1

6560-50-P

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, 70, and 71

[EPA-HQ-OAR-2009-0517; FRL-_________]

RIN 2060-AP86

Prevention of Significant Deterioration and Title V Greenhouse 

Gas Tailoring Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

SUMMARY: EPA is tailoring the applicability criteria that 

determine which stationary sources and modification projects 

become subject to permitting requirements for greenhouse gas 

(GHG) emissions under the Prevention of Significant 

Deterioration (PSD) and title V programs of the Clean Air Act 

(CAA or Act). This rulemaking is necessary because without it 

PSD and title V requirements would apply, as of January 2, 2011, 

at the 100 or 250 tons per year (tpy) levels provided under the 

CAA, greatly increasing the number of required permits, imposing 

undue costs on small sources, overwhelming the resources of 

permitting authorities, and severely impairing the functioning 

of the programs. EPA is relieving these resource burdens by 

phasing in the applicability of these programs to GHG sources, 

starting with the largest GHG emitters. This rule establishes 
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two initial steps of the phase-in. The rule also commits the 

agency to take certain actions on future steps addressing 

smaller sources, but excludes certain smaller sources from PSD 

and title V permitting for GHG emissions until at least April 

30, 2016.

DATES: This action is effective on [INSERT DATE 60 DAYS FROM 

DATE OF PUBLICATION IN THE FEDERAL REGISTER].

ADDRESSES: EPA has established a docket for this rulemaking 

under Docket ID No. EPA-HQ-OAR-2009-0517. All documents in the 

docket are listed in the www.regulations.gov index. Although 

listed in the index, some information is not publicly available, 

e.g., Confidential Business Information or other information 

whose disclosure is restricted by statute. Certain other 

material, such as copyrighted material, is not placed on the 

Internet and will be publicly available only in hard copy. 

Publicly available docket materials are available either 

electronically in www.regulations.gov or in hard copy at the EPA 

Docket Center EPA/DC, EPA West, Room 3334, 1301 Constitution 

Avenue, Northwest, Washington, D.C. 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 

EPA Docket Center is (202) 566-1742.
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FOR FURTHER INFORMATION CONTACT: Mr. Joseph Mangino, Air 

Quality Policy Division, Office of Air Quality Planning and 

Standards (C504-03), Environmental Protection Agency, Research 

Triangle Park, NC 27711; telephone number: (919) 541-9778; fax 

number: (919) 541-5509; e-mail address: mangino.joseph@epa.gov. 

SUPPLEMENTARY INFORMATION: 

I. General Information

A. Does this action apply to me?

Entities affected by this action include sources in all 

sectors of the economy, including commercial and residential 

sources. Entities potentially affected by this action also 

include states, local permitting authorities, and tribal 

authorities. The majority of categories and entities 

potentially affected by this action are expected to be in the 

following groups:

Industry Group NAICSa

Agriculture, fishing, 

and hunting ............... 11

Mining .................... 21

Utilities (electric, 

natural gas, other 

systems) .................. 2211, 2212, 2213

Manufacturing (food, 

beverages, tobacco, 

textiles,leather) ......... 311, 312, 313, 314, 315, 316 
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Wood product, paper 

manufacturing ............. 321, 322 

Petroleum and coal 

products 

manufacturing. ............ 32411, 32412, 32419

Chemical 

manufacturing. ............ 3251, 3252, 3253,3254, 3255, 

3256,3259

Rubber product 

manufacturing ............. 3261, 3262

Miscellaneous chemical 

products .................. 32552, 32592, 32591, 325182, 

32551

Nonmetallic mineral 

product manufacturing ..... 3271, 3272, 3273, 3274, 3279

Primary and fabricated 

metal manufacturing ....... 3311, 3312, 3313, 3314, 3315, 

3321, 3322, 3323, 3324, 3325, 

3326, 3327, 3328, 3329

Machinery 

manufacturing ............. 3331, 3332, 3333, 3334, 3335, 

3336, 3339

Computer and 

electronic products 

manufacturing ............. 3341, 3342, 3343, 3344, 3345, 

4446

Electrical equipment, 

appliance, and 

component 

manufacturing .............

3351, 3352, 3353, 3359

Transportation 

equipment 

manufacturing ............. 3361, 3362, 3363, 3364, 3365, 

3366, 3366, 3369
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Furniture and related 

product manufacturing ..... 3371, 3372, 3379

Miscellaneous 

manufacturing ............. 3391, 3399

Waste management and 

remediation ............... 5622, 5629

Hospitals/Nursing and 

residential care 

facilities ................ 6221, 6231, 6232,6233, 6239

Personal and laundry 

services .................. 8122, 8123

Residential/private 

households ................

8141 

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 this preamble organized?

The information presented in this preamble is organized as 

follows:

Outline

I. General Information

A. Does this action apply to me?

B. How is this preamble organized?

C. Preamble Acronyms and Abbreviations

II. Overview of the Final Rule 

III. Background 

A. What are GHGs and their sources?

B. Endangerment Finding and the LDVR

1. Endangerment Finding

2. Light-Duty Vehicle Rule

C. What are the general requirements of the PSD program?
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1. Overview of the PSD Program

2. General Requirements for PSD

D. What are the general requirements of the title V 

operating permits program?

1. Overview of Title V

2. Title V Permit Requirements

E. The Interpretive Memo

IV. Summary of Final Actions 

A. How do you define the GHG pollutant for PSD and title V 

purposes?

1. GHG Pollutant Defined as the Sum-of-Six Well-Mixed GHGs

2. What GWP values should be used for calculating CO2e?

B. When will PSD and title V applicability begin for GHGs 

and emission sources?

1. What are the Step 1 thresholds, timing, and calculation 

methodology?

2. What are the Step 2 thresholds, timing, and calculation 

methodology?

3. What about Step 3?

4. What about the proposed 6-year exclusion for smaller 

sources? 

5. When and how will EPA take further action on smaller 

sources? 

C. How do state, local, and tribal area programs adopt the 

final GHG applicability thresholds?

D. How do you treat GHGs for purposes of title V permit 

fees?

E. Other Actions and Issues 

1. Timing for Permit Streamlining Techniques

2. Guidance for BACT Determinations

3. Requests for Higher Category-Specific Thresholds and 

Exemptions from Applicability

4. Transitional Issues Including Requests for 

Grandfathering

V. What is the legal and policy rationale for the final 

actions? 

A. Rationale for Our Approach to Calculating GHG Emissions 

for PSD and Title V Applicability Purposes

1. Grouping of GHGs into a Single Pollutant

2. Identifying Which GHGs are Included in the Group

3. Use of GWP vs. Mass-Based GHG Thresholds

4. Determining What GWP Values Are To Be Used 

5. Use of Short Tons vs. Metric Tons 

B. Rationale for Thresholds and Timing for PSD and Title V 

Applicability to GHG Emissions Sources
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1. Overview

2. Data Concerning Costs to Sources and Administrative 

Burdens to Permitting Authorities

3. “Absurd Results,” “Administrative Necessity,” and “OneStep-at-a-Time” Legal Doctrines

4. The PSD and Title V Programs

5. Application of the “Absurd results” Doctrine for the 

PSD Program

6. Application of the “Absurd Results” Doctrine for the 

Title V Program 

7. Additional Rulemaking for the PSD and Title V Programs

8. Rationale for the Phase-in Schedule for Applying PSD 

and Title V to GHG Sources

9. “Administrative Necessity” Basis for PSD and Title V 

Requirements in Tailoring Rule

10. “One-Step-at-a-Time” Basis for Tailoring Rule 

C. Mechanisms for Implementing and Adopting the Tailoring 

Approach

1. PSD Approach: Background and Proposal

2. Rationale for Our Final Approach to Implementing PSD

3. Other Mechanisms

4. Codification of Interpretive Memo

5. Delaying Limited Approvals and Request for Submission 

of Information from States Implementing a SIP-Approved 

PSD Program

6. Title V Programs

D. Rationale for Treatment of GHGs for Title V Permit Fees

E. Other Actions and Issues 

1. Permit Streamlining Techniques

2. Guidance for BACT Determinations 

3. Requests for Higher Category-Specific Thresholds or 

Exemptions from Applicability 

4. Transitional Issues Including Requests for 

Grandfathering 

VI. What are the economic impacts of the final rule? 

A. What entities are affected by this final rule?

B. What are the estimated annual benefits to sources due 

to regulatory relief from the statutory requirements?

1. What are annual estimated benefits or avoided burden 

costs for title V permits? 

2. What are annual benefits or avoided costs associated 

with NSR permitting regulatory relief? 

C. What are the economic impacts of this rulemaking?

D. What are the costs of the final rule for society?

VII. Comments on Statutory and Executive Orders Reviews 
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A. Comments on Executive Order 12866 - Regulatory Planning 

and Review

B. Comments on the Paperwork Reduction Act

C. Comments on the RFA

D. Comments on the Unfunded Mandates Reform Act

E. Comments on Executive Order 13132 – Federalism

F. Comments on Executive Order 13175 - Consultation and 

Coordination with Indian Tribal Governments

G. Comments on Executive Order 13211 - Actions That 

Significantly Affect Energy Supply, Distribution, or 

Use

VIII. Statutory and Executive Orders Reviews 

A. Executive Order 12866 - Regulatory Planning and Review

B. Paperwork Reduction Act

C. Regulatory Flexibility Act

D. Unfunded Mandates Reform Act

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 and Safety Risks

H. Executive Order 13211 - Actions That Significantly 

Affect Energy Supply, Distribution, or Use

I. National Technology Transfer and Advancement Act

J. Executive Order 12898 – Federal Actions to Address 

Environmental Justice in Minority Populations and LowIncome Populations

K. Congressional Review Act

L. Judicial Review

IX. Statutory Authority

C. Preamble Acronyms and Abbreviations

The following are abbreviations of terms used in this

preamble.

ANPR Advance Notice of Proposed Rulemaking

APA Administrative Procedure Act

AQRVs Air Quality Related Values

BACT Best Available Control Technology

Btu British thermal units

Btu/hr British thermal units per hour

CAA or Act Clean Air Act

CAAAC Clean Air Act Advisory Committee
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CAFE Corporate Average Fuel Economy

CH4 Methane

CO Carbon Monoxide 

CO2 Carbon Dioxide

CO2e Carbon Dioxide Equivalent

EPA U.S. Environmental Protection Agency

FDA Food and Drug Administration

FIP Federal Implementation Plan

FTEs Full-Time Equivalents

GHG Greenhouse Gas

GHz Gigahertz

GWP Global Warming Potential

HAP Hazardous Air Pollutant

HFCs Hydrofluorocarbons

ICR Information Collection Request

IPCC Intergovernmental Panel on Climate Change

LDVR Light-Duty Vehicle Rule

MACT Maximum Achievable Control Technology

MCL Maximum Contaminant Level

N2O Nitrous Oxide

NAAQS National Ambient Air Quality Standard

NHTSA National Highway Traffic Safety 

Administration

NMOC Nonmethane Organic Compounds

NOx Nitrogen Oxides

NPDES National Pollutant Discharge Elimination 

System

NSPS New Source Performance Standard

NSR New Source Review

NTAA National Tribal Air Association

NTTAA National Technology Transfer and Advancement 

Act

OMB Office of Management and Budget

PFCs Perfluorocarbons

PM Paticulate Matter

PSD Prevention of Significant Deterioration

PTE Potential to Emit

RFA Regulatory Flexibility Act

RIA Regulatory Impact Analysis

RTC Response to Comment

SBA Small Business Administration

SBAR Small Business Advocacy Review

SBREFA Small Business Regulatory Enforcement 

Fairness Act

SF6 Sulfur Hexafluoride
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SIP State Implementation Plan

SNPR Supplemental Notice of Proposed Rulemaking

TIP Tribal Implementation Plan

TRS Total Reduced Sulfur

TSD Technical Support Document

tpy Tons Per Year

UMRA Unfunded Mandates Reform Act

UNFCCC United Nations Framework Convention on 

Climate Change

VOC Volatile Organic Compound

II. Overview of the Final Rule 

EPA is relieving overwhelming permitting burdens that 

would, in the absence of this rule, fall on permitting 

authorities and sources. We accomplish this by tailoring the 

applicability criteria that determine which GHG emission sources 

become subject to the PSD and title V programs1 of the CAA. In 

particular, EPA is establishing with this rulemaking a phase-in 

approach for PSD and title V applicability, and is establishing 

the first two steps of the phase-in for the largest emitters of 

GHGs. We also commit to certain follow-up actions regarding 

future steps beyond the first two, discussed in more detail 

later. Our legal basis for this rule is our interpretation of 

the PSD and title V applicability provisions under the familiar 

 

1 Unless otherwise indicated, references in this preamble to 

“title V,” “title V requirements,” the “title V program,” and 

similar references are to the operating permit provisions in CAA 

sections 501-506, and not the “small business stationary source 

technical and environmental compliance assistance program” under 

CAA section 507.
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Chevron2 two-step framework for interpreting administrative 

statutes, taking account of three legal doctrines, both 

separately and interdependently: they are what we will call (1) 

the “absurd results” doctrine, which authorizes agencies to 

apply statutory requirements differently than a literal reading 

would indicate, as necessary to effectuate congressional intent 

and avoid absurd results, (2) the “administrative necessity” 

doctrine, which authorizes agencies to apply statutory 

requirements in a way that avoids impossible administrative 

burdens; and (3) the “one-step-at-a-time” doctrine, which 

authorizes agencies to implement statutory requirements a step 

at a time. This legal basis justifies each of the actions we 

take with this rule – e.g., each of the first two steps of the 

phase-in approach - both (1) as part of the overall tailoring 

approach, and (2) independently of each other action we take 

with this rule. EPA also has authority for this Tailoring Rule 

under CAA section 301(a)(1), which authorizes the Administrator 

“to prescribe such regulations as are necessary to carry out his 

functions under [the CAA].”

For the first step of this Tailoring Rule, which will begin 

on January 2, 2011, PSD or title V requirements will apply to 

sources’ GHG emissions only if the sources are subject to PSD or 

 

2 Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984).
12

title V anyway due to their non-GHG pollutants. Therefore, EPA 

will not require sources or modifications to evaluate whether 

they are subject to PSD or title V requirements solely on 

account of their GHG emissions. Specifically, for PSD, Step 1 

requires that as of January 2, 2011, the applicable requirements 

of PSD, most notably, the best available control technology 

(BACT) requirement, will apply to projects that increase net GHG 

emissions by at least 75,000 tpy carbon dioxide equivalent 

(CO2e), but only if the project also significantly increases 

emissions of at least one non-GHG pollutant. For the title V 

program, only existing sources with, or new sources obtaining, 

title V permits for non-GHG pollutants will be required to 

address GHGs during this first step. 

The second step of the Tailoring Rule, beginning on July 1, 

2011, will phase in additional large sources of GHG emissions. 

New sources as well as existing sources not already subject to 

title V that emit, or have the potential to emit, at least 

100,000 tpy CO2e will become subject to the PSD and title V 

requirements. In addition, sources that emit or have the 

potential to emit at least 100,000 tpy CO2e and that undertake a 

modification that increases net emissions of GHGs by at least 

75,000 tpy CO2e will also be subject to PSD requirements. For 

both steps, we also note that if sources or modifications exceed 
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these CO2e-adjusted GHG triggers, they are not covered by 

permitting requirements unless their GHG emissions also exceed 

the corresponding mass-based triggers (i.e., unadjusted for 

CO2e.) 

EPA believes that the costs to the sources and the 

administrative burdens to the permitting authorities of PSD and 

title V permitting will be manageable at the levels in these 

initial two steps, and that it would be administratively 

infeasible to subject additional sources to PSD and title V 

requirements at those times. However, we also intend to issue a 

supplemental notice of proposed rulemaking (SNPR) in 2011, in 

which we will propose or solicit comment on a third step of the 

phase-in that would include more sources, beginning by July 1, 

2013. In the same rulemaking, we may propose or solicit comment 

on a permanent exclusion from permitting for some category of 

sources, based on the doctrine of “absurd results,” within the 

Chevron framework. We are establishing an enforceable 

commitment that we will complete this rulemaking by July 1, 

2012, which will allow for 1 year's notice before Step 3 would 

take effect. 

In addition, we commit to explore streamlining techniques 

that may well make the permitting programs much more efficient 

to administer for GHGs, and that therefore may allow their 
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expansion to smaller sources. We expect that the initial 

streamlining techniques will take several years to develop and 

implement. 

We are also including in this action a rule that no source 

with emissions below 50,000 tpy CO2e, and no modification 

resulting in net GHG increases of less than 50,000 tpy CO2e, will 

be subject to PSD or title V permitting before at least 6 years 

from now, April 30, 2016. This is because we are able to 

conclude at the present time that the administrative burdens 

that would accompany permitting sources below this level will be 

so great that even the streamlining actions that EPA may be able

to develop and implement in the next several years, and even 

with the increases in permitting resources that we can 

reasonably expect the permitting authorities to acquire, it will 

be impossible to administer the permit programs for these 

sources until at least 2016. 

Further, we are establishing an enforceable commitment that 

we will (1) complete a study by April 30, 2015, to evaluate the 

status of PSD and title V permitting for GHG-emitting sources, 

including progress in developing streamlining techniques; and 

(2) complete further rulemaking based on that study by April 30, 

2016, to address the permitting of smaller sources. That 
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rulemaking may also consider additional permanent exclusions 

based on the “absurd results” doctrine, where applicable. 

This Tailoring Rulemaking is necessary because without it, 

PSD and title V would apply to all stationary sources that emit 

or have the potential to emit more than 100 or 250 tons of GHGs 

per year beginning on January 2, 2011. This is the date when 

EPA’s recently promulgated Light-Duty Vehicle Rule (LDVR) takes 

effect, imposing control requirements for the first time on 

carbon dioxide (CO2) and other GHGs. If this January 2, 2011 

date were to pass without this Tailoring Rule being in effect, 

PSD and title V requirements would apply at the 100/250 tpy 

applicability levels provided under a literal reading of the CAA

as of that date. From that point forward, a source owner 

proposing to construct any new major source that emits at or 

higher than the applicability levels (and which therefore may be 

referred to as a “major” source) or modify any existing major 

source in a way that would increase GHG emissions would need to 

obtain a permit under the PSD program that addresses these 

emissions before construction or modification could begin. 

Similarly, title V would apply to a new or existing source 

exceeding the 100 tpy applicability level in the Act, if the 

source did not already have a title V permit. 
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Under these circumstances, many small sources would be 

burdened by the costs of the individualized PSD control 

technology requirements and permit applications that the PSD 

provisions, absent streamlining, require. Additionally, state 

and local permitting authorities would be burdened by the 

extraordinary number of these permit applications, which are 

orders of magnitude greater than the current inventory of 

permits and would vastly exceed the current administrative 

resources of the permitting authorities. Permit gridlock would 

result with the permitting authorities able to issue only a tiny 

fraction of the permits requested. 

These impacts – the costs to sources and administrative 

burdens to permitting authorities – that would result from 

application of the PSD and title V programs for GHG emissions at 

the statutory levels as of January 2, 2011, are so severe that 

they bring the judicial doctrines of “absurd results,” 

“administrative necessity,” and “one-step-at-a-time” into the 

Chevron two-step analytical framework for statutes administered 

by agencies. Under the U.S. Supreme Court’s decision in 

Chevron, the agency must, at Step 1, determine whether 

Congress’s intent as to the specific matter at issue is clear, 
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and, if so, the agency must give effect to that intent.3 If 

congressional intent is not clear, then, at Step 2, the agency 

has discretion to fashion an interpretation that is a reasonable 

construction of the statute. 

To determine congressional intent, the agency must first 

consider the words of the statutory requirements, and if their 

literal meaning answers the question at hand, then, in most 

cases, the agency must implement those requirements by their 

terms. However, under the “absurd results” doctrine, the 

literal meaning of statutory requirements should not be 

considered to indicate congressional intent if that literal

meaning would produce a result that is senseless or that is 

otherwise inconsistent with - and especially one that 

undermines - underlying congressional purpose. In these cases, 

if congressional intent for how the requirements apply to the 

question at hand is clear, the agency should implement the 

statutory requirements not in accordance with their literal

meaning, but rather in a manner that most closely effectuates 

congressional intent. If congressional intent is not clear, 

then an agency may select an interpretation that is reasonable 

under the statute. 

 

3

 Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-43 (1984).
18

Under the “administrative necessity” doctrine, Congress is 

presumed, at Chevron Step 1, to intend that its statutory 

directives to agencies be administrable, and not to have 

intended to have written statutory requirements that are 

impossible to administer. Therefore, under this doctrine, an 

agency may depart from statutory requirements that, by their 

terms, are impossible to administer, but the agency may depart 

no more than necessary to render the requirements administrable. 

Under the “one-step-at-a-time” doctrine, Congress is presumed at

Chevron Step 1 to have intended to allow the agency to 

administer the statutory requirements on a step-by-step basis, 

as appropriate, when the agency remains on track to implement 

the requirements as a whole. Each of these doctrines supports 

our action separately, but the three also are intertwined and 

support our action in a comprehensive manner. 

Here, we have determined, through analysis of burden and 

emissions data as well as consideration of extensive public 

comment, that the costs to sources and administrative burdens to 

permitting authorities that would result from application of the 

PSD and title V programs for GHG emissions at the statutory 

levels as of January 2, 2011 should be considered “absurd 

results.” Therefore, we conclude that under the “absurd 

results” doctrine, Congress could not have intended that the PSD 
19

or title V applicability provisions – in particular, the 

threshold levels and timing requirements - apply literally to 

GHG sources as of that date.

Even so, the PSD and title V provisions and their 

legislative history do indicate a clear congressional intent, 

under Chevron Step 1, as to whether the two permitting programs 

applied to GHG sources, and that the intent was in the 

affirmative, that the permitting programs do apply to GHG 

sources. Our previous regulatory action defining the 

applicability provisions made this clear, and we do not reopen 

this issue in this rulemaking. Moreover, even if this longestablished regulatory position were not justifiable based on 

Chevron Step 1 – on the grounds that in fact, congressional 

intent on this point is not clear - then we believe that this 

position, that the statutory provisions to apply PSD and title V 

generally to GHG sources, was justified under Chevron step 2

4.

As to how to apply the PSD program to GHG sources, 

congressional intent, as expressed in the various statutory 

provisions and statements in the legislative history, is clear 

 

4 In this preamble and the response to comments document we 

fully address arguments that commenters and others have 

presented about congressional intent and coverage of GHGs. We 

do so to be fully responsive, even though we believe that this 

is a settled matter for which the time for judicial review has 

past. 
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that PSD should apply at least to the largest sources initially,

at least to as many more sources as possible and as promptly as 

possible over time - consistent with streamlining actions that 

we intend to consider coupled with increases in permitting 

authority resources - and at least to a certain point. This is 

the approach we take in this Tailoring Rule, and because it is 

consistent with congressional intent, we believe it is required 

under Chevron Step 1. Even if congressional intent were not 

clear as to how to apply the PSD requirements to GHG sources, we 

would have authority under Chevron Step 2 to establish a 

reasonable interpretation that is consistent with the PSD 

provisions, and we believe that the tailoring approach so 

qualifies. 

As for title V, the statutory provisions and legislative 

history, which of course are different than those concerning the 

PSD program, do not express a clear intent as to how title V 

applies to GHG sources, which leads our analysis to Chevron Step

2, and here, again, we believe that the tailoring approach is a 

reasonable interpretation that is consistent with the title V 

provisions. 

For both PSD and title V, we intend to use the tailoring 

approach to address smaller GHG sources over time, consistent 

with Congress’s expectations that the programs would not impose 
21

undue costs to sources or undue administrative burdens to 

permitting authorities. However, we cannot say at this point 

how close to the statutory thresholds we will eventually reach. 

Because this rule establishes only the first two phases of the 

tailoring approach, we do not find it necessary to answer these 

questions in this rule, and instead we expect to resolve them

through future rulemaking. We will remain mindful of the 

concerns that Congress expressed about including small sources 

in either program. We intend to consider the issue of the 

applicability of title V to GHG sources without applicable 

requirements (i.e., “empty permits”) in future steps of our 

tailoring approach. When we do so, we will further assess the 

potential for the approach of excluding empty permits from title 

V to relieve burden consistent with statutory requirements. 

In addition, because Congress can be said to have intended 

the PSD and title V programs to apply to GHG sources, the 

Tailoring Rule is also justifiable under the “administrative 

necessity” and “one-step-at-a-time” doctrines.

The legal analysis just described justifies each of the 

actions in this rule. The first two steps that we promulgate in 

this rule, which take effect on January 2, 2011 and July 1, 

2011, constitute the most that permitting authorities can 

reasonably be expected to do by those times. Similarly, the 
22

50,000 tpy floor that we promulgate through at least April 30, 

2016 is reasonable because the information we have available now 

shows that it constitutes the most that permitting authorities 

can reasonably be expected to do by that date. Finally, the 

study and two additional rulemakings – to take effect by July 1, 

2013 and April 30, 2016 - to which we commit in this rule 

establish a track for acquiring additional information and for 

taking further steps to address the application of PSD and title 

V more closely to the literal statutory levels. We intend to 

apply them as closely to those levels as is consistent with 

congressional intent and administrative imperatives, in light of 

the “absurd results,” “administrative necessity,” and “one-stepat-a-time” doctrines, although, as noted previously, we will

consider in future rulemaking how closely to the statutory 

thresholds we will be able to implement the PSD and title V 

programs as well as what to require with respect to a 

potentially large number of sources with empty title V permits. 

In this rule, we are adopting regulatory language codifying 

our phase-in approach. As we will explain, many state, local 

and tribal area programs will likely be able to immediately 

implement our approach without rule or statutory changes by, for 

example, interpreting the term “subject to regulation” that is 

part of the applicability provisions for PSD and title V. We 
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ask permitting authorities to confirm that they will follow this 

implementation approach for their programs, and if they cannot, 

then we ask them to notify us so that we can take appropriate 

follow-up action to narrow our federal approval of their 

programs before GHGs become subject to regulation for PSD and 

title V programs on January 2, 2011. Narrowing our approval

will ensure that for federal purposes, GHG sources below the 

size thresholds we establish in this Tailoring Rule are not 

obligated to hold PSD or title V permits until the states 

develop and submit revised PSD and title V programs that EPA 

approves, either because they adopt our tailoring approach or 

because, if they continue to cover smaller GHG sources, the 

states have demonstrated that they have adequate resources to 

administer those programs.

The thresholds we are establishing are based on CO2e for the 

aggregate sum of six greenhouse gases that constitute the 

pollutant that will be subject to regulation, which we refer to 

as GHGs.5 These gases are: CO2, methane (CH4), nitrous oxide 

(N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and 

sulfur hexafluoride (SF6). Thus, in this rule, we provide that

 

5 The term “greenhouse gases” is commonly used to refer 

generally to gases that have heat-trapping properties. However, 

in this notice, unless noted otherwise, we use it to refer to 

specifically to the pollutant regulated in the LDVR.
24

PSD and title V applicability is based on the quantity that 

results when the mass emissions of each of these gases is 

multiplied by the Global Warming Potential (GWP) of that gas, 

and then summed for all six gases. However, we further provide 

that in order for a source’s GHG emissions to trigger PSD or 

title V requirements, the quantity of the GHGs must equal or 

exceed both the applicability thresholds established in this

rulemaking on a CO2e basis and the statutory thresholds of 100 or 

250 tpy on a mass basis.6 Similarly, in order for a source to be 

subject to the PSD modification requirements, the source’s net 

GHG emissions increase must exceed the applicable significance 

level on a CO2e basis and must also result in a net mass increase 

of the constituent gases combined. 

We are adopting this rule after careful consideration of 

numerous public comments. On October 27, 2009 (74 FR 55292), 

EPA proposed the GHG Tailoring Rule. EPA held two public 

hearings on the proposed rule, and received over 400,000 written 

public comments. The public comment period ended on December 

28, 2009. The comments have provided detailed information that 

has helped EPA understand better the issues and potential 

impacts of this rule, and the final rule described in this 

 

6 The relevant thresholds are 100 tpy for title V, and 250 

tpy for PSD, except for 28 categories listed in EPA regulations 

for which the PSD threshold is 100 tpy.
25

preamble incorporates many of the suggestions we received. We 

respond to many of these comments in explaining our rationale 

for the final rule, which is described in section V. The final 

rule adopts many elements of the proposal but differs from the 

proposal in several important respects. We proposed to apply 

PSD and title V to GHG sources that emit or have the potential 

to emit at least 25,000 tpy CO2e, and we proposed a PSD 

significance level in a range between 10,000 and 25,000 tpy CO2e, 

but based on consideration of the additional information we 

received and our further analysis, we are finalizing the 

threshold levels in the amounts and on the schedule described 

previously. In addition, the mechanism for state, local, and 

tribal program implementation has been significantly changed to 

reflect the comments received that we needed to develop an 

implementation approach that states could adopt under state law 

more expeditiously. 

The remainder of this notice describes our approach and 

rationale in more detail. Following this overview, section III

of this preamble provides background information on the nature 

of GHG emissions, recent regulatory developments that affect 

when and how GHG emissions are subject to stationary source 

permitting, and the general requirements of the PSD and title V 

programs. Section IV describes in detail the summary of the key 
26

actions being taken in this rule, including the determination of 

emissions, the thresholds and timing for the phase-in, our 

approach to implementing the phase-in, and the additional future 

actions we will take. Section V provides a more detailed 

description of each action, explaining the policy and legal 

rationale and responding to comments received. Section V begins

with our decisions on how to calculate the mass-based and CO2ebased emissions used in the phase-in. Section V then turns to 

our legal and policy rationale for the first two steps of the 

phase-in, the 50,000 tpy floor, and the subsequent study and 

rulemakings to determine whether and how smaller sources should 

be subject to permitting. This section then describes key 

implementation issues including the approach to state adoption. 

After describing our plans for follow-up on title V fee 

programs, the section concludes by describing permit 

streamlining techniques; guidance on BACT for the GHG sources 

that are affected under the first two steps of the Tailoring 

Rule phase-in; requests for exemptions; and transitional issues, 

including grandfathering. Finally, section VI describes the 

expected impacts that will result from the phase-in approach 

(i.e, the narrower application of PSD and title V requirements 

during the phase-in period) and sections VII and VIII address

administrative requirements.
27

III. Background 

A. What are GHGs and their sources?

Greenhouse gases trap the Earth’s heat that would otherwise 

escape from the atmosphere into space, and form the greenhouse 

effect that helps keep the Earth warm enough for life. 

Greenhouse gases are naturally present in the atmosphere and are 

also emitted by human activities. Human activities are 

intensifying the naturally occurring greenhouse effect by 

increasing the amount of GHGs in the atmosphere, which is 

changing the climate in a way that endangers human health, 

society, and the natural environment.

Some GHGs, such as CO2, are emitted to the atmosphere 

through natural processes as well as human activities. Other 

gases, such as fluorinated gases, are created and emitted solely 

through human activities. As previously noted, the well-mixed

GHGs of concern directly emitted by human activities include CO2, 

CH4, N2O, HFCs, PFCs, and SF6. These six GHGs will, for the 

purposes of this final rule, be referred to collectively as "the 

six well-mixed GHGs,” or, simply, GHGs, and together constitute 

the “air pollutant” upon which the GHG thresholds in this action 

are based. These six gases remain in the atmosphere for decades 

to centuries where they become well-mixed globally in the 

atmosphere. When they are emitted more quickly than natural 
28

processes can remove them from the atmosphere, their 

concentrations increase, thus increasing the greenhouse effect. 

The heating effect caused by the human-induced buildup of GHGs 

in the atmosphere is very likely the cause of most of the 

observed global warming over the last 50 years. A detailed 

explanation of greenhouse gases, climate change and its impact 

on health, society, and the environment is included in EPA’s

technical support document (TSD) for the endangerment finding 

final rule (Docket ID No. EPA-HQ-OAR-2009-0472-11292). 

In the United States, the combustion of fossil fuels (e.g., 

coal, oil, gas) is the largest source of CO2 emissions and 

accounts for 80 percent of the total GHG emissions. 

Anthropogenic CO2 emissions released from a variety of sources, 

including through the use of fossil fuel combustion and cement 

production from geologically stored carbon (e.g., coal, oil, and 

natural gas) that is hundreds of millions of years old, as well 

as anthropogenic CO2 emissions from land-use changes such as 

deforestation, perturb the atmospheric concentration of CO2 and 

the distribution of carbon within different reservoirs 

readjusts. More than half of the energy related emissions come 

from large stationary sources such as power plants, while about 

a third comes from transportation. Of the six well-mixed GHGs, 

four (CO2, CH4, N2O, and HFCs) are emitted by motor vehicles. In 
29

the United States industrial processes (such as the production 

of cement, steel, and aluminum), agriculture, forestry, other 

land use, and waste management are also important sources of 

GHGs. 

Different GHGs have different heat-trapping capacities. 

The concept of GWP was developed to compare the heat-trapping 

capacity and atmospheric lifetime of one GHG to another. The 

definition of a GWP for a particular GHG is the ratio of heat 

trapped by one unit mass of the GHG to that of one unit mass of 

CO2 over a specified time period. When quantities of the 

different GHGs are multiplied by their GWPs, the different GHGs 

can be summed and compared on a CO2e basis. For example, CH4 has 

a GWP of 21, meaning each ton of CH4 emissions would have 21 

times as much impact on global warming over a 100-year time 

horizon as 1 ton of CO2 emissions. Thus, on the basis of heattrapping capability, 1 ton of CH4 would equal 21 tons of CO2e. 

The GWPs of the non-CO2 GHGs range from 21 (for CH4) up to 23,900 

(for SF6). Aggregating all GHGs on a CO2e basis at the source 

level allows a facility to evaluate its total GHG emissions 

contribution based on a single metric. 

B. Endangerment Finding and the LDVR

1. Endangerment Finding

On April 2, 2007, the U.S. Supreme Court found that GHGs 
30

are air pollutants under CAA section 302(g). Massachusetts v. 

EPA, 549 U.S. 497 (2007). As a result, the Supreme Court found 

that EPA was required to determine, under CAA section 202(a),

whether (1) GHGs from new motor vehicles cause or contribute to 

air pollution which may reasonably be anticipated to endanger 

public health or welfare, or (2) the science is too uncertain to 

make a reasoned decision. After issuing a proposal and 

receiving comment, on December 7, 2009, the Administrator signed 

two distinct findings regarding GHGs under CAA section 202(a):

 Endangerment Finding: The Administrator found that the 

current and projected atmospheric concentrations of the mix 

of six long-lived and directly emitted GHGs — CO2, CH4, N2O, 

HFCs, PFCs, and SF6 (referred to as “well-mixed greenhouse 

gases” in the endangerment finding) – are reasonably 

anticipated to endanger the public health and welfare of 

current and future generations.

 Cause or Contribute Finding: The Administrator found that 

the emissions of the single air pollutant defined as the 

aggregate group of six well-mixed greenhouses gases from 

new motor vehicles and new motor vehicle engines 

contributes to the GHG air pollution that threatens public 

health and welfare. 
31

These findings, which were published December 15, 2009 (74 FR 

66496), do not themselves impose any requirements on industry or 

other entities. However, they were a prerequisite to finalizing 

the GHG standards for light-duty vehicles, described next. 

2. Light-Duty Vehicle Rule

The LDVR, 75 FR 25324 (May 7, 2010), is a joint rule 

between EPA and the Department of Transportation’s National 

Highway Traffic Safety Administration (NHTSA) that establishes a 

national program consisting of new standards for light-duty 

vehicles that will reduce GHG emissions and improve fuel 

economy. EPA finalized the national GHG emissions standards 

under the Act, and NHTSA finalized Corporate Average Fuel 

Economy (CAFE) standards under the Energy Policy and 

Conservation Act, as amended. The new standards apply to new 

passenger cars, light-duty trucks, and medium-duty passenger 

vehicles, starting with model year 2012. The EPA GHG standards 

are projected to result in an estimated combined average 

emissions level of 250 grams of CO2 per mile for model year 2016 

vehicles. The standards begin with the 2012 model year, with 

standards increasing in stringency through model year 2016. The 

standards are a fleet average for each manufacturer, based on a 

footprint attribute curve, meaning that the actual target for a 

vehicle will vary depending on the size of the vehicle. Under 
32

the footprint-based standards, each manufacturer will have a GHG 

standard unique to its fleet, depending on the footprints of the 

vehicle models produced by that manufacturer. A manufacturer 

will have separate footprint-based standards for cars and for 

trucks.

The endangerment and contribution findings described 

previously require EPA to issue standards under section 202 (a) 

“applicable to emission” of the air pollutant that EPA found 

causes or contributes to the air pollution that endangers public 

health and welfare. The final emissions standards satisfy this 

requirement for GHGs from light-duty vehicles. Under section 

202(a), the Administrator has significant discretion in how to 

structure the standards that apply to the emission of the air 

pollutant at issue here, the aggregate group of six GHGs. EPA 

has the discretion under section 202(a) to adopt separate 

standards for each gas, a single composite standard covering 

various gases, or any combination of these. In the LDVR, EPA 

finalized separate standards for N2O and CH4, and a CO2 standard 

that provides for credits based on reductions of HFCs, as the 

appropriate way to issue standards applicable to emission of the 

single air pollutant, the aggregate group of six GHGs. EPA did 

not set any standards for PFCs or SF6, as they are not emitted by 

motor vehicles. 
33

C. What are the general requirements of the PSD program?

1. Overview of the PSD Program

The PSD program is a preconstruction review and permitting 

program applicable to new major stationary sources and major 

modifications at existing major stationary sources. The PSD 

program applies in areas that are designated “attainment” or 

“unclassifiable” for a National Ambient Air Quality Standard 

(NAAQS). The PSD program is contained in part C of title I of 

the CAA. The "nonattainment new source review (NSR)" program 

applies in areas not in attainment of a NAAQS or in the Ozone 

Transport Region and is implemented under the requirements of 

part D of title I of the CAA. Collectively, we commonly refer 

to these two programs as the major NSR program. The governing 

EPA rules are contained in 40 CFR 51.165, 51.166, 52.21, 52.24, 

and part 51, Appendices S and W. There is no NAAQS for CO2 or 

any of the other well-mixed GHGs, nor has EPA proposed any such 

NAAQS; therefore, unless and until we take further such action, 

we do not anticipate that the nonattainment NSR program will 

apply to GHGs.

The applicability of PSD to a particular source must be 

determined in advance of construction or modification and is 

pollutant-specific. The primary criterion in determining PSD 

applicability for a proposed source is whether the source is a 
34

“major emitting facility,” based on its predicted potential 

emissions of regulated pollutants, within the meaning of CAA 

section 169(1) and either constructs or undertakes a 

modification. EPA has implemented these requirements in its 

regulations, which use somewhat different terminology for 

determining PSD applicability, which is whether the source is a 

“major stationary source” or whether the proposed project is a 

“major modification.”

a. Major Stationary Source

Under PSD, a “major stationary source” is any source 

belonging to a specified list of 28 source categories which 

emits or has the potential to emit 100 tpy or more of any 

pollutant subject to regulation under the CAA, or any other 

source type which emits or has the potential to emit such 

pollutants in amounts equal to or greater than 250 tpy. We 

refer to these levels as the 100/250-tpy thresholds. A new 

source with a potential to emit (PTE) at or above the applicable 

“major stationary source threshold” is subject to major source

NSR. These limits originate from section 169 of the CAA, which 

applies PSD to any “major emitting facility” and defines the 

term to include any source that emits or has a PTE of 100 or 250 

tpy, depending on the source category. Note that the major 

source definition incorporates the phrase “subject to 
35

regulation,” which, as described later, will begin to include 

GHGs on January 2, 2011, under our interpretation of that phrase 

discussed in the recent Interpretive Memo notice. 75 FR 17004, 

April 2, 2010.

b. Major Modifications

PSD also applies to existing sources that undertake a 

"major modification," which occurs: (1) when there is a 

physical change in, or change in the method of operation of, a 

"major stationary source;" (2) the change results in a 

"significant" emission increase of a pollutant subject to 

regulation (equal to or above the significance level that EPA 

has set for the pollutant in 40 CFR 52.21(b)(23)); and (3) there 

is a “significant net emissions increase” of a pollutant subject 

to regulation that is equal to or above the significance level 

(defined in 40 CFR 52.21(b)(23)). Significance levels, which 

EPA has promulgated for criteria pollutants and certain other 

pollutants, represent a de minimis contribution to air quality 

problems. When EPA has not set a significance level for a 

regulated NSR pollutant, PSD applies to an increase of the 

pollutant in any amount (that is, in effect, the significance 

level is treated as zero). 

2. General Requirements for PSD
36

This section provides a very brief summary of the main

requirements of the PSD program. One principal requirement is 

that a new major source or major modification must apply BACT, 

which is determined on a case-by-case basis taking into account, 

among other factors, the cost effectiveness of the control and 

energy and environmental impacts. EPA has developed a “topdown” approach for BACT review, which involves a decision 

process that includes identification of all available control 

technologies, elimination of technically infeasible options, 

ranking of remaining options by control and cost effectiveness, 

and then selection of BACT. Under PSD, once a source is 

determined to be major for any regulated NSR pollutant, a BACT 

review is performed for each attainment pollutant that exceeds 

its PSD significance level as part of new construction or for 

modification projects at the source, where there is a 

significant increase and a significant net emissions increase of 

such pollutant.

8

In addition to performing BACT, the source must analyze 

impacts on ambient air quality to assure that no violation of 

 

8 We note that the PSD program has historically operated in 

this fashion for all pollutants – when new sources or 

modifications are “major,” PSD applies to all pollutants that 

are emitted in significant quantities from the source or 

project. This rule does not alter that for sources or 

modifications that are major due to their GHG emissions.
37

any NAAQS or PSD increments will result, and must analyze 

impacts on soil, vegetation, and visibility. In addition, 

sources or modifications that would impact Class I areas (e.g., 

national parks) may be subject to additional requirements to 

protect air quality related values (AQRVs) that have been 

identified for such areas. Under PSD, if a source’s proposed 

project may impact a Class I area, the Federal Land Manager is 

notified and is responsible for evaluating a source’s projected 

impact on the AQRVs and recommending either approval or 

disapproval of the source’s permit application based on 

anticipated impacts. There are currently no NAAQS or PSD 

increments established for GHGs, and therefore these PSD 

requirements would not apply for GHGs, even when PSD is 

triggered for GHGs. However, if PSD is triggered for a GHG 

emissions source, all regulated NSR pollutants which the new 

source emits in significant amounts would be subject to PSD 

requirements. Therefore, if a facility triggers review for 

regulated NSR pollutants that are non-GHG pollutants for which 

there are established NAAQS or increments, the air quality, 

additional impacts, and Class I requirements would apply to 

those pollutants.

The permitting authority must provide notice of its 

preliminary decision on a source's application for a PSD permit, 
38

and must provide an opportunity for comment by the public, 

industry, and other interested persons. After considering and 

responding to comments, the permitting authority must issue a 

final determination on the construction permit. Usually NSR 

permits are issued by state or local air pollution control 

agencies, which have their own permit programs approved by EPA 

in their State Implementation Plans (SIPs). In some cases, EPA 

has delegated its authority to issue PSD permits to the state or 

local agency. In other areas, EPA issues the permits under its 

own authority.

D. What are the general requirements of the title V operating 

permits program?

1. Overview of Title V

The operating permit requirements under title V are 

intended to improve sources' compliance with other CAA 

requirements. The title V program is implemented through 

regulations promulgated by EPA, 40 CFR part 70, for programs 

implemented by state and local agencies and tribes, and 40 CFR 

part 71, for programs generally implemented by EPA. 

In summary, the title V program requires major sources 

(defined and interpreted by EPA to include sources that emit or 

have a PTE of 100 tpy of any pollutant subject to regulation) 

and certain other sources to apply for operating permits. Under 
39

EPA’s long-standing interpretation, a pollutant, such as a GHG, 

is “subject to regulation” when it is subject to a CAA 

requirement establishing actual control of emissions. Title V 

generally does not add new pollution control requirements, but 

it does require that each permit contain all pollution control 

requirements or “applicable requirements” required by the CAA 

(e.g., New Source Performance Standard (NSPS), and SIP

requirements, including PSD), and it requires that certain 

procedural requirements be followed, especially with respect to 

compliance with these requirements. "Applicable requirements" 

for title V purposes include stationary source requirements, but 

do not include mobile source requirements. Other procedural 

requirements include providing review of permits by EPA, states, 

and the public, and requiring permit holders to track, report, 

and annually certify their compliance status with respect to 

their permit requirements.

2. Title V Permit Requirements

This section provides a brief summary of the requirements 

of the title V program that are most relevant to this action. A 

source generally must apply for a title V permit within 1 year 

of first becoming subject to permitting – for new sources, this 

is usually within 1 year of commencing operation. The 

application must include, among other things, identifying 
40

information, a description of emissions and other information 

necessary to determine applicability of requirements and 

information concerning compliance with those requirements. The 

permitting authority uses this information to develop the 

source's operating permit.

Title V permits generally contain the following elements: 

(1) emissions limitations and standards to assure compliance 

with all applicable requirements; (2) monitoring, recordkeeping, 

and reporting requirements, including submittal of a semiannual 

monitoring report and prompt reporting of deviations from permit 

terms; (3) fee payment; and (4) an annual certification of 

certification by a responsible official. The detailed 

requirements are set forth at 40 CFR 70.6.

In addition to the permit content requirements, there are 

procedural requirements that must be followed in issuing title V 

permits, including (1) application completeness determination; 

(2) public notice and a 30-day public comment period, including 

an opportunity for a public hearing, on draft permits; (3) EPA 

and affected state review; and (4) a statement of the legal and 

factual basis of the draft permit. The permitting authority 

must take final action (issue or deny) on the permit 

applications within 18 months of receipt. EPA also has 45 days 

from receipt of a proposed permit to object to its issuance, and 
41

citizens have 60 days after that to petition EPA to object to a 

permit. Permits may also need to be revised or reopened if new 

requirements come into effect during the permit terms or if the 

source makes changes that conflict with, or necessitate changes 

to, the current permit. Permit revisions and re-openings follow 

procedural requirements which vary depending on the nature of 

the necessary change to the permit.

E. The Interpretive Memo

On December 18, 2008, EPA issued a memorandum, "EPA's 

Interpretation of Regulations that Determine Pollutants Covered 

by Federal Prevention of Significant Deterioration (PSD) Permit 

Program" (known as the “Johnson Memo” or the “PSD Interpretive 

Memo,” and referred to in this preamble as the “Interpretive 

Memo”) that set forth EPA’s interpretation regarding which EPA 

and state actions, with respect to a previously unregulated 

pollutant, cause that pollutant to become “subject to 

regulation” under the Act. Whether a pollutant is “subject to 

regulation” is important for the purposes of determining whether 

it is covered under the federal PSD and title V permitting 

programs. The Interpretive Memo established that a pollutant is 

“subject to regulation” only if it is subject to either a 

provision in the CAA or regulation adopted by EPA under the CAA 

that requires actual control of emissions of that pollutant 
42

(referred to as the “actual control interpretation”). On 

February 17, 2009, EPA granted a petition for reconsideration on 

the Interpretive Memo, and announced its intent to conduct a 

rulemaking to allow for public comment on the issues raised in 

the memorandum and on related issues. EPA also clarified that 

the Interpretive Memo would remain in effect pending 

reconsideration.

On March 29, 2010, EPA signed a notice conveying its 

decision to continue applying (with one limited refinement) the 

Interpretive Memo’s interpretation of “subject to regulation” 

(“Interpretation of Regulations that Determine Pollutants 

Covered by Clean Air Act Permitting Programs”). See 75 FR 

17004. EPA concluded that the “actual control interpretation” 

is the most appropriate interpretation to apply given the policy 

implications. However, we refined our interpretation in one 

respect: we established that PSD permitting requirements apply 

to a newly regulated pollutant at the time a regulatory 

requirement to control emissions of that pollutant “takes 

effect” (rather than upon promulgation or the legal effective 

date of the regulation containing such a requirement). In 

addition, based on the anticipated promulgation of the LDVR, we 

stated that the GHG requirements of the vehicle rule would take 

effect on January 2, 2011, because that is the earliest date 
43

that a 2012 model year vehicle may be introduced into commerce. 

In other words, the compliance obligation under the LDVR does 

not occur until a manufacturer may introduce into commerce 

vehicles that are required to comply with GHG standards, which 

will begin with model year 2012 and will not occur before 

January 2, 2011. We also reiterated EPA’s interpretation that 

the 100 tpy major source threshold for title V is triggered only 

by pollutants “subject to regulation” under the Act, and we 

defined and applied that term for title V purposes in the same 

way that we did for PSD purposes. That is, we stated that a 

pollutant is “subject to regulation” if it is subject to a CAA 

requirement establishing “actual control of emissions;” that a 

pollutant is considered “subject to regulation” for title V 

purposes when such a requirement “takes effect”; and, based on 

the anticipated promulgation of the LDVR, that the GHG 

requirements of the vehicle rule would take effect on January 2, 

2011.

On April 1, 2010, we finalized the LDVR as anticipated, 

confirming that manufacturer certification can occur no earlier 

than January 2, 2011. Thus, under the terms of the final notice 

for the Interpretive Memo, GHGs become subject to regulation on 

that date, and PSD and title V program requirements will also 

begin to apply upon that date. 
44

IV. Summary of Final Actions 

This section describes the specific actions we are taking 

in this final rule. It describes the overall tailoring approach 

for NSR and title V applicability, the steps we are taking to 

put it into place, and future actions that we commit to take.

The next section, V, provides the legal and policy rationale for 

these actions. In that section, we provide a description of our 

rationale and response to comments for each action, presented in 

the same order as we describe the actions here.

A. How do you define the GHG pollutant for PSD and title V 

purposes?

1. GHG Pollutant Defined as the Sum-of-Six Well-Mixed GHGs

We are identifying the air pollutant for purposes of PSD 

and title V applicability to be the pollutant subject to 

regulation, which is the air pollutant for GHGs identified in 

EPA’s LDVR, as well as EPA’s endangerment and contribution 

findings.

10 In the LDVR, EPA set emissions standards under 

section 202(a) that were “applicable to emission” of a single 

air pollutant defined as the aggregate sum of six GHGs. The six 

GHGs, which are well-mixed gases in the atmosphere, are CO2, CH4, 

N2O, HFCs, PFCs, and SF6. Earlier, EPA made the contribution 

finding for this single air pollutant. 

 

10 See 74 FR 66496, 66499, 66536-7. December 15, 2009.
45

Furthermore, as proposed, we are using an emissions 

threshold that allows all six constituent gases to be evaluated 

using a common metric – CO2e. Thus, to determine applicability, 

a source's GHG emissions are calculated on a CO2e basis by 

multiplying the mass emissions of any of the six GHGs that the 

source emits by that gas’s GWP and then summing the CO2e for each 

GHG emitted by the source. This sum, expressed in terms of tpy 

CO2e, is then compared to the applicable CO2e-based permitting 

threshold to determine whether the source is subject to PSD and 

title V requirements. 

In addition, because we are implementing this phase-in 

through the term “subject to regulation,” the regulatory 

language is structured such that the statutory mass-based 

thresholds (i.e., for PSD, 100/250 tpy for new construction and 

zero tpy for modifications at a major stationary source, and for 

title V, 100 tpy) continue to apply. As a result, stationary 

source apply and stationary sources or modifications that do not 

meet these thresholds are not subject to permitting 

requirements. While technically evaluation of the mass-based 

thresholds is the second step in the applicability analysis, 

from a practical standpoint most sources are likely to treat 

this as an initial screen, so that if they would not trigger PSD 

or title V on a mass basis, they would not proceed to evaluate 
46

emissions on a CO2e basis. We have treated evaluation of massbased thresholds as the initial step in our descriptions. As 

applicable, a source would evaluate these mass-based thresholds 

by summing each of the six GHGs it emits on a mass basis (i.e., 

before applying GWP). We expect that it will be very rare for a 

new stationary source or modification to trigger permitting 

based on CO2e and not also trigger based on mass alone. 

Determining permit program applicability for the GHG “air 

pollutant” by using the sum-of-six GHGs is based on EPA’s 

interpretation that the PSD and title V requirements apply to 

each “air pollutant” that is “subject to regulation” under 

another provision of the CAA. As discussed previously, the 

final LDVR for GHGs makes it clear that the emissions standards 

EPA adopted are standards applicable to emission of the single 

air pollutant defined as the aggregate mix of these six wellmixed GHGs. See LDVR, May 7, 2010, 75 FR 25398-99, section 

III.A.2.c, and 40 CFR 86.1818-12.12 For reasons explained in 

more detail in section V, we have determined it is legally 

required, and preferable from a policy standpoint, for EPA to 

 

12 40 CFR 86.1818-12 (a) (“Applicability. This section 

contains standards and other regulations applicable to the 

emission of the air pollutant defined as the aggregate group of 

six greenhouse gases: carbon dioxide, nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride”).
47

use the same definition of the air pollutant for permitting 

purposes as that used in the rule that establishes the control 

requirements for the pollutant. We also believe there are 

implementation advantages for applying PSD and title V in this 

way. Thus, this rule establishes that a stationary source will 

use the group of six constituent gases for permitting 

applicability, rather than treating each gas individually. 

Similarly, you will include all six constituent gases because 

that is how the air pollutant is defined, even though motor 

vehicles only emit four of the six.

2. What GWP values should be used for calculating CO2e?

We are requiring that wherever you perform an emissions 

calculations involving CO2e for the purposes of determining the 

applicability of PSD or title V requirements, you use the GWP 

values codified in the EPA’s mandatory GHG reporting rule.

13 

This approach will assure consistency between the values 

required for calculations under the reporting rule and for PSD 

or title V. In addition, because any changes to Table A-1 of 

the mandatory GHG reporting rule regulatory text must go through 

a rulemaking, this approach will assure that the values used for 

 

13 Table A-1 to subpart A of 40 CFR part 98 – Global Warming 

Potentials, 74 FR 56395.
48

the permitting programs will reflect the latest values adopted 

for usage by EPA after notice and comment.

B. When will PSD and title V applicability begin for GHGs and 

emission sources?

Overview

In this action, we establish the first two phases of our 

phase-in approach, which we refer to as Steps 1 and 2. We also 

commit to a subsequent rulemaking in which we will propose or 

solicit comment on establishing a further phase-in, that is, a 

Step 3, that would apply PSD and title V to additional sources, 

effective July 1, 2013, and on which we commit to take final 

action, as supported by the record,14 by no later than July 1, 

2012.

We also commit to undertaking an assessment of sources’ and 

permitting authorities’ progress in implementing PSD and title V 

for GHG sources, and to complete this assessment by 2015. We 

further commit to completing another round of rulemaking 

addressing smaller sources by April 30, 2016. Our action in 

that rulemaking would address permitting requirements for 

 

14 Although we commit to propose or solicit comment on lower 

thresholds and to take final action on that proposal by July 1, 

2012, we cannot, at present, commit to promulgate lower 

thresholds. It will not be until the Step 3 rulemaking itself 

that we will gather and analyze data and receive comments that 

determine whether we have basis for promulgating lower 

thresholds.
49

smaller sources, taking into account the remaining problems 

concerning costs to sources and burdens to permitting 

authorities. Finally, we determine in this action that we will 

apply PSD or title V requirements to sources that emit GHGs, or

that conduct modifications that result in increases in emissions 

of GHGs, in amounts of less than 50,000 tpy CO2e any earlier than 

when we take the required further action to address smaller 

sources by April 30, 2016. 

Through this process, we will implement the phase-in 

approach by applying PSD and title V at threshold levels that 

are as close to the statutory levels as possible, and do so as 

quickly as possible, at least to a certain point. The level and 

timing of the thresholds that we promulgate in future actions 

will be based on our assessment of the resulting costs to 

sources and burdens to permitting authorities, and that, in 

turn, will depend on such variables as our progress in 

developing streamlining approaches and on permitting 

authorities’ progress in developing permitting expertise and 

acquiring more resources. At this time, we cannot foresee 

exactly when or in what manner those developments will occur. 

Therefore, we cannot promulgate more components of the tailoring 

approach beyond what we promulgate in this action. We can say 

only that we may continue the phase-in process with further 
50

rulemaking after 2016. Alternatively, we may make a definitive 

determination in one of the future rulemaking actions that, 

under the “absurd results” doctrine, PSD or title V applies only 

to certain GHG sources, and does not apply to the remaining GHG 

sources, and with that rulemaking, bring this tailoring process 

to a close.

1. What are the Step 1 thresholds, timing, and calculation 

methodology?

a. PSD Permitting

Step 1 of the Tailoring Rule phase-in will begin on January 

2, 2011. With respect to the PSD program, GHG sources will 

become subject to PSD for their GHG emissions if they undergo 

PSD permitting anyway, either for new construction or for 

modification projects, based on emissions of non-GHG pollutants, 

in which case they will be subject to the PSD requirements for 

GHG if they increase GHG emissions by 75,000 tpy CO2e or more. 

Under this step, only these sources, which we refer to as 

“anyway” PSD sources, will become subject to PSD; no sources 

will become major sources for PSD purposes or be treated as 

undertaking modifications that trigger PSD based solely on their 

GHG emissions. As a result, no additional PSD permitting 

actions will be necessary solely due to GHG emissions. However, 

existing or newly-constructed sources that are determined to be 
51

major sources based on non-GHG emissions are required to conduct 

a BACT review for their GHG emissions (from new construction) or 

emissions increases (from modifications), if they are subject to 

PSD due to their non-GHG emissions from construction or 

modification actions and each of the following conditions is 

met: 

(1) The GHG emissions (or net emissions increase) due to the 

new construction (or modification) project, calculated 

as the sum of the six well-mixed GHGs on a mass basis 

(no GWPs applied) exceed a value of 0 tpy; and

(2) The GHG emissions (or net emissions increase) due to the 

new construction (or modification) project, calculated 

as the sum of the six well-mixed GHGs on a CO2e basis 

(GWPs applied) equal or exceed a value of 75,000 tpy 

CO2e. 

The purpose of the first condition is to determine whether 

the GHG emissions or net emissions increase has resulted in an 

“increase in the amount” of an air pollutant as required by the 

Act. Because EPA has not defined a mass-based regulatory 

significance level for GHGs, that level, in effect, is treated 

as zero. See 40 CFR 52.21 (b)(23)(ii) and 51.166 (b)(23)(ii). 

In practice, this means any amount of new emissions or an 

emission increase will exceed the mass-based limit. We are not, 
52

at this time, establishing a significance level based on mass 

emissions, and instead we are establishing one based on CO2e that 

addresses permitting burdens. The zero mass-based amount 

applies, but only as an initial screen to exclude sources or 

changes that have no mass increase of GHGs. 

b. Title V Permitting

Under Step 1, only sources required to have title V permits 

for non-GHG pollutants (i.e., “anyway” title V sources) will be 

required to address GHGs as part of their title V permitting. 

That is, no sources will become major for title V based solely 

on their GHG emissions. Note further, however, that the 75,000 

tpy CO2e limit does not apply to title V, so that anyway title V 

sources must apply any title V requirements to their GHG 

emissions. Sources with title V permits must address GHG 

requirements when they apply for, renew, or revise their 

permits. These requirements will include any GHG applicable 

requirements (e.g., GHG BACT requirements from a PSD process) 

and associated monitoring, record-keeping and reporting. When a 

permit application is otherwise required, they will also need to 

identify GHG emissions and other information in that application 

to the extent required under 40 CFR 70.5(c) and 71.5(c), 
53

including information necessary to determine applicable 

requirements.15

2. What are the Step 2 thresholds, timing, and calculation 

methodology?

a. PSD Permitting

Step 2 will begin July 1, 2011. Under Step 2, anyway PSD 

sources - that is, sources already subject to PSD based on nonGHGs and covered under Step 1 previously - will remain subject 

to PSD. In addition, sources with the potential to emit 100,000 

tpy CO2e or more of GHG will be considered major sources for PSD 

permitting purposes (provided that they also emit GHGs or some 

other regulated NSR pollutant above the 100/250 tpy (mass based) 

statutory thresholds. Additionally, any physical change or 

change in the method of operation at a major source (including 

one that is only major due to GHGs) resulting in a net GHG 

emissions increase of 75,000 tpy CO2e or more will be subject to 

PSD review and requirements with respect to GHGs (provided that 

it also results in an increase of GHG emissions on a mass 

basis). 

 

15 EPA notes, however, that many sources subject to title V 

under Steps 1 and 2 will also be subject to the GHG mandatory 

reporting rule. For these sources, the emissions description 

requirements in the title V regulations will generally be 

satisfied by referencing information provided under the 

reporting rule.
54

 Specifically, for purposes of determining whether a GHG 

emission source, resulting from either new construction or a 

physical or operational change at an existing source, is 

considered a major source under PSD, both of the following 

conditions must be met:

(1) The GHG emission source, which is not major for another 

pollutant, emits or has the potential to emit GHG in 

amounts that equal or exceed the following, calculated 

as the sum-of-six well-mixed GHGs on a mass basis (no 

GWPs applied):

 100 tpy for sources in any of the 28 major emitting 

facility source categories listed under PSD, or 

 250 tpy for any other stationary source. 

(2) The GHG emission source emits or has the potential to 

emit GHGs in amounts that equal or exceed 100,000 tpy

CO2e basis.

For determining whether a modification project at a major 

stationary source is subject to PSD review, both of the 

following conditions must be met:

(1) The net GHG emissions increase resulting from the 

project, calculated as the sum-of-six well-mixed GHGs on 

a mass basis (no GWPs applied) equals or exceeds 0 tpy. 
55

(2) The net GHG emissions increase resulting from the 

project, calculated as the sum-of-six well-mixed GHGs on 

a CO2e basis (GWPs applied) equals or exceeds 75,000 tpy 

CO2e. 

The purpose of the first condition in both of these 

determinations is to confirm whether the GHG emissions or 

emissions increase have exceeded, on a mass-basis, the statutory 

major source thresholds (where the source is not otherwise 

major) and mass-based statutory significance level for GHGs, 

which, as noted previously, is 0 tpy. See 40 CFR 52.21 

(b)(23)(ii) and 51.166 (b)(23)(ii). 

As an example of how the mass-based test would apply, 

consider a modification project that results in a 5 tpy increase 

of GHG emissions on a mass basis, associated with a high-GWP GHG 

gas (for example, SF6, with a GWP value of 23,900), but also 

results in a 100 tpy reduction in CO2 emissions (assume no other 

contemporaneous increases or decreases of GHG). In this 

example, there would be a net decrease of GHG emissions on a 

mass basis (5 tpy – 100 tpy = -95 tpy). Because there is no 

mass-based increase of GHG, this project does not trigger PSD, 

despite the fact that the net GWP-adjusted emissions increase of 

SF6 in this example would equal 119,500 tpy of CO2e and the 

project would thus exceed 75,000 tpy CO2e.
56

b. Title V Permitting

Under Step 2, “anyway” title V sources - that is, sources 

already subject to title V based on non-GHGs and that are 

covered under Step 1 previously - will continue to be subject to 

title V. In addition, GHG emission sources that equal or exceed 

the 100,000 tpy CO2e threshold will be required to obtain a title 

V permit if they do not already have one. It is important to 

note that the requirement to obtain a title V permit will not, 

by itself, result in the triggering of additional substantive 

requirements for control of GHG. Rather, these new title V 

permits will simply incorporate whatever applicable CAA 

requirements, if any, apply to the source being permitted. Both 

of the following conditions need to be met in order for title V 

to apply under Step 2 to a GHG emission source:

(1) An existing or newly constructed source emits or has 

the potential to emit GHGs in amounts that equal or exceed 100 

tpy calculated as the sum of the six well-mixed GHGs on a mass 

basis (no GWPs applied). 

(2) An existing or newly constructed source emits or has the 

potential to emit GHGs in amounts that equal or exceed 

100,000 tpy calculated as the sum of the six well-mixed

GHGs on a CO2e basis (GWPs applied).

3. What about Step 3?
57

In this rule, EPA establishes an enforceable commitment to 

complete another rulemaking no later than July 1, 2012, in which 

we will propose or solicit comment on a Step 3 of the phase-in 

and may also consider other approaches that may result in the 

permanent exclusion of a category of sources from PSD or title V

requirements, under the Chevron framework, taking account of the 

“absurd results” doctrine.

Consistent with our phase-in approach, it is important for 

us to consider whether, at some point during the implementation 

of Step 2, it will become possible to administer GHG permitting 

programs for additional sources. For example, if EPA is able to 

promulgate measures that streamline programs to at least some 

extent, if permitting authorities increase their resources, or 

if implementation experience and more seasoned staff results in 

more effective use of scarce permitting resources, then we 

expect that we will be able to phase in the application of PSD 

and title V to more sources by establishing Step 3. We do not 

have enough information now to establish a final Step 3, 

particularly because there will be significant transition 

occurring in the GHG permitting programs during Steps 1 and 2. 

However, we believe that it will be possible to develop a record 

on which to base Step 3 sometime soon after we begin to 

implement Step 2. 
58

Therefore, we plan to propose a rule in which we solicit 

comment on or propose lower thresholds for PSD and title V 

applicability, and we establish an enforceable commitment to 

finalize a rule in which we address those matters by July 1, 

2012. In order to provide a year for permitting authorities and 

sources to prepare for any additional GHG permitting action in 

Step 3, we will establish that Step 3 would take effect on July 

1, 2013. We also commit to explore, between now and the Step 3 

proposal, a wide range of streamlining options. In the 

proposal, we will take comment on streamlining approaches we 

think may be viable (except to the extent we will have already 

issued guidance documents concerning streamlining approaches), 

and we will address those options in the final rule. 

In addition, as part of the Step 3 action, we may solicit 

comment on a permanent exclusion of certain sources from PSD, 

title V or both, based on an “absurd results” rationale. For 

example, we may make a final determination that under the 

“absurd results” doctrine, PSD and/or title V do not apply to a 

set of GHG sources that, although above the statutory thresholds 

for those programs, are too small and relatively inconsequential 

in terms of GHG contribution. Another type of such exclusion 

for the title V program could be for sources that would 

otherwise be required to obtain an “empty permit,” that is, for 
59

example, one that would not contain any applicable requirements 

because there are none that apply to the source. If we 

promulgate a permanent exclusion, we may conclude that by that 

time, we will have brought into the PSD and title V programs the

full set of sources that would be consistent with congressional 

intent (or, if congressional intent on that point is unclear, 

with a reasonable policy consistent with statutory requirements)

and, under those circumstances, we would find that such a rule 

brings the tailoring process to a close. The application of the 

“absurd results” rationale for a permanent exclusion is 

discussed in more detail in section V.B, later in this preamble.

4. What about the proposed 6-year exclusion for smaller 

sources? 

The tailoring proposal contemplated at least a 6-year 

exclusion from permitting for small sources. This proposed 

exclusion was based on the overwhelming numbers of permitting 

actions at small sources and the need for time for permitting 

authorities to secure resources, hire and train staff, and gain 

experience with GHG permitting for new types of sources and 

technologies. It was also based on the time needed for EPA to 

develop, and for states to adopt, streamlining measures to 

reduce the permitting burden (e.g., concerning PTE, presumptive 

BACT, or general permits). We therefore proposed such an 
60

exclusion, and proposed that it would last 6 years – 5 years to 

complete a required study evaluating permitting burden and 

assessing the effect of streamlining measures or techniques in 

reducing this burden, plus an additional year to complete a 

final rulemaking that would phase in additional sources as 

appropriate based on the study. 

We are finalizing the 6-year exclusion, and for reasons 

described later, are establishing that in no event will sources 

below 50,000 tpy CO2e be subject to PSD or title V permitting 

during the 6-year period, nor will modifications be subject to 

PSD unless they increase emissions by 50,000 tpy CO2e or more. 

The exclusion will last until we take the action described later

to address smaller sources, which is required by April 30, 2016. 

The exclusion provides certainty that, before this date, EPA 

will not act to cover sources and modifications below these 

thresholds, including during the required Step 3 rulemaking that 

will occur in 2012. In effect, this means that Step 3 will 

establish a major source threshold and significance level no 

lower than 50,000 tpy CO2e. This does not necessarily mean we 

will cover sources below this level on April 30, 2016. It 

simply means that the provision we are adopting would assure 

that EPA does not cover such sources any sooner than that.
61

5. When and how will EPA take further action on smaller 

sources? 

As we proposed, we are establishing an enforceable 

commitment to act within 5 years to complete a study projecting 

the administrative burdens that remain for small sources after 

permitting authorities have had time to secure resources, hire 

and train staff, and gain experience with GHG permitting for new 

types of sources and technologies, and after EPA has had time to 

develop (and states have had time to adopt) streamlining 

measures to reduce the permitting burden for such sources. We 

will use the results of this study to serve as the basis for an 

additional rulemaking that would take further action to address 

small sources. Similar to the enforceable commitment to act on 

Step 3, we are making an enforceable commitment to complete this 

rulemaking by April 30, 2016.

We cannot predict at this time what form that final action 

will take. It could function as a Step 4, bringing in 

additional sources based on, for example, streamlining actions, 

increased permitting authority resources, and experienced and 

more efficient permitting staff; and it could further indicate 

that we intend to follow-up with a Step 5 to bring in more 

sources. Alternatively, it could also function as a final step 

excluding certain sources permanently based on our application 
62

of the Chevron framework, taking account of the “absurd results” 

doctrine, and subjecting the remaining sources to permitting. 

However, whatever final action we take would explain any 

necessary changes to the Step 3 thresholds and would supersede

the 6-year exclusion for sources and modifications below 50,000 

tpy CO2e.

C. How do state, local and tribal area programs adopt the final 

GHG applicability thresholds?

We are finalizing our proposed approach to change the 

definition of “major stationary source” in the PSD implementing 

regulations, and the “major source” definition in the title V

implementing regulations to tailor the application of these 

permitting programs to GHG emissions. We are also finalizing a 

significance level for GHG emissions for purposes of defining a 

major modification under the PSD program, and add an exclusion 

from PSD and title V permitting for GHG emissions, until we 

complete a rulemaking required by April 30, 2016, for any 

sources that are not already subject to PSD and title V 

permitting and that emit less than 50,000 tpy of CO2e.

As explained earlier, we are adopting thresholds that phase 

in the applicability of GHG permitting over a specified time 

period. In adopting regulatory changes to implement these 

thresholds, we follow an approach that is substantively the same 
63

as the approach proposed, but takes a different form for 

purposes of revisions to our PSD and title V regulations. 

Specifically, in this final rule, for our regulations, in 

conjunction with the definitions of “major stationary source” 

and “major modification” (for PSD) and “major source” (for title 

V), we are adopting a definition of the term “subject to 

regulation.” Moreover, we are defining this term so that GHG 

emissions from sources above the threshold are treated as 

subject to regulation, and therefore the sources that emit them 

are subject to PSD and title V. We are not finalizing the 

approach we proposed, which was to revise the numerical 

thresholds in the definitions so that GHG sources would have a 

higher threshold. Although we are defining the term “subject to 

regulation,” we recognize that from a substantive standpoint, 

our tailoring approach entails interpreting the definitions of 

“major emitting facility,” “major modification,” and “major 

source” to phase in the applicability of PSD and title V, as 

applicable, to GHG sources, and it makes no difference whether 

we interpret those definitions through a definition of the term 

“subject to regulation,” revising the numerical thresholds, or 

revising other terms in those definitions. 

We are adopting definitions of the term “subject to 

regulation” to implement the tailoring approach because that 
64

will facilitate rapid implementation of the final rules by 

states. Under this approach, states may not need to undertake a 

regulatory or legislative action before implementing the finl 

rule. These states would be able to establish their 

interpretations of the term “subject to regulation” used in 

existing state rules before January 2, 2011, which is the date 

that the LDVR and permitting requirements would take effect, and 

thereby exempt sources below the threshold from PSD and title V 

as a matter of both federal and state law. We are also 

codifying in this definition EPA interpretations discussed in 

our recent action “Reconsideration of Interpretation of 

Regulations that Determine Pollutants Covered by Clean Air Act 

Permitting Programs” (75 FR 17704) to provide a complete picture 

of the meaning of this phrase as it applies to all air 

pollutants. 

Because we are finalizing the rule in a manner that will 

allow most states to rapidly implement the final rule, and 

because our recent action on the Interpretive Memo allowed for a 

longer transition time than we anticipated at proposal, we are 

delaying final action on our proposal to issue limited approvals 

for SIP-approved PSD programs and part 70 operating permit 
65

programs.16 Instead, we are requesting that states submit 

information to the appropriate EPA Regional Administrator by 

[INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL 

REGISTER] so that we may determine whether it is still necessary 

to finalize any of our proposed limited approvals for any SIPapproved PSD and part 70 title V state programs. In that 

letter, states should explain whether they will apply the 

meaning of the term “subject to regulation” established by EPA 

in this action in implementing both their PSD and part 70 title 

V permitting programs, and if so, whether the state intends to 

do so without undertaking a regulatory or legislative process. 

If a state must revise its statutes or regulations to implement 

this rule, we ask that it provide an estimate of the time to 

adopt final rules in its letter to the Regional Administrator. 

If a state chooses not to apply the approach reflected in this 

rule, the letter should address whether the state has 

alternative authority to implement the final rule’s tailoring

approach or some other approach that is at least as stringent, 

but which also addresses the expected shortfalls in personnel 

and funding that would exist if the state carried out permitting 

at thresholds lower than those in the final rules. For any 

 

16 In the alternative, we also proposed to use our 110(k)(6) 

error correction authority to revise SIP-approved PSD programs.
66

state that is unable or unwilling to apply the permitting 

thresholds in the final rules, and otherwise is unable to 

demonstrate adequate personnel and funding, or alternate 

authority to permit GHG emissions sources consistent with the 

final rules, EPA will move forward with finalizing a limited 

approval of the state’s permitting program. By the same token, 

if we do not receive a letter from a state in response to this 

request by [INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN THE 

FEDERAL REGISTER], we will be obliged to move forward with 

finalizing a narrowing of our approval of the existing SIP or 

title V program.

We also ask any state that currently lacks authority to 

issue PSD or title V permits to any GHG emissions sources to 

notify the EPA Regional Administrator by letter as to whether 

the state intends to undertake rulemaking to revise its rules 

consistent with these applicability thresholds. For any state 

that lacks the ability to issue PSD or title V permits for GHG 

emissions sources consistent with the final rule, we intend to

undertake a separate action to call for revisions to these 

programs. We also intend to move quickly to impose a Federal 

Implementation Plan (FIP) for PSD through 40 CFR 52.21, and use 

our federal title V authority to ensure that GHG sources will be 
67

permitted consistent with the final rules. Our request for 

information from states is discussed further in section V.C.

D. How do you treat GHGs for purposes of title V permit fees?

We are not amending the title V regulations for fees at 

this time, including any of the provisions specifying the 

presumptive minimum fee. We are also not, at this time, calling 

for each state, local or tribal program to submit new fee 

adequacy demonstrations as a result of increased GHG permitting 

workload during Steps 1 and 2. However, as described in section 

VI.D the statutory and regulatory requirement to collect fees 

sufficient to cover all reasonable (direct and indirect) costs 

required to develop and administer title V programs still 

applies. Therefore, we are recommending that each program 

review its resource needs for GHG-emitting sources and determine 

if the existing fee approaches will be adequate. If those 

approaches will not be adequate, we suggest that state, local 

and tribal agencies should be proactive in raising fees to cover 

the direct and indirect costs of the program or develop other 

alternative approaches to meet the shortfall. We will closely 

monitor approved title V programs during implementation of the 

first two steps of the Tailoring Rule to ensure that the added 

workload from incorporating GHGs into the permit program does 

not result in fee shortfalls that imperil operating permit 
68

program implementation and enforcement. In developing 

alternative approaches, we note the value of approaches that do 

not require a per-ton fee for GHG and therefore do not require a 

GHG inventory to develop. Finally, we offer to work with 

permitting authorities that request our assistance with 

developing fee approaches.

E. Other Actions and Issues 

This section describes other actions we intend to take in 

the future related to GHG permitting in addition to the actions 

that we are promulgating with this final rule. This section 

also responds to commenters’ suggestions that we undertake 

certain additional actions in this rule, which we decline to do.

1. Timing for Permit Streamlining Techniques

As described at proposal, we intend to develop a series of 

streamlining approaches as an integral part of our phase-in 

approach. The approaches we described at proposal included: 

(1) defining PTE for various source categories, (2) establishing 

emission limits for various source categories that constitute 

presumptive BACT, (3) establishing procedures for use of general 

permits and permits-by-rule, (4) establishing procedures for 

electronic permitting, and (5) applying lean techniques to 

establish more efficient permitting processes. Taken as a 

whole, these techniques have the potential to obviate the 
69

applicability of PSD and title V requirements for some GHGemitting sources; promote more efficient treatment of GHGemitting sources that will already be subject to PSD and title 

V; and allow the expeditious expansion of PSD and title V 

applicability to more GHG-emitting sources while protecting 

those sources and the permitting authorities from undue 

expenses. 

As a result, we fully intend to move forward expeditiously 

with developing streamlining approaches. However, for reasons 

discussed in section V.E, we do not expect to develop and 

implement any of these approaches before Step 2 begins. 

Moreover, we generally expect that each of the first three –

which are the most far-reaching - will take several years to 

implement because we will need to undertake notice and comment 

rulemaking to develop them, and then the permitting authorities 

will need to adopt them through the appropriate state or local 

processes. We commit to explore a wide range of possible 

approaches before the Step 3 rulemaking, and, in that 

rulemaking, to propose those that we think may be viable once we 

have had time to gather and review key supporting data, and once 

the states and we have key implementation experience that can 

inform our thinking. Because the streamlining approaches 

generally carry uncertainty - as demonstrated by comments we 
70

received raising legal and policy concerns, as discussed later, 

that we will have to address - we cannot commit with this action 

to adopt any streamlining actions in particular, nor to adopting 

them on any particular schedule. However, we intend to pursue 

streamlining options as expeditiously as possible, beginning 

immediately and proceeding throughout the phase-in period, and 

we encourage permitting authorities to do the same.

2. Guidance for BACT Determinations

Through this final rule we are not amending our regulations 

or issuing guidance on BACT for GHGs. As described in our 

proposal, we recognize the need to develop and issue technical 

and policy guidance for permitting of GHGs, and we plan to 

accomplish it through a separate effort that will involve 

stakeholder input. This effort is already underway; in addition 

to comments EPA received on the proposed Tailoring Rule related 

to GHG BACT guidance and information needs, EPA received a suite 

of recommendations from the Clean Air Act Advisory Committee 

(CAAAC) to which EPA is actively responding. This includes 

technical guidance and database tools that EPA anticipates 

issuing by June 2010, and policy guidance that will be issued by 

the end of 2010. Thus, this important information will be 

available to support permitting agencies in their BACT 

determinations at the time that the GHGs become a regulated NSR 
71

pollutant, once the LDVR takes effect in January 2011. EPA is 

confident that these measures will help support a smooth 

transition to permitting emissions of GHGs.

3. Requests for Higher Category-Specific Thresholds and 

Exemptions from Applicability

 EPA has decided not to provide exemptions from 

applicability determinations (major source and major 

modification) under title V and PSD for certain GHG emission 

sources, emission activities, or types of emissions at this 

time. Commenters requested several applicability exemptions 

with respect to GHGs from, for example, agricultural sources, 

residential sources, small businesses, energy-intensive 

industrial processes (e.g., aluminum, steel, cement, glass, and 

pulp and paper manufacturers), lime production, semiconductor 

production, poultry production, solid waste landfills, biomass 

combustion/biogenic emissions, fugitive emissions, and pollution 

control projects. For reasons explained in section V.E, we have 

decided to address the need for tailoring through a uniform 

threshold-based approach, rather than through a collection of 

various specific exclusions. 

4. Transitional Issues Including Requests for Grandfathering

For reasons explained in section V.E, EPA has determined 

that transitional issues for pending applications and permitted 
72

sources are adequately addressed by existing requirements and 

the amount of lead time provided before permitting requirements 

apply to GHGs under this rule and the March 29, 2010 final 

action regarding the Interpretive memo. This rule does not 

contain any additional exemptions or grandfathering provisions 

addressing the transition to PSD and title V permitting for 

GHGs. 

We are not promulgating an exemption for PSD permit 

applications that are pending when Step 1 of the permitting 

phase-in begins for those sources that would otherwise need to 

obtain a PSD permit based on emissions of pollutants other than 

GHGs. Any PSD permits issued to such Step 1 sources on or after 

January 2, 2011 will need to address GHGs. This action makes no 

change to the position we expressed on this issue on April 2, 

2010. 

Final PSD permits issued before January 2, 2011 need not be 

reopened or amended to incorporate requirements for GHGs that 

take effect after the permit is issued. A source that is 

authorized to construct under a PSD permit but has not yet begun 

actual construction on January 2, 2011 may begin actual 

construction after that date without having to amend the 

previously-issued PSD permit to incorporate GHG requirements, 

provided the permit has not expired. 
73

Sources that are not subject to PSD permitting requirements 

until Step 2 need not obtain a PSD permit addressing GHGs in 

order to continue any actual construction that begins before 

July 1, 2011, when such a source was not a major stationary 

source required to obtain a PSD permit. However, Step 2 sources 

that begin actual construction in Step 2 may do so only after 

obtaining a PSD permit. 

The title V permitting regulations already include a robust 

set of provisions to address the incorporation of new applicable 

requirements and other transitional considerations. A title V 

source applying for the first time must submit its permit 

application within 12 months after the source becomes subject to 

the operating permit program or an earlier time at the 

discretion of the permitting authority. Where a source is 

required to obtain a PSD permit, the source must apply for a 

title V permit or permit revision within 12 months of commencing 

operation or on or before such earlier date as the permitting 

authority may establish. Where additional applicable 

requirements become applicable to a source after it submits its 

permit application, but prior to release of a draft permit, the 

source is obligated to supplement its application. Permitting 

authorities may also ask for additional information during the 

processing of an application. In addition, where a source that 
74

already has a title V permit becomes subject to additional 

applicable requirements, the permitting authority is required to 

reopen the permit to add those applicable requirements if the 

permit term has 3 or more years remaining and the applicable 

requirements will be in effect prior to the date the permit is 

due to expire. 

V. What is the legal and policy rationale for the final 

actions? 

In this section, we describe the legal and policy rationale 

for our action, including our rationale for the following: (1) 

our approach to calculating GHG emissions for PSD and title V 

applicability purposes, (2) our approach to establishing the 

thresholds and timing of PSD and title V applicability to GHG 

emissions sources; (3) how state, local, and tribal area 

programs adopt the final GHG applicability thresholds; (4) 

treatment of GHGs for title V permit fees; (5) future 

activities, including streamlining actions. We present the 

rationale description in the following five subsections, 

corresponding to the basic presentation of the approach in 

section IV.

A. Rationale for Our Approach to Calculating GHG Emissions for 

PSD and Title V Applicability Purposes

1. Grouping of GHGs into a Single Pollutant
75

In this section, we explain our treatment of the air 

pollutant at issue for purposes of PSD and title V, such that 

sources that emit that pollutant in the requisite quantities 

become subject to PSD and/or title V requirements. We explain 

our rationale for treating the GHG air pollutant as a combined 

group of six GHGs instead of six separate air pollutants defined 

by each individual GHG, and our rationale for including all six 

of the GHGs in that group. We also define the GHG metric to use 

for comparison to the applicability thresholds. 

We proposed to identify the air pollutant as the aggregate 

group of the six GHGs that comprise the GHG pollutant, and to 

use a GHG metric for the applicability thresholds based on CO2e. 

The summed CO2e emissions would then be compared to the 

applicable permitting threshold to determine whether the source 

is subject to PSD and title V requirements. Historically, the 

PSD and title V regulatory provisions do not, in the first 

instance, define the “air pollutant” to which they apply, but 

rather rely for the definition of the pollutant on a crossreference to the regulatory provision under another part of the 

Act that establishes the emission standards or limits for that 

pollutant that in turn causes the pollutant to be subject to 

regulation under PSD and title V permitting. As an example, the 

pollutant “total reduced sulfur” (TRS) is a pollutant comprised 
76

of the sum of multiple compounds that was originally defined 

under the NSPS, subpart BB, Standards of Performance for Kraft 

Pulp Mills, which then caused it to be subject to regulation 

under the PSD program. The actual compounds that define the 

pollutant TRS are identified in the NSPS. The PSD program 

regulations did not introduce its own independent definition of 

TRS, but instead relied on the definition as contained in the 

Kraft Pulp Mills NSPS. 

However, at the time of our proposal, the endangerment and 

cause or contribute findings had not been completed and the LDVR 

for GHGs had not been finalized. Thus, there was no final 

agency action defining the “air pollutant” consisting of GHGs to 

be considered “subject to regulation.” Absent a definition of 

“greenhouse gases” under another regulatory provision that we 

could cross-reference, we proposed to define “greenhouse gases” 

for permitting purposes as “the single air pollutant that is 

comprised of the group of six GHGs, as proposed in the [CAA] 

section 202(a) endangerment and contribution findings.” 74 FR

55329, col. 1. The six well-mixed GHGs identified in the 

proposed contribution finding were: CO2, CH4, N2O, SF6, HFCs, and 

PFCs. 

In the proposal, we further recognized that the LDVR for 

GHGs, as it was proposed, would result in reductions of only 
77

four of the gases, not all six, because only four are emitted by 

vehicles. However, we concluded that if the LDVR were finalized 

as proposed, then the air pollutant for purposes of PSD and 

title V applicability would be a single air pollutant that is 

the aggregate mix of the group of six GHGs because –

[t]hese six GHGs as a class comprise the air pollutant 

that is the subject of the endangerment finding and 

companion contribution finding and constitute the air 

pollutant that is regulated by the light-duty vehicle 

rule through measures that address the components of 

that air pollutant that are emitted from the mobile 

sources. Thus, although the CAA section 202(a) 

proposal establishes controls only with respect to 

four GHGs, as a legal matter, the proposal covers the 

entire set of GHGs that as a class are the single “air 

pollutant” in the proposed endangerment and 

contribution findings.

74 FR 55329 col. 1. 

We also solicited comment on whether we should identify 

the GHG metric in a different way, such as addressing each GHG 

constituent compound individually or including (whether 

individually or as a group) only those four GHG constituent 

compounds for which reductions would occur through the emission 

standards or limits proposed in the LDVR. 

A minority of the comments on our proposal addressed this 

issue. Some commenters supported combining the individual GHGs 

as one pollutant for purposes of determining permitting 

applicability, and stated that it is not uncommon for EPA to 
78

recognize “collective” air pollutants comprised of many 

individual compounds based upon shared threats to health and 

welfare, including such EPA-created group pollutants as sulfur 

oxides, nitrogen oxides, volatile organic compounds (VOCs), and 

particulate matter (PM). 

On the other hand, a significant number of commenters also 

raised concerns about grouping the individual GHGs into one 

metric. Some of these commenters argued that grouping GHGs is 

not appropriate because GHGs are not like other air pollutants 

that are comprised of numerous substances of concern (e.g., VOCs 

and PM), individual GHGs do not interact or combine to create a 

pollutant of concern, and EPA has not established a “GHG” NAAQS 

that supports the definition of the pollutant as a group. Some 

were concerned that regulating the GHGs as a group would 

increase the likelihood that a source will trigger permitting 

requirements, adding that this is unnecessary and would conflict 

with the “absurd results” and “administrative necessity” 

doctrines because it would lead to larger numbers of sources 

becoming subject to permitting. Some commenters opposing 

grouping suggested that we should explore regulating each of the 

GHG pollutants on an individual mass basis rather than 

collectively because in their view, it is reasonable and 

feasible to regulate and control emissions of each of the listed 
79

pollutants, other than CO2, at the 100/250 tpy thresholds, or 

less if deemed necessary, in accordance with the established 

mechanisms of the Act and doing so would lead to a better 

environmental result. Finally, some commenters argued that 

disaggregating the pollutants would also allow for more 

appropriate technology review.

After considering these comments, and taking into account 

other related actions that have occurred since proposal, we have 

determined that PSD and title V permitting program requirements 

will apply, as proposed, to the “single air pollutant that is 

comprised of the group of six GHGs.” 74 FR 55329, col. 1. We 

believe that this approach is both compelled by the statute and 

reflects the preferable policy approach. 

As more fully discussed elsewhere in this rulemaking, the 

PSD requirements apply to a “major emitting facility” that 

undertakes construction or “modification.” CAA sections 165(a), 

169 (2)(C). The term “major emitting facility” is defined as, 

in general, a source that emits 100 or 250 tons of “any air 

pollutant,” CAA section 169(1), and, similarly, the term 

“modification” is defined as a physical or operational change 

that results in the increased or new emissions of “any air 

pollutant.” CAA sections 169(2)(C), 111(a)(4). Through 

regulation, we have interpreted the term “any air pollutant,” as 
80

found in both the terms “major emitting facility” and 

“modification,” more narrowly to mean any “regulated NSR 

pollutant,” and we further define this term to include any 

pollutant that is “subject to regulation under the Act.” 40 CFR 

52.21(b)(50)(iv), 52.21.(b)(2).17

Similarly, as discussed elsewhere, the title V requirements 

apply to a “major source,” which is defined, in general, as any

source that emits at least 100 tpy of “any air pollutant.” CAA 

sections 502(a), 501(2)(B), 302(j). EPA has interpreted the 

term “any air pollutant” narrowly so that applies only with 

respect to air pollutants that are subject to regulation under 

the CAA. Memorandum from Lydia N. Wegman, Deputy Director, 

Office of Air Quality Planning and Standards, U.S. EPA, 

“Definition of Regulated Air Pollutant for Purposes of Title V” 

(Apr. 26, 1993). 

Based on these provisions, the key issue for present 

purposes in determining whether a source is subject to PSD 

(because it qualifies as a major emitting facility that 

undertakes construction or modification) or title V is whether 

 

17

 By the same token, CAA section 165(a)(4) requires that a 

source subject to PSD impose best available control technology 

for “each pollutant subject to regulation under this chapter” 

that the source emits.
81

the pollutant or pollutants that the source emits comprise the 

“air pollutant” that is “subject to regulation” under the Act. 

The phrase “subject to regulation under the Act,” by its 

terms, identifies the air pollutant that is subject to PSD and 

title V as the same air pollutant that is identified in the 

regulatory action under another provision of the Act. The term 

is a simple cross-reference. It carries no implication that 

EPA, in identifying the pollutant to which PSD or title V apply, 

may redefine the pollutant that is regulated elsewhere in the 

Act. Whatever the pollutant is that is regulated elsewhere, it 

is that pollutant to which PSD and title V apply. 

Since the time of our proposal, we have finalized both the 

contribution finding and the LDVR for GHGs. The final LDVR for 

GHGs specifies, in the rule’s applicability provisions, the air 

pollutant subject to control as the aggregate group of the six 

GHGs, including CO2, CH4, N2O, SF6, HFCs, and PFCs.

18 Because it 

is this pollutant that is regulated under the LDVR, it is this 

 

18 The applicability provision of the LDVR is found in 40 

CFR 86.1818-12(a), which provides as follows:

Greenhouse gas emission standards for light-duty vehicles, 

light-duty trucks, and medium-duty passenger vehicles. 

Applicability. This section contains standards and other 

regulations applicable to the emission of the air pollutant 

defined as the aggregate group of six greenhouse gases: carbon 

dioxide, nitrous oxide, methane, hydrofluorocarbons, 

perfluorocarbons, and sulfur hexafluoride.
82

pollutant to which PSD and title V apply. Specifically, the 

applicability provision in the LDVR provides a clear reference 

to the definition of the single pollutant comprised of the 

aggregate group of the six well-mixed GHGs, which makes clear

PSD and title V applicability depends on the same sum-of-six GHG 

construct. We must follow this construct of the aggregate group 

of the six gases and do not have discretion to interpret the GHG 

“air pollutant” differently for the purposes of PSD or title V. 

This construct of the pollutant as the aggregate group of 

the six gases is also consistent with the definition of the air 

pollutant in the final contribution finding for GHGs [see 74 FR

66496, 66499, 66536-7 (December 15, 2009)]. There, the 

Administrator defined the air pollutant as the “aggregate group 

of the same six ... greenhouse gases,” 74 FR 66536), and these 

well-mixed GHGs are defined to include CO2, CH4, N2O, SF6, HFCs, 

and PFCs. 

Moreover, even if we had discretion to identify the GHGs 

air pollutant differently in the permitting programs than in the 

LDVR, we believe it is reasonable to identify the GHGs air 

pollutant through the sum-of-six construct for the same reasons 

why we adopted that definition in the contribution finding and 

for additional reasons noted below specific to the permit 

programs. The term “air pollutant” is defined under CAA section 
83

302(g) as “any air pollution agent or combination of such 

agents, including any physical, chemical, biological, 

radioactive ... substance or matter which is emitted into or 

otherwise enters the ambient air.” Under this definition, EPA 

has broad discretion to identify an air pollutant, including, as 

appropriate, treating a combination of air pollutant agents as a 

single air pollutant. Here, we think that the six well-mixed 

gases are appropriately combined into a single air pollutant 

because, as noted in the contribution findings, they share 

several important attributes: Each of the six gases:

 Is directly emitted (and is not formed by secondary 

processes in the atmosphere);

 Is long-lived in the atmosphere after it is emitted;

 Is sufficiently long-lived that it becomes “well-mixed,” 

which means that its concentration is essentially uniform 

in the atmosphere (as opposed to having significant 

local/regional variation); and 

 Has well understood atmospheric properties (e.g., radiative

forcing).

See 74 FR 66516-66518.

In addition, treating the six GHGs as a single air 

pollutant is consistent with the actions of international 

scientific bodies. For example, the Intergovernmental Panel on 
84

Climate Change (IPCC) considers in various reports how the six 

gases drive human-induced climate change and how that affects 

health, society, and the environment. Similarly, the United 

Nations Framework Convention on Climate Change (UNFCCC) requires 

reporting of these six gases and the commitments under the 

UNFCCC and Kyoto Protocol are based on the combined emissions of 

these six gases. Finally, as discussed later, it is standard 

practice to compute the “CO2 equivalency” of aggregate emissions 

using GWP. 

We disagree with commenters who argued that grouping all 

six GHGs is not appropriate because GHGs are not like other air 

pollutants that are comprised of numerous substances of concern 

(e.g., VOCs and PM). First, as noted previously, we are 

following the approach to a single air pollutant comprised of 

the aggregate of the six GHGs initially adopted in the 

contribution finding and followed in the LDVR. Many of these 

same comments have already been addressed in the contribution 

finding and Response to Comment (RTC) document for that action, 

and those responses apply equally here. 

In addition to the reasons described in the endangerment 

and contribution findings, there are CAA permitting programmatic 

and policy advantages to using the sum-of-six construct for the 

GHG air pollutant for PSD and title V applicability purposes. 
85

We believe now, as we did at proposal, that the benefits in 

using the cumulative group of GHGs outweigh any implementation 

advantages to using an individual-GHG-based metric. The 

advantages to sum-of-six definition include that it may: (1) 

allow significantly more flexibility to sources for designing 

and implementing control strategies that maximize reductions 

across multiple GHGs and would also likely align better with 

possible future regulations that allow for such flexibility; (2) 

more effectively support possible future offsets or trading 

mechanisms that involve different source categories and 

different compositions of GHG emissions; and (3) could better 

accommodate and harmonize with future regulations because it 

establishes one class of pollutants that includes individual

components that may, in turn, become subject to specific 

emission standards under future regulatory efforts. 

We disagree with commenters who believe that aggregating 

the GHGs under one GHG metric for permitting applicability 

purposes would lead to an excessive amount of source permitting 

activity. This is because the phase-in approach addresses 

overwhelming permitting burdens associated with permitting of 

GHGs. It does so by designing our applicability thresholds to 

allow for a manageable amount of new permitting actions based on 

the emissions from sources using the sum-of-six metric. If we 
86

based applicability on individual gases, (assuming, again, that

we had authority to deviate from the definition of “air 

pollutant” as used in the LDVR), we would still need to 

determine what level of permitting is manageable and appropriate 

based on thresholds on an individual gas basis and would expect 

that the final rule would result in the same levels of remaining 

burden. Accordingly, unless the permitting program were being 

implemented at the statutory thresholds, the effect of a 

decision to aggregate or not aggregate would not reduce 

workload; rather, it would simply shift work from permitting 

facilities that trigger based on combined GHGs to those that 

trigger based on individual GHGs. Although we acknowledge that 

this may affect applicability for a particular source, we 

disagree with the comment that doing so would conflict with our 

conclusions based on the “absurd results” or “administrative 

necessity” doctrines. By using a consolidated and weighted 

measurement, we are able to direct the limited administrative 

resources to those new sources and modifications with the 

greatest impact on GHG emissions. 

We also believe that the additional flexibility resulting 

from the sum-of-six GHG metric will provide substantially more 

opportunities for sources to address emission increases of GHGs 

than they would have had under an individual gas based metric, 
87

and, thereby, possibly reduce their permitting burden through

multi-gas mitigation strategies. We disagree with the comment 

that isolating BACT review on sources that emit a single GHG 

necessarily leads to better environmental results than it would 

for sources that undergo a combined review for all six gases. 

To the contrary, given that Congress built in considerations of 

energy, environmental, and economic impacts into the BACT 

requirement, we think that allowing consideration of those 

factors across six gases will likely result in decisions that 

more appropriately account for those impacts at the source.

2. Identifying Which GHGs are Included in the Group

As discussed previously, we proposed to include the 

combination of six well-mixed GHGs as the air pollutant that 

triggers PSD and title V applicability: CO2, CH4, N2O, SF6, HFCs, 

and PFCs. Some commenters supported including all six. They 

cite the proposed contribution findings that identify the 

pollutant through the sum-of-six construct, and they emphasize 

that EPA, in order to protect the public, has to control all the 

GHGs it has regulated and reduce the overall impact of the mix 

of six GHGs.

However, a substantial number of commenters, mainly from 

industry sectors who also disagree with grouping the GHGs 

together, contend that only the constituent gases that are 
88

actually subject to controls under the LDVR should be included 

in determining applicability under the Tailoring Rule. Some of 

these commenters believe that only the three compounds (CO2, CH4, 

N2O) for which the LDVR contains emissions standards or caps 

should be considered in the GHG metric for permitting, while 

others would also add HFCs (which are included in a credit 

flexibility arrangement under the LDVR) for a total of four 

GHGs. These commenters argued that PSD is not triggered for all 

six GHGs by the LDVR because under the proposed PSD 

interpretation in the Interpretive Memo, actual emission 

controls under the Act are required to trigger PSD obligations 

for a given pollutant. They also argue that including all six 

would conflict with EPA’s rationale for the Tailoring Rule by 

leading to larger numbers of sources subject to permitting, 

thereby increasing the harm that EPA says it wants to avoid. 

They further assert that the EPA cannot exercise its discretion 

to widen the scope of PSD and title V applicability to six GHGs 

when it is relying on the judicial doctrines of “absurd results” 

and “administrative necessity” to narrow PSD and title V 

applicability. They explain that in their view, those doctrines 

apply only when EPA has taken all steps possible to narrow the 

scope of PSD and title V and thereby avoid the administrative 

problems that force it to rely on those doctrines.
89

There were a few comments on whether to include specific 

gases as part of the sum-of-six grouping. Several commenters 

representing sectors that have significant SF6 usage specifically 

argue that SF6 should not be included as a GHG, at least at this 

time, because there are no known SF6 controls, it is not clear 

how PTE would be calculated from such facilities, and EPA has 

not addressed the economic burden that regulation of these 

facilities would create. A solid waste industry commenter 

asserts that the Tailoring Rule should confirm that CH4 and N2O 

will not be regulated under PSD or title V because these 

pollutants are only emitted in miniscule amounts from 

automobiles. 

We disagree with commenters who suggest that because the 

LDVR actually reduces only four of the six GHGs, EPA may apply 

PSD and title V to only those four GHGs. It is true that the 

LDVR standard for the single air pollutant that is comprised of 

the aggregate of six GHGs consists of individual standards for

only four particular constituents of the single air pollutant –

which are emissions limits or caps for three GHGs (CO2, CH4, and 

N2O) and an emission crediting option for one GHG (HFCs) – but 

this does not dictate that only those four compounds are subject 

to regulation for permitting purposes. Although the LDVR 

results in reductions only with respect to four specific GHGs, 
90

as a legal matter the LDVR standard covers the entire set of 

GHGs that as a class are the single “air pollutant” in the 

contribution finding. Similar to our rationale for addressing 

the group of six GHGs as one pollutant for PSD and title V 

applicability purposes, we must adhere to the definition of 

applicability, cited previously, in the final LDVR for GHGs and 

include CO2, CH4, N2O, SF6, HFCs, and PFCs. We do not have 

discretion to select only a subset of these gases in defining 

our GHG threshold metric for the permitting applicability 

purposes. See LDVR, May 7, 2010, 75 FR 25398-99, section 

III.A.2.c., (discussing EPA’s exercise of discretion under 

section 202(a) in setting emissions standards applicable to 

emission of the single air pollutant). 

For the same reasons, we disagree that this approach is 

inconsistent with the Agency’s final action in “EPA’s 

Interpretation of Regulations that Determine Pollutants Covered 

by Federal Prevention of Significant Deterioration (PSD) Permit 

Program.” While it is the case that only four constituent gases 

are reduced by the LDVR, the “air pollutant” that is controlled, 

and thus “subject to regulation,” is the group of six, and it is 

this “air pollutant” to which PSD and title V apply. 

We also disagree with commenters who suggested that

including all six GHGs in determining permitting applicability 
91

would conflict with our “absurd results” and “administrative 

necessity” rationale for the phase-in periods and applicability 

thresholds for GHGs. Even if we did have discretion to identify 

the air pollutant for PSD and title V purposes as consisting of 

only four of the six well-mixed GHGs, we do not believe that 

doing so would have any meaningful impact on the administrative 

burdens that are at the heart of our reliance on the “absurb 

results” and “administrative necessity” doctrines. The number 

of additional permitting actions and amount of additional 

permitting burden resulting from including all six GHGs, rather 

than four, is minimal. This is because the administrative 

burden of GHG permitting is dominated by CO2 and CH4 emission 

sources. For example, with a major source threshold set at 

100,000 tpy CO2e, the combined population of sources that would 

be major for N2O, HFCs, PFCs, and SF6 accounts for fewer than two 

percent of the GHG sources that would remain covered.

For similar reasons, we disagree with commenters who 

specifically suggest SF6 emissions should not be included in the 

applicability metric for GHGs. As we have stated earlier in 

this section, our selection of the GHG metric is driven by the 

definition of the “air pollutant” as defined in the LDVR, and in 

consideration of the final GHG endangerment finding. SF6 is 

specifically included as one of the “well-mixed greenhouse 
92

gases” in the definition of air pollutant in the contribution 

finding, and is included in the definition of the air pollutant 

in the LDVR for which that rule is applicable. We do not 

believe we have the discretion to define the “air pollutant” 

differently for PSD and title V applicability purposes than the 

definition of the “air pollutant” that is regulated elsewhere. 

In any event, including SF6 emissions based on the thresholds 

finalized in this rulemaking does not add an excessive 

administrative burden for permitting authorities. Based on our 

threshold evaluation study, we estimate that less than 40 

sources of SF6 nationwide would exceed the 100,000 tpy CO2e

threshold. Furthermore, SF6 is a high GWP gas and, as discussed 

elsewhere, we have included a mass-based trigger for high GWP 

gases that will likely have the effect of further reducing this 

count. 

For the same reasons, we disagree with the commenters who 

suggest we include black carbon and other short-lived climate 

forcers to the list of GHGs, and well as commenters asking for 

an exclusion of CH4 and N2O. The definition of the air 

pollutant, as cited in the LDVR, includes CH4 and N2O and does 

not include black carbon or other short-lived gases.

3. Use of GWP vs. Mass-Based GHG Thresholds

For the reasons discussed previously, we are determining 
93

permit program applicability based on the sum-of-six well-mixed 

gases that comprise the GHG air pollutant. This section 

discusses our use of both the CO2e metric and mass emissions of 

the GHGs for applicability purposes. 

Under our proposal, a source’s emissions of all six GHGs 

would be combined into a single metric by multiplying the mass 

of each individual GHG (in tpy) by its GWP value, and summing 

these products to determine the total emissions of the GHG 

pollutant in tpy CO2e. We received comments on this aspect of 

the proposed metric. Several commenters explicitly support the 

use of GWP and the CO2e metric for GHG emissions. These 

commenters believe EPA has the authority to select an 

appropriate metric to measure GHGs in the PSD program, and 

policy considerations support the choice of GWP. Some of them 

note that GWP is a widely-used metric which employs 

internationally-recognized conversion factors to compare GHGs 

based upon their climate properties, and some add that states 

and local areas that have climate action plans for GHG 

reductions use CO2e. Some of these commenters believe this 

metric will ensure a standard measure across all permitting 

agencies and will lead to a more effective system for permitting 

authorities and create more opportunities to reduce emissions 
94

over the full class of GHGs, rather than focusing on reducing 

individual GHGs.

On the other hand, some commenters oppose the use of GWP 

and CO2e, believing that thresholds should be based on individual 

mass-based emissions for each GHG. Some of these commenters 

felt that EPA has no discretion to ignore the metric for 

regulation established by Congress for PSD in section 169 of the 

Act. Some commenters were also concerned that the use of CO2e 

will complicate the implementation of BACT because sources that 

trigger PSD will be required to install BACT for each regulated 

pollutant, not for CO2e. As a result, a source that exceeds the 

threshold primarily due to its CO2 emissions would be forced to 

install BACT for all other individual GHGs, regardless of how 

minor those other emissions may be. Finally, a commenter was 

concerned that use of GWP would complicate implementation 

because GWP values can sometimes change.

In our proposal preamble discussion of GHG metric, EPA also 

raised the possibility of including a limitation in the metric 

to address the prospect (expected to occur only rarely) that 

high-GWP gases could be emitted in quantities less than 

statutory thresholds for PSD and title V but nevertheless exceed 

the proposed thresholds in terms of CO2e. Most commenters on 

this subject support a dual threshold under which a source would 
95

be subject to title V or PSD only if its GHG emissions exceeded 

both the statutory thresholds on an actual tonnage basis and the 

tailored thresholds on a CO2e basis. Commenters supporting this 

approach felt that it would be unlawful to apply PSD when GHGs 

are below the statutory thresholds, or when there is not a net 

emissions increase. Others added that the complexity of 

accounting for emissions according to both mass and GWP should 

be manageable and is not a reason to ignore the role of mass–

based emission rates in determining the applicability of PSD 

requirements. Additionally, one commenter observed that a dual 

threshold is consistent with phasing in the Tailoring Rule and 

is an effective way to address the current uncertainty 

surrounding how to measure high-GWP gases such as SF6. In 

contrast, a few commenters stated they do not support a dual 

threshold, primarily on the grounds that there is no benefit to 

the added complexity.

After considering these comments, we have decided to adopt 

applicability thresholds in the final rule based on a CO2e metric 

for the sum-of-six well-mixed gases, and also to adopt an 

additional mass-based threshold for the sum-of-six gases as 

discussed in the proposal. First, as discussed in the previous 

section, we have explained why the appropriate pollutant for PSD 

purposes is the single pollutant GHG, which is composed of the 
96

six well-mixed gasses. Regarding the CO2e metric, we continue to 

believe there are a number of advantages, as laid out in the 

proposal, to a CO2e measure that would not be available if we 

used only a mass-based metric. These include: (1) a CO2e 

metric, by incorporating the GWP values, best addresses the 

relevant environmental endpoint, which is radiative forcing of 

the GHGs emitted; (2) when combined with a sum-of-six gases 

approach, the CO2e metric best allows for consideration of their 

combined effects when sources emit any one or combination of the 

six well-mixed GHGs; (3) a cumulative CO2e metric is consistent 

with the metric used in the mandatory GHG reporting rule and 

other related rules and guidelines; and (4) a CO2e metric allows 

more flexibility for designing and implementing control 

strategies that maximize reductions across multiple GHGs. We 

recognize the tension between the mass-based metric in the 

statute and the CO2e-based metric we are adopting in this rule, 

but as discussed later, we will address this by also retaining 

the mass-based metric. Moreover, given our need to tailor our 

approach to covering sources of GHGs, we believe that the 

considerations driving our choice to also use a CO2e-based metric 

are appropriate for defining the phase-in and allow for 

permitting resources to be directed at those sources and 
97

modifications that have the greatest impact on radiative forcing 

of the GHGs emitted. 

We recognize the concern of commenters who stated that we 

cannot ignore the statutory thresholds based on the mass-based 

emissions of an air pollutant as described under CAA section 

169(1). As we mentioned in the proposal, because both the PSD 

and title V statutory thresholds are expressed on a mass basis

(i.e., tons of a pollutant with no weighting values applied) we 

were concerned from a legal standpoint that the metric proposed 

(CO2e) could have the effect of subjecting to PSD or title V 

requirements a source whose emissions fall below the statutory 

threshold limits on a strictly mass basis, but whose CO2e-based 

emissions exceed the CO2e thresholds we establish under the 

Tailoring Rule. As an example, in rare instances it is possible 

that a source may emit only a non-CO2 GHG in very small amounts, 

on a mass basis, but one that carries a very large GWP. In this 

case, it is possible that the source may emit the GHG in amounts 

that fall below the PSD and/or title V statutory applicability 

threshold (100 or 250 tpy, as applicable) on a mass basis, but 

exceed the 100,000 CO2e PSD and title V applicability thresholds 

for Step 2 finalized in this action. Under these circumstances, 

without a mass-based threshold, the source would trigger PSD and 
98

title V for its CO2e emissions even though its GHG mass emissions 

would not, in fact, exceed the statutory triggers. 

Upon review of the comments pertaining to this issue and 

further analysis of the legal and programmatic implications, we 

are adopting a two-part applicability process, for both major 

source applicability determinations for GHGs under PSD and title 

V and for determining if a net increase has occurred in PSD 

applicability determinations for modifications. As explained in 

the RTC document, we accomplish this two-step applicability 

approach by continuing to rely on the existing mass-based 

applicability provisions in the current regulations, and by 

including new regulatory provisions that add a definition of 

"subject to regulation" that in turn includes the phase-in 

thresholds. Similarly, for PSD modification reviews and 

associated netting analyses, the same two-step process must be 

used. Our summary in section IV.A described how we expect this 

provision to be implemented in practice. 

We acknowledge that the possibility of changing GWP values 

is a downside to the use of CO2e for the GHG metric, and we 

address this comment in the next section, where we discuss our 

plan to codify GWP values. By codifying GWP, any changes will 

be manageable, and, in our judgment, will not outweigh the 

benefits of a CO2e-based approach. We also acknowledge that a 
99

CO2e-based approach may appear to complicate the BACT review and 

implementation process. However, we disagree with the 

commenter’s ultimate conclusion that BACT will be required for 

each constituent gas rather than for the regulated pollutant, 

which is defined as the combination of the six well-mixed GHGs. 

To the contrary, we believe that, in combination with the sumof-six gases approach described above, the use of the CO2e metric 

will enable the implementation of flexible approaches to design 

and implement mitigation and control strategies that look across 

all six of the constituent gases comprising the air pollutant 

(e.g., flexibility to account for the benefits of certain CH4

control options, even though those options may increase CO2). 

Moreover, we believe that the CO2e metric is the best way to 

achieve this goal because it allows for tradeoffs among the 

constituent gases to be evaluated using a common currency.

4. Determining What GWP Values Are To Be Used 

At proposal, we proposed to link the calculation of CO2e for 

GHGs to GWP values in EPA’s “Inventory of U.S. Greenhouse Gas 

Emissions and Sinks” (GHG Inventory). See, e.g., proposed 40 

CFR 51.166(b)(58). Numerous commenters expressed concerns about 

this proposal on various grounds, including the following:

 The EPA should follow the proper notice-and-comment 

procedures and the requirements of the Information Quality 
100

Act for the relevant technical underpinnings of the 

proposal. The EPA relies upon the GWPs of the IPCC without 

providing the supporting data for review, and it is 

inappropriate to use this as a basis for this rule without 

first making all the raw data available for public 

inspection and comment.

 The EPA cannot tie the definition of GWP to the GHG

Inventory because it is a non-regulatory document that may 

be changed without notice-and-comment rulemaking. Before 

EPA uses a new GWP, that GWP must be subject to notice and 

comment to comply with the requirements of CAA section 307 

and the Administrative Procedure Act (APA).

 An annual update of GWP would create a moving target for 

sources conducting applicability determinations and 

assessing compliance with minor NSR and PSD emission 

limits. The EPA needs to ensure that applicability and 

compliance with limits continue to be based on the GWP that 

existed when the determination was made or the limit was 

established.

 The EPA should freeze the GWP at the current values by 

incorporating those values into the regulation. The EPA 

could still revise the “NSR” GWP, but would have to revise 

the regulation to do so.
101

Commenters added that it is important to ensure that all 

permitting agencies are using the same calculations for the 

determination of CO2e for GHGs.

We agree with commenters who suggested we should codify, 

either in the Tailoring Rule or through reference to codified 

values in another rulemaking, the GWP values to be used in 

permitting analyses. We agree that this approach provides

certainty as to which GWP values need to be used by permitting 

authorities and allows sources to plan appropriately for 

possible changes in the GWP values. As mentioned in the 

comments, recommended GWP values from IPCC can change over time. 

While this is infrequent — the last such changes were in 2007 —

when it occurs, there are generally significant lag times in 

universal adoption of new values because of inconsistencies that 

could be created in national inventories and emission reporting 

mechanisms. In a regulatory setting, such as in the permitting 

programs, this could potentially create significant 

implementation issues, such as when a GWP change occurs while a 

permit action is in progress.19 EPA also recognized similar 

 

19 We note that our approach does not entirely avoid the 

possibility that a GWP change can occur while a permit is in 

progress although it will ensure advance notice of such a 

change. In the event that we plan to propose a change to GWP 

values, we will work with permitting authorities as necessary to 

provide guidance to sources on transitional issues.
102

potential implementation issues in developing its final 

mandatory GHG reporting rule, and codified in the regulatory 

text for that rule the GWP values to be used in reporting GHGs 

as part of that final rulemaking.

For these reasons, we have decided to follow the approach 

in the mandatory GHG reporting rule and require that for PSD and 

title V permitting requirements, wherever emissions calculations 

are performed, that permitting authorities and sources use GWP 

values that are codified in EPA rules. We will establish the 

GWP values for PSD and title V rules based on a cross-reference 

to the values that are codified in the EPA’s mandatory GHG 

reporting rule. 74 FR 56395, Table A-1 to subpart A of 40 CFR 

part 98 – Global Warming Potentials. Any changes to Table A-1 

of the mandatory GHG reporting rule regulatory text must go 

through an appropriate regulatory process. In this manner, the 

values used for the permitting programs will reflect the latest 

values adopted for usage by EPA after a regulatory process and 

will be consistent with those values used in the EPA’s mandatory 

GHG reporting rule. Furthermore, the lead time for adopting 

changes to that rule will provide a transition time to address 

implementation concerns raised by commenters.

5. Use of Short Tons vs. Metric Tons 
103

We proposed that the GHG metric would be expressed in terms 

of English (or short) tons, rather than metric (or long) tons. 

A few commenters support using short tons for this purpose. 

Others prefer the use of metric tons, and most of them note that 

the mandatory GHG reporting rule is based on metric tons and 

believe that the Tailoring Rule should be consistent with that 

rule. These commenters believe that using different units in 

the two rules would be confusing and could result in sources 

that are not subject to the mandatory GHG reporting rule

becoming subject to PSD. Some of the commenters add that 

various “cap and trade” legislative proposals also quantify GHGs 

in metric tons. A few other commenters recommend that EPA 

harmonize the applicability thresholds established under the 

Tailoring Rule and the mandatory GHG reporting rule without 

expressing a preference for short or metric tons.

We are finalizing our proposal to use short tons because 

short tons are the standard unit of measure for both the PSD and 

title V permitting programs and the basis for the threshold 

evaluation to support this rulemaking. Calculation inputs for 

PSD are typically prepared in English units (e.g., pounds of 

fuel, British thermal units (Btu), etc.) which is the common 

convention for all PSD analyses and the units of the statutory 

thresholds under the Act. 
104

It is true that the GHG reporting rule uses metric tons, 

but this does not create an inconsistency between permitting 

programs and the reporting rule because the two rules already 

use different applicability approaches. Although we originally 

proposed 25,000 tpy as the major source level for permitting 

programs, which was similar to the threshold in the reporting 

rule, we decided to adopt substantially higher thresholds in the 

final rule. Furthermore, even if the numbers were similar, the 

thresholds used for the reporting rule are based on actual 

emissions, while the PSD and title V programs thresholds are 

based on PTE. Therefore, we are less persuaded by arguments for 

consistency, and believe it is more important for ease of permit 

program implementation to ensure that GHG emissions calculations 

for PSD and title V will build on the same set of input 

variables used to develop short-ton based estimates for non-GHG 

pollutants. Thus, the use of short tons should actually 

facilitate the development of the GHG emission estimate. It 

would likely be more confusing to require a multi-pollutant PSD 

applicability analysis to present emissions information using 

different units for different pollutants, as would be the case 

if we required metric tons for GHG but continue to use short 

tons for every other pollutant. Finally, we do not expect this 

choice to introduce additional complexity because the conversion 
105

between short tons and metric tons is a very simple calculation. 

Therefore, based on these considerations we are requiring that 

short tons be used as the basis for emission calculations used 

to meet PSD and title V permitting requirements. 

B. Rationale for Thresholds and Timing for PSD and Title V 

Applicability to GHG Emissions Sources

In this subsection, we describe our legal and policy 

rationale for our determinations concerning PSD and title V 

applicability to GHG emissions sources. This subsection 

includes: (1) an overview of our rationale; (2) data concerning 

costs to sources and administrative burdens to permitting 

authorities; (3) a review of the Chevron legal framework and the 

“absurd results,” “administrative necessity,” and “one-step-ata-time” doctrines, as well as a review of how those doctrines 

fit into the Chevron framework; (4) an overview of the relevant 

PSD and title V requirements and their legislative history; (5) 

our application of the “absurd results” doctrine for tailoring 

the PSD requirements; (6) our application of the “absurd 

results” doctrine for tailoring the title V requirements; (7) 

our plans to issue further rulemaking that will address the 

“absurd results” basis for both PSD and title V requirements; 

(8) our rationale for the phase-in schedule for applying PSD and 

title V to GHG sources; (9) our application of the 
106

“administrative necessity” basis for tailoring the PSD and title 

V requirements; and (10) our application of the “one-step-at-atime” basis for tailoring the PSD and title V requirements.

1. Overview

Under the familiar Chevron two-step approach to 

construction of agency-administered statutes, the agency must 

first, at Chevron Step 1, determine whether Congress's intent in 

a particular provision on a specific question is clear; and if 

so, then the agency must follow that intent. If the intent of 

the provision is not clear, then the agency may, under Chevron

Step 2, fashion a reasonable interpretation of the provision. 

The best indicator of congressional intent is the literal

meaning of the provision and generally, according to the 

caselaw, if the literal meaning addresses the specific question, 

then the agency should follow the literal meaning. 

However, the courts have developed three doctrines relevant 

here that authorize departure from a literal application of 

statutory provisions. The first is the “absurd results” 

doctrine, which authorizes such a departure if the literal 

application would produce a result that is inconsistent with 

congressional intent, and particularly if it would undermine 

congressional intent. The judicial doctrine of “administrative 

necessity” authorizes an agency to depart from statutory 
107

requirements if the agency can demonstrate that the statutory 

requirements, as written, are impossible to administer. The 

“one-step-at-a-time” doctrine authorizes an agency, under 

certain circumstances, to implement a statutory requirement 

through a phased approach. Each of the three doctrines fits 

into the Chevron framework for statutory construction because 

each of the three is designed to effectuate congressional 

intent. 

To apply the statutory PSD and title V applicability 

thresholds literally to sources of GHG emissions would bring 

tens of thousands of small sources and modifications into the 

PSD program each year, and millions of small sources into the 

title V program. These extraordinary increases in the scope of 

the permitting programs would mean that the programs would 

become several hundred-fold larger than what Congress appeared 

to contemplate. Moreover, the great majority of additional 

sources brought into the PSD and title V programs would be small 

sources that Congress did not expect would need to undergo 

permitting and that, at the present time, in the absence of 

streamlined permit procedures, would face unduly high permitting 

costs. Further, again at the present time, in the absence of 

streamlined permit procedures the administrative strains would 

lead to multi-year backlogs in the issuance of PSD and title V 
108

permits, which would undermine the purposes of those programs. 

Sources of all types – whether they emit GHGs or not – would 

face long delays in receiving PSD permits, which Congress 

intended to allow construction or expansion. Similarly, sources 

would face long delays in receiving title V permits, which 

Congress intended to promote enforceability. For both programs, 

the addition of enormous numbers of additional sources would 

provide relatively little benefit compared to the costs to 

sources and the burdens to permitting authorities. In the case 

of PSD, the large number of small sources that would be subject 

to control constitute a relatively small part of the 

environmental problem. In the case of title V, a great many of 

the sources that would be newly subject to permit requirements 

would have “empty” permits, that is, permits that do not include 

any applicable requirements, and that therefore serve relatively 

little purpose. For these reasons, the “absurd results” 

doctrine applies to avoid a literal application of the 

thresholds at this time. By the same token, the impossibility 

of administering the permit programs brings into play the 

“administrative necessity” doctrine. This doctrine also 

justifies not applying the PSD or title V applicability 

threshold provisions literally to GHG sources at this time. 

The situation presented here is exactly the kind that the 
109

“absurd results,” “administrative necessity,” and “one-step-ata-time” doctrines have been developed to address. Separately 

and interdependently, they authorize EPA and the permitting 

authorities to tailor the PSD and title V applicability 

provisions through a phased program as set forth in this rule, 

and to use the initial period of phase-in to develop 

streamlining measures, acquire expertise, and increase 

resources, all of which would facilitate applying PSD and title 

V on a broader scale without overburdening sources and 

permitting authorities. In this manner, the phased approach 

reconciles the language of the statutory provisions with the 

results of their application and with congressional intent.

2. Data Concerning Costs to Sources and Administrative Burdens 

to Permitting Authorities

This final action concerning applicability of PSD and title 

V to GHG-emitting sources, including the decisions on timing for 

the selected permitting thresholds, is based on our assessments 

of both the costs to the regulated sources to comply with PSD 

and title V permitting requirements and the administrative 

burdens to the permitting authorities to process PSD and title V 

permit actions for GHG-emitting sources. This section provides 

a summary of our cost and administrative burden assessments of 

permitting that would be required in the absence of any 
110

tailoring as well as under various tailoring options.

Our estimates of costs to the sources and administrative 

burdens to the permitting authorities from PSD and title V 

applicability for GHG emissions are based on labor and cost 

information from the existing Information Collection Requests 

(ICRs) for PSD and title V programs.20 We apply the same basic 

methodology used for the proposal, which incorporates 

information on numbers and types of affected sources and 

estimated permitting actions. We evaluate administrative 

burdens in terms of staffing needs, time for processing permits, 

and monetary costs, and we make some judgments about how those 

burdens would affect the permitting authorities’ ability to 

effectively manage and administer their programs with the 

addition of GHG emission sources. We present the administrative 

burden data for applying PSD and title V requirements at the 

literal statutory thresholds - that is, the 100/250 tpy levels 

for PSD (and 0 tpy for modifications) and the 100 tpy level for 

title V – as well as at other thresholds, which range from 

25,000 tpy CO2e to 100,000 tpy CO2e. We have significantly 

revised upwards our assessments of costs to sources and 

 

20 “Summary of Methodology and Data Used to Estimate Burden 

Relief and Evaluate Resource Requirements at Alternative 

Greenhouse Gas (GHG) Permitting Thresholds;” Prepared by EPA 

Staff; March 2010. 
111

administrative burdens since proposal, and we summarize later

our reasons for doing so. We also present significant comments 

concerning administrative burdens, and our responses to those 

comments. 

In the next section, concerning legal and policy rationale 

for our actions, we discuss how these data on costs to the 

sources and administrative burdens to the permitting authorities

informed our decisions that PSD and title V requirements should 

not, at present, be applied to GHG-emitting sources under the 

literal terms of the statutory thresholds as well as our 

decisions concerning what thresholds to apply for Steps 1 and 2 

of the applicability phase-in approach and the applicability 

floor of 50,000 tpy CO2e. 

a. Costs to Sources 

As we did at proposal, we have estimated costs to the 

sources of complying with PSD and title V starting from the data 

in the ICRs. We recognize that the sizes of the sources, as 

measured by their emissions, that would be swept into the PSD 

and title V programs would vary greatly, and that their 

permitting costs would vary as well. For example, their PSD 

permitting costs would depend on the amount and types of their 

emissions and their control requirements. Accordingly, we have 

determined average costs, as described later.
112

For PSD, at proposal, we estimated that on average, an 

industrial source would incur costs of $84,500 to prepare the 

PSD application and receive the permit, and on average, a 

commercial or residential source would incur costs of 20 percent

that amount, or $16,900. 74 FR 55337 col. 3 to 55339 col. 3. 

For this action, we retain the same burden estimates for an 

average industrial source. This type of source would need 866 

hours, which would cost $84,500, to prepare the application and 

the PSD permit. However, based on comments received, we have 

determined that a more accurate estimate for an average 

commercial or residential source is 70 percent of that amount of 

time that an industrial source would need, up from our proposal 

of 20 percent. Thus, an average commercial or residential 

source would need 606 hours, which would cost $59,000, to 

prepare the PSD application and receive the permit. We are 

increasing this time over what we proposed because we now 

recognize that virtually all commercial and residential sources 

will have no experience with the PSD permitting process, and 

therefore will face a significant learning curve that will 

entail more time to complete the application, develop control 

recommendations, and take the other required steps. We believe 

this learning period could extend from 2 to possibly 4 years or 

more from the date that the sources become subject to PSD 
113

requirements, depending on the type and actual number of new 

sources that come in for permitting. In addition, we expect 

that in many cases, draft PSD permits for GHGs will receive 

comments from various stakeholders, from citizens groups to 

equipment vendors, who will seek to participate in the permit 

process, and that all this could add to the hours that the 

permittee will need to invest in the process.21 The actual costs 

to sources to install BACT controls, while still uncertain at 

this point, would likely add additional costs across a variety 

of sources in a sector not traditionally subject to such 

permitting requirements.

For title V, at proposal, we estimated that on average, an 

industrial source would incur costs of approximately $46,400 to 

prepare the title V application and receive the permit, and on 

average, a commercial or residential source would incur costs of 

10 percent that amount, or almost $5,000. 74 FR 55338 col. 1 to 

55339 col. 3. For this action, we retain the same burden 

estimates for an average industrial source. This type of source 

would need 350 hours, which would cost $46,400, to prepare the 

application and the title V permit. However, we have determined 

 

21 “Summary of Methodology and Data Used to Estimate Burden 

Relief and Evaluate Resource Requirements at Alternative 

Greenhouse Gas (GHG) Permitting Thresholds;” Prepared by EPA 

Staff; March 2010.
114

that a more accurate estimate for an average commercial or 

residential source is 50 percent of that amount of time that an 

industrial source would need, up from our proposal of 10

percent. Thus, an average commercial or residential source 

would need about 175 hours, which would cost $23,200, to prepare 

the title V application and receive the permit. This increase 

is due to the same reasons as with the PSD program just 

discussed. We now recognize that virtually all commercial and 

residential sources will have no experience with the title V 

permitting process and, therefore, will face a significant 

learning curve that will entail more time to assess, for the 

firs time, their GHG emissions (because such sources are not 

covered by EPA’s mandatory GHG reporting rule), complete the 

application, respond to permitting authority comments, meet 

other title V administrative requirements, and respond to 

interested stakeholders.22 

b. Administrative Burdens to Permitting Authorities

(1) Estimated Permitting Authority Burden at Proposal

As at proposal, we estimated the administrative burdens to 

the permitting authorities at the various threshold levels for 

PSD or title V applicability as follows. First, for a 

 

22 “Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate 

Resource Requirements at Alternative Greenhouse Gas (GHG) Permitting Thresholds;” Prepared 

by EPA Staff; March 2010.
115

particular threshold level, we estimated the number of GHGemitting sources that would be subject to PSD requirements 

because they would undertake new construction or modification, 

and the number of existing sources that would be subject to 

title V requirements. Second, we estimated the average 

additional administrative burden and cost of each PSD permitting 

action and each title V permitting action for the GHG-emitting 

sources. Third, we multiplied those two estimates, and the 

product is the additional administrative burden at the 

particular threshold level. We employed the same methodology 

for this final rule, but, as discussed later, and described in 

more detail in our final burden analysis,23 we have updated 

several key assumptions since the proposal as a result of our 

consideration of comments received.

First, we present the administrative burdens at the 

statutory levels for PSD and title V applicability. At 

proposal, for the PSD program, we estimated the administrative 

burdens that would result from applying PSD at the 100/250 tpy 

major emitting facility threshold levels in two ways, as 

described in this section. We stated that at present, 280 

 

23 “Summary of Methodology and Data Used to Estimate Burden 

Relief and Evaluate Resource Requirements at Alternative 

Greenhouse Gas (GHG) Permitting Thresholds;” Prepared by EPA 

Staff; March 2010.
116

sources are subject to PSD each year, both for new construction 

and modifications. This figure served as the baseline from 

which to calculate increases in administrative burdens due to 

permitting GHG-emitting sources.

The first method that we used to calculate the 

administrative burdens to the permitting authorities was in 

terms of workload hours, which we then converted to monetary 

costs. To make the workload calculation, we first estimated the 

number of GHG-emitting sources that would become subject to PSD 

through new construction and modification. Based on our GHG 

threshold data analysis, we estimated that almost 41,000 new and 

modified sources per year would become subject to PSD review. 

We first calculated the number of new sources that would become 

subject to PSD. To do this, we estimated growth rates for the 

various sectors, and then applied those growth rates to the 

numbers of sources in those sectors. We then calculated the 

number of modifications. To do this, we first assumed that each 

year, two percent of sources that meet or exceed the threshold 

levels for PSD applicability due to their conventional 

pollutants undertake modifications. We then calculated the 

number of sources that would meet or exceed the threshold levels 

for PSD applicability due to their GHG emissions, and applied 

the same assumption that two percent of them would undertake 
117

modifications. In this manner, we estimated the number of 

modifications of GHG-emitting sources that would become subject 

to PSD.

 We noted that currently, 280 PSD permits are issued each 

year, but that applying PSD to GHG-emitting sources at the 

100/250 tpy statutory threshold levels would cause an increase 

in permits of more than 140-fold. The reason for the 

extraordinary increase in PSD applicability lies simply in the 

fact that it takes a relatively large source to generate 

emissions of conventional pollutants in the amounts of 100/250 

tpy or more, but many sources combust fossil fuels for heat or 

electricity, and the combustion process for even small 

quantities of fossil fuel produces quantities of CO2 that are far 

in excess of the sources’ quantities of conventional pollutants 

and that, for even small sources, equal or exceed the 100/250 

tpy levels. 

Based on the 140-fold increase in permits, we then 

estimated the per-permit burden on permitting authorities. As 

we stated in the proposal:

We estimated the number of workload hours and 

cost a permitting authority would expend on each new 

source and each modification. We based these 

estimates on the workload hours and cost for 

processing permits for new sources of non-GHG 

emissions, which we derived from labor and cost 

information from the existing ICRs for PSD programs. 
118

The ICRs show that permitting authorities expend 301 

hours to permit a new or modified industrial source.... 

We then made assumptions for number of workload 

hours and costs for new sources of GHG emissions. We 

assumed that permitting new industrial GHG sources 

that emit in excess of the 250-tpy threshold would be 

of comparable complexity to permitting non-GHG 

emitting industrial sources that are subject to PSD. 

Thus, for these sources, we assumed that permitting 

authorities would expend the same number of workload 

hours and costs, on a per-permit basis, as they do for 

non-GHG emitting industrial sources. On the other 

hand, for commercial and residential GHG sources that 

emit GHGs above the 250-tpy threshold (and as a result 

would be subject to the requirements of the PSD 

permitting program at this threshold level), we 

assumed that the workload hours and cost for 

permitting these sources would be significantly less 

than—only 20 percent of—the hours and cost necessary 

to prepare and issue initial PSD permits or permit 

modifications for industrial GHG sources. This 20-

percent estimate amounts to 60 hours of permitting 

authority time per residential or commercial permit.

Based on these assumptions, the additional annual 

permitting burden for permitting authorities, on a 

national basis, is estimated to be 3.3 million hours 

at a cost of $257 million to include all GHG emitters 

above the 250-tpy threshold. 

74 FR 55301 col. 2. 

Note that at the proposal, in calculating the PSD 

administrative burdens that would occur each year due to GHG 

emissions, we did not undertake separate calculations for the 

administrative burdens associated with permitting obligations 

stemming from the GHG emissions of the 280 sources already 

subject to PSD permitting requirements due to their conventional 
119

pollutants. In effect, we treated these 280 sources are part of 

the over 40,000 sources that would become subject to PSD due to 

their GHG emissions.

The second way that we evaluated the burden on permitting 

authorities was by reviewing a study conducted by state and 

local air permitting agencies. As we said in the preamble: 

In addition to conducting our burden analysis, we 

also reviewed summary information from state and local 

air permitting agencies regarding additional resources 

and burden considerations if GHG sources that emit 

above the 100/250-tpy thresholds were subjected to the 

PSD and title V programs. This information covered 43 

state and local permitting agencies, representing 

programs from different regions of the country and 

various permitting program sizes (in terms of 

geographic and source population coverage).... This 

information showed significant burdens projected by 

permitting agencies with adding sources of GHG 

emissions in terms of staffing, budget, and other 

associated resource needs. Importantly, the agencies 

based their analysis on the assumption that, for 

purposes of determining whether a source is major, its 

emissions would be calculated on an actual emissions 

("actuals") basis, and not on a PTE basis. On an 

actuals basis, the agencies estimated a 10-fold 

increase in the number of permits. 

Specifically, the agencies estimated that:

 Assuming, again, that number of permits was 

to increase by 10-fold (based on actual 

emissions), the resulting workload would 

require an average of 12 more [full-time 

equivalents (FTEs)] per permitting authority 

at an estimated cost of $1 million/year; 

 Without the additional FTEs, the average 

processing time for a permit would increase 

to 3 years, which is three times the current 

average processing time;

 Permitting authorities would need 2 years on 
120

average to add the necessary staff;

 Permitting authorities would also need, on 

average, eight additional enforcement and 

judicial FTEs;

 Ninety percent of permitting agencies would 

need to train their staff in all aspects of 

permitting for sources of GHG emissions.

 A quarter of permitting agencies were currently 

under a hiring freeze.

We went on to explain that this state survey 

significantly underestimated the administrative burdens:

It is important to reiterate that the state and 

local permitting information on burden was based on 

the number of additional facilities subject to PSD 

because their emissions of GHGs exceed the 100/250-tpy 

thresholds at actual emissions rates, not PTE-based 

emissions rates. However, the PSD applicability 

requirements are based on PTE. By adjusting the 

increase in number of permits to account for GHG 

sources that exceed the 100/250-tpy applicability 

thresholds based on their PTE emissions, EPA estimated 

a 140-fold increase in numbers of PSD permits, much 

more than the 10-fold increase estimated by the states 

based on actual emissions. 

74 FR 55301 col. 2-3.

In addition to PSD, we also estimated title V burdens at 

the statutory threshold. At proposal, for the title V program, 

we estimated the administrative burdens that would result from 

applying title V requirements at the 100 tpy major source 

threshold level in the same two ways as for PSD, as follows. 

The first method was to calculate the administrative burdens in 

terms of workload hours, which we then converted to monetary 

costs. To make the workload calculation, we first estimated the 
121

number of existing GHG-emitting sources that would become 

subject to title V. Based on our GHG threshold data analysis, 

we estimated that approximately 6 million sources would become 

subject to title V. Compared to the 14,700 title V permits 

currently issued, this would be an increase in permits of more 

than 400-fold. We noted, in addition, that most of the 14,700 

sources already subject to title V also emit GHGs and may be 

affected as well.

We then described the type of work that the permitting 

authorities would need to do for these GHG-emitting sources –

the six million that would become newly subject to title V and 

most of the 14,700 that are already subject to title V – as 

follows. Note at the outset that the permitting authorities’ 

workload is greater for sources newly subject to title V than 

for existing sources that seek a revised or renewed permit. As 

EPA noted in the preamble:

[T]he[] permits [for the 6 million new sources] would 

need to include any requirements for non-GHGs that may 

apply to the source, such as provisions of an 

applicable SIP. For any such requirements, permitting 

authorities would also need to develop terms 

addressing the various compliance assurance 

requirements of title V, including monitoring, 

deviation reporting, six-month monitoring reports, and 

annual compliance certifications.

Adding to the burden described above would be the 

burden to add GHG terms to the 14,700 existing title V 

permits. While, in general, existing title V permits 
122

would not immediately need to be revised or reopened 

to incorporate GHG (because as noted above, there are 

generally not applicable requirements for GHGs that 

apply to such sources), permitting authorities may 

face burdens to update existing title V permits for 

GHG under two possible scenarios: (1) EPA promulgates 

or approves any applicable requirements for GHGs that 

would apply to such a source, which would generally 

require a permit reopening or renewal application, or 

(2) the source makes a change that would result in an 

applicable requirement for GHGs to newly apply to the 

source, such as PSD review, which would generally 

require an application for a permit revision. 

Permitting authorities will also need to process 

permit renewal applications, generally on a five-year 

cycle, and such renewals would need to assure that the 

permit properly addresses GHG. Finally they would 

have to process title V applications for new sources 

(including all the PSD sources previously discussed).

 

74 FR 55302 cols. 2-3.

In light of those demands, we estimated the per-permit 

burden on permitting authorities as follows. Note, at the 

outset, that as with PSD, we based the workload hours on 

information in ICRs for industrial sources, and we then assumed 

that the workload for commercial and residential sources would 

be the indicated percentage of the workload for industrial 

sources: 

As with PSD, we have quantified the extent of the 

administrative problem that would result in workload 

hours and cost on the basis of information concerning 

hours and costs for processing existing title V 

permits that is indicated on ICRs. However, we 

recognize that more than 97 percent of these new 

sources would be commercial and residential sources. 

We estimate that for permitting authorities, the 

average new commercial or residential permit would 
123

require 43 hours to process, which is 10 percent of 

the time needed for the average new industrial permit. 

For an average existing permit, which permitting 

authorities would need to process through procedures 

for significant revisions and permit renewals, adding 

GHG emissions to the permit would result in, we 

estimate, 9 additional hours of processing time, which 

is 10 percent of the amount of time currently 

necessary for processing existing permits. We 

estimate that the total nationwide additional burden 

for permitting authorities for title V permits from 

adding GHG emissions at the 100-tpy threshold would be 

340 million hours, which would cost over $15 billion.

74 FR 55302 col. 3.

As with PSD, the second way that we evaluated the burden on 

permitting authorities at the statutory threshold was by 

reviewing a study conducted by state and local air permitting 

agencies of the burden of applying title V to existing GHGemitting sources at the 100 tpy statutory threshold level. As 

we said in the preamble to the proposed rule: 

[W]e also reviewed summary information from state 

and local permitting agencies, which showed 

significant burdens associated with adding GHGs in 

their title V programs in terms of staffing, budget, 

and other associated resource needs.24 Again, note 

that the permitting agencies based their estimates on 

numbers of permits that would be required from sources 

subject to the 100-tpy title V applicability threshold 

on an actuals—not PTE—basis. Based on that level, the 

agencies assumed a 40-fold increase in numbers of 

permits, and estimated that:

 The resulting workload would require an average 

 

24 “NACAA Summary on Permitting GHGs Under the Clean Air Act”; 

Memorandum from Mary Stewart Douglas, National Association of 

Clean Air Agencies to Juan Santiago, EPA/OAQPS, September 3, 

2009.
124

of 57 more FTEs per permitting agency at an 

estimated cost of $4.6 million/year; 

 Without the additional FTEs, the average 

processing time for a permit would increase to 

almost 10 years, which is 20 times the current 

average permit processing time;

 Permitting authorities would need 2 years on 

average to add the necessary staff;

 On average, permitting authorities would need 29 

additional enforcement and judicial staff;

 Eighty percent of permitting authorities would 

need to train their staff in all aspects of 

permitting for sources of GHG emission.

 A quarter of permitting agencies were currently 

under a hiring freeze. 

 As with PSD, we added that this state survey 

significantly underestimated the administrative burdens:

It is important to reiterate that, as with PSD, 

the state and local information on projected 

permitting burden is based on the number of additional 

facilities subject to title V because their emissions 

of GHGs exceed the 100-tpy thresholds at actual 

emissions rates, not the PTE-based emissions rates. 

However, the title V applicability requirements are 

based on PTE. As noted elsewhere in this preamble, 

the state and local agencies estimated a 40-fold 

increase in numbers of title V permits based on the 

amount of GHG sources' actual emissions. By adjusting 

the summary estimates provided by the state and local 

agencies to account for GHG sources that exceed the 

100-tpy threshold based on their PTE emissions, EPA 

estimated that the average permitting authority would 

need 570 more FTEs to support its title V permitting 

program.

74 FR 55302 col. 3 – 55303 col. 1.

(2) Revisions to Proposal Estimates of Permitting Authority 

Burden
125

We received numerous comments from state and local 

authorities stating that EPA had underestimated the 

administrative burden on the permitting authorities in the 

proposal. State and local authorities stated that in 

particular, EPA underestimated the number of modifications and 

the amount of time it would take permitting authorities to 

process permits, particularly for commercial and residential 

sources. Based on the comments and additional analysis that we 

have conducted in response, we are revising in several respects 

our estimates of the administrative burdens for applying PSD and 

title V at the statutory threshold levels.

First we present revisions to our analysis regarding the 

burdens at the statutory levels. Before we present those 

changes, we want to note a revision to our methodology that 

affected our estimate of the number of permits currently issued 

under existing programs. We are revising upwards the number of 

sources that are already subject to PSD permitting requirements 

anyway for their conventional pollutants, which, as discussed 

previously, we refer to as “anyway” sources. This revision has 

implications both for (1) the number of sources that would 

become subject to PSD due to their GHG emissions; and also (2) 

the baseline number of sources already subject to PSD, which we 

use to compare the amount of increases in administrative burden 
126

due to permitting GHG sources. At proposal, we stated that 280 

sources each year are subject to PSD due to their new 

construction or modifications. However, upon further analysis, 

we have realized that this figure is too low because it includes 

only sources that have emissions of one or more NAAQS pollutants 

at the 100/250 tpy thresholds and that are located in areas of 

the country that are designated attainment or unclassifiable for 

all of those pollutants, and thus are not designated 

nonattainment for any of those NAAQS pollutants. We estimate 

that another 520 sources have emissions of one or more NAAQS 

pollutants at the 100/250 tpy thresholds and are located in 

areas of the country that are nonattainment for at least one of 

those NAAQS pollutants. Some of these 520 sources may also emit 

one or more pollutants at the 100/250 tpy level for which their 

area is designated attainment or unclassifiable, and therefore 

may be subject to PSD for those pollutants. Accordingly, the 

correct number of “anyway” sources subject to PSD each year is 

the 280 sources that are located in areas that are attainment or 

unclassifiable for each pollutant that the sources emits at the 

100/250 tpy level, plus at least some of the 520 sources that 

are located in areas that are nonattainment for at least one of 

the NAAQS pollutants that the sources emit at or above the 

100/250 tpy threshold. In the absence of data on the number of 
127

nonattainment NSR permits that do not have a PSD component, and 

because we expect this to be a small number, we have assumed for 

purposes of this action, that each of the 520 sources is subject 

to PSD for at least one pollutant, so that we will consider all 

800 sources as subject to PSD. Of this number, we estimate that 

70 percent, or 560 sources will undergo a modification, while 

the remaining 240 permitting actions will involve new 

construction. Of the modifications, we assume that 80 percent, 

or 448, would become subject to additional requirements due to 

their GHG emissions because those projects have combustionrelated activities that would likely emit GHGs in the requisite 

quantities. Our estimate of 80 percent of modification 

activities significantly involving combustion activities is 

based on a review of a random sample of PSD permits. In total 

we estimate that 688 sources, either upon new construction or 

modification, would need to add GHG requirements to their 

otherwise required PSD permitting action.

We should also note that in this rulemaking we are 

justifying our conclusions about permitting authority 

administrative burdens on the basis of their PSD and title V 

cost as calculated on both a separate basis and a combined 

basis. That is, we believe that the administrative burdens of 

the PSD program justify our tailoring approach for the PSD 
128

requirements, and the administrative burdens of the title V 

program justify our tailoring approach for the title V 

requirements, but in addition, the administrative burdens of 

both programs on a combined basis justify the tailoring 

approaches. Viewing the administrative burdens on a combined 

basis provides a useful perspective because most permitting 

authorities have a single organizational unit that is 

responsible for both the PSD program and the title V program, 

and in many cases, the same employees work on both programs. In 

addition, in some jurisdictions, permitting authorities issue a 

single, merged permit that includes both PSD and title V 

requirements. For these reasons, considering administrative 

burdens on a combined PSD and title V basis, offers a more 

accurate picture of the issues these agencies will face in 

transitioning to GHG permitting. 

Turning to the revisions to our burden estimates that we 

made as a result of public comment, we begin by noting that many 

commenters believed that we significantly underestimated the 

administrative burdens associated with the proposed thresholds 

or that the administrative burden under the proposed thresholds 

would still overwhelm the states and result in significant 

permitting delays and uncertainty for sources. Many of these 

commenters indicate that our estimate of the number of sources 
129

that would be subject to permitting is too low, and some add 

that we have underestimated the per-permit effort required. 

(More detail on these comments is given elsewhere on the 

methodology used in the analysis). Several state and local 

agencies provided estimates of the increased number of permits 

and/or staff that would be required under the thresholds we 

proposed that were higher than our original estimates. 

Specifically, commenters recommended that we increase the 

estimated administrative burdens for PSD permits by anywhere 

from 100 percent to over 2,000 percent; and that we increase the 

burdens for title V permits by anywhere from 29 percent to 240 

percent. Many commenters indicated that EPA has not adequately 

accounted for “synthetic minor” sources or modification 

projects, stating that many such sources and projects will not 

be able to keep GHGs below the proposed thresholds, and those 

who could do so may not be able to establish enforceable 

synthetic minor limits. Numerous commenters also stated that 

the EPA has underestimated the rate of major modifications for 

GHGs under PSD. Some commenters assert that we underestimated 

the number of permits required for specific industry sectors, 

including the oil and gas production industry, the natural gas 

transmission industry, the semiconductor industry, the wood 

products industry, the brick industry, and landfills. Some of 
130

the state and local commenters also believe that we have 

overestimated their ability to hire and train sufficient staff 

to administer GHG permitting. 

We are persuaded by the data and arguments provided by the 

many commenters who believe EPA underestimated the number of 

permitting actions and the burdens of each action, and thus the 

overall administrative burdens associated with permitting GHG 

sources. Accordingly, we have reevaluated our assessment of 

these administrative burdens, for both the PSD and title V 

programs. In conducting this re-evaluation, we considered 

arguments made by the commenters, as well as any actual data 

they provided, and then we determined whether and how to modify 

various aspects of our detailed assessment of the burdens. 

Based on this consideration we have substantially revised 

upwards our estimate of administrative burdens, based on the 

analysis included in the final docket for this rulemaking.

25 The 

revisions affect two elements of our analysis by showing: (1) a 

substantial increase in the number of PSD and title V permits 

that will occur at a given threshold, and (2) an increase in the 

average burden estimate for each such permit. 

 

25 “Summary of Methodology and Data Used to Estimate Burden 

Relief and Evaluate Resource Requirements at Alternative 

Greenhouse Gas (GHG) Permitting Thresholds;” Prepared by EPA 

Staff; March 2010.
131

Regarding the increase in our estimate of the number of 

projects that will occur, we estimated an increase in both PSD 

and title V permit actions, though the greatest changes were for 

PSD. At proposal, we estimated that, if PSD requirements were 

to apply to GHG sources at the 100/250 tpy statutory levels, 

40,496 projects - consisting of 3,299 projects at industrial 

sources and 37,197 projects at commercial or residential sources 

- would need PSD permits each year. Some of these projects 

involve the construction of an entirely new source, but the 

majority of these are modifications. We now estimate that at 

the 100/250 tpy levels, 81,598 projects would become subject to 

PSD each year. These projects include 26,089 actions at 

industrial sources and 55,509 at commercial and residential 

sources. We describe our calculation of this 81,598 amount in a 

TSD.

26 The great majority of these 81,598 projects that would 

become subject to PSD are modifications. We base these 

estimates on the assumption that the significance levels would 

be 100 tpy regardless of category. 

Our estimate of the number of PSD modifications is where we 

made our most significant upward revisions from our proposal, 

 

26 “Summary of Methodology and Data Used to Estimate Burden 

Relief and Evaluate Resource Requirements at Alternative 

Greenhouse Gas (GHG) Permitting Thresholds;” Prepared by EPA 

Staff; March 2010.
132

based on comments. Our doubling of the estimated PSD permitting 

actions – from 40,496 at proposal to 81,598 - results from three 

separate adjustments we made to our estimates at proposal of the 

number of permit actions that would result from applying PSD to 

GHG sources. Two of these increased the number of major 

modifications, and one of these increased the number of major 

sources and modifications. The most significant adjustment, and 

one that was raised by multiple commenters, was that we 

undercounted the number of major modification projects at 

existing major sources because we did not include the existing 

projects that avoid major PSD review by either taking “synthetic 

minor” limits or by netting out for conventional pollutants, but 

that would not be able to avoid PSD through those mechanisms for 

GHGs. 

We agree that the ability and procedures for sources to 

achieve reductions, or minimize increases, due to GHGs through 

adoption of enforceable limits or through netting out are not 

well established at this point. We believe that there will be 

numerous instances, particularly for combustion-related 

projects, where it will not be possible for sources to achieve 

the same level of reductions for CO2 emissions as they do for 

emissions of nitrogen oxides (NOx), for example, simply because 

there are not as many proven control techniques that can reduce 
133

CO2 emissions to the same degree as NOx. Also, more research 

will be necessary in the type of emission units and processes 

resulting in GHG emissions, and how they operate over a wide 

range of utilization patterns at a variety of source categories, 

before permitting authorities will be able to establish 

procedures and rules for developing minor source permit 

limitations. Therefore, we adjusted our count of major 

modification permits under PSD upward to account for this. 

The second change to the number of permits concerns the 

general modification rate of 2 percent that we applied at 

proposal, based on historical experience across all pollutant 

types. Commenters provided information that suggest that this 2

percent figure is an underestimate for GHG sources because their 

emissions of CO2 are high and accumulate quickly from various 

changes involving combustion units. Therefore, a greater 

percentage of their physical or operational changes will result 

in GHG emissions in excess of the significance levels that we 

identified at proposal. In light of these comments, we reviewed 

the source populations and pollutant mix within the various 

populations, and determined that we should revise our general 

modification rate to 4 percent for GHG sources. This 4 percent

rate was obtained by dividing the current annual major NSR 

permit actions involving modifications by the 14,700 existing 
134

sources. We have revised our burden analysis accordingly. 

Again, the burden analysis in the docket describes our basis for 

these calculations in more detail. 

The third adjustment to the number of permits involves our 

estimate of the number of sources with PTE that is greater than 

the various thresholds considered. This affects the number of 

major sources at the statutory thresholds, which we used to 

estimate the number of PSD and title V major sources, but also 

has an effect on the number of major modifications because the 

number of modifications depends on the size of the population of 

major sources. Commenters provided evidence that our estimates 

of capacity utilization (which, as described previously, we use 

for estimating potential-to-emit based on data for actual 

emissions) for the general manufacturing source category 

(referred to as “unspecified stationary combustion” in our 

analysis) and for the oil and gas industry were not accurate. 

In our proposal, our estimated range for capacity utilization 

for “unspecified stationary combustion” varied from 70 to 90

percent depending on manufacturing category. For the oil and 

gas industry, our estimate was 90 percent. We received comments 

indicating that these utilization rates are higher than what is 

normally achieved in real-world conditions, particularly for 

smaller manufacturing type facilities. Accordingly, in this 
135

action, we are using a 50 percent capacity utilization rate for 

both of these source categories, which better reflects what can 

be deemed reasonable operation under normal conditions for 

facilities in these source categories. This adjustment 

increased the overall number of affected facilities at various 

threshold levels and we have revised our burden analysis 

accordingly.

A few commenters asserted that we underestimated the number 

of residential homes, commercial buildings, and retail stores 

that would be subject to permitting requirements because these 

commenters believed the estimate in EPA’s TSD was based on 

actual emissions from space heating equipment rather than PTE. 

We wish to clarify that our threshold analysis estimates for the 

number of residential and commercial sources (as well as all 

other sources) did use a PTE basis. To calculate the PTE amount 

for these sources, we extrapolated from the actual emissions 

data for the residential and commercial sources. Specifically, 

we assumed that a typical residential facility operates its fuel 

combustion sources at only 10 percent of its capacity and a 

typical commercial facility operates at only 15 percent of its 

capacity. Based on these assumptions, we multiplied residential 

actual emissions by a factor of 10, and commercial actual 

emissions by a factor of 6.6 to obtain PTE-based estimates. 
136

There is very little information available on the capacity 

utilization rates of fuel combustion equipment at different 

types of residential and commercial facilities, but we believe 

our methodology was reasonable for these types of sources and we 

did not adjust it in response to this comment. Information on 

the development of these estimates is provided in our Technical 

Support Document for Greenhouse Gas Emissions Thresholds 

Evaluation. 

The second source of upward revisions to our 

administrative burden estimate is that we are increasing the 

estimated average cost to permitting authorities of issuing each 

PSD and title V permit at the statutory thresholds. At 

proposal, we estimated that for PSD permits, permitting 

authorities would expend, on average, 301 hours to permit an 

industrial source of GHG emissions, and 20 percent of that time, 

or 60 hours to permit a commercial or residential source. After 

estimating that amount of workload, we went on to estimate the 

monetary cost to permitting authorities of that workload. 

Similarly, for title V permits, we estimated at proposal that 

permitting authorities would expend 10 percent of the number of 

hours needed to process an industrial permit in order to process 

a commercial or residential permit for GHG sources.
137

We received comments from both permitting authorities and 

sources asserting that our methodology underestimated the 

administrative burden on grounds that (1) our methodology fails 

to recognize that when a source triggers PSD for conventional 

pollutants, additional labor hours would be required to issue 

BACT for GHGs; (2) our estimate of 60 hours (versus 301 hours) 

to issue PSD permits to commercial and residential sources of 

GHGs is unrealistically low; (3) our estimate failed to account 

for the increase in the complexity of permits for criteria 

pollutants due to (i) increases in criteria pollutant emissions 

becoming newly subject to BACT at sources that are major only 

for GHGs, which will result in increased permitting and (ii) 

BACT controls for criteria pollutants (e.g., an oxidizer for 

VOCs) may result in significant GHG emissions, triggering an 

additional BACT determination; and (4) our methodology failed to 

account for the significant additional PSD and title V burdens 

due to sources that obtain federally enforceable permit limits 

on GHGs in order to become “synthetic minors” and thereby avoid 

PSD (and possibly also title V).

Based on these comments and our own reassessment of 

permitting actions created by the addition of GHGs, we have 

revised upwards in several ways our estimate of the additional 

per-permit costs of applying PSD and title V to GHG sources, 
138

including the following: First we have added an estimate of the 

additional permitting cost for adding a GHG component to 

“anyway” PSD and title V permitting actions for conventional 

pollutants. We estimated this burden based on information in 

the comments together with our own judgment about how to adjust 

the burden numbers contained in the current supporting 

statements for our approved permitting ICRs. These adjustments 

are found in our revised burden estimate document.

Second, we have raised the per-permit burden hours for 

commercial and residential sources for PSD and title V. At 

proposal, our estimates were based on the fact that many of 

these permits will be technically simpler due to such factors as 

a lower number of emissions points, simpler processes, and less 

required modeling. However, commenters pointed out that, until 

EPA streamlines its permitting procedures, there are many 

permitting activities that represent a fixed cost, such as 

public notice, hearing, and response to comment activities. In 

addition, we agree, as commenters pointed out, that many of 

these sources will need significantly more permitting authority 

staff time to assist them in the permit application and 

preparation process because of their lack of experience with 

these requirements. In addition, permitting authorities will 

have little, if any, experience in permitting commercial and 
139

residential sources, and therefore will face a learning curve 

that will entail more time to take permitting action. In 

addition, we expect that in many cases PSD and title V permit 

applications for GHGs will receive comments from various 

stakeholders, from citizens groups to equipment vendors, who 

will seek to participate in the permit process, and responding 

and revising permits accordingly will add to the hours that the 

permitting authority will spend. 

As a result, we raised the PSD per-permit hours for various 

steps in the permitting process, as described in the burden 

estimate document. While we continue to estimate that 

permitting authorities will expend, on average, 301 hours to 

issue a PSD permit to an industrial source, and that this would 

cost $23,243, we now recognize that a permitting authority would 

expend 70 percent of that time or 210 hours, to permit a 

commercial or residential source, which would cost $16,216. 

Similarly, for title V, while we continue to estimate that 

permitting authorities will expend, on average, 428 hours to

issue a title V permit to an industrial source, and that this 

would cost $19,688, we now recognize that a permitting authority 

would expend 50 percent of the time, or 214 hours, to permit a 

commercial or residential source, which would cost $9,844.
140

We disagree with commenters who suggested that by basing 

our estimates on the numbers of newly constructing and modifying 

sources with high enough emissions to qualify as major emitting 

facilities, we failed to account for the costs of sources that 

seek “synthetic minor” permits to avoid PSD, and possibly title 

V, requirements. In fact, our methodology includes sources that 

might take such limits as newly-major sources for their GHG 

emissions; and therefore we count the full administrative burden 

associated with a PSD permit and a title V permit for those 

sources. In effect, we assume that such sources would go 

through PSD or title V permitting, rather than take “synthetic 

minor” limits. We take this approach because although we 

suspect that there may, in fact, be significant synthetic minor 

activity, we do not have data that would allow us to determine 

whether, and how many of, these sources will be able to adopt 

“synthetic minor” limits or restrict their operations to obtain 

minor source permitting status. Nor do we have data on the 

amount of the administrative burden that would fall on any 

particular permitting authority to establish a “synthetic minor” 

limit, except that we understand that the amount varies widely 

across states. As a result, we opted to include these sources 

in our analysis as sources receiving a PSD or title V permit. 

Therefore, to the extent that synthetic minor activity occurs, 
141

our estimate would already have included the burden for that 

activity. In fact, our estimate would have overestimated the 

burden to the extent that a permitting authority would have less 

administrative costs to issuing a “synthetic minor” permit, as 

compared to a PSD or title V permit. 

(3) Revised Burden Estimates at Statutory Thresholds

Based on the revisions just described, we estimate that in 

all, if sources that emit GHGs become subject to PSD at the 

100/250 tpy levels, permitting authorities across the country 

would face over $1.5 billion in additional PSD permitting costs 

each year. This would represent an increase of 130 times the 

current annual burden hours under the NSR major source program 

for permitting authorities. The permitting authorities would 

need a total of almost 10,000 new FTEs to process PSD permits 

for GHG emissions. 

In addition, we estimate that in all, if sources that emit 

GHGs become subject to title V at the 100 tpy level, permitting 

authorities across the country would incur about 1.4 billion 

additional work hours, which would cost $63 billion. We 

estimate that most of this work would be done over a 3 year 

period, which would amount to 458 million in additional work 

hours, and $21 billion in additional costs, on an annual basis 

over that 3-year period.
142

We also note that the survey of state and local permitting 

authorities described in the proposed rulemaking continues to 

shed light on the extent of the administrative burdens, 

including staffing, budget, and other associated resource needs, 

as projected by the permitting authorities. As noted 

previously, that survey concluded that application of the PSD 

requirements to GHG-emitting sources at the level of 100/250 tpy 

or more of actual emissions would, without additional FTEs, 

increase the average processing time for a PSD permit from one 

to 3 years. The survey further concluded that application of 

the title V requirements to GHG-emitting sources at the level of 

100 tpy or more of actual emissions would, without additional 

FTEs, increase the average processing time for a title V permit 

from 6 months to 10 years. As we noted at proposal, this survey 

assumed a ten-fold increase in the number of PSD permits and a 

40-fold increase in the number of title V permits due to GHGemitting sources, but those assumptions were severely 

underestimated because they were based on actual emissions. At 

proposal, our calculations, which were based on potential 

emissions, indicated a 140-fold increase in PSD permits and a 

more than 400-fold increase in title V permits. In this

rulemaking, we recognize that even our estimates at proposal 

were severely underestimated. We now recognize that the number 
143

of PSD permits will be about twice what we estimated at 

proposal, and the average processing time for both PSD and title 

V permits will be two or three times greater than what we 

estimated at proposal. The survey of state and local permitting 

authorities provided other useful information as well, including 

the fact that it would take the permitting authorities 2 years, 

on average, to hire the staff necessary to handle a ten-fold 

increase in PSD permits and a 40-fold increase in title V 

permits, and that 90 percent of their staff would need 

additional training in all aspects of permitting for GHG 

sources. 

(4) Revised Estimates of Administrative Burdens at Various 

Threshold Levels

In order to determine the appropriate PSD and title V 

applicability level for GHG sources, we not only estimated the 

burden at the statutory thresholds, as described previously, but 

we also estimated the number of sources, number of permitting 

actions, and amount of administrative burden at various 

applicability levels for both PSD and title V, based on the 

revised methodology described previously, that we used to 

estimate the administrative burdens of applying PSD and title V 

at the statutory levels. This information is summarized in 

Table V-1. Note that Table V-1 also includes, in the last 
144

column, the administrative burdens, described previously, 

associated with the 100/250 tpy thresholds.
145

Table V-1. Coverage and Burden Information

Current 

Program

1

“Anyway” 

Source 

Approach 

75k Major 

Mod.

100k 

Major 

Source

100k 

Major 

Mod.

100k 

Major 

Source

75k 

Major

Mod.

100k Major 

Source

50k Major

Mod.

50k Major

Source

50k Major

Mod.

25k Major 

Source

25k Major

Mod.

100/250

Major,

100 Mod.

Number of Major 

Sources

15,000 15,000 15,550 15,550 15,550 18,500 22,500 6,118,252

Number of Newly 

Major GHG Sources

N/A 0 550 550 550 3,500 7,500 6,105,913

Number of PSD New

Construction

Actions

240 240 242 242 242 243 250 19,889

Number of PSD 

Modification

Actions at 

Covered major 

sources

448 448 468 1,363 2,257 2,354 9,645 62,284

Permitting 

Authority Cost to 

Run PSD programs

$12M/yr. $15M/yr. $15M/yr. $36M/yr. $57M/yr. $59M/yr. $229M/yr. $1.5B/yr

Permitting 

Authority Work 

Hours to Run PSD 

programs2

150,795 185,195 192,055 461,450 730,544 764,781 2.97 M 19.7 M

Permitting 

Authority Cost to 

Run Title V 

Programs

$62M/yr. $63M/yr. $67M/yr. $69M/yr. $70M/yr. $88M/yr. $126M/yr. $21 B/yr

Permitting 

Authority Work 

Hours to Run 

Title V Programs 

1.35 M 1.38 M 1.46 M 1.49 M 1.53 M 1.92 M 2.74 M 460 M
146

Annual Total Cost 

to Run PSD and 

Title V Programs 

and percent

increase in cost 

over current 

program 

$74M/yr. $78M/yr. 

5% 

increase 

(once 

states 

adopt)

$82M/yr. 

11% 

increase

$105M/yr 

42% 

increase

$127M/yr. 

72% 

increase

$147M/yr. 

99% 

increase

$355M/yr. 

380% 

increase

$22.5 B/yr

30,305% 

increase

% GHG emissions 

covered3

-0- 65% 67% 67% 67% 70% 75% 78%

Notes: (1) As explained in the preamble, "current program" figures for PSD permits also 

reflect NSR permits in nonattainment areas that we assume include a PSD component for at 

least one pollutant. (2) Number of FTEs may be calculated as work hours divided by 2,000 

hours. (3) Percent of national GHG stationary source emissions emitted from sources that 

would be considered major for GHG emissions under each threshold scenario.
147

As described in the TSD, we considered several different 

major source/major modification threshold combinations. We 

chose the combinations to reflect representative, incremental 

steps along the possible range. Because it is time- and 

resource- intensive to develop estimates for a given step, we 

chose intervals that best reflect representative points within 

the range, given those time and resource constraints. Here, we 

discuss key observations about some of the combinations that we 

assessed. As the table indicates, under the current PSD and 

title V programs, approximately 15,000 sources qualify as major 

PSD sources for at least one pollutant and therefore meet the 

applicability thresholds. Of these, approximately 668 sources 

are subject to PSD requirements each year for at least one 

pollutant - 240 because they undertake new construction, and 448 

because they undertake modifications. The permitting 

authorities’ administrative burdens for the NSR program are 

153,795 work hours, and $12 million. For the title V program, 

the 15,000 sources are, for the most part already permitted, and 

therefore need revised permits as required and renewal permits 

on a 5-year schedule. The permitting authorities’ title V 

administrative burdens on an annual basis are 1,349,659 work 

hours and $62 million.

The first threshold Table 1 describes – and which, as 
148

discussed later, we are adopting for Step 1 – is the “anyway” 

source approach. Under this approach, (i) PSD applies to the 

GHG emissions from projects that are subject to PSD anyway as 

new sources or major modifications due to their emissions of 

non-GHG pollutants and that result in an increase (or, in the 

case of modifications, a net increase) of at least 75,000 tpy 

CO2e; and (ii) title V applies to what we will call “anyway” 

title V sources, that is, sources that are subject to title V 

anyway due to their emissions of non-GHG pollutants. Under this 

approach, the number of sources subject to PSD each year –

including new construction and modifications - is the same as 

under the current program, but the permitting authorities will 

need to address GHG emissions as part of those permitting 

actions each year and, to do so, will require, each year, 34,400 

additional workload hours costing an additional $3 million. For 

title V, we estimate that the number of title V sources that 

require permitting actions will, on average, be the same each 

year, but permitting authorities will need to address GHG 

requirements for some of them; as a result, permitting 

authorities will need, each year, 27,468 additional work hours 

costing $1 million in additional funding.

Another threshold described in Table V-1 is the one we are 

adopting under Step 2, as described later, under which (i) 
149

sources will be subject to PSD on account of their GHG emissions 

if they newly construct and emit at least 100,000 tpy CO2e, or if 

they are existing sources that emit at least 100,000 tpy CO2e of 

GHGs and make a modification that results in a net emissions 

increase of at least 75,000 tpy CO2e; and (ii) existing sources 

will be subject to title V due to their GHG emissions if they 

emit 100,000 tpy CO2e in GHG emissions. Under this approach, 

which we will call the 100,000/75,000 approach, we estimate that 

each year, compared to current levels, the permitting 

authorities will need to issue GHG permits to two additional 

sources that newly construct and to 915 additional sources that 

undertake modifications. Doing so will require 310,655 

additional workload hours costing an additional $24 million, 

compared to the current program. For title V, an additional 190

sources will require new title V permits each of the first 3 

years, and the permitting authorities’ associated costs will be 

141,322 work hours and $7 million more than the current program. 

The last approach we will describe here may be called the 

50,000/50,000 approach, which, as discussed later, we adopt as 

the floor for thresholds during the first 6 years after 

promulgation. Under this approach, (i) sources will be subject 

to PSD on account of their GHG emissions if they newly construct 

and emit at least 50,000 tpy CO2e, or if they are existing 
150

sources that emit at least 50,000 tpy CO2e of GHGs and make a 

modification that results in a net emissions increase of at 

least 50,000 tpy CO2e; and (ii) existing sources will be subject 

to title V on account of their GHG emissions if they emit 50,000 

tpy CO2e in GHG emissions. Under this approach, each year, the 

permitting authorities will need to issue GHG permits to 3 

additional sources that newly construct and 1,900 that undertake 

modifications above current permitting levels. Doing so will 

require 613,986 additional workload hours costing $47 million, 

compared to the current program. For title V, an additional 

1,189 sources will require new title V permits each of the first 

3 years and the permitting authorities’ associated costs will be 

568,017 work hours and $26 million more than the current 

program. 

We present the remaining entries in the table to illustrate 

how the cost and burden estimates vary with increasing or 

decreasing thresholds relative to those selected in this rule. 

These variations are important in understanding how alternative

thresholds would compare to the ones selected. We also include 

entries reflecting the baseline (current program without GHG 

permitting) and the burdens if we immediately implemented the 

full statutory thresholds on January 2, 2011, without tailoring 

or streamlining.
151

3. “Absurd Results,” “Administrative Necessity,” and “One-Stepat-a-Time” Legal Doctrines

a. Introduction and Summary

Having described the factual underpinnings of our action, 

which are the costs to sources and administrative burdens to 

permitting authorities, we now describe the legal underpinnings. 

They involve the framework for analyzing agency-administered 

statutes, as established by the U.S. Supreme Court in Chevron 

U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-43 (1984). In this case,

Chevron framework must take into account the “absurd results,” 

“administrative necessity,” and “one-step-at-a-time” legal 

doctrines. We believe that each of these doctrines provides 

independent support for our action, but in addition, the three 

doctrines are directly intertwined and can be considered in a 

comprehensive and interconnected manner. Moreover, although 

each of the three doctrines pre-date the 1984 Chevron decision, 

in which the U.S. Supreme Court established the framework for 

construing agency-administered statutes, each fits appropriately 

into the Chevron framework.27

 

27 Although we set out an analysis of how the three 

doctrines fit into the Chevron framework, we note that even if 

the doctrines are viewed independently of the Chevron framework, 

they support this action.
152

To reiterate, for convenience, the statutory provisions at 

issue: Congress, through the definition of “major emitting 

facility,” applied the PSD program to include “any ... source

[that] emit[s], or ha[s] the potential to emit, one hundred [or, 

depending on the source category two hundred fifty] tons per 

year or more of any air pollutant.” CAA sections 165(a), 

169(1). In addition, Congress, through the definition of 

“modification,” applied the PSD program to include “any physical 

change in, or change in the method of operation of, a stationary 

source which increases the amount of any air pollutant emitted 

by such source or which results in the emission of any air 

pollutant not previously emitted.” CAA sections 165(a), 

169(2)(C), 111(a)(4). Similarly, Congress, through the 

definition of “major source,” specified that the title V program 

includes “any stationary facility or source of air pollutants 

which directly emits, or has the potential to emit, one hundred 

tons per year or more of any air pollutant.” CAA sections

502(a), 501(2)(B), 302(j). EPA, through long-established 

regulatory action, in the case of PSD, and long-established 

guidance, in the case of title V, has interpreted these 

definitions narrowly so that they apply only with respect to air 

pollutants that are subject to regulation under the CAA. 
153

Applying these definitions by their terms, as interpreted 

narrowly by EPA, to GHG sources at the present time would mean 

that the PSD and title V programs would apply to an 

extraordinarily large number of small sources, the sources would 

incur unduly high compliance costs, and permitting authorities 

would face overwhelming administrative burdens. As a result, we 

believe Congress did not intend for us to follow this literal 

reading, and instead, with this action, we chart a course for 

tailoring the applicability provisions of the PSD program and 

the title V program by phasing them in over time to the 

prescribed extent.

For our authority to take this action, we rely in part on 

the “absurd results” doctrine, because applying the PSD and 

title V requirements literally (as previously interpreted 

narrowly by EPA) would not only be inconsistent with 

congressional intent concerning the applicability of the PSD and 

title V programs, but in fact would severely undermine 

congressional purpose for those programs. We also rely on the 

“administrative necessity” doctrine, which applies because 

construing the PSD and title V requirements literally (as 

previously interpreted narrowely by EPA) would render it 

impossible for permitting authorities to administer the PSD 

provisions. The tailoring approach we promulgate in this action
154

is consistent with both doctrines. It is also consistent with a 

third doctrine, the “one-step-at-a-time” doctrine, which 

authorizes administrative agencies under certain circumstances 

to address mandates through phased action.

Our discussion of the legal bases for this rule is 

organized as follows: In this section V.B.3, we provide an 

overview of the three doctrines and describe how they fit into 

the Chevron framework for statutory construction. In section 

V.B.4, we discuss the PSD and title V programs, including each 

program’s relevant statutory provisions, legislative history, 

and regulatory history. In sections V.B.5 and V.B.6 we discuss 

the “absurd results” approach for PSD and title V, respectively, 

that we are finalizing in our action. In section V.B.7., we 

discuss additional rulemaking in which we may consider exempting 

certain categories of sources from PSD and title V under the 

“absurd results” doctrine. In section V.B.8, we discuss the 

legal and policy rationale for the phase-in schedule that we are 

adopting for applying PSD and title V to GHG sources. In 

section V.B.9 we discuss the “administrative necessity” approach 

for PSD and title V, respectively. In section V.B.10, we 

discuss the third legal basis for our action, the “one-step-ata-time” doctrine. 

b. The “Absurd Results” Doctrine
155

Turning first to the “absurd results” doctrine, we note at 

the outset that we discussed the doctrine at length in the 

notice of proposed rulemaking, and we incorporate by reference 

that discussion, although we make some refinements to that 

discussion in this preamble. The starting point for EPA's 

interpretation of the PSD and title V applicability provisions 

and reliance on the “absurd results” doctrine is the familiar 

Chevron two-step analysis. We discuss this analysis in greater 

detail later, but in brief, in interpreting a statutory 

provision, an agency must, under Chevron Step 1, determine 

whether Congress's intent on a particular question is clear; if 

so, then the agency must follow that intent. If the intent of 

the provision is not clear, then the agency may, under Step 2, 

fashion a reasonable interpretation of the provision. Chevron 

U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-43 (1984). 

The courts consider the best indicator of congressional 

intent to be the plain meaning of the statute. However, the 

U.S. Supreme Court has held that the literal meaning of a 

statutory provision is not conclusive “in the ‘rare cases [in 

which] the literal application of a statute will produce a 

result demonstrably at odds with the intentions of the drafters’ 

... [in which case] the intention of the drafters, rather than the 

strict language, controls.” United States v. Ron Pair 
156

Enterprises, 489 U.S. 235, 242 (1989). This doctrine of 

statutory interpretation may be termed the “absurd results” 

doctrine.

Although, as just noted, the U.S. Supreme Court has 

described the “absurd results” cases as “rare,” in that case the 

Court seemed to be referring to the small percentage of 

statutory-construction cases that are decided on the basis of 

the doctrine. The D.C. Circuit, in surveying the doctrine over 

more than a century of jurisprudence, characterized the body of 

law in absolute numbers as comprising “legions of court 

decisions.” In re Franklyn C. Nofziger, 925 F.2d 428, 434 (D.C. 

Cir. 1991). Indeed, there are dozens of cases, dating from 
157

within the past several years to well into the 19th century,28 in 

which the U.S. Supreme Court has applied the “absurd results” 

doctrine to avoid the literal application of a statute, or if 

not so holding, has nevertheless clearly acknowledged the 

validity of the doctrine. Some of the more recent of these 

cases include: Logan v. United States, 552 U.S. 23, 36-37 

(2007) (“[s]tatutory terms, we have held, may be interpreted 

against their literal meaning where the words ‘could not 

conceivably have been intended to apply’ to the case at hand 

[citation omitted]”); Nixon v. Missouri Municipal League, 541 

U.S. 125, 132-33 (2004) (“any entity” includes private but not 

public entities); Raygor v. Regents of Univ. of Minn., 534 U.S. 

 

28 For early cases in which the U.S. Supreme Court applied 

the “absurd results” doctrine, see Holy Trinity Church v. U.S., 

143 U.S. 457, 516-17 (1892) (“any alien” does not include a 

foreign pastor; Court stated, “It is a familiar rule, that a 

thing may be within the letter of the statute and yet not within 

the statute, because not within its spirit, nor within the 

intention of its makers.... If a literal construction of the 

words be absurd, the Act must be construed as to avoid the 

absurdity”); Chew Heong v. United States, 112 U.S. 536, 555 

(1884) (rejecting a literal interpretation of treaty that would 

have prevented the re-entry of a person into the U.S. upon the 

ground that he did not possess a certificate which did not exist 

prior to his departure, and which could not possibly have been 

issued); Heyenfeldt v. Daney Gold Mining Co., 93 U.S. 634, 638 

(1877) (statutory language expressly referred to past land sales 

and dispositions, “but evidently they were not employed in this 

sense, for no lands in Nevada had been sold or disposed of by 

any act of Congress,” and the language of the statute “could not 

... apply to past sales or dispositions, and, to have any effect 

at all, must be held to apply to the future”).
158

533, 542-45 (2002) (“implying a narrow interpretation of ... ‘any 

claim asserted’ so as to exclude certain claims dismissed on 

Eleventh Amendment grounds”); United States v. X-Citement Video, 

Inc., 513 U.S. 64, 69 (1994) (rejecting a literal interpretation 

of the statutory term “knowingly” on grounds that Congress could 

not have intended the “positively absurd” results that some 

applications of such an interpretation would produce, “[f]or 

instance, a retail druggist who returns an uninspected roll of 

developed film to a customer “knowingly distributes” a visual 

depiction and would be criminally liable if it were later 

discovered that the visual depiction contained images of 

children engaged in sexually explicit conduct”); Rowland v. Cal. 

Men’s Colony, 506 U.S. 194, 200 (1993) (finding that an 

artificial entity such as an association is not a “person” under 

the statute, and describing the absurdity doctrine as a “common 

mandate of statutory construction”); United States v. Ron Pair 

Enterprises, 489 U.S. 235, 242 (1989) (the plain meaning of a 

statutory provision is not conclusive “in the ‘rare cases [in 

which] the literal application of a statute will produce a 

result demonstrably at odds with the intentions of the drafters’ 

... [in which case] the intention of the drafters, rather than the 

strict language, controls”); Green v. Bock Laundry Machine 

Company, 490 U.S. 504 (1989) (provision in Federal Rule of 
159

Evidence that protects “the defendant” against potentially 

prejudicial evidence, but not the plaintiff, refers to only 

criminal, and not civil, defendants); Public Citizen v. United 

States Dep’t of Justice, 491 U.S. 440, 453-54 (1989) (rejecting 

a broad, straightforward reading of the term “utilize,” on 

grounds that a literal reading would appear to require the 

absurd result that all of FACA’s restrictions apply if a 

President consults with his own political party before picking 

his Cabinet, and such a reading “was unmistakably not Congress’ 

intention”); Watt v. Alaska, 451 U.S. 259, 266 (1981) (rejecting 

reliance on plain statutory language and concluding that the 

term “minerals” in section 401(a) of the Wildlife Refuge Revenue 

Sharing Act applies only to minerals on acquired refuge lands; 

stating “[t]he circumstances of the enactment of particular 

legislation may persuade a court that Congress did not intend 

words of common meaning to have their literal effect”); Train v. 

Colorado Public Interest Research Group, Inc., 426 U.S. 1, 23-

24 (1976) (prohibition in Federal Water Pollution Control Act 

against discharging into navigable waters “pollutants,” which 

are defined to include “radioactive materials,” does not apply 

to three specific types of radioactive materials); Jackson v. 

Lykes Bros. S.S. Co., 386 U.S. 731, 735 (1967) (refusing to 

distinguish between a longshoreman hired by “an independent 
160

stevedore company” and one hired by “the shipowner ... to do 

exactly the same kind of work,” despite the clear terms of the 

Act, and stating: “[w]e cannot hold that Congress intended any 

such incongruous, absurd, and unjust result in passing this 

Act,” when the Act was “designed to provide equal justice to 

every longshoreman similarly situated”); Lynch v. Overholser,

369 U.S. 705, 710, (1962) (statutory construction is not 

confined to the “bare words of a statute”); United States v. 

Bryan, 339 U.S. 323, 338 (1950) (“Despite the fact that the 

literal language would encompass testimony elicited by the House 

Committee in its questioning of respondent relative to the 

production of the records of the association, the Court will not 

reach that result if it is contrary to the congressional intent 

and leads to absurd conclusions. And we are clearly of the 

opinion that the congressional purpose would be frustrated if 

the words, “in any criminal proceeding,” were read to include a 

prosecution for willful default under R.S. § 102.”).

29

 

29 For other U.S. Supreme Court cases, see Utah Junk Co. v. 

Porter, 328 U.S. 39, 44 (1946) (“literalness may strangle 

meaning”); Markham v. Cabell, 326 U.S. 404, 409 (1945) (“The 

policy as well as the letter of the law is a guide to 

decision.”); United States v. American Trucking Associations, 

Inc. 310 U.S. 534 (1940) (the term “employees” in the Federal 

Motor Carrier Act, is limited to employees whose activities 

affect safety); C.V. Sorrels v. U.S., 287 U.S. 435, 446-49 

(1932) (provisions of National Prohibition Act that criminalize 

possessing and selling liquor do not apply if defendant is 
161

The D.C. Circuit has also handed down numerous decisions 

that applied the absurd results doctrine to avoid a literal 

interpretation or application of statutory provisions or that 

have acknowledged the doctrine. Some of the most recent ones 

include: Arkansas Dairy Cooperative Ass’n, Inc., v. U.S. Dep’t 

of Agriculture, 573 F.3d 815 (D.C. Cir. 2009) (rejecting the 

canon of construction that presumes that Congress is aware of 

existing law pertinent to the legislation that it enacts, when 

in this case, the presumption that Congress was aware of the 

Departments definition of “hearing” would lead to “the absurd 

result that Congress intended to impose a requirement with which 

the Secretary could not comply;” stating: “Courts, ‘in 

interpreting the words of a statute, [have] some scope for 

adopting a restricted rather than a literal or usual meaning of 

its words where acceptance of that meaning would lead to absurd 

results ... or would thwart the obvious purpose of the statute 

 

entrapped; Court declines to apply the “letter of the statute” 

because doing so “in the circumstances under consideration is 

foreign to its purpose”); United States v. Katz, 271 U.S. 354, 

362 (1926) (holding that the statutory words “no person” refer 

only to persons authorized under other provisions of the Act to 

traffic alcohol, thus rejecting a literal application of general 

terms descriptive of a class of persons made subject to a 

criminal statute); Hawaii v. Mankichi, 190 U.S. 197, 212-14 

(1903) (refusing to adopt a literal application of the “Newlands 

resolution” which would have entitled every criminal in the 

State of Hawaii convicted of an offense between 1898 – 1900 to 

be set at large, as “surely such a result could not have been 

within the contemplation of Congress”). 
162

....’” (quoting In re Trans Alaska Pipeline Rate Cases, 436 U.S. 

631, (1978)); Buffalo Crushed Stone, Inc. v. Surface 

Transportation Board, 194 F.3d 125, 129-30 (D.C. Cir. 1999) 

(regulation of Surface Transportation Board providing that if a 

notice of exemption “contains false or misleading information, 

the use of the exemption is void ab initio” does not apply to a 

notice containing false information when declaring the notice 

void ab initio would undermine the goals of the governing 

statute; a conflict between the “literal application of 

statutory language” and maintaining the integrity of the 

regulatory scheme should be resolved by construing the text in 

accordance with its purpose); Mova Pharm. Corp. v. Shalala, 140 

F.3d 1060, 1068-69 (D.C. Cir. 1998) (as discussed later, 

describes the “absurd results” doctrine in the context of the 

Chevron framework for statutory construction; invalidates a Food

and Drug Administration’s (FDA) regulation designed to remedy 

what the FDA described as the absurd result of a literal 

application of the statutory provisions governing FDA approval 

of successive generic drug applications, on grounds that “[i]n 

effect, the FDA has embarked upon an adventurous transplant 

operation in response to blemishes in the statute that could 

have been alleviated with more modest corrective surgery;” 

states that “[t]he rule that statutes are to be read to avoid
163

absurd results allows an agency to establish that seemingly 

clear statutory language does not reflect the "unambiguously 

expressed intent of Congress," Chevron, 467 U.S. at 842, and 

thus to overcome the first step of the Chevron analysis”);

Environmental Defense Fund v. EPA, 82 F.3d 451, 468-69 (D.C. 

Cir. 1996) (although Act requires that a federal action conform 

to the SIP that is currently in place, EPA may instead require 

conformity to a revised implementation plan that state commits 

to develop; “[t]his is one of those rare cases ... [that] requires 

a more flexible, purpose-oriented interpretation if we are to 

avoid ‘absurd or futile results.’”); American Water Works Ass’n 

v. EPA, 40 F.3d 1266, 1271 (D.C. Cir. 1994) (holding that EPA’s 

interpretation of the term “feasible” so as to require a 

treatment technique instead of a maximum contaminant level (MCL)

for lead is reasonable; the court stated: “Indeed, where a 

literal reading of a statutory term would lead to absurd 

results, the term simply ‘has no plain meaning ... and is the 

proper subject of construction by the EPA and the courts.’ If 

the meaning of ‘feasible’ suggested by the NRDC is indeed its 

plain meaning, then this is such a case; for it could lead to a 

result squarely at odds with the purpose of the Safe Drinking 

Water Act.” (quoting Chem. Mfrs. Ass’n v. Natural Res. Def. 

Council, Inc., 470 U.S. 116, 126 (1985)) (citation omitted); In 
164

re Nofziger, 925 F.2d 428, 434-35 (D.C. Cir. 1991) (provision 

authorizing payment of attorney fees to the subject of an 

investigation conducted by an independent counsel of the 

Department of Justice only if “no indictment is brought” against 

such individual does not preclude payment of attorney fees when 

an indictment is brought but is determined to be invalid). 

c. The “Administrative Necessity” Doctrine

In the proposed rulemaking, we also described in 

detail the “administrative necessity” doctrine, 74 FR 55311 

col. 3 to 55318 col. 3, and we incorporate that discussion 

by reference into this notice. Under this doctrine, if a 

statutory provision, however clear on its face, is 

impossible for the agency to administer, then the agency is 

not required to follow the literal requirements, and 

instead, the agency may adjust the requirements in as 

refined a manner as possible to assure that the 

requirements are administrable, while still achieving 

Congress's overall intent. The D.C. Circuit set out the 

doctrine of "administrative necessity" in a line of cases 

that most prominently includes Alabama Power v. Costle, 636 

F.2d 323 (D.C. Cir. 1980). The Court cited the doctrine 

most recently in New York v. EPA, 443 F.3d 880, 884, 888 

(D.C. Cir. 2006).
165

As we stated in the proposed rulemaking, “We believe that 

the “administrative necessity” case law establishes a three-step 

process under which an administrative agency may, under the 

appropriate circumstances, in effect revise statutory 

requirements that the agency demonstrates are impossible to 

administer so that they are administrable.” 74 FR 55315 col. 1. 

Specifically:

[T]he three steps are as follows: When an agency 

has identified what it believes may be insurmountable 

burdens in administering a statutory requirement, the 

first step the agency must take is to evaluate how it 

could streamline administration as much as possible, 

while remaining within the confines of the statutory 

requirements. The second step is that the agency must 

determine whether it can justifiably conclude that 

even after whatever streamlining of administration of 

statutory requirements (consistent with those 

statutory requirements) it conducts, the remaining 

administrative tasks are impossible for the agency 

because they are beyond its resources, e.g., beyond 

the capacities of its personnel and funding. If the 

agency concludes with justification that it would be 

impossible to administer the statutory requirements, 

as streamlined, then the agency may take the third 

step, which is to phase in or otherwise adjust the 

requirements so that they are administrable. However, 

the agency must do so in a manner that is as refined 

as possible so that the agency may continue to 

implement as fully as possible Congressional intent.

74 FR 55315 cols. 1-2.

It should also be noted that we believe the administrative 

burdens encountered by the state and local permitting 

authorities are fully relevant under the “administrative 
166

necessity” doctrine. Although the caselaw that discusses the 

doctrine focuses on federal agencies (see 74 FR 55312-14), under 

the CAA, state and local agencies are EPA’s partners in 

implementing provisions of the CAA, and have primary 

responsibility for implementing the PSD program. They generally 

adopt EPA’s PSD requirements in their SIPs, as required under 

CAA section 110(a)(2)(C); and they generally adopt EPA’s title V 

requirements in their title V programs, as required under CAA 

section 502(d). They issue the PSD and title V permits and are 

responsible in the first instance for enforcing the terms of the 

permits. In all these respects, the law that the state and 

local permitting authorities administer is both federal and 

state law. Under certain circumstances, EPA may become 

responsible for permit issuance and enforcement in the first 

instance, but even then, EPA may, and frequently has, delegated 

those duties to a state, in which case, the state implements 

federal law directly. Thus, although the PSD and title V 

programs are federal requirements, for the most part, it is the 

states that implement those programs. For this reason, the 

administrative burdens that the states face in implementing the 

programs are relevant in determining the applicability of the 

“administrative necessity” doctrine.

d. “One-Step-at-a-Time” Doctrine
167

In addition to the “absurd results” and “administrative 

necessity” doctrines, another judicial doctrine supports at 

least part of EPA’s Tailoring Rule, and that is the doctrine 

that agencies may implement statutory mandates one step at a 

time, which we will call the “one-step-at-a-time” doctrine. In 

the notice of proposed rulemaking, we also described this 

doctrine and recent case law applying it. 74 FR 55319 col. 1-3. 

As we noted, that the U.S. Supreme Court recently described the 

doctrine in Massachusetts v. EPA, 549 U.S. 497, 524 (2007), as 

follows: “Agencies, like legislatures, do not generally resolve 

massive problems in one fell regulatory swoop;” and instead they 

may permissibly implement such regulatory programs over time, 

“refining their preferred approach as circumstances change and 

as they develop a more nuanced understanding of how best to 

proceed.” We assume familiarity with our discussion in the 

proposal, but we expand upon it here to review the caselaw in 

greater detail and to highlight certain components of the 

doctrine that are particularly relevant to the Tailoring Rule.

The roots of the doctrine go back at least to the D.C. Circuit’s 

1979 decision in United States Brewers Association, Inc. v. EPA, 

600 F.2d 974 (D.C. Cir. 1979). There, the Court considered a 

challenge to EPA’s guidelines for managing beverage containers, 

which EPA was required to promulgate under the Resource 
168

Conservation and Recovery Act of 1976 (RCRA). RCRA gave EPA one 

year to promulgate the guidelines. EPA promulgated a partial 

set of guidelines, started two others, and was challenged before 

the year was out by petitioners who objected to the initial 

guideline, saying it fell short of the statutory mandate. The 

Court upheld the initial guideline, stating: “Under these 

circumstances we think the question of whether the Agency has 

fully satisfied the mandate of the statute is not fit for 

judicial review at this time, when the Agency, still well within 

the one-year period granted by statute, is deeply involved in 

the process of formulating rules designed to carry out the 

congressional mandate. The Agency might properly take one step 

at a time.” States Brewers Association, Inc. v. EPA, 600 F.2d 

at 982.

The Court addressed the doctrine at greater length in 

National Association of Broadcasters v. FCC, 740 F.2d 1190, 

1209-14 (D.C. Cir. 1984). There, the Court noted that under 

certain statutory schemes, step-by-step agency action might not 

be authorized; but the Court emphasized that when it is 

authorized, it may offer significant benefits; and the Court 

went on to delineate some of the circumstances under which its 

use is justified. In that case, the Court held that Federal 

Communications Commission (FCC) acted reasonably in making a 
169

spectrum allocation decision that granted direct broadcast 

satellite service priority use of a gigahertz (GHz) band in 5-

years time, and - although acknowledging that fixed service 

users that were, at that time, using that band, would have to 

relocate to other bands – in postponing the details of the fixed 

service relocation to future proceedings. The Court described 

in some detail “[t]he circumstances under which ... [an] agency 

may defer resolution of problems raised in a rulemaking,” as 

follows: 

The requisite judgment is in essence a pragmatic one. 

In an ideal world, of course, agencies would act only after 

comprehensive consideration of how all available 

alternatives comported with a well-defined policymaking 

objective, and in some circumstances, statutes indeed 

mandate that agencies proceed by only such a course .... But 

administrative action generally occurs against a shifting 

background in which facts, predictions, and policies are in 

flux and in which an agency would be paralyzed if all the 

necessary answers had to be in before any action at all 

could be taken .... We have therefore recognized the 

reasonableness of [an agency’s] decision to engage in 

incremental rulemaking and to defer resolution of issues 

raised in a rulemaking even when those issues are “related”

to the main ones being considered .... At the same time, [an 

agency] cannot ‘restructure [an] entire industry on a 

piecemeal basis’ through a rule that utterly fails to 

consider how the likely future resolution of crucial issues 

will affect the rule’s rationale ....

Drawing a line between the permissible and the 

impermissible in this area will generally raise two 

questions. First the agency will likely have made some 

estimation, based upon evolving economic and technological 

conditions, as to the nature and magnitude of the problem 

it will have to confront when it comes to resolve the 

postponed issue. With regard to this aspect of the 
170

agency’s decision, as long as the agency’s predictions 

about the course of future events are plausible and flow 

from the factual record compiled, a reviewing court should 

accept the agency’s estimation .... Second, once the nature 

and magnitude of the unresolved issue is determined, the 

relevant question is whether it was reasonable, in the 

context of the decisions made in the proceeding under 

review, for the agency to have deferred the issue to the 

future. With respect to that question, postponement will 

be most easily justified when an agency acts against a 

background of rapid technical and social change and when 

the agency’s initial decision as a practical matter is 

reversible should the future proceedings yield drastically 

unexpected results. In contrast, an incremental approach 

to agency decision making is least justified when small 

errors in predictive judgments can have catastrophic 

effects on the public welfare or when future proceedings 

are likely to be systematically defective in taking into 

account certain relevant interests.... 

740 F.2d at 1210-11 (citations omitted).

In City of Las Vegas v. Lujan, 891 F.2d 927 (D.C. Cir. 

1989), the Court suggested that one component of upholding 

partial agency compliance with a statutory directive is evidence 

that the agency was on track for full compliance. There, the 

Court upheld the Department of Interior’s decision to list the 

population of desert tortoises living north and west of the 

Colorado River (the “Mojave” population) as endangered species, 

but not the nearby population living south and east of the river 

(the “Sonoran” population). The agency explained that the 

Mojave population faced certain threats that the Sonoran 

population did not, and the Court found nothing to fault in that 
171

reasoning. The Court added: “Since agencies have great 

discretion to treat a problem partially, we would not strike 

down the listing if it were a first step toward a complete 

solution, even if we thought it ‘should’ have covered both the

Mojave and Sonoran populations.” City of Las Vegas v. Lujan, 

891 F.2d 927, 935 (D.C. Cir. 1989) (footnote omitted). 

In Grand Canyon Air Tour Coalition v. F.A.A., 154 F.3d 455 

(D.C. Cir. 1998), the D.C. Circuit added another component to 

the “one-step-at-a-time” doctrine: While reiterating that 

“ordinarily, agencies have wide latitude to attack a regulatory 

problem in phases and that a phased attack often has substantial 

benefits,” id. at 471, the Court went on to uphold partial 

agency action even when that action was long-delayed. There, 

the relevant statute was the Overflights Act, which required the 

Federal Aviation Administration (FAA) to reduce aircraft noise 

from sightseeing tours in Grand Canyon National Park, and 

established the goal of “substantial restoration of natural 

quiet and experience of the park.” The statute required the 

agency to develop a plan to implement the statutory requirements 

within 120 days after enactment, and report to Congress within 2

years after the date of the plan as to the plan’s success. In 

fact, the FAA did not develop, through rulemaking, a plan until 

ten years after enactment, and when it did, it acknowledged that 
172

the plan was only a partial one, and that it would need two more 

rules and another ten years to meet the statutory goal of 

substantial restoration. Although recognizing that the 

Overflights Act did not establish an explicit timetable for 

meeting the statutory goal, the Court stated that “[t]he 

language of the Overflights Act does manifest a congressional 

concern with expeditious agency action,” and described the 

agency’s action variously as “tardy,” “undeniably slow,” and 

“slow and faltering.” Id. at 476-77. Even so, the Court upheld 

the FAA’s action against different challenges from appellants 

and intervenors that (i) the agency acted unreasonably in not 

promulgating a complete plan to meet the statutory goal, instead 

of promulgating just the first step; and (ii) the agency acted 

unreasonably in not waiting until it had a complete plan before 

promulgating the first step. The Court stated: “We agree that 

it would be arbitrary and capricious for an agency simply to 

thumb its nose at Congress and say – without any explanation –

that it simply does not intend to achieve a congressional goal 

on any timetable at all....,” but went on to emphasize that the 

FAA’s rule was the first of three that the agency assured would 

achieve the statutory goal. The Court cited City of Las Vegas 

v. Lujan, discussed previously, for the proposition that “a 

court will not strike down agency action ‘if it were a first 
173

step toward a complete solution.’” Grand Canyon Air Tour 

Coalition v. F.A.A., 154 F.3d 455, 477-78 (D.C. Cir. 1998).30

e. Consistency of Doctrines with Chevron Framework

Although the formation of the “absurd results,” 

“administrative necessity,” and “one-step-at-a-time” doctrines 

pre-date the Chevron two-step analysis for construing statutes 

that Congress has authorized an agency to administer, we believe 

that the doctrines can be considered very much a part of that

analysis, and courts have continued to apply them post-Chevron.

Under Chevron Step 1, an agency must determine whether “Congress 

has directly spoken to the precise question at issue.” If so, 

“the court, as well as the agency, must give effect to the

unambiguously expressed intent of Congress.” However, if “the 

statute is silent or ambiguous with respect to the specific 

issue, the question for the court is whether the agency’s answer 

is based on a permissible construction of the statute.” 

Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-42 (1984).

Thus, Step 1 under Chevron calls for determining

congressional intent for the relevant statutory directive on the 

 

30 For other cases, see Arizona Public Service Co. v. EPA, 

562 F.3d 1116, 1125-26 (10th Cir. 2009); General American 

Transp. Corp. v. ICC, 872 F.2d 1048, 1058 (D.C. Cir. 1989); 

Hazardous Waste Treatment Council v. EPA, 861 F.2d 277, 287 

(D.C. Cir. 1988); Western Union International, Inc. v. FCC, 725 

Fl2d 732, 754 (D.C. Cir. 1984).
174

specific issue presented. To determine Congress’s intent, the 

agency must look first to the statutory terms in question, and 

generally interpret them according to their literal meaning, 

within the overall statutory context, and perhaps with reference 

to the legislative history. If the literal meaning of the 

statutory requirements is clear then, absent indications to the 

contrary, the agency must take it to indicate congressional 

intent and must implement it. Even if the literal meaning of 

the statutory requirements is not clear, if the agency can 

otherwise find indications of clear congressional intent, such 

as in the legislative history, then the agency must implement 

that congressional intent.

The D.C. Circuit has indicated that the “absurd results” 

doctrine fits into the Chevron Step 1 analysis in the following 

way: Recall that in the cases in which the courts have invoked 

this doctrine, the literal meaning of the statutory requirements 

has been clear, but has led to absurd results. This can occur 

when the literal meaning, when applied to the specific question, 

conflicts with other statutory provisions, contradicts 

congressional purpose as found in the legislative history – and, 

in particular, undermines congressional purpose – or otherwise 

produces results so illogical or otherwise contrary to sensible 

public policy as to be beyond anything Congress would reasonably 
175

have intended. See United States v. Ron Pair Enterprises, 489 

U.S. 235, 242-43 (1989); Griffin v. Oceanic Contractors, Inc., 

458 U.S. 564, 571 (1982).

Under these circumstances, the agency must not take 

the literal meaning to indicate congressional intent. As 

the D.C. Circuit has explained, “where a literal reading of 

a statutory term would lead to absurd results, the term 

‘simply has no plain meaning ... and is the proper subject of 

construction by the EPA and the court.’” American Water 

Works Assn v. EPA, 40 F.3d 1266, 1271 (D.C. Cir. 1994) 

(quoting Chemical Manufacturers’ Association v. NRDC, 470 

U.S. 116, 126 (1985)). Under these circumstances, if the 

agency can find other indications of clear congressional 

intent, then the agency must implement that intent. See 

United States v. Ron Pair Enterprises, 489 U.S. 235, 242-43 

(1989). This may mean implementing the statutory terms, 

albeit not in accordance with their literal meaning, but in 

a way that achieves a result that is as close as possible 

to congressional intent. As the D.C. Circuit said in Mova 

Pharm. Corp. v. Shalala, 140 F.3d 1060 (D.C. Cir. 1998):

The rule that statutes are to be read to 

avoid absurd results allows an agency to 

establish that seemingly clear statutory language 

does not reflect the “unambiguously expressed 

intent of Congress,” ... and thus to overcome the 
176

first step of the Chevron analysis. But the 

agency does not thereby obtain a license to 

rewrite the statute. When the agency concludes 

that a literal reading of a statute would thwart 

the purposes of Congress, it may deviate no 

further from the statute than is needed to 

protect congressional intent .... [T]he agency 

might be able to show that there are multiple 

ways of avoiding a statutory anomaly, all equally 

consistent with the intentions of the statute’s 

drafters .... In such a case, we would move to the 

second stage of the Chevron analysis, and ask 

whether the agency’s choice between these options 

was “based on a permissible construction of the 

statute.” Otherwise, however, our review of the 

agency’s deviation from the statutory text will 

occur under the first step of the Chevron

analysis, in which we do not defer to the 

agency’s interpretation of the statute.

Id. at 1068 (quoting Chevron U.S.A. Inc. v. NRDC, 467 U.S. 

837, 842, 843 (1984) (citations omitted)).

The “administrative necessity” doctrine is not as well 

developed as the “absurd results” doctrine, so that the courts 

have not had occasion to explicitly describe how the doctrine 

fits into the Chevron analytical framework. However, we think 

that a reasonable approach, in line with the D.C. Circuit’s 

approach to the “absurd results” doctrine as just described, is 

as follows: Recall that under the “administrative necessity” 

doctrine, an agency is not required to implement a statutory 

provision in accordance with the literal requirements when doing 

so would be impossible, but the agency must nevertheless 
177

implement the provision as fully as possible. Placed in the 

context of the Chevron framework, we think that that the 

“administrative necessity” doctrine is based on the premise that 

inherent in the statutory design is the presumption that 

Congress does not intend to impose an impossible burden on an 

administrative agency. See Alabama Power v. Costle, 636 F.2d 

323, 357 (D.C. Cir. 1980) (describing the “administrative 

necessity” approach as one of the “limited grounds for the 

creation of exemptions [that] are inherent in the administrative 

process, and their unavailability under a statutory scheme 

should not be presumed, save in the face of the most unambiguous 

demonstration of congressional intent to foreclose them”). 

Therefore, if the literal meaning of a statutory directive 

would impose on an agency an impossible administrative burden, 

then that literal meaning should not be considered to be 

indicative of congressional intent. Rather, congressional 

intent should be considered to achieve as much of the statutory 

directive as possible. As a result, the agency must adopt an 

approach that implements the statutory directive as fully as 

possible. This is consistent with the D.C. Circuit’s holding in 

Mova Pharm. Corp that if congressional intent is clear, but the 

plain meaning of a statute does not express that intent, then 

the agency must, under Chevron Step 1, select an interpretation 
178

that most closely approximates congressional intent. Mova 

Pharm. Corp, 140 F.3d at 1068.

31

The “one-step-at-a-time” doctrine fits into the Chevron

framework in much the same manner that the “administrative 

necessity” doctrine does. That is, inherent in the statutory 

design is the presumption that Congress intended an agency, 

under certain circumstances, to implement the statutory 

requirements in a one-step-at-a-time fashion, as long as the 

agency stays on a path towards full implementation. 

Under all of the circumstances described previously, 

congressional intent is clear – whether it is indicated by the 

plain language or otherwise – and as a result, the agency must 

follow that intent under Chevron Step 1. On the other hand, the 

agency may determine that congressional intent on the specific 

issue is not clear. In these cases, the agencies should proceed 

to Chevron Step 2 and select an interpretation or an application 

that is a permissible construction of the statute. This 

situation generally occurs when the statutory provisions are 

ambiguous or silent as to the specific issue, and there are no 

other indications of clear congressional intent. In addition, 

 

31 We recognize that we described the relationship between 

the Chevron framework and the “administrative necessity” 

doctrine somewhat differently in the proposal, 74 FR 55312, and 

that, after further analysis, we are refining our view of that 

relationship as described previously.
179

in some cases in which the literal meaning of the statutory 

provision, when applied to the specific question, leads to an 

absurd result – and, therefore, the statutory provision should 

be considered not to have a plain meaning – there may be no 

other indications of clear congressional intent. Under all 

these circumstances, the agency is authorized, under Chevron

Step 2, to develop and implement a construction of the statute 

that the courts will uphold as long as it is reasonable.

As noted previously, the D.C. Circuit, has pointed out that 

this situation may also occur when the literal language leads to 

an absurd result, and, in attempting to implement congressional 

intent, the agency is “able to show that there are multiple ways 

of avoiding a statutory anomaly, all equally consistent with the 

intentions of the statute’s drafters .... In such a case, we 

would move to the second stage of the Chevron analysis, and ask 

whether the agency’s choice between these options was ‘based on 

a permissible construction of the statute.’” Mova Pharm. Corp,

140 F.3d at 1068. As the U.S. Supreme Court has recently said, 

although in a context different than “absurd results,” “In the 

end, the interpretation applied by EPA "governs if it is a 

reasonable interpretation of the statute - not necessarily the 

only possible ... interpretation, nor even the interpretation 
180

deemed most reasonable by the courts." Entergy Corp. v. 

Riverkeeper, Inc., 129 S.Ct. 1498. 1505 (2009).

As a related matter, although the courts have described 

Chevron Step 2 as requiring that the agency’s policy be “a 

permissible construction of the statute,” see Mova Pharm. Corp,

140 F.3d at 1068 (quoting Chevron, 467 U.S. at 842-43), if the 

statutory requirements cannot be read literally because doing so 

would produce “absurd results,” then the agency’s policy need 

not be completely consistent with those particular requirements. 

The policy must still, in order to be upheld, be consistent with 

Congress’s actions, but those actions should be considered to 

afford the agency broad discretion considering that both the 

statutory terms cannot be considered dispositive and underlying 

congressional intent is not clear. As the U.S. Supreme Court 

has recently said, although in a context different than “absurd 

results,” “ In the end, the interpretation applied by the agency

governs if it is a reasonable interpretation of the statute -

not necessarily the only possible ... interpretation, nor even the 

interpretation deemed most reasonable by the courts." Entergy 

Corp. v. Riverkeeper, Inc., 129 S.Ct. 1498. 1505 (2009).

There is another aspect of the “administrative necessity” 

doctrine worth noting in this context: The doctrine applies 

when (i) a literal application of the statutory directive to the 
181

case at hand is impossible for the agency to administer; and 

(ii) even so, either Congress clearly intended the statutory 

directive to apply to the case at hand or, if Congress did not 

clearly intend that, then the agency reasonably construes the 

statute to apply the statutory directive to the case at hand. 

In contrast, if Congress did not intend the statutory directive 

to apply to the case at hand, or if congressional intent is 

uncertain and the agency considers another approach to be 

reasonable, then the “administrative necessity” doctrine would 

not apply. As a result, the agency would not be required to 

implement the statutory directive to the case at hand at all, 

much less in a more administrable fashion.

f. Interconnectedness of the Legal Doctrines

Although we believe that each of the “absurd results,” 

“administrative necessity,” and “one-step-at-a-time” doctrines

provide independent support for our action, we also believe that 

in this case, the three doctrines are intertwined and form a 

comprehensive basis for EPA’s tailoring approach. As just 

discussed, each of the three doctrines is tied into the Chevron

analytical framework because each is designed to give effect to 

underlying intent. As discussed previously, each of the three 

doctrines comes into play in this case because a literal reading 

of the PSD and title V applicability provisions results in 
182

insurmountable administrative burdens. Those insurmountable 

administrative burdens - along with the undue costs to sources -

must be considered “absurd results” that would undermine 

congressional purpose for the PSD and title V programs. Under 

the “absurd results” doctrine, EPA is authorized not to 

implement the applicability provisions literally – that is, not 

to implement them as applying on the January 2, 2011 date that 

PSD and title V are triggered to all GHG sources at or above the 

statutory thresholds - but instead to tailor them in a manner 

consistent with congressional intent. That means applying the 

PSD and title V requirements through a phase-in approach to as 

many sources as possible and as quickly as possible, starting 

with the largest sources, as EPA does with this Tailoring Rule,

32 

at least to a certain point. By the same token, the 

insurmountable administrative burdens bring into play the 

“administrative necessity” doctrine, under which EPA is, again, 

authorized not to implement the applicability provisions 

literally, but instead to apply them in a manner consistent with 

administrative resources. This also means phasing them in 

through the approach in the Tailoring Rule. Finally, the “one-

 

32 As discussed later, EPA may, in future rulemaking, make 

a final determination that under the “absurd results” doctrine, 

Congress did not intend for EPA to apply PSD to very small 

sources, that is, those, with emissions at or near the 100/250 

tpy statutory levels.
183

step-at-a-time” doctrine, which authorizes incremental action by 

agencies to implement statutory requirements under certain 

circumstances, provides further support for the phased tailoring 

approach in the Tailoring Rule.

g. Application of Chevron Approach

The Chevron analytical approach, and the three legal 

doctrines at issue here, apply to this action in the following 

manner: To reiterate, for convenience, the statutory provisions 

at issue: Congress, through the definition of “major emitting 

facility,” applied the PSD program to include (i) “any ... 

stationary sources of air pollutants which emit or have the 

potential to emit, one hundred [or, depending on the source 

category, two hundred fifty] tons per year or more of any air 

pollutant,” CAA sections 165(a), 169(1); and (ii) and such 

sources that undertake a physical or operational change that 

“increases the amount of any air pollutant emitted” by such 
184

sources, CAA sections 165(a), 169(2)(C), 111(a)(4).33 Similarly, 

Congress, through the definition of “major source,” specified 

that the title V program includes “any stationary facility or 

source of air pollutants which directly emits, or has the 

potential to emit, one hundred tons per year or more of any air 

pollutant.” CAA sections 502(a), 501(2)(B), 302(j). EPA, 

through long-established regulatory action, in the case of PSD, 

and long-established interpretation, in the case of title V, has 

interpreted these definitions so that they apply only with 

respect to air pollutants that are subject to regulation under 

the CAA. 

For each of these applicability provisions, the approach 

under Chevron is as follows: Under Chevron Step 1, we must 

determine whether Congress expressed an intention on the 

specific question, which is whether the PSD or title V

applicability provisions apply to GHG sources. Said 

differently, the specific question is whether, in the case of 

PSD, Congress intended that the definitions of “major emitting 

 

33 A physical or operational change is treated as a 

“modification” that is subject to PSD if it either “increases 

the amount of any air pollutant emitted” by the source or 

“results in the emission of any air pollutant not previously 

emitted.” For convenience, unless otherwise indicated, when we 

refer to changes that “increase[] the amount of any air 

pollutant emitted,” we mean both to those types of changes and 

changes that “result[] in the emission of any air pollutant not 

previously emitted.”
185

facility” and “modification” apply, respectively, to all GHG 

sources that emit at least 100 or 250 tpy or GHGs and to all 

physical or operational changes by major emitting facilities 

that “increase[] the amount” of GHGs; and, in the case of title 

V, whether the definition of “major source” applies to all GHG 

sources that emit at least 100 tpy GHGs.

To determine intent, we must first examine the terms of the 

statute in light of their literal meaning. Here, the literal

reading of each provision covers GHG sources. For PSD, a GHG 

source that emits at least 100 or 250 tpy GHGs literally

qualifies as “stationary source [] of air pollutants which 

emit[s] or ha[s] the potential to emit, one hundred [or two 

hundred fifty] tons per year or more of any air pollutant 

[subject to regulation under the CAA].” CAA section 169(1). 

For modifications, a physical or operational change that 

increases the amount of GHG emissions qualifies as a 

“modification” because it “increases the amount of any air 

pollutant emitted” by the source. Similarly, for title V, a GHG 

source that emits at least 100 tpy GHGs literally qualifies as 

“any stationary facility or source of air pollutants which 

directly emits, or has the potential to emit, one hundred tons 

per year or more of any air pollutant [subject to regulation 

under the CAA].” CAA sections 502(a), 501(2)(B), 302(j). 
186

Although each definition is clear that it applies to GHG 

sources as a general matter, applying each definition in 

accordance with its literal meaning to all GHG sources at the 

specified levels of emissions and at the present time – in 

advance of the development of streamlining methods and greater 

permitting authority expertise and resources - would create 

undue costs for sources and impossible administrative burdens 

for permitting authorities. These results are not consistent 

with other provisions of the PSD and title V requirements, and 

are inconsistent with – and, indeed, undermine – congressional 

purposes for the PSD and title V provisions. Accordingly, under 

the “absurd results” doctrine, neither the PSD definition of 

“major emitting facility” or “modification” nor the title V 

definition of “major source,” should be applied literally to all 

GHG sources, and therefore none should be considered to have a 

literal meaning with respect to its application to all GHG 

sources.

In analyzing the provisions of each definition more 

closely, we believe that each has four terms, any one of which 

could be considered not to have its literal meaning, in this 

respect. Specifically, each provision includes (i) the term 

“any ... source,” or “a stationary source,” and that term could be 

considered not to refer literally to all of the GHG sources; 
187

(ii) either the term “two hundred fifty tons per year” or “100 

tons per year,” or the term “increases the amount,” and those 

terms could be considered not to refer literally to the tonnage 

amount of emissions from all of the GHG sources; (iii) the term 

“any air pollutant,”34 and that term could be considered not to 

refer literally to the emissions from all of the GHG sources; 

and (iv) the term “subject to regulation under the CAA” (which 

we have interpreted “any air pollutant” to include), and that 

term could be considered not to refer literally to the emissions 

from all of the GHG sources. As long as any one of those four

terms may be considered not to have its literal meaning as 

applied to GHG sources, then the definition as a whole – again, 

for PSD, the terms “major emitting facility” or “modifications,” 

and for title V, the term “major source” – cannot be considered 

to apply literally to GHG sources. Because we read the terms 

together, as integral parts of each definition as a whole, we do 

not think that the choice of which of those four terms within 

each definition cannot be considered to apply literally to GHG 

sources has substantive legal effect. In other words, we 

believe that any one of these terms, or all of them together as 

 

34 We do not believe that this term is ambiguous with 

respect to the need to cover GHG sources under either the PSD or 

title V program, only with respect to what sources of GHG should 

be covered under the circumstances presented here.
188

part of each definition as a whole, should be considered not to 

apply literally in the case of GHG sources.

Having determined that each definition does not have a 

literal meaning with respect to the applicability of PSD or 

title V applies to all GHG sources, we must next inquire as to 

whether Congress has nevertheless expressed an intent on that 

question through other means. We discuss the statutory terms 

and legislative history of the PSD and title V provisions in 

more detail later, but for now it suffices to say that on the 

issue of whether PSD and title V apply to GHG sources, we 

believe that congressional intent is clear, and that is to apply 

PSD and title V to GHG sources generally. We believe that this 

intent is clear from the broad phrasing of the applicability 

provisions – as noted earlier, the definitions apply by their 

terms to GHG source generally, even though the definitions 

should not be applied literally to all GHG sources - the fact 

that the various components of the PSD and title V programs can 

be readily applied to GHG sources, and the fact that the two 

programs can readily accommodate at least some GHG sources. As 

a result, we believe that as a matter of Chevron Step 1, PSD and 

title V generally apply to GHG sources. Our previous regulatory 

action defining the applicability provisions made this clear, 

and we do not reopen this issue in this rulemaking. Moreover, 
189

even if this long-established regulatory position were not 

justifiable based on Chevron step 1 – on the grounds that in 

fact, congressional intent on this point is not clear -- then we 

believe that this position, that the statutory provisions to 

apply PSD and title V generally to GHG sources, was justified 

under Chevron step 2.

35

On the issue of how to apply PSD to GHG sources, including 

the specific threshold levels and the timing, we believe that 

Congress could be considered to have expressed a clear intent

that GHG sources be included in the PSD program at as close to 

the statutory thresholds as possible, and as quickly as 

possible, and at least to a certain point, all as consistent 

with the need to assure that the PSD program does not impose 

undue costs on sources or undue administrative burdens on the 

permitting authorities. Under this view, EPA would be required 

at Chevron Step 1 to adopt the Tailoring Rule because, by 

phasing in PSD applicability, it most closely gives effect to 

Congress’s intent. Under these circumstances, EPA is authorized 

 

35 In this preamble and the response to comments document we 

fully address arguments that commenters and others have 

presented about congressional intent and coverage of GHGs. We 

do so to be fully responsive, even though we believe that this 

is a settled matter for which the time for judicial review has 

past. 
190

to exercise its expert judgment as to the best approach for 

phasing in the application of PSD to GHG sources.

Even so, we recognize that it could be concluded that on 

the issue of how to apply PSD to GHG sources, congressional 

intent is unclear. Under these circumstances, EPA has the 

discretion at Chevron Step 2 to adopt the Tailoring Rule because 

it is a reasonable interpretation of the statutory requirements

(remaining mindful that the applicability requirements cannot be 

applied literally). Under the Tailoring Rule, EPA seeks to 

include as many GHG sources in the permitting programs at as 

close to the statutory thresholds as possible, and as quickly as

possible, although we recognize that we ultimately may stop the 

phase-in process short of the statutory threshold levels.

As for title V, we believe that taken together, the various 

statutory requirements and statements in the legislative history 

do not evidence a clear congressional intent for how title V is 

to be applied to GHG sources. As discussed later, the relevant 

title V requirements and statements in legislative history 

differ from PSD, not least because they include provisions that 

concern empty permits that point in different directions. As a 

result, here, too, EPA has the discretion at Chevron Step 2 to 

adopt the Tailoring Rule as a reasonable interpretation of the 

statutory requirements. Alternatively, even if the statute does 
191

express a clear intent as to title V that, similar to PSD, title 

V requirements must be phased in as closely to the statutory 

threshold as possible and as quickly as possible, this Tailoring 

Rule is consistent with that intent. 

It should also be noted that although EPA has concluded 

that applying the PSD and title V applicability provisions 

literally in the case of GHG sources would produce “absurd 

results” and therefore is not required, this conclusion has no 

relevance for applying other CAA requirements – such as the 

requirements concerning endangerment and contribution findings 

under CAA section 202(a)(1) or emission standards for new motor 

vehicles or new motor vehicle engines under CAA section 202 - to 

GHGs or GHG sources. EPA’s conclusions with respect to the PSD 

and title V applicability requirements are based on the specific 

terms of those requirements, other relevant PSD and title V 

provisions, and the legislative history of the PSD and title V 

programs.

Within the context of the Chevron framework, the 

“administrative necessity” doctrine applies as follows: Under 

the doctrine, Congress is presumed to intend that the PSD and 

title V applicability requirements be administrable. Here, 

those applicability requirements, if applied to GHG sources in 

accordance with their literal meaning, would be impossible to 
192

administer. Accordingly, under Chevron Step 1, it is consistent 

with congressional intent that EPA and the permitting 

authorities be authorized to implement the applicability 

requirements in a manner that is administrable, that is, through 

the tailoring approach. 

As for the “one-step-at-a-time” doctrine, we believe it

applies within the Chevron framework in conjunction with the 

“absurd results” and “administrative necessity” doctrines. As 

we discuss elsewhere, the PSD and title V applicability 

provisions by their terms require that sources at or above the 

100/250 tpy thresholds comply with PSD and title V requirements 

at the time those requirements are triggered, which is when GHGs 

become subject to regulation. Therefore, if the literal meaning 

of the applicability provisions as applied to GHG sources were 

controlling – that is, if it reflected congressional intent - it 

would foreclose use of the one-step-at-a-time doctrine to 

implement a phase-in approach. However, the literal meaning is 

not controlling because - in light of the absurd results, 

including the insurmountable administrative burdens, that would 

result from the literal meaning - congressional intent is not to 

require the application of the PSD and title V requirements to 

all GHG sources at or above the statutory thresholds at the time 

that GHGs become subject to regulation. Instead, as described 
193

previously, we consider congressional intent for the 

applicability provisions, as applied to GHG sources, either (i) 

to be clear that PSD and title V should be phased in for GHG 

sources as quickly as possible, or (ii) to be unclear, so that 

EPA may reasonably choose to phase PSD and title V in for those 

sources in that manner. Under either view, congressional intent 

for PSD and title V applicability to GHG sources accommodates 

the “one-step-at-a-time” approach. 

4. The PSD and Title V Programs

Having discussed both the factual underpinnings and, 

immediately above, the legal underpinnings for our tailoring 

approach, we now discuss the PSD and title V programs 

themselves, including, for each program, the key statutory 

provisions, their legislative history, and the relevant 

regulations and guidance documents through which EPA has

implemented the provisions. We start with the PSD program.

a. The PSD program

(1) PSD Provisions

Several PSD provisions are relevant for present purposes 

because of the specific requirements that they establish and the 

window that they provide into congressional intent. These 

provisions start with the applicability provisions, found in CAA 

sections 165(a) and 169(1), which identify the new sources 
194

subject to PSD, and CAA section 111(a)(4), which describes the 

modifications of existing sources that are subject to PSD. CAA 

section 165(a) provides:

No major emitting facility on which construction 

is commenced after August 7, 1977, may be constructed 

in any area to which this part applies unless—

(1) a permit has been issued for such proposed 

facility in accordance with this part setting forth 

emission limitations for such facility which conform 

to the requirements of this part;

(2) the proposed permit has been subject to a 

review in accordance with this section ..., and a public 

hearing has been held with opportunity for interested 

persons including representatives of the Administrator 

to appear and submit written or oral presentations on 

the air quality impact of such source, alternatives 

thereto, control technology requirements, and other 

appropriate considerations;

...

(4) the proposed facility is subject to the best 

available control technology for each pollutant 

subject to regulation under this chapter emitted from, 

or which results from, such facility .... 

The term "major emitting facility" is defined, under CAA 

section 169(1) to include:

... stationary sources of air pollutants which emit, or 

have the potential to emit, one hundred tons per year 

or more of any air pollutant from [28 listed] types of 

stationary sources. ... Such term also includes any 

other source with the potential to emit two hundred 

and fifty tons per year or more of any air pollutant. 

This term shall not include new or modified facilities 

which are nonprofit health or education institutions 

which have been exempted by the State.

As for modification of existing sources, CAA section 
195

169(1)(C) provides that the term "construction," as used in CAA 

section 165(a) (the PSD applicability section) "includes the 

modification (as defined in section 111(a)(4)) of any source or 

facility." Section 111(a)(4), in turn, provides: 

The term "modification" means any physical change in, or 

change in the method of operation of, a stationary source 

which increases the amount of any air pollutant emitted by 

such source or which results in the emission of any air 

pollutant not previously emitted.

As interpreted by EPA regulations, these provisions, taken 

together, provide that new stationary sources are subject to PSD 

if they emit at the 100/250-tpy thresholds air pollutants that 

are subject to EPA regulation, and that existing stationary 

sources that emit such air pollutants at the 100/250-tpy 

thresholds are subject to PSD if they undertake a physical or 

operational change that increases their emissions of such air 

pollutants by any amount.

Other provisions of particular relevance are the 

requirements for timely issuance of permits. The permitting 

authority must “grant[] or den[y] [any completed permit 

application] not later than one year after the date of filing of 

such completed application.” CAA section 165(c). 

In addition, the PSD provisions articulate “the purposes of 

[the PSD program],” which are to balance environmental 

protection and growth. CAA section 160. One of the purposes, 
196

in subsection (1), is specifically “to protect public health and 

welfare,” and another, in subsection (3), is “to insure that 

economic growth will occur in a manner consistent with the 

preservations of existing clean air resources.” 

The PSD provisions also include detailed procedures for 

implementation. Most relevant for sources of GHG are the 

provisions that the proposed permit for each source must be the 

subject of a public hearing with opportunity for interested 

persons to comment, CAA section 165(a)(2), and each source must 

be subject to BACT, as determined by the permitting authority on 

a source-by-source basis, CAA section 165(a)(4), 169(3). 

(2) PSD Legislative History

The legislative history of the PSD provisions, enacted in 

the 1977 CAA Amendments, makes clear that Congress was largely

focused on sources of criteria pollutants: primarily sulfur 

dioxide, PM, NOx, and carbon monoxide (CO). This focus is 

evident in the basic purpose of the PSD program, which is to 

safeguard maintenance of the NAAQS. See S 95-127 (95th Cong., 1st

Sess.), at 27.

Congress designed the PSD provisions to impose significant 

regulatory requirements, on a source-by-source basis, to 

identify and implement BACT and, for criteria pollutant, to also 

undertake certain studies. Congress was well aware that because 
197

these requirements are individualized to the source, they are 

expensive. Accordingly, Congress designed the applicability 

provisions (i) to apply these requirements to industrial sources 

of a certain type and a certain size – sources within 28 

specified source categories and that emit at least 100 tpy - as 

well as all other sources that emit at least 250 tpy, and, by 

the same token, (ii) to exempt other sources from these 

requirements.36 

Although Congress required that CAA requirements generally 

apply to “major emitting facilities,” defined as any source that 

emits or has the potential to emit 100 tpy of any pollutant, 

Congress applied PSD to only sources at 100 tpy or higher in 28 

specified industrial source categories, and at 250 tpy or more 

in all other source categories. This distinction was 

deliberate: According to Sen. McClure, Congress selected the 28 

source categories after reviewing an EPA study describing 190 

industrial source categories. 122 Cong. Rec. 24521 (July 29, 

1976) (statement by Sen. McClure).

Congress also relied on an EPA memorandum that identified 

 

36

 Coverage of modifications by the PSD program was 

addressed by a technical amendment which added a cross reference 

in section 169 to section 111. The legislative history of this 

provision is scant and there is no suggestion that Congress 

would have contemplated sweeping in large number of changes from 

smaller sources through the addition of this provision.
198

the range of industrial categories that EPA regulated under its 

regulations that constituted the precursor to the statutory PSD 

program,37 and listed both the estimated number of new sources 

constructing each year and the amount of pollution emitted by 

the “typical plant” in the category. The memorandum was 

prepared by B.J. Steigerwald, Director of the Office of Air 

Quality Planning and Standards and Roger Strelow, EPA’s 

Assistant Administrator for Air and Waste Management 

(“Steigerwald-Strelow memorandum”). The Steigerwald-Strelow 

memorandum makes clear that the 100 tpy cut-off for the 28 

listed sources categories, and the 250 tpy cut-off for all other 

sources, was meaningful; that is, there were a large number of 

sources below those cut-offs that Congress explicitly 

contemplated would not be included in the PSD program. Id. at 

24548-50.

Consistent with this, the legislative history on the Senate 

side also specifically identified certain source categories that 

Senators believed should not be covered by PSD. The Senate bill 

language limited PSD to sources of 100 tpy or more in 28 listed 

source categories, and to any other categories that the 

 

37 Beginning in 1974, EPA implemented a program that required sources of certain NAAQS 

pollutants seeking to construct in attainment or unclassifiable areas to implement emission 

controls for the purpose of preventing deterioration in the ambient air quality in those areas. 

This program was the precursor to the PSD program Congress enacted in 1977.
199

Administrator might add. Sen. Muskie stated that the Senate 

bill excluded “houses, dairies, farms, highways, hospitals, 

schools, grocery stores, and other such sources.” 123 Cong. 

Rec. 18021 (June 8, 1977) (statement of Sen. Muskie). Sen. 

McLure’s list of excluded source categories were “[a] small 

gasoline jobber, or a heating plant at a community college, 

[which] could have the potential to emit 100 tons of pollution 

annually.” 122 Cong. Rec. 24548-49 (July 29, 1976) (statement 

of Sen. McClure). The Senate Committee Report included a 

comparable list, and in describing it, concisely articulated the 

cost-conscious basis for the line-drawing: “[the PSD] procedure 

... must include an effective review-and-permit process. Such a 

process is reasonable and necessary for very large sources, such 

as new electrical generating plants or new steel mills. But the 

procedure would prove costly and potentially unreasonable if 

imposed on construction of storage facilities for a small 

gasoline jobber or on the construction of a new heating plant at 

a junior college, each of which may have the potential to emit 

100 tons of pollution annually.” S. Rpt. 95-127 at 96-97.

The enacted legislation differs from the Senate bill by 

replacing the authorization to EPA to include by regulation 

source categories in addition to the listed 28 source categories 

with an inclusion of all other sources if they exceed 250 tpy, 
200

and with an authorization for the states to exempt hospitals and 

educational institutions. But Congress’s overall intention 

remains clear, as the D.C. Circuit described in Alabama Power: 

"Congress's intention was to identify facilities which, due to 

their size, are financially able to bear the substantial 

regulatory costs imposed by the PSD provisions and which, as a 

group, are primarily responsible for emissions of the 

deleterious pollutants that befoul our nation's air....[With 

respect to] the heating plant operating in a large high school 

or in a small community college ... [w]e have no reason to believe 

that Congress intended to define such obviously minor sources as 

'major' for the purposes of the PSD provision."38 636 F.2d at 

353-54. 

A particularly important indication of congressional intent 

to limit the PSD program it was designing to larger sources 

comes in considering the emissions profile of the small-sized 

boilers. Congress focused closely on identifying which sources 

with emissions in excess of 100 tpy should not be subject to PSD 

even though they are subject to CAA requirements generally. But 

 

38 Note that although Congress specifically authorized the 

states to exempt "nonprofit health or education institutions" 

from the definition of "major emitting facility," this statement 

by the D.C. Circuit should be taken as the Court's view that 

Congress did not design PSD to cover sources of the small size 

described.
201

Congress viewed a large set of sources as emitting below 100 tpy 

and therefore not included in the PSD program. Chief among 

these sources, in terms of absolute numbers of sources, were 

small boilers. The Steigerwald-Strelow memorandum identified 

two categories of these boilers, differentiated by size. The 

first ranges in size from 10 to 250 x 106 Btu per hour (Btu/hr), 

and has a “typical plant” size of 107 Btu/hr, with “BACT 

emissions from typical plant” of 53 tpy, and a total of 1,446 

sources in the category. The second category ranges in size 

from 0.3 to 10 x 106 Btu/hr, and has a “typical plant” size of 

1.3 x 106 Btu/hr, with “BACT emissions from typical plant” of 2 

tpy, and a total of 11,215 sources in the category. The 

memorandum discusses these two categories in the context of 

explaining which source categories exceed a size of 100 tpy -

and therefore would be subject to PSD if a 100 tpy threshold 

were set - by stating, “Fortunately, most truly small boilers 

and typical space heating operations would not be covered.” 122 

Cong. Rec. 24549 (July 29, 1976). 

The legislative history also provides a window into the 

scope of the program that Congress anticipated and related 

administrability concerns. According to the Steigerwald-Strelow 

memorandum, the number of new sources each year whose “BACT 

emissions from typical plant” exceed 100 for the 28 listed 
202

source categories and 250 for all other source categories is 

less than 100 per year. Although the Steigerwald-Strelow 

memorandum does not attempt to estimate the number of 

modifications, it appears that based on this information, 

Congress had reason to expect the total size of the PSD program 

to be measured in the hundreds or perhaps thousands of permits 

each year. A program of this size would be manageable by EPA 

and the permitting authorities. 

(3) PSD Regulatory History: Regulations Concerning the 

Definition of “Major Stationary Source”

For present purposes, the regulatory history of the PSD 

program is most noteworthy because it shows that since the 

inception of the program following the 1977 CAA Amendments, EPA 

has interpreted the statutory PSD applicability provisions to 

apply more narrowly – to any air pollutant subject to regulation

– than their literal meaning (“any air pollutant”). EPA’s 

initial rulemaking implementing the PSD program, which was 

proposed and finalized in 1977-1978, made explicit that the 

entire PSD program applied to only pollutants regulated under 

the Act. 43 FR 26380, 26403, 26406 (June 19, 1978) 

(promulgating 40 CFR 51.21(b)(1)(i)). In 1979-1980, EPA revised 

the PSD program to conform to Alabama Power v. Costle, 636 F.2d 

323 (D.C. Cir. 1980). 44 FR 51924 (September 5, 1979) (proposed 
203

rule); 45 FR 52676 (August 7, 1980) (final rule). In this 

rulemaking, EPA did not disturb the pre-existing provisions that 

limited the applicability of the PSD program to regulated air 
204

pollutants.39 In 1996 EPA proposed, and in 2002 finalized, 

a set of amendments to the PSD provisions that included 

revisions to conform with the 1990 CAA Amendments, which, in 

relevant part, exempted hazardous air pollutants (HAPs) from 

PSD, under CAA section 112(b)(6). See 61 FR 38250 (July 23, 

1996), 67 FR 80186 (December 31, 2002). In the preamble to the 

final rule, EPA noted that based on a request from a commenter, 

EPA was amending the regulations to “clarify which pollutants 

are covered under the PSD program.” EPA accomplished this by 

promulgating a definition for “regulated NSR pollutant,” which 

listed categories of pollutants regulated under the Act, and by 

substituting that defined term for the phrase “pollutants 

regulated under the Act” that was previously used in various 

parts of the PSD regulations. 67 FR 80240. The definition of 

 

39 As noted elsewhere in this notice, in Alabama Power, the 

D.C. Circuit noted that the definition of “major emitting 

facility” under CAA section 169(1) could apply to air pollutants 

not regulated under other provisions of the Act, and discussed 

the contrast of this broad definition to the narrower 

application of the BACT provisions. 636 F.2d at 352-53 & n. 60. 

In its rulemaking notices responding to Alabama Power, EPA 

discussed at length certain issues, such as the applicability of 

NSR to pollutants emitted below the “major” thresholds, that are 

based on the reference in “major emitting facility” to “any air 

pollutant.” However, throughout its discussion, EPA interpreted 

that reference as “any regulated air pollutant,” again without 

specifically acknowledging the difference or without 

acknowledging the above-noted statements in Alabama Power. See

45 FR 52710 – 52711. EPA did not indicate that it had received 

comments on this issue. 
205

“regulated NSR pollutant” includes several categories of 

pollutants (including, in general, NAAQS pollutants and 

precursors, pollutants regulated under CAA section 111 NSPS, 

Class I or II substances regulated under CAA title VI) and a 

catch-all category, “[a]ny pollutant that otherwise is subject 

to regulation under the Act.” E.g., 40 CFR 52.21(b)(50). As in 

the previous rulemakings, EPA did not address the difference 

between the definition of “major emitting facility” and its 

regulatory approach or indicate that it had received comments on 

this issue. While the definition of “major modification” in the 

PSD regulations has changed over time with respect to how 

emission increases are calculated, the regulatory history with 

respect to pollutant coverage parallels that of major emitting 

facility. 

We recount this regulatory history as background 

information. We are not reconsidering or reopening these 

regulations to the extent they interpret the definition of 

“major emitting facility” and “modification” narrowly to be 

limited to pollutants subject to regulation under the Act.

b. Title V Program

Having reviewed the key statutory provisions, their 

legislative history, and the relevant administrative 
206

interpretations for the PSD program, we now do the same for the 

title V program. 

(1) Title V Provisions

The key title V provisions for present purposes start with 

the applicability provisions, which are found in CAA sections 

502(a), 501(2)(B), and 302(j). These provisions provide that it 

is unlawful for any person to operate a "major source" without a 

title V permit, section 502(a), and define a "major source" to 

include “any major stationary facility or source of air 

pollutants which directly emits, or has the potential to emit, 

one hundred tons per year or more of any air pollutant.” CAA 

sections 501(2)(B) and 302(j). As noted elsewhere, these 

provisions, taken together and as interpreted by EPA, provide 

that stationary sources are subject to title V if they emit at 

the 100-tpy threshold air pollutants that are subject to EPA 

regulation.

In addition, although title V does not have a set of 

provisions describing its purpose, it is clear from its 

provisions and its legislative history, discussed later, that 

its key goal is to gather into one permitting mechanism the CAA

requirements applicable to a source and impose conditions 

necessary to assure compliance with such requirements, and 

thereby promote the enforceability of CAA requirements 
207

applicable to the covered sources. Section 503(b)(1) requires 

that the source’s permit application contain a compliance plan 

describing how the source will ”comply with all applicable 

requirements” of the CAA, and section 504(a) requires that 

“[e]ach permit issued under [title V] shall include ... such ...

conditions as are necessary to assure compliance with applicable 

requirements of [the Act].” See H.R. Rep. No. 101–490, at 351 

(1990) (“It should be emphasized that the operating permit to be 

issued under this title is intended by the Administration to be 

the single document or source of all of the requirements under 

the Act applicable to the source.”).

Importantly, title V is replete with provisions designed to 

make the permitting process as efficient and smooth-running as 

possible, including the expeditious processing of permit 

applications and the timely issuance of permits. Section 503(c) 

requires that “the permitting authority shall approve or 

disapprove a completed application ... and shall issue or deny the 

permit, within 18 months after the date of receipt thereof ....” 

Section 502(b)(6) requires the permitting authority to develop 

“adequate, streamlined, and reasonable procedures for 

expeditiously determining when applications are complete, for 

processing such applications, for public notice ... and for 

expeditious review of permit actions, including ... judicial 
208

review in State court of the final permit action by [specified 

persons].” Section 502(b)(7) includes a “hammer” provision 

designed to reinforce timely permit issuance, which is that the 

permitting authority’s program must include:

To ensure against unreasonable delay by the permitting 

authority, adequate authority and procedures to 

provide that a failure of such permitting authority to 

act on a permit application or permit renewal 

application (in accordance with the time periods 

specified in [CAA] section 503 ...) shall be treated as 

a final permit action solely for purposes of obtaining 

judicial review in State court of an action brought by

any person referred to in paragraph (6) to require 

that action be taken by the permitting authority on 

such application without additional delay.

Section 502(b)(8) requires the permit program to include 

“[a]uthority and reasonable procedures consistent with the need 

for expeditious action by the permitting authority on permit 

applications and related matters, to make available to the 

public [certain permit-related documents]”. Section 502(b)(9) 

requires a permit revision to incorporate requirements 

promulgated after issuance of the permit, but only if the permit 

is for a major source and has a term of 3 or more years 

remaining. In addition, the revision must occur “as 

expeditiously as practicable.” Section 502(b)(10) requires the 

permit program to include operational flexibility provisions 

that “allow changes within a permitted facility ... without 

requiring a permit revision, if the changes are not 
209

modifications ... and ... do not exceed the emissions allowable 

under the permit ....”

In addition, title V includes a comprehensive and finely 

detailed implementation schedule that mandates timely issuance 

of permits while building in EPA and affected state review, 

public participation, and timely compliance by the source with 

reporting requirements. Following the date that sources become 

subject to title V, they have 1 year to submit their permit 

applications. CAA section 503(c). As noted previously, the 

permitting authority then has 18 months to issue or deny the 

permit. CAA section 503(c). Permitting authorities must 

provide an opportunity for public comment and a hearing. CAA 

section 502(b)(6). If the permitting authority proposes to 

issue the permit, the permitting authority must submit the 

permit to EPA, and notify affected states, for review. CAA 

section 505(a)(1). EPA then has 45 days to review the permit 

and, if EPA deems it appropriate, to object to the permit. CAA 

section 505(b)(1). If EPA does object, then the permitting 

authority must, within 90 days, revise it to meet the 

objections, or else EPA becomes required to issue or deny the 

permit. CAA section 505(c). If EPA does not object, then, 

within 60 days of the close of the 45-day review period, any 

person may petition EPA to object, and EPA must grant or deny 
210

the petition within 60 days. CAA section 505(b)(2). If a 

permit is issued, it must include a permit compliance plan, 

under which the permittee must “submit progress reports to the 

permitting authority no less frequently than every 6 months,” 

and must “periodically (but no less frequently than annually) 

certify that the facility is in compliance with any applicable 

requirements of the permit, and [] promptly report any 

deviations from permit requirements to the permitting 

authority.” CAA section 503(b).

(2) Title V Legislative History

The legislative history of title V, enacted by Congress in 

the 1990 CAA Amendments, indicates the scope of the program that 

Congress expected: Congress expected the program to cover some 

tens of thousands of sources, which would approximate the scope 

of the permit program under the Clean Water Act. The Senate 

Committee on Environment and Public Works stated:

EPA estimates that the new permit requirements 

will cover about 8,200 major sources that emit 100 

tons per year or more of criteria pollutants (which 

are regulated under SIPs). In addition, many smaller 

sources are (or, as EPA promulgates additional 

regulations, will be) covered by new source 

performance standards under section 111 of the Act, 

hazardous air pollutant standards under section 112 of

the Act, and nonattainment provisions of this 

legislation. By comparison, under the Clean Water 

Act, some 70,000 sources receive permits, including 

more than 16,000 major sources. Although many air 

pollution sources have more emission points than water 
211

pollution sources, the additional workload in managing 

the air pollution permit system is estimated to be 

roughly comparable to the burden that States and EPA 

have successfully managed under the Clean Water Act.

S. Rep. 101–228, at 353 (1990).40 Sen. Mitchell, the Senate 

Majority Leader, stated that he expected “over 10,000 permits 

[to] ... be issued under this program.” 136 Cong. Rec. S3239-03 

(March 27, 1990). Others in Congress had similar estimates. 

See, e.g., 136 Cong. Rec. S3166 (“thousands and thousands of 

permit applications ... will be required to be submitted”) 

(statement of Sen. Nickles).

Furthermore, the legislative history indicates that 

Congress did not contemplate that large numbers of very small 

sources would be subject to title V’s requirements.41 This 

becomes clear by reviewing the legislative history of a 

companion piece of legislation to the operating permits 

 

40 The House Committee on Energy and Commerce acknowledged 

that it was “uncertain about the magnitude of permit 

applications likely to be submitted under the bill initially and 

thereafter in each State or to EPA,” H. Rep. 101-490 p. 346. 

41 Title V can apply to certain small businesses in some 

circumstances. Under CAA sections 502(a) and 501(2)(A), title V 

applies to major sources of HAPs, which includes sources that 

may emit as little as 10 tpy of a single HAP, and which may 

includes some dry cleaners and other small businesses. In 

addition, under CAA section 502(a), title V applies to area 

sources subject to standards under CAA sections 111 or 112 (or 

required to have a PSD or nonattainment NSR permit), unless the 

Administrator exempts those sources from title V because 

compliance would be impracticable, infeasible, or unnecessarily 

burdensome.
212

provisions that Congress enacted into CAA section 507, which is 

the “Small business stationary source technical and 

environmental compliance assistance program.” CAA section 507. 

Under this provision, sources that, among other things, “are not 

major stationary source[s]” and that emit less than 50 tpy of 

any regulated pollutant, as well as less than 75 tpy or all 

regulated pollutants, are eligible for assistance under CAA 

section 507. CAA section 507(c)(1). The House Committee Report 

described this provision – including what types of sources it 

expected this provision to benefit - as follows: 

New section [507] is a small source/small 

business provision added by the Committee. It seeks 

to help small businesses to comply with the problems 

that are likely to occur under the Act as amended by 

this bill. For purposes of this section, small 

businesses or small emitters are defined as sources 

that are emitting 100 tons or less per year and that 

have a number of employees that would qualify them for 

assistance from the Small Business Administration 

(SBA). As we look to the future of environmental 

protection under the Act, we take special steps here 

to ensure that it is possible for these small 

businesses to comply with minimum hassle and in 

recognition of the problems that are unique to them.

Such small businesses include printers, furniture 

makers, dry cleaners, and millions of other small 

businesses in this country. 

House Committee Report, H.R. 101-590, at 354. In this manner, 

the House Committee Report made clear that it expected “millions 

of ... small businesses” - including “printers, furniture makers, 
213

dry cleaners” and many others - to benefit from the CAA section 

507 small source/small business program, but Congress did not 

expect them to become subject to the operating permit 

requirements of title V because their emissions fell below 100 

tpy, which is, in general, the threshold for title V 

applicability as a “major source.”

The legislative history of title V confirms that Congress 

viewed a principal purpose of title V as providing a vehicle to 

compile the requirements applicable to the source. As the 

report of the House Committee on Energy and Commerce (“House 

Committee Report”) stated, “It should be emphasized that the 

operating permit to be issued under this title is intended by 

the Administration to be the single document or source of all of 

the requirements under the Act applicable to the source.” H.R. 

Rep. No. 101–490, at 351 (1990). Combined with the source’s 

reporting requirements, this compilation of applicable 

requirements would facilitate public awareness of a source’s 

obligations and compliance and would facilitate compliance and 

enforcement.

On the Senate side, Sen. Chafee, one of the floor managers 

of the bill, made a similar point:

The permits will serve the very useful function 

of gathering and reciting in one place - the permit 

document itself - all of the duties imposed by the 
214

Clean Air Act upon the source that holds the permit.

This would clearly be an improvement over the present 

system, where both the source and EPA must search 

through numerous provisions of state implementation 

plans and regulations to assemble a complete list of 

requirements that apply to any particular plant....

Once these permits are in place, plant managers 

will be better able to understand and to follow the 

requirements of the Clean Air Act. At the same time, 

EPA will be better able to monitor how well each plant 

is complying with those requirements. This is a 

highly sensible approach for all concerned.

136 Cong. Rec. S213 (January 24, 1990) (statement of Sen. 

Chafee). Sen. Lieberman made a similar statement. 136 Cong. 

Rec. 3172-73 (March 26, 1990) (statement of Sen. Lieberman). 

Thus, a central purpose of the title V permit program is to 

compile all the requirements applicable to the source into a 

single place, the permit. Implicit in this purpose is that the 

sources subject to title V will have applicable requirements to 

be compiled. As Sen. Chafee directly stated, “[T]he vast 

majority of these permit applications will ... , in all 

likelihood, only codify the existing requirements of the 

applicable State implementation plan.” 136 Cong. Rec. S2720

(March 20, 1990) (statement of Sen. Chafee). 

More broadly, the legislative history also indicates 

congressional concern about the costs of permitting for small 

businesses, and a determination to minimize those costs to the 

extent possible. This concern is reflected in several 
215

provisions of title V. For example, section 502(a) authorizes 

EPA to exempt all or part of a source category – except for any 

major source - from the title V permit program if EPA “finds 

that compliance with [title V] requirements is impracticable, 

infeasible, or unnecessarily burdensome on such categories.” 

Similarly, the permit fee provisions include a presumptive 

minimum fee amount, but authorize an exemption from that 

presumptive amount upon a showing that a lesser amount will meet 

overall fee requirements, CAA section 502(b)(3)(B)(iv). One of 

the drafters of this provision, Rep. Wyden, explained that its 

purpose was to preserve the flexibility of states to impose 

lower fees of small businesses: 

I note that the provision on fees allows 

reductions for small sources where appropriate. The 

state has some flexibility, under the general permit 

fee provisions, to adjust fee levels for any source so 

long as the average fee charged meets the statutory 

minimum.

136 Cong. Rec. H12884 (Oct. 26, 1990) (statement of Rep. Wyden). 

See, e.g., 136 Cong. Rec. H2559 (May 21, 1990) (statement of 

Rep. Wyden) (discussing need to “help small businesses through 

the air permit labyrinth”).

The legislative history also indicates that Congress was 

deeply concerned both about the need not to burden sources 

generally with undue costs and to assure the administrability of 
216

the title V program, and as a result, was determined to make the 

program as smooth-running as possible. These goals are 

reflected in many of the title V requirements, as discussed 

previously. See, e.g., CAA section 502(b)(6) (requiring 

“adequate, streamlined, and reasonable procedures for 

expeditiously determining when applications are complete, for 

processing such applications, for public notice ... and for 

expeditious review of permit actions); CAA section 502(b)(7) 

(includes a “hammer” provision designed to reinforce timely 

permit issuance); CAA section 502(b)(9)-(10) (limiting 

circumstances under which permit revision is required; requiring 

revision to occur “as expeditiously as practicable;” including 

operational flexibility provisions). 

The legislative history confirms that these provisions were 

designed to reduce costs to sources and promote 

administrability. The “Chafee-Baucus Statement of Senate 

Managers” for the bill explained the purpose of the CAA section 

502(b)(6) requirement for “[a]dequate, streamlined, and 

reasonable procedures for expeditious[]” permit actions as 

follows: 

[M]uch concern has been expressed that this new 

permitting process will unduly delay the proper 

functioning of many sources, and we intend to mitigate 

any delay by directing that the process be 

expeditious.
217

In addition to this general directive for 

expeditious processing, we mandate in new section 503 

that permitting authorities approve or reject permit 

applications within certain specified time periods 

following filing. In this fashion, we have taken 

explicit steps to protect against undue delays.

136 Cong. Rec. S16941 (statement of Sen. Chafee). The same 

statement explained that the permit revision procedures of CAA 

section 502(b)(9) reflect a –

careful effort to ensure that the permit program works 

effectively and efficiently. Succinctly, this 

provision accommodates two competing concerns. On the 

one hand, it is important to ensure that permit 

requirements remain up-to-date as the provisions of 

the Clean Air Act are developed and new requirements 

are imposed. On the other hand, it also is important 

to be sure that we do not reduce the permit program to 

a shambles by requiring sources to engage in a 

continuous process of revising their permits as these 

new requirements are imposed.

136 Cong. Rec. 16942 (Oct. 27, 1990) (Chafee-Baucus 

statement of Senate Managers) (statement of Sen. Chafee).

In addition, these concerns were at the bottom of the 

following statement by Sen. Chafee, in which he described how 

the bill’s drafters had revised it in response to a concern by 

industry that an earlier version of the bill would have put 

undue costs on industry: 

We have also heard concerns from industry that S. 

1630 would burden sources unduly by requiring them to 

submit-along with their permit applications-plans 

explaining how they intend to comply with all 

requirements of the Clean Air Act that apply to them.
218

But, Mr. President, we emphatically do not intend 

to burden industry with preparation and submission of 

unnecessary compliance plans. The substitute 

clarifies that any compliance plans would address only 

those matters by which the sources would comply with 

new requirements imposed by this act as it is finally 

signed into law. These plans would not need to 

address compliance with any existing Clean Air Act 

requirements, unless the source is in violation of 

those requirements.

136 Cong. Rec. S2107 (March 5, 1990) (statement of Sen. Chafee). 

As another indication of congressional concern over 

administrability, Congress recognized that at the beginning of 

the program, large numbers of permit applications might 

overwhelm the permitting authorities. To protect against this, 

Congress included in CAA section 503(c) a phase-in schedule for 

permitting authorities to act on the initial set of permit 

applications. Under 503(c), permitting authorities were not 

required to act on the initial set of permit applications within 

18 months after it received the application, but rather could 

act on one-third of them on an annual basis over a 3-year 

period. Sen. Chafee, in describing an early version of this 

provision – which would have allowed permitting authorities to 

phase in the submission of permit applications – explained that 

its purpose was “to avoid a logjam of permit applications[,] ... 

ensure that [regulatory] gridlock can be avoided, and [ensure] 

that the permitting process will work with a minimum of 
219

disruption and delay.” 136 Cong. Rec., S2106 (March 5, 1990) 

(statement of Sen. Chafee).

(3) Title V Regulatory History

As with PSD, for present purposes, the regulatory history 

of the title V program is most noteworthy because it shows that 

beginning shortly after the inception of the program following 

the 1990 CAA Amendments, EPA has interpreted the statutory title 

V applicability provisions to apply more narrowly – to any air 

pollutant subject to regulation – than their literal meaning 

(“any air pollutant”). As discussed previously, title V applies 

to any “major source,” defined, as relevant here, under CAA 

sections 501(2)(B) and 302(j), as “any stationary facility or

source of air pollutants which directly emits, or has the 

potential to emit, one hundred tons per year or more of any air 

pollutant ....” EPA’s regulations mirror the CAA definitional 

provisions. 40 CFR 70.2.

However, since 1993, EPA has interpreted the applicability 

provisions more narrowly. At that time, which was shortly after 

title V was enacted, EPA issued a guidance document making clear 

that it interprets this requirement to apply to sources of 

pollutants “subject to regulation” under the Act. Memorandum 

from Lydia N. Wegman, Deputy Director, Office of Air Quality 

Planning and Standards, U.S. EPA, “Definition of Regulated Air 
220

Pollutant for Purposes of Title V” (Apr. 26, 1993) (Wegman 

Memorandum). The interpretation in this memorandum was based 

on: (1) EPA’s reading of the definitional chain for “major 

source” under title V, including the definition of “air 

pollutant” under section 302(g) and the definition of “major 

source” under 302(j); (2) the view that Congress did not intend 

to require a variety of sources to obtain title V permits if 

they are not otherwise regulated under the Act (see also CAA 

section 504(a), providing that title V permits are to include 

and assure compliance with applicable requirements under the 

Act); and (3) consistency with the approach under the PSD 

program. 

While the specific narrow interpretation in the Wegman 

Memorandum of the definition of “air pollutant” in CAA section 

302(g) is in question in light of the holding in Massachusetts 

v. EPA, 549 U.S. 497, 533 (2007) (finding this definition to be 

“capacious”), we believe that the overall rationale for our

interpretation of the applicability of title V remains sound. 

EPA continues to maintain its interpretation, consistent with 

CAA sections 302(j), 501, 502 and 504(a), that the provisions 

governing title V applicability for “a major stationary source” 

can only be triggered by emissions of pollutants subject to 

regulation. This interpretation is based primarily on the 
221

purpose of title V to collect all regulatory requirements 

applicable to a source and to assure compliance with such 

requirements, see, e.g., CAA section 504(a), and on the desire 

to promote consistency with the approach under the PSD program.

In the Tailoring Rule notice of proposed rulemaking, EPA 

acknowledged the Wegman Memorandum and affirmed the memorandum’s 

continued viability, stating that “EPA continues to maintain 

this interpretation.” 74 FR 55300, col. 3, fn. 8; see also 75 

FR 17022-23 (Interpretive Memo reconsideration).

As with PSD, we recount this regulatory history as 

background information, and we are not reconsidering or reopening this interpretation of the definition of “major source” 

narrowly to be limited to pollutants subject to regulation under 

the Act.

5. Application of the “Absurd Results” Doctrine for the PSD 

Program

Having reviewed the factual background, legal doctrines, 

and the key components of the PSD and title V programs, we now 

turn towards interpreting the PSD and title V requirements in 

accordance with the Chevron framework, accounting for the 

applicable legal doctrines. We begin with the “absurd results” 

doctrine, and apply it first to the PSD requirements.
222

In this action, we finalize, with some refinements, the 

“absurd results” basis we proposed. Specifically, we are 

revising our regulations to limit PSD applicability to GHG 

emitting sources by revising the regulatory term, “regulated NSR 

pollutant,” and although our revised regulations do not accord 

with a literal reading of the statutory provisions for PSD 

applicability, which are incorporated into the definition of 

“major emitting facility” and “major modification,” we have 

concluded that based on the “absurd results” doctrine, a literal 

adherence to the terms of these definitions is not required. 

Even so, we believe Congress did intend that PSD apply to GHG 

sources as a general matter. Further, we may apply PSD to GHG 

sources in a phased-in manner, as we do through the tailoring 

approach, because either congressional intent is clear on that 

issue and the tailoring approach best reflects it, or 

congressional intent is unclear and the tailoring approach is a 

reasonable interpretation of the statute. 

a. Congressional Purpose for the PSD Program

To reiterate, for convenience, CAA section 169(1) defines a 

“major emitting facility” to include “any ... source[] [that] 

emit[s], or ha[s] the potential to emit, [depending on the 

source category], one hundred [or two hundred fifty] tons per 

year or more or more of any air pollutant.” CAA section 169(1); 
223

and a “modification” as any physical or operational change in “a 

stationary source which increases the amount of any air 

pollutant emitted by such source,” CAA section 169(2)(C), 

111(a)(4). We also reiterate that, as discussed above, 

beginning with our initial rulemaking in 1977-1978 to implement 

the PSD program, we have interpreted these definitions more 

narrowly by reading into them the limitation that a source is 

subject to PSD only if the air pollutants in question are 

“subject to regulation under the Act.” 40 CFR 

51.166(b)(49)(iv). EPA is not re-opening this interpretation in

this regulation in this action.

Under the current interpretation of the PSD applicability 

provision, EPA’s recent promulgation of the LDVR will trigger 

the applicability of PSD for GHG sources at the 100/250 tpy 

threshold levels as of January 2, 2011. This is because PSD 

applicability hinges on the definition of “major emitting 

facility,” which, under EPA’s long-standing narrowing 

interpretation, but absent further tailoring, applies PSD to 

sources of any air pollutant subject that is subject to 

regulation under another provision of the CAA. EPA’s 

promulgation of the LDVR means that GHGs will become subject to 

regulation on the date that the rule takes effect, which will be 

January 2, 2011. 
224

But absent tailoring, the January 2, 2011 trigger date for 

GHG PSD applicability will subject an extraordinarily large 

number of sources, more than 81,000, to PSD each year, an 

increase of almost 300-fold. And the great majority of these 

new sources will be small commercial or residential sources. We 

believe that for many reasons, this result is contrary to 

congressional intent for the PSD program, and in fact would 

severely undermine what Congress sought to accomplish with the 

program. As a result, under our Chevron analysis, accounting 

for the “absurd results” doctrine, the statutory definition for 

“major emitting facility” (as interpreted narrowly to include 

“subject to regulation”) should not be read to apply to all GHG 

sources at or above the 100/250 tpy threshold as of the January 

2, 2011 date. Rather, the definitions of “major emitting 

facility” and “modification” should be tailored so that they 

applies to GHG sources on a phased-in basis, with the largest 

sources first, as we describe in this rule.

As explained previously, Chevron Step 1 calls for a 

determination of congressional intent, and the courts consider 

the best indicator of congressional intent to be the plain 

meaning of the statute. However, the U.S. Supreme Court has 

held that the literal meaning of a statutory provision is not 

conclusive “in the ‘rare cases [in which] the literal 
225

application of a statute will produce a result demonstrably at 

odds with the intentions of the drafters’ ... [in which case] the 

intention of the drafters, rather than the strict language, 

controls.” United States v. Ron Pair Enterprises, 489 U.S. 235, 

242 (1989). To determine whether “the intentions of the ...

drafters” differ from the result produced from “literal 

application” of the statutory provisions in question, the courts 

may examine the overall context of the statutory provisions, 

including whether there are related statutory provisions that 

either conflict or are consistent with that interpretation; and 

the legislative history to see if it exposes what the 

legislature meant by the terms in question. In addition, the 

courts may examine whether a literal application of the 

provisions produces a result that the courts characterize 

variously as absurd, futile, strange, or indeterminate, and 

therefore so illogical or otherwise contrary to sensible public 

policy as to be beyond anything Congress would reasonably have 

intended. In such cases, the literal language cannot be said to 

reflect the intention of the drafters, and therefore does not 

control. See United States v. Ron Pair Enterprises, 489 U.S. 

235, 242-43 (1989); Griffin v. Oceanic Contractors, Inc., 458

U.S. 564, 571 (1982).
226

Here, applying the definitions of “major emitting facility” 

and “modification” literally (as EPA has interpreted them more 

narrowly) at the present time -– in the absence of streamlining 

measures or additional permitting authority resources, and 

without tailoring – would be contrary to congressional purpose 

for the PSD provisions, as found in the statutory provisions and 

legislative history, especially in light of the impact from 

applying those definitions literally. Congress established the 

PSD program in large measure because it was concerned that 

around the country, industrial development, which was 

confronting barriers to locating in nonattainment areas (that 

is, areas that do not meet the NAAQS), would attempt to locate 

in clean air areas (that is, attainment areas or unclassifiable 

areas), but that as a consequence, the clean air areas would see 

their air quality deteriorate to the point where they, too, 

would no longer meet the NAAQS. The end result would be the 

spread of environmental and health problems to those formerly 

clean air areas, as well as more barriers to further industrial 

development. With these concerns in mind, Congress designed the 

PSD program to require newly constructing or modifying sources 

in areas with air quality that meets the NAAQS (or that is 

unclassifiable) to analyze their emissions of NAAQS pollutants 

and to implement controls as needed to assure that those 
227

emissions do not significantly deteriorate air quality. Many of 

the PSD requirements, and much of the discussion in the 

legislative history, reflect these aspects of the PSD program. 

E.g., CAA sections 162, 163, 164, 165(a)(3), 165(d)(2), 165(e), 

166; see generally H. Rep. 95-294, 95th Cong., 1st Sess. (1977) 

103-78.

Congress also designed the PSD program to impose controls 

on non-NAAQS pollutants, through the requirement under CAA 

section 165(a)(4) that the source be “subject to the best 

available control technology for each pollutant subject to 

regulation under this chapter emitted from, or which results 

from, such facility.” For example, when Congress enacted the 

PSD provisions in 1977, sources emitting HAPs were required to 

implement BACT for those pollutants, although in the 1990 CAA

Amendments, Congress redesigned CAA section 112, which includes 

the requirements for HAPs, and excluded HAPs from PSD. CAA 

section 112(b)(6).

Congress was keenly aware that the PSD program needed to 

serve two purposes: protect the environment and promote 

economic growth. Congress explicitly identified these two goals 

in the “purposes” section of the PSD provision, CAA section 160, 

and various PSD requirements clearly reflect them. For example, 

to protect economic growth, the PSD program expedites the permit 
228

process to include a 1-year limitation on the time that the 

permitting authority has act on permit applications. To protect 

the environment, in addition to including many provisions that 

focus on NAAQS pollutants, the PSD program requires that the 

preconstruction permit impose emission limits that reflect BACT 

for each pollutant subject to regulation under another CAA 

provision. CAA section 165(a)(4). This BACT provision also 

makes clear, by its terms, that although Congress designed the 

PSD program largely with NAAQS pollutants in mind, Congress also 

intended that sources subject to PSD control the emissions of 

their other pollutants as well. The D.C. Circuit has recognized 

the twin goals of environmental protection and economic 

development that underlie PSD, and has upheld EPA 

interpretations of the PSD program that reflect a balancing of 

those goals. See, e.g., New York v. EPA, 413 F.3d 3, 27 (D.C. 

Cir.), rehearing en banc den. 431 F.3d 801 (2005). 

Congress was also keenly aware that the PSD analyses and 

controls that it was mandating had to be implemented on a 

source-by-source basis, and that this process would be expensive 

for sources. As a result, Congress intended to limit the PSD 

program to large industrial sources because it was those sources 

that were the primary cause of the pollution problems in 

question and because those sources would have the resources to 
229

comply with the PSD requirements. Congress’s mechanism for 

limiting PSD was the 100/250 tpy threshold limitations. Focused 

as it was primarily on NAAQS pollutants, Congress considered 

sources that emit NAAQS pollutants in those quantities generally 

to be the large industrial sources to which it intended PSD to 

be limited.

That Congress paid careful attention to the types and sizes 

of sources that would be subject to the PSD program and designed 

the thresholds deliberately to limit the program’s scope is 

evident from the legislative history. Several Senate floor 

statements and the Committee Report made clear that PSD should 

not apply to small sources. As discussed later, Congress 

scrutinized information that EPA provided as to types and sizes 

of sources, found largely in the Steigerwald-Strelow memorandum. 

Sen. Muskie stated that the Senate bill excluded “houses, 

dairies, farms, highways, hospitals, schools, grocery stores, 

and other such sources.” 123 Cong. Rec. 18021 (June 8, 1977) 

(statement of Sen. Muskie). Sen. McClure stated that PSD should 

be limited to “industrial plants of significant impact,” and 

should exclude ”[a] small gasoline jobber, or a heating plant at 

a community college, [which] could have the potential to emit 

100 tons of pollution annually.” 122 Cong. Rec. 24548-49 (July 

29, 1976) (statement of Sen. McClure). The Senate Committee 
230

Report mirrored Sen. McClure’s statement, and concisely 

articulated the cost-related basis for the line-drawing: “[The 

PSD] procedure ... must include an effective review-and-permit 

process. Such a process is reasonable and necessary for very 

large sources, such as new electrical generating plants or new 

steel mills. But the procedure would prove costly and 

potentially unreasonable if imposed on construction of storage 

facilities for a small gasoline jobber or on the construction of 

a new heating plant at a junior college, each of which may have 

the potential to emit 100 tons of pollution annually.” S. Rpt. 

95-127 at 96-97.

The D.C. Circuit had occasion, in Alabama Power, to 

acknowledge this legislative history. "Congress's intention was 

to identify facilities which, due to their size, are financially 

able to bear the substantial regulatory costs imposed by the PSD 

provisions and which, as a group, are primarily responsible for 

emissions of the deleterious pollutants that befoul our nation's 

air." Alabama Power, 636 F.2d at 353. The Court added, “Though 

the costs of compliance with [the PSD] requirements are 

substantial, they can reasonably be borne by facilities that 

actually emit, or would actually emit when operating at full 

capacity, the large tonnage thresholds specified in section 

169(1).”. Id. at 354.
231

It is not too much to say that applying PSD requirements 

literally to GHG sources at the present time – in the absence of 

streamlining or increasing permitting authority resources and 

without tailoring the definition of “major emitting facility” or 

“modification” - would result in a program that would have been 

unrecognizable to the Congress that designed PSD. Congress 

intended that PSD be limited to a relatively small number of 

large industrial sources. Without phasing in PSD and title V 

applicability to GHG sources so as to allow the development of 

streamlining methods and increases in permitting authority 

resources, the PSD program would expand by January 2, 2011 from 

the current 280 sources per year to almost 82,000 sources, 

virtually all of which would be smaller than the sources 

currently in the PSD program and most of which would be small 

commercial and residential sources. Until EPA could develop 

streamlining methods, all of the sources that would become newly 

subject to PSD – whether they be larger or smaller sources, 

whether industrial or commercial/residential sources - would 

have to undergo source-specific BACT determinations for their 

GHG emissions, as well as their emissions of conventional 

pollutants in amounts in excess of the significance levels. We 

estimate that the commercial and residential sources – the great 

majority of which are small business - would each incur, on 
232

average, almost $60,000 in PSD permitting expenses. This result 

would be contrary to Congress’s careful efforts to confine PSD 

to large industrial sources that could afford these costs.

A closer look at the legislative history confirms the view 

that Congress did not expect PSD to apply to large numbers of 

small sources, including commercial and residential sources, and 

instead expected the 100/250 tpy thresholds to limit PSD’s 

applicability to larger sources. As noted previously, Congress 

relied on an EPA memorandum – the Steigerwald-Strelow memorandum 

- that identified the range of industrial categories that EPA 

regulated under its program that constituted the precursor to 

the statutory PSD program, and listed both the estimated number 

of new sources constructing each year and the amount of 

pollution emitted by the “typical plant” in the category. The 

Steigerwald-Strelow memorandum makes clear that the 100 tpy cutoff for the 28 listed sources categories, and the 250 tpy cutoff for all other sources, would exclude from PSD a large number 

of sources. 122 Cong. Rec. 24548-50 (July 29, 1976). However, 

virtually all, if not all, of the sources in half the 28 source 

categories emit CO2 in quantities that equal or exceed the 100 

tpy threshold, and almost all of the sources in the remaining 

categories emit CO2 in quantities that equal or exceed the 100 

tpy threshold. Therefore, applying the “major emitting 
233

facility” definition to GHG sources, in the absence of 

streamlining methods and without tailoring, would, as a 

practical matter, vitiate much of the purpose of the 100 
234

tpy cut-off for industrial sources.42

Most telling, in this regard, is the small-sized boilers, 

which the Steigerwald-Strelow memorandum describes, in terms of 

size, pollutants emitted, and numbers of sources, as follows: 

The memorandum identified two categories of these boilers, 

differentiated by size. The first ranges in size from 10 to 250 

x 106 Btu/hr, and has a “typical plant” size of 107 Btu/hr, with 

“BACT emissions from typical plant” of 53 tpy, and a total of 

1,446 sources in that category. The second category ranges in 

size from 0.3 to 10 x 106 Btu/hr, and has a “typical plant” size 

of 1.3 x x 106 Btu/hr, with “BACT emissions from typical plant” 

of 2 tpy, and a total of 11,215 sources in the category. That

memorandum makes clear that EPA did not believe that sources in 

 

42 Specifically, of the 28 source categories under CAA 

section 169(1), information available to EPA indicates that all 

of the sources in the following categories emit at least 100 tpy 

of CO2 annually: fossil-fuel fired steam electric plants of more 

than 250 million Btu per hour heat input, Portland Cement 

plants, primary zinc smelters, iron and steel mill plants, 

primary aluminum ore reduction plants, municipal incinerators 

capable of charging more than 50 tons of refuse per day, nitric 

acid plants, petroleum refineries, lime plants, primary lead 

smelters, fossil-fuel boilers of more than 250 Btus per hour 

heat input. In addition, all but a few kraft pulp mills and 

glass fiber processing plants emit at least 100 tpy CO2 annually. 

Our information is incomplete with respect to the remaining 

source categories, but with the possible exception of petroleum 

storage and transfer facilities with a capacity exceeding three 

hundred thousand barrels, we suspect that virtually all sources 

emit at least 100 tpy CO2 annually. See “Technical Support 

Document for Greenhouse Gas Emissions Thresholds Evaluation”;

Office of Air Quality Planning and Standards; March 29, 2010.
235

these two categories – and especially the smallest one – would 

be subject to PSD under a 100 tpy threshold, by stating, 

“Fortunately, most truly small boilers and typical space heating 

operations would not be covered.” 122 Cong. Rec. 24549 (July 

29, 1976). However, these data and conclusions were all based 

on emissions of NAAQS pollutants, the amounts of which placed 

these boilers well below the PSD threshold limitations. In 

general, most boilers of these small sizes are fired with 

natural gas, and a natural gas boiler greater than 0.5 x 106

Btu/hr emits at least 250 tpy CO2. Therefore, if the CO2 

emissions of these small boilers are considered – as would occur 

by applying the definition of “major emitting facility” to GHG 

sources without tailoring - then most of them would in fact be 

subject to PSD. Again, this result would directly contravene 

Congress’s intention to limit PSD to “industrial plants of 

significant impact.” 122 Cong. Rec. 24548-49 (statement of Sen. 

McClure). 

Perhaps the most compelling reason why applying the PSD 

program to GHG sources without tailoring, and before the 

development of streamlining methods, would be inconsistent with 

congressional intent, is that the resulting program would prove 

unadministrable. Although the legislative history of the PSD 

program does not reveal much explicit congressional focus on
236

administrability issues, the Steigerwald-Strelow Memorandum, 

which identifies the source categories and numbers of sources 

that were before Congress as it considered PSD, suggests that 

the program that Congress fashioned could be expected to cover 

at most a few thousand sources each year. This appears to be 

approximately the size of the program that EPA administered 

before the 1977 CAA Amendments, so that it seems reasonable to 

assume that Congress expected the PSD program it enacted to be 

within EPA’s and the states’ administrative capacities. 

 Moreover, the Alabama Power court stressed the importance 

of administrability concerns: Most importantly, the Court held 

that EPA, in interpreting the “modification” provisions that

apply PSD to physical or operational changes by major emitting 

facilities that “increase the amount of any air pollutant 

emitted,” CAA section 111(a)(4), may “exempt from PSD review 

some emission increases on grounds of de minimis or 

administrative necessity,” and went on to state that in 

establishing the exemption thresholds, “[t]he Agency should look 

at the degree of administrative burden posed by enforcement at 

various de minimis threshold levels.” 636 F.2d at 400,405. In 

addition, the Court based its holding that potential-to-emit for 

purposes of the applicability thresholds should be defined as 

emissions at full capacity with implementation of control 
237

equipment, in part on its view that with this definition, the 

number of sources subject to PSD would be manageable:

Though the costs of compliance with section 165 

requirements are substantial, they can reasonably be 

borne by facilities that actually emit, or would 

actually emit when operating at full capacity, the 

large tonnage thresholds specified in section 169(1). 

The numbers of sources that meet these criteria, as we 

delineate them, are reasonably in line with EPA’s 

administrative capability. 

Alabama Power, 636 F.2d at 354. However, applying PSD to GHG 

sources before streamlining and without tailoring would increase 

the size of the PSD program at least an order of magnitude 

beyond what Congress seems to have expected, which would have 

been far beyond the “administrative capability” that Alabama 

Power described EPA as having.

Beyond this disconnect with congressional expectations, 

what is most important is that the extraordinarily large number 

of permit applications would overwhelm permitting authorities 

and slow their ability to process permit applications to a 

crawl. Our best estimate at present is that permitting 

authorities would need to process almost 82,000 permit 

applications per year, compared to, at most, 800 in the current 

PSD program. The total additional workload, in workhours, for 

PSD permits would be more than 19.5 million more work hours, 

compared to 150,795 work hours for the current PSD program, and 
238

the total additional costs would be over $1.5 billion, compared 

with $12 million for the current PSD program.

At proposal, we noted that the states had estimated that 

the influx of permit applications that would result from 

applying the 250 tpy threshold at actual emissions would, 

without additional resources result in permitting delays of 3

years. In fact, as we noted at proposal, a literal reading of 

the PSD requirements would require their application at the 250 

tpy PTE level, which would result in ten times more permit 

applications than were assumed when the states made the 3-year 

estimate. Further, our current estimates of the numbers of 

sources that would be subject to PSD requirements are about 

twice what we estimated at proposal, as described elsewhere. 

Moreover, our estimate of the number of hours that permitting 

authorities would need to process a permit application from a 

source in the commercial or residential sector – which is, by 

far, the largest single sector – is three and one-half times as 

long as we estimated at proposal. And under a literal reading 

of the PSD applicability provisions as applied to GHG sources, 

the permitting authorities would be required to implement a 

program of this size beginning on January 2, 2011, less than 9

months from now. We received many comments from states and 

industry raising concerns about the cost to sources and 
239

administrative burdens of PSD permitting if the statutory 

threshold were to apply for GHG emissions. One commenter 

estimated a cost of over $5 billion and the dedication of over 

17,000 FTEs to this effort. 

We consider it difficult to overstate the impact that 

applying PSD requirements literally to GHG sources as of January 

2, 2011 – before streamlining or increasing permitting resources 

and without tailoring - would have on permitting authorities and 

on the PSD program, and we are concerned that this impact could 

adversely affect national economic development. The number of 

PSD permits that would be required from such an approach is far 

beyond what the PSD program has seen to date. It is clear 

throughout the country, PSD permit issuance would be unable to 

keep up with the flood of incoming applications, resulting in 

delays, at the outset, that would be at least a decade or 

longer, and that would only grow worse over time as each year, 

the number of new permit applications would exceed permitting 

authority resources for that year. Because PSD is a 

preconstruction program, during this time, tens of thousands of 

sources each year would be prevented from constructing or 

modifying. In fact, it is reasonable to assume that many of 

those sources will be forced to abandon altogether plans to 

construct or modify. As a result, a literal application of the 
240

PSD applicability provisions to GHG sources would slow

construction nationwide for years, with all of the adverse 

effects that this would have on economic development. 

The remedies for this scenario would be for permitting 

authorities to increase their PSD funding by over 100-fold, from 

$12 million to over $1.5 billion, or the development by EPA and 

the permitting authorities of streamlining techniques. But it 

is not possible for permitting authorities to increase their 

funding to those levels in the foreseeable future, partly 

because of the sheer magnitude of those levels and partly 

because of the financial challenges that states currently face. 

And, for the reasons discussed later, although streamlining 

offers genuine promise to improve the manageability of the PSD 

workload, streamlining cannot do so in the very near term and, 

in any event, the extent to which it can do so has not yet come 

into focus. 

So clear are at least the broad outlines of this picture 

that EPA did not receive any substantive comments arguing that 

permitting authorities could in fact administer the PSD program 

with the applicability requirements applied literally to GHG 
241

sources beginning in the very near future.43 Every permitting 

authority that addressed this issue in their comments on the 

proposed Tailoring Rule stated unequivocally that it could not 

administer the PSD program at the statutory levels. To cite a 

few examples (each of which considered both the PSD and title V 

programs together): NACAA, which represents air pollution 

control agencies in 53 states and territories, stated it 

“...agrees with the EPA that immediately attempting to implement 

the PSD and title V programs using the statutory thresholds 

meets the test for invoking the administrative necessity and 

absurd results doctrines.” Similarly, the California Air 

Resources Board stated that it “... concurs with the United 

States, EPA that if more appropriate applicability thresholds 

[as opposed to the statutory thresholds] are not set for GHG it 

will not be administratively possible to implement these [the 

PSD and tile V] permitting programs.” All other state and local 

permitting agencies that commented on the proposed tailoring 

provided similar comments that they would not have the adequate 

staff capacity or resources to be able to successfully

administer their permitting programs with the addition of GHG 

 

43 EPA did receive a smaller number of comments that 

asserted in conclusory fashion that permitting authorities could 

administer the 100/250 tpy levels.
242

emission sources at the statutory thresholds for PSD and title 

V. 

It is the many-year delays in permit issuance and the 

consequent chilling of economic development that provide perhaps 

the clearest indication that applying the PSD applicability 

provisions to GHG sources without tailoring produces absurd 

results. These effects would undermine one of Congress’s 

central purposes in establishing the PSD program, which was to 

promote development in clean air areas by large industrial 

sources (as long as they included environmental safeguards). As 

discussed previously, this goal is manifest in the structure of 

the PSD provisions, and Congress even went so far as to make 

this goal explicit in the purposes section of the PSD 

provisions. 

Moreover, at the present time, there is relatively little 

environmental benefit in subjecting large numbers of small GHG 

sources to the expensive, source-by-source PSD permitting 

requirements. They represent a relatively small share of the 

GHG inventory and the control options available to them, at 

present, are limited. As a result, approaches other than 

source-by-source permitting presently offer more promise for 

generating emissions reductions in an efficient manner. These 

approaches, which may be developed through both federal and 
243

state efforts, include requirements, incentives, and educational 

outreach to promote efficiency improvements to boilers and 

furnaces and energy efficient operations, including, for 

example, weatherization programs. 

For all these reasons, interpreting the definition of 

“major emitting facility” and “modification” literally - that 

is, as EPA has interpreted them more narrowly, but without 

tailoring and before the program requirements can be streamlined 

or permitting authority resources can be increased -– would 

produce results that are not consonant with, and, in fact, would 

severely undermine, Congress’s purpose for the PSD program. 

These results may fairly be characterized as the type of absurd 

results that support our view that the literal terms of the PSD 

applicability provisions do not indicate congressional intent 

for how those provisions should applied to GHG sources.

b. Congressonal Intent for the Applicability Provisions

(1) Congressional Intent for Whether and How PSD Applies to GHG 

Sources

Several of the PSD provisions and statements in the 

legislative history are particularly important in determining 

whether and how the PSD program should apply to GHG sources, as 

discussed elsewhere: 
244

(1)The applicability provisions, under CAA section 165(a) 

and 169(1). These provisions are written broadly, and 

although, as we explain above, they cannot be read 

literally to apply to GHG sources at or above the 

100/250 tpy, they nevertheless can be read to indicate 

that directionally, Congress intended that PSD be 

applied inclusively. 

(2) The various PSD provisions that identify the pollutants 

subject to PSD. Compare, e.g., CAA sections 162, 163, 

164, 165(a)(3), 165(d)(2), 165(e), and 166 (NAAQS 

pollutants) with CAA sections 165(a)(3)(C), 165(a)(4) 

(other pollutants). These provisions indicate that a 

major purpose of the PSD program is to control NAAQS 

pollutants, but that the program also covers non-NAAQS 

pollutants. 

(3) The requirement that permitting authorities act on PSD 

applications within 1 year. CAA section 165(c). This 

provision indicates that Congress anticipated the PSD 

program would be of a size that would allow permitting 

authorities to meet this deadline. 

(4) The purpose provision. CAA section 160. This provision 

makes clear that PSD is designed both to protect public 

health and welfare and to promote economic growth. 
245

(5) In addition, we consider important the legislative 

history indicating the Congress intended PSD to apply to 

large industrial sources because they were the primary 

source of the air pollution problems and they have the 

resources to manage the demands of the PSD permitting 

process; and that, by the same token, Congress expected 

that small sources would not be subject to PSD. The 

legislative history does not specifically mention GHG 

sources. 

Looking at these provisions and the legislative history 

together, we think Congress can be said to have intended that 

the PSD program apply to GHG sources as a general matter. The 

most important indication of congressional intent in this regard 

is the applicability provisions, which provide, in part, that 

PSD applies to (i) “any ... source[ that] emit[s], or ha[s] the 

potential to emit [the specified quantity] of any air 

pollutant,” CAA section 169(1); and (ii) to any such source that 

undertakes a physical or operational change that “increases the 

amount of any air pollutant emitted.” CAA section 169(2)(C), 

111(a)(4). These terms are quite broad, and should be read to 

include GHG sources and GHGs. See Massachusetts v. EPA, 549 

U.S. 497, 533 (2007) (“Because greenhouse gases fit well within 

the Clean Air Act's capacious definition of ‘air pollutant,’ we 
246

hold that EPA has the statutory authority to regulate the 

emission of such gases from new motor vehicles.”). Moreover, 

including GHG sources – under certain circumstances – is 

consistent with the PSD provisions that refer to other 

pollutants, establish the time-frame for acting on PSD 

applications, and establish the overall purpose of the program. 

In addition, including GHG sources – again, under certain 

circumstances - is consistent with the legislative history that 

PSD be limited to sources that cause a meaningful part of the 

air pollution problem and have the resources to manage the PSD 

requirements. No PSD provision explicitly imposes any 

limitation of PSD to large industrial sources, and Congress’s 

reasoning for focusing on large industrial sources – which was 

that these sources are best suited to handle the resource -

intensive analyses required by the PSD program – could extend to 

GHG sources under certain circumstances (that is, large sources 

first, and smaller sources after streamlining methods are 

developed). Similarly, as discussed previously, it is 

reasonable to read into Congress’s intent that the PSD program 

be limited to a size that permitting authorities would be able 

to administer, but it is consistent with that reading to 

recognize that the permitting authorities could take certain 

steps – including adoption of streamlining measures and ramping 
247

up resources – that would allow them to handle a higher volume 

of permitting. Finally, we find nothing in the PSD provisions 

or legislative history that would indicate congressional intent 

to exclude GHG sources. Accordingly, we believe that Congress 

must be said to have intended an affirmative response for 

whether PSD applies to sources of GHGs as a general matter. Our 

previous regulatory action defining the PSD applicability 

provisions made this clear, and we do not reopen this issue in 

this rulemaking. Moreover, even if this long-established 

regulatory position were not justifiable based on Chevron Step 1 

– on the grounds that in fact, congressional intent on this 

point is not clear - then we believe that this position, that 

the statutory provisions to apply PSD to GHG sources in general, 

was justified under Chevron Step 2. 

As to how PSD applies to GHG sources, although, for reasons 

discussed previously, the 100/250 tpy threshold provision, which 

establishes the scope of PSD applicability, should not be read 

as applying literally to GHG sources - and as a result, the 

applicability provision as a whole cannot be said to have a 

plain meaning as to the scope of coverage of GHG sources - we 

believe that the applicability provisions and legislative 

history nevertheless indicate a congressional intent for how PSD 

should apply to GHG sources. That is to apply PSD to as many 
248

sources as possible as quickly as possible, at least to a 

certain point. We believe that this intent can be inferred from 

the inclusiveness of the applicability provision, combined with 

the legislative history that focuses on Congress’s desire to 

include in the PSD program sources that have the resources to 

comply with the requirements and, as the Court in Alabama Power 

recognized, Congress’s concern about administrability. That is, 

at first, PSD may apply to the largest GHG sources because they 

may be expected to have the resources to comply with PSD’s 

requirements and permitting authorities may be expected to 

accommodate those sources; and over time, with streamlining and 

increases in permitting authority resources, PSD may apply to 

more GHG sources. As discussed later, the tailoring approach is 

consistent with congressional intent in this regard.

We recognize the tension between the applicability 

provisions, which are inclusive, and the statements in the 

legislative history that express Congress’s expectation that PSD 

be limited to large industrial sources. At least to a point, 

the applicability provisions and these statements can be 

reconciled by recognizing that the reason why Congress expected 

that PSD would be limited to large industrial sources was that 

Congress recognized that PSD applied on a source-by-source 

basis, that this would be costly to sources, and that only the 
249

large industrial sources could afford those costs. Taking 

certain actions – including streamlining PSD requirements – can 

render PSD more affordable and thereby allow its application to 

smaller sources in a more cost-effective manner. In this way, 

PSD’s inclusive applicability provisions can be reconciled with 

the narrower scope Congress expected, and this is part of the 

reason why we characterize congressional intent as being 

consistent with phasing in the applicability of PSD to GHG 

sources through the tailoring approach.44 

On the other hand, if Congress cannot be said to have 

expressed an intent as to the manner and scope of PSD 

applicability to GHG sources, then, under Chevron Step 2, EPA 

may apply a reasonable interpretation of the applicability 

 

44

 Reconciling the applicability provisions with the 

statements in the legislative history in this manner is also 

consistent with the U.S. Supreme Court’s view that the Clean Air 

Act has inherent flexibility, as it stated in Massachusetts v. 

EPA, 549 U.S. 497, 532 (2007):

While the Congresses that drafted §202(a)(1) might not have 

appreciated the possibility that burning fossil fuels could lead 

to global warming, they did understand that without regulatory 

flexibility, changing circumstances and scientific developments 

would soon render the Clean Air Act obsolete. The broad 

language of §202(a)(1) reflects an intentional effort to confer 

the flexibility necessary to forestall such obsolescence. See

Pennsylvania Dept. of Corrections v. Yeskey, 524 U. S. 206, 212 

(1998) (“[T]he fact that a statute can be applied in situations 

not expressly anticipated by Congress does not demonstrate 

ambiguity. It demonstrates breadth” (internal quotation marks 

omitted)).
250

provisions to determine the scope of coverage of GHG sources 

that is consistent with the statutory requirements. The 

Tailoring Rule is a reasonable interpretation under Chevron Step

2. It is consistent with (1) the applicability provisions, 

recognizing that as we have seen, those provisions cannot be 

applied literally under these circumstances,45 (2) the provisions 

described above concerning which pollutants the PSD provisions 

cover and the timetable for permitting authority action on PSD 

applications; (3) the purpose provisions of PSD, and the 

accompanying legislative history, because it protects public 

health and welfare without inhibiting economic development; and 

(4) the legislative history indicating Congress intended that 

PSD be limited to sources that cause a meaningful part of the 

problem and can manage its requirements, because it will expand 

PSD’s applicability only after streamlining methods and greater 

permitting authority resources will allow for such an expansion 

in an orderly manner.

(2) Criteria for Establishing Phase-in Schedule

 

45 For the reasons discussed above, we believe that Step 2 

of the Chevron framework, which authorizes the exercise of 

agency discretion as long as the agency remains consistent with 

a reasonable construction of the statute, does not require a 

literal construction of the statute in a case such as this one, 

in which the “absurd results” doctrine applies so that the 

statutory requirements cannot be read literally.
251

The specific phase-in schedule under the tailoring approach 

will depend on several things. The first is our progress in 

developing streamlining methods that will render the permitting 

authority workload more manageable by taking some sources off 

the table (through regulations or guidance interpreting PTE), 

and by allowing for more efficient permit processing (through 

general permits and presumptive BACT). At the same time, 

streamlining techniques will lower permitting costs to sources 

or even eliminate some sources’ obligations to obtain permits 

altogether. The second is the time that permitting authorities 

need to ramp up their resources in an orderly and efficient 

manner to manage the additional workload. The third is 

information we have as to the sources’ abilities to meet the 

requirements of the PSD program and the permitting authorities’ 

ability to process permits in a timely fashion. That 

information will be based on the real-world experience the 

permitting authorities will accumulate as they proceed to 

process permit application for the larger GHG sources. 

Thus, under our present approach, we will develop 

streamlining techniques, we expect the permitting authorities to 

ramp up resources in response to the additional demands placed 

upon them in the first two steps, and we will gather real worldinformation about the GHG permitting process; and based on all 
252

that, we will address expanding the PSD program in a step-bystep fashion to include more sources over time. We intend to 

follow this process to establish both the PSD applicability 

thresholds and, as we describe next, the significance levels. 

(3) Criteria for Establishing Significance Levels46

The criteria for establishing the significance levels are 

the same as for establishing the “major emitting facility”

thresholds. As noted previously, under the applicable CAA 

sections, any physical or operational change at a stationary 

source that “increases the amount of any air pollutant emitted 

by such source” or that results in the emission of a new 

pollutant is treated as a “modification” that is subject to PSD 

requirements. Although the CAA, by its terms, treats as an 

“increase” any amount of emissions that is greater than zero, 

the D.C. Circuit held in Alabama Power v. Costle that EPA may 

establish a threshold – called the significance level – on de 

minimis grounds for the amount of any particular pollutant that 

may be increased. 636 F.2d at 400. 

 

46 It should be noted that strictly speaking, we do not, in our 

drafting of the regulatory revisions that are part of this 

rulemaking, establish a significance level for GHG emissions 

based on CO2e. Rather, we establish an applicability criteria 

for determining whether GHGs are subject to regulation with 

respect to the particular source. We explain our approach in 

more detail in the Response to Comments document. Throughout 

this preamble, we refer to this action, for convenience, as a 

significance level.
253

Of particular importance, the Court in Alabama Power

indicated that EPA may rely on administrative considerations to 

establish significance levels. Id. To reiterate, the Court 

held that “EPA does have discretion, in administering the 

statute’s ‘modification’ provision, to exempt from PSD review 

some emission increases on grounds of de minimis or 

administrative necessity.” 636 F.2d at 400. The Court added a 

more detailed exposition of its views in a subsequent part of 

its opinion, where it discussed the BACT provision, under CAA 

section 165(a)(4), and the Court made clear that those views 

applied as well to the “modification” provision. There, the 

Court invalidated an EPA regulation that established a 100- and 

250-tpy exemption from the BACT requirement. Both the BACT 

provision and the modification provision apply by their terms to 

all emissions from a source, but the Court stated that each 

provision must be read to incorporate an exemption based on de 

minimis or administrative considerations, and explained:

We understand that the application of BACT 

requirements to the emission of all pollutants from a 

new facility, no matter how miniscule some may be, 

could impose severe administrative burdens on EPA, as 

well as severe economic burdens on the construction of 

new facilities. But the proper way to resolve this 

difficulty is to define a de minimis standard 

rationally designed to alleviate severe administrative 

burdens, not to extend the statutory 100 or 250-ton 

threshold to a context where Congress clearly did not 

apply it. Just as for the applicability of PSD to 
254

modifications, the de minimis exemption must be 

designed with the specific administrative burdens and 

specific regulatory context in mind. This the Agency 

has failed to do. We do not hold that 100 tons per 

year necessarily exceeds a permissible de minimis

level; only that the Agency must follow a rational 

approach to determine what level of emission is a de 

minimis amount.

A rational approach would consider the 

administrative burden with respect to each statutory 

context: what level of emission is de minimis for 

modification, what level de minimis for application of 

BACT. Concerning the application of BACT, a rational 

approach would consider whether the de minimis

threshold should vary depending on the specific 

pollutant and the danger posed by increases in its 

emission. The Agency should look at the degree of 

administrative burden posed by enforcement at various 

de minimis threshold levels. It is relevant that our 

decision requires the Agency, in its evaluation of 

emissions of facilities, to take into account the 

facility's air pollution controls. It may also be 

relevant, though it is certainly not controlling, that 

Congress made a judgment in the Act that new 

facilities emitting less than 100 or 250 tons per year 

are not sizeable enough to warrant PSD review.

Id. at 405. As just quoted, the Court acknowledged the 100 and 

250 tpy thresholds for a major emitting facility, and did not 

indicate whether the modification exemption level could exceed 

those statutory levels, but nevertheless, the Court made clear 

that EPA may “consider the administrative burden” associated 

with modifications to establish an exemption level for 

modifications. 
255

EPA has established significance levels for various 

pollutants, generally relying on a de minimis basis. See, e.g., 

45 FR 52676, 52705 – 52710 (August 7, 1980). In these actions, 

EPA generally established the level based on the triviality of 

the amount of emissions excluded. To this point, we have not 

attempted to determine de minimis – that is, trivial - levels 

for GHGs. Instead, in this rulemaking, EPA is establishing a 

phase-in schedule for significance levels based on the Chevron

framework, accounting for the “absurd results,” “administrative 

necessity,” and “one-step-at-a-time” doctrines. It is not 

necessary to establish a permanent de minimis level in this 

rulemaking. For one thing, the Court in Alabama Power

explicitly authorized an administrative basis for significance 

levels. Moreover, were EPA to establish a de minimis level, 

that amount could be below – perhaps even well below – the 

“major emitting facility” thresholds established in this 

rulemaking on grounds of “administrative necessity” and the 

other doctrines. Accordingly, at present, if we were to 

establish a permanent significance level on a de minimis basis,

that level could result in too many small sources being required 

to submit permit applications while the phase-in is occurring. 

This would give rise to the same problems concerning undue costs 

to the sources and administrative burdens for the permitting 
256

authorities for which we are fashioning a remedy. Accordingly, 

the significance levels we establish with this action are the 

lowest levels that sources and permitting authorities can 

reasonably be expected to implement at the present time in light 

of the costs to the sources and the administrative burdens to 

the permitting authorities.

c. Other Possible Approaches to Reconciling a Literal Reading 

of PSD Applicability Provisions and Congressional Intent

Commenters have suggested another approach to reconciling 

the inconsistency between the definition of “major emitting 

facility” and congressional intent. They urge that the “major 

emitting facility” definition should be applied so that only 

sources that emit NAAQS pollutants, for which the area is 

designated attainment or unclassifiable, in the requisite 

quantities would be subject to PSD, and sources would not be 

subject to PSD based solely on their emissions of non-NAAQS 

pollutants or a NAAQS pollutant for which an area has been 

designated nonattainment. Some commenters argue that this 

approach is mandated by several of the PSD provisions, read 

together or at least that the relevant statutory provisions are 

ambiguous and that this approach is a reasonable reading of 

them. Under this approach, we would not need to phase in the 
257

application of PSD by lowering the applicability threshold for 

GHG emitters. 

Specifically, many commenters have questioned whether EPA 

has the authority to regulate GHGs under the PSD provisions.

Although the specific lines of reasoning vary somewhat from one 

commenter to another, in general, they based their arguments 

largely on CAA sections 161 and 165(a). Under CAA section 161:

In accordance with the policy of section 101(b)(1), 

each applicable implementation plan shall contain 

emission limitations and such other measures as may be 

necessary, as determined under regulations promulgated 

under this part, to prevent significant deterioration 

of air quality in each region (or portion thereof) 

designated pursuant to section 107 as attainment or 

unclassifiable.

Commenters point out that section 107 applies only to NAAQS 

pollutants and directs that areas be designated as attainment, 

nonattainment, or unclassifiable on a pollutant-by-pollutant 

basis. Under CAA section 165(a), a “major emitting facility” 

cannot be constructed “in any area to which this part applies” 

unless it meets certain requirements. According to some 

commenters, these provisions, read together, limit PSD’s 

applications to only NAAQS pollutants that are emitted from 

sources in areas that are designated attainment or 

unclassifiable for those pollutants. Other comments make a 
258

similar point, except state that PSD applies more broadly to 

pollutants with a local, ambient impact.

Some commenters go on to take the position that NAAQS 

pollutants for which the area is designated attainment or 

unclassifiable are the only pollutants that can be regulated 

under any provision of the PSD requirements; while others take 

the position that once PSD is triggered for a source on the 

basis of its NAAQS pollutants, then other, non-NAAQS, pollutants 

may be regulated under certain PSD provisions, in particular, 

the BACT provision under CAA section 165(a)(4). These 

commenters agree, however, that emissions of GHGs, by 

themselves, cannot trigger PSD applicability. Finally, some 

commenters state that even if the PSD provisions cannot be read 

by their terms to preclude GHGs from triggering PSD, then they 

can be read to authorize EPA to determine that GHG emissions do

not trigger PSD.

We recognize, as we have said elsewhere, that a major

purpose of the PSD provisions is to regulate emissions of NAAQS 

pollutants in an area that is designated attainment or 

unclassifiable for those pollutants. However, we do not read 

CAA sections 161 and the “in any area to which this part 

applies” clause in 165(a), in the context of the PSD 

applicability provisions, as limiting PSD applicability to those 
259

pollutants. The key PSD applicability provisions are found in 

sections 165(a) and 169(1). Section 165(a) states, “No major 

emitting facility on which construction is commenced after 

August 7, 1977, may be constructed in any area to which this 

part applies unless [certain requirements are met]. A “major 

emitting facility” is defined, under CAA section 169(1), as “any 

... stationary source[] which emit[s], or ha[s] the potential to 

emit, one hundred [or, depending on the source category, two 

hundred fifty] tons per year or more of any air pollutant.” As 

discussed elsewhere, EPA has long interpreted the term “any air 

pollutant” to refer to “any air pollutant subject to regulation 

under the CAA,” and for present purposes, will continue to read 

the “subject to regulation” phrase into that term.

Although section 165(a) makes clear that the PSD 

requirements apply only to sources located in areas designated 

attainment or unclassifiable, it does not, by its terms, state 

that the PSD requirements apply only to pollutants for which the 

area is designated attainment or unclassifiable. Rather, 

section 165(a) explicitly states that the PSD requirements apply

more broadly to any pollutant that is subject to regulation. 

Moreover, another requirement in CAA section 165(a) also applies

to air pollutants broadly. Under CAA section 165(a)(3), one of 

the requirements for securing a preconstruction permit is to 
260

demonstrate that the source’s emissions “will not cause, or 

contribute to, air pollution in excess of any (A) maximum 

allowable increase or maximum allowable concentration for any 

pollutant in any area [to which the PSD requirements apply], (B) 

[NAAQS] in any air quality control region, or (C) any other 

applicable emission standard or standard of performance under 

this chapter.” As just quoted, subparagraph (C), by its terms 

clearly applies to non-NAAQS pollutants. This is because it 

refers to (1) “any other applicable emission standard,” which 

distinguishes it from subparagraph (B) and therefore from NAAQS 

pollutants; and (2) “any ... standard of performance under this 

chapter,” which refers to standards of performance under section 

111, several of which are for non-NAAQS pollutants. See, e.g.,

40 CFR 60.33c(a) “municipal solid waste landfill emissions.” By 

the same token, CAA section 110(j) specifically contemplates 

that a source required to hold a permit under title I of the 

Act, which includes a PSD permit, demonstrate that the source 

complies with “standards of performance,” which may include 

requirements for pollutants other than NAAQS. 

In addition, CAA section 163(a)(4) includes as a PSD 

requirement that “the proposed facility is subject to the best 

available control technology for each pollutant subject to 

regulation under this chapter emitted from, or which results 
261

from, such facility.” Section 163(a)(4)’s broad reference to 

“each pollutant subject to regulation under this chapter” 

clearly indicates that it applies to non-NAAQS pollutants, as 
262

long as they are regulated under other provisions of the Act.47 

The D.C. Circuit, in Alabama Power v. Costle, 636 F.2d 323, 361 

n.90 (D.C. Cir. 1980) indicated that, under the law applicable 

at the time the Court handed down the decision in 1980, PSD 

applies to HAPs.48

In addition, PSD requirements are part of SIPs, and 

although SIPs generally are limited to provisions that implement 

the NAAQS, and therefore generally are limited to controlling 

NAAQS pollutants (or non-NAAQS pollutants that affect ambient 

air quality), see generally CAA section 110, Congress explicitly 

required SIPs to include requirements to protect visibility, 

under CAA section 169A-B. See CAA sections 110(a)(2)(D)(i)(II), 

169A(b)(2)(A). Congress took much the same approach with the 

PSD program, which was to require that PSD requirements be 

included in the SIPs, but to explicitly require that PSD apply 

to non-NAAQS pollutants. 

 

47 We find no support for the proposition raised by some 

commenters that this provision is limited to “NAAQS” pollutants. 

To the contrary, “under this chapter” unambiguously signals an 

intent to cover any pollutant regulated under the Act. Had 

Congress intended a narrower focus, they would have specified 

“any NAAQS pollutant” or any pollutant subject to regulation 

under this Part (PSD).

48 In the 1990 CAA Amendments, Congress added section 

112(b)(6), which provides that PSD “shall not apply to 

pollutants listed under this section,” that is, HAPs.
263

These provisions – sections 165(a)(3), 165(a)(4), and 

110(j) - all indicate by their terms that PSD requirements apply 

to non-NAAQS pollutants. As such, they lend credence to our 

view that Congress intended the PSD applicability provisions to 

include GHG sources. At the very least, they demonstrate that 

Congress certainly knew how to specifically describe certain air 

pollutants – e.g., “air pollution in excess of ... any other 

applicable emission standard or standard of performance under 

this chapter,” CAA section 165(a)(3)(C) – which indicates that 

its decision not to specifically describe air pollutants in the 

applicability provisions suggests an intent to cover air 

pollutants broadly. 

To return to sections 161 and the “in any area to which 

this part applies” phrase in 165(a), which commenters rely on as 

the cornerstone of their argument, commenters in effect take the 

position that Congress intended the geographic references in 

these provisions – that is, the references to areas designated 

as attainment or unclassifiable – to limit the scope of the 

permitting provisions. We think it unpersuasive that Congress 

would have taken such an indirect, and silently implied, route 

to limit the scope of the permitting provisions. As noted 

previously, the permitting provisions apply broadly by their 

terms. Had Congress intended to limit PSD permitting in the 
264

manner urged by commenters, it certainly could have done so 

directly, such as by limiting PSD permitting to “any pollutant 

for which an area is designated attainment or unclassifiable.” 

Indeed, Congress did so in other PSD provisions, discussed 

previously. Similarly, in other sections of the CAA, Congress 

also directly limited the scope of pollutant applicability by 

specifying which pollutants are or are not subject to the 

provision. See, e.g., section 111(d) (performance standards for 

existing sources apply only to pollutants other than NAAQS or 

HAPs), section 112(a)(1) (applying air toxics requirements in 

section 112 to sources that emit above the specified tonnage 

thresholds of “hazardous air pollutants”).

In addition, although section 161 requires that SIPs 

contain emission limitations and other measures as necessary to 

prevent significant deterioration in areas designated as 

attainment or unclassifiable, it does not by its terms limit 

SIPs to only those measures. 

Most broadly, we read the PSD provisions and their 

legislative history to evidence Congress’s intent that PSD apply 

throughout the country to large sources that undertake new 

construction or modifications, and that Congress’s overall 

purpose was to assure that, as the industrial stock of the

nation turned over, it would become cleaner for all air 
265

pollutants emitted. Greenhouse gas sources, as a general 

matter, fit readily into this overall vision. At the time that 

Congress enacted the PSD provisions in 1977, every area of the 

nation was designated attainment or unclassifiable for at least 

one air pollutant, and that has remained the case to the present 

time. Accordingly, at all times, PSD has applied in every area 

of the country. The PSD requirements clearly cover all air 

pollutants emitted by the source, and provide a process for 

reviewing those emissions and determining BACT for them under 

CAA section 165(a)(4). It is true that at the time Congress 

adopted the PSD provisions, it was primarily concerned about the 

NAAQS pollutants – or, as some commenters assert, pollutants 

with local, ambient impact - because those pollutants 

represented a major component of the air pollution problems it 

was aware of and was addressing. But its overall purpose was 

broad enough to cover additional pollutants; the process it 

enacted for establishing BACT was broad enough to encompass 

additional pollutants; and the applicability provisions it 

established were phrased broadly enough to encompass additional 

pollutants, see section 169(1). As a result, we believe that 

the PSD applicability provisions, which, again, refer to, as we 

have interpreted them, “any air pollutant [subject to regulation 

under the CAA]” should be seen as “capacious” and therefore 
266

encompass GHG sources, in much the same manner as the U.S. 

Supreme Court viewed the definition of “air pollutant” to be 

“capacious” and therefore encompass GHGs. Massachusetts v. EPA, 

549 U.S. 497, 533 (2007). 

In addition, it should not be overlooked that we have 

applied PSD to non-NAAQS pollutants since the inception of the 

program over 30 years ago. For example, prior to the 1990 CAA 

Amendments, PSD applied to HAPs regulated under CAA section 112; 

and over the years, EPA has established significance levels for 

fluorides, sulfuric acid mist, hydrogen sulfide, TRS, reduced 

sulfur compounds, municipal waste combustor organics, municipal 

waste combustor metals, municipal waste combustor acid gases, 

and municipal solid waste landfill emissions, see 40 CFR 

51.166(b)(23)(i); and EPA has proposed a significance level for 

ozone depleting substances. See 61 FR 38307 (July 23, 1996). 

Of course, the basis for all these actions is PSD’s 

applicability to these non-NAAQS air pollutants. We are not 

aware that EPA’s actions in establishing significance levels for 

these pollutants gave rise to challenges on grounds that the PSD 

provisions do not apply to them. As the U.S. Supreme Court 

recently stated in upholding an EPA approach in another context: 

“While not conclusive, it surely tends to show that the EPA’s 

current practice is a reasonable and hence legitimate exercise 
267

of its discretion ... that the agency has been proceeding in 

essentially this fashion for over 30 years.” Entergy Corp. v. 

Riverkeeper, Inc., 129 S.Ct. 1498, 1509 (2009) (citations 

omitted).

Finally, we note that excluding GHG sources from PSD 

applicability would create inequitable results. Consider the 

hypothetical case of two sources that construct in the same 

area, each of which emits the same amount of GHGs, and that 

amount is large enough to trigger PSD applicability. Assume 

that the first one, but not the second, also emits NAAQS 

pollutants amounts large enough to trigger PSD applicability. 

If GHG sources are excluded from PSD applicability, then the 

first of those sources, but not the second, would be subject to 

PSD requirements for its GHG emissions. Similarly, consider the 

hypothetical case of two sources that emit identical amounts of 

the same NAAQS pollutant and identical amounts of GHGs, all 

amounts of which are large enough to trigger PSD applicability 

requirements. Assume that the first source constructs in an 

area that is an attainment or unclassifiable area for the NAAQS 

pollutant that it emits, and that the second source constructs 

in an area that is not an attainment or unclassifiable area for 

that NAAQS pollutant. Here again, if GHG sources are excluded 

from PSD applicability, then the first of those sources, but not 
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the second, would be subject to PSD requirements for its GHG 

emissions. These results are inequitable and would create an 

uneven playing field and for this reason, too, support our view 

that the PSD applicability provisions apply to GHG sources.

Accordingly, we reject the argument that section 165 must 

be, or may reasonably be, limited in scope to pollutants for 

which an area has been designated as attainment or 

unclassifiable. Rather, the PSD applicability provision – the 

definition of “major emitting facility” in CAA section 169(1) –

applies by its terms (as we have interpreted them narrowly

through regulation) to sources emitting any air pollutant 

subject to regulation, and is not limited to any NAAQS air 

pollutant. Our research has not disclosed any explicit 

statements in the legislative history that Congress intended to 

limit PSD applicability to sources of NAAQS pollutants.

6. Application of the “Absurd Results” Doctrine for the Title V 

Program 

Having discussed the application of the Chevron framework, 

taking account of the “absurd results” doctrine, for the PSD 

applicability requirements, we now turn towards applying the 

same approach to the title V applicability requirements. 

Because of the parallels between the PSD and title V 

applicability provisions, much of the discussion later parallels 
269

the previous discussion of PSD. As with PSD, we finalize, with 

some refinements, the “absurd results” basis we proposed. 

Specifically, we are revising our regulations to limit title V 

applicability to GHG emitting sources by revising the regulatory 

term, “major source,” and although our revised regulations do 

not accord with a literal reading of the statutory provisions 

for title V applicability, which are incorporated into the 

statutory definition of “major source,” we have concluded that 

based on the “absurd results” doctrine, a literal adherence to 

the terms of this definition is not required. Rather, we may 

apply title V to GHG sources in a phased-in manner, as we do 

through the tailoring approach, because although congressional 

intent is clear that title V applies to GHG sources in general,

congressional intent is unclear on the question of how title V 

applies, and the tailoring approach is a reasonable 

interpretation of the statute. 

To reiterate, for convenience, the title V applicability 

provisions provide that after the effective date of a title V 

program, it is unlawful for any person to operate a "major 

source" without a title V permit (CAA section 502(a), and define 

a "major source" to include "any major stationary facility or 

source of air pollutants which directly emits, or has the 
270

potential to emit, one hundred tons per year or more of any air 

pollutant." CAA sections 501(2)(B) and 302(j).

Under the current interpretation of the title V 

applicability provisions, EPA’s recent promulgation of the LDVR

will trigger the applicability of title V for GHG sources at the 

100 tpy threshold levels as of January 2, 2011. This is because 

title V applicability hinges on the definition of “major 

source,” which, under EPA’s long-standing narrowing 

interpretation, but absent further tailoring, applies title V to 

sources of any air pollutant that is subject to regulation under 

another provision of the CAA. EPA’s promulgation of the LDVR

means that GHGs will become subject to regulation on the date 

that the rule takes effect, which will be January 2, 2011. 

But absent tailoring, the January 2, 2011 trigger date for 

GHG PSD applicability will see an extraordinarily large number 

of sources - some 6.1 million - become subject to title V, an 

increase of over 400-fold over the 14,700 sources that currently 

are subject to title V. The great majority of these will be 

small commercial or residential sources.

We believe that for many reasons, this result is contrary 

to congressional intent for the title V program, and in fact 

would severely undermine what Congress sought to accomplish with 

the program. As a result, under Chevron, accounting for the 
271

“absurd results” doctrine, the statutory definition for “major 

source” (as EPA has already narrowed it to refer to any air 

pollutant “subject to regulation”) should not be read to apply 

to all GHG sources at or above the 100 tpy threshold as of the 

January 2, 2011 date. Rather, the definition of “major source” 

should be tailored so that it applies to GHG sources on a 

phased-in basis, with the largest sources first, as we describe 

in this rule.

a. Congressional Intent for the Title V Program

As we said, previously, in a similar circumstance involving 

the PSD program, applying title V requirements to GHG sources 

without tailoring the definition of “major source” – and, as 

discussed later, without streamlining the title V requirements 

or allowing for time for permitting authorities to ramp up 

resources - would result in a program unrecognizable to the

Congress that enacted title V, and one that would be flatly 

unadministrable. Without tailoring, the PSD program would 

expand from the current 14,700 sources to some 6.1 million, with 

the great majority of the sources being small commercial and 

residential sources that not only have never been permitted 

before, but that in many cases have no applicable requirements 

under the CAA to include in the permit. In the next several 

sections, we will describe some of the specific ways that this 
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literal application of title V would not only differ from, but 

would undermine, congressional intent. But the big picture is 

readily drawn: The influx of millions of permit applications 

would do nothing less than overwhelm the program Congress finely 

crafted for thousands of sources, with its multi-step deadlines 

measured in days and months, its multiple mandates for 

expeditious permit processing, its nuanced limitations on the 

need for permit revisions, its efforts to save smaller sources 

permit fees. Regulatory gridlock, precisely what Congress 

strove to avoid, would result.

Most visibly, interpreting the applicability provisions 

literally to include GHG sources at the 100 tpy level

immediately would revise the program from what Congress 

envisioned in three major ways, the legislative history of each 

of which was discussed previously: 

 It would immediately expand the program to cover severalhundred-fold more sources than Congress anticipated.

 It would immediately expand the program to cover very small 

sources that Congress expected would not be included in the 

program.

 It would immediately expand the program so that a large 

number of sources have empty permits, that is, permits 

without applicable requirement, and undermine the 
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implementation of the program for sources with applicable 

requirements.

Revising the program in this way through a literal 

interpretation of the applicability provisions – without 

tailoring the applicability requirements and without 

streamlining the program requirements - is clearly inconsistent 

with Congress’s conception of the program’s scope, and these 

inconsistencies are foundational. Most importantly, the program 

that would result would be unduly costly to sources and 

impossible for permitting authorities to implement, and 

therefore would frustrate the purposes that Congress intended to 

achieve with the program that it did design.

As discussed previously, Congress was fully aware that with 

the title V program, it was subjecting sources and permitting 

authorities to additional costs and administrative burdens, and 

it was fully aware of concerns that absent careful design, the 

program could become a formula for regulatory gridlock. 

Determined to make the program workable, Congress crafted the 

provisions to be efficient and workable. 

However, if title V were to apply to GHG sources at the 100 

tpy level, until EPA could develop streamlining methods, all of 

these sources newly subject to title V would need to apply for 

permits. We estimate that the commercial and residential 
274

sources would incur, on average, expenses of $23,175, while an 

industrial source would incur expenses of $46,350, to prepare a 

permit application and receive a permit. The great majority of 

these sources would be small commercial and residential sources 

of the type that Congress did not expect would be included in 

title V. For example, as discussed above, the legislative 

history of title V, including both the permit program under CAA 

sections 501-506 and the “small business stationary source 

technical and environmental compliance assistance program” under 

CAA section 507, indicated that Congress did not expect that 

“printers, furniture makers, dry cleaners, and millions of other 

small businesses” would become subject to title V. House 

Committee Report, H.R. 101-590, at 354. These sources generally 

do not have the potential to emit conventional pollutants at or 

above the 100 tpy threshold.49 However, many do have the 

potential to emit GHGs above that threshold. Many printers and 

 

49 As noted previously, the fact that some small sources 

are subject to title V because they are “major sources” of HAPs 

or certain area sources and therefore are covered under CAA 

sections 502(a) and 501(2)(A) does not alter the conclusion from 

the legislative history that Congress did not expect large 

numbers of small sources to become subject to title V. The fact 

that Congress authorized the Administrator to exempt area 

sources from the title V program where compliance with title V 

would be “impracticable, infeasible, or unnecessarily 

burdensome” reinforces the conclusion that Congress did not 

intend the program to be “impracticable, infeasible or 

unnecessarily burdensome” for small sources.
275

furniture makers use a variety of combustion equipment that has 

the potential to emit at least 100 tpy CO2, and many commercial 

dry cleaners have gas-fired driers that have the potential to 

emit at least 100 tpy of CO2. All told, there are in fact 

“millions of ... small businesses” that would become subject to 

title V - of the 6.1 million sources that would become subject 

to title V, the great majority are small businesses – if the 

title V applicability provisions are applied literally to GHG 

sources. 

Moreover, the overall cost to all 6.1 million sources –

before the development of streamlining methods - would be a 

staggering $49 billion per year over a 3 year period. Imposing 

burdens of this magnitude on these sources – individually and in 

total – would of course be contrary to Congress’s efforts to 

minimize the expenses of title V, especially to small sources. 

The magnitude of the costs is, in a sense, heightened because a 

great many of these sources will not have applicable 

requirements to include in their permits; therefore, much of the 

costs will produce relatively little benefit. 

Yet, the most important reason why applying the title V

program to GHG sources without tailoring, and before the 

development of streamlining methods, would be inconsistent with 

congressional intent, is that the resulting program would prove 
276

unadministrable. Adding some 6.1 million permit applications to 

the 14,700 that permitting authorities now handle would 

completely overwhelm permitting authorities, and for all 

practical purposes, bring the title V permitting process to a 

standstill.

The costs to permitting authorities of this multi-millionsource program would again be staggering. On average, and 

without streamlining, a permitting authority would expend 214 

hours, which would cost $9,844, to issue a permit to a 

commercial or residential source; and 428 hours, which would 

cost $19,688, to issue a permit to an industrial source. In 

all, permitting authorities would face over $21 billion in 

additional permitting costs each year due to GHGs, compared to 

the current program cost of $62 million each year.

Beyond this disconnect with congressional expectations as 

to scope of the program, the extraordinarily large number of 

permit applications would overwhelm permitting authorities and 

slow their ability to process permit applications to a crawl. 

As described at proposal, the survey of permitting authorities 

conducted by NACAA found that a literal application of the title 

V applicability provisions to all GHG sources would result in 

permitting delays of some 10 years. However, as we further 

noted at proposal, this estimate was based on the assumption 
277

that the applicability threshold would be 100 tpy based on 

actual emissions; in fact, the applicability threshold would be 

100 tpy based on PTE, which would sweep in many more sources. 

Moreover, as stated elsewhere, we currently estimate the amount 

of per-permit work hours for permitting authorities in 

processing title V permit applications to be several times 

higher than what we estimated at proposal. As with PSD, such a 

program would be beyond anything within our experience, and it

is difficult to give a meaningful estimate for how long the 

permitting process would take for each permit on average. But 

it is clear that the period would be many years longer than even 

the 10 years estimated by NACAA.

In addition, applying title V to all GHG sources without 

tailoring would be in tension with a specific CAA requirement, 

that of CAA section 503(c), which imposes a time limit of 18 

months from the date of receipt of the completed permit 

application for the permitting authority to issue or deny the 

permit. It would be impossible for permitting authorities to 

meet this statutory requirement if their workload increases from 

some 14,700 permits to 6.1 million, and without streamlining. 

Instead, as just noted, permit applications would face multiyear delays in obtaining their permits.
278

Moreover, these delays would undermine the overall 

statutory design that promotes the smooth-running of the 

permitting process, and the underlying purpose of the title V 

program itself. As noted elsewhere, Congress intended through 

title V to facilitate sources’ compliance with their CAA 

obligations by establishing an operating permit program that 

requires the source to combine all of its CAA requirements, and 

explain how it will assure compliance with such requirements. 

Congress established a comprehensive process to implement the 

operating permit program. Through this process, following the 

date that sources become subject to title V, they have 1 year to 

submit their permit applications. CAA section 503(c). As 

noted, the permitting authority then has 18 months to issue or 

deny the permit. CAA section 503(c). Permitting authorities 

must provide an opportunity for public comment and a hearing. 

CAA section 502(b)(6). If the permitting authority proposes to 

issue the permit, the permitting authority must submit the 

permit to EPA for review, and notify affected states. CAA 

section 505(a)(1). EPA then has 45 days to review the permit 

and, if EPA deems it appropriate, to object to the permit. CAA 

section 503(b)(1). If EPA does object, then the permitting 

authority must, within 90 days, revise it to meet the 

objections, or else EPA becomes required to issue or deny the 
279

permit. CAA section 503(c). If EPA does not object, then, 

within 60 days of the close of the 45-day review period, any 

person may petition EPA to object, and EPA must grant or deny 

the petition within 60 days. CAA section 505(b)(2). This set 

of applicant, permitting authority, and EPA actions and 

deadlines establishes the process for the prompt and efficient 

issuance of operating permits for the appropriate universe of 

sources.

But at least for an initial period, until resources could 

be ramped up and streamlining methods could be developed, the 

extraordinary numbers of these permit applicants would sweep 

aside this carefully constructed program, and instead, backlog 

the permit authorities. This initial period would last for many 

years. As discussed elsewhere, it would take several years to 

develop and apply streamlining measures – in particular, general 

permits – and during that time, the permit backlog would grow so 

large that it would take many more years for permitting 

authorities to catch up by raising the requisite funds and 

hiring and training the necessary employees. 

What’s more, only a fraction of these millions of sources 

newly covered by title V will be subject to any CAA requirements 

due to their GHG emissions, and we suspect that a larger number

will not be subject to any CAA requirements at all. As a 
280

result, for most of these sources, although they would need to 

apply for and receive a permit, there would be no applicable 

requirements to include in the permit and thus the exercise 

would not improve compliance. 

The picture that emerges from a literal application of 

title V’s requirements to all GHG sources - at the 100 tpy 

level, beginning on January 2, 2011 – shows multi-year delays in 

issuance of all permits, for both the sources that have

applicable requirements and that Congress clearly intended the 

program to cover, and for the millions of sources that may not 

be subject to any applicable requirements. In short, this

literal interpretation would apply title V to millions of 

sources that Congress did not expect be covered, and the ensuing 

administrative burdens – at least initially - would impede the 

issuance of permits to the thousands or perhaps tens of 

thousands of sources that Congress did expect be covered. This 

is the type of “absurd results” from a literal application of 

statutory provisions that the courts have held should be 

avoided. And even beyond all that, the sheer magnitude of the 

numbers involved – millions of permits requiring thousands of 

FTEs at a cost to the permitting authorities of billions of 

dollars, all this beginning immediately at the time that GHGs 

become subject to regulation – makes clear that this result of a 
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literal application of the title V provisions to GHG sources 

cannot be what Congress intended.

b. EPA’s Reconciliation of Applicability Provisions With 

Congressional Intent

For the reasons just described, we should not consider the 

literal meaning of the applicability provisions to be 

determinative of congressional intent as to the applicability of 

title V to all GHG sources; rather, we should examine other 

provisions of the statute and the legislative history to 

determine congressional intent on that question. If 

congressional intent is clear, we must adopt and implement an 

applicability approach that is as close as possible to 

congressional intent; and if congressional intent is not clear, 

then we must select an interpretation that is reasonable and 

consistent with the statutory requirements. This section 

explains EPA’s view of congressional intent for the 

applicability of the title V program to GHG sources and the 

principles and approach EPA is using for tailoring. In 

addition, we also respond to other approaches that were 

suggested by commenters.

To determine congressional intent, we consider the 

statutory provisions and legislative history, and this analysis 

is similar to that for PSD. The most important title V 
282

provisions and legislative history for this purpose are the 

following: 

(i) The applicability provisions themselves, which, as we 

have interpreted them, apply title V to all sources that 

emit at least 100 tpy of any air pollutant subject to 

regulation. CAA sections 502(a), 501(2)(B), 302(j). 

Although we do not believe these provisions should be 

applied literally to GHG sources, their broad phrasing 

indicates, directionally, a congressional intent towards 

inclusiveness of sources in title V, including GHG 

sources. 

(ii) The provisions for general permits, CAA section 

504(d); and title V fees, CAA section 502(b)(3)(A). 

These provisions give title V an important measure of 

flexibility as to its scope. The explicit authorization 

of general permits means that title V may be applied to 

more sources and more efficiently, thereby saving costs 

to both source and permitting authority. The 

requirements for permit fees provide a mechanism for 

permitting authorities to, over time, develop their 

programs to cover more sources. In this sense, these 

provisions could be construed to indicate congressional 

intent to apply title V inclusively, to the extent that 
283

permitting authorities can accommodate additional 

sources through general permits and permit fees. 

(iii) The detailed procedural requirements - including 

time periods, such as the 18-month time period for 

action on permit applications - for title V permit 

processing. CAA sections 503, 505. Although these 

requirements are consistent with applying title V to GHG 

sources - in the sense that at least in theory, there is 

nothing intrinsic to GHG sources that would mean that 

permitting authorities could not comply with these 

requirements – these requirements cast doubt on whether 

Congress can be said to have intended that title V cover 

the many small GHG sources (at least immediately) in 

light of the risk that including all those sources in 

title V would strain the process. 

(iv) The provisions and legislative history concerning 

applicable requirements, which indicate that a purpose 

of title V is to include sources’ applicable 

requirements in their permits. CAA sections 503(b)(2), 

504(a). These provisions, and the accompanying 

legislative history, discussed previously, suggest an 

intent to include within title V GHG sources that have 

applicable requirements, but may also suggest that 
284

Congress would not have intended to include in title V 

the large numbers of GHG sources that have “empty 

permits,” at least where their inclusion would undermine 

implementation of the program for sources with 

applicable requirements. 

(5) The small-business-assistance provisions of section 507 

and the legislative history of title V – both the 

permitting program and the small-business-assistance 

program - concerning the scope of the permitting program 

and small businesses. These indicate that Congress 

intended title V to cover some tens of thousands of 

sources, and did not intend that title V apply to small 

businesses. These provisions and legislative history 

suggest that Congress did not intend for title V to 

apply to include large numbers of small GHG sources. 

Finally, the legislative history of title V does not explicitly 

mention GHG sources, which could suggest that Congress did not 

have occasion to focus on whether and how title V would apply to 

GHG sources. 

With all this, we believe that Congress had a clear intent 

on the question of whether title V generally applies to GHG 

sources, and that was that it does. As with PSD, the most 

important indication of congressional intent in this regard is 
285

the applicability provisions, which provide, in part, that title 

V applies to “any stationary facility or source of air 

pollutants which directly emits, or has the potential to emit,

[the requisite quantity] of any air pollutant.” CAA sections

502(a), 501(2)(B), 302(j). This term is quite broad, and should 

be read to include GHG sources. See Massachusetts v. EPA, 549 

U.S. 497, 533 (2007) (“Because greenhouse gases fit well within 

the Clean Air Act's capacious definition of ‘air pollutant,’ we 

hold that EPA has the statutory authority to regulate the 

emission of such gases from new motor vehicles.”). Moreover, 

including GHG sources – under certain circumstances – is 

consistent with the various statutory provisions and statements 

in the legislative history described previously.

In the alternative, if it is concluded that Congress did 

not express a clear intent on that question, then, under Chevron 

Step 2, EPA exercises its discretion to conclude that title V 

applies to GHG sources as a general matter. This is a 

reasonable policy because applying the title V program to at 

least the larger GHG sources will assure promote accountability 

and enforceability for those sources, which is a key goal of the 

title V program, and will not impose obligations that are beyond 

the resources of those sources or insurmountable burdens on the 

permitting authorities. This policy is a reasonable 
286

interpretation of the statutory provisions for the same reasons 

just discussed. 

As to the question of how title V applies to GHG sources, 

we believe that Congress cannot be said to have expressed a

clear intent. A central aspect of how title V is to apply to 

GHG sources concerns “empty permits,” and on this aspect, some 

of the above-described provisions and statements in the 

legislative history point in different directions. This is 

particularly true of, on the one hand the title V applicability 

provisions, which apply by their terms inclusively and, on the 

other hand, the requirement that sources include applicable CAA 

requirements in their permits, and the statements in the 

legislative history indicating that Congress intended title V to 

cover sources subject to other CAA requirements. 

Because Congress cannot be said to have expressed an 

intent as to the manner and scope of title V applicability to 

GHG sources, then, under Chevron Step 2, EPA may apply a 

reasonable interpretation of the applicability provision to 

determine the scope of coverage of GHG sources that is 

consistent with the statutory requirements. The Tailoring Rule 

qualifies as such an interpretation. The Tailoring Rule in 

effect reads the applicability provisions not to apply title V 

to GHG sources at or above the 100 tpy level, but instead to 
287

apply title V to as many of the GHG sources at or above that 

level as possible and as quickly as possible, starting with the 

largest sources first, that is consistent with both the 

permitting authorities’ ability to administer the program and 

with a sensible imposition of costs to sources. This tailoring 

approach is consistent with the inclusive direction of the 

applicability provision, the flexibility in title V’s scope that 

is inherent in the provisions authorizing general permits and 

requiring permit fees, the detailed process requirements, and 

the legislative history that focuses on Congress’s concern about 

costs to sources and administrability. With the tailoring 

approach, over time, more sources may be included in title V, 

consistent with those provisions and legislative history. This 

reconciles the inclusiveness of the applicability provisions 

with Congress’s expectations of a more limited scope for the 

title V program.50 However, as part of the tailoring approach, 

we recognize that we may at some point determine that it is 

appropriate to exclude certain sources, such as the smallest of 

the GHG sources. In addition, we intend to address the issue of 

 

50 As with PSD, this way of reconciling the PSD 

applicability provisions with Congress’s expectations for a 

narrower PSD program is consistent with the U.S. Supreme Court’s 

view that the CAA should be read to include “regulatory 

flexibility, [without which] changing circumstances and 

scientific developments would soon render the Clean Air Act 

obsolete.” Massachusetts v. EPA, 549 U.S. 532.
288

sources with “empty permits” in a later rulemaking, as discussed 

previously. 

The specific phase-in schedule will depend on the 

following: We will gather information about the permitting 

authorities’ ability to process permits, and we will develop 

streamlining techniques. Based on that information, we will 

address expanding the title V program in a step-by-step fashion 

to include more sources over time. Each step will be based on 

our assessment of the permitting authorities’ and sources’ 

ability to comply with their respective obligations under the 

title V program.

We recognize that the availability of permit fees to 

support title V permit actions creates a potentially important 

source of resources, and that this has implications for the 

permitting authorities’ ability to implement the title V program 

for sources of GHGs. At least in theory, permitting authorities 

could assess and collect sufficient fees to support hiring and 

training sufficient personnel so that they could expand their 

programs to match the expansion in the number of sources covered 

by the program.

Even so, title V fees cannot be considered a panacea that 

will resolve all resource problems that permitting authorities 

will have, for several reasons. Permitting authorities will 
289

likely be constrained as to the rate in which they can increase 

fees in light of the costs to sources. As indicated elsewhere, 

at least at the outset of the program before streamlining 

techniques have been developed, a literal application of the 

title V applicability provisions to GHG sources would, on 

average, cost each industrial source $46,400 and each commercial 

or residential source $23,200 to complete the permit application 

and take other associated actions; and it would cost each 

permitting authority, on average, $19,688 to process the 

industrial source permit and $9,844 to process the commercial or 

residential source permit. Particularly in light of the high 

costs to sources of applying for a permit, it is not likely that 

permitting authorities would be able to pass on to the sources 

in the form of fees, the entirety of the permitting authorities’ 

own high costs for processing those permits, at least not right 

away. Even to the extent it would be possible to raise permit 

fees, permitting authorities would have to undergo a process to 

assess, impose, and collect those fees, and then hire and train 

personnel. The survey from the state and local agencies 

described previously forecast a 2-year period for hiring and 

training, without counting time for the fee process. For these 

reasons, we do not believe that the authorization for fees will 

allow the permitting authorities either to accelerate Steps 1 or 
290

2 of the tailoring schedule or to permit a larger number of 

sources at those steps. Step 1 will take effect on January 2, 

2011, Step 2 will take effect on July 1, 2011, and the process 

for determining and collecting fees, and then hiring and 

training personnel will take at least several years after July 

1, 2011. 

Moreover, we do not believe that the authorization for fees 

means that permitting authorities can reasonably be expected to 

permit title V sources at levels below 50,000 tpy CO2e before 

2016. The next level below 50,000 tpy CO2e for which we have 

data is 25,000 tpy CO2e, and the costs to permitting authorities 

to run their programs at that level ($126 million) is more than 

double their current costs ($62 million). We do not consider it 

reasonable to expect permitting authorities to more than double 

their program within the first 6 years of title V applicability 

to GHG sources. That it is not reasonable to expect that is 

made even clearer when the permitting authorities’ burdens in 

implementing their PSD programs are considered. The ability of 

permitting authorities to impose fees may have more important

implications for subsequent steps, and as we address those 

subsequent steps in future rulemakings, we will consider the 

fees. EPA’s approach to fees in this rulemaking is discussed 

elsewhere.
291

c. Other Possible Approaches to Reconciling Literal Reading of 

Title V Applicability Provisions and Congressional Intent

Having described how the Chevron framework, accounting for 

the ”absurd results” doctrine, applies to title V requirements 

in this case and why it supports this Tailoring Rule - under 

which we expect to apply title V to more sources, in a step-bystep fashion, over time - we turn to the last part of our 

discussion of this doctrine. Here, we address another possible 

approach suggested by comments, which is that EPA should apply 

the title V program only to sources that are subject to 

applicable requirements, so that sources should not be required 

to hold “empty permits” (e.g., permits issued to a source that 

is not subject to any applicable requirement for any pollutant). 

To the extent that commenters argue that the statute requires 

EPA to adopt a “no-empty–permits” theory, we disagree. We 

believe that although various provisions of title V indicate 

that one of title V’s purposes is to gather a source’s 

applicable requirements into a single permitting mechanism, see

CAA sections 503(b)(1), 504(a), we do not read those provisions 

as expressly limiting, as a matter of Chevron Step 1, title V to 

sources with applicable requirements. The applicability 

provisions, by their terms, include sources based on amount of 

emissions, and do not include any explicit limits to 
292

applicability based on whether the sources has applicable 

requirements. As described previously, we believe that 

Congress, although clearly expressing an intent that title V 

apply to GHG sources generally, did not express a clear intent 

as to how title V applies to GHG sources. The tension between 

these two sets of provisions, which we identified in the 

proposal and commenters further discussed, provides further 

support for that conclusion. Accordingly, we have discretion 

under Chevron Step 2 to determine a reasonable approach, 

consistent with the statutory requirements, concerning the 

application of title V to GHG sources with empty permits.

We note that to date, we have issued permits to sources 

without applicable requirements, albeit on rare occasions. We 

have little reason to believe that the “empty-permits” issue 

will arise in Steps 1 and 2 of our tailoring approach because we 

believe there will be no “empty permits” in Step 1 or Step 2 or, 

if there are, that they will be very few in number. As stated 

elsewhere, we believe that the tailoring approach we adopt in 

this rulemaking for Steps 1 and 2 is a reasonable approach that 

is consistent with statutory requirements. 

We need to gather more information concerning the potential 

number and utility of “empty permits” for GHG sources, in light 

of the fact that the need for requirements in title V permits 
293

will vary based on the requirements of each SIP, and the fact

that some SIPs contain broadly applicable requirements. As 

stated elsewhere, we intend to consider the issue of the 

applicability of title V to GHG sources with “empty permits” in 

Step 3 of our tailoring approach. When we do so, we will 

further assess the potential for the approach of excluding empty 

permits from title V to relieve burden consistent with statutory 

requirements. 

7. Additional Rulemaking for the PSD and Title V Programs

The previous sections 5 and 6 discussed our application of 

the Chevron framework, accounting for the “absurd results” 

doctrine, to the PSD and title V applicability requirements, 

respectively. As another point in this regard, which is 

relevant for both PSD and title V purposes, we also commit to 

subsequent rulemakings in which we may further address the 

“absurd results” doctrine. 

Specifically, we will propose or solicit comment on 

establishing a further phase-in, that is, a Step 3, that would 

apply PSD and title V to additional sources, effective July 1, 

2013, and on which we commit to take final action, as supported 

by the record, by no later than July 1, 2012. We further commit 

to completing another round of rulemaking addressing smaller 

sources by April 30, 2016. Our action in that rulemaking would 
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take into account the severity of the remaining problems 

associated with permitting authority burden and source costs.

While committing to future action, we do not decide in this 

rule when the phase-in process will ultimately end, or at what 

threshold level, because all that depends on uncertain variables 

such as our progress in developing streamlining approaches and 

on permitting authorities’ progress in developing permitting 

expertise and acquiring more resources. We may continue the 

phase-in process with further rulemaking(s) after 2016. 

Alternatively, we may make a final determination through future 

rulemaking that, under the “absurd results” doctrine, PSD and/or 

title V do not apply to GHG sources that, while small and 

relatively inconsequential in terms of GHG contribution, are 

above the statutory tonnage thresholds for these programs, and 

thereby end the phase-in process. In addition, we may consider 

whether to limit title V applicability to GHG sources in order 

to minimize the number of GHG sources with “empty” permits. 

8. Rationale for the Phase-In Schedule for Applying PSD and 

Title V to GHG Sources

Having discussed in sections V.B.5, V.B.6, and V.B.7 the 

reasons for tailoring the PSD and title V programs, we now 

describe our rationale for selecting the specific phase-in 

schedule in this rule for applying PSD and title V to GHG-
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emitting sources. To reiterate for convenience, under Step 1 of 

this schedule, which begins on January 2, 2011, (1) PSD applies 

to the GHG emissions of “anyway” PSD sources, that is, sources 

that are subject to PSD anyway due to their emissions of 

conventional pollutants and that undertake a modification that 

results in an increase of at least 75,000 tpy CO2e; and (2) title 

V applies to “anyway” title V sources, that is, sources that are 

subject to title V anyway due to their emissions of conventional 

pollutants. Under Step 2, which begins on July 1, 2011, (1) 

sources will be subject to PSD on account of their GHG emissions 

if they newly construct and emit at least 100,000 tpy CO2e, or if 

they are existing sources that emit at least 100,000 tpy CO2e of 

GHGs and make a modification that results in the emission of at 

least 75,000 tpy CO2e; and (2) existing and new sources will be 

subject to title V on account of their GHG emissions if they 

emit 100,000 tpy CO2e in GHG emissions. In addition, EPA intends 

to begin another round of rulemaking – Step 3 – in 2011 and 

commits to complete it by July 1, 2012. In that rulemaking, we 

will propose or solicit comment on a further phase-in of GHG 

sources for PSD and title V applicability, and we may propose or 

solicit comment on another application of the “absurd results” 

doctrine that excludes categories of sources from PSD or title 

V. However, under this rule, in no event will EPA apply PSD or 
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title V to sources below the 50,000 tpy CO2e levels in Step 3, or 

any other step we might promulgate prior to April 2016. In 

addition, EPA commits to conduct a study, to be concluded by 

April 30, 2015, evaluating the status of PSD and title V

applicability to GHG sources, and, based on the study, complete 

a rulemaking by April 30, 2016 that addresses another round of a 

phase-in. 

a. Rationale for Step 1

In Step 1 of our tailoring approach, which begins on 

January 2, 2011, PSD and title V requirements will apply to only 

those sources that are subject to PSD or title V requirements 

anyway due to their conventional pollutants (“anyway” sources) 

and that, in the case of PSD, make modifications that result in 

an increase in GHG emissions of at least 75,000 tpy CO2e. No 

sources would become major for PSD or title V under this step 

based on their GHG emissions alone. This section describes our 

proposal, comments on the proposal and our response to those 

comments, and our rationale for Step 1.

(1) Proposal

In our proposal, we proposed (1) the application of PSD and 

title V requirements to sources that emit at least 25,000 tpy 

CO2e, (2) a PSD significance level of between 10,000 and 25,000 

tpy CO2e, and (3) a commitment to undertake a study to be 
297

followed by further rulemaking after 6 years. In addition, we 

solicited comment on the alternative of limiting PSD and title V 

applicability to “anyway” sources for at least the first 6

years. Under this approach, PSD and title V applicability would

be determined based on non-GHG pollutants, and without regard to 

GHGs, but those sources subject to PSD would also be subject to 

BACT requirements for GHGs if their GHG emissions exceeded the 

significance level established in the final rule, and those 

sources subject to title V would be required to include any 

applicable requirements for GHGs in their permits.

(2) Comments

Many commenters supported this “anyway”-source approach, 

and offered a variety of reasons: According to the commenters, 

(1) this approach is a better reading of Congress’s intent in 

the Act and is consistent with Alabama Power v. Costle, 636 F.2d 

323 (D.C. Cir. 1980); (2) this approach would reduce the 

permitting workload on sources currently considered minor and 

focus PSD and title V requirements on large sources of non-GHG 

pollutants, as intended by Congress; (3) it is appropriate to 

base PSD and title V applicability on non-GHG emissions until 

data on GHG emissions are available from the mandatory GHG 

reporting rule; (4) in the initial phase, this approach would be 

more straightforward to administer, would provide a more 
298

predictable permitting workload, and would prevent a flood of 

newly regulated sources from overburdening state agencies; (5) 

this approach would provide permitting agencies time to develop 

experience handling GHG sources and requirements under the PSD 

and title V programs; (6) this approach would provide EPA and 

the permitting agencies the time needed to develop streamlining 

techniques; (7) this approach is consistent with the “absurd 

results” and “administrative necessity” doctrines because the 

scope of the permitting programs would remain consistent with 

both congressional intent and current administrative practice, 

but EPA and state agencies would still be allowed to begin 

regulating GHG emissions from existing PSD and title V sources; 

and (8) sources already required to obtain PSD permits are best 

equipped to work through BACT issues with permitting 

authorities.

Commenters added that if BACT is applied for GHGs due to 

permit actions involving non-GHG pollutants, EPA would need to 

set a significance threshold for the application of BACT, 

without which BACT could apply to very small (e.g., 1 ton) GHG 

increases associated with projects that otherwise triggered PSD 

for increases of non-GHG. 

(3) Determination as to Step 1, PSD and Title V Applicability 

and PSD Significance Level
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After considering the administrative burdens from increased 

permitting actions and the need for permitting authorities to 

have sufficient time to develop necessary expertise and staffing 

resources to address that burden, we have decided in this final 

action to establish the “anyway” source approach as Step 1. 

Beginning on January 2, 2011, sources subject to PSD 

requirements for their conventional pollutants anyway will be 

required to apply BACT to their GHG emissions if they construct 

or modify and in so doing, emit at least 75,000 tpy CO2e in GHGs. 

Similarly, sources subject to title V requirements anyway due to 

their conventional pollutants will be required to meet certain 

requirements for their GHGs, as described elsewhere. These 

requirements at Step 1 for PSD and title V will not expire. On 

July 1, 2011, a further phase-in of PSD and title V

applicability – Step 2 – will kick in. 

At Step 1, by definition, all of the covered sources are 

already subject to PSD and title V permitting requirements, and 

will simply be adding a GHG component to what would be an 

otherwise occurring permitting action for conventional 

pollutants. These sources include fossil fuel-fired power 

plants, petroleum refineries, cement plants, iron and steel 

plants, pulp and paper plants, petroleum refineries, large 

landfills, and other large industrial sources. These sources 
300

will need to perform some additional analysis that is unique to 

GHG emission units, particularly related to the BACT review and 

selection process, but they will likely be able to utilize 

information developed as part of other permitting requirements 

for conventional pollutants, such as equipment fuel usage and 

operational parameters. Also, because these facilities are 

familiar with the case-by-case permitting processes, including 

all the steps from the application to the final review process, 

they will not confront a high PSD or title V learning curve.

The “anyway”-source approach has particular appeal during 

the first step of the phase-in approach because it begins to 

apply key PSD and title V program requirements as soon as 

January 2, 2011 to large sources of emissions, but because it 

applies only to sources that are already subject to PSD for 

other pollutants, it can be implemented efficiently and with an 

administrative burden that is manageable in the next 8 months. 

We expect that under this approach, the sources and permitting 

authorities will still face substantial additional work to 

address the GHG emissions. In addition to the activities 

discussed elsewhere, there will be significant and complex 

policy questions about how BACT will be implemented for GHGs 

that must be resolved. These issues will include how to 

determine BACT for GHGs, how to do netting, and other similar 
301

issues. Even with EPA guidance, many case-specific policy 

issues will arise and will have to be resolved by the permitting 

authority in the context of a specific permit application. 

Nevertheless, with the “anyway” source approach, this work will 

be manageable because the associated permitting burden will be 

limited to adding a GHG component to each existing permit action

for which it will be required, and will avoid the significantly 

greater burdens associated with large numbers of new permit 

actions that would be required for sources and modifications 

that would be subject to PSD for the first time. Instead, this 

“anyway” source approach allows permitting authorities 

sufficient time to develop necessary expertise and staffing 

resources to address GHG BACT.

We agree with commenters that the establishment of a 

significance level – which, in effect, is a BACT threshold - is 

appropriate, and we have decided to establish this level at 

75,000 tpy CO2e because, for reasons discussed later, that is the 

level that will apply during Step 2. At this level, the 

administrative burdens, described later, will be manageable. 

Importantly, we believe a consistent significance level between 

Steps 1 and 2, as opposed to a lower significance level in Step 

1, will provide for a smoother transition and avoid the problems 

that would arise if PSD applied to modifications during Step 1 
302

that PSD would not apply to in Step 2. Otherwise, we would 

create a perverse incentive for companies to delay such projects 

until Step 2 to avoid BACT. 

We estimate that Step 1 will result in a 23 percent

increase in permitting authority work hours and a $3 million 

increase – which amounts to a 25 percent increase from the 

current program cost of $12 million - in their annual costs for 

running PSD programs. This is primarily due to the GHG BACT 

review requirements. For title V programs, we estimate a 2

percent increase in permitting authority work hours and a $1 

million increase in the title V annual program costs for 

permitting authorities under Step 1 as compared to the current 

program cost of $62 million. These work hours and costs will be 

needed primarily to review GHG emissions information, add any 

GHG-related requirements to title V revisions and renewal 

actions that would otherwise be occurring, respond to comments 

and petitions from the public, as well as develop fee 

requirements and make fee determinations associated with issuing 

new or revised title V permits that add GHG-related information. 

For both the PSD and title V programs on a combined basis, the 

additional costs for Step 1 will be $4 million, which amounts to 

a 5 percent increase in the current combined program cost of $74 

million.
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In addition to these workload and monetary costs, 

permitting authorities will confront additional burdens before 

and during Step 1, which we have not attempted to quantify. One 

of the most significant of these is training staff in the PSDrelated areas of GHG emissions calculations and BACT 

evaluations. In addition, permitting staff will need to build 

staff expertise and capacity for addressing GHG requirements in 

preparation for Step 2, which will begin only 6 months after 

Step 1; and in communicating and providing outreach to sources 

addressing GHG emissions for the first time. Based on comments 

we received on the proposal from permitting authorities, we 

believe these additional training and outreach requirements –

for both the PSD and title V programs - will add significantly 

to the permitting authorities’ burden during the initial 6-month 

period under Step 1. 

We believe that these administrative burdens are 

substantial but manageable. Following this action, permitting 

authorities will have only 8 months to prepare for Step 1, when 

they will need to increase their resources by 5 percent for both 

the PSD and title V programs combined, and be able to implement 

BACT requirements for GHG sources. During Step 1, they will 

need to prepare for Step 2, when, as discussed later, they will 
304

need to process over 900 additional PSD permits each year and 

begin to process over 1,100 additional title V permit actions. 

We have decided to limit Step 1 to the “anyway” source 

approach, and not apply PSD or title V to sources based on their 

GHG emissions, for several reasons. First, we believe that the 

administrative burdens described previously are the most that 

the permitting authorities can reasonably be expected to manage 

before and during Step 1. Tighter PSD and title V applicability 

requirements would mean greater administrative burdens. 

Second, we believe that the costs of GHG permitting to the 

sources, as described previously, are substantial and as a 

result, necessitate that we wait for the permitting authorities 

to develop the PSD and title V programs for GHG sources during 

the first 6 months of 2011 before subjecting sources to PSD and 

title V requirements on account of their GHG emissions. By July 

1, 2011, when Step 2 takes effect, the PSD and title V programs 

will be better developed. For example, the permitting 

authorities will have more experience making BACT 

determinations. In addition, by that time, sources will have 

had more time to prepare for the permitting processes. In 

addition, as suggested by one commenter, the additional time 

will allow sources and permitting authorities to address the 

current uncertainty surrounding how to measure high-GWP gases.
305

Third, we estimate that “anyway” sources account for 

approximately 65 percent of total national stationary source GHG 

emissions. As a result, limiting Step 1 to these sources will 

still capture a large portion of the GHG inventory.

A large number of commenters urged us to leave this 

“anyway” source approach in place until such time as we complete 

an assessment and conduct further rulemaking, which we proposed 

would be 6 years from now. We are not taking this action; 

rather, for the reasons discussed next, we believe it is 

reasonable to use GHG thresholds to begin to phase in PSD and 

title V applicability to additional sources in Step 2. 

b. Rationale for Step 2

(1) Proposal

We proposed to establish the applicability level for PSD 

and title V to GHG sources at 25,000 tpy CO2e, and we proposed a 

PSD significance level in the range of 10,000 to 25,000 tpy CO2e. 

Our burden estimates at proposal led us to conclude that at 

those threshold levels, for the PSD program, “approximately 400 

additional new or modified facilities would be subject to PSD 

review in a given year. These include approximately 130 new 

facilities and approximately 270 modifications....” 74 FR 55331, 

col. 1. We estimated that processing these numbers of 

additional permits, along with doing the additional work 
306

associated with GHG emissions from sources subject to PSD anyway 

due to their conventional emissions, would increase permitting 

authority burdens by “approximately 112,000 staff hours at an 

additional cost of approximately $8 million. This workload 

amount represents an increase of about 1.3 times, or 32 percent, 

in the current burden for permitting authorities on a nationwide 

basis.” Id. col. 3. We concluded that “this additional burden 

is manageable,” but that “any threshold lower than 25,000 tpy 

CO2e, would create undue administrative burdens.” Id. 

For the title V program, we estimated that at a 25,000-tpy 

CO2e permitting threshold, “about 13,600 existing facilities” 

would become subject to title V, and that to manage the 

additional workload associated with permitting those sources and 

with the other permit revisions and modifications that would 

result from the 25,000 tpy CO2e threshold, permitting authorities 

would require an additional 492 FTEs, which would be an 

estimated 50 percent increase over current title V staffing 

levels. 74 FR 55335, cols. 1-2.

(2) Comments

We received a significant number of comments from both 

permitting authorities and industry representatives that our 

proposed GHG threshold of 25,000 tpy CO2e for major source 

applicability was too low and would result in an unmanageable 
307

amount of permitting actions in the near term. Many offered 

evidence that we severely underestimated both the number of 

permitting actions and the per-permit administrative burden, for 

both PSD and title V programs. 

Commenters also asserted that the proposed 25,000 tpy 

threshold is too low because it will subject small sources 

(including many small businesses) to PSD and title V, which is 

not in keeping with Congress’s intent to limit PSD and title V 

to large sources when Congress set the 100/250 tpy thresholds 

for the permitting programs. EPA, in collaboration with the 

SBA, conducted an outreach meeting designed to exchange 

information with small entities that may be interested in these 

regulations. The EPA took this small business outreach effort 

into account when finalizing this rule. Many commenters from 

this outreach effort said that there were many more small 

businesses that would become subject to PSD and title V due to 

the proposed permitting thresholds than EPA estimated at 

proposal.

Many commenters recommended specific major source 

thresholds for PSD and title V, including levels of 25,000 (as 

proposed), 40,000, 50,000, 100,000, 150,000, 250,000, and 

1,000,000 tpy CO2e. A majority of the commenters – including 

both industry and state agency commenters - recommended major 
308

source thresholds of 100,000 tpy CO2e. However, several state 

agency commenters recommended thresholds of 50,000 tpy CO2e. 

Other commenters recommended sector-specific thresholds. For 

example, solid waste industry commenters suggested thresholds of 

820,000 tpy CO2e for PSD [which they calculate to be equivalent 

to the existing PSD threshold for “municipal solid waste 

landfill emissions,” i.e., 250 tpy nonmethane organic compounds

(NMOC)] and 320,000 tpy CO2e for title V (calculated to be 

equivalent to the existing major source applicability threshold 

of 100 tpy NMOC). Other commenters urged EPA to set the GHG 

thresholds at levels that correspond to emissions of 

conventional pollutants at the 100/250 tpy level.

Many of the commenters that recommended increasing the 

thresholds cited EPA’s estimates that a particular threshold 

would significantly reduce the number of sources subject to the 

rule while causing only a slight reduction in the percentage of 

GHGs captured. Several of these commenters noted that Table 

VIII-2 in the proposal preamble indicates that shifting the 

major source threshold for PSD from 25,000 to 100,000 tpy CO2e

would reduce the number of major sources from 13,661 to 4,850 

while reducing the coverage of U.S. stationary source GHG 

emissions by only about 4 percent. Other commenters referred to 

the regulatory impact analysis (RIA) for the mandatory GHG 
309

reporting rule to conclude that raising the threshold from 

25,000 to 100,000 tpy CO2e would exclude thousands of entities 

that, on a combined basis, emit only one percent of the nation’s 

GHG emissions. See the RTC document for this final rulemaking 

for more detailed description of comments received on our 

proposed burden assessment. 

Many commenters also recommended specific PSD GHG 

significance thresholds, including levels of 10,000 (as 

proposed), 15,000 (within the proposed range), 25,000 (also as 

proposed), 40,000, 50,000, and 100,000, and 150,000 tpy CO2e, as 

well as suggesting sector-specific thresholds. These 

recommendations were based on the view that we had 

underestimated the number of modifications and that the burden 

of permitting at the proposed levels would therefore be much 

worse than we projected. A number of the commenters argued that 

the significance threshold should be no less than the major 

source threshold, at whatever level that is set. The largest 

number of commenters recommended a PSD significance threshold of 

100,000 tpy CO2e, although significant numbers also support 

25,000 and 50,000 tpy CO2e. 

(3) Rationale for Step 2

Based on these comments, we reassessed our original burden 

estimates from our proposal. This reassessment is discussed at 
310

the beginning of this section. We decided that, once this 

adjustment is taken into account, the burdens at the proposed 

25,000 threshold and the proposed 10,000-25,000 significance 

levels would be unmanageable. We therefore evaluated higher 

thresholds ranging from a 25,000 tpy CO2e major source 

applicability level for PSD and title V to a 50,000, 75,000, or 

100,000 tpy CO2e level, with associated PSD GHG significance 

levels of equal or lesser magnitude; and we selected the 

100,000/75,000 tpy CO2e level. Central to our decision to 

promulgate higher thresholds than what we proposed is our 

recognition, based on comments and further analysis, that 

applying PSD to GHG sources at the statutory or any other 

threshold level or significance level that we have considered 

would result in (1) a greater number of sources, and 

significantly greater number of modifications than we first 

estimated becoming subject to those programs; and (2) a greater 

per-permit cost than we first estimated to the permitting 

authority of processing those permit actions. We discussed our 

revised estimates and reasoning at the beginning of this 

section.

We now estimate that the 25,000/25,000 tpy level would 

result in 250 additional PSD permit actions for new construction 

(either for GHG-only sources or additions to otherwise occurring 
311

permits) and an additional 9,200 PSD permits for modifications 

each year (compared to our estimate at proposal of 130 for new 

construction and 270 for modifications). This level of 

permitting would require an additional 2,815,927 work hours, or 

1,400 FTEs (compared to our estimate at proposal of 112,000 

additional work hours, or 57 FTEs); and would cost an additional 

$217 million each year (compared to our estimate at proposal of 

an additional $8 million). See 74 FR 55331 (proposal). This 

$217 million amount represents approximately a 1,800 percent

increase over current permitting authority annual cost of $12 

million for the major NSR programs 

For title V, under our final burden analysis at a 25,000 

tpy CO2e threshold, we estimate a $64 million annual increase in 

program costs to permitting authorities to add GHG emission 

sources, which reflects a greater than 100 percent increase over 

current programs costs of $62 million. We estimate that this 

increased burden would result in the need for almost 700 new 

FTEs nationwide at permitting authorities (compared to our 

estimate at proposal of 492 additional FTEs, or about a 50

percent increase in existing program size). This increase in 

burden is due to an estimated annual increase of 2,500 new title 

V permits, over 9,500 permit revisions, and over 2,600 permit 

renewal actions due to GHG emission sources. These additional 
312

title V actions compare to current annual program actions of 

approximately 50 new title V permits, 1,394 significant 

revisions, and 3,267 permit renewals. 

Based on this information, we have decided not to finalize 

our proposal to apply a 25,000 tpy CO2e applicability threshold 

to GHG sources at the time that PSD and title V take effect. At 

that level, too many sources – many more than we thought at 

proposal – would be subject to high permitting costs. In 

addition, permitting at that level and at that time would not be 

administratively feasible. The resulting increase in the number 

of PSD and title V permitting actions and workload would create 

insurmountable resource demands for permitting agencies in the 

near term, which would jeopardize the functioning of these 

permitting programs. We are mindful that not only would the 

permitting programs have to bear the costs that our estimates 

are able to monetize, but they would also incur burdens 

associated with hiring and training staff to make and implement 

GHG BACT determinations, GHG emissions evaluations, and other 

evaluations required under the PSD program for a wide variety of 

formerly unpermitted sources, including significant numbers and 

types of small manufacturing and commercial or residential 

establishments. They would also incur burdens associated with 

reviewing applications, citizen comment and petitions, and the 
313

need to communicate and provide outreach to new categories of 

sources, including, again, significant numbers and types of 

small manufacturing and commercial or residential sources. 

Thus, the increased administrative burdens at the 25,000/25,000 

tpy CO2e levels are so great that we have concluded that they 

would not be consistent with the goals of avoiding absurd 

results that contravene congressional intent, including avoiding 

a permitting burden that would overwhelm the capacity of 

permitting authorities to effectively implement their programs. 

Based on our revised burden analysis, in this final action, 

we have decided to establish a multi-step, phase-in approach 

that contains a significantly higher initial threshold level. 

We have determined that a 100,000 tpy CO2e major source threshold 

level for PSD and title V purposes, and a 75,000 tpy CO2e

significance level, produce a level of permitting activity that 

would certainly be an increase over current workload, but that 

would be administratively feasible by July 1, 2011. As a 

result, we have decided to finalize these thresholds as Step 2.

In reaching this conclusion, we needed to consider 

both the sources’ abilities to manage the permitting 

process and the permitting authorities’ capacity to address 

newly-major sources as expeditiously as possible. As to 

the former, sources subject to Step 2 will, for the most 
314

part, continue to include the “anyway” sources subject to 

Step 1. In addition, we estimate that Step 2 will include 

about 500 additional sources that are not already subject 

to permitting. Most of them will become subject to PSD and 

title V because of fuel burning. In order to meet the 

100,000/75,000 threshold, they will have to burn a 

significant quantity of fuel, and that means they will be a 

significant size. In general, these sources include 

municipal or commercial landfills that are large, but not 

large enough to be covered by the NSPS, pulp and paper 

facilities, electronics manufacturing plants, chemical 

production plants, and beverage producers. Although these 

sources have not been subject to PSD permitting before, 

some of them have already been subject to minor source 

permitting, and so will have some familiarity with the 

permitting process. In addition, in general, these sources 

are in source categories that have larger sources that are 

already subject to PSD and title V. As a result, they are 

in industries that have experience in the permitting 

process. Because of their relatively large size and access 

to knowledge about the permitting processes, we believe 

these sources will be able to manage the permitting 

requirements.
315

As to the permitting authorities’ capacity to handle the 

Step 2 workload, we note first that our Step 1 approach does not 

cover newly-major sources. As a result, the Step 2 threshold 

and timing has to be established in a way that takes into 

account permitting authority challenges in addressing many 

sources and categories that would be subject to major source 

permitting for the first time. 

We considered the various PSD and title V threshold 

applicability and significance level options in our final burden 

analysis, summarized in Table VI-1, including levels at 50,000 

CO2e, and 100,000 CO2e. As Table VI-1 indicates, we estimate 

that a 100,000 tpy CO2e major source applicability threshold 

would result in approximately 550 sources becoming newly 

classified as major sources for PSD based on their GHG 

emissions, while a 50,000 tpy CO2e threshold would result in 

3,500 newly classified major sources. 

We then considered the impact on both PSD and title V 

programs of different PSD significance level options for GHGs. 

The choice of a PSD significance level has a direct impact on 

title V burdens because PSD permit requirements resulting from 

modification activities will result in required title V permit 

revisions. We developed PSD and title V burden estimates based 

on significance levels of 50,000 tpy, 75,000 tpy and 100,000 tpy 
316

CO2e, combined with a major source applicability level of 100,000 

tpy CO2e. 

At a 50,000 tpy CO2e significance level, we estimated an 

annual increase of approximately 1,800 PSD permitting actions 

and almost 2,000 additional title V permitting actions, as 

compared to Step 1. At a 75,000 tpy CO2e significance level, we 

estimated an annual increase of approximately 900 PSD permitting 

actions and just over 1,000 additional title V permitting 

actions as compared to Step 1. At a 100,000 tpy CO2e

significance level we estimated an annual increase of 

approximately 25 PSD permitting actions and 210 additional title 

V permitting actions as compared to Step 1. For title V, under 

these different scenarios, the major source applicability level 

of 100,000 tpy CO2e results in approximately 200 new permits 

annually, but, as noted, the choice of significance levels 

affects the number of required permit revisions. 

Based on this information, we have decided to set our final 

Step 2 thresholds at 100,000 tpy CO2e for major source 

applicability under PSD and title V and at a 75,000 tpy CO2e

significance level for PSD. Overall, we estimate that the 

almost 900 additional PSD permitting actions (virtually all of 

which would be modifications) per year at these levels will 

result in an approximately a $21 million increase (from Step 1) 
317

in states’ annual costs for running PSD programs. In addition, 

we estimate that the 1,000 additional title V permit actions 

will cause the total title V burden for permitting authorities 

to increase by $6 million annually from Step 1. This total 

increase in permit program burdens of $27 million represents a 

34 percent increase over the $78 million in total cost of PSD 

and title V programs at Step 1. We consider this a substantial 

increase particularly because Step 2’s start date of July 1, 

2011 is only 6 months after Step 1’s start date of January 2, 

2011. What’s more, Step 1 will entail a substantial increase in 

permitting authority obligations, so that adding the costs of 

Step 1 and Step 2 together - $31 million – means that permitting 

authorities will be required to increase their permitting 

resources by approximately 42 percent between now and Step 2. 

In addition to the administrative burdens we have been able to 

monetize, we must be mindful that permitting authorities will 

incur other burdens, including the significant support and 

outreach activities by permitting staff for the many newly 

permitted sources. We believe that any lower thresholds in this 

timeframe, whether in the PSD and title V applicability levels 

or in the significance level, would give rise to administrative 

burdens that are not manageable by the permitting authorities. 
318

Although the burdens at the 100,000 tpy CO2e/75,000 tpy CO2e

levels are steep, we consider them manageable. Step 2 

permitting for GHGs will mostly involve source categories in 

which some sources have traditionally been subject to 

permitting, which should render applying even the new GHG 

requirements more manageable. These source categories include 

fossil fuel-fired power plants, petroleum refineries, cement 

plants, iron and steel plants, and petroleum refineries, in 

addition to other large industrial type source categories. A 

full description of the type of sources that we expect will have 

GHG emissions that exceed the 100,000 tpy CO2e threshold is 

provided in the “Technical Support Document for Greenhouse Gas 

Emissions Thresholds Evaluation” located in the public docket 

for this rulemaking. In addition, because Step 2 does not begin 

until July 1, 2011, permitting authorities have about 14 months 

to prepare for it. 

In addition, we believe that the sources that will become 

subject to PSD and title V requirements at the 100,000/75,000 

tpy CO2e levels will be able to accommodate the additional costs 

of permitting. For the most part, these sources will be of a 

comparable size and activity level as those sources that are 

already subject to those requirements.
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Because the administrative burdens at the 100,000/75,000 

tpy CO2e level are as heavy as the permitting authorities can 

reasonably be expected to carry, adopting these threshold levels 

is consistent with our legal basis under the “absurd results” 

doctrine. Under this basis, we are reconciling the statutory 

levels with congressional intent by requiring that the PSD and 

title V requirements be applied to GHG sources at levels as 

close as possible to the statutory thresholds, and as quickly as 

possible, in light of costs to sources and administrative 

burdens. 

Because the administrative burdens at the 100,000/75,000 

tpy CO2e level are manageable, we do not believe that higher 

threshold levels are justifiable for Step 2. Specifically, at 

the 100,000/100,000 level – which would entail a 100,000 tpy CO2e

significance level, rather than a 75,000 tpy CO2e level –

permitting sources would need to handle only 20 additional 

modifications beyond current levels, and thus would not incur 

substantial additional costs. By the same token, we disagree 

with commenters who suggested that we needed to set permanent 

GHG permitting thresholds for major sources at a rate equivalent 

to the amount of GHGs that would be emitted by conventional 

pollutants at the 100 and 250 tpy level in order to meet the 

legal bases of the “absurd results” and “administrative 
320

necessity” doctrines. These levels would likely be well above 

300,000 tpy CO2e, depending on fuel types and assumptions 

regarding the relative emissions of GHGs compared to the 

conventional pollutants. Our data show that none of the levels 

above 100,000/75,000 tpy CO2e would result in significant 

increases in administrative burdens. As a result, establishing 

these levels would not apply PSD or title V requirements to GHG 

sources as quickly as possible, and thus would not be consistent 

with our approach in the Tailoring Rule. 

We estimate that facilities meeting the Step 2 major source 

applicability thresholds account for approximately 67 percent of 

total national stationary source GHG emissions. Many commenters 

felt that this should be an important basis for our selection of 

a threshold, stating that there is no significant loss in GHG 

emissions coverage of source categories at the 100,000 tpy CO2e

threshold, and in some cases arguing that as a result, we should 

set the level even higher. We agree that it is important that 

the coverage in Step 2 represents 86 percent of the coverage at 

full implementation of the statutory 100/250 thresholds. 

c. Rationale for EPA’s Plan Beyond Step 2

EPA commits that after Step 2, EPA will begin another 

rulemaking in 2011 and complete it by July 1, 2012, and in that 

rulemaking take comment on a further phase-in of GHG sources for 
321

PSD and title V applicability (Step 3). However, under this

rule, in no event will EPA apply PSD or title V to sources below 

the 50,000 tpy CO2e levels prior to 2016. In addition, EPA 

commits to conduct a study, to be concluded by April 30, 2015, 

evaluating the status of PSD and title V applicability to GHG 

sources, and, based on the study, complete a rulemaking by April 

30, 2016 that addresses another round of a phase-in. 

(1) Proposal

In our proposal, we noted that following implementation of 

the first phase of PSD and title V applicability to GHG sources, 

generally at the 25,000 tpy CO2e threshold, additional action 

would be required over time to assure full compliance with the 

statute. We did not establish more steps in the schedule, but 

we did commit to conduct a study, to be completed by 5 years 

after promulgation, evaluating the status of PSD and title V 

applicability to GHG sources, and, based on the study, complete 

a rulemaking by 6 years after promulgation that addressed an 

additional step of the phase-in. 

(2) Comments

A number of commenters supported the proposal’s overall 

approach to phase in the permitting of GHGs, mainly because this 

approach will allow permitting of the largest sources of GHGs 

immediately while collecting more information about smaller 
322

sources and more fully considering streamlining options for 

subsequent phases. Many of these commenters made clear that 

they do not support implementation of the statutory 100/250 tpy 

thresholds, even through a phase-in approach. On the other 

hand, one commenter asserted that EPA has failed to demonstrate 

that it needs 6 years to study and implement NSR and title V for 

sources emitting less than 25,000 tpy. The commenter contends 

that EPA has not analyzed, among other things, what combined 

effect the full implementation of its streamlining proposals in 

the 15 months before the due-date for title V permit 

applications would be to reduce the cost, complexity, and number 

of title V permit applications that would have to be submitted.

(3) Rationale for Further Steps

We agree with commenters who support a phased-in approach 

to the Tailoring Rule. Our final action reflects a multi-step 

process that we believe will facilitate a manageable expansion 

of PSD and title V applicability, as appropriate, to GHGemitting sources. In our final action, we have established the 

initial two steps of a multi-step phase-in of lower threshold 

applicability with a commitment to take further regulatory 

activity to consider adopting lower thresholds. We believe this 

process will provide substantial opportunity for permitting 

authorities and sources to establish enough experience and 
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information, and to provide significant real-world feedback to 

EPA, so as to better inform decisions on future phase-in steps. 

With this overall phase-in approach in mind, in this final 

rule, EPA includes an enforceable commitment to undertake a 

notice-and-comment rulemaking that would begin with an SNPR that 

we expect to be issued in 2011 and that we commit will be 

finalized in 2012. The notice will propose or solicit comment 

on further reductions in the applicability levels. This 

rulemaking will take effect by July 1, 2013 and therefore, in 

effect, constitute Step 3. In this action, we are committing to 

a rulemaking for Step 3, but are not promulgating Step 3, 

because it is important to allow EPA and the permitting 

authorities to gain experience permitting sources under Steps 1 

and 2, and to allow time to develop streamlining methods, before 

attempting to determine what would be the next phase-in levels 

for PSD and title V applicability. While committing to future 

action, we do not decide in this rule when the phase-in process 

will ultimately end, or at what threshold level, because all 

that depends on uncertain variables such as our progress in 

developing streamlining approaches and on permitting 

authorities’ progress in developing permitting expertise and 

acquiring more resources. We may continue the phase-in process 

with further rulemaking(s) after 2016. Alternatively, we may 
324

make a final determination through future rulemaking that, under 

a Chevron analysis, accounting for the “absurd results” 

doctrine, PSD and/or title V do not apply to GHG sources that, 

while small and relatively inconsequential in terms of GHG 

contribution, are above the statutory tonnage thresholds for 

these programs, and thereby end the phase-in process.

In addition, in this action, we are determining that in no 

event – whether through Step 3 or a subsequent step – will we 

apply PSD or title V to sources at the 50,000/50,000 tpy CO2e 

level or lower prior to May 1, 2016. We have several reasons 

for making this determination at this time. Most importantly, 

our examination of the expected burdens to the permitting 

authorities of applying PSD and title V to GHG sources convinces 

us that extending the permitting programs to sources at or below 

the 50,000/50,000 tpy CO2e level within 6 years of promulgation 

would result in prohibitively heavy burdens. This threshold 

option would result in close to 2,000 additional annual PSD 

permitting actions per year over the current program and more 

than 1,000 over Step 2, including both new construction and 

modifications. For title V, we estimated an increase of over 

1,000 new title V permits (all newly permitted sources because 

of GHG emissions) over 2,000 permit revisions per year over the 

current program, and about 980 new title V permits and 900 
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permit revisions more than the Step 2 amounts. 

These increases, which could occur between 2013 and 2016 

under our approach depending on the outcome of the Step 3 

rulemaking, represent very substantial additions to the 

permitting program. In terms of cost, we estimate that these 

additional actions would result in a $73 million per year 

increase in joint PSD and title V program costs over the current 

programs – which is almost a doubling of costs – and $42 million 

annual cost increase over Step 2 for the current programs. We 

believe that it would take permitting authorities some time to 

adjust to this workload. This is particularly true because at 

the 50,000/50,000 tpy CO2e level, smaller sources – including 

ones not previously subject to permitting requirements – will 

become subject to PSD and title V. It will take some time for 

both the permitting authorities and the sources to absorb these 

new obligations. 

Importantly, the next lower cut-off – below 50,000 tpy CO2e

for the major threshold level – is the 25,000/25,000 tpy CO2e

level. For the reasons discussed previously, this level is 

clearly not manageable within the first 6 years after this

action. This applicability level would bring in over 7,000

sources that would be newly subject to title V permitting and 

result in close to 10,000 new PSD permitting actions. This 
326

would result in a 380 percent increase over current program 

costs for PSD and title V to run these programs. Based on 

comments we received from state and local permitting agencies on 

our proposed Tailoring Rule, these levels of permitting 

activities would far exceed the administrative capabilities of 

the permitting agencies for at least the near future. Thus, the 

6-year exclusion is necessary to provide these agencies and 

their permittees certainty that this will not occur. 

We recognize that at present, we do not have data that 

would allow us to compile administrative burden estimates for 

specific levels between the 50,000/50,000 and 25,000/25,000 tpy 

CO2e levels we assessed. However, it is clear that the burdens 

begin to rise sharply below the 50,000/50,000 tpy CO2e level. To 

reiterate, the combined PSD and title V administrative burdens 

at the 50,000/50,000 tpy CO2e level cost almost twice as much as 

the current programs, but the burdens at the 25,000/25,000 tpy 

CO2e level cost almost four times as much as the current 

programs. As a result, we conclude that dropping the level 

below 50,000/50,000 tpy CO2e too soon would quickly expose the 

permitting authorities to unacceptably high burdens. 

As a further reason for concluding that we will not reduce 

thresholds beyond 50,000/50,000 tpy CO2e during the first 6

years, we recognize that the PSD permitting process in 
327

particular carries important ramifications for the permitting 

authorities and the affected sources. If we have underestimated 

the permitting burden or the ability of states to respond to 

their additional workload, then permitting backlogs will result, 

and PSD permit issuance will be delayed, and sources seeking a 

PSD permit will not be able to construct or modify. If this 

were to happen on a large enough scale, it could have 

potentially serious consequences for the national economy. 

Moreover, we need to be mindful that the best information 

we currently have as to permitting authority burdens represents 

a national average, as described previously. Our information at 

the individual state and local level, where permitting occurs, 

is not as robust. Accordingly, we recognize that a particular 

state may encounter permitting costs that are higher than 

average, and this may result in permitting backlogs in that 

state, with the consequence that sources in that state will face 

long delays in constructing or modifying. Similarly, even if a 

particular state’s costs are in line with the national average, 

that state may not be able to find the additional resources to 

cover those costs as readily as other states. For this reason, 

too, sources in that state could face long delays in

constructing or modifying.

Beyond the administrative burdens to permitting 
328

authorities, we recognize that the costs of PSD and title V 

permitting to sources may be high, and we are not inclined to 

allow their imposition at this time on sources smaller than the 

50,000/50,000 tpy CO2e threshold. At that level, the permitting 

programs will apply to a significant number of newly permitted 

sources, including a variety of small manufacturing, commercial 

and residential categories. The next level that we have 

analyzed is the 25,000/25,000 tpy CO2e threshold. At that level, 

more than 7,000 more sources would become subject to PSD each 

year – almost all due to modifications – and another 4,000 

sources would become subject to title V each year. These 

sources would be even smaller than those that already will have 

become subject to PSD and title V due to their GHG emissions. 

We do not think it reasonable to subject more of those types of 

sources, and smaller ones, to permitting costs within the next 6

years. 

Finally, we note that moving from a 50,000 tpy CO2e

threshold to 25,000 tpy CO2e will increase the emissions coverage 

of GHG stationary sources from 70 percent to 75 percent

nationwide, which we consider to be a relatively small amount. 

We recognize that our progress in developing streamlining 

methods will be a key determinant to the ability of permitting 

authorities to administer, and sources to comply with, PSD and 
329

title V at GHG emission levels below 50,000/50,000 tpy CO2e. 

Although we commit to pursue streamlining, we cannot predict our 

progress. This uncertainty may be problematic for stakeholders, 

primarily permitting authorities and industry. That is, 

permitting authorities will face uncertainty in planning the 

scope of their programs over the next few years, and industry 

will face uncertainty as to what new construction projects and 

modifications will be subject to PSD for GHGs. By determining 

now that for the next 6 years we will not impose PSD 

requirements below a floor at the 50,000/50,000 tpy CO2e level, 

we add a measure of needed certainty. 

We also recognize that selecting a level that is too high 

or keeping a level for too long means that some sources may 

construct or modify without implementing BACT level controls, 

and this could result in additional emissions of GHGs. We need 

to be vigilant and to protect against this outcome. Even so, 

all things considered, we believe that our determination not to 

apply the PSD or title V permitting requirements to sources 

below the 50,000/50,000 tpy CO2e level for the first 6 years also 

represents a reasonable balancing of protection of the 

environment with promotion of economic development. This type 

of balancing is consistent with our authority under the PSD 

provisions.
330

We also raised the issue of “hollow” or “empty” permits in 

discussing our rationale for why it may make sense to delay 

title V permitting under our proposal. We were concerned that 

many title V permits for GHG sources would contain no applicable 

requirements, and their issuance would therefore be of little 

value and would not be the best use of scarce resources. 

Several commenters agreed that implementing title V for GHGs

will, at least initially, require “empty permits” to be issued 

to GHG sources because such sources will not be subject to 

“substantive” requirements, and that this would not be the best 

use of scarce resources. 

We believe that the amount of resources that would be spent 

on, and the limited value that would result from, “empty 

permits” does warrant consideration under the Chevron analysis, 

taking account of the “absurd results” doctrine. Therefore, we 

intend to consider the role of “empty permits” when we undertake 

future rulemaking. However, we believe the issue of “empty 

permits” has limited or no relevance to the first two steps of 

the phase-in that we are promulgating in this rule. During Step

1, permitting for GHGs is only required if the source is 

otherwise subject to permitting for its emissions of non-GHGs. 

Those sources very likely will be subject to existing 

substantive applicable requirements for non-GHGs (e.g., NSPS, 
331

Maximum Achievable Control Technology (MACT), and SIP 

requirements, including PSD). Thus, there should be no, or at 

least no additional, “empty permits” during Step 1. For Step 2, 

it is possible that sources that become subject to title V 

requirements for GHG emissions may not be subject to other 

requirements, but our assessment suggests that this is very 

unlikely. We estimate that virtually all of the 550 newly-major

sources in Step 2 will be subject to applicable requirements 

under the CAA because they are from categories that have been 

traditionally subject to regulations, such as smaller industrial 

sources from already regulated categories, large landfills, and

oil/gas/coal production. Even the approximately 50 newlysubject commercial sources in Step 2, which we estimate to be 

comprised of very large hospitals, are likely to be covered by 

standards for medical waste incinerators. In addition, we 

expect these sources may well be subject to SIP requirements. 

Thus, we do not expect any, or at most very few “empty permits”

during Step 2.

In later stages of implementation (e.g., prospective Step

3) or in the event that we permit smaller, non-traditional 

sources of GHGs that have never otherwise been subject to major 

source permitting, there would be a greater potential for “empty 

permits” to be issued under title V. Cognizant of this, we 
332

intend to further explore in the rulemaking for Step 3 “empty

permit” theories under the “absurd results” rationale that may 

serve to permanently narrow the scope of title V to exclude 

sources that would potentially be required to obtain an “empty 

permit” due to GHG emissions. 

In this action, EPA is also finalizing its proposal to 

commit to conduct an assessment of the threshold levels – to be 

completed in 2015, 5 years after this action - that will examine 

the permitting authorities’ progress in implementing the PSD and 

title V programs for GHG sources as well as EPA’s and the 

permitting authorities’ progress in developing streamlining 

methods. We further commit to undertake another round of 

rulemaking - beginning after the assessment is done, and to be 

completed by April 30, 2016 – to address smaller sources. 

We disagree with the commenter who asserted that we do not 

need 6 years to study and implement PSD and title V for smaller 

sources. As we discussed in the proposal, and reiterate in this 

final action, we do not have sufficient information at this time 

to determine the applicability and effectiveness of the various 

permitting streamlining techniques. For reasons discussed in 

more detail in section V.E.1 regarding streamlining, we are not 

now able to determine how such techniques will be implemented or 

whether they will prove viable or effective. We agree with the 
333

commenter that these measures may reduce the scope, cost, and 

complexity of these programs, but there is considerable 

uncertainty as to the extent of this effect. We do commit in 

this action to fully investigate, propose, and evaluate permit 

streamlining techniques to determine where they may have 

applications, how they would be applied, and whether they can 

withstand legal challenge. Even for those techniques that may 

ultimately be deemed viable, there is a significant time period 

necessary for rulemaking and state adoption, all of which could 

take up to 3 years or more. We also note that we will be 

required to complete our study of the effectiveness of these 

techniques within 5 years, meaning that, in order to complete it 

in time, we will essentially need to begin the study as soon as 

relevant data are starting to become available. Finally, the 

sixth year, in which EPA must complete rulemaking, requires 

proposal and promulgation of a rule within 1 year, which is an 

ambitious schedule. Therefore we believe that 6 years is 

appropriate for this type of effort. We also have received a 

substantial number of comments from permitting authorities that 

agreed with our 5-year timeframe, or a greater timeframe, to get 

more prepared for permitting smaller sources.

d. Other Comments on “Absurd Results” Doctrine
334

We received other comments on our application of the 

“absurd results” doctrine, which we respond to in the RTC

document. One comment was overarching, and so we respond to it 

here: Commenters have asserted that under the “absurd results” 

doctrine, EPA does not have authority to, or at least should 

not, promulgate the endangerment/cause or contribute findings 

(which we will sometimes refer to as the “findings”) or the LDVR 

because doing so would trigger the PSD and title V requirements, 

which in turn would give rise to “absurd results”. According to 

commenters, under the “absurd results” caselaw, EPA is obliged 

to avoid taking any action that would trigger absurd results and 

in this case that means foregoing the endangerment/cause or 

contribute findings and/or the LDVR, or at least deferring 

finalizing them until EPA has time to streamline PSD and title V 

requirements so as to avoid “absurd results”. Commenters made 

the related comment that if we promulgate the LDVR, and thereby 

trigger PSD, we cannot rely on the “absurd results” doctrine 

because it is our own actions – the promulgation of the LDVR --

that will have given rise to the “absurd results,” and under 

those circumstances, the doctrine is not available.

The comments that EPA had no authority to promulgate, or 

should not have promulgated, the endangerment/cause or 

contribute findings or the LDVR at the times that EPA did are 
335

not relevant to this rule, the Tailoring Rule. EPA has already 

promulgated the findings and the LDVR, and the LDVR triggers PSD 

and title V applicability, as we have seen. These comments 

would have been relevant only to the proposed findings and LDVR, 

and we are not, in this rulemaking, revisiting or reopening the 

findings or the LDVR.51

Commenters claim that if EPA promulgates the LDVR, the 

“absurd results” doctrine will no longer apply to the Tailoring 

Rule because it will have been EPA’s own action – promulgation 

of the LDVR – that gives rise to the “absurd results”. We 

disagree for several reasons. For one thing, commenters have 

not cited caselaw, and our research has disclosed none, in which 

a court specifically addressed a similar situation and issued a 

holding along the lines of what commenters urge. Moreover, 

commenters’ approach would be punitive because the absurd 

results would occur absent this rule going final. Such an 

outcome would be counter to the purpose of the doctrine. That 

is, it would mean that PSD and title V would apply to GHG 

sources by their terms – at the statutory levels, as of January 

2, 2011 – with all the adverse consequences described elsewhere. 

 

51 EPA does have pending before it ten petitions to 

reconsider the endangerment and cause or contribute findings. 

EPA is carefully evaluating those petitions and expects to issue 

its decision(s) on or about July 30, 2010.
336

In any event, and although we are not obligated to respond 

to these comments on the merits, they are incorrect on the 

merits, for the reasons that follow. This discussion should not 

be viewed as reopening the endangerment/cause or contribute 

findings or the LDVR because, as stated previously, we are not 

reconsidering or reopening those two actions in this rule.

In determining and implementing congressional intent, it is 

important that the statutory provisions at issue be considered 

together – (1) the obligation to make a determination on 

endangerment and contribution under CAA section 202(a); (2) if 

affirmative endangerment/cause or contribute findings are made, 

the obligation to promulgate standards applicable to the 

emission of any air pollutant from new motor vehicles or new 

motor vehicle engines under CAA section 202(a); and (3) the PSD 

and title V applicability provisions. The most appropriate 

reading, and certainly a reasonable reading, is that we are 

required to take the action we have taken, and are taking with 

this rule, and that is to issue the findings, promulgate the 

LDVR, and promulgate the Tailoring Rule. Our approach gives 

effect to as much of Congress’s intent for each of these 

provisions, and the CAA as whole, as possible. 

With respect to the endangerment/cause or contribute 

findings under CAA section 202(a), congressional intent is clear 
337

that, as we stated in making the findings and the Supreme Court 

held in Massachusetts v. EPA, we are precluded from considering 

factors other than the science based factors relevant to 

determining the health and welfare effects of the air pollution 

in question. Accordingly, EPA determined that under 

Massachusetts v. EPA, 549 U.S. 497 (2007) we were precluded from 

deferring or foregoing the findings due to concern over impacts 

on stationary sources affected by PSD or title V requirements. 

See 74 FR at 66496, 66500-01 (“Taken as a whole, the Supreme 

Court’s decision clearly indicates that policy reasons do not 

justify the Administrator avoiding taking further action on the 

questions here.”); see also Massachusetts v. EPA, 549 U.S. at 

533; see also 74 FR at 66515-16 (December 9, 2009). (The 

Administrator “must base her decision about endangerment on the 

science, and not on the policy considerations about the 

repercussions or impact of such a finding).52 Moreover, as EPA 

also noted, “EPA has the ability to fashion a reasonable and 

common-sense approach to address greenhouse gas emissions and 

climate change.” 74 FR at 66516.

 

52 Note, that at least one petition for reconsideration on 

the endangerment/contribution findings raises the same arguments 

related to the timing of decisions and absurd results. As noted 

before, EPA is carefully evaluating all the pending petitions 

for reconsideration.
338

Regarding the timing of the LDVR, Congress’s intent was 

that endangerment/cause or contribute findings under section 

202(a) would in fact lead to control of the air pollutants from 

new motor vehicles and new motor vehicle engines contributing to 

the harm. The primary goal of section 202(a) is to achieve such

reductions by requiring that EPA adopt emissions standards, and 

as a result, proceeding with the LDVR is consistent with that 

goal. In contrast, deferring the LDVR and thereby delaying 

achievement of the public health and welfare benefits Congress 

expected and required under section 202(a) would run directly 

counter to what Congress intended under section 202(a) - EPA 

issuing emissions standards to address the public health and 

welfare problems that were identified, not EPA refusing to do 

so.

Moreover, we have compelling reasons to proceed with the 

LDVR, in the manner that we did. As we stated in the LDVR, in 

response to similar comments that we were not obligated to 

conduct that rulemaking, or to conduct it at the time that we 

did: 

Some of the comments relating to the stationary 

source permitting issues suggested that EPA should 

defer setting GHG standards for new motor vehicles to 

avoid ... [adverse] stationary source permitting 

impacts. 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 
339

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. In the absence of these final 

standards, there would be three separate federal and 

state regimes independently regulating light-duty 

vehicles to increase fuel economy and reduce GHG 

emissions: NHTSA’s CAFE standards, EPA’s GHG 

standards, and the GHG standards applicable in 

California and other states adopting the California 

standards. This joint EPA-NHTSA program will allow 

automakers to meet all of these requirements with a 

single national fleet because California has indicated 

that it will accept compliance with EPA’s GHG 

standards as compliance with California's GHG 

standards. 74 FR at 49460. California has not 

indicated that it would accept NHTSA’s CAFE standards 

by themselves. Without EPA’s vehicle GHG standards, 

the states will not offer the federal program as an 

alternative compliance option to automakers and the 
340

benefits of a harmonized national program will be 

lost. California and several other states have 

expressed strong concern that, without comparable 

federal vehicle GHG standards, the states will not 

offer the federal program as an alternative compliance 

option to automakers. Letter dated February 23, 2010 

from Commissioners of California, Maine, New Mexico, 

Oregon and Washington to Senators Harry Reid and Mitch 

McConnell (Docket EPA-HQ-OAR-2009-0472-11400). The 

automobile industry also strongly supports issuance of 

these rules to allow implementation of the national 

program and avoid “a myriad of problems for the auto 

industry in terms of product planning, vehicle 

distribution, adverse economic impacts and, most 

importantly, adverse consequences for their dealers 

and customers.” Letter dated March 17, 2010 from 

Alliance of Automobile Manufacturers to Senators Harry 

Reid and Mitch McConnell, and Representatives Nancy 

Pelosi and John Boehner (Docket EPA-HQ-OAR-2009-0472-

11368). Thus, without EPA’s GHG standards as part of 

a federal harmonized program, important GHG reductions 

as well as benefits to the automakers and to consumers 

would be lost.165 In addition, delaying the rule would 

impose significant burdens and uncertainty on 

automakers, who are already well into planning for 

production of MY 2012 vehicles, relying on the ability 

to produce a single national fleet. Delaying the 

issuance of this final rule would very seriously 

disrupt the industry’s plans 

Instead of delaying the LDV rule and losing the 

benefits of this rule and the harmonized national 

program, EPA is directly addressing concerns about 

stationary source permitting in other actions that EPA 

is taking with regard to such permitting. That is the 

proper approach to address the issue of stationary 

source permitting, as compared to delaying the 

issuance of this rule for some undefined, indefinite 

time period. 

75 FR 25,402 cols. 1-3 (May 7, 2010) (footnote omitted).

With respect to both the endangerment/cause or contribute 

findings and the LDVR, it would require speculation and 
341

conjecture to defer – or, certainly, to forego altogether - the 

findings or LDVR until EPA completed streamlining the PSD and 

title V requirements on grounds that doing so would allow full 

compliance in the future with all PSD and title V statutory 

provisions. That is the gist of commenters argument – that EPA 

should defer or forego issuance of the findings and the LDVR to 

avoid causing an absurd result from implementation of the 

separate PSD and title V programs. Underlying this claim is the 

assumption that this would allow EPA to avoid the “absurb 

results”. As we discuss elsewhere in this rulemaking, there is 

no basis at this point to determine that streamlining will 

ultimately allow full compliance with the PSD and title V 

requirements. Rather, it is possible that EPA may conclude that 

none of the available streamlining techniques will allow all GHG 

sources at the statutory thresholds to comply with PSD and title 

V requirements in a manner that does not impose undue costs on 

the sources or undue administrative burdens on the permitting 

authorities. Under these circumstances, EPA may then 

permanently exclude GHG source categories from PSD or title V 

applicability under the absurd results doctrine. Moreover, it 

may well take many years before EPA is in a position to come to 

a conclusion about the extent to which streamlining will be 

effective and therefore be able to come to a conclusion as to 
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whether any source categories should be permanently excluded 

from PSD or title V applicability. In our rulemaking today, we 

describe what actions we expect to take in the first 6 years 

after PSD and title V are triggered for GHG sources, and we may 

well be in a situation in which we continue to evaluate 

streamlining measures and PSD and title V applicability to GHG 

sources after this 6-year period. 

Accordingly, deferring the endangerment/cause or contribute 

findings and LDVR until such time that PSD and title V 

streamlining would allow full implementation of these programs 

at the statutory limits would serve only to delay the benefits 

of the LDVR, as well as the benefits that come from phasing in 

implementation of the PSD program to cover larger sources first.

It would rely on an assumption that is unfounded at this point, 

that is, that such full compliance will be required at some 

point in the future. Delaying the emissions benefits of the 

LDVR and the related emissions benefits from partial 

implementation of the PSD program fails to implement Congress’ 

intent that the endangerment/cause or contribute findings 

“shall” lead to emissions standards for new motor vehicles 

contributing to the endangerment, and related emissions controls 

for the same air pollutant under the PSD program. EPA need not 

determine at this time what approach would be appropriate if 
343

there was a determination that full compliance with PSD and 

title V would in fact occur at some point in the future. In 

this case, absent such a determination, it would be improper to 

rely on speculation of such a future possibility as a basis 

under section 202(a) to defer or forego issuance of the LDVR on 

the grounds that EPA should defer or forego the LDVR to avoid 

causing an absurd result. Likewise there is no basis to defer 

proceeding at this time with the streamlining of the PSD and 

title V programs.

With respect to the PSD and title V applicability 

requirements, as we discuss elsewhere, we believe that Congress 

expressed a clear intent to apply PSD and title V to GHG sources 

and that the phase-in approach incorporated in the Tailoring 

Rule is fully appropriate. Proceeding now with the 

endangerment/contribution findings and LDVR, even if phasing-in 

of the PSD and title V programs is required, is consistent with 

our interpretation of the PSD and title V applicability 

requirements. Delaying the endangerment/contribution findings 

or LDVR, and thereby delaying the triggering of PSD and title V 

requirements for GHG sources, would lead to the loss of a 

practicable opportunity to implement the PSD and title V 

requirements in important part, and thereby lead to the loss of 

important benefits. As discussed elsewhere, promulgating the 
344

LDVR and applying the PSD and title V requirements to the 

largest GHG sources, as we do in this Tailoring Rule, is 

practicable because the sources that would be affected by the 

initial implementation steps we promulgate in this rule are able 

to bear the costs and the permitting authorities are able to 

bear the associated administrative burdens. Promulgating the 

LDVR now provides important advantages because the sources that 

would be affected by the initial steps are responsible for most 

of the GHG emissions from stationary sources. 

It should also be noted that as discussed elsewhere in this 

rulemaking, our ability to develop appropriate streamlining 

techniques for PSD and title V requirements is best done within 

the context of actual implementation of the permitting programs, 

and not in isolation of them. That is, because the great 

majority of GHG sources have not been subject to PSD and title V 

requirements, we will need to rely on the early experience in 

implementing the permitting requirements for the very large 

sources that initially will be subject to those requirements in 

order to develop streamlining techniques for smaller sources. 

It is the real world experience gained from this initial phase 

that will allow EPA to develop any further modifications that 

might be necessary. This would not and could not occur if the 

LDVR were delayed indefinitely or permanently, so that PSD and 
345

title V requirements were not triggered. It is unrealistic to 

expect that delaying action until a future tailoring rule could 

resolve all of the problems identified in this rulemaking, 

absent any real world implementation experience. 

At its core, commenters’ argument is that EPA should delay 

(if not forego altogether) doing anything to address GHG 

emissions and the problems they cause until it can do so in a 

way that does not cause any implementation challenges, even if 

that delay results in continued endangerment to public health 

and welfare. EPA does not take such a myopic view of its duties 

and responsibilities under the CAA. Congress wrote the CAA to, 

among other things, promote the public health and welfare and 

the productive capacity of the population. CAA §101(b)(1). 

EPA’s path forward does just this. Thus, proceeding with the 

endangerment/cause or contribute findings, the LDVR, and with 

PSD and title V through the phase-in approach of the Tailoring 

Rule maximizes the ability of EPA to achieve the Congressional 

goals underlying sections 202(a) and the PSD and title V 

provisions, and the overarching CAA goal of protecting public 

health and welfare. Congress called for EPA (1) to determine 

whether emissions from new motor vehicles contribute to air 

pollution that endangers, (2) if that the determination is 

affirmative, to issue emissions standards for new motor vehicles 
346

to address the endangerment, and (3) to implement the PSD and 

Title V program to address similar emissions in their permitting 

program as another tool to address the air pollutant at issue. 

Delaying both the LDVR and PSD/title V implementation, as 

commenters have called for, would run directly counter to these 

Congressional expectations. Commenters’ calls for deferral or 

foregoing of the findings or LDVR are generally phrased in a 

conclusory fashion, and do not demonstrate how EPA could take 

the required CAA actions concerning GHGs while remaining within 

the requirements of each of the various CAA provisions, and 

achieving the overall goals of the CAA. As such the comments do 

not provide a valid basis for the deferral of agency action they 

suggest. 

9. “Administrative Necessity” Basis for PSD and Title V 

Requirements in Tailoring Rule

EPA believes that the “administrative necessity” doctrine, 

within the Chevron framework, also justifies this rulemaking. 

Applying the applicability requirements of the PSD and title V

programs according to a literal reading of their terms (as EPA 

has narrowed them in the past through interpretation) to GHG 

sources beginning on the January 2, 2011 date that regulation of 

GHGs takes effect would sweep so many sources into those 

programs as to render the programs impossible for the permitting 
347

authorities to administer. Although streamlining the PSD and 

title V programs offers some promise to improve the 

administrability of the programs, given the time needed to 

implement such streamlining, the step-by-step expansion of PSD 

and title V requirements to GHG sources that we are promulgating 

is the most that the permitting authorities can reasonably be 

expected to administer.

This section discusses the application of the 

“administrative necessity” doctrine. Our views concerning this 

doctrine remain similar to what we said at proposal, except that 

in this rulemaking we place the doctrine more clearly in the 

Chevron analytical framework, we revise our assessment of the 

administrative burdens due to new analysis we have conducted and 

information we have received since proposal, and we make certain 

revisions to the tailoring approach.53 This analysis and 

information, as well as the revisions to the tailoring approach,

 

53 In addition, we base our reliance on the “administrative 

necessity” doctrine on the administrative burdens to the 

permitting authorities of permitting smaller GHG sources, but 

not on the relatively small amount of GHG emissions associated 

with the smaller sources. See Alabama Power v. Costle, 636 F.2d 

323, 357 (D.C. Cir. 1980) (establishing the “administrative 

necessity” doctrine as “inherent in the administrative process” 

and presumptively available under the statutory scheme, absent 

clear congressional intent to the contrary; but adding that in 

contrast, “there exists no general administrative power to 

create exemptions to statutory requirements based upon the 

agency’s perceptions of costs and benefits”).
348

have already been presented previously, in the discussion of the 

“absurd results” basis. In addition, it is not necessary to 

reiterate the lengthy discussion of the “administrative 

necessity” doctrine that we included in the proposal or the 

factual data presented previously; as a result, this section 

briefly highlights the conclusions we have reached about the 

application of this doctrine.

As noted previously, under the PSD and title V 

applicability provision – read literally, as we have long 

interpreted them - EPA’s recent promulgation of the LDVR will 

trigger the applicability of PSD and title V for GHG sources at 

the 100/250 tpy and 100 tpy threshold levels, respectively, as 

of January 2, 2011. This is because PSD applicability hinges on

the definition of “major emitting facility” and title V 

applicability hinges on the definition of “major sources,” and 

those terms, read literally, and under EPA’s long-standing 

narrowing interpretation, apply PSD and title V, respectively, 

to sources of any air pollutant that is subject to regulation 

under another provision of the CAA. EPA’s promulgation of the 

LDVR means that GHGs will become subject to regulation on the 

date that the rule takes effect, which will be January 2, 2011.

Absent tailoring, the January 2, 2011 trigger date for GHG 

PSD applicability will give rise to an extraordinarily large 
349

number of PSD permitting actions – we estimate more than 81,000 

per year – representing an increase of almost 300-fold over the 

current 280 PSD permitting actions each year. In addition, over 

6 million sources will become subject to title V, an increase of 

more than 400-fold over the 14,700 sources that currently are 

subject to title V. The permitting authorities will find it 

impossible to administer programs of these sizes as of that 

date.

All this results from a literal application of the PSD and 

title V applicability provisions to GHG sources. However, under 

Chevron, we must interpret and apply statutory requirements on 

the basis of congressional intent. Although the literal meaning 

of the statutory provisions is the first and generally the best 

indicator of congressional intent, there are cases in which that 

is not so. As discussed previously, we believe that as a 

general matter, statutory directives should be considered to 

incorporate Congress’s intent that they be administrable, and we 

believe that this proposition is implicit in the “administrative 

necessity” doctrine that the D.C. Circuit has established and 

that we believe applies here. See Alabama Power v. Costle, 636 

F.2d 323, 356-57 (D.C. Cir. 1980). This doctrine authorizes EPA 

to undertake a process for rendering the PSD and title V 

requirements administrable. Indeed, the Court in Alabama Power
350

established this doctrine specifically in the context of the PSD 

provisions, including, in particular, the modification 

provision. As noted elsewhere, the Court held that EPA may 

“consider the administrative burden” associated with applying 

PSD for emissions increases, and establish significance levels 

designed to avoid “severe administrative burdens on EPA, as well 

as severe economic burdens” on sources. Id. at 405.

As we said in the proposal, we read the caselaw to 

establish a three-step approach for implementing the 

“administrative necessity” doctrine: An agency is not required 

to adhere to literal statutory requirements if the agency, as 

the first step, makes every effort to adjust the requirements 

within the statutory constraints, but concludes with 

justification – at the second step – that it would be impossible 

to comply with the literal reading of the statute. Under those 

circumstances, the agency may – at the third step – develop what 

is in effect a compliance schedule with the statutory 

requirements, under which the agency will implement the statute 

as much as administratively possible and as quickly as 

administratively possible. See 74 FR 55315 – 55316.

a. First Step of the “Administrative Necessity” Analysis: 

Streamlining
351

In the proposed rulemaking, EPA discussed at length the 

prospect of streamlining both PSD and title V. EPA described 

“several potentially useful tools available in the streamlining 

toolbox for the PSD permitting threshold level, the PSD 

significance level, and the title V permitting threshold,” 

specifically:

For the PSD permitting threshold level and 

significance level, there are at least three such 

tools: The first is interpreting the definition of 

"potential to emit" so that the amount of a source's 

emissions that counts in determining whether it 

qualifies as a major source and therefore is above the 

permitting threshold requirements is closer to the 

amount of its emissions when it is in actual 

operation, rather than the amount of emissions that 

the source would emit if it were operating 

continuously. Narrowing the definition of PTE is a 

potentially extremely important tool in this context 

because identifying the amount of a source's emissions 

as closer to its actual emissions in this manner would 

mean that very large numbers of residential and 

commercial sources would have significantly lower 

emissions and would fall below the statutory threshold 

requirements for triggering PSD. Second, EPA believes 

it may be able to develop programs involving general 

permits, under which large numbers of similarly 

situated sources would each be covered by essentially 

the same permit established through a regulatory 

action by the permitting authority. This approach 

could achieve economies of scale and thereby reduce 

administrative burden. Third, EPA believes it may be 

able to streamline the single most time-consuming 

element of the PSD permit program, which is the 

determination of BACT as required under CAA 

§165(a)(4), by establishing presumptive BACT levels 

for certain source categories that comprise large 

numbers of sources. As for title V, as discussed 

below in detail, EPA believes that defining "potential 

to emit" to reflect more closely a source's actual 
352

operation and developing a program of general permits 

could streamline the administration of title V 

permits.

74 FR 55315 col. 2-3.

At proposal we stated that we would, and we still commit 

to, vigorously pursue development of these streamlining 

measures, and, as indicated in our discussion of streamlining 

methods in section V.E.1 and in response to comments, we have 

already begun developing those measures. For example, as 

described elsewhere, we have done much work – both with 

stakeholders and in-house - to begin to develop recommendations 

for what controls would qualify as BACT for various industries. 

This work is important as a foundation for developing 

presumptive BACT, which is a potentially efficient streamlining 

measure. 

However, it is not possible for us or the state and local 

permitting authorities to develop and implement streamlining 

techniques by the time that PSD and title V are triggered for 

sources emitting GHGs – January 2, 2011 - or shortly thereafter. 

Developing streamlining methods would entail acquiring more 

information about the affected industry, may entail rulemaking, 

and would likely entail some type of public review of proposals 

for streamlining even if not done through rulemaking. As 
353

discussed in section V.E, we do not expect that we could 

complete all those steps for meaningful streamlining measures 

within 2 years.

b. Second Step of the “Administrative Necessity” Analysis: 

Demonstration of Administrative Impossibility

With no streamlining measures available at the time that 

PSD and title V would apply to sources of GHGs or shortly 

thereafter, under the second step of the “administrative 

necessity” analysis, we must determine whether implementation of 

the statutory requirements at that time would be 

administratively impossible for the permitting authorities. We 

are mindful that the D.C. Circuit has cautioned that this 

showing is a high hurdle. See 74 FR 55317.

Even so, we believe there is no question that a literal 

application of the PSD and title V programs to GHG sources as of 

January 2, 2011 would be flatly impossible for the state and 

local permitting authorities to administer for at least an 

initial period of time.54 The key facts have been recounted 

 

54 We recognize that in a few states, we are the permitting 

authority. We do not think that this changes the calculation of 

administrative burdens. We do not believe that we could 

reasonably be expected to adjust our budget to accommodate the 

large new permitting burdens, and even if we could, the 

administrative burdens would remain in most of the rest of the 

nation where it is the state or local agencies that bear 

permitting responsibility.
354

previously, and no more than a brief recitation is necessary 

here. On the PSD side, annual permit applications would 

increase by over 300-fold, from 280 to almost 82,000; costs to 

the permitting authorities would increase more than 100-fold, 

from $12 million to $1.5 billion; and the permitting authorities 

would need to hire, train, and manage 9,772 FTEs. For title V, 

total permit applications would increase by over 400-fold, from 

14,700 to 6.1 million; costs to the permitting authorities would 

increase from $62 million to $21 billion; and the permitting 

authorities would need to hire, train, and manage 229,118 FTEs.

We have elaborated upon these burdens elsewhere in this

notice. They bespeak an impossible administrative task. It is 

not hyperbole to say that if these administrative 

responsibilities are not considered impossible within the 

meaning of the “administrative necessity” doctrine, then it is 

difficult to imagine what would be considered impossible. 

c. Third Step of the “Administrative Necessity” Analysis: 

Tailoring

Under the third step of the “administrative necessity” 

analysis, we must demonstrate that the steps we intend to take 

towards implementation of the statutory requirements are the 

most that can be done during the indicated time frames, in light 

of administrative resources. In this manner, we adhere most 
355

closely to the statutory requirements. See 74 FR 55318. This 

amounts to establishing a schedule for phasing in PSD and title 

V applicability to GHG sources. Because this step is based on 

the administrative resources of the permitting authorities, our 

analysis is similar, and leads to the same conclusions, as we 

described previously concerning the “absurd results” basis. 

That is, we believe that our tailoring approach – including Step

1, to be implemented as of January 2, 2011; Step 2, to be 

implemented as of July 1, 2011; the additional rulemaking that 

we commit to finalize by July 1, 2012, and that will address 

further threshold reductions as a Step 3; the study and 

subsequent rulemaking to address smaller sources by April 30, 

2016; and the determination not to lower the threshold below 

50,000/50,000 tpy CO2e before April 30, 2016 at the earliest - 

is the most that we can do to expand the PSD and title V 

programs, based on administrative resources and the information 

we currently have about the prospects for streamlining and 

increasing permitting resources.

As noted previously, at some point in the process of 

additional rulemaking, we may conclude under the “absurd 

results” doctrine that we will not apply PSD or title V to GHG 

sources below a certain size level. The same conclusion may be 

supportable under the “administrative necessity” doctrine if we 
356

decide, based on the information available to us, that even with 

all of the streamlining that we are able to accomplish and even 

with a significant expansion of permitting resources, it may not 

be administratively feasible to implement PSD or title V to 

sources below that level. See Alabama Power v. Costle, 636 F.2d 

at 358 (acknowledging, in discussing the “administrative 

necessity” doctrine, that “[c]ategorical exemptions from the 

clear commands of a regulatory statute [are] sometimes 

permitted,” although emphasizing that such exemptions “are not 

favored”).

In addition, as noted above, in a subsequent rulemaking, we 

may conclude that title V should not apply to GHG sources with 

“empty permits,” under the “absurd results” doctrine. The basis 

for this conclusion could be a determination that (1) although 

the applicability provisions apply by their terms to sources on 

the basis of their emissions, and without regard to whether the 

sources would hold “empty permits”, those provisions cannot be 

read literally under the “absurd results” doctrine; and (2) it 

is not clear whether Congress intended that title V apply to 

such sources, and EPA has reasonably determined, under Chevron

Step 2, that title V does not. If we come to that conclusion, 

then, at that point in time, the “administrative necessity” 

doctrine would remain relevant for title V purposes only if is 
357

necessary, for administrative reasons, to phase in the 

application of title V to GHG sources that have applicable 

requirements, and that therefore do not have “empty permits.” 

This is because the “administrative necessity” doctrine is 

relevant only when a statutory directive, read literally, 

imposes impossible administrative obligations, and Congress may 

be presumed to have intended that the directive be 

administrable. The “administrative necessity” doctrine would 

not come into play if it is concluded either that under the 

“absurd results” doctrine Congress did not intend the statutory 

directive or that, under that doctrine, Congress’s intent was 

not clear and EPA reasonably decided that the directive does not 

apply. 

10. “One-Step-at-a-Time” Basis for Tailoring Rule 

In addition to the “absurd results” and “administrative 

necessity” doctrines, the “one-step-at-a-time” judicial 

doctrine, within the Chevron framework, supports EPA’s Tailoring 

Rule. The caselaw under this doctrine, described previously, 

indicates that the doctrine justifies an agency’s step-by-step 

approach under the following circumstances or conditions: (1) 

the agency’s ability to comply with a statutory directive 

depends on facts, policies, or future events that are uncertain; 

(2) the agency has estimated the extent of its remaining 
358

obligation; (3) the agency’s incremental actions are structured 

in a manner that is reasonable in light of the uncertainties; 

and (4) the agency is on track to full compliance with the 

statutory requirements. EPA’s Tailoring Rule fulfills each of 

those four. 

First, as the D.C. Circuit stated in National Association 

of Broadcaster v. FCC, 740 F.2d 1190, 1210 (D.C. Cir. 1984) 

(“National Association of Broadcasters”), incremental agency 

action is most readily justifiable “against a shifting 

background in which facts, predictions, and policies are in flux 

and in which an agency would be paralyzed if all the necessary 

answers had to be in before any action at all could be taken.” 

Those circumstances are present here, and so is that fact that 

the task at hand is extraordinarily demanding. As discussed 

previously, EPA and the permitting authorities’ progress in 

implementing the PSD and title V programs for GHG sources will 

depend in large measure on the development of streamlining 

measures and increases in permitting authorities’ resources, and 

those things carry some uncertainty and in any event, under the 

best of circumstances, cannot have much impact for at least 

several years. It will take EPA that long to develop 

streamlining measures, and it will take permitting authorities 

that long to begin to raise money and hire and train FTEs. 
359

Second, as the Court stated in National Association of 

Broadcasters, “the agency [should] ma[k]e some estimation, based 

upon evolving economic and technological conditions, as to the 

nature and magnitude of the problem it will have to confront 

when it comes to [undertake the remaining steps]” and that 

estimation must be “plausible and flow from the factual record 

compiled.” Id. at 1210. Here, EPA has done this by estimating 

the number of PSD and title V permits and the costs of issuing 

them, and has provided as much information as possible about the 

development of streamlining methods and permitting authority 

resources.

Third, again as the Court stated in National Association of 

Broadcasters, it must be “reasonable, in the context of the 

decisions made in the proceeding under review, for the agency to 

have deferred the issue to the future. With respect to that 

question, postponement will be most easily justified when an 

agency acts against a background of rapid technical and social 

change and when the agency’s initial decision as a practical 

matter is reversible should the future proceedings yield 

drastically unexpected results.” Id. at 1211. Here, our 

tailoring approach is reasonable in light of changes in 

permitting authority capacity that may occur with the 

development of streamlining methods and increased resources. In 
360

addition, the first two steps that EPA promulgates today are 

reasonable initial steps that we expect to build on by lowering 

thresholds, as appropriate, in the future. We have no reason to 

suspect that we may need to reverse either of the first two 

steps. Having received and analyzed extensive comment on the 

number of permitting actions to expect and on permitting 

authority resources, we consider it unlikely that we would need 

to establish a higher threshold level than what we have 

established in Steps 1 and 2. In addition, if we were to adopt 

an “empty permits” approach for title V, we would not need to 

reverse either of Steps 1 and 2, as explained above.

Finally, as the D.C. Circuit stated in Grand Canyon Air 

Tour Coalition v. F.A.A., 154 F.3d 455, 477-78 (D.C. Cir. 1998), 

the Courts will accept an initial step towards full compliance 

with a statutory mandate, as long as the agency is headed 

towards full compliance, and we believe that the doctrine is 

applicable here. EPA intends to require full compliance with 

the CAA applicability provisions of the PSD and title V 

programs, but we believe that in the case of GHG-emitting 

sources, by application of the “absurd results” doctrine or the 

“administrative necessity” doctrine, full compliance with the 

applicability provisions does not necessarily mean full 
361

compliance with the literal terms of those provisions.55 Rather, 

as we have explained elsewhere, in the case of GHG sources, full 

compliance may mean compliance with higher levels that are 

consistent with congressional intent, under the “absurd results” 

doctrine, or that are within the reach of permitting authorities 

in light of their administrative constraints, under the 

“administrative necessity” doctrine. This rulemaking 

constitutes a package of initial steps towards that full 

compliance, and, seen in that light, is supported by the “onestep-at-a-time” doctrine.

Even if the doctrine were found to apply only when an 

agency is committed to fully implementing statutory requirements 

according to their literal terms, we believe that the steps we 

promulgate in this notice would be considered valid under the 

one-step-at-a-time doctrine. This is because even if we are 

incorrect about the applicability of the “absurd results” and 

“administrative necessity” doctrines, so that GHG sources are 

required to comply with the literal terms of the PSD and title V 

applicability provisions, the “one-step-at-a-time” doctrine 

 

55 For reasons explained elsewhere, our reference to the 

literal terms of the applicability provisions means the literal 

terms of the definition of “major emitting facility” for PSD and 

“major source” for title V, as EPA has narrowed those 

definitions to refer to “any pollutant” that is subject to 

regulation under the CAA.
362

would allow PSD and title V applicability to be phased in, and 

the first two steps we promulgate in this notice would be upheld 

as reasonable initial steps toward full compliance with the 

literal terms of the CAA. As we have described elsewhere, there 

is little question but that sources and permitting authorities 

cannot reasonably be expected to comply with or implement PSD 

and title V applicability requirements in the near term – by 

January 2, 2011 and July 1, 2011 - except to the limited extent 

described under Steps 1 and 2. Nor is applicability of the PSD 

and title V requirements at levels below 50,000 tpy CO2e

reasonable before 6 years from promulgation of this rule, as 

discussed elsewhere. If further steps resulting in full 

compliance with the literal terms of the applicability 

provisions of PSD and title V were required, it would be 

reasonable for those steps to occur in the future, as part of 

the rulemaking to be completed by the sixth year after 

promulgation, to which EPA commits itself as part of this

action, or as part of subsequent actions. See Grand Canyon Air 

Tour, 891 F.2d at 476-77 (upholding agency action as a step 

towards full compliance with statutory mandate when the agency 

expected full compliance to occur some 20 years after the 

deadline in the statute).
363

C. Mechanisms for Implementing and Adopting the Tailoring 

Approach

In this section, we discuss three issues related to 

adoption of the tailoring approach within our regulations and by 

permitting agencies. The first is the regulatory mechanism for 

implementing the tailoring approach – that is, the specific way 

we are revising the PSD and title V applicability provisions to 

incorporate the tailoring approach – and our rationale. The 

second is the process by which state or local permitting 

authorities may incorporate the tailoring approach into their 

PSD SIP and title V permit programs. Finally, we discuss our 

reasons for delaying action on our proposal to limit approval of 

both SIP-approved PSD programs and title V programs, and we 

request certain information from states on both of their 

programs and their actions in response to this rule. 

In brief, we proposed to exempt sources emitting GHGs below 

certain threshold levels from the definition of the regulatory 

terms “major stationary source” and “major modification” in PSD 

programs and the definition of the regulatory term “major 

source” in title V programs. We further proposed to effectuate 

this change in SIP-approved PSD programs (as included in SIPs) 

and EPA-approved part 70 title V programs by limiting our prior 

approval of those programs to the revised applicability 
364

thresholds for GHGs.56 These changes would have the effect of 

putting the higher thresholds adopted under the Tailoring Rule 

in place in states PSD and title V programs as a matter of 

federal law. However, state commenters expressed concern that 

they would not be able to adopt the Tailoring Rule under state 

laws on an expeditious basis. To address this, our final action 

differs from our proposed rule in the way we incorporate the 

limitations promulgated in this Tailoring Rule into the “major 

stationary source,” “major modification” and “major source” 

definitions. This approach relies on further defining the term 

“subject to regulation” and although this approach is not 

substantively different in effect from the proposed rule, it 

will facilitate more rapid adoption and implementation of the 

Tailoring Rule by states through interpretation of language in 

existing state regulations. We believe these differences are a 

logical outgrowth of our proposed rule. We are also delaying 

action on our proposed limited approval of EPA-approved PSD

programs and part 70 title programs to determine how each state 

will implement the final rules. 

1. PSD Approach: Background and Proposal

 

56 In the alternative, we also proposed to use our section 

110(k)(6) error correction authority to revise SIP-approved PSD 

program. We are also delaying action on this proposal.
365

Under CAA section 165(a), no “major emitting facility” may 

construct or modify unless it receives a preconstruction permit 

that meets the requirements of the PSD program. CAA section 

169(1) defines a major emitting facility as “any ... source[]” in 

one of 28 specified source categories that “emit[s], or ha[s] 

the potential to emit, one hundred tons per year or more of any 

air pollutant;” or “any other source with the potential to emit 

two hundred and fifty tons per year or more of any air 

pollutant.” EPA’s regulations replace the term “major emitting 

facility” with the term “major stationary source” and define the 

term as “[a]ny of ... [28 types of] stationary sources of air 

pollutants which emits, or has the potential to emit, 100 tons 

per year or more of any regulated NSR pollutant” or “any 

stationary source which emits, or has the potential to emit 250 

tons per year or more of a regulated NSR pollutant.” 40 CFR 

51.166(b)(1)(i)(a)-(b). The term “regulated NSR pollutant” is 

defined to include, among other things, “any ... air pollutant 

that otherwise is subject to regulation under the Clean Air 

Act.” 40 CFR 51.166(b)(50). Note that the regulatory 

definition in effect interprets the statutory definition more 

narrowly to read “one hundred [or two hundred and fifty] tons 

per year or more of any air pollutant subject to regulation 

under the Clean Air Act” (emphasis added). 
366

Similarly, under the statute, a modification occurs if 

there is a physical change or change in the method of operation 

“which increases the amount of any air pollutant emitted ....” CAA

section 165(a), 169(2)(c), and 111(a)(4). As with the major 

stationary source definition, we have limited coverage of the 

modification provision to physical changes or changes in the 

method of operation that result a significant net emissions 

increase in emissions of a “regulated NSR pollutant.” 40 CFR 

51.166(b)(2)(i). 

Our proposed rule revised the definition of “major 

stationary source to 1) exempt GHG from the regulated NSR 

pollutants that, if emitted by a source in the 100 or 250 tpy 

quantities, would cause the source to qualify as a “major 

stationary source,” and 2) add a specific threshold at which a 

source that emits a specified quantity of GHGs (at proposal, 

that quantity was 25,000 tpy CO2e) would qualify as a “major 

stationary source.” 74 FR 55351, proposed 40 CFR 

51.166(b)(1)(i)(a), (b), and (d). We also proposed a 

significance threshold, which is the amount of an increase 

needed to trigger PSD for a modification or to require BACT for 

a new source, at a level between 10,000 and 25,000 tpy CO2e. 74 

FR 55351; 40 CFR 51.166(b)(23)(i). 
367

Additionally, we recognized that it may take some time 

before states could change their SIP-approved PSD programs and 

that as a result, absent additional action on our part, GHGemitting sources would remain subject to the 100 or 250 tpy 

thresholds, and subject to a zero significance threshold for 

major modifications as a matter of federal law. To address this 

issue, we proposed to narrow our previous approval of those 

SIPs. The effect of our proposal would be that EPA would have 

approved the SIP PSD programs only to the extent they apply PSD 

and requirements to GHG sources at or above the thresholds 

established in the Tailoring Rule (which, generally, were 25,000 

tpy CO2e), and EPA would have taken no action on the SIP PSD 

programs to the extent they apply PSD requirements to GHG 

sources below that threshold. We relied on the authority of the 

APA and the general authority of CAA section 301 and, in the 

alternative, on the error correction mechanism under CAA section 

110(k)(6). Our limited approval would revise existing EPAapproved SIP PSD programs to authorize permitting under the CAA

only for GHG sources at the appropriate levels. 

In response to our proposed approach, we received numerous 

comments from state and local permitting agencies expressing 

significant concern. They observed that our proposed approach 

could meet its objectives to avoid applying PSD requirements to 
368

small sources under federal law, but would not succeed in 

avoiding the application of PSD requirements to those small 

sources under state law. The commenters explained that, 

although EPA was changing federal PSD applicability thresholds;

for GHG-emitting sources to incorporate the tailoring approach, 

and limiting the scope EPA approval of SIPs consistent with 

these thresholds, the state rules containing the originallyapproved SIP thresholds would continue to apply as a matter of 

state law. As commenters explained, for the most part, the laws 

and regulations states adopt to implement federal PSD programs 

mirror EPA’s regulations, so that the state laws, apply PSD to 

sources that emit air pollutants subject to regulation at the 

100/250 tpy threshold. Commenters reasoned that, until the 

states can change their state laws, the 100/250 tpy thresholds 

will continue to apply as a matter of state law, even though the 

higher thresholds apply as a matter of federal law. 

Importantly, these commenters emphasized, their state 

process requires that they promulgate a rulemaking, or in some 

cases, a legislative change, to incorporate the higher 

thresholds for GHG sources in their SIPs. These processes would 

require many months and in some cases as long as 2 years. As a 

result, sources that emit GHGs below the federally established 

levels in the final rule, but at above the 100/250 tpy levels in 
369

state laws and rules, would still be required to obtain PSD 

permits under state law. As a result, states, in attempting to 

implement state permitting requirements, would be faced with the 

same administrative difficulties that EPA recognized in the 

proposed rule as impossible. Commenters emphasized that this 

situation was untenable. 

In addition to the state comments just described, we

received comments that took issue with our view that we were in 

effect revising the numerical thresholds for PSD applicability 

as the legal mechanism for the tailoring approach. They 

asserted that in fact, our mechanism consisted of interpreting 

the term “any source” to exclude small GHG-emitting sources. 

Other commenters objected to our proposed mechanism of narrowing 

our previous SIP approval, arguing that this mechanism was 

without legal basis. 

2. Rationale for Our Final Approach to Implementing PSD

In response to these concerns, we are adding another 

mechanism to implement the tailoring approach for PSD, and that 

is to adopt a definition, within our PSD regulations, the phrase 

“subject to regulation,” as found within the phrase “any 

regulated NSR pollutant,” which, in turn, is part of the 

definitions of “major stationary source” and “major 

modification.” To implement this mechanism, we are defining the 
370

phrase “subject to regulation” so that the GHGs emitted by 

sources that fall below the thresholds or scope established in 

Steps 1 and 2 are not treated as “subject to regulation,” and 

therefore do not trigger PSD for the sources that emit them. As 

discussed in section V.B.3., the term “subject to regulation” is 

one of four terms that should be considered not to apply 

literally in the case of GHG sources.

To understand this approach, it is useful to return to the 

definition of “major stationary source,” which, again, is 

central to PSD applicability. The definition, quoted 

previously, employs the term “regulated NSR pollutant,” which is 

a defined term. The definition incorporates many other elements 

as well (e.g., the 100/250 threshold requirements), but for 

convenience, we quote it as follows: a “major stationary 

source” is “[a]ny ... source[] of air pollutants, which emits, or 

has the potential to emit, [depending on the source category, 

either] 100 [or 250] tons per year or more of any air pollutant 

that is subject to regulation under the Clean Air Act.” 40 CFR 

51.166(b)(1)(i)(a)-(b). Applying our definition of “subject to 

regulation” to exclude GHG sources that emit below specified 

thresholds, the definition may now be paraphrased as follows: A 

“major stationary source” is any source of air pollutants, which 

emits, or has the potential to emit, depending on the source 
371

category, either 100 or 250 tpy or more of any air pollutant 

subject to regulation under the CAA, except that the source’s 

GHGs are considered to be subject to regulation under the CAA

only the extent indicated under Steps 1 and 2 of the Tailoring 

Rule, e.g., for Step 2, only if the source’s GHG emissions 

exceed the threshold established in Step 2. We adopt the same 

approach for the definition of the regulatory term “major 

modification.” 

Although EPA is revising its regulations to apply the 

phrase subject to regulation in this manner, we have been 

advised that states may be able to adopt our approach without 

having to undertake a rulemaking action to revise their state

regulations or without requiring an act of the state 

legislature. Instead, it is our understanding that states may 

adopt our approach by interpreting the term “subject to

regulation” reflected in their regulations to have the same 

meaning that we are assigning to that term in our regulations in 

this rulemaking. This is particularly – although not 

exclusively - the case in a state that has taken the position, 

or determines now, that the state’s definition of “subject to 

regulation,” or, more broadly, “regulated NSR pollutant” or 

“major stationary source” or “major modification, is intended to 

be interpreted in a way that tracks the meanings that EPA has 
372

assigned to these phrases. Such states can adopt the meaning of 

“subject to regulation” that we establish in this rule by

January 2, 2011, and thereby avoid the situation in which, as a 

matter of state law, GHG-emitting sources above the 100 or 250 

tpy thresholds become subject to PSD by that date. The 

following explains our basis for concluding that states may 

apply EPA’s approach under existing regulations that use the 

term “subject to regulation.” On December 18, 2008, EPA issued 

the Interpretive Memo, establishing EPA’s interpretation of the 

definition “regulated NSR pollutant” found at 40 CFR 

52.21(b)(50). EPA intended this memorandum to resolve ambiguity 

in subparagraph (iv) of this definition, which includes “any 

pollutant that otherwise is subject to regulation under the 

Act.” Specifically, the memorandum stated that EPA will 

interpret the definition of “regulated NSR pollutant” to exclude 

pollutants for which EPA regulations only require monitoring or 

reporting but to include pollutants subject to either a 

provision in the CAA or regulation adopted by EPA under the CAA

that requires actual control of emissions of that pollutant. 

After reconsidering this interpretation through a formal 

notice-and-comment process, EPA refined its interpretation to 

establish that the PSD permitting requirements will not apply to 

a newly regulated pollutant until a regulatory requirement to 
373

control emissions of that pollutant “takes effect.” 75 FR

17704. Importantly, as stated previously, because the term 

“regulated NSR pollutant” is embedded within the definition of 

“major stationary source,” this interpretation effectively 

defines which major stationary sources are subject to PSD 

permitting. As a result, for example, EPA explained that PSD 

and title V permitting requirements for GHGs will not apply to 

GHGs until at least January 2, 2011, following the anticipated 

promulgation of EPA regulations requiring control of GHG 

emissions under title II of the CAA. Id. 

In the RTC document for EPA’s reconsideration of the PSD 

interpretative memorandum, we stated that, 

Absent a unique requirement of state law, EPA believes that 

state laws that use the same language that is contained in 

EPA’s PSD program regulations at 52.21(b)(50) and 

51.166(b)(50) are sufficiently open-ended to incorporate 

greenhouse gases as a regulated NSR pollutant at the 

appropriate time consistent with EPA’s interpretation of 

these regulations (emphasis added). (Docket ID No. EPA-HQOAR-2009-0597-0128). 

Because the state regulations that include EPA’s definition of 

the term “subject to regulation” in the reconsideration of the 

Interpretive Memo are “sufficiently open-ended to incorporate 

greenhouse gases as a regulated pollutant,” those state 

regulations are also sufficiently open-ended to incorporate the 
374

further refinement to the meaning of the phrase “subject to 

regulation” that we make in this rulemaking.

By the same token, EPA has historically interpreted certain 

state SIP-approved programs as sufficiently open-ended such that 

the rules provide for the “automatic assumption for the 

responsibility for review” of new pollutants before the general 

deadline for states to revise their PSD programs. See, e.g., 52

FR 24682. Conversely, we have also read federal rules and state 

rules approved in SIPs to provide for the automatic removal of a 

pollutant when such pollutant is no longer “subject to 

regulation.” For example, the 1990 CAA Amendments exempted HAPs

listed in section 112(b)(1) from the PSD requirements. See CAA 

section 112(b)(6). Following passage of the amendments, EPA 

issued “New Source Review (NSR) Program Transitional Guidance,”

a memorandum from John S. Seitz, Director, Office of Air Quality 

Planning and Standards to Regional Air Division Directors on 

March 11, 1991. In that guidance, EPA interpreted its PSD 

regulations to automatically cease to apply to listed HAPs (with 

some noted exceptions), and implicitly stated that a state with 

an open-ended SIP-approved PSD rule could also take the position 

that its SIP-approved rule automatically ceased to regulate 

HAPs. 

After reviewing these past practices in the PSD permitting 
375

program, and EPA’s prior statements regarding pollutants subject 

to the PSD program, we conclude that states with SIP-approved

rules that contain the same language as used in 40 CFR 

52.21(b)(50) or 40 CFR 51.166(b)(49), or that otherwise have 

sufficiently open-ended PSD regulations, would be able to 

implement our Tailoring Rule approach to permitting by 

interpreting their regulations, and without needing to 

promulgate a regulation or seek state legislative action. This 

is particularly – although not exclusively - the case for states 

that take the position that they intend their rules to apply in 

the same manner as EPA's counterpart rules. If states adopt 

this reading of their regulations, GHG sources falling below the 

specified cutoffs would not be emitting pollutants “subject to 

regulation” within the definition of “regulated NSR pollutant” 

and therefore would not be subject to PSD permitting as a major 

stationary source or for making a major modification. 

During our consideration of this action, we participated in 

teleconferences with one local and six state agency permitting 

authorities to discuss this issue of whether they could 

implement the proposed rule without the need for state law or 

regulation changes or a revision of the provisions of state law 

that are a part of the SIP. We specifically discussed whether 

defining the phrase “subject to regulation” would better 
376

facilitate state incorporation of the limitations in this final 

rule. The state and local agencies participating in the calls 

generally agreed that defining the phrase “subject to 

regulation” would, compared to our proposed approach, better 

facilitate state incorporation of the limitations in the final 

rule in states with regulations that mirror the existing federal 

rules, or in states whose rules are otherwise sufficiently openended to incorporate the limitations in the final rule by 

interpretation. Participants from each agency also indicated 

that their rules contain the term “subject to regulation” and 

that term has not been previously interpreted in ways that would 

preclude application of the meaning assigned to the term by EPA. 

We therefore concluded it is likely the state rules are 

sufficiently open-ended to apply EPA’s approach by 

interpretation (although some states indicated they may elect to 

pursue rulemaking in addition to or instead of interpretation).

Accordingly, we selected the “subject to regulation” regulatory 

approach as the mechanism for implementing the final rule. 

3. Other Mechanisms

As just described, we selected the “subject to regulation” 

mechanism because it most readily accommodated the needs of 

states to expeditiously revise – through interpretation or 

otherwise - their state rules. Even so, it is important to 
377

recognize that this mechanism has the same substantive effect as 

the mechanism we considered in the proposed rule, which was 

revising numerical thresholds in the definitions of major 

stationary source and major modification. Most importantly, 

although we are codifying the “subject to regulation” mechanism, 

that approach is driven by the needs of the states, and our 

action in this rulemaking should be interpreted to rely on any 

of several legal mechanisms to accomplish this result. Thus, 

our action in this rule should be understood as revising the 

meaning of several terms in these definitions, including: (1) 

the numerical thresholds, as we proposed; (2) the term, “any 

source,” which some commenters identified as the most relevant 

term for purposes of our proposal; (3) the term, “any air 

pollutant; or (4) the term, “subject to regulation.” The 

specific choice of which of these constitutes the nominal 

mechanism does not have a substantive legal effect because each 

mechanism involves one or another of the components of the terms

“major stationary source” - which embodies the statutory term, 

“major emitting facility” - and “major modification,” which 

embodies the statutory term, “modification,” and it is those

statutory and regulatory terms that we are defining to exclude 
378

the indicated GHG-emitting sources.57 

4. Codification of Interpretive Memo

As noted previously, we recently affirmed and refined our 

interpretation of the term “subject to regulation” as it applies 

broadly to the PSD program through a formal notice and comment 

process. “Interpretation of Regulations that Determine 

Pollutants Covered by Clean Air Act Permitting Programs,” 75 FR 

17004. In the proposal associated with that action, we 

requested comment on whether we should codify our interpretation 

in the regulatory text. 74 FR 51535, 51547 (October 7, 2009). 

We elected not to codify out interpretation in the final action 

on reconsideration of the Interpretive Memo because we concluded 

such an action was not necessary and that it was important to 

apply the refined interpretation immediately. 75 FR 17015. 

However, in the RTC document for that action, we indicated that 

we had not ruled out the option of codifying our interpretation 

at a later time. Since we are otherwise adopting a definition 

of “subject to regulation” in this rule as the mechanism for 

implementing the phase-in, it makes sense in this final rule to 

 

57 We also think that this approach better clarifies our 

long standing practice of interpreting open-ended SIP 

regulations to automatically adjust for changes in the 

regulatory status of an air pollutant, because it appropriately 

assures that the Tailoring Rule applies to both the definition 

of “major stationary source” and “regulated NSR pollutant.”
379

codify the interpretation reflected in the Interpretive Memo and 

the final action on reconsideration at the same time to bring 

clarity to our rules. Specifically, the definitions of the term

“subject to regulation” contain a paragraph that reflects our 

existing interpretation of that term (i.e., prior to adopting 

the provisions that implement the phase-in). Codification of 

the Interpretive Memo in this action makes sense to ensure the 

regulations reflect a complete picture of the meaning of 

“subject to regulation” applied by EPA. We also are moving

existing exceptions (e.g., section 112 HAPs) to a new paragraph 

within the definition of "subject to regulation." This minor 

reorganization of these regulations is not intended to effect 

any change in how they are to be implemented, but merely 

simplifies and clarifies the regulations by clearly delineating 

different terms and concepts.

This codification of this interpretation of “subject to 

regulation” from the reconsideration for the Interpretive Memo 

is not necessary to assure the effectiveness of the 

interpretation, and it does not disturb states’ existing 

authority to adopt the definition through interpretation of 

their existing rules. Codifying our existing interpretation in 

this action will ensure that parties reading the regulations 

have a full understanding of how EPA applies the PSD program 
380

requirements. Since the interpretation described in the 

Interpretive Memo and the April 2, 2010 final action are 

otherwise applicable at this time, the particular time 

sensitivity discussed in the latter action is not the same for 

this final action tailoring the PSD requirements. 

5. Delaying Limited Approvals and Request for Submission of 

Information from States Implementing a SIP-Approved PSD Program

Because we now anticipate that many states will be able to 

implement our tailoring approach through interpretation of the 

term “subject to regulation,” and without the need to revise 

their SIPs, we are delaying further action on our proposal to 

limit our approval of SIPs until we better understand how 

permitting authorities will, in fact, implement our tailoring 

approach. For this purpose, we ask each state to submit a 

letter to the appropriate EPA Regional Administrator no later 

than [INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN THE 

FEDERAL REGISTER]. In that letter, the state should explain 

whether it will apply EPA’s meaning of the term “subject to 

regulation” and if so, whether the state intends to incorporate 

that meaning of the term through interpretation, and without 

undertaking a regulatory or legislative process. If a state 

must undertake a regulatory or legislative process, then the 

letter should provide an estimate of the time needed to adopt 
381

the final rules. If a state chooses not to adopt EPA’s meaning 

by interpretation, the letter should address whether the state 

has alternative authority to implement either our tailoring 

approach or some other approach that is at least as stringent, 

whether the state intends to use that authority. If the state 

does not intend to interpret or revise its SIP to adopt the 

tailoring approach or such other approach, then the letter 

should address the expected shortfalls in personnel and funding 

that will arise if the state attempts to carry out PSD 

permitting for GHG sources under the existing SIP and 

interpretation. 

For any state that is unable or unwilling to adopt the 

tailoring approach by January 2, 2011, and that otherwise is

unable to demonstrate adequate personnel and funding, we will 

move forward with finalizing our proposal to limit our approval 

of the existing SIP. Although we received comments questioning 

our authority to limit approval as proposed, using our general 

rulemaking and CAA section 110(k)(6) authorities, we are not 

responding to those comments at this time. We will address 

these comments in any final action we take to implement a 

limited approval.

In our proposed rule, we also noted that a handful of EPAapproved SIPs fail to include provisions that would apply PSD to 
382

GHG sources at the appropriate time. This is generally because 

these SIPs specifically list the pollutants subject to the SIP 

PSD program requirements, and do not include GHGs in that list,

rather than include a definition of NSR regulated pollutant that 

mirrors the federal rule, or because the state otherwise 

interprets its regulations to limit which pollutants the state 

may regulate. At proposal, we indicated that we intended to 

take separate action to identify these SIPs, and to take 

regulatory action to correct this SIP deficiency. 

We ask any state or local permitting agency that does not 

believe its existing SIP provides authority to issue PSD permits 

to GHG sources to notify the EPA Regional Administrator by 

letter, and to do so no later than [INSERT DATE 60 DAYS AFTER 

DATE OF PUBLICATION IN THE FEDERAL REGISTER]. This letter 

should indicate whether the state intends to undertake 

rulemaking to revise its rules to apply PSD to the GHG sources 

that will be covered under the applicability thresholds in this 

rulemaking, or alternatively, whether the state believes it has 

adequate authority through other means to issue federallyenforceable PSD permits to GHG sources consistent with this

final rule. For any state that lacks the ability to issue PSD 

permits for GHG sources consistent with this final rule, we 

intend to undertake a separate action to issue a SIP call, under 
383

CAA section 110(k)(5). As appropriate, we may also impose a FIP

through 40 CFR 52.21 to ensure that GHG sources will be 

permitted consistent with this final rule.

6. Title V Programs

Our final action also differs from the proposal in the 

specific regulatory mechanism by which we tailor the definition 

of “major source” for title V permit programs, but is a logical 

outgrowth of our proposed rule. EPA proposed to implement 

tailoring for GHGs under title V by excluding sources of GHGs 

from the general definition of “major source” under 40 CFR 70.2 

and 71.2, and adding a separate definition of “major source” 

with tailored thresholds for sources of GHGs. In response to 

comments, particularly from states concerned with implementation 

of the proposed approach under state law, EPA is adopting an 

approach in the final rule that (1) amends the definition of 

“major source” by codifying EPA’s longstanding interpretation 

that applicability for a “major stationary source” under CAA 

sections 501(2)(B) and 302(j) and 40 CFR 70.2 and 71.2 is 

triggered by sources of pollutants “subject to regulation,” and 

(2) adds a definition of “subject to regulation.” Further, we 

are delaying our action to move forward with limiting our 

previous approval of existing state part 70 programs.
384

We are finalizing this alternative approach to address 

concerns similar to those we received with respect to state 

implementation of SIP-approved PSD programs. Specifically, we 

received comments that the mechanism we proposed would not 

address the significant administrative and programmatic 

considerations associated with permitting GHGs under title V, 

because the 100 tpy threshold would continue to apply as a 

matter of state law. Commenters stated that states would need 

to undertake a regulatory and/or legislative process to change 

the threshold in their state laws which they could not complete 

before the laws would otherwise require issuance of operating 

permits to GHG sources. 

After considering the commenters’ concerns, we are 

finalizing an approach designed to address the state law 

concerns for states. As a result, it is unnecessary to move 

forward at this time with our proposed approach to limit 

approval of existing part 70 programs in many states. 

EPA’s approach involves the interrelationship of terms 

within the part 70 definition of “major source” in title V and 

EPA’s implementing regulations, and EPA’s historical practice of 

interpreting the term “any air pollutant” in the “major 

stationary source” component of that definition. EPA believes 

the approach in the final rule will allow many states to adopt 
385

the final rule through interpretation of existing state laws. 

Specifically, paragraph (3) within the definition of “major 

source” found in 40 CFR 70.2 and 71.2 defines a major source as 

“a major stationary source of air pollutants, as defined in 

section 302 of the Act, that directly emits or has the potential 

to emit, 100 tpy or more of any air pollutant ....” The EPA 

previously articulated the Agency’s interpretation that the 

regulatory and statutory definitions of “major source” under 

title V, including the term “any air pollutant,” applies to 

pollutants “subject to regulation.” Memorandum. EPA recently 

re-affirmed this position in EPA’s Reconsideration of 

Interpretation of Regulations that Determine Pollutants Covered 

by Clean Air Act Permitting Programs. 75 FR 17704, 17022-23 

(April 2, 2010) (Interpretive Memo reconsideration final 

action). 

Accordingly, under our long-established policy, states 

historically have interpreted the term “any air pollutant” under 

the title V definition of “major source” to mean any pollutant 

“subject to regulation” under the Act. Thus, as a matter of 

established interpretation, EPA and states effectively read the 

definition of “major source” under title V to include a source 

“... that directly emits or has the potential to emit, 100 tpy or 

more of any air pollutant subject to regulation under the Act”
386

(emphasis added). By amending our regulations to expressly 

include and define “subject to regulation” to implement our 

tailoring for GHGs under title V, we are seeking to enable 

states to adopt and implement this approach through a continued 

interpretation of the phrase “any air pollutant” within the 

“major source” definition, without the need for changes to state 

regulations or statutes. States may be able to track EPA’s 

approach to tailoring for GHG permitting without regulatory or 

statutory changes, for example, where a state has taken the 

position, or determines now, that the state’s interpretation of 

“major source,” “subject to regulation” and/or “any air 

pollutant” is intended to track EPA’s interpretation. 

Thus, EPA is adding the phrase “subject to regulation” to 

the definition of “major source” under 40 CFR 70.2 and 71.2. 

EPA is also adding to these regulations a definition of “subject 

to regulation.” Under the part 70 and part 71 regulatory 

changes adopted, the term “subject to regulation,” for purposes 

of the definition of “major source,” has two components. The 

first component codifies the general approach EPA recently 

articulated in the “Reconsideration of Interpretation of 

Regulations That Determine Pollutants Covered by Clean Air Act 

Permitting.” 75 FR 17704. Under this first component, a 

pollutant “subject to regulation” is defined to mean a pollutant 
387

subject to either a provision in the CAA or regulation adopted 

by EPA under the CAA that requires actual control of emissions 

of that pollutant and that has taken effect under the CAA. See 

id. at 17022-23; Wegman Memorandum at 4-5. To address tailoring 

for GHGs, EPA includes a second component of the definition of 

“subject to regulation,” specifying that GHGs are not subject to 

regulation for purposes of defining a major source, unless as of 

July 1, 2011, the emissions of GHGs are from a source emitting 

or having the potential to emit 100,000 tpy of GHGs on a CO2e

basis.

As explained previously, we find no substantive difference 

between the alternative mechanisms for implementing GHG 

tailoring in the final rule. Whether we add GHG thresholds 

directly to the definition of “major source” (as we proposed), 

or alternatively, expressly add and define the term “subject to 

regulation,” both approaches revise the definition of “major 

source” to implement the Tailoring Rule. Accordingly, we adopt 

the later approach to facilitate state implementation of the 

final rule through an interpretation of existing state part 70 

programs. Similar to our explanation previously for PSD, while 

we adopt the “subject to regulation” mechanism for implementing 

GHG tailoring in the final rule, the thrust of our rulemaking is 

to apply the title V definition of “major source” – which 
388

includes the statutory term, “major stationary source” - to GHG 

sources by treating only GHG sources that emit at levels above 

the Steps 1 and 2 thresholds as meeting that definition. 

Further, we believe that our action may reasonably be construed 

to revise any of several terms in that definition, including (1) 

the numerical thresholds, as we proposed; (2) the term “any air 

pollutant,” (3) the term “a major stationary source,” (4) the 

term “subject to regulation,” which, as discussed previously, 

our regulations graft into the definition of “major source.” We 

believe that the specific choice of which term constitutes the 

legal mechanism does not have a substantive legal effect because 

each mechanism involves one of the components of the regulatory 

term “major source” – which embodies the meaning of the 

statutory term, “major source” - and it is that term that we are 

interpreting to tailor title V applicability for GHG-emitting 

sources. Thus, while the “subject to regulation” mechanism 

facilitates expeditious implementation by states, and we are 

therefore revising our regulations to adopt this approach, we 

otherwise find no substantive difference between the alternative 

mechanisms we may use to finalize the proposed rule.

Further, similar to our revised approach for addressing 

state SIP-approved PSD programs, we are delaying our action to 

limit our previous approvals for state part 70 operating permit 
389

programs. In our proposed rule, we explained our concern that 

states lack adequate personnel and resources to carry out part 

70 operating permit programs for GHG sources that emit or have 

the potential to emit 100 tpy of GHGs. Accordingly, we proposed 

to use our general rulemaking authority under section 301(a) of 

the CAA and APA section 553 to limit our prior approval of state 

operating permit programs. This limited approval action would 

have had the effect of applying CAA permitting requirements only 

to sources that exceed the permitting thresholds established in 

this rule for the phase-in, because only those sources would be 

covered by the federally approved part 70 programs. 74 FR 

55345. As discussed previously, we are proceeding with a 

slightly revised approach to address concerns similar to those 

raised with our proposed approach for addressing SIP-approved 

PSD permit programs. Because we now recognize that, like the 

PSD program, many states will be able to implement the final 

rules without the need to revise their existing part 70 

operating permit programs, we are delaying further action on our 

proposal to limit approval of existing part 70 programs until we 

better understand how permitting authorities will implement our 

final rule. 

In addition to the information requested previously on SIPapproved PSD permit programs, we ask each state to submit a 
390

letter to the appropriate EPA Regional Administrator no later 

than [INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN THE 

FEDERAL REGISTER] detailing the state’s plan for permitting of 

GHG sources under the state’s part 70 program. In that letter, 

states should explain whether they will adopt an interpretation 

of the terms “major source” or any of its component terms – “a 

major stationary source,” “any air pollutant,” or “subject to 

regulation,” or the numerical thresholds - that is consistent 

with EPA’s regulatory interpretation of the these terms as 

codified at 40 CFR 70.2, and whether the state intends to adopt 

the interpretation without undertaking a regulatory or 

legislative process. This approach may be available, for 

example, where a state has taken the position, or determines 

now, that the state’s interpretation of these terms is intended 

to track EPA’s interpretation, resulting in title V permitting

for sources of GHGs as described in EPA’s regulations adopted in 

this rule. If a state must revise its title V regulations or 

statutes to implement the interpretation, we ask that it

provides an estimate of the time to adopt final rules or 

statutes in its letter to the Regional Administrator. If a 

state chooses not to (or cannot) adopt our interpretation, the 

letter should address whether the state has alternative 

authority to implement the GHG tailoring approach or some other 
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approach that is at least as stringent, but which also addresses 

the expected shortfalls in personnel and funding and delays in 

permitting that would exist if the state carried out permitting 

under part 70 program thresholds lower than those adopted by EPA 

in this final rule. For any state that is unable or unwilling 

to adopt the permitting thresholds in the final rules, and 

otherwise is unable to demonstrate adequate personnel and 

funding, EPA will move forward with finalizing a narrowed

limited approval of the state’s existing part 70 program. If we 

do so, then we will respond in that action to comments on our 

proposal. 

In our proposed rule, we also noted that a handful of part 

70 operating permit programs may include provisions that would 

not require operating permits for any source of GHG emissions 

because, for example, the programs may apply only to pollutants 

specifically identified in the program provisions, and the 

provisions do not specifically identify GHGs. In these cases, 

states may be unable to interpret their regulatory provisions to 

interpret the term “any pollutant” to include pollutants 

“subject to regulation.” We indicated that we intended to take 

separate action to identify these programs, and to take 

regulatory action to correct this deficiency. Accordingly, we 

ask any state or local permitting agency that does not believe 
392

its existing part 70 regulations convey authority to issue title 

V permits to GHG sources consistent with the final rule to 

notify the EPA Regional Administrator by letter as to whether 

the state intends to undertake rulemaking to revise its rules 

consistent with these applicability thresholds. This 

notification should be done no later than the previously 

described letter regarding adoption of the Tailoring Rule, and 

could be combined with similar notifications we request 

regarding the PSD program. We intend to undertake a separate 

regulatory action to address part 70 programs that lack the 

ability to issue operating permits for GHG sources consistent 

with the final rule. We also intend to use our federal title V 

authority to ensure that GHG sources will be permitted 

consistent with the final rule.

D. Rationale for Treatment of GHGs for Title V Permit Fees

The title V program requires permitting authorities to 

collect fees “sufficient to cover all reasonable (direct and 

indirect) costs required to develop and administer [title V] 

programs.” 58 To meet this requirement, permitting authorities 

either collect an amount not less than a minimum amount 

specified in our rules (known as the “presumptive minimum”), or 

 

58 The fee provisions are set forth in CAA section 502(b)(3) 

and in our regulations at 40 CFR 70.9 and 71.9.
393

may collect a different amount (usually less than the 

presumptive minimum). We did not propose to change the title V 

fee regulations in our notice of proposed rulemaking for this 

action, nor did we propose to require new fee demonstrations 

when title V programs begin to address GHGs. However, we did 

recommend that each state, local or tribal program review its 

resource needs for GHGs and determine if the existing fee 

approaches will be adequate. If those approaches will not be 

adequate, we suggested that states should be proactive in 

raising fees to cover the direct and indirect costs of the 

program or develop other alternative approaches to meet the 

shortfall. We are retaining this proposed approach, and are not 

changing our fee regulations as part of this final action 

establishing Steps 1 and 2 of the phase-in. However, we are 

offering some additional clarification of our fee approach 

during these steps in response to comments we received on this 

issue. Additional discussion of fees will be included as part 

of subsequent actions establishing Step 3 and beyond. 

A few state commenters suggested that EPA should modify 

part 70 to adopt a presumptive minimum fee (or range for such 

fee) for GHGs, some of whom suggested that current fees may be 

insufficient to cover the costs of their program. It is 

important to clarify that altering the presumptive minimum would 
394

only affect those states that chose to charge the presumptive 

minimum fee to sources. Most states – including some of the 

commenters asking EPA to raise the presumptive minimum - collect 

a lower amount that is not based on the presumptive minimum, but 

rather, relies on another fee schedule that it developed and EPA 

approved as adequate to cover costs. Therefore, it is useful to 

first discuss our approach to programs that have fee schedules 

resulting in a different amount before discussing our approach 

to the presumptive minimum.

Because of the added GHG title V permitting workload 

described elsewhere in this notice, any state that will not, 

under its current fee structure, collect fees adequate to fund 

the permitting of GHG sources must alter its fee structure in 

order to meet the requirement that fees be adequate to cover 

costs. Changes may not be required in every instance; 

circumstances will vary from state to state. For example, a 

state may see increases in revenue from newly-covered sources 

(based on emissions of pollutants already subject to fees) that 

fully cover the state’s increased costs, or a state may be overcollecting fees now and could use the surplus to offset the 

increased costs. Nonetheless, in many cases, we think states 

will need to adjust their fee structures to cover the costs of 
395

GHG permitting in order to meet the requirements of the Act and 

our regulations. 

For this reason, although we are not calling for new fee 

demonstrations at this time, we plan to closely monitor state 

title V programs during the first two steps of the Tailoring 

Rule to ensure that the added workload from incorporating GHGs 

into the permit program does not result in fee shortfalls that 

imperil operating permit program implementation and enforcement, 

whatever the basis of the states’ fee schedule. As described in 

the proposal, such fee oversight by EPA may involve fee audits 

under the authority of 40 CFR 70.9(b)(5) to ensure that adequate 

fees are collected in the aggregate to cover program costs, with 

emphasis on whether the additional GHG workload is being 

appropriately funded. Also, EPA retains the ability to initiate 

a program revision under 40 CFR 70.4(i)(3) or issue a notice of 

deficiency under the process described in 40 CFR 70.10(b) to 

address fee adequacy issues, which may be uncovered during a fee 

audit. By relying on existing oversight measures, we are 

ensuring that the fee requirements are met with a minimum of 

disruption to existing programs at a time when they will already 

be facing significant challenges related to GHG permitting.

Turning to the minority of states that do use the 

presumptive minimum, we did not propose to change the 
396

presumptive minimum calculation method to account for GHGs. 

Currently under the statute and our rules, the presumptive 

minimum is based on a subset of air pollutants (i.e., VOCs, 

NAAQS pollutants except for CO, and pollutants regulated under 

the NSPS and MACT standards promulgated under sections 111 and 

112 of the Act, respectively) that does not include GHGs. The 

amount is specified on a per-ton basis and changes with 

inflation (it is currently set at $43.75/ton), but does not

apply to emissions over 4,000 tpy of a given pollutant from a 

given source. We noted several difficulties in applying the 

presumptive minimum to GHG, including the large amounts of GHG 

emissions relative to other pollutants and the need for better 

data to establish a GHG-specific amount. Noting that GHGs are 

not currently included in the Act’s list of pollutants to which 

the presumptive fee applies, we also invited comment on whether 

we should raise the fee for listed pollutants to cover the added 

cost of GHG permitting.

A few state commenters asked us to set a presumptive fee 

for GHGs, which we take to mean we should add GHGs to the list 

of pollutants to which a presumptive fee would apply. However, 

many commenters noted that the current presumptive minimum fee 

is unreasonable for GHGs because GHGs are emitted in greater 

quantities than the pollutants currently subject to presumptive 
397

fees, which would result in excessive fees. These commenters 

believe that EPA needs to limit the fees that states can charge 

for GHGs. Moreover, one commenter read the statute to prohibit 

us from listing GHGs in the presumptive fee calculation in the 

first place. Several commenters disagreed with the idea of 

increasing the presumptive fee for other pollutants to cover the 

cost of regulating GHGs, some of whom believed that this would 

unfairly punish existing sources or would bring in no new 

revenue from sources triggering title V for the first time.

After considering these comments, we remain disinclined, as 

we were at proposal, to change the presumptive fee calculation 

regulations. While there is some support for changing the 

regulations, the comments confirm the challenges in doing so. 

While we expressly rejected charging the full presumptive cost 

per ton amount for GHG, we also did not propose language to 

establish a different amount just for GHG, to establish whether 

a different tpy cap would apply, or to assess whether GHGs could 

even be added to the list. Thus, many commenters were very 

concerned about whether the full $43.75 or the 4000 tpy cap 

would apply to GHG if we listed it as a regulated pollutant for 

fee purposes. Furthermore, we noted at proposal, and commenters 

did not disagree, that more data would be needed to establish 

the appropriate basis for the GHG presumptive minimum. We are 
398

not taking a final position in this notice on whether the 

statute is amenable to including GHG in the presumptive fee 

calculation currently, but these comments illustrate some of the 

difficulties of such an approach. 

At the same time, we are not increasing the presumptive 

minimum for other pollutants already included in the fee 

calculation. We disagree with the commenter who said such an 

approach would bring in no new revenue from newly-subject 

sources. Many of the newly subject sources would emit alreadyincluded pollutants. If new revenue from these pollutants were 

insufficient, and because the Act does not specify how the 

shortfall must be addressed, the amount of any projected 

shortfall could be made up by increasing fees on these 

pollutants. In fact, the projected shortfall could be addressed 

without having to inventory GHG emissions from title V sources, 

since the emissions of already-included pollutants are wellknown. We also note that, although some commenters are 

concerned that failing to assess fees for GHGs directly would be 

unfair, the statute does not provide that the presumptive fee be 

proportional to each type of pollutant or be proportionally 

allocated to all sources. Rather, the presumptive fee approach 

provides a backstop for states that do not wish to adopt a more 

tailored approach. Nonetheless, we have decided not to increase 
399

the presumptive fee amounts for other pollutants because we lack 

information about the extent to which shortfalls exist due to 

GHG permitting, and which mix of sources and fees is appropriate 

for addressing any such shortfall in a state. This decision

also provides greater flexibility to states and minimizes 

disruption to existing programs. 

We note that, contrary to the statements of some 

commenters, the CAA provisions allowing for a presumptive fee 

calculation do not override the basic requirement that fees be 

adequate to cover costs. As noted previously, we expect states 

to see a revenue increase from emissions of listed pollutants at 

newly-major sources for GHGs, and it is also possible that the 

presumptive minimum may currently be resulting in overcollection of fees in a state. Thus, a state continuing to use 

the presumptive minimum may not have a shortfall. However, if 

states using the presumptive minimum approach do have a revenue 

shortfall due to GHG permitting, the statute requires the 

shortfall to be addressed. The EPA has had, and will continue 

to have, the ability to require states that use the presumptive 

minimum to increase their fees if the presumptive minimum 

results in a revenue shortfall that imperils operating permit 

program implementation and enforcement. Thus, although we are 

not changing the presumptive minimum in our regulations, we plan 
400

to follow the same oversight approach for states using the 

presumptive minimum as for those collecting less based on a 

resource demonstration. As described previously, this approach 

may involve fee audits with emphasis on whether the additional 

GHG workload is being appropriately funded, and other 

appropriate follow-up. 

Consistent with our proposal, EPA is not modifying its own 

part 71 fee structure (which closely mirrors the presumptive 

minimum) in order to charge an additional fee for GHGs. EPA 

must revise its fee schedule if the schedule does not reflect 

the costs of program administration. We have not determined 

that the existing fee structure will be inadequate to fund the 

part 71 programs costs during the first two phases of permitting 

GHGs as set forth in this action. However, we are required to 

review the fee schedule every 2 years, and make changes to the 

fee schedule as necessary to reflect permit program costs. 40 

CFR 71.9(n)(2). Thus we will continue to examine the increases 

in part 71 burden due to GHG permitting, the current revenue 

collection, and the increases in revenue from newly-subject part 

71 sources, and will adjust the part 71 fee approach 

accordingly.

Finally, several state and industry commenters asked EPA to 

provide guidance and recommendations for an appropriate GHG fee 
401

structure. We note that title V grants permitting authorities 

considerable discretion in charging fees to sources for title V 

purposes and does not require or prohibit fees specifically for 

GHGs, provided the states collect fees in the aggregate that are 

sufficient to cover all the direct and indirect program costs. 

In responding to requests for guidance, we do not wish to limit 

state discretion. For example, some commenters suggest that EPA 

prohibit emissions-based fees for GHGs or cap the amount that 

can be collected, while others suggest we provide a range of 

acceptable fees. We are concerned that, given the wide variety 

of fee approaches that states now take, providing specific 

guidance may be disruptive, rather than helpful, to states.

On the other hand, we recognize that it will initially be 

difficult for states to establish an appropriate emissions fee 

for GHGs. As noted previously, there are currently limited data 

available for establishing such a fee, and, due to the large 

quantities of GHG emissions, such a fee may only amount to a few 

cents per ton. At the same time, as noted in the proposal, a 

number similar to that used for other pollutants (e.g., the 

presumptive minimum of approximately $45/ton of GHG) would be 

inappropriate because it would likely result in huge overcollection. Because of this challenge, we note that 40 CFR 

70.9(b)(3) allows the state to charge fees to individual sources 
402

on any basis (e.g., emission fee, application fee, service-based

fees, or others, in any combination). While most states use 

emissions-based fees, there is merit to considering all the 

available fee bases to address increased GHG workload, including 

approaches that do not require a GHG emissions inventory for fee 

purposes. For example, where it is possible to estimate a 

revenue shortfall as a percentage of fee revenue, it may be 

appropriate to simply attach a percentage-based surcharge to 

each source’s fee to match that shortfall. Similarly, where the 

shortfall could be estimated as a total dollar amount, a flat 

surcharge could be added to each source’s fee to address the 

shortfall. 

These suggestions should not be read to indicate that EPA 

prefers any particular approach, or that EPA rejects a cost per 

ton approach. Rather, they illustrate that it is possible to 

address a revenue shortfall without establishing a GHG per-ton 

fee. While the EPA is declining to recommend specific 

approaches in this preamble, we are committed to assisting 

states in implementing the fee requirements for GHG. Therefore, 

we will work with any state that requests assistance from EPA in 

developing a workable fee approach.

E. Other Actions and Issues 

1. Permit Streamlining Techniques
403

In our proposal, we stated that while we were phasing-in 

permitting requirements, we would make a concerted effort to 

assess and implement streamlining options, tools, and guidance 

to reduce the costs to sources and permitting authorities of GHG 

permitting. We recognized that the development and 

implementation of these techniques should be an integral part of 

our strategy during the phase-in period, and we stated that we 

would undertake as many streamlining actions as possible, as 

quickly as possible. We discussed several streamlining 

techniques in particular, including (1) defining PTE for various 

source categories, (2) establishing emission limits for various 

source categories that constitute presumptive BACT, (3) 

establishing procedures for use of general permits and permitsby-rule, (4) establishing procedures for electronic permitting, 

and (5) establishing “lean” techniques for permit process 

improvements. The first three of these approaches have the 

potential to have the greatest impact in reducing the numbers of 

sources subject to PSD or title V (the definition of PTE) or of 

reducing permitting costs (presumptive BACT and general permits 

or permits-by-rule).

In our proposal, we also described the timing for 

development and implementation of these streamlining techniques. 

We explained that each of the first three techniques would 
404

generally take 3-4 years to develop and implement, and therefore 

would be of limited use in the near-term. This time frame is 

necessary because EPA will first need to collect and analyze 

small source data that we do not currently have – because these 

are sources that EPA has not traditionally regulated - in order 

to assess which of these techniques are viable or effective for 

such sources. In general, EPA will then need to conduct noticeand-comment rulemaking to establish the approaches, and that 

rulemaking will need to address various legal and policy aspects 

of these approaches. After that, the permitting authorities 

will need some time to adopt the streamlining techniques as part 

of their permitting programs.

We received several comments on streamlining techniques. 

In general, the comments indicate widespread support for our 

pursuit of streamlining approaches, but some commenters were 

concerned that one or more of EPA’s identified streamlining 

options were complex, vague, ineffective, and questionable 

legally. Noting our proposal to phase in permitting, in part to 

allow more time to develop streamlining options for smaller 

sources, some commenters suggested that we should delay 

permitting for larger sources for the same reasons. We 

disagree. Such a delay is not justified under our legal basis 

for this rule. While implementation of Steps 1 and 2 – which 
405

will cover larger sources - will pose implementation challenges, 

and some of the streamlining tools could assist with meeting 

these challenges, we have assessed the burdens associated with 

GHG permitting and have established a phase-in schedule that 

represents a manageable workload, even in the absence of 

streamlining techniques. On the other hand, we do agree with 

these commenters that, absent streamlining, applying PSD and 

title V requirements to the much larger number of small sources 

would lead to absurd results and administrative impossibility. 

The sources for whom the phase-in delays applicability are 

precisely the sources that have the greatest need for 

streamlining measures, and thus the greatest need for a deferral 

while we develop and implement streamlining options.

In addition, commenters generally echoed many of our 

concerns about why it will take time to put these measures in 

place, and no commenter presented any information to suggest 

that our 3-4 year estimate for the PTE, presumptive BACT, and 

general permit measures was invalid. 

For these three techniques, we continue to believe that as 

we noted at proposal, we will require collection of significant 

category-specific data for source and emission unit types that 

have heretofore generally not been regulated by the CAA (e.g., 

furnaces, water heaters, etc.), which could take up to 1 year. 
406

Moreover, commenters had differences of opinion as to whether 

and how we should move forward on these approaches, and some 

raised policy and legal issues that we would likely want to 

explore through a notice and comment process in order to assess

which of these measures are viable to pursue further.

59 Even if 

a rulemaking were done expeditiously, it would likely require 1

year. Finally, unlike lean and electronic permitting, these 

approaches, once finalized by EPA, will likely require 

additional time of up to 2 years for states to adopt. Thus, it 

is clear that these approaches will not be in place in time to 

ease any burden prior to the planned rulemaking for Step 3.

Some commenters did observe that the fourth and fifth 

techniques, lean and electronic permitting, could, at least 

theoretically, become available sooner. However, these 

commenters also noted that successful design and implementation 

of these approaches will require implementation experience with 

GHG permitting that is not now available. We expect that for 

the lean and electronic permitting techniques, at least 1 year 

 

59 We do not attempt to address or resolve the various 

opinions about what legal or policy direction we must take 

regarding any of these streamlining options. The proper forum 

for doing that will be in the action(s) where we apply a given 

option. Nonetheless, our RTC document provides additional 

detail about the options we described and what commenters said 

about our proposed options. In addition, the comments 

themselves can be accessed in the docket for this action. 
407

of implementation experience (of the type that we will gain 

starting in 2011) would be required, plus at least an additional 

year to extrapolate that experience to small sources and put 

these approaches into effect for small source permitting. Thus, 

we do not think the lean and electronic permitting would be in 

place before the beginning of 2013. Moreover, a handful of 

commenters questioned whether lean and/or electronic permitting 

would alleviate significant burden. Thus we are not able, at 

this time, to presume that these approaches will ease any burden 

prior to the planned rulemaking for Step 3.

It is also important to note that, as a practical matter, 

while these efforts to streamline the program for small sources 

are underway, EPA and states will also be devoting a significant 

amount of their permitting resources and expertise to 

implementing the PSD and title V programs for the GHG-emitting 

sources covered under Steps 1 and 2. We have established these 

steps in a manner that they will be feasible for EPA and 

state/local/tribal authorities, but even so, they will not only 

consume current permitting authority resources, but they will 

also require substantial additional resources. As a result, the 

efforts to develop and implement streamlining techniques will 

have to compete with the work necessary to administer existing 

programs. For example, during the remainder of 2010, as 
408

described elsewhere in this notice, EPA permitting program 

resources will, in addition to continuing to administer programs 

for non-GHG pollutants, be used to conduct at least the 

following GHG-related activities in addition to streamlining: 

(1) develop BACT and other information and guidance for 

implementing programs for sources covered by Step 1, followed by 

additional guidance and information for sources covered by Step 

2; (2) review and act on information we receive regarding state 

adoption of GHG permitting requirements, which may entail 

narrowing of previous SIP approvals or processing of other 

programmatic revisions; and (3) propose and finalize measures to 

address programs with deficiencies in GHG coverage. As the 

beginning of Step 2 nears, we will also begin to receive and 

process the first applications for permits that will incorporate 

GHG requirements (i.e., those that will be issued after January 

2, 2011). States seeking to implement streamlining approaches 

will face similar competition for permitting resources.

These time frames and resource considerations for 

streamlining confirm the approach to phase-in that we are taking 

in this rule. First and foremost, they make clear that it will 

not be possible to have streamlining measures in place in time 

for either Step 1 or Step 2. Therefore our selection of 

threshold for those steps is not built on assumptions that 
409

streamlining will remove some or all of the burden during those 

steps. 

Second, they make clear that, while no significant 

streamlining can be in place by the time we must begin to 

develop the Step 3 rule (i.e., latter half of 2011, to 

promulgate by July 2012, effective July 2013), it is likely that 

by that time EPA and states will have had an opportunity to gain 

implementation experience that could serve as the basis for 

beginning to implement streamlining techniques that do not 

require rulemaking or state adoption (e.g., lean and electronic 

permitting). It is also likely that we will have had an 

opportunity to gather technical information – which we have 

already begun to gather - for certain source and emissions unit 

categories that would be necessary to support proposal of PTE or 

presumptive BACT approaches for those categories. We expect 

that the Step 3 rulemaking will provide an opportunity for us to 

use that experience and data to begin to propose streamlining 

approaches that need notice and comment rulemaking. We can also 

begin to take into account any burden reductions from possible 

early streamlining efforts – that is, through lean and 

electronic permitting - in the establishment of Step 3. 

Third, it is clear that the potential availability of 

streamlining measures does not call into question our decision 
410

that in no event will we broaden PSD and title V applicability 

to cover GHG-emitting sources below the 50,000 tpy CO2e level 

prior to July 2016, as discussed elsewhere. EPA cannot now 

predict the resources that will be required to implement PSD and 

title V programs for GHG-emitting sources once various 

streamlining techniques are ultimately completed. This is 

uncertain not only because we need data and implementation 

experience with GHG permitting during Steps 1, 2, and 3 that we 

can apply to estimates for small sources, but also because, as 

comments indicate, there is a broad range of legal and policy 

issues to consider in crafting the streamlining approaches we 

ultimately adopt. We have presented an initial assessment of 

options and obtained views of commenters both supporting and 

opposing them, and it is the result of these future actions, 

whose outcomes are uncertain at this time, that will ultimately 

determine the extent to which streamlining approaches will allow 

for the administration of PSD and title V programs for numerous 

small sources. Thus, while we are optimistic that we can craft 

workable, common-sense solutions, we nonetheless, believe it is 

important to preserve our small source exclusion until we have 

not only had time to put the streamlining approaches in place, 

but also have had time to assess the burdens that remain, before 

we bring in additional sources below the 50,000 tpy CO2e levels. 
411

We believe that the 6-year timeframe will require a sustained 

intensive effort by EPA and states to develop, adopt, and 

implement streamlining techniques, and will require EPA to then 

evaluate those techniques and complete a rulemaking concerning 

PSD and title V applicability to small-sources based on that 

evaluation. In this manner, the 6-year period will give us the 

necessary time to make the best decisions about the actions we 

should take beyond Step 3.

While comments make clear that there are issues to be 

addressed, nothing in the comments has persuaded us that we 

should abandon our streamlining efforts. To the contrary, the 

strong support for these efforts shown by many commenters 

reinforces our intention, as stated at proposal, to move forward 

with these approaches as an integral part of our phase-in 

approach. Moreover, notwithstanding the competition for GHG 

permitting resources and expertise, we believe it is critical 

that we move forward expeditiously. As noted previously, we are 

already taking a first step by initiating permitting for larger 

sources, beginning January 2011, that will begin to provide 

valuable implementation experience. This experience can be 

useful in allowing states to begin implementing early 

streamlining measures, like lean and electronic permitting, 

which do not require EPA action. We have also already begun, 
412

and will continue, developing data necessary to support possible 

rulemakings addressing approaches such as PTE, presumptive BACT, 

and/or general permits. We expect to be able to use these data 

to support possible rulemakings on these topics, as appropriate, 

at about the same time as our Step 3 rulemaking. There may also 

be available streamlining options that were not described in our 

proposal that warrant further consideration. Because of the 

uncertainty surrounding such approaches, we are not committing 

to finalize rules on any particular approach, but we do plan to 

explore all streamlining options as expeditiously as possible, 

beginning immediately and proceeding throughout the phase-in 

period, and we encourage permitting authorities to do the same. 

We commit to consider a wide array of possible streamlining 

measures, and we commit to propose and take comment on, in the 

Step 3 rulemaking, a set of those measures that we determine are 

viable to pursue further.

2. Guidance for BACT Determinations 

The CAA requires that a PSD permit contain, among other 

things, emissions limits based on the BACT for each pollutant 

subject to regulation under the Act emitted from the source that 

triggers PSD. 42 U.S.C. 7475(a)(4); 42 U.S.C. 7479(3). BACT is 

defined as follows:
413

(3) The term "best available control technology" 

means an emission limitation based on the maximum 

degree of reduction of each pollutant subject to 

regulation under this Act emitted from or which 

results from any major emitting facility, which the 

permitting authority, on a case-by-case basis, taking 

into account energy, environmental, and economic 

impacts and other costs, determines is achievable for 

such facility through application of production 

processes and available methods, systems, and 

techniques, including fuel cleaning, clean fuels, or 

treatment or innovative fuel combustion techniques for 

control of each such pollutant. In no event shall 

application of "best available control technology" 

result in emissions of any pollutants which will 

exceed the emissions allowed by any applicable 

standard established pursuant to section 111 or 112 of 

this Act. Emissions from any source utilizing clean 

fuels, or any other means, to comply with this 

paragraph shall not be allowed to increase above 

levels that would have been required under this 

paragraph as it existed prior to enactment of the 

Clean Air Act Amendments of 1990.

 

42 U.S.C. 7479(3). 

Thus, the BACT process is designed to determine the most 

effective control strategies achievable in each instance, 

considering energy, environmental, and economic impacts. 

However, the case-by-case nature of BACT, together with the 

range of factors and technologies that must be considered, 

presents a challenge in determining BACT for newly regulated 

pollutants. When a new pollutant is regulated, the first permit 

applicants and permitting authorities that are faced with 

determining BACT for a new pollutant will likely need to invest 

more time and resources in gathering and analyzing information 
414

necessary to make an assessment of BACT under the statutory 

criteria. Once the PSD permitting program matures with respect 

to the new pollutant, successive BACT analyses will establish 

precedents that can inform subsequent BACT determinations. 

While the BACT provisions clearly contemplate that the 

permitting authority evaluate control strategies on a case-bycase basis, EPA recognizes the need to develop and share policy 

guidance and technical information for sources and permitting 

authorities as they begin to permit sources of newly regulated 

pollutants, such as GHGs. When applied in a practical manner, 

this additional EPA guidance and technical information should 

reduce time and resource needs when evaluating BACT for newly 

regulated pollutants.

As described in the proposed Tailoring Rule, EPA intends to 

compile and make available technical and background information 

on GHG emission factors, control technologies and measures, and 

measurement and monitoring methodologies for key GHG source 

categories. We expressed our intent to work closely with 

stakeholders in developing this supporting information and to 

ensure this information is available in sufficient time to 

assist permitting agencies in their BACT determinations. The 

proposal took comment on what other types of support or 
415

assistance EPA can provide to initially help air pollution 

control agencies with the permitting of GHGs.

Commenters on the proposed Tailoring Rule generally 

supported EPA providing technical information and policy 

guidance for sources of GHGs. Several commenters specifically 

requested guidance to clarify GHG-related issues, such as how to 

compute CO2e emissions, how to evaluate emissions of CO2 from 

biomass fuel, and whether an air quality analysis will be 

required for GHGs. Additionally, commenters requested that EPA 

issue “white papers” and other tools that would provide 

information on a range of control technologies and measures for 

major stationary source categories, such as power plants, cement 

kilns, glass furnaces, and other sources. Many of these 

commenters further requested that EPA provide an opportunity for 

stakeholder input on the guidance, and a few commenters insisted 

that permitting for sources of GHGs should not begin prior to 

issuing final guidance. 

Consistent with our commitment at proposal to involve all 

stakeholders in our guidance development, EPA called upon the 

CAAAC in September 2009, to provide assistance and 

recommendations for what types of guidance and technical 
416

information would be helpful.60 Specifically, our charge to the 

CAAAC was “... to discuss and identify the major issues and 

potential barriers to implementing the PSD Program under the CAA 

for greenhouse gases ... [and] focus initially on the BACT 

requirement, including information and guidance that would be 

useful for EPA to provide concerning the technical, economic, 

and environmental performance characteristics of potential BACT 

options.” This charge also requested the CAAAC to “identify and 

discuss approaches to enable state and local permitting 

authorities to apply the BACT criteria in a consistent, 

practical and efficient manner.”

At its October 6, 2009 meeting, the CAAAC established a 

Climate Change Work Group, made up of 35 representatives from a 

variety of industries, state and local governments, and 

environmental and public health non-profit organizations, 

organized under CAAAC’s Permits, New Source Review and Toxics 

 

60 The CAAAC is a senior-level policy committee established in 

1990 to advise the U.S. EPA on issues related to implementing 

the CAA Amendments of 1990. The committee is chartered under 

the Federal Advisory Committee Act and has been renewed every 2

years since its creation. The membership is approximately 40 

members and experts representing state and local government, 

environmental and public interest groups, academic institutions, 

unions, trade associations, utilities, industry, and other 

experts. The CAAAC meets three times a year, normally in 

Washington, D.C. It provides advice and counsel to EPA on a 

variety of important air quality policy issues. The committee 

has formed several subcommittees to provide more detailed 

discussion and advice on many technical issues.
417

Subcommittee. The Work Group initially focused its attention on 

the procedure for evaluating BACT and decided that the process 

and criteria for determining BACT for criteria pollutants 

represented a workable and acceptable framework for GHGs. The 

Work Group also recommended a second phase, in which the Work 

Group would consider member proposals regarding possible 

alternative or supplementary approaches to applying the PSD 

program to GHG sources. 

In February 2010, the CAAAC completed work on the first 

phase of its effort and sent EPA a list of recommendations that 

highlighted areas of the BACT determination process that are in 

need of technical and policy guidance. For more information, 

see the Interim Phase I Report on Issues related to BACT for 

GHGs, February 3, 2010 that is located in the public docket for 

this rulemaking and at 

http://www.epa.gov/air/caaac/climate/2010_02_InterimPhaseIReport

.pdf. In response, we are working on a number of fronts to 

develop technical information, guidance, and training to assist 

states in permitting large stationary sources of GHGs, including 

identifying GHG control measures for different industries. EPA 

is currently working with states on technical information and 

data needs related to BACT determinations for GHGs. This 

includes developing the EPA Office of Research and Development 
418

GHG Mitigation Strategies Database, enhancing the RACT/BACT/LAER 

Clearinghouse to include GHG-specific fields, and preparing 

technical information on sector-based GHG control measures. 

Also, EPA is actively developing BACT policy guidance for GHGs 

that will undergo notice and comment and will culminate in 

training courses for state, local, and tribal permitting 

authorities. The results of all of these efforts will roll out 

over the remainder of 2010. EPA currently awaits the Work 

Group’s recommendations from its second phase of deliberations, 

which is underway as of the date of this notice.

EPA does not agree with some commenters’ suggestion that 

EPA should delay permitting of any sources until final BACT 

guidance is issued. As discussed in the final action on 

reconsideration of the Interpretive Memo, delaying the 

application of BACT to enable the development of guidance or 

control strategies is not consistent with the BACT requirements. 

63 FR 17008. Furthermore, as just described, EPA expects such a 

delay to be unnecessary because EPA will soon begin providing 

technical information to inform BACT decisions, and will 

continue to provide additional guidance prior to the date that 

GHG permitting begins. However, even in the absence of such 

guidance, a delay would not be justified under the legal 

doctrines of “absurd results” and “administrative necessity”. 
419

While implementation of the BACT requirement during Steps 1 and 

2 will pose implementation challenges, EPA has assessed the 

burden associated with GHG permitting with consideration given 

to these challenges, and has established a phase-in schedule 

that represents a manageable workload. 

Thus, while BACT will remain a case-by-case assessment, as 

it always has been under the PSD program, EPA is confident that 

this guidance development effort will help support a smooth 

transition to permitting emissions of GHGs. Furthermore, EPA 

will continue to work to provide the most updated information 

and support tools to allow permitting authorities to share and 

access the most updated information on GHG BACT determinations 

as they are made once permitting of GHGs begins. EPA remains 

committed to involving stakeholders in the upcoming efforts to 

develop guidance to help to permitting authorities in making 

BACT determinations for sources of GHGs. 

3. Requests for Higher Category-Specific Thresholds or 

Exemptions from Applicability 

Although we did not propose any categorical exemptions, 

many commenters requested exemptions from major source and major 

modification applicability determinations under title V and PSD 

for certain types of GHG-emitting sources or certain types of 

GHG emissions as follows:
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Source Categories. Many commenters requested various 

exemptions or exclusions from source applicability for GHGs 

under both PSD and title V permitting, either during the phasein period or permanently, citing anticipated burdens, societal 

costs, and differences in emission characteristics. Commenters 

representing non-traditional sources or source categories 

(sources that have not historically been required to get 

permits) requested exemptions from permitting based on GHG 

emissions, including agricultural sources, residential sources, 

and small businesses. In general, these commenters sometimes, 

but not always cited “absurd results” and “administrative 

necessity” arguments in their exemption requests. 

Several commenters from sectors that consume a great deal 

of energy in their industrial processes and that are subject to 

international competitiveness, such as aluminum, steel, cement, 

glass, pulp and paper, and other manufacturers, requested that 

they be exempt from permitting under this final rule. These 

commenters state that we have not carefully considered the 

environmental and economic consequences of this action because 

if we had, we would have exempted them for several reasons, 

including (1) other countries typically exempt similar sources 

from GHG cap and trade programs because the industries are 

making significant energy efficiency improvements even in the 
421

absence of GHG regulation, and (2) permitting such sources may 

cause many facilities to move to countries that have less 

regulation or no regulation for GHGs. 

Other industry groups cited unique characteristics of their 

emissions, or the quantities in which they are emitted, that 

they argued should justify exclusion or unique thresholds.

Semiconductor production facilities asked for exemptions, 

arguing that combustion-related GHG emissions are different from 

their GHG emissions, which result from the use of high-GWP 

industrial gases, such as PFCs, with higher GWP values that are 

more likely to trigger permitting requirements at relatively low 

tpy values. One lime production commenter stated that EPA could 

encourage energy efficiency projects at its plants by excluding 

calcination and other process emissions, arguing that these 

emissions are a relatively small portion of the national 

inventory that will have no material effect on air quality and 

global warming. Another commenter requested that EPA exclude 

emissions from poultry production (natural bird respiration) 

from permitting consideration because the IPCC excludes them 

from its GHG emission estimates. Representatives of the 

landfill industry pointed to the relationship between current 

statutory thresholds that apply to their regulated emissions, 

primarily NMOC, and the equivalent amount of GHG emissions this 
422

corresponds to. They argued for a source-category specific 

threshold that is at least equivalent to their current NMOC 

threshold, or roughly 750,000 tpy CO2e according to their 

estimate. 

Although the proposal for the Tailoring Rule generally 

addressed how the statutory requirements for major source 

applicability (100/250 tpy thresholds) could be phased in in 

ways that would offer relief to traditional and non-traditional 

sources, such as residences, farms, small business, and 

semiconductor manufacturers, it did so by establishing 

relatively high CO2e thresholds during the early implementation 

period and lowering the thresholds over time as streamlining 

mechanisms become available to reduce administrative burdens. 

We did not propose any permanent exemptions of any kind or 

temporary exemptions based on source category. Also, note that 

the proposal discussed energy efficiency, process efficiency 

improvements, recovery and beneficial use of process gases, and 

certain raw material and product changes in the context of 

short-term, low-cost means of achieving GHG emission reductions 

for small-scale stationary sources, but not in the context of 

exemptions. 

As discussed previously, we are still considering whether 

permanent exemptions from the statute are justified for GHG 
423

permitting based on the “absurd results” legal doctrine. We do 

not have a sufficient basis to take final action at this time to

promulgate any of the suggested exclusions on the grounds, 

described previously, suggested by the commenters. We note, 

however, that nothing in this rule forecloses the opportunities 

we may have to explore such options in the future. Therefore, 

we are taking no action in this rule on these various 

commenters’ requests for exclusions.

Some commenters also recommended that we create exclusions 

for their particular source categories for the specific purpose 

of avoiding overwhelming permitting burdens. We did solicit 

comment on alternative approaches to burden relief in the 

proposal. Some commenters suggested that the “administrative 

necessity” or “absurd results” rationale, each of which would be 

based on extraordinary administrative burdens, could be used to 

create at least temporary exclusions that would allow more 

sources to escape permitting than what we proposed. However, 

commenters have not, to date, provided specific information 

about the costs and administrative burdens associated with 

permitting their source categories. 

Regarding the specific concerns about the need for a small 

business exclusion, we note that the Office of Advocacy of the 

SBA made several recommendations on the proposal to address 
424

concerns about large numbers of small businesses becoming 

subject to the permit programs. For example they recommended 

that EPA adopt major source thresholds of 100,000 tpy and major 

modification thresholds of 50,000 tpy CO2e. They also 

recommended that we adopt an interpretation of the effective 

date of the LDVR to provide additional time to prepare. We took 

action consistent with the latter recommendation in the 

Interpretive Memo, and we are taking action consistent with the 

former recommendation in this rule (although the threshold for 

modifications we are adopting is higher, for reasons explained 

previously). We are finalizing Steps 1 and 2 using the 

threshold-based approach, which applies the various legal 

doctrines, in the context of the Chevron framework, in a way 

that effectively exempts all small sources during this part of 

the phase-in, while assuring the administrability of the 

permitting programs for the sources that remain subject to them. 

We anticipate that virtually all small businesses not already 

subject to PSD and title V would be excluded under this 

approach. Similarly, with respect to high GWP gases as 

discussed previously, we are maintaining the statutory massbased threshold, and this should address commenters’ concerns

regarding the inclusion of those gases. Therefore, we reiterate 

that we are not finalizing any such exclusions in this rule and, 
425

as noted above, we are not taking final action in the 

commenters’ requests for exclusions. 

Concerning the comment that we did not take appropriate 

economic and environmental considerations into account for this 

rulemaking action, we disagree. The approach we finalize in 

this notice for Steps 1 and 2 minimizes economic burdens by 

limiting permitting to the largest GHG emission sources. We 

further note that the PSD program as applied to the sources that 

are covered in Steps 1 and 2 contains an express requirement to 

take energy, environmental, and economic considerations into 

account when making control technology (i.e., BACT) decisions 

and accordingly many of the concerns about control costs will be 

able to be accounted for in that analysis.

Biomass Combustion/Biogenic Emissions. Several commenters 

request that EPA exempt emissions from biogenic activities or 

biomass combustion or oxidation activities, including solid 

waste landfills, waste-to-energy projects, fermentation 

processes, combustion of renewable fuels, ethanol manufacturing, 

biodiesel production, and other alternative energy production 

that uses biomass feedstocks (e.g., crops or trees). For 

example, commenters urged that EPA exclude emissions from 

biomass combustion in determining the applicability of PSD to 

GHGs based on the notion that such combustion is “carbon 
426

neutral” (i.e., that combustion or oxidation of such materials 

would cause no net increase in GHG emissions on a lifecycle 

basis). Some commenters oppose the exemption of 

biogenic/biomass activities, claiming the lack of a valid 

scientific basis for treating these GHG emissions differently 

than other GHG emissions and expressing concern that we should 

not assume all biomass combustion were carbon neutral.

The proposed Tailoring Rule did not address this issue of 

exemptions for biomass combustion or biogenic emissions. We are 

mindful of the role that biomass or biogenic fuels and 

feedstocks could play in reducing anthropogenic GHG emissions, 

and we do not dispute the commenters’ observations that many 

state, federal, and international rules and policies treat 

biogenic and fossil sources of CO2 emissions differently. We 

note that EPA's technical support document for the endangerment 

finding final rule (Docket ID No. EPA-HQ-OAR-2009-0472-11292) 

states that “carbon dioxide has a very different life cycle 

compared to the other GHGs, which have well-defined lifetimes. 

Instead, unlike the other gases, CO2 is not destroyed by 

chemical, photolytic, or other reaction mechanisms, but rather 

the carbon in CO2 cycles between different reservoirs in the 

atmosphere, ocean, land vegetation, soils, and sediments. There 
427

are large exchanges between these reservoirs, which are 

approximately balanced such that the net source or sink is near 

zero.” 

Nevertheless, we have determined that our application of 

the “absurd results,” “administrative necessity,” and one-stepat-a-time legal rationales that support this rule, which are 

based on the overwhelming permitting burdens described 

previously, do not provide sufficient basis to exclude emissions 

of CO2 from biogenic sources in determining permitting 

applicability provisions at this time. This is because such an 

exclusion alone, while reducing burdens for some sources, would 

not address the overwhelming permitting burdens described above, 

and a threshold-based approach would still be needed. As noted 

above, we have not examined burdens with respect to specific 

categories and thus we have not analyzed the administrative 

burden of permitting projects that specifically involve biogenic 

CO2 emissions taking account of the threshold-based approach, nor 

did the commenters provide information to demonstrate that an 

overwhelming permitting burden would still exist, justifying a 

temporary exclusion for biomass sources. 

At the same time, the decision not to provide this type of 

an exclusion at this time does not foreclose EPA’s ability to 

either (1) provide this type of an exclusion at a later time 
428

when we have additional information about overwhelming 

permitting burdens due to biomass sources, or (2) provide 

another type of exclusion or other treatment based on some other 

rationale. Although we do not take a final position here, we 

believe that some commenters’ observations about a different 

treatment of biomass combustion warrant further exploration as a 

possible rationale. Therefore, although we did not propose any 

sort of permanent exclusion from PSD or title V applicability 

based on lifecycle considerations of biogenic CO2, we plan to 

seek further comment on how we might address emissions of 

biogenic carbon dioxide under the PSD and title V programs 

through a future action, such as a separate Advance Notice of 

Proposed Rulemaking (ANPR). This action would seek comment on 

how to address biogenic carbon under PSD and title V, the legal 

and policy issues raised by options regarding implementation. 

We will provide an opportunity for public comment before 

adopting any final approach. 

We further note that, while we are not promulgating an 

applicability exclusion for biogenic emissions and biomass fuels 

or feedstocks, there is flexibility to apply the existing 

regulations and policies regarding BACT in ways that take into 

account their lifecycle effects on GHG concentrations. This 

topic has already been explored by the CAAAC workgroup on BACT 
429

issues related to GHGs that recently provided recommendations to 

EPA. These recommendations are located in the public docket for 

this rulemaking and at 

http://www.epa.gov/air/caaac/climate/2010_02_InterimPhaseIReport

.pdf. While that group was unable to come to a consensus on how 

biomass-based emissions should be treated, it provided us with 

information that we will consider as we issue guidance on BACT. 

As previously discussed, we plan to issue BACT guidance later 

this year, but are not doing so as part of this rulemaking.

Without prejudging the outcome of our process to seek comment 

whether and how we might address emissions of biogenic carbon 

under the PSD and title V programs through a future action, this 

issue warrants further exploration in the BACT context as well, 

and we plan to fully explore it and take action if appropriate. 

Fugitive Emissions. Numerous commenters believe that 

fugitive GHG emissions should be excluded from major source 

determinations, citing difficulties in measuring or estimating 

such emissions. Others believe EPA did not address fugitive 

emissions in the proposal and they ask for clarification of the 

treatment of fugitive GHGs in applicability determinations under 

PSD and title V. Some of these commenters state that EPA has 

not undertaken a rulemaking under CAA section 302(j) for any 

source category of fugitive GHGs, so they should not be 
430

included. Several commenters representing the solid waste 

disposal industry requested exemptions for fugitive emissions 

for landfills and waste-to-energy projects, pointing out that 

current practice under PSD is for fugitive emissions from 

certain landfills to not be counted toward major source 

determinations. 

In the proposal, EPA did not offer any specific guidance or 

discuss exemptions for fugitive emissions of GHGs. Commenters 

did not suggest that a fugitive exemption would address the 

overwhelming permitting burdens described previously, or that it 

was necessary to specifically tailor GHG applicability through 

the use of a fugitive emissions exclusion for categories that 

would otherwise be required to include them. 

We do agree with commenters who stated that we should 

clarify how to count fugitives in determining applicability 

under this rule. In response, we note that we are not taking 

final action with respect to commenters’ request, and we are not 

finalizing any special rules for fugitive emissions related to 

GHG. Thus, EPA's rules related to the treatment of fugitives 

would apply. Regarding the comment that a CAA section 302(j) 

rulemaking is required before fugitive emissions may be counted, 

we disagree. As we read section 302(j), once EPA has 

established by rule that fugitive emissions are to be counted 
431

for a specific source category, nothing in section 302(j) 

requires EPA to conduct new rulemaking to allow for the counting 

of additional pollutants from that category. We read section 

302(j) as imposing an obligation to determine if fugitive 

emission generally should be counted from a source or source 

category and not requiring that EPA list both source categories 

and relevant pollutants. Indeed, our practice in listing 

categories has not been to limit the pollutants to which the 

listing applies. Therefore, we are applying our existing rules 

and policies for fugitive emissions for GHG as we would any 

other pollutant.

Pollution Control Projects. Other commenters request 

exemptions for pollution control projects from PSD major 

modification requirements, particularly projects that increase 

the efficiency or thermal performance of a unit or facility, 

resulting in emission reductions on a pounds/megawatt-hour or 

production basis. The current PSD rules do not exclude 

pollution control projects from being considered a physical 

change or change in the method of operation that would – if it 

resulted in a significant net emissions increase - constitute a 

major modification, and the caselaw makes clear that we could 
432

adopt a permanent exclusion in the future.

61 To the extent that 

the commenters seek an exclusion for pollution control projects 

that relies solely on “absurd results” or “administrative 

necessity” for reasons similar to those described previously for 

other requested exclusions, we take no action on this request in 

this rulemaking. 

4. Transitional Issues Including Requests for Grandfathering 

In the Tailoring Rule proposal, we did not discuss or 

specifically ask for comment on any provisions to address the 

transition from a permitting regime that does not incorporate 

GHGs to one that does, such as “grandfathering” provisions or 

similar approaches that would exempt previously issued permits 

or pending applications from having to incorporate requirements 

for GHGs. We nonetheless received several public comments that 

addressed a variety of transitional issues. One group of 

comments addresses situations prior to permit issuance where a 

PSD or title V application is either administratively complete 

or more generally being processed prior to the trigger date for 

 

61 On June 24, 2005, the United States Court of Appeals for 

the District of Columbia Circuit vacated the portions of the 

2002 and 1992 NSR rules that pertained to pollution control 

projects, among other provisions. In response to this Court 

action, on June 5, 2007, EPA removed these provisions from the 

NSR regulations. (See 72 FR 32526). These provisions were 

added as part of EPA’s NSR improvement rule that was issued on 

December 31, 2002.
433

GHG permitting (“in process” applications). Another group of 

comments addresses situations where a PSD or title V permit is 

issued prior to the GHG trigger date and the commenters request 

that the application and/or permit be exempt from any 

requirements for updates related to GHGs after permit issuance. 

With respect to PSD, many commenters requested that we 

adopt a “grandfathering” approach to applicability to exempt 

projects that have administratively complete PSD or minor NSR 

permit applications pending when the GHG permitting requirements 

go into effect. Several commenters urged us to promulgate 

transition provisions (without specifically using the term 

“grandfathering”), pointing out that we have provided transition 

periods for revising pending PSD permits, in the past, when new 

PSD rules were issued (e.g., in late 1970s and 1980). These 

commenters assert that GHG requirements will cause more 

disruption than those previous rule changes. Several commenters 

asked that PSD applications be evaluated on the basis of the PSD 

requirements effective when the application is submitted and if 

submitted prior to the trigger date, then the application and 

permit would not need to address GHGs. Several commenters also 

asked that PSD sources with a valid permit that commences 

construction within 18 months of the trigger date not be 

required to seek a revised PSD permit for GHGs. Similarly, 
434

several commenters asked that PSD permits issued prior to the 

GHG trigger date not be required to be reopened only for the 

purpose of addressing GHG emissions. Additional commenters 

asked that we clarify that sources or projects not be required 

to obtain PSD permits if they obtained a determination that PSD 

did not apply (a “non-applicability” determination) prior to the 

GHG trigger date. Finally, many commenters also requested 

“grandfathering” for title V so that existing title V 

applications and permits do not need to be amended, revised, or 

resubmitted to address GHGs after they become “subject to 

regulation.” Other commenters asked that transition provisions 

for title V be provided in the final action that would be 

similar to those requested for PSD. 

We partially addressed transitional issues for PSD 

permitting in our April 2, 2010 final action on reconsideration 

of the Interpretive Memo. 75 FR 17021. This action addressed 

the applicability of PSD permitting requirements for GHGs to 

pending PSD permit applications that were (or will be) submitted 

prior to January 2, 2011 based on emissions of pollutants other 

than GHGs. However, we have not yet addressed the questions 

raised by public comments concerning sources that obtain PSD 

permits, minor NSR permits, or determinations that no such 

permits are needed prior to the Step 1 period set forth in this 
435

rule. We have also not yet addressed questions about the 

applicability of PSD permitting requirements for sources that 

are not currently required to submit an application for a PSD 

permit but that could be required to do so in Step 2 of the 

phase-in established in this action. In addition, our April 2, 

2010 action did not address transitional issues concerning the 

application of the title V provisions to GHGs.

a. Transition for PSD Permit Applications Pending When Step 1 

Begins

In our action on April 2, 2010, EPA explained that the 

Agency did not see grounds to establish a transition provision 

for pending PSD permit applications because we had determined 

that PSD permitting requirements would not apply for GHGs for 

another 9 months. We explained that permit applications 

submitted prior to April 2, 2010 should in most cases be issued 

prior to January 2, 2011 and, thus, effectively have a 

transition period of 9 months to complete processing before PSD 

requirements become applicable to GHGs. We also observed that, 

in the case of any PSD permit application review that cannot 

otherwise be completed within the next 9 months based on the 

requirements for pollutants other than GHGs, it should be 

feasible for permitting authorities to begin incorporating GHG 

considerations into permit reviews in parallel with the 
436

completion of work on other pollutants without adding delay to 

permit processing. Additional discussion of EPA’s reasons for 

not developing transition provisions for PSD permit applications 

that are pending on January 2, 2011 are provided in the April 2, 

2010 notice. 75 FR 17021-22. 

For these same reasons, we continue to feel that a 

transition period is not warranted to incorporate GHG 

requirements into any PSD permit applications that are pending 

when Step 1 of the permitting phase-in begins for those sources 

that would otherwise need to obtain a PSD permit based on 

emissions of pollutants other than GHGs. Thus, this action 

makes no change to the position we expressed on this particular 

issue in the April 2, 2010 notice. In this final rule on 

tailoring the PSD program to address GHGs, we have determined 

that the additional burden of incorporating GHG requirements 

into PSD permits for the sources already required to obtain such 

permits is manageable in the Step 1 period. Thus, this rule has 

added no additional requirements or limitations that would 

justify deferring the establishment of pollution controls for 

this category of GHG sources once PSD permitting requirements 

are initially triggered for GHGs.

While we do not provide for grandfathering of PSD 

applications, we do note that there are more than 7 months left 
437

before GHG BACT requirements will be triggered at anyway sources 

for projects that increase GHG emissions by more than 75,000 tpy 

CO2e and more than a year before the requirements would be 

triggered at sources solely because of emissions of GHGs (more 

than 100,000 tpy of CO2e). We intend to work constructively and 

affirmatively with permitting authorities to use this time to 

ensure expeditious processing of pending permits and to further 

assure that the triggering of BACT requirements at such sources 

will not result in adverse impacts on pending projects. We have 

separately described our plans to expeditiously issue GHG BACT 

guidance, but we understand that for pending projects that will 

be permitted soon after January 2, 2011, an opportunity for 

earlier engagement with EPA on BACT issues would be beneficial 

for permitting authorities to issue these permits without delay. 

Therefore, following the issuance of this rule, we will 

contact permitting authorities that have pending PSD permit 

applications to identify those applications with a reasonable 

likelihood that final issuance will occur after January 2, 2011, 

and therefore will be required to contain GHG BACT limits. We 

will then work closely with those permit agencies to provide 

technical, legal or policy assistance to help prepare BACT 

analysis and provide additional support as necessary to expedite 

permitting for those pending applications. Similarly, when EPA 
438

is the permitting authority, we will provide assistance to 

applicants with pending permits to ensure that GHG permitting 

decisions are made promptly, and that administrative processes 

move forward expeditiously. 

b. PSD Permits Issued Prior to Step 1

EPA has not historically required PSD permits to be updated 

or reopened after they are issued in the absence of an action by 

the applicant to change the physical or operational 

characteristics of the source described in the permit 

application. EPA’s PSD permitting regulations contain no 

provisions that address the modification or amendment of a PSD 

permit or require a PSD permit to be reopened or modified on the 

basis of new PSD permitting requirements that take effect after 

the final permit is issued. Since PSD permits are construction 

permits, EPA has not required updates to PSD permits in the same 

manner as is typically required for operating permits that 

incorporate a variety of applicable requirements (such as title 

V permits and National Pollutant Discharge Elimination System 

(NPDES) permits under the Clean Water Act). In addition, unlike 

operating permits, PSD permits are not required to be renewed. 

However, if construction under a PSD permit is not commenced in 

a timely manner or is discontinued for an extended period, a PSD 
439

permit may expire if an extension is not requested or justified. 

See 40 CFR 52.21(r)(2); 40 CFR 124.5(g).

With respect to the application of PSD permitting 

requirements for GHGs beginning on January 2, 2011, we do not 

see any cause to deviate from our historical practice of not 

requiring PSD permits to be reopened or amended to incorporate 

requirements that take effect after the permit is issued. Thus, 

we are not promulgating any new rules or requirements pertaining 

to PSD permits issued prior to Step 1 of the phase-in described 

in this rule. There is no mandatory requirement to reopen a 

previously issued PSD permit to incorporate GHG requirements 

that were not applicable at the time the permit was issued. 

A major source that obtains a PSD permit prior to January 

2, 2011 will not be required under EPA regulations to reopen or 

revise the PSD permit to address GHGs in order for such a source 

to begin or continue construction authorized under the permit. 

Our current PSD permitting regulations provide that “[n]o new 

major stationary source or major modification to which the 

requirements of paragraphs (j) through (r)(5) of this section 

apply shall begin actual construction without a permit that 

states the major stationary source or major modification will 

meet those requirements.” 40 CFR 51.166(a)(7)(iii); 40 CFR 

52.21(a)(2)(iii). The term “begin actual construction” 
440

generally means “initiation of physical onsite construction 

activities on an emissions unit which are of a permanent nature” 

and includes activities such as “installation of building 

supports and foundations, laying underground pipework and 

construction of permanent storage structures.” 40 CFR 

51.166(b)(11); 40 CFR 52.21(b)(11). A source that begins actual 

construction authorized under a PSD permit prior to January 2, 

2011 will not be in violation of the prohibition described 

previously if it continues construction after that date. This 

portion of the regulation precludes only beginning construction 

without the appropriate preconstruction permit and does not 

require a permit to be updated to continue actual construction 

that has already begun. 

Furthermore, a source that is authorized to construct under 

a PSD permit but has not yet begun actual construction on 

January 2, 2011 may still begin actual construction after that 

date without having to amend the previously-issued PSD permit to 

incorporate GHG requirements. Sections 51.166(a)(7)(iii) and 

52.21(a)(2)(iii) require “a permit that states that the major 

stationary source or major modification will meet those 

requirement,” which refers to the “requirements in paragraphs 

(j) through (r)(5)” referenced earlier in those provisions. EPA 

construes this language to describe a permit that meets the 
441

requirements of paragraph (j) through (r)(5) that are in effect 

at the time the permit is issued. Permitting and licensing 

decisions of regulatory agencies must generally reflect the law 

in effect at the time the agency makes a final determination on 

a pending application. See Ziffrin v. United States, 318 U.S. 

73, 78 (1943); State of Alabama v. EPA, 557 F.2d 1101, 1110 (5th

Cir. 1977); In re: Dominion Energy Brayton Point, LLC, 12 E.A.D. 

490, 614-616 (EAB 2006); In re Phelps Dodge Corp., 10 E.A.D. 

460, 478 n. 10 (EAB 2002). 

Thus, a source may begin actual construction on or after 

January 2, 2011 under a PSD permit that authorized construction 

to begin prior to January 2, 2011 because such a permit states 

that the source will meet the requirements of paragraphs (j) 

through (r)(5) of these regulations (or state equivalents) that 

were in effect at the time the permit was issued. However, this 

would not be the case if the permit has expired because the 

applicant has discontinued construction or failed to commence 

construction by the necessary date. See 40 CFR 52.21(r)(2). 

This approach is consistent with EPA’s practice when the 

preconstruction permitting requirements change by virtue of the 

designation of an area as a nonattainment area after a PSD 

permit is issued. In transitional guidance issued by EPA in 

1991, EPA explained that “the area designation in effect on the 
442

date of permit issuance by the reviewing agency determines which 

regulations (part C or D) apply to that permit.” Memorandum 

from John S. Seitz, Director OAQPS, New Source Review (NSR) 

Program Transitional Guidance, page 6 (March 11, 1991). This 

memorandum explained further that “where a source receives a PSD 

or other permit prior to the date the area is designated as 

nonattainment, the permit remains in effect” as long as the 

source meets the conditions necessary to prevent the permit from 

expiring. Id. at 6. 

This approach does not apply if the source engages in a 

major modification after January 2, 2011 that is not authorized 

by the previously issued permit. Once Step 1 of the phase-in 

begins, if the PSD requirements for GHGs are applicable to a 

previously-permitted source that engages in a major modification 

not covered by the permit, such a source will need to obtain a 

new PSD permit to authorize the modification and that permit may 

need to include GHG requirements depending on the level of 

increase in GHGs that results from the modification. 

c. Additional Sources for Which PSD Applies in Step 2

In light of the terms of existing PSD regulations and the 

lead time provided in this action for sources that will first 

become subject to PSD permitting in Step 2, we do not believe 

there is presently a need to establish transition provisions for 
443

sources that will be required to obtain PSD permits for the 

first time in Step 2 of the phase-in. As described previously, 

under our current PSD permitting regulations, a new major 

stationary source or major modification may not begin actual 

construction without a PSD permit that meets the applicable 

preconstruction permitting requirements. 40 CFR 

51.166(a)(7)(iii); 40 CFR 52.21(a)(2)(iii). 

Since a permit must be obtained before a major source may 

begin actual construction, the major source preconstruction 

permitting requirements in 40 CFR 51.166 and 52.21 of the 

regulation do not generally apply to a source that begins actual 

construction at a time when it was not a major source required 

to obtain a PSD permit. One exception, however, is the unique 

circumstance when a source becomes a major source solely by 

virtue of the relaxation of an enforceable limitation on the 

source’s PTE. 40 CFR 51.166(r)(2); 40 CFR 52.21(r)(4). But 

absent these circumstances, PSD preconstruction permitting 

requirements do not generally preclude a source from continuing 

actual construction that began before the source was a source 

required to obtain a PSD permit. Thus, a source that began 

actual construction under the authorization of any previously 

required minor source or state construction permit is not 

required to meet any PSD preconstruction permitting requirement 
444

that becomes applicable after actual construction begins unless 

the source engages in a major modification after PSD permitting 

requirements are applicable. Likewise, a PSD permit is not 

required after a source begins actual construction based on a 

valid determination (by the source or the permitting authority) 

that the source need not obtain either a major PSD permitting 

requirements or and minor NSR permit. Based on these provisions 

in existing regulations, EPA will not require any sources to 

which PSD permitting requirements begin to apply in Step 2 to 

obtain a PSD permit to continue construction that actually 

begins before Step 2 begins. 

However, we will expect Step 2 sources that begin actual 

construction in Step 2 (i.e., beginning July 1, 2011) to do so 

only after obtaining a PSD permit in accordance with 40 CFR

52.21 or 51.166, or any applicable state regulation that meets 

the requirements of 40 CFR 51.166. We recognize the potential 

for the triggering of Step 2 to result in a change in status 

where a project may legally have begun actual construction 

before Step 2 but did not do so and would then need a PSD 

permit. However we also note that we are providing over a year 

of lead time before PSD permitting requirements become 

applicable to Step 2 sources. If projects would be adversely 

affected by this change in status, this lead time affords an 
445

opportunity for sources planning such projects to secure 

appropriate minor NSR permits (which generally take less than a 

year to issue), non-applicability determinations, etc. in time 

to avoid such a change in status. If a new or modified source 

that would become newly subject to PSD in Step 2 plans to begin 

actual construction before Step 2, it has more than a year to 

obtain the applicable preconstruction approvals and begin actual 

construction. Likewise, a Step 2 source that does not 

anticipate the ability to begin actual construction before Step

2 begins should have enough lead time to submit a PSD permit 

application and obtain the necessary permit without 

significantly delaying the project further. Therefore, we do 

not think it is necessary or appropriate to promulgate a 

transition provision that would exempt Step 2 sources from PSD 

permitting requirements that will apply based on construction 

that begins after Step 2 takes effect.

This approach for Step 2 sources that have obtained a minor 

source construction permit or non-applicability determination 

differs from the approach described previously for source that 

obtained a PSD permit prior to Step 1. As described previously, 

a Step 1 source that is authorized to begin actual construction 

before January 2, 2011 under a previously-issued PSD permit may 

begin actual construction under that permit after January 2, 
446

2011 without modifying the PSD permit to address GHGs. However, 

a Step 2 source that was not required to obtain a PSD permit 

before Step 2 begins would need to obtain a PSD permit 

addressing GHGs if it has not yet begun actual construction 

prior to Step 2, even if the source had obtained any 

preconstruction approvals that were necessary to authorize 

construction prior to Step 2. This is because such a Step 2 

source that begins actual construction after Step 2 would likely 

be doing so without having any permit meeting the requirements 

of paragraphs (j) through (r)(5) of 40 CFR 52.21 or 51.166, or a 

state equivalent. A source that has obtained only a minor 

source permit prior to Step 2 but that begins actual 

construction after July 1, 2011 would violate the requirements 

of 40 CFR 52.21(a)(2)(iii) or 51.166(a)(7)(iii), or a state 

equivalent, unless the source took care to ensure that it was 

authorized to construct under a PSD permit or could demonstrate 

that the source’s minor source construction permit makes clear 

that requirement of paragraphs (j) through (r)(5) of 40 CFR

52.21 or 51.166, or a state equivalent, would be met by the 

source even though such a permit was not nominally a PSD permit. 

This difference in approach for non-PSD sources is driven by the 

terms of 40 CFR 52.21(a)(2)(iii) and 51.166(a)(7)(iii). Since 

we have not provided any prior notice that we might be 
447

considering revisions to 40 CFR 52.21 and 51.166 to address this 

topic, we are unable to revise the regulations in this action to 

achieve the same result for non-PSD sources as for PSD sources. 

Furthermore, at the present time, we see no indication that this 

difference in approach is unreasonable since non-PSD sources 

will not trigger permitting for GHG until Step 2 (only anyway 

PSD source trigger in Step 1). Thus sources will have until 

July 1, 2011, an additional 6 months of lead time (for a total 

of more than 14 months), to prepare for the transition described 

here. Nevertheless, we recognize that the transition to the 

increased coverage of new sources and modifications that occurs 

in July will represent an unusual occurrence that may have 

unanticipated impacts. For this reason it is important to note 

that nothing in this rule forecloses our ability to further 

address such impacts, as necessary, by adopting rule changes or 

using other available tools. 

EPA has previously promulgated exemptions that have 

authorized some sources that were not previously subject to the 

PSD regulations to commence construction on the basis of minor 

source permits after the date new PSD requirements have took 

effect in 1978 and 1980. See, e.g., 40 CFR 52.21(i)(1)(iv)-(v). 

There is a notable distinction between these provisions, which 

use the term “commence construction,” and the terms of 40 CFR
448

52.21(a)(2)(iii) and 51.166(a)(7)(iii), which use the term 

“begin actual construction.” “Commence construction” is defined 

more broadly than “begin actual construction” to include 

obtaining all necessarily preconstruction approvals and either 

beginning actual on-site construction or entering into binding 

contracts to undertake a program of actual construction. 40 CFR 

52.21(b)(9); 40 CFR 51.166(b)(9). The term “commence 

construction” is also defined in the CAA. 42 U.S.C. 7479(2)(A). 

Among other purposes, the term “commence construction” is 

generally used in the Act and EPA regulations to distinguish 

construction activities that are exempt from new PSD permitting 

requirements from those that are not. See, e.g., 42 U.S.C.

7475(a); 40 CFR 52.21(i)(1)(i)-(v). In the absence an explicit 

exemption in the CAA or the PSD regulations that uses the term 

“commence construction,” we do not believe we can use the date a 

source “commences construction” under a minor source 

construction permit approval as a demarcation point for Step 2 

sources that may continue ongoing construction activities 

without having to obtain a PSD permit based on emissions of 

GHGs. Since we did not provide prior notice of an intention to 

adopt transition provisions applicable to this situation, we are 

unable to adopt such an exemption in this action that applies 

the term commence construction in this context. Consequently, 
449

the approach described previously applies the term “begin actual 

construction” based on the language in 40 CFR 52.21(a)(2)(iii) 

and 51.166(a)(7)(iii).

d. Transitional Issues for Title V Permitting

Since the title V permitting regulations already include a 

robust set of provisions to address the incorporation of new 

applicable requirements and other transitional considerations, 

we do not see grounds to establish unique transition or 

grandfathering provisions for GHGs in this action. Furthermore, 

since the purpose of title V is to collect all regulatory 

requirements applicable to a source and ensure compliance, we do 

not believe special exemptions for GHG requirements are likely 

to be justified. The existing title V rules do not provide any 

exemptions that relieve the obligation to incorporate all 

applicable requirements into a title V permit. However, the 

title V regulations contain numerous provisions that allow a 

reasonable period of time for incorporating new applicable 

requirements or applying for a title V permit that was not 

previously required. Transitional issues for incorporation of 

GHG requirements into title V permitting generally involve 

questions in the following categories: (1) permit application 

requirements for sources not previously subject to title V that 

will become subject to title V requirements in Step 2 of the 
450

phase-in; (2) the need for updates or amendments to title V 

permit applications that are pending when GHGs become subject to 

regulation in Step 1 of the phase-in; and (3) the incorporation 

of new applicable requirements for GHGs into existing permits 

for sources currently subject to title V. 

With respect to the first category, a title V source 

applying for the first time must submit its permit application 

within 12 months after the source “becomes subject to the 

[operating] permit program” or such earlier time that the 

permitting authority may require (see 40 CFR 70.5(a)(1)). 

Sources not otherwise subject to title V can become major 

sources subject to title V due to emissions of GHG no sooner 

than July 1, 2011. If a source becomes “subject to the 

[operating] permit program” on July 1, 2011, then its permit 

application under the title V operating permit program would 

typically have to be submitted no later than July 1, 2012. 

There are also existing regulations relevant for the second 

category of GHG transition issues, where sources currently 

subject to title V have title V permit applications pending with 

a permitting authority as of January 2, 2011. Where additional 

applicable requirements become applicable to a source after it 

submits its application, but prior to release of a draft permit, 

the source is obligated to supplement its permit application. 
451

See 40 CFR 70.5(b); 71.5(b). Furthermore, title V permits are 

generally required to contain provisions to assure compliance 

with all applicable requirements at the time of permit issuance. 

See CAA section 504(a); 40 CFR 70.6(a)(1) and 71.6(a)(1). If a 

permitting authority determines that additional information is 

necessary to evaluate or take final action on an application 

(e.g., because of uncertainty over whether a draft permit 

assures compliance with all applicable requirements), it may, 

and should, request additional information from the source in 

writing and set a reasonable deadline for a response. See 40 

CFR 70.5(a)(2); 71.5(a)(2). 

Likewise, the existing title V regulations provide 

sufficient transition for the third category of issues, where a 

source has additional GHG-related applicable requirements (such 

as the terms of a PSD permit) that must be incorporated into its 

existing title V permit. Where a source is required to obtain a 

PSD permit, the source must apply for a title V permit or permit 

revision within 12 months of commencing operation or on or 

before such earlier date as the permitting authority may 

establish (or prior to commencing operation if an existing title 

V permit would prohibit the construction or change in 

operation). See 40 CFR 70.5(a)(1)(ii); 71.5(a)(1)(ii); see also

40 CFR 70.7(d) and (e); 71.7(d) and (e) (permit modifications). 
452

In addition, where a source becomes subject to additional 

applicable requirements, the permitting authority is required to 

reopen the permit to add those applicable requirements if the 

permit term has three or more years remaining and the applicable 

requirements will be in effect prior to the date the permit is 

due to expire. See 40 CFR 70.7(f)(1)(i); 71.7(f)(1)(i). 

Finally, EPA notes that the existing title V regulations 

require sources to furnish permitting authorities, within a 

reasonable time, any information the permitting authority may 

request in writing to determine whether cause exists for 

modifying, revoking, and reissuing, or terminating the permit, 

and for other reasons, and further provide that permitting 

authorities shall reopen and revise permits if EPA or the 

permitting authority determine that the permit must be revised 

or revoked to assure compliance with applicable requirements. 

See 40 CFR 70.6(a)(6)(v);71.6(a)(6)(v) and 70.7(f)(1)(iv); 

71.7(f)(1)(iv).

Thus, EPA believes that the existing title V regulations 

provide an adequate regulatory framework for managing the 

transition to incorporating GHG requirements in title V permits 

and additional specific exemptions or transition rules for title 

V are not currently warranted.

VI. What are the economic impacts of the final rule? 
453

This section of the preamble examines the economic impacts 

of the final rule including the expected benefits and costs for 

affected sources and permitting authorities. The final rule 

uses a phased-in approach for requiring sources of GHG emissions 

to comply with title V operating permit and PSD statutory 

requirements, essentially lifting this burden for the phase-in 

period for a large number of smaller sources of GHG. Thus, this 

rule provides regulatory relief rather than regulatory 

requirements for these smaller GHG sources. For larger sources 

of GHGs that will be required to obtain title V permits and/or 

comply on PSD requirements, there are no direct economic burdens 

or costs as a result of this final rule, because these 

requirements are not imposed as a result of this rulemaking. 

Statutory requirements to obtain a title V operating permit or 

to adhere to PSD requirements are already mandated by the CAA 

and by existing rules, not by this rule. Similarly, this rule 

will impose costs to society in the form of foregone 

environmental benefits resulting from GHG emission reductions 

that, absent this rule, might otherwise have occurred at sources 

deferred from permitting during the phase-in period.

The RIA conducted for this final rule provides details of 

the benefits or regulatory relief that smaller GHG sources will 

experience in terms of costs avoided as a result of this final 
454

rule and the potential for social costs in terms of foregone 

environmental benefits during this 6-year period. Complete 

details of the RIA conducted for this final rule may be found in 

the document "Regulatory Impact Analysis for the Final 

Prevention of Significant Deterioration and Title V Greenhouse 

Gas Tailoring Rule," in the docket for this rulemaking.

This rulemaking provides permitting thresholds for sources 

of GHG that exceed levels contained in the CAA, and these levels 

are phased-in steps based upon application of the 

“administrative necessity” and “absurd results” doctrines as 

explained in section V.B. For Step 1, which is effective from 

January 2, 2011 through June 30, 2011, only sources required to 

undergo title V or PSD permitting based upon non-GHG air 

pollutants are required to obtain an operating permit or PSD 

permit to include GHG emissions (referred to as the “anyway” 

threshold). Step 2, effective from July 1, 2011 until such time 

as EPA acts on a rule to amend it (which for reasons described 

previously, we assume is June 30, 2013 for the purposes of this 

analysis), will phase in title V permit requirements for larger 

sources emitting GHG above 100,000 tpy CO2e (if they do not 

already have one) and phase in for such sources, PSD 

requirements when they are newly constructed or modify in a way 

that increases emissions by more than a 75,000 tpy CO2e
455

significance level. Step 2 is referred to as the 100,000 tpy 

CO2e threshold. Thereafter, EPA makes an enforceable commitment 

to consider a possible Step 3 to further lower thresholds below 

100,000 tpy CO2e and/or permanently exclude some sources from the 

program(s), but only after a regulatory process is conducted 

addressing “administrative necessity” and “absurd results”

considerations based upon the actual permitting experiences in 

the first two steps of the phase-in. In addition, EPA provides 

a deferral of permitting until we take required action in April 

2016 for sources and modifications that emit below 50,000 tpy 

CO2e. The deferral will end when a required study is conducted 

of the permitting process for sources of GHG and EPA acts, based 

on the study, to promulgate a rule that describes the additional 

GHG permitting requirements beyond 2016. In the 6 years 

following promulgation of this rule, the EPA estimates that 

compared to baseline estimates that do not include the effects 

of this rule, over six million sources of GHG emissions in total 

will be allowed to continue to operate without a title V 

operating permit. During this period, tens of thousands of new 

sources or modifying sources each year will not be subject to 

PSD requirements for GHG. For this large number of smaller 

sources, this rule alleviates the regulatory burden associated 

with obtaining an operating or PSD permit or complying with NSR 
456

BACT requirements. Therefore, this final action may be 

considered beneficial to these small sources because it provides 

relief from regulation that would otherwise be required. 

This decision does potentially have environmental 

consequences in the form of higher emissions during the 6-year 

period of time (generally because emissions increases would have 

been lower if BACT were applied). These consequences are 

limited due to the fact that sources between 100/250 and 100,000 

tpy CO2e account for an estimated 11 percent of the six directly 

emitted GHG nationally from industrial, commercial, and 

residential source categories, while representing over 95 

percent of the total number of sources potentially requiring an 

operating or PSD permit for GHG under current permitting 

thresholds in the CAA. Moreover, requiring such a large number 

of small sources to obtain permits for the first time would 

overtax the permitting authorities' abilities to process new 

permits and would therefore interfere with any such benefits 

actually being achieved. Moreover, reductions from these small 

sources will still be occurring, notwithstanding the fact that 

permitting requirements would not apply to them. These smaller 

sources of GHGs will be the focus of voluntary emission 

reduction programs and energy efficiency measures that lead to 

reductions in GHGs. We will also reevaluate this decision after 
457

a 6-year period and complete a study of the implications for 

those sources and permitting authorities of permitting smaller 

GHG sources beyond 2016.

In reaching the preceding decisions for this final rule, we 

carefully considered comments received on the Tailoring Rule

proposal. We received several comments specifically on our 

description of the impacts of this rule. Most of these comments 

disagreed with our assertion that the rule is a “relief” rule.

Others assert that we should have prepared a more comprehensive 

RIA than prepared for the rule proposal. Those commenting 

contend: (1) we understated the burdens of the rule while 

overstating its relief at proposal; (2) we erroneously omitted 

the impacts for “larger sources” of GHGs from the proposal RIA 

and should have recognized the burden to “larger sources” due to 

other GHG actions; (3) the economic impacts the rule will have 

on industry and the U.S. economy and society in general will be 

burdensome, especially given the current state of the economy; 

and (4) we need to propose a full RIA or a complete estimation 

of impacts to comply with CAA section 307(d) and the APA. 

EPA has carefully considered the comments addressing the 

issue of whether the Tailoring Rule is a regulatory “relief 

rule,” and we are not persuaded that we erred in concluding that 

the effect of the Tailoring Rule is to provide regulatory relief 
458

to a large number of sources of GHG for a period of up to 6

years. This final rule will provide relief from title V 

permitting to over 6 million sources of GHG in this country. 

Likewise tens of thousands of sources potentially subject to PSD 

permitting requirements annually for GHG will have regulation 

postponed for a period of up to 6 years under this rule, 

followed by an additional required rule addressing the period 

beyond 6 years. While larger sources of GHG may be required to 

obtain title V permits or modify existing permits and to comply 

with PSD requirements, these burdens result not from the 

Tailoring Rule but rather from the CAA requirements to apply PSD

and title V to each pollutant subject to regulation, which are

triggered when the LDVR takes effect. To clearly illustrate 

this, consider what would occur if EPA did not complete the 

Tailoring Rule. Sources would not be relieved of the 

requirement to obtain permits addressing each pollutant subject

to regulation when they construct or modify, nor would they be 

relieved of their obligation to obtain title V permits. 

Instead, these requirements would simply apply to a much larger 

population of sources and modifications, and would lead to the 

absurd results and severe impairment to program implementation 

that this rule is designed to address.
459

In response to comments asserting that the RIA completed 

for proposal of this rulemaking: (1) understated the burdens of 

the rule and overstated the benefits, (2) did not fully 

recognize the rule will be burdensome, especially given the 

current state of the economy; and (3) does not consider a 

complete estimation of impacts to comply with the APA and CAA 

section 307(d) and needs to correct flawed or erroneous 

assumptions, EPA did make improvements and modifications to the 

RIA completed for this final rule. Based upon comments, EPA 

modified estimates of the number of sources affected at various 

threshold levels upward. EPA also improved the burden estimates 

associated with obtaining permits for sources and permitting 

authorities. 

After consideration of the burden imposed by the proposed 

rule with these improved estimates for affected sources, the EPA 

modified the steps of the phase-in period to include two initial 

steps, described in section V, that are higher, and therefore 

cover fewer sources and are less burdensome than the proposal 

threshold of 25,000 tpy CO2e emissions. EPA also increased the 

threshold below which permitting would not apply for 6 years 

from 25,000 to 50,000 tpy CO2e. After the initial two step 

period, EPA has committed to consider lower thresholds but only 

down to 50,000 tpy CO2e, and only after a regulatory process that 
460

uses information gathered on actual permitting activity during 

the first two steps of the phase-in period. The RIA conducted 

for the final rule also incorporates improvements in our 

estimates of the number of sources affected at alternative 

thresholds and improved estimates of the costs of obtaining 

permits by sources and processing permits by permitting 

authorities. The EPA acknowledges that the regulatory relief 

associated with the control costs due to BACT requirements for 

PSD new and modifying sources is not included in the RIA for the 

final rule due to the lack of sufficient data about the nature 

of those requirements. However, it is the case that, as it 

relates to burden, those estimates would simply increase the 

amount of regulatory relief associated with this final rule. 

Finally, with regard to comments that the RIA should have 

been a more comprehensive analysis to include the larger sources 

of GHG that will be required to obtain permits when GHG are 

regulated, the EPA maintains as previously explained that there 

are no direct economic burdens or costs as a result of this rule 

for these sources. Requirements for larger GHG sources to 

obtain title V or PSD permits are already mandated by the Act 

and by existing rules and are not imposed as a result of the 

Tailoring Rule. Thus the economic impacts for larger sources of 

GHG do not occur because of this Tailoring Rule. To include 
461

these larger sources in the RIA would actually be an inaccurate 

assessment of how this rule affects sources and would ignore the 

fact that this rule provides regulatory relief.

A. What entities are affected by this final rule?

As previously stated, this final rule does not itself 

result in the application of permitting requirements to any 

industrial, commercial, or residential entities. Entities 

affected by this rule are those who experience regulatory relief 

due to the higher thresholds and deferred applicability set 

forth in this rule. This action increases the threshold to 

obtain a title V and PSD permitting from statutory CAA levels 

using a phased-in step process as previously discussed. As 

Table VI-1 shows, this action lifts permitting requirements for 

over six million potential title V sources in total and tens of 

thousands of potential PSD new sources annually that would be 

otherwise required by the CAA to obtain permits. Under Step 1, 

over six million title V sources in total and approximately 20 

thousand new PSD sources per year will not be required to obtain 

permits. Under Step 2, requiring sources over a 100,000 tpy CO2e

to obtain a permit, over six million title V sources in total 

and approximately 19.9 thousand new PSD sources per year will 

obtain regulatory relief. While the threshold approach differs 

for Steps 1 and 2 of the phase-in plan, the estimated number of 
462

sources affected does not differ greatly as shown in Table VI-1. 

Sectors experiencing this regulatory relief include electricity, 

industrial, energy, waste treatment, agriculture, commercial and 

residential.
463

Table VI-1. Estimated Number of Affected Sources Experiencing

Regulatory Relief1,2

Number of Sources Experiencing Regulatory 

Relief

Step 1 Anway Step 2 100,000 tpy

Sector Title V New PSD Title V New PSD

Electricity 285 93 285 33

Industrial 170,910 604 170,654 599

Energy 2,588 48 2,536 44

Waste Treatment 3,358 2 3,165 1

Agriculture 37,351 299 37,351 299

Commercial 1,355,921 12,041 1,355,870 12,039

Residential 4,535,500 6,915 4,535,500 6,915

Totals 6,105,913 20,002 6,105,361 19,930

% Emissions Covered3 13% 11%

Notes: (1) Number of sources is determined on a PTE basis. 

Estimates for title V are the total number of sources expected 

to experience regulatory relief. PSD sources are annual 

estimates of newly constructed facilities and do not include 

modifications at existing facilities that may also be subject to 

PSD requirements. (2) See appendices to “Regulatory Impact 

Analysis of the Final Prevention of Significant Deterioration 

and Title V Greenhouse Gas Tailoring Rule” for more details of 

how thresholds and sources affected are developed. (3) 

Percentage of emissions covered represent estimated actual 

emissions from sources expected to experience regulatory relief 

as a percentage of total stationary source GHG emissions.

B. What are the estimated annual benefits to sources due to 

regulatory relief from the statutory requirements?

EPA estimated the annual benefits (avoided costs) to 

sources of GHG emissions and permitting authorities anticipated 

from this final rule. In addition, an accounting of the 

benefits from this action as measured by avoided permit 

processing costs for state, local, and tribal permitting 

authorities is provided. These benefits or avoided costs relate 

specifically to permit burden costs postponed for smaller 
464

sources of GHG emissions otherwise required to obtain an 

operating permit under title V or required to modify an existing 

permit to address GHG emissions. Avoided costs shown also 

include permit burdens for additional PSD permits postponed for 

new or modifying smaller sources of GHG, as well as the avoided 

costs to state, local and tribal permitting authorities. We are 

providing an illustrative monetary estimate of statutory 

permitting requirements to show the magnitude of the savings 

that hypothetically result from this rulemaking. While we 

believe it is impossible to implement these permit requirements 

by January 2, 2011, for the reasons laid out in this preamble, 

it is useful to understand the scale of what the burden may have 

been. For sake of simplicity, we refer to this illustrative 

monetary estimate as the monetized benefits of the regulatory 

relief presented by this rulemaking or regulatory relief 

benefits for brevity.

These benefit estimates do not consider avoided emission 

control costs associated with PSD requirements for potential 

BACT requirements. Estimates for BACT are unavailable at this 

time because of the difficulty predicting the results of the 

BACT process as it would be applied to new pollutants and 

classes of sources for which there is no previous BACT 

experience on which to rely. 

1. What are annual estimated benefits or avoided burden costs 
465

for title V permits? 

Table VI-2 shows that the estimated annual title V benefits 

to sources and to permitting authorities in terms of avoided 

information collection cost resulting from this final action to 

be approximately $70,535 million under Step 1 of the phase-in. 

These avoided costs become $70,520 million annually under Step 2 

of the phase-in. where permitting is required for sources at or 

above the 100,000 tpy CO2e threshold. Under the anyway threshold 

Step 1, approximately $49,457 million in regulatory relief will 

accrue to sources and approximately $21,078 million to 

permitting authorities annually in the form of avoided permit 

processing costs. With the 100,000 tpy CO2e threshold for phasein Step 2, these annual regulatory relief benefits are expected 

to be quite similar at $49,447 million for sources of GHG 

emissions and $21,072 million for permitting authorities. 

Industrial sources permitting costs are estimated to be $46.4 

thousand per permit for a new permit and $1.7 thousand for a 

permit revision. The EPA estimates that over tens of thousands 

of industrial sources per year will avoid incurring these 

permitting costs under Steps 1 and 2 of the phase-in period. 

The cost for a permit for new commercial and residential sources 

is estimated to be $23.2 thousand per permit with approximately 

2 million of these permits avoided annually.

State, local, and tribal permitting authorities will also 
466

benefit in terms of avoided permitting administrative costs of 

over $21 billion as a result of the decisions final in this 

action. For industrial sources, the cost for permitting 

authorities to process a new industrial title V permit is 

approximately $19.7 thousand per permit and $1.8 thousand for a 

permit revision. Similarly, permitting authority avoided permit 

processing costs are approximately $9.8 thousand per permit for 

a new commercial or residential title V permit. All estimates 

are stated in 2007 dollars. 
467

Table VI-2. Annual Title V Regulatory Relief for Sources and Permitting Authorities1, 2

Step One 

Anyway

Step Two 

100,000 tpy CO2e

Activity

Cost per 

Permit 

(2007$)

Number of 

Permits

Avoided Costs 

(millions 

2007$)

Number of 

Permits

Avoided Costs 

(millions 

2007$)

Sources

New Industrial $46,350 71,829 $3,329 71,657 $3,321

New Commercial/

Residential $23,175 1,985,948 $46,024 1,985,930 $46,024

Permit revisions due 

to GHG $1,677 61,836 $104 60,921 $102

Source Total 2,119,613 $49,457 2,118,508 $49,447

Permitting Authority

New Industrial $19,688 71,829 $1,414 71,657 $1,410

New Commercial/

Residential $9,844 1,985,948 $19,550 1,985,930 $19,550

Permit revisions due 

to GHG $1,840 61,836 $114 60,921 $112

Permitting Authority 

Total 2,119,613 $21,078 2,118,508 $21,072

 

Total Title V Regulatory Relief $70,535 $70,520

Notes: Sums may not add due to rounding. (1) Annual title V avoided costs estimates 

represent information collection costs for one third of the total number of title V 

sources obtaining regulatory relief shown in Table VI-1 potentially requiring permits or 

permit revisions for GHG. 

(2) More details on these estimated regulatory relief benefits are available in the 

appendices to the “Regulatory Impact Analysis for the Final Prevention of Significant 

Deterioration and Title V Greenhouse Gas Tailoring Rule.”
468

2. What are annual benefits or avoided costs associated with 

NSR permitting regulatory relief? 

Table VI-3 summarizes the estimated annual permit burden

costs avoided by sources and permitting authorities for PSD 

permitting due to this Tailoring Rule. The benefits associated 

with avoided cost of compliance for BACT for these sources is 

not included in these estimates due to a lack of available data. 

The estimated avoided burden or reporting and recordkeeping cost 

that would occur absent this rule for new industrial sources to 

obtain permits is estimated to be $84.5 thousand for a modifying 

PSD industrial source and $59.2 thousand for a modifying 

commercial or multi-family residential source. New PSD sources 

will also be required to obtain a title V permit increasing 

these costs to $130.9 thousand per permit for new industrial 

sources and to $82.3 thousand per permit for new commercial or 

multi-family residential sources. (Note the title V costs for 

these new PSD sources have been included in title V estimates 

shown in Table VI-2.) New and modifying sources avoid 

approximately $5.5 billion annually in PSD permitting costs with 

this rule under the phase-in Step 1 threshold. Under the phasein Step 2, 100,000 tpy CO2e threshold and 75,000 tpy CO2e

significance level, this avoided PSD permitting cost estimate 

becomes $5.4 billion annually. State, local, and tribal 

permitting authorities are expected to avoid about $1.51 billion 
469

annually in administrative expenditures associated with 

postponing PSD program requirements for these GHG sources under 

Step 1 and $1.49 billion under Step 2. All estimates are shown 

in 2007 dollars. 
470

Table VI-3. Annual PSD Regulatory Relief for Sources and Permitting Authorities1,2

Step One

Anyway

Step Two

100,000 tpy 

Threshold, 75,000 

Significance Level

Activity

Cost 

per 

Permit 

(2007$)

Number 

of 

Permits

Avoided 

Costs 

(millions 

2007$)

Number 

of 

Permits

Avoided 

Costs 

(millions 

2007$)

Sources

New Industrial $84,530 26,089 $2,205 25174 $2,128

New Commercial/Residential $59,152 55,509 $3,283 55505 $3,283

Source Total 81,598 $5,489 80679 $5,411

Permitting Authority

New Industrial $23,243 26,089 $606 25174 $585

New Commercial/Residential $16,216 55,509 $900 55505 $900

Permitting Authority Total 81,598 $1,506 80679 $1,485

 

Total Title V Regulatory Relief $6,995 $6,896

Notes: Sums may not add due to rounding. (1) All estimates are based upon PTE. 

Regulatory relief shown represents annual estimates of PSD permitting costs avoided under 

Steps 1 and 2 of the phase-in period. (2) More details on these estimated regulatory 

relief benefits are available in the appendices to the “Regulatory Impact Analysis for 

the Final Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring 

Rule.”
471

C. What are the economic impacts of this rulemaking?

This final rulemaking does not impose economic burdens or 

costs on any sources or permitting authorities, but should be 

viewed as regulatory relief for smaller GHG emission sources and 

for permitting authorities. Although sources above the 

thresholds set in this rule will become subject to permitting on 

January 2, 2011, those impacts are not attributable to the 

present rulemaking. Rather they are mandated by the CAA and 

existing regulations and automatically take effect independent 

of this action. 

In addition to considering the regulatory relief expected 

for affected entities as a result of this final rule, the EPA 

considered the impact of this rulemaking to small entities 

(small businesses, governments and non-profit organizations) as 

required by the Regulatory Flexibility Act (RFA) and the Small 

Business Regulatory Enforcement Fairness Act (SBREFA). For 

informational purposes, the RIA includes the SBA definition of 

small entities by industry categories for stationary sources of 

GHG and potential regulatory relief from title V and NSR 

permitting programs for small sources of GHG. Since this rule 

does not impose regulatory requirements but rather lessens the 

regulatory burden of the CAA requirements to smaller sources of 

GHG, no economic costs are imposed upon small sources of GHG as 

a result of this final rule. Rather this action provides 
472

regulatory relief for small sources. These avoided costs or 

benefits accrue because small sources of GHG are not required to 

obtain a title V permit and new or modifying small sources of 

GHG are not required to meet PSD requirements. Some of the 

small sources benefitting from this action are small entities, 

and these entities will benefit from the regulatory relief 

finalized by this rule. For discussion of comments received and 

EPA responses regarding small entities impacts, see section VII

of this preamble.

D. What are the costs of the final rule for society?

EPA examined the social costs of this final rule. These 

social costs represent the foregone environmental benefits that 

will occur as a result of the regulatory relief offered to 

sources of GHG emissions. This action is one of regulatory 

relief since it increases the emissions thresholds for the title 

V and PSD programs, as they apply to sources of GHG emissions, 

to levels above those in the CAA. In this preamble section, the 

benefits or avoided regulatory costs of such relief are 

discussed, but there is also a social cost imposed by such 

relief, because this rule may forego some of the possible 

benefits associated with title V and PSD programs for sources of 

GHG emissions below the permitting thresholds established. 

These benefits are those attributed to title V and PSD 

permitting programs in general. These benefits are based upon 
473

the relevance of these programs to policymaking, transparency 

issues, and market efficiency, and therefore are very difficult 

to quantify and monetize. For title V, they include the 

benefits of improved compliance with CAA requirements that stem 

from (1) improved clarity regarding applicability of 

requirements, (2) discovery and required correction of 

noncompliance prior to receiving a permit, (3) improving 

monitoring, recordkeeping, and reporting concerning compliance 

status, (4) self-certification of compliance with applicable 

requirements initially and annually, and prompt reporting of 

deviations from permit requirements, (5) enhanced opportunity 

for the public to understand and monitor sources’ compliance 

obligations, and (6) improved ability of EPA, permitting 

authorities, and the public to enforce CAA requirements. 

However, it is important to remember that a title V permit 

generally does not add new requirements for pollution control 

itself, but rather collects all of a facility’s applicable 

requirements under the CAA in one permitting mechanism. 

Therefore, the compliance benefits above are less when title V 

permits contains few or no CAA applicable requirements. During 

the initial steps of the phase-in plan established under this

action, we expect that the vast majority of sources excluded 

from title V would be sources that have no CAA applicable 

requirements for GHG emissions and few or no requirements for 
474

other pollutants because their emissions of those pollutants are 

so small. For this reason while it is extremely difficult to 

measure the degree of improved compliance, if any, that would be 

foregone, or to quantify the social costs that would be imposed, 

we expect that they would be small. We will be evaluating this 

issue further during subsequent phases.

For PSD, the primary social cost imposed by the Tailoring 

Rule stems from the foregone benefit of applying BACT to the 

tens of thousands of small new sources and modifications that 

will be below our final thresholds during the first steps of the 

phase-in. This social cost potentially weighs against the cost 

savings described previously that stem (in part) from avoiding 

the administrative and control costs of applying BACT to these 

sources. The BACT requirement assures that new and modified 

sources, when they increase their emissions are using state-ofthe-art emission controls and affords the public an opportunity 

to comment on the control decision. It does not prohibit 

increases but it assures that such controls are applied. 

Delaying the BACT requirement for numerous small sources during 

the first steps of the phase-in for this final rule could allow 

increases from these smaller sources that are greater than they 

would be if BACT were applied. A detailed analysis of this 

difference is beyond the scope of this rule, because we do not 

have detailed information on the universe of these tens of 
475

thousands of small PSD actions, the candidate BACT technologies 

for each of them, how permitting authorities would make the BACT 

decisions, and how the BACT limit would compare to what would 

otherwise be installed absent BACT.

It is not possible at this time to quantify the social 

costs of avoided BACT. However, we note that the universe of 

possible emissions that would be regulated by sources excluded 

under the Tailoring Rule is small compared to those that would 

remain subject to PSD. The sources excluded in these first two 

steps of the phase-in plan of this action comprise only 11 

percent of total stationary source GHG emissions, while 67 

percent remain subject to regulation. Furthermore, we expect 

the emissions differences due to BACT controls for such sources 

to be relatively small due to the lack of available capture and 

control technologies for GHG at such sources that are akin to 

those that exist for conventional pollutants and sources, as 

well as the likelihood that even in the absence of BACT such 

sources would already be installing relatively efficient GHG 

technologies to save on fuel costs. Thus, while potential 

benefits would be foregone by excluding smaller sources from the 

permitting programs, these benefits are likely to be small. 

Under the Tailoring Rule, we will be working during the 6-year 

period to greatly improve our understanding of both the 

administrative costs of regulating and the social costs of not 
476

regulating smaller sources under PSD and title V, and we will be 

relying on that information to support our future threshold 

analyses called for under the action. 

In reaching the decisions for this Tailoring Rule, the EPA 

recognizes that GHG emissions can remain in the atmosphere for 

decades to centuries, meaning that their concentrations become 

well-mixed throughout the global atmosphere regardless of 

emission origin, and their effects on climate are long lasting 

and significant. A detailed explanation of climate change and 

its impact on health, society, and the environment is included 

in EPA's TSD for the endangerment finding action (Docket ID No. 

EPA-HQ-OAR-2009-0171). The EPA recognizes the importance of 

reducing climate change emissions for all sources of GHG 

emissions including those sources afforded regulatory relief in 

this rule and plans to address potential emission reductions 

from these small sources using voluntary and energy efficiency 

approaches. Elsewhere, we have discussed EPA's interest in 

continuing to use regulatory and/or non-regulatory tools for 

reducing emissions from smaller GHG sources because we believe 

that these tools will likely result in more efficient and costeffective regulation than would case-by-case permitting.

E. What are the net benefits of this final rule?

The net benefits of this GHG tailoring rule represent the 

difference between the benefits and costs of this rule to 
477

society. As discussed in this preamble, this rule is one of 

regulatory relief and the benefits to society are estimates the 

regulatory relief (avoided permit burden costs) to sources and 

permitting authorities for Steps 1 and 2 of the phase-in period. 

The social costs of the rule are the foregone environmental 

benefits in the form of potential GHG emission reductions that 

could occur during the phase-in period and are discussed 

qualitatively.

This rulemaking provides regulatory relief for a phase-in 

period to smaller sources of GHG by phasing in the statutory 

permitting threshold at levels above statutory requirements. 

This final rule establishes thresholds and PSD significance 

levels for Steps 1 and 2 of the phase-in period (the 2.5 year 

period between January 2, 2011 and July 1, 2013), commits to 

considering a further Step 3, and indicates floor title V and 

PSD threshold levels from July 1, 2013 through April 30, 2016. 

The net benefits of the final rule for Steps 1 and 2 are 

$193,598+B-C million for the 2 and one-half year period where B

denotes the unquantified benefits and C the quantified costs of 

this final rule. These unquantified benefits of this rule 

include the avoided PSD BACT costs for new and modifying 

sources. The unquantified costs previously discussed relate to 

the foregone environment benefits or GHG emission reductions 

that might be possible during the 2.5 year Step 1 and 2 phase-in 
478

period. These estimates are subject to significant 

uncertainties that are discussed at length in the Regulatory 

Impact Analysis for the Prevention of Significant Deterioration

and Title V GHG Tailoring Rule contained in the docket to this 

final rule. All dollar estimates shown are based upon 2007$.
479

Table VI-4. Net Benefits of the Rule for Steps 1 and 2 of the 

Phase-in Period

Final Rule Amounts 

(millions of 2007$)

Benefits - Regulatory Relief

Sources

 Title V1 $123,624

 PSD2 $13,567

Total Source Regulatory Relief $137,190

Permitting Authority

 Title V1 $52,684

 PSD2 $3,724

Total Permitting Authority $56,407

Total Regulatory Relief $193,598+B

Costs - Foregone GHG Emission 

Reductions

 Title V & PSD C

Net Benefits3 $193,598+B-C

Benefits represent regulatory relief for sources with the 

annual potential to emit below the thresholds shown.

B - unquantified benefits of the rule include regulatory 

relief from BACT requirements for PSD sources

C - unquantified social costs of tailoring rule represents 

economic value of foregone environmental benefits (potential 

GHG emission reductions) during Step 1 and 2 of the phase in 

period. Foregone GHG emission reductions are not known at 

this time. 

1Reflects estimates of regulatory relief or avoided permit 

burden costs for title V GHG sources and permitting 

authorities.

2 Shows estimates of regulatory relief or avoided permit 

burden costs for GHG PSD sources and permitting authorities.

3 Includes one-half year of Step 1 (anyway threshold), 2 

years of Step 2 (100,000 threshold), 

VII. Comments on Statutory and Executive Orders Reviews 

In this section, we provide responses to comments we 

received for various Executive Orders. 
480

A. Comments on Executive Order 12866 - Regulatory Planning and 

Review

At proposal, EPA prepared an analysis of the potential 

costs and benefits associated with EPA’s Tailoring Rule proposal 

in an RIA. Several commenters state that EPA’s failure to 

estimate the full costs of the effects of its interpretation of 

PSD applicability in the proposed Tailoring Rule violates 

Executive Order 12866. Some of these commenters maintain that 

Executive Order 12866 directs EPA to submit to the Office of 

Management and Budget (OMB) new significant regulations under 

consideration by the EPA. These commenters assert that, in the 

section 202 rule, EPA failed to analyze the effect on stationary 

sources in the cost benefit analysis and there is no indication 

that EPA included these impacts in its submission to OMB. 

According to the commenters, in EPA’s proposal for this 

rulemaking, EPA has similarly failed to analyze the costs and 

benefits of triggering PSD for stationary sources. The 

commenters assert that without this key information, OMB could 

not fully review the impacts of the proposed rule. The 

commenters believe that EPA’s failure to account for known costs 

that will occur as a direct result of the promulgation of the 

proposed rule in conjunction with the section 202 rule violates 

several applicable requirements of Executive Order 12866, 

including sections 6(B)(ii) and 6(C)(iii), which require 
481

assessments of the potential costs and benefits of the 

regulatory action and “reasonably feasible alternatives to the 

planned regulation, identified by the Agencies or the public . . 

.” thereby violating both the APA and CAA section 307(d) because 

they deprive businesses and permitting authorities alike of a 

meaningful opportunity to comment on the rule.

The EPA has prepared a revised RIA assessing the benefits 

and costs of the final Tailoring Rule to support this rulemaking 

in accordance with Executive Order 12866, as was done with the 

proposal for this rulemaking. Similarly, the RIA completed for 

this action is subject to review by an Inter-agency review panel 

that includes OMB, as was the case with the proposal RIA. 

Further, the RIA completed for this final rule fully assesses 

the known benefits and costs associated with the Tailoring Rule. 

This final rule is one of regulatory relief from statutory 

requirements in which a large number of sources of GHGs will be 

relieved of the burden of title V and PSD permitting for a 

period of at least 6 years. This final rule will provide relief 

from title V permitting to over 6 million sources of GHG in this 

country. Likewise tens of thousands of sources potentially 

subject to PSD permitting requirements for GHGs will have 

regulation postponed for a period of at least 6 years. While 

larger sources of GHG may still be required to obtain title V 

permits or modify existing permits and to comply with PSD 
482

requirements, these burdens result from existing statutory 

requirements, not from this final Tailoring Rule.

B. Comments on the Paperwork Reduction Act

At proposal, we stated in the preamble that we did not 

believe that the proposal would impose any new information 

collection burden. We concluded that the proposed action would 

reduce costs incurred by sources and permitting authorities 

relative to the costs that would be incurred if EPA did not 

revise the rule and provided estimates of those reduced costs. 

Further, we stated that, despite our estimated burden 

reductions, it was unnecessary for us to submit a new ICR to the 

OMB because the ICR contained in the existing regulations for 

PSD (see, e.g., 40 CFR 52.21) and title V (see 40 CFR parts 70 

and 71) had already been approved under the provisions of the 

Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and was assigned 

OMB control number 2060–0003 and OMB control number 2060–0336, 

respectively.

However, several commenters disagree that it was 

unnecessary for us to submit a new ICR for the proposed action. 

These commenters believe that (1) prior approval of an ICR for 

the PSD and title V programs ignores the fact that there would 

be an increase in the paperwork burden as a result of applying 

PSD and title V permitting requirements; and (2) unless EPA 

resubmits the information collection approval request to OMB 
483

with a proper and fully-inclusive analysis, EPA will lack 

authority to collect information from stationary sources for PSD 

and title V GHG emissions permitting.

As we stated in the proposal, this is a burden relief rule 

and as such it does not impose any new requirements for the NSR 

or title V programs that are not currently required. For that 

reason, we concluded that for purposes of this rule it was 

unnecessary for us to submit a new ICR to the OMB and that the 

ICR contained in the existing regulations for PSD (see, e.g., 40 

CFR 52.21) and title V (see 40 CFR parts 70 and 71) that had 

already been approved under the provisions of the Paperwork 

Reduction Act, 44 U.S.C. 3501 et seq. and was assigned OMB 

control number 2060–0003 and OMB control number 2060–0336, 

respectively, still applies.

Nevertheless, we understand that once GHGs are regulated 

under the PSD and title V programs, there might be an increase 

in the overall paperwork burden for these programs. EPA will 

have to assess this possible burden during the normal course of 

3-year renewal ICR process.

C. Comments on the RFA

At proposal, EPA certified that the proposed rule would not 

have a significant impact on a substantial number of small 

entities and therefore we are not obligated to convene a formal 

Small Business Advocacy Review (SBAR) panel. This certification 
484

was based upon the fact that the proposed action would relieve 

the regulatory burden associated with the major PSD and title V 

operating permits programs for new or modified major sources 

that emit GHGs, including small businesses. Nevertheless, EPA 

was aware at proposal that many small entities would be 

interested in the various GHG rulemakings currently under 

development and might have concerns about the potential impacts 

of the statutory imposition of PSD requirements that may occur 

as a result of the group of EPA actions, notwithstanding the 

relief provided to small businesses by the Tailoring Rule. For 

these reasons, and in collaboration with the SBA, EPA conducted 

an outreach meeting designed to exchange information with small 

entities that may be interested in these regulations. The 

outreach effort was organized and led by representatives from 

EPA’s Office of Air Quality Planning and Standards within the 

Office of Air and Radiation, EPA’s Office of Policy Economics 

and Innovation, the Office of Information and Regulatory Affairs 

within OMB, and the Office of Advocacy of the SBA. This meeting 

was conducted on November 17, 2009 in Arlington, VA, and 

documentation of this meeting, which includes a summary of the 

advice and recommendations received from the small entity 

representatives identified for the purposes of this process, can 

be obtained in the docket for this rulemaking. (See Docket No. 

EPA-HQ-OAR-2009-0517-19130.) 
485

During the comment period, several commenters alleged that

EPA inappropriately limited its RIA and RFA/SBREFA analysis, and 

that had we done a comprehensive analysis, we would not have 

been able to certify that any of the proposed rules will not 

have a significant economic impact on a “substantial number of 

small entities.” Thus they conclude that EPA failed to prepare 

and publicize an initial regulatory flexibility analysis (IRFA). 

Additional commenters stated that EPA’s failure to conduct an 

IRFA to assess the full costs of the effects of its 

interpretation of PSD applicability in the proposed Tailoring 

Rule violates a host of statutes and Executive Orders requiring 

analysis and public review of regulatory burdens. These 

commenters conclude that EPA should have convened one or more 

SBAR Panels. 

We are not persuaded that we should have taken into account 

effects beyond those caused by the Tailoring Rule when we made 

our certification of no significant economic impact on a 

substantial number of small entities for this rule. No 

permitting requirements are imposed by this final Tailoring 

Rule. Instead, this final Tailoring Rule offers regulatory 

relief to over an estimated six million sources of GHG emissions 

that would otherwise be required to obtain a title V permit and 

tens of thousands of sources of GHG emissions subject to PSD 

permitting requirements that would otherwise be required 
486

statutorily to obtain permit. The RFA does not require that an 

agency complete a regulatory flexibility analysis or conduct an 

SBAR panel where the rule does not have any negative impact on

small entities. For more discussion of RFA issues, please see 

the RTC document.

D. Comments on the Unfunded Mandates Reform Act

At proposal, EPA asserted that the Tailoring Rule does not 

impose unfunded mandates on any entities including sources and 

permitting authorities. Since the proposed Tailoring Rule is 

one of regulatory relief, it alleviates the burden of adhering 

to statutorily required permitting thresholds and does not 

impose regulatory requirements. 

Some commenters on the proposed rule assert that EPA has 

failed to comply with the requirements of the Unfunded Mandates 

Reform Act (URMA), pursuant to which EPA must assess the effects 

of the proposed rule on state, local, and tribal governments and 

the private sector. Specifically, these commenters state that 

section 202 of the UMRA requires EPA to prepare a written 

statement, including a cost-benefit analysis, for proposed rules 

with “federal mandates” that may result in expenditures to 

state, local, and tribal governments, in the aggregate, or to 

the private sector, of $100 million or more in any 1 year. 

According to the commenters, in concluding that “the revisions 

would ultimately reduce the PSD and title V program 
487

administrative burden that would otherwise occur in the absence 

of this rulemaking,” EPA did not account for the billions of 

dollars that permitting authorities and stationary sources will 

soon be required to spend once PSD is triggered for GHGs. 

Additionally, a few commenters contend that the EPA 

underestimated the impacts to public utilities which are 

owned/operated by local governments and also to state regulatory 

agencies. 

The EPA has carefully considered the comments on unfunded 

mandates expressed by commenters to the proposed rule. The EPA 

did complete a RIA for the final rule assessing the benefits and 

costs of the Tailoring Rule, including any unfunded mandates. 

As previously discussed, the Tailoring Rule is one of regulatory 

relief because it increases the GHG emissions threshold for NSR 

and title V permitting substantially above otherwise statutory 

requirements. As such, the EPA has determined that this 

Tailoring Rule does not impose unfunded mandates on any 

entities. This RIA of the final rule incorporates the extensive 

changes made in this final rule, including increased threshold 

levels for title V and PSD above those contained in the proposed 

rule. While we also incorporated improved estimates of the 

costs for sources to obtain permits and for permitting 

authorities to process permits, they do not change our 

conclusion that this final rule does not impose unfunded 
488

mandates on any entities. 

E. Comments on Executive Order 13132 – Federalism

Some comments received on the proposed rule assert that 

federalism concerns were ignored, in violation of Executive 

Order 13132. According to the commenters, EPA cannot maintain 

that the Tailoring Rule "will not have a substantial direct 

effect on the states, on the relationship between the national 

government and the states, or on the distribution of power and

responsibilities between various levels of government," such 

that Executive Order 13132 does not apply. Some of these 

commenters assert that the proposed rulemaking would require 

radical changes in state laws, interjects GHGs into permit 

programs never once conceived for that purpose (any more than 

was EPA's), requires massive staff hiring at state agencies, and 

rewrites SIPs in place for years or even decades.

As we stated previously, this is a burden relief rule and 

as such it does not impose any requirements for the NSR or title 

V programs that are not currently required. In addition, this 

action does not interject GHGs into the permit programs, nor 

does it change state laws or SIPs to impose any new permitting 

requirements. Instead, this action will significantly reduce 

the burden and costs incurred by sources and permitting 

authorities relative to the burden and costs that would be 

incurred if EPA did not revise the permitting provisions to 
489

account for higher applicability thresholds for GHG emissions. 

However, since this rule finalizes burden reducing 

thresholds that will not otherwise apply to the PSD and title V

programs, we are aware that a few states may have to amend their 

SIPs to incorporate these new thresholds if they do not 

incorporate federal rules by reference and cannot adopt our 

approach through interpretation. Executive Order 13132 is still 

not implicated by this rule because it finalizes burden reducing 

thresholds that would not otherwise apply to the PSD and title V 

programs. 

F. Comments on Executive Order 13175 - Consultation and 

Coordination with Indian Tribal Governments

The National Tribal Air Association (NTAA) supports EPA’s 

proposed rule but requests that tribal air grant funding be 

increased to reflect the air quality-related needs of tribes 

across the nation, and to allow these tribes the opportunity to 

implement the CAA’s PSD and title V programs. The NTAA states 

that, not only are tribes eligible for section 103 grant funding 

to conduct air quality monitoring, emissions inventories, and 

other studies and assessments, but they may also obtain section 

105 grant funding to implement CAA regulatory programs. 

According to the NTAA, tribes are facing many of the same airrelated issues that neighboring state and local jurisdictions 
490

are facing, but are significantly underfunded to address such 

issues.

The Agency is aware and concerned about the resource needs 

for the tribal air program and we are working to see how grant 

funding might be increased in the future. Nevertheless and for 

the purpose of the permitting programs, we want to clarify that 

tribes that develop Tribal Implementation Plans (TIPs) can 

charge for permits and tribes with delegation or authorization 

would develop permit fee programs under their authority (e.g., 

Navajo’s permit fee program for their delegated title V permit 

program) to fund both the NSR and title V programs. For these 

reasons, there are a number of ways we would like to work with 

tribes to address the funding concern, including encouraging 

delegation or authorization of permitting programs and having 

model codes available for tribes that want to do TIPs for NSR 

and title V permitting.

G. Comments on Executive Order 13211 - Actions That 

Significantly Affect Energy Supply, Distribution, or Use

Other commenters assert that EPA’s analysis under Executive 

Order 13211 is insufficient because it addresses only smaller 

sources. These commenters contend that EPA has not meaningfully 

examined the energy implications of its proposed actions and 

interpretations of the CAA. The commenters disagree with EPA’s 

conclusion that the imposition of costly PSD obligations on 
491

power plants would have no impact on power supply, distribution, 

or use, when those plants will have had no time to prepare for 

compliance and no idea what BACT may be for GHG emissions. 

Other commenters opine that the adoption of BACT for some 

industries newly-subject to PSD permitting requirements for GHGs 

could involve fuel-switching, and increased energy costs (due to 

the need for a source to convert from coal to natural gas to 

meet BACT).

Again, this action is a burden relief rule and as such it 

does not create any new requirements for sources in the energy 

supply, distribution, or use sectors. For the purpose of the 

BACT determinations for GHGs, the long-standing top-down BACT 

selection process still applies. Under the CAA and EPA’s 

implementing regulations, BACT is still an emission limitation 

based on the maximum degree of emission reduction achievable 

through application of production processes and available 

methods, systems, and techniques that considers energy, 

environmental, and economic impacts. In other words, BACT 

determinations for GHGs will still have to consider energy, 

environmental and economic feasibility for the various control 

technologies under consideration before selecting a particular 

technology as BACT for a specific source. For that reason, what 

BACT may be for GHG emissions will vary by source, and the 

technology that is ultimately selected has to be one that is 
492

feasible based on the current energy, environmental and economic 

impacts that the planned technology might have. Thus, we do not 

believe that this action is likely to have a significant adverse 

effect on the supply, distribution, or use of energy.

VIII. Statutory and Executive Orders Reviews 

A. Executive Order 12866 - Regulatory Planning and Review

Under section 3(f)(1) of Executive Order 12866 (58 FR 

51735, October 4, 1993), this action is an "economically 

significant regulatory action” because it is likely to have an 

annual effect on the economy of $100 million or more. 

Accordingly, EPA submitted this action to the OMB for review 

under Executive Order 12866 and any changes made in response to 

OMB recommendations have been documented in the docket for this 

action.

In addition, EPA prepared an analysis of the potential 

costs and benefits associated with this action. This analysis 

is contained in the RIA for this final rule. A copy of the 

analysis is available in the docket for this action and the 

analysis is briefly summarized in section VII of this preamble.

This rule uses a phased-in approach for requiring larger 

sources of GHG emissions to comply with title V operating permit 

and PSD statutory requirements, essentially lifting this burden 

for a period of at least 6 years for a large number of sources 

of GHG. Thus, this rule provides regulatory relief rather than 
493

regulatory requirements for these GHG sources. For sources of 

GHG that will be required to obtain title V permits and/or 

comply with PSD requirements, there are no direct economic 

burdens or costs as a result of this final rule, because these 

requirements are not imposed as a result of this rulemaking. 

Statutory requirements to obtain a title V operating permit or 

to adhere to PSD requirements are already mandated by the CAA 

and by existing rules, not by this rule. As a result, this 

Tailoring Rule annual effect on the economy will be positive 

because it will result in billions of dollars of regulatory 

relief during the phase-in period.

B. Paperwork Reduction Act

This action does not impose any new information collection 

burden. Instead, this action will significantly reduce costs 

incurred by sources and permitting authorities relative to the 

costs that would be incurred if EPA did not revise the rule. 

Based on our revised GHG threshold data analysis, we estimate 

that over 80,000 new and modified facilities per year would be 

subject to PSD review based on applying a GHG emissions 

threshold of 100/250 tpy using a CO2e metric. This is compared 

to 280 PSD permits currently issued per year, which is an 

increase of more than 280-fold. Similarly, for title V, we 

estimate that over six million new sources would be affected at 

the 100-tpy threshold for GHGs using the CO2e metric. By 
494

increasing the volume of permits by over 400 times, the 

administrative burden would be unmanageable without this rule.

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. The OMB control numbers 

for EPA’s regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

The RFA generally requires an agency to prepare a 

regulatory flexibility analysis of any rule subject to notice 

and comment rulemaking requirements under the APA 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 final action 

on small entities, small entity is defined as: (1) a small 

business that is a small industrial entity as defined in the 

U.S. 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 
495

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 final action will not 

have a significant economic impact on a substantial number of 

small entities. In determining whether a rule has a significant 

economic impact on a substantial number of small entities, the 

impact of concern is any significant adverse economic impact on 

small entities, since the primary purpose of the regulatory 

flexibility analyses is to identify and address regulatory 

alternatives “which minimize any significant economic impact of 

the rule on small entities.” 5 U.S.C. 603 and 604. Thus, an 

agency may certify that a rule will not have a significant 

economic impact on a substantial number of small entities if the 

rule relieves regulatory burden, or otherwise has a positive 

economic effect on all of the small entities subject to the 

rule. 

We have therefore concluded that this final rule will 

relieve the regulatory burden for most affected small entities 

associated with the major PSD and title V operating permits 

programs for new or modified major sources that emit GHGs, 

including small businesses. This is because this rule raises 

the major source applicability thresholds for these programs for 

the sources that emit GHGs. As a result, the program changes 
496

provided in this rule are not expected to result in a 

significant economic impact on a substantial number of 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 1 year. Only those few states whose permitting 

authorities do not implement the federal PSD and title V rules 

by reference in their SIPs will have a small increase in burden. 

These states will have to amend their corresponding SIPs to 

incorporate the new applicability thresholds, since the burden 

reducing thresholds that we are finalizing with this rule will 

not otherwise apply to the PSD and title V programs. Thus, this 

rule is not subject to the requirements of sections 202 or 205 

of UMRA.

This rule is also not subject to the requirements of 

section 203 of UMRA because it contains no regulatory 

requirements that might significantly or uniquely affect small 

governments. As discussed earlier, this rule is expected to 

result in cost savings and an administrative burden reduction 

for all permitting authorities and permittees, including small 

governments.

E. Executive Order 13132 – Federalism
497

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. These final amendments will ultimately simplify and 

reduce the burden on state and local agencies associated with 

implementing the PSD and title V operating permits programs, by 

providing that a source whose GHG emissions are below the 

proposed levels will not have to obtain a PSD permit or title V 

permit. 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 

proposed rule from state and local officials.

F. Executive Order 13175 - Consultation and Coordination with

Indian Tribal Governments

Subject to the Executive Order 13175 (65 FR 67249, November 

9, 2000) EPA may not issue a regulation that has tribal 

implications, that imposes substantial direct compliance costs, 

and that is not required by statute, unless the federal 

government provides the funds necessary to pay the direct 

compliance costs incurred by tribal governments, or EPA consults 
498

with tribal officials early in the process of developing the 

proposed regulation and develops a tribal summary impact 

statement. 

EPA has concluded that this action may have tribal 

implications. However, it will neither impose substantial 

direct compliance costs on tribal governments, nor preempt 

tribal law. There are no tribal authorities, currently issuing 

major NSR permits; however, this may change in the future. 

EPA consulted with tribal officials early in the process of 

developing this regulation to allow them to have meaningful and 

timely input into its development by publishing an ANPR that 

included GHG tailoring options for regulating GHGs under the 

CAA. (73 FR 44354, July 30, 2008) As a result of the ANPR, EPA 

received several comments from tribal officials on differing GHG 

tailoring options presented in the ANPR which were considered in 

the proposal and this final rule. Additionally, we also 

specifically solicited comment from tribal officials on the 

proposed rule (74 FR 55292, October 27, 2009). 

G. Executive Order 13045 - Protection of Children from 

Environmental Health and Safety Risks

EPA interprets Executive Order 13045 (62 FR 19885, 

April 23, 1997) as applying only to those regulatory 

actions that concern health or safety risks, such that the 

analysis required under section 5-501 of the Executive 
499

Order has the potential to influence the regulation. This 

action is not subject to Executive Order 13045 because it 

does not establish an environmental standard intended to 

mitigate health or safety risks.

H. Executive Order 13211 - Actions That Significantly Affect 

Energy Supply, Distribution, or Use

This 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. Further, we have 

concluded that this rule is not likely to have any adverse 

energy effects because this action would not create any new 

requirements for sources in the energy supply, distribution, or 

use sectors. 

I. National Technology Transfer and Advancement Act

Section 12(d) of the National Technology Transfer and 

Advancement Act of 1995 ("NTTAA"), Public Law 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. The NTTAA directs EPA to provide 
500

Congress, through OMB, explanations when the Agency decides not 

to use available and applicable voluntary consensus standards. 

This action does not involve technical standards. 

Therefore, EPA did not consider 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 (Feb. 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 United States. 

EPA has concluded that it is not practicable to determine 

whether there would be disproportionately high and adverse human 

health or environmental effects on minority and/or low income 

populations from this rule. This rule is necessary in order to 

allow for the continued implementation of permitting 

requirements established in the statute. Specifically, without 

this rule, the CAA permitting programs (PSD and title V) would 
501

become overwhelmed and unmanageable by the millions of GHG 

sources that would become newly subject to them. This would 

result in severe impairment of the functioning of these programs 

with potentially adverse human health and environmental effects 

nationwide. Under this rule and the legal doctrines of “absurd 

results,” administrative necessity, and one-step-at-a-time, EPA 

is ensuring that the CAA permitting programs continue to operate 

by limiting their applicability to the maximum number of sources 

the programs can possibly handle. This approach is consistent 

with congressional intent as it allows PSD applicability to at 

least the largest sources initially, at least to as many more 

sources as possible, and as promptly as possible over time. By 

doing so, this rule allows for the maximum degree of 

environmental protection possible while providing regulatory 

relief for the unmanageable burden that would otherwise exist. 

Therefore, we believe it is not practicable to identify and 

address disproportionately high and adverse human health or 

environmental effects on minority populations and low income 

populations in the United States under this final rule.

K. Congressional Review Act

The Congressional Review Act, 5 U.S.C. 801 et seq., as 

added by SBREFA, 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 
502

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 is a “major 

rule” as defined by 5 U.S.C. 804(2). This rule will be 

effective [INSERT DATE 60 DAYS FROM DATE OF PUBLICATION IN THE 

FEDERAL REGISTER].

L. Judicial Review

Under section 307(b)(1) of the Act, petitions for judicial 

review of this action must be filed in the United States Court 

of Appeals for the District of Columbia Circuit by [INSERT DATE 

60 DAYS FROM DATE OF PUBLICATION IN THE FEDERAL REGISTER]. Any 

such judicial review is limited to only those objections that 

are raised with reasonable specificity in timely comments.

Filing a petition for reconsideration by the Administrator of 

this final rule does not affect the finality of this rule for 

the purposes of judicial review nor does it extend the time 

within which a petition for judicial review may be filed, and 

shall not postpone the effectiveness of such rule or action.

Under section 307(b)(2) of the Act, the requirements of this 

final action may not be challenged later in civil or criminal 
503

proceedings brought by us to enforce these requirements. 

Pursuant to section 307(d)(1)(V) of the Act, the Administrator 

determines that this action is subject to the provisions of 

section 307(d). Section 307(d)(1)(V) provides that the 

provisions of section 307(d) apply to “such other actions as the 

Administrator may determine.” This action finalizes some, but 

not all, elements of a previous proposed action – the Prevention 

of Significant Deterioration and Title V Greenhouse Gas 

Tailoring Rule Proposed Rule (74 FR 55292, October 27, 2009). 

IX. Statutory Authority

The statutory authority for this action is provided by 

sections 307(d)(7)(B), 101, 111, 114, 116, and 301 of the CAA as 

amended (42 U.S.C. 7401, 7411, 7414, 7416, and 7601). This 

action is also subject to section 307(d) of the CAA (42 U.S.C. 

7407(d)).

List of Subjects

40 CFR Part 51 

Environmental protection, Administrative practice and 

procedure, Air pollution control, Carbon dioxide, Carbon dioxide 

equivalents, Greenhouse gases, Hydrofluorocarbons, 

Intergovernmental relations, Methane, Nitrous oxide, 

Perfluorocarbons, Reporting and recordkeeping requirements, 

Sulfur hexafluoride.

40 CFR Part 52 
504

Environmental protection, Administrative practice and 

procedure, Air pollution control, Carbon dioxide, Carbon dioxide 

equivalents, Greenhouse gases, Hydrofluorocarbons, 

Intergovernmental relations, Methane, Nitrous oxide, 

Perfluorocarbons, Reporting and recordkeeping requirements, 

Sulfur hexafluoride.

40 CFR Part 70

Environmental protection, Administrative practice and 

procedure, Air pollution control, Carbon dioxide, Carbon dioxide 

equivalents, Greenhouse gases, Hydrofluorocarbons, 

Intergovernmental relations, Methane, Nitrous oxide, 

Perfluorocarbons, Reporting and recordkeeping requirements, 

Sulfur hexafluoride.
505

Page 478 of 495 - Prevention of Significant Deterioration and 

Title V Greenhouse Gas Tailoring Rule

40 CFR Part 71

Environmental protection, Administrative practice and 

procedure, Air pollution control, Carbon dioxide, Carbon dioxide 

equivalents, Greenhouse gases, Hydrofluorocarbons, Methane, 

Nitrous oxide, Perfluorocarbons, Reporting and recordkeeping 

requirements, Sulfur hexafluoride.

___________________________________________ 

Dated: 

___________________________________________ 

Lisa P. Jackson, 

Administrator.
506

For reasons stated in the preamble, title 40, chapter I of the 

Code of Federal Regulations is amended as set forth below.

PART 51 – [AMENDED]

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

follows:

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

Subpart I - [Amended]

2. Section 51.166 is amended:

a. By adding paragraph (b)(48)

b. By revising paragraph (b)(49)(iv); and

c. By adding paragraph (b)(49)(v).

The revisions and additions read as follows:

§51.166 Prevention of significant deterioration of air quality.

* * * * *

(b) * * * 

(48) Subject to regulation means, for any air pollutant, 

that the pollutant is subject to either a provision in the Clean 

Air Act, or a nationally-applicable regulation codified by the 

Administrator in subchapter C of this chapter, that requires 

actual control of the quantity of emissions of that pollutant, 

and that such a control requirement has taken effect and is 

operative to control, limit or restrict the quantity of 

emissions of that pollutant released from the regulated 

activity. Except that: 
507

(i) Greenhouse gases (GHGs), the air pollutant defined in 

§86.1818-12(a) of this chapter as the aggregate group of six 

greenhouse gases: carbon dioxide, nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride, 

shall not be subject to regulation except as provided in 

paragraphs (b)(48)(iv) through (v) of this section.

(ii) For purposes of paragraphs (b)(48)(iii) through (v) of 

this section, the term tpy CO2 equivalent emissions (CO2e) shall 

represent an amount of GHGs emitted, and shall be computed as 

follows:

(a) Multiplying the mass amount of emissions (tpy), for 

each of the six greenhouse gases in the pollutant GHGs, by the 

gas’s associated global warming potential published at Table A-1

to subpart A of part 98 of this chapter – Global Warming 

Potentials.

(b) Sum the resultant value from paragraph (b)(48)(ii)(a) 

of this section for each gas to compute a tpy CO2e. 

(iii) The term emissions increase as used in paragraphs 

(b)(48)(iv) through (v) of this section shall mean that both a 

significant emissions increase (as calculated using the 

procedures in (a)(7)(iv) of this section) and a significant net 

emissions increase (as defined in paragraphs (b)(3) and (b)(23) 

of this section) occur. For the pollutant GHGs, an emissions 

increase shall be based on tpy CO2e, and shall be calculated 
508

assuming the pollutant GHGs is a regulated NSR pollutant, and 

“significant” is defined as 75,000 tpy CO2e instead of applying 

the value in paragraph (b)(23)(ii) of this section. 

(iv) Beginning January 2, 2011, the pollutant GHGs is 

subject to regulation if:

(a) The stationary source is a new major stationary source 

for a regulated NSR pollutant that is not GHGs, and also will 

emit or will have the potential to emit 75,000 tpy CO2e or more; 

or 

(b) The stationary source is an existing major stationary 

source for a regulated NSR pollutant that is not GHGs, and also 

will have an emissions increase of a regulated NSR pollutant, 

and an emissions increase of 75,000 tpy CO2e or more; and, 

(v) Beginning July 1, 2011, in addition to the provisions 

in paragraph (b)(48)(iv) of this section, the pollutant GHGs 

shall also be subject to regulation: 

(a) At a new stationary source that will emit or have the 

potential to emit 100,000 tpy CO2e; or

(b) At an existing stationary source that emits or has the 

potential to emit 100,000 tpy CO2e, when such stationary source 

undertakes a physical change or change in the method of 

operation that will result in an emissions increase of 75,000 

tpy CO2e or more.

(49) * * * 
509

(iv) Any pollutant that otherwise is subject to regulation 

under the Act as defined in paragraph (b)(48) of this section. 

(v) Notwithstanding paragraphs (b)(49)(i) through (iv) of 

this section, the term regulated NSR pollutant shall not include 

any or all hazardous air pollutants either listed in section 112 

of the Act, or added to the list pursuant to section 112(b)(2) 

of the Act, and which have not been delisted pursuant to section 

112(b)(3) of the Act, unless the listed hazardous air pollutant 

is also regulated as a constituent or precursor of a general 

pollutant listed under section 108 of the Act.

PART 52 – [AMENDED]

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

follows:

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

Subpart A - [Amended]

4. Section 52.21 is amended:

a. By adding paragraph (b)(49);

b. By revising paragraph (b)(50)(iv); and

c. By adding paragraph (b)(50)(v). 

The revisions and additions read as follows:

§52.21 Prevention of significant deterioration of air quality.

* * * * *

(b) * * *
510

(49) Subject to regulation means, for any air pollutant, 

that the pollutant is subject to either a provision in the Clean 

Air Act, or a nationally-applicable regulation codified by the 

Administrator in subchapter C of this chapter, that requires 

actual control of the quantity of emissions of that pollutant, 

and that such a control requirement has taken effect and is 

operative to control, limit or restrict the quantity of 

emissions of that pollutant released from the regulated 

activity. Except that: 

(i) Greenhouse gases (GHGs), the air pollutant defined in 

§86.1818-12(a) of this chapter as the aggregate group of six 

greenhouse gases: carbon dioxide, nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride, 

shall not be subject to regulation except as provided in 

paragraphs (b)(49)(iv) through (v) of this section .

(ii) For purposes of paragraphs (b)(49)(iii) through (v) 

of this section, the term tpy CO2 equivalent emissions (CO2e)

shall represent an amount of GHGs emitted, and shall be computed 

as follows:

(a) Multiplying the mass amount of emissions (tpy), for 

each of the six greenhouse gases in the pollutant GHGs, by the 

gas’s associated global warming potential published at Table A-1

to subpart A of part 98 of this chapter – Global Warming 

Potentials.
511

(b) Sum the resultant value from paragraph (b)(49)(ii)(a) 

of this section for each gas to compute a tpy CO2e., 

(iii) The term emissions increase as used in paragraphs 

(b)(49)(iv) through (v) of this section shall mean that both a 

significant emissions increase (as calculated using the 

procedures in paragraph(a)(2)(iv) of this section) and a 

significant net emissions increase (as defined in paragraphs 

(b)(3) and (b)(23) of this section) occur. For the pollutant 

GHGs, an emissions increase shall be based on tpy CO2e, and shall 

be calculated assuming the pollutant GHGs is a regulated NSR 

pollutant, and “significant” is defined as 75,000 tpy CO2e 

instead of applying the value in paragraph (b)(23)(ii) of this 

section. 

(iv) Beginning January 2, 2011, the pollutant GHGs is 

subject to regulation if:

(a) The stationary source is a new major stationary source 

for a regulated NSR pollutant that is not GHGs, and also will 

emit or will have the potential to emit 75,000 tpy CO2e or more; 

or 

(b) The stationary source is an existing major stationary 

source for a regulated NSR pollutant that is not GHGs, and also 

will have an emissions increase of a regulated NSR pollutant, 

and an emissions increase of 75,000 tpy CO2e or more; and, 
512

(v) Beginning July 1, 2011, in addition to the provisions 

in paragraph (b)(49)(iv) of this section, the pollutant GHGs 

shall also be subject to regulation 

(a) At a new stationary source that will emit or have the 

potential to emit 100,000 tpy CO2e; or

(b) At an existing stationary source that emits or has the 

potential to emit 100,000 tpy CO2e, when such stationary source 

undertakes a physical change or change in the method of 

operation that will result in an emissions increase of 75,000 

tpy CO2e or more. 

(50) * * * 

(iv) Any pollutant that otherwise is subject to regulation 

under the Act as defined in paragraph (b)(49) of this section. 

(v) Notwithstanding paragraphs (b)(50)(i) through (iv) of 

this section, the term regulated NSR pollutant shall not include 

any or all hazardous air pollutants either listed in section 112 

of the Act, or added to the list pursuant to section 112(b)(2) 

of the Act, and which have not been delisted pursuant to section 

112(b)(3) of the Act, unless the listed hazardous air pollutant 

is also regulated as a constituent or precursor of a general 

pollutant listed under section 108 of the Act.

* * * * *

5. A new §52.22 is added to read as follows: 
513

§52.22 Enforceable Commitments for Further Actions Addressing 

the Pollutant Greenhouse Gases (GHGs).

(a) Definitions.

(1) Greenhouse Gases (GHGs) means the air pollutant as 

defined in §86.1818-12(a) of this chapter as the aggregate group 

of six greenhouse gases: carbon dioxide, nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.

(2) All other terms used in this section shall have the 

meaning given in §52.21.

(b) Further action to regulate GHGs under the PSD program.

(1) Near term Action on GHGs. The Administrator shall 

solicit comment, under section 307(b) of the Act, on 

promulgating lower GHGs thresholds for PSD applicability. Such 

action shall be finalized by July 1, 2012 and become effective 

July 1, 2013. 

(2) Further Study and Action on GHGs.

(i) No later than April 30, 2015 the Administrator shall 

complete a study projecting the administrative burdens that 

remain with respect to stationary sources for which GHGs do not 

constitute a regulated NSR pollutant. Such study shall account, 

among other things, for permitting authorities ability to secure 

resources, hire and train staff; experiences associated with GHG 

permitting for new types of sources and technologies; and, the 

success of streamlining measures developed by EPA (and adopted 
514

by the states) for reducing the permitting burden associated 

with such stationary sources. 

(ii) Based on the results of the study described in 

paragraph (b)(2)(i) of this section, the Administrator shall 

propose a rule addressing the permitting obligations of such 

stationary sources under §52.21 and §51.166 of this chapter. 

The Administrator shall take final action on such a rule no 

later than April 30, 2016.

(iii) Before completing the rule described in paragraph 

(b)(2)(ii) of this section, the Administrator shall take no 

action to make the pollutant GHGs subject to regulation at 

stationary sources that emit or have the potential to emit less 

than 50,000 tpy CO2e, or for physical changes or changes in the 

method of operations at stationary sources that result in an 

emissions increase of less than 50,000 tpy CO2e (as determined 

using the methodology described in §52.21(b)(49)(ii).)

PART 70 - [AMENDED]

6. The authority citation for part 70 continues to read as 

follows:

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

7 Section 70.2 is amended: 

a. By revising the introductory text of paragraph (2) of 

the definition for “major source”; and
515

b. By adding a definition for “subject to regulation” in 

alphabetical order.

The revision and addition read as follows:

§70.2 Definitions.

* * * * *

Major source * * *

(2) A major stationary source of air pollutants, as 

defined in section 302 of the Act, that directly emits, or has 

the potential to emit, 100 tpy or more of any air pollutant 

subject to regulation (including any major source of fugitive 

emissions of any such pollutant, as determined by rule by the 

Administrator). The fugitive emissions of a stationary source 

shall not be considered in determining whether it is a major 

stationary source for the purposes of section 302(j) of the Act, 

unless the source belongs to one of the following categories of 

stationary source:

* * * * *

Subject to regulation means, for any air pollutant, that 

the pollutant is subject to either a provision in the Clean Air 

Act, or a nationally-applicable regulation codified by the 

Administrator in subchapter C of this chapter, that requires 

actual control of the quantity of emissions of that pollutant, 

and that such a control requirement has taken effect and is 

operative to control, limit or restrict the quantity of 
516

emissions of that pollutant released from the regulated 

activity. Except that:

(1) Greenhouse gases (GHGs), the air pollutant defined in 

§86.1818-12(a) of this chapter as the aggregate group of six 

greenhouse gases: carbon dioxide, nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride, 

shall not be subject to regulation unless, as of July 1, 2011, 

the GHG emissions are at a stationary source emitting or having 

the potential to emit 100,000 tpy CO2 equivalent emissions.

(2) The term tpy CO2 equivalent emissions (CO2e) shall 

represent an amount of GHGs emitted, and shall be computed by 

multiplying the mass amount of emissions (tpy), for each of the 

six greenhouse gases in the pollutant GHGs, by the gas’s 

associated global warming potential published at Table A-1 to 

subpart A of part 98 of this chapter – Global Warming 

Potentials, and summing the resultant value for each to compute 

a tpy CO2e. 

* * * * *

8. A new section 70.12 is added to read as follows:

§70.12 Enforceable Commitments for Further Actions Addressing 

Greenhouse Gases (GHGs).

(a) Definitions.

(1) Greenhouse Gases (GHGs) means the air pollutant as 

defined in §86.1818-12(a) of this chapter as the aggregate group 
517

of six greenhouse gases: carbon dioxide, nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.

(2) All other terms used in this section shall have the 

meaning given in §70.2.

(b) Further action to regulate GHGs under the title V 

program.

(1) Near term Action on GHGs. The Administrator shall 

solicit comment, under section 307(b) of the Act, on 

promulgating lower GHGs thresholds for applicability under 

§70.2. Such action shall be finalized by July 1, 2012 and 

become effective July 1, 2013. 

(2) Further Study and Action on GHGs.

(i) No later than April 30, 2015 the Administrator shall 

complete a study projecting the administrative burdens that 

remain with respect to stationary sources for which GHGs do not 

constitute a pollutant subject to regulation. Such study shall 

account, among other things, for permitting authorities ability 

to secure resources, hire and train staff; experiences 

associated with GHG permitting for new types of sources and 

technologies; and, the success of streamlining measures 

developed by EPA (and adopted by the states) for reducing the 

permitting burden associated with such stationary sources. 

(ii) Based on the results of the study described in 

paragraph (b)(2)(i) of this section, the Administrator shall 
518

propose a rule addressing the permitting obligations of such 

stationary sources under §70.2. The Administrator shall take 

final action on such a rule no later than April 30, 2016.

(iii) Before completing the rule described in paragraph 

(b)(2)(ii) of this section, the Administrator shall take no 

action to make the pollutant GHGs subject to regulation at 

stationary sources that emit or have the potential to emit less 

than 50,000 tpy CO2e (as determined using the methodology 

described in §70.2.)

PART 71 - [AMENDED]

9. The authority citation for part 71 continues to read as 

follows:

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

Subpart A – [AMENDED]

10. Section 71.2 is amended: 

a. By revising the introductory text of paragraph (2) of 

the definition for “major source”; and

b. By adding a definition for “subject to regulation” in 

alphabetical order.

The revision and addition read as follows:

§71.2 Definitions.

* * * * *

Major source * * * 
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(2) A major stationary source of air pollutants, as 

defined in section 302 of the Act, that directly emits or has 

the potential to emit, 100 tpy or more of any air pollutant 

subject to regulation (including any major source of fugitive 

emissions of any such pollutant, as determined by rule by the 

Administrator). The fugitive emissions of a stationary source 

shall not be considered in determining whether it is a major 

stationary source for the purposes of section 302(j) of the Act, 

unless the source belongs to one of the following categories of 

stationary source:

* * * * *

Subject to regulation means, for any air pollutant, that 

the pollutant is subject to either a provision in the Clean Air 

Act, or a nationally-applicable regulation codified by the 

Administrator in subchapter C of this chapter, that requires 

actual control of the quantity of emissions of that pollutant, 

and that such a control requirement has taken effect and is 

operative to control, limit or restrict the quantity of 

emissions of that pollutant released from the regulated 

activity. Except that:

(1) Greenhouse gases (GHGs), the air pollutant defined in 

§86.1818-12(a) of this chapter as the aggregate group of six 

greenhouse gases: carbon dioxide, nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride, 
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shall not be subject to regulation unless, as of July 1, 2011, 

the GHG emissions are at a stationary source emitting or having 

the potential to emit 100,000 tpy CO2 equivalent emissions. 

(2) The term tpy CO2 equivalent emissions (CO2e) shall 

represent an amount of GHGs emitted, and shall be computed by 

multiplying the mass amount of emissions (tpy), for each of the 

six greenhouse gases in the pollutant GHGs, by the gas’s 

associated global warming potential published at Table A-1 to 

subpart A of part 98 of this chapter – Global Warming 

Potentials, and summing the resultant value for each to compute 

a tpy CO2e. 

11. A new §71.13 is added as follows:

§71.13 Enforceable commitments for further actions addressing

Greenhouse Gases (GHGs)

(a) Definitions.

(1) Greenhouse Gases (GHGs) means the air pollutant as 

defined in §86.1818-12(a) of this chapter as the aggregate group 

of six greenhouse gases: carbon dioxide, nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.

(2) All other terms used in this section shall have the 

meaning given in §71.2.

(b) Further action to regulate GHGs under the title V 

program.
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(1) Near term Action on GHGs. The Administrator shall 

solicit comment, under 307(b) of the Act, on promulgating lower 

GHGs thresholds for applicability under §71.2. Such action 

shall be finalized by July 1, 2012 and become effective July 1, 

2013. 

(2) Further Study and Action on GHGs.

(i) No later than April 30, 2015, the Administrator shall 

complete a study projecting the administrative burdens that 

remain with respect to stationary sources for which GHGs do not 

constitute a pollutant subject to regulation. Such study shall 

account, among other things, for permitting authorities ability 

to secure resources, hire and train staff; experiences 

associated with GHG permitting for new types of sources and 

technologies; and, the success of streamlining measures 

developed by EPA (and adopted by the states) for reducing the 

permitting burden associated with such stationary sources. 

(ii) Based on the results of the study described in 

paragraph (b)(2)(i) of this section, the Administrator shall 

propose a rule addressing the permitting obligations of such 

stationary sources under §71.2. The Administrator shall take 

final action on such a rule no later than April 30, 2016.

(iii) Before completing the rule described in paragraph 

(b)(2)(ii) of this section, the Administrator shall take no 

action to make the pollutant GHGs subject to regulation at 
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stationary sources that emit or have the potential to emit less 

than 50,000 tpy CO2e, (as determined using the methodology 

described in §71.2.)