# Determinations Concerning Need for Error Correction, Partial Approval and Partial Disapproval, and Federal Implementation Plan Regarding Texas ’s Prevention of Significant

Deterioration Program ; Proposed Rule

Response to Comments(This page intentionally left blank.)

# Determinations Concerning Need for Error Correction, Partial Approval and Partial Disapproval, and Federal Implementation Plan Regarding Texas ’s Prevention of Significant Deterioration Program; Proposed

Rule

Response to Comments

New Source Review Group Air Quality Policy Division Office of Air Quality Policy and Standards

U. S. Environmental Protection Agency Research Triangle Park, NC 27711

April 2011(This page intentionally left blank.)i 

## Table of Contents

Acronyms and Abbreviations

................................ ................................ ................................ ..... ii

1 Introduction

................................ ................................ ................................ ........................... 1

1.1 Background

................................ ................................ ................................ .................... 1

1.2 The Commenters

................................ ................................ ................................ ............ 1

1.3 Organization of This Document

................................ ................................ ...................... 1

2 Oral Testimony at the Public Hearing and Mass Comment Campaigns

................................ .. 5

2.1 Oral Testimony at the Public Hearing

................................ ................................ ............. 5

2.2 Mass Comm ent Campaigns

................................ ................................ ............................ 5

3 General Comments on the Proposed Rulemaking

................................ ................................ .... 9

4 Comments on EPA’s Determination that It Erred in Approving Texas’s PSD program

........ 10

5 Comments on EPA’s Approach for Correcting Its Erroneous Approval

............................... 23

5.1 Comments on CAA Section 110(k)(6) Authority

................................ .......................... 23

5.2 Comments on CAA Section 301 Authority

................................ ................................ ... 45

5.3 Comments on Inherent Authority under the APA and the Act

................................ ....... 47

5.4 Other Comments on EPA’s Error Correction

................................ ................................ 52

6 Comment s on the Proposed FIP

................................ ................................ ........................... 56

7 Comments on Other Topics

................................ ................................ ................................ . 57

7.1 Comments on a “Construction Ban”

................................ ................................ ............. 57

7.2 Comments on the Interim Final Rule

................................ ................................ ............ 63

7.3 Other Comments

................................ ................................ ................................ .......... 66ii 

## Acronyms and Abbreviations

Act Clean Air Act (42 U.S.C. 7401

– 7671q)

CAA Clean Air Act (42 U.S.C. 7401

– 7671q)

CFR Code of Federal Regulations

EPA U.S. Environmental Protection Agency

FIP Federal Implementation Plan

FR Federal Register

GHG Greenhouse Gas

NAAQS National Ambient Air Quality Standards

NSR New Source Review

PM 10 Particulate matter less than 10 micrometers

PSD Prevention of Significant Deterioration

SIP State Implementation Plan

TACB Texas Air Control Board

U.S.C. United States Code1 

## 1 Introduction

**1.1 Background** 

T he U.S. Environmental Protection Agency (EPA or “we”) proposed to correct our previous full approval of Texas ’ s Clean Air Act (CAA or Act ) Prevention of Significant Deterioration (PSD) program to be a partial approval and partial disapproval and propos ed a Fe deral Implementation Plan (FIP) for Texas. 1 This action wa s based on EPA ’ s determination

that Texas ’ s PSD program is flawed because the state did not address how the program would apply to all pollutants that would become newly subject to regulation in th e future, including

non

- National Ambient Air Quality Standard (NAAQS) pollutants, among them greenhouse gases (GHGs). The partial disapproval requires EPA to promulgate a FIP

, and so EPA is also propos ed

a FIP in order to assure that GHG

- emitting sources in Texas are able to proceed with plans to construct or expand.



### 1.2 **The Commenters**

In the proposal, EPA stated that public comments were to be submitted by February 12, 2011, which f e ll on a Saturday. In order to avoid confusion and ensure that the public wa s aware that it could submit comments as late as February 14, 2011, which wa s a Monday, we extend ed the public comment period until February 14, 2011. A public hearing on the proposal was held in Dallas, Texas on January 14, 2011.

Sixty

- seven speakers p resented oral testimony at the public hearing. The oral testimony

is discussed further in Section 2.1 of this document

W e received over 5

, 3 30 comments. Of these, about 5,300 comments came from private citizens who responded to mass comment campaigns fro m environmental interest groups . These

comments are discussed further in Section 2 .2 of this document.

In addition to the mass comment campaign, w e received 2 8 unique comments , not including duplicates , requests to extend the public comment period, or letters unrelated to the rulemaking . The comments can be broken down by general type as follows: 1 7 from private

citizens

, 3 from Texas state government entities, 6 from industry associations

, 1 from an environmental advocacy group

, and 1 from a citizen education and advocacy group

. The se comments are listed at the end of this section

. The comments are summarized by topic in Sections 3 through 7 of this document.



### 1.3 **Organization of This Document**

After this introductory section, this document includes six additional sections as follows:

1 The rulemaking was proposed in the Federal Register , Volume 7 5 , pages 82,365 through 82,370 (7 5 FR

82365 ) on December 30, 2010

.2 • Section 2

– Oral Testimony at the Public Hearing and Mass Comment Campaigns

• Section 3

– General Comments on the Proposed Rulemaking

• Section 4

– Comments on EPA’s Determination that It Erred in Approving Texas’s PSD program

• Section 5

– Comments on EPA’s Approach for Correcting Its Erroneous Approval

• Section 6

– Comments on the Proposed FIP

• Section 7

– Comments on Other Topics3 

## LIST OF UNIQUE COMMENTS

Document Id a b

EPA

- HQ

- OAR

20 10

- 1033

- XXXX Title Type of Commenter

0065 Comment submitted by N. Adams Private Citizen

0111 Comment submitted by N. Wilson Private Citizen

0163 Comment submitted by D. Kocurek Private Citizen

0164 Comment submitted by B. Cox Private Citizen

0172 Comment submitted by F. Hobin Private Citizen

0173 Comment submitted by E. McLarty Private Citizen

0175 Comment submitted by M. Hoodwin Private Citizen

0190 Comment submitted by K. Wicce Private Citizen

0201 Comment submitted by M. Carter Private Citizen

0203 Comment submitted by M. Hamaker Private Citizen

0211 Comment submitted by L. Gorecki Private Citizen

0221 Comment submitted by K. Sieverman Private Citizen

0222 Comment submitted by D. Snowden Private Citizen

0223 Comment and attachment submitted by Todd Staples, Commissioner, Texas Department of Agriculture Texas Government Entity

0224 Comment and attachment submitted by Leslie A. Hulse, American Chemistry Council (ACC) Industry Association

0225 Comment and attachment submitted by Matthew G. Paulson, Baker Botts LLP on behalf of the Texas Industry Project (TIP) Industry Ass ociation

0226 Comment and attachment submitted by John Fainter, President and CEO, Association of Electric Companies of Texas, Inc. (AECT) Industry Association4 

## LIST OF UNIQUE COMMENTS

Document Id a b

EPA

- HQ

- OAR

20 10

- 1033

- XXXX Title Type of Commenter

0227 Comment and attachment submitted by Charles H. Knauss, Bingham McCutchen LLP; Roger R. Martella, Jr., Sidley Austin LLP; Matthew G. Paulson, Baker Botts LLP; on behalf of National Association of Manufacturers (NAM) et al. Industry Association

0228 Comment and attachment submitted by Norman W. Fichthorn, Hunton & Williams LLP for Utility Air Regulatory Group (UARG) Industry Association

0229 Comment and attachment s submitted by Mark R. Vickery, P.G., Executive Director, Texas Commission on Environmental Quality (TCEQ) Texas Government Entity

0230 Comment and attachment submitted by Vinson & Elkins LLP and Holland & Hart LLP on behalf of Coalition for Responsible Regulation, Inc. (CRR) Industry Association

0231 Comment and attachment submitted by Craig Holt Segall, Project Attorney, Sierra

Club et al. Environm ental Advocacy Group

0232 Comment and attachment s submitted by Baker & Hostetler LLP on behalf of J. Reed Clay, Jr., Office of the Attorney General, State of Texas (Texas AG) Texas Government Entity

0233 Comment submitted by M. J. McCarty Private Citizen

0234 Comment submitted by N. Lupo Private Citizen

0235 Comment submitted by D. Lawrence Private Citizen

0255 Comment submitted by M. and U. Herrmann Private Citizen

0257 Comment submitted by Karen Nicholson, President, League of Women Voters of Texas (LWV

- TX) Citizen educaton and advocacy Group

a Document ID identifies written comments found in Docket No. EPA

- HQ

- OAR

- 20 10

- 1 0 33 by document number.

b Documents submitted to the docket together appear in the docket as multiple documents with the same 4

- digit "root number" followed by a

unique extension. For example, comments received via email are generally assigned two numbers. First, the email message its elf is assigned the root number (e.g., 0001 ). Second, the attached comment document is assigned an extended number based on the root number (e.g., 0 00 1.1). Additional attachments, if any, would follow the same pattern (e.g., 0 00 1.2, 0 00 1.3, etc.). For the p urposes of this table, we listed all related

documents under the root number. In the summary text, the full document number is given.5 

## 2 Oral Testimony at the Public Hearing and Mass Comment Campaigns

**2.1 Oral**  **Testimony at the Public Hearing** 

A total of 67 persons presented oral testimony at the public hearing held in Dallas, Texas on January 14, 2011. An additional 72 persons attended the meeting but chose not to present oral testimony. A verbatim transcript of the hearing is in the docket f or this rulemaking,

Document No. EPA

- HQ

- OAR

- 2010

- 1033

- 0259

. Of these speakers, 31 identified themselves as concerned citizens, 34 persons were representing environmental or health advocacy organizations , and 2 persons identified themselves as public official s

.

Comment:

A ll of the commenters support EPA ’s proposed actions in Texas

. Nearly all of the

commenters expressed the belief that GHG s should be regulated under the Act. Many believe

that this action will not have negative impacts on the local economy. A majority of commenters

also exp ressed distrust for the Texas s tate government ’s role in protecting the environment and public health. In addition, many of these commenters described environmental degradation they

have witnesse d or threats to the environment in their areas. Many of the comments specifically mentioned concern for the growing number of natural gas wells being drilled in their neighborhoods and towns.

Response:

We agree with the commenters that our proposed action is justified and appropriate.
However, t his action is not specifically related to the regulation of natural gas drilling in Texas. This action is limited to the PSD program as it applies to large sources emitting GHG emissions

i n Texas.



### 2.2 **Mass Comment**  **Campaigns**

We received many comments from private citizens inspired by five mass comment campaigns. Most of these commenters submitted the templates provided by the sponsoring organizations without change, but others customized the templates to some degree.

Comment s :

Comment 00 67 represents a mass comment campaign organized by the Sierra Club,

which was submitted essentially verbatim by 1 ,8 45 commenters . The comment reads as follows :

Dear Administrator Jackson,6 Thank you for the positive steps you have taken by addressing carbon pollution in

Texas’ s air permitting program. This is an important first step in correcting the air quality of Texas. EPA ’ s action to step in and issue permits under federal law for carbon pollution i s both necessary and a huge step toward protecting citizens

from their own failed state government. Your recent actions will make sure that businesses in Texas can get the construction permits they need this year. But now is the time to do more by protec ting our public health

-- not just Texas industry.

As you know, Texas’ s air permitting program is broken in multiple ways and only you can protect our health and ensure that Texas ’ s businesses comply with the

law of the land. Texas refuses to comply with federal law. Among its many flaws, the program refuses to address carbon pollution, its flexible permit programming is illegal, it inadequately enforces its approved air permitting programs, it fails to adequately promote public participation. Texas’ s refusal to apply federal law has no basis and puts the health of citizens and jobs at risk.

Now is the time for you to please do more to fix Texas's air permitting program once and for all.

An additional 15 3 commenters submitted comment s via the Sierra Club campaign, most incorporating some or all of the same points. 2 In addition, m any of these commenters described environmental degradation they have witnesses or threats to the environment in their areas and/or expressed dissatisfaction with the Texas s tate government for what they perceive to be shortcomings in environmental protection.

Comment 0250 represents a campaign organized by the Greenpeace. It consists of a petition with 429 signers and reads as follows:

Dear Administrator Jackson,

Thank you for taking steps to limit pollution from coal

- fired power plants. These facilities threaten the health of communities here in Texas and fuel dangerous climate change. Texas’ s refusal to comply with common

- sense federal standards puts our health and the future of our planet at risk. Currently, several elements of

the [Texas C ommission on Environmental Quality’s] permitting program are in violation of the Federal Clean Air Act. EPA has the legal obligation and moral duty to intervene and fix Texas’ s air permitting program.

Comment 0251 represents a mass comment campaign sponsored by the National Wildlife Federation, which was submitted without change by 2,153 commenters. Three additional

comment er s ( 0186, 0195, and 0197 ) ad ded slight variations

, including comments regarding

2 These are comments EPA

- HQ

- OAR

- 2010

- 1033

- 0066, 0068

- 0110, 0112

- 0162, 0165

- 0169, 0171, 0174,

0176

- 0185, 0187

- 0189, 0191

- 0194, 0196, 0198

- 0200, 0202, 0204

- 0210, 0 212

- 0216, 0218

- 0220, 0236

- 0248, and

0254.7 natural gas drilling, environmental degradation

, and dissatisfaction with the Texas s tate
government. The main comment reads as follows:

Dear Agency,

I strongly support Environmental Protection Agency ’ s action to correct Te xas’ flawed air permitting program by issuing federal permits for new or modified sources of global warming pollution. Now is the time for swift and effective

action to cut the se harmful emissions, and Texas’ obstructionist tactics are illegal,
counterpro ductive, and damaging to our local environment and economy.

By refusing to implement the federal law, Texas is attempting to block r egulations that would clean up our air while also providing the regulatory certainty that

businesses need. It is both app ropriate and necessary for EPA to step in and ensure that the Clean Air Act, our l andmark public health protection law, is

followed in Texas. I am grateful for EPA’ s leadership in finally taking action to

cut global warming pollution from the largest sour ces in the country, and urge you to continue to move forward boldly in confronting this urgent threat.

Comment 0252 represents a campaign sponsored by Environment America. It consists of a petition with 296 signers and reads as the follow s :

Dear EPA A dministrator Lisa Jackson,

Coal

- fired power plants and industrial facilities spew hundreds of thousands of tons of dangerous pollutants into our air every year. This pollution cuts short the

lives of thousands of Americans each year, and is particularly harmful to babies

and you ng children, who are at risk of developmental disorders and respiratory

illnesses.

Please protect the public from dangerous pollution and save lives by:

• Establishing strong standards for toxic pollutants like mercury, lead, soot and dioxins from industrial facilities and power plants;

• Significantly reducing global warming pollution through new standards for power plants and other stationary sources.

Please take these steps to protect the health of our families and future generati ons.

Comment 0253 represents a campaign sponsored by Environment Texas. It consists of a petition with 415 signers and reads as the follows:

Dear EPA Administrator Jackson:8 T exans are suffering from air pollution coming from the state’s refineries,

c hemical plants and power plants. Big polluters like Exxon Mobil are operating under permits that fail to meet federal standards and routinely violate even those overly generous limits.

Irresponsibly, officials at the Texas Commission on Environmental Qu ality have failed to protect public health and ensure compliance with the law.

We urge you to prepare a Federal Implementation Plan to c ompel Texas t o comply with the Clean Air Act.

Response:

We agree with the commenters that our proposed action to address carbon pollution in Texas’s air permitting program is justified and appropriate in order to allow businesses to get permits. We are not, in this action, addressing other aspects of Texas’s permitting program, including flexible air permits, Te xas’s enforcement of its current air permitting program, or opportunities for public participation in the issuance of permits by Texas. This action is not related to regulation of air toxics, or the establishment of new standards for source categories

suc h as power plants or natural gas production

.9 

## 3 General Comments on the Proposed Rulemaking

Comment:

Fourteen commenters, including 12 private citizens (0111, 0163, 0164, 0172, 0173, 0175, 0190, 0201, 0203, 0211, 0221, 0222), 1 environmental advocacy g roup ( 0231.1 ), and 1 citizen educaton and advocacy group (0257), expressed general support for our action. In contrast, ten commenters, including three Texas governmental entities (0223.1, 0229.2, 0232.1)

, six industry associations (0 224 .1

, 0 225 .1

, 0 226 .1

, 0 227 .1

, 0 228 .1

, 0 230 .1) , and one private citizen (0065) opposed the proposed rule and requested that EPA withdraw it.

The supportive private citizens (0111, 0163, 0164, 0172, 0173, 0175, 0190, 0201, 0203, 0211, 0221, 0222) generally encouraged EPA to p rovide federal enforcement of the Act in Texas. In many cases, these commenters expressed concern that the state government is not safeguarding the health of Texas’s citizens but instead favoring business interests. Often, these

comments voiced broad con cerns that were not specific to GHGs. The public interest advocacy group (0257) noted that Texas is the top emitter of carbon dioxide in the United States and strongly supported the proposed action to provide a FIP in Texas, believing that i t is clear tha t Texas is not implementing and does not intend to implement the Act with regard to GHG s. The environmental advocacy group ( 0231.1 ) similarly expressed the opinion that EPA’s action is necessary because Texas refuses to implement federal law, which requir es it to address GHG emissions from the largest industrial sources , and because Texas maintain s that its SIP does not allow Texas to comply with the Act

.

The opposing commenters ( 0065, 0223.1, 0 224 .1

, 0 225 .1

, 0 226 .1

, 0 227 .1

, 0 228 .1

, 0229.1, 0 230 .1

, 0 232

. 1) generally asserted that the interim final and proposed rules are unlawful for a variety of reasons, sometimes indicating that EPA’s action is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law . These commenters frequ ently noted that

these rules were published shortly after EPA provided Texas a deadline of December 1, 2011 to

submit revisions to its SIP. The particulars of these comments are detailed in the subsequent

sections of this document.

Response:

We agree with the commenters who stated that this action is necessary to provide a permitting authority for GHG in Texas. This rule does not, however, address other issues with regard to air permitting in Texas. Detailed comments on the rule are addressed i n the specific

sections below.10 

## 4 Comments on EPA’s Determination that It Erred in Approving Texas’s PSD program

Comment:

One commenter (0231.1) expressed support for EPA’s determination that it was in error when it approved Texas’s PSD SIP, while four other commenter s ( 0227.1, 0229.2 TCEQ, 0230.1, 0232.1 Texas AG ) disagreed. The comments are summarized in the following paragraphs.

T he supportive commenter (0231.1) noted that EPA acknowledges that it knew when it approved Texas’s SIP, that the SIP did not automatically incorporate newly

‐ re gulated pollutants. 75 F R 82340, 82438

‐ 39

, Dec ember 30, 2010. Thus, continuing pollution control was left at the state’s discretion, rather than required as a matter of law

– a gap that has led directly to today’s problems, as Texas refuses to regulate GHG s under PSD

. The commenter pointed out

that other states with SIPs that do not automatically update have made sure that they complete the necessary SIP revision process in a timely manner (with some a greeing to an interim FIP as needed), so as to prevent any significant gaps in authority. Thus, the commenter believes that no correction of their SIPs is needed.

This commenter (0231.1) indicated that s tatements by Texas and EPA at the time of the

init ial SIP approval demonstrate that the state had not made a binding commitment to keep its SIP up to date. Although a September 5, 1989, commitment letter state d that Texas intended to implement EPA requirements “as effectively as possible,” EPA did not un derstand this statement as a binding commitment to swiftly update the SIP to account for new pollutants and other requirements. Instead, EPA approved the SIP stating that it did “not intend to suggest that Texas is required to follow EPA’s interpretations and guidance issued under the Act” and that, though EPA would exercise a “vigorous oversight and enforcement role,” Texas would “remain free to follow [its] own course.” 57 F R 28,093, 28095

, June 24, 1992. The commenter believes that

the se general state ments raised serious questions, which EPA failed to address at the time of approval and never subsequently addressed in a formal determination until recently, when the full implications of the error and the extent of Texas’s refusal to meet federal require ments came
to the fore. The commenter concluded that EPA thus erred when it approved Texas’s PSD SIP in

that it fail ed to secure binding, regulatory commitments that Texas would expand its preconstruction program when the Act so required.

Response:

We agree with the comment that we made an error in previously approving the Texas SIP (0231.1) . We also agree with the comment that, while other states do not automatically update their SIPs, each of those states, unlike Texas, have taken actions to address permitting of GHG. These measures include taking steps to revise the SIP or cooperating with EPA to facilitate the timely issu anc e of a FIP so that permitting may continue in the state. We agree with the

commenter that no correction is needed at this ti me to these SIPs, in spite of the lack of a provision to automatically update to include pollutants newly subject to regulation. There are several reasons for this conclusion. First, each of these states may have addressed in other ways11 the need to apply PSD to pollutants newly subject to regulation, so that their SIPs cannot be said to be flawed. Even if not, because each of these states is taking action to assure that its GHG

emitting sources have a permitting authority available, any flaw in the SIP i s not one that requires EPA corrective action at this time. The error correction provision, CAA §110(k)(6), is discretionary, and EPA has no reason to exercise its discretion to apply this provision to those

states at this time. We disagree with commente rs that contend that we are treating Texas differently from other states. It is because Texas has stated that it will neither implement PSD requirements for GHGs by revising or committing to revise its SIP, nor cooperate with EPA to assure the timely avai lability of a permitting authority for its GHG

- emitting sources that Texas can be distinguished from other states, and that EPA’s error in previously approving the Texas PSD SIP has been made apparent and EPA’s discretionary use of the error correction pro vision is justified. This issue is discussed in more detail in the preamble to the final rule.

Comment:

One of t he opposing commenter s (0232.1 Texas AG) asserted that EPA’s approval of Texas’s PSD SIP in 1992 was correct and that EPA lacked statutory authority to do anything other than fully approve Texas’s SIP submission. The commenter provided extensive rationale for this position, which is discussed below:

The commenter stated that EPA must approve a SIP submission that comports with the

Act. The EPA’s authority to disapprove SIP submissions is limited by CAA section 110(k)(3)

, which states that EPA “shall approve such submittal as a whole if it meets all of the applicable requirements of this chapter.” United States Code , Title 42, section 74 10(k)(3) [ 42 U.S.C. 7410(k)(3) ] ; see also BCCA Appeal Grp. v. EPA , 355 F.3d 817, 826 (5th Cir. 2003) (“EPA’s role in approving air pollution control plans is limited”; the agency “must approve a plan [submittal] if it meets minimum statutory requirements”)

. Section 161 of the Act requires EPA to establish

the minimum requirements that the s tate must meet , which it has in the Code of Federal Regulations , Title 40, section 51.166 ( 40 CFR 51.166 )

.

Response:

EPA disagrees with this comment. For the reasons discussed in the preamble, EPA does not agree that the Texas SIP comports with the requirements of the Clean Air Act or 40 CFR

51.166 because

, among other things

, Texas, in adopting the SIP and revising it since, has not

addre s sed pollutants newly subject regulation

.

Comment:

The commenter went on to state that t he 40 CFR part 51 regulations did not require automatic updating or leg a l authority to require updates. The commenter referred to two part 51 regulations in this discussion

—

o At the time EPA approved Texas’ s SIP in 1992, 40 CFR 51.166 did not require approvable SIP submissions to automatically update, to contain provisions specifically addressing SIP revisions to incorporate pollutants that subsequently12 became subject to regulation under the Act, or to provide legal assurances about

matters not included in the SIP. The commenter is not aware of any regulations, interpretive decisions, or contemporaneous SIP approval actions whereby EPA took the view that automatic updating was required, no r d oes EPA identify any in

the i nterim f inal r ule.

o The regulations at 40 CFR 51.230 that interpret CAA section 110(a)(2)(E) extend only to carrying out “the plan” as approved and preventing activities that would
prevent “the attainment or maintenance of a national standard.” The regulations do not require legal authority for applying the PSD program to pollutants for which EPA has not promulgated a national standard that may be attained or

maintained. This is consistent with case law inte rpreting C AA section 110, which requires only that the s tate have legal authority to carry out the plan:

 BCCA Appeal Grp. , 355 F.3d at 844 (stating that the “plain language of the [Clean Air Act] only requires a state to give assurances that it has the fun ding, personnel, and authority to implement the plan . . . .”) (emphasis added)

.

 Sierra Club v. Larson , 2 F.3d 462, 471 n.9 (1st Cir. 1993) (this provision “requires a state to provide ‘necessary assurances’ that it has authority under state law to carry o ut the implementation plan.”)

.

 Wall v. EPA , 265 F.3d 426, 429 (6th Cir. 2001) (stating that a SIP “must also include provisions for the enforcement of the measures included in the SIP . . . as well as the commitment of adequate resources and legal authori ty to implement the enforcement measures”)

Response:

For the reasons discussed in the preamble, the Texas SIP PSD program was required to address its applicability to pollutants newly subject to regulation. The Clean Air Act provides that PSD applies to a pollutant at the time it becomes subject to regulation, without further regulatory action by EPA, CAA §§165(a)(1), 169(1); and EPA regulations have long codified this automatically updating aspect of the CAA PSD requirements. See 43 FR 26,380, 26,403/3, 26,406 (June 19, 1978) (promulgating 40 CFR 51.21(b)(1)(i)) and 42 FR 57,479, 57,480, 57,483 (November 3, 1977) (proposing 40 CFR 51.21(b)(1)(i)). Because PSD applies automatically to pollutants newly subject to regulation, SIP PSD programs must address h ow the program will cover such pollutants. See CAA §§110(a)(2(C) (requiring SIPs to include “a permit program as required in part[] C”), 110(a)(2)(J) (requiring SIPs to meet the applicable requirements of part C, relating to PSD); CAA §161 (requiring SIPs to include emission limitations and such other measures as may be necessary to prevent significant deterioration). Under CAA §110(k)(3), EPA may approve a SIP only if it meets all of the applicable requirements. EPA has never required SIP PSD programs to automatically apply to such pollutants, but if a program does not do so, then the State or the SIP must address in some other manner the applicability of the program to such pollutants. If the State or SIP fails to address such pollutants, then the PSD

p rogram does not incorporate the PSD requirement

– which, again, is clear under both the CAA and long

- standing EPA regulations

– that PSD applies to all newly regulated pollutants, and the SIP does not meet the requirements of CAA §§110(a)(2)(C) and (J) and 161, and EPA may not approve it under CAA §110(k)(3). EPA’s primary basis in this rulemaking for concluding that it erred in approving Texas’s PSD program is that at the time that EPA approved the program, the program

– as illuminated13 by Texas’s recent s tatements

-- did not address the program’s applicability to pollutants newly subject to regulation. There are several ways that the SIP could address the program’s applicability to such pollutants. One way would be for the program to automatically update to apply to any pollutant newly subject to regulation. Although the Texas SIP PSD program appears to apply by its terms to all pollutants subject to regulation, other provisions of Texas law (which are not part of the SIP) limit that applicability to pol lutants subject to regulation at the time that Texas adopts, or updates, the SIP, and preclude the program from applying to pollutants that become newly subject to regulation after Texas adopts, or last updates the SIP, and until Texas further updates the SIP. Another way that the Texas SIP PSD program could address pollutants newly subject to regulation would be a commitment or agreement to update the SIP PSD program, through a SIP revision, to apply to any pollutant newly subject to regulation. Other wa ys may be possible as well. However, in this case EPA has concluded that Texas’s PSD SIP does not address in any way the applicability of pollutants newly subject to regulation.

EPA recognizes that it could be argued that at the time EPA approved the Tex as SIP PSD program, that program met all CAA requirements due to Texas’s several commitment letters, discussed elsewhere, coupled with the fact that Texas had submitted SIP revisions to apply its PSD program to pollutants newly subject to regulation after Texas’s initial SIP submittal containing its PSD program. For the reasons discussed elsewhere, EPA does not view these commitment letters or the actions Texas took as indicating that Texas or the SIP addressed the applicability of its PSD program to all p ollutants newly subject to regulation, and this particularly so in light of recent statements. Instead, EPA’s conclusion is that Texas’s PSD program had a gap and so was flawed, and therefore EPA’s approval of that program was in

error.

However, if it w ere to be concluded that in fact, Texas’s PSD program did meet CAA requirements through the commitment letters and other actions, so that the PSD program does adequately address its applicability to pollutants newly subject to regulation, then EPA has

anot her concern that, under those circumstances, provides the basis for its action in this rulemaking. That stems from the separate CAA requirement under CAA §110(a)(2)(E)(i) that each SIP provide “necessary assurances that the State ... will have adequate ... au thority under State ... law to carry out such implementation plan (and is not prohibited by any provision of Federal or State law from carrying out such implementation plan...).” EPA has reviewed the record, the relevant parts of which are described in the pr eamble, and sees no evidence of assurances that Texas has the authority to carry out its SIP PSD program in a manner that addresses pollutants newly subject to regulation. To the contrary, Texas’s state law, which, again, is not part of the SIP, precludes automatic updating, and thus Texas is prohibited by a provision of state law from carrying out the SIP. Moreover, as discussed in the preamble, Texas has recently stated that “Texas has neither the authority nor the intention of interpreting, ignoring, o r amending its laws in order to compel the permitting of greenhouse gas emission.” This statement confirms that Texas does not view itself as having the authority to apply its SIP to cover at least one pollutant newly subject to regulation: GHGs. Althou gh Texas did not make this statement or one like it with respect to the SIP PSD program as it applied in 1992, when EPA approved that program, there is no reason to believe that Texas had broader legal authority at that time, and it is clear now that Texas did not.14 Comment:

The commenter stated that t he EPA always understood that Texas’s SIP did not “automatically update” or “address the application of PSD to pollutants newly subject to regulation. T he EPA suggest ed in the interim final rule that it did not understand that Texas’s SIP did not “address the application of PSD to pollutants newly subject to regulation, including

non

- NAAQS pollutants.” 75 FR 82450. However, EPA was well aware in 1992, and at all times since, that Texas’s SIP did not automatically update. The EPA’s claims are contrary to its other SIP actions and are internally contradictory: “ It is clear from the record that both Texas and

EPA were well aware that the Texas PSD rules’ IBR of EPA PSD r egulatory requirements did not automatically update.” 75 FR 82449.

o In 1987, Texas included a specific date in its PSD SIP to clarify that the content of its SIP pertaining to smokestack height requirements would not change with later interpretation of th e Act. Texas Air Control Board (“TACB”) Order No. 87

- 09

, July 17, 1987

. The EPA not only had full knowledge of this action, but itself suggested that Texas put the date in its SIP. Letter from William B. Hathaway, Director, Air, Pesticides and Toxics Di vision, EPA Region 6, to Allen Eli Bell, Executive Director, TACB

, July 3, 1986. In short, EPA suggested the very means by which Texas specified that its SIP did not automatically update.

o When Texas initially submitted its PSD SIP revision in 1985, EPA ha d not promulgated a NAAQS for particulate matter less than 10 micrometers ( PM 10 )

. After EPA promulgated that standard in 1987, Texas specifically revised the applicability date in its PSD SIP submission so that PM 10 would be regulated under the relevant SIP provisions. TACB Board Order No. 88

- 08

, July 15, 1988.

Texas’ s actions were made pursuant to C AA section 110(a)’s provisions for prospective SIP revisions.

 The EPA proposed to approve Texas’ s SIP on the understan ding that it was not necessary to incorporate by reference later requirements:

[T]he [Texas SIP] incorporates by reference the Federal PSD regulations (40 CFR 52.21) as they existed on August 1, 1987, which include revisions associated with the July 1, 198 7, promulgation o f revised [NAAQS] for particulate matter (52 FR 24872) and the visibility [new source review ( NSR )] requirements

noted above. . . .

57 F R 28093, 28094

, June 24, 1992

.

 The EPA further acknowledged that “any fundamental changes in the

admi nistration of PSD would have to be accomplished through amendments to the regulations in 40 C.F.R. §§ 52.21 and 51.166, and subsequent SIP

revisions.” Id. The EPA was clear that this meant that the s tate could implement its SIP according to its terms:15 Th e EPA did not intend to suggest that Texas is required to follow EPA’s interpretations and guidance issued under the Act in the sense that those pronouncements have i ndependent status as enforceable provisions of the Texas PSD SIP, such that mere

failure t o follow such pronouncements, standing alone, would

constitute a violation of the Act. . . .

. . . PSD

- SIP approved states remain free to follow their own course, provided that state action is consistent with the letter and spirit of the SIP, when read in conjunction with the applicable statutory and regulatory provisions.

57 F R 28095.

Response:

We disagree with the comment that the flaw we are correcting in the Texas SIP is the failure to automatically update the SIP. As discussed above, the flaw in the Texas SIP is the broader gap due to failure of the State, at the time it submitted (and EPA approved) the PSD

program
, to address pollutants newly subject to regulation. Both Texas and EPA were well aware that the Texas SIP did not automatically ap ply PSD to pollutants newly subject to regulation, but even so, the Texas SIP does not address in any other way how the PSD program would apply to such pollutants and the record does not reveal that either Texas or EPA raised the issue. Texas’s subsequent actions have illuminated this gap EPA disagrees with the comment concerning “fundamental changes” for the reasons discussed in the preamble for this rulemaking.

Comment:

The commenter objected to EPA ’s argument that Texas did not “provide the requisit e assurance that it had legal authority to apply” the PSD program “to pollutants newly subject to regulation, including non

- NAAQS pollutants.” 75 F R 82432. However, according to the

commenter, n either C AA section 110(a) nor the 40 CFR p art 51 regulations require that s tates provide assurances that they have legal authority to apply the PSD program to pollutants newly subject to regulation. Instead, the s tate is only required to show that it has legal authority to carry out the implementatio n plan, 42 U.S.C. 7410(a)(2)(E), 40 C FR 51.120, including specifically authority to “prevent construction, modification, or operation of a facility . . . at any location which will prevent the attainment or maintenance of a national standard.” 40 C FR

51.2 30(d). According to this commenter, i f EPA is correct that Texas’ s plan, as approved, did

not automatically update, then Texas cannot be required to have legal authority to carry out requirements tha t are not included in the plan. Similarly, because EPA has not promulgated a national standard that may be attained or maintained, the Agency correctly concluded in 1992 that Texas need not provide specific legal assurances with respect to non

- NAAQS pollutants.16 Response:

We disagree with the comment that T exas is only required to provide assurances that it has legal authority to carry out its implementation plan. The requirement under CAA section 110(a)(2)(E)(i) that each SIP provide “necessary assurances that the State ... will have adequate ... authority und er State ... law to carry out such implementation plan...” must be read in the context of the CAA mandate that SIPs meet all CAA requirements. That is, just as the SIP must meet all CAA requirements, the state must also provide assurances that the state has t he legal authority to carry out a SIP that meets all CAA requirements.

Comment:

The EPA suggest ed that Texas’ s SIP is deficient because it “did not include any information concerning Texas’ s methods or timing for” making “pollutants newly subject to

r egulation” part of the SIP. 75 F R 82450. However, according to the commenter, EPA never
suggest ed that it asked Texas or any other s tate to include this information in its PSD SIP. 75 F R

82441. Instead, the Act and the 40 CFR p art 51 regulations provide the method and timing by which new requirements may be incorporated into a SIP. Moreover, EPA appropriately does not suggest that its action is based on Texas’ s failure to meet any submitt al deadline required under

the Act or EPA’s regulations. T he EPA may not find Texas’ s SIP inadequate on this basis in the absence of default by Texas on a required deadline.

Response:

EPA made the statements, as quoted by the commenter, in the context of describing ways

that Texas could have address ed the appli cation of PSD to pollutants newly subject to regulation. These statements do not imply that this action is based on “based on Texas’s failure to meet any submittal deadline required under the Act or EPA’s regulations.” This action is

based on EPA’s error in previously approving Texas’s SIP, as discussed elsewhere in this document, and at length in the preamble. As discussed elsewhere, the CAA and reg ulation s require that PSD programs apply to pollutants newly subject to regulation. Texas’s SIP failed to address how it would do so, and it is this that is the error that EPA identified and that served as the basis for the error correction. It is true that EPA does not suggest that its action is based on Texas’s failure to meet any submittal deadline requir ed under the Act or EPA’s regulations, but, again, that is not EPA’s basis for this action.

Comment:

The commenter stated that t he EPA’s approval of Texas’s SIP is consistent with its other

SIP actions. The failure to automatically update is not a “flaw” in Texas’ s SIP

– it is an intentional feature designed to protect the rights of regulated entities and s tate

- level separation of

powers. The EPA approved Texas’ s SIP without automatic updating, provisions governing the inclusion of pollutants that become subject to regulation after the SIP was promulgated, or legal assurances on updating. This approval was consistent with EPA’s other SIP approvals, as well

as the terms of numerous SIPs that are currently in force.17 o The EPA’s consistent and longstanding practice both reinforces Texas’ s explanation that EPA was required to approve SIPs that did not automatically update or provide for revisions in the case of pollutants that are newly subject to regulation under the Act, as well as constituting a binding interpretation of the

Act. BankAmerica Corp. v. United States , 462 U.S. 122, 130

- 31 (1983) (emphasis added):

In rejecting the Government’s present interpretation of [the statute], we by no means depart from our long

- held policy of giving great weight to the contemporaneous interpretation of a challenged statute by an agency charged with a challenged statute by an agency charged

with its enforcement. But the Government does not come to this case with a consistent history of enforcing or attempti ng to enforce [the statute] in accord with what it urges now

. On the contrary, for over 60 years, the Government made no attempt, either by filing suit or by seeking voluntary resignations, to apply Section 8 to interlocks between banks and nonbanking c orporations, even though interlocking

directorates between banks and insurance companies were widespread and a matter of public record throughout the period . We find it difficult to believe that the Department of Justice and the Federal Trade Commission, which share authority for enforcement of the Clayton Act, and the Congress, which oversees those agencies, would

have overlooked or ignored the pervasive and open practice of interlocking directorates between banks and insurance companies had

it been tho ught contrary to the law

.

See also Fed. Power Comm’n v. Panhandle E. Pipe Line Co. , 337 U.S. 498, 513 (1949) (“Failure to use such an important power for so long a time indicates to us that the Commission did not believe the power existed.”); Thomas Jeffe rson Univ.

v. Shalala , 512 U.S. 504, 524 (1994) (Thomas, J., dissenting) (stating that an agency’s failure to give any substantive effect to a regulation for twenty years “certainly constitutes a ‘settled course of behavior’”)

.

o In 1990, EPA approved a Kans as SIP revision to regulate PM 10

. 55 F R 1420

, Jan uary 16, 1990. The EPA explained that this revision was necessary because Kansas, while adopting EPA’s PSD pollutant inventory by reference, did not allow automatic updating of that inventory. Id. at 1421

. Instead, the s tate implementation rules incorporated the federal regulations as of a particular date, which had to be changed to effectuate the regulation of PM 10

. Id. T he EPA explained that a SIP revision

, rather than some automatic mechanism, was th e usual and proper manner in which a s tate would address a newly regulated pollutant :
In order for states to regulate PM 10 , they must make certain changes in their rules and regulations and in the SIPs. The changes to the rules

and the SIP must ensure that the PM 10 NAAQS are attained and maintained; that new and modified sources which emit PM 10 are18 reviewed; that PM 10 is one of the pollutants to trigger alert, warning, and emergency actions; and that th e states’ monitoring networks be designed to include PM 10 monitors.

Id. at 1421. Thus, it was EPA’s working assumption that, prior to revision, a SIP (1) would not ensure the attainment of NAAQS for a newly regulated pollutant; (2) would not require revi ew of sources of such a pollutant; and (3) would not trigger actions otherwise required for regulated pollutants. Nor did EPA require Kansas to include provisions for revising its SIP in the SIP itself, or provide legal assurances on this point.

o In 2003, when EPA approved revisions to Kansas’s PSD regulations, EPA explained that the revisions was necessary to bring Kansas’s SIP up to date with the latest federal regulations: “This rule was last adopted as a State rule in 1990; therefore, this revision ad opts by reference Federal PSD regulations, as in effect on July 1, 2000.” 68 FR 8845, February 26, 2003. The rule list ed the changes to federal regulations that were, with th at action, incorporated into the SIP. Id. As before, Kansas’ s actions were tak en pursuant to the normal SIP revision process, as set forth in the Act.

o Texas’ s and Kansas’ s SIPs are not the only ones that do not automatically update.

 Florida law provides that “[a] rule may incorporate material by reference . . . only as the material exists on the date the rule is adopted.” Florida Statutes

section 120.54(1)(i). Thus, under Florida law, “changes in the material are not

effective unles s the rule is amended to incorporate the changes.” Id.

 Idaho law provides that any “incorporated material shall be identified with specificity and shall include the date when the code, standard or rule was published, approved or became effective.” Idah o Code section 67

- 5229(3). “If the agency subsequently wishes to adopt amendments to previously incorporated material,” it may do so only by complying with the usual procedures for rulemaking. Id.

 See also Oregon Administrative Rules section 340

- 200

- 002 0(100).

Response:

The premise of this comment is that the error that EPA is correcting is the failure of the Texas SIP to automatically update to apply to pollutants newly subject to regulation. This is not the case. The error that EPA is correcting is the failure of the SIP to address the applicability of PSD to pollutants newly subject to regulation, whether by automatically updating or by some other method. Accordingly, although EPA has approved PSD SIPs that do not automatically apply PSD to pollutants newly subject t o regulation, this does not mean that EPA has a long

standing practice of sanctioning PSD SIP s that do not address such pollutants, such that EPA is precluded from treating its approval of Texas’s PSD SIP as an error. Although the other states cited by th e commenter do not have PSD programs that automatically update, the commenter has not demonstrated that those PSD programs do not otherwise address pollutants newly subject to regulation. Nor does EPA agree that the fact that EPA has approved the cited PS D19 programs establishes a long

- standing practice or, if it does so, that such a practice necessarily precludes EPA from disapproving Texas’s PSD program at this time. As EPA has stated elsewhere, Texas is unique among the states because its recent statemen ts and actions concerning non

- NAAQS pollutants and GHGs have highlighted the gap in its PSD program and have justified EPA’s discretionary exercise of the error

- correction provision. In contrast, all of the other states identified by the commenter have ta ken steps to assure that their GHG

- emitting sources have available a permitting authority. For example, Kansas has updated its PSD SIP to apply to GHG

- emitting sources and Florida

, Idaho, and Oregon cooperated with EPA to assure that EPA could implement a FIP as of January 2, 2011 and thereby assure the availability of a permitting authority for GHG

- emitting sources in the state.

Comment:

The commenter states that i n 2002 EPA created a new definition of “regulated NSR pollutant” that automatically update s to address this issue in SIPs. Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Baseline Emissions Determination, Actual

- to

- Future

- Actual Metho dology, Plantwide Applicability Limitations, Clean Units, Pollution Control Projects

– Final Rule , 67 FR 80186, 80220, December 31, 2002. To the best of the commenter’s knowledge, EPA has never required the states to promulgate definitions that update aut omatically to meet the 2002 NSR Rule’s revised minimum standards for approvable SIPs. Nor has the Agency ever required states to include alternative measures in their SIPs setting forth the procedure for revisions. The creation of this voluntary rule und ercuts any claim that the failure to include automatic updating language in a SIP approved in 1992 (or at any time prior to 2002) is a “flaw” that necessitates “error

- correction.”

Response:

A s discussed elsewhere , the failure to have a SIP that automati cally updates is not the flaw that this error

- correction action seeks to correct. The flaw in the Texas SIP, that EPA mistakenly approved, is that it fails to address in any manner how PSD will be applied to pollutants newly subject to regulation . As dis cussed elsewhere in this document, and in the preamble, that could be through an automatic update, as most states do or through some other

action.

Comment:

According to the commenter, t he EPA’s SIP actions demonstrate that EPA has never before interpreted the Act or its regulations to require that PSD SIP submissions include regulatory provisions that automatically update when EPA revises its regulations or reinterprets

the Act. This long

- standing interpretation conflicts with the position EPA has taken in the

i nterim f inal r ule that Texas’s SIP is “flawed” because it does not automatically update to include “all pollutants newly subject to regulation.” 75 F R 82433.

The commenter goes o n to state that t he flaws in EPA’s position are underscored by the Agency’s own recognition that other s tates have not automatically updated their SIPs to include GHGs, but that EPA will not consider whether those other SIPs are sufficient

. 75 F R 82434. In20 short, EPA admits that Texas has been singled out not because of its SIP, but because of its statements. Moreover, EPA has singled out Texas for actions that EPA concedes in the GHG

SIP Call are lawful and within Texas’ s rights under the Act. Th e EPA’ s decision to “correct”

Texas’ s SIP alone is arbitrary and capricious, an abuse of discretion, and contrary to law.

Another of the opposing commenters (0229.2 TCEQ) made some of the same points about the fact that it has always been clear that Texas’s PS D rules are not prospective . This commenter also stated that the Texas PSD program meets all CAA requirements for an approvable program, and was not and is not flawed. The commenter assert ed that Texas has always maintained adequate legal authority to implement the PSD program, and that EPA is now creating a new requirement that does not exist in the Act or the 40 CFR part 51 and part 52 regulations . The commenter contended that EPA is now for the first time claiming that state PSD programs must automati cally update or provide specific assurances that the state will revise its plan to apply to new pollutants , and that his is not a requirement found in statute or rule as a prerequisite for approval

.

An other opposing commenter (0227.1) also made the poin t that the proposal creates disparate treatment of Texas as compared with other states. The commenter asserted that Texas is no different from many other states that take regulation of pollutants in stepwise fashion, yet EPA has not proposed to disapprove these other states’ SIPs . The commenter cited information

from the Supplemental Information Document prepared by EPA for the SIP Call rule to contend that PSD SIPs in Arizona, Arkansas, Connecticut, Florida , and other states do not automatically update to include newly regulated pollutants. 3 The commenter incorporated the Supplemental Information Document by reference into its comments in order to make the document part of the record for purposes of judicial review of this a ction.

Response:

We respond to these comments elsewhere in this document and the preamble. We add here that the states of Arizona, Arkansa s , and Connecticut have taken steps to assure the availability of a permitting authority on a timely basis in each of their states, whether by cooperating with EPA so that EPA was able to promulgate a FIP as of January 2, 2011 (Arizona, Arkan s as) or by proceeding to develop a SIP revision to apply PSD to its GHG

emitting sources on a time

- table consistent with the need s of its sources (Connecticut). Accordingly, unlike Texas, those states have not taken any action or made any statements that illuminate any gap in their SIPs or that have created real

- world negative effects (such as, absent action by EPA, a delay in the availability of a permitting authority). We further note that although the commenter objects that EPA is singling out Texas because of Texas’s statements, the important point is that those statements, combined with Texas’s actions, have

– in a manner uniq ue to Texas

-- illuminated the gap in Texas’s SIP and created adverse impacts that justifies EPA exercising its discretionary authority to correct under CAA §110(k)(6).

3 The Supplemental Information Document is in the rulemaking docket for the SIP Call rule, Document

No. EPA

- HQ

- OAR

- 2010

- 0107

- 0129.21 Comment:

The fourth opposing commenter (0230.1) stated that EPA ’s decision to corr ect and partially revoke its approval of Texas ’s PSD SIP is an abuse of discretion because EPA based

that decision on materials outside the original administrative record. According to the

commenter, EPA ’ s proposed rule makes clear that its conclusion is based in substantial part on

“ [r]ecent ” statements by Texas officials that “confirm” that Texas ’s SIP was inadequate at the time of EPA's original approval. By supplementing the administrative record in this way and using that evidence to attribute “ error ” to EPA ’ s original determination, the commenter believes

that EPA ’ s present action contradicts the basic legal principle that an agency’ s decision must be based only on material in the record before it at the time of the decision , as specifically provide d

in CAA section 307(d)(6)(C) where it states that a “ promulgated rule may not be based (in part or whole) on any information or data which has not been placed in the docket as of the date of such promulgation. ”

Response: ]

EPA disagrees with this comment. EPA’s 1992 approval of the Texas SIP was not taken under CAA §307(d), so that the paragraph (6)(C) is not relevant. In any event, the relevant action is the present one, and Texas’s recent statements are relevant to this action because they

illuminate t he meaning of Texas’s SIP and make clear that the gaps in Texas’s SIP have negative

real

- world impacts that merit EPA’s exercise of its discretionary authority under CAA §110(k)(6).

Comment:

T hree commenter s (0224.1

, 0227.1, 0228.1 ) indicated that the proposed and interim final

rules for Texas are fatally flawed because the theory on which they rest, in conjunction with the SIP Narrowing Rule simultaneously promulgated at 75 FR 82536, would make approval of any

PSD SIP “erroneous.” T he commenter s asserted that the effect of th e PSD Narrowing Rule

, combined with the rule s for Texas, is that EPA can never approve any SIP in that (1) a SIP cannot be approved if, like Texas ’ s, it does not automatically incorporate whatever pollutant

EPA m ay choose to regulate in the future , b ut (2) a SIP also cannot be approved if, like the PSD

SIPs in the 24 states subject to the PSD Narrowing Rule , it does automatically incorporate whatever pollutant EPA chooses to regulate in the future, because then it does not “ provide necessary assurances that they have adequate funding and personnel to implement their SIPs. ”

According to one of the commenter s (0224.1) , t he only conceivable way for a s tate to avoid this conundrum is to adopt a SIP that merely inco rporates all federal requirements instantaneously when EPA adopts them. However, the commenter believes that this is no

solution at all because (1) many states, such as Texas, have state legislative and constitutional requirements that forbid them from ad opting regulations that cede law making auth ority to the federal government, and (2) this is completely inconsistent with the cooperative federalism structure of the PSD program in that it would reduce the SIP process to one where the substance

of each SIP would simply be dictated by EPA. Thus, the commenter asserted that these rulemakings are plainly inconsistent with congressional intent for the PSD program.22 The second commenter (0228.1) concluded that EPA’s rationale reflects an interpretation

of the Act that is neither plausible nor coherent. The commenter asserted that EPA has failed to provide an explanation as to how these rules and their competing and mutually inconsistent theories can coexist in any reasonable fashion that effectuates congressio nal intent.

The third commenter (0227.1) indicated that Texas’s approach is correct because states could never anticipate all the pollutants that EPA might choose to regulate and at what levels. Thus, the commenter believes that the approach of regulati ng pollutants as EPA regulates them, adopting requirements through proper state procedures, is far more consistent with congressional intent than an approach that would automatically incorporate pollutants that EPA regulates.

Response:

This issue is addressed in the preamble to the Final Rule. On the one hand, s tates with

SIPs that automatic ally updat e to apply PSD to pollutants newly subject to regulation can take other action to assure that any limits EPA places on the application of PSD to such pollutants

– as EPA did in the Tailoring Rule

– are incorporated into the SIP. In the SIP Narrowing Rule, the flaw that needed correction was the combination of the unrestrained applicability of the program to the newly regulated pollutant, wi th the failure to plan for adequate resources to carry out the plan, in the time provided. Some states were able to revise their SIPs in the time provided and others were able to interpret their SIPs to regulate GHGs at the Tailoring Rule

thresholds. On the other hand, s tates that do not have PSD programs that automatically update to apply to pollutants newly subject to regulation may take other action to assure that their PSD programs address the applicability of PSD to pollutants newly subject to regula tion. Accordingly, , there is not a “conundrum” as the commenter asserts.

The second commenter’s commenter is general and vague. EPA has described the rationale for this rule in the preamble and in this document.

With respect to the third commenter, i t should be reiterated that in this action, EPA is not articulating any requirement that PSD programs must automatically update to apply to pollutants newly subject to regulation.23 

## 5 Comments on EPA’s Approach for Correcting Its Erroneous Approval

**5.1 Comments**  **on CAA Section 110(k)(6) Authority**

Comment:

One commenter (0231.1) supported the use of CAA section 110(k)(6) authority in this

situation. S even other commenters (0224.1 , 0225.1

, 0227.1, 0228.1

, 0229.2 TCEQ, 0230.1.

0232.1 Texas AG ) asserted that the rules do not fall within EPA ’ s CAA section 110(k)(6) authority

.

The supportive commenter (0231.1) noted that section 110(k)(6) states that “ [w] henever [EPA] determines” that its action “approving ... any plan or plan revision ... was in error,” i t may correct that error “without requiring any further submission from the State.” 42 U.S.C. 7410(k)(6). Industrial Envt’l Ass’n v. Browner , 225 F.3d 662, 2000 WL 689518, *1 (9th Cir. 2000) (unpub. mem. disp.) (noting that this provision, added in the 1990 C AA Amendments, provided an alternate mechanism for EPA to act “unilaterally to revise any aspect of a[ ] SIP which had been approved ‘in error’”). The commenter asserted that this mechanism is appropriate here, where serious flaws in Texas’s SIP hav e become glaringly apparent and where those flaws, if left uncorrected, would cause immediate harm.

The commenter (0231.1) added that b ecause EPA has now determined that Texas’s program does not satisfy the “minimum criteria” required of a SIP, it must “ promulgate a Federal implementation plan” to fill the gap, as it has done here. 42 U.S.C. 7410(c)(1)(A). The

commenter believes that f ailing to meet the Act’s basic pollution control requirements is a clear error warranting correction and a FIP and tha t, i n such circumstances, EPA is well justified in correcting its error before harm to public health or the environment can occur.

Response:

We agree with the comment that flaws in the Texas SIP have become apparent, necessitating our correction of the error we made in previously approving the SIP. We are

correct ing the error and promulgating the FIP at this time to assure that GHG

- emitting so urces in Texas will have available a permitting authority to process their permit applications and thereby allow them to proceed with plans to construct or modify.

Comment:

Five of t he opposing commenters (0224.1 , 0225.1, 0227.1, 0228.1, 0232.1 Texas AG )

stated that EPA ’ s approval of Texas ’ s SIP was not a clerical error or unintentional , noting that the SIP was approved well before EPA ever contemplated any regulation of GHG emissions and that EPA intended to approve the language that Texas submi tted

. Consequently, the commenters

believe that EPA must use normal p rocedures to modify the SIP’ s approval status.24 Four of the c ommenters ( 0224.1

, 0225.1, 0227.1, 0232.1 Texas AG) believe that t he

relevant case law confirms that EPA cannot use the CAA section 110(k)(6) error

- correction

shortcut in this situation. In Concerned Citizens of Bridesburg v. EPA , 836 F.2d 777 (3d Cir. 1987) ( Bridesburg )

, the Third Circuit reviewed EPA ’ s deletion of odo r regulations from Pennsylvania ’ s federally

- approved SIP. The Court rejected EPA ’ s arguments that its earlier approval of the odor regulations was a “ mistake, ” or alternatively, that the deletion was merely a

“ revision of EPA ’ s own prior action. ” Id . at 789. The Court was not “ persuaded by the EPA ’ s reference to the revisions as ‘ corrections, ’” stating, “ [we] are not dealing here with typographical

errors. ” Id . at 786. Furthermore, the Court held that all SIP modifications must occur through the design ated revisions process. Id . at 789 (citing Bethlehem Steel Corp. v. EPA , 723 F.2d 1303, 1309

– 10 (7th Cir. 1983)).

Response:

We disagree with the comment that CAA section 110(k)(6) can only be used to correct clerical errors. As we discussed in the pre amble to the final rule, the term “error” in CAA section 110(k)(6) is not defined and, as a result, should be given its ordinary, everyday meaning. Commenters’ assertions that this provision is limited to “technical” errors or “typographical

errors” are conclusory and unsupported. It is true that EPA intended to approve the Texas PSD program, but that does not mean that at that time, EPA was aware of and understood the implications of what it now recognizes as gaps, including the failure of the SIP to ad dress the applicability of the PSD program to pollutants newly subject to regulation. EPA responds to the comments concerning the Bridesburg case in the preamble to this rule.

Comment:

The se commenter s (0224.1 , 0225.1

, 0227.1, 0232.1 Texas AG ) contended that these r ules make precisely the same claim that was rejected in the Bridesburg case

– EPA claims to be correcting a mistake, but it is actually justifying partial disapproval of a SIP. The commenters stated that, j ust as in Bridesburg , EPA ’ s approval of the current Texas SIP regulations was not an uncontroversial mistake or typographical error.

One of the commenters (0224.1) stated that EPA ’ s claim in this case is less plausible than

the claim in Bridesburg , and that effectively EPA is claiming that when it approved the Texas SIP, which does not regulate GHGs, it really meant that it approved Texas ’ s SIP only in part, while disapproving of its failure to cover GHGs, not at the statutory thresholds, but only to the

extent that sources emit GHG s th at would qualify for coverage under the complex non

- statutory formulas adopted by EPA in the GHG Tailoring Rule. 75 F R 82457. The commenter added that

EPA ’ s failure to specify those formulas when it approved Texas ’ s SIP was not a mere typographical error

.

Response:

A s discussed in the preamble to this rule, CAA §110(k)(6) authorizes EPA to make a set of error corrections that are significantly broader than what the Bridesburg court sanctioned, and that EPA’s present action is fully justifiable as an error correction under CAA §110(k)(6).25 As a result, the Bridesburg case does not limit EPA’s ability to undertake the action it is taking in this rulemaking.

Comment:

Two other of the commenters (0227.1 , 0230.1 ) stated that under section 110(k)(6) any

c orrections must be through the same procedures as an original action would require. One of

these commenter s (0227.1) then pointed out that section 110(l) states that any revisions to a SIP must be adopted by a state after reasonable notice and a public he aring. The other commenter (0230.1) similarly noted that the Act provides a very specific “manner” of SIP approval or disapproval that relies on a precise sequence of events and timetables, which EPA’s present action ignores.

Response:

We disagree with the comment that corrections must be made through the same procedures as the original approval. As discussed in the preamble, EPA disagrees with this reading of the phrase “in the same manner.” This phrase is not defined in section 110(k )(6). As a matter of Chevron step 1, or, in the alternative, Chevron step 2, the phrase refers to Administrative Procedure Act or, if applicable, CAA section 307(d) procedures. Thus, if the original action were a notice

- and

- comment rulemaking under the A dministrative Procedure Act, then the error correction must follow the same procedure. EPA’s approval of the Texas SIP in 1992 followed notice

- and

- comment rulemaking, and t his final rule has been subject to notice and comment rulemaking as well

.

Comment :

One commenter (0229.2 TCEQ) stated that Texas’s SIP is not deficient because the Act does not mandate that state PSD rules automatically update to cover newly regulated pollutants, so EPA cannot rely on section 110(k)(6) error correction authority. T he commenter indicated

that historically EPA has used section 110(k)(6) to revise its own previous action on a SIP submittal, but it cannot singlehandedly change what the state has submitted. The commenter believes that this action was precipitated by EPA ’s interpretation that GHGs must be covered under PSD (which is under legal challenge), not by some long

- standing flaw in Texas’s SIP. The commenter asserted that in this case, EPA intends not just to remove “non

- technical” provisions from the approved SI P, but rather to impose its own plan to regulate GHGs in Texas without first allowing Texas to revise its PSD program. The commenter concluded that any SIP rule rejection EPA makes must provide 3 years for the state to correct the shortcoming as provided by the 2002

NSR reform rules.

Response:

We respond to many of these comments elsewhere. With respect to the remaining comments, we add here the following responses: (i) EPA’s use of the §110(k)(6) error

correction in this action is to revise EPA’s own action

– that is, to revise its previous approval of Texas’s SIP to a partial approval and partial disapproval

– and not to change what the state has26 submitted. (ii) This action was precipitated by Texas’s statements that it would not apply PSD to
GHGs, that it would not cooperate with EPA’s efforts to assure the availability of a permitting authority in for GHG

- emitting sources in Texas, and that it did not believe that the CAA requires the applicability of PSD to non

- NAAQS pollutants, all of which illum inated the gaps in Texas’s

PSD SIP and threatened to create adverse real

- world consequences to GHG

- emitting sources in Texas. (iii) EPA did give Texas the opportunity to revise its PSD program and Texas has made

clear that the state does not intend to do so.

Comment:

One commenter (0232.1 Texas AG) asserted that EPA’s reading of CAA

section 110(k)(6) contravenes its plain text, and therefore fails under Chevron step 1. The commenter believes that section 110(k)( 6) contains four express limitations on EPA’s authority, which taken separately or together demonstrate that “Congress has directly spoken to the precise question at issue,” Chevron v. Natural Resources Def. Council , 467 U.S. 837, 842

- 43 (1984).

Accordin g to the commenter, EPA cannot revise a plan to “correct” “errors” of which it was fully aware at the time of plan approval, and which it did not even consider to be “errors” at the

time. Grobach v. Reno , 210 F.3d 1087, 10989 (9 th Cir. 2000) (holding that agency error

correction power cannot supersede express denaturalization procedures). A summary of the commenter’s analysis of the language of section 110(k)(6) follows:

Comment:

• The EPA incorrectly construed the phrase “was in error.”

o Based on cited definitions of “error” and “correction,” the commenter concluded that section 110(k)(6) empowers EPA only to make a correction to an inadvertent error, such as a typographical or technical error. In support of this conclusion, the

commenter cite d Bridesbu rg , 836 F2d at 786; Dart Industries, Inc. v. Banner , 636 F.2d 684, 688 (D.C. Cir. 1980) ; In Re Creative Technologies Corp. , 83 F.3d 1394,

1397 (Fed. Cir. 1996) ; In re Serenkin , 479 F.3d 1359, 1362 (Fed. Cir 2007) ; and Eastern Investment Corp v. United States , 49 F.3d 651, 657 (10 th Cir. 1995)

.

o The commenter asserted that section 110(k)(6) authorizes EPA to act only where the original action “ was in error,” not where the action “ is in error”

– Congress’ use of the past tense limits EPA’s authority to act ions that were incorrect when they were made, not to actions of which EPA later disapproved.

o The commenter believes that EPA’s interpretation w ould give the term “error” so broad a meaning as to authorize any change in policy, depriving the term “error”

of any limiting effect and rendering Congress’ comprehensive scheme in C AA

section 110 for SIP promulgation and revision nugatory. Th e commenter noted

that this is contrary to the well

- recognized rule that statutes must be construed “so

as to avoid renderin g superfluous” any statutory language and cited Astoria Federal Savings & Loan Ass’n v. Solimino , 501 U.S. 104, 112 (1991) ; Sprietsma v. Mercury Marine , 537 U.S. 51, 63 (2003) ; and GTE New Media Services Inc. v. BellSouth Corp. , 199 F.3d 1343, 1351 (D.C. C ir. 2000)

. The commenter also cited four cases where the courts were alleged to have reversed statutory27 interpretations made by EPA to “ escape congressionally imposed limitations on its powers. ”

Response:

We disagree with the comment that EPA has incorrectly interpreted the phrase “w as in error.” As discussed in the preamble, the natural meaning of the term “error” in the error correction provision is broad and as a result, the provision applies by its terms to any mistake. The explicit legislati ve history of the provision

– what Congress said in the various reports and statements accompanying its passages

- is sparse and does not illuminate its meaning. Because there is nothing in the statute or legislative history that suggests that Congress in tended a meaning narrower than the natural meaning of the term, the natural meaning of the term controls. Commenters’ assertions that this provision is limited to “technical” errors or “typographical errors” are conclusory and unsupported. Of the cases c ited by the commenter,

the Bridesburg case is the closest on point and EPA discusses that case in the preamble to this rulemaking. For the reasons discussed elsewhere in this document and in the preamble, Texas’s SIP was flawed and as a result, EPA’s acti on in approving that flawed SIP was in error.

EPA agrees that the error correction provision applies only where EPA’s initial action approving a SIP was in error. However, the basis for EPA’s action in this rulemaking is that EPA’s approval of the Texa s PSD SIP revision was in error because at the time that the State submitted and EPA approved the revision, the PSD program failed to address the applicability of PSD to pollutants newly subject to regulation. This conclusion is based on the record as it existed at the time of the 1992 action. As a result, at the time of the 1992 action, had EPA focused on this flaw in the PSD program, EPA would not have fully approved the program, but rather would have approved it in part (to the extent that it applied t o certain pollutants) and disapproved it in part (to the extent the program did not address its applicability to pollutants newly subject to regulation). Recent statements and actions by Texas, described elsewhere, have illuminated this flaw and therefore EPA’s error in fully approving the program in 1992. At the present time, now that EPA is focused on the flaw in the program, EPA has the discretion to proceed with an error correction action and convert the full approval to a partial approval and partia l disapproval. The vehicle for EPA to exercise this discretion is to make a “determin[ation]” under CAA §110(k)(6) that EPA’s previous action was in error. Importantly, Texas’s recent statements and actions have done more than simply illuminate the flaw in the program, they have also jeopardized the ability of Texas’s GHG

- emitting sources to have available a permitting authority to process their PSD permit applications, and to proceed with their plans to construct or modify. Accordingly, Texas’s recent s tatements and actions have provided a basis for EPA to exercise its discretion to make the determination that its previous action was in error. Even so, to reiterate, that determination is dependent on the record as it existed at the time of EPA’s 1992 fu ll approval.

In addition, EPA has two alternative grounds for this action, which arise if, at the time of EPA’s 1992 approval, Texas’s PSD SIP can be said to have met CAA requirements by addressing pollutants newly subject to regulation so that EPA can b e said to have approved Texas’s SIP on that basis. First, Texas’s recent statements

– which assert that Texas will not apply its PSD program to GHGs

– undermine that basis for EPA’s approval. Under these alternative grounds, EPA’s action in approving Te xas’s SIP was in error because it depended on28 a basis that the State subsequently undermined. Although Texas’s statements occurred after EPA’s action, they should be treated as being associated with that action, and as a result, EPA’s initial basis for it s action should be treated as invalid. Viewed in this manner, EPA’s action approving the SIP was in error. Second, Texas failed to provide assurances of adequate authority to carry out the SIP because, as explained elsewhere in this response to comments, at the time EPA approved the SIP, the Texas SIP was prohibited by state law from automatically updating to including pollutants newly subject to regulation and Texas did not provide assurances of other adequate authority.

T

his rulemaking action is sim ply the correction of an error, as authorized under CAA §110(k)(6). Contrary to some comments, this action is not based on a policy shift in EPA’s administration of the PSD program. Nor does this action upset federalism concerns or constitute a claim of authority to unilaterally revise any action on any SIP submittal. EPA does not read section 110(k)(6) to provide unlimited discretion to act on SIP submissions, only to provide authority to make error corrections.

Comment:

• The EPA incorrectly construed the phrase “in the same manner.” The commenter believes that EPA has failed to act “in the same manner” both procedurally and substantively.

o The commenter stated that courts have consistently interpreted the term “in the same manner” to incorporate substantive, in addition to procedural, requirements, citing United States v. Navistar Int’l. Transp. Corp.

, 152 F.3d 702, 714 (7 th Cir. 1998); Unit ed States v. Township of Brighton , 153 F.3d 307, 324 (6 th Cir. 1998) ; Andes v. Versant Corp. , 878 F.2d 147, 149 (4 th Cir. 1989) ; and Oveissi v. Islamic Republic of Iran , 573 F.3d 835, 841 (D.C. Cir. 2009) . The commenter believes

EPA has erred in appl ying different standards to Texas’s SIP today than those that were in place in 1992, and propos ing to make a decision on a different record than the one supporting its action in 1992.

o The commenter also stated that t he phrase “in the same manner” compels EPA to

act “in the same manner” that it did previously

– in other words, to take the same action. The commenter asserted that converting an approval to a disapproval fails

this test

, and added that if the deficiency in a SIP is substantive in nature and

renders the SIP unapprovable, EPA may not act in the summary fashion authorized by section 110(k)(6) but must instead call for a plan revision. The commenter pointed out that in the examples given by EPA of its past use of

section 110(k)(6), it did not change an action approving a SIP into an action disapproving that SIP (or vice versa).

Response:

We respond to many of these comments elsewhere. We add here that w e disagree with the commenter’s assertion that the phrase “in the same manner” requires the agency to take the

same action

. We see no basis for reading th is phrase more narrowly to limit an error correction29 of an approval to be only another approval, and not a disapproval. That strained reading is inconsistent with the purpose of the section, which is to allow for the correction of errors, a process that may well require reversing the initial action if found to be in error. Although EPA sees no basis for the substantive requirements that the commenter reads into the phrase, the record for the present action

– which includes the relevant documents in the record for the 1992 approval

– makes clear that EPA’s 1992 action was in error, and nothing in CAA section 110(k)(6) limits the record for an error correction more narrowly.

Comment:

• The EPA ignore d the phrase “revise such action.” The commenter believes that section 110(k)(6) affords EPA no discretion to “revise” an approval action into a disapproval but instead limits the Agency to revising the contents of “such action” that it previously undertoo k. Citing a dictionary definition of “revise,” the commenter asserted that EPA does not “revise” an action by substituting another action for it; rather, EPA must take the same type of action, a reading reinforced by the requirement that the Agency act “i n the same manner as the [original action].” The EPA may not “reconsider” or “replace” a SIP

- related action. The commenter indicated that in this way, section 110(k)(6) is not a mechanism for revisiting a decision but for correcting mistakes in an action

– using this section to reverse an approval offends both the participation requirements and the principles of the Act’s SIP provisions.

Response:

We disagree with th is comment

. Section 110(k)(6) authorizes EPA to “revise” the action

it determines to be in error “as appropriate.” The term “revise” is not defined in section 110(k)(6). Its natural meaning is to “change” or “modify.” Webster’s II New Riverside University Dictionary (1988) at 1005. As a matter of Chevron step 1, or, in the alternative, Chevron step 2, the term is broad enough to encompass changing or modifying an approval to a disapproval. This is particularly so in light of the authorization under section 110(k)(6) to revise

the action in error “as appropriate.” Used in this context, the term “appropriate” indicates EPA is under a constraint of reasonableness in revising the action, but is not under the other constraints that commenter suggests. Thus, if EPA has a basis for revi sing an approval to a disapproval, then EPA may do so on grounds that this type of revision is “appropriate.”

Comment:

• The EPA ignored the phrase “as appropriate.” According to the commenter, l ike the “as necessary” language that Congress inserted into CAA section 110(k)(5) as part of the 1990 amendments, this language serves to “keep EPA within bounds.” Virginia v.

EPA , 108 F.3d 1397, 1410 (1997). Specifically, EPA may revise an earlier action only “as appropriate” to correct its error in undertaking the earlier action, and not to effect a change in policy. The commenter added the following reasons (which are discussed further in other sections of this document) that EPA’s actions are not appropriate:30 o I t is not “appropriate” to act on an emergency ba sis without notice

- and

- comment rulemaking to address a purported deficiency that the Agency has known about for nearly two decades.

o I t is not “appropriate” to single out Texas’s SIP submission for disapproval based on a purported deficiency that is presen t in other s tates’ SIPs.

o I t is not “appropriate” to exercise section 110(k)(6)’s error correction provisions where EPA is simultaneously exercising its powers under section 110(k)(5),

which affords s tates procedural protections EPA has refused to afford u nder

section 110(k)(6).

o I t is not “appropriate” to exercise section 110(k)(6)’s error correction provisions to change a SIP approval into a disapproval where the Agency has made no finding that the purported SIP submission deficiency will directly harm pu blic

health or welfare.

Response:

We disagree with this comment. The term “as appropriate” should be viewed as highlighting the significant discretion that EPA has under the error correction provision to “revise” the action it found to be in error, as discussed earlier in this preamble. EPA responds elsewhere in this rulemaking preamble to the specific reasons the commenter gives as to why the commenter believes EPA’s action was not appropriate. It should be noted here that the various

considerations the commenter cites would suggest the commenter’s agreement that the term “appropriate” allows EPA to consider a wide range of factors, that is, to exercise broad

discretion.

Comment:

One commenter (0225.1) stated that EPA is attempting to achieve a ma jor policy shift through a section 110(k)(6) process that is intended for the correction of errors. The commenter

indicated that EPA is attempt ing to achieve the illusion of compliance with Bridesburg by

assert ing that the Texas SIP was approved contrary to then

- existing EPA policy. 75 F R 82449.

The commenter asserted that e ven accepting this allegation as true, EPA ’s statement that “it is

clear from the record that both Texas and EPA were well aware that the Texas PSD rules’ [incorporation by reference] of EPA PSD regulatory requirements did not automatically update

, ”

i d

. , shows that there was no inadvertent error in EPA’s approval

. Rather, the commenter concluded, EPA is plainly pursuing a major policy change, which cannot be made in the guise of

error correction.

The commenter (0225.1) noted that other states, including Arizona, Arkansas, Connecticut, and Florida, also have SIPs that do not automatically apply PSD requirements to all pollutants newly

- subject to PSD requirements. The commenter believes that i f EPA were truly concerned with whether a SIP applies to newly

- regulated pollutants and whether a state has adequate legal authority to regulate newly

- regulated pollutants under its SIP, then EPA would also disapprove of these SIPs under the s ection 110(k)(6) error correction process. The31 commenter asserted that EPA’s failure to do so only underscores that EPA is attempting to implement policy through s ection 110(k)(6) error correction.

Finally, the commenter (0225.1) alleg ed that another EPA rule published on

December 30, 2010 “withdraw[s] the SIPs ” for 24 other states on grounds that their applicat ion

of GHG permitting requirements to sources beneath the Tailoring Rule thresholds was an

“error” under s ection 110(k)(6). 75 FR 82536, 82538. According to the commenter , EPA

claimed that these states failed to provide necessary assurances that they h ave adequate funding and personnel to implement the ir SIPs . 75 FR 82539. The commenter believes that this makes it apparent that EPA views the s ection 110(k)(6) error correction process as a potentially boundless grant of authority to achieve policy shif ts unilaterally. The commenter asserted that s uch a liberal reading of “error correction” is directly contrary to the Act’s cooperative f ederalism

scheme and the text of s ection 110(k)(6).

Response:

We disagree with the comments that EPA is attempting t o make a major, unilateral policy shift through section 110(k) error correction

. For the reasons discussed elsewhere in this

document and in the preamble, Texas’s SIP was flawed and as a result, EPA’s action in approving that flawed SIP was in error.

As a result, this rulemaking action is simply the correction of an error, as authorized under CAA §110(k)(6). Contrary to the comments, this action is not based on a policy shift in EPA’s administration of the PSD program. We do not read section 110(k)(6 ) to provide unlimited discretion to act on SIP submissions, only to provide authority to make error

corrections.

We disagree with the comment that not correcting the SIPs of other states that, like Texas, do not update automatically apply PSD requirement s to all pollutants newly subject to regulation, is an indication that EPA is attempting to implement policy through an error correction. Our reasons for taking this action with regard to Texas, and not for other states

, is

discussed elsewhere in this doc ument and in the preamble to the final rule

Comment:

T hree commenters (0225.1, 0228.1 , 0232.1 Texas AG ) disagreed with EPA’s interpretation of Congress’ intent in adding section 110(k)(6) to the Act in the 1990 CAA

Amendments

, as discussed at 75 FR 8243 5

. In that discussion, we stated that “Congress passed CAA section 110(k)(6) apparently for the purposes of overturning the Bridesburg decision” and that the timing of the enactment shortly after that decision suggests a broad interpretation.

One of the commenters (0232.1 Texas AG) stated that EPA has offered no support for

this assertion , and added that EPA has never asserted in the Federal Register that it had such authority under section 110(k)(6) in the intervening 20 years . The commenter offer ed th at Representative Henry Waxman, the principal architect of the Clean Air Act Amendments of 1990, described the subsection as being highly circumscribed:32 [S]ection 110(k)(6) explicitly authorizes EPA on its own motion to correct any errors it may make in taking any action, such as issuing any designation or classification, or approving or disapproving any plan. This section is

included to enable EPA to deal promptly with clerical errors or technical errors.

It is not intended to offer a route for EPA to reevaluate its policy judgments.

Hon. Henry Waxman et al.

, Roadmap to Title I of the Clean Air Act Amendments of 1990: Bringing Blue Skies Back To America’s Cities , 21 Envt’l L. 1843, 1925 (1991) (emphasis a dded) (footnote omitted). Th e commenter took from this that Representative Waxman’s commentary and the language of C AA section 110(k)(6) that parallels that in the Bridesburg decision unambiguously demonstrate that Congress intended to codify Bridesburg

, not to supersede it.

One of the commenters (0228.1) stated that EPA’s argument is nothing more than speculation; the Agency offers no evidence that Congress intended to overturn Bridesburg

. The

commenter asserted that Congress knows well how to overrule judicial precedent and, when doing so through CAA amendments, has explained its intent to do so. As examples, the

commenter noted that the Senate committee reporting the 1990 CAA Amendments approved an amendment that, it explained, “overrules West Penn P ower Co. v. EPA , 860 2d 581 (3d Cir. 1988) . . . .” 5 Environment and Natural Resources Policy Division, Library of Congress, A Legislative History of the Clean Air Act Amendments of 1990 at 8712 (1998): Report of Senate

Committee on Environment and Publ ic Works; see also id . at 8715 (“[t]his amendment would overrule the holding of State of New York v. Thomas , 802 F.2d 1443 (D.C. Cir. 1986”); id. at 9908 (“[i]t is evident . . . that the effect of these provisions would be to overrule the recent en banc de cision in Vinyl Chloride ”). The commenter believes that i f Congress in 1990 had

intended to overturn Bridesburg with its enactment of section 110(k)(6), it would have said so, as it did with respect to different CAA amendments that overturned other court decisions. The

commenter also stated that EPA offer ed no evidence of congressional intent to do so.

An other commenter (0225.1) indicated that EPA has decline d to explain why Congress would “apparently” take an action that gives EPA the ability to undermine the CAA

s ection 110(k)(5) SIP revision scheme that Congress declined to delete when adding

section 1 10(k)(6). Furthermore, according to the commenter, thoug h Congress did add express authority for error correction in CAA s ection 110(k)(6), EPA has fail ed to adequately explain why Congress did not address the substance of the Third Circuit’s holding

– that “error

correction” be limited to inadvertent mistakes such as typographical errors and not encompass major policy shifts.

Response:

We disagree with these comments. For the reasons noted in the preamble and elsewhere in this document, the natural meaning of the term “error” in the error correction provisio n is broad and as a result, the provision applies by its terms to any mistake. The explicit legislative history of the provision

– what Congress said in the various reports and statements accompanying its passages

- is sparse and does not illuminate its m eaning. The statements by Congressman Waxman are the statements of a single legislator after the passage of the33 legislation, and should not be considered to be persuasive legislative history. We note that during the enactment of the 1990 Clean Air Act am endments, Mr. Waxman and Mr. Dingell stated that statements by individual legislators should not be considered to be persuasive legislative history. Because there is nothing in the statute or legislative history that suggests that Congress intended a mean ing narrower than the natural meaning of the term, the natural meaning of the term controls. Commenters’ assertions that this provision is limited to “technical” errors or “typographical errors” are conclusory and unsupported. We discuss in the preamble for this rule our views on the Bridesburg case and why §110(k)(6) should be read to expand the types of error that Congress authorized EPA to correct beyond what Bridesburg
authorized.

Comment:

Two commenter s (0228.1 , 0232.1 Texas AG ) disputed EPA ’s statement that it has relied on section 110(k)(6) in the past to “correct errors of a non

- technical nature.” 75 FR 82435.

A ccording to one of the commenter s (0228.1)

, the examples EPA cite d to support the contention that it has used section 110(k)(6) to make substantive SIP changes in fact all removed inadvertently included or retained provisions rather than impos ing new obligations. In addition,

the commenter stated that it does not appear that any of the provisions that were deleted from

SIPs in these proceedings was ever enforced before it was removed, lending further weight to the conclusion that each was a true correction necessary to fix earlier clerical mistakes. The second commenter (0232.1 Texas AG) stated that none of the actions that EPA cited as examples present a substantive conflict between EPA’s interpretation of the Act and the content of an approved SIP, nor do any address an action of significance.

As an example, one of the commenter s (0228.1) noted that in “Approval and Promulgation of Implementation Plans; Kentucky: Approval of Revisions to the State Implementation Plan,” EPA, at Kentucky’s request, removed the “potentially hazardous matter or toxic substances rule” from the state’s implementation plan “because the rule is not relat ed to the attainment and maintenance of the national ambient air quality standards” and therefore was “erroneously incorporated” into the SIP. 75 F R 2440

- 41

, Jan uary 15, 2010. According to the

commenter, o ther historical examples of EPA’s use of section 110(k)(6) are similar:

uncontroversial edits to EPA’s approval of a SIP to remove the federal enforceability of regulatory requirements that had been included or retained inadvertently. In all of these cases,

the commenter added , the changes were made at the state’s request.

The same commenter (0228.1) drew a contrast with prior uses of section 110(k)(6)

, stating that i n this proposed rule EPA would impose substantial new (rather than delete existing) requirements on the state, and would do so against rather than in fulfillment of the state’s wishes. The commenter alleged that i n doing so, EPA would purport to “correct” an intentional and fully knowing “error” the Agency made nearly two decades ago (rather than an inadvertent oversight).

T he commenter asserted that t his is an unprecedented and wholly unsupported application of section 110(k)(6).

The second commenter (0232.1 Texas AG) noted that in none of EPA’s examples did the Agency convert a SIP approval into a disapproval. This commenter stated that EPA’s actions34 with regard to Kentucky and other states may not be consistent with the Third Circuit’s decision

in Bridesburg , but in none of these actions did EPA suggest that Bridesburg did not control. The

comm enter stressed that to the extent that EPA’s prior actions constituted substantive changes

made outside the C AA section 110(a) and 110 ( l ) SIP revision process, they would form a pattern of unlawful conduct, not a justification for action:

[P]revious statu tory violations cannot excuse the one now before the court. “[W]e do not see how merely applying an unreasonable statutory interpretation for several years can transform it into a reasonable interpretation.”

New Jersey v. EPA , 517 F.3d 574, 583 (D.C. Cir . 2008) (quoting F.J. Vollmer Co. v. Magaw

, 102 F.3d 591, 598 (D.C.Cir.1996)). T he commenter asserted that t his is particularly true with regard to section 110(k)(6), a power that has in the past always been exercised by EPA in conjunction with the s tates , which apparently wished to evade the Act’s SIP revision procedures.

Response :

We disagree with these comments on the historical use of section 110(k)(6). EPA’s previous use of the error correction provision makes clear that EPA has corrected errors many years after they occurred, and that EPA has corrected errors that are broader than merely technical or typographical errors. In addition to the examples EP A has cited elsewhere, EPA notes that in some error correction actions, it has revised the boundaries of nonattainment areas.

“

Air Quality Designations and Classifications for the 8

- Hour Ozone National Ambient Air Quality Standards; Early Action Compact A reas With Deferred Effective Dates ; Final Rule,” 71 Fed. Reg. 60429 (Oct. 13, 2006 ); “ Phoenix 1

- Hour Ozone Boundary Correction, Direct Final Rule, 70 F ed. Reg. 68339 ( November 10, 2005); “ Miami (Arizona) SO 2 Boundary Correction : Direct Final Rule, ” 72 F ed. R eg. 3061 ( January 24, 200 7 ). Moreover , EPA’s most recent use of the error correction provision was in the PSD Narrowing Rule, in which EPA again corrected errors in SIP approvals that occurred many years ago, and which relied on as broad an application of section 110(k)(6) as in the present rulemaking. Moreover, in the GHG PSD Narrowing Rule, EPA relied on the error correction mechanism without having first been asked to do so by some of the affected states, and, in fact, in the face of negative commen ts by some of the affected states. Even so, the PSD Narrowing Rule was not challenged in Court by any party.

In any event, for the reasons noted elsewhere in this document and in the preamble

, EPA’s action in this rulemaking qualifies as an error corre ction within the meaning of CAA section 110(k)(6). Whether the affected state

– or any other party

- agrees or disagrees that the SIP that is the subject of the error correction is flawed , and, as related matter, whether the action is controversial, are n ot criteria under CAA section 110(k)(6).

Comment:

One commenter (0228.1) disputed EPA’s alleged claim that case law supports the existence of Agency discretion “whether and when to make the specified finding” of error in the previous decision that EPA seeks to correct. 75 FR 82435. The commenter asserted that the cases EPA cited are inapposite. According to the commenter, New York Public Interest35 Research Group v. Whitman , 321 F.3d 316 (2d Cir. 2003), addresses EPA’s authority in the

context of the T itle V operating permit program, specifically under CAA section 502, and is not relevant to the PSD SIP context under Title I of the CAA at issue here. The other case, Her Majesty The Queen In Right of Ontario v. EPA , 912 F.2d 1525 (D.C. Cir. 1990), addresses EPA’s timing discretion in acting under section 115 of the Act (concerning international air pollution) and construes the word “whenever” in section 115(a) to clarify when EPA is required or authorized to make a finding under that provision. The commenter expressed the opinion that neither of these cases remotely relates to section 110(k)(6) and cannot be relied on as justification for EPA’s interpretation of authority to act under that error correction provision.

Response :

The cases are relev ant because they interpret the same term that is used in CAA §110(k)(6). Their interpretation of the term, as used in Title V and section 115, as providing EPA with significant discretion supports EPA’s view that the same term should be interpreted in

CA §110(k)(6) to provide EPA with significant discretion.

Comment:

Two commenter s ( 0227.1, 0232.1 Texas AG) believe that EPA’s reading of CAA

section 110(k)(6) is contrary to the structure of the Act . One of the commenters (0232.1 Texas AG) added that E PA’s reliance on section 110(k)(6)’s error correction provisions to revise its full approval of Texas’ s PSD SIP constitutes an unlimited revisory power that contradicts the Act’s

text and structure. According to the commenter, EPA is attempting to circumv ent the procedural requirements and protections that the Act provides for s tates in the SIP process, thereby defeating Congress’ intent in crafting a process respectful of the s tates’ role in the control of air pollution and public engagement in environmental regulation.

Response:

As discussed elsewhere in this document, we disagree with the comment that EPA is attempting to circumvent the CAA SIP approval process or that we believe that section 110(k)(6) provides unlimited revisory power. EPA’ s revisory power is limited to revising the specific action it took when it approved the Texas SIP PSD program. I n light of the gap in the Texas PSD SIP, EPA, had it focused on that gap at the time it acted on the PSD program, could have disapproved the P SD program to the extent the program did not address its applicability to pollutants newly subject to regulation. By exercising its discretion under CAA §110(k)(6) at this time, EPA is taking the same action

– a partial approval and partial disapproval

-- it could have

taken earlier.

Comment:

Th e commenter (0232.1 Texas AG) noted that C AA section 110(i) prohibits amendments to SIPs with respect to stationary sources except through SIP revisions adopted by s tates under section 110(a) or FIPs promulgated by EPA under section 110(c) , and pointed out that

section 110(i) specifically mentions “plan revisions” and “other action modifying any36 requirement of an applicable implementation plan.” Section 110(a) of the Act and the legislative rules that implement i t, such as 40 CFR 51.166

, provide a detailed process for s tates to incorporate new requirements into their SIPs. The commenter believes that the specific provisions of sections 110(a) and (i) control over EPA ’s ( allegedly ) erroneous interpretation of

section 110(k)(6) and therefore EPA must allow states 3 years to modify their SIPs to incorporate GHGs (if EPA has authority to regulate GHGs under the Act, which the commenter has challenged).

Response:

We disagree with this comment. CAA §110(k)(6) governs the action EPA is taking with this rulemaking, and by its terms, CAA §110(k)(6) is independent of CAA §§110(a) and (i). Nothing in those provisions limits EPA’s authority under CAA §110(k)(6). Further, even if CAA §110(i ) applied, EPA’s action under this rulemaking is a FIP under CAA §110(c). In any event,

w e disagree with the comment that states must be given three years to modify their SIPs to incorporate GHGs. This issue was addressed in detail in the preamble to the final PSD GHG SIP Call (75 FR 77698) and in the RTC for that rulemaking (EPA

- HQ

- OAR

- 2010

- 0107

- 0130).

Comment:

The commenter (0232.1 Texas AG) believes that EPA’s approach leads to absurd results: if EPA promulgates a NAAQS for a new pollutant or revi ses a NAAQS, the Agency must follow

the section 110 SIP revision process, but if a pollutant for which there is no NAAQS becomes subject to regulation for peripheral reasons EPA arrogate s the authority to immediately impose requirements on the states. The commenter assert ed that this is incongruous with Congress’

intent.

Response :

We disagree with the comment that EPA’s approach leads to absurd results that are incongruous with Congress’ intent. As discussed earlier, it is section 165(a) of the CAA that requires a so u rce to obtain a permit before construction or modification when a pollutant

becomes newly subject to regulation. This is the case whether EPA add s a new NAAQS pollutant, or, as is the case here, a non

- NAAQS pollutant.

Comment:

The commenter (0232.1 Texas AG) also asserted that EPA’ s interpretation of

section 110(k)(6) is incompatible with section 110(k)(5), and disagreed with EPA’s discussion of the relationship between the two sections at 75 FR 92454

- 55

. The commenter asserted that EPA’s interpretation of section 11 0 (k)(6) would render sec tion 110(k)(5) mere surplusage because EPA would be able to declare any earlier approvals of substantially inadequate SIPs “in error” and disapprove the SIP under section 110(k)(6) rather than exercising its power under

section 110(k)(5).37 Response:

EPA explained the relationship between CAA §§110(k)(6) and 110(k)(5) in the preamble to this rulemaking.

Comment:

In summarizing section 110(k)(5) , the commenter (0232.1 Texas AG) indicated that it is expressly limited in order to prevent circumvention of the Act’s default SIP process: (1) the inadequacy must be “substantial,” and (2) EPA may only “subject the State to the requirements of [the Act] to which the State was subject when it dev eloped and submitted the plan for which such finding was made.” The commenter asserted that Congress would not have provided these significant procedural protections for states where EPA finds that a SIP is “substantially inadequate,” but nonetheless allo w EPA to “revise” or “correct” a SIP approval into a disapproval for any “error,” no matter how significant.

Response:

CAA §§110(k)(6) and 110(k)(5) are different provisions and the commenter offers no reason why they should be treated as having a compa rable scope. CAA §110(k)(6) provides EPA with the discretion to correct a previous action that was in error and, in doing so, place EPA and the State in the same situation that they would have been in had EPA taken the correct action in the first place. Nothing in that scheme undermines the Act’s SIP process.

Comment:

The commenter (0232.1 Texas AG) went on to say that EPA’s proposed reading of section 110(k)(6) would essentially give it unlimited discretion to act on states’ SIP submissions, which is incompatible with the highly

- circumscribed process for SIP submission and approval set out in section 110(k). Afte r describing the requirements of sections 110(k)(1)(B), 110(k)(2), 110(k)(3), and 110(k)(5), the commenter stated that it is not reasonable to interpret

section 110(k)(6) to allow EPA to reverse its approval of a SIP submission after 18 years, where Congre ss plainly required that the Agency make a binding decision within 18 months. Bridesburg , 836 F.2d at 786 (holding that an action revising a SIP outside of the statutory time

limit was not an error

- correction action).

Response:

CAA §110(k)(6) includes its own timing mechanism through its provision authorizing EPA to take corrective action “[w]henever the Administrator determines that” the previous action was in error. Therefore, no 18

- month limitation applies and any contrary statements in

the Bridesbu rg case, as commenter reads that case, which applied the provisions of the CAA prior to the enactment of CAA §110(k)(6), indicate that Congress designed CAA §110(k)(6) to apply more broadly than the Bridesburg court’s application of error

- correction author ity under the pre

- existing Clean Air Act.38 Comment:

The commenter (0232.1 Texas AG) concluded that the unambiguous text and structure of CAA section 110 allow EPA only to correct minor errors by exercising its powers under

section 110(k)(6), which do n ot require any additional submission or input from the states. The commenter believes that any broader construction of this power would intrude, in whole or in large part, on section 110’s comprehensive scheme for SIP revisions and FIP impositions.

Response :

CAA §110(k)(6) simply allows EPA, by correcting a previous action that was in error, to place itself and the state in the same position that they would have been in had EPA acted correctly in the first place. By its terms, CAA §110(k)(6) provid es the process for undertaking that corrective action, that is, EPA may take the corrective action “in the same manner” as the previous action, and without any further submittal from the state. Thus, Congress established CAA §110(k)(6) as part of what the commenter describes as section 110’s comprehensive scheme for SIP revisions and FIP imposition, and Congress included within §110(k)(6) the process for taking the corrective action authorized under that provision, , and as a result, that process, as EPA h as followed it here, cannot be said to intrude on section 110’ s scheme for SIP revisions and FIP impositions.

Comment:

Three commenters (0224.1, 0225.1, 0230.1) believe that it is inconsistent with the intent of the Act to use both the section 110(k)( 5) and section 110(k)(6) mechanisms for SIP revisions in Texas at the same time. Another commenter (0231.1) lauded EPA for using both mechanisms.

Two of the commenters (0224.1, 0225.1) asserted that the rules subvert the SIP revision process by deprivin g Texas of the opportunity to submit revisions to its SIP to avoid a FIP. The commenters noted that these rules come less than 2 weeks after EPA provided Texas a deadline of December 1, 2011 to submit revisions to its SIP. According to the commenters, th e section 110(k)(5) SIP call process is not intended to be completed under the burden of a FIP; instead, imposition of a FIP is only considered after the Administrator finds that a state has failed to meet a SIP call deadline, 42 U.S.C. 7410(c)(1)(A), as E PA has acknowledged, 75 FR 77700 (“If a state for which we are finalizing a SIP call in this action does not submit its corrective SIP revision by the deadline, EPA intends to immediately issue to the state a finding of failure to submit a required SIP rev ision and also immediately promulgate a [FIP] for the state, under CAA

section 110(c)(1)(A).” ). The commenters stated that EPA’s contrary action undercuts the cooperative federalism principles that underlie the Act . (Another commenter (0229.2 TCEQ)

simila rly indicated that under section 110(c) of the Act, EPA cannot issue a FIP for Texas until the December 1, 2011 deadline established in the SIP Call has passed, although this commenter did not discuss the use of sections 110(k)(5) and 110(k)(6) at the sam e time).39 Response:

E

PA discusses the relationship of CAA §§110(k)(6) and 110(k)(5) in the preamble to this rulemaking, including the relationship of the associated FIPs. EPA’s action here is fully authorized by CAA §110(k)( 6), as EPA interprets it, and, as discussed in the preamble, that interpretation does not undermine CAA §110(k)(5). Therefore, there is no basis for concluding that EPA’s interpretation and application of CAA §110(k)(6) undermines the principles of

coo perative federalism. We add here that both CAA §§110(k)(6) and 110(k)(5) authorize the exercise of discretion by EPA and that it is the unique circumstances of the present case that ha s led EPA to apply both the CAA §110(k)(5) SIP call requirements and th e CAA §110(k)(6) error correction process at the same time. Most importantly, Texas’s unwillingness to cooperate with EPA through the SIP Call process to facilitate the timely implementation of a permitting authority in Texas led EPA to invoke the error

- c orrection process. We further add that in this

case, it is incongruous to consider the FIP promulgated under the error

- correction process as burdening the SIP call process because Texas has clearly indicated that it does not intend to adopt a SIP revision as required under the SIP Call, and, to this point, Texas has not advised us that it has taken any steps to adopt such a SIP revision.

Comment:

One of the commenters (0230.1) asserted that the proposed error correction under

section 110(k)(6) short

- ci rcuits the ongoing process of the SIP Call under section 110(k)(5) and renders the Act’s entire statutory scheme for SIP revisions under sections 110(a)(1) and 110(k)(5) superfluous. According to the commenter, EPA’s interpretation of section 110(k)(6) is contrary to the “cardinal principle of statutory construction,” that “[i]t is [a court’s] duty to give effect, if possible, to every clause and word of a statute.’” Duncan v. Walker, 533 U.S. 167, 174 (2001). “[A] statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant.” TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001).

Response:

We discuss in the preamble the relationship between CAA §§110(k)6) and 110(k)(5) and the circumstances under which each applies, and why our interpretation of 110(k)(6) does not render superfluous 110(k)(5).

Comment:

This same commenter (0230.1) stated that EPA attempted to avoid this result by suggesting that EPA would have auth ority to issue a SIP call under section 110(k)(5) but not to promulgate an error

- correction rule under section 110(k)(6) if the SIP “currently has a substantial inadequacy but was not flawed at the time of its submittal and approval.” 75 FR 82455, n. 84. However, the commenter believes that this set of circumstances is precisely what confronts EPA

now

– i.e. , that despite EPA’s “revisionist history” in concluding that Texas’s SIP was inadequate at the time it was approved some two decades ago, any inadequ acy in Texas’s SIP40 results from EPA's actions in the last year bringing GHGs into the Act. The commenter added that if EPA has rejected the section 166 mechanism, the sequence of steps under

section 110(k)(5) is a more natural mechanism under the circumst ances than EPA’s “awkward reading” of its authority under section 110(k)(6).

Response:

In this action, EPA is appropriately applying the CAA §110(k)(6) process, for the reasons

discussed elsewhere.

Comment:

The commenter (0230.1) alleged that EPA justified its “expansive reading” of the term “error” in section 110(k)(6) by the absence of any express cross

- reference to section 110(k)(5) or any explicit limitation constraining its use. However, according to th e commenter, the Supreme Court has explained that individual statutory provisions must be interpreted in their context and in light of the statute as a whole. Smith v. United States, 508 U.S. 223, 233 (1993) (“A provision that may seem ambiguous in isolat ion is often clarified by the remainder of the statutory scheme ... because only one of the permissible meanings produces a substantive effect that is compatible with the rest of the law.”). The commenter asserted that EPA broadly construed “error” in

sec tion 110(k)(6) to include even the circumstance where a subsequent event renders inadequate a previously

- adequate SIP (or where subsequent events “confirm” EPA's post hoc views about whether an original adequacy determination was “in error”), but such a ca se more naturally falls under the rubric of a revision under section 110(k)(5) following the Administrator’s subsequent finding that the implementation plan “is substantially inadequate to attain or maintain” the ambient air quality standards or “to otherw ise comply with any requirement of [the Act].” The commenter believes that this division of authority comports with section 110(k)(6)’s use of the past tense: that provision is applicable only when a prior agency decision “ was in error.”

Response:

We respond to substantially similar comments elsewhere.

Comment:

The commenter (0230.1) asserted that EPA lacks authority to issue a FIP without first providing the required statutory period for revising the SIP after a SIP call under

section 110(k)(5). T he commenter stated that section 110(c)(1) requires EPA to allow the state time to correct the deficient SIP after a SIP call, but EPA has imposed a FIP without allowing Texas the opportunity to submit its plan revision by the December 1, 2011 deadline. T he commenter added that by acting to disapprove Texas’s SIP and simultaneously promulgate a FIP, EPA has truncated the orderly administrative process required by the Act.41 Response:

CAA §110(c)(1)(B) authorizes EPA to promulgate a FIP “at any time with in 2 years after the Administrator ... disapproves a [SIP] submission in whole or in part.” In this action, EPA has utilized the CAA §110(k)(6) process to partially disapprove the Texas PSD SIP submission, and that, in turn, authorizes EPA to promulgate the FIP at this time.

Comment:

In contrast, the favorable commenter (0231.1) appreciate d that EPA has combined th e targeted error correction under section 110(k)(6) with a SIP call, thereby directly engaging Texas state regulators in revising their program to correct its flaws. According to the commenter, t he SIP call process in fact “ calls ” for the state to carry out corrective action while also providing for

a FIP to provide protections until the state corrects the deficiency and the SIP revision is

appr oved. 42 U.S.C. 7410(c), (k)(5). Now that EPA’s error correction efforts have prevented these flaws from causing immediate substantial problems, the commenter believes that Texas

and EPA should focus on SIP revisions that will ensure that Texas is finall y able to take responsibility for controlling carbon pollution under its SIP jurisdiction.

Response :

We agree with the commenter that Texas should work to correct its SIP. EPA’s continues to believe that the states are in the best position to be the per mitting authority for their sources

and looks forward to work ing with Texas to develop and approve an appropriate SIP that

included GHG s in the state’s PSD program

.

Comment:

Two commenters (0230.1, 0232.1 Texas AG) believe that EPA’s actions are not consistent with the Act’s framework of cooperation between EPA and the states. These

comments are summarized below.

One commenter (0232.1 Texas AG) stated that EPA’s reading of CAA section 11 0(k)(6) would fundamentally undermine the Act’s cooperative federalism scheme. According to the commenter, EPA’s interpretation of section 110(k)(6) is unlawful because it is not “a reasonable policy choice for the agency to make” in the context of the st atutory scheme established by Congress. Chevron , 467 U.S. at 845. The commenter contended that EPA’s attempt to construe section 110(k)(6) as an unlimited revisory power for SIP approvals would obliterate the Act’s structure of cooperative federalism by inappropriately and unlawfully eliminating Texas’s authority to manage its air quality resources, and would undermine the policies of deliberative rulemaking and public involvement that Congress expressed clearly in the Act.

The commenter (0232.1 Texas A G) elaborated on the cooperative federalism approach embodied in the Act with numerous citations to the Act, the implementing PSD regulations, and42 court decisions. The commenter concluded that EPA’s action disapproving Texas’s SIP and imposing a FIP is in consistent with this scheme in the following ways:

• Texas has not been afforded the 3

- year period in which PSD SIP submissions are required, or even the 1

- year period EPA afforded in the GHG SIP Call.

• Texas and the public were not given the opportunity t o comment on the FIP with the knowledge that it could be imposed on Texas before the date EPA set for plan

revisions in the GHG SIP Call.

• The purported deficiency in Texas’s SIP

– its failure to automatically update to incorporate pollutants that become s ubject to regulation after its enactment

– contravenes a fundamental Texas policy that generally prevents statutes that incorporate other regulatory provisions by reference from changing along with their incorporated provisions.

Response:

EPA disagrees with this comment. CAA §110(k)(6) is a component of the §110 scheme that authorizes EPA to correct an error in an action involving a state that puts EPA and the state in the same position that they would have been in had EPA not made the error in the first place. EPA is applying that process here, and in a manner consistent with the requirements of CAA §110(k)(6). Those requirements obviate the need for a state to make another submittal. EPA is not establishing some unlimited revisory power for SIP approvals; rather, it is simply correcting a previous error in a SIP approval and putting the parties in the same position they would have been in had EPA acted correctly in the first place . By using a tool provided under the CAA

– CAA §110(k)(6)

-- EPA cannot be said to be eliminat ing Texas’s ability to manage its air quality resources. In any event, EPA is using its discretion under the error

- correction provision precisely because Texas has chosen not to take the same steps every other state has taken to assure the timely availability of a permitting authority for its GHG

- emitting sources.

Comment:

The commenter (0232.1 Texas AG) indicated that EPA has claimed that the 1990 CAA Amendments’ inclusion of the section 110(k)(6) error

- correction p rovision to the Act was intended to rework fundamentally the relationship between EPA and the states, and argued that this alleged claim is unreasonable. According to the commenter, the D.C. Circuit rejected a nearly identical argument by EPA in the conte xt of CAA section 110(k)(5), which was revised and recodified in the 1990 CAA Amendments. The commenter stated that when EPA argued in that case that a minor change made by the 1990 Amendments gave the Agency the power to dictate control measures specifie d in SIPs, the Court disagreed and rejected the notion that Congress would have worked such a fundamental change in so sensitive of a relationship through a minor alteration to the statutory text and without making clear that it intended to do so. Virgini a , 108 F.3d at 1410. The commenter believes that, as in Virginia , EPA has failed to produce any evidence that Congress intended to alter the balance between the federal government and the states by adding a modest error

- correction provision to the Act.43 The commenter (0232.1 Texas AG) also believes that EPA’s interpretation of CAA section 110(k)(6) disregards Congress’ clear policy in favor of extensive public participation in nearly all SIP

- related actions, citing several sections of the Act and the Adm inistrative Procedure Act ( APA). The commenter argued that EPA must strike a reasonable balance among the policies that Congress sought to advance through CAA section 110(k)(6). Chevron , 467 U.S. at 865 (agency interpretation entitled to deference becaus e it “represents a reasonable accommodation of manifestly competing interests”). The commenter believes that EPA has undertaken no such balancing and may not achieve the goal of regulating GHGs by regulatory fiat that disregards public participation in th e SIP revision process.

Response:

As discussed elsewhere, we view CAA §110(k)(6) as authorizing EPA to correct an error that involves an action concerning a state, and thereby put the parties in the same position they would have been in had EPA acted correctly in the first place. We view this provision as authorizing that action for any type of error, whether some may view that error as smaller or larger. The provision provides a streamlined process, which, in the case of an action involving a SIP revision, avoids the need for any further state submission, because it was during the initial state submission that the public had its opportunity for participation, and it is not necessary to provide more opportunity. All this is consistent with the provision’s purpose of authorizing the

correc tion of a previous action so as to place EPA and the state in the same positions they would have been in had EPA acted correctly.

Comment:

The second commenter (0230.1) stated that sections 110 and 166 of the Act allow states reasonable time to adapt SIPs to any new PSD

- regulated pollutants. Although EPA sets national standards, the states are free to craft their responses to any newly announced standards. The

commenter indicated that section 110(a)(2) of the Act, as well as state law, require that S IPs may be submitted to EPA for approval, and later be adopted by the state, only after “ reasonable notice and public hearings.” CAA sections 110(a)(1) and (2); also sections 110(a)(3)(B) and 110(l) (notice and hearing required before SIP revisions). Ac cording to the commenter, the

Third Circuit held in Bridesburg, 836 F.2d at 785, that because a state must have an opportunity to pass first upon the mechanics of achieving compliance with air quality standards, EPA cannot unilaterally revise a SIP witho ut following the Act’s revision provisions. Thus, SIPs are developed by states pursuant to mandatory notice and comment requirements in CAA

sections 110(a)(2) and 110(l), and EPA subsequently approves or disapproves submitted SIPs through a separate APA

- mandated federal notice and comment rulemaking. 5 U.S.C. 553;

42 U.S.C. 7601.

This commenter (0230.1) also indicated that section 166(b) of the Act demands that EPA allow states enough time to change their laws to accommodate newly promulgated federal

e xpectations. Specifically, with regard to SIP revisions responding to a new regulated PSD pollutant, this section allows states 21 months to submit a plan revision. The commenter stressed that section 166(b) is clear that EPA may approve or disapprove th e revised plan only after the state submits its revision. Accordingly, the commenter contended that any SIP call issued before44 the states have failed to satisfy their obligations within 21 months is illegally premature. The commenter added that, a fortio ri, EPA lacks statutory authority to issue a retroactive “correction” to a state’s SIP for failing to comply with EPA’s newly

- promulgated requirements, or unilaterally to federalize the state’s permitting program. The commenter stated that EPA may

not ac hieve through its power to “correct” under section 110(k)(6) what it is prohibited from doing under the Act’s express procedures for SIP revision.

The commenter (0230.1) believes that EPA’s failure to allow the 21 months mandated by CAA section 166(b), i.e., by pronouncing that no PSD permits may be issued after January 2, 2011 without consideration of GHGs, in effect imposed a national construction ban. The commenter stated that EPA’s solution to this problem

– to bypass the Act’s procedures for

notice , comment, and reasoned decision

- making and unilaterally federalize the state permitting

programs

– illustrated the implausible nature of EPA’s undertaking and the absence of supporting statutory authority. The commenter also indicated that EPA’s SIP Call that gave Texas until December 1, 2011 to submit a S IP revision, followed by this interim final rule and proposal is the antithesis of the partnership between EPA and the states set out by the Act.

Response :

For the reasons discussed elsewhere, EPA’s a ctions in this rulemaking are fully authorized under CAA §110(k)(6). That provision authorizes EPA to revise a EPA action related to a state that was in error without a further submittal or other action on the part of the State. That provision is not circ umscribed by the provisions cited by the commenter under section 110.

Nor is the error

- correction provision circumscribed by section 166, which the commenter also cites. The commenter’s argument that the 21

- month period under section 166 circumscribes

t he period for SIP submittal under a SIP Call and that, in turn, circumscribes EPA’s authority under CAA §110(k)(6) is strained and lacks credibility. In any event, EPA explained in the SIP Call rulemaking preamble and response

- to

- comments document that th e 21

- month period does not constrain the timing for EPA’s actions under the CAA §110(k)(5) SIP call provision. EPA incorporates that explanation by reference into this response. CAA section 166(b) by its terms applies only in the case of certain pollutan ts listed in CAA section 166(a) and pollutants for which NAAQS are promulgated and therefore does not apply to GHGs, and (ii) the D.C. Circuit held, in Alabama Power v. Costle

, that the 21

- month period does not toll the applicability of PSD requirements to pollutants, that is, that PSD requirements apply to pollutants during that period. 636 F.2d 323,406 (1980).

Most broadly, EPA’s regulation of GHGs under the motor vehicle rule triggered the applicability of PSD for GHG

- emitting sources as of January 2, 2011. As a result, by operation of the Clean Air Act itself

– specifically, the requirements of CAA §165(a)(1)

-- certain GHG

emitting sources were precluded from undertaki ng construction or modification unless they had a PSD permit. Most of the states in the union either had in place approved PSD SIPs or FIPs that automatically applied PSD to GHG

- emitting sources , and in those states, either the state (if an approved

- SIP s tate) or EPA (if a FIP state) would serve as the permitting authority. For these states, no construction ban of any type was in place. A minority of states , including Texas, had approved SIPs in place that did not provide authority to apply PSD to GHG

- e mitting45 sources and, because they had approved SIPs in place, did not have FIPs in place. As a result, absent further action by the states or EPA, GHG

- emitting sources in those states would, after January 2, 2011, lack a permitting authority to process th eir permit applications and, lacking a permit, would be unable lawfully to undertake construction or modification. This scenario does not result from any construction ban, rather it is the result of the lack of an approved SIP or FIP

in the state. For th ese states, EPA issued a SIP call, and, as noted elsewhere, each of these states except for Texas took steps to assure the availability of a permitting authority on a timely basis for their GHG

- emitting sources. Texas’s failure to do so was the genesis fo r this rulemaking. Under these circumstances, t he §110(k)(5) SIP Call (for each of the minority of states) and the §110(k)(6) error correction (for Texas) were appropriate procedures for EPA to undertake, and EPA was under no obligation to undertake the procedures, if they applied at all, in the other CAA provisions identified by the commenter.



### 5.2 **Comments on CAA Section 301 Authority**

Comment:

Six commenters (0224.1 , 0225.1

, 0227.1, 0228.1 , 0229.2 TCEQ , 0230.1 ) stated that EPA

also seeks to rely on its general rulemaking authority under CAA section 301 , 42 U.S.C. 7601 , to justify its revision of the Texas SIP

, and asserted that t his argument is without merit. According to the commenters, w hile section 301 authorizes EPA “ to prescribe such regula tions as are necessary to carry out [its] functions under this chapter, ” id ., it does not eviscerate the CAA ’ s procedural requirements.

T hree of t he commenters (0224.1 , 0225.1 , 0227.1 ) noted that the courts have held that when specific provisions “ define[] the relevant function of EPA in a particular area, ” then “ EPA cannot rely on its general authority to make rules necessary to c arry out its functions. ” American

Petroleum Institute v. EPA , 52 F.3d 1113, 1119 (D.C. Cir. 1995). The commenters stat ed that

s ection 110 of the Act provides the processes for SIP revisions, and that EPA has already acknowledged that they require, at a minimum, giving Texas 1 year to respond. 75 F R 77703.

T wo of t he commenters (0224.1, 0225.1) asserted that the American Petroleum Institute court recognized that these two powers cannot be used in tandem, 52 F.3d at 1119; therefore the specific procedures for SIP revisions govern EPA ’ s general rulemaking authority.

Another of t he commenter s (0228.1) similarly sta ted that the D.C. Circuit has confirmed

that EPA’s “inherent administrative authority” is not as free

- ranging as EPA suggests , pointing

out that t he court has observed that, although the Agency does possess administrative discretion,

it does not have a “ro ving commission.” Michigan v. EPA , 268 F.3d 1075, 1084 (D.C. Cir. 2001); Am. Petroleum Inst. v. EPA , 52 F.3d 1113, 1119 (D.C. Cir. 1995); Ethyl Corp. v. EPA , 51 F.3d 1053, 1058 (D.C. Cir. 1995). The commenter added that t he notice

- and

- hearing procedure

t hat is required by the CAA for states to adopt and revise SIPs, and for EPA’s approval or disapproval of SIPs, exists for a reason

– in part to provide a check on potential state and federal agency misuse of regulatory authority. The commenter asserted th at i n the present proposed rule, EPA is undertaking what amounts to a un ilateral revision of a SIP; e ven where46 section 301(a) does apply, EPA would be unable to override procedural requirements imposed by

the Act . According to the commenter, s ection 301(a ) does not allow EPA to do what the proposed rule would do: in effect, revise a SIP in a way that circumvents the CAA’s requirement that states provide public notice and a hearing before any substantive SIP revisions may occur.

Response:

We disagree wit h these comments because they do not accurately describe the manner in which EPA relies on CAA §301. As explained in the preamble for this rulemaking, t he provisions in CAA section 110 that authorize EPA to take action on a SIP revision inherently

authori ze EPA to, on its own initiative, reconsider and revise that action as appropriate. In several decisions, described in the preamble for this rulemaking, the courts have found that an administrative agency has the inherent authority to reconsider its decis ions, unless Congress specifically proscribes the agency's discretion to do so. Section 301(a) of the CAA, read in conjunction with CAA section 110 and this case law, provides further statutory authority for

EPA to reconsider its actions under CAA section 110. CAA section 301(a) authorizes EPA "to prescribe such regulations as are necessary to carry out [EPA's] functions" under the CAA. Reconsidering prior rulemakings, when necessary, is part of “[EPA’s] functions” under the CAA

- in light of EPA’s inher ent authority as recognized under the case law to do so

– and, as a result, CAA section 301(a) confers such authority upon EPA.

We disagree with the comment that because section 110(k)(5) sets up one process to revise SIPs, the current action may not be taken under EPA’s general rulemaking authority. As will be further discussed below, EPA’s inherent authority to reconsider its actions, in conjunction with CAA section 301(a) is not limited by the availability of the SIP call pr ocess. The SIP call process is used when EPA determines that a current SIP is substantially inadequate to attain or maintain compliance with the CAA requirements and is a means for addressing a deficiency on the state’s part by calling for state action. EPA action today is fundamentally different

. Today, EPA is reconsidering its previous approval to address deficiencies in its own previous action, not that of the state

. Section 110(k)(6) provides EPA with the authority to act to

correct errors in its ow n previous actions in such a situation. EPA believes that its inherent authority to reconsider its own prior actions also provides it with the authority here to correct errors in its own prior actions.

In general , the reconsideration authority is broader than the section 110(k)(6) authority because the former is not necessarily limited to the correction of errors. However, EPA recognizes that if section 110(k)(6) has the breadth that EPA believes it has, then it may take the place of EPA’s inherent autho rity to reconsider prior erroneous actions here

. I f instead , as commenters argue, the section 110(k)(6) authority is limited to only technical or typographical errors, then the reconsideration authority is substantially broader and EPA continues to have inherent authority to make corrections beyond what section 110(k)(6) authorizes, including this

action . For these reasons, the reconsideration authority should not be considered to have been

pre

- empted or otherwise eliminated by the availability of either the SIP revision process or the error correction process under American Petroleum Institute.

.47 In this case, EPA’s reliance on §301, in conjunction with the other authorities and case law, does not give EPA a “roving commission;” rather, EPA’s action is narrowly circumscribed: It is reconsidering its own previous action on the basis of the relevant parts of the record for that action, and is not unilaterially revising the SIP or requiring the state to take any further action,



### 5.3 **Comments on Inherent Authority under the APA and the Act**

Comment:

Three commenters (0225.1, 0230.1, 0232.1 Texas AG) disp uted that EPA has “inherent authority ” to take the proposed interim final actions. One commenter (0225.1) stated that EPA “finds further support for its authority to narrow its approvals” in APA s ection 553(e) provision requiring EPA to give interested pe rsons “the right to petition for the issuance, amendment, or repeal of a rule,” and the CAA s ection 307(b)(1) provision allowing persons to file a petition for

reconsideration under certain circumstances. 75 FR 82436. According to the commenter, EPA

asse rt ed that these provisions

– w hich EPA admits apply to “other persons”

– imply that EPA has inherent authority to issue an amendment or repeal on its own. Id . The commenter contended

that t his justification using two provisions which are obviously not in tended to apply to EPA does not grant EPA any “inherent authority.” As discussed in the previous comment

, the

commenter believes that even if these provisions did grant EPA any inherent authority, EPA’s general authority cannot override specific provision s which define EPA’s authority to carry out

its functions. The commenter concluded that EPA cannot escape the statutorily

- delegated CAA

s ection 110 SIP revision process by relying on its self

- conferred “inherent authority.”

Response:

We disagree with these comments. The provisions in CAA section 110 that authorize

EPA to take action on a SIP revision , read in conjunction with CAA section 110(k) and other statutory provisions, inherently authorize EPA to, on its own initiative, reconsi der and revise that action as appropriate. The courts have found that an administrative agency has the inherent authority to reconsider its decisions, unless Congress specifically proscribes the agency’s

discretion to do so. See, e.g., Gun South, Inc. v. B rady, 877 F.2d 858, 862 (11th Cir. 1989) (holding that agencies have implied authority to reconsider and rectify errors even though the applicable statute and regulations do not provide expressly for such reconsideration); Trujillo v. General Electric Co., 621 F.2d 1084, 1086 (10th Cir. 1980) (‘‘Administrative agencies have an inherent authority to reconsider their own decisions, since the power to decide in the first

instance carries with it the power to reconsider’’); see also New Jersey v. EPA, 517 F.3d 574 (DC Cir. 2008) (holding that an agency normally can change its position and reverse a prior

decision but that Congress limited EPA’s ability to remove sources from the list of hazardous air pollutant source categories, once listed, by requiring EPA to follow the specific delisting process at CAA section 112(c)(9)). 4

4 For additional case law, see Belville Mining Co. v. United States, 999 F.2d 989, 997 (6th Cir. 1993); Dun & Bradstreet Corp. v. United States Postal Service, 946 F.2d 189, 193 (2d Cir. 1991); Iowa Power & Light Co. v. United States, 712 F.2d 1292 (8th Cir. 1983).48 Section 301(a) of the CAA, read in conjunction with CAA section 110 and the case law just described, provides further statutory authority for EPA to reconsider its actions under CAA

section 110. CAA section 301(a) authorizes EPA ‘‘to prescribe such regulations as are necessary

to carry out [EPA’s] functions’’ under the CAA. Reconsidering prior rulemakings, when necessary, is part of ‘‘[EPA’s] functions’’ under the CAA

— in light of EPA’s inher ent authority as recognized under the case law to do so

— and as a result, CAA section 301(a) confers such authority upon EPA.

EPA finds further support for its authority to narrow its approvals in APA section 553(e), which requires EPA to give interested persons ‘‘the right to petition for the issuance,

a mendment, or repeal of a rule,’’ and CAA section 307(b)(1), which expressly contemplates that persons may file a petition for reconsideration under certain circumstances (at the same time

that a rule is under judicial review). These authorizations for other persons to petition EPA to amend or repeal a rule suggest that EPA has inherent authority, on its own, to issue such

amendment or repeal. The commenter claims that these provisions are irrelevant, sin ce they only directly speak to the ability of a third party to petition EPA to act. However, EPA may only

grant a petition from another person for an amendment to or repeal of a rule if justified under

the CAA . I f such an amendment or repeal is justified under the CAA, then EPA should be considered as having inherent authority to initiate the process on its own, even without a petition from another person. In other words, if EPA did not have the authority to take the requested action, then it could not d o so at the behest of a third party and the right to petition EPA to take the action would be meaningless. Thus, these provisions provide additional support for EPA inherent general authority to revise its own prior actions.

EPA recently used its authori ty to reconsider prior actions and limit its prior approval of

a SIP in connection with California conformity SIPs. See, e.g., 68 FR 15720, 15723 (discussing prior action taken to limit approvals); 67 FR 69139 (taking final action to amend prior approvals to limit their duration); 67 FR 46618 (proposing to amend prior approvals to limit their duration, based on CAA sections 110(k) and 301(a)). EPA had previously approved SIPs

with emissions budgets based on a mobile source model that was current at the time of EPA’s approval. Later, EPA updated the mobile source model. But, even though the model had been updated, emissions budgets would continue to be based on the older, previously approved model in the SIPs, rather than the updated model. To rectify this problem, EPA conducted a rulemaking that revised the previous SIP approvals so that the approvals of the emissions budgets would expire early, when the new ones were submitted by states and found adequate, rather than when

a SIP revision was approved. This helped California more quickly adjust its regulations to incorporate the newer model. EPA is using its authority to reconsider and limit its prior approval of SIPs generally in the same manner as it did in connection with California conformity

SIPs.

EPA disagrees with the commenter that the SIP revision process in 110(k)(5) bars EPA from using any inherent general authority it has to revise its own prior action. First, by including section 110(k)(6) in the CAA, Congress has made clear that the SIP call p rocess is not the exclusive means by which EPA may address flaws in a SIP. Sections 110(k)(5) and (6) of the CAA are intended to address different types of problems with SIPs. Congress provided EPA with49 section 110(k)(5) for use when EPA determines that a current SIP is substantially inadequate to attain or maintain compliance with the CAA requirements. This process is a means for EPA to require state action. See

, e.g
., Sierra Club v. Georgia Power Company , 443 F.3d 1346, 1348 (11th Cir. 2006) (describi ng the SIP call process generally as a means to state action). However, Congress also explicitly laid out EPA’s error correction authority under CAA section 110(k)(6), as a means for EPA to unilaterally reconsider its own prior actions without using a

SIP call. As made clear above, EPA is today correcting its own erroneous action

– not requiring any state action to amend the language of the SIP. EPA’s general reconsideration authority also applies to EPA’s reconsideration of its own actions.

In the pr esent case, EPA believes that this error correction provision authorizes this action. If section 110(k)(6) has the breadth that EPA believes it has, then it may take the place of EPA’s inherent authority to reconsider prior erroneous actions. If section 110(k)(6) has a more limited breadth and does not apply to this action, then EPA continues to have inherent authority to make corrections beyond what section 110(k)(6) authorizes, including this action. For further discussion of a similar action in which EPA relied in the alternative on its authority to reconsider its previous actions, EPA incorporates by reference the Limitation of Approval of Prevention of Significant Deterioration Provisions Concerning Greenhouse Gas Emitting

Sources in State Implement ation Plans; Final Rule (“PSD SIP Narrowing Rule), 75 Fed. Reg. 82536, 82544

- 82547 (Dec. 30, 2010).

Comment:

An other of the commenter s (0230.1) stated that an agency only has those powers specifically delegated to it by statute and noted that the Second Circuit has explained in rejecting

the Government’s similar assertion of “‘inherent’ power to reconsider final rules it has published

in the Federal Register ” that such a claim is “ a bit puzzling in light of the well

- established principle that ‘ an agency literally has no power to act ... unless and until Congress confers power upon it. ’” NRDC v. Abraham, 355 F.3d 179, 202 (2d Cir. 2004) (quoting La. Pub. Serv

. Comm ’ n

v. FCC, 476 U.S. 355, 374 (1986)).

This commenter (0230.1) al so stated that EPA ’ s assertion of “ inherent authority ” in this case violates basic principles of statutory interpretation because it ignores the express authority

for SIP revision and error correction that Congress provide d in the Act. The commenter asser ted

that i t is implausible to suggest that Congress would have gone to the trouble of enacting these carefully crafted authorities (with specific sequences and timeframes) if EPA could act unilaterally at any time under an atextual, implied power to revoke and revise a SIP. The

commenter added that EPA itself concede d that such inherent authority to reconsider is always subordinate to Congress ’ decision to proscribe an agency’ s discretion. Finally, the commenter noted that EPA cited no authority for the p roposition that the power to reconsider an action in response to a petition under CAA section 307(b)(1) includes the authority to reconsider sua sponte at any time.

The third of these commenters (0232.1) similarly believes that EPA has no inherent

author ity to reconsider its approval of Texas’s SIP. The commenter stated that w hether EPA has inherent authority to reconsider certain decisions in appropriate circumstances, it must not do so50 in an arbitrary and capricious manner, and EPA must reconsider its decision within a reasonable time of the original decision. ConocoPhillips Co. v. EPA , 612 F.3d 822, 832 (5th Cir. 2010). Moreover, “an agency cannot exercise its inherent authority in a manner that is contrary to a

statute, [and also that] in situations where a statute does expressly provide for reconsideration of

d ecisions, the agency is obligated to follow the procedures for reconsideration set forth in the

statute.” Tokyo Kikai Seisakusho, Ltd. v. United States , 529 F.3d 1352, 1361 (2008) (citing Civ il Aeronautics Bd. v. Delta Air Lines, Inc. , 367 U.S. 316, 329 (1961))

. The commenter noted that the Act contains an expedited and circumscribed procedure for EPA action regarding SIPs and summarized the requirements of sections 110(k)(1)(B), 110(k)(2), 1 10(k)(3), and 110(k)(5).

Response:

We disagree with these comments. Caselaw supports an inherent general authority for agencies to reconsider their own prior actions. As discussed above, the D.C. Circuit, among others, has found in a case specificall y involving the Clean Air Act that an agency can inherently change its opinion and reverse its own prior decision, though Congress can limits its ability to

do so. New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008). Embedded in an agency's power to

make a decision is its power to reconsider that decision. In addition, “[t]he power of an administrative agency to administer a congressionally created and funded program necessarily requires the formulation of policy and the making of rules to fill any gap left , implicitly or explicitly, by Congress.” Morton v. Ruiz, 415 U.S. 199, 231

- 32 (1974). EPA agrees with these and similar precedents on this matter. In addition, here, as discussed above, EPA finds that it has the inherent general authority to revise its prior approval based on both this body of caselaw and CAA section 301(a), read in conjunction with CAA section 110(k) and other statutory provisions. Thus EPA relies on an inherent general authority derived from the authority Congress actually granted to EPA.

As discussed above, the CAA delineates both a SIP call process and an error correction process, each for application under different circumstances. Congress provided EPA with section 110(k)( 5) for use when EPA determines that a current SIP is substantially inadequate to attain or maintain compliance with the CAA requirements. This process is a means for EPA to require state action. See

, e.g
., Sierra Club v. Georgia Power Company , 443 F.3d 1 346, 1348 (11th Cir. 2006) (describing the SIP call process generally as a means to state action). Congress provided section 110(k)(6) as a means for EPA to address its own flawed prior action, rather a flaw in the state’s action. Thus, EPA’s error corre ction authority under CAA section 110(k)(6) is a means for EPA to unilaterally reconsider its own prior actions without using a SIP call. Here, EPA is not revising the SIP submitted by Texas, but rather EPA is amending its own prior action in approving th e SIP.

EPA believes it has the inherent general authority to revise its prior approval here. However, EPA recognizes that if section 110(k)(6) has the breadth that EPA believes it has, then it may take the place of EPA’s inherent authority to reconsid er prior erroneous actions. If section 110(k)(6) has a more limited breadth and does not apply to this action, then EPA continues to have inherent authority to make corrections beyond what section 110(k)(6) authorizes, including this action. Section 110( k)(5), which provides a means of amending a state51 action, rather than EPA’s own action, is not a bar to EPA’s exercise of its inherent general authority.

While EPA does not rely on either APA section 553 or CAA section 307(b)(1) as direct authority for its action, it does find that these provisions lend support to the proposition that EPA has inherent authority to correct an error as it does here. EPA finds that the authority to act upon a petition to reconsider must necessarily contain within it the ac t to reconsider as applied here. The commenter does not cite to any authority indicating otherwise.

Today’s reconsideration is not being done in an arbitrary and capricious manner. Rather, EPA has undertaken a full rulemaking action in the context of ne w facts brought to light by the regulation of a new pollutant under the CAA. As discussed throughout this rulemaking and RTC, EPA has taken this action to resolve a flaw that, if left unaddressed, would have real negative practical consequences for source s seeking permits in the state of Texas. EPA’s reconsideration of its prior approval was taken promptly once recent actions by Texas illuminated the error in EPA’s prior approval. EPA could not have reasonably taken this action any earlier, as it had not yet recognized the flaw in its previous approval of Texas’s SIP.

Comment:

The same commenter (0232.1 Texas AG ) added that the Bridesburg court held that because section 110(k) limits the time by which EPA may consider in approving a SIP, the

statute also places “at least reasonable limits on the Administrator’s authority to reconsider” and that a change after 1 3 years is a revision that must be accomplished through appropriate statutory

means. Bridesburg at 786. The commenter believes that the inter im final rule similarly is a revision that must be accomplished through appropriate statutory means. The commenter noted

that EPA did not mention Bridesburg in its discussion of inherent authority (even though it

mentioned Bridesburg elsewhere), and opine d that “this omission was undoubtedly purposeful and further underscores the arbitrary and capricious nature of EPA’s proposed action.” The

commenter also cited New Jersey , 517 F.3d at 583 to support the argument that EPA lacks inherent authority for this action.

The commenter (0232.1 Texas AG) also asserted that EPA’s actions limiting its prior approval of California SIPs to allow the s tates to use newer motor vehicle emission modeling technology does not support its action here. 75 F R 82436. Accordin g to the commenter, EPA

never identified “inherent authority” to reconsider or limit its SIP approval as a basis for these

actions. 67 F R 46618

, July 16, 2002 ; 67 F R 69139

, Nov ember 15, 2002; 68 F R 15720

, Apr il 1,

2003. Instead, EPA described its action as “provid[ing] a mechanism for enhancing compliance with [] CAA section 176(c)(1).” 67 F R 69142. The commenter argued that t hese actions, made at California’s request, have no relevance to the instant action.

Respons e:

We disagree with these comments. EPA reconsidered its prior approval of Texas’s SIP in a timely manner once it determined that a flaw existed. Unlike when a new SIP submittal is provided to EPA, it would make little sense to time limit EPA’s abilit y to reconsider its actions to52 correct errors in those actions because there is no guarantee such errors may be noticed within a prescribed time period.

EPA has accomplished today’s action through appropriate means as part of a full rulemaking action. EPA believes that section 11 0(k)(6) provides the statutory authority for this action. But, to the extent section 1 1 0(k)(6) is interpreted more narrowly than EPA believes is appropriate, then EPA’s inherent general authority

– based in part on its statutor y authority

-- applies. As discussed above, EPA disagrees with the commenter’s interpretation of the New Jersey case.

With regards to the California Conformity SIPs discussed by the commenter, EPA was acting to provide a mechanism for enhancing complianc e with CAA section 176(c)(1). However, the legal basis for this action was EPA’s inherent general authority to reconsider its prior actions. Just as here EPA finds that CAA sections 110(k) and 301(a) provide the basis for our inherent authority, to recon sider our prior actions, the proposed rule there stated that EPA was there acting “as authorized in CAA sections 110(k) and 301(a).” 67 FR 46618, 46620 (July 16, 2002).



### 5.4 **Other Comments on EPA’s Error Correction**

Comment:

One commenter (0228.1) stated that according to previous EPA interpretations, adoption of the Tailoring Rule is a “fundamental change” to the PSD program and therefore requires a SIP revision to be implemented. 57 F R 28093, 28096

, June 24, 1992 ; 54 F R 528 23, 52 824,

Dec ember 22, 1989. The commenter noted that EPA ’s 1989 proposed approval of Texas’s PSD SIP stated that EPA’s changing statutory interpretations do not have to be included in a SIP because it would be “administratively impracticable” to do so

, b ut EPA concluded that “any fundamental changes in the administration of PSD would have to be accomplished through amendments to the regulations in 40 C.F.R. 52.21 and 51.166, and subsequent SIP revisions .”

Id. (emphases added). The commenter added that i n the 1992 final EPA rule approving Texas’s PSD program, EPA reiterated: “EPA cannot unilaterally change the clear meaning of any approved SIP provision by later guidance or policy. Rather, as stated in the proposed approval notice, such fundamental cha nge must be accomplished through the SIP revision process .”

57 F R 28096 (emphasis added).

The commenter (0228.1) believes that t here may be no more fundamental change to the PSD program than its recent expansion to include GHGs as provided in the Tailor ing Rule. T he commenter alleged that t his expansion was effected “through amendments to the regulations in 40 C.F.R. 52.21 and 51.166,” 54 F R 52824, and accordingly qualifies as a “fundamental change.” Id. As EPA recognized, the step needed to “accompli sh[]” this fundamental change is the state’s adoption of “subsequent SIP revisions.” 54 F R 52824. Through the SIP Call, EPA called on Texas to revise its SIP to incorporate GHGs in its PSD program. The commenter

believes that Texas properly has 3 years to accomplish this task, but even if it must do so by53 EPA’s SIP Call

- imposed deadline of December 1, 2011, SIP revisions need to be accomplished to effectuate this unmistakably fundamental change.

The commenter (0228.1) stated that the language of the Ac t and EPA’s rules give states

reasonable time to make SIP revisions to accommodate fundamental changes in law. Because EPA has been “well aware,” 75 F R 82432, of what it characterizes as the “deficiencies,” id. at 82459, in Texas’s PSD program for some ti me, and because the GHG change EPA made to the federal PSD program is unquestionably “fundamental,” 54 F R 52824, the change is required by law to be effected through SIP revisions and cannot be made through the section 110(k)(6) error

correction mechanism

.

Response:

In the preamble for this rulemaking, we respond to the comment that the application of the PSD program to GHG

- emitting sources was a “fundamental change ” within the meaning of EPA’s proposed approval of Texas’s PSD SIP. As we stated there, applying PSD to a pollutant newly subject to regulation was not a “fundamental change in the administration of PSD;” rather, EPA intended that phrase to refer to requirements of the PSD program. As discussed elsewhere in the preamble and this document, T exas was already required by the Clean Air Act and EPA regulations to apply PSD to pollutants newly subject to regulation. We add here that the Tailoring Rule did not apply PSD to GHG

- emitting sources; rather, it established thresholds for the applicabili ty of PSD to such sources. Moreover, those thresholds are incorporated into EPA regulations for the applicability of PSD to GHG

- emitting sources, so that EPA’s FIP for Texas promulgated through this rulemaking

– which applies PSD to GHG

- emitting sources

– incorporates those thresholds.

Comment:

One commenter (0232.1 Texas AG) opin ed that EPA may not engage in retroactive rulemaking, so EPA’s action is unlawful because the Agency has no authority to make retroactive revisions to its regulations concernin g SIP approvals. The commenter asserted that though EPA claim ed to correct an error in its 1992 approval of Texas’ s SIP submission, the Agency is applying requirements that did not exist at the time the SIP was approved , particularly

the asserted requirem ent that the SIP contain a mechanism to automatically update to include newly regulated pollutants in the PSD program. As discussed in other comments

, the commenter

believes that EPA was fully aware of this feature of Texas’ s SIP and did not consider this to be a requirement at the time, as demonstrated by its knowing approval of Texas’ s SIP and other SIPs that did not automatically update. According to the commenter, Congress has denied EPA the power to impose requirements o n the s tates retroactively : b ecause “[r]etroactivity is not favored in the law,” “a statutory grant of legislative rulemaking authority will not, as a general matter, be understood to encompass the power to promulgate retroactive rules unless that power i s conveyed by Congress in express terms.” Bowen v. Georgetown University Hosp. , 488 U.S. 204, 208 (1988). The commenter stated that the SIP

- related provisions of the Act contain no authorization of retroactive rulemaking and, in fact, specifically prohib it it as regards revision of SIPs in the following ways:54 • Section 110(k)(3) requires EPA to approve any SIP submittal that meets the minimum standards of the Clean Air Act, including applicable EPA regulations. No provision provides for approval or disapp roval of a SIP submission or approved SIP on the basis of subsequent rulemaking.

• Sec tion 110(k)(5) allows EPA to make a finding of substantial inadequacy only with regard to “the requirements of this chapter to which the State was subject when it developed and submitted the plan.” Thus, even where a SIP may be “substantially inadequate” to achieve one or more air quality standards, EPA may not impose new or additional requirements on the s tate.

• Section 110(k)(6) error corrections are required to be made und er the restrictive statutory provisions described elsewhere in the comments , including by acting “in the same manner as the approval” by applying the same standards that governed the Agency’s original action on the SIP submission. Further, non

- retroactivi ty is, as

described elsewhere , inherent in the notion of error

- correction: failure to meet a requirement could not have been “in error” if the requirement did not exist at the time

of the decision.

• Section 110(i) specifically prohibits any “order, suspensi on, plan revision, or other action modifying any requirement of an applicable implementation plan” regarding stationary sources except through the plan revision process or FIP process. This prohibition is an unequivocal and absolute bar on retroactive rul emaking that affects

the contents of an approved SIP as it relates to stationary sources.

The commenter concluded that w hile the absence of any provision for retroactive rulemaking would itself be fatal to EPA’s action, these statutory features demonstrate that Congress considered, and specifically rejected, authorizing EPA to act retroactively with respect to SIPs.

Response:

We disagree with this comment. EPA is not making a retroactive revision to its regulations concerning SIP approvals. As discussed elsewhere, EPA is not, in this rulemaking creating a requirement that SIPs contain a provision to automatically update to include pollutants newly subject t o regulation. EPA is correcting the error it made in previously approving the Texas SIP because at the time the SIP was approved, Texas did not address the applicability of PSD to all pollutants newly subject to regulation, as the CAA and EPA regulations required at that time. These are not new requirements being applied retroactively.55 Comment:

One commenter (0232.1 Texas AG) asserted that EPA must follow the CAA

section 110(a) SIP revision process if it wishes to change the content of the Texas SIP . The commenter stated that historically, EPA has incorporated new regulatory requirements, including in situations where new pollutants have become “subject to regulation,” by respecting s tates’ rights to submit prospective SIP revisions pursuant to sect ion 110(a) and EPA’s regulations incorporating those provisions (and the PSD program). According to the commenter, when EPA proposed to approve Texas’s SIP, it reaffirmed this commitment, stating that “ any fundamental changes in the administration of PSD would have to be accomplished through amendments to the regulations in 40 C.F.R. § 52.21 and 51.166, and subsequent SIP revisions.” 54 F R 52824

. The commenter indicated that EPA was clear that this meant that the state could implement its SIP according t o its terms. 57 FR 28095. The commenter believes that EPA’s failure to follow the section 110(a) revisions process as it is compelled to do is arbitrary and capricious, and is contrary to law.

The commenter added that, assuming arguendo that EPA could impose another statutory mechanism, it would be the section 110(k)(5) SIP call process. In the GHG SIP Call, EPA recognized that it could not impose a FIP on Texas until December 2, 2011, and the commenter

believes that the interim final rule conflicts wi th this decision.

Response:

EPA disagrees with this comment. EPA is not changing the content of the Texas SIP in this action, it is only correcting the error it made in previously approving the Texas SIP. EPA responds elsewhere in this document to the commenter’s statements concerning “fundamental changes

. ”56 

## 6 Comments on the Proposed FIP

Comment:

One industry association commenter (0227.1) indicated that t he proposed FIP finds that it

is s ections 160 through 165 of the Act that require GHGs to trigger PSD permitting , but EPA

state d that it is not soliciting comment on this issue. The commenter stated that EPA’s assertion that these sections of the Act require GHGs to trigger PSD is not only incorrect but is unsupported in the record

, and that E PA cannot determine that it will not accept comment on an

issue that is at the core of the proposed regulatory language. Thus, the commenter believes that EPA’s statement that it is not accepting comments on this particular issue is unavailing and

difficu lt to comprehend. The commenter also asserted that EPA’s claim that it is not accepting

comment on issues that were addressed in its four

- rule suite of GHG rulemakings is irrelevant. Accordingly, t he commenter attach ed and incorporate d by reference the c omments previously

filed purportedly explaining why only NAAQS pollutant emissions can trigger PSD permitting.

Response:

As discussed in the preamble to the final rule, we did not solicit comment on the self

executing nature of the PSD program because we have taken comment on this issue in numerous previous rulemakings and we believe this issue to be resolved in those rulemakings. In addition to the discussion in the preamble to this final rule, this issue was discussed in previous rulemakings includin g the GHG PSD SIP Call Rulemaking and associated FIP, and in the response to comments (RTC) documents for those rulemakings (EPA

- HQ

- OAR

- 2010

- 0107

- 0130

and EPA

- HQ

- OAR

- 2010

- 0107

- 0157, respectively). Although not re

- opening this issue in this rule, for compl eteness, EPA incorporates by reference its responses to comments on this issue in the SIP Call rulemaking.

Comment:

One commenter (0229.2 TCEQ) disagreed that the language in proposed 40 CFR 52.2303 justifies EPA’s partial disapproval action. According to the commenter, i t is obvious from

EPA’s failure to “ correct ” its approval for over 18 years that this action and the FIP are about GHG regulation and not any other pollutants and is more clear by reference to the new definition

of “ subject to regulatio n ” added by the GHG Tailoring Rule only months ago. The commenter

believes that a n immediate partial disapproval for failure to include GHG which have only recently been added through this new definition in 40 CFR 52.21(b)(49) is illegal and does not

comp ort with the amendment process provided under 40 CFR 52.21.

Response:

We disagree with this comment. As we explain elsewhere in this document and in the preamble for this rulemaking, this action is rooted in the Texas’s SIP PSD program’s flaw stemming from its failure to not address pollutants newly subject to regulation. This flaw, which was present in the SIP at the time EPA approved it, means that EPA’s approval was in error, and that, in turn, serves as the basis for this action.57 

## 7 Comments on Other Topics

**7.1 Comments on a “Construction Ban”** 

Comment:

Four industry association commenters (0224.1, 0225.1, 0227.1, 0228.1) stated that EPA justifies the proposed and final rules out of fear that a “construction ban” will result absent the rules, but the commenters asserted that there is no need for the proposed or final rules to avoid a construction ban. The primary points made by two of the commenters (0224.1, 0225.1) are as

follows:

• An EPA

- approved SIP may differ from the Act and EPA regulations. In basing its FIP on concern with a construction ban, EPA fails to appreciate that an EPA

approved SIP may differ from the CAA and EPA regulations prior to revision. An approved SIP does not immediately become invalid upon a change in the Act or regulations. Section 110 of the Act codifies Congress’s intent that the PSD provisions of the Act be implemented, maintained, and enforced through implementation plans administered by states. 42 U.S.C. 7410(a)(1), (a)(2)(C), (D),

and (J). Once approved, a state pla n defines the entire set of PSD requirements for sources in that state until the plan is revised through processes established in s ection

110. I d

. section 7410(k); Concerned Citizens of Bridesburg v. EPA , 836 F.2d 777, 787 n. 12 (3d Cir. 1987). Thus, EPA ’s regulation of GHGs does not, by its own force, compel stationary sources emitting GHGs to obtain PSD permits based on

those emissions. O nly a direct congressional mandate, a SIP revision, or an EPA disapproval pursuant to the CAA s ection 110(k)( 6) error correction process can cause

an EPA

- approved SIP to lose effect. Other parts of the CAA reflect Congress’s desire

that EPA

- approved SIPs, with whatever flaws they may have, remain binding absent statutory amendments or regulations. Section 406 of the CAA Amendments of 1977 provided that no “requirement of an approved implementation plan” would be affected by the new law until affirmatively “modified or rescinded in accordance

with” the Act. Pub. L. No. 95

- 95, section 406, 91 Stat. 685, 796 (1977). Section 110(n), part of the 1990 amendments, reiterates Congress’s desire more clearly, providing that provisions in approved plans “shall remain in effect as part of such applicable implementation plan, except to the extent that a revision t o such provision is approved or promulgated by the Administrator pursuant to this Act.” 42 U.S.C. 7410(n).

• An EPA

- approved SIP may be changed in only two ways

– by rare explicit statutory command through CAA section 168 or through the revision process in CAA

section 110. Section 168(b) provides an exhaustive list of clearly self

- executing PSD requirements. Citizens to Save Spencer County v. EPA , 600 F.2d 844, 851

– 52 (D.C. Cir. 1979). The s ection 165(a) PSD requirements are not included on that list and therefore do not bind sources until incorporated into implementation plans; i.e. , until implemented by notice

- and

- comment rulemaking. I d . at 888

- 90 (upholding regulations incorporating s ection 165(a) into FIPs well after the s ection’s effective58 date); cf . id . at 903 (Robinson, J., dissenting) (preferring to hold that EPA could not incorporate Section 165(a) into federal plans “before revision and approval of applicable state implementation plans”). The EPA did not give Texas sufficient opportunity to rev ise its SIP through the proper CAA processes.

Response:

As EPA explains elsewhere in this document, EPA’s regulation of GHGs under the light

duty motor vehicle rule triggered the application of PSD to GHG

- emitting stationary sources as of January 2, 2011. By operation of CAA §165(a)(1), as of that date, certain GHG

- emitting sources cannot construct or modify unless they obtain a PSD permit. An approved SIP PSD program, such as Texas’s, that fails to include GHGs in its PSD program does not override this statutory requirement. CAA section 110(n) is not relevant to the applicability of CAA §165(a)(1). The Citizens to Save Spencer County case does not stand f o r the proposition that CAA §165(a)(1) is not self

- executing. Having revised its previous approval of Texas’s SIP to a partial approval and partial disapproval, EPA is authorized under CAA §110(c)(1)(B) to promulgate a FIP immediately, and is not required to wait until Texas has had another opportunity to submit a SIP revision.

Comment:

• Compliance with an EPA

- approved SIP does not violate the Act. The EPA does not cite any provision of the Act that supports its contention that Congress intended to impose a construction ban when EPA newly regulates a pollutant. To the contrary,

CAA s ecti on 113(a)(1) protects sources that comply with applicable implementation plans by authorizing EPA to issue orders or bring civil actions only when a source violates a plan. 42 U.S.C. 7413(a)(1); cf

. General Motors Corp. v. United States , 496 U.S. 530, 539

- 42 (1990) (sources must comply with applicable plans, which govern until EPA approves a replacement). That remains true even when an approved plan allows conduct that would otherwise violate the Act or EPA regulations. Indeed, the U.S. Court of Appeals for the Seventh Circuit recently held that the Clean Air Act “does not authorize the imposition of sanctions for conduct that complies with a State Implementation Plan that EPA has approved.” United States v. Cinergy Corporation

, 623 F.3d 455, 458 (7th Ci r. 2010) (citing 42 U.S.C. 7413(a)(1)).

Response:

Here, too, EPA stated in the proposal for this rulemaking that because EPA addressed this comment in earlier rulemakings on which this rulemaking is based

– including the Tailoring

Rule and the GHG PSD SIP Call

– EPA was not soliciting comment on this issue and was not required to respond to such comments. 75 FR at 82,388/2, see 75 FR 31,514 (June 3, 2010) and 75 FR 77,698 (December 13, 2010). Even so, for the sake of completeness, and without re

opening this issue in this rulemaking, EPA provides the following response: We disagree with the comment that compliance with an approved SIP that does not apply PSD to GHG

- emitting sources means that such sources are not subject to the requirement of CAA §165(a) (1) to obtain a permit before undertaking construction or modification. CAA §113(a) does not shield sources that comply with SIP requirements from the §165(a)(1) requirements. As we stated in th e preamble for this rulemaking , EPA has long interpreted the PSD applicability provisions in the59 CAA to be self

- executing, 5 that is, they apply by their terms so that a source that emits any air pollutant subject to regulation becomes subject to PSD

- and, therefore, cannot lawfully construct or modify without obta ining a PSD permit

— and these provisions apply by their terms in this manner regardless of whether the state has an approved SIP PSD program. What is more, until an applicable implementation plan is in place

— either an approved SIP or a FIP

— no permitt ing authority is authorized to issue a permit to the source.

In the recent Cinergy decision, the 7th Circuit confronted a case that, at the district court level, involved both nonattainment NSR and PSD claims, with the appeal involving a substantive nonattainment NSR issue and an evidentiary PSD issue. However, in its opinion, the 7 th Circuit described the substantive nonattainment NSR issue as if it applied to both nonattainment NSR and PSD. On that issue, the Court held that sources could continue to abide by permitting requirements in an existing SIP until amended, even if that SIP does not comport with the law. Again, notwithstanding the Court’s broader description of the case, that holding applied only to the nonattainment NSR claims because, a gain, only those claims were before the Court on that

issue. United States v. Cinergy Corp ., 623 F.3d 455 (7th Cir. 2010). In stark contrast to the nonattainment provisions actually at issue in Cinergy

— which are not self

- executing and must therefore be en forced through a SIP

— PSD is self

- executing; it is the statute (CAA section 165), not just the SIP, that prohibits a source from constructing a project without a permit issued in

accordance with the Clean Air Act.

Comment:

The commenter goes on to sta te that t he State of Texas’s failure to submit a required SIP revision could not justify a construction ban. Congress provided sanctions for a state’s failure to submit a required SIP revision pursuant to a SIP call in CAA s ection 179(b). The sanctions

a vailable include withdrawing federal highway funds and doubling offset ratios. Though severe,

these sanctions fall short of a full construction ban. Indeed, Congress repealed the only

construction ban in the A ct

, s ection 110(a)(2)(I), as it existed prior to the 1990 Amendments. The repeal of this provision is a clear indication that EPA should not be interpreting the post

1990 Act to impose a construction ban based on whether a state can issue permits for GHGs under the PSD program. Section 166 of the A ct provides statutory evidence that when a pollutant is regulated under PSD, following EPA promulgation of a NAAQS, Congress provided

for EPA to allow states time to revise their SIPs. 42 U.S.C. 7476(b) ( “ Within 21 months after such date of promulgation s uch [SIP] revision shall be submitted to the Administrator who shall approve or disapprove the plan within 25 months after such date or promulgation in the same manner as required under section 7410 of this title. ” ). If Congress intended a construction ba n, it would have expressly provided such an extreme remedy.

• A construction ban will only result from disapproval. The only reason EPA cites for promulgating the FIP immediately and without proper administrative process is concern over a possible construction ban

– a concern of EPA’s own making. 75 FR

82431. A construction ban in this situation can only result from d isapproval of the Texas SIP. Even if the Texas SIP is inconsistent with the Act, it remains valid until disapproved or revised. Thus, EPA can mitigate its concerns over a construction ban by abandoning its disapproval of the Texas SIP and following the p rocess that EPA

5 EPA likewise did not reopen this issue in this rulemaking.60 claimed it would follow in its December 13, 2010 SIP Call

– consideration of Texas revisions submitted by the EPA

- assigned deadline of December 1, 2011. The Texas SIP would remain valid in the interim period and affected sources will conse quently continue to have the permitting authority that EPA claims to prefer: the State. The EPA advertised that it would give Texas until December 1, 2011 to submit a SIP revision, then surprised Texas only days later with an ill

- considered disapproval a nd interim FIP, neither of which was subject to the notice

- and

- comment process. The only reason provided for this abrupt disapproval was the potential for a construction ban, a construction ban that would not result if not for the disapproval itself.

Res ponse:

EPA replies to many of these comments elsewhere in this document. We add here that the construction ban that the commenter describes is a function of the requirement that sources obtain a permit in order to construct or modify, coupled with the l ack of a permitting authority in

the state. It is not the result of some sanction

- like provision in the Clean Air Act or any disapproval of the Texas SIP. The SIP Call does allow Texas until December 1, 2011 to submit its SIP, but until then, absent fur ther action by EPA, GHG

- emitting sources in Texas would not be able to obtain a construction or modification permit for their GHGs. In any event, Texas has indicated that it does not intent to submit a SIP revision to apply PSD to GHGs.

Comment:

Comme nter 0228.1 made many of the same points and added that CAA section 110(i), entitled “Modification of requirements prohibited,” provides that SIPs may not be revised except through revision of the plan pursuant to the procedures of CAA section 110(a) or, w here authorized, through promulgation of a FIP under CAA section 110(c). 42 U.S.C. 7410(i); see also Concerned Citizens of Bridesburg v. EPA , 836 F.2d 777, 787 n.12 (3d Cir. 1987) (observing, with reference to section 110(i), that “the Act attempts to enu merate an exhaustive list of the EPA’s powers regarding SIPs. Lacking another statutory source of authority, the EPA must utilize the revision provisions [under section 110(a) or (c)] to accomplish its purpose”); cf

. 42 U.S.C. 7410(k) (establishing proces s for EPA to “call” a SIP for revision when the SIP has become substantially inconsistent with pre

- existing requirements of the Act). According to the

commenter , EPA’s proposed rule would violate the terms of section 110(i) by “modifying . . . an applicab le implementation plan,” id. section 110(i), by circumventing the requirement that SIP revisions follow the procedures described in section 110(a) or 110(c), including the

section 110(a)(2) requirement for “reasonable notice and public hearing” by the stat e.

Response:

For the reasons discussed elsewhere, CAA §110(k)(6) provides direct authority for this rulemaking action, and is not constrained by CAA §110(i).61 Comment:

This commenter (0228.1) believes that EPA’s regulations confirm that the PSD program is not self

- executing , pointing out that the PSD rules for states at 40 CFR 51.166 provide that “[a]ny State required to revise its implementation plan by reason of an amendment to this section . . . shall adopt and submit such plan revision to the Administrator for approval no later than three years after such amendment is published in the Federal Register .” 40 CFR 51.166(a)(6)(i) (emphasis added). Further, “[a]ny [such] revision . . . shall take effect no later than the date of its approval and may operate prospectively.” Id

. 40 CFR 51.166(a)(6)(iii). Accordingly, the

commenter asserted that rather than imposing a permitting moratorium upon EPA’s adoption of a new minimum PSD requirement, the PSD rules provide states a reasonable period of time for incorporating a new minimum PSD requirement, with prospective effect, into SIPs

– during

which time the EPA

- approved SIP continues in force and the state may continue to issue permits under that SIP without addressing the new minimum requirement promu lgated by EPA.

Response:

The requirements of 40 CFR 51.166 do not mean that a pollutant is not subject to PSD for the first time except through a revision to 51.166. The PSD requirements for pollutants newly subject to regulation are triggered at the time those pollutants become subject to regulation under other provisions of the CAA, as the PSD requirements for GHGs were triggered by regulation of GHGs under the light

- duty vehicle rule, as of January 2, 2011. Once the PSD requirements are triggered, CAA §165(a)(1) applies by its terms to require sources that emit those pollutants to obtain a permit before undertaking construction or modification. This issue is discussed in more detail in the preamble and in earlier rulemakings

. See 75 FR 31,514 (June 3, 2010) and 75 FR 77,698 (December 13, 2010).

Comment:

The commenter (0228.1) added that because EPA published the Tailoring Rule’s

amendments to the 40 CFR 51.166 PSD rules on June 3, 2010, Texas’s lawful deadline for submitting a revised SIP to adopt that change is 3 years after that date, i.e. , June 3, 2013. According to the commenter, because 40 CFR 51.166(a)(6)(i) omit s the language of underlying

CAA sec tion 110(a)(1) that this period is to be 3 years “or such shorter period as the Administrator may prescribe” and instead codifie s a 3

- year period , t hat binding rule precludes

any attempt by EPA to shorten the 3

- year period for SIP submittal.

Response:

EPA disagrees with the argument that the authorization for states to submi t PSD SIP

revisions within a three

- year period, under 40 CFR 51.166(a)(6), means that PSD does not apply

to GHG

- emitting sources until states submit such a SIP revision. Section 51.166(a)(6) provides, in relevant part: “Any State required to revise its im plementation plan by reason of an amendment to this section ... shall adopt and submit such plan revision to the Administrator for approval no later than three years after such amendment is published in the Federal Register”;62 and “[a]ny [such] revision ... shall take effect no later than the date of its approval and may operate prospectively. 40 CFR 51.166(a)(6)(i), (iii) (emphasis added). The requirements of 40 CFR 51.166 do not mean that a pollutant is not subject to PSD for the first time except throug h a revision to 51.166. The PSD requirements for pollutants newly subject to regulation are triggered at the time those pollutants become subject to regulation under other provisions of the CAA, as the PSD requirements for GHGs were triggered by regulatio n of GHGs under the light

duty vehicle rule, as of January 2, 2011. Once the PSD requirements are triggered, CAA §165(a)(1) applies by its terms to require sources that emit those pollutants to obtain a permit before undertaking construction or modificati on. B ecause 51.166 is a regulation, it cannot, no matter how it is interpreted, override the CAA requirements that apply PSD requirements to

GHG

- emitting sources so that those CAA requirements do not take effect as of January 2, 2011.

This issue is discus sed in more detail in the preamble and in earlier rulemakings

. See 75 FR 31,514 (June 3, 2010) and 75 FR 77,698 (December 13, 2010).

C omment:

Commenter 0227.1 also touched on many of the points summarized above. In addition, the commenter stated that EPA provides no rationale for its apparent position that section 165 of the Act operates independently of implementation plans, so it is difficult for commenters to respond to it. The commenter added that the structure of the Act provides that statutory requirements are given content and effect through notice

- and

- comment rulemaking (per

section 110 procedures) rather than self

- executing statutory d irectives, and contrasted the Clean Water Act, which prohibits discharge of any pollutant without a permit, to CAA Title I programs, which require rulemaking to bring about a restriction on emissions of a pollutant.

Response:

EPA disagrees with these commenters and EPA continues to take the view that the CAA PSD requirements apply by their terms to pollutants newly subject to regulation, regardless of whether a state with an approved SIP applies PSD to such pollutants. As discussed at length in the pr eamble to the final PSD GHG SIP call (75 FR 77,707

- 77,709, Dec 13. 2010), the CAA requirements (i) prohibit a "major emitting facility" from constructing or modifying without obtaining a permit that meets the PSD requirements, CAA section 165(a)(1); and (i i) define a "major emitting facility" as a source that emits a specified quantity of "any air pollutant," CAA section 169(1), which EPA has long interpreted as any pollutant subject to regulation. 40 CFR 52.166(b)(49)(iv). In this manner, the CAA require ments for PSD applicability are what we call automatically updating, that is, at the very time EPA regulates a previously unregulated pollutant, any source emitting that pollutant in sufficient quantities becomes a “major emitting facility,” and that sourc e cannot construct or modify without receiving a PSD permit. That is, PSD applies to that pollutant at the time it becomes subject to regulation, without further regulatory action by EPA.

EPA regulations have codified this automatically updating aspect of the CAA PSD requirements. See 43 FR 26,380, 26,403/3, 26,406 (June 19, 1978) (promulgating 40 CFR 51.21(b)(1)(i)) and 42 FR 57,479, 57,480, 57,483 (November 3, 1977) (proposing 40 CFR63 51.21(b)(1)(i)) (applying PSD requirements to a "major stationary s ource" and defining that term to include sources that emit specified quantities of "any air pollutant regulated under the Clean Air Act"). Most recently, in our 2002 NSR Reform rule, EPA reiterated these requirements, although changing the terminology. 6 7 FR 80,186 (December 31, 2002). Specifically, EPA required that emissions of "any regulated NSR pollutant" be subject to PSD requirements when emitted in specified quantities by sources and defined that term to include pollutants regulated under certain CAA requirements, as well as "any pollutant that otherwise is subject to regulation under the [CAA]." 40 CFR 52.166(b)(49)(iv). EPA made clear in the preamble to the NSR Reform rule that PSD applicability was automatically updating. 67 FR
80,240.

G HG

- emitting sources became subject to PSD due to the operation of these CAA and regulatory provisions, in conjunction with the Light

- Duty Vehicle Rule. The latter rule subjected GHGs to regulation for the first time, as of January 2, 2011, so that, by ope ration of the CAA PSD provisions and the associated regulatory provisions, PSD automatically applied to GHG

emitting stationary sources as of that date. The Tailoring Rule codified in 40 CFR 51.166 an interpretation that, read in conjunction with the Ligh t

- Duty Vehicle Rule regulations, had the effect of establishing the January 2, 2011 date by which GHGs became subject to regulation, see 40 CFR 51.166(b)(48) along with a phase

- in schedule, see id at 51.166(b)(48)(iv)

- (v). However,

contrary to commenters arguments, the Tailoring Rule did not itself require that PSD apply to

GHG

- emitting sources, and the provisions that the Tailoring Rule incorporated into 40 CFR 51.166(b)(48), as just described, did not impose that requirement.



### 7.2 **Comments on the Interim Fin al Rule** 

Comment:

Four commenters (0224.1. 0225.1, 0230.1, 0232.1 Texas AG) believe that the interim final rule is procedurally deficient for failure to follow notice

- and

- comment rulemaking procedures. The commenters stated that the interim final rule is not justified by the APA’s “good cause” exception. Commenter 0225.1 stated that EPA’s justification is circular because the rules themselves are the cause of the harm they purport to avert for the reasons discussed

above in Section 7.1 of this document related to the possibility of a “construction ban” in the

absence of the rules.

One of the commenters (0224.1) stated that section 110(k)(6) of the Act is designed to allow the Agency to correct an error “ without requiring any further submission from the State, ” but the Agency must otherwise still proceed “ in the same manner ” as the original action

– i.e., the agency must use notice and comment rulemaking as prescribed by CAA section 307(d)

. 42 U.S.C. 7607(d). Concerned Citizens of Bridesburg v. EPA

, 836 F.2d 777, 780 (3d Cir. 1987). According to the commenter

, section 110(k)(6) relieves the s tate of the need to submit further

information to EPA

– i t is no longer a “ requir[ed] ” prerequisite for Agency action

– b ut it does not relieve the Agency of it s duty to solicit and accept comment from the s tate. T he commenter

contended that t his is consistent with section 110(k)(6)’ s status as a mechanism for correction of64 uncontroversial mistakes such as “ typographical errors, ” not a massive loophole in the

pr ocedures prescribed by Congress for agency action. Bridesburg , 836 F.2d at 786

.

This commenter (0224.1) stated that EPA has not offered any “ good cause ” that would justify its disregard of established CAA procedures. According to the commenter , the cou rts have repeatedly stated that the “ good cause ” exce ption to APA procedures “ should be read narrowly, ” United States Steel Corp. v. EPA , 595 F.2d 207, 213

– 15 (5th Cir. 1979), rejecting agency attempts to invoke it when the agency could have proposed the rule earlier, id ., and when

the rule is not “ unimportant to the industry and to the public, ” Texaco, Inc. v. Federal Power

Commission , 41 2 F. 2d 740, 743 (3d Cir. 1969) (internal quotation omitted). The circumstances here do not meet that extremely stringent standard. In fact, the only reason that EPA can give for ignoring the congressional prerequisites for agency action is its own decis ion to impose a FIP on

Texas at the eleventh hour. The commenter elaborated as follows:

• The EPA has not given any justification for its decision to delay this rulemaking until December 30, 2010, the last business day before January 2, 2011 which, accordi ng to EPA, is the first day that permitting authorities would have to rely on its rule. 75 F R

82455. In these circumstances, the courts have held that an agency has failed to demonstrate good cause. United States Steel Corp , 595 F.2d at 213

– 15. When th e agency could have at least given “ some warning of the imminent ” action and given parties the “opportunity to influence the agency’s a ction ” through comments before taking final action, it cannot cite statutory deadlines as “good cause” for avoiding

estab lished statutory procedures. Id . at 214.

• T his is not the kind of uncontroversial action that can be justified under the “ good

cause ” exception. As the Third Circuit stated, courts have interpreted the good cause “language of 5 U.S.C. § 553(b)(B) to appl y to situations where an agency rule is a routine determination, insignificant in nature and impact, and unimportant to the

indu stry and to the public. ” Texaco, Inc. v. Federal Power Commission , 412 F. 2d 740, 743 (3d Cir. 1969) (internal quotation omitte d) (citing National Motor Freight Traffic Ass’n v. United States , 268 F.Supp. 90, 95

– 96 (D.D.C. 1967)). The EPA ’ s action here is far from uncontroversial; indeed, it is a matter of national controversy, vehemently resisted by the State of Texas; thus it c annot be exempted from the ordinary rulemaking procedures designed to allow input from all stakeholders.

• The EPA ’ s claimed justification for the Texas FIP Rules is unreasonable

– the Agency cites a fear that a construction ban will result absent the rules

. 75 F R 82431. This fear is entirely illusory because, in the absence of EPA action, no construction

ban would result. Under Texas ’ s current SIP, sources may obtain a PSD permit without accounting for GHGs. The EPA, however, asserts that “ [u]nless and until EPA promulgates this rule, Texas sources will not have available a permitting authority to process their PSD permit applications and as a result, may face delays in

construction and modification. ” 75 FR 82434. See section 7.1 of this document for

comments on whether a “construction ban” will result absent these rules.

Another of the commenters (0230.1) similarly argued that the “good cause” exception to notice and comment rulemaking “is to be ‘narrowly construed and only reluctantly65 countenanced.’” Jifry v. FAA , 370 F.3d 1174, 1179 (D.C. Cir. 2004). T he exception excuses notice and comment only “ in emergency situations, where delay could result in serious harm. ” Chamber of Commerce v. SEC, 443 F.3d 890, 908 (D.C. Cir. 2006). A ccor ding to the

commenter, numerous courts have explained that stringent standard is simply not met when an emergency is of the agency’ s own creation. NRDC v. Abraham, 355 F.3d 179, 205 (2d Cir. 2004) ( “ We cannot agree [] that an emergency of [the agency ’ s] own making can constitute good cause. ” ); Envtl. Def Fund v. EPA, 716 F.2d 915, 921 (D.C. Cir. 1983) (good cause exception inapplicable “ where an alleged ‘ emergency ’ arises as the result of an agency ’ s own delay ” ). The commenter noted that EPA ’ s series o f rulemakings respond to the Supreme

Court’ s decision in Massachusetts v. EPA, 549 U.S. 497 (2007), which was rendered nearly

4 years ago. The commenter opined that the January 2, 2011 deadline creating the present

“ emergency ” is entirely a creature of E PA’ s own actions in interpreting the relationship between

the Act’ s mobile and stationary source provisions , and that EPA has ample authority to delay or reconsider that interpretation.

This commenter (0230.1) also believes that there is no actual “ emergency ” requiring the

EPA to avoid ordinary notice and comment procedures. The commenter stated that EPA has not
attempt ed to quantify the marginal environmental benefits it alleges will result from regulating GHGs emissions beginning on January 2, 201 1, rather than a short period later to permit notice

and comment. The commenter asserted that the proposition that great environmental harm will result from delayed implementation is unsustainable given that EPA's Tailoring Rule adopts a phased approach t o applying PSD over the course of several years.

In addition, the same commenter (0230.1) contended that EPA cannot plausibly claim it

has been unaware until now that Texas ’s SIP does not automatically incorporate new PSD requirements by reference , since it has conceded that it has known this since it approved the SIP nearly two decades ago

. According to the commenter, EPA’ s alternate suggestion that it “ only recently ( i.e. , on August 2, 2010 ) had notice of Texas ’s interpretation of the Act ignores the

i ntervening period of nearly 5 months in which it could have provided notice and solicited

comments. Finally, the commenter stated that courts have routinely held that the “ mere existence of [statutory] deadlines for agency action, ” including dead lines in the CAA itself,

“ does not in itself constitute good cause ” under 5 U.S.C. 553(b)(B). New Jersey v. EPA, 626 F.2d 1038, 1042, 1047

- 48 (D.C. Cir. 1980).

The fourth commenter (0232.1 Texas AG) stated that EPA’s promulgation of the i nterim

f inal r ule without notice and comment was unlawful for the reasons explained in Texas’s Motion for Stay and Reply in Support of its Motion for Stay , which we re attached to the c omments and incorporated by reference

. 6 The commenter argued that EPA knew about any purported

deficiencies in Texas’s SIP for 18 years, but did not act until December 30, 2010. The

commenter indicated that EPA acted on the basis of a purported emergency despite the fact that

other s tates’ SIPs share the characteristic s EPA claims are deficient in Texas’s SIP

. According to the commenter, e ven if EPA ’s claims of ignorance are credited, it knew about the purported deficiency in Texas’ s SIP submittal since August 2010 at the latest, but failed to subject the plan

to notic e and comment.

6 Thes e documents are included in the docket for this rulemaking as attachments to the comment, numbered

EPA

- HQ

- OAR

- 2010

- 1033

- 0232.4 and

- 0232.5.66 Response :

These comments on the interim final rulemaking are not relevant for the present rulemaking, and no response from EPA is required in the present rulemaking.

Comment:

Three commenters (0225.1, 0229.2 TCEQ, 0230.1) asserted that EPA’s promulgation of the interim final rule results in no meaningful opportunity for comment on the proposed rule. Two of the commenters (0229.2 TCEQ, 0230.1) indicated that the interim final rule effective on the same day as the proposal is a clear indi cation that proposed FIP/partial disapproval is a foregone conclusion and EPA will not be swayed by any arguments to the contrary. One of these commenters (0230.1) added that that courts have repeatedly held that “ [p]ermitting the

submission of views afte r the effective date is no substitute for the right of interested persons to make their views known to the agency in time to influence the rule making process in a meaningful way.” New Jersey, 626 F.2d at 1049.

Because the interim final rule is functio nally identical to the proposed rule, the third commenter (0225.1) similarly believes that EPA has plainly evidenced its intent to proceed with the partial disapproval and FIP and the public has little reason to expect full and fair

consideration of commen ts under these circumstances. According to the commenter , EPA’s

solicitation of comments on the p roposed r ule operates as nothing more than an attempt at after

the

- fact legitimization of the i nterim FIP, which EPA intends to seamlessly replace with the

p r oposed FIP.

Response:

EPA’s intention in promulgating an interim final rule at the same time as the proposed rule was to ensure that there would be a permitting authority available for large sources of GHG in Texas. It was not, as suggested by commenters, to prevent a meaningful opportunity for comment. EPA held a public hearing for this rule, at which 67 commenters presented their views. In addition, during the comment period, EPA received comments from over 5300 commenters, the majority of w hich were supportive of EPA’s action. EPA has considered these comments in the development of this final rule and has responded to them.



### 7.3 **Other Comments**

Comment:

One commenter (0225.1) stated that EPA provided no meaningful opportunity for comment on the proposed rule because EPA stipulate d in the p roposed r ule that it will not consider comments relating to “the Endangerment Finding, the Light

- Duty Vehicle Rule,

th e Johnson Memo Reconsideration and the Tailoring Rule, or the 1978, 1980, or 2002 PSD67 rules.” 75 FR 82368. Given the high degree of interrelatedness of these issues, the commenter

believes that EPA ha s assert ed a de facto right to ignore nearly any comme nt at its discretion. According to the commenter, it is difficult to imagine any issue presented by this rulemaking that was not in some way invoked in the prior rulemakings that are integral to this GHG rulemaking

process. The commenter indicated that h is comments are focused on the “rationale and legal basis” for EPA’s rulemaking, and thus are in the category expressly solicited by EPA, regardless of any similarity to issues raised in prior rulemakings. The commenter added that EPA may not legitimately refuse to consider any comments that address the effects of this rulemaking, regardless of whether they involve issues that are similar to those considered previously.

Because EPA has taken a new and unanticipated action in this rulemaking, issues consid ered previously now have new and unanticipated consequences. The commenter asserted that

s tationary source GHG regulation has been a progression of rules

– which the commenter has

found to be a confused and sometimes conflicting progression

– and for EPA to pretend that these prior rules have no effect on its latest rules is disingenuous.

Response:

We disagree with the comment. It is frequently the case that an agency conducts a rulemaking that is based in part on actions or interpretations of the agency in a previous rulemaking, but that does not mean that the later rulemaking necessarily reopens the issues in the prior rulemaking or is unreasonable if it does not do so. If that were the case, then many issues addressed by agencies would remain un resolved for lengthy periods of time. In any event, for the sake of completeness, EPA has responded to all comments in this rulemaking, including incorporating by reference responses to comments in related rulemakings.

Comment:

One commenter (0232.1 Te xas AG) believes that the interim final rule and proposed SIP disapproval are founded on a defective administrative record because EPA has not made publicly

available all materials from the docket of its prior action approving Texas’s PSD SIP submission. According to the commenter

, EPA has selectively included documents on which it predicate d the current decision, without allowing the opportunity for Texas and the public to review and comment on the remaining documents.

The commenter (0232.1 Texas AG) as serted that EPA’s failure to include these

documents is unlawful because EPA has a duty under the APA , 5 U.S.C. 551 et seq. , and C AA

section 307(d) to make this information publicly available. The commenter believes that EPA’s alleged failure to meet thi s duty renders its decisionmaking “arbitrary” as a matter of law.

[W]here . . . an agency justifies its actions by reference only to information in the public file while failing to disclose the substance of other relevant information that has been pre sented to it, a rev iewing court cannot presume that the agency has acted properly, but must treat the agency’s justifications as a fictional account

of the actual decision making process and must perforce find its actions arbitrary.68 Home Box Office, Inc. v. FCC , 567 F.2d 9, 54

– 55 (D.C. Cir. 1977) (citing, inter alia, Citizens to Preserve Overton Park, Inc. v. Volpe , 401 U.S. 402, 415 (1971)); see also U.S. Lines, Inc. v. Fed.

Maritime Comm’n , 584 F.2d 519, 535 (D.C. Cir. 1978) (stating that disclosure is “necessary to ensure the parties to [regulatory] proceedings the opportunity to participate in the [agency’s] decisionmaking which is guaranteed them by statute”); Conn. Light & Power Co. v. Nuclea r Reg. Comm’n , 673 F.2d 525, 530 (D.C. Cir. 1982); Am. Radio Relay League, Inc. v. FCC

, 524 F.3d 227, 244

- 45 (D.C. Cir. 2008) (Tatel, J., concurring).

The commenter (0232.1 Texas AG) stated that the details of EPA’s failure to include all

materials from the docket of its action approving Texas’s PSD SIP submission in the docket for the interim final rule and proposed SIP d isapproval is especially arbitrary and capricious :

• If EPA has considered all the materials in the previous docket but has not included them in the docket, then it has unlawfully failed to include these materials in the

docket.

• If the opposite is true

– that EPA has not considered all material in the previous

docket

– then the Agency has acted arbitrarily and capriciously by finding erro r in its 1992 approval of Texas’s PSD SIP submission without fully reviewing the record on

which that action is based.

The commenter (0232.1 Texas AG) believes that EPA must at least state whether it has

reviewed all materials in the docket of its action approving Texas’s PSD SIP submission and

include the full docket in the docket for this rulemaking (EPA

- HQ

- OAR

- 2010

- 0133). The

commenter added that EPA must also extend the time for comment to allow public consideration

of these materials.

Response:

EPA has provided all relevant material, including all material on which we relied and cited in this rulemaking in the docket for this rulemaking. The relevant material primarily includes the proposed and final rulemaking notices; various documents include d in the Texas plan, including the SIP submittals from Texas and letters from Texas containing commitments; the technical support document; other letters between Texas and EPA; and other materials. EPA reviewed the docket for the 1992 rulemaking and did not rely on other documents for this action. We disagree with the commenter’s apparent assertion that we must also include material on which we did not rely in this rulemaking. Administrative agencies regularly review documents as part of rulemaking pro ceedings, some of which do not turn out to be relevant and therefore are not included in the rulemaking record. All material that EPA considered relevant was made publically available at the same time as the proposed rule, so was available throughout the public comment period for this rule. The docket for the 1992 rulemaking is a matter of public record and commenters could review it if they want to do so. For this reason, we do not agree that additional time for public comment is warranted.69 Comment:

One commenter (0232.1 Texas AG) stated that EPA’s actions over the last several months conclusively demonstrate that the Agency has improperly and unlawfully prejudiced the

outcome of this action.

The commenter (0232.1 Texas AG) indicated that EPA’s statements and actions before November 2010 manifest its understanding that it lacked the authority to disapprove Texas’ s existing PSD SIP or to impose a FIP before the submittal date EPA set for Texas in the GHG SIP

Call . To support this assertion, the commenter cited statements in the Tailoring Rule, the GHG SIP Call and FIP proposals, and an exhibit offered by Assistan t Administrator McCarthy to supplement her sworn statement to the U

. S

. Court of Appeals for the D .C. Circuit on October 28,

2010. 7

Acc ording to the commenter (0232.1 Texas AG), EPA then changed strategies and undertook efforts to supplant Texas as permitting authority by imposing a FIP on the Texas

. In support of this contention, the commenter offered the following arguments:

• In the fi nal SIP Call signed by EPA Administrator Jackson on December 1, 2010, and published in the Federal Register on December 13, 2010, EPA stated for the first time

that it was “planning additional actions” to ensure that GHG sources in Texas would

have availab le a permitting authority to process their permit applications as of January 2, 2011

. 75 F R 77710.

• In a n interview following the Administrator’s signing of this r ule, Assistant Administrator McCarthy publicly represented the EPA ’s intentions to prevent a situation where Texas could not issue permits based on its approved SIP. Mondaq Blog, Weekly Climate Change Policy Update, http://www.mondaq.com/unitedstates/article.asp?articleid=117476

, Dec ember 8,

2010.

• At that point, EPA had either determined to disap prove Texas’ s decades

- old SIP submission and impose a FIP (while hiding its plans from Texas and the public), or

had decided to eliminate Texas’ s permitting authority without yet deciding which procedural vehicle it would use to effect this action. In either case, EPA had prejudiced the outcome of this proceeding.

• On December 21, 2010, Assistant Administrator McCarthy sent a letter to Texas stating that EPA would partially disapprove Texas’s SIP and impose a FIP arrogating to EPA the authority to is sue preconstruction permits to GHG emitting sources in Texas. Letter from Gina McCarthy, Assistant Administrator, EPA, to Bryan W. Shaw, Chairman, Texas Commission on Environmental Quality, December 21,

2010. 8 Ms. McCarthy’s letter further demonstrates that EPA had made the final

7 This document is included in the docket for this rulemaking as an attach ment to the comment , numbered

EPA

- HQ

- OAR

- 0232.6.

8 This document is included in the docket for this rulemaking as an attach ment to the comment , numbered

EPA

- HQ

- OAR

- 0232.7.70 decision to supplant Texas’s permitting authority without presenting the issue for

notice and comment.

• On December 23, 2010, the Administrator, without notice and comment, signed the Interim Final Rule disapproving Texas’s exist ing PSD SIP and formally imposing a FIP. 75 FR 82430. Despite EPA’s claim that it did not have an opportunity to publish a proposal or solicit comments, the interim final rule was 183 pages in pre

publication form, and is unquestionably the product of si gnificant work by the Agency.

The commenter (0232.1 Texas AG) believes that t hese actions by EPA constitute improper prejudgment of the r ule and cannot stand. According to the commenter, c ourts may set aside legislative rules where “there has been a cle ar and convincing showing that the agency member has an unalterably closed mind on matters critical to the disposition of the proceeding.” Ass’n of Nat’l Advertisers, Inc. v. FTC , 627 F.2d 1151, 1170 (D.C. Cir. 1979). See also Int’l

Snowmobile Mfrs. Ass’ n v. Norton, 340 F. Supp. 2d 1249, 1261 (D. Wyo. 2004). The

commenter asserted that the Administrator’s statements in the final GHG SIP Call and Assistant Administrator McCarthy’s statements in December 2010 clearly and convincingly demonstrate EPA’s prej udgment of the issues in this rulemaking, and have prejudiced the outcome of this proceeding.

Response :

EPA disagrees with the comment. Statements made by Texas during the summer and fall of 2010, and, in particular, comments received from Texas on the SIP Call Rulemaking, made it clear that Texas would not take appropriate steps to assure that its GHG

- emit ting sources would have a permitting authority available to process their permit applications, so that they could proceed with plans to construct or modify. These statements, as we have made clear in the preamble to the final rule, are what made the defic iencies in the Texas SIP apparent to EPA. One the deficiencies were clear, EPA took the necessary action to correct its previous approval of the Texas SIP and issue a FIP, on an interim final basis, due to the limited time available

between Texas’s commen ts on the SIP Call and the January 2, 2011 date by when GHG

- emitting sources would become subject to PSD requirements. At the same time that it issued the interim final rule, EPA also issued a proposed rule for an error correction, limited approval and

dis approval, and a FIP. As noted elsewhere, EPA conducted a hearing, received extensive comments, and has responded to those comments. EPA believes that this final rulemaking action is lawful, based on the record, and responsive to comments. EPA has mainta ined an open mind throughout and carefully considered all comments. The fact that EPA issued an interim final rule, and shortly before then began to advise the public of the path it was considering, does not indicate any prejudice as to this rulemaking. Commenters have had a full opportunity to present any concerns they may have as to the legal or policy basis for this final rule, and of course may challenge EPA’s action if they believe that basis is deficient. Commenters’ assertion of prejudice would ne cessarily apply whenever an agency conducts an interim final rule, followed by a final rule, which would compromise the usefulness of the interim final process. EPA’s

reliance on an interim

- final rule as a gap

- filling measure says little more about what f inal rule EPA would promulgate than does the proposed rulemaking.71 Comment:

One commenter (0231.1) argued that Texas’s failure, or inability, to update the SIP to

meet new federal GHG requirements is symptomatic of a well

‐ documented and pervasive problem with the way Texas implements and enforces its SIP. The commenter noted that

a ddressing these Texas SIP implementation flaws through multiple rules is inefficient and will lead to continued SIP gaps. Accordingly, the commenter beli eves that EPA should issue a broad,

top

‐ t o

‐ bottom, SIP call to ensure that the residents of Texas can enjoy the full health protections

of the Act.

Response:

EPA appreciates the comment. However, this action is related only to regulation of pollutants newly subject to regulation, which at this time, only includes GHG. Updates on other actions related to the permitting program in Texas may be found on the Region 6 website at http://www.epa. gov/region6/region

- 6/tx/tx001.html

.

Comment:

One commenter (0226.1) asserted that GHG emissions should not be regulated under the

current CAA because the entire framework for regulation of pollutants under the A ct is based on the assumption that the em issions of regulated pollutants may have local or regional impacts that differ geographically. The commenter indicated that the potential impacts of the emissions of each GHG are global in nature and generally do not differ geographically

.

Another commen ter (0232.1 Texas AG) disputed EPA’s claim that Texas’s SIP must regulate GHGs as inconsistent with the Act. As the commenter has described in detail in comments to EPA and Motions to Stay, the commenter believes GHGs are not properly subject to regulati on under the Act, and the Endangerment Determination, Tailpipe Rule, Timing Rule, and Tailoring Rule are all arbitrary and capricious, and are contrary to law. 9 Given that these actions are unlawful, EPA cannot disapprove Texas’ s SIP for failing to regulate GHGs, or for failing to automatically update to include pollutants that should not be subject to regulation.

Response:

EPA disagrees with the commenters. The question of whether or not to regulate GHG was not the subject of this rulemaking. Our reasoning for why it is necessary to regulate GHG under the CAA and our basis for the other rules and actions cited by commenter was explained in those rules and actions and were not reopened here.

Comment:

One commenter (022 6.1) asserted that t he potential negative impacts of any program to regulate GHG emissions on Texas ’s economy are of critical importance and must be considered.

9 These documents are included in the docket for this rulemaking as attachments to the comment, numbered

EPA

- HQ

- OAR

- 2010

- 1 033

- 0232

. 3,

- 0232. 8,

- 0232.9, and

- 0232.10.72 The commenter stated that t he regulation of GHG emissions from stationary sources under the

PS D and Title V permitting programs would impose significant costs on both the state and the regulated community, and thus, on the general public in Texas through higher taxes and prices

, which would cause considerable stress on the economy of Texas

. The co mmenter added that Texas is a large producer of the petrochemicals, gasoline and diesel, and electricity used by other

states and it is imperative that the impacts of any regulation of GHG emissions under the PSD and Title V permitting programs not directl y or indirectly penalize Texas since its economy is based to a significant degree on this production

.

Response:

This comment is not relevant to this action. This rule does not initiate regulation of GHG

in Texas. GHG PSD permitting requirements would a pply to sources in Texas regardless of whether this rulemaking action were taken . Instead, this rule addresses a deficiency in the Texas SIP which, if uncorrected, would disrupt the ability of certain sources in Texas to obtain the permits they need to c onstruct or expand.

Comment:

One commenter (0227.1) argued that EPA has inappropriately concluded that the inability to issue PSD permits that cover GHGs to a small number of sources constitutes a substantial inadequacy. The commenter believes that this is not appropriate based on th e language of CAA section 110(k)(5) which requires a SIP call if the SIP is inadequate to 1) attain or maintain the NAAQS; 2) mitigate adequately interstate transport; or 3) otherwise comply with requirements of the Act. According to the commenter, not bei ng able to obtain a permit for GHG emissions does not constitute a substantial inadequacy in the SIP because none of the three conditions is satisfied. According to the commenter, only a few permits are likely to be issued that would require permitting fo r GHG, and the lack of a BACT limit for GHG would not affect the ability of the state to attain a NAAQS, therefore no substantial inadequacy exists, and no SIP call is necessary. States should be provided with three years to amend their SIPs when PSD rules change.

Response:

This comment is not relevant to this action. EPA is not determining that there is a substantial inadequacy in Texas’s SIP requiring a SIP call, and this rulemaking is not based on the requirements of section 110(k)(5). Rather, EP A is determining that there is a flaw in Texas’s SIP which made it erroneous for EPA to have approved the SIP in the first instance. EPA is thus acting to address this error in its own action under section 110(k)(6) or, in the alternative, under

its inher ent authority to reconsider its own prior actions. Further, EPA believes that the negative consequences of a disruption to the ability of certain sources in Texas to obtain the permits they need to construct or expand would be significant. This issue was discussed at length in the preamble to the final GHG PSD SIP Call Rulemaking, and in the RTC for that rule (EPA

HQ

- OAR

- 2010

- 0107

- 0130).73 Comment:

One commenter (0230.1) believes that the proposed rule violates Executive Order 13132

on federalism. The commenter indicated that EP A state d without adequate explanation that its

“revocation” of Texas’s SIP and imposition of a federal permitting program for all large construction projects in the State of Texas “ does not have federalism implications ” and “ will not
have substantial direct effects on Texas, on the relationship between the national government and Texas, or on the distribution of power and responsibilities among the various levels of
government ” under Executive Order 13132. T he commenter asserted that t hese conclusions are impossible to square with the fact that the p roposed r ule unilaterally revokes Texas ’s authority to issue permits to businesses and new construction projects within its borders and interposes a federal official in the permitting process. According to the commenter, u nder the Executive Order, EPA must, among other things, “ grant the States the maximum administrative discretion possible ” in administering “ Federal statutes and regulations administered by the States. ”

Exec utive Order 13132 section 3(c). The commenter questioned h ow EPA can claim to have met that exacting standard when it has cut off Texas ’ s 1

- year SIP revision process after only

17 days.

Response:

EPA disagrees with the commenter. The CAA specifies the conditions under which states may request, and EPA may approve a state’s implementation of CAA requirements. The CAA also specifies the action EPA is to take, including issuing a FIP, when states have not met their requirements under the CAA. This rulemaking does not change that distribution of power between the federal and state government. With this action, EPA is only revising its previous approval of the Texas PSD SIP to be a partial approval and partial disapproval and promulgating a FIP to address the defici encies identified in the Texas SIP as authorized by the CAA. Therefore, Executive Order 13132 does not apply to this action. We further note that this rule does not affect Texas’s ability to issue permits to its sources for their non

- GHG emissions;

rathe r, this rule simply adds an authority

– EPA

– to process permit applications for GHG emissions, an action that Texas has declined to take.

Comment:

One Texas industry association commenter (0225.1) expressed concern that the nature of the federal permi tting process and the likely delays and uncertainties inherent in a federal takeover of the Texas PSD permitting program will add significant uncertainty to the current business climate, which will negatively impact planning and investment for its members. The

commenter believes that the impacts of this permitting uncertainty in Texas cannot be overemphasized because many of its members’ facilities could be unable to obtain authorization for crucial projects that may range from badly needed maintenance and upgrades to pollution control projects that reduce emissions of criteria pollutants to facility expansions that will create jobs and economic growth. T he commenter’s member companies represent a significant portion of the energy, refining, and petrochemi cal industries in Texas, w hich produces 23 percent and

28 percent of the nation’s crude oil and natural gas, respectively, more than any other state in the74 country. Thus, the commenter believes that given the significant concentration of industries that depend on reliable and predictable permitting programs to keep their businesses viable, Texas would be affected on a large scale.

Response:

We disagree with the comment. By promulgating this rule, EPA is providing a PSD permitting authority for large GHG emitters in Texas. Without this action, there would be no permitting authority for large emitters of GHG, though large emitters of GHGs would still be required to receive a PSD permit prior to construction or modification. Thus, without today’s

rule these facilities would have no ability to obtain authorization for construction or modification, which would certainly result in the negative impact on planning and investment that the commenter raises. Today’s rule in fact ameliorates the impacts cited b y the commenter. Contrary to the commenter’s statements, EPA is not taking over the Texas PSD permitting process. Texas will continue to be the permitting authority for conventional (non

- GHG) pollutants.