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EXHIBIT 11

95 EPA Response to Stay Motion

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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 doing

economic analysis of regulations and have contributed to the EP A analysis of carbon capand-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 the

Clean Air Act rely in part on analysis done by myself and others at EP A of economywide 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, economywide 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

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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).

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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)"

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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

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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

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EXHIBIT 12

101 EPA Response to Stay Motion

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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

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102 EPA Response to Stay Motion

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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.

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103 EPA Response to Stay Motion

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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.

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104 EPA Response to Stay Motion

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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

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EXHIBIT 13

106 EPA Response to Stay Motion

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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

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jt , ~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

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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

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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 GHGemitting sources to PSD requirements. Interpretation of Regulations that Determine Pollutants

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Covered by Clean 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).

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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.

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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

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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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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

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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

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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 deal

of 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

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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

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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

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

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84. 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

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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.

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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 GHGemitting 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.

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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

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. 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 highestranked ("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.

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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

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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

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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,

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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: 41
Table 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. " ,..; ,-"?,.,.,,, d

revision.

'I.T~l:'dÄ~å~i~~ti

. prQn1ulgati()fJPf'; F/e¿C' '. ..J').r:;,

Dec. 23, 2010

State expects to submit a sip

revision prior to EPA's issuance of

a final sip call on Dec. 1, 2010. Inthat case, the state would not be

included in the sip call and EPA

expects to parallel process the

revision, and to approve the sip

revision by Jan. 2, 2011. If the

State fails to submit before Dec. 1,

2010, it will receive a Dec. 1,2011

deadline for sip submittaL.

State intends to seek delegation ofthe FIP.

Approved sip in place.

Promulgated FIP in

lace. Alaska I Dec. 1, 2011

Arizona - Pinal

County I Dec. 22,2010Arizona - Rest of

State (excluding

Maricopa

County, Pima

County, and

Indian Countv \ Dec. 22, 2010

before Dec. 1,

2010 Bv Jan 2, 2011 N/A

Arkansas i Dec. 22, 2010

Dec. 23, 2010

State intends to seek delegation of

the FIP.

State is considering seeking

deleaation of the FIP.

Promulgated FIP in

lace.

Promulgated FIP in

lace.

No permitting authority

will be in place as of

Jan. 2. Promulgated

FIP in place by Feb. 1,2011. No permit

applications are

expected to be

submitted or affected

during this 1-month

eriod.

Dec. 23, 2010

California -

Sacramento

Metropolitan

AQMD Jan. 31,2011

Feb. 1, 2011

136 EPA Response to Stay Motion Exhibits

Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 42
~X'l#j~

March 2, 2011

Connecticut March 1, 2011

Dec, 23, 2010

Florida Dec. 22, 2010

Dec. 23, 2010

Idaho Dec. 22, 2010

Dec. 23, 2010

Kansas Dec. 22, 2010

Kentucky -

Louisville Metro

APCD (Jefferson County) \ Jan. 1, 2011

Kentucky - Rest

of State \ March 31,2011

during Dec.

2010 EPA estimates by Dec. 1,2010 N/A

Dec. 14,2010 bv Jan. 2, 2011 N/A

Nebraska i March 1, 2011

Feb. 1, 2011 N/A

137

EPA is parallel processing sip

submission.

State intends to seek delegation ofthe FIP,

State is submitting a SiP revision

and EPA plans to parallel process.

State intends to seek delegation ofthe FIP.

County expects to submit a sip

revision prior to EPA's issuance of

a final sip call on Dec. 1,2010, inwhich case it would not be

included in the SiP calL. EPAwould then rule on the submission

by Jan. 2, 2011. However, if the

county fails to submit before Dec.

1,2010, it would accept a Jan. 1,

2011 deadline for sip submittaL.

EPA is parallel processing the sip

revision.

No permitting authoritywill be in place as of

Jan. 2. The state

expects that either a FIP

wil be in place on March

2, 2011, or a revised

sip will be in place

either before or shortly

after March 2, 2011.

Promulgated FIP in

lace.

Promulgated FIP in

lace.

Promulgated FIP in

place. sip is expected

to be approved by Jan.

15, 2011.

Approved SiP will be in

lace.

Approved sip will be in

lace.

No permitting authoritywill be in place as of

Jan. 2. Approved SiP

wil be signed by Feb. 1,

2011.

EPA Response to Stay Motion

Exhibits

--~g-ç"';~l:-;

Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 43
Nevada - Clark

Count

before Dec. 1,

2010 bv July 1,2011 N/A July 1, 2011

Dec. 23, 2010

Oreaon Dec. 22, 2010

Dec. 2, 2011

Texas Dec. 1, 2011

Dec. 23, 2010

Wvomin Dec. 22, 2010

Comments

County expects to submit a sip

revision prior to EPA's issuance of

a final sip call on Dec. 1, 2010, inwhich case it would not be

included in the sip calL. EPAwould then rule on the submission

by July 1, 2011. However, if the

county fails to submit before Dec.

1,2010, it would accept a July 1,2011 deadline for sip submittaL.

State intends to seek delegation of

the FIP.

State did not address a sip call

deadline, so will receive a deadline

1 year from date of promulgation of

the sip calL. There is no indication

that Texas will pursue rulemaking

activities until the pending litigation

is resolved.

No permitting authoritywill be in place as of

Jan. 2. Approved sip

revisions in place by

July 1, 2011. No permit

applications are

expected to be

submitted or affected

during this 6-month

eriod.

Promulgated FIP in

lace.

No permitting authoritywill be in place as of

Jan. 2, 2011. FIP

cannot be promulgated

until December 2,2011

at the earliest.

Promulgated FIP in

lace.

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 wrien

communicaüons and in meetings and wlecnferences. In some cases, the slte offciats have cauüoned that because the dates are dependent upon state

admintstüve and/or tegtslaüve processes, cerlain events coutd ocur - such as negative comments received during rutemaking or tegistative delays - that could

tead 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.

138

EPA Response to Stay Motion

Exhibits

Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 44
Table 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 TR

thresholds. State requirement

reflect TR thresholds on January Alabama I no I Jan. 18,2011 I yes I exoected bv Jan, 2011, 118,2011.

Federal requirements reflect TR

thresholds. Districtrequirements do not yet reflect California -

I no

TR thresholds, but are expected Mendocino

I before or during Jan. I 

Adoption is planned for no later than to do so by not later than Jan. Countv 2011 ves Jan, 2011, maybe sooner. 31,2011.

Federal and district

requirements reflect TR

es I I no I I thresholds.

Federal requirements reflect TR

thresholds. District

requirements do not yet reflect I 'i California - TR thresholds, but are expected North Coast before or during Jan. Adoption is planned for no later than to do so by not later than Jan. Unified no 2011 yes Jan. 2011, maybe sooner. 31,2011.

California -

Northern

Sonoma

I No I Dec. 14,2010 I yes I I Federal and state requirements Countv reflect TR thresholds.

I yes I I Federal and state requirements Colorado I no I Nov. 20, 2010 reflect TR thresholds.

139 EPA Response to Stay Motion

Exhibits

'. -;:.'.',~.':"'~ ... ~,. .

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? .'

es

Interprets "subject to regulation" to

incorporate GHG Tailoring Rule

thresholds, but also plans to explicitly

add the higher thresholds by

amending its regulations. Anticipatefinalizing regulatory changes by Jan, Federal and state requirements

no 2. reflect TR thresholds

Federal and state requirements

Dec. 29, 2010 I ves I expected bv Jan, 2011, I reflect TR thresholdsEmergency rule

effective Jan. 2,2011. Permanent

rule effective March Federal and state requirements

or A ril 2011. es reflect TR thresholds

Federal and state requirements

Dec. 22, 2010

I yes I I reflect TR thresholds Federal and state requirements

bv Jan. 2, 2011 I yes I I reflect TR thresholds Federal requirements reflect TR

thresholds. State requirements

will reflect TR thresholds in Feb.

Feb. 2, 2011

I yes I expected in May 2011. 12011. Federal and state requirements

before Jan. 2, 2011

I yes I expected by March 2011. i reflect TR thresholds Federal and state requirements

no reflect TR thresholds

Final EPA action on s~p revision Federal and state requirements

bv Dec. 2, 2010 i yes I expected bv Jan. 2011. reflect TR thresholds

140 EPA Response to Stay Motion

Exhibits

Delaware I vesGeorqia I no

Indiana I noIowa I noLouisiana I no

Maine I no

Marvland I no

Mississipp~ I no

Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 46
Missouri

Montana

NewHampshire

New Mexico -

Albuaueraue

New Mexico -Rest of State

New York

North CarolinaNorth Dakota

no

es

no

nono

unknown*

no

es

Emergency rule

effective Jan, 3,

2011. Permanentrule effective July 30, 2011. i ves

Jan. 2, 2011

bv Jan. 8, 2011

bv Jan. 2, 2011

bv Aua. 2011

Jan. 2, 2011

no

es

eses

no

es

no

EPA expects to approve a PSD sip

for state in Oct. 2010. This approvalwill be narrowed to only approve

permitting of GHG emissions at or

above the TR threshold. NY is stilldetermining whether it can interpret itsstate law to incorporate the TR

thresholds, or whether state law

revisions are reauired.

Final EPA action on SiP revision

expected by Jan, 2011.State also expects to adopt the TR

thresholds by state rule revision by

April 2011.

141

Federal requirements reflect TR

thresholds. State requirements

reflect TR thresholds on Jan. 3,

2011 through an emergency ruleeffective for 180 days.

Permanent rule effective by July30,2011.

Federal and state requirements

reflect TR thresholds.

Federal and state requirements

reflect TR thresholdsFederal requirements reflect TR

thresholds. Albuquerque

requirements will reflect TR

thresholds bv Januarv 8th.

Federal and state requirementsreflect TR thresholdsFederal requirements reflect TR

thresholds. Whether state law

currently allows the state to

impose TR thresholds is

unclear. State expects to reviselaw to clarify that it reflects TR

thresholds bv Auaust 2011.

Federal and state requirementsreflect TR thresholdsFederal and state requirements

reflect TR thresholds

~

EPA Response to Stay MotionExhibits

Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 47
Federal and state requirements

Ohio I no I Jan. 2, 2011 I yes I I reflect TR thresholds

Federal requirements reflect TR

Emergency rule thresholds. State requirements

effective by January reflect TR thresholds, as a result2, 2011. Permanent of emergency state rulemaking.

rule effective no Permanent rules changing state

earlier than July requirements will be2011, latest is July incorporated before the

Oklahoma no 2012. yes emerqency rules expirePennsylvania - Federal and state requirementsPhiladelphia yes no reflect TR thresholds

Pennsylvania - Federal and state requirementsRest of State ves no reflect TR thresholds

Federal requirements reflect TR

thresholds. State requirements

Final EPA action on sip revision will reflect TR thresholds Jan.

Rhode Island I no I Jan. 15,2011 I yes I 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 to Federal and state requirements

South Carolina I no I June11,2010 es also ursue re ulato chan es. reflect TR thresholds

Federal requirements reflect TR

thresholds. State requirementswill not reflect TR thresholds,

but are expected to do so by

South Dakota I no I bv Jan. 10,2011 I yes I I Jan. 10,2011.

142 EPA Response to Stay Motion

Exhibits

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..turther

action?

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? .

Tennessee no Feb. 15, 2011 yes

Tennessee has a mandatory 90 day

effective 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 be

effective on Feb. 15, 2011.

Federal requirements reflect TR

thresholds. State requirementswill reflect TR thresholds

Februarv 15, 2011.

Utah no Dec. 2010 yes

Federal and state requirementsreflect TR thresholds

Viroinia before Jan. 2, 2011

Final EPA action on SiP revision

expected in April 2011.

Federal and state requirements

reflect TR thresholds Vermont no end of 2010

no

Federal and state requirements

reflect TR thresholds

West Vir no

Federal and state requirementsreflect TR thresholds

Wisconsin no

Emergency rule

effective by Jan. 2,2011. Permanent

rule effective in

summer or fall 2011. es

Federal and state requirements

reflect TR thresholds

Note: The dates for state law actions included in these tables are reasonably expected based on statements by state officials to EPA regional offcials, 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.

143 EPA Response to Stay Motion

Exhibits

... ~.

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: 52
79 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: 53
H. 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 GHGemitting 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: 57
ild ,

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

Prr"l.a~" Hoi:j,cr"ø p.1p-ør Exhibits

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: 64
r

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

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r

~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

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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. ~

~

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U41 u;inu 1.4: U ( .O'lI1.J l:1I11 1.lHlJ KS SGl LAW ,L1B ~ 002/005 '

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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 incorporate 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: 69
04/03/97 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 consisted of installation rules of the National Board of Fire Underwriters 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 every

two 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 

cal code" was invalid as an abdication or unlawful delegation 'adoption of the "national electriof 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 or

to be promulgated after~ards by some subordinate 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 government

of the people of this state or for the management of their property, or that the legislature 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 property 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.

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04/03/87 14: OM "ö913 296 186:i KS seT LAW LIB 14 004/005

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, practicably 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 association 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 referenced. 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 therein. ' to the reader of the avaílabili ty of any material referenced

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

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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: 77
AIR 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 effect. 11 ' until the State took specific action to that

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: 81
Docket 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: 83
Uct.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,

~ewis Wallenmeyer, Director

.ß~~

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: 87
OCT-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: 88
0(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-OAR2010-0107

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
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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. ~ _ _ ,._

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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

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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' "

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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 of

having 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

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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
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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: 106
Idaho

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: 107
Wyoming -+ 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

nE~t1cn¿~ clean air

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: 115
source; 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

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'.~'.'; . .~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

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later 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

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,&"

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

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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

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Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 122
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

217 EPA Response to Stay Motion

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Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 123
'~t:~

r.,

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

218 EPA Response to Stay Motion

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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.

219 EPA Response to Stay Motion

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Case: 10-1131 Document: 1274376 Filed: 10/28/2010 Page: 125
'!,

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

220 EPA Response to Stay Motion

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