- :~:. :'. ~ ¡. . ~.t



# EXHIBIT 11

95 EPA Response to Stay Motion Exhibits ~c~ 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 1'~H



### Declaration of Jared R. Creason Background and Qualifications

1. I am Dr. Jared R. Creason, economist in the Offce of Air and Radiation of the U.S. 

### Environmental Protection Agency. I hold M.S. and Ph.D. degrees in agricultural and

applied economics from the University of Minnesota and a bachelor's degree in 

### economics from Indiana State University. I have 13 years experience at EPA doingeconomic analysis of regulations and have contributed to the EP A analysis of carbon cap

### and-trade legislation including the American Power Act of2010 and the American Clean Energy and Security Act (H.R. 2454), as well as the Interagency Report on International Competitiveness and Emissions Leakage.

2. I prepared this declaration. 

### Comparisons to Analyses of Cap-and- Trade Proposals 

### 3. The Movants claims of economic harms resulting from EP A actions taken under theClean Air Act rely in part on analysis done by myself and others at EP A of economy

### wide cap-and-trade legislative efforts. This leads to an exaggeration ofthe estimated economic harms resulting from the actions. Declarations from Bezdek (NAM Ex. 13)and Thorning (NAM Ex. 19) cite EPA and other analyses of comprehensive, economy

### wide cap-and-trade bils that were designed to achieve a target of an 83 percent reduction in greenhouse gas (GHG) emissions by 2050, and which covered all major sources of 

### GHGs in the economy. In comparison, the EPA actions in question have no binding emission caps and are much smaller in scope, with PSD requirements covering, during 

### 2011, an estimated 344 sources in the first six months, and 802 additional facilities in the second phase. EP A estimates that new and modifying sources subject to PSD represent

approximately 3.5% of 

### the total number of industrial sources with GHG emissions that are likely to construct or modify facilities in the US in a given year, and would account 

### for a much smaller percentage ofthe total number of industrial sources operating in the US.!

4. Movants made no attempt to determine the level of 

### harm likely to occur during the stay 

### period. Their cost claims do not reflect the fact that they seek only a "temporary stay" 

### (NAM, p. 56). In the long term cap-and-trade analyses, economic growth makes 

### emission reduction targets more difficult to achieve. This difference in the timeframe of

analysis further confounds attempts to use cap-and-trade to estimate costs of the EPA 

### actions in question.

5. Because of the limited scope and duration of the EPA actions in comparison to national cap and trade scenarios, claims of economic harm stemming from the EP A actions in 

### question cannot be substantiated by analyses of cap and trade proposals conducted by
EP A or others. i See Attachment C, table 4-7 in US EP A. Regulatory impact Analysis for the Final Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule. Final Report. EPA 452 R-lO-003. May 2010.

96 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 2- :~",.:'. ):



### Effects of Regulatory Uncertainty on Investment

6. A key element of the Movants' claim is the effect of 

### regulation on investment. 

### Specifically, the Movants assert that "(t)he uncertainty surrounding EPA's regulations 

### will discourage capital investment..." NAM p. 3. As an economic argument, this assertion and the supporting analyses are flawed in at least three ways. First, these EP A 

### actions arguably reduce regulatory uncertainty, not increase it. Second, the Movants' declarations contain many speculative assertions that are not supported by empirical

estimation. Third, the quantitative estimates of negative consequences of 

### reduced 

### investment are based on unrealistic assumptions.

EP A actions reduce regulatory uncertainty 7. Movants claim that regulation-induced uncertainty is having a large effect on investment 

### is not supported by their data. Movants cite the NAM/IndustryWeek Manufacturing 

### Index survey conducted in June, 2010 (Huether Decl., NAM Ex. 20). Thirt-seven percent of survey respondents said that "possible regulatory or legislative changes" were

a concern, compared to 46 percent that identified "the state of the U.S. economic

recovery." Moreover, EPA rules are but one type of 

### regulation that may be a concern to the 37 percent; others may include health care, tax policy, immigration, financial reforms, 

### trade agreements, and others. Recently, numerous climate bills have been proposed, perhaps resulting in some uncertainty about what form regulations would take, but promulgation of the EP A actions together with the lack of legislative passage would 

### logically be expected to reduce uncertainty, not increase it because regulation makes 

### clear which sources will be subject to what rules and at what point in time. Indeed, many businesses recognize the benefits of structuring their business strategy around compliance with greenhouse gas regulation.2 

### Costs of uncertainty are speculative 

### 8. Movants' declarations contain many speculative assertions. Peterson concedes that "(i)t is

simply not possible to estimate the exact magnitude of 

### harms flowing from regulations 

### that have yet to be written...." (Peterson Decl., NAM Ex. 11 at p. 5) and can only conclude that "(t)he proposed regulations make future modifications more expensive and 

### possibly unprofitable." (Peterson Decl., NAM Ex. 11 at p. 5). This is speculative because Peterson does not attempt to quantify how much "more expensive" and cannot

state the likelihood of un profitability. Higgins is equally speculative: "Likely 

### outcomes

of the high level and multitudinous areas of 

### uncertainty could include the postponement or cancellation of construction of new sources and major upgrades or expansions to existing sources that otherwise would occur...." Higgins Decl., NAM Ex.10 at para. 29. 

### That this uncertainty "could" lead to such postponement or cancellation is speculative.

2 See for example, the results ofa survey of the world's 500 largest public companies concerning their efforts to reduce carbon emissions. (Carbon Disclosure Project 2010: Global 500 Report. ww.cdproiect.net).In 2010, Over

86% of respondents stated "that they see 'significant opportunities' arising from climate change, whether regulatory, physical, or commercial, and many companies, are investing cash and resources into this pathway" (page 19).

97 2 EPA Response to Stay Motion Exhibits 

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### Kerr bases his finding that the uncertainties are deterring investment primarily on the 

### concern that regulations "threaten to require reductions in carbon dioxide emissions for 

### any coal-fired facility, potentially through carbon capture and sequestration." Kerr Decl., 

### CRR Ex. 21 at para. 10. Stating that BACT wil "potentially" require carbon capture and sequestration is speculative and, as discussed in the affidavit ofEPA Assistant Administrator Gina McCarthy, in fact, in many instances BACT can be expected to 

### require much less expensive energy effciency. Ellis asserts irreparable harm even though

he does not state that any of 

### his group's members have emissions that exceed the 

### tailoring rule thresholds (only the statutory levels), and as a result, he cannot demonstrate that PSD requirements for GHG sources with the Tailoring rule in place would cause 

### harm. Ellis Decl., CRR Ex. 25 at paras.14-16. Unrealistic assumptions bias cost estimates

9. The quantitative estimates of negative consequences of 

### reduced investment are based on

unrealistic assumptions. Thorning attempts to quantify the effects of 

### uncertainty on 

### investment. (Thorning Decl., NAM Ex. 19 at para. 19-22). Her analysis utilizes the concept of a hurdle rate defined as "the required rate of return on an investment, above 

### which an investment project is worth pursuing." She assumes that this hurdle rate increases from 6 to 8.5 percent, an increase of 40 percent. (Thorning Decl., NAM Ex. 19 at para. 22). However, she provides no empirical support given for this assumption. Mainstream economists have noted that profits and retained earnings are currently high,3 

### creating a large reserve available for investment.

10. Thorning then broadens this unsupported assumption from the small number of 

### regulated

entities to the entire US economy. Her analysis ofthe impact of 

### uncertainty on the hurdle

rate and the impacts of this rate on U.S. investment grossly exaggerates the impacts of 

### the
EPA actions by assuming the scope reaches far beyond the number of 

### facilities estimated 

### to be covered, to even the entire industrial sector. ("(T)e negative effect on investment of 

### EPA's permitting requirements for regulated entities wil be felt economy-wide." Thorning Decl., NAM Ex. 19 at para. 21); ("Assuming that the new regulations wil increase the cost of capital for firms in many industries ...1 estimate that U.S. investment could decrease...." Thorning Decl., NAM Ex. 19 at para. 22.) This assumption fails on 

### two grounds. First, not all firms in a given sector wil be regulated, only those above a given threshold or with preconstruction plans. Thus, even assuming that costs have a 

### measurable impact on capital costs for a regulated firm, production could be expected to

shift within a sector to other firms. Second, she assumes that 

### all firms in every sector 

### will face the same increase in capital costs because even "non-regulated sectors wil also see their hurdle rates for new investment rise." (Thorning Decl., NAM Ex. 19 at para.

21). These assumptions are completely unsupportable in light of 

### the relatively small 

### numbers of regulated entities. Furthermore, such chillng effects on investment demand

would cause interest rates to fall, automatically correcting some of the market imbalance 

### and undoing some ofthe stated impact, but she does not account for that. Her bottom

J For example, Global Insight has said "(b)usinesses are flush with cash, and increased spending on replacement investment should pull equipment purchases 8.9% higher in 2010. (US Economic Outlook, March, 2010)"

98 3 EPA Response to Stay Motion Exhibits 

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--- . -~",_:'. .



### line conclusion that EP A regulations would lead to the same amount of loss to the US economy as the US recession is absurd. 

### Effects on Com petitiveness and Carbon Leakage 

### 11. Movants claim that a stay will reduce global GHG emissions "because it will keep 

### facilities from relocating to nations where GHG emissions are greater" (NAM p. 4), but 

### in fact there are no such protections created by granting a stay. Relocation decisions are complex, based on labor cost, market conditions, input costs, transportation costs, tax policy, and many factors other than environmental regulation. Movants cite estimates of

the effects of 

### unilateral regulation, but in fact many of our largest trading partners (~,

in Europe) are enacting or have enacted regulations of 

### their own.4 Finally, the estimates in the Movant's declarations cite examples derived from analyses of cap-and-trade 

### proposals. ("EPA's PSD and Title V permitting requirements wil raise production and energy costs just as would a GHG cap and trade system." Thorning Decl., NAM Ex. 19at

para. 37). Thus, Movants' assertions grossly overstate the impact of 

### these EPA actions on 

### the US economy, energy-intensive industries, potential trade impacts, and any alleged resulting carbon leakage. 

### Social Cost of Carbon Emissions 12. Movants' claims that a stay would not harm EPA or other parties in any manner (NAM p. 

### 53-57) ignore recent findings. Carbon emissions have been found to have a social cost, 

### and there are quantifiable additional benefits to early action. As described in the

Economic Report of 

### the President, the Administration has conducted an interagency

evaluation of the social cost ofGHG emissions (Social Cost of Carbon, or SCC).5 

### Importantly, the report finds that the cost of emissions is nonlinear - that is projected 

### losses increase more rapidly as emissions rise. EPA first used these estimates in the benefits analysis for the final joint EPA/DOT Rulemaking to establish Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy 

### Standards. 6 The SCC technical Support Document provides a complete discussion of the methods used to develop these SCC estimates.7 The interagency group selected four SCC values for use in regulatory analyses, $5, $21, $35, and $65 per metric ton ofCOz

4 USEPA - Interagency Report: The Effects ofH.R. 2454 on International Competitiveness and Emission Leakage in Energy-Intensive Trade-Exposed Industries. Dec. 2, 2009. http://www.epa.gov/climatechange/economics/economicanalyses.html 5 Economic Report of the President. 2010. Ch 9. Transforming the Energy Sector of the Economy and Addressing Climate Change. Washington: Government Printing Offce, 2010. htt:llwww.gpoaccess.gov/eop/ 6 See the rule's preamble for discussion about application ofSC,C (75 FR 25324). 7 Docket ID EPA-HQ-OAR-2009-0472-1 14577, Technical Support Document: Social Cost a/Carbon/or Regulatory Impact Analysis Under Executive Order 12866. Interagency Working Group on Social Cost of
Carbon, with participation by Council of Economic Advisers, Council on Environmental Quality, Departent of Agriculture, Department of Commerce, Department of Energy, Department of Transportation, Environmental Protection Agency, National Economic Council, Offce of Energy and Climate Change, Offce of Management and
Budget, Offce of Science and Technology Policy, and Department of Treasury (February 2010). Also available at http://www.epa.goy/otaq/climate/regulations.htm

99 4 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 5~,.- . ~__";J - _ r -~



### emissions in 2010, in 2007 dollars. These values could be applied to each ton emitted as a result of a stay.

13. I, Jared R. Creason, declare under penalty of perjury under the laws of 

### the United States

of America that the foregoing is true and correct to the best of 

### my knowledge. Executed this 28th of October, 2010


### Isl Jared R. Creason


### Jared R. Creason Economist U.S. EPA 

### 1200 Pennsylvania Avenue Mail Code 6207 J 

### Washington, D.C. 20460

100 5 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 6

# EXHIBIT 12

101 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 7~..-' .~___""J



### Declaration of Ronald C. Evans

1. I am Ronald C. Evans, Leader for the Air Benefits and Cost Group of 

### the Office of Air

Quality Planning and Standards, in the Offce of Air and Radiation, of 

### the United States Environmental Protection Agency.

2. I have been running the Offce of Air Quality Planning and Standards applied economics shop in the U.S. EP A for 16 years. I have supervised the production of dozens of EP A

economic analyses during that time, including those analyzing some of the most 

### controversial regulations the U.S. EPA has proposed or promulgated. Under my leadership, my staff has published numerous peer reviewed economics articles and we 

### have developed state of the art methods for estimating the benefits and costs of reducing air pollution. 

### 3. I prepared this declaration to address errors in the claims in the National Association of

Manufacturers (NAM or Movants) motion for a stay of 

### the Vehicle rule, Timing Decision, and the Tailoring rule (hereinafter referred to as EPA rules) as they affect 

### stationary sources of greenhouse gas (GHG) emissions. In their motion, Movants assert that these rulemakings will result in significant irreparable economic harm to Movants and the US economy. 

### 4. I believe NAM's claims of significant economic harm to industry and the US economy as

a result of 

### the EPA rules are exaggerated and make erroneous comparisons. As basis for this significant economic harm claim, NAM relies upon economic analyses of 

### comprehensive, economy-wide cap-and-trade biIs that were designed to target 83 percent reductions in carbon dioxide (C02) emissions by 2050 and would affect all major sources 

### ofGHGs in the US economy, including emissions from more than 10,000 stationary sources. In reality, the EPA rules represent a significantly smaller scoped regulatory 

### regime affecting only larger sources ofGHG emissions. Specifically, during the first 

### phase ofthe Tailoring rule (January 2 - June 30,2011), GHG Title V and Prevention of Significant Deterioration (PSD) requirements will apply only to those stationary sources 

### already required to obtain Title V permits or to undergo PSD preconstruction review due 

### to CAA pollutants other than GHGs, which we call "anyway" sources. During this period, no source will be required to apply for a permit as a result of its GHG emissions alone. For the two year period beginning July I, 201 I, in addition to the "anyway" 

### sources, only large newly constructed sources with GHG emissions at or above 100,000 

### tons per year (tpy) C02 equivalents (C02e), and modifying sources with emissions at or 

### above 100,000 tpy C02e making modifications resulting in a GHG emissions increase of 75,000 tpy C02e or more, would be required to comply with Title V and PSD permitting

requirements for GHGs. During this second phase of 

### the Tailoring rule, EPA estimates 

### that only about 900 new industrial sources ofGHG emissions per year are anticipated to 

### require PSD preconstruction review. According to EPA estimates, this number of

sources represents about 3.5 percent of 

### the stationary industrial sources planning new construction or modifications in the economy that would require GHG PSD

1 102 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 8"'.' .;' ...'.



### preconstruction review absent the Tailoring rule.! These roughly 900 large newly constructing or modifying industrial sources of GHG emissions would likely come from a variety of industrial categories and be located throughout the US based upon where

construction actually occurs. Thus Movants' analysis of 

### the impact ofEPA rules on industry and the US economy based upon the economic costs of legislative 

### comprehensive economy-wide cap-and-trade analyses makes improper comparisons

grossly overstating the impact of the EPA rules that wil affect only a limited set of 

### very 

### large newly constructed or modifying sources of GHG emissions. 

### 5. Movants mischaracterize the regulatory uncertainty created by EPA rules and erroneously

conclude harmful economic consequences will impact all sectors of the economy. 

### a. In their motion, Movants mistakenly state that delays and construction freezes will result from an overloaded permitting system. However, for the reasons explained in detail in the declaration submitted by EPA Assistant Administrator Gina McCarthy,

EPA fully expects the permitting burdens to be manageable during the period of 

### this litigation. b. Movants also inaccurately suggest permitting delays and uncertainty wil result from 

### the novelty of GHG permitting. However, permitting authorities have a proven 

### record of administering Title V and psn permitting for conventional pollutants and the Tailoring rule phased-in approach and threshold levels are designed to consider potential burdens on permitting authorities. EP A recognizes in its final Tailoring rule 

### that some GHG sources and control strategies for GHGs will represent new areas for 

### both permitting staff and sources to become more familar. As discussed in the Gina McCarthy affdavit, ir 99, EPA is currently developing guidance and training 

### materials, and taking other steps that wil facilitate this transition to permitting GHG 

### sources. These EP A actions wil reduce uncertainty by increasing the consistency of decisions such as Best Achievable Control Technology (BACT), ensuring consistent application of established principles and norms taking into account energy, environmental, and economic impacts and other costs. In addition, EP A is 

### conducting regional hands-on training and webinars to distribute this guidance as expeditiously as possible to permitting authorities and sources around the country.

Also, it should be noted that although the PSD requirements of 

### the federal PSD 

### program include several provisions requiring new and modified major stationary sources to conduct air quality analyses that may involve air quality modeling and 

### ambient monitoring, since there are no National Ambient Air Quality Standards

(NAAQS) or PSD increments for GHGs, this step is not required as part of the PSD 

### permitting process for GHG emissions. 

### c. NAM assertions about the uncertainty of increased delay due to stakeholder process in PSD permit actions are overstated. The review process, both public and EPA 

### review, are integral aspects ofthe PSD and title V permitting programs, and as such 

### will be an important part ofGHG permitting activities as welL. It is possible that some early decisions on GHG permit actions wil take more time and generate more review than conventional pollutants, but EP A expects that the time and level of

I US EP A. "Regulatory Impact Analysis for the Final Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule," Final Report, May 2010. ww.epa.gov/ttn/ecas/reports.

2 103 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 9

### review wil equate to conventional pollutant permitting levels, similar to the

maturation of 

### the permitting process on conventional pollutants.

6. Movants' claim that "EPA estimates permitting costs of $78 bilion" is misleading and 

### misrepresents the economic information included in the EP A Regulatory Impact

Analysis. Actually, the $78 bilion is an estimate of 

### the annual regulatory reliefafforded small sources ofGHG and permitting authorities by the Tailoring rule. 

### 7. Movants' assertions that EPA regulatory actions wil increase uncertainty in the

economy, stiflng private investment through an increase in the required rate of 

### return on 

### investment, especially energy-effcient technology, are without merit. The EPA regulatory actions wil tend to reduce the regulatory uncertainty faced by business in the 

### economy rather than increase it. In addition, the Tailoring rule provides regulatory relief

to tens of 

### thousands of industrial sources of GHG emissions and millions of commercial 

### sources. Only large newly constructed or modifying sources of GHG wil be subject to PSD BACT and potentially required to implement GHG limiting measures during the 

### first two phases ofthe Tailoring rule. For those GHG sources that will be subject to BACT, it is EPA's expectation that initially, energy efficiency measures may serve as the

foundation for a BACT analysis because ofthe current state of 

### post-combustion 

### technology development. EP A anticipates that the PSD program for stationary sources 

### of GHG as defined by the Tailoring rule wil likely promote the use of energy efficient technologies. 

### 8. Similarly, Movants' claims about the impact ofthe EPA rules causing substantial production cost increases, particularly energy costs, in the US economy are speculative, 

### overstated and unsubstantiated. For example, Friedman (NAM Exhibit 22, para. 34) claims, "(i)t is reasonable to predict that needed refinery or petrochemical plant projects - 

### projects that create or maintain tens ofthousands of jobs across the nation - wil be

delayed or cancelled in the face of 

### this economic and regulatory uncertainty. Such

delayed or cancelled projects will reduce the effciency of 

### these facilities...." However, Friedman does not substantiate these conclusory allegations. Likewise, Huether 

### concludes without support that harm is likely to the manufacturing sector because 

### "(r)egulation of greenhouse gases in the United States wil likely require a reduction in emissions that can be achieved in only two ways - (1) improving emissions efficiency or 

### (2) reducing manufacturing output." Huether also does not substantiate the sweeping claim that "(m)anufacturers are already working to employ all energy effciency measures that are economically viable." (NAM Exhibit 11, para. 24). The preceding claims are merely assertions of drastically negative economic consequences without any supporting 

### economic analysis. The limited economic analysis support actually provided by the Movants to support their sweeping assertions are based only on analysis of economy 

### wide cap-and-trade legislation rather than the actual regulatory requirements ofEPA rules as discussed in 4 above, and thus are grossly overstated. As previously discussed, PSD BACT requirements will be determined on a case-by-case basis, taking into account

energy, environmental, and economic impacts and other costs of the affected sources. 

### Further EP A is providing BACT guidance as previously discussed likely to promote

energy 

### efficiency.

3 104 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 10',&,,"-



### 9. Movants' claims that a stay would not harm EPA or other parties in any manner (NAM pp. 53-57) ignore potential benefits to society associated with redùctions in GHG

emissions likely to occur as a result of 

### the EPA rules. Large newly constructed or modifying PSD sources of GHG gases wil be required to comply with BACT requirements leading to potential reductions in GHG emissions that would not occur absent the EPA rules. These carbon emissions have been found to have a social cost, and 

### there are benefits to society associated with reductions in these GHG emissions. It is relevant to note that the benefits of GHG reductions required for newly constructed or

modifying sources wil continue throughout the useful life of 

### the facilty which is in some

cases The Administration has conducted an interagency evaluation of 

### the social cost of

GHG emissions. EPA first used these Social Cost of 

### Carbon (SCC) estimates in the

benefits analysis for the final joint EPA/Department of Transportation Rulemaking to 

### establish Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate 

### Average Fuel Economy Standards (75 FR 25324). See the SCC Technical Support

Document for a complete discussion of 

### the SCC estimates and methods used to develop these estimates.2 

### 10. In conclusion, I believe NAM's assertions of economic harm from EP A rules are flawed 

### and unsubstantiated by economic analysis. The limited economic analysis provided by NAM relates to economy-wide cap-and-trade GHG legislation that is not comparable to 

### the limited title V and PSD permitting required for large sources ofGHG emissions by EPA's Tailoring rule.

I, Ronald C. Evans declare under penalty of perjury under the laws ofthe United States of 

### America that the foregoing is true and correct to the best of my knowledge.

Executed this 28th of 

### October

Isl Ronald C. Evans



### Ronald C. Evans, Leader Air Benefits and Cost Group 

### Office of Air Quality Planning and Standards United States Environmental Protection Agency 109 TW Alexander Drive, Code C439-02 

### Research Triangle Park, NC 27709 2 Docket ID EPA-HQ-OAR-2009-0472-1 14577, Technical Support Document: Social Cost a/Carbon/or Regulatory Impact Analysis Under Executive Order /2866, Interagency Working Group on Social Cost of
Carbon, with participation by Council of Economic Advisers, Council on Environmental Quality, Departent of Agriculture, Department of Commerce, Departent of Energy, Department of Transportation, Environmental
Protection Agency, National Economic Council, Office of Energy and Climate Change, Offce of Management and
Budget, Offce of Science and Technology Policy, and Deparment of Treasury (Februar 2010). Also available at http://ww.epa.gov/otaq/climate/regulations.htm

4 105 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 11'~t: "



# EXHIBIT 13

106 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 12

## IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT



## COALITION FOR RESPONSIBLE REGULATION, ) 

# etal., ) Petitioners, )

) 

# v. ) No. 09-1322 (and

) consolidated cases) 

# UNITED STATES ENVIRONMENTAL ) 

# PROTECTION AGENCY, ) 

# Respondent. )

)



## COALITION FOR RESPONSIBLE REGULATION, ) 

# INC., et aI., ) 

# Petitioners, )

) 

# v. ) No. 10-1073 (and

) consolidated cases) 

# UNITED STATES ENVIRONMENTAL ) 

# PROTECTION AGENCY, )

1 

### 107 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 13jt , ~l:~ 

# Respondent. )

)
) 

## COALITION FOR RESPONSIBLE REGULATION, ) 

# et a/., ) Petitioners, )

) 

# v. ) No. 10-1092 (and

) consolidated cases) 

# UNITED STATES ENVIRONMENTAL ) 

# PROTECTION AGENCY, ) 

# Respondent. )

) 

# SOUTHEASTERN LEGAL FOUNDATION, ) 

# INC., et a/., ) 

# Petitioners, )

) 

# v. ) No. 10-1131 (and

) consolidated cases) 

# UNITED STATES ENVIRONMENTAL ) 

# PROTECTION AGENCY, ) 

# Respondent. )

2 

### 108 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 14

## DECLATION OF REGINA MCCARTHY

I, Regina McCarthy, declare under penalty of perjury under the laws of 

### the United States of America that the following is true and correct to the best of my knowledge, information and

belief, and is based on my own 

### personal knowledge or on information contained in the records of the United States Environmental Protection Agency (EPA) or supplied to me by EPA employees under my supervision. 

### I. I am the Assistant Administrator for the Offce of Air and Radiation at EPA, a 

### position I have held since June 2009. The Offce of Air and Radiation (OAR) is the EPA offce that develops national programs, technical policies, and regulations for controlling air pollution.

OAR's assignments include the protection of 

### public health and welfare, pollution prevention and 

### energy efficiency, air quality, industrial air pollution, pollution from vehicles and engines, acid rain, stratospheric ozone depletion, and climate change.

2. OAR is responsible for the development and implementation of regulations, policy,
and guidance associated with the Prevention of 

### Significant Deterioration (PSD) and title V 

### operating permits programs under the Clean Air Act (CAA or Act). This includes the

development of 

### regulations governing the way that the PSD program applies to sources of 

### greenhouse gas (GHG) emissions. In particular, my offce was responsible for developing the Tailoring Rule and the other actions at issue in the above-captioned cases. Along with other EPA offces and States, OAR is responsible for implementing the actions at issue.

3. Prior to joining EPA, I served as the Commissioner of 

### the Connecticut Department of Environmental Protection. I have worked at both the state and local levels on critical environmental issues, helped coordinate policies on economic growth, energy, transportation and 

### the environment, and have experience with the Regional Greenhouse Gas Initiative, the nation's first market-based, greenhouse gas cap-and-trade system. I have a B.A. in Social Anthropology

from the University of 

### Massachusetts at Boston and ajoint M.S. in Environmental Health Engineering and Planning and Policy from Tufts University. 

### 4. EP A is currently - and has been for some time - very closely focused on the need to implement the PSD and Title V programs in a smooth-running fashion for GHG-emitting

sources. The purpose of this declaration is to describe the status of state and EP A efforts to 

### implement the PSD and title V programs for GHG-emitting sources, including the Tailoring Rule

thresholds. Much of 

### this information is available in various rulemakings that EPA has 

### promulgated or proposed; even so, for convenience, this declaration will summarize it. As I wil explain in this declaration, we have carefully developed a plan - which involves several 

### additional rulemakings that are now in process - that wil provide for smooth implementation of PSD and Title V permitting requirements for GHG-emitting sources. In almost all cases, the

109 3 EPA Response to Stay Motion Exhibits 

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### states are working closely with us. Our current information, which I describe at length here and in the supporting attachments, demonstrates that come January 2, 2011, when GHG requirements 

### wil take effect, there is every reason to expect that the permitting authorities - the states and in some cases EPA - will be fully able to manage the permitting process. Moreover, as I also explain in this declaration, there is every reason to expect that the permitting authorities wil be well-equipped to determine the central PSD permitting requirement, which is the identification

of 

### best available control technology (BACT), for the regulated sources, based on the procedures

and precedents in EPA's 30-year history of 

### BACT implementation. 

### i. The PSD program and applicabilty to GHGs 5. EPA is undertaking several actions and working closely with the states to assure that in each state, locality, or other jurisdiction in the United States, as appropriate, as of January 2, 20 i 1 or as soon as possible thereafter, there is a permitting authority to process PSD permit 

### applications, and the Tailoring Rule thresholds are in place under both federal and state law.

6. EPA is taking these actions against the backdrop of EPA's recent completion of 

### four 

### distinct actions related to regulation of greenhouse gases under the Clean Air Act. The first was 

### the Endangerment Finding, which is governed by CAA § 202(a). Based on an exhaustive review

and analysis of 

### the science, in December 2009 the Administrator exercised her judgment to 

### conclude that "six greenhouse gases taken in combination endanger both the public health and 

### the public welfare of current and future generations." The Administrator also found "that the

combined emissions of 

### these greenhouse gases from new motor vehicles and new motor vehicle engines contribute to the greenhouse gas air pollution that endangers public health and welfare 

### under CAA section 202(a)," Endangerment and Cause or Contribute Findingsfor Greenhouse

Gases Under Section 202(a) of 

### the Clean Air Act, 74 FR 66496 (December 15,2009). This

Endangerment Finding led directly to promulgation of 

### what we call the Vehicle Rule, also 

### governed by CAA § 202(a), in which EPA set standards for the emission of greenhouse gases for 

### new motor vehicles built for model years 2012-2016. Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule, 75 FR 25324 

### (May 7,2010). 

### 7. The other two actions, the Johnson Memo Reconsideration and the Tailoring Rule, governed by the PSD and title V provisions in the CAA, were issued to address the automatic statutory triggering of these programs for greenhouse gases due to the Vehicle Rule establishing 

### the first controls for greenhouse gases under the Act. More specifically, the Johnson Memo Reconsideration provided EP A's interpretation of a pre-existing definition in its PSD regulations 

### delineating the "pollutants" that are taken into account in determining whether a source must 

### obtain a PSD permit and the pollutants each permit must control. The Johnson Memo Reconsideration stated that when the Vehicle Rule "takes effect" on January 2, 2011, the

regulations in that rule will, by operation of 

### the applicable CAA requirements, subject GHG

### emitting sources to PSD requirements. Interpretation of Regulations that Determine Pollutants

110 4 EPA Response to Stay Motion Exhibits 

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### Air Act Permitting Programs, 75 FR17,004 (April 2, 2010). The Tailoring



### Rule established a series of steps for phasing in the applicability thresholds that govern what sources PSD and title V permit requirements for greenhouse gases apply to, starting with the

largest sources of greenhouse gas emissions. Prevention of 

### Signifcant Deterioration and Title V 

### Greenhouse Gas Tailoring Rule; Final Rule, 75 FR 31,514 (June 3, 2010). 

### A. Introduction 8. In the following paragraphs, I wil briefly provide the essential background information concerning the CAA PSD program, the incorporation ofthe PSD program into state

implementation plans (SIP), and the applicability of 

### the PSD program to GHGs. More detailed

expositions of this background information are contained in a number of rules or proposed rules. i 

### B. The PSD program 9. As provided in EPA regulations, the PSD program requires that a "major stationary 

### source" obtain a permit before it constructs or undertakes a major modification. While I focus on major stationary sources in this declaration, most PSD triggering actions relate to major

modifications and much of the discussion below applies equally to them as welL.

10. EP A regulations define a "major stationary source" as a source that emits 100 or 250 

### tons per year (tpy), depending on the source category, of any "regulated NSR pollutant." I will refer to this 100 or 250 tpy threshold as the "100/250 tpy threshold." 11. EPA regulations define the term "regulated NSR pollutant" to include, among other 

### things, "any other pollutant subject to regulation under the CAA." 

### 12. EPA adopted the requirement that PSD apply to a source that emits a "regulated NSR

pollutant" in Prevention of 

### Signifcant Deterioration (PSD) and Nonattainment New Source Review (NSR); Final Rule and Proposed Rule" 67 FR 80186 (December 31, 2002) (NSR 

### Reform rule). Prior to this rule, EPA regulations required that PSD apply to a source that emits


### i See Prevention of Signifcant Deterioration and Title V Greenhouse Gas Tailoring Rule; Proposed Rule, 74 FR 55292 (October 27,2010) (proposed Tailoring Rule); 75 FR 31514. 

### Prevention of Signifcant Deterioration and Title V Greenhouse Gas Tailoring Rule; Final Rule, 75 FR 31514 (June 3,2010) (final Tailoring Rule); Action to Ensure Authority to Issue Permits

under the Prevention of Signifcant Deterioration Program to Sources of 

### Greenhouse Gas

Emissions: Finding of Substantial Inadequacy and SIP Call; Proposed Rule, 75 FR 53,892 (September 2,2010) (proposed GHG PSD SIP Call or proposed SIP Call); Action to Ensure

Authority to Issue Permits under the Prevention of 

### Signifcant Deterioration Program to Sources

of 

### Greenhouse Gas Emissions: Federal Implementation Plan; Proposed Rule, 75 FR 53,892 (September 2, 2010) (proposed GHG PSD FIP or proposed FIP).

111 5 EPA Response to Stay Motion Exhibits 

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"any pollutant subject to regulation." This phrase is not part of the definition of 

### "regulated 

### pollutant." 13. Once a source is subject to PSD, it must obtain a permit before it constructs or

modifies and the permit must meet certain requirements. For purposes of the applicability of 

### the 

### PSD program to GHG-emitting sources, the key requirement is that the source must implement BACT. 

### C. The incorporation of the PSD program into the SIP 14. Each state is required to include a PSD program in its approved SIP. 

### 15. Most states have done so, as indicated in Attachment 1 (Table 1: State

Implementation of 

### Greenhouse Gas PSD Permitting Requirements). 16. The approved SIP PSD programs must contain requirements that mirror, or are at

least substantially 

### equivalent to, EPA regulatory requirements.

17. Most of 

### the approved SIP PSD programs apply to a stationary source that emits at the 100/250 tpy threshold any "regulated NSR pollutant" when it constructs or undertakes a major modification, in accordance with current EPA regulations, which reflect the NSR Reform rule requirements. 18. Some of the approved PSD SIPs provide that they apply the PSD program to a 

### stationary source that emits at the 100/250 tpy threshold any "pollutant subject to regulation" when it constructs or undertakes a major modification, in accordance with EP A regulations in 

### place prior to revision by the NSR Reform rule.

19. In the states that do not have a PSD program as part of 

### their approved SIP, EPA 

### regulations are the applicable law in the state and EPA acts as the permitting authority for PSD 

### permits. In this case, the EPA regulations constitute a Federal implementation plan ("FIP"). See, 40 C.F.R. 52.21(a)(I). 20. A state with a FIP may accept a delegation from EPA to administer the FIP and issue 

### PSD permits pursuant to federal law as EPA's agent. See,40 C.F.R. 52.21(u). Such delegations are implemented through a delegation agreement between EP A Regional Offces and state or local air pollution control agencies and do not require a notice and comment rulemaking process. 

### Delegation agreements may be completed in a relatively short time frame, as soon as the parties 

### are able to agree upon the appropriate terms. EPA has several existing delegation agreements for PSD permitting that may be used as a model for agreements addressing PSD permitting for greenhouse gases.

112 6 EPA Response to Stay Motion Exhibits 

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### "r

21. In a state that has an approved SIP PSD program, the provisions of the SIP PSD 

### program as well as the CAA are the applicable law in the state and the state - or in some cases local government - acts as the permitting authority for PSD permits. 

### D. Applicabilty of PSD program to GHGs 22. As of January 2,2011, PSD requirements will apply to certain stationary sources of GHG emissions. 

### 23. In promulgating the Tailoring Rule, EPA recognized that absent such a rule, the PSD program would apply to GHG-emitting sources at the 100/250 tpy threshold, in accordance with 

### the CAA, EPA's PSD regulatory requirements and with SIP PSD requirements. 

### 24. In the Tailoring Rule, EPA further recognized that ifPSD requirements applied to GHG-emitting sources at the 100/250 tpy threshold levels as of January 2,2011, permitting authorities would be overwhelmed by the large number of permit applications. 

### 25. Accordingly, in the Tailoring Rule, EPA revised its regulations to phase in the 

### application ofPSD requirements to GHG-emitting sources. As of January 2, 2011, PSD applies only to sources that would otherwise be required to obtain PSD permits for their other pollutants (which we refer to as "anyway" sources), and that emit 75,000 tpy C02e ofGHGs as a result of 

### construction or wil increase emissions by at least 75,000 tpy C02e as a result of a modification. As of July 1, 2011, PSD continues to apply to such "anyway" sources, and also applies to any 

### other sources that emit at least specified amounts ofGHGs when they construct or modify.

E. Categories of SIPs

26. The smooth-running of 

### the PSD program for GHG-emitting sources necessitates assuring that in each state or locality (as appropriate) as of January 2, 2011 or as soon as possible 

### thereafter, there is a permitting authority in place to process PSD permit applications and either 

### (i) the Tailoring Rule thresholds are in place under both federal and state law or, (ii) ifthe state prefers thresholds lower than the Tailoring Rule thresholds, the state has provided assurances in accordance with CAA § 11 0(a)(2)(E)(i) that it has adequate resources to carry the associated 

### permitting burdens. Assuring the availability ofa permitting authority is important because the CAA requires sources to have a permit and without a permitting authority, the source cannot 

### acquire the permit and therefore would face an obstacle to constructing or modifying. Including the Tailoring Rule thresholds in the SIP is important - assuming the state does not seek lower thresholds - because otherwise, large numbers of small sources would require permits and permitting authorities would experience overwhelming burdens. 27. Each state fa1ls into one ofthree categories with respect to the authority contained in 

### its SIP to apply its PSD program to GHG-emitting sources and its authority to implement the 

### Tailoring Rule thresholds: Category 1 includes states that do not have an approved SIP PSD

113 7 EPA Response to Stay Motion Exhibits 

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program. In each of 

### these states, the applicable law is EPA regulatory requirements - which already incorporate the Tailoring Rule thresholds - and the permitting authority is either EPA or

the state (if 

### the state has accepted delegation). Category 2 includes states that do have approved SIP PSD programs but do not have the authority to apply those programs to GHG emitting 

### sources because, for example, their SIP PSD programs are limited to certain listed pollutants (and do not list GHGs) or are not automatically self-updating to include newly regulated pollutants. For these states, steps must be taken to ensure that a permitting authority is available 

### to process PSD permit applications from GHG-emitting sources, and to ensure that PSD 

### requirements apply to GHG-emitting sources. Category 3 includes states that do have approved 

### SIP PSD programs that apply to GHG-emitting sources. For these states, steps must be taken to ensure that PSD requirements apply only to GHG-emitting sources at the Tailoring Rule thresholds. 

### 1. Category i: States that do not have an approved SIP PSD Programs 28. Category i includes states and other jurisdictions that do not have an approved SIP PSD program.

29. As indicated in Attachment 1, table I, Category 1 includes 47 locations total-7 

### states, 4 territories, 35 localities (including Michigan Class I areas), and the District of Columbia 

### - as well as all ofIndian country (which is not included in this table).

30. In each of 

### these states and other jurisdictions, EPA regulations, 40 CFR 52.21, 

### constitute the applicable PSD regulatory requirements. These regulations constitute a federal implementation plan (FIP).

31. In most of these states and other jurisdictions, EP A is the permitting authority, but 5 

### states and 7 localities (including Michigan Class 1 areas) have accepted delegation (and one additional state has accepted partial delegation).

32. In all of 

### these states and other jurisdictions, EPA revised the operative law when it promulgated the Tailoring Rule, so that the operative PSD requirements incorporate the Tailoring Rule thresholds.

33. Therefore, in each of 

### these states and other jurisdictions, as ofJanuary 2, 2011, when GHG-emitting sources become subject to PSD requirements for their GHGs, a permitting 

### authority wil be in place to process the sources' PSD permit applications, and the applicable law 

### wil reflect the Tailoring Rule thresholds, so that sources ofGHGs below the Tailoring Rule thresholds wil not be subject to the requirement to obtain a PSD permit. 2. Category 2: States with approved SIP PSD programs that do not apply to GHGs 

### 34. Category 2 includes states and other jurisdictions that do have approved SIP PSD programs, but whose PSD programs do not apply to GHG-emitting sources.

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## _-r -~

35. In Category-2 jurisdictions in this category, the lack of an approved SIP PSD program

that applies to GHG-emitting sources means that EPA's regulatory interpretation of 

### the 

### applicability ofPSD to GHG-emitting sources governs (as opposed to whatever an approved SIP PSD program might have otherwise provided about PSD applicability to GHG-emitting sources), and under the Tailoring Rule, EP A interpreted the PSD applicability provisions to apply only to 

### GHG-emitting sources above the Tailoring Rule thresholds. As a result, in these jurisdictions, only GHG-emitting sources at or above the Tailoring Rule thresholds are required to apply for permits for their GHGs. 

### 36. However, for these states, it is important to take steps to ensure that a permitting 

### authority is available to process PSD permit applications from GHG-emitting sources. Without an authority, no permits can be issued to these sources. 

### a. Proposed SIP Call and FIP 37. EPA addressed Category 2 states and other jurisdictions in two companion rules 

### proposed by notice dated September 2, 2010: the proposed GHG PSD SIP Call (or SIP Call) and the GHG PSD FIP (or FIP). 

### 38. In the proposed GHG PSD SIP Call and FIP, EPA stated that 13 states (including, in

two of 

### the states, some localities) had approved SIP PSD programs that did not apply to GHGs, 

### that is, that fell into Category 2, and EPA proposed a SIP Call and FIP, as discussed below, for each of those states. 

### 39. In the GHG PSD SIP Call and FIP proposals, EPA explained in detail what a SIP Call and FIP are the legal basis and expected process for the SIP Call and FIP, and how the SIP Call 

### and FIP will address the availability ofa permitting authority. The following is a summary description of what we said in our proposals. 

### 40. Approved SIPs are required to include PSD programs. PSD programs, in turn, are 

### required to apply to all pollutants subject to regulation. As noted above, as of January 2,2011, GHGs will be subject to PSD. Accordingly, PSD programs are required to apply to GHGs as of

that date. 41. Under CAA § 11 0(k)(5), EP A is authorized to find that a SIP is substantially 

### inadequate to meet CAA requirements, and ifEPA makes such a finding, to require the state to 

### submit a corrective SIP revision. We refer to that requirement as a SIP calL. In issuinga SIP call, EPA is required to establish a reasonable deadline not to exceed 18 months for the state to submit the corrective SIP revision.

42. Under CAA § IIO(c), if 

### the state fails to submit the corrective SIP revision by that deadline, then EPA is authorized to find that the state failed to submit a required SIP submittaL.

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### That finding triggers an obligation by EPA to issue a FIP under 110(c) any time within two years

of the finding. 

### 43. In the PSD GHG SIP Call proposal, EPA, applying these requirements to the 13 states, proposed to find that their SIPs were substantially inadequate to meet CAA requirements because they do not apply the PSD requirements to GHGs as of January 2, 2011. EP A stated that it intended to finalize the SIP Call on Dec. 1, 20 I O. 

### 44. In the PSD GHG SIP Call proposal, EP A proposed a SIP submittal deadline of 12

months from date of 

### the final rule, unless the state indicated that it preferred, or at least did not

object to, an earlier deadline, as early as 3 weeks from the date of signature of 

### the final rule (that is, December 22, 2010). EP A asked states to advise EP A by letter, by October 4, 2010, how 

### each state intended to respond to the SIP Call, including the SIP submittal date that the state 

### believed EPA should establish for the state. We refer to this letter as the "30-day letter." EPA

made clear that if 

### a state indicated in its 30-day letter that it did not object to EPA establishing an 

### earlier SIP submittal date that the state identifies - again, as early as three weeks after

promulgation of 

### the GHG PSD SIP Call final rule - EPA would establish that date as the SIP
submittal deadline.

45. In the GHG PSD FIP proposal, EPA proposed a FIP for each of 

### the 13 states that

were the subject of the GHG PSD SIP Call proposaL. The FIP would consist of the applicable 

### provisions of EP A regulations, 40 CFR 52.21, and as a result, would apply PSD to GHGs and 

### would include the Tailoring Rule thresholds. 

### 46. In the GHG PSD SIP Call and FIP proposals, EPA stated that upon the SIP submittal

date, if 

### the state had submitted a corrective SIP revision, EPA would proceed to promptly take action on it. EP A further stated that ifthe state so requested, EP A would expedite its action on 

### the SIP submittal through parallel processing. Under this approach, the state would send EPA

the draft of 

### the SIP revision on which the state intended to seek comment at the state leveL. EPA 

### would publish a Federal Register notice proposing to approve the SIP revision and providing a 

### public comment period. In this manner, the state public comment period and the Federal public 

### comment period would occur at approximately the same time. Following the state public comment period, the state would submit the final SIP revision to EP A as a formal SIP 

### submission. Ifthe final SIP revision was substantially similar to the draft SIP submittal upon which EPA solicited comment, then EPA would expeditiously move to take final action on the 

### final SIP revision. In this manner, parallel processing provides for expedited EPA action on SIP submittals. Parallel processing is specifically authorized in EPA regulations, and EPA has used it many times. i;


### 47. In the GHG PSD SIP Call and FIP proposals, EPA further stated that upon the SIP submittal date, ifthe state had not submitted the corrective SIP revision, then EPA would

116 10 EPA Response to Stay Motion Exhibits 

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### immediately make a finding offailure to submit and immediately finalize the proposed FIP for the state. 

### 48. In the GHG PSD SIP Call and FIP proposals, EPA further stated that the FIP, if promulgated, would remain in place until the state submitted and EPA approved the corrective SIP revision, in accordance with CAA section IIO(c). 49. In the GHG PSD SIP Call and FIP proposals, EPA made clear that its preferred outcome was that the states submit and EPA approve corrective SIP revisions that applied PSD

to GHG-emitting sources and either incorporated the Tailoring Rule thresholds or, if 

### the state 

### selected lower thresholds, demonstrated adequate resources to implement those lower thresholds. EPA explained that this action would establish the state as the permitting authority and would establish the proper thresholds. EP A emphasized that if it ended up promulgating a FIP, it would

rescind the FIP as soon as the 

### state submitted and EP A approved a corrective SIP revision. 

### 50. Through this approach, the GHG PSD SIP Call and FIP actions are designed to encourage the states to submit for approval a corrective SIP revision as soon as possible. In addition, these actions establish a mechanism by which, if any state is unable to submit a 

### corrective SIP revision for approval prior to January 2, 2011, EPA may take action - that is, 

### promulgate a FIP - to establish a permitting authority and to establish the Tailoring Rule 

### thresholds as the applicable law. EPA stated in the SIP Call proposal that the state can assure that EPA will take that action by the January 2,2011 date that PSD applies to GHG sources by

indicating that the state does not object to EPA establishing a SIP submittal date of 

### December 

### 22, 2010. EP A asked the States to send letters within 30 days indicating their SIP submittal deadline. We call these letters the 30-day letters. The letters EPA received from the 

### jurisdictions, on October 4, 2011 and shortly thereafter, are included in Attachment 2.

51. In the GHG PSD SIP Call, EPA solicited comment on whether each of the 13 states'
SIP PSD programs fails to apply to GHGs, and whether any of the other states' SIP PSD 

### programs fail to cover GHGs. EPA stated that if, after receiving comment, EPA concluded that

any of 

### the 13 states' SIP PSD program actually does apply to GHGs, then EPA would not finalize the SIP Call for that state. By the same token, ifEPA concluded that any ofthe other 

### states' SIP PSD programs actually does not apply to GHGs, then EPA would finalize the SIP Call for such a state.

b. Expected action 

### 52. EPA expects to finalize the GHG PSD SIP Call by December 1,2010. Although no final decision has been made, at present, based on comments and other information received, we 

### expect the final SIP Call to cover the same states and localities as proposed, except that we do 

### not expect to finalize the SIP call at this time for Alaska, Kentucky (Louisvile Metro APCD (Jefferson County)), or Nevada (Clark County), for which we proposed the SIP Call, because we expect those jurisdictions to submit SIP revisions prior to December 1, 2010; and we do expect

117 11 EPA Response to Stay Motion Exhibits 

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### to finalize the SIP call for Wyoming, for which we did not propose the SIP call but did solicit comment on whether to issue a SIP calL. 

### 53. For any state that submits a corrective SIP revision by its deadline, EPA expects to take action promptly on that SIP revision. 

### 54. For any state that fails to submit a corrective SIP revision by its deadline, EPA

expects, immediately after that deadline, to issue a finding of 

### failure to submit a required SIP 

### revision and, at the same time, to promulgate a FIP. 

### c. Status of states. 55. EPA regional and headquarters offcials have conferred extensively with state 

### offcials concerning the states' progress and plans, and the results are summarized in Table 2in Attachment I and discussed below.2 Based on the states' 30-day letters and other communications with the states, 12 states and 4 localities (16 total) operate PSD programs under SIPs that EPA expects to identify as lacking the authority to issue PSD permits for GHG

emissions starting Jan. 2, 2011.3 EPA expects that of 

### these programs, 7 states and 1 locality wil be subject to a FIP by Jan. 2, 2011; and 2 additional states and 1 additional locality will have an

approved SIP in place by Jan. 2, 2011. Of 

### the remaining 3 states and 2 localities, 2 states and 1 

### locality are expected to have a SIP revision or FIP in place in the first quarter of2011 and 1 locality is expected to have a SIP in place in the first half of 20 11. As noted in the table, in none

of 

### these states are the gaps expected to pose meaningful diffculties for sources in the states because, depending on the state, the gap is very brief, the state does not expect any sources to

seek a permit during the gap, or even if 

### the state were the permitting authority during the gap, it 

### could not complete processing the permits during that time. One remaining state, Texas, has not yet specified a SIP submittal deadline and as a result, EP A intends to continue to work with the 

### state to satisfactorily establish a permitting authority so as to avoid delays in processing the permitting applications for the sources in the state that are expected to undertake construction or modification projects. 

### 2 In addition, the National Association of Clean Air Agencies (NACAA) recently reviewed the 30-day letters from the states and accurately summarized them in a report, "GHG Permitting 

### Programs Ready To Go By January 2nd" (October 28,2010). This report is included as Attachment 3. In a few cases, the information EPA collected is more recent than what was

available to NACAA because EPA's information is based not 

### just on the 30-day letters but also on conferring with the states.

3 Note that the proposed GHG PSD SIP call 

### proposed the SIP call for 13 states and localities. 

### However, our most recent information indicates that 12 states and 4 localities should be subject to the SIP calL. See'¡'¡ 51-52, supra. Because of our solicitation of comment, no supplemental 

### proposal for this action is necessary.

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d. Other YIP Issues

56. We expect that of 

### the 10 states and localities4for which there is a strong chance we 

### wil promulgate a FIP, 4 intend to accept delegation and 1 is considering accepting delegation. 57. In general, any state that accepts a delegation and implements the FIP in its state, would retain a great deal of discretion in making PSD permitting decisions, including the BACT 

### determination. The BACT determination will generally be the most important of determination that a permitting authority will make for GHG emissions during the permitting process.

58. I am aware that offcials in Texas have expressed reservations about the impact that 

### becoming subject to a FIP would have on state prerogatives. 

### 59. Accordingly, as part of our ongoing efforts to satisfactorily establish a permitting

authority in Texas, we have analyzed one of 

### the choices available to Texas, which is our promulgation of a FIP and Texas' acceptance of a delegation of permitting authority, with an eye 

### to ascertaining how this choice would impact Texas' ability to make key permitting decisions for

its sources. If 

### Texas were to accept delegation, Texas would be required to implement EPA 

### regulations, including EPA regulatory requirements concerning BACT. Even so, the PSD BACT requirements that Texas would be required to apply if it were the permitting authority by virtue of being EP A's delegee would be the same as it would be required to apply if it were the

permitting authority by virtue of 

### having the Texas approved SIP apply to GHG sources.

55982/1, See 75 Fed. Reg. 55978, 55982/1, 55986 (Sept. 15,2010) (recent approval of Texas SIP 

### submission for PSD BACT) (in taking this action, EPA stated, "Based upon TCEQ's July 2010 SIP revision, which reinstates into the TCEQ rules the federal PSD BACT definition, its PSD 

### BACT definition is EPA's PSD BACT definition." (emphasis in original)). 60. In addition, Texas, like any permitting authority, would inherently have a great dealof discretion PSD permitting decisions because BACT determinations are made on a case-bycase basis that entails making 

### judgments about a number of factors. 61. EP A recognizes that it will need to devote additional resources to permitting in those 

### states and localities for which EPA has promulgated a FIP but that do not accept a delegation. EP A expects to have adequate resources for each such state. 

### 3. Category 3: States with approved SIP PSD programs that apply to GHGs but 

### that do not incorporate the Tailoring Rule thresholds. 62. The third PSD category includes states and localities that do have approved SIP PSD programs that will apply to GHG-emitting sources as of January 2, 2011, but that do not 4 This count does not include Texas, for which, as noted above, we intend to continue to work on a resolution.

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### incorporate the Tailoring Rule thresholds. As a result, absent further action, as of January 2, 20 II, these SIPs wi II apply PSD to GHG-emitting sources at the 100/250 tpy leveL. Because 

### none ofthese states has indicated an intent to permit GHG-emitting sources at levels below the 

### Tailoring Rule thresholds, or any assurance that they may have suffcient resources to do so, it is important to take steps as soon as possible to ensure that PSD requirements in these states apply to GHG-emitting sources at the Tailoring Rule thresholds. 

### 63. EPA addressed this category in the Tailoring Rule proposal and final rule, and is 

### preparing additional action, to be completed before the end ofthis year. The following describes how EPA intends to address this category, as set forth in the Tailoring Rule and as EPA expects to set forth in an upcoming action, and the status of state efforts to implement the Tailoring Rule thresholds. 

### a. Tailoring Rule Proposal 64. The States in Category 3 have approved SIPs that incorporate either EPA's current PSD regulatory requirements (established in the NSR Reform rulemaking in 2002) or EPA's PSD regulatory requirements prior to being revised in the NSR Reform rulemaking. 

### 65. As noted above, under the current EPA regulatory requirements, PSD applies to a 

### "major stationary source," which is defined as a stationary source that emits, at the 100/250 tpy 

### threshold, a "regulated NSR pollutant," and that term, in turn, is defined in relevant part as "any 

### pollutant that is otherwise subject to regulation." These regulations reflect EPA's interpretation ofthe PSD applicability requirements in Clean Air Act section 165(a)(1) and 169. 

### (i). Applicabilty threshold and method of revising regulations 66. In the Tailoring Rule proposal, EPA recognized that when PSD became applicable to

sources - which would occur by operation of 

### the PSD statutory requirements in CAA section

165(a)(I) as a result ofEPA's completion of 

### the Vehicle Rule the PSD applicability thresholds of 100/250 tpy in the EP A regulations and the SIPs for states in this category would apply, and 

### result in many small sources becoming subject to PSD. As a practical matter, this would impose extraordinary administrative burdens on the permitting authorities. 

### 67. Accordingly, and on the basis of its legal interpretation ofthe Clean Air Act PSD applicability requirements, EPA proposed to phase-in the applicability ofPSD to GHG-emitting
sources.

68. To accomplish this, EPA proposed to revise the definition of 

### major stationary source 

### in its regulations to establish for GHGs an applicability threshold of, in general, 25,000 tpy

carbon dioxide equivalent (C02e), instead of 

### the 100/250 tpy threshold, and to adopt this as the

threshold for determining if a modification has occurred. Under this proposal, this higher

120 14 EPA Response to Stay Motion Exhibits 

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threshold would remain in place for at least six years, after which time EP A would conduct 

### further rulemaking. 

### 69. EPA proposed to revise the majorstationary source definition by replacing the 100/250 tpy threshold with a higher threshold that applied only for GHGs, so that when GHGs 

### became subject to regulation and therefore became a regulated NSR pollutant, a source emitting 

### GHGs would be treated as a major stationary source on account of its GHG emissions only if it emitted at or above the higher threshold established for GHGs. (ii). Proposed Process for SIP action by states and EP A 

### 70. In the Tailoring Rule proposal, EPA recognized that even after it revised its regulations to include higher thresholds for GHGs, in states in this category, the SIP PSD

requirements would apply to GHG-emitting sources as of 

### the date that GHGs became subject to regulation under the Clean Air Act, and the SIP PSD requirements would remain applicable until 

### the state revised them and EP A approved those revisions. Moreover, those approved SIPs would impose PSD requirements at the 100/250 tpy threshold.

71. EPA further recognized that application of 

### the PSD applicability requirements by the SIPs at the 100/250 tpy threshold - notwithstanding the fact that EP A would have revised its 

### regulations to include the Tailoring Rule thresholds - would give rise to the administrabilty issues that the Tailoring Rule was designed to address. 

### 72. EPA also recognized that many states might find it diffcult to submit a SIP revision incorporating the higher Tailoring Rule threshold for GHGs in time for EPA to approve it by the date that PSD would become applicable to GHG-emitting sources.

73. To address the problems posed by the continuing applicability of 

### the SIPs with 

### approved PSD provisions to GHGs, EP A included in the Tailoring Rule proposal a proposal to

rescind EPA approval of 

### these SIPs to the extent they applied the PSD program to GHG-emitting

sources below the Tailoring Rule threshold. Such a rescission of 

### approval would mean that GHG-emitting sources below the Tailoring Rule threshold would not be under any SIP

requirement as a matter of 

### Federal law to obtain a PSD permit. 

### 74. EPA explained that its legal basis for this rescission proposal was rooted in the 

### requirement under CAA §110(a)(2)(E), 42 U.S.c. 7410(a)(2)(E) that States have adequate 

### resources to implement their SIP. Specifically, EPA stated: (O)f particular relevance for this action, subparagraph (E)(i) of section 1 1O(a)(2) ofthe 

### CAA provides that SIPs must "provide... necessary assurances that the state... wil have 

### adequate personnel... (and) funding... to carry out such implementation plan...." As applicable to PSD programs, this provision means that EP A may approve the SIP PSD 

### provisions only ifEPA is satisfied that the state will have adequate personnel and funding to administer the PSD program, including conducting the appropriate analyses for new

121 15 EPA Response to Stay Motion Exhibits 

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# l

and existing sources, issuing the permits, conducting enforcement, and taking other necessary administrative action.

74 Fed. Reg. at 55341/1. EPA went on to state that in light of 

### the potentially enormous

expansion of 

### these SIP PSD programs once GHGs become subject to regulation, it is clear that 

### "(s)tate resources accordingly wil not be adequate to administer the program." Id. at 55343/1. EP A concluded: 

### EPA believes that the SIPs did not provide the necessary assurances, as required under CAA section 110(a)(2)(E), that the permitting authorities would have personnel and funding adequate to implement the extensive SIP PSD programs that could result from 

### the broadly applicable PSD threshold provisions. . . as approved.

Id. In light of the states' obvious lack of 

### adequate resources, EPA proposed several different

legal mechanisms for EPA that would allow it to rescind its previous approval of the SIPs to the 

### extent the SIPs required permits, ranging from an agency's inherent authority to reconsider its previous action to the special provision included under CAA section 110(k)(6) authorizing the EPA Administrator, upon finding that a previous action (such as a SIP approval) was in error, to 

### correct that error. Id. at 55342/2 to 55343/2. 

### (ii). Comments 75. EPA received numerous comments from states and other commenters on the proposed Tailoring Rule that the proposed PSD applicability threshold was too low and 

### therefore, if finalized, would not solve the administrability burdens that the permitting authorities 

### would confront. No state commented that it had adequate resources to implement PSD at the 100/250 tpy threshold, and no state requested that EP A retain the 100/250 tpy threshold. 

### 76. EP A also received numerous comments from states affirming that they would have diffculty in developing SIP revisions and submitting them for EP A approval to occur by the date 

### that PSD became applicable for GHG-emitting sources. Moreover, the states expressed concern

that although the proposed rescission ofEPA approval would, if 

### finalized, eliminate the 

### obligation for GHG-emitting sources below the Tailoring Rule thresholds to obtain PSD permits 

### under Federal law, this rescission of approval would leave in place the sources' obligations to 

### obtain PSD permits under state law. As a result, according to the states, the rescission of approval would not eliminate the severe administrative problems that state permitting authorities would confront.

77. Accordingly, a number of 

### states recommended that EPA recast its approach to 

### revising its regulatory requirements to incorporate the higher thresholds so that states could

adopt those higher thresholds by interpretation of 

### their SIPs, rather than through the more timeconsuming process of revision of 

### their SIPs. 

### (iv). Final Rulemaking

122 16 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 28r. .

78. In the final Tailoring Rule, EPA adopted the basic approach it proposed of 

### phasing

### in the applicability threshold for PSD requirements to GHG-emitting sources, but EPA 

### established the initial thresholds at, in general, a 75,000 and 100,000 tpy C02e, which is significantly higher than the level EPA proposed in the proposed Tailoring Rule. 

### 79. EPA explained that it established the higher threshold based on further analysis and in response to concerns by states and others that the thresholds in the proposed Tailoring Rule 

### would result in too many small sources remaining subject to PSD requirements, which would

give rise to administrative burdens. EPA conducted an extensive analysis of the administrative 

### burdens that would result from applying PSD to GHG-emitting sources at various threshold levels, including the ones it finalized, and concluded that the burdens at the levels finalized 

### would be manageable by the permitting authorities. This is because during the first step ofthe phase-in process, PSD would apply only to the new "anyway" sources and "anyway"

modifications that had high levels ofGHG emissions (the total number of 

### which EPA estimated

as 688 on an annual basis, nationwide), and that in the second step of 

### the phase-in process, PSD 

### would apply only to the new sources and modifications with high levels ofGHG-emissions (the

total number of 

### which EPA estimated to be 917 on an annual basis, nationwide). 

### 80. EPA also finalized a revised phase-in process to address, as appropriate, future revisions to the PSD applicability thresholds to cover more GHG-emitting sources. 

### 81. In the final Tailoring Rule, EPA also revised its regulations to incorporate the higher

thresholds for GHGs in a manner that would allow states, if 

### they chose, to adopt those higher thresholds into their SIPs through interpretation rather than SIP revision. Specifically, EP A

incorporated the higher thresholds into the definition of 

### "subject to regulation." Under this revised definition, GHGs would be considered "subject to regulation under the Clean Air Act," 

### and therefore constitute a "regulated NSR pollutant," if emitted in amounts at or above the Tailoring Rule threshold of, as noted above, in general, 75,000 and 100,000 tpy C02e. As a 

### result, a stationary source that emits GHGs in such amounts would be treated as emitting a

regulated NSR pollutant and, if 

### the amount were also above the 100/250 tpy threshold on a mass basis, would be treated as a major stationary source and therefore subject to PSD.

82. In the final Tailoring Rule, EP A requested that each state submit a letter to EP A
within 60 days of 

### publication ofthe rule (which we refer to as the "60-day letters"), advising EPA as to the state's process and timetable for incorporating the Tailoring Rule thresholds into its SIP.

83. EPA did not finalize its proposal to rescind approval of 

### SIP PSD programs that apply 

### PSD to GHG-emitting sources but that do not incorporate the Tailoring Rule thresholds. EPA

indicated that it would await receipt of 

### the states' 60-day letters before deciding what further steps were necessary to implement PSD permitting for GHG sources.

123 17 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 2984. In addition, in the final Tailoring Rule, EPA codified the definition of "subject to



### regulation" added by the Johnson Memo Reconsideration, which clarified that GHGs would become subject to PSD on the date that the motor vehicle rule takes effect, which is January 2, 2011.

4. EP A and state action; 60-day letters 85. The states submitted their 60-day letters to EPA in generally a timely manner.

Almost all of 

### the states submitted a 60-day letter, including those in Categories 1 and 2, sas 

### discussed above. The majority of states submitting 60-day letters fall into Category 3, the status and EPA's expected future action for which are discussed below. The 60-day letters are available on this link: http://ww.epa.gov/nsr/2010Ietters.html 

### 86. The National Association of Clean Air Agencies (NACAA) accurately tabulated and summarized the statements made by the states in their letters. NACAA, "States Moving Full 

### Speech Ahead on Greenhouse Gas Permitting," Attachment 4, at 1. NACAA stated, The vast majority of states are moving full speed ahead to begin permitting emissions of

... GHGs ... under the (CAA), and expect to complete revisions of 

### state andlor local rules by, or within a few months after, January 2,2011 - the date that GHG permitting under the Act's... PSD ... and Title V programs begins. 

### 5. Expected future action 87. EPA, through its regional offces, has maintained close communication with the states over implementation ofthe SIP PSD program for GHGs. Through the regional offices,

EPA is conducting an ongoing survey of 

### the states' efforts to implement PSD for GHG-emitting

sources, the results of 

### which are included in Attachment 1 Table 3, and described in this 

### declaration. Through this ongoing contact with the states, EPA in effect is regularly updating the 60-day letters. 

### 88. The Category-3 states - which, again, have SIP-approved PSD programs that apply to GHG-emitting sources but that do not incorporate the Tailoring Rule thresholds - can be 

### divided into two groups, as discussed below. For each, EPA is undertaking a process to

maximize the smooth-running administration of 

### the PSD program and, in particular, to minimize the possibility that sources below the Tailoring Rule thresholds will be required to obtain PSD 

### permits after January 2, 20 II under either federal or state law. 

### 89. The first group of Category-3 states is those that interpret their SIPs to include the Tailoring Rule thresholds, and do not need a SIP revision to incorporate those thresholds. Offcials in 8 jurisdictions indicated in their 60-day letters and in conferring with EP A regional

officials that they are able to interpret their SIPs to include the 

### Tailoring Rule thresholds. As a

result, as of January 2, 2011, as a matter of 

### both state and Federal law, the SIP PSD programs in

124 18 EPA Response to Stay Motion Exhibits 

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### these states will not apply to GHG-emitting sources below the Tailoring Rule thresholds, and EPA is not planning to take further action with respect to these states prior to January 2, 2011.5

90. The second group is the rest of 

### the category-3 jurisdictions. For these, EPA intends to finalize its proposal in the Tailoring Rule proposal to rescind its previous approval of Category-3 SIP PSD programs to the extent those programs apply to GHG-emitting sources 

### below the Tailoring Rule thresholds. EPA intends to sign the final rule and forward it to the Federal Register for publication by no later than December 30, 20 10, and I expect that this rule

will take effect by January 2, 2011. This action wil not disturb EPA's previous approval of 

### the 

### affected SIPs' PSD program to the extent the program applies to GHG-emitting sources at or 

### above the Tailoring Rule thresholds. This narrowing ofEPA approval will have the effect of eliminating any federal legal requirement for GHG-emitting sources below the Tailoring Rule thresholds to obtain a PSD permit. 

### 91. In addition, in its final action rescinding its approval, EPA intends to request each Category 3 state to withdraw the part of its approved SIP PSD requirements that apply PSD to 

### sources below the Tailoring Rule thresholds. Through such a withdrawal, EPA wil not be required to take further action (such as a disapproval) on those SIP provisions.

92. In addition, for each of 

### the states for whose SIP EPA is narrowing its approval, EPA is strongly encouraging the state to revise its state law as soon as possible to incorporate the 

### Tailoring Rule thresholds. Once the state does so, sources in the state below the Tailoring Rule threshold will no longer be under a state law requirement to obtain a PSD permit. The combination of EP A's narrowing of its approval (to cover only the part of the SIP PSD 

### requirements that applies PSD to GHG-emitting sources above the Tailoring Rule thresholds)

### and state revision of state law (to incorporate the Tailoring Rule threshold) wil mean that GHGemitting sources in the state below the Tailoring Rule threshold wil not be subject to Federal or state requirements to obtain a PSD permit. 

### 93. In addition, EPA is strongly encouraging each state to complete the processing of state law changes as a SIP revision and to submit it to EP A for approval. Doing so will clarify 

### the SIP provisions. EP A included in the final Tailoring Rule recommendations to the states to expedite their SIP development process.

94. In addition, EPA is making implementation of 

### the PSD program for GHG-emitting 

### sources one ofEPA's highest priorities. EPA is working closely with the states to assistthem in 5 Even so, EPA is recommending that these states develop and submit to EPA a SIP revision that

codifies this interpretation of 

### the SIP for purposes of clarity, and 3 jurisdictions have indicated that they intend to do so.

125 19 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 31

### developing, and is committed to acting expeditiously on, SIP revisions to implement the PSD



### program for GHG-emitting sources, including parallel processing the SIP revisions, upon request from the State. 

### 6. Status of states

95. 30 states and 6 localities (36 total) comprise Category 3. 8 of 

### these jurisdictions have 

### stated that they can interpret their SIPs to include the Tailoring Rule threshold. As a result, for these jurisdictions, as of January 2, 2011, only GHG-emitting sources at or above the tailoring Rule thresholds will be required to obtain PSD permits under either Federal or state law. 96. For each of the rest ofthe jurisdictions, EP A intends to finalize the rule to rescind

EPA approval of the SIPs so that, by January 2, 2011, as a matter of 

### Federal law, only GHG

### emitting sources at or above the Tailoring Rule threshold, and not those below, will be subject to PSD. 

### 97. As for the obligations ofGHG-emitting sources under the Tailoring Rule threshold to obtain a PSD permit under state law, EPA anticipates that programs in 23 states and 3 localities

will interpret or make state or local 

### law amendments effective to incorporate the Tailoring Rule 

### thresholds by Jan. 2, 2011. 5 state and 3 locality programs anticipate that state law changes wil be in place by Feb. 2, 2011, and one additional state program anticipates that state law changes 

### will be in place by mid-Feb. 2011. One state has not yet determined whether it may interpret its state laws to incorporate the thresholds, or whether it must seek amendments to its state law. 

### 98. Overall, EPA has received information about the status of99 jurisdictions (49 states6, 4 territories, 45 localities, and the District of Columbia), and included that information in

Attachment I. Of 

### these jurisdictions, 94 wil have, for Federal law purposes, a PSD permitting program for GHG emissions at the Tailoring Rule thresholds on Jan. 2, 2011. Ofthese 94 

### entities, 84 wil have made any necessary amendments to state or local law to ensure that state or local permits are not required for GHG emissions below Tailoring Rule thresholds. By the

end of the first quarter of2011, only one 

### jurisdiction will not have authority to permit GHG sources, and that jurisdiction wil obtain authority by July 1, 2011 and in the meantime, does not 

### expect large sources seeking permits for their GHGs. In addition, by the end ofthe first quarter of 20 11, all but one more state wil have made any necessary amendments to state or local law to 

### ensure that permits are not required for GHG emissions below Tailoring Rule levels. 1 program with GHG permitting authority at the lower statutory levels has not yet determined how, and on 

### which timeline, it will incorporate the Tailoring Rule thresholds into its state law. As discussed above, for one remaining program - Texas' - we intend to continue to work on establishing, in 

### a satisfactory manner, a permitting authority.

6 In California's PSD program is administered in its entirety by local jurisdictions.

126 20 EPA Response to Stay Motion Exhibits 

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### Vi. GHG PSD and BACT guidance 99. The Clean Air Act Advisory Committee formed the Climate Change Work Group in October 2009 to recommend information and guidance that would be useful for EPA to provide

to permitting agencies regarding the consideration of the energy, economic, and environmental 

### impacts of potential control options for greenhouse gases in the context of a BACT analysis and 

### to identify approaches to enable state and local permitting authorities to apply the BACT criteria 

### in a consistent, practical and effcient manner. The Work Group included 45 representatives from state and local governments, a variety of industries and environmental and public health non-profit organizations. The Work Group

issued two reports, one in February 2010 and the second in 

### October 2010. The reports provide 

### valuable insights on stakeholders perspectives on how PSD, and BACT in particular, should be applied to GHGs. The first report focused on recommending information and guidance that

would be useful for EPA to provide to permitting agencies regarding the consideration of 

### the

energy, economic, and environmental impacts of 

### potential control options for greenhouse gases 

### in the context of a BACT analysis. The second report focused on how the BACT process could 

### be used to encourage energy effciency and innovative control technology waivers to encourage 

### the development of more effcient and less emitting processes. Together, these reports have assisted EP A in developing a document entitled "PSD and 

### Title V Permitting Guidance for Greenhouse Gases" (hereinafter GHG Guidance) (which I

expect to be available shortly, as noted below) and a number of 

### technical and other resources to assist in the transition of permitting for GHGs under the PSD and title V Programs. 

### In addition to the GHG Guidance, EPA has also developed a number oftechnical resources and tools to assist permitting authorities and permit applicants. For example, EP A has 

### developed technical "white papers", targeting specific industrial sectors, that provide basic information on GHG control options to assist states and local air pollution control agencies, 

### tribal authorities and regulated entities implementing measures to reduce GHG, particularly in

the assessment of 

### best available control technology (BACT) under the PSD permitting program. 

### These papers will provide basic technical information that may be useful in a BACT 

### analysis but they do not define BACT for each sector. The industrial sectors covered include:

. Electric Generating Units
. Large Industrial/Commercial/Institutional Boilers
. Pulp and Paper


### . Cement

. Iron and Steel Industry

127 21 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 33. Refineries

. Nitric Acid Plants



### EPA also has implemented enhancements to the Control Technology Clearinghouse (known as the RACT/BACT/LAER Clearinghouse, or the RBLC). This website provides access 

### to information and decisions about pollution control measures required by air pollution emission permits issued for GHG by state and local permitting agencies so that the information is 

### accessible to all permitting agencies working on similar projects. The expanded RBLC includes GHG control and test data, and a GHG message board for permitting authorities. In addition, EPA will provide a GHG Mitigation Strategies Database. EPA expects 

### technology capable of reducing GHG emissions in various major industrial sectors wil evolve.

Recognizing the importance of 

### tracking these developments, EPA will provide a new online tool 

### which includes specific performance and cost data on current and developing GHG control measures. It also provides available data on other potential environmental impacts that a GHG 

### control measure may have. Currently, the database includes information on GHG controls for electric generating and cement production. 

### Finally, EPA has formed a GHG Permitting Action Team. This team will assist EPA and

permitting authorities in 

### responding to GHG permitting questions. The GHG Permitting Action Team, comprised of experienced senior staff and permitting managers from EP A, wil work together to provide a smooth transition to GHG permitting and consistent GHG permitting guidance..

My expectation is that EPA wil make available the guidance and all of the tools in the 

### near term and well before January 2, 2011. 

### At EPA's request, the CAAAC Climate Change Work Group reviewed the application of BACT for GHGs and reached general consensus that the existing Top-Down BACT Process that EPA has applied and recommended that states apply for over 20 years to determine BACT, should be used for GHGs. This methodology for determining BACT, on a case-by-case basis, 

### calls for all available control technologies for a given pollutant to be identified and ranked in

### descending order of control effectiveness. The permit applicant should first examine the highest

### ranked ("top") option. The top-ranked options should be established as BACT unless the permit

applicant demonstrates to the satisfaction of 

### the permitting authority that technical 

### considerations, or energy, environmental, or economic impacts and other costs justify a

conclusion that application of 

### the top-ranked technology is not "achievable" in that particular 

### case. The cost of applying pollution control strategies is an important consideration in

determining BACT. If 

### the most effective control strategy is eliminated in this fashion based on cost or other factors, then the next most effective alternative should be evaluated, and so on, until an option is selected as BACT.

128 22 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 34'~l:~

In accordance with the recommendation of 

### the Work Group, EPA wil continue to apply and recommend that states apply the Top-Down BACT Process to determine BACT for GHGs. 

### EPA's guidance for GHGs will reaffrm and build on an extensive body of existing guidance reflected in EPA memorandum and orders describing and applying the Top Down BACT process.

Based upon the input from the Work Group and the current state of 

### technology 

### development, it is EPA's expectation that initially, in many instances energy efficiency measures 

### wil serve as the foundation for a BACT analysis for GHGs at the present time. From a capital cost perspective, we do not anticipate that the addition of energy

effciency measuresare likely to represent a significant part of 

### the project cost, certainly when 

### compared to costs for add-on controls. Typical capital costs of criteria pollutant add-on controls are in the millions of dollars (and often result in no economic payback), whereas energy 

### effciency measures are typically an order of magnitude lower and often generate cost savings

over a reasonable amount of 

### time. Further, improved energy effciency measures wil always

have a payback (in fuel savings). For example, many of 

### the measures that are commonly 

### employed at a refinery have payback periods of I -2 years. Thus, a number of energy efficiency 

### measures are going to be included in new equipment without regard for BACT. Furthermore,

many of 

### these efficiency measures are already considered in BACT reviews for criteria 

### pollutants, since improving a unit's energy effciency reduces not only GHG but also non-GHG 

### products of combustion (e.g., NOx, S02, CO) on an output basis. Finally, in cases where the capital cost or other cost factors are high for an energy effciency measure, the permitting authority has discretion within the BACT review to determine whether the costs are unreasonable.

100. There has been, and continues to be, a very high level of 

### collaboration between EPA 

### and the states in moving forward with GHG SIP PSD and title V implementation. For example, 

### EP A Regional offcials and state offcials have conferred on a regular basis. The OAR Offce of Air Quality Planning and Standards held teleconferences with NACAA to discuss the rulemaking 

### efforts on June 22 and 29, 2010, and August 11 and 23, 2010. OAQPS .conducted a webinar on the proposed SIP Call and FIP rules on September 23, 20 i 0, which included representatives of at 

### least 39 states, several state air pollution organizations, and several tribes and a tribal environmental organization.



### VII. Title V 101. In this section, I wil briefly provide the essential background information concerning the CAA title V program, including the implementation ofthe program through state

permit programs and the applicability of 

### the title V program to GHG-emitting sources. More

129 23 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 35

### detailed expositions ofthis background information may be found in the proposed and final Tailoring Rule. 

### A. Background Information on Title V 102. The title V operating permits program is designed to improve sources' compliance

with the requirements of 

### the CAA. Title V establishes a federal-state partnership that is similar to the one established for SIPs and for the PSD program. Unlike PSD, however, title V does not impose substantive pollution control requirements. 

### 103. The title V program requires a "major source" (discussed below) to obtain an operating permit that: consolidates all CAA requirements applicable to the source into a document; includes conditions necessary to assure compliance with such requirements; provides

for review of 

### these documents by EPA, states, and the public; and requires permit holders to 

### track, report, and annually certify their compliance status with respect to their permit requirements. 

### 104. A "major source" is defined to include, among other things, a source that actually

emits or has the potential to emit 100 tpy, of 

### "any air pollutant." CAA 501(2),3020). See also 40 CFR 70.2 and 71.2. Since 1993, EPA has interpreted the Clean Air Act to define a "major

source" for purposes of 

### title V to include any sources that emit, or have the potential to emit, at 

### least 100 tons per year of an air pollutant subject to regulation under the CAA. Memorandum 

### from Lydia N. Wegman, Deputy Director, Offce of Air Quality Planning and Standards, U.S.

EPA, "Definition of Regulated Air Pollutant for Purposes of 

### Title V" (Apr. 26, 1993); 75 FR 

### 31553-54. In the Johnson Memo Reconsideration (75 FR 17022-23), EPA determined that

GHGs should be considered "subject to regulation" for purposes of 

### title V no earlier than the 

### date on which a control requirement for GHGs "takes effect." 105. Section 502(b) requires EPA to promulgate regulations setting forth the minimum 

### elements of any title V permit program, and specifies certain such minimum requirements. Section 502(d) provides that Governors shall develop title V permit programs consistent with 

### these requirements and submit them to EPA for approvaL. Ifa permit program consistent with

the requirements of 

### title V has not been approved in a timely fashion for any state, then EPA is required to administer and enforce a federal operating permit program for that state. 

### 106. Section 503 provides that a source is required to apply for a permit generally within

one year of 

### the later of: 1) the effective date ofa permit program applicable to the source; or 2) the date the source becomes subject to section 502(a). 

### 107. The requirements for title V are primarily implemented through the operating permit program rules promulgated at 40 CFR part 70, which set out the minimum requirements for title V operating permit programs administered by state, local, and tribal permitting authorities (57 FR 32261; July 21, 1992); and part 71, the federal operating permit program

130 24 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 36'~!'

requirements that apply where EPA or a delegate agency authorized by EPA to carr out a 

### federal permit program is the title V permitting authority (61 FR 34228, July 1, 1996). 

### B. Background information on the Tailoring Rule 108. On January 2, 2011, ifthe Tailoring Rule does not take effect, GHGs wil become

subject to regulation for purposes of 

### title V. In the Tailoring Rule, EPA concluded that it was

necessary to limit, at least initially, the scope of 

### required title V permitting. Accordingly, EPA amended the regulations for the title V permit program, promulgated at 40 CFR parts 70 and 71,

to provide that no source wil be considered a major source ofGHG for purposes of 

### title V until 

### July 1,2011. Sources that are subject to title V for other reasons (because they are major for some other pollutant, or fall within a different clause of section 502(a), such as the requirement to get a PSD permit) would be subject to title V in the same manner as prior to the Tailoring 

### Rule. Such sources would need to address any GHG requirements from other Clean Air Act programs when they apply for a renewed or revised permit, as appropriate; EPA expects this exercise to be relatively straightforward for most sources. Beginning July 1,2011, sources of 

### GHGs that emit at least 100 tpy on a mass basis and 100,000 tpy C02e wil be considered major

sources for purposes of 

### title V. 

### 109. In the final Tailoring Rule, EPA requested that states provide information as to whether they have sufficient authority to permit GHG sources, and, if so, whether they can and will do so consistent with the thresholds established in part 70 by the Tailoring Rule. 

### 110. States responded by providing information in the same 60-day letters that they provided with information as to their PSD programs.

C. Categories of States 

### 111. Because all states have approved title V programs - that is, in each state, the title V program consists of state regulations that were submitted to, and approved by, EP A - there are 

### two general categories oftitle V states for purposes of addressing sources that are major sources

subject to title V as a result of 

### their GHG emissions (GHG Sources): approved title V programs 

### that include authority to require and issue permits for GHG sources, and approved title V programs that do not.

1. Category 1

112. Most of 

### the states have approved title V programs that will apply to GHG Sources. 

### Based on their 60-day letters, these states may be divided into two groups. The first group includes states that are able to interpret their approved title V program to include the Tailoring 

### Rule thresholds, and do not need to revise their title V program to do so. For these states, EPA does not anticipate further action being necessary at this time, although we will continue to work

with states on implementation of 

### title V permitting for sources ofGHGs. Beginning July i,

131 25 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 37

### "r ,~



### 2011, the GHG Sources that wil become subject to title V wil become obligated to submit an application for a title V permit, generally within one year. 

### 113. The second group includes states that need to revise their title V programs to reflect the Tailoring Rule thresholds.7 

### 114. EP A recognizes that the state regulations that comprise the permitting program may 

### include a lower threshold for major sources applicable to GHG Sources. In the proposed

Tailoring Rule, EPA proposed to limit its approvals of 

### states' title V programs to the extent they 

### apply to sources below the Tailoring Rule thresholds. 74 FR 55345. EPA intends to finalize this proposal and thereby narrow the scope of its approval of these state programs such that any requirement for permitting of sources at lower levels of GHG emissions will not be federally 

### approved, and thus there wil be no obligation on these sources for federal purposes to apply for title V permits. 

### 115. EP A is currently planning to issue its determination narrowing its approval of state 

### title V programs so as to conform them to the Tailoring Rule thresholds by the end ofthe year. 

### 116. As a result, on January 2,2011, EPA anticipates that there wil be no requirement under a federally-approved title V program for any source of GHGs to apply for a title V permit 

### due to its status as amajor source ofGHG. 117. Beginning July 1,2011, in states with a title V program that is applicable to GHG 

### Sources, such sources at the Tailoring Rule thresholds wil generally have up to one year to 

### apply for a title V permit. Thus, EPA does not anticipate any title V applications for such 

### sources being due until 2012. See 75 FR 31595/2.

118. Many of 

### these states have already begun to work on revisions to their title V programs, as indicated in their 60-day letters.

2. Category 2 

### i 19. The second category includes states whose title V programs do not cover GHG Sources. 

### 120. Under section 503(a), a source does not "become subject to a (title V) permit program, and required to have a (title V) permit" until there is a title V permit program
7 EP A also proposed in the tailoring rule that, if a state wants to implement an approved title V 

### program at a threshold level lower than the thresholds in the Tailoring Rule, the state may submit 

### an operating permit program revision that identifies the lower thresholds and provides the 

### necessary assurances that it has adequate personnel and funding. 74 FR 55345. No state has indicated to EPA in its 60-day letter that it intends to do so.

132 26 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 38- :~"-.:' , . - -,' - .~'".':

"applicable to the source." Thus, EP A's interpretation of 

### the Clean Air Act is that if a state with 

### an approved title V program lacks any authority to permit GHG Sources, then there is no title V 

### permit program "applicable to the source" and GHG Sources in that state have no obligation to apply for a title V permit until after such time as a permit program becomes applicable to them. 

### 121. Several states have indicated that their programs currently do not apply to GHG

Sources. Some of 

### these states have indicated that they are taking steps to include GHG Sources

within the scope of 

### their title V programs. EPA intends to work with states, through program revisions, notices of deficiency andlor application ofthe federal title V program, in order to 

### assure that GHG Sources in all states are subject to title V programs. 75 FR 31526. 122. In states without a title V program applicable to GHG Sources, there will be no requirement for any GHG Sources to apply for a title V permit until a title V program becomes applicable to such sources. 

### 123. At the time that these states do have a revised title V program that applies to GHG

Sources, or, if 

### necessary, EPA promulgates a federal program, GHG Sources meeting the 

### thresholds in the Tailoring Rule in those states generally will have one year to submit their 

### permit applications. Accordingly, EPA does not expect that in these states, any GHG Sources will be under any requirements to submit permit applications until at least 2012.

Executed this 28th of October, 2010 

### Isl Regina McCarthy Regina McCarthy 

### Assistant Administrator 

### Offce of Air and Radiation United States EP A

133 27 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 39,,l-. 

### .~~. 

## ,r



# EXHIBIT 13

Attachment 1

134 ,~

EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 40"'~.... --c::.::'

Table I. Category-1 __ States that do not have an approved PSD SIP, and therefore apply EPA regulations directly.
State Name 

### Deleaated? American Samoa Arizona - Maricopa County 

### yes Arizona - Pima 

### yes California - Amador County APCD California - Antelope Valley AQMD California - Bay Area AQMD 

### yes California - Butte County AQMD California - Calaveras County APCD California - Colusa County APCD California - Eastern Kern APCD California - EI Dorado County AQMD California - Feather River AQMD California - Glenn County APCD California - Great Basin Unified APCD California - Imperial County APCD California - Lake County AQMD California - Lassen County APCD California - Mariposa County APCD California - Modoc County APCD California - Moiave Desert AQMD California - Northern Sierra AQMD California - Placer County APCD California - San Dieqo County APCD California - San Joaquin Valley APCD California - San Luis Obispo County APCD California - Santa Barbara County APCD California - Shasta County AQMD California - Siskiyou County APCD California - South Coast AQMD 

### yes California - Tehama County APCD California - Tuolumne County APCD California - Ventura County APCD California - Yolo-Solano AQMD District of Columbia Guam Hawaii 

### yes Illinois 

### yes 

### Massachusetts Michiqan - Class I areas 

### yes Minnesota 

### yes Neyada - Rest of the State (NDEP) (Except Clark and Washoe Counties, and Indian CountrY) yes Neyada - Washoe County 

### yes New Jersey 

### yes Pennsylvania - Alleqheny County 

### yes
Puerto Rico Virqin Islands Washinçiton partial k f

135 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 41Table II. Category 2-States with an approved PSD SiP that, when the Tailoring Rule issued, did not allow for 1/2/11 regulation of GHGs.~¿tdåF'Òf.......'leXp'~çi~ctaåt~' ".''p'tfirlá¡dEF'-A;d ....ac..t.í.O....Í1... ò.n. $.' 'lB. ",..; ,-"?,.,.,,, drevision.'I.T~l:'dÄ~å~i~~ti. prQn1ulgati()fJPf';F/e¿C' '. ..J').r:;,Dec. 23, 2010State expects to submit a siprevision prior to EPA's issuance ofa final sip call on Dec. 1, 2010. Inthat case, the state would not beincluded in the sip call and EPAexpects to parallel process therevision, and to approve the siprevision by Jan. 2, 2011. If theState fails to submit before Dec. 1,2010, it will receive a Dec. 1,2011deadline for sip submittaL.State intends to seek delegation ofthe FIP.Approved sip in place.Promulgated FIP inlace.Alaska I Dec. 1, 2011Arizona - PinalCounty I Dec. 22,2010Arizona - Rest ofState (excludingMaricopaCounty, PimaCounty, andIndian Countv \ Dec. 22, 2010before Dec. 1,2010Bv Jan 2, 2011N/AArkansas i Dec. 22, 2010Dec. 23, 2010State intends to seek delegation ofthe FIP.State is considering seekingdeleaation of the FIP.Promulgated FIP inlace.Promulgated FIP inlace.No permitting authoritywill be in place as ofJan. 2. PromulgatedFIP in place by Feb. 1,2011. No permitapplications areexpected to besubmitted or affectedduring this 1-montheriod.Dec. 23, 2010California -SacramentoMetropolitanAQMDJan. 31,2011Feb. 1, 2011136EPA Response to Stay MotionExhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 42~X'l#j~March 2, 2011ConnecticutMarch 1, 2011Dec, 23, 2010FloridaDec. 22, 2010Dec. 23, 2010IdahoDec. 22, 2010Dec. 23, 2010KansasDec. 22, 2010Kentucky -Louisville MetroAPCD (JeffersonCounty) \ Jan. 1, 2011Kentucky - Restof State \ March 31,2011during Dec.2010EPA estimates byDec. 1,2010N/ADec. 14,2010bv Jan. 2, 2011N/ANebraska i March 1, 2011Feb. 1, 2011N/A137EPA is parallel processing sipsubmission.State intends to seek delegation ofthe FIP,State is submitting a SiP revisionand EPA plans to parallel process.State intends to seek delegation ofthe FIP.County expects to submit a siprevision prior to EPA's issuance ofa final sip call on Dec. 1,2010, inwhich case it would not beincluded in the SiP calL. EPAwould then rule on the submissionby Jan. 2, 2011. However, if thecounty fails to submit before Dec.1,2010, it would accept a Jan. 1,2011 deadline for sip submittaL.EPA is parallel processing the siprevision.No permitting authoritywill be in place as ofJan. 2. The stateexpects that either a FIPwil be in place on March2, 2011, or a revisedsip will be in placeeither before or shortlyafter March 2, 2011.Promulgated FIP inlace.Promulgated FIP inlace.Promulgated FIP inplace. sip is expectedto be approved by Jan.15, 2011.Approved SiP will be inlace.Approved sip will be inlace.No permitting authoritywill be in place as ofJan.2. Approved SiPwil be signed by Feb. 1,2011.EPA Response to Stay MotionExhibits--~g-ç"';~l:-; 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 43Nevada - ClarkCountbefore Dec. 1,2010bv July 1,2011N/AJuly 1, 2011Dec. 23, 2010OreaonDec. 22, 2010Dec. 2, 2011TexasDec. 1, 2011Dec. 23, 2010WvominDec. 22, 2010CommentsCounty expects to submit a siprevision prior to EPA's issuance ofa final sip call on Dec. 1, 2010, inwhich case it would not beincluded in the sip calL. EPAwould then rule on the submissionby July 1, 2011. However, if thecounty fails to submit before Dec.1,2010, it would accept a July 1,2011 deadline for sip submittaL.State intends to seek delegation ofthe FIP.State did not address a sip calldeadline, so will receive a deadline1 year from date of promulgation ofthe sip calL. There is no indicationthat Texas will pursue rulemakingactivities until the pending litigationis resolved.No permitting authoritywill be in place as ofJan. 2. Approved siprevisions in place byJuly 1, 2011. No permitapplications areexpected to besubmitted or affectedduring this 6-montheriod.Promulgated FIP inlace.No permitting authoritywill be in place as ofJan. 2, 2011. FIPcannot be promulgateduntil December 2,2011at the earliest.Promulgated FIP inlace.Note' The dates for state law actions tnctuded in these labtes are reasonably expected based on statements by slate offcials to EPA reionat offciats, in wriencommunicaüons and in meetings and wlecnferences. In some cases, the slte offciats have cauüoned that because the dates are dependent upon stateadmintstüve and/or tegtslaüve processes, cerlain events coutd ocur - such as negative comments received during rutemaking or tegistative delays - that couldtead to delays In some ofthe state law aetons. By the same token, some ofthe slate taw actions may lake less time than estimated. Even so, as stated above,each of the various state law actions is reasonably expected to occur on the indicated date.138EPA Response to Stay MotionExhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 44Table II: Category 3---States with an approved PSD sip that, when the Tailoring Rule issued,allowed Jan. 2, 2011 regulation of GHGs, but at the lower statutory threshold./raA~~šiatf.. ......Êor~tåt~#,l&'at?d..d/nißrp¡et~SIP , i TeviSaddöi:wil(Ùtvise .,1pi-~~rs;C?dft(). . ". 'dtA~ir~tat€!(sWt() e.;/fl9~'rCl(ateTR; '. .in?9rpWàtf?TR '. ........;thres&~/ds wittiÒpt .' thrf?~n()~gi~f!åtClf!té""I..fèqUirllIg; furthef .' "~illtr8s~dth~ngfJs" . ..,faction? ....,......'....... bééffectivé?Federal requirements reflect TRthresholds. State requirementreflect TR thresholds on JanuaryAlabamaI noI Jan. 18,2011I yesI exoected bv Jan, 2011,118,2011.Federal requirements reflect TRthresholds. Districtrequirements do not yet reflectCalifornia -I noTR thresholds, but are expectedMendocinoI before or during Jan.IAdoption is planned for no later thanto do so by not later than Jan.Countv2011 vesJan, 2011, maybe sooner.31,2011.Federal and districtrequirements reflect TResII noII thresholds.Federal requirements reflect TRthresholds. Districtrequirements do not yet reflect I'iCalifornia -TR thresholds, but are expectedNorth Coastbefore or during Jan.Adoption is planned for no later thanto do so by not later than Jan.Unifiedno2011yesJan. 2011, maybe sooner.31,2011.California -NorthernSonomaI NoI Dec. 14,2010I yesII Federal and state requirementsCountvreflect TR thresholds.I yesII Federal and state requirementsColoradoI noI Nov. 20, 2010reflect TR thresholds.139EPA Response to Stay MotionExhibits'. -;:.'.',~.':"'~ ... ~,. . 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 45;.,;'.....~..-:..~..,..stdt~.....:......it7triipretS/R' '.'.rjtòVisio?.s.JP... .......,: ifJS9rPt)':ciW'.lfJ,;;..,thrësholds...withoiJd.'. , ':':',':(",_,,_;-_ _ _ __ :__ '.' " _ ,~, '__,,', '~,,;:, ':-' ::'-:y- '_ i "" ,;,r~Cj~Îririg further. action? .'esInterprets "subject to regulation" toincorporate GHG Tailoring Rulethresholds, but also plans to explicitlyadd the higher thresholds byamending its regulations. Anticipatefinalizing regulatory changes by Jan,Federal and state requirementsno2.reflect TR thresholdsFederal and state requirementsDec. 29, 2010I vesI expected bv Jan, 2011,I reflect TR thresholdsEmergency ruleeffective Jan. 2,2011. Permanentrule effective MarchFederal and state requirementsor A ril 2011.esreflect TR thresholdsFederal and state requirementsDec. 22, 2010I yesII reflect TR thresholdsFederal and state requirementsbv Jan. 2, 2011I yesII reflect TR thresholdsFederal requirements reflect TRthresholds. State requirementswill reflect TR thresholds in Feb.Feb. 2, 2011I yesI expected in May 2011.12011.Federal and state requirementsbefore Jan. 2, 2011I yesI expected by March 2011.i reflect TR thresholdsFederal and state requirementsnoreflect TR thresholdsFinal EPA action on s~p revisionFederal and state requirementsbv Dec. 2, 2010i yesI expected bv Jan. 2011.reflect TR thresholds140EPA Response to Stay MotionExhibitsDelaware I vesGeorqia I noIndiana I noMaine I noIowa I noLouisiana I noMarvland I noMississipp~ I no 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 46MissouriMontanaNewHampshireNew Mexico -AlbuaueraueNew Mexico -Rest of StateNew YorkNorth CarolinaNorth Dakotanoesnononounknown*noesEmergency ruleeffective Jan, 3,2011. Permanentrule effective July 30,2011. i vesJan. 2, 2011bv Jan. 8, 2011bv Jan. 2, 2011bv Aua. 2011Jan. 2, 2011noesesesnoesnoEPA expects to approve a PSD sipfor state in Oct. 2010. This approvalwill be narrowed to only approvepermitting of GHG emissions at orabove the TR threshold. NY is stilldetermining whether it can interpret itsstate law to incorporate the TRthresholds, or whether state lawrevisions are reauired.Final EPA action on SiP revisionexpected by Jan, 2011.State also expects to adopt the TRthresholds by state rule revision byApril2011.141Federal requirements reflect TRthresholds. State requirementsreflect TR thresholds on Jan. 3,2011 through an emergency ruleeffective for 180 days.Permanent rule effective by July30,2011.Federal and state requirementsreflect TR thresholds.Federal and state requirementsreflect TR thresholdsFederal requirements reflect TRthresholds. Albuquerquerequirements will reflect TRthresholds bv Januarv 8th.Federal and state requirementsreflect TR thresholdsFederal requirements reflect TRthresholds. Whether state lawcurrently allows the state toimpose TR thresholds isunclear. State expects to reviselaw to clarify that it reflects TRthresholds bv Auaust 2011.Federal and state requirementsreflect TR thresholdsFederal and state requirementsreflect TR thresholds~EPA Response to Stay MotionExhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 47Federal and state requirementsOhioI noI Jan. 2, 2011I yesII reflect TR thresholdsFederal requirements reflect TREmergency rulethresholds. State requirementseffective by Januaryreflect TR thresholds, as a result2, 2011. Permanentof emergency state rulemaking.rule effective noPermanent rules changing stateearlier than Julyrequirements will be2011, latest is Julyincorporated before theOklahomano2012.yesemerqency rules expirePennsylvania -Federal and state requirementsPhiladelphiayesnoreflect TR thresholdsPennsylvania -Federal and state requirementsRest of Statevesnoreflect TR thresholdsFederal requirements reflect TRthresholds. State requirementsFinal EPA action on sip revisionwill reflect TR thresholds Jan.Rhode IslandI noI Jan. 15,2011I yesI ex ected in Feb. 2011.15,2011.State legislature passed anemergency resolution on June 11,2010 to incorporate the TR thresholdsthat is already in effect. State plans toFederal and state requirementsSouth Carolina I noIJune11,2010esalsoursue re ulatochan es.reflect TR thresholdsFederal requirements reflect TRthresholds. State requirementswill not reflect TR thresholds,but are expected to do so bySouth DakotaI noI bv Jan. 10,2011I yesII Jan. 10,2011.142EPA Response to Stay MotionExhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 48";;0~C~1¡~iiliitn;'ki'lnteq:ra(sip..;ag~~~~~rT~;'.i,...'...'..thra$fipiasw.i~hoú( '"....raqllitiiig..turtheraction?d'a~~~~&R*V¿tJft~iiW....intand..to..inç/licJt/Æ-I...din'rule'rêsçif1didg;;':àppl:ovaÎ;ofih.eparlpi,:thêtSe'pfo-gr~i1,,'d;;:' .applýinglqsn1aH..............:GHG so¡Jicès'6ý, .. 1/2I11? .TennesseenoFeb. 15, 2011yesTennessee has a mandatory 90 dayeffective period that cannot be waivedexcept for emergency situations.Changes were supposed to beadopted Oct. 13,2010. Region willcheck with state on this. Final EPAaction on sip revision expected to beeffective on Feb. 15, 2011.Federal requirements reflect TRthresholds. State requirementswill reflect TR thresholdsFebruarv 15, 2011.UtahnoDec.2010yesFederal and state requirementsreflect TR thresholdsViroiniabefore Jan. 2, 2011Final EPA action on SiP revisionexpected in April 2011.Federal and state requirementsreflect TR thresholdsVermontnoend of 2010noFederal and state requirementsreflect TR thresholdsWest VirnoFederal and state requirementsreflect TR thresholdsWisconsinnoEmergency ruleeffective by Jan. 2,2011. Permanentrule effective insummer or fall 2011.esFederal and state requirementsreflect TR thresholdsNote: The dates for state law actions included in these tables are reasonably expected based on statements by state officials to EPA regionaloffcials, in writencommunications and in meetings and teleconferences. In some cases, the state officials have cautioned that because the dates are dependent upon stateadministrative and/or legislative processes, certain events could occur - such as negative comments received during rulemaking or legislative delays - that couldlead to delays in some of the state law actions. By the same token, some of the state law actions may take less time than estimated. Even so, as stated above,each of the various state law actions is reasonably expected to occur on the indicated date.143EPA Response to Stay MotionExhibits... ~. 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 49~c~ r



# EXHIBIT 13

Attachment 2

144 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 50

# SlAlE Of AUASl( SEAN PARNELL, GOVERNOR



## DEPT. OF ENVIRONMENTAL CONSERVATION OFFICE OF THE COMMISSIONER 410 Wiloughby Avenue, Suite 303 Post Offce Box 1 11800 Juneau, Alaska 99811-1800 Phone: 907-465-5066 Fax: 907-465-5070 

### ww.dec.state.ak.us 

## October 4, 2010 Mr. Dennis McLerran 

### U.S. EPA, Region 10 Regional Administrator's Offce, RA-140 

## 1200 Sixth Avenue, Suite 900 Seattle, WA 98101 

### Dear Mr. McLerran: EPA's recent "Action To Ensure Authority To Issue Permits Under the Prevention of 

## Significant Deterioration (PSD) Program to Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP Call" (Federal Register/Vol. 75, No. 

## 170/Thursday, September 2,2010) includes Alaska on the list of states whose State Implementation Plans (SIPs) are substantially inadequate to meet Clean Air Act (CAA) requirements related to PSD requirements for GHG-emitting sources. EPA 

### has requested that states submit information by October 4, 2010 on their plans for 

## implementing the rule. The State of Alaska, Department of Environmental Conservation (ADEC) through this letter fulfils this request and provides the 

### following information regarding the Division of Air Quality's plan for implementation of the GHG Tailoring Rule by January 2, 2011. 

### At the present time, ADEC's regulations revision which includes the adoption by reference of the GHG Tailoring Rule have been adopted and are undergoing review 

### by the Alaska Department of Law. Upon completion of the Department of Law 

### review, the regulations will be fied by the Lieutenant Governor and will take effect 30 days later. The applicable subsection of Title 18 Chapter 50 of the Alaska 

## Administrative Code being revised is 18 AAC 50.040(h), wherein 40,C.F.R. 51.166 and 40 C.F.R. 52.21 - 40 C.F.R. 52.22 as revised through the federal register notice 

### of June 3, 2010, are being adopted by reference. This incorporation will allow the 

## state to comply with the federal rules regarding the permitting of greenhouse gas emissions. At this time, ADEC anticipates that the state regulations will be in effect by January 

### 2, 2011, which will allow ADEC to implement the federal rule. Given the short timeframes, ADEC is formally requesting that EPA initiate the process to approve Alaska's SIP revisions based on the state regulations now undergoing legal review. 

## Our hope is that the EPA approval process can proceed in parallel with the final steps of the state rulemaking process. We will provide the state regulations as soon as possible. We anticipate being able to submit our final SIP revisions to EPA

145 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 51): . ~t:~.,," r



### Dennis McLerran 2 

## October 4, 2010 

## Region 10 before December 22, 2010. Upon submittal, ADEC asks that Alaska be

dropped from the SIP call 

### list. 

## ADEC requests that EPA Region 10 keep us informed of its progress in taking action on Alaska's SIP revision. If it appears that timing will not allow for full EPA approval of Alaska's revised program prior to the January 2, 2011 deadline, we ask that you 

## notify us so we can collectively determine what alternatives are available to avoid any restrictions to issuing approvable permits to Alaskan facilities.

Your staff 

### may contact Alice Edwards at (907) 465-5109 or John Kuterbach at (907) 

## 465-5103 for additional information, if necessar. As always, I would be pleased to discuss any of this with you. 

### Sincerely,

-:;:¡;::;z::;¿;;......_.., , 

# ,....-,/ L/' (j Larry Hartig 

## Commissioner

cc: EPA Docket ID No. EPA-HQ-OAR-2010-0107 

## Rick Albright, Director, Offce of Air Waste and Toxics, EPA Dave Bray, EPA Region 10 Alice Edwards, Acting Director, Division of Air Quality, DEC John Kuterbach, Air Permits Program Manager, Division of Air Quality, DEC

G:\COMM\WP\20JO\lO.zJ7 co to EPA re GHG SIP J004JO,docx 146 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 5279 ELM STREET HARTFORD, CT 06106-5127 

# STA.TE OF CONNECTICUT DEPARTitlENT OF ENVIRONMENTAL PROTECTION

Amey W. Manella Commissioner PHONE: 860-424-3001 September 29,20 I 0 i-i. Cui1is Spalding Regional Administrator U.S. Environmental Protection Agency 5 Post Office Square - Suite 100 

### Boston, MA 02109-3912

Re: Notifcation by Connecticut Department of Environmental Protection Regarding tlie

Greenliouse Gas SIP Call for tlie Prevention of 

### Signifcant Deterioration Permitting Program Dear Mr. Spalding:

Pursuant to Action to Ensure Authority to Issue Permits under the Prevention of 

### Signifcant Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP Call (75 FR 53892; September 2,2010; hereinafter, the SIP Call), the Connecticut Department of Environmental Protection (CTDEP) is notifying you that its State Implementation Plan (SIP), read as a whole, does not apply its new source review (NSR) prevention of significant deterioration (PSD) permit program to sources of greenhouse gas (GHG) emissions. CTDEP intends to revise Connecticut's NSR PSD permit program to include GHG emissions at the applicability thresholds defined in Prevention of Signifcant Deterioration and Title V Greenhouse Gas Tailoring Rule (75 FR 31514; June 3, 20 I 0; hereinafter the Tailoring Rule). CTDEP agrees with the U.S. Environmental Protection Agency's (EPA's) identification of Connecticut as having a PSD program that does not apply to GHG emissions. In this letter, we provide the information requested in the SIP Call concerning our PSD program and our plan to revise the PSD program according to the Tailoring Rule. Recognizing the importance of having PSD permitting authority in place for any GHG sources that may be subject to PSD requirements, CTDEP does not object to a shorter SIP submittal deadline, as discussed below. Connecticut's SIP specifically precludes PSD applicability for GHG sources. Our current NSR PSD program applies to each "criteria air pollutant," and criteria air pollutant is defined to mean a pollutant for which a national ambient air quality standard has been adopted.1 In other words, Connecticut's regulations apply PSD to sources of individually identified pollutants, and GHGs, for which no ambient air quality standard has been adopted, are not among the listed pollutants. CTDEP intends to undertake a regulatory adoption process to add GHGs to the list of individual pollutants to which PSD is applied, to revise the PSD thresholds consistent with the Tailoring Rule and to require the i Connecticut's NSR program is established in section 22a- 1 74-3a of the Regulations of Connecticut State Agencies (RCSA). Subsection (k) sets out the PSD proYisions. Subsection (k)(l) states: "The provisions ofthis subsection shall apply to the owner or operator of any new major stationary source for each criteria air pollutant that is significant from such new major stationary source located in an attainment area or unclassified area for such pollutant." (emphasis addedJ "Criteria air pollutant" is defined in RCSA § 22a-1 74-1, a regulation that sets out definitions of general applicability, as follows: "any air pollutant for which an ambient air Qualitv standard has
been established by the Administrator in accordance with Section 107 of the Act." (emphasis addedj

The complete text of the referenced regulations is available on CTDEP's website at the following location: hnp;//y.yv:iy,c.tgiy JdeDiQY!-Yiç\Y,asp'!aZÚ84&(2= 312 i 84&depNi,,y,JJIJJJ(\J9

: P,-iiiid on Recvcled ('¡¡per) , www,J$t\'/dq) Aii E'qìrtll Oppor/unily ~~mp/(J)'(.ll EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 53H. ClItis Spalding Page 2 September 29, 2010

application of best available control technology reviews consistent with the Tailoring Rule. CTDEP does not intend to change the approach of applying the PSD program to listed pollutants and wil not be
adopting a form of the "regulated NSR pollutant" approach.2 Connecticut's regulatory adoption process is lengthy and involves reviews and approvals from other Connecticut state agencies. The typical process takes 14 - 20 months to complete. However, with the cooperation of other Connecticut state agencies and offces and the regulated community, we intend to seek expedited processing for these regulatory revisions. We have drafted our initial proposal and have scheduled the public hearing for October 18, 20 i O. As you may be preparing comments on our proposal, please note that the comment period also closes on October 18, 2010. Given this hearing date and estimated time to complete our adoption process and submit the corresponding SfP revision, Connecticut does not object to EPA's establishment ofa corrective SIP submittal deadline of March 1,20 II. We also request that you parallel process the approval of our SIP submission. We will keep EPA Region 1 infOlmed of our progress in meeting our planned schedule as we move through the regulatory adoption process. Should you or your staff have any questions regarding this submittal, please call me at 860-424-3001. Sincerely yours, 

# ~

cc: David Conroy, U.S. EPA, Region i 2 Even ifCTDEP did oyerhaul its program to use the "regulated NSR pollutant" approach, CTDEP would stil need to undertake a rule revision should EPA add or delete the pollutants that EPA considers regulated NSR pollutants
because we have a general legislative prohibition against prospective incorporation by reference offederal regulations, except under certain circumstances. In Connecticut's regulatory adoption process, the Regulation Reyiew Committee has limited statutory authority, which is exercised on a yoluntary basis, to approve the prospective incorporation by reference of federal regulations. A necessary condition for such an approyal, which is not present in this circumstance, is that a federal statute requires that a Connecticut regulation at all times remain identical to that federal statute or regulation.

The statute of concern is section 4-170(b)(4) of the Connecticut General Statutes (CGS), which states: The committee may permit any proposed regulation, including, but not limited to, a proposed regulation which by reference incorporates in whole or in part, any other code, rule, regulation, standard or specification, to be submitted in summary form together with a statement of purpose for the proposed regulation. On and after October i, 1994, if the committee finds that a federal statute requires, as a condition of the state exercising regulatorv authority, that a Connecticut re~wlation at all times must be identical to a federal statute or regulation, then the committee may apPl've a Connecticut rel!ulation that bv reference specificallv incorporates future amendments to such federal statute or I'el!ulation provided the agency that proposed the Connecticut regulation shall submit for approval amendments to such Connecticut regulations to the committee not later than thiity days after the effectiye date of such amendment, and provided fuither the committee may hold a public hearing on such Connecticut amendments." (emphasis addedj The full text ofCGS section 4-170 is available at the following location: httn,:l/w_w~,ç£._a.:tgQyí.Q.Q9.iub! chap05 4.11 tnJil_~çs.l:L7Q,JiJrn

148 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 54

# "r ,~

Printed by: Julie Vergeront, 10/21/2010, 11 :57:04 AM

History: RE: Idaho sip Submittal Deadline

Martin.Bauer to: Julie Vergeront, Dave Bray, Nancy Helm Cc: lisa.carlson, Michael.Simon This message has been replied to and forwarded. 10/21/201010:07 AM

This e-mail is written to confirm that Idaho is requesting a December 22, 2010 deadline for submitting a SIP in response to the Notice of Deficiency printed in 75 Fed. Reg. 53892, 53907 so that a FIP is in place by January 2,2011. This request is made as Idaho wants to ensure industrial sources are able to construct or modify sources which would then be subj ect to greenhouse gas regulation. Martin Bauer 

## Administrator Air Quality Division

149 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 55- :¡; --~ ..,:'. , '~c~

CiUnJC ( ¡-¡~¡ 

# Florida Department of Environmental Protection (.l:.j\'cru(¡x

\ 

## \\



# .. 

# ~~it~~~.,;~~ 

# ~~r~~~~~~ J~'n' Lt. (;,)\'(.'-litÜ1" Bob Martnez Center 2600 Blair Stone Road Tallahassee, Florida 32399-2400 ;.'Tixn; :\, l)r",'.,.\

October I, 2010


### u. S. Environmental Protection Agency - EP A West (Air Docket) 

### 1200 Pennsylvania Avenue, NW Mail Code: 6102T Washington, DC 20460 

### Attention: Docket ID No. EP A-HQ-OAR-20l0-0107 

### To Whom It May Concern: On September 2, 2010, the U.S. Environmental Protection Agency (EP A)

published in the Federal Register a proposed 

### "Finding of Substantial Inadequacy and SIP Call" under section 110(k)(5) of the Clean Air Act for 13 states with state implementation plans (SIPs) that do not appear to apply prevention of signicant 

### deterioration (PSD) permitting requirements to sources of greenhouse gas (GHG) emissions as set forth in EP A' s June 3, 2010, "Tailoring Rule." Florida is correctly 

### identified as one such state. For each of the 13 states, EP A has proposed to make final 

### findings of inadequacy and SIP calls on or about December I, 2010. Further, EP A has 

### proposed a deadline for each state's subrrttal of a corrective SIP revision in the range of between three weeks and twelve months from the date of the SIP call, and has 

### requested comments from each state on the proposed deadline.Considering EP Ns interest in establishing PSD permitting authority for GHG

### emitting sources by January 2,2011, and Florida's interest in avoiding any resulting 

### "construction ban" that might result from the failure to do so, the Florida Department of Environmental Protection (DEP) does not object to EPA's establishment of a deadline of December 22,2010, for a corrective SIP revision. To quote EPA's proposal (75 FR 

### 53905), DEP understands that in this case" a finding that a state has failed to submit a 

### required SIP revision for a PSD area wil not trigger mandatory sanctions." In the September notice, EP A has also requested that each proposed SIP-call state 

### provide certain information by the close of the comment period. The requested items are enumerated (a) through (g) in section IV.E.1. of the Federal Register preamble and are addressed below.

" :t",. , " '.. ~ ¡ ,'; .; iC ¡:,,',i" "d ',3lp:(;c, EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 56",r



### Docket ID No. EPA-HQ-OAR-2010-0107 Page 2 October 11 2010 

### (a) Confirmi with citations and a copy of the relevant languagei that the SIP PSD 

### applicabilty provisions do not explicitly include GHG sources. Floridal s EP A-approved PSD permittng requirements are found at Florida 

### Administrative Code (F.A.C.) Rule 62-212.4001 which can be accessed at: 

### bUps:/ / www.f1rules.org/gatewav/ruleNo.asp?id=62-212.400.This rule uses the terms "major modification,l' "major stationary sourcel/(PSD pollutant," and 

### "significant emissions rate" to establish PSD applicabilty. These terms are defined at Rule 62-210.2001 F.A.C.1 which can be accessed at: 

### bUps:/ /www.flrules.org/gatewav/ruleNo.asp?id=62-210.200. The key term is PSD pollutant, which is limited by state rule to a finite set of pollutants; 

### specifically, any pollutant defined by rule as having a significant emissions rate. The Florida-defined set of PSD pollutants does not include GHGs. 

### (b) Identiy and provide a copy of any provision that specifically precludes PSD 

### applicabilty for GHG sources. Not applicable. (c) Identify and provide a copy of any provision of State constitution or other 

### law, including the SIP, that may be read to limit the applicabilty of the PSD program to pollutants identified at a certain point in timei and therefore not to GHGs. Florida Stahite (F.5) 120.54 governs rulemaking procedures for all state agencies. Subparagraph 120.54(1)(i), F.5., quoted below, speaks to the "point in time" issue as it relates to materials, including federal regulatioTh,), adopted by reference. 'IA rule may incorporate material by reference but only as the material exists on the date the rule is adopted. For purposes of the rule, changes in the material are not effective 

### unless the rule is amended to incorporate the changes.'1 

### (d) Indicate, with citations and a copy of the relevant language, if anyi whether the SIP includes general authority for the State to issue PSD permits that meet EP A 

### requirements.

Florida has general statutory authority to issue PSD permits that meet EP A . 

### requirements; specifically, subsection 403.061(35), F.S., provides that the DEI' shall have the power and the duty to: "Exercise the dutiesi powers, and responsibilities required of the state unde the federal Clean Air Act, 42 U.S.c. ss. 7401 

### et seq. Th department shall implement the programs required under that act in conjunction with its other powers and duties. Nothing in this subsection shall be construed to repeal or supersede any of the departmene s existing rules. i'

151 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 57ild ,



### Docket ID No. EP A-HQ-OAR-2010-0l07 Page 3 

### October 1, 2010 (c) Indicate, with citations and a copy of the relevant language, any other 

### provisions of the SIP or State law that may bear on the applicabilty of the PSD program to GHG-emitting sources. The term "Regulated Air Pollutant" is defined by subsection 403.031(19), F.s., as: "any pollutant regulated under the federal Clean Air Act." This definition provides a 

### basis for rulemaking, but is not applied verbatim in any current DEP rule. (f) Indicate the State's interpretation as to whether the SIP, read as a whole, does 

### or does not apply the PSD program to GHG sources or authorize the State to issue PSD permits for GHG sources that meet EP A requirements. This statement should be made 

### by the commissioner or general counsel of the State environmental agency, or by the

counterpart at the local or tribal 

### level, or by the State Attorney General. 

### The SIP, read as a whole, does not authorize the State to issue PSD permits for GHG sources tha t meet EP A requirements. Nowhere in Florida's rules does the 

### term "Regulated NSR Pollutant" appear, nor do the state rules include the phrase "any pollutant that is otherwise subject to regulation under the Act," the lynchpin of the EP A tailoring rnle. The DEP General Counsel attests to thi by his signature below. 

### (g) If the SIP, read as a whole, does not apply the PSD program to GHG sources 

### or authorize the issuance of permits to GHG sources, indicate whether the State plans to 

### develop adequate authority to apply the PSD program to GHG sources and to submit it to EP A as a SIP revision by December 1, 2010. Florida cannot develop adequate authority to apply the PSD program to GHG 

### sources and to submit it to EP A as a SIP revision by December 1, 2010. 

### The Florida DEP looks forward to working with EP A Region iv to effectively apply PSD requirements to Florida sources of GHG emissions under the proposed Federal 

### Implementation Plan, if and when such plan should take effect. Sincerel y, 

# (:Æ¡~JJ ' V',,/ ' iJ~/ J 0 ph Kahn, Director Division of Air Resource Management 

# ~.~ Thomas M. Beason, General Counsel Dept. of Environmental Protection


### cc: Richard Schutt, Chief, Air Planing Branch, EP A Region 4

152 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 58,~

STATE OF IDAHO DEPARTMENT OF ENVIRONMENTAL QUALITY

1410 North Hilton. Boise, Idaho 83706. (208) 373-502 C.L. "Butch" Oller. Governor Toni Hardesty, Director
October 20, 2010
Dennis McLerran 

### Regional Administrtor MS RA-140 US EPA Region 10 1200 Sixth Avenue Seattle, W A 98101 

### RE: Docket IDNo. EPA-HQ-OAR-2010-0107 Dear Administrator Mclerran: This letter is written in response to the United State Environmental Protection Agency's (EPA's) request for states to submit information regarding states applicability provisions to implement green house gas (GHG) Prevention of Significant Deterioration (PSD) provisions. See 75 Fed. Reg. 5390 I (September 2, 2010). 

### Specifically, EPA requests that states listed in table IV-l in the September 2,2010, Federal Register address seven issues outlined in 75 Fed. Reg. 53901. EPA is requesting the following infonnation:

(a.) Confinn, with citations and a copy of 

### the relevant language, that the sip PSD applicabilty provisions do not explicitly include GHG sources; (b.) Identify and provide a copy of any provision that specifically precludes PSD applicabilty for GHG sources;

(c.) Identify and provide a copy of any provision of State constitution or other law, including the SIP,
that may be read to limit the applicabilty of the PSD program to pollutants identified at a certain point in time, and therefore not to GHGs;

(d.) Indicate, with citations and a copy of 

### the relevant language, if any, whether the sip includes
general authority for the State to issue PSD penn its that meet EP A requirements;

(e.) Indicate, with citations and a copy of the relevant language, any other provisions of the s~p or
State law that may bear on the applicabilty of the PSD program to GHG-emitting sources; (f.) Indicate the State's interpretation as to whether the SIP, read as a whole, does or does not apply
the PSD program to GHG sources or authorize the State to issue PSD penn its for GHG sources that meet EPA requirements. This statement should be made by the commissioner or general

counsel of the State environmental agency, or by the counterpart at the local or tribal level or by the State Attorney General;

(g.) If 

### the SIP, read as a whole, does not apply the PSD progrm to GHG sources or authorize the

issuance of penn its to GHG sources, indicate whether the State plans to develop authority to apply the PSD program to GHG sources and when it plans to submit this infonnation to EPA as a SIP revisions.

153 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 59

### ,éd, "'- 'J



### Idaho's responses below corrspond to the requested infonnation above: 

### (a) In a letter dated July 28, 2010 submitt to Regon 10 EPA, Idaho DEQ outlned Idah's PSD 

### pro and its relationship to GHG soures (see atthed July 28, 2010 letr). (b) Idao's laws do not contain a provision that specifically precludes PSD applicabilty for GHG 

### sourcs. (c) As outlined in the July 28, lettr, Idao's curnt rules under IDAPA 58.0L.01.07.03.d incorprates by reference EPA's PSD regulations as of July 1,2009. GHG were not considere "subject to regulation" until afer July 1, 2009. Idaho's updated incorpration by reference wil
include incorpraion of EPA's PSD regulations and GHG as "subject to regulation" (see attched July 28,2010 letter). Idaho Code section 67-5229(3) reuirs that incorprated material include a 

### date when the law was publishe approved or afective. Amendments or updates ar subject to rulemaking reuirements. 

### (d) The Idaho air rules incorprate by reference EPA's PSD progrm at IDAPA 58.01.01.205.01 (see 

### attched copy Idaho's air rule). Idaho's pertent air rules ar approved in the SIP at 40 CFR Par

52.681 (see atthed copy of the CFR).

(e) There are no other provisions of the SIP or stte law that be on the applicabilty of the PSD progr to GHG-emittng sours. (f) As stated in the July 28i1 letter attched, Idaho's curnt SIP red as a whole doe not authorize the issuace ofPSD pennits for GHG soces.

(g) On October 6,2010, the Idaho Boad of Environmental Quality adopted as pending rule Docket No. 58-010 1-1002. This Doket updtes and incorporates the appropriate federal sectons that wil authorize Idaho to issue PSD pennits for GHG sours. As sted in the July 28i1 letter, the updated rules are considere pending until finally approved by the Idao legislat, effective sine die.

In addition to responding to EP A's reuest for the information above, plea consider this Idao's formal 

### request for the "frendly" Federa Implementation Plan (FIP) outlined in 75 Fed. Reg. 53883, 53892 

### (September 2,2010). Idaho requests that the "friendly" FIP be effective no later than Januar 2, 201 1, when EPA's GHG Tailoring Rule becomes effective. Idaho intends to submit for SIP approval our 

### incorration by refernce of the tailoring rule an apprpriate PSD portons of the federa rules son afr approval by the legislat and sine die, which would be between Apri12011 and June 201 1.

If 

### you have any questions regarding this letter or our PSD progr and it's relation to GHG pennitting, pleas contact Marin Bauer, Administrtor, Air Quality Division at (208) 373-0552. Sincerely, 

# ~~

Toni Hardest Director MB;ts
Enclosure c: Lisa Carlson, Deputy Attorney General 

### Mike Simon, Staonar Sour Progr Manager Nancy Helm, EP A Unit Manager Dave Bray, EPA

154 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 60

### "r ,~

STATE OF IDAHO DEPARTMENT OF ENVIRONMENTAL QUALITY

1410 Noth Hihon. Bose. ICl 83706. (208) 373.D502 C.L. "8uçh" Olr, GovrnOl Toni Haesly, D1reçlor 

### July 28, 2010 

### Dennis Mclerrn Regional Administrtor MS RA-I40 

### U.S. EPA Region 10 1200 Sixth Avenue Seattle, W A 9810 I 

### RE: Greenhouse Gas Tailoring Rule Implementation Dea Administrator McLenan: 

### This letter is wntten in response to the United States Environmental Protection Agency's (EP A's) 

### request to the states for inronoation regarding adoption and implementation of the ter "subject to regulation" and the grenhouse gas tailoringnile. See 75 Fed. Reg. 31514, 31525 (June 3,2010).

The stale of Idaho updates the incorporation by reference of federl reuirments as of July 1 on an
annual basis. Upon public comment and approval by the Board of 

### Environmental Quality, the update incorprated rules ar considered pending until finally approved by the Idaho legislature, effctive sine die. 

### Idaho Code Section 67-5229(3) notes that incorprated materal must be identified with specificity including the date the code, standard or rule was published approved or became effective. Amendments to the material must be prosed in accordnce with nilemaking reuirements of 

### Idaho's Administrtive Prcedures Act. Consequently, the state ofldaho wil not interpret state law under IDAP A 58.01.0 i. i 07 .03.d., which currntly incorprates 42 U.S.C. 52 revised as of July I,

2009, to include grenhouse gase as "subject to regulation" under 42 U.S.C. 52.21(b)(SO)(iv) until
final approval of the upted incorpration by referee rules by the (daho legislature, which occurs 

### sine die, expected end of March or early April, 2011. The greenhouse ga tailoring rule 

### incorpration by reference is subject to the same schedule, expete to be finally approved end of

March 201 i or 

### early April, 201 i.

If 

### you have questions, please feel fre to contact Martn Bauer, DEQ's Air Quality Program Administrtor, at 373-0552. 

### Sincerly, 

# ~~

Toni Hardesty 

## Dirtor

cc: Martin Bauer

155 EPA Response to Stay Motion Exhibits Prr"l.a~" Hoi:j,cr"ø p.1p-ør 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 61

### tl' . - _ ~J'



# ~~~ KANSAS Mark Parkinson, Governor Roderick L. Bremby, Secretory DEPARTMENT OF HEATH 

### AND ENVIRONMENT 

### ww.kdheks.gov Division of Environment 

### October 1, 2010 Attention Docket ID No. EPA-HQ-OAR-201O-0107 

### U.S. Environmental Protection Agency, EPA West (Air Docket) 1200 Pennsylvania Avenue, NW 

### Mail Code: 6102T Washington, DC 20460 To Whom It May Concern: 

### On August 12,2010, the U.S. Environmental Protection Agency (BPA) issued a proposed finding of substantial inadequacy and SIP CalI under Clean Air Act section 11 0(k)(5). 

### Specifically, EP A proposed that 13 states, including Kansas, do not have a State 

### Implementation Plcl (SIP) that applies Prevention of Significant Deterioration (PSD) 

### requirements to greenhouse gas (GHG) sources. This SIP Call proposal was published in the Federal Register on September 2, 2010 (75 FR 53892). 

### In a companion proposal also published on September 2,2010 (75 FR 53883), EPA proposes a Federal Implementation Plan (FIP) for the 13 states identified in the proposed SIP CalL. EP A states its "goal is to have each and every affected State have in place the necessar 

### permtting authorities by the time businesses seeking constrction permits need to have their applications processed and the permits issued-and to achieve that outcome by means of engaging with the States directly through a concerted process of consultation and support" (75 FR 53890). 

### To that end, EP A has parnered with the National Association of Clean Air Agencies

(NACAA) on a number of conference calls and webinars in which KDHE staff 

### has actively
participated. KDHE staff 

### has also had numerous conversations with EPA Region 7 staff. We 

### are all workig hard to char a path forward, but the natue of a proposed rue has led to sometimes contradictory messages from EP A regarding how these proposed SIPIFIP rules 

### will be implemented. 

### The proposed SIP Call rule includes a request that specific inormation be submitted by the 13 states (as identified in Table IV-I, 75 FR 53899) that do not appear to apply PSD 

### requirements to GHG sources. The information requests (75 FR 53901) are listed verbatim below, with each followed by Kansas' comments and/or responses. These responses are 

### Kansas' best efforts to clearly outlne the path Kansas intends to tae to implement EPA's proposed SIPIFIP rules. Kansas' comments are offered only on the rules as proposed. Ifthe final rules differ substantially from the proposed rules, we suggest that EP A stay the proposed

CURTIS STATE OFFICE BUILDING, 1000 SW JACKSON ST., STE. 400, TOPEKA, KS 66612 Voice 785-296-15jg6 Fax 785-296-8464 ~::ib~:sponse to Stay Motion 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 62.-.~ '. . .-' ~ .,'- .-. ..- . ---~ -- -.-_. --



### Kansas PSD SIP Comment Letter 

### Docket il No. EPA-HQ-OAR-2010-0107 Page 2 of5
rule. Kansas' primary objective in this effort is to have in place the necessary permitting 

### authority to avoid a moratorium and/or ban on constrction and to eliminate any period of time when GHG permts canot be issued by KDHE.

(a) Confirm, with citations and a copy of 

### the relevant language, that the SIP PSD 

### applicabilty provisions do not explicitly include GRG sources; The curently approved Kansas PSD SIP does not contain applicability provisions that

explicitly include GHG sources. Please see the attached copy of Kansas' PSD' 

### regulation, Kansas Administrative Regulation (K.A.R.) 28-19-350, which adopts by reference the federal PSD requirements at 40 C.F.R. 52.21 (with certain exceptions) to July 1, 2007. 

### (b) Identify and provide a copy of any provision that specifcally precludes PSD 

### applicabilty for GHG sources; There are no provisions that specifically preclude PSD applicability for GHG sources. 

### However, Kansas Statutes Anotated (K.S.A.) 2009 Supp. 65-3005(b)(1) limits the

ru1emakng authority of the Secretar of the Kansas Deparment of 

### Health and 

### Environment (KDHE) such that regulations "shall not be any more strngent, restrictive or expansive than those required under the federal clean air act, as amended, 

### nor shall the rules and regulations be enforced in any area of the state prior to the time 

### required by the federal clean air act." A copy ofK.S.A. 2009 Supp. 65-3005 is attached. ( c) Identify and provide a copy of any provision of State constitution or other law, 

### including the SIP, that may be read to limit the applicabilty of the PSD program to pollutants identified at a certain point in time, and therefore not to GRGs.

Aricle 2 of the Constitution of the State of 

### Kansas declares the legislative power is

vested in the Kanas House of 

### Representatives and Senate. The legislative branch enacts statutes that specify actions or limits state agencies must abide by when

promulgating rules and regulations. By way of 

### Kansas Attorney General Opinon No.

77-379, a state agency may only adopt by reference federal rules or reguations that

### are "known and in existence at the time of adoption by reference." Therefore, "openended" or "forward" adoption by reference of the federal PSD regulations (40 C.F.R.

52.21) is not allowed in Kansas; as a result, the applicabilty of 

### the PSD program to

pollutats is curently limited to those curently identified at the point in time of 

### the 

### current regulation (i.e., July I, 2007).

(d) Indicate, with citations and a copy of the reI 

### evant language, if any, whether the SIP 

### includes general authority for the State to issue PSD permits that meet EP A 

### requirements;

157 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 63,A"

Kansas PSD SIP Comment Letter 

### Docket il No. EPA-HQ-OAR-2010-0107 Page 3 of 5 K.S.A. 65-3008 contains general authority for Kansas to issue a permt to a statÏonar 

### source that emits air contaminants. "Air contaminant" is defined in K.S.A. 65-3002, as amended. 

### K.A.R. 28-19-350 implements the federal New Source Review PSD program via

adoption by reference of 

### the majority of 40 C.F.R. 52.21. However, since K.A.R. 28- 

### 19-350 only adopts by reference 40 C.F.R. 52.21 as in effect on July 1,2007, Kansas 

### does not curently have the authority to address GHG emissions when issuing PSD permits. (e) Indicate, with citations and a copy ofthe relevant language, any other provisions of

### the SIP or State law that may bear on the applicabilty of the PSD program to GHGemittg sources. 

### See previous answers, paricularly paragraphs (c) and (d). 

### (1) Indicate the State's interpretation as to whether the SIP, read as a whole, does or does not apply the PSD program to GHG sources or authorize the State to issue PSD 

### permits for GHG sources that meet EP A requirements. This statement should be made by the commissioner or general counsel of the State environmental agency, or by the

counterpart at the local or tribal 

### level, or by the State Attorney General.

Please see the attched statement from KDHE's Chief 

### Legal Counsel.

(g) If 

### the SIP, read as a whole, does not apply the PSD program to GHG sources or 

### authorie the issuance of permits to GHG sources, indicate whether the State plans to develop adequate authority to apply the PSD program to GHG sources and to submit it to EP A as a SIP revision by December 1, 2010, which is shortly before the date on which, 

### as discussed below, EP A intends to finalie its finding of inadequacy and finalize the SIP Call. To implement the Tailoring Rule for Kansas, KDHE is proposing to adopt by 

### reference 40 C.F.R. 52.21 and Subpar I of 40 C.F.R. Par 51 for PSD permtting, and adopt and update the definitions from 40 C.F.R. 70.2 for Title V permitting. This update will only include revisions needed for adopting the final Tailoring Rule as 

### published in the Federal Register on June 3, 2010 (75 FR 31606-31607). A public hearing on the proposed Kansas administrative regulations and SIP revision will be held on October 26,2010. KDHE intends to publish the final rues in November 2010 

### with an implementation date of Januar 2, 2011. This will align state and federal regulations and faciltate SIP approvaL. 

### Kansas submitted a draft proposed SIP revision to EP A for parallel processing on 

### October 1, 2010. This submitt contains all the necessar elements for EPA to

commence review in order to propose approval of 

### Kansas' SIP revision except for the 

### final published state regulations that adopt the federal requirements by reference. The

158 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 64r



### Kansas PSD SIP Comment Letter

Docket ID No. EPA-HQ-OAR-2010-0107 

### Page 4 of5
final, fully-adopted rule will be submitted as soon as possible afer the public comment period closes on October 26,2010.

The primar objective 

### is that sources in Kansas are able to obtai necessar permts from KDHE without delay. Kansas' path forward relies heavily on several key concepts described

in the preambles of 

### the proposed SIPIFIP rules, including parallel processing, expedited SIP approval, and the FIP as a "backstop" (75 FR 53901). 

### In an effort to intercept a rinding of SIP inadequacy or a SIP Call, Kansas will develop regulations by December 1, 2010, to allow KDHE to issue PSD permits for GHGs and to 

### avoid a construction ban. Kansas' reguations will simply adopt by reference the revisions to 40 C.F.R. 52.21 and 40 C.F.R. 70.2 as promulgated in the Tailorig Rule published on June 3,
2010. With the simplicity of 

### Kansas' proposed SIP revision, its parallel processing request, 

### the imperative to minimize the period when sources will be subject to PSD without an 

### available PSD permitting authority, and EPA's goal that PSD permtting authority reside in the states, Kansas requests EP A to take action quickly on this proposed SIP revision, no later than Januar 2,2011. This tImeframe is reasonable (75 FR 53901) and sensibly avoids the 

### imposition of a permitting moratorium of potentially uncertain duration. If, however, EP A is unable to act quickly on this request and Kansas remains on the

"presumptive SIP Call list," Kansas requests 

### the shortest possible SIP revision submittal 

### deadline as stated in the proposed rue at 75 FR 53901, which is either December 22, 2010, or 

### three weeks from the date of signatue of the final rule. If EP A canot assure Kansas that the SIP revision, if approvable, wil be approved by January

2,2011, the state does not object to EPA's immediately issuing a finding of failure to submit a
required SIP revision and immediately thereafer promulgating a FIP for Kansas. If 

### this is the case, Kansas requests imediate delegation of federal PSD permtting authority to the Kansas 

### Deparent of Health and Environment to ensure there is no permitting moratorium and constrction ban. 

### IfEPA approves the SIP revision before January 2,2011, a constrction ban or permitting moratorium can be avoided and a Federal Implementation Plan need not be issued to Kansas.. We look forward to resolving this matter as soon as possible. Sincerely,


# ~~ Secretary

159 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 65

### Kansas PSD SIP Comment Letter



### Docket rD No. EPA-HQ-OAR-2010-0Iü7

cc: Lisa Jackson, Administrator 

### Environmental Protection Agency Karl Brooks, Regional Administrator Environmental Protection Agency, Region 7

John W. Mitchell, Director of the Division of 

### Environment Kansas Deparent of Health and Environment 

### Senator Vicki Schmdt, Chair 

### Joint Commttee on Adminstrative Rules and Regulations Senator Carolyn McGinn, Chair 

### Joint Committee on Energy and Environmental Policy Mark Smith, Air Permitting and Compliance Branch Environmental Protection Agency, Region 7

160 

### Page 5 of5

EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 66r ~c~



# ~ ..-- ~ KANSAS Mark Parkinson, Governor Roderick L. Breniby, SecretaI)


### DEPARTMENT OF HEALTH 

### AND ENVIRONMENT 

### ww.kdheks.gov October 1,2010 

### Attention Docket ID No. EPA-HQ-OAR-2010-0107 U.S. Environmental Protection Agency, EPA West (Air Docket) 

### 1200 Pennsylvana Avenue, NW Mail Code: 6102T Washington, DC 20460 To Whom It May Concern:

Article 2, Section 1 of the Kansas Constitution grants to the House of Representatives and the

Senate the state's legislative power, which includes the power to delegate legislative authority to 

### state agencies. In the case of the Kansas Deparment of Health and Environment (KDHE), K.S.A. 2009 Supp. 65-3005(a)(1) and (6) empower the Secretar to adopt regulations

implementing the Kansas air quality act. Newly enacted in 2009, subsection (b) of the statute furter establishes the policy that state air quality laws and regulations are to be consistent with 

### those of the federal governent and empowers the Secretary to promulgate reguations to ensure the state's compliance with the federal clean air act, as amended. This grant of authority is not 

### without restriction. "The standards so established shall not be any more strngent, restrctive or

expansive than those required under 

### the federal clean air act, as amended, nor shall the rules and 

### regulations be enforced in any area of the state prior to the time requied by the federal clean air act. " 

### KDHE's rulemaking authority is subject to legislative oversight through mandated regulation 

### adoption and fiing procedures that include reviews and approvals by the Kansas Deparment of Administration and the Attorney General, review by the Kansas Legislatue's Joint Commttee on Administrative Rules and Regulations, and the opportty for public paricipation. See 

### K.S.A. 77-415 et seq., as amended by L. 2010, Ch. 95. Within the Deparment of

Administration's Policy and Procedure Manual for the Filing of 

### Kansas Administrative Regulations (p. 65) is a reference to Attorney General Opinion 1977-369, issued November 30, 1977, which concludes that state agencies may adopt by reference only regulations that are 

### known and in existence at the time of adoption. 

### The Environmental Protection Agency (EPA) last approved the revision ofK.A.R. 28-19-350 into the Kansas State Implementation Plan (SIP) on May 29, 2007 (72 FR 29429). This 

### reguation adopts by reference the Prevention of Significant Deterioration (PSD) applicabilty provisions of 40 C.F .R. 52.21, as in effect on July 1, 2004. Kansas adopted a later revision of 

### K.A.R. 28-19-350 updating the adoption by reference of 40 C.F.R. 52.21 to July 1, 2007. The

OFFICE OF LEGAL SERVICES KANSAS DEPARTMENT OF HEALTH AND ENVIRONMENT CURTIS STATE OFFICE BUILDING, 1000' SW JACKSON ST., STE.560, TOPEKA, KS 66612-1368 Voice 785-296-1291 Fax 785-296-71 19

161 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 67

### Docket ID No. EPA-HQ-OAR-2010-0107

October 1,2010 Page 2 

### SIP revision for this update is pending before EPA. In either case, K.A.R. 28-19-350 predates EPA's Endangerment and Cause and Contribute Findings, Johnson Memo Reconsideration,

Light-Duty Vehicle Rule, and Tailoring Rule, all of 

### which taen together, trigger PSD applicabilty for greenhouse gas sources on and after Januar 2,2011.

Given the curent status of 

### the Kansas SIP, the intervening changes in Kansas law and EPA's 

### recent rule-makng activities, I state as Chief Legal Counsel, that the Kansas SIP, when read as a whole, does not apply the PSD program to GHG sources or authorize Kansas to issue PSD 

### pennts for GHG sources that meet EP A requirements. Sincerely, 

# ~rJ~

Yvonne C. Anderson Chief Legal Counsel

162 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 68

# -.i-~ ~ r. ~



# ~

I i

~



# ~

: '-~!l r 

### U41 u;inu 1.4: U ( .O'lI1.J l:1I11 1.lHlJ KS SGl LAW ,L1B 

### ~ 002/005 '

i 

# i STATE OF KASA ',i.. 

## OHice of the AHorney General 1st Rcar, Stale Capitol Blelg.' (913) 2962215 Topeka, Kanii 66612

Curl T. Schneider AllOTney GønMlIl 

### November 30, 1971



### ATTORNY GENERAL OPINION NO. ~ 77- ~
The Honorable Geneva Anderson 

# State Representative . 3rd Floor - ,State Capi tol Building 

### Topeka, Kansas 66612 

## Re: Department of Agriculture--Rules and Regulations--incorpor.ation by Reference 

## .,

- 

### Synopsis: The Department of Agriculture may adopt by reference

in regulations adopted by that agency rules or regulations promulgated by any federal agency, standards 

### promulgated by a national trade, professional or like association, or similar material which is known and in existence at the time of adoption by reference, and 

### which is identified in the adopting language by specific

ci tat 

# ion or reference thereto.

* 

### * 

# , 'i
Dear Representative Anderson:

### You inquire whether the Kansas Department of Agriculture is authorized in rules and regulations adopted by that department to incor### porate therein by reference federal regulations or standards promulgated by national trade, professional and like associations w

### It has long beén the position of this office that any state officer or agency which is authorized by law to adopt rules' and 

### regulations may adopt therein by reference rules and regulations of any agency' of the federal government, or standards or like 

### 'matter promulgated by national associations and groups, with certain limi tationsw 

### " In State v. Crawford, 104 Kan~ 141 (1919) r the defendant was . charged wi th misdemeanor~ under a state statutè which provided t 

### 163 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 6904/03/97 14: O~ 'U913 296 1863 KS seT LAW LIB l4 003/005 

### . -... . J: 'i. .' . . : . .... ,i : 

### -. .."f)=_, '~;-~".'-c=,A



## ~' The Honorable Geneva Anòe~son 

### Page Two November 30, 1977

among other matters, that" fa) 11 electrical matters shall be in

### accordance with the national electrical code. R That Code con### sisted of installation rules of the National Board of Fire Under

### writers for electrical wiring and apparatus, having been originally drawn under the auspices of the National Conference on Standard, 

### Electrical ~ules, which had since been disbanded and its work 

### taken over by several associations. The code was revised everytwo years, through the cooperative labors of the several associations, such as the American Electric Railway Association and American rnstitute of Electrical EngineersI' to name but two.

~he court held that the statutory 

### 'adoption of the "national electri

### cal code" was invalid as an abdication or unlawful delegation of legislative powers ,to private bodies. The court stated thusr 

# in pertinent part:



# " ftInour commonwealth the power to make# amend,



# al ter and repeal the laws is vested in the legislature. That body may not abdicate its functions nor delegate ì ts powe~s to any other 

### body, however learned, wise and farsighted the latter may be. . . . 

### Some courts, inClUding our ownr have

### relaxed, or seemingly relaxed, the ~i9id enforcement of this principle in some instances, 

### by giving countenance to legislation enacted to punish as misdemeanors or otherwise to 

### penalize the breacn of rules promUlgated orto be promulgated after~ards by some subor

### dinate official body created by the legis- 

# latiire. . . . But none of the cases ci tea has ventured

# so' far afield as to intimate that the legislature might delegate to some 

# unofficial organization of pri~ate persons, like the 

### National Fire Protecti~e ~ssociation~ the 

### powe( to promulgate rules for tpe governmentof the people of this state or for the management of their property, or that the legis

### lature might prescribe punishment for breaches 

### of these rules. We feel certain that no such judicial doctrine has ever been annöunced. If assent to such a doctrine c6uia be given,

### a situation would arise where owners of pro

### perty with consiòerable persistence might 

## learn, what these code rules were and incur the expense of making their prope(ty conform, 

### thereto, only to find that the Nation~l Fire ' . Protective Association Mid reconvened in ,s~I3~~~;toStaYMotlon 'Exfiibir , " 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 70- ",.:--i ..,.



# 4. r '" '~c~

04/03/87 14: OM 

### "ö913 296 186:i 14 004/005 KS seT LAW LIB



### The Honorable Geneva Anderson 

### Page 'Three 

## November 30 i 1977

New York, or New Orleans, and had revised the code, and that' the work and expense had 

### to be undertaken anew. . . . Furthermore, 

### there is no official way, indeed no practical 

### way, for the average property owner to know~hat these code rules are. . . . If the legislature desires to adopt a rule of the national electrical code as a law of this state, it' sbouid copy that rule and give it a title' 

### and an enacting clause and pass it through 

## the senate and the house ,of representatives by a constitutional majority and give the 

### governor a chance to approve or veto it, and 

# then band it over to the secretaty of s'tate for publication."


### The court held the statute to be "void for uncertainty. n



# ~

, 

### The deoision is subject to varying constructions. It may be 

# . argued t)ia tit prohibits the adoption of any standards, under' any circumstances, when promulgated by a private association. 

### In my view, it does not. The constitutionally objectionable feature of the statute was that it adopted by reference a body of rules 'or standards which were subject to amendment or revision a t any time by the promulgating associations r which amendments 

### or revisions thereby became legally binding in this state, not through any action of the legislature, but through action, of the 

### 'private associations themselves. Thus, by adopting by reference the national electrical code as it may be from time. to time amend..

### ed and revised, the legislature had indeed delegated its legislati ve functions ta the respective associationsa The court noted a further objectional feature, that the referenced material was not in any official fashion available to the citizens of the 

## s ta te . A legislative grant of authority 'to a public officer to promulgate rules and regulations is t itself, a delegation of legislati~e

### authority. Such a delegation is not an unlawful delegation, however, so long as the authorizing legislation prescribes sufficiently desc~iptive standards or guidelines to impose some, prac

### ticably meaningful limitations on the exercise of that authority. 

### In promUlgating a rule or regQlation which adopts by reference 

### an existing body of regulations adopted by a federal agency, for example, or existing body of standards promulgated by' a national trade association, the adopting official. delegates no authority

whatever, for the 

### referenced mater ial becomes legally applicable 

### in this state only through the delibe~ate considered decision

1lì5 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 71, "r ,~



### U4/U~/~7 14: U~ 'O"lID Zlltl l1tl:J KS seT LAW LIB I4 005/005



### The Honorable Geneva Anderson 

## Page, Four .. 'November 30, 1977



### "" of the adopting official or agency, in the exercise of the delegated legislative authority vested in that officer or agency, 

### and not as the result of any action by the federal agency or voluntary association whatever'.:. No state officér GII' ag'ency may 

### adopt by' reference rules, regulation~ or standards as they may 

### from time to time be amended or revised, thereby adopting by reference material which is not yet in existence, but which, as

### a result of its adoption by the federal agency or voluntary asso

### ciation becomes applicable in Kansas by operation of la~. The, Department of Agriculture, like any other state official or agency empowered to adopt rules and regulations may adopt only rules, regulations or stand-ards which are known and in existence at t.he 

### time of adoption by incorporation in a rule or regulation. No 

# material may be adopted in futuro. In State v. Cr,awford7 supra¡ the court criticized the lack of 

### any official access to the referenced code. It is not clear that that, in and of itself, poses a separate constitutional objection. 

### Federal regulations are promulgated by publication in the Federal 

### Register, which constitutes official notice to all persons~ When
published regulations are in~orporated by 

# reference to their publication in ei ther the Federal Register or the Code of Federal 

### Regulations, that reference is legally sufficient, i~ my judgment,to consti tute official notification of the material thereby ref# erenced. When standards of a national voluntary trade association, e.g., are adopted by reference, it is highly desirable that the language of the adopting rule or regulation, or a footnote 

### appended thereto, advise the reader that the referenced material

### is available from the adopting agency. This office has not imposed such a requirement in the past in revieWing the form and sufficiency of proposed regulations; however r future regulations 

### will be considered with a view to requiring sufficient notice to the reader of the avaílabili ty of any material referenced 

# therein. '

Yotlr~ tr.;guiy. /;7

j p.' .-\..~ 

# ;~Ad: ~G

CURT T. SCHNEIDER Attorney General CTS :JRM: kj



# ,

166 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 72',.'.f.: l' . '~t:~

Steven L. Beshear Governor 

### Energy and Environment Cabinet Departent for Environmental Protection

Division for Air Quality 200 Fair Oaks Lane, 1 st Floor Franfort Kentucky 40601-1403 

## ww.àI.ky.gov September 29, 2010 

### EPA Docket Center, EPA West (Air Docket) 

### Attention: Docket ID No. EPA-HQ-OAR-2010-0107 U.S. Environmental Protection Agency EP A West Air Docket 

### 1200 Pennsylvania Avenue, NW 

### Mail Code: 6102T Washington, DC 20460 Leonard K. Peters Secretary



### RE: Comments on Proposed Rule Published in the Federal Register, September 2,2010 (75 FR 53892), Action To Ensure Authority To Issue Permits Under the Prvention of Significant Deterioration

Progrm to Sources of Grenhouse Ga Emissions: Finding of Substtia 1 Inadequay 

### and SIP Call To Whom It May Concern: 

### The Cabinet is authorized by the Kentucky General Assembly under K. 224 and by the U.S. Environmental Protection Agency (EPA) under 40 CFR 51.166 and 40 CFR Par 70, as the state air pollution control agency and reviewing authority responsible for carring out the Prevention of Signifcant 

### Deterioration of Air Quality (PSD) and Title V Operating Permit Progrs in the Commonwealth of Kentucky. 

### The Cabinet is pleased to provide the following comments, puruat to the requests for public 

### comment published in the Federal Register on September 2,2010: 

### Comment Due to the close relationship between the "Tailoring Rule" proposed in the Federal Register on September 

### 28,2009, (74 FR 49454) and the currnt notice referenced above, the Cabinet has attched the comments on the "Tailoring Rule" that were submitted to BPA on December 18,2009. The Cabinet wishes to reiterate 

### the submitted comments and was disappointed that they were not adequately addrssed in the final rule published in the June 3, 2010, Federal Register (75 FR 31514). 

### Comment The Cabinet reiterates its general agreement that the Light-duty Vehicle Rule, finalized in the May 7, 2010, 

### Federal Register (75 FR 25324) results in the application of PSD to the emissions of caron dioxide and other greenhouse gas emissions (GHGs) at stationar soures. However, the Cabinet contiues to have substatial concerns with the regulatory approach EP A has provided in the Tailoring Rule, as well as with the curent proposals. Specifically, the Cabinet is most concerned with the unworkable premise that GHGs 

### can be treated as a criteria pollutant under the Prvention of Significant Deterioration of Air Quality

KentuckyUnbridledSpirit.com M/ID 

# J(et~

An Eq Opporbty Employer
167 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 73

### "r



### Docket IDNo. EPA-HQ-OAR-2010-0107 September 29, 2010 

### Page 2 of3

provisions of Clean Air Act, Title I, Par C, without first being listed as a criteria pollutt by
corresponding EPA action and regulation pursuat to 42 U.S.C. 7409. In the absence of 

### being declard a 

### criteria pollutant with the appropriate attinment area classifications made pursuant to 42 D.S.C. 7407, GRG gases must be treated like any other non-criteria regulated NSR pollutat, such as fluorides, sulfuc acid mist or hydrogen sulfide, total reduced sulfu, and certin contaminants from municipal solid waste 

### plants. 

### Comment EP A quotes CAA, Section 161, in the proposed rule as follows: "Each applicable implementation pIan shall contain emission limitations and such other measures as may be necessa, as detennined under regulations 

### promulgated under this par (C), to prevent significant deteriomtion of air quality for such region'" .. .. designated'" .. .. as attinment or unclassifiable." (75 FR 53896) 

### The omitted text in this citation is crucial because the full text in the CAA makes it clear that the designations must be made pursuant to CAA, Section 107, and that designations ar made for criteria pollutats only. The text should red: " Eah applicable implementation pIan shall contain emission limitaions and such other measures as may be necessary, as determined under regulations promulgated 

### under this part (C), to prevent significant deterioration of air quality in each region (or portion thereot) designated pursuant to section 7407 (107) oftbis title as attinent or unclassifiable." (emphasis added) Furthermore, CAA, Section 107(d)(1)(A)(ii) allows an area to be designated unclassifiable only for aras 

### "... that canot be classified on the basis of available information as meetig or not meeting the national primary or secondar ambient air quality stndad for the pollutant" Therefore, it is not possible to designate areas unclassifiable for GROs without first making GRGs a criteria pollutant. 

### Comment In the September 2,2010, Federal Register at 75 FR 53883, Action To Ensure Authority To Issue Permits 

### Under the Prevention of Significant Deterioration Progrm to Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP Call, EPA taes steps to assur that in thireen (13) states, 

### including Kentucky, that do not appear to have authority to issue PSD permits to GHG-emitting sources at 

### present, either the State or EPA wil have the authority to issue PSD permits by Januar 2, 2011. In this rulemaking, EP A proposes to find that these 13 state SIPs are substantially inadequate to comply with CAA requirements and, accordingly, proposes to issue a SIP Call to requi a corrtive SIP revision that applies these SIP PSD programs to GHG-emitting sources. In a companion rulemakg, EPA proposes a FIP that would give EP A autQority to apply EP A's PSD progrm to GHG-emitting sources in case such a state is 

### unable to submit a corrective SIP revision by its deadline. 

### EPA has not followed the normal SIP Call process that is mandated under the Clean Air Act. Since EPA 

### has not shown any environmental harm that would result from following the established, reasonable SIP Call process, EP A should proceed to do so. EP A's suggestion that a the week deadline is a ''rasonable 

### deadline" under section 110 of the CAA is presumptuous and dmstically deviates from the normal SIP Call 

### process. A January 2,2011, effective date is impossibly aggrssive for many agencies and EPA, states, and the regulated community would be bettr served by setting a later date to allow states the abilty to properly and adequately prepare to implement the new stndads as has been done historically with every SIP Call in the past.

KentuckyUnbridledSpirit.com M/ID 

# J(ei~ An Equal Oprtty Employe
168 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 74

### Docket il No. EPA-HQ-OAR-201O-0107

September 29, 2010 

### Page 3 of3 

### Comment Under state regulations approved puruant to 40 CFR Par 70, sources will be obligated to include GHG emissions in Title V permit renewal applications on and afer Januar 2, 2011. Considering the significant 

### impact on Title V permitting, the Cabinet request that the sepamte rulemakig pertining to Title V progrms noted at 75 FR 53905 be proposed and published in the Federal Register prior to this rulemakg becoming finaL. The separate Title V rulemaking should include provisions to address insignificant soures 

### of emissions and establish de minimis levels. 

### Comment EPA has not published BACT guidance for subject sources that are subject to GHG provisions on and aftr Januar 2, 2011. This guidace should be made available prior to the effective date of GHGs becoming a 

### regulated NSR pollutat and must be made available to permitting agencies for the permittg of GHGs to be effective. 

### Comment Curnt Legal challenges to the Tailorig Rule and associated rulemakings call into question the long-term stabilty of the rule. Therefore, EP A should delay furter processing of these rules until aftr litigation has been completed. 

### In summar, the Cabinet encourges EPA to give serious considemtion to the issues mised by the Commonwealth and other states concerning the deleterious effects implementation of the GHG SIP Call will have on state permitting progrms and the regulated communty. We reitemte our reommendation that 

### EP A delay this action until afer the proper legal grundwork has been established for regulating GHGs as 

### a criteria pollutant, as a "regulated NSR pollutat" pursuant to 40 CFR 51.166, and as a "regulated air 

### pollutat" pursuant to 40 CFR 70.2. The Cabinet looks forward to continuing to work with EPA in developing a comprehensive and effective climate change policy that wil achieve environmental goals without imposing unmanageable or unnecessar burdens on EPA, state and local permittng agencies, and our strggling economy. Thank you for the opportity to provide comments and recommendations on this 

### proposal. If you have questions or require furter information, please contact me at (502) 564-3999 or email: iohn.lyons~y .gov.

JSL/me c. Dick Schutt, U.S. EPA, Region 4, Air Pi ng Branch Chief 

### Gregg Worley, U.S. EPA, Region 4, Air Permits Section Chief

KentuckyUnbridledSpirt.com M/ID 

# J(t!~

An Eqal Oportty Employer 169 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 75,~

STEVEN L. BESHEAR GOVERNOR LENA K. PETERS SECREY 

### \ 

## ENERGY AN ENVONM CABINT

OFFCE OF TH SECRETAY 500 MERO STRET iim FLOOR, CAPITAL PLA TOWE FRORT, KY 406Ol TELEPHONE: (502) 5650 FACSIM: (S02) 5643354 ww.eec.ky.gov
October, 4, 2010

Ms. Lisa P. Jacksn 

### Administtor U.S. Environmenta Protection Agency Arel Rios Building 1200 Pennsylvania Avenue, N. W. Washingtn, D.C. 20460 Ms. Gwen Keyes Fleming Regional Administrtor U.S. EPA, Region 4 Sam Nunn Atlanta Federal Center 61 Fors Strt, SW Atlanta, Georgia 30303 Dear Administor Jackson and Regional Administtor Fleming:

As requested in the preamble to the "Action To Ensur Autont To Issue Pen its under the Prevention of Significat Deterioration Program to Soures of Greenhouse Gas Emissions: Finding of Substatial Inadequay and SIP Call" (75 FR 53892, Vol. 75, No. 170, September 2,2010 p.S3901) the Energy and Environment Cabinet on behf of the Commonweal of 

### Kentky, respelly submits this Jettr to the Administrator and Regional Administratr detling the stps Kentucky will ta in addrssing the SIP (State Implementation Plan) CalL. In order for Kentucky to retn st pr of the New Soure Review (NSR) progr, the Commonwealth is obligate to adopt ret revisions to the NSR and Title V defitions. This step is necss to prevent dual penniting progr at the st and 

### feder level thereby creating unecessar delay and confusion in makng perm decisions afectig all intereste paes, a problem created by this deiation from the nor SIP Cal pr. Therefore, as a 

### SIP-approved stte for the NSR progr, the Commonwealth inteds to amend the currnt relations to 

### define the tenn "subject to regulation" for the NSR progr and the Title V pennitng prgr and maintain a fully SIP- approved NSR program in Kentuky. Considering the sttutory and regulatry requirments in appropriately promulgaing regutions, the Commonwealth submits the following schedule, curently under way, for amending the regulations to

allow for revision of Kentucky's SIP to implement the grenouse gas tailorig rule.

KeDtaekyUDbridledSpireom 

# J(l?~ An Equa Opportty Empler MIID

170 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 76.\i!L. ',- - .." ~ . . '-~:e..:'. ,



### Ms. Jackson and Ms. Fleming October 4,2010 

### Page No.2

JuJ 14 2010

November 9.2010
December 2,2010 

### If reviewed by 2 Subcmmitt, the effectve date is at adjournment of' meeting, else 30 days af the 

### reguaton referr by ) 51 Subcommittee

Submit amendments to EPA as an amendment to Kentuc 's SIP 

### Janu 1, 2011

Kentucky wilt make every effort to meet the ambitious scheduJe set fort above. However, as wi any regulatory prmulgation and revised SIP Call proess, completion is subjec to contingencies which may
alter the anticipated timeline. Consequently, in response to the request in the pramble of the Federal Register for a deadline to meet the revised SIP Call deadine Kentuky proposes a date of Marh 31, 20 i i
to allow more time to complete the SIP Call process. The prense of the nee to coplete the SIP CalJ by the implementation date of Janua 2, 20) 1 is necessitted solely by EPA's cirumvention of the nonnal SIP Call process, which would otherise allow for a reaonable tie fre to comply with the SIP Call pro~ess without adverse consequences (e.g. constction ba for emitting sourcs). I sincerely hope that EP A wil consider this request to extd the time necess to complete this very complex tak in recognition of currnt national and local circumstces. There is a significat amount of litigation that may alter the way this rule is implemente by your agency and, in tu, the manner ,in which Kentucky must act. Furer, the quick implementaion of this rule wil place a ver heavy burden on our agency at a time when many crtica issues fac us and we ar strining wider unprecedented budgeta and stffng shortges. 

# Sí7~ '

Lenar K. Peters 

# Secre

171 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 77AIR POLLUTON CONTROL DISTRICT LOUISVILLE, KENTCKY
JERRY E. ABRAMSON

MAYOR LAUREN ANDERSON. EXECtr DIRECfOR


### October 4, 2010
U. S. EP A Environmental Protection Agency - EP A West (Air Docket) 

### 1200 Pennsylvana Avenue, NW Mail Code: 6102T Washigton, DC 20460 Via e-mail: a-and-r-docket(Æ,epa.gov

Re: Action to Ensure Authority to Issue Permits Under the Prevention of 

### Signifcant

Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of 

### Substantial
Inadequacy and SIP Call, 75 Fed. Reg. 53892 (September 2, 2010) (proposed 

### rue), DocketlD No. EPA-HQ-OAR-2010-0107. To Whom It May Concern:

On September 2,2010, EPA proposed an "Action to Ensue Authority to Issue Permts Under 

### the 

### Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions:

Findig of Substntial Inadequacy 

### and SIP Cal," which identified Jefferson County, Kentuky as having a state implementation plan (SIP) that does not appear to apply Prevention of Signficant Deteroration (PSD) permttg requirements to sources of greenhouse gas (GHG) 

### emissions, as set forth in the Greenhouse Gas "Tailorig Rule," 75 Fed. Reg. 31514,31521 (June 3, 2010). Ths correspondence is being sent in response to EPA's identification of Jefferson County~ Kentucky on the Presumptive SIP CalI List. 

### I. Backgourid

The Louisvlle Metro Air Pollution Control Dismct (APCD) is the ai pollution control agency 

### of Louisvil1e/Jefferson County, Kentucky. Established in 1945 as the Louisville Smoke Commission, it became the Air Pollution Control Dismct of Jefferson County in 1952 pursuant 

### to Chapter 77 of the Kentucky Revised Statutes (KRS). Concurent jursdiction was granted by. 

### the Kentucky Energy and Environment Cabinet (formerly the Kentucky Envionmental and Public Protection Cabinet) pursuant to KRS 224.20-130. APCD's reguations may be more, but no less, strgent than either federal or state law. i 

### From adopting local regulations in the early 1940's to later implementing the federal PSD 

### progr, APCD has been a leader in protecting ai qualty. As par of that leadership role,

1 KRS 224.20-130(2); see also 70 Op. Atty Gen. 610 (1970). 

### www.louisvileky.gov WWW.LOUISVILLEKY,GOV/APCD 850 BARRET AVENUE, ROOM 205 LOUl§VÎLLE, KENTUCKY 40204- i 7 4S ~~eipønio Sl\l, Molin 74. S 306 Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 78

### ,~' "','," . :~:-.:'.



### Docket il No. EPA-HQ-OAR-2010-0107 October 4,2010 

### Page 2 

### APCD, though its Ai Pollution Control Board, is authorized to "make and enforce all needfu 

### orders, rues, and reguations necessar or proper to aècompIih the puioses of (K Chapter 77) for the admstation of such (air pollution control) distct, and may perform all other acts

necessary or proper to accomplish the purposes of 

### this chapter."z 

### On June 19, 2002, APCD adopted Reguation 2.05 Version 8, Prevention of Signifcant 

### Deterioration, which incorporated 40 CFR 52.21, Prevention of Signifcant Deterioration (July 

### 1, 2001) by reference. This version of Regulation 2.05, which addressed "any pollutat subject to reguation under the (Clean Ai) Act,,,3 was subsequently approved into the SIP on November 3,2003.4 Version: 8 remained both the locally approved version and the SIP approved version 

### for nearly seven years. 

### On May 20, 2009, APCD adopted Reguation 2.05 Version 9, Prevention of Signifcant

Deterioration, which incorporated 40 CFR 52.2 1, Prevention of Signifcant Deterioration (lily
1,2008) by reference. This version of Regulation 2.05 adopted the definition of 

### "regulated NSR 

### pollutant" for the fist time.5 A "regulated NSR pollutat" includes, by definition, "any pollutant subject to regulation under the Act." A public c9mment period was held from Februar 20, 2009 

### through March 23, 2009. A public hearng was conducted prior to adoption of Regulation 2.05 Version 9 by the Air Pollution Control Board on May 20,2009. 

### The Kentucky Energy and Environment Cabinet submitted Regulation 2.05 Version 9 on 

### APCD's behalf to EPA on July 1, 2009, for approval as ¡i SIP revision on the basis that the amended regulation incorporates the requiements of, and is no less strngent than, the federal

PSD program as codified 

### in 40 CFR 52.21. To date, EPA has not approved Version 9 into the SIP.

On September 18, 2010, APCD began formal rulemakg to adopt a new version of 

### Regulation 

### 2.05 and to incorporate 40 CFR 52.21 as of Jily 1, 2010, thereby implementig the Tailoring Rule and establishing new provisions applicable to PM2.5. Conformg chages were also proposed for APCD's Title V program. Written comments on the proposed amendments to 

### Reguation 2.05 Version 10 wil be accepted until October 18, 2010. A public hearng to adopt the proposed reguation is planed for November 17, 2010, and wi include an opportty for members of the public to make an oral statement. APCD is requesting paralel processing of its 

### . SIP revision for Regulation 2.05 Version 10 coordinated through the Kentucky Energy and 

### Envionment Cabinet ß. PSD Applicabilty

2 KRS 77.180. 3 Regulation 2.05 Version 8 Section 1 adopting 40 CFR 52.21 (2001); 40 CFR 52.21(b)(1)()(a) (2001). 4 Approval and Promulgation of Implementation Plans for Kentucky: Permit PrOVisions for Jefferson County, KY, 68 

# Fed. Reg. 62236 (2003). . 5 Regulation 2.05 Version 9 Section 1 adopting 40 CFR 52.21 (2008); 40 CFR 52.21(b)(SO) (2008).

173 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 79

### Docket il No. EPA-HQ-OAR-2010-0107

October 

### 4, 2010 Page 3 

### In its proposed Finding of Substatial Inadequacy and SIP Call, EP A has requestd responseS to

the items listed in (a) though (g) in section IV.E.1 of 

### the Federal Register.6 APCD provides the 

### followig in response. 

### a. Confirm, With Citations and a Copy of the Relevant Language, that the SIP PSD Applicabilty Proviions Do.Not Explicitly Include GHG Sources.

According to EP A, the term "reguated NSR pollutant," which includes any "pollutt subject

to 

### reguation," is automatically updating and needs no revision in order to cover pollutants that become subject to reguation under the CAA.7 As a result, these provisions cover GHG 

### emissions when they become subject to reguation imder other provisions of the CAA. See 40

CFR 52.21 

# (b) (50).8 .

Reguation 2.05 Version 8, which is in the SIP, applies broadly to "any pollutant subject to 

### regulation under the Act:,9 Version 9 of Reguation 2.05, which is in effect locally, applies to "regulated NSR pollutats," which includes "any pollutant subject to regulation under the Act." 1bs "SIP gap" notwthstading, APCD's PSD program does not explicitly preclude regulation 

### of GHG sources in accordance with EPA's "subject to regulation" approach.

b. Identi and Provide a Copy of 

### Any Provision that Specifcally Preclude PSD . Applicabilty for GHG Sources

Based on APCD's review, there are no constitutiona, sttutory, 

### or regulatory provisions that specifically preclude PSD applicabilty for GHG sources.
c. Identi and Provide a Copy òf Any Provision of the State Constittion or Other 

### Law, including the SIP, that May Be Read to Limt the Applicabilty of the PSD Program to Pollutants'Identied at a Certain Point in Time, and Therefore Not to 

### GHGs

According to EPA, some states may have in their SIPs,; 

### statutes, or consitutions, a provision that 

### precludes "forward adoption" or includes a SIP PSD applicability provision tht incorporates by 

### reference the Federal PSD rue at 40 CFR 52.21 -- inc1udin~ the defmition of "reguated NSR 

### pollutt" -- as of the date the PSD provision was adopted.1 If so, EP A believes that either of these provisions could lit the SIP PSD applicabilty rule to only those pollutants that were 

### reguated as of the time the State adopted the PSD applicabilty rule, wruch means the SIP PSD

program would not cover GHG-emitting sources until the State took specific action to that 

# effect. 11 '

675 Fed. Reg. 53901. 775 Fed. Reg. 53897. SId. 9 Regulation 2.05 Version 8 Section 1 adopting 40 CFR 52.21 (2001); 40 CFR 52.21(b)(1)(i)(a) (2001). 1075 Fed. Reg. 53898. Illd.

174 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 80

### ~d ".'."



### Docket ID No. EPA-HQ-OAR-201O-0l07 October 4, 2010 

### Page 4 

### APCD believes that its PSD reguation may be interpreted to apply to GHGs for the sae 

### reasons expressed by EP A in the Interpretative Memo. However, ,since 2002, APCD has incorporated 40 CFR 52.21 and its associated applicability provisions by reference and as of a specific date: Version 8 as of July 1, 2001 and Version 9 as of July 1, 2008. 

### As a result, APCD is requied under APCD Reguation 1.08, Administrate Procedures, to 

### underte formal mlemakg to adopt a regulation or to amend an existig regulation.12 Th requirement applies whether APCD is updating a reguation to include a new standard under the Clean Air Act, such as aNew Source Performance Standard (NSPS), or updating material previously incorporated by reference into the regulations as of a specific date. For that reason,
APCD has formally proposed a new version of 

### Regulation 2.05 (Version 10) to incorporate 40 CFR 52.21 as of July 1, 2010, thereby implementing the Tailorig Rule and estblishig new 

### provisions applicable to PM2,5. Followig an opportty for wntten comment, a public heag will be held, followed by a public meeting of the Ai Pollution. Control Board to adopt the proposed reguation. 

### d. Indicate, With Citations and a Copy of the Relevant Language, If Any, Whether the 

### SIP Includes General Authority for the State to Issue PSD Permits that Meet EP A Requirements 

### As described by EPA, some states may have a "general authority clause" in their SIPs that aff the State's legal authority to issue, and enforce compliance with, pennts that are 

### consistent with Federal requirements. As an example, EP A refers to"an approach used by the Californa Bay Area Ai Quality Management Districf (BAAQMD) to address sources of PM25 

### though an exercise of general authority under the BAAQMD admstrative regulations, which provide that the Ai Pollution Control Offcer "may impose any permit condition that he deems reasonably necessar to insure compliance with Federal or Californa law or Distct 

### regulations. "

Neither APCD's regulations not its SIP contain a similar grant of "general autority" for sources 

### subject to PSD.l 

## e. Indicate, With Citations and a Copy of the Relevant Language, Any other provisions that may bear on the applicabilty of the PSD program to GHG-emittg sources 

### Under KR 77.180, APCD, though its Board, may "make and enforce al needfu orders, rues, and reguations necessar or proper to accomplish the purposes of (K Chapter 77) for the
administration of such distrct, and may 

### perform all other acts necessar or proper to accomplish

12 APCD Regulation 1.08 section 7.1; Approved into the sip on November 3,2003, Approval and Promulgation of Implementation Plans for Kentucky: Permit Provisions for Jefferson County, KY, 68 Fed. Reg. 62236 (2003). 13 See APCD Regulation 2.06, which provides general authorit for sources not subject to NSR or PSD .

175 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 81Docket il No. EPA-HQ-OAR-20 10-0 1 

### 07



### October 4, 2010 

### Page 5

the puroses of 

### ths chapter," including rulemakg to reguate GHOs through the Distrct's PSD
reguation. 14 

### f. Does the SIP, read as a whole, apply the PSD Program to GHG sources or authorie the State to issue PSD Permits for GHG sources that meet EP A requirements APcn believes that its SIP, as a whole, could be read to authorize APCD to issue PSD pennts to 

### sources emitting GHGs. Version 8 of Reguation 2.05, which is the SIP-approved version, applies to "any pollutant subject to regulation." However, ths would be a depare from

APCD's practice of updating material previously ircorporated by reference as of a specifc date 

### through ruemakg. 

### g. If the SIP, read as a whole, does not apply the PSD Program to GHG sources, 

### indicate whether the State plans to develop such authority. APCD is in the process of revising its existing PSD reguation to incorporate 40 CFR 52.2 1 by reference as of July 1,2010. Conformg changes have proposed for APCD's Title V program. 

### APCD anticipates adopting these revIsea reguations prior to December 1, 20 i 0, as described herein. Therefore, It should not be necessar for EP A to finalize its fidings of inadequacy and a 

### SIP Call for APCD's program. However, if APCD is unable to fialize proposed Regulation 2.05 Version 10 by December i, 2010, APCD does not object to EPA's establishment of januar

'1,2011, as the 

### deadline to submit a SIP revision in response toa SIP CalL. In accordance with 

### EPA's proposal, APCD understads that, in the event a SIP revision is necessar, EPA's fiding that APCD "failed to submit a required SIP revision for a PSD area will not trgger mandatory s~ctions.,,15 

# Sjn~

Lauren ~ers:n Executive Director Louisville Metro Air Pollution Control Distrct 850 Baret Ave., Room 205 

### Louisville, KY 40204-1745
cc: Gwen Keyes Flemig, Regional Adminsttor 

### US EP A, Region 4 

### Carol L. Kemker, Acting Director, Ai, Pesticides and Toxics Management Division, U.S. EPA 

### John Lyons, Director, Division for Ai Quality, Kentucky Energy and Environment Cabinet

14 KRS 77.180. 15 75 Fed. Reg. 53905.

176 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 82

### \~ :

Oct. 20. 2010 2:11PM 

### Lou. Met ro APeD (502) 574-5306 

### No. 5643 p, 2

AI POLLUTON CONTOL DlS1CT 

### LOWSVI, KECK
JERRY E. ABRAMSON

MAYOII 

### LAUR l.1l"'.1i Ðiu

Octbe 19,2010 

### Ms. Lynra E. Beamin Chef 

### Ai Plan Brach APTM U.S. EP A, Reon 4 

### 100 Alab Str S.W. Atlta Georg 30303-3104 

### Via/ax: 404-562-9019 

## Re: Action to Ene Authority to Issue Pennits Unr the Preventin o/Signifcan Deteroraton Program to Souces 0/ Greenhuse Gas Emissions: Findmg ofSubstcma/ 

## /nquac an SIP Call, 75 Feci Reg. 53892 (Septber 2, 2010) (.nr rule), Dot II No. EPA-HQ-OAR-2010-0107. 

# De Lyn: This conden is being se as a follow-up re to the Louisvie Meto Ai Polluton 

## Contrl Dict's (APeD) Ocbe 4. 2010, sutt rega EPA's idencaon of Jef Coty, Kentuky on the Prumptive SIP Ca Lis 

### APCD believes tht its SIP, as a whole, coul be re to aut APCD to is PSD pets to 

### sour emttg GHOs. Verion 8 of Regution 2.05, whch is the SIP-apprve verson, aplies to ~y Pollutt subject to regulaton" However, ths would be a dep ft 

# APCD's ptce of up maal prouly incora by reerce as of a spc da . tbug ruem as reui by APCD Reon 1.08, Adminisate Procedies. As a consuece, we canot inerpre our curt SIP proviions to alow us to issue PSD pe 

### goverg GHGs withut undeg fom rnlfMR1n"g. l
APeD ha fory prse a new veiion of Reguaton 2.05 (Veron 10) to in 40 

## CF 52.21 as of July 1,2010, therby implementi th Taiori Rule and esli new 

# prvions aplicale to PM..~. To da, APeD ha provided an oppty for wr comment and will hold a public he followed by a publi meeg of th Ai Pollon Cotrl Boar to adopt the prse regution on Novembe 17, 2010. If ad~ th re 

## reguon wil beme effecve as oftb da.

i APeD Reglation 1.08 secon 7.1; Approved into the sip on November 3,2003, Approval and Promulgtion of Implementation Plans for Kentuck Permit Proviions for Jefelln Count, KY, 68 Fed. Reg 6226 (200). www.louisl.illeky.aov WWW.LOUlSVILUKY.GOV/APCD850BARJlTAVENUE.ROOM:iOSLOUliNiú¡¡.KI!NTUCKY4020.-..45~JlDtoFiIl.Ylli.cn...5i06 Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 83Uct.LO. L010 2:11PM Lo u. Me t r 0 APeD (502) 574-5306 

### No. 5643 P. 3
Doket ID No. EPA~HQ-OAR~2010-107 

### October 19, 2010 P ag e 2 

## If you hae an queons or need any fuer inormon, plea contct me at your ealies convenence at (502) 574-6009. As always, we appreiae EPNs assice.



## Laurn Anden 

## Execve Dir 

## Louie Met Ai Polluton Contol Disct 850 Ba Ave., Roo 205 Louisvie, KY 40204-1745 

## cc: Gwen Keyes Fleming, Regona Admtor US EP A, Region 4 

## C~L L. Kemer, Act Diror, Ai, Pescides and Taxies Maemen Divsion, U.S. EP A 

### John Lyons, Direcr, Division for Ai Qualty, Ketucky Engy and Envient Cabinet

178 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 84

# E

DEPARTMENT OF AIR QUALITY & ENVIRONMENTAL MANAGEMENT 500 S Grand Central Parkway 1s1 Floor' Box 555210. Las Vegas, NV 89155-5210 (7021 455-5942 . Fax (702)383-9994 lewis. Wollenmeyer O¡rcc101 . Tina Gingro$ AS~¡~lC1n1 Direfor



### October 4, 2010


### Docket ID No. EPA-HQ-OAR-2010-0107 U.S. Environmental Protection Agency EPA West (Air Docket) 1200 Pennsylvania Avenue, NW 

### Mail Code: 6102T Washington, D.C. 20460 

## . RE: Comments from Clark County, Nevada, on 75 FR 53892, "Action to Ensure Authority to Issue Permits Under the Prevention of Significant Deterioration 

## Program to Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP Call"
Clark County, Nevada, is providing these comments in response to the notice EP A published on 

### September 2, 2010, in the Federal Register, "Action to Ensure Authority to Issue Permits Under 

### the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP Call" (75 FR 53892). We appreciate the opportunity to provide comments for the record.

In May 2010, the Clark County Board of County Commissioners (BCC), the governing body 

### with authority to adopt, amend, and repeal air quality regulations, substantially revised the

Prevention Of Signification Deterioration (PSD) applicability provisions in Section 12 of the 

### Clark County Air Quality Regulations (AQRs) and related provisions in Section 0, "Definitions." 

### These revisions became locally effective on July i, 2010, and were submitted to EPA Region 9 

## on September 1, 2010, for approval into the Nevada SIP. Because the current state implementation plan (SiP) PSD rules are no longer part of the AQRs, and the County has 

### submitted new rules for SIP approval, discussing the current SIP PSD applicability provisions is 

### not relevant to EPA concerns about Clark County's ability to issue PSD permits for greenhouse gas (GHG) sources beginning January 2,2011.

80ARD OF COUNTY COMMISSIONERS Rory Reid Chairma" . Susan Brager VlCo-Chairmon Larry Brown, Torn Collins, Chris Giunchiglioni, SIeve Sisolok. Lawrence Weekly Virginia Valentine, PE, Coimty Manager
179 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 85'~t:~ :. .t:



### Docket ID No. EPA-HQ-OAR-2010-0107 

### U.S. Environmental Protection Agency Page 2


### As stated above, the County has submitted SIP revisions to EPA that the BCC adopted in May

2010. EPA approval of 

### this SIP submittal is necessary to ensure that the County obtains authority to issue PSD permits to GHG sources. Additionally, as discussed below, Clark County must 

### complete another rulemaking that EP A wil need to approve into the SIP before it will have the authority to issue PSD permits to GHG sources. 

### The PSD applicability provisions that have been submitted for SIP approval are found in AQR 

### Section 12.2. This rule tracks the federal PSD regulations and includes the term "subject to regulation" in its definition of "regulated NSR pollutant" (AQR Section 12.2.2(pp)(4)). In the 

### proposed and final rules EPA has promulgated regarding GHGs, EPA suggests that a local 

### governmental entity such as the County may have the authority to interpret "subject to 

### regulation" to include GHGs without any rulemaking. Further, EPA suggests that the interpretation of this phrase as outlined in the Tailoring Rule will allow the County to incorporate future pollutants that become subject to regulation under the Clean Air Act without any additional rulemaking (75 FR 53892, 53903). 

### Unfortunately, the County does not have statutory authority to adopt rules that wil automatically 

### update, including when changes are made to the federal PSD program. The County is subject to Dillon's Rule, meaning it has only that authority provided in the Nevada Revised Statutes (NRS).

While there is no language in the NRS that explicitly limits the applicability of the PSD program 

### to pollutants identified at a certain point in time, more importantly, there is no language that 

### allows or authorizes the County to adopt air quality regulations that could prospectively incorporate new pollutants as they become subject to regulation in the future. For the most part, NRS Chapters 237, 244, and 445B set forth the statutory requirements to 

### adopt, amend, repeal, or otherwise revise air quality regulations. NRS Chapter 445B provides the 

### County with authority to regulate GHGs upon the adoption of rules into its air quality program. This chapter, as well as Chapters 237 and 445, describe the process the County must use to adopt 

### rules into its air quality program, including PSD rules. This process includes a notice to the 

### public, a business impact review, and a public hearing. Until the County goes through the rulemaking process to adopt a provision into the AQRs, it does not have a rule it can enforce.

When the BCC adopted revisions to the PSD program in Sections 0 and 12 of 

### the AQRs in May 

### 20 i 0, EP A had not yet adopted the Greenhouse Gas Tailoring Rule. The newly adopted 

### regulations do not contain any mention of GHGs. Furthermore, nothing in the notices, during the 

### public hearing, or from the administrative record indicates that these regulations were meant to 

### apply to GHG emissions. Although the revised regulations contain the phrase "subject to

regulation" in their definitions of 

### "regulated NSR pollutant," this phrase and EPA's subsequent 

### adoption of the Tailoring Rule are not suffcient to trigger a revision to the regulation because they do not satisfy the state law requirements applicable to the County.

180 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 86

### Docket TO No. EPA-HQ-OAR-201O-0107



### U.S. Environmental Protection Agency Page 3 

### Fortnately, the COW1ty is in. the process of amending Sections 0 and 12 of the AQRs to incorporate the applicable provisions of the Tailoring Rule (Enclosure i, "Notice of Public Hearing/otice of 30 Day Public Review and Comment Perod"). The County anticipates that the BCC wil consider these revisions on November 16,2010. Upon BCC approval, the County will submit these revisions to EPA Region 9 by December 1,2010, for approval into the SIP. 

### As stated previously, the County has already submitted SIP revisions from the acC's May 2010 

### rule adoption. Upon the County's submittal of additional SIP revisions to incorporate the Tailoring Rule by December 1, 2010, EP A wil not need to finalize a finding of substantial inadequacy or issue a SIP call for Clark County (75 FR 53901). If, due to unforeseen 

### circumstances, the County does not submit its SIP revision by December 1,2010, it would accept 

### a SIP submittal deadline of July 1,2011. 

### Upon approval of both SIP revisions, the County wil have the authority it needs to issue federally enforceable PSD permits to GHG sources. 

### We appreciate the opportnity to comment on the proposed GHG SIP Call. Please contact Russell Roberts at (702) 455-1611 or rroberts~co.c1ark.nv.us if you have questions or need additional information.


### Sincerely, 

# .ß~~

~ewis Wallenmeyer, Director

Enclosure: Notice of public hearng publication

cc: 

### Deborah Jordan, EP A Region 9 Amy Zimpfer, EP A Region 9 Gerardo Rios, EP A Region 9 

### Mike Elges, NDEP 

### Tina Gingras, DAQEM Russell Roberts, DAQEM 

### Catherine Jorgenson, Deputy District Attorney, DAO

181 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 87OCT-1-2010 09:47 FROM:DEPT OF ENUIROMENT Q 402-471-2909 TO: 912025669744 p.1 

### P:2/3



### STATE OF NEBRASKA Dave HeføDJn Gouem(lr DEPARTMl!NT Of' ENVIRONMNTAL QUI\LlTV Michael J. Linder

Dlrect"r Suitt¡ 400. Th~ Atrium

),200 'N' SI.reel P,O. Box 98922 lincoln. N"br~5kQ 6B509-8922 Phone. (402) ~-7.21a6 FAX (402) 471-2909 wab.ltc, ww.Mq.stiite..I1...us September 30, 2010
Lisa P. Jackson Administrator u.S. Environmental Protection Agency 1200 Pennsylvania Avenue, N.W. Washington, De 20460 RE: Attention Docket 10 No. EPA-HQ-OAR-2010-o107

Dear Administrator Jackson: On September 2, 2010 the U.S. Environmental protection Agency (EPA) published notice that EPA intends to find that the State of Nebraska's EPA-approved State implementation Plan New Source Review Prevention of Sien1ficant Deterioration (PSD) program is substantially Inadequate to meet Clean Air Act (CAA) requirements for issuing permits for sources of greenhouse gases (GHGs) (SIP call). This sip call follows up on the earlier EPA action published August 2, 2010 which finalized a Tailoring Rule that promulgated substantive requirements including thresholds that define when PSD and Title V permIts are required for GHGs under the eAA. On behalf ofthe State of Nebraska, this letter responds to the sip call and describes Nebraska's Intention to adopt state reeulations that apply the PSD program to GHG-emitting sources In accordance with the Nebraska's Administrative Procedures Act, a rulemakrng which is already underway. These proposed regulations add certain definitions, Including GHGs to the list of PSD applicable sources, and incorporate the emission thresholds and phase-in approach for sources that wil trigger PSD consistent with the Tailoring Rule. The Nebraska Department of Environmental Quality, pursuant to Neb. Rev. Stat. §81-1504(4) is authorized to act as the state agency for all purposes of the Federal Clean Air Act, as amended. The NDEQ's authority further derives from regulations adopted pursuant to Neb. Rev. Stat. §81-1S05(12). These regulations are codified as Title 129 in the Nebraska Administrative Code. I believe this statutory
authority Is suffcient to allow the NDEQ to proposu and promulgate regulations that apply PSD to GHG sources and NDEQ has already begun the state rulemakln8 process to do sa. While NDEQ's current Title 129 does not indicate any explicit prohibition to regulating GHGs, I believe It is more prudent and transparent to specifically adopt these Federal requirements into State regulation as NDEQ would norma lIy do for a ny other federally promulgated CAA requirement. In response to EPA's proposed sip call, NDEQ is proposing to adopt regulations as expeditiously as possible that would expressly apply the PSD program to GHGs. To that end, NDEQ has alreadV provided a draft of our proposed regulations to EPA Region 7 for early review and comment, and to the

A" Equol o"portulill¡lAJfrmoUUt Actio" Emplo¡ir tli f'"lnd with BOY ~'Ä~n fT pspo . EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 880(T-1-2010 09:47 FROM:DEPT OF ENVIROMENT Q 402-471-2909 TO: 912025569744 p. 2 

### P:3r3

regulated community and the public for comment as well. I have greatly appreciated EPA Region 7's assistance in this regard. We are requesting with this letter that EPA parallel process our sip submittal as described in the Federal Register notice. ND'Eo.ls planning to publish legal notice for the proposed regulations in mid-October soliCiting formal public comment with a projected public rulemaking hearing in the first week of December 2010 and anticipates final promulgation by January i, 2011. Since EPA has proposed a December 1, 2010 deadline for submittal of a corrective SIP, It is unlikely that NOEQ wil be able to submit its corrective sip by that date. However, NDEQ shares (PA's perception of the Importance of having a PSD pemiltting authority In place, either State or Federal, as soon as possible for any GHG-emittlng sources that may be subject to PSD requirements to avoid a reguliltory construction freeze. Therefore, Nebraska does not object to EPA's establishment of a deadline of March 1,2011 for submittal of Nebraska's corrective SIP, although we are expeditiously working for an earlier submittal. NDEQ wíl continue to work with EPA Region 7 In the coming weeks as we finalize our rulemaking and look forward to a satisfctory resolution to the sip call. If you have any questions, please do not hesitate to contact me or Shelley Schneider, our Air Quality Division Administrator.



# 0-

xc: Karl Brooks, EPA Region 7

183 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 89'~~

Bryan W. Shaw, Ph.D., Chairman Buddy Garcia, Commissioner Carlos Rubinstein, Commissioner Mark R. Vickery. P.G., Executive Director



### TEXAS COMMISSION ON ENVRONMENTAL QUALITY

Protecting Texas by Reducing and Preventing Pollution

October 4, 2010



### Attn: Docket il No. EPA-HQ-OAR-2010-0l07 U.S. Environmental Protection Agency Ai and Radiation Docket and Inormation Center 1301 Constitution Ave., NW 

### Washigton, DC 20460 Re: Proposed Action to Ensure Authority to Issue Permts Under the Prevention of Signficant Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of Substantial 

### Inadequacy and SIP Call, Docket il No. EPA-HQ-OAR-2010-0107, FRL-9190-7; and Proposed 

### Action to Ensure Authority to Issue Permts Under the Prevention of Signficant Deterioration Program to Sources of Greenhouse Gas Emissions: Federal Implementation Plan, Docket il No. 

### EPA-HQ-OAR-20l0-0l07, FRL-9l90-8
Dear Sir or Madam:

The Texas Commission on Environmental Quality (TCEQ) appreciates the opportty to respond to the 

### U.S. Envionmental Protection Agency (EP A) anouncements of a public comment periods published in 

### the September 2, 2010, edition of the Federal Register entitled: "Action to Ensure Authority to Issue 

### Permts Under the Prevention of Signficant Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP CalI," and "Action'to Ensure Authority to Issue 

### Permts Under the Prevention of Signficant Deterioration Program to Sources of Greenhouse Gas Emissions: Federal Implementation Plan" 

### Enclosed, please find the TCEQ's detailed comments relating to the EPA actions referenced above. If you have comments or questions concerng the enclosed comments, please contact John M. Minter,

Enwonmental Law Division, Offce of Legal Servces, (512) 239-0663 or imiter0tceq.state.tx.us.



### Enclosure

P.O. Box 13087 Austin, Texas 78711-3087 

### ~-239-1000 

### Internet addrfêll fl.~1:igt¡yi~otion Exhibits prinl~d on recycled paper using soy-based ink 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 90

## '"r ,~

~AIN~GEß~T1hlJc~ 

### 1960 - 2010 Larry Greene AIR POLLUTION CONTROL OFFICER September 30, 2010 Lisa P. Jackson, Administrator Environmental Protection Agency EPA West (Air Docket) 

### Mail Code 61 02T 1200 Pennsylvania Ave, NW Washington, DC 20460 

### Attn: Docket 10 No. EPA-HQ-OAR-201 0-01 07

Subject: Action to Ensure Authority to Issue Permits Under the Prevention of Significant

Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of

Substantial Inadequacy and SiP Call, (75FR53892) Docket ID No. EPA-HQ-OAR

### 2010-0107
Dear Administrator Jackson: 

### We are writing on behalf of the Sacramento Metropolitan Air Quality Management District (SMAQMD.) EPA proposes 1 to find that 13 states with EPA approved State Implementation Plan 

### (SIP) New Source Review Prevention of Significant Determination (PSD) programs are 

### substantially inadequate to meet Clean Air Act requirements b,ecause they do not apply PSD requirements to greenhouse gas (GHG) emitting sources. EPA proposes to require the 13 

### states to revise its SI P to correct the deficiencies. The State of California is one of the 13 states. 

### SMAQMD is the area identified as being deficient in California. EPA requested specific information (75FR53901) during the comment period for this action. This letter provides the seven requested information items, revises or conclusions on GHG authority, and affirms that 

### we would not oppose an earlier deadline for submittal of the required SIP revision. It is important to note that our initial GHG authority analysis in our July 27, 2010 letter to Regional Administrator Blumenfeld indicated that our sip approved PSD Rule 202 did not provide sufficient authority to implement GHG PSD requirements. However, that review did not consider the implications of our general authority. We have continued to review this issue as we prepare 

### to move forward with the program and, as discussed further below, we now conclude that our SIP includes general authority to implement other state and federal requirements, such as PSD 

### for GHG, without sip amendments. 

### a) Confirm the PSD applicability provisions do not explicitly include GHGs 

### SMAQMD Rule 202 - New Source Review includes our PSD program 2 Section 102 - Applicability states that Rule 202 applies to "affected pollutants" but see paragraph e and f below.)

i Federal Register, September 2, 2010, (75FR53982) 2 All sections noted are from Rule 202 - New Source Reyiew. Federal Register, June 19, i 985 (50 FR 25417) Web. http://yosemíte.epa.goy/R9/r9sips.nsf/ AgencyProvisionl7 87E6C5908045 A3 A 8825698FOOS i C644/$fie/SA + 202.PD F?OpenElement accessed September 16, 2010

777 12th Street, 3rd Floor i Sacramento, CA 95814-1908

916/874-4800 118916/874-4899 fax EPA Response to Stay Motion 

### ww.airquality.org Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 91- :¡:~ :. , ~..i .l' ~C"~

Administrator Jackson PSD sip Call - EPA-HQ-OAR-201 0-01 07 September 30,2010 

### 102 APPLICABILITY: This rule shall apply to all new stationary sources and all modifications to existing stationary sources, which, after construction, emit or may emit any affected pollutants. Section 202 defines Affected Pollutants, but does not include GHGs. 

### 202 AFFECTED POLLUTANTS: All pollutants for which an ambient air qualiy standard has been established by the US Environmental Protection Agency or the California Air Resources Board and the precursors to such pollutants, all pollutants regulated by the US Environmental Protection Agency under the Clean Air Act or by the 

### California Air Resources Board under the California Health and Safety Code, including 

### reactive organic compounds (ROC), nitrogen oxides (NOx), sulfur oxides (Sax), particulate matter (PM), carbon monoxide (CO), lead, asbestos, beryllium, mercury, vinyl 

### chloride, fluorides, sulfuric acid mist, hydrogen sulfde, total reduced sulfur, and reduced sulfur compounds. Also all of the pollutants which the US Environmental Protection
Agency after notice and opportunity for public comments, or the California Air Resources 

### Board or the Air Pollution Control Board after public hearing, determine may have a significant adverse effect on the environment, the public health, or the public welfare. 

### b) Identify provisions that specifically preclude PSD applicabilty to GHG sources

Rule 202, Section 301.3 

### excludes requiring sources of GHG to apply BACT because they are not listed as pollutants in Section 301.1. 301 BEST AVAILABLE CONTROL TECHNOLOGY: An applicant shall apply Best 

### Available Control Technology to a new source or modification of an existing source, except cargo carriers, for each affected pollutant emitted, including halogenated hydrocarbons, under the following conditions: 301.1 A new stationary source emits more than the following amounts:

_.__.,_.....W"~..._,..,W~'".."..._n'__~"._,_.__ 

### Pollutant 

### ka/dav !!Jl~~Y.._., -_......_- ..."...."""'"'".,,'''''''~'''' , 

### Haloaenated hvdrocarbons 68 150 _._---_..........-._~.._.- Reactive 0'lanic"q9.r!!1?_9U!!f!§',____ 

### 68 150



# --- _._.._..__.. Nitroaen oxides 

### 68 150 Sulfur oxides 

# ._-~- 68 150 "--",,,~~,-,,-_..,-- 

# ------ Particulate matter 

### 68 150 

## ~,---,-,."',._._.,"'----,._.,, "..-......,. Carbon monoxide 

### 250 550 '_._._'W__W.' __.._'..'wn.__..__.__.___ 

### Lead 1.5 

### 3.3

-_._.__..',.....,...,....."._. ,..._.-....._..._... 

### Asbestos 0.018 0.04 . 

### Bervllum ..._,-_..,_..~- 

### 0.001 

### 0.0022 Mercurv 

### 0.25 ,. 

### 0.55 Vinvl Chloride ..,...._"",,"' 

### 2.3 5.5 ,.~w_,_'w..____ 

### Fluorides 7.5 16 ~-"'----"-''' ...,,_.._- -~.__._,.__._.._._....."-,,_...',,..._- Sulfuric acid mist 17 

### 38 Hvdroaen sulfde ,."._--"..,- 

### 25 55 T otal r~cl.Icf!,rl,s--l!rL!rggpRQllf'!ç!S,""".".,_'""'_ 

### 25 55 Reduced sulfu~ compoi¿nds_ 

### 25 55

2

186 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 92, .,...... ." "..' . . .. r. ~ _ _ ,._ 

### "r ,~

Administrator Jackson PSD sip Call - EPA-HQ-OAR-201 0-0107 September 30, 2010
301.3 a new source or modification subject to Best Available Control Technology for any 

### pollutant shall apply Best Available Control Technology for any other affected pollutant emitted from the new source or modifcation in an amount greater than 50% of the levels in Section 301. 1 if the Air Pollution Control Offcer should so require. 

### c) Identify provisions of law, including the SiP, that limit the applicabilty of the PSD program to pollutants identified at a specific point in time, and therefore not to GHGs There are no such provisions. 

## d) Indicate whether the SiP includes any general authority for the state to issue PSD permits that meet EPA requirements Section 40001 of the California Health and Safety Code directs and authorizes the District to 

### adopt and enforce all rules necessary to achieve and maintain federal ambient air quality

standards, as well as to enforce applicable provisions of federal law. This provision includes 

### the authority to regulate GHGs since, as discussed in the September 2, 2010 Proposed Findings, EPA has recently made Endangerment and Cause of Contribute findings relative 

### to GHGs, and has also taken other steps to regulate these pollutants under the Federal 

### Clean Air Act (CM). Section 42300(a) of the Health and Safety Code authorizes the District to implement a permit program, and Section 42301 (b) also specifically requires that the permit program adopted by the District require that it deny permit applications unless it is 

### satisfied that the facility will comply with all provisions of the state clean air laws, including the requirements in section 40001. Specifically, the code sections state: 

### 40001 (a) Subject to the powers and duties of the state board, the districts shall adopt and enforce rules and regulations to achieve and maintain the state and federal ambient 

### air qualiy standards in all areas affected by emissions sources under their jurisdictions,
and shall enforce all applicable provisions of state and federal law. 

### 42300(a) Every district board may establish, by regulation, a permit system that requires. . .that before any person builds, erects, alters, replaces, operates or uses any 

### article, machine equipment, or other contrivance which may cause the issuance of air contaminants, the person obtain a permit to do so from the air pollution control officer of the district. 

### 42301 Purpose of permit system - A permit system established pursuant to Section 42300 shall do all of the following: 

### 42301 (b) Prohibit the issuance of a permit unless the air pollution control officer is satisfied, on the basis of criteria adopted by the district board, that the article, machine 

### equipment, or contrivance wil comply... The District's regulations meet these statutory mandates. Specifically, Rule 201, section 

### 303.1 of the Sip3 requires the APCO to deny an authority to construct or permit to operate unless the applicant demonstrates that the permitted equipment is "designed, controlled or

J Rule 201 - General Permit Requirements. Federal Register, July 13, 1987 (52 FR 26148) Web.
http://yoseinite.epa,gov/R9/r9sips.nsf/ AgelicvProyision/ ACQ~1!?lUi 42&J"7E i 8.S,.fS(j2_SF0051 C643/$file/SA+20 i .PD F?OpenElement accessed September 16, 20 I 0

3

187 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 93&,'- - :~",.:'.

Administrator Jackson PSD sip Call- EPA-HQ-OAR-2010-0107 September 30,2010

equipped" to operate without emittng or causing the emission of any air contaminants in 

### violation of any state or federal statutes enforceable by the District. This provision includes 

### the authority to deny a permit if it will result in the unauthorized emission of the GHGs recently identified by EPA pursuant to its authorities under the Federal CAA: 

### 303.1 The Air Pollution Control Offcer shall deny an authority to construct or permit to operate, except as provided in Rule 202 if the applicant does not show that every article, 

### machine, equipment or other contrivance, the use of which may cause the issuance of air contaminants, or the use of which may eliminate or reduce or control the issuance of 

### air contaminants, is so designed, controlled or equipped with such air pollution control equipment that it may be expected to operate without emittng or without causing to be 

### emitted air contaminants in violation of these rules and regulations or of such state or federal statutes as may be enforceable by the Air Pollution Control Officer. The inclusion of permit conditions to insure that state and federal statutes are not violated is standard procedure for any regulatory agency. Consequently, to adequately implement 

### Rule 201, section 303.1, the District must include all conditions necessary to limit GHG emissions, including BACT requirements. 

### e) Indicate any other provisions of the sip or state law that bear on the applicabilty of the PSD program to GHG sources The definition of "affected pollutant," cited above, includes all pollutants regulated by EPA 

### and ARB and all pollutants that either agency has determined may have a significant adverse effect on the environment or public health and welfare. EPA's recent 

### Endangerment and Cause of Contribute findings relative to GHGs, referenced in the September 2, 2010 Proposed Finding, meets this requirement. 

## f) Indicate whether the SIP, when read as a whole, does or does not apply the PSD program to GHG sources or authorize the SMAQMD to issue PSD permits for GHG sources that meet EPA requirements The inclusion of the broad definition of affected pollutant, coupled with the general authority 

### to attach additional permit conditions, supports the District's determination that the sip as a whole authorizes it to regulate GHGs through its permit process and to require that sources emitting GHGs apply BACT. 

### g) If the SiP, read as a whole does not apply the PSD program to GHG sources, indicate whether the SMAQMD plans to develop adequate authority to apply the PSD program 

### and submit it to EPA as a s~p revision by December 1, 2010. Although we believe that the SiP, read as a whole, applies PSD to GHG sources, we intend 

### to revise our PSD rule to clarify the language in Rule 202. We intend to revise the PSD rule 

### in January 2011. EPA has proposed a finding of substantial inadequacy and sip call under 

### Clean Air Act section 110(k)(5) concerning our sip PSD provisions. EPA proposed a deadline for corrective SiP revision. EPA requested comments on that deadline. In light of the importance of having clear PSD permitting authority for GHG sources in place as soon as possible, if EPA disagrees with our reading of the sip as a whole, we would not object to EPA's establishment of a deadline of January 31 i 2011.

4

188 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 94i~..';"-' 

# j

,~

Administrator Jackson PSD sip Call - EPA-HQ-OAR-2010-0107 September 30,2010

If you have any questions regarding these comments, please contact Brigette Tollstrup at (916) 

### 874-4832 or Kathrine Pittard at (916) 874-4809. Sincerely,

ç' " ",-' -- ..~'

K""'....,..P..,'_M~~ ~--t." ;: Larry Greene Executive Director SMAQMD 

# f

~: ~,:- 

# ( ~AAr- ~ ~ine Pittard District Counsel SMAQMD

cc. Deborah Jordan, EPA Region 9 Robert Fletcher, CARB Brigette Tollstrup, SMAQMD

5

189 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 95

## ,l' 

# Dregon

Theodore R. Kulongoski, Governoi' 

### Department of Environmental Quality Headquarers 811 SW Sixth A venue Portland, OR 972041390

(503) 229-5696 FAX (503) 229-6124 TT (503) 229-6993 

### October 1, 2010 

# fõ~(Ç~~~~~,
~ OCT - Ll 2010 ~ 

### Denns McLerrn Regional Administrator U.S. EPA, Region 10 Regional Administrator's Offce, RA- i 40 

### 1200 Sixh Avenue, Suite 900 Seattle, WA 98101 OFFICE. OF THE EXECUTIVE 

### RE: Request for Submission of Information from States Regarding Pennittg Authority for Greenhouse Gas Prevention of Significant Deterioration
Dear Mr. McLerran:

The United States Environmental Protection Agency (EP A) has proposed a fiding of 

### substantial inadequacy and State Implementation Plan (SIP) Call under Clean Air Act section 110(k)(5) concerning Oregon's SIP, on the basis that Oregon's current SIP 

### Prevention of Significant Deterioration (PSD) program wil not apply to greenhouse gases beginnng on January 2, 2011. Action To Ensure Authority To Issue Permits Under

the Prevention of Signifcant Deterioration Program to Sources of 

### Greenhouse Gas

Emissions: Finding of 

### Substantal Inadequacy and SIP Call, 75 Fed. Reg. 53,892 (Sept. 2, 2010). This letter responds to the requests in EP A's proposal.

EPA asked Oregon to inform EPA of the period of 

### time that Oregon would accept as the

deadline for submittal of 

### Oregon's SIP revisions in response to a SIP CalL. EPA has 

### proposed a rmding of substantial inadequacy and SIP Call under Clean Air Act section 

### 1 lO(k)(5) conceming Oregon's SIP PSD applicabilty provisions. Furer, EPA has proposed a deadline for Oregon's submittal of a corrective SIP revision. EP A has

requested Oregon's comments on the proposed deadline. In light of 

## the importce ofhaving in place as soon as possible PSD penntting authority for any greenhouse gasemitting SOllces that may be subject to PSD requirements, Oregon does not object to

EPA's esablishment ofa deadline of December 22,2010.

The remainder of 

### this letter responds to the EPA requests listed below.

(a) Confirm. with citations and a COPy of 

### the relevant language. that the SIP PSD aVfJlicabilty fJrovisions do not explicitly include GHG sources. 

### Oregon's SIP PSD program applies to "regulated air pollutants" as defined in OAR 340- 200-0020(99):



# ~ 190 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 96

## Dennis McLerr

Regional Administrator U.S. EPA, Region 10 Page 2


### "Regulated air pollutant" or "Regulated Pollutant":

(a) Except as provided in subsections (b) and(c) of 

### ths rule, means: (A) Nitrogen oxides or any VOCs; 

### (B) Any pollutant for which a national ambient air quality stadard has been promulgated; 

### (C) Any pollutant that is subject to any standard promulgated under'section 111 of the Act; 

### (D) Any Class I or II substance subject to a standard promulgated under or 

### established by Title VI of the Act; or (E) Any pollutant listed under OAR 340-244-0040 or 340-244~0230. (b) As used in OAR 340 division 220, regulated pollutant means pariculates,
volatile organic compounds, oxides of 

### nitrogen and sulfur dioxide. 

### (c) As used in OAR 340 division 224 any pollutant listed under OAR 340-244- 0040 or 340-244-0230 is not a regulated pollutant.

The list of 

### regulated air pollutants does not include greenhouse gases; therefore, Oregon's SIP PSD program currently does not apply to greenhouse gas emissions from greenhouse 

# gas sources. i ,

(b) Identify and provide a coPy otanv provision that specifically precludes PSD 

### applicabilty for GHG sources. There are no provisions in Oregon law that specifically preclude PSD applicabilty for greenhouse gas sources.


### i To be precise, Oregon's SIP PSD program applies to greenhouse gas sources, but not to emissions of greenhouse gases from greenhouse gas sources. That is, Oregon's program applies to emissions of criteria pollutants and other non-greenhouse gas pollutants from 

### greenhouse gas sources. However, it is our understanding that EPA's question was primarily aimed at confirming whether Oregon's program applies to greenhouse gas emissions from greenhouse gas sources, as opposed to non-greenhouse gas emissions 

### fl'm greenhouse gas sources.

191 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 97

## ,~' . .~,'. :'

Dennis McLerran 

### Regional Administrator U.S. EP A, Region lO Page 3
(c) Identify and provide a coPy of any provision of state constitution or other law,
including the SIP. that may be read to limit the applicabilty of 

### the PSD program to 

### pollutants identified at a certain point in time. and therefore not to GHGs. 

### The Oregon Environmental Quality Commssion (EQc) has adopted administl'tive rules to implement the Clean Air Act PSD program in Oregon, and EP A has approved those

rues as par of Oregon's SIP. However, the EQC's rules limit the applicabilty of 

### the 

### PSD program to "regulated pollutants" identifed in rule by the EQC, and the rules do not 

### currently include greenhouse gases. Unlike the adminstrative rues of some states, the EQC's rules do not purport to incorporate by reference futue EPA rues. The relevant 

### EQC rule is found at Oregon Administrative Rule (OAR) 340-200-0020(99) and is included above.

(d) Indicate, with citations and a copy of 

### the relevant language. ifanv. whether the SIP includes general authority for the state to issue PSD permits that meet EP A requirements. The Oregon SIP does not include general authority for Oregon to issue PSD pernts that 

### meet EP A requirements for applying the PSD program to greenhouse gases.

(8) Indicate. with citations and a coPy of 

### the relevant language, any other provisions of

the SIP or state law that may bear on the applicabilty of 

### the PSD prOí!am to GHGemitting sources. 

### There are no other provisions in the Oregon SIP or Oregon law that bear on the

applicabilty of 

### the Oregon PSD program to greenhouse gas emissions from greenhouse gas sources. See answers to (a) and (c) above. 

### (f Indicate the state IS interpretation as to whether the Sip, read as a whole. does or does not apply the PSD program to GHG sources or authorize the state to issue PSD permits for GHG sources that meet EP A requirements. This statement should be made bv the 

### commissioner or general counsel of the state environmental agency. or by the

counterpart at the local or tribal 

### level. or by the state Attorney General.

192 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 98~.- . . ._,~. . - .~. _.



## Dennis McLerr Regional Administrator 

### U.S. EPA, Region 10 Page 4


### The state's interpretation is that the current Oregon SIP, read as a whole, does not apply the Oregon PSD program to greenhouse gas emissions from greenhouse gas sources or authorize Oregon to issue PSD permits for greenhouse gas sources, based on greenhouse

gas emissions, that meet EP A requirements. 2

(g) If the sip, read as a whole, does not apply the PSD program to GHG sources or

authorize the issuance of 

### permits to GHG sources. indicate whether the state vÎans to 

### develop adequate authority to apply the PSD vrogram to GHG sources and to submit it to EP A as a SiP revision bv December 1, 2010. which is shortly before the date on which. as discussed below, EP A intends to finalize its findinf! of inadequacy and finalize the SIP 

# Call. '

Oregon plans to develop adequate autority to apply the Oregon PSD program to greenhouse gas emissions from greenhouse gas sources and to submit it to EP A as a SIP
revision by the end of 

### February 2011. As explained above, DEQ and the EQC must undertake a regulatory process to develop adequate authority. Oregon's PSD program 

### applies to regulated pollutants, and Oregon's administative rues define regulated pollutants by specifically listing the pollutats included in that defintion. Currently, that 

### definition does not include greenhouse gases. Therefore, to develop adequate authority, 

### DEQ and the EQC must amend Oregon's administrative nùes accordigly. DEQ plans to propose that the EQC amend its rules, in order to apply Oregon's PSD program to 

### greenhouse gases. The draf proposed rulemaking package was sent to your offce in early September for review. It is anticipated that the public comment period wil begin sometime between mid-October and early November, with public heaiIgs scheduled the

week of 

### November 15th. DEQ plans to propose that the EQC adopt the rule amendments

2 Because i am the Director of the Oregon Department of 

### Environmental Quality (a 

### position commonly referred to as "commssioner" in other states), and because I am 

### signing this letter, this sttement is therefore made by the head of Oregon's priary environmental agency.

193 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 99

## Dennis McLerr Regional Administrator 

### U.S. EPA, Region 10 Page 5 A"



### on Februar 17, 201 1. If the EQC amends the rules, DEQ wil submit a SIP revision for EP A approval. 

### Than you for the opportnity to comment. Sincerely, 

# VioL ~e¡,, i- cJ~

Dick Pedersen

Director, Oregon Department of 

### Environmental Quality 

### cc: Andrew Ginsburg, Oregon Department of Environmental Quaity 

### Paul Logan, Oregon Deparment of Justice

194 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 100.,,j

To protect, conserve and enhance the quality of Wyoming's 

### environment for the benefit of current and future generations. 

# Department of Environmental Quality

Dave Freudenthal, Governor John Carra, Director


### October 4. 20 10 

### Ms. Lisa Jackson, EPA Administrator Docket ID No. EPA-HQ-OAR-2010-0107 U.S. EPA, EPA West (Air Docket) 1200 Pennsylvania Ave., NW Mail Code 61 02T 

### Washington, D.C. 20460 

### RE: Greenhouse Gas Tailoring Rule - Docket ID No. EPA-HQ-OAR-2010-0107
Dear Ms. Jackson: 

### J am writing to you to submit comments on the Federal Register Notices, dated September 2, 2010, and titled 

### "Action to Ensure Authority to Issue Permits Under the Prevention of Significant Deterioration Program to. Sources of Greenhouse Gas Emissions: Federal Implementation Plan and Finding of Substantial Inadequacy and

SIP Call". Both of 

### these proposed rules solicit similar comments when it comes to state authority to regulate 

### Greenhouse Gases (GHG) through their respective SIP and PSD regulation. Wyoming intends to comment on 

### both the FIP and SIP Call in this same letter, since the Docket ID No. is the same. Clllently, Wyoming is listed in Table II-2 in the FIP Rule and Table IV-2 in the SIP Call Rule respectively. 

### SIP

Presently, the state of Wyoming has a SIP and a PSD program that enables the regulation of 

### major sources. 

### You have presumed that the existing Wyoming SIP enables the application of its PSD regulation to GHG as well, by listing Wyoming in Table 11-2. However, Governor Freudenthal has already stated in his letter to the EP A, dated September 9, 2010, that "The Wyoming Environmental Quality Act prevents the State of Wyoming 

## from regulating greenhouse gases." The actual statute is: . §35-1 1-213. Restrictions on state regulations related to greenhouse gas emissions. 

### (a) Effective March 31, 1999, neither the Department nor the Council shall propose or promulgate any new rule or regulation intended in whole or in part to reduce emissions as called for in the Kyoto protocol, from the residentiaL. commercial, industrial, electric utility, transportation, agricultural, energy or mining sectors.

(b) In the absence of a resolution or other act of the Legislature approving same, the director of 

### the 

### Deparment shall not submit to the United States Environmental Protectio~ Agency or to any other

agency of the federal government any legally enforceable commitments related to the Kyoto 

### Protocol.

ADMIN/OUTREACH (307) 777.7937 F i\X ¡ i7 .~\G 10 Herscliler Building . 122 West 25th Street . Cheyenne, WY 82002 . http://deq.state.wy.us

ABANDONED MINES AIR QUALITY INDUSTRIAL SITü5 LAND QUALITY SOLIO & HA:iVAflpori'Æ¡Sta~.ucpiøn (307) 7776145 (307) 1'77-7391 (307) 7l7nG9 (307) 777-7756 (307) 777l1~its (307) 777-7781 IA\iÎI-G:tf¡:: FA\(/i-:,G1C F/,X7ììSJIJ F;\X¡li-~;ßb.l FAXIO.!j73 FAXì7ì.SHl3 .;rr 

## ", ./ Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 101

### October 4, 2010



### Page 2 of3

(c) Nothing in this section shall be construed to limit or impede state or private participation in any on-going voluntary initiatives to reduce greenhouse gasses including, but not limited to, the United 

### States Environmental Protection Agency's Green Lights Program, the United States Department of 

### Energy's Climate Challenge Program and similar state and federal initiatives relying on voluntar participation. 

### (d) This section shall remain in effect until repealed by an act of the Wyoming Legislature or until

ratification of 

### the Kyoto Protocol by the United States Senate and enactment of federal legislation implementing the Kyoto Protocol. 

### Because the Wyoming Environmental Quality Act prevents the State of Wyoming from regulating greenhouse 

### gases, Wyoming needs to be moved to Table II-I in the FIP rule and Table IV.i in the SIP call rule, respectively. Further, U.S. EP A has proposed a deadline for the State's submittal of a corrective SIP revision.

U.S. EPA has requested the State's comments on the proposed deadline. In light of EPA's perception of 

### the

importance of 

### having in place as soon as possible a PSD permitting authority for any GHG-emitting sources that may be subject to PSD requirements, the State does not object to U.S. EP A's establishment of a deadline of 

### December 22,2010. 

### FIP Wyoming should remain the permitting authority for the non-GHG portion of any PSD permit administered, as well as any minor SOUlce permitting activities. To proceed with any other arrangement would signify a 

### nullfication of a long standing agreement between the EP A and the State of Wyoming on the current PSD 

### program and is imacceptable to Wyoming. Secondly, we support any "narowing of authority" on the pait of the EP A as it would tend to give the states and their regulated sources more time to understand the true 

### magnitude of these new rules as well as limiting the degree of federal involvement in our Title V permitting process. We strongly urge EP A to have its FIP procedures in place and ready to go on January 1,2011. Any FIP process 

### applicable to Wyoming must have a fiim deadline of pern1it review completion that is no later than the date at 

### which Wyoming would be ready to approve or issue a standard PSD pennit. This will ensure that new 

### constmction is not unnecessarily delayed. We also wish to convey our strong desire to work with EPA in the way in which the FIP will be applied to applicable sources in Wyoming. This could take the form of concurrent permitting by Wyoming and the EP A so that the two PSD permits can be issued together, ensuring that the criteria pollutants and greenhouse gases are included. 

### We also believe that close coordination between our respective permitting staffs is absolutely necessary and urge planning meetings to occur we1l before January 2, 2010 to assure a smooth transition. 

### We also offer the following comments in the event that the many petitions fied in opposition to the actions you are proposing to take are ignored by the comts.

196 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 102'~("~ r ~..-'



### October 4, 2010 

### Page 3 of3



### Federalism
When it comes to the Executive Order 13132 and the ideas of Federalism and future PSD SIP submittals and 

### any subsequent FIP, the Wyoming Environmental Quality Act states in its purose for state primacy: "it is

hereby declared to be the policy and purpose of 

### this (Wyoming Environmental Quality) act.. .to preserve and

exercise the primary responsibilities and rights of 

### the State ofWyoming(.)" See WYO. STAT. ANN. §35-11- 102. 

### As EP A proceeds with expedited SIP approval and FIP implementation, Wyoming cannot ascertain at this time 

### the job loss and cost to the state and her citizens of these rwes. It is also difficult at this time to determine the

potential impacts of this rule on small entities in each state. Without a clear understanding of 

### the BACT 

### requirements, EPA's permitting guidance and the actual content ofa FIP the full impacts to small entities is

hard to predict. We are disappointed that we must comment well ahead of 

### knowing whatEPA's BACT guidance will entaiL. 

### Combustion of Biomass Technical Issues

There is also a call for information (CFI) to solicit data on technical issues with the combustion of 

### biomass as a 

### fuel and their emissions with respect to PSD applicability and the BACT review process. There are curently no major sources in Wyoming that use biomass as a fueL. Therefore, our experience is limited in the area of biomass combustion and their emissions. 

### Thank you for your consideration of our comments. If I can assist you further, please feel free to contact me.

cc: Governor Freudenthal 

### Steve Dietrich, DEQ, AQD 

### Nancy Vehr, Attorney General's Office Tina Anderson, DEQ, AQD

197 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 103

# EXHIBIT 13

Attachment 3

198 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 104-_.:-:'''.- - /, '~c~ ....."..

natìonai assoCi 

### clean air



## GHG Permitting Programs Ready to Go by January 2nd

National Association of Clean Air Agencies

October 28, 2010 With the onset of greenhouse gas (GHG) permitting only two months away, every state but one is poised to ensure that sources can obtain preconstruction permits under the Clean Air Act come January 2, 2011. While most states already have the authority to permit GHGs under preconstruction permit - or Prevention of Significant Deterioration (PSD) - programs, EPA has identified programs in 13 states that need to revise their State Implementation Plans (SIPs) in order to gain authority to issue PSD permits for GHG emissions. Excepting only one, programs in all states on the list have indicated that 

### they will either revise their PSD rules by January 2, 2011 or very shortly thereafter, or accept a Federal Implementation Plan (FIP) that will give EPA authority to issue the GHG portion of PSD permits until state rules are revised. This provides that sources required to apply PSD controls to their GHG emissions 

### will be able to obtain the necessary permits and avoid construction delays. In August of this year, EPA proposed two companion rulemakings to ensure that authority to issue PSD permits for GHG emissions is in place by January 2, 2011. In the first action, Proposed Finding

of Substantial Inadequacy and sip Call,i EPA identified programs in 13 states that did not appear to have the authority to apply their PSD programs to GHG emissions ("Presumptive s~p Call List"). States on the Presumptive s~p Call List were asked to send a letter to EPA by October 4, 2010 confirming that GHGs are not included in their PSD programs and identifying a deadline for submitting s~p revisions to EPA for approvaL. The agency proposed allowing programs to identify a s~p submittal date as early as December 

### 22, 2010, or three weeks from issuance of the final sip CalL. In the second action, Proposed Federal Implementation Plan,2 EPA proposed to immediately promulgate a FIP for any program unable to submit sip revisions by the identified deadline, providing states a federal backstop in the event that they could 

### not change their own rules by January 2, 2011. Programs unable to revise their rules by January 2, 2011 have the option of choosing the earliest sip submittal date, allowing EPA to immediately promulgate a FIP.3 The National Association of Clean Air Agencies (NACAA), the association of air pollution control 

### agencies in 52 states and territories and over 165 metropolitan areas across the country, has reviewed and briefly summarized the responses of the programs on EPA's Presumptive s~p Call List.4 The letters summarized below are from programs in 14 states: the 13 identified by EPA in the Presumptive s~p Call List plus one state that asked to be added to the list. Of these, programs in 7 states indicated that they 

### anticipate revising their rules by January 2, 2011 or very shortly thereafter, while programs in 6 states 

### indicated that théy will accept a FIP to apply PSD requirements to GHG emissions. Only one state declined to revise its rules or accept the FIP. 1 75 Federal Register 53892. 2 75 Federal Register 53883. 3 The agency also indicated that authority to permit GHGs under Title V operating permit programs will be addressed separately at a later date. 4 All letters are available in Docket # EPA-HQ-OAR-2010-0107. The following summary includes responses from only those states that were identified by EPA as part of, or asked to be added to, the Presumptive sip Call List.

444 North Capitol Street, NW * Suite 307 '" Washington, DC 2ood~9 phone 202.624.7864 ~ faxizftßiIj\l¿"?Nß~ f,t~9R~eanair.org



# . É'xnlliri Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 105

### State-By-State Summary of GHG sip Call Letters

AGENCY SUMMARY OF RESPONSES Alaska 

## -l Alaska is currently in the process of revising its regulations to allow the state to comply with federal rules regarding GHG permitting, and anticipates that those revisions will be in effect by January 2, 2011. 

## -l The state anticipates submitting its sip revisions to EPA by December 22, 2010, 

### and asks to be dropped from the sip Call list upon submittaL. The state requests 

### parallel processing of its SiP revisions, and for notification if EPA is unable to approve the SiP revisions by January 2,2011. Pinal Co., AZ 

## -l Pinal Co.'s PSD program does not currently include GHGs. The county plans to amend its rules to inClude GHGs and submit SiP revisions to EPA. 

## -l Until then, the county asks for the implementation of a FIP to address GHGs under its PSD program, and will request delegation of the FIP. Arizona5 

## -l Arizona does not have the authority to permit GHGs under its PSD program, and does not agree that its program is therefore inadequate. 

## -l The state will accept the imposition of a FIP implementing PSD requirements for GHGs, and does not object to a SiP submittal deadline as short as 3 weeks from
the date of the final SiP CalL. Arkansas 

## -l Arkansas confirms its status as a state that does not currently have the authority to permit GHGs under its PSD program. 

### While the state plans to develop the authority to include GHGs in its PSD program, and to ask for parallel processing of its associated SiP revisions, it will not be submitting sip revisions by December 2010. 

## -l The state does not object to the shortest sip submittal deadline of 3 weeks 

### from the date of the final SiP Call, and subsequent implementation of a FIP to address PSD requirements for GHGs. The state prefers not to accept delegation
of the FIP. Sacramento, CA 

## -l Sacramento concludes, after further review, that its SiP does contain general authority to implement PSD requirements for GHGs. 

### Nonetheless, the district plans to revise its PSD rules for clarity in January 2011. 

## -l If EPA disagrees with the district's reading of its s~p as a whole as conferring authority to apply PSD requirements to GHGs, then the district would not object 

### to a sip submittal deadline of January 31,2011. Connecticut 

## -l Connecticut confirms that its SiP does not currently apply its PSD program to GHGs. The state intends to revise its PSD program to include GHGs, and will seek expedited processing of those regulatory revisions. 

### A public hearing on 

### the initial draft proposal is scheduled for October 18, 2010. The state requests parallel processing of its s~p revisions. -+ 

### The state does not object to a sip submittal deadline of March 1,2011. Florida -+ 

### Florida confirms that its SiP does not apply PSD requirements to GHGs; the state cannot develop adequate authority and submit sip revisions by December 2010. -+ The state does not object to a s~p submittal deadline of December 22, 2010, and subsequent implementation of a FIP to address GHG PSD requirements.
5 Excluding Maricopa Co., Pima Co., and Indian Country.

2

200 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 106Idaho

Kansas

Jefferson Co., KY

Kentucky

Nebraska

Clark Co., NV

Oregon

Texas ~C~

-+ Idaho confirms that its current sip does not authorize the issuance of PSD permits for GHGs. The state intends to incorporate GHGs into its PSD program, and will submit sip revisions after approval by its legislature (between April and June 2011). -+ The state requests a sip submittal deadline of December 22, 2010, and the subsequent implementation of a FIP to address PSD requirements for GHGs. -+ Kansas confirms that it does not currently have the authority to include GHGs in 

### its PSD permits. The state is in the process of revising its regulations to include 

### GHGs, and intends to publish the final rules in November 2010 with an implementation date of January 2, 2011. The state has requested parallel processing of its sip revisions, and submitted a draft to EPA on October 1, 2010. The final rule will be submitted as soon as possible after the close of public comments on October 26, 2010. -+ The state requests that EPA take action on its sip revisions no later than January 2, 2011. If EPA is unable to act in time and the state remains on the proposed sip Call list, the state requests the shortest possible sip submittal deadline of 

### December 22, 2010 or 3 weeks from the final sip Call, and subsequent implementation of a FIP to address PSD requirements for GHGs. If so, the state requests immediate delegation of the FIP. -+ Jefferson Co. is in the process of revising its PSD regulations to incorporate 

### GHGs. The district anticipates adopting the revised regulations prior to December 1, 2010, and requests parallel processing of its sip submittaL. -+ In the event that the district is unable to adopt the revised regulations by 

### December I, 2010, it would not object to a sip submittal deadline of January 1, 2011. -+ Kentucky intends to amend current regulations to incorporate GHGs into its 

### PSD program, and anticipates submitting sip amendments by January 1,2011. -+ The state proposes a sip submittal deadline of March 31, 2011. -+ Nebraska intends to adopt regulations to apply its PSD program to GHGs. A rulemaking is already underway, and the state anticipates final promulgation by January 2, 2011. The state requests parallel processing of its sip revision. -+ The state does not object to a sip submittal deadline of March 1, 2011. -+ Clark Co. submitted sip revisions concerning its PSD applicability provisions and 

### definitions earlier this year, though further revisions to incorporate GHGs are required. The county is in the process of amending its PSD regulations to incorporate GHGs, and anticipates submitting sip revisions to EPA by December 1, 2010. -+ If, due to unforeseen circumstances, the county does not submit its sip 

### revisions by December I, 2010, it would not object to a sip submittal deadline of July 1, 2011. 

### -+ Oregon confirms that its sip PSD program does not currently apply to GHGs. 

### The state plans to develop authority to apply its PSD program to GHGs, and submit sip revisions to EPA by the end of February 2010. -+ The state does not object to a sip submittal deadline of December 22, 2010. 

### -+ Texas does not believe that its SiP is inadequate because it does not include GHGs, and questions the legality of EPA's s~p Call proposaL. -+ The state does not believe EPA's proposed s~p submittal deadline is reasonable.

3

201 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 107Wyoming 

### -+ Wyoming indicates that its laws prevent the state from regulating GHGs, and asks to be moved to the sip Call List. -+ The state does not object to a sip submittal deadline of December 22, 2010, and subsequent implementation of a FIP to address PSD requirements for GHGs.

4

202 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 108."'-,.,:



# EXHIBIT 13

Attachment 4

203 l~ '~~

EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 109,r



### clean air nE~t1cn¿~ 

## States Moving Full Speed Ahead on Greenhouse Gas Permitting National Association of Clean Air Agencies

September 15, 2010

The vast majority of states are moving full speed ahead to begin permitting emissions of greenhouse gases (GHGs) under the Clean Air Act, and expect to complete revisions of state and/or local rules by, or within a few months after, January 2, 2011 - the date that GHG permitting under the Act's Prevention of Significant Deterioration (PSD) and Title V programs begins. Nearly 80% of states have indicated that they will be ready to permit the largest sources of GHGs by the time permitting requirements take effect. The U.S. Environmental Protection Agency (EPA) issued rules earlier this year regulating GHGs under the Clean Air Act, including rules that exempt smaller sources and subject only the largest GHG emitters to permit requirements. In response to calls from the states for more time to 

### revise state and local regulations to exempt smaller sources, the agency also delayed the commencement of GHG permitting until January 2, 2011. In December 2009, pursuant to the Supreme Court's 2007 decision in Massachusetts v. EPA that GHGs are an air pollutant under the Clean Air Act, EPA determined that GHGs do indeed contribute to air pollution that endangers public health and welfare. i Following on that finding, EPA and the U.S. Department of Transportation issued a final rule controlling GHGs from new motor vehicles and engines on April 1, 2010.2 Once GHGs become subject to regulation under the Clean Air Act, permitting 

### provisions under PSD and Title V are triggered, requiring the implementation of control technologies to 

### abate emissions of GHGs. In anticipation of this, EPA promulgated the final Johnson Memo Reconsideration3 in March 2010, which interpreted the phrase "subject to regulation" as occurring when an actual control requirement contained within a nationwide rule takes effect. Therefore, under the

### agency's interpretation, once GHGs became subject to regulation with promulgation of the final Iightduty vehicle rule, PSD and Title V permit requirements apply to GHGs as of January 2, 2011. The PSD and Title V Greenhouse Gas Tailoring Rule4 (Tailoring Rule) was promulgated in June 

### 2010 to address concerns regarding the crippling administrative burden that would result from issuing millions of permits to sources emitting only very small amounts of GHGs. The Tailoring Rule raised the thresholds for GHG permitting to include only the largest sources and extended the onset of GHG permitting in order to give states time to revise their own rules to include the Tailoring Rule requirements and exempt smaller sources. Most states are moving forward with legislative and/or regulatory processes to incorporate the Tailoring Rule provisions.

i Endangerment and Cause or Contribution Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act, 74 Federal Register 66496 (December 15, 2009). 2 Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule, 75 Federal Register 25324 (May 7, 2010). 3 Reconsideration of Interpretation of Regulations that Determine Pollutants Coyered by Clean Air Act Permitting

Programs; Final Action on Reconsideration of Interpretation, 75 Federal Register 17004 (April 2, 2010). 475 Federal Register 31514 (June 3, 2010).

444 North Capitol Street, NW ~ Suite 30/ " Washington, DC 200cfp4e phone 202.624./864 $ fax ~.~~.~3° St~i¡~anair.org Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 110.C',. _'.',

In the final Tailoring Rule, EPA asked states to send letters to the agency by August 2, 2010 with information regarding how the state intends to implement the Tailoring Rule. EPA asked each state to respond by indicating whether or not the state needs to undertake a regulatory or legislative process in order to incorporate the provisions of the Tailoring Rule, as well as the timeline for completing any such process. States were also asked to notify EPA if they do not have any authority to permit GHGs and, if not, to indicate whether or not they intend to revise their rules to include GHGs. The National Association of Clean Air Agencies (NACAA), the association of air pollution control 

### agencies in 52 states and territories and over 165 metropolitan areas across the country, has reviewed and briefly summarized letters from all applicable states, as well as those from a number of local and 

### territorial air pollution control agencies. NACAA's analysis shows that the vast majority of states are working quickly to prepare for GHG permitting and incorporate the provisions of the Tailoring Rule into applicable state and local rules and State Implementation Plans (SIPs) as soon as possible. Nearly 80% of states expect to have rules in place by January 2, 2011 or shortly thereafter. Of the minority of states 

### that will not yet have rules in place by January 2, 2011 or shortly thereafter, most are working to incorporate the provisions of the Tailoring Rule, but will be delayed due to state legislative and/or 

### regulatory requirements. Below, NACAA provides a brief summary of each state's response to the questions posed by EPA, and includes all letters submitted to EPA by states pursuant to the agency's request in the final Tailoring Rule. The 57 letters summarized below, from 48 states and territories and 9 local air pollution 

### control agencies, provide a snapshot of the implementation plans of the states as of August 2010. Many 

### of these plans are subject to current regulatory and/or political processes. Three states - Nebraska, Nevada, and the District of Columbia - have not submitted Tailoring Rule letters to EPA as of September 

### 2010, though both Nevada and the District of Columbia implement delegated PSD programs under 

### federal regulations.s In California, local air pollution control agencies throughout the state are responsible for stationary source permitting, and the PSD program in most of California is implemented by EPA under federal regulations.

S Programs operating under the federal regulations include the provisions of the Tailoring Rule as of the date the final rule took effect.
2

205 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 111,~

AGENCY & DATE Alabama July 31, 2010

Alaska August 2, 2010

Arizona August 27, 2010

Arkansas July 26, 2010

Colorado July 29, 2010

Connecticut July 20, 2010

Delaware July 29, 2010 

### State-By-State Summary

SUMMARY OF RESPONSES -+ Alabama has the authority to permit GHGs under both PSD and Title V; no 

### revisions need to be made for this purpose. -+ State PSD regulations need to be revised to be consistent with the Tailoring
Rule thresholds. -+ The state plans to begin the rulemaking process to revise its PSD regulations 

### by August 22, 2010. The revisions should be considered for adoption in December 2010, and, if approved, submitted to EPA in January 2011. The 

### state has requested parallel processing for this sip revision. Title V regulations will be revised at a later date. 

### -+ Alaska needs to undertake a regulatory process in order to incorporate the provisions of the Tailoring Rule and comply with federal rules regarding GHG permitting. -+ The state has already initiated the rulemaking process, and anticipates that the regulations will be adopted and in effect by January 2, 2011. -+ Arizona does not have the authority to permit GHGs under its PSD and Title V programs. The state does not agree that its PSD program is inadequate because it does not apply to GHGs. -+ Completing the rulemaking and SiP approval process by January 2011 would be nearly impossible. 

### -+ Arkansas does not currently have the authority to permit GHGs under state law. -+ State PSD and Title V regulations need to be revised to be consistent with the Tailoring Rule thresholds. -+ The state estimates that it will take 10-18 months to revise the regulations, and will not make the January 2, 2011 deadline. -+ Colorado needs to revise its PSD and Title V regulations to incorporate the Tailoring Rule thresholds. -+ The state has begun the rulemaking process and hopes that regulatory 

### changes will be complete by the end of November 2010. Regulatory changes then need to undergo legislative review, which is expected to conclude by winter or spring 2011. The state requests that EPA limit approval of its PSD and delegated Title V program to match the GHG permitting thresholds under the Tailoring Rule. 

### -+ Connecticut does not currently have the authority to permit GHGs under its PSD or Title V programs. -+ The state intends to revise its regulations to include GHGs for both 

### programs, as well as to incorporate the Tailoring Rule thresholds for both its PSD and Title V programs. 

### -+ The regulatory adoption process generally takes 14-20 months. The state will try to expedite the process, but expects regulatory revisions by late summer/early fall 2011. 

### -+ Delaware does have the authority to interpret subject to regulation for both its PSD and Title V programs. 

### -+ However the state will also undertake rulemaking to explicitly add the

3
206 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 112

## ld,

Georgia

August 2, 2010 Tailoring Rule thresholds to its regulations. -+ The state has begun the regulatory process, and anticipates finalizing the 

### revised regulations by the end of 2010 with a compliance date of January 2, 2011. -+ Florida does not have the authority to permit GHGs under either its PSD or Title V programs, and cannot automatically interpret subject to regulation. 

### -+ The state needs to amend its regulations to incorporate GHGs into its permitting programs, but cannot at this time estimate how long this will 

### take. -+ Georgia intends to adopt EPA's interpretation of subject to regulation for both its PSD and Title V programs, and will do so by undertaking a rulemaking process. -+ The state anticipates completing rulemaking for both PSD and Title V by, January 1, 2011. 

### -+ Hawaii currently has the authority to permit GHGs and can implement the Tailoring Rule thresholds under its delegated PSD program. The state also has the authority to permit GHGs under its Title V program. 

### -+ Rule changes are required in order to apply the definition of subject to regulation for the state's Title V program. -+ The state estimates that the Title V regulatory changes will be completed by
the end of 2011. 

### -+ Idaho must undertake a regulatory/legislative process in order to incorporate GHGs as subject to regulation, as well as to incorporate the provisions of the Tailoring Rule. -+ The state expects to complete the process by late March/early April 2011. -+ Illinois has the authority to permit GHGs consistent with the Tailoring Rule provisions under its delegated PSD program. -+ The statute and regulations governing its Title V program need to be revised 

### in order to incorporate the Tailoring Rule thresholds and update the fee structure. State regulations will also be revised to ensure that smaller sources do not require permits under state law. -+ The state anticipates that the Title V legislative revisions will be completed in 

### spring or summer 2011, with regulatory revisions following shortly thereafter. -+ Indiana currently has the authority to permit GHGs under both its PSD and 

### Title V programs, and intends to apply EPA's definition of subject to regulation. 

### -+ PSD and Title V regulations need to be revised in order to incorporate the Tailoring Rule thresholds. 

### -+ The state plans to use emergency rulemaking as an interim measure to make the Tailoring Rule thresholds effective by January 2, 2011. A permanent, expedited rulemaking process is expected to be completed in March 2011. 

### -+ Iowa needs to undertake a rulemaking process in order to adopt the Tailoring Rule definition of subject to regulation for both its PSD and Title V programs. -+ The state plans to finish rule revisions and submit these to EPA for inclusion in its SIP by the end of December 2010. Florida July 2, 2010

Hawaii July 28, 2010

Idaho July 28, 2010

Illinois July 29, 2010

Indiana July 23, 2010

Iowa July 20, 2010

4

207 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 113. ,'" ..~ .'. .'.' , . .-'. ~.' _. L ~ _ _ . 

### "r

Kansas -+ August 2, 2010 -+ Kentucky -+ July 27, 2010 -+
Louisiana -+ August 2, 2010 -+ Kansas needs to revise its regulations in order to implement the Tailoring Rule provision for both its PSD and Title V programs. The state estimates that regulatory changes will be completed by April 1, 

### 201l. 

### Kentucky intends to amend current regulations to adopt the definition of subject to regulation for both its PSD and Title V programs. 

### The state anticipates finalizing regulatory changes and submitting SiP revisions to EPA by the beginning of December 2010. Louisiana rules do not appear to prohibit permitting GHGs under its PSD and Title V programs. The state intends to apply the meaning of subject to regulation consistent 

### with the Johnson Memo Reconsideration without regulatory changes; however PSD and Title V regulations need to be revised in order to incorporate the Tailoring Rule thresholds. -+ If it undertakes fast track rulemaking, the state could have final rules by 

### December 20, 2010, though the effective date could be delayed. -+ The state also needs to amend other state regulations in order to revise thresholds for small source exemptions; these revisions will not be final by 

### January 2, 201l. -+ Maine has the authority to implement PSD and Title V permitting for GHGs.
-+ Certain regulatory changes need to be made in order to incorporate the Tailoring Rule thresholds. -+ The state expects that regulatory changes will be adopted before January 2, 

### 201l. -+ Maryland intends to amend its regulations consistent with the Tailoring Rule 

### thresholds contained in the definition of subject to regulation for both its PSD and Title V programs. PSD regulations will also be amended to clarify that sources are subject to the Tailoring Rule provisions. -+ The state anticipates completing rulemaking by January 2, 2011. -+ Massachusetts currently implements a delegated PSD program. 

### -+ GHGs are not currently a regulated pollutant under its Title V program. The state needs to undertake a rulemaking process in order to adopt the
definition of subject to regulation and incorporate the Tailoring Rule thresholds for its Title V program. 

### -+ The goal is to provide regulatory language for public review during the first half of 2011. 

### -+ Michigan intends to interpret subject to regulation as defined in the Tailoring 

### Rule; no rule changes are required to incorporate the Tailoring Rule requirements for its PSD program. -+ The state needs to undertake a rulemaking process in order to amend its rules to incorporate the Tailoring Rule provisions under its Title V program. 

### -+ The rulemaking process normally takes 12-18 months, and the state anticipates completing this process before July 1, 2012. -+ Minnesota implements a delegated PSD program, and no changes are required to incorporate the Tailoring Rule provisions. -+ Title V rules need to be revised in order to incorporate the Tailoring Rule thresholds. Various rule requirements for state-only permits may also be Maine August 5, 2010

Maryland August 2, 2010



### Massachusetts August 2, 2010

Michigan July 27, 2010

Minnesota June 23, 2010

5

208 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 114'~',&~' "'. .,. -:l?:,..:'. ,

modified.



# ~ The state expects to initially use an expedited rulemaking process to 

### complete regulatory changes for its Title V program by January 2, 2011. It will then need to undertake a traditional rulemaking process beginning in early 2011, and expects to have final rulemaking finished by mid/late 2012. Mississippi 

# ~ Mississippi needs to amend its regulations in order to implement the July 28, 2010 Tailoring Rule provisions for its PSD and Title V programs.



# ~ The state expects that the regulatory amendment process should be 

### completed by January 2,2011, pending public interest. Missouri 

# ~ Missouri needs to amend its regulations in order to incorporate the Tailoring July 27, 2010 Rule thresholds for its PSD and Title V programs.



# ~ The state is currently reviewing the final Tailoring Rule and state regulations to determine the necessary changes, and will then begin the rulemaking process. The process usually takes 12-18 months for permanent rules; the state may be able to propose emergency rulemaking, though rules would only then be effective for 180 days. Montana 

# ~ Montana's existing rules and regulations provide 

### the framework for August 20, 2010 implementing its PSD and Title V programs consistent with the Tailoring Rule provisions. New Hampshire 

# ~ New Hampshire needs to undertake a rulemaking process in order to July 30, 2010 incorporate the Tailoring Rule thresholds for both its PSD 

### and Title V programs.



# ~ The state has initiated a rulemaking process, and expects to complete it in December 2010, with an effective date of January 2, 2011. New Jersey 

# ~ New Jersey implements a delegated PSD program. July 30, 2010 

# ~ For its Title V program, the state intends to apply EPA's definition of subject to regulation, and does not need to undertake a regulatory or legislative process in order to do so.



# ~ In the future, the state may specifically add the 100,000 tpy threshold to the Title V major source definition as a matter of clarification. New Mexico 

# ~ New Mexico needs to amend is PSD and Title V rules in order to incorporate June 24, 2010 the Tailoring Rule requirements.



# ~ The state intends to request a hearing in November 2010, and expects rule revisions to be effective by January 1, 201l. New York 

# ~ New York has the authority to permit GHGs under both its PSD and Title V August 11, 2010 programs.



# ~ Though the state is currently not PSD SIP-approved, it has submitted a s~p and is awaiting final approval; therefore the letter addresses relevant PSD questions in anticipation of approvaL.



# ~ The state will interpret subject to regulation in the same manner as EPA, and intends to undertake rulemaking in order to implement the Tailoring Rule approach for both its PSD and Title V programs.



# ~ The state has initiated a formal state rulemaking process, and seeks to finish in less than one year. North Carolina 

# ~ North Carolina needs to undertake a rulemaking process in order to August 2, 2010 incorporate the Tailoring Rule thresholds under its PSD program.



# ~ Its Title V program automatically incorporates the federal definition of major

6

209 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 115source; the state will review regulations, including fees, to ensure sufficient resources to permit GHGs under Title V.



# ~ The state has begun the rulemaking process for PSD. The earliest completion 

### date is January 2, 2011. However if there are letters of objection the rule will 

### be forwarded to the next legislative session; if so, it may take as long as summer 2011 for the rules to take effect. North Dakota6 

# ~ North Dakota intends to apply the definition of subject to regulation under June 21, 2010 

### both its PSD and Title V programs, and will implement the definition as of January 2, 2011.



# ~ The state will also update state rules to incorporate the definition of subject to regulation.



# ~ The process of updating state rules has already begun and is expected to be

completed by April 1, 2011. Ohio 

# ~ Ohio needs to modify its PSD and Title V rules in order to permit GHGs July 26, 2010 consistent with the Tailoring Rule.



# ~ The state has begun the rule 

### making process, which could be completed by December 2010 if there are no delays. Oklahoma 

# ~ Oklahoma regulations could support an interpretation that the state does July 15, 2010 have the authority to permit GHGs under its PSD and Title V programs.



# ~ State rules for PSD and Title V need to be revised in order to incorporate the Tailoring Rule thresholds.



# ~ The state plans to initiate a rulemaking process. 

### It will not be possible to have rules in place by January 2, 2011. The earliest date that rules could be in place is July 2011, but it may be as long as July 2012 if the rulemaking process results in unexpected problems. Oregon 

# ~ Oregon needs to undertake a regulatory process in order to include GHGs as July 29, 2010 a regulated pollutant under its PSD program and incorporate the Tailoring Rule definition of subject to regulation.



# ~ The state expects to complete its regulatory process on February 17, 2011 and submit s~p revisions to EPA. Pennsylvania 

# ~ Pennsylvania has the authority to apply the Tailoring Rule definition of August 4, 2010 

### subject to regulation without making any regulatory or legislative changes for both its PSD and Title V programs. Puerto Rico 

# ~ Puerto Rico needs to amend its regulations in order to incorporate the July 29, 2010 Tailoring Rule thresholds for its Title V program.



# ~ A public hearing for the proposed Title V amendments is expected by December 2010. Rhode Island 

# ~ Rhode Island has the authority to permit GHGs. August 3, 2010 

# ~ PSD and Title V regulations need to be revised in order to incorporate the Tailoring Rule thresholds.



# ~ The state anticipates adopting the necessary regulations before January 2, 2011. South Carolina 

# ~ South Carolina needs to revise its regulations in order to incorporate the August 2, 2010 Tailoring Rule thresholds for both its PSD and Title V programs. 6 On July 29, 2010, North Dakota submitted a follow up letter clarifying that nothing in the initial, June 21, 2010 letter, summarized above, was intended to waive the state's right to challenge the legality of any EPA rule or action.

7
210 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 116'.~'.'; . .~d'

-+ As a temporary measure, the South Carolina legislature enacted a Joint Resolutioni effective June 11, 20101 that makes the Tailoring Rule provisions 

### effective in South Carolina until the state revises its PSD and Title V regulations. -+ The temporary measure is already in effect; permanent regulatory revisions are expected to take at least 18 months. South Dakota -+ South Dakota needs to take action to incorporate the Tailoring Rule July 301 2010 definition of subject to regulation into its rules for both PSD and Title V. -+ 

### The state estimates that the adoption of the definition of subject to regulation and submittal of SiP revisions will take until at least January 2011. 

### Tennessee -+ Tennessee has the authority to permit GHGs under both its PSD and Title V July 301 2010 programs. -+ The state needs to undertake a rulemaking process in order to incorporate the Tailoring Rule thresholds for PSD and Title V. -+ The state is working to complete the regulatory revisions by January 21 2011. Texas -+ Texas does not have the authority to permit GHGs1 and does not intend to August 21 2010 interpret or amend its laws to compel GHG permitting. Utah -+ Utah intends to adopt the Tailoring Rule definition of subject to regulation July 29, 2010 for both its PSD and Title V programsi and needs to undertake rule changes in order to do this. -+ 

### The state plans to adopt final rule changes by end of December 2010. Vermont -+ 

### Vermont needs to amend its laws and regulations in order to incorporate the July 221 2010 Tailoring Rule thresholds. -+ 

### Statutory changes took effect July 11 2010. Regulatory changes are now underway and are expected to be completed by the end of 2010. Virginia -+ Virginia needs to revise its regulations in order to incorporate the Tailoring July 281 2010 Rule thresholds under its PSD and Title V programs. -+ The state anticipates, pending approvali using an expedited process to present proposed regulatory revisions in September 2010. Assuming the revisions are adopted they would take effect by January 21 2011. Washington -+ Washington needs to amend its general permitting and Title V regulations in July 291 2010 order to apply the Tailoring Rule definition of subject to regulation. -+ The state expects that the rulemaking process will be completedi and the amended rules in effecti by January 21 2011. West Virginia -+ West Virginia will undertake a legislative process in order to incorporate the July 301 2010 Tailoring Rule thresholds under its PSD and Title V programs. -+ Provisionallyi the state plans to apply the Tailoring Rule definition of subject to regulation in its PSD and Title V programsi while also pursuing rulemaking. -+ The state intends to send PSD amendments to its legislature in the 2011 

### session; if approvedi it anticipates the amendments would take effect in June 2011. The state intends to undertake emergency rulemaking to amend its Title V rules by early February 20111 and will also pursue a permanent rule

that will likely be effective in May 2012. Wisconsin -+ Wisconsin needs to revise its state rulesi and also plans to revise its SIP1 in July 281 2010 order to incorporate the Tailoring Rule provisions for both its PSD and Title V programs. -+ The state intends to promulgate emergency rules that will take effect no

8

211 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 117later than January 2, 2011, and estimates that permanent rulemaking will take 9-12 months. Wyoming7 -+ Wyoming is still evaluating its options, including regulatory and legislative July 30, 2010 processes, and wants to take time to understand the implications of each option. Butte Co., eA -+ Butte Co. does not implement a PSD program. July 30, 2010 -+ The district can apply the meaning of subject to regulation to its Title V program without rule changes, though it may in the future add the specific definition to its rules for clarification. Monterey Bay, eA -+ 

### Monterey Bay can implement the Tailoring Rule provisions under its PSD July 28, 2010 

### program without undertaking regulatory changes. 

### The district intends to revise its Title V regulations to mirror the Tailoring Rule. -+ The district plans to propose Title V revisions; no timeline given. Northern Sonoma -+ 

### Northern Sonoma Co. needs to revise its rules in order to incorporate the Co., eA Tailoring Rule provisions under its PSD and Title V programs. July 30, 2010 -+ The district intends to propose rules to its governing board by the end of 2010. Sacramento, eA -+ Sacramento needs to revise its rules to include GHGs under its PSD and Title July 27, 2010 V programs, and will also revise its rules consistent with the Tailoring Rule 

### thresholds. -+ The district plans to prepare rule changes and present them for adoption on January 27,2011. The district will also submit sip revisions to EPA. San Luis Obispo -+ San Luis Obispo Co. does not implement a PSD program. 

### eo.,eA -+ 

### The district needs to revise its Title V rules in order to incorporate the August 3, 2010 Tailoring Rule thresholds. -+ 

### The district anticipates presenting the revised rule for adoption on January 27, 201l. South Coast, eA -+ South Coast currently implements a PSD program under partial delegation. July 30, 2010 -+ The district intends to amend its local rules for PSD and Title V in order to incorporate the Tailoring Rule requirements. -+ The district anticipates presenting the proposed amendments to its local 

### rules by December 3, 2010, though it cannot guarantee final action on the proposed amendments by the end of 2010. Ventura Co., eA -+ Ventura Co. does not implement a PSD program. July 30, 2010 -+ 

### The district needs to revise its Title V rules in order to incorporate the Tailoring Rule requirements. -+ 

### The district intends to adopt rule amendments by December 14, 2010.
Louisville, KY -+ Louisville needs to revise its regulations in order to implement the Tailoring August 2, 2010 

### Rule definition of subject to regulation for its PSD and Title V programs. It will also need to revise a number of other regulations to clarify the scope of GHG regulations. -+ 

### The district anticipates adoption of the revisions by the end of December 2010.

7 Wyoming's letter in response to the Tailoring Rule request for information is summarized here. The state subsequently submitted a letter in response to EPA's proposed SiP Call indicating that it does not believe it has the authority to regulate GHG emissions.
9

212 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 118,&"

Clark Co., NV August 2, 2010 -+ Clark Co. does not have the authority to permit GHGs for PSD or Title V under its existing SIP-approved rule. The department is in the process of

submitting a sip revision to EPA that more closely tracks federal language for PSD and Title V and includes the term subject to regulation. 

### -+ The county needs to undertake a regulatory process in order t~ adopt the definition of subject to regulation in the Tailoring Rule. 

### -+ The county will work with EPA to determine the best approach for making sure that federally enforceable PSD and Title V permits are available beginning January 2, 2011.

10

213 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 119

# EXHIBIT 14

214 ~''-''

EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 120

### August 2, 2010



### Hon. Lisa Jackson Administrator 

### U.S. Environmental Protection Agency 1200 Pennsylvania Avenue, N.W. 

### Washington, DC 20460 

### Mail Code: l101A Byfax (202.501.1450), email O'ackson.lisa(qepa.f!ov), Us. mail, and hand delivery



### Dr. Alfredo "AI" Armendariz Regional Administrator U.S. Environmental Protection Agency, Region 6 1445 Ross Avenue, Suite 1200 

### Dallas, TX 75202 Mail Code: 6RA By fax (214.665.7113), 

### email (armendariz.al(qe/Ja.fGov). Us. mail, and hand delivery



### Dear Administrators Jackson and Armendariz: 

### In order to deter challenges to your plan for centralized control of industrial 

### development through the issuance of permits for greenhouse gases, you have called upon each state to declare its allegiance to the Environmenta Protection Agency's recently 

### enacted greenhouse gas regulations-regulations that are plainly contrary to United Stateslaw. 75 F' ~çl. Reg,31,S 1 ~k Jl ,525&3 l,s 82(JU1~~, iOl Q) (h~rei_l1af~-l'dtl~ "Tailoring Rule"). To encourage acquiescence with your unsupported findings you 

### threaten to usurp state enforcement authority and to federalize the permitting program of any state that fails to pledge their fealty to the Environmental Protection Agency (EP A). 

### On behalf of the State of Texas, we write to inform you that Texas has neither the authority nor the intention of interpreting, ignoring, or amending its laws in order to compel th.e permitting of greenhouse gas emissions. 

### You have declared that EP A's decision to enact automobile tailpipe emission limits for greenhouse gases pursuant to Title II of the federal Clean Air Act renders such 

### gases immediately "subject to regulation" for all puroses under that Act, including the

215 EPA Response to Stay Motion Exhibits 

### Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 121'~l-~



### Title I Prevention of Significant Deterioration (PSD) preconstruction permitting program 

### and the Title V operating permit program. Simultaneously, however, you recognize that 

### permitting greenhouse gases under the Act is "absurd." In the Tailoring Rule, EPA

states: "Here, we have determined, through analysis of 

### burden and emissions data as well 

### as consideration of extensive public comment, that the costs to sources and administrative 

### burdens to permitting authorities that would result from application of the PSD and title 

### V programs for GHG emissions at the statutory levels as of January 2, 2011 should be considered 'absurd results.'" 75 Fed. Reg. at 31,517. We agree. -: 

### In order to avoid the absurd results of EP A's own creation, you have developed a 

### "tailoring rule" in which you have substituted your own judgment for Congress's as to 

### how deep and wide to spread the permitting burden. Notably absent from your rules is 

### any evidence that they would achieve specific results; in fact, you assiduously (and correctly) avoid ascribing what environmental benefit may be achieved by mandating permits to emit a uniformly distributed, trace constituent of clean air, vital to all life, that is emitted by all productive activities on Earth. 

### Instead of acknowledging that congressionally set emission limits preclude the regulation of greenhouse gases, you instead re-write those statutorily-established limits stating, "For our authority to take this action, we rely in par on the 'absurd results' 

### doctrine, because applying the PSD and title V requirements literally (as previously 

### interpreted narrowly by EP A) would not only be inconsistent with congressional intent concerning the applicability of the PSD and title V programs, but in fact would severely undermine congressional purose for those programs. We also rely on the 'administrative 

### necessity' doctrine, which applies because constring the PSD and title V requirements 

### literally (as previously interpreted narrowly by EP A) would render it impossible for permitting authorities to administer the PSD provisions." 75 Fed. Reg. at 31,541-42. 

### Because of your view that greenhouse gases become "subject to regulation" on the first day it becomes illegal to manufacture a car not meeting the new tailpipe emission 

### limits for greenhouse gases (on Januar 2, 201 1), you insist that states may not issue permits after that date without considering greenhouse gas emissions. Your view is not enough. Applicable law provides to the contrary. Texas' stationary source permitting program encompasses all "federally regulated new sôurce review pollutants," including, "aiypollutant that ötherWseÎS--sü15jecftö 

### regulation under the (federal Clean Air Act)." 30 TEX. ADMIN. CODE § 116.12(14)(D). 

### The rules of the Texas Commission on Environmental Quality (TCEQ), like the EPA's rules, do not define the phrase "subject to regulation." In its Tailoring Rule, however, the 

### EP A promulgated-without notice-a definition of the previously undefined term, "subject to regulation." This new definition (attached hereto) specifically relates to the regulation of greenhouse gases, spans several Federal Register colums, and is over 600 words in length. Specifically, in the EPA's first phase of greenhouse gas reguation, this new definition raises the PSD permitting threshold for new and modified "major" sources of other pollutants from 100 tons per year to 75,000 tons per year (tpy) of CO2 equivalent (C02e) emissions.

216 EPA Response to Stay Motion Exhibits 

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### In the Tailoring Rule you have asked TCEQ to report to you by August 2, 2010,

whether it would "interpret" the undefined phrase "subject to regulation" in TCEQ Rule 

### 116.12 consistent with the newly promulgated definition in EP A Rule 51.166, in all its specifics and pariculars. That is, you have effectively requested that Texas agree to 

### regulate greenhouse gases in the exact marier and method proscribed by the EP A. 

### In other words, you have asked Texas to agree that when it promulgated its air quality permitting program rules for pollutants "subject to regulation" in 1993, that Texas really meant to define the term "subject to regulation" as set forth in the dozens of paragraphs and subparagraphs of EP A Rule 51.166, first promulgated in 2010. The State of Texas does not believe that EP A's "suggested" approach comports 

### with the rule of law. The United States and Texas Constitutions, United States and Texas 

### statutes, and EP A and TCEQ rules all preclude TCEQ from declarng itself ready to require permits for greenhouse gas emissions from stationar sources as you request. 

### We start with constitutional diffculties. As noted, Texas' stationar source permitting program encompasses all "federally regulated new source review pollutants," 

### including "any pollutant that otherwise is subject to regulation under the (federal Clean 

### Air Act)." 30 TEX. ADMIN. CODE § 116.12(14)(D). This delegation of legislative authority to the EP A is limited solely to those pollutants regulated when Texas Rule 116.12 was adopted (1993) and last amended (2006). As the Texas Supreme Court has explained, "The general rule is that when a statute is adopted by a specific descriptive 

### reference, the adoption takes the statute as it exists at that time, and the subsequent amendment thereof would not be within the terms of the adopting act." Trimmer v. 

## Carlton, 296 S.W. 1070 (1927). Thus, in order for Texas Rule 116.12 to pass constitutional muster, it must be limited to adopting by reference the definition of "subject to regulation" in existence when Rule 116.12 was last amended in 2006. In other words, Texas Rule 116.12 canot delegate authority to the EP A to define "subject 

### to regulation" in 2010 to include pollutants that were not "subject to regulation" in 2006. 

### For example, the Texas Solid Waste Disposal Act defines "hazardous waste" as 

## "solid waste identified or listed as hazardous waste by the administrator of the Environmental Protection Agency under the federal Solid Waste Disposal Act." When

. 

### this delegatî6ffóf legislatiVe' äiithö-tifY'wascnälleïigeâ;irwas upnelâ'õy Texasl-lûgnesr-" 

### court, but only because the cour found that "the reference to the federal act in section 361.003(15) adopts by reference the act and the regulations promulgated thereunder 

### which were in effect on July 30, 1991, the date section 361.003(15) of the Texas Solid Waste Disposal Act was enacted. .." Ex parte Ellott, 973 S.W.2d 737, 741 (Tex. App.-Austin 1998, pet. retd). As the Ellott court explained, "We acknowledge that section 361.003(15) may be read to say that the legislatue has delegated to the EPA the 

### power to define hazardous waste under the THSC (Texas Health & Safety Code) and that 

### definition may change from time to time at the will of EP A without intervention or 

### guidance from the legislature." The court noted, however, that "(s)uch a constrction would in fact place in doubt the constitutionality of this provision," and therefore, the

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### court would "not construe, in this case, the adopting statute as attempting to adopt futue 

### laws, rules or regulations of the federal governent." The same analysis applies here: TCEQ Rule 116.12 canot delegate authority to the EPA to define "subject to regulation" in 2010 to include pollutats that were not "subject to regulation" in 2006. 

### In addition to constitutional limitations, the TCEQ is also precluded from adopting the EPA's newly promulgated definition of "subject to regulation" pursuant to 

### the express terms of the Texas Governent Code, which requires public notice of agency rulemaking. See, e.g., TEX. GOy'T CODE § 2001.023 ("A state agency shall give at least 

### 30 days' notice of its intention to adopt a rule before it adopts the rule."). Likewise, 

### TCEQ rules mandate notice and an opportity to be heard when substantive rules are enacted. See, e.g., 30 TEX. ADMIN. CODE § 20.3. Like Texas law, federal law also requires notice and hearing before Texas can revise its State Implementation Plan (SIP). 

### See Clean Air Act § 110(1); 42 U.S.C. § 7410(1) ("Each revision to an implementation 

### pIan submitted by a State under this chapter shall be adopted by such State after reasonable notice and public hearing."). When the TCEQ promulgated Rule 116.12 in 

### 1993, or even when it last amended the rule in 2006, it had no intention of enacting a permitting program for greenhouse gases. Consequently, TCEQ had no reason to (nor did it) give public notice of any such intent. Obviously, Texans concerned with 

### greenhouse gas permitting could not have known to participate and comment on the decision to require permits for pollutats "subject to regulation" in 2006, when the EP A 

### first discovered greenhouse gases were "subject to regulation" in 2010. It should go 

### without saying that the nearly infinite expansion of Texas' permitting programs to include greenhouse gases with no state-level ru1emaking at all would not satisfy Texas or federal law requiring notice and an opportity to be heard.

Perhaps more fundamentally, however, the EPA itself 

### has not undertaken a proper 

### rulemaking to require all SIPs to include the definition of "subject to regulation" it has 

### just promulgated. This revision to EP A's Par 51 rules-which layout the requirements 

### for approvable SIPs-were preceded by no proposal whatsoever. Rather, this new requirement first appeared in the EPA's final notice anouncing the "Tailonng Rile," and accordingly, has not been properly adopted. See Clean Air Act § 307(d)(1)(J); 42 U.S.C. § 7607(d)(1)(J) (requiring formal rulemaking procedures in order to establish any requirement under the PSD program).

And 

### even if EPA provided proper notice and the oppOrtnity to cofrent,EPA canot lawfully adopt any rule that directly and immediately changes Texas' permit 

### program in any respect-much less to expand the reach of the program so far as to be deemed "absurd." Clean Air Act Section 166(a) sets fort the SIP revision process for

"other pollutants" under the PSD program. The only sensible interpretation of the Clean 

### Air Act is one that requires the EPA to promulgate a National Ambient Air Quality Stadard (NAAQS) for greenhouse gases before the EPA can require PSD permitting of 

### greenhouse gases. Thereafer, pursuant to the express terms of the Clean Air Act, states are provided with 21 months after EP A undertakes a proper rulemaking to add that new 

### pollutant to their SIP. Clean Air Act § 166(b), 42 U.S.C. § 7476(b) ("Within 21 months after such date of promulgation such plan revision shall be submitted to the

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### Administrator"). EP A, however, has not developed a NAAQS for greenhouse gases, has



### not undertaken a rulemaking to promulgate corresponding regulations, and has not allowed any time for a state response. 

### In addition to circumscribing the statutory 21 -month review and implementation process afforded the states, EP A is also circumventing the statutory one-year review and 

### revision process afforded Congress, which specifically states, "Regulations referred to in subsection (166)(a) of this section shall become effective one year after the date of

promulgation." The purose of 

### this one-year delay is to allow Congress the opportunity 

### to review (and approve or revise) new rules for "other pollutants" before states are required to implement them. 72 Fed. Reg. 54,112, 54,118 (Sept. 21, 2007); citng H.R. Conf. 95-564, at 151 (1977), 1977 U.S.C.C.A.N. 1502,1532. The path proposed by EPA painstakingly avoids such congressional oversight. 

### Even under normal SIP revision procedures (those not involving new pollutants), 

### the EP A has failed to provide Texas a reasonable time to submit a plan revision. Clean Air Act Section 110 sets forth EPA's authority to direct the requirements for approvable SIPs. Section 1 10(k)(5) allows states up to 18 months after proper adoption of new SIP 

### expectations before requiring their implementation by the states. See 42 U.S.C. § 

### 7410(k) ("The Administrator shall notify the State of the inadequacies, and may establish 

### reasonable deadlines (not to exceed 18 months after the date of such notice) for the submission of such plan revisions."). 

### Instead, EP A has demanded (in the absence of statutory authority) that Texas submit a schedule for the completion of statutory and rule revisions. But notwthstanding 

### the above-referenced statutory requirements regarding SIP revisions, EP A has declared 

### that it will "ensure" all sources of greenhouse gases, will be permitted under the final Tailoring Rule on Januar 2, 2011, by moving "quickly to impose a Federal 

### Implementation Plan (FIP) for PSD through 40 CFR 52.21." 75 Fed. Reg. at 3 1 ,526. 

### The federal Clean Air Act, however, clearly does not authorize such bureaucratic nimbleness. To the contrary, before EPA can implement a FIP, Section 110(c)(l) specifically requires the EP A to first make a finding that a state has failed to make a required submission, such as a revision under Section 1 10(k)(5), and even then, a FIP is 

### not effective until after the state is afforded additional time to correct the deficiency 

### identified by EP A. EP A has shown no intention of following the Clean Air Act procedures or a1lowing states a reasonable oppomÙiíwtochange theiI-ruTes~- 

### Each of these objections to EPA's demand for a loyalty oath from the State of Texas would suffice to justify our refusal to make one. Indeed, it is an affront to the congressionally-established judicial review process for EP A to force states to pledge 

### allegiance to its rules (or forfeit their right to permit) on the final day by which states must exercise their statutory right to challenge those same rules. Texas wil not facilitate EPA's apparent attempt to thwart these established procedures and ignore the law. In the 

### event a court concludes EPA's actions comport with the law, Texas specifically reserves 

### and does not waive any rights under the federal Clean Air Act or other law with respect to the issues raised herein.

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### We object to adopting the EPA's definition of "subject to regulation" without 

### directly raising any of our substantive objections to each of the four EP A rulemakings 

### that collectively comprise your greenhouse gas control initiative. Those objections wil 

### be resolved in litigation now pending in the D.C. Circuit Court of Appeals. Given that you are unable to ascribe the benefits of your greenhouse permitting regime, it is difficult 

### to see why you would refuse to stay the effectiveness of your greenhouse gas rules. We therefore ask you to stay the effectiveness of your rules until our challenge is resolved. Sincerely, 

# ry¿; tJ L 

# ~~

Bryan W. Shaw, Ph.D. Chairman 

### Texas Commission on Environmental Quality Greg Abbott

Attorney General of 

### Texas

1 i

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