SUBJECT:

FROM:

TO: UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION III 1650 Arch Street Philadelphia, Pennsylvania 19103-2029

Maryland Dept. oftheEnvironment PSDINNSR SIP Revision Requests
David Talley 

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Kathleen Cox, Associate Director Office ofPermits and Air Toxics

Approval and Promulgation ofAir Quality Implementation Plans; Maryland; Preconstruction Requirements-Prevention ofSignificant Deterioration and NonattainmentNew SourceReview
I. BACKGROUND
The Maryland Department ofthe Environment (MDE) has submittedthree State Implementation Plan (SIP) revision requests, pertaining to the New Source Review (NSR) requirements ofthe CleanAirAct (CAA). The proposedrevisions affect both Maryland's Prevention ofSignificant Deterioration (PSD) program and its NonattainmentNSRprogram. Ifapproved, this action would revise eachpreviously approved version ofthese rules as described in detail below.
Inaddition, the proposed SIP revisions will satisfY the following required SIP elements: NSR Reform, NOx as a precursorto ozone, Infrastructure, and Greenhouse Gases.

II. SUMMARY OFACTIONS
A. SIP Revision #07-13
On October 24, 2007 MDE submitted a SIP revision request to EPA. This SIP revision request includes amendments to Regulations .01-.03, repeal ofexisting Regulations .04 and .05, and the adoption ofnew Regulations .04

- .09 under COMAR 26.11.17, Nonattainment Provisions for MajorNew Sources and Major Modifications.
This action, ifapproved, would revise the previously-approvedversions ofthese rules as approved into the Maryland SIP onFebruary 12,2001 for COMAR 26.11.17 Regulations .02, .04, and .05 (66 FR9766) and September 20, 2004 for COMAR26.11.17 Regulations .01 and .03 (69 FR 56170). A public hearing was held on August 8, 2007. No comments were submitted. These amendments were adopted by Maryland on September 18,2007 andbecame effective on October 22, 2007. The State adopted these regulations in orderto meetthe relevant planrequirements ofTitle 40 ofthe Code ofFederal Regulations (CFR) Part 51.165 and the CAA. The MDE is now seeking approval ofthese amendments.B. SIP Revision #09-03
OnJuly 31, 2009, MDE submitted a SIP revision request to EPA. This SIP revision request consists ofthe incorporation by reference ofthe federal PSD requirements codified inthe July 1, 2008 edition ofthe CFR. The SIP revision request includes amendments to the MDE Regulations .01 under COMAR 26.11.01 (General Administrative Provisions) and Regulations .14 under COMAR26.11.06 (General Emission Standards, Prohibitions, and Restrictions). On June 23, 2011, MDE submitted a letter, retracting the part ofsubmission #09-03 which updated the incorporation byreference date. Since originally submitting #09-03, Maryland has adopted the federal regulations as they appear inthe July 1, 2009 version ofthe CFR (See State Submission #11-02, below). Today's action proposes approval ofonly that part ofthe submission which clarifies the definitions of"Administrator" and "reviewing authority".
This action, ifapproved, would revise the previously-approved versions ofthese rules as approved into the Maryland SIP onMay 28,2002 (67 FR 36810). A public hearing was held on May 28, 2009. No comments were submitted. These amendments were adopted by Maryland on June 11, 2009 and became effective on July 16, 2009. The State adopted these regulations in orderto meetthe relevant plan requirements of40 CFR 51.166 and the CAA. The MDE is now seeking approval ofthese amendments.

C. SIP Revision #11-02
On June 23, 2011, MDE submitted a SIP revision request to EPA. This SIP revision request consists ofthe incorporation by reference ofthe federal PSD requirements as codified inthe July 1,2009 edition ofthe CFR, as well as the incorporation ofthe revisions to 40 CFR 52.21 promulgated inthe Greenhouse Gas Tailoring Rille (75 FR 31514). The SIP revision request includes amendments to the MDE Regulation .01 under COMAR26.11.01 (General Administrative Provisions), Regulations .01 and .12 under COMMAR26.11.02 (Permits, Approvals, and Registration), and Regulation .14 under COMAR 26.11.06 (General Emission Standards, Prohibitions, and Restrictions).
This action, ifapproved, would revise the previously-approved versions ofthese rules, approved
as follows: COMAR 26.11.01.01 and COMAR 26.11.06.14 were adopted into the Maryland SIP
onMay 28,2002 (67 FR 36810). COMAR26.11.02.01 and.12 were adopted into the Maryland SIP on February 27,2003 (68 FR 9012). A public hearing was held on February 15,2011. These amendments were adopted by Maryland on April 14, 2011 and became effective on May 16,2009. The State adopted these regulations in order to meetthe relevantplanrequirements of 40 CFR 51.166 and the CAA. The MDE is now seeking approval ofthese amendments.

III. ANALYSIS

A. NSR REFORM History
OnDecember 31, 2002 (67 FR 80186), EPA published final rule changes to 40 CFRParts 51 and 52, regarding the CAA's PSD and NonattainmentNSRprograms. OnNovember 7, 2003

2(68 FR 63021), EPA published a notice offinal action onthe reconsideration ofthe December 31,2002, final rule changes. The December 31,2002, and the November 7, 2003, final actions are collectivelyreferred to as the "2002 NSR Reform Rules." The purpose ofthis action is to propose to approve the SIP submittals from the State ofMaryland that include State rule changes made as a result ofEPA's 2002 NSR Reform Rules.
The 2002 NSR Reform Rules are part ofEPA's implementation ofparts C and D oftitle I ofthe CAA, 42 U.S.C. 7470-7515. Part C oftitle I ofthe CAA, 42 U.S.C. 7470-7492, is the PSD program, which applies in areas that meetthe National Ambient Air Quality Standards (NAAQS}-"attainment" areas--as well as in areas for which there is insufficient information to determine whether the area meets the NAAQS-"unclassifiable" areas. Part D oftitle I ofthe CAA, 42 U.S.C. 7501-7515, is the Nonattainment NSRprogram, which applies in areas that are not in attainment oftheNAAQS-"nonattainment" areas. Collectively, the PSD and Nonattainment NSRprograms are referred to as the "New Source Review" orNSRprograms. EPA regulations implementing these programs are contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and part 51, appendix S.
The CAA's NSRprograms are preconstructionreview and permittingprograms applicable to new and modified stationary sources ofair pollutants regulated underthe CAA. TheNSR programs ofthe CAA include a combination ofair quality planning and air pollution control technology program requirements. Briefly, section 109 ofthe CAA, 42 U.S.C. 7409, requires EPA to promulgate primaryNAAQS to protectpublichealth and secondary NAAQS to protect public welfare. Once EPA sets those standards, states must develop, adopt, and submit to EPA for approval a SIP that contains emissions limitations and other control measures to attain and maintain the NAAQS. Each SIP is required to contain a preconstruction review program for the construction and modification ofany stationary source ofair pollution to assure that the NAAQS
are achieved and maintained; to protect areas ofclean air; to protect air qualityrelated values (such as visibility) in national parks and other areas; to assure that appropriate emissions controls
are applied; to maximize opportunities for economic development consistent with the preservation ofclean air resources; and to ensure that any decision to increase air pollution is made only after full public consideration ofthe consequences ofthe decision.
The 2002 NSR Reform Rules made changes to five areas ofthe NSRprograms. In summary, the 2002 Rules: (I) provide a new method for determiningbaseline actual emissions; (2) adopt an actual-to-projected-actual methodology for determining whether a major modificationhas occurred; (3) allow major stationary sources to comply with a Plantwide Applicability Limit (PAL) to avoid having a significant emissions increase that triggers the requirements ofthe majorNSRprogram; (4) provided a new applicabilityprovision for emissions units that are designated clean units; and (5) excluded pollution control projects (PCPs) from the definition of "physical change or change in the method ofoperation." OnNovember 7,2003 (68 FR 63021), EPA published a notice offinal action on its reconsideration ofthe 2002 NSR Reform Rules, which added a definition for "replacement unit" and clarified an issueregarding PALs. For additional information on the 2002 NSR Reform Rules, see, 67 FR 80186 (December 31, 2002), and http://www.epa.gov/nsr.
After the 2002 NSRReform Rules were finalized and effective (March 3, 2003), industry, state, and environmental petitioners challenged numerous aspects ofthe 2002 NSR Reform Rules, along with portions ofEPA's 1980 NSR Rules (45 FR 52676, August 7,1980). OnJune 24, 2005, the United States Court ofAppeals for the District ofColumbia (D.C. Circuit Court) issued
a decision on the challenges to the 2002 NSR Reform Rules. New York v. United States, 413
3F.3d 3 (New York 1). In summary, the D.C. Circuit Court vacated portions oftherules pertaining to cleanunits and PCPs, remanded a portion oftherules regardingrecordkeeping and the term "reasonablepossibility" found in 40 CFR 52.21(r)(6) and 40 CFR 5l.l66(r)(6), and eitherupheld
or did not comment on the otherprovisions included as part ofthe 2002 NSR Reform Rules. On June 13, 2007 (72 FR 32526), EPA took final action to revise the 2002 NSR Reform Rules to remove from federal law all provisions pertaining to clean units and the PCP exemption that
were vacatedbythe D.C. Circuit Court.

Withregard to the remanded portions ofthe 2002 NSR Reform Rules related to recordkeeping,
on December21,2007, EPA took final action to establish that a "reasonable possibility" applies where source emissions equal or exceed 50percent ofthe CAANSR significance levels for anypollutant (72 FR 72607). The "reasonablepossibility" provision identifies for sources and reviewing authorities the circumstances under which a major stationary source undergoing a modification that does not trigger majorNSRmust keep records. Finally, on January 19,2010, EPA denied a petition from theNatural Resources Defense Council (NRDC) and Sierra Club (SC) requesting EPA to reconsider and staytheWisconsin Department ofNatural Resources SIP revision that incorporated EPAs New Source Review Reforms of2002. Petitioners submitted comments arguing that these NSR Reform provisions were "backsliding", and thus prohibited underCAA sections 110(1) and 193. EPA approvedthe Wisconsin SIP revisions and addressed Petitioners' arguments aboutbackslidingby (l) notingthat the provisions hadbeen upheldbytheNew YorkI court, (2) that the general analysis that EPA had done to support the 2002 rule supported NSR Reform in Wisconsin, and (3) Petitioners had not provided any information orarguments demonstrating that the general analysis did not applyin Wisconsin, and that information in therecord countered Petitioners' specific arguments that the revisions wouldbebacksliding. Additionally, in response to comments, EPAperformed an analysis specific to Wisconsin to examine the impacts ofapplyingreform in that State. Our findings were consistent with those ofthe supplementary environmental analysis (SEA) for the 2002 reform rule (neutral).

NRDC v. Jackson: On June 16,2011, the u.S. Court ofAppeals for the Seventh Circuit (Seventh Circuit) denied thepetitions for review filed byNRDC and Sierra Club challenging EPA's approval ofthe 2002 NSR Reform provisions into the Wisconsin SIP. Theprimary issue addressed in the opinion was whether EPA's approval ofWisconsin's NSR SIP was backsliding prohibitedby CAA sections 110(1) and 193. The Courtheld that EPA's decision was not contraryto these provisions. First, the court found that Petitioners' arguments were a repeat of the arguments that theyhad made and lost inNew York 1. Second, the courtheld that the general analysis that supported the NSRReformprovisions when they were challenged after promulgation "supply substantial evidence for the EPA's decision [with respect to the Wisconsin SIP] and show that it is neither arbitrary or capricious." But, the court did note that some states have implemented theNSR Reform provisions and that the experience in those states might support orrefute EPA's conclusions and that "[a]t somepoint, preferring predictions over facts is
no longer rational." Analysis The2002 NSR Reform Rules required that state agencies adopt and submit revisions to their SIP permitting programs implementingthe minimum program elements ofthe 2002 NSR Reform Rules no laterthan January2,2006 (Consistent with changes to 40 CFR 51.166(a)(6)(i), state agencies are now required to adopt and submit SIP revisions within three years after new amendments arepublished in the Federal Register). State agencies maymeet therequirements of
440 CFRPart 51 and the 2002 NSR Reform Rules with different but equivalentregulations. For the purposes ofPSD, Maryland has incorporated byreference 40 CFR 52.21. For nonattainment NSR, the Statehas adopted regulations that in most respects track the federal rules. The proposed SIP revisions include onlythose provisions which were upheldbythe D.C. Circuit in 2005, and reaffirmed in the Seventh Circuit's denial ofthepetitionto reconsider EPA's approval ofNSR Reform into Wisconsin's SIP (NRDC v. Jackson).
With respect to Maryland's nonattainment NSRrules, a line-by-line comparison indicates that they vary from the federal 2002 NSR Reform rules in insignificant ways. Forinstance, the State's definition of"baseline actual emissions" for sources otherthan electric steam generating facilities has a five-year presumptive "look-back" period but allows a facility to request up to a 1

0 year look-back period ifit is more representative ofactual source operations. In addition, PALs are limited to a five year effective date, rather than ten years as allowed inthe federal rules. As noted above, states mayhave different but equivalent rules and in this regard, it is clear that Maryland's nonattainment NSR rules contain the basic elements for implementing NSR reform.
Section 110(1) ofthe CAA prohibits the approval ofa SIP revision which would interfere with any applicable requirement concerning attainment and reasonable further progress or any other applicable requirement ofthe CAA. EPA has determined that approval ofthe proposed revisions to COMAR 26.11.17 and the incorporation of40 CFR 52.21 will.not violate Section 110(1). The inherent checks and balances afforded bythe CAA have beenmaintained, including the independent obligation for attainment ofthe NAAQS. Nevertheless, the Seventh Circuit, in upholding EPA's approval ofthe Wisconsin NSR SIP rules, cautioned thatpredictions made when these rules werepromulgated should no longerberelied upon to demonstrate that NSR Reform is not a relaxation ofthe SIP. In fact, the proposed regulations have been in effect in Maryland since 2007, and several states, including Georgia, New York, and North Carolinahave had the NSR Reform regulations approved into their SIPs withno demonstrable linkbetween reform and a decrease in air quality or an interference with reasonable further progress. This is not surprising. NSR Reform only affects permitting ofmodifications to existing sources. Any growth occurring from new, greenfield sites would be controlled and permitted the sameboth pre- and post-reform. Therefore, any concerns about NSR Reform would berelated to unregulated growth from existing major sources. In the specific case ofMaryland, the State maintains a robust minorNSR program that specificallyregulates minor changes to major stationary sources. So while a facility may escape the requirements ofNSR, they do not escape the requirement to obtain a pre-construction permit that includes the requirement to monitor emissions after a change and mayalso include an air qualityimpact analysis. Finally, Maryland's demonstration ofreasonable further progress for nonattainment areas does notrely
on this NSRrule, but onothercontrol requirements such as Reasonably Available Control Technology (RACT).
Reasonable Possibility
As noted above, EPA took final action in Decemberof2007 to promulgate the "reasonable possibility"provisions which had beenremanded bythe D.C. Circuit in 2005 inNew YorkI. These are recordkeeping and reporting requirements for major stationary sources undergoing minormodifications. These requirements are included in the PSD regulations that Maryland has incorporatedbyreference. However, because Maryland's proposed non-attainment regulations
were effective and submitted to EPA in October of 2007, the submittal does notinclude the "reasonablepossibility" requirements promulgated on December 21, 2007 (72 FR72607).
5While these provisions are a required minimum program element, we note that inthe preamble to the final rule, we acknowledge that "State andlocal authorities may adopt ormaintainNSR program elements that have the effect ofmaking theirregulations more stringent thanthese rules." (72 FR 72614). Maryland maintains a robust minor NSRprogram, with recording keeping and reportingrequirements that are more stringent than the "reasonablepossibility" requirements. As further discussed in the preamble, "MinorNSR programs bydefinition apply to emissions increases less than the majorNSR significant level, and only activities that a State qualifies as "insignificant activities" under the SIP-approved program may be excluded from review. Thus, reviewing authorities have an opportunity to review virtually all projects causing
an emissions increasebefore constructionbegins. Moreover, ourregulations (40 CFR 51.161) provide for public review ofinformation submittedby owners/ operators for purposes ofminor NSRreview. Thus, informationprovided for purposes ofminorNSRprograms is also ofvalue in determining applicability ofmajor NSR" (72 FR 72613). On December 6, 2011, MDE submitted a letter acknowledging that the SIP approved regulations under COMAR 26.11.02 fulfill the requirements of40 CFR 5U65(a)(6) and (a)(6)(vi).

B. Related Infrastructure Requirements
CAA section 11O(a) imposes obligations upon states to submit a SIP submission "within 3 years (or such shorterperiod as the Administrator mayprescribe) after the promUlgation ofa national primary ambient air quality standard (or anyrevision thereof)." These SIP submissions are to provide for the "implementation, maintenance, and enforcement" ofsuch NAAQS. Section 110(a)(2) includes a list ofspecific elements that "[eJach suchplan" submission must meet. EPA has historicallyreferred to these particular submissions that states must make after the promulgation ofa new orrevised NAAQS as "infrastructure SIPs." This specific term does not appear inthe statute, but EPA uses the term to distinguish this particulartype ofSIP submission designed to address basic structural requirements ofa SIP from othertypes ofSIP submissions designed to address other different requirements, such as "nonattainment SIP" submissions required to address the nonattainmentplanningrequirements of part D, "regional haze SIP" submissions required to address the visibilityprotectionrequirements ofCAA section 169A, new sourcereview permittingprogram submissions required to address the requirements ofpart D, and a host ofother specific types ofSIP submissions that address other specificmatters. Although states typically have met manyofthebasic program elements required in section 110(a)(2) through earlier SIP submissions, states (including all the Region 3 states) were still required to submit SIP revisions that address section 110(a)(2) for the 1997 PM2.5 and 8-hour Ozone NAAQS and the 2006 PM2 .5 NAAQS. Maryland provided EPA withmultiple submittals to satisfY section 110(a)(2) requirements for the 1997 PM2.5 and 8-hour OzoneNAAQS and the 2006 PM2.5 NAAQS. Maryland's 11O(a)(2) submittals relating to the 1997 8-hour Ozone NAAQS were dated July 27,2007 and November 30, 2007. Maryland's 110(a)(2) submittals relating to the 1997 PM2

.5NAAQS were dated April 3, 2008 and April 16, 2010. And, Maryland's 11O(a)(2) submittals relating to the 2006 PM2

.5NAAQS were dated April 16,2010 and July 21,2010. These submissions addressed one ormore ofthe section 110(a)(2) requirements for each ofthese NAAQS.
On September 12, 2011 (76 FR 56130), EPA proposed to approve portions ofthese submittals. Final approval was granted on November 25, 2011 (76 FR 72624). EPA's approval ofeach of these submissions was limited to the following 110(a)(2) elements which were subjectto EPA's completeness findings pursuant to CAA section 11O(k)(l) for the 1997 8-hourozoneNAAQS

6dated March 27, 2008 and the 1997 PM2.5 NAAQS dated October 22, 2008: 11O(a)(2)(A), (B), (C), (D)(ii), (E), (F), (0), (H), (J), (K), (L), and (M), or portions thereof; and the following infrastructure elements for the 2006 PM25 NAAQS: 110(a)(2)(A), (B), (C), (D)(ii), (E), (F), (0), (H), (J), (K), (L), and (M), or portions thereof. See 76 FR 56130. EPA explicitly stated that such action did not include the portions of 110(a)(2)(C) and (J) as they pertainto a permit program as required byPart C ofTitle I ofthe CAA. EPA proposed approval ofthese submissions as theyrelated to all otherportions of 1l0(a)(2)(C) and (J). EPA also stated that such action did not include the portion of 11O(a)(2)(D)(i)(II) thatpertained to Part C ofTitle I or to visibility. A general discussion relating to Section 11O(a)(2) requirements maybe found in EPA's proposed approval. See 76 FR 56130.
Theproposed PSD SIP revisions in the present action relate to Maryland's compliance with the portions of 110(a)(2)(C), (D)(i)(II) and (J) which pertain to a permitprogram as required byPart C ofTitle I ofthe CAA. Maryland recognized that these SIP revisions are also related to its compliance with 110(a)(2) requirements inits June 22,2011 cover letter to EPA.
The proposed SIP revisions correct deficiencies identifiedbyEPA in the March 27, 2008 Federal Register action entitled, "Completeness Findings for Section 110(a) State Implementation Plans for the 8-hour OzoneNational Ambient Air Quality Standards (1997 Ozone NAAQS)" (73 FR 16205). The proposed SIP revisions address Maryland's compliance with the portion ofCAA Section 110(a)(2)(C) & (J) relating to the CAA'sparts C and D permitprograms for the 1997 Ozone NAAQS, because this proposed approval would approve regulating NOx as a precursor to ozone in Maryland's SIP in accordance with the Federal Register action dated November 29, 2005 (70 FR 71612) that finalized NOx as a precursor for ozone regulations set forth at 40 CFR 51.165 and in 40 CFR 52.21. Additionally, on August 4, 2011 (76 FR47090), EPA proposed to approve a submittal from MDE related to Maryland's PSD and non-attainment NSR programs. That submittalrevised and supplemented the preconstruction requirements for electric generating stations. On February 10, 2012, EPA granted limited approval ofthis submittal. See 77 FR 6963.
Based upon EPA's February 10, 2012 final action (approving SIP revisions that revised and supplemented thepreconstruction requirements for electric generating stations) and the proposed SIP revisions addressed in this current action, EPA is proposingto approve Maryland's submittals for purposes ofmeeting the requirements ofCAA sections 110(a)(2)(C), (D)(i)(II) and (J) relating to Maryland's PDS permitting program as necessary to implement, maintain, and enforce the 1997 8-hour ozone and PM25 NAAQS and the 2006 PM25NAAQS. EPA is also proposingto approve those portions ofMaryland's July 27,2007, April 3, 2008 and July 21, 2010 SIP submittals which relate to the portions of 110(a)(2)(C), (D)(i)(II) and (J) as they pertain to a permitprogram as required byPart C ofTitle I oftheCAA.
The relevant portion ofCAA section 11O(a)(2)(C) requires that-
"Each implementation plan

...shall

...include a program to provide for.

..regulation of the modification and construction of any stationary
source within the areas covered by the plan as necessary to assure that national ambient air quality standards are achieved, including a permit program as required in part[] C

...ofthis subchapter."

7The relevant portion ofCAA section 110(a)(2)(D)(i)(II) requires that-
"Each implementation plan

. . . shall

. . . contain adequate provisions prohibiting, consistent with this subchapter, any source or other type ofemissions activity within the State from emitting any air pollutant in amounts which will

...

. interfere with measures required to·be included in the applicable implementation plan for any other State under part C of this subchapter to prevent significant deterioration ofair quality

... "
The relevant portion ofCAA section 110(a)(2)(J) requires that-
"Each implementation plan

...shall.. .meet the applicable requirements of

...part C of this subchapter (relating to significant deterioration of air quality and visibilityprotection)." Maryland has made sufficient demonstration that its SIP meets the requirements ofllO(a)(2)(C), (D)(i)(II) and (J) which relate to Part C ofTitle I ofthe CAA. As stated above, for the purposes ofPSD, Maryland incorporates the federal regulations byreference. COMAR 26.11.06.14(8)(1) prohibits the construction, modification, oroperation ofany PSD source in a manner that would violate any provision of40 CFR 52.21. Fornon-attainment NSR, the Statehas adopted regulations that in most respects track the federal rules. The proposed SIP revisions include only those provisions which were upheld bythe D.C. Circuit in 2005, and reaffirmed inthe Seventh Circuit's denial ofthepetition to reconsider EPA's approval ofNSRReform into Wisconsin's SIP (NRDC v. Jackson). Byincorporatingbyreference the regulations set forth at 40 CFR 52.21, Marylandhas ensured that its SIP approved PSD program will be as stringent and as comprehensive as EPA's PSD regulations. Therefore, EPA proposes to find that Maryland has met its obligations pursuant to 1l0(a)(2)(C) that require its SIP to "include a program to provide for.

..regulation ofthe modification and construction ofany stationary source within the areas covered bythe plan as necessary to assure that national ambient air quality standards are achieved, including a permit program as required in part[] C

...ofthis subchapter." Upon final approval ofthe NSRlPSD SIP submissions at issue, Maryland will have a SIP approved PSD program that is consistent with current federal requirements in place. The permittingprogram is codified at 40 CFR 52.1070.
C. Greenhouse Gases
Below is an overview ofGHGs and GHG-emitting sources, the CAA PSD program, minimum SIP elements for a PSD program, and EPA'srecent actions regarding GHG permitting, as well as the relationship between the proposed Maryland SIP revision and EPA's othernational rulemakings, and EPA's analysis ofMaryland's SIP revision. Background
On June 23,2011, MDE submitted a draft revision to EPA for approval into the Maryland SIP to establish appropriate emission thresholds for determining which new ormodified stationary
sources become subject to Maryland's Prevention ofSignificant Deterioration (PSD) permitting requirements for GHG emissions. Maryland has chosen to adopt changes under COMAR
8consistent with those incorporated bythe Tailoring Rule on June 3,2010 (75 FR 31514). Final approval ofMaryland's June 23,2011, SIP revision will put in place the GHG emission thresholds for PSD applicability set forth in EPA's "Prevention ofSignificant Deterioration and Title V Greenhouse Gas Tailoring Rule," (the Tailoring Rule) Final Rule, 75 FR 31514 (June 3, 2010), ensuring that smaller GHG sources emitting less than these thresholds will notbe subject to permitting requirements. Pursuant to section 110 ofthe CAA, EPA is proposing to approve this revision into the Maryland SIP.
With regard to GHG's, the proposed action onthe Maryland SIP generallyrelates to four federal rulemaking actions. The first rulemaking is EPA's Tailoring Rule. The second rulemaking is EPA's "Action to Ensure Authority to Issue Permits Under the Prevention ofSignificant Deterioration Program to Sources ofGreenhouse Gas Emissions: Finding ofSubstantial Inadequacy and SIP Call," Proposed Rule (GHG SIP Call) 75 FR 53892 (September 2, 2010). The third rulemaking is EPA's "Action to Ensure Authority to Issue Permits Under the Prevention ofSignificant Deterioration Program to Sources ofGreenhouse Gas Emissions: Federal Implementation Plan," Proposed Rule, 75 FR 53883 (September 2,2010) (GHG FIP), which serves as a companionrulemaking to EPA's proposed GHG SIP Call. The fourth rulemaking is the "Limitation ofApproval ofPrevention ofSignificant Deterioration Provisions Concerning Greenhouse Gas Emitting-Sources in State Implementation Plans" 75 FR 82536 (Narrowing Rule) (December 30, 2010). A summary ofeach oftheserulemakings is described below.

In the first rulemaking, the Tailoring Rule, EPA established appropriate GHG emission thresholds for determining the applicability ofPSD requirements to GHG-emitting sources. In the second rulemaking, the GHG SIP Call, EPA proposed to find that the EPA-approved PSD programs in 13 States (not including Maryland) are substantiallyinadequate to meet CAA requirements because they do not appear to apply PSD requirements to GHG-emitting sources. For each ofthese States, EPA proposed to require the State (through a "SIP Call") to revise its SIP as necessary to correct such inadequacies. EPA proposed an expedited schedule for these States to submit their SIP revision, in light ofthe fact that on January 2,2011, certain GHGemitting sources would be subject to the PSD requirements and would not be able to obtain a PSD permit in order to construct or modify. In the third rulemaking, the GHG FIP, EPA proposed a FIP to apply in any state that is unable to submit, byits deadline, a SIP revision to ensure that the statehas authority to issue PSD permits for GHG-emitting sources. Because Maryland already has authority to regulate GHGs, Maryland is only seeking to revise its SIP to put in place the GHG emission thresholds for PSD applicability set forth in EPA'sTailoring Rule, thereby ensuring that smaller GHG sources emitting less than these thresholds are not subject to permitting requirements. In the Narrowing Rule, EPA limited its approval ofthose states' programs which had the authority to regulate GHG's, but lacked a vehicle to limit applicability to the higher thresholds established bythe Tailoring Rule.
Below is abriefoverview ofGHGs and GHG-emitting sources, the CAA PSD program, minimum SIP elements for a PSD program, and EPA's recent actions regarding GHG permitting. Following this section, EPA discusses, in sections III and IV, the relationship between the proposed Maryland SIP revision and EPA's othernational rulemakings as well as EPA's analysis ofMaryland's SIP revision.

9What are GHGs and their sources?

A detailed explanation ofGHGs, climate change and the impact onhealth, society, and the environment is included in EPA's technical support document for EPA's GHG endangerment finding final rule (Document ID No. EPA-HQ-OAR-2009-0472-11292 at \vww.regulations.gov). The endangerment finding rulemaking is discussed later inthis rulemaking. A summaryofthe nature and sources ofGHGs is providedbelow.
GHGs trap the Earth's heat that would otherwise escape from the atmosphere into space and form the greenhouse effect that helps keep the Earth warm enough for life. GHGs are naturally present in the atmosphere and are also emitted byhuman activities. Human activities are intensifYing the naturally occurring greenhouse effect byincreasingthe amount ofGHGs in the atmosphere, which is changing the climate in a way that endangers humanhealth, society, and the natural environment.
Some GHGs, such as carbon dioxide (C02 ), are emitted to the atmosphere through natural processes as well as human activities. Other gases, such as fluorinated gases, are created and emitted solelythrough human activities. The well-mixed GHGs ofconcern directly emittedby human activities include C02, methane (CH4 ), nitrous oxide (N20), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6), hereafterreferred to collectively as "the six well-mixed GHG," or, simply, GHGs. Together these six well-mixed GHGs constitute the "airpollutant" upon which the GHG thresholds in EPA's Tailoring Rule are based. These six gases remain in the atmosphere for decades to centuries where theybecome well-mixed globally in the atmosphere. When they are emitted more quickly than natural processes can remove them from the atmosphere, their concentrations increase, thus increasing the greenhouse effect.

In the United States, the combustion offossil fuels (e.g., coal, oil, gas) is the largest source of C02 emissions and accounts for 80percent ofthe total GHG emissions by mass. Anthropogenic C02 emissions released from a variety ofsources, including through theuse offossil fuel combustion and cement production from geologically stored carbon (e.g., coal, oil, and natural gas) that is hundreds ofmillions ofyears old, as well as anthropogenic CO2emissions from landuse changes such as deforestation, perturb the atmospheric concentration ofC02, and the distribution ofcarbon within different reservoirs readjusts. More than halfofthe energy-related emissions come from large stationary sources such as powerplants, while about a third come from transportation. Ofthe six well-mixed GHGs, four (C02, CH4, N2 0, and HFCs) are emitted bymotor vehicles. In the United States, industrial processes (such as the production ofcement, steel, and aluminum), agriculture, forestry, other land use, and waste management are also important sources ofGHGs.
Different GHGs have different heat-trapping capacities. The concept ofGlobal Warming Potential (GWP) was developed to compare theheat-trapping capacity and atmospheric lifetime ofone GHG to another. The definition ofa GWP for a particular GHG is the ratio ofheat trapped byone unit mass ofthe GHG to that ofone unitmass ofC02 over a specified time period. When quantities ofthe different GHGs are multipliedbytheir GWPs, the different GHGs can be summed and compared on a carbon dioxide equivalent (C02 e) basis. For example, CH4has a GWP of21, meaning each ton ofCH4 emissions would have 21 times as muchimpact
on global warming over a 1 OO-year time horizon as 1 ton ofCO2emissions. Thus, on the basis ofheat-trapping capability, 1ton ofCH4 would equa121 tons ofC02e. The GWPs ofthenonC02 GHG range from 21 (for CH4 ) up to 23,900 (for SF6). Aggregating all GHG on a C02e

10basis at the source level allows a facility to evaluate its total GHG emissions contributionbased
on a single metric.
What are the general requirements ofthe PSD program?
Overview ofthePSD Program
The PSD program is a preconstruction review and permittingprogram applicable to new major stationary sources and majormodifications at existing stationary sources. The PSD program applies in areas that are designated "attainment" or "unclassifiable" for a national ambient air quality standard (NAAQS). The PSD program is contained in part C oftitle I ofthe CAA. The "nonattainment new source review (NSR)"program applies in areas not in attainment ofa NAAQS or in the Ozone Transport Region, and it is implemented under the requirements ofpart D oftitle I ofthe CAA. Collectively, EPA commonlyrefers to these two programs as the major NSRprogram. The governing EPA rules are contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and part 51, Appendices S and W. There is no NAAQS for C02 or any ofthe other well-mixed GHGs, nor has EPA proposed any such NAAQS; therefore, unless and until EPA takes such further action, the nonattainment NSRprogram does not apply to GHGs.
The applicability ofPSD to aparticular source mustbe determined in advance ofconstruction or modification and is pollutant-specific. Theprimary criterion in determining PSD applicability for a proposed new ormodified source is whether the source is a "major emitting facility," based
on its predicted potential emissions ofregulated pollutants, within the meaning ofCAA section 169(1) that either constructs or undertakes a modification. EPA has implemented these requirements in its regulations, which use somewhat different terminology than the CAA does, for determining PSD applicability. Major Stationary Source
Under PSD, a "major stationary source" is any sourcebelongingto a specified list of28 source categories that emits orhas the potential to emit (PTE) 100 tons per year (tpy) ormore ofany air pollutant subject to regulation under the CAA, or any other source type that emits orhas the potential to emit such pollutants in amounts equal to or greater than 250 tpy. Werefer to these levels as the 100/250-tpy thresholds. A new source with a potential to emit (PTE) at or above the applicable "major stationary source threshold" is subject to majorNSR. These limits originate from section 169 ofthe CAA, which applies PSD to any "major emitting facility" and defines theterm to include any sourcethat emits orhas a PTE of 100 or250 tpy, depending on the source category. Note that the major source definition incorporates the phrase "subjectto regulation," which, as described later, includes GHGs, under ourinterpretation ofthat phrase as discussed in the recent memorandum entitled, "EPA's Interpretation ofRegulations that Determine Pollutants Covered byFederal Prevention ofSignificant Deterioration (PSD) Permit Program." 75 FR 17004 (April 2, 2010). MajorModifications
PSD also applies to existing sources that undertake a "majormodification," which occurs when: (l) there is a physical change in, or change in the method ofoperation of, a "major stationary source;" (2) the change results in a "significant" emissions increase ofa pollutant subject to regulation (equal to or above the significance level that EPA has set for thepollutant in 40 CFR 52.21(b)(23)); and (3) there is a "significant net emissions increase" ofa pollutant subject to
11regulation that is equal to or above the significance level (defined in 40 CFR 52.21(b)(23». Significance levels, which EPA has promulgated for criteria pollutants and certain other pollutants, represent a de minimis contribution to air quality problems. When EPAhas not set a significance level for a regulated NSRpollutant, PSD applies to an increase ofthe pollutant in any amount (that is, in effect, the significance level is treated as zero).
General Requirements for PSD
This section provides a very briefsummary ofthe mainrequirements ofthe PSD program. One principal requirement is that a new major source ormajor modification must applybest available control technology (BACT), which is determined on a case-by-casebasis taking into account, among other factors, the cost effectiveness ofthe control and energy and environmental impacts. EPA has developed a "top-down" approach for BACT review, which involves a decision process that includes identification ofall available control technologies, elimination oftechnically infeasible options, ranking ofremaining options by control and cost effectiveness, and then selection ofBACT. UnderPSD, once a source is determined to bemajor for anyregulated NSR pollutant, a BACT review is performed for each attainment pollutantthat exceeds its PSD significance level as part ofnew construction orfor modification projects at the source, where there is a significant increase and a significant net emissions increase ofsuch pollutant.]

In addition to performing BACT, the source must analyze impacts on ambient air qualityto assure that sources do not cause or contribute to violation ofanyNAAQS or PSD increments and must analyze impacts on soil, vegetation, and visibility. In addition, sources ormodifications that would impact Class I areas (e.g., national parks) maybe subjectto additional requirements to protect air qualityrelated values (AQRVs) that havebeen identified for such areas. Under PSD, ifa source's proposed project mayimpact a Class I area, the Federal Land Manageris notified and is responsible for evaluating a source's projected impact on the AQRVs and recommending either approval ordisapproval ofthe source's permit applicationbased on anticipated impacts. There are currentlyno NAAQS or PSD increments established for GHGs, and therefore these PSD requirements would not apply for GHGs, even when PSD is triggered for GHGs. However, ifPSD is triggered for a GHG-emitting source, all regulated NSR pollutants that the new source emits in significant amounts wouldbe subject to PSD requirements. Therefore, ifa facility triggers NSR for non-GHG pollutants for which there are established NAAQS orincrements, the air quality, additional impacts, and Class I requirements would applyto those pollutants.

Pursuant to existing PSD requirements, the permitting authority must provide notice ofits preliminarydecision on a source's application for a PSD permit and must provide an opportunity for commentbythe public, industry, and otherinterested persons. After considering and responding to comments, the permitting authority must issue a final determination on the constructionpermit. UsuallyNSRpermits are issuedby a state orlocal air pollution control agency that has its own authority to issue PSD permits under a permit program that has been approved byEPA for inclusion in its SIP. In some areas, EPA has delegated its authority to issue PSD permits under federal regulations to the state orlocal agency. In other areas, EPA issues the permits under its own authority.

I EPA notes that the PSD programhas historically operated inthis fashion for all pollutants--when new sources or modifications are "major," PSD applies to all pollutants that are emitted in significant quantities from the source or project. This rule does not alter that for sources or modifications that are major due to their GHG emissions. 12What are the CAA Requirements to include the PSD Program in the SIP?

As stated above, the CAA contemplates that the PSD program beimplemented in the first instancebythe states and requires that states include PSD requirements in their SIPs. CAA section 11O(a)(2)(C) requires that-

"Each implementation plan

...shall

...include a program to provide for.

..regulation of the modification and construction of any stationary
source within the areas covered by the plan as necessary to assure that national ambient air quality standards are achieved, including a permit program as required inpart[] C

...ofthis subchapter."

CAA section 11O(a)(2)(J) requires that-
"Each implementation plan

...shall

...meet the applicable requirements of

...part C of this subchapter (relating to significant deterioration of air quality and visibilityprotection)."

CAA section 161 provides that

- "Each applicable implementation plan shall contain emission limitations and such other measures as may be necessary, as determined under regulations promulgated under this part [C], to prevent significant deterioration ofair quality for such region

...designated

...as attainment or unclassifiable."
Theseprovisions, read in conjunction with the PSD applicabilityprovisions as well as other provisions such as the BACTprovision the under CAA Section 165(a)(4), mandate that SIPs include PSD programs that are applicable to, among otherthings, any air pollutant that is subject to regulation. As discussed below, this includes GHGs on and after January 2,2011.2 A number ofstates do not have PSD programs approved into their SIPs. In those states, EPA's regulations at 40 CFR 52.21 govern, and eitherEPA orthe state as EPA's delegatee acts as the permitting authority. However, most states have PSD programs thathave been approved into their SIPs, and these states implement their PSD programs and act as thepermitting authority.
What Actions Has EPA Taken Concerning PSD Requirements for GHG-emitting Sources?

a. What are the Endangerment Finding, the Light DutyVehicle Rule, and the Johnson Memo Reconsideration? Bynotice dated December 15,2009, and pursuant to CAA section 202(a), EPA issued two findings regarding GHGs that are commonlyreferred to as the "EndangermentFinding" and the "Cause or Contribute Finding." "Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) ofthe Clean AirAct," 74 FR 66496. Inthe

2 In the Tailoring Rule, EPA noted that commenters argued, with some variations, that the PSD provisions applied only to NAAQS pollutants, and not GHG, and EPA responded that the PSD provisions apply to all pollutants subject to regulation, including GHG. See 75 FR 31560-62 (June 3, 2010). EPA maintains its position that the PSD provisions apply to all pollutants subject to regulation, and the Agencyincorporates byreference the discussion of this issue in the Tailoring Rule. 13Endangerment Finding, the Administrator found that six long-lived and directly emitted GHGsC02, CH4, N20, HFCs, PFCs, and SF6-mayreasonablybe anticipated to endanger publichealth and welfare. 

### In the Cause or Contribute Finding, the Administrator "define[d] the airpollutant
as the aggregate group ofthe same six

...greenhouse gases," 74 FR 66536, and found that the combined emissions ofthis air pollutant from new motor vehicles and new motor vehicle engines contribute to the GHG air pollution that endangers public health and welfare. Bynotice dated May7, 2010, EPA published what is commonlyreferred to as the "Light-Duty Vehicle Rule" (LDVR), which for the first time established federal controls on GHGs emitted from light-duty vehicles. "Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule." 75 FR 25324. In its applicability provisions, the LDVR specifies that it "contains standards and otherregulations applicable to the emissions ofsix greenhouse gases," including CO2, CH4, N20, HFCs, PFCs, and SF6. 75 FR 25686 (40 CFR 86.1818-12(a». Shortlybefore finalizing the LDVR, bynotice dated April 2, 2010, EPApublished a notice commonlyreferred to as the Johnson Memo Reconsideration. On December 18, 2008, EPA issued amemorandum, "EPA's Interpretation ofRegulations that Determine Pollutants CoveredbyFederal Prevention ofSignificant Deterioration (PSD) Permit Program" (known as the "Johnson Memo"or the "PSD Interpretive Memo," and referredto in this preamble as the "Interpretive Memo"), that set forth EPA's interpretation regarding which EPA and state actions, with respect to a previously unregulated pollutant, cause thatpollutant to become "subject to regulation" under the CAA. Whether a pollutant is "subject to regulation" is important for the purposes ofdetermining whether it is covered underthe federal PSDpermitting program. The Interpretive Memo established that a pollutant is "subjectto regulation" onlyifit is subject to either a provision inthe CAA orregulation adopted byEPA under the CAA that requires actual control ofemissions ofthatpollutant (referred to as the "actual control interpretation"). On February 17, 2009, EPA granted a petition for reconsideration onthe Interpretive Memo and announced its intent to conduct a rulemaking to allow for public comment on the issues raised inthe memorandum and on related issues. EPA also clarified that the Interpretive Memo would remain in effect pending reconsideration.
On March 29,2010, EPA signed a notice conveying its decision to continue applying (with one limited refinement) the Interpretive Memo's interpretation of"subject to regulation" ("Interpretation ofRegulations that Determine Pollutants Coveredby Clean Air Act Permitting Programs," 75 FR 17004). EPA concluded that the "actual control interpretation" is the most appropriate interpretation to apply given the policyimplications. However, EPA refined the Agency's interpretation in one respect: EPA established that PSD permittingrequirements apply to a newly regulated pollutant at the time a regulatory requirement to control emissions ofthat pollutant "takes effect" (rather than upon promulgation or the legal effective date ofthe regulation containing such a requirement). In addition, based onthe anticipated promulgation of the LDVR, EPA stated that the GHG requirements ofthe vehicle rule would take effect on January 2, 2011, because that is the earliest date that a 2012 model year vehicle maybe introduced into commerce. In other words, the compliance obligationunderthe LDVR does not occuruntil a manufacturer mayintroduce into commerce vehicles that are required to comply with GHG standards, which will begin with model year 2012 and will not occurbefore January 2,2011.
b. What is EPA'sTailoring Rule?
On June 3, 2010 (effective August 2,2010), EPA promulgated a final rulemaking, the Tailoring Rule, for the purpose ofrelieving overwhelmingpermittingburdens that would, in the absence of
14the rule, fall on permitting authorities and sources 75 FR 31514. EPA accomplished this by tailoring the applicability criteria that determine which GHG emission sources become subject to the PSD program3 ofthe CAA. Inparticular, EPA established in the Tailoring Rule a phase-in approach for PSD applicability and established the first two steps ofthe phase-in for the largest GHG-emitters. Additionally, EPA committed to certain follow-up actions regarding future steps beyond the first two, discussed in more detail later in this notice.

For the first step ofthe Tailoring Rule, which began onJanuary 2, 2011, PSD requirements apply to major stationary source GHG emissions onlyifthe sources are subject to PSD anyway due to their emissions ofnon-GHG pollutants. Therefore, in the first step, EPA did not require sources ormodifications to evaluate whether they are subject to PSD requirements solely on account of their GHG emissions. Specifically, for PSD, Step I requires that as ofJanuary 2,2011, the applicable requirements ofPSD, most notably, the BACTrequirement, apply to projects that increasenet GHG emissions by at least 75,000 tpy C02e, but only ifthe project also significantly increases emissions ofat least one non-GHG pollutant.
The second step oftheTailoring Rule, which began on July I, 2011, phased in additional large
sources ofGHG emissions. New sources that emit, orhave the PTE, at least 100,000 tpy C02e
are subject to the PSD requirements. In addition, sources that emit orhave the PTE at least 100,000 tpy C02e and that undertake a modification that increases net GHG emissions by at least 75,000 tpy C02e are also be subject to PSD requirements. Forboth steps, EPA notes that if
sources ormodifications exceed these C02e-adjusted GHG triggers, they are not coveredby permitting requirements unless their GHG emissions also exceed the corresponding mass-based

. triggers in tpy.
EPA believes that the costs to the sources and the administrativeburdens to the permitting authorities ofPSDpermitting will be manageable at the levels in these initial two steps and that it wouldbe administratively infeasibleto subject additional sources to PSD requirements at those times. However, EPA also intends to issue a supplemental notice ofproposed rulemaking in 2011, in which the Agency will propose or solicit comment on a third step ofthe phase-in that would includemore sources, beginning on July I, 2013. Inthe Tailoring Rule, EPA established
an enforceable commitment that the Agency will complete this rulemakingbyJuly I, 2012, which will allow 1year's noticebefore Step 3 would take effect.

In addition,EPA committed to explore streamlining techniques that maywell make the permittingprograms much more efficient to administer for GHG, and that therefore may allow their expansionto smaller sources. EPA expects that the initial streamliningtechniques will take several years to develop and implement.

In the Tailoring Rule, EPA also included a provision, that no source with emissions below 50,000 tpy C02e, and no modificationresulting in net GHG increases ofless than 50,000 tpy C02e, will be subject to PSD permittingbefore at least 6 years (i.e., April 30, 2016). This is because EPA has concluded that atthe present time, the administrativeburdens that would accompany permitting sources below this level would be so great that even with the streamlining actions that EPAmaybe able to develop and implement inthenext several years, and even with the increases in permitting resources that EPA can reasonably expect thepermitting authorities to

3The Tailoring Rule also applies to the title V program, which requires operating permits for existing sources. However, today's action does not affect Virginia's title V program. 15acquire, it would be impossible to administer the permit programs for these sources until at least 2016.
As EPA explained inthe Tailoring Rule, the thresholdlimitations are necessarybecausewithout it, PSD applies to all stationary sources that emit or have the PTE more than 100 or 250tons of GHG per year, beginning on January 2, 2011. This is the date when EPA's recently promulgated LDVR took effect, imposing control requirements for the first time on COz and other GHGs. If this January 2,2011, date had passed without the Tailoring Rulebeing in effect, PSD requirements would have applied to GHG emissions at the 1001250tpy applicability levels provided under a literal reading ofthe CAA as ofthat date. From that point forward, a source ownerproposing to construct any new major source that emits at orhigher than the applicability levels (and which therefore maybe referred to as a "major" source) ormodify any existingmajor
source in a waythat would increase GHG emissions would need to obtain a permit underthe PSD program that addresses these emissions before construction or modification couldbegin.
Underthese circumstances, many small sources would be burdenedbythe costs ofthe individualized PSD control technology requirements and permit applications that the PSD provisions, absent streamlining, require. Additionally, state and local permitting authorities would beburdened bythe extraordinary number ofthese permit applications, which are orders of magnitude greater than the current inventory ofpermits and would vastly exceed the current administrativeresources ofthe permitting authorities. Permit gridlock would result since the permitting authorities would likelybe able to issue only a tiny fraction ofthepermits requested.

In the Tailoring Rule, EPA adopted regulatory language codifying the phase-in approach. As explained in thatrulemaking, many state, local and tribal area programs will likelybe able to immediately implement the approach without rule or statutory changes by, for example, interpreting the term "subject to regulation" that is part ofthe applicabilityprovisions for PSD permitting. EPA requested permitting authorities to confirm that they will follow this implementation approach for theirprograms, and ifthey could not, then EPA requested thatthey notify the Agency so that we could take appropriate follow-up action to narrow federal approval oftheir programs before GHGs became subject to PSD permitting on January 2,2011. On August 2, 2010, Maryland provided a letterto EPA with confirmation that the State has the authority to regulate GHG in its PSD and title V programs, but lacked the authority to interpret "subject to regulation" as defined in the Tailoring Rule without additional rulemaking. Seethe docket for this proposed rulemaking for a copy ofMaryland's letter.

c. What is the GHG SIP Call? ByFederal Register notice dated September2,2010, EPA proposed the GHG SIP Call. In that action, along with the companion GHG FIP rulemakingpublished at the same time, EPA took steps to ensure that in the 13 States that did not appear to have authority to issue PSD permits to GHG-emitting sources at present, eitherthe State or EPA would have the authority to issue such permits byJanuary 2, 2011. EPA explained that although for most states, eitherthe state or EPA is already authorized to issue PSD permits for GHG-emitting sources as ofthat date, our preliminaryinformation showed that these 13 States have EPA-approved PSD programs that did not appear to include GHG-emitting sources and therefore did not appear to authorize these States to issue PSD permits to such sources. Therefore, EPAproposed to find that these 13 States' SIPs were substantiallyinadequate to complywith CAArequirements and, accordingly, proposed to issue a SIP Call to require a SIP revision that applies their SIP PSDprograms to GHG-emitting sources. In the companion GHG FIP rulemaking, EPA proposed aFIP that would
16give EPA authorityto apply EPA's PSD program to GHG-emitting sources in any State that is unable to submit a corrective SIP revision byits deadline. Maryland was not one ofthe States for which EPA proposed a SIP Call.
What is the Relationship Between Today's Proposed Action and EPA's Proposed GHG SIP Call and GHG FIP?
As noted above, bynotice dated September 2, 2010, EPA proposed the GHG SIP Call. At the
sametime, EPA proposed a FIP to apply in any state that is unable to submit, byits deadline, a SIP revision to ensure that the state has authority to issue PSD permits to GHG-emitting
sources.4 As discussed earlier, Maryland interprets its current PSD regulations as providing them with the authority to regulate GHG, and as such, Maryland is not included on the list of
areas for the proposed SIP call. Additionally, Maryland would notbe subjectto the FIP to implement GHG for PSD applicability. Maryland's June 23,2011,proposed SIP revision (the subject ofthis rulemaking) merely modifies Maryland's SIP to establish appropriate thresholds for determining which stationary sources and modification projects become subjectto permitting requirements for GHG emissions under the PSD program ofthe CAA.
d. What is the Narrowing Rule?

EPA finalized the "Limitation ofApproval ofPrevention ofSignificant Deterioration Provisions Concerning Greenhouse Gas Emitting-Sources in State Implementation Plans" (75 FR 82536), also known as the "Narrowing Rule" on December 30, 2010. Narrowing EPA's approval ensured that for federal purposes, sources with GHG emissions that are less than the TailoringRule's emission thresholds were not obligated under federal law to obtain PSD permits during the gap between when GHG PSD requirements went into effect on January 2,2011 and when either (1) EPA approves a SIP revision adopting EPA's tailoring approach, or (2) ifa state opts to regulate smaller GHG-emitting sources, the state demonstrates to EPA that ithas adequateresources to handle permitting for such sources. Maryland was one ofthe states impacted bythe Narrowing Rule. With the regulations submitted in the proposed SIP revision, Maryland has adopted EPA's tailoring approach.
The thresholds that EPA established in the Tailoring Rule are based on C02e for the aggregate sum ofsix GHGs that constitute the pollutant that will be subject to regulation, which we refer to as GHG. 5 These gases are: C02, CH4, N20, HFCs, PFCs, and SF6• Thus, in EPA's Tailoring Rule, EPA provided that PSD applicability is based on the quantity that results when the mass emissions ofeach ofthese gases is multipliedbythe GWP ofthat gas, and then summed for all six gases. However, EPA further provided that in order for a source's GHG emissions to trigger PSD requirements, the quantity ofthe GHG emissions must equal or exceedboth the applicability thresholds established in the Tailoring Rule on a C02ebasis and the statutory thresholds of 100 or 250 tpy on a mass basis.6 Similarly, in order for a source to be subject to the

4As explained in the proposed GHG SIP Call (75 FR 53892, 53896), EPA intends to finalize its finding of substantial inadequacy and the SIP call for the 13 listed states byDecember 1, 2010. EPA requested that the states for which EPA is proposing a SIP call identify the deadline-between 3 weeks and 12 months from the date of signature ofthe final SIP Call-that they would accept for submitting their corrective SIP revision. S The term "greenhouse gases" is commonly used to refer generally to gases that have heat-trapping properties. However, in this notice, unless noted otherwise, we use it to refer specifically to the pollutant regulated in the LDVR.

6The relevant thresholds are 100 tpy for title V, and 250 tpy for PSD, except for 28 categories listed in EPA 17PSD modification requirements, the source's net GHG emissions increase must exceedthe applicable significance level on a COze basis and must also result in a net mass increase ofthe constituent gases combined.

IV. Summary ofChanges
A. SIPRevision #07-13
COMAR 26.11.17 NonattainmentProvisions for Major New Sources and Major Modifications The following is a briefsummary ofthe changes.
fi

.. Regulation .01: De llltIons Section Status Description .01B(l} Modified text· Clarified definition of"actual emissions" .0IB(3)(a)- Modified text Added definition of""Baseline Actual Emissions" ("BAE") and (t) guidelines for calculating them; .0IB(3)(b) is for existing EGU's; (c) is for existingunits other than EGU's; (d) is for new units; (e) proscribes how to calculate BAE for a Plantwide Applicability Limit ("PAL"); (t) is general provisions

. .01B(5) Modified text Re-ordered definition ofBest Available Control Technology ("BACT") [Formerly .0IB(3)]; clarified that BACTrequirements apply to "regulated NSR pollutants" .0IB(6) Modified text Re-ordered definition of"building, structure, facility, or installation" [formerly .01B(5)]; removed (a)(ii): reference to outer continental shelf .0IB(8) Modified text Re-orderedlclarified definition of"construction" [formerly .01B(7)] .0IB(9) Modified text Added definition of"electricutility steam generatingunit" .0IB(10) Modified text Added definition of"Emissions Reduction Credit (ERC)" .01B(1l} Modified text Re-ordered definition of"emissions unit" [formerly .0IB(8)]; revised definition to morebroadly apply definition to "regulated NSR pollutant(s)" [formerly onlyVOC, NOx, and CO applied] .0IB(12) Modified text Added definition of"existing emissions unit" .0IB(13) Modified text Re-ordered and clarified definition of"federally enforceable" [formerly.01B(921 .0IB(14) Re-ordered Formerly .0IB(10); Textunchanged .0IB(15) Modified text Re-ordered and clarified definition of"LowestAchievable Emission Rate" [formerly .0IB(11)] .01B(16) Modified text Re-ordered [formerly .0IB(12)]; Revised definition of"Major Modification"to applyto "anyregulated NSRpollutant", "significant emissions increases", and "major stationary sources"; includes PAL exclusion

regulations for which the PSD threshold is 100 tpy.

18Section Status Description .01B(17) Modified text Re-ordered [formerly .0IB(13)]; Revised definition of"Major Modification"
.0IB(18) Re-ordered Formerly .0IB(14); text unchanged .01B(19) Modified text Re-ordered [formerly .0IB(1S)]; Revised definition of"Net Emissions Increase"
.01B(20) Modified text Added definition of"New Emissions Unit" .0IB(21) Re-Ordered Formerly .0IBI6; text unchanged .01B(22) Modified text Added definition of"project" .0IB(23) Modified text Added definition of"Projected Actual Emissions" .0 1 B(24) Modified text Added definition of"RegulatedNSR Pollutant" .01B(2S) Modified text Added definition of"Replacement Unit" .0IB(26) Modified text Re-ordered [formerly .01B(18)]; clarified significant emission rates .01B(27) Modified text Re-ordered [formerly .01B(18)]; clarified definition of"Stationary Source"

Rel!.ulation.02: Applicabilin Section Status Description .02A Modified text Clarified statewide applicability .02B Modified text Clarification .02D Modified text Clarified possible additional applicability ofPSD requirements for attainment areas .02F Modified text Deleted existing; replaced with definition ofwhen a project is a major modification [.02F(1)] and procedures for applicability tests [.02F(2)(a)-(c)] .020 Modified text Clarified applicability to sources whichbecome majorby virtue ofrelaxation ofsynthetic minor limits .02H Modified text Clarified applicable regulations to sources with PAL's .021 Modified text Clarified applicability ofregulations to sources in attainment
areas where the new construction ormodification wouldresult in
a violation ofthe NAAQS



### R I· 03 G

el!.u atlOU. : eneraIe dT on I Ions Section Status Description .03A Modified text Clarification .03B(2) Modified text Clarification .03B(3) Modified text Clarification ofemission offset ratios for reasonable further progress; Deleted .03B(3)(c) [CO ratio] .03B(S) Modified text Changed timeframe ofrequirement that ERC'sbe federally 19Section Status Description enforceable to before commencement of construction. [Formerly beforepermitto construct was issued] .03B(7) Modifiedtext Clarified the quantity ofemissions required to be offset .03C Modifiedtext Clarified LAER requirements for phased construction .03D Modifiedtext Clarification .03E Modified text Synthetic minor requirements .03F Modified text Retroactive applicability ofregulations to synthetic minor facilities that becomemajor

Regulation .04: CreatingEmission Reduction Credits (ERCs) *NOTE: Existing Regulations .04 and .OS were repealed and replaced intheir entiretywith the sections below Section Status Description .04A Added Guidelines for creating NOx and VOC ERC's [.04A(J)-(3)] .04B Added Procedures for establishingERC's [.04B(J)-(3)] .04C Added Quantification and use ofERC's [.04C(J)-(6)] .04D Added Location ofERC's [.04D(l),(2)] .04E Added Exclusions and limitations [.04E(J)-(3)] Regulation .05: TransferringEmission Reduction Credits *NOTE: Existing Regulations .04 and .OS were repealed and replaced intheir entiretywith the sections below Section Status Description .OSA Added Required information for creating ERC's [.OSA(l)-(S)] .OSB Added Requirement that ERC'sbe certified .OSC Added Procedure for certifying ERC's [.OSC(J),(2)] Regulation .06: TransferringEmission Reduction Credits *NOTE: Regulations.06 D" b I

- .09 are new. escnptIOns eow Section Status Description .06A Added ERC maybe transferred after it has been certified and is federally enforceable .06B Added Prohibition against using ERCs in a manner that would violate State or federal emission standard/requirement .06C Added Prohibition against transfer for any purpose otherthan offsets through federally enforceablepermit to construct .06D Added Requirements for MD sources using ERCs generated in other states [.06D(l)-(3)]

Regulation .07: PlantwideApplicabilityLimit (PAL)

- General

. 06 09 D" b I *NOTE: RegulatIOns. 

## - are new. escnptIOns eow Section Status Description .07A Added Applicability [.07A(l)-(3)] .07B Added Definitions [.07B(l)-(JS)]

20Regulation .08: Plantwide ApplicabilityLimit (PAL)

- Permits *NOTE' Regulations 06

- 09 are new Descriptions below Section Status Description .08A Added Application requirements .08B Added Establishing the PAL limit [.08B(I)-(4)1 .08C Added Issuance ofPAL permits [.08(1),(2)] .08D Added General requirements [.08(1)-(6)] .08E Added Expiration ofPALs [.08E(1)-(7)] .08F Added Re-opening a PAL [.08F(1)-(3)] .08G Added Renewal ofaPAL [.08G(I)-(5)] .08H Added Increasing a PAL [.08H(I)-(3)] Regulation .07: PlantwideApplicability Limit (PAL)

- Monitoring, Recordkeeping, and Reporting *NOTE R I' 06 09 D b I egu atlOns.



### - are new. escnptlOns eow Section Statns Description .09A Added Monitoring and Recordkeeping Requirements [.09A(1)-(14)] .09B Added Reporting requirements [.09B(1)-(3)]

B. SIPREVISION#09-03
COMAR 26.11.06: General Emission Standards, Prohibitions, and Restrictions The following is a briefsummary ofthe changes.

R It'

e2u a Ion.14 C t I fPSD S : on ro 0 ources Section Status Description .14A Modified text Clarified definition of"Administrator" as used in 40 CFR §§52.21 and 51.166 .14B(2) Modified text Clarified definition of"Reviewing Authority" as used in 40 CFR §§52.21 and 51.166

C. SIPREVISION #11-02
COMAR 26.11.01 GeneralAdministrative Provisions (Terms Defined) Th fill b'f fh h e 0 owmg IS a ne summary 0 tee anges. Section Status Description .01B(6-1) Revised/Reordered Added definition ofC02e .01B(l8-1) Added Definition ofgreenhouse gases .01B(37) Modified Updated federal incorporationbyreference date in the Definition of regulatory text to the July 1, 2009 edition ofthe CFR, "as Prevention of amended bythe tailoring rule" for all air emission units. Sigoificant Modified B(37)(a),(b) to exclude greenhouse gases from Deterioration 100/250 ton/year applicabilitythresholds. Added B(37)(c),(d) (PSD) source to incorporate Tailoring Rule thresholds for greenhouse gases

21COMAR 26.11.02 Permits,Approvals, and Registration The following is a briefsummary ofthe changes Section Status Descr!J!tion .0IB(44)(f) Added Added ORO to definition of"regulated air pollutant" .01 (C)(1)(d) Added Added ORO to definition of"Major Source" .l2(A)(2) Added Added ORO sources to those subject to the permitting procedures ofRegulation .12

COMAR 26.11.06 General Emission Standards, Prohibitions, and Restrictions Th 611

. b'f ffu h e 0 owmg IS a ne summary 0 e c anges. Section Status Description .14 B(1) Modifiedtext Updated federal incorporationbyreference date intheregulatory text to fue July I, 2009 edition ofthe CFR, "as amendedbythe tailoring rule" for all air emission units.

The following items wereprovided by Maryland in support ofthis SIP Revision Request. This infonnation was provided in the State's Technical Support Document:
I. Sources Affectedbythis SIP Revision These regulations affect new and major modification sources in attainment areas in Maryland with emissions ofanypollutant subject to regulation underfue Clean Air Act. A new source is subject to PSD requirements ifit is within a listed source category with emissions ofat least 100 tons peryear or a non-listed source with emissions ofat least 250 tons peryear or more ofany regulatedpollutant. Existing major sources undergoing amajormodification will be subject to PSD requirements iffuemodification causes an increase in emissions of40 tons ormoreperyear. A source may "net out" ofPSD requirements ifemission reductions during the contemporaneous period cause fue net emissions increase to be less thanthe applicable threshold.

2. Economic Impact ofthis SIP Revision The proposed action has no economic impactbecause the substantive requirements ofthe PSD program have not changed.
3. Requirements ofthe PSD Program in Maryland The PSD regulation requires an affected source to install BACT. Itis theresponsibility of the applicant to review available documents, includingthe EPA 

### BACT/LAER Clearinghouse, to detennine fue best controls demonstrated for the type equipment being proposed ormodified. The applicant must also demonstrate that emissions will not exceed PSD increment for certain criteriapollutants. An air dispersion model maybe necessary to demonstrate that the proposed emission increase will not cause orcontributeto a violation of the National Ambient Air Quality Standards.

22V. RECOMMENDED AGENCY ACTION

I find that the proposed revisions represent a strengthening ofMaryland's SIP. Accordingly, I recommend that the October 24, 2007 proposed revisions to COMAR 26.11.17, theJuly31, 2009 proposed revisions to COMAR 26.11.06, and the June 23,2011 proposed revisions to COMAR 26.11.01, .02, and .06 be approved as described above.

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