Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

1

6560-50-P

ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OAR-2009-0597; FRL-xxxx-x]

RIN 2060-AP87

Reconsideration of Interpretation of Regulations that 

Determine Pollutants Covered by Clean Air Act Permitting

Programs

AGENCY: Environmental Protection Agency.

ACTION: Final Action on Reconsideration of Interpretation.

SUMMARY: EPA has made a final decision to continue 

applying the Agency’s existing interpretation of a 

regulation that determines the scope of pollutants subject

to the federal Prevention of Significant Deterioration 

(PSD) program under the Clean Air Act (CAA or Act). In a 

December 18, 2008 memorandum, EPA established an 

interpretation clarifying the scope of the phrase “subject 

to regulation” found within the definition of the term 

“regulated NSR pollutant.” After considering comments on 

alternate interpretations of this term, EPA has decided to 

continue to interpret it to include each pollutant 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. Thus, this notice explains that EPA 

will continue following the interpretation in the December 

18, 2008 memorandum with one exception. EPA is refining 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

2

its interpretation to establish that the PSD permitting 

requirements will not apply to a newly regulated pollutant 

until a regulatory requirement to control emissions of that 

pollutant “takes effect.” In addition, this notice

addresses several questions regarding the applicability of 

the PSD and Title V permitting programs to greenhouse gases 

(GHGs) upon the anticipated promulgation of EPA regulations 

establishing limitations on emissions of GHGs from vehicles 

under Title II of the CAA. Collectively, these conclusions 

result in an EPA determination that PSD and Title V 

permitting requirements will not apply to GHGs until at 

least January 2, 2011.

DATES: This final action is applicable as of [INSERT DATE 

OF SIGNATURE].

FOR FURTHER INFORMATION CONTACT: Mr. David Svendsgaard, 

Air Quality Policy Division (C504-03), U.S. Environmental 

Protection Agency, Research Triangle Park, NC 27711, 

telephone number: (919) 541-2380; fax number: (919) 541-

5509, e-mail address: svendsgaard.dave@epa.gov.

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me? 

Entities potentially affected by this action include 

sources in various industry groups and state, local, and 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

3

tribal governments.

B. How is this document organized?

This document is organized as follows:

I. General Information

II. Background

III. This Action

A. Overview

B. Analysis of Proposed and Alternative 

Interpretations for Subject to Regulation

1. Actual Control Interpretation

2. Monitoring and Reporting Interpretation

3. State Implementation Plan (SIP) Interpretation

4. Endangerment Finding Interpretation

5. Section 209 Waiver Interpretation

C. Other Issues on Which EPA Solicited Comment

1. Prospective Codification of Interpretation

2. Section 821 of the Clean Air Act Amendments of 1990

3. Timing of When a Pollutant becomes Subject to 

Regulation

IV. Application of PSD Interpretive Memo to Permitting for 

GHGs

A. Date by Which GHGs Will Be “Subject to Regulation”

B. Implementation Concerns

C. Interim EPA Policy to Mitigate Concerns Regarding 

GHG Emissions from Construction or Modification of 

Large Stationary Sources

D. Transition for Pending Permit Applications

V. PSD Program Implementation by EPA and States

VI. Application of the Title V Program to Sources of GHGs

VII. Statutory Authority

VIII. Judicial Review

II. Background

On December 18, 2008, then-EPA Administrator Stephen 

Johnson issued a memorandum setting forth EPA’s

interpretation regarding which pollutants were “subject to 

regulation” for the purposes of the federal PSD permitting 

program. See Memorandum from Stephen Johnson, EPA 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

4

Administrator, to EPA Regional Administrators, RE: EPA’s 

Interpretation of Regulations that Determine Pollutants 

Covered by Federal Prevention of Significant Deterioration 

(PSD) Permit Program (Dec. 18, 2008) (“PSD Interpretive 

Memo” or “Memo”); see also 73 FR 80300 (Dec. 31, 2008) 

(public notice of Dec. 18, 2008 memo). The Memo interprets 

the phrase “subject to regulation” 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,” while excluding pollutants 

“for which EPA regulations only require monitoring or 

reporting.” See Memo at 1. The Memo was necessary after 

issues were raised regarding the scope of pollutants that 

should be addressed in PSD permitting actions following the 

Supreme Court’s April 2, 2007 decision in Massachusetts v. 

EPA, 549 U.S. 497 (2007). 

In Massachusetts v. EPA, the Supreme Court held that 

GHGs, including carbon dioxide (CO2), fit within the 

definition of air pollutant in the CAA. The case arose 

from EPA’s denial of a petition for rulemaking filed by 

more than a dozen environmental, renewable energy, and 

other organizations requesting that EPA control emissions 

of GHGs from new motor vehicles under section 202(a) of the 

CAA. The Court found that, in accordance with CAA section 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

5

202(a), EPA was required to determine whether or not 

emissions of GHGs 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.1 

On November 13, 2008, the Environmental Appeals Board 

(EAB) issued a decision in a challenge to a PSD permit to 

construct a new electric generating unit in Bonanza, Utah. 

In re Deseret Power Electric Cooperative, PSD Appeal No. 

07-03 (EAB Nov. 13, 2008) (“Deseret”). The permit was 

issued by EPA Region 8 in August 2007 and did not include 

best available control technology (BACT) limits for CO2. At 

the time, the Region acknowledged Massachusetts but found 

that decision alone did not require PSD permits to include 

limits on CO2 emissions. In briefs filed in the EAB case, 

EPA maintained the position that the Agency had a binding, 

historic interpretation of the phrase “subject to 

regulation” in the federal PSD regulations that required 

PSD permit limits to apply only to those pollutants already 

subject to actual control of emissions under other 

provisions of the CAA. Response of EPA Office of Air and 

 

1 On December 15, 2009, EPA published the final endangerment 

and cause or contribute findings for GHGs under section 

202(a) of the CAA. See 74 FR 66495. 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

6

Radiation and Region 8 to Briefs of Petitioner and 

Supporting Amici (filed March 21, 2008). Accordingly, EPA 

argued that the regulations contained in 40 CFR Part 75, 

which require monitoring of CO2 at some sources, did not 

make CO2 subject to PSD regulation. The order and opinion 

issued by the EAB remanded the permit after finding that 

prior EPA actions were insufficient to establish a 

historic, binding interpretation that “subject to 

regulation” for PSD purposes included only those pollutants 

subject to regulations that require actual control of 

emissions. However, the EAB also rejected arguments that 

the CAA compelled only one interpretation of the phrase 

“subject to regulation” and found “no evidence of a 

Congressional intent to compel EPA to apply BACT to 

pollutants that are subject only to monitoring and 

reporting requirements.” Thus, the Board remanded the 

permit to the Region to “reconsider whether or not to 

impose a CO2 BACT limit in light of the ‘subject to 

regulation’ definition under the CAA.” The Board 

encouraged EPA to consider “addressing the interpretation 

of the phrase ‘subject to regulation under this Act’ in the 

context of an action of nationwide scope, rather than 

through this specific permitting proceeding.” See Deseret

at 63-64. 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

7

EPA issued the PSD Interpretive Memo shortly after the 

Deseret decision with the stated purpose to “establish[] an 

interpretation clarifying the scope of the EPA regulation 

that determines the pollutants subject to the federal 

Prevention of Significant Deterioration (PSD) program under 

the Clean Air Act (CAA or Act)” by providing EPA’s 

“definitive interpretation” of the definition of the term 

“regulated NSR pollutants” found at 40 CFR 52.21(b)(50) and 

resolving “any ambiguity in subpart ([iv]) of that 

paragraph, which includes ‘any pollutant that otherwise is 

subject to regulation under the Act.’” See Memo at 1. As 

the Memo explains, the statute and regulation use similar 

language – the regulation defines a regulated NSR pollutant 

to include “[a]ny pollutant that otherwise is subject to 

regulation under the Act” and requires BACT for “each 

regulated NSR pollutant,” per 40 CFR 52.21(b)(50) and (j), 

while the Act requires BACT for “each pollutant subject to

regulation under this [Act],” per CAA sections 165(a)(4) 

and 169. The EAB had determined that “the meaning of the 

term ‘subject to regulation under this Act’ as used in 

[CAA] sections 165 and 169 is not so clear and unequivocal 

as to preclude the Agency from exercising discretion in 

interpreting the statutory phrase” in implementing the PSD 

program. See Deseret at 63.
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

8

The PSD Interpretive Memo seeks to resolve the 

ambiguity in implementation of the PSD program by stating 

that “EPA will interpret this definition of ‘regulated NSR 

pollutant’ to exclude pollutants for which EPA regulations 

only require monitoring or reporting but to include each 

pollutant subject to either a provision in the Clean Air 

Act or regulation adopted by EPA under the Clean Air Act 

that requires actual control of emissions of that 

pollutant.” The Memo states that “EPA has not previously 

issued a definitive interpretation of the definition of 

‘regulated NSR pollutant’ in section 52.21(b)(50) or an 

interpretation of the phrase ‘subject to regulation under 

the Act’ that addressed whether monitoring and reporting 

requirements constitute ‘regulation’ within the meaning of 

this phrase.” The Memo, however, explains that the 

interpretation reflects the “considered judgment” of thenAdministrator Johnson regarding the PSD regulatory 

requirements and is consistent with both historic Agency 

practice and prior statements by Agency officials. See

Memo at 1-2. 

The PSD Interpretive Memo is not a substantive rule 

promulgated under section 307(d) of the CAA, but rather an 

interpretation of the terms of a regulation at 40 CFR 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

9

52.21(b)(50).2 An interpretive document is one that 

explains or clarifies, and is consistent with, existing 

statutes or regulation. See National Family Planning and 

Reproductive Health Ass’n v. Sullivan, 979 F.2d 227, 236-37 

(D.C. Cir. 1992). The PSD Interpretive Memo explains and 

clarifies the meaning of the definition of “regulated NSR 

pollutant” in section 52.21(b)(50) of the existing NSR 

regulations, and does not alter the meaning of the 

definition in any way that is inconsistent with the terms 

of the regulation. As a result, EPA concluded that the PSD 

interpretive Memo was an interpretive rule that could be 

issued without a notice and comment rulemaking process. 

However, the PSD Interpretive Memo observed that the 

adoption of an interpretation of a rule without a notice 

and comment process does not preclude subsequent action by 

the Agency to solicit public input on the interpretation. 

Indeed, given the significant public interest in the issue 

addressed in the December 18, 2008 memorandum, EPA 

 

2

The PSD Interpretive Memo also reflects EPA’s 

interpretation of sections 165(a)(4) and 169(3) of the CAA, 

which use language similar to the EPA regulations that are 

based on these provisions of the statute. The Memo 

discusses the Agency’s interpretation of the CAA and 

concludes that the Agency’s interpretation of its 

regulations is not precluded by the terms of the CAA. 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

10

subsequently elected to seek public input on the memorandum 

and alternative readings of the regulations. 

On December 31, 2008, EPA received a petition for 

reconsideration of the position taken in the PSD 

Interpretive Memo from Sierra Club and 14 other 

environmental, renewable energy, and citizen organizations. 

See Petition for Reconsideration, In the Matter of: EPA 

Final Action Published at 73 FR 80300 (Dec. 31, 2008), 

entitled “Clean Air Act Prevention of Significant 

Deterioration (PSD) Construction Permit Program; 

Interpretation of Regulations That Determine Pollutants 

Covered by the Federal PSD Permit Program.” Petitioners 

argued that the PSD Interpretive Memo “was impermissible as 

a matter of law, because it was issued in violation of the 

procedural requirements of the Administrative Procedures

[sic] Act ... and the Clean Air Act..., it directly 

conflicts with prior agency actions and interpretations, 

and it purports to establish an interpretation of the Act 

that conflicts with the plain language of the statute.” 

See Petition at 2. Accordingly, Petitioners requested that 

EPA reconsider and retract the PSD Interpretive Memo. 

Petitioners later amended their Petition for 

Reconsideration to include a request to stay the effect of 

the Memo pending the outcome of the reconsideration 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

11

request. Amended Petition for Reconsideration (filed Jan. 

6, 2009).3

On February 17, 2009, EPA granted the Petition for 

Reconsideration, on the basis of the authority conferred by 

section 553(e) of the Administrative Procedure Act (APA), 

and announced its intent to conduct a rulemaking to allow 

for public comment on the issues raised in the Memo and on 

any issues raised by the EAB’s Deseret opinion, to the 

extent they do not overlap with the issues raised in the 

Memo.4 Because the Memo was not a substantive rule 

promulgated under section 307(d) of the APA, the

reconsideration action was not a reconsideration under the 

authority of section 307(d)(7)(B) of the CAA. See Letter 

from Lisa P. Jackson, EPA Administrator, to David 

Bookbinder, Chief Climate Counsel at Sierra Club (Feb. 17, 

2009). EPA did not stay the effectiveness of the PSD 

 

3 On January 15, 2009, a number of environmental 

organizations that filed this Petition for Reconsideration 

also filed a petition challenging the PSD Interpretive Memo 

in U.S. Court of Appeals for the District of Columbia 

Circuit. Sierra Club v. E.P.A., No. 09-1018 (D.C. Cir., 

filed Jan. 15, 2009). Thereafter, various parties moved to 

intervene in that action or filed similar petitions 

challenging the Memo. The consolidated D.C. Circuit cases 

have been held in abeyance pending this reconsideration 

process. Id., Order (filed March 9, 2009).

4

 Because the grant of reconsideration directed the Agency 

to conduct this reconsideration using a notice and comment 

process, the proposal did not address the procedural 

challenge presented in the Petition for Reconsideration. 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

12

Interpretive Memo pending reconsideration, but the Agency 

did reiterate that the Memo “does not bind States issuing 

[PSD] permits under their own State Implementation Plans.”

Id. at 1. 

On October 7, 2009 (74 FR 51535), EPA proposed a 

reconsideration of the PSD Interpretive Memo that solicited 

comment on five possible interpretations of the regulatory 

phrase “subject to regulation” – the “actual control” 

interpretation (adopted by the Memo); the “monitoring and 

reporting” interpretation (advocated by Petitioners); the 

inclusion of regulatory requirements for specific 

pollutants in SIPs (discussed in both the Memo and the 

Petition for Reconsideration); an EPA finding of 

endangerment (discussed in the Memo); and the grant of a 

section 209 waiver interpretation (raised by commenters in 

another EPA action). EPA also addressed, and requested 

public comment on, other issues raised in the PSD 

Interpretive Memo and related actions that may influence 

this reconsideration. 

Of the five interpretations described in the proposed 

reconsideration notice, EPA expressly favored the actual 

control interpretation, which has remained in effect since 

issuing the memorandum, notwithstanding the EPA’s grant of 

reconsideration. The proposal explained that the actual 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

13

control interpretation best reflects EPA’s past policy and 

practice, is in keeping with the structure and language of 

the statute and regulations, and best allows for the 

necessary coordination of approaches to controlling 

emissions of newly identified pollutants. While the other 

interpretations may represent reasoned approaches for 

interpreting “subject to regulation,” no particular one is 

compelled by the statute, nor did the EAB determine that 

any one of them was so compelled. Because EPA had 

overarching concerns over the policy and practical 

application of each of the alternative interpretations, the 

Agency proposed to retain the actual control 

interpretation. Nevertheless, EPA requested comment on all 

five of the interpretations. 

III. This Action

A. Overview

EPA has made a final decision to continue applying 

(with one limited refinement) the Agency’s existing 

interpretation of 40 CFR 52.21(b)(50) that is articulated 

in the PSD Interpretive Memo. For reasons explained below, 

and addressed in further detail in the document

“Reconsideration of Interpretation of Regulations that 

Determine Pollutants Covered by Clean Air Act Permitting 

Programs: EPA’s Response to Public Comments”, after 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

14

reviewing the comments, EPA has concluded that the “actual 

control interpretation” is a permissible interpretation of 

the CAA and is the most appropriate interpretation to apply 

given the policy implications. However, EPA is refining 

its interpretation in one respect to establish 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, 

this notice addresses several outstanding questions 

regarding the applicability of the PSD and Title V 

permitting programs to GHGs upon the anticipated 

promulgation of EPA regulations establishing limitations on

emissions of GHGs from vehicles under Title II of the CAA.

5

EPA received 71 comments on the proposed 

reconsideration notice published on October 7, 2009 (74 FR 

 

5

 On September 28, 2009, EPA proposed a rule establishing 

emissions standards for new motor vehicles, starting with 

Model Year 2012, that would reduce GHGs and improve fuel 

economy from motor vehicles. This proposal was a joint 

proposal by EPA and the U.S. Department of Transportation

(DOT), with DOT proposing to adopt corporate average fuel 

economy (CAFE) standards for model years 2012 and after. 

See 74 FR 49453. 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

15

51535).6 Commenters represented a range of interests, 

including state regulatory agencies, corporations that may 

need to obtain PSD permits, trade associations representing 

various industrial sectors, and environmental and public 

interest groups. Commenters representing states and 

regulated entities generally expressed support for the 

actual control interpretation, while environmental and 

public interest groups generally favored the alternative 

interpretations. States and regulated entities also 

supported EPA’s proposed action to apply PSD requirements 

at the point in time when an actual control requirement 

becomes effective, with many entities specifically 

requesting that EPA interpret “effective” to mean the 

compliance date of a rule. Environmental stakeholders

supported retaining the position in the existing PSD 

Interpretive Memo that PSD requirements apply to a 

pollutant upon the promulgation of the relevant requirement 

for that pollutant. 

EPA has not been persuaded that the Agency is 

compelled by the CAA, the terms of EPA regulations, or 

 

6 In some cases, a commenter on the proposed reconsideration 

of the PSD Interpretive Memo addressed an issue or topic 

that is under consideration in the forthcoming PSD and 

Title V GHG Tailoring Rule. Accordingly, EPA refers the 

reader to that rulemaking for EPA responses to those 

comments.
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

16

prior EPA action to apply any of the four alternatives to 

its preferred interpretation described in the October 7, 

2009 notice – monitoring and reporting requirement, EPAapproved SIP, endangerment finding, or CAA section 209 

waiver. EPA has likewise not been persuaded that all of 

the alternative interpretations are precluded by the CAA. 

However, since Congress has not precisely spoken to this 

issue, EPA has the discretion to choose among the range of 

permissible interpretations of the statutory language. 

Since EPA’s interpretation of the regulations is not 

precluded by the statutory language, EPA is electing to 

maintain that interpretation on policy grounds. EPA has

concluded that the “actual control” interpretation is not 

only consistent with decades of past practice, but provides 

the most reasonable and workable approach to developing an 

appropriate regulatory scheme to address newly identified 

pollutants of concern. Thus, except as to the one element 

that EPA proposed to modify, EPA is reaffirming the PSD 

Interpretive Memo and its establishment of the actual 

control interpretation as EPA’s definitive interpretation 

of the phrase “subject to regulation” under the PSD 

provisions in the CAA and EPA regulations. 

EPA has been persuaded by public comments on the 

proposed reconsideration to modify the portion of its 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

17

interpretation regarding the timing of when a pollutant 

becomes subject to regulation under the CAA and thus 

covered by the requirements of the PSD permitting program. 

Specifically, EPA is modifying its interpretation of 40 CFR 

52.21(b)(50) of its regulations, and the parallel provision 

in 40 CFR 51.166(b)(49), to establish that the PSD 

requirements will not apply to a newly regulated pollutant 

until a regulatory requirement to control emissions of that 

pollutant “takes effect.” EPA has concluded that this 

approach is consistent with the CAA and a reasonable 

reading of the regulatory text. 

Based on these final determinations, EPA will continue 

to apply the interpretation reflected in the PSD 

Interpretive Memo with one refinement. For the reasons 

discussed in more detail below, EPA has not generally found 

cause to change the discussion or reasoning reflected in 

the Memo. As a result, EPA does not see a need to either 

withdraw or re-issue the Memo. However, this notice 

refines one paragraph of that memorandum to reflect EPA’s 

current view that a pollutant becomes subject to regulation 

at the time the first control requirements applicable to a 

pollutant take effect. Public comments raised several 

questions regarding the application of the PSD program and 

Title V permits to GHGs that EPA did not specifically raise 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

18

in the October 7, 2009 proposed notice of reconsideration. 

Some of these comments raised significant issues that the 

Agency recognizes the need to address at this time to 

ensure the orderly transition to the regulation of GHGs 

under these permitting programs. Thus, this notice 

reflects additional interpretations and EPA statements of 

policy on topics not discussed in the October 7, 2009 

notice. These interpretations and polices have been 

developed after careful consideration of the public 

comments submitted to EPA on this action and related 

matters. In subsequent actions, EPA may address additional 

topics raised in public comments on this action that the 

Agency did not consider necessary to address at this time. 

Regarding GHGs, EPA has concluded that PSD program 

requirements will apply to GHGs upon the date that the 

anticipated tailpipe standards for light-duty vehicles 

(known as the “LDV Rule”) take effect. Based on the 

proposed LDV Rule, those standards will take effect when 

the 2012 model year begins, which is no earlier than 

January 2, 2011. While the LDV Rule will become 

“effective” for the purposes of planning for the upcoming 

model years as of 60 days following publication of the 

rule, the emissions control requirements in the rule do not 

“take effect” – i.e., requiring compliance through 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

19

vehicular certification before introducing any Model Year 

2012 into commerce – until Jan. 2, 2011, or approximately 9 

months after the planned promulgation of the LDV Rule. 

Furthermore, as EPA intends to explain soon in detail in 

the final action on the PSD and Title V GHG Tailoring Rule 

(known as the “Tailoring Rule”)7, in light of the 

significant administrative challenges presented by the 

application of the PSD and Title V requirements for GHGs

(and considering the legislative intent of the PSD and 

Title V statutory provisions), it is necessary to defer 

applying the PSD and Title V provisions for sources that 

are major based only on emissions of GHGs until a date that 

extends beyond January 2, 2011. 

B. Analysis of Proposed and Alternative Interpretations 

for Subject to Regulation

1. Actual Control Interpretation

EPA has concluded that the “actual control” 

interpretation (as articulated in the PSD Interpretive 

Memo) is permissible under the CAA and is preferred on 

policy grounds. Thus, EPA will continue to interpret the 

definition of “regulated NSR pollutant” in 40 CFR 

52.21(b)(50) to exclude pollutants for which EPA 

 

7

 The proposed “Tailoring Rule” can be found at 74 FR 55291 

(Oct. 27, 2009).
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

20

regulations only require monitoring or reporting but to 

include each pollutant subject to either a provision in the 

CAA or regulation promulgated by EPA under the CAA that 

requires actual control of emissions of that pollutant. As 

discussed further below, EPA will also interpret section 

51.166(b)(49) of its regulations in this manner. This 

interpretation is supported by the language and structure 

of the regulations and is consistent with past practice in 

the PSD program and prior EPA statements regarding 

pollutants subject to the PSD program. The CAA is most 

effectively implemented by making PSD emissions limitations 

applicable to pollutants after a considered judgment by EPA

(or Congress) that particular pollutants should be subject 

to control or limitation. The actual control 

interpretation promotes the orderly administration of the 

permitting program by allowing the Agency to first assess 

whether there is a justification for controlling emissions 

of a particular pollutant under relevant criteria in the 

Act before applying the requirements of the PSD permitting 

program to a pollutant. 

Because the term “regulation” is susceptible to more 

than one meaning, there is ambiguity in the phrase “each 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

21

pollutant subject to regulation under the Act”8 that is used 

in both sections 165(a)(4) and 169(3) of the CAA. As 

discussed in the Memo, the term “regulation” can be used to 

describe a rule contained in a legal code, such as the Code 

of Federal Regulations, or the act or process of 

controlling or restricting an activity. The primary 

meaning of the term “regulation” in Black’s Law Dictionary 

(8th Ed.) is “the act or process of controlling by rule or 

restriction.” However, an alternative meaning in this same 

dictionary defines the term as “a rule or order, having 

legal force, usu. issued by an administrative agency or 

local government.” The primary meaning in Webster’s 

dictionary for the term “regulation” is “the act of 

regulating: the state of being regulated.” MerriamWebster’s Collegiate Dictionary 983 (10th Ed. 2001). 

Webster’s secondary meaning is “an authoritative rule 

dealing with details of procedure” or “a rule or order 

issued by an executive authority or regulatory agency of a 

government and having the force of law.” Webster’s also 

 

8 The CAA requires BACT for “each pollutant subject to 

regulation under this Act.” See CAA 165(a)(4), 169(3). 

The United States Code refers to “each pollutant regulated 

under this chapter,” which is a reference to Chapter 85 of 

Title 42 of the Code, where the CAA is codified. See 42 

U.S.C. 7475(a)(4), 7479(3). For simplicity, this notice 

generally uses “the Act” and the CAA section numbers rather 

than the U.S. Code citation. 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

22

defines the term “regulate” and the inflected forms 

“regulated” and “regulating” (both of which are used in 

Webster’s definition of “regulation”) as meaning “to govern 

or direct according to rule” or to “to bring under the 

control of law or constituted authority.” Id.

The PSD Interpretive Memo reasonably applies a common 

meaning of the term “regulation” to support a permissible 

interpretation that the phrase “pollutant subject to 

regulation” means a pollutant subject to a provision in the 

CAA or a regulation issued by EPA under the Act that 

requires actual control of emissions of that pollutant. 

Public comments have not demonstrated the dictionary 

meanings of the term “regulation” described in the Memo are 

no longer accepted meanings of this term. In light of the 

different meanings of the term “regulation,” EPA has not 

been persuaded by public comments that the CAA plainly and 

unambiguously requires that EPA apply any of the other 

interpretations described in the October 7, 2009 notice. 

Moreover, the Memo carefully explains how the actual 

control interpretation is consistent with the overall 

context of the CAA in which sections 165(a)(4) and 169(3) 

are found. After consideration of public comment, EPA 

continues to find this discussion persuasive. The “subject 

to regulation” language appears in the BACT provisions of 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

23

the Act, which themselves require actual controls on 

emissions. The BACT provisions reference the New Source 

Performance Standards (NSPS) and other control requirements 

under the Act, which establish a floor for the BACT 

requirement. See 42 U.S.C. 7479(3). Other provisions in 

the CAA that authorize EPA to establish emissions 

limitations or controls on emissions provide criteria for 

the exercise of EPA’s judgment to determine which 

pollutants or source categories to regulate. Thus, it 

follows that Congress expected that pollutants would only 

be regulated for purposes of the PSD program after: (1) 

the EPA promulgated regulations requiring control of a 

particular pollutants on the basis of considered judgment, 

taking into account the applicable criteria in the CAA, or 

(2) EPA promulgates regulations on the basis of 

Congressional mandate that EPA establish controls on 

emissions of a particular pollutant, or (3) Congress itself 

directly imposes actual controls on emissions of a 

particular pollutant. In addition, considering other 

sections in the Act that require reasoned decision-making 

and authorize the collection of emissions data prior to 

establishing controls on emissions, it is also consistent 

with the Congressional design to require BACT limitations 

for pollutants after a period of data collection and study 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

24

that leads to a reasoned decision to establish control 

requirements. Public commenters did not demonstrate that 

it was erroneous for EPA to interpret the PSD provisions in 

this manner, based on the context of the Act. 

Furthermore, the actual control interpretation is 

consistent with the terms of the regulations EPA 

promulgated in 2002.9 EPA continues to find the reasoning 

of the PSD Interpretive Memo to be persuasive. The 

structure and language of EPA’s definition of ‘regulated 

NSR pollutant’ at 40 CFR 52.21(b)(50) supports the actual 

control interpretation. The first three parts of the 

definition describe pollutants that are subject to 

regulatory requirements that mandate control or limitation 

of the emissions of those pollutants, which suggests that 

the use of “otherwise subject to regulation” in the fourth 

prong of the definition also intended some prerequisite act 

or process of control. The definition’s use of “subject to 

regulation” should be read in light of the primary meanings 

of “regulation” described above, which each use or 

incorporate the concept of control. 

One commenter stated that EPA’s suggestion that its 

proposed interpretation will allow for a more practical 

approach to determining whether emissions of air pollutants 

 

9 See 67 FR 80186-80289.
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

25

endanger health and human welfare amounts only to a policy 

preference. The commenter argued that EPA’s policy 

preference should be subordinate to statutory language and 

Congressional intent. Another commenter made similar 

comments and stated that EPA cannot avail itself of 

additional, non-statutory de facto extensions of time to 

fulfill its statutory obligations. 

Where the governing statutory authority is susceptible 

to more than one interpretation, it is not impermissible 

for EPA to apply policy preferences when determining which 

interpretation to apply, so long as the interpretation EPA 

elects to follow is a permissible one. The PSD 

Interpretive Memo provides a persuasive explanation for why 

the interpretation reflected in that memorandum is 

consistent with the terms of the CAA and Congressional 

intent. In this instance, EPA’s policy preferences are 

fully consistent with that intent. As explained above, 

Congress intended for EPA to gather data before 

establishing controls on emissions and to make reasoned 

decisions.

EPA continues to prefer the actual control 

interpretation because it ensures an orderly and manageable 

process for incorporating new pollutants into the PSD 

program after an opportunity for public participation in 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

26

the decision making process. Several commenters who 

supported EPA’s proposal to continue applying the “actual 

control” interpretation identified these considerations as 

important reasons that EPA should continue doing so. EPA 

agrees with these comments. As discussed persuasively in 

the PSD Interpretive Memo, under this interpretation, EPA 

may first assess whether there is a justification for 

controlling emissions of a particular pollutant under 

relevant criteria in the Act before imposing controls on a 

pollutant under the PSD program. In addition, this 

interpretation permits the Agency to provide notice to the 

public and an opportunity to comment when a new pollutant 

is proposed to be regulated under one or more programs in 

the Act. It also promotes the orderly administration of 

the permitting program by providing an opportunity for EPA 

to develop regulations to manage the incorporation of a new 

pollutant into the PSD program, for example, by 

promulgating a significant emissions rate (or de minimis

level) for the pollutant when it becomes regulated. See 40 

CFR 52.21(b)(23). Furthermore, this interpretation 

preserves the Agency’s ability to gather data on pollutant 

emissions to inform their judgment regarding the need to 

establish controls on emissions without automatically 

triggering such controls. This interpretation preserves 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

27

EPA’s authority to require control of particular pollutants 

through emissions limitations or other restrictions under 

various provisions of the Act, which would then trigger the 

requirements of the PSD program for any pollutant addressed 

in such an action. 

Some commenters who opposed the actual control 

interpretation argued that this deliberate approach leads 

to “analysis paralysis” and is subject to political 

manipulation. The commenter further noted that the caseby-case BACT requirement does not contemplate waiting years 

for EPA to conduct analyses and “develop” control options; 

rather, BACT must be based on control options that are 

available. Then, permitting agencies are to make “case-bycase” determinations “taking into account energy, 

environmental, and economic impacts and other costs,” 

thereby ensuring that the decision is informed by the 

available solutions, their efficacy and costs.

While this analysis may sometimes take more time than 

the commenter would prefer, a deliberative and orderly 

approach to regulation is in the public interest and 

consistent with Congressional intent. It would be 

premature to impose the BACT requirement on a particular 

pollutant if neither EPA nor Congress has made a considered 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

28

judgment that a particular pollutant is harmful to public 

health and welfare and merits control. 

Once the Agency has made a determination that a 

pollutant should be controlled using one or more of the 

regulatory tools provided in the CAA and those controls 

take effect, EPA agrees that a BACT analysis must then be 

completed based on available information. As the commenter 

points out, the BACT process is designed to determine the 

most effective control strategies achievable in each 

instance, considering energy, environmental, and economic 

impacts. Thus, EPA agrees that the onset of the BACT 

requirement should not be delayed in order for technology 

or control strategies to be developed. Furthermore, EPA 

agrees with the commenter that delaying the application of 

BACT to enable development of guidance on control 

strategies is not necessarily consistent with the BACT 

requirement. The BACT provisions clearly contemplate that 

the permitting authority will develop control strategies on 

a case-by-case basis. Thus, EPA is not in this final 

action relying on the need to develop guidance for BACT as 

a justification for choosing to continue applying the 

actual control interpretation. However, in the absence of 

guidance on control strategies from EPA and other 

regulatory agencies, the BACT process may be more time and 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

29

resource intensive when applied to a new pollutant. Under 

a mature PSD permitting program, successive BACT analyses 

establish guidelines and precedents for subsequent BACT 

determinations. However, when a new pollutant is 

regulated, the first permit applicants and permitting 

authorities that are faced with determining BACT for a new 

pollutant must invest more time and resources in making an 

assessment of BACT under the statutory criteria. Given the 

potentially large number of sources that could be subject 

to the BACT requirement when EPA regulates GHGs, the 

absence of guidance on BACT determinations for GHGs

presents a unique challenge for permit applicants and 

permitting authorities. EPA intends to address this 

challenge in part by deferring, under the Tailoring Rule,

the applicability of the PSD permitting program for sources 

that would become major based solely on GHG emissions. EPA 

is also developing guidance on BACT for GHGs. 

Several commenters expressed concern with EPA’s 

explanation that the actual control interpretation best 

reflects EPA’s past practice. One commenter argued that 

the Deseret decision rejects the idea that “past policy and 

practice” is a sufficient justification for EPA’s preferred 

interpretation. In addition, several commenters argued 

that the memorandum was in fact not consistent with past 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

30

EPA practice, based on their interpretation of a statement 

made in the preamble to a rule which promulgated PSD 

regulations in 1978. 

While the record continues to show that the actual 

control interpretation is consistent with EPA’s historic 

practice, EPA agrees that continuity with past practice 

alone does not justify maintaining a position when there is 

good cause to change it. In this case, however, EPA has 

not found cause to change an interpretation that is 

consistent with Congressional intent and supported by the 

policy considerations described earlier. Thus, EPA is not 

retaining the actual control interpretation simply to 

maintain continuity with historic practice. The record 

reflects that EPA’s past practice was grounded in a 

permissible interpretation of the law and supported by 

rational policy considerations. Commenters have not 

otherwise persuaded EPA to change its historic practice in 

this area. 

A review of numerous federal PSD permits shows that 

EPA has been applying the actual control interpretation in 

practice – issuing permits that only contained emissions 

limitations for pollutants subject to regulations requiring 

actual control of emissions under other portions of the 

Act. Furthermore, in 1998, well after promulgation of the 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

31

initial CO2 monitoring regulations in 1993, EPA’s General 

Counsel concluded that CO2 would qualify as an “air 

pollutant” that EPA had the authority to regulate under the 

CAA, but the General Counsel also observed that “the 

Administrator has made no determination to date to exercise 

that authority under the specific criteria provided under 

any provision of the Act.”10 The 1978 Federal Register

notice promulgating the initial PSD regulations stated that 

pollutants “subject to regulation” in the PSD program 

included “any pollutant regulated in Subchapter C of Title 

40 of the Code of Federal Regulations.” Commenters argue 

this statement illustrates that EPA has in fact applied the 

PSD BACT requirement to any pollutant subject to only a 

monitoring requirement codified in this portion of the Code 

of Federal Regulations. However, this comment overlooked 

the discussion in the PSD Interpretive Memo regarding the 

differing meanings of the term “regulation” and “regulate.” 

The 1978 preamble did not amplify the meaning of the term 

“regulated in.” Thus, commenters have not demonstrated 

that EPA had concluded in 1978 that monitoring requirements 

equaled “regulation” within the meaning of sections 

 

10 Memorandum from Jonathan Z. Cannon, General Counsel to 

Carol M. Browner, Administrator, entitled EPA’s Authority 

to Regulate Pollutants Emitted by Electric Power Generation 

Sources (April 10, 1998).
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

32

165(a)(4) and 169(3) of the CAA, nor have commenters 

provided any examples of permits issued by EPA after 1978 

that demonstrate EPA’s interpretation was inconsistent with 

the practice described in the PSD Interpretive Memo.

Therefore, EPA affirms that the actual control 

interpretation expressed in the PSD Interpretive Memo 

continues be the operative statement for the EPA 

interpretation of the meaning of the regulatory phrase 

“subject to regulation” within the federal PSD rules. 

2. Monitoring and Reporting Interpretation 

EPA is not persuaded that the monitoring and reporting 

interpretation is compelled by the CAA, and the Agency 

remains concerned that application of this approach would 

lead to odd results and make the PSD program difficult to 

administer. EPA continues to find the reasoning of the PSD 

Interpretive Memo persuasive. 

The monitoring and reporting interpretation would make 

the substantive requirements of the PSD program applicable 

to particular pollutants based solely on monitoring and 

reporting requirements (contained in regulations 

established under section 114 or other authority in the 

Act). This approach would lead to the perverse result of 

requiring emissions limitations under the PSD program while 

the Agency is still gathering the information necessary to 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

33

conduct research or evaluate whether to establish controls 

on the pollutant under other parts of the Act. Such a 

result would frustrate the Agency’s ability to gather 

information using section 114 and other authority and make 

informed and reasoned judgments about the need to establish 

controls or limitations for particular pollutants. If EPA 

interpreted the requirement to establish emissions 

limitations based on BACT to apply solely on the basis of a 

regulation that requires collecting and reporting emissions 

data, the mere act of gathering information would 

essentially dictate the result of the decision that the 

information is being gathered to inform (whether or not to 

require control of a pollutant). Many commenters 

representing state permitting agencies and industry groups 

agree with the policy arguments advanced by EPA and others 

that EPA’s critical information gathering activities will 

be constrained, with likely adverse environmental and 

public health consequences, if monitoring requirements are 

necessarily associated with the potentially significant 

implementation and compliance costs and resource 

constraints of the PSD program. Commenters expressed 

concern that without the ability to gather data or 

investigate unregulated pollutants, for fear of triggering 

automatic regulation under the CAA, EPA will not have the 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

34

flexibility to review the validity of controlling new 

pollutants.

EPA agrees that a monitoring and reporting 

interpretation would hamper the Agency’s ability to conduct 

monitoring or reporting for investigative purposes to 

inform future rulemakings involving actual emissions 

control or limits. In addition, it is not always possible 

to predict when a new pollutant will emerge as a candidate 

for regulation. In such cases, the Memo’s reasoning is 

correct in that EPA would be unable to promulgate any 

monitoring or reporting rule for such a pollutant without 

triggering PSD under this interpretation. 

An environmental organization disagreed with the

proposed notice of reconsideration, and commented that EPA 

has issued monitoring and reporting regulations for CO2 in 

40 CFR 75, promulgated pursuant to section 821 of the 1990

CAA Amendments. The commenter felt that these monitoring 

and reporting rules are “regulation” in that they are 

contained in a legal code, have the force of law, and bring 

the subject matter under the control of law and the EPA. 

Furthermore, the commenter says that EPA itself has 

characterized these monitoring and reporting requirements 

as “regulations.” In contrast, another commenter argued 

that an agency’s interpretation of a statute should focus 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

35

first on the ordinary dictionary meaning of the terms used 

and that monitoring emissions does not fit within any of 

the types of activities understood to constitute 

“regulation” of those emissions in the ordinary meaning of 

that term. Each of these commenters focuses on only one of 

the two potential meanings of the term “regulation” 

described above.

The commenter that favors the “monitoring and 

reporting” interpretation appears to focus only on the 

dictionary meanings that describe a rule contained in a 

legal code. The commenter has not demonstrated that it is 

impermissible for EPA to construe the CAA on the basis of 

another common meaning of the term “regulation.” In the 

context of construing the Act, the EAB observed in the 

Deseret case that a plain meaning could not be ascertained 

from looking solely at the word “regulation.” The Board 

reached this conclusion after considering the dictionary 

definitions of the term “regulation” cited above. See

Deseret slip op. at 28-29. EPA continues to find the 

reasoning of the EAB and the PSD Interpretive Memo to be 

persuasive. The EAB found “no evidence of Congressional 

intent to compel EPA to apply BACT to pollutants that are 

subject only monitoring and reporting requirements.” See

Deseret at 63. 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

36

Comments have not convincingly shown that Congress 

clearly intended to use the term “regulation” in section 

165(a)(4) and 169(3) to describe any type of rule in a 

legal code. Some commenters presented alternative theories 

of Congressional intent regarding the BACT provisions, but 

they have not persuasively demonstrated that the 

interpretation of Congressional intent based on the context 

of the CAA described in the PSD Interpretive Memo is 

erroneous. 

For example, one commenter opposed to EPA’s proposed 

action commented that the PSD Interpretive Memo ignores the 

Congressionally-established purpose of PSD to protect 

public health and welfare from actual and potential adverse 

effects. See CAA section 160(1). Specifically, this 

commenter stated that to limit application of BACT until 

after control requirements are in place following an 

endangerment finding ignores the broad, protective purpose 

of the PSD program. The commenter said that the emphasis 

on “potential adverse effect[s]” distinguishes PSD the 

requirement from the National Ambient Air Quality Standards

(NAAQS) and NSPS programs, which require that EPA make an 

endangerment finding before establishing generally 

applicable standards such as the NSPS or motor vehicle 

emissions standards. According to this commenter, BACT’s 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

37

case-by-case approach provides the dynamic flexibility 

necessary to implement an emission limitation appropriate 

to each particular source. This commenter feels that the 

PSD program’s ability to address potential adverse effects 

is hindered by the position that an endangerment 

determination and actual control limits must be first 

established. 

EPA does not agree that the terms of section 160 cited 

by the commenter compel EPA to read sections 165(a)(4) and 

169(3) to apply to a pollutant before the Agency has 

established control requirements for the pollutant. 

Section 160(1) describes PSD’s purpose to “protect public 

health and welfare from any actual or potential adverse 

effect which in the Administrator’s judgment may reasonably 

be anticipated to occur from air pollution.” Thus, this 

goal contemplates an exercise of judgment by EPA to 

determine that an actual or potential adverse effect may 

reasonably be anticipated from air pollution. In that 

sense, this goal is consistent with NAAQS and NSPS 

programs, which contemplate that regulation of a pollutant 

will not occur until a considered judgment by EPA that a 

substance or source category merits control or restriction. 

The commenter has not persuasively established that the 

“potential adverse effect” language in section 160(1) makes 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

38

this provision markedly different than the language used in 

sections 108(a)(1)(A) and 111(b)(1)(A). All three sections 

use the phrase “may reasonably be anticipated.” 

Furthermore, section 160 contains general goals and 

purposes and does not contain explicit regulatory 

requirements. The controlling language in the PSD 

provisions is the “subject to regulation” language in 

sections 165(a)(4) and 169(3). As discussed earlier, the 

“actual control” interpretation is based on a common and 

accepted meaning of the term “regulation.” To the extent 

the goals and purpose in section 160 are instructive as to 

the meaning of other provisions in Part C of the Act, 

section 160(1) is just one of several purposes of the PSD 

program that Congress specified. The Act also instructs 

EPA to ensure that economic growth occurs consistent with 

the preservation of existing clean air resources. See CAA 

section 160(3). EPA’s interpretation is consistent with 

this goal because it allows EPA to look at the larger 

picture by coordinating control of an air pollutant under 

the PSD program with control under other CAA provisions. 

EPA finds the logic of the PSD Interpretive Memo more 

persuasive. The Memo considers the full context of the 

CAA, including the health and welfare criteria that 

generally must be satisfied to establish control 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

39

requirements under other parts of the Act, information 

gathering provisions that contemplate data collection and 

study before pollutants are controlled, and requirements 

for reasoned decision making. While some commenters

presented arguments for why it might be possible or 

beneficial to apply the BACT requirement before a control 

requirement is established for a pollutant elsewhere under 

the Act, these arguments do not demonstrate that the 

contextual reading of the CAA described in the Memo is 

erroneous. Thus, the comments have at most provided 

another permissible reading of the Act, but they do not 

demonstrate that EPA must require BACT limitations for 

pollutants that are not yet controlled but only subject to 

data collection and study. 

EPA continues to believe that the monitoring and 

reporting interpretation is inconsistent with past agency 

practice because, as the Memo notes, “EPA has not issued 

PSD permits containing emissions limitations for pollutants 

that are only subject to monitoring and reporting 

requirements,” including CO2 emissions. Further, the Memo 

determines that the monitoring and reporting interpretation 

is not required under the 1978 preamble language, 

explaining that the preamble language could be interpreted 

in a variety of ways and “did not specifically address the 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

40

issue of whether a monitoring or reporting requirement 

makes a pollutant ‘regulated in’ [Subpart C of Title 40] of 

the Code of Federal Regulations.” See Memo at 11-12. 

Commenters have not demonstrated that the Agency 

specifically intended, through this statement, to apply the 

PSD requirements to pollutants that were covered by only a 

monitoring and reporting requirement codified in this part 

of the CFR. 

One commenter questioned EPA’s basis for rejecting the 

monitoring and reporting interpretation because they 

believe EPA has not identified a pollutant other than CO2

that would be affected by the monitoring and reporting 

interpretation. However, EPA’s GHG Reporting Rule covers 

six GHGs, not just CO2. Further, EPA has promulgated 

regulations that require monitoring of oxygen (O2) in the 

stack of a boiler under certain circumstances. See 40 CFR 

60.49Da(d). These examples help demonstrate why monitoring 

and reporting requirements alone should not be interpreted 

to trigger PSD and BACT requirements.

For the reasons discussed above, EPA affirms the 

Memo’s rejection of the monitoring and reporting 

interpretation for triggering PSD requirements for a new 

pollutant.

3. State Implementation Plan (SIP) Interpretation
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

41

In discussing the application of the actual control 

interpretation to specific actions under the CAA, the PSD 

Interpretive Memo rejects an interpretation of “subject to 

regulation” in which regulatory requirements for a 

particular pollutant in the EPA-Approved State 

Implementation Plan (SIP) for a single state would “require 

regulation of that pollutant under the PSD program 

nationally.” (Hereinafter, referred to as the “SIP 

interpretation.”) In this action, EPA affirms and 

supplements the rationale for rejecting the SIP 

interpretation provided in the PSD Interpretive Memo and 

the reconsideration proposal. Since the meaning of the 

term “subject to regulation” is ambiguous and susceptible 

to multiple interpretations, the SIP interpretation is not 

compelled by the structure and language of the Act. 

Furthermore, there would be negative policy implications if 

EPA adopted this interpretation. 

The Memo reasons that application of the SIP 

interpretation would convert EPA’s approval of regulations 

applicable only in one state into a decision to regulate a 

pollutant on a nationwide scale for purposes of the PSD 

program. The Memo explains that the establishment of SIPs 

is better read in light of the “cooperative federalism” 

underlying the Act, whereby Congress allowed individual 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

42

states to create and apply some regulations more 

stringently than federal regulations within its borders, 

without allowing individual states to set national 

regulations that would impose those requirements on all 

states. See Ellis v. Gallatin Steel Co., 390 F.3d 461, 467 

(6th Cir. 2004). In rejecting the SIP interpretation, the 

Memo also explains that EPA adopted a similar position in

promulgating the NSR regulations for fine particulate 

matter (or “PM2.5”), without any public comments opposing 

that position. See Memo at 15-16.

EPA continues to believe that the CAA and EPA’s 

implementing regulations are intended to provide states 

flexibility to develop and implement SIPs to meet the air 

quality goals of their individual state. Each state’s 

implementation plan is a reflection of the air quality 

concerns in that state, allowing a state significant 

latitude in the treatment of specific pollutants of concern 

(or their precursors) within its borders based on air 

quality, economic, and other environmental concerns of that 

state. As such, pollutant emissions in one state may not 

present the same problem for a state a thousand miles away. 

As expressed in the PSD Interpretive Memo, EPA continues to 

have concerns that the SIP interpretation would improperly 

limit the flexibility of states to develop and implement 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

43

their own air quality plans, because the act of one state 

to establish regulatory requirements for a particular 

pollutant would drive national policy. If EPA determined

that a new pollutant becomes “subject to regulation”

nationally within the meaning of section 165 based solely 

on the provisions of an EPA-approved SIP, then all states 

would be required to subject the new pollutant to PSD 

permitting whether or not control of the air pollutant was 

relevant for improving that state’s air quality. Whether 

one state, five states, or 45 states make the decision that 

their air quality concerns are best addressed by imposing 

regulations on a new pollutant, EPA does not think those 

actions should trump the cooperative federalism inherent in 

the CAA. While several states may face similar air quality 

issues and may choose regulation as the preferred approach 

to dealing with a particular pollutant, EPA is concerned 

that allowing the regulatory choices of some number of 

states to impose PSD regulation on all other states would 

do just that. 

Some commenters support the SIP interpretation, and 

fault the Agency’s rejection of the interpretation by 

stating that neither the Act, nor the Memo, provides a 

basis for a position that regulation by a single state is 

not enough to constitute “regulation under the Act” on a 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

44

nationwide basis for purpose of section 165. Petitioners 

and another commenter also assert that CO2 is already 

“subject to regulation under the Act” and take the position 

that any requirement EPA adopts and approves in an 

implementation plan makes the covered pollutant “subject to 

regulation under the Act” because it is approved by the EPA

“under the Act,” and because it becomes enforceable by the 

state, by EPA and by citizens “under the Act” upon 

approval. 

EPA disagrees with the Petitioner and with this 

commenter that this reasoning necessarily means that a 

pollutant regulated in one SIP approved by EPA must

automatically be regulated through the PSD program 

nationally. In fact, Congress demonstrated intent, in the 

language and structure of the Act, for SIP requirements to 

have only a local or regional effect. 

In section 102(a) of the CAA, Congress directs EPA to 

encourage cooperative activities among states, and the 

adoption of uniform state and local laws for the control of 

air pollution “as practicable in light of the varying 

conditions and needs.” This language informs the issue of 

whether SIP requirements have nationwide applicability in

two ways. First, there would be no need for EPA to 

facilitate uniform adoption of standards in different air 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

45

quality control regions, if the regulation of an air 

pollutant by one region would automatically cause that 

pollutant to be regulated in another region. Second, 

Congress bounded its desire to promote uniformity by 

recognizing that addressing local air quality concerns may 

preempt national uniformity of regulation. 

Indeed, section 116 of the CAA grants States the right 

to adopt more stringent standards than the uniform, minimum 

requirements set forth by EPA. See 42 U.S.C. 7416. The 

legislative history of the 1977 CAA Amendments shows that 

Congress understood that States may adopt different and 

more stringent standards then the federal minimum 

requirements. See, e.g., 122 Cong. Rec. S12456 (daily ed. 

July 26, 1976) (statement of Sen. Randolph) (“[T]he States 

are given latitude in devising their own approaches to air 

pollution control within the framework of broad goals. ... 

The State of West Virginia has established more stringent 

requirements than those which, through the Environmental 

Protection Agency, are considered as adequate...”); 122 

Cong. Rec. S12458 (daily ed. July 26, 1976) (statement of 

Sen. Scott) (“The states have the right, however, to 

require higher standards, and they should have under the 

police powers.”) Congress could not have intended states 

to have latitude to implement their own approaches to air 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

46

pollution control, and simultaneously, require that air 

pollutants regulated by one State automatically apply in 

all other States.

Importantly, the legislative history also shows that 

Congress intended to limit the EPA’s ability to disapprove 

a State’s decision to adopt more stringent requirements in 

setting forth the criteria for approving state submissions 

under section 110. This intent is supported by the 

following passage:

State implementation plans usually contain a unified 

set of requirements and frequently do not make 

distinctions between the controls needed to achieve 

one kind of ambient standard or another. To try to 

separate such emission limitations and make judgments 

as to which are necessary to achieving the national 

ambient air quality standards assumes a greater 

technical capability in relating emissions to ambient 

air quality than actually exists.

A federal effort to inject a judgment of this kind 

would be an unreasonable intrusion into protected 

State authority. EPA’s role is to determine whether 

or not a State’s limitations are adequate and that 

State implementation plans are consistent with the 

statute. Even if a State adopts limits which may be 

stricter than EPA would require, EPA cannot second 

guess the State judgment and must enforce the approved 

State emission limit.11

123 Cong. Rec. S9167 (daily ed. June 8, 1977) (statement of 

Sen. Muskie). 

 

11 Notably, the legislative record refers to “State” emission 

limit, and makes no note of this State emission limitation 

having broader applicability. 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

47

This Congressional intent is reflected within the 

statutory language. Under section 110(k)(3), the EPA 

Administrator “shall approve” a state’s submittal if it 

meets the requirements of the Act, and under section 110(l) 

“shall not” approve a plan revision “if the revision would 

interfere with any other applicable requirement of this 

Act.” Courts have similarly interpreted this language to 

limit EPA’s discretion to approve or disapprove SIP 

requirements. See, e.g., State of Connecticut v. EPA, 656 

F.2d 902, 906 (2d. Cir. 1981) (“As is illustrated by 

Congress’s use of the word ‘shall,’ approval of an SIP 

revision by the EPA Administrator is mandatory if the 

revision has been the subject of a proper hearing and the 

plan as a whole continues to adhere to the requirements of 

section 110(a)(2)”) (referencing Union Electric Co. v. EPA, 

427 U.S. 246, 257 (1976); and Mission Indus., Inc. v. EPA, 

547 F.2d 123 (1st Cir. 1976)). These provisions of the 

statute do not establish any authority or criteria for EPA

to judge the approvability of a state’s submission based on 

the implications such approval would have nationally. The

absence of such authority or criteria in the applicable 

standard argues against nationwide applicability of SIP 

requirements and the SIP interpretation.
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

48

Moreover, under section 307(b) of the CAA, Congress 

assigns review of specific regulations promulgated by EPA

and “any other nationally applicable regulations 

promulgated or final action taken, by the Administrator 

under this Act” only to the U.S. Court of Appeals for the 

District of Columbia Circuit (“D.C. Circuit”). In 

contrast, “the Administrator’s action in approving and 

promulgating any implementation plan under Section 110 ...

or any other final action of the Administrator under this 

Act ... which is local or regionally applicable may be 

filed only in the United States Court of Appeals for the 

appropriate circuit.” 42 U.S.C. 7607(b) (emphasis added). 

Thus, Congress set forth its intended applicability of 

these regulations in assigning judicial venue and clearly 

articulated that requirements in a SIP are generally “local 

or regionally applicable.” 

Even if the Act could be read to support EPA review of 

the national implications of state SIP submissions, such an 

approach would be undesirable for policy reasons. As 

highlighted in the reconsideration proposal, one practical 

effect of allowing state-specific concerns to create 

national regulation is that EPA’s review of SIPs would 

likely be much more time-consuming, because EPA would have 

to consider each nuance of the SIP as a potential statement 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

49

of national policy. Thus, EPA would have heightened 

oversight of air quality actions in all states – even those 

regarding local and state issues that are best decided by 

local agencies. EPA approval of SIPs would be delayed, 

which would in turn, delay state’s progress toward 

improving air quality. And, EPA would be required to 

defend challenges to the approval of a SIP with national 

implications in the D.C. Circuit Court of Appeals rather 

than the local Circuit Court of Appeals. The potential 

increased burden of reviewing and approving SIPs to analyze 

the national implications of each SIP, and the associated 

delay in improving air quality, creates a compelling policy 

argument against adoption of the SIP interpretation.

Petitioners also fault EPA’s reliance on Connecticut 

v. EPA, 656 F.2d 902 (2d Cir. 1981) and assert that this 

case has nothing to do with the issue of whether a 

pollutant is “subject to regulation under the Act.” In the 

PSD Interpretive Memo, EPA cited Connecticut to support the 

notion that while a state is free to adopt air quality 

standards more stringent than required by the NAAQS or 

other federal law provisions, Congress precludes those 

stricter requirements from applying to other states. The 

Agency agrees with commenter that the circumstances 

involved in that case are not directly analogous, but, 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

50

nevertheless, the case supports the inference that EPA has

drawn from it. The Court concluded that “[n]othing in the 

Act, however, indicates that a state must respect its 

neighbor's air quality standards (or design its SIP to 

avoid interference therewith) if those standards are more 

stringent than the requirements of federal law.” If a 

state is not required to respect the more stringent 

requirements of a neighboring State in developing its own 

implementation plan, then by inference, the state would 

also not be compelled to follow the more stringent 

standards. 

In sum, after reconsidering the legal and policy 

issues, EPA declines to adopt the SIP interpretation.

4. Endangerment Finding Interpretation 

The PSD Interpretive Memo states that the fourth part 

of the regulated NSR pollutant definition (“[a]ny pollutant 

that otherwise is subject to regulation”) should not be 

interpreted “to apply at the time of an endangerment 

finding.” See Memo at 14 (hereinafter, referred to as the 

“endangerment finding interpretation.”). After considering 

public comments, EPA is affirming the position expressed in 

the PSD Interpretative Memo that an endangerment finding 

alone does not make the requirements of the PSD program 

applicable to a pollutant. EPA maintains its view that the 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

51

terms of EPA’s regulations and the relevant provisions of 

the CAA do not compel EPA to conclude that an air pollutant 

becomes “subject to regulation” when EPA finds that it 

endangers public health or welfare without 

contemporaneously promulgating control requirements for 

that pollutant. 

As explained in EPA’s Endangerment and Cause or 

Contribute Findings for GHGs under section 202(a) of the 

CAA, there are actually two separate findings involved in 

what is often referred to as an endangerment finding. 74 

FR 66496 (Dec. 15, 2009). The first finding addresses 

whether air pollution may reasonably be anticipated to 

endanger public health or welfare. The second finding 

involves an assessment of whether emissions of an air 

pollutant from the relevant source category cause or 

contribute to this air pollution. In this notice, EPA uses

the phrase “endangerment finding” to refer to EPA findings 

on both of these questions. The EPA interpretation 

described here applies to both findings regardless of 

whether they occur together or separately. 

As explained in the proposed reconsideration, an 

interpretation of “subject to regulation” that does not 

include endangerment findings is consistent with the first 

three parts of the definition of “regulated NSR pollutant” 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

52

in section 52.21(b)(50) of EPA’s regulations. Unlike the 

first three parts of the definition, an endangerment 

finding does not itself contain any restrictions (e.g., 

regarding the level of air pollution or emissions or use). 

Moreover, two parts of the definition involve actions that 

can occur only after an endangerment finding of some sort 

has taken place. In other words, other parts of the 

definition already bypass an endangerment finding and apply 

the PSD trigger to a later step in the regulatory process. 

Specifically, under the first part of that definition, 

PSD regulation is triggered by promulgation of a NAAQS 

under CAA section 109. However, in order to promulgate 

NAAQS standards under section 109, EPA must first list, and 

issue air quality criteria for a pollutant under section 

108, which in turn can only happen after EPA makes an 

endangerment finding and a version of a cause or contribute 

finding, in addition to meeting other requirements. See

CAA sections 108(a)(1) and 109(a)(2). Thus, if EPA were to 

conclude that an endangerment finding, cause or contribute 

finding, or both would make a pollutant “subject to 

regulation” within the meaning of the PSD provisions, this 

would read all meaning out of the first part of the 

“regulated NSR pollutant” definition because a pollutant 

would become subject to PSD permitting requirements well 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

53

before the promulgation of the NAAQS under section 109. 

See 40 CFR 52.21(b)(50)(i).

Similarly, the second part of the definition of 

“regulated NSR pollutant” includes any pollutant that is 

subject to a standard promulgated under section 111 of the 

CAA. Section 111 requires the EPA Administrator to list a 

source category, if in his or her judgment, “it causes, or 

contributes significantly to, air pollution which may 

reasonably be anticipated to endanger public health or 

welfare.” See CAA section 111(b)(1)(A). After EPA lists a 

source category, it promulgates NSPS for that source 

category. For a source category not already listed, if EPA 

were to list it on the basis of its emissions of a 

pollutant that was not previously regulated, and such a 

listing made that pollutant “subject to regulation” within 

the meaning of the PSD provisions, this chain of events 

would result in triggering PSD permitting requirements for 

that pollutant well in advance of the point contemplated by 

the second prong of the regulated NSR pollutant definition. 

See 40 CFR 52.21(b)(50)(ii).

Furthermore, as discussed in the Memo, waiting to 

apply PSD requirements at least until the actual 

promulgation of control requirements that follow an 

endangerment finding is sensible. The Memo explains that 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

54

when promulgating the final regulations establishing the 

control requirements for a pollutant, EPA often makes 

decisions that are also relevant to decisions that must be 

made in implementing the PSD program for that pollutant. 

See Memo at 14. For example, EPA often does not make a 

final decision regarding how to identify the specific 

pollutant subject to an NSPS standard until the NSPS is 

issued, which occurs after both the endangerment finding 

and the source category listing. 

Public comments echoed these concerns. One commenter 

said that subjecting the pollutant to PSD requirements, 

including imposition of BACT emission limits, before the 

Agency has taken regulatory action to establish emission 

controls would turn the CAA process on its head. Another 

commenter indicated that triggering PSD review upon 

completion of an endangerment finding, but potentially 

before the specific control requirement that flows directly 

from the endangerment finding, clearly undermines the 

orderly process created by Congress for regulation of new 

air pollutants. A third commenter added that establishing 

controls without having a standard to be achieved leads to 

uncertainty in the permitting program. 

In further support of EPA’s interpretation that an 

endangerment finding does not make an air pollutant 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

55

“subject to regulation” is the fact that an endangerment 

finding is not a codified regulation; it does not contain 

any regulatory text. The PSD Interpretive Memo explains,

and numerous commenters agree, that an endangerment finding 

should not be construed as “regulating” the air 

pollutant(s) at issue because there is no actual regulatory 

language applicable to the air pollutant at this time in 

the Code of Federal Regulations. Rather, the finding is a 

prerequisite to issuing regulatory language that imposes 

control requirements. This is true even if the 

endangerment finding is a “rule” for purposes of 

administrative processes; that does not alter the fact that 

there is no regulation or regulatory text attached to the 

endangerment finding itself. Since an endangerment finding 

does not establish “regulation” within the common meaning 

of the term applied by EPA, EPA does not believe the CAA

compels EPA to apply PSD requirements to a pollutant on the 

basis of an endangerment finding alone. 

EPA’s interpretation is also consistent with the 

Supreme Court’s decision in Massachusetts. In its 

decision, the Court acknowledged that EPA “has significant 

latitude as to the manner, timing, content and 

coordination” of the regulations that would result from a 

positive endangerment finding under section 202(a). See
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

56

549 U.S. at 532. Just as EPA has discretion regarding the 

timing of the section 202(a) control regulations that would 

flow from an endangerment finding under that section, it 

also has some discretion regarding the timing of the 

triggering of PSD controls that the statute requires based 

on those section 202(a) regulations. EPA has reasonably 

determined that PSD controls should not precede any other 

control requirements. Some commenters cited Massachusetts

in support of EPA’s position. 

For the foregoing reasons, EPA affirms that the 

prerequisite act of making an endangerment finding, a cause 

or contribute finding, or both, does not make a pollutant 

“subject to regulation” for the purposes of the PSD 

program. This interpretation applies to both steps of the 

endangerment finding – the finding that air pollution may 

reasonably be anticipated to endanger public health or 

welfare, and the finding that emissions of an air pollutant 

from a particular source category causes or contributes to 

this air pollution – regardless of whether the two findings 

occur together or separately. As explained above, EPA 

believes that there are strong legal and policy reasons for 

rejecting the endangerment finding interpretation. 

5. Section 209 Waiver Interpretation
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

57

EPA is affirming its position that an Agency decision 

to grant a waiver to a state under section 209 of the CAA

does not make the PSD program applicable to pollutants that 

may be regulated under state authority following a grant of 

such a waiver. For the reasons discussed below, the 

granting of a waiver does not make the pollutants that are 

regulated by a state after obtaining a section 209 waiver 

into pollutants regulated under the CAA. Furthermore, EPA 

is also affirming the position that PSD requirements are 

not applicable to a pollutant in all states when a handful 

of states besides the one obtaining the waiver adopt 

identical standards under section 177 of the CAA that are 

then approved into state SIPs by EPA. 

As explained in the proposal, neither the PSD 

Interpretive Memo nor the Petition for Reconsideration 

raise the issue of whether a decision to grant a waiver 

under the section 209 of the CAA triggers PSD requirements 

for a pollutant regulated by a state after obtaining a 

waiver. EPA received comments in response to the notice of 

an application by California for a CAA section 209 waiver 

to the state of California to adopt and enforce GHG 

emission standards for new motor vehicles that suggested 

that arguments might be made that the grant of the waiver 

made GHGs subject to regulation across the country for the 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

58

purposes of PSD. See 74 FR 32744, 32783 (July 8, 2009). 

Those commenters requested that EPA state clearly that 

granting the California Waiver did not render GHGs subject 

to regulation under the CAA, while others commented that 

the question of when and how GHGs should be addressed in 

the PSD program or otherwise regulated under the Act should 

instead be addressed in separate proceedings. At that 

time, EPA stated that these interpretation issues were not 

a part of the waiver decision and would be more 

appropriately addressed in another forum. 

In the proposed reconsideration notice, EPA proposed 

to affirm the following position that EPA previously 

explained to Congress: “a decision to grant a waiver under 

section 209 of the Act removes the preemption of state law 

otherwise imposed by the Act. Such a decision is 

fundamentally different from the decisions to establish 

requirements under the CAA that the Agency and the [EAB] 

have considered in interpreting the provisions governing 

the applicability of the PSD program.” Letter from Lisa P. 

Jackson, EPA Administrator, to Senator James M. Inhofe 

(March 17, 2009). Specifically, EPA proposed to find that 

neither the CAA nor the Agency’s PSD regulations make the 

PSD program applicable to pollutants that may be regulated 

by states after EPA has granted a waiver of preemption 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

59

under section 209 of the CAA. Accordingly, EPA said that 

the Agency’s decision to grant a section 209 waiver to the 

state of California to establish its own GHG emission 

standards for new motor vehicles does not trigger PSD 

requirements for GHGs. 

Several commenters disagreed with EPA’s proposed 

position on the section 209 waiver provisions, and assert 

that EPA’s granting of the waiver results in “actual 

control.” According to these commenters, even under EPA’s 

interpretation of “subject to regulation,” CO2 is now 

subject to BACT. One of these commenters argues that EPA’s 

granting of a waiver is an EPA regulatory action that 

“controls” CO2 by allowing California and 10 other states to 

“regulate” CO2 under the Act. Another one of these 

commenters states that 10 states used section 177 of the 

CAA to adopt the California Standards into their SIPs, thus 

making these provisions enforceable by both EPA and 

citizens under the CAA. See, e.g., 42 U.S.C. 7413; 42 

U.S.C. 7604(a)(1), (f)(3). EPA has not been persuaded to 

change its proposed position based on these comments. 

EPA does not disagree that the regulations promulgated 

by the state pursuant to the waiver will require control of 

emissions and thus constitute “regulation” of GHGs under 

the meaning applied by EPA. However, the principal issue 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

60

here is whether this regulation occurs under the authority 

of the Clean Air Act (i.e., “under the Act.”). 

In the proposed reconsideration notice, EPA explained 

that a waiver granted under CAA section 209(b)(1) simply 

removes the prohibition found in section 209(a) that 

forbids states from adopting or enforcing their own 

standards relating to control of emissions from new motor 

vehicles or new motor vehicle engines. Thus, the grant of 

the waiver does not lead to regulation “under the Act” 

because it simply allows California to exercise the same 

authority to adopt and enforce state emissions standards 

for new motor vehicles that California could have exercised 

without the initial prohibition in section 209(a). Several 

other commenters agreed with EPA’s position and reasoning. 

They explained that a waiver constitutes a withdrawal of 

federal preemption that allows a state to develop its own 

state standards to regulate vehicle emissions; the waiver 

does not transform these state standards into federal 

standards. Other supporting commenters also assert that 

there is nothing in the legislative history that supports a 

conclusion that Congress intended section 209 waivers to 

result in application of PSD requirements. The opposing 

comments have not convincingly articulated a mechanism 

through which EPA’s action granting the waiver in fact 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

61

requires control of emissions (as opposed to the states 

action under state law). If EPA granted the waiver alone 

and the state ultimately decided not to implement its 

regulation, there would be no control requirement in effect 

under the CAA. 

As explained in the proposed reconsideration notice, 

EPA also finds it instructive that enforcement of any 

emission standard by the state after EPA grants a section 

209 waiver would occur pursuant to state enforcement 

authority, not federal authority. EPA would continue to 

enforce the federal emission standards EPA promulgates

under section 202. EPA does not enforce the state 

standard. EPA only conducts testing to determine 

compliance with the federal standard promulgated by EPA and 

any enforcement would be for violation of EPA standards, 

not the state standards. As one commenter noted, CAA 

section 209(b)(3) provides that where a state has adopted 

standards that have been granted a waiver “compliance with 

such state standards shall be treated as compliance with 

applicable Federal standards for purposes of this 

subchapter,” but does not say that such state standards 

actually become the federal standards. Accordingly, EPA

finds the absence of legislative history supporting the 

contrary position, and the language in section 209(b)(3) 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

62

instructive as Congress clearly recognized the co-existence 

of the federal and state standards. This shows Congress 

did not intend that state regulations replace, or transform 

state standards into federal regulations “under the Act.” 

EPA agrees with supporting commenters’ conclusions 

summarized here, and is not persuaded to change the 

proposed position. 

EPA has also concluded that the adoption of identical 

standards by several states under section 177 does not make 

a pollutant covered by those standards “subject to 

regulation under the Act” in all states. Like section 209, 

section 177 only grants states authority to regulate under 

state authority by removing federal preemption. Adoption 

of California standards by other states does not change the 

fact that those standards are still state standards 

enforced under state law and federal law is approved in a 

SIP. However, EPA agrees that when a state adopts 

alternate vehicle standards into its SIP pursuant to 

section 177, and EPA approves the SIP, these standards 

become enforceable by EPA and citizens under the CAA. 

Nonetheless, EPA does not agree that this compels an 

interpretation that any pollutant included in an individual 

state SIP requirement becomes “subject to regulation” in 

all states under the CAA. As discussed earlier, EPA 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

63

rejects the theory that a regulation of a pollutant in one 

or more states in an EPA-approved implementation plan 

necessarily makes that pollutant subject to regulation in 

all states. Such an approach is inconsistent with the 

fundamental principle of cooperative federalism embodied in 

the CAA. 

In summary, EPA concludes that neither the act of 

granting a section 209 waiver of preemption for state 

emission standards nor the EPA-approval of standards 

adopted into a SIP pursuant to section 177 makes a 

pollutant “subject to regulation under the Act” in all 

states for the purposes of the PSD program.

C. Other Issues on Which EPA Solicited Comment

1. Prospective Codification of Interpretation

Through the proposed reconsideration notice, EPA

requested comment on whether the Agency should codify its 

final interpretation of the “subject to regulation” in the 

statute and regulation by amending the federal PSD rules at 

40 CFR 52.21. EPA received a number of comments both in 

support of and opposing codification.

EPA does not believe it is necessary to codify its 

interpretation in the regulatory text. EPA feels it is 

important to promptly communicate and apply these final 

decisions regarding the applicability of the PSD program in 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

64

light of recent and upcoming actions related to GHGs. More 

specifically, EPA recently finalized the “Mandatory 

Reporting of Greenhouse Gases” rule (known as the 

“Reporting Rule”)12, which added monitoring requirements for 

additional GHGs not covered in the Part 75 regulations. 

Further, EPA is poised to finalize by the end of March 2010 

the LDV Rule that will establish controls on GHGs that take 

effect in Model Year 2012, which starts as early as January 

2, 2011. Thus, these actions make it important that EPA 

immediately apply its final interpretation of the PSD 

regulations on this issue (as refined in this action).

Furthermore, even if EPA modified the text of the federal

rules, many states may continue to proceed under an 

interpretation of their rules. EPA thus believes overall 

implementation of PSD permitting programs is facilitated by 

this notice that describes how existing requirements in 

federal regulations at 40 CFR 52.21 are interpreted by EPA 

and how similar state provisions may be interpreted by 

states.

Likewise, EPA does not believe it is necessary to reissue the PSD Interpretive Memorandum. The Agency has not 

identified any legal requirement for the Agency to re-issue 

 

12

 See 74 FR 56259 (Oct. 30, 2009).
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

65

an interpretive rule after a process of reconsideration. 

No comparable procedure is required after the 

reconsideration of substantive rule. In the latter 

situation, a notice of final action is sufficient to 

conclude the reconsideration process and an Agency may 

simply decline to revise an existing regulation that 

remains in effect. EPA has therefore concluded that this 

notice of final action is sufficient to conclude the 

reconsideration process initiated on February 17, 2009 and

that there is no need to re-issue the entire memorandum in 

order for EPA to continue applying the interpretation 

reflected therein, as refined in this notice. 

2. Section 821 of the Clean Air Act Amendments of 1990

In the October 7, 2009 notice, EPA also solicited 

comment on the question of whether section 821 of the Clean 

Air Act Amendments of 1990 is part of the Clean Air Act. 

EPA indicated that the Agency was inclined against 

continuing to argue that section 821 was not a part of the 

CAA, as the Office of Air and Radiation and Region 8 had 

done in briefs submitted to the EAB in the Deseret matter. 

This question bears on the determination of whether the CO2

monitoring requirements in EPA’s Part 75 regulations are 

requirements “under the Act.” In the proposed 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

66

reconsideration notice, EPA explained that it would be 

necessary to resolve whether or not the CO2 monitoring and 

reporting regulations in Part 75 were promulgated “under 

the Act” if EPA adopted the monitoring and reporting 

interpretation. EPA received public comments on both sides 

of this issue, with one environmental organization pressing 

EPA to drop the position that section 821 is not a part of 

the CAA and several industry parties requesting that EPA 

affirm it.

EPA has not yet made a final decision on this 

question, and it is not necessary for the Agency to do so 

at this time. Since EPA is not adopting the monitoring and 

reporting interpretation, the status of section 821 is not 

material to the question of whether and when CO2 is “subject 

to regulation under the Act.” Because there are currently 

no controls on CO2 emissions, the pollutant is not “subject 

to regulation.” Given that the provisions in Part 75 do 

not “regulate” emissions of CO2, it is unnecessary determine 

whether such provisions are “under the Act” or not to 

determine PSD applicability. Furthermore, the promulgation 

of EPA’s Reporting Rule makes this issue even less 

material. In that rule, which became effective in December 

2009 and required monitoring to begin in January of this 

year, EPA established monitoring and reporting requirements 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

67

for CO2 and other GHGs under sections 114 and 208 of the 

CAA. Thus, there can be no dispute that monitoring and 

reporting of CO2 (as well as other GHGs) is now occurring 

under the CAA, regardless of the status of section 821 of 

the 1990 amendments. At this point, the section 821 issue 

would only become relevant if a court were to find that the 

monitoring and reporting interpretation is compelled by the 

CAA and a party subsequently seeks to retroactively enforce 

such a finding against sources that had not obtained a PSD 

permit with any limit on CO2 emissions. If this situation 

were to arise, EPA will address the section 821 issue as 

necessary. 

3. Timing of When a Pollutant becomes Subject to

Regulation

The October 7, 2009 notice also solicited comment on 

whether the interpretation of “subject to regulation” 

should also more clearly identify the specific date on 

which PSD regulatory requirements would apply. In the PSD 

Interpretive Memo, EPA states that the language in the 

definition of “regulated NSR pollutant” should be 

interpreted to mean that the fourth part of the definition 

should “apply to a pollutant upon promulgation of a 

regulation that requires actual control of emissions.” See

Memo at 14. After evaluating the underlying statutory 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

68

requirement in the CAA and the language in all parts of the 

regulatory definition more closely, EPA proposed to modify 

its interpretation of the fourth part of the definition 

with respect to the timing of PSD applicability. The 

Agency proposed to interpret the term “subject to 

regulation” in the statute and regulation to mean that PSD 

requirements apply when the regulations addressing a 

particular pollutant become final and effective.

Based on public comments and other considerations 

raised in the proposal, EPA has determined that it is 

necessary to refine the portion of the PSD Interpretive 

Memo that addresses the precise point in time when a 

pollutant becomes subject to regulation for purposes of the 

PSD program. As a result, while the Memo is otherwise 

unchanged by the reconsideration proceeding, this final 

notice will adjust the first paragraph of section II.F of 

the Memo (bottom of page 14) to reflect EPA’s conclusion

that it is more appropriate and consistent with the 

reasoning of the Memo to construe EPA regulations and the 

CAA to make a pollutant subject to PSD program requirements 

when the first controls on a pollutant take effect. This 

refines the approach proposed in the October 7, 2009

notice. 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

69

Like the PSD Interpretive Memorandum itself, the

refinement to EPA’s interpretation described in this final 

notice is an interpretation of the regulation at 40 CFR 

52.21 and the CAA provisions that provide the statutory 

foundation for EPA’s regulations. The refinement reflected 

in this notice explains, clarifies, and is consistent with 

existing statutes and the text of regulatory provisions at 

40 CFR 52.21(b)(50)(ii) through (iv). Some commenters

argued that courts have limited an Agency’s ability to 

fundamentally change a long-standing, definitive, and 

authoritative interpretation of a regulation13 without 

engaging in a notice and comment rulemaking. See, e.g.,

Alaska Professional Hunters Association v. FAA, 177 F.3d 

1030, 1033-34 (D.C. Cir. 1999); Paralyzed Veterans of 

America v. D.C. Arena L.P., 117 F.3d 579, 586 (D.C. Cir. 

1997). Since EPA’s interpretation of the PSD program 

regulations is unchanged in most respects by this action,

it is not clear that the particular refinement to that 

interpretation that EPA is making in this action would

invoke the doctrine described in these cases. Even if this 

 

13 To EPA’s knowledge, no court has required a rulemaking 

procedure when the Agency seeks to issue or change its 

interpretation of a statute. Nevertheless, EPA has 

completed this notice and comment proceeding before 

deciding to adopt the revised interpretation of the CAA 

described in this notice. 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

70

refinement is viewed as a fundamental change, EPA has 

completed the revision reflected in this action after a 

notice and comment process. Furthermore, since EPA 

initiated a process of reconsidering and soliciting comment 

on the PSD Interpretive Memo within three months of its 

issuance, the memorandum had not yet become particularly 

well-established or long-standing. See MetWest Inc. v. 

Secretary of Labor, 560 F.3d 506, 511 n.4 (D.C. Cir. 2009). 

Thus, the doctrines reflected in these cases do not 

preclude the action EPA has taken here to refine its 

interpretation of the regulations. 

The regulatory language of 40 CFR 52.21(b)(50)(iv) 

does not specify the exact time at which the PSD 

requirements should apply to pollutants in the fourth 

category of the definition of “regulated NSR pollutant.”

In the PSD Interpretive Memo, EPA states that EPA 

interprets the language in this definition to mean that the 

fourth part of the definition should “apply to a pollutant 

upon promulgation of a regulation that requires actual 

control of emissions.” See Memo at 14. However, after 

continuing to consider the underlying statutory requirement 

in the CAA and the language in all parts of the regulatory 

definition more closely, EPA proposed in the October 7, 

2009 notice to modify its interpretation of the fourth part 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

71

of the definition with respect to the timing of PSD 

applicability. In the proposed notice of reconsideration, 

EPA observed that the term “subject to regulation” in the 

statute and regulation is most naturally interpreted to 

mean that PSD requirements apply when the regulations 

addressing a particular pollutant become final and 

effective. In addition, EPA expressed a desire to 

harmonize the application of the PSD requirements with the 

limitation in the Congressional Review Act (CRA) that a 

major rule cannot take effect until 60 days after it is 

published in the Federal Register. 

In this final notice on reconsideration, based on 

information provided in public comments, EPA is refining 

its interpretation of the time the PSD requirements will 

apply to a newly-regulated pollutant. Under the PSD 

program, EPA will henceforth interpret the date that a 

pollutant becomes subject to regulation under the Act to be 

the point in time when a control or restriction that 

functions to limit pollutant emissions takes effect or 

becomes operative to control or restrict the regulated 

activity. As discussed further below, this date may vary 

depending on the nature of the first regulatory requirement 

that applies to control or restrict emissions of a 

pollutant.
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

72

Several public comments observed that a date a control 

requirement becomes “final and effective” and the date it 

actually “takes effect” may differ. Some commenters

supported these points with reference to federal court 

decisions that suggest the date that the terms of a 

regulation become effective can take more than one form. 

In one case involving the Congressional Review Act, the

United States Court of Appeals for the Federal Circuit 

observed that the date a regulation may “take effect” in 

accordance with the CRA is distinct from the “effective 

date” of the regulation. See Liesegang v. Sec’y of 

Veterans Affairs, 312 F.3d 1368, 1374-75 (Fed. Cir. 2002), 

amended on reh’g in part on other grounds, 65 Fed. Appx. 

717 (Fed. Cir. 2003). In this opinion, the court observed 

that “[t]he ordinary meaning of ‘take effect’ is ‘[t]o be 

in force; go into operation’” Id. at 1375 (quoting Black’s 

Law Dictionary at 1466 (7th ed. 1999). Based on this, the 

court reasoned that the CRA does not “change the date on 

which the regulation becomes effective” but rather “only 

affects the date when the rule becomes operative.” Id. In 

another case, the Second Circuit Court of Appeals described 

a distinction between the date a rule may “take effect” 

under the CRA, the “effective date” for application of the 

rule to regulated manufacturers, and the “effective date” 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

73

for purposes of modifying the Code of Federal Regulations.

See Natural Resources Defense Council v. Abraham, 355 F.3d 

179, 202 (2d Cir. 2004).

The Office of Federal Register (OFR) uses the term 

“effective date” to describe the date that amendments in a 

rulemaking document affect the current Code of Federal 

Regulations. See Federal Register Document Drafting 

Handbook, at p. 2-10 (Oct. 10, 1998). However, OFR draws a 

contrast between such a date and the compliance or 

applicability date of a rule, which is described as “the 

date that the affected person must start following the 

rule.” Id. at 2-11. Thus, the “effective date” of a 

regulation is commonly used to describe the date by which a 

provision in the Code of Federal Regulations is enacted as 

law, but it is not necessarily the same as the time when 

provision enacted in the Code of Federal Regulations is 

operative on the regulated activity or entity. The latter 

may be described as the “compliance,” “applicability,” or 

“takes effect” date. 

The terms of the CAA also recognize a similar 

distinction in some instances. CAA section 112(i)(3)(A)

provides that “after the effective date of any emissions 

standard, limitation or regulation promulgated under this 

section and applicable to a source, no person may operate 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

74

such source in violation of such standard, limitation, or 

regulation except, in the case of an existing source, the 

Administrator shall establish a compliance date or dates 

for each category or subcategory of existing sources, which 

shall provide for compliance as expeditiously as 

practicable, but in no event later than 3 years after the 

effective date of such standard.” Another example in 

section 202 of the Act is discussed in more detail below. 

Another formulation may be found in Section 553(c) of 

the APA (5 U.S.C. 553(c)), which provides, with some 

exceptions, that “[t]he required publication or service of 

a substantive rule shall be made not less than 30 days 

before its effective date.” The APA does not define the 

term “effective date” or make precisely clear whether it is 

referring to the date a regulation has the force of law or 

the date by which a regulatory requirement applies to a 

regulated entity or activity. The APA also separately 

recognizes the concept of finality of Agency action for 

purposes of judicial review. See 5 U.S.C. 704. 

In the October 7, 2009 notice, EPA did not clearly 

distinguish between the various forms of the date when a 

regulatory requirement may become effective. One commenter 

observed that the EPA analysis in the proposed 

reconsideration notice appeared to blur the distinction 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

75

between the “effective date” set by EPA and the date that 

Congress allows a regulation to become effective under the 

CRA. EPA in fact discussed all of these concepts in its 

notice, with part of the discussion focused on the date a 

regulation becomes “final” and “effective” and a part on 

when a regulation may “take effect” under the CRA. EPA 

viewed these forms of the date when a regulation becomes 

“effective” to be essentially the same, but the case law 

suggests that administrative agencies do not necessarily 

need to harmonize the date that regulatory requirements 

take effect with the “effective date” of a regulation, 

meaning the date a regulation has the force of law and 

amends the Code of Federal Regulations. Since these are 

distinct concepts, the effective date of a regulation for 

purposes of amending the CFR may precede the date when a 

regulatory requirement “takes effect” or when a regulated 

entity must comply with a regulatory requirement. A

regulation may “take effect” subsequent to its stated 

“effective date” where it has been published in final form 

but does not require immediate implementation by the agency 

or compliance by regulated entities. 

The key issue raised by EPA in the October 7, 2009 

notice was determining which date should be determined by 

EPA to be the date when a pollutant becomes “subject to 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

76

regulation” and, thus, the date when the requirements of 

the PSD permitting program apply to that pollutant. In 

recognition of the distinction between the “effective date” 

of the regulation for purposes of amending the CFR and the 

point at which a regulatory restriction may “take effect,” 

EPA has considered whether it is permissible to construe 

sections 165(a)(4) and 169(3) of the CAA to mean that a 

pollutant becomes “subject to regulation” at the point that 

a regulatory restriction or control “takes effect.” In the 

October notice, EPA observed that the use of “subject to” 

in the Act suggests that PSD requirements are intended to 

be triggered when those standards become effective for the 

pollutant. EPA also said that no party is required to 

comply with a regulation until it has become final and 

effective. Prior to that date, an activity covered by a 

rule is not in the ordinary sense “subject to” any 

regulation. Regardless of whether one interprets 

regulation to mean monitoring or actual control of 

emissions, prior to the effective date of a rule there is 

no regulatory requirement to monitor or control emissions.

The same reasoning applies to the date that a 

regulation “takes effect,” as that term is used in the 

judicial decisions described above. Regulated entities are 

not required to comply with a regulatory requirement until 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

77

it takes effect. Prior to the date a regulatory 

requirement takes effect, the activity covered by a rule is 

not in the ordinary sense subject to any regulation. 

As discussed in the PSD Interpretive Memo, as used in 

the context of the PSD provisions in EPA regulations and 

the CAA, EPA interprets the term “regulation” in the 

context of sections 165(a)(4) and 169 of the CAA to mean 

the act or process of controlling or restricting an 

activity. This interpretation applies a common meaning of 

the term regulation reflected in dictionaries. 

Thus, EPA agrees with commenters that the term 

“subject to regulation” used in both the CAA and EPA’s 

regulations may be construed to mean the point at which a 

requirement to control a pollutant takes effect. The CAA 

does not necessarily preclude construing a pollutant to 

become subject to regulation upon the promulgation date or 

the date that a regulation becomes final and effective for 

purposes of amending the CFR or judicial review. However, 

EPA has been persuaded by public comments that the phrase 

“subject to regulation” may also be interpreted to mean the 

date by which a control requirement takes effect.

Indeed, EPA has concluded that the latter 

interpretation is more consistent with the actual control 

interpretation reflected in the PSD Interpretive Memo. As 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

78

one commenter observed, a regulation would have to have

become actually effective, in the sense that actual legal 

obligations created by the regulation have become currently 

applicable for regulated entities and are no longer merely 

prospective obligations, before that regulation could make 

a pollutant subject to actual control. Another commenter 

noted that a regulated entity has no immediate compliance 

obligations and cannot be held in violation of the 

regulation until a legal obligation becomes applicable to 

them on the “takes effect” date. Thus, based on this 

reasoning, EPA has decided that it will construe the point 

at which a pollutant becomes “subject to regulation” within 

the meaning of section 52.21(b)(50)(iv) of EPA’s 

regulations to be when a control or restriction is 

operative on the activity regulated. EPA agrees with 

commenters that there is generally no legally enforceable 

obligation to control a pollutant when a regulation is 

promulgated or, in some instances, even when a regulation 

becomes effective for some purposes.

Thus, EPA currently interprets the time that a 

pollutant becomes a “regulated NSR pollutant” under section 

52.21(b)(50)(iv) to be the time when a control or 

restriction on emissions of the pollutant takes effect or 

becomes operative on the regulated activity. Given EPA’s 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

79

conclusion that this is a permissible interpretation of the 

“subject to regulation” language in sections 165(a)(4) and 

169(3) of the CAA, EPA will also interpret other parts of 

section 52.21(b)(50) to make a pollutant a regulated NSR 

pollutant on the date that a control requirement takes 

effect, provided such an interpretation is not inconsistent 

with the existing language of the regulations. 

EPA does not agree with several commenters who 

suggested that EPA determine that a pollutant does not 

become subject to regulation until the time that an 

individual source engages in the regulated activity. EPA 

does not believe such a reading is consistent with the 

“subject to regulation” language in the CAA. Even if no 

source is actually engaged in the activity, once a standard 

or control requirement has taken effect, no source may 

engage in the regulated activity without complying with the 

standard. At this point, the regulated activity and the 

emissions from that activity are controlled or restricted, 

thus being subject to regulation within the common meaning 

of the term regulation used in EPA’s regulations and 

section 165(a)(4) and 169(3) of the CAA.

Likewise, EPA does not agree with commenters who 

argued that a pollutant does not become subject to 

regulation until the date when a source must certify 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

80

compliance with regulatory requirements or submit a 

compliance report. In some instances, a compliance report 

or certification of compliance may not be required until 

well after the point that a regulation operates to control 

or restrict the regulated activity. Thus, EPA does not 

feel that it would be appropriate as a general rule to 

establish the date when a source certifies compliance or 

submits its compliance report as the date that a pollutant 

becomes subject to regulation.

Since the fourth part of the definition of “regulated 

NSR pollutant” functions as a catch-all provision, it may 

cover a variety of different types of control requirements 

established by EPA under the CAA. These different types of 

regulations may contain a variety of different mechanisms 

for controlling emissions and have varying amounts of lead 

time before controls take effect under the particular 

regulatory framework. Thus, whenever the Agency adopts 

controls on a new pollutant under a portion of the CAA

covered by the fourth part of the definition, EPA 

anticipates that it will be helpful to states and regulated 

sources for EPA to identify the date when a new pollutant 

becomes subject to regulation. In section IV.A of this 

notice, EPA provides such an analysis for the forthcoming 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

81

LDV Rule that is anticipated to establish the first 

controls on GHGs. 

EPA has also concluded that it is appropriate to 

extend the reasoning of this interpretation across all 

parts of the definition of the term “regulated NSR 

pollutant.” The reasoning described above is equally 

applicable to the regulation of additional pollutants under 

the specific sections of the Act delineated in the first 

three parts of the definition of “regulated NSR pollutant.” 

While the date a control requirement may take effect could 

vary across sections 109, section 111, and Title VI, EPA

does not see any distinction in the applicability of the 

legal reasoning above to these provisions of the CAA. 

There should be less variability among rules promulgated 

under the same statutory section, so EPA does not expect 

that it will be necessary for EPA to identify the date that 

a new pollutant becomes subject to regulation each time EPA 

regulates a new pollutant in a NAAQS or NSPS. EPA can more 

readily identify the specific dates when controls under 

such rules take effect. 

By way of example, the NSPS under section 111 of the 

Act preclude operation of a new source in violation of such 

a standard after the effective date of the standard. See

42 U.S.C. 7411(e). Thus, the control requirements in an
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

82

NSPS take effect on the effective date of the rule. Once 

such a standard takes effect and operates to preclude 

operations in violation of the standards, then EPA 

interprets the statute and EPA’s PSD regulations to also 

require that the BACT requirement apply to a pollutant that 

is subject to NSPS. Consistent with the October 7, 2009

proposal, EPA has determined that the existing language in 

section 52.21(b)(50)(ii) of its regulations may be 

construed to apply to a new pollutant upon the effective 

date of an NSPS. This part of the definition covers “[a]ny 

pollutant that is subject to any standard promulgated under 

section 111 of the Act.” See 40 CFR 52.21(b)(50)(ii). 

While the word “promulgated” appears in this part of the 

definition, this term modifies the term “standard” and does 

not directly address the timing of PSD requirements. Under 

the language in this part of the definition, the PSD 

requirements apply when a pollutant becomes “subject to” 

the underlying standard, which is “promulgated under” 

section 111 of the Act. Thus, this language can be 

interpreted to make an NSPS pollutant a regulated NSR 

pollutant upon the effective date of an NSPS. EPA did not 

receive any public comments that opposed reading this 

portion of the definition to invoke PSD requirements upon 

the effective date of an NSPS. This can logically be 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

83

extended to be consistent with the general view described 

above that the time a pollutant becomes subject to 

regulation is the time when a control requirement “takes 

effect.” As discussed above, the effective date of an NSPS 

is also that date when the controls in an NSPS “take 

effect.” 

Likewise, under section 169(a)(3) of the Act, a source 

applying for a PSD permit must demonstrate that it will not 

cause or contribute to a violation of the NAAQS in order to 

obtain the permit. Once a NAAQS is effective with respect 

to a pollutant, the standard operates through section 

169(a)(3) of the Act and section 52.21(k) of EPA’s 

regulations to preclude construction of a new source that 

would cause or contribute to a violation of such standard. 

Using the effective date of a NAAQS to determine when 

a pollutant covered by a NAAQS becomes a regulated NSR 

pollutant is more consistent with EPA’s general approach 

for determining when a new NAAQS applies to pending permit 

applications. EPA generally interprets a revised NAAQS 

that establishes either a lower level for the standard or a 

new averaging time for a pollutant already regulated to 

apply upon the effective date of the revised NAAQS. Thus, 

unless EPA promulgates a grandfathering provision that 

allows pending applications to apply standards in effect 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

84

when the application is complete, a final permit decision 

issued after the effective date of a NAAQS must consider 

such a NAAQS. As described above, the effective date of 

the NAAQS is also the date a NAAQS takes effect through the 

PSD permitting program to regulate construction of a new or 

modified source.

Since a NAAQS covering a new pollutant would operate 

through the PSD permitting program to control emissions of 

that pollutant from the construction or modification of a 

major source upon the effective date of the NAAQS, a NAAQS 

covering a new pollutant takes effect on the effective date 

of the regulation promulgating the NAAQS. EPA does not 

agree with one commenter’s suggestion that such a NAAQS 

would not take effect until the time a state first 

promulgates limitations for the pollutant in a SIP. Under 

section 165(a)(3) of the Act and the federal PSD permitting

regulations at 52.21(k), to obtain a PSD permit, a major 

source must demonstrate that the proposed construction will 

not cause or contribute to a violation of a NAAQS. Due to 

these requirements, the PSD program operates to incorporate 

the NAAQS as a governing standard for permitting 

construction of large sources. Thus, under the federal PSD 

program regulations at least, a new pollutant covered by a 

NAAQS becomes subject to regulation at a much earlier date. 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

85

These PSD provisions require emissions limitations for the 

NAAQS pollutant before construction at a major source may 

commence and thereby function to protect the NAAQS from new 

source construction and modifications of existing major 

sources in the SIP development period before a completion 

of the planning process necessary to determine whether 

additional standards for a new NAAQS pollutant need to be 

developed. The timing when the NAAQS operates in this 

manner under SIP-approved programs is potentially more 

nuanced and depends on whether state laws are sufficiently 

open-ended to call for application of a new NAAQS as a 

governing standard for PSD permits upon the effective date. 

EPA believes that state laws that use the same language as

in EPA’s PSD program regulations at 52.21(k) and 51.166(k) 

are sufficiently open-ended and allow such a NAAQS to “take 

effect” through the PSD program upon the effective date of 

the NAAQS. Notwithstanding this complexity in SIP-approved 

programs, the applicability of the federal PSD program 

regulations to a new NAAQS pollutant upon the effective 

date of the NAAQS is sufficient to determine that a new 

pollutant is subject to regulation on this date.

In the October 7, 2009 notice, EPA observed that one 

portion of its existing regulations was not necessarily 

consistent with this reading of the CAA. For the first 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

86

class of pollutants described in the definition of 

“regulated NSR pollutant,” the PSD requirements apply once 

a “standard has been promulgated” for a pollutant or its 

precursors. See 40 CFR 52.21(b)(50)(i). The use of “has 

been” in the regulation indicates that a pollutant becomes 

a "regulated NSR pollutant," and hence PSD requirements for 

the pollutant are triggered, on the date a NAAQS is 

promulgated. Thus, EPA observed in the October 7, 2009 

notice that it may not be possible for EPA to read the 

regulatory language in this provision to make PSD 

applicable to a NAAQS pollutant upon the effective date of 

the NAAQS. EPA did not propose to modify the language in 

40 CFR 52.21(b)(50)(i) in the October 2009 notice because 

EPA had not yet reached a final decision to interpret the 

CAA to mean that a pollutant is subject to regulation on 

the date a regulatory requirement becomes effective. Since 

EPA was not proposing to establish a NAAQS for any 

additional pollutants, the timing of PSD applicability for 

a newly identified NAAQS pollutant did not appear to be of 

concern at the time. No public comments on the October 

2009 notice addressed this issue. Since EPA is now 

adopting a variation of the proposed interpretation with 

respect to the timing of PSD applicability, EPA believes it 

will be appropriate to propose a revision of the regulatory 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

87

language in section 52.21(b)(50)(i) at such time as EPA may 

consider promulgation of a NAAQS for an additional 

pollutant. Until that time, EPA will continue to apply the 

terms of section 52.21(b)(50)(i) of the regulation. This 

is permissible because, even though EPA believes the better 

reading of the Act is to apply PSD upon the date that a 

control requirement “takes effect,” the Agency has not 

determined in this action that the CAA precludes applying 

PSD requirements upon the promulgation of a regulation that 

establishes a control requirement (as a NAAQS does through 

the PSD provisions). 

IV. Application of PSD Interpretive Memo to PSD Permitting 

for GHGs

A. Date by Which GHGs Will Be “Subject to Regulation”

Although the PSD Interpretive Memo and this 

reconsideration reflect a broad consideration of the most 

appropriate legal interpretation and policy for all 

pollutants regulated under the CAA, the need to clarify 

this issue as a general matter has been driven by concerns 

over the effects of GHG emissions on global climate and the 

contention made by some parties in permit proceedings that 

EPA began regulating CO2 as early as the promulgation of 

monitoring and reporting requirements in EPA’s Part 75 

rules to implement section 821 of the CAA Amendments of 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

88

1990. The vast majority of public comments on the October 

7, 2009 notice focused on the regulation of GHGs under the 

PSD program. As a result, EPA recognizes that it is 

critically important at this time for the Agency to make 

clear when the requirements of the PSD permitting program 

for stationary sources will apply to GHGs. For the reasons 

discussed below, GHGs will initially become “subject to 

regulation” under the CAA on January 2, 2011, assuming that 

EPA issues final GHG emissions standards under section 

202(a) applicable to model year 2012 new motor vehicles as 

proposed. As a result, with that assumption, the PSD 

permitting program would apply to GHGs on that date. 

However, the Tailoring Rule, noted above, proposed various

options for phasing in PSD requirements for sources 

emitting GHGs in various amounts above 100 or 250 tons per 

year. Since EPA has not yet completed that rulemaking, 

today’s action concludes only that, under the approach 

envisioned for the vehicle standards, GHGs would not be 

considered “subject to regulation” (and no source would be 

subject to PSD permitting requirements for GHGs) earlier 

than January 2, 2011. The final Tailoring Rule will

address the applicability of PSD requirements for GHGemitting sources that are not presently subject to PSD 

permitting.
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

89

EPA’s determination that PSD will begin to apply to 

GHGs on January 2, 2011 is based on the following 

considerations: (1) the overall interpretation reflected in 

the PSD Interpretive Memo; (2) EPA’s conclusion in this 

notice that a pollutant becomes subject to regulation when 

controls “take effect,” and (3) the assumption that the 

agency will establish emissions standards for model year 

2012 vehicles when it completes the proposed LDV Rule. 

As proposed, the LDV Rule consists of two kinds of 

standards — fleet average standards determined by the 

emissions performance of a manufacturer’s fleet of various 

models, and separate vehicle standards that apply for the 

useful life of a vehicle to the various models that make up 

the manufacturer’s fleet. CAA section 203(a)(1) prohibits 

manufacturers from introducing a new motor vehicle into 

commerce unless the vehicle is covered by an EPA-issued 

certificate of conformity for the appropriate model year. 

Section 206(a)(1) of the CAA describes the requirements for 

EPA issuance of a certificate of conformity, based on a 

demonstration of compliance with the emission standards 

established by EPA under section 202 of the Act. A 

certification demonstration requires emission testing, and 

must be done for each model year. 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

90

The certificate covers both fleet average and vehicle 

standards, and the manufacturer has to demonstrate 

compliance with both of these standards for purposes of 

receiving a certificate of conformity. The demonstration 

for the fleet average is based on a projection of sales for 

the model year, and the demonstration for the vehicle 

standard is based on emissions testing and other 

information. 

Both the fleet average and vehicle standards in the 

LDV Rule will require that automakers control or limit GHG 

emissions from the tailpipes of these vehicles. As such, 

they clearly constitute “regulation” of GHGs under the

interpretation in the PSD Interpretive Memo. This view is 

consistent with the position originally expressed by EPA in 

1978 that a pollutant regulated in a Title II regulation is 

a pollutant subject to regulation. See 42 FR at 57481. 

However, the regulation of GHGs will not actually take 

effect upon promulgation of the LDV Rule or on the 

effective date of the LDV Rule when the provisions of the 

rule are incorporated into the Code of Federal Regulations. 

Under the LDV Rule, the standards for GHG emissions 

are not operative until the 2012 model year, which may 

begin as early as January 2, 2011. In accordance with the 

requirements of Title II of the CAA and associated 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

91

regulations, vehicle manufacturers may not introduce a 

model year 2012 vehicle into commerce without a model year 

2012 certificate of conformity. See CAA section 203(a)(1). 

A model year 2012 certificate only applies to vehicles 

produced during that model year, and the model year 

production period may begin no earlier than January 2, 

2011. See CAA section 202(b)(3)(A) and implementing 

regulations at 40 CFR 85.2302 through 85.2305. Thus, a 

vehicle manufacturer may not introduce a model year 2012 

vehicle into commerce prior to January 2, 2011. 

There will be no controls or limitations on GHG 

emissions from model year 2011 vehicles. The obligation on 

an automaker for a model year 2012 vehicle would be to have 

a certificate of conformity showing compliance with the 

emissions standards for GHGs when the vehicle is introduced 

into commerce, which can occur on or after January 2, 2011. 

Therefore, the controls on GHG emissions in the Light Duty 

Rule will not take effect until the first date when a 2012 

model year vehicle may be introduced into commerce. In 

other words, the compliance obligation under the LDV Rule 

does not occur until a manufacturer may introduce into 

commerce vehicles that are required to comply with GHG 

standards, which will begin with MY 2012 and will not occur 

before January 2, 2011. Since CAA section 203(a)(1)
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

92

prohibits manufacturers from introducing a new motor 

vehicle into commerce unless the vehicle is covered by an 

EPA-issued certificate of conformity for the appropriate 

model year, as of January 2, 2011, manufacturers will be 

precluded from introducing into commerce any model year 

2012 vehicle that has not been certified to meet the 

applicable standards for GHGs. 

This interpretation of when the GHG controls in the 

LDV Rule take effect, and therefore, make GHGs subject to 

regulation under the Act for PSD purposes, is consistent 

with the statutory language in section 202(a)(2) of the 

CAA. This section provides that “any regulation prescribed 

under paragraph (1) of this subsection (and any revision 

thereof) shall take effect after such period as the 

Administrator finds necessary to permit the development and 

application of the requisite technology, giving appropriate 

consideration to the cost of compliance within such 

period.” See 42 U.S.C. 7521(a)(2) (emphasis added). The 

final LDV Rule will apply to model years 2012 through 2016. 

The time leading up to the introduction of model year 2012 

is the time that EPA “finds necessary to permit the 

development and application of the requisite technology, 

giving appropriate consideration to the cost of compliance 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

93

within such period.” Model year 2012 is therefore when the 

GHG standards in the rule “take effect.” 

EPA does not agree with several commenters who have 

suggested that the GHG standards in the proposed LDV Rule 

would not take effect until October 1, 2011. The latter 

date appears to be based on how the National Highway 

Traffic Safety Administration (NHTSA) determines the 

beginning of the 2012 model year under the Energy Policy 

and Conservation Act (EPCA). Under EPCA, a more stringent 

CAFE standard must be prescribed by NHTSA at least 18 

months before the beginning of the model year. For 

purposes of this EPCA provision, NHTSA has historically 

construed the beginning of the model year to be October 1 

of the preceding calendar year. See 49 U.S.C. 32902(g)(2); 

74 FR 49454, 49644 n.447 (Sep. 28, 2009). Although EPA has 

endeavored to harmonize its section 202(a) standards with 

the NHTSA CAFE standards, EPA’s standards are promulgated 

under distinct legal authority in the CAA. Thus, the 

section 202(a) standards promulgated in the LDV Rule are 

not subject to EPCA or NHTSA’s interpretation of when a 

model year begins for purposes of EPCA. Under EPA’s

planned LDV Rule, model year 2012 vehicles may be 

introduced into commerce as early as January 2, 2011. 

Although as a practical matter, some U.S. automakers may 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

94

not begin introducing model year 2012 vehicles into 

commerce until later in 2011, they may nevertheless do so 

as early as January 2, 2011 under EPA’s regulations. 

Consistent with the discussion above, EPA construes the 

phrase “subject to regulation” in section 165(a)(4) and 

169(3) of the Act to mean that the BACT requirement applies 

when controls on a pollutant first apply to a regulated 

activity, and not the point at which an entity first 

engages in the regulated activity. In this instance, the 

regulated activity is the introduction of model year 2012 

vehicles into commerce. As of January 2, 2011, a 

manufacturer may not engage in this activity without 

complying with the applicable GHG standards. 

Likewise, EPA does not agree with commenters who 

argued that EPA should not consider the GHG controls in the 

LDV Rule to take effect until automakers have to 

demonstrate compliance with the fleet average standards at 

the end of the model year, based on actual vehicle model 

production. As discussed above, the LDV Rule includes both 

fleet average standards and vehicle standards that apply to 

individual vehicles throughout their useful lives. As 

discussed above, both of these standards for GHG emissions 

are operative on model year 2012 vehicles introduced into 

commerce on or after January 2, 2011. Thus, controls on 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

95

GHG emissions from automobiles will take effect prior to 

the date that a manufacturer must demonstrate compliance 

with the fleet average standards. The fact that the 

manufacturer demonstrates final compliance with the fleet 

average at a later date, based on production for the entire 

year, does not change the fact that their conduct was 

controlled by both the fleet average and the vehicle 

standards, and subject to regulation, prior to that date.

B. Implementation Concerns

A substantial number of commenters requested that EPA 

defer application of the PSD program requirements to GHGs 

based on various practical implementation considerations, 

and several of these comments argued that the CAA affords 

EPA the discretion to set an implementation date based on 

such concerns. EPA agrees that application of PSD program 

requirements to GHGs presents several significant 

implementation challenges for EPA, states and other 

entities that issue permits, and the sources that must 

obtain permits. Indeed, many of the public comments have 

illustrated the magnitude of the challenge beyond what is 

described in the proposed notice on reconsideration of the 

PSD Interpretive Memo and the proposed Tailoring Rule. 

In recognition of the substantial challenges 

associated with incorporating GHGs into the PSD program, 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

96

EPA’s preference would be to establish a specific date when 

the PSD permitting requirements initially apply to GHGs

based solely on these practical implementation 

considerations. However, EPA has not been persuaded that 

it has the authority to proceed in this manner. While EPA 

may have discretion as to the manner and time for 

regulating GHG emissions under the CAA, once EPA has 

determined to regulate a pollutant in some form under the 

Act and such regulation is operative on the regulated 

activity, the terms of the Act make clear that the PSD 

program is automatically applicable.

Nonetheless, given the substantial magnitude of the 

PSD implementation challenges presented by the regulation 

of GHGs, EPA proposed in the Tailoring Rule to at least 

temporarily limit the scope of GHG sources covered by the 

PSD program to ensure that permitting authorities can 

effectively implement it. EPA based the proposal primarily 

on two legal doctrines: the “absurd results” doctrine, 

which EPA proposed to apply on the basis that Congress did 

not envision that the PSD program would apply to the many 

small sources that emit GHGs; and the “administrative 

necessity” doctrine, which EPA proposed to apply because of 

the extremely large administrative burdens that permitting 

authorities would confront in permitting the GHG sources. 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

97

In comment on that action, as well as in comments on the 

PSD Interpretive Memo reconsideration proposal, EPA 

received numerous suggestions that it is necessary to limit 

the scope of sources covered at the time GHGs become 

subject to regulation. Commenters further stated that it 

is necessary to select a “trigger date” for GHG permitting

that takes into account the time needed for permitting 

authorities to adopt any scope-limiting measures (including 

the need to amend state law), to secure the necessary 

additional financial and other resources, and to hire and 

train the staff needed to respond to the increase in 

permitting workload. These comments make clear that more 

time will be needed beyond January 2, 2011 before 

permitting of many GHG stationary sources can begin. Thus, 

EPA will be taking additional action in the near future in 

the context of the Tailoring Rule to address GHG-specific 

circumstances that will exist beyond January 2, 2011.

C. Interim EPA Policy to Mitigate Concerns Regarding GHG 

Emissions from Construction or Modification of Large 

Stationary Sources

While EPA has concluded that GHGs will not become 

subject to regulation (and hence the PSD BACT requirement 

will not apply to them) earlier than January 2, 2011, 

permitting authorities that issue permits before January 2, 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

98

2011 are already in a position to, and should, use the 

discretion currently available under the BACT provisions of 

the PSD program to promote technology choices for control 

of criteria pollutants that will also facilitate the 

reduction of GHG emissions. More specifically, the CAA 

BACT definition requires permitting authorities selecting 

BACT to consider the reductions available through 

application of not only control methods, systems, and 

techniques, but also through production processes, and 

requires them to take into account energy, environmental, 

and economic impacts. Thus, the statute expresses the need 

for a comprehensive review of available pollution control 

methods when evaluating BACT that clearly requires 

consideration of energy efficiency. The consideration of 

energy efficiency is important because it contributes to 

reduction of pollutants to which the PSD requirements 

currently apply and have historically been applied. 

Further, although BACT does not now apply to GHG, BACT for 

other pollutants can, through application of more efficient 

production processes, indirectly result in lower GHG 

emissions. 

Neither the statute nor EPA regulations specify 

precisely how to address energy efficiency in BACT 

determinations, nor has EPA fully articulated how to take 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

99

climate considerations into account under the “energy, 

environmental, and economic impacts” considerations of 

BACT. Further, while EPA’s BACT guidance for currently 

regulated pollutants has addressed some facets of these 

issues, EPA believes that, given the potential importance 

of the indirect GHG benefits, it will be useful for EPA to 

summarize this guidance and further clarify it as necessary 

in order to further illustrate where PSD permitting 

authorities should be using existing BACT authority for 

pollutants that are presently regulated in ways that can 

indirectly address concerns about GHG emissions from large 

stationary sources. EPA is developing such guidance and 

plans to issue it in the near future.

D. Transition for Pending Permit Applications

Some commenters requested that EPA address the 

question of how the application of PSD requirements to GHGs

will affect applications for PSD permits that are pending 

on the date GHGs initially become “subject to regulation.” 

These commenters generally asked that EPA establish an

exclusion for any PSD permit application that was submitted 

in complete form before the date on which PSD begins to 

apply to GHGs.

In light of EPA’s conclusion that pollutants become 

subject to regulation for PSD purposes when control 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

100

requirements on that pollutant take effect and that such 

requirements will not take effect for GHGs until January 2, 

2011 if EPA finalizes the proposed LDV Rule as anticipated, 

EPA does not see any grounds to establish a transition 

period for permit applications that are pending before GHGs 

become subject to regulation. As a general matter, 

permitting and licensing decisions of regulatory agencies 

must 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, in the absence of an explicit 

transition or grandfathering provision in the applicable 

regulations (and assuming EPA finalizes the LDV Rule as 

planned), each PSD permit issued on or after January 2, 

2011 would need to contain provisions that satisfy the PSD

requirements that will apply to GHGs as of that date.

Under certain circumstances, EPA has previously 

allowed proposed new major sources and major modifications 

that have submitted a complete PSD permit application 

before a new requirement becomes applicable under PSD 

regulations, but have not yet received a final and 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

101

effective PSD permit, to continue relying on information 

already in the application rather than immediately having 

to amend applications to demonstrate compliance with the 

new PSD requirements. In such a way, these proposed 

sources and modifications were “grandfathered” or exempted 

from the new PSD requirements that would otherwise have 

applied to them.

For example, EPA adopted a grandfathering provision 

when it changed the indicator for the particulate matter 

NAAQS from total suspended particulate matter (TSP) to 

particulate matter less than 10 microns (PM10). The 

federal PSD regulations at 40 CFR 52.21(i)(1)(x) provide 

that the owners or operators of proposed sources or 

modifications that submitted a complete permit application 

before July 31, 1987, but did not yet receive the PSD 

permit, are not required to meet the requirements for PM10, 

but could instead satisfy the requirements for TSP that 

were previously in effect.

 In addition, EPA has allowed some grandfathering for

permit applications submitted before the effective date of 

an amendment to the PSD regulations establishing new 

maximum allowable increases in pollutant concentrations 

(also known as PSD “increments”). The federal PSD 

regulations at 40 CFR 52.21(i)(10) provide that proposed 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

102

sources or modifications that submitted a complete permit 

application before the effective date of the increment in 

the applicable implementation plan are not required to meet 

the increment requirements for PM10, but could instead 

satisfy the increment requirements for TSP that were 

previously in effect. Also, 40 CFR 52.21(i)(9) provides 

that sources or modifications that submitted a complete 

permit application before the provisions embodying the 

maximum allowable increase for nitrogen oxides (NOx)

14 took 

effect, but did not yet receive a final and effective PSD 

permit, are not required to demonstrate compliance with the 

new increment requirements to be eligible to receive the 

permit.

Under the particular circumstances presented by the 

forthcoming application of PSD requirements to GHGs, EPA 

does not see a justification for adopting an explicit 

grandfathering provision of the nature described above. 

Permit applications submitted prior to the publication of 

this notice should in most cases be issued prior to January 

2, 2011 and, thus, effectively have a transition period of 

nine months to complete processing before PSD requirements 

 

14

 The increments for emissions of the various oxides of 

nitrogen are expressed as concentrations of nitrogen 

dioxide (NO2). 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

103

become applicable. Additional time for completion of 

action on applications submitted prior to the onset of PSD 

requirements for GHGs therefore does not appear warranted 

to ensure a smooth transition and avoid delays for pending 

applications. To the extent any pending permit review 

cannot otherwise be completed within the next nine 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 completion of work on other pollutants 

without adding any additional delay to permit processing. 

Furthermore, the circumstances surrounding the onset 

of requirements for GHGs are distinguishable from prior 

situations where EPA has allowed grandfathering of 

applications that were deemed complete prior to the 

applicability new PSD permitting requirements. First, this 

action and the PSD Interpretive Memo do not involve a 

revision of the PSD permitting regulations but rather 

involves clarifications of how EPA interprets the existing 

regulatory text. This action articulates what has, in most 

respects, been EPA’s longstanding practice. It has been 

EPA’s consistent position since 1978 that regulation of a 

pollutant under Title II triggers PSD requirements for such 

a pollutant. See 42 FR 57481. Thus, permitting 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

104

authorities and permit applicants could reasonably 

anticipate that completion of the LDV Rule would trigger 

PSD and prepare for this action. Many commenters 

interpreted EPA’s October 7, 2009 notice as proposing to 

trigger PSD requirements within 60 days of the promulgation 

of the LDV Rule rather than the January 2, 2011 date that 

EPA has determined to be the date the controls in that rule 

take effect. Second, there are presently no regulatory 

requirements in effect for GHGs. On the other hand, at the 

time EPA moved from using TSP to using PM10 as the 

indicator for the particulate matter NAAQS, grandfathered 

sources were still required to satisfy PSD requirements for 

particulate matter based on the TSP indicator. Likewise, 

when EPA later updated the PSD increment for particulate 

matter to use the PM10 indicator, the grandfathered sources 

were still required to demonstrate that they would not 

cause or contribute to a violation of the particulate 

matter increment based on TSP. In the case of the adoption 

of the NO2 increment, grandfathered sources were still 

required to demonstrate that they would not cause or 

contribute to a violation of the NO2 NAAQS. In contrast, 

for GHGs, there are no measures currently in effect that 

serve to limit emission of GHGs from stationary sources.
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

105

For these reasons, EPA does not intend to promulgate a 

transition or grandfathering provision that exempts pending 

permit applications from the onset of GHG requirements in 

the PSD program. As discussed above, in the absence of 

such a provision, PSD permits that are issued on or after 

January 2, 2011 (in accordance with limitations promulgated 

in the upcoming Tailoring Rule) will be required to contain 

provisions that fulfill the applicable program requirements

for GHGs.

V. PSD Program Implementation by EPA and States

Consistent with the PSD Interpretive Memo, the refined 

interpretation reflected in this notice (that a pollutant 

subject to actual control becomes subject to regulation at 

the time such controls take effect) is an interpretation of 

the language in 40 CFR 52.21(b)(50) of EPA’s regulations. 

EPA will apply the PSD Interpretive Memo, with the 

refinement described above, when implementing the federal 

permitting program under 40 CFR 52.21. Furthermore, EPA

will expect that states that implement the federal PSD 

permit program under delegation from an EPA Regional Office 

will do the same. 

In addition, EPA will apply the interpretation 

reflected in this notice and the PSD Interpretive Memo in 

its oversight of existing state programs and review and 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

106

approval of new program submissions. Many states implement 

the PSD program pursuant to state laws that have been 

approved by EPA as part of the SIP, pursuant to a 

determination by EPA that such laws meet the PSD program 

criteria set forth in 40 CFR 51.166. The EPA regulation 

setting forth PSD program requirements for SIPs also 

includes the same definition of the term “regulated NSR 

pollutant” as the federal program regulation. See 40 CFR 

51.166(b)(49). Because this regulation uses the same 

language as contained in 40 CFR 52.21 and the same 

considerations apply to implementation of the PSD program 

under state laws, EPA will interpret section 51.166(b)(49) 

in the same manner as section 52.21(b)(50). However, in 

doing so, EPA will be mindful that permitting authorities 

in SIP approved states have some independent discretion to 

interpret state laws, provided those interpretations are 

consistent with minimum requirements under the federal law. 

To the extent approved SIPs contain the same language 

as used in 40 CFR 52.21(b)(50) or 40 CFR 51.166(b)(49), 

SIP-approved state permitting authorities may interpret 

that language in state regulations in the same manner 

reflected in the PSD Interpretive Memo and this notice. 

However, EPA will not seek to preclude actions to address 

GHGs in PSD permitting actions prior to January 2, 2011 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

107

where a state permitting authority feels it has the 

necessary legal foundation and resources to do so. 

EPA has not called on any states to make a SIP 

submission that addresses the interpretive issues addressed 

in this notice and the PSD Interpretive Memo. As long as 

states are applying their approved program regulations 

consistent with the minimum program elements established in 

40 CFR 51.166, EPA does not believe it will be necessary to 

issue a SIP call for all states to address this issue. 

However, permitting authorities in SIP-approved states do 

not have the discretion to apply state laws in a manner 

that does not meet the minimum federal standards in 40 CFR 

51.166, as interpreted and applied by EPA. Thus, if a 

state is not applying the PSD requirements to GHGs for the 

required sources after January 2, 2011, or lacks the legal 

authority to do so, EPA will exercise its oversight 

authority as appropriate to call for revisions to SIPs and 

to otherwise ensure sources do not commence construction 

without permits that satisfy the minimum requirements of 

the federal PSD program. 

To enable EPA to assess the consistency of a state’s 

action with any PSD program requirements for GHGs, states 

should ensure that the record for each PSD permitting 

decision addresses whether the state has elected to follow 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

108

EPA’s interpretation or believes it is appropriate to apply 

a different interpretation of state laws that is 

nonetheless consistent with the requirements of EPA’s PSD 

program regulations. In light of additional actions to be 

taken by EPA in the Tailoring Rule, states that issue 

permits in the near term may want to preserve the 

discretion to modify their approach after other EPA actions 

are finalized. In light of this contingency, one option 

states may consider is to establish that the state will not 

interpret its laws to require PSD permits for sources that 

are not required to obtain PSD permits under EPA 

regulations. 

VI. Application of the Title V Program to Sources of GHGs

Although the PSD Interpretive Memorandum and the 

October 7, 2009 proposed reconsideration notice addressed 

only PSD permitting issues, EPA received several comments 

on the proposed reconsideration that also addressed the 

application of Title V permitting requirements to GHGs. 

Most of these comments urged EPA to apply the same approach 

for determining major source applicability for Title V

permitting that EPA applies to PSD. EPA has in fact been 

following the PSD approach in many respects. As with the 

PSD program, currently GHGs are not considered to be 

subject to regulation and have not been considered to 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

109

trigger applicability under Title V. EPA discussed this in 

the preamble to the proposed Tailoring Rule as described 

below. See 74 FR at 55300 n.8. 

Title V requires, among other things, that any “major 

source” – defined, as relevant here, under CAA sections

302(j) and 501(2)(b), 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...” – apply for a Title V permit. EPA 

interprets this requirement to apply to sources of 

pollutants “subject to regulation” under the Act. EPA 

previously articulated its interpretation that this Title V

permitting requirement applies to “pollutants subject to 

regulation” in a 1993 memorandum from EPA’s air program. 

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) (“Wegman Memo”). EPA continues to maintain this 

interpretation. 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 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

110

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 Memo of the 

definition of “air pollutant” in CAA section 302(g) is in 

question in light of Massachusetts (finding this definition 

to be “sweeping”), EPA believes the core rationale for its 

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 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 applying this interpretation under Title V, the 

Wegman Memo also explains that EPA does not consider CO2 to 

be a pollutant subject to regulation based on the 

monitoring and reporting requirements of section 821 of the 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

111

Clean Air Act Amendments of 1990. As articulated in 

numerous orders issued by EPA in response to petitions to 

object to Title V permits, EPA views the Title V operating 

permits program as a vehicle for ensuring that air quality 

control requirements are appropriately applied to facility 

emission units and that compliance with these requirements 

is assured. See, e.g., In the Matter of Fort James Camas 

Mill, Petition No. X-1999-1 at 3-4 (Dec. 22, 2000); In the 

Matter of Cash Creek Generation, LLC, Petition Nos. IV2008-1 & IV-2008-2 at 2 (Dec. 15, 2009). The Wegman Memo 

points out that section 821 involves reporting and study of 

emissions, but is not related to actual control of 

emissions. Since the reporting requirements of section 821 

have no connection to existing air quality control 

requirements, it is appropriate not to treat them as making 

CO2 “subject to regulation” for purposes of Title V. Cf.

Section 504(b) (providing EPA authority to specify 

requirements for “monitoring and analysis of pollutants 

regulated under this Act.”).

EPA has not previously explicitly considered the 

question of when a pollutant becomes “subject to 

regulation” under this established interpretation of the 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

112

Title V requirements.15 EPA received comments in this 

reconsideration proceeding specifically on the question of 

when a pollutant becomes subject to regulation for purposes 

of Title V. In light of these comments, and the decision 

to adopt a “takes effect” approach for PSD, EPA believes it 

is appropriate to address this issue for Title V with 

respect to GHG. 

EPA is mindful of the different purposes for the PSD 

and Title V programs under the statute. While PSD results 

in substantive control requirements as necessary to meet 

air quality goals, Title V is focused on identifying, 

collecting, and assuring compliance with other Act 

requirements (including PSD), and generally does not itself 

result in new control requirements. Nevertheless, as 

reflected in the Wegman Memo, the two programs have 

historically followed the same approach for determining 

when a pollutant is “subject to regulation.”16 EPA believes

that a “takes effect” approach to the triggering of new 

 

15

 The preamble to the proposed Tailoring Rule implicitly 

assumed that a pollutant will become “subject to 

regulation” for PSD and Title V at the same time (and, in 

one case, suggests that time will be on promulgation of the 

LDV Rule). The latter statement was based on the 

interpretation in the current PSD Interpretive Memorandum, 

but failed to note that EPA had proposed to change that 

interpretation in the October 7, 2009 notice (signed the 

same day as the proposed Tailoring Rule). See 74 FR at 

55300 and 55340-41. 

16 Wegman Memo at 5.
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

113

pollutants is desirable and appropriate for Title V, for 

many of the reasons described above for PSD. EPA is

therefore generally inclined to follow the approach adopted 

today for PSD, and concludes that GHGs are “subject to 

regulation,” for purposes of determining whether a source 

of GHGs is a “major source” for Title V, no earlier than 

the date on which a control requirement for GHGs “takes 

effect.” EPA currently anticipates that the LDV Rule will 

be the first control requirement for GHGs to take effect. 

Under this approach, as with PSD, if the LDV Rule takes 

effect as of January 2, 2011, a source that is not 

currently subject to Title V for its GHG emissions could 

become so no earlier than January 2, 2011.17 

Finally, as with PSD, EPA expects that, beyond January 

2, 2011, there will remain significant administrative and 

programmatic considerations associated with permitting of 

GHGs under Title V. In light of this, as discussed above 

with regard to PSD permitting, EPA will be further 

addressing in the final Tailoring Rule (to be promulgated 

in the near future) the manner in which sources can become 

subject to Title V as a result of their GHG emissions. 

VII. Statutory Authority

 

17 This date is also when EPA expects the first CAA control 

program addressing GHGs at stationary sources (i.e., the 

PSD program) to be in place. 
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

114

The statutory authority for this action is provided by 

section 553 of the Administrative Procedure Act (5 U.S.C. 

553) and the Clean Air Act (CAA), as amended (42 U.S.C. 

7401 et seq.). Relevant portions of the CAA include, but 

are not necessarily limited to, sections 101, 165, 169,

301, 302, 307, 501, 502, and 504 (42 U.S.C. 7401, 7475, 

7479, 7601, 7602, 7607, 7661, 7661a, and 7661d).
Draft – Do Not Cite or Quote March 25, 2010

For Internal EPA Deliberations Only

115

Page 115 of 115 - Reconsideration of Interpretation of 

Regulations that Determine Pollutants Covered by Clean Air 

Act Permitting Programs

VIII. Judicial Review

This action is a nationally applicable final action 

under section 307(b) of the Act. As a result, any legal 

challenges to this action must be brought to the United 

States Court of Appeals for the District of Columbia 

Circuit by [INSERT DATE 60 DAYS FROM DATE OF PUBLICATION].

_______________________________

Dated:

_______________________________

Lisa P. Jackson,

Administrator.