[Federal Register Volume 76, Number 54 (Monday, March 21, 2011)]
[Proposed Rules]
[Pages 15249-15266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-6438]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, 70, and 71

[EPA-HQ-OAR-2011-0083; FRL-9283-8]
RIN 2060-AQ79


Deferral for CO2 Emissions From Bioenergy and Other Biogenic 
Sources Under the Prevention of Significant Deterioration (PSD) and 
Title V Programs: Proposed Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: This action proposes to defer for a period of three (3) years 
the application of the Prevention of Significant Deterioration (PSD) 
and Title V permitting requirements to biogenic carbon dioxide 
(CO<INF>2</INF>) emissions from bioenergy and other biogenic stationary 
sources. This action is being taken as part of the process of granting 
the Petition for Reconsideration filed by the National Alliance of 
Forest Owners (NAFO) on August 3, 2010, related to the PSD and Title V 
Greenhouse Gas Tailoring Rule.

DATES: Comments. Comments must be received on or before May 5, 2011.
    Public Hearing. EPA will hold one hearing on this action. The 
hearing will

[[Page 15250]]

be conducted on April 5, 2011, in the Washington, DC area. The EPA will 
provide further information about the hearing on its Web page: http://www.epa.gov/NSR/actions.html. To register to speak at the hearing, 
please go to the Web page: http://www.epa.gov/NSR/actions.html or 
contact the person listed in the FOR FURTHER INFORMATION CONTACT 
section.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2011-0083 by one of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
online instructions for submitting comments.
    E-mail: <a href="/cdn-cgi/l/email-protection#2f6867684d4640484a41464c6f4a5f4e01484059"><span class="__cf_email__" data-cfemail="d4939c93b6bdbbb3b1babdb794b1a4b5fab3bba2">[email protected]</span></a>. Include docket ID No. EPA-HQ-OAR-2011-
0083 in the subject line of the message.
    Fax: (202) 566-9744.
    Mail: Environmental Protection Agency, EPA Docket Center (EPA/DC), 
Mailcode 28221T, Attention Docket ID No. EPA-HQ-OAR-2011-0083, 1200 
Pennsylvania Avenue, NW., Washington, DC 20460.
    Hand/Courier Delivery: EPA Docket Center, Public Reading Room, EPA 
West Building, Room 3334, 1301 Constitution Avenue, NW., Washington, DC 
20004. Phone: (202) 566-1744. Such deliveries are only accepted during 
the Docket's normal hours of operation, and special arrangements should 
be made for deliveries of boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2011-0083. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
http://www.regulations.gov, including any personal information 
provided, unless the comment includes information claimed to be 
confidential business information (CBI) or other information whose 
disclosure is restricted by statute.
    Do not submit information that you consider to be CBI or otherwise 
protected through http://www.regulations.gov or e-mail. Send or deliver 
information identified as CBI to only the mail or hand/courier delivery 
address listed above, attention: Docket ID No. EPA-HQ-OAR-2011-0083. 
The http://www.regulations.gov Web site is an ``anonymous access'' 
system, which means EPA will not know your identity or contact 
information unless you provide it in the body of your comment. If you 
send an e-mail comment directly to EPA without going through http://www.regulations.gov your e-mail address will be automatically captured 
and included as part of the comment that is placed in the public docket 
and made available on the Internet. If you submit an electronic 
comment, EPA recommends that you include your name and other contact 
information in the body of your comment and with any disk or CD-ROM you 
submit. If EPA cannot read your comment due to technical difficulties 
and cannot contact you for clarification, EPA may not be able to 
consider your comment. Electronic files should avoid the use of special 
characters, any form of encryption, and be free of any defects or 
viruses.
    Docket: All documents in the docket are listed in the http://www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy. 
Publicly available docket materials are available either electronically 
in http://www.regulations.gov or in hard copy at the Air Docket, EPA/
DC, EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, DC. 
This Docket Facility is open from 8:30 a.m. to 4:30 p.m., Monday 
through Friday, excluding Federal holidays. The telephone number for 
the Public Reading Room is (202) 566-1744, and the telephone number for 
the Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Carole Cook, Climate Change Division, 
Office of Atmospheric Programs (MC-6207J), Environmental Protection 
Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone 
number: (202) 343-9334; fax number: (202) 343-2342; e-mail address: 
<a href="/cdn-cgi/l/email-protection#accec5c3c8c9cac9dedecdc0fcffe8ecc9dccd82cbc3da"><span class="__cf_email__" data-cfemail="8ceee5e3e8e9eae9fefeede0dcdfc8cce9fceda2ebe3fa">[email protected]</span></a>.
    Worldwide Web (WWW): In addition to being available in the docket, 
an electronic copy of today's proposal, memoranda to the docket, and 
all other related information will also be available through the WWW on 
EPA's Web site at http://www.epa.gov/NSR/actions.html

SUPPLEMENTARY INFORMATION: Acronyms and Abbreviations. The following 
acronyms and abbreviations are used in this document.

ANPR Advanced notice of proposed rulemaking
BACT Best Available Control Technology
BAU Business as Usual
CAA Clean Air Act
CAR U.S Climate Action Report
CBI Confidential Business Information
CFI Call for Information
CFR Code of Federal Regulations
CH<INF>4</INF> methane
CO<INF>2</INF> Carbon dioxide
CO<INF>2</INF>e Carbon dioxide equivalents
EO Executive Order
EPA U.S. Environmental Protection Agency
FR Federal Register
GHG Greenhouse gas
GWP Global warming potential
HFC Hydrofluorocarbon
ICR Information Collection Request
IPCC Intergovernmental Panel on Climate Change
LULUCF Land-Use, Land-Use Change and Forestry
MSW Municipal solid waste
N<INF>2</INF>O Nitrous oxide
NAFO National Alliance of Forest Owners
NAAQS National Ambient Air Quality Standards
NO<INF>X</INF> Nitrogen oxides
NSPS New Source Performance Standards
NSR New Source Review
NTTAA National Technology Transfer and Advancement Act of 1995
OMB Office of Management and Budget
PFC Perfluorocarbon
PSD Prevention of Significant Deterioration
PTE Potential to Emit
RFA Regulatory Flexibility Act
SMC Significant monitoring concentration
SF<INF>6</INF> sulfur hexafluoride
SIL Significant impact level
SIP State implementation plan
SMC Significant monitoring concentration
Tg Teragram
tpy Tons per year
U.S. United States
UMRA Unfunded Mandates Reform Act
UNFCCC United Nations Framework Convention on Climate Change
USDA U.S. Department of Agriculture
WWW Worldwide Web

Table of Contents

I. General Information
    A. What is the purpose of this action?
    B. Does this action apply to me?
    C. What are biogenic CO<INF>2</INF> emissions?
    D. What should I consider as I prepare my comments to EPA?
II. Relevant Background
    A. Carbon Source and Sink Dynamics
    B. PSD, Title V, and Tailoring Rule
    C. Complexity of Determining Net Atmospheric Impact of 
CO<INF>2</INF> Emissions and Incorporating This Information Into the 
PSD and Title V Programs
    D. Designing and Implementing an Accounting Approach
III. Interim Deferral of Biogenic CO<INF>2</INF> Emissions Under the 
PSD and Title V Permitting Programs
    A. General Rationale and Legal Justification for the Interim 
Deferral
    B. CO<INF>2</INF> Emissions That Are Deferred
    C. Non-CO<INF>2</INF> GHGs
    D. Mechanism for Deferral and State Implementation
    E. Requesting Comment
IV. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act (UMRA)
    E. Executive Order 13132: Federalism

[[Page 15251]]

    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Clean Air Act section 307

I. General Information

A. What is the purpose of this action?

    This action proposes to defer for a period of three (3) years the 
consideration of CO<INF>2</INF> emissions from bioenergy and other 
biogenic sources (hereinafter referred to as ``biogenic CO<INF>2</INF> 
emissions'') when determining whether a stationary source meets the 
Prevention of Significant Deterioration (PSD) and Title V applicability 
thresholds, including those for the application of Best Available 
Control Technology (BACT). Stationary sources that combust biomass and 
construct or modify during the deferral period will avoid the 
application of PSD to the biogenic CO<INF>2</INF> emissions resulting 
from those actions. This deferral applies only to CO<INF>2</INF> 
emissions and does not affect non-GHG pollutants or other greenhouse 
gases (GHGs) (e.g., methane (CH<INF>4</INF>) and nitrous oxide 
(N<INF>2</INF>O)) emitted from the combustion of biomass fuel. Also, 
this does not affect any other EPA programs that pertain to stationary 
sources, such as New Source Performance Standards (NSPS) or the GHG 
Reporting Program.
    On January 12, 2011, EPA explained in letters to Members of 
Congress and to the National Alliance of Forest Owners (NAFO), the 
steps that the Agency intends to take to address the issues associated 
with biogenic CO<INF>2</INF> emissions from stationary sources.\1\ 
First, EPA granted a Petition for Reconsideration filed by the NAFO on 
August 3, 2010, related to the PSD and Title V Greenhouse Gas Tailoring 
Rule (75 FR 31514, June 3, 2010) (``Tailoring Rule''). Second, the 
Agency is proposing this rule to defer for three years the application 
of the PSD and Title V permitting requirements to biogenic 
CO<INF>2</INF> emissions from stationary sources. Third, concurrent 
with this rulemaking, we are providing an interim guidance document 
(discussed further in section III.D.3) to help permitting authorities 
establish a basis for concluding that BACT for biogenic CO<INF>2</INF> 
emissions at stationary sources is the combustion of biomass fuels by 
itself. Fourth, EPA will be conducting a detailed examination of the 
science associated with biogenic CO<INF>2</INF> emissions from 
stationary sources. This examination will include discussion with 
partners and scientists both inside and outside the Federal government, 
as well as engagement with an independent scientific panel, to consider 
technical issues that the Agency must resolve in order to account for 
biogenic CO<INF>2</INF> emissions in ways that are scientifically sound 
and also manageable in practice (discussed further in section II.C and 
II.D). Finally, EPA intends to use the feedback from the scientific and 
technical review to develop a rulemaking on how these emissions should 
be treated and accounted for in PSD and Title V permitting.
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    \1\ See Docket EPA-HQ-OAR-2011-0083 for copies of the letters or 
http://www.epa.gov/nsr/actions.html#jan11.
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B. Does this action apply to me?

    This action applies to stationary sources that emit biogenic 
CO<INF>2</INF>.

                               Table 1--Examples of Affected Entities by Category
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                    Category                         NAICS              Examples of affected facilities
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Biomass combustion..............................          221  Electric utilities burning biomass fuels.
                                                          321  Wood products manufacturing, and wood pellet fuel
                                                                manufacturing.
                                                          322  Pulp and paper manufacturing.
Municipal solid waste combustion................       562213  Solid waste combustors and incinerators.
Sources/users of biogas.........................          112  Animal production manure management operations.
                                                       221320  Sewage treatment facilities.
                                                       562212  Solid waste landfills.
Fermentation processes..........................       325193  Ethanol manufacturing.
Other...........................................      311/312  Food/Beverage processors burning agricultural
                                                                biomass residues, using fermentation processes,
                                                                or producing/using biogas from anaerobic
                                                                digestion of waste materials.
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    Table 1 of this preamble lists the types of entities that 
potentially could be affected by the deferral covered by this proposal. 
This list is not intended to be exhaustive, but rather provides a guide 
for readers regarding facilities likely to be affected by this action. 
Note that this rule does not make or infer any policy determination on 
the part of EPA as to whether, or what part of, emissions from any of 
these sources may be determined ``fugitive'' emissions for the purposes 
of accounting and applicability under air permitting requirements. Such 
determinations are not within the scope of this rule and are part of 
the case-by-case application and review process established under the 
regulations covering these permitting requirements. If you have 
questions regarding the applicability of this action to a particular 
facility, consult the person listed in the FOR FURTHER INFORMATION 
CONTACT section of this preamble.

C. What are biogenic CO<INF>2</INF> emissions?

    Carbon dioxide emissions from bioenergy and other biogenic sources 
(hereinafter referred to as ``biogenic CO<INF>2</INF> emissions'') are 
generated during the combustion or decomposition of biologically-based 
material .\2\ In this action we are addressing only the CO<INF>2</INF> 
emissions from biogenic sources, not emissions of other GHGs or non-GHG 
pollutants. The term ``biogenic CO<INF>2</INF> emissions'' is defined 
here as emissions of CO<INF>2</INF> from a stationary source directly 
resulting from the combustion or decomposition of biologically-based 
materials other than fossil fuels. Examples of ``biogenic 
CO<INF>2</INF> emissions'' include, but are not limited to:
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    \2\ Non-fossilized and biodegradable organic material 
originating from plants, animals or micro-organisms (including 
products, by-products, residues and waste from agriculture, forestry 
and related industries as well as the non-fossilized and 
biodegradable organic fractions of industrial and municipal wastes, 
including gases and liquids recovered from the decomposition of non-
fossilized and biodegradable organic material).

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[[Page 15252]]

    <bullet> CO<INF>2</INF> generated from the biological decomposition 
of waste in landfills, wastewater treatment or manure management 
processes;
    <bullet> CO<INF>2</INF> from the combustion of biogas collected 
from biological decomposition of waste in landfills, wastewater 
treatment or manure management processes;
    <bullet> CO<INF>2</INF> from fermentation during ethanol 
production;
    <bullet> CO<INF>2</INF> from combustion of the biological fraction 
of municipal solid waste or biosolids;
    <bullet> CO<INF>2</INF> from combustion of the biological fraction 
of tire-derived fuel; and
    <bullet> CO<INF>2</INF> derived from combustion of biological 
material, including all types of wood and wood waste, forest residue, 
and agricultural material.
    For stationary sources co-firing fossil fuel and biologically-based 
fuel, and/or combusting mixed fuels (e.g., tire-derived fuels, 
municipal solid waste (MSW), etc.), the biogenic CO<INF>2</INF> 
emissions from that combustion are included in this deferral. However, 
as stated above, the fossil CO<INF>2</INF> emissions are not. Various 
methods are available to calculate both the biogenic and fossil 
portions of CO<INF>2</INF> emissions, including those methods contained 
in the GHG Reporting Program (40 CFR part 98). EPA is requesting 
comment on whether this deferral should specify that stationary sources 
subject to the PSD and Title V programs use a specific method(s) for 
determining their biogenic CO<INF>2</INF> emissions. EPA also seeks 
comment on other ways to ensure there is an accurate estimate of how 
much biogenic CO<INF>2</INF> is subject to the deferral for a specific 
facility, particularly when combusting mixed fuels.

D. What should I consider as I prepare my comments to EPA?

1. Submitting CBI
    Clearly mark the part or all of the information that you claim to 
be CBI. For CBI information in a disk or CD ROM that you mail to EPA, 
mark the outside of the disk or CD ROM as CBI and then identify 
electronically within the disk or CD ROM the specific information that 
is claimed as CBI. In addition to one complete version of the comment 
that includes information claimed as CBI, a copy of the comment that 
does not contain the information claimed as CBI must be submitted for 
inclusion in the public docket. Information marked as CBI will not be 
disclosed except in accordance with procedures set forth in 40 CFR part 
2.
    Do not submit information that you consider to be CBI or otherwise 
protected through http://www.regulations.gov or e-mail. Send or deliver 
information identified as CBI to only the mail or hand/courier delivery 
address listed above, attention: Docket ID No. EPA-HQ-OAR-2011-0083.
    If you have any questions about CBI or the procedures for claiming 
CBI, please consult the person identified in the FOR FURTHER 
INFORMATION CONTACT section.
2. Tips for Preparing Your Comments
    When submitting comments, remember to:
    Identify the rulemaking by docket number and other identifying 
information (e.g., subject heading, Federal Register date and page 
number).
    Follow directions. EPA may ask you to respond to specific questions 
or organize comments by referencing a CFR part or section number.
    Explain why you agree or disagree; suggest alternatives and 
substitute language for your requested changes.
    Describe any assumptions and provide any technical information and/
or data that you used.
    If you estimate potential costs or burdens, explain how you arrived 
at your estimate in sufficient detail to allow for it to be reproduced.
    Provide specific examples to illustrate your concerns and suggest 
alternatives.
    Explain your views as clearly as possible, avoiding the use of 
profanity or personal threats.
    Make sure to submit your information and comments by the comment 
period deadline identified in the preceding section titled DATES. To 
ensure proper receipt by EPA, be sure to identify the docket ID number 
assigned to this action in the subject line on the first page of your 
response. You may also provide the name, date, and Federal Register 
citation.
    To expedite review of your comments by Agency staff, you are 
encouraged to send a separate copy of your comments, in addition to the 
copy you submit to the official docket, to Carole Cook, U.S. EPA, 
Office of Atmospheric Programs, Climate Change Division, Mail Code 
6207-J, Washington, DC, 20460, telephone (202) 343-9263, e-mail 
<a href="/cdn-cgi/l/email-protection#8dcac5caefe4e2eae8e3e4eecde8fdeca3eae2fb"><span class="__cf_email__" data-cfemail="e2a5aaa5808b8d85878c8b81a2879283cc858d94">[email protected]</span></a>. You are also encouraged to send a separate copy of 
your CBI information to Carole Cook at the provided mailing address in 
the FOR FURTHER INFORMATION CONTACT section. Please do not send CBI 
information to the electronic docket or by e-mail.

II. Relevant Background

    The purpose of this section is to provide relevant background on 
this action. Section II.A provides basic information on biogenic 
CO<INF>2</INF> emissions including the relevant information concerning 
carbon source and sink dynamics and how biogenic CO<INF>2</INF> 
emissions are accounted for in the Inventory of U.S. Greenhouse Gas 
Emissions and Sinks (Inventory).\3\ While we are presenting this 
information for context, as explained in that section and in later 
parts of this preamble, the Inventory is an annual report that tracks 
US GHG emissions and sinks at the national scale. The Inventory is not 
intended to quantify the net atmospheric impacts of a particular type 
of fuel from a stationary source over a specified time period that 
extends into the future.
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    \3\ ``Inventory of U.S. Greenhouse Gas Emissions and Sinks: 
1990-2008,.'' U.S. Environmental Protection Agency, EPA 430-R-10-
006, (April 15, 2010). http://www.epa.gov/climatechange/emissions/usinventoryreport.html. (incorporated by reference into Docket EPA-
HQ-OAR-2011-0083)
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    Section II.B identifies general information concerning the PSD and 
Title V permitting programs and the steps EPA undertook in the GHG PSD 
and Title V Tailoring Rule to implement the requirements of those 
permitting programs in a common sense manner, given congressional 
intent and the overwhelming administrative burden that would otherwise 
have resulted if EPA were to apply the permitting programs to GHG at 
the statutory PSD and Title V thresholds. The relevant history and 
information concerning EPA's treatment of biomass under the Tailoring 
Rule and in subsequent GHG permitting guidance and other actions is 
also addressed.
    Section II.C sets forth the complexities associated with 
determining the net atmospheric impact of biogenic CO<INF>2</INF> 
emissions and factors to consider to ensure the determinations are 
sound from a practical, predictable and scientific basis when 
accounting for these emissions in the PSD and Title V Programs.
    Section II.D discusses information that is lacking and needed for 
EPA to determine how to account for the net atmospheric impact of 
CO<INF>2</INF> emissions from various types of feedstocks and 
facilities.

A. Carbon Source and Sink Dynamics

1. Cycling of CO<INF>2</INF> Between Plants and the Atmosphere
    Through relatively rapid photosynthesis, plants absorb 
CO<INF>2</INF> from the atmosphere and add it to their biomass, which 
contains roughly 50% carbon by weight, through a process called 
sequestration. Some of the carbon absorbed by plants may eventually be

[[Page 15253]]

transferred from dead organic matter to the soil where it can remain 
for long periods of time. Plant biomass, dead organic matter, and soil 
carbon are ``pools'' that together make up the carbon stock on a given 
area of land. Carbon can cycle fairly rapidly back to the atmosphere or 
it can remain stored on land. Stored carbon can be released naturally 
back into the atmosphere as CO<INF>2</INF> through decomposition or 
plant respiration.
    When biological material such as plant biomass is harvested or 
cleared from the land, burned for energy, used as an input to an 
industrial process, or biodegraded as part of waste treatment 
processes, the material acts as a source of carbon, releasing its 
stored carbon back into the atmosphere as CO<INF>2</INF>. Over large 
spatial scales such as States, regions, or continents, if more carbon 
is sequestered in plant biomass than is emitted to the atmosphere 
through processes such as harvest, fire, or natural decomposition, 
plant biomass acts as a net sink for carbon. Conversely, if more carbon 
is released than is sequestered, plant biomass acts as a net source for 
carbon. Soils can also be net sources or sinks depending on the balance 
of carbon added from biomass and lost through disturbances such as 
tillage or deforestation.
2. Treatment of Biogenic CO<INF>2</INF> Emissions in the U.S. GHG 
Inventory
    National-level GHG inventories are a common starting point for 
quantification of the source and sink status for particular land areas. 
The Inventory tracks annual GHG emissions including emissions of 
CO<INF>2</INF>, CH<INF>4</INF>, N<INF>2</INF>O, hydrofluorocarbons 
(HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride 
(SF<INF>6</INF>). The United States (U.S.) has submitted the Inventory 
to the Secretariat of the United Nations Framework Convention on 
Climate Change (UNFCCC) under its obligation as a Party to the 
Convention every year since 1993. The UNFCCC, ratified by the U.S. in 
1992, defines the overall framework for intergovernmental efforts to 
tackle the challenge posed by climate change. The Inventory submitted 
by the U.S. is consistent with national inventory data submitted by 
other UNFCCC Parties, and uses internationally accepted methodologies 
established by the Intergovernmental Panel on Climate Change (IPCC).
    The Revised 1996 IPCC Guidelines (IPCC Guidelines) \4\ provide 
methodologies for estimating all anthropogenic sources and sinks of GHG 
emissions at the national scale, classified into six broad sectors: 
Energy, Industrial Processes, Solvents and Other Product Uses, 
Agriculture, Land-Use Change and Forestry (LUCF), and Waste.
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    \4\ ``Revised 1996 IPCC Guidelines for National Greenhouse Gas 
Inventories,'' Intergovernmental Panel on Climate Change (IPCC), 
Prepared by the National Greenhouse Gas Inventories Programme. 
(1996.). http://www.ipcc-nggip.iges.or.jp/public/gl/invs1.html.
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    The Energy Sector includes all GHGs emitted during the production, 
transformation, handling and consumption of energy commodities, 
including fuel combustion. The LULUCF Sector includes emissions and 
sequestration resulting from human activities that influence the way 
land is used or that affect the size of carbon stocks on land. 
According to the IPCC Guidelines, CO<INF>2</INF> emissions from biomass 
combustion:

should not be included in national CO<INF>2</INF> emissions from 
fuel combustion. If energy use, or any other factor, is causing a 
long term decline in the total carbon embodied in standing biomass 
(e.g. forests), this net release of carbon should be evident in the 
calculation of CO<INF>2</INF> emissions described in the Land Use 
Change and Forestry chapter.\5\

    \5\ ``Revised 1996 IPCC Guidelines for National Greenhouse Gas 
Inventories,'' Intergovernmental Panel on Climate Change (IPCC), 
Prepared by the National Greenhouse Gas Inventories Programme 
(1996). http://www.ipcc-nggip.iges.or.jp/public/gl/invs1.html. 
Reference Manual (Vol. 3), Page 1.10.

    Thus, at the national level, these CO<INF>2</INF> emissions are not 
included in the estimate of emissions from a country's Energy Sector, 
even though the emissions physically occur at the time and place in 
which useful energy is being generated (i.e., at a power plant or other 
stationary source). The purpose of this accounting convention is to 
avoid double-counting of CO<INF>2</INF> emissions from the Energy 
Sector and LULUCF Sector that would provide a misleading 
characterization of a country's contribution to global GHG. Carbon 
dioxide emissions from a subset of bioenergy sources are reported as 
information items in the Energy Sector of the Inventory, but are not 
included in national fuel-combustion totals to avoid this double-
counting at the national scale.\6\
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    \6\ The Energy Sector of the Inventory does include emissions of 
CH<INF>4</INF> and N<INF>2</INF>O from the combustion of biomass for 
energy. These emissions are included in this sector because their 
magnitude is dependent on the specific way in which the fuel is 
burned (i.e., combustion technology and operating conditions), which 
cannot be known by analyzing the changes in the amount of carbon in 
standing biomass.
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    The Inventory is a comprehensive report of emissions and sinks at 
the national scale. All biogenic CO<INF>2</INF> emissions, as defined 
in this deferral, are also included in the Inventory. However, because 
the Inventory is organized by broad sector, not by facility type, this 
deferral covers biogenic CO<INF>2</INF> emissions that may be reported 
in any sector of the Inventory.
3. Accounting for Carbon Stocks on Land in the U.S. GHG Inventory
    The LULUCF Sector includes all of the land-based source categories 
of GHG emissions and sinks. In the Inventory, EPA's estimate of 
emissions and sinks from U.S. land areas is divided into forest land, 
crop land, grassland, wetlands, settlements, and other land. The 
largest stocks of carbon are found on forestlands.
    Data from the U.S. Department of Agriculture (USDA) Forest Service 
Forest Inventory and Analysis Program are used to develop national-
scale estimates of forest carbon stocks and carbon stock change. The 
methodology relies on annual or periodic surveys to assess changes in 
carbon stocks over the entire forest land base. The overall change in 
land-based forest carbon stocks from year to year represents the net 
carbon balance between atmosphere and forest land. Importantly, this 
measurement of the net change in forest carbon stocks integrates and 
inherently includes all of the factors that might influence forest 
carbon stocks, such as insect outbreaks, wildfire, prescribed fire, all 
types of harvest (including harvest for bioenergy uses), forest 
management, enhanced growth, and land use change. As noted earlier, 
when trees are harvested and combusted to generate bioenergy, the 
CO<INF>2</INF> combustion emissions do not occur in the forest but 
rather in a power plant or industrial facility. Following the 
convention established by the IPCC in the Guidelines, EPA counts these 
emissions as part of the LULUCF sector for the official US Inventory.
    In assessing CO<INF>2</INF> emissions from the LULUCF Sector, EPA 
looks to the net change in carbon stocks. Over the time period of 
interest, if the net change in forest carbon stocks is positive, then 
more carbon was sequestered on land in carbon pools (such as those 
described in section II.A.1) than was lost to the atmosphere (through 
all of the processes previously described, such as decomposition, fire, 
and harvest). In this case the land is acting as a net carbon sink. If 
the net change in land-based carbon stocks is negative, over the time 
period of interest more carbon was emitted to the atmosphere than was 
sequestered on land, and the forest was a net source for carbon.
    Averaged over the years 1990-2008, data from the Inventory show 
that the LULUCF sector in the U.S. has been a net sink of roughly 815 
teragrams (Tg)

[[Page 15254]]

carbon dioxide equivalent (CO<INF>2</INF>e) per year.\7\ This sink is 
about 12% of the average gross emissions from all other sources 
combined in the U.S. over the same time period.\8\ Future national 
projections under business as usual (BAU), as reported in the Fifth U.S 
Climate Action Report (CAR) submitted to the UNFCCC in 2010, suggest 
that this LULUCF sink is likely to continue, if not increase in size, 
at least until 2020.\9\
---------------------------------------------------------------------------

    \7\ 84% of this amount is from carbon stock change in the forest 
source categories; the remainder comes from source categories such 
as Sequestration in Urban Trees and carbon stock changes in mineral 
soils on crop land and grassland. U.S. EPA, ``Inventory of U.S. 
Greenhouse Gas Emissions and Sinks: 1990-2008'' (See data archived 
at http://www.epa.gov/climatechange/emissions/downloads10/2010-Inventory-Chapter-Tables.zip). See also Tables 1 and 2, LULUCF 
sector C storage.pdf.
    \8\ See U.S. EPA, ``Inventory of U.S. Greenhouse Gas Emissions 
and Sinks: 1990-2008.,'' Table ES-4.
    \9\ U.S. Dept. of State, U.S. Climate Action Report 2010., at 
81. http://www.state.gov/documents/organization/140636.pdf.
---------------------------------------------------------------------------

    In 2010, for the first time since EPA began tracking emissions and 
sinks, the Inventory included estimates of forest carbon stocks and 
stock change at the State level. Forestlands in seven (7) U.S. States 
(AZ, CT, ID, LA, MI, ND, and VT) were net sources of carbon averaged 
over the time period from 2000 to 2008. In one State (AK) the 
forestland was neither a source nor a sink.\10\ Forestlands in all 
other States were net sinks for carbon over that time period.
---------------------------------------------------------------------------

    \10\ U.S. EPA., ``Inventory of U.S. Greenhouse Gas Emissions and 
Sinks: 1990-2008.,'' Annex 3.12 (Table A-210). http://www.epa.gov/climatechange/emissions/downloads10/US-GHG-Inventory-2010-Annex-3-Addtl-Source-Sink-Categories.pdf.
---------------------------------------------------------------------------

    The IPCC Guidelines, as utilized in the Inventory, seek to estimate 
net changes in carbon stocks on land for a given period of time that 
occurred in the past. However, neither the IPCC Guidelines nor the 
Inventory were designed to quantify the net atmospheric impacts of a 
particular type of fuel from a stationary source over a specified time 
period, that extends into the future.
4. Distinction Between Biogenic and Fossil CO<INF>2</INF> Carbon 
Reservoirs, and Between Biogenic CO<INF>2</INF> and Non-GHG Pollutants
    Once CO<INF>2</INF> is emitted to the atmosphere, it is not 
possible to distinguish between the radiative forcing associated with a 
molecule of CO<INF>2</INF> originating from a biogenic source and one 
originating from the combustion of fossil fuel. Biogenic CO<INF>2</INF> 
differs qualitatively from fossil CO<INF>2</INF> in that there is a 
significant difference between fossil carbon and biogenic carbon in the 
length of time required to replenish the reservoirs where the carbon is 
stored. For example, many coal deposits in North America originated 
during the Carboniferous Period, hundreds of millions of years ago. In 
contrast, the reservoirs of carbon found on the surface of Earth, in 
pools such as tree biomass and cropland soils, have accumulated over 
decades, not millennia. Because these land-based biomass carbon stocks 
can be replenished more quickly than fossil carbon stocks, these 
biogenic carbon stocks can act as a sink on a far shorter time scale 
than fossil carbon.
    Another way in which biogenic CO<INF>2</INF> differs from fossil 
CO<INF>2</INF>, as well as from other regulated pollutants, is the 
sometimes ambiguous line between the net emissions caused by human 
activities and those that occur as part of the natural background 
emission fluxes. There are both natural biogenic CO<INF>2</INF> 
emissions and anthropogenic biogenic CO<INF>2</INF> emissions. For 
example, fires, decomposition, and plant respiration all result in 
substantial biogenic emissions of CO<INF>2</INF>. These transfers of 
CO<INF>2</INF> between land and atmosphere are critical to the 
maintenance of life on Earth. However, human activities, such as forest 
and land management practices (i.e., anthropogenic biogenic 
CO<INF>2</INF> emissions), can also influence the release of 
CO<INF>2</INF> from natural systems. There are challenges in 
categorizing the biogenic CO<INF>2</INF> emissions that would have 
occurred naturally and those attributable to human activity. While the 
Inventory accounts for all anthropogenic biogenic CO<INF>2</INF> 
emissions at the national level, this deferral and the Agency's intent 
to collaborate with Federal partners and the scientific community to 
conduct a detailed examination of the science associated with biogenic 
CO<INF>2</INF> emissions and technical issues in accounting for those 
emissions at stationary sources is our effort to better characterize 
these distinctions and the associated impacts.

B. PSD, Title V, and Tailoring Rule

    Central to today's action are the PSD and Title V programs and 
their applicability requirements. This section provides background 
information on those programs as relevant for today's action.
1. The PSD Program
    The PSD program is a preconstruction review and permitting program 
applicable to ``new major stationary sources'' and ``major 
modifications'' at existing major stationary sources, in the 
terminology of EPA's implementing regulations. The PSD program applies 
in areas meeting the health-based National Ambient Air Quality 
Standards (NAAQS) or for which there is insufficient information to 
determine whether the area meets the NAAQS. The applicability of the 
PSD program to a particular source is determined in advance of 
construction or modification. The primary criterion in determining PSD 
applicability is whether the proposed project is sufficiently large (in 
terms of its emissions) to be a major stationary source or major 
modification.
    Under the Clean Air Act (CAA), the PSD program applies to any 
``major emitting facility'' that undertakes construction, and such 
facility is defined to include ``any * * * stationary sources of air 
pollutants which emit, or have the potential to emit, one hundred [or, 
depending on the source category] two hundred and fifty tons per year 
or more of any air pollutant.'' CAA sections 165(a), 169(1). In this 
notice, we refer to these levels as the 100/250-tpy thresholds. In 
addition, Congress also applied PSD to any existing major emitting 
facility that undertakes a ``modification,'' and defined that term to 
include ``any physical change in, or change in the method of operation 
of, a stationary source which increases the amount of any air pollutant 
emitted by such source or which results in the emission of any air 
pollutant not previously emitted.'' CAA sections 165(a), 169(2)(C), 
111(a)(4).
    The EPA has included these CAA requirements in its long-standing 
regulations that implement PSD, although the Agency has interpreted 
these requirements so that they apply only with respect to air 
pollutants that are subject to regulation under the CAA. Specifically, 
under EPA's regulations, a ``major stationary source'' is any source 
type belonging to a specified list of 28 source categories which emits 
or has a potential to emit (PTE) 100 tpy or more of any pollutant 
subject to regulation under the CAA, or a source of any other type 
which emits or has the potential to emit such pollutants in amounts 
equal to or greater than 250 tpy. See, e.g., 40 CFR 52.21(b)(1). A new 
source with a PTE at or above the applicable ``major stationary source 
threshold'' amount is subject to PSD.
    The regulations also say that PSD applies to, not only new 
construction, but also to existing sources that undertake a ``major 
modification,'' which is defined in terms of the following three 
criteria:

    (1) A physical change in, or change in the method of operation 
of, a ``major stationary source'' must occur;
    (2) The change must result in an increase in emissions that is 
``significant,'' that is,

[[Page 15255]]

equal to or above the significance level defined for the pollutant 
in question, e.g., in 40 CFR 52.21(b)(23); and
    (3) The increase in emissions resulting from the change must be 
a significant net emissions increase.

The level of emissions that is significant (also called the 
``significance levels'' or the ``significant emissions rate'') is also 
defined in regulations. See, e.g. 40 CFR 52.21(b)(23). Generally, 
significance levels for PSD are pollutant specific emissions rates. For 
example, the significance level for emissions of nitrogen oxides 
(NO<INF>X</INF>) is 40 tpy. See, e.g., 40 CFR 52.21(b)(23)(i). Under 
the regulations, the increase in emissions that results from the 
modification project is added to other contemporaneous increases and 
decreases in actual emissions at the source, to determine if the net 
emissions increase is significant (equal to or above the significance 
level). 40 CFR 52.21(b)(23) and (b)(48).
    Under the PSD program, one of the principal substantive 
requirements is that a new major source or major modification must meet 
an emissions limitation based on application of Best Available Control 
Technology (BACT). This emissions limitation must be based on the 
maximum amount of pollutant reduction that is achievable for each 
individual source on a case-by-case basis, taking into account cost and 
other factors. BACT applies to each ``regulated NSR pollutant.'' While 
PSD applies if a source is determined to be ``major'' for any regulated 
pollutant, the BACT review for such a source must be performed for each 
regulated NSR pollutant whose emissions exceed or increase by more than 
its PSD significance level (excluding pollutants for which the area has 
been designated nonattainment). See 40 CFR 52.21(a)(2), (j)(2) and (3) 
and 40 CFR 52.21(b)(23).
    To identify the pollutants covered by the PSD program, EPA 
regulations define the term ``regulated NSR pollutant.'' This 
definition applies to determine both the pollutants subject to the BACT 
requirement and pollutants that are counted to determine whether a 
source is a major source required to obtain a PSD permit. The term 
``regulated NSR pollutant'' is incorporated into the definition of BACT 
and definitions of ``major stationary source'' and ``major 
modification.'' 40 CFR 52.21(b)(12); 40 CFR 52.21(b)(1)-(2). A 
``regulated NSR pollutant'' includes any pollutant for which a national 
ambient air quality standard has been promulgated and any pollutant 
identified under this 40 CFR (b)(50)(i) as a constituent or precursor 
for such pollutant; any pollutant that is subject to any standard 
promulgated under section 111 of the Act; any Class I or II substance 
subject to a standard promulgated under or established by title VI of 
the Act; any pollutant that otherwise is subject to regulation under 
the Act; except that any or all hazardous air pollutants either listed 
in section 112 of the Act or added to the list pursuant to section 
112(b)(2) of the Act, which have not been delisted pursuant to section 
112(b)(3) of the Act, are not regulated NSR pollutants unless the 
listed hazardous air pollutant is also regulated as a constituent or 
precursor of a general pollutant listed under section 108 of the Act.
2. Title V
    The Title V permit program establishes operating permit 
requirements that are intended to assure sources' compliance with 
applicable CAA requirements. Title V generally does not add new 
pollution control requirements, but it does require that each source 
subject to Title V obtain an operating permit that assures compliance 
with all pollution control requirements or ``applicable requirements'' 
required by the CAA (e.g., NSPS, and State implementation plan (SIP) 
requirements, including PSD), and it requires that certain procedural 
requirements be followed, especially with respect to compliance with 
these requirements. ``Applicable requirements'' for Title V purposes 
include stationary source requirements, but do not include mobile 
source requirements. Other procedural requirements include providing 
review of permits by EPA, States, and the public, and requiring permit 
holders to track, report, and annually certify their compliance status 
with respect to their permit requirements.
    The CAA applies Title V, through the definition of ``major 
source,'' to ``any stationary facility or source of air pollutants 
which directly emits, or has the potential to emit, one hundred tons 
per year or more of any air pollutant.'' CAA sections 502(a), 
501(2)(B), 302(j). EPA codified in the Tailoring Rule its long-
established interpretation that this definition applies only with 
respect to air pollutants that are subject to regulation under the 
CAA.\11\
---------------------------------------------------------------------------

    \11\ Memorandum from Lydia N. Wegman, Deputy Director, Office of 
Air Quality Planning and Standards, U.S. EPA, ``Definition of 
Regulated Air Pollutant for Purposes of Title V'' (April 26, 1993).
---------------------------------------------------------------------------

3. Tailoring Rule
a. Rationale and Requirements
    In the Tailoring Rule, EPA recognized that if the applicability 
provisions of the PSD and Title V programs were applied literally so 
that PSD and Title V requirements applied to GHG-emitting sources at 
the 100/250 tpy levels provided in the CAA, then the permitting 
authorities would be overwhelmed by the large numbers of permittees and 
many small sources would be unduly encumbered by the permitting 
demands. In light of those impacts, EPA concluded that, as a legal 
matter, Congress did not intend that the PSD and Title V applicability 
requirements be applied literally to all sources emitting GHGs over the 
major source thresholds as of January 2, 2011--the date by which EPA 
determined that GHGs become subject to regulation under the CAA due to 
the motor vehicle rule. Instead, EPA concluded that it is authorized to 
tailor those applicability requirements to apply PSD and Title V to 
such sources in a phased-in manner, starting with the largest sources 
first.
    Specifically, in the Tailoring Rule, EPA has implemented these PSD 
and Title V applicability provisions by applying the familiar Chevron 
\12\ two-step framework for interpreting administrative statutes, 
taking into account certain legal doctrines. Those doctrines, insofar 
as relevant to the Tailoring Rule, are (1) the ``absurd results'' 
doctrine, which authorizes agencies to apply statutory requirements 
differently than a literal reading would indicate, as necessary to 
effectuate congressional intent and avoid absurd results; and (2) the 
``administrative necessity'' doctrine, which authorizes agencies to 
apply statutory requirements in a way that avoids impossible 
administrative burdens.\13\
---------------------------------------------------------------------------

    \12\ Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984).
    \13\ In the Tailoring Rule, EPA also considered a third 
doctrine, the ``one-step-at-a-time'' doctrine, which authorizes 
agencies to implement statutory requirements a step at a time. This 
doctrine is not relevant to the present rulemaking.
---------------------------------------------------------------------------

    Under Chevron, the agency must, at step 1, determine whether 
Congress's intent as to the specific matter at issue is clear, and, if 
so, the agency must give effect to that intent.\14\ If congressional 
intent is not clear, then, at step 2, the agency has discretion to 
fashion an interpretation that is a reasonable construction of the 
statute.
---------------------------------------------------------------------------

    \14\ Chevron, 467 U.S. at 842-43.
---------------------------------------------------------------------------

    To determine congressional intent, the agency must first consider 
the words of the statutory requirements, and if their literal meaning 
answers the question at hand, then, in most cases, the agency must 
implement those requirements by their terms. However, under the 
``absurd results'' doctrine, the

[[Page 15256]]

literal meaning of statutory requirements should not be considered to 
indicate congressional intent if that literal meaning would produce a 
result that is senseless or that is otherwise inconsistent with--and 
especially one that undermines--underlying congressional purpose. In 
these cases, if congressional intent for how the requirements apply to 
the question at hand is clear, the agency should implement the 
statutory requirements not in accordance with their literal meaning, 
but rather in a manner that most closely effectuates congressional 
intent. If congressional intent is not clear, then an agency may select 
an interpretation that is reasonable under the statute.
    Under the ``administrative necessity'' doctrine, Congress is 
presumed, at Chevron step 1, to intend that its statutory directives to 
agencies be administrable, and not to have intended to have written 
statutory requirements that are impossible to administer. Therefore, 
under this doctrine, an agency may depart from statutory requirements 
that, by their terms, are impossible to administer, but the agency may 
depart no more than necessary to render the requirements administrable.
    In the Tailoring Rule, EPA closely considered the burdens to the 
permitting authorities of applying PSD and Title V to GHG-emitting 
sources. For example, EPA calculated, on a national basis, the workload 
that GHG permit applications would entail, and compared that to the 
existing workload of permitting authorities. EPA concluded that 
permitting authorities would be overwhelmed by permit applications if 
the PSD and Title V applicability thresholds were applied literally as 
of January 2, 2011 to the GHG emissions from stationary sources. In 
addition, EPA calculated the cost to the sources of permitting 
requirements and concluded that many small sources would become subject 
to unduly high expenses.
    Accordingly, in applying the Chevron analytical framework, in 
conjunction with the absurd results and administrative necessity 
doctrines, EPA concluded that Congress intended that PSD and Title V 
apply to the GHG-emissions from stationary sources, but that, in light 
of the burdens to the permitting authority and the costs to the sources 
of determining applicability of permitting requirements by applying the 
statutory thresholds to GHG emissions, the application of the 
permitting programs should be phased in, starting with the largest 
sources of GHG emissions first. EPA also concluded that the calculation 
of the amount of GHG emissions should be based on the amount of GHG 
pollutant emitted in tons per year, weighted by the global warming 
potential (GWP) of the particular GHG pollutant, normalized to the GWP 
of one ton of CO<INF>2</INF> over a 100-year period, which is called 
carbon dioxide equivalent (CO<INF>2</INF>e).
    Accordingly, in the Tailoring Rule, EPA established two steps to 
implement PSD and Title V, with Tailoring Rule Step 1 beginning on 
January 2, 2011. Step 1 applies to sources subject to PSD or Title V 
anyway due to emissions of pollutants other than GHGs (called 
``anyway'' sources) and, as to PSD, to sources that emit 75,000 tpy 
CO<INF>2</INF>e (or increase emissions by that amount for 
modifications). Tailoring Rule Step 2, beginning on July 1, 2011, will 
apply to the largest GHG-emitting sources. Sources not otherwise 
subject to Title V will become subject to it as of July 1, 2011 if they 
emit or have the potential to emit at least 100,000 tpy CO2e. Sources 
that would not otherwise trigger PSD will trigger PSD on or after July 
1, 2011 if they have emissions at the 100,000 tpy CO<INF>2</INF>e level 
and higher or emit at that level and modify to increase emissions by 
75,000 tpy CO<INF>2</INF>e or more. In addition, EPA committed to 
promulgate by July 1, 2012 another rulemaking--in effect, Step 3 of the 
Tailoring Rule--that would consider whether to reduce the thresholds 
further. EPA also committed to promulgate another rulemaking after 
that, by April 1, 2016, that would consider still further action. As 
EPA stated in the Tailoring Rule, part of the purpose of the phase-in 
approach embodied in the Tailoring Rule is to allow permitting 
authorities time to acquire additional resources and to allow EPA time 
to develop streamlining methods and thereby enable the application of 
PSD and Title V to more sources in subsequent rulemakings.
b. Biomass
    As noted previously, in the Tailoring Rule, EPA determined that the 
amount of each GHG emitted by a facility should be calculated by 
reference to the weight of the GHG emissions, in tons of 
CO<INF>2</INF>e per year. The Tailoring Rule proposal referenced EPA's 
Inventory submitted annually to the UNFCCC, for the applicable GWP 
values and guidance on how to calculate a source's GHG emissions in tpy 
CO<INF>2</INF>e.\15\ 75 FR 31514-31608. The Inventory includes 
emissions of the six GHGs in terms of CO<INF>2</INF>e units. By linking 
the calculation of CO<INF>2</INF>e for GHGs to GWP values, a facility 
could evaluate its total GHG emissions contribution based on a single 
metric. We solicited comment on the benefits and limitations of this 
proposed metric.
---------------------------------------------------------------------------

    \15\ U.S. EPA, ``Inventory of U.S. Greenhouse Gas Emissions and 
Sinks: 1990-2007,'' at ES-3 (See also the SAR GWPs (IPCC 1996) in 
table 1-2, p. 1-6. http://www.epa.gov/climatechange/emissions/usinventoryreport.html.
---------------------------------------------------------------------------

    While we referred to the Inventory for GWP identification purposes 
only, several commenters appeared to misunderstand our intent, claiming 
that the Inventory excludes CO<INF>2</INF> emitted from biomass. These 
commenters requested that, in calculations of emissions for determining 
applicability of PSD and Title V, EPA exempt emissions from biogenic 
activities or biomass combustion or oxidation activities, including 
solid waste landfills, waste-to-energy projects, fermentation 
processes, combustion of renewable fuels, ethanol manufacturing, 
biodiesel production, and other alternative energy production that uses 
biomass feedstocks (e.g., crops or trees). In particular, these 
commenters urged that EPA exclude emissions from biomass combustion in 
determining the applicability of PSD to such sources based on the 
notion that such combustion is ``carbon neutral'' (i.e., that 
combustion or oxidation of such materials would cause no net increase 
in GHG emissions on a lifecycle basis).
    In response, when finalizing the Tailoring Rule, we acknowledged 
the role that biomass or biogenic fuels and feedstocks could play in 
reducing anthropogenic GHG emissions, and did not dispute the 
commenters' observations that many State, Federal, and international 
rules and policies treat biogenic and fossil sources of CO<INF>2</INF> 
emissions differently. 75 FR 31514. Regarding commenters' claims that 
the Inventory excludes CO<INF>2</INF> emissions from biomass, the 
Inventory does not exclude these emissions (see section II.A.2). 
Rather, they are included in the LULUCF Sector rather than the Energy 
Sector to avoid double-counting at the national scale. The narrow 
reference to the use of the Inventory's GWP values for estimating GHG 
emissions was provided to offer consistent guidance on how to calculate 
these emissions and not as an indication, direct or implied, that 
biomass emissions would be excluded from permitting applicability 
merely by association with the national inventory, see 74 FR 55351, 
under the definition for ``carbon dioxide equivalent.'' We determined 
that our application of the ``absurd results,'' ``administrative 
necessity,'' and one-step-at-a-time legal rationales supporting the 
Tailoring Rule, based on the expected overwhelming permitting burdens 
in its absence, did not provide sufficient basis to exclude emissions 
of

[[Page 15257]]

CO<INF>2</INF> from biogenic sources in determining permitting 
applicability provisions at that time. We reasoned that such an 
exclusion alone, while reducing burdens for some sources, would not 
address the overwhelming permitting burdens, and a threshold-based 
approach would still be needed. At that time, we had not examined 
burdens with respect to specific source categories impacted by the rule 
and thus had not analyzed the administrative burden of permitting 
projects that specifically involve biogenic CO<INF>2</INF> emissions 
taking account of the threshold-based approach. Commenters also did not 
provide information to demonstrate that an overwhelming permitting 
burden would still exist, justifying a temporary exclusion for biomass 
sources.
    In the final Tailoring Rule we indicated that the decision not to 
provide this type of an exclusion at that time did not foreclose EPA's 
ability to either (1) provide this type of exclusion at a later time 
with additional information about overwhelming permitting burdens due 
to biomass sources, or (2) provide another type of exclusion or other 
treatment based on some other rationale. Although we did not take a 
final position, we noted that some commenters' observations about a 
different treatment of biomass combustion warranted further exploration 
as a possible rationale.
    Therefore, although we did not establish a permanent exclusion from 
PSD or Title V applicability based on specific characteristics of 
biogenic CO<INF>2</INF>, we indicated our intent to seek further 
comment on how we might address emissions of biogenic CO<INF>2</INF> 
under the PSD and Title V programs through a future action.
    We further noted that, while not promulgating an applicability 
exclusion for biogenic emissions and biomass fuels or feedstocks in the 
final Tailoring Rule, flexibility exists to apply the existing 
regulations and policies regarding BACT in ways that take into account 
their net effects on atmospheric GHG concentrations. Without prejudging 
the outcome of our process to seek comment on whether and how we might 
address emissions of biogenic carbon under the PSD and Title V programs 
through a future action, we indicated that this issue warranted further 
exploration.
    In order to explore the issue further following the promulgation of 
the Tailoring Rule, on July 15, 2010 EPA solicited views from the 
public through a Call for Information (CFI) on approaches to accounting 
for biogenic CO<INF>2</INF> emissions, including whether some or all of 
a source's biogenic CO<INF>2</INF> emissions could be discounted based 
on a determination that they are canceled out by the CO<INF>2</INF> 
absorption associated with growing the fuel. 75 FR 41173. Also, we 
solicited information on the means to estimate and measure 
CO<INF>2</INF> emissions from a variety of biogenic CO<INF>2</INF> 
sources that typically have not been part of emission inventories 
(e.g., landfills, livestock management, and fermentation processes), as 
well as information on other biogenic sources that may be affected but 
which were not identified specifically in the CFI.
    With promulgation of the Tailoring Rule we committed to issue 
technical and policy guidance for permitting of GHGs. Subsequently, the 
information gathered from stakeholders in response to the CFI provided 
diverse perspectives on treatment of biogenic CO<INF>2</INF> emissions 
in pre-construction and operating permit reviews, including many 
requests to exclude, either partially or wholly, biogenic 
CO<INF>2</INF> sources from PSD applicability determinations and BACT 
analyses on the basis of Inventory results and other considerations. On 
November 10, 2010, EPA issued the draft ``PSD and Title V Permitting 
Guidance for Greenhouse Gases'' which provides the basic information 
that permit writers and applicants need to address GHG emissions in 
permits.\16\ Within the November guidance, EPA acknowledged the 
numerous stakeholder comments on biogenic CO<INF>2</INF> BACT analyses 
and provided general guidance to permitting authorities to consider 
environmental, energy, and economic benefits that may accrue from the 
use of certain types of biomass (e.g., biogas from landfills for energy 
generation), consistent with existing air quality standards. We also 
committed to provide more detailed technical and policy guidance early 
in 2011 for completing Step 4 of a ``top-down'' BACT analyses for GHG 
emissions from certain types of biomass sources to enable permitting 
authorities to simplify and streamline BACT determinations for such 
sources. EPA accepted public comments on the November guidance through 
December 1, 2010, and the Agency is considering these comments while 
developing the detailed permitting guidance.
---------------------------------------------------------------------------

    \16\ http://www.epa.gov/nsr/ghgdocs/epa-hq-oar-2010-0841-0001.pdf.
---------------------------------------------------------------------------

    Noting that a variety of Federal and State policies have recognized 
that some types of biomass can be part of a national strategy to reduce 
dependence on fossil fuels and to reduce emissions of GHGs, EPA 
determined that it is appropriate for permitting authorities to account 
for both existing Federal and State policies and their underlying 
objectives in evaluating the environmental, energy and economic 
benefits of biomass fuel. Based on these considerations, permitting 
authorities might determine that the use of certain types of biomass 
alone meets the BACT requirement for GHGs.
    On August 3, 2010, NAFO petitioned the EPA to reconsider and stay 
the implementation of the PSD and Title V GHG Tailoring Rule.\17\ The 
petition alleged that the final Tailoring Rule declared, for the first 
time and without any prior proposal or notice to industry, that EPA 
would count CO<INF>2</INF> emissions from combustion of biomass toward 
the applicability thresholds established for the PSD and Title V 
permitting programs of the CAA. Petitioners further alleged that EPA's 
proposed rule had provided for the appropriate and opposite conclusion: 
That CO<INF>2</INF> emissions from combustion of biomass should not be 
counted. Petitioners stated that there is near-universal recognition 
that CO<INF>2</INF> emitted from combustion of fuels derived from 
biomass should be excluded from GHG regulations because production and 
combustion of such fuels do not increase atmospheric CO<INF>2</INF> 
levels. Pending reconsideration, petitioners requested that the 
application of the PSD and Title V permitting programs to emissions of 
CO<INF>2</INF> from biomass be stayed. We considered carefully the 
petitioners' assertions and noted that we also received comments 
through the CFI supporting the exclusion of biogenic CO<INF>2</INF> 
from stationary source permitting requirements. Through the CFI, 
however, EPA also received information supporting the position that 
biogenic CO<INF>2</INF> should not be excluded from permitting 
programs, and that the use of certain types of biomass as fuel could 
increase atmospheric CO<INF>2</INF> levels. Based on consideration of 
the petitioners' arguments, together with the weight of the comments 
received on the CFI, EPA has concluded that the issue of accounting for 
the net atmospheric impact of biogenic CO<INF>2</INF> emissions is 
complex enough that further consideration of this important issue is 
warranted. Therefore, EPA granted the petition on January 12, 2011.
---------------------------------------------------------------------------

    \17\ National Alliance of Forest Owners' Petition To Reconsider 
the Prevention of Significant Deterioration and Title V Greenhouse 
Gas Tailoring Rule and To Stay the Rule Pending Reconsideration. 
EPA-HQ-OAR-2010-0841-0029.1.
---------------------------------------------------------------------------

    However, EPA did not grant the request for an administrative stay 
of the Tailoring Rule, because the rule is critical for making overall

[[Page 15258]]

implementation of the PSD program feasible. Furthermore, an 
administrative stay of the statements in the preamble of the Tailoring 
Rule that describe EPA's initial determination not to exempt emissions 
of CO<INF>2</INF> from biomass would not provide the requested relief 
of excluding emissions of CO<INF>2</INF> from biomass from the PSD and 
Title V permitting programs. The effect of a stay of this or any other 
aspect of the Tailoring Rule would be to return the legal regime that 
existed before EPA's issuance of a final Tailoring Rule. As no 
exemption for emissions of CO<INF>2</INF> from biomass existed prior to 
the final rule, an administrative stay would not result in an exemption 
from the requirements of PSD and Title V.

C. Complexity of Determining Net Atmospheric Impact of CO<INF>2</INF> 
Emissions and Incorporating This Information Into the PSD and Title V 
Programs

    In this section we discuss the complexity of the issues associated 
with reconciling facility-based and land-based sequestration accounting 
systems, as well as with accounting for land-based sequestration. Based 
on comments received from stakeholders in the CFI, we discuss further 
some general principles for land-based accounting (e.g., changes in the 
BAU baseline), and we present some of the proposed accounting 
methodologies (e.g., case-by-case analysis, categorical exclusion, 
contingent exclusion, and feedstock-based approaches).
1. Reconciling Accounting Systems: Facility-Based Emissions and Land-
Based Sequestration
    Within the context of the PSD and Title V programs, the argument 
for treating CO<INF>2</INF> emissions from bioenergy and biogenic 
sources differently from fossil-based CO<INF>2</INF> emissions at the 
facility relies on the premise that sequestration occurs offsite, 
outside the boundaries of the facility. Therefore, when considering 
application of this premise to the PSD and Title V programs, it is 
important that the sequestration be accounted for at a level of spatial 
and temporal resolution that is meaningful and practical for purposes 
of facility-based permitting. Such an accounting system must also be 
predictable, so that it can be utilized effectively by facilities and 
permitting authorities. Finally, the accounting system should be 
scientifically sound to allow for accurate accounting of net 
CO<INF>2</INF> emissions to the atmosphere.
    In addition to those commenters suggesting a categorical approach 
(i.e., as discussed below, an exclusion for all biogenic CO<INF>2</INF> 
emissions based on a finding of a net sink in the LULUCF section of the 
Inventory) other comments in response to the CFI repeatedly explained 
that different types of biological material (e.g., feedstocks) have 
different effects on atmospheric carbon emissions. Comments also 
underscored the importance of reconciling the facility-based permitting 
requirements under PSD and Title V with an accounting approach that 
relies upon estimates of land-based sequestration. This reconciliation 
will require careful attention to issues of spatial and temporal scale, 
to ensure that the principles of practicality, predictability, and 
scientific soundness are met.
2. Complexity in Accounting for Land-Based Sequestration
    Establishing an accounting system for the net atmospheric impact of 
biogenic CO<INF>2</INF> emissions from stationary sources is complex. 
As mentioned above and below, commenters to the CFI made suggestions 
ranging from a categorical exclusion of facility-based emissions to a 
case-by-case analysis approach. Multiple factors need to be considered 
to accurately assess the net atmospheric impacts of the use of a 
particular type of fuel by a stationary source over a specified time 
period, that extends into the future: Net emissions to the atmosphere 
(emissions from the facility and sequestration elsewhere) of carbon 
from the biomass used for bioenergy; the time scale against which net 
emissions should be measured; delineation of geographic areas for 
measurement; and leakage.
    Many of these factors are driven by or determined at the local or 
regional level. Bioenergy production may result in dramatic changes in 
one region's carbon stock, for example, and very little change in 
another's. Regional variability is also inherent in natural systems, 
for example in rates of plant growth and disturbance frequencies. Some 
areas are more prone to disturbances such as drought and fire, while 
other areas experience warmer temperatures and unpredictable 
precipitation patterns. Some areas receive more atmospheric nitrogen 
deposition than others, or are more susceptible to insect outbreaks. 
Species-specific variations are important as well. Some plant species 
simply grow more quickly than others.
    As mentioned above, considerations of spatial and temporal scale 
become increasingly important in an accounting system that seeks to 
reconcile facility-based emissions with land-based sequestration. How 
large an area should be considered when developing an accounting 
system--should it be facility-level, ownership-level, State-level, 
regional, or national? What is the appropriate period of time to be 
considered in the accounting system--should it roughly parallel the 
length of time required for plant biomass to re-sequester the amount of 
CO<INF>2</INF> released during the biomass combustion? How might this 
time period differ for various biomass types? Can the issues of spatial 
and temporal scale be considered together, such that the time period 
considered for the analysis varies depending on where the land is 
located or how large an area is considered?
    Given the inherent variability in biological processes, as well as 
the variability in spatial and temporal scales that can influence 
estimates of sequestration, general principles that can be broadly 
applicable to all aspects of accounting for CO<INF>2</INF> emissions 
from bioenergy and other biogenic sources will likely be most helpful.
3. General Principles
    The level of sequestration that occurs naturally on the landscape 
without additional intervention can be considered as the ``baseline.'' 
In other words, this level of sequestration (or emissions) will likely 
continue into the future without additional action. For example, if 
favorable conditions for plant growth cause sequestration to increase 
beyond what is incorporated into the baseline for that region, then net 
atmospheric carbon levels will be lower than anticipated under 
``business as usual'' (BAU). If sustainable forestry is practiced, then 
neither gain nor loss from carbon stocks on forestland would be 
expected over time, and net atmospheric carbon levels would not deviate 
from those expected in the BAU case. However, if logging is accelerated 
from a particular region over a certain period of time, and 
CO<INF>2</INF> emissions from the forest are thereby increased, then 
the net atmospheric carbon levels will be higher than anticipated in 
the BAU case.
    In the context of bioenergy and biogenic emissions, where such a 
wide variety of potential feedstocks exists, the baseline might be 
considered the emissions that ``would have happened anyway'' in the BAU 
case. Using this approach, it is necessary to determine the extent to 
which a policy action or an activity increases or reduces 
CO<INF>2</INF> emissions above or below what would have occurred in 
comparison with the baseline. From the perspective of bioenergy and 
other biogenic emissions, emissions that would have occurred anyway--
regardless of whether or not the facility captured the energy from the 
biofuel use or carried out the process using biological material as a

[[Page 15259]]

feedstock--might be treated differently than emissions that would not 
have occurred anyway (i.e., new emissions generated as the result of 
policy-based bioenergy incentives). For example, some commenters to the 
CFI suggested that utilizing logging residue to generate energy, rather 
than leaving the residue to decompose on the forest floor following 
harvesting, likely would not cause emissions over and above that which 
would have taken place if the energy use did not occur, while also 
noting the length of time required for the residue to decompose (for 
example, 10-15 years).
    Land use change has a separate set of considerations under the 
baseline case. For example, if the rate of land use transition from 
forest to agricultural use were to increase over and above that which 
was expected in the BAU case, and if this increase were attributable to 
market demand for a bioenergy crop, then it would be possible that 
these emissions would be additional to the emissions expected under 
BAU. In that situation, the bioenergy use might result in increased 
atmospheric CO<INF>2</INF> levels.
4. Complexity in Developing Accounting Methodology
    In response to the CFI, commenters suggested various approaches to 
accounting for CO<INF>2</INF> emissions from bioenergy and other 
biogenic sources.
a. Case-by-Case Analysis
    Some commenters suggested that analysis of PSD applicability should 
rely on a case-by-case, facility-specific assessment of the net 
atmospheric impact of the intended biomass fuels. This would require 
facility-level accounting for the emissions associated with the full 
chain of fuel production and use. Commenters indicated that this type 
of facility-specific approach would be the most scientifically sound 
approach for assessing the net carbon cycle impact of specific biomass 
fuels.
    However, other commenters noted that the case-by-case approach, in 
which a complete analysis would be conducted for each permit 
application, would likely be prohibitively time-consuming and complex 
for facilities and permitting authorities.
b. Categorical Exclusion
    Some commenters suggested that a categorical exclusion for all 
bioenergy and biogenic sources would be appropriate. Using this 
approach, no emissions from any such sources would be counted for PSD 
and Title V applicability. According to commenters supporting this 
option, the rationale for such an exclusion rests on the idea that all 
biological sources are part of the ``active carbon cycle,'' in which 
CO<INF>2</INF> is cycled between the land and atmosphere on a 
relatively short timeframe.
c. Contingent Exclusion
    In other comments, stakeholders suggested that a categorical 
exclusion for all bioenergy and other biogenic sources would be 
appropriate with an added contingency. For example, all bioenergy and 
other biogenic emissions could be excluded from PSD and Title V 
applicability as long as forest land in the U.S. remains a net carbon 
sink, such that sequestration remains greater than emissions at the 
national scale. Some commenters suggested that this contingency might 
also be expressed at a State scale, such that all facilities that emit 
CO<INF>2</INF> from bioenergy or other biogenic sources would be 
excluded from applicability as long as the forest land within that 
State acts as a net carbon sink.
d. Feedstock-Based Approach
    An important area of consensus from commenters was the idea that 
feedstocks are different, and that the net impact of bioenergy and 
other biogenic emissions may be traceable to the feedstock that is 
used. For example, commenters indicated that it would be preferable to 
distinguish various categories of woody biomass feedstocks, such as 
wood waste, logging residue, forest treatment thinnings, biomass crops, 
and whole-tree chips from expanded harvest operations. Various other 
feedstock categorizations for different types of material were also 
proposed.\18\
---------------------------------------------------------------------------

    \18\ Though this proposed rule concerns emissions from 
stationary sources, we note that various motor vehicle fuels are 
derived from plant material. For example, ethanol can be produced 
from plant starch or cellulose, and diesel fuel can be produced from 
various plant oils. The Energy Independence and Security Act of 2007 
(EISA) required EPA, in the context of implementing the renewable 
fuel program under section 211(o) of the CAA, to evaluate the 
lifecycle greenhouse gas emissions of these and other motor vehicle 
fuels. EPA's analysis of the various fuels demonstrated that 
multiple factors, including the type of feedstock used, resulted in 
a wide variation in their associated lifecycle GHG emissions. For 
example, from a lifecycle perspective some of the analyzed motor 
vehicle fuels result in very large reductions in GHG emissions 
compared to the fossil fuel they replace, while others do not. The 
lifecycle analyses of the motor vehicle fuels took into account a 
wide range of factors, including the carbon sequestration associated 
with the biomass. See 75 FR 14670, 14764-799 (March 26, 2010).
---------------------------------------------------------------------------

D. Designing and Implementing an Accounting Approach

    As described in section III below, EPA is proposing to defer the 
applicability of the PSD and Title V program to biogenic CO<INF>2</INF> 
emissions from stationary sources for three years in order to allow 
time for a detailed examination of the science associated with biogenic 
CO<INF>2</INF> emissions and to consider the technical issues that the 
Agency must resolve in order to account for biogenic CO<INF>2</INF> 
emissions in ways that are scientifically sound and also manageable in 
practice. As part of that examination we intend to engage with an 
independent scientific panel, as well as with partners inside and 
outside the Federal government with relevant expertise, to ensure a 
robust review of the scientific and technical issues associated with 
this type of accounting. During this time period the Agency can develop 
an appropriate accounting methodology that satisfies the principles of 
predictability, practicality, and scientific soundness. Should it be 
necessary, EPA proposes to implement the appropriate accounting 
methodology through notice-and-comment rulemaking within the three-year 
timeframe.

III. Interim Deferral of Biogenic CO2 Emissions Under the PSD and Title 
V Permitting Programs

    As stated above, one critical reason for the proposed deferral is 
to give EPA time to conduct a detailed examination of the science, to 
engage with an independent scientific panel and then, if appropriate, 
to initiate a notice and comment rulemaking to implement an accounting 
approach all within the proposed three year timeframe.
    Another important reason for the three-year deferral period, 
described in Section III.C below, is to allow sufficient time to 
consider the unique characteristics and attributes of biogenic 
CO<INF>2</INF> feedstocks, using the results from the detailed 
examination mentioned previously, within both the State permitting 
agencies and affected facilities. We concluded that, absent this 
deferral, there would be significant additional and unique 
complexities, as described in more detail in section II.C. As a result 
there would be additional permitting burden in terms of time and 
resources requirements, resulting from the associated analysis that 
would be required for permitting entities that are sources of biogenic 
CO<INF>2</INF> emissions under Step 2 of the Tailoring Rule, which is 
scheduled to begin on July 1, 2011.
    While the interim guidance described in section III.D will help 
alleviate some of this burden, we expect that more and more diverse 
users of biomass combustion or other biogenic CO<INF>2</INF> sources 
are likely to be affected under Step 2 of the Tailoring Rule because,

[[Page 15260]]

under Step 2, these sources can trigger permitting requirements based 
solely on their GHG emissions with no pre-requisite requirement that 
they otherwise trigger PSD or Title V permitting requirements for a 
non-GHG pollutant. We believe, absent the deferral period and the 
completion of EPA's full analysis of the unique technical issues 
associated with these diverse facilities emitting biogenic 
CO<INF>2</INF>, it would be particularly challenging for permitting 
authorities and facilities to process permits involving these 
emissions.
    Also, as described in section III.D, this proposed deferral is 
intended to temporarily exclude biogenic CO<INF>2</INF> emissions from 
the definition of ``subject to regulation,'' as that term was defined 
for purposes of the Tailoring Rule, for a period of three years, while 
EPA further considers, through notice and comment rulemaking, the 
approach to accounting for these emissions on a permanent basis.

A. General Rationale and Legal Justification for Interim Deferral

1. Applicability of PSD and Title V to Biogenic CO<INF>2</INF> 
Emissions From Major Stationary Sources
    As currently written, the PSD and Title V regulations apply to 
biogenic CO<INF>2</INF> emissions from major sources or major 
modifications at such sources according to provisions included under 
the definition of ``subject to regulation'' in the SIP regulations at 
40 CFR 51.166 and the Title V State program regulations at 40 CFR 70.2, 
as well as the Federal Implementation Plan requirements at 40 CFR 52.21 
and the Title V Federal program regulations at 40 CFR 71.2. Thus, 
revisions to these regulations are necessary to defer application of 
the PSD and Title V programs to such sources of biogenic 
CO<INF>2</INF>.
    Specifically, with respect to PSD, EPA's regulations implement the 
PSD provisions of the CAA, and the language of these statutory 
provisions is broad enough to cover biogenic CO<INF>2</INF> emissions. 
The 100/250 tpy thresholds previously described originate from section 
169 of the CAA, which applies PSD to any ``major emitting facility'' 
\19\ and defines the term to include any source with a potential to 
emit ``any air pollutant'' in an amount over 100 or 250 tpy, depending 
on source category. EPA's long-standing regulations interpret the PSD 
applicability provision that refers to ``any air pollutant'' to refer 
to any ``regulated NSR pollutant,'' which in turn includes any air 
pollutant ``subject to regulation.'' Similarly, under sections 
165(a)(4) and 169(3) of the CAA, the BACT requirement applies to ``each 
pollutant subject to regulation'' under the CAA. As noted in other 
recent EPA actions, GHG are currently ``subject to regulation'' under 
the CAA, subject to specific limitations reflected in the definition of 
that term that EPA adopted in the Tailoring Rule. Thus, emissions of 
GHG (including CO<INF>2</INF>) must be considered in determining 
whether a source is a major emitting facility subject to PSD, as a 
result of construction or modification, and whether the BACT 
requirement applies to GHG (including CO<INF>2</INF> as a component of 
GHG). In light of the way these regulations are currently written, EPA 
is unable to exclude biogenic CO<INF>2</INF> emissions from PSD review 
without amending the regulations.
---------------------------------------------------------------------------

    \19\ EPA's regulations employ the term ``major stationary 
source'' in lieu of ``major emitting facility.'' e.g., 40 CFR 
52.21(a)(2)(i), (b)(1)(i).
---------------------------------------------------------------------------

    Stationary sources of air pollutants, including sources of biogenic 
CO<INF>2</INF> emissions, are currently subject to PSD requirements if 
they emit more than 100 or 250 tpy of a regulated NSR pollutant other 
than GHG and have triggered PSD as a result of these emissions. We call 
these sources ``anyway'' PSD sources, and bioenergy and other sources 
of biogenic CO<INF>2</INF> emissions may be among them based on 
emissions of pollutants other than GHG. Under the Tailoring Rule, since 
January 2, 2011 (the beginning of step 1 of the Rule), PSD permits for 
such a source have had to meet emissions limitations based on 
application of BACT for GHG if the source is newly constructed and has 
the potential to emit 75,000 tpy or more of this pollutant on a 
CO<INF>2</INF>e basis; or is an existing source which, as a result of a 
modification, increases GHG emissions by 75,000 tpy or more on a 
CO<INF>2</INF>e basis and by any amount on a mass basis. In addition, 
starting on July 1, 2011 (the beginning of step 2 of the Tailoring 
Rule), a source that is not an ``anyway'' PSD source, but that newly 
constructs and emits at least 100,000 tpy CO<INF>2</INF>e GHG, or that 
is an existing source that emits at least 100,000 GHG tpy 
CO<INF>2</INF>e and that modifies and increases its GHG emissions by at 
least 75,000 tpy CO<INF>2</INF>e GHG and any amount on a mass basis, 
will need a PSD permit for its GHG, including any biogenic 
CO<INF>2</INF>.
    With respect to Title V, as noted previously, Title V applies to 
sources, among others, that emit 100 tons per year of specified 
quantities of ``any air pollutant,'' see CAA section 502(a), 501(2)(B), 
302(g). In the Tailoring Rule, EPA codified its longstanding 
interpretation that this requirement only extends to major sources of 
air pollutants subject to regulation, and further defined ``subject to 
regulation'' such that it may include GHGs at sources which emit or 
have the potential to emit 100,000 tpy CO2e as of July 1, 2011. As 
described immediately above, GHG are currently ``subject to 
regulation'' under the CAA (again, subject to specific limitations 
reflected in the definition of that term that EPA adopted in the 
Tailoring Rule), and as a result, emissions of GHG, including biogenic 
CO<INF>2</INF> emissions, are considered in determining whether a 
source is subject to Title V as of July 1, 2011.
    Under the Tailoring Rule, since January 2, 2011 (again, the 
beginning of step 1), sources that are subject to Title V anyway--which 
we call ``anyway'' Title V sources and which include existing sources 
with Title V permits, or new sources obtaining Title V permits, due to 
their non-GHG emission--have been required to address GHG, including 
GHG from biomass, to the extent there are Title V requirements relevant 
to GHG. This means that their Title V permits must contain, at the 
appropriate time, conditions necessary to assure compliance with any 
applicable requirements concerning their GHG emissions. As of July 1, 
2011 (again, the beginning of step 2), new or existing sources that are 
not ``anyway'' Title V sources, that emit or have the potential to emit 
at least 100,000 GHG tpy CO<INF>2</INF>e (and 100 tpy on a mass basis), 
and are subject to an approved or EPA-promulgated title V program, will 
become subject to Title V requirements.
    Therefore, absent some further regulatory action, EPA is unable to 
exclude biogenic CO<INF>2</INF> emissions from the applicability of 
Title V.
2. Authority To Exempt de minimis Emissions
    As noted, since the relevant provisions of the Act apply to ``any 
air pollutant'' or any ``air pollutant subject to regulation,'' the 
terms of the CAA suggest that the PSD and Title V requirements should 
apply to CO<INF>2</INF> emissions from bioenergy or other biogenic 
sources in the same manner as they apply to emissions of CO<INF>2</INF> 
from any other type of source, since such emissions are constituents of 
the regulated pollutant GHG. However, as discussed elsewhere in this 
preamble, EPA believes it has the authority to exclude biogenic 
CO<INF>2</INF> emissions from the PSD and Title V requirements for the 
proposed three-year deferral period and will be exploring whether a 
permanent exemption is permissible for at least some and perhaps all 
types of feedstocks.

[[Page 15261]]

    Courts have recognized that administrative agencies have the 
implied authority to establish exemptions ``when the burdens of 
regulation yield a gain of trivial or no value.'' Alabama Power Co. v. 
Costle, 636 F.2d 323, 360 (DC Cir. 1980). In this decision that 
specifically addressed the requirements of the PSD program, the DC 
Circuit described this principle as follows:

    Categorical exemptions may also be permissible as an exercise of 
agency power, inherent in most statutory schemes, to overlook 
circumstances that in context may fairly be considered de minimis. 
It is commonplace, of course, that the law does not concern itself 
with trifling matters, and this principle has often found 
application in the administrative context. Courts should be 
reluctant to apply the literal terms of a statute to mandate 
pointless expenditures of effort.
    Id. (internal citations omitted).

In an earlier case cited by the court in Alabama Power, the court 
described the doctrine as follows:

    The `de minimis' doctrine that was developed to prevent trivial 
items from draining the time of the courts has room for sound 
application to administration by the Government of its regulatory 
programs. * * * The ability, which we describe here, to exempt de 
minimis situations from a statutory command is not an ability to 
depart from the statute, but rather a tool to be used in 
implementing the legislative design. District of Columbia v. 
Orleans, 406 F.2d 957, 959 (1968).

In this respect, the Alabama Power opinion observed in a footnote that 
the de minimis principle ``is a cousin of the doctrine that, 
notwithstanding the `plain meaning' of a statute, a court must look 
beyond the words to the purpose of the act where its literal terms lead 
to `absurd or futile results.' '' Id. at 360 n. 89 (citations omitted).
    To apply an exclusion based on the de minimis doctrine, ``the 
agency will bear the burden of making the required showing'' that a 
matter is truly de minimis which naturally will turn on the assessment 
of particular circumstances. Id. The Alabama Power opinion concluded 
that ``most regulatory statutes, including the CAA, permit such agency 
showings in appropriate cases.'' Id.
    A notable limitation on the de minimis doctrine is that it does not 
authorize the agency to exclude something on the basis of a cost-
benefit analysis. As the court explained, this ``implied authority is 
not available for a situation where the regulatory function does 
provide benefits, in the sense of furthering the regulatory objectives, 
but the agency concludes that the acknowledged benefits are exceeded by 
the costs.'' Id. The court held that any ``implied authority to make 
cost-benefit decisions must be based not on a general doctrine but on a 
fair reading of the specific statute, its aims and legislative 
history.'' Id.
    Since the early years of the PSD program, EPA has applied this de 
minimis principle to establish various types of values in the PSD 
regulations that may be used to exempt a source from all or part of the 
PSD program requirements. These include the significance levels 
(described previously), which are also called significant emissions 
rates, and air quality screening values called significant impact 
levels (SILs) and significant monitoring concentrations (SMCs).
    The significant emission rates reflect levels below which EPA 
considers an emissions increase to be de minimis. 45 FR 52676, 52705-
07. They are applied to allow modifications having minimal impact to 
proceed without the need for obtaining a PSD permit. See also 40 CFR 
51.166(b)(23); 40 CFR 52.21(b)(23). In addition, these values may be 
used to eliminate the need for a permit to contain BACT limitations for 
a particular pollutant or to require a source to prepare an ambient air 
quality analysis for a particular pollutant that is not emitted or 
increased by significant amounts.
    EPA has also relied on the de minimis doctrine to establish values 
that permitting authorities can use to show that a source that requires 
a PSD permit meets the necessary criteria to obtain a permit. 
Significant impact levels may be used in particular ways identified in 
prior EPA rules and guidance as part of an assessment of whether a 
source causes or contributes to a violation of air quality standards. 
Significant monitoring concentrations may be used to exempt sources 
from pre-construction monitoring requirements. See 75 FR 64864, 64890-
97 (October 20, 2010).
3. Potential for Some Biomass Feedstocks To Have a de minimis Impact on 
Carbon Levels in the Atmosphere
    As discussed previously in this preamble, EPA has sufficient 
information at this time to conclude that at least some biomass 
feedstocks that may be utilized to produce energy have a negligible 
impact on the net carbon cycle, such as residue material (e.g., sawdust 
from milling operations) that would have decomposed under natural 
circumstances in a relatively short period of time (e.g., 10-15 years). 
Given this negligible impact on the carbon cycle, the gain from 
regulating emissions from combustion of this feedstock for bioenergy 
could be considered to be trivial.
    It appears that the potential may exist for EPA to determine that 
other types of biomass feedstocks would have a negligible impact on the 
net carbon cycle impact after further detailed examination of the 
science associated with biogenic CO<INF>2</INF> emissions. Thus, if EPA 
were to require all bioenergy facilities to limit emissions of 
CO<INF>2</INF> before this assessment is complete, it may later 
determine that such actions have yielded trivial gain. To avoid this 
outcome, and because of the administrative burdens described elsewhere 
in this preamble, EPA believes an initial deferral of the PSD 
requirements for bioenergy and other biogenic sources is justified at 
this time. However, the possibility also remains that more detailed 
examination of the science of biogenic CO<INF>2</INF> will demonstrate 
that the utilization of some biomass feedstocks for bioenergy 
production will have a significant impact on the net carbon cycle, 
making application of the PSD program requirements to such emissions 
necessary to fulfill Congressional intent. Thus, EPA is proposing only 
a temporary, rather than a permanent, deferral of PSD requirements for 
such sources at this time.
4. Given the Burden of Case-by-Case Analysis and Potential for de 
minimis Impact, Regulation at This Time Is Not Justified
    Since finalizing the Tailoring Rule, EPA has gathered additional 
information concerning biomass through the CFI. The information 
collected to this point indicates that at present, attempting to 
determine the net carbon cycle impact of particular facilities 
combusting particular types of biomass feedstocks would require 
extensive analysis and would therefore entail extensive workload 
requirements. Further, methodologies are not sufficiently developed to 
assure that various permitting authorities would be able to reasonably 
and consistently perform the necessary calculations to determine the 
net atmospheric impact in particular instances.
    The extensive workload requirements that PSD and Title V permit 
applications for bioenergy facilities and other sources of biogenic 
CO<INF>2</INF> emissions would entail would necessarily strain 
permitting authority resources and result in delays in processing 
permits for other applicants. Moreover, at present, devoting these 
limited permitting authority resources to biomass would not be 
productive in

[[Page 15262]]

light of the previously described possibility that EPA may ultimately 
determine that the utilization of some biomass feedstocks for bioenergy 
has a negligible or de minimis impact on the net carbon cycle.
    Therefore, the information EPA has collected since promulgating the 
Tailoring Rule indicates that it is consistent with the rationale of 
the Tailoring Rule to defer on a temporary basis biogenic 
CO<INF>2</INF> emissions from PSD and Title V applicability, pending 
the detailed examination of the science associated with biogenic 
CO<INF>2</INF> emissions from stationary sources, including engaging 
with an independent scientific panel, and considering technical issues, 
that the Agency must resolve in order to account for biogenic 
CO<INF>2</INF> emissions in ways that are scientifically sound and also 
manageable in practice. As noted previously, EPA based the Tailoring 
Rule on the extreme administrative burdens to permitting authorities, 
and undue costs to sources, that would result from a literal 
application of the PSD and Title V 100/250 tpy statutory thresholds, as 
of January 2, 2011, when those requirements first apply to GHGs. EPA 
reasoned that, in accordance with the Chevron analytical framework for 
statutory construction, taking into account the ``absurd results'' and 
``administrative necessity'' lines of cases, Congress did not intend 
that the PSD and Title V requirements apply at the 100/250 tpy 
statutory thresholds to GHG-emitting sources as of January 2, 2011, but 
rather that those requirements could be limited, at least initially, 
through a phase-in approach, to higher-emitting sources. Just as the 
extensive workload of processing permit applications from sources below 
the Tailoring Rule thresholds justified exempting those sources at 
least from the initial steps in the Tailoring Rule phase-in program, 
pending EPA's development of streamlining methods and the permitting 
authorities' acquisition of additional resources, so too the extensive 
workload of processing permit applications from biomass facilities 
justifies exempting those sources for a period of time, pending EPA's 
development of a consistent and practical methodology for determining 
net carbon cycle impacts (see section II.D). The EPA proposes in the 
present action that a three-year deferral will be adequate to allow 
time for the development of the methodology. In effect, EPA proposes in 
this action to revise the Tailoring Rule's phase-in approach to, in 
effect, defer the applicability of PSD and Title V to biogenic 
CO<INF>2</INF> emissions, relying in part, on the same rationale as EPA 
used to justify the Tailoring Rule's phase-in approach.
    An alternative way to reduce the permitting burden would be to 
apply PSD and Title V to all facilities with biogenic CO<INF>2</INF> 
emissions that emit at or above the Tailoring Rule thresholds, but 
without making any effort to take into account net carbon cycle 
impacts. However, we believe that it is conceivable that as a result of 
the scientific examination of biogenic CO<INF>2</INF> emissions 
described in section II.D, we could conclude that the net carbon cycle 
impact for some biomass feedstocks is negligible. Accordingly, this 
could result in regulation that yields trivial gain as previously 
discussed. To avoid this outcome, given our current state of knowledge, 
we believe a case-by-case net carbon cycle impact analysis would be 
required in the course of reviewing each permit application. This 
burden would be in addition to the currently existing burden associated 
with obtaining a PSD or Title V permit. In light of the permitting 
burdens assessed in the Tailoring Rule, adding to that burden would 
frustrate the goals we sought to accomplish in the Tailoring Rule to 
ensure that the PSD and Title V programs can be administered in each 
State.
    Furthermore, given the potential that the utilization of at least 
some biomass feedstocks may have a negligible impact on the net carbon 
cycle, engaging in this type of burdensome analysis may not be an 
optimal use of the limited resources of PSD and Title V permitting 
authorities. The additional scientific examination proposed by the EPA 
(see section II.D) could ultimately conclude that such resources could 
have been more effectively utilized to target CO<INF>2</INF> emissions 
that clearly have a detrimental impact on the net carbon cycle. 
Establishing a three-year deferral period for biogenic CO<INF>2</INF> 
emissions will enable EPA to consider the results of the detailed 
examination of the science of these emissions and undertake a 
rulemaking to determine the best way to account for biogenic 
CO<INF>2</INF> emissions when determining PSD applicability.
5. Subjecting Biogenic CO<INF>2</INF> Emissions to Permitting may be 
Counterproductive Because it Could Discourage Utilization of the 
Biomass Feedstock as Fuel
    In some cases, the use of biological material as a fuel would 
clearly reduce net atmospheric CO<INF>2</INF> levels. In these cases, 
requiring permitting at this time, before conducting the detailed 
scientific examination discussed in section II.D that is required to 
develop an appropriate accounting system for bioenergy and other 
biogenic sources, might actually discourage projects that would have a 
net benefit for the atmosphere. For example, requiring permitting for 
facilities seeking to generate energy from the combustion of dead 
trees, especially those killed due to a widespread event like the 
mountain pine beetle epidemic, is likely to discourage the utilization 
of a readily available resource that would clearly reduce 
CO<INF>2</INF> emissions (e.g., by removing and utilizing biomass 
material that would otherwise be susceptible to fire or decompose in 
the forest, leading to CO<INF>2</INF> and CH<INF>4</INF> emissions from 
decomposition). Likewise, combustion of CH<INF>4</INF>-laden biogas 
(e.g., from landfills or other large sources of methane) for energy 
production reduces overall CO<INF>2</INF>e emissions because of the 
higher GWP for CH<INF>4</INF>.

B. CO<INF>2</INF> Emissions That Are Deferred

    As discussed earlier, the deferral applies to biogenic 
CO<INF>2</INF> emissions from biogenic feedstocks, rather than to 
specific types of facilities. All non-biogenic emissions from a 
facility continue to be included for purposes of PSD applicability 
throughout the deferral period. However, the portion of the 
CO<INF>2</INF> emissions from a facility that result from biologically-
derived material are deferred and not included for purposes of 
determining PSD applicability during the deferral period. If fossil-
derived fuel is used within a facility to provide energy for a process 
that also uses biological material, the emissions associated with the 
fossil fuel must be counted toward PSD applicability regardless of the 
use of the biological material.
    Specifically, the emissions that are deferred from applicability 
include, but are not limited to:
    <bullet> CO<INF>2</INF> generated from the biological decomposition 
of waste in landfills, wastewater treatment or manure management 
processes;
    <bullet> CO<INF>2</INF> from the combustion of biogas collected 
from biological decomposition of waste in landfills, wastewater 
treatment or manure management processes;
    <bullet> CO<INF>2</INF> from fermentation during ethanol 
production;
    <bullet> CO<INF>2</INF> from combustion of the biological fraction 
of municipal solid waste or biosolids;
    <bullet> CO<INF>2</INF> from combustion of the biological fraction 
of tire-derived fuel; and
    <bullet> CO<INF>2</INF> derived from combustion of biological 
material, including all types of wood and wood waste, forest residue, 
and agricultural material.

[[Page 15263]]

C. Non-CO<INF>2</INF> GHGs and Non-GHG Pollutants

    As explained in section II.A.4, CO<INF>2</INF> is unique among GHGs 
in that large and relatively rapid fluxes of CO<INF>2</INF> between 
land and atmosphere occur as part of the global biogeochemical system 
that maintains life on Earth.\20\ Because other non-GHG pollutants and 
non-CO<INF>2</INF> GHGs do not participate in natural biogeochemical 
carbon cycles as CO<INF>2</INF> does, this frame of reference--in which 
sequestration outside the facility is considered as part of the 
justification for differential treatment in the PSD and Title V 
programs--is not relevant for those other pollutants. The deferral 
proposed here does not apply to GHG emissions from bioenergy or 
biogenic sources other than biogenic CO<INF>2</INF> 
emissions<INF>,</INF> nor does it apply to emissions of non-GHG 
pollutants.
---------------------------------------------------------------------------

    \20\ U.S. Greenhouse Gas Inventory Fast Facts (April 2010.). 
http://www.epa.gov/climatechange/emissions/downloads10/US-GHG-Inventory-Fast-Facts-2008.pdf.
---------------------------------------------------------------------------

D. Mechanism for Deferral and State Implementation

1. Adding to Definition of Subject to Regulation Established in 
Tailoring Rule
    To implement the proposed deferral, we are proposing to revise the 
definition of the term ``subject to regulation'' that EPA adopted in 
the PSD and Title V GHG Tailoring Rule. We are proposing to add 
language to the definition of ``subject to regulation'' to exclude 
biogenic CO<INF>2</INF> emissions from stationary sources for a three-
year period starting on the date the promulgated rule is published in 
the Federal Register.
    The EPA's PSD regulations implement the PSD provisions of the CAA, 
and the language of these statutory provisions is broad enough to cover 
biogenic CO<INF>2</INF> emissions. The 100/250 tpy thresholds 
previously described originate from section 169 of the CAA, which 
applies PSD to any ``major emitting facility'' and defines the term to 
include any source with a potential to emit ``any air pollutant'' in an 
amount equal to or greater than 100 or 250 tpy, depending on the source 
category. The EPA's long-standing regulations interpret the PSD 
applicability provision that refers to ``any air pollutant'' to refer 
to any ``regulated NSR pollutant,'' which includes any air pollutant 
``subject to regulation.'' In the final Tailoring Rule, EPA defined the 
term ``subject to regulation'' so that only GHG emissions from sources 
at or above specified thresholds (depending on the circumstances, 
75,000 and/or 100,000 tpy on a CO<INF>2</INF>e basis) are pollutants 
subject to regulation. Thus, sources that emit amounts exceeding the 
established thresholds, are subject to PSD as long as that amount of 
GHG also exceeds 100/250 tpy on a mass basis. Similarly, in the 
Tailoring Rule, EPA defined ``subject to regulation'' under the Title V 
program regulations so GHG emissions from sources at or above 100,000 
tpy on a CO<INF>2</INF>e basis are subject to regulation. We believe 
this is also the most efficient and effective approach for implementing 
the deferral of biogenic CO<INF>2</INF> emissions proposed in this 
rule.
    Under this approach, some States may not need to undertake a 
regulatory or legislative action to implement the final rule if they 
are able to interpret the term ``subject to regulation'' used in 
existing State regulations in a manner consistent with the revised 
definition propose in this rule. A full description of the ``subject to 
regulation'' mechanism and the basis for its usage in the Tailoring 
Rule can be found in preamble text for that rulemaking.\21\
---------------------------------------------------------------------------

    \21\ 75 FR 31579-81 (June 3, 2010).
---------------------------------------------------------------------------

2. State Decisions To Adopt Deferral
    Currently, a SIP-approved PSD program that applies to GHG-emitting 
sources applies to biogenic CO<INF>2</INF> emissions to the same extent 
as the program applies to all other GHGs. The same is true for an 
approved Title V program that applies to GHG-emitting sources. However, 
we believe that many States may not be inclined to apply their PSD or 
Title V programs to biogenic CO<INF>2</INF> emission sources for the 
same fundamental reasons that we are proposing to defer inclusions of 
these sources under the PSD and Title V permitting programs for a 
three-year period. As has been stated previously, one of our primary 
reasons for reconsideration of application of the Tailoring Rule 
requirements to biogenic CO<INF>2</INF> emissions sources \22\ was to 
allow for a detailed examination of the science associated with 
biogenic CO<INF>2</INF> emissions and to consider the technical issues 
that the agency must resolve in order to account for biogenic 
CO<INF>2</INF> emissions in ways that are scientifically sound and also 
manageable in practice. We believe that most, if not all, States are 
facing similar needs for further scientific examination and analysis to 
properly consider biogenic CO<INF>2</INF> emissions under a permitting 
scenario in a way that will not disrupt the proper functioning and 
timeliness of permitting activity within the State PSD and Title V 
programs. We believe States will also benefit from the deferral period 
in order to have sufficient time to respond to the results of the data 
collection and examination of the science associated with biogenic 
emissions and to properly educate and train staff in the unique 
permitting issues associated with biogenic sources, including 
fundamental principles such as accurate emission estimation 
methodologies and full consideration of environmental impacts 
associated with these sources.
---------------------------------------------------------------------------

    \22\ Letter from Honorable Lisa Jackson, Administrator, U.S. 
EPA, to R. Martella, Jr., R. Gray, and J. Coleman, Sidley Austin, 
LLP. (January 12, 2011.). http://www.epa.gov/NSR/ghgdocs/McCarthytoMartella.pdf.
---------------------------------------------------------------------------

    Thus, States that cannot interpret their PSD SIP or Title V 
requirements to incorporate the three-year deferral are strongly 
encouraged to submit SIP revisions or Title V program revisions to 
adopt the three-year deferral. However, EPA recognizes that some States 
may not have any, or may have only a few, sources that combust biomass, 
and may have adequate information and resources as to the nature of 
biogenic emissions from those sources. EPA requests each State to 
advise EPA by letter, during the comment period for this proposal, as 
to the number and type of biomass sources in the State and what the 
State expects to be the number and type of biomass sources over the 
next three years, and the State's resource constraints, to the extent 
that information is available. EPA solicits comment on how to treat 
States in light of this information and any preferences that the States 
may express.
3. Interim Guidance To Address Biogenic CO<INF>2</INF> Sources Under 
PSD Review
    Concurrent with this proposal to defer application of the pre-
construction and Title V permitting programs to biogenic CO<INF>2</INF> 
emissions, EPA is issuing interim guidance to help permitting 
authorities establish a basis for concluding that BACT (which is one of 
the statutory conditions for receiving a permit) for GHG emissions at 
such sources is combustion of biomass fuel by itself. As previously 
noted, under the Tailoring Rule, since January 2, 2011, large 
stationary sources that become subject to PSD for other pollutants have 
had to address GHG such as CO<INF>2</INF>. Since this proposed 
rulemaking to defer biogenic CO<INF>2</INF> emissions from PSD 
permitting requirements for a three-year period is not planned to be 
finalized until the July 2011 timeframe, there will be an interim 
period when such biogenic CO<INF>2</INF> emissions will still need to 
be addressed in making PSD permitting determinations since the deferral 
will not yet be in effect.\23\ For example, if a

[[Page 15264]]

PSD permit is issued before the planned July 2011 finalization of this 
rulemaking that would defer biogenic CO<INF>2</INF> emissions from PSD 
applicability, then existing regulations might require that the PSD 
permit meet the BACT requirement for GHG emissions, including biogenic 
CO<INF>2</INF> emissions, during the interim period of time.
---------------------------------------------------------------------------

    \23\ As of January 2, 2011, permitting authorities and sources 
subject to Title V need to address any applicable requirements for 
GHG, such as PSD permit requirements, consistent with the 
requirements of 40 CFR part 70 and approved State programs. However, 
GHG emissions will not be used to establish Title V applicability 
before July 1, 2011.
---------------------------------------------------------------------------

    In its November 2010 GHG permitting guidance, EPA explicitly 
recognized that a permitting authority might determine that certain 
types of biomass by themselves are BACT for GHG emissions after 
considering the environmental, energy, and economic benefits of using 
the fuel. EPA's supplemental guidance provides a basis that permitting 
authorities may use to support the conclusion, during the interim 
period until the biomass deferral rulemaking is finalized, that BACT 
for biogenic CO<INF>2</INF> emissions from applicable sources is the 
combustion of biomass fuel by itself.

E. Requesting Comment

    Given the detail and rationale above, EPA has concluded this 
approach to defer application of PSD and Title V permitting 
requirements to biogenic CO<INF>2</INF> emissions is appropriate. 
However, EPA is requesting comment on this proposal, including the 
approach, the rationale and other considerations the Agency should take 
into account.

IV. Statutory and Executive Order Review

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), 
this action is a ``significant regulatory action'' because it raises 
novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in the EO. 
Accordingly, EPA submitted this action to the Office of Management and 
Budget (OMB) for review under EO 12866.

B. Paperwork Reduction Act

    This action does not impose any new information collection burden. 
Instead, this action will reduce costs incurred by any facility with 
biogenic CO<INF>2</INF> emissions, as well as permitting authorities, 
relative to the costs that would be incurred if EPA did not revise the 
rule.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. The OMB has previously approved the 
information collection requirements contained in the existing 
regulations for PSD (see, e.g., 40 CFR 52.21) and Title V (see 40 CFR 
parts 70 and 71) under the provisions of the Paperwork Reduction Act, 
44 U.S.C. 3501 et seq. and has assigned OMB control number 2060-0003 
and OMB control number 2060-0336. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of this proposed rule on 
small entities, small entity is defined as: (1) A small business as 
defined by the Small Business Administration's regulations at 13 CFR 
121.201; (2) a small governmental jurisdiction that is a government of 
a city, county, town, school district or special district with a 
population of less than 50,000; and (3) a small organization that is 
any not-for-profit enterprise that is independently owned and operated 
and is not dominant in its field.
    After considering the economic impacts of this proposed action on 
small entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. In 
determining whether a rule has a significant economic impact on a 
substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, since the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of the rule on small entities.'' 5 U.S.C. 603 and 604. 
Thus, an agency may certify that a rule will not have a significant 
economic impact on a substantial number of small entities if the rule 
relieves regulatory burden, or otherwise has a positive economic effect 
on all of the small entities subject to the rule.
    We believe that this proposed rule will relieve the necessary 
extensive analysis and corresponding extensive workload requirements 
for most affected facilities, including small businesses. As a result, 
the program changes provided in this rule are not expected to result in 
a significant economic impact on a substantial number of small 
entities. In addition, EPA determined that the proposed rulemaking 
would not have a significant impact on small governmental 
jurisdictions. The EPA has therefore concluded that this proposed 
action will not have a significant economic impact on a substantial 
number of small entities.
    We continue to be interested in the potential impacts of this 
proposed action on small entities and welcome comments on issues 
related to such impacts.

D. Unfunded Mandates Reform Act (UMRA)

    This proposed rule does not contain a Federal mandate that may 
result in expenditures of $100 million or more for State, local, and 
Tribal governments, in the aggregate, or the private sector in any one 
year. Only those few States whose permitting authorities do not 
implement the Federal PSD and Title V rules by reference in their SIPs 
will have a small increase in burden. These States will have to amend 
their corresponding SIPs to incorporate the proposed amendments from 
today's action, as the deferral that we propose will not otherwise 
apply to the PSD and Title V programs. Thus, this rule is not subject 
to the requirements of sections 202 or 205 of the UMRA.
    This rule is also not subject to the requirements of section 203 of 
UMRA because it contains no regulatory requirements that might 
significantly or uniquely affect small governments. As discussed 
earlier, this rule is expected to result in an administrative burden 
reduction for all affected permitting authorities and permittees, 
including small governments.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government, as 
specified in EO 13132. These proposed amendments would simplify and 
reduce the burden on implementing the PSD and Title V operating permit 
programs, by deferral of PSD and Title V application requirements to 
biogenic CO<INF>2</INF> emissions at a facility. Thus, EO 13132 does 
not apply to this action.

[[Page 15265]]

    In the spirit of Executive Order 13132, and consistent with EPA 
policy to promote communications between EPA and State and local 
governments, EPA specifically solicits comment on this proposed action 
from State and local officials.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (59 FR 22951, November 6, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by Tribal officials in the development of regulatory 
policies that have Tribal implications.''
    The EPA has concluded that this proposed rule may have Tribal 
implications. However, it will neither impose substantial direct 
compliance costs on Tribal government, nor preempt Tribal law. There 
are no Tribal authorities currently issuing major NSR permits; however, 
this may change in the future.
    The EPA specifically solicits additional comment on this proposed 
action from Tribal officials.

G. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    The EPA interprets Executive Order 13045 (62 FR 19885, April 23, 
1997) as applying only to those regulatory actions that concern health 
or safety risks, such that the analysis required under section 5-501 of 
the Executive Order 492 has the potential to influence the regulation. 
This action is not subject to Executive Order 13045 and does not 
establish an environmental standard intended to mitigate health or 
safety risks.

H. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This proposed rule is not a ``significant energy action'' as 
defined in EO 13211 (66 FR 28355, May 22, 2001) because it is not 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy. Further, we have concluded that this 
rule is not likely to have any adverse energy effects because this 
action would not create any new requirements for sources in the energy 
supply, distribution, or use sectors.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113 (15 U.S.C. 272 note) directs 
EPA to use voluntary consensus standards in its regulatory activities 
unless to do so would be inconsistent with applicable law or otherwise 
impractical. Voluntary consensus standards are technical standards 
(e.g., materials specifications, test methods, sampling procedures, and 
business practices) that are developed or adopted by voluntary 
consensus standards bodies. The NTTAA directs EPA to provide Congress, 
through OMB, explanations when the Agency decides not to use available 
and applicable voluntary consensus standards.
    This proposed rulemaking does not involve technical standards. 
Therefore, EPA is not considering the use of any voluntary consensus 
standards.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898 (59 FR 7629, February 16, 1994) establishes 
Federal executive policy on environmental justice. Its main provision 
directs Federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the U.S.
    The EPA has determined that this proposed rule will not have 
disproportionately high and adverse human health or environmental 
effects on minority or low-income populations because it does not 
affect the level of protection provided to human health or the 
environment because any impacts that it will have will be global in 
nature and will not affect local communities or populations in a manner 
that adversely affects the level of protection provided to human health 
or the environment.

K. CAA Section 307

    Pursuant to section 307(d)(1)(J) and (V) of the CAA, the 
Administrator determines that this action is subject to the provisions 
of section 307(d). Section 307(d)(1)(J) provides that the provisions of 
section 307(d) apply to the promulgation or revision of regulations 
under Part C of Title I of the Clean Air Act, which covers the PSD 
program. Section 307(d)(1)(V) provides that the provisions of section 
307(d) apply to ``such other actions as the Administrator may 
determine.'' The Administrator determines that section 307(d) applies 
to the Title V program components of this rule.
    Furthermore, this action has a nationwide scope and effect. Thus, 
under section 307(b)(1) of the Act, judicial review of the final action 
on this proposal will be available by filing of a petition for review 
in the U.S. Court of Appeals for the District of Columbia Circuit.

List of Subjects

40 CFR Part 51

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Carbon dioxide, Carbon dioxide equivalents, 
Greenhouse gases, Intergovernmental relations, Methane, Nitrous oxide.

40 CFR Part 52

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Carbon dioxide, Carbon dioxide equivalents, 
Greenhouse gases, Intergovernmental relations, Methane, Nitrous oxide.

40 CFR Part 70

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Carbon dioxide, Carbon dioxide equivalents, 
Greenhouse gases, Intergovernmental relations, Methane, Nitrous oxide.

40 CFR Part 71

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Carbon dioxide, Carbon dioxide equivalents, 
Greenhouse gases, Intergovernmental relations, Methane, Nitrous oxide.

    Dated: March 11, 2011.
Lisa P. Jackson,
Administrator.

    For the reasons stated in the preamble, title 40, chapter I, of the 
Code of Federal Regulations is proposed to be amended as follows:

PART 51--[AMENDED]

    1. The authority citation for part 51 continues to read as follows:

    Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.

Subpart I--[Amended]

    2. Section 51.166 is amended by revising paragraph (b)(48)(ii)(a) 
to read as follows:


Sec.  51.166  Prevention of significant deterioration of air quality.

* * * * *
    (b) * * *
    (48) * * *

[[Page 15266]]

    (ii) * * *
    (a) Multiplying the mass amount of emissions (tpy), for each of the 
six greenhouse gases in the pollutant GHGs, by the gas's associated 
global warming potential published at Table A-1 to subpart A of part 98 
of this chapter--Global Warming Potentials. For purposes of this 
paragraph (b)(48)(ii)(a), prior to [DATE 3 YEARS AFTER THE EFFECTIVE 
DATE OF THE FINAL DEFERRAL RULE], the mass of the greenhouse gas carbon 
dioxide shall not include carbon dioxide emissions resulting from the 
combustion or decomposition of non-fossilized and biodegradable organic 
material originating from plants, animals, or micro-organisms 
(including products, by-products, residues and waste from agriculture, 
forestry and related industries as well as the non-fossilized and 
biodegradable organic fractions of industrial and municipal wastes, 
including gases and liquids recovered from the decomposition of non-
fossilized and biodegradable organic material).
* * * * *

PART 52--[AMENDED]

    3. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401, et seq.

Subpart A--[Amended]

    4. Section 52.21 is amended by revising paragraph (b)(49)(ii)(a) to 
read as follows:


Sec.  52.21  Prevention of significant deterioration of air quality.

* * * * *
    (b) * * *
    (49) * * *
    (ii) * * *
    (a) Multiplying the mass amount of emissions (tpy), for each of the 
six greenhouse gases in the pollutant GHGs, by the gas's associated 
global warming potential published at Table A-1 to subpart A of part 98 
of this chapter--Global Warming Potentials. For purposes of this 
paragraph, prior to [DATE 3 YEARS AFTER THE EFFECTIVE DATE OF THE FINAL 
DEFERRAL RULE], the mass of the greenhouse gas carbon dioxide shall not 
include carbon dioxide emissions resulting from the combustion or 
decomposition of non-fossilized and biodegradable organic material 
originating from plants, animals, or micro-organisms (including 
products, by-products, residues and waste from agriculture, forestry 
and related industries as well as the non-fossilized and biodegradable 
organic fractions of industrial and municipal wastes, including gases 
and liquids recovered from the decomposition of non-fossilized and 
biodegradable organic material).
* * * * *

PART 70--[AMENDED]

    5. The authority citation for part 70 continues to read as follows:

    Authority: 42 U.S.C. 7401, et seq.

    6. Section 70.2 is amended by revising paragraph (2) of the 
definition of ``Subject to regulation'' to read as follows:


Sec.  70.2  Definitions.

* * * * *
    Subject to regulation * * *
    (2) The term tpy CO<INF>2</INF> equivalent emissions 
(CO<INF>2</INF>e) shall represent an amount of GHGs emitted, and shall 
be computed by multiplying the mass amount of emissions (tpy), for each 
of the six greenhouse gases in the pollutant GHGs, by the gas's 
associated global warming potential published at Table A-1 to subpart A 
of part 98 of this chapter--Global Warming Potentials, and summing the 
resultant value for each to compute a tpy CO<INF>2</INF>e. For purposes 
of this paragraph, prior to [DATE 3 YEARS AFTER THE EFFECTIVE DATE OF 
THE FINAL DEFERRAL RULE], the mass of the greenhouse gas carbon dioxide 
shall not include carbon dioxide emissions resulting from the 
combustion or decomposition of non-fossilized and biodegradable organic 
material originating from plants, animals, or micro-organisms 
(including products, by-products, residues and waste from agriculture, 
forestry and related industries as well as the non-fossilized and 
biodegradable organic fractions of industrial and municipal wastes, 
including gases and liquids recovered from the decomposition of non-
fossilized and biodegradable organic material).
* * * * *

PART 71--[AMENDED]

    7. The authority citation for part 51 continues to read as follows:

    Authority: 42 U.S.C. 7401, et seq.

Subpart A--[Amended]

    8. Section 71.2 is amended by revising paragraph (2) of the 
definition of ``Subject to regulation'' to read as follows:


Sec.  71.2  Definitions.

* * * * *
    Subject to regulation * * *
    (2) The term tpy CO<INF>2</INF> equivalent emissions 
(CO<INF>2</INF>e) shall represent an amount of GHGs emitted, and shall 
be computed by multiplying the mass amount of emissions (tpy), for each 
of the six greenhouse gases in the pollutant GHGs, by the gas's 
associated global warming potential published at Table A-1 to subpart A 
of part 98 of this chapter--Global Warming Potentials, and summing the 
resultant value for each to compute a tpy CO<INF>2</INF>e. For purposes 
of this paragraph, prior to [DATE 3 YEARS AFTER THE EFFECTIVE DATE OF 
THE FINAL DEFERRAL RULE], the mass of the greenhouse gas carbon dioxide 
shall not include carbon dioxide emissions resulting from the 
combustion or decomposition of non-fossilized and biodegradable organic 
material originating from plants, animals, or micro-organisms 
(including products, by-products, residues and waste from agriculture, 
forestry and related industries as well as the non-fossilized and 
biodegradable organic fractions of industrial and municipal wastes, 
including gases and liquids recovered from the decomposition of non-
fossilized and biodegradable organic material).
* * * * *
[FR Doc. 2011-6438 Filed 3-18-11; 8:45 am]
BILLING CODE 6560-50-P


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