```

[Federal Register Volume 75, Number 238 (Monday, December 13, 2010)]
[Rules and Regulations]
[Pages 77698-77719]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-30854]

[[Page 77697]]

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Part II

Environmental Protection Agency

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40 CFR Part 52

 Action To Ensure Authority To Issue Permits Under the Prevention of 
Significant Deterioration Program to Sources of Greenhouse Gas 
Emissions: Finding of Substantial Inadequacy and SIP Call; Final Rule

Federal Register / Vol. 75 , No. 238 / Monday, December 13, 2010 / 
Rules and Regulations

[[Page 77698]]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-HQ-OAR-2010-0107; FRL-9236-3]
RIN-2060-AQ08

Action To Ensure Authority To Issue Permits Under the Prevention 
of Significant Deterioration Program to Sources of Greenhouse Gas 
Emissions: Finding of Substantial Inadequacy and SIP Call

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The EPA is issuing a finding that the EPA-approved state 
implementation plans (SIP) of 13 states (comprising 15 state and local 
programs) are substantially inadequate to meet Clean Air Act (CAA) 
requirements because they do not apply Prevention of Significant 
Deterioration (PSD) requirements to greenhouse gas (GHG)-emitting 
sources. In addition, EPA is issuing a ``SIP call'' for each of these 
states, which requires the state to revise its SIP as necessary to 
correct such inadequacies. Further, EPA is establishing a deadline for 
each state to submit its corrective SIP revision. These deadlines, 
which differ among the states, range from December 22, 2010, to 
December 1, 2011.

DATES: This action is effective on December 13, 2010. The deadline for 
each state to submit its corrective SIP revision is listed in table IV-
1, ``SIP Call States and SIP Submittal Deadlines'' in the SUPPLEMENTARY 
INFORMATION section of this rule.

ADDRESSES: EPA has established a docket for this rulemaking under 
Docket ID No. EPA-HQ-OAR-2010-0107. 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 
U.S. Environmental Protection Agency, Air Docket, EPA/DC, EPA West 
Building, Room 3334, 1301 Constitution Ave., NW., Washington, DC. The 
Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through 
Friday, excluding legal holidays. The telephone number for the Public 
Reading Room is (202) 566-1744, and the telephone number for the Air 
Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Ms. Lisa Sutton, Air Quality Policy 
Division, Office of Air Quality Planning and Standards (C504-03), 
Environmental Protection Agency, Research Triangle Park, NC 27711; 
telephone number: (919) 541-3450; fax number: (919) 541-5509; e-mail 
address: sutton.lisa@epa.gov.
    For information related to a specific state, local, or tribal 
permitting authority, please contact the appropriate EPA regional 
office:

----------------------------------------------------------------------------------------------------------------
                               Contact for regional office (person, mailing
  EPA  regional  office                 address, telephone number)                     Permitting authority
----------------------------------------------------------------------------------------------------------------
I........................  Dave Conroy, Chief, Air Programs Branch, EPA Region   Connecticut, Massachusetts,
                            1, 5 Post Office Square, Suite 100, Boston, MA        Maine, New Hampshire, Rhode
                            02109-3912, (617) 918-1661.                           Island, and Vermont.
II.......................  Raymond Werner, Chief, Air Programs Branch, EPA       New Jersey, New York, Puerto
                            Region 2, 290 Broadway, 25th Floor, New York, NY      Rico, and Virgin Islands.
                            10007-1866, (212) 637-3706.
III......................  Kathleen Cox, Chief, Permits and Technical            District of Columbia, Delaware,
                            Assessment Branch, EPA Region 3, 1650 Arch Street,    Maryland, Pennsylvania,
                            Philadelphia, PA 19103-2029, (215) 814-2173.          Virginia, and West Virginia.
IV.......................  Lynorae Benjamin, Chief, Regulatory Development       Alabama, Florida, Georgia,
                            Section, Air, Pesticides and Toxics Management        Kentucky, Mississippi, North
                            Division, EPA Region 4, Atlanta Federal Center, 61    Carolina, South Carolina, and
                            Forsyth Street, SW., Atlanta, GA 30303-3104, (404)    Tennessee.
                            562-9033.
V........................  J. Elmer Bortzer, Chief, Air Programs Branch (AR-     Illinois, Indiana, Michigan,
                            18J), EPA Region 5, 77 West Jackson Boulevard,        Minnesota, Ohio, and
                            Chicago, IL 60604-3507, (312) 886-1430.               Wisconsin.
VI.......................  Jeff Robinson, Chief, Air Permits Section, EPA        Arkansas, Louisiana, New
                            Region 6, Fountain Place 12th Floor, Suite 1200,      Mexico, Oklahoma, and Texas.
                            1445 Ross Avenue, Dallas, TX 75202-2733, (214) 665-
                            6435.
VII......................  Mark Smith, Chief, Air Permitting and Compliance      Iowa, Kansas, Missouri, and
                            Branch, EPA Region 7, 901 North 5th Street, Kansas    Nebraska.
                            City, KS 66101, (913) 551-7876..
VIII.....................  Carl Daly, Unit Leader, Air Permitting, Monitoring &  Colorado, Montana, North
                            Modeling Unit, EPA Region 8, 1595 Wynkoop Street,     Dakota, South Dakota, Utah,
                            Denver, CO 80202-1129, (303) 312-6416.                and Wyoming.
IX.......................  Gerardo Rios, Chief, Permits Office, EPA Region 9,    Arizona; California; Hawaii and
                            75 Hawthorne Street, San Francisco, CA 94105, (415)   the Pacific Islands; Indian
                            972-3974.                                             Country within Region 9 and
                                                                                  Navajo Nation; and Nevada.
X........................  Nancy Helm, Manager, Federal and Delegated Air        Alaska, Idaho, Oregon, and
                            Programs Unit, EPA Region 10, 1200 Sixth Avenue,      Washington.
                            Suite 900, Seattle, WA 98101, (206) 553-6908.
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SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

    Entities affected by this rule include state and local permitting 
authorities.\1\ In this rule, EPA finds that any state's SIP-approved 
PSD applicability provisions that do not apply the PSD program to GHG-
emitting sources are substantially inadequate to meet CAA requirements, 
under CAA section 110(k)(5), and such states will be affected by this 
rule. For example, if a state's PSD regulation identifies its regulated 
New Source Review (NSR) pollutants by specifically listing each 
individual pollutant and the list omits GHGs, then the regulation is 
substantially inadequate.
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    \1\ For convenience, we refer to ``states'' in this rulemaking 
to collectively mean states and local permitting authorities.
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    Entities affected by this rule also include sources in all industry 
groups, which have a direct obligation under the CAA to obtain a PSD 
permit for GHGs for projects that meet the applicability thresholds set 
forth in a GHG PSD rule that EPA recently promulgated, which

[[Page 77699]]

we refer to as the Tailoring Rule.\2\ This independent obligation on 
sources is specific to PSD and derives from CAA section 165(a). The 
majority of entities affected by this action are in the following 
groups:
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    \2\ Prevention of Significant Deterioration and Title V 
Greenhouse Gas Tailoring Rule; Final Rule. 75 FR 31514 (June 3, 
2010).

------------------------------------------------------------------------
        Industry group                         NAICS \a\
------------------------------------------------------------------------
Utilities (electric, natural   2211, 2212, 2213
 gas, other systems).
Manufacturing (food,           311, 312, 313, 314, 315, 316
 beverages, tobacco,
 textiles, leather).
Wood product, paper            321, 322
 manufacturing.
Petroleum and coal products    32411, 32412, 32419
 manufacturing.
Chemical manufacturing.......  3251, 3252, 3253, 3254, 3255, 3256, 3259
Rubber product manufacturing.  3261, 3262
Miscellaneous chemical         32552, 32592, 32591, 325182, 32551
 products.
Nonmetallic mineral product    3271, 3272, 3273, 3274, 3279
 manufacturing.
Primary and fabricated metal   3311, 3312, 3313, 3314, 3315, 3321, 3322,
 manufacturing.                 3323, 3324, 3325, 3326, 3327, 3328, 3329
Machinery manufacturing......  3331, 3332, 3333, 3334, 3335, 3336, 3339
Computer and electronic        3341, 3342, 3343, 3344, 3345, 4446
 products manufacturing.
Electrical equipment,          3351, 3352, 3353, 3359
 appliance, and component
 manufacturing.
Transportation equipment       3361, 3362, 3363, 3364, 3365, 3366, 3366,
 manufacturing.                 3369
Furniture and related product  3371, 3372, 3379
 manufacturing.
Miscellaneous manufacturing..  3391, 3399
Waste management and           5622, 5629
 remediation.
Hospitals/nursing and          6221, 6231, 6232, 6233, 6239
 residential care facilities.
Personal and laundry services  8122, 8123
Residential/private            8141
 households.
Non-residential (commercial).  Not available. Codes only exist for
                                private households, construction and
                                leasing/sales industries.
------------------------------------------------------------------------
\a\ North American Industry Classification System.

B. How is the preamble organized?

    The information presented in this preamble is organized as follows:

I. General Information
    A. Does this action apply to me?
    B. How is the preamble organized?
II. Overview of Final Rule
III. Background
    A. CAA and Regulatory Context
    1. SIP PSD Requirements
    2. Recent EPA Regulatory Action Concerning PSD Requirements for 
GHG-emitting Sources
    3. SIP Inadequacy and Corrective Action
    4. State PSD SIPs
    B. Proposed Action
    1. Finding of Substantial Inadequacy and SIP Call
    2. Corrective SIP Revision
IV. Final Action and Response to Comments
    A. Response to Comments
    B. Finding of Substantial Inadequacy and SIP Call
    1. Overall Basis
    2. State-Specific Actions
    C. Requirements for Corrective SIP Revision
    1. Application of PSD Program to GHG-Emitting Sources
    2. Definition and Calculation of Amount of GHGs
    3. Thresholds
    D. Response to Procedural and Other Comments
    1. Approved SIP PSD Programs That Apply to GHG Sources
    2. Opportunity for Notice and Comment
    3. Federal Implementation Plan
V. SIP Submittals
    A. EPA Action: Findings of Failure To Submit and Promulgation of 
FIPs; Process for Action on Submitted SIPs
    1. Actions on SIP Submittals
    2. Findings of Failure To Submit and Promulgation of FIPs
    3. Rescission of the FIP
    B. Streamlining the State Process for SIP Development and 
Submittal
    C. Primacy of the SIP Process
    D. Effective Date
VI. Statutory and Executive Order Reviews
    A. Executive Order 12866--Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform
    E. Executive Order 13132--Federalism
    F. Executive Order 13175--Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045--Protection of Children From 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211--Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898--Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act
VII. Judicial Review
VIII. Statutory Authority

II. Overview of Final Rule

    This rulemaking is related to four distinct GHG-related actions 
recently taken by EPA. Some of these actions, in conjunction with the 
operation of the applicable CAA provisions, will require stationary 
sources that emit large amounts of GHGs to obtain a PSD permit before 
they construct or modify, beginning January 2, 2011. In one of these 
actions, which we call the Tailoring Rule, EPA limited the 
applicability of PSD to GHG-emitting sources at or above specified 
thresholds.\3\
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    \3\ Prevention of Significant Deterioration and Title V 
Greenhouse Gas Tailoring Rule; Final Rule. 75 FR 31514 (June 3, 
2010).
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    Most states include EPA-approved PSD programs in their state 
implementation plans (SIPs), and, as a result, they act as the 
permitting

[[Page 77700]]

authority. Most of these states' PSD programs apply to GHG-emitting 
sources, and through a separate regulatory action, EPA and these states 
are now taking steps to limit the applicability of PSD to GHG-emitting 
sources at or above the Tailoring Rule thresholds. However, 13 states 
have SIPs with EPA-approved PSD programs that do not apply PSD to GHG-
emitting sources, and it is those states that are the subject of this 
rulemaking.
    In this rulemaking, EPA is (i) issuing a finding of substantial 
inadequacy for 13 states because their EPA-approved SIP PSD programs do 
not apply to GHG-emitting sources, (ii) issuing a requirement, which we 
refer to as a SIP call, that these states submit a corrective SIP 
revision to assure that their PSD programs will apply to GHG-emitting 
sources, and (iii) establishing the deadline by which each of these 
states must submit its corrective SIP revision, which differs among the 
various states and ranges from December 22, 2010, to December 1, 2011. 
Each of these actions is authorized under CAA section 110(k)(5). The 13 
states (some of which include at least one local permitting agency) 
are: Arizona; Arkansas; California; Connecticut; Florida; Idaho; 
Kansas; Kentucky; Nebraska; Nevada; Oregon; Texas; and Wyoming.
    If a state for which we are finalizing a SIP call in this action 
does not submit its corrective SIP revision by its deadline, EPA 
intends to immediately issue to the state a finding of failure to 
submit a required SIP revision and also immediately promulgate a 
federal implementation plan (FIP) for the state, under CAA section 
110(c)(1)(A). EPA proposed this SIP call and the FIP by separate 
notices dated September 2, 2010. ``Action to Ensure Authority to Issue 
Permits under the Prevention of Significant Deterioration Program to 
Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy 
and SIP Call--Proposed Rule,'' 75 FR 53892; ``Action to Ensure 
Authority to Issue Permits under the Prevention of Significant 
Deterioration Program to Sources of Greenhouse Gas Emissions: Federal 
Implementation Plan--Proposed Rule,'' 75 FR 53883.
    This SIP call is important because without it, large GHG-emitting 
sources in these states may be unable to obtain a PSD permit for their 
GHG emissions and therefore may face delays in undertaking construction 
or modification projects. This is because without the further action by 
the states or EPA that the SIP call is designed to lead to, sources 
that emit or plan to emit large amounts of GHGs will, starting January 
2, 2011, be required to obtain PSD permits before undertaking new 
construction or modification projects, but neither the states nor EPA 
would be authorized to issue the permits. The SIP call and, in the 
states in which it is necessary, the FIP will assure that in each of 
the 13 states--with the exception of Texas--either the state or EPA 
will have the authority to issue PSD permits by January 2, 2011, or 
sufficiently soon thereafter so that sources in the state will not be 
adversely affected by the short-term lack of a permitting authority. We 
are planning additional actions to ensure that GHG sources in Texas can 
be issued permits as of January 2, 2011.
    The SIP submittal deadlines that this rule establishes for the 
states reflect, in almost all instances, a recognition by EPA and the 
states of the need to move expeditiously to assure the availability of 
a permitting authority. EPA emphasizes that for those states for which 
EPA proceeds to promulgate a FIP: (i) The purpose of the FIP is solely 
to assure that industry in the state will be able to obtain required 
air permits to construct or modify; (ii) EPA encourages the state to 
assume delegation of the FIP so that the state will become the permit 
issuer (although administering EPA regulations); and (iii) EPA will 
rescind the FIP as soon as the state submits and EPA approves a 
corrective SIP revision.
    The corrective SIP revision that this rule requires must: (i) Apply 
the SIP PSD program to GHG-emitting sources; (ii) define GHGs as the 
same pollutant to which the Light-Duty Vehicle Rule \4\ (LDVR) applies, 
that is, a single pollutant that is the aggregate of the group of six 
gases (carbon dioxide (CO2), methane (CH4), 
nitrous oxide (N2O), hydrofluorocarbons (HFCs), 
perfluorocarbons (PFCs), and sulfur hexafluoride (SF6)); and 
(iii) either limit PSD applicability to GHG-emitting sources by 
adopting the applicability thresholds included in the Tailoring Rule or 
adopt lower thresholds and show that the state has adequate personnel 
and funding to administer and implement those lower thresholds.
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    \4\ ``Light-Duty Vehicle Greenhouse Gas Emission Standards and 
Corporate Average Fuel Economy Standards; Final Rule.'' 75 FR 25324 
(May 7, 2010).
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III. Background

A. CAA and Regulatory Context

    EPA described the relevant background information in the SIP call 
proposal, 75 FR at 53896-98, as well as in the final Tailoring Rule, 75 
FR at 31518-21. Knowledge of this background information is presumed 
and will be only briefly summarized here.
1. SIP PSD Requirements
    In general, under the CAA PSD program, as discussed later in this 
preamble, a stationary source must obtain a permit prior to undertaking 
construction or modification projects that would result in specified 
amounts of new or increased emissions of air pollutants that are 
subject to regulation under other provisions of the CAA. CAA sections 
165(a), 169(1), 169(2)(C). The permit must, among other things, include 
emission limitations associated with the best available control 
technology (BACT). CAA section 165(a)(4).
    Specifically, under the CAA PSD requirements, a new or existing 
source that emits or has the potential to emit ``any air pollutant'' in 
the amounts of either 100 or 250 tons per year (tpy), depending on the 
source category, cannot construct or modify unless the source first 
obtains a PSD permit that, among other things, includes emission 
limitations that qualify as BACT. CAA sections 165(a)(1), 165(a)(4), 
169(1). Longstanding EPA regulations have interpreted the term ``any 
air pollutant'' more narrowly so that only emissions of any pollutant 
subject to regulation under the CAA trigger PSD. This interpretation 
currently is found in 40 CFR 51.166(j)(1), 52.21(j)(2), which applies 
PSD to any ``regulated NSR pollutant,'' a term that the regulations 
then define to include four classes of air pollutants, including, as a 
catch-all, ``any pollutant that otherwise is subject to regulation 
under the Act.'' 40 CFR 51.166(b)(49)(iv), 52.21(b)(50)(iv).
    The CAA contemplates that the PSD program be implemented by the 
states through their SIPs. CAA section 110(a)(2)(C) requires that:

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

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

    Each implementation plan * * * shall * * * meet the applicable 
requirements of * * * part C of this subchapter (relating to 
significant deterioration of air quality and visibility protection).

    CAA section 161 provides that:

    Each applicable implementation plan shall contain emission 
limitations and such other measures as may be necessary, as 
determined under regulations promulgated under this part [C], to 
prevent significant deterioration of air quality for such region * * 
* designated * * * as attainment or unclassifiable.

[[Page 77701]]

    These provisions, read in conjunction with the PSD applicability 
provisions, CAA section 165(a)(1), 169(1), mandate that SIPs include 
PSD programs that are applicable to any air pollutant that is subject 
to regulation under the CAA, including, as discussed later in this 
preamble, GHGs on and after January 2, 2011.\5\
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    \5\ In the Tailoring Rule, we noted that commenters argued, with 
some variations, that the PSD provisions applied only to National 
Ambient Air Quality Standards (NAAQS) pollutants, and not GHGs, and 
we responded that the PSD provisions apply to all pollutants subject 
to regulation, including GHGs. See 75 FR 31560-62; ``Prevention of 
Significant Deterioration and Title V GHG Tailoring Rule: EPA's 
Response to Public Comments,'' May 2010, pp. 38-41. We are not 
reopening that issue in this rulemaking.
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2. Recent EPA Regulatory Action Concerning PSD Requirements for GHG-
emitting Sources
    In recent months, EPA has taken four distinct actions related to 
GHGs under the CAA. Some of these, in conjunction with the operation of 
the CAA, trigger PSD applicability for GHG-emitting sources on and 
after January 2, 2011, but focus the scope of PSD on the largest GHG-
emitting sources. The first of these four actions was what we call the 
``Endangerment Finding,'' which is governed by CAA section 202(a). 
Based on an exhaustive review and analysis of the science, in December 
2009 the Administrator exercised her judgment to conclude that ``six 
greenhouse gases taken in combination endanger both the public health 
and the public welfare of current and future generations.'' The 
Administrator also found ``that the combined emissions of these 
greenhouse gases from new motor vehicles and new motor vehicle engines 
contribute to the greenhouse gas air pollution that endangers public 
health and welfare under CAA section 202(a).'' \6\ This Endangerment 
Finding led directly to promulgation of what we call the ``Vehicle 
Rule'' or the ``LDVR,'' also governed by CAA section 202(a), in which 
EPA set standards for the emission of greenhouse gases for new motor 
vehicles built for model years 2012-2016.\7\ The other two actions were 
what we call the ``Johnson Memo Reconsideration'' or the ``Timing 
Decision'' \8\ and the Tailoring Rule and were governed by the PSD and 
title V provisions in the CAA. EPA issued them to address the automatic 
statutory triggering of these programs for greenhouse gases due to the 
Vehicle Rule's establishing the first controls for greenhouse gases 
under the Act. More specifically, the Johnson Memo Reconsideration 
provided EPA's interpretation of a pre-existing definition in its PSD 
regulations delineating the ``pollutants'' that are taken into account 
in determining whether a source must obtain a PSD permit and the 
pollutants each permit must control. Regarding the Vehicle Rule, the 
Johnson Memo Reconsideration stated that such regulations, when they 
take effect on January 2, 2011, will, by operation of the applicable 
CAA requirements, subject GHG-emitting sources to PSD requirements. The 
Tailoring Rule limited the applicability of PSD requirements to the 
largest GHG-emitting sources on a phased-in basis.
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    \6\ ``Endangerment and Cause or Contribute Findings for 
Greenhouse Gases Under Section 202(a) of the Clean Air Act.'' 74 FR 
66496 (December 15, 2009).
    \7\ ``Light-Duty Vehicle Greenhouse Gas Emission Standards and 
Corporate Average Fuel Economy Standards; Final Rule.'' 75 FR 25324 
(May 7, 2010).
    \8\ ``Interpretation of Regulations that Determine Pollutants 
Covered by Clean Air Act Permitting Programs.'' 75 FR 17004 (April 
2, 2010). This action finalizes EPA's response to a petition for 
reconsideration of ``EPA's Interpretation of Regulations that 
Determine Pollutants Covered by Federal Prevention of Significant 
Deterioration (PSD) Permit Program'' (which we call the ``Johnson 
Memo''), December 18, 2008.
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    Certain specific aspects of these rules are important to highlight 
for purposes of the present action. In the Endangerment Finding, the 
Administrator found that six long-lived and directly emitted GHGs--
CO2, CH4, N2O, HFCs, PFCs, and 
SF6--may reasonably be anticipated to endanger public health 
and welfare. The LDVR included applicability provisions specifying that 
the rule ``contains standards and other regulations applicable to the 
emissions of those six greenhouse gases.'' 75 FR at 25686 (40 CFR 
86.1818-12(a)).
    In the Tailoring Rule, EPA identified the air pollutant that, if 
emitted or potentially emitted by the source in excess of specified 
thresholds, would subject the source to PSD requirements, as the 
aggregate of the same six GHGs (CO2, CH4, 
N2O, HFCs, PFCs, and SF6), based on the LDVR. The 
Tailoring Rule further provided that for purposes of determining 
whether the amount of GHGs emitted (or potentially emitted) exceeded 
the specified thresholds, it must be calculated on both a mass 
emissions basis and on a carbon dioxide equivalent (CO2e) 
basis. With respect to the latter, according to the rule, ``PSD * * * 
applicability is based on the quantity that results when the mass 
emissions of each of these [six] gases is multiplied by the Global 
Warming Potential (GWP) of that gas, and then summed for all six 
gases.'' 75 FR 31518.
3. SIP Inadequacy and Corrective Action
    The CAA provides a mechanism for the correction of SIPs with 
certain types of inadequacies, under CAA section 110(k)(5), which 
provides:
    (5) Calls for plan revisions

    Whenever the Administrator finds that the applicable 
implementation plan for any area is substantially inadequate to * * 
* comply with any requirement of this Act, the Administrator shall 
require the State to revise the plan as necessary to correct such 
inadequacies. The Administrator shall notify the State of the 
inadequacies and may establish reasonable deadlines (not to exceed 
18 months after the date of such notice) for the submission of such 
plan revisions.

    This provision by its terms authorizes the Administrator to 
``find[] that [a SIP] * * * is substantially inadequate to * * * comply 
with any requirement of this Act,'' and, based on that finding, to 
``require the State to revise the [SIP] * * * to correct such 
inadequacies.'' This latter action is commonly referred to as a ``SIP 
call.'' In addition, this provision provides that EPA must notify the 
state of the substantial inadequacy and authorizes EPA to establish a 
``reasonable deadline[] (not to exceed 18 months after the date of such 
notice)'' for the submission of the corrective SIP revision.
    If EPA does not receive the corrective SIP revision by the 
deadline, CAA section 110(c) authorizes EPA to ``find[] that [the] 
State has failed to make a required submission.'' CAA section 
110(c)(1)(A). Once EPA makes that finding, CAA section 110(c)(1) 
requires EPA to ``promulgate a Federal implementation plan at any time 
within 2 years after the [finding] * * * unless the State corrects the 
deficiency, and [EPA] approves the plan or plan revision, before [EPA] 
promulgates such [FIP].''
4. State PSD SIPs
    The states and other jurisdictions in the U.S. may be grouped into 
three categories with respect to their PSD programs and the 
applicability of those PSD programs to GHG-emitting sources:
    The first category is the states that do not have PSD programs 
approved into their SIPs. In those states, EPA's regulations at 40 CFR 
52.21 govern, and either EPA or the state as EPA's delegatee acts as 
the permitting authority.\9\
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    \9\ EPA identified the first category of states, local 
jurisdictions, and Indian country, in the proposal for this action. 
75 FR at 53898, n. 11. This list is updated in Declaration of Regina 
McCarthy, Coalition for Responsible Regulation v. EPA, DC Cir. No. 
09-1322 (and consolidated cases) (McCarthy Declaration), Attachment 
1, Table 1, which can be found in the docket for this rulemaking, 
except that the Northern Mariana Islands and the Trust Territories 
also fall into this category. EPA is not taking any final action 
with respect to these jurisdictions, and EPA's identification of 
them in this action is for informational purposes only.

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[[Page 77702]]

    The second category comprises states that have approved SIP PSD 
programs that do not apply to GHG-emitting sources. This second 
category is the subject of this rulemaking and is discussed further in 
this preamble.
    The third category, which includes most of the states, is states 
that have approved SIP PSD programs that apply to GHG-emitting sources. 
Those SIPs have PSD applicability provisions that identify, as some or 
all of the pollutants covered under their PSD program, any ``pollutant 
subject to regulation'' under the CAA. Further, in these states, this 
term in effect is automatically updating so as to cover pollutants that 
become newly subject to regulation under the CAA without further action 
by the state. As a result, the PSD programs of these states will apply 
to GHG emissions as of January 2, 2011, when GHGs become subject to 
regulation under the LDVR. See 40 CFR 52.21(b)(50).\10\
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    \10\ EPA included in the proposal a list of states and local 
jurisdictions that appeared to fall into this third category. 75 FR 
at 53899, table IV-2. This list is updated in Declaration of Regina 
McCarthy, Coalition for Responsible Regulation v. EPA, DC Cir. No. 
09-1322 (and consolidated cases) (McCarthy Declaration), Attachment 
1, Table 3, which can be found in the docket for this rulemaking. 
Except to the extent discussed later in this preamble, EPA is not 
taking final action in this rule with respect to these states and 
local jurisdictions.
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B. Proposed Action

1. Finding of Substantial Inadequacy and SIP Call
    In the proposal for this rulemaking, EPA proposed the SIP call for 
13 states whose SIPs have EPA-approved PSD programs but did not appear 
to apply to GHG-emitting sources. These 13 states are listed in table 
III-1:

 Table III-1--States with SIPs that EPA Proposed Do Not Appear To Apply
                           PSD to GHG Sources
                       [Presumptive SIP Call List]
------------------------------------------------------------------------
                             State (or area)
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Alaska
Arizona: Pinal County; Rest of State (Excludes Maricopa County, Pima
 County, and Indian Country)
Arkansas
California: Sacramento Metropolitan AQMD
Connecticut
Florida
Idaho
Kansas
Kentucky: Jefferson County; Rest of State
Nebraska
Nevada: Clark County
Oregon
Texas
------------------------------------------------------------------------

    In the proposal, EPA explained that it had identified these 13 
states on the basis of EPA's review of the SIP PSD provisions and other 
relevant state law, as well as the views of the states as expressed in 
their written statements to EPA following promulgation of the Tailoring 
Rule and in other communications with the EPA regions. EPA further 
explained that this information appeared to indicate that these SIP PSD 
provisions did not apply to GHG-emitting sources because of one or 
another of the following problems, depending on the state: (i) The PSD 
applicability provision applies to any ``pollutant subject to 
regulation'' under the CAA, but other provisions of state law preclude 
what we call automatic updating or forward adoption, so that this 
applicability provision covers only pollutants--not including GHGs--
that were subject to regulation at the time the state promulgated or 
enacted the applicability provision; (ii) the PSD applicability 
provision does not apply to any ``pollutant subject to regulation'' 
under the CAA and instead applies to only specifically identified 
pollutants, not including GHGs; or (iii) the SIP explicitly precludes 
regulation of CO2. On the other hand, EPA further recognized 
in the proposal that a state that fits into one of the earlier-
described subcategories might nevertheless have in its SIP or other 
state laws a ``general authority clause'' that affirms the state's 
legal authority to issue, and enforce compliance with, permits that are 
consistent with federal requirements. In this case, the SIP, read as a 
whole, may be considered to apply PSD to GHG sources. Even so, we added 
that if a SIP appeared ambiguous as to whether it applied PSD to GHG-
emitting sources (e.g., it includes an applicability provision that 
explicitly excludes GHG sources but also includes a general-authority 
provision that could be read to authorize permitting of GHG sources), 
we would consider the SIP PSD program not to apply to GHG sources.
    As a related matter, we noted that if a state with a SIP that did 
not appear to apply PSD to GHG-emitting sources submitted a SIP 
revision prior to December 1, 2010--the date EPA intended to issue the 
SIP call--EPA would not include that state in the SIP call.
    EPA included with the proposal a technical support document (TSD) 
that addressed each state with an approved PSD program that did not at 
time of proposal appear to apply to GHG-emitting sources. The TSD 
referenced the applicable state law and the position of the state as to 
PSD applicability for GHG-emitting sources, based on communications to 
EPA. EPA also included in the TSD much the same information for each 
state with an approved PSD program that did at time of proposal appear 
to apply to GHG-emitting sources.
    For each of the 13 states, EPA proposed to issue a finding that the 
SIP is ``substantially inadequate * * * to * * * comply with any 
requirement of [the CAA]'' and EPA proposed to ``require the State to 
revise the plan as necessary to correct such inadequacies,'' i.e., EPA 
proposed to issue a SIP call in accordance with CAA section 110(k)(5). 
EPA explained that the reference in CAA section 110(k)(5) to ``any 
requirement of [the CAA]'' includes the PSD requirements and that SIPs 
are therefore required to include PSD programs that apply to sources 
that emit pollutants subject to regulation. As a result, EPA proposed 
the 13 states' SIPs merit a finding of substantial inadequacy because 
they fail to apply the PSD program to GHG-emitting sources on and after 
January 2, 2011. EPA further proposed that because the SIPs merit a 
finding of substantial inadequacy, EPA is authorized to issue a SIP 
call and thereby require a corrective SIP revision.
    EPA invited comment on its legal interpretation of the 13 states' 
SIPs and made clear that for any of these states, if EPA did not 
receive any further information from the state or other commenters 
indicating that EPA's proposed interpretation was incorrect, EPA 
intended to finalize the SIP call, but that on the other hand, if EPA 
did receive further information indicating that the proposed 
interpretation was incorrect, then EPA would not finalize the SIP call.
    In addition, EPA specifically solicited comment on its 
interpretation that the approved SIPs for the other states do appear to 
apply their PSD program to GHG-emitting sources. EPA indicated that if 
it received comments indicating, for any of these latter states, that 
the SIP does not apply PSD to GHG sources, then, without further 
proposed action, EPA would issue a final finding of substantial 
inadequacy and SIP call for

[[Page 77703]]

that state. EPA identified these states as listed in table III-2, 
``States with SIPs that EPA Proposed Appear to Apply PSD to GHG Sources 
(Presumptive Adequacy List).'' \11\
---------------------------------------------------------------------------

    \11\ Note that in this final rule, except for any of these 
states for which EPA is making a finding of substantial inadequacy 
and issuing a SIP call, EPA is not taking any action with respect to 
these states.
    \12\ Pennsylvania's Philadelphia County correctly belongs in the 
category of states that do not have PSD programs approved into their 
SIPs. We note this correction for informational purposes only, as it 
has no bearing on this rulemaking. A corrected table III-2 would 
list, ``Pennsylvania: All except Allegheny County and Philadelphia 
County.'' However, we have not reflected the correction in table 
III-2 itself, for the reason that the table represents our proposed 
list. In addition, as noted above, an updated version of this 
category of jurisdictions--those that have approved PSD SIPs that 
apply to GHG-emitting sources--appears in Declaration of Regina 
McCarthy, Coalition for Responsible Regulation v. EPA, DC Cir. No. 
09-1322 (and consolidated cases) (McCarthy Declaration), Attachment 
1, Table 3, which can be found in the docket for this rulemaking.
    \13\ Note that in this final action, we are issuing a SIP call 
for Wyoming, based on information submitted by the state during the 
SIP call comment period.

 Table III-2--States With SIPs That EPA Proposed Appear To Apply PSD to
                               GHG Sources
                       [Presumptive Adequacy List]
------------------------------------------------------------------------
                             State (or area)
-------------------------------------------------------------------------
Alabama: Jefferson County; Huntsville; Rest of State
California: Mendocino County AQMD; Monterey Bay Unified APCD; North
 Coast Unified AQMD; Northern Sonoma County APCD
Colorado
Delaware
Georgia
Indiana
Iowa
Louisiana
Maine
Maryland
Michigan
Mississippi
Missouri
Montana
New Hampshire
New Mexico: Albuquerque; Rest of State
North Carolina: Forsyth County; Mecklenburg; Western NC; Rest of State
North Dakota
Ohio
Oklahoma
Pennsylvania: All except Allegheny County \12\
Rhode Island
South Carolina
South Dakota
Tennessee: Chattanooga; Nashville; Knoxville; Memphis; Rest of State
Utah
Vermont
Virginia
West Virginia
Wisconsin \13\
Wyoming \13\
------------------------------------------------------------------------

    We further stated in the proposal that we intended to finalize the 
finding of substantial inadequacy and the SIP call on or about December 
1, 2010, approximately one month in advance of the January 2, 2011, 
date when PSD requirements will first apply to GHG-emitting sources. We 
justified this timing on the need to give sources notice that the PSD 
requirements apply. In addition, we recognized that as a practical 
matter, some states would not object to our imposing a FIP effective as 
of January 2, 2011, in order to avoid any period of time when the GHG-
emitting sources identified in the Tailoring Rule as subject to PSD 
would be unable to obtain a permit due to lack of a permitting 
authority to process their PSD applications. We observed that we could 
not impose a FIP until we have first finalized the SIP call and given 
the state a reasonable period of time to make the corrective SIP 
submission.
    In the proposal, we also described in greater detail the process 
for finalizing the SIP call. We stated that we would issue the final 
SIP call for any state for which we had concluded that the PSD program 
did not as of that date apply to GHG-emitting sources. However, if a 
state that was included in the proposed SIP call were to submit a SIP 
revision by December 1, 2010, that purported to correct that 
inadequacy, we would not finalize the finding or SIP call for that 
state. Rather, we would take action on its SIP submittal as promptly as 
possible. While we will strive to expedite approval of such SIP 
submissions, we could not commit in the proposal to approving them by 
January 2, 2011. We therefore cautioned in our proposal (see 75 FR at 
53904) that states with submitted (but not EPA-approved) SIP revisions 
will not be able to issue federally approved PSD permits until those 
SIP revisions are approved. We stated that for all other states for 
which we concluded that the PSD program did not apply to GHG sources, 
on or about December 1, 2010, we would make the finding of substantial 
inadequacy and issue the SIP call in a final rule and submit the notice 
for the rule for publication in the Federal Register as soon as 
possible thereafter. We stated that at the same time, we would also 
notify the state of the finding of substantial inadequacy by letter and 
by posting the signed SIP call rulemaking on our Web site. In view of 
the urgency of the task, which is to do everything possible to ensure 
that a PSD permitting authority for affected GHG sources is in place by 
January 2, 2011, we proposed to give the final SIP call an effective 
date of its publication date. We recognized that this process is highly 
expedited, but we stated that it was essential to maximize our and the 
states' opportunity to put in place a permitting authority to process 
PSD permit applications beginning on January 2, 2011, without which 
sources may be unable to proceed with plans to construct or modify.
    In the proposal, EPA discussed in some detail the SIP submittal 
deadline it was proposing to establish under CAA section 110(k)(5). 
Under this provision, in notifying the state of the finding of 
substantial inadequacy and issuing the SIP call, EPA ``may establish 
reasonable deadlines (not to exceed 18 months after the date of such 
notice) for the submission of such plan revisions.'' EPA proposed to 
allow the state up to 12 months from the date of signature of the final 
finding of substantial inadequacy and SIP call within which to submit 
the SIP revision, unless, during the comment period, the state 
expressly advised that it would not object to a shorter period--as 
short as 3 weeks from the date of signature of the final rule--in which 
case EPA would establish the shorter period as the deadline. EPA stated 
that, assuming that EPA were to finalize the SIP call on or about 
December 1, 2010, as EPA said it intended to do in the proposal, then 
the earliest possible SIP submittal deadline would be December 22, 
2010.
    A few states did not inform EPA until after the end of the comment 
period for the proposed SIP call that they would not object to a 
deadline earlier than December 2011. Nevertheless, we considered their 
responses when establishing their SIP submittal deadlines in this final 
action.
    EPA made clear that the purpose of establishing the shorter period 
as the deadline--for any state that advises us that it does not object 
to that shorter period--is to accommodate states that wish to ensure 
that a FIP is in effect as a backstop to avoid any gap in PSD 
permitting. EPA also made clear that if a state did not advise EPA that 
it does not object to a shorter deadline, then the 12-month deadline 
would apply. EPA emphasized that for any state that receives a deadline 
after January 2, 2011, the affected GHG-emitting sources in that state 
may be delayed in their ability to receive a federally approved permit 
authorizing construction or modification. That is, after January 2, 
2011, these sources may not have available a permitting authority to 
review their permit applications until

[[Page 77704]]

the date that EPA either approves the SIP submittal or promulgates a 
FIP.
    EPA proposed that this 3-week-to-12-month time period, although 
expedited, meets the CAA section 110(k)(5) requirement as a 
``reasonable'' deadline in light of: (i) The SIP development and 
submission process; (ii) the preference of the state; and (iii) the 
imperative to minimize the period when sources will be subject to PSD 
but will not have available a PSD permitting authority to act on their 
permit application and therefore may face delays in constructing or 
modifying.
2. Corrective SIP Revision
    EPA proposed certain requirements for each state receiving a SIP 
call. The central requirement is that the corrective SIP revision must 
apply the PSD program to GHG-emitting sources. EPA proposed two 
different ways for the SIP revision to do so: First, the SIP revision 
could revise the PSD applicability provisions or other provisions of 
the SIP or state law that affect PSD applicability, to assure that the 
PSD applicability provisions are automatically updating. This means 
that these provisions would apply PSD to any air pollutant as soon as 
the pollutant becomes newly subject to regulation under the CAA. As a 
result, the PSD applicability provisions will apply to GHGs as of 
January 2, 2011. In this case, EPA would approve the SIP revision as 
fully meeting the CAA requirements. Second, and as an alternative, the 
SIP revision could simply specifically identify GHGs as subject to PSD 
applicability, in which case EPA would approve the SIP revision on the 
basis that the revision is SIP-strengthening, as discussed later in 
this preamble.
    In addition, EPA proposed to require that the corrective SIP 
revision, in applying the PSD program to GHG-emitting sources, must 
either limit PSD applicability to GHG-emitting sources at or above the 
Tailoring Rule thresholds or adopt lower thresholds. However, EPA added 
that if the state adopts lower thresholds, then the state must 
demonstrate that it has ``adequate personnel [and] funding * * * to 
carry out,'' that is, administer and implement, the PSD program with 
those lower thresholds, in accordance with CAA section 110(a)(2)(E)(i).
    EPA also noted in the proposal that the state must define GHGs as a 
single pollutant that is the aggregate of the group of six gases: 
CO2, CH4, N2O, HFCs, PFCs, and 
SF6, which is the pollutant that the LDVR subjected to 
regulation. EPA further noted in the proposal that in the Tailoring 
Rule, EPA adopted a carbon dioxide equivalent (CO2e) metric 
and use of short tons (as opposed to metric tons) for calculating GHG 
emissions in order to implement the Tailoring Rule thresholds. 75 FR at 
31530, 31532. A state retains the authority to adopt lower thresholds 
than in the Tailoring Rule in order to meet statutory requirements, 
and, as a result, EPA stated in the proposal that the state is not 
obligated to adopt the CO2e metric or use of short tons in 
the corrective SIP revision. However, if the state wishes to adopt the 
Tailoring Rule thresholds, but through a different approach, then the 
state must assure that its approach is at least as stringent as under 
the Tailoring Rule.
    As we noted in the preamble to the proposed rulemaking (75 FR at 
53902), EPA issued a Call for Information (CFI) to solicit public 
comment and data on technical issues that might be used to consider 
biomass fuels and the emissions resulting from their combustion 
differently with regard to applicability under PSD and with regard to 
the BACT review process under PSD. Subsequently, EPA discussed these 
considerations in its ``PSD and Title V Permitting Guidance for 
Greenhouse Gases'' \14\ that was released on November 10, 2010, and 
made available for public comment. In that GHG permitting guidance 
document, EPA described on pages 8 through 10 how permitting 
authorities may consider the use of biomass for energy generation when 
carrying out their BACT analyses for GHGs. EPA also described plans for 
future guidance regarding analysis of the environmental, energy, and 
economic benefits of biomass in GHG BACT determinations.\15\
---------------------------------------------------------------------------

    \14\ See http://www.epa.gov/nsr/ghgpermitting.html/for more 
information on EPA's recent GHG permitting guidance document and on 
EPA's other permitting guidance for GHGs.
    \15\ Specifically, we stated the following in ``PSD and Title V 
Permitting Guidance for Greenhouse Gases,'' pages 8-10: In the 
annual US inventory of GHG emissions and sinks, EPA has reported 
that the Land-Use, Land-Use Change and Forestry (LULUCF) sector 
(including those stationary sources using biomass for energy) in the 
United States is a net carbon sink, taking into account the carbon 
gains (e.g., terrestrial sequestration) and losses (e.g., emissions 
or harvesting) from that sector. [Footnote: 2010 US Inventory Report 
at http://epa.gov/climatechange/emissions/usinventoryreport.html.] 
On the basis of the Inventory results and other considerations, 
numerous stakeholders requested that EPA exclude, either partially 
or wholly, emissions of GHG from bioenergy and other biogenic 
sources for the purposes of the BACT analysis and the PSD program 
based on the view that the biomass used to produce bioenergy 
feedstocks can also be a carbon sink and therefore management of 
that biomass can play a role in reducing GHGs. [Footnote: GHG 
emissions from bioenergy and other biogenic sources are generated 
during combustion or decomposition of biologically-based material, 
and include sources such as utilization of forest or agricultural 
products for energy, wastewater treatment and livestock management 
facilities, and fermentation processes for ethanol production.] EPA 
plans to provide further guidance on the how to consider the unique 
GHG attributes of biomass as fuel.
     Even before EPA takes further action, however, permitting 
authorities may consider, when carrying out their BACT analyses for 
GHG, the environmental, energy and economic benefits that may accrue 
from the use of certain types of biomass and other biogenic sources 
(e.g., biogas from landfills) for energy generation, consistent with 
existing air quality standards. In particular, 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. Federal and state policies, along with 
a number of state and regional efforts, are currently under way to 
foster the expansion of renewable resources and promote biomass as a 
way of addressing climate change and enhancing forest-management. 
EPA believes 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, with respect to the 
biomass component of a facility's fuel stream, certain types of 
biomass by themselves are BACT for GHGs.
    To assist permitting authorities further in considering these 
factors, as well as to provide a measure of national consistency and 
certainty, EPA intends to issue guidance in January 2011 that will 
provide a suggested framework for undertaking an analysis of the 
environmental, energy and economic benefits of biomass in Step 4 of 
the top-down BACT process, that, as a result, may enable permitting 
authorities to simplify and streamline BACT determinations with 
respect to certain types of biomass.
    The guidance will include qualitative information on useful 
issues to consider with respect to biomass combustion, such as 
specific feedstock types and trends in carbon stocks at different 
spatial scales (national, regional, state). The aim of the 
information will be to assist permitting authorities in evaluating 
``carbon neutrality'' in the assessment of environmental, energy and 
economic impacts of control strategies under Step 4 of the BACT 
process, which, again, may enable the streamlining of BACT 
determinations with respect to certain types of biomass. The agency 
is currently reviewing the comments received in response to the July 
15, 2010 Call for Information (CFI) that solicited feedback from 
stakeholders on approaches to accounting for GHG emissions from 
bioenergy and other biogenic sources. [Footnote: The Call for 
Information was published on July 15, 2010. (75 FR 41173 and 75 FR 
45112). EPA received over 7,000 comments and is still assessing 
them.] These comments, among other things, suggest that certain 
biomass feedstocks (e.g., biogas) may be considered carbon neutral 
with minor additional analysis. Such a carbon benefit may further 
inform the BACT process, especially where a permitting authority 
considers the net carbon impact or carbon-neutrality of certain 
feedstocks in accounting for the broader environmental implications 
of using particular biomass feedstocks.
     Finally, EPA also plans to determine by May 2011, well before 
the start of the second phase of PSD implementation pursuant to the 
Tailoring Rule, whether the issuance of a supplemental rule is 
appropriate to address whether the Clean Air Act would allow the 
Agency and permitting authorities or permitted sources, when 
determining the applicability of PSD permitting requirements to 
sources of biogenic emissions, to quantify carbon emissions from 
bioenergy or biogenic sources by applying separate accounting rules 
for different types of feedstocks that reflect the net impact of 
their carbon emissions. This determination will take into 
consideration both the LULUCF inventory and the full record of 
responses to the CFI.

---------------------------------------------------------------------------

[[Page 77705]]

IV. Final Action and Response to Comments

A. Process for Response to Comments

    We proposed our SIP call and FIP actions as companion proposals. 
Both proposals were signed by the Administrator and made publicly 
available on August 12, 2010, and both proposals were published in the 
Federal Register on September 2, 2010. The SIP call and FIP actions 
share a rulemaking docket, and the majority of comments that were 
submitted to EPA during the proposals' comment periods were provided in 
the form of a letter that intermingled comments on the SIP call and the 
FIP actions. We respond to comments on the SIP call proposal in this 
preamble, in a Response to Comment Document for the SIP call, and in a 
Supplemental Information Document for the SIP call. The Response to 
Comment Document and Supplemental Information Document can be found in 
the docket for this action. We will respond to comments on the FIP when 
we finalize that action.

B. Finding of Substantial Inadequacy and SIP Call

    In this action, EPA is finalizing its proposal, under CAA section 
110(k)(5), to: (i) Issue a finding that the SIPs for 13 states 
(comprising 15 state and local programs) are ``substantially inadequate 
to * * * comply with any requirement of this Act'' because their PSD 
programs do not apply to GHG-emitting sources as of January 2, 2011; 
(ii) ``require[] the state[s] to revise the [SIP] * * * to correct such 
inadequacies,'' that is, to issue a SIP call requiring submission of a 
corrective SIP revision; and (iii) establish a ``reasonable deadline[] 
(not to exceed 18 months after the date of such notice)'' for the 
submission of the corrective SIP revision. This deadline ranges, for 
different states, from 3 weeks to 12 months after the date of this 
action. The 13 states and their deadlines are listed in table IV-1, 
``SIP Call States and SIP Submittal Deadlines'':

         Table IV-1--SIP Call States and SIP Submittal Deadlines
------------------------------------------------------------------------
                                                                 SIP
                      State (or area)                         submittal
                                                               deadline
------------------------------------------------------------------------
Arizona: Pinal County......................................     12/22/10
Arizona: Rest of State (Excludes Maricopa County, Pima          12/22/10
 County, and Indian Country)...............................
Arkansas...................................................     12/22/10
California: Sacramento Metropolitan AQMD...................     01/31/11
Connecticut................................................     03/01/11
Florida....................................................     12/22/10
Idaho......................................................     12/22/10
Kansas.....................................................     12/22/10
Kentucky (Jefferson County): Louisville Metro Air Pollution     01/01/11
 Control District..........................................
Kentucky: Rest of State (Excludes Louisville Metro Air          03/31/11
 Pollution Control District (Jefferson County))............
Nebraska...................................................     03/01/11
Nevada: Clark County.......................................     07/01/11
Oregon.....................................................     12/22/10
Texas......................................................     12/01/11
Wyoming....................................................     12/22/10
------------------------------------------------------------------------

    This final rule is consistent with EPA's proposal, except that (i) 
EPA is not finalizing the SIP call with respect to one state for which 
EPA proposed the SIP call, namely Alaska, because it has already 
submitted a revised SIP, and (ii) EPA is finalizing the SIP call with 
respect to one state for which EPA solicited comment but did not 
propose the SIP call, namely Wyoming.
    In this section of this preamble, we: (1) Explain in detail our 
overall basis for these actions, including responding to comments on 
that overall basis; and (2) explain concisely our basis for action for 
each of the 13 states. In a Supplemental Information Document, which 
can be found in the docket for this rulemaking, we include more detail 
for our explanations and we respond to state-specific comments we 
received in response to the proposed actions.
1. Overall Basis
a. Finding of Substantial Inadequacy: Final Action and Response to 
Comments
(i) Final Action
    Our overall basis for issuing the finding of substantial inadequacy 
and issuing the SIP call for the 13 states is the same as we stated 
during the proposal. As summarized earlier in this preamble, for each 
of these 13 states, EPA finds that the failure of the SIP PSD 
applicability provisions to apply to GHG-emitting sources renders the 
SIP ``substantially inadequate * * * to * * * comply with any 
requirement of [the CAA]'' and as a result, EPA ``require[s] the State 
to revise the plan as necessary to correct such inadequacies,'' i.e., 
issues a SIP call, all in accordance with CAA section 110(k)(5).
    We consider the legal basis to be straightforward. CAA section 
110(k)(5), as quoted earlier in this preamble, authorizes EPA to issue 
a finding that a SIP is ``substantially inadequate'' to meet CAA 
requirements. The CAA does not define the quoted term, and as a result, 
it should be given its ordinary, everyday meaning. In the present case, 
the failure of a SIP to apply PSD to GHG-emitting sources means that 
the SIP is ``substantially inadequate'' to comply with CAA requirements 
because (i) The CAA requires that SIP PSD programs apply PSD to GHG-
emitting sources, (ii) the SIPs at issue fail to do so, and (iii) 
applying PSD to GHG-emitting sources would affect a large number of 
sources and permitting actions.
    CAA section 110(k)(5) authorizes EPA to issue a finding of 
substantial inadequacy whenever the SIP fails to comply with ``any 
requirement of [the CAA].'' CAA section 165(a)(1) provides that ``[n]o 
major emitting facility * * * may be constructed * * * unless * * * a 
[PSD] permit has been issued for such proposed facility in accordance 
with this part.'' CAA section 169(1) defines ``major emitting 
facility'' as any stationary source that emits specified quantities of 
``any air pollutant.'' EPA regulations have long defined ``any air 
pollutant'' as, at least in part, ``any pollutant * * * subject to 
regulation under the Act.'' 40 CFR 52.21(b)(50)(iv). Further, CAA 
section 161 requires SIPs to contain ``emission limitations and such 
other measures as may be necessary to prevent significant deterioration 
of air quality * * *'' and CAA section 110(a)(2)(J) requires that 
``[e]ach [SIP] * * * meet the applicable requirements of * * * part C 
of this subchapter (relating to significant deterioration of air 
quality.'' Reading these provisions together, the CAA requires that PSD 
requirements apply to any stationary source that emits specified 
quantities of any air pollutant subject to regulation under the CAA, 
and those PSD requirements must be included in the approved SIPs.\16\
---------------------------------------------------------------------------

    \16\ EPA has long interpreted the PSD applicability provisions 
in the CAA to be self-executing, that is, they apply by their terms 
so that a source that emits any air pollutant subject to regulation 
becomes subject to PSD--and, therefore, cannot construct or modify 
without obtaining a PSD permit--and these provisions apply by their 
terms in this manner regardless of whether the state has an approved 
SIP PSD program. What's more, until an applicable implementation 
plan is in place--either an approved SIP or a FIP--no permitting 
authority is authorized to issue a permit to the source. In a recent 
decision, the 7th Circuit, mistakenly citing to PSD provisions when 
the issue before the court involved the separate and different non-
attainment provisions of CAA sections 171-193, concluded that 
sources could continue to abide by permitting requirements in an 
existing SIP until amended, even if that SIP does not comport with 
the law. United States v. Cinergy Corp., No. 09-3344, 2010 WL 
4009180 (7th Cir. Oct. 12, 2010). In stark contrast to the 
nonattainment provisions actually at issue in Cinergy--which are not 
self-executing and must therefore be enforced through a SIP--PSD is 
self-executing; it is the statute (CAA section 165), not just the 
SIP, that prohibits a source from constructing a project without a 
permit issued in accordance with the Act.

---------------------------------------------------------------------------

[[Page 77706]]

    As of January 2, 2011, GHG-emitting sources will become subject to 
PSD. As a result, the CAA provisions described earlier in this preamble 
require PSD programs to apply to GHG-emitting sources. Accordingly, it 
is clear that the failure of any SIP PSD applicability provisions to 
apply the PSD program to GHG-emitting sources means that the SIP fails 
to comply with these CAA requirements.
    Moreover, in this case, the failure of the SIPs to apply PSD to 
GHG-emitting sources will affect a substantial number of sources and 
permitting actions. EPA estimated in the Tailoring Rule that on a 
nationwide basis, many of the sources that now require PSD permit 
applications due to their emissions of non-GHG pollutants (which we 
call ``anyway'' sources) also emit GHG pollutants in quantities that 
will trigger the application of PSD. On average, on an annual basis 
nationwide, these sources submit 688 PSD permit applications. 75 FR at 
31540. In addition, EPA estimated that beginning on July 2, 2011, on an 
annual basis nationwide, another 917 permit applications would 
potentially be submitted due to the GHG emissions of sources 
undertaking construction or modification activities, even though these 
sources' other pollutants would not, in and of themselves, trigger PSD. 
Id. Thus, large numbers of permitting actions are at issue. Moreover, 
the principal PSD requirement that will apply to GHG-emitting sources 
is the requirement to implement BACT, which is the principal mechanism 
under the PSD provisions for controlling emissions from non-NAAQS 
pollutants.
    The failure of a SIP to apply PSD to GHG-emitting sources--when the 
SIP is required to apply PSD to GHG-emitting sources and when doing so 
would, on average, result in a significant number of additional 
permitting actions subject to PSD--justifies a finding by the 
Administrator that a SIP that does not apply PSD to such sources as of 
January 2, 2011, is ``substantially inadequate'' to comply with CAA 
requirements.
(ii) Response to Comments
(I) Pollutants Subject to the SIP Call
    Some commenters stated that failure of a SIP to require PSD permits 
for GHG-emitting sources does not constitute a ``substantial[] 
inadequa[cy]'' under CAA section 110(k)(5). In making this point, the 
commenters first state that ``PSD can only be triggered by pollutants 
for which EPA has issued a national ambient air quality standard 
(``NAAQS'') and only in attainment areas for such pollutants.'' The 
commenters go on to assert that whether a SIP can be considered 
substantially inadequate due to its failure to require PSD permits 
depends on the extent to which the foregone controls ``affect * * * the 
state's ability to attain a NAAQS.'' Then, the commenters claim that 
the numbers of permits that the state would be required to issue that 
would include GHG controls beginning January 2, 2011, will be such ``a 
small number'' that ``the lack of a BACT limit for [GHGs] would not 
affect in any way the state's ability to attain a NAAQS.'' The 
commenters explain that the number of permits that would be required 
for GHG sources under the Tailoring Rule is limited to, on an annual 
basis, on average, in each state, (i) beginning as of January 2, 2011, 
``one or two permits'' for sources that would be subject to PSD anyway 
due to their emissions of other pollutants (which, again, we call 
``anyway'' sources), plus (ii) beginning as of July 1, 2011, 11 permits 
for sources that would become subject to PSD solely because of their 
emissions of GHGs.\17\ Again, the commenters assert that the controls 
foregone from this ``small number'' of permits would have too little an 
impact on a state's ability to attain a NAAQS to justify finding the 
SIP to be substantially inadequate under CAA section 110(k)(5).
---------------------------------------------------------------------------

    \17\ In another part of their comments, commenters state that 
the total number of affected permits is ``a few permits with GHG 
limits in the first 6 months of 2011.''
---------------------------------------------------------------------------

    We find this argument unpersuasive for several reasons. Most 
importantly, we do not accept what appear to be the premises of this 
argument, which are that PSD can only be triggered for NAAQS pollutants 
and that whether deficiencies in a PSD program can render a SIP 
substantially inadequate depend only on whether any foregone controls 
affect the state's ability to maintain a NAAQS. In the Tailoring Rule, 
we addressed at length the comment that PSD can be triggered only by 
pollutants subject to the NAAQS, and we concluded that as a matter of 
Chevron Step 1, this view was incorrect and that, instead, PSD applies 
to non-NAAQS pollutants, including GHGs. (See discussion in Tailoring 
Rule preamble, 75 FR at 31514 and elsewhere.)\18\ In this rulemaking, 
we are not reopening that issue. We did not solicit comment on it and 
our response to this comment should not be construed to be a reopening.
---------------------------------------------------------------------------

    \18\ We also explained our view that PSD may be triggered by 
non-NAAQS pollutants such as GHGs in the Tailoring Rule response to 
comments document (``Prevention of Significant Deterioration and 
Title V GHG Tailoring Rule: EPA's Response to Public Comments''), 
pp. 34-41; and in EPA's response to motions for a stay filed in the 
litigation concerning those rules (``EPA's Response to Motions for 
Stay,'' Coalition for Responsible Regulation v. EPA, DC Cir. No. 09-
1322 (and consolidated cases)), at 47-59.
---------------------------------------------------------------------------

    Second, we believe that the commenters have understated the number 
of permitting actions that will involve GHG controls. As noted earlier 
in this preamble, we provided estimates of the numbers of permits in 
the Tailoring Rule. There, we addressed at length the numbers of 
permitting actions that would involve GHGs, including soliciting 
comment on our proposed estimates and revising our final estimates 
based on comments received. In this rulemaking, the GHG PSD SIP call, 
we are not reopening that issue. We did not solicit comment on it and 
our response to this comment should not be construed to be a reopening. 
As noted earlier in this preamble and also in the Tailoring Rule, we 
estimated that on an annual basis, nationwide, beginning January 2, 
2011, there would be 688 permitting actions for ``anyway'' sources that 
would require GHG controls, and, beginning July 1, 2011, there would be 
an additional 917 permitting actions per year. These totals are 
significantly higher than the commenters' estimates.\19\
---------------------------------------------------------------------------

    \19\ Although, again, we are not reopening in this rule the 
issue of the number of permits that would include GHG controls, we 
note the following additional reasons why we do not find the 
commenters' estimates persuasive: (i) The commenters stated that 
they were adjusting downward what they described as EPA's estimates 
for ``anyway'' sources, but the commenters did not provide a basis 
for that downward adjustment. (ii) Some of the commenters have also 
brought lawsuits against the Tailoring Rule, and in court papers 
filed at approximately the same time as their comments in this 
rulemaking, they stated that the numbers of affected permits would 
be significantly higher than the numbers that they stated in their 
comments in this rulemaking. National Association of Manufacturers, 
et al., ``Petitioner's Motion for Partial Stay of EPA's Greenhouse 
Gas Regulations,'' Coalition for Responsible Regulation v. EPA, DC 
Cir. No. 09-1322 (and consolidated cases) at 45, 47.
---------------------------------------------------------------------------

    Commenters also state that ``EPA's own actions further reveal the 
flaw in its analysis.'' They note that EPA has proposed to issue the 
SIP call on grounds that some of the SIPs apply PSD to only criteria 
pollutants and not

[[Page 77707]]

to pollutants other than criteria pollutants, and they state that these 
SIPs have applied to only criteria pollutants for ``many years.'' The 
commenters argue that EPA has never, up until now, issued a SIP call on 
the basis that the PSD provisions in the SIPs do not cover pollutants 
more broadly.
    Commenters appear to infer from EPA's failure to have initiated a 
SIP call for these states in the past an indication that EPA does not 
have authority to do so. That inference is simply incorrect. An 
agency's not taking certain action at one point in time does not 
indicate a lack of authority to take that action, nor is the agency 
required to explain its earlier inaction in order to justify subsequent 
action. An agency may properly address an issue in step-by-step 
fashion. See, e.g., Grand Canyon Air Tour Coalition v. F.A.A., 154 F.3d 
455 (DC Cir. 1998), City of Las Vegas v. Lujan, 891 F.2d 927 (DC Cir. 
1989). 75 FR at 31544. In addition, as discussed later in this 
preamble, EPA has discretion in deciding whether, and when, to issue a 
finding of substantial inadequacy. Moreover, commenters have pointed to 
no statements by EPA indicating that SIPs that do not apply PSD to all 
pollutants subject to regulation fully meet CAA requirements; on the 
contrary, in the 2002 NSR Reform rule,\20\ EPA specifically required 
SIP revisions to apply PSD to all pollutants subject to regulation.
---------------------------------------------------------------------------

    \20\ ``Prevention of Significant Deterioration (PSD) and 
Nonattainment New Source Review (NNSR): Baseline Emissions 
Determination, Actual-to-Future-Actual Methodology, Plantwide 
Applicability Limitations, Clean Units, Pollution Control Projects--
Final Rule,'' 67 FR 80186 (December 31, 2002).
---------------------------------------------------------------------------

(II) Requirements of Tailoring Rule
(A) Comment
    Some industry commenters stated that EPA had no basis to issue a 
SIP call, and so should withdraw the proposal, because EPA was required 
to give states 3 years from the date the Tailoring Rule was published 
(June 3, 2010) to submit SIP revisions implementing PSD requirements 
for GHG-emitting sources. The commenters' premise is that without the 
Tailoring Rule, PSD would not apply to GHG-emitting sources, and the 
Tailoring Rule imposed the requirement that PSD applies to GHG-emitting 
sources. As evidence for its premise that the Tailoring Rule imposed 
this requirement, the commenters point to the fact that EPA codified 
certain provisions in 40 CFR 51.166, including, for example, provisions 
concerning the definition of GHGs.
    As a corollary to their premise, the commenters take the position 
that EPA regulations establishing the process for SIPs to adopt PSD 
program requirements govern and, therefore, require EPA to give the 
states up to 3 years to submit their SIP revisions that incorporate 
what the commenters view as the Tailoring Rule's requirement to apply 
PSD to GHG-emitting sources. See 40 CFR 51.166(a)(6) (``Any state 
required to revise its implementation plan by reason of an amendment to 
this section, including any amendment adopted simultaneously with this 
paragraph (a)(6)(i), shall adopt and submit such plan revision to the 
Administrator for approval no later than three years after such 
amendment is published in the Federal Register.''). The commenters add 
that during this 3-year period, the Tailoring Rule requirements that 
PSD applies to GHG-emitting sources do not apply in the states. Rather, 
according to the commenters, state permitting authorities may continue 
to issue PSD permits that do not include requirements for GHGs.
    Commenters also argue that CAA section 110(a)(1), which requires 
SIP submittal ``within 3 years (or such shorter period as the 
Administrator may prescribe),'' supports a 3-year period for the SIPs 
required under the SIP call. Another commenter takes a similar position 
but points to CAA section 166, which, the commenter asserts, provides a 
21-month period for SIP submissions and also prevents the application 
of PSD to GHG-emitting sources in the meantime.
    Turning to the SIP call, the commenters view the purpose of the SIP 
call as requiring the state to adopt what the commenters call the 
Tailoring Rule's requirements to apply PSD to GHG-emitting sources. The 
commenters assert that because, in their view, the adoption process of 
40 CFR 51.166(a)(6) applies--which allows states 3 years to adopt the 
SIP revision and, in the meantime, allows states to continue to issue 
permits without GHG controls--the SIP call (with its 12-month or 
shorter deadlines) does not apply and EPA should withdraw its SIP call 
proposal.
    Continuing to focus on the SIP call, one of the industry commenters 
adds: ``In the proposed SIP Call rule, EPA characterizes the Tailoring 
Rule as creating a PSD permit moratorium, beginning on the [January 2, 
2011 and July 1, 2011 phase-in] dates, with regard to those sources 
whose GHG emissions are above the applicable Tailoring Rule 
thresholds.'' This commenter argues that ``EPA's premise that the 
Tailoring Rule imposes a construction moratorium, absent a SIP revision 
or a FIP, beginning on January 2, 2011, is unlawful and should be 
abandoned.'' This commenter appears to ascribe to EPA the view that the 
construction ban is a sort of sanction that EPA may impose; the 
commenter appears to read the proposed SIP call as characterizing the 
Tailoring Rule as attempting to use the construction moratorium in that 
manner. The commenter does not cite any statement in the proposed SIP 
call that characterizes the Tailoring Rule in that manner or any 
provision in the Tailoring Rule that could be read to attempt to use 
the construction moratorium in that manner.
(B) Response
    The commenters have misstated what the Tailoring Rule did and, in 
so doing, have misstated the source of the requirement that PSD applies 
to GHG-emitting sources. Contrary to what the commenters state, the 
Tailoring Rule did not establish the requirement that PSD apply to GHG-
emitting sources. This requirement was established by operation of the 
applicable CAA provisions, in conjunction with the LDVR. That is, the 
CAA requirements (i) prohibit ``major emitting facilit[ies]'' from 
constructing or modifying without obtaining a permit that meets the PSD 
requirements, CAA section 165(a)(1), and (ii) define a ``major emitting 
facility'' as a source that emits a specified quantity of ``any air 
pollutant,'' CAA section 169(1), which EPA has long interpreted as any 
pollutant subject to regulation. In this manner, the CAA requirements 
for PSD applicability are what we call automatically updating, that is, 
whenever EPA regulates a previously unregulated pollutant, PSD applies 
at that time to that pollutant without further regulatory action by 
EPA.
    EPA regulations have long codified this automatically updating 
aspect of the CAA PSD requirements. See 43 FR 26380, 26403/3, 26406 
(June 19, 1978) (promulgating 40 CFR 51.21(b)(1)(i)) and 42 FR 57479, 
57480, 57483 (November 3, 1977) (proposing 40 CFR 51.21(b)(1)(i)) 
(applying PSD requirements to a ``major stationary source'' and 
defining that term to include sources that emit specified quantities of 
``any air pollutant regulated under the Clean Air Act''). Most 
recently, in our 2002 NSR Reform rule, EPA reiterated these 
requirements, although changing the terminology. 67 FR 80186 (December 
31, 2002). Specifically, EPA required that emissions of ``any regulated 
NSR pollutant'' be subject to PSD requirements when emitted in 
specified quantities by sources and defined that

[[Page 77708]]

term to include pollutants regulated under certain CAA requirements, as 
well as ``any pollutant that otherwise is subject to regulation under 
the [CAA].'' 52.166(b)(49)(iv). EPA made clear in the preamble to the 
NSR Reform rule that PSD applicability was automatically updating. 67 
FR at 80240.
    As discussed elsewhere, it is these provisions, in conjunction with 
the LDVR (which subjects GHGs to regulation), that have triggered PSD 
applicability for GHG-emitting sources. The Tailoring Rule did not do 
so.
    In fact, rather than establishing the requirement that PSD apply to 
GHG-emitting sources, the Tailoring Rule alleviated that requirement 
for most of the GHG-emitting sources that would otherwise be affected. 
The Tailoring Rule did so by providing that the only GHGs ``subject to 
regulation'' are those that are emitted by sources at or above 
specified thresholds (the Tailoring Rule thresholds).\21\ In order to 
identify the thresholds, it was necessary for EPA to identify (i) the 
pollutant that comprises GHGs and (ii) how to account for that 
pollutant. However, the Tailoring Rule made clear that, on the one 
hand, the states may either: (a) Adopt different requirements for the 
thresholds, as long as those requirements were equivalent to the 
requirements of the thresholds promulgated by EPA; or (b) apply lower 
thresholds, as long as the states accompanied them with an assurance of 
adequate resources. Thus, had EPA never promulgated the Tailoring Rule, 
PSD would nevertheless apply to GHG-emitting sources; it would apply to 
all GHG-emitting sources at or above the 100/250-tpy threshold; and it 
would not be limited to GHG-emitting sources at or above the Tailoring 
Rule thresholds.
---------------------------------------------------------------------------

    \21\ More broadly, the Tailoring Rule indicated that the 
Tailoring Rule thresholds could be treated as incorporated in any of 
several of the components of the regulatory definition of ``major 
stationary source.'' 75 FR at 31582.
---------------------------------------------------------------------------

    The SIP call that EPA is finalizing in this action is based on the 
failure of the SIPs to apply PSD to GHG-emitting sources, and that 
failure, in turn, is rooted in the failure of the SIPs to apply PSD to 
newly regulated pollutants on an automatically updating basis. The 
states' corrective SIP revision in response to the SIP call that 
applies PSD to GHG-emitting sources may apply the Tailoring Rule 
thresholds (or lower thresholds, depending, as just noted, on the 
state's resources), but, again, the current failure of the SIPs to 
include the Tailoring Rule thresholds is not the basis for the SIP 
call.
    As a result, the process of 40 CFR 51.166(a)(6)(i), with its 3-year 
deadline, does not apply in place of the SIP call, as the commenter 
suggests. 40 CFR 51.166(a)(6)(i) provides, ``Any State required to 
revise its implementation plan by reason of an amendment to this 
section, including any amendment adopted simultaneously with this 
paragraph (a)(6)(i), shall adopt and submit such plan revision to the 
Administrator for approval no later than three years after such 
amendment is published in the Federal Register.'' (Emphasis added.) 
This provision was added as part of the 2002 rulemaking revising the 
NSR program that we call the NSR Reform rule. See 67 FR 80186 (December 
31, 2002). In addition, as noted already, the requirement that SIP PSD 
programs automatically update is a longstanding requirement, and EPA 
most recently reiterated that requirement, with revised terminology, in 
the NSR Reform rule as well. There, EPA revised the definition of major 
stationary source--the entity to which PSD applies--to mean a source 
that emits the requisite amount of ``any regulated NSR pollutant,'' 40 
CFR 51.166(b)(1)(i)(a), 67 FR at 80239-40; and EPA defined that term to 
include, among other things, ``any air pollutant that otherwise is 
subject to regulation under the Act.'' 40 CFR 51.166(b)(49)(iv). EPA 
added in the preamble, ``[t]he PSD program applies automatically to 
newly regulated NSR pollutants, which would include final promulgation 
of an NSPS applicable to a previously unregulated pollutant.'' 67 FR at 
80240. After EPA promulgated the NSR Reform rule, many states submitted 
SIP revisions that incorporated the revised terminology, and in that 
manner, assured that their PSD programs automatically updated. Of 
course, the states subject to this SIP call have had the opportunity to 
submit SIP revisions since December 31, 2002--almost 8 years ago--to 
conform to the NSR Reform rule and thereby assure that their PSD 
programs are automatically updating. 67 FR at 80241. Many of the 
affected states did not do so, and that has led to the failure of the 
SIPs to apply PSD to GHGs, which is the substantial inadequacy that 
justifies the SIP call.
    It is true that the SIP call requires a corrective SIP revision for 
states to apply PSD to GHG-emitting sources (and does not mandate that 
states revise their PSD applicability provisions to incorporate an 
automatic updating mechanism). In doing so, states may adopt the 
Tailoring Rule thresholds--including certain features such as the 
definition of GHGs--or may adopt differently phrased requirements or 
lower thresholds, as explained earlier in this preamble, but this 
aspect of the state's obligation does not, as commenters would have it, 
somehow take the requirement out of the SIP call process and place it 
in the 40 CFR 51.166(a)(i) process.
    In addition, it is clear that the commenters are incorrect in their 
assertion that PSD applicability for GHGs must be delayed for the 3-
year SIP submission period under 40 CFR 51.166(a)(i) and in their 
related assertion that EPA's efforts to apply the Tailoring Rule amount 
to unlawful retroactive application of regulatory requirements. The 3-
year period does not apply to this requirement that PSD apply to GHG-
emitting sources, as discussed earlier in this preamble; even more, by 
operation of the CAA, in conjunction with the LDVR, PSD applies to GHGs 
beginning on January 2, 2011, with or without the Tailoring Rule. 
Again, the Tailoring Rule simply adds thresholds to limit that 
applicability.\22\
---------------------------------------------------------------------------

    \22\ Nor does any provision in 40 CFR 51.166 mandate that states 
adopt the Tailoring Rule thresholds. Again, the Tailoring Rule 
thresholds are limitations on PSD applicability and are not minimum 
PSD requirements that states must adopt under CAA section 110(a) or 
the PSD provisions. Rather, a state may, if it chooses, retain the 
lower 100/250-tpy thresholds, apply PSD to a larger universe of GHG-
emitting sources, and increase its resources for PSD permitting 
accordingly. Thus, the 3-year period in 40 CFR 51.166(a)(1) does not 
apply to the SIP revisions that adopt the Tailoring Rule thresholds.
---------------------------------------------------------------------------

    For similar reasons, commenters are also incorrect in arguing that 
CAA section 110(a)(1), which requires a SIP submittal ``within 3 years 
(or such shorter period as the Administrator may prescribe),'' supports 
a 3-year period for the SIPs required under the SIP call and precludes 
PSD applicability during that period. Nothing in that provision 
overrides the operation of the CAA provisions, discussed elsewhere, 
which automatically apply PSD to newly regulated pollutants, and EPA's 
regulations that codify those provisions, in conjunction with the LDVR, 
to mean that GHG-emitting sources are subject to PSD as of January 2, 
2011. Moreover, this provision cannot override the SIP call provisions, 
which apply for reasons stated elsewhere. In any event, this provision 
does not mandate a 3-year period for SIP submittal; rather, the 
provision, by its terms, authorizes EPA to prescribe a shorter period.
    Another commenter is mistaken in making the somewhat similar 
assertion that ``with regard to the SIP revisions required to 
accommodate any new regulated pollutant under the PSD program Section 
166(b) of the Act allows the States 21 months. Any SIP

[[Page 77709]]

Call before the States have failed to meet that deadline is illegally 
premature.'' The commenter is mistaken because (i) CAA section 166(b) 
by its terms applies only in the case of certain pollutants listed in 
CAA section 166(a) and pollutants for which NAAQS are promulgated and 
therefore does not apply to GHGs, and (ii) the D.C. Circuit held, in 
Alabama Power v. Costle, that the 21-month period does not toll the 
applicability of PSD requirements to pollutants, that is, that PSD 
requirements apply to pollutants during that period. 636 F.2d 323,406 
(1980).
    Finally, the commenter erred in asserting that in the proposed SIP 
call, ``EPA characterized the Tailoring Rule as creating a PSD permit 
moratorium,'' that EPA has no authority to impose such a moratorium, 
and therefore that no such moratorium can apply in the affected states. 
On the contrary, neither in the proposed SIP call nor anywhere else has 
EPA ``characterized the Tailoring Rule as creating a PSD permit 
moratorium.'' The commenter has not--nor could it--provide any 
citations to that effect. It is certainly true that EPA does not have 
authority to impose a blanket construction moratorium, and EPA has 
never claimed to the contrary. What EPA did say in the proposed SIP 
call is that GHG-emitting sources in states without authority to issue 
permits to those sources will face de facto obstacles to construction 
or modification. For example, EPA said that in such states, ``absent 
further action, GHG sources that will be required to obtain a PSD 
permit for construction or modification on and after January 2, 2011, 
will be unable to obtain that permit and therefore may be unable to 
proceed with planned construction or modification * * *. '' 75 FR at 
53894/3. This statement remains valid.
(III) Timing of finding of substantial inadequacy
    Some industry commenters also stated that EPA ``cannot make [a 
finding of substantial inadequacy] until the January 2, 2011, date on 
which PSD permitting requirements for GHGs will [first] apply.'' They 
explained that CAA section 110(k)(5) ``does not describe the event of a 
`substantial inadequacy' as an anticipated future occurrence, instead 
stating that EPA may issue a SIP call to any state with a SIP that `is 
substantially inadequate' to comply with CAA requirements. The CAA does 
not provide EPA with a basis for * * * issu[ing] a SIP call because the 
agency expects to find that some states' SIP will become `substantially 
inadequate' at some later time.'' (Emphasis in original.)
    We disagree with commenters' reading of CAA section 110(k)(5). EPA 
is justified in finding that under CAA section 110(k)(5), each of the 
affected SIPs ``is substantially inadequate'' to comply with CAA 
requirements at the present time.
    In brief, under each of these SIPs' current provisions, they will 
not apply PSD to GHG-emitting sources when, in only one month's time, 
those sources will be subject to PSD under the CAA. Some lead time 
generally is required to revise SIPs. As a result, there is a 
meaningful risk in each of these states that, beginning in one month's 
time, sources that are subject to PSD will not have a permitting 
authority available to process their permit applications and therefore 
will face delays in their construction and modification projects. This 
situation is not in keeping with one of the purposes of PSD, which is 
to protect the environment in a manner that reduces potential negative 
repercussions to economic growth. Consistent with that purpose, we 
interpret CAA section 110(k)(5) to authorize a finding at this time 
that the SIPs are substantially inadequate to comply with CAA 
requirements.
    Specifically, as discussed earlier in this preamble, under the 
terms of the CAA PSD applicability provisions, large sources become 
subject to PSD as soon as the pollutants they emit become subject to 
regulation. CAA section 165(a)(1), 169(1). Accordingly, again as 
discussed earlier in this preamble, (i) the CAA requires that states 
assure that the PSD applicability provisions in their SIPs are 
automatically updating, (ii) EPA's longstanding regulations incorporate 
this requirement, and (iii) EPA reiterated this regulatory requirement 
for automatic updating in the 2002 NSR Reform rule (see 67 FR 80186, 
December 31, 2002), using different terminology, and required states to 
submit SIP revisions incorporating the requirement within 3 years. The 
requirement for automatic updating is one of the foundations for the 
requirement that the SIPs affected by this action apply PSD to GHG-
emitting sources as of January 2, 2011.
    These SIPs, under their present provisions, do not do so, and thus 
they will not apply PSD to GHG-emitting sources by January 2, 2011. If 
they do not, then no permitting authority will be available by January 
2, 2011, and sources may face delays in obtaining permits to construct 
or modify. To assure the availability of a permitting authority, the 
SIPs must be revised and approved by EPA, or else a FIP must be put in 
place. This process requires some time, but again, until it is 
completed, sources face those delays.
    Delays in construction or modification solely due to the lack of a 
permitting authority to process applications are not consonant with the 
purposes of the PSD provisions. One purpose of the PSD provisions is to 
protect public health and the environment consistent with the promotion 
of economic development. See CAA section 160. In particular, CAA 
section 160(3) identifies as some of the purposes of PSD, ``to insure 
that economic growth will occur in a manner consistent with the 
preservation of existing clean air resources.''
    The requirements of CAA section 110(k)(5), as they apply to PSD 
SIPs, should be interpreted in that light. The DC Circuit has held that 
the terms of the PSD provisions should be interpreted with the PSD 
purposes in mind, New York v. EPA, 413 F.3d 3, 23(DC Cir.), rehearing 
en banc den., 431 F.3d 801 (2005), and the same should be true of CAA 
section 110(k)(5) as applied to PSD requirements. Therefore, whether a 
SIP ``is substantially inadequate'' under CAA section 110(k)(5) should 
be interpreted in light of the purposes of the PSD provisions, 
including the need to insure that economic growth will occur consistent 
with environmental goals.
    In this light, EPA concludes that each affected SIP ``is 
substantially inadequate'' at this time because it does not apply PSD 
to GHG-emitting sources, and only a month remains before those sources 
will become subject to the requirement to obtain a permit for their GHG 
emissions when they construct or modify. In light of the lead time 
required to revise the SIP or put in place a FIP, there is a 
substantial risk that no permitting authority will be in place to 
process permit applications, which would result in delays in PSD permit 
issuance. As a result, it is sensible and in keeping with the purposes 
of the PSD provisions to issue the SIP call at this time and thereby 
set in motion the process to establish a permitting authority. As noted 
elsewhere, with this approach, almost all of the affected states will 
have a permitting authority in place by January 2, 2011, or soon enough 
thereafter that any delay will not have substantial adverse effects on 
sources in the state.
    In contrast, under the commenter's interpretation, EPA would be 
obliged to wait until January 2, 2011, when PSD begins to apply to GHG-
emitting sources, before EPA could require corrective action. Under 
that approach, it is much more likely that sources in some states would 
find themselves subject to delays before they could

[[Page 77710]]

construct or modify, a result at odds with the purposes of the PSD 
provisions.
b. Deadline
(i) Final Action
    This action finalizes our proposal to establish for each state 
subject to the SIP call a deadline of 12 months from the date of the 
final SIP call to submit its corrective SIP revision, except that if 
the state informed EPA that it would not object to a specified shorter 
deadline--as short as 3 weeks from the date of this final action--then 
EPA would establish that shorter period as the SIP deadline.
    This 3-week-to-12-month time deadline, although expedited, meets 
the CAA section 110(k)(5) requirement of a ``reasonable deadline[].'' 
The term ``reasonable'' as it appears in that provision is not defined. 
Accordingly, it should be given its everyday meaning. The dictionary 
definition of the word ``reasonable'' is ``fair and sensible,'' ``based 
on good sense,'' or ``as much as is appropriate or fair.'' Oxford 
American College Dictionary 1138 (2d ed. 2007). Thus, a reasonable 
deadline is a time period that is sensible or logical, and that in turn 
depends on the facts and circumstances. Those facts and circumstances 
include (i) The SIP development and submission process, (ii) the 
preference of the state, and (iii) the imperative to minimize the 
period when sources will be subject to PSD but will not have available 
a PSD permitting authority to act on their permit application and 
therefore would be unable to construct or modify.
    First, as to the SIP development process, the 12-month outside time 
limit is reasonable because it is consistent with the time period 
required for SIP revisions in at least one previous SIP call that EPA 
issued, the NOx SIP Call.\23\ Moreover, a large number of states have 
indicated to EPA that they expect to submit their GHG SIP revisions 
within 12 months. These states include some that are the subject of 
today's SIP call action and others that already have PSD programs that 
apply to GHG-emitting sources and are submitting SIP revisions to 
incorporate the Tailoring Rule thresholds.\24\
---------------------------------------------------------------------------

    \23\ ``Finding of Significant Contribution and Rulemaking for 
Certain States in the Ozone Transport Assessment Group Region for 
Purposes of Reducing Regional Transport of Ozone; Rule.'' 63 FR 
57356 (October 27, 1998).
    \24\ Declaration of Regina McCarthy, Coalition for Responsible 
Regulation v. EPA, DC Cir. No. 09-1322 (and consolidated cases) 
(McCarthy Declaration), Attachment 1, Tables 2-3, in the docket for 
this rulemaking.
---------------------------------------------------------------------------

    At the state's election, the deadline may be shorter than 12 
months. We recognize that this period is expedited in light of the time 
involved in most SIP development and submission processes. In 
particular, we recognize that some states may need to undertake full-
blown rulemaking actions, which often take a long time to complete, and 
we acknowledge that some states may need to change their statutory 
provisions, which may take even longer. Even so, we believe that under 
the circumstances present here, states may decide that a deadline 
shorter than 12 months is reasonable in light of emergency or other 
streamlined processes that may be used to significantly expedite 
action. The reasonableness of the shorter deadline is further supported 
because as a practical matter, for the most part, the affected states 
were given notice as early as August 12, 2010, when the proposed SIP 
call was signed and posted to the web (75 FR 53907), that they would 
likely need to submit, on a short timeframe, a SIP revision. Thus, 
these states will have had some three-and-a-half months prior to the 
final SIP call date to have begun work on their SIP revisions. Indeed, 
many states have taken advantage of that time and have already begun to 
develop their SIP submissions, some have already submitted them in 
draft form for parallel processing, and some have submitted them in 
final form. Although this is a matter of state process, we are prepared 
to work with the states on our end to develop expedited methods for 
developing, processing, and submitting SIP revisions.
    Second, the flexibility in EPA's structure for deadlines, including 
the opportunity for states to select shorter deadlines, is reasonable 
because it is based on the state's preference. This is consistent with 
the federalism principles that underlie the SIP call process and the 
SIP system as a whole. That is, in the first instance, it is to the 
state to whom falls the responsibility of developing pollution controls 
through an implementation plan. Here, the deadline for the state to 
submit the plan can be as long as 1 year or as little as 3 weeks, at 
the election of the state. In fact, almost all of the states have 
articulated a preference for a deadline, and among them, they are 
choosing--or at least not objecting to--deadlines that range from 3 
weeks to 12 months. An earlier deadline under which the state must 
operate acts as a burden on the state, but if the state has chosen 
that, and thereby has declined the option of a longer deadline (e.g., 
12 months), then the earlier deadline should be considered reasonable.
    Third, the need to give the states the opportunity to minimize the 
period when sources may be unable to construct or modify due to the 
lack of regulatory authority to act on their permit applications is an 
essential consideration that supports the reasonableness of EPA's 
schedule. A shorter period for SIP submittal means that either the 
state, through the SIP revision that it submits on an expedited basis 
in light of this tight schedule, or EPA, through a FIP, will become the 
permitting authority sooner and will then be able to act on permit 
applications and issue permits that allow new construction and 
modification of existing plants. As noted earlier in this preamble, the 
purposes of the PSD provisions include both the protection of public 
health and the environment as well as the promotion of economic 
development. See, e.g., CAA section 160(3). The D.C. Circuit has held 
that the terms of the PSD provisions should be interpreted with these 
goals in mind. New York v. EPA, 413 F.3d 3, 23 (DC Cir.), rehearing en 
banc den., 431 F.3d 801 (2005). Accordingly, determining a ``reasonable 
deadline[]'' for the submittal of a PSD SIP revision should account for 
the need to protect economic development, consistent with protecting 
clean air resources, by assuring the availability of a permitting 
authority to process permit applications.
(ii) Response to comments
    Some industry commenters objected to this deadline on several 
grounds. Their first objection is that (i) EPA contends that EPA has 
the authority to impose a construction ban, (ii) in fact, EPA does not 
have that authority, but (iii) EPA is ``using the phantom threat of a 
construction ban to intimidate states into immediately accepting GHG 
regulation. * * *''
    We disagree with the commenters' objection. It is untrue that EPA 
somehow interprets the CAA to authorize EPA to apply a construction ban 
as a type of sanction to apply when a pollutant becomes subject to 
regulation, or that EPA has stated that it interprets the CAA that way. 
Rather, as discussed earlier in this preamble, it is by operation of 
the CAA provisions that as of January 2, 2011, large GHG-emitting 
sources will be required to obtain permits to construct or modify. If 
these sources are located in a state with an approved PSD program that 
does not apply to GHGs, then no permitting authority may be available 
and, as a result, the sources may face delays in undertaking 
construction or modification projects. EPA is not seeking to intimidate 
states; rather, we wish to make sure states are fully aware

[[Page 77711]]

of this potential for delays in their sources' ability to construct or 
modify, and we do wish to give states the option to allow an early FIP 
that will eliminate that potential for delays. As noted earlier in this 
preamble, some states are selecting an early SIP submittal deadline in 
order to allow an early FIP that will eliminate that potential, while 
other states are selecting a later SIP submittal deadline but are 
confident that their sources will not suffer damaging delays in the 
interim.
    Commenters also state that even with a SIP call, states should be 
given more than 12 months to submit their corrective SIP revisions. The 
commenters explain that a 12-month period is ``much too brief'' in 
light of the need for notice and comment at the state level in 
developing a SIP revision. Some commenters claim that the ```default' 
timeframe for allowing states to revise their SIPs due to a 
`substantial inadequacy' with the SIPs' ability to maintain NAAQS for a 
conventional pollutant is 18 months.'' Some commenters state that 
``[b]ased on EPA's SIP call precedent, a development period of up to 
three years would be appropriate.'' Commenters also note that the 
legality of various aspects of the Tailoring Rule, including the 
revisions made by that rule to 40 CFR 51.166, has been challenged in 
the U.S. Court of Appeals for the DC Circuit, and the outcome of that 
litigation will not be known for some time. In such a setting, 
commenters state, even a December 2011 SIP call deadline would be 
inconsistent with CAA section 110(k)(5) by not affording states a 
``reasonable'' time to accomplish all that they would need to do in 
order to address the Tailoring Rule requirements.
    Another commenter concludes that ``[i]t was EPA's choice (and EPA's 
legal interpretation of the CAA) to require states to regulate GHGs 
under the states' PSD and Title V permit programs; the agency must now 
give states a 'reasonable' period of time to comply free from onerous 
consequences if the states do not act within one month.''
    Other commenters also express concern that a deadline of 3 weeks 
cannot be considered ``reasonable.'' One state commenter (Kentucky) 
observes that the 3-week deadline departs from the ``normal SIP Call 
process'' and is ``impossibly aggressive for many agencies,'' and the 
commenter recommends ``a later date to allow states the ability to 
properly and adequately prepare to implement the new standards as has 
been done historically with every SIP Call in the past.'' Another state 
commenter (Arkansas) notes that its standard rulemaking process is 
lengthy in comparison to the 3-week-to-12-month deadline EPA proposed 
and weighs against calling EPA's deadline reasonable.
    According to a state commenter (Arkansas), ``the need to keep state 
PSD permitting authority intact in order to act on permit applications 
would not be an issue but for the conglomeration of rules and timelines 
put into place by EPA to implement the regulation of GHG-emitting 
sources.'' Responding to the proposed SIP call, Arkansas states that it 
does not object to the shortest SIP deadline of 3 weeks after the SIP 
call, in light of the precarious position that Arkansas sources would 
be in without the speedy issuance of a FIP. However, state officials 
remark that the deadline is not a preference but instead is more aptly 
described as a necessity under the circumstances created by EPA.
    With respect to the longer end of the schedule, as we explained 
earlier in this preamble, we consider the 12-month period to be 
adequate. We provided 12 months for the NOX SIP Call 
rulemaking, and states were generally able to comply within that 
timeframe. Our information indicates that in virtually all cases, the 
affected states have begun to develop their SIP revisions already, and 
so far, almost all of the states are on track to submit their SIP 
revisions by December 1, 2011, even though many have indicated they do 
not object to an earlier deadline.
    Specifically, EPA regional and headquarters officials have 
conferred extensively with state officials concerning the states' 
progress and plans.\25\ Based on the states' 30-day letters and other 
communications with the states, 13 states operate PSD programs under 
SIPs that EPA identifies as lacking the authority to issue PSD permits 
for GHG emissions starting January 2, 2011. EPA expects that, of these 
13 states (encompassing 15 state and local permitting agencies), 7 
states (8 state and local permitting agencies) will be subject to a FIP 
by January 2, 2011. One state, Texas, has not indicated a preference 
for a SIP submittal deadline--and so will receive the default deadline 
of December 1, 2011--and has said that it does not intend to submit a 
SIP revision. EPA specifically requested of states for which we 
proposed the SIP call that they inform EPA of the period of time that 
they would accept as the deadline for submittal of their SIP revisions 
in response to a SIP call. See 75 FR at 53901. Accordingly, EPA is 
planning additional actions to ensure that GHG sources in Texas, as in 
every other state in the country, have available a permitting authority 
to process their permit applications as of January 2, 2011 (or, at the 
state's election, a short period thereafter that the state has said 
will not impede the ability of sources to obtain permits in a timely 
way).
---------------------------------------------------------------------------

    \25\ In addition, the National Association of Clean Air Agencies 
(NACAA) recently reviewed the 30-day letters from the states and 
accurately summarized them in a report, ``GHG Permitting Programs 
Ready To Go By January 2nd'' (October 28, 2010). This report is 
included as Attachment 3 to the McCarthy Declaration. This report 
can be found in the docket for this rulemaking. In a few cases, the 
information EPA collected is more recent than what was available to 
NACAA because EPA's information is based not just on the 30-day 
letters but also on conferring with the states. NACAA summarized its 
conclusions as follows: ``Excepting only one, programs in all states 
[for which EPA proposed a SIP Call] have indicated that they will 
either revise their PSD rules by January 2, 2011 or very shortly 
thereafter, or accept a Federal Implementation Plan (FIP) that will 
give EPA authority to issue the GHG portion of PSD permits until 
state rules are revised. This provides that sources required to 
apply PSD controls to their GHG emissions will be able to obtain the 
necessary permits and avoid construction delays.''
---------------------------------------------------------------------------

    With respect to the shorter end of the timetable, EPA recognizes 
commenters' concerns about the 3-week period that states may elect but 
considers this period reasonable, under the particular circumstances 
presented, as discussed earlier in this preamble, including the facts 
that the states still retain some discretion in selecting that period 
and that at this point in time, that 3-week period is what some states 
may need to protect their sources from the potential delays due to the 
lack of a permitting authority, and any longer period would expose 
their sources to such delays.
    A commenter's suggestion that EPA grant states ``a `reasonable' 
period of time to comply, free from onerous consequences if the states 
do not act within one month,'' is not tenable. A longer period of time 
would not solve the problem that, absent the establishment of EPA or 
state authority to issue GHG PSD permits by January 2, 2011, some 
sources in some states may experience obstacles to obtaining PSD 
permits authorizing construction or modification activities.
    As for the commenters' concerns that it is EPA's actions that have 
led to the timing issues, our response is that the timing issues arise 
because, on the one hand, the CAA requires that PSD applies to GHG-
emitting sources as soon as EPA subjects GHGs to regulation, but, on 
the other hand, the affected states' SIPs do not automatically apply 
PSD to GHG-emitting sources. As a result of the lack of automatic PSD 
applicability in those states, no permitting authority is available to 
issue permits to the GHG-emitting sources until some rulemaking 
action--whether it is a SIP or a FIP--occurs that applies PSD to GHG-

[[Page 77712]]

emitting sources in that state and thereby establishes a permitting 
authority. This timing issue does not arise in the majority of states, 
because their SIPs do automatically apply to GHG-emitting sources as 
soon as EPA subjects GHGs to regulation.
    In this regard, we reiterate that EPA's actions in promulgating the 
LDVR, which, in conjunction with the operation of the CAA, resulted in 
PSD applicability for GHGs, were fully consistent with the CAA. In 
addition, EPA has endeavored to provide as much time as possible to 
establish a permitting authority in the affected states by 
expeditiously implementing PSD applicability, including the Tailoring 
Rule and this rulemaking.
    More specifically, with respect to the timing for the LDVR, EPA 
promulgated that rule by notice dated May 7, 2010, and explained the 
timing as follows:

    EPA is issuing these final GHG standards for light-duty vehicles 
as part of its efforts to expeditiously respond to the Supreme 
Court's nearly three year old ruling in Massachusetts v. EPA, 549 
U.S. 497 (2007). In that case, the Court held that greenhouse gases 
fit within the definition of air pollutant in the Clean Air Act, and 
that EPA is therefore compelled to respond to the rulemaking 
petition under section 202(a) by determining whether or not 
emissions from new motor vehicles cause or contribute to air 
pollution which may reasonably be anticipated to endanger public 
health or welfare, or whether the science is too uncertain to make a 
reasoned decision. The Court further ruled that, in making these 
decisions, the EPA Administrator is required to follow the language 
of section 202(a) of the CAA. The Court stated that under section 
202(a), ``[i]f EPA makes [the endangerment and cause or contribute 
findings], the Clean Air Act requires the agency to regulate 
emissions of the deleterious pollutant.'' 549 U.S. at 534. As 
discussed above, EPA has made the two findings on contribution and 
endangerment. 74 FR 66496 (December 15, 2009). Thus, EPA is required 
to issue standards applicable to emissions of this air pollutant 
from new motor vehicles.
    The Court properly noted that EPA retained ``significant 
latitude'' as to the ``timing * * * and coordination of its 
regulations with those of other agencies'' (id.). However it has now 
been nearly three years since the Court issued its opinion, and the 
time for delay has passed.

75 FR at 25402/1. EPA went on to explain other reasons why it was 
necessary to promulgate the LDVR at that time. Id. at 25402/1-2.
    The LDVR, in conjunction with the operation of the CAA, resulted in 
the January 2, 2011, ``take effect'' date that is triggering PSD 
applicability for GHG-emitting sources. Less than one month after the 
LDVR, by notice dated June 3, 2010, EPA finalized the Tailoring Rule, 
and in that action, EPA requested states to advise EPA by letter within 
60 days, or by August 2, 2010, whether their SIP PSD program applied to 
GHG-emitting sources. These letters helped indicate the number of 
states that lacked authority to apply PSD to GHG-emitting sources. Less 
than one month later, on September 2, 2010, EPA published the proposed 
SIP call and proposed FIP. EPA is now taking final action on the SIP 
call only 3 months after that.
    As a result of EPA's expedited actions, states will have some 
opportunity to develop SIP revisions by, or soon after, the January 2, 
2011, date. Some states began to develop their SIP revisions promptly 
following the SIP call proposal. As a result, they in fact are able to 
revise their SIPs within a very short timeframe. For example, of the 
states and localities for which EPA proposed the SIP call, EPA 
currently expects one state to have an approved SIP revision by January 
2, 2011, and two more states (three local permitting agencies) to have 
one by February 1, 2011. Other jurisdictions have SIP development 
processes that generally take longer but can still be accomplished well 
within the 12-month period. According to these particular states, a 
deadline that is later than January 2, 2011, does not pose a problem 
because they do not expect their sources to require permits from 
January 2, 2011, until their deadline. We believe that taken as a 
group, the affected states and local agencies have selected a range of 
deadlines that suit their individual circumstances and, we think, that 
evidences the reasonableness of the deadlines we are establishing.
    We note, finally, that our approach results in reasonable deadlines 
in light of the fact that states that select the FIP approach may 
immediately seek a delegation of authority to implement the FIP. 
Therefore, as a practical matter, there is little difference between 
processing GHG PSD permit applications under the authority of the 
state's own SIP and processing such applications under the authority of 
a FIP. This is because if a state were to accept delegation, the state 
would be required to implement EPA regulations, including EPA 
regulatory requirements concerning BACT, but in many cases, these EPA 
regulatory BACT requirements are the same as BACT requirements in the 
state's approved SIP. In addition, the state would inherently have a 
great deal of discretion in PSD permitting decisions because BACT 
determinations are made on a case-by-case basis that entails making 
judgments about a number of factors.
2. State-Specific Actions
    In this section of the preamble, we summarize our basis for action 
for each of the states for which we are issuing a finding of 
substantial inadequacy and issuing a SIP call, as well as our basis for 
not issuing a finding or SIP call for any state for which we proposed 
to do so. We present a more detailed discussion in a Supplemental 
Information Document, which can be found in the docket for this 
rulemaking. The Supplemental Information Document includes all letters 
received from the affected states in response to our proposed action, 
as well as additional material that we collected and considered for 
this final action.
    In table IV-2, ``Summary of State-specific Actions in Finalizing 
SIP Call, by State,'' we identify the states and areas affected in this 
final rule.

                 Table IV-2--Summary of State-Specific Actions in Finalizing SIP Call, by State
----------------------------------------------------------------------------------------------------------------
                                                              Basis for finding of       SIP submittal deadline
          State (or area)           Final SIP call status    substantial inadequacy            (MM/DD/YY)
----------------------------------------------------------------------------------------------------------------
Alaska............................  No SIP call..........  Not applicable. Already     Not applicable.
                                                            made SIP submittal to
                                                            EPA..
Arizona: Pinal County.............  SIP call issued......  PSD applicability           12/22/10.
                                                            provision identifies
                                                            specific pollutants but
                                                            does not include GHG.
Arizona: Rest of State (Excludes    SIP call issued......  PSD applicability           12/22/10.
 Maricopa County, Pima County, and                          provision identifies
 Indian Country).                                           specific pollutants but
                                                            does not include GHG.

[[Page 77713]]

 
Arkansas..........................  SIP call issued......  PSD applicability           12/22/10.
                                                            provision incorporates by
                                                            reference 40 CFR 52.21,
                                                            but it does not include
                                                            GHG because it does not
                                                            allow automatic updating.
California: Sacramento              SIP call issued......  PSD applicability           01/31/11.
 Metropolitan AQMD.                                         provision identifies
                                                            specific pollutants but
                                                            does not include GHG.
Connecticut.......................  SIP call issued......  PSD applicability           03/01/11.
                                                            provision explicitly
                                                            exempts ``carbon
                                                            dioxide.''.
Florida...........................  SIP call issued......  PSD applicability           12/22/10.
                                                            provision identifies
                                                            specific pollutants but
                                                            does not include GHG.
Idaho.............................  SIP call issued......  PSD applicability           12/22/10.
                                                            provision generally
                                                            incorporates by reference
                                                            40 CFR 52.21, but it does
                                                            not include GHG because
                                                            it does not allow
                                                            automatically updating.
Kansas............................  SIP call issued......  PSD applicability           12/22/10.
                                                            provision incorporates by
                                                            reference 40 CFR 52.21,
                                                            but it does not include
                                                            GHG because it does not
                                                            allow automatic updating.
Kentucky: Louisville Metro Air      SIP call issued......  PSD applicability           01/01/11.
 Pollution Control District.                                provision incorporates by
                                                            reference 40 CFR 52.21,
                                                            but it does not include
                                                            GHG because it does not
                                                            allow automatic updating.
Kentucky: Rest of State (Excludes   SIP call issued......  PSD applicability           03/31/11.
 Louisville Metro Air Pollution                             provision incorporates by
 Control District).                                         reference 40 CFR 52.21,
                                                            but it does not include
                                                            GHG because it does not
                                                            allow automatic updating.
Nebraska..........................  SIP call issued......  PSD requirements lack       03/01/11.
                                                            clear authority to
                                                            regulate GHG.
Nevada: Clark County..............  SIP call issued......  PSD applicability           07/01/11.
                                                            provision identifies
                                                            specific pollutants but
                                                            does not include GHG.
                                                            Local agency-effective
                                                            rule recently submitted
                                                            for SIP approval does not
                                                            include GHG because it
                                                            does not allow automatic
                                                            updating.
Oregon............................  SIP call issued......  PSD applicability           12/22/10.
                                                            provision identifies
                                                            specific pollutants but
                                                            does not include GHG.
Texas.............................  SIP call issued......  PSD applicability           12/01/11.
                                                            provision incorporates by
                                                            reference 40 CFR 52.21,
                                                            but it does not include
                                                            GHG because it does not
                                                            allow automatic updating.
Wyoming...........................  SIP call issued......  State law prevents the      12/22/10.
                                                            state's regulation of GHG.
----------------------------------------------------------------------------------------------------------------

C. Requirements for Corrective SIP Revision

1. Application of PSD Program to GHG-Emitting Sources
    Because EPA is issuing a finding of substantial inadequacy and 
issuing a SIP call for each state whose SIP fails to apply the PSD 
program to GHG-emitting sources, EPA is requiring the state to correct 
its SIP by submitting a SIP revision that applies PSD to GHG-emitting 
sources.
    For those states whose PSD applicability provisions apply PSD to 
listed air pollutants, the state may accomplish this correction in one 
of at least two different ways. First, the state may revise its PSD 
applicability provisions so that, instead of applying PSD to sources of 
individually listed pollutants, the provisions apply PSD to sources 
that emit any ``regulated NSR pollutant.'' We recommend that states 
follow this ``regulated NSR pollutant'' approach. It is consistent with 
our 2002 NSR Reform rule. See 67 FR at 80240.
    Moreover, the ``regulated NSR pollutant'' approach would more 
readily incorporate, for state law purposes, the phase-in approach for 
PSD applicability to GHG sources that EPA has developed in the 
Tailoring Rule and may develop further through additional rulemaking. 
As explained in the Tailoring Rule, incorporation of this phase-in 
approach for state law purposes (including Steps 1 and 2 of the phase-
in as promulgated in the Tailoring Rule and additional steps of the 
phase-in that EPA may promulgate in the future) can be most readily 
accomplished through state interpretation of the ``subject to 
regulation'' prong of the definition of ``regulated NSR pollutant.''
    There are other advantages to a state that adopts EPA's definition 
of ``regulated NSR pollutant.'' Doing so would resolve any issues about 
whether the state has authority to issue permits for sources of 
pollutants that EPA may subject to regulation for the first time in the 
future. In addition, the SIP would apply PSD to sources emitting 
PM2.5.\26\ Finally, state adoption of EPA's definition of 
``regulated NSR pollutant'' would allow the SIP to mirror EPA 
regulations and the SIPs of most states, which would promote 
consistency and ease of administration. EPA's reasons for recommending 
that states follow the ``regulated NSR pollutant'' approach are 
explained in more detail in the proposal for this action (see 75 FR at 
53903).
---------------------------------------------------------------------------

    \26\ Following a 1997 review of our NAAQS for particulate 
matter, we promulgated NAAQS for fine particles (PM2.5). 
We then designated all areas of the country as ``attainment,'' 
``nonattainment,'' or unclassifiable for the PM2.5 
standards, which became effective in April 2005. Pursuant to the 
CAA, states are obliged to revise their PSD regulations to include 
the new PM2.5 standards. However, some SIP PSD programs 
do not apply to PM2.5-emitting sources. To effect a 
smooth transition, EPA allowed states to use PM10 as a 
surrogate for PM2.5. EPA is not at present issuing a 
finding of substantial inadequacy under CAA section 110(k)(5) for 
such PSD programs.
---------------------------------------------------------------------------

    As an alternative to the ``regulated NSR pollutant'' approach just 
described, the state may retain its approach of applying PSD to sources 
of individually listed pollutants but submit a SIP revision that 
includes GHGs on that list of pollutants. If the state takes this 
approach, it must either incorporate the Tailoring Rule thresholds or 
demonstrate adequate resources to administer lower thresholds. If a 
state chooses this approach, we will approve the SIP revision on the 
basis that the revision is SIP-strengthening, as we stated in the 
proposal (see 75 FR at 53902).
    One state commenter (Connecticut) stated its understanding that ``a 
SIP-

[[Page 77714]]

strengthening approval is a form of limited approval that EPA uses for 
SIP submissions that meet only some of EPA's requirements, but for 
which there is no portion that may be separated out and fully approved 
or fully disapproved.''
    The commenter believes its previously SIP-approved PSD program 
should be fully approvable, once the state revises its regulations to 
include GHGs in the list of pollutants subject to its PSD program, to 
add applicability thresholds for GHGs, and to add GHGs to the 
pollutants for which a BACT review is required. This state commenter 
points out what it sees as a contradiction if EPA approves such a SIP 
revision as merely a SIP-strengthening one. The contradiction is that 
in our proposal, according to the commenter, EPA ``specifically notes 
that it is limiting the SIP Call to the failure to apply PSD to GHG-
emitting sources, as distinguished from finding that a SIP is 
substantially inadequate.'' The state commenter (Connecticut) strongly 
encourages EPA to ``reconsider this distinction in approving state PSD 
programs and to fully approve any state program that addresses GHGs as 
set out in the Tailoring Rule, regardless of the format the state uses 
to revise its SIP.''
    We appreciate this comment and welcome the opportunity to clarify 
what we mean by a ``SIP-strengthening'' approval in this case. This 
type of approval constitutes a full approval of the SIP revision 
because it meets the requirements of the SIP call to submit a 
corrective SIP revision that applies PSD to GHG-emitting sources. In 
this case, there is no limited or partial approval. However, because 
this SIP revision otherwise leaves the PSD applicability provision as 
it stands and does not revise that provision to automatically update to 
cover any pollutant newly subject to regulation, we term our approval 
SIP-strengthening.
    Although we recommend that the states adopt the ``regulated NSR 
pollutant'' approach, we do not require it because that approach is not 
necessary to correct the substantial inadequacy--which is the failure 
of the PSD SIP to cover GHG sources--for which we are issuing the SIP 
call. Rather, that substantial inadequacy may be corrected more 
narrowly by listing GHGs. We note that CAA section 110(k)(5) provides 
that ``[w]henever the Administrator finds'' that a SIP is substantially 
inadequate to meet CAA requirements, the Administrator shall require a 
SIP revision. This provision, by its terms--specifically, the use of 
the term ``[w]henever''--authorizes, but does not require, EPA to make 
the specified finding and does not impose any time constraints. As a 
result, EPA has discretion in determining whether and when to make the 
specified finding. See New York Public Interest Research Group v. 
Whitman, 321 F.3d 316, 330-31 (2d Cir. 2003) (opening phrase ``Whenever 
the Administrator makes a determination'' in CAA section 502(i)(1) 
grants EPA ``discretion whether to make a determination''); Her Majesty 
the Queen in Right of Ontario v. EPA, 912 F.2d 1525, 1533 (DC Cir. 
1990) (``whenever'' in CAA section 115(a) ``impl[ied] a degree of 
discretion'' in whether EPA had to make a finding). Accordingly, in 
this case, EPA is authorized to decide whether to issue the finding of 
substantial inadequacy on the basis of the SIP's lack of automatic 
updating or the narrower basis of the SIP's failure to apply PSD to 
GHGs. EPA chose the narrower basis because it addresses the immediate 
problem and because even states that do not adopt the automatic 
updating approach may nevertheless promptly take action to apply PSD to 
new pollutants and thereby avoid the problem of gaps in permitting 
authority. We caution, however, that in this case, if the state adopts 
the narrower approach of applying PSD to GHGs instead of the broader 
approach of applying PSD to ``regulated NSR pollutants'' so that the 
SIP will be automatically updating, then the SIP will not include the 
term ``subject to regulation'' and therefore may not include any 
vehicle or ``hook'' for the state to adopt by interpretation the 
current and any future steps of the phase-in approach. As a result, the 
state may have to adopt and submit for EPA approval additional SIP 
revisions to incorporate the current and future steps of the phase-in 
approach.
    For those states whose PSD applicability provisions apply PSD to 
regulated NSR pollutants, but whose SIPs or other state law limit that 
applicability to pollutants subject to regulation at or about the time 
the SIP provision was adopted by the state, the corrective SIP revision 
may accomplish the correction in one of several different ways. At a 
minimum, the state must revise its PSD applicability provision or other 
state law in such a manner that PSD applies to GHGs and either 
incorporates the Tailoring Rule thresholds or demonstrates adequate 
resources to administer lower thresholds. In addition, for many of the 
same reasons as discussed earlier in this preamble, we recommend--but 
do not require--that the state revise its PSD applicability provisions 
or other state law in such a manner that they (i) incorporate any 
future refinements to the Tailoring Rule thresholds that EPA may 
promulgate through its phase-in approach and (ii) will apply to any 
other pollutant that EPA newly subjects to regulation.
2. Definition and Calculation of Amount of GHGs
    In its corrective SIP revision to apply PSD to GHGs, the state must 
define GHGs as a single pollutant that is the aggregate of the group of 
six gases: CO2, CH4, N2O, HFCs, PFCs, 
and SF6. As EPA stated in the Tailoring Rule, ``[t]he final 
LDVR for GHGs specifies, in the rule's applicability provisions, the 
air pollutant subject to control as the aggregate group of the six GHGs 
* * *. Because it is this pollutant that is regulated under the LDVR, 
it is this pollutant to which PSD * * * appli[es].'' 75 FR at 31528.
    We proposed to require that the state define GHGs as just 
described, but we solicited comment on whether the state may adopt a 
different definition that is at least as stringent, and, if so, what 
such a definition might be. We cautioned that a definition that 
includes more gases than the six identified earlier in this preamble 
could prove to be less stringent in certain ways because such a 
definition could allow greater opportunities for a source of different 
gases to net out of PSD.
    One industry commenter stated that no state should be permitted to 
unilaterally adopt a definition of GHG that includes more gases than 
set forth in the Tailoring Rule. EPA did not receive any comments on 
the proposed rulemaking in support of a different definition. 
Accordingly, EPA is finalizing this requirement as proposed.
3. Thresholds
    A state, in revising its SIP to apply PSD to GHG-emitting sources, 
may adopt the Tailoring Rule phase-in approach into its SIP and thereby 
exclude sources below the Tailoring Rule thresholds. Alternatively, the 
state may adopt lower thresholds, but if it does so, it must show that 
it has ``adequate personnel [and] funding * * * to carry out,'' that 
is, administer and implement, the PSD program with those lower 
thresholds, in accordance with CAA section 110(a)(2)(E)(i).
    In the Tailoring Rule, EPA adopted a CO2e metric and use 
of short tons (as opposed to metric tons) for calculating GHG emissions 
in order to implement the higher thresholds. 75 FR 31530, 31532. If 
states wish to adopt the Tailoring Rule thresholds, they are not 
obligated to adopt the CO2e metric or use of short tons; 
however, the state

[[Page 77715]]

must assure that its approach is at least as stringent as under the 
Tailoring Rule, so that the state does not exclude more sources than 
under the Tailoring Rule. In addition, as noted earlier in this 
preamble, a state retains the authority to adopt lower thresholds than 
in the Tailoring Rule, but if it does, it must demonstrate that it has 
adequate resources.

D. Response to Procedural and Other Comments

1. Approved SIP PSD Programs That Apply to GHG Sources
    Commenters state that, ``[b]ased on its proposed rules, EPA has not 
fully considered the effect of its recent rulemakings on states and 
other jurisdictions that have indicated the 100 tpy CO2e and 
250 tpy CO2e thresholds apply to determine if GHGs trigger 
PSD under their SIP rules.'' The commenters emphasize that ``more than 
a dozen agencies implementing CAA permitting requirements will need to 
revise their regulations to incorporate EPA's tailored thresholds for 
GHGs and may be unable to do so before the Tailoring Rule's January 2, 
2011, effective date. After that, these agencies could each be 
potentially overwhelmed by permit applications from many newly-covered 
emissions sources, essentially halting construction within the 
agencies' jurisdictions.'' The commenters observe that ``[t]he Proposed 
SIP Call and Proposed FIP fail to discuss the economic consequences of 
this problem of the lower thresholds or to acknowledge that EPA has 
created this situation in the first instance.'' The commenters state 
that ``EPA should be focused on addressing this problem rather than the 
comparatively minor issue of whether a state that will not face this 
onslaught can include GHG emission limits in a few permits each year.'' 
The commenters add that states face difficult implementation issues as 
they incorporate the elements of the Tailoring Rule into their SIPs.
    These comments have no legal relevance to the SIP call because the 
states that are the focus of these commenters are not subject to the 
SIP call. We wish to note, however, that in fact, EPA is addressing 
expeditiously and comprehensively precisely the problems identified by 
the commenters. When EPA proposed the Tailoring Rule, EPA recognized 
and discussed at length these problems, that is, the fact that absent 
further action, in states with approved PSD programs that apply to GHG-
emitting sources, those sources at the 100/250-tpy thresholds would be 
required to obtain preconstruction permits. We identified the problems 
that would result. We proposed to address the federal law element of 
this problem by narrowing our approval of those SIP PSD programs to 
only the part of them that applied to GHG-emitting sources at or above 
the Tailoring Rule thresholds. 74 FR at 55340-44.
    Moreover, in the final Tailoring Rule, we remained mindful of this 
problem. We noted that, on the basis of teleconferences with states, we 
had decided to fashion the regulatory changes to implement the 
Tailoring Rule in a manner that would expedite state adoption of the 
Tailoring Rule thresholds. 75 FR at 31580-81. In addition, we asked 
states to tell us in letters to be submitted within 60 days after the 
Tailoring Rule how they planned to implement GHG permitting 
requirements and the Tailoring Rule, and we decided to delay final 
action on our proposal to narrow previous SIP approvals until we heard 
from the states. 75 FR at 31582. Having received and reviewed the 
states' responses, we intend to finalize the proposal in the Tailoring 
Rule to narrow EPA approval by January 2, 2011. That rule will assure 
that sources below the Tailoring Rule thresholds will not be subject to 
a Federal law requirement to obtain PSD permits due to their GHG 
emissions.
    Finally, we have worked closely with the states on this issue. We 
have encouraged them to interpret, when possible, their PSD 
applicability provisions to include the Tailoring Rule thresholds, so 
that no further action on their part is necessary, and a significant 
number of states are able to do so. In addition, we have encouraged the 
states that need to revise their laws to incorporate the Tailoring Rule 
thresholds to do so as quickly as possible, so that as of January 2, 
2011, or as soon as possible thereafter, sources below the Tailoring 
Rule thresholds will not be subject to a state law requirement to 
obtain PSD permits due to their GHG emissions. A large number of states 
have indicated that they will be able to take that step by January 2, 
2011, on at least an emergency basis. Accordingly, we are in fact 
addressing quickly and comprehensively the problems presented by the 
fact that, absent further action, sources of GHGs below the Tailoring 
Rule thresholds may trigger PSD requirements as of January 2, 2011.\27\
---------------------------------------------------------------------------

    \27\ Commenters add that a similar problem arises under title V, 
that is, that in a number of states, absent further action, large 
numbers of small sources will become subject to title V for the 
first time on account of their GHG emissions. The commenters 
conclude, ``[t]his further shows why it is both puzzling and 
troubling that EPA would consider a state's inability to issue a few 
permits with GHG limits in the first 6 months of 2011 a `substantial 
inadequacy.' '' EPA is also moving to address the title V issue 
commenters raise. EPA does not agree that deciding whether failure 
of the affected states' SIPs to apply PSD to GHG-emitting sources 
constitutes a substantial inadequacy depends on the relative 
importance of the problem represented by that failure compared with 
the importance of the problem represented by the need for states to 
incorporate the Tailoring Rule thresholds into their title V 
programs (which in any event are generally not SIP-related). For 
reasons discussed elsewhere in this preamble, the failure of the 
SIPs to apply PSD to GHG-emitting sources constitutes a substantial 
inadequacy to meet a CAA requirement under CAA section 110(k)(5), 
regardless of how it may stack up against other problems that EPA 
and the states may face in implementation of the CAA. Moreover, for 
the reasons noted here, the commenters' assertion that the scope of 
the problem represented by the affected states' failure to apply PSD 
to GHG-emitting sources is limited to ``a few permits with GHG 
limits in the first 6 months of 2011'' underestimates the number of 
permits involved.
---------------------------------------------------------------------------

2. Opportunity for Notice and Comment
    Some industry commenters objected that because EPA provided 
``lengthy requests'' for information to states for which it proposed 
the SIP call, and stated that it would use this information to 
determine which states should receive a SIP call, commenters would not 
have an opportunity to comment on that information, even though EPA 
would be relying on it for the basis of its final action. Commenters 
stated, ``EPA is using the proposed rule to create the analysis to 
eventually support its SIP call,'' which is ``inconsistent with both 
Section 307(d) procedures and the Administrative Procedure Act.''
    We disagree with the commenters. In the proposed rulemaking, EPA 
proposed to find that, as a legal matter, the PSD applicability 
provisions in the SIPs for 13 states did not apply to GHG-emitting 
sources, and EPA provided citations to, and discussion of, each 
affected state's SIP or other relevant state law provision, as well as 
the views of each state on the issue. This was adequate notice to give 
commenters the opportunity to comment. EPA solicited as much 
information as possible about each state's laws so that the final 
action would be fully in accordance with state law, and it is certainly 
conceivable that EPA might receive information that would form part of 
the basis of its final action. Indeed, that is the very purpose of 
notice-and-comment rulemaking. Even so, it is well established that the 
mere fact that EPA solicited comment and could receive some information 
that would form part of the basis of the final action does not mandate 
another round of notice-and-comment; otherwise, agencies would find 
themselves caught up in continual do-loops of notice-and-comment, with 
each comment period

[[Page 77716]]

yielding information that, as commenters would have it, would 
necessitate yet another comment period.
    Commenters state that ``[r]emarkably, EPA states that it will also 
directly promulgate a SIP call and FIP for any states it has 
inadvertently omitted from its notice of proposed rulemaking.'' 
Although the commenters do not elaborate upon this statement, they seem 
to imply that for EPA to finalize a finding of substantial inadequacy 
and a SIP call for such states would be improper because we did not 
provide adequate notice and opportunity for comment.
    We disagree with the commenters. In the proposal, EPA listed in the 
``presumptive adequacy list'' the states with approved SIP PSD programs 
for which EPA was not proposing a finding of substantial inadequacy and 
a SIP call, and we included citations to the relevant SIP provisions, 
but we went on to specifically solicit comment on whether each of those 
states merited a finding and SIP call. Moreover, EPA generally 
described the circumstances under which those states may merit a 
finding and SIP call. As a result, commenters had adequate notice that 
EPA could ultimately finalize a finding and SIP call for those states, 
and they could have commented if they had relevant views or 
information. As it turns out, we are finalizing a SIP call for only one 
state, Wyoming, for which we solicited comment. In response to our 
proposal's presumption of the adequacy of the Wyoming SIP with respect 
to applying PSD requirements to GHG sources, we received comments from 
the state's Governor, from the state's Department of Environmental 
Quality, and from industry and environmental commenters. Our proposal 
clearly provided adequate notice to these stakeholders so they could 
provide comment.\28\
---------------------------------------------------------------------------

    \28\ In addition, commenters are mistaken in assuming that the 
reason why we did not propose to issue the SIP call for Wyoming was 
an ``inadvertent[]'' omission. We proposed or solicited comment 
based on the information available at the time.
---------------------------------------------------------------------------

3. Federal Implementation Plan
    Some comments address the timing and other aspects of the FIP. 
Those comments are not relevant to this rule; therefore, EPA will not 
discuss them here but will discuss them in the final FIP rulemaking.

V. SIP Submittals

A. EPA Action: Findings of Failure To Submit and Promulgation of FIPs; 
Process for Action on Submitted SIPs

1. Actions on SIP Submittals
    For any of the 13 states subject to this action, if the state 
submits the required SIP revision by its submittal deadline, then EPA 
will not issue a finding of failure to submit or promulgate a FIP. 
Instead, EPA will take action on the SIP submittal as quickly as 
possible.
    Because PSD applicability for certain GHG sources begins January 2, 
2011, even states with proposed SIP revisions will not be able to issue 
federally approved PSD permits for construction or modification to 
affected sources until those revisions are approved. The affected 
source would be able to receive a state-issued permit, but the lack of 
a federally approved permit means that the source would not be in 
accordance with federal requirements concerning its GHG emissions if it 
constructed or modified. In light of this potential for burden on the 
affected sources, we intend to act on any SIP submittals that we 
receive as promptly as possible.
    One key opportunity to expedite approval is that we will parallel-
process the SIP submittal upon request of the state. Under this 
approach, the state sends us the draft of the SIP revision on which it 
plans to seek public comment at the state level, in accordance with CAA 
section 110(a)(2), and the state publishes its proposed approval of 
that draft SIP revision. While the state is taking public comment on 
its proposed SIP revision, we will initiate a separate public 
proceeding on our proposed approval of the SIP revision at the federal 
level. If, subsequently, the SIP revision that the state adopts and 
submits to EPA is substantially similar to the draft on which EPA 
solicited comment, then EPA will proceed to take final action on the 
SIP submittal and will not re-notice it for public comment. EPA has 
successfully employed the parallel-processing approach in past 
rulemakings, and we believe that employing it in this process could 
significantly shorten the time EPA needs to act on the SIP revision. 
Several states have already submitted drafts of their GHG-related SIP 
revisions for parallel processing and EPA has already proposed to 
approve those SIP revisions. These states include Alabama, Kentucky, 
Tennessee, North Carolina, and Mississippi.\29\
---------------------------------------------------------------------------

    \29\ Some commenters objected to, and others supported, parallel 
processing. We discuss those comments in the Supplemental 
Information Document, although we note that those comments are not 
relevant to any legal issues in this rulemaking.
---------------------------------------------------------------------------

2. Findings of Failure To Submit and Promulgation of FIPs
    If the state does not meet its SIP submittal deadline, we intend to 
immediately issue a finding of failure to submit a required SIP 
submission under CAA section 110(c)(1)(A) and intend to immediately 
thereafter issue a FIP. This timing for FIP promulgation is authorized 
under CAA section 110(c)(1), which authorizes us to promulgate a FIP 
``at any time within 2 years after'' finding a failure to submit a 
required SIP submission.
3. Rescission of the FIP
    After we have promulgated a FIP, it must remain in place until the 
state submits a SIP revision and we approve that SIP revision. CAA 
section 110(c)(1). Under the present circumstances, we will act on a 
SIP revision to apply the PSD program to GHG sources as quickly as 
possible and, upon request of the state, will parallel-process the SIP 
submittal in the manner described earlier in this preamble. If we 
approve such a SIP revision, we will, at the same time, rescind the 
FIP. We discussed this approach in our proposed FIP rulemaking.\30\
---------------------------------------------------------------------------

    \30\ Proposed rule, ``Action To Ensure Authority To Issue 
Permits Under the Prevention of Significant Deterioration Program to 
Sources of Greenhouse Gas Emissions: Federal Implementation Plan.'' 
75 FR 53883 (September 2, 2010). The notice can be found in the 
docket for this rulemaking, at Document ID No. EPA-HQ-OAR-2010-0107-
0045.
---------------------------------------------------------------------------

B. Streamlining the State Process for SIP Development and Submittal

    In the proposal, we recognized that the deadline we are giving 
states to submit their SIP revisions is expeditious, and we stated that 
we were prepared to work with the states to develop methods to 
streamline the state administrative process, although we recognized 
that the states remain fully in charge of their own state processes. We 
solicited recommendations during the comment period for ways that the 
states and we may streamline the state process for adopting and 
submitting these SIPs and to streamline or simplify what is required 
for the SIP submittal.
    In the proposal, we noted as an example of possible streamlining 
the process as it concerns public hearing requirements. Many states 
require that the underlying state regulation that the state intends to 
develop into the SIP submittal undergo a public hearing. In addition, 
the CAA requires that the state provide a public hearing on the 
proposed SIP submittal, under CAA section 110(a)(2). In the proposal, 
EPA

[[Page 77717]]

solicited public comment on whether it may, consistent with the CAA, 
accept the public hearing that the state holds on the underlying 
regulation as meeting the requirement for the hearing on the SIP 
submittal, as long as the state provides adequate public notice of the 
hearing. If so, EPA will not require a separate SIP hearing.
    Two state commenters (Arkansas and Connecticut) favor this 
approach. One commenter (Connecticut) notes that because of the 
similarity in the required minimum public participation procedures, it 
has used this approach in the past and understands that it will 
significantly shorten the length of both its regulatory and SIP 
processing. The state commenter added that, in cases where it adopted a 
similar public hearing streamlining process as being proposed by EPA, 
it has been careful to provide adequate published notice concerning 
both the SIP revision and state regulatory adoption aspects of its 
public hearings and has thus avoided unnecessary time and expenses 
incurred in published notices, waiting for comments, and holding public 
hearings.
    We appreciate the commenters' observations. A state meets its CAA 
requirements as long as it holds a hearing on the SIP revision and 
gives adequate notice of that hearing. EPA believes that, under the 
CAA, the state has discretion to combine any other hearing required at 
the state level--including a hearing on the state law provision--with 
the hearing on the SIP revision and, again, as long as the state 
provides adequate notice of that hearing, the state will meet CAA 
requirements in this regard. Because of the self-evident efficiencies 
in combining those types of hearings, we continue to encourage states 
to consider this approach.

C. Primacy of the SIP Process

    We reiterate, as we stated in the proposal, that this action is 
secondary to our overarching goal, which is to assure that in every 
instance, it will be the state that will be the permitting authority. 
EPA continues to recognize that the states are best suited to the task 
of permitting because the states and their sources have experience 
working together in the state PSD program to process permit 
applications. EPA seeks to remain solely in its primary role of 
providing guidance and acting as a resource for the states as they make 
the various required permitting decisions for GHG emissions.
    Accordingly, we have continued to work closely with the states to 
help them promptly develop and submit to us their corrective SIP 
revisions that extend their PSD program to GHG-emitting sources. Some 
of the states have submitted drafts of their SIP revisions for parallel 
processing, and some have submitted their adopted SIP revisions for 
approval. We will act promptly on their SIP submittals and we have 
already proposed to approve some of the SIP submittals. Again, EPA's 
goal is to have each and every affected state have in place the 
necessary permitting authorities by the time businesses seeking 
construction permits need to have their applications processed and the 
permits issued--and to achieve that outcome by means of engaging with 
the states directly through a concerted process of consultation and 
support.
    EPA is taking up the additional task of issuing this SIP call and 
preparing to finalize, as necessary, the FIP action only because the 
Agency believes it is compelled to do so by the need to assure 
businesses, to the maximum extent possible and as promptly as possible, 
that a permitting authority is available to process PSD permit 
applications for GHG-emitting sources once they become subject to PSD 
requirements on January 2, 2011.
    In order to provide that assurance, we are obligated to recognize, 
as both states and the regulated community already do, that there may 
be circumstances in which states are simply unable to develop and 
submit those SIP revisions by January 2, 2011, or for some period of 
time beyond that date. As a result, absent further action by EPA, those 
states' affected sources confront the risk that they may have to put on 
hold their plans to construct or modify, a risk that may have adverse 
consequences for the economy.
    Given these exigent circumstances, EPA is proceeding with this 
plan, within the limits of our power, with the intent to make a back-up 
permitting authority available--and to send a signal of assurance 
expeditiously in order to reduce uncertainty and thus facilitate 
businesses' planning. Within the design of the CAA, it is EPA that must 
fill that role of back-up permitting authority. This SIP call action 
and the associated FIP action fulfill the CAA requirements to establish 
EPA in that role.
    At the same time, we take these actions with the intent that states 
retain as much discretion as possible. In this rulemaking, we have 
authorized states to choose the deadline they consider reasonable for 
submission of their corrective SIP revision. If, under CAA 
requirements, we are compelled to promulgate a FIP, we invite the 
affected state to accept a delegation of authority to implement that 
FIP, so that it will still be the state that processes the permit 
applications, although operating under federal law. In addition, if we 
are compelled to issue a FIP, we intend to continue to work closely 
with the state to assist it in developing and submitting for approval 
its corrective SIP revision, so as to minimize the amount of time that 
the FIP must remain in place.
    It is clear from the responses states made to our request in the 
proposal to advise us concerning the appropriate deadline for SIP 
submittal, and also from states' comments on the proposal, that 
officials in many states recognize the need for our SIP call and FIP 
actions, that is, that a short-term FIP may be necessary in their 
states to establish permitting authority to construct and modify in 
accordance with environmental safeguards for these sources. In 
addition, some states (Kansas; Arizona's Pinal County) have already 
indicated in their responses that they will accept delegation of the 
permitting responsibilities.

D. Effective Date

    This rule is effective immediately upon publication in the Federal 
Register. Section 553(d) of the Administrative Procedure Act (APA), 5 
U.S.C. 553(d), generally provides that rules may not take effect 
earlier than 30 days after they are published in the Federal Register. 
However, APA section 553(d)(3) provides an exception when the agency 
finds good cause exists for a rule to take effect in less than 30 days.
    We find good cause exists here to make this rule effective upon 
publication because implementing a 30-day delayed effective date would 
interfere with the Agency's ability to ensure that, as of January 2, 
2011, there is a permitting authority authorized to issue certain major 
stationary sources in the affected states the required PSD permits for 
GHG emissions. A 30-day delay in the effective date of this rule will 
impede implementation of this rule and create regulatory confusion. 
This rule establishes, for each affected state, a date by which the 
state must submit a corrective SIP revision; after that date, EPA may 
issue a FIP. This rule sets that deadline for some states as December 
22, 2010, and this rule states that if a state does not meet that 
deadline, EPA will issue a finding of failure to submit a required SIP 
revision and issue a FIP on December 23, 2010. This will allow the FIP 
to be published and become effective by the January 2, 2011, date that 
PSD will first apply to GHG-emitting sources under the CAA. It is 
unclear whether EPA could impose these deadlines if this rule had a 30-
day effective date, resulting in confusion

[[Page 77718]]

about when the deadlines would take effect. Plus, if EPA could not 
impose those deadlines, for whatever reason, then, as of January 2, 
2011, certain major stationary sources in the affected states would be 
required to obtain PSD permits for GHG emissions that no permitting 
authority would be authorized to issue. Thus it would be impractical to 
wait 30 days to provide a regulatory mechanism to avoid the confusion 
that could result if this rule is not effective upon publication. 
Moreover, EPA finds that it is necessary to make this rule effective 
upon publication to avoid any economic harm that the public and the 
regulated industry might incur if there is no permitting authority able 
to issue PSD permits for GHG emissions on January 2, 2011.
    The purpose of the APA's 30-day effective date provision is to give 
affected parties time to adjust their behavior before the final rule 
takes effect. The states for which the rule sets short deadlines have 
each indicated in comment letters to EPA that they do not object to 
those deadlines; states with longer deadlines will, in fact, have more 
than 30 days to react to this rule. Both the states and the public have 
been aware of this impending final rule for some time, as it was made 
available to the public on August 12, 2010, even before its September 
2, 2010, publication date in the Federal Register, and the public was 
afforded the opportunity to comment on the proposal. 75 FR 53892. The 
public has also been aware of the timeline for this action, since the 
proposed rule stated that the rule would be finalized on December 1, 
2010, and that it may set dates for state action as early as December 
22, 2010. See 75 FR 53892, 53896.
    In addition, this rule is not a major rule under the Congressional 
Review Act (CRA). Thus, the 60-day delay in effective date required for 
major rules under the CRA does not apply.

VI. Statutory and Executive Order Reviews

A. Executive Order 12866--Regulatory Planning and Review

    Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), 
this action is a ``significant regulatory action'' because it raises 
novel legal or policy issues. Accordingly, EPA submitted this action to 
the Office of Management and Budget (OMB) for review under EO 12866 and 
any changes made in response to OMB recommendations have been 
documented in the docket for this action.

B. Paperwork Reduction Act

    This action does not impose any new information collection burden. 
However, 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 respectively. 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 rule on small 
entities, small entity is defined as: (1) A small business that is a 
small industrial entity as defined in the U.S. Small Business 
Administration (SBA) size standards (see 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; or (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 final rule on small 
entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. This final 
rule will affect states and will not, in and of itself, directly affect 
sources. In addition, although this rule could lead to federal 
permitting requirements for certain sources, those sources are large 
emitters of GHGs and tend to be large sources. This final rule will not 
impose any requirements on small entities.

D. Unfunded Mandates Reform Act

    This 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. 
The action may impose a duty on certain state, local or tribal 
governments to meet their existing obligation for PSD SIP submittal, 
but with lesser expenditures. Thus, this rule is not subject to the 
requirements of sections 202 or 205 of 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. EPA refers to the 
definition of a small governmental jurisdiction that the Regulatory 
Flexibility Act uses, which is a government of a city, county, town, 
school district, or special district with a population of less than 
50,000. Thus, this rule only applies to large state and local 
permitting programs and not to 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 Executive Order 13132. This action merely prescribes EPA's 
action for states that do not meet their existing obligation for PSD 
SIP submittal. Thus, Executive Order 13132 does not apply to this 
action.
    In the spirit of Executive Order 13132, and consistent with EPA 
policy to promote communications between EPA and state and local 
governments, EPA specifically solicited comment on the proposal for 
this action from state and local officials.

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

    This action does not have tribal implications, as specified in 
Executive Order 13175 (65 FR 67249, November 9, 2000). In this action, 
EPA is not addressing any tribal implementation plans. This action is 
limited to states that do not meet their existing obligation for PSD 
SIP submittal. Thus, Executive Order 13175 does not apply to this 
action.
    Although Executive Order 13175 does not apply to this final rule, 
EPA specifically solicited additional comment on the proposal for this 
action from tribal officials and we received one comment from a tribal 
agency. Additionally, EPA participated in a conference call on July 29, 
2010, with the National Tribal Air Association (NTAA).

[[Page 77719]]

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

    EPA interprets EO 13045 (62 FR 19885, April 23, 1997) as applying 
only to those regulatory actions that concern health or safety risks, 
such that the analysis required under section 5-501 of the EO has the 
potential to influence the regulation. This action is not subject to EO 
13045 because it merely prescribes EPA's action for states that do not 
meet their existing obligation for PSD SIP submittal.

H. Executive Order 13211--Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    This action is not a ``significant energy action'' as defined in 
Executive Order 13211 (66 FR 28355 (May 22, 2001)), because it is not 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy. This action merely prescribes EPA's 
action for states that do not meet their existing obligation for PSD 
SIP submittal.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law No. 104-113, 12(d) (15 U.S.C. 272 
note) directs EPA to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. NTTAA directs EPA to 
provide Congress, through OMB, explanations when the Agency decides not 
to use available and applicable voluntary consensus standards.
    This rulemaking does not involve technical standards. Therefore, 
EPA is not considering the use of any voluntary consensus standards.

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

    Executive Order 12898 (59 FR 7629, February 16, 1994) establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the U.S.
    EPA has determined that this final 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. This rule merely prescribes EPA's action for states that 
do not meet their existing obligation for PSD SIP submittal.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action does not constitute a ``major rule'' as defined 
by 5 U.S.C. 804(2). Therefore, this action will be effective December 
13, 2010.

VII. Judicial Review

    Under section 307(b)(1) of the Act, judicial review of this final 
action is available by filing of a petition for review in the U.S. 
Court of Appeals for the District of Columbia Circuit by February 11, 
2011. Any such judicial review is limited to only those objections that 
are raised with reasonable specificity in timely comments. Under 
section 307(b)(2) of the Act, the requirements of this final action may 
not be challenged later in civil or criminal proceedings brought by us 
to enforce these requirements.

VIII. Statutory Authority

    The statutory authority for this action is provided by sections 
101, 111, 114, 116, and 301 of the CAA as amended (42 U.S.C. 7401, 
7411, 7414, 7416, and 7601).

List of Subjects in 40 CFR Part 52

    Air pollution control, Carbon dioxide, Carbon dioxide equivalents, 
Carbon monoxide, Environmental protection, Greenhouse gases, 
Hydrofluorocarbons, Incorporation by reference, Intergovernmental 
relations, Lead, Methane, Nitrogen dioxide, Nitrous oxide, Ozone, 
Particulate matter, Perfluorocarbons, Reporting and recordkeeping 
requirements, Sulfur hexafluoride, Sulfur oxides, Volatile organic 
compounds.

    Dated: December 1, 2010.
Lisa P. Jackson,
Administrator.
[FR Doc. 2010-30854 Filed 12-10-10; 8:45 am]
BILLING CODE 6560-50-P
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