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Wednesday, 


July 30, 2008 


Part II 

Environmental 

Protection Agency 

40 CFR Chapter I 

Regulating Greenhouse Gas Emissions 

Under the Clean Air Act; Proposed Rule 

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ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Chapter I 

[EPA–HQ–OAR–2008–0318; FRL–8694–2] 

RIN 2060–AP12 

Regulating Greenhouse Gas 

Emissions Under the Clean Air Act 

AGENCY: Environmental Protection 

Agency (EPA). 


ACTION: Advance Notice of Proposed 


Rulemaking. 


SUMMARY: This advance notice of 

proposed rulemaking (ANPR) presents 

information relevant to, and solicits 

public comment on, how to respond to 

the U.S. Supreme Court’s decision in 

Massachusetts v. EPA. In that case, the 

Supreme Court ruled that the Clean Air 

Act (CAA or Act) authorizes regulation 

of greenhouse gases (GHGs) because 

they meet the definition of air pollutant 

under the Act. In view of the potential 

ramifications of a decision to regulate 

GHGs under the Act, the notice reviews 

the various CAA provisions that may be 

applicable to regulate GHGs, examines 

the issues that regulating GHGs under 

those provisions may raise, provides 

information regarding potential 

regulatory approaches and technologies 

for reducing GHG emissions, and raises 

issues relevant to possible legislation 

and the potential for overlap between 

legislation and CAA regulation. In 

addition, the notice describes and 

solicits comment on petitions the 

Agency has received to regulate GHG 

emissions from ships, aircraft and 

nonroad vehicles such as farm and 

construction equipment. Finally, the 

notice discusses several other actions 

concerning stationary sources for which 

EPA has received comment regarding 

the regulation of GHG emissions. 

The implications of a decision to 

regulate GHGs under the Act are so farreaching that a number of other federal 

agencies have offered critical comments 

and raised serious questions during 

interagency review of EPA’s ANPR. 

Rather than attempt to forge a consensus 

on matters of great complexity, 

controversy, and active legislative 

debate, the Administrator has decided 

to publish the views of other agencies 

and to seek comment on the full range 

of issues that they raise. These 

comments appear in the Supplemental 

Information, below, followed by the 

June 17 draft of the ANPR preamble 

prepared by EPA, to which the 

comments apply. None of these 

documents represents a policy decision 

by the EPA, but all are intended to 

advance the public debate and to help 

inform the federal government’s 

decisions regarding climate change. 

DATES: Comments must be received on 

or before November 28, 2008. 

ADDRESSES: Submit your comments, 

identified by Docket ID No. EPA–HQ– 

OAR–2008–0318, by one of the 

following methods: 

• www.regulations.gov: Follow the 

on-line instructions for submitting 

comments. 

• E-mail: a-and-rDocket@epa.gov. 

• Fax: 202–566–9744. 

• Mail: Air and Radiation Docket and 

Information Center, Environmental 

Protection Agency, Mailcode: 2822T, 

1200 Pennsylvania Ave., NW., 

Washington, DC 20460. In addition, 

please mail a copy of your comments on 

the information collection provisions to 

the Office of Information and Regulatory 

Affairs, Office of Management and 

Budget (OMB), Attn: Desk Officer for 

EPA, 725 17th St., NW., Washington, DC 

20503. 

• Hand Delivery: EPA Docket Center, 

EPA West Building, Room 3334, 1301 

Constitution Ave., NW., Washington 

DC, 20004. Such deliveries are only 

accepted during the Docket’s normal 

hours of operation, and special 

arrangements should be made for 

deliveries of boxed information. 

Instructions: Direct your comments to 

Docket ID No. EPA–HQ–OAR–2008– 

0318. EPA’s policy is that all comments 

received will be included in the public 

docket without change and may be 

made available online at 

www.regulations.gov, including any 

personal information provided, unless 

the comment includes information 

claimed to be Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

Do not submit information that you 

consider to be CBI or otherwise 

protected through www.regulations.gov 

or e-mail. The www.regulations.gov Web 

site is an ‘‘anonymous access’’ system, 

which means EPA will not know your 

identity or contact information unless 

you provide it in the body of your 

comment. If you send an e-mail 

comment directly to EPA without going 

through www.regulations.gov your 

e-mail address will be automatically 

captured and included as part of the 

comment that is placed in the public 

docket and made available on the 

Internet. If you submit an electronic 

comment, EPA recommends that you 

include your name and other contact 

information in the body of your 

comment and with any disk or CD–ROM 

you submit. If EPA cannot read your 

comment due to technical difficulties 

and cannot contact you for clarification, 

EPA may not be able to consider your 

comment. Electronic files should avoid 

the use of special characters, any form 

of encryption, and be free of any defects 

or viruses. For additional information 

about EPA’s public docket visit the EPA 

Docket Center homepage at http:// 

www.epa.gov/epahome/dockets.htm. 

For additional instructions on 

submitting comments, go to Section VII, 

Public Participation, of the 

SUPPLEMENTARY INFORMATION section of 

this document. 

Docket: All documents in the docket 

are listed in the www.regulations.gov 

index. Although listed in the index, 

some information is not publicly 

available, e.g., CBI or other information 

whose disclosure is restricted by statute. 

Certain other material, such as 

copyrighted material, will be publicly 

available only in hard copy. Publicly 

available docket materials are available 

either electronically in 

www.regulations.gov or in hard copy at 

the Air and Radiation Docket and 

Information Center, EPA/DC, EPA West, 

Room 3334, 1301 Constitution Ave., 

NW., Washington, DC. The Public 

Reading Room is open from 8:30 a.m. to 

4:30 p.m., Monday through Friday, 

excluding legal holidays. The telephone 

number for the Public Reading Room is 

(202) 566–1744, and the telephone 

number for the Air Docket is (202) 566– 

1742. 

FOR FURTHER INFORMATION CONTACT: Joe 

Dougherty, Office of Air and Radiation, 

1200 Pennsylvania Ave., NW., 

Washington, DC 20460; telephone 

number: (202) 564–1659; fax number: 

(202) 564–1543; e-mail address: 

Dougherty.Joseph-J@epa.gov. 

SUPPLEMENTARY INFORMATION: 

Preface From the Administrator of the 

Environmental Protection Agency 

In this Advanced Notice of Proposed 

Rulemaking (ANPR), the Environmental 

Protection Agency (EPA) seeks comment 

on analyses and policy alternatives 

regarding greenhouse gas (GHG) effects 

and regulation under the Clean Air Act. 

In particular, EPA seeks comment on 

the document entitled ‘‘Advanced 

Notice of Proposed Rulemaking: 

Regulating Greenhouse Gas Emissions 

under the Clean Air Act’’ and 

observations and issues raised by other 

federal agencies. This notice responds to 

the U.S. Supreme Court’s decision in 

Massachusetts v. EPA and numerous 

petitions related to the potential 

regulation of greenhouse gas emissions 

under the Clean Air Act. 

EPA’s analyses leading up to this 

ANPR have increasingly raised 

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questions of such importance that the 

scope of the agency’s task has continued 

to expand. For instance, it has become 

clear that if EPA were to regulate 

greenhouse gas emissions from motor 

vehicles under the Clean Air Act, then 

regulation of smaller stationary sources 

that also emit GHGs—such as apartment 

buildings, large homes, schools, and 

hospitals—could also be triggered. One 

point is clear: The potential regulation 

of greenhouse gases under any portion 

of the Clean Air Act could result in an 

unprecedented expansion of EPA 

authority that would have a profound 

effect on virtually every sector of the 

economy and touch every household in 

the land. 

This ANPR reflects the complexity 

and magnitude of the question of 

whether and how greenhouse gases 

could be effectively controlled under 

the Clean Air Act. This document 

summarizes much of EPA’s work and 

lays out concerns raised by other federal 

agencies during their review of this 

work. EPA is publishing this notice 

today because it is impossible to 

simultaneously address all the agencies’ 

issues and respond to our legal 

obligations in a timely manner. 

I believe the ANPR demonstrates the 

Clean Air Act, an outdated law 

originally enacted to control regional 

pollutants that cause direct health 

effects, is ill-suited for the task of 

regulating global greenhouse gases. 

Based on the analysis to date, pursuing 

this course of action would inevitably 

result in a very complicated, timeconsuming and, likely, convoluted set of 

regulations. These rules would largely 

pre-empt or overlay existing programs 

that help control greenhouse gas 

emissions and would be relatively 

ineffective at reducing greenhouse gas 

concentrations given the potentially 

damaging effect on jobs and the U.S. 

economy. 

Your input is important. I am 

committed to making the data and 

models EPA is using to form our 

policies transparent and available to the 

public. None of the views or alternatives 

raised in this notice represents Agency 

decisions or policy recommendations. It 

is premature to do so. Rather, I am 

publishing this ANPR for public 

comment and review. In so doing, I am 

requesting comment on the views of 

other federal agencies that are presented 

below including important legal 

questions regarding endangerment. I 

encourage the public to (1) understand 

the magnitude and complexity of the 

Supreme Court’s direction in 

Massachusetts v. EPA and (2) comment 

on the many questions raised in this 

notice. 

BILLING CODE 6560–50–P 

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Department of Transportation Advance Notice of Proposed view of the very short time the 

Rulemaking ‘‘Regulating Greenhouse Department has had to review the The Department of Transportation Gas Emissions under the Clean Air document, DOT will offer a longer, more (‘‘the Department’’ or ‘‘DOT’’) hereby Act,’’ which was submitted to the Office detailed response by the close of the submits the following preliminary of Management and Budget on June 17, comment period. comments on the Environmental 

Protection Agency (‘‘EPA’’) staff’s draft 2008 (‘‘June 17 draft’’ or ‘‘draft’’). In 

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General Considerations 

In response to Massachusetts v. EPA 

and multiple rulemaking petitions, the 

EPA must consider whether or not 

greenhouse gases may reasonably be 

anticipated to endanger public health or 

welfare, within the meaning of the 

Clean Air Act. Such a determination 

requires the resolution of many novel 

questions, such as whether global or 

only U.S. effects should be considered, 

how imminent the anticipated 

endangering effects are, and how 

greenhouse gases are to be quantified, to 

name just a few. Without resolving any 

of these questions, let alone actually 

making an endangerment finding, the 

June 17 draft presents a detailed 

discussion of regulatory possibilities. In 

other words, the draft suggests an array 

of specific regulatory constructs in the 

transportation sector under the Clean 

Air Act without the requisite 

determinations that greenhouse gas 

emissions endanger public health or 

welfare and that regulation is feasible 

and appropriate. In fact, to propose 

specific regulations prejudices those 

critical determinations and reveals a 

predilection for regulation that may not 

be justified. 

Policymakers and the public must 

consider a broader question: even if 

greenhouse gas regulation using a law 

designed for very different 

environmental challenges is legally 

permissible, is it desirable? We contend 

that it is not. We are concerned that 

attempting to regulate greenhouse gases 

under the Clean Air Act will harm the 

U.S. economy while failing to actually 

reduce global greenhouse gas emissions. 

Clean Air Act regulation would 

necessarily be applied unevenly across 

sources, sectors, and emissions-causing 

activities, depending on the particular 

existing statutory language in each 

section of the Act. Imposing Clean Air 

Act regulations on U.S. businesses, 

without an international approach that 

involves all of the world’s major 

emitters, may well drive U.S. 

production, jobs, and emissions 

overseas, with no net improvement to 

greenhouse gas concentrations. 

The Department believes that the 

Nation needs a well considered and 

sustainable domestic climate change 

policy that takes into account the best 

climatological, technical and economic 

information available. That policy—as 

with any significant matter involving 

Federal law and regulation—should also 

reflect a national consensus that the 

actions in question are justified and 

effective, and do not bring with them 

substantial unintended consequences or 

unacceptable economic costs. Reducing 

greenhouse gas emissions across the 

various sectors of our economy is an 

enormous challenge that can be met 

effectively only through the setting of 

priorities and the efficient allocation of 

resources in accordance with those 

priorities. 

It is an illusion to believe that a 

national consensus on climate policy 

can be forged via a Clean Air Act 

rulemaking. Guided by the provisions of 

a statute conceived for entirely different 

purposes—and unconstrained by any 

calculation of the costs of the specific 

regulatory approaches it contemplates— 

such a rulemaking is unlikely to 

produce that consensus. 

Administrator Johnson of the EPA 

said in a recent speech, ‘‘now is the time 

to begin the public debate and upgrade 

[the Clean Air Act’s] components.’’ 

Administrator Johnson has called for 

fundamental changes to the Clean Air 

Act ‘‘to consider benefits, costs, risk 

tradeoffs and feasibility in making 

decisions about how to clean the air.’’ 

This, of course, is a criticism of the 

Clean Air Act’s ability to address its 

intended purposes, let alone purposes 

beyond those Congress contemplated. 

As visualized in the June 17 draft, the 

U.S. economy would be subjected to a 

complex set of new regulations 

administered by a handful of people 

with little meaningful public debate and 

no ability to consider benefits, costs, 

risk tradeoffs and feasibility. This is not 

the way to set public policy in an area 

critical to our environment and to our 

economy. 

As DOT and its fellow Cabinet 

departments argue in the cover letter to 

these Comments, using the Clean Air 

Act as a means for regulating 

greenhouse gas emissions presents 

insurmountable obstacles. For instance, 

Clean Air Act provisions that refer to 

specific pollutants, such as sulfur 

dioxide, have been updated many times 

over the past three decades. In contrast, 

the language referring to unspecified 

pollutants, which would apply to 

greenhouse gases, retains, in fossil form, 

the 1970s idea that air pollution is a 

local and regional scale problem, with 

pollution originating in motor vehicles 

and a few large facilities, for which 

‘‘end of pipe’’ control technologies exist 

or could be invented at acceptable cost. 

Greenhouse gas emissions have global 

scale consequences, and are emitted 

from millions of sources around the 

world. If implemented, the actions that 

the draft contemplates would 

significantly increase energy and 

transportation costs for the American 

people and U.S. industry with no 

assurance that the regulations would 

materially affect global greenhouse gas 

atmospheric concentrations or 

emissions. 

Transportation-Related Considerations 

As the Nation’s chief transportation 

regulatory agency, the Department has 

serious concerns about the draft’s 

approach to mobile sources, including, 

but not limited to, the autos, trucks, and 

aircraft that Section VI of the draft 

considers regulating. 

Title II of the Clean Air Act permits 

the use of technology-forcing regulation 

of mobile sources. Yet Section VI of the 

draft appears to presume an 

endangerment finding with respect to 

emissions from a variety of mobile 

sources and then strongly suggests the 

EPA’s intent to regulate the 

transportation sector through an array of 

source-specific regulations. Thus, much 

of Section VI is devoted to describing 

and requesting information appropriate 

to setting technology-forcing 

performance standards for particular 

categories of vehicles and engines based 

on an assessment of prospective vehicle 

and engine technology in each source 

category. 

In its focus on technology and 

performance standards, the draft spends 

almost no effort on assessing how 

different regulatory approaches might 

vary in their effectiveness and 

compliance costs. This despite the fact 

that picking an efficient, effective, and 

relatively unintrusive regulatory scheme 

is critically important to the success of 

any future program—and far more 

important at this stage than identifying 

the cost-effectiveness of speculative 

future technologies. 

The draft fails to identify the market 

failures or environmental externalities 

in the transportation sector that 

regulation might correct, and, in turn, 

what sort of regulation would be best 

tailored to correcting a specific 

situation. Petroleum accounts for 99 

percent of the energy use and 

greenhouse gas emissions in the 

transportation sector. Petroleum prices 

have increased fivefold since 2002. 

Rising petroleum prices are having a 

powerful impact on airlines, trucking 

companies, marine operators, and 

railroads, and on the firms that supply 

vehicles and engines to these industries. 

Petroleum product prices have doubled 

in two years, equivalent to a carbon tax 

of $200 per metric ton, far in excess of 

the cost of any previously contemplated 

climate change measure. Operators are 

searching for every possible operating 

economy, and capital equipment 

manufacturers are fully aware that fuel 

efficiency is a critical selling point for 

new aircraft, vehicles, and engines. At 

this point, regulations could provide no 

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more powerful incentive for commercial 

operators than that already provided by 

fuel prices. Badly designed performance 

standards would be at best non-binding 

(if private markets demand more 

efficiency than the regulatory standard) 

or would actually undermine efficient 

deployment of fuel efficient 

technologies (if infeasible or non-costeffective standards are required). 

Light Duty Vehicles 

On December 19, 2007, the President 

signed the Energy Independence and 

Security Act (‘‘EISA’’), which requires 

the Department to implement a new fuel 

economy standard for passenger cars 

and light trucks. The Department’s 

National Highway Traffic Safety 

Administration (‘‘NHTSA’’) has moved 

swiftly to comply with this law, issuing 

a Notice of Proposed Rulemaking 

(‘‘NPRM’’) on April 22, 2008. The 

comment period for this NPRM closed 

on July 1, 2008. If finalized in its 

present form, the rule would reduce 

U.S. carbon dioxide emissions by an 

estimated 521 million metric tons over 

the lifetime of the regulated vehicles. 

This NPRM is only the latest in a 

series of NHTSA Corporate Average 

Fuel Economy (‘‘CAFE’’) program rules 

proposed or implemented during this 

Administration. Indeed, these proposals 

together represent the most aggressive 

effort to increase the fuel economy (and 

therefore to reduce the emissions) of the 

U.S. fleet since the inception of the 

CAFE program in 1975. 

In enacting EISA, Congress made 

careful and precise judgments about 

how standards are to be set for the 

purpose of requiring the installation of 

technologies that reduce fuel 

consumption. Although almost all 

technologies that reduce carbon dioxide 

emissions do so by reducing fuel 

consumption, the EPA staff’s June 17 

draft not only ignores those 

congressional judgments, but promotes 

approaches inconsistent with those 

judgments. 

The draft includes a 100-page analysis 

of a tailpipe carbon dioxide emissions 

rule that has the effect of undermining 

NHTSA’s carefully balanced approach 

under EISA. Because each gallon of 

gasoline contains approximately the 

same amount of carbon, and essentially 

all of the carbon in fuel is converted to 

carbon dioxide, a tailpipe carbon 

dioxide regulation and a fuel economy 

regulation are essentially equivalent: 

they each in effect regulate fuel 

economy. 

In the draft’s analysis of light duty 

vehicles, the external benefits of 

reducing greenhouse gas emissions 

account for less than 15 percent of the 

total benefits of improving vehicle 

efficiency, with the bulk of the benefits 

attributable to the market value of the 

gasoline saved. Only rather small 

marginal reductions in fuel 

consumption or greenhouse gas 

emissions would be justified by external 

costs in general, and climate change 

benefits in particular. Thus, the draft 

actually describes fuel economy 

regulations, which generate primarily 

fuel savings benefits, under the rubric of 

environmental policy. 

Though it borrows an analytical 

model provided by NHTSA, the draft 

uses differing assumptions and 

calculates the effects of the Agency’s 

standard differently than does the rule 

NHTSA proposed pursuant to EISA. The 

draft conveys the incorrect impression 

that the summary numbers such as fuel 

savings, emission reductions, and 

economic benefits that are presented in 

the draft are comparable with those 

presented in NHTSA’s NPRM, when in 

fact the draft’s numbers are calculated 

differently and, in many cases, using 

outdated information. 

The draft does not include the 

provisions of EISA or past, current, or 

future CAFE rulemakings in its baseline 

analysis of light duty vehicle standards. 

Thus, the draft inflates the apparent 

benefits of a Clean Air Act light duty 

vehicle rulemaking when much of the 

benefits are already achieved by laws 

and regulations already on the books. 

The draft fails to ask whether additional 

regulation of light duty vehicles is 

necessary or desirable, nor gives any 

serious consideration how Clean Air Act 

and EISA authorities might be 

reconciled. 

The draft comprehensively 

mischaracterizes the available evidence 

on the relationship between safety and 

vehicle weight. In the draft, EPA asserts 

that the safety issue is ‘‘very complex,’’ 

but then adds that it disagrees with the 

views of the National Academy of 

Sciences (NAS) and NHTSA’s safety 

experts, in favor of the views of a twoperson minority on the NAS panel and 

a single, extensively criticized article. 

Much of the text of this portion of the 

draft is devoted to a point-by-point 

recitation and critique of various 

economic and technological 

assumptions that NHTSA, the Office of 

Management and Budget, and other 

Federal agencies—among them EPA— 

painstakingly calculated over the past 

year, but that EPA now unilaterally 

revises for this draft. It is not clear why 

it is necessary or desirable to use one set 

of analytical assumptions, while the rest 

of the Federal Government uses another. 

The public interest is ill-served by 

having two competing proposals, put 

forth by two different agencies, both 

purporting to regulate the same industry 

and the same products in the same ways 

but with differing stringencies and 

enforcement mechanisms, especially 

during a time of historic volatility in the 

auto industry and mere months after 

Congress passed legislation tasking 

another agency with regulation in this 

area. The detailed analysis of a light 

duty vehicle rule in the draft covers the 

same territory as does NHTSA’s current 

rulemaking—and is completely 

unnecessary for the purposes of an 

endangerment finding or for seeking 

comment on the best method of 

regulating mobile source emissions. 

Setting Air Quality Standards 

The discussion of the process for 

setting National Ambient Air Quality 

Standards (‘‘NAAQS’’) and development 

of state/Federal implementation plans 

for greenhouse gases is presented as an 

option for regulating stationary sources, 

and is placed in the discussion of 

stationary sources. The draft describes a 

scenario in which the entire country is 

determined to be in nonattainment. 

Such a finding would reach beyond 

power plants and other installations to 

include vital transportation 

infrastructure such as roads, bridges, 

airports, ports, and transit lines. At a 

time when our country critically needs 

to modernize our transportation 

infrastructure, the NAAQS that the draft 

would establish—and the development 

of the implementation plans that would 

follow—could seriously undermine 

these efforts. Because the Clean Air 

Act’s transportation and general 

conformity requirements focus on local 

impacts, these procedures are not 

capable of assessing and reducing 

impacts of global pollutants without 

substantial disruption and waste. 

If the entire Nation were found to be 

in nonattainment for carbon dioxide or 

multiple greenhouse gases, and 

transportation and general conformity 

requirements applied to Federal 

activities, a broad range of those 

activities would be severely disrupted. 

For example, application of 

transportation conformity requirements 

to all metropolitan area transportation 

plans would add layers of additional 

regulations to an already arduous 

Federal approval process and expand 

transportation-related litigation without 

any assurance that global greenhouse 

gas emissions would be reduced. 

Indeed, needed improvements to 

airports, highways and transit systems 

that would make the transportation 

system more efficient, and thus help 

reduce greenhouse gas and other 

emissions, could be precluded due to 

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difficulties in demonstrating 

conformity. Though the potential for 

such widespread impact is clear from 

even a cursory reading of the draft, it 

ignores the issue entirely. 

For these reasons, we question the 

practicality and value of establishing 

NAAQS for greenhouse gases and 

applying such a standard to new and 

existing transportation infrastructure 

across the Nation. 

Heavy Duty Vehicles 

The draft contemplates establishing a 

greenhouse gas emissions standard for 

heavy duty vehicles such as tractortrailers. The draft’s discussion of trucks 

makes no mention of the National 

Academy of Sciences study required by 

Section 108 of EISA that would evaluate 

technology to improve medium and 

heavy-duty truck fuel efficiency and 

costs and impacts of fuel efficiency 

standards that may be developed under 

49 U.S.C. Section 32902(k), as amended 

by section 102(b) of EISA. This section 

directs DOT, in consultation with EPA 

and DOE, to determine test procedures 

for measuring and appropriate 

procedures for expressing fuel efficiency 

performance, and to set standards for 

medium- and heavy-duty truck 

efficiency. DOT believes that it is 

premature to review potential 

greenhouse gas emission standards for 

medium- and heavy-duty trucks in light 

of this study and anticipated future 

standard-setting action under EISA, and, 

in any event, that it is problematic to do 

so with no accounting of the costs that 

these standards might impose on the 

trucking industry. 

In the case of light duty vehicles, it 

can be argued that consumers do not 

accurately value fuel economy, and 

regulation can correct this failure. 

Heavy-duty truck operators, on the other 

hand, are acutely sensitive to fuel costs, 

and their sensitivity is reflected in the 

product offerings of engine and vehicle 

manufacturers. The argument for fuel 

economy or tailpipe emissions 

regulation is much harder to make than 

in the case of light duty vehicles. 

The medium and heavy truck market 

is more complex and diverse than the 

light duty vehicle market, incorporating 

urban delivery vans, on-road 

construction vehicles, work trucks with 

power-using auxiliaries, as well as the 

ubiquitous long-haul truck-trailer 

combinations. Further, a poorly 

designed performance standard that 

pushes operators into smaller vehicles 

may result in greater and not fewer of 

the emissions the draft intends to 

reduce. Because freight-hauling 

performance is maximized by matching 

the vehicle to the load, one large, high 

horsepower truck will deliver a large/ 

heavy load at a lower total and fuel cost 

than the same load split into two 

smaller, low horsepower vehicles. 

Railroads 

The Clean Air Act includes a special 

provision for locomotives, Section 

213(a)(5), which permits EPA to set 

emissions standards based on the 

greatest emission reduction achievable 

through available technology. The text 

of the draft suggests that EPA may 

consider such standards to include 

hybrid diesel/electric locomotives and 

the application of dynamic braking. 

As in other sectors, it is hard to 

imagine how a technology-forcing 

regulation can create greater incentives 

than provided by recent oil prices. And 

sensible public policy dictates caution 

against imposing unrealistic standards 

or mandating technology that is not 

cost-effective, not reliable, or not 

completely developed. 

Marine Vessels 

The International Maritime 

Organization (‘‘IMO’’) sets voluntary 

standards for emissions from engines 

used in ocean-going marine vessels and 

fuel quality through the MARPOL 

Annex VI (International Convention for 

the Prevention of Pollution from Ships, 

1973, as modified by the Protocol of 

1978 relating thereto (‘‘MARPOL’’), 

Annex VI, Prevention of Air Pollution 

from Ships). Member parties apply these 

voluntary standards through national 

regimes. The IMO is also working to 

consider ways to address greenhouse 

gas emissions from vessels and marine 

transportation, including both vesselbased and operational measures. The 

U.S. is a participant in these 

discussions. We believe that the 

discussion of ways to reduce 

greenhouse gas emissions from vessels 

and marine transportation should 

reference the IMO voluntary measures 

and discussions, and need not address 

detailed technological or operational 

measures. 

Aviation 

The draft includes a lengthy 

discussion of possible methods by 

which to regulate the greenhouse gas 

emissions of aircraft. For all its detail, 

however, the draft does not provide 

adequate information (and in some 

instances is misleading) regarding 

aviation emissions related to several 

important areas: (1) The overwhelming 

market pressures on commercial airlines 

to reduce fuel consumption and 

therefore carbon dioxide emissions and 

the general trends in aviation emissions 

growth; (2) expected technology and 

operational improvements being 

developed under the interagency Next 

Generation Air Transportation System 

(‘‘NextGen’’) program; (3) the work and 

role of the International Civil Aviation 

Organization (‘‘ICAO’’) in aviation 

environmental matters; (4) limits on 

EPA’s ability to impose operational 

controls on aviation emission; and (5) 

the scientific uncertainty regarding 

greenhouse gas emissions from aircraft. 

First, the draft does not provide the 

public an accurate picture of aviation 

emissions growth. Compared to 2000, 

U.S. commercial aviation in 2006 

moved 12 percent more passengers and 

22 percent more freight while burning 

less fuel, thereby reducing carbon 

output. Further, the draft’s projections 

of growth in emissions are overstated 

because they do not reflect technology 

improvements in aircraft or air traffic 

operations and apparently do not take 

into account the industry’s ongoing 

contraction or even the sustained 

increase in aviation jet fuel prices in 

2007 and 2008. That increase (in 2008, 

U.S. airlines alone will spend $60 

billion for fuel, compared to $16 billion 

in 2000) provides an overwhelming 

economic incentive for a financially 

troubled industry to reduce fuel 

consumption. Because reduction of a 

gallon of jet fuel displaces about 21 

pounds of carbon dioxide, that incentive 

is the single most effective tool for 

reducing harmful emissions available 

today. Yet the draft makes no note of the 

trend. 

Second, the draft does not adequately 

address the multi-agency NextGen 

program, one of whose principal goals is 

to limit or reduce the impact of aviation 

emissions on the global climate. This 

includes continued reduction of 

congestion through modernization of 

the air traffic control system, continued 

research on aircraft technologies and 

alternative fuels, and expanded 

deployment of operational advances 

such as Required Navigation 

Performance that allow aircraft to fly 

more direct and efficient routes in 

crowded airspace. Through NextGen, 

the Department’s Federal Aviation 

Administration (FAA), in cooperation 

with private sector interests, is actively 

pursuing operational and technological 

advances that could result in a 33 

percent reduction in aircraft fuel burn 

and carbon dioxide emissions. 

Third, the draft gives short shrift to 

the Administration’s efforts to reduce 

aviation emissions through a 

multilateral ICAO process, and it 

contemplates regulatory options either 

never analyzed by EPA or the aviation 

community for aircraft (‘‘fleet 

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averaging’’1) or previously rejected by 

ICAO itself (flat carbon dioxide 

standards). The FAA has worked within 

the ICAO process to develop guidance 

for market-based measures, including 

adoption at the 2007 ICAO Assembly of 

guidance for emissions trading for 

international aviation. ICAO has 

established a Group on International 

Aviation and Climate Change that is 

developing further recommendations to 

address the aviation impacts of climate 

change.2 The FAA’s emphasis on 

international collaboration is compelled 

by the international nature of 

commercial aviation and the fact that 

performance characteristics of engines 

and airframes—environmental and 

otherwise—work best when they 

maximize consistency among particular 

national regulations.3 

Fourth, the draft invites comments on 

potential aviation operational controls 

that might have emissions benefits. But 

proposals for changes to airspace or air 

traffic operational procedures usurp the 

FAA’s responsibility as the Nation’s 

aviation safety regulator and air traffic 

manager. It is inappropriate for the EPA 

to suggest operational controls without 

consideration of the safety implications 

that the FAA is legally required to 

address. 

Finally, the draft does not accurately 

present the state of scientific 

understanding of aviation emissions and 

contains misleading statements about 

aviation emissions impacts. The report 

of the Intergovernmental Panel on 

1 The concept of ‘‘fleet averaging,’’ though used 

for automobiles, has never been applied to aviation 

or considered by either ICAO or FAA as a basis for 

standard setting. The draft offers little indication of 

why the concept would be worth serious 

consideration, and it is difficult to understand how 

that could be, given that manufacturers turn out 

only several hundred commercial airplanes for 

‘‘averaging’’ annually, compared to over a million 

light duty vehicles per year built by large 

manufacturers. In any event, if further analysis 

supports the viability of fleet averaging, the 

appropriate venue for pursuing this would be 

through ICAO—so that aviation experts from 

around the world can assess the concept. 

2 In this context, we note that the draft invites 

comment on proposals in the European Union 

regarding an emissions trading scheme to be 

imposed by the EU on all Europe-connected 

commercial operations. The U.S. Government, led 

by the Department of State, has repeatedly argued 

that any of these proposals, if enacted, would 

violate international aviation law and has made 

clear its opposition to the proposals in ICAO and 

other international fora. It is curious that the EPA 

would solicit comments on the benefits of proposals 

that the United States (along with numerous other 

nations) opposes as unlawful and unworkable. 

3 The draft is potentially misleading in suggesting 

that the fuel flow rate data reported for the ICAO 

landing and takeoff cycle engine emissions 

certification process, and the carbon dioxide 

emissions concentrations data collected for 

calculation and calibration purposes may be used 

as the basis for a carbon dioxide standard. 

Climate Change (cited in the draft but 

often ignored) more clearly conveys 

cautions about underlying uncertainties 

associated with regulating aviation 

emissions. For instance, the IPCC 

specifically concludes that water vapor 

is a small contributor to climate change, 

yet the draft focuses on condensation 

trails produced by water vapor and 

includes an inaccurate statement that 

carbon dioxide and water vapor are ‘‘the 

major compounds from aircraft 

operations that are related to climate 

change.’’ Further, the draft does not 

convey the significant scientific 

uncertainty associated with measuring 

particulate matter (PM) emissions from 

aircraft engines. That understanding 

needs to be significantly improved 

before any ‘‘tailpipe’’ PM standard 

could sensibly be considered. 

Conclusion 

The EPA has made an enormous effort 

in assembling the voluminous data that 

contributed to the draft as published 

today. However, because the draft does 

not adequately identify or discuss the 

immense difficulties and burdens, and 

the probable lack of attendant benefits, 

that would result from use of the Clean 

Air Act to regulate GHG emissions, DOT 

respectfully submits these preliminary 

comments to point out some of the 

problematic aspects of the draft’s 

analysis regarding the transportation 

sector. We anticipate filing additional 

comments before the close of the 

comment period. 

Department of Energy 

I. Introduction 

The U.S. Department of Energy 

(Department or DOE) strongly supports 

aggressively confronting climate change 

in a rational manner that will achieve 

real and sustainable reductions in global 

greenhouse gas (GHG) emissions, 

promote energy security, and ensure 

economic stability. In support of these 

goals, DOE believes that the path 

forward must include a comprehensive 

public discussion of potential solutions, 

and the foreseeable impacts of those 

proposed solutions—including impacts 

on energy security and reliability, on 

American consumers, and on the 

Nation’s economy. 

The Department supports the actions 

taken by the United States to date to 

address global climate change and 

greenhouse gas emissions, and believes 

these efforts should be continued and 

expanded. These actions have included 

a broad combination of market-based 

regulations, large increases in funding 

for climate science, new government 

incentives for avoiding, reducing or 

sequestering GHG emissions, and 

enormous increases in funding for 

technology research. The Department 

has played a significant role in 

implementing many of these initiatives, 

including those authorized by the 

Energy Policy Act of 2005 and the 

Energy Independence and Security Act 

of 2007. 

The Department believes that an 

effective and workable approach to 

controlling GHG emissions and 

addressing global climate change should 

not simply consist of a unilateral and 

extraordinarily burdensome Clean Air 

Act (CAA or the Act) regulatory program 

being layered on top of the U.S. 

economy, with the Federal Government 

taking the position that energy security 

and indeed the American economy will 

just have to live with whatever results 

such a program produces. Rather, the 

United States can only effectively 

address GHG emissions and global 

climate change in coordination with 

other countries, and by addressing how 

to regulate GHG emissions while 

considering the effect of doing so on the 

Nation’s energy and economic security. 

Considering and developing such a 

comprehensive approach obviously is 

enormously difficult. 

Unfortunately, and no doubt due in 

part to the limitations of the Clean Air 

Act itself, the draft Advance Notice of 

Proposed Rulemaking prepared by the 

staff of the Environmental Protection 

Agency (EPA) does not take such an 

approach. That draft Notice, entitled 

‘‘Regulating Greenhouse Gas Emissions 

under the Clean Air Act’’ (‘‘draft’’), 

which was submitted to the Office of 

Management and Budget on June 17, 

2008, instead seeks to address global 

climate change through an enormously 

elaborate, complex, burdensome and 

expensive regulatory regime that would 

not be assured of significantly 

mitigating global atmospheric GHG 

concentrations and global climate 

change. DOE believes that once the 

implications of the approach offered in 

the draft are fully explained and 

understood, it will make one thing clear 

about controlling GHG emissions and 

addressing global climate change— 

unilaterally proceeding with an 

extraordinarily burdensome and costly 

regulatory program under the Clean Air 

Act is not the right way to go. 

DOE has had only a limited 

opportunity to review the June 17 EPA 

staff draft, and therefore anticipates 

providing additional comments at a 

later date. Based on the limited review 

DOE has been able to conduct so far, it 

is apparent that the draft reflects 

extensive work and includes valuable 

information, analyses and data that 

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should help inform the public debate 

concerning global climate change and 

how to address GHG emissions. 

However, DOE has significant 

concerns with the draft because it lacks 

the comprehensive and balanced 

discussion of the impacts, costs, and 

possible lack of effectiveness were the 

United States, through the EPA, to use 

the CAA to comprehensively but 

unilaterally regulate GHG emissions in 

an effort to address global climate 

change. The draft presents the Act as an 

effective and appropriate vehicle for 

regulating GHG emissions and 

addressing climate change, but we 

believe this approach is inconsistent 

with the Act’s overarching regulatory 

framework, which is based on States 

and local areas controlling emissions of 

air pollutants in order to improve U.S. 

air quality. Indeed, the Act itself states 

that Congress has determined ‘‘air 

pollution prevention * * * and air 

pollution control at its source is the 

primary responsibility of States and 

local governments,’’ CAA § 101(a)(3); 

that determination is reflected in the 

Act’s regulatory structure. The CAA 

simply was not designed for 

establishing the kind of program that 

might effectively achieve global GHG 

emissions controls and emissions 

reductions that may be needed over the 

next decades to achieve whatever level 

of atmospheric GHG concentration is 

determined to be appropriate or 

necessary. 

Although the draft recognizes that the 

CAA does not authorize ‘‘economywide’’ cap and trade programs or 

emission taxes, it in essence suggests an 

elaborate regulatory regime that would 

include economy-wide approaches and 

sector and multi-sector trading programs 

and potentially other mechanisms yet to 

be conceived. The draft has the overall 

effect of suggesting that under the CAA, 

as it exists today, it would be possible 

to develop a regulatory scheme of 

trading programs and other mechanisms 

to regulate GHG emissions and thus 

effectively address global climate 

change. It is important to recognize, 

however, that such programs have not 

yet been fully conceived, in some cases 

rely on untested legal theories or 

applications of the Act, would involve 

unpredictable but likely enormous 

costs, would be invasive into virtually 

all aspects of the lives of Americans, 

and yet would yield benefits that are 

highly uncertain, are dependent on the 

actions of other countries, and would be 

realized, if at all, only over a long time 

horizon. 

The draft takes an affirmative step 

towards the regulation of stationary 

sources under the Act—and while it is 

easy to see that doing so would likely 

dramatically increase the price of energy 

in this country, what is not so clear is 

how regulating GHG emissions from 

such sources would actually work under 

the CAA, or whether doing so would 

effectively address global climate 

change. Other countries also are 

significant emitters of GHGs, and 

‘‘leakage’’ of U.S. GHG emissions could 

occur—that is, reduced U.S. emissions 

simply being replaced with increased 

emissions in other countries—if the 

economic burdens on U.S. GHG 

emissions are too great. In that regard, 

CAA regulation of GHG emissions from 

stationary sources would significantly 

increase costs associated with the 

operation of power plants and industrial 

sources, as well as increase costs 

associated with direct energy use (e.g., 

natural gas for heating) by sources such 

as schools, hospitals, apartment 

buildings, and residential homes. 

Furthermore, in many cases the 

regulatory regime envisioned by the 

draft would result in emission controls, 

technology requirements, and 

compliance costs being imposed on 

entities that have never before been 

subject to direct regulation under the 

CAA. Before proceeding down that path, 

EPA should be transparent about, and 

there should be a full and fair 

discussion about, the true burdens of 

this path—in terms of its monetary cost, 

in terms of its regulatory and permitting 

burden, and in terms of exactly who 

will bear those costs and other burdens. 

These impacts are not adequately 

explored or explained in the draft. What 

should be crystal clear, however, is that 

the burdens will be enormous, they will 

fall on many entities not previously 

subject to direct regulation under the 

Act, and all of this will happen even 

though it is not clear what precise level 

of GHG emissions reduction or 

atmospheric GHG concentration level is 

being pursued, or even if that were 

decided, whether the CAA is a workable 

tool for achieving it. 

In the limited time DOE has had to 

review the draft, DOE primarily has 

focused on the extent to which the draft 

addresses stationary sources and the 

energy sector. Based on DOE’s review, 

we briefly discuss below (1) the 

inadequacy of CAA provisions for 

controlling greenhouse gas emissions 

from stationary sources as a method of 

affecting global GHG concentrations and 

addressing global climate change; (2) the 

potential costs and effects of CAA 

regulation of GHG emissions on the U.S. 

electric power sector; and (3) 

considerations for U.S. action to address 

GHG emissions from stationary sources 

in the absence of an effective global 

approach for addressing climate change 

and worldwide GHG emissions. 

II. The Ineffectiveness and Costs 

Associated with CAA Regulation of 

Greenhouse Gas Emissions from 

Stationary Sources 

The draft states that it was prepared 

in response to the decision of the United 

States Supreme Court in Massachusetts 

v. EPA, 549 U.S. ___, 127 S. Ct. 1438 

(2007). In that case, the Court held that 

EPA has the authority to regulate GHG 

emissions from new motor vehicles 

because GHGs meet the Clean Air Act’s 

definition of an ‘‘air pollutant.’’ Id. at 

1460. As a result, under section 202(a) 

of the Act, the EPA Administrator must 

decide whether, ‘‘in his judgment,’’ ‘‘the 

emission of any air pollutant from any 

class or classes of new motor vehicles or 

new motor vehicle engines’’ ‘‘cause, or 

contribute to, air pollution which may 

reasonably be anticipated to endanger 

public health or welfare.’’ If the EPA 

Administrator makes a positive 

endangerment finding, section 202(a) 

states that EPA ‘‘shall by regulation 

prescribe * * * standards applicable to 

the emission of’’ the air pollutant with 

respect to which the positive finding 

was made. 

The Supreme Court stated that it did 

not ‘‘reach the question whether on 

remand EPA must make an 

endangerment finding, or whether 

policy concerns can inform EPA’s 

actions in the event that it makes such 

a finding.’’ Instead, the Court said that 

when exercising the ‘‘judgment’’ called 

for by section 202(a) and in deciding 

how and when to take any regulatory 

action, ‘‘EPA must ground its reasons 

for action or inaction in the statute.’’ 

As a result, and based on the text of 

section 202(a) of the Clean Air Act, any 

EPA ‘‘endangerment’’ finding must 

address a number of issues that involve 

interpretation of statutory terms and the 

application of technical or scientific 

data and judgment. For example, an 

endangerment determination must 

involve, among other things, a decision 

about the meaning of statutory terms 

including ‘‘reasonably be anticipated 

to,’’ ‘‘cause, or contribute to,’’ 

‘‘endanger,’’ and ‘‘public health or 

welfare.’’ Moreover, because the Act 

refers to ‘‘air pollutant’’ in the singular, 

presumably EPA should make any 

endangerment finding as to individual 

greenhouse gases and not as to all GHGs 

taken together, but this also is a matter 

that EPA must address and resolve. 

There are other issues that must be 

resolved as well, such as: whether the 

‘‘public health and welfare’’ should be 

evaluated with respect to the United 

States alone or, if foreign impacts can or 

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should or must be addressed as well, 

what the statutory basis is for doing so 

and for basing U.S. emissions controls 

on foreign impacts; what time period in 

the future is relevant for purposes of 

determining what is ‘‘reasonably 

anticipate[d]’’; whether and if so how 

EPA must evaluate any beneficial 

impacts of GHG emissions in the United 

States or elsewhere in making an 

endangerment determination; and 

whether a particular volume of 

emissions or a particular effect from 

such emissions from new motor 

vehicles must be found before EPA may 

make a ‘‘cause or contribute’’ finding, 

since the Act explicitly calls for the EPA 

Administrator to exercise his 

‘‘judgment,’’ and presumably that 

judgment involves more than simply a 

mechanistic calculation that one or 

more molecules will be emitted. 

If EPA were to address these issues 

and resolve them in favor of a positive 

endangerment finding under section 

202(a) of the Act with respect to one or 

more greenhouse gases and in favor of 

regulating GHG emissions from new 

motor vehicles, then the language 

similarities of various sections of the 

CAA likely would require EPA also to 

regulate GHG emissions from stationary 

sources. A positive endangerment 

finding and regulation of GHGs from 

new motor vehicles likely would 

immediately trigger the prevention of 

significant deterioration (PSD) permit 

program which regulates stationary 

sources that either emit or have the 

potential to emit 250 tons per year of a 

regulated pollutant or, if they are 

included on the list of source categories, 

at least 100 tons per year of a regulated 

pollutant. Because these thresholds are 

extremely low when considered with 

respect to GHGs, thousands of new 

sources likely would be swept into the 

PSD program necessitating time 

consuming permitting processes, costly 

new investments or retrofits to reduce or 

capture GHG emissions, increasing 

costs, and creating vast areas of 

uncertainty for businesses and 

commercial and residential 

development. 

In addition to the PSD program, it is 

widely acknowledged that a positive 

endangerment finding could lead to 

three potential avenues of stationary 

source regulation under the CAA: (1) 

The setting of national ambient air 

quality standards (NAAQS) under 

sections 108 and 109; (2) the issuance of 

new source performance standards 

(NSPS) under section 111; and/or (3) the 

listing of one or more greenhouse gases 

as hazardous air pollutants (HAP) under 

section 112. Each of these approaches, 

and their associated deficiencies with 

respect to GHG emissions and as a 

method of addressing global climate 

change, are briefly discussed below. 

a. Sections 108–109: NAAQS 

Section 108 of the CAA requires EPA 

to identify and list air pollutants that 

‘‘cause or contribute to air pollution 

which may reasonably be anticipated to 

endanger public health or welfare.’’ For 

such pollutants, EPA promulgates 

‘‘primary’’ and ‘‘secondary’’ NAAQS. 

The primary standard is defined as the 

level which, in the judgment of the EPA 

Administrator, based on scientific 

criteria, and allowing for an adequate 

margin of safety, is requisite to protect 

the public health. The secondary 

standard is defined as the level which 

is requisite to protect the public welfare. 

Within one year of EPA’s promulgation 

of a new or revised NAAQS, each State 

must designate its regions as nonattainment, attainment, or 

unclassifiable. Within three years from 

the NAAQS promulgation, States are 

required to adopt and submit to EPA a 

State implementation plan (SIP) 

providing for the implementation, 

maintenance, and enforcement of the 

NAAQS. 

At least three major difficulties would 

be presented with respect to the 

issuance by EPA of a NAAQS for one or 

more greenhouse gases: (1) The 

determination of what GHG 

concentration level is requisite to 

protect public health and welfare; (2) 

the unique nature of GHGs as pollutants 

dispersed from sources throughout the 

world and that have long atmospheric 

lifetimes; and (3) GHG concentrations in 

the ambient air are virtually the same 

throughout the world meaning that they 

are not higher near major emissions 

sources than in isolated areas with no 

industry or major anthropogenic sources 

of GHG emissions. 

While much has been said and 

written in recent years about the need 

to reduce greenhouse gas emissions to 

address climate change, there is far less 

agreement on the acceptable or 

appropriate atmospheric concentration 

level of CO2 or other GHGs. As the draft 

states, ‘‘[d]etermining what constitutes 

‘dangerous anthropogenic interference’ 

is not a purely scientific question; it 

involves important value judgments 

regarding what level of climate change 

may or may not be acceptable.’’ While 

the Department agrees with this 

statement, the courts have held that 

when setting a NAAQS, EPA cannot 

consider important policy factors such 

as cost of compliance. This limitation 

inhibits a rational balancing of factors in 

determining and setting a GHG NAAQS 

based on the science available, the 

availability and cost of emission 

controls, the resulting impact on the 

U.S. economy, the emissions of other 

nations, etc. 

Unlike most pollutants where local 

and regional air quality, and local and 

regional public health and welfare, can 

be improved by reducing local and 

regional emissions, GHGs originate 

around the globe, and are mixed and 

dispersed such that there is a relatively 

uniform atmospheric GHG 

concentration level around the world. 

There is little or nothing that a single 

State or region can do that will 

appreciably alter the atmospheric GHG 

concentration level in that particular 

State or region. Thus, it is hard to see 

how a GHG NAAQS, which required 

States to take action to reduce their 

emissions to meet a particular air 

quality standard, would actually work. 

A GHG NAAQS standard would put the 

entire United States in either attainment 

or non-attainment, and it would be 

virtually impossible for an individual 

State to control or reduce GHG 

concentrations in its area and, thus, to 

make significant strides towards 

remaining in or reaching attainment 

with the NAAQS. 

Whatever level EPA might eventually 

establish as an acceptable NAAQS for 

one or more GHGs, EPA’s setting of such 

a level would immediately implicate 

further issues under the NAAQS regime, 

including the ability of States and 

localities to meet such a standard. If the 

GHG NAAQS standard for one or more 

gases is set at a level below the current 

atmospheric concentration, the entire 

country would be in nonattainment. All 

States then would be required to 

develop and submit State 

Implementation Plans (SIPs) that 

provide for meeting attainment by the 

specified deadline. And yet, as the draft 

states, ‘‘it would appear to be an 

inescapable conclusion that the 

maximum 10-year horizon for attaining 

the primary NAAQS is ill-suited to 

pollutants such as greenhouse gases 

with long atmospheric residence times 

* * * [t]he long atmospheric lifetime of 

* * * greenhouse gases * * * means 

that atmospheric concentrations will not 

quickly respond to emissions reduction 

measures * * * in the absence of 

substantial cuts in worldwide 

emissions, worldwide concentrations of 

greenhouse gases would continue to 

increase despite any U.S. emission 

control efforts. Thus, despite active 

control efforts to meet a NAAQS, the 

entire United States would remain in 

nonattainment for an unknown number 

of years.’’ 

As the draft also recognizes, if the 

NAAQS standard for GHGs is set at a 

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level above the current atmospheric 

concentration, the entire country would 

be in attainment. In a nationwide 

attainment scenario, the PSD and new 

source review (NSR) permitting regimes 

would apply and States would have to 

submit SIPs for the maintenance of the 

primary NAAQS and to prevent 

interference with the maintenance by 

other States of the NAAQS; tasks, that 

as applied to GHGs, are entirely 

superfluous given the inability of any 

single State to change through its own 

unilateral action the global or even local 

concentration level of GHGs. 

As the difficult choices and 

problematic results outlined above 

demonstrate, the inability of a single 

State to appreciably change atmospheric 

GHG concentrations in its own area 

through its own emission reduction 

efforts is inconsistent with a 

fundamental premise of the Clean Air 

Act and of the NAAQS program—that 

States and localities are primarily 

responsible for air pollution control and 

maintaining air quality, and that State 

and local governments can impose 

controls and permitting requirements 

that will allow the State to maintain or 

attain air quality standards through its 

own efforts. 

b. Section 111: NSPS 

Section 111 of the CAA requires the 

EPA Administrator to list categories of 

stationary sources if such sources cause 

or contributes significantly to air 

pollution which may reasonably be 

anticipated to endanger public health or 

welfare. The EPA must then issue new 

source performance standards (NSPS) 

for such sources categories. An NSPS 

reflects the degree of emission 

limitation achievable through the 

application of the ‘‘best system of 

emission reduction’’ which the EPA 

determines has been adequately 

demonstrated. EPA may consider 

certain costs and non-air quality health 

and environmental impact and energy 

requirements when establishing NSPS. 

Where EPA also has issued a NAAQS or 

a section 112 maximum achievable 

control technology (MACT) standard for 

a regulated pollutant, NSPS are only 

issued for new or modified stationary 

sources. Where no NAAQS has been set 

and no section 112 MACT standard 

issued, NSPS are issued for new, 

modified, and existing stationary 

sources. 

Regulation of GHGs under section 111 

presents at least two key difficulties. 

First, EPA’s ability to utilize a market 

system such as cap and trade has not 

been confirmed by the courts. EPA’s 

only attempt to establish a cap and trade 

program under section 111, the ‘‘Clean 

Air Mercury Rule,’’ was vacated by the 

U.S. Court of Appeals for the District of 

Columbia Circuit, though on grounds 

unrelated to EPA’s authority to 

implement such a program under 

section 111. DOE believes EPA does 

have that authority, as EPA previously 

has explained, but there is legal 

uncertainty about that authority, which 

makes a GHG market-oriented program 

under section 111 uncertain. 

Second, EPA’s regulation of small 

stationary sources (which account for a 

third of all stationary source emissions) 

would require a burdensome and 

intrusive regulatory mechanism unlike 

any seen before under the CAA. If EPA 

were to determine that it cannot feasibly 

issue permits to and monitor 

compliance for all of these sources, a 

section 111 system presumably would 

cover only large stationary sources, 

which would place the compliance 

burden completely on electric 

generators and large industrial sources, 

and reduce any overall effect from the 

GHG control regime. 

However, there are questions about 

whether it would be permissible for 

EPA to elect not to regulate GHG 

emissions from small stationary sources. 

Section 111(b)(1) indicates that the 

Administrator must list a category of 

sources if, in his judgment, it causes, or 

contributes significantly to, air pollution 

which may reasonably be anticipated to 

endanger public health and welfare. 

Given the volume of greenhouse gases 

that are emitted from small stationary 

sources in the aggregate, it is uncertain 

whether, if EPA makes a positive 

endangerment finding for emissions of 

one or more GHGs from new motor 

vehicles, EPA could conclude that small 

stationary sources do not cause ‘‘or 

contribute significantly’’ to air pollution 

that endangers the public health or 

welfare. This might well turn on the 

interpretation and application of the 

terms in CAA section 202(a), noted 

above. Regardless, it is uncertain 

whether, and if so where, EPA could 

establish a certain GHG emission 

threshold for determining what sources 

or source categories are subject to GHG 

regulations under section 111. What 

does seem clear is that regulating GHG 

emissions under section 111 would 

entail implementation of an enormously 

complicated, costly, and invasive 

program. 

c. Section 112: HAP 

Section 112 contains a list of 

hazardous air pollutants subject to 

regulation. A pollutant may be added to 

the list because of adverse health effects 

or adverse environmental effects. DOE 

believes it would be inappropriate for 

greenhouse gases to be listed as HAPs 

given, among other things, EPA’s 

acknowledgment that ambient GHG 

concentrations present no health risks. 

Nevertheless, if one or more GHGs were 

listed under section 112, EPA would 

have to list all categories of ‘‘major 

sources’’ (defined as sources that emit or 

potentially emit 10 tons per year of any 

one HAP or 25 tons per year of any 

combination of HAPs). For each major 

source category, EPA must then set a 

maximum available control technology 

(MACT) standard. 

It is entirely unclear at this point what 

sort of MACT standard would be placed 

on which sources for purposes of 

controlling GHG emissions, what such 

controls would cost, and whether such 

controls would be effective. However, 

complying with MACT standards with 

respect to GHG emission controls likely 

would place a significant burden on 

States and localities, manufacturing and 

industrial facilities, businesses, power 

plants, and potentially thousands of 

other sources throughout the United 

States. As the draft explains, section 112 

‘‘appears to allow EPA little flexibility 

regarding either the source categories to 

be regulated or the size of sources to 

regulate * * * EPA would be required 

to regulate a very large number of new 

and existing stationary sources, 

including smaller sources * * * we 

believe that small commercial or 

institutional establishments and 

facilities with natural gas fired furnaces 

would exceed this major source 

threshold; indeed, a large single family 

residence could exceed this threshold if 

all appliances consumed natural gas.’’ 

Compliance with the standards under 

section 112 is required to be immediate 

for most new sources and within 3–4 

years for existing sources. Such a strict 

timeline would leave little to no time for 

emission capture and reduction 

technologies to emerge, develop, and 

become cost-effective. 

d. Effects of CAA Regulation of GHGs on 

the U.S. Energy Sector 

While the Department has general 

concerns about the portrayal of likely 

effects of proposals to regulate GHGs 

under the CAA on all sectors of the U.S. 

economy, DOE is particularly concerned 

about the effects of such regulation on 

the energy sector. The effects of broad 

based, economy-wide regulation of 

GHGs under the CAA would have 

significant adverse effects on U.S. 

energy supplies, energy reliability, and 

energy security. 

Coal is used to generate about half of 

the U.S. electricity supply today, and 

the Energy Information Administration 

(EIA) projects this trend to continue 

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through 2030. (EIA AEO 2008, at 68) At 

the electricity generating plant itself, 

conventional coal-fired power stations 

produce roughly twice as much carbon 

dioxide as a natural gas fired power 

station per unit of electricity delivered. 

Given this reality, the effect of 

regulating emissions of GHGs from 

stationary sources under the CAA could 

force a drastic shift in the U.S. power 

sector. As Congressman John D. Dingell, 

Chairman of the U.S. House of 

Representatives Committee on Energy 

and Commerce, explained in a 

statement issued on April 8, 2008: 

‘‘As we move closer to developing policies 

to limit and reduce emissions, we must be 

mindful of the impact these policies have on 

the price of all energy commodities, 

particularly natural gas. What happens if 

efforts to expand nuclear power production 

and cost-effectively deploy carbon capture 

and storage for coal-fired generation are not 

successful? You know the answer. We will 

drive generation to natural gas, which will 

dramatically increase its price tag. We don’t 

have to look too far in the past to see the 

detrimental effect that high natural gas prices 

can have on the chemical industry, the 

fertilizer industry, and others to know that 

we must be conscious of this potential 

consequence.’’ 

Chairman Dingell’s view is supported 

by studies of the climate bill recently 

considered by the United States Senate. 

EIA’s analysis of the Lieberman-Warner 

bill stated that, under that bill, and 

without widespread availability of 

carbon capture and storage (CCS) 

technology, natural gas generation 

would almost double by 2030. See 

Energy Information Administration, 

Energy Market and Economic Impacts of 

S. 2191, the Lieberman-Warner Climate 

Security Act of 2007 at 25.4 

4 DOE’s Energy Information Administration (EIA) 

prepared an analysis of the proposed LiebermanWarner Climate Security Act of 2007 and projected 

that if new nuclear, renewable and fossil plans with 

carbon capture and sequestration are not developed 

and deployed in a time frame consistent with 

emissions reduction requirements, there would be 

increased natural gas use to offset reductions in coal 

generation, resulting in markedly higher delivered 

prices of natural gas. See Energy Market and 

Economic Impacts of S. 2191, the LiebermanWarner Climate Security Act of 2007 (EIA, April 

2008) EIA estimated price increases from 9.8 cents 

per kilowatthour in 2020 to 14.5 cents per 

kilowatthour in 2030, ranging from 11 to 64 percent 

higher by 2030. Id., p. 27, Figure 16. EPA’s analysis 

of the proposed legislation similarly projected 

electricity prices to increase 44% in 2030 and 26% 

in 2050 assuming the growth of nuclear, biomass or 

carbon capture and storage technologies. See EPA 

Analysis of the Lieberman-Warner Climate Security 

Act of 2008 (March 14, 2008), pp. 3, 57. If the 

growth of nuclear, biomass, or carbon capture and 

storage technologies was constrained, EPA 

projected that electricity prices in 2030 would be 

79% higher and 2050 prices would be 98% higher 

than the reference scenario prices. Other analyses 

of the legislation also projected substantial 

increases in energy costs for consumers. See, e.g. 

If CAA regulation of GHG emissions 

from stationary sources forces or 

encourages a continued move toward 

natural gas fired electric generating 

units, there will be significantly 

increased demand for natural gas. Given 

the limitations on domestic supplies, 

including the restrictions currently 

placed on the production of natural gas 

from public lands or from areas on the 

Outer Continental Shelf, much of the 

additional natural gas needed likely 

would have to come from abroad in the 

form of liquefied natural gas (LNG). This 

LNG would have to be purchased at 

world prices, currently substantially 

higher than domestic natural gas prices 

and generally tied to oil prices (crude or 

product). To put this into perspective, 

natural gas closed on June 27, 2008, at 

about $13.20/mcf for August delivery, 

about twice as high as last year at this 

time, despite increasing domestic 

natural gas production. The reason is 

that unlike last year, the U.S. has been 

able to import very little LNG this year, 

even at these relatively high domestic 

prices. United States inventories of 

natural gas in storage currently are 

about 3% below the five year average, 

and are 16% below last year at this time. 

Among other effects, a large policyforced shift towards increased reliance 

on imported LNG would raise energy 

security and economic concerns by 

raising domestic prices for consumers 

(including electricity prices) and 

increasing U.S. reliance on foreign 

sources of energy. 

In order for coal to remain a viable 

technology option to help meet the 

world’s growing energy demand while 

at the same time not addressing GHG 

emissions, CCS technologies must be 

developed and widely deployed. While 

off-the-shelf capture technologies are 

available for coal power plant 

applications, current technologies are 

too costly for wide scale deployment for 

both new plant construction and retrofit 

of the existing fleet of coal-fired power 

plants. DOE studies (e.g., DOE/NETL 

Analysis of the Lieberman-Warner Climate Security 

Act (S. 2191) Using the National Energy Modeling 

System (A Report by the American Council for 

Capital Formation and the National Associate of 

Manufacturers, conducted by Science Applications 

International Corporation (SAIC))(study finding 

increases in energy prices for residential consumers 

by 26% to 36% in 2020, and 108% to 146% in 2030 

for natural gas, and 28% to 33% in 2020, and 101% 

to 129% in 2030 for electricity). Further, in its 

analysis o the bill the Congressional Budge Office 

estimated that costs of private sector mandates 

associated with the legislation would amount to 

more than $90 billion each year during the 2012– 

2016 period, most of which cost would ultimately 

be passed on to consumers in the form of higher 

prices for energy and energy-intensive goods and 

services. See Congressional Budget Office Cost 

Estimate, S. 2191 (April 10, 2008), pp. 2, 19. 

Report: ‘‘Cost and Performance Baseline 

for Fossil Energy Plants,’’ May 2007) 

show that capturing and sequestering 

CO2 with today’s technology is 

expensive, resulting in electricity cost 

increases on the order of 30%–90% 

above the cost of electricity produced 

from new coal plants built without CCS. 

The impact of a policy that requires 

more production of electricity from 

natural gas will be felt not just in the 

United States but in worldwide efforts 

to reduce GHG emissions. Unless U.S. 

policy supports rapid development of 

CCS technologies to the point that they 

are economically deployable (i.e., 

companies are not forced to switch to 

natural gas fired electric generating 

facilities), CCS will not be installed as 

early as possible in the China or other 

developing nations. In a global climate 

sense, most of the benefit from new 

technology installation will come from 

the developing countries, and much of 

the international benefit would come 

from providing countries like China and 

India with reasonable-cost CCS options 

for development of their massive coal 

resources, on which we believe they 

will continue to rely. 

III. Energy Policy Considerations for 

Addressing Climate Change 

The Department is concerned that the 

draft does not properly acknowledge 

collateral effects of using CAA 

regulation to address global climate 

change, particularly in the absence of a 

regime that actually will effectively 

address global climate change by 

addressing global GHG emissions. DOE 

strongly supports efforts to reduce GHG 

emissions by advancing technology and 

implementing policies that lower 

emissions, but doing so in a manner that 

is conscious of and that increases, rather 

than decreases, U.S. energy security and 

economic security. With these goals in 

mind, DOE believes policymakers and 

the public should be mindful of the 

considerations briefly described below 

as the United States seeks to effectively 

address the challenge of global climate 

change. 

Secretary Bodman has stated that 

‘‘improving our energy security and 

addressing global climate change are 

among the most pressing challenges of 

our time.’’ This is particularly true in 

light of the estimate by the International 

Energy Agency that the world’s primary 

energy needs will grow by over 50% by 

2030. 

In order to address these challenges 

simultaneously and effectively, the 

United States and other countries must 

make pervasive and long-term changes. 

Just as the current energy and 

environmental situation did not develop 

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overnight, neither can these challenges 

be addressed and resolved immediately. 

To ensure that we both improve 

energy security and reduce GHG 

emissions, rather than address one at 

significant cost to the other, DOE 

believes that a number of actions must 

be taken. None of these actions is 

sufficient in itself, and none of these 

actions can be pursued to the exclusion 

of the others. 

Specifically, the United States and 

other nations must: Bring more 

renewable energy online; aggressively 

deploy alternative fuels; develop and 

use traditional hydrocarbon resources, 

and do so in ways that are clean and 

efficient; expand access to safe and 

emissions-free nuclear power, while 

responsibly managing spent nuclear fuel 

and reducing proliferation risks; and 

significantly improve the efficiency of 

how we use energy. In all of these 

things, the Department believes that 

technological innovation and 

advancement is the key to unlocking the 

future of abundant clean energy and 

lower GHG emissions. Therefore, this 

innovation and advancement—through 

government funding, private 

investment, and public policies that 

promote both of these—should be the 

cornerstone of any plan to combat global 

climate change. 

In recent years, DOE has invested 

billions of dollars to advance the 

development of technologies that 

advance these objectives. For example, 

in 2007 DOE funded the creation of 

three cutting-edge bioenergy research 

facilities. These facilities, which are 

already showing progress, will seek to 

advance the production of biofuels that 

have significant potential for both 

increasing the Nation’s energy security 

and reducing GHG emissions. Since the 

start of 2007, DOE has invested well 

over $1 billion to spur the growth of a 

robust, sustainable biofuels industry in 

the United States. 

DOE also has promoted technological 

advancement and deployment in other 

renewable energy areas such as wind, 

solar and geothermal power, and these 

advancements and policies are 

producing results. For example, in 2007, 

U.S. cumulative wind energy capacity 

reached 16,818 megawatts—more than 

5,000 megawatts of wind generation 

were installed in 2007 alone. The 

United States has had the fastest 

growing wind power capacity in the 

world for the last three years in a row. 

In addition, DOE recently issued a 

solicitation offering up to $10 billion in 

federal loan guarantees, under the 

program authorized by Title XVII of the 

Energy Policy Act of 2005, to 

incentivize the commercial deployment 

of new or significantly improved 

technologies in projects that will avoid, 

reduce or sequester emissions of GHGs 

or other air pollutants. 

DOE strongly believes that nuclear 

power must play an important role in 

any effective program to address global 

climate change. Indeed, we believe that 

no serious effort to effectively control 

GHG emissions and address climate 

change can exclude the advancement 

and development of nuclear power. 

DOE continues to seek advancements in 

nuclear power technology, in the 

licensing of new nuclear power 

facilities, and in responsibly disposing 

of spent nuclear fuel. With respect to 

new nuclear power plants, DOE has put 

in place a program to provide risk 

insurance for the developers of the first 

new facilities, and recently issued a 

solicitation offering up to $18.5 billion 

in federal loan guarantees for new 

nuclear power plants. 

Significant advancements have been 

made in recent years toward the 

development of new nuclear facilities. 

There now are pending at the Nuclear 

Regulatory Commission several 

applications, all of which have been 

filed in 2007 or 2008, to license new 

nuclear generating facilities. DOE views 

the filing of these applications and the 

interest in licensing and building new 

nuclear power facilities as very positive 

developments from the perspectives of 

the Nation’s electric reliability and 

energy security, as well as the effort to 

control greenhouse gas emissions. But 

there still is much to be done, and it will 

take a sustained effort both by the 

private sector and by federal, State and 

local governments, to ensure that these 

facilities are licensed, built and placed 

into service. 

As noted above, DOE believes that 

coal can and must play an important 

role in this Nation’s energy future. 

Moreover, regardless what decisions 

about coal U.S. policy officials may 

wish to make, it seems clear that coal 

will continue to be used by other 

countries to generate electricity for 

decades to come. It has been noted that 

China is building new coal power plant 

capacity at the incredible rate of one per 

week. As a result, it is critically 

important that we develop and deploy 

cost-effective carbon capture and 

sequestration technology, both to ensure 

that we can take advantage of significant 

energy resources available in the United 

States, but also to help enable the 

control of emissions in other countries 

as well. 

DOE believes that cost effective CCS 

technology must be developed over the 

next 10–15 years that could be deployed 

on new plants built to meet increasing 

demand and to replace retiring capital 

stock, and retrofitted on existing plants 

with substantial remaining plant life. 

DOE is helping to develop technologies 

to capture, purify, and store CO2 in 

order to reduce GHG emissions without 

significant adverse effects on energy use 

or on economic growth. DOE’s primary 

CCS research and development 

objectives are: (1) Lowering the cost and 

energy penalty associated with CO2 

capture from large point sources; and (2) 

improving the understanding of factors 

affecting CO2 storage permanence, 

capacity, and safety in geologic 

formations and terrestrial ecosystems. 

Once these objectives are met, new 

and existing power plants and fuel 

processing facilities in the U.S. and 

around the world will have the potential 

to deploy CO2 capture technologies. 

Roughly one third of the United States’ 

carbon emissions come from power 

plants and other large point sources. To 

stabilize and ultimately reduce 

atmospheric concentrations of CO2, it 

will be necessary to employ carbon 

sequestration—carbon capture, 

separation and storage or reuse. The 

availability of advanced coal-fired 

power plants with CCS to provide clean, 

affordable energy is essential for the 

prosperity and security of the United 

States. 

The DOE carbon sequestration 

program goal is to develop at R&D scale 

by 2012, fossil fuel conversion systems 

that offer 90 percent CO2 capture with 

99 percent storage permanence at less 

than a 10 percent increase in the cost of 

energy services from new plants. For 

retrofits of existing facilities, the task 

will be much harder, and the penalties 

in terms of increased cost of power 

production from those plants likely will 

be much higher. We expect that these 

integrated systems for new plants will 

be available for full commercial 

deployment—that is, will have 

completed the demonstration and early 

deployment phase—in the 2025 

timeframe. Of course, there are inherent 

uncertainties in these projections and 

long-term research, development, 

demonstration and deployment goals. 

In line with the Department’s CCS 

R&D goals, DOE is working with 

regional carbon sequestration 

partnerships to facilitate the 

development of the infrastructure and 

knowledge base needed to place carbon 

sequestration technologies on the path 

to commercialization. In addition, DOE 

recently restructured its FutureGen 

program to accelerate the near-term 

deployment of advanced clean coal 

technology by equipping new integrated 

gasification combined cycle (IGCC) or 

other clean coal commercial power 

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plants with CCS technology. By funding 

multiple projects, the restructured 

FutureGen is expected to at least double 

the amount of CO2 sequestered 

compared to the concept that previously 

had been announced in 2003. The 

restructured FutureGen approach also 

will focus on the challenges associated 

with avoidance and reduction of carbon 

emissions and criteria pollutants 

through sequestration. 

In order to reduce the demand on our 

power sector and the associated 

emissions of GHGs and other pollutants, 

we must continue to support expanded 

efforts to make our society more 

efficient, from major power plants to 

residential homes. DOE has helped lead 

this effort with, among other things, its 

Energy Star program, a governmentbacked joint effort with EPA to establish 

voluntary efficiency standards that help 

businesses and individuals protect the 

environment and save money through 

greater energy efficiency. By issuing 

higher efficiency standards for an 

increasing number of products, the 

Energy Star program helps consumers 

make fully-informed and energyconscious decisions that result in 

reduced emissions of GHGs and other 

pollutants. Last year alone, with the 

help of the Energy Star program, 

American consumers saved enough 

energy to power 10 million homes and 

avoid GHG emissions equivalent to the 

emissions from 12 million cars—all 

while saving $6 billion in energy costs. 

IV. Conclusion 

The Department believes the draft 

does not address and explain in clear, 

understandable terms the extraordinary 

costs, burdens and other adverse 

consequences, and the potentially 

limited benefits, of the United States 

unilaterally using the Clean Air Act to 

regulate GHG emissions. The draft, 

while presenting useful analysis, seems 

to make a case for the CAA being the 

proper vehicle to meaningfully combat 

global climate change, but we believe it 

understates the potential costs and 

collateral adverse effects of attempting 

to regulate GHG emissions and address 

climate change through a regulatory 

scheme that is forced into the Clean Air 

Act’s legal and regulatory mold. 

Any effective and workable approach 

to controlling GHG emissions and 

addressing global climate change should 

not simply consist of a unilateral and 

extraordinarily burdensome CAA 

regulatory program that is placed on top 

of the U.S. economy with all other 

existing mandates, restrictions, etc. 

simply remaining in place and the 

Government taking the position that 

U.S. energy security and indeed the 

American economy will just have to live 

with whatever results the GHG control 

program produces. Rather, the Nation 

can only effectively address GHG 

emissions and global climate change in 

coordination with other countries, and 

by addressing how to regulate GHG 

emissions while considering the effect 

of doing so on the Nation’s energy and 

economic security. Considering and 

developing such a comprehensive 

approach obviously will be very 

difficult. But what seems clear is that it 

would be better than the alternative, if 

the alternative is unilaterally proceeding 

with the enormously burdensome, 

complex and costly regulatory program 

under the Clean Air Act discussed in 

the draft, which in the end might not 

even produce the desired climate 

change benefits. 

U.S. Department of Commerce 

Analysis of Draft Advanced Notice of 

Proposed Rulemaking 

’’Regulating Greenhouse Gas Emissions 

Under the Clean Air Act’’ 

Overview: This analysis reviews some 

of the implications of regulating 

greenhouse gas (GHG) emissions under 

the Clean Air Act (CAA) as outlined in 

the draft Advance Notice of Proposed 

Rulemaking submitted to the Office of 

Management and Budget on June 17, 

2008 (the draft). The Department of 

Commerce’s fundamental concern with 

the draft’s approach to using the CAA to 

regulate GHGs is that it would impose 

significant costs on U.S. workers, 

consumers, and producers and harm 

U.S. competitiveness without 

necessarily producing meaningful 

reductions in global GHG emissions. 

Impact on U.S. Competitiveness and 

Manufacturing: The draft states that 

competitiveness is an important policy 

consideration in assessing the 

application of CAA authorities to GHG 

emissions. It also acknowledges the 

potential unintended consequences of 

domestic GHG regulation, noting ‘‘[t]he 

concern that if domestic firms faced 

significantly higher costs due to 

regulation, and foreign firms remained 

unregulated, this could result in price 

changes that shift emissions, and 

possibly some production capacity, 

from the U.S. to other countries.’’ 5 This 

is a real issue for any domestic 

regulation implemented without an 

international agreement involving the 

world’s major emitters. 

However, the draft does not detail the 

shift in global emissions that is 

currently taking place. As the chart 

below shows, the emissions of countries 

outside of the Organization of Economic 

Cooperation and Development (OECD) 

already exceed those of OECD countries. 

By 2030, non-OECD emissions are 

projected to be 72 percent higher than 

those of their OECD counterparts.6 

BILLING CODE 6560–50–P 

5 EPA draft, pg. 36. 

6 EIA International Energy Outlook 2008, http:// 

www.eia.doe.gov/oiaf/ieo/highlights.html. 

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Any climate change regulation must 

take this trend into account. Greenhouse 

gas emissions are a global phenomenon, 

and, as documented in the draft, require 

reductions around the world in order to 

achieve lower concentrations in the 

atmosphere. However, the costs of 

emissions reductions are generally 

localized and often borne by the specific 

geographic area making the reductions. 

As a result, it is likely that the U.S. 

could experience significant harm to its 

international competitiveness if GHGs 

were regulated under the CAA, while at 

the same time major sources of 

emissions would continue unabated 

absent an international agreement. 

Because the draft does not specify an 

emissions target level, the implications 

of national regulation for the U.S. 

economy as a whole and for energy 

price-sensitive sectors in particular are 

difficult to forecast. However, recent 

analysis of emissions targets similar to 

those cited in the draft provides a guide 

to the estimated level of impacts. 

In April 2008, the Energy Information 

Administration (EIA) released an 

analysis of legislation that set emission 

reduction targets of 30 percent below 

2005 levels by 2030 and 70 percent 

below 2005 levels by 2050. The EIA 

estimated that in the absence of 

international offsets and with limited 

development of alternatives, achieving 

those emission targets would reduce 

manufacturing employment by 10 

percent below currently projected levels 

in 2030. Under the same scenario, the 

EIA estimate indicated the emission 

targets would reduce the output of key 

energy-intensive manufacturing 

industries, such as food, paper, glass, 

cement, steel, and aluminum, by 10 

percent and the output of non-energy 

intensive manufacturing industries by 

nine percent below currently projected 

levels in 2030.7 

The European Union’s experience 

with implementation of its cap-and7 Energy Market and Economic Impacts of S. 

2191, Figure 28 & 29, http://www.eia.doe.gov/oiaf/ 

servicerpt/s2191/economic.html. 

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Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 44373 

trade system is also instructive from a 

competitiveness standpoint. Key energy 

intensive industries in Europe have 

raised concerns about the 

competitiveness impacts of the 

emissions trading system (ETS), arguing 

that the ETS would force them to 

relocate outside of Europe. EU leaders 

have responded to these concerns by 

considering the possibility of awarding 

free emissions permits to certain 

industries, provided the industries also 

agreed to reduce emissions.8 This 

illustrates one of the challenges of 

crafting an effective national or regional 

solution to a global problem. 

International Trade: In order to 

address the concern that GHG regulation 

in the United States will lead to 

emissions leakage and movement of 

certain sectors to countries without 

strict carbon regulations, the draft 

requests comment on ‘‘trade-related 

policies such as import tariffs on carbon 

or energy content, export subsidies, or 

requirements for importers to submit 

allowances to cover the carbon content 

of certain products.’’ 9 

Applying tariffs to imports from 

countries without carbon regulations 

would have a number of significant 

repercussions. In addition to exposing 

the United States to World Trade 

Organization challenges by our trading 

partners, unilateral U.S. carbon tariffs 

could spark retaliatory measures against 

U.S. exporters, the brunt of which 

would fall on U.S. workers, consumers, 

and businesses. For example, a World 

Bank study found that carbon tariffs 

applied to U.S. exports to Europe 

‘‘could result in a loss of about 7 percent 

8 Financial Times, ‘‘Brussels softens line on 

carbon permits,’’ Andrew Bounds, Jan. 22, 2008. 

9 EPA draft, pg. 37. 

in U.S. exports to the EU. The energy 

intensive industries, such as steel and 

cement * * * could suffer up to a 30 

percent loss.’’ 10 

Moreover, carbon tariffs would 

actively undermine existing U.S. trade 

policy. The U.S. Government has 

consistently advocated for reducing 

tariffs, non-tariff barriers, and export 

subsidies. Introducing new tariffs or 

export subsidies for carbon or energy 

content would undermine those efforts 

with respect to clean energy 

technologies specifically and U.S. goods 

and services more broadly, as well as 

invite other countries to expand their 

use of tariffs and subsidies to offset 

costs created by domestic regulations. 

Two examples of U.S. efforts to 

reduce tariffs or enhance exports in this 

area: The United States Trade 

Representative is actively engaged in 

trade talks to specifically reduce tariffs 

on environmental technologies, which 

will lower their costs and encourage 

adoption, while the Department of 

Commerce’s International Trade 

Administration is currently planning its 

third ‘‘Clean Energy’’ trade mission to 

China and India focused on opening 

these rapidly developing economies to 

U.S exporters of state-of-the-art clean 

technologies. Rather than raising trade 

barriers, the U.S. Government should 

continue to advocate for the deployment 

of clean energy technologies through 

trade as a way to address global GHG 

emissions 

The issue of emissions leakage and 

the potential erosion of the U.S. 

industrial base are real concerns with 

any domestic GHG regulation proposal 

10 The World Bank, International Trade and 

Climate Change: Economic, Legal, and Institutional 

Perspectives, 2008, pg. 12. 

outside of an international framework. 

Accordingly, the proper way to address 

this concern is through an international 

agreement that includes emission 

reduction commitments from all the 

major emitting economies, not by 

unilaterally erecting higher barriers to 

trade. 

Realistic Goals for Reducing Carbon 

Emissions: Establishing a realistic goal 

of emissions reduction is an essential 

aspect of designing policies to respond 

to climate change. Although the draft 

does not ‘‘make any judgment regarding 

what an appropriate [greenhouse gas] 

stabilization goal may be,’’ the 

document cites, as an example, the 

Intergovernmental Panel on Climate 

Change’s projection that global CO2 

emissions reductions of up to 60 percent 

from 2000 levels by 2050 are necessary 

to stabilize global temperatures slightly 

above pre-industrial levels.11 

To provide context, it is useful to note 

that a 60 percent reduction in U.S. 

emissions from 2000 levels would result 

in emissions levels that were last 

produced in the United States during 

the 1950s (see chart on next page). In 

1950, the population in the United 

States was 151 million people—about 

half the current size—and the Gross 

Domestic Product was $293 billion.12 

Without the emergence of technologies 

that dramatically alter the amount of 

energy necessary for U.S. economic 

output, the reduction of energy usage 

necessary to achieve this goal would 

have significant consequences for the 

U.S. economy. 

BILLING CODE 6560–50–P 

11 EPA draft, pg. 14. 

12 U.S. Census Bureau, 1950 Decennial Census; 

Bureau of Economic Analysis, National Income and 

Product Accounts Table. 

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44374 Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 

BILLING CODE 6560–50–C 

Moreover, as the draft acknowledges, 

initial emissions reductions under the 

CAA or other mechanism ‘‘may range 

from only [a] few percent to 17% or 

more in some cases. Clearly, more 

fundamental technological changes will 

be needed to achieve deeper reductions 

in stationary source GHG emissions over 

time.’’ 13 But the inability, at this time, 

to identify either a realistic emissions 

target or the technical feasibility of 

achieving various levels of reduction is 

one of the major flaws of using the draft 

to assess policy changes of this 

magnitude. 

The draft also notes that ‘‘[a]n 

economy-wide, market-oriented 

environmental regulation has never 

been implemented before in the U.S.’’ 14 

This point is worth underscoring: The 

CAA has never been applied to every 

sector in the U.S. economy. Instead, the 

CAA is generally applied to specific 

sectors (such as the power sector) or 

sources of emissions, and it has 

included initiatives to address regional 

and multi-state air quality issues. While 

these examples clearly provide valuable 

experience in addressing air pollution 

issues across state boundaries, using the 

13 EPA draft, pg. 209. 


14 EPA draft, pg. 32. 


CAA to regulate GHGs is significantly 

more ambitious in scope than anything 

previously attempted under the CAA. 

Accountability and Public Input: The 

draft contemplates a dramatic regulatory 

expansion under the CAA. However, 

climate policies of this magnitude are 

best addressed through legislative 

debate and scrutiny. Examining these 

issues in the legislative context would 

ensure that citizens, through their 

elected representatives, have ample 

opportunity to make their views known 

and to ensure accountability for the 

decisions that are made. 

Economic Implications of Applying 

CAA Authorities: The draft noted 

numerous issues of economic 

significance in analyzing the potential 

application of the CAA to stationary 

sources of GHGs. The Department of 

Commerce highlights below some of the 

most important issues raised in the draft 

that could impact U.S. competitiveness, 

innovation, and job creation. 

Compliance Costs of Multiple State 

Regulations Under the CAA: The draft 

describes the various authorities under 

the CAA that could be applied to GHGs. 

One such mechanism involves the 

development of individual state 

implementations plans (SIPs) in order to 

meet a national GHG emissions 

reduction standard. As the draft notes, 

‘‘[t]he SIP development process, because 

it relies in large part on individual 

states, is not designed to result in a 

uniform national program of emission 

controls.’’ 15 The draft also raises the 

potential implications of this approach: 

‘‘[u]nder the traditional SIP approach, 

emissions controls on specific source 

categories would flow from independent 

state-level decisions, and could result in 

a patchwork of regulations requiring 

different types and levels of controls in 

different states.’’ 16 If this were the 

result, it could undermine the benefit of 

having a national standard and 

significantly raise compliance costs. The 

implications of this approach should be 

examined further. 

Viability of Technological 

Alternatives: The draft notes that some 

of the authorities in the CAA could 

impose requirements to use technology 

that is not commercially viable. For 

example, when discussing Standards of 

Performance for New and Existing 

Sources, the draft notes that ‘‘the 

systems on which the standard is based 

need only be ‘adequately demonstrated’ 

in EPA’s view * * * The systems, and 

corresponding emission rates, need not 

be actually in use or achieved in 

15 EPA draft, pg. 181. 


16 EPA draft, pg. 187. 


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practice at potentially regulated sources 

or even at a commercial scale.’’ 17 

Similarly, in examining the potential 

application of the New Source Review 

program to nonattainment areas, the 

draft outlines the program’s required 

use of the Lowest Available Emissions 

Rate (LAER) technology which ‘‘does 

not allow consideration of the costs, 

competitiveness effects, or other related 

factors associated with the technology 

* * * New and modified sources would 

be required to apply the new technology 

even if it is a very expensive technology 

that may not necessarily have been 

developed for widespread application at 

numerous smaller sources, and even if 

a relatively small emissions 

improvement came with significant 

additional cost.’’ 18 

If CAA requirements such as these 

were used to regulate GHGs, it would 

impose significant costs on those 

required to adopt the technology. 

Expanding CAA Regulation to Cover 

Small Businesses and Non-Profits: The 

draft notes that the use of some CAA 

authorities could extend regulation to 

small and previously unregulated 

emissions sources. For example, the 

draft states that the use of one authority 

under the CAA could result in the 

regulation of ‘‘small commercial or 

institutional establishments and 

facilities with natural gas-fired 

furnaces.’’ 19 This could include large 

single family homes, small businesses, 

schools, or hospitals heated by natural 

gas. If the CAA was applied in ways that 

extended it beyond those traditionally 

regulated under the Act, it could have 

significant economic impacts, and the 

costs of such an application should be 

further analyzed. To put this potential 

expansion in context, in 2003 there 

were 2.4 million commercial non-mall 

buildings in the United States that used 

natural gas, and an estimated 54 percent 

of these buildings were larger than 5,000 

square feet.20 According to the EIA’s 

2003 Commercial Building Energy 

Consumption Survey, a building 

between 5,001 to 10,000 square feet 

consumes 408,000 cubic feet of natural 

gas per year.21 Based on preliminary 

calculations using the EPA’s 

Greenhouse Gas Equivalencies 

Calculator, this translates into annual 

CO2 emissions of 21 metric tons, which 

would exceed the allowable threshold 

under one provision of the CAA.22 

The table below taken from the EIA’s 

2003 Commercial Building Energy 

Consumption Survey shows the number 

and size of U.S. buildings, providing 

more detail on the type of structures 

that could be regulated if the CAA was 

applied to GHGs. Based on the estimate 

of 21 metric tons of annual emissions 

from a building 5,000–10,000 square 

feet in size, it is likely that schools, 

churches, hospitals, hotels, and police 

stations heated by natural gas could be 

subject to the CAA. Clearly, the costs 

and benefits of such an approach should 

be examined in greater detail. 

NON-MALL BUILDINGS USING NATURAL GAS 

[Number and Floorspace by Principal Building Activity, 2003] 

Number of 

buildings 

(thousand) 

Total floorspace 

(million sq. ft.) 

Mean square 

feet per building 

(thousand) 

All Buildings ..................................................................................................................... 

Education ......................................................................................................................... 

Food Sales ....................................................................................................................... 

Food Service .................................................................................................................... 

Health Care ...................................................................................................................... 

Inpatient .................................................................................................................... 

Outpatient ................................................................................................................. 

Lodging ............................................................................................................................ 

Mercantile ........................................................................................................................ 

Office ................................................................................................................................ 

Public Assembly .............................................................................................................. 

Public Order and Safety .................................................................................................. 

Religious Worship ............................................................................................................ 

Service ............................................................................................................................. 

Warehouse and Storage .................................................................................................. 

Other ................................................................................................................................ 

Vacant .............................................................................................................................. 

2,391 

213 

98 

226 

72 

7 

65 

86 

245 

488 

146 

36 

220 

281 

187 

45 

49 

43,468 

7,045 

747 

1,396 

2,544 

1,805 

739 

4,256 

2,866 

8,208 

2,723 

637

2,629 

2,496 

5,494 

1,252 

1,176 

18.2 

33.1 

7.6 

6.2 

35.5 

257.0 

11.4 

49.7 

11.7 

16.8 

18.6 

17.7 

11.9 

8.9 

29.4 

27.9 

24.2 

Source: from Energy Information Administration, 2003 Commercial Buildings Energy Consumption Survey, Table C23. (http://www.eia.doe.gov/ 

emeu/cbecs/cbecs2003/detailed_tables_2003/2003set11/2003excel/c23.xls) 

Cost of CAA Permitting: As the draft hotels, apartment building and large CAA permitting regimes to these areas 

states, ‘‘the mass emissions [of CO2] retail facilities.23 The draft also notes of the economy, such as small 

from many source types are orders of the potential time impacts (i.e., the businesses and commercial 

magnitude greater than for currently number of months necessary to receive development, merit a complete 

regulated pollutants,’’ which could a CAA permit) of applying new permit assessment of the costs and benefits of 

result in the application of the CAA’s requirements to projects and buildings such an approach. 

preconstruction permitting like those noted above that were not Conclusion: Climate change presents 

requirements for modification or new previously subject to the CAA.24 The real challenges that must be addressed 

construction to large office buildings, potential economic costs of applying the through focused public policy 

17 EPA draft, pg. 196. 21 2003 Commercial Buildings Energy HAP standard’s ‘‘major source thresholds of 10 tons 

18 EPA draft, pg. 232. Consumption Survey. for a single HAP and 25 for any combination of 

19 EPA draft, pg. 215. 22 Calculation done by converting cubic feet of HAP would mean that very small GHG emitters 

20 gas consumed to therms, and the number of therms would be considered major sources.’’ Energy Information Agency, 2003 Commercial then inserted into the EPA calculator. According to Buildings Energy Consumption Survey-Overview of 23 EPA draft, pg. 224, 225. the EPA draft (pg. 214): If GHGs were listed as a Commercial Buildings Characteristics, Table C23. Hazardous Air Pollutant (HAP) under the CAA, the 24 EPA draft, pg. 227. 

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44376 Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 

responses. However, the draft raises 

serious concerns about the use of the 

CAA to address GHG emissions. The 

CAA is designed to reduce the 

concentration of pollutants, most of 

which have a limited lifetime in the air, 

while climate change is caused by GHG 

emissions that linger in the atmosphere 

for years. The CAA uses regulations that 

are often implemented at the state and 

regional level, while climate change is 

a global phenomenon. The CAA is 

designed to regulate major sources of 

traditional pollutants, but applying 

those the standards to GHGs could 

result in Clean Air Act regulation of 

small businesses, schools, hospitals, and 

churches. 

Using the CAA to address climate 

change would likely have significant 

economic consequences for the United 

States. Regulation of GHG emissions 

through the CAA would mean that the 

United States would embrace emissions 

reductions outside of an international 

agreement with the world’s major 

emitters. This would put U.S. firms at 

a competitive disadvantage by raising 

their input costs compared to foreign 

competitors, likely resulting in 

emissions leakage outside of the United 

States and energy-intensive firms 

relocating to less regulated countries. 

Such an outcome would not be 

beneficial to the environment or the 

U.S. economy. 

Department of Agriculture 

Americans enjoy the safest, most 

abundant, and most affordable food 

supply in the world. Our farmers are 

extraordinarily productive, using 

technology and good management 

practices to sustain increased yields that 

keep up with growing populations, and 

they are good stewards of the land they 

depend upon for their livelihoods. 

Because of their care and ingenuity, the 

United States is projecting an 

agricultural trade surplus of $30 billion 

in 2008. 

Unfortunately, the approach 

suggested by the Environmental 

Protection Agency (‘‘EPA’’) staff’s draft 

Advance Notice of Proposed 

Rulemaking ‘‘Regulating Greenhouse 

Gas Emissions under the Clean Air 

Act,’’ which was submitted to the Office 

of Management and Budget on June 17, 

2008 (‘‘June 17 draft’’ or ‘‘draft ANPR’’), 

threatens to undermine this landscape. 

If EPA were to exercise a full suite of the 

Clean Air Act (‘‘CAA’’) regulatory 

programs outlined in the draft ANPR, 

we believe that input costs and 

regulatory burden would increase 

significantly, driving up the price of 

food and driving down the domestic 

supply. Additionally, the draft ANPR 

does not sufficiently address the 

promise of carbon capture and 

sequestration, and how a Clean Air Act 

regulatory framework could address 

these issues. 

Input Costs 

Two of the more significant 

components of consumer food prices are 

energy and transportation costs, and as 

these costs rise, they will ultimately be 

passed on to consumers in the form of 

higher food prices. As the past several 

months have demonstrated to all 

Americans, food prices are highly 

sensitive to increased energy and 

transportation costs. From May 2007 to 

May 2008, the price of crude oil has 

almost doubled, and the price 

consumers in the United States paid for 

food has increased by 5.1%. 

We do not attempt here to address the 

effects on energy and transportation 

costs that would likely flow from a 

Clean Air Act approach to regulating 

greenhouse gases. The expert agencies— 

the Department of Energy and the 

Department of Transportation—have 

each included their own brief 

assessments of such effects. Our 

analysis begins with the assumption 

that these input costs would be borne by 

agricultural producers. 

United States commercial agriculture 

is a highly mechanized industry. At 

every stage—field preparation, planting, 

fertilization, irrigation, harvesting, 

processing, and transportation to 

market—modern agriculture is 

dependent on technically complex 

machinery, all of which consume 

energy. Direct energy consumption in 

the agricultural sector includes use of 

gas, diesel, liquid petroleum, natural 

gas, and electricity. In addition, 

agricultural production relies on energy 

indirectly through the use of inputs 

such as nitrogen fertilizer, which have 

a significant energy component 

associated with their production. 

Crop and livestock producers have 

been seeing much higher input prices 

this year. From June 2007 to June 2008, 

the prices paid by farmers for fertilizer 

are up 77%, and the prices paid for 

fuels have risen 61%. The prices paid 

by farmers for diesel fuel alone have 

increased by 72% over the past year. In 

practical terms, these figures mean that 

it is becoming far more costly for the 

producer to farm. Currently, USDA 

forecasts that expenditures for fertilizers 

and lime, petroleum fuel and oils, and 

electricity will exceed $37 billion in 

2008, up 15% from 2007. 

Depending on the extent to which the 

Clean Air Act puts further pressure on 

energy prices, input costs for 

indispensible items such as fuel, feed, 

fertilizer, manufactured products, and 

electricity will continue to rise. A study 

conducted by USDA’s Economic 

Research Service (Amber Waves, April 

2006) found the impact of energy cost 

changes on producers depends on both 

overall energy expenditures and, more 

importantly, energy’s share of 

production costs, with the potential 

impacts on farm profits from changes in 

energy prices greatest for feed grain and 

wheat producers. The study also found 

that variation in the regional 

distribution of energy input costs 

suggests that changes in energy prices 

would most affect producers in regions 

where irrigation is indispensable for 

crop production. Less use of irrigation 

could mean fewer planted acres or 

lower crop yields, resulting in a loss of 

production. In addition to potential 

financial difficulties, farmers fear that 

future tillage practices could be 

mandated and livestock methane 

management regulated. 

However, the impact of higher energy 

prices on farmers is only part of the 

story. Only 19% of what consumers 

paid for food in 2006 went to the farmer 

for raw food inputs. The remaining 81% 

covered the cost of transforming these 

inputs into food products and 

transporting them to the grocery store 

shelf. Of every $1 spent on U.S.-grown 

foods, 3.5 cents went toward the costs 

of electricity, natural gas, and other 

fuels used in food processing, 

wholesaling, retailing, and food service 

establishments. An additional 4 cents 

went toward transportation costs. This 

suggests that for every 10 percent 

increase in energy costs, retail food 

prices could increase by as much as 0.75 

percent if fully passed onto consumers. 

The resulting impact to the consumer of 

higher energy prices will be much 

higher grocery bills. More important, 

however, will be the negative effect on 

our abundant and affordable food 

supply. 

Regulatory Burden on Agriculture 

In its draft ANPR, EPA contemplates 

regulating agricultural greenhouse gas 

(GHG) emissions under the three 

primary CAA programs—National 

Ambient Air Quality Standards 

(‘‘NAAQS’’), New Source Performance 

Standards (‘‘NSPS’’), or Hazardous Air 

Pollutant (‘‘HAP’’) standards. Like the 

Act itself, these programs were neither 

designed for, nor are they suitable to, 

regulation of greenhouse gases from 

agricultural sources. If agricultural 

producers were covered under such 

complex regulatory schemes, most 

(except perhaps the largest operations) 

would be ill-equipped to bear the costly 

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burdens of compliance, and many 

would likely cease farming altogether. 

The two common features of each 

CAA program are permitting and control 

requirements: 

Permitting: Operators who are subject 

to Title V permitting requirements— 

regardless of which CAA program is 

applicable—are required to obtain a 

permit in order to operate. These Title 

V permits are subject to a public notice 

and comment period and contain 

detailed requirements for emission 

estimation, monitoring, reporting, and 

recordkeeping. Title V permits may also 

contain control requirements that limit 

the operation of a facility. If a producer 

desired, or were compelled by changed 

circumstances (e.g., changing market 

demand, weather events, or pest 

infestation) to modify his operational 

plans, he would be required to first seek 

a permit modification from EPA or the 

State. 

If GHG emissions from agricultural 

sources are regulated under the CAA, 

numerous farming operations that 

currently are not subject to the costly 

and time-consuming Title V permitting 

process would, for the first time, 

become covered entities. Even very 

small agricultural operations would 

meet a 100-tons-per-year emissions 

threshold. For example, dairy facilities 

with over 25 cows, beef cattle 

operations of over 50 cattle, swine 

operations with over 200 hogs, and 

farms with over 500 acres of corn may 

need to get a Title V permit. It is neither 

efficient nor practical to require 

permitting and reporting of GHG 

emissions from farms of this size. 

Excluding only the 200,000 largest 

commercial farms, our agricultural 

landscape is comprised of 1.9 million 

farms with an average value of 

production of $25,589 on 271 acres. 

These operations simply could not bear 

the regulatory compliance costs that 

would be involved. 

Control: Unlike traditional point 

sources of concentrated emissions from 

chemical or manufacturing industries, 

agricultural emissions of greenhouse 

gases are diffuse and most often 

distributed across large open areas. 

These emissions are not easily 

calculated or controlled. Moreover, 

many of the emissions are the result of 

natural biological processes that are as 

old as agriculture itself. For instance, 

technology does not currently exist to 

prevent the methane produced by 

enteric fermentation associated with the 

digestive processes in cows and the 

cultivation of rice crops; the nitrous 

oxide produced from the tillage of soils 

used to grow crops; and the carbon 

dioxide produced by soil and animal 

agricultural respiratory processes. The 

only means of controlling such 

emissions would be through limiting 

production, which would result in 

decreased food supply and radical 

changes in human diets. 

The NAAQS program establishes 

national ambient concentration levels 

without consideration of specific 

emission sources. The determination of 

which source is required to achieve 

emission reductions and how to achieve 

those reductions is specified in the State 

Implementation Plans (‘‘SIPs’’) 

developed by each State. Under a 

NAAQS regulatory program, agricultural 

sources may need to employ Reasonably 

Available Control Measures (‘‘RACM’’) 

or, at a minimum, include the use of 

Reasonably Available Control 

Technologies (‘‘RACT’’). In the past, 

such control measures were established 

with a national focus for typical 

industrial sources. In previously 

regulated sectors, these control 

measures and technologies have 

typically been associated with improved 

engineering or chemical processes; 

however, agriculture is primarily 

dependent upon biological processes 

which are not readily re-engineered. 

Given the nature of many agricultural 

source emissions, RACM and RACT 

may not exist or may be cost 

prohibitive. 

The NSPS program regulates specific 

pollutants emitted from industrial 

categories for new, modified, or 

reconstructed facilities. EPA, rather than 

individual States, determines who is 

regulated, the emission reductions that 

must be achieved, and the associated 

control technologies and compliance 

requirements. Should EPA choose to 

regulate agriculture under NSPS, control 

requirements would be established at 

the national level using a ‘‘one-size-fitsall’’ approach. Differences in farming 

practices make it difficult to comply 

with this approach, as variability exists 

between types of operations and 

between similar operations located in 

different regions of the United States. 

In addition, regulation of the 

agricultural sector under a NSPS 

program would likely trigger the added 

challenge of compliance with the preconstruction permitting process under 

the Prevention of Significant 

Deterioration (‘‘PSD’’) program. 

Triggering pre-construction permits 

could result in a requirement to utilize 

Best Available Control Technologies 

(‘‘BACT’’) or technologies that achieve 

the Lowest Available Emission 

Reductions (‘‘LAER’’). Given the state of 

available control methods for 

agricultural area sources, compliance 

with these requirements may not 

currently be achievable in many 

instances. Should BACT or LAER 

technologies exist, the ability to utilize 

them across the variety of farming 

operations is questionable, and the costs 

to employ these technologies would be 

high since they would be relatively new 

technologies. 

Similar to the NSPS program, the 

HAP program focuses on industrial 

categories. EPA must list for regulation 

all categories of major sources that emit 

one or more HAP at levels that are very 

low (i.e., 10 tons per year of a single 

HAP or 25 tons per year of a 

combination of HAP). Under a HAP 

program, EPA can regulate both major 

sources and smaller (i.e., area) sources. 

In addition to the Title V permit 

requirement, this program would result 

in emission control requirements for all 

agricultural sources regardless of the 

size of the operation. These 

requirements are driven by the bestperforming similar sources, with EPA 

determining the similarity between 

sources. This approach does not lend 

itself to compliance by agricultural 

sources whose practices vary farm-byfarm and locality-by-locality. In 

addition, the cost of controls used by 

the best-performing sources would 

increase the operating expenses for all 

farms regardless of size. 

While this discussion only begins to 

address the practical difficulties that 

agricultural producers will face if EPA 

were to regulate GHGs under the CAA, 

these questions have not been raised in 

the draft ANPR in the context of 

agriculture. USDA believes that these 

issues must be thoroughly considered 

before a rule is finalized. 

Capture and Sequestration 

The draft ANPR does not sufficiently 

address the promise of carbon capture 

and sequestration, or how a Clean Air 

Act regulatory framework could address 

these issues. In describing emissions by 

sector, the draft ANPR does contain the 

following brief introductory statement: 

Land Use, Land-Use Change, and Forestry: 

Land use is not an economic sector per se but 

affects the natural carbon cycle in ways that 

lead to GHG emissions and sinks. Included 

in this category are emissions and 

sequestration of CO2 from activities such as 

deforestation, afforestation, forest 

management and management of agricultural 

soils. Emissions and sequestration depend on 

local conditions, but overall land use in the 

United States was a net sink in 2006 

equivalent to 12.5 percent of total GHG 

emissions. 

Thus, the United States Government, 

as well as private landowners 

throughout the country, possess land 

resources that hold potentially 

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tremendous economic and 

environmental value in a carbon-limited 

environment. 

Unfortunately, in the draft ANPR’s 

extensive discussion of regulatory 

alternatives, the EPA staff does not even 

attempt to make the case that the Clean 

Air Act could or should be used to 

ensure that a regulatory scheme 

maximizes opportunities and incentives 

for carbon capture and sequestration. 

Had the draft ANPR raised these issues, 

it would become evident that there are 

substantial questions as to whether the 

CAA could provide an effective vehicle 

to account for such beneficial actions. 

Additionally, any regulatory program 

should avoid needless duplication and 

conflict with already existing efforts. 

The recently enacted Food, 

Conservation and Energy Act of 2008 

(‘‘Farm Bill’’) requires the Secretary of 

Agriculture to establish technical 

guidelines to create a registry of 

environmental services benefits from 

conservation and land management 

activities, including carbon capture and 

sequestration. USDA is including EPA 

and other Federal agencies as 

participants in this process, which we 

believe holds substantial promise. 

BILLING CODE 6560–50–P 

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BILLING CODE 6560–50–C 

General Information 

What Should I Consider as I Prepare My 

Comments for EPA? 

A. Submitting CBI 

Do not submit this information to EPA 

through www.regulations.gov or e-mail. 

Clearly mark the part or all of the 

information that you claim to be 

confidential business information (CBI). 

For CBI information in a disk or CD 

ROM that you mail to EPA, mark the 

outside of the disk or CD ROM as CBI 

and then identify electronically within 

the disk or CD ROM the specific 

information that is claimed as CBI. In 

addition to one complete version of the 

comment that includes information 

claimed as CBI, a copy of the comment 

that does not contain the information 

claimed as CBI must be submitted for 

inclusion in the public docket. 

Information so marked will not be 

disclosed except in accordance with 

procedures set forth in 40 CFR part 2. 

B. Tips for Preparing Your Comments 

When submitting comments, 

remember to: 

• Explain your views as clearly as 

possible. 

• Describe any assumptions that you 

used. 

• Provide any technical information 

and/or data you used that support your 

views. 

• If you estimate potential burden or 

costs, explain how you arrived at your 

estimate. 

• Provide specific examples to 

illustrate your concerns. 

• Offer alternatives. 

• Make sure to submit your 

comments by the comment period 

deadline identified. 

• To ensure proper receipt by EPA, 

identify the appropriate docket 

identification number in the subject line 

on the first page of your response. It 

would also be helpful if you provided 

the name, date, and Federal Register 

citation related to your comments. 

Outline of This Preamble 

I. Introduction 

II. Background Information 

III. Nature of Climate Change and 

Greenhouse Gases and Related Issues for 

Regulation 

IV. Clean Air Act Authorities and Programs 

V. Endangerment Analysis and Issues 

VI. Mobile Source Authorities, Petitions and 

Potential Regulation 

VII. Stationary Source Authorities and 

Potential Regulation 

VIII. Stratospheric Ozone Protection 

Authorities, Background, and Potential 

Regulation 

I. Introduction 

Climate change is a serious global 

challenge. As detailed in section V of 

this notice, it is widely recognized that 

greenhouse gases (GHGs) have a 

climatic warming effect by trapping heat 

in the atmosphere that would otherwise 

escape to space. Current atmospheric 

concentrations of GHGs are significantly 

higher than pre-industrial levels as a 

result of human activities. Warming of 

the climate system is unequivocal, as is 

now evident from observations of 

increases in global average air and ocean 

temperatures, widespread melting of 

snow and ice, and rising global average 

sea level. Observational evidence from 

all continents and most oceans shows 

that many natural systems are being 

affected by regional climate changes, 

particularly temperature increases. 

Future projections show that, for most 

scenarios assuming no additional GHG 

emission reduction policies, 

atmospheric concentrations of GHGs are 

expected to continue climbing for most 

if not all of the remainder of this 

century, with associated increases in 

average temperature. Overall risk to 

human health, society and the 

environment increases with increases in 

both the rate and magnitude of climate 

change. 

Today’s notice considers the potential 

use of the CAA to address climate 

change. In April 2007, the Supreme 

Court concluded in Massachusetts v. 

EPA, 127 S. Ct. 1438 (2007), that GHGs 

meet the CAA definition of ‘‘air 

pollutant,’’ and that section 202(a)(1) of 

the CAA therefore authorizes regulation 

of GHGs subject to an Agency 

determination that GHG emissions from 

new motor vehicles cause or contribute 

to air pollution that may reasonably be 

anticipated to endanger public health or 

welfare. The Court also ruled that in 

deciding whether to grant or deny a 

pending rulemaking petition regarding 

section 202(a)(1), EPA must decide 

whether new motor vehicle GHG 

emissions meet that endangerment test, 

or explain why scientific uncertainty is 

so profound that it prevents making a 

reasoned judgment on such a 

determination. If EPA finds that new 

motor vehicle GHG emissions meet the 

endangerment test, section 202(a)(1) of 

the CAA requires the Agency to set 

motor vehicle standards applicable to 

emissions of GHGs. 

EPA is also faced with the broader 

ramifications of any regulation of motor 

vehicle GHG emissions under the CAA 

in response to the Supreme Court’s 

decision. Over the past several months, 

EPA has received seven petitions from 

states, localities, and environmental 

groups to set emission standards under 

Title II of Act for other types of mobile 

sources, including nonroad vehicles 

such as construction and farm 

equipment, ships and aircraft. The 

Agency has also received public 

comments seeking the addition of GHGs 

to the pollutants covered by the new 

source performance standard (NSPS) for 

several industrial sectors under section 

111 of the CAA. In addition, legal 

challenges have been brought seeking 

controls for GHG emissions in 

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preconstruction permits for several coalfired power plants. 

The interrelationship of CAA 

authorities and the broad array of 

pending and potential CAA actions 

concerning GHGs make it prudent to 

thoroughly consider how the various 

CAA authorities would or could work 

together if GHG controls were 

established under any provision of the 

Act. Since regulation of one source of 

GHG emissions would or could lead to 

regulation of other sources of GHG 

emissions, the Agency should be 

prepared to manage the consequences of 

CAA regulation of GHGs in the most 

effective and efficient manner possible 

under the Act. 

Today’s notice discusses our work to 

date in response to the Supreme Court’s 

decision regarding an endangerment 

finding and vehicle standards under 

section 202 of the Act. It also includes 

a comprehensive examination of the 

potential effects of using various 

authorities under the Act to regulate 

other sources of GHG emissions. In 

addition, this notice examines and seeks 

public comment on the petitions the 

Agency has received for GHG regulation 

of additional mobile source categories. 

In light of the interrelationship of CAA 

authorities and the pending CAA 

actions concerning GHGs, the notice 

identifies and discusses possible 

approaches for controlling GHG 

emissions under the Act and the issues 

they raise. 

Today’s notice is also part of broader 

efforts to address the climate change 

challenge. Since 2001, President Bush 

has pursued a broad climate change 

agenda that has improved our 

understanding of climate change and its 

effects, spurred development of needed 

GHG control technologies, increased our 

economy’s energy efficiency, and 

engaged other nations in efforts to foster 

sensible solutions to the global 

challenge of climate change. Building 

on that success, the President recently 

announced a new national goal: to stop 

the growth of U.S. GHG emissions by 

2025. New actions will be necessary to 

meet this goal. 

The President has identified several 

core principles for crafting any new 

GHG-specific legislation. EPA believes 

these principles are also important in 

considering GHG regulation under the 

CAA, to the extent allowed by law. 

These principles include addressing 

GHG emissions in a manner that does 

not harm the U.S. economy; 

encouraging the technological 

development that is essential to 

significantly reducing GHG emissions; 

and recognizing that U.S. efforts to 

reduce GHG emissions could be 

undermined if other countries with 

significant GHG emissions fail to control 

their emissions and U.S. businesses are 

put at a competitive disadvantage 

relative to their foreign competitors. 

Throughout this notice we discuss and 

seek comment on whether and how 

these principles can inform decisions 

regarding GHG regulation under the 

CAA. 

In Congress, both the House and 

Senate are considering climate change 

legislation. A number of bills call for 

reducing GHG emissions from a wide 

variety of sources using a ‘‘cap-andtrade’’ approach. Many of the sources 

that would be subject to requirements 

under the bills are already subject to 

numerous CAA controls. Thus, there is 

potential for overlap between regulation 

under the CAA and new climate change 

legislation. 

This ANPR performs five important 

functions that can help inform the 

legislative debate: 

• First, in recognition of the Supreme 

Court’s decision that GHGs are air 

pollutants under the CAA, the ANPR 

outlines options that may need to be 

exercised under the Act. 

• Second, this notice provides 

information on how the GHG 

requirements under the CAA might 

overlap with control measures being 

considered for climate change 

legislation. 

• Third, the notice discusses issues 

and approaches for designing GHG 

control measures that are useful in 

developing either regulations or 

legislation to reduce GHG emissions. 

• Fourth, the ANPR illustrates the 

complexity and interconnections 

inherent in CAA regulation of GHGs. 

These complexities reflect that the CAA 

was not specifically designed to address 

GHGs and illustrate the opportunity for 

new legislation to reduce regulatory 

complexity. However, unless and until 

Congress acts, the existing CAA will be 

applied in its current form. 

• Fifth, some sections of the CAA are 

inherently flexible and thus more 

capable of accommodating 

consideration of the President’s 

principles. Other sections may not 

provide needed flexibility, raising 

serious concerns about the results of 

applying them. EPA believes that the 

presentation in this notice of the various 

potential programs of the CAA will help 

inform the legislative debate. 

EPA is following the Supreme Court’s 

decision in Massachusetts v. EPA by 

seriously considering how to apply the 

CAA to the regulation of GHGs. In light 

of the CAA’s interconnections and other 

issues explored in this notice, EPA does 

not believe that all aspects of the Act are 

well designed for establishing the kind 

of comprehensive GHG regulatory 

program that could most efficiently 

achieve the GHG emission reductions 

that may be needed over the next 

several decades. EPA requests comment 

on whether well-designed legislation for 

establishing a broad GHG regulatory 

framework has the potential for 

achieving greater environmental results 

at lower cost for many sectors of the 

economy, with less concern about 

emissions leakage and more effective, 

clearer incentives for development of 

technology, than a control program 

based on the CAA alone. 

II. Background Information 

A. Background on the Supreme Court 

Opinion 

On October 20, 1999, the International 

Center for Technology Assessment 

(ICTA) and 18 other environmental and 

renewable energy industry organizations 

filed a petition with EPA seeking 

regulation of GHGs from new motor 

vehicles under section 202 (a)(1) of the 

CAA. The thrust of the petition was that 

four GHGs—carbon dioxide (CO2), 

methane (CH4), nitrous oxide (N2O), and 

hydrofluorocarbons (HFCs)—are air 

pollutants as defined in CAA section 

302(g), that emissions of these GHGs 

contribute to air pollution which is 

reasonably anticipated to endanger 

public health or welfare, that these 

GHGs are emitted by new motor 

vehicles, and therefore that EPA has a 

mandatory duty to issue regulations 

under CAA section 202(a) addressing 

GHGs from these sources. 

EPA denied the petition in a notice 

issued on August 8, 2003. The Agency 

concluded that it lacked authority under 

the CAA to regulate GHGs for purposes 

of global climate change. EPA further 

decided that even if it did have 

authority to set GHG emission standards 

for new motor vehicles, it would be 

unwise to do so at this time. More 

specifically, EPA stated that CAA 

regulation of CO2 emitted by light-duty 

vehicles would interfere with fuel 

economy standards issued by the 

Department of Transportation (DOT) 

under the Energy Policy and 

Conservation Act (EPCA), because the 

principal way of reducing vehicle CO2 

emissions is to increase vehicle fuel 

economy. The Agency also noted in the 

2003 notice that there was significant 

scientific uncertainty regarding the 

cause, extent and effects of climate 

change that ongoing studies would 

reduce. EPA further stated that 

regulation of climate change using the 

CAA would be inappropriate given the 

President’s comprehensive climate 

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change policies, concerns about 

piecemeal regulation, and implications 

for foreign policy. 

EPA’s denial of the ICTA petition was 

challenged in a petition for review filed 

in the U.S. Court of Appeals for the D.C. 

Circuit. Petitioners included 12 states, 

local governments, and a variety of 

environmental organizations. 

Intervenors in support of respondent 

EPA included 10 states and several 

industry trade associations. 

The D.C. Circuit upheld EPA’s denial 

of the petition in a 2–1 opinion 

(Massachusetts v. EPA, 415 F.3d 50 

(D.C. Cir. 2005)). The majority opinion 

did not decide but assumed, for 

purposes of argument, that EPA had 

statutory authority to regulate GHGs 

from new motor vehicles and held that 

EPA had reasonably exercised its 

discretion in denying the petition. 

In a 5–4 decision, the Supreme Court 

reversed the D.C. Circuit’s decision and 

held that EPA had improperly denied 

ICTA’s petition (Massachusetts v. EPA, 

127 S. Ct. 1438 (2007)). The Court held 

that GHGs are air pollutants under the 

CAA, and that the alternative denial 

grounds provided by EPA were 

‘‘divorced from the statutory text’’ and 

hence improper. 

Specifically, the Court held that CO2, 

CH4, N2O, and HFCs fit the CAA’s 

definition of ‘‘air pollutant’’ because 

they are ‘‘ ‘physical [and] chemical 

* * * substances which [are] emitted 

into * * * the ambient air.’ ’’ Id. at 

1460. The Court rejected the argument 

that EPA could not regulate new motor 

vehicle emissions of the chief GHG, 

CO2, under CAA section 202 because 

doing so would essentially regulate 

vehicle fuel economy, which is the 

province of DOT under EPCA. The 

Court held that EPA’s mandate to 

protect public health and welfare is 

‘‘wholly independent of DOT’s mandate 

to promote energy efficiency,’’ even if 

the authorities may overlap. Id. at 1462. 

The Court stated that ‘‘there is no reason 

to think the two agencies cannot both 

administer their obligations and yet 

avoid inconsistency.’’ Id. 

Turning to EPA’s alternative grounds 

for denial, the Court held that EPA’s 

decision on whether to grant the 

petition must relate to ‘‘whether an air 

pollutant ‘causes, or contributes to, air 

pollution which may reasonably be 

anticipated to endanger public health or 

welfare.’ ’’ Id. Specifically, the Court 

held that generalized concerns about 

scientific uncertainty were insufficient 

unless ‘‘the scientific uncertainty is so 

profound that it precludes EPA from 

making a reasoned judgment as to 

whether greenhouse gases contribute to 

global warming.’’ Id. at 1463. The Court 

further ruled that concerns related to 

piecemeal regulation and foreign policy 

objectives were unrelated to whether 

new motor vehicle GHG emissions 

contribute to climate change and hence 

could not justify the denial. 

The Court remanded the decision to 

EPA but was careful to note that it was 

not dictating EPA’s action on remand, 

and was not deciding whether EPA 

must find there is endangerment. Nor 

did the Court rule on ‘‘whether policy 

concerns can inform EPA’s actions in 

the event that it makes such a finding.’’ 

Id. The Court also observed that under 

CAA section 202(a), ‘‘EPA no doubt has 

significant latitude as to the manner, 

timing, content, and coordination of its 

regulations with those of other 

agencies.’’ The Supreme Court sent the 

case back to the D.C. Circuit, which on 

September 14, 2007, vacated and 

remanded EPA’s decision denying the 

ICTA petition for further consideration 

by the Agency consistent with the 

Supreme Court’s opinion. 

B. Response to the Supreme Court’s 

Decision to Date 

1. The President’s May 2007 

Announcement and Executive Order 

In May 2007, President Bush 

announced that he was ‘‘directing the 

EPA and the Departments of 

Transportation and Energy (DOT and 

DOE) to take the first steps toward 

regulations that would cut gasoline 

consumption and GHG emissions from 

motor vehicles, using my 20-in-10 plan 

as a starting point.’’ The 20-in-10 plan 

refers to the President’s legislative 

proposal, first advanced in his 2007 

State of the Union address, to reduce 

domestic gasoline consumption by 20% 

by 2017 through the use of renewable 

and alternative fuels and improved 

motor vehicle fuel economy. 

On the same day, President Bush 

issued Executive Order (EO) 13432 ‘‘to 

ensure the coordinated and effective 

exercise of the authorities of the 

President and the heads of the [DOT], 

the Department of Energy, and [EPA] to 

protect the environment with respect to 

greenhouse gas emissions from motor 

vehicles, nonroad vehicles, and nonroad 

engines, in a manner consistent with 

sound science, analysis of benefits and 

costs, public safety, and economic 

growth.’’ 

In response to the Supreme Court’s 

Massachusetts decision and the 

President’s direction, EPA immediately 

began work with DOT and the 

Departments of Energy and Agriculture 

to develop draft proposed regulations 

that would reduce GHG emissions from 

motor vehicles and their fuels. In 

particular, EPA and DOT’s National 

Highway Traffic Safety Agency 

(NHTSA) worked together on a range of 

issues related to setting motor vehicle 

GHG emission standards under the CAA 

and corporate average fuel economy 

(CAFE) standards under EPCA. As a 

prerequisite to taking action under the 

CAA, the Agency also compiled and 

reviewed the available scientific 

information relevant to deciding 

whether GHG emissions from motor 

vehicles, and whether GHG emissions 

from the use of gasoline and diesel fuel 

by motor vehicles and nonroad engines 

and equipment, cause or contribute to 

air pollution that may reasonably be 

anticipated to endanger public health or 

welfare. 

Sections V and VI of this notice 

provide further discussion and detail 

about EPA’s work to date on an 

endangerment finding and new motor 

vehicle regulation under section 202 of 

the CAA. 

2. Passage of a New Energy Law 

At the same time as EPA was working 

with its federal partners to develop draft 

proposed regulations for reducing motor 

vehicle and fuel GHG emissions, 

Congress was considering broad new 

energy legislation that included 

provisions addressing the motor vehicle 

fuel economy and fuel components of 

the President’s 20-in-10 legislative plan. 

By the end of 2007, Congress passed and 

the President signed the Energy 

Independence and Security Act (EISA). 

Title II of EISA amended the CAA 

provisions requiring a Renewable Fuels 

Standard (RFS) that were first 

established in the Energy Policy Act of 

2005. EISA also separately amended 

EPCA with regard to the DOT’s 

authority to set CAFE standards for 

vehicles. 

With regard to the RFS, Congress 

amended section 211(o) of the CAA to 

increase the RFS from 7.5 billion gallons 

in 2012 to 36 billion gallons in 2022. 

There are a number of significant 

differences between the RFS provisions 

of EISA and the fuels program EPA was 

developing under the President’s 

Executive Order. As a result, EPA is 

undertaking substantial new analytical 

work as part of its efforts to develop the 

regulations needed to implement the 

new RFS requirements. These 

regulations are subject to tight statutory 

deadlines. 

With regard to motor vehicle 

regulations, EISA did not amend CAA 

section 202, which contains EPA’s 

general authority to regulate motor 

vehicle emissions. However, EISA did 

substantially alter DOT’s authority to set 

CAFE standards under EPCA. The 

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legislation directs the Department to set 

CAFE standards that achieve fleet-wide 

average fuel economy of at least 35 

miles per gallon by 2020 for light-duty 

vehicles, and for the first time to 

establish fuel economy standards for 

heavy-duty vehicles after a period of 

study. 

In view of this new statutory 

authority, EPA and DOT have reviewed 

the previous regulatory activities they 

had undertaken pursuant to the 

President’s May 14 directive and EO 

13432. While EPA recognizes that EISA 

does not change the Agency’s obligation 

to respond to the Supreme Court’s 

decision in Massachusetts v. EPA or the 

scientific basis for any decision, the new 

law has changed the context for any 

action EPA might take in response to the 

decision by requiring significant 

improvements in vehicle fuel economy 

that will in turn achieve substantial 

reductions in vehicle emissions of 

CO2.25 

3. Review of CAA Authorities 

As part of EPA’s efforts to respond to 

the Supreme Court’s decision, the 

Agency conducted a thorough review of 

the CAA to identify and assess any other 

CAA provisions that might authorize 

regulation of GHG emission sources. 

That review made clear that a decision 

to control any source of GHG emissions 

could or would impact other CAA 

programs with potentially far-reaching 

implications for many industrial sectors. 

In particular, EPA recognized that 

regulation of GHG emissions from motor 

vehicles under section 202(a)(1) or from 

other sources of GHG emissions under 

many other provisions of the Act would 

subject major stationary sources to 

preconstruction permitting under the 

CAA. As discussed later in this notice, 

the Prevention of Significant 

Deterioration (PSD) program established 

in Part C of Title I of the Act requires 

new major stationary sources and 

modified stationary sources that 

significantly increase their emissions of 

regulated air pollutants to apply for PSD 

permits and put on controls to reduce 

emissions of those pollutants that reflect 

the best available control technology 

(BACT). Because CO2 is typically 

emitted in much larger quantities 

relative to traditional air pollutants, 

CAA regulation of CO2 would 

25 The Current Unified Agenda and Regulatory 

Plan (Regulatory Plan) available in May 2008 

reflects that EPA is addressing its response to 

Massachusetts v. EPA as part of today’s notice. The 

latest Regulatory Plan also contains a new entry for 

the renewable fuels standard program EPA is 

undertaking pursuant to Title II of EISA (RIN 2060– 

AO81). The current Regulatory Plan is available at 

http://www.reginfo.gov/public/do/eAgendaMain. 

potentially extend PSD requirements to 

many stationary sources not previously 

subject to the PSD program, including 

large buildings heated by natural gas or 

oil, and add new PSD requirements to 

sources already subject to the program. 

This and other CAA implications of 

regulation of GHG emissions under the 

Act are explored later in this notice. 

C. Other Pending GHG Actions Under 

the CAA 

1. Additional Mobile Source Petitions 

Since the Supreme Court’s 

Massachusetts decision, EPA has 

received seven additional petitions 

requesting that the Agency make the 

requisite endangerment findings and 

undertake rulemaking under CAA 

sections 202(a)(3), 211, 213 and 231 to 

regulate GHG emissions 26 from (1) fuels 

and a wide array of mobile sources 

including ocean-going vessels; (2) all 

other types of nonroad engines and 

equipment, such as locomotives, 

construction equipment, farm tractors, 

forklifts, harbor crafts, and lawn and 

garden equipment; (3) aircraft; and (4) 

rebuilt heavy-duty highway engines. 

The petitioners represent state and local 

governments, environmental groups, 

and nongovernmental organizations. 

Copies of these seven petitions can be 

found in the docket for this notice. 

These petitions have several common 

elements. First, the petitioners state that 

climate change is occurring and is 

driven by increases in GHG emissions; 

that the mobile sources described in the 

petitions account for a significant and 

growing portion of these emissions; and 

that those mobile sources must therefore 

be regulated under the CAA. Second, 

the petitioners assert that EPA should 

expeditiously regulate GHG emissions 

from those mobile sources because they 

are already harming the petitioners’ 

health and welfare and further delay by 

the Agency will only increase the 

severity of future harms to public health 

and welfare. Lastly, the petitioners 

contend that technology is currently 

available to reduce GHG emissions from 

the mobile sources for which regulation 

is sought. 

Section VI of this notice provides a 

brief discussion of these petitions. The 

section also summarizes information on 

the GHG emissions of each of the three 

mobile source categories, technologies 

and other strategies for reducing GHG 

emissions from those categories, and 

potential approaches for EPA to address 

26 While petitioners vary somewhat in their 

definition of GHGs, taken together they seek 

regulation of CO2, CH4, N2O, HFCs, PFCs, and SF6, 

water vapor, and soot or black carbon. 

their emissions. We request comment on 

all issues raised by the petitioners. 

2. New Source Performance Standards 

The Massachusetts decision also 

impacts several stationary source 

rulemakings. A group of state and local 

governments and environmental 

organizations petitioned the U.S. Court 

of Appeals for the D.C. Circuit to review 

a 2006 decision by EPA not to regulate 

the GHG emissions of several types of 

steam generating units when the Agency 

conducted the periodic review of the 

new source performance standard 

(NSPS) for those units as required by 

CAA section 111. EPA based its 

decision on the position it announced in 

denying the ICTA petition that the CAA 

does not authorize regulation of GHG 

emissions. After the Supreme Court 

ruled that the CAA does provide 

authority for regulating GHG emissions, 

the Agency filed a request with the D.C. 

Circuit to have the NSPS rule remanded 

to us for further actions consistent with 

the Supreme Court’s opinion. Our 

motion was granted, and this ANPR 

represents the next step in our efforts to 

evaluate and respond to the court’s 

decision. 

Another NSPS affected by the 

Supreme Court’s decision is the 

standard applicable to petroleum 

refineries. Pursuant to a consent decree 

deadline, EPA proposed revisions to the 

NSPS on April 30, 2007, less than one 

month following the Supreme Court 

decision. During the comment period 

for the review, EPA received comments 

calling for the NSPS to be revised to 

include limits on GHG emissions. In our 

final rule on April 30, 2008, we 

declined to adopt standards for GHGs at 

that time. First, we noted that, in the 

context of statutorily mandated 8-year 

reviews for NSPS, EPA has discretion 

regarding the adoption of standards for 

pollutants not previously covered by an 

NSPS. We also explained that the 

significant differences between GHGs 

and the other air pollutants for which 

we have previously established 

standards under section 111 require a 

more thorough and deliberate process to 

identify and fully evaluate the 

implications of a decision to regulate 

under this and other provisions of the 

CAA before deciding how to regulate 

GHGs under the Act. We pointed to this 

notice as the means for providing that 

process. We further noted that the time 

period available for proposing NSPS 

was too short for EPA to evaluate and 

develop proposed standards in light of 

the Massachusetts decision. 

EPA also recently issued proposed 

revisions of the Portland cement NSPS 

in accordance with the schedule of a 

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consent decree. In its May 30, 2008 

notice, EPA decided not to propose 

adding GHG emission requirements to 

the Portland cement NSPS for 

essentially the same reasons the Agency 

gave in deciding against adding GHG 

controls to the refinery NSPS. 

3. Prevention of Significant 

Deterioration Permitting 

As noted previously, the CAA’s PSD 

program requires new major stationary 

sources and modified major stationary 

sources that significantly increase 

emissions to obtain air pollution 

permits before construction can begin. 

As part of the permit issuance process, 

the public can comment on drafts of 

these permits. Since the Massachusetts 

decision, the number and scope of 

issues raised by public comments on 

draft permits has increased.27 The main 

issue that has been raised is whether 

EPA should be establishing facilityspecific emission limits for CO2 in these 

permits as a result of the Court’s 

decision. EPA’s interpretation, 

discussed in more detail later in this 

notice, is that CO2 is not a regulated 

pollutant under the Act and that we 

therefore currently lack the legal 

authority to establish emission limits for 

this pollutant in PSD permits. That 

interpretation has been challenged to 

EPA’s Environmental Appeals Board, 

and we anticipate a decision in this case 

later this year.28 The Appeals Board’s 

decision could also affect several other 

permits awaiting issuance by EPA, and 

may have significant implications for 

the entire PSD program. The broader 

consequences of CO2 and other GHGs 

being classified as a regulated pollutant 

are discussed later in this notice. 

EPA has also received other GHG 

related comments related to other 

elements of the PSD program, such as 

the consideration of GHG emissions in 

establishing controls for other 

pollutants, the consideration of 

alternatives to the proposed project, and 

related issues. EPA is currently 

considering these comments in the 

context of evaluating each PSD permit 

application on a case-by-case basis, 

applying current law. 

27 Most PSD permits are issued by states under 

EPA-approved state rules. Other states without 

approved rules can also issue permits on behalf of 

EPA under delegation agreements. EPA is the 

permitting authority in New York, Massachusetts, 

Washoe Co (Nevada), Puerto Rico, Guam, American 

Samoa, and the Virgin Islands. EPA also issues PSD 

permits for sources on tribal lands. 

28 See, In Re Deseret Power Electric Cooperative, 

PSD Appeal No. 07–03 (http://www.epa.gov/ 

region8/air/permitting/deseret.html). 

4. GHG Reporting Rule 

In EPA’s most recent appropriations 

bill, Congress called on EPA to develop 

and issue a mandatory GHG emissions 

reporting rule by the middle of 2009.29 

Accordingly, EPA is now developing 

a proposed rule that would collect 

emissions and emissions-related 

information from stationary and mobile 

sources. The overall purpose of the rule 

is to obtain comprehensive and accurate 

GHG data relevant to future climate 

policy decisions, including potential 

regulation under the CAA. EPA expects 

the rule to provide valuable additional 

information on the number and types of 

U.S. GHG sources and on the GHG 

emission levels of those sources. 

D. Today’s Action 

In view of the interrelationship of 

CAA authorities and the many pending 

CAA actions concerning GHGs before 

the Agency, EPA decided to issue this 

ANPR to elicit information that will 

assist us in developing and evaluating 

potential action under the CAA. In this 

ANPR, we review the bases for a 

potential endangerment finding in the 

context of the pending petition 

concerning new motor vehicles, explore 

interconnections between CAA 

provisions that could lead to broader 

regulation of GHG emissions, and 

examine the full range of potential CAA 

regulation of GHGs, including a 

discussion of the issues raised by 

regulation of GHG emissions of mobile 

and stationary sources under the Act. 

The ANPR will help us shape an overall 

approach for potentially addressing 

GHG emissions under the CAA as part 

of a broader set of actions to address 

GHG emissions taken by Congress, EPA, 

other federal departments and agencies, 

state and local governments, the private 

sector, and the international 

community. 

III. Nature of Climate Change and 

Greenhouse Gases and Related Issues 

for Potential Regulation 

Much of today’s notice is devoted to 

a detailed examination of the various 

CAA authorities that might be used to 

regulate GHG emissions and the 

scientific and technical bases for 

potentially exercising those authorities. 

A key question for EPA is whether and 

29 The fiscal year 2008 Consolidated 

Appropriations Act states that ‘‘not less than 

$3,500,000 shall be provided for activities to 

develop and publish a draft rule not later than 9 

months after the date of enactment of this Act, and 

a final rule not later than 18 months after the date 

of enactment of this Act, to require mandatory 

reporting of greenhouse gas emissions above 

appropriate thresholds in all sectors of the economy 

***.’’ 

how potentially applicable CAA 

provisions could be used to regulate 

GHG emissions in an effective and 

efficient manner in light of the terms of 

those provisions. The global nature of 

climate change, the unique 

characteristics of GHGs, and the 

ubiquity of GHG emission sources 

present special challenges for regulatory 

design. In this section of the notice, we 

identify and discuss these and several 

other important considerations that we 

believe should inform our examination 

and potential use of CAA authorities. 

Throughout this notice we ask for 

comment on whether particular CAA 

authorities would allow EPA to develop 

regulations that address those 

considerations in an effective and 

appropriate manner. 

A. Key Characteristics of Greenhouse 

Gases 

The six major GHGs of concern are 

those directly emitted by human 

activities. These are CO2, CH4, N2O, 

HFCs, perfluorocarbons (PFCs), and 

sulfur hexafluoride (SF6). GHGs have a 

climatic warming effect by trapping heat 

in the atmosphere that would otherwise 

escape to space. 

Global emissions of these six GHGs 

have grown since pre-industrial times 

and particularly over recent decades, 

having increased by 70% between 1970 

and 2004.30 In 2000, U.S. GHG 

emissions accounted for approximately 

21% of the global total. Other major 

emitting countries include China, the 

Russian Federation, Japan, Germany, 

India and Brazil. Future projections 

show that, for most scenarios assuming 

no additional GHG emission reduction 

policies, global atmospheric 

concentrations of GHGs are expected to 

continue climbing for most if not all of 

the remainder of this century and to 

result in associated increases in global 

average temperature. The 

Intergovernmental Panel on Climate 

Change (IPCC) projects an increase of 

global GHG emissions by 25 to 90% 

between 2000 and 2030 under a range 

of different scenarios. For the U.S., 

under a business as usual scenario, total 

gross GHG emissions are expected to 

rise 30 percent between 2000 and 

2020.31 

A significant difference between the 

major GHGs and most air pollutants 

regulated under the CAA is that GHGs 

have much longer atmospheric 

30 The data provided here come from 

‘‘Contribution of Working Group III to the Fourth 

Assessment Report of the Intergovernmental Panel 

on Climate Change (IPCC)’’—Summary for 

Policymakers. 

31 Fourth U.S.Climate Action Report, 2007. http:// 

www.state.gov/g/oes/rls/rpts/car/. 

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Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 44401 

lifetimes.32 Once emitted, GHG can 

remain in the atmosphere for decades to 

centuries while traditional air pollutants 

typically remain airborne for days to 

weeks. The fact that GHGs remain in the 

atmosphere for such long periods of 

time has several important and related 

consequences: 

(1) Unlike most traditional air 

pollutants, GHGs become well mixed 

throughout the global atmosphere so 

that the long-term distribution of GHG 

concentrations is not dependent on 

local emission sources. Instead, GHG 

concentrations tend to be relatively 

uniform around the world. 

(2) As a result of this global mixing, 

GHGs emitted anywhere in the world 

affect climate everywhere in the world. 

U.S. GHG emissions have climatic 

effects not only in the U.S. but in all 

parts of the world, and GHG emissions 

from other countries have climatic 

effects in the U.S. 

(3) Emissions of the major GHGs build 

up in the atmosphere so that past, 

present and future emissions ultimately 

contribute to total atmospheric 

concentrations. While concentrations of 

most traditional air pollutants can be 

reduced relatively quickly (over months 

to several years) once emission controls 

are applied, atmospheric concentrations 

of the major GHGs cannot be so quickly 

reversed. Once applied, GHG emission 

controls would first reduce the rate of 

build-up of GHGs in the atmosphere 

and, depending on the degree of 

controls over the longer term, would 

gradually result in stabilization of 

atmospheric GHG concentrations at 

some level. 

(4) GHG emissions have long-term 

consequences. Once emitted, the major 

GHGs exert their climate changing 

effects for a long period of time. Past 

and current GHG emissions thus lead to 

some degree of commitment to climate 

change for decades or even centuries. 

According to the IPCC, past GHG 

emissions have already resulted in an 

increase in global average temperature 

and associated climatic changes. Much 

of those past emissions will continue to 

contribute to temperature increases for 

some time to come, while current and 

future GHG emissions contribute to 

climate change over a similarly long 

period. See section V for a fuller 

discussion of the effects of GHG 

emissions as they relate to making an 

endangerment finding under the CAA.33 

32 Some pollutants regulated under the CAA have 

long atmospheric lifetimes, including those 

regulated for protection of stratospheric ozone and 

mercury. 

33 Another important difference between CO2 and 

traditional air pollutants is the high volume of CO2 

emissions relative to other pollutants for most 

The large temporal and spatial scales 

of the climate change challenge 

introduce regulatory issues beyond 

those typically presented for most 

traditional air pollutants. Decision 

makers are faced with many 

uncertainties over long time frames and 

across national boundaries, such as 

population and economic growth, 

technological change, the exact rate and 

magnitude of climate change in 

response to different emissions 

pathways, and the associated effects of 

that climate change. These uncertainties 

increase the complexity of designing an 

effective long-term regulatory strategy. 

Acknowledging that overall risk 

increases with increases in both the rate 

and magnitude of climate change, the 

United Nations Framework Convention 

on Climate Change (UNFCCC), signed 

and ratified by the U.S. in 1992, states 

as its ultimate objective the ‘‘*** 

stabilization of greenhouse gas 

concentrations in the atmosphere at a 

level that would prevent dangerous 

anthropogenic interference with the 

climate system.’’ In 2007, the U.S. and 

other Parties to the UNFCCC recognized 

that ‘‘* * * deep cuts in global 

emissions will be required to achieve 

the ultimate objective of the Convention 

***’’ and emphasized ‘‘* * * the 

urgency to address climate change as 

indicated * * *’’ by the IPCC. 

Determining what constitutes 

‘‘dangerous anthropogenic interference’’ 

is not a purely scientific question; it 

involves important value judgments 

regarding what level of climate change 

may or may not be acceptable. It is not 

the purpose of this ANPR to make any 

judgment regarding what an appropriate 

stabilization goal may be. In the absence 

of further policy action, the IPCC notes 

that, ‘‘With current climate change 

mitigation policies and related 

sustainable development practices, 

global GHG emissions will continue to 

grow over the next few decades.’’ 

As indicated above, to stabilize GHGs 

at any level in the atmosphere, 

emissions would need to peak and 

decline thereafter. A decision to 

stabilize at lower concentrations and 

associated temperature increases would 

necessarily advance the date by which 

emissions would need to peak, and 

would therefore require greater 

emissions reductions earlier in time. 

According to the IPCC, mitigation efforts 

over the next two to three decades will 

have a large impact on the ability of the 

world to achieve lower stabilization 

levels. For illustration, IPCC projected 

sources. The significance of this difference is 

discussed later in this section and in section VII of 

this notice. 

that, in order to prevent long-term 

global temperatures from exceeding 2.8 

°C (approximately 5 °F) relative to preindustrial temperatures, atmospheric 

CO2 concentrations would need to be 

stabilized at 440 parts per million (ppm) 

(current levels stand at about 379 ppm), 

translating into global CO2 emission 

reductions by 2050 of up to 60% 

(relative to emissions in the year 2000). 

Stabilization targets that aim to prevent 

even more warming would require 

steeper and earlier emission reductions, 

whereas stabilization targets that allow 

for more warming (with higher 

associated risks and impacts) would 

require less steep and later emission 

reductions. 

B. Types and Relative Emissions of GHG 

Emission Sources 

1. Background 

Each year EPA prepares a complete 

inventory of the anthropogenic 

emissions and sinks of all six major 

GHGs in the United States.34 

Anthropogenic in this context means 

that emissions result from human 

activities. ‘‘Sinks’’ are the opposite of 

emissions in that they are activities or 

processes that remove GHGs from the 

atmosphere (e.g., CO2 uptake by plants 

through photosynthesis). EPA prepares 

the inventory in cooperation with 

numerous federal agencies as part of the 

U.S. commitment under the UNFCCC.35 

This inventory is derived largely from 

top-down national energy and statistical 

data. As mentioned previously, EPA is 

currently developing a proposed GHG 

reporting rule that will provide bottomup data from covered reporters and thus 

provide greater detail on the emissions 

profile of specific source categories. 

2. Emissions by Gas 

In 2006, total U.S. GHG emissions 

were 7,054 million metric tons of CO2 

equivalent (MMTCO2e).36 Overall, total 

U.S. GHG emissions have risen by 

14.7% from 1990 to 2006. GHG 

emissions decreased from 2005 to 2006 

by 1.1 percent (or 76 MMTCO2e). Figure 

III–1 illustrates the relative share of each 

34 Inventory of U.S. Greenhouse Gas Emissions 

and Sinks: 1990–2006, (April 2008) USEPA #430– 

R–08–005. http://www.epa.gov/climatechange/ 

emissions/usinventoryreport.html. 

35 See Articles 4 and 12 of the UNFCCC treaty. 

http://www.unfccc.int. Parties to the Convention 

‘‘shall develop, periodically update, publish and 

make available * * * national inventories of 

anthropogenic emissions by sources and removals 

by sinks of all greenhouse gases not controlled by 

the Montreal Protocol, using comparable 

methodologies * * *’’ 

36 International standards for reporting are 

established by the IPCC, which uses metric units. 

1 MMTCO2e is equal to 1 teragram (Tg) or 10 12 

grams. 1 metric ton is equal to 1.1023 short tons. 

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44402 Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 

gas, and trend since 1990, weighted by in this section are based on CO2-

global warming potential.37 All GHG equivalency. 

units and percentage changes provided 

Carbon Dioxide: The primary GHG 

emitted as a result of human activities 

in the United States is CO2, representing 

approximately 85% of total GHG 

emissions. CO2 results primarily from 

fossil fuel combustion to generate 

electricity, power vehicles and factories, 

heat buildings, etc. Fossil fuel-related 

CO2 emissions accounted for 

approximately 79% of CO2 emissions 

since 1990, and increased at an average 

annual rate of 1.1% from 1990 to 2006. 

Changes in CO2 emissions from fossil 

fuel combustion are influenced by many 

long-term and short-term factors, 

including population and economic 

growth, energy price fluctuations, 

technological changes, and seasonal 

temperatures. 

Methane: According to the IPCC, CH4 

is more than 20 times as effective as CO2 

at trapping heat in the atmosphere. By 

2006, CH4 emissions had declined from 

1990 levels by just under 9%, and now 

make up approximately 8% of total U.S. 

GHG emissions. Enteric fermentation 

(22.7%) is the largest anthropogenic 

source of CH4 emissions in the United 

States, followed by landfills (22.6%), 

natural gas systems (18.4%), coal 

mining (10.5%), and manure 

management (7.5%). Smaller sources 

such as rice cultivation and incomplete 

37 Emissions of different GHGs are compared 

using global warming potentials (GWPs). The GWP 

of a GHG is the ratio of heat trapped by one unit 

mass of the GHG compared to that of one unit mass 

of CO2 over a specified time period, which is 100 

fossil fuel combustion account for the 

remainder. 

Nitrous Oxide: While total N2O 

emissions are much lower than CO2 

emissions in terms of mass, N2O is 

approximately 300 times more powerful 

than CO2 at trapping heat in the 

atmosphere. U.S. emissions of N2O are 

just over 5% of total U.S. GHG 

emissions, and have declined by 4% 

since 1990. The main anthropogenic 

activities producing N2O in the United 

States are agricultural soil management 

(72%), and fuel combustion in motor 

vehicles (9%). A variety of chemical 

production processes and liquid waste 

management sources also emit N2O. 

HFCs, PFCs, and SF6: These GHGs are 

often grouped together because they 

contain fluorine, typically have large 

global warming potentials, and are 

produced only through human activities 

(there are no natural sources), either 

intentionally for use or unintentionally 

as an industrial byproduct. HFCs and 

some PFCs are increasingly being 

used—and therefore emitted—as 

substitutes for the ozone depleting 

substances controlled under the 

Montreal Protocol and Title VI of the 

CAA. The largest source is the use of 

HFCs in air conditioning and 

refrigeration systems. Other sources 

include HFC–23 emitted during the 

years for the GWPs estimated by the IPCC used 

here. The reference gas is CO2, and therefore GWPweighted emissions are measured in teragrams of 

CO2 equivalent (Tg CO2 Eq.). The GWP values used 

in this analysis come from the IPCC Second 

production of HCFC–22, electrical 

transmission and distribution systems 

(SF6), and PFC emissions from 

semiconductor manufacturing and 

primary aluminum production. U.S. 

HFC emissions have increased 237% 

over 1990 levels, while emissions of 

PFCs and SF6 have decreased by 71 and 

47%, respectively, from 1990 levels. 

Combined, these GHGs made up 2.1% 

of total U.S. GHG emissions in 2006. 

3. Emissions by Sector 

An alternative way to look at GHG 

emissions is by economic sector. All 

U.S. GHG sources can be grouped into 

the electricity, industrial, commercial, 

residential, transportation and 

agriculture sectors. Additionally, there 

are changes in carbon stocks that result 

in emissions and sinks associated with 

land-use and land-use change activities. 

Figure III–2 illustrates the relative 

contributions and historical trends of 

these economic sectors. 

Electricity Generation: The electricity 

generation sector includes all facilities 

that generate electricity primarily for 

sale rather than for use on site (e.g., 

most large-scale power plants). 

Electricity generators emitted 33.7% of 

all U.S. GHG emissions in 2006. The 

type of fuel combusted by electricity 

generators has a significant effect on 

Assessment report, consistent with the UNFCCC 

reporting requirements for Parties listed in Annex 

I. 

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Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 44403 

their emissions. For example, some 

electricity is generated with low or no 

CO2 emitting energy technologies, 

particularly non-fossil options such as 

nuclear, hydroelectric, or geothermal 

energy. However, over half of the 

electricity in the U.S. is generated by 

burning coal, accounting for 94% of all 

coal consumed for energy in the U.S. in 

2006. 

Transportation Sector: The 

transportation sector includes 

automobiles, airplanes, railroads and a 

variety of other sources. Transportation 

activities (excluding international 

bunker fuels) accounted for 

approximately 28% of all GHG 

emissions in 2006, primarily through 

the combustion of fossil fuels.38 

Virtually all of the energy consumed in 

this end-use sector came from 

petroleum products. Over 60% of the 

CO2 emissions resulted from gasoline 

consumption for personal vehicle use. 

Industrial Sector: The industrial 

sector includes a wide variety of 

facilities engaged in the production and 

sale of goods. The largest share of 

38 International bunker fuels are used in aviation 

and marine trips between countries. 

emissions from industrial facilities 

comes from the combustion of fossil 

fuels. Emissions of CO2 and other GHGs 

from U.S. industry also occur as a result 

of specialized manufacturing processes 

(e.g., calcination of limestone in cement 

manufacturing). The largest emitting 

industries tend to be the most energy 

intensive: Iron and steel, refining, 

cement, lime, chemical manufacturing, 

etc. Overall, 19.4% of total U.S. GHG 

emissions came from the industrial 

sector in 2006. 

Residential and Commercial Sectors: 

These two sectors directly emit GHGs 

primarily through operation and 

maintenance of buildings (i.e., homes, 

offices, universities, etc.). The 

residential and commercial end-use 

sectors accounted for 4.8 and 5.6% of 

total emissions, respectively, with CO2 

emissions from consumption of natural 

gas and petroleum for heating and 

cooking making up the largest share. 

Agriculture Sector: The agriculture 

sector includes all activities related to 

cultivating soil, producing crops, and 

raising livestock. Agricultural GHG 

emissions result from a variety of 

processes, including: Enteric 

fermentation in domestic livestock, 

livestock manure management, rice 

cultivation, agricultural soil 

management, and field burning of 

agricultural residues. Methane and N2O 

are the primary GHGs emitted by 

agricultural activities.39 In 2006, 

agriculture emission sources were 

responsible for 6.4% of total U.S. GHG 

emissions. 

Land Use, Land-Use Change, and 

Forestry: Land use is not an economic 

sector per se but affects the natural 

carbon cycle in ways that lead to GHG 

emissions and sinks. Included in this 

category are emissions and 

sequestration of CO2 from activities 

such as deforestation, afforestation, 

forest management and management of 

agricultural soils. Emissions and 

sequestration depend on local 

conditions, but overall land use in the 

U.S. was a net sink in 2006 equivalent 

to 12.5% of total GHG emissions. 

BILLING CODE 6560–50–P 

39 Agricultural soils also emit CO2 and sequester 

carbon. The fluxes are discussed under the LandUse, Land-Use Change and Forestry section because 

of the integrated nature of methodological 

approaches to the carbon cycle, and international 

reporting conventions. 

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44404 Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 

C. Advancing Technology 	 and the risks of climate change. increasing energy efficiency and 

International, U.S., and private studies conservation and employing hybrid and President Bush, the IPCC, and many have identified a broad range of diesel vehicle technologies, are other private and public groups have potential strategies that can reduce available today. There is also broad spotlighted the critical importance of emissions from diverse economic consensus that for many sectors of the technology to reducing GHG emissions sectors. Many strategies, such as economy new technologies will be 

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Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 44405 

needed to achieve deep reductions in 

GHG emissions at less cost than today’s 

technologies alone can achieve. 

In developing potential CAA (or 

other) controls, one important question 

is the extent to which needed 

technological development can be 

expected to occur as a result of market 

forces alone (e.g., as a result of 

increasing prices for oil and other fossil 

fuels), and the extent to which 

government or other action may be 

needed to spur development. There are 

several different pathways for 

technological change, including 

investment in research and 

development (private and public), 

spillovers from research and 

development in other sectors (e.g., 

advances in computing made hybrid 

vehicles possible), learning by doing 

(i.e., efficiency gains through 

repetition), and scale economies (i.e., 

aggregate cost reductions from improved 

process efficiencies). As further 

discussed later in this section, marketbased incentives that establish a price 

(directly or indirectly through a limit) 

for carbon and/or other GHGs could 

continuously spur technological 

innovation that could lower the cost of 

reducing emissions. However, even with 

such a policy, markets tend to underinvest in development of new 

technologies when investors can only 

capture a portion of the returns. This is 

particularly true at the initial stages of 

research and development when risks 

are high and market potential is not 

evident. In such cases, policies to 

encourage the development and 

diffusion of technologies that are 

complements to pollution control 

policies may be warranted.40 

This section draws insights from IPCC 

and other reports on available and 

needed technologies. In later sections of 

this notice, we explain each potentially 

applicable CAA provision and consider 

the extent to which that provision 

authorizes regulatory actions and 

approaches that could spur needed 

technology development. 

40 Economic Report of the President, February 

2007. 

1. The Role of Existing and New 

Technology in Addressing Climate 

Change 

The 2007 IPCC report on mitigation of 

climate change examined the 

availability of current technologies and 

the need for new technologies to 

mitigate climate change.41 Among its 

conclusions, the IPCC states: 

• The range of stabilization levels assessed 

[by the IPCC] can be achieved by deployment 

of a portfolio of technologies that are 

currently available and those that are 

expected to be commercialized in coming 

decades. This assumes that appropriate and 

effective incentives are in place for 

development, acquisition, deployment and 

diffusion of technologies and for addressing 

related barriers.42 

According to one study, five groups of 

strategies that could substantially 

reduce emissions between now and 

2030 include (1) improving energy 

efficiency in buildings and appliances; 

(2) increasing fuel efficiency and 

reducing GHG emissions from vehicles 

and the carbon intensity of 

transportation fuels; (3) industrial 

equipment upgrades and process 

changes to improve energy efficiency; 

(4) increasing forest stocks and 

improving soil management practices; 

and (5) reducing carbon emissions from 

electric power production through a 

shift toward renewable energy, 

expanded nuclear capacity, improved 

power plant efficiency, and use of 

carbon capture and storage technology 

on coal-fired generation.43 (Note that 

41 IPCC, 2007, ‘‘Climate Change 2007: Mitigation. 

Contribution of Working Group III to the Fourth 

Assessment Report of the Intergovernmental Panel 

on Climate Change,’’ [B. Metz, O.R. Davidson, P.R. 

Bosch, R. Dave, L.A. Meyers (eds)], Cambridge 

University Press, Cambridge, United Kingdom and 

New York, NY. 

42 Ibid, ‘‘Summary for Policymakers,’’ p. 25. 

43 See McKinsey & Company, ‘‘Reducing U.S. 

Greenhouse Gas Emissions: How Much at What 

Cost?’’, U.S. Greenhouse Gas Abatement Mapping 

Initiative, Executive Report, December 2007. This 

study performed an economic assessment of 

potential control methods based on a ‘‘bottom-up’’ 

partial equilibrium model, which does not account 

for interactions among economic sectors. Bottom-up 

models include many more specific technologies 

than ‘‘top-down’’ general equilibrium models, 

which account for cross-sector interactions. 

EPA is not rank-ordering these 

technologies by their relative cost 

effectiveness.) As noted elsewhere in 

this notice, there is federal regulatory or 

research and development activity 

ongoing in most of these areas. 

Many energy efficiency technologies 

exist that appear to be extremely costeffective in reducing fuel costs 

compared to other alternatives. 

However, they have yet to be adopted as 

widely as expected because of market 

barriers. Such barriers include lack of 

knowledge or confidence in the 

technology by potential users, 

uncertainty in the return on investment 

(potentially due to uncertainty in either 

input prices or output prices), concerns 

about effects of energy efficiency 

technologies on the quality of inputs or 

outputs, size of the initial capital 

investment (coupled with potential 

liquidity constraints), and requirements 

for specialized human capital 

investments. Some of these costs are 

lower in larger firms, due to the 

increased availability of financial 

resources and human capital.44 Vendor 

and other projections of cost-savings for 

energy efficiency technologies are often 

based on average pay-back and thus do 

not reflect differences among firms that 

can affect the costs and benefits of these 

technologies and therefore the 

likelihood of adoption. Over time, as 

firms gain more experience with these 

technologies, the rate of adoption will 

likely increase if significant cost-savings 

are realized by early adopters. 

The IPCC report on mitigation 

identified technologies that are 

currently available and additional 

technologies that are expected to be 

commercialized by 2030, as shown in 

the following table.45 These include 

technologies and practices in the energy 

supply, transportation, buildings, 

industry, agriculture, forest, and waste 

sectors: 

44 Pizer, et al., ‘‘Technology Adoption and 

Aggregate Energy Efficiency,’’ December 2002, 

December 2002 Resources for the Future Discussion 

Paper 02–52. 

45 IPCC 2007, ‘‘Summary for Policymakers,’’ p. 

14. 

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44406 Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 

How much any of the mitigation 

strategies identified by these studies 

would actually be deployed to address 

climate change is an open question. It is 

possible that unanticipated technologies 

could play a significant role in reducing 

emissions. The point of these studies is 

to illustrate that potentially feasible 

technologies exist that could be 

employed to mitigate GHG emissions, 

not to predict the precise role they will 

play or to suggest sectors or methods for 

regulation. The particular policies 

pursued by governments, including the 

U.S. under the CAA or other authorities, 

will influence the way in which these 

technologies are deployed as well as 

incentives for developing and deploying 

new technologies. 

2. Federal Climate Change Technology 

Program 

The U.S. government is investing in a 

diverse portfolio of technologies with 

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Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 44407 

the potential to yield substantial 

reductions in emissions of GHGs. The 

Climate Change Technology Program 

(CCTP) is a multi-agency planning and 

coordination entity that assists the 

government in carrying out the 

President’s National Climate Change 

Technology Initiative. Managed by the 

Department of Energy, the program is 

organized around five technology areas 

for which working groups were 

established. EPA participates in all of 

the working groups and chairs the group 

focused on non-CO2 GHGs. 

The CCTP strategic plan, released in 

September 2006, provides strategic 

direction and organizes approximately 

$3 billion in federal spending for 

climate change-related technology 

research, development, demonstration, 

and deployment.46 The plan sets six 

complementary goals, including five 

aimed at developing technologies to: 

• Reduce emissions from energy enduse and infrastructure; 

• Reduce emissions from energy 

supply, particularly through 

development and commercialization of 

no- or low-emission technologies; 

• Capture, store and sequester CO2; 

• Reduce emissions of non-CO2 

GHGs; and 

• Enhance the measurement and 

monitoring of CO2 emissions. 

The first four of these goals focus on 

GHG emissions reduction technologies, 

and the fifth addresses a key need for 

developing comprehensive GHG control 

strategies. The sixth CCTP goal is to 

strengthen the contributions of basic 

science to climate change technology 

development. 

3. Potential for CAA Regulation to 

Encourage Technology Development 

Past EPA efforts to reduce air 

pollution under the CAA demonstrate 

that incentives created by regulation can 

help encourage technology development 

and deployment. As noted in a recent 

EPA regulatory analysis, the history of 

the CAA provides many examples in 

which technological innovation and 

‘‘learning by doing’’ have made it 

possible to achieve greater emissions 

reductions than had been feasible 

earlier, or have reduced the costs of 

emission control in relation to original 

estimates.47 Among the examples are 

motor vehicle emission controls, diesel 

fuel and engine standards to reduce 

46 U.S. Climate Change Technology Program 

Strategic Plan, September 2006; http:// 

www.climatetechnology.gov/stratplan/final/ 

index.htm. 

47 See section 5.4 of Final Ozone NAAQS 

Regulatory Impact Analysis, March 2008, EPA–HQ– 

OAR–2007–0225. The RIA is available at http:// 

www.epa.gov/ttn/ecas/ria.html#ria2007. 

NOX and particulate matter emissions, 

engine idle-reduction technologies, 

selective catalytic reduction and ultralow NOX burners for NOX emissions, 

high-efficiency scrubbers for SO2 

emissions from boilers, CFC-free air 

conditioners and refrigerators, low or 

zero VOC paints, and idle-reduction 

technologies for engines.48 

One of the issues raised by potential 

CAA regulation of GHGs is whether the 

CAA can help spur needed 

technological development for reducing 

GHG emissions and the costs of those 

reductions. The regulatory authorities in 

the CAA vary in their potential for 

encouraging new technology. As 

discussed later in this notice, some 

provisions offer little flexibility in 

standard-setting criteria, emission 

control methods, compliance deadlines 

and potential for market-oriented 

regulation. Other provisions offer more 

potential to encourage new technology 

through market incentives or to 

establish standards based on anticipated 

advances in technology. EPA requests 

comment on the extent to which various 

CAA provisions could be used to help 

spur technological development, and on 

the need for federally conducted or 

funded research to promote 

technological development. 

D. Relationship to Traditional Air 

Pollutants and Air Pollution Controls 

An issue for any regulation of GHGs 

under the CAA or other statutory 

authority is how a GHG control program 

would and should interact with existing 

air quality management programs. This 

section describes the relationships 

between climate change and air quality 

and between GHG emissions and 

traditional air pollution control 

programs. As explained below, those 

relationships suggest the need for 

integrated approaches to climate change 

mitigation and air quality protection. 

Differences between GHGs and 

traditional air pollutants should also be 

taken into account in considering how 

CAA authorities could be employed for 

GHG regulation. 

1. Connections Between Climate Change 

and Air Quality Issues 

Climate change affects some types of 

air pollution, and some traditional air 

pollutants affect climate. According to 

the IPCC, climate change can be 

expected to influence the concentration 

and distribution of air pollutants 

through a variety of direct and indirect 

processes. In its recent review of the 

NAAQS for ozone, EPA examined how 

climate change can increase ozone 

48 Ibid. 

levels and how ozone, itself a GHG, can 

contribute to climate change. Similarly, 

in its reviews of the NAAQS for 

particulate matter, the Agency examined 

the extent to which some particles help 

absorb solar energy in the earth’s 

atmosphere and others help reflect it 

back to space.49 How EPA regulates 

those pollutants under the CAA is 

potentially part of an overall strategy for 

addressing climate change, and how 

GHGs are regulated is potentially an 

important component of protecting air 

quality. For example, it is likely to 

become more difficult and expensive to 

attain the ozone NAAQS in a future, 

warmer climate. 

Most of the largest emitters of GHGs 

are also large emitters of traditional air 

pollutants and therefore are already 

regulated under the CAA. The 

electricity generation, transportation 

and industrial sectors, the three largest 

contributors to GHG emissions in the 

U.S., are subject to CAA controls to help 

meet NAAQS, control acid rain, and 

reduce exposures to toxic emissions. 

Some manufacturers of the GHGs that 

are fluorinated gases are subject to CAA 

regulations for protection of the 

stratospheric ozone layer. 

Many measures for controlling GHG 

emissions also contribute to reductions 

in traditional air pollutants, and some 

measures for controlling traditional air 

pollutants result in reductions in 

GHGs.50 Co-benefits from reduced air 

pollution as a result of actions to reduce 

GHG emissions can be substantial.51 In 

general, fossil fuel combustion results in 

emissions not only of CO2 but also of 

many traditional air pollutants, 

including SO2, NOX, CO and various 

toxic air pollutants. For many types of 

sources, to the extent fossil fuel 

combustion is reduced, emissions of all 

those pollutants are reduced as well. 

Some control measures reduce GHGs 

and traditional air pollutants, including 

leak detection and fuel switching. 

However, some measures for controlling 

traditional air pollutants increase GHGs, 

and some measures for controlling 

GHGs may increase traditional air 

pollutants. For example, controls to 

decrease SO2 emissions from industrial 

sources require energy to operate and 

result in reduced process efficiencies 

and increases in GHGs, and changing 

49 EPA did not have adequate information in 

these reviews for impacts on climate change to 

change the Agency’s decision on whether or how 

to revise the standards. See, e.g., 71 FR 61144, 

61209–10 (October 17, 2006) (PM NAAQS review). 

50 EPA, OAP, Clean Energy-Environmental Guide 

to Act, http://www.epa.gov/cleanenergy/ 

documents/gta/guide_action_full.pdf. 

51 IPCC, 2007, Working Group III, Summary for 

Policymakers. 

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the composition of transportation fuels 

to reduce GHGs may affect traditional 

air pollutant emissions. 

By considering policies for addressing 

GHGs and traditional air pollutants in 

an integrated manner, EPA and the 

sectors potentially subject to GHG 

emission controls would also have the 

opportunity to consider and pursue the 

most effective way of accomplishing 

emission control across pollutants. For 

example, adoption of some air quality 

controls could result in a degree of 

‘‘technology lock-in’’ that restricts the 

ability to implement GHG control 

technologies for significant periods of 

time because of the investment in 

capital and other resources to meet the 

air quality control requirements. 

Sections VI and VII below discuss 

technologies and opportunities for 

controlling GHGs in more detail from 

various sectors, including 

transportation, electricity generation, 

and manufacturing. EPA requests 

comment on strategies and technologies 

for simultaneously achieving reductions 

in both traditional air pollutants and 

GHG emissions. 

In light of the connections between 

climate change and air quality, the large 

overlap of GHG and traditional air 

pollution sources, and the potential 

interactions of GHG and traditional air 

pollution controls, it makes sense to 

consider regulation of GHGs and 

traditional air pollutants in an 

integrated manner. Indeed, the National 

Academy of Sciences recommends that 

development of future policies for air 

pollution control be integrated with 

climate change considerations.52 GHG 

control measures implemented today 

could have immediate impacts on air 

pollution and air quality. Similarly, air 

pollution controls implemented today 

could have near term impacts on GHG 

emissions and thus long term impacts 

on climate. Ideally, any GHG control 

program under the Act, or other 

statutory authority would address GHGs 

in ways that simultaneously reduce 

GHGs and traditional air pollutants as 

needed to mitigate climate change and 

air pollution.53 

52 National Academy of Sciences, ‘‘Radiative 

Forcing of Climate Change: Expanding the Concept 

and Addressing Uncertainties,’’ October 2005. 

53 Integration of planning efforts related to air 

quality, land use, energy efficiency, and 

transportation to improve air quality and reduce 

GHG emissions is in line with the CAA Advisory 

Committee Air Quality Management 

Subcommittee’s Phase II recommendations (June 

2007), and the recommendations of the National 

Research Council of the National Academy of 

Sciences in its January 2004 report, ‘‘Air Quality 

Management in the United States.’’ EPA has 

initiated several programs to encourage integrated 

planning efforts, including the Sustainable Skylines 

2. Issues in Applying CAA Controls to 

GHGs 

One important issue for regulation of 

GHGs under some CAA provisions 

concerns the emissions thresholds 

established by the Act for determining 

the applicability of those provisions. 

Several CAA provisions require 

stationary sources that emit traditional 

air pollutants above specific emission 

thresholds to comply with certain 

requirements. Applying the same 

thresholds to GHGs could result in 

numerous sources, such as space heaters 

in large residential and commercial 

buildings, becoming newly subject to 

those requirements. Currently regulated 

sources could become subject to 

additional requirements. This would 

occur in part because most sources 

typically emit CO2, the predominant 

GHG, in much larger quantities than 

traditional air pollutants. Issues related 

to threshold levels are discussed in 

more detail in Section VII below. 

Other important issues for CAA 

regulation of GHGs are raised by the 

different temporal and spatial scope of 

GHGs compared to traditional 

pollutants. Air pollutants currently 

regulated under the CAA tend to have 

local (a few kilometers) or regional 

(hundreds to thousands of kilometers) 

impacts and relatively short 

atmospheric lifetimes (days to a month). 

Historically, this has meant that EPA 

could identify and differentiate between 

affected and unaffected areas and devise 

control strategies appropriate for each 

area. Controls applied within an area 

with high concentrations of traditional 

air pollutants generally have been 

effective in achieving significant 

reductions in air pollution 

concentrations within that area in a 

relatively short amount of time. The 

spatial nature of traditional air pollution 

also has made it appropriate to place the 

primary responsibility for planning 

controls on state, tribal, or local 

governments. 

In the years since the CAA was 

enacted, we have learned that some 

traditional air pollutants (e.g., ozone, 

particulates and their precursors) are 

transported across regions of the 

country and thus have geographically 

broader impacts than individual states 

can address on their own. Our control 

strategies for those pollutants have 

evolved accordingly. The Nitrogen 

Oxides (NOX) SIP Call Rule and the 

Clean Air Interstate Rule (CAIR) are 

Initiative, a public-private partnership to reduce air 

emissions and promote sustainability in urban 

environments, and the Air Quality Management 

Plan pilot program for testing a comprehensive, 

multipollutant planning approach. 

examples of regional control programs 

that significantly supplement local 

control measures. NSPS and motor 

vehicle controls are examples of 

national measures that also help 

improve air quality locally and 

regionally. 

The global nature and effect of GHG 

emissions raise questions regarding the 

suitability of CAA provisions that are 

designed to protect local and regional 

air quality by controlling local and 

regional emission sources.54 As noted 

above, GHGs are relatively evenly 

distributed throughout the global 

atmosphere. As a result, the geographic 

location of emission sources and 

reductions are generally not important 

to mitigating global climate change. 

Instead, total GHG emissions in the U.S. 

and elsewhere in the world over time 

determine cumulative global GHG 

concentrations, which in turn determine 

the extent of climate change. As a result, 

it will be the total emission reductions 

achieved by the U.S. and the other 

countries of the world that will 

determine the extent of climate change 

mitigation. The global nature of GHGs 

suggests that the programmatic and 

analytical tools used to address local 

and regional pollutants under the CAA 

(e.g., SIPs, monitoring networks, and 

models) would need to be adapted to 

inventory, analyze, control effectively 

and evaluate progress in achieving GHG 

reductions. 

EPA seeks information about how 

differences in pollutant characteristics 

should inform regulation of these 

pollutants under the CAA. EPA also 

requests comment on the types of 

effective programs at all levels (local, 

regional, national and international) that 

may be feasible to design and 

implement under existing CAA 

authorities. 

E. Relationship to Other Environmental 

Media 

An effective GHG control program 

may require application of many 

technologies and approaches that may 

in turn result in increased discharges to 

water, generation of solid materials that 

require appropriate disposal, or have 

other impacts to the environment that 

may not be addressed under the CAA. 

Examples of these impacts include the 

potential for groundwater 

contamination from geological 

54 It should be noted that international transport 

of ozone and particulate matter precursors 

contributes to NAAQS nonattainment in some areas 

of the U.S. Nevertheless, most traditional air 

pollution problems are largely the result of local 

and regional emission sources, while for GHGs, 

worldwide emissions determine the extent of the 

problem. 

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sequestration of CO2, the generation of 

spent sorbent material from carbon 

capture systems, or the depletion of 

water resources and increased nutrient 

runoff into surface waters from 

increased production of bioenergy 

feedstocks. EPA and other regulatory 

agencies at the tribal, state, and local 

level may need to respond to such 

impacts to prevent or minimize their 

impact to the environment and public 

health under authorities other than the 

CAA. 

Since the nature and extent of these 

impacts would depend upon the 

technologies and approaches that are 

implemented under a GHG control 

program, an important consideration in 

designing GHG controls is minimizing 

or mitigating such impacts EPA seeks 

comment on how different regulatory 

approaches to GHG control under the 

CAA could result in environmental 

impacts to water or land that could 

require response under the CAA or 

EPA’s other legislative authorities. 

F. Other Key Policy and Economic 

Considerations for Selecting Regulatory 

Approaches 

This section identifies general policy 

considerations relevant to developing 

potential regulatory approaches for 

controlling GHG emissions. In 

developing approaches under the CAA, 

EPA must first consider the Act’s 

provisions as well as the Agency’s 

previous interpretation of the provisions 

and relevant and controlling court 

opinions. Provisions of the CAA vary in 

terms of the degree of flexibility 

afforded EPA in designing 

implementing regulations under the 

Act. To the extent particular provisions 

permit, EPA believes the following 

considerations should guide its choice 

among available regulatory approaches. 

This section also discusses three 

selected issues in greater depth because 

of their importance to designing 

effective GHG controls: advantages of 

market-oriented regulatory approaches, 

economy-wide and sector-based 

regulation under the CAA, and 

emissions leakage and international 

competitiveness. In discussing these 

and other policy and economic 

considerations, EPA is not directly or 

indirectly implying that it possesses the 

requisite statutory authority in all areas. 

1. Overview of Policy and Economic 

Considerations 

The following considerations are 

useful in developing potential 

regulatory approaches to the extent 

permissible under the CAA. These 

considerations are also generally 

applicable to the design of GHG control 

legislation. EPA is in the process of 

evaluating the CAA options described 

later in this notice in light of these 

considerations. 

Effectiveness of health and 

environmental risk reduction: How 

much would the approach reduce 

negative health and environmental 

impacts (or the risk of such impacts), 

relative to other potential approaches? 

Certainty and transparency of results: 

How do the potential regulatory 

approaches balance the trade-off 

between certainty of emission 

reductions and costs? To what extent 

can compliance flexibility be provided 

for regulated entities while maintaining 

adequate accountability for emission 

reductions? 

Cost-effectiveness and economic 

efficiency considerations: To what 

extent does the approach allow for 

achieving health and environmental 

goals, determined in a broader policy 

process, in a manner that imposes the 

least cost? How do the societal benefits 

compare to the societal costs? To what 

extent are there non-monetizable or 

unquantifiable benefits and costs? Given 

the uncertainties associated with 

climate change, to what extent can 

economic efficiency be judged? 

Equity considerations (i.e., 

distributional effects): Does the 

approach by itself or in combination 

with other programs result in a socially 

acceptable apportionment of the burden 

of emission reduction across groups in 

our society? Does the approach provide 

adequate protection for those who will 

experience the adverse effects of 

emissions, including future generations? 

Policy flexibility over time: Does the 

approach allow for updating of 

environmental goals and mechanisms 

for meeting those goals as new 

information on the costs and benefits of 

GHG emission reductions becomes 

available? 

Incentives for innovation and 

technology development: Does the 

approach provide incentives for 

development and deployment of new, 

cleaner technologies in the United 

States and transfer abroad? Does the 

approach create incentives for 

individual regulated entities to achieve 

greater-than-required emissions 

reductions? 

Competitiveness/emissions shifts: Can 

the approach be designed to reduce 

potential adverse impacts and 

consequent shifts in production and 

emissions to other sectors or geographic 

areas? Can the policy be designed to 

minimize the shifting, or ‘‘leakage,’’ of 

emissions to other sectors or other 

countries, which would offset emission 

reduction benefits of the policy? To 

what extent can the approach consider 

the degree and nature of action taken by 

other countries? 

Administrative feasibility: How 

complex and resource-intensive would 

the approach be for federal, state, and 

local governments and for regulated 

entities? Do personnel in the public and 

private sectors have sufficient expertise, 

or can they build sufficient expertise, to 

successfully implement the approach? 

Enforceability: Is the approach 

enforceable in practice? Do available 

regulatory options differ regarding 

whether the government or the 

regulated entity bears the burden of 

demonstrating compliance? 

Unintended consequences: Does the 

approach result in unintended 

consequences or unintended effects for 

other regulations? Does the approach 

allow for consideration of, and provide 

tools to address, any perverse 

incentives? 

Suitability of tool for the job: Overall, 

is the approach well-suited to the 

environmental problem, or the bestsuited among imperfect alternatives? 

For example, does the regulatory 

approach fit the characteristics of the 

pollutant in question (e.g., the global 

and long-lived nature of GHGs, high 

volume of CO2 emissions)? 

2. Market-Oriented Regulatory 

Approaches for GHGs 

EPA believes that market-oriented 

regulatory approaches, when wellsuited to the environmental problem, 

offer important advantages over nonmarket-oriented approaches. A number 

of theoretical and empirical studies 

have shown these advantages.55 In 

general, market-oriented approaches 

include ways of putting a price on 

emissions through a fixed price (e.g., a 

tax) or exchangeable quantity-based 

instrument (e.g., a cap-and-trade 

program), while non-market-oriented 

approaches set performance standards 

limiting the rate at which individual 

entities can emit, or prescribe what 

abatement behaviors or technologies 

they should use.56 The primary 

regulatory advantage of a marketoriented approach is that it can achieve 

a particular emissions target at a lower 

55 See EPA (2000), Baumol and Oates (1988), 

Tietenberg (2006) and Burtraw et al. (2005) for a 

detailed description of the advantages of marketoriented policies, such as the Title IV sulfur dioxide 

trading program, over non-market-oriented 

approaches. 

56 Performance standards provide a source 

flexibility to use any emission reduction method 

that meets the performance standard; they can be 

coupled with market-oriented approaches such as 

emissions trading to promote lower costs and 

technology innovation, as described later in this 

section. 

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social cost than a non-market-oriented 57 

approach (Baumol and Oates, 1971; 

Tietenberg, 1973).58 This is because 

market-oriented approaches leave the 

method for reducing pollution to the 

emitter, and emitters have an incentive 

to find the least cost way of achieving 

the regulatory requirement. Efficient 

market-oriented regulatory systems 

provide a common emissions price for 

all emitters that contribute to a 

particular harm, either through the tax 

on emissions or the price of an 

exchangeable right to emit. As a result, 

the total abatement required by the 

policy can theoretically be distributed 

across all emitters in such a way that the 

marginal cost of control is equal for all 

emitters and the cost of reducing 

emissions is minimized.59 Non-marketoriented policies offer emitters fewer 

choices on how to reduce emissions, 

which can lead to higher costs than are 

necessary to achieve the overall 

environmental objective (i.e. emission 

level). 

As noted previously, it is especially 

important that any GHG emission 

reduction policy encourage the 

innovation, development and diffusion 

of technologies to provide a steady 

decline in the costs of emission 

reductions. Another advantage of 

market-oriented approaches is that they 

generally provide a greater incentive to 

develop new ways to reduce pollution 

than non-market-oriented approaches 

(Malueg 1989; Milliman and Prince 

1989; Jung et al., 1996). Polluters not 

only have an incentive to find the least 

cost way of adhering to a standard but 

they also have an incentive to 

continually reduce emissions beyond 

what is needed to comply with the 

standard. For every unit of emissions 

reduced under a market-oriented policy, 

the emitter either has a lower tax burden 

or can sell an emissions permit (or buy 

one less emissions permit). Also, there 

are more opportunities under a market57 Many studies use the term ‘‘command-andcontrol’’ to refer to non-market-oriented 

approaches. Here we use the term ‘‘non-marketedoriented’’ because the term ‘‘command and control’’ 

may be misleading when used to refer to 

performance-based emission limits that allow the 

regulated entity to choose the control technology or 

strategy for compliance. 

58 It is important to note that judgments about the 

appropriate mitigation approach also may consider 

important societal values not fully captured in 

economic analysis, such as political, legal, and 

ethical considerations. For example, different 

regulatory forms may result in different 

distributions of costs and benefits across 

individuals and firms. This is a particularly 

sensitive issue with policies that raise energy costs, 

which are known to be regressive. However, these 

issues are not discussed at length here. 

59 For a standard textbook treatment supporting 

this finding see Tietenberg (2006) or Callan and 

Thomas (2007). 

oriented approach for developers of new 

control technologies to work directly 

with polluters to find less expensive 

ways to reduce emissions, and polluters 

are faced with less compliance risk if a 

new pollution control technique does 

not work as expected. This is because 

they can either pay for their 

unanticipated emissions through the tax 

or by purchasing emission rights instead 

of being subject to enforcement action 

(Hahn, 1989). 

There are a number of examples of 

CAA rules in which market-oriented 

approaches have been used for groups of 

mobile or stationary sources. Usually 

this has taken the form of emissions 

trading within a sector or subsector of 

a source category, although there are 

some examples of broader trading 

programs. Differences in implications of 

sector-specific and economy-wide 

market-oriented systems are discussed 

in subsection below. 

The cost advantage of market-oriented 

policies can be extended when emitters 

are allowed to achieve a particular 

environmental objective across multiple 

pollutants that affect environment 

quality in the same way but differ in the 

magnitude of that effect (e.g., different 

GHGs have different global warming 

potentials). Either a cap-and-trade or a 

tax approach could be designed so that 

the effective price per unit of emissions 

is higher for those pollutants that have 

a greater detrimental effect. Under a cap, 

the quantity of emissions reductions is 

fixed but not the price; under a tax, the 

price is fixed but not the emissions 

reductions. Some current legislative 

proposals include flexible multiplepollutant market-oriented policies for 

the control of GHG emissions. 

Market-oriented approaches are 

relatively well-suited to controlling 

GHG emissions. Since emissions of the 

major GHGs are globally well-mixed, a 

unit of GHG emissions generally has the 

same effect on global climate regardless 

of where it occurs. Also, while policies 

can control the flow of GHG emissions, 

what is of ultimate concern is the 

concentration of cumulative GHGs in 

the atmosphere. Providing flexibility on 

the method, location and precise timing 

of GHG reduction would not 

significantly affect the global climate 

protection benefits of a GHG control 

program (assuming effective 

enforcement mechanisms), but could 

substantially reduce the cost and 

encourage technology innovation.60 

60 We say ‘‘precise’’ timing because the qualifier 

is important: The IPCC and others have noted that 

lower GHG stabilization targets would require 

steeper and earlier emission reductions, whereas 

stabilization targets that allow for more warming 

However, it should be noted that for 

GHG control strategies that also reduce 

emissions of traditional pollutants, the 

timing and location of those controls 

could significantly affect air quality in 

local or regional areas. There is the 

potential for positive air quality effects 

from strategies that reduce both GHGs 

and traditional pollutants, and for 

adverse air quality effects that may be 

avoidable through complementary 

measures to address air quality. For 

example, when the acid rain control 

program was instituted, existing sulfur 

dioxide control programs were left in 

place to ensure that trading under the 

acid rain program did not undermine 

achievement of local air quality 

objectives. 

As noted previously, broad-based 

market-oriented approaches include 

emissions taxes and cap-and-trade 

programs with and without cost 

containment mechanisms. While 

economists disagree on which of these 

approaches—emissions taxes or capand-trade programs—may be 

particularly well-suited to the task of 

mitigating GHG emissions, they do agree 

that attributes such as flexibility, cost 

control, and broad incentives for 

minimizing abatement costs and 

developing new technologies are 

important policy design 

considerations.61 For a description of 

various market-oriented approaches, see 

section VII.G. 

3. Legal Authority for Market-Oriented 

Approaches Under the Clean Air Act 

The ability of each CAA regulatory 

authority potentially applicable to GHGs 

to support market-oriented regulatory 

approaches is discussed in sections VI 

and VII of this notice. To summarize, 

some CAA provisions permit or require 

market-oriented approaches, and others 

do not. Trading programs within sectors 

or subsectors have been successfully 

implemented for a variety of mobile and 

stationary source categories under the 

Act, including the Acid Rain Control 

Program (58 FR 3590 (Jan. 11, 1993)) 

and a variety of on-road and non-road 

vehicle and fuel rules. Multi-sector 

trading programs, though not economywide, have been successfully 

implemented under section 110(a)(2)(D) 

for nitrogen oxides (i.e. the NOX SIP 

Call Rule) and under Title VI for ozonedepleting substances, and may be 

(with higher associated risks and impacts) would 

require less steep and later emission reductions. 

61 These approaches also raise the issue of the 

potential use of revenues from collecting a tax or 

auctioning allowances to emit GHGs at levels that 

do not exceed the cap. See Chapter 4 of U.S. EPA 

(2000), ‘‘Guidelines for Preparing Economic 

Analyses,’’ EPA 240–R–00–003. 

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possible among stationary source sectors 

under section 111. An economy-wide 

system might be legally possible under 

CAA section 615 (if the two-part test 

unique to that section were met) or if a 

NAAQS were established for GHGs. 

However, any economy-wide program 

under either provision would not stand 

alone; it would be accompanied by 

source-specific or sector-based 

requirements as a result of other CAA 

provisions (e.g., PSD permitting under 

section 165). 

The CAA does not include a broad 

grant of authority for EPA to impose 

taxes, fees or other monetary charges 

specifically for GHGs and, therefore, 

additional legislative authority may be 

required if EPA were to administer such 

charges (which we will refer to 

collectively as fees). EPA may 

promulgate regulations that impose fees 

only if the specific statutory provision at 

issue authorizes such fees, whether 

directly or through a grant of regulatory 

authority that is written broadly enough 

to encompass them. For example, CAA 

section 110(a)(2)(A) allows for the use of 

‘‘economic incentives such as fees, 

marketable permits, and auctioning 

allowances.’’ Under this provision, 

some states intend to auction 

allowances under CAIR (70 FR 25162 

(May 12, 2005)) and some have under 

the NOX SIP Call Rule (63 FR 57356 

(Oct. 27, 1998)). By the same token, 

states have authority to impose 

emissions fees as economic incentives 

as part of their SIPs and collect the 

revenues. Similarly, section 110(a)(2)(A) 

authorizes EPA to impose fees as 

economic incentives as part of a Federal 

Implementation Plan (FIP) under 

section 110(c), although EPA has never 

done so.62 

Section 111 authorizes EPA to 

promulgate ‘‘standards of performance,’’ 

which are defined as ‘‘standard[s] for 

emissions of air pollutants.’’ EPA has 

taken the position that this term 

authorizes a cap-and-trade program 

under certain circumstances. A fee 

program differs from a cap and trade 

because it does not establish an overall 

emission limitation, and we have not 

taken a position on whether, given this 

limitation, a fee program fits the 

definition of a ‘‘standard of 

performance.’’ Even so, under section 

111 costs may be considered when 

establishing NSPS regulations, and a fee 

may balance the consideration of 

assuring emissions are reduced but not 

at an unacceptably high cost. Also, there 

62 Any such revenues from a FIP would be 

deposited in the Federal Treasury under the 

Miscellaneous Receipts Act, and not retained and 

disbursed by EPA. 

may be advantages of including an 

emission fee feature into a cap-and-trade 

program (i.e., as a price ceiling). The use 

of a price ceiling that is not expected to 

be triggered except in the case of 

unexpectedly high (or low) control costs 

may be viewed differently under the 

auspices of the CAA than a stand-alone 

emissions fee. 

We request comment on what CAA 

provisions, if any, would authorize 

emissions fees to control GHG 

emissions, and whether there are other 

approaches that could be taken under 

the CAA that would approximate a fee. 

Furthermore, we request comments on 

the use of emission fee programs under 

other sections of the Act. We also seek 

comment on whether sector-specific 

programs, or inter-sector programs 

where emission fees on a CO2 

equivalent basis are harmonized, might 

be more appropriate as possible 

regulatory mechanisms under the Act. 

4. Economy-Wide and Sector-Based 

Regulation in a Clean Air Act Context 

Several legislative cap-and-trade 

proposals for reducing GHG emissions 

are designed to be nearly economy 

wide, meaning that they attempt to 

reduce GHG emissions in most 

economic sectors through a single 

regulatory system. By contrast, many 

CAA authorities are designed for 

regulations that apply to a sector, 

subsector or source category, although 

broader trading opportunities exist 

under some authorities. This section 

discusses the relative merits of 

economy-wide systems and sector-based 

market-oriented approaches. These 

considerations may also be relevant in 

considering the use of CAA provisions 

in tandem with any climate change 

legislation. 

i. Economy-Wide Approach 

Economic theory suggests that 

establishing a single price for GHG 

emissions across all emitters through an 

economy-wide, multiple GHG, marketoriented policy would promote optimal 

economic efficiency in pursuing GHG 

reductions. According to the economics 

literature, economy-wide GHG trading 

or GHG emissions taxes could offer 

significantly greater cost savings than a 

sector-by-sector approach for GHGs 

because the broader the universe of 

sources covered by a single marketoriented approach (within a sector, 

across sectors, and across regions), the 

greater the potential for finding lowercost ways to achieve the emissions 

target. If sources of pollution are 

compartmentalized into different sectorspecific or pollutant-specific 

approaches, including the relatively 

flexible cap-and-trade approaches, each 

class of polluter may still face a 

different price for their contribution to 

the environmental harm, and therefore 

some trading opportunities that reduce 

pollution control costs will be 

unrealized (Burtraw and Evans, 2008).63 

Taking a sector-by-sector approach to 

controlling GHG emissions is likely to 

result in higher costs to the economy. 

For example, limiting a market-oriented 

GHG policy to the electricity and 

transportation sectors could double the 

welfare cost of achieving a five percent 

reduction in carbon emissions 

compared to when the industrial sector 

is also included.64 

A second factor that favors making the 

scope of a market-oriented system as 

broad as possible is that the incentive 

for development, deployment and 

diffusion of new technologies would be 

spread across the economy. In contrast 

to an approach targeting a few key 

sectors, an economy-wide approach 

would affect a greater number of diverse 

GHG-emitting activities, and would 

influence a larger number of individual 

economic decisions, potentially leading 

to innovation in parts of the economy 

not addressed by a sector-by-sector 

approach. 

As stated at the outset of this section, 

there are, first and most important, CAA 

authority issues as well as other policy 

and practical considerations in addition 

to economic efficiency that must be 

weighed in evaluating potential CAA 

approaches to GHG regulation. An 

economy-wide, market-oriented 

environmental regulation has never 

been implemented before in the U.S. 

The European Union, after encountering 

difficulties in early years of 

implementation, recently adopted major 

revisions to its broad multi-sector capand-trade system; this illustrates that 

some time and adjustments may be 

needed for such a program to achieve its 

intended effect. Although EPA has 

successfully designed and implemented 

market-oriented systems of narrower 

scope, a single economy-side system 

would involve new design and 

implementation challenges, should the 

CAA make possible such a system. For 

example — 

• Administrative costs may be a 

concern, because more sources and 

sectors would have to be subject to 

63 With traditional pollutants there are geographic 

issues to consider. 

64 William Pizer, Dallas Burtraw, Winston 

Harrington, Richard Newell, and James Sanchirico 

(2006), ‘‘Modeling Economywide versus Sectoral 

Climate Policies Using Combined AggregateSectoral Models,’’ The Energy Journal, Vol. 27, No. 

3: 135–168. 

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reporting and measurement, monitoring, 

and verification requirements. 

• Some sources and sectors are more 

amenable to market-oriented approaches 

than others. The feasibility and cost of 

accurate monitoring and compliance 

assurance needed for trading programs 

(whether economy-wide or sector-based) 

varies among sectors and source size. As 

a result, there are potential tradeoffs 

between trading program scope and 

level of assurance that required 

emissions reductions will be achieved. 

• To broaden the scope of cap-andtrade systems, covered sources could be 

allowed to purchase GHG emission 

reductions ‘‘offsets’’ from non-covered 

sources. However, offsets raise 

additional accountability issues, 

including how to balance cost efficiency 

against certainty of emissions 

reductions, how to quantify resulting 

emissions reductions, and how to 

ensure that the activities generating the 

offsets are conducted and maintained 

over time. 

• Allocating allowances or auction 

revenues for an economy-wide GHG 

trading system would be very 

challenging for an executive branch 

agency because of high monetary stakes 

and divergent stakeholder views on how 

to distribute the allowances or revenues 

to promote various objectives. For 

example, many economists believe that 

auctioning allowances under a cap-andtrade system and using the proceeds to 

reduce taxes that distort economic 

incentives would be economically 

efficient, but regulated entities typically 

favor free allowance allocations to offset 

their compliance costs.65 66 

ii. Sector-Based and Multi-Sector 

Trading Under the Clean Air Act 

As mentioned above, EPA has 

implemented multi-sector, sector and 

subsector-based cap-and-trade 

approaches in a number of CAA 

programs, including the Acid Rain (SO2) 

Program, the NOX SIP Call Rule, the 

Clean Air Interstate Rule (CAIR), and 

the stratospheric ozone-depleting 

substances (ODS) phase-out rule. In the 

65 Many economists also suggest that an 

emissions tax with proceeds used to decrease 

distortionary taxes would be economically efficient; 

however, the CAA does not authorize such a 

program. 

66 Bovenberg and Goulder (2001) find that freely 

allocating 20% of allowances to fossil fuel suppliers 

is enough to keep profits from falling. When all 

allowances are freely allocated, profits are found to 

be higher than in the absence of the carbon cap-andtrade policy. Free allocation of allowances or an 

approach that exempts particular sectors also raises 

the specter of ‘‘rent-seeking,’’ the notion that sectors 

or particular source categories will lobby to gain 

preferential treatment and, in essence, be subject to 

less regulatory oversight than other sectors or 

competitors. 

case of the acid rain and ODS rules, the 

CAA itself called for federal controls. By 

contrast, the NOX SIP Call rule and 

CAIR were established by EPA through 

regulations under CAA section 

110(a)(2)(d) to help states attain various 

NAAQS. The two rules and EPA’s 

accompanying model rules enable states 

to adopt compatible cap-and-trade 

programs that form regional interstate 

trading programs. The power sector and 

a few major industrial source categories 

are included in the trading system for 

the NOX SIP Call, and the trading 

system for CAIR focuses on the 

electricity generation sector. 

In addition to creating cap-and-trade 

systems, EPA has often incorporated 

market-oriented emissions trading 

elements into the more traditional 

performance standard approach for 

mobile and stationary sources. Coupling 

market-oriented provisions with 

performance standards provides some of 

the cost advantages and market 

flexibility of market-oriented solutions 

while also directly incentivizing 

technology innovation within the 

particular sector, as discussed below. 

For example, performance standards for 

mobile sources under Title II have for 

many years been coupled with 

averaging, banking and trading 

provisions within a subsector. In 

general, averaging allows covered 

parties to meet their emissions 

obligation on a fleet- or unit-wide basis 

rather than requiring each vehicle or 

unit to directly comply. Banking 

provides direct incentives for additional 

reductions by giving credit for overcompliance; these credits can be used 

toward future compliance obligations 

and, as such, allow manufacturers to put 

technology improvements in place 

when they are ready for market, rather 

than being forced to adhere to a strict 

regulatory schedule that may or may not 

conform to industry or company 

developments. Allowing trading of 

excess emission reductions with other 

covered parties provides an incentive 

for reducing emissions beyond what is 

required. 

Based on our experience with these 

programs, EPA believes that sector and 

multi-sector trading programs for 

GHGs—relative to non-market 

regulatory approaches—could offer 

substantial compliance flexibility, cost 

savings and incentives for innovation to 

regulated entities. In addition, as 

discussed below, in some sectors there 

may be a need to more directly 

incentivize technology development 

because of market barriers that a sectorspecific program might help to 

overcome. To the extent sector-based 

approaches could provide for control of 

multiple pollutants (e.g., traditional 

pollutants and GHGs), they could 

provide additional cost savings relative 

to multiple single-pollutant, sectorbased regulations. Another 

consideration is that it may be simpler 

and thus faster to move forward with 

cap-and-trade programs for sectors 

already involved in, and thus familiar 

with, cap-and-trade programs. This 

raises the question of whether it would 

make sense to phase in an economywide system over time. 

Sector and multi-sector approaches 

would not offer the relative economic 

efficiency of the economy-wide model 

for the reasons explained above. To the 

extent the program sets more stringent 

requirements for new sources than for 

existing source, a sector or multi-sector 

approach could also pose the vintage 

issues discussed below. It is also 

important to keep in mind that the 

economic efficiency of any CAA capand-trade approach for GHGs, sector- or 

economy-wide, could be reduced to a 

significant extent by the application of 

other GHG control requirements (e.g., 

PSD permitting) to the sources covered 

by the cap-and-trade program, if the 

result were to restrict compliance 

options. 

iii. Combining Economy-Wide and 

Sector-Based Approaches 

It is worth noting that market-oriented 

approaches may not incentivize the 

most cost-effective reductions when 

information problems, infrastructure 

issues, technological issues or other 

factors pose barriers that impeded the 

market response to price incentives. In 

such instances, there may be economic 

arguments for combining an economywide approach with complementary 

sector-based requirements unless these 

problems can be directly addressed, for 

instance by providing the information 

needed or directly subsidizing the 

creation of needed infrastructure. 

For instance, given the relative 

inelasticity of demand for 

transportation, even a relative high 

permit price for carbon may not 

substantially change consumer vehicle 

purchases or travel demand, although 

recent reports indicate that the current 

price of gasoline and diesel are inducing 

an increasing number of consumers to 

choose more fuel efficient vehicles and 

drive less. Some have expressed 

concern that this relatively inelastic 

demand may be related to 

undervaluation by consumers of fuel 

economy when making vehicle 

purchasing decisions. If consumers 

adequately value fuel economy, fuel 

saving technologies will come online as 

a result of market forces. However, if 

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consumers undervalue fuel economy, 

vehicle or engine manufacturers may 

need a more direct incentive for making 

improvements or the technology 

innovation potential may well be 

delayed or not fully realized. Beyond 

this consumer valuation issue, questions 

have been raised as to whether a carbon 

price alone (especially if the impact is 

initially to raise gasoline prices by 

pennies a gallon) will provide adequate 

incentives for vehicle manufacturers to 

invest now in breakthrough 

technologies with the capability to 

achieve significantly deeper emissions 

reductions in the future, and for fuel 

providers to make substantial 

investments in a new or enhanced 

delivery infrastructure for large-scale 

deployment of lower carbon fuels.67 

EPA requests comment on how to 

balance the different policy and 

economic considerations involved in 

selecting potential regulatory 

approaches under the CAA, and on how 

the potential enactment of legislation 

should affect EPA’s deliberations on 

how to use CAA authorities. 

5. Other Selected Policy Design Issues 

Another policy and legal issue in 

regulatory design is whether 

requirements should differentiate 

between new and existing sources. 

Because it is generally more costly to 

retrofit pollution control equipment 

than to incorporate it into the 

construction or manufacture of a new 

source, environmental regulations, 

including under the CAA, frequently 

apply stricter standards to new or 

refurbished sources than to 

‘‘grandfathered’’ sources that pre-date 

the regulation. New sources achieve 

high-percentage reductions and over 

time existing high-emitting sources are 

replaced with much cleaner ones. For 

example, emissions from the U.S. auto 

fleet have been dramatically reduced 

over time through new vehicle 

standards. However, some suggest that 

stricter pollution control requirements 

for new or refurbished sources may 

retard replacement of older sources, 

discouraging technology investment, 

innovation and diffusion while 

encouraging older and less efficient 

sources to remain in operation longer, 

thereby reducing the environmental 

effectiveness and cost-effectiveness of 

the regulation. Others believe that 

economic factors other than differences 

in new and existing source requirements 

(e.g., capital outlay, power prices and 

fuel costs) have the most impact on rate 

67 See Kopp and Pizer, ‘‘Assessing U.S. Climate 

Policy Options,’’ Chapter 12, RFF Press: 

Washington, DC (2007). 

of return, and that differences in 

regulatory stringency generally do not 

drive business decisions on when to 

build new capacity. 

A 2002 EPA report on new source 

review requirements found that NSR 

‘‘appears to have little incremental 

impact on construction of new 

electricity generation,’’ but also found 

that ‘‘there were credible examples of 

cases in which uncertainty over the 

[NSR] exemption for routine activities 

has resulted in delay or cancellation of 

projects [at existing plants]’’ that would 

have increased energy capacity, 

improved energy efficiency and reduced 

air pollution.68 To the extent that a gap 

in new and existing source requirements 

affects business decisions, regulating 

existing as well as new sources can 

diminish or eliminate that gap. In the 

power sector, the gap has narrowed over 

time, in part as a result of CAA national 

and regional cap-and-trade systems that 

do not discriminate between new and 

existing facilities (i.e., both new and old 

power plants must hold allowances to 

cover their NOX and SO2 emissions). 

Another consideration is that equity 

issues can arise when applying 

retroactive requirements to existing 

sources. For GHGs, EPA requests 

comment on the concept of a marketoriented approach that does not 

differentiate between new and existing 

source controls and, by avoiding 

different marginal costs of control at 

new and existing sources, would 

promote more cost-effective emissions 

reductions. In addition, EPA requests 

comment on whether GHG regulations 

should differentiate between new and 

existing sources for various sectors, and 

whether there are circumstances in 

which requirements for stringent 

controls on new sources would have 

policy benefits despite the existence of 

a cap-and-trade system that also would 

apply to those sources. 

Another possible design consideration 

for a GHG program is whether and how 

lifecycle approaches to controlling GHG 

emissions could or should be used. 

Lifecycle (LC) analysis and 

requirements have been proposed for 

determining and regulating the entire 

stream of direct and indirect emissions 

attributable to a regulated source. 

Indirect emissions are emissions from 

the production, transportation, and 

processing of the inputs that go into 

producing that good. Section VI.D 

describes possible CAA approaches for 

reducing GHG emissions from 

transportation fuels through lifecycle 

analysis and includes a brief discussion 

68 ‘‘New Source Review: Report to the President, 

June 2002,’’ U.S. EPA, pp. 30–31. 

of a potential lifecycle approach to 

reducing fuel-related GHG emissions. In 

that context, displacing petroleumbased fuels with renewable or 

alternative fuels can reduce fuel-related 

GHGs to the extent the renewable or 

alternative fuels are produced in ways 

that result in lower GHG emissions than 

the production of an equivalent amount 

of fossil-based fuels. Tailpipe GHG 

emissions typically do not vary 

significantly across conventional and 

alternative or renewable fuels. 

EPA recognizes that other programs, 

such as stationary source or area source 

programs described in this notice, could 

potentially address at least some of the 

indirect GHG emissions from producing 

fuels. We note that the technology and 

fuel changes that may result from an 

economy-wide cap-and-trade approach 

would likely be different from the 

technology and fuel changes that may 

result from a lifecycle approach. 

EPA asks for comment on how a 

lifecycle approach for fuels could be 

integrated with other stationary source 

approaches and whether there are 

potentially overlapping incentives or 

disincentives. EPA also asks for 

comments on whether a lifecycle 

approach to reducing GHG emissions 

may be appropriate for other sectors and 

types of sources, and what the 

implications for regulating other sectors 

would be if a lifecycle approach is taken 

for fuels. 

6. ‘‘Emissions Leakage’’ and 

International Competitiveness 

A frequently raised concern with 

domestic GHG regulation 

unaccompanied by comparable policies 

abroad is that it might result in 

emissions leakage or adversely affect the 

international competitiveness of certain 

U.S. industries. The concern is that if 

domestic firms faced significantly 

higher costs due to regulation, and 

foreign firms remained unregulated, this 

could result in price changes that shift 

emissions, and possibly some 

production capacity, from the U.S. to 

other countries. Emissions leakage also 

could occur without being caused by a 

competitiveness issue: for instance, if a 

U.S. GHG policy raised the domestic 

price of petroleum-based fuels and led 

to reduced U.S. demand for those fuels, 

the resulting world price decline could 

spur increased use of petroleum-based 

fuels abroad, leading to increased GHG 

emissions abroad that offset U.S. 

reductions. 

The extent to which international 

competitiveness is a potential concern 

varies substantially by sector. This issue 

is mainly raised for industries with high 

energy use and substantial potential 

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foreign competition. Even for vulnerable 

sectors, the concern would depend on 

the actual extent which a program 

would raise costs for an energy 

intensive firm facing international 

competition, and on whether policies to 

address the competitiveness issue were 

adopted (either as part of the rule or in 

another venue). 

Leakage also could occur within the 

U.S. if emissions in one sector or region 

are controlled, but other sources are not. 

In this case, the market effects could 

lead to increased activity in unregulated 

sectors or regions, offsetting some of the 

policy’s emissions reductions. In turn, 

this would raise the cost of achieving 

the environmental objective. The more 

uniform the price signal for an 

additional unit reduction in GHG 

emissions across sectors, states, and 

countries, the less potential there is for 

leakage to occur. 

A recent report has identified and 

evaluated five conceptual options for 

addressing competitiveness concerns in 

a legislative context; some options 

might also be available in a regulatory 

context.69 The first option, weaker 

program targets, would affect the entire 

climate protection policy. Four other 

options also could somewhat decrease 

environmental stringency but would 

allow for the targeting of industries or 

sectors particularly vulnerable to 

adverse economic impacts: 

• Exemptions 

• Non-market regulations to avoid 

direct energy price increases on an 

energy-intensive industry 

• Distribution of free allowances to 

compensate adversely affected 

industries in a cap-and-trade system 

• Trade-related policies such as 

import tariffs on carbon or energy 

content, export subsidies, or 

requirements for importers to submit 

allowances to cover the carbon content 

of certain products. 

Significantly, the report noted that 

identifying the industries most likely to 

be adversely affected by domestic GHG 

regulation, and estimating the degree of 

impact, is complex in terms of data and 

analytical tools needed. 

We request comment on the extent to 

which CAA authorities described in this 

notice could be used to minimize 

competitiveness concerns and leakage of 

emissions to other sectors or countries, 

69 Morgenstern, Richard D., ‘‘Issue Brief 8: 

Addressing Competitiveness Concerns in the 

Context of a Mandatory Policy for Reducing U.S. 

Greenhouse Gas Emissions,’’ in Assessing U.S. 

Climate Policy Options: A report summarizing work 

at RFF [Resources for the Future] as part of the 

inter-industry U.S. Climate Policy Forum, 

November 2007, Raymond J. Kopp and William A. 

Pizer, eds. 

and which approaches should be 

preferred. 

G. Analytical Challenges for Economic 

Analysis of Potential Regulation 

In the event that EPA pursues GHG 

emission reduction policies under the 

CAA or as a result of legislative action, 

we are required by Executive Order 

12866 to analyze and take into account 

to the extent permitted by law the costs 

and benefits of the various policy 

options considered. Economic 

evaluation of GHG mitigation is 

particularly challenging due to the 

temporal and spatial dimensions of the 

problem discussed previously: GHG 

emissions have extremely long-run and 

global climate implications. 

Furthermore, changes to the domestic 

economy are likely to affect the global 

economy. In this section, we discuss a 

few overarching analytical challenges 

that follow from these points. Many of 

the issues discussed are also relevant 

when valuing changes in GHGs 

associated with non-climate policies. 

1. Time Horizon and International 

Considerations in General 

As discussed earlier in this section, 

changes in GHG emissions today will 

affect environmental, ecological, and 

economic conditions for decades to 

centuries into the future. In addition, 

changes in U.S. GHG emissions that 

result from U.S. domestic policy will 

affect climate change everywhere in the 

world, as will changes in the GHG 

emissions of other countries. U.S. 

domestic policy could trigger emissions 

changes across the U.S. economy and 

across regions globally, as production 

and competitiveness change among 

economic activities. Similarly, 

differences in the potential impacts of 

climate change across the world can 

also affect competitiveness and 

production. Capturing these effects 

requires long-run, global analysis in 

addition to traditional domestic and 

sub-national analyses. 

2. Analysis of Benefits and Costs Over 

a Long Time Period 

Since changes in emissions today will 

affect future generations in the U.S. and 

internationally, costs and benefits of 

GHG mitigation options need to be 

estimated over multiple generations. 

Typically, federal agencies discount 

future costs or benefits back to the 

present using a discount rate, where the 

discount rate represents how society 

trades-off current consumption for 

future consumption. With the benefits 

of GHG emissions reductions 

distributed over a very long time 

horizon, benefit and cost estimations are 

likely to be very sensitive to the 

discount rate. For policies that affect a 

single generation of people, the analytic 

approach used by EPA is to use 

discount rates of three and seven 

percent at a minimum.70 According to 

the Office of Management and Budget 

(OMB), a three percent rate is consistent 

with what a typical consumer might 

expect in the way of a risk free market 

return (e.g., government bonds). A seven 

percent rate is an estimate of the average 

before-tax rate of return to private 

capital in the U.S. economy. A key 

challenge facing EPA is the appropriate 

discount rate over the longer timeframe 

relevant for GHGs. 

There are reasons to consider even 

lower discount rates in discounting the 

costs of benefits of policy that affect 

climate change. First, changes in GHG 

emissions—both increases and 

reductions—are essentially long-run 

investments in changes in climate and 

the potential impacts from climate 

change. When considering climate 

change investments, they should be 

compared to similar alternative 

investments (via the discount rate). 

Investments in climate change are 

investments in infrastructure and 

technologies associated with mitigation; 

however, they yield returns in terms of 

avoided impacts over a period of one 

hundred years and longer. Furthermore, 

there is a potential for significant 

impacts from climate change, where the 

exact timing and magnitude of these 

impacts are unknown. These factors 

imply a highly uncertain investment 

environment that spans multiple 

generations. 

When there are important benefits or 

costs that affect multiple generations of 

the population, EPA and OMB allow for 

low but positive discount rates (e.g., 

0.5–3% noted by U.S. EPA, 1–3% by 

OMB).71 In this multi-generation 

context, the three percent discount rate 

is consistent with observed interest rates 

from long-term investments available to 

current generations (net of risk 

premiums) as well as current estimates 

of the impacts of climate change that 

reflect potential impacts on consumers. 

In addition, rates of three percent or 

lower are consistent with long-run 

uncertainty in economic growth and 

interest rates, considerations of issues 

associated with the transfer of wealth 

between generations, and the risk of 

70 EPA (U.S. Environmental Protection Agency), 

2000. Guidelines for Preparing Economic Analyses. 

EPA 240–R–00–003. See also OMB (U.S. Office of 

Management and Budget), 2003. Circular A–4. 

September 17, 2003. 

71 OMB (2003). EPA (2000). These documents are 

the guidance used when preparing economic 

analyses for all EPA rulemakings. 

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high impact climate damages. Given the 

uncertain environment, analysis could 

also consider evaluating uncertainty in 

the discount rate (e.g., Newell and Pizer, 

2001, 2003).72 EPA solicits comment on 

the considerations raised and 

discounting alternatives for handling 

both benefits and costs for this long 

term, inter-generational context. 

3. Uncertainty in Benefits and Costs 

The long time horizon over which 

benefits and costs of climate change 

policy would accrue and the global 

relationships they involve raise 

additional challenges for estimation. 

The exact benefits and costs of virtually 

every environmental regulation is at 

least somewhat uncertain, because 

estimating benefits and costs involves 

projections of future economic activity 

and the future effects and costs of 

reducing the environmental harm. In 

almost every case, some of the future 

effects and costs are not entirely known 

or able to be quantified or monetized. In 

the case of climate change, the 

uncertainly inherent in most economic 

analyses of environmental regulations is 

magnified by the long-term and global 

scale of the problem and the resulting 

uncertainties regarding socio-economic 

futures, corresponding GHG emissions, 

climate responses to emissions changes, 

the bio-physical and economic impacts 

associated with changes in climate, and 

the costs of reducing GHG emissions. 

For example, uncertainties about the 

amount of temperature rise for a given 

amount of GHG emissions and rates of 

economic and population growth over 

the next 50 or 100 years will result in 

a large range of estimates of potential 

benefits and costs. Lack of information 

with regard to some important benefit 

categories and the potential for large 

impacts as a result of climate exceeding 

known but uncertain thresholds 

compound this uncertainty. Likewise, 

there are uncertainties regarding the 

pace and form of future technological 

innovation and economic growth that 

affect estimates of both costs and 

benefits. These difficulties in predicting 

the future can be addressed to some 

extent by evaluating alternative 

scenarios. In uncertain situations such 

as that associated with climate, EPA 

typically recommends that analysis 

consider a range of benefit and cost 

estimates, and the potential 

72 Newell, R. and W. Pizer, 2001. Discounting the 

benefits of climate change mitigation: How much do 

uncertain rates increase valuations? PEW Center on 

Global Climate Change, Washington, DC. Newell, R. 

and W. Pizer, 2003. Discounting the distant future: 

how much do uncertain rates increase valuations? 

Journal of Environmental Economics and 

Management 46: 52–71. 

implications of non-monetized and nonquantified benefits. 

Given the substantial uncertainties in 

quantifying many aspects of climate 

change mitigation and impacts, it is 

difficult to apply economic efficiency 

criteria, or even positive net benefit 

criteria.73 Identifying an efficient policy 

requires knowing the marginal benefit 

and marginal cost curves for GHG 

emissions reductions. If the marginal 

benefits are greater than the marginal 

costs, then additional emissions 

reductions are merited (i.e., they are 

efficient and provide a net benefit). 

However, the curves are not precise 

lines; instead they are wide and 

partially unknown bands. Similarly, 

estimates of total benefits and costs can 

be expressed only as ranges. As a result, 

it is difficult to both identify the 

efficient policy and assess net benefits. 

In situations with large uncertainties, 

the economic literature suggests a risk 

management framework as being 

appropriate for guiding policy (Manne 

and Richels, 1992; IPCC WGIII, 2007).74 

In this framework, the policymaker 

selects a target level of risk and seeks 

the lowest cost approach for reaching 

that goal. In addition, the decisionmaking process is an iterative one of 

acting, learning, and acting again (as 

opposed to there being a single decision 

point). In this context, the explicit or 

implicit value of changes in risk is 

important. Furthermore, some have 

expressed concern in the economics 

literature that standard deterministic 

approaches (i.e., approaches that imply 

there is only one known and single 

realization of the world) do not 

appropriately characterize the 

uncertainty and risk related to climate 

change and may lead to a substantial 

underestimation of the benefits from 

taking action (Weitzman, 2007a, 

2007b).75 Formal uncertainty analysis 

73 IPCC WGI. (2007). Climate Change 2007—The 

Physical Science Basis Contribution of Working 

Group I to the Fourth Assessment Report of the 

IPCC, http://www.ipcc.ch/. IPCC WGII. (2007). 

Climate Change 2007—Impacts, Adaptation and 

Vulnerability Contribution of Working Group II to 

the Fourth Assessment Report of the IPCC, http:// 

www.ipcc.ch/. IPCC WGIII (2007). Climate Change 

2007—Mitigation Contribution of Working Group III 

to the Fourth Assessment Report of the IPCC, 

http://www.ipcc.ch/. U.S. Congressional Budget 

Office (2005). Uncertainty in Analyzing Climate 

Change: Policy Implications. The Congress of the 

United States, January 2005. 74 Manne, A. and R. Richels (1992). ‘‘Buying 

Greenhouse Insurance—the Economic Costs of 

Carbon Dioxide Emission Limits’’, MIT Press book, 

Cambridge, MA, 1992. IPCC WGIII (2007). 75 Weitzman, M., 2007a, ‘‘The Stern Review of the 

Economics of Climate Change,’’ Journal of 

Economic Literature. Weitzman, M., 2007b, 

‘‘Structural Uncertainty and the Statistical Life in 

the Economics of Catastrophic Climate Change,’’ 

Working paper http://econweb.fas.harvard.edu/ 

faculty/weitzman/papers/ValStatLifeClimate.pdf. 

may be one approach for at least 

partially addressing this concern. EPA 

solicits comment on how to handle 

uncertainty in benefits and costs 

calculations and application, given the 

quantified and unquantified 

uncertainties. 

4. Benefits Estimation Specific Issues— 

Scope, Estimates, State-of-the-art 

Another important issue in economic 

analysis of climate change policies is 

valuing domestic and international 

benefits. U.S. GHG reductions are likely 

to yield both domestic and global 

benefits. Typically, because the benefits 

and costs of most environmental 

regulations are predominantly domestic, 

EPA focuses on benefits that accrue to 

the U.S. population when quantifying 

the impacts of domestic regulation. 

However, OMB’s guidance for economic 

analysis of federal regulations 

specifically allows for consideration of 

international effects.76 

GHGs are global pollutants. Economic 

principles suggest that the full costs to 

society of emissions should be 

considered in order to identify the 

policy that maximizes the net benefits to 

society, i.e., achieves an efficient 

outcome (Nordhaus, 2006).77 Estimates 

of global benefits capture more of the 

full value to society than domestic 

estimates and can therefore help guide 

policies towards higher global net 

benefits for GHG reductions.78 

Furthermore, international effects of 

climate change may also affect domestic 

benefits directly and indirectly to the 

extent U.S. citizens value international 

impacts (e.g., for tourism reasons, 

concerns for the existence of 

ecosystems, and/or concern for others); 

U.S. international interests are affected 

(e.g., risks to U.S. national security, or 

the U.S. economy from potential 

disruptions in other nations); and/or 

domestic mitigation decisions affect the 

level of mitigation and emissions 

changes in general in other countries 

(i.e, the benefits realized in the U.S. will 

depend on emissions changes in the 

U.S. and internationally). The 

economics literature also suggests that 

policies based on direct domestic 

benefits will result in little appreciable 

76 OMB (2003), page 15. 

77 Nordhaus, W., 2006, ‘‘Paul Samuelson and 

Global Public Goods,’’ in M. Szenberg, L. 

Ramrattan, and A. Gottesman (eds), Samuelsonian 

Economics, Oxford. 

78 Both the United Kingdom and the European 

Commission following these economic principles in 

consideration of the global social cost of carbon 

(SCC) for valuing the benefits of GHG emission 

reductions in regulatory impact assessments and 

cost-benefit analyses (Watkiss et al, 2006). 

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reduction in global GHGs (e.g., 

Nordhaus, 1995).79 

These economic principles suggest 

that global benefits should also be 

considered when evaluating alternative 

GHG reduction policies.80 In the 

literature, there are a variety of global 

marginal benefits estimates (see the Tol, 

2005, and Tol, 2007, meta analyses).81 A 

marginal benefit is the estimated 

monetary benefit for each additional 

unit of carbon dioxide emissions 

reduced in a particular year.82 

Based on the characteristics of GHGs 

and the economic principles that follow, 

EPA developed ranges of global and 

U.S. marginal benefits estimates. The 

estimates were developed as part of the 

work evaluating potential GHG emission 

reductions from motor vehicles and 

their fuels under Executive Order 

13432. However, it is important to note 

at the outset that the estimates are 

incomplete since current methods are 

only able to reflect a partial accounting 

of the climate change impacts identified 

by the IPCC (discussed more below). 

Also, as noted above, domestic 

estimates omit potential impacts on the 

United States (e.g., economic or national 

security impacts) resulting from climate 

change impacts in other countries. The 

global estimates were developed from a 

survey analysis of the peer reviewed 

literature (i.e. meta analysis). U.S. 

79 Nordhaus, William D. (1995). ‘‘Locational 

Competition and the Environment: Should 

Countries Harmonize Their Environmental 

Policies?’’ in Locational Competition in the World 

Economy, Symposium 1994, ed., Horst Siebert, J. C. 

B. Mohr (Paul Siebeck), Tuebingen, 1995. 

80 Recently, the National Highway Traffic Safety 

Administration (NHTSA) proposed a new 

rulemaking for average fuel economy standards for 

passenger cars and light trucks that is based on 

domestic marginal benefit estimates for carbon 

dioxide reductions. See section V.A.7.l.(iii) 

‘‘Economic value of reductions in CO2 emissions’’ 

(p. 24413) of Vol. 73 of the Federal Registry. 

Department of Transportation, National Highway 

Traffic Safety Administration, 49 CFR Parts 523, 

531, 533, 534, 536 and 537 [Docket No. NHTSA– 

2008 –0089], RIN 2127–AK29, Average Fuel 

Economy Standards: Passenger Cars and Light 

Trucks, Model Years 2011–2015, http:// 

www.regulations.gov/fdmspublic/component/ 

main?main=DocumentDetail&;o=09000064 

80541adc. 

81 Tol, Richard, 2005. The marginal damage costs 

of carbon dioxide emissions: an assessment of the 

uncertainties. Energy Policy 33: 2064–2074. Tol, 

Richard, 2007. The Social Cost of Carbon: Trends, 

Outliers and Catastrophes. Economics Discussion 

Papers Discussion Paper 2007–44, September 19, 

2007. Tol (2007) has been published on-line with 

peer review comments (http://www.economicsejournal.org/economics/discussionpapers/2007–44). 

82 This is sometimes referred to as the social cost 

of carbon, which specifically is defined as the net 

present value of the change in climate change 

impacts over the atmospheric life of the greenhouse 

gas and the resulting climate inertia associated with 

one additional net global metric ton of carbon 

emitted to the atmosphere at a particular point in 

time. 

estimates, and a consistent set of global 

estimates, were developed from a single 

model and are highly preliminary, 

under evaluation, and likely to be 

revised. 

The range of estimates is wide due to 

the uncertainties described above 

relating to socio-economic futures, 

climate responsiveness, impacts 

modeling, as well as the choice of 

discount rate. For instance, for 2007 

emission reductions and a 2% discount 

rate the global meta analysis estimates 

range from $–3 to $159/tCO2, while the 

U.S. estimates range from $0 to $16/ 

tCO2. For 2007 emission reductions and 

a 3% discount rate, the global metaestimates range from $–4 to $106/tCO2, 

and the U.S. estimates range from $0 to 

$5/tCO2.83 The global meta analysis 

mean values for 2007 emission 

reductions are $68 and $40/tCO2 for 

discount rates of 2% and 3% 

respectively (in 2006 real dollars) while 

the domestic mean value from a single 

model are $4 and $1/tCO2 for the same 

discount rates. The estimates for future 

year emission changes will be higher as 

future marginal emissions increases are 

expected to produce larger incremental 

damages as physical and economic 

systems become more stressed as the 

magnitude of climate change 

increases.84 

The current state-of-the-art for 

estimating benefits is also important to 

consider when evaluating policies. 

There are significant partially 

unquantified and omitted impact 

categories not captured in the estimates 

provided above. The IPCC WGII (2007) 

concluded that current estimates are 

‘‘very likely’’ to be underestimated 

because they do not include significant 

impacts that have yet to be monetized.85 

Current estimates do not capture many 

of the main reasons for concern about 

climate change, including non-market 

damages (e.g., species existence value 

and the value of having the option for 

future use), the effects of climate 

variability, risks of potential extreme 

weather (e.g., droughts, heavy rains and 

wind), socially contingent effects (such 

as violent conflict or humanitarian 

83 See the Technical Support Document on 

Benefits of Reducing GHG Emissions for global 

estimates consistent with the U.S. estimates in the 

text and for a comparison to the Tol (2005) meta 

analysis peer reviewed estimates. Tol (2005) 

estimates were cited in NHTSA’s proposed rule and 

by the 9th U.S. Circuit Court (Center for 

Biodiversity v. NHTSA, F. 3d. 9th Cir., Nov. 15, 

2007). 84 Note that, except for illustrative purposes, 

marginal benefits estimates in the peer reviewed 

literature do not use consumption discount rates as 

high as 7%. 

85 IPCC WGII, 2007. In the IPCC report, ‘‘very 

likely’’ was defined as a greater than 90% 

likelihood based on expert judgment. 

crisis), and potential long-term 

catastrophic events. Underestimation is 

even more likely when one considers 

that the current trajectory for GHG 

emissions is higher than typically 

modeled, which when combined with 

current regional population and income 

trajectories that are more asymmetric 

than typically modeled, imply greater 

climate change and vulnerability to 

climate change. 

Finally, with projected increasing 

changes in climate, some types of 

potential climate change impacts may 

occur suddenly or begin to increase at 

a much faster rate, rather than 

increasing gradually or smoothly. In this 

case, there are likely to be jumps in the 

functioning of species and ecosystems, 

the frequency and intensity of extreme 

conditions (e.g., heavy rains, forest 

fires), and the occurrence of 

catastrophic events (e.g., collapse of the 

West Antarctic Ice Sheet). As a result, 

different approaches are necessary for 

quantifying the benefits of ‘‘small’’ 

(incremental) versus ‘‘large’’ (nonincremental) reductions in global GHGs. 

Marginal benefits estimates, like those 

presented above, can be useful for 

estimating benefits for small changes in 

emissions. However, for large changes 

in emissions, a more comprehensive 

assessment of impacts would be needed 

to capture changes in economic and 

biophysical dynamics and feedbacks in 

response to the policy. Even small 

reductions in global GHG emissions are 

expected to reduce climate change risks, 

including catastrophic risks. 

EPA solicits comment on the 

appropriateness of using U.S. and global 

values in quantifying the benefits of 

GHG reductions and the appropriate 

application of benefits estimates given 

the state of the art and overall 

uncertainties. We also seek comment on 

our estimates of the global and U.S. 

marginal benefits of GHG emissions 

reductions that EPA has developed, 

including the scientific and economic 

foundations, the methods employed in 

developing the estimates, the discount 

rates considered, current and proposed 

future consideration of uncertainty in 

the estimates, marginal benefits 

estimates for non-CO2 GHG emissions 

reductions, and potential opportunities 

for improving the estimates. We are also 

interested in comments on methods for 

quantifying benefits for non-incremental 

reductions in global GHG emissions. 

5. Energy Security 

In recent actions, both EPA and 

NHTSA have considered other benefits 

of a regulatory program that, though not 

directly environmental, can result from 

compliance with the program and may 

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be quantified.86 One of these potential 

benefits, related to the transportation 

sector, is increased energy security due 

to reduced oil imports. It is clear that 

both financial and strategic risks can 

result within the U.S. economy if there 

is a sudden disruption in the supply or 

a spike in the costs of petroleum. 

Conversely, actions that promote 

development of lower carbon fuels that 

can substitute for petroleum or 

technologies that more efficiently 

combust petroleum during operation 

can result in reduced U.S. oil imports, 

and can therefore reduce these financial 

and strategic risks. This reduction in 

risks is a measure of improved energy 

security and represents a benefit to the 

U.S. As the Agency evaluates potential 

actions to reduce GHGs from the U.S. 

economy, it intends to also consider the 

energy security impacts associated with 

these actions. 

6. Interactions With Other Policies 

Climate change and GHG mitigation 

policies will likely affect most 

biophysical and economic systems, and 

will therefore affect policies related to 

these systems. For example, as 

previously mentioned, climate change 

will affect air quality and GHG 

mitigation will affect criteria pollutant 

emissions. These effects will need to be 

evaluated, both in the context of 

economic costs and benefits, as well as 

policy design in order to exploit 

synergies and avoid inefficiencies across 

policies. Non-climate policies, whether 

focused on traditional air pollutants, 

energy, transportation, or other areas, 

can also affect baselines and mitigation 

opportunities for climate policies. For 

instance, energy policies can change 

baseline GHG emissions and the 

development path of particular energy 

technologies, potentially affecting the 

GHG mitigation objectives of climate 

policies as well as changing the relative 

costs of mitigation technologies. EPA 

seeks comment on important policy 

interactions. 

7. Integrating Economic and 

Noneconomic Considerations 

While economics can answer 

questions about the cost effectiveness 

and efficiency of policies, judgments 

about the appropriate mitigation policy, 

potential climate change impacts, and 

even the discount rate can be informed 

86 The EPA has worked with Oak Ridge National 

Laboratory to develop a methodology that quantifies 

energy security benefits associated with the 

reduction of imported oil. This methodology was 

used to support the EPA’s 2007 Renewable Fuels 

Standards Rulemaking and NHTSA’s 2008 

proposed Average Fuel Economy Standards for 

Passenger Cars and Light Trucks Rulemaking for 

Model Years 2001—2015. 

by economics and science but also 

involve important policy, legal, and 

ethical questions. The ultimate choice of 

a global climate stabilization target may 

be a policy choice that incorporates both 

economic and non-economic factors, 

while the choice of specific 

implementation strategies may be based 

on effectiveness criteria. Furthermore, 

other quantitative analyses are generally 

used to support the development of 

regulations. Distributional analyses, 

environmental justice analyses, and 

other analyses can be informative. For 

example, to the extent that climate 

change affects the distribution of wealth 

or the distribution of environmental 

damages, then climate change 

mitigation policies may have significant 

distributional impacts, which may in 

some cases be more important than 

overall efficiency or net benefits. EPA 

seeks comment on how to adequately 

inform economic choices, as well as the 

broader policy choices, associated with 

GHG mitigation policies. 

IV. Clean Air Act Authorities and 

Programs 

In developing a response to the 

Massachusetts decision, EPA conducted 

a thorough review of the CAA to 

identify and assess all of the Act’s 

provisions that might be applied to GHG 

emissions. Although the Massachusetts 

decision addresses only CAA section 

202(a)(1), which authorizes new motor 

vehicle emission standards, the Act 

contains a number of provisions that 

could conceivably be applied to GHGs 

emissions. EPA’s review of these 

provisions and their interconnections 

indicated that a decision to regulate 

GHGs under section 202(a) or another 

CAA provision could or would lead to 

regulation under other CAA provisions. 

This section of the notice provides an 

overview of the CAA and examines the 

various interconnections among CAA 

provisions that could lead to broad 

regulation of GHG emission sources 

under the Act. 

A. Overview of the Clean Air Act 

The CAA provides broad authority to 

combat air pollution. Cars, trucks, 

construction equipment, airplanes, and 

ships, as well as a broad range of 

electric generation, industrial, 

commercial and other facilities, are 

subject to various CAA programs. 

Implementation of the Act over the past 

four decades has resulted in significant 

reductions in air pollution at the same 

time the nation’s economy has grown. 

As more fully examined in Section VII 

of this notice, the CAA provides three 

main pathways for regulating stationary 

sources of air pollutants. They include, 

in order of their appearance in the Act, 

national ambient air quality standards 

(NAAQS) and state plans for 

implementing those standards (SIPs); 

performance standards for new and 

existing stationary sources; and 

hazardous air pollutant standards for 

stationary sources. In addition, the 

Prevention of Significant Deterioration 

(PSD) program requires preconstruction 

permitting and emission controls for 

certain new and modified major 

stationary sources, and the Title V 

program requires operating permits for 

all major stationary sources. 

Section 108 of the CAA authorizes 

EPA to list air pollutants that are 

emitted by many sources and that cause 

or contribute to air pollution problems 

such as ozone (smog) and particulate 

matter (soot). For every pollutant listed, 

EPA is required by section 109 to set 

NAAQS that are ‘‘requisite’’ to protect 

public health and welfare. EPA may not 

consider the costs of meeting the 

NAAQS in setting the standards. Under 

section 110, every state develops and 

implements plans for meeting the 

NAAQS by applying enforceable 

emission control measures to sources 

within the state. The Act’s requirements 

for SIPs are more detailed and stringent 

for areas not meeting the standards 

(nonattainment areas) than for areas 

meeting the standards (attainment 

areas). Costs may be considered in 

implementing the standards. States are 

aided in their efforts to meet the 

NAAQS by federal emissions standards 

for mobile sources and major categories 

of stationary sources issued under other 

sections of the Act. 

Under CAA section 111, EPA 

establishes emissions performance 

standards for new stationary sources 

and modifications of existing sources for 

categories of sources that contribute 

significantly to harmful air pollution. 

These new source performance 

standards (NSPS) reduce emissions of 

air pollutants addressed by NAAQS, but 

can be issued regardless of whether 

there is a NAAQS for the pollutants 

being regulated. NSPS requirements for 

new sources help ensure that when 

large sources of air pollutants are built 

or modified, they apply available 

emission control technologies and 

strategies. 

When EPA establishes a NSPS for a 

pollutant, section 111(d) calls upon 

states to issue a standard for existing 

sources in the regulated source category 

except in two circumstances. First, 

section 111(d) prohibits regulation of a 

NAAQS pollutant. Second, ‘‘where a 

source category is being regulated under 

section 112, a section 111(d) standard of 

performance cannot be established to 

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address any HAP listed under section 

112(b) that may be emitted from that 

particular source category.’’87 In effect, 

existing source NSPS provides a 

‘‘regulatory safety net’’ for pollutants 

not otherwise subject to major 

regulatory programs under the CAA. 

Section 111 provides EPA and states 

with significant discretion concerning 

the sources to be regulated and the 

stringency of the standards, and allows 

consideration of costs in setting NSPS. 

CAA section 112 provides EPA with 

authority to list and issue national 

emissions standards for hazardous air 

pollutants (HAPs) from stationary 

sources. HAPs are broadly defined as 

pollutants that present, or may present, 

a threat of adverse human or 

environmental effects. HAPs include 

substances which are, or may 

reasonably be anticipated to be, 

carcinogenic, mutagenic, neurotoxic or 

acutely or chronically toxic. Section 112 

contains low emissions thresholds for 

regulation in view of its focus on toxic 

pollutants, and requires regulation of all 

major sources of HAPs. Section 112 also 

provides for ‘‘maximum achievable 

control technology’’ (MACT) standards 

for major sources, limiting consideration 

of cost. 

The PSD program under Part C of 

Title I of the Act is triggered by 

regulation of a pollutant under any 

other section of the Act except for 

sections 112 and 211(o). As mentioned 

previously in this notice, under this 

program, new major stationary sources 

and modifications at existing major 

stationary sources undergo a 

preconstruction permitting process and 

install best available control technology 

(BACT) for each regulated pollutant. 

These basic requirements apply 

regardless of whether a NAAQS exists 

for the pollutant; additional PSD 

requirements apply in the event of a 

NAAQS. The PSD program’s control 

requirements help prevent large new 

and modified sources of air pollutants 

from significantly degrading the air 

quality in clean air areas. A similar 

program, called ‘‘new source review,’’ 

ensures that new or modified large 

sources in areas not meeting the 

NAAQS do not make it more difficult 

for the areas to eventually attain the air 

quality standards. 

Title II of the CAA provides 

comprehensive authority for regulating 

mobile sources of air pollutants. As 

more fully described in Section VI of 

this notice, Title II authorizes EPA to 

address all categories of mobile sources 

and take an integrated approach to 

regulation by considering the unique 

87 See 70 FR 15994, 16029–32 (Mar. 29, 2005). 

aspects of each category, including 

passenger vehicles, trucks and nonroad 

vehicles, as well as the fuels that power 

them. Title II requires EPA to consider 

technological feasibility, costs, safety 

and other factors in setting standards, 

and gives EPA discretion to set 

technology-forcing standards as 

appropriate. In addition, section 211(o) 

of the Act establishes the renewable fuel 

standard (RFS) program, which was 

recently strengthened by EISA to require 

substantial increases in the use of 

renewable fuels, including renewable 

fuels with significantly lower lifecycle 

GHG emissions than the fossil fuelbased fuels they replace.88 The CAA’s 

mobile source authorities work in 

tandem with the Act’s stationary source 

authorities to help protect public health 

and the environment from air pollution. 

Title VI of the CAA authorizes EPA to 

take various actions to protect 

stratospheric ozone, a layer of ozone 

high in the atmosphere that helps 

protect the Earth from harmful UVB 

radiation. As discussed in Section VIII 

of this notice, section 615 provides 

broad authority to regulate any 

substance, practice, process or activity 

that may reasonably be anticipated to 

affect the stratosphere and that effect 

may reasonably be anticipated to 

endanger public health or welfare. 

B. Interconnections Among Clean Air 

Act Provisions 

The provisions of the CAA are 

interconnected in multiple ways such 

that a decision to regulate one source 

category of GHGs could or would lead 

to regulation of other source categories 

of GHGs. As described in detail below, 

there are several provisions in the CAA 

that contain similar endangerment 

language. An endangerment finding for 

GHGs under one provision of the Act 

could thus have ramifications under 

other provisions of the Act. In addition, 

CAA standards applicable to GHGs for 

one category of sources could trigger 

PSD requirements for other categories of 

sources that emit GHGs. How a term is 

interpreted for one part of the Act could 

also affect other provisions using the 

same term. 

These CAA interconnections are by 

design. As described above, the Act 

combats air pollutants in several ways 

that reflect the nature and effects of the 

particular air pollutant being addressed. 

The Act’s approaches are in many cases 

complementary and reinforcing, 

ensuring that air pollutants emitted by 

88 As explained further below, EISA provides that 

regulation of renewable fuels based on lifecycle 

GHG emissions does not trigger any other regulation 

of GHGs under the CAA. 

various types of emission sources are 

reduced in a manner and to an extent 

that reflects the relative contribution of 

particular categories of sources. The 

CAA’s authorities are intended to work 

together to achieve air quality that 

protects public health and welfare. 

For GHGs, the CAA’s 

interconnections mean that careful 

attention needs to be paid to the 

consequences and specifics of decisions 

regarding endangerment and regulation 

of any particular category of GHG 

sources under the Act. In the case of 

traditional air pollutants, EPA and 

States have generally regulated 

pollutants incrementally over time, 

adding source categories or program 

elements as evolving circumstances 

make appropriate. In light of the broad 

variety and large number of GHG 

sources, any decision to regulate under 

the Act could lead, relatively quickly, to 

more comprehensive regulation of GHG 

sources under the Act. A key issue to 

consider in examining the Act’s 

provisions and their interconnections is 

the extent to which EPA may choose 

among and/or tailor the CAA’s 

authorities to implement a regulatory 

program that makes sense for GHGs, 

given the unique challenges and 

opportunities that regulating them 

would present. 

This section of the notice explores 

these interconnections, and later 

sections explain how each CAA 

provision might apply to GHGs. 

1. Similar Endangerment Language Is 

Found in Numerous Sections of the 

Clean Air Act 

The Supreme Court’s decision in 

Massachusetts v. EPA requires EPA to 

address whether GHG emissions from 

new motor vehicles meet the 

endangerment test of CAA section 

202(a)(1). That section states: 

[t]he Administrator shall by regulation 

prescribe (and from time to time revise) 

* * * standards applicable to the emissions 

of any air pollutant from any class or classes 

of new motor vehicles or new motor vehicle 

engines, which in his judgment cause, or 

contribute to, air pollution which may 

reasonably be anticipated to endanger public 

health or welfare. 

CAA section 202(a)(1). If the 

Administrator makes a positive 

endangerment determination for GHG 

emissions from new motor vehicles, he 

must regulate those GHG emissions 

under section 202(a) of the Act. 

Similar endangerment language is 

found in numerous sections of the CAA, 

including sections 108, 111, 112, 115, 

211, 213, 231 and 615. For example, 

CAA section 108(a)(1) (regarding listing 

pollutants to be regulated by NAAQS) 

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states, ‘‘[T]he Administrator shall * * * 

publish, and shall from time to time 

thereafter revise, a list which includes 

each air pollutant (A) emissions of 

which, in his judgment, cause or 

contribute to air pollution which may 

reasonably be anticipated to endanger 

public health or welfare * * *’’ CAA 

section 111(b)(1)(A) (regarding listing 

source categories to be regulated by 

NSPS) states: ‘‘[The Administrator] shall 

include a category of sources in such list 

if in his judgment it causes, or 

contributes significantly to, air pollution 

which may reasonably be anticipated to 

endanger public health or welfare.’’89 

While no two endangerment tests are 

precisely the same, they generally call 

on the Administrator of EPA to exercise 

his or her judgment regarding whether 

a particular air pollutant or source 

category causes or contributes to air 

pollution which may reasonably be 

89 Other CAA endangerment provisions read as 

follows: 

CAA section 115 (regarding international air 

pollution) states: ‘‘Whenever the Administrator, 

upon receipt of reports, surveys or studies from any 

duly constituted international agency has reason to 

believe that any air pollutant or pollutants emitted 

in the United States cause or contribute to air 

pollution which may reasonably be anticipated to 

endanger public health or welfare in a foreign 

country or whenever the Secretary of State requests 

him to do so with respect to such pollution which 

the Secretary of State alleges is of such a nature, the 

Administrator shall give formal notification thereof 

to the Governor of the State in which such 

emissions originate.’’ 

CAA section 211(c)(1) (regarding regulating fuels 

and fuel additives) states: ‘‘The Administrator may, 

* * * [regulate fuels or fuel additives] (A) if in the 

judgment of the Administrator any emission 

product of such fuel or fuel additive causes, or 

contributes, to air pollution which may reasonably 

be anticipated to endanger public health or welfare, 

(B) *	 * *’’ 

CAA section 213(a)(4) (regarding regulating 

nonroad engines) states: ‘‘If the Administrator 

determines that any emissions not referred to in 

paragraph 2 [regarding CO, NOX and VOC 

emissions] from new nonroad engines or vehicles 

significantly contribute to air pollution which may 

reasonably be anticipated to endanger public health 

or welfare, the Administrator may promulgate 

* * * standards applicable to emissions from those 

classes or categories of new nonroad engines and 

new nonroad vehicles (other than locomotives) 

which in the Administrator’s judgment cause, or 

contribute to, such air pollution, * * *’’. 

CAA section 231 (regarding setting aircraft 

standards) states: ‘‘The Administrator shall * * * 

issue proposed emissions standards applicable to 

the emission of any air pollutant from any class or 

classes of aircraft engines which in his judgment 

causes, or contributes to, air pollution which may 

reasonably be anticipated to endanger public health 

or welfare.’’ 

CAA section 615 (regarding protection of 

stratospheric ozone) states: ‘‘If, in the 

Administrator’s judgment, any substance, practice, 

process, or activity may reasonably be anticipated 

to affect the stratosphere, especially ozone in the 

stratosphere, and such effect may reasonably be 

anticipated to endanger public health or welfare, 

the Administrator shall promptly promulgate 

regulations respecting the control of such 

substance, practice, process, or activity * * *’’ 

anticipated to endanger public health or 

welfare. For provisions containing 

endangerment language, a positive 

finding of endangerment is a 

prerequisite for regulation under that 

provision.90 The precise effect of a 

positive or negative finding depends on 

the specific terms of the provision under 

which it is made. For some provisions, 

a positive endangerment finding triggers 

an obligation to regulate (e.g., section 

202(a)(1)), while for other provisions, a 

positive finding allows the Agency to 

regulate in its discretion (e.g., section 

213). In some cases, other criteria must 

also be met to authorize or require 

regulation (e.g., section 108). Each of 

these sections is discussed in more 

detail later in this notice. 

2. Potential Impact Cross the Clean Air 

Act From a Positive or Negative 

Endangerment Finding or Regulation of 

GHGs Under the Act 

a. Potential Impact on Sections 

Containing Similar Endangerment 

Language 

One important issue is whether a 

positive or negative endangerment 

finding under one section of the CAA 

(e.g., under section 202(a) in response to 

the ICTA petition remand) would 

necessarily or automatically lead to 

similar findings under other provisions 

of the Act containing similar language. 

Even though CAA endangerment tests 

vary to some extent, an endangerment 

finding under one provision could have 

some bearing on whether endangerment 

could or should be found under other 

CAA provisions, depending on their 

terms and the facts at issue. EPA request 

comment on the extent to which an 

endangerment finding under any section 

of the CAA would lead EPA to make a 

similar endangerment finding under 

another provision. 

In discussing the implications of 

making a positive endangerment finding 

under any CAA section, we use the 

actual elements of the endangerment 

test in section 202(a) for new motor 

vehicles as an example. The section 

202(a) endangerment test asks two 

distinct questions— 

(1) whether the air pollution at issue 

may reasonably be anticipated to 

endanger public health or welfare, and 

(2) whether emissions from new 

motor vehicles cause or contribute to 

that air pollution. The first question is 

90 As defined by the CAA, ‘‘air pollutant’’ 

includes virtually any substance or material emitted 

into the ambient air. Given the breadth of that term, 

many CAA provisions require the Administrator to 

determine whether a particular air pollutant causes 

or contributes to an air pollution problem as a 

prerequisite to regulating emissions of that 

pollutant. 

generic and looks at whether the type of 

air pollution at issue endangers public 

health or welfare. The second question 

is specific to motor vehicles, and 

considers the contribution of motor 

vehicle emissions to the particular air 

pollution problem. EPA must answer 

both questions in the affirmative for the 

Agency to regulate under section 202(a) 

of the Act. 

A finding of endangerment under one 

section of the Act would not by itself 

constitute a complete finding of 

endangerment under any other section 

of the CAA. How much of a precedent 

an endangerment finding under one 

CAA provision would be for other CAA 

provisions would depend on the basis 

for the finding, the statutory tests for 

making findings, and the facts. For 

example, the two-part endangerment 

test in section 202(a) (motor vehicles) is 

similar to that in sections 211(c)(1) 

(highway and nonroad fuels) and 

231(a)(2) (aircraft). An affirmative 

finding under section 202(a) on the first 

part of the test—whether the air 

pollution at issue endangers public 

health or welfare—would appear to 

satisfy the first part of the test for the 

other two provisions as well. However, 

an affirmative finding on the second 

part of the test, regarding the 

contribution of the particular source 

category to that air pollution, would not 

satisfy the test for the other provisions, 

which apply to different source 

categories. Still, a finding that a 

particular source category’s emissions 

cause or contribute to the air pollution 

problem would likely establish some 

precedent for what constitutes a 

sufficient contribution for purposes of 

making a positive endangerment finding 

for other source categories. 

Other similarities and differences 

among endangerment tests are also 

relevant. While the first part of the test 

in sections 213(a)(4) (nonroad engines 

and vehicles) and 111(b) (NSPS) is 

similar to that in other sections (i.e., 

whether the air pollution at issue 

endangers public health or welfare), the 

second part of the test in sections 

213(a)(4) and 111(b) requires a finding 

of ‘‘significant’’ contribution. In 

addition, the test under section 111(b) 

applies to source categories, not to a 

particular air pollutant.91 Sections 112 

and 615 have somewhat different tests. 

The extent to which an endangerment 

finding would set precedent would also 

depend on the pollutants at issue. For 

example, the ICTA petition to regulate 

motor vehicles under section 202(a) 

91 As discussed below, EPA has already listed a 

very wide variety of source categories under section 

111(b)(1)(A). 

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addresses CO2, CH4 , N2O, and HFCs, 

while the petitions to regulate GHGs 

from other mobile source categories 

collectively address water vapor, NOX 

and black carbon, as well as CO2, CH4, 

and N2O. As further discussed below, 

the differences in the GHGs emitted by 

different types of sources may be 

relevant to the issue of how to define 

‘‘air pollutant’’ for purposes of applying 

the endangerment tests. 

In addition, some CAA sections 

require EPA to act following a positive 

endangerment finding, while others do 

not. In the case of section 202(a)(1), if 

we make a positive endangerment 

finding, we are required to issue 

standards applicable to motor vehicle 

emissions of the GHGs covered by the 

finding. Section 231(a) (aircraft) uses 

similar mandatory language, while 

sections 211(c)(1) (highway and 

nonroad fuel) and 213(a)(4) (nonroad 

engines and vehicles) authorize but do 

not require the issuance of regulations. 

Section 108 (NAAQS pollutants) 

requires that EPA list a pollutant under 

that section if a positive endangerment 

finding is made and two other criteria 

are met. 

In sum, a positive or negative 

endangerment finding for GHG 

emissions under one provision of the 

Act could have a significant and direct 

impact on decisions under other CAA 

sections containing similar 

endangerment language. EPA requests 

comment on the interconnections 

between the CAA endangerment tests 

and the impact that a finding under one 

provision of the Act would have for 

other CAA provisions. 

b. Potential Impact on PSD Program 

Another important issue is the 

potential for a decision to regulate GHGs 

for mobile or stationary sources to 

automatically trigger additional 

permitting requirements for stationary 

sources under the PSD program. As 

explained previously and in detail in 

Section VII of this notice, the main 

element of the PSD program under Part 

C of Title I of the Act is the requirement 

that a PSD permit be obtained prior to 

construction of any new major source or 

any major modification at an existing 

major source. Such a permit must 

contain emissions limitations based on 

BACT for each pollutant subject to 

regulation under the Act. EPA does not 

interpret the PSD program provisions to 

apply to GHG at this time, but any 

requirement to control CO2 or other 

GHGs promulgated by EPA under other 

provisions of the CAA would make 

parts of the PSD program applicable to 

any additional air pollutant(s) that EPA 

regulates in this manner. 

The PSD program applies to each air 

pollutant (other than a HAP) that is 

‘‘subject to regulation under the Act’’ 

within the meaning of sections 165(a)(4) 

and 169(3) of the Clean Air Act and 

EPA’s regulations.92 As a practical 

matter, the identification of pollutants 

subject to the PSD program is driven by 

the BACT requirement because this 

requirement applies to the broadest 

range of pollutants. Under EPA’s PSD 

program regulations, BACT is required 

for ‘‘each regulated NSR pollutant.’’ 40 

CFR 52.21(j)(2)–(3). EPA has defined 

this term to include pollutants that are 

regulated under a NAAQS or NSPS, a 

class I or II substance under Title VI of 

the Act, or ‘‘[a]ny pollutant otherwise 

subject to regulation under the Act.’’ See 

52.21(b)(50).93 Similarly, the 

determination of whether a source is a 

major source subject to PSD is based on 

whether the source emits more than 100 

or 250 tons per year (depending on the 

type of source) of one or more regulated 

pollutants.94 

EPA has historically interpreted the 

phrase ‘‘subject to regulation under the 

Act’’ to describe air pollutants subject to 

CAA statutory provisions or regulations 

that require actual control of emissions 

of that pollutant.95 PSD permits have 

not been required to contain BACT 

emissions limit for GHGs because GHGs 

(and CO2 in particular) have not been 

subject to any CAA provisions or EPA 

regulations issued under the Act that 

require actual control of emissions.96 

92 Section 112(b)(6) precludes listed HAPs from 

the PSD program. Section 210(b) of EISA provides 

that nothing in section 211(o) of the Act, or 

regulations issued pursuant to that subsection, 

‘‘shall affect or be construed to affect the regulatory 

status of carbon dioxide or any other greenhouse 

gas, or to expand or limit regulatory authority 

regarding carbon dioxide or any other greenhouse 

gas, for purposes of other provisions (including 

section 165) of this Act.’’ 

93 This definition reflects EPA’s interpretation of 

the phrase ‘‘each pollutant subject to regulation 

under the Act’’ that is used in the provisions in the 

Clean Air Act that establish the BACT requirement. 

Since this statutory language (as implemented in 

the definition of ‘‘regulated NSR pollutant’’) can 

apply to additional pollutants that are not also 

subject to a NAAQS, the scope of the BACT 

requirement determines the overall range of 

pollutants that are subject to the PSD permitting 

program. 

94 Under the relevant regulations, a major 

stationary source is determined by its emissions of 

‘‘any regulated NSR pollutant.’’ See 40 CFR 

52.21(b)(1)(i). Thus, the emissions that are 

considered in identifying a major source are 

determined on the basis of the same definition that 

controls the applicability of the BACT. 

95 43 FR 26388, 26397 (June 19, 1978); Gerald E. 

Emison, Director, Office of Air Quality Planning 

and Standards, Implementation of North County 

Resource Recovery PSD Remand (Sept. 22, 1987) 

(footnote on the first page). 

96 See briefs filed before the Environmental 

Appeal Board on behalf of specific EPA offices in 

challenges to the PSD permits for Deseret Power 

Although CAA section 211(o) now 

targets GHG emissions, EISA provides 

that neither it nor implementing 

regulations affect the regulatory status of 

GHGs under the CAA. In the absence of 

statutory or regulatory requirements to 

control GHG emissions under the Act, a 

stationary source need not consider 

those emissions when determining its 

major source status. 

The Supreme Court’s conclusion that 

GHGs are ‘‘air pollutants’’ under the 

CAA did not automatically make these 

pollutants subject to the PSD program. 

A substance may be an ‘‘air pollutant’’ 

under the Act without being regulated 

under the Act. The Supreme Court 

directed the EPA Administrator to 

determine whether GHG emissions from 

motor vehicles meet the endangerment 

test of CAA section 202(a). A positive 

finding of endangerment would require 

the Administrator to then set standards 

applicable to GHG emissions from 

motor vehicles under the Act. The 

positive finding itself would not 

constitute a regulation requiring actual 

control of emissions. GHGs would 

become regulated pollutants under the 

Act if and when EPA subjects GHGs to 

control requirements under a CAA 

provision other than sections 112 and 

211(o). 

c. Definition of ‘‘Air Pollutant’’ 

Another way in which a decision to 

regulate GHGs under one section of the 

Act could impact other sections of the 

Act involves how the term ‘‘air 

pollutant’’ is defined as part of the 

endangerment analysis. As described 

above, many of the Act’s endangerment 

tests require a two-part analysis: 

Whether the air pollution at issue may 

reasonably be anticipated to endanger 

public health or welfare, and whether 

emissions of particular air pollutants 

cause or contribute to that air pollution. 

Electric Cooperative (PSD Appeal No. 07–03) and 

Christian County Generation LLC (PSD Appeal No. 

07–01), as well as the Response to Public Comments 

on Draft Air Pollution Control Prevention of 

Significant Deterioration (PSD) Permit to Construct 

[for Deseret Power Electric Cooperative], Permit No. 

PSD–OU–0002–04.00 (August 30, 2007), at 5–6, 

available at http://www.epa.gov/region8/air/ 

permitting/deseret.html. EPA has not previously 

interpreted the BACT requirement to apply to air 

pollutants that are only subject to requirements to 

monitor and report emissions. See, 67 FR 80186, 

80240 (Dec. 31, 2002); 61FR 38250, 38310 (July 31, 

1996); In Re Kawaihae Cogeneration Project 7 

E.A.D. 107, 132 (EAB 1997); Inter-power of New 

York, 5 E.A.D. 130, 151 (EAB 1994); 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) 

(emphasis added); Memorandum from Lydia N. 

Wegman, Deputy Director, Office of Air Quality 

Planning and Standards, entitled Definition of 

Regulated Air Pollutant for Purposes of Title V, at 

5 (April 26, 1993). 

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As discussed in more detail in the 

following sections, what GHGs might be 

defined as an ‘‘air pollutant’’ and 

whether those GHGs are treated 

individually or as a group could impact 

EPA’s flexibility to define the GHGs as 

air pollutants elsewhere in the CAA. 

For example, as noted above, how 

EPA defines GHGs as air pollutants in 

making any positive endangerment 

finding could carry over into 

implementation of the PSD program. If 

EPA defines each individual GHG as a 

separate air pollutant in making a 

positive endangerment finding, then 

each GHG would be considered 

individually as a ‘‘regulated NSR 

pollutant’’ in the PSD program. On the 

other hand, if EPA defines the group of 

GHGs as an air pollutant, then the PSD 

program would need to treat the GHGs 

in the same manner—as a group. As 

discussed in more detail below, there 

are flexibilities and considerations 

under various approaches. One question 

is whether we could or should define 

GHGs as an ‘‘air pollutant’’ one way 

under one section of the Act (e.g., 

section 202) and another way under 

another section (e.g., section 231). See, 

e.g., Environmental Defense v. Duke 

Energy Corp., 127 S.Ct. 1423, 1432 

(2007) (explaining that the general 

presumption that the same term has the 

same meaning is not rigid and readily 

gives way to context). Another question 

is whether having different definitions 

of ‘‘air pollutant’’ would result in both 

definitions applying to the PSD 

program, and whether that result would 

mean that any flexibilities gained under 

one definition would be lost with the 

application of the second. 

Another consideration, noted above, 

is that different source categories emit 

different GHGs. This fact could impact 

the definition of ‘‘air pollutant’’ more 

broadly. EPA requests comment on the 

issues raised in this section, to assist the 

Agency as it considers the implications 

of how to define a GHG ‘‘air pollutant’’ 

for the first time under any section of 

the Act. 

2. Relationships Among Various 

Stationary Source Programs 

As a result of other interactions 

among various CAA sections, a decision 

to act under one part of the CAA may 

preclude action under another part of 

the Act. These interactions reflect the 

Act’s different regulatory treatment of 

pollutants meeting different criteria, and 

prevent duplicative regulation. For 

instance, listing a pollutant under 

section 108(a), which leads to setting a 

NAAQS and developing SIPs for the 

pollutant, generally precludes listing the 

same air pollutant as a HAP under 

section 112(b), which leads to every 

major source of a listed HAP having to 

comply with MACT standards for the 

HAP. CAA section 112(b)(2).97 Listing 

an air pollutant under section 108(a) 

also preludes regulation of that air 

pollutant from existing sources under 

section 111(d), which is intended to 

provide for regulation of air pollutants 

not otherwise subject to the major 

regulatory programs under the Act. CAA 

section 111(d)(1)(A). 

Similarly, regulation of a substance 

under Title VI precludes listing that 

substance as a HAP under section 112(b) 

based solely on the adverse effects on 

the environment of that air pollutant. 

CAA section 112(b)(2). Moreover, listing 

an air pollutant as a HAP under section 

112(b) generally precludes regulation of 

that air pollutant from existing sources 

under section 111(d). CAA section 

111(d)(1)(A).98 Finally, section 112(b)(6) 

provides that the provisions of the PSD 

program ‘‘shall not apply to pollutants 

listed under [section 112].’’ CAA section 

112(b)(6), 42 U.S.C. 7412(b)(6) 

V. Endangerment Analysis and Issues 

In this section, we present our work 

to date on an endangerment analysis in 

response to the Supreme Court’s 

decision in Massachusetts v. EPA. As 

explained previously, the Supreme 

Court remanded EPA’s denial of the 

ICTA petition and ruled that EPA must 

either decide whether GHG emissions 

from new motor vehicles cause or 

contribute to air pollution which may 

reasonably be anticipated to endanger 

public health or welfare, or explain why 

scientific uncertainty is so profound 

that it prevents making a reasoned 

judgment on such a determination. 

In response to the remand, EPA 

analyzed synthesis reports and studies 

on how elevated concentrations of 

GHGs in the atmosphere, and other 

factors, contribute to climate change, 

and how climate change is affecting, 

and may affect in the future, human 

health and welfare, primarily within the 

United States. We also analyzed direct 

GHG effects on human health and 

welfare, i.e., those effects from elevated 

concentrations of GHGs that do not 

occur via climate change. This 

information, summarized briefly below, 

is contained in the Endangerment 

97 ‘‘No air pollutant which is listed under section 

108(a) may be added to the list under this section, 

except that the prohibition of this sentence shall not 

apply to any pollutant which independently meets 

the listing criteria of this paragraph and is a 

precursor to a pollutant which is listed under 

section 108(a) or to any pollutant which is in a class 

of pollutants listed under such section.’’ 

98 However, see 70 FR 15994, 16029–32 (2005) 

(explaining EPA’s interpretation of the conflicting 

amendments to section 111(d) regarding HAPs). 

Technical Support Document found in 

the docket for today’s notice. In 

addition, we compiled information 

concerning motor vehicle GHG 

emissions to assess whether motor 

vehicles cause or contribute to elevated 

concentrations of GHGs in the 

atmosphere. Information on motor 

vehicle emissions is contained in the 

Section 202 Technical Support 

Document, also found in the docket. 

As discussed above, making an 

endangerment finding under one section 

of the CAA has implications for other 

sections of the Act. In this ANPR, we 

consider, and seek comment on these 

implications and other questions 

relevant to making an endangerment 

finding regarding GHG emissions. 

This section is organized as follows. 

Section A discusses the legal framework 

for the endangerment analysis. Section 

B provides information on how ‘‘air 

pollution’’ could be defined for 

purposes of the endangerment analysis, 

as well as a summary of the science 

regarding GHGs and climate change and 

their effects on health and welfare. 

Section C uses the information on 

emissions of GHGs from the mobile 

source categories relevant to the ICTA 

Petition to frame a discussion about 

whether GHGs as ‘‘air pollutants’’ 

‘‘cause or contribute’’ to ‘‘air pollution’’ 

which may reasonably be anticipated to 

endanger public health or welfare. 

A. Legal Framework 

The endangerment language relevant 

to the ICTA petition is contained in 

section 202(a) of the CAA. As explained 

previously, it is similar to endangerment 

language in many other provisions of 

the Act and establishes a two-part test. 

First, the Administrator must decide if, 

in his judgment, air pollution may 

reasonably be anticipated to endanger 

public health or welfare. Second, the 

Administrator must decide whether, in 

his judgment, emissions of any air 

pollutant from new motor vehicles or 

engines cause or contribute to this air 

pollution. 

1. Origin of Current Endangerment and 

Cause or Contribute Language 

The endangerment language in 

section 202(a) and other provisions of 

the CAA share a common legislative 

history that sheds light on the meaning 

of this language. As part of the 1977 

amendments to the CAA, Congress 

added or revised endangerment 

language in various sections of the Act. 

The legislative history of those 

amendments, particularly the report by 

the House Committee on Interstate and 

Foreign Commerce, provides important 

information regarding Congress’ intent 

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when it revised this language. See H.R. 

Rep. 95–294 (1977), as reprinted in 4 A 

Legislative History of the Clean Air Act 

Amendments of 1977 at 2465 

(hereinafter ‘‘LH’’). 

a. Ethyl Corp. v. EPA 

In revising the endangerment 

language, Congress relied heavily on the 

approach discussed in a federal appeals 

court opinion interpreting the pre-1977 

version of CAA section 211. In Ethyl 

Corp v. EPA, 541 F.2d 1 (D.C. Cir. 1976), 

the en banc (i.e. full) court reversed a 3-

judge panel decision regarding an EPA 

rule restricting the content of lead in 

leaded gasoline.99 The en banc court 

began its opinion by stating: 

Man’s ability to alter his environment has 

developed far more rapidly than his ability 

to foresee with certainty the effects of his 

alterations. 

541 F.2d at 6. After reviewing the 

relevant facts and law, the full-court 

evaluated the statutory language at issue 

to see what level of ‘‘certainty [was] 

required by the Clean Air Act before 

EPA may act.’’ Id. 

By a 2–1 vote, the 3-judge panel had 

held that the statutory language ‘‘will 

endanger’’ required proof of actual 

harm, and that the actual harm had to 

come from fuels ‘‘in and of themselves.’’ 

Id. at 12. The en banc court rejected this 

approach, finding that the term 

‘‘endanger’’ allowed the Administrator 

to act when harm is threatened, and did 

not require proof of actual harm. Id. at 

13. ‘‘A statute allowing for regulation in 

the face of danger is, necessarily, a 

precautionary statute.’’ Id. Optimally, 

the court held, regulatory action would 

not only precede, but prevent, a 

perceived threat. Id. 

The court also rejected petitioners’ 

argument that any threatened harm 

must be ‘‘probable’’ before regulation 

was authorized. Specifically, the court 

recognized that danger ‘‘is set not by a 

fixed probability of harm, but rather is 

composed of reciprocal elements of risk 

and harm, or probability or severity.’’ Id. 

at 18. Next, the court held that EPA’s 

evaluation of risk is necessarily an 

exercise of judgment, and that the 

statute did not require a factual finding. 

Id. at 24. Thus, ultimately, the 

99 At the time of the 1973 rules requiring the 

reduction of lead in gasoline, section 211(c)(1)(A) 

of the CAA stated that the Administrator may 

promulgate regulations that control or prohibit the 

manufacture, introduction into commerce, offering 

for sale, or sale of any fuel or fuel additive for use 

in a motor vehicle or motor vehicle engine (A) if 

any emissions product of such fuel or fuel additive 

will endanger the public health or welfare *** . 

CAA section 211(c)(1)(A) (1970) (emphasis 

added). The italicized language in the above quote 

is the relevant language revised by the 1977 

amendments. 

Administrator must ‘‘act, in part on 

‘factual issues,’ but largely on choices of 

policy, on an assessment of risks, [and] 

on predictions dealing with matters on 

the frontiers of scientific knowledge 

*** .’’ Id. at 29 (citations omitted). 

Finally, the en banc court agreed with 

EPA that even without the language in 

section 202 regarding ‘‘cause or 

contribute to,’’ section 211 authorized 

EPA to consider the cumulative impact 

of lead from numerous sources, not just 

the fuels being regulated under section 

211. Id. at 29–31. 

b. The 1977 Clean Air Act Amendments 

The dissent in the original Ethyl Corp 

decision and the en banc opinion were 

of ‘‘critical importance’’ to the House 

Committee which proposed the 

revisions to the endangerment language 

in the 1977 amendments to the CAA. 

H.R. Rep. 95–294 at 48, 4 LH at 2515. 

In particular, the Committee believed 

the Ethyl Corp decision posed several 

‘‘crucial policy questions’’ regarding the 

protection of public health and 

welfare.’’ Id.100 The Committee 

addressed those questions with the 

endangerment language that now 

appears in section 202(a) and several 

other CAA provisions—‘‘which in [the 

Administrator’s] judgment cause, or 

contribute to, air pollution which may 

reasonably be anticipated to endanger 

public health or welfare.’’ 

The Committee intended the language 

to serve several purposes consistent 

with the en banc decision in Ethyl 

Corp.101 First, the phrases ‘‘in his 

judgment’’ and ‘‘in the judgment of the 

Administrator’’ call for the 

Administrator to make comparative 

assessment of risks and projections of 

future possibilities, consider 

uncertainties, and extrapolate from 

limited data. Thus, the Administrator 

must balance the likelihood of effects 

with the severity of the effects in 

reaching his judgment. The Committee 

100 The Supreme Court recognized that the 

current language in section 202(a)(1) is ‘‘moreprotective’’ than the 1970 version that was similar 

to the section 211 language before the D.C. Circuit 

in Ethyl Corp. 127 S.Ct. at 1447, fn 1. 

101 Specifically, the language (1) emphasizes the 

precautionary or preventive purpose of the CAA; (2) 

authorizes the Administrator to reasonably project 

into the future and weigh risks; (3) requires the 

consideration of the cumulative impact of all 

sources; (4) instructs that the health of susceptible 

individuals, as well as healthy adults, should be 

part of the analysis; and (5) indicates an awareness 

of the uncertainties and limitations in information 

available to the Administrator. H.R. Rep. 95–294 at 

49–50, 4 LH at 2516–17. Congress also wanted to 

standardize this language across the various 

sections of the CAA which address emissions from 

both stationary and mobile sources which may 

reasonably be anticipated to endanger public health 

or welfare. H.R. Rep. 95–294 at 50, 4 LH at 2517; 

Section 401 of CAA Amendments of 1977. 

emphasized that ‘‘judgment’’ is different 

from a factual ‘‘finding.’’ Importantly, 

projections, assessments and estimates 

must be reasonable, and cannot be based 

on a ‘‘crystal ball inquiry.’’ Moreover, 

procedural safeguards apply (e.g., CAA 

307(d)) to the exercise of judgment, and 

final decisions are subject to judicial 

review. Also, the phrase ‘‘in his 

judgment’’ modifies both phrases ‘‘cause 

and contribute’’ and ‘‘may reasonably be 

anticipated’’ discussed below. H.R. Rep. 

95–294 at 50–51, 4 LH at 2517–18. 

As the Committee further explained, 

the phrase ‘‘may reasonably be 

anticipated’’ builds upon the 

precautionary and preventative goals 

already provided in the use of the term 

‘‘endanger.’’ Thus, the Administrator is 

to assess current and future risks rather 

than wait for proof of actual harm. This 

phrase is also intended to instruct the 

Administrator to consider the 

limitations and difficulties inherent in 

information on public health and 

welfare. H.R. Rep. 95–294 at 51, 4 LH 

at 2518. 

Finally, the phrase ‘‘cause or 

contribute’’ ensures that all sources of 

the contaminant which contribute to air 

pollution be considered in the 

endangerment analysis (e.g., not a single 

source or category of sources). It is also 

intended to require the Administrator to 

consider all sources of exposure to a 

pollutant (e.g., food, water, air) when 

determining risk. Id. 

3. Additional Considerations for the 

‘‘Cause or Contribute’’ Analysis 

While the legislative history sheds 

light on what should be considered in 

making an endangerment finding, it is 

not clear regarding what constitutes a 

sufficient ‘‘contribution’’ for purposes of 

making a finding. The CAA does not 

define the concept ‘‘cause or contribute’’ 

and instead requires that the 

Administrator exercise his judgment 

when determining whether emissions of 

air pollutants cause or contribute to air 

pollution. As a result, the Administrator 

has the discretion to interpret ‘‘cause or 

contribute’’ in a reasonable manner 

when applying it to the circumstances 

before him. 

The D.C. Circuit has discussed the 

concept of ‘‘contribution’’ in the context 

of a CAA section 213 rule for nonroad 

vehicles. In Bluewater Network v. EPA, 

370 F.3d 1 (2004), industry argued that 

section 213(a)(3) requires a finding of a 

significant contribution before EPA 

could regulate, but EPA argued that the 

CAA requires a finding only of 

‘‘contribution.’’ 102 Id. at 13. The court 

102 The relevant language in section 213(a)(3) 

reads ‘‘[i]f the Administrator makes an affirmative 

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looked at the ‘‘ordinary meaning of 

‘contribute’’’ when upholding EPA’s 

reading. After referencing dictionary 

definitions of contribute,103 the court 

also noted that ‘‘[s]tanding alone, the 

term has no inherent connotation as to 

the magnitude or importance of the 

relevant ‘share’ in the effect; certainly it 

does not incorporate any ‘significance’ 

requirement.’’ Id.104 The court also 

found relevant the fact that section 

213(a) uses the term ‘‘significant 

contributor’’ in some places and the 

term ‘‘contribute’’ elsewhere, suggesting 

that the ‘‘contribute’’ language invests 

the Administrator with discretion to 

exercise his judgment regarding what 

constitutes a sufficient contribution for 

the purpose of making an endangerment 

finding. Id. at 14 

In the past the Administrator has 

looked at emissions of air pollutants in 

various ways to determine whether they 

‘‘cause or contribute’’ to the relevant air 

pollution. For instance, in some mobile 

source rulemakings, the Administrator 

has looked at the percent of emissions 

from the regulated mobile source 

category compared to the total mobile 

source inventory for that air pollutant. 

See, e.g., 66 FR 5001 (2001) (heavy duty 

engine and diesel sulfur rule). In other 

instances the Administrator has looked 

at the percent of emissions compared to 

the total nonattainment area inventory 

of the air pollution at issue. See, e.g., 67 

FR 68,242 (2002) (snowmobile rule). 

EPA has found that air pollutant 

emissions that amount to 1.2% of the 

determination under paragraph (2) the 

Administrator shall, * * * promulgate (and from 

time to time revise) regulations containing 

standards applicable to emissions from those 

classes or categories of new nonroad engines and 

new nonroad vehicles (other than locomotives or 

engines used in locomotives) which in the 

Administrator’s judgment cause, or contribute to, 

such air pollution.’’ Notably, CAA section 213(a)(2), 

which is referenced in section 213(a)(3), requires 

that the ‘‘Administrator shall determine * * * 

whether emissions of carbon monoxide, oxides of 

nitrogen, and volatile organic compounds from new 

and existing nonroad engines or nonroad vehicles 

(other than locomotives or engines used in 

locomotives) are significant contributors to ozone or 

carbon monoxide concentrations in more than 1 

area which has failed to attain the national ambient 

air quality standards for ozone or carbon 

monoxide’’ (emphasis added). 

103 Specifically, the decision noted that 

‘‘ ‘contribute’ means simply ‘to have a share in any 

act or effect,’ Webster’s Third New International 

Dictionary 496 (1993), or ‘to have a part or share 

in producing,’ 3 Oxford English Dictionary 849 (2d 

ed. 1989).’’ 370 F.3d at 13. 

104 The court explained, ‘‘The repeated use of the 

term ‘significant’ to modify the contribution 

required for all nonroad vehicles, coupled with the 

omission of this modifier from the ‘cause, or 

contribute to’ finding required for individual 

categories of new nonroad vehicles, indicates that 

Congress did not intend to require a finding of 

‘significant contribution’ for individual vehicle 

categories.’’ Id. 

total inventory ‘‘contribute.’’ Bluewater 

Network, 370 F.3d at 15 (‘‘For 

Fairbanks, this contribution was 

equivalent to 1.2% of the total daily CO 

inventory for 2001.’’). 

We solicit comment on these prior 

precedents, including their relevance to 

contribution findings EPA may be 

considering regarding GHG emissions. 

Where appropriate, may the 

Administrator determine that emissions 

at a certain level or percentage 

contribute to air pollution in one 

instance, while also finding that the 

same level or percentage of another air 

pollutant and involving different air 

pollution, and different overall 

circumstances, does not contribute? 

When exercising his judgment, is it 

appropriate for the Administrator to 

consider not only the cumulative 

impact, but also the totality of the 

circumstances (e.g., the air pollutant, 

the air pollution, the type of source 

category, the number of sources in the 

source category, the number and type of 

other source categories that may emit 

the air pollutant) when determining 

whether the emissions ‘‘justify 

regulation’’ under the CAA? See Ethyl 

Corp., 541 F.2d at 31, n62 (‘‘Moreover, 

even under a cumulative impact theory 

emissions must make more than a 

minimal contribution to total exposure 

in order to justify regulation under 

§ 211(c)(1)(A).’’). 

B. Is the Air Pollution at Issue 

Reasonably Anticipated to Endanger 

Public Health or Welfare? 

This section discusses options for 

defining, with respect to GHGs, the ‘‘air 

pollution’’ that may or may not be 

reasonably anticipated to endanger 

public health or welfare, the first part of 

the two part endangerment test. It also 

summarizes the state of the science on 

GHGs and climate change, and relates 

that science to the endangerment 

question. We solicit comment generally 

on the information and issues discussed 

below. 

1. What is the Air Pollution? 

As noted above, in applying the 

endangerment test in section 202(a) or 

other sections of the Act to GHG 

emissions, the Administrator must 

define the scope and nature of the 

relevant ‘‘air pollution’’ that may or may 

not be reasonably anticipated to 

endanger public health or welfare. The 

endangerment issue discussed in 

today’s notice involves, primarily, 

anthropogenic emissions of GHGs, the 

accumulation of GHGs in the 

atmosphere, the resultant impacts 

including climate change, and the risks 

and impacts to human health and 

welfare associated with those impacts. 

a. The Six Major GHGs of Concern 

The six major GHGs of concern are 

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

The IPCC focuses on these six GHGs for 

both scientific assessments and 

emissions inventory purposes because 

these are the six long-lived, well-mixed 

GHGs not controlled by the Montreal 

Protocol on Substances that Deplete the 

Ozone Layer. These six GHGs are 

directly emitted by human activities, are 

reported annually in EPA’s Inventory of 

U.S. Greenhouse Gas Emissions and 

Sinks, and are the common focus of the 

climate change research community. 

The ICTA petition addresses the first 

four of these GHGs, and the President’s 

Executive Orders 13423 and 13432 

define GHGs to include all six of these 

GHGs. 

Carbon dioxide is the most important 

GHG directly emitted by human 

activities, and is the most significant 

driver of climate change. The 

anthropogenic combined heating effect 

(referred to as forcing) of CH4, N2O, 

HFCs, PFCs and SF6 is about 40% as 

large as the CO2 cumulative heating 

effect since pre-industrial times, 

according to the Fourth Assessment 

Report of the IPCC. 

b. Emissions and Elevated 

Concentrations of the Six GHGs 

As mentioned previously, these six 

GHGs can remain in the atmosphere for 

decades to centuries. Therefore, these 

GHGs, once emitted, become well mixed 

throughout the global atmosphere 

regardless of their emission origin, such 

that their average concentrations over 

the U.S. are roughly the same as the 

global average. This also means that 

current GHG concentrations are the 

cumulative result of both historic and 

current emissions, and that future 

concentrations will be the cumulative 

result of historic, current and future 

emissions. 

Greenhouse gases trap some of the 

Earth’s heat that would otherwise 

escape to space. The additional heating 

effect caused by the buildup of 

anthropogenic GHGs in the atmosphere 

enhances the Earth’s natural greenhouse 

effect and causes global temperatures to 

increase, with associated climatic 

changes (e.g., change in precipitation 

patterns, rise in sea levels, and changes 

in the frequency and intensity of 

extreme weather events). Current 

atmospheric concentrations of all of 

these GHGs are significantly higher than 

pre-industrial (~1750) levels as a result 

of human activities. Atmospheric 

concentrations of CO2 and other GHGs 

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44424 Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 

are projected to continue to climb over 

the next several decades. 

The scientific literature that assesses 

the potential risks and end-point 

impacts of climate change (driven by the 

accumulation of atmospheric 

concentrations of GHGs) does not assess 

these impacts on a gas-by-gas basis. 

Observed climate change and associated 

effects are driven by the buildup of all 

GHGs in the atmosphere, as well as 

other natural and anthropogenic factors 

that influence the Earth’s energy 

balance. Likewise, the future projections 

of climate change that have been done 

are driven by emission scenarios of all 

six GHGs, as well as other pollutants, 

many of which are already regulated in 

the U.S. and other countries. 

For these reasons, EPA is considering 

defining the ‘‘air pollution’’ related to 

GHGs as the elevated combined current 

and projected atmospheric 

concentration of the six GHGs. This 

approach is consistent with other 

provisions of the CAA and previous 

EPA practice under the CAA, where 

separate air pollutants from different 

sources but with common properties 

may be treated as a class (e.g., Class I 

and Class II substances under Title VI of 

the CAA). It also addresses the 

cumulative effect that the elevated 

concentrations of the six GHGs have on 

climate, and thus on different elements 

of health, society and the environment. 

We seek comment on this potential 

approach, as well as other alternative 

ways to define ‘‘air pollution.’’ One 

alternative would be to define air 

pollution as the elevated concentration 

of an individual GHG; however, in this 

case the Administrator may still have to 

consider the impact of the individual 

GHG in combination with the impacts 

caused by the elevated concentrations of 

the other GHGs. 

c. Other Anthropogenic Factors That 

Have a Climatic Warming Effect Beyond 

the Six Major GHGs 

There are other GHGs and aerosols 

that have climatic warming effects: 

water vapor, chlorofluorocarbons 

(CFCs), hydrochlorofluorocarbons 

(HCFCs), halons, stratospheric and 

tropospheric ozone (O3), and black 

carbon. Each of these is discussed here. 

We seek comment on whether and how 

they should be considered in the 

definition of ‘‘air pollution’’ for 

purposes of an endangerment finding. 

Water vapor is the most abundant 

naturally occurring GHG and therefore 

makes up a significant share of the 

natural, background greenhouse effect. 

However, water vapor emissions from 

human activities have only a negligible 

effect on atmospheric concentrations of 

water vapor. Significant changes to 

global atmospheric concentrations of 

water vapor occur indirectly through 

human-induced global warming, which 

then increases the amount of water 

vapor in the atmosphere because a 

warmer atmosphere can hold more 

moisture. Therefore, changes in water 

vapor concentrations are not an initial 

driver of climate change, but rather an 

effect of climate change which then acts 

as a positive feedback that further 

enhances warming. For this reason, the 

IPCC does not list direct emissions of 

water vapor as an anthropogenic forcing 

agent of climate change, but does 

include this water vapor feedback 

mechanism in response to humaninduced warming in all modeling 

scenarios of future climate change. 

Based on this recognition that 

anthropogenic emissions of water vapor 

are not a significant driver of 

anthropogenic climate change, EPA’s 

annual Inventory of U.S. Greenhouse 

Gas Emissions and Sinks does not 

include water vapor, and GHG 

inventory reporting guidelines under 

the United Nations Framework 

Convention on Climate Change 

(UNFCCC) do not require data on water 

vapor emissions. 

Water vapor emissions may be an 

issue for concern when they are emitted 

by aircraft at high altitudes, where, 

under certain conditions, they can lead 

to the formation of condensation trails, 

referred to as contrails. Similar to highaltitude, thin clouds, contrails have a 

warming effect. Extensive cirrus clouds 

can also develop from aviation contrails, 

and increases in cirrus cloud cover 

would also have a warming effect. The 

IPCC Fourth Assessment Report 

estimated a very small positive radiative 

forcing effect for linear contrails, with a 

low degree of scientific understanding. 

Unlike the warming effects associated 

with the six long-lived, well-mixed 

GHGs, the warming effects associated 

with contrails or contrail-induced cirrus 

cloud cover are more regional and 

temporal in nature. Further discussion 

of aviation contrails can be found in 

Section VI on mobile sources. EPA 

invites input and comment on the 

scientific and policy issues related to 

consideration of water vapor’s 

association with aviation contrails in an 

endangerment analysis. 

The CFCs, HCFCs, and halons are all 

strong anthropogenic GHGs that are 

long-lived in the atmosphere and are 

adding to the global anthropogenic 

heating effect. Therefore, these gases 

share common climatic properties with 

the six GHGs discussed above. The 

production and consumption of these 

substances (and hence their 

anthropogenic emissions) are being 

controlled and phased out, not because 

of their effects on climate change, but 

because they deplete stratospheric O3, 

which protects against harmful 

ultraviolet B (UVB) radiation. The 

control and phase-out of these 

substances in the U.S. and globally is 

occurring under the Montreal Protocol 

on Substances that Deplete the Ozone 

Layer, and in the U.S. under Title VI of 

the CAA as well.105 Therefore, the 

climate change research and policy 

community typically does not focus on 

these substances, precisely because they 

are essentially already being ’taken care 

of’ with non-climate policy 

mechanisms. For example, the UNFCCC 

does not address these substances, and 

instead defers their treatment to the 

Montreal Protocol. As mentioned above, 

the President’s Executive Orders 13423 

and 13432 do not include these 

substances in the definition of GHGs. 

For these reasons, EPA’s preliminary 

conclusion is that we would not include 

CFCs, HCFCs and halons in the 

definition of ‘‘air pollution’’ for 

purposes of an endangerment finding. 

We seek comment on this issue. 

The depletion of stratospheric O3 due 

to CFCs, HCFCs, and other ozonedepleting substances has resulted in a 

small cooling effect on the planet. 

Increased concentrations of 

tropospheric O3 are causing a significant 

anthropogenic warming effect, but, 

unlike the long-lived six GHGs, 

tropospheric O3 has a short atmospheric 

lifetime (hours to weeks), and therefore 

its concentrations are more variable over 

space and time. For these reasons, its 

global heating effect and relevance to 

climate change tends to entail greater 

uncertainty compared to the wellmixed, long-lived GHGs. More 

importantly, tropospheric ozone is 

already listed as a NAAQS pollutant 

and is regulated through SIPs and other 

measures under the CAA, due to its 

direct health effects including increases 

in respiratory infection, medicine use by 

asthmatics, emergency department visits 

and hospital admissions, and its 

potential to contribute to premature 

death, especially in susceptible 

populations such as asthmatics, 

105 Under the Montreal Protocol, production and 

consumption of CFCs were phased out in developed 

countries in 1996 (with some essential use 

exemptions) and are scheduled for phase-out by 

2010 in developing countries (with some essential 

use exemptions). For halons the schedule was 1994 

for phase out in developed countries and 2010 for 

developing countries; HCFC production was frozen 

in 2004 in developed countries, and in 2016 

production will be frozen in developing countries; 

and HCFC consumption phase-out dates are 2030 

for developed countries and 2040 in developing 

countries. 

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children and the elderly. Tropospheric 

O3 is not addressed under the UNFCCC. 

For these reasons, EPA’s preliminary 

conclusion is that we would not include 

tropospheric O3 in the definition of ‘‘air 

pollution’’ for purposes of an 

endangerment finding because, as with 

CFCs, HCFCs and halons, it is already 

being addressed by regulatory actions 

that control precursor emissions (NOX 

and volatile organic compounds (VOCs)) 

from major U.S. sources. We invite 

comment on this issue. 

Black carbon is an aerosol particle 

that results from incomplete combustion 

of the carbon contained in fossil fuels, 

and it remains in the atmosphere for 

about a week. Black carbon causes a 

warming effect by absorbing incoming 

sunlight in the atmosphere (whereas 

GHGs cause warming by trapping 

outgoing, infrared heat), and by 

darkening bright surfaces such as snow 

and ice, which reduces reflectivity and 

increases absorption of sunlight at the 

surface. Some recent research,106 

published after the IPCC Fourth 

Assessment Report, has suggested that 

black carbon may play a larger role in 

warming than previously thought. Like 

other aerosols, black carbon can also 

alter the reflectivity and lifetime of 

clouds, which in turn can have an 

additional climate effect. How black 

carbon and other aerosols alter cloud 

properties is a key source of uncertainty 

in climate change science. Given these 

reasons, there is considerably more 

uncertainty associated with black 

carbon’s warming effect compared to the 

estimated warming effect of the six longlived GHGs. 

Black carbon is also co-emitted with 

organic carbon, which tends to have a 

cooling effect on climate because it 

reflects and scatters incoming sunlight. 

The ratio of black carbon to organic 

carbon varies by fuel type and by 

combustion efficiency. Diesel vehicles, 

for example, emit a much greater 

portion of black carbon, whereas forest 

fires tend to emit much more organic 

carbon. The net effect of black carbon 

and organic carbon on climate should 

therefore be considered. Also, black 

carbon is a subcomponent of particulate 

matter (PM), which is regulated as a 

NAAQS pollutant under the CAA due to 

its direct health effects caused by 

inhalation. Diesel vehicles are estimated 

to be the largest source of black carbon 

in the U.S., but these emissions are 

expected to decline substantially over 

the coming decades due to recently 

promulgated EPA regulations targeting 

106 Ramathan, V, and G. Carmichael (2008) Global 

and regional climate changes due to black carbon. 

Nature Geoscience, 1: 221–227. 

PM2.5 emissions from on-road and offroad diesel vehicles (the Highway Diesel 

Rule and the Clean Air Nonroad Diesel 

Rule, the Locomotive and Marine 

Compression Ignition Rule). Nonregulatory partnership programs such as 

the National Clean Diesel Campaign and 

Smartway are reducing black carbon as 

well. In sum, black carbon has different 

climate properties compared to longlived GHGs, and major U.S. sources of 

black carbon are already being 

aggressively reduced through regulatory 

actions due to health concerns. 

Nevertheless, EPA has recently received 

petitions asking the Agency to reduce 

black carbon emissions from some 

mobile source categories (see Section 

VI.). Therefore, EPA seeks comment on 

how to treat black carbon (and coemitted organic carbon) regarding the 

definition of ‘‘air pollution’’ in the 

endangerment context. 

2. Science Summary 

The following provides a summary of 

the underlying science that was 

reviewed and utilized in the 

Endangerment Technical Support 

Document for the endangerment 

discussion, which in turn relied heavily 

on the IPCC Fourth Assessment Report. 

We seek comment on the best available 

science for purposes of the 

endangerment discussion, and in 

particular on the use of the more recent 

findings of the U.S. Climate Change 

Science Program. 

a. Observed Global Effects 

The global atmospheric CO2 

concentration has increased about 35% 

from pre-industrial levels to 2005, and 

almost all of the increase is due to 

anthropogenic emissions. The global 

atmospheric concentration of CH4 has 

increased by 148% since pre-industrial 

levels. Current atmospheric 

concentrations of CO2 and CH4 far 

exceed the recorded natural range of the 

last 650,000 years. The N2O 

concentration has increased 18%. The 

observed concentration increase in these 

non-CO2 gases can also be attributed 

primarily to anthropogenic emissions. 

The industrial fluorinated gases, HFCs, 

PFCs, and SF6, have relatively low 

atmospheric concentrations but are 

increasing rapidly; these gases are 

entirely anthropogenic in origin. 

Current ambient concentrations of 

CO2 and other GHGs remain well below 

published thresholds for any direct 

adverse health effects, such as 

respiratory or toxic effects. 

The global average net effect of the 

increase in atmospheric GHG 

concentrations, plus other human 

activities (e.g., land use change and 

aerosol emissions), on the global energy 

balance since 1750 has been one of 

warming. This total net radiative forcing 

(a measure of the heating effect caused 

by changing the Earth’s energy balance) 

is estimated to be +1.6 Watts per square 

meter (W/m2). The combined radiative 

forcing due to the cumulative (i.e., 1750 

to 2005) increase in atmospheric 

concentrations of CO2, CH4, and N2O is 

+2.30 W/m2. The rate of increase in 

positive radiative forcing due to these 

three GHGs during the industrial era is 

very likely to have been unprecedented 

in more than 10,000 years. The positive 

radiative forcing due to the increase in 

CO2 concentrations is the largest (+1.66 

W/m2). The increase in CH4 

concentrations is the second largest 

source of positive radiative forcing 

(+0.48 W/m2). The increase in N2O has 

a positive radiative forcing of +0.16 

W/m2. 

Warming of the climate system is 

unequivocal, as is now evident from 

observations of increases in global 

average air and ocean temperatures, 

widespread melting of snow and ice, 

and rising global average sea level. 

Global mean surface temperatures have 

risen by 0.74°C (1.3°F) over the last 100 

years. The average rate of warming over 

the last 50 years is almost double that 

over the last 100 years. Global mean 

surface temperature was higher during 

the last few decades of the 20th century 

than during any comparable period 

during the preceding four centuries. 

Most of the observed increase in 

global average temperatures since the 

mid-20th century is very likely due to 

the observed increase in anthropogenic 

GHG concentrations. Global observed 

temperatures over the last century can 

be reproduced only when model 

simulations include both natural and 

anthropogenic forcings, i.e., simulations 

that remove anthropogenic forcings are 

unable to reproduce observed 

temperature changes. Thus, the 

warming cannot be explained by natural 

variability alone. 

Observational evidence from all 

continents and most oceans shows that 

many natural systems are being affected 

by regional climate changes, particularly 

temperature increases. Observations 

show that changes are occurring in the 

amount, intensity, frequency and type of 

precipitation. There is strong evidence 

that global sea level gradually rose in 

the 20th century and is currently rising 

at an increased rate. Widespread 

changes in extreme temperatures have 

been observed in the last 50 years. 

Globally, cold days, cold nights, and 

frost have become less frequent, while 

hot days, hot nights, and heat waves 

have become more frequent. 

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44426 Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 

The Endangerment Technical Support 

Document provides evidence that the 

U.S. and the rest of the world are 

experiencing effects from climate 

change now. 

b. Observed U.S. Effects 

U.S. temperatures also warmed during 

the 20th and into the 21st century. U.S. 

temperatures are now approximately 1.0 

°F warmer than at the start of the 20th 

century, with an increased rate of 

warming over the past 30 years. The 

past nine years have all been among the 

25 warmest years on record for the 

contiguous U.S., a streak which is 

unprecedented in the historical record. 

Like the average global temperature 

increase, the observed temperature 

increase for North America has been 

attributed to the global buildup of 

anthropogenic GHG concentrations in 

the atmosphere. 

Widespread changes in extreme 

temperatures have been observed in the 

last 50 years across all world regions 

including the U.S. Cold days, cold 

nights, and frost have become less 

frequent, while hot days, hot nights, and 

heat waves have become more frequent. 

Total annual precipitation has 

increased over the U.S. on average over 

the last century (about 6%), and there is 

evidence of an increase in heavy 

precipitation events. Nearly all of the 

Atlantic Ocean shows sea level rise 

during the past decade with highest rate 

in areas that include the U.S. east coast. 

Observations show that climate 

change is currently impacting the 

nation’s ecosystems and services in 

significant ways. 

c. Projected Effects 

The Endangerment Technical Support 

Document, the IPCC Fourth Assessment 

Report, and a report under the U.S. 

Climate Change Science Program, 

provide projections of future ambient 

concentrations of GHGs, future climate 

change, and future anticipated effects 

from climate change under various 

scenarios. This section summarizes 

some of the key global projections, such 

as changes in global temperature, as 

well as those particular to North 

America and the United States. 

Overall risk to human health, society 

and the environment increases with 

increases in both the rate and magnitude 

of climate change. Climate warming 

may increase the possibility of large, 

abrupt, and worrisome regional or 

global climatic events (e.g., 

disintegration of the Greenland Ice 

Sheet or collapse of the West Antarctic 

Ice Sheet). The majority of the climate 

change impacts literature assesses the 

potential effects on health, society and 

the environment due to projected 

changes in average conditions (e.g., 

temperature increase, precipitation 

change, sea level rise) and do not take 

into account how the frequency and 

severity of extreme events due to 

climate change may cause certain 

additional impacts. Likewise, impact 

studies typically do not account for 

large, abrupt climatic events, and 

generally consider rates of warming that 

would result from climate 

sensitivities 107 within the most likely 

range, not at the tails of the distribution. 

To weigh the full range of risks and 

impacts, it is important to consider 

these possible extreme outcomes, 

including those that are of low 

probability. 

i. Global Effects 

The majority of future reference-case 

scenarios (assuming no explicit GHG 

mitigation actions beyond those already 

enacted) project an increase of global 

GHG emissions over the century, with 

climbing GHG concentrations and 

associated increases in radiative forcing 

and average global temperatures. 

Projected ambient concentrations of 

CO2 and other GHGs remain well below 

published thresholds for any direct 

adverse health effects, such as 

respiration or toxic effects. 

Through about 2030, the global 

warming rate is affected little by 

different future scenario assumptions or 

different model sensitivities, because 

there is already some degree of 

commitment to future warming given 

past and present GHG emissions. By 

mid-century, the choice of scenario 

becomes more important for the 

magnitude of the projected warming 

because only about a third of that 

warming is projected to be due to 

climate change that is already 

committed. By the end of the century, 

projected average global warming 

(compared to average temperature 

around 1990) varies significantly by 

emissions scenario, with IPCC’s best 

estimates ranging from 1.8 to 4.0 °C (3.2 

to 7.2 °F), with a fuller likely range of 

1.1 to 6.4 °C (2.0 to 11.5 °F), which takes 

into account a wider range of future 

emission scenarios and a wider range of 

uncertainties.108 

107 ‘‘Climate sensitivity’’ is a term used to 

describe how much long-term global warming 

occurs if global atmospheric concentrations of CO2 

are doubled compared to their pre-industrial levels. 

The IPCC Fourth Assessment Report states that 

climate sensitivity is very likely greater than 1.5°C 

(2.7 °F) and likely to lie in the range of 2 °C to 4.5 

°C (3.6 °F to 8.1 °F), with a most likely value of 

about 3 °C (5.4 °F), and that a climate sensitivity 

higher than 4.5 °C cannot be ruled out. 

108 The IPCC scenarios are also described in the 

Technical Support Document and include a range 

The IPCC identifies the most 

vulnerable world regions as the Arctic, 

because of high rates of projected 

warming on natural systems; Africa, 

especially the sub-Saharan region, 

because of current low adaptive 

capacity; small islands, due to high 

exposure of population and 

infrastructure to risk of sea-level rise 

and increased storm surge; and Asian 

mega deltas, due to large populations 

and high exposure to sea level rise, 

storm surge, and river flooding. Climate 

change impacts in certain regions of the 

world may exacerbate problems that 

raise humanitarian and national security 

issues for the U.S. Climate change has 

been described as a potential threat 

multiplier regarding national security 

issues. 

ii. United States Effects 

Projected global warming is 

anticipated to lead to effects in the U.S. 

For instance, all of the U.S. is very 

likely to warm during this century, and 

most areas of the U.S. are expected to 

warm by more than the global average. 

The U.S, along with the rest of the 

world, is projected to see an increase in 

the intensity of precipitation events and 

the risk of flooding, greater runoff and 

erosion, and thus the potential for 

adverse water quality effects. 

Severe heat waves are projected to 

intensify in magnitude, frequency, and 

duration over the portions of the U.S. 

where these events already occur, with 

likely increases in mortality and 

morbidity, especially among the elderly, 

young, and frail. Warmer temperatures 

can also lead to fewer cold-related 

deaths. It is currently not possible to 

quantify the balance between decreased 

cold-related deaths and increased heatrelated deaths attributable to climate 

change over time. 

The IPCC projects with virtual 

certainty (i.e., greater than 99% 

likelihood) declining air quality in cities 

due to warmer days and nights, and 

fewer cold days and nights, and/or more 

frequent hot days and nights over most 

land areas, including the U.S. Climate 

change is expected to lead to increases 

in regional ozone pollution, with 

associated risks for respiratory infection, 

aggravation of asthma, and potential 

premature death, especially for people 

in susceptible groups. Climate change 

effects on ambient PM are currently less 

certain. 

Additional human health concerns 

include a change in the range of vectorof future global emission scenarios and a range of 

climate sensitivities (which measure how much 

global warming occurs for a given increase in global 

CO2 concentrations). 

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borne diseases, and a likely trend 

towards more intense hurricanes (even 

though any single hurricane event 

cannot be attributed to climate change) 

and other extreme weather events. For 

many of these issues, sensitive 

populations, such as the elderly, young, 

asthmatics, the frail and the poor, are 

most vulnerable. 

Moderate climate change in the early 

decades of the century is projected to 

increase aggregate yields of rainfed 

agriculture in the United States by 5– 

20%. However, as temperatures 

continue to rise, grain and oilseed crops 

will increasingly experience failure, 

especially if climate variability 

increases and precipitation lessens or 

becomes more variable. How climatic 

variability and extreme weather events 

will continue to change under a 

changing climate is a key uncertainty, 

and these events also have the potential 

to offset the benefits of CO2 fertilization 

and a longer growing season. 

Climate change is projected to 

constrain over-allocated water resources 

in the U.S., increasing competition 

among agricultural, municipal, 

industrial, and ecological uses. Rising 

temperatures will diminish snowpack 

and increase evaporation, affecting 

seasonal availability of water. 

Disturbances like wildfire and insect 

outbreaks are increasing and are likely 

to intensify in a warmer future with 

drier soils and longer growing seasons. 

Overall forest growth in the U.S. will 

likely increase by 10–20% as a result of 

extended growing seasons and elevated 

CO2 over the next century, but with 

important spatial and temporal 

variation. Although recent climate 

trends have increased vegetation growth 

in parts of the United States, continuing 

increases in disturbances are likely to 

limit carbon storage, facilitate invasive 

species, and disrupt ecosystem services. 

The U.S. will be affected by global sea 

level rise, which is expected to increase 

between 0.18 and 0.59 meters by the 

end of the century relative to around 

1990. These numbers represent the 

lowest and highest projections of the 5 

to 95% ranges for all scenarios 

considered collectively and include 

neither uncertainty in carbon cycle 

feedbacks nor rapid dynamical changes 

in ice sheet flow. U.S. coastal 

communities and habitats will be 

increasingly stressed by climate change 

interacting with development and 

pollution. Sea level is already rising 

along much of the coast, and the rate of 

change is expected to increase in the 

future, exacerbating the impacts of 

progressive inundation, storm-surge 

flooding, and shoreline erosion. 

Climate change is likely to affect U.S. 

energy use (e.g., heating and cooling 

requirements), and energy production 

(e.g., effects on hydropower), physical 

infrastructures (including coastal roads, 

railways, transit systems and runways) 

and institutional infrastructures. 

Climate change will likely interact with 

and possibly exacerbate ongoing 

environmental change and 

environmental pressures in some 

settlements, particularly in Alaska 

where indigenous communities are 

facing major environmental and cultural 

impacts. 

3. Endangerment Discussion Regarding 

Air Pollution 

The Administrator must exercise his 

judgment in evaluating whether the first 

part of the endangerment test is met, 

i.e., whether air pollution (e.g., the 

elevated concentrations of GHGs) is 

reasonably anticipated to endanger 

public health or welfare. As discussed 

above, in exercising his judgment it is 

appropriate for the Administrator to 

make comparative assessments of risk 

and projections of future possibilities, 

consider uncertainties, and extrapolate 

from limited data. The precautionary 

nature of the statutory language also 

means that the Administrator should act 

to prevent harm rather than wait for 

proof of actual harm. 

The scientific record shows there is 

compelling and robust evidence that 

observed climate change can be 

attributed to the heating effect caused by 

global anthropogenic GHG emissions. 

The evidence goes beyond increases in 

global average temperature to include 

observed changes in precipitation 

patterns, sea level rise, extreme hot and 

cold days, sea ice, glaciers, ecosystem 

functioning and wildlife patterns. 

Global warming trends over the last 50 

years stand out as significant compared 

to estimated global average temperatures 

for at least the last few centuries. Some 

degree of future warming is now 

unavoidable given the current buildup 

of atmospheric concentrations of GHGs, 

as the result of past and present GHG 

emissions. Based on the scientific 

evidence, it is reasonable to conclude 

that future climate change will result 

from current and future emissions of 

GHGs. Future warming over the course 

of the 21st century, even under 

scenarios of low emissions growth, is 

very likely to be greater than observed 

warming over the past century. 

The range of potential impacts that 

can result from climate change spans 

many elements of the global 

environment, and all regions of the U.S. 

will be affected in some way. The U.S. 

has a long and populous coastline. Sea 

level rise will continue and exacerbate 

storm-surge flooding and shoreline 

erosion. In areas where heat waves 

already occur, they are expected to 

become more intense, more frequent, 

and longer lasting. Wildfires and the 

wildfire season are already increasing 

and climate change is expected to 

continue to worsen conditions that 

facilitate wildfires. Where water 

resources are already scarce and overallocated in the western U.S., climate 

change is expected to put additional 

strain on these water management 

issues for municipal, agricultural, 

energy and industrial uses. Climate 

change also introduces an additional 

stress on ecosystems which are already 

affected by development, habitat 

fragmentation, and broken ecological 

dynamics. There is a wide range in the 

magnitude of these estimated impacts, 

with there being more confidence in the 

occurrence of some effects and less 

confidence in the occurrence of others. 

In addition to the effects from changes 

in climate, there are some additional 

welfare effects that occur directly from 

the anthropogenic GHG emissions 

themselves. For example, ocean 

acidification occurs through elevated 

concentrations of CO2, and crop and 

other vegetation growth can be 

enhanced through elevated CO2 

concentrations as well. 

Current and projected levels of 

ambient concentrations of the six GHGs 

are not expected to cause any direct 

adverse health effects, such as 

respiratory or toxic effects, which would 

occur as a result of the elevated GHG 

concentrations themselves rather than 

through the effects of climate change. 

However, there are indirect human 

health risks (e.g., heat-related mortality, 

exacerbated air quality, extreme events) 

and benefits (e.g., less cold-related 

mortality) that occur due to climate 

change. We seek comment on how these 

human health impacts should be 

characterized under the CAA for 

purposes of an endangerment analysis. 

Some elements of human health, 

society and the environment may 

benefit from climate change (e.g., shortterm increases in agricultural yields, 

less cold-related mortality). We seek 

comment on how the potential for some 

benefits should be viewed against the 

full weight of evidence showing 

numerous risks and the potential for 

adverse impacts. 

Quantifying the exact nature and 

timing of impacts due to climate change 

over the next few decades and beyond, 

and across all vulnerable elements of 

U.S. health, society and the 

environment, is currently not possible. 

However, the full weight of evidence as 

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summarized above and as documented 

in the Endangerment Technical Support 

Document points towards the robust 

conclusion that expected rates of 

climate change (driven by past, present 

and plausible future GHG emissions) 

pose a number of serious risks to the 

U.S., even if the exact nature of the risks 

is difficult to quantify with confidence. 

The uncertainties in this context can 

also mean that future rates of climate 

change are being underestimated, and 

that the potential for associated and 

difficult-to-predict-and-quantify 

extreme events is not adequately 

incorporated into impact assessments. 

The scientific literature states that risk 

increases with increases in both the rate 

and magnitude of climate change. We 

solicit comment on how these 

uncertainties should be considered. 

We seek comment on whether, in 

light of the precautionary nature of the 

statutory language, the Administrator 

needs to find that current levels of GHG 

concentrations endanger public health 

or welfare now. As noted above, the fact 

that GHGs remain in the atmosphere for 

decades to centuries means that future 

concentrations are dependent not only 

on tomorrow’s emissions, but also on 

today’s emissions. Should the 

Administrator consider both current and 

projected future elevated concentrations 

of GHGs, as well as the totality of the 

observed and projected effects that 

result from current and projected 

concentrations? Or should the 

Administrator focus on future projected 

elevated concentrations of GHGs and 

their projected effects in the United 

States because they are larger and of 

greater concern than current GHG 

concentrations and observed effects? 

In sum, EPA invites comment on all 

issues relevant to making an 

endangerment finding, including the 

scientific basis supporting a finding that 

there is or is not endangerment under 

the CAA, as well as the potential scope 

of the finding (i.e., public health, 

welfare, or both). 

C. Illustration for the ‘‘Cause or 

Contribute’’ Part of the Endangerment 

Discussion: Do emissions of air 

pollutants from motor vehicles or fuels 

cause or contribute to the air pollution 

that may reasonably be anticipated to 

endanger public health or welfare in the 

United States? 

1. What Is/Are the Air pollutant(s)? 

a. Background and Context 

If the Administrator, in his judgment, 

finds that GHG ‘‘air pollution’’ may 

reasonably be anticipated to endanger 

public health or welfare, he must then 

define ‘‘air pollutant(s)’’ for purposes of 

making the ‘‘cause or contribute’’ 

determination. The question is whether 

the ‘‘air pollutants’’ to be evaluated for 

‘‘cause or contribute’’ should be the 

individual GHGs, or whether the ‘‘air 

pollutant’’ is one or more classes of 

GHGs as a group. 

We recognize that the alternative 

definitions could have important 

implications for how GHGs are treated 

under other provisions of the Act. The 

Administrator seeks comment on these 

options, and is particularly interested in 

views regarding the implications for the 

potential future regulation of GHGs 

under other parts of the Act. 

b. Defining ‘‘Air Pollutant’’ as Each 

Individual Greenhouse Gas 

Under this approach, the 

Administrator could define ‘‘air 

pollutant’’ as each individual GHG 

rather than as GHGs as a collective 

whole for the purposes of assessing 

‘‘cause or contribute.’’ The 

Administrator would evaluate each 

individual GHG to determine if it 

causes, or contributes to, the elevated 

combined level of GHG concentrations. 

This approach enables an evaluation 

of the unique characteristics and 

properties of each GHG (e.g., radiative 

forcing, lifetimes, etc.), as well as 

current and projected emissions. This 

facilitates a customized approach 

accounting for these factors. This 

approach also is consistent with the 

approach taken in several federal GHG 

programs which target reductions of 

individual greenhouse gases. For 

example, EPA manages a variety of 

partnership programs aimed at reducing 

emissions of specific sources of methane 

and the fluorinated gases (HFCs, PFCs 

and SF6). 

c. Defining ‘‘Air Pollutants’’ Collectively 

as a Class of Greenhouse Gases 

Under this approach, the 

Administrator could define the ‘‘air 

pollutant’’ as (a) the collective group of 

the six GHGs discussed above (CO2, 

CH4, N2O, HFCs, PFCs, and SF6), (b) the 

collective group of the specific GHGs 

that are emitted from the relevant source 

category at issue in the endangerment 

finding (e.g., for section 202 sources it 

would be CO2, CH4, N2O, and HFCs), or 

(c) other reasonable groupings. 

There are several federal and state 

climate programs, such as EPA’s 

Climate Leaders program, DOE’s 1605b 

program, and Multi-state Climate 

Registry, that encourage firms to report 

(and reduce) emissions of all six GHGs, 

recognizing that the non-CO2 GHG 

emissions are a significant part of the 

atmospheric buildup of GHG 

concentrations and thus radiative 

forcing. In addition, the President’s 

recent 2007 Executive Orders (13423 

and 13432) and his 2002–2012 intensity 

goal both encompass the collective 

emissions of all six GHGs. 

Consideration of a class of gases 

collectively takes into account the 

multiple effects of mitigation options 

and technologies on each gas, thus 

enabling a more coordinated approach 

in addressing emissions from a source. 

For example, collection and combustion 

of fugitive methane will lead to net 

increases in CO2 and possibly nitrous 

oxide emissions, but this is nevertheless 

desirable from an overall mitigation 

perspective given the lower total 

radiative forcing. 

2. Discussion of ‘‘Cause or Contribute’’ 

Once the ‘‘air pollutant(s)’’ is defined, 

the Administrator must look at the 

emissions of the air pollutant from the 

relevant source category in determining 

whether those emissions cause or 

contribute to the air pollution he has 

determined may reasonably be 

anticipated to endanger public health or 

welfare. There arguably are many 

possible ways of assessing ‘‘cause and 

contribute’’ and different approaches 

have been used in previous 

endangerment determinations under the 

CAA. For example, EPA could consider 

how emissions from the relevant source 

category would compare as a share of 

the following: 

• Total global aggregated emissions of 

the 6 GHGs discussed in the definition 

of ‘‘air pollution’’; 

• Total aggregated U.S. emissions of 

the 6 GHGs; 

• Total global emissions of the 

individual GHG in question; 

• Total U.S. emissions of the 

individual GHG in question; and 

• Total global atmospheric 

concentrations of the GHG in question. 

In the past, the smallest level or 

amount of emissions that the 

Administrator determined 

‘‘contributed’’ to the air pollution at 

issue was just less than 1% (67 FR 

68242 (2002)). We solicit comment on 

other factors that may be relevant to a 

contribution determination for GHG 

emissions. For example, given the global 

nature of the air pollution being 

addressed in this rulemaking, one might 

expect that the percentage contribution 

of specific GHGs and sectors would be 

much smaller than for previous 

rulemakings when the nature of the air 

pollution at issue was regional or local. 

On an absolute basis, a small U.S. GHG 

source on a global scale may have 

emissions at the same level as one of the 

largest sources in a single small to 

medium size country, and given the 

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large size of the global denominator, 

even sectors with significant emissions 

could be very small in percentage terms. 

In addition, EPA notes that the EPA 

promotes the reduction of particular 

GHG emissions through a variety of 

voluntary programs (e.g., EPA’s 

domestic CH4 partnership programs and 

the international Methane to Markets 

Partnership (launched in 2004)). EPA 

requests comment on how these and 

other efforts to encourage the voluntary 

reductions in even small amounts of 

GHG emissions are relevant to decisions 

about what level of ‘‘contribution’’ 

merits mandatory regulations. 

Below we use the section 202 source 

category to illustrate these and other 

various ways to consider and compare 

source category GHG emissions for the 

‘‘cause or contribute’’ analysis. In 

keeping with the discussion above 

regarding possible definitions of ‘‘air 

pollutant,’’ we provide the information 

on an individual GHG and collective 

GHG basis. In addition, we raise various 

policy considerations that could be 

relevant to a ‘‘cause or contribute’’ 

determination. EPA invites comment on 

the various approaches, data, and policy 

considerations discussed below. 

a. Overview of Section 202 Source 

Categories 

The relevant mobile sources under 

section 202(a)(1) of the Clean Air Act 

are ‘‘any class or classes of new motor 

vehicles or new motor vehicle engines, 

*** ’’ CAA section 202(a)(1). To 

support this illustrative assessment, 

EPA analyzed historical GHG emissions 

data for motor vehicles and motor 

vehicle engines in the United States 

from 1990 to 2006.109 

The motor vehicles and motor vehicle 

engines (hereinafter ‘‘section 202 source 

categories’’) addressed include 

passenger cars, light-duty trucks, 

motorcycles, buses, medium/heavy-duty 

trucks, and cooling.110 Of the six 

primary GHGs, four are associated with 

section 202 source categories: CO2, CH4, 

N2O, and HFCs. 

A summary of the section 202 

emissions information is presented here, 

and a more detailed description along 

with data tables is contained in the 

Emissions Technical Support 

Document. All annual emissions data 

are considered on a CO2 equivalent 

basis. 

b. Carbon Dioxide Emissions From 

Section 202 Sources 

CO2 is emitted from motor vehicles 

and motor vehicle engines during the 

fossil fuel combustion process. During 

combustion, the carbon stored in the 

fuels is oxidized and emitted as CO2 and 

smaller amounts of other carbon 

compounds.111 

CO2 is the dominant GHG emitted 

from motor vehicles and motor vehicle 

engines, and the dominant GHG emitted 

in the U.S. and globally.112 CO2 

emissions from section 202 sources 

grew by 32% between 1990 and 2006, 

largely due to increased CO2 emissions 

from light-duty trucks (61% since 1990) 

and medium/heavy-duty trucks (76%). 

Emissions of CO2 from section 202 

sources, and U.S. and global emissions 

are presented below in Table V–1. 

TABLE V–1—SECTION 202 CO2, U.S. AND GLOBAL EMISSIONS 

U.S. Emissions 2006 

Sec 202 CO2 

share 

(percent) 

Section 202 CO2 ...................................................................................................................................................... 

All U.S. CO2 ............................................................................................................................................................. 

U.S. emissions of Sec 202 GHG ............................................................................................................................. 

All U.S. GHG emissions .......................................................................................................................................... 

1,564.6 

5983.1 

1,665.4 

7,054.2 

26.2 

93.9 

22.2% 

Global Emissions 2000 

Sec 202 CO2 

share (in 

2000) 

(percent) 

All global CO2 emissions ......................................................................................................................................... 

Global transport GHG emissions ............................................................................................................................. 

All global GHG emissions ........................................................................................................................................ 

30,689.5 

5,315.2 

36,727.9 

4.8 

27.5 

4.0 

Other Sources of U.S. CO2 2006 

Share of U.S. 

CO2 emissions 

(percent) 

Electricity Sector CO2 .............................................................................................................................................. 

Industrial Sector CO2 ............................................................................................................................................... 

2360.3 

984.1 

39.4 

16.4 

Arguably, based on these data, if the 

Administrator did not find that, for 

purposes of section 202, that CO2 

emissions from section 202 source 

categories contribute to the elevated 

109 The source of the emissions data is the 

Inventory of U.S. Greenhouse Gas Emissions and 

Sinks: 1990–2006 (USEPA #430–R–08–005) 

(hereinafter ‘‘U.S. Inventory’’). See the Emissions 

Technical Support Document for a discussion on 

the correspondence between Section 202 source 

categories and IPCC source categories. The most 

recent year for which official EPA estimates are 

available is 2006. 

combined level of GHG concentrations, 

it is unlikely that he would find that the 

other GHGs emitted by section 202 

source categories contribute. 

110 Greenhouse gas emissions result from the use 

of HFCs in cooling systems designed for passenger 

comfort, as well as auxiliary systems for 

refrigeration. 

111 Detailed CO2 emissions data from section 202 

source categories are presented in the Emissions 

Technical Support Document. Other carbon 

compounds emitted such as CO, and non-methane 

volatile organic compounds oxidize in the 

c. Methane Emissions From Section 202 

Source Categories 

Methane (CH4) emissions from motor 

vehicles are a function of the CH4 

content of the motor fuel, the amount of 

atmosphere to form CO2 in a period of hours to 

days. 

112 EPA typically uses current motor vehicle fleet 

emissions information when making a contribution 

analysis under section 202. We solicit comment on 

how or whether the reductions in CO2 emissions 

expected by implementation of EISA, or any other 

projected change in emissions from factors such as 

growth in the fleet or vehicle miles traveled, would 

impact a contribution analysis for CO2. 

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hydrocarbons passing uncombusted Methane emissions from these source light-duty trucks.113 Emissions of CH4 

through the engine, and any post- categories decreased by 58% between from section 202 sources, and U.S. and 

combustion control of hydrocarbon 1990 and 2006, largely due to decreased global emissions are presented below in 

emissions (such as catalytic converters). CH4 emissions from passenger cars and Table V–2. 

TABLE V–2—SECTION 202 CH4, U.S. AND GLOBAL EMISSIONS 

U.S. Emissions 2006 

Sec 202 CH4 

share 

(percent) 

Section 202 CH4 ...................................................................................................................................................... 

All U.S. CH4 ............................................................................................................................................................. 

U.S. emissions of Sec 202 GHG ............................................................................................................................. 

All U.S. GHG emissions .......................................................................................................................................... 

1.80 

555.3 

1,665.40 

7,054.20 

0.32 

0.11 

0.03 

Global Emissions 2000 

Sec 202 CH4 

share (in 

2000) 

(percent) 

All global CH4 emissions ......................................................................................................................................... 

Global transport GHG emissions ............................................................................................................................. 

All global GHG emissions ........................................................................................................................................ 

5,854.90 

5,315.20 

36,727.90 

0.05 

0.05 

0.01 

Other Sources of U.S. CH4 2006 

Share of U.S. 

CH4 emissions 

(percent) 

Landfill CH4 emissions ............................................................................................................................................. 

Natural Gas CH4 emissions ..................................................................................................................................... 

125.7 

102.4 

22.6 

18.4 

EPA also notes that the EPA promotes d. Nitrous Oxide Emissions From emissions from passenger cars and lightthe reduction of CH4 and other non-CO2 Section 202 Source Categories duty trucks.114 Earlier generation 

GHG emissions, as manifested in its Nitrous oxide (N2O) is a product of control technologies initially resulted in 

domestic CH4 partnership programs and the reaction that occurs between higher N2O emissions, causing a 24% 

the international Methane to Markets nitrogen and oxygen during fuel increase in N2O emissions from motor 

Partnership (launched in 2004), which combustion. N2O (and nitrogen oxide vehicles between 1990 and 1995. 

are not focused on the transportation (NOX)) emissions from motor vehicles Improvements in later-generation 

sector. EPA requests comment on how and motor vehicle engines are closely emission control technologies have 

these and other efforts to encourage the related to fuel characteristics, air-fuel reduced N2O output, resulting in a 41% 

voluntary reductions in even small mixes, combustion temperatures, and decrease in N2O emissions from 1995 to 

amounts of GHG emissions are relevant the use of pollution control equipment. 2006. Emissions of N2O from section 

to decisions about what level of Nitrous oxide emissions from section 202 sources, and U.S. and global 

‘‘contribution’’ merits mandatory 202 sources decreased by 27% between emissions are presented below in Table 

regulations. 1990 and 2006, largely due to decreased V–3. 

TABLE V–3—SECTION 202 N2O, U.S. AND GLOBAL EMISSIONS 

U.S. Emissions 2006 

Sec 202 N2O 

share 

(percent) 

Section 202 N2O ...................................................................................................................................................... 

All U.S. N2O ............................................................................................................................................................. 

U.S. emissions of Sec 202 GHG ............................................................................................................................. 

All U.S. GHG emissions .......................................................................................................................................... 

29.5 

367.9 

1665.4 

7054.2 

8.0 

1.8 

0.4 

Global Emissions 2000 

Sec 202 N2O 

share (in 

2000) 

(percent) 

All global N2O emissions ......................................................................................................................................... 

Global transport GHG emissions ............................................................................................................................. 

All global GHG emissions ........................................................................................................................................ 

3,113.8 

5,315.2 

36,727.9 

1.6 

0.9 

0.1 

113 Detailed methane emissions data for section 114 Detailed nitrous oxide emissions data for 

202 source categories are presented in the section 202 source categories are presented in the 

Emissions Technical Support Document. Emissions Technical Support Document. 

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Share of U.S. 

Other Sources of U.S. N2O 2006 N2O emissions 

(percent) 

Agricultural Soil N2O emissions ...............................................................................................................................
 265.0 72.0 

Nitric Acid N2O emissions ....................................................................................................................................... 15.6 4.3 

Past experience has shown that technology by the three major U.S. being phased out under the Montreal 

substantial emissions reductions can be adipic acid plants.115 Protocol and Title VI of the CAA.116 

made by small N2O sources. For Hydrofluorocarbons were not used in 

example, the N2O emissions from adipic e. Hydrofluorocarbons Emissions From motor vehicles or refrigerated rail and Section 202 Source Categories acid production is smaller than that of marine transport in the U.S. in 1990, but 

Section 202 sources, and this sector Hydrofluorocarbons (a term which by 2006 emissions had increased to 70 

reduced its emission by over 60 percent encompasses a group of eleven related Tg CO2e.117 Emissions of HFC from 

from 1990 to 2006 as a result of compounds) are progressively replacing section 202 sources, and U.S. and global 

voluntary adoption of N2O abatement CFCs and HCFCs in section 202 cooling emissions are presented below in Table 

and refrigeration systems as they are V–4. 

TABLE V–4—SECTION 202 HFC, U.S. AND GLOBAL EMISSIONS 

U.S. Emissions 2006 

Sec 202 HFC 

share 

(percent) 

Section 202 HFC ..................................................................................................................................................... 

All U.S. HFC ............................................................................................................................................................ 

U.S. emissions of Sec 202 GHG ............................................................................................................................. 

All U.S. GHG emissions .......................................................................................................................................... 

69.5 

124.5 

1665.4 

7054.2 

55.8 

4.2 

1.0 

Global Emissions 2000 

Sec 202 HFC 

share (in 

2000) 

(percent) 

All global HFC emissions ........................................................................................................................................ 

Global transport GHG emissions ............................................................................................................................. 

All global GHG emissions ........................................................................................................................................ 

259.2 

5,315.2 

36,727.9 

20.3 

1.0 

0.1 

Other Sources of U.S. HFC 2006 

Share of U.S. 

HFC emissions 

(percent) 

HCFC–22 Production ............................................................................................................................................... 

Other ODS Substitutes ............................................................................................................................................ 

13.8 

41.2 

11.1 

33.1 

EPA notes that section 202 HFC 

emissions are the largest source of HFC 

emissions in the United States, that 

these emissions increased by 274% from 

1995 to 2006, and that section 202 

sources are also the largest source of 

emissions of high GWP gases (i.e., HFCs, 

PFCs or SF6) in the U.S. Thus, a 

decision not to set standards for HFCs 

under section 202 could be viewed as 

precedential with respect to the 

likelihood of future regulatory actions 

for any of these three gases. 

f. Perfluorocarbons and Sulfur 

Hexafluoride 

Perfluorocarbons (PFCs) and sulfur 

hexafluoride (SF6) are not emitted from 

motor vehicles or motor vehicle engines 

in the United States. 

g. Total GHG Emissions From Section 

202 Source Categories 

We note if ‘‘air pollutant’’ were 

defined as the collective group of four 

to six GHGs, the emissions of a single 

component (e.g., CO2) could 

theoretically support a positive 

contribution finding. We also solicit 

comment on whether the fact that total 

GHG emissions from section 202 source 

categories are approximately 4.3% of 

total global GHG emissions would mean 

that adopting this definition of ‘‘air 

pollutant’’ would make it unnecessary 

to assess the individual GHG emissions 

levels less than that amount. Table V– 

5 below presents the contribution of 

individual GHGs to total GHG emissions 

from section 202 sources, and from all 

sources in the U.S. 

TABLE V–5—CONTRIBUTION OF INDIVIDUAL GASES IN 2006 TO SECTION 202 AND U.S. TOTAL GHG 

(In percent) 

CO2 CH4 N2O HFC PFC SF6 

Section 202 .............................................................................................. 93.9 0.1 1.8 4.2 

115 Inventory of U.S. Greenhouse Gas Emissions 116 2006 IPCC Guidelines, Volume 3, Chapter 7. 117 Detailed HFC emissions data for section 202 

and Sinks: 1990–2006 (USEPA #430–R–08–005), Page 43. source categories are presented in Tables in the 

p.2–22. Emissions Technical Support Document. 

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TABLE V–5—CONTRIBUTION OF INDIVIDUAL GASES IN 2006 TO SECTION 202 AND U.S. TOTAL GHG—Continued 

(In percent) 

CO2 CH4 N2O HFC PFC SF6 

U.S. Total ................................................................................................. 84.8 7.9 5.2 1.8 0.1 0.2 

Emissions of GHG from section 202 

sources, and U.S. and global emissions 

are presented below in Table V–6. 

TABLE V–6—SECTION 202 GHG, U.S. AND GLOBAL EMISSIONS 

U.S. Emissions 2006 

Sec 202 GHG 

share 

(percent) 

Section 202 GHG .................................................................................................................................................... 

All U.S. GHG emissions .......................................................................................................................................... 

1665.4 

7054.2 23.6 

Global Emissions 2000 

Sec 202 GHG 

share (in 

2000) 

(percent) 

Global transport GHG emissions ............................................................................................................................. 

All global GHG emissions ........................................................................................................................................ 

5,315.2 

36,727.9 

29.5 

4.3 

Other Sources of U.S. GHG 2006 

Share of U.S. 

GHG 

emissions 

(percent) 

Electricity Sector emissions ..................................................................................................................................... 

Industrial Sector emissions ...................................................................................................................................... 

2377.8 

1371.5 

33.7 

19.4 

h. Summary of Requests for Comment 

EPA is seeking comment on the 

approach outlined above in the context 

of section 202 source categories, 

regarding how ‘‘air pollutant’’ should be 

defined, and contribution analyzed. 

Specifically, EPA is interested in 

comments regarding the data and 

comparisons underlying the above 

example contained in Emissions 

Technical Support Document. We also 

welcome comment on prior precedents 

for assessing contributions, as well as 

the potential precedential impact of a 

positive section 202 contribution 

findings for other potential sources of 

these and other GHGs. We also welcome 

comment on the relationship of these 

proposals to existing U.S. climate 

change emissions reduction programs 

and the magnitude of reductions sought 

under these programs. 

VI. Mobile Source Authorities, 

Petitions, and Potential Regulation 

A. Mobile Sources and Title II of the 

Clean Air Act 

Title II of the CAA provides EPA’s 

statutory authority for mobile source air 

pollution control. Mobile sources 

include cars and light trucks, heavy 

trucks and buses, nonroad recreational 

vehicles (such as dirt bikes and 

snowmobiles), farm and construction 

machines, lawn and garden equipment, 

marine engines, aircraft, and 

locomotives. The Title II program has 

led to the development and widespread 

commercialization of emission control 

technologies throughout the various 

categories of mobile sources. Overall, 

the new technologies sparked by EPA 

regulation over four decades have 

reduced the rate of emission of 

regulated pollutants from personal 

vehicles by 98% or more, and are key 

components of today’s high-tech cars 

and SUVs. EPA’s heavy-duty, nonroad, 

and transportation fuels regulatory 

programs have likewise promoted both 

pollution reduction and cost-effective 

technological innovation. 

In this section, we consider how Title 

II authorities could be used to reduce 

GHG emissions from mobile sources and 

the fuels that power them. The existing 

mobile source emissions control 

program provides one possible model 

for how EPA could use Title II of the 

CAA to achieve long-term reductions in 

mobile source GHG emissions. The 

approach would be to set increasingly 

stringent performance standards that 

manufacturers would be required to 

meet over 10, 20 or 30 years using 

flexible compliance mechanisms like 

emissions averaging, trading and 

banking to increase the economic 

effectiveness of emission reductions 

over less flexible approaches. These 

performance standards would reflect 

EPA’s evaluation of available and 

developing technologies, including the 

potential for technology innovation, that 

could provide sustained long-term GHG 

emissions reductions while allowing 

mobile sources to satisfy the full range 

of consumer and business needs. 

Another approach we explore is the 

extent to which CAA authorities could 

be used to establish a cap-and-trade 

system for reducing mobile sourcerelated GHG emissions that could 

provide even greater flexibility to 

manufacturers in finding least cost 

emission reductions available within 

the sector. With respect to cars and light 

trucks, we also present and discuss an 

alternative approach to standard-setting, 

focused on technology already in the 

market today in evaluating near term 

standards, that EPA began developing in 

2007 as part of an inter-agency effort in 

response to the Massachusetts decision 

and the President’s May 2007 directive. 

This approach took into consideration 

and used as a starting point the 

President’s 20-in-10 goals for vehicle 

standards. Congress subsequently 

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addressed many of the 20-in-10 goals 

through its action in passing EISA in 

December 2007. 

EPA seeks public comment on how a 

Title II regulatory program could serve 

as an approach for addressing GHG 

emissions from mobile sources. In 

addition, EPA invites comments on the 

following specific questions: 

• What are the implications for 

developing Title II programs in view of 

the global and long-lived nature of 

GHGs? 

• What factors should be considered 

in developing a long-term, i.e, 2050, 

GHG emissions target for the 

transportation sector? 

• Should the transportation sector 

make GHG emission reductions 

proportional to the sector’s share of total 

U.S. GHG emissions or should other 

approaches be taken to determining the 

relative contribution of the 

transportation sector to GHG emission 

reductions? 

• What are the merits and challenges 

of different regulatory timeframes such 

as 5 years, 10–15 years, 30–40 years? 

• Should Title II GHG standards be 

based on environmental need, current 

projections of future technology 

feasibility, and/or current projections of 

future net societal benefits? 

• Could Title II accommodate a 

mobile sources cap-and-trade program 

and/or could Title II regulations 

complement a broader cap-and-trade 

program? 

• Should trading between mobile 

sources and sources in other sectors be 

allowed? 

• Is it necessary or would it be 

helpful to have new legislation to 

complement Title II (such as legislation 

to provide incentives for the 

development and commercialization of 

low-GHG mobile source technologies)? 

• How best can EPA fulfill its CAA 

obligations under Title II yet avoid 

inconsistency with NHTSA’s regulatory 

approach under EPCA? 

EPA also invites comments on whether 

there are specific limitations of a Title 

II program that would best be addressed 

by new legislation. 

1. Clean Air Act Title II Authorities 

In this section we review the Title II 

provisions that could be applied to GHG 

emissions from various categories of 

motor vehicles and fuels. For each 

provision, we describe the relevant 

category of mobile sources, the terms of 

any required ‘‘endangerment’’ finding, 

and the applicable standard-setting 

criteria. We also identify the full range 

of factors EPA may consider, including 

costs and safety, and discuss the extent 

to which standards may be technologyforcing. 

a. CAA Section 202(a) 

Section 202(a)(1) provides broad 

authority to regulate new ‘‘motor 

vehicles,’’ which are on-road vehicles. 

While other provisions of Title II 

address specific model years and 

emissions of motor vehicles, section 

202(a)(1) provides the authority that 

EPA would use to regulate GHGs from 

new on-road vehicles. The ICTA 

petition sought motor vehicle GHG 

emission standards under this section of 

the Act. 

As previously discussed, section 

202(a)(1) makes a positive 

endangerment finding a prerequisite for 

setting emission standards for new 

motor vehicles. Any such standards 

‘‘shall be applicable to such vehicles 

* * * for their useful life.’’ Emission 

standards under CAA section 202(a)(1) 

are technology-based, i.e. the levels 

chosen must be premised on a finding 

of technological feasibility. They may 

also be technology-forcing to the extent 

EPA finds that technological advances 

are achievable in the available lead time 

and that the reductions such advances 

would obtain are needed and 

appropriate. However, EPA also has the 

discretion to consider and weigh 

various additional factors, such as the 

cost of compliance (see section 

202(a)(2)), lead time necessary for 

compliance (section 202(a)(2)), safety 

(see NRDC v. EPA, 655 F. 2d 318, 336 

n. 31 (D.C. Cir. 1981)) and other impacts 

on consumers, and energy impacts. Also 

see George E. Warren Corp. v. EPA, 159 

F.3d 616, 623–624 (D.C. Cir. 1998). CAA 

section 202(a)(1) does not specify the 

weight to apply to each factor, and EPA 

accordingly has significant discretion in 

choosing an appropriate balance among 

the factors. See EPA’s interpretation of 

a similar provision, CAA section 231, at 

70 FR 69664, 69676 (Nov. 17, 2005), 

upheld in NACAA v. EPA, 489 F.3d 

1221, 1230 (2007). 

b. CAA Section 213 

CAA section 213 provides broad 

authority to regulate emissions of nonroad vehicles and engines, which are a 

wide array of mobile sources including 

ocean-going vessels, locomotives, 

construction equipment, farm tractors, 

forklifts, harbor crafts, and lawn and 

garden equipment. 

CAA section 213(a)(4) authorizes EPA 

to establish standards to control 

pollutants, other than NOX, volatile 

organic compounds and CO, which are 

addressed in section 213(a)(3), if EPA 

determines that emissions from nonroad 

engines and vehicles as a whole 

contribute significantly to air pollution 

‘‘which may reasonably be anticipated 

to endanger public health or welfare’’. 

Once this determination is made, CAA 

section 213(a)(4) provides that EPA 

‘‘may’’ promulgate standards it deems 

‘‘appropriate’’ for ‘‘those classes or 

categories of new nonroad engines and 

new nonroad vehicles (other than 

locomotives or engines used in 

locomotives), which in the 

Administrator’s judgment, cause or 

contribute to, such air pollution, taking 

into account costs, noise, safety, and 

energy factors associated with the 

application of available technology to 

those vehicles and engines.’’ As with 

section 202(a)(1), this provision 

authorizes EPA to set technology-forcing 

standards to the extent appropriate 

considering all the relevant factors. 

CAA section 213(a)(5) authorizes EPA 

to adopt standards for new locomotives 

and new locomotive engines. These 

standards must achieve the greatest 

degree of emissions reduction 

achievable through the application of 

available technology, giving appropriate 

consideration to the cost of applying 

such technology, lead time, noise, 

energy and safety. Section 213(a)(5) 

does not require that EPA review the 

contribution of locomotive emissions to 

air pollution which may reasonably be 

expected to endanger public health or 

welfare before setting emission 

standards, although in the past, EPA has 

provided such information in its 

rulemakings. 

c. CAA Section 231 

CAA section 231(a) provides broad 

authority for EPA to establish emission 

standards applicable to the ‘‘emission of 

any air pollutant from any class or 

classes of aircraft engines, which in the 

Administrator’s judgment, causes, or 

contributes to, air pollution which may 

reasonably be anticipated to endanger 

public health or welfare.’’ NACAA v. 

EPA, 489 F.3d 1221, 1229 (D.C. Cir. 

2007). As with sections 202(a) and 

213(a)(4), this provision authorizes, but 

does not require, EPA to set technologyforcing standards to the extent 

appropriate considering all the relevant 

factors, including noise, safety, cost and 

necessary lead time for the development 

and application of requisite technology. 

Unlike the motor vehicle and nonroad programs, however, EPA does not 

directly enforce its standards regulating 

aircraft engine emissions. Under CAA 

section 232, the Federal Aviation 

Administration (FAA) is required to 

prescribe regulations to insure 

compliance with EPA’s standards. 

Moreover, FAA has authority to regulate 

aviation fuels, under Federal Aviation 

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44434 Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 

Act section 44714. However, under the 

Federal Aviation Act, the FAA 

prescribes standards for the composition 

or chemical or physical properties of an 

aircraft fuel or fuel additive to control 

or eliminate aircraft emissions the EPA 

‘‘decides under section 231 of the CAA 

endanger the public health or 

welfare[.]’’ 

d. CAA Section 211 

Section 211(c) authorizes regulation 

of vehicle fuels and fuel additives 

(excluding aircraft fuel) as appropriate 

to protect public health and welfare, 

and section 211(o) establishes 

requirements for the addition of 

renewable fuels to the nation’s vehicle 

fuel supply.118 In relevant parts, section 

211(c) states that, ‘‘[t]he Administrator 

may * * * by regulation, control or 

prohibit the manufacture, introduction 

into commerce, offering for sale, or sale 

of any fuel or fuel additive for use in a 

motor vehicle, motor vehicle engine, or 

nonroad engine or nonroad vehicle’’ if, 

in the judgment of the Administrator, 

any fuel or fuel additive or any emission 

product of such fuel or fuel additive 

causes, or contributes, to air pollution or 

water pollution (including any 

degradation in the quality of 

groundwater) which may reasonably be 

anticipated to endanger the public 

health or welfare, * * *’’ Similar to 

other CAA mobile source provisions, 

section 211(c)(1) involves an 

endangerment finding that includes 

considering the contribution to air 

pollution made by the fuel or fuel 

additive. 

The Energy Policy Act of 2005 also 

added section 211(o) to establish the 

volume-based Renewable Fuels 

Standard program. Section 211(o) was 

amended by the Energy Independence 

and Security Act of 2007. 

Section VI.D of this notice provides 

more information and discussion about 

the CAA section 211 authorities. 

2. EPA’s Existing Mobile Source 

Emissions Control Program 

In this notice, EPA is examining 

whether and how the regulatory 

mechanisms employed under Title II to 

reduce conventional emissions could 

also prove effective for reducing GHG 

emissions. Under Title II, mobile source 

standards are technology-based, taking 

such factors as cost and lead time into 

consideration. Various Title II 

provisions authorize or require EPA to 

set standards that are technology 

forcing, such as standards for certain 

pollutants for heavy-duty or nonroad 

engines.119 Title II also provides for 

comprehensive regulation of mobile 

sources so that emissions of air 

pollutants from all categories of mobile 

sources may be addressed as needed to 

protect public health and the 

environment. 

Pursuant to Title II, EPA has taken a 

comprehensive, integrated approach to 

mobile source emission control that has 

produced benefits well in excess of the 

costs of regulation. In developing the 

Title II program, the Agency’s historic, 

initial focus was on personal vehicles 

since that category represented the 

largest source of mobile source 

emissions. Over time, EPA has 

established stringent emissions 

standards for large truck and other 

heavy-duty engines, nonroad engines, 

and marine and locomotive engines, as 

well. The Agency’s initial focus on 

personal vehicles has resulted in 

significant control of emissions from 

these vehicles, and also led to 

technology transfer to the other mobile 

source categories that made possible the 

stringent standards for these other 

categories. 

As a result of Title II requirements, 

new cars and SUVs sold today have 

emissions levels of hydrocarbons, 

oxides of nitrogen, and carbon 

monoxide that are 98–99% lower than 

new vehicles sold in the 1960s, on a per 

mile basis. Similarly, standards 

established for heavy-duty highway and 

nonroad sources require emissions rate 

reductions on the order of 90% or more 

for particulate matter and oxides of 

nitrogen. Overall ambient levels of 

automotive-related pollutants are lower 

now than in 1970, even as economic 

growth and vehicle miles traveled have 

nearly tripled. These programs have 

resulted in millions of tons of pollution 

reduction and major reductions in 

pollution-related deaths (estimated in 

the tens of thousands per year) and 

illnesses. The net societal benefits of the 

mobile source programs are large. In its 

annual reports on federal regulations, 

the Office of Management and Budget 

reports that many of EPA’s mobile 

source emissions standards typically 

have projected benefit-to-cost ratios of 

5:1 to 10:1 or more. Follow-up studies 

show that long-term compliance costs to 

the industry are typically lower than the 

cost projected by EPA at the time of 

regulation, which result in even more 

favorable real world benefit-to-cost 

ratios. Title II emission standards have 

also stimulated the development of a 

much broader set of advanced 

automotive technologies, such as onboard computers and fuel injection 

systems, which are at the core of today’s 

automotive designs and have yielded 

not only lower emissions, but improved 

vehicle performance, reliability, and 

durability. 

EPA requests comment on whether 

and how the approach it has taken 

under Title II could effectively be 

employed to reduce mobile source 

emissions of GHGs. In particular, EPA 

seeks comment and information on 

ways to use Title II authorities that 

would promote development and 

transfer of GHG control technologies for 

and among the various mobile source 

categories. The Agency is also interested 

in receiving information on the extent to 

which GHG-reducing technologies 

developed for the U.S. could usefully 

and profitably be exported around the 

world. Finally, EPA requests comments 

on how the Agency could implement its 

independent obligations under the CAA 

in a manner to avoid inconsistency with 

NHTSA CAFE rulemakings, in keeping 

with the Supreme Court’s observation in 

the Massachusetts decision (‘‘there is no 

reason to think the two agencies cannot 

both administer their obligations yet 

avoid inconsistencies’’). 

3. Mobile Sources and GHGs 

The domestic transportation sector 

emits 28% of total U.S. GHG emissions 

based on the standard accounting 

methodology used by EPA in compiling 

the inventory of U.S. GHG emissions 

pursuant to the United Nations 

Framework Convention on Climate 

Change (Figure VI–1). 

BILLING CODE 6560–50–P 

118 EPA’s authority to regulate fuels under CAA Air Act endanger the public health or welfare[.]’’ 49 Technology-forcing standards further Congress’ goal 

section 211 does not exend to aircraft engine fuel. U.S.C. 44714. of having EPA project future advances in pollution 

Instead, under the Federal Aviatiion Act, the FAA 119 Technology-forcing standards are based upon control technology, rather than being limited by 

prescribes standads for the compositiion or performance of technology that EPA determines technology which already exists. NRDC v. Thomas, 

chemical or physical properties of an aircraft fuel will be available (considering technical feasibility, 805 F. 2d 410, 428 n. 30 (D.C. Cir. 1981). 

cost, safety, and other relevant factors) when the Technology-forcing standards are performance or additive to control or eliminate aircraft emissions standard takes effect, as opposed to standards based standards and do not require the development or the EPA ‘‘decides under section 231 of the Clean upon technology which is already available. use of a specific technology. 

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Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 44435 

The only economic sector with higher 

GHG emissions is electricity generation 

which accounts for 34% of total U.S. 

GHG emissions. However, the inventory 

accounting methodology attributes to 

other sectors two sources of emissions 

that EPA has the authority to regulate 

under Title II of the CAA. First, the 

methodology includes upstream 

transportation fuel emissions 

(associated with extraction, shipping, 

refining, and distribution, some of 

which occur outside of the U.S.) in the 

emissions of the industry sector, not the 

transportation sector. However, 

reducing transportation fuel 

consumption would automatically and 

proportionally reduce upstream 

transportation fuel-related GHG 

emissions as well. Second, nonroad 

mobile sources (such as construction, 

farm, and lawn and garden equipment) 

are also included in the industry sector 

contribution. All of these emissions can 

be addressed under CAA Title II 

authority, at least with respect to 

domestic usage. Including these 

upstream transportation fuel (some of 

which occur outside of U.S. boundaries) 

and nonroad equipment GHG emissions 

in the mobile sources inventory would 

raise the contribution from mobile 

sources and the fuels utilized by mobile 

sources to approximately 36% of total 

U.S. GHG emissions. Since, based on 

2004 data, the U.S. emits about 23% of 

global GHG emissions, under the 

traditional accounting methodology the 

U.S. transportation sector contributes 

about 6% of the total global inventory. 

If upstream transportation fuel 

emissions and nonroad equipment 

emissions are also included, U.S. mobile 

sources are responsible for about 8% of 

total global GHG emissions. 

Personal vehicles (cars, sport utility 

vehicles, minivans, and smaller pickup 

trucks) emit 54% of total U.S. 

transportation sector GHG emissions 

(including nonroad mobile sources), 

with heavy-duty vehicles the second 

largest contributor at 18%, aviation at 

11%, nonroad sources at 8%, marine at 

5%, rail at 3%, and pipelines at 1% 

(Figure VI–2). CO2 is responsible for 

about 95% of transportation GHG 

emissions, with air conditioner 

refrigerant HFCs accounting for 3%, 

vehicle tailpipe nitrous oxide emissions 

for 2%, and vehicle tailpipe methane 

emissions for less than 1% (Figure VI– 

3). 

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44436 Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 

As noted previously, global climate 

change is a long-term problem. Climate 

experts such as the IPCC often use 2050 

as a key reference point for future 

projections. Long-term projections of 

U.S. mobile source GHG emissions 

show that there is likely to be a major 

increase in transportation GHG 

emissions in the future. 

Prior to the passage of EISA, U.S. 

transportation GHG emissions 

(including upstream fuel emissions) 

were projected to grow significantly, 

from about 2800 million metric tons in 

2005 to about 4800 million metric tons 

in 2050 (see Figure VI–4, top curve). 

The fuel economy and renewable fuels 

provisions of EISA (Figure VI.A.2.–4, 

second curve from top) provide 

significant near-term mobile source 

GHG emissions reductions relative to 

the non-EISA baseline case. However, 

addressing climate change requires 

setting long-term goals. President Bush 

has proposed a new goal of stopping the 

growth of GHG emissions by 2025, and 

the IPCC has modeled several long-term 

climate mitigation targets for 2050. 

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Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 44437 

Using Title II authority, mobile 

sources could achieve additional GHG 

emission reductions based on a variety 

of criteria including the amount of 

reduction needed, technological 

feasibility and cost effectiveness. While 

EISA’s fuel economy and renewable fuel 

requirements will contribute to mobile 

source GHG emission reductions, its 

fuel economy standards affect only CO2 

emissions and do not apply to the full 

range of mobile source categories. EISA 

also specifies that fuel economy 

standards be set for no more than five 

years at a time, effectively limiting the 

extent to which those standards can take 

into account advancing technologies. 

Moreover, its renewable fuel provisions 

are limited in the extent to which they 

provide for GHG emission reductions, 

although EISA does mandate the use of 

renewable fuels that meet different 

lifecycle GHG emission reduction 

requirements. 

Under Title II, EPA has broad 

authority to potentially address all 

GHGs from all categories of mobile 

sources. In addition, Title II does not 

restrict EPA to specific timeframes for 

action. If circumstances warrant, EPA 

could set longer term standards and 

promote technological advances by 

basing standards on the performance of 

technologies not yet available but which 

are projected to be available at the time 

the standard takes effect. Title II also 

provides authority to potentially require 

GHG emission reductions from 

transportation fuels. Consequently, the 

CAA authorizes EPA to consider what 

GHG emissions reductions might be 

available and appropriate to require 

from the mobile source sector, 

consistent with the Act. 

EPA has not determined what level of 

GHG emission reduction would be 

appropriate from the mobile source 

sector in the event a positive 

endangerment finding is made, although 

this ANPR includes some discussion of 

possible reductions. Any such 

determination is necessarily the 

province of future rulemaking activity. 

Without prejudging this important 

issue, and for illustrative purposes only, 

the final three curves in Figure VI–4 

illustrate the additional reductions 

mobile sources would have to achieve if 

mobile sources were to make a 

proportional contribution to meeting the 

President’s climate goal, the IPCC 450 

CO2 ppm stabilization scenario, and an 

economy-wide GHG emissions cap 

based on a 70% reduction in 2005 

emissions by 2050.120 As the figure 

illustrates, EISA provides about 25%, 

15% and 10% of the transportation GHG 

120 Prior to the passage of EISA, an EPA analysis 

projected that, absent additional regulatory 

approaches, transportation would provide about 

one-tenth of the GHG emission reductions that 

would be required to comply with an emissions cap 

based on a 70% reduction from 2005 levels in 2050, 

even though transportation is responsible for 28% 

of the official U.S. GHG emissions inventory. 

emissions reductions that would be 

needed for mobile sources to make a 

proportional contribution to meeting the 

President’s climate goal by 2050 (Figure 

VI–4, third curve), the IPCC 450 CO2 

ppm stabilization scenario in 2050 

(Figure VI–4, fourth curve), and a 70% 

reduction in 2005 levels in 2050 (Figure 

VI–4, bottom curve), respectively.121 

These curves shed light on the possible 

additional role the transportation sector 

could play in achieving reductions, but 

do not address whether such reductions 

would be cost effective compared to 

other sectors. Title II regulation of GHG 

emissions could conceivably achieve 

greater emissions reductions so that 

mobile sources would make a larger 

contribution to meeting these targets. 

EPA requests comment on the 

usefulness of the information provided 

in Figure VI–4 and on approaches for 

determining what additional mobile 

source GHG emissions reductions 

would be appropriate. As described 

later in this section, our assessment of 

available and developing mobile source 

technologies for reducing GHG 

emissions indicates that mobile sources 

could feasibly achieve significant 

additional reductions. 

121 Calculation of the GHG emission reductions 

that EISA’s fuel economy provisions will achieve 

include standards that result in an industry-wide 

fleet average fuel economy of 35 miles per gallon 

by 2020. 

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44438 Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 

4. Potential Approaches for Using Clean 

Air Act Title II To Reduce Mobile 

Source GHG Emissions 

The regulatory approach and 

principles that guided development of 

our current mobile source emissions 

control program may prove useful in 

considering a possible mobile source 

GHG emissions control strategy under 

Title II of the CAA. As explained above, 

under Title II, EPA could potentially 

apply its historical approach for 

regulating traditional tailpipe emissions 

to long-term mobile source GHG 

emissions control, with the aim of 

providing strong incentives for 

technological innovation. The Agency 

invites public comment on the 

principles and underlying legal 

authority it has applied in the past and 

other possible principles for 

establishing GHG emissions standards 

under Title II, including— 

• Coverage of all key vehicle, engine, 

and equipment sub-sectors in the entire 

transportation sector so that GHG 

emission standards are set not only for 

cars and light trucks, but for heavy-duty 

vehicles, non-road engines and 

equipment, including locomotive and 

marine engines, and aircraft as well. 

This broader regulatory coverage would 

provide more comprehensive mobile 

source GHG emissions reductions and 

market incentives to seek the most costeffective solutions within the sector. 

• Coverage of all GHGs emitted by the 

transportation sector by setting 

emissions standards that address every 

GHG for which the Agency makes the 

appropriate cause or contribute 

endangerment finding. 

• Inclusion of transportation fuels in 

the program by considering vehicles and 

fuels as a system, rather than as isolated 

components. 

• Addressing transportation fuels by 

setting GHG standards that account for 

the complete lifecycle of GHG 

emissions, including upstream GHG 

emissions associated with 

transportation fuel production.122 

• Identifying long-term U.S. mobile 

source GHG emissions targets based on 

scientific assessments of environmental 

need, and basing the stringency of 

standards for individual mobile source 

sub-sectors on technology feasibility, 

cost and fuel savings, taking into 

account the relationship of mobile 

source reductions to reductions in other 

sectors under any economy-wide 

program. 

• Allowing for staggered rulemakings 

for various sub-sectors and fuels, rather 

122 EPA invites comment on how such an 

approach would interact with GHG regulations 

under other parts of the CAA or with a possible 

economy-wide approach. 

than regulating all mobile source 

entities at one time. EPA seeks comment 

on its CAA authority in this area, as 

well as on an approach to base the 

timing of the staggered rulemakings on 

factors such as the contribution of the 

mobile source sub-sector to the overall 

GHG emissions inventory and the lead 

time necessary for the 

commercialization of innovative 

technology. 

• Use of Title II statutory authority to 

adopt technology-forcing standards, 

when appropriate, in conjunction with 

periodic reviews of technology and 

other key analytical inputs as a ‘‘reality 

check’’ to determine whether midcourse corrections in GHG emissions 

standards are needed. 

• Use of our statutory authority to 

increase the rate of emissions reduction 

targets over time while allowing 

sufficient time for entrepreneurs and 

engineers to develop cost-effective 

technological solutions and minimize 

the risk of early retirement of capital 

investments. 

• Establishment of a flexible 

compliance program that would allow 

averaging, banking and borrowing, and 

credit trading. Existing Title II programs 

generally allow credit trading only 

within individual mobile source subsector programs. EPA solicits comments 

on whether the global nature of climate 

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Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 44439 

change supports allowing credit trading 

between obligated parties across all 

mobile source sub-sectors and whether 

this would allow the sector as a whole 

to seek the lowest-cost solutions. 

• Design of enforcement programs to 

ensure real world emissions reductions 

over the life of vehicles, engines, and 

equipment. 

• Providing sufficient flexibility so 

that mobile source GHG emissions 

control programs can complement and 

harmonize with existing regulatory 

programs for certain pollutants. 

In developing potential approaches to 

design of a Title II program, it is critical 

for EPA to understand the full 

ramifications of advanced technologies. 

Accordingly, EPA seeks public 

comment on potential GHG reducing 

technologies and their impacts, 

including availability, practicality, 

emissions reduction potential, cost, 

performance, reliability, and durability. 

EPA also seeks comment on how best to 

balance factors such as the need to send 

effective long-term signals that stimulate 

technology innovation, the imprecision 

of predictions of future technology 

innovation, and the importance of lead 

time to allow orderly investment cycles. 

While advanced technology for 

reducing GHGs would likely increase 

the initial cost of vehicles and 

equipment to consumers and 

businesses, it would also increase 

efficiency and reduce fuel costs. In 

many cases, there is the potential for the 

efficiency advantages of low-GHG 

technologies to offset or more than offset 

the higher initial technology cost over 

the lifetime of the vehicle or equipment. 

EPA recognizes that not all consumers 

may understand or value changes to 

vehicles that reduce GHG emissions by 

increasing fuel efficiency, even though 

these changes lower fuel costs (see 

discussion in Section VI.C.2). One 

analytic issue that has policy 

implications is the most appropriate 

method for treating future consumer 

fuel savings when calculating cost 

effectiveness for a mobile sources GHG 

control strategy. Some analyses that 

consider the decisions made by 

automakers in isolation from the market 

and consumers exclude future fuel 

savings entirely. A second approach, 

used in models trying to predict future 

consumer behavior based on past 

experience, counts only those future 

fuel savings which consumers implicitly 

value in their new vehicle purchase 

decisions. A third method, reflecting a 

societal-wide accounting of benefits, 

includes all future fuel savings over 

vehicle lifetimes, whether overtly 

valued by new vehicle purchasers or 

not. EPA seeks comments on what could 

be done under Title II, or under any new 

legislation to complement Title II, to 

establish economic incentives that send 

long-term market signals to consumers 

and manufacturers that would help 

spark development of and investment in 

the necessary technology innovation. 

An effective mobile source emissions 

compliance and enforcement program is 

fundamental to ensuring that the 

environmental benefits of the emission 

standards are achieved. We request 

comments on all aspects of the 

compliance approaches discussed in 

this notice and any other approaches to 

a compliance program for mobile source 

GHG emissions control. Topics to 

address could include, but are not 

limited to, methods for classifying, 

grouping and testing vehicles for 

certification, useful life and component 

durability demonstration, in-use testing, 

warranty and tampering, prohibited 

acts, and flexibilities for manufacturers. 

Historically, EPA’s programs to 

reduce criteria pollutants have typically 

included provisions to allow the 

generation, averaging, banking, and 

trading of emission credits within a 

vehicle or engine category. For example, 

there are averaging, banking, and 

trading (ABT) programs for light-duty 

vehicles, heavy-duty engines, and 

nonroad engines, among others. In these 

programs, manufacturers with vehicles 

or engines designed to over-comply 

with the standards can generate credits. 

These credits can then be used by that 

manufacturer or sold to other 

manufacturers in order to allow similar 

vehicles or engines with emissions 

above the standards to be certified and 

sold. 

However, for a variety of reasons, we 

have in most cases not provided for 

trading of emission credits from one 

mobile source category to another. For 

example, credits generated in the lightduty vehicle program cannot be used for 

heavy-duty engines to comply, or 

credits generated for lawn and garden 

equipment cannot be used for larger 

gasoline engines to comply. These 

limitations are generally grounded in 

characteristics of required pollutants 

that do not necessarily apply in the case 

of GHG emissions. For instance, in the 

case of hydrocarbon emissions, because 

our programs are meant, in part, to 

reduce the pollutant in areas where it 

most contributes to ozone formation, we 

have not allowed farm tractors in rural 

areas to generate credits that would 

allow urban passenger cars to be sold 

with little or no emission control. 

Similarly, for problems like carbon 

monoxide ‘‘hot spots’’ or direct, 

personal exposure to diesel PM, it has 

been important to ensure a certain 

minimum degree of control from each 

vehicle or engine, rather than allowing 

the very localized benefits to be ‘‘traded 

away.’’ 

Given the global nature of the major 

GHGs, we request comment on whether 

new provisions could be used to allow 

broad trading of CO2-equivalent 

emission credits among the full range of 

mobile sources, and if so, how they 

could be designed, including highway 

and nonroad vehicles and engines as 

well as mobile source fuels. 

EPA has also considered the potential 

of GHG emissions leakage to other 

domestic economic sectors, or to other 

countries, should EPA adopt Title II 

standards for motor vehicle GHG 

emissions and GHG emissions from 

transportation fuels. As discussed in 

more detail later in this section, there 

are transportation fuels (such as grid 

electricity) that do not result in tailpipe 

GHG emissions, but that do result in 

GHG emissions when the fuel is 

produced. Greater use of such fuels in 

transportation would reduce GHG 

emissions covered by Title II, but would 

increase GHG emissions covered by 

Title I, requiring coordination among 

the CAA programs to ensure the desired 

level of overall GHG control. In 

addition, GHG emissions from potential 

land use changes caused by 

transportation fuel changes could cause 

GHG emissions leakage unless 

accounted for in any transportation 

fuels GHG program. Finally, since 

transportation fuels can be fungible 

commodities, if other countries do not 

adopt similar GHG control programs, it 

is possible that lower-lifecycle GHG 

fuels will be concentrated in the U.S. 

market, while higher-lifecycle GHG 

fuels will be concentrated in 

unregulated markets. For example, sugar 

cane-based ethanol, if it were 

determined to have more favorable 

upstream GHG emissions, could shift 

from the Brazilian to the U.S. market, 

and corn-based ethanol, if it were 

determined to have less favorable 

upstream GHG emissions, could shift 

from the U.S. to the Brazilian market. 

This shifting could ease compliance 

with U.S. transportation fuel GHG 

regulations, but could actually increase 

global GHG emissions due to the GHG 

emissions that would result from 

transporting both types of ethanol fuels 

over greater distances. EPA seeks 

comments on all possible GHG 

emissions leakage issues associated with 

mobile source GHG regulation, and in 

particular on whether the theoretical 

concern with fungible transportation 

fuels is likely to be realized. 

While the preceding discussion has 

focused on using the existing CAA Title 

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44440 Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 

II model for regulating mobile source 

GHG emissions, there are other 

alternative regulatory approaches on 

which EPA invites comments. In 

particular, long-term mobile source 

GHG emissions reductions from 

vehicles and equipment might be 

achieved by establishing GHG emissions 

caps on vehicle, engine, and/or 

equipment manufacturers to the extent 

authorized by the CAA. EPA’s existing 

regulatory program uses performance 

standards that are rate-based, meaning 

that they require manufacturers to meet 

a certain gram/mile average for their 

fleet, as in the Tier 2 light-duty vehicle 

program. Manufacturers produce 

vehicles with varying rates of emissions 

performance, and through averaging, 

banking, and trading demonstrate 

compliance with this performance 

standard on a sales-weighted average 

basis. While a manufacturer must take 

its fleet mix of higher-emitting and 

lower-emitting models into account in 

demonstrating compliance, the salesweighted average is independent of 

overall sales as long as the fleet mix 

does not change. As a result, a 

manufacturer’s fleet may emit more or 

less total pollution depending on its 

total sales, so long as the sales-weighted 

average emissions of its vehicles do not 

exceed the standard. 

In a cap-and-trade program, the 

standard set by EPA would not be an 

average, sales-weighted rate of 

emissions, but rather a cap on overall 

emissions from a manufacturer’s 

production. Under such a program, the 

emissions attributable to a 

manufacturer’s fleet could not grow 

with sales unless the manufacturer 

obtained (e.g., through trading) 

additional allowances to cover higher 

emissions. Presumably, EPA could 

assign a VMT or usage value to be used 

by manufacturers, and manufacturers 

would demonstrate compliance by 

combining the rate of performance of 

their vehicles, their sales volume, and 

the assigned VMT or usage value to 

determine overall emissions. 

EPA could set standards under an 

emissions cap-and-trade program by 

assessing the same kind of factors as we 

have in the past: Availability and 

effectiveness of technology, cost, safety, 

energy factors, etc. Setting an 

appropriate emissions cap would be 

more complex, and EPA would need to 

demonstrate that the cap is appropriate, 

given that changes in sales levels (both 

industry-wide and for individual 

manufacturers) must be accounted for in 

the standard-setting process. An 

emissions cap approach also raises 

difficult issues of how allowable 

emissions under the cap would be 

allocated among the manufacturers, 

including new entrants. 

EPA invites comment on all issues 

involving this emissions cap-and-trade 

approach, including comment on 

relevant technical and policy issues, 

and on EPA’s authority to adopt such an 

approach under Title II. 

A third possible model for regulating 

mobile source GHG emissions would 

combine elements of these approaches. 

This type of hybrid approach would 

include, as one element, either ratebased GHG emissions performance 

standards similar to the existing mobile 

source program for conventional 

pollutants or GHG emissions caps for 

key vehicle, engine, and/or equipment 

manufacturers, both of which would be 

promulgated under Title II of the CAA. 

The second element of this hybrid 

approach would be an upstream 

emissions cap on fuel refiners for all 

life-cycle GHG emissions associated 

with transportation fuels, including 

both upstream fuel production GHG 

emissions and downstream vehicle GHG 

emissions, to the extent authorized 

under the CAA or future climate change 

legislation. For a discussion of issues 

associated with including direct mobile 

source obligations in combination with 

an economy-wide approach, see section 

III.F.3. 

An important interrelationship 

between stationary sources and mobile 

sources would develop if grid electricity 

becomes a more prevalent 

transportation fuel in the future. There 

is considerable interest, both by 

consumers and automakers, in the 

possible development and 

commercialization of plug-in hybrid 

electric vehicles (PHEVs) that would use 

electricity from the grid as one of two 

sources of energy for vehicle 

propulsion. Use of grid electricity 

would yield zero vehicle tailpipe GHG 

emissions, providing automakers with a 

major incentive to consider PHEVs, 

which may be appropriate given that 

vehicle cost is the single biggest market 

barrier to PHEV commercialization. But 

it would also result in a net increase in 

demand for electricity, which could add 

to the challenge of reducing GHG 

emissions from the power sector. Any 

evaluation of the overall merits of using 

grid electricity as a transportation fuel 

could not be done in isolation, but 

would require a coordinated assessment 

and approach involving both mobile 

sources under CAA Title II and 

stationary sources under CAA Title I. 

Linking efforts under Titles I and II 

would allow for needed coordination 

regarding any type of future 

transportation fuel that would have zero 

vehicle tailpipe GHG emissions but 

significant fuel production GHG 

emissions. 

EPA seeks comment on all aspects, 

including the advantages and 

disadvantages, of using Title II 

regulations to complement an economywide cap-and-trade GHG emissions 

program. 

EPA also seeks public comment on 

the available authority for, and the 

merits of, allowing credit trading 

between mobile sources and non-mobile 

source sectors. One of the potential 

limitations of allowing credit trading 

only within the transportation sector is 

that it would not permit firms to take 

advantage of emission reduction 

opportunities available elsewhere in the 

economy. In particular, EPA requests 

comment on the advantages and 

disadvantages of allowing trading across 

sectors, and how to ensure that credit 

trading would have environmental 

integrity and that credits are real and 

permanent. 

Finally, EPA seeks public comment 

on two remaining issues: (1) How a CAA 

Title II mobile source GHG emissions 

control program and NHTSA’s corporate 

average fuel economy program for cars 

and light-duty trucks could best be 

coordinated; and (2) whether and how 

Title II, or other provisions in the CAA, 

could be used to promote lower vehicle 

miles traveled and equipment activity. 

B. On-Highway Mobile Sources 

1. Passenger Cars and Light-Duty Trucks 

In this section, we discuss and request 

comment on several potential 

approaches for establishing light-duty 

vehicle GHG emission standards under 

section 202(a)(1). These approaches 

build off of, to varying extents, the 

analysis EPA undertook during 2007 to 

support the development of a near-term 

control program for GHG emissions for 

passenger cars and light duty trucks 

under the authorities of Title II of the 

CAA. 

We begin this section with a 

discussion of one potential approach for 

establishing GHG standards under 

section 202(a) of the CAA that reflects 

EPA’s historical approach used for 

traditional pollutants, including the 

principles EPA has used in the past 

under Title II. This approach focuses on 

long-term standard setting based on the 

technology-forcing authority provided 

under Title II. Next we present and 

discuss the results of alternative 

approaches to standard-setting which 

EPA considered during 2007 in the 

work performed under EO 13432. This 

alternative approach is based on setting 

near-term standards based primarily on 

technology already in the market today. 

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This is followed by a discussion of the 

wide range of technologies available 

today and technologies that we project 

will be available in the future to reduce 

GHG emissions from light-duty vehicles. 

We next include a discussion of a 

potential approach to reduce HFC, 

methane, N2O, and vehicle air 

conditioning-related CO2 emissions. We 

conclude with a discussion of the key 

implementation issues EPA has 

considered for the development of a 

potential light-duty vehicle GHG control 

program. 

Our work to date indicates that there 

are significant reductions of GHG 

emissions that could be achieved for 

passenger cars and light-duty trucks up 

to 2020 and beyond that would result in 

large net monetized benefits to society. 

For example, taking into account 

specific vehicle technologies that are 

likely to be available in that time period 

and other factors relevant to motor 

vehicle standard-setting under the CAA, 

EPA’s analysis suggests that substantial 

reductions can occur where the costper-ton of GHG reduced is more than 

offset by the value of fuel savings, and 

the net present value to society could be 

on the order of $340 to $830 billion 

without considering benefits of GHG 

reductions (see section VI.B.1.b).123 

a. Traditional Approach to Setting 

Light-Duty Vehicle GHG Standards 

In this section we discuss and request 

comment on employing EPA’s 

traditional approach to setting mobile 

source emissions standards to develop 

standards aimed at ensuring continued, 

long-term, technology-based GHG 

reductions from light-duty vehicles, in 

light of the unique properties of GHG 

emissions. We also request comment on 

how EPA could otherwise use its CAA 

Title II authorities to provide incentives 

to the market to accelerate the 

development and introduction of ultra 

clean, low GHG emissions technologies. 

Based on our work to date, we expect 

that such an approach could result in 

standards for the 2020 to 2025 time 

frame that reflect a majority of the new 

light-duty fleet achieving emission 

reductions based on what could be 

accomplished by many of the most 

advanced technologies we know of 

today (e.g., hybrids, diesels, plug-in 

hybrid vehicles, full electric vehicles, 

and fuel cell vehicles, all with 

significant use of light-weight 

materials). Our analysis (presented in 

section VI.B.1.b) indicates that 

standards below 250 g/mile CO2 (above 

123 These estimates do not account for the future 

CAFE standards that will be established under 

EISA. 

35 mpg) could be achievable in this time 

frame, and the net benefit to society 

could be in excess of $800 billion. These 

estimates, however, do not account for 

future CAFE standards that will be 

established under EISA. 

EPA’s historical approach for setting 

air pollutant standards for mobile 

sources has been to assess the 

capabilities of pollution control 

technologies, including advanced 

control technologies; whether 

reductions associated with these 

technologies are feasible considering 

cost, safety, energy, and other relevant 

factors; and the benefits of these 

controls in light of overall public health 

and environmental goals. Public health 

and environmental goals provide the 

important context in which this 

technology-driven process occurs. In 

many cases in the past, the goals have 

involved the need for emissions 

reductions to attain and maintain 

NAAQS. 

As mentioned previously, EPA has 

utilized the CAA to establish mobile 

source programs which apply 

progressively more stringent standards 

over many years, often with substantial 

lead time to maximize the potential for 

technology innovation, and where 

appropriate, we have included 

technology reviews along the way to 

allow for ‘‘mid-course corrections,’’ if 

needed. We have also provided 

incentives for manufacturers to develop 

and introduce low emission 

technologies more quickly than required 

by the standards. For example, in our 

most recent highway heavy-duty engine 

standards for PM and NOX, we 

established technology-forcing 

standards via a rulemaking completed 

in 2000 which provided six years of 

lead-time for the start of the program 

and nearly ten years of lead-time for the 

completion of the phase-in of the 

standards. In addition, EPA performed 

periodic technology reviews to ensure 

industry was on target to comply with 

the new standards, and these reviews 

allowed EPA to adjust the program if 

necessary. This same program provided 

early incentive emission credits for 

manufacturers who introduced products 

complying with the standards well in 

advance of the program requirements. 

Consistent with the CAA and with our 

existing mobile source programs, we 

request comment on using the following 

traditional principles for development 

of long-term GHG standards for lightduty vehicles: Technology-forcing 

standards, sufficient lead-time 

(including phase-in of standards 

reflecting use of more advanced 

technologies), continual improvements 

in the rate of emissions reduction, 

appropriate consideration of the costs 

and benefits of new standards, and the 

use of flexible mechanisms such as 

banking and credit trading (between 

sources within or outside of this sector). 

EPA’s goal would be to determine the 

appropriate level of GHG emission 

standards to require by an appropriate 

point in the future. We would establish 

the future time frame in light of the 

needs of the program. EPA would 

evaluate a broad range of technologies 

in order to determine what is feasible 

and appropriate in the time frame 

chosen, when considering the fleet as a 

whole. EPA would analyze the costs and 

reductions associated with the 

technologies, and compare those to the 

benefits from and the need for such 

reductions. We would determine what 

reductions are appropriate to require in 

that time frame, assuming industry 

started now, and then determine what 

appropriate interim standards should be 

set to most effectively move to this longterm result. 

In developing long-term standards, we 

would consider known and projected 

technologies which in some cases are in 

the market in limited production or 

which may not yet be in the market but 

which we project can be, provided 

sufficient lead-time. We would consider 

how broadly and how rapidly specific 

technologies could be applied across the 

industry. If appropriate, EPA could 

include technology reviews during the 

implementation of new standards to 

review the industry’s progress and to 

make adjustments as necessary. EPA 

would evaluate the amount of lead-time 

necessary and if appropriate the phasein period for long-term standards. To 

the extent that future standards may 

result in significant increases in 

advanced technologies such as plug-in 

electric hybrid or full electric vehicles, 

we would consider how a Title II 

program might interact with a potential 

Title I program to ensure that reductions 

in GHG emissions due to a decrease in 

gasoline consumption are not off-set by 

increases in GHG emissions from the 

electric utility sector. We would also 

consider the need for flexibilities and 

incentives to promote technology 

innovation and provide incentives for 

advanced technologies to be developed 

and brought to the market. We would 

consider the need for orderly 

manufacturer production planning to 

ensure that capital investments are 

wisely used and not stranded. Finally, 

EPA would evaluate the near and longterm costs and benefits of future 

standards in order to ensure the 

appropriate relationship between 

benefits and costs, e.g. ensuring that 

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benefits of any future standards exceed 

the costs. This could lead to standard 

phase-in schedules significantly 

different from the two approaches 

contained in our Light-duty Vehicle 

Technical Support Document analysis 

(available in the docket for this advance 

notice); which under one approach was 

the same incremental increase in 

stringency each year (the 4% per year 

approach), and for the second approach 

lead to large increases in stringency the 

first several years followed by small 

changes in the later years (the modeloptimized approach). 

One critical element in this approach 

is the time frame over which we should 

consider new GHG standards for lightduty vehicles. We request comment on 

the advantages and disadvantages of 

establishing standards for the 2020 or 

2025 time frame, which is roughly 

consistent with EPA’s traditional 

approach to setting standards while 

allowing a sufficient time period for 

investment and technological change, 

and even longer. There are two major 

factors which may support a long-term 

approach. First, addressing climate 

change will require on-going reductions 

from the transportation sector for the 

foreseeable future. Thus, establishing 

short-term goals will not provide the 

long-term road map which the 

environmental problem requires. 

Second, providing a long-term road map 

could have substantial benefits for the 

private sector. The automotive industry 

itself is very capital intensive—the costs 

for developing and producing a major 

vehicle model is on the order of several 

billion dollars. A manufacturer making 

a major investment to build a new 

engine, transmission or vehicle 

production plant expects to continue to 

use such a facility without major 

additional investments for at least 15 

years, if not more. A regulatory 

approach which provides a long-term 

road map could allow the automotive 

industry to plan their future 

investments in an orderly manner and 

minimize the potential for stranded 

capital investment, thus helping to 

ensure the most efficient use of societal 

resources. A long-term regulatory 

program could also provide industry 

with the regulatory certainty necessary 

to stimulate technology development, 

and help ensure that the billions of 

dollars invested in technology research 

and development are focused on longterm needs, rather than on short-term 

targets alone. 

There could also be disadvantages to 

establishing long-term standards. For 

example, uncertainties in the original 

analysis underlying the long-term 

standards could result in overly 

conservative or optimistic assumptions 

about emission reductions could and 

should be accomplished. Long-terms 

standards could also reduce flexibility 

to respond to more immediate market 

changes or other unforeseen events. EPA 

has tools, such as technology reviews, 

that could help reduce these risks of 

long-term standards. We request 

comment on the advantages and 

disadvantages of a long-term approach 

to standard-setting, and any issues it 

might raise for integration with an 

economy-wide approach to emission 

reductions. 

More generally, EPA requests 

comment on the issues discussed in this 

section, and specifically the 

appropriateness of a light-duty vehicle 

GHG regulatory approach in which EPA 

would identify long-term emissions 

targets (e.g., the 2020–2025 time frame 

or longer) based on scientific 

assessments of environmental need, and 

developing standards based on a 

technology-forcing approach with 

appropriate consideration for lead-time, 

costs and societal benefits. 

b. 2007 Approach to Setting Light-Duty 

Vehicle Emission Standards 

i. CAA and EPCA Authority; Passage of 

EISA 

As indicated above in section VI.A.2, 

CAA section 202(a) provides broad 

authority to regulate light-duty vehicles. 

Standards which EPA promulgates 

under this authority are technologybased and applicable for the useful life 

of a vehicle. EPA has discretion to 

consider and weigh various additional 

factors, including the cost of 

compliance, safety and other impacts on 

consumers, and energy impacts. 

NHTSA authority to set CAFE 

standards derives from the Energy 

Policy and Conservation Act (42 U.S.C. 

section 6201 et seq.) as amended by 

EISA. This statutory authority, enacted 

in December 2007, directs NHTSA to 

consider four factors in determining 

maximum feasible fuel economy 

standards—technological feasibility, 

economic practicability, the effect of 

other standards issued by the 

government on fuel economy, and the 

need of the nation to conserve energy. 

NHTSA may also take into account 

other relevant considerations such as 

safety. 

EISA amends NHTSA’s fuel economy 

standard-setting authority in several 

ways. Specifically it replaces the 

statutory default standard of 27.5 miles 

per gallon for passenger cars with a 

mandate to establish separate passenger 

cars and light truck standards annually 

beginning in model year 2011 to reflect 

the maximum feasible level. It also 

requires that standards for model years 

2011–2020 be set sufficiently high to 

ensure that the average fuel economy of 

the combined industry-wide fleet of all 

new passenger cars and light trucks sold 

in the U.S. during MY 2020 is at least 

35 miles per gallon. In addition, EISA 

provides that fuel economy standards 

for no more than five model years be 

established in a single rulemaking, and 

mandated the reform of CAFE standards 

for passenger cars by requiring that all 

CAFE standards be based on one or 

more vehicle attributes, among other 

changes.124 EISA also directs NHTSA to 

consult with EPA and the Department of 

Energy on its new CAFE regulations. 

Pursuant to EISA’s amendments to 

EPCA, NHTSA recently issued a notice 

of proposed rulemaking for new, more 

stringent CAFE standards for model 

years 2011–2015 for both passenger cars 

and light-duty trucks. 73 FR 24352 (May 

2, 2008). 

Prior to EISA’s enactment, EPA and 

NHTSA had coordinated under EO 

13432 on the development of CAA rules 

that would achieve large GHG emission 

reductions and CAFE rules that would 

achieve large improvements in fuel 

economy. As discussed later in this 

section, there are important differences 

in the two agencies’ relevant statutory 

authorities. EPA nevertheless believes 

that it is important that any future GHG 

regulations under CAA Title II and 

future fuel economy regulations under 

NHTSA’s statutory authority be 

designed to ensure that an automaker’s 

actions to comply with CAA standards 

not interfere with or impede actions 

taken for meeting fuel economy 

standards and vice versa. The goals of 

oil savings and GHG emissions 

reductions are often closely correlated, 

but they are not the same. As the 

Supreme Court pointed out in its 

Massachusetts decision, ‘‘[EPA’s] 

statutory obligation is wholly 

independent of DOT’s mandate to 

promote energy efficiency’’, and ‘‘[t]he 

two obligations may overlap, but there 

is no reason to think the two agencies 

cannot both administer their obligations 

and yet avoid inconsistency.’’ It is thus 

important for EPA and NHTSA to 

maximize coordination between their 

programs so that both the appropriate 

degree of GHG emissions reductions and 

oil savings are cost-effectively achieved, 

given the agencies’ respective statutory 

authorities. EPA asks for comment on 

how EPA’s and NHTSA’s respective 

statutory authorities can best be 

124 For a full discussion of EISA requirements and 

NHTSA interpretation of its statutory authority 

please see 73 FR 24352 (May 2, 2008). 

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coordinated under all of the alternatives 

presented in this section so that 

inconsistency can be avoided. 

ii. 2007 Approach 

In this section, we present an 

overview of two alternative approaches 

for setting potential light-duty vehicle 

GHG standards based on our work 

during 2007 under EO 13432. As noted 

previously, in response to 

Massachusetts v. EPA and as required 

by EO 13432, prior to EISA’s passage, 

we coordinated with NHTSA and the 

Department of Energy in developing 

approaches and options for a 

comprehensive near-term program 

under the CAA to reduce GHG 

emissions from cars and light-duty 

trucks.125 Results from this effort are 

discussed below and in a Technical 

Support Document, ‘‘Evaluating 

Potential GHG Reduction Programs for 

Light Vehicles’’ (referred to as the 

‘‘Light-duty Vehicle TSD’’ in the 

remainder of this notice). 

The Light-duty Vehicle TSD 

represents EPA’s assessment during 

2007 of how a light-duty vehicle 

program for GHG emissions reduction 

under the CAA might be designed and 

implemented in keeping with program 

parameters (e.g., time frame, program 

structure, and analytical tools) 

developed with NHTSA prior to 

enactment of EISA. In addition, the 

Light-duty Vehicle TSD assesses the 

magnitude of the contribution of lightduty vehicles to U.S. GHG emissions. It 

also addresses both tailpipe CO2 

emissions as measured by EPA tests 

used for purposes of determining 

compliance with CAFE standards, and 

control of other vehicular GHG 

emissions. These other emissions are 

not accounted for if the regulatory focus 

is solely on CO2, and involve 

greenhouse gases that have higher global 

warming potentials than CO2. These 

emissions, as well as air-conditioningrelated CO2, are not measured by the 

existing EPA test procedure for 

determining compliance with CAFE 

standards, so that there is no overlap 

with control of these emissions and 

CAFE standards if these emissions are 

controlled under the CAA. As described 

in the section VI.B.1.d of this advance 

notice, these emissions account for 10 

percent of light-duty vehicle GHG 

emissions on a CO2 equivalent basis. 

They include emissions of CO2 from air 

conditioning use and emissions of HFCs 

from air conditioning system leaks. 

125 E.O. 13432 called on the agencies to, 

‘‘undertake such regulatory action, to the maximum 

extent permitted by law and determined by the 

head of the agency to be practicable, jointly with 

other agencies.’’ 

Technologies exist which can reduce 

these emissions on the order of 40 to 

75% (for air conditioning efficiency 

improvements and HFC leakage control, 

respectively), at an initial cost to the 

consumer of less than $110. This initial 

cost would be more than offset by the 

reduced maintenance and fuel savings 

due to the new technology over the life 

of the vehicle. We also considered 

standards which would prevent future 

increases in N2O and methane. 

Based on our work in 2007 pursuant 

to Executive Order 13432, EPA 

developed two different analytical 

approaches which could be pursued 

under the CAA for establishing lightduty vehicle CO2 standards. Both are 

attribute-based approaches, using 

vehicle footprint (correlating roughly to 

vehicle size) as the attribute. Under 

either approach, a CO2-footprint 

continuous function curve is defined 

that establishes different CO2 emission 

targets for each unique vehicle footprint. 

In general, the larger the vehicle 

footprint, the higher (less stringent) the 

corresponding vehicle CO2 emission 

target will be. Each manufacturer would 

have a different overall fleet average 

CO2 emissions standard depending on 

the distribution of footprint values for 

the vehicles it sells. See Section VI.B.1.d 

and the Light-duty Vehicle TSD of this 

Advance Notice for additional 

discussion of attribute-based standards 

and other approaches (e.g., a nonattribute, or universal standard). 

One approach was based on a fixed 

percentage reduction per year in CO2 

emissions. We examined a 4% per year 

reduction in CO2 emissions, reflecting 

the projected reductions envisioned by 

the President in his 20-in-10 plan in the 

2007 State of the Union address and 

subsequent legislative proposals . The 

other approach identified CO2 standards 

which an engineering optimization 

model projects as resulting in maximum 

net benefits for society (hereafter 

referred to as the ‘‘model-optimized’’ 

approach). That approach uses a 

computer model developed by the 

Department of Transportation Volpe 

Center called the CAFE Effects and 

Compliance Model (the ‘‘Volpe 

Model’’). The Volpe Model was 

designed by DOT as an analytical tool 

which could evaluate potential changes 

in the stringency and structure of the 

CAFE program, and was first used in 

DOT’s 2006 rulemaking establishing 

CAFE standards for model years 2008– 

2011 light-trucks.126 127 

126 See 66 FR 17566—Average Fuel Economy 

Standards for Light Trucks Model Years 2008–2011. 

127 See ‘‘CAFE Compliance and Effects Modeling 

System Documentation, Draft, 1/26/07’’ published 

Using the fixed percentage reduction 

approach, projections regarding 

technology feasibility, technology 

effectiveness, and lead-time are critical 

as these are the most important factors 

in determining whether and how the 

emission reductions required by a future 

standard would be achieved. When 

using the model-optimized approach, a 

larger set of inputs are critical, as each 

of these inputs can have a significant 

impact in the model’s projections as to 

the future standard. These inputs 

include technology costs and 

effectiveness, lead-time, appropriate 

discount rates, future fuel prices, and 

the valuation of a number of 

externalities (e.g., criteria air pollution 

improvements, GHG emission 

reductions, and energy security). 

Although all of these factors are relevant 

under either approach, there are major 

differences in the way this information 

is used in each approach to develop and 

evaluate appropriate standards. 

EPA believes both of these approaches 

for establishing fleet-wide average CO2 

emissions standards are permissible, 

conceptually, under section 202(a) of 

the Act. Section 202(a)(2) requires EPA 

to give consideration to ‘‘the cost of 

compliance’’ for use of the technology 

projected to be used to achieve the 

standards (‘‘requisite technology’’). The 

model-optimized approach can be used 

in appropriate circumstances to satisfy 

this requirement.128 The fixed percent 

per year approach is broadly consistent 

with EPA’s traditional means of setting 

standards for mobile sources, which 

identifies levels of emissions reductions 

that are technologically feasible at 

reasonable cost with marginal emissions 

reduction benefits which may far 

outweigh marginal program costs, 

without adverse impacts on safety and 

with positive impacts on energy 

utilization, and which address a societal 

need for reductions.129 Comparing and 

contrasting these approaches with the 

model-optimized approach is one way 

to evaluate options for appropriate 

standards under section 202(a). We 

request comment on these approaches 

and whether one or the other is a more 

appropriate method for EPA to consider 

future light-duty GHG standards under 

section 202 of the CAA. We also request 

comment on other potential approaches 

by DOT, a copy of which is available in the docket 

for this Advanced Notice. 

128 See Husqvarna AB v. EPA, 254 F. 3d 195, 200 

(D.C. Cir. 2001) (EPA reasonably chose not to use 

marginal cost-benefit analysis to analyze standards 

[under the technology-forcing section 213 of the 

Act], where section 213 does not mandate a specific 

method of cost analysis). 

129 See NRDC v. EPA, 655 F. 2d 318, 332–334 

(D.C. Cir. 1981). 

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EPA should consider, including the 

approach described in section VI.B.1.a. 

During 2007, EPA, DOT’s Volpe 

Center, and NHTSA expended a major 

technical effort to make a series of 

significant enhancements to the Volpe 

Model by reviewing and updating, 

where possible, many of the critical 

inputs to the Model (e.g., cost reduction 

learning curves, the number and 

estimated costs and effectiveness of 

potential CO2/mpg control 

technologies), as well as making updates 

to the Model itself. This technical work 

notably improved the Volpe Model. 

However, the Volpe Model was 

designed specifically to analyze 

potential changes to NHTSA’s CAFE 

program, and there remained several 

aspects of the analysis we conducted 

that did not reflect differences between 

EPA and NHTSA statutory authorities, 

and we were not able to address these 

aspects in 2007. As a result, our analysis 

tended to underestimate the benefits 

and/or overestimate the costs of lightduty vehicle CO2 standards that could 

be established under the CAA. We 

discuss these issues below. 

First, past NHTSA CAFE regulatory 

actions have generally had a short-term 

focus (a 3–5 year timeframe), and 

NHTSA is currently proposing more 

stringent CAFE standards for five model 

years, 2011–2015, in keeping with its 

revised statutory authority, as discussed 

above. In contrast, EPA’s Title II 

authority permits EPA to set standards 

over a significantly longer period of 

time as appropriate in light of 

environmental goals, developing 

technologies, costs, and other factors. A 

short-term focus can have a significant 

implication for the technology 

assumptions which go into a standardsetting analysis. 

In our 2007 analysis, we assumed 

limited technology innovation beyond 

what is known today, and did not 

include several commercially available 

or promising technologies such as 

advanced lightweight materials for all 

vehicle classes (several auto companies 

have recently announced plans for large 

future reductions in vehicle weight), 

plug-in hybrids, optimized ethanol 

vehicles, and electric vehicles. To the 

extent such innovations penetrate the 

market over the next 10 years, the 

societal benefits and/or decreased 

societal cost of CO2 standards will be 

greater than what we projected. A shortterm focus may yield a more reliable 

short-term projection because it relies 

on available technology and is less 

prone to uncertainties involved in 

projecting technological developments 

and other variables over a longer term. 

The trade-off is that such a focus may 

not stimulate the development of 

advanced, low GHG-emitting 

technologies. For the auto industry, 

significant technological advances have 

historically required many years and 

large amounts of capital. 

Second, our 2007 analysis does not 

account for a series of flexibilities that 

EPA may employ under the CAA to 

reduce compliance costs, such as multiyear strategic planning, and credit 

trading and banking. As mentioned 

previously, EPA has used many of these 

flexibilities in its existing mobile source 

programs, and we would attempt to 

include such flexibilities in any future 

EPA GHG standards analysis. 

Third, under the CAA manufacturers 

traditionally choose to comply instead 

of non-comply, since they cannot sell 

new vehicles unless they receive a 

certificate of conformity from EPA that 

is based on a demonstration of 

compliance. Under the penalty 

provisions of the CAA, light-duty 

vehicle manufacturers may not pay a 

civil penalty or a fine for noncompliance with the standards and still 

introduce their vehicles into commerce. 

In our 2007 analysis, we assumed a 

number of manufacturers would pay 

fees rather than comply with the 

analyzed standards. This assumption 

resulted in a lower compliance cost 

estimation and lower GHG benefits. 

Fourth, in our 2007 analysis, we did 

not reflect the difference in carbon 

content between gasoline and diesel 

fuel. This difference has not been 

germane to NHTSA’s setting of CAFE 

standards, but it is important to the 

GHG emissions reductions that different 

standards can achieve. Therefore, our 

Light-duty Vehicle TSD analysis did not 

account for the higher CO2 emissions 

which result from the use of a gallon of 

diesel fuel compared to a gallon of 

gasoline (diesel fuel has a higher carbon 

content than gasoline fuel), and we 

would address this issue in any future 

EPA GHG standards analysis. 

As noted previously, our 2007 

analysis relied upon the use of key 

inputs concerning predictions of future 

technologies and fuel prices and 

valuation of a number of externalities, 

such as the benefits of climate change 

mitigation and improvements in energy 

security. The information used for these 

key inputs can have a significant effect 

on projections regarding the costs of a 

standard based on a fixed percentage 

reduction or the level of a modeloptimized standard. In the analyses we 

present in this notice, we have generally 

taken an approach similar to NHTSA’s, 

although we have also used alternative 

values in some cases to illustrate the 

impact from different, alternative 

values. For example, to account for large 

uncertainties regarding the magnitude of 

the marginal benefits of GHG emission 

reductions, we looked at alternative 

approaches to valuing those benefits 

and developed a range of values to 

capture the uncertainties. (See section 

III.G in this ANPR for a discussion of 

GHG benefits issues and marginal 

benefits estimates.) 

Another key, but uncertain, input is 

the future price of fuel. Important for 

any analysis of fuel savings over a long 

time frame is an adequate projection of 

future oil prices. Typically, EPA relies 

on Annual Energy Outlook (AEO) 

forecasts made by the Energy 

Information Agency. However, AEO 

forecasts in past decades have at times 

over-predicted the price of oil, and more 

recently, with the rapid increase in oil 

prices over the past several years, AEO 

forecasts have consistently underpredicted near-term oil prices. In the 

Light-duty Vehicle TSD analysis, we 

used the Energy Information 

Administration’s 2007 AEO projections 

for future oil and fuel prices, which 

correspond to a projected retail gasoline 

price of slightly more than $2 per gallon 

in the 2010–2020 time period, while 

current gasoline fuel prices are on the 

order of $3.50 to $3.80 per gallon or 

more. Since our analyses are sensitive to 

the oil price used, this raised concerns 

regarding the ability to accurately 

estimate fuel savings. In addition, when 

using a model-optimized approach, this 

can have a significant impact on the 

appropriate standard predicted by the 

model. For our updated analysis 

(described in more detail below), 

however, we have continued to use the 

AEO2007 forecasted fuel prices. The 

‘‘baseline’’ for our Light-duty Vehicle 

TSD and updated analysis reflects 

projections from the automotive 

manufacturers regarding future product 

offerings which were developed by the 

manufacturers in late 2006 through the 

spring of 2007. The AEO2007 fuel price 

projections are more representative of 

the fuel prices considered by the 

manufacturers when they developed the 

baseline future product offerings used as 

an input in the analysis. 

This approach has certain limitations. 

Given the large increases in fuel price in 

the past year, most major automotive 

companies have since announced major 

changes to their future product 

offerings, and these changes are not 

represented in our analysis. However, 

the projection of future product 

offerings (model mix and sales volume) 

is static in the analysis we have 

performed, both for the baseline 

(projections with no new standards) and 

in the control scenarios (projections 

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with the impact of new standards). Our 

analysis to date does not account for a 

range of possible consumer and 

automaker responses to higher fuel 

prices, higher vehicle prices and 

attribute-based standards that could 

affect manufacturer market share, car/ 

truck market share, or vehicle model 

mix changes. EPA has initiated work 

with Resources for the Future to 

develop a consumer choice economic 

model which may allow us to examine 

the impact of consumer choice and 

varying fuel prices when analyzing 

potential standard scenarios in the 

future, and to more realistically estimate 

a future baseline. Higher fuel prices 

than those predicted in AEO2007 can 

certainly have a large impact on the 

projected costs and benefits of future 

light-duty GHG limits, and we will 

continue to examine this issue as part of 

our on going work. 

We ask for comment on the relative 

importance of, and how best to address, 

the various issues we have highlighted 

with our analysis of potential light-duty 

vehicle GHG standards performed to 

date. In particular, we seek comment on 

the feasibility and utility of 

incorporating into the regulations 

themselves a mechanism for correcting 

mistaken future projections or 

accomplishing the same through a 

periodic review of the regulations. 

We now summarize the results from 

our 2007 analysis. Since 2007 we have 

updated this analysis to address several 

of the issues noted above, in order to 

evaluate the impact of these issues. EPA 

requests comment on the two 

approaches we examined for setting 

standards, and seeks input on 

alternative approaches, including the 

approach described in section VI.B.1.a. 

In Table VI–1 we present weighted 

combined car and truck standards we 

developed based on efforts to update the 

work we did in 2007 to address some of 

the issues identified above. We show 

the results from our 2007 analysis, as 

well as the updated results when we 

utilize the same methodology for the 4% 

per year approach, but attempt to 

address a number of the issues 

discussed above. As part of addressing 

these issues, we have extended the time 

frame for our analysis to 2020, while our 

Light-duty Vehicle TSD analysis was 

limited to 2018. Our updated analysis 

results are documented in a separate 

technical memorandum available in the 

public docket for this Advance 

Notice.130 

TABLE VI–1—PROJECTED VEHICLE CO2 (GRAM/MILE UNITS) AND MPG STANDARDS (MPG UNITS IN SQUARE BRACKETS), 


INCLUDING A/C CO2 LIMITS


Year 

Light-duty vehicle TSD analysis Updated 2008 

analysis 

4% per year Model-Optimized 4% per year 

2011 ................................................................................................................................. 

2012 ................................................................................................................................. 

2013 ................................................................................................................................. 

2014 ................................................................................................................................. 

2015 ................................................................................................................................. 

2016 ................................................................................................................................. 

2017 ................................................................................................................................. 

2018 ................................................................................................................................. 

2019 ................................................................................................................................. 

2020 ................................................................................................................................. 

338 [26.3] 

323 [27.5] 

309 [28.8] 

296 [30.0] 

285 [31.2] 

274 [32.4] 

263 [33.8] 

253 [35.1] 

n/a 

n/a 

334 [26.6] 

317 [28.0] 

295 [30.1] 

287 [31.0] 

281 [31.6] 

275 [32.3] 

270 [32.9] 

266 [33.4] 

n/a 

n/a 

335 [26.5] 

321 [27.7] 

307 [28.9] 

293 [30.3] 

283 [31.4] 

272 [32.7] 

261 [34.0] 

251 [35.4] 

241 [36.9] 

232 [38.3] 

Compared to the Light-duty Vehicle 

TSD analysis, we have attempted in the 

updated analysis to address for potential 

CAA purposes several, but not all, of the 

noted issues, and as such we continue 

to believe that the results of this 

analysis are conservative—that is, they 

tend to overestimate the costs and/or 

underestimate the benefits. We have 

included the following updates: 

—Inclusion of plug-in hybrids as a 

viable technology beginning in 2012; 

—Consideration of multi-year planning 

cycles available to manufacturers; 

—Consideration of CO2 trading between 

car and truck fleets within the same 

manufacturer; 

—Assumption that all major 

manufacturers would comply with the 

standards rather than paying a 

monetary penalty; 

—Correction of the CO2 reduction 

effectiveness for diesel technology. 

Our updated analysis does not 

address all of the issues we discussed 

previously. For example, we have not 

considered the widespread use of 

lightweight materials, further 

improvements in the CO2 reduction 

effectiveness of existing technologies, 

potential for cost reductions beyond our 

2007 analysis, and the potential for new 

technologies. We also have not 

addressed the potential changes in 

vehicle market shifts that may occur in 

the future in response to new standards, 

new consumer preferences, or the 

potential for higher fuel prices. Recent 

trends in the U.S. auto industry indicate 

there may be a major shift occurring in 

consumer demand away from light-duty 

trucks and SUVs and towards smaller 

passenger cars.131 Such potential trends 

are not captured in our analysis and 

they could have a first-order impact on 

the results. 

Table VI–2 summarizes the most 

important societal and consumer 

impacts of the standards we have 

analyzed. 

130 See EPA Technical Memorandum, 131 See ‘‘As Gas Costs Soar, Buyers Are Flocking 

‘‘Documentation of Updated Light-duty Vehicle to Small Cars’’, New York Times, May 2, 2008, page 

GHG Scenarios.’’ A1. 

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TABLE VI–2—SUMMARY OF SOCIETAL AND CONSUMER IMPACTS FROM POTENTIAL LIGHT-DUTY VEHICLE GHG 


STANDARDS


[2006 $s, AEO2007 oil prices] 


Light-duty vehicle TSD analysis * Updated 2008 

analysis 

4% per year Model-Optimized 4% per year 

Societal Impacts 

GHG Reductions (MMTCO2 equivalent in 2040) ............................................................... 378 ................... 343 ................... 635 

Fuel Savings (million bpd in 2040) ..................................................................................... 2.3 .................... 2.0 .................... 4.2 

Net Societal Benefits in 2040 (Billion $s) ** ....................................................................... $54 + B ............. $54 + B ............. $130 + B 

Net Present Value of Net Benefits through 2040 (Billion $s): ** 

3% DR ......................................................................................................................... $320 + B ........... $390 + B ........... $830 + B 

7% DR ......................................................................................................................... $120 + B ........... $160 + B ........... $340 + B 

Consumer Impacts 

Per-Vehicle Costs: 

2015 ............................................................................................................................. $736 ................. $672 ................. $565 

2018 ............................................................................................................................. $1,567 .............. $995 ................. $1,380 

2020 ............................................................................................................................. n/a .................... n/a .................... $1,924 

Payback Period: *** 

3% DR ......................................................................................................................... 6.2 yr. (2018) .... 4.8 yr. (2018) .... 6.0 yrs. (2020) 

7% DR ......................................................................................................................... 8.9 yr. (2018) .... 6.0 yr. (2018) .... 8.7 yrs. (2020) 

Lifetime Monetary Impact: *** 

3% DR ......................................................................................................................... $2,753 (2018) ... $2,245 (2018) ... $1,630 (2020) 

7% DR ......................................................................................................................... $1,850 (2018) ... $1,508 (2018) ... $437 (2020) 

* The Light-duty Vehicle TSD Societal Impacts are based on new stds. for 2011–2018 for cars and 2012–2017 for trucks, while the updated 

analysis is based on new stds. for 2011–2020 for cars and trucks. 

** The identified ‘‘B’’ = unquantified benefits, for example, we have not quantified the co-pollutant impacts (PM, ozone, and air toxics), and 

does not include a monetized value for the social cost of carbon. Societal benefits exclude all fuel taxes because they represent transfer payments. In addition, for the updated analysis, we have not included the increased costs nor the GHG emissions of electricity associated with the 

use of plug-in electric hybrid vehicles. We have also not quantified the costs and/or benefits associated with changes in consumer preferences 

for new vehicles. 

*** The payback period and lifetime monetary impact values for Light-duty Vehicle TSD analysis is for the average 2018 vehicle, and 2020 for 

the updated analysis. 

Given the current uncertainty 

regarding the social cost of carbon, 

Table VI–2 does not include a 

monetized value for the reduction in 

GHG emissions. We present here a 

number of different values and indicate 

what impact they would have on the net 

social benefits for our updated analysis. 

Presentation of these values does not 

represent, and should not be interpreted 

to represent, any determination by EPA 

as to what the social cost of carbon 

should be for purposes of calculating 

benefits pursuant to the Clean Air Act. 

We have analyzed the valuation for 

the social cost of carbon of $40 per 

metric ton (for emission changes in year 

2007, in 2006 dollars, grown at a rate of 

3% per year) that reflects potential 

global, including domestic, benefits of 

climate change mitigation. This 

valuation (which is the mean value from 

a meta analysis of global marginal 

benefits estimates for a 3% discount rate 

discussed in section III.G. of this 

Advance Notice) would result in an 

increase in the 2040 monetized benefits 

for the 2008 updated analysis of $67 

billion. Given the nature of the 

investment in GHG reductions, we 

believe that values associated with 

lower discount rates should also be 

considered. For example, for a 2% 

discount rate for year 2007, the mean 

value from the meta analysis is $68 per 

metric ton. This valuation would result 

in an increase in the 2040 monetized 

benefits for the 2008 updated analysis of 

$110 billion. 

As discussed in section III.G, another 

approach to developing a value for the 

social cost of carbon is to consider only 

the domestic benefits of climate change 

mitigation. The two approaches—use of 

domestic or global estimates—are 

discussed in section III.G of this notice. 

There is considerable uncertainty 

regarding the valuation of the social cost 

of carbon, and in future analyses EPA 

would likely utilize a range of values 

(see section III.G).132 Furthermore, 

132 Ranges better reflect the available scientific 

information and the uncertainties in marginal 

benefits estimates, and the fact that there are 

estimates well above the means. The corresponding 

ranges for the 2007 mean estimates discussed above 

are the following: For the meta-analysis global 

marginal benefits estimates, the range is $¥4 to 

$106 per metric ton CO2 based on a 3 percent 

discount rate, or $¥3 to $159 per metric ton CO2 

based on a 2 percent discount rate. The preliminary 

domestic ranges derived from a single model are $0 

to $5 per metric ton CO2 based on a 3 percent 

current estimates are incomplete and 

omit a number of impact categories such 

that the IPCC has concluded that current 

estimates of the social cost of carbon are 

very likely to underestimate the benefits 

of GHG reductions. 

This Advance Notice asks for 

comment on the appropriate value or 

range of values to use to quantify the 

benefits of GHG emission reductions, 

including the use of a global value. 

While OMB Guidance allows for 

consideration of international effects, it 

also suggests that the Agency consider 

domestic benefits in regulatory analysis. 

Section III.G.4 discusses very 

preliminary ranges for U.S. domestic 

estimates with means of $1 and $4 per 

metric ton in 2007, depending on the 

discount rate. These valuations ($1 and 

$4 per metric ton in 2007) would result 

in an increase in the 2040 monetized 

benefits for the 2008 updated analysis of 

$1.7–6.7 billion. In its recent proposed 

rulemaking, NHTSA utilized $7 per 

metric ton as the initial value for U.S. 

CO2 emissions in 2011. 

Table VI–2 shows the impact of 

addressing a number of the issues noted 

discount rate, and $0 to $16 per metric ton CO2 

based on a 2 percent discount rate. 

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above. With respect to per-vehicle costs, 

the updated 4% per year approach 

shows a $171 per vehicle lower cost in 

2015 and a $187 per vehicle lower cost 

in 2018 compared to our 2007 analysis, 

for a slightly more stringent standard in 

both cases. This is primarily due to the 

impact of including multi-year planning 

and car-truck trading within a given 

manufacturer. 

The estimated CO2 reductions in 2040 

from the updated analysis are much 

larger than the 2007 analysis (by nearly 

a factor of 2). This occurs primarily 

because we have addressed the diesel 

CO2 issue noted above, and because we 

have extended the time frame for the 

analyzed standards to 2020. The 

estimated fuel savings are also larger 

primarily due to the additional years we 

extended the 4% per year standard to. 

The estimated monetized net benefits 

for the updated analysis are also 

significantly higher than our previous 

estimates. This is a result of a 

combination of factors: lower estimates 

for the increased vehicle costs due to 

multi-year planning and within 

manufacturer car-truck trading; and the 

extension of the analyzed standards to 

2020. 

Table VI–2 also provides estimates of 

‘‘payback period’’ and ‘‘lifetime 

monetary impact’’. The payback period 

is an estimate of how long it will take 

for the purchaser of the average new 

vehicle to break-even; that is, where the 

increased vehicle costs is off-set by the 

fuel savings. Our updated analysis 

shows for the average 2020 vehicle that 

period of time ranges from 6.0 to 8.7 

years (depending upon the assumed 

discount rate). The lifetime monetary 

impact provides an estimate of the costs 

to the consumer who owns a vehicle for 

the vehicle’s entire life. The lifetime 

monetary impact is simply the 

difference between the higher initial 

vehicle cost increase and the lifetime, 

discounted fuel savings. Our updated 

analysis indicates the lifetime, 

discounted fuel savings will exceed the 

initial cost increase substantially. As 

shown in the table, the positive lifetime 

monetary impact ranges from about 

$440 to $1,630 per vehicle (depending 

upon the assumed discount rate). 

Section VI.C.2 of the Light-duty Vehicle 

TSD discusses possible explanations for 

why consumers do not necessarily 

factor in these fuel savings in making 

car-buying decisions. 

Our updated analysis projects the 

2020 CO2 limit of 232 gram/mile (38.3 

mpg) shown in Table VI–1, could be 

achieved with about 33% of the new 

vehicle fleet in 2020 using diesel 

engines and full hybrid systems 

(including plug-in electric hybrid 

vehicles). Higher penetrations of these 

and other advanced technologies 

(including for example the wide-spread 

application of light-weight materials) 

could result in a much greater GHG 

reductions. 

The results of our updated analysis 

indicate that: 

—Technology is readily available to 

achieve significant reductions in lightduty vehicle GHG emissions between 

now and 2020 (and beyond); 

—The benefits of these new standards 

far outweigh their costs; 

—Owners of vehicles complying with 

the new standard will recoup their 

increased vehicle costs within 6–9 

years, and; 

—New standards would result in 

substantial reductions in GHGs. 

We request comment on all aspects of 

this analysis, the appropriateness of the 

two approaches described, and the 

inputs and the tools that we utilized in 

performing the assessment, when 

considering the setting of light-duty 

vehicle GHG standards under the CAA. 

We also request comment on the 

alternative approach for establishing 

light-duty vehicle GHG standards 

described in section VI.B.1.a of this 

advance notice. 

c. Technologies Available To Reduce 

Light-Duty Vehicle GHGs 

In this section we discuss a range of 

technologies that can be used to 

significantly reduce GHG emissions 

from cars and light trucks. We discuss 

EPA’s assessment of the availability of 

these technologies, their readiness for 

introduction into the market, estimates 

of their cost, and estimates of their GHG 

emission reduction potential. We 

request comment on all aspects of our 

current assessment, including 

supporting data regarding technology 

costs and effectiveness. 

In the past year EPA undertook a 

comprehensive review of information in 

the literature regarding GHG-reducing 

technologies available for cars and light 

trucks. In addition, we reviewed 

confidential business information from 

the majority of the major automotive 

companies, and we met with a large 

number of the automotive companies as 

well as global automotive technology 

suppliers regarding the costs and 

effectiveness of current and future GHGreducing technologies. EPA also worked 

with an internationally recognized 

automotive technology firm to perform 

a detailed assessment of the GHG 

reduction effectiveness of a number of 

advanced automotive technologies.133 

133 See ‘‘A Study of Potential Effectiveness of 

Carbon Dioxide Reducing Vehicle Technologies’’, 

EPA recently published a Staff 

Technical Report describing the results 

of our assessment, and we provided this 

report to the National Academy of 

Sciences Committee on the Assessment 

of Technologies for Improving LightDuty Vehicle Fuel Economy.134 This 

Staff Technical Report details our 

estimates of the costs and GHG 

reduction potential of more than 40 

technologies applicable to light-duty 

vehicles, and is one of the key inputs to 

our analysis of potential future 

standards presented in Section VI.B.1.b. 

These technologies span a large range of 

effectiveness and technical availability, 

from technologies as simple as reduced 

rolling resistance tires (offering a 1–2% 

reduction in vehicle CO2 emissions) to 

advanced powertrain systems like 

gasoline and diesel hybrids, plug-in 

electric hybrids, and full electric 

vehicles (offering up to a 100% 

reduction in vehicle CO2 emissions). 

The majority of the technologies we 

investigated are in production and 

available on vehicles today, either in the 

United States, Japan or Europe. Over the 

past year, most of the major automotive 

companies or suppliers have announced 

the introduction of new technologies to 

the U.S. market. The following are some 

recent examples: 

—Ford’s new ‘‘EcoBoost’’ turbocharged, 

down-sized direct-injection gasoline 

engines; 

—Honda’s new 2009 global gasoline 

hybrid and 2009 advanced diesel 

powertrain; 

—Toyota and General Motors plans for 

gasoline plug-in hybrid systems 

within the next two to three years; 

—General Motors breakthroughs in 

lower-cost advanced diesel engines; 

—Nissan’s 2010 introduction of a clean 

diesel passenger car; 

—Chrysler’s widespread use of dualclutch automated manual 

transmissions beginning in 2009; and, 

—Mercedes’ new product offerings for 

clean diesel applications as well as 

diesel-electric hybrid technologies. 

We also evaluated the costs and 

potential GHG emissions reductions 

from some of the advanced systems not 

currently in production or that are only 

available in specialty niche vehicles, 

such as gasoline homogeneous charge 

compression ignition engines, camless 

valve actuation systems, hydraulic 

hybrid powertrains, and full electric 

Ricardo, Inc., EPA Report 420–R–08–004a, June 

2008. 

134 See ‘‘EPA Staff Technical Report: Cost and 

Effectiveness Estimates of Technologies Used to 

Reduce Light-duty Vehicle Carbon Dioxide 

Emissions’’, EPA Report 420–R–08–008, March 

2008. 

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vehicles. These technologies are 

described in detail, along with our 

estimates for costs and GHG reduction 

potential, in our Staff Technical Report. 

An additional area where we see 

opportunities for significant CO2 

emissions reduction is in material 

weight substitution. The substitution of 

traditional vehicle materials (e.g., steel, 

glass) with lighter materials (e.g., 

aluminum, plastic composites) can 

provide substantial reductions in CO2 

emissions while maintaining or 

enhancing vehicle size, comfort, and 

safety attributes. Several companies 

have recently announced plans to 

utilize weight reduction as a means to 

improve vehicle efficiency while 

meeting all applicable safety 

standards.135 We request data and 

comment on the extent to which 

material substitution should be 

considered as a means to reduce GHG 

emissions, and information on the costs 

and potential scope of material 

substitution over the next 5 to 20 years. 

Finally, we note that in the past 30 

years there has been a steady, nearly 

linear increase in the performance of 

cars and light trucks. We estimate that 

the average new vehicle sold in 2007 

had a 0–60 miles/hour acceleration time 

of 9.6 seconds—compared to 14.1 

seconds in 1975.136 If this historic trend 

continues, by 2020 the average 0–60 

acceleration for the combined new car 

and truck fleet will be less than 8 

seconds. During the past 20 years, this 

increase in acceleration has been 

accompanied by a gradual increase in 

vehicle weight. It is generally accepted 

that over the past 20 years, while fuel 

economy for the light-duty fleet has 

changed very little, the fuel efficiency 

has in fact improved but has largely 

been used to enable increases in both 

the weight and the performance of 

vehicles. We request comment on how 

we should consider the potential for 

future changes in vehicle weight and 

performance (e.g., acceleration time) in 

assessing the costs and benefits of 

standards for reducing GHG emissions. 

d. Potential Options for Reducing HFCs, 

N2O, CH4, and Air Conditioning-Related 

CO2 

As described above, in addition to 

fleet average and in-use CO2 standards, 

EPA has analyzed how new control 

measures might be developed for other 

135 See Automotive News, February 11, 2008, in 

which Daimler-Benz CEO states that Mercedes-Benz 

will reduce the weight of all new vehicle models 

by 5%, and Ford announces every model will lose 

between 250 and 750 pounds. 

136 See ‘‘Light-Duty Automotive Technology and 

Fuel Economy Trends: 1995–2007’’, EPA Report 

EPA420–R–07–008, September 2007. 

car and light truck emissions that have 

global warming impacts: air 

conditioning (‘‘A/C’’)-related emissions 

of HFCs and CO2, and tailpipe 

emissions of nitrous oxide (N2O), and 

methane (CH4). Under CAA section 

202(a), EPA may regulate these 

emissions if a positive endangerment 

finding is made for the relevant GHGs. 

Together, these emissions account for 

about 10% of greenhouse gases from 

light-duty cars and trucks (on a CO2 

equivalent basis). The direct HFC 

emissions account for 4.3%, while the 

A/C CO2 emissions are 3.1%. N2O and 

CH4 account for 2.7% and 0.2% 

respectively. With regard to air 

conditioning-related emissions, 

significant opportunity exists to reduce 

HFC emissions from refrigerant leakage 

and CO2 from A/C induced engine 

loads, and EPA has considered potential 

standards to reduce these emissions. In 

addition, EPA has considered potential 

limits for N2O and CH4 emissions that 

could apply to both cars and light trucks 

that would limit future growth of these 

emissions. 

i. Potential Controls for Air 

Conditioning-Related GHG Emissions 

Over 95% of the new cars and light 

trucks in the U.S. are equipped with A/ 

C systems. There are two mechanisms 

by which A/C systems contribute to the 

emissions of GHGs. The first is through 

direct leakage of the refrigerant 

(currently the HFC compound R134a) 

into the air. Based on the higher GWP 

of HFCs, a small leakage of the 

refrigerant has a greater global warming 

impact than a similar amount of 

emissions of other mobile source GHGs. 

Leakage can occur slowly through seals, 

gaskets, hose permeation and even small 

failures in the containment of the 

refrigerant, or more quickly through 

rapid component deterioration, vehicle 

accidents or during maintenance and 

end-of-life vehicle scrappage (especially 

when refrigerant capture and recycling 

programs are less efficient). The leakage 

emissions can be reduced through the 

choice of leak-tight, durable 

components, or the global warming 

impact of leakage emissions can be 

addressed through the implementation 

of an alternative refrigerant. Refrigerant 

emissions during maintenance and at 

the end of the vehicle’s life (as well as 

emissions during the initial charging of 

the system with refrigerant) are already 

addressed by the CAA Title VI 

stratospheric ozone protection program, 

as described in section VIII of this 

notice.137 

137 The second mechanism by which vehicle A/ 

C systems contribute to GHG emissions is through 

EPA’s analysis indicates that together, 

these A/C-related emissions account for 

about 7.5% of the GHG emissions from 

cars and light trucks. EPA considered 

standards designed to reduce direct 

leakage emissions by 75% and to reduce 

the incremental increase of A/C related 

CO2 emissions by 40% in model year 

2015 vehicles, phasing in starting in 

model year 2012. It is appropriate to 

separate the discussion of these two 

categories of A/C-related emissions 

because of the fundamental differences 

in the emission mechanisms and the 

methods of emission control. Refrigerant 

leakage control is akin in many respects 

to past EPA fuel evaporation control 

programs in that containment of a fluid 

is the key control feature, while 

efficiency improvements are more 

similar to the vehicle-based control of 

CO2 in that they would be achieved 

through specific hardware and controls. 

The Memo to the Docket, ‘‘Light-Duty 

Vehicle Hydrofluorocarbon, Nitrous 

Oxide, Methane, and Air ConditioningRelated Carbon Dioxide Emissions’’ 

provides a more detailed discussion of 

the air conditioning-related GHG 

emissions, both refrigerant leakage and 

CO2 emissions from A/C use, as well as 

potential test procedure and compliance 

approaches that have been considered 

by EPA. 

ii. Feasibility of Potential A/C 

Reduction Approaches 

EPA believes that significant 

reductions in A/C HFC leakage and A/ 

C CO2 emissions would be readily 

technically feasible and highly cost 

effective. The types of technologies and 

methods that manufacturers could use 

to reduce both types of A/C emissions 

are commercially available and used 

today in many models of U.S. cars and 

light trucks. For example, materials and 

components that reduce leakage as well 

as electronic monitoring systems have 

been used on various vehicles in recent 

years. Regarding A/C CO2 reduction, 

such technologies as variabledisplacement compressors and their 

controls are also in use today. Although 

manufacturers might find that more 

advanced technologies, like alternate 

refrigerants, become economically 

attractive in the coming years, EPA 

believes that currently available 

technologies and systems designs would 

the consumption of excess fuel when the A/C 

system is running, and from carrying around the 

weight of the A/C system hardware all-year round. 

This excess fuel required to run the system is 

converted into CO2 by the engine during 

combustion. This excess CO2 from A/C operation 

can thus be reduced by increasing the efficiency of 

the overall vehicle-A/C system. 

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be sufficient to meet potential limits 

being assessed by EPA. 

iii. Potential Impacts of Requiring 

Improved A/C Systems 

(1) Emission Reductions for Improved 

A/C Systems 

Manufacturers producing cars and 

light trucks for the U.S. market have not 

historically had economic or regulatory 

incentives or requirements to reduce 

refrigerant leakage and CO2 from A/C 

systems. As a result, there is an 

opportunity for significant reductions in 

both of these types of emissions. With 

potential standards like the ones 

considered above, EPA has estimated 

that reductions in HFC refrigerant 

leakage, converted to CO2 equivalent 

emissions, and added to projected A/C 

CO2 reductions, these limits would 

result in an average per-vehicle 

reduction in CO2-equivalent emissions 

of about 4.7% (excluding CH4 and N2O 

from the baseline). This reduction is 

equivalent to about 7.5% of light vehicle 

CO2-equivalent emissions, or about 2 

tons per year. 

(2) Potential Costs for Improved A/C 

Systems 

Although the technologies and system 

designs EPA expects could be used to 

comply with the two A/C related 

standards being considered are 

currently available, not all 

manufacturers are using them on all 

vehicles. Thus, the industry would 

necessarily incur some costs to apply 

these technologies more broadly across 

the car and truck fleet. EPA estimates 

that the cost of meeting the full HFC 

leakage standard it is considering would 

average about $40 per vehicle (retail 

price equivalent or RPE) and that the 

cost of meeting the A/C CO2 standard 

would be about $70 per vehicle (RPE). 

At the same time, complying with such 

limits would result in very significant 

savings in fuel costs (as system 

efficiency improves) and in A/C-related 

maintenance costs (as more durable 

systems result in less frequent repairs). 

In fact, EPA’s analysis shows that these 

cost savings would significantly exceed 

projected retail costs of the potential A/ 

C standards, more than offsetting the 

costs of both types of A/C system 

improvements.138 

iv. Potential Interaction With Title VI 

Refrigerant Regulations 

As described further in Section VIII of 

this notice, Title VI of the CAA deals 

138 See Appendix 3.B. of the EPA Technical 

Memorandum ‘‘Documentation of Updated Lightduty Vehicle GHG Scenarios’’ for a detailed 

discussion of these costs estimates. 

with the protection of stratospheric 

ozone. Section 608 of the Act 

establishes a comprehensive program to 

limit emissions of certain ozonedepleting substances (ODS) from 

appliances and refrigeration. The rules 

promulgated under section 608 regulate 

the use and disposal of such substances 

during the service, repair or disposal of 

appliances and industrial process 

refrigeration. In addition, section 608 

and the regulations promulgated under 

it prohibit the knowingly venting or 

releasing ODS during the course of 

maintaining, servicing, repairing or 

disposing of an appliance or industrial 

process refrigeration equipment. Section 

609 governs the servicing of motor 

vehicle air conditioners (MVACs). The 

regulations promulgated under section 

609 (40 CFR part 82, subpart B) 

establish standards and requirements 

regarding the servicing of MVACs. 

These regulations include establishing 

standards for equipment that recovers 

and recycles or only recovers refrigerant 

(CFC–12, HFC 134a, and for blends only 

recovers) from MVACs; requiring 

technician training and certification by 

an EPA-approved organization; 

establishing recordkeeping 

requirements; imposing sales 

restrictions; and prohibiting the venting 

of refrigerants. 

Another Title VI provision that could 

interact with potential Title II motor 

vehicle regulation of GHGs is section 

612, which requires EPA to review 

substitutes for ozone depleting 

substances and to consider whether 

such substitutes would cause an adverse 

effect to human health or the 

environment as compared with other 

substitutes that are currently or 

potentially available. EPA promulgated 

regulations for this program in 1992 and 

those regulations are located at 40 CFR 

part 82, subpart G. When reviewing 

substitutes, in addition to finding them 

acceptable or unacceptable, EPA may 

also find them acceptable so long as the 

user meets certain use conditions. For 

example, all motor vehicle air 

conditioning system must have unique 

fittings and a uniquely colored label for 

the refrigerant being used in the system. 

EPA views the potential program 

analyzed here as complementing these 

Title VI programs, and not conflicting 

with them. The potential standards 

would apply at pre-production when 

manufacturers demonstrate that they are 

utilizing requisite equipment (or 

utilizing other means designated in the 

potential program) to achieve the 

suggested 75% leak reduction 

requirement. These requirements would 

dovetail with the Title VI section 609 

standards which apply to maintenance 

events, and to end-of-vehicle life 

disposal. In fact, as noted, a benefit of 

a program is that there could be fewer 

and less impactive maintenance events 

for MVACs, since there would be less 

leakage. In addition, although the 

suggested standards would also apply 

in-use, the means of enforcement should 

not conflict (or overlap) with the Title 

VI section 609 standards. EPA also 

believes the menu of leak control 

technologies described above would 

complement the section 612 

requirements because these control 

technologies would help ensure that 

134a (or other refrigerants) would be 

used in a manner that would further 

minimize potential adverse effects on 

human health and the environment. 

v. Potential Controls for Nitrous Oxide 

Emissions 

Nitrous oxide, or N2O, is emitted from 

gasoline and diesel car and light truck 

tailpipes and is generated during 

specific catalyst warm-up temperature 

conditions conducive to N2O formation. 

While N2O emissions from current Tier 

2 vehicles with conventional three-way 

catalysts are relatively low on a mass 

basis (e.g., around 0.005 g/mi), N2O does 

have a high GWP of 310. N2O is a more 

significant concern with diesel vehicles 

(and potentially future gasoline leanburn engines) equipped with advanced 

catalytic NOX emissions control 

systems. These systems can (but need 

not) be designed in a way that 

emphasizes efficient NOX control while 

allowing the formation of significant 

quantities of N2O. Excess oxygen 

present in the exhaust during lean-burn 

conditions in diesel (or lean-burn 

gasoline) engines equipped with these 

advanced systems can favor N2O 

formation if catalyst temperatures are 

not carefully controlled. Without 

specific attention to controlling N2O 

emissions in the development of such 

new NOX control systems, vehicles 

could have N2O emissions many times 

greater than are emitted by current 

gasoline vehicles. 

EPA has considered a ‘‘cap’’ approach 

to controlling N2O emissions would not 

require any new technology for current 

Tier 2 gasoline vehicles, but would limit 

any increases in N2O emissions that 

might otherwise occur with future 

technology vehicles. Such an approach 

would have minimal feasibility, 

emissions, or cost impacts. 

The Memo to the Docket, ‘‘Light-Duty 

Vehicle Hydrofluorocarbon, Nitrous 

Oxide, Methane, and Air ConditioningRelated Carbon Dioxide Emissions’’ has 

more in-depth discussion of car and 

light truck N2O emissions, as well as of 

potential test procedure and compliance 

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approaches that have been considered 

by EPA. 

vi. Potential Controls for Methane 

Emissions 

Methane, or CH4, is emitted from 

gasoline and diesel car and light truck 

tailpipes and is one of the family of 

hydrocarbon compounds generated in 

the engine as a by-product of gasoline 

and diesel fuel combustion. As such, 

levels of CH4 emissions have been 

somewhat controlled by the lower 

hydrocarbon emissions standards that 

have been phased in since the early 

1970s. Current CH4 emissions from Tier 

2 gasoline vehicles are relatively low 

(about 0.017 g/mi on average), and CH4 

has a global warming potential of 23. 

The one technology where much higher 

CH4 emissions could be of concern 

would be natural gas-fueled vehicles, 

since CH4 is the primary constituent of 

natural gas fuel and would be the largest 

component of unburned fuel emissions. 

As with N2O, EPA has considered a 

‘‘cap’’ CH4 emissions standard approach 

that would not require any new 

technology for current Tier 2 gasoline 

vehicles, but would limit any increases 

in CH4 emissions that might otherwise 

occur with future natural gas vehicles. 

Such an approach would have no 

significant feasibility, emissions, or cost 

impacts. 

The Memo to the Docket, ‘‘Light-Duty 

Vehicle Hydrofluorocarbon, Nitrous 

Oxide, Methane, and Air ConditioningRelated Carbon Dioxide Emissions’’ has 

greater discussion of car and light truck 

CH4 emissions. 

e. Specific Programmatic Design Issues 

As discussed above, Title II of the 

CAA provides the Agency with both 

direction and flexibility in designing 

and implementing a GHG control 

program. Consistent with existing motor 

vehicle programs, the Agency would 

need to develop appropriate 

mechanisms to address issues such as 

certification of new motor vehicles to 

applicable standards, ensuring the 

emissions requirements are being met 

throughout the designated useful life of 

the vehicle, and appropriate compliance 

mechanisms if the requirements are not 

being met. Domestic and imported 

vehicles and engines subject to 

emissions standards must obtain a 

certificate of conformity in order to be 

sold in the U.S. marketplace. EPA has 

utilized a wide range of program design 

tools and compliance mechanisms to 

help address the large variation of 

market participants yet still provide a 

level regulatory playing field for these 

parties. As part of the design effort for 

a GHG program, it would be appropriate 

to take into account these flexibilities as 

well as existing requirements that the 

automobile and engine industries 

already face in order to help reduce 

compliance costs if possible while still 

maintaining our overall environmental 

objectives. However, given the nature of 

GHG control, it would also be 

appropriate to determine if new design 

structures and compliance measures 

might be more effective. 

The Light-duty Vehicle TSD includes 

a discussion of a wide range of 

programmatic and technical issues and 

presents potential approaches that 

would address these issues in the design 

of a comprehensive near-term light-duty 

vehicle GHG control program. We 

highlight here a few of these issues, and 

point the reader to the Light-duty 

Vehicle TSD for additional detail. 

Among the issues discussed in the 

Light-duty Vehicle TSD are several 

which could differ significantly under a 

different approach. EPA specifically 

requests comment on these issues: 

—Potential classification approaches for 

light-duty vehicles (e.g., treating cars 

and light trucks in a single averaging 

class or separate, and the potential 

classification of vehicle types as 

either a passenger car or a light truck); 

—How any classification approaches 

would relate to NHTSA’s regulatory 

approach; 

—The significant flexibilities allowed 

under Title II which we utilize for 

existing criteria pollutant standards 

for light-duty vehicles, including 

detailed concepts for a GHG 

averaging, banking, and trading 

program; 

—Potential light-duty GHG compliance 

program concepts. 

As we have considered various 

potential light-duty vehicle GHG 

approaches, significant thought and 

stakeholder outreach went into 

designing a potential system for 

determining compliance that would 

meet Agency and industry needs and 

goals. The Light-duty Vehicle TSD 

presents a compliance structure for 

vehicle GHG control that adheres to 

CAA requirements and at the same time 

is compatible with the existing CAFE 

program. However, this is not the only 

approach to compliance, as is discussed 

in the Light-duty Vehicle TSD. Other 

compliance approaches could also be 

considered, each with their own 

advantages. For example, a GHG 

compliance program patterned after the 

Tier 2 light duty vehicles emissions 

program offers an approach that is more 

similar to the existing compliance 

structure for other pollutants. 

We discuss below in detail three 

specific issues regarding potential future 

light-duty vehicle GHG programmatic 

issues: universal and attribute-based 

standards; environmental backstop 

standards; and tailpipe CO2 test cycles. 

i. Universal and Attribute-Based Vehicle 

GHG Standard Approaches 

A specific programmatic issue that 

EPA would like to highlight here is the 

use of attribute-based standards for 

vehicle GHG standards, and the concept 

of an environmental backstop to 

accompany an attribute-based standard 

promulgated under the CAA, in order to 

assure that GHG emission reductions 

which are feasible at reasonable cost 

under section 202(a) are not foregone. A 

CAA program for reducing GHG 

emissions from light vehicles could set 

the average emissions standards for 

manufacturers in one of two 

fundamental ways. A ‘‘universal’’ GHG 

standard would apply a single 

numerical requirement to each 

manufacturer, to be met on average 

across its entire light-duty vehicle 

production. One potential consequence 

of the universal approach is that the 

costs of compliance may fall unevenly 

on different manufacturers. That is, 

complying with a single standard would 

be more difficult for companies with 

current product mixes weighted 

relatively heavily toward vehicles with 

higher compliance costs. 

The other approach EPA has 

considered would set individual 

standards for each manufacturer, based 

on one or more vehicle attributes (such 

as the footprint attribute approach 

currently used by NHTSA). Thus, to the 

extent a manufacturer produced 

vehicles with different attributes from 

the vehicles of another manufacturer; 

unique standards would be set for each 

company. The Light-duty Vehicle TSD 

discusses various vehicle attributes on 

which light duty vehicle CO2 standards 

could be based. EPA requests comment 

on the use of an attribute-based 

approach, and on each of the attributes 

considered in the Light-duty Vehicle 

TSD, as well as on a universal standard 

approach. In addition, some in the 

industry have suggested power-toweight ratio may be an appropriate 

attribute for this purpose, and we 

request comment on that attribute as 

well. 

A key characteristic of any attributebased program is that significant 

industry shifts in the attribute over time 

would increase or decrease the average 

emission performance requirement for 

the fleet. For example, if such a shift in 

attributes resulted in the unique 

manufacturer standards being on 

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average less stringent than those 

determined to be feasible and costeffective in the establishment of the 

program, the program would fall short 

of those overall emissions reductions, 

and conversely, market shifts could also 

result in larger emissions reductions 

than those determined to be feasible and 

cost-effective at the time the program 

was established. EPA seeks comment on 

the universal approach as compared to 

the attribute-based approach. 

ii. Concepts for Light-Duty Vehicle GHG 

Environmental Backstops 

In order to limit the potential loss of 

feasible emissions control due to a 

change in market attributes, EPA could 

consider a supplemental ‘‘backstop’’ 

carbon dioxide emissions standard for 

each year (also referred to as an ‘‘antibacksliding’’ provision) as a 

complement under the CAA to an 

attribute-based standard. This would be 

an additional obligation for 

manufacturers that would limit the 

maximum fleet average carbon dioxide 

emissions, independent of attributes. 

The backstop requirement could 

establish fixed minimum and feasible 

fleet average CO2 g/mile standards. The 

backstop would apply separately to the 

domestic car, import car, and truck 

classes. This backstop obligation may 

not apply to small volume 

manufacturers. While EPA will 

quantitatively describe one specific 

backstop concept below, we are seeking 

public comment on a range of 

alternative approaches described 

qualitatively below, briefly, as well. 

More generally, EPA seeks comment as 

to whether a backstop approach would 

be appropriate under the CAA as a 

means of providing greater emission 

reduction certainty. 

A backstop could be an appropriate 

complement under the CAA to an 

attribute-based standard. The most 

important factor under section 202(a) of 

the Act is to ensure reductions of the 

emissions from the motor vehicle sector 

which cause or contribute to the 

endangerment caused by greenhouse gas 

emissions. As discussed earlier, one 

important feature of an attribute-based 

program is that collective decisions by 

consumers and manufacturers could 

result in higher or lower industry-wide 

average footprint values than projected 

by EPA at the time of promulgation. 

Since the attribute-based curve 

establishes a fleet average for a 

manufacturer based on the 

manufacturer’s sales and attribute 

values, the actual reductions achieved 

by the program could vary as this mix 

varies. In the extreme, if the entire 

industry moved to much higher 

attribute values, then the carbon dioxide 

emissions reductions could be 

significantly less than projected by EPA 

as technically feasible and cost effective. 

Under section 202(a), EPA could 

consider a supplemental fleet average 

backstop standard that would be the 

same for every manufacturer in a given 

year. Such a standard would ensure that 

a minimum level of reductions would 

be achieved as the fleet mix changes 

over time. EPA could base such a 

standard on feasible carbon dioxide 

emission reductions and other 

important factors such as technological 

feasibility, cost, energy, and safety in 

analyzing section 202(a) standards. EPA 

recognizes that a CO2 emissions 

backstop could partially reduce the 

flexibility and market elements of an 

attribute-based approach, but believes it 

could be needed to provide for an 

appropriate degree of emissions 

reduction certainty. 

As with other structural issues such 

as universal versus attribute-based 

approaches, EPA believes that various 

backstop approaches have conceptual 

advantages and disadvantages with 

respect to relevant criteria such as 

certainty of industry-wide carbon 

dioxide emissions reductions, flexibility 

with respect to consumer choice and 

vehicle offerings, varying treatment of 

automakers, and complexity of 

explanation and implementation. Any 

approach would also need to address 

the relevant factors, including cost 

(economic feasibility, cost effectiveness, 

and per vehicle cost) and technological 

feasibility. EPA encourages commenters 

to evaluate the design approaches 

presented below, as well as to suggest 

alternative approaches, in terms of these 

and other relevant criteria. 

As an illustrative example, Table VI– 

3 shows one set of fleet average carbon 

dioxide emissions and mpg backstops, 

along with the projected, average 

industry-wide carbon dioxide emissions 

and mpg compliance levels, for the two 

sets of fleet average carbon dioxide 

emissions standards based on the 

footprint attribute, analyzed in 

December 2007, and discussed earlier in 

this advance notice: The 4% per year 

and model-optimized scenarios. These 

carbon dioxide emissions backstops are 

based on the projected fleet average 

carbon dioxide emissions compliance 

levels for the high-volume car and light 

truck manufacturers with the highest 

projected car and light truck footprint 

levels, based on the footprint curves that 

were developed by EPA in December 

2007. Chrysler is the high-volume car 

manufacturer with the highest projected 

footprint values, and General Motors 

has the highest projected footprint 

values among the high-volume truck 

manufacturers. 

These backstops would be universally 

applied to every manufacturer, except 

small volume manufacturers, and would 

become the effective fleet average 

standard for any automaker that would 

otherwise have a higher fleet average 

carbon dioxide emissions standard, for 

any of the three respective averaging 

sets (import and domestic cars and 

trucks), based on the footprint curve. 

The underlying rationale for this 

backstop approach is that the 

manufacturer that is projected to sell the 

highest footprint vehicles, which 

therefore is projected to be able to 

comply with the highest fleet average 

carbon dioxide emissions compliance 

levels, should be treated as establishing 

the minimum acceptable level of 

emissions reductions for the industry. 

Similarly, no other manufacturers 

should exceed the feasible, cost effective 

level established by that projected 

highest footprint manufacturer. The 

approach, and underlying rationale, is 

similar to the approach used by NHTSA 

before the 2006 truck standards, 

whereby the level of a universal 

standard was established based on the 

capabilities of the least capable large 

manufacturer (Public Citizen v. NHTSA, 

848 F. 2d 256, 259, D.C. Cir. 1988). 

Although the backstop would not 

prohibit the highest footprint 

manufacturer from selling higher 

footprint vehicles, it would prohibit any 

carbon dioxide emissions ‘‘backsliding’’ 

that would otherwise be associated with 

that increase in footprint. Average 

carbon dioxide emissions from other 

manufacturers could increase, of course, 

in accordance with the footprint curve, 

but in no case could the carbon dioxide 

emissions level for any manufacturer 

increase beyond these backstop levels. 

The passenger car carbon dioxide 

emissions and mpg backstop levels 

shown in Table VI–3 adhere to the 

methodology described above with one 

exception. Based on Chrysler’s projected 

footprint values, its 2011 standard for 

the 4% per year option would be 325 g/ 

mi, equivalent to a gasoline vehicle fuel 

economy of 27.3 mpg. Since the current 

car CAFE standard, which acts as an 

effective fuel economy backstop, is 27.5 

mpg, EPA could instead consider a 2011 

backstop of 323 g/mi for the 4% per year 

option, which is equivalent to a 27.5 

mpg gasoline vehicle. 

In this illustrative backstop example, 

the carbon dioxide emissions backstop 

levels would range from 8 to 22 g/mi, 

or 2 to 8%, higher than the projected, 

average industry-wide carbon dioxide 

levels. 

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TABLE VI–3—ILLUSTRATIVE BACKSTOPS FOR THE FLEET AVERAGE CARBON DIOXIDE EMISSIONS STANDARD (CO2 GRAMS


PER MILE/MPG) 


CARS 

4 percent per year option Model-optimized option 

Projected 

industry-wide 

CO2 levels 

Backstop 

Projected 

industry-wide 

CO2 levels 

Backstop 

2010 (base) .............................................................................................. 

2011 ......................................................................................................... 

2012 ......................................................................................................... 

2013 ......................................................................................................... 

2014 ......................................................................................................... 

2015 ......................................................................................................... 

2016 ......................................................................................................... 

2017 ......................................................................................................... 

2018 ......................................................................................................... 

(323)/27.5 

309/28.7 

298/29.8 

285/31.1 

275/32.3 

264/33.6 

254/34.9 

244/36.3 

235/37.7 

.......................... 

323/27.5 

319/27.8 

296/30.0 

287/30.9 

277/32.0 

266/33.4 

257/34.5 

245/36.2 

(323)/27.5 

301/29.5 

291/30.5 

276/32.1 

268/33.2 

260/34.1 

247/35.9 

244/36.4 

239/37.2 

.......................... 

317/28.0 

314/28.3 

287/30.9 

281/31.6 

273/32.5 

258/34.4 

257/34.5 

249/35.7 

A second illustrative example of a 

universal backstop approach could be 

modeled on the ‘‘minimum standard’’ in 

the Energy Independence and Security 

Act (EISA) of 2007. EISA establishes a 

fuel economy backstop for the domestic 

car class that is equal to 92% of the 

average fuel economy level projected for 

all cars. EPA believes this 92% value 

was derived by dividing the current car 

CAFE standard of 27.5 mpg by the 

average industry-wide car fuel economy 

performance over the past several years. 

The car CAFE standard, in effect, has 

served as a backstop for those 

manufacturers that have chosen not to 

pay CAFE penalties. Applying this 

model to a carbon dioxide emissions 

backstop would involve dividing the 

average projected industry-wide carbon 

dioxide emissions levels by 0.92, or 

multiplying by a factor of 1.087, an 

increase of 8.7%, to generate a universal 

backstop level that would apply to all 

manufacturers. Under this approach, the 

backstop levels for the 4% per year and 

model-optimized standards in Table VI– 

3 would be greater than the backstop 

levels discussed earlier in every case, 

ranging from 3 to 23 g/mi higher. This 

alternative approach yields backstop 

levels 20 to 31 g/mi higher than the 

projected, average industry-wide 

standards. 

For the backstop approaches 

discussed above, all automakers would 

have the same uniform backstop for 

domestic and import cars, and a higher 

uniform backstop for trucks. These 

universal approaches would make the 

backstop more of a constraint on those 

manufacturers that sold vehicles with 

higher average footprint levels and less 

of a constraint on those automakers that 

sold vehicles with lower average 

footprint levels. 

An alternative backstop approach 

could be to establish unique maximum 

numerical carbon dioxide emissions 

values that would apply to different 

automakers (e.g., X g/mi for Automaker 

A, and Y g/mi for Automaker B) and 

that would become the effective fleet 

average standard for an individual 

automaker when that automaker would 

otherwise be allowed to meet a higher 

fleetwide average carbon dioxide 

emissions value based exclusively on 

the footprint curve. The rationale for 

this type of approach would be that 

since manufacturers start at different 

average footprint levels, manufacturerspecific backstop values could provide 

greater insurance against carbon dioxide 

emissions backsliding for all 

manufacturers, rather than just those 

manufacturers that sold vehicles with 

higher average footprint levels. One 

illustrative example of this type of 

approach would be to base the annual 

backstop for each manufacturer on its 

2010 carbon dioxide emissions baseline, 

reducing it by the same percentage each 

year. A similar approach would base the 

annual backstop for the highestfootprint manufacturer on its 2010 

carbon dioxide emissions baseline 

reduced by a percentage each year, the 

annual backstop for the lowest-footprint 

automaker on its 2010 carbon dioxide 

emissions baseline reduced by a lesser 

percentage per year, and the annual 

backstop values for other manufacturers 

on annual percentage reductions 

between the higher and lower 

percentages. This latter approach would 

yield backstop values that would be 

somewhat more binding on 

manufacturers that sold vehicles with 

higher average footprint values, yet still 

binding to some degree on all 

automakers. This approach would also 

limit the degree to which manufacturers 

that sold vehicles with lower average 

footprint values could increase average 

footprint values over time. 

A combination of the universal and 

manufacturer-specific approaches could 

be to begin with manufacturer-specific 

backstop values, and to transition to 

uniform backstop values over a 5 or 10 

year period. 

Another alternative backstop 

approach would not set a maximum 

numerical carbon dioxide emissions 

value for individual manufacturers, but 

would establish mathematical functions 

that would automatically increase the 

stringency of and/or ‘‘flatten’’ the 

footprint curves for future years when 

actual industry-wide carbon dioxide 

emissions performance in the future is 

found to fall short of EPA’s projections 

at the time of promulgation. For 

example, at the time of promulgation, 

EPA could assume a certain average 

industry-wide carbon dioxide g/mi 

emissions level for 2011–2012. If, in 

2013, EPA found that the average 

industry-wide emissions level in 2011– 

2012 was higher than projected in the 

final rule (and therefore the carbon 

dioxide emissions reductions were 

lower than projected because of higher 

than projected average footprint levels), 

then the backstop provisions would be 

triggered and the footprint curves for 

future years (say, 2016 and later) would 

be automatically changed to be more 

stringent and/or flatter in shape. This 

approach would reframe the backstop 

issue in terms of industry-wide 

emissions performance, rather than in 

terms of individual automaker 

emissions performance. 

In lieu of a backstop, another 

approach would be to flatten (i.e., 

reduce the slope of) the carbon dioxide 

emissions-footprint curve such that 

there would a major disincentive for 

automakers to increase vehicle 

footprint. EPA invites comments on the 

pros and cons of this approach relative 

to a backstop. 

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In conclusion, EPA seeks comment on 

whether a CO2 emissions backstop is an 

appropriate complement to a footprintbased regulatory approach under the 

CAA to ensure that the program would 

achieve a minimum level of feasible 

carbon dioxide emissions reductions. 

EPA invites comments on both the 

potential backstop approaches 

discussed above, as well as suggestions 

for other approaches. 

iii. Potential Test Procedures for LightDuty Vehicle Tailpipe CO2 Emissions 

For the program options EPA 

analyzed to date, EPA would expect 

manufacturers and EPA to measure CO2 

for certification and compliance 

purposes over the same test procedures 

currently used for measuring fuel 

economy, except for A/C-related CO2 

emissions. This corresponds with the 

data used in our analysis of the 

potential footprint-based CO2 standards 

presented in section VI.B.1.b of this 

advance notice, as the data on control 

technology efficiency was also 

developed in reference to these test 

procedures. These procedures are the 

Federal Test Procedure (FTP or ’’city’’ 

test) and the Highway Fuel Economy 

Test (HFET or ’’highway’’ test). EPA 

established the FTP for emissions 

measurement in the early 1970s. In 

1976, in response to requirements in the 

Energy Policy and Conservation Act 

(EPCA), EPA extended the use of the 

FTP to fuel economy measurement and 

added the HFET. The provisions in the 

1976 regulation, effective with the 1977 

model year, established procedures to 

calculate fuel economy values both for 

labeling and for CAFE purposes. Under 

EPCA, EPA is required to use these 

procedures (or procedures which yield 

comparable results) for measuring fuel 

economy for cars for CAFE purposes, 

but not for fuel economy labeling 

purposes. EPCA does not impose this 

requirement on CAFE test procedures 

for light trucks, but EPA does use the 

FTP and HFET for this purpose. 

On December 27, 2006, EPA 

established new ‘‘5-cycle’’ test 

procedures for fuel economy labeling— 

the information provided to the carbuying public to assist in making fuel 

economy comparisons from vehicle to 

vehicle. These procedures were 

originally developed for purposes of 

criteria emissions testing, not fuel 

economy labeling, pursuant to section 

206(h) of the Clean Air Act, which 

requires EPA to review and revise as 

necessary test procedures for motor 

vehicles and motor vehicle engines ‘‘to 

insure that vehicles are tested under 

circumstances which reflect the actual 

current driving conditions under which 

motor vehicles are used.’’ In updating 

the fuel economy labeling regulations, 

EPA determined that these emissions 

test procedures take into account several 

important factors that affect fuel 

economy in the real world but are 

missing from the FTP and HFET tests. 

Key among these factors are high 

speeds, aggressive accelerations and 

decelerations, the use of air 

conditioning, and operation in cold 

temperatures. Consistent with section 

206 (h), EPA revised its procedures for 

calculating the label estimates so that 

the miles per gallon (mpg) estimates for 

passenger cars and light-duty trucks 

would better reflect what consumers 

achieve in the real world. Under the 

new methods, the city miles per gallon 

estimates for the manufacturers of most 

vehicles have dropped by about 12% on 

average relative to the previous 

estimates, with estimates for some 

vehicles dropping by as much as 30%. 

The highway mpg estimates for most 

vehicles dropped on average by about 

8%, with some estimates dropping by as 

much as 25% relative to the previous 

estimates. The new test procedures only 

affect EPA’s vehicle fuel economy 

labeling program and do not affect fuel 

economy measurements for the CAFE 

standards, which continue to be based 

on the original 2-cycle test procedures 

(FTP/HFET). 

EPA continues to believe that the new 

5-cycle test procedures more accurately 

predict in-use fuel economy than the 2-

cycle test procedures. Although, as 

explained below, to date there has been 

insufficient information to develop 

standards based on 5-cycle test 

procedures, such information could be 

developed and there is no legal 

constraint in the CAA to developing 

such standards. Indeed, section 206(h) 

provides support for such an approach. 

Now that automotive manufacturers are 

using the 5-cycle test procedure for 

labeling purposes, we anticipate 

significant amount of data regarding the 

impact of the 5-cycle test on vehicle CO2 

emissions will be made available to the 

Agency over the next several years. 

However, for the programs analyzed 

in the Light-duty Vehicle TSD, EPA 

used the original 2-cycle test. Indeed, 

data were simply lacking for the 

efficiencies of most fuel economy 

control measures as measured by 5-

cycle tests. Thus, existing feasibility 

studies and analyses, such as the 2002 

National Academy of Sciences (NAS) 

and the 2004 Northeast States Center for 

a Clean Air Future (NESCCAF) studies 

that examined technologies to reduce 

CO2, were based on the 2-cycle test 

procedures. However, as noted above, 

we expect that new data regarding the 

5-cycle test procedures will be made 

available and could be considered in 

future analysis. 

It is important to note, however, that 

all of our benefits inputs, modeling and 

environmental analyses underlying the 

potential programs analyzed in the 

Light-duty Vehicle TSD accounted for 

the difference between emissions levels 

as measured by the 2-cycle test and the 

levels more likely to actually be 

achieved in real world performance. 

Thus, EPA applied a 20% conversion 

factor (2-cycle emissions result divided 

by 0.8) to convert industry-wide 2-cycle 

CO2 emissions test values to real world 

CO2 emissions factors. EPA used this 

industry-wide conversion factor for all 

of its emission reduction estimates, and 

calculated such important values as 

overall emission reductions, overall 

benefits, and overall cost-effectiveness 

using these corrected values. In reality, 

this conversion factor is not uniform 

across all vehicles. For example, the 

conversion factor is greater than 20% for 

vehicles with higher fuel economy/ 

lower CO2 values and is less than 20% 

for vehicles with lower fuel economy/ 

higher CO2 values. But to simplify the 

technology feasibility analysis, the 

analysis assumed a uniform conversion 

factor of 20% for all vehicles. EPA does 

not believe the overall difference would 

have a significant effect on the 

standards because the errors on either 

side of 20% tend to offset one another. 

EPA thus analyzed CO2 standards 

based on the 2-cycle test procedures for 

our analysis to date. EPA would expect 

to continue to gain additional 

experience and data on the 5-cycle test 

procedures used in the labeling 

program. If EPA determined that 

analyzing potential CO2 standards based 

on these test procedures would result in 

more robust control of those emissions, 

we would consider this in future 

analyses. EPA requests comments on the 

above test procedure issues, and the 

relative importance of using the 2-cycle 

versus the 5-cycle test in any future EPA 

action to establish standards for lightduty vehicle tailpipe CO2 emissions. 

2. Heavy-Duty Trucks 

Like light-duty vehicles, EPA’s 

regulatory authority to address pollution 

from heavy-duty trucks comes from 

section 202 of the CAA. The Agency 

first exercised this responsibility for 

heavy-duty trucks in 1974. Since that 

time, heavy-duty truck and diesel 

engine technologies have continued to 

improve, and the Agency has set 

increasingly stringent emissions 

standards (today’s diesel engines are 

98% cleaner than those from 1974). 

Over that same period, freight shipment 

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by heavy-duty trucks has more than 

doubled. Goods shipped solely by truck 

account for 74% of the value of all 

commodities shipped within the United 

States. Trucked freight is projected to 

double again over the next two decades, 

growing from 11.5 billion tons in 2002 

to over 22.8 billion tons in 2035.139 

Total truck GHG emissions are expected 

to grow with this increase in freight. 

Reflecting important distinctions 

between light and heavy-duty vehicles, 

section 202 gives EPA additional 

guidelines for heavy-duty vehicle 

regulations for certain pollutants, 

including defined regulatory lead time 

criteria and authority to address heavyduty engine rebuild practices. The 

Agency has further used the discretion 

provided in the CAA to develop 

regulatory programs for heavy-duty 

vehicles that reflect their primary 

function. Key differences between our 

light-duty and heavy-duty programs 

include vehicle standards for cars 

versus engine standards for heavy-duty 

trucks, gram per distance (mile) 

standards for cars versus gram per work 

(brake horsepower-hour) for trucks, and 

vehicle test procedures for cars versus 

engine-based tests for trucks. EPA has 

thus determined that in the heavy-duty 

sector, the appropriate metric to 

evaluate performance is per unit of work 

and that engine design plays a critical 

role in controlling criteria pollutant 

emissions. EPA’s rules also reflect the 

nature of the heavy-duty industry with 

separate engine and truck 

manufacturers. As EPA considers the 

best way to address GHG emissions 

from the heavy-duty sector, we will 

again be considering the important ways 

that heavy-duty vehicles differ from 

light-duty vehicles. 

In this section, we will characterize 

the heavy-duty GHG emissions 

inventory, broadly discuss the 

technologies available in the near- and 

long-term to reduce heavy-duty truck 

GHG emissions, and discuss potential 

regulatory options to address these 

emissions. We invite comment on the 

issues that are relevant to considering 

potential GHG emission standards for 

heavy-duty trucks. In particular, we 

invite commenters to compare and 

contrast potential heavy-duty solutions 

to our earlier discussion of light-duty 

vehicles and our existing heavy-duty 

criteria pollutant control program in 

light of the differences between GHG 

emissions and traditional criteria air 

pollutants. 

139 Government Accountability Office. Freight 

Transportation: National Policy and Strategies Can 

Help Improve Freight Mobility GAO–08–287. Report 

to the Ranking Member, Committee on Environment 

and Public Works, U.S. Senate. January 2008. 

a. Heavy-Duty Truck GHG Emissions 

Heavy-duty on-road vehicles emitted 

401 million metric tons of CO2 

emissions in 2006, or approximately 

19% of the mobile source CO2 

emissions, the largest mobile source 

sub-category after light-duty vehicles.140 

CO2 emissions from these vehicles are 

expected to increase significantly in the 

future, by approximately 29% between 

2006 and 2030.141 

Diesel powered trucks comprise 91% 

of the heavy-duty CO2 emissions, with 

the remaining 9% coming from gasoline 

and natural gas engines. Heavy-duty 

GHG emissions come primarily from 

two types of applications, combination 

and single unit trucks. Combination 

trucks constitute 75% of the total heavyduty GHG emissions—44% from longhaul and 31% from short-haul 

operations. Short-haul single unit trucks 

are the third largest source at 19%. The 

remaining 5% consists of long-haul 

single unit trucks; intercity, school, and 

transit buses; refuse trucks, and motor 

home emissions.142 

GHG emissions from heavy-duty 

trucks are dominated by CO2 emissions, 

which comprise approximately 99% of 

the total, while hydrofluorocarbon and 

N2O emissions represent 0.5% and 

0.3%, respectively, of the total 

emissions on a CO2 equivalent basis. 

b. Potential for GHG Emissions 

Reductions From Heavy-Duty Trucks 

Based on the work from EPA’s 

SmartWay Transport Partnership and 

the 21st Century Truck Partnership, we 

see a potential for up to a 40% 

reduction in GHG emissions from a 

typical heavy-duty truck in the 2015 

timeframe, with greater reductions 

possible looking beyond 2015, through 

improvements in truck and engine 

technologies.143 While highly effective 

criteria pollutant control has been 

realized based on engine system 

regulation alone, the following sections 

make clear that GHG emissions 

improvements to truck technology 

provide a greater potential for overall 

140 Emissions data in this section are from the 

United States Environmental Protection Agency. 

Inventory of U.S. Greenhouse Gas Emissions and 

Sinks: 1990–2006. EPA 430–R–08–005. April 2008. 

141 Growth data in this section is from United 

States Department of Energy, Energy Information 

Administration. Annual Energy Outlook 2008. 

#DOE/EIA–0383. April 2008. 

142 Breakdown of emissions data in this section is 

from United States Environmental Protection 

Agency. MOVES model. April 8, 2008. 

143 21st Century Truck Partnership. Technology 

Roadmap for the 21st Century Truck Program. 

21CT–001. December 2000. http://www.doe.gov/ 

bridge. 

GHG emission reductions from this 

sector. 

In this section, we will provide a brief 

summary of the potential for GHG 

emission reductions in terms of engine 

technology, truck technology and 

changes to fleet operations. The public 

docket for this Advance Notice includes 

a technical memorandum from EPA staff 

summarizing this potential in greater 

detail.144 In discussing the potential for 

CO2 emission reductions, it can be 

helpful to think of work flow through a 

truck’s system. The initial work input is 

fuel. Each gallon of diesel fuel has the 

potential to produce some amount of 

work and will produce a set amount of 

CO2 (about 22 lbs. of CO2 per gallon of 

diesel fuel). The engine converts the 

chemical energy in the fuel to useable 

work to move the truck. Any reductions 

in work demanded of the engine by the 

vehicle or improvements in engine fuel 

conversion efficiency will lead directly 

to CO2 emission reductions. Current 

diesel engines are about 35% efficient 

over a range of operating conditions 

with peak efficiency levels of a little 

over 40%. This means that 

approximately one-third of the fuel’s 

chemical energy is converted to useful 

work and two-thirds is lost to waste heat 

in the coolant and exhaust. In turn, the 

truck uses this work output from the 

engine to overcome vehicle 

aerodynamic drag (53%), tire rolling 

resistance (32%), and friction in the 

vehicle driveline (6%) and to provide 

auxiliary power for components such as 

air conditioning and lights (9%).145 

While it may be intuitive to look first to 

the engine for CO2 reductions given that 

only about one-third of the fuel is 

converted to useable work, it is 

important to realize that any 

improvement in vehicle efficiency 

reduces both the work demanded and 

also the energy wasted in proportional 

amounts. 

In evaluating the potential to reduce 

GHG emissions from trucks and 

operations as a whole, it will be 

important to develop an appropriate 

metric to quantify GHG emission 

reductions. As discussed above, our 

current heavy-duty regulatory programs 

measure emissions expressed on a mass 

per work basis (g/bhp-hr). This 

approach has proven highly effective at 

controlling criteria pollutant emissions 

while normalizing the diverse range of 

144 Summary of GHG Emission Control 

Technologies for Heavy-Duty Trucks, Memorandum 

to Docket XXX, May 2008. 

145 Approximate truck losses at 65 mph from 21st 

Century Truck Partnership. 21st Century Truck 

Partnership Roadmap/Technical White Papers: 

Engine Systems. 21CT–003. December 2006. 

http://www.doe.gov/bridge. 

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heavy-duty vehicle applications to a 

single engine-based test metric. While 

such an approach could be applied to 

evaluate CO2 emission reductions from 

heavy-duty engines, it would not readily 

provide a mechanism to measure and 

compare reductions due to vehicle 

improvements. Hence, we will need to 

consider other performance metrics 

such as GHG emissions per ton-mile. 

We request comment on what types of 

metrics EPA should consider to measure 

and express GHG emission rates from 

heavy-duty trucks. 

We discuss below the wide range of 

engine, vehicle, and operational 

technologies available to reduce GHG 

emissions from heavy-duty trucks. Our 

discussion broadly assesses the 

availability of these technologies and 

their GHG emissions reduction 

potential. We request comment on all 

aspects of our current assessment 

summarized here and in more detail in 

our technical memorandum, including 

supporting data with regard to 

technology costs, GHG reduction 

effectiveness, the appropriate GHG 

metric to evaluate the technology and 

the timeframe in which these 

technologies could be brought into the 

truck market. More generally, we 

request comment on the overall GHG 

emissions reductions that can be 

achieved by heavy-duty trucks in the 

2015 and 2030 timeframes. 

i. Engine 

The majority of heavy-duty vehicles 

today utilize turbocharged diesel 

engines. Diesel engines are more 

efficient compared to gasoline engines 

due to the use of higher compression 

ratios, the ability to run with lean airfuel mixtures, and the ability to run 

without a throttle for load control. 

Modern diesel engines have a peak 

thermal efficiency of approximately 

42%, compared to gasoline engines that 

have a peak thermal efficiency of 30%. 

Turbochargers increase the engine’s 

power-to-weight ratio and recover some 

of the exhaust heat energy to improve 

the net efficiency of the engine. 

Additional engine improvements 

could increase efficiency through 

combustion improvements and 

reductions of parasitic and pumping 

losses. Increased cylinder pressure, 

waste heat recovery, and low viscosity 

lubricants could reduce CO2 emissions, 

but are not widely utilized in the heavyduty industry. Individual improvements 

have a small impact on engine 

efficiency, but a combination of 

approaches could increase efficiency by 

20% to achieve a peak engine efficiency 

of approximately 50%.146 

Waste heat recovery technologies, 

such as Rankine bottoming cycle, 

turbocompounding and thermoelectric 

materials, can recover and convert 

engine waste heat to useful energy, 

leading to improvements in the overall 

engine thermal efficiency and 

consequent reduction in CO2 emissions. 

We request comment on the potential of 

these technologies to lower both GHG 

emissions and overall heavy-duty 

vehicle operating costs. In section VI.D below, we discuss the 

Renewable Fuel Standard (RFS) 

program and more broadly the overall 

role of fuel changes to reduce GHG 

emissions. As we have previously 

noted, the Agency has addressed vehicle 

emissions through a systems-based 

approach that integrates consideration 

of fuel quality and vehicle or engine 

emission control systems. For example, 

removing lead from gasoline and sulfur 

from diesel fuel has enabled the 

introduction of very clean gasoline and 

diesel engine emission control 

technologies. A systems approach may 

be a means to address GHG emissions as 

well. Since 1989, European engine 

maker Scania has offered an ethanol 

powered heavy-duty diesel cycle engine 

with traditional diesel engine fuel 

efficiency (the current version offers 

peak thermal efficiency of 43%).147 

Depending on the ethanol production 

pathway, such an approach could offer 

a significant reduction in GHG 

emissions from a life cycle perspective 

when compared to more traditional 

diesel fuels. We request comment on the 

potential for a systems approach 

considering alternate fuel and engine 

technologies to reduce GHG emission 

from heavy-duty trucks. We also request 

comment on how EPA might structure 

a program to appropriately reflect the 

potential for such GHG emission 

reductions. 

ii. Vehicle systems 

An energy audit of heavy-duty trucks 

shows that vehicle efficiency is strongly 

influenced by systems outside of the 

engine. As noted above, aerodynamics, 

tire rolling resistance, drivetrain, and 

weight are areas where technology 

improvements can significantly reduce 

GHG emissions through reduced energy 

losses. The fuel savings benefits of many 

of these technologies often offset the 

146 21st Century Truck Partnership. 21st Century 

Truck Partnership Roadmap/Technical White 

Papers: Engine Systems. 21CT–003. December 2006. 

http://www.doe.gov/bridge. 147 Green Car Congress. Scania Extending HeavyDuty Ethanol Engine Technology to Trucks. April 

15, 2008. http://www.greencarcongress.com/2008/ 

04/scania-extendin.html (April 30, 2008). 

additional costs. Opportunities for HFC 

and additional CO2 reductions are 

available through improved air 

conditioning systems. 

For a typical combination tractortrailer truck traveling at 65 mph, energy 

losses due to aerodynamic drag can total 

over 21% of the total energy 

consumed.148 A recent study between 

industry and the federal government 

demonstrated that reducing the tractortrailer gap and adding trailer side skirts, 

trailer boat tails, and aerodynamic 

mirrors can reduce aerodynamic drag by 

as much as 23%. If aerodynamic drag 

were reduced from 21% to 15% (a 23% 

reduction), GHG emissions at 65 mph 

would be reduced by almost 12%.149 

The cost of aerodynamic equipment 

installed on a new or existing trailer is 

generally paid back within two years.150 

As aerodynamic designs become more 

sophisticated, more consistency in how 

aerodynamics is measured is needed. 

There is no single, consistent approach 

used by industry to measure the 

coefficient of aerodynamic drag of heavy 

trucks. As a result, it is difficult for 

fleets to understand which truck 

configurations have the lowest 

aerodynamic drag. We request comment 

on the best approach to evaluate 

aerodynamic drag and the impact of 

aerodynamic drag on truck GHG 

emissions. 

For a typical combination tractortrailer truck traveling at 65 mph, energy 

losses due to tire rolling resistance can 

total nearly 13% of the total energy 

consumed.151 Approximately 80–95% 

of the energy losses from rolling 

resistance occur as the tire flexes and 

deforms when it meets the road surface, 

due to viscoelastic heat dissipation in 

the rubber. For heavy trucks, a 10% 

reduction in rolling resistance can 

reduce GHG emissions by 1–3%.152 

Improvements of this magnitude and 

greater have already been demonstrated, 

and continued innovation in tire design 

148 21st Century Truck Partnership. Technology 

Roadmap for the 21st Century Truck Program. 

21CT–001. December 2000. http://www.doe.gov/ 

bridge. 149 United States Department of Energy, Lawrence 

Livermore National Laboratory. Working Group 

Meeting on Heavy Vehicle Aerodynamic Drag: 

Presentation, Summary of Contents and Conclusion. 

UCRL–TR–214683. May 2005. 150 Bachman, L. Joseph,; Anthony Erb; Cheryl 

Bynum. Effect of Single Wide Tires and Trailer 

Aerodynamics on Fuel Economy and NOx 

Emissions of Class 8 Line-Haul Tractor-Trailers. 

SAE Paper 2005–01–3551. 2005. 151 21st Century Truck Partnership. Technology 

Roadmap for the 21st Century Truck Program. 

21CT–001. December 2000. http://www.doe.gov/ 

bridge. 152 21st Century Truck Partnership. Technology 

Roadmap for the 21st Century Truck Program. 

21CT–001. December 2000. http://www.doe.gov/ 

bridge. 

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has the potential to achieve even larger 

improvements in the future. Specifying 

single wide tires on a new combination 

truck can have a lower initial cost and 

lead to immediate fuel savings.153 

Despite the well-understood benefits of 

lower rolling resistance tires, 

manufacturers differ in how they assess 

tire rolling resistance. We seek comment 

on the potential for low rolling 

resistance tires to lower GHG emissions, 

the need for consistent protocols to 

measure tire rolling resistance, and the 

need for a common ranking or rating 

system to provide tire rolling resistance 

information to the trucking industry. 

Hybrid technologies, both electric and 

hydraulic, offer significant GHG 

reduction potential. The hybrid 

powertrain is a combination of two or 

more power sources: an internal 

combustion engine and a second power 

source with an energy storage and 

recovery device. Trucks operating under 

stop-and-go conditions, such as urban 

delivery trucks and refuse trucks, lose a 

significant amount of energy during 

braking. In addition, engines in most 

applications are designed to perform 

under a wide range of requirements and 

are often oversized for the majority of 

their requirements. Hybrid powertrain 

technologies offer opportunities to 

capture braking losses and downsize the 

engine for more efficient operation. We 

invite comment on the potential of GHG 

reductions from hybrids in all types of 

heavy-duty applications. 

Currently most truck auxiliaries, such 

as the water pump, power steering 

pump, air conditioning compressor, air 

compressor and cooling fans, are 

mechanical systems typically driven by 

belts or gears off of the engine 

driveshaft. The auxiliary systems are 

inefficient because they produce power 

proportionate to the engine speed 

regardless of the actual vehicle 

requirements and require conversion of 

fuel energy to electrical or mechanical 

work. If systems were driven by 

electrical systems they could be 

optimized for actual requirements and 

reduced energy consumption. We 

request comment on the potential for 

these auxiliary systems to lower GHG 

emissions from heavy-duty trucks. 

Air conditioning systems are 

responsible for GHG emissions from 

refrigerant leakage and from the exhaust 

emissions generated by the engine to 

produce the load required to run the air 

conditioning. The emissions due to 

leakage can be reduced by the use of 

153 United States Environmental Protection 

Agency. A Glance at Clean Freight Strategies: Single 

Wide-Based Tires. EPA420–F–04–004. February 

2004. 

improved sealing designs, lowpermeation hoses, and refrigerant 

substitution. Replacing today’s 

refrigerant, HFC–134a, which has a high 

global warming potential (GWP=1,300), 

with HFC–152a (GWP=120) or CO2 

(GWP=1) reduces the impact of the air 

conditioning leakage on the 

environment.154 The load requirements 

of the air conditioning system can be 

reduced through the use of improved 

condensers, evaporators, and variable 

displacement compressors. We request 

comment on the impact of air 

conditioning improvements on GHG 

reductions in heavy-duty trucks. 

iii. Operational 

The operation of the truck, including 

idle time and vehicle speed, also has 

significant impact on the GHG 

emissions. Technologies that improve 

truck operation exist and provide 

benefits to owners through reduced fuel 

costs. 

Idling trucks emit a significant 

amount of CO2 emissions (as well as 

criteria pollutants). On average, a 

typical truck will emit 18 pounds of CO2 

per hour of idling.155 Long haul truck 

idle reduction technologies can reduce 

main engine idling while still meeting 

cab comfort needs. Some idle reduction 

technologies have no upfront cost for 

the truck owner and hence represent an 

immediate savings in operating costs 

with lower GHG emissions. Other idle 

reduction technologies pay back within 

three years.156 In addition to providing 

information about these systems, EPA 

seeks comment on whether it should 

work with stakeholders to develop a 

formal evaluation protocol for the 

effectiveness, cost, durability, and 

operability of various idle-reduction 

technologies. 

Vehicle speed is the single largest 

operational factor affecting CO2 

emissions from large trucks. A general 

rule of thumb is that every mph increase 

above 55 mph increases CO2 emissions 

by more than 1%. Speed limiters are 

generally available on new trucks or as 

a low-cost retrofit, and assuming a five 

mph decrease in speed, payback occurs 

within a few months.157 

154 Frey, H. Christopher and Po-Yao Kuo. Best 

Practices Guidebook for GHG Emissions Reductions 

in Freight Transportation. Prepared for U.S. 

Department of Transportation via Center for 

Transportation and the Environment. October 2007. 

Pages 26–27. 

155 United States Environmental Protection 

Agency. A Glance at Clean Freight Strategies: Idle 

Reduction. EPA420–F–04–009. February 2004. 

156 EPA SmartWay Transport Partnership, 

Technology Package Savings Calculator, http:// 

www.epa.gov/smartway/calculator/loancalc.htm. 

157 American Trucking Associations Petition to 

National Highway Traffic Safety Administration, 

Automatic tire inflation systems 

maintain proper inflation pressure, and 

thereby reduce tire rolling resistance. 

Studies indicate that automatic tire 

inflation systems result in about 0.5 to 

1% reduction of CO2 emissions for a 

typical truckload or less-than-truckload 

over-the-road trucking fleet.158 

Automatic tire inflation systems can pay 

back in less than four years, assuming 

typical underinflation rates. 

All of the technologies summarized 

here can provide real GHG reductions 

while providing value to the truck 

owner through reduced fuel 

consumption. We request comment on 

the potential of these specific 

technologies and on any other 

technologies that may allow vehicle 

operators to reduce overall GHG 

emissions. 

c. Regulatory Options for Reducing 

GHGs From Heavy-Duty Trucks 

In developing any GHG program for 

heavy-duty vehicles, we would rely on 

our past experience addressing the 

multifaceted characteristics of this 

sector. In the following sections, we 

discuss three potential regulatory 

approaches for reducing GHG emissions 

from the heavy-duty sector. We request 

comments on all aspects of these 

options. We also encourage commenters 

to suggest other approaches that EPA 

should consider to address GHG 

emissions from heavy-duty trucks, 

recognizing that there are some 

important differences between criteria 

air pollutants and GHG emissions. 

The heavy-duty engine manufacturers 

have made great strides in reducing 

criteria pollutant emissions. We know 

these same manufacturers have already 

achieved GHG emission reductions 

through the introduction of more 

efficient engine technologies, and have 

the potential to realize even greater 

reductions. We estimate that 

approximately 30% of the overall GHG 

emission reduction potential from this 

sector comes from engine 

improvements, 60% from truck 

improvements, and 10% from 

operational improvements based on the 

technologies outlined in the 21st 

Century Truck roadmap and Best 

Practices Guidebook for GHG Emissions 

Reductions in Freight Transportation. 

We request comment on our assessment 

(Docket NHTSA–2007–26851, Document ID 

NHTSA–2007–26851–0005), October 20, 2006, and 

American Trucking Associations Comment to 

Docket (Docket NHTSA–2007–26851, Document ID 

NHTSA–2007–26851–3708), March 27, 2007. 158 mission reduction and payback information 

from United States Environmental Protection 

Agency. A Glance at Clean Freight Strategies: 

Automatic Tire Inflation Systems. EPA420–F–04– 

010. February 2004. 

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of the relative contributions of engine, 

truck, and operational technologies. 

The first approach we could consider 

would be a regulatory program based on 

an engine CO2 standard or weighted 

GHG standard including N2O and 

methane. One advantage to this option 

is its simplicity because it preserves the 

current regulatory and market 

structures. The heavy-duty engine 

manufacturers are familiar with today’s 

certification testing and procedures. 

They have facilities, engine 

dynamometers, and test equipment to 

appropriately measure emissions. The 

same equipment and test procedures 

can be, and already are, used to measure 

CO2 emissions. Measuring and reporting 

N2O and methane emissions would 

require relatively simple additions to 

existing test cell instrumentation. We 

request comment regarding issues that 

EPA should consider in evaluating this 

option and the most appropriate means 

to address the issues raised. We 

recognize that an engine-based 

regulatory structure would limit the 

potential GHG emission reductions 

compared to programs that include 

vehicle technologies and the crediting of 

fleets for operational improvements. 

The other approaches considered below 

would have the potential to provide 

greater GHG reductions by providing 

mechanisms to account for vehicle and 

fleet operational changes. 

Recognizing that GHG emissions 

could be further reduced through 

improvements to both engines and 

trucks, we request comment on an 

alternative test procedure that would 

include vehicle aspects in an enginebased standard. This option would still 

be based on an engine standard. 

However, it would provide a 

mechanism to adjust the engine test 

results to account for improvements in 

vehicle design. For example, if through 

an alternate test procedure (e.g., a 

vehicle chassis test) a hybrid truck were 

shown to reduce GHG emissions by 

20%, under this option an engine based 

GHG test result could be adjusted 

downward by that same 20%. In this 

way, we could reflect a range of vehicle 

or perhaps even operational changes 

into an engine based regulatory 

program. In fact, we are already 

developing such an approach for a 

vehicle based change to provide a better 

mechanism to evaluate criteria 

emissions from hybrid vehicles.159 We 

are currently working with the heavyduty industry to develop these new 

159 As discussed in section VI.C.2, we have also 

applied a similar alternate test procedure approach 

in our new locomotive standards (see 40 CFR 

1033.530(h)). 

alternate test procedures and protocols. 

These new procedures could provide a 

foundation for regulatory programs to 

address GHG emissions as well. We 

request comment on the potential for 

alternate test procedures to reflect 

vehicle technologies in an engine based 

GHG regulatory program. 

A second potential regulatory option 

for heavy-duty truck GHG emissions 

would be to follow a model very similar 

to our current light-duty vehicle test 

procedures. Each truck model could be 

required to meet a GHG emissions 

standard based on a specified drive 

cycle. The metric for the standard could 

be either a weighted GHG gram/mile 

with prescribed test weight and payload 

or GHG gram/payload ton-mile to 

recognize that heavy-duty trucks 

perform work. This option would reflect 

an important change from our current 

regulatory approach for most heavyduty vehicles by direct regulation of 

trucks (and therefore truck 

manufacturers) rather than engines.160 

As discussed earlier in this section, we 

have historically regulated heavy-duty 

engines rather than vehicles reflecting 

in part the heavy-duty industry 

structure and in part the preeminence of 

engine technology in controlling NOX 

and PM emissions. Clearly truck design 

plays a much more important role in 

controlling GHG emissions due to 

significant energy losses through 

aerodynamic drag and tire rolling 

resistance, and therefore, this option 

directly considers the regulation of 

heavy-duty trucks. We request comment 

on all aspects of this option including 

the appropriate test metric, the need to 

develop new test procedures and 

potential approaches for grouping 

heavy-duty vehicles into subcategories 

for GHG regulatory purposes. 

As described earlier, there are a 

number of technologies and operational 

changes that heavy-duty fleet operators 

can implement to reduce both their 

overall operating costs and their GHG 

emissions. Therefore, a third regulatory 

option that could be considered as a 

complement to those discussed 

previously would be to allow heavyduty truck fleets to generate GHG 

emissions credits for applying 

technologies to reduce GHG emissions, 

such as idle reduction, vehicle speed 

limiters, air conditioning improvements, 

and improved aerodynamic and tire 

rolling resistance. In order to credit the 

use of such technologies, EPA would 

first need to develop procedures to 

160 For some years EPA has allowed gasoline and 

other non-diesel vehicle manufactures to certify to 

and comply with a vehicle based standard as 

compared to en engine based standard, at their 

option. See, e.g., 40 CFR 86.005–10. 

evaluate the potential for individual 

technologies to reduce GHGs. Such a 

procedure could be based on absolute 

metrics (g/mile or g/ton-mile) or relative 

metrics (percent reductions). We would 

further need to address a wide range of 

complex potential issues including 

mechanisms to ensure that the 

reductions are indeed realized in use 

and that appropriate assurance of such 

future actions could be provided at the 

time of certification, which occurs prior 

to the sale of the new truck. Such a 

regulatory program could offer a 

significant opportunity to reward 

trucking fleets for their good practices 

while providing regulatory flexibility to 

help address the great diversity of the 

heavy-duty vehicle sector. It would not 

lead to any additional GHG reductions, 

however, as the credits generated by the 

fleet operators would be used by the 

engine or vehicle makers to comply 

with their standards. We welcome 

comments on the merits and issues 

surrounding potential approaches to 

credit operational and technical changes 

from heavy-duty fleets to reduce GHG 

emissions. 

In considering the regulatory options 

available, we are cognizant of the 

significant burden that could result if 

these programs were to require testing of 

every potential engine and vehicle 

configuration related to its GHG 

emissions. Therefore, we have been 

following efforts in Japan to control 

GHG emissions through a regulatory 

program that relies in part on engine test 

data and in part on vehicle modeling 

simulation. As currently constructed, 

Japan’s heavy-duty fuel efficiency 

regulation considers engine fuel 

consumption, transmission type, and 

final drive ratio in estimating overall 

GHG emissions. Such a modeling 

approach may be a worthwhile first step 

and may be further improved by 

including techniques to recognize 

design differences in vehicle 

aerodynamics, tire rolling resistance, 

weight, and other factors. We request 

comment on the appropriateness of 

combining emissions test data with 

vehicle modeling results to quantify and 

regulate GHG emissions. In particular, 

we welcome comments addressing 

issues including model precision, 

equality aspects of model based 

regulation, and the ability to standardize 

modeling inputs. 

The regulatory approaches that we 

have laid out in this section reflect 

incremental steps along a potential path 

to fully address GHG emissions from 

this sector. These approaches should 

not be viewed as discrete options but 

rather as potential building blocks that 

could be mixed and matched in an 

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overall control program. Given the 

potential for significant burden, EPA is 

also interested in considering how 

flexibilities such as averaging, banking, 

and/or credit trading that may help to 

reduce costs may be built into any of the 

regulatory options discussed above. We 

request comment on all of the 

approaches described in this section 

and the potential to implement one or 

more of these approaches in a phased 

manner to capture the more 

straightforward approaches in the nearterm and the more complex approaches 

over a longer period. 

3. Highway Motorcycles 

The U.S. motorcycle fleet 

encompasses a vast array of types and 

styles, from small and light scooters 

with chainsaw-sized engines to large 

and heavy models with engines as big 

as those found in many family sedans. 

In 2006 approximately 850,000 highway 

motorcycles were sold in the U.S., 

reflecting a near-quadrupling of sales in 

the last ten years. Even as motorcycles 

gain in popularity, their overall GHG 

emissions remain a relatively small 

fraction of all mobile source GHG 

emissions. Most motorcycles are used 

recreationally and not for daily 

commuting, and use is seasonally 

limited in much of the country. For 

these reasons and the fact that the fleet 

itself is relatively small, total annual 

vehicle miles traveled for highway 

motorcycles is about 9.5 billion miles 

(as compared to roughly 1.6 trillion 

miles for passenger cars).161 

The Federal Highway Administration 

reports that the average fuel economy 

for motorcycles in 2003 was 50 mpg, 

almost twice that of passenger cars in 

the same time frame. However, 

motorcycles are generally designed and 

optimized to achieve maximum 

performance, not maximum efficiency. 

As a result, many high-performance 

motorcycles have fuel economy in the 

same range as many passenger cars 

despite the smaller size and weight of 

motorcycles. Recent EPA emission 

regulations are expected to reduce fuel 

use and hence GHG emissions from 

motorcycles by: (1) Leading 

manufacturers to increase the use of 

electronic fuel injection (replacing 

carburetors); (2) reducing permeation 

from fuel lines and fuel tanks; and (3) 

eliminating the use of two-stroke 

engines in the small scooter category.162 

There may be additional 

opportunities for further reductions in 

161 ‘‘Highway Statistics 2003,’’ U.S. Department of 

Transportation, Federal Highway Administration, 

Table VM–1, December 2004. 

162 See 69 FR 2398, January 15, 2004. 

GHG emissions. Options available to 

manufacturers may include 

incorporating more precise feedback 

fuel controls; controlling enrichment on 

cold starts and under load by 

electronically controlling choke 

operation; allowing lower idle speeds 

when the opportunity exists; optimizing 

spark for fuel and operating conditions 

through use of a knock sensor; and, like 

light-duty vehicles, reducing the engine 

size and incorporating a turbo-charger. 

The cost of these fuel saving and GHG 

reducing technologies may be offset by 

the fuel savings realized over the 

lifetime of the motorcycle. 

We request comment on information 

on what approaches EPA should 

consider for potential further reductions 

in GHG emissions from motorcycles. We 

also request comment and data 

regarding what technologies may be 

applicable to achieve further GHG 

reductions from motorcycles. 

C. Nonroad Sector Sources 

As discussed previously, CAA section 

213 provides broad authority to regulate 

emissions from a wide array of nonroad 

engines and vehicles,163 while CAA 

section 211 provides authority to 

regulate fuels and fuel additives from 

both on-highway and nonroad sources 

and CAA section 231 authorizes EPA to 

establish emissions standards for 

aircraft. Collectively, the Title II 

nonroad and fuel regulation programs 

developed by EPA over the past two 

decades provide a possible model for 

how EPA could structure a long-term 

GHG reduction program for nonroad 

engines and vehicles, fuels and aircraft. 

In this section, we first review and 

request comment on a number of 

petitions received by EPA requesting 

action to regulate GHG emissions from 

these sources and we highlight the 

similarities and key issues raised in 

those petitions. We invite comment on 

all of the questions and issues raised in 

these petitions. For each of three 

primary groupings, nonroad, marine, 

and aircraft, we then discuss and seek 

comment on the GHG emissions from 

these sources and the opportunities to 

reduce GHG emissions through design 

and operational changes. 

163 The Act does not define ‘‘vehicle’’, but we 

have interpreted section 213 from its inception to 

include the broad array of equipment, machines, 

and vessels powered by nonroad engines, including 

those that are not self-propelled, such as portable 

power generators. In keeping with common usage, 

we typically use the generic terms ‘‘equipment’’, 

‘‘machine’’, or ‘‘application’’, as well as the more 

application-specific terms ‘‘vehicle’’ and ‘‘vessel’’, 

to refer to these units, as appropriate. 

1. Petition Summaries 

Since the Massachusetts decision, 

EPA has received seven additional 

petitions requesting that we make 

endangerment findings and undertake 

rulemaking procedures using our 

authority under CAA sections 211, 213 

and 231 to regulate GHG 164 emissions 

from fuels, nonroad sources, and 

aircraft. The petitioners represent states, 

local governments, environmental 

groups, and nongovernmental 

organizations (NGO) including the states 

of California, New Jersey, New Mexico, 

Friends of the Earth, NRDC, OCEANA, 

International Center for Technology 

Assessment, City of New York, and the 

South Coast Air Quality Management 

District. Copies of these seven petitions 

can be found in the docket for this 

Advance Notice. Following is a brief 

summary of these petitions. We request 

comment on all issues raised by the 

petitioners. 

a. Marine Engine and Vessel Petitions 

The Agency has received three 

petitions to reduce GHG emissions from 

ocean-going vessels (OGVs). California 

submitted its petition on October 3, 

2007. A joint petition was filed on the 

same day by EarthJustice on behalf of 

three environmental organizations: 

Oceana, Friends of the Earth and the 

Center for Biological Diversity 

(‘‘Environmental Petitioners’’). A third 

petition was received from the South 

Coast Air Quality Management District 

(SCAQMD) on January 10, 2008. 

The California petition requests that 

EPA immediately begin the process to 

regulate GHG emissions from Category 3 

powered OGVs.165 According to the 

petition, the Governor of California has 

already recognized that, ‘‘California is 

particularly vulnerable to the impacts of 

climate change,’’ including the negative 

impact of increased temperature on the 

Sierra snowpack, one of the State’s 

primary sources of water, and the 

further exacerbation of California’s air 

quality problems.166 The petition 

outlines the steps California has already 

taken to reduce its own contributions to 

global warming and states that it is 

petitioning the Administrator to take 

action to regulate GHG emissions from 

164 While petitioners vary somewhat in their 

definition of GHGs, collectively they define carbon 

dioxide, methane, nitrous oxide, 

hydrofluorocarbons, perfluorocarbons, water vapor, 

sulfur hexaflouride, and soot or black carbon as 

GHGs. 

165 A category 3 vessel is one where the main 

propulsion engine(s) have a per-cylinder 

displacement of more than 30 liters. 

166 State of California, Petition for Rulemaking 

Seeking the Regulation of Greenhouse Gas 

Emissions from Ocean—Going Vessels, page3, 

October 3, 2007 (‘‘California Petition’’). 

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OGVs because it believes national 

controls will be most effective. 

California makes three key points in 

its petition. First, California claims that 

EPA has clear authority to regulate OGV 

GHG emissions under CAA section 

213(a)(4). The State points out that the 

‘‘primary substantive difference’’ 

between CAA section 202(a)(1), which 

the Supreme Court found authorizes 

regulation of GHGs emissions from new 

motor vehicles upon the Administrator 

making a positive endangerment 

finding, and section 213 is that section 

202(a)(1) requires regulation if such an 

endangerment finding is made while 

section 213(a)(4) authorizes, but does 

not require, EPA to regulate upon 

making the requisite endangerment 

finding. But petitioner states that EPA’s 

discretion to decide whether to regulate 

OGVs under section 213(a)(4) is 

constrained in light of the overall 

structure and purpose of the CAA. 

Citing the Massachusetts decision, 

California asserts that the Supreme 

Court has ‘‘set clear and narrow limits 

on the kinds of reasons EPA may 

advance for declining to regulate 

significant sources of GHGs’’. 

The second claim California makes is 

that international law does not bar 

regulation of GHG emissions from 

foreign-flagged vessels by the U.S. 

California asserts that U.S. laws can 

operate beyond U.S. borders (referred to 

as extra-territorial operation of laws) 

when the conduct being regulated 

affects the U.S. and where Congress 

intended such extra-territorial 

application.167 Petitioner believes that 

such application of the CAA is both 

‘‘permissible and essential in this case’’ 

because to effectively control GHG 

emissions from shipping vessels, the 

EPA must regulate foreign-flagged 

vessels since they comprise 95% of the 

fleet calling on U.S. ports.168 Petitioner 

cites two other instances where the U.S. 

has regulated foreign-flagged vessels. 

First, in Specto v. Norwegian Cruiseline. 

545 U.S. 119 (2005), the Supreme Court 

held that the Americans with 

Disabilities Act (ADA) could be applied 

to foreign-flagged cruise ships that 

sailed from U.S. ports as long as the 

required accommodations for disabled 

passengers did not require major, 

permanent modification to the ships 

involved. Second, the National Park 

Service recently imposed air pollutant 

emissions controls on cruise ships, 

including foreign-flagged cruise ships 

that sail off the coast from Glacier Bay 

167 Petitioners cite EEOC v. Arabian American Oil 

Co., 499 U.S. 244 (1991) (‘‘Aramco’’) as supporting 

this principle. 

168 California Petition, page 13. 

National Park, Alaska. The petitioner 

points out that in this case they did so 

to protect and preserve the natural 

resources of the Park, which is 

analogous to California’s reasons for 

why EPA must regulate GHG emissions 

from foreign-flagged vessels.169 

The third claim raised in California’s 

petition is that technology is currently 

available to reduce GHG emissions from 

these vessels, either through NOX 

reductions or by reducing fuel 

consumption. Options include, using 

marine diesel fuel oil instead of bunker 

fuel, using selective catalytic reductions 

and exhaust gas recirculation or by 

reducing speed. Petitioner states that the 

Clean Air Act was intended to be a 

technology-forcing statute and that EPA 

can and should consider OGV control 

measures that force the development of 

new technology. 

California requests three forms of 

relief: (1) That EPA make a finding that 

carbon dioxide emissions from new 

marine engines and vessels significantly 

contribute to air pollution which may 

reasonably be anticipated to endanger 

public health and welfare; (2) that EPA 

use its CAA section 213(a)(4) authority 

to adopt regulations specifying 

emissions standards for CO2 emissions 

from these engines and vessels; and (3) 

that EPA adopt regulations specifying 

fuel content or type necessary to carry 

out the emission standards adopted for 

new marine engines. 

The second group requesting EPA 

action on OGVs, Environmental 

Petitioners, believes that climate change 

threatens public health and welfare and 

that marine shipping vessels make a 

significant contribution to GHG 

emissions, and that therefore EPA 

should quickly promulgate regulations 

requiring OGVs to meet emissions 

standards by ‘‘operating in a fuelefficient manner, using cleaner fuels 

and/or employing technical controls, so 

as to reduce emissions of carbon 

dioxide, nitrous oxide, and black 

carbon.’’ These petitioners further state 

that EPA should also control ‘‘the 

manufacture and sale of fuels used in 

marine shipping vessels by imposing 

fuel standards’’ to reduce GHG 

emissions.170 

The Environmental Petitioners focus 

their petition on four specific 

arguments. First, like California, they 

assert that OGVs play a significant role 

in global climate change. They focus on 

169 Petitioners cite regulations found at 36 CFR 

13.65 (b)(4) and 61 FR 27008, at 27011. 

170 Environmental Petition, Petition for 

Rulemaking Under the Clean Air Act to Reduce the 

Emissions of Air Pollutants from Marine Shipping 

Vessels that Contribute to Global Climate Change, 

page 2, October 3, 2007. 

the emissions of four pollutants: CO2, 

NOX, N20, and black carbon (also known 

as soot). Petitioners cite numerous 

studies that they assert document that 

the impact of these GHG emissions are 

significant today and that industry 

trends indicate these emissions will 

grow substantially in future decades. 

Second, petitioners lay out a detailed 

legal argument asserting that EPA has 

clear authority to regulate these four air 

pollutants from OGVs, and contending 

that the Massachusetts decision must 

guide EPA’s actions as it decides how to 

regulate GHG emissions from OGVs. 

Third, petitioners discuss a number of 

regulatory measures that can effectively 

reduce GHG emissions from OGVs and 

which EPA could adopt using its 

regulatory authority under CAA section 

213(a)(4), including measures requiring 

restrictions on vessel speed; requiring 

the use of cleaner fuels in ships and 

other technical and operations measures 

petitioners believe are relatively easy 

and cost-effective. Lastly, petitioners 

assert that the CAA section 213 provides 

EPA with clear authority to regulate 

GHG emissions from both new and 

remanufactured OGV engines as well as 

from foreign-flagged vessels. 

SCAQMD petition also requests 

Agency action under section 213 of the 

CAA and states that it has a strong 

interest in the regulation of GHG 

emissions from ships including 

emissions of NOX, PM, and CO2. 

SCAQMD states that the net global 

warming effect of NOX emissions is 

potentially comparable to the climate 

effect from ship CO2 emissions and that 

PM emissions from ships in the form of 

black carbon can also increase climate 

change.171 Finally, because 

international shipping activity is 

increasing yearly, SCAQMD asserts that 

if EPA dos not act quickly, future ship 

pollution will become even worse, 

increasing both ozone and GHG levels 

in the South Coast area of California. As 

with other petitioners, SCAQMD states 

that there is a clear legal basis for EPA 

to regulate ships GHG emissions under 

section 213(a)(4). 

SCAQMD makes two additional 

assertions in its petition which mirror 

the California and Environmental 

Petitions. First, EPA can avoid 

regulation of ship GHG emissions only 

if it determines that ‘‘endangerment’’ 

can be avoided without regulation of 

ship emissions.172 Second, SCAQMD 

believes that EPA has the authority to 

regulate foreign-flagged vessels under at 

171 SCAQMD, Petition for Rulemaking under the 

Clean Air Act to Reduce Global Warming Pollutants 

from Ships, page 2, January 10, 2008. 

172 SCAQMD Petition, page 9. 

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least two circumstances: (1) For a 

foreign owned and operated vessel, 

where the regulation(s) would not 

interfere with matters that ‘‘involve only 

the internal order and discipline of the 

vessel,’’ Spector v. Norwegian Cruise 

Lines, 545 U.S. 119, 131 (2005), and (2) 

where the vessel is owned and operated 

by a U.S. corporation, even if it is 

foreign-flagged.173 

SCAQMD requests two types of relief: 

(1) That EPA, within six months of 

receiving its petition, make a positive 

endangerment determine for CO2, NOX, 

and black carbon emissions from new 

marine engines and vessels ‘‘because of 

their contribution to climate change;’’ 

and (2) that EPA promulgate regulations 

under CAA section 213 (a)(4) to obtain 

the maximum feasible reductions in 

emissions of these pollutants. We invite 

comment on all elements of the 

petitioners’ assertions and requests. 

b. Aircraft Petitions 

The Agency has received two 

petitions to reduce GHG emissions from 

aircraft.174 The first petition was 

submitted on December 4, 2007, by 

California, Connecticut, New Jersey, 

New Mexico, Pennsylvania’s 

Department of Environmental 

Protection, the City of New York, the 

District of Columbia, and the SCAQMD 

(‘‘State Petitioners’’). A second petition 

was filed on December 31, 2007, by 

Earthjustice on behalf of four 

environmental organizations: Friends of 

the Earth, Oceana, Center for Biological 

Diversity and NRDC (‘‘Environmental 

Petitioners’’). 

All petitioners request that EPA 

exercise its authority under section 

231(a) of the CAA to regulate GHG 

emissions from new and existing aircraft 

and/or aircraft engine operations, after 

finding that aircraft GHG emissions 

cause or contribute to air pollution 

which may reasonably be anticipated to 

endanger public health or welfare.175 

173 SCAQMD Petition, page10. 

174 While aircraft engines are not ‘‘nonroad 

engines’’ as defined in CAA section 216(10) and 

aircraft are not ‘‘nonroad vehicles’’ as defined in 

CAA section 216(11), such that aircraft could be 

subject to regulation under CAA section 213, for 

organizational efficiency we include aircraft in this 

‘‘Nonroad Sector Sources’’ section of today’s notice. 

175 Petitioners maintain that aircraft engine 

emissions of CO2, NOX, water vapor, carbon 

monoxide, oxides of sulfur, and other trace 

components including hydrocarbons such as 

methane and soot contribute to global warming and 

that in 2005, aircraft made up 3% of U.S. CO2 

emissions from all sectors, and 12% of such 

emissions from the transportation sector. States of 

California et al, Petition for Rulemaking Seeking the 

Regulation of Greenhouse Gas Emissions from 

Aircraft, page 11, December 4, 2007, and Friends of 

the Earth et al., Petition for Rulemaking under the 

Clean Air Act to Reduce the Emissions of Air 

Petitioners suggest that these regulations 

could allow compliance through 

technological controls, operational 

measures, emissions fees, or a cap-andtrade system. 

Both petitions discuss how aircraft 

engines emit GHG emissions which they 

assert have a disproportionate impact on 

climate change. Petitioners cite a range 

of scientific documents to support their 

statements. They assert that groundlevel aircraft NOX, a compound they 

identify as a GHG, contributes to the 

formation of ozone, a relatively shortlived GHG. NOX emissions in the upper 

troposphere and tropopause, where 

most aircraft emissions occur, result in 

greater concentrations of ozone in those 

regions of the atmosphere compared to 

ground level ozone formed as a result of 

ground level aircraft NOX emissions. 

Petitioners contend that aircraft 

emissions contribute to climate change 

also by modifying cloud cover patterns. 

Aircraft engines emit water vapor, 

which petitioners identify as a GHG that 

can form condensation trails, or 

‘‘contrails,’’ when released at high 

altitude. Contrails are visible line 

shaped clouds composed of ice crystals 

that form in cold, humid atmospheres. 

Persistent contrails often evolve and 

spread into extensive cirrus cloud cover 

that is indistinguishable from naturally 

occurring cirrus clouds. The petitioners 

state that over the long term this 

contributes to climate change. 

State Petitioners highlight the effects 

climate change will have in California 

and the City of New York as well as 

efforts underway in both places to 

reduce GHG emissions. They argue that 

without federal government regulation 

of GHG emissions from aircraft, their 

efforts at mitigation and adaptation will 

be undermined. Both petitioners urge 

quick action by EPA to regulate aircraft 

GHG emissions since these emissions 

are anticipated to increase considerably 

in the coming decades due to a 

projected growth in air transport both in 

the United States and worldwide. They 

cite numerous reports to support this 

point, including an FAA report, which 

indicates that by 2025 emissions of CO2 

and NOX from domestic aircraft are 

expected to increase by 60%.176 

We request comment on all issues 

raised in the petitions, particularly on 

two assertions made by Environmental 

Petitioners: (1) That technology is 

available to reduce GHG emissions from 

Pollutants from Aircraft that Contribute to Global 

Climate Change, pages 6–7, December 31, 2007. 

176 FAA, Office of Environment and Energy, 

Aviation and Emission: A Primer, January 2005, 

page 10, available at http://www.faa.gov/ 

regulations_policies/policy_guidance/envir_policy/ 

media/aeprimer.pdf. 

aircraft allowing EPA to take swift 

action, and (2) that EPA has a 

mandatory duty to control GHG 

emissions from aircraft and can fulfill 

this duty consistent with international 

law governing aircraft. In addition, we 

invite comment on the petitioners’ 

assessment of the impact of aircraft GHG 

emissions on climate change, including 

the scientific understanding of these 

impacts, and whether aircraft GHG 

emissions cause or contribute to air 

pollution which may reasonably be 

anticipated to endanger public health or 

welfare. 

With regard to technology, petitioners 

highlight existing and developing 

aviation procedures and technologies 

which could reduce GHG emissions 

from new and existing aircraft. For 

example, they point to various aviation 

operations and procedures including 

minimizing engine idling time on 

runways and employing single engine 

taxiing that could be undertaken by 

aircraft to reduce GHG emissions. 

Petitioners also discuss the availability 

of more efficient aircraft designs to 

reduce GHG emissions, such as 

reducing their weight, and they suggest 

that using alternative fuels could also 

reduce aviation GHG emissions. 

Environmental Petitioners contend 

that once EPA makes a positive 

endangerment finding for aircraft GHG 

emissions, EPA has a mandatory duty to 

act, but that the potential regulatory 

responses available to EPA are quite 

broad and should be considered for all 

classes of aircraft, including both new 

and in-use aircraft and aircraft engines. 

In addition, petitioners argue that EPA’s 

authority to address GHG emissions 

from aircraft is consistent with 

international law-in particular the 

Convention on International Civil 

Aviation (the ‘‘Chicago Convention’’)— 

and that the United States’’ obligations 

under the Convention do not constrain 

EPA’s authority to adopt a program that 

addresses aviation’s climate change 

impacts, including those from foreign 

aircraft. 

The State and Environmental 

Petitioners each request the following 

relief: (1) That EPA make an explicit 

finding under CAA section 231(a)(2)(A) 

that GHG emissions from aircraft cause 

or contribute to air pollution which may 

reasonably be anticipated to endanger 

public health or welfare; (2) that EPA 

propose and adopt standards for GHG 

emissions from both new and in-use 

aircraft as soon as possible; (3) that EPA 

adopt regulations that allow a range of 

compliance approaches, including 

emissions limits, operations practices 

and/or fees, a cap-and-trade system, as 

well as measures that are more near-

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term, such as reduced taxi time or use 

of ground-side electricity measures. The 

Environmental Petitioners’ also request 

that EPA issue standards 90 days after 

proposal. We invite comment on all 

elements of the petitioners’ assertions 

and requests, as well as the scientific 

and technical basis for their assertions 

and requests. 

c. Nonroad Engine and Vehicle Petitions 

On January 29, 2008, EPA received 

two petitions to reduce GHG emissions 

from nonroad engines and vehicles. The 

first petition was submitted by 

California, Connecticut, Massachusetts, 

New Jersey and Oregon and 

Pennsylvania’s Department of 

Environmental Protection (‘‘State 

Petitioners’’). The second petition was 

submitted by the Western 

Environmental Law Center on behalf of 

three nongovernmental organizations: 

the International Center for Technology 

Assessment, Center for Food Safety, and 

Friends of the Earth (‘‘NGO 

Petitioners’’). 

Both petitions request that EPA 

exercise its authority under CAA section 

213(a)(4) to adopt emissions standards 

to control and limit GHG emissions 

from new nonroad engines excluding 

aircraft and vessels. Both petitions seek 

EPA regulatory action on a wide range 

of nonroad engines and equipment, 

which the petitioners believe, contribute 

substantially to GHG emissions, 

including outdoor power equipment, 

recreational vehicles, farm and 

construction machinery, lawn and 

garden equipment, logging equipment 

and marine vessels.177 

The State Petitioners, mirroring the 

earlier State petitions on ocean-going 

vessels and aircraft, describe the harms 

which they believe will occur due to 

climate change, including reduced 

water supplies, increased wildfires, and 

threats to agricultural outputs in 

California; loss of coastal wetlands, 

beach erosion, saltwater intrusion of 

drinking water in Massachusetts and 

Connecticut; and similar harms to the 

Pennsylvania, New Jersey and Oregon. 

The petition highlights actions that 

California has already taken to reduce 

its own contributions to global warming 

but points out that only EPA has 

authority to regulate emissions from 

new farm and construction equipment 

177 The two petitions request that EPA regulate 

slightly different categories of nonroad engines and 

vehicles under CAA section 213. State Petitioners 

exclude from their request aircraft, locomotives and 

ocean-going vessels and do not include rebuilt 

heavy-duty engines. The NGO Petitioners exclude 

only aircraft and ocean-going vessels but also 

request that EPA use its CAA section 202 authority 

to regulate GHG emissions from rebuilt heavy-duty 

engines. 

under 175 horsepower, ‘‘which 

constitutes a sizeable portion of all 

engines in this category.* * * ’’ 178 

The State Petitioners present three 

claims which, they believe compel EPA 

action to reduce GHG emissions from 

nonroad sources. First, petitioners claim 

that GHG emissions from these sources 

are significant.179 Petitioners cite 

various reports documenting national 

GHG emissions from a broad range of 

nonroad categories which, they contend, 

provide evidence that nonroad GHG 

emissions are already substantial, and 

will continue to increase in the future. 

Petitioners, also cite additional 

inventory reports that nonroad GHG 

emissions already exceed total U.S. 

GHG emissions from aircraft as well as 

from boats and ships, rail, and pipelines 

combined.180 Petitioner’s present 

California nonroad GHG emissions data 

which, they contend, mirror national 

GHG emission trends for nonroad 

engines and bolster their claim that 

GHG emissions from the nonroad sector, 

as a whole, are significant and are 

substantial for three categories: 

Construction and mining equipment, 

agricultural, and industrial equipment. 

State Petitioners’ second claim is that 

EPA has the authority to regulate GHG 

emissions from nonroad sources, 

although they acknowledge that CAA 

section 213(a)(4) is discretionary. 

Petitioners contend this discretion is not 

unlimited and that the structure of the 

CAA must guide EPA’s actions. 

Petitioners maintain that since the CAA 

prohibits States from undertaking their 

traditional police power role in 

regulating pollution from new 

construction or agricultural sources 

under 175 horsepower, ‘‘Congress has 

implicitly invested EPA with the 

responsibility to act to prevent [these] 

harmful emissions.’’ The third and final 

claim raised by State Petitioners is that 

both physical and operational controls 

are currently available to achieve fuel 

savings and/or to limit GHG emissions. 

Such measures include idle reduction, 

electrification of vehicles, the use of 

hybrid or hydraulic-hybrid technology, 

as well as use of ‘‘cool paints’’ that 

reduce the need for air conditioning. 

178 States Petition for Nonroad, page 7–8. 

179 Petitioners indicate that in 2007, nontransportation mobile vehicles and equipment were 

responsible for approximately 220 million tons of 

CO2 emissions (data derived from EPA’s Nonroad 

Emissions model for 2007). State of California et al, 

Petition for Rulemaking Seeking the Regulation of 

Greenhouse Gas Emissions from Nonroad Vehicles 

and Engines, page 8, January 29, 2008, and 

International Center for Technology Assessment et 

al, Petition for Rulemaking Seeking the Regulation 

of Greenhouse Gas Emissions from Nonroad 

Vehicles and Engines, page 5, January 29, 2008. 

180 State Petition for Nonroad, page 9. 

NGO petitioners make three similar 

claims in their petition. First, 

petitioners argue that serious public 

health and environmental consequences 

are projected for this century unless 

effective and timely action is taken to 

mitigate climate change. Petitioners 

further contend that GHG emissions 

from nonroad engines and vehicles are 

responsible for a significant and 

growing amount of GHG emissions and, 

like the State petitioners previously, 

they highlight three nonroad sectors 

responsible for a large portion of these 

GHG emission—construction, mining, 

and agriculture. 

Petitioners’ second claim is that once 

EPA renders a positive endangerment 

determination under CAA section 202 

for motor vehicles and engines, this 

finding should also satisfy the 

endangerment determination required 

under CAA section 213(a)(4) for 

nonroad engines. EPA’s discretion 

under CAA section 213(a)(4) is limited, 

petitioners assert, by the relevant 

statutory considerations, as held by the 

Supreme Court in Massachusetts v. 

EPA, so that the Agency ‘‘can decline to 

regulate nonroad engine and vehicle 

emissions only if EPA determines 

reasonably that such emissions do not 

endanger public health or welfare, or 

else, taking into account factors such as 

cost, noise, safety and energy, no such 

regulations would be appropriate.’’ 181 

Like State petitioners, NGOs point out 

that because the CAA restricts states’ 

ability to regulate pollution from new 

construction or farm vehicles and 

engines under 175 horsepower, 

Congress ‘‘implicitly invested EPA with 

unique responsibility to act in the 

states’’ stead so as to prevent such 

harmful emissions.’’ Petitioners also 

argue that the National Environment 

Policy Act (NEPA) section 101(b) 

compels EPA action to fulfill its duty 

‘‘as a trustee of the environment for 

succeeding generations.’’ 

NGO Petitioners’ third claim is that a 

wide range of technology is currently 

available to reduce GHG emissions from 

nonroad engines and vehicles and that, 

in addition, the CAA was intended to be 

a technology-forcing statute so that EPA 

‘‘can and should’’ establish regulations 

that ‘‘substantially limit GHG 

emissions.* * * even where those 

regulations force the development of 

new technology.’’ Regarding technology 

availability, petitioners provide a list of 

technologies that they believe are 

currently available to reduce GHG 

emissions from nonroad vehicles and 

engines, including auxiliary power unit 

systems to avoid engine use solely to 

181 NGO Petition, page 8. 

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heat or cool the cab; tire inflation 

systems; anti-idling standards; use of 

hybrid or hydraulic-hybrid technology; 

use of low carbon fuels; and use of low 

viscosity lubricants. 

Both State and NGO Petitioners 

request three types of relief: (1) That 

EPA make a positive endangerment 

determination for GHG emissions from 

nonroad vehicles and engines; 182 (2) 

that EPA adopt regulations to reduce 

GHG emissions from this sector; and (3) 

that regulations necessary to carry out 

the emissions standards also be 

adopted.183 We invite comment on all of 

the petitioners’ assertions and requests. 

2. Nonroad Engines and Vehicles 

In this section, we discuss the GHG 

emissions and reduction technologies 

that are or may be available for the 

various nonroad engines and vehicles 

that are the subject of the petitioners 

described above. Since section 213 was 

added to the CAA in 1990, the Agency 

has completed a dozen major 

rulemakings which established 

programs that reduce traditional air 

pollutants from nonroad sources by over 

95%, benefitting local, regional, and 

national air quality. EPA’s approach has 

been to set standards based on 

technology innovation, with flexibility 

for the regulated industries to meet 

environmental goals through continued 

innovation that can be integrated with 

marketing plans. 

With help from industry, 

environmental groups and state 

regulators, EPA has designed nonroad 

regulatory programs that have resulted 

in significant air quality gains with little 

sacrifice of products’ ability to serve 

their purpose. In fact, manufacturers 

have generally added new features and 

performance improvements that are 

highly desirable to users. Because GHG 

reductions from nonroad sources can be 

derived from fuel use reductions that 

directly benefit the user’s bottom line, 

we expect that manufacturers’ incentive 

to increase the fuel efficiency of their 

products will be even stronger in the 

future. This potential appears higher for 

nonroad engines compared to highway 

engines because in the past energy 

consumption has been less of a focus in 

the nonroad sector, so there may be 

more opportunity for improvement, 

while at the same time higher fuel 

182 In addition, NGO Petitioners also request that 

EPA make a determination under CAA section 202 

(a)(3)(D) that GHG emissions from rebuilt heavyduty engines also are significant contributors to air 

pollution which may reasonably be anticipated to 

endanger public health and welfare. NGO Petition, 

page 11. 

183 State Petitioners indicate that adopting 

regulations specifying fuel type, for example, may 

be necessary to carry out the emission limitations. 

prices are now beginning to make fuel 

expenses more important to potential 

equipment purchasers. 

The Agency and regulated industries 

have in the past grouped nonroad 

engines in a number of ways. The first 

is by combustion cycle, with two 

primary cycles in use: compressionignition (CI) and spark-ignition (SI). The 

combustion cycle is closely linked to 

grouping by fuel type, because CI 

engines largely burn diesel fuel while SI 

engines burn gasoline or, for forklifts 

and other indoor equipment, liquefied 

petroleum gas (LPG). It has also been 

useful to group nonroad engines by 

application category. Regulating 

nonroad engine application categories 

separately has helped the Agency create 

effective control programs, due to the 

nonroad sector’s tremendous diversity 

in engine types and sizes, equipment 

packaging constraints, affected 

industries, and control technology 

opportunities. Although for the sake of 

discussion we use these application 

groupings, we solicit comment on what 

grouping engines and applications 

would make the most sense for GHG 

regulation, especially if flexible 

emissions credit and averaging concepts 

are pursued across diverse applications. 

a. Nonroad Engine and Vehicle GHG 

Emissions 

Nonroad engines emitted 249 million 

metric tons of CO2 in 2006, 12% of the 

total mobile source CO2 emissions.184 

CO2 emissions from the nonroad sector 

are expected to increase significantly in 

the future, approximately 46% between 

2006 and 2030. Diesel engines emit 71% 

of the total nonroad CO2 emissions. The 

other 29% comes from gasoline, LPG, 

and some natural gas-fueled engines. 

CO2 emissions from individual nonroad 

application categories in decreasing 

order of prominence are: Nonroad diesel 

(such as farm tractors, construction and 

mining equipment), diesel locomotives, 

small SI (such as lawn mowers, string 

trimmers, and portable power 

generators), large SI (such as forklifts 

and some construction machines), 

recreational marine SI, and recreational 

offroad SI (such as all terrain vehicles 

and snowmobiles). 

GHG emissions from nonroad 

applications are dominated by CO2 

emissions which comprise 

approximately 97% of the total. 

Approximately 3% of the GHG 

emissions (on a CO2 equivalent basis) 

from nonroad applications are due to 

184 Emissions data in this section are from 

Inventory of U.S. Greenhouse Gas Emissions and 

Sinks: 1990–2006. EPA 430–R–08–005. April 2008, 

and EPA NONROAD2005a model. 

hydrofluorocarbon emissions, mainly 

from refrigerated rail transport. Methane 

and N2O make up less than 0.2% of the 

nonroad sector GHG emissions on a CO2 

equivalent basis. Much of the following 

discussion focuses on technology 

opportunities for CO2 reduction, but we 

note that these technologies will 

generally reduce N2O and methane 

emissions as well, and we ask for 

comment on measures and options for 

specifically addressing N2O and 

methane emissions. 

b. Potential for GHG Reductions From 

Nonroad Engines and Vehicles 

The opportunity for GHG reductions 

from the nonroad sector closely 

parallels the highway sector, especially 

for the heavy-duty highway and 

nonroad engines that share many design 

characteristics. In addition, there is 

potential for significant further GHG 

reductions from changes to vehicle and 

equipment characteristics. A range of 

GHG reduction opportunities is 

summarized in the following 

discussion. Comment is requested on 

these opportunities and on additional 

suggestions for reducing GHGs from 

nonroad sources. 

It should be noted that any means of 

reducing the energy requirements 

necessary to power a nonroad 

application can yield the desired 

proportional reductions of GHGs (and 

other pollutants as well). Although in 

past programs, the Agency has typically 

focused on a new engine’s emissions per 

unit of work, such as gram/brake 

horsepower-hour (g/bhp-hr), it may 

prove more effective to achieve GHG 

reductions by redesigning the 

equipment or vehicle that the engine 

powers so that the nonroad application 

accomplishes its task while expending 

less energy. Improvements such as these 

do not show up in measured g/bhp-hr 

emissions levels, but would be reflected 

in some other metric such as grams 

emitted by a locomotive in moving a ton 

of freight one mile. 

EPA solicits comment on possible 

nonroad GHG emissions reduction 

strategies for the various ‘‘pathways’’ by 

which GHGs can be impacted. Although 

it is obvious that internal combustion 

engines emit GHGs via the engine 

exhaust, it is helpful to take the analysis 

to another level by putting it in the 

context of energy use and examining the 

pathways by which energy is expended 

in a nonroad application, such as 

through vehicle braking. Because of the 

diversity of nonroad applications, we 

are taking a different approach here than 

in other sections of this notice: first, we 

summarize some of the engine, 

equipment, and operational pathways 

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and opportunities for GHG reductions 

that are common to all or at least a large 

number of nonroad applications; next, 

we examine more closely just one of the 

hundreds of nonroad applications, 

locomotives, to illustrate the many 

additional application-specific 

pathways for GHG reductions that are 

available. Our assessment is that, 

despite the great diversity in nonroad 

applications, technology-based 

solutions exist for every application to 

achieve cost-effective and substantial 

GHG emissions reductions. 

i. Common GHG Reduction Pathways 

To ensure that this advance notice 

initiates the widest possible discussion 

of potential GHG control solutions, the 

following discussion includes all three 

types of possible control measures: 

engine, equipment, and operational. 

(1) Engine Pathways 

To date, improving fuel usage in 

many nonroad applications has not been 

of great concern to equipment users and 

therefore to designers. There is potential 

for technologies now fairly 

commonplace in the highway sector, 

such as advanced lubricants and greater 

use of electronic controls, to become 

part of an overall strategy for GHG 

emissions reduction in the nonroad 

sector. We welcome comment on the 

opportunities and limitations of doing 

so. 

One engine technology in particular 

warrants further discussion. Two-stroke 

gasoline engines have been popular 

especially in handheld lawn care 

applications and recreational vehicles 

because they are fairly light and 

inexpensive. However, they also 

produce more GHGs than four-stroke 

engines. Much progress has been made 

in recent years in the development of 

four-stroke engines that function well in 

these applications. We ask for comment 

on the extent to which a shift to fourstroke engines would be feasible and 

beneficial. 

Although today’s nonroad gasoline 

and diesel engines produce significantly 

less GHGs than earlier models, further 

improvements are possible. Engine 

designers are continuing to work on 

new designs incorporating technologies 

that produce less GHGs, such as 

homogeneous charge CI, waste heat 

recovery through turbo compounding, 

and direct fuel injection in SI engines. 

Most of this work has already been done 

for the automotive sector where 

economies of scale can justify the large 

investments. Much of this innovation 

can eventually be adapted to nonroad 

applications, as has occurred in the past 

with such technologies as electronic 

fuel injection and common rail fueling. 

We therefore request comment on the 

feasibility and potential for these 

advanced highway sector technologies, 

discussed in section VI.B, to be 

introduced or accelerated in the 

nonroad sector. 

(2) Equipment and Operational 

Pathways 

Technology solutions in both the 

equipment design and operations can 

reach beyond the engine improvements 

to further reduce GHG emissions. We 

broadly discuss the following 

technologies below: Regenerative energy 

recovery and hybrid power trains, CVT 

transmissions, air conditioning 

improvements, component design 

improvements, new lighting 

technologies, reduced idling, and 

consumer awareness. 

Locomotives, as an example, have 

significant potential to recover energy 

otherwise dissipated as heat during 

braking. An 8,000-ton coal train 

descending through 5,000 feet of 

elevation converts 30 MW-hrs of 

potential energy to frictional and 

dynamic braking energy. Storing that 

energy on board quickly enough to keep 

up with the energy generation rate 

presents a challenge, but may provide a 

major viable GHG emissions reduction 

strategy even if only partially effective. 

Another regenerative opportunity 

relates to the specific, repetitive, 

predictable work tasks that many 

nonroad machines perform. For 

example, a forklift in a warehouse may 

lift a heavy load to a shelf and in doing 

so expend work. Just as often, the 

forklift will lower such a load from the 

shelf, and recover that load’s potential 

energy, if a means is provided to store 

that energy on board. 

There are, however, many nonroad 

applications that may not have much 

potential for regenerative energy 

recovery (a road grader, for example), 

but in those applications a hybrid 

diesel-electric or diesel-hydraulic 

system without a regenerative 

component may still provide some GHG 

benefits. A machine that today is made 

with a large engine to handle occasional 

peak work loads could potentially be 

redesigned with a smaller engine and 

battery combination sized to handle the 

occasional peak loads. 

Besides pre-existing electrical or 

hydraulic systems, some nonroad 

applications have one additional 

advantage over highway vehicles in 

assessing hybrid prospects: They often 

have quite predictable load patterns. A 

hybrid locomotive, for example, can be 

assigned to particular routes, train sizes, 

and consist (multi-locomotive) teams, to 

ensure it is used as close to full capacity 

as possible. The space needs of large 

battery banks could potentially be 

accommodated on a tender car, and the 

added weight would be offset somewhat 

by a smaller diesel fuel load (typically 

35,000 lbs today) and dynamic brake 

grid. At least one locomotive 

manufacturer, General Electric, is 

already developing a hybrid design, and 

battery energy storage has been 

demonstrated for several years in rail 

yard switcher applications. 

We request comment on all aspects of 

the hybrid and regeneration opportunity 

in the nonroad sector, including the 

extent to which the electric and 

hydraulic systems already designed into 

many nonroad machines and vehicles 

could provide some cost savings in 

implementing this technology, and the 

extent to which plug-in technologies 

could be used in applications that have 

very predictable downtime such as 

overnight at construction sites, or that 

can use plug-in electric power while 

working or while sitting idle between 

tasks. 

A Continuously Variable 

Transmission (CVT) has an advantage 

over other conventional transmission 

designs by allowing the engine to 

operate at its optimum speed over a 

range of vehicle speeds and typically 

over a wider range of available ratios, 

which can provide GHG emission 

reductions. It has been estimated that 

CVTs can provide a 3 to 8% decrease in 

fuel use over 4-speed automatic 

transmissions.185 They are already in 

use some in nonroad vehicles such as 

snowmobiles and all-terrain vehicles, 

and could possibly be used in other 

nonroad applications as well. We 

request comment on the opportunities 

to apply CVT to various nonroad 

applications. 

Some nonroad applications have air 

conditioning or refrigeration equipment, 

including large farm tractors, highway 

truck transport refrigeration units 

(TRUs), locomotives, and refrigerated 

rail cars. Reducing refrigerant leakage in 

the field or reducing its release during 

maintenance would work to reduce 

GHG emissions In addition, a switch to 

refrigerants with lower GHG emissions 

than the currently-used fluorinated 

gases can have a significant impact. We 

expect that the measures used to reduce 

nonroad equipment refrigerant GHGs 

would most likely involve the same 

strategies that have been or could be 

pursued in the highway and stationary 

185 ‘‘Effectiveness and Impact of Corporate 

Average Fuel Economy (CAFE) Standards,’’ 

National Research Council, National Academy of 

Sciences, 2002. 

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source sectors, and the reader is referred 

to section VI.B.1 for additional 

discussion. We request comment on the 

degree to which nonroad applications 

emit fluorinated gases, and on measures 

that may be taken to reduce these 

emissions. 

An extensive variety of energyconsuming electrical, mechanical, and 

hydraulic accessories are designed into 

nonroad machines to help them perform 

their tasks. Much of the energy output 

of a nonroad engine passes through 

these components and systems in 

making the machine do useful work, 

and all of them have associated energy 

losses through bearing friction, 

component heating, and other 

pathways. Designing equipment to use 

components with lower GHG impacts in 

these systems can yield substantial 

overall reductions in GHG emissions. 

Some nonroad applications expend 

significant energy in providing light, 

such as locomotive headlights and other 

train lighting. Furthermore, dieselpowered portable light towers for 

highway construction activities at night 

are increasingly being used to reduce 

congestion from daytime lane closures. 

We request comment on the extent to 

which a switch to less energy-intensive 

lighting could reduce GHG emissions. 

Many nonroad diesel engines are left 

idling during periods when no work is 

demanded of them, generally as a 

convenience to the operator, though 

modern diesel engines are usually easy 

to restart. In some applications this may 

occupy hours every day. Even though 

the hourly fuel rate is fairly low during 

idle, in the past several years railroads 

have saved considerable money by 

adding automatic engine stop start 

(AESS) systems to locomotives. These 

monitor key parameters such as state of 

battery charge, and restart the engine 

only as needed, thereby largely 

eliminating unnecessary idling. They 

reduce GHG emissions and typically 

pay for themselves in fuel savings 

within a couple of years. Our recent 

locomotive rule mandated these systems 

for all new locomotives as an emission 

control measure (40 CFR 1033.115(g)). 

AESS or similar measures may be 

feasible for other nonroad applications 

with significant idling time as well. We 

request comment on the availability and 

effectiveness of nonroad idle reduction 

technologies. 

ii. Application-Specific GHG Pathways 

As mentioned above, we discuss 

application-specific approach for further 

reducting GHG emissions from one 

nonroad application, locomotives, to 

illustrate application-specific 

opportunities for GHG emission 

reductions beyond those discussed 

above that apply more generally. We 

note that some of these applicationspecific opportunities, though limited in 

breadth, may be among the most 

important, because of their large GHG 

reduction potential. 

We have chosen locomotives for this 

illustration in part because rail 

transportation has already been the 

focus of substantial efforts to reduce its 

energy use, resulting in generally 

favorable GHG emissions per ton-mile 

or per passenger-mile. The Association 

of American Railroads calculates that 

railroads move a ton of freight 423 miles 

on one gallon of diesel fuel.186 Reasons 

for the advantage provided by rail 

include the use of medium-speed diesel 

engines, lower steel-on-steel rolling 

resistance, and relatively gradual 

roadway grades. Rail therefore warrants 

attention in any discussion on modeshifting as a GHG strategy. Even if GHG 

emissions reduction were not at issue, 

shippers and travelers already 

experience substantial mode-shift 

pressure today from long-term high fuel 

prices. Growth in the rail sector 

highlights the critical importance of 

locomotive GHG emissions reduction. 

We have listed some key locomotivespecific opportunities below. We note 

that a number of these are aimed at 

addressing GHG pathways from rail 

cars. Rail cars create very significant 

GHG reduction pathways for 

locomotives, because all of the very 

large energy losses from railcar 

components translate directly into 

locomotive fuel use. This is especially 

important when one considers that an 

average train has several dozen cars. We 

request comment on the feasibility of 

the ideas on this list and on other 

possible ways to reduce GHG emissions. 

Opportunities for Rail GHG Reduction 

Locomotives 

• Low-friction wheel bearings 

• Aerodynamic improvements 

• Idle emissions control beyond 

AESS (such as auxiliary power units) 

• Electronically-controlled pneumatic 

(ECP) brakes 

• High-adhesion trucks (wheel 

assemblies) 

• Global positioning system (GPS)-

based speed management (to minimize 

braking, over-accelerations, and runout/run-in losses at couplings) 

Railcars 

• Low-torque rail car wheel bearings 

186 Comments of the Association of American 

Railroads on EPA’s locomotive and marine engine 

proposal, July 2, 2007. Available in EPA docket 

EPA–HQ–OAR–2003–0190. 

• Tare weight reduction 

• Aerodynamic design of rail cars and 

between-car gaps 

• Better insulated refrigeration cars 

Rail Infrastructure 

• Application of lubricants or friction 

modifiers to minimize wheel-to-track 

friction losses 

• Higher-speed railroad crossings 

• Targeted-route electrification 

• Rail yard infrastructure 

improvements to eliminate congestion 

and idling 

Operational 

• Consist manager (automated 

throttling of each locomotive in a 

consist team for lowest overall GHG 

emissions) 

• Optimized GPS-assisted 

dispatching/routing/tracking of rail cars 

and locomotives 

• Optimized matching of locomotives 

with train load for every route 

(including optimized placement of each 

locomotive along the train) 

• Expanded resource sharing among 

railroads 

• Reduction of empty-car trips 

• Early scrappage of higher-GHG 

locomotives 

c. Regulatory Options for Nonroad 

Engines and Vehicles 

There is a range of options that could 

be pursued under CAA section 213 to 

control nonroad sector GHGs. The large 

diversity in this sector allows for a great 

number of technology solutions as 

discussed above, while also presenting 

some unique challenges in developing a 

comprehensive, balanced, and effective 

regulatory program, and highlights the 

importance of considering multiple 

potential regulatory strategies. We have 

met similar challenges in regulating 

traditional air pollutants from this 

sector, and we request comment on the 

regulatory approaches discussed below 

and whether they would address the 

challenges of regulating GHGs from 

nonroad engines. 

As discussed in our earlier section on 

heavy-duty vehicles, the potential 

regulatory approaches that we discuss 

here should be considered not as 

discrete options but as a continuum of 

possible approaches to address GHG 

emissions from this sector. Just as we 

have in our technology discussion, these 

regulatory approaches begin with the 

engine and then expand to included 

potential approaches to realize 

reductions through vehicle and 

operational changes. In approaching the 

discussion in this way, each step along 

such a path has the potential to greater 

regulatory complexity but also has the 

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potential for greater regulatory 

flexibility, GHG reduction, and program 

benefits. For large GHG reductions in 

the long term we expect to give 

consideration to approaches that 

accomplish the largest reductions, but 

we also note that, given the long time 

horizons for GHG issues, we can 

consider a number of incremental 

regulatory steps along a longer path. 

Also, given the absence of localized 

effects associated with GHG emissions, 

EPA is interested in considering the 

incorporation of banking, averaging, 

and/or credit trading into the regulatory 

options discussed below. 

The first regulatory approach we 

consider is a relatively straightforward 

extension of our existing criteria 

pollutant program for nonroad engines. 

In its simplest form, this approach 

would be an engine GHG standard that 

preserves the current regulatory 

structure for nonroad engines. Nonroad 

engine manufacturers are already 

familiar with today’s certification 

testing and procedures. Just like the 

highway engine manufacturers, they 

have facilities, engine dynamometers, 

and test equipment to appropriately 

measure GHG emissions. Further, 

technologies developed to reduce GHG 

emissions from heavy-duty engines 

could be applied to the majority of 

diesel nonroad engines with additional 

development to address differences in 

operating conditions and engine 

applications in nonroad equipment. 

Hence, this approach would benefit 

from both regulatory work done to 

develop a heavy-duty engine GHG 

program and technology development 

for heavy-duty engines to comply with 

a GHG program. While we do not expect 

that new test cycles would be needed to 

effect meaningful GHG emissions 

control, we request comment on 

whether new test cycles would allow for 

improved control, and especially on 

whether there are worthwhile GHG 

control technologies that would not be 

adequately exercised and measured 

under the current engine test cycles and 

test procedures. 

A second approach that would extend 

control opportunities beyond engine 

design improvements involves 

developing nonroad vehicle and 

equipment GHG standards. Changes to 

nonroad vehicles and equipment can 

offer significant opportunity for GHG 

emission reductions, and therefore any 

nonroad GHG program considered by 

EPA would need to evaluate the 

potential for reductions not just from 

engine changes but from vehicle and 

equipment changes as well. In section 

VI.B.2 we discussed a potential heavyduty truck GHG standard (e.g., a gram 

per mile or gram per ton-mile standard). 

A similar option could be considered for 

at least some portion of nonroad 

vehicles and equipment. For example, a 

freight locomotive GHG standard could 

be considered on a similar mass per ton 

mile basis. This would be a change from 

our current mass per unit work 

approach to locomotive regulation, but 

section 213 of the Clean Air Act does 

authorize the Agency to set vehiclebased and equipment-based nonroad 

standards as well. 

However, we are concerned that there 

may be significant drawbacks to 

widespread adoption of this 

application-specific standards-setting 

approach. For the freight locomotive 

example given above, a gram per tonmile emissions standard measured over 

a designated track route might be a 

suitable way to express a GHG standard, 

but such a metric would not necessarily 

be appropriate for other applications. 

Instead each application could require a 

different unit of measure tied to the 

machine’s mission or output— such as 

grams per kilogram of cuttings from a 

‘‘standard’’ lawn for lawnmowers and 

grams per kilogram-meter of load lift for 

forklifts. Such application-specific 

standards would provide the clearest 

metric for GHG emission reductions. 

The standards would directly reflect the 

intended use of the equipment and 

would help drive equipment and engine 

designs that most effectively meet that 

need while reducing overall GHG 

emissions. However, the diversity of 

tasks performed by the hundreds of 

nonroad applications would lead to a 

diverse array of standard work units and 

measurement techniques in such a 

nonroad GHG program built on 

equipment-based standards. We request 

comments on this second regulatory 

approach, and in particular comments 

that identify specific nonroad 

applications that would be best served 

by such a nonroad vehicle-based 

regulatory approach. 

A variation on the above-described 

approaches would be to maintain the 

relative simplicity of an engine-based 

standard while crediting the GHG 

emission reduction potential of new 

equipment designs. Under this option, 

the new technology would be evaluated 

by measuring GHG emissions from a 

piece of equipment that has the new 

technology while performing a standard 

set of typical tasks. The results would 

then be compared with data from the 

same or an identical piece of equipment, 

without the new technology, performing 

the same tasks. This approach could be 

carried out for a range of equipment 

models to help improve the statistical 

case for the resulting reductions. The 

percentage reduction in GHG emissions 

with and without the new equipment 

technology could then be applied to the 

GHG emissions measured in 

certification testing of engines used in 

the equipment in helping to 

demonstrate compliance with an 

engine-based GHG standard. Thus if a 

new technology were shown to reduce 

the GHG emissions of a typical piece of 

equipment by 20%, that 20% reduction 

could be applied at certification to the 

GHG emission results from a more 

traditional engine-based test procedure 

and engine-based standard. 

In fact, a very similar approach has 

been adopted in EPA’s recently 

established locomotive program (see 73 

FR 25155, May 6, 2008). In this 

provision, credit is given to energysaving measures based on the fact that 

they provide proportional reductions in 

the criteria pollutants. This credit takes 

the form of an adjustment to criteria 

pollutant emissions measured under the 

prescribed test procedure for assessing 

compliance with engine-based 

standards. 

A more flexible extension of this 

approach would be to de-link the 

equipment-based GHG reduction from 

the compliance demonstration for the 

particular engine used in the same 

equipment. Instead the GHG difference 

would provide fungible credits for each 

piece of equipment sold with the new 

technology, credits that then could be 

used in a credit averaging and trading 

program. Under this concept it would be 

important to collect and properly weight 

data over an adequate range of 

equipment and engine models, tasks 

performed, and operating conditions, to 

ensure the credits are deserved. We 

request comments on the option of 

applying the results of equipment 

testing to an engine-based GHG standard 

and the more general concept of 

generating GHG emission credits from 

such an approach. We also request 

comment on whether such credit-based 

approaches to accounting for the many 

promising equipment measures are 

likely to obtain similar GHG reductions 

as the setting of equipment based 

standards, and on whether some 

combined approach involving both 

standards and credits may be 

appropriate. 

There are also a number of ways to 

reduce GHG emissions in the nonroad 

sector that do not involve engine or 

equipment redesign. Rather, reductions 

can be achieved by altering the way in 

which the equipment is used. For 

example, intermodal shipping moving 

freight from trucks and onto lower GHG 

rail or marine services, provides a 

means of reducing these emissions for 

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freight shipments that can accommodate 

the logistical constraints of intermodal 

shipping. Many of the operational 

measures with GHG-reducing potential 

do involve a significant technology 

component, perhaps even hardware 

changes, but they can also involve 

actions on the part of the equipment 

operator or owner that go beyond 

simply maintaining and not tampering 

with the emission controls. For 

example, a railroad may make the 

capital and operational investment in 

sophisticated computer technology to 

dispatch and schedule locomotive 

resources, using onboard GPS-based 

tracking hardware. The GHG reduction 

benefit, though enabled in part by the 

onboard hardware, is not realized 

without the people and equipment 

assigned to the dispatch center. 

Credit for such operational measures 

could conceivably be part of a nonroad 

GHG control program and could be 

calculated and assigned using the same 

‘‘with and without’’ approach to credit 

generation described above for 

equipment-based changes. However, 

some important implementation 

problems arise from the greater human 

element involved. This human element 

becomes increasingly significant as the 

scope of creditable measures moves 

further away from automatic 

technology-based solutions. Assigning 

credits to such measures must involve 

good correlation between the credits 

generated and the GHG reductions 

achieved in real world applications. It 

therefore may make sense to award 

these credits only after an operational 

measure has been implemented and 

verified as effective. This might 

necessitate that such credits have value 

for equipment or sources other than the 

equipment associated with the earning 

of the credit, such as in a broader credit 

market. This is because nonroad 

equipment and engines must 

demonstrate compliance with EPA 

standards before they are put into 

service. They therefore cannot benefit 

from credits created in the future unless 

through some sort of credit borrowing 

mechanism. 

Once verified, however, we would 

expect credits reflecting these 

operational reductions could be banked, 

averaged and traded, just as much as 

credits derived from equipment- or 

engine-based measures. Verifiable GHG 

reductions, regardless of how generated, 

have equal value in addressing climate 

change. We also note, however, that an 

effective credit program, especially one 

with cross-sector utility, should account 

for the degree to which a creditgenerating measure would have 

happened anyway, or would have 

happened eventually, had no EPA 

program existed; this is likely to be 

challenging. We request comment on 

the appropriateness of a much broader 

GHG credit-based program as described 

here. 

In this section, we have laid out a 

range of regulatory approaches for 

nonroad equipment that takes us from a 

relatively simple extension of our 

existing engine-based regulatory 

program through equipment based 

standards and finally to a fairly wide 

open credit scheme that would in 

concept at least have the potential to 

pull in all aspects of nonroad equipment 

design and operation. In describing 

these approaches, we have noted the 

increasing complexity and the greater 

need for new mechanisms to ensure the 

emission reductions anticipated are real 

and verifiable. We seek comment on the 

relative merits of each of these 

approaches but also on the potential for 

each approach along the continuum to 

build upon the others. 

3. Marine Vessels 

Marine diesel engines range from very 

small engines used to propel sailboats, 

or used for auxiliary power, to large 

propulsion engines on ocean-going 

vessels. Our current marine diesel 

engine emission control programs 

distinguish between five kinds of 

marine diesel engines, defined in terms 

of displacement per cylinder. These five 

types include small (≤37 kW), 

recreational, and commercial marine 

engines. Commercial marine engines are 

divided into three categories based on 

per cylinder displacement: Category 1 

engines are less than 5 l/cyl, Category 2 

engines are from 5 l/cyl up to 30 l/cyl, 

and Category 3 engines are at or above 

30 l/cyl. Category 3 engines are 2- or 4-

stroke propulsion engines that typically 

use residual fuel; this fuel has high 

energy content but also has very high 

fuel sulfur levels that result in high PM 

emissions. Most of the other engine 

types are 4-stroke and can be used to 

provide propulsion or auxiliary power. 

These operate on distillate fuel although 

some may operate on a blend of 

distillate and residual fuel or even on 

residual fuel (for example, fuels 

commonly known as DMB, DMC, RMA, 

and RMB). 

There are also a wide variety of 

vessels that use marine diesel engines 

and they can be distinguished based on 

where they are used. Vessels used on 

inland waterways and coastal routes 

include fishing vessels that may be used 

either seasonally or throughout the year, 

river and harbor tug boats, towboats, 

short- and long-distance ferries, and 

offshore supply and crew boats. These 

vessels often have Category 2 or smaller 

engines and operate in distillate fuels. 

Ocean-going vessels (OGVs) include 

container ships, bulk carriers, tankers, 

and passenger vessels and have 

Category 3 propulsion engines as well as 

some smaller auxiliary engines. As EPA 

deliberates on how to potentially 

address GHG emissions from marine 

vessels, we will consider the 

significance of the different engine, 

vessel, and fuel types. We invite 

comment on the marine specific issues 

that EPA should consider; in particular, 

we invite commenters to compare and 

contrast potential marine vessel 

solutions to our earlier discussions of 

highway and nonroad mobile sources 

and our existing marine engine criteria 

pollutant control programs. 

a. Marine Vessel GHG Emissions 

Marine engines and vessels emitted 

84.2 million metric tons of CO2 in 2006, 

or 3.9 percent of the total mobile source 

CO2 emissions. CO2 emissions from 

marine vessels are expected to increase 

significantly in the future, more than 

doubling between 2006 and 2030. The 

emissions inventory from marine 

vessels comes from operation in ports, 

inland waterways, and offshore. The 

CO2 inventory estimates presented here 

refer to emissions from marine engine 

operation with fuel purchased in the 

United States.187 OGVs departing U.S. 

ports with international destinations 

take on fuel that emits 66 percent of the 

marine vessel CO2 emissions; the other 

34 percent comes from smaller 

commercial and recreational vessels. 

GHG emissions from marine vessels 

are dominated by CO2 emissions which 

comprise approximately 94 percent of 

the total. Approximately 5.5 percent of 

the GHG emissions from marine vessels 

are due to HFC emissions, mainly from 

reefer vessels (vessels which carry 

refrigerated containers). Methane and 

nitrous oxide make up less than 1 

percent of the marine vessel sector GHG 

emissions on a CO2 equivalent basis. 

Comment is requested on the 

contribution of marine vessels to GHG 

emissions and on projections for growth 

in this sector. 

b. Potential for GHG Reductions From 

Marine Vessels 

There are significant opportunities to 

reduce GHG emissions from marine 

vessels through both traditional and 

innovative strategies. These strategies 

include technological improvements to 

engine and vessel design as well as 

changes in vessel operation. This 

187 U.S. EPA, ‘‘Inventory of U.S. Greenhouse Gas 

Emissions and Sinks: 1990–2006,’’ April 15, 2008. 

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section provides an overview of these 

strategies, and a more detailed 

description is available in the public 

docket.188 EPA requests comment on the 

advantages and drawbacks of each of the 

strategies described below, as well as on 

additional approaches for reducing 

greenhouse gases from marine vessels. 

i. Reducing GHG Emissions Through 

Marine Engine Changes 

GHG emissions may be reduced by 

increasing the efficiency of the marine 

engine. As discussed earlier for heavyduty trucks, there are a number of 

improvements for CI engines that may 

be used to lower GHGs. These 

improvements include higher 

compression ratios, higher injection 

pressure, shorter injection periods, 

improved turbocharging, and electronic 

fuel and air management. Much of the 

energy produced in a CI engine is lost 

to the exhaust. Some of this energy can 

be reclaimed through the use of heat 

recovery systems. We request comment 

on the feasibility of reducing GHG 

emissions through better engine designs 

and on additional technology which 

could be used to achieve GHG 

reductions. 

As discussed above, marine engines 

are already subject to exhaust emission 

standards. Many of the noxious 

emissions emitted by internal 

combustion engines may also be GHGs. 

These pollutants include NOX, methane, 

and black carbon soot. Additionally, 

some strategies used to mitigate NOX 

and PM emissions can also indirectly 

impact GHGs through their impact on 

fuel use—for example, use of 

aftertreatment rather than injection 

timing retard to reduce NOX emissions. 

We request comment on the GHG 

reductions associated with HC+NOX 

and PM emissions standards for these 

engines. 

The majority of OGVs operate 

primarily on residual fuel, while smaller 

coastal vessels operate primarily on 

distillate fuel. Shifting more shipping 

operation away from residual fuel 

would reduce GHG emissions from the 

ship due to the lower carbon/hydrogen 

ratio in distillate fuel. Marine engines 

have been developed that operate on 

other lower carbon fuels such as natural 

gas and biodiesel. Because biodiesel is 

a renewable fuel, lifecycle GHG 

emissions are much lower than for 

operation on petroleum diesel. We 

request comment on these and other 

fuels that may be used to power marine 

188 ‘‘Potential Technologies for GHG Reductions 

from Commercial Marine Vessels’’, memorandum 

from Michael J. Samulski, U.S. EPA, to docket xx, 

DATE. 

vessels and the impact these fuels 

would have on lifecycle GHG emissions. 

A number of innovative alternatives 

are under development for providing 

power on marine vessels. These 

alternative power sources include fuel 

cells, solar power, wind power, and 

even wave power. While none of these 

technologies are currently able to 

supply the total power demands of 

larger, ocean-going vessels, they may 

prove to be capable of reducing GHG 

emissions through auxiliary power or 

power-assist applications. Hybrid 

engine designs are used in some vessels 

where a bank of engines is used to drive 

electric motors for power generation. 

The advantage of this approach is that 

the same engines may be used both for 

propulsion and auxiliary needs. 

Another advantage is that alternative 

power sources could be used with a 

hybrid system to provide supplemental 

power. We request comment on the 

extent to which alternative power 

sources and hybrid designs may be 

applied to marine vessels to reduce 

greenhouse gases. 

ii. Reducing GHG Emissions Through 

Vessel Changes 

GHG emissions may be reduced by 

minimizing the power needed by the 

vessels to perform its functions. The 

largest power demand is generally for 

overcoming resistance as the vessel 

moves through the water but is also 

affected by propeller efficiency and 

auxiliary power needs. 

Water resistance is made up of the 

effort to displace water and drag due to 

friction on the hull. The geometry of the 

vessel may be optimized in many ways 

to reduce water resistance. Ship 

designers have used technologies such 

as bulbous bows and stern flaps to help 

reduce water resistance from the hull of 

the vessel. Marine vessels typically use 

surface coatings to inhibit the growth of 

barnacles or other sea life that would 

increase drag on the hull. Innovative 

strategies for reducing hull friction 

include coatings with textures similar to 

marine animals and reducing water/hull 

contact by enveloping the hull with 

small air bubbles released from the sides 

and bottom of the ship. 

Both the wetted surface area and 

amount of water displaced by the hull 

may be reduced by lowering the weight 

of the vessel. This may be accomplished 

through the use of lower weight 

materials such as aluminum or 

fiberglass composites or by simply using 

less ballast in the ship when not 

carrying cargo. Other options include 

ballast-free ship designs such as 

constantly flowing water through a 

series of pipes below the waterline or a 

pentamaran hull design in which the 

ship is constructed with a narrow hull 

and four sponsons which provide 

stability and eliminate the need for 

ballast water. We request comment to 

the extent that these approaches may be 

used to reduce GHGs by reducing fuel 

consumption from marine vessels in the 

future. We also request comment on 

other design changes that may reduce 

the power demand due to resistance on 

the vessel. 

In conventional propeller designs, a 

number of factors must be considered 

including load, speed, pitch, diameter, 

pressure pulses, and cavitation 

(formation of bubbles which may 

damage propeller and reduce thrust). 

Proper maintenance of the propeller can 

minimize energy losses due to friction. 

In addition, propeller coatings are 

available that reduce friction on the 

propeller and lead to energy savings. 

Because of the impact of the propeller 

on the operation of the vessel, a number 

of innovative technologies have been 

developed to increase the efficiency of 

the propeller. These technologies 

include contra-rotating propellers, 

azimuth thrusters, ducted propellers, 

and grim vane wheels. We request 

comment on the GHG reductions that 

may be achieved through improvements 

in vessel propulsion efficiency, either 

through the approaches listed here or 

through other approaches. 

Power is also needed to provide 

electricity to the ship and to operate 

auxiliary equipment. Power demand 

may be reduced through the use of less 

energy intensive lighting, improved 

electrical equipment, improved reefer 

systems, crew education campaigns, and 

automated air-conditioning systems. We 

request comment on the opportunities 

to provide auxiliary power with reduced 

GHG emissions. 

In addition, GHG emissions may be 

released from leaks in air conditioning 

or refrigeration systems. There is a large 

amount of fluorinated and chlorinated 

hydrocarbons used in refrigeration and 

air-conditioning systems on ships. We 

request comment on the degree to which 

marine vessels emit fluorinated and 

chlorinated hydrocarbons to the 

atmosphere, and on measures that may 

be taken to mitigate these emissions. 

iii. Reducing GHG Emissions Through 

Vessel Operational Changes 

In addition to improving the design of 

the engine and vessel, GHG emissions 

may be reduced through operational 

measures. These operational measures 

include reduced speeds, improved 

routing and fleet planning, and shoreside power. 

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In general, the power demand of a 

vessel increases with at least the square 

of the speed; therefore, a 10 percent 

reduction in speed could result in more 

than a 20 percent reduction in fuel 

consumption, and therefore in GHG 

emissions. An increased number of 

vessels operating at slower speeds may 

be able to transport the same amount of 

cargo while producing less GHGs. In 

some cases, vessels operate at higher 

speeds than necessary simply due to 

inefficiencies in route planning or 

congestion at ports. Ship operators may 

need to speed up to correct for these 

inefficiencies. GHG reductions could be 

achieved through improved route 

planning, coordination between ports, 

and weather routing systems. GHG 

reductions may also be achieved by 

using larger vessels and through better 

fleet planning to minimize the time 

ships operate at less than full capacity. 

We request comment on the extent to 

which greenhouse gas emissions may be 

practically reduced through vessel 

speed reductions and improved route 

and fleet planning. 

Many ports have shore-side power 

available for ships as an alternative to 

using onboard engines at berth. To the 

extent that the power sources on land 

are able to produce energy with lower 

GHG emissions than the auxiliary 

engines on the vessel, shore-side power 

may be an effective strategy for GHG 

reduction. In addition to more 

traditional power generation units, 

shore-side power may come from 

renewable fuels, nuclear power, fuel 

cells, windmills, hydro-power, or 

geothermal power. We request comment 

on GHG reductions that could be 

achieved through the use of shore-side 

power. 

c. Regulatory Options for Marine 

Vessels 

EPA could address GHG emissions 

from marine vessels using strategies 

from a continuum of different regulatory 

tools, including emission standards, 

vessel design standards, and strategies 

that incorporate a broader range of 

operational controls. These potential 

regulatory strategies are briefly 

described below. As is the case with 

other source categories, EPA is also 

interested in exploring the potential 

applicability of flexible mechanisms 

such as banking and credit trading. With 

regard to ocean-going vessels, we are 

also exploring the potential to address 

GHG emissions through the 

International Maritime Organization 

under a program that could be adopted 

as a new Annex to the International 

Convention for the Prevention of 

Pollution from Ships (MARPOL). Those 

efforts are also described below. EPA 

requests comment on the advantages 

and drawbacks of each of these 

regulatory approaches. 

As with trucks and land-based 

nonroad equipment, the first regulatory 

approach we could consider entails 

setting GHG emission limits for new 

marine diesel engines. For engines with 

per cylinder displacement up to 30 

liters (i.e., Category 1 and Category 2), 

EPA has already adopted stringent 

emission limits for several air pollutants 

that may be GHGs, including NOX, 

methane (through hydrocarbon 

standards) and black carbon soot 

(through PM standards). This emission 

control program could be augmented by 

setting standards for GHG emissions 

that could be met through the 

application of the technologies 

described above (e.g., improved engine 

designs, hybrid power). We request 

comment regarding issues that EPA 

should consider in evaluating this 

approach and the most appropriate 

means to address the issues raised. We 

recognize that an engine-based 

regulatory structure would limit the 

potential GHG emission reductions 

compared to programs that include 

vessel technologies and crediting 

operational improvements. In the 

remainder of this section, we consider 

other options that would have the 

potential to provide greater GHG 

reductions by providing mechanisms to 

account for vessel and operational 

changes. 

A second regulatory approach to 

address GHG emissions from marine 

vessels is to set equipment standards. 

As described above, these could take the 

form of standards that require reduced 

air and/or water resistance, improved 

propeller design, and auxiliary power 

optimization. Equipment standards 

could also address various equipment 

onboard vessels, such as refrigeration 

units. While Annex VI currently 

contains standards for ozone depleting 

substances, this type of control could be 

applied more broadly to U.S. vessels 

that are not subject to the Annex VI 

certification requirements. 

A critical characteristic of marine 

vessels that must be taken into account 

when considering equipment standards 

is that not all marine vessels are 

designed alike for the same purpose. A 

particular hull design change that 

would lower GHGs for a tugboat may 

not be appropriate for a lobster vessel or 

an ocean-going vessel. These differences 

will have an impact on how an 

equipment standard would be 

expressed. We request comment on how 

to express equipment standards in terms 

of an enforceable limit, and on whether 

it is possible to set a general standard or 

if separate standards would be 

necessary for discrete vessel types/sizes. 

We also request comment on the critical 

components of a compliance program 

for an equipment standard, how it can 

be enforced, and at what point in the 

vessel construction process it should be 

applied. 

In addition to the above, the spectrum 

of regulatory approaches we outline in 

section VI.C.2.c for nonroad engines and 

vehicles could potentially be applied to 

the marine sector as well, with 

corresponding GHG reductions. These 

would include: (1) Setting missionbased vessel standards (such as GHG 

gram per ton-mile shipping standards) 

for at least some marine applications 

where this can be reliably measured and 

administered, (2) allowing vessel 

changes such as lower resistance hull 

designs to generate credits against 

marine engine-based standards, (3) 

granting similar credits for operational 

measures such as vessel speed 

reductions, and (4) further allowing 

such credits to be used in wider GHG 

credit exchange programs. We note too 

that the implementation complexities 

for these approaches discussed in 

section VI.C.2.c apply in the marine 

sector as well, and these complexities 

increase as regulatory approaches move 

further along the continuum away from 

engine-based standards. 

Separate from the Annex VI 

negotiations for more stringent NOX and 

PM standards discussed above, the 

United States is working with the 

Marine Environment Protection 

Committee of the IMO to explore 

appropriate ways to reduce CO2 

emissions from ships for several years. 

At the most recent meeting of the 

Committee, in April 2008, the Member 

States continued their work of assessing 

short- and long-term GHG control 

strategies. A variety of options are under 

consideration, including all of those 

mentioned above. The advantage of an 

IMO-based program is that it could 

provide harmonized international 

standards. This is important given the 

global nature of vessel traffic and given 

that this traffic is expected to increase 

in the future. 

4. Aircraft 

In this section we discuss and seek 

comment on the impact of aircraft 

operations on GHG emissions and the 

potential for reductions in GHG 

emissions from these operations. 

Aircraft emissions are generated from 

aircraft used for public, private, and 

national defense purposes including air 

carrier commercial aircraft, air taxis, 

general aviation, and military aircraft. 

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Commercial aircraft include those used 

for scheduled service transporting 

passengers, freight, or both. Air taxis fly 

scheduled and for-hire service carrying 

passengers, freight or both, but they 

usually are smaller aircraft than those 

operated by commercial air carriers. 

General aviation includes most other 

aircraft (fixed and rotary wing) used for 

recreational flying, business, and 

personal transportation (including 

piston-engine aircraft fueled by aviation 

gasoline). Military aircraft cover a wide 

range of airframe designs, uses, and 

operating missions. 

As explained previously, section 231 

of the CAA directs EPA to set emission 

standards, test procedures, and related 

requirements for aircraft, if EPA finds 

that the relevant emissions cause or 

contribute to air pollution which may 

reasonably be anticipated to endanger 

public health or welfare. In setting 

standards, EPA is to consult with FAA, 

particularly regarding whether changes 

in standards would significantly 

increase noise and adversely affect 

safety. CAA section 232 directs FAA to 

enforce EPA’s aircraft engine emission 

standards, and 49 U.S.C. section 44714 

directs FAA to regulate fuels used by 

aircraft. Historically, EPA has worked 

with FAA and the International Civil 

Aviation Organization (ICAO) in setting 

emission standards and related 

requirements. Under this approach 

international standards have first been 

adopted by ICAO, and subsequently 

EPA has initiated CAA rulemakings to 

establish domestic standards that are at 

least as stringent as ICAO’s standards. In 

exercising EPA’s own standard-setting 

authority under the CAA, we would 

expect to continue to work with FAA 

and ICAO on potential GHG emission 

standards, if we found that aircraft GHG 

emissions cause or contribute to air 

pollution which may reasonably be 

anticipated to endanger public health or 

welfare. 

Over the past 25–30 years, EPA has 

established aircraft emission standards 

covering certain criteria pollutants or 

their precursors and smoke; these 

standards do not currently regulate 

emissions of CO2 and other GHGs.189 

However, provisions addressing test 

procedures for engine exhaust gas 

emissions state that the test is designed 

to measure various types of emissions, 

including CO2, and to determine mass 

emissions through calculations for a 

simulated aircraft landing and takeoff 

cycle (LTO). Currently, CO2 emission 

189 Our existing standards include hydrocarbon 

emissions and CH4 is a hydrocarbon. If CH4 is 

present in the engine exhaust, it would be measured 

as part of the LTO test procedure. There is not a 

separate CH4 emission standard for aircraft engines. 

data over the LTO cycle is collected and 

reported.190 Emission standards apply 

to engines used by essentially all 

commercial aircraft involved in 

scheduled and freight airline activity.191 

a. GHG Emissions From Aircraft 

Operations 

Aircraft engine emissions are 

composed of about 70 percent CO2, a 

little less than 30 percent water vapor, 

and less than one percent each of NOX, 

CO, sulfur oxides (SOX), non-methane 

volatile organic carbons (NMVOC), 

particulate matter (PM), and other trace 

components including hazardous air 

pollutants (HAPs). Little or no nitrous 

oxide (N2O) emissions occur from 

modern gas turbines. Methane (CH4) 

may be emitted by gas turbines during 

idle and by relatively older technology 

engines, but recent data suggest that 

little or no CH4 is emitted by more 

recently designed and manufactured 

engines.192 By mass, CO2 and water 

vapor are the major compounds emitted 

from aircraft operations that relate to 

climate change. 

In 2006, EPA estimated that among 

U.S. transportation sources, aircraft 

emissions constituted about 12 percent 

of CO2 emissions, and more broadly, 

about 12 percent of the combined 

emissions of CO2, CH4, and N2O. 

Together CH4 and N2O aircraft 

emissions constituted only about 0.1 

percent of the combined CO2, CH4, and 

N2O emissions from U.S. transportation 

sources, and they make up about one 

percent of the total aircraft emissions of 

CO2, CH4, and N2O.193 Aircraft 

emissions were responsible for about 4 

percent of CO2 emissions from all U.S. 

sources, and about 3 percent of CO2, 

CH4, and N2O emissions collectively. 

While aircraft CO2 emissions have 

declined by about 6 percent between 

2000 and 2006, from 2006 to 2030, the 

U.S. Department of Energy projects that 

the energy use of aircraft will increase 

by about 60 percent (excluding military 

190 Certification information includes fuel flow 

rates over the different modes (and there are 

specified times in modes) of the LTO cycle. 

Utilizing this information, the ICAO Engine 

Emissions Databank reports kilograms of fuel used 

during the entire LTO cycle (see http:// 

www.caa.co.uk/ 

default.aspx?catid=702&pagetype=90). 

191 Regulated aircraft engines are used on 

commercial aircraft including small regional jets, 

single-aisle aircraft, twin-aisle aircraft, and 747s 

and larger aircraft. 

192 IPCC, Aviation and the Global Atmosphere, 

1999, at http://www.grida.no/climate/ipcc/aviation/ 

index.htm. 

193 U.S. EPA, Inventory of U.S. Greenhouse Gas 

Emissions and Sinks: 1990–2006, April 2008, 

USEPA #430–R–08–005, available at http:// 

www.epa.gov/climatechange/emissions/us 

inventoryreport.html. 

aircraft operations).194 Commercial 

aircraft make up about 83 percent of 

both CO2 emissions and the combined 

emissions of CO2, CH4, and N2O for U.S. 

domestic aircraft operations. In 

addition, U.S. domestic commercial 

aircraft activity represents about 24 

percent of worldwide commercial 

aircraft CO2 emissions. With 

international aircraft departures, the 

total U.S. CO2 emissions from 

commercial aircraft are about 35 percent 

of the total global commercial aircraft 

CO2 emissions.195 196 Globally, 93 

percent of the fuel burn (a surrogate for 

CO2) and 92 percent of NOX emissions 

from commercial aircraft occur outside 

of the basic LTO cycle (i.e., operations 

nominally above 3,000 feet).197 

The compounds emitted from aircraft 

that directly relate to climate change are 

CO2, CH4, N2O and, in highly 

specialized applications, SF6.198 Aircraft 

also emit other compounds that are 

indirectly related to climate change 

such as NOX, water vapor, and PM. NOX 

is a precursor to cruise-altitude ozone, 

which is a GHG. An increase in ozone 

also results in increased tropospheric 

hydroxyl radicals (OH) which reduces 

ambient CH4, thus potentially at least 

partially offsetting the warming effect 

from the increase in ozone. Water vapor 

and PM modify or create cloud cover, 

which in turn can either amplify or 

194 Energy Information Administration, Annual 

Energy Outlook 2008, Report No.: DOE/EIA–0383 

(2008), March 2008, available at http:// 

www.eia.doe.gov/oiaf/aeo/. These Department of 

Energy projections are similar to FAA estimates 

(FAA, Office of Environment and Energy, Aviation 

and Emission: A Primer, January 2005, at pages 10 

and 23, available at http://www.faa.gov/ 

regulations_policies/policy_guidance/envir_policy/ 

media/aeprimer.pdf ). The FAA projections were 

based on FAA long-range activity forecasts that 

assume a constant rate of emissions from aircraft 

engines in conjunction with an increase in aviation 

operations. It does not take into account projected 

improvements in aircraft, aircraft engines, and 

operational efficiencies. 

195 FAA, System for Assessing Aviation’s Global 

Emissions, Version 1.5, Global Aviation Emissions 

Inventories for 2000 through 2004, FAA–EE–2005– 

02, September 2005, available at http:// 

www.faa.gov/about/office_org/ 

headquarters_offices/aep/models/sage/. 

196 International flights are those that depart from 

the U.S. and arrive in a different country. 

197 FAA, System for Assessing Aviation’s Global 

Emissions, Version 1.5, Global Aviation Emissions 

Inventories for 2000 through 2004, FAA–EE–2005– 

02, September 2005, at page 10, at Table 3, available 

at http://www.faa.gov/about/office_org/ 

headquarters_offices/aep/models/sage/. 

198 SF6 is used as an insulating medium in the 

radar systems of some military reconnaissance 

planes. 2006 IPCC Guidelines for National 

Greenhouse Gas Inventories, Volume 3, Industrial 

Processes and Product Use, Chapter 8, Other 

Product Manufacture and Use, Section 8.3, Use of 

SF6 and HFCs in Other Products; http://www.ipccnggip.iges.or.jp/public/2006gl/index.htm. 

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44470 Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 

dampen climate change.199 Contrails are 

unique to aviation operations, and 

persistent contrails are of interest 

because they increase cloudiness.200 

The IPCC Fourth Assessment Report 

(2007) has characterized the level of 

scientific understanding as low to very 

low regarding the radiative forcing of 

contrails and aviation induced cirrus 

clouds.201 EPA requests information on 

the climate change compounds emitted 

by aircraft and the scientific 

understanding of their climate effects, 

including contrail formation and 

persistence. 

b. Potential for GHG Reductions From 

Aircraft Operations 

There are both technological controls 

and operational measures potentially 

available to reduce GHG emissions from 

aircraft and aircraft operations. These 

are discussed below. 

i. Reducing GHG Emissions Through 

Aircraft Engine Changes 

Fuel efficiency and therefore GHG 

emission rates are closely linked to jet 

aircraft engine type (e.g., high bypass 

ratio) and choice of engine 

thermodynamic cycles (e.g., pressure 

and temperature ratios), but 

modifications in the design of the 

engine’s combustion system can also 

have a substantial effect on the 

composition of the exhaust.202 Turbofan 

engines, with their high bypass ratios 

and increased temperatures, introduced 

in the 1970s and 1980s reduced CO2, 

HC, and CO emissions, but in many 

cases put upward pressure on NOX 

emission rates. Also, a moderate 

increase in the engine bypass ratio (high 

bypass turbofan) decreases fuel burn 

(and CO2) by enhancing propulsive 

efficiency and reduces noise by 

decreasing exhaust velocity, but it may 

lead to increased engine pressure ratio 

and potentially higher NOX. 203 There is 

199 IPCC, Climate Change 2007—The Physical 

Science Basis, Contribution of Working Group I to 

the Fourth Assessment Report of the IPCC, Chapter 

2, Changes in Atmospheric Constituents and in 

Radiative Forcing. 

200 EPA, Aircraft Contrails Factsheet, EPA430–F– 

00–005, September 2000, developed in conjunction 

with NASA, the National Oceanic and Atmospheric 

Administration (NOAA), and FAA, available at 

http://www.epa.gov/otaq/aviation.htm. 

201 IPCC, Climate Change 2007—The Physical 

Science Basis, Contribution of Working Group I to 

the Fourth Assessment Report of the IPCC, Chapter 

2, Changes in Atmospheric Constituents and in 

Radiative Forcing, (page 202). 

202 IPCC, Aviation and the Global Atmosphere, 

1999, at Aircraft Technology and Its Relation to 

Emissions, at page 221, at section 7.1, available at 

http://www.grida.no/climate/ipcc/aviation/ 

index.htm. 

203 ICCIA, Technical Design Interrelationships, 

Presentation by Dan Allyn, ICCAIA Chair, at 

Aviation and the Environment Conference, March 

no single relationship between NOX and 

CO2 that holds for all engine types. As 

the temperatures and pressures in the 

combustors are increased to obtain 

better efficiency, emissions of NOX 

increase, unless there is also a change in 

combustor technology.204 There are 

interrelationships among the different 

emissions and noise to be considered in 

engine design. 

The three major jet engine 

manufacturers in the world are General 

Electric (GE), Pratt and Whitney, and 

Rolls-Royce. All of these manufacturers 

supply engines to both U.S. and nonU.S. aircraft manufacturers, and their 

engines are installed on aircraft that 

operate worldwide. These three 

manufacturers are now (or will be in the 

future) producing more fuel efficient 

(lower GHG) engines with improved 

NOX. The General Electric GEnx jet 

engine is being developed for the new 

Boeing 787, and GE’s goal is to have the 

GEnx engine meet NOX levels 50 

percent lower than the ICAO standards 

approved in 2005.205 The combustor 

technology GE is employing is called 

the Twin Annular, Pre-mixing Swirler 

(TAPS) combustor. In addition, the 

GEnx is expected to improve specific 

fuel consumption by 15 percent 

compared to the previous generation of 

engine technology (GE’s CF6 engine).206 

Pratt and Whitney has developed the 

geared turbofan technology that is 

expected to deliver 12 percent reduction 

in fuel burn while emitting half of the 

NOX emissions compared to today’s 

engines. In addition to an advanced gear 

system, the new engine design includes 

the next generation technology for 

advanced low NOX (TALON). The richquench-lean TALON combustor utilizes 

advanced fuel/air atomizers and mixers, 

metallic liners, and advanced cooling 

management to decrease NOX emissions 

during the LTO and high-altitude cruise 

operations. Flight testing of the engine 

is expected this year, and introduction 

19, 2008, available at 

http://www.airlines.org/government/environment/ 

Aviation+and+the+Environment 

+Conference+Presentations.htm. 

204 IPCC, Aviation and the Global Atmosphere, 

1999, at Aircraft Technology and Its Relation to 

Emissions, at page 237, at section 7.5.6, available 

at 

http://www.grida.no/climate/ipcc/aviation/ 

index.htm. 

205 The NOX standards adopted at the sixth 

meeting of ICAO’s Committee on Aviation 

Environmental Protection (CAEP) in February 2004 

were approved by ICAO in 2005. 

206 General Electric, Press Release, Driving GE 

Ecomagination with the Low-Emission GEnx Jet 

Engine, July 20, 2005, available at 

http://www.geae.com/aboutgeae/presscenter/genx/ 

genx_20050720.html. 

into service is expected in 2012.207 

Mitsubishi Heavy Industries has chosen 

the engine for its regional jet.208 209 

Rolls-Royce’s Trent 1000 jet engine 

will power the Boeing 787s on order for 

Virgin Atlantic airlines. The Trent 1000 

powered 787 is expected to improve 

fuel consumption by up to 15 percent 

compared to the previous generation of 

engines (Rolls-Royce’s Trent 800 

engine).210 The technology in the Trent 

1000 improves the operability of the 

compressors, and enables the engine to 

run more efficiently at lower speeds. 

This contributes to better fuel burn, 

especially in descent.211 

ii. Reducing GHG Emissions Through 

Aircraft Changes 

Aircraft (or airframe) efficiency gains 

are mainly achieved through 

aerodynamic drag and weight 

reduction.212 Most of the fuel used by 

aircraft is needed to overcome 

aerodynamic drag, since they fly at very 

high speeds. Reduction of aerodynamic 

drag can substantially improve the fuel 

efficiency of aircraft thus reducing GHG 

emissions. Aerodynamic drag can be 

decreased by installing add-on devices, 

such as film surface grooves, hybrid 

laminar flow technology, blended 

winglets, and spiroid tips, and GHG 

emissions can be reduced by each of 

these measures from 1.6 to 6 percent. 

207 Engine Yearbook, Pratt & Whitney changing 

the game with geared turbofan engine, 2008, at page 

96. 

208 Aviation, Japanese Airliner to Introduce PW’s 

New Engine Technology, by Chris Kjelgaard, 

October 9, 2007, available at 

http://www.aviation.com/technology/071009-pwgeared-turbofan-powering-mrj.html. 

209 The New York Times, A Cleaner, Leaner Jet 

Age Has Arrived, by Matthew L. Wald, April 9, 

2008, available at 

http://www.nytimes.com/2008/04/09/technology/ 

techspecial/09jets.html?_r=1& 

ex=1208491200&en=6307ad7d1372acdf& 

ei=5070&emc=eta1&oref=slogin. 

210 Rolls-Royce, Trent and the environment, 

available at http://www.rolls-royce.com/ 

community/downloads/trent_env.pdf and the RollsRoyce environmental report, Powering a better 

world: Rolls-Royce and the environment, 2007, 

available at http://www.rolls-royce.com/ 

community/environment/default.jsp. 

211 Green Car Congress, Rolls-Royce Wins $2.6B 

Trent 1000 Order from Virgin Atlantic; The Two 

Launch Joint Environmental Initiative, March 3, 

2008, available at http:// 

www.greencarcongress.com/2008/03/rolls-roycewin.html. 

212 U.S. Department of Transportation, Best 

Practices Guidebook for Greenhouse Gas 

Reductions in Freight Transportation—Final 

Report, Prepared for U.S. Department of 

Transportation via Center for Transportation and 

the Environment, Prepared by H. Christopher Frey 

and Po-Yao Kuo, Department of Civil, Construction, 

and Environmental Engineering, North Carolina 

State University, October 4, 2007, available at 

http://www4.ncsu.edu/~frey/Frey_Kuo_071004.pdf. 

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Further discussion of these devices is 

provided below. 

—Film surface grooves: This 

technology is undergoing testing, and it 

is an adhesive-backed film with microgrooves placed on the outer surfaces of 

the wings and the fuselage of the 

aircraft. Film surface grooves are 

estimated to reduce total aerodynamic 

drag and GHG emissions by up to 1.6 

percent. 

—Hybrid laminar flow technology: 

Contamination on the airframe surface, 

such as the accumulation of ice, insects 

or other debris, degrades laminar flow. 

A newly developed concept, hybrid 

laminar flow technology (replace 

turbulent air flow), integrates 

approaches to maintain laminar flow. 

This technology can reduce fuel use by 

6 to 10 percent and potentially GHG 

emissions by 6 percent. 

—Blended winglets: A blended 

winglet is a commercially available 

wing-tip device that can decrease liftinduced drag. This technology is an 

extension mounted at the tip of a wing. 

The potential decreases in both GHG 

emissions and fuel use are estimated to 

be 2 percent. 

—Spiroid tip: A spiroid tip has been 

pilot tested and, similar to blended 

winglets, it is intended to reduce liftinduced drag. This technology is a 

spiral loop formed by joining vertical 

and horizontal winglets. Greenhouse gas 

emissions and fuel use are both 

potentially estimated to be decreased by 

1.7 percent. 

Reductions in the weight of an aircraft 

by utilizing light-weight materials and 

weight reduction of non-essential 

components could lead to substantial 

decreases in fuel use. The weight of an 

airframe is about 50 percent of an 

aircraft’s gross weight. The use of 

advanced lighter and stronger materials 

in the structural components of the 

airframe, such as aluminum alloy, 

titanium alloy, and composite materials 

for non-load-bearing structures, can 

decrease airframe weight. These 

materials can reduce structural weight 

by 4 percent. The potential reduction in 

greenhouse gas emissions and fuel use 

are estimated to both be 2 percent. 

iii. Reducing GHG Emissions Through 

Operational Changes 

Rising jet fuel prices tend to drive the 

aviation industry to implement 

practices to decrease fuel usage and 

lower fuel usage reduces GHG 

emissions.213 Indeed this has occurred 

213 According to the Energy Information 

Administration, jet fuel prices increased by about 

140 percent from 2000 to 2007 (see http:// 

tonto.eia.doe.gov/dnav/pet/hist/rjetnyhA.htm.). 

in the recent past where several airlines 

have reduced flights and announced 

plans to retire older aircraft. However, 

such practices are voluntary, and there 

is no assurance that such practices 

would continue or not be reversed in 

the future. Technology developments 

for lighter and more aerodynamic 

aircraft and more efficient engines 

which reduce aircraft fuel consumption 

and thus GHG emissions are expected to 

improve in the future. However, 

technology changes take time to find 

their way into the fleet. Aircraft and 

aircraft engines operate for about 25 to 

30 years. 

Air traffic management and 

operational changes are governed by 

FAA. The FAA, in collaboration with 

other agencies, is in the process of 

developing the next generation air 

transportation system (NextGen), a key 

environmental goal of which is to 

decrease aviation’s contribution to GHG 

emissions by reducing aviation systeminduced congestion and delay and 

accelerating air traffic management 

improvements and efficiencies. As will 

be discussed below, measures of this 

type implemented together with 

technology changes may be a way to 

reduce GHG emissions in the near term. 

A few examples of the advanced 

systems/procedures and operational 

measures are provided below. 

Reduced Vertical Separation 

Minimum (RSVM) allows air traffic 

controllers and pilots to reduce the 

standard required vertical separation 

from 2,000 feet to 1,000 feet for aircraft 

flying at altitudes between 29,000 and 

41,000 feet. This increases the number 

of flight altitudes at which aircraft 

maximize fuel and time efficiency. 

RSVM has led to about a 2 percent 

decrease in fuel burn.214 Continuous 

Descent Approach is a procedure that 

enables continuous descent of the 

aircraft on a constant slope toward 

landing, as opposed to a staggered or 

staged approach, thus allowing for a 

more efficient speed requiring less fuel 

and reducing GHG emissions. Aircraft 

auxiliary power units (APUs) are 

engine-driven generators that supply 

electricity and pre-conditioned cabin air 

for use aboard the aircraft while at the 

gate. Ground-based electricity sources or 

electrified gates combined with 

preconditioned air supplies can reduce 

APU fuel use and thus CO2 emissions 

substantially. Single-engine taxiing, a 

practice already used by some airlines, 

214 PARTNER, Assessment of the impact of 

reduced vertical separation on aircraft-related fuel 

burn and emissions for the domestic United States, 

PARTNER–COE–2007–002, November 2007, 

available at web.mit.edu/aeroastro/partner/reports/ 

rsvm-caep8.pdf. 

could be utilized more broadly to 

reduce CO2 emissions.215 Fuel 

consumption, and thus GHG emissions, 

could be reduced by decreasing the 

aircraft weight by reducing the amount 

of excess fuel carried. More efficient 

routes and aircraft speeds would be 

directly beneficial to reducing full flight 

GHG emissions. Operational safety must 

be considered in the application of all 

of these measures. 

In regard to the above three sections, 

we request information on potentially 

available technological controls 

(technologies for airframes, main 

engines, and auxiliary power units) and 

operational measures to reduce GHG 

emissions from aircraft operations. 

Since FAA currently administers and 

implements air traffic management and 

operational procedures, EPA would 

share information on these items with 

FAA. 

Efforts are underway to potentially 

develop alternative fuels for aircraft in 

the future. Industry (manufacturers, 

operators and airports) and FAA 

established the Commercial Aviation 

Alternative Fuels Initiative (CAAFI) in 

2006 to explore the potential use of 

alternative fuels for aircraft for energy 

security and possible environmental 

improvements. CAAFI’s goals are to 

have available for certification in 2008 

a 50 percent Fischer-Tropsch synthetic 

kerosene fuel, 2010 for 100 percent 

synthetic fuel, and as early as 2013 for 

other biofuels. However, any alternative 

fuel would need to be compatible with 

current jet fuel for commercial aircraft 

to prevent the need for tank and system 

flushing on re-fueling and to meet 

comprehensive performance and safety 

specifications. In February 2008, 

Boeing, General Electric, and Virgin 

Atlantic airlines tested a Boeing 747 that 

was partly powered by a biofuel made 

from babassu nuts and coconut oil, a 

first for a commercial aircraft. 

EPA requests information on 

decreasing aircraft emissions related to 

climate change through the use of 

alternative fuels, including what is 

feasible in the near-term and long-term 

and information regarding safety, 

distribution and storage of fuels at 

airports, life-cycle impacts, and cost 

information. Given the Agency’s work to 

develop a lifecycle methodology for 

fuels as required by the Energy 

Independence and Security Act, EPA 

also is interested in information on the 

lifecycle impacts of alternative fuels. 

215 ICAO, Operational Opportunities to Minimize 

Fuel Use and Reduce Emissions, Circular 303 AN/ 

176, February 2004, available at http:// 

www.icao.int/icao/en/m_publications.html. 

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c. Options To Address GHG Emissions 

From the Aviation Sector 

In the preceding nonroad sections, we 

have described a continuum of 

regulatory approaches that take us from 

traditional engine standards through a 

range of potential approaches for 

vehicle standards and even potential 

mechanisms to credit operational 

changes. For commercial aircraft, 

although the reasons to consider such 

continuum are just as valid, the means 

to accomplish these could be simpler. 

We see at least two potential basic 

approaches for regulating aircraft GHG 

emissions under the CAA, engine 

emission standards or a fleet average 

standard. These approaches are 

discussed further below. 

The first approach we can consider is 

setting emission standards as an 

extension of our current program. Under 

this approach we would establish, for 

example, CO2 exhaust emission 

standards and related requirements for 

all newly and previously certified 

engines applicable in some future year 

and later years. These standards could 

potentially cover all phases of flight. 

Depending on timing, this first set of 

standards could effectively be used to 

either establish baseline values and/or 

to require reductions. 

As described earlier, ICAO and EPA 

currently require measurement and 

reporting of CO2 emissions during 

engine exhaust gaseous emissions 

testing for the current certification cycle 

(although the current absence of this 

information for other GHGs does not 

rule out a similar approach for those 

GHGs).216 Although test procedures for 

measuring CO2 are in place already and 

LTO cycle CO2 data exists, test 

requirements to simulate full-flight 

emissions are a significant 

consideration. Further work is needed 

to determine how CO2 and other GHG 

emissions measured over the various 

modes of LTO cycle might be used to as 

a means to estimate or simulate cruise 

or full-flight emissions. A method has 

been developed by ICAO for 

determining NOX for climb/cruise 

operations (outside the LTO) based on 

LTO data, and this could be a good 

starting point.217 218 For CO2, and 

216 EPA’s regulations at 40 CFR 87.62 require 

testing at each of the following operating modes in 

order to determine mass emission rates: taxi/idle, 

takeoff, climbout, descent and approach. 

217 ICAO, CAEP/7 Report, Working Paper 68, 

CAEP/7–WP/68, February 2007, see http:// 

www.icao.int. 

218 ICAO has deferred work on using the NOX 

climb/cruise method for a certification procedure 

and standards since future engines (potential new 

technologies) may behave in a different way. There 

may need to be future work to consider the aircraft 

potentially NOX and other GHGs as 

well, the climb/cruise methods could 

then be codified as test procedures, and 

we could then establish emission 

standards for these GHGs. We request 

comments on the need to develop a new 

test procedure for aircraft engines and 

the best approach to developing such a 

procedure, including the viability and 

need for altitude simulation tests for 

emissions certification. 

Furthermore, to drive the 

development of engine technology, we 

could pursue near- and long-term GHG 

exhaust emission standards. Near-term 

standards, which could for example 

apply 5 years from their promulgation, 

would encourage engine manufacturers 

to use the best currently available 

technology. Long-term standards could 

require more significant reductions in 

emissions beyond the near-term values. 

In both cases, new standards could 

potentially apply to both newly and 

previously certified engines, but 

possibly at different levels and 

implementation dates based on lead 

time considerations. Under this 

approach, we would expect that no 

engines would be able to be produced 

indefinitely if they did not meet the new 

standards, except possibly based on the 

inclusion of an emissions averaging 

program for GHG as discussed below. 

For emission standards applied to 

other mobile sources, EPA has often 

incorporated emission averaging, 

banking and trading (ABT) programs to 

provide manufacturers more flexibility 

in phasing-in and phasing-out engine 

models as they seek to comply with 

emission standards. In these types of 

programs, the average emissions within 

a manufacturer’s current year product 

line are required to meet the applicable 

standard, which allows a manufacturer 

to produce some engines with emission 

levels above the standard provided they 

are offset with some below the standard. 

The calculation for average compliance 

is usually sales, activity, and power 

weighted. In addition, emissions credits 

and debits may be generated, banked 

and traded with other engine 

manufacturers. We request comment on 

the approaches to engine standards for 

reducing GHG emissions and an engine 

ABT program for new GHG emission 

standards, including whether certain 

GHGs, such as CO2, are more amenable 

than are other GHGs to being addressed 

by such a program. 

As part of this option, we could 

pursue new standards and test 

procedures for PM that would 

encompass LTO and climb/cruise 

mission, taking into account all phases of flight and 

the performance of the whole aircraft. 

operations (ICAO and EPA currently do 

not have test procedures or emission 

standards for PM from aircraft), if we 

find that aircraft PM emissions cause or 

contribute to air pollution which may 

reasonably be anticipated to endanger 

public health or welfare.219 Work has 

been underway for several years under 

the auspices of the Society of 

Automotive Engineers E–31 Committee, 

and EPA/FAA are working actively with 

this committee to bring forth a draft 

recommended test procedure. In 

addition, requirements could potentially 

be proposed and adopted using the 

same approach as discussed above for 

GHGs for near- and long-term standards 

and newly and already certified engines. 

In the preceding nonroad sections, we 

have discussed several approaches or 

variations on approaches to include 

vehicle and operational controls within 

a GHG emission control program for 

nonroad equipment. In doing so, we 

have not discussed direct regulation of 

equipment or fleet operators. Instead, 

we have focused on approaches that 

would credit fleet operators for 

improvements in operational controls 

within a vehicle or engine GHG 

standards program. Those approaches 

described in section VI.C.2 could apply 

to aircraft GHG emissions as well, and 

we request comments on the potential to 

apply those approaches to aircraft. 

As a second approach, in the case of 

aircraft, it may be more practical and 

flexible to directly regulate airline fleet 

average GHG emissions. Under such an 

approach we would set a declining fleet 

average GHG emission standard for each 

airline, based on the GHG emission 

characteristics of its entire fleet. This 

would require GHG certification 

emission information for all engines in 

the fleet from the aircraft engine 

manufacturers and information on hours 

flown and average power (e.g., thrust). 

Airlines would have GHG emission 

baselines for a given year based on the 

engine emission characteristics of their 

fleet, and beginning in a subsequent 

year, airlines would be required to 

reduce their emissions at some annual 

rate, at some rolling average rate, or 

perhaps to some prescribed lower level 

in a future year. This could be done as 

a fleet average GHG emission standard 

for each airline or through a surrogate 

measure of GHGs such as airline total 

fuel consumption, perhaps adjusted for 

flight activity in some way. This could 

219 As mentioned earlier, PM modifies or creates 

cloud cover, which in turn can either amplify or 

dampen climate change. Aircraft are also a source 

of PM emissions that contribute to local air quality 

near the ground, and the public health and welfare 

effects from these emissions are an important 

consideration. 

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Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 44473 

cover all domestic operations and 

international departures of domestic 

airlines. The fleet average program 

could potentially be implemented in the 

near term since it is not as reliant on 

lead times for technology change. 

Although we might develop such a 

declining fleet average emissions 

program based on engine emissions, an 

operational declining fleet average 

program could potentially be designed 

to consider the whole range of engine, 

aircraft and operational GHG control 

opportunities discussed above. Under 

this approach compliance with a 

declining fleet average standard would 

be based not only on parameters such as 

engine emission rates and activity, but 

could also consider efficiencies gained 

by use of improved operational controls. 

It is important to note that as part of this 

approach, a recordkeeping and reporting 

system would need to be established for 

airlines to measure and track their 

annual GHG emissions. Perhaps this 

could be accomplished through a 

surrogate measure of GHGs such as 

airline total fuel consumption. Today 

each airline reports its annual fuel 

consumption to the Department of 

Transportation. We request comment on 

the operational fleet average GHG 

emission standard concept, how it could 

be designed and implemented, what are 

important program design 

considerations, and what are potential 

metrics for establishing standards and 

determining compliance. While we have 

discussed two basic concepts above, we 

invite comment and information on any 

other approaches for regulating aircraft 

GHG emissions. 

d. Other Considerations 

We are aware that the European 

Commission (EC) has proposed a 

program to cap aviation-related CO2 

emissions (cap is 100% of sector’s 

emissions during 2004–2006). They 

would by 2012 include CO2 emissions 

from all flights arriving at and departing 

from European airports, including U.S.-

certified aircraft, in the European Union 

Emissions Trading Scheme (ETS).220, 221 

220 Commission Proposal for a Directive of the 

European Parliament and of the Council amending 

Directive 2003/87/EC so as to include aviation 

activities in the scheme for greenhouse gas emission 

allowance trading within the Community, 2006/ 

0304 (COD), COM(2006) 818 final, December 20, 

2006, available at http://eur-lex.europa.eu/ 

smartapi/cgi/sga_doc?smartapi!celexplus!prod!Doc 

Number&1g=en&type_doc=COMfinal& 

an_doc=2006&nu_doc=818. 

221 Proposal for a Directive of the European 

Parliament and of the Council amending Directive 

2003/87/EC so as to include aviation activities in 

the scheme for greenhouse gas emission allowance 

trading within the Community—Political 

agreement, December 21, 2007 available at http:// 

If the proposal is adopted, airlines from 

all countries (EU and non-EU) will be 

required to submit allowances to cover 

emissions from all such aircraft flights 

over the compliance period (e.g., 5 

years). The EU has expressed some 

interest in developing a program to 

waive this requirement for foreignflagged carriers (non-EU carriers) whose 

nations develop ‘‘equivalent’’ measures. 

The petitioners discussed this program, 

and we invite comments on it. 

The 36th Session of ICAO’s Assembly 

met in September 2007 to focus on 

aviation emissions related to climate 

change, including the use of emissions 

trading.222 In response to the EC’s 

proposed aviation program, the 

Assembly agreed to establish a highlevel group through ICAO to develop a 

framework of action that nations could 

use to address these emissions. A report 

with recommendations is due to be 

completed before the next Assembly 

Session in 2010. In addition, the 

Assembly urged all countries to not 

apply an emissions trading system to 

other nations’ air carriers except on the 

basis of mutual consent between those 

nations.223 

To address greenhouse gas emissions, 

ICAO’s focus currently appears to be on 

the continued development of guidance 

for market-based measures.224 These 

measures include emissions trading (for 

CO2), environmental levies, and 

voluntary measures. Emissions trading 

is when an overall target or cap is 

established and a market for carbon is 

set. This approach allows participants to 

buy and sell allowances, the price of 

which is established by the market. 

Environmental levies include taxes and 

charges with the objective of generating 

an economic incentive to decrease 

emissions. Voluntary measures are 

unilateral actions by industry or in an 

agreement between industry and 

government to decrease emissions 

beyond the base case. Note, for ICAO’s 

efforts on CO2 emission charges, it 

evaluated an aircraft efficiency 

parameter, and in early 2004 ICAO 

decided that there was not enough 

information available at the time to 

create a parameter that correlated 

properly with aircraft/engine 

performance.225 However, it is 

register.consilium.europa.eu/pdf/en/07/st16/ 

st16855.en07.pdf. 222 ICAO, Assembly—36th Session, Report of the 

Executive Committee on Agenda Item 17, A36–WP/ 

355, September 27, 2007. 223 ICAO, Assembly—36th Session, Report of the 

Executive Committee on Agenda Item 17, A36–WP/ 

355, September 27, 2007. 224 ICAO, ICAO Environmental Report 2007, 

available at http://www.icao.int/env/. 225 ICAO, CAEP/6 Report, February 2004, 

available at http:/www.icao.int. 

important to note, that unlike EPA, 

ICAO has not been petitioned under 

applicable law to determine whether 

GHG emissions from aircraft may 

reasonably be anticipated to endanger 

public health or welfare or to take any 

action if such a finding is made. We 

invite information on reducing overall 

emissions that relate to climate change 

from aircraft through a cap-and-trade 

system or other market-based system. 

Another consideration in the GHG 

program is the regulation of emissions 

from engines commonly used in general 

aviation aircraft. As indicated earlier, 

our current aircraft engine requirements 

apply to gas turbine engines that are 

mainly used by commercial aircraft, 

except in cases where general aviation 

aircraft sometimes use commercial 

engines. Our requirements do not 

currently apply to many engines used in 

business jets or to piston-engines used 

in aircraft that fall under the general 

aviation category, although our 

authority under the Clean Air Act 

extends to any aircraft emissions for 

which we make the prerequisite finding 

that those emissions cause or contribute 

to air pollution which may reasonably 

be anticipated to endanger public health 

or welfare.226 In 2006, general aviation 

made up about one percent of the CO2 

emissions from U.S. domestic 

transportation sources, and about 8 

percent of CO2 emissions from U.S. 

domestic aircraft operations.227 

Regulating GHG emissions from this 

sector of aviation would require the 

development of test procedures and 

emission standards. EPA requests 

comment on this matter and on any 

elements we should consider in 

potentially establishing test procedures 

and emission standards for these 

currently unregulated engines. 

5. Nonroad Sector Summary 

There are a number of potential 

approaches for reducing GHG emissions 

from the nonroad sector within the 

regulatory structure of the CAA. In 

considering our next steps to address 

GHG emissions from this sector, we seek 

comment on all of the issues raised in 

this notice along with recommendations 

226 As specified in 40 CFR 87.10, our emission 

standards apply to different classes of aircraft gas 

turbine engines, which have a particular minimum 

rated output. The engine class and rated output 

specifications correspond to certain engine 

operational or use practices, but we do not, by the 

terms of the rule, exempt general aviation aircraft 

or engines as such. 

227 U.S. EPA, Inventory of U.S. Greenhouse Gas 

Emissions and Sinks: 1990–2006, April 2008, 

USEPA #430–R–08–005, available at http:// 

www.epa.gov/climatechange/emissions/ 

usinventoryreport.html. 

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on the most appropriate means to 

address the issues. 

D. Fuels 

1. Recent Actions Which Reduce GHG 

Impacts of Transportation Fuels 

Historically under Title II of the CAA, 

EPA has treated vehicles, engines and 

fuels as a system. The interactions 

between the designs of vehicles and the 

fuels they use must be considered to 

assure optimum emission performance 

at minimum cost. While EPA continues 

to view its treatment of vehicles, 

engines and fuels as a system as 

appropriate, we request comment on 

whether it would continue to be 

advantageous to take this approach for 

the purpose of controlling GHG 

emissions from the transportation 

sector. This section describes existing 

authorities under the CAA for regulating 

the GHG emissions contribution of 

fuels. In this discussion, we ask for 

comment on the combination of 

authorities that would suit the goal of 

GHG emission reductions from 

transportation fuel use. 

In response to CAA section 211(o) 

adopted as part of the Energy Policy Act 

of 2005 (Energy Act of 2005), EPA 

issued regulations implementing a 

Renewable Fuels Standard (RFS) 

program (72 FR 23900, May 1, 2007). 

These regulations were designed to 

ensure that 4.0 billion gallons of 

renewable fuel were used in motor 

vehicles beginning in 2006, gradually 

increasing to 7.5 billion gallons in 2012. 

While the primary purpose of this 

provision of the Energy Act of 2005 was 

to reduce U.S. dependence on 

petroleum-based fuel and promote 

domestic sources of energy, EPA 

analyzed the extent to which reductions 

in GHG emissions would also result 

from the new RFS program. Therefore, 

for the first time in a major rule, EPA 

presented estimates of the GHG impacts 

of replacing petroleum-based 

transportation fuel with fuel made from 

renewable feedstocks. 

In December 2007, EISA revised 

section 211(o) to set three specific 

volume standards for biomass-based 

diesel, cellulosic biofuel, and advanced 

biofuel as well as a total renewable fuel 

standard of 36 billion gallons annually 

by 2022. Certain eligible fuels must also 

meet specific GHG performance 

thresholds based upon a lifecycle GHG 

assessment. In addition to being limited 

to renewable fuels, EISA puts 

constraints on what land sources can be 

used to produce the renewable fuel 

feedstock, requires assessment of both 

primary and significant secondary land 

use impacts as part of the required 

lifecycle GHG emissions assessment, 

and has a number of other specific 

provisions that affect both the design of 

the rule and the required analyses. EISA 

requires that EPA adopt rules 

implementing these provisions by 

January 2009. 

The U.S. federal government is not 

alone in considering or pursuing fuel 

changes which can result in reductions 

of GHG emissions from the 

transportation sector California is 

moving toward adopting a low carbon 

fuel standard that it anticipates will 

result in significant reductions in GHG 

emissions through such actions as 

increasing the use of renewable fuel and 

requiring refiners to offset any emission 

increases that might result from changes 

in crude oil supply. Canada, the 

countries of the European Union, and a 

number of other nations are considering 

or in the process of requiring fuel 

changes as part of their strategy to 

reduce GHG emissions from the 

transportation sector. 

2. GHG Reductions Under CAA Section 

211(o) 

The two principal CAA authorities 

available to EPA to regulate fuels are 

sections 211(c) and 211(o). As explained 

in previously, section 211(o), added by 

the Energy Act of 2005 and amended by 

EISA, requires refiners and other 

obligated parties to assure that the 

mandated volumes of renewable fuel are 

used in the transportation sector. 

Section 211(o) only addresses renewable 

fuels; other alternative fuels such as 

natural gas are not included nor are any 

requirements imposed on the 

petroleum-based portion of our 

transportation fuel pool. EPA is 

authorized to waive or reduce required 

renewable fuel volumes specified in 

EISA under certain circumstances, and 

is also authorized to establish required 

renewable fuel volumes after the years 

for which volumes are specified in the 

Act (2012 for biomass-based diesel and 

2022 for total renewable fuel, cellulosic 

biofuel and advanced biofuel). One of 

the factors EPA is to consider in setting 

standards is the impact of production 

and use of renewable fuels on climate 

change. In sum, EPA has limited 

discretion under 211(o) to improve GHG 

performance of fuels. 

Changes in fuel feedstock sources (for 

example, petroleum versus biomass) 

and processing technologies can have a 

significant impact on GHG emissions 

when assessed on a lifecycle basis. As 

analyzed in support of the RFS rules, a 

lifecycle approach considers the GHG 

emissions associated with producing a 

fuel and bringing it to market and then 

attributes those emissions to the use of 

that fuel. In the case of petroleum, the 

lifecycle would account for emissions 

resulting from extraction of crude oil, 

shipping the oil to a refiner, refining the 

oil into a fuel, distributing the fuel to 

retail markets and finally the burning 

the gasoline or diesel fuel in an engine. 

This assessment is sometimes referred 

to as a ‘‘well-to-wheels’’ assessment. A 

comparable assessment for renewable 

fuel would include the process of 

growing a feedstock such as corn, 

harvesting the feedstock, transferring it 

to a fuel production facility, turning the 

feedstock into a fuel, getting the 

renewable fuel to market and then 

assessing its impact on vehicle 

emissions. EPA presented estimates of 

GHG impacts as part of the assessment 

for the Energy Act of 2005 RFS 

rulemaking that increasing renewable 

fuel use from approximately 4 billion 

gallons to 7.5 billion gallons by 2012. 

However, as noted below, the 

methodology used in that RFS 

rulemaking did not consider a number 

of relevant issues. 

The 7.5 billion gallons of renewable 

fuel required by the Energy Act of 2005 

program represents a relatively small 

portion of the total transportation fuel 

pool projected to be used in 2012 (add 

figure as % of energy). The much larger 

36 billion gallons of renewable fuel 

required by EISA for 2022 would be 

expected to displace a much larger 

portion of the petroleum-based fuel 

used in transportation and would 

similarly be expected to have a greater 

impact on GHG emissions. Comments 

on the RFS proposal suggested 

improvements to the lifecycle 

assessment used in that rule. For 

instance, the RFS analysis did not fully 

consider the impact of land use changes 

both domestically and abroad that 

would likely result from increased 

demand for corn and soybeans as 

feedstock for ethanol and biodiesel 

production in the U.S. EPA largely 

agreed with these comments but was not 

able to incorporate a more thorough 

assessment of land use impacts and 

other enhancements in its lifecycle 

emissions modeling in time. We are 

undertaking such a lifecycle assessment 

as we develop the proposal to 

implement EISA fuel mandates. Because 

this updated lifecycle assessment will 

incorporate more factors and the latest 

data, it will undoubtedly change the 

estimates of GHG reductions included 

in the Energy Act 2005 RFS package. 

EISA recognizes the importance of 

distinguishing between renewable fuels 

on the basis of their impact on lifecycle 

GHG emissions. Nevertheless, EISA 

stops short of directly comparing and 

crediting each fuel on the basis of its 

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estimated impact on GHG emissions. 

For example, while requiring a 

minimum of 60% GHG emission 

reduction for cellulosic biomass fuel 

compared to the petroleum-based fuel 

displaced, EISA does not distinguish 

among the multiple pathways for 

producing cellulosic biofuel even 

though these pathways might differ 

significantly in their lifecycle GHG 

emission performance. It may be that 

the least costly fuels meeting the 

cellulosic biofuel GHG performance 

threshold will be produced which may 

not be the fuels with the greatest GHG 

benefit or even the greatest GHG benefit 

when considering cost (e.g., GHG 

reduction per dollar cost). The same 

consideration applies to other fuels and 

pathways. Without further delineating 

fuels on the basis of their lifecycle GHG 

impact, no incentive is provided for 

production of particular fuels which 

would minimize lifecycle GHG 

emissions within the EISA fuel 

categories. 

We request comment on the 

importance of distinguishing fuels 

beyond the categories established in 

EISA and how an alternative program 

might further encourage the 

development and use of low GHG fuels. 

We also request comment on the ability 

(including considerations of uncertainty 

and the measurement of both direct and 

indirect emissions associated with the 

production of fuels) of lifecycle analysis 

to estimate the GHG emissions of a 

particular fuel produced and used for 

transportation and how EPA should 

delineate fuels (e.g., on the basis of 

feedstock, production technology, etc.). 

EPA notes that a certain level of 

aggregation in the delineation of fuels 

may be necessary, but that the greater 

the aggregation in the categories of fuels, 

the fewer incentives exist for changes in 

behavior that would result in reductions 

of GHG emissions. EPA asks for 

comment on this idea as well as how 

and whether methods for estimating 

lifecycle values for use in a regulatory 

program can take into account the 

dynamic nature of the market. EPA also 

requests comment on the relative 

efficacy of a lifecycle-based regulatory 

approach versus a price-based (e.g., 

carbon tax or cap and trade) approach 

to incentivize the multitude of actors 

whose decisions collectively determine 

the GHG emissions associated with the 

production, distribution and use of 

transportation fuels. Finally, we request 

comment on the ability to determine 

lifecycle GHG performance for fuels and 

fuel feedstocks that are produced 

outside the U.S. 

EISA addresses impacts of renewable 

fuels other than GHG impacts. Section 

203 of EISA directs that the National 

Academy of Sciences be asked to 

consider the impacts on producers of 

feed grains, livestock, and food and food 

products, energy producers, individuals 

and entities interested in issues relating 

to conservation, the environment and 

nutrition, users and consumers of 

renewable fuels, and others potentially 

impacted. Section 204 directs EPA to 

lead a study on environmental issues, 

including air and water quality, 

resource conservation and the growth 

and use of cultivated invasive or 

noxious plants. We request comment on 

what impacts other than GHG impacts 

should be considered as part of a 

potential fuels GHG regulation and how 

such other impacts should be reflected 

in any policy decisions associated with 

the rule. These impacts could include 

the potential impacts on food prices and 

supplies. 

Programs under section 211(o) are 

subject to further limitations. Limited to 

renewable fuels, these programs do not 

consider other alternative fuels such as 

coal-to-liquids fuel that could be part of 

the transportation fuel pool and could 

impact the lifecycle GHG performance 

of the fuel pool. Additionally, EISA’s 

GHG performance requirements are 

focused on the renewable fuels, not the 

petroleum-based fuel being replaced. 

Under EISA, the GHG performance of 

renewable fuels is tied to a 2005 

baseline for petroleum fuel. No 

provision is included for considering 

how the GHG impacts of the petroleumbased fuel pool might change over time, 

either for the purpose of determining 

the comparative performance for 

threshold compliance of renewable fuels 

or for assessing the impact of the 

petroleum fuel itself on transportation 

fuel GHG emissions. Thus, for example, 

there is no opportunity under EISA to 

recognize and credit improvements in 

refinery operation which might improve 

the lifecycle GHG performance of the 

petroleum-based portion of the 

transportation fuel pool. Comments are 

requested on the importance of lowering 

GHG emissions from transportation 

fuels via the inclusion of alternative, 

non-renewable fuels in a GHG 

regulatory program as well as the 

petroleum portion of the fuel pool, thus 

providing opportunity to reflect 

improvements in refinery practices. 

Finally while the current RFS and 

anticipated EISA programs will tend to 

improve the GHG performance of the 

transportation fuel pool compared to a 

business as usual case, they would not 

in any way cap the GHG emissions due 

to the use of fuels. In fact, under both 

programs, the total amount of fuel 

consumed and thus the total amount of 

GHG emissions from those fuels can 

both increase. We note that other 

lifecycle fuel standard programs being 

developed such as those in California, 

Canada, and Europe, while also taking 

into account the GHG emissions 

reduction potential from petroleum 

fuels, do not cap the emissions from the 

total fuel pool; the GHG per gallon of 

transportation fuel consumed may 

decrease but the total gallons consumed 

are not constrained such that the total 

GHG emissions from fuel may continue 

to grow. We request comment on setting 

a GHG control program covering all 

transportation fuels used in the United 

States which would also cap the total 

emissions from these transportation 

fuels. 

Elsewhere in this notice, comments 

are solicited on the potential for 

regulating GHG emissions from 

stationary sources which could include 

petroleum refineries and renewable and 

alternative fuel production facilities. 

EPA recognizes the potential for 

overlapping incentives to control 

emissions at fuel production facilities. 

We request comment on the 

implications of using a lifecycle 

approach in the regulation of GHG 

emissions from fuels which would 

include refinery and other fuel 

production facilities while potentially 

also directly regulating such stationary 

source emission under an additional 

control program. Recognizing that the 

use of biomass could also be a control 

option for stationary sources seeking to 

reduce their lifecycle GHG impacts, EPA 

requests comment on the implications 

of using biomass for transportation fuel 

in potential competition as an energy 

source in stationary source applications. 

3. Option for Considering GHG Fuel 

Regulation Under CAA Section 211(c) 

Section 211(c)(1) of the CAA has 

historically been the primary authority 

used by EPA to regulate fuels. It 

provides EPA with authority to ‘‘control 

or prohibit the manufacture, 

introduction into commerce, offering for 

sale, or sale of any fuel or fuel additive 

for use in a motor vehicle, motor vehicle 

engine, or nonroad engine of nonroad 

vehicle [(A)] if in the judgment of the 

Administrator any emission product of 

such fuel or fuel additive causes or 

contributes to air pollution or water 

pollution (including any degradation in 

the quality of groundwater) which may 

reasonably be anticipated to endanger 

public health or welfare.’’ Section 

211(c)(2) specifies that EPA must 

consider all available relevant medical 

and scientific information, including 

consideration of other technologically or 

economically feasible means of 

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achieving vehicle emission standards 

under CAA section 202 before 

controlling a fuel under section 

211(c)(1)(A). A prerequisite to action 

under 211(c)(1) is an EPA finding that 

a fuel or fuel additive, or emission 

product of a fuel or fuel additive, causes 

or contributes to air or water pollution 

that may reasonably be anticipated to 

endanger public health or welfare. 

Issues related to an endangerment 

finding are discussed in section V of 

this advance notice. 

EPA asks for comment on whether 

section 211(c) could be read as 

providing EPA a broader scope of 

authority to establish a new GHG fuel 

program than section 211(o). 

Specifically, EPA asks for comment on 

whether section 211(c)(1)(A) could 

allow EPA to start the program as soon 

as appropriate in light of our analysis 

and similarly cover the time period 

most appropriate; whether it could 

allow a program that would encourage 

the use of both renewable and 

alternative fuels with beneficial GHG 

emissions impacts and discourage those 

fuels with relatively detrimental GHG 

impacts; and whether it could allow 

EPA to establish requirements for all 

fuels (gasoline, diesel, renewables, 

alternative and synthetic fuel, etc.) used 

in both highway and nonroad vehicles 

and engines. EPA requests comment on 

whether the flexibilities under section 

211(c) allow it to consider a broad set 

of options for controlling GHG 

emissions through fuels, including those 

that solely regulate the final point of 

emissions such as tailpipe emissions 

rather than also controlling the 

emissions at the fuel production facility 

through a lifecycle approach. 

Typically EPA has acted through CAA 

section 211(c) to prohibit the use of 

certain additives (e.g., lead) in fuel, to 

control the level of a component of fuel 

to reduce harmful vehicle emissions 

(e.g., sulfur, benzene), or to place a limit 

on tailpipe emissions of a pollutant 

(e.g., the reformulated gasoline 

standards for volatile organic 

compounds and toxics emissions 

performance). While multiple 

approaches may be available to regulate 

GHG emissions under section 211(c), 

one option could require refiners and 

importers of gasoline and diesel meet a 

GHG performance standard based on 

reducing their lifecycle GHG emissions 

of the fuel they import or produce. They 

would comply with this performance 

standard by ensuring the use of 

alternative and/or renewable fuels that 

have lower lifecycle GHG emissions 

than the gasoline and diesel they 

displace and through selection of lower 

petroleum sources that also reduce the 

lifecycle GHG performance of 

petroleum-based fuel. EPA asks 

comment on whether section 211(c) 

could authorize such an approach 

because it would be a control on the sale 

or manufacture of a fuel that addresses 

the emissions of GHGs from the 

transportation fuels that would be the 

subject the endangerment finding 

discussed in section V. Comments are 

requested on this interpretation of 

211(c) authority. 

As pointed out above, neither the 

Energy Act of 2005 RFS program nor the 

forthcoming program under EISA 

directly addresses the varying GHG 

emission reduction potential of each 

fuel type and production pathway. EPA 

asks comment on whether it could have 

the authority under CAA section 211(c) 

to design and implement a program that 

includes not only renewable fuels but 

other alternative fuels, considers the 

GHG emissions from the petroleum 

portion of the fuel pool and reflects 

differences in fuel production not 

captured by the GHG thresholds 

established under EISA, including 

differences in technology at the fuel 

production facility. We request 

comment on the factors EPA should 

consider in developing a GHG fuel 

control program under section 211(c) 

and how including such factors could 

serve to encourage the use of low GHGemitting practices and technology. 

We note that the RFS and the 

forthcoming EISA programs require 

refiners and other obligated parties to 

meet specified volume standards and 

that these programs are anticipated to 

continue. We request comment on the 

impacts and opportunities of 

implementing both a GHG program 

under 211(c) and volume mandates 

under 211(o). 

EPA seeks comment on the potential 

for reducing GHG emissions from 

transportation fuel over and above those 

reductions that could be achieved by 

RFS and the anticipated EISA 

requirements. Although EPA has not 

completed its analysis of the GHG 

emission reductions expected under the 

combined RFS and EISA programs, EPA 

seeks comment on how it might 

structure a program that could reduce 

GHG emissions from transportation fuel 

over and above those reductions that 

could be achieved by the RFS and 

anticipated EISA requirements. 

VII. Stationary Source Authorities and 

Potential Options for Regulating 

Greenhouse Gases Under the Clean Air 

Act 

In this section, we explore three major 

pathways that the CAA provides for 

regulating stationary sources, as well as 

other stationary source authorities of the 

Act, and their potential applicability to 

GHGs. The three pathways include 

NAAQS and implementation plans 

(sections 107–110 and related 

provisions); performance standards for 

new and existing stationary sources 

(section 111); and hazardous air 

pollutant standards for stationary 

sources (section 112).228 Special 

provisions for regulating solid waste 

incinerators are contained in section 

129. 

We also review the implications of 

regulating GHGs under Act’s programs 

for preconstruction permitting of new 

emissions sources, with emphasis on 

the PSD program under Part C of the 

Act. These programs require permits 

and emission controls for major new 

sources and modifications of existing 

major sources. The permitting 

discussion closes by examining the 

implications of requiring operating 

permits under Title V for major sources 

of GHGs. Finally, we describe four 

different types of market-oriented 

regulatory designs that (in addition to 

other forms of regulation) could be 

considered for programs to reduce GHG 

emissions from stationary sources to the 

extent permissible under the CAA: capand-trade, rate-based emissions trading, 

emissions fees, and a hybrid approach. 

For each potential pathway of 

stationary source regulation, this notice 

discusses the following basic questions: 

• What does the section require? 

• What sources would be affected if 

GHGs were regulated under this 

authority? 

• What would be the key milestones 

and implementation timeline? 

• What are key considerations 

regarding use of this authority for GHGs 

and how could potential issues be 

addressed? 

• What possible implications would 

use of this authority for GHGs have for 

other CAA programs? 

In discussing these questions, EPA 

considers the President’s core principles 

and other policy design principles 

enumerated in Section III.F.1. EPA seeks 

comment on the advantages and 

disadvantages of alternative regulatory 

authorities in light of those policy 

design principles. EPA further invites 

comments on the following aspects of 

each CAA stationary source authority: 

• How much flexibility does the CAA 

section provide for implementing its 

requirements? For example, can EPA set 

compliance dates that reflect the global 

228 As explained in this section, the NAAQS 

pathway is not solely a stationary source regulatory 

authority; plans for implementating the NAAQS can 

involve regulation of stationary and mobile sources. 

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and long-lived nature of GHGs and that 

allow time for technological advances 

and new technology deployment? 

• To what extent would the section 

allow for consideration of the costs and 

economic impacts of regulating GHGs? 

For example, would the section provide 

opportunities for sending a price signal, 

such as through cap and trade programs 

(with or without cost containment 

mechanisms) and emission fees. 

• To what extent can each section 

account for the international aspects of 

GHG emissions, atmospheric 

concentrations, and emission impacts, 

including ways for potentially 

addressing international pollutant 

transport and emission leakage? 

• How does each section address the 

assessment of available technologies, 

and to what extent could the section 

promote or require the advancement of 

technology? 

• To what extent does the section 

allow for the ability to prioritize 

regulation of significant emitting sectors 

and sources? 

• To what extent could each authority 

be adapted to GHG regulation without 

compromising the Act’s effectiveness in 

regulating traditional air pollutants? 

Finally, for each regulatory authority, 

EPA requests comment on a range of 

program-specific issues identified in the 

discussion below. EPA also requests 

comment on whether there are specific 

statutory limitations that would best be 

addressed by new legislation. 

Additional information concerning 

potential CAA regulation of stationary 

source GHGs may be found in the 

Stationary Source Technical Support 

Document (Stationary Source TSD) 

placed in the docket for this notice. 

A. National Ambient Air Quality 

Standards (NAAQS) 

1. What Are the Requirements for 

Setting and Implementing NAAQS? 

a. Section 108: Listing Pollutant(s) and 

Issuing Air Quality Criteria 

Section 108(a)(1) establishes three 

criteria for listing air pollutants to be 

regulated through NAAQS. Specifically, 

section 108(a)(1) states that: EPA ‘‘shall 

from time to time * * * list * * * each 

air pollutant— 

(A) emissions of which, in [the 

Administrator’s] judgment, cause or 

contribute to air pollution which may 

reasonably be anticipated to endanger 

public health or welfare; 

(B) the presence of which in the 

ambient air results from numerous or 

diverse mobile or stationary sources; 

and 

(C) for which air quality criteria had 

not been issued before the date of 

enactment of the Clean Air 

Amendments of 1970, but for which [the 

Administrator] plans to issue air quality 

criteria under this section.’’ 

In determining whether a pollutant 

meets these criteria, EPA must consider 

a number of issues, including many of 

those discussed in section IV above 

regarding an endangerment finding. As 

discussed there, in the context of the 

ICTA petition remand, EPA is 

considering defining the ‘‘air pollution’’ 

as the elevated current and future 

concentration of six GHGs (CO2, CH4, 

N2O, HFCs, PFCs, and SF6). Also in that 

context, EPA is considering alternative 

definitions of ‘‘air pollutant’’ as the 

group of GHGs or each individual GHG 

for purposes of the ‘‘cause or 

contribute’’ determination. 

In considering the potential listing of 

GHGs under section 108, EPA solicits 

input on appropriate definitions of both 

the ‘‘air pollution’’ and the ‘‘air 

pollutants.’’ With regard to section 108, 

it is important to note that EPA has clear 

precedents for listing related 

compounds as groups rather than as 

individual pollutants. For example, 

photochemical oxidants, oxides of 

nitrogen, and particulate matter all 

comprise multiple compounds, but the 

listing under section 108 is for the group 

of compounds, not the individual 

elements of the group. The Agency is 

soliciting comment on the relevance of 

these precedents for GHGs. In addition, 

as discussed later, there would be 

increased complexity in setting NAAQS 

for individual GHGs than for GHGs as 

a group. We are particularly interested 

in comments on how to apply the terms 

‘‘air pollution’’ and/or ‘‘air pollutants’’ 

under sections 108 and 109 in the 

context of GHGs, and the implications 

of taking consistent or different 

approaches under other Titles or 

sections of the Act. 

A positive endangerment finding for 

GHGs under section 202(a) or other 

sections of the CAA could have 

significant and direct impacts on EPA’s 

consideration of the first two criteria for 

listing the pollutant(s) under section 

108, as explained in section IV.B.2 of 

this notice. The third criterion for listing 

under section 108, however, may be 

unrelated to the issues involved in any 

motor vehicle or other endangerment 

finding. Moreover, this third criterion 

could provide EPA discretion to decide 

whether to list those pollutants under 

section 108 for purposes of regulating 

them via the NAAQS.229 EPA requests 

229 With respect to the third criterion, while there 

is a decision of U.S. Court of Appeals for the 

Second Circuit to the contrary, NRDC v. Train, 545 

F.2d 320 (2nd Cir. 1978), EPA notes that that 

comment on the effect of a positive 

finding of endangerment for GHGs 

under section 202(a) of the Act on 

potential listing of the pollutant(s) 

under section 108. 

Section 108 also requires that once a 

pollutant is listed, EPA issue ‘‘air 

quality criteria’’ encompassing ‘‘all 

identifiable effects on public health or 

welfare,’’ including interactions 

between the pollutant and other types of 

pollutants in the atmosphere. We are 

interested in commenters’ views on 

whether and how developing air quality 

criteria for GHGs would differ from 

developing such criteria for other 

pollutants such as ozone and particular 

matter, given the long-lived nature of 

GHGs and the breadth of impacts and 

other special issues involved with 

global climate change. EPA also invites 

comment on the extent to which it 

would be appropriate to use the most 

recent IPCC reports, including the 

chapters focusing on North America, 

and the U.S. government Climate 

Change Science Program synthesis 

reports as scientific assessments that 

could serve as an important source or as 

the primary basis for the Agency’s 

issuance of ‘‘air quality criteria.’’ 

Finally, section 108 requires EPA to 

issue information on air pollution 

control techniques at the same time it 

issues air quality criteria. This would 

include information on the cost of 

installation and operation, energy 

requirements, emission reduction 

benefits, and environmental impacts of 

these techniques. Generally, the Agency 

defers this obligation until the time a 

standard is actually issued. As required 

under Executive Order 12866, EPA must 

issue a Regulatory Impact Analysis 

(RIA) for major rulemaking actions, and 

it is in this context that EPA has 

previously described the scope and 

effectiveness of available pollution 

control techniques. EPA requests 

comment on whether this approach is 

appropriate in the case of GHGs. 

b. Section 109: Standard-Setting 

Section 109 requires that the 

Administrator establish NAAQS for any 

air pollutant for which air quality 

criteria are issued under section 108. 

Both the air quality criteria and the 

standards are to be reviewed and, as 

appropriate, revised by the 

Administrator, every five years. These 

decisions are to be informed by an 

decision was rendered prior to the Supreme Court’s 

decision in Chevron v. Natural Resources Defense 

Council, 467 U.S. 837 (1984). Thus, a proper and 

reasonable question to ask is whether this criterion 

affords EPA discretion to decide whether it is 

appropriate to apply the NAAQS structure to a 

global air pollution problem like GHGs. 

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independent scientific review 

committee, a role which has been 

fulfilled by the Clean Air Scientific 

Advisory Committee (CASAC) of EPA’s 

Science Advisory Board. The committee 

is charged with reviewing both the air 

quality criteria for the pollutant(s) and 

the standards, and recommending any 

revisions deemed appropriate. 

The statute specifically provides that 

primary NAAQS ‘‘shall be ambient air 

quality standards the attainment and 

maintenance of which in the judgment 

of the Administrator, based on such 

criteria and allowing an adequate 

margin of safety, are requisite to protect 

the public health,’’ including the health 

of sensitive groups. The requirement 

that primary standards provide an 

adequate margin of safety was intended 

to address uncertainties associated with 

inconclusive scientific and technical 

information available at the time of 

standard setting. It was also intended to 

provide a reasonable degree of 

protection against hazards that research 

has not yet identified. Lead Industries 

Association v. EPA, 647 F.2d 1130, 1154 

(DC Cir 1980), cert. denied, 449 U.S. 

1042 (1980); American Petroleum 

Institute v. Costle, 665 F.2d 1176, 1186 

(DC Cir 1981), cert. denied, 455 U.S. 

1034 (1982). The selection of any 

particular approach to providing an 

adequate margin of safety is a policy 

choice left specifically to the 

Administrator’s judgment. Lead 

Industries Association v. EPA, 647 F.2d 

at 1161–62. 

With regard to secondary NAAQS, the 

statute provides that these standards 

‘‘specify a level of air quality the 

attainment and maintenance of which in 

the judgment of the Administrator 

* * * is requisite to protect the public 

welfare from any known or anticipated 

adverse effects associated with the 

presence of such air pollutant in the 

ambient air.’’ Welfare effects as defined 

in CAA section 302(h) include, but are 

not limited to, ‘‘effects on soils, water, 

crops, vegetation, manmade materials, 

animals, wildlife, weather, visibility and 

climate, damage to and deterioration of 

property, and hazards to transportation, 

as well as effects on economic values 

and on personal comfort and wellbeing.’’ 

One of the central issues posed by 

potential regulation of GHGs through 

the NAAQS is the nature of the health 

and environmental effects to be 

addressed by the standards and, thus, 

what effects should be addressed when 

considering a primary (public health) 

standard and what effects should be 

addressed when considering a 

secondary (public welfare) standard. 

This issue has implications for whether 

it would be appropriate to establish a 

primary standard as well as a secondary 

standard for these pollutants. As 

discussed above in section V, the direct 

effects of GHG emissions appear to be 

principally or exclusively welfarerelated. GHGs are unlike other current 

NAAQS pollutants in that direct 

exposure to GHGs at current or 

projected ambient levels appears to have 

no known adverse effects on human 

health. Rather, the health impacts 

associated with ambient GHG 

concentrations are a result of the 

changes in climate at the global, 

regional, and local levels, which trigger 

myriad ecological and meteorological 

changes that can adversely affect public 

health (e.g., increased viability or 

altered geographical range of pests or 

diseases; increased frequency or severity 

of severe weather events including heat 

waves) (see section V above). The effects 

on human health are thus indirect 

impacts resulting from these ecological 

and meteorological changes, which are 

effects on welfare. This raises the 

question of whether it is more 

appropriate to address these health 

effects as part of our consideration of 

the welfare effects of GHGs when setting 

a secondary NAAQS rather than a 

primary NAAQS. Control of GHGs 

would then occur through 

implementation of the secondary 

NAAQS rather than the primary 

NAAQS. EPA invites comment on 

whether and how these indirect human 

health impacts should be addressed in 

the context of setting a primary or a 

secondary NAAQS. 

Past experience suggests EPA may 

have discretion to decline to set either 

a primary or a secondary standard for a 

pollutant if the evidence shows that 

there are no relevant adverse effects at 

or near current ambient concentrations, 

and therefore that no standard would be 

requisite to protect public health or 

welfare. In 1985, for example, EPA 

determined that it was appropriate to 

revoke the secondary standard for 

carbon monoxide (CO) after a review of 

the scientific evidence indicated that 

there was no evidence of known or 

anticipated adverse welfare effects 

associated with CO at or near ambient 

levels. 50 FR 37484, 37494 (September 

13, 1985). This decision was reaffirmed 

by the Agency in the 1994 CO NAAQS 

review, and there remains only a 

primary standard for this pollutant. EPA 

requests comment on whether it would 

be necessary and/or appropriate for the 

Agency to establish both primary and 

secondary NAAQS for GHGs if those 

pollutants were listed under section 

108. 

It is also important to consider how a 

NAAQS for GHGs would interface with 

existing NAAQS for other pollutants, 

particularly oxides of nitrogen (NOX) 

and ozone (O3), as well as particulate 

matter. EPA’s approach in other NAAQS 

reviews has been to consider climate 

impacts associated with any pollutant as 

part of the welfare impacts evaluated for 

that pollutant in setting secondary 

standards for the pollutant. If separate 

NAAQS were established for GHGs, 

EPA would likely address the climate 

impacts of each specific GHG in the 

NAAQS for GHGs, and would not need 

to address the climate impacts of that 

GHG when addressing other NAAQS, 

thus avoiding duplication of effort. 

In considering the application of 

section 109 to GHGs and whether it 

would be appropriate to regulate GHGs 

through the NAAQS, EPA must evaluate 

a number of other standard-setting 

issues, as discussed below. 

i. Level 

For potential GHG standards, EPA 

would face special challenges in 

determining the level of the NAAQS. As 

noted above, the primary standard must 

be ‘‘requisite to protect public health 

with an adequate margin of safety’’ and 

the secondary standard ‘‘requisite to 

protect public welfare against any 

known or anticipated adverse effects.’’ 

EPA’s task is to establish standards that 

are neither more nor less stringent than 

necessary for the purposes of protecting 

public health or welfare. Whitman v. 

American Trucking Associations, 531 

U.S. 457, 473. Under established legal 

interpretation, the costs of 

implementation associated with various 

potential levels cannot be factored into 

setting a primary or secondary 

standard.230 Any determinations by the 

EPA Administrator regarding the 

appropriate level (and other elements 

of) of a NAAQS for GHGs must based on 

the available scientific evidence of 

adverse public health and/or public 

welfare impacts, without consideration 

of the costs of implementation. 

EPA expects it would be difficult to 

determine what levels and other 

elements of NAAQS would meet these 

criteria for GHGs, given that the full 

effects associated with elevated 

atmospheric concentrations of these 

230 The Supreme Court has confirmed EPA’s longstanding interpretation and ruled that ‘‘[t]he text of 

§ 109(b), interpreted in its statutory and historical 

context and with appreciation for its importance to 

the CAA as a whole, unambiguously bars cost 

considerations from the NAAQS-setting process.’’ 

The court also noted that consideration of costs 

occurs in the state’s formulation of the 

implementation plan with the aid of EPA cost data. 

Whitman v. American Trucking Associations, 531 

U.S. at 472. 

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pollutants occur over a long period of 

time and there are significant 

uncertainties associated with the health 

or welfare impacts at any given 

concentration. The delayed nature of 

effects and the complex feedback loops 

associated with global climate change 

would require EPA to consider both the 

current effects and the future effects 

associated with current ambient 

concentrations. In making a 

determination of what standard is 

sufficient but not more stringent than 

necessary, EPA would also have to 

grapple with significant scientific 

uncertainty. As with other NAAQS, 

however, the iterative nature of the 5-

year review cycle means the standards 

could be revised as appropriate in light 

of new scientific information as it 

becomes available. EPA requests 

comment on the scientific, technical, 

and policy challenges of determining 

appropriate levels for NAAQS for GHG 

pollutants, for both primary and 

secondary standards. 

As with all pollutants for which EPA 

establishes NAAQS, EPA would need to 

evaluate what constitutes an ‘‘adverse’’ 

impact in the climate context. EPA 

notes that the 1992 UNFCCC calls for 

the avoidance of ‘‘dangerous 

anthropogenic interference with the 

climate system.’’ However, it is possible 

that the criteria for setting a NAAQS 

may call for protection against risks and 

effects that are less egregious than 

‘‘dangerous interference.’’ Furthermore, 

international agreement has not been 

reached on either the metric (e.g., 

atmospheric concentrations of the six 

major directly emitted anthropogenic 

GHGs, radiative forcing, global average 

temperature increase) or the level at 

which dangerous interference would 

occur. EPA requests comment on 

whether it would be appropriate, given 

the unique attributes of GHGs and the 

significant contribution to total 

atmospheric GHG contributions from 

emissions emanating outside the United 

States, to establish a level for a GHG 

NAAQS based on an internationally 

agreed-upon target GHG level, 

considering legal and policy factors. 

Another key question is the 

geographical extent of the human health 

and welfare effects that should be taken 

into consideration in determining what 

level and other elements of a standard 

would provide the appropriate 

protection. The pollutants already 

subject to NAAQS are typically local 

and/or regional in nature, so the 

standards are designed to limit ambient 

concentrations of pollutants associated 

with emissions typically originating in 

and affecting various parts of the United 

States. In assessing what standard is 

requisite to protect either public health 

or welfare, EPA has focused in the past 

on analyzing and addressing the 

impacts in the United States. It may be 

appropriate to interpret the Act as 

requiring standards that are requisite for 

the protection of U.S. public health and 

welfare. However, atmospheric 

concentrations of GHGs are relatively 

uniform around the globe, the impacts 

of climate change are global in nature, 

and these effects, as described in section 

V, may be unequally distributed around 

the world. The severity of impacts in the 

U.S. might differ from the severity of 

impacts in the rest of the world. In light 

of these factors, EPA invites comment 

on whether it would be appropriate to 

consider adverse effects on human 

health and welfare occurring outside the 

U.S. Specifically, we invite comment on 

whether, and if so, on what legal basis, 

it would be appropriate for EPA to 

consider impacts occurring outside the 

U.S. when those impacts, either in the 

short or long term, may reasonably be 

anticipated to have an adverse effect on 

health or welfare in the U.S. 

As noted briefly above, if each GHG 

is listed as a separate pollutant under 

section 108, rather than as a group or 

category of pollutants, then EPA 

arguably would have to establish 

separate NAAQS for each listed GHG. 

This scenario raises significant 

challenges for determining which level 

of any particular standard is 

appropriate, especially as the science of 

global climate change is generally 

focused on the total radiative impact of 

the combined concentration of GHGs in 

the atmosphere. Since for any one 

pollutant, the standard that is requisite 

to protect public health with an 

adequate margin of safety or public 

welfare from known or anticipated 

adverse effects is highly dependent 

upon the concentration of other GHGs 

in the atmosphere, it would be difficult 

to establish independent standards for 

any of the six principal GHGs. EPA 

requests comments on possible 

approaches for determining appropriate 

levels for GHG NAAQS if these 

pollutants are listed individually under 

section 108. 

ii. Indicator 

If each GHG is listed as an individual 

pollutant under section 108, the 

atmospheric concentration of each 

pollutant could be measured separately, 

and establishing an indicator for each 

pollutant would be straightforward. 

However, if GHGs are listed as a group, 

it would be more challenging to 

determine the appropriate indicator for 

use in measuring ambient air quality in 

comparison to a GHG NAAQS. One 

approach could be to measure the total 

atmospheric concentration of a group of 

GHGs on a CO2 equivalent basis, by 

assessing their total radiative forcing 

(measured in W/m2).231 Radiative 

forcing is a measure of the heating effect 

caused by the buildup of the GHGs in 

the atmosphere. Estimating CO2-

equivalent atmospheric concentrations, 

however, would not be a simple matter 

of multiplying emissions times their 

respective GWP values. Rather, the 

heating effect (radiative forcing) due to 

concentrations of each individual GHG 

would have to be estimated to define 

CO2-equivalent concentrations. EPA 

invites comment on the extent to which 

radiative forcing could be an effective 

metric for capturing the heating effect of 

all GHGs in a group (or for each GHG 

individually). For example, in the year 

2005 global atmospheric CO2 

concentrations were 379 parts per 

million (ppm), but the CO2-equivalent 

concentration of all long-lived GHGs 

was 455 ppm. This approach would not 

require EPA to specify the allowable 

level of any particular GHG, alone or in 

relation to the concentration of other 

GHGs present in the atmosphere. 

A second option would be to select 

one GHG as the indicator for the larger 

group of pollutants intended to be 

controlled under the standard. This 

kind of indicator approach is currently 

used in regulating photochemical 

oxidants, for which ozone is the 

indicator, and oxides of nitrogen, for 

which NO2 has been used as an 

indicator. There are several reasons, 

however, that this approach may not be 

appropriate for GHGs. For example, in 

the instances noted above, the indicator 

species is directly related to the other 

pollutants in the group, either through 

common precursors or similar chemical 

composition, and there is a basis for 

expecting that control of the indicator 

compound will lead to the appropriate 

degree of control for the other 

compounds in the listed pollutant. In 

the case of GHGs, it would be more 

difficult to select one species as the 

indicator for the larger group, given that 

the GHGs are distinct in origin, 

chemical composition, and radiative 

forcing, and will require different 

control strategies. Furthermore, this 

approach raises an issue regarding 

whether states would have the 

appropriate incentive to address all 

pollutants within the group. For 

example, there could be a focus on 

controlling the single indicator species 

at the expense of other species also 

associated with the adverse effects from 

231 See footnote 13 for an explanation of CO2 

equivalency. 

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which the standard(s) are designed to 

offer protection. 

EPA seeks comment on the merits and 

drawbacks of these various approaches, 

as well as suggestions for other possible 

approaches, to defining an indicator for 

measuring allowable concentrations of 

GHGs in the atmosphere. 

c. Section 107: Area Designations 

After EPA establishes or revises a 

NAAQS, the CAA requires EPA and the 

states to begin taking steps to ensure 

that the new or revised NAAQS are met. 

The first step is to identify areas of the 

country that do not meet the new or 

revised NAAQS. This applies to both 

the primary and secondary NAAQS. 

EPA is required to identify each area of 

the country as ‘‘attainment,’’ 

‘‘nonattainment,’’ or 

‘‘unclassifiable.’’ 232 

For a GHG NAAQS, the designations 

given to areas would depend on the 

level of the NAAQS and the availability 

of ambient data to make informed 

decisions for each area. For GHGs, in 

contrast to current NAAQS pollutants, it 

would likely make sense to conduct the 

air quality assessment at the national 

scale rather than at a more localized 

scale. All of the potential indicators 

discussed above for measuring ambient 

concentrations of GHGs for purposes of 

a NAAQS involve globally averaged 

metrics. Therefore, the ambient 

concentrations measured across all 

locations within the U.S. for purposes of 

comparison to the level of the standard 

would not vary, and all areas of the 

country would have the same 

designation—that is, the entire U.S. 

would be designated either attainment 

or non-attainment, depending on the 

level of the NAAQS compared to 

observed GHG ambient concentrations. 

232 CAA Section 107(d)(1) requires EPA to 

establish a deadline for states to submit 

recommendations for area designations that is no 

later than one year after promulgation of the new 

or revised NAAQS. Section 107(d)(1) also directs 

states to recommend appropriate area boundaries. A 

nonattainment area must consist of that area that 

does not meet the new or revised NAAQS, and the 

area that contributes to ambient air quality in a 

nearby area that does not meet the new or revised 

NAAQS. Thus, a key factor in setting boundaries for 

nonattainment areas is determining the geographic 

extent of nearby source areas contributing to the 

nonattainment problem. EPA then reviews the 

states’ recommendations, collects and assesses 

additional information as appropriate, and issues 

final designations no later than 2 years following 

the date EPA promulgated the new or revised 

NAAQS. EPA may take one additional year 

(meaning final designations can be up to 3 years 

after promulgation of new or revised NAAQS) if the 

Administrator has insufficient information to 

promulgate the designations. Whether or not a state 

or a Tribe provides a recommendation, EPA must 

promulgate the designation that it deems 

appropriate. 

If, in making decisions about the 

appropriate level of the GHG NAAQS, 

EPA were to determine that current 

ambient concentrations are not 

sufficient to cause known or anticipated 

adverse impacts on human health or 

welfare now or in the future, then it is 

possible that the NAAQS would be set 

at some level higher than current 

ambient concentrations. In that case, the 

entire country would likely be 

designated nonattainment. If, on the 

other hand, EPA were to set the NAAQS 

at a level above current ambient 

concentrations, the entire country 

would likely be designated attainment. 

d. Section 110: State and Federal 

Implementation Plans 

i. State Implementation Plans 

The CAA assigns important roles to 

EPA, states, and tribal governments in 

implementing NAAQS and in ensuring 

visibility protection in Class I areas. 

States have the primary responsibility 

for developing and implementing state 

implementation plans (SIPs). A SIP is 

the compilation of authorities, 

regulations, control programs, and other 

measures that a state uses to carry out 

its responsibilities under the CAA to 

attain, maintain, and enforce the 

NAAQS and visibility protection goals, 

and to prevent significant deterioration 

of air quality in areas meeting the 

standard. Additional specifics on SIP 

requirements are contained in other 

parts of the CAA. 

EPA assists states and tribes in their 

efforts to clean the air by promulgating 

national emissions standards for mobile 

sources and selected categories of 

stationary sources. Also, EPA assists the 

states in developing their plans by 

providing technical tools, assistance, 

and guidance, including information on 

potentially applicable emissions control 

measures. 

Historically, the pollutants addressed 

by the SIP program have been local and 

regional pollutants rather than globally 

mixed pollutants like GHGs. The SIP 

development process, because it relies 

in large part on individual states, is not 

designed to result in a uniform national 

program of emissions controls. 

(1) Generic Requirements for All SIPs 

This section discusses the specific 

CAA requirements states must address 

when implementing any new or revised 

NAAQS.233 

233 The visibility protection program required by 

CAA sections 169A and 169B, and as implemented 

through state compliance with EPA’s 1999 Regional 

Haze Rule, will only be raised again here in this 

section of the ANPR in the context of a framework 

for implementing a secondary GHG NAAQS. 

Under section 110(a)(1) and (2) of the 

CAA, all states are required to submit 

plans to provide for the implementation, 

maintenance, and enforcement of any 

new or revised NAAQS. Section 

110(a)(1) and (2) require states to 

address basic program elements, 

including requirements for emissions 

inventories, monitoring, and modeling, 

among other things. These requirements 

apply to all areas of the state regardless 

of whether those areas are designated 

nonattainment for the NAAQS. 

In general, every state is required to 

submit to EPA within 3 years of the 

promulgation of any new or revised 

NAAQS a SIP demonstrating that these 

basic program elements are properly 

addressed. Subsections (A) through (M) 

of section 110(a)(2) enumerate the 

elements that a state’s program must 

contain. See the Stationary Source TSD 

for this list. 

Other statutory requirements for state 

implementation plans vary depending 

on whether an area is in nonattainment 

or attainment. There are four specific 

scenarios that could hypothetically 

apply, depending on whether a primary 

or a secondary standard, or both, are 

established, and on the level(s) set for 

those standards. Because we are 

proposing no scientific determinations 

in this notice, our discussion of NAAQS 

implementation addresses all four of 

these scenarios. 

(2) Scenario 1: Primary GHG Standard 

With Country in Nonattainment 

If the entire country were designated 

nonattainment for a primary GHG 

NAAQS, each state would be required to 

develop and submit a SIP that provided 

for attainment and met the other 

specific requirements of Part D of Title 

I of the Act by the specified deadline. 

Requirements for the general contents 

of a nonattainment area plan are set 

forth in section 172 of the CAA. Section 

172(c) specifies that SIPs must, among 

other things: 234 

• Include all Reasonably Available 

Control Measures (RACM) (including, at 

a minimum, emissions reductions 

obtained through adoption of 

Reasonably Available Control 

Technology (RACT)) and provide for 

attainment of the NAAQS; 

• Provide for Reasonable Further 

Progress (RFP), which means reasonable 

interim progress toward attainment; 

• Include an emissions inventory; 

• Require permits for the construction 

and operation of major new or modified 

stationary sources, known as 

234 For additional information about 

nonattainment area planning requirements, please 

see the Technical Support Document. 

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‘‘nonattainment new source review’’ 

(see also section 173 of the Act and 

section VII.E. of this notice); 

• Contain contingency measures that 

are to be implemented in the event the 

air quality standard is not met by the 

area’s attainment deadline; and 

• Meet the applicable provisions of 

section 110(a)(2) of the CAA related to 

the general implementation of a new or 

revised NAAQS. 

In addition, all nonattainment areas 

must meet requirements of section 

176(c) known as ‘‘general conformity’’ 

and ‘‘transportation conformity.’’ 235 In 

brief, general conformity requires the 

federal government only to provide 

financial assistance, issue a permit or 

approve an activity that conforms to an 

approved SIP for a NAAQS. 

Transportation conformity requires 

metropolitan planning organizations 

and the U.S. Department of 

Transportation only to approve or fund 

transportation plans, programs and 

projects that conform to an approved 

SIP for a NAAQS. For the scenario of 

the country in nonattainment with a 

GHG NAAQS, these requirements 

would apply nationwide one year after 

the effective date of EPA’s 

nonattainment designations. 

For nonattainment areas, SIPs must 

provide for attainment of the primary 

NAAQS as expeditiously as practicable, 

but no later than 5 years from the 

effective date of the nonattainment 

designation for the area—or no later 

than 10 years if EPA finds additional 

time is needed considering the severity 

of nonattainment and the availability 

and feasibility of pollution control 

measures. 

At the outset, it would appear to be 

an inescapable conclusion that the 

maximum 10-year horizon for attaining 

the primary NAAQS would be ill-suited 

to GHGs. The long atmospheric lifetime 

of the six major emitted GHGs means 

that atmospheric concentrations will not 

quickly respond to emissions reduction 

measures (with the possible exception 

of methane, which has an atmospheric 

lifetime of approximately a decade). In 

addition, in the absence of substantial 

cuts in worldwide emissions, 

worldwide concentrations of GHGs 

would continue to increase despite any 

U.S. emission control efforts. Thus, 

despite active control efforts to meet a 

NAAQS, the entire U.S. would remain 

in nonattainment for an unknown 

number of years. If States were unable 

to develop plans demonstrating 

235 These requirements also apply to 

‘‘maintenance areas’’—former nonattainment areas 

that have met the standard and been redesignated 

according to a formal EPA determination. 

attainment by the required date, the 

result would be long-term application of 

sanctions, nationwide (e.g., more 

stringent offset requirements and 

restrictions on highway funding), as 

well as restrictions on approvals of 

transportation projects and programs 

related to transportation conformity. 

EPA is currently evaluating the extent to 

which section 179B might provide relief 

to states in this circumstance. As further 

explained below, section 179B is a 

waiver provision providing for SIP 

approval under certain circumstances 

when international emissions affect a 

U.S. nonattainment area. 

In addition to submitting plans 

providing for attainment within the 

state, each state would be required to 

submit, within 3 years of NAAQS 

promulgation, a plan under section 

110(a)(2)(D) prohibiting emissions that 

would significantly contribute to 

nonattainment in another state. EPA 

requests comments on what approaches 

could be utilized for purposes of 

addressing this requirement as well as 

the general matter of controlling GHGs 

to meet a NAAQS. 

Impact of section 179B on 

nonattainment requirements: States may 

use section 179B of the CAA to 

acknowledge the impact of emissions 

from international sources that may 

contribute to violations of a NAAQS. 

Section 179B provides that EPA shall 

approve a SIP for a nonattainment area 

if: (1) The SIP meets all applicable 

requirements of the CAA; and (2) the 

submitting state can satisfactorily 

demonstrate that ‘‘but for emissions 

emanating from outside of the United 

States,’’ the area would attain and 

maintain the applicable NAAQS. EPA 

has historically evaluated these ‘‘but 

for’’ demonstrations on a case-by-case 

basis, based on the individual 

circumstances and the data provided by 

the submitting state. These data might 

include ambient air quality monitoring 

data, modeling scenarios, emissions 

inventory data, and meteorological or 

satellite data. In the case of GHGs, 

however, where global emissions impact 

all areas within the United States, the 

federal government may be best suited 

for establishing whether a ‘‘but for’’ 

demonstration can be made for the 

entire country. 

If a ‘‘but for’’ conclusion is affirmed, 

section 179B would allow EPA to 

approve a SIP that did not demonstrate 

attainment or maintenance of the 

relevant NAAQS. Section 179B does not 

provide authority to exclude monitoring 

data influenced by international 

transport from regulatory 

determinations related to an area’s 

status as an attainment or 

nonattainment area. Thus, even if EPA 

approves a section 179B ‘‘but for’’ 

demonstration for an area, the area 

would continue to be designated as 

nonattainment and subject to certain 

applicable nonattainment area 

requirements, including nonattainment 

new source review, conformity, and 

other measures prescribed for 

nonattainment areas by the CAA. EPA 

requests comment on the practical effect 

of application of section 179B on the 

global problem of GHG emissions and 

on the potential for controls based on 

the attainment plan requirement and 

other requirements directly related to 

the attainment requirement, including 

the reasonable further progress 

requirement and the RACM 

requirement.236 

(3) Scenario 2: Secondary Standard 

With Country in Nonattainment (No 

Primary Standard) 

As noted above in the NAAQS 

standard-setting discussion, depending 

on the nature and bases of any 

endangerment finding under section 

108, EPA may be able to consider setting 

only a secondary NAAQS for GHGs and 

not also a primary NAAQS. 

In general, the same nonattainment 

requirements that apply to SIPs for a 

primary standard apply for a secondary 

standard, including nonattainment new 

source review and the other programs 

listed under the Scenario 1 subsection 

above. 

A notable difference in nonattainment 

requirements for primary and secondary 

standards is the time allowed for 

attainment. Under a secondary standard, 

state plans must achieve attainment as 

expeditiously as practicable, but there is 

no statutory maximum date for 

attainment. The general requirement to 

attain as expeditiously as practicable 

includes consideration of required 

controls, including ‘‘reasonably 

available control measures.’’ These 

requirements do allow for consideration 

of cost. What would constitute ‘‘as 

expeditiously as practicable’’ would be 

determined based on the entire set of 

facts and circumstances at issue. EPA 

requests comment on how to interpret 

236 EPA has interpreted RACM as emissions 

reducing measures that are technically and 

economically feasible, and considered collectively 

would advance the nonattainment area’s attainment 

date by at least one year. RACT has been interpreted 

in two different ways, depending on the applicable 

statutory requirements. In the case of ozone, RACT 

consists of measures that are technically and 

economically feasible, without regard to whether 

the measures would result in earlier attainment. In 

recent rules on PM2.5, EPA interpreted RACT for 

PM2.5 as essentially the same as RACM, with RACT 

referring to the stationary source component of 

RACM, which applies to all types of sources. 

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the requirement that state plans 

demonstrate that attainment will be 

achieved ‘‘as expeditiously as 

practicable’’ in the context of a 

secondary NAAQS for GHGs. 

Potential implementation approach 

based on regional haze model: For a 

secondary GHG NAAQS with no 

prescribed attainment date, EPA 

requests comment on the concept of 

implementing a GHG secondary NAAQS 

standard in a way roughly analogous to 

an approach used in the long-term 

regional visibility program, known as 

the regional haze program. This program 

is based on a goal of achieving natural 

visibility conditions in our nation’s 

parks and wilderness areas (Class I 

areas) by 2064. The program requires 

states to develop reasonable progress 

goals every 10 years and implement 

emissions control programs to achieve 

those goals, ultimately achieving the 

2064 natural condition goal in each 

Class I area. At the midpoint of every 

10-year period, states must assess the 

progress being made and take corrective 

action if necessary to maintain 

reasonable progress toward the 10-year 

progress milestone. 

The regional haze program’s model 

for goal planning, control strategy 

development, and control strategy 

implementation could offer a possible 

framework for achieving a GHG 

secondary NAAQS. This framework 

potentially could be designed to address 

the RACM, RACT and Reasonable 

Further Progress requirements, as well 

as the attainment planning requirement. 

This framework may also provide a 

mechanism for implementing a 

nationwide GHG emissions cap and 

trade program adopted and 

implemented through state plans. 

However, EPA recognizes that the global 

nature of GHGs and their persistence in 

the atmosphere make an approach based 

on ‘‘reasonable’’ progress more difficult 

to implement than in the case of 

regional haze. For example, despite 

domestic emissions reductions, it might 

not be possible to discern improvement 

in atmospheric concentrations of GHGs 

due to their relatively long atmospheric 

lifetimes or to growth in emissions from 

other countries which could eclipse 

reductions made in the U.S. We note 

that using this framework would not 

provide relief from any of the applicable 

nonattainment area requirements of the 

Act. EPA requests comment on whether, 

and if so how, the regional haze 

approach could be adapted for use in 

the GHG context. 

(4) Scenarios 3 and 4: Primary and/or 

Secondary Standard With Country in 

Attainment 

If a primary or secondary GHG 

NAAQS were set at a level higher than 

ambient GHG levels at the time of 

designations, then the country would be 

in attainment. (See preceding section on 

NAAQS standard-setting for discussion 

of this issue.) In this case, a much 

shorter list of requirements would apply 

than if the country were in 

nonattainment. 

SIPs would be required to include 

PSD programs for GHGs, which would 

require preconstruction permitting of 

new major sources and significant 

modifications to existing major sources. 

(See section VII.D on PSD.) 

EPA has identified two other 

requirements that potentially could 

apply, both of which could provide 

authority for a nationwide cap-and-trade 

program implemented at the state level. 

First, section 110(a)(1) requires states to 

submit a SIP providing for 

‘‘implementation, maintenance, and 

enforcement’’ of primary and secondary 

NAAQS. Under the scenario of a GHG 

NAAQS with the country in attainment, 

where states may need more than PSD/ 

NSR to maintain attainment, EPA could 

consider using this provision to require 

SIPs to provide for maintenance of air 

quality consistent with the GHG 

standard. This requirement could be 

implemented through a nationwide capand-trade program designed at the 

federal level and adopted by individual 

states in their SIPs, a program similar 

but broader in scope than existing 

programs such as the more limited NOX 

SIP Call regional cap-and-trade system 

for EGUs and selected industrial source 

categories. If a state failed to submit an 

adequate maintenance SIP, EPA would 

be required to develop and implement 

a federal implementation plan for that 

state. EPA could design the FIP to 

enable the state to participate in a 

nationwide cap-and-trade system. 

Second, section 110(a)(2)(D) requires 

SIPs to prohibit emissions that would 

interfere with maintenance of the 

standard by other states. Because GHGs 

are globally well-mixed, it may be that 

GHGs emitted from any state could be 

found to interfere with maintenance of 

a GHG NAAQS in every other state. In 

the past, EPA has issued rules that have 

resulted in states adopting interstate 

cap-and-trade programs (e.g., the Clean 

Air Interstate Rule) implemented 

through SIPs to address the 

requirements of this provision. In the 

case of GHGs, this authority could 

potentially support a nationwide capand-trade program for GHGs, adopted 

through SIPs. If a state failed to submit 

its section 110(a)(2)(D) SIP, EPA would 

be required to develop and implement 

a FIP for that state. EPA could design 

the FIP to enable the state to participate 

voluntarily in a nationwide cap-andtrade system. We request comment on 

the suitability of adopting either of these 

approaches under section 110(a). 

ii. Additional CAA Provisions Affecting 

SIP Obligations and FIPs 

(1) Section 179(a) 

The CAA requires states to submit 

SIPs to EPA for review, and EPA must 

approve or disapprove them based on 

whether the state plan or component 

meets the Act’s requirements. An EPA 

finding that a state has failed to submit 

a nonattainment plan or plan 

component, or an EPA disapproval of 

such a plan because it does not meet the 

requirements of the Act, would start a 

‘‘sanctions clock’’ under section 179(a). 

This means that sanctions would apply 

in the state if the deficiencies are not 

corrected within prescribed deadlines. 

These sanctions include additional 

requirements for major new sources (18 

months after the finding of failure) and 

restrictions on federal highway funds (6 

months after the offset sanction).237 EPA 

must promulgate a FIP for the deficient 

component of the SIP if the state’s plan 

component is not approved within 2 

years of EPA’s finding or disapproval 

action. In the case of GHGs, it is 

possible that EPA could design the FIP 

to enable the state to participate in a 

nationwide cap-and-trade system. 

(2) Section 115 

CAA section 115 creates a mechanism 

through which EPA can require states to 

amend their SIPs to address 

international transport issues. It is 

designed to protect public health and 

welfare in another country from air 

pollution emitted in the U.S. provided 

the U.S. is given essentially reciprocal 

rights with respect to prevention and 

control of air pollution originating in 

the other country. The Administrator 

could exercise his authority under this 

provision if EPA were to promulgate a 

NAAQS for GHG. 

To act under section 115, the 

Administrator would need to make a 

finding that, based on information from 

any duly constituted international 

agency, he has reason to believe that air 

pollutants (GHGs) emitted in the U.S. 

causes or contributes to air pollution 

which may reasonably be anticipated to 

endanger public health or welfare in a 

foreign country. Upon making such a 

finding, the Administrator would give 

237 40 CFR 52.31. 

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formal notification to the Governor of 

the state (or in this case potentially all 

of the states) where GHGs originate. A 

finding under this section has the same 

regulatory consequences as a finding 

that the state’s existing SIP is 

inadequate to attain the NAAQS or 

otherwise meet the requirements of the 

Act. This notification would require the 

notified states to modify their SIPs to 

prevent or eliminate the endangerment. 

Addressing GHGs under this authority 

could allow some flexibility in program 

design, subject to limitations of the SIP 

development process. Section 115 could 

not be used to require states to 

incorporate into their SIPs measures 

unrelated to attainment or maintenance 

of a NAAQS. A factor to consider is that 

this section of the Act only applies 

where countries that suffer possible 

endangerment give reciprocal rights to 

the U.S. However, reciprocity with one 

or more affected countries may be 

sufficient to trigger section 115. We 

request comment on the efficacy of 

using section 115 as a mechanism to 

facilitate more effective regulation of 

GHGs through a NAAQS. 

2. What Sources Would Be Affected? 

Sections 108 and 109 impose no 

controls directly on sources, but instead 

establish the air quality benchmarks that 

control requirements would be designed 

to meet. The precise nature of these 

controls would be determined through 

federal and state programs, as 

established via SIPs and, for states 

failing to submit an approvable plan, 

FIPs. Considering that GHGs are emitted 

by a wide array of sources, it is likely 

that NAAQS implementation would 

result in controls on numerous 

stationary and mobile sources through 

sections 110 and 172. 

The federal government could have 

less flexibility under the NAAQS 

approach to target control efforts toward 

particular groups of existing stationary 

sources. Under the traditional SIP 

approach, emissions controls on specific 

source categories would flow from 

independent state-level decisions, and 

could result in a patchwork of 

regulations requiring different types and 

levels of controls in different states. 

However, the SIP approach could also 

be adapted for use in a more 

coordinated strategy. As mentioned 

above, EPA has in the past issued rules 

that have resulted in states adopting 

limited interstate cap-and-trade 

programs (e.g., NOX SIP Call and the 

Clean Air Interstate Rule) implemented 

through state SIPs. Furthermore, the 

federal government would also have 

flexibility to design a national control 

program in the event that states did not 

adopt the required programs and EPA 

were required to promulgate a FIP. 

EPA requests comment on whether 

and how the different implementation 

provisions within the NAAQS program 

could be adapted to be most suitable for 

application to control GHGs. 

3. What Would Be the Key Milestones 

and Implementation Timeline? 

The key milestones that would apply 

if EPA were to regulate GHGs as a 

NAAQS pollutant include: listing the 

pollutant(s); issuing air quality criteria; 

issuing information on air pollution 

control techniques; proposing primary 

and secondary NAAQS for the 

pollutants; issuing final standards; 

designating areas; development of SIPs/ 

FIPs; and application of control 

measures. 

EPA has discretion with regard to the 

date of listing of a pollutant under 

section 108. The statute does not 

prescribe any specific deadline for 

listing, instead stating that EPA ‘‘shall 

from time to time * * * list * * * each 

air pollutant’’ that EPA judges meets the 

three criteria discussed above. This 

could provide the Agency some latitude 

in determining the precise timing of any 

listing. 

Once a pollutant is listed, the CAA 

specifies a very ambitious timeline for 

issuing the initial NAAQS for the 

pollutant. Section 108 allows 12 months 

between date of listing and issuance of 

air quality criteria for the pollutant(s). 

Since these criteria are intended to 

encompass ‘‘all identifiable effects on 

public health or welfare,’’ it would be 

difficult to meet this timeline in the case 

of GHGs. In 1970, when the NAAQS 

program was first established under the 

CAA, air quality criteria either were in 

development or had already been issued 

for a variety of pollutants, and the 

process involved consideration of a 

much smaller body of science than is 

now available. Therefore, the 12-month 

period allotted for the initial issuance of 

air quality criteria appeared 

reasonable.238 However, based on recent 

NAAQS reviews for ozone, particulate 

matter, lead, and other pollutants, it 

now generally takes several years for the 

Agency to complete the thorough 

scientific assessment necessary to issue 

air quality criteria. 

Given the complexity of global 

climate change science, and the vast 

238 For each air pollutant for which air quality 

criteria had already been issued prior to enactment 

of the Clean Air Act Amendments of 1970, section 

109(a)(1) actually required EPA to issue proposed 

NAAQS within 30 days of enactment and to finalize 

those standards within 90 days of publication of the 

proposal. This included carbon monoxide, ozone, 

particulate matter, hydrocarbons, and sulfur oxides. 

amount of research that would be 

relevant to the Agency’s scientific 

assessment, EPA anticipates this task 

would be particularly time consuming 

in the case of GHGs, though relying on 

synthesis reports such as the 

Intergovernmental Panel on Climate 

Change’s Fourth Assessment Report and 

various reports of the U.S. Climate 

Change Science Program could help 

expedite the process. The challenge of 

completing a thorough scientific 

assessment for GHGs could result in a 

significant delay in listing the 

pollutant(s) under section 108, since 

EPA would likely choose to list GHGs 

only when the scientific assessment had 

progressed sufficiently to enable the 

Agency to meet the statutory 

requirement to issue ‘‘air quality 

criteria’’ within one year of listing, and 

to meet the tight rulemaking timeframe, 

discussed below. To the extent that EPA 

addresses GHGs through this CAA 

mechanism, EPA requests comments on 

the issuance of ‘‘air quality criteria’’ 

following listing, as well as the 

adequacy of the available scientific 

literature. 

Under section 109, EPA must propose 

NAAQS for any newly listed pollutant 

at the same time it issues air quality 

criteria under section 108, and must 

finalize those standards within 90 days 

after proposal. Thus, from the date of 

listing a pollutant(s) under section 108, 

the Agency has only 12 months to 

propose standards, and only 3 

additional months to issue final NAAQS 

for the pollutant(s). This tight timeframe 

would be particularly challenging in the 

case of GHGs, for which review and 

synthesis of an enormous body of 

literature would be required before a 

proposal could be issued. Furthermore, 

it is important to note that while 

subsequent NAAQS reviews of existing 

standards are required on a revolving 5-

year cycle, EPA has found it challenging 

to meet even this extended schedule, 

which generally allows 9–12 months 

between issuance of the air quality 

criteria and proposal and an additional 

6 months or more for issuance of final 

standards. 

Once a new standard has been 

established, the CAA allows EPA to 

establish a deadline for states to submit 

designation recommendations that is no 

later than one year after promulgation of 

the new or revised NAAQS. EPA then 

reviews the states’ recommendations, 

collects and assesses additional 

information as appropriate, and issues 

final designations no later than 2 years 

following the date EPA promulgated the 

new or revised NAAQS. EPA may take 

up to one additional year if the 

Administrator has insufficient 

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information to promulgate the 

designations, which could push the date 

of final designations out to three years 

after promulgation of a new GHG 

NAAQS. 

The timeline for SIP submittal and 

implementation of control requirements 

depends an area’s designation status 

(attainment, nonattainment, 

unclassifiable) and whether there is 

only a secondary NAAQS, or both a 

primary and a secondary standard. 

These various scenarios are described 

above. As a first step, regardless of 

attainment status of level of the 

standard, states must submit 

infrastructure SIPs to EPA within 3 

years of the promulgation of any new or 

revised NAAQS. These SIPs 

demonstrate that certain basic program 

elements (including emissions 

inventories, monitoring, and modeling) 

are properly addressed. Areas that are 

designated attainment would face a 

much shorter list of requirements, 

which are discussed above in the 

context of, Scenarios 3 and 4. 

For areas designated nonattainment 

with a primary standard, states must 

submit nonattainment SIPs no more 

than 3 years after the effective date of 

designations, and must reach attainment 

no later than 5 years after the effective 

date designations. EPA can extend the 

attainment deadline by up to an 

additional 5 years—i.e., to no later than 

10 years after the effective date of 

designations, if EPA finds additional 

time is needed considering the severity 

of nonattainment and the availability 

and feasibility of pollution control 

measures. 

As noted above, the maximum 10-year 

horizon for attaining the primary 

NAAQS is ill-suited to pollutants such 

as GHGs with long atmospheric 

residence times. It is probable that, 

despite active control efforts, the entire 

U.S. would remain in nonattainment for 

an indefinite number of years if the 

level of a NAAQS were set at or below 

current atmospheric concentrations; 

whether attainment would ever be 

reached would depend on the timing 

and stringency of GHG control measures 

implemented on a global basis. 

For areas designated nonattainment 

with a secondary standard only, the 

attainment schedule could be 

significantly longer. The CAA requires 

that state plans under a secondary 

standard must provide for reaching 

attainment as expeditiously as 

practicable, but there is no statutory 

maximum date for attainment (e.g., up 

to 10 years). EPA requests comment on 

the suitability of adapting this approach 

for use in the GHG context, and 

specifically, on the schedule that could 

reasonably be considered as 

‘‘expeditious as practicable.’’ We also 

request comment on how global 

emissions should be taken into 

consideration in this context. 

EPA requests comment on whether 

the avenues discussed in this notice, or 

alternative approaches, could facilitate 

schedule adjustments that would better 

enable use of the NAAQS approach for 

regulating GHGs. 

4. What Are Key Considerations 

Regarding Use of This Authority for 

GHGs? 

a. Possible Cost and Emissions Impacts 

Listing GHGs as pollutants under 

section 108 and setting NAAQS under 

section 109 would have no direct cost 

or emissions impacts. However, these 

actions would trigger further federal 

actions, including designations under 

section 107, and state or federal actions 

through SIPs or FIPs developed under 

section 110 and other provisions in title 

I of the CAA. Thus, the listing of GHGs 

as NAAQS pollutants would likely lead 

to the adoption of a substantial control 

program affecting sources across the 

nation. 

Because establishing NAAQS for a 

pollutant sets in motion a broad and 

prescriptive implementation process 

that could affect a wide array of 

stationary and mobile sources, it is 

likely to entail substantial costs. The 

magnitude of these costs would depend, 

in part, on the relative reliance on 

technologies which are not yet suitable 

for commercial application or which 

have not yet been developed. Though 

this problem affects other pollutants, it 

is more acute in the case of GHGs. The 

timing and nature of controls instituted, 

and thus the costs, would depend to a 

significant extent on an area’s 

designation status and whether EPA set 

only a secondary NAAQS (with a longer 

implementation time horizon), or a 

primary standard as well (with a more 

rapid and rigid compliance schedule, 

allowing less time for technological 

advances and efficiency improvements). 

The standard set and the nature of GHGs 

could also determine whether it is 

feasible to attain a NAAQS in the nearterm, or how costly attainment could be 

over a longer term. 

One important aspect of the NAAQS 

approach is that the standards 

themselves (both primary and 

secondary) are established without 

consideration of these costs. EPA 

requests comment on the suitability of 

establishing regulations to limit 

atmospheric concentrations of GHGs 

through a statutory mechanism that 

prohibits consideration of the costs such 

regulations might entail. EPA also 

requests comment on the extent to 

which various implementation 

mechanisms in Title I are available for 

addressing such costs. 

As mentioned above, CAA section 108 

requires EPA to issue information on air 

pollution control techniques at the same 

time it issues air quality criteria. This 

would include information on the cost 

of installation and operation, energy 

requirements, emission reduction 

benefits, and environmental impacts. 

Generally, the Agency fulfills this 

obligation at the time a standard is 

issued; as required under Executive 

Order 12866, EPA must issue an RIA for 

major rulemaking actions. A NAAQS 

RIA provides an illustrative analysis of 

control options available to reduce 

emissions and ambient concentrations 

of the regulated pollutant(s); evaluates 

the costs of these controls; and estimates 

the human health and environmental 

benefits likely to accrue from the 

improved air quality resulting from the 

standards. 

As required by EO 12866 and 

guidance from OMB, the analysis 

generally compares control options and 

estimated costs and benefits of multiple, 

specific standard options under 

consideration. While EPA recognizes 

the cost estimates for future GHG 

control technologies would potentially 

place more reliance on yet-to-bedeveloped options, the precedent exists 

for consideration of future, unknown 

controls. EPA requests comment on 

whether there are important distinctions 

between GHGs and previously regulated 

criteria pollutants that would make it 

appropriate in the case of a new NAAQS 

for GHG(s) to issue a separate air 

pollution control techniques document 

earlier in the process, specifically in 

conjunction with the air quality criteria 

as required by section 108, or whether 

such information is more useful if 

tailored to specific standard options 

under consideration, as in the RIA. 

b. Technology Development and 

Leakage 

Two of the policy design 

considerations noted in section III.F.1 

include the potential to promote 

technology development and to address 

potential concerns about shifting 

emissions to other countries. The 

NAAQS establish standards based on 

ambient concentrations that must be 

attained and maintained everywhere, 

and are implemented through SIPs that 

establish emissions budgets consistent 

with meeting the standards. The limited 

emissions budget encourages state and 

local areas and affected sources to work 

together to identify least-cost emissions 

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controls to meet their SIP obligations 

and reduce ambient concentrations of 

the regulated pollutant(s). The NAAQS 

requirements help create market 

demand for technologies that can assist 

in meeting air quality standards at the 

least cost. As discussed in Section III.C 

of this notice, this process has 

encouraged significant technological 

innovation. EPA requests comment on 

the extent to which the NAAQS can be 

an effective mechanism for encouraging 

technological innovation and 

development of least-cost controls for 

GHG emissions. 

The 10-year maximum timeline for 

attaining a primary NAAQS would 

allow some time for development and 

deployment of emerging technologies, 

but longer timelines available under 

other forms of the NAAQS would 

provide greater flexibility to provide 

continuous incentives over a longer 

time period for major technology 

advances, and more time to deploy new 

technologies that are developed. EPA 

requests comment on the extent to 

which a GHG NAAQS could reasonably 

be expected to advance new control 

technologies, and on what timeframe. 

With respect to the leakage issue, 

establishing a primary NAAQS could 

lead to high costs among affected 

industries unless a viable approach is 

identified to limit the control burden on 

U.S. sources. Because the standards 

themselves are set without 

consideration of cost or availability of 

control technologies, and because states 

would be required to adopt a plan to 

attain a primary standard within 10 

years of designation, the NAAQS 

approach might offer less flexibility to 

delay emissions reductions in the 

absence of effective control technologies 

or when costs are prohibitive. This 

consideration may be particularly 

relevant in the case of GHGs, where 

highly efficient control technologies or 

mitigation options are currently limited, 

and where critical new control 

strategies, such as carbon capture and 

storage, are still in the early stages of 

development. In these instances, 

industries that are unable to locate costeffective control strategies may consider 

relocating to non-regulated locations, 

resulting in significant emissions 

leakage. 

We request comment on the costeffectiveness of utilizing a NAAQS 

approach to regulating GHGs, and on 

the extent to which this approach might 

be expected to result in emissions 

leakage, especially as compared to other 

potential regulatory approaches 

outlined in this notice. 

c. Summary of Opportunities and 

Challenges Afforded by NAAQS 

Pathway 

Regulating GHGs through a NAAQS 

offers certain opportunities; however, 

there are also significant technological, 

legal and program design challenges 

that would tend to limit the 

appropriateness of the NAAQS program. 

NAAQS are based purely on 

preventing adverse health and 

environmental impacts, rather than on 

considerations of cost, feasibility, or 

availability of technology. Our 

expectation is that the NAAQS 

approach would establish a goal tied to 

actual ambient concentrations of GHGs. 

A NAAQS would call for assessment of 

potential control strategies for a broad 

array of sources, rather than focusing 

only on emissions reductions from a 

specified (but potentially limited) list of 

sources. The NAAQS approach would 

allow for some flexibility in the design 

of control strategies and requirements, 

including the possibility of a cap-andtrade approach, and might spur 

significant technological innovation. It 

would provide a mechanism for 

reducing GHG emissions from current 

sources and limiting the growth of 

emissions from new sources. If the facts 

supported adopting only a secondary 

standard, this would somewhat reduce 

the specific obligations on states, and 

would allow a suitably extended 

timeline for achieving the emissions 

reductions necessary to stabilize and 

then reduce ambient GHG 

concentrations. 

Though such an approach has the 

potential to be effective in reducing 

emissions, there would be a number of 

obstacles to overcome. Chief among 

these is that if worldwide (non-U.S.) 

emissons were to continue increasing, 

global concentrations of GHGs would 

continue to increase despite U.S. 

emission control efforts, and the 

NAAQS would be unachievable 

(depending on the level of the 

standards) even if U.S. emissions were 

reduced to zero. Unless viable legal 

approaches could be identified for 

limiting the control burden on U.S. 

sources, such as by defining a U.S. share 

of the emissions reductions needed to 

attain a NAAQS, the NAAQS approach 

would result in an expensive program. 

It would not achieve the adopted GHG 

NAAQS due to foreign emissions 

growth, although U.S. emissions 

reductions would be achieved. If the 

result of a NAAQS were stringent 

unilateral controls for vulnerable 

industries, this would encourage 

emissions leakage in the absence of 

comparable control efforts abroad. 

Especially if the Agency were to set a 

primary as well as a secondary standard, 

a NAAQS would trigger a relatively 

rigid implementation apparatus, 

limiting the Agency’s flexibility to target 

cost-effective emissions reductions and 

to shift the burden of control 

requirements among different industries 

based on the availability of new 

technological approaches. The lack of 

flexibility allowed under the CAA for 

many of the NAAQS implementation 

requirements—especially those affecting 

areas designated nonattainment with a 

primary standard—makes them difficult 

to adapt effectively for application in 

the GHG context. For example, it would 

be challenging to apply requirements for 

transportation conformity under a GHG 

NAAQS, or for states to develop 

attainment demonstration SIPs. As 

discussed in section IV.E, a 

nonattainment new source review 

program requiring for GHGs would 

dramatically expand the scope of the 

preconstruction permitting program to 

include smaller sources and new types 

of sources such as apartment buildings 

with natural gas heat, unless EPA were 

successful in applying legal theories 

that justify deviating from statutory 

language. This would pose substantial 

administrative feasibility and cost 

issues. While implementation of an 

attainment-level NAAQS would involve 

fewer specific requirements, this avenue 

would only apply if the standard set by 

EPA under section 109 resulted in 

attainment designations. Section 109 

calls for standards to be set based on 

science-based criteria, which exclude 

consideration of the cost or efficiency of 

the implementation requirements in 

determining the level of the standard. 

We note that while the NAAQS 

implementation system is state-based, 

legislative proposals have focused on 

establishing federally administered 

national cap-and-trade strategies to 

address the global climate problem. 

In closing, we request comment on 

our assessment of NAAQS approaches, 

and on how the NAAQS approach 

compares to other potential CAA 

approaches in light of the policy 

principles enunciated in section III.F.1. 

5. Possible Implications for Other CAA 

Provisions 

Listing a pollutant under section 

108(a)(1) would preclude listing under 

section 112 or regulation under section 

111(d), but would not preclude listing 

and regulation under section 111(a)–(c) 

New Source Performance Standards 

(NSPS) provisions as described below. 

Similarly, regulation of GHGs under 

section 111(a)–(c) NSPS provisions, as 

discussed further in other sections of 

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today’s notice, would not preclude 

regulation of those pollutants through a 

NAAQS, although controls 

implemented through these provisions 

might influence the Agency’s 

perspective on the appropriateness of 

establishing air quality criteria for 

GHGs. EPA requests comment on the 

extent to which regulatory action under 

section 111 could be considered in the 

context of exercising authority under 

section 108 relevant to GHGs. 

B. Standards of Performance for New 

and Existing Sources 

CAA section 111 provides EPA with 

authority to set national performance 

standards for stationary sources. There 

are two alternative pathways for using 

section 111 to regulate GHGs—as part of 

an implementation program for a GHG 

NAAQS or as a freestanding program. 

• In the event of a GHG NAAQS, 

section 111 authorizes EPA to set 

emissions performance standards for 

new and modified sources but not for 

unmodified existing sources. 

• In the absence of a GHG NAAQS, 

section 111 offers the potential for an 

independent, comprehensive program 

for regulating most stationary sources of 

GHGs, except to the extent GHG 

emissions are regulated under section 

112 

Section 111 provides for 

consideration of cost, and allows 

substantial discretion regarding the 

types and size of sources regulated. As 

with most other CAA authorities, 

however, establishment of a section 111 

standard for any source category of 

GHGs would trigger preconstruction 

permitting requirements for all types of 

GHG major sources under the PSD 

program. 

The Stationary Source TSD for this 

ANPR identifies some specific industry 

sectors that EPA has evaluated for their 

emissions of multiple pollutants, 

including GHGs. EPA requests comment 

on this analysis. In addition, EPA 

requests comment on GHG emissions 

from these and all other categories and 

subcategories that have been subject to 

section 111 standards and on the 

relative costs that could be associated 

with employing certain identified 

control technology or practices affecting 

GHG emissions, including any positive 

or negative impacts on the emissions of 

traditional pollutants. 

1. What Does Section 111 Require? 

Section 111 establishes two distinct 

mechanisms for controlling emissions of 

air pollutants from stationary sources. 

Section 111(b) provides authority for 

EPA to promulgate New Source 

Performance Standards (NSPS) which 

may be issued regardless of whether 

there is a NAAQS for the pollutant 

being regulated, but apply only to new 

and modified sources. Once EPA has 

elected to set an NSPS for new and 

modified sources in a given source 

category, section 111(d) calls for 

regulation of existing sources with 

certain exceptions explained below. 

Taken together, the section 111 

provisions could allow significant 

flexibility in regulation that may not be 

available under other CAA Title I 

provisions. 

a. Section 111(b) New Source 

Performance Standards 

Section 111(b) of the CAA requires 

EPA to establish emission standards for 

any category of new and modified 

stationary sources that the 

Administrator, in his judgment, finds 

‘‘causes, or contributes significantly to, 

air pollution which may reasonably be 

anticipated to endanger public health or 

welfare.’’ EPA has previously made 

endangerment findings under this 

section for more than 60 stationary 

source categories and subcategories that 

are now subject to NSPS.239 An 

endangerment finding would be a 

prerequisite for listing additional source 

categories under section 111(b), but is 

not required to regulate GHGs from 

source categories that have already been 

listed. 

For listed source categories, EPA must 

establish ‘‘standards of performance’’ 

that apply to sources that are 

constructed, modified or reconstructed 

after EPA proposes the NSPS for the 

relevant source category.240 However, 

EPA has significant discretion to define 

the source categories, determine the 

pollutants for which standards should 

be developed, identify the facilities 

within each source category to be 

covered, and set the level of the 

standards. In addition, EPA believes 

that the NSPS program is flexible 

239 EPA has developed NSPS for more than 70 

source categories and subcategories. However, 

endangerment findings apply to the categories as a 

whole, while subcategories within them have been 

established for purposes of creating standards that 

distinguish among sizes, types, and classes of 

sources. 

240 Specific statutory and regulatory provisions 

define what constitutes a modification or 

reconstruction of a facility. 40 CFR 60.14 provides 

that an existing facility is modified, and therefore 

subject to an NSPS, if it undergoes ‘‘any physical 

change in the method of operation . . . which 

increases the amount of any air pollutant emitted 

by such source or which results in the emission of 

any air pollutant not previously emitted.’’ 40 CFR 

60.15, in turn, provides that a facility is 

reconstructed if components are replaced at an 

existing facility to such an extent that the capital 

cost of the new equipment/components exceed 50 

percent of what is believed to be the cost of a 

completely new facility. 

enough to allow the use of certain 

market-oriented mechanisms to regulate 

emissions, as discussed below. 

As implemented over many years by 

EPA, the NSPS program has established 

standards that do not necessarily set 

emission limits for all pollutants or even 

all regulated pollutants emitted by 

sources within the relevant source 

category. Rather, the NSPS generally 

focus on specific pollutants of concern 

for a particular source category. Air 

pollutants currently regulated through 

section 111(b) include the criteria 

pollutants listed under section 108 and 

certain additional pollutants. These 

additional pollutants are acid mist, 

fluorides, hydrogen sulfide in acid gas, 

total reduced sulfur, and landfill gas. 

EPA has discretion to revise an existing 

NSPS to add standards for pollutants 

not currently regulated for that source 

category, but has interpreted the section 

to not require such a result when an 

NSPS is reviewed pursuant to section 

111(b)(1)(B). That section requires EPA 

to review and, if appropriate, revise 

NSPS every eight years unless the 

Agency determines that such review is 

not appropriate in light of readily 

available information on the efficacy of 

the standard. 

Further, in contrast to other 

provisions in the CAA which require 

regulation of all sources above specific 

size thresholds, section 111 gives EPA 

significant discretion to identify the 

facilities within a source category that 

should be regulated. To define the 

affected facilities, EPA can use size 

thresholds for regulation and create 

subcategories based on source type, 

class or size. Emission limits also may 

be established either for equipment 

within a facility or for an entire facility. 

EPA also has significant discretion to 

determine the appropriate level for the 

standards. Section 111(a)(1) provides 

that NSPS are to ‘‘reflect the degree of 

emission limitation achievable through 

the application of the best system of 

emission reduction which (taking into 

account the cost of achieving such 

reduction and any nonair quality health 

and environmental impact and energy 

requirements) the Administrator 

determines has been adequately 

demonstrated.’’ This level of control is 

commonly referred to as best 

demonstrated technology (BDT). In 

determining BDT, we typically conduct 

a technology review that identifies what 

emission reduction systems exist and 

how much they reduce air pollution in 

practice. This allows us to identify 

potential emission limits. Next, we 

evaluate each limit in conjunction with 

costs, secondary air benefits (or 

disbenefits) resulting from energy 

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requirements, and non-air quality 

impacts such as solid waste generation. 

The resultant standard is commonly a 

numerical emissions limit, expressed as 

a performance level (i.e., a rate-based 

standard). While such standards are 

based on the effectiveness of one or 

more specific technological systems of 

emissions control, unless certain 

conditions are met, EPA may not 

prescribe a particular technological 

system that must be used to comply 

with a NSPS. Rather, sources remain 

free to elect whatever combination of 

measures will achieve equivalent or 

greater control of emissions. 

It is important to note that under 

section 111, the systems on which a 

standard is based need only be 

‘‘adequately demonstrated’’ in EPA’s 

view such that it would be reasonable 

to apply them to the regulated category. 

The systems, and corresponding 

emission rates, need not be actually in 

use or achieved in practice at 

potentially regulated sources or even at 

a commercial scale. Further, EPA 

believes that if a technology is 

‘‘adequately demonstrated’’ for use at a 

date in the future, EPA could establish 

a future-year standard based on that 

technology. This would allow EPA to 

develop two- or multi-phased standards 

with more stringent limits in future 

years that take into account and 

promote the development of technology. 

Costs are also considered in 

evaluating the appropriate standard of 

performance for each category or 

subcategory. We generally compare 

control options and estimated costs and 

emission impacts of multiple, specific 

emission standard options under 

consideration. As part of this analysis, 

we consider numerous factors relating 

to the potential cost of the regulation, 

including industry organization and 

market structure; control options 

available to reduce emissions of the 

regulated pollutant(s); and costs of these 

controls. Frequently, much of this 

information is presented in the 

Regulatory Impact Analysis (RIA) that is 

required for all major rulemaking 

actions. 

b. Section 111(d) Emissions Guidelines 

for Existing Sources 

Section 111(d) requires regulation of 

existing sources in specific 

circumstances. Specifically, where EPA 

establishes a NSPS for a pollutant, a 

section 111(d) standard is required for 

existing sources in the regulated source 

category except in two circumstances. 

First, section 111(d) prohibits regulation 

of a NAAQS pollutant under that 

section. Second, ‘‘where a source 

category is being regulated under 

section 112, a section 111(d) standard of 

performance cannot be established to 

address any HAP listed under 112(b) 

that may be emitted from that particular 

source category.’’ 241 

Section 111(d) also uses a different 

regulatory mechanism to regulate 

existing sources than section 111(b) uses 

for new and modified sources in a 

source category. Instead of giving EPA 

direct authority to set national standards 

applicable to existing sources in the 

source category, section 111(d) provides 

that EPA shall establish a procedure for 

states to issue performance standards for 

existing sources in that source category. 

Under the 111(d) mechanism, EPA first 

develops regulations known as 

‘‘emission guidelines.’’ These may be 

issued at the same time or after an NSPS 

for the source category is promulgated. 

Although called ‘‘guidelines,’’ they 

establish binding requirements that 

states are required to address when they 

develop plans to regulate the existing 

sources in their jurisdictions. These 

state plans are similar to state 

implementation plans and must be 

submitted to EPA for approval. 

Historically, EPA has issued model 

standards for existing sources that could 

then be adopted by states. Under this 

approach, creating an interstate trading 

system would require adoption of 

compatible state rules promoted by EPA 

rules and guidance. In the event that a 

state does not adopt and submit a plan, 

EPA has authority to then issue a federal 

plan covering affected sources. 

Section 111(d) guidelines, like NSPS 

standards, must reflect the emission 

reduction achievable through the 

application of BDT. However, both the 

statute and EPA’s regulations 

implementing section 111(d) recognize 

that existing sources may not always 

have the capability to achieve the same 

levels of control at reasonable cost as 

new sources. The statute and EPA’s 

regulations in 40 CFR 60.24 permit 

states and EPA to set less stringent 

standards or longer compliance 

schedules for existing sources where 

warranted considering cost of control; 

useful life of the facilities; location or 

process design at a particular facility; 

physical impossibility of installing 

necessary control equipment; or other 

factors making less stringent limits or 

longer compliance schedules 

appropriate. 

2. What Sources Could Be Affected? 

Section 111 has been used to regulate 

emissions of traditional and 

nontraditional air pollutants from a 

broad spectrum of stationary source 

241 See 70 FR 15994, 16029–32 (Mar. 29, 2005). 

categories. EPA has already 

promulgated NSPS for more than 70 

source categories and subcategoriesand 

we could add GHG emission standards, 

as appropriate, to the standards for 

existing source categories.242 EPA has 

begun a review of the existing NSPS 

source categories to determine whether 

it would be appropriate to regulate GHG 

emissions from sources in each 

category. In addition, EPA is in the 

process of responding to a remand from 

the D.C. Circuit requiring it to consider 

whether to add standards for GHGs to 

the NSPS for utility boilers, and EPA 

has received suggestions that it would 

be appropriate to add such standards to 

the NSPS for Portland cement kilns.243 

To determine whether regulation of 

GHGs is appropriate for existing 

categories, we must evaluate whether it 

is reasonable to do so given the 

magnitude of emissions and availability 

of controls, considering the costs of 

control. Decisions in this regard could 

be influenced by several factors, 

including the magnitude of the GHG 

emissions from a source category; the 

potency of the particular GHG emitted; 

whether emissions are continuous, 

seasonal or intermittent; the availability 

of information regarding the category’s 

GHG emissions; and whether regulating 

GHG emissions from the source category 

would be beneficial. EPA requests 

comment on the extent to which these 

factors should, if at all, influence EPA’s 

decisions whether to add standards to 

existing NSPS and what additional 

factors should be taken into 

consideration. EPA also requests 

242 Some of the existing source categories are very 

broad, comprising an entire industrial process such 

as steel making, while others are narrowly defined 

as a single piece of equipment within a broader 

production process. Examples of source categories 

subject to NSPS are fossil fuel-fired boilers, 

incinerators, sulfuric acid plants, petroleum 

refineries, lead smelters, and equipment leaks of 

VOCs in the synthetic organic chemicals 

manufacturing industry. A complete list of the 

NSPS source categories is found at 40 CFR part 60. 

243 The NSPS for Petroleum Refineries were 

recently amended, resulting in the promulgation of 

new Subpart Ja. These performance standards 

include emission limitations and work practice 

standards for fluid catalytic cracking units, fluid 

coking units, delayed coking units, fuel gas 

combustion devices, and sulfur recovery plants. As 

such, they regulate criteria pollutant emissions from 

the processes that are also responsible for most of 

the refinery GHG emissions. During the public 

comment period for Subpart Ja, we received several 

comments in favor of developing new source 

performance standards to address GHG emissions 

from refineries. However, we declined to adopt 

standards for GHG emissions in that rulemaking, in 

part because while doing so was within our 

discretion, we believed that it was important to 

fully consider the implications for programs under 

other parts of the CAA before electing to regulate 

GHG under section 111. This is a fundamental 

purpose for today’s notice and request for 

comments. 

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comment on which of the previously 

regulated categories might be 

appropriate for GHG regulation and on 

the information on which such 

judgments might be based. 

To inform the public of EPA’s 

analytical work to date, we have 

provided descriptions of key industrial 

sectors, their GHG emissions, and 

information that we have collected to 

date on GHG control options for those 

sectors in the Stationary Source TSD in 

the docket for today’s notice. It is 

important to note that, as described 

further in the technical support 

materials, many near-term technologies 

or techniques for reducing GHG, e.g., 

energy efficiency or process efficiency 

improvements, are relatively cost 

effective and achieve modest emission 

reductions when compared with the 

potential of some add-on control 

techniques. Other controls may become 

available in the future whose costs and 

emission reduction effectiveness may 

differ substantially from what is 

discussed here today. The Stationary 

Source TSD also discusses various 

mechanisms, such as cap-and-trade 

programs or emissions averaging 

approaches across facilities or 

industries, that can help reduce costs of 

reducing emissions. EPA requests 

comment on the availability and extent 

of its legal authority for such 

mechanisms. 

In addition to regulating GHGs from 

previously listed source categories, 

section 111 provides discretionary 

authority to list new source categories, 

or reformulate listed source categories, 

for purposes of regulating of GHG 

emissions. For example, such categories 

could include sources of emissions 

covered by existing NSPS source 

categories as well as sources not 

currently covered by any NSPS. One 

option available to EPA is the 

reorganization of source categories for 

purposes of GHG regulation. In creating 

new categories to be used for regulation 

of GHGs, EPA could consider factors 

unique to GHG emissions. For example, 

EPA could take into account concerns 

about emissions leakage (discussed in 

section III.F.5 of this notice), and 

structure categories to minimize 

opportunities for shifting emissions to 

other source categories. EPA could also 

explore how the rearrangement of 

source categories could facilitate netting 

arrangements through which a more 

broadly defined ‘‘source’’ could avoid 

triggering an GHG NSPS by off-setting 

its increased GHG emissions.244 In 

244 We recognize that the Court in Asarco Inc. v. 

EPA, 578 F.2d 326 (D.C. Cir. 1978) struck down an 

NSPS provision that allowed netting. The provision 

addition, EPA could structure categories 

to take into account possible reductions 

from improvements at non-emitting 

parts of the plants, for example, by 

creating source categories that cover all 

equipment at particular plants, instead 

of using categories that cover only 

specific types of equipment at a plant. 

EPA invites comment on whether such 

rearrangement would be appropriate 

and what type of rearrangement would 

be desirable. We also solicit information 

on how rearrangement could facilitate 

netting and how we might structure 

such netting. 

An alternative, or complementary, 

scenario would be to create larger 

‘‘super-categories’’ covering major 

groupings of stationary sources of GHG 

emissions. For example, it might be 

possible to create process-based 

categories (i.e., all sources emitting CO2 

through a stack as a result of 

combustion processes) or vertically 

integrated categories which take more of 

a life-cycle approach to the control of 

GHG emissions and reduce the 

possibility of leakage of GHG reductions 

to other parts of the economy or other 

geographic regions.245 The creation of 

such ‘‘super-categories’’ might provide 

additional opportunities for the 

development of innovative control 

mechanisms such as cap-and-trade 

programs covering multiple industry 

sectors. In light of these considerations, 

EPA requests comment on whether the 

creation of such ‘‘super categories’’ 

would be appropriate and what 

categories would be most useful for 

regulating GHGs. 

Under either option, EPA possesses 

authority to distinguish among classes, 

types and sizes of sources within 

existing categories for purposes of 

regulating GHG emissions. For example, 

we have at times distinguished between 

new and modified/reconstructed 

sources when setting the standards. This 

may be appropriate, for instance, when 

a particular new technology may readily 

be incorporated into a new installation, 

but it may be technically infeasible or 

unreasonably costly to retrofit this 

technology to an existing facility 

undergoing modification or 

reconstruction. Alternatively, we have 

distinguished among sources within a 

category, for instance fossil fuel-fired 

at issue there, however, permitted netting between 

sources, not within a source. See Alabama Power 

v. EPA, 636 F.2d 323, 401–02 (D.C. Cir. 1980). 245 For instance, a ‘‘super-category’’ could be 

created encompassing all aspects of the production, 

processing, and consumption of petroleum fuels, or 

to regulate the production and consumption of 

fossil fuels for heat and power, addressing all 

aspects of emissions-producing activity within a 

sector, including fuel production, consumption, 

and energy conservation. 

boilers, for which we have 

subcategorized on the basis of fuel types 

(e.g., coal, oil, natural gas). EPA requests 

comment on what considerations are 

relevant to determining whether it is 

appropriate and reasonable to establish 

subcategories for regulation under 

section 111. 

3. What Are Possible Key Milestones 

and Implementation Timelines? 

a. Priority Setting Among Source 

Categories 

If EPA were to pursue section 111 

regulation of GHGs, timetables for 

regulation would depend upon how 

EPA prioritized among source categories 

to determine which categories should be 

regulated first. In the near term, it may 

be possible to address GHGs under 

section 111 in a limited fashion by 

establishing control requirements for 

new and existing sources in some 

number of existing source categories, 

while information is developed on other 

source categories. Actions under other 

portions of the CAA may involve longer 

lead times to develop and implement, so 

that standards under section 111 for 

certain source categories could provide 

for emission reductions in the interim. 

We have begun to examine source 

categories subject to existing NSPS and 

other standards to consider how we 

might determine priorities among them 

for review and revisions, and whether 

GHGs could be addressed for specific 

sectors in a more coordinated, multipollutant fashion. EPA requests 

comment on the availability of its legal 

authority, if any, to prioritize among 

source categories in the event that 

regulation under section 111 was 

pursued. 

Under a ‘‘prioritization’’ approach, 

EPA could seek to revise standards 

earliest for those categories offering the 

greatest potential for significant 

reductions in the emissions of covered 

pollutants, and either deferring action or 

determining that no further action is 

necessary or appropriate at this time for 

other categories. This conclusion could 

be based, for example, on the lack of 

significant improvements in technology 

since the last NSPS review or the fact 

that no new sources are considered to be 

likely in the foreseeable future. 

Another possibility might be to 

schedule and structure the review and 

revision of standards for source 

categories to account for the fact that, in 

addition to the need to address GHG 

emissions, they may be subject to 

multiple standards for different 

pollutants under several sections of the 

CAA. Such standards may often be 

subject currently to different review 

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timetables resulting from when these 

standards were last established or 

revised. In addition, as discussed in 

section III.D of today’s notice, they may 

have the potential for positive or 

negative interactions with one another 

and with opportunities for the control of 

GHG emissions. 

Still another approach might consider 

the impacts of future reduction 

opportunities or enacted legislation so 

that standards under section 111 might 

focus initially on source categories for 

which near-term benefits might result 

largely from efficiency improvements 

which do not result in ‘‘stranded 

capital,’’ or investment in systems that 

will be superseded by more effective 

systems that we determine will be 

available at some specific future date. 

Alternatively, standards could focus on 

those sectors of the economy which will 

not likely be subject to controls being 

addressed in enacted legislation. 

We request comment on EPA’s 

available legal authority, if any, to defer 

action with respect to any ‘‘class’’ of 

section 111 source categories or 

subcategories as well as how and under 

what circumstances EPA could also 

consider such approaches to the 

identification of source categories for 

standards to address GHGs. Assuming 

the existence of adequate authority, 

what, if any, additional criteria should 

be considered in our priority-setting 

analysis efforts? In considering such 

sector- or multi-pollutant-based 

approaches, we further request 

comment on the extent to which we 

could establish new or revised source 

categories which better accommodate 

these approaches, or whether we are 

bound by existing source categories and 

their definitions. 

b. Timetables for Promulgation and 

Implementation 

In our experience, collecting and 

analyzing information regarding 

available control technologies, resulting 

emission reductions, and cost 

effectiveness can take up to several 

years for a source category. However, 

this time period can be shortened to 11⁄2 

to 2 years when information is readily 

available or is presented to the Agency 

in a form that facilitates efficient 

consideration. With respect to GHGs, 

there has been significant effort devoted 

to identifying and evaluating ways to 

reduce emissions within sectors such as 

the electricity generating industry, and 

we are aware of the potential for GHG 

reductions through energy efficiency 

and other means within other 

industries. However, for many others, 

technologies for reducing GHG 

emissions have not yet been identified 

or evaluated by EPA. EPA requests 

comment on whether and how the 

availability of current information 

should be considered when considering 

regulation under section 111. 

As is the case with traditional 

pollutants, any new or revised NSPS for 

new and modified sources of GHGs 

under section 111(b) would be 

developed through a notice and 

comment rulemaking process and 

would be effective upon promulgation. 

As noted previously, EPA is also 

required to review, and if appropriate 

revise, existing NSPS every 8 years 

unless the Administrator determines 

that ‘‘such review is not appropriate in 

light of readily available information on 

the efficacy of such standard.’’ 

Standards for pollutants not regulated 

by the existing NSPS may be added 

concurrent with the 8-year review, but 

such additions are not part of that 

review process. 

Any section 111(d) emission 

guidelines associated with the revised 

NSPS standards would be promulgated 

either along with or after the NSPS. 

States are generally required to submit 

the required state plans containing the 

standards of performance applicable to 

existing sources in their jurisdictions 

within 9 months of EPA’s promulgation 

of the guidelines. 

In the case of existing sources 

regulated under section 111(d), affected 

sources are typically provided up to 3 

years to comply with any resulting 

requirements; however, states have 

flexibility to provide longer or shorter 

compliance timeframes based on a 

number of source-specific factors. In 

addition, where we determine that a 

technology has been adequately 

demonstrated to be available for use by 

some particular future date, we believe 

it is possible to establish timeframes for 

compliance that reflect this finding.246 

No explicit 8-year review requirement 

exists with regard to section 111(d) 

standards for existing sources. 

Nonetheless, it also may be appropriate 

to require existing source plans to 

periodically revise their control 

strategies to reflect changes in available 

technologies and standards over time, 

particularly where the existing 

limitations were based on more limited 

controls at the time they were 

established. EPA requests comment on 

its authority and the advisability of such 

periodic updating with respect to the 

possible control of GHG. 

The CAA and EPA’s regulations 

implementing section 111(d) permit 

states to consider a number of factors 

246 See Portland Cement Association v. EPA, 486 

F.2d 275 (D.C. Cir. 1973). 

when determining the level of 

stringency of controls, but do not 

establish a bright line test when stricter 

requirements for existing sources are 

warranted. Many of these sources may 

also be subject to requirements for the 

control of other non-section 111(d) 

pollutants as part of implementation 

plans to attain and maintain NAAQS for 

one or more pollutants, and in some 

cases, these provisions may result in 

more stringent coincidental control of 

section 111(d) pollutants. We request 

comment on how and when we should 

evaluate, review, and revise as 

appropriate any section 111(d) 

standards that might be established in 

the future for GHGs. 

4. What Are the Key Considerations 

Regarding Use of This Authority To 

Regulate GHGs? 

a. Key Attributes and Limitations of 

Section 111 

As noted above, section 111 possesses 

certain flexible attributes that may be 

useful in tailoring emissions standards 

to address GHG emissions. Yet, 

regulation under this section also has 

important limitations. This section of 

today’s notice briefly summarizes these 

attributes and limitations. We request 

comment on how these attributes and 

limitations relate to the policy design 

considerations set forth in section 

III.F.1. 

Program scope: Section 111 provides 

EPA with authority to regulate GHG 

emissions from stationary source 

categories, but does not require EPA to 

regulate GHGs emitted by all source 

categories or even all listed source 

categories. EPA has flexibility to 

identify the source categories for which 

it is appropriate to establish GHG limits. 

For example, EPA could decide to set 

GHG limits for those source categories 

with the largest GHG emissions and 

reduction opportunities. EPA could 

postpone or decline to set GHG limits 

for source categories for which 

emissions contributions may be small or 

for which no effective means of 

reducing emissions exist, currently or 

within the reasonably foreseeable 

future. EPA also could consider 

traditional air pollutants as well as 

GHGs in setting its overall priorities for 

the NSPS program. 

Source size: Section 111 does not 

require regulation of all sources above a 

certain size. Instead, EPA has discretion 

to use rational emission thresholds to 

identify which facilities within a source 

category are covered by NSPS standards. 

Consideration of cost: Section 111 

explicitly directs EPA to take ‘‘into 

account the cost of achieving’’ emission 

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reductions, as well as other nonair 

quality, health and environmental 

impact and energy requirements.’’ This 

gives EPA significant flexibility to 

determine of appropriate levels of 

control, and can be an important source 

of distinctions between requirements for 

new sources and those for modified or 

reconstructed sources. 

Potential for emissions trading: As 

EPA has interpreted the NSPS 

requirements in the past with respect to 

certain air pollutants, we believe that 

the NSPS program could use emissions 

trading, including cap-and-trade 

programs and rate-based regulations that 

allow emissions trading, to achieve GHG 

emission reductions. EPA believes such 

programs are consistent with the 

statutory requirements because they 

satisfy the three substantive components 

of the section 111(a)(1) definition of 

‘‘standard of performance’’—(1) a 

standard for emissions of air pollutants; 

that (2) reflects that degree of emission 

limitation available’’; and (3) 

‘‘constitutes the best system of emission 

reduction.’’ A cap-and-trade program 

can constitute a ‘‘standard for emissions 

of air pollutants’’ because it is a system 

created by EPA for control of emissions. 

The use of emissions budgets does not 

make the system less of a ‘‘standard’’ 

since the budgets must be met 

regardless of the methodology used to 

allocate allowances to specific sources. 

Further, any such system would be 

based on our assessment of the overall 

degree of emission reduction available 

for the source category and our analysis 

of the available systems of emission 

reductions. EPA could select a marketoriented mechanism as the ‘‘standard of 

performance’’ if these analyses 

(including cost analyses) indicate that 

the system would ‘‘reflect the degree of 

emission limitation achievable’’ and 

‘‘constitute the best system of emission 

reduction.’’ EPA also believes that 

trading among new and existing sources 

could be permitted, and could offer, at 

least in some cases, cost efficiencies.247 

EPA also believes that because of the 

potential cost savings, it might be 

possible for the Agency to consider 

deeper reductions through a cap-andtrade program that allowed trading 

247 In the Clean Air Mercury Rule we concluded 

that new sources needed to comply with a unit 

specific control requirement in addition to 

participating in the trading program. We solicit 

comment on whether section 111 requires such 

controls for new sources or if it would be sufficient 

for them to participate in a trading program or other 

market based mechanism without this restriction. 

While not ensuring an equally stringent level of 

control at each new source, the latter approach 

would be expected to achieve the same total 

emissions reductions at a lower overall compliance 

cost. 

among sources in various source 

categories relative to other systems of 

emission reduction. We request 

comment on the extent of EPA’s 

available legal authority in this area as 

well as the attributes such a program 

must possess to qualify as a standard of 

performance under section 111. 

Potential for declining performance 

standards: EPA believes that section 111 

authority may be used to set both singlephase performance standards based 

upon current technology and to set twophased or multi-phased standards with 

more stringent limits in future years. 

Future-year limits may permissibly be 

based on technologies that, at the time 

of the rulemaking, we find adequately 

demonstrated to be available for use at 

some specified future date. 

Alternatively, it may be possible to 

establish a goal based on future 

availability of a technology and to revise 

the standard to reflect technological 

advancements at appropriate intervals, 

such as the 8-year review cycles. We 

believe these concepts could be applied 

to standards for new and modified 

sources, as well as to standards for 

existing sources under section 111(d). In 

addition, this concept could be coupled 

with emissions trading. 

We recognize that various legal issues 

and questions concerning legal 

authority may be involved in setting 

standards based on technology only 

adequately demonstrated for use at a 

future date. For example, there might be 

greater uncertainty regarding the cost of 

technology for such standards than for 

standards based only on technology that 

is already commercially demonstrated at 

the time of promulgation. In the Clean 

Air Mercury Rule (CAMR), which was 

vacated by the D.C. Circuit on other 

grounds, EPA interpreted section 111 to 

allow a two-phased ‘‘standard of 

performance’’ to reduce mercury 

emissions from existing sources. The 

compliance date for the more stringent 

second phase was 2018. EPA believed 

that it had greater flexibility to set such 

a standard for existing sources under 

section 111(d) because these standards, 

in contrast to section 111(b) standards 

for new sources, are not subject to the 

requirements of section 111(e). Section 

111(e) makes unlawful to operate any 

new source in violation of a standard of 

performance after its effective date. EPA 

requests comment on this interpretation. 

We also request comment on the 

circumstances under which the 

requirements of section 111(e) would be 

satisfied by a standard requiring 

compliance with the initial 

requirements of a multi-phase standard. 

More generally, EPA seeks comment on 

its legal authority in this matter as well 

as the legal and factual conditions that 

must be satisfied to support a multiphase standard with future-year 

standards based on technology 

adequately demonstrated for use by that 

future date. EPA also seeks comment on 

how far into the future multi-phase 

standards could extend and the degree 

of certainty with which EPA must make 

its determinations of availability for 

future use, considering the section 111 

standard setting language. 

Technology development: Section 111 

also contains a waiver provision that 

can be used to encourage the 

development of innovative technologies, 

as described below. 

Standards tied to available 

technology: The fact that section 111 

requirements are based upon a 

demonstration of the availability of 

control technology could limit the 

amount of reductions achievable 

through section 111 regulations to 

demonstrably feasible and cost-effective 

levels. If a given level of overall 

emission reduction is determined to be 

necessary and that level exceeds what is 

currently demonstrated to be feasible 

now or by some future date, then 

section 111 may not provide adequate 

authority by itself to achieve needed 

reductions. Although section 111 

provides certain opportunities and 

incentives for technology development, 

this feature may make it more difficult 

to set ‘‘stretch goals’’ without other 

companion mechanisms. 

In light of these considerations, we 

request comment on whether and to 

what extent section 111 provides an 

appropriate means for regulating GHG 

emissions. 

b. Additional Considerations 

We also request comment on the 

questions presented below which relate 

to the manner in which EPA could or 

should exercise its authority under this 

section to regulate GHGs. 

i. What Regulatory Mechanisms Are 

Available? 

As noted above, NSPS standards and 

111(d) emission guidelines most 

commonly establish numerical emission 

standards expressed as a performance 

level. Such rate-based limits, however, 

are not the only mechanisms that could 

be used to regulate GHGs. 

Efficiency Standards: We believe that 

most reductions in stationary GHG 

emissions may occur initially as the 

result of increased energy efficiency, 

process efficiency improvements, 

recovery and beneficial use of process 

gases, and certain raw material and 

product changes that could reduce 

inputs of carbon or other GHG-

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generating materials. Such emission 

reductions may range in the near term 

(e.g., 5–10 years) from 1 to 10%. Thus, 

it could be possible to utilize NSPS 

standards to ensure reductions from 

efficiency improvements are obtained. 

For such standards to be effective, they 

likely would generally need to apply to 

the entire facility, not just specific 

equipment at the facility. EPA requests 

comment on the availability of its legal 

authority in this area and whether and 

when it might be appropriate to 

establish efficiency standards for source 

categories as a way of reducing GHG 

emissions. 

Plant-wide standards: EPA also 

believes there may be benefits to 

developing plant-wide or companywide standards for GHG emissions. 

Section 111, however, requires each 

affected facility to comply with the 

standard. EPA believes that it could 

redefine the affected facility for certain 

categories, for purposes of GHG 

regulation only, to include an entire 

plant. EPA also requests comment on 

whether it would be consistent with the 

statutory requirements to establish 

company-wide limits. 

Work practice standards: In some 

circumstances, it may not be possible to 

identify a specific performance level for 

sources in a particular category; 

however, section 111(h) permits 

promulgation of design, equipment, 

work practice, or operational standards 

but allows such standards to be 

established only in specific 

circumstances. Specifically, it provides 

that where we determine ‘‘that (A) a 

pollutant or pollutants cannot be 

emitted through a conveyance designed 

and constructed to emit or capture such 

pollutant, or that any requirement for, or 

use of, such a conveyance would be 

inconsistent with any Federal, State, or 

local law, or (B) the application of 

measurement methodology to a 

particular class of sources is not 

practicable due to technological or 

economic limitations,’’ we may 

establish a ‘‘design, equipment, work 

practice, or operational standard, or 

combination thereof, which reflects the 

best technological system of continuous 

mission reduction which . . . has been 

adequately demonstrated.’’ EPA 

requests comment on the circumstances 

under which the section 111(h) criteria 

would be satisfied and when, and for 

which source categories, work practice 

standards could be appropriate 

standards to control GHGs. 

Market-oriented regulatory 

mechanisms: As mentioned above, EPA 

believes that market-oriented regulatory 

approaches including emissions trading 

are worthy of consideration for applying 

NSPS to GHG emissions. Several 

market-oriented regulatory mechanisms 

are discussed in section VII.G of today’s 

notice. EPA requests comment on which 

of these mechanisms are consistent with 

the section 111 definition of a ‘‘standard 

of performance.’’ 

ii. Request for Comment on Section 111 

Regulatory Approaches 

This notice and the Stationary Source 

TSD describe possible approaches for 

using section 111 to reduce GHG 

emissions, in general and in regard to 

particular source categories. We request 

comment on the following specific 

questions regarding potential regulatory 

approaches under section 111: 

• What are the overall advantages and 

disadvantages of the regulatory 

approaches discussed above, in light of 

the policy design considerations in 

section III.F.1? Please describe in detail 

any approaches not discussed in today’s 

notice that you think we should 

consider. 

• What are the industry-specific 

advantages and disadvantages of the 

regulatory approaches discussed above 

and in the TSD? 

In developing section 111 standards 

for a particular source category (e.g., 

refineries, cement plants, industrial 

commercial boilers, electric generating 

plants, etc.) we are requesting source 

category-specific comments on the 

following additional issues: 

• What data are available, or would 

need to be collected, to support the 

development of performance standards, 

either by process, subcategory, or for the 

facility? 

• Should the standards be different 

for new and existing sources, either in 

terms of the systems for emission 

reductions on which they should be 

based and/or on the regulatory structure 

and implementing mechanisms for such 

standards? 

• To what extent, if any, should the 

standards be technology-forcing for 

existing sources? 

• Should the standards require 

additional reductions over time? To 

what extent would such reductions be 

consistent with the authority and 

purpose of section 111, and how should 

they be designed and carried out to 

ensure consistency? 

iii. What Reductions Could Be Achieved 

From Efficiency Improvements at 

Existing Sources? 

Recognizing that existing sources do 

not have as much flexibility in the 

levels of control that may realistically be 

achieved at a new source, a section 

111(d) standard regulating GHG from 

existing sources would at this time most 

likely focus on currently available 

measures to increase the energy 

efficiency at the facility, thereby 

reducing GHG emissions. Examples of 

typical measures that promote energy 

efficiency include the use of cleaner 

fuels and equipment replacement or 

process improvements which reduce 

energy consumption. How well a 

measure, or combination of measures, 

will reduce GHG emissions at an 

individual facility will vary. A review of 

available literature suggests a range of 

improvements for various industry 

sectors that may be achievable through 

energy and process efficiency 

improvements, and some representative 

examples are summarized below. This 

information is illustrative, and does not 

represent any final technical 

determination by the agency as to what 

emission reduction requirements might 

be appropriate to require from the 

source categories discussed below. 

For example, reductions in emissions 

of GHG from cement plants would most 

likely occur from fuel efficiency and 

electric energy efficiency measures as 

well as raw material and product 

changes that reduce the amount of CO2 

generated per ton of cement produced. 

There are numerous efficiency measures 

generally accepted by much of the U.S. 

industry, and many of these measures 

have been adopted in recent cement 

plant improvements. Such measures 

may directly reduce GHG emissions by 

cement plants, or they may indirectly 

reduce GHG emissions at sources of 

power generation due to reduced 

electrical energy requirements. The 

range of effectiveness of the individual 

measures in reducing GHG is from less 

than 1% to 10%.248 Benchmarking and 

other studies have demonstrated a 

technical potential for up to 40% 

improvement in energy efficiency for a 

new cement plant using the most 

efficient technologies compared to older 

plants using wet kilns. 

A number of opportunities may exist 

within refineries to increase energy 

efficiency by optimizing utilities, fired 

heaters, heat exchangers, motors, and 

process designs. Competitive 

benchmarking data indicate that most 

petroleum refineries can economically 

improve energy efficiency by 10 to 

20%.249 Therefore, we would expect 

that a new refinery could be designed to 

be at least 20% more efficient than an 

existing one. 

248 U.S. EPA (2008), Air Pollution Controls and 

Efficiency Improvement Measures for Cement Kiln. 

Final Report. 

249 Energy Efficiency Improvement and Cost 

Saving Opportunities for Petroleum Refineries, 

LBNL, 2005. 

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In the case of industrial boilers, 

measures applied to individual facilities 

could result in energy savings and GHG 

reductions on the order of 1% to 10%. 

Replacing an existing boiler with a 

combined heat and power plant could 

improve the energy efficiently of an 

existing plant by 10% to 33%. 

Existing coal-fired power plants can 

reduce their fuel consumption (reduce 

heat rate) and reduce CO2 emissions by 

performing well known modifications 

and upgrades to plant systems. Heat rate 

reductions of up to 10% may be feasible 

through various efficiency 

improvements at individual coal units, 

depending on site specific conditions. 

Because of plant age and other physical 

limitations, the potential average heat 

rate reduction for the coal fleet would 

likely not exceed about 5%. The 

existing fleet operates at an average net 

efficiency of about 33%. If the 

corresponding coal fleet average net 

heat rate were reduced by 5% via 

efficiency improvements, a potential 5% 

reduction in CO2 emissions could be 

obtained as well. 

As older, less efficient coal power 

plants are retired, their capacity may be 

replaced with new, more efficient coalfired units. A new, fully proven 

supercritical coal plant design can 

operate at a heat rate 10–15% below the 

current coal fleet average, and therefore 

produce 10–15% less GHG than the 

average existing coal plant. Future more 

advanced ultra-supercritical plant 

designs with efficiencies above 40% 

would have heat rates that are 20–25% 

or more below the current coal fleet 

average, and therefore produce that 

much less GHG than the average 

existing coal plant. 

Technology to capture and 

geologically sequester CO2 is the subject 

of ongoing projects in the U.S. and other 

countries and is a promising 

technology.250 The electric power sector 

will most likely be the largest potential 

market for carbon capture and 

sequestration (CCS) technologies, with 

the potential to reduce CO2 by 

approximately 80–90% at an individual 

plant.251 It may become possible to 

apply CCS to some portion of the 

existing coal-fired fleet by retrofit to 

achieve significant CO2 reductions. 

Other facilities that might be able to use 

CCS include refineries, chemical 

manufacturing plants, ethanol 

production facilities, cement kilns and 

steel mills. As advances in GHG 

250 See http://www.netl.doe.gov/technologies/ 

carbon_seq/partnerships/partnerships.html for 

more information about the Regional Carbon 

Sequestration Partnerships in the United States. 

251 IPCC Special Report on Carbon Dixoide 

Capture and Storage, 2005, pp.3, 22. 

reduction technologies continue, section 

111(d) standards would be expected to 

consider and reflect those advances over 

time. We solicit comment on the criteria 

EPA should use to evaluate whether 

CCS technology is adequately 

demonstrated to be available for the 

electric power and other industrial 

sectors, including the key milestones 

and timelines associated with the widespread use of the technology. 

iv. What Are the Possible Effects of 

Section 111 With Respect to Innovation? 

As noted previously, whatever path 

may be pursued with respect to the 

control of GHG through the CAA or 

other authority, we believe it is likely 

that most early reductions in stationary 

GHG emissions may occur as the result 

of increased energy efficiency, process 

efficiency improvements, recovery and 

beneficial use of process gases, and 

certain raw material and product 

changes that could reduce inputs of 

carbon or other GHG-generating 

materials. Clearly, more fundamental 

technological changes will be needed to 

achieve deeper reductions in stationary 

source GHG emissions over time. We 

request general comments on how to 

create an environment in which new, 

more innovative approaches may be 

encouraged pursuant to section 111, or 

other CAA or non-CAA authority. 

Waiver authority under section 111(j) 

would be useful as one element of 

broader policies to encourage 

development of innovative technologies. 

Section 111(j) authorizes the 

Administrator to waive the NSPS 

requirements applicable to a source if he 

determines that the innovative 

technology the source proposes to use 

will operate effectively and is likely to 

achieve greater emission reductions, or 

at least equivalent reductions but at 

lower cost. Also, the Administrator 

must determine that the proposed 

system has not yet been adequately 

demonstrated (i.e. it is still an 

innovative technology), but that it will 

not cause or contribute to an 

unreasonable risk to public health, 

welfare, or safety in its operation, 

function, or malfunction. These waivers 

can be given for up to 7 years, or 4 years 

from the date that a source commences 

operation, whichever is earlier. 

We believe that effective GHG 

reduction techniques for many source 

categories potentially subject to NSPS 

may at this time be limited and that 

additional research and development 

will be necessary before these controls 

are demonstrated to be effective. We ask 

for comment on how the use of 

innovative technology waivers could 

conceivably be used to foster the 

development of additional approaches 

for GHG reductions. 

5. Possible Implications for Other CAA 

Provisions 

Regulation of GHGs under a section 

111 standard for any industry would 

trigger preconstruction permitting 

requirements for all types of GHG 

sources under the PSD program. NSPS 

are also incorporated into operating 

permits issued under Title V of the 

CAA. The consequences of triggering 

and the options for addressing these 

permitting requirements are addressed 

in detail in section VII.D of this notice. 

Whether GHGs were regulated 

individually or as a group in NSPS 

standards would affect the definition of 

regulated pollutant for stationary 

sources subject to preconstruction 

permitting under the PSD program. 

Conversely, while the section 111 

mechanisms are relatively independent 

of other CAA programs, NSPS decisionmaking as a practical matter would need 

to consider the pollutant definitions 

adopted under other CAA authorities. It 

would be advantageous to maintain 

consistency regarding the GHG 

pollutants subject to regulation 

elsewhere in the Act to avoid the 

potential for PSD review requirements 

for individual GHGs as well as for 

groups of the same GHGs. 

In considering the impact that 

decisions to list pollutants under other 

authorities of the CAA might have on 

our use of section 111 authority, we 

note that some industries have 

processes that emit more than one GHG 

and a potential may exist among some 

of these industries to control emissions 

of one GHG in ways that may increase 

emissions of others (e.g., collecting 

methane emissions and combusting 

them to produce heat and/or energy, 

resulting in emissions of CO2.) While an 

overall reduction in GHGs may occur, as 

well as a reduction in global warming 

potential, whether GHGs are regulated 

as a class of compounds or as individual 

constituents could have implications for 

the degree of flexibility and for the 

outcome of any regulatory decisions. 

More specifically, if we were to regulate 

GHGs as a group, then standards under 

section 111 might establish an overall 

level of performance that could 

accommodate increases in emissions of 

some gases together with reductions in 

others, so long as the overall 

performance target was met. If we were 

to regulate individual GHGs, then we 

may be less able to establish less 

stringent requirements for the control of 

some gases, while setting more stringent 

requirements for others. The extent to 

which we may be able to do so depends 

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on the significance of the emissions of 

each gas from the source category in 

question as well as the feasibility and 

cost-effectiveness of controlling each. 

One result of this lessened flexibility 

may be the preclusion of certain 

approaches that could yield greater net 

reduction in GHG emissions. For this 

reason, we request comments on (1) the 

extent to which we are limited in our 

flexibility to regulate GHG as a class if 

listed individually under other CAA 

authorities, and (2) whether regulation 

under section 111 should treat GHG 

emissions as a class for determining the 

appropriate systems for emissions 

reduction and resulting standards. 

Finally, we note that our authority to 

promulgate 111(d) standards for existing 

sources depends on the two restrictions 

noted above. First, section 111(d) 

prohibits regulation of a NAAQS 

pollutant under that section. Second, 

‘‘where a source category is being 

regulated under section 112, a section 

111(d) standard of performance cannot 

be established to address any HAP listed 

under 112(b) that may be emitted from 

that particular source category.’’ If we 

were to promulgate a section 111(d) 

emission standard and then 

subsequently take action under sections 

108 or 112 such that we could not 

promulgate a section 111(d) standard 

had we not already done so, the 

continued validity of the section 111(d) 

regulations might become unclear. We 

request comment on the extent, if any, 

to which the requirements of section 

111(d) plans would, or could, remain in 

force under such circumstances. 

C. National Emission Standards for 

Hazardous Air Pollutants 

Along with the NAAQS system and 

section 111 standards, section 112 is 

one of the three main regulatory 

pathways under the CAA for stationary 

sources. Section 112 is the portion of 

the Act that Congress designed for 

controlling hazardous air pollutant 

emissions from these sources, including 

toxic pollutants with localized or more 

geographically widespread effects. This 

focus is reflected in the statutory 

provisions, which, for example, require 

EPA to regulate sources with relatively 

small amounts of emissions. In 

comparison to section 111, section 112 

provides substantially less discretion to 

EPA concerning the size and types of 

sources to regulate, and is specific about 

when EPA may and may not consider 

cost. 

This section explores the implications 

if EPA were to list GHGs as hazardous 

air pollutants under section 112. 

1. What Does Section 112 Require? 

a. Overview 

Section 112 contains a list of 

hazardous air pollutants (HAPs) for 

regulation. EPA can add or delete 

pollutants from the list consistent with 

certain criteria described below. 

EPA must list for regulation all 

categories of major sources that emit one 

or more of the HAPs listed in the statute 

or added to the list by EPA. A major 

source is defined as a source that emits 

or has the potential to emit 10 tons per 

year or more of any one HAP or 25 tons 

per year of any combination of HAPs. 

For each major source category, EPA 

must develop national emission 

standards for hazardous air pollutants 

(NESHAP). Standards are required for 

existing and new major sources. The 

statute requires the standards to reflect 

‘‘the maximum degree of reduction in 

HAP emissions that is achievable, taking 

into consideration the cost of achieving 

the emission reduction, any nonair 

quality health and environmental 

impacts, and energy requirements.’’ 

This level of control is commonly 

referred to as maximum achievable 

control technology, or MACT. 

The statute also provides authority for 

EPA to list and regulate smaller ‘‘area’’ 

sources of HAPs. For those sources EPA 

can establish either MACT or less 

stringent ‘‘generally available control 

technologies or management practices’’. 

Section 112(d)(6), requires a review of 

these technology-based standards every 

8 years and requires that they be revised 

‘‘as necessary taking into account 

developments in practices, processes 

and control technologies.’’ Additionally, 

EPA under section 112(f)(2)(C) must 

reevaluate MACT standards within 8 

years of their issuance to determine 

whether MACT is sufficient to protect 

public health with an ample margin of 

safety and prevent adverse 

environmental effects. If not, EPA must 

promulgate more stringent regulations 

to address any such ‘‘residual risk’’. 

b. How Are Pollutants and Source 

Categories Listed for Regulation Under 

Section 112? 

Section 112(b)(1) includes an initial 

list of more than 180 HAPs. Section 

112(b)(2) requires EPA to periodically 

review the initial HAP list and outlines 

criteria to be applied in deciding 

whether to add or delete particular 

pollutants. 

A pollutant may be added to the list 

because of either human health effects 

or adverse environmental effects. With 

regard to adverse human health effects, 

the provision allows listing of pollutants 

‘‘including, but not limited to, 

substances which are known to be, or 

may reasonably be anticipated to be, 

carcinogenic, mutagenic, teratogenic, 

neurotoxic, which cause reproductive 

dysfunction, or which are acutely or 

chronically toxic.’’ An adverse 

environmental effect is defined as ‘‘any 

significant and widespread adverse 

effect, which may reasonably be 

anticipated, to wildlife, aquatic life, or 

other natural resources, including 

adverse impacts on populations of 

endangered or threatened species or 

significant degradation of 

environmental quality over broad 

areas.’’ Section 112(b)(2) provides that 

‘‘no substance, practice, process or 

activity regulated under [the Clean Air 

Act’s stratospheric ozone protection 

program] shall be subject to regulation 

under this section solely due to its 

adverse effects on the environment.’’ 

Thus, section 112 may not be used to 

regulate certain chlorofluorocarbons and 

other ozone-depleting substances, their 

sources, or activities related to their 

production and use to address climate 

change unless we establish that such 

regulations are necessary to address 

human health effects in addition to any 

adverse environmental impacts. See 

section 602 of the Clean Air Act for a 

partial list of these substances. 

Section 112(b)(3) of the Act 

establishes general requirements for 

petitioning EPA to modify the HAP list 

by adding or deleting a substance. 

Although the Administrator may add or 

delete a substance on his own initiative, 

if a party petitions the Agency to add or 

delete a substance, the burden 

historically has been on the petitioner to 

include sufficient information to 

support the requested addition or 

deletion under the substantive criteria 

set forth in CAA section 112(b)(3)(B) 

and (C). The Administrator must either 

grant or deny a petition within 18 

months of receipt of a complete petition. 

The effects and findings described in 

section 112 are different from other 

sections of the CAA addressing 

endangerment of public health 

discussed in previous sections of 

today’s notice. Given the nature of the 

effects identified in section 112(b)(2), 

we request comment on whether the 

health and environmental effects 

attributable to GHG fall within the scope 

of this section. We also request 

comment on direct and indirect GHG 

emissions from existing source 

categories currently subject to regulation 

under section 112, any assessment of 

the relative costs of regulating GHG 

under the authority of section 112, and 

any co-benefits or co-detriments with 

regard to controlling GHG and the 

emissions of HAP. 

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The source categories to be regulated 

under section 112 are determined based 

on the list of HAP. Section 112(c) 

requires EPA to publish a list of all 

categories and subcategories of major 

sources of one or more of the listed 

pollutants, and to periodically review 

and update that list. In doing this, EPA 

also is required to list each category or 

subcategory of area sources which the 

Administrator finds presents a threat of 

adverse effects to human health or the 

environment (by such sources 

individually or in the aggregate) 

warranting regulation under section 

112. 

c. How Is MACT Determined? 

In essence, MACT standards are 

intended to ensure that all major 

sources of HAP emissions achieve the 

level of control already being achieved 

by the better controlled and lower 

emitting sources in each category. This 

approach provides assurance to citizens 

that each major source of toxic air 

pollution will be required to effectively 

control its emissions. At the same time, 

this approach provides assurances that 

facilities that employ cleaner processes 

and good emissions controls are not 

disadvantaged relative to competitors 

with poorer controls. 

MACT is determined separately for 

new and existing sources. For existing 

sources, MACT standards must be at 

least as stringent as the average 

emissions limitation achieved by the 

best performing 12 percent of sources in 

the category or subcategory (or the best 

performing five sources for source 

categories with less than 30 sources). 

This level is called the ‘‘MACT floor.’’ 

For new or reconstructed sources, 

MACT standards must be at least as 

stringent as the control level achieved in 

practice by the best controlled similar 

source.252 EPA also must consider more 

stringent ‘‘beyond-the-floor’’ control 

options for MACT. When considering 

beyond-the-floor options, EPA must 

consider not only the maximum degree 

of reduction in emissions of the HAP, 

but also costs, energy requirements and 

non-air quality health environmental 

impacts of imposing such requirements. 

MACT standards may require the 

application of measures, processes, 

methods, systems, or techniques 

including, but not limited to, (1) 

reducing the volume of, or eliminating 

emissions of, such pollutants through 

process changes, substitution of 

materials, or other modifications; (2) 

enclosing systems or processes to 

eliminate emissions; (3) collecting, 

capturing, or treating such pollutants 

252 See CAA section 112(d)(3). 

when released from a process, stack, 

storage or fugitive emissions point; (4) 

design, equipment, work practice, or 

operational standards (including 

requirements for operator training or 

certification) as provided in subsection 

(h); or (5) a combination of the above. 

(See section 112(d)(2) of the Act.) 

For area sources, CAA section 

112(d)(5) provides that the standards 

may reflect generally available control 

technology or management practices 

(GACT) in lieu of MACT. 

d. What Is Required To Address Any 

Residual Risk? 

Section 112(f)(2) of the CAA requires 

us to determine for each section 112(d) 

source category whether the MACT 

standards protect public health with an 

ample margin of safety. If the MACT 

standards for a HAP ‘‘classified as a 

known, probable, or possible human 

carcinogen do not reduce lifetime excess 

cancer risks to the individual most 

exposed to emissions from a source in 

the category or subcategory to less than 

1-in-1-million,’’ EPA must promulgate 

residual risk standards for the source 

category (or subcategory) as necessary to 

protect public health with an ample 

margin of safety. EPA must also adopt 

more stringent standards if needed to 

prevent an adverse environmental 

effect, but must consider cost, energy, 

safety, and other relevant factors in 

doing so. EPA solicits comments on the 

extent to which these programs could 

apply with respect to the possible 

regulation of sources of GHG under 

section 112, including the relevance of 

any carcinogenic effects of individual 

GHG. 

2. What Sources Would Be Affected if 

GHGs Were Regulated Under This 

Authority? 

If GHGs were listed as HAP, EPA 

would be required to regulate a very 

large number of new and existing 

stationary sources, including smaller 

sources than if alternative CAA 

authorities were used to regulate GHG. 

This is the result of three key 

requirements. First, the section 112(a) 

major sources thresholds of 10 tons for 

a single HAP and 25 for any 

combination of HAPs would mean that 

very small GHG emitters would be 

considered major sources. Second, 

section 112(c) requires EPA to list all 

categories of major sources. Third, 

section 112(d) requires EPA to issue 

MACT standards for all listed 

categories. 

We believe that most significant 

stationary source categories of GHG 

emissions have already been listed 

under section 112 (although the 10-ton 

threshold in the case of GHGs would be 

expected to bring in additional 

categories such as furnaces in buildings, 

as explained below). To date we have 

adopted standards for over 170 

categories and subcategories of major 

and area sources. This is a significantly 

greater number than the categories for 

which we have adopted NSPS because 

under section 112 we must establish 

standards for all listed categories, 

whereas section 111 requires that we 

identify and regulate only those source 

categories that contribute 

‘‘significantly’’ to air pollution 

endangering public health and welfare. 

3. What Are the Key Milestones and 

Expected Timeline if Section 112 Were 

Used for GHG Controls? 

One possible timetable for addressing 

GHG under this part of the Act would 

be to incorporate GHG emission control 

requirements concurrent with the 

mandatory 8-year technology reviews 

for each category, collecting information 

on emissions and control technologies 

at the time the existing MACT standards 

are reviewed to determine whether 

revisions are needed. If we were to list 

new source categories under section 

112, EPA would be required to adopt 

MACT standards for those categories 

within 2 years of the date of category 

listing. 

EPA must require existing sources to 

comply within 3 years of a standard’s 

promulgation, although states and EPA 

are authorized in certain circumstances 

to extend the period of compliance by 

one additional year. Most new sources 

must comply as soon as a section 112 

standard is issued; however, there is an 

exception where the final rule is more 

stringent than the proposal. 

Because of the more detailed 

requirements for identifying appropriate 

levels of control to establish a level for 

MACT, significantly more information 

on the best performing sources is 

needed under section 112 than under 

section 111, making the development of 

such standards within 2 years after 

listing a source category difficult. We 

request comment on this and other 

approaches for addressing GHG under 

section 112, both for categories already 

listed for regulation and for any that 

might appropriately be added to the 

section 112 source category list if we 

were to elect to regulate GHGs under 

this section. 

4. What Are the Key Considerations 

Regarding Use of This Authority for 

GHGs (and How Could Potential Issues 

Be Addressed)? 

A key consideration in evaluating use 

of section 112 for GHG regulation is that 

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the statutory provisions appear to allow 

EPA little flexibility regarding either the 

source categories to be regulated or the 

size of sources to regulate. As described 

above, EPA would be required to 

regulate a very large number of new and 

existing stationary sources, including 

smaller sources than if alternative CAA 

authorities were used to regulate GHG. 

For example, in calculating CO2 

emissions based on fossil-fuel 

consumption, we believe that small 

commercial or institutional 

establishments and facilities with 

natural gas-fired furnaces would exceed 

this major source threshold; indeed, a 

large single-family residence could 

exceed this threshold if all appliances 

consumed natural gas. EPA requests 

comment on the requirement to 

establish standards for all sources under 

section 112 relevant to GHG emissions 

and whether any statutory flexibility is 

or is not available with respect to this 

requirement and GHGs. 

A section 112 approach for GHGs 

would require EPA to issue a large 

number of standards based on 

assessments for each source category. 

Determining MACT based on the bestcontrolled 12 percent of similar sources 

for each category would present a 

difficult challenge, owing to our current 

lack of information about GHG control 

by such sources and the effort required 

to obtain sufficient information to 

establish a permissible level of 

performance. 

GHG regulation under section 112 

would likely be less cost effective than 

under some CAA authorities, in part 

because section 112 was designed to 

ensure a MACT level of control by each 

major source, and thus provides little 

flexibility for market-oriented 

approaches. Given the structure and 

past implementation of section 112, this 

section may not provide EPA with 

authority to allow emissions trading 

among facilities or averaging across 

emitting equipment in different source 

categories. This is because the statutory 

terms of section 112 provide that 

emission standards must be established 

for sources within ‘‘each category’’ and 

those standards must be no less 

stringent than the ‘‘floor,’’ or the level 

of performance achieved by the bestperforming sources within that category. 

Each source in the category must then 

achieve control at least to this floor 

level. Trading would allow sources to 

emit above the floor. In addition, it may 

not be possible to assess individual 

source fence line risk for section 112(f) 

residual risk purposes if the sources did 

not each have fixed limits. Finally, the 

section 112 program is in part designed 

to protect the population in the vicinity 

of each facility, which trading could 

undermine (in contrast to an ambient 

standard). Given the global nature of 

GHGs and the lack of direct health 

effects from such emissions at ambient 

levels, EPA requests comments on the 

extent to which the CAA could be 

interpreted to grant flexibility to 

consider such alternative 

implementation mechanisms, and what, 

if any, limitations should be considered 

appropriate in conjunction with them. 

Another reason that section 112 

regulation of GHGs would be expected 

to be less cost effective than other 

approaches is that the statute limits 

consideration of cost in setting MACT 

standards. As described above, the 

statute sets minimum stringency levels, 

or ‘‘floors,’’ for new and existing source 

standards. Cost can only be considered 

in determining whether to require 

standards to be more stringent than the 

floor level. 

A further consideration is that the 

short compliance timetables— 

immediate for most new sources, and 

within 3–4 years for existing sources— 

appear to preclude setting longer 

compliance timeframes to allow for 

emerging GHG technologies to be 

further developed or commercialized. 

5. What Are the Possible Implications 

for Other Provisions of the Clean Air 

Act? 

As provided under section 112(b)(6), 

pollutants regulated under section 112 

of the Act are exempt from regulation 

under the PSD program. Also, a section 

111(d) standard of performance for 

existing sources cannot be established to 

address any HAP listed under section 

112(b) that that is emitted from a source 

category regulated under section 112.253 

If EPA were to list GHGs under 

section 108 of the CAA for purposes of 

establishing NAAQS, we would be 

prevented by section 112(b)(2) from 

listing and regulating them as HAPs 

under this section of the Act. However, 

it is less clear that the reverse is true; 

that is, if a pollutant were first listed 

under section 112 and then EPA 

decided to list and regulate it under 

section 108, the statute does not clearly 

say whether that is permissible, or 

whether EPA would then have to 

remove the pollutant from the section 

112 pollutant list. We request comment 

on the extent to which this apparent 

ambiguity in the Act poses an issue 

regarding possible avenues for 

regulating GHG and if so, how it should 

be addressed. 

253 It is important to note that many sources may 

be subject to standards under both section 111 and 

112; however these standards establish 

requirements for the control of different pollutants. 

In light of the foregoing, we request 

comment on the appropriateness of 

section 112 as a mechanism for 

regulating stationary source emissions 

of GHGs under the CAA. If commenters 

believe use of section 112 would be 

appropriate, we further request 

comments on which GHGs should be 

considered, what additional sources of 

emissions should be listed and 

regulated, and how MACT should be 

determined for GHG emission sources. 

D. Solid Waste Combustion Standards 

1. What Does Section 129 Require? 

Section 129 of the CAA requires EPA 

to set performance standards under 

section 111 to control emissions from 

solid waste incineration units of at least 

9 specific air pollutants. It directs EPA 

to develop standards which include 

emission limitations and other 

requirements for new units and 

guidelines and other requirements 

applicable to existing units. 

Section 129 directs EPA to set 

standards for ‘‘each category’’ of such 

units, including those that combust 

municipal, hospital, medical, infectious, 

commercial, or industrial waste, and 

‘‘other categories’’ of solid waste 

incineration units, irrespective of size. 

The pollutants to be addressed by these 

standards include the NAAQS 

pollutants particulate matter (total and 

fine), sulfur dioxide, oxides of nitrogen, 

carbon monoxide, and lead; and the 

hazardous air pollutants hydrogen 

chloride, cadmium, mercury, and 

dioxins and dibenzofurans. EPA is 

authorized to regulate additional 

pollutants under these provisions, but 

section 129 includes no endangerment 

test or other criteria for determining 

when it is appropriate to do so. 

Although the emission standards 

called for by section 129 are to be 

established pursuant to section 111, the 

degree of control required under those 

standards more closely resembles that of 

section 112(d). For new sources the 

level of control is required to be no less 

stringent than that of the best 

performing similar source, while for 

existing sources the level of control is to 

be no less stringent than the average of 

the top 12% of best-performing sources. 

For both new and existing source 

standards, beyond these ‘‘floor’’ levels 

EPA must consider the cost of achieving 

resulting emission reductions and any 

non-air quality health and 

environmental impacts and energy 

requirements in determining what is 

achievable for units within each 

category. The performance standards 

must be reviewed every 5 years. 

Additionally, for those pollutants that 

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are listed under section 112 as a HAP, 

EPA must reevaluate the standards in 

accordance with section 112(f) to 

determine whether they are sufficient to 

protect public health with an ample 

margin of safety and prevent adverse 

environmental effects, and must 

promulgate more stringent regulations if 

necessary to address any such ‘‘residual 

risk.’’ Thus, for this particular class of 

source categories, section 129 merges 

important elements of both sections 111 

and 112. 

EPA has established standards for a 

variety of solid waste incinerator 

categories and is in the process of 

developing additional standards and 

revising others.254 In the absence of 

statutory criteria for determining 

whether and under what circumstances 

EPA should regulate additional 

pollutants under this section of the 

CAA, we request comment on whether 

emissions of GHG could fall within the 

scope of this section. We also request 

comment on direct and indirect GHG 

emissions from existing source 

categories currently subject to regulation 

under section 129, any assessment of 

the relative costs of regulating GHGs 

under the authority of section 129, and 

any co-benefits or co-detriments with 

regard to controlling GHG and the 

emissions of pollutants specifically 

listed for regulation under section 129. 

2. What Sources Would Be Affected if 

GHGs Were Regulated Under This 

Authority? 

Standards required by section 129 are 

applicable to ‘‘any facility which 

combusts any solid waste material from 

commercial or industrial establishments 

or the general public (including single 

and multiple residences, hotels, and 

motels).’’ Thus the provisions of this 

section are limited to a specific type of 

emission source, although there are 

many such units in existence that are 

subject to regulation. To date we have 

adopted standards for five categories of 

incinerators and are currently in the 

process of developing revised standards 

on remand for several of these 

categories, which may involve the 

inclusion of several additional 

subcategories of incineration units. We 

anticipate that when completed these 

rules will establish standards of 

performance for as many as five 

hundred or more units. 

254 Rules have been promulgated for large and 

small municipal waste combustors; medical waste 

incinerators; other solid waste incinerators; and 

commercial, institutional, and industrial solid 

waste incinerators. EPA is also currently 

reevaluating and revising certain standards under 

section 129 in response to decisions by the U.S. 

Court of Appeals for the D.C. Circuit. 

Because section 129 does not require, 

but authorizes EPA to establish 

requirements for other air pollutants, we 

request comment on whether and for 

what categories or subcategories of 

incinerators EPA could address GHG 

emissions control requirements. 

a. How Are Control Requirements 

Determined? 

As noted above, the control 

requirements for sources regulated 

under section 129 are similar to the 

MACT standards mandated under 

section 112(d). However, whereas 

section 112(d)(3) provides that 

standards are to be based on the best 

performing sources ‘‘for which the 

Administrator has emissions 

information,’’ section 129 contains no 

such limitation. Consequently, it 

appears that EPA is obligated to obtain 

information from all potentially affected 

sources in order to determine the 

appropriate level of control. 

Section 129(a)(2) provides authority 

for EPA to distinguish among classes, 

types, and sizes of units within a 

category in establishing standards. This 

provision is similar to authorities 

provided in sections 111( b)(2) and 

112(b)(2). Because section 129 directs 

that EPA establish standards for affected 

source categories under sections 111(b) 

and (d), we believe that the provisions 

governing the creation of design, 

equipment, work practice, or 

operational standards are also available 

for standards required by section 129. 

For existing sources, we believe that 

provisions for consideration of 

remaining useful life and other related 

factors are relevant to EPA and States 

when determining the requirements and 

schedules for compliance for individual 

affected sources. 

b. What Is Required To Address Any 

Residual Risk? 

For each of the air pollutants named 

in section 129 that are listed as HAP 

under section 112, section 129 requires 

EPA to evaluate and address any 

residual risk remaining after controls 

established under the initial emission 

standards.255 In so doing, it requires 

EPA to determine for each affected 

source category whether the 

performance standards protect public 

health with an ample margin of safety. 

EPA must also adopt more stringent 

standards if needed to prevent an 

adverse environmental effect, but must 

255 Section 129(h)(3) provides that for purposes of 

considering residual risk the standards under 

section 129(a) and section 111 applicable to 

categories of solid waste incineration units are to 

be ‘‘deemed standards under section 112(d)(2).’’ 

consider cost, energy, safety, and other 

relevant factors in doing so. 

Section 129(h)(3) limits residual risk 

assessments and any subsequent 

resulting regulations to ‘‘the pollutants 

listed under subsection (a)(4) of this 

section and no others.’’ Consequently, if 

EPA were to regulated GHG emissions 

from incineration units under section 

129, we would not be required to 

conduct additional residual risk 

determinations. 

3. What Are the Key Milestones and 

Expected Timeline if Section 129 Were 

Used for GHG Controls? 

As stated above, we have adopted 

rules governing emissions from certain 

categories of solid waste incineration 

units and are in the process of revising 

or establishing new standards for others. 

Thus if we were to elect to regulate GHG 

emissions under section 129, a question 

arises concerning how to incorporate 

new requirements for those categories 

for which standards have already been 

established. One possible timetable for 

addressing GHG under this part of the 

Act would be to incorporate GHG 

emission control requirements 

concurrent with the mandatory 5-year 

reviews for each previously-regulated 

category, collecting information on 

emissions and control technologies at 

the time the existing standards are 

reviewed to determine whether 

revisions are needed. Because of the 

more detailed requirements for 

identifying appropriate levels of control 

to establish a level for these categories 

of sources, significantly more 

information on the best performing 

sources is needed under section 129 

than even under section 112 (because of 

the absence of limitations for this 

analysis to those sources ‘‘for which the 

Administrator has information’’), 

making the development of such 

standards a more time-consuming effort. 

In the event that we were to elect to 

regulate GHGd under this section, we 

request comment on this and other 

approaches for addressing GHGd under 

section 129, both for categories already 

regulated and for any for which 

standards are currently under 

development. 

4. What Are the Key Considerations 

Regarding Use of This Authority for 

GHGs (and How Could Potential Issues 

Be Addressed)? 

If we were to elect to regulate GHG 

emissions from solid waste incinerators 

under section 129, then we would need 

to establish standards for at least some 

number of categories of such sources. 

We request comment on the availability 

of authority to establish requirements 

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for controlling GHG emissions from 

subcategories of incineration units 

based on size, type or class, as provided 

under section 111, and to exclude from 

regulation other categories or 

subcategories. 

Given the structure of section 129 and 

its hybrid approach to the use of 

authorities under sections 111 and 112, 

we question whether this section 

provides EPA with available authority 

to establish alternative compliance 

approaches, such as emissions trading 

or averaging across sources within a 

category. This is because the statutory 

terms of section 129 provide that 

emission standards must be established 

for sources within ‘‘each category’’ and 

those standards must be no less 

stringent than the level of performance 

achieved by the best-performing sources 

within that category. Each source in the 

category must then achieve control at 

least to this level. Trading would allow 

sources to emit above the floor. As a 

practical matter, given that requirements 

for control of specifically-listed 

pollutants may preclude trading for 

those pollutants, and given that many of 

the controls applicable to those 

pollutants would be the same as or 

similar to those that would be 

applicable to GHGs, we believe that 

trading options would likely be 

infeasible with respect to GHG control 

requirements. However, EPA requests 

comments on the extent to which the 

CAA could be interpreted to grant 

flexibility to consider such alternative 

implementation mechanisms, to what 

extent, and what, if any, limitations 

should be considered appropriate in 

conjunction with them. 

5. What Are the Possible Implications 

for Other Provisions of the Clean Air 

Act? 

Section 129 recognizes that many 

incineration units may also be subject to 

prevention of significant deterioration 

or nonattainment new source review 

requirements. It addresses potentially 

conflicting outcomes of control 

determinations under those programs by 

providing that ‘‘no requirement of an 

applicable implementation plan . . . 

may be used to weaken the standards in 

effect under this section.’’ 

If EPA were to list GHGs under 

section 108 for purposes of establishing 

NAAQS, we would not be prevented 

from regulating them under this section 

of the Act as well. If EPA were to list 

GHG under section 112, a potential 

conflict arises in that section 112 

establishes major and area source 

emissions thresholds, providing for 

standards of different stringency for 

each, and requires analysis of residual 

risk for major sources regulated under 

that section of the Act. We request 

comments on how such apparent 

conflicts could be reconciled if we were 

to elect to regulate emissions of GHGs 

from solid waste incineration units 

under section 129. 

In light of the foregoing, we request 

comment on the appropriateness of 

section 129 as a mechanism for 

regulating incineration unit emissions of 

GHGs under the CAA. If commenters 

believe that use of section 129 would be 

appropriate, we further request 

comments on which GHGs should be 

considered, what source categories or 

subcategories should be regulated, and 

how appropriate control requirements 

should be determined for new and 

existing GHG emission sources. 

E. Preconstruction Permits Under the 

New Source Review (NSR) Program 

1. What Are the Clean Air Act 

Provisions Describing the NSR Program? 

Under what is known as the New 

Source Review (NSR) program, the CAA 

requires the owners and operators of 

large stationary sources of air pollution 

to obtain construction permits prior to 

building or modifying such a facility. 

The program is subdivided into the 

Prevention of Significant Deterioration 

(PSD) and nonattainment NSR (NNSR) 

programs, either of which may be 

applicable depending on the air quality 

for a particular pollutant in the location 

of the source subject to permitting. 

The PSD program, set forth in Part C 

of Title I of the CAA, applies in areas 

that are in attainment with the NAAQS 

(or are unclassifiable) and has the 

following five goals and purposes: 

• To protect public health and 

welfare from air pollution beyond that 

which is addressed by the attainment 

and maintenance of NAAQS; 

• To protect specially designated 

areas such as national parks and 

wilderness areas from the effects of air 

pollution; 

• To assure that economic growth 

will occur in a manner consistent with 

the preservation of existing clean air 

resources; 

• To assure emissions in one state 

will not interfere with another state’s 

PSD plan; and 

• To assure that any decision to 

permit increased air pollution is made 

only after evaluating the consequences 

of the decision and after opportunities 

for informed public participation. 

The main element of the PSD program 

is the requirement that a PSD permit be 

obtained prior to construction of any 

new ‘‘major emitting facility’’ or any 

new ‘‘major modification.’’ Before a 

source can receive approval to construct 

under PSD, the source and its 

permitting authority (usually a state or 

local air pollution control agency, but 

sometimes EPA) must follow certain 

procedural steps, and the permit must 

contain certain substantive 

requirements. The most important 

procedural step is providing an 

opportunity for the public to comment 

when a permitting authority proposes to 

issue a permit. 

The PSD program primarily applies to 

all pollutants for which a NAAQS is 

promulgated, but some of the 

substantive requirements of the PSD 

program also apply to regulated 

pollutants for which there is no NAAQS 

(except that there is an explicit statutory 

exemption from PSD for HAPs).256 

Since there is currently no NAAQS for 

GHGs and GHGs are not otherwise 

subject to regulation under the CAA, the 

PSD program is not currently applicable 

to GHGs.257 However, as discussed in 

section IV of this notice, it is possible 

that EPA actions under other parts of 

the CAA could make GHGs pollutants 

subject to regulation under the Act and 

thus subject to one or more parts of the 

PSD program. 

If EPA were to promulgate a rule 

establishing limitations on GHG 

emissions from mobile sources or 

stationary sources without promulgating 

a NAAQS for GHGs, the PSD 

requirement of greatest relevance would 

be the requirement that a permit contain 

emissions limits that reflect the Best 

Available Control Technology (BACT). 

BACT is defined as the maximum 

achievable degree of emissions 

reduction for a given pollutant 

(determined by the permitting authority 

on a case-by-case basis), taking into 

account energy, environmental, and 

economic impacts. BACT may include 

add-on controls, but also includes 

application of inherently lowerpolluting production processes and 

other available methods and techniques 

for control. BACT cannot be less 

stringent than any applicable NSPS. 

Since emission control requirements 

will likely have the most direct impact 

on new or modified stationary sources 

subject to PSD, our focus in this notice 

is on the BACT requirement. However, 

we are also interested in stakeholder 

input on the extent to which we should 

256 CAA section 112(b)(6). 

257 In the Energy Independence and Security Act 

of 2007 (EISA), Congress provided that regulation 

of GHGs under CAA section 211(o) would not 

automatically result in regulation of GHGs under 

other CAA provisions. Because of this provision, 

EISA does not impact the interrelationship of other 

provisions of the CAA, and we only reference the 

HAP exception in the text. 

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evaluate other substantive PSD program 

elements which would be affected by 

any possible EPA action to regulate 

GHGs under other parts of the Act. 

These include the requirements to 

evaluate, in consultation with the 

appropriate Federal Land Manager 

(FLM), the potential impact of proposed 

construction on the Air Quality Related 

Values of any affected ‘‘Class I area’’ 

(national parks, wilderness areas, etc.) 

and additional impacts analysis.258 

If EPA were to promulgate a NAAQS 

for GHGs, because of the relatively 

uniform concentration of GHGs, we 

expect that the entire country would be 

in nonattainment or attainment of the 

NAAQS. The preconstruction 

permitting requirements that apply 

would depend on whether the country 

is designated as nonattainment or 

attainment for the GHG emissions that 

would increase as a result of a project 

being constructed. 

If the entire country is designated 

attainment, and PSD applies, the 

adoption of a NAAQS would trigger air 

quality analysis requirements that are in 

addition to all the requirements 

described above. For example, under 

CAA section 165(a)(3), permit 

applicants have to conduct modeling to 

determine whether they cause or 

contribute to a NAAQS violation. 

Following promulgation of a NAAQS, 

EPA may also promulgate a PSD 

increment for GHGs, which would 

require additional analysis for each new 

and modified source subject to PSD.259 

However, this notice does not address in 

detail the PSD elements that relate to 

increments. 

Under a GHG NAAQS with the 

country in nonattainment, the 

nonattainment NSR permitting program 

would be triggered nationally. The 

nonattainment NSR program 

requirements are contained in section 

173 of the Act. Like PSD, they apply to 

new and modified major stationary 

sources, but they contain significantly 

different requirements from the PSD 

program. A key difference is the 

requirement that the emissions 

increases from the new or modified 

source in a nonattainment area must be 

offset by reductions in existing 

emissions from the same nonattainment 

area or a contributing upwind 

258 As codified at 40 CFR 51.166(o), the owner or 

operator shall provide an analysis of the 

impairment to visibility, soils, and vegetation that 

would occur as a result of the source or 

modification and general commercial, residential, 

industrial, and other growth associated with the 

source or modification. 

259 PSD increments are air quality levels which 

represent an allowable deterioration in air quality 

as compared to the existing air quality level on a 

certain baseline date for a given area. 

nonattainment area of equal or higher 

nonattainment classification. The 

offsetting emissions reductions must be 

at least equal to the proposed increase 

and must be consistent with a SIP that 

assures the nonattainment area is 

making reasonable progress toward 

attainment.260 Another key difference is 

that instead of BACT, sources subject to 

nonattainment NSR must comply with 

the Lowest Achievable Emission Rate 

(LAER), which is the most stringent 

emission limitation that is (1) contained 

in any SIP for that type of source, or (2) 

achieved in practice for sources of the 

same type as the proposed source.261 

Notably, if the rate is achievable, LAER 

does not allow for consideration of costs 

or of the other factors that BACT does. 

While LAER and offsets are likely of 

greatest significance for GHG regulation 

under nonattainment NSR, there are 

additional requirements for 

nonattainment NSR that would also 

apply. The additional requirements 

include the alternatives analysis 

requirement; the requirement that 

source owners and operators 

demonstrate statewide compliance with 

the Act; and the prohibition against 

permit issuance if the SIP is not being 

adequately implemented. 

For simplicity, the remainder of this 

notice describing affected sources, 

impacts, and possible tailoring generally 

focuses on PSD, raising issues specific 

to nonattainment NSR where applicable. 

2. What Sources Would Be Affected if 

GHGs Were Regulated Under NSR? 

A PSD permit is required for the 

construction or modification of ‘‘major 

emitting facilities,’’ which are 

commonly referred to as ‘‘major 

sources.’’ A ‘‘major emitting facility’’ is 

generally any source that emits or has 

the potential to emit 250 tons per year 

(tpy) of a regulated NSR pollutant.262 263 

A source that belongs to one of several 

specifically identified source categories 

is considered a major source if it emits 

or has the potential to emit 100 tpy of 

a regulated NSR pollutant.264 Also, for 

nonattainment NSR, the major source 

260 CAA section 173(a)(1); limitations on offsets 

are set forth in section 173(c). 261 CAA section 173(a); LAER is defined in 

section 171(3)(A). 

262 42 U.S.C. 7569(1). The PSD regulations use the 

term ‘‘major stationary source.’’ 40 CFR 51.166(b)(1) 

The definition of ‘‘regulated NSR pollutant’’ is at 40 

CFR 51.166(b)(49). 

263 ‘‘Potential-to-emit’’, or PTE, is defined as the 

maximum capacity of a source to emit any air 

pollutant under its physical and operational design. 

264 These specific sources include major 

industrial categories such as petroleum refining, 

fossil-fuel fired steam electric plants, chemical 

process plants, and 24 other categories. The full list 

of 100 tpy major sources is promulgated at 40 CFR 

51.166(b)(1)(i)(a). 

threshold is at most 100 tpy, and is less 

in some nonattainment areas, depending 

on the pollutant and the nonattainment 

classification. 

A ‘‘major modification’’ is any 

physical change or change in the 

method of operation of a major source 

which significantly increases the 

amount of emissions of any regulated 

NSR pollutant. EPA defines what 

emissions levels of a pollutant are 

‘‘significant’’ through regulation, and 

the defined significance levels range 

from 0.3 tpy for lead to 100 tpy for CO. 

Currently there is no defined 

significance level for GHGs (either 

individually or as a group) because they 

are not regulated NSR pollutants, and 

thus, were GHGs to become regulated, 

the significance threshold would be 

zero. Note that, when determining 

whether a facility is ‘‘major,’’ a source 

need not count fugitive emissions (i.e., 

emissions which may not reasonably be 

vented through stacks, vents, etc.) 

unless it is in a listed category. 

As noted in section IV, GHGs are not 

currently subject to regulation under the 

Act, and therefore are not regulated NSR 

pollutants. However, if GHG emissions 

become subject to regulation under any 

of the stationary or mobile source 

authorities discussed above (except 

sections 112 and 211(o)), GHGs could 

become regulated NSR pollutants. Many 

types of new GHG sources and GHGincreasing modifications that have not 

heretofore been subject to PSD would 

become subject to PSD permitting 

requirements. This is particularly true 

for CO2 because, as noted in section III, 

the mass CO2 emissions from many 

source types are orders of magnitude 

greater than for currently regulated 

pollutants. Thus, many types of new 

small fuel-combusting equipment could 

become newly subject to the PSD 

program if CO2 becomes a regulated 

NSR pollutant. As discussed below in 

the section on potential to emit, the 

extent to which such equipment would 

become subject to PSD would depend 

upon whether, for each type of 

equipment, its maximum capacity 

considering its physical and operational 

design would involve constant yearround operation or some lesser amount 

of operation. For example, the 

calculated size of a natural gas-fired 

furnace that has a potential to emit 250 

tpy of CO2, if year-round operation 

(8760 hours per year) were assumed— 

would be only 0.49 MMBTU/hr, which 

is comparable to the size of a very small 

commercial furnace. In practice, a 

furnace like this would likely operate 

far less than year round and its actual 

emissions would be well below 250 tpy. 

For example, such a furnace, if used for 

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space heating, might only be burning 

gas for about 1000 hours per year, 

meaning that it would need to be sized 

at over 4 MMBTU/hr—a size more 

comparable to a small industrial 

furnace—to actually emit 250 tons of 

CO2. For sources such as these, the 

interpretation of the term ‘‘potential to 

emit’’ and the availability of streamlined 

mechanisms for smaller sources to limit 

their potential to emit would determine 

whether they would be considered 

‘‘major’’ for GHG emissions under PSD. 

For sources already major for other 

pollutants, it is likely that many more 

changes made by the source would also 

qualify as major modifications and 

become subject to PSD as well, unless 

potential approaches (including those 

discussed below) for raising 

applicability thresholds were 

implemented. Relatively small changes 

in energy use that cause criteria 

pollutant emissions too small to trigger 

PSD would newly trigger PSD at such 

facilities because such changes would 

likely result in greater CO2 increases. 

For example, consider a hypothetical 

500 MW electric utility boiler firing a 

bituminous coal that is well-controlled 

for traditional pollutants. Such a boiler, 

operating more than 7000 hours per year 

(out of a possible 8760), can emit 

approximately 4 million tons of CO2 per 

year, or more than 580 tons per hour. 

Assuming a 100 tpy significance level 

(rather than the current zero level for 

GHGs), any change resulting in just 10 

additional minutes of utilization over 

the course of a year at such a source 

would be enough to result in an increase 

of 100 tons and potentially subject the 

change to PSD. By contrast, to be 

considered a modification for NOX, the 

same change would require 

approximately 36 additional hours of 

operation assuming that the 

hypothetical source had a low-NOX 

burner, and 90 additional hours of 

operation assuming that the source also 

employed a selective catalytic reduction 

add-on control device. 

Once a source is major for any NSR 

regulated pollutant, PSD applies to 

significant increases of any other 

regulated pollutant, so significant 

increases of GHGs would become newly 

subject to PSD at sources that are now 

major for other regulated pollutants. 

Similarly, significant increases of other 

pollutants would become subject to PSD 

if they occur at sources previously 

considered minor, but which become 

classified as major sources for GHG 

emissions. 

Currently, EPA estimates that EPA, 

state, and local permitting authorities 

issue approximately 200–300 PSD 

permits nationally each year for 

construction of new major sources and 

major modifications at existing major 

sources. Under existing major source 

thresholds, we estimate that if CO2 

becomes a regulated NSR pollutant 

(either as an individual GHG or as a 

group of GHGs), the number of PSD 

permits required to be issued each year 

would increase by more than a factor of 

10 (i.e. more than 2000–3000 permits 

per year), unless action were taken to 

limit the scope of the PSD program 

under one or more of the legal theories 

described below. The additional permits 

would generally be issued to smaller 

industrial sources, as well as large office 

and residential buildings, hotels, large 

retail establishments, and similar 

facilities. These facilities consist 

primarily of equipment that combusts 

fuels of various kinds and release their 

exhaust gases through a stack or vent. 

Few of these additional permits would 

be for source categories (such as 

agriculture) where emissions are 

‘‘fugitive,’’ because, as noted above, 

fugitive emissions do not count toward 

determining if a source is a major source 

except in a limited number of categories 

of large sources. 

Because EPA and states have 

generally not collected emissions 

information on sources this small, our 

estimate of the number of additional 

permits relies on limited available 

information and engineering judgment, 

and is uncertain. Our estimate of the 

number of additional permits is also not 

comprehensive. First, it does not 

include permits that would be required 

for modifications to existing major GHG 

sources because the number of these is 

more difficult to estimate.265 

Nonetheless, we anticipate that, for 

modifications, coverage of GHGs would 

increase because the larger universe of 

major sources will bring in additional 

sources at which modifications could 

occur and because for ‘‘traditional’’ 

major sources, many more types of 

small modifications that were minor for 

traditional pollutants could become 

major due to increases in GHG 

emissions that exceed the significance 

levels. Second, EPA’s estimate is 

uncertain because it is based on actual 

emissions, and thus excludes a 

potentially very large number of sources 

that would be major if they operated at 

their full potential-to-emit (PTE) (i.e. 

they emitted at a level that reflects the 

265 Among other things, any estimate of 

modifications must take into account the netting 

provisions of NSR, in which sources can avoid NSR 

if the increase of pollutant emissions from a project 

is below the significance level for that pollutant, 

after taking into account other increases and 

decreases of emissions that are contemporaneous 

with the project. 

maximum capacity to emit under their 

physical and operational design), but 

which in practice do not. Such sources 

could be defined as major sources 

without an enforceable limitation on 

their PTE, but for the purposes of this 

estimate, we assume they have options 

for limiting their PTE and avoiding 

classification as a major source. 

(Nonetheless, there are important 

considerations in creating such PTE 

limits, as discussed below). Third, this 

estimate does not specifically account 

for CO2 from sources other than 

combustion sources. While we know 

there are sources with significant noncombustion emissions of GHGs, there 

are relatively few of these compared to 

the sources with major amounts of 

combustion CO2. These non-combustion 

sources would likely be major for 

combustion CO2 in any event, and many 

of these are likely already major for 

other pollutants, though GHG regulation 

would likely mean increases in the 

number of major modifications at such 

sources. 

We request any available information 

that would allow us to better 

characterize the number and types of 

sources and modifications that would 

become subject to the PSD program if 

CO2 becomes a regulated NSR pollutant. 

As discussed below, we are particularly 

interested in information that would 

allow us to analyze the effects of 

different major source thresholds and 

significance levels. 

Finally, we note that our estimates 

above are for CO2. As described above 

in section IV, there are implications to 

regulating additional GHGs as 

pollutants, or GHGs in the aggregate. 

Our estimates of PSD program impacts 

do not include consideration of GHGs 

other than CO2 because we expect that 

at the vast majority of these sources CO2 

will be the dominant pollutant. We ask 

for comment on whether there are large 

categories of potentially newly regulated 

PSD sources for individual GHGs 

besides CO2. We also ask for comment 

on the effects of aggregating GHGs for 

PSD applicability. Aggregating GHGs 

could bring additional sources into PSD 

to the extent that other GHGs are 

present and would add enough to a 

source’s PTE to make it a major source. 

On the other hand, under the netting 

provisions of the CAA, it may be easier 

to facilitate interpollutant netting if 

GHGs are aggregated (e.g., a source 

using netting to avoid PSD for a CO2 

increase based on methane decreases at 

the same source). 

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3. What Are the Key Milestones and 

Expected Timeline if the PSD Program 

Were Used for GHG Controls? 

Because PSD applies to all regulated 

pollutants except HAP, EPA’s 

interpretation of the Act is that PSD 

program requirements would become 

applicable immediately upon the 

effective date of the first regulation 

requiring GHG control under the Act.266 

While existing PSD permits would 

remain unaffected, from that point 

forward, each new major source of 

GHGs and each major modification at an 

existing major source that significantly 

increases GHGs would need to get a PSD 

permit before beginning construction. 

Control requirements could take effect 

as the first new and modified sources 

obtain their permits and complete 

construction of the permitted projects. 

Because of the case-by-case nature of the 

PSD permitting decisions, the 

complexity of the PSD permitting 

requirements, and the time needed to 

complete the PSD permitting process, it 

can take several months to receive a 

simple PSD permit, and more than a 

year to receive a permit for a complex 

facility. We ask for comment on whether 

there are additional timeline 

considerations not noted here. 

4. What Are Key Considerations 

Regarding Application of the PSD 

Program to GHGs (and How Could 

Potential Issues Be Addressed?) 

a. Program Scope 

As noted above, regulating GHGs 

under the PSD program has the 

potential to dramatically expand the 

number of sources required to obtain 

PSD permits, unless action is taken to 

limit the scope of the program, as 

described below. Since major source 

thresholds were enacted before this 

assessment of the application of the PSD 

program to GHGs, it is reasonable to 

expect that Congress could consider 

legislative alterations to account for the 

different aspects of GHGs versus 

traditional air pollutants noted above 

(e.g., the relatively uniform atmospheric 

concentrations of GHGs versus more 

localized effects of traditional 

pollutants.) Possible ways to limit the 

scope of the program without legislation 

are described later in this section. 

266 Because PSD is implemented in many areas by 

states under EPA-approved state regulations, there 

may be a lag time in a small number of states if their 

PSD regulations are written in such a way that 

revision of the regulations (and EPA approval) 

would be required to give the state authority to 

issue permits for GHGs. However this would not be 

the case for EPA’s own regulations or for any state 

delegated to implement EPA regulations on our 

behalf. 

In the absence of such action, we 

would expect (assuming a 250 tpy major 

source threshold, or 100 tpy for 

statutorily specified source categories) 

at least an order-of-magnitude increase 

in the number of new sources required 

to obtain PSD permits, and an 

expansion of the program to numerous 

smaller sources not previously subject 

to it. While such sources may emit 

amounts of GHGs that exceed statutory 

thresholds, they have relatively small 

emissions of non-GHG pollutants (such 

that they have not been regulated under 

PSD, and many have not been regulated 

under any CAA program).267 Regulating 

GHGs under the PSD program would 

also cause a large increase in the 

number of modifications at existing 

sources that would be required to obtain 

PSD permits. Such modifications may 

occur at existing sources that have been 

long regulated as major for other 

pollutants, or at existing sources that 

become classified as major solely due to 

their GHG emissions. 

Permitting smaller sources and 

modifications is generally less effective 

due to the fact that, while there are still 

administrative costs borne by the source 

and permitting authority, the 

environmental benefit of each permit is 

generally less than what results from 

permitting a larger source. Congress 

excluded smaller sources from PSD by 

adopting 100 and 250 tpy major source 

cutoffs in 1977 when PSD was enacted, 

and EPA rules have long excluded 

smaller sources and modifications from 

the program. This cutoff would not 

exclude many smaller sources of GHGs 

because the mass emissions (i.e., tons 

per year) of the relevant GHG may be 

substantially higher than the mass 

emissions of traditional pollutants for 

the same process or activity. Thus, 

while existing cutoffs for traditional 

pollutants capture a relatively modest 

number of new and modified sources 

per year, applying those same major 

source levels to CO2, and possibly for 

other GHG, would capture a very large 

number of sources, many of which are 

comparatively smaller in size when 

compared to ‘‘traditional’’ sources. 

Similarly, for modifications, the current 

absence of a significance level, or the 

future adoption of a significance level 

that is below the current major source 

thresholds, would subject numerous 

small changes to PSD permitting 

requirements. 

267 Some fraction of these small sources are 

regulated, at least in some areas, by SIPs and state 

minor source permit programs under section 110 of 

the CAA. 

b. Potential Program Benefits 

In the past, EPA has recognized that 

the PSD program can achieve significant 

emissions benefits over time as 

emissions increases from new major 

sources and major modifications are 

minimized through application of stateof-the-art technology.268 As a result, 

other programs designed to reduce 

emissions are not compromised by 

growth in new emissions from PSD 

sources. Further emissions benefits are 

achieved when sources limit or reduce 

emissions to avoid PSD applicability. 

A rationale for new source review 

since its inception has been that it is 

generally more effective and less 

expensive to engineer and install 

controls at the time a source (or major 

modification) is being designed and 

built, as BACT does, rather than 

retrofitting controls absent other 

construction.269 In addition, the BACT 

determination process requires 

consideration of new emissions 

reduction technologies, which provides 

an ongoing incentive to developers of 

these technologies. There is the 

potential for avoiding or reducing GHG 

emissions if ‘‘traditional’’ sources begin 

to install abatement technologies for 

GHGs as they do for traditional 

pollutants. On the other hand, as 

discussed in section III,F, some suggest 

that regulations that apply stringent 

requirements to new sources and 

‘‘grandfather’’ existing sources may 

create incentives to keep older and 

inefficient sources in use longer than 

otherwise would occur, diminishing the 

incentive for technological innovation 

and diffusion and reducing the 

environmental effectiveness and cost 

effectiveness of the regulation. Others 

believe that economic factors other than 

these regulatory differences tend to 

drive business decisions on when to 

build new capacity. EPA examined the 

effect of new source review on utilities 

and refineries in a 2002 report, as 

described in section III.F.4 of this 

notice.270 

268 See, for example, Section II of ‘‘NSR 

Improvements: Supplemental Analysis of the 

Environmental Impact of the 2002 Final NSR 

Improvement Rules,’’ U.S. EPA, November 21, 

2002. 

269 Critics of this rationale suggest that under a 

market-oriented system covering both new and 

existing sources, source owners would be best 

placed to decide whether it is economic to place 

state-of-the-art controls on new sources. 

270 See U.S. EPA, ‘‘New Source Review: Report to 

the President, June 2002.’’ As noted in section III.F 

of this notice, the report concluded (pp. 30–31) that, 

for existing sources, ‘‘[c]redible examples were 

presented of cases in which uncertainty about the 

exemption for routine activities has resulted in 

delay or resulted in the cancellation of projects 

which sources say are done for purposes of 

maintaining and improving the reliability, 

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EPA has not performed an analysis of 

the GHG emissions that might be 

avoided or reduced under PSD 

preconstruction permitting, nor of 

possible increases through unintended 

incentives. Such an analysis would 

necessarily involve new analysis of 

potential BACT technologies, 

considering costs and other factors, for 

GHGs emitted by numerous sectors. The 

PSD program, through the BACT 

requirement, might result in installation 

of such technologies as CCS, or the 

incorporation of other CO2 reducing 

technologies, such as more efficient 

combustion processes.271 However, it is 

not possible at this time to estimate 

these effects in light of the uncertainty 

surrounding the future trends in 

construction at new and modified 

sources, demonstration of commercial 

availability of various GHG control 

technology options, their control 

effectiveness, costs, and the 

aforementioned incentives to keep 

existing sources in operation and avoid 

modifying them. We ask for comment 

on the nature (and to the extent 

possible, the magnitude) of the potential 

effects of PSD on GHG emissions, and 

whether these effects vary between new 

and existing sources. 

Regarding the potentially large 

universe of smaller sources and 

modifications that could become newly 

subject to BACT, as described above, 

there are large uncertainties about the 

potential benefits of applying BACT 

requirements to GHG emissions from 

such sources. Individual emission 

reduction benefits from such sources 

would be smaller; however, the 

cumulative effect could theoretically be 

large because the requirement would 

cover many more sources. However, 

unless there are ways to effectively 

streamline BACT determinations and 

permitting for smaller sources (as 

discussed below), BACT would not 

appear to be an efficient regulatory 

approach for many other types of 

sources. We request comment on the 

potential overall benefit of applying the 

BACT requirement to GHG emissions, 

efficiency and safety of existing energy capacity. 

Such discouragement results in lost capacity, as 

well as lost opportunities to improve energy 

efficiency and reduce air pollution.’’ With respect 

to new facilities, the report said, ‘‘there appears to 

be little incremental impact of the program on the 

construction of new electricity generation and 

refinery facilities.’’ 

271 However, EPA notes that the BACT 

requirement does not require consideration of 

technologies that would fundamentally redefine a 

proposed source into a different type of source (e.g., 

BACT for a proposed coal-fired power plant need 

not reflect emission limitations based on building 

a gas-fired power plant instead). See, for example, 

In re: Prairie State Generating Company, PSD 

Appeal No. 05–05, slip op. at 19–37 (EAB 2006). 

and how this potential benefit is 

distributed among categories of 

potentially regulated sources and 

modifications. Below, we discuss and 

ask for comment on possible tailoring of 

BACT for GHGs. 

Finally, in considering the potential 

for emissions reductions from the PSD 

program, it is important to note that, 

historically, sources generally have 

taken action to avoid PSD rather than 

seeking a permit, where possible. 

Companies can reduce their PTE, for 

example, by artificially capping 

production or forgoing efficiency 

improvements. While these PSD 

avoidance strategies can sometimes 

reduce emissions (e.g., limiting 

operating hours or installing other 

controls to net out), they can sometimes 

result in forgone environmental benefits 

(e.g., postponing an efficiency project). 

These effects are very difficult to 

quantify. For example, the developer of 

a large apartment building that would 

be a major source for CO2 might elect to 

provide electric space heat if it were 

determined that the direct and indirect 

costs of PSD made installation of gas 

heat uneconomical. From a lifecycle 

analysis standpoint, PSD could— 

depending upon the source of the 

electricity—lead to either a better or a 

worse outcome for overall emissions of 

GHGs. Similarly, because PSD is 

triggered based on increases over a past 

baseline, a source considering a 

potential modification may have an 

incentive to increase emissions (to the 

extent that can be done without a 

modification) for the 2-year period 

before the modification to artificially 

inflate the baseline. Similarly, in the 

electricity sector, a desire to avoid PSD 

review could be a disincentive for some 

projects to improve efficiency, because 

a small increase in utilization of the 

more-efficient EGU would raise CO2 

emissions sufficiently to trigger review. 

We solicit comments on the potential 

indirect effects, adverse or beneficial, 

that may arise from the incentive to 

avoid triggering PSD. 

c. Administrative Considerations and 

Implications of Regulating Numerous 

Smaller Sources 

The PSD program is designed to 

provide a detailed case-by-case review 

for the sources it covers, and that review 

is customized to account for the 

individual characteristics of each source 

and the air quality in the particular area 

where the source will be located. 

Although this case-by-case approach has 

effectively protected the environment 

from emissions increases of traditional 

criteria pollutants, there have been 

significant and broad-based concerns 

about PSD implementation over the 

years due to the program’s complexity 

and the costs, uncertainty, and 

construction delays that can sometimes 

result from the PSD permitting process. 

Expanding the program by an order of 

magnitude through application of the 

100/250-ton thresholds to GHGs, and 

requiring PSD permits for numerous 

smaller GHG sources and modifications 

not previously included in the program, 

would magnify these concerns. EPA is 

aware of serious concerns being 

expressed by sources and permitting 

authorities concerning the possible 

impacts of a PSD program for GHGs. 

While the program would provide a 

process for reviewing and potentially 

reducing GHG emissions through the 

BACT requirement as it has done for 

other pollutants, we are concerned that 

without significant tailoring (and 

possibly even with significant tailoring), 

application of the existing PSD 

permitting program to these new smaller 

sources would be a very inefficient way 

to address the challenges of climate 

change. We ask for comment on how we 

should approach a determination of (1) 

whether PSD permit requirements could 

be appropriate and effective for 

regulating GHGs from the sources that 

would be covered under the statutory 

thresholds, (2) whether PSD 

requirements could at least be effective 

for particular groups of sources (and if 

so, which ones), and (3) what tailoring 

of program requirements (options for 

which are described in more detail 

below) is necessary to maximize the 

program’s effectiveness while 

minimizing administrative burden and 

permitting delays. We are particularly 

interested in how we might make such 

judgments in light of the limitations on 

our ability to quantify the costs and 

emissions reduction benefits of the PSD 

program, and whether there are specific 

examples or other data that would help 

us with such an analysis. 

For example, if 100- and 250-ton 

thresholds were applied to GHGs, the 

BACT requirement would need to be 

newly implemented for numerous small 

sources and modifications that 

permitting authorities have little 

experience with permitting. It would 

also likely involve, for both large and 

small sources, consideration of new 

pollutants for which there are limited 

add-on control options available at this 

time. Thus, as with setting NSPS, a 

BACT determination for GHGs would 

likely involve decisions on how 

proposed installations of equipment and 

processes for a specific source category 

can be redesigned to make those sources 

more energy efficient while taking cost 

considerations into account. However, 

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unlike NSPS, because BACT is typically 

determined on a case-by-case basis for 

each facility and changes as technology 

improves, these decisions would have to 

take into account case-specific factors 

and constantly evolving technical 

information 272. Due to the more-thantenfold increase in the number of PSD 

permits that would be required if the 

100- and 250-ton thresholds were 

applied to GHGs, and the potential 

complexity of those permitting 

decisions, state, local, federal, and tribal 

permitting authorities would likely face 

significant new costs and other 

administrative burdens in implementing 

the BACT requirement for GHGs. Large 

investments of resources would be 

required by permitting authorities, 

sources, EPA, and members of the 

public interested in commenting on 

these decisions. Also under this 

scenario, sources would likely face new 

costs, uncertainty, and delay in 

obtaining their permits to construct. 

d. Definition of Regulated Pollutant for 

GHGs 

We also note, as described above, that 

decisions on the definition of regulated 

pollutant for GHGs—whether GHGs 

would be regulated as individual gases 

or as a class—has implications for BACT 

determinations under the PSD program. 

If GHGs are regulated separately, it is 

possible that a control project for one 

GHG could trigger PSD for another (e.g., 

controlling methane in a way that 

increases CO2). In addition, the 

economic and other impacts for BACT 

would need to be evaluated on a 

pollutant-by-pollutant basis. While 

regulating GHGs as a class would 

provide additional flexibility in this 

area, each BACT analysis would be 

more extensive because it would have to 

include combined consideration of all 

GHGs in the class. We ask for comment 

on the relative strengths and weaknesses 

of the various ways to define the 

regulated pollutant for GHGs as related 

to the BACT requirement. 

e. Other PSD Program Requirements 

Other parts of the CAA PSD 

provisions and EPA regulations that 

could be affected by bringing GHGs into 

the program include the requirement to 

evaluate, in consultation with the 

Federal Land Manager (FLM), impacts 

on Air Quality Related Values (AQRVs) 

in any affected ‘‘Class I area’’ (national 

parks, wilderness areas, etc.), and the 

need to conduct additional analysis of 

272 The NSPS program does take into account 

improvements in technology, but does so during the 

8-year review of the NSPS under 111(b)(1)(B) rather 

than on a permit-by-permit basis. 

the proposed source’s impacts on 

ambient air quality, climate and 

meteorology, terrain, soils and 

vegetation, and visibility, as provided 

for in section 165(e) of the Act. These 

requirements can result in adjustments 

to the permit (for example, permit 

conditions may be added if a FLM 

demonstrates to a permitting authority 

that additional mitigation is necessary 

to address the impacts of GHG 

emissions on the AQRVs of a Class I 

area). Due to the increase in number of 

permits, permitting authorities may 

have to make significant programmatic 

changes to deal with the increased 

workload to conduct these analytical 

requirements of the PSD program, and 

many additional applicants will have to 

devote resources to satisfying these 

requirements. In addition, given the 

uneven geographic distribution of new 

source growth, some permitting 

authorities may be required to conduct 

more permit analyses than others. 

f. GHG NAAQS Nonattainment Scenario 

If nonattainment NSR were triggered 

under a GHG NAAQS, the most 

significant requirement would be the 

LAER requirement. Because LAER does 

not allow consideration of costs, energy, 

and environmental impacts of the 

emissions reduction technology, the 

LAER requirement would have the 

potential to act as a strong technology 

forcing mechanism in GHG 

nonattainment areas. On the other hand, 

once a technology is demonstrated, this 

mechanism does not allow 

consideration of the costs, 

competitiveness effects, or other related 

factors associated with the new 

technology. As with PSD requirements, 

the application of LAER to numerous 

smaller sources nationwide would raise 

new issues on which we request 

comment. For example, with LAER, any 

demonstrated technology for reducing 

CO2 emissions, such as a new efficient 

furnace or boiler design, could become 

mandated as LAER for all future 

construction or modification involving 

furnaces or boilers. Manufacturers 

would have to supply technologies that 

could meet LAER or face regulatory 

barriers to the market, and could face a 

constantly changing regulatory level 

that may result in newly designed 

products being noncompliant shortly 

after, or even before, they are produced 

and sold. New and modified sources 

would be required to apply the new 

technology even if it is a very expensive 

technology that may not necessarily 

have been developed for widespread 

application at numerous smaller 

sources, and even if a relatively small 

emissions improvement came with 

significant additional cost. We request 

comment on how EPA should evaluate 

the LAER requirement under a NAAQS 

approach for GHGs. In particular, we 

ask for information about whether the 

relatively inflexible nature of the LAER 

requirement would lead to economic 

disruption for certain types of sources 

(and if so which ones), and whether the 

benefits of a NAAQS approach 

including LAER would warrant further 

evaluation and possible tailoring of 

LAER to address GHGs. 

We also ask for comment on any other 

NSR program issues particular to a 

NAAQS approach, should EPA decide 

to establish a NAAQS for GHGs. 

Although we have not provided a 

comprehensive discussion of such 

issues, a number of questions arise that 

are particular to the NSR requirements 

that flow from a NAAQS approach. For 

example, if the entire country were 

designated nonattainment for GHGs, 

would the offset requirement function 

as a national cap-and-trade program for 

GHG emissions for all major sources? If 

so, how would such a program be 

administered, and would the numerous 

small sources described above be 

covered? Would the offset requirement 

argue for regulating GHGs as a group, 

rather than individually, to facilitate 

offset trading? What would be an 

appropriate offset ratio to ensure 

progress toward attainment? Similarly, 

for the air quality analysis requirements 

of PSD, how would a single source 

determine whether its contribution to 

nonattainment is significant? When 

must such a source mitigate its 

emissions impact, and what options are 

available to do so? Should EPA set a 

PSD increment for GHGs if a NAAQS is 

established? Are there additional issues 

of interest that we have not raised in 

this notice? 

5. What Are the Possible Implications 

on Other Provisions of the Clean Air 

Act? 

If PSD for GHGs applied to the same 

sources as a new market-oriented 

program to regulate GHGs under the 

Act, the interaction of the two programs 

would be a key issue. PSD would ensure 

that new and modified sources were 

built with the best available technology 

to minimize GHG emissions. A 

traditional argument for NSR is that it 

ensures that new sources are built with 

state-of-the-art technology that will 

reduce emissions throughout the 

lifetime of that source, which can be 

several decades. However if the marketoriented program is a cap-and-trade 

system with sufficiently stringent caps, 

PSD would not result in more stringent 

control of new GHG sources than the 

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cap-and-trade system alone. In addition, 

the potential would exist for PSD to 

interfere with the efficient operation of 

the GHG cap-and-trade program. 

Although PSD would neither reduce nor 

increase the overall emission reductions 

achieved under the cap, it would force 

different choices about the stringency 

and location of controls than if control 

choices were based solely on market 

factors. Under this scenario, the result 

would be to increase costs without 

achieving additional GHG emissions 

reductions. For example, assume that a 

company undertakes a change that 

triggers PSD at a location where controls 

are expensive to retrofit but are required 

as BACT for that location. Without PSD, 

the company could have increased 

emissions and still complied with the 

cap by purchasing less expensive 

emissions reductions from another 

source, and the same total GHG 

emissions reductions would have been 

achieved. Notably, for GHGs, which 

have relatively uniform global 

concentrations, the location of GHG 

emissions does not matter to global 

climate impacts, so the policy reasons 

for the spatial component of PSD 

control requirement would not apply to 

GHG controls. 

PSD program requirements also affect 

numerous CAA programs that require 

stationary source controls that may 

increase emissions of pollutants other 

than the pollutant targeted for control 

(i.e. ‘‘collateral increases’’), such as the 

increased NOX emissions that result 

when a thermal oxidizer is installed to 

control VOC. Because there is no 

exemption from PSD requirements for 

such pollution control projects, the 

collateral increase must be reviewed, 

which can result in added costs and 

delay of those pollution control projects. 

Regulation of GHGs would exacerbate 

these concerns because the energy 

demands of many controls for criteria 

pollutants, HAP, and other pollutants 

have the potential to result in increased 

CO2 emissions. 

6. What Are Some Possible Tailoring 

Approaches to Address Administrative 

Concerns for GHG NSR? 

The cost and potential broad 

applicability of PSD requirements raises 

questions about whether GHG 

regulation through PSD would be more 

effective in minimizing GHG increases if 

it operates as a broad program targeting 

numerous smaller sources and 

modifications, or as a narrow program 

targeting smaller numbers of large 

sources and modifications. We ask for 

comment on how these cost/benefit 

considerations for permitting small 

sources and modifications under PSD, 

as well as any other factors, should be 

considered in EPA’s deliberations 

regarding the major source cutoffs and 

significance levels for GHGs as well as 

EPA’s available legal authority in this 

area. 

EPA believes that whether or not PSD 

is workable for GHGs may depend on 

our ability to craft the program to deal 

with the unique issues posed by GHG 

regulation. 

This section discusses several 

options, including: 

• Reducing the potential universe of 

sources based on ‘‘potential to emit’’ 

approaches; 

• Increasing the major source 

thresholds and significance levels for 

GHGs, to permanently restrict the 

program to larger sources; 

• Phasing in the applicability of PSD 

for GHGs; 

• Developing streamlined approaches 

to implementing the BACT requirement; 

and 

• Issuing general permits for 

numerous similar sources. 

The options are not necessarily 

exclusive. Many are complementary, 

and we note that some combination of 

these options may be most effective. We 

also ask for suggestions on additional 

tailoring options not described below, 

and more generally on which options, if 

any, present an appropriately balanced 

means of addressing the administrative 

concerns. 

Before discussing each option in 

detail, we present an overarching legal 

discussion that lays out possible 

rationales for such flexibility. For at 

least one of the options identified (e.g., 

the option of adopting higher major 

source sizes than those contained in the 

Act), the principal legal constraint is the 

‘‘plain meaning’’ of the applicable PSD 

provisions, such as the major source 

levels. Nonetheless, we have identified 

two legal doctrines that may provide 

EPA with discretion to tailor the PSD 

program to GHGs: Absurd results and 

administrative necessity. 

The Supreme Court has stated that the 

plain meaning of legislation is not 

conclusive ‘‘in the ‘rare cases [in which] 

the literal application of a statute will 

produce a result demonstrably at odds 

with the intentions of the drafters’ 

* * * [in which case] the intention of 

the drafters, rather than the strict 

language, controls.’’ U.S. v. Ron Pair 

Enterprises, Inc., 489 U.S. 235, 242 

(1989). To determine whether ‘‘the 

intentions of the drafters’’ differs from 

the result produced from ‘‘literal 

application’’ of the statutory provisions 

in question, the courts may examine 

whether there is a related statutory 

provision that conflicts, whether there is 

legislative history of the provisions in 

question that exposes what the 

legislature meant by those terms, and 

whether a literal application of the 

provisions produces a result that the 

courts characterize variously as absurd, 

futile, strange, or indeterminate. See, 

e.g., id., Nixon v. Missouri Municipal 

League, 541 U.S. 125 (2004); United 

States v. American Trucking 

Association, Inc. 310 U.S. 534 (1940); 

Rector of Holy Trinity Church v. U.S., 

143 U.S. 457 (1892). 

Further, the administrative burdens 

that would result for the federal and 

state permitting authorities, as well as 

the sources, from a literal application of 

the PSD provisions give rise to 

consideration of whether EPA can craft 

relief from a strict interpretation based 

on the judicial doctrine of 

administrative necessity. In Alabama 

Power, the D.C. Circuit addressed 

various instances of claimed 

administrative burdens resulting from 

the application of the PSD statutory 

provisions and efforts by EPA to provide 

regulatory relief. Alabama Power Co. v. 

Costle, 636 F.2d at 357–60 (D.C. Cir. 

1980). In a section of its opinion titled 

‘‘Exemptions Born of Administrative 

Necessity,’’ the Court stated, 

Certain limited grounds for the creation of 

exemptions are inherent in the 

administrative process, and their 

unavailability under a statutory scheme 

should not be presumed, save in the face of 

the most unambiguous demonstration of 

congressional intent to foreclose them. 

Id. at 357. The Court identified several 

types of administrative relief. One is 

‘‘[c]ategorical exemptions from the clear 

commands of a regulatory statute,’’ 

which the court stated are ‘‘sometimes 

permitted,’’ but emphasized that they 

‘‘are not favored.’’ Id. at 358. A second 

is ‘‘an administrative approach not 

explicitly provided in the statute,’’ such 

as ‘‘streamlined agency approaches or 

procedures where the conventional 

course, typically case-by-case 

determinations, would, as a practical 

matter, prevent the agency from carrying 

out the mission assigned to it by 

Congress.’’ Id. A third is a delay of 

deadlines upon ‘‘ ‘a showing by [the 

agency] that publication of some of the 

guidelines by that date is infeasible.’ ’’ 

Id. at 359 (quoting NRDC v. Train, 510 

F.2d 692, 712 (D.C. Cir. 1974). The 

Court indicated it would evaluate these 

choices based on the ‘‘administrative 

need to adjust to available resources 

* * * where the constraint was 

imposed * * * by a shortage of funds 

* * *, by a shortage of time, or of the 

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technical personnel needed to 

administer a program.’’ Id. at 358. 

a. Potential-to-Emit: Reducing the 

Number of Sources Potentially Covered 

Applicability of PSD is based in part 

on a source’s ‘‘potential to emit’’ or PTE. 

The PTE concept also is used for 

applicability of nonattainment NSR, 

Title V, and the air toxics requirements 

of section 112. We discuss PTE in detail 

here, but the issues and questions we 

discuss in this section apply equally to 

these other programs. As noted above, 

PTE is defined as the maximum 

capacity of a source to emit any air 

pollutant under its physical and 

operational design. In the case of 

sources that are not operating for part of 

the year, the PTE for many types of 

sources counts the emissions that would 

be possible if those sources did emit 

year round. 

EPA believes that an important 

threshold question is how to interpret 

‘‘maximum capacity * * * to emit 

* * * under its physical and 

operational design’’ for commercial and 

residential buildings, and other types of 

source categories that might be subject 

to PSD and Title V solely due to GHG 

emissions. For example, in the case of 

a furnace at a residence, is it 

appropriate, in calculating the furnace’s 

PTE, to assume that a homeowner 

would set the thermostat at a level that 

would require the furnace to operate 

continuously throughout the year? Even 

on a cold winter day, a furnace typically 

turns on and off throughout the day, and 

as the weather warms, the number of 

operating hours decreases until the 

weather warms to the point where the 

furnace is not needed at all and is shut 

off for an extended time. 

The EPA has in a few instances 

provided guidance on PTE calculation 

methodologies to account for categoryspecific considerations. For example, 

we issued technical guidance for 

calculating PTE from grain elevators 

that took into account inherent 

limitations on the amount of grain that 

could be handled due to the fact that 

grain is only available for handling 

during a relatively short harvest period, 

and is further limited by the amount of 

grain capable of being grown (as 

represented by a record crop year 

adjusted for future increases in crop 

yield) on the land that would ever 

reasonably be served by the elevator.273 

We ask for comment on whether, for 

smaller GHG sources like these, there 

273 Calculating Potential to Emit (PTE) and Other 

Guidance for Grain Handling Facilities: November 

14, 1995 memorandum from John S. Seitz, Director, 

U.S. EPA Office of Air Quality Planning and 

Standards, to EPA Regional Offices. 

could be appropriate methodologies for 

defining PTE in ways that consider 

these common-sense limitations on a 

source’s operation, but still reflect the 

maximum capacity to emit of a source. 

Sources with PTE exceeding the major 

source threshold can become minor 

sources by taking legally and practically 

enforceable limits on their PTE, by, for 

example, agreeing to operate only part 

of the year, or only so many hours per 

day, or by employing control devices.274 

Many sources are able to avoid 

classification as ‘‘major’’ by taking such 

limits. 

The estimates provided for potential 

new permits for GHG sources outlined 

in section VII.D.2 above are based on 

actual emissions. Were they based on 

PTE, and if year-round operation were 

assumed to represent PTE for all source 

categories, the estimates would likely be 

an order of magnitude higher (in the 

absence of actions to limit the scope of 

the programs). This emphasizes the 

significance of the interpretation of 

‘‘potential to emit’’ for buildings and 

other categories not traditionally subject 

to PSD, as well as the importance of 

streamlined mechanisms for obtaining 

limits on PTE. 

For traditional PSD and Title V 

permitting, the PTE limit is typically a 

source specific limit that is crafted in a 

facility’s minor source permit and 

tailored to the source’s individual 

circumstances. If it were necessary to 

create PTE limits for very large numbers 

of GHG-emitting sources nationwide, 

this would certainly require a more 

efficient approach than creating them 

through individual minor source 

permits. Not only would the sheer 

volume of permits and the process 

required for each one severely strain 

permitting authority resources, but some 

state and local agencies may lack the 

authority to establish minor source 

permit limits for non-NAAQS 

pollutants. In addition, while sources 

may not seek PTE limits for PSD until 

they have planned modifications that 

could otherwise trigger PSD, sources 

may seek PTE limits for Title V 

purposes as soon as the program is 

effective, meaning that the approach 

274 Current regulatory language allows 

consideration of such limits in calculating PTE only 

if they are federally enforceable, but this definition 

was vacated or remanded in three separate cases— 

one for PSD/NSR (Chemical Manufacturers Assn v. 

EPA, No. 89–1514 (D.C. Cir. Sept. 15, 1995), one for 

Title V (Clean Air Implementation Project v. EPA, 

No. 96–1224 (D.C. Cir. June 28, 1996), and one for 

section 112 (National Mining Association v. EPA, 

59 F. 3d 1351 (D.C. Cir. 1995). EPA is developing 

a rule to respond to these cases and in the 

meantime is following a transition policy that does 

not require federal enforceability. 

would need to deal with a large number 

of sources at essentially the same time. 

We ask for comment on whether we 

should also therefore consider 

streamlined regulatory approaches for 

creating the legally and practically 

enforceable limits sources need without 

requiring a huge number of individual 

minor source permits. A possible 

mechanism could involve adopting a 

regulation that sets forth operational 

restrictions that limit PTE for a broad 

class of sources. We may wish to 

consider adopting—or encouraging state 

permitting authorities to adopt—rules 

for numerous categories where we 

expect there to be large numbers of 

sources whose actual emissions are not 

major but who have major PTE (unless 

addressed through interpreting 

maximum capacity as described above). 

Such a rule could, for example, limit a 

source’s natural gas usage to 1700 MM 

BTU (17,000 therms) per year, which 

would keep it below the 100 tpy cutoff 

for Title V.275 Typically, the rule would 

also build in some operating margin so 

that the limit is not right at the major 

source cutoff. The rule would have to 

include recordkeeping and reporting, 

which would be simple here since fuel 

use is metered. This approach may be a 

streamlined effective way to limit PTE 

for many sources with fuel combustion 

equipment, provided they can agree to 

comply with the limits in the rule, even 

in an abnormally long, cold winter. We 

ask for comment on stakeholders’ 

experience with limiting PTE by rule 

rather than through individual permits, 

possible considerations in tailoring this 

approach to GHG sources, and 

identification of categories that might 

benefit from the use of rules limiting 

PTE. 

Finally, where the establishment of a 

rule-based PTE limit for an entire source 

category is not recommended or is 

infeasible, the EPA requests comment 

on whether general permitting 

approaches might be useful. A general 

permit is a permit that the permitting 

authority drafts one time, and then 

applies essentially identically (except 

for some source-specific identifying 

information) to each source of the 

appropriate type that requests coverage 

under the general permit. Similar to the 

type of rules limiting PTE described 

above, a general permit could also limit 

PTE by setting out the operational 

restrictions (e.g., fuel combusted per 

275 Although the PSD cutoff may in some cases be 

250 tpy, sources will generally adopt PTE limits 

below 100 tpy to avoid both PSD and Title V 

applicability where they have the option to do so. 

For this reason, this example uses a 100 tpy cutoff, 

though in some cases PTE limits are taken to stay 

below a 250 tpy cutoff. 

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year) necessary to assure the GHG 

emissions stay below major source 

thresholds, and would also spell out 

records the source would have to keep 

to assure it met these restrictions. To be 

most useful, the permit would need to 

address large numbers of similar 

sources. This approach may also work 

well for many types of GHG sources as 

well. We request comment on the use of 

a general permit approach to limiting 

PTE, and whether it would offer 

additional benefit over the approach of 

establishing operational restrictions 

directly by rule. 

b. Options for Setting Higher GHG Major 

Source Cutoffs and Significance Levels 

If the EPA ultimately determines that 

subjecting numerous small sources and 

modifications to PSD is not an effective 

way to address GHG emissions, one 

possible option for tailoring the program 

would be to raise the major source 

cutoffs (e.g., raise the threshold only for 

GHGs as a class, or perhaps only for 

certain individual GHGs) and establish 

a significance level for GHGs at a level 

high enough to assure that the program 

applies to larger sources and 

modifications, but excludes smaller 

sources and modifications. Since the 

existing major source thresholds are set 

forth in the CAA itself, EPA would need 

to find the legal flexibility to raise these 

thresholds above 250 and 100 tons per 

year. We present for discussion below 

several policy and legal options for 

higher major source cutoffs and 

significance levels. 

i. Higher GHG major source cutoffs— 

possible approaches and legal basis 

Regardless of how PTE is calculated, 

the major source size threshold will be 

a critical consideration in tailoring the 

PSD program for GHGs. There are a 

number of factors one might consider in 

choosing an appropriate cutoff for GHGs 

and whether to establish the cutoff for 

individual gases such as CO2 or for 

GHGs as a class. One conceptual 

approach might be to identify the 

number of sources and modifications 

affected by various cutoffs, calculate the 

costs and benefits of a PSD program for 

that universe of affected sources, and 

select a cutoff that optimizes the benefitcost ratio. Unfortunately, we presently 

have the ability to quantify in dollar 

terms only a subset of the climate 

impacts identified by the IPCC. Also, we 

have very limited data on the number of 

sources expected at various major 

source cutoffs, and even more limited 

data on the number of modifications at 

various significance levels. More 

importantly, it is very difficult to project 

the future number of permits or the 

incremental impact of any additional 

GHG reductions that would result from 

the control technology decisions 

therein. For these reasons, EPA cannot 

quantitatively determine an optimal 

major source size or significance level. 

We could, however, consider other 

means of setting levels. One example is 

an emissions scaling approach. This 

approach would compare the emissions 

of other existing NSR pollutants for 

sources that are major and would 

calculate the corresponding GHG 

emissions that the same source would 

emit. This would be an appropriate 

approach if the goal were to tailor PSD 

applicability for GHGs to cover a similar 

universe of source sizes and types to the 

universe now regulated for other 

pollutants. A second option would be to 

base the major source size on a scientific 

determination of a level below which an 

individual source would have a de 

minimis contribution to any particular 

adverse climate-related impact on a 

relevant health, societal, or 

environmental endpoint. Although it 

may be possible to generally estimate 

such a level, we are not currently aware 

of any scientific literature that 

establishes a specific numeric threshold 

below which GHG emissions are de 

minimis, either in terms of their impact 

on climate, or on these endpoints. By 

the same token, aside from an ability to 

use currently available models to project 

temperature effects, the Agency does not 

have the ability to project specific 

climatic impacts or endpoints resulting 

from individual sources. Alternatively, 

we could potentially choose a GHG 

major source size that is selected to 

harmonize with GHG cutoffs from other 

regulatory programs. For example, the 

DOE’s 1605(b) program has a threshold 

of 10,000 metric tons of CO2-equivalent, 

California’s AB32 regulation for 

mandatory reporting of GHGs has a 

threshold of 25,000 metric tons of CO2-

equivalent, and the Wisconsin emission 

inventory reporting requirements has a 

CO2 threshold of 100,000 short tons. 

Notably, these examples are thresholds 

for reporting requirements only. PSD 

would involve much more than simply 

reporting emissions, so under a 

harmonizing approach we may need to 

evaluate whether it is feasible to require 

not only reporting, but also the other 

PSD elements for the sources that would 

be covered. We ask for comment on the 

range of approaches EPA could take in 

selecting a major source cutoff if we 

decide it is appropriate under existing 

legal authority, if available, to develop 

a higher cutoff for GHGs. In addition, 

we request data that may be useful for 

conducting necessary analysis to 

support such approaches. 

A related issue to the establishment of 

the major source thresholds and 

significance levels for GHGs is the 

selection of the metric against which 

these levels are evaluated. Emissions of 

GHGs are typically expressed in a 

common metric, usually the metric 

called CO2-equivalent, although the 

measure known as Carbon Equivalent 

(CE) is also used. The use of either 

metric allows the impact of emissions of 

different GHGs to be directly compared, 

as some gases have a higher global 

warming potential or GWP than others. 

Since both units are measured in 

weight—usually tons—either could be 

used for purposes of PSD applicability. 

The use of either metric has the 

advantage of linking emissions of a GHG 

directly to its ability to impact climate, 

appropriately regulating more potent 

GHGs more stringently. The use of CO2-

equivalent would solve the problem of 

leaving unreviewed significant GHG 

emissions of some chemicals, such as 

hydrofluorocarbons, but it would leave 

many small CO2 sources with less 

climate impact still subject to PSD. 

However, the use of Carbon Equivalent 

(CE) addresses both concerns. The 

attached table demonstrates the possible 

effect of using CE in making PSD 

applicability decisions: 

GWP 

Emissions 

equal to 

250 tons CE 

Carbon dioxide (CO2) 1 917 tons. 

Methane (CH4) ......... 21 44 tons. 

Nitrous oxide (N2O) .. 310 3 tons. 

Hydrofluorocarbon 1300 1410 lbs. 

(HFC)–134a. 

As the table shows, it would take 

more CO2 emissions to reach the major 

source size for CE. However. it would 

take substantially less of several other 

GHGs. Such an approach would likely 

result in fewer sources being added to 

the PSD program for GHGs in total. 

While more sources for several GHGs 

would be considered major, the major 

source population is, as noted above, 

dominated by CO2, and there would be 

fewer sources classified as major due to 

CO2 emissions. This approach arguably 

would regulate significant sources of 

potent GHG while also reducing the 

burden on relatively small sources of 

CO2, focusing efforts on the sources 

with the most important climate 

impacts. EPA seeks comments on the 

potential use of the CE measure as the 

means to determine PSD applicability. 

Specifically we ask for comment on the 

appropriateness of the metric 

(considering that CO2, rather than 

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carbon, is the air pollutant), data 

regarding its effect on PSD applicability, 

and views concerning whether such an 

approach fits within the language of the 

CAA. 

Whether, and the extent to which, 

EPA has flexibility to limit the 

application of the PSD permitting 

requirements (and, by extension, the 

nonattainment NSR permitting 

requirements if a NAAQS is set for 

GHGs) to sources that emit larger 

amounts of CO2 and other GHGs than 

the 100/250 tpy thresholds depends on 

the interpretation of the key PSD 

definitional term, ‘‘major emitting 

facility.’’ Under CAA section 165(a), the 

basic PSD applicability requirement is 

that a ‘‘major emitting facility’’ may not 

construct unless it has received a permit 

that covers specified requirements.276 

As defined by CAA section 169(1), a 

‘‘major emitting facility’’ is defined to 

include (i) ‘‘any * * * stationary 

source[]’’ that emits or has the potential 

to emit 100 tpy or more of any air 

pollutant and that falls into one of 28 

specified industrial source categories; 

and (ii) ‘‘any other source with the 

potential to emit 250 tons per year or 

more of any air pollutant.’’ However, the 

last sentence of this definition allows 

states to exempt ‘‘new or modified 

facilities which are nonprofit health or 

educational institutions’’ from the PSD 

program. EPA’s regulations, 

promulgated in 1980 and revised several 

times since then, make clear that 

emissions count toward the 100/250 tpy 

thresholds only if they are ‘‘regulated 

NSR pollutant[s]’’ (e.g., 40 CFR 

52.21(b)(1)(i)(a)), the specific meaning of 

which is discussed elsewhere in this 

notice. 

Once GHGs are regulated, these PSD 

provisions, by their terms, would apply 

to sweep into the PSD program new 

sources that emit 100 or 250 tpy of CO2 

or other GHGs. As indicated above, the 

courts have held that the plain meaning 

of statutory provisions is generally 

controlling. Even so, we solicit 

comment on whether these PSD 

threshold requirements may present one 

of those rare cases in which 

congressional intent differs, based on 

the legislative history. 

The legislative history indicates that 

Congress was aware of the range of 

276 The requirement to obtain a permit applies to 

a source that commences construction after the 

effective date of the 1977 Clean Air Act 

Amendments (August 7, 1977), and that does so ‘‘in 

any area to which [the PSD provisions] appl[y].’’ All 

parts of the United States and its possessions are 

covered (see CAA sections 161, 302(d) and (q), and 

110(a)(1)), but if EPA promulgates a NAAQS for 

GHGs and designates certain areas as 

nonattainment, then those areas would not be 

covered. 

stationary sources that emitted pollution 

and did not envision that PSD would 

cover the large numbers of smaller 

sources within that inventory. As the 

D.C. Circuit stated in Alabama Power, 

the seminal court decision regarding 

PSD that reviewed numerous challenges 

to EPA’s initial set of PSD regulations, 

Congress’s intention was to identify 

facilities which, due to their size, are 

financially able to bear the substantial 

regulatory costs imposed by the PSD 

provisions and which, as a group, are 

primarily responsible for emissions of the 

deleterious pollutants that befoul our 

nation’s air. 

636 F.2d. 323, 353 (D.C. Cir. 1980) 

(emphasis added). In addition, Congress 

also sought to protect permitting 

authorities from undue administrative 

burdens. See S. Rep. 95–127 at 97; 

Alabama Power, 636 F.2d at 354. 

One important indication that 

Congress viewed PSD as limited in 

scope may be found in information 

provided by EPA in 1976 and included 

in the Congressional Record: A 

comprehensive list of industrial and 

commercial source categories, which 

included the amounts of certain 

pollutants emitted by ‘‘typical’’ sources 

in those categories and the number of 

new plants in those categories 

constructed each year. 122 Cong. Rec. S 

24548–50 (July 29, 1976) (statement of 

Sen. McClure). The pollutants included 

particulate matter (PM), sulfur dioxide 

(SO2), carbon monoxide (CO), and 

hydrocarbons. The two largest of these 

source categories consisted of— 

• Small boilers, those that generate 

between 10 MMbtu/hr and 250 MMbtu/ 

hr. EPA estimated that 1,446 new plants 

with boilers of this size were, at that 

time, constructed each year, and that the 

amount of PM emissions with controls 

from a ‘‘typical’’ such boiler were 53 

tpy. 

• Very small ‘‘boilers,’’ those that 

generate between 0.3 MMBtu/hr and 10 

MMBtu/hr. EPA estimated that 11,215 

new plants with boilers of this size 

were, at that time, constructed each 

year, and that the amount PM emissions 

with controls would be 2 tpy. 

The D.C. Circuit indicated, in 

Alabama Power, that Congress did not 

believe sources with boilers of these 

small sizes should be covered by PSD: 

‘‘[With respect to] the heating plant 

operating in a large high school or in a 

small community college * * * [w]e 

have no reason to believe that Congress 

intended to define such obviously 

minor sources as ‘major’ for the 

purposes of the PSD provision.’’ 277 636 

277 Although Congress specifically authorized the 

States to exempt ‘‘nonprofit health or education 

F.2d at 354. To support this proposition, 

the Court cited a statement in the 

Congressional Record by Sen. Bartlett 

arguing that the PSD provisions should 

not cover ‘‘[s]chool buildings, shopping 

malls, and similar-sized facilities with 

heating plants of 250 million BTUs.’’ Id. 

at 354 (citing 122 Cong. Rec. S. 12775, 

12812 (statement of Sen. Bartlett)). Yet, 

boilers of even this small size could 

well emit at least 250 tpy of CO2 and 

therefore could fall into PSD permitting 

requirements if the definition of ‘‘major 

emitting facility’’ is read to include 

emitters of CO2 of that size or more. 

Thus, it is clear that Congress’s 

construct of PSD—specifically, the 100/ 

250 tpy thresholds—was based on 

Congress’s focus on conventional 

pollutants at that time and its 

understanding that sources emitting 

conventional pollutants above those 

levels should be subject to PSD, with its 

attendant cost burdens, both because 

such sources have the financial 

resources and because they have the 

responsibility to reduce their large share 

of the convention pollution problems. 

Limited administrative resources were 

also part of this equation. But the 

equation is scrambled when CO2 is the 

pollutant because many smaller sources, 

with limited resources, and whose share 

of the GHG emissions problem is no 

greater than their share of the 

conventional pollution problem, get 

swept into PSD at those threshold 

levels. Further, administrative resources 

become greatly stretched. Juxtaposing 

the limited scope of the universe of PSD 

sources that Congress had in mind 

against the broad terms that Congress 

used in defining ‘‘major emitting 

facility,’’ which determines PSD 

applicability, raises the question of 

whether a narrower interpretation of 

those terms may be permissible under 

various judicial doctrines. 

We solicit comment on whether the 

case law cited above, concerning 

narrowing the application of statutory 

provisions in light of other indications 

of congressional intent or in light of 

administrative necessity, support 

interpreting the term, ‘‘major emitting 

facility’’ in a manner that is narrower 

than the literal meaning of the phrase, 

‘‘any other source’’ in the case of 

sources that emit amounts of CO2 that 

are more than 250 tpy but less than the 

levels discussed above. 

institutions’’ from the definition of ‘‘major emitting 

facility’’ this statement by the D.C. Circuit should 

be taken as the Court’s view that Congress did not 

design PSD to cover sources of the small size 

described. 

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ii. Modifications: Options and Legal 

Basis for Higher GHG Significance 

Levels 

Regarding the selection of a 

significance level for GHG emissions, 

we could follow a de minimis approach, 

as we have done in setting the existing 

PSD significance levels. We could base 

the significance level on the level below 

which an individual modification has a 

de minimis contribution to climate 

change. A scaling approach similar to 

that discussed above for the major 

source threshold is also an option for 

setting the significance level. We could 

set the significance level to a level of 

GHG emissions that corresponds to the 

same activity level as the significance 

levels for other pollutants, so as to 

roughly maintain the same permitting 

burden for GHGs as for ‘‘traditional’’ 

pollutants. We ask for comment on the 

merits of these approaches and invite 

suggestions on other approaches. We are 

also interested in specific information 

that would help us analyze how the 

selection of various significance levels 

would affect the number and types of 

modifications affected. 

The legal rationale for establishing a 

significance level is found in the D.C. 

Circuit’s Alabama Power decision, 636 

F.2d at 405, where the Court authorized 

EPA to establish ‘‘a de minimis standard 

rationally designed to alleviate severe 

administrative burdens.’’ The Court 

elaborated: 

A rational approach would consider the 

administrative burden with respect to each 

statutory context: what level of emission is 

de minimis for modification, what level de 

minimis for application of BACT. Concerning 

the application of BACT, a rational approach 

would consider whether the de minimis 

threshold should vary depending on the 

specific pollutant and the danger posed by 

increases in its emission. The Agency should 

look at the degree of administrative burden 

posed by enforcement at various de minimis 

threshold levels.* * * It may * * * be 

relevant * * * that Congress made a 

judgment in the Act that new facilities 

emitting less than 100 or 250 tons per year 

are not sizeable enough to warrant PSD 

review. 

Id. (emphasis added). We believe that 

this approach entails broad discretion in 

fashioning a de minimis level, 

consistent with the overarching 

principle of obviating administrative 

burdens that are not commensurate with 

the contribution of the amount of 

emissions to the pollution problem. We 

consider the Court’s emphasized 

statement to leave the door open to 

setting significance levels at the same 

level as the applicability threshold 

levels. We solicit comment on 

appropriate GHG significance levels, 

and on the relationship of significance 

levels to the GHG applicability 

thresholds discussed above. 

c. Phase-In of PSD Permitting 

Requirements 

Absent higher major source cutoffs 

and significance levels, it would be 

necessary to formulate a strategy for 

dealing with the tenfold increase in 

required permits that EPA projects 

permitting authorities will experience if 

GHGs become regulated for PSD 

purposes. Even with advance notice, an 

increase of this magnitude over a very 

short time could overwhelm permitting 

authorities. They would likely need to 

fund and hire new permit writers, and 

staff would need to develop expertise 

necessary to identify sources, review 

permits, assess control technology 

options for a new group of pollutants 

(and for a mix of familiar and unfamiliar 

source categories), and carry out the 

various procedural requirements 

necessary to issue permits. Sources 

would also face transition issues. Many 

new source owners and operators would 

need to become familiar with the PSD 

regulations, control technology options, 

and procedural requirements for many 

different types of equipment. If the 

transition were not effectively managed, 

an overwhelmed permit system would 

not be able to keep up with the demand 

for new pre-construction permits, and 

construction could be delayed on a large 

number of projects under this scenario. 

The size of the increase in workload 

that must be accommodated and the 

potentially serious consequences of an 

overly abrupt transition demonstrate 

that a phase-in approach may have 

merit. Under one concept of a phase-in 

approach, EPA could phase-in PSD 

applicability beginning with the largest 

sources of GHGs and gradually include 

smaller sources. This could be 

accomplished by initially adopting a 

relatively high major source size and 

significance level, and then periodically 

lowering the level until the full coverage 

level is reached. We ask for comment on 

what an appropriate transition time 

would be, what the appropriate starting, 

middle, and end points would be in 

terms of coverage, and what 

requirements, if any, should be put into 

place for sources prior to their being 

phased in. For example, if the ultimate 

goal is to reach a 250 tpy major source 

cutoff, what would be the appropriate 

starting cutoff (e.g., 10,000 tpy) and how 

should it be determined? Would the 

phase-in need to be complete by a 

certain date, and if so how long should 

the phase-in take? Alternatively, could 

the phase-in of the smaller sources 

proceed by setting up periodic EPA 

evaluations of the administrative 

necessity for deferring applicability for 

such sources, and applying PSD only 

after we determine that it is feasible to 

do so? We also ask for comment on what 

activities occurring over this time we 

should consider in structuring a phasein. 

As noted elsewhere, in its broad 

review of the initial PSD program 

promulgated under the 1977 Clean Air 

Act Amendments, the D.C. Circuit set 

out a range of mechanisms through 

which an agency can, at least under 

‘‘limited’’ circumstances, provide relief 

on grounds of ‘‘administrative 

necessity’’ from even clear statutory 

mandates, as long as those mandates do 

not unambiguously foreclose such relief. 

Alabama Power, 636 F.2d at 357. The 

Court noted that an agency could 

establish the need for such relief based 

on ‘‘a shortage of funds[,] * * * time, or 

* * * technical personnel.’’ Id. at 358. 

As described above, the large number 

of sources that would become subject to 

the PSD requirements at the 100/250 tpy 

levels would strain the administrative 

resources of the State permitting 

authorities and perhaps also of the EPA 

regional offices that issue PSD permits. 

Each of the constraints noted by the 

Court in Alabama Power—funds, time, 

and technical personnel—would arise. 

Elsewhere in this notice, we solicit 

comment on whether ‘‘administrative 

necessity’’ authorizes EPA to exempt 

categories of smaller GHG emitters. 

Here, we solicit comment on phasing-in 

the applicability of the permit program 

over a multi-year period, with 

successively smaller sources becoming 

subject. This method could allow an 

orderly ramp-up in funding and in 

essential human capital. Under such an 

approach, we also seek comment on 

whether it would be necessary to set a 

firm schedule for phase-in, or whether 

it is sufficient for the agency to select a 

future date to assess the level of 

program coverage and the associated 

administrative burden, and determine at 

that time whether it is appropriate to 

add them to the program, and if not, to 

set an additional future date to revisit 

the issue. We request information that 

would help us determine the 

appropriate timeframe for such 

assessments, including the current and 

anticipated state resources for 

processing PSD permits, including 

numbers of permitting personnel, and 

the time period and person-hours 

needed to issue a typical permit. 

d. Streamlining Determinations of 

Required Controls 

As previously noted, one of the most 

significant aspects of the PSD program 

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for GHGs is the BACT requirement. 

While permitting authorities are 

accustomed to making BACT 

determinations on a case-by-case basis 

for major sources and modifications 

under the current PSD program, BACT 

for GHGs (particularly CO2) presents 

significant additional permitting 

challenges. The primary challenge is the 

dramatic increase in the number of 

sources and modifications that under 

the 100/250-ton thresholds would be 

subject to BACT review and the new 

source categories that would be brought 

into the PSD program, which could 

exceed the capacity of the permitting 

system and have negative effects 

described above in section VII.D.4. An 

additional challenge stems from the fact 

that for some GHG-emitting activities, 

primarily CO2 from combustion sources, 

permitting authorities will need to look 

at alternative approaches to determining 

BACT such as setting efficiency targets, 

if add-on controls are not viewed as 

adequately demonstrated. While there is 

much information available on 

efficiency for some of the various kinds 

of equipment used by these newly 

applicable sources, permit engineers 

will need to understand this 

information for a very wide range of 

source categories. 

This section seeks comment on 

approaches for streamlining the BACT 

process for many new smaller sources 

that could be brought into the PSD 

program based on their GHG emissions. 

Under PSD, BACT is a case-by-case 

decision that reflects the state-of-the-art 

demonstrated control technology at the 

time of the permit action. Thus, BACT 

changes over time and requires 

continual updating. Determining BACT 

is also a decision that affords permitting 

authorities flexibility to consider a range 

of case-specific factors such as cost, 

energy, and environmental impacts. 

However, full case-by-case 

consideration of those factors requires 

significant data and analysis in order for 

permitting authorities to arrive at a 

permitting decision that is appropriate 

for each individual source or 

modification 

EPA is interested in whether there 

would be ways to move from a PSD 

permit system in which BACT limits are 

set on an individual case-by-case basis 

to a system in which BACT 

determinations could be made for 

common types of equipment and 

sources, and those determinations could 

be applied to individual permits with 

little to no additional tailoring or 

analysis. EPA has previously introduced 

this concept, known as ‘‘presumptive 

BACT,’’ as an aid to streamlining 

permitting for desulfurization projects at 

refineries as well as in other 

instances,278 and some state permitting 

authorities have adopted similar 

approaches in their air permitting 

programs.279 Based on our 

understanding of the types of sources 

that will become subject to PSD if GHGs 

are regulated with a major source size of 

250 tpy of emissions, we believe the 

presumptive BACT process could offer 

significant streamlining benefits. These 

benefits arise because many of these 

smaller sources will likely have very 

similar emissions producing equipment, 

and there will be little variation across 

sources with respect to the cost, energy, 

and environmental considerations in the 

BACT decision. 

While the CAA states that PSD 

permits shall be issued with BACT 

determinations made for each pollutant 

on a ‘‘case-by-case basis,’’ the court in 

Alabama Power recognized that 

exceptions may be appropriate where 

‘‘case-by-case determinations, would, as 

a practical matter, prevent the agency 

from carrying out the mission assigned 

to it by Congress.’’ 636 F.2d at 358 

(emphasis added). The court recognized 

that such streamlining measures may be 

needed when time or personnel 

constraints or other practical 

considerations ‘‘would make it 

impossible for the agency to carry out its 

mandate.’’ See id. at 359. Given the 

more-than-tenfold increase in new 

sources that would likely be brought 

into the PSD program once GHGs are 

regulated and the other challenges 

described above, maintaining a 

traditional PSD permitting program with 

individual case-by-case BACT 

determinations may be impractical, 

warranting streamlined regulatory 

approaches as allowed under the Act. A 

presumptive BACT permitting program 

would allow EPA, state and local 

permitting authorities to carry out the 

PSD program in a timely and efficient 

manner necessary to promote (rather 

than hinder) control of GHG emissions 

from the many new, small source 

categories that would be required to 

have PSD permits based on their GHG 

278 See January 19, 2001 memo from John S. Seitz, 

Director, Office of Air Quality Planning and 

Standards to the Regional Air Division Directors 

entitled, ‘‘BACT and LAER for Emissions of 

Nitrogen Oxides and Volatile Organic Compounds 

at Tier 2/Gasoline Sulfur Refinery Projects.’’ 

279 For example, Wyoming has a minor source 

permitting program that includes a BACT analysis, 

and they use a presumptive BACT process for 

issuing minor source permits to a particular source 

category—oil and gas production facilities. See 

Permitting Guidance for Oil and Gas Production 

Facilities, Wyoming Dept. of Environmental 

Quality, Air Quality Division (August 2007 

revision). 

emissions, while still preserving 

opportunities for public participation. 

In considering a change from case-bycase BACT determinations to a 

presumptive BACT process for some 

specific source categories within the 

PSD program, EPA is considering how 

such presumptive BACT limits should 

be established and used, and what 

provisions in the CAA would set 

requirements or limits on their 

establishment and use. In particular, 

EPA recognizes the statutory 

requirement to set BACT limits on a 

case-by-case basis after taking into 

account site-specific energy, economic, 

and environmental impacts (otherwise 

known as collateral impacts). One 

option would be to allow permitting 

authorities to adjust any BACT limit 

that was based on presumptive BACT, 

as necessary, upon identifying 

significant collateral impacts applicable 

to a specific source. EPA also recognizes 

the requirement to subject proposed 

PSD permits, and the BACT limits 

contained within them, to public notice 

and comment before such permits 

become final. A presumptive BACT 

program could be designed to establish 

presumptive emissions limits for a 

particular category of sources through 

guidance that would be issued only after 

public notice and comment procedures. 

Another approach could be to allow 

presumptive BACT limits in each 

permit to become final only if public 

comments fail to establish that 

significant case-specific energy, 

economic, and/or environmental 

impacts require adjustment of the 

presumed limit for that particular 

source. 

In addition, while case-by-case BACT 

determinations allow for the continual 

evolution of BACT requirements over 

time (as controls applied in prior 

permits are considered in each 

subsequent case-by-case BACT 

determination), EPA recognizes that 

application of presumptive BACT to a 

category of sources over many 

permitting decisions may somewhat 

diminish PSD’s incentives for improved 

technology. EPA is interested in options 

that would help maintain advances in 

control technologies, such as a 

requirement to update and/or strengthen 

the presumptive BACT at set intervals 

(such as after 3 years). EPA seeks 

comment on all aspects of the use of 

presumptive BACT limits within the 

PSD program, including EPA’s authority 

to do so, whether there is need for and 

value to such an approach, and 

suggestions for how such limits could 

be established, updated, and used 

consistent with the requirements of the 

CAA. 

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The central component of a 

presumptive BACT approach would be 

the recurring technical determination, 

subject to notice and comment, of the 

presumptive BACT levels for various 

categories. Because of the limited data 

we currently have about the number and 

types of sources that would become 

subject to the BACT requirement for 

GHGs, we cannot at this time predict 

how many or which source categories 

might benefit from such an approach if 

we opt to pursue it. We seek comment 

on the basis we could use in setting the 

presumptive BACT level. Considerable 

work will be needed to determine what 

options exist for controlling GHG 

emissions from these categories of 

smaller sources and the various emitting 

equipment they use. Even if a 

determination is made that add-on 

controls for CO2 from combustion 

sources are adequately demonstrated, it 

is unlikely that the application of these 

controls would be cost-effective at these 

small sources in the relatively near 

future. Thus the focus of presumptive 

BACT for CO2 would likely be on energy 

efficiency standards for the installed 

equipment. 

While PSD permitting staff generally 

would not possess specialized 

knowledge in the area of energy 

efficiency for categories of small 

sources, there is experience within EPA 

and other agencies that could help 

inform the establishment of 

presumptive BACT. Both EPA and DOE, 

for example, have extensive experience 

in deploying cost effective technologies 

and practices to reduce greenhouse 

gases from a wide range of emissions 

sources in support of the President’s 

GHG intensity goal. For example the 

Energy Star program promotes efficient 

technologies through a labeling program 

that establishes performance-based 

specifications for determining the most 

efficient products in a particular 

category, which then qualify for the 

Energy Star label. To develop these 

specifications, EPA and DOE use a 

systematic process that relies on 

rigorous market, engineering, and 

pollution savings analyses as well as 

input from stakeholders. While Energy 

Star specifications generally cover 

electrical appliances or fuel combusting 

appliances that would be smaller than 

those triggering the BACT requirement, 

the types of analyses conducted for 

Energy Star could inform the 

presumptive BACT process. In addition, 

DOE’s Energy Efficiency and Renewable 

Energy program sets standards for 

several types of equipment, some of 

which may be affected by the BACT 

requirement if GHGs are regulated, 

including furnaces, boilers, and water 

heaters. The DOE standards are similar 

to the concept of presumptive BACT in 

that they take cost into consideration 

and are updated over time.280 They also 

take into account effects on 

competitiveness among equipment 

manufacturers, which could be a 

significant concern if left unaddressed 

in determining presumptive BACT. We 

ask for comment on whether these or 

other similar programs could serve as a 

basis for the setting of presumptive 

BACT where applicable. 

Regarding LAER, we note that, as 

previously discussed, if a NAAQS were 

established for GHG at levels lower than 

current concentrations, the relevant 

technology requirement would be 

LAER, not BACT. We ask for comment 

on whether the presumptive BACT 

approach would have utility for LAER 

and whether the particular statutory 

language of the LAER requirement 

would allow a presumptive approach 

under the same legal principles laid out 

for BACT. 

Finally, while presumptive BACT or 

LAER may have the potential to help 

address the problem of numerous small 

but similar types of sources, it is likely 

of less value in making BACT or LAER 

determinations at the types of large 

sources that have generally been subject 

to PSD for traditional pollutants. This is 

because there is generally less similarity 

among these traditional sources. 

Nonetheless, as noted above, there may 

be numerous modifications that will be 

newly subject to PSD for GHGs at such 

sources, and there may also be issues 

unique to establishing control 

technology requirements for GHGs that 

do not presently exist for such sources. 

We ask for comment on whether there 

are issues at traditional PSD major 

sources that arise for GHGs and that 

would not be addressed by a 

presumptive BACT approach. If so, we 

ask for comment on additional options 

for tailoring the BACT requirement to 

address these issues. 

e. General Permits for Streamlined 

Permitting of Numerous Similar Sources 

An approach closely linked with the 

presumptive BACT concept is the 

concept of a general permit for PSD. A 

general permit is a permit that the 

permitting authority drafts one time, 

and then applies essentially identically 

(except for some source specific 

identifying information) to each source 

of the appropriate type that requests 

coverage under the general permit. 

Congress expressly codified the concept 

of general permits when it enacted the 

280 See, e.g., 42 U.S.C. 6295(o). 

Title V program (discussed below) and 

states have been using general permits 

and similar process for years in their 

own permit programs, particularly for 

minor source NSR 281 and operating 

permits. Due to the case-by-case nature 

of PSD permitting for ‘‘traditional’’ 

major sources and the differences 

among individual PSD sources, there 

has not been much interest or activity in 

general permitting for PSD. However, if 

one or more GHGs (particularly CO2) 

become regulated pollutants, this 

approach merits strong consideration 

due to the large number of sources that 

EPA expects will become newly subject 

to PSD for their GHG emissions and the 

similar characteristics of many of these 

sources. 

Although there is no provision in the 

CAA that expressly authorizes the use of 

general permits in the PSD program, the 

D.C. Circuit, in the Alabama Power case 

described above, recognized that 

‘‘[c]onsiderations of administrative 

necessity may be a basis for finding 

implied authority for an administrative 

approach not explicitly provided in the 

statute’’ and expressly identified general 

permits as an alternative to the 

exemptions that were at issue in that 

case. See 636 F.2d at 360. Further, 

courts have recognized EPA’s authority 

to use general permits under section 402 

of the Clean Water Act without an 

express provision authorizing such 

general permits. Environmental Defense 

Center v. EPA, 344 F.3d 832, 853 (9th 

Cir. 2003) (‘‘General permitting has long 

been recognized as a lawful means of 

authorizing discharges.’’) (citing NRDC. 

v. Costle., 568 F.2d 1369, 1381 (D.C. Cir. 

1977)); NRDC v. Train., 396 F. Supp. 

1393, 1402 (D.D.C. 1975) (EPA has 

‘‘substantial discretion to use 

administrative devices, such as area 

permits, to make EPA’s burden 

manageable.’’). 

In considering the use of general 

permits within the PSD program, EPA is 

considering how such general permits 

would be established and used, and 

what provisions in the CAA might limit 

their establishment and use. One 

consideration in establishing PSD 

general permits is the requirement in 

CAA section 165(a)(2) that permits be 

issued after ‘‘a public hearing has been 

held with opportunity for interested 

persons including representatives of the 

Administrator to appear and submit 

written or oral presentations.’’ One 

possible approach for fulfilling the 

public participation requirement is the 

approach followed for Title V general 

281 The minor NSR is a NAAQS-based program 

for review of minor sources that is distinct from the 

PSD program. It is not discussed here. 

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permits in 40 CFR 70.6(d), which 

provide that permitting authorities may 

establish general permits after following 

notice and comment procedures 

required under 40 CFR 70.7(h) and then 

grant a source’s request to operate under 

a general permit without repeating the 

public participation procedures. Other 

considerations for establishing general 

permits under the PSD program include 

determining BACT on a case-by-case 

basis (as discussed in the previous 

section), and the other requirements 

referred to earlier in this section 

concerning the evaluation of impacts on 

AQRVs in Class I areas and the analysis 

of air quality and other potential 

impacts under CAA section 165(e). 

EPA seeks comment on the use of 

general permits within the PSD 

program, including both EPA’s authority 

to do so and suggestions for how general 

permits would be established and used 

consistent with the requirements of the 

CAA and identification of source 

categories that could benefit from such 

an approach. We also ask for comment 

on whether a general permit program 

approach could also work for 

nonattainment NSR in the event the 

EPA promulgates a NAAQS for GHGs 

and designates areas as nonattainment. 

f. Coordinating Timing of PSD 

Streamlining With GHG Regulation 

Under the Act 

Regardless of how EPA might tailor 

the NSR program for GHGs, the timing 

of these approaches must be 

coordinated with other GHG actions 

under the CAA. As described above, the 

applicability of PSD is tied to whether 

a pollutant is subject to a control 

program under the Act. EPA strongly 

believes that we should be prepared the 

first time we regulate one or more GHGs 

under any part of the CAA to explain 

our approach to permitting, including 

full consideration of the ideas presented 

above for responding to the PSD 

implementation challenges. 

Coordination of the timing of tailoring 

strategies for PSD or nonattainment NSR 

to match with the effective date of the 

first GHG regulation is necessary to 

minimize confusion on the part of 

sources, permitting authorities, and the 

public, to provide for as effective a 

transition as possible, and to ensure that 

the strategies intended to avoid 

problems can be in place in time to 

prevent those problems. We seek 

comment on timing issues in general, 

and particularly on the coordination of 

the timing of permitting requirements 

with the timing of GHG regulation 

under other parts of the Act. 

F. Title V Operating Permits Program 

1. What Are the Clean Air Act 

Requirements Describing the Operating 

Permits Program? 

The Title V operating permits 

program was enacted in 1990 to 

improve sources’ compliance with the 

requirements of the CAA.282 In 

summary, it provides for facility 

operating permits that consolidate all 

Act requirements into a single 

document, provides for review of these 

documents by EPA, States, and the 

public, and requires permit holders to 

track, report, and certify annually to 

their compliance status with respect to 

their permit requirements. Through 

these measures, it is more likely that 

compliance status will be known, any 

noncompliance will be discovered and 

corrected, and emissions reductions will 

result. Title V generally does not add 

new substantive requirements for 

pollution control, but it does require 

that each permit contain all a facility’s 

‘‘applicable requirements’’ under the 

Act, and that certain procedural 

requirements be followed, especially 

with respect to compliance with these 

requirements. ‘‘Applicable 

requirements’’ for Title V purposes 

generally include all stationary source 

requirements, but mobile source 

requirements are excluded. 

Presently there are generally not any 

applicable requirements for control of 

GHGs that would be included in Title V 

permits, but regulation of GHGs under 

any of the approaches described above, 

including PSD, could give rise to 

applicable requirements that would be 

included. Even if a particular source 

emitting 100 tpy of a GHG is not subject 

to GHG regulations that are ‘‘applicable 

requirements,’’ under a literal reading of 

Title V, the Title V permit for that 

source must include any other 

applicable requirements for other 

pollutants. For example, while a 100 tpy 

CO2 source would usually have 

relatively small criteria pollutant 

emissions that would not by themselves 

have subjected the source to title V, 

once subjected to title V for CO2 

emissions, the source would then need 

to include any SIP rules (e.g., generally 

applicable opacity limitations that exist 

in several SIPs) that apply to the source. 

When a source becomes subject to 

Title V, it must apply for a permit 

within one year of the date it became 

subject.283 The application must include 

282 The operating permits program requirements 

are contained in title V of the CAA, and are codified 

in EPA regulations at 40 CFR parts 70 and 71. 

283 The deadline may be earlier if the permitting 

authority (usually an approved state or local air 

identifying information, description of 

emissions and other information 

necessary to determine applicability of 

CAA requirements, identification and 

certification of the source’s compliance 

status with these requirements 

(including a schedule to come into 

compliance for any requirements for 

which the source is currently out of 

compliance), a statement of the methods 

for determining compliance, and other 

information. The permitting authority 

then uses this information to issue the 

source a permit to operate, as 

appropriate. A Title V source may not 

operate without a permit, except that if 

it has submitted a complete application, 

it can operate under an ‘‘application 

shield’’ while awaiting issuance of its 

permit. 

Title V permits must contain the 

following main elements: (1) Emissions 

standards to assure compliance with all 

applicable requirements; (2) a duration 

of no more than 5 years, after which the 

permit must be renewed; (3) monitoring, 

recordkeeping, and reporting 

requirements necessary to assure 

compliance, including a semiannual 

report of all required monitoring and a 

prompt report of each deviation from a 

permit term; (4) provisions for payment 

of permit fees as established by the 

permitting authority such that total fees 

collected are adequate to cover the costs 

of running the program; and (5) a 

requirement for an annual compliance 

certification by a responsible official at 

the source. An additional specific 

monitoring requirement, compliance 

assurance monitoring (CAM), also 

applies to some emissions units 

operating at major sources with Title V 

permits.284 The CAM rule requires 

source owners to design and conduct 

monitoring of the operation of add-on 

control devices used to control 

emissions from moderately large 

emissions units. Source owners use the 

monitoring data to evaluate, verify, and 

certify the compliance status for 

applicable emissions limits.285 The 

CAM rule is implemented in 

conjunction with the schedule of the 

operating permits program. 

While these are the main elements 

relevant to a discussion of GHGs, there 

are numerous other permit content 

requirements and optional elements, as 

set forth in the Title V implementing 

regulations at 40 CFR 70.6. One of these 

pollution control agency, but in some cases the 

EPA) sets an earlier date. 

284 Specifically, CAM applies to units with addon control devices whose pre-control emissions 

exceed the applicable major source threshold for 

the regulated pollutant. 

285 CAM requirements are codified in 40 CFR part 

64. 

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optional elements is of particular 

interest when considering the 

implications of GHG permitting: The 

provisions for general permits, which, 

as discussed in more detail below, can 

allow for more streamlined permitting 

of numerous similar sources. 

In addition to the permit content 

requirements, there are procedural 

requirements that the permitting 

authority must follow in issuing Title V 

permits, including (1) determining and 

notifying the applicant that its 

application is complete; (2) public 

notice and a 30-day public comment 

period on the draft permit, as well as the 

opportunity for a public hearing; (3) 

notice to EPA and affected states, and 

(4) preparing and providing to anyone 

who requests it a statement of the legal 

and factual basis of the draft permit. The 

permitting authority must take final 

action on permit applications within 18 

months of receipt. EPA also has 45 days 

from receipt of a proposed permit to 

object to its issuance, and citizens have 

60 days to petition EPA to object. 

Permits may also need to be revised or 

reopened if new requirements come into 

effect or if the source makes changes 

that conflict with, or necessitate changes 

to, the current permit. Permit revisions 

and reopenings follow procedural 

requirements which vary depending on 

the nature of the necessary changes to 

the permit. 

2. What Sources Would Be Affected If 

GHGs Were Regulated Under Title V? 

Title V requires permitting for several 

types of sources subject to CAA 

requirements including all sources that 

are required to have PSD permits. 

However, it also applies to all sources 

that emit or have the potential to emit 

100 tpy of an air pollutant.286 As 

discussed above for the PSD program, 

the addition of GHG sources to the 

program would trigger permitting 

requirements for numerous sources that 

are not currently subject to Title V 

because their emissions of other 

pollutants are too small. The Title V 

cutoff would bring in even more sources 

than PSD because the 100 tpy (rather 

than 250 tpy) cutoff applies to all source 

categories, not just the ones specified in 

the Act’s PSD provisions. 

Using available data, which we 

acknowledge are limited, and 

engineering judgment in a manner 

similar to what was done for PSD, EPA 

estimates that more than 550,000 

286 Other sources required to obtain Title V 

permits are ‘‘affected sources’’ under the acid rain 

program, and sources subject to NSPS or MACT 

standards (though non-major sources under these 

programs can be exempted by rule). It does not 

apply to mobile sources. 

additional sources would require Title V 

permits, as compared to the current 

universe of about 15,000–16,000 Title V 

sources. If actually implemented, this 

would be more than a tenfold increase, 

and many of the newly subject sources 

would be in categories not traditionally 

regulated by Title V, such as large 

residential and commercial buildings. 

However, as described below, EPA 

believes that, if appropriate, there may 

be grounds to exclude most of these 

sources from Title V coverage, either 

temporarily or permanently, under legal 

theories similar to those for PSD. 

The CAM requirement also applies to 

major sources that require Title V 

permits, meaning that a number of 

smaller sources are potentially newly 

subject to CAM as well. Under the 

current CAM requirements, 

applicability is limited to the 

monitoring of add-on control devices 

(e.g., scrubbers, ESPs). Presently there 

are few known add-on control devices 

for CO2, and for many smaller sources, 

it is unlikely that there will be cost 

effective add-on controls for CO2 for 

many years. Thus, we generally expect 

source owners to comply with any 

applicable GHG limits through the use 

of improved energy efficiency and other 

process operational changes rather than 

the use of add-on emissions reduction 

devices. As a result, even with the large 

number of sources that will exceed the 

applicability cutoffs, the CAM rule will 

have very limited application for 

sources subject to GHG rules. We ask for 

comment on this assessment of CAM 

applicability, and whether there may be 

CAM impacts that we have not 

described here. 

As an additional note, if GHGs were 

regulated under section 112 authority, 

Title V could apply at an even smaller 

threshold. This consideration adds to 

the list of difficulties with using section 

112 to regulate GHGs that were 

identified in section VII.C. Although 

HAPs are excluded from the definition 

of ‘‘regulated NSR pollutant,’’ Title V 

explicitly includes major sources as 

defined in section 112 on the list of 

sources required to obtain an operating 

permit. While minor sources of HAP can 

be excluded by rule, major sources of 

HAP cannot. For HAPs, the major 

source cutoffs are (as noted previously) 

25 tons for any combination of HAPs, 

and 10 tons for any single HAP. Thus, 

if GHGs were regulated as HAPs, a 10 

ton CO2 source would require an 

operating permit under Title V. Under 

this approach, the number of new Title 

V sources would easily number in the 

millions absent a means to limit PTE. In 

addition the major source definition 

under section 112 does not exclude 

fugitive emissions, as it does under PSD 

for unlisted categories. Thus, if GHGs 

were designated as HAPs, an uncertain 

number of additional new kinds of 

sources (e.g., agriculture, mining), 

would become newly subject to Title V 

due to fugitive emissions of GHGs. We 

ask for comment on whether there are 

factors EPA should consider in its 

description of the universe of 

potentially affected sources. 

3. What Are the Key Milestones and 

Implementation Timeline if Title V 

Were Applicable for GHGs? 

Under an interpretation of the Act 

parallel to that for PSD, Title V would 

become applicable for GHGs as soon as 

GHGs become subject to any actual 

control requirement. This timing is 

perhaps even more important for Title V 

than for PSD because of the potential for 

an extremely large number of new 

sources (unless EPA administratively 

reduced coverage) combined with the 

fact that Title V applications would all 

be due at the same time (unless a phasein approach were adopted). This is 

because Title V requires permit 

applications within one year of a source 

becoming subject to the program, in 

contrast to the PSD program, where 

permitting authorities would receive 

applications over time as sources 

construct or modify. 

Permitting authorities generally must 

act on Title V applications within 18 

months. However, Congress addressed 

the burden imposed by the initial influx 

of (what turned out to be less than 

20,000) initial Title V permits when it 

enacted Title V in 1990 by providing for 

a 3-year phased permit issuance 

timeline. Although the initial phase-in 

period is over, we discuss below the 

possibility of interpreting Title V 

provisions to authorize a phase-in 

period for GHG sources becoming newly 

subject to Title V as well. We ask for 

comment on whether there are factors 

EPA should consider in its description 

of these timelines. 

4. What Are Possible Cost and Emission 

Impacts of Title V for GHGs? 

Title V generally does not impose 

additional applicable requirements on a 

source. However, sources, permitting 

authorities, EPA, and the public (to the 

extent that they participate in the 

permitting process) all may incur 

administrative burden due to numerous 

activities associated with applying for, 

reviewing, commenting on, and 

complying with Title V permits. There 

are significant challenges that would 

arise if GHG sources become subject to 

Title V. The sheer volume of new 

permits would heavily strain the 

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resources of state and local Title V 

programs. These programs may have to 

tailor their fee requirements or other 

program elements to address the strain 

caused by the influx of numerous 

smaller sources, even if the permits for 

each individual source are relatively 

straightforward. Many new types of 

sources would need to understand and 

comply with a new and unfamiliar 

program. Even under streamlined 

approaches like general permits 

(discussed below), there would be 

administrative burden imposed as 

sources would have to determine 

whether they are covered and, if so, 

would need to submit annual reports 

and certifications. EPA would see 

additional burden as well, both because 

we are the permitting authority in some 

areas and because we would probably 

see an increase in the number of Title 

V petitions. Because Title V does not 

create new applicable requirements, the 

new costs of Title V would be mainly 

attributable to administrative burden. 

Nonetheless, this overall administrative 

burden is likely to be unreasonable 

unless EPA reduces the number of 

covered sources as discussed below. 

Title V of the CAA also contains a 

self-funding mechanism requiring that 

permitting authorities collect permit 

fees adequate to support the costs of 

running a Title V program. Title V fees 

must be used solely to run the permit 

program. For GHGs, the possibility of a 

huge influx of smaller sources raises 

questions about how permitting 

authorities should adjust their fee 

schedules to ensure that they have 

adequate resources to permit these 

sources without causing undue financial 

hardship to the sources. The most 

common approach, a cost per ton fee 

that is equal for all pollutants, would 

likely result in excessive costs to GHGemitting sources because of the large 

mass emissions of GHGs compared to 

other pollutants. This is particularly 

true for the universe of small sources 

brought into Title V solely for their GHG 

emissions, because those permits are 

expected to be relatively simple and 

may even be addressed through general 

permits (which would not require as 

many resources or as high a fee). 

Although it may be permissible for 

permitting authorities to adopt lower 

fees specifically for GHGs, they would 

have to assess the new resources needed 

for permitting these sources and 

determine some basis for an appropriate 

fee and a workable mechanism for 

collecting it. 

As noted above, the benefits of Title 

V stem primarily from the way its 

various provisions contribute to 

improved compliance with CAA 

requirements. However, for the 

particular sources that would be added 

to the program solely due to their GHG 

emissions, it is unclear whether there 

would be much benefit from these 

provisions given the small size of most 

of these new sources, the uniform 

design and operation of many of their 

emissions points, the anticipated lack of 

add-on control devices, and the 

relatively small number of applicable 

requirements that would be included in 

the permit. We ask for comment on the 

expected overall costs and benefits of 

running a Title V program for small 

GHG sources and for larger GHG sources 

(e.g., those emitting more than 10,000 

tons per year). 

5. What Possible Implications Would 

Use of This Authority for GHGs Have for 

Other CAA Programs? 

Because Title V is designed to work 

in concert with other CAA requirements 

and is self-funding, we have not 

identified any impacts it would have on 

other programs. 

6. What Are Possible Tailoring 

Approaches To Address Administrative 

Concerns for Title V for GHGs? 

As we did in section VII.D regarding 

NSR, we present here for comment some 

possible tailoring options to address 

concerns about implementing Title V for 

GHGs. As was previously noted for 

NSR, we must consider how the Act’s 

language may constrain these options. 

Nonetheless, we see at least two 

possible legal theories for reducing 

administrative concerns through 

limiting the scope of coverage of Title V 

that would otherwise result from 

regulating GHGs. First, case law 

indicates that in rare cases, the courts 

will interpret or apply statutory 

provisions in a manner other than what 

is indicated by their plain meaning. 

Courts will do so when Congress’s 

intent differs from the plain meaning, as 

indicated by other statutory provisions, 

legislative history, or the absurd, futile, 

strange, or indeterminate results 

produced by literal application. Second, 

the administrative burden of literal 

application of the Title V provisions 

may also provide a basis for EPA, based 

on the judicial doctrine of 

administrative necessity, to craft relief 

in the form of narrowed source 

coverage, exemptions, streamlined 

approaches or procedures, or a delay of 

deadlines. Some specific options are 

discussed in the remainder of this 

section, and we invite comment on 

these and other suggested approaches. 

a. Potential for Higher Major Source 

Cutoffs 

As discussed above in section VII.A.5, 

Title V applies to several types of 

sources under the Act, including, among 

others, all PSD sources, as well as 100 

tpy sources that are not subject to PSD. 

In section VII.D, we described the 

reasons why a higher major source 

cutoff for PSD might make sense to 

improve the effectiveness of the 

program by focusing resources away 

from numerous small sources for which 

the environmental benefits gained from 

permitting may not justify the 

associated administrative burdens. We 

believe such an approach might be even 

more important for Title V because 

many small sources that could become 

subject to the program solely because of 

their GHG emissions may have few or 

no applicable requirements. Unless 

GHG emissions from these small sources 

are regulated elsewhere under the Act, 

the only GHG-related applicable 

requirements for these sources would 

come from PSD permitting. Thus, if EPA 

adopts a higher major source size for 

PSD, it would arguably be incongruous 

to require 100 tpy GHG sources to 

obtain permits under Title V. In that 

case, adopting a higher applicability 

threshold for GHGs under Title V in 

parallel with, and at the same level as 

for PSD, would make even more sense. 

Similarly, if EPA were to regulate GHGs 

for certain source categories under CAA 

section 111 or 112, and were to include 

size cutoffs in those regulations, then it 

could make sense for the size-cutoffs for 

Title V purposes to reflect the cutoffs for 

those source categories under those 

regulations. Indeed, it could make sense 

to apply Title V only to those sources of 

GHGs that are themselves subject to 

regulation for GHG emissions. 

We have found several indications of 

congressional intent that could serve as 

a basis for interpreting the Title V 

applicability provisions to implement 

the above-described size-cutoffs or other 

limitations, instead of interpreting them 

literally. First, other provisions in Title 

V and the legislative history indicate 

that the purpose of Title V is to promote 

compliance and facilitate enforcement 

by gathering into one document the 

requirements that apply to a particular 

source. See section 504(a) (each Title V 

permit must contain terms ‘‘necessary to 

assure compliance with applicable 

requirements’’ of the CAA), H.R. Rep. 

No. 101–490, at 351 (1990) (‘‘It should 

be emphasized that the operating permit 

to be issued under this title is intended 

by the Administration to be the single 

document or source of all of the 

requirements under the Act applicable 

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to the source.’’). Limiting the 

applicability of Title V to sources that 

emit GHGs in the same quantity as 

sources that would be subject to GHG 

limits under PSD (or other CAA 

requirements) for GHGs—and excluding 

sources that emit GHGs in lower 

quantities and therefore are not subject 

to CAA requirements for GHGs—would 

be consistent with that purpose. Second, 

the legislative history of Title V 

indicates that Congress expected the 

provisions to apply to a much smaller 

set of sources than would become 

subject at 100 tpy GHG levels. See S. 

Rep. 101–228, at 353 (‘‘[T]he additional 

workload in managing the air pollution 

permit system is estimated to be roughly 

comparable to the burden that States 

and EPA have successfully managed 

under the Clean Water Act[,]’’ under 

which ‘‘some 70,000 sources receive 

permits, including more than 16,000 

major sources’’). 

We ask for comment on whether we 

should consider higher GHG 

applicability cutoffs for Title V, what 

the appropriate cutoffs might be, and 

whether there are additional policy 

reasons and legal justifications for doing 

so or concerns about such an approach. 

b. Potential for Phase-In of Title V 

Requirements 

Due to the severe administrative 

burden that would result if hundreds of 

thousands of sources were all to become 

subject to Title V at the same time, as 

could be the case if EPA regulates GHGs 

elsewhere under the Act, and because 

many of the sources could become 

subject before the development of any 

stationary source controls for GHGs, it 

may make sense to defer Title V 

applicability for GHG sources that are 

subject to Title V solely due to GHG 

emissions. One deferral approach would 

be to defer Title V for such sources until 

such time as they become subject to 

applicable requirements for GHGs. 

Alternatively, it may make sense to 

phase in Title V applicability with the 

largest sources applying soonest, similar 

to what was discussed above for PSD 

permitting. 

Legal support for some type of 

deferral may be found in the case law, 

described above, that identifies deferral 

as one of the tools in the 

‘‘administrative necessity’’ toolbox. In 

the case of Title V, deferral may find 

further legal support by reference to 

provisions of Title V itself: Congress 

addressed the burden imposed by the 

initial influx of tens of thousands of 

Title V permits when it originally 

enacted Title V in 1990 by providing for 

a 3-year phased permit issuance 

timeline.287 A similar phased approach 

may have even greater merit here due to 

the even greater number of permits. We 

ask for comment on the legal and policy 

arguments for or against a phase-in 

approach, and request suggestions for 

workable permit application and 

issuance timelines for Title V permits 

for small GHG sources. 

c. General Permits 

The use of general permits is an 

additional option for addressing the 

potentially large numbers of GHG 

sources that could become subject to 

Title V. While general permits would 

not completely eliminate the resource 

burden, and may not work for every 

type of source, they clearly offer an 

option for meeting the Title V 

requirements in a more efficient way. 

Congress expressly provided for general 

permits for Title V and many states have 

experience issuing them. They appear to 

be a good fit for the numerous similar 

small sources we are primarily 

concerned about. Nonetheless, we still 

expect that the sheer volume of sources 

and number of different types of sources 

affected will present challenges. 

Further, any Title V general permit must 

comply with all requirements applicable 

to permits under Title V, and no source 

covered by a general permit may be 

relieved from the obligation to file a 

permit application under section 503 of 

the Act. We seek comment on whether 

source characteristics and applicable 

requirements are similar enough for a 

general permit approach to be helpful, 

for what categories it would provide the 

greatest benefit, and the degree to which 

it would or would not ease the expected 

difficulties with implementing a GHG 

Title V program. 

d. Fees 

Title V contains a self-funding 

mechanism requiring that permitting 

authorities collect permit fees adequate 

to support the costs of running a Title 

V program. Title V fees must be used 

solely to run the permit program. For 

GHGs, the possibility of a huge influx of 

new sources raises questions about how 

permitting authorities should adjust 

their fee schedules to ensure that they 

have adequate resources to permit these 

sources. Title V provides significant 

flexibility to permitting authorities in 

setting their fee schedules so long as 

they can demonstrate that fees are 

adequate to cover all reasonable costs 

required to develop and administer the 

Title V program requirements.288 The 

287 CAA section 503(c). 

288 See CAA section 502(b)(3), which also lists 

specific activities whose costs must be covered. 

additional resource burden imposed by 

GHG sources will depend heavily on 

what approaches EPA and states 

ultimately adopt for tailoring the 

program for these sources, but EPA does 

expect that some additional resources 

will be necessary under virtually any 

scenario. 

Most states charge Title V fees on a 

dollar/ton basis, and actual amounts 

vary from state to state. For 2008, EPA 

charges $43.40 per ton, but only for 

regulated pollutants for the fee 

calculation (which generally includes 

all regulated pollutants but excludes 

carbon monoxide and some other 

pollutants). Because of the large mass 

emissions of GHGs and especially of 

CO2 compared to other pollutants, if 

EPA and states charge fees for GHG 

emissions based on cost/ton numbers 

for criteria pollutants or HAPs, we 

expect that the fee revenues would be 

grossly excessive for what is needed to 

process permits for GHG sources. This 

is particularly true for the universe of 

small sources brought into Title V solely 

for their GHG emissions because those 

permits are expected to be relatively 

simple and may be addressed through 

general permits. Therefore we believe 

that it is appropriate for permitting 

authorities to consider other available 

options for covering their GHG source 

permitting costs, including: 

substantially lower cost per ton fees for 

GHGs, fixed fees (e.g., one time or 

annual processing fee that is the same 

for all applicants below a certain size), 

and/or charging no fees for smaller GHG 

sources. We ask for comment on these 

and other suggestions for permitting 

authorities to use on structuring their 

fee provisions. We also request 

comment on the expected resource 

burden resulting from new GHG 

permitting, and how EPA should 

determine the adequacy of fees. EPA 

rules contain an optional method for 

permitting authorities to use in 

calculating a presumptively adequate 

fee. These regulations do not include 

GHGs as a regulated pollutant for this 

calculation but could in the future if 

GHGs were regulated under certain 

parts of the Act. For permitting 

authorities that still use this 

presumptive calculation, we ask for 

comment on whether, for the reasons 

described above, EPA should 

specifically exclude GHGs from this 

calculation or address it in a different 

manner. Finally, because EPA itself is 

the permitting authority for some 

sources, we are also interested in 

comments on whether and how EPA 

should change its fee structure in its 

part 71 permitting regulations to meet 

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its own increased resource needs from 

GHG permitting.289 

e. Coordinating Timing With Other 

Actions 

Like PSD, the timing of any approach 

to streamline Title V must be 

coordinated with other GHG actions 

under the CAA. We believe that any 

EPA determination about the 

applicability of the Title V program to 

GHGs should be accompanied by an 

explanation of how EPA plans to 

address—and how we recommend that 

State and local permitting authorities 

address—the numerous implementation 

challenges such a determination would 

pose. This timing is perhaps even more 

important for Title V than for PSD 

because of the potential for an extremely 

large number of new sources and the 

fact that Title V applications would 

(unless a phase-in approach is adopted) 

all be due at the same time, whereas 

PSD applications would come in over 

time as sources construct or modify. We 

seek comment on timing issues in 

general, and particularly on the 

coordination of the timing of Title V 

applicability with the timing of GHG 

regulation under other parts of the Act. 

We specifically request comment on 

the timing of the applicability of Title V 

permit requirements in relation to the 

applicability of GHG control 

requirements. Consider the scenario 

where EPA issues a rule regulating 

GHGs from mobile sources, and then 

issues a series of rules regulating GHGs 

from categories of stationary sources. 

One possible interpretation of the Act 

and EPA’s regulations is that the mobile 

source rule would trigger the 

applicability of Title V, at which point 

the hundreds of thousands of 100-ton 

and above sources would become 

subject toTtitle V and would have one 

year to apply for Title V permits. 

Generally, however, these permits 

would initially contain no applicable 

requirements for control of GHGs 

(mobile source requirements are not 

included in Title V permits), and would 

likely contain no applicable 

requirements for other pollutants, or 

only some generally applicable SIP rules 

that apply to sources which had 

previously not needed Title V permits. 

We have discussed the challenges of 

issuing even these minimal permits in 

such large numbers. However, as EPA 

proceeded to issue stationary source 

rules, each permit with three or more 

years remaining on its term would, 

289 Technically these increased resources would 

need to be provided to EPA through increased 

appropriation, as the EPA fee revenues would go to 

the general treasury. 

under current rules, have to be reopened 

within 18 months of promulgation of 

each new rule to incorporate any 

applicable requirements from the new 

rule that would apply to the permitee. 

For permits with less than 3 years 

remaining, the applicable requirements 

would be incorporated at permit 

renewal. This scenario would result in 

duplicative effort as permitting 

authorities issued hundreds of 

thousands of minimal Title V permits 

with no GHG requirements, followed by 

a period of numerous reopenings for 

some GHG source categories, while the 

requirements for other GHG source 

categories would remain off-permit until 

renewal, at which point they would 

need to be included in the renewal 

permit. We ask for comment on how 

best to tailor the options above to 

minimize duplicative effort and 

maximize administrative efficiency in 

light of these timing concerns, and on 

whether additional options may be 

needed. 

G. Alternative Designs for MarketOriented Regulatory Mechanisms for 

Stationary Sources 

EPA believes that market-oriented 

regulatory approaches merit 

consideration under section 111 or other 

CAA authorities for regulating 

stationary source emissions, along with 

other forms of regulation. Economic 

efficiency advantages of market-oriented 

approaches that have the effect of 

establishing a price for emissions were 

discussed in section III. This section 

discusses four types of market-oriented 

approaches: 

• A cap-and-trade program, which 

caps total emissions from covered 

sources, providing certainty regarding 

their future emission levels, but not 

their costs. 

• A rate-based emission credit 

program (also called a tradable 

performance standard), which imposes 

an average mass-based emission rate 

across covered sources but does not cap 

total emissions, so emissions could rise 

with increased production. 

• An emissions fee, which sets a price 

for emissions but doesn’t limit total 

emissions from covered sources. 

• A hybrid approach, which could 

combine some attributes of a rate-based 

emissions trading system and some 

attributes of a tax. A variety of hybrid 

approaches are possible; the best-known 

is the combination of a cap-and-trade 

system with a ‘‘price ceiling.’’ With a 

price ceiling, if the price of allowances 

exceeds a certain level, the government 

makes allowances available to the 

market at the ceiling price. 

For a local pollutant, a regulatory 

approach that provides certainty 

concerning future emissions can 

provide a predictable level of 

protection, within modeling 

uncertainties. In the GHG context, 

certainty concerning the amount of 

emission reduction to be achieved by a 

U.S. program can make possible an 

estimated change in predicted warming, 

but does not provide certainty that the 

U.S. will achieve a desired level of 

climate protection. This is because 

GHGs are global pollutants and the level 

of climate protection provided depends 

on the actions of other countries as well 

as the U.S. 

There is a robust debate about the 

respective merits of policies that 

provide price certainty, but not 

emissions certainty, and policies that 

provide emissions certainty, but not 

price certainty. A variety of costcontainment mechanisms have been 

proposed for GHG cap-and-trade 

systems; these mechanisms offer 

different tradeoffs between emissions 

certainty and price certainty. 

EPA requests comment on the extent 

to which CAA legal authorities would 

accommodate each of these regulatory 

approaches. In the section 111 context, 

we note that these market-oriented 

approaches could be used in lieu of, or 

in addition to, other options including 

emission rate standards, technologybased standards, or work practices. With 

respect to section 111, EPA recognizes 

that these market-oriented approaches 

may differ in significant ways from the 

manner in which we have historically 

designed emission standards and 

required compliance with those 

standards. For this reason, we request 

comment on the extent to which each of 

these approaches could meet the 

statutory definition of a ‘‘standard of 

performance’’ and on what additional 

criteria or conditions could be 

considered to ensure that they do so. We 

also seek comment on how these 

options compare based on the policy 

design considerations listed in section 

III.F.1, including effectiveness of risk 

reduction, certainty and transparency of 

results, economic efficiency, incentives 

for technology development, and 

enforceability. 

1. Emissions Cap-and-Trade 

A cap-and-trade system limits GHG 

emissions by placing a cap on aggregate 

emissions from covered sources. 

Authorizations to emit, known as 

emissions allowances, are distributed to 

companies or other entities consistent 

with the level of the cap. Each 

allowance gives the holder an 

authorization to emit a fixed amount of 

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emissions (e.g., one ton) during a given 

compliance period. At the close of the 

compliance period, sources must 

surrender allowances equal to their 

emissions during that period. Such a 

system does not impose limits on 

emissions from individual sources; 

rather, it caps emissions across a group 

of sources (e.g., an industry sector) and 

allows entities to buy and sell those 

allowances with few restrictions. Key 

features of a well-designed cap-andtrade program include accurate tracking 

and reporting of all emissions, 

compliance flexibility, and certainty 

(provided by the cap) in achieving 

emission reductions. While the cap 

provides certainty in future emissions, 

cap-and-trade does not provide certainty 

of the price, which is determined by the 

market (price uncertainty diminishes as 

certainty regarding control costs 

increases). 

EPA has previously authorized 

emissions trading under section 111. 

For instance, EPA promulgated 

standards of performance for new and 

existing electric utility steam generating 

units on May 18, 2005 (70 FR 28606), 

establishing a mercury emissions capand-trade program for coal-fired electric 

generating units that states could use to 

meet their section 111 obligations to 

control mercury for coal-fired electric 

generating units. While the court 

subsequently vacated this action, the 

ruling did not address the legality of 

trading under section 111. 

If EPA designed a cap-and-trade 

program that could cover certain source 

categories covered by section 111, such 

a program could be modeled after 

similar trading programs the Agency has 

developed under sections 110 and 111 

of the Act, such as the NOX Budget 

Trading Program, the Clean Air 

Interstate Rule NOX and SO2 Trading 

Programs, and the Clean Air Mercury 

Rule Trading Program. Under this 

model, EPA would establish appropriate 

state GHG emissions budgets covering 

emissions of GHG for each covered 

source category. EPA would establish 

consistent rules related to subjects such 

as monitoring, applicability and timing 

of allocations that states would be 

required to meet. EPA would develop 

and administer a GHG allowance 

tracking system, similar to tracking 

systems the Agency administers for SO2, 

and NOX. EPA would determine 

provisions for monitoring, reporting, 

and enforcement. If states promulgated 

rules consistent with the requirements 

set forth by EPA, sources in their State 

could participate in the trading 

program. Alternatively, states could 

develop alternative regulatory 

mechanisms to meet the emissions 

budgets. 

A key component of an emissions 

cap-and-trade program is the ability to 

accurately monitor emissions.290 For 

many, but possibly not all, large 

stationary sources, there are methods to 

monitor CO2 that may provide enough 

accuracy for a cap-and-trade program. 

Most large utility boilers are already 

required to monitor and report CO2 

emissions under the Acid Rain Program. 

Utility and industrial boilers are well 

suited to cap-and-trade; many 

participate in SO2 and NOX trading 

under the Acid Rain and NOX SIP Call 

programs. At refineries, some emission 

sources could be well suited to cap-andtrade, while for others, accurate 

monitoring methods or other ways to 

track and verify emissions may not be 

available. More analysis is needed to 

determine availability of monitoring 

methods for all refinery emission 

sources. The cement industry is another 

that may be well suited to emissions 

cap-and-trade, since monitoring is 

available and a number of facilities 

currently participate in NOX trading 

under the NOX SIP Call. Cap-and-trade 

may not be an appropriate mechanism 

for the landfills, except for potential use 

of landfill gas projects for offsets. The 

quantity of landfill methane captured 

and combusted (i.e., the emission 

reduction) can be measured directly; 

however, total emissions are difficult to 

measure. 

We request comments generally on 

the use of cap-and-trade programs for 

GHGs under section 111 and other CAA 

authorities, including design elements 

such as opportunities for sources to opt 

into such programs, inter-sector trading 

and offsets, allowance auctions, cost 

containment mechanisms, and 

conditions or safeguards to ensure that 

emission reduction goals are met and 

that local air quality is protected. 

Particular issues to consider include 

whether it be allowable under section 

111 to develop a cap-and-trade program 

that covered multiple source categories 

or would each source category have to 

be covered under a source-categoryspecific cap-and-trade program. Another 

issue is whether it would be legally 

permissible to allow offsets (i.e., 

obtaining emission reductions from 

sources outside of the capped sector) to 

meet the requirements of section 111. 

290 While monitoring is important for determining 

compli,ance in all regulatory emission reduction 

approaches, in a cap-and-trade system monitoring 

is also important for functioning of the allowance 

market. 

2. Rate-Based Emissions Credit Program 

A rate-based emissions credit 

program—also called a tradable credit 

standard or intensity target program—is 

an emissions trading mechanism. 

Unlike cap-and-trade, however, a ratebased credit program does not impose a 

cap on aggregate emissions from 

covered sources. Rather, a rate-based 

emissions credit program establishes a 

regulatory standard based on emissions 

intensity (e.g., emissions per unit of 

input, emissions per unit of product 

produced, emissions per revenue/valueadded generated). To the extent that a 

covered source has an emission rate 

below the regulatory intensity standard, 

the source generates credits that it can 

sell to sources with emission rates 

higher than the regulatory intensity 

standard. The price of credits would be 

determined by the market.291 The 

regulatory intensity standard might be 

set below the recent average intensity 

for a given industry.292 Once in place, 

the standard would determine the 

average emissions intensity (or rate) of 

the regulated industry. 

Like a cap-and-trade approach, a ratebased trading approach can reduce the 

cost of reducing emissions from a group 

of sources, relative to the cost of 

requiring every source to reach the same 

emission rate. A drawback of the ratebased approach is that it provides an 

incentive to increase whatever is used 

in the denominator of the rate (e.g., the 

output of a good or the amount of a 

particular input). Therefore, rate-based 

policies can encourage increased 

production because production can be 

rewarded with additional credits. This 

in turn has the potential to encourage 

increased emissions and thus to raise 

the overall cost of achieving a given 

level of emissions. 

Many of the considerations described 

above for cap-and-trade program design 

291 Credits are generated by a source with 

emissions below the regulatory intensity (or rate). 

Credits are measured in a fixed unit of emissions, 

e.g., a ton. A source that emits at an intensity higher 

than the regulatory intensity must surrender 

credits—purchased from a source with emissions 

below the regulatory intensity or other entity 

holding credits—equivalent to the difference 

between their actual emissions and the allowable 

emissions. 

292 The average intensity could be set using any 

of a number of metrics and baselines. For example, 

the metric might be tons of CO2 emitted per ton of 

cement produced. The baseline year for calculating 

average intensity might be the same as the 

compliance year, i.e., after the close of the 

compliance year, the average tons CO2 emitted per 

ton of cement produced would be calculated across 

the industry and a source that produced with 

emissions above the average would need to buy 

credits while a source that produced with emissions 

below the average could sell credits. Alternatively, 

the average intensity could be based on a year prior 

to the initial compliance year. 

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44516 Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 

would also apply to design of a ratebased credit program. Measuring 

outputs to determine the regulatory 

intensity may present some difficulty. In 

particular, determining the intensity for 

facilities that generate multiple products 

would be challenging. Sectors that use 

multiple inputs (e.g., different fuels) 

might require use of a common metric 

(e.g., Btu combusted) to support a ratebased approach based on inputs. 

Rate-based trading programs are most 

easily applied in a specific sector where 

facilities have similar emissions 

characteristics. For utility and industrial 

boilers, a rate-based credit standard 

could be established for GHG emissions. 

For refineries, rate-based credit 

standards could be established for 

individual processes or equipment but 

would be difficult to set at the facility 

level. A GHG emissions rate-based 

tradable credit standard could be 

developed for the Portland cement 

industry. This mechanism may not be 

appropriate for landfills (see discussion 

of monitoring above). 

We request comments on the use of 

emission rate trading programs under 

section 111 or other CAA authorities. 

Similar to cap-and-trade programs, we 

are seeking comment on whether sectorspecific programs or inter-sector 

programs might be more appropriate. 

We also request comment on issues 

related to defining emission rates for 

facilities producing multiple types of 

products. 

3. Emissions Fee 

A GHG fee would limit GHG 

emissions by placing a price on those 

emissions. The price is fixed up front 

(unlike cap-and-trade where the price 

depends on the market), and a source 

covered by the tax would pay to the 

government the fixed price for every ton 

of GHG that it emits. A GHG fee permits 

the aggregate amount of emissions to 

adjust in response to the tax, in contrast 

to a cap-and-trade system where the 

quantity of emissions is fixed. Some key 

features of a GHG fee include accurate 

tracking and reporting of all emissions 

from covered sources, compliance 

flexibility, and certainty in the price of 

emissions (but not certainty in future 

emissions because there is no cap). As 

noted in the cap-and-trade subsection 

above, the emissions of CO2 from most 

large utility boilers are already 

accurately monitored; this attribute 

would facilitate application of an 

emissions tax (as well as facilitating 

application of a cap-and-trade system). 

Depending on the specific authority 

granted by Congress with respect to the 

disposition of revenue, the revenue 

generated by the fee (as with potential 

auction revenues under a cap-and-trade 

approach) could theoretically be used 

for any number of public purposes. Note 

that depending on how the money was 

spent, the use of the revenues would 

have the potential either to reduce or to 

increase market distortions that reduce 

economic welfare. 

The issue of whether the CAA 

authorizes emissions fees is discussed 

above in section III.F.2. 

4. Hybrid Market Based Approach 

A hybrid, market-oriented approach 

that could be used to regulate GHG 

borrows from pollution control options 

that are based on setting emissions rates, 

emissions credit trading, and emissions 

fees. This approach starts with a ratebased emissions credit program in 

which an average emission rate (e.g., 

tons of GHGs emitted per unit of output 

or input) would be established for a 

given industry. As with a typical ratebased policy, a source in the given 

industry would need to buy credits to 

the extent it produces with emissions 

over the average intensity, and could 

sell credits to the extent it produces 

with emissions below the average. An 

element of an emissions fee approach 

would then be added to this policy in 

which the government would also buy 

and sell credits. The government could 

set a price for credits based on selected 

policy criteria, and offer credits to 

sources at that predetermined price. 

Sources could then buy credits from the 

government as well as other regulated 

sources. Therefore, the government-set 

price would act as a price ceiling (or 

‘‘safety-valve’’), and the potential for 

price fluctuations in emissions credits 

would be diminished (because the 

government’s predetermined price 

would act as a ceiling price). As long as 

relatively cost-effective GHG emissions 

reductions could occur within a covered 

sector over time, the average emissions 

intensity may decline and total 

reductions in emissions would occur in 

a relatively cost-effective manner 

without significant government 

handling of emissions fee revenues. In 

addition to being a seller, the 

government could also act as a buyer (so 

the government sales of credits would 

not result in an excess supply). A 

similar approach without the 

government’s role in selling credits at a 

ceiling price and with a fixed schedule 

of allowable average annual rate of 

allowable emissions was actually 

successfully used in the phase down of 

lead in gasoline in the 1980s by EPA. 

Some have suggested that the 

government could set a price for GHG 

credits or allowances based on its 

assessment of those benefits to be 

gained from the GHG emissions 

reduction per unit of output or input. In 

theory, under this approach the 

marginal compliance costs would never 

exceed the marginal benefits of reducing 

emissions. Note, however, that there are 

serious issues to be resolved regarding 

whether and how a defensible single 

estimate of marginal GHG reduction 

benefits can be developed for this 

purpose (see section III.G). First, 

whether the scope of benefits counted is 

global or domestic could significantly 

affect the marginal benefits estimate. 

Second, for benefits categories that can 

be quantified and monetized, there are 

many uncertainties that result in a range 

of legitimate estimates, making it 

difficult to pinpoint an appropriate 

number. Third, there is a bias toward 

underestimating benefits of GHG 

reductions because many impacts 

categories identified by the IPCC are not 

quantified and monetized.293 As a 

result, the price might be set too low to 

achieve the amount of emissions 

reductions that would be warranted 

considering all benefits and policy 

goals. 

By including this discussion, EPA is 

not taking a position on whether it has 

legal authority to pursue a hybrid 

market-oriented approach. (See section 

III.F.2 above.) However, the agency 

seeks comment on the general matter of 

how the pricing of credits within an 

emissions intensity approach might be 

designed and established, what legal 

authority would be necessary for this 

action, and what impact different pricesetting approaches would have on 

aggregate emissions reductions, costs 

and benefits. 

VIII. Stratospheric Ozone Protection 

Authorities, Background, and Potential 

Regulation 

A. Ozone Depleting Substances and 

Title VI of the Clean Air Act 

Title VI of the CAA provides authority 

to protect stratospheric ozone, a layer 

high in the atmosphere that protects the 

Earth from harmful UVB radiation. 

Added to the CAA in 1990, Title VI 

establishes a number of regulatory 

programs to phase out and otherwise 

control substances that deplete 

stratospheric ozone. These ozonedepleting substances (ODS) are used in 

many consumer and industrial 

applications, such as refrigeration, 

293 There also are policy considerations that 

would be neglected by an approach attempting to 

find a point at which marginal costs equal marginal 

benefits. Examples include irreversibility of 

changes in climate with adverse impacts affecting 

future generations who cannot take part in today’s 

decision-making, and unequal geographic 

distribution of adverse climate change impacts. 

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building and vehicle air conditioning, 

solvent cleaning, civil aviation, foam 

blowing, and fire extinguishing, and 

even in small but important uses such 

as metered dose inhalers. 

Many ODS and some of the 

substances developed to replace them 

(e.g., HFCs) are also potent GHGs. As 

described below, Title VI programs have 

already achieved significant reductions 

in emissions of ODS and thus in 

emissions of GHGs. However, the ODS 

being phased out are not among the six 

major GHGs addressed by this notice. 

Because these ODS are already being 

addressed by international and national 

requirements for protecting 

stratospheric ozone, they are not 

covered by UNFCCC requirements, the 

President’s May 2007 directive or many 

other efforts to address climate change. 

Similarly, the discussion in this notice 

of a potential endangerment finding for 

GHGs does not include in its analysis 

the ODS being phased out. 

In this section of the notice, we briefly 

describe Title VI regulatory programs as 

they relate to ODS because of the GHG 

emission reductions they achieve. We 

also consider the Title VI program for 

regulating ODS substitutes, since some 

substitutes are also GHGs. Since our 

focus in this notice is on potential use 

of the CAA to control the six major 

GHGs, we also examine the general 

authority in section 615 as it might be 

used to control those GHGs. However, 

as further explained below, section 615 

would be available for that purpose only 

to the extent that EPA finds that 

emissions of the major GHGs are known 

or reasonably anticipated to cause or 

contribute to harmful effects on 

stratospheric ozone or otherwise affect 

the stratosphere in a way that may 

reasonably be anticipated to endanger 

public health or welfare. Unlike other 

CAA provisions examined in this 

notice, section 615 would not be 

triggered by a finding that one or more 

GHGs cause or contribute to air 

pollution that may reasonably be 

anticipated to endanger public health or 

welfare. The potential applicability of 

section 615 to the major GHGs depends 

on whether specified findings related to 

the stratosphere or ozone in the 

stratosphere could be made. In this way, 

Title VI is significantly different from 

other CAA titles that provide more 

general regulatory authority to address 

air pollutants that meet an 

endangerment test. 

1. Title VI Regulatory Programs 

Existing Title VI programs are largely 

focused on reducing and otherwise 

controlling ODS to protect stratospheric 

ozone. The cornerstone Title VI program 

is a graduated phaseout of ODS that 

implements similar requirements in the 

Montreal Protocol on Substances that 

Deplete the Ozone Layer, an 

international treaty to which the U.S. is 

a party. The Title VI phaseout program 

relies on a system of marketable 

allowances to control overall U.S. 

consumption (defined as production + 

imports¥exports) consistent with the 

Protocol’s requirements. EPA tracks 

production, export, and import of ODS, 

as well as transactions in ODS 

allowances reflecting the flexibility 

inherent in the program’s marketoriented approach. This ensures 

compliance with U.S. consumption caps 

established under the Protocol. The 

program also allows exemptions from 

the phaseout to ensure that supplies of 

ODS critical to certain sectors, like the 

agricultural fumigant methyl bromide, 

are available until alternatives 

adequately penetrate the marketplace. 

Other Title VI provisions supplement 

the phaseout program in a variety of 

ways that enhance ozone layer 

protection. Under these provisions, EPA 

has established a national ODS 

recycling and emission reduction 

program, bans on nonessential ODS 

uses, a program for labeling ODScontaining products, and the Significant 

New Alternatives Policy (SNAP). Under 

the SNAP program, EPA reviews and 

approves substitutes for ODS to help 

spur the development and uptake of 

safer alternatives. Finally, Title VI 

authorizes EPA to accelerate the 

schedule for phasing out ODS as 

warranted by scientific information, the 

availability of substitutes, or the 

evolution of the treaty’s requirements 

pursuant to international negotiations 

among Parties to the Montreal Protocol. 

Title VI has achieved large reductions 

in ODS consumption and emissions, 

and consequently has reduced GHG 

emissions and slowed climate change. 

According to a recent study, by 2010 

ozone layer protection will have done 

more to mitigate climate change than 

the initial reduction target under the 

Kyoto Protocol, amounting to avoided 

emissions of 11 billion metric tons of 

CO2 equivalent per year, or a delay in 

climate impacts by about 10 years.294 

Because some ODS substitutes are 

GHGs, some have asked whether the net 

effect of the Protocol on climate has 

been beneficial. Recent research has 

demonstrated that the climate impact of 

ODS (e.g., chlorofluorocarbons (CFCs), 

hydrochlorofluorocarbons (HCFCs)), 

compared to CO2 emissions from fossil 

fuel combustion, fell from about 33 

percent in 1990 to about 10 percent in 

2000. The following graph shows how 

the shift over time toward ODS 

alternatives under Title VI has created a 

marked downward trend for GHG 

consumption in sectors that use ODS 

and their substitutes, even while these 

uses have grown with the U.S. economy 

and population. As can be seen below, 

consumption of the ODS (CFCs, HCFCs, 

etc.) in 2004, although significantly 

lower than peak ODS emissions in 1990, 

were actually greater than consumption 

of HFCs, which are substitutes for CFCs 

and HCFCs. 

In view of the GHG emission 

reduction benefits of existing Title VI 

programs, EPA seeks public comment 

on how elements of the existing Title VI 

program could be used to provide 

further climate protection while 

assuring a successful completion of the 

ODS phaseout, including a smooth 

transition to alternatives. 

BILLING CODE 6560–50–P 

294 Velders, G.J. et al., The Importance of the 

Montreal Protocol in Protecting Climate, 

Proceedings of the National Academy of Sciences, 

March 2007. 

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44518 Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 

2. Further Action Under the Montreal 

Protocol 

The Montreal Protocol has been and 

will continue to be an important, if 

limited, step in addressing climate 

change. At the 19th Meeting of the 

Parties in September 2007, the Parties 

agreed to more aggressively phase out a 

class of ODS, the 

hydrochlorofluorocarbons (HCFCs). The 

agreement to adjust the phase-out 

schedule for HCFCs is expected to 

reduce emissions of HCFCs to the 

atmosphere by 47 percent, compared to 

the prior commitments under the treaty 

over the 30-year period of 2010 to 2040. 

For the developing countries, the 

agreement means there will be about a 

58 percent reduction in HCFC emissions 

over the same period. 

The climate benefits of the faster 

phase-out of HCFCs will depend to 

some extent on technology choices in 

the transition from HCFCs. The 

estimated climate benefit of the new, 

stronger HCFC phase-out may be 

approximately 9,000 million metric tons 

of CO2e. A byproduct of the 

manufacture of HCFC–22 is 

hydrofluorocarbon-23 (HFC–23), a gas 

that does not damage ozone in the 

stratosphere but has a very high GWP. 

Because this gas is produced in higher 

quantities in lower efficiency 

production, to the extent that HCFC–22 

production in the developing world 

remains uncontrolled, additional HFC– 

23 would be created. Thus, the 

agreement to sharply limit future 

developing world production of ODS 

represents an important opportunity for 

climate protection, as well as ozone 

layer recovery, as the President 

recognized in his April 16, 2008 speech 

on climate change. 

B. Title VI Authorities Potentially 

Applicable to the Major GHGs 

As mentioned previously, the 

framework created by Title VI could be 

effective in achieving GHG reductions 

by reducing and controlling ODS and 

ODS substitutes through existing 

mechanisms for tracking production, 

evaluating new safer alternatives, and 

addressing the needs of the major 

contributing subsector, refrigeration and 

air conditioning, through technician 

training, emission reduction and 

recycling. In this section we review 

Title VI provisions that could 

potentially apply to efforts to reduce the 

major GHGs that are not also ODS or 

ODS substitutes. 

Title VI mostly includes provisions 

specific to individual ODS and 

programs. The provisions generally 

apply to ‘‘class I’’ or ‘‘class II’’ ODS. 

Title VI requires EPA to list specified 

substances as class I and class II ODS, 

and authorizes EPA to add other 

substances to either category if the 

Agency makes certain findings 

regarding the substance’s effect on 

stratospheric ozone (see sections 602(a) 

and (b)). One important difference 

between class I and class II ODS is that 

class I substances include the most 

potent ODS; section 602(a) requires EPA 

to list as class I substances all 

substances with an ozone depletion 

potential of more than 0.2.295 

Title VI also requires EPA to publish 

the global warming potential (GWP) of 

each listed ODS. Section 602(e) further 

provides that the requirement to publish 

295 The ozone depletion potential (ODP) of a 

chemical measures its ability to reduce 

stratospheric ozone compared to a common ODS 

known as CFC–11. While this and another common 

ODS have ODPs of 1.0, the ODPs of class I and class 

II ODSs known to be in use range from 0.02 to 10. 

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Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 44519 

GWP for a listed substance ‘‘shall not be 

construed to be the basis of any 

additional regulation under’’ the CAA. 

Since the major GHGs being 

addressed in this notice have no ozone 

depletion potential, it appears that the 

Title VI provisions that authorize 

regulation of listed ODS are of limited 

potential use for regulating those GHGs. 

EPA requests comment on the potential 

applicability of ODS-specific Title VI 

authorities, and the significance of the 

section 602(e) language quoted above for 

regulation of GHGs under Title VI. 

1. Section 615 

In addition to the specific provisions 

that authorize regulation of listed ODS 

and in some cases ODS substitutes, Title 

VI also includes general authority in 

section 615 to protect the stratosphere, 

especially stratospheric ozone. Section 

615 states: 

If, in the Administrator’s judgment, any 

substance, practice, process, or activity may 

reasonably be anticipated to affect the 

stratosphere, especially ozone in the 

stratosphere, and such effect may reasonably 

be anticipated to endanger public health or 

welfare, the Administrator shall promptly 

promulgate regulations respecting the control 

of such substance, practice, process or 

activity, and shall submit notice of the 

proposal and promulgation of such 

regulation to the Congress. 

While Title VI was added to the CAA in 

1990, a provision largely identical to 

section 615 was added to the Act in 

1977, soon after concerns about the 

effects of some substances on the 

stratosphere were initially raised. In 

1988, EPA promulgated regulations 

implementing the first round of 

requirements of the Montreal Protocol 

through a system of tradable allowances 

under section 157(b) of the CAA as 

amended in 1977. Section 157(b) was 

subsequently modified by the 1990 

Amendments and became section 615. 

Since 1990, EPA has rarely relied on 

the authority in section 615 to support 

rulemaking activity, since the activities 

that the Agency regulates to protect 

stratospheric ozone have generally been 

addressed under the more specific Title 

VI authorities. However, in 1993 EPA 

did rely on section 615 to promulgate 

trade restrictions in order to conform 

EPA regulations to Montreal Protocol 

provisions on trade with countries that 

were not Parties to the Protocol. (March 

18, 1993, 58 FR 15014, 15039 and 

December 10, 1993, 58 FR 65018, 

65044). These trade restrictions 

prevented shipments of ODS from the 

U.S. to countries with no regulatory 

infrastructure to control their use. 

Promulgating these restrictions reduced 

the release of ODS into the atmosphere, 

thereby reducing harmful effects on 

public health and welfare. The 

restrictions also resulted in eliminating 

the U.S. as a potential market for ODS 

produced in non-Parties, thereby 

discouraging shifts of production to 

non-Parties and limiting the potential 

for undermining the phaseout. 

Section 615 authority remains 

available when other CAA authorities 

are not sufficient to address effects on 

the stratosphere, especially ozone in the 

stratosphere. For example, in the late 

1990s, EPA, the National Aeronautics 

and Space Administration (NASA), and 

the Federal Aviation Administration 

(FAA) considered options for addressing 

potential ozone depletion resulting from 

supersonic commercial aircraft. EPA 

and NASA analyzed the impacts from a 

theoretical fleet of supersonic 

commercial aircraft, known as High 

Speed Civil Transport (HSCT), and in an 

October 1998 Memorandum of 

Agreement between the two agencies 

(signed by Spence M. Armstrong, 

Associate Administrator for Aeronautics 

and Space Transportation Technology 

(NASA) and Robert Perciasepe, 

Assistant Administrator for Air and 

Radiation (EPA)) noted the potential to 

rely on section 615 in conjunction with 

other regulatory authorities.296 

While section 615 sets forth the 

authority and responsibility of the 

Administrator to address effects on the 

stratosphere in order to protect public 

health and welfare, EPA recognizes that 

this authority was intended to augment 

other authorities and responsibilities 

established by Title VI. EPA does not 

believe this authority is a basis for 

prohibiting practices, processes, or 

activities that Congress specifically 

exempted elsewhere. For example, EPA 

does not intend to promulgate 

regulations eliminating the exceptions 

from the ODS phaseout for essential 

uses as established by section 604. 

For section 615 authority to be used, 

a two-part endangerment test unique to 

that section must be met. First, the 

Administrator must find, in his 

judgment, that ‘‘a substance, practice, 

process or activity may reasonably be 

anticipated to affect the stratosphere, 

especially ozone in the stratosphere.’’ 

Second, he must determine that ‘‘such 

effect may reasonably be anticipated to 

endanger health or welfare.’’ To 

determine the potential applicability of 

section 615 to major GHGs, EPA thus 

would have to consider whether 

available scientific information supports 

making the requisite findings. 

The effect on the stratosphere of GHG 

emissions and of climate change 

generally is a topic of ongoing scientific 

study.297 Recent science suggests that 

feedback mechanisms exist that allow 

temperatures in the stratosphere and 

troposphere to be mutually reinforcing 

or mutually antagonistic depending on 

a number of factors, including the 

latitude at which the ozone loss occurs. 

Further research is underway to better 

understand these interactions. While it 

is beyond the scope of this notice to 

assess and analyze the available 

scientific information on the effect of 

GHGs on the stratosphere, EPA requests 

comment on how evolving science 

might be relevant to the Agency’s 

potential use of section 615. More 

specifically, EPA requests comment on 

how scientific research might help 

resolve areas of ambiguity in the 

relationship between GHGs, effects on 

the stratosphere, and climate change, 

and how this might help the 

Administrator make appropriate 

judgments in applying the two-part test 

of section 615. 

If the requisite endangerment finding 

is made, the regulatory authority 

provided by section 615 is broad. While 

most Title VI authorities are applicable 

to class I or class II substances or their 

substitutes, section 615 authorizes 

regulation of ‘‘any substance, practice, 

process, or activity’’ which EPA finds 

meets the two-part endangerment test. 

As noted elsewhere in this notice, 

depending on the nature of any finding 

made, section 615 authority may be 

broad enough to establish a cap-andtrade program for the substance, 

practice, process or activity covered by 

the finding, if appropriate. Title VI 

provisions provide other examples of 

possible regulatory approaches, such as 

maximizing recapture and recycling and 

requiring product labeling. EPA requests 

comment on possible regulatory 

approaches under section 615 and how 

those approaches would be affected by 

the particular endangerment finding 

that is a prerequisite to the use of 

section 615 authority. 

2. Section 612 

Section 612 is also relevant to today’s 

notice to the extent a GHG may be used 

as a substitute for an ODS. CAA section 

612 provides for the review of 

alternatives to ODS and the approval of 

substitutes that do not present a risk 

more significant than other alternatives 

that are available. Under that authority, 

the SNAP program has worked 

collaboratively for many years with 

industries, user groups, and other 

297 See, e.g., World Meteorological Organization, 

Global Ozone Research and Monitoring Project— 

Report No. 50, Scientific Assessment of Ozone 

Depletion: 2006, Ch. 5, Climate-Ozone Connections. 

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44520 Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 / Proposed Rules 

stakeholders to create a menu of 

alternatives that can be substituted for 

the ODS as they are phased out of 

production in the U.S. 

In recent years, industry partners in 

the motor vehicle air conditioning 

(MVAC) sector have urged EPA to 

identify and approve appropriate new 

substitutes to allow for the 

implementation of a world-wide 

platform that will satisfy the needs of 

the U.S. market while also meeting new 

requirements in the European Union, 

which call for a transition over 

approximately six years beginning with 

the 2011 model year into non-ODS 

alternatives with Global Warming 

Potentials (GWPs) of less than 150. 

To address these concerns, EPA 

proposed in September 2006 a SNAP 

rulemaking that provided for the use of 

CO2 and HFC–152a in MVACs (71 FR 

55140 docket no. EPA–HQ–OAR–2004– 

0488). In a separate action (INSERT FR 

CITE), EPA has made final the portion 

of the rulemaking related to HFC–152a. 

This substitute meets the EU 

requirements, while also providing a 

new avenue for automakers to replace 

ODS. We believe we should issue 

guidance on the use of CO2 as an MVAC 

alternative in the context of the broader 

considerations of regulating GHGs set 

forth in this notice. We have included 

in the docket cited above a summary of 

our proposal regarding CO2 as an 

alternative from MVACs. This summary 

reflects our latest thinking on the safe 

use of CO2 in those systems. 

List of Subjects in 40 CFR Chapter I 

Environmental protection, Air 

pollution control. 

Dated: July 11, 2008. 

Stephen L. Johnson, 

Administrator. 

[FR Doc. E8–16432 Filed 7–29–08; 8:45 am] 

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