1

Response to Comments Submitted to Docket but N ot Addressed in Final Rule to Issue 9 - month Stay of Grandfather Provision : 74 FR 48153, September 22, 2009 June 8, 2010 1. Comment : One commentor (Mirant) 1 claims that the original [administrative] stay that became effective on June 1, 2009 (see 74 Fed. Reg. 26,098 (June 1, 2009)) , is invalid because it responds to a petition that was not authorized by statute (filed 151 day s after statutory deadline) and sought relief that is not available under section 307(d) of the CAA. In addition, the commentor claims that the EPA could not subsequently extend that invalid stay . Similarly , another commentor (NEDA/CAP) states that EPA could not extend the 3

- month stay beyond the 3
- month period provided for in CAA 307(d)(7 )(B). Response : First, the original administrative stay that became effective on June 1, 2009 expired in September 2009 and is not at issue in this action to establish the current 9

- month stay. Thus, EPA does not need to respond to this commentor’s claim that the original administrative stay was invalid. Second, the 9

- month stay issued on September 22, 2009 at 74 FR 48,153, is not an extension of the 3

- month stay established under CAA 307(d)(7)(B) in the sense that the two stays combine to create a single 12

- month stay. Instead, the 9

- month stay is a separate stay established by a separate notice and comment rulemaking under the authority of CAA 301(a). EPA understands that this confusion may have arisen because the proposed 9

- month stay described it as an “extension ” 2 ; however, the authority identified as the basis for the proposed rule was CAA 301(a)

-- not CAA 307(d)(7)(B) which is the authority for the administrative stay . See 74 Fed. Reg. 36,427, 36,430 (July 23, 2009). The final rule also identifi ed CAA 301(a) as the statutory authority for the 9

- months stay, see 74 Fed. Reg. 48,153, 48,156 (Sept. 22, 2009), and explained that use of the word ”extension“ and other forms of the word ”extend“ was not intended to indicate that the 9

- month stay was extending the administrative stay beyond 3 months. See 74 Fed. Reg. at 48,154 n. 2. Finally, EPA notes that the 3

- month stay expired on September 1, 2009 (s ee 74 Fed. Reg. 26,098 (June 1, 2009), and the 9

- month stay did not become effective until September 22, 2009 (see 74 Fed. Reg. 48,153 (Sept. 22, 2009). This timing further confirms that the two stays are separate actions.

1 Mirant’s letter providing its comments on the proposed nine

- month stay began with a request that EPA state that the proposed nine

- month stay would not appl y t o the applications for Mirant’s two facilities in Conta Costa County , California, and said that if EPA were to provide s uch a statement then Mirant had no objection to the proposed nine

- month stay . Because EPA is not providing the statement requested b y Mirant, it is responding to Mirant’s comments opposing the nine

- month stay . A response to Mirant’s argument that the stay does not apply to these two facilities is provided below. 2 This inaccurate description of the 9

- mo nth stay as an extension of the 3

- mo nths stay appears elsewhere. See Memorandum from Stephen D. Page, Director, Office of Air Quality Planning and Standar ds, “Modeling Procedures for Demonstrating Compliance with PM2.5 NAAQS” (March 23, 2010) at 2.2

2. Comment : One commentor (Mirant) state s that the stay has the effect of imposing new requirements on regulated entities, and th at EPA cannot use an administrative stay to impose new requirements on permit applicants. Instead, EPA must use notice and comment rulemaking, and it has not done so. Response : As noted above, the 9

- month stay, which followed the original administrative s tay, is not based on the authority to establish an administrative stay under CAA 307(d)(7)(B). EPA used notice and comment rulemaking to establish the 9

- month stay

. See 74 Fed. Reg. 36,427(July 23, 2009) and 74 Fed. Reg. 48,153 (Sept. 22, 2009). Further , we disagree with the commentor’s premise here: that the stay of the grandfather provision imposes new requirements. Neither the PM

10 surrogate policy nor the grandfather provision (when applied consistent with the applicable case law and within the limi ts of the policy) eliminates or reduces any requirements that must be met under the CAA. Instead, the PM 10 surrogate policy provides an alternative means of demonstrating compliance with the applicable requirements. 3. Comment : One commentor (NEDA

- CAP) say s that the stay would create confusion among regulated entities and others concerning the application of (1) the PM 10 surrogate policy in states with approved NSR SIPs, and (2) the NSR transition period for condensable PM. The commentor requests that E PA clarify that this stay has no effect on these two provisions. Response : We regret any confusion that may exist between the proposed stay to end the grandfather provision for PM 2.5 and the other two proposed actions identified by the commentor. The proposed action to stay the grandfather provision for PM 2.5 applies solely to the implementation of PM 2.5 in the federal PSD program. The proposed stay does not does not affect permit applications in SIP

- approved states where applicants and permitting autho rities that are considering relying on the PM 10 Surrogate Policy in SIP

- approved states are expected to consider the case law that impacts the use of the PM 10 Surrogate Policy, and other limits in the use of the policy. See, e.g., 75 Fed. Reg. 6827, 6831

- 3 2 (Feb. 11, 2010). Further, EPA notes that it has proposed to end early the PM 10 Surrogate Policy in SIP

- approved states. See 75 Fed. Reg. 6827, 6833

- 35. Similarly, the stay of the grandfather provision does not effect the transition period for condens able PM, but EPA notes that it has taken a separate action to take comment on ending the NSR transition period for condensable PM earlier than January 1, 2011. See 74 Fed. Reg. 12,970, 12,976 (March 25, 2009 ). 4. Comment : Two commentors (Mirant and UARG) state that a 9

- month stay of the grandfather provision is inconsistent with § 165(c) of the Clean Air Act, which provides that any completed PSD permit application be granted or denied within one year aft er the date of filing of the completed application. UARG further states that EPA’s rules and policies in effect at the time of their application allowed the applicants to rel y on the PM 10 s urrogate p olicy, and any change in that policy

is contrary

to the requirement for prompt action under CAA 165(c). ]3

R esponse : EPA does not dispute that some of the permit applications that fell within the grandfather provision have not been granted or denied within the one

- year period provided in § 165(c) of the Act. Commentors, however, have not shown that this dela y can be attributed to a stay of the grandfather provision. For example, even if the grandfather provision were not stayed with respect to these pending applications, it is not clear that the applications have provided the information or analysis necessar y under the case law to demonstrate that PM 10 is a reasonable surrogate such that the Surrogate Policy could be used. See, e.g., discussion of case law in 75 Fed. Reg. 6827, 6831

- 32 (Feb. 11, 2010). Finally, EPA notes that the change that commentor refer

s to with respect to how the PM 10 s urrogate p olicy is applied does not come from a change in the p olicy itsel f. Instead, it comes from the c ourt opinions that EPA must recognize as governing EPA’s policy. 5. Comment : One commentor (UARG) states that th e proposed [second] stay is unsupported and fails to provide adequate basis for public comment. The commentor further claims that the proposed stay

has the effect of imposing requirements that would not otherwise appl y; thus, the stay changes rather than preserves the regulatory status quo and thus imposes a “particularl y heav y burden” on EPA to explain the basis for the stay (UARG p.3) Response : First, in the proposed rule, we stated the basis on which we were proposing to impose a further 9

- month stay on the grandfather provision: that the grandfather provision was adopted without prior public notice and is not longer substantially justified in light of the resolution of the technical issues with respect to PM 2.5 that led to the PM 10 s urrogate p olicy in 1997, and that an additional nine months would provide time for EPA to propose, take comment on, and issue a final action on whether the grandfather provision should be repealed. 74 Fed. Reg. 36,427, 36,429 (col. 1) (July 23, 2009). To the extent that this commentor or any other person believed that there were remaining technical issues that required the continued use of the surrogate policy, this was sufficient notice for them to identify any such technical issues and explain why those issues should pre vent the proposed stay from being put in place. With respect to EPA’s statement that the grandfather provision was adopted without public notice, EPA notes that this same commentor provided its views on why there was adequate public notice, demonstrating that EPA’s statement was sufficient to put persons on notice of this issue. Second, as noted above, we disagree with the commentor’s premise that the stay of the grandfather provision has the effect of impos ing new requirements on sources that would be permitted to rely on the PM 10 s urrogate p olicy under the grandfather provision . Neither the PM 10 surrogate policy nor the grandfather provision (when applied consistent with the applicable case law and within the limits of the policy) eliminates or reduce s any requirements that must be met under the CAA. Instead, the PM 10 surrogate policy provides an alternative means of demonstrating compliance with the applicable requirements. 6
. Comment : One commentor (UARG) state s that the timing of the proposed 9

- month stay would not allow sufficient time for EPA to take final action on the 9

- month stay before the end of the 3

- month administrative stay on September 1, 2009. Response : This comment is founded on the premise that EPA would have to finalize the 9

- month stay

before the end of the administrative stay on September 1 to ensure that the second4

stay would be a legitimate “extension” of the administrative stay . In fact, the second stay was not intended to extend the administrative stay , but instead to establis h a second, separate stay o f the grandfather provisions. EPA did not finalize the 9

- month stay until September 22. See 74 Fed. Reg. 48,153 (Sept. 22, 2009). 7. Comment : One commentor (Mirant) states that EPA has misrepresented the effects of the nine

- mo nth stay and presented arguments wh y the stay would not appl y to completed applications because the stay cannot have retroactive effect. Response : EPA does not agree with the commentor’s arguments c on cerning the effect of the stay or its analysis concluding that the effect of the stay would constitute a retroactive effect that is inconsistent with case law or EPA regulations, but does not need to respond to these arguments at this time

. Wh ether or not the effect of the stay will be consistent with the c ommentor’s arguments will be determined in individual permitting decisions going forward for sources that had originally been grandfathered

. Wi th respect to the stay overall, EPA has determined that the 9

- month stay is appropriate regardless of whether th e commentor’s arguments on these points are correct or not

, for the reasons presented in response to other comments and in the final rule preamble. 74 Fed. Reg. 48,153, 48,154 (Sept. 22, 2009). 8
. Comment : One commentor (UARG) state s that a 9

- month st ay is inconsistent with the argument that EPA made in opposing a motion to stay the grandfather provision (among other parts of EPA’s May

2008 final rule) in NRDC v. EPA, No. 08

- 1250 (D.C. Cir.). Response : EPA disagrees that its opposition to a court

- ordered stay of the grandfather provision is inconsistent with an agency stay of the provision. As EPA made clear, the issue on the motion to stay was whether the Court should issue a stay that had the effect of rewriting an agency rule by severing related provisions of the rule and allowing some, but not others, to take effect. EPA opposed such a court

- ordered stay on the basis of well

- established case law finding that it is not proper for courts to sever and stay a portion of an agency action if there is substantial doubt that the agency would have adopted the severed portion on its own. That situation is different than the circumstances here, where the agency (not the court) considers whether one portion of the rule (the grandfather provision) should be stayed while the other part of the rule (the decision to otherwise end the use of the PM 10 s urrogate p olicy in federal program states) remains in effect. 9
. Comment : Two commenters claim that there is a lack of adequate guidance to justify ending the us e of the PM 10 surrogate policy at this time. One commentor (Mirant ) state s that with stay in place, there is no guidance to review pending applications. There is no modeling available to meet PM 2.5 requirements. The second commentor (UARG ) claim s that E PA mentions resolution of technical issues but does not explain this conclusion . This commentor believes that there is n o evidence that technical issues are resolved. The commentor also state s that EPA gives no reason why the PM 10 surrogate policy is no l onger appropriate (which was reaffirmed in 2005 and restated in our Sept. 2008 Opp. To Motion for Stay). Response : We believe that there is sufficient information available to enable sources to estimate the ambient impacts of direct PM 2.5 emissions from stationary sources, and to a limited extent to account for ambient levels of secondarily

- formed PM

2.5 as well. In fact, some of the sources5

affected by the stay have chosen to revise their analyses for PM 2.5 by addressing PM 2.5 emissions in lieu of relying on the PM 10 surrogate policy. While the technical tools needed to complete a comprehensive analysis of all emissions that contribute to ambient concentrations of PM 2.5 are only in the developmental stage; the use of available tools is preferred over th e continued use of the PM

10 surrogate policy to satisfy the requirements for PM 2.5 . Modeling of direct PM 2.5 emissions from stationary sources can be accomplished using the same air quality model that is used for PM

10 . Moreover, EPA is in the process of developing procedures that will assist sources and permitting authorities to carry out the required analyses for meeting the PM 2.5 requirements. An initial outcome of this process is a memorandum dated March 23, 2010, titled “Modeling Procedures for Demon strating Compliance with PM 2.5 NAAQS,” which clarifies the implications of the transition away from the PM 10 surrogate policy

, and provides basic guidance that can be used by PSD applicants and permitting authorities to assist in completing a PM 2.5 ambient impact analysis for PSD applications

. With regard to commentor’s claim that EPA gave no reason why the PM 10 surrogate policy was no longer appropriate, we have made it clear that courts have issued various opinions that govern the use of PM 10 as a surrogate for meeting the PSD requirements for PM 2.5 . For example, courts have held that a surrogate may be used only after it has been shown to be reasonable to do so, and this would include a discussion of the differences between PM 10 and PM 2.5 and a demons tration that PM 10 is nonetheless an adequate surrogate for PM 2.5 . Finally, the 1997 surrogate policy presumes that the necessary technical tools for completing a PM 2.5 analysis are not available. Because we have concluded that these technical issues have been sufficiently resolved, we believe that any use of the surrogate policy should include a finding that the technical tools needed for a PM 2.5 analysis are not available, thereby necessitating the use of a surrogacy approach. 1 0
. Comment : One comme nter (Mirant) seeks assurance from EPA that the grandfather provision is still applicable to two permit applications for the commentor’s facilities in Contr a Costa County , California, which were determined to be complete while the provision was in effect p rior to the issuance of the stay . This commenter requests that EPA concur that the grandfather provision remains applicable to two permit applications pending before the Bay Area Air Quality

Management Division (BAAQMD), which administers a delegated PSD program. The commenter reasons that this result is achieved by virtue of a BAAQMD regulation that EPA has approved into the SIP, which provides that a decision to authorize construction shall be based on federal and state regulations and standards in force on the date the application is declared to be complete. Response : EPA has determined that the area in which the two permit applications of concern are located is currently designated “nonattainment ” for PM 2.5 . Hence, as long as the area continues to be designated nonattainment when construction permits are issued to these sources, the federal PSD permit requirements under 40 CFR 52.21 do not apply to them , and so they are not impacted by the stay of the grandfather provision. However, even if the area of concern was not designated as nonattainment for PM 2.5, EPA could not provide assurance to any proposed source that the condi tions allowed under the grandfather provision would remain applicable under the circumstances described by the6

commenter
. While the stay of section 52.21(i)(1)(xi) remains in effect, the grandfathering provision will not be applicable under federal law to a final decision by BAAQMD to issue either of these PSD permits. Permitting decisions are generally governed by the law in effect at the time they are made. See, In re: Dominion Energy Brayton Point, LLC , 12 E.A.D. 490, 614

- 616 (EAB 2006). Even if the “regulations in force” provision is applicable under state law (section 2

- 1

- 409 of BAAQMD regulations), this provision c annot supercede or nullify the EPA regulations at 40 CFR 52.21 that also apply and determine the requirements of federal law for these pending PSD permit applications. Although EPA has approved section 2

- 1

- 409 of BAAQMD regulations as part of the State Im plementation for Plan for certain purposes, BAAQMD does not have an approved SIP that applies to PSD permitting. As the administrator of a delegated PSD permitting program under section 52.21(u), BAAQMD stands in the shoes of US EPA Region 9 and is requi red to apply the provisions of 40 C.F.R. 52.21. See, In re: West Suburban Recycling and Energy Center, LP, 6 E.A.D. 692, 703

- 707 (EAB 1996). The commenter impermissibly equates BAAQMDs delegated PSD program with a state PSD program that has been duly a uthorized by EPA as part of a state SIP. See, id. at 704. The applicable delegation agreement between Region 9 and BAAQMD specifies that “[t ]h e District shall issue PSD permits under this partial delegation agreement in accordance with the PSD requiremen ts of the District’s Regulation 2

– Rule 2 and 40 CFR 52.21, as amended on December 31, 2002.” U.S. EPA

– Bay Area Air Quality Management District Agreement for Delegation of Authority to Issue and Modify Prevention of Significant Deterioration Permits S ubject to 40 CFR 52.21 (Feb. 6, 2008). While the delegation agreement references District Regulation 2, the agreement does not specify that District Regulation 2 may supercede 40 CFR 52.21 in this or any other circumstance.