1 

### Summary of Methodology and Data Used to Evaluate Resource Requi rements at Alternative Greenhouse Gas (GHG) Permitting Thresholds

December 2011

1. Introduction This paper summarizes an assessment of the estimated resource requirements for permitting authorities to include greenhouse ga ses (GHGs) at several possible major source permitting thresholds in the title V and Preventi on of Significant Deterioration (PSD) permitting programs. The initial analysis was conducted to support the Ta iloring Rule, resulting in a Technical Support Document (T SD) found at EPA-HQ-OAR-2009-0517. 1 Utilizing the Tailoring Rule TSD as a starting point, this analysis exam ines burden impacts at five additional thresholds between 50,000 and 100,000 tons per year (tpy) carbon dioxide equivalent (CO 2 e). As before, the analysis was performed considering GHG emissions on a CO 2 e-basis, which represents the sum of the six primary GHGs with their respective global warming potentials (GWP) applied. Time and costs associated with permit activities ar e derived from existing Information Collection Requests (ICRs) for the title V and PSD programs. Estimates for the number of affected sources used in this analysis were obtained from the additional GHG thresholds evaluation, which can be found at EPA-HQ-OAR-2009-0517. 2

1 “Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate Resource Requirements at Alternative Greenhouse Gas (GHG) Permitting Thre sholds;” Prepared by EPA Staff; March 2010. 2 “Technical Support Document: Additional Threshold Analysis Greenhouse Gas Tailoring Rule,” October 12, 2011.2 2. Methodology for Estimating Permitting Burden Due to GHG Emission Sources

This section describes the basic methodology us ed to estimate the different types and quantities of permitting actions that would be a ffected by altering the th reshold levels for GHGs under the PSD and title V permitting programs. Fina l burden results summarized in Section 3 are based on the methodologies described in this section. In developing our methodology for the Tailoring Rule and future rulemaking, we examin ed different applicability options under which GHG emission sources would be regulated. These GHG applicability thresholds range from the thresholds established for Step 2 of the Tailoring Rule (100,000 tpy CO 2 e for new major sources and 75,000 tpy CO 2 e significance threshold for major modifications) 3 to 50,000 tpy CO 2 e for both, as we indicated that no source with emissions below 50,000 tpy CO 2 e and no modification resulting in a net GHG increas e of less than 50,000 tpy CO 2 e will be subject to PSD or title V permitting before April 30, 2016. 4

PSD Permits

Table 2-1 summarizes EPA’s estimate of modifications and new construction PSD permitting actions potentially affected by the addition of GHG as a regulated air pollutant at

different thresholds. These actions are br oken down by type of modification and new construction activity. Three types of modifications are included in this analysis: major modifications at major sources that are triggere d by increased conventional pollutant emissions,

3 Step 2 of the Tailoring Rule, which began on July 1, 2011, continued Step 1 and applied PSD and title V to new sources as well as existing sources that are not “anyway” sour ces and that emit, or have the potential to emit, at least 100,000 tpy CO 2 e. In addition, existing sources that emit or have the potential to emit at least 100,000 tpy CO 2 e and that undertake a modification that increases net emissions of GHGs by at least 75,000 tpy CO 2 e also became subject to PSD requirements. We refer to this Step 2 threshold as the 100,000/75,000 threshold. 4 75 FR 31516 (June 3, 2010).3 that also exceed the significance level for GHG; m odifications previously considered minor that become major modifications due to GHG emissions occurring at existing major sources; and modifications at newly major GHG sources due so lely to emissions exce eding the significance threshold for GHGs. For new construction, two type s of sources are listed – those that are major sources due solely to the emissions of GHG, a nd those which are classified as major due to conventional pollutant emissions , but also exceed the GHG signifi cance threshold (or ‘anyway’ sources).

The first line items in Table 2-1 for modifi cations and new construction present estimates of GHG-related permitting actions that would occur at ‘anyway’ sources; these are labeled in the

table as “Current Modifications – Add Additional GHG” and “New ly Constructed Major Sources – Add Additional GHG.” The August 2008 ICR for the New Source Review (NSR) program

estimates that 282 PSD and 519 non-attainme nt NSR permits are issued annually. 5

5 Prevention of Significant Deterioration and Non-Atta inment Area New Source Revi ew (Renewal), EPA ICR Number 123.23, OMB Control Number 2060-0003, 2008. A copy of this document is available in the docket for the final Tailoring Rule.4Table 2-1. Number of Permit Actions Exceeding GHG6Threshold OptionsThreshold100,000tpy major;75,000 tpysig.threshold90,000tpy major;75,000 tpysig.threshold80,000 tpymajor;75,000 tpysig.threshold75,000 tpymajor;75,000 tpysig.threshold70,000 tpymajor;70,000 tpysig.threshold60,000 tpymajor;60,000 tpysig.threshold50,000 tpymajor;50,000 tpysig.thresholdCurrent Modifications - Add Additional GHG 448 448 448 448 448 448 448Minor Modifications Becoming Newly Major 895 895 895 895 1,074 1,432 1,789Modifications at Newly Major Sources 22 30 40 45 48 60 142Modifications Total 1,365 1,373 1,383 1,388 1,570 1,940 2,379Newly Constructed Major Sources - Add AdditionalGHG 240 240 240 240 240 240 240Newly Constructed Major Sources 2 2 3 3 3 3 3Newly Constructed Sources Total 242 242 243 243 243 243 243Total 1,607 1,615 1,626 1,631 1,813 2,183 2,6226GHG threshold options are all based on tpy CO2e.5 Some of the facilities applying for nonattainment permits may al so undergo PSD actions at the same time, depending on the level of emissions for the attainment pollu tants. Although there is no way of accurately predicting which of the 519 nonattainment actions might also coincide with a PSD action related to GHG emissions, we believe it is likely that most will since they typically involve large emission sources; thus, it is assume d all nonattainment actions from the ICR annual estimate will also need a PSD permit as a resu lt of their GHG emissions. Therefore, in this analysis, to more accurately depict the number of PSD permitting actions occurring annually, it is assumed that all 801 permitting actions above i nvolve a PSD action. We estimate that 70% of these permit actions are modifications, or 560 of the 801 listed. 7 Further, 80% of these modifications are expected to involve combustion activities with GHG emissions exceeding the statutory thresholds and any of the significance thresholds we c onsidered, up to and including the 100,000 tpy CO 2 e threshold, thus requiring the inclusi on of GHG related requirements in a PSD permit. 8 This equates to 448 modificat ions annually. We believe that any of the modifications that would be subject to PSD due to the conve ntional emissions would also be large enough to increase GHGs by at least 75,000 tpy of CO 2 e. The 240 remaining annual permit actions, labe led in Table 2-1 as “Newly Constructed Major Source- Add Additional GHG”, are assumed to be construction of new major sources as determined by emissions of one or more NAAQS pollutants. Due to the size and emissions of sources currently subject to the PSD permitting program, it is believed all of these newly

7 Based on feedback received from the National Association of Clean Air Agencies (which estimated that some 65% of these permitting actions involve modifications); other commenters on the proposed tailoring rule (who generally said that most permitting actions involve modifications); and EPA program staff experience. See “NACAA Summary on Permitting GHGs Under the Clean Air Act”; Memorandum from Mary Stewart Douglas, National Association of Clean Air Agencies to Juan Santiago, EPA/OAQPS, September 3, 2009. 8 The 80% estimate was obtained by reviewing a sample of PSD modification permits to determine the number involving combustion that would emit GHGs. This revi ew showed that approximately 80% of PSD permitting actions involve combustion units of all types. These permitti ng actions are being permitted for, or taking limits for, NOx or some other combustion-related emission. These run the gamut of industrial activity, from power generators to manufacturing facilities, and many other types.6 constructed major sources will ex ceed each of the GHG thresholds we considered, including the 100,000 tpy CO 2 e, and will also need to include GHG-rela ted requirements in the PSD permit. In total, we estimate that all 688 major permitting ac tions mentioned above will need to factor in GHG requirements as indicated in Table 2-1. For permitting authorities, 50 additional burden

hours are estimated to include the GHG requirements in a permit. 9 For affected sources, approximately 222 additional burden hours are needed , based on the two line items in the current NSR ICR we expect to be impacted by the addition of GHG – approximately 120 hours to “obtain guidance on data needs” and 102 hours for th e “preparation of BACT analysis.” That is, the current NSR ICR indicates that on average, affected sources spend 222 hours for these two activities for their conventional pollutants. We e xpect that they will need to spend an equal

amount of time for these two activities for th eir GHG emissions. The sources will need to “obtain guidance on data needs” because they will be analyzing their emissions from GHG units and will need to prepare a separate BACT analysis for their GHG emissions, or else expand the BACT analysis they would otherwise do for their conventional pollutants to account for their GHG emissions. We believe that the remaining activities that the a ffected sources must undertake would not be apprecia bly lengthened by their need to include GHG emissions. According to the NSR ICR, approximately 74,591 minor permitting actions occur annually, including the following: 30% involve new minor sources, new synthetic minor sources, and synthetic-based modifications; 30% involve true minor modifications ; 20% involve netting-

9 A well-known gas with a familiar BACT process, such as NOx, requires an average of 20-30 burden hours to be included in a permit. As less is known regarding GHGs and the BACT decision process, expert staff judgment set the burden for permitting authorities to add GHG to permits at 50 hours. This is because determining BACT entails review and analysis of the available control techniques. For a well-known pollutant, the experience of the permitting authority allows it to efficiently consider the various options and narrow them down promptly to the one that should be considered BACT. Because no BACT determinations have ever been made, permitting authorities will need to invest additional time into reviewing the available technologies and selecting which one should be considered the best for the particular source. In the absence of any prev ious experience sel ecting BACT for GHG sources, we estimate that twice as much time w ill be necessary as for co nventional pollutants.7 based minor modifications; and 20% involve minor/administrative permit revisions. 10 We believe that a number of projects that could have taken limits or netted out of PSD review and thereby obtain a minor permit will now be required to apply for a major PSD permit, depending on the significance thres hold set for GHGs. These projects ar e identified in Table 2-1 under “Minor Modifications Becoming Newly Major. ” Combining the number of synthetic-based modifications (7,459) and netting-based modi fications (14,909) id entified in the ICR, approximately 22,368 of these actions could poten tially become major modi fications subject to

PSD review if their associated GHG emissions increases exceed the selected GHG significance threshold option. We did not count ‘new minor sources’ and ‘new synthetic minors’ because we have already accounted for them as potential major GHG sources if their PTE emissions exceed the selected GHG major s ource threshold option. Based on staff review of samples of minor s ource permits, it is estimated that 80% of the current minor modification actions likely invol ve combustion sources – totaling 17,894 actions of the total 22,368 minor modification actions. 11 Some of these actions may trigger the requirements of the PSD program depending on th eir GHG emission increases and the selected GHG significance threshold. In the absence of extensive experience involving GHG sources, we determined the number of these actions on the following basis: We assumed the following percentage of the total 17,984 actions would move to a major modification status due to GHG increases for each of the GHG significance threshold options considered in this analysis: 10% at 50,000 tpy CO 2 e; 8% at 60,000 tpy CO 2 e; 6% at 70,000 tpy CO 2 e; and 5% at 75,000 tpy CO 2 e. To determine these percentages, we considered the relative emissions of CO 2 emissions to NOx emissions at the current major modification signif icance level for NOx (40 tpy). For example, for an average natural gas combusti on boiler (a common industrial com bustion unit that is part of

10 See NSR ICR at page 11. 11 See footnote 6, above (basis for 80% calculation).8 many modification projects), a 40 tpy NOx em issions would coincide with a 56,000 tpy CO 2 e level. Since many combustion related projects ke ep just under the 40 tpy NOx level to avoid major modification status, we assume that the CO 2 e emissions for a similar project will be around the 50,000 tpy CO 2 e level. Based on the relationshi p in combustion-related emission

levels between NOx and CO 2 e just described, we believe it is reasonable to assume that a decreasing proportion of projects will be signi ficantly large enough, or they may emit GHGs close enough to the GHG significance level, to be able to limit their oper ations or net-out for GHGs like they can for NOx. In the absence of experience and quantitat ive information from commenters on the Tailoring Rule, we made th e following assumptions regarding how many of these formerly minor modification projects woul d be subject to major PSD review at the different GHG significance threshol d options: at the 50,000 tpy CO 2 e significance threshold, we estimate that 10% of these prev iously minor now major modificat ions will be covered by PSD; at 60,000 tpy CO 2 e and 70,000 tpy CO 2 e we estimate 8% and 6% resp ectively; and lastly, at the 75,000 tpy CO 2 e significance level we estimate that only 5% of these currently minor modification projects move into a major modification status for GHGs In addition to sources becoming subject to PSD requirements because of GHG emissions related to modifications, new construction will occu r that will require a PSD permit solely due to the source’s potential GHG emi ssions, identified in Table 2-1 as “Newly Constructed Major

Sources.” Based on the source da ta obtained from the GHG thresh olds evaluation, these newly constructed major sources involve both indus trial and commercial/residential facilities

. 12 The current NSR ICR notes that permitting authorities spend approximately 300 hours processing and issuing a new construction industrial source PSD permit. Sources spend almost 870 hours on average preparing for the same permit. The EPA estimates the commercial/residential permits to

12 “Technical Support Document: Additional Threshold Analysis Greenhouse Gas Tailoring Rule,” October 12, 2011.9 take 70% of the time required to complete an in dustrial permit, resulting in approximately 210 hours and 866 hours for permitting aut horities and sources respectively. 13 There are also many permit preparation activities that represent a fixed cost, such as preparation of notices and public hearings. Of the sources falling in this category, the number requiring PSD permitting will vary depending on where the thresholds for tri ggering PSD review (both major source and modifications thresholds) are established.

Table 2-2. Average Permitting Authority Burden per GHG PSD Permit Type

Activity Burden Hours per

Permit - Industrial Burden Hours per Permit - Commercial/ Residential a Attend Preapplication Meetings 36 27 Answer Respondent Questions 20 15 Log In and Review Data Submissions 16 12 Request Additional Information 8 6 Analyze for and Provide Confidentiality Protection 24 2 Prepare Completed Applications for Processing 38 29 File and Transmit Copies 8 6 Prepare Preliminary Determination 36 27 Prepare Notices for and Attend Public Hearings 40 30 Application Approval 48 36 Notification of Applicant of PA Determination 8 6 Submittal of Information on BACT/LAER to RBLC 19 14 Total Burden Hours per Permit 301 210

a In general, to process commercial/residential permits, perm itting authorities will have to spend 75% of the amount of time they spend on industrial permits, except they will have to spend even less time on confiden tiality due to the fact that most residential sources are not likely to be concerned a bout confidentiality. Commerci al/residential permits will be much simpler than industrial permits, but a large part of the permitting costs are fixed costs. For example, organizing and holding a hearing for a much simpler permit, compared to a more complex permit, nevertheless take almost as long because of the document preparation, travel, and organizational details.

13 See Tables 2-2 and 2-3.10 Table 2-3. Average Source Burden per GHG PSD Permit Type

Activity Burden Hours per Permit -

Industrial Burden Hours per Permit - Commercial/ Residential a Preparation and Planning Determination of Compliance Requirements 170 170 Obtain Guidance on Data Needs 120 120 Preparation of BACT Analysis 102 102 Data Collection and Analysis Air Quality Modeling 200 40 Determination of Impact on Air Quality Related Values 100 30 Post-construction Air Quality Monitoring 50 20 Permit Application Preparation and Submittal of Permit Application 60 60 Public Hearings 24 24 Revisions to Permit 40 40 Total Burden 866 606

a PSD permit applications for commercia l/residential sources will be significantly simpler than industrial source PSD permit applications. However, due to their inexperience, we estimate commercial/residential sources will take as long to complete their steps for their permit application as it will for industrial sources to complete their steps. Commercial/residential sources will, on average, have much le ss work for data collection and analysis. We estimate that they will have approximately 25% as much work in these areas (90 hours) compared to industrial sources (350 hours). However, commercial/residential sources will have to spend some time on data collection analysis is because some of them will have conventional pollutants that they emit in amounts that exceed the “significance” levels, but not the “major” levels, and they will have to an alyze those conventional pollutants. Our 25% estimate is based, in the absence of actual experience or quantitative data from commenters, on our judgment that significantly less than 50% of commercial/residential sources emit conventional pollutants in amounts that equal or exceed the significance levels, but those that do may have to spend more time than industrial sources on data collection because they are unfamiliar with the tasks and therefore will face a learning curve.

Finally, an existing, but newly classifi ed major source for GHG, may undergo a modification for which it will then be subject to PSD permitting requirements. This category of PSD permitting activity is listed on Table 2-1 as “Modifications at Newly Major Sources.” With this new major source status, these facilities must apply for and be issued a PSD permit, if they undergo a major modification. See Appendix A for a list of newly major sources at different major source GHG thresholds. We estimate that 4% of these newly major sources will undergo modifications. This rate was obtained by divi ding the current 560 annual PSD modification-11 related permit actions (i.e., 70% of 801 actions identifie d in the NSR ICR) by the existing major source population of 14,700 major source title V pe rmits. This represents our best available estimate of the rate of PSD modification activity at major sources, and we make the assumption that this rate will also apply for newly major GHG sources. We recognize that there is some level of uncertainty in applying this rate to GHG-only sources, particularly for sources in

unconventional sectors such as commercial and re sidential categories, however we believe at higher GHG thresholds, where large industrial sources predominate, that this modification rate provides a reasonable estimate of modification ac tivity. As no data are yet available for

commercial/residential sources and because we cannot conclude that they will differ from industrial sources, we sel ect the same 4% rate for modification activity.

Title V Permits Title V programs also complete severa l types of permitting actions annually, including processing and issuing new permits , permit revisions, and permit renewals. Newly constructed major sources or sour ces designated newly major due to a modification are required to apply for and be i ssued a title V permit in order to operate. In addition to sources new to title V, permitting authorities must add GHG terms to permits for sources exceeding the threshold set for GHG emissions. Permitting authorities may face burdens to update existi ng title V permits for GHG under two possible scenarios: (1) EPA promulgates or approves any applicable requirements for GHGs that would apply to such a source, which would generally require a permit reopening or renewal application, or (2) the source makes a change that would result in an applicable requirement for GHG to newly apply to the source, such as PSD review, which would generally require an application for a permit revision. Permitting authorities will also need to process permit12 renewal applications, generally on a five-year cycle, and such renewals would need to assure that the permit properly addresses GHG. The April 2007 title V ICR estimates that 50 permits are completed every year for new

sources. 14 For this analysis, it is assumed that all 50 of these typically large industrial-type sources will be capable of potentially em itting GHG and will need to add GHG-related requirements to the permit. The estimated burden per title V permit in the ICR represents an average of multiple pollutants; we estimate the addition of GHGs will add an additional 10% of the time currently estimated for a new title V permit. We believe that 10% is the appropriate amount because for the most part, these sources will simply need to add information concerning inventory, reporting, or mon itoring of their GHG emissions, as appropriate, which they can readily do. The ICR also identifies 3,267 permit renewals conducted on an annual basis. As not all sources potentially emit GHG above a determined threshold, th is analysis examines the estimated 80% involving combusti on activities that most likely ha ve the potential to emit GHG above the series of poten tial thresholds evaluated. 15 Therefore, approximately 2,614 sources will need to address GHG in the permit renewal. Revisions to title V permits will also be necessary based on the number of modifications calculated for this analysis. Revisions occurri ng specifically due to GHG may involve significant revisions, minor revisions, or ad ministrative actions to operating permits. EPA estimates that this activity will require 40 hours per permit on aver age for permitting authorities to complete. 16 The

14 Information Collection Request for St ate Operating Permit Regulations (R enewal), EPA ICR Number 1587.07, OMB Control Number 2060-0243, 2007. A copy of this document is available in the docket for the final Tailoring Rule. 15 The 80% estimate was obtained through a review of existing title V permit source categorization. 16 The Title V ICR indicates the burdens associated with revi sions are as follows: 90 hours for a significant revision, 30 hours for a minor revision, and 5 hours for an administrative action. See Table 8 at 23 . It is not known which revision will be required for any modification that exceeds the GHG significance level threshold; therefore, the EPA averages the three permitting burdens to obtain a value of 40 hours per permit.13 number of operating permit revisions will vary based on the number of previously minor modifications now qualifying as major modifications , and modifications at newly major sources, both listed in Table 2-1. At any level, it is assumed that the 448 modifications involving combustion that occur annually will need to in clude any GHG requirements in the revision of their respective title V permits. EPA estimates th at permitting authorities will spend, in addition to the current burden to issue a title V permit re vision, an additional 10% of the 40 hours needed to complete this process, or four hours per action. Finally, new industrial and commercial/reside ntial sources will be entering title V permitting programs annually due solely to thei r GHG emissions. These commercial/residential sources that exceed the major source threshold so lely due to their GHG emissions will not likely have substantial applicable requirements in the n ear term and/or will not require as much time to process as those for industrial sources, which ha ve other applicable requirements in addition to those related to their GHG emissions. However, the EPA believes both permitting authorities and

commercial/residential sources will confront chal lenges as they have little experience permitting GHGs for these types of facilitie s. This will increase the time needed to assess GHG emissions, complete the application, and respond to permitting authority comments. We also expect that in many cases the draft permits will undergo high le vels of public participation through public comment periods, public hearings, and petitions for reconsideration. Therefore, EPA assumes preparing a permit for affected commercial/res idential sources will take 50% of the time a permitting authority currently spends on issuing a title V permit for an industrial source.14 Table 2-4. Average Permitting Authority Burden per GHG Title V Permit

Activity Burden Hours per Permit – Industrial Burden Hours per Permit - Commercial/ Residential a Permit Application Review 100 33 Draft Permits Preparation 150 50 Comment Period Notification 10 10 Hold Public Hearings 100 90 Interaction with EPA 20 5 Analyze Public Comments 40 20 Permits Issuance 8 6 Total Burden 428 214

a Commercial/residential permits will be simpler, so that it would take the permitting authority about 1/3 of the time to review the permit applicati on and draft the permit than it would for an industrial source permit. The comment period notification and time for public hearings , however, would be about the same because of the fixed time burdens necessary to provi de notice and hold hearings. The amo unt of time interacting with EPA would be much less because of the relative simplicity of the permits. Analyzing public comments would take half as long as for an industrial permit because although the permits are much simpler, there could be a fair amount of public interest because of th e location of the source. Permit issu ance would take a less time than for an industrial source because most of the cost s are fixed, although the permit is simpler.

Table 2-5. Average Source Burden per GHG Title V Permit

Activity Burden Hours per Permit – Industrial Burden Hours per Permit - Commercial/ Residential a Prepare Application 300 150 Draft Permits Interaction 40 20 Public Hearing Participation 10 10 Total Burden 350 180

a Commercial/residential permit applications will be si gnificantly simpler than industrial source title V permit applications. However, due to their inexperience, we es timate commercial/residential sources will take half as long to complete their steps for their permit application as it will for industrial sources to complete their steps. Less interaction, again 50% less time, will be needed with permitting authorities during the permit drafting process. However, public hear ing participation will likely require the sa me amount of time because of the fixed time burdens necessary to complete hearings.

Uncertainties in Estimates of Affected Sources To date, EPA has observed lower permitting levels than expected and does not yet have enough data to evaluate the accuracy of our estimates. However, we expect the pace of15 permitting to increase. For the purposes of moving forward, we continue to estimate burden using the same methodology applied in the Tailo ring Rule analysis. Uncertainties in the estimates were noted in the TSD; we reiterate those uncertainties below.

In order to estimate the number of facilitie s that exceed a given GHG threshold (such as the Step 2 thresholds of 100,000/75,000 tpy CO 2 e for baseline analysis), it is necessary to have emissions inventory data at the facility or build ing level, including, and particularly for lower threshold scenarios, numerous small sources in the residential and commercial sectors (e.g., apartment buildings and office buildings). Histor ically, however, EPA has not collected sectorwide, facility-level inform ation for GHG emissions under th e CAA (with the exception of information from electric genera ting units required to report CO 2 emissions under the Acid Rain Program reporting requirements). To date, nati onal EPA inventories of GHG sources have primarily focused on ‘top-down’ estimates of GH G emissions from sectors and sources, and not facility-level estimates. As a re sult, many of the uncertainties de scribed here result from the absence of a comprehensive data set of facility -level GHG emissions across all sectors. A full description of the methodology used for determini ng facility level emissions is provided in our GHG thresholds evaluation study, whic h can be found at EPA-HQ-OAR-2009-0517. 17

For residential, commercial, and smaller ma nufacturing operations, our current analysis relies on sample facility datase ts and ‘top-down’ sector data (e.g., national fuel consumption statistics and/or building characteristics). Ther e are inherent uncertainties in developing source

counts from the allocatio n of these nationally aggregated st atistics. The allocation factors we used, based on U.S. Energy Information Admini stration statistical sampling procedures and energy consumption statistics, are likely the best available to estimate the population of

17 “Technical Support Document: Additional Threshold Analysis Greenhouse Gas Tailoring Rule,” October 12, 2011.16 residential, commercial, and small manufacturing sources exc eeding different GHG thresholds. However, uncertainties may result in either overestimating or underestimating GHG emissions for a given individual facility. It is worth not ing that our estimates for the largest GHG emitting sources, such as electric utilities and refineri es, are derived from bottom-up calculations of individual facility/build ing emissions so that there is in creased certainty in evaluating and comparing the facility counts at the higher GHG threshold scenarios where residential and commercial sources are not highly affected. Although there are differe nt levels of uncertainty in our facility level estimates across sectors, we do believe that the data are sufficiently robust to use in the aggregate to assess national permitting level impacts.

EPA’s estimate of affected sources is based on their potential to emit (PTE) emissions, as opposed to actual emission levels. PTE is defi ned as the maximum capacity of a stationary source to emit a pollutant under it s physical and operational de sign, including certain legal limitations, for example, on emissions or hours of operation. NSR and title V programs both use PTE for defining and identifying major sources. Although we have attempted to identify reasonable adjustments to account for PTE in our methodology, there are significant uncertainties in our PTE-based estimates, partic ularly for the commercial, residential and small manufacturing sectors that have not traditionally been subject to any form of air permitting. In practice, for example, for the residential sector and for many of the facilities in the commercial sector, where CO 2 emissions are primarily due to space heating/appliance usage, the combustion units are not likely to be used constantly at th eir maximum rated capacity because heating is not needed year-round and heating systems have ther mostats. However, for our analysis we do assume full PTE-based estimates for the residential and commercial sectors, using PTE17 adjustment factors of 10 and 6. 6, respectively to adjust actual emissions to PTE level. 18 Absent industry specific data, for small manufacturing source categories we as sume a PTE adjustment factor of 2; individual manufactur ing facilities may operate their combustion equipment at levels above and below this capacity utilization rate, but we believe this PTE adjustment reflects a reasonable average rate across the variety of small manufacturing fac ilities included in the threshold analysis. Ultimately, the number of sources brought into either the NSR or title V programs due solely to their PTE would depend on how EPA interprets PTE for various types of emitting equipment (e.g., space-heating furnaces in residential and commercial buildings), and

the extent to which streamlined mechanisms are made available for sources to obtain legal limits on their PTE so that the programs are not applicab le. No such decisions or interpretations have been made at this point and, as mentioned in the preamble, they will require significant time to develop. As a result, our threshold analysis uniformly assumes that no PTE limits are in place for any of the affected sectors, which may likel y be the case in the immediate stages of GHG permitting for affected sources. There is significant uncertainty in both our modification rate for newly major GHG

sources and in our estimate of m odification activity at existing major sources that will become subject to PSD review for GHG emission increa ses. The general uncertainty results from predicting not only how many major sources will undergo physical or opera tional changes in any given year, but also which of those changes woul d result in GHG emissions increases that would exceed a proposed GHG significance level. First, in formation is not available across sectors and source categories on the types and numbers of specific physical and operational changes that

would result in GHG emissions increases in amounts that can be estimated and that therefore can

18 For more detail on the PTE adjustment, refer to pages 62-69 of the “ Technical Support Document for Greenhouse Gas Emissions Thresholds Evaluation , March 29, 2010 (EPA-HQ-OAR-2009-0517-19158).18 be compared to various GHG emi ssions significance thresholds. Second, there is uncertainty in how many project modifications will occur within any given year because decisions on these projects are driven by facility- a nd sector-based growth patterns and business planning decisions. Lastly, some source categories and units that emit GHGs have not previously been subject to any type of permitting or reporting re quirements; as a result, for thes e sources, there is very little historical record for use in estimating the number and types of projects that would occur at these sources and, in turn, establish an appr opriate significance th reshold for GHGs.

Uncertainties in Permitting Costs The primary reference sources for our estimate of burden hours and costs for permitting

GHGs are the current ICRs for the PSD and title V programs. There are a number of uncertainties introduced in using these referenc es for costing GHG permitti ng activities. First, we are assuming that the average, conventional pollutant per-permit costs will be similar for GHGs. We do recognize the likelih ood that residential and commercial permits would be simpler and have a lower per-permit burden than trad itional industrial sour ces, and have made adjustments for this. However, for industrial so urces we assume per-permit costs on par with what are estimated in the latest ICRs for PSD and title V programs. There is uncertainty in applying these average ICR-based costs to GHG perm itting, even for industrial sources, because there is no historical track record for pe rmitting these GHG sources and thus any cost

efficiencies that have been realized over the years for conventional pollutant permitting, and thus reflected in the current ICRs, ma y not be initially realized for GHG permitting. For example, we assume the same public hearing estimate as in cluded in the ICR for current PSD permits (i.e., that 1 in 50 major PSD permits require a hearing) for GHG sources , this number may be higher initially if there ends up being significantly more public interest in these permits. We do believe19 overall, however, that larger facilities, especially those affected at highe r threshold levels, will have had sufficient permitting experience such that out ICR-based costs should reasonably

reflect the added burde n of including GHGs. As mentioned above, in our burden scenario analyses we do discount the ICR-based perpermit costs for residential and commercial sources to reflect what we believe will generally be simpler permits, involving primarily uniform com bustion type equipment. For PSD we discount the per-permit cost by 30%, and for title V we discount the per-permit cost by 50%. There is significant uncertainty in these estimated discounts since we have no track record for permitting

these smaller commercial and residential sources. However, we do believe that, based solely on the type and uniformity of the GHG emission units that would be subject to permitting at these facilities under lower GHG threshold scenarios, th at average per-permit costs would be less than those currently experienced by more complex indus trial facilities, with numerous emission units, for currently regulated pollutants.

3. Evaluation of ICR-based Resource Requireme nts for Permitting Authorities at Different Possible GHG Permitting Thresholds

For this proposal, EPA examined resource requirements at the current Step 2 thresholds as well as 50,000 tpy CO 2 e and five thresholds in between. These thresholds range from the current 100,000 tpy CO 2 e major source applicability threshold for PSD and title V down to a 50,000 tpy CO 2 e threshold, with associated PSD GHG si gnificant thresholds ranging from the current 75,000 tpy CO 2 e through 50,000 tpy CO 2 e, as the choice of a PSD significance threshold also has a direct impact on title V burdens si nce a greater number of PSD permit requirements

that result from modification activities will resu lt in a greater number of necessary title V

revisions.20 PSD Permits Table 3-1 presents the estimated burden for permitting authorities at different possible PSD GHG major source applicability thresholds. Descriptions of the different thresholds selected are provided below. Burden estimates for the PSD program are calculated based on listed values

obtained from Tables 6-1 and 6-2 the NSR ICR. 19 The ICR does not distinguish between new construction and modification actions; therefore, Table 3-1 combines the actions into permit preparation issuance based solely on GHG emissi ons or the addition of GHG requirements to permits being issued for conventional sources, or ‘anyway’ permits. PSD permit preparation and

issuance is further divided into industrial and commercial/residential sources since less time is required for commercial/residential sources.

19 All threshold levels represented estimate burden over cu rrent ICR values. At this time, a new program ICR is under development for the NSR program that will incorporate n ecessary adjustments from implementation of the Tailoring Rule.21 Table 3-1. Additional Permitting Auth ority PSD Burden with GHG (Annual)

Activity Burden Hours

per Permit Affected Permits Total Burden (hours) Total Cost ($2007) a Baseline: 100,000 tpy; 75,000 tpy Significance Threshold PSD Permit Preparation and Issuance - Industrial 301 915 275,415 $21,267,546 PSD Permit Preparation and Issuance - Commercial/Residential 210 4 840 $64,865 Additions to Current PSD Applications 50 688 34,400 $2,656,368 Total Additional Burden 310,655 $23,988,779 90,000 tpy; 75,000 tpy Significance Threshold PSD Permit Preparation and Issuance - Industrial 301 922 277,522 $21,430,249 PSD Permit Preparation and Issuance - Commercial/Residential 210 5 1,050 $81,081 Additions to Current PSD Applications 50 688 34,400 $2,656,368 Total Additional Burden 312,972 $24,167,698 80,000 tpy; 75,000 tpy Significance Threshold PSD Permit Preparation and Issuance - Industrial 301 927 279,027 $21,546,465 PSD Permit Preparation and Issuance - Commercial/Residential 210 11 2,310 $178,378 Additions to Current PSD Applications 50 688 34,400 $2,656,368 Total Additional Burden 315,737 $24,381,211 75,000 tpy; 75,000 tpy Significance Threshold PSD Permit Preparation and Issuance - Industrial 301 931 280,231 $21,639,438 PSD Permit Preparation and Issuance - Commercial/Residential 210 12 2,520 $194,594 Additions to Current PSD Applications 50 688 34,400 $2,656,368 Total Additional Burden 317,151 $24,490,400 70,000 tpy; 70,000 tpy Significance Threshold PSD Permit Preparation and Issuance - Industrial 301 1,113 335,013 $25,869,704 PSD Permit Preparation and Issuance - Commercial/Residential 210 12 2,520 $194,594 Additions to Current PSD Applications 50 688 34,400 $2,656,368 Total Additional Burden 371,933 $28,720,666 60,000 tpy; 60,000 tpy Significance Threshold PSD Permit Preparation and Issuance - Industrial 301 1,478 444,878 $34,353,479 PSD Permit Preparation and Issuance - Commercial/Residential 210 17 3,570 $275,675 Additions to Current PSD Applications 50 688 34,400 $2,656,368 Total Additional Burden 482,848 $37,285,523 50,000 tpy; 50,000 tpy Significance Threshold PSD Permit Preparation and Issuance - Industrial 301 1,906 573,706 $44,301,577 PSD Permit Preparation and Issuance - Commercial/Residential 210 28 5,880 $454,054 Additions to Current PSD Applications 50 688 34,400 $2,656,368 Total Additional Burden 613,986 $47,411,999

a Labor cost of $77.22/hr from Prevention of Significant Deterior ation and Non-Attainment Area New Source Review (Renewal), EPA I CR Number 1230.23, OMB Control Number 2060-0003, 2008. b Assume permit preparation and issuance for commercial/residential permits takes 70% the amount of time needed to prepare and is sue an industrial permit.

c For current permit applications, assume it takes an additi onal 50 hours to include GHG requirements in the permit.22 Current Threshold Estimates Step 1 involved only sources required to get a PSD permit due to their non-GHG emissions and then were further required to add GHG related requirements as a result of GHG

emissions increases from modi fications, or GHG emissions at newly constructed facilities, exceeding a significance threshold of 75,000 tpy GHG. In this scenario, only the annual 688 PSD permit actions derived from the NSR ICR were exp ected to need the inclusion of GHG related requirements to the permits. The additional burden to permitting authorities under this scenario was estimated at 34,000 hours at a cost of $2.7 million. Step 2 of the Tailoring Rule, which began on July 1, 2011, continues Step 1 and applies PSD and title V to new sources as well as existing sources that are not ‘anyway’ sources and that emit, or have the potential to emit, at least 100,000 tpy CO 2 e. In addition, existing sources that emit or have the potential to emit at least 100,000 tpy CO 2 e and that undertake a modification

that increases net emissions of GHGs by at least 75,000 tpy CO 2 e also become subject to PSD requirements. At this current threshold, the earlier TSD estimated that permitting authorities would experience an increase up to 919 new permit acti ons annually due to the inclusion of GHGs. The corresponding burden was expected to require up to an additiona l 311,000 hours at a cost of $24

million.

Alternate Threshold Scenarios

Additional annual burden was determined at five different major stationary source

thresholds in order to evaluate the relative differences in impacts to permitting authorities. Estimates represent the additional burden and costs due to GHG permitting at lower thresholds,23 beyond to the burden currently experienced and estimated in the ICR by permitting authorities

and sources. The first scenario is the 90,000 tpy CO 2 e threshold with 75,000 tpy CO 2 e significance threshold. Results of this analysis indicat e a potential of 927 new permits, plus 688 permit actions to include GHG related requirements into current PSD permitting actions (including both new construction and modifications). This poten tial additional workload equates to 313,000 hours for permitting authorities at a cost of $24.2 million. Decreasing the emission threshold to 80,000 tpy CO 2 e, while maintaining the 75,000 tpy

CO 2 e significance threshold, would lead to an estimated 316,000 hours additional burden at a cost of $24.4 million. This scenario estimates 938 potential new construction or modification activities subject to PSD permitting annually due to GHG. Setting a threshold of 75,000 tpy CO 2 e with a significance threshold of 75,000 tpy CO 2 e, permitting authorities would spend an estimated 317,000 hours preparing and issuing permits, at a cost of $24.5 million. At this threshold, EPA estimates 1,813 potential new actions require PSD permits. Next, at the 70,000 tpy CO 2 e threshold with a 70,000 tpy CO 2 e significance threshold, the annual permitting authority burden would incr ease by 372,000 hours at an estimated cost of $28.7 million. In this scenario, 1,125 potential new permit actions will occur annually. At a 60,000 tpy CO 2 e threshold, with a 60,000 tpy CO 2 e significance threshold for modifications, EPA estimates a potential of 1,478 new industrial PSD permit actions and 17 commercial/residential. Permitting authorities would spend an estimated 483,000 additional hours on permits at a cost of $37.3 million. Finally, as identified in the Tailoring Rule analysis, lowering the emission threshold to 50,000 tpy CO 2 e would lead to an estimated 614,000 hours additional burden at an approximate24 cost of $474 million. This scenario estimates 1,934 potential new construction or modification activities subject to PSD permitting annually due to GHG.

Title V Permits Table 3-2 presents the estimated burden for permitting authorities at different possible title V GHG major source applicab ility thresholds. Descriptions of the different thresholds selected are provided below. Burden estimates are calculated and annual values derived from

Tables 7 and 8 of the current Title V ICR. 20

Current Threshold Estimates Step 1, which began on January 2, 2011, i nvolved only sources required to get a title V permit for emissions other than GHG and that ar e required to add GHG related requirements. Under this Step, only the annual issuance of 50 perm its noted in the title V ICR were expected to need the inclusion of GHG related requirement s to the permits. The additional burden to permitting authorities was estimated at 27 million hours at a cost of $1.3 million. Building on Step 1, Step 2 began on July 1, 2011. Utilizing a 75,000 tpy CO 2 e PSD significance threshold, the earlier version of th is TSD estimated the annual permitting authority burden to increase by 161,000 hours at a cost of $7.4 million. At this significance threshold, approximately 915 operating permit revisions could be necessary due to GHG.

20 For consistency, the permitting authority labor costs are updated to 2007 dollars utilizing the 2007 General Schedule Salary Table from the Office of Personnel Management.25 Table 3-2. Additional Permitting Authority Title V Burden with GHG (Annual)

Activity Burden Hour

per Permit Affected Permits Total Burden (hours) Total Cost ($2007) a 100,000 tpy (associated with PSD 100,000 tpy maj./75,000 tpy sig.) New Permit Preparation and Issuance - Industrial 428 172 73,473 3,379,773 Add GHG component to new Non-GHG Permit b 43 50 2,150 $98,900 New Permit Preparation and I ssuance - Commercial/Residential c 214 18 3,781 $173,911 Permit Revisions - due to GHG 40 915 36,600 $1,683,600 Permit Revisions - add GHG to Current Non-GHG Permits 4 448 1,792 $82,432 Permit Renewals d 9 2,614 23,526 $1,082,196 Total Additional Burden 141,322 $6,500,812 90,000 tpy (associated with PSD 90,000 tpy maj./75,000 tpy sig.) New Permit Preparation and Issuance - Industrial 428 229 97,869 $4,501,989 Add GHG component to new Non-GHG Permit 43 50 2,150 $98,900 New Permit Preparation and Issuance - Commercial/Residential 214 25 5,421 $249,381 Permit Revisions - due to GHG 40 895 35,800 $1,646,800 Permit Revisions - add GHG to Current Non-GHG Permits 4 448 1,792 $82,432 Permit Renewals 9 2,614 23,526 $1,082,196 Total Additional Burden 166,559 $7,661,699 80,000 tpy (associated with PSD 80,000 tpy maj./75,000 tpy sig.) New Permit Preparation and Issuance - Industrial 428 277 118,556 $5,453,576 Add GHG component to new Non-GHG Permit 43 50 2,150 $98,900 New Permit Preparation and Issuance - Commercial/Residential 214 68 14,552 $669,392 Permit Revisions - due to GHG 40 895 35,800 $1,646,800 Permit Revisions - add GHG to Current Non-GHG Permits 4 448 1,792 $82,432 Permit Renewals 9 2,614 23,526 $1,082,196 Total Additional Burden 196,376 $9,033,296 75,000 tpy (associated with PSD 75,000 tpy maj./75,000 tpy sig.) New Permit Preparation and Issuance - Industrial 428 301 128,685 $5,919,525 Add GHG component to new Non-GHG Permit 43 50 2,150 $98,900 New Permit Preparation and Issuance - Commercial/Residential 214 76 16,264 $748,144 Permit Revisions - due to GHG 40 895 35,800 $1,646,800 Permit Revisions - add GHG to Current Non-GHG Permits 4 448 1,792 $82,432 Permit Renewals 9 2,614 23,526 $1,082,196 Total Additional Burden 208,217 $9,577,997 70,000 tpy (associated with PSD 70,000 tpy maj./70,000 tpy sig.) New Permit Preparation and Issuance - Industrial 428 335 143,380 $6,595,480 Add GHG component to new Non-GHG Permit 43 50 2,150 $98,900 New Permit Preparation and Issuance - Commercial/Residential 214 78 16,763 $771,113 Permit Revisions - due to GHG 40 1,074 42,960 $1,976,160 Permit Revisions - add GHG to Current Non-GHG Permits 4 448 1,792 $82,432 Permit Renewals 9 2,614 23,526 $1,082,196 Total Additional Burden 230,571 $10,606,28126 Alternate Threshold Scenarios After reviewing the current established thre sholds, additional burden was determined at

five different major stationary source thresholds in order to evaluate the re lative differences in impacts to permitting authorities. Estimates repr esent the additional annual burden and costs due to GHG permitting beyond the burden and costs curre ntly experienced by permitting authorities

and sources. Results of the analysis at th e first threshold, 90,000 tpy CO 2 e, indicate a potential of 254 new permits as well as 50 permits that would ne ed to include GHG requirements in their permits. This additional workload equates to 167,000 hours for permitting authorities at a cost of $7.7 Table 3-2 (continued). Additional Permitting Authority Title V Burden with GHG (Annual)

Activity Burden Hour

per Permit Affected Permits Total Burden (hours) Total Cost ($2007) a 60,000 tpy (associated with PSD 60,000 tpy maj./60,000 tpy sig.) New Permit Preparation and Issuance - Industrial 428 517 221,133 $10,172,133 Add GHG component to new Non-GHG Permit 43 50 2,150 $98,900 New Permit Preparation and Issuance - Commercial/Residential 214 116 24,895 $1,145,185 Permit Revisions - due to GHG 40 1,432 57,280 $2,634,880 Permit Revisions - add GHG to Current Non-GHG Permits 4 448 1,792 $82,432 Permit Renewals 9 2,614 23,526 $1,082,196 Total Additional Burden 330,777 $15,215,727 50,000 tpy (associated with PSD 50,000 tpy maj./50,000 tpy sig.) New Permit Preparation and Issuance - Industrial 428 981 419,868 $19,313,928 Add GHG component to new Non-GHG Permit 43 50 2,150 $98,900 New Permit Preparation and Issuance - Commercial/Residential 214 208 44,441 $2,044,271 Permit Revisions - due to GHG 40 1,906 76,240 $3,507,040 Permit Revisions - add GHG to Current Non-GHG Permits 4 448 1,792 $82,432 Permit Renewals 9 2,614 23,526 $1,082,196 Total Additional Burden 568,017 $26,128,767

a Salaries from title V ICR adjusted to 2007 dollars using 2007 OPM General Sc hedule Salary Table available at: http://www.opm.gov/oca/07tables/index.asp

b Incorporating GHG information/requirements in to significant revisions and permit renewals adds an additional 10% of the current time (90 hours each)

c New commercial/residential permits require half the time needed for new industrial permits d The title V ICR estimates that 3,267 permits annually under go renewal - assume 80% of these involve combustion

___________________________________________________________________________________________________________________________27 million. As with PSD programs, increases are due to more complete estimates of annual

modifications and the revised burden associ ated with commercial/residential permits. Decreasing the emission threshold to 80,000 tpy CO 2 e would lead to an estimated 196,000 hours additional burden at a co st of $9 million. This scenario estimates 345 new sources would be subject to title V permitting annually due to GHG. At the next threshold examined, 75,000 tpy CO 2 e, permitting authorities would experience an additional workload of 208,000 hour s at a cost of $9.6 million. Potential new permits at this threshold are estimated to include 301 industrial permits and 76 commercial/residential permits, leading to 377 sources being subject to title V annually. Setting a threshold of 70,000 tpy CO 2 e, permitting authorities wouldspend an estimated 231,000 hours preparing and issuing permits, at a cost of $10.6 million. At this threshold, approximately 413 new sources would be subject to title V permitting annually. Lowering the threshold to 60,000 tpy CO 2 e, we expect permitting authorities will spend an estimated 331,000 additional hours on permits at a cost of $15.2 million. Over 630 new sources are expected to potentially ente r title V permitting programs based on their GHG

emissions. The final scenario at 50,000 tpy CO 2 e will lead to an estimated 568,000 hours additional burden at a cost of $26.1 million. This scenario estimates 1,189 potential new sources will be subject to title V permitting annually due to GHG.28 APPENDIX A

Table A-1. Newly Major Affected Source Estimates Based on Threshold 21 Source Type 100,000 tpy 90,000 tpy 80,000 tpy 75,000 tpy 70,000 tpy 60,000 tpy 50,000 tpy EGUs 0 0 0 0 0 0 0 Industrial 256 277 292 302 313 337 1,934 Oil/Gas/Coal production 52 57 61 64 64 71 75 Waste Treatment 193 331 455 525 598 749 910 Commercial 51 74 201 225 232 346 600 Residential 0 0 0 0 0 0 20 Total 552 739 1,009 1,116 1,207 1,503 3,539 Based on information contained in the “ Technical Support Document: Additional Threshold Analys is Greenhouse Gas Tailoring Rule,” October 12, 2011. and information retrieved from EPA's enfo rcement and compliance history online (ECHO) database during January 2010. ECHO is a computer-data based created and maintained by the EPA that c ontains source-specific data submitted primarily by state and local environmental agenc ies. See http://www.epaecho.gov/echo/index.html.

21 GHG threshold options are all based on tpy CO 2 e.