Page 1 of 75 6560-50-P

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52 [EPA-HQ-OAR-2010-0107; FRL-xxxx-x]

RIN-2060-AQ08 Action to Ensure Authority to Issue Permits under t he Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy a nd SIP Call

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

SUMMARY: The EPA is proposing to find that 13 states with E PAapproved state implementation plan (SIP) New Source Review Prevention of Significant Deterioration (PSD) progr ams are substantially inadequate to meet Clean Air Act (CAA ) requirements because they do not appear to apply PS D requirements to GHG-emitting sources. For each of these states, EPA proposes to require the state (through a "SIP C all") to revise its SIP as necessary to correct such inadequ acies. EPA proposes an expedited schedule for states to submit their corrective SIP revision, in light of the fact that as of January 2, 2011, certain GHG-emitting sources will become s ubject to the PSD requirements and may not be able to obtain a PS D permit in order to construct or modify. As for the rest of t he states with approved SIP PSD programs, EPA solicits commen t on whetherPage 2 of 75

their PSD programs do or do not apply to GHG-emitti ng sources. If, on the basis of information EPA receives, EPA c oncludes that the SIP for such a state does not apply the PSD pro gram to GHGemitting sources, then EPA will proceed to also iss ue a finding of substantial inadequacy and a SIP Call for that s tate. In a companion notice, EPA proposes a federal implementa tion plan (FIP), which EPA would finalize if a state fails to make the required SIP submission and which would authorize E PA to issue the PSD permits to the GHG sources.

DATES: Comments . Comments must be received on or before [INSERT DATE 30 DAYS AFTER DATE OF PUBLICATION IN T HE FEDERAL REGISTER]

. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2010-0107 by one of the following method s:

• www.regulations.gov : Follow the online instructions for submitting comments.

• E-mail : a-and-r-docket@epa.gov

.

• Fax : (202) 566-9744

• Mail : Attention Docket ID No. EPA-HQ-OAR-2010-0107, U. S. Environmental Protection Agency, EPA West (Air Dock et), 1200 Pennsylvania Avenue, NW, Mail code: 6102T, Was hington, DC 20460. Please include a total of 2 copies. In addition, please mail a copy of your comments on th ePage 3 of 75

information collection provisions to the Office of Information and Regulatory Affairs, Office of Manag ement and Budget (OMB), Attn: Desk Officer for EPA, 725 1 7th Street, NW, Washington, DC 20503.

• Hand Delivery : U.S. Environmental Protection Agency, EPA West (Air Docket), 1301 Constitution Avenue, Northw est, Room 3334, Washington, DC 20004, Attention Docket I D No. EPA-HQ-OAR-2010-0107. Such deliveries are only acc epted during the Docket's normal hours of operation, and special arrangements should be made for deliveries of boxed information. Instructions . Direct your comments to Docket ID No. EPA-HQ-OAR

2010-0107. EPA's policy is that all comments recei ved will be included in the public docket without change and ma y be made available online at www.regulations.gov , including any personal information provided, unless the comment includes i nformation claimed to be Confidential Business Information (CB I) or other information whose disclosure is restricted by statu te. Do not submit information that you consider to be CBI or o therwise protected through www.regulations.govor e-mail. The www.regulations.govWeb Site is an "anonymous access" system, which means EPA will not know your identity or cont act information unless you provide it in the body of yo ur comment.Page 4 of 75

If you send an e-mail comment directly to EPA witho ut going through www.regulations.gov , your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available o n the Internet. If you submit an electronic comment, EPArecommends that you include your name and other contact inform ation in the body of your comment and with any disk or CD-ROM yo u submit. If EPA cannot read your comment due to technical diffi culties and cannot contact you for clarification, EPA may not b e able to consider your comment. Electronic files should avo id the use of special characters, avoid any form of encryption, a nd be free of any defects or viruses. For additional informationabout EPA's public docket visit the EPA Docket Center homepage at www.epa.gov/epahome/dockets.htm . For additional instructions on submitting comments, go to section I.C of the SUPPLEMENTARY
INFORMATIONsection of this document. Docket . All documents in the docket are listed in the www.regulations.govindex. Although listed in the index, some information is not publicly available, e.g. , CBI or other information whose disclosure is restricted by statu te. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available do cket materials are available either electronically inPage 5 of 75

www.regulations.govor in hard copy at the U.S. Environmental Protection Agency, Air Docket, EPA/DC, EPA West Bui lding, Room 3334, 1301 Constitution Ave., NW, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., M onday through Friday, excluding legal holidays. The telephone nu mber for the Public Reading Room is (202) 566-1744, and the tele phone number for the Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Ms. Lisa Sutton, Air Quality Policy Division, Office of Air Quality Planning and Standards (C504-03), Environmental Protection Agency, Researc h Triangle Park, NC 27711; telephone number: (919) 541-3450; f ax number: (919) 541-5509; e-mail address: sutton.lisa@epa.go v . SUPPLEMENTARY INFORMATION: For questions related to a specific state, local, o r tribal permitting authority, or to submit information requ ested in this action, please contact the appropriate EPA regional office:

EPA r egional office Contact for regional office

(person, mailing address, telephone number) Permitting authority I Dave Conroy, Chief, Air Programs Branch, EPA Region 1, 5 Post Office Square, Suite 100, Boston, MA 02109-3912, (617) 918-1661. Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont. II Raymond Werner, Chief, Air Programs Branch, EPA Region 2, 290 Broadway, 25th Floor, New York, NY 10007-1866, (212) 637-3706. New Jersey, New York, Puerto Rico, and Virgin Islands.Page 6 of 75

III Kathleen Anderson, Chief,

Permits and Technical Assessment Branch, EPA Region 3, 1650 Arch Street, Philadelphia, PA 19103-2029, (215) 814-2173. District of Columbia, Delaware, Maryland, Pennsylvania, Virginia, and West Virginia.

IV Dick Schutt, Chief, Air Planning Branch, EPA Region 4, Atlanta Federal Center, 61 Forsyth Street, SW, Atlanta, GA 30303-3104, (404) 562- 9033. Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee. V J. Elmer Bortzer, Chief, Air Programs Branch (AR-18J), EPA Region 5, 77 West Jackson Boulevard, Chicago, IL 60604- 3507, (312) 886-1430. Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin.

VI Jeff Robinson, Chief, Air Permits Section, EPA Region 6, Fountain Place 12th Floor, Suite 1200, 1445 Ross Avenue, Dallas, TX 75202-2733, (214) 665-6435. Arkansas, Louisiana, New Mexico, Oklahoma, and Texas.

VII Mark Smith, Chief, Air

Permitting and Compliance Branch, EPA Region 7, 901 North 5th Street, Kansas City, KS 66101, (913) 551-7876. Iowa, Kansas, Missouri, and Nebraska.

VIII Carl Daly, Unit Leader, Air

Permitting, Monitoring & Modeling Unit, EPA Region 8, 1595 Wynkoop Street, Denver, CO 80202-1129, (303) 312- 6416. Colorado, Montana, North Dakota, South Dakota, Utah, and Wyoming.

IX Gerardo Rios, Chief, Permits Office, EPA Region 9, 75 Hawthorne Street, San Francisco, CA 94105, (415) 972-3974. Arizona; California; Hawaii and the Pacific Islands; Indian Country within Region 9 and Navajo Nation; and Nevada. X Nancy Helm, Manager, Federal and Delegated Air Programs Unit, EPA Region 10, 1200 Sixth Avenue, Suite 900, Seattle, WA 98101, (206) 553- 6908. Alaska, Idaho, Oregon, and Washington.Page 7 of 75

I. General Information A. Does this action apply to me? Entities potentially affected by this rule include states, local permitting authorities, and tribal authoritie s. 1 Any SIPapproved PSD air permitting regulation that is not structured such that it includes GHGs among pollutants subject to the PSD program will potentially be found to be substantial ly inadequate to meet CAA requirements, under CAA 110(k)(5), and the state will potentially be affected by this rule. For exa mple, if a state's PSD regulation identifies its regulated NSRpollutants by specifically listing each individual pollutant a nd the list omits GHGs, then the regulation is substantially in adequate. Entities potentially affected by this rule also inc lude sources in all industry groups, which have a direct obligation under the CAA to obtain a PSD permit for GHGs for p rojects that meet the applicability thresholds set forth in the Tailoring Rule. 2 This independent obligation on sources is specifi c to PSD

1 EPA respects the unique relationship between the U .S. government and tribal authorities and acknowledges that tribal concerns are not interchangeable with state concern s. However, for convenience, we refer to "states" in this rulem aking to collectively mean states, local permitting authorit ies, and tribal authorities. 2 Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule; Final Rule. 75 FR 31514. The Tailoring Rule is described in more detail later in this prea mble.Page 8 of 75

and derives from CAA 165(a). Any source that is su bject to a state PSD air permitting regulation not structured to apply to GHG-emitting sources will potentially rely on this rule to obtain a permit that contains emission limitations that conform to requirements under CAA 165(a). The majority of entities potentially affected by this action are expected to be in the following groups: Industry Group NAICS a Utilities (electric, natural gas, other systems) 2211, 2212, 2213 Manufacturing (food, beverages, tobacco, textiles, leather) 311, 312, 313, 314, 315, 316 Wood product, paper manufacturing 321, 322 Petroleum and coal products manufacturing 32411, 32412, 32419 Chemical manufacturing 3251, 3252, 3253, 3254, 3255 , 3256, 3259 Rubber product manufacturing 3261, 3262 Miscellaneous chemical products 32552, 32592, 32591 , 325182, 32551 Nonmetallic mineral product manufacturing 3271, 3272, 3273, 3274, 3279 Primary and fabricated metal manufacturing 3311, 3312, 3313, 3314, 3315, 3321, 3322, 3323, 3324, 3325, 3326, 3327, 3328, 3329 Machinery manufacturing 3331, 3332, 3333, 3334, 333 5, 3336, 3339 Computer and electronic products manufacturing 3341, 3342, 3343, 3344, 3345, 4446 Electrical equipment, appliance, and component manufacturing 3351, 3352, 3353, 3359

Transportation equipment manufacturing 3361, 3362, 3363, 3364, 3365, 3366, 3366, 3369Page 9 of 75

Furniture and related product manufacturing 3371, 3372, 3379 Miscellaneous manufacturing 3391, 3399 Waste management and remediation 5622, 5629 Hospitals/nursing and residential care facilities 6221, 6231, 6232, 6233, 6239 Personal and laundry services 8122, 8123 Residential/private households 8141 Non-residential (commercial) Not available. Codes only exist for private households, construction and leasing/sales industries.

a North American Industry Classification System.

B. Where can I get a copy of this document and othe r related information? In addition to being available in the docket, an el ectronic copy of this proposal will also be available on the World Wide Web. Following signature by the EPA Administrator, a copy of this notice will be posted on the EPA's NSR Web Sit e, under Regulations & Standards, at www.epa.gov/nsr

. C. What should I consider as I prepare my comments for EPA? 1. Submitting CBI . Do not submit this information to EPA through www.regulations.govor e-mail. Clearly mark the part or all of the information that you claim to be CBI. F or CBI information in a disk or CD ROM that you mail to EP A, mark the outside of the disk or CD ROM as CBI and then ident ify electronically within the disk or CD ROM the specif ic information that is claimed as CBI. In addition to one completePage 10 of 75

version of the comment that includes information cl aimed as CBI, a copy of the comment that does not contain the inf ormation claimed as CBI must be submitted for inclusion in t he public docket. Information so marked will not be disclose d except in accordance with procedures set forth in 40 CFR part 2. Send or deliver information identified as CBI only to the f ollowing address: Roberto Morales, OAQPS Document Control Of ficer (C404- 02), U.S. EPA, Research Triangle Park, NC 27711, At tention Docket ID No. EPA-HQ-OAR-2010-0107. 2. Tips for preparing your comments . When submitting comments, remember to:

• Identify the rulemaking by docket number and other identifying information (subject heading, Federal R egister date and page number).

• Follow directions - The agency may ask you to respo nd to specific questions or organize comments by referenc ing a Code of Federal Regulations (CFR) part or section n umber.

• Explain why you agree or disagree; suggest alternat ives and substitute language for your requested changes.

• Describe any assumptions and provide any technical information and/or data that you used.

• If you estimate potential costs or burdens, explainhow you arrived at your estimate in sufficient detail to al low forPage 11 of 75

it to be reproduced.

• Provide specific examples to illustrate your concer ns, and suggest alternatives.

• Explain your views as clearly as possible, avoiding the use of profanity or personal threats.

• Make sure to submit your comments by the comment pe riod deadline identified. D. How is the preamble organized? The information presented in this preamble is organ ized as follows: I. General Information A. Does this action apply to me? B. Where can I get a copy of this document and othe r related information? C. What should I consider as I prepare my comments for EPA? D. How is the preamble organized? II. Overview of Proposed Rule III. Background A. CAA and Regulatory Context B. State PSD SIPs IV. Proposed Action: Finding of Substantial Inadeq uacy and SIP Call A. Introduction B. States with SIP PSD Applicability Provisions tha t Do Not Appear to Apply to GHG-emitting Sources C. States with SIP PSD Applicability Provisions tha t Do Appear to Apply to GHG-emitting Sources D. Proposed Finding of SIP Substantial Inadequacy a nd SIP Call; Solicitation of Comment E. Comment Period F. State Actions G. EPA Actions on SIP Submittals; Findings of Failu re to Submit and Promulgation of FIPs H. Streamlining the State Process for SIP Developme nt and SubmittalPage 12 of 75

I. Primacy of the SIP Process J. Sanctions K. Title V V. Statutory and Executive Order Reviews A. Executive Order 12866 – Regulatory Planning and Review B. Paperwork Reduction Act C. Regulatory Flexibility Act D. Unfunded Mandates Reform E. Executive Order 13132 – Federalism F. Executive Order 13175 – Consultation and Coordin ation with Indian Tribal Governments G. Executive Order 13045 – Protection of Children f rom Environmental Health Risks and Safety Risks H. Executive Order 13211 – Actions Concerning Regul ations that Significantly Affect Energy Supply, Distributi on, or Use I. National Technology Transfer and Advancement Act J. Executive Order 12898 – Federal Actions to Addre ss Environmental Justice in Minority Populations and L owIncome Populations VI. Statutory Authority II. Overview of Proposed Rule In this rulemaking, along with the companion rulema king described elsewhere in this preamble, EPA is taking another in a series of actions concerning the PSD program for GH G-emitting sources that will begin on January 2, 2011. These two rulemakings take steps to assure that in 13 states that do not appear to have authority to issue PSD permits to GH G-emitting sources at present, either the state or EPA will ha ve the authority to issue PSD permits by January 2, 2011. Although for most states, either the state or EPA is already aut horized to issue PSD permits for GHG-emitting sources as of th at date, our preliminary information shows that these 13 states have EPA-Page 13 of 75

approved PSD programs that do not appear to include GHG-emitting sources and therefore do not appear to authorize th ese states to issue PSD permits to such sources. In this rulemak ing, EPA proposes to find that these 13 states' SIPs are sub stantially inadequate to comply with CAA requirements and, acc ordingly, proposes to issue a SIP Call to require a correctiv e SIP revision that applies their SIP PSD programs to GHG -emitting sources. In a companion rulemaking, EPA proposes a FIP that would give EPA authority to apply EPA's PSD programto GHGemitting sources in case such a state is unable to submit a corrective SIP revision by its deadline. Under the CAA PSD program, stationary sources must obtain a permit prior to undertaking construction or modific ation projects that would result in specified amounts of new or increased emissions of air pollutants that are subj ect to regulation under other provisions of the CAA. CAA 165(a), 169(1). The permit must, among other things, impos e emission limitations associated with the best available cont rol technology (BACT). CAA 165(a)(4). In recent months, EPA has taken four related action s that, taken together, trigger PSD applicability for GHG s ources on and after January 2, 2011, but limit the scope of PSD. These actions included, as they are commonly called, the "EndangermentPage 14 of 75

Finding" and "Cause or Contribute Finding," which w ere issued in a single final action, 3 the "Johnson Memo Reconsideration," 4 the "Light-Duty Vehicle Rule," 5 and the "Tailoring Rule." 6 Taken together, these actions established regulatory requ irements for GHGs emitted from new motor vehicles and new motor vehicle engines, determined that such regulations, when the y take effect on January 2, 2011, will subject GHGs emitted from stationary sources to PSD requirements, and limited the applic ability of PSD requirements to GHG sources on a phased-in basi s. We are taking this action on the basis of: our anal ysis of the affected states' SIP provisions and other relev ant state law; the states' analyses of their SIP provisions a nd state law, as indicated in letters sent to us as required unde r the

3 "Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act." 74 FR 66496 (December 15, 2009). 4 "Interpretation of Regulations that Determine Poll utants Covered by Clean Air Act Permitting Programs." 75 FR 17004 (April 2, 2010). This action finalizes EPA's respo nse to a petition for reconsideration of "EPA's Interpretati on of Regulations that Determine Pollutants Covered by Fe deral Prevention of Significant Deterioration (PSD) Permi t Program" (commonly referred to as the "Johnson Memo"), December 18, 2008. 5 "Light-Duty Vehicle Greenhouse Gas Emission Standa rds and Corporate Average Fuel Economy Standards; Final Rul e." 75 FR 25324 (May 7, 2010). 6 "Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule; Final Rule." 75 FR 31514 (June 3, 2010).Page 15 of 75

Tailoring Rule; 7 and direct consultation with the individual states and with the National Association of Clean A ir Agencies (NACAA). As further described in section IV.D of t his preamble, EPA compiled relevant provisions of the affected st ates' SIPs and other state law into a Technical Support Docume nt for this rulemaking, which can be found in the docket for th is rulemaking. Our analysis, along with information r eceived from consulting with the states, indicates that the EPA- approved SIPs for 13 states appear to not apply the PSD program t o GHG sources. In many of these states, the SIP applicab ility provisions apply the PSD program to sources of spec ifically listed air pollutants and do not include GHGs. In one state, Connecticut, the SIP explicitly precludes the appli cation of PSD to GHG-emitting sources. In other states, the SIP applicability provisions apply the PSD program generally to regul ated pollutants, and these provisions, by their terms, c over GHGs; however, these states have other constitutional, st ate law, or SIP provisions that may limit their state laws or S IP requirements to applying only when specifically app roved by the appropriate state authority. These constitutional or statutory

7 In the Tailoring Rule, EPA asked states to advise EPA by letter, within 60 days of publication of the Tailor ing Rule, how the states intended to implement the requirements o f the Tailoring Rule, including whether the states had au thority to apply their PSD program to GHG-emitting sources.Page 16 of 75

provisions may limit the scope of the state PSD app licability provisions expressly to pollutants identified at a certain point in time as subject to PSD. For example, if the sta te has not yet expressly identified GHGs as subject to its PSD program, the authority to regulate GHG-emitting sources may not exist. As a result, absent further action, GHG sources that wil l be required to obtain a PSD permit for construction or modifica tion on and after January 2, 2011, will be unable to obtain tha t permit and therefore may be unable to proceed with planned con struction or modification in those states. In this rulemaking, we are proposing to find that u nder CAA 110(k)(5), the SIP for each of these 13 states is s ubstantially inadequate to meet the CAA PSD requirements, and we are proposing a SIP Call to require that each affected state submit a corrective SIP revision that applies the PSD prog ram to GHG sources. These states are listed in table IV-1, "S tates with SIPs that Do Not Appear to Apply PSD to GHG Sources (Presumptive SIP Call List)." As for the remaining states with EPA-approved SIP P SD programs, our preliminary research indicates that t heir SIP PSD applicability provisions apply the PSD programs mor e broadly—for example, many apply to sources of "regulated NSR po llutants"—and therefore appear to include GHG-emitting sources. Moreover, wePage 17 of 75

have not to this point received information about o ther provisions in the state constitutional or other sta te or SIP law that would have the effect of limiting the applicab ility of the PSD provisions to exclude GHG-emitting sources. Th ose remaining states, which include all the states with EPA-appro ved PSD programs not listed in table IV-1, are listed in ta ble IV-2, "States with SIPs that Appear to Apply PSD to GHG S ources (Presumptive Adequacy List)." Even so, we are aware of the possibility that some of those states may also have other state law provisions tha t may have the effect of limiting their PSD SIP requirements t o applying only to pollutants specifically approved by the app ropriate state authority, which would not include GHGs. In light of this possibility, we are soliciting comment on whether e ach of those remaining states' SIPs (see table IV-2) apply PSD t o GHGemitting sources. If, for any such state, we recei ve information that leads us to conclude that its SIP does not apply PSD to GHG-emitting sources, we will take fin al action to issue a finding of substantial inadequacy and a SIP Call for that state, on the same schedule as that for the 13 states. In a companion action to this rulemaking, we are pr oposing to promulgate, in any state that is not in a positi on to make a timely submittal of the corrective SIP revision, a FIP that willPage 18 of 75

assure that sources will be able to obtain the nece ssary permits, with EPA as the permitting authority for G HG emissions. In view of the need for prompt action to eliminate or significantly limit any time period during which ce rtain GHG sources are precluded from constructing or modifyin g because no entity has the authority to issue them permits, we intend to finalize this rulemaking action on or about Decembe r 1, 2010, and we propose in this rulemaking to give states a deadline of 12 months from the date we finalize to submit their corrective SIP revision. However, we are also proposing to au thorize states to accept a shorter deadline, as short as th ree weeks from the date we finalize. If any state is not abl e to submit a corrective SIP revision by its deadline, then EPA, by virtue of the authority of the FIP provisions under CAA 110(c ), will immediately make a finding that the state has faile d to submit the required SIP revision and will immediately prom ulgate the

FIP. Some states may already be in the process of develo ping the legal authority needed and may be able to submit a SIP revision sooner than December 2010. EPA encourages states t o take action as expeditiously as possible and will assist states as much as possible. Therefore, for each state for which EPA is proposing a SIP Call, it is possible that by January 2, 2011, when certainPage 19 of 75

GHG sources in the state may be required to obtain PSD permits, the state would have the authority in place to act on the sources' permit applications. The availability of this authority to regulate GHGs would depend on whether the state submits a SIP revision before EPA finalizes this ac tion or, alternatively, on which deadline the state receives for the corrective SIP submittal. We ask that, within the comment period for this act ion, each of the states listed in table IV-1 confirm to EPA that its SIP does not apply the PSD program to GHG-emitting sources. We also ask that within this comment period, every oth er state in the nation with an approved SIP (see table IV-2) re view its SIP and inform EPA if its SIP does not apply the PSD pr ogram to GHGemitting sources. Further, we ask that the states (see table IV-1) for which we are proposing a SIP Call identif y the deadline—between 3 weeks and 12 months from the dat e of signature of the final SIP Call—that they would acc ept for submitting their corrective SIP revision. For example, assuming that, as we anticipate, this rulemaking is signed i n final form by December 1, 2010, a state may specify that it wo uld accept a SIP submittal deadline that falls between December 22, 2010, and December 1, 2011, inclusive. III. BackgroundPage 20 of 75

A. CAA and Regulatory Context EPA described the relevant background information i n the Tailoring Rule. Knowledge of this background infor mation is presumed and will be only briefly summarized here. 1. SIP PSD Requirements Under the CAA PSD requirements, a new or existing s ource that emits or has the potential to emit "any air po llutant" in the amounts of either 100 or 250 tons per year (tpy ), depending on the source category, cannot construct or modify unless it first obtains a PSD permit that, among other things , imposes emission limitations that qualify as BACT. CAA 165 (a)(1), 165(a)(4), 169(1). Longstanding EPA regulations ha ve interpreted the term "any air pollutant" narrowly s o that only emissions of any "regulated NSR pollutant" trigger PSD. 40 CFR 51.166(j)(1), 52.21(j)(2). The term "regulated NSRpollutant" is defined to include the following four classes of air pollutants: (i) any pollutant for which a NAAQS has been promu lgated; (ii) any pollutant subject to an NSPS promulgated under CAA 111; (iii) any pollutant subject to a standard promulga ted under CAA title VI; and (iv) "any pollutant that otherwise is subject toPage 21 of 75

regulation under the Act" (excluding HAPs listed un der CAA 112). 40 CFR 51.166(b)(49), 52.21(b)(50). The CAA contemplates that the PSD program be implem ented in the first instance by the states and requires that states include PSD requirements in their SIPs. CAA 110(a) (2)(C) requires that – Each implementation plan * * * shall * * * include a program to provide for * * * regulation of the modification and construction of any stationary sou rce within the areas covered by the plan as necessary t o assure that national ambient air quality standards are achieved, including a permit program as required in part[] C * * * of this subchapter. CAA 110(a)(2)(J) requires that – Each implementation plan * * * shall * * * meet the applicable requirements of * * * part C of this subchapter (relating to significant deterioration o f air quality and visibility protection). CAA 161 provides that – Each applicable implementation plan shall contain emission limitations and such other measures as maybe necessary, as determined under regulations promulga ted under this part [C], to prevent significant deterioration of air quality for such region * * * designated * * * as attainment or unclassifiable. These provisions, read in conjunction with the PSD applicability provision—which, as noted above, appl ies, by its terms, to "any air pollutant," and which EPA has, t hrough regulation, interpreted more narrowly as any "NSR r egulated pollutant"—and read in conjunction with other provi sions, suchPage 22 of 75

as the BACT provision under CAA 165(a)(4), mandate that SIPs include PSD programs that are applicable to, among other things, any air pollutant that is subject to regulation, in cluding, as discussed below, GHGs on and after January 2, 2011. 8 A number of states do not have PSD programs approve d into their SIPs. In those states, EPA's regulations at 40 CFR 52.21 govern, and either EPA or the state as EPA's delega tee acts as the permitting authority. On the other hand, most states have PSD programs that have been approved into their SIP s, and these states implement their PSD programs and act as the permitting authority. These approved SIPs are discussed in mo re detail below. 2. Recent EPA Regulatory Action Concerning PSD Requ irements for GHG-emitting Sources By notice dated December 15, 2009, pursuant to CAA 202(a), EPA issued, in a single final action, two findings regarding GHGs that are commonly referred to as the "Endanger ment Finding" and the "Cause or Contribute Finding." "Endangerme nt and Cause

8 In the Tailoring Rule, we noted that commenters ar gued, with some variations, that the PSD provisions applied on ly to NAAQS pollutants, and not GHGs, and we responded that the PSD provisions apply to all pollutants subject to regul ation, including GHGs. See 75 FR 31560-62, "Prevention of Significant Deterioration and Title V GHG Tailoring Rule: EPA's Response to Public Comments," May 2010, pp.38-41. We maintain our position that the PSD provisions apply to all pollutants sub ject to regulation, and we incorporate by reference our dis cussion of this issue in the Tailoring Rule.Page 23 of 75

or Contribute Findings for Greenhouse Gases Under S ection 202(a) of the Clean Air Act," 74 FR 66496. In the Endange rment Finding, the Administrator found that six long-live d and directly emitted greenhouse gases—carbon dioxide (C O 2 ), methane (CH 4 ), nitrous oxide (N 2 O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (S F 6 )—may reasonably be anticipated to endanger public healthand welfare. In the Cause or Contribute Finding, the Administrat or "define[d] the air pollutant as the aggregate group of the sam e six * * * greenhouse gases," 74 FR 66536, and found that the combined emissions of this air pollutant from new motor vehi cles and new motor vehicle engines contribute to the GHG air pol lution that endangers public health and welfare. By notice dated May 7, 2010, EPA published what is commonly referred to as the "Light-Duty Vehicle Rule" (LDVR) , which for the first time established federal controls on GHGs emitted from light-duty vehicles. "Light-Duty Vehicle Greenhous e Gas Emission Standards and Corporate Average Fuel Econo my Standards; Final Rule." 75 FR 25324. In its applicability pr ovisions, the LDVR specifies that it "contains standards and othe r regulations applicable to the emissions of six greenhouse gases ," including

CO 2 , CH 4 , N 2 O, HFCs, PFCs, and SF 6 . 75 FR 25686 (40 CFR 86.1818- 12(a)).Page 24 of 75

Shortly before finalizing the LDVR, by notice dated April 2, 2010, EPA published a notice commonly referred t o as the Johnson Memo Reconsideration, which interpreted the term "subject to regulation," a term that is one of the regulatory triggers for PSD applicability. 9 The Johnson Memo Reconsideration concluded that for GHGs, promulgati on of the LDVR would trigger PSD applicability for GHG-emitti ng sources on or after January 2, 2011, which according to EPA is the date upon which the LDVR takes effect. By notice dated June 3, 2010, EPA published what is commonly referred to as the "Tailoring Rule," 10 which limits the applicability of PSD through a multi-step phase-in approach to only the highest-emitting GHG-emitting sources for a specified period of time, and not all GHG-emitting sources at the 100/250- tpy statutory thresholds. The Tailoring Rule estab lished the first two steps of the approach, which take effect on January 2, 2011, and July 1, 2011, respectively. In the Tailo ring Rule, EPA codified the Johnson Memo Reconsideration inter pretation of

9 "Interpretation of Regulations that Determine Poll utants Covered by Clean Air Act Permitting Programs," 75 F R 17004 (finalizing EPA's response to a petition for recons ideration of "EPA's Interpretation of Regulations that Determine Pollutants Covered by Federal Prevention of Significant Deteri oration (PSD) Permit Program" (commonly referred to as the "Johns on Memo"), December 18, 2008). 10 Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule; Final Rule. 75 FR 31514.Page 25 of 75

the term "subject to regulation" and added a furthe r interpretation of that term designed to expedite th e adoption of the phase-in approach for PSD permitting for GHGs b y the states into their SIPs. In addition, in the Tailoring Rul e, EPA identified the air pollutant that, if emitted or po tentially emitted by the source in excess of specified thresh olds, would subject the source to PSD requirements, as the aggr egate of the six GHGs, again, CO 2 , CH 4 , N 2 O, HFCs, PFCs, and SF 6 . The Tailoring Rule further provided that for purposes o f determining whether the GHGs emitted (or potentially emitted) e xceeded the specified thresholds, the amount of the GHGs must b e calculated first on a mass emissions basis and then on a carbo n dioxide equivalent (CO 2 e) basis. With respect to the latter, according to the rule, "PSD * * * applicability is based on t he quantity that results when the mass emissions of each of the se [six] gases is multiplied by the Global Warming Potential (GWP) of that gas, and then summed for all six gases." 75 F R 31518. In the Tailoring Rule, we asked states to submit to us letters within 60 days of publication describing how they i ntended to incorporate into their SIPs the limitations on PSD applicability included in the rule's phase-in approach. Further information on the Endangerment and Cause o r Contribute Findings, the LDRV, the Johnson Memo Rec onsideration,Page 26 of 75

and the Tailoring Rule is contained in the Tailorin g Rule. 3. SIP Inadequacy and Corrective Action The CAA provides a mechanism for the correction of flawed SIPs, under CAA 110(k)(5), which provides: (5) Calls for plan revisions Whenever the Administrator finds that the applicable implementation plan for any area is substantially inadequate to * * * comply with any requirement of this Act, the Administrator shall require the State to revise the plan as necessary t o correct such inadequacies. The Administrator shall notify the State of the inadequacies and may establ ish reasonable deadlines (not to exceed 18 months after the date of such notice) for the submission of such plan revisions. This provision by its terms authorizes the Administ rator to "find[] that [a SIP] * * * is substantially inadequ ate to * * * comply with any requirement of this Act," and, base d on that finding, to "require the State to revise the [SIP] * * * to correct such inadequacies." This latter action is commonly referred to as a "SIP Call." In addition, this pro vision provides that EPA must notify the state of the subs tantial inadequacy and authorizes EPA to establish a "reaso nable deadline[] (not to exceed 18 months after the date of such notice)" for the submission of the corrective SIP r evision. If the state fails to submit the corrective SIP rev ision by the deadline, CAA 110(c) authorizes EPA to "find[] that [the] State has failed to make a required submission." C AAPage 27 of 75

110(c)(1)(A). Once EPA makes that finding, CAA 110 (c)(1) requires EPA to "promulgate a Federal implementatio n plan at any time with 2 years after the [finding] * * * unless the State corrects the deficiency, and [EPA] approves the pla n or plan revision, before [EPA] promulgates such [FIP]."

B. State PSD SIPs 1. SIP PSD Applicability Provisions As noted earlier in this preamble, most states have approved PSD SIPs. Most of those SIPs identify the pollutants addressed under their PSD program as any "regulated NSR pollutant." This definition covers any "pollutant subject to regulation" and therefore, by its terms, in effect is automatically updating and needs no revision in ord er to cover pollutants that become subject to regulation under the CAA. As a result, these provisions cover GHG emissions whenthey become subject to regulation under other provisions of the CAA. See 40 CFR 52.21(b)(50). However, EPA has become aware that a minority of ap proved SIPs fail to include this broad approach to identif ying pollutants subject to PSD and instead simply list t he individual pollutants by name. These SIPs do not identify GHG s as among the pollutants addressed under their PSD program. As a result, these applicability provisions, by their terms, do not appear toPage 28 of 75

apply the PSD requirements to sources of GHGs when GHGs become "subject to regulation" under the CAA on January 2, 2011. In addition, the PSD SIP applicability provisions o f one state that we are aware of, Connecticut, explicitlyexcludes CO 2 as an "air pollutant," so that CO 2 is not subject to PSD requirements. 2. Other Relevant State Law Provisions Some states may have other state laws, including ot her SIP provisions that bear upon the applicability of thei r PSD programs to GHG-emitting sources. First, some states may have in their SIPs some sort of "general authority clause" that affirms the state's legal authority to issue, and enforce compliance with, pe rmits that are consistent with federal requirements. If one o f the states listed in table IV-1 of this preamble as having a S IP that does not explicitly apply PSD to GHG emitters neverthele ss has such a "general authority clause," then the SIP, read as a whole, may be considered to apply PSD to GHG sources. For an example of the type of "general authority cl ause" that may have this effect, we refer to corresponden ce between the California Bay Area Air Quality Management Dist rict (BAAQMD) and EPA Region IX that is included in the docket fo r this rulemaking. In a letter dated October 28, 2009, th e BAAQMDPage 29 of 75

proposed to exercise general authority in order to issue air permits to sources of PM 2.5 even though its air permit regulations did not contain specific provisions for PM 2.5 emissions. Under the proposed approach, with whichEPA concurred, BAAQMD exercised general authority under the administrative requirements within its air permit r egulations, which provide that the Air Pollution Control Office r "may impose any permit condition that he deems reasonably neces sary to insure compliance with federal or California law or District regulations...." See Regulation 2-1-403 included in the docket for this rulemaking. Second, some states may have, in their SIPs, statut es, or constitutions, a provision that precludes "forward adoption," that is, that prevents the state law from incorpora ting by reference or otherwise adopting any requirements no t specifically adopted by the state legislature or ot her state authority. In particular, some states may include a SIP PSD applicability provision that incorporates by refere nce (IBR) our federal PSD rule at 40 CFR 52.21—including the defi nition of "regulated NSR pollutant"—but that further provides that this IBR is not "rolling" and therefore is limited to on ly pollutants identified as regulated NSR pollutants as of the da te the state adopted the PSD provision. Any of these provisions could limitPage 30 of 75

the SIP PSD applicability rule to only the pollutan ts that were regulated as of the time the state adopted the PSD applicability rule, which means the SIP PSD program would not cov er GHGemitting sources until the state took specific acti on to that effect. IV. Proposed Action: Finding of Substantial Inadeq uacy and SIP Call A. Introduction Beginning on January 2, 2011, certain stationary so urces that construct or undertake modifications will beco me subject to the CAA requirement to obtain a PSD permit for thei r GHG emissions. This is because of the following CAA st atutory and EPA regulatory requirements: Under CAA 165(a) and 169(1), as interpreted through longstanding EPA regulations, P SD applies to sources that emit specified amounts of "regulated N SR pollutants," which include specified air pollutants as well any other "[air] pollutant" that is "subject to regulat ion." 40 CFR 51.166(j)(1), (b)(49)(iv). By notice dated May 7, 2010, EPA promulgated the Light-Duty Vehicle Rule (LDVR), whi ch establishes requirements for GHGs. 75 FR 25324. B y the terms of the LDVR, these emission limits take effect on J anuary 2, 2011. The LDVR identified the GHGs to which it app lies as a single air pollutant that consists of CO 2 , CH 4 , N 2 O, HFCs, PFCs,Page 31 of 75

and SF 6 . The LDVR followed EPA's Endangerment and Cause o r Contribute Findings, issued by notice dated Decembe r 15, 2009, by which EPA found that GHGs—defined to include the same six constituents—may reasonably be anticipated to endan ger public health and welfare. By notice dated April 2, 2010, EPA promulgated the Johnson Memo Reconsideration. 75 F R 17004. In this action, EPA made clear that the regulation of GHGs by the LDVR will trigger the applicability of PSD requirem ents to GHGemitting stationary sources as of January 2, 2011, because GHGs will become "subject to regulation" through the LDVR. By notice dated June 3, 2010, EPA promulgated the Tailoring R ule, which narrows PSD applicability to specified GHG-emitting sources on a specified phase-in schedule and makes clear that GH Gs—defined as the same single pollutant, with six constituent gas es, as described in the LDVR—are the "[air] pollutant" to which PSD requirements apply. 75 FR 31514. Pursuant to the Tailoring Rule, PSD permitting requirements for construction or modification will apply to certain GHG-emitting sta tionary sources beginning on January 2, 2011, for the first step of the Tailoring Rule, and beginning on July 1, 2011, for the second step of the Tailoring Rule. A number of states do not have an approved PSD SIP; as aPage 32 of 75

result, in these states 11 the applicable regulatory authority is EPA's regulations, found in 40 CFR 52.21, which con stitute a FIP. For sources in these states, either the EPA R egional Office or the state acting as EPA's delegatee is th e permitting authority. Because EPA's regulations apply directl y, sources in these states that emit GHGs will become subject to PSD for their GHG emissions, to the extent provided under the Tai loring Rule, on January 2, 2011. These sources will be able, onand after January 2, 2011, to apply for and receive in due co urse their PSD permits either from EPA directly or from those state permitting authorities acting on EPA's behalf. All of the other states administer their PSD progra m through an approved SIP and, as a result, they or t heir local entities are the PSD permitting authority. This ru lemaking concerns whether those approved SIP PSD programs in clude GHGemitting sources and, for those that do not, the st eps that EPA will take to assure that a PSD permit program that includes GHGs

11 In the following listed state or local jurisdictio ns, as well as in all Indian country, EPA is the PSD permitting authority, implementing the federal PSD regulation at 40 CFR 5 2.21: American Samoa; Arizona (some areas); California (m ost areas); District of Columbia; Guam; Massachusetts; New Jers ey; New York; Northern Mariana Islands; Puerto Rico; Trust Territ ories; and the Virgin Islands. In a smaller number of areas, listed as follows, the state or local permitting authority is delegated at least partial authority by EPA to implement the fed eral PSD regulation: Arizona (some areas); California (some areas); Hawaii; Illinois; Minnesota; Nevada (most areas); P ennsylvania (some areas); and Washington.Page 33 of 75

is in place. B. States with SIP PSD Applicability Provisions tha t Do Not Appear to Apply to GHG-emitting Sources Our review of the SIPs and other authorities, as we ll as consultation with states, as described further in s ection IV.D of this preamble and the Technical Support Document included in the docket for this rulemaking, indicates that for 13 of the states with approved PSD SIPs, the PSD programs of their SIPs do not appear to apply to GHG-emitting sources. These states are listed in table IV-1, "States with SIPs that Do Not Appear to Apply PSD to GHG Sources (Presumptive SIP Call List )." In a number of these SIPs, the PSD applicability provisi ons do not mirror EPA's regulatory provisions by applying PSD requirements to sources of any air pollutant "subject to regulat ion"; instead, the PSD applicability provisions specifica lly list the air pollutants to which the PSD program applies and do not include GHGs on that list. As a result, the PSD ap plicability provisions do not, by their terms, cover GHG-emitti ng sources. In addition, Connecticut's SIP appears by its terms to preclude the application of PSD to GHG-emitting sou rces. Further, some of these states have SIP PSD provisio ns that by their terms apply PSD to regulated NSR pollutant s, or have a substantially similarly phrased requirement, but al so have statePage 34 of 75

constitutional or other statutory or SIP provisions that appear to have the effect of limiting PSD applicability to air pollutants identified on a certain date. Therefore , state law, read as whole, would not appear to apply PSD requir ements to GHGs until the appropriate state authority takes ac tion to specifically subject PSD to GHGs, and the state has not yet done

so.We conclude that the states with SIPs or state law with these provisions do not appear to apply the PSD pro gram to GHGemitting sources, and we are including them in tabl e IV-1. We recognize that stakeholders may have other interpre tations of these provisions, and we solicit comments from stak eholders on their interpretations. In addition, some of these SIPs may include what we will refer to as a "general authori ty provision," which is a provision for the state to i ssue PSD permits that comply with EPA requirements, as descr ibed earlier in this preamble. If so, it is possible that these provisions could be interpreted to authorize the state in some cases to issue to GHG sources PSD permits that incorporate E PA's regulatory requirements, as found in 40 CFR 51.166. As a result, we consider table IV-1 to be a presumptive SIP Call list.Page 35 of 75

Table IV-1. States with SIPs that Do Not Appear to Apply PSD to

GHG Sources (Presumptive SIP Call List)

State (or Area) EPA Region Alaska X Arizona: Pinal County; Rest of State (Excludes Maricopa County, Pima County, and Indian Country) IX

Arkansas VI California: Sacramento Metropolitan AQMD IX Connecticut I Florida IV Idaho X Kansas VII Kentucky: Jefferson County; Rest of State IV Nebraska: Lincoln Lancaster; Omaha; Rest of State VII Nevada: Clark County IX Oregon X Texas VIPage 36 of 75

C. States with SIP PSD Applicability Provisions tha t Do Appear to Apply to GHG-emitting Sources On the other hand, as noted above, for most of the states with approved SIPs, those SIPs generally apply PSD to sources of any "regulated NSR pollutant," and we have not rece ived information indicating that the state law includes other provisions that may have the effect of precluding P SD from applying to GHG-emitting sources. As a result, EPAis including a list of states with presumptively adequate SIPs i n table IV-2, "States with SIPs that Appear to Apply PSD to GHG S ources (Presumptive Adequacy List)."Page 37 of 75

Table IV-2. States with SIPs that Appear to Apply PSD to GHG

Sources (Presumptive Adequacy List)

State (or Area) EPA Region Alabama: Jefferson County; Huntsville; Rest of State IV California: Mendocino County AQMD; Monterey Bay Unified APCD; North Coast Unified AQMD; Northern Sonoma County APCD IX

Colorado VIII Delaware III Georgia IV Indiana V Iowa VII Louisiana VI Maine I Maryland III Michigan V Mississippi IV Missouri VII Montana VIII New Hampshire I New Mexico: Albuquerque; Rest of State VI North Carolina: Forsythe County; Mecklenburg; Western NC; Rest of State IV North Dakota VIII Ohio V Oklahoma VI Pennsylvania: All except Allegheny County III Rhode Island I South Carolina IV South Dakota VIII Tennessee: Chattanooga; Nashville; Knoxville; Memphis; Rest of State IV

Vermont I Virginia III West Virginia III Wisconsin V Wyoming VIII Utah VIIIPage 38 of 75

We have developed these two lists of states—one lis ting states whose PSD program appears to not apply to GH G-emitting sources and one listing states whose program appear s to cover such sources—based on our own preliminary research, consultation with states, and review of the 60-day letters, desc ribed earlier in this preamble, submitted thus far by states in r esponse to the Tailoring Rule. As explained elsewhere in this preamble, we ask that each state with an approved SIP submit inf ormation during the comment period for this rulemaking perti nent to whether its SIP—including the PSD applicability pro visions and any other relevant provisions—covers GHG-emitting s ources. D. Proposed Finding of SIP Substantial Inadequacy a nd SIP Call; Solicitation of Comment For each of the states listed in table IV-1 of this preamble, we propose to issue a finding that the SI P is "substantially inadequate ... to ... comply with [the P SD] requirement[s]" and to "require the State to revise the plan as necessary to correct such inadequacies," i.e. , to issue a SIP Call. CAA 110(k)(5). For each of these states, th e SIP appears to not apply the PSD program to GHG-emitting source s. In consultation with the affected states, EPA compi led relevant provisions of the affected states' SIPs an d other statePage 39 of 75

law into a Technical Support Document for this rule making. The Technical Support Document, which can be found in t he docket for this rulemaking, presents the basis for EPA's propo sed finding of substantial inadequacy for the states listed in table IV-1. As discussed elsewhere in this preamble, we invite comment on this proposal. For any state listed in table IV -1, if we do not receive any further information from the state or other commenters, we expect to finalize our proposed find ing and SIP Call. Also for any state listed in table IV-1, if we do receive additional information that our interpretation of t hese provisions is incorrect or that the SIP includes a general authority provision so that, read as a whole, the S IP applies the PSD program to GHG sources, we will not finaliz e our proposed finding and SIP Call. Our basis for the proposed finding—and the propose d SIP Call that is based on this finding—is that CAA 110( k)(5) provides that EPA may make the finding when the SIP is "substantially inadequate ... to ... comply with any re quirement of [the CAA]," and this includes the PSD requirements. As discussed earlier in this preamble, SIPs are requir ed to include PSD programs that apply to sources that emit pollut ants subject to regulation; as a result, the SIPs at issue merit a finding of substantial inadequacy because they fail to apply t he PSDPage 40 of 75

program to GHG-emitting sources on and after Januar y 2, 2011. For all other states with approved PSD SIPs—which a re the ones listed in table IV-2—we solicit comment on whe ther their SIPs, read as a whole, apply the PSD program to GHG -emitting sources. If, on the basis of additional informatio n, we conclude that their PSD programs do not apply to GH G-emitting sources, we will issue a final finding of substanti al inadequacy and SIP Call on the same schedule as that for any o f the states for which we are issuing a proposed finding and SIP Call. We recognize that PSD requirements will not apply t o GHGemitting sources until January 2, 2011, but that fo r any state for which we finalize a finding of substantial inad equacy and a SIP Call, our plan is to do so approximately one mo nth in advance of that date. Even so, EPA believes this t iming is justified. SIPs must include, at least a month pri or to January 2, 2011, a provision applying PSD requirements to G HG-emitting sources as of January 2, 2011, in order to give sou rces notice that the requirement applies and that the state wil l act as the permitting authority. We recognize that as a pract ical matter, some states may wish that we impose a FIP effective as of January 2, 2011, in order to avoid any period of ti me when the GHG-emitting sources identified in the Tailoring Ru le as subject to PSD are unable to obtain a permit due to lack of a permittingPage 41 of 75

authority. We cannot impose a FIP until we have fi rst finalized the SIP Call and given the state a reasonable perio d of time to make the corrective SIP submission. EPA strongly b elieves that this necessarily entails, for those states, finaliz ing the SIP Call prior to January 2, 2011. After the close of the comment period for this prop osed action, we will review all comments. If we determi ne that the PSD SIP for any state either by its terms does not apply to sources of GHGs or has conflicting provisions that create ambiguity as to whether it applies to sources of GH Gs (such as an applicability provision that explicitly excludes GHG sources, coupled with a general-authority provision that cou ld be read to authorize permitting of GHG sources), then, for tha t state, we will finalize the finding that the SIP is "substant ially inadequate ... to ... comply with [the PSD] requirement [s]." At the same time, we will finalize a SIP Call for that sta te. We will make the finding of substantial inadequacy, notify the state that we have made the finding, and issue the SIP Ca ll in a final action that we intend to sign on or about December 1, 2010, and submit for publication in the Federal Register as soon as possible thereafter. We will notify the state of t he finding of substantial inadequacy by letter and by posting the signed action on our Web Site. In view of the urgency of the task,Page 42 of 75

which is to ensure that a PSD permitting authority for affected GHG sources is in place by January 2, 2011, we prop ose to give the final SIP Call an effective date of its publica tion date. We recognize that this process is highly expedited, but we believe that this is essential to maximize our and the states' opportunity to put in place a permitting authority to process PSD permit applications beginning on January 2, 201 1, without which sources may be unable to proceed with plans t o construct or modify. Commenters should feel free to advise u s if they believe a different approach can achieve this goal. E. Comment Period In order to deepen our understanding of what provis ions are in the relevant PSD SIPs, and how they are to be in terpreted, as well as to ensure that we have a comprehensive pict ure of all the SIPs in this regard, we ask each state to give us the following information by the close of the comment p eriod on this rule: 1. States with SIP PSD Applicability Provisions tha t Do Not Appear to Include GHGs We ask that each of the states listed in table IV-1 of this preamble—for which we have information that their S IP PSD applicability provisions do not include GHGs, and f or which we propose a finding of substantial inadequacy and a S IP Call—Page 43 of 75

provide the following information by the end of the comment period for this action: (a) Confirm, with citations and a copy of the relev ant language, that the SIP PSD applicability provisions do not explicitly include GHG sources; (b) Identify and provide a copy of any provision th at specifically precludes PSD applicability for GHG so urces; (c) Identify and provide a copy of any provision o f state constitution or other law, including the SIP, that may be read to limit the applicability of the PSD program to po llutants identified at a certain point in time, and therefor e not to
GHGs. (d) Indicate, with citations and a copy of the rele vant language, if any, whether the SIP includes general authority for the state to issue PSD permits that meet EPA requir ements; (e) Indicate, with citations and a copy of the rel evant language, any other provisions of the SIP or state law that may bear on the applicability of the PSD program to GHG -emitting

sources. (f) Indicate the state's interpretation as to wheth er the SIP, read as a whole, does or does not apply the PS D program to GHG sources or authorize the state to issue PSD per mits for GHG sources that meet EPA requirements. This statement should bePage 44 of 75

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 program to GHG sources or authorize the issuance of permits to GHG sources, indicate whether the state plans to de velop adequate authority to apply the PSD program to GHG sources and to submit it to EPA as a SIP revision by December 1 , 2010, which is shortly before the date on which, as discussed b elow, EPA intends to finalize its finding of inadequacy and f inalize the SIP Call. As discussed later in this preamble, we also ask th ese states to inform us, by the end of the comment peri od, of the period of time (as bounded in this preamble) that t hey would accept as the deadline for submittal of their SIP r evisions in response to a SIP Call. 2. All Other States with Approved SIPs We request that each state with an approved PSD SIP (see table IV-2) that is not also one of the 13 states f or which we propose a SIP Call review its PSD provisions to con firm that it applies the PSD program to GHG sources. We request that each of these states inform us if it has a SIP PSD applicab ility provision that does not by its terms apply to pollu tantsPage 45 of 75

"subject to regulation" or similar language, or oth erwise apply to GHG sources. In addition, we request that each of these states inform us if it has another state law provis ion or legal interpretation that may have the effect of limiting PSD applicability to air pollutants covered by EPA's PS D program as of a certain date, and therefore does not include G HGs. For any state whose PSD program, for any of these reasons, may not apply to GHG-emitting sources, we request the same inform ation described in section IV.E.1 of this preamble as soo n as possible during the comment period. Once we receive this in formation, if we believe it shows that the state's SIP PSD progra m does not apply to GHG sources, we will finalize a finding of substantial inadequacy and a SIP Call on the same schedule as a ny of the states for which we are proposing a finding and SIP Call. F. State Actions 1. State Submission of SIP Revision Prior to Final SIP Call If a state for whose SIP we propose a finding of substantial inadequacy submits a SIP revision by De cember 1, 2010, that purports to correct that inadequacy, we will not finalize the finding or SIP Call for that state. R ather, we will take action on their SIP submission promptly, as discussed below. 2. State Response to SIP CallPage 46 of 75

a. Timing of State Submittal Under CAA 110(k)(5), in notifying the state of the finding of substantial inadequacy and issuing the SIP Call, we "may establish reasonable deadlines (not to exceed 18 mo nths after the date of such notice) for the submission of suchplan revisions." We propose to allow the state 12 month s from the date of the notice, which will be the date on whichwe sign the final action, to submit the SIP revision, unless, d uring the comment period, the state expressly advises that it would not object to a shorter period—as short as 3 weeks fromthe date of signature of the final rule—in which case we will e stablish the shorter period as the deadline. As stated earlier in this preamble, EPA intends to finalize the SIP Call on o r about December 1, 2010. If the Administrator signs the n otice on that date, the earliest possible deadline would be December 22, 2010. The purpose of establishing the shorter period as t he deadline— assuming that state advises us that it does not obj ect to that shorter period—is to accommodate states that wish t o ensure that a FIP is available as, in effect, a backstop to ens ure that there is no gap in PSD permitting. If the state do es not advise us that it does not object to a shorter deadline, t hen the 12- month deadline will apply. It must be emphasized that for any state that recei ves aPage 47 of 75

deadline after January 2, 2011, the affected GHG-em itting sources in that state—which are those larger GHG-em itters identified in the Tailoring Rule—will be unable to receive a federally approved permit authorizing construction or modification. Therefore, after January 2, 2011, th ese sources may not lawfully be able to construct or modify unt il the date that EPA either approves the SIP submittal or promu lgates a FIP. EPA proposes that this 3-week-to-12-month time peri od, although expedited, meets the CAA 110(k)(5) require ment as a "reasonable deadline[]" and we welcome comment on t his interpretation. The term "reasonable deadline[]," as it appears in that provision, is not defined. We interpret it to mean a time period that is sensible or logical, based on a ll the facts and circumstances. Those facts and circumstances i nclude (i) the state SIP development and submission process, ( ii) the imperative to minimize the period when sources will be subject to PSD but not have available a PSD permitting auth ority to act on their permit application, and therefore will be unable to construct or modify; and (iii) the preferences of t he state. The following elaborates on those three facts and c ircumstances. First, although the 12-month period is consistent w ith the time period required for SIP revisions in at least one previousPage 48 of 75

SIP call that EPA issued, the NOx SIP Call, 12 we recognize that a period shorter than 12 months is expedited in light of the time involved in most state SIP development and submissi on processes. In particular, we recognize that some states may ne ed to undertake full-blown rulemaking actions, which may typically be time-consuming, and we acknowledge that some states may need to change their statutory provisions, which may typica lly be even more time-consuming. Even so, we understand that a t least some states have emergency processes that may be used to significantly expedite action. Although this is a matter of state process, we are prepared, as described elsewh ere in this preamble, to work with the states to develop expedi ted methods for developing, processing, and submitting SIP revi sions. Second, the need to minimize the period when source s may be unable to construct or modify due to the lack of re gulatory authority to act on their permit applications is anessential consideration. A shorter period for SIP submittal means that either the state, through the SIP revision that it submits on an expedited basis in light of this tight schedule, or EPA, through a FIP, will become the permitting authority sooner and will then be able to act on permit applications and issue per mits that

12 "Finding of Significant Contribution and Rulemakin g for Certain States in the Ozone Transport Assessment Gr oup Region for Purposes of Reducing Regional Transport of Ozon e; Rule." 63 FR 57356 (October 27, 1998).Page 49 of 75

allow new construction and modification of existing plants. The purposes of the PSD provisions include both the pro tection of the environment and the promotion of economic devel opment, see,
e.g., CAA 160(3)-(4), and the D.C. Circuit has held that the terms of the PSD provisions should be interpreted w ith these goals in mind. New York v. EPA, 413 F.3d 3, 23(D.C. Cir.), rehearing en banc den., 431 F.3d 801 (2005). Accordingly, determining a "reasonable deadline[]" for the submi ttal of a PSD SIP revision should account for the need to promote economic development by assuring the availability of a permi tting authority to process permit applications. Finally, the preference of the state is important b ecause the deadline for submittal of the corrective SIP re vision in response to a SIP Call acts as a burden on the stat e. If the state does not object to an earlier deadline under which it must operate—which, in a sense, is contrary to the state 's selfinterest because an earlier deadline typically incr eases burdens—then that is an indication of the reasonabl eness of the deadline. We suggest the following model language that a stat e wishing to indicate that it does not object to a de adline shorter than 12 months could consider using in its response to our request for comments. Of course, the state is not obligatedPage 50 of 75

to use this specific language, and we present it so lely for the convenience of the states: U.S. EPA has proposed a finding of substantial inadequacy and SIP Call under Clean Air Act section 110(k)(5) concerning the state's SIP PSD applicabil ity provisions. Further, U.S. EPA has proposed a deadl ine for the state's submittal of a corrective SIP revision. U.S. EPA has requested the state's comme nts 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. EPA 's establishment of a deadline of [identify the deadline]. b. Substance of State Submittal (i) Addition of GHGs to List of Pollutants Subject to PSD We propose to make a finding of substantial inadequ acy and issue a SIP Call for each state whose SIP fails to apply the PSD program to GHG-emitting sources. Accordingly, for the state to correct its SIP, the state must submit a SIP revisi on that applies PSD to GHG sources. For those states whose SIP applies PSD to listed air pollutants, the state may accompl ish this correction in at least two different ways. First, the state may revise its SIP so that instead of applying PSD to s ources of individually listed pollutants, the SIP applies PSD to sources that emit any "regulated NSR pollutant." We recomm end that states follow this approach. It is consistent withour 2002 "NSR Reform" rule. "Prevention of Significant Dete riorationPage 51 of 75

(PSD) and Nonattainment New Source Review (NSR); Fi nal Rule and Proposed Rule," 67 FR 80186, 80240 (December 31, 20 01). In addition, it would resolve any issues about whether the state has authority to issue permits for sources of PM 2.5 emissions, as well as permits for sources of pollutants that EPA may subject to regulation for the first time in the future. Se condly, and as an alternative, the state may retain its approac h of applying PSD to sources of individually listed pollutants bu t submit a SIP revision that includes GHGs on that list of pol lutants. If a state chooses this second approach, we will appro ve the SIP revision as SIP strengthening. (ii) Definition and Calculation of Amount of GHGs In adding GHGs to the list of pollutants subject to PSD applicability, the state must define GHGs as a sing le pollutant that is the aggregate of the group of six gases: C O 2 , CH 4 , N 2 O, HFCs, PFCs, and SF 6. As EPA stated in the Tailoring Rule, "[t]he final LDVR for GHGs specifies, in the rule's applic ability provisions, the air pollutant subject to control as the aggregate group of the six GHGs * * * . Because it is this pollutant that is regulated under the LDVR, it is t his pollutant to which PSD * * * appli[es]." 75 FR 31528. Although we propose to require that the state defin e GHGs as described immediately above, we solicit comment on whetherPage 52 of 75

the state may adopt a different definition that is at least as stringent, and, if so, what such a definition might be. We caution that a definition that includes more gases than the six identified above could prove to be less stringent i n certain ways because it could allow greater opportunities f or a source of different gases to net out of PSD. We note that in this rulemaking, we are not address ing the issue of accounting for emissions of GHGs from bioe nergy and other biogenic sources (which are generated during the combustion or decomposition of biologically based m aterial such as forest or agriculture products). When we finali zed the Tailoring Rule, we noted that EPA planned to seek c omment on how to address emissions of biogenic CO 2 under the PSD and title V programs through future action, such as a separate Advance Notice of Proposed Rulemaking (ANPR) (75 FR at 3159 1). As a first step, we recently issued a Call for Informati on (CFI) to solicit public comment and data on technical issues that might be used to consider biomass fuels and the emissions resulting from their combustion differently with regard to ap plicability under PSD and with regard to the BACT review proces s under PSD. See "Call for Information: Information on Greenhou se Gas Emissions Associated with Bioenergy and Other Bioge nic Sources," 75 FR 41173 (July 15, 2010).Page 53 of 75

Additional information on this CFI is available at http://www.epa.gov/climatechange/emissions/biogenic _emissions.ht ml . In the CFI we stated: "In response to this Call for Information, interested parties are invited to assi st EPA in the following: (1) Surveying and assessing the science by submitting research studies or other relevant information, and (2) evaluating different accounting approaches and opti ons by providing policy analyses, proposed or published me thodologies, or other relevant information. Interested parties are also invited to submit data or other relevant informatio n about the current and projected scope of GHG emissions from b ioenergy and other biogenic sources." 75 FR at 41174. Without prejudging the outcome of the CFI process, EPA anticipates that the comments we receive in respons e to the CFI, with regard to applicability under PSD and with reg ard to the BACT review process under PSD, will inform any subs equent actions to address applicability of emissions of GH Gs from bioenergy and other biogenic sources under the PSD program. (iii) Thresholds For a state to correct its SIP, the state must subm it a SIP revision that applies PSD to GHG sources. Once a s tate applies the PSD program to GHG-emitting sources, the state must determine the threshold for emissions from those so urces thatPage 54 of 75

will trigger PSD. In the Tailoring Rule, EPA promu lgated a determination that the CAA thresholds of 100 or 250 tpy (depending on the source category) would not apply as of January 2, 2011, or for a period of years thereafter, in li ght of, in part, administrative concerns. Instead, EPA promul gated a phase-in approach that limits PSD applicability to only the largest GHG emitting sources for a period of time. A state, in revising its SIP to apply PSD to GHG so urces, may adopt the Tailoring Rule phase-in approach into its SIP or it may adopt lower thresholds—as low as the 100/250 tpy statutory thresholds—but if it adopts lower thresho lds, it must show that it has "adequate personnel [and] funding * * * to carry out," that is, administer and implement, the PSD program with those lower thresholds, in accordance with CAA 110(a)(2)(E)(i). 13 In the Tailoring Rule, EPA adopted a CO 2 e metric and use of short tons (as opposed to metric tons) for calculat ing GHG emissions in order to implement the higher threshol ds. 75 FR 31530, 31532. As noted above, a state retains the authority to

13 We indicated in the Tailoring Rule (75 FR at 31525 -26) that a state may undertake a SIP action to either: (1) re vise its PSD program, which already applies to GHG-emitting sour ces, in order to implement the tailoring approach; or (2) revise its PSD program so that it applies to GHG-emitting sources, in which case the state must also establish its PSD applicab ility thresholds for PSD. This rulemaking relates to the latter described SIP action.Page 55 of 75

adopt lower thresholds than in the Tailoring Rule i n order to meet statutory requirements. As a result, the stat es are not obligated to adopt the CO 2 e metric or use of short tons; however, the state must assure that its approach is at least as stringent as the thresholds in the Tailoring Rule. (iv) State Adoption of "Regulated NSR Pollutants" Beyond this, we encourage—but do not propose to req uire—the states for which we propose a SIP Call to submit a SIP revision to adopt the PSD applicability provision found in E PA regulations—which is that PSD applies to "regulated NSR pollutant[s]," including any air pollutant "subject to regulation"—instead of simply adding GHGs to the SI P's list of pollutants subject to PSD. There are many advantages for a state to revise its SIP PSD applicability provisions in the manner that we enco urage. First, doing so would more readily incorporate, for state law purposes, the phase-in approach for PSD applicabili ty to GHG sources that EPA has developed in the Tailoring Rul e and expects to develop further through additional rulemaking. As explained in the Tailoring Rule, incorporating this phase-in approach for state law purposes—including Steps 1 and 2 of the p hase-in as promulgated in the Tailoring Rule and additional st eps of the phase-in that EPA may promulgate in the future—can be mostPage 56 of 75

readily accomplished through state interpretation o f the "subject to regulation" prong of the definition of "regulated NSR pollutant." If, instead of adopting into its S IP the "regulated NSR pollutant" trigger for PSD applicabi lity, the state simply adds GHGs to its list of pollutants su bject to PSD, then the SIP will not include the term "subject to regulation" and therefore may not include any vehicle or "hook" for the state to adopt by interpretation the current and an y future steps of the phase-in approach. As a result, the s tate may have to adopt and submit for EPA approval additional SIP revisions to incorporate the current and future steps of the pha se-in approach. There are other advantages to a state that adopts E PA's definition of "regulated NSR pollutant." The SIP w ould apply PSD to sources emitting PM 2.5 , thereby resolving as well the problem that some SIPs have of failing to cover PM 2.5 for PSD purposes. That is, many of the states for which we propose a SIP Call due to their SIPs' failure to apply PSD to sources that emit GHGs also may fail to apply PSD to sources tha t emit PM 2.5 . 14

14 Following a 1997 review of our national ambient ai r quality standards ("NAAQS") for particulate matter, we prom ulgated NAAQS for fine particles (PM 2.5 ). We then designated all areas of the country as "attainment," "nonattainment," or uncla ssifiable for the PM 2.5 standards, which became effective in April 2005. Pursuant to the CAA, states are obliged to revise t heir PSD regulations to include the new PM 2.5 standards.Page 57 of 75

To this point in time, this failure has not been a problem because we have allowed the state to issue PSD perm its for sources of PM 2.5 emissions through what is commonly called EPA's "1997 PM 10 surrogate policy." Under the 1997 PM 10 surrogate policy, sources and permitting authorities satisfy the CAA requirements for PM 2.5 in PSD permits by applying the PM 10 requirements as a surrogate for PM 2.5 . Each permit that relies

on our PM 10 surrogate policy is subject to review as to the adequacy of the presumption that the PM 2.5 requirements are satisfied. However, we note that EPA has issued a notice of proposed rulemaking to end the prospective use of t he 1997 PM 10 surrogate policy by the end of 2010 (75 FR 6827, Fe bruary 11, 2010). We are not at this time taking action with respect to these SIPs on account of PM 2.5 , but we encourage states to submit SIP revisions that apply PSD to sources of PM 2.5 . In addition, the SIP would, in effect, automaticall y update the state PSD program to apply PSD to any newly reg ulated pollutants and thereby avoid recurrence of the pres ent problem of a gap in the PSD program coverage for newly regu lated pollutants. Finally, state adoption of EPA's defin ition of "regulated NSR pollutant" would allow the SIP to mi rror EPA regulations and the SIPs of most states, which may promote consistency and ease administration.Page 58 of 75

Notwithstanding the advantages to a state of revisi ng its SIP to apply PSD to "regulated NSR pollutants," we do not, at this time, propose a finding that the SIP is substa ntially inadequate to comply with a CAA requirement or prop ose to issue a SIP call that would require a SIP revision that a pplies PSD to "regulated NSR pollutants." Instead, as noted abov e, our proposed finding and SIP call are limited to the fa ilure to apply PSD to GHG-emitting sources, and the SIP revi sion may simply include GHGs on the state's list of pollutan ts subject to PSD. We do not propose to require the "regulated N SR pollutant" approach because that approach is not necessary to correct the substantial inadequacy—which is the failure of the PSD SIP to cover GHG sources—for which we propose to issue a S IP Call. Rather, that substantial inadequacy may be correcte d more narrowly by listing GHGs. 3. General Authority Provision As noted earlier in this preamble, some SIPs that a pply PSD to sources of specified pollutants, not including G HGs, may also include a general authority provision that provides general authority to issue PSD permits that meet EPA requir ements. For states that include such general authority, it may be possible to read their SIPs as a whole to authorize the issu ance of PSD permits to GHG sources. In that case, EPA would no t finalize aPage 59 of 75

finding of substantial inadequacy or a SIP Call for that state. Even so, EPA encourages states with these SIP provi sions to submit a SIP revision that applies PSD to GHG-emitt ing sources. Such a SIP revision would add clarity to the SIP an d, in general, carry the benefits described earlier in th is preamble. G. EPA Actions on SIP Submittals; Findings of Failu re to Submit and Promulgation of FIPs 1. Actions on SIP Submittals As noted above, for any state for which EPA propose s a finding of substantial inadequacy and SIP Call but that submits a SIP revision before December 1, 2010, EPA will no t issue a final finding of substantial inadequacy or a SIP Ca ll. Instead, EPA will take action on the SIP submittal as quickl y as possible. By the same token, for any state for which EPA has issued a final finding of substantial inadequacy and a SIP C all, if the state submits the SIP revision within the submittal deadline, then EPA will not issue a finding of failure to submit or promulgate a FIP. Instead, EPA will take action onthe SIP submittal as quickly as possible. We reiterate and encourage states to keep in mind t hat PSD applicability for certain GHG sources begins Januar y 2, 2011. As such, even states with proposed SIP revisions wi ll not bePage 60 of 75

able to issue federally approved PSD permits for co nstruction or modification to affected sources until those revisi ons are approved. The affected source would be able to rec eive a stateissued permit, but the lack of a federally approved permit means that the source would not be in accordance with fed eral requirements if it constructed or modified. In lig ht of this potential for burden on the affected sources, we in tend to act on any SIP submittals that we receive as promptly a s possible. For example, upon request of the state, we will par allelprocess the SIP submittal. Under this approach, th e state sends us the draft of the SIP revision on which it plans to seek public comment at the state level, in accordance wi th CAA 110(a)(2), and we will publish a proposed approval of that draft SIP revision. In addition, at the same time the st ate solicits such public comment of its SIP revision at the stat e level, we will initiate a separate public proceeding on our p roposed approval of the SIP revision at the federal level. If, subsequently, the SIP revision that the state adopt s and submits to EPA is substantially similar to the draft on whi ch EPA solicited comment, then EPA will proceed to take fi nal action on the SIP submittal and will not re-notice it for pub lic comment. EPA has successfully employed the parallel-processi ng approach in past rulemakings, and we believe that to employ it in thisPage 61 of 75

process could significantly shorten the time EPA ne eds to act on the SIP revision. 2. Findings of Failure to Submit and Promulgation o f FIPs If the state does not meet its SIP submittal deadli ne, we will immediately issue a finding of failure to subm it a required SIP submission under CAA 110(c)(1)(A) and immediate ly thereafter issue a FIP. This timing for FIP promulgation is a uthorized under CAA 110(c)(1), which authorizes us to promulg ate a FIP "at any time within 2 years after" finding a failure to submit a required SIP submission. We discuss our approach t o the FIP in the companion notice to this rulemaking concerning FIPs for failure to submit the required PSD SIP revision. 3. Rescission of the FIP After we have promulgated a FIP, it must remain in place until the state submits a SIP revision and we appro ve that SIP revision. CAA 110(c)(1). Under the present circum stances, we will act on a SIP revision to apply the PSD programto GHG sources as quickly as possible and, upon request of the state, will parallel-process the SIP submittal in the mann er described earlier in this preamble. If we approve such a SIP revision, we will, at the same time, rescind the FIP. We discus s this approach in the companion notice to this rulemaking concerning FIPs for failure to submit the required PSD SIP rev ision.Page 62 of 75

H. Streamlining the State Process for SIP Developme nt and Submittal As stated earlier in this preamble, we recognize th at the deadline we are giving states to submit their SIP r evisions is expeditious. EPA understands that each state must determine whether its own regulatory development process allo ws for streamlining, and we defer to the states on the ext ent to which they may choose to streamline the process. Given t he exigencies, we believe a streamlining approach coul d be beneficial to a state in meeting its deadline. We are prepared to work with the states to develop methods to strea mline the state administrative process, although we recognize that the states remain fully in charge of their own state pr ocesses. We solicit recommendations during the comment period f or ways to streamline the state process for adopting and submi tting these SIPs, and to streamline or simplify what is require d for the SIP submittal. For example, we may streamline the process as it co ncerns public hearing requirements. Many states require t hat the underlying state regulation that the state intends to develop into the SIP submittal undergo a public hearing. I n addition, the CAA requires that the state provide a public he aring on the proposed SIP submittal, under CAA 110(a)(2). EPA w ill acceptPage 63 of 75

the hearing that the state holds on the underlying regulation as meeting the requirement for the hearing on the SIP submittal, as long as the state provides adequate public notice o f the hearing, and EPA will not require a separate SIP he aring. I. Primacy of the SIP Process Today's proposal is secondary to our overarching go al, which is to assure that in every instance, it will be the state that will be that permitting authority. EPA contin ues to recognize that the states are best suited to the ta sk of permitting because they and their sources have expe rience working together in the state PSD program to proces s permit applications. EPA seeks to remain solely in its pr imary role of providing guidance and acting as a resource for the states as they make the various required permitting decisions for GHG emissions. Accordingly, beginning immediately we intend to wor k closely with the states—as we have already begun to do since earlier in the year—to help them promptly develop a nd submit to us their corrective SIP revisions that extend their PSD program to GHG-emitting sources. Moreover, we intend to pr omptly act on their SIP submittals. Again, EPA's goal is to have each and every affected state have in place the necessary pe rmitting authorities by the time businesses seeking construc tion permitsPage 64 of 75

need to have their applications processed and the p ermits issued—and to achieve that outcome by means of enga ging with the states directly through a concerted process of cons ultation and support. EPA is taking up the additional task of proposing t his SIP Call and the companion FIP action only because the Agency is compelled to do so by the need to assure businesses , to the maximum extent possible and as promptly as possible , that a permitting authority is available to process PSD pe rmit applications for GHG-emitting sources once they bec ome subject to PSD requirements on January 2, 2011. Again, wit hout a permitting authority, those sources will be unable to construct or modify. In order to provide that assurance, we are obligate d to recognize, as both states and the regulated communi ty already do, that there may be circumstances in which states are simply unable to develop and submit those SIP revisions byJanuary 2, 2011, or for some period of time beyond that date. As a result, absent further action by EPA, those states' affecte d sources confront the risk that they will have to put on hol d their plans to construct or modify, a risk that may have advers e consequences for the economy—and a risk that can be minimized only by EPA's taking the specific step of issuing t his proposal.Page 65 of 75

To be sure, these circumstances are exigent. They demand that we develop a plan to assure, within the limits of our power, that a back-up permitting authority is avail able—and to send that signal of assurance expeditiously in orde r to eliminate uncertainty and thus facilitate businesse s' planning. Within the design of the CAA, it is EPA that must f ill that role of back-up permitting authority. This SIP Call act ion and the companion FIP action fulfill the CAA requirements t o establish EPA in that role. At the same time, we have designed these actions to retain as much discretion as possible in the hand of the s tates. The states may choose the deadline they consider reason able for submission of their corrective SIP revision. If we are compelled to promulgate a FIP, we invite the affect ed state to accept a delegation of authority to implement that FIP, so that it will still be the state that processes the permi t applications, albeit operating under federal law. In addition, if we are compelled to issue a FIP, we intend to co ntinue to work closely with the state to assist it in develop ing and submitting for approval its corrective SIP revision , so as to minimize the amount of time that the FIP must remai n in place. Finally, we can report that in informal conversatio ns, officials of various states have acknowledged the n eed for ourPage 66 of 75

SIP call and FIP actions. That is, they have ackno wledged that a short-term FIP may be necessary in their states t o protect their sources' abilities to construct and modify in accordance with environmental safeguards. In addition, some h ave indicated that they will closely consider their opportunities to accept delegation of the permitting responsibilities. J. Sanctions Under CAA 179(a)(3)(A), if EPA finds that a state f ailed to submit a PSD SIP revision as required under a SIP C all, then a mandatory sanctions clock begins to run, so that if the state does not submit the required SIP revision within 18 months, EPA must impose one of two sanctions identified under C AA 179; if the state does not submit the required SIP revisionwithin another 6 months, EPA must impose the second of the sanctions. However, because each sanction applies only to nona ttainment areas, it has been a longstanding EPA position that a finding that a state has failed to submit a required SIP re vision for a PSD area will not trigger mandatory sanctions. The two sanctions are described in CAA 179(b) and i nclude: (i) "highway sanctions," which are "a prohibition, applicable to a nonattainment area, on the approval" of certain h ighway construction projects or certain federal grants for highway construction, CAA 179(b)(1); and (ii) "[i]n applyin g thePage 67 of 75

emission offset requirements of [CAA 173] to new or modified sources or emissions units for which a permit is re quired under this part, the ratio of emissions reductions to inc reased emissions shall be at least 2 to 1." CAA 179(b)(2)

. Each of these sanctions applies, by its terms, to nonattainment areas. That is, as just quoted, CAA 179(b)(1) limits the application of the highway sanctions "to a nonattainment area," and the offsets sanctions unde r CAA 173(c) apply only to nonattainment areas. See, e.g., CAA 173(c)(1) (referring to "any offset requirement under this pa rt [D]," which is entitled, "Plan Requirements for Nonattainment Areas"); 182(b)(5) (offset requirement for ozone moderate ar eas); 182(c)(10) (offset requirement for ozone serious ar eas); 182(d)(2) (offset requirement for ozone severe area s); 182(e)(1) (offset requirement for ozone extreme areas). Neit her of the mandatory sanctions provided under CAA 179(b) appli es to attainment/unclassifiable areas. As a result, a finding that a state has failed to s ubmit a required SIP revision will not trigger mandatory sa nctions. K. Title V We note that a number of states may have a similar problem with their approved title V operating permit progra ms, (i.e. , that their title V programs do not apply to GHG-emi ttingPage 68 of 75

sources). We intend to address this issue through separate rulemaking. V. Statutory and Executive Order Reviews A. Executive Order 12866 - Regulatory Planning and Review Under Executive Order (EO) 12866 (58 FR 51735, Octo ber 4, 1993), this action is a "significant regulatory act ion" because it raises novel legal or policy issues. Accordingl y, EPA submitted this action to the Office of Management a nd Budget (OMB) for review under EO 12866 and any changes mad e in response to OMB recommendations have been documented in the docket for this action. B. Paperwork Reduction Act This action does not impose any new information col lection burden. Although this action asks states to provid e information during the comment period, the information requeste d, which concerns whether the states have authority to regul ate GHGs under their SIP PSD provisions, is substantially si milar to the information already requested of the states in the Tailoring Rule. The OMB has previously approved the informat ion collection requirements contained in the existing r egulations for PSD (see, e.g. , 40 CFR 52.21) and title V (see 40 CFR parts 70 and 71) under the provisions of the Paperwork Re duction Act , 44 U.S.C. 3501 et seq . and has assigned OMB control number 2060-Page 69 of 75

0003 and OMB control number 2060-0336 respectively. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9. C. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) generally requ ires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requiremen ts under the Administrative Procedure Act or any other statute u nless the agency certifies that the rule will not have a sign ificant economic impact on a substantial number of small en tities. Small entities include small businesses, small orga nizations, and small governmental jurisdictions. For purposes of assessing the impacts of this notic e on small entities, small entity is defined as: (1) a s mall business that is a small industrial entity as defined in the U.S. Small Business Administration (SBA) size standards (see 13 CFR 121.201); (2) a small governmental jurisdiction tha t is a government of a city, county, town, school district , or special district with a population of less than 50,000; or (3) a small organization that is any not-for-profit enterprise that is independently owned and operated and is not dominan t in its field. This proposed rule will affect states and will not, in andPage 70 of 75

of itself, directly affect sources. In addition, a lthough this rule could lead to federal permitting requirements for certain sources, those sources are large emitters of GHGs a nd tend to be large sources. After considering the economic impa cts of this proposed rule on small entities, I certify that thi s action will not have a significant economic impact on a substan tial number of small entities. D. Unfunded Mandates Reform Act This rule does not contain a federal mandate that m ay result in expenditures of $100 million or more for state, local, and tribal governments, in the aggregate, or the pr ivate sector in any one year. The action may impose a duty on c ertain state, local or tribal governments to meet their existing obligation for PSD SIP submittal, but with lesser expenditures . Thus, this rule is not subject to the requirements of sections 202 or 205 of UMRA. This rule is also not subject to the requirements o f section 203 of UMRA because it contains no regulato ry requirements that might significantly or uniquely a ffect small governments. E. Executive Order 13132 - Federalism This action does not have federalism implications. It will not have substantial direct effects on the states, on thePage 71 of 75

relationship between the national government and th e states, or on the distribution of power and responsibilities a mong the various levels of government, as specified in Execu tive Order 13132

. This action merely prescribes EPA's action for stat es that do not meet their existing obligation for PSD SIP submittal. In the spirit of Executive Order 13132, and consist ent with EPA policy to promote communications between EPA an d state and local governments, EPA specifically solicits commen t on this proposed rule from state and local officials. F. Executive Order 13175 - Consultation and Coordin ation with Indian Tribal Governments This action does not have tribal implications, as s pecified in Executive Order 13175 (65 FR 67249, November 9, 2000). In this action, EPA is not addressing any tribal imple mentation plans. This action is limited to states that do no t meet their existing obligation for PSD SIP submittal. Thus, Executive Order 13175 does not apply to this action. Although Executive Order 13175 does not apply to th is proposed rule, EPA specifically solicits additional comment on this proposed action from tribal officials. G. Executive Order 13045 - Protection of Children f rom Environmental Health Risks and Safety RisksPage 72 of 75

EPA interprets EO 13045 (62 FR 19885, April 23, 19 97) as applying only to those regulatory actions that conc ern health or safety risks, such that the analysis required under section 5- 501 of the EO has the potential to influence the re gulation. This action is not subject to EO 13045 because it merely prescribes EPA's action for states that do not meet their existing obligation for PSD SIP submittal. H. Executive Order 13211 - Actions Concerning Regul ations That Significantly Affect Energy Supply, Distribution, o r Use This action is not a "significant energy action" a s defined in Executive Order 13211 (66 FR 28355(May 22, 2001) ), because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. This actio n merely prescribes EPA's action for states that do not meet their existing obligation for PSD SIP submittal. I. National Technology Transfer and Advancement Act Section 12(d) of the National Technology Transfer a nd Advancement Act of 1995 ("NTTAA"), Public Law No. 1 04-113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary c onsensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impra ctical. Voluntary consensus standards are technical standar ds (e.g. , materials specifications, test methods, sampling pr ocedures, andPage 73 of 75

business practices) that are developed or adopted b y voluntary consensus standards bodies. NTTAA directs EPA to p rovide Congress, through OMB, explanations when the Agencydecides not to use available and applicable voluntary consensus standards. This proposed rulemaking does not involve technical standards. Therefore, EPA is not considering the u se of any voluntary consensus standards. J. Executive Order 12898 - Federal Actions to Addre ss Environmental Justice in Minority Populations and L ow-Income Populations Executive Order 12898 (59 FR 7629, February 16, 199 4) establishes federal executive policy on environment al justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make en vironmental justice part of their mission by identifying and ad dressing, as appropriate, disproportionately high and adverse hu man health or environmental effects of their programs, policies, and activities on minority populations and low-income p opulations in the U.S. EPA has determined that this proposed rule will no t have disproportionately high and adverse human health or environmental effects on minority or low-income pop ulations because it does not affect the level of protection provided toPage 74 of 75

human health or the environment. This proposed rul e merely prescribes EPA's action for states that do not meet their existing obligation for PSD SIP submittal. VI. Statutory Authority The statutory authority for this action is provided by sections 101, 111, 114, 116, and 301 of the CAA as amended (42 U.S.C. 7401, 7411, 7414, 7416, and 7601).Page 75 of 75 – Action to Ensure Authority to Issue Perm its under

the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of Substantia l Inadequacy and SIP Call

Page 75 of 75 List of Subjects in 40 CFR Part 52 Air pollution control, Carbon dioxide, Carbon dioxi de equivalents, Carbon monoxide, Environmental protect ion, Greenhouse gases, Hydrofluorocarbons, Intergovernme ntal relations, Lead, Methane, Nitrogen dioxide, Nitrous oxide, Ozone, Particulate matter, Perfluorocarbons, Report ing and recordkeeping requirements, Sulfur hexafluoride, Su lfur oxides, Volatile organic compounds.

________________________ Dated:

_________________________ Lisa P. Jackson, Administrator.