, EPA also solicited comment on the question of whether section 821 of the CAA Amendments of 1990 is part of the Clean Air Act. EPA indicated that the Agency was inclined agains t continuing to argue that section 821 was not a part of the CAA, as the Office of Air and Radiation and Region 8 had done in briefs submitted to the EAB in the Deseret matter. This question bears on the determination of whether the CO 2 monitoring require ments in EPA’s Part 75 regulations are requirements ‘‘under the Act.’’ In the proposed reconsideration notice, EPA explained that it would be necessary to resolve whether or not the CO 2 monitoring and reporting regulations in Part 75 were promulgated ‘‘un der the Act’’ if EPA adopted the monitoring and reporting interpretation. EPA received public comments on249

both sides of this issue, with one environmental organization pressing EPA to drop the position that section 821 is not a part of the CAA and several industry parties requesting that EPA affirm it. EPA has not y et made a final decision on this question, and it is not necessary for the Agency to do so at this time. Since EPA is not adopting the monitoring and reporting interpretation, the status of se ction 821 is not material to the question of whether and when CO 2 is ‘‘subject to regulation under the Act.’’ Because there are currently no controls on CO 2 emissions, the pollutant is not ‘‘subject to regulation.’’ Given that the provisions in Part 75 d o not ‘‘regulate’’ emissions of CO 2 , it is unnecessary to determine whether such provisions are ‘‘under the Act’’ or not to determine PSD applicability . Furthermore, the promulgation of EPA’s GHG Mandatory Reporting Rule makes this issue even less materia l. In that rule, which became effective in December 2009 and required monitoring to begin in January of this y ear, EPA established monitoring and reporting requirements for CO 2 and other GHGs under sections 114 and 208 of the CAA. Thus, there can be no d ispute that monitoring and reporting of CO 2 (as well as other GHGs) is now occurring under the CAA, regardless of the status of section 821 of the 1990 amendments. At this point, the section 821 issue would only become relevant if a court were to find that the monitoring and reporting interpretation is compelled by the CAA and a party subsequently

seeks to retroactivel y enforce such a finding against sources that had not obtained a PSD permit with any

limit on CO 2 emissions. I f this situation were to aris e, EPA will address the section 821 issue as necessary

. Comment: One commenter (8531) states that EPA should clarify when the FLM should be notified of PSD permit actions. In the discussion of General Requirements for PSD, on page 55298, in order to al ign with EPA and FLM guidance, the commenter recommends that the sentence reads: "Under PSD, if a source's proposed project may impact a Class I area, the Federal Land Manager (FLM) is notified and is responsible for evaluating a source's projected impact on the AQRVs..." The commenter states that the FLAG 2000 Report, consistent with EPA guidance, does not use a bright line test of 100 kilometers in determining when to notify the FLM. The significance of the impact to AQRVs is more important than the d istance of the source. The commenter states that the requested change allows for the use of the most current FLM guidance for notifying the FLM of PSD permit actions. Inaddition, the requested change allows the FLM to carry out its affirmative respons ibility of protecting Class I area. Response: We agree with the commenter when he states that the significance of the impact to AQRVs is more important than the distance of the source to a Class I area. We should not have specified a distance in the pr eamble of the proposed rule. For that reason, we are amending the text in the preamble of the final rule to state, as the commenter suggested, that: “Under PSD, if a source's proposed project may impact a Class I area, the FLM is notified and is responsib le for evaluating a source's projected impact on the AQRVs...

. "250

Comment: Several commenters (0523, 1157, 3607, 3741, 4021, 4123, 5184, 5312, 5318, 5454, 5766, 5803, 7136, 8534) requested that EPA extend the period of public comment. One industry

c ommenter (0523) requested a 30 day extension to the public comment period for the proposed PSD and ti tle V GHG Tailoring Rule. The proposed rule requests comment on an array

of issues, many

of which require detailed anal ys is and consideration. The commenter stated that they believe that the proposed 60 day comment deadline is wholly inadequate to assess implications, review background documentation, and develop comments substantiated with technical data and facts, especially in the midst of the holiday se ason. The commenter stated that until GHG related mobile source regulations are promulgated, EPA is under no obligation to promulgate GHG regulations for stationary sources and that a 30 day extension would allow those who wish to comment additional time to consider the rulemaking and develop a thoughtful response well before the mobile source regulations are promulgated. One manufacturing association commenter representing a group of 20 industry associations (1157) submitted, on November 18, 2009, a re quest to EPA to extend until January 28, 2010, the public comment period for the Tailoring Rule. The commenter states that the associations should be given the opportunity to fully evaluate the consequences of the GHG rulemakings, develop data and analy se s, and formulate appropriate comments. The commenter further states that the current comment period is simply insufficient to allow the associations a fair opportunity

to do so. The request for extension of the comment period was denied by EPA on Novembe r 25, 2009. On December 22, 2009, the commenter submitted another request for an extension. (5766) The commenter summarizes the request in the following paragraph: "To ensure an adequate and complete record for the GHG rulemakings, to give commenters a fair and full opportunity to anal yz e the proposals individually and collectively , and given the close timing and inter

- relatedness of the rulemakings, the Associations respectfully request that either: (1) EPA and NHTSA extend the public comment deadli ne for the Motor Vehicle GHG Rule until December 28, 2009, and that EPA extend the public comment deadlines for both the GHG Tailoring Rule and the PSD Interpretive Memo Reconsideration until January 28, 2010; or alternativel y (2) that EPA consider comment s submitted in the GHG Tailoring Rule to be submitted in both the PSD Interpretive Memo Reconsideration and Motor Vehicle GHG Rule dockets, and vice

versa. The Associations believe that a failure to grant this reasonable request would be arbitrary and cap ricious." Response: As we stated in the letter of November 25, 2009; we were not able to extend the comment period of the Tailoring Rule or an y of the other proposed actions related to GHGs due to the importance of proceeding with these actions. Howeve r, we did clarify that, as we have done in251

the past, we would consider, to the extent possible, an y comments that arrived after the close of the comment period. Comment: One academic commenter (3003) suggests that EPA use the Universit y of California d ataset of GHG emissions available either through the Climate Registry or the CARB. These data include GHG emissions data from on

- site stationary combustion and will soon be third

party certified and may

be useful to EPA. If the commenter already collects these data for other purposes, it should not be difficult for the commenter to comply with the GHG Mandatory Reporting R

ule requirements if applicable. Response: We thank this commenter for their suggestion, but we believe that the GHG data we are co llecting under the GHG Mandatory Reporting Rule is the data most useful for the Agency at this time. Comment: State commenter 3915 expresses concern over the proposed implementation periods. They s tate, “If EPA intends to reduce CO 2 significance level s to current PSD levels, then it should be done now, thereb y creating only o ne period of chaos and panic instead of two separated by

5 y ears. According to the commenter, if EPA does not intend to reduce the significance levels, then that should be made c lear now or this rule promulgation postponed until EPA is more certain on the path forward and can justify it.” Response: We disagree with this commenter. As we have stated in the preamble of this final Tailoring Rule, this rulemaking is necessary bec ause without it, PSD and title V would apply to all stationary

sources that emit or have the PTE more than 100 or 250 tons of GHGs per y ear beginning on January

2, 2011. This is the date when EPA’s recentl y promulgated LDVR takes effect, imposing control requirements for the first time on CO 2 and other GHGs. If this January 2, 2011 date were to pass without this rule being in effect, PSD and title V requirements would apply at the 100/250 tpy

applicability

levels provided under a literal reading of the CA A as of that date. Under these circumstances, man y small sources would be burdened by the costs of the individualized PSD control technology requirements and permit applications that the PSD provisions, absent streamlining, require. Additionally , state and local permitting authorities would be burdened b y the extraordinary number of these permit applications, which are orders of magnitude greater than the current inventory of permits and would vastly exceed the current administrative resources of the perm itting authorities. Permit gridlock would result with the permitting authorities able to issue only a tiny fraction of the permits requested. These impacts

– the costs to sources and administrative burdens to permitting authorities

– that would result from application of the PSD and title V programs for GHG252

emissions at the statutory levels as of January 2, 2011 are so severe that they bring into play

the judicial doctrines of “absurd results” and “administrative necessity .” The “absurd results” doctrine authorizes departure from a literal application of statutory provisions if such an application would produce a result that is inconsistent with, and especially a result that undermines congressional intent. The “administrative necessit y” doctrine auth orizes an agency to depart from statutory

requirements if the agency can demonstrate that those requirements, as written, are impossible to administer. The departure from the statutory provisions must be no greater than necessary

to effectuate congression al intent, in the case of the “absurd results” doctrine, and administrative imperatives, in the case of the “administrative necessit y” doctrine. We have determined, through anal ys is of burden and emissions data as well as consideration of extensive pu blic comment, that the costs to sources and administrative burdens to permitting authorities that would result from application of the PSD and title V programs for GHG emissions at the statutory levels as of January

2, 2011 should be considered “absurd res ults” that are contrary

to congressional intent for each program. Similarly , the administrative burdens are so great as to render compliance with the literal provisions of the PSD and title V permitting programs administratively impossible under the “admi nistrative necessit y” doctrine. The phase

- in approach that we promulgate with this rulemaking is consistent with congressional intent and administrative imperatives because it will implement the statute as closely to the literally prescribed levels as pos sible and as soon as possible, while still assuring that permitting authorities and affected sources can manage their permitting requirements. In particular, the first two steps that we promulgate in this rule, which take effect on January 2, 2011 and July

1, 2011, are consistent with congressional intent and administrative imperatives because they constitute the most that permitting authorities can reasonabl y be expected to do by

those times. Similarly , the 50,000 tpy floor that we promulgate through at least April 30, 2016 is reasonable because the information we have available now shows that it constitutes the most that permitting authorities can reasonabl y be expected to do by that date. Finally , the study

and two additional rulemakings

– to take ef fect by July 1, 2013 and April 30, 2016

-- to which we commit in this rule are also consistent with congressional intent and administrative imperatives because they establish a track for acquiring additional information and for taking further steps to appl y PSD and title V more closel y to the literal statutory levels. Although we cannot say

whether or when we would ultimately apply the PSD and title V programs at the literal statutory thresholds, we can say

that we intend to apply

them as closely

to those levels as is consistent with congressional intent and administrative imperatives, consistent with the “absurd results” and “administrative necessity” doctrines. Comment: One commenter asserts that to the extent that the rule works a discriminatory hard ship against Midwestern coal

- burning sources, it also imposes an economic hardship against the lower income populations in that region. The commenter believes that b y using an environmental regulation to selectively create an economic harm, EPA is raising serious issues of environmental justice. (5312)253

Response: As we stated in the previous chapter, this is a burden relief rule and as such it does not impose any

requirements for the NSR or title V programs that are not currently required. In addition , this action does not interject GHGs into the permit programs, nor does it change state laws or SIPs to impose any new permitting requirements. Instead, this action will significantl y reduce the burden and costs incurred b y sources and permitting authori ties relative to the burden and costs that would be incurred if EPA did not revise the permitting provisions to account for higher applicability

thresholds for GHG emissions. For these reasons, we disagree with this commenter when he states that the rule might work a discriminatory hardship against Midwestern coal

- burning sources.