STATE OF NORTH CAROLINA 

DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES 

DIVISION OF AIR QUALITY 

REPORT OF PROCEEDINGS OF PUBLIC HEARINGS 

ON PROPOSED AMENDMENTS TO RULE 

15A NCAC 02D .0544, PREVENTION OF SIGNIFICANT DETERIORATION 

REQUIREMENTS FOR GREENHOUSE GASES 

 

 

August 31, 2010 

RALEIGH, NC 

ENVIRONMENTAL MANAGEMENT COMMISSION 

Appendix A A-1
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CONTENTS 

CHAPTER I Summaries and Recommendations I-1

Background and Summary I-1

Comments and Responses Thereto I-2

Conclusion I-5

Hearing Officers Recommendation I-5

CHAPTER II Regulations Proposed for Adoption II-1

CHAPTER III Report of Proceedings III-1

Introduction III-1

Public Notice III-1

Transcript III-1

Designation of Hearing Officer III-2

CHAPTER IV Exhibits IV- 1

Proposed Regulations as Presented at the Hearing IV-2

Hearing Officer Comments at Hearing IV-6

CHAPTER V Written Comments During Comment Period V-1

CHAPTER VI Attachments VI-1

CHAPTER VII Documentation VII-1

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CHAPTER I 

Summaries and Recommendations 

BACKGROUND AND SUMMARY 

 

Rule 15A NCAC 02D .0544, PREVENTION OF SIGNIFICANT DETERIORATION 

REQUIREMENTS FOR GREENHOUSE GASES is proposed for amendment, to adopt Federal 

Greenhouse Gas Tailoring guidance from the Federal Register Notice on June 3, 2010. 

[75 FR 31514] 

On May 13, 2010 the U.S. Environmental Protection Agency Administrator Jackson signed the 

final Greenhouse Gas Tailoring Rule and published it in the Federal Register on June 2, 2010. 

The effective date of the rule is August 2, 2010. 

GHGs are emitted in much greater mass than conventional pollutants. At the current PSD and 

Title V applicability levels of GHG emissions, numerous sources, including many small sources 

that would not otherwise be required to hold air quality permits, would be required to be 

permitted for GHG emissions. Recognizing that tailoring of the PSD and Title V permitting 

programs is necessary to provide a common sense approach to GHG regulation that effectively 

balances the burdens on both the permitting authorities and the regulated community, EPA 

developed a tailoring rule. 

Under the final federal regulation, EPA defines the terms “subject to regulation”, “greenhouse 

gases”, “CO2 equivalent emissions”, “emissions increase” and “significant” and establishes 

related thresholds, and amends the definition of “major source” relative to GHGs. The final 

federal tailoring rule regulates permitting of sources of GHG emissions in two steps. In the first 

step, new major stationary sources of a regulated new source review (NSR) pollutant other than 

GHG that also have the potential to emit or will emit GHG emissions > 75,000 tons per year 

(tpy) CO2e and existing major stationary sources for non-GHGs that have an emissions increase 

of a regulated NSR pollutant and an emissions increase of CO2e of 75,000 tons per year or more 

are required to undergo PSD review and to obtain Title V permits. In step two new stationary 

sources that will emit or have the potential to emit 100,000 tpy CO2e and at existing stationary 

sources, that emit or have the potential to emit 100,000 tpy CO2e, modifications that will result 

in an emission increase of 75,000 tpy CO2e or more are required to undergo PSD review and to 

obtain Title V permits. Under the final federal regulation, EPA considers GHGs subject to 

regulation beginning January 2, 2011. 

North Carolina has its own approved PSD program and does not automatically pick up the 

federal tailoring provisions. Rulemaking is necessary to incorporate GHG as a regulated 

pollutant and to implement tailoring provisions to allow DAQ to efficiently and effectively 

implement its PSD and Title V permitting programs. The rule amendments are proposed to add 

tailoring provisions to the state rules. 

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PUBLIC COMMENTS AND RESPONSES THERETO

The following comments were received during the comment period. 

Comment:

Blue Ridge Environmental Defense League (BREDL) - David Mickey 

BREDL supports the Commission’s proposed rule incorporating the federal greenhouse gas 

(GHG) tailoring rules into North Carolina’s PSD and Title V program. The tailoring rule is 

necessary to avoid the regulatory burden that would result from permitting all sources of GHG 

that would be beginning on January 2, 2011. The EPA recognized that because GHG pollutants 

are emitted at much higher rates than criteria pollutants tens of thousands of facilities would 

require permits beginning January 2, 2010 unless new thresholds limits were set. The State’s 

fiscal note for this rule indicates that PSD and Title V permit applications would total over 

50,000 and associated costs would total $490 million on an annual basis. Under these 

circumstances, the critical need for the tailoring rule is obvious. In addition to limiting the 

number of sources, the rule also adopts by reference the transition in the federal rule and applies 

the new rule only to facilities subject to PSD for non-GHG emissions on Jan 2, 2011 and non 

PSD facilities in July 2011. It is important to note that no facilities are subject to regulation only 

due to their GHG emissions. 

Carbon dioxide and the other GHG are pollutants. Recognizing this, both EPA and North 

Carolina are taking steps including this tailoring rule and beginning with the state’s largest 

sources to regulate GHG emissions. The final tailoring rule from EPA properly included all 

sources regardless of the fuel being burned. Specifically, power plants that burn biomass are not 

and should not be exempt from the rules. The final tailoring rule does not directly address the 

issue of biogenic vs. anthropogenic fuels, although various interests questioned EPA’s decision 

not to exempt biomass. 

 

Biomass should not be exempt for several reasons. The attached letter of concern to DENR, 

Secretary Dee Freeman from the NC Academy of Family Physicals focused on human health 

impacts from air pollution, but it also referred to CO2 emissions. In addition, the Division of Air 

Quality’s July 8, 2009 presentation to the EMC, “Comparison of Biomass with Coal” found 

higher CO2 emissions from biomass per energy produced. Given the fact that new carbon added 

to the atmosphere remains there for decades, future rules retain a comprehensive approach that 

covers all smokestacks without exception. Controlling GHG emissions at the source is essential 

to combat global warming. To avoid catastrophic impacts, both globally and here in North 

Carolina, substantial reductions must occur in the near future. The GHG Tailoring Rule in a 

beginning first step in a complex process that will lead to an economy that by necessity will rely 

less on carbon fuels in all forms, Thank you for the opportunity to comment. 

Response: 

Under the North Carolina GHG Tailoring Rule facilities using biomass fuels are not treated 

differently than facilities using other fuels. If their total emissions of regulated pollutants are 

below the tailoring thresholds, then they would be exempt; if not then they are subject to PSD 

permitting. 

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In the final Federal GHG Tailoring Rule, EPA did not take action on a request from commenters 

to exclude CO2 emissions from biogenic fuels. Instead, EPA explained that the legal basis for 

the Rule, reflecting specifically the overwhelming permitting burdens that would be created 

under the statutory emissions thresholds, does not itself provide a rationale for excluding all 

emissions of CO2 from combustion of a particular fuel, even a biogenic one . The fact that the 

Tailoring Rule did not take final action one way or another concerning such exclusion does not 

mean that EPA has decided there is no basis for treating biomass CO2 emissions differently from 

fossil fuel CO2 emissions under the Clean Air Act's PSD and Title V Programs. Further, in 

finalizing the Tailoring Rule, the Agency did not have sufficient information to address the issue 

of the carbon neutrality of biogenic energy in any event. 

On July 9, 2010, OAR Assistant Administrator Gina McCarthy signed a Call for Information in 

which EPA requests public comment and information from interested parties on approaches to 

accounting for greenhouse gas emissions from bioenergy and other biogenic sources. The Call 

for Information was published in the Federal Register, July 15, 2010. The purpose of this Call is 

to request comment on developing an approach for such emissions under the Prevention of 

Significant Deterioration (PSD) and Title V Programs (GHG Tailoring Rule) as well as to 

receive data submissions about these sources and their emissions, general technical comments on 

accounting for these emissions, and comments on the underlying science that should inform 

possible accounting approaches. GHG emissions from bioenergy and other biogenic sources are 

those generated during combustion or decomposition of biologically-based material, and include 

sources such as, but not limited to, utilization of forest or agricultural products for energy, 

wastewater treatment and livestock management facilities, landfills, and fermentation processes 

for ethanol production. 

EPA’s Call for Information may result in additional guidance related to GHG emissions from 

biomass and that may necessitate future rule amendments. At this time, no rule change is 

required. 

Comment:

Environmental Protection Agency (EPA) reviewed the prehearing GHG SIP revision and offer 

draft comments for review and consideration. EPA requests that we clarify that North Carolina’s 

intend was to incorporate by reference the rule as promulgated on June 3, 2010 and effective 

August 2, 2010. 

Response:

Emphasis added to include the reference to the effective date of August 2, 2010 as suggested by 

EPA. 

 

Comment:

Preston Howard, President of Manufacturers and Chemical Industry Council of North Carolina 

(MCIC), wants the final rule to be such that North Carolina companies are held to the same 

permitting and compliance program for GHGs as our competitors who operate in other states. 

As proposed the state-adopted rule would not be stayed during the pendency of a stay of the 

federal GHG Tailoring rule, and our companies may incur significant and unnecessary costs. 

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Response:

The federal action making GHG’s subject to regulation was the vehicle emissions rule (LDV). 

Absent a stay or vacatur of that rule, not the federal NSR tailoring rule, GHG’s will become a 

regulated NSR pollutant when that rule takes effect in North Carolina. On the date that the LDV 

rule takes effect, currently interpreted to be January 2, 2011, North Carolina will begin 

regulating GHG’s as “regulated NSR pollutants” under the NSR programs. The rule under 

consideration is North Carolina’s tailoring rule, consistent with the federal tailoring rule, and this 

rule is designed to reduce the number of sources that would otherwise be subject to NSR review 

at the current statutory and regulatory level of 100/250 tpy beginning in January 2, 2011. North 

Carolina has state-adopted rules for its PSD and Nonattainment NSR programs, which do not 

include any subsequent amendments or editions to referenced materials. A stay or vacatur of the 

federal tailoring rule has no immediate effect on North Carolina’s rule. If the federal tailoring 

rule is stayed or vacated, then North Carolina will evaluate its position and take appropriate 

action. 

Comment:

Pamela F. Faggert, Vice President and Chief Environmental Officer, of Dominion Resources 

Services supports the expeditious promulgation of North Carolina proposed regulatory revisions 

to include greenhouse gases in Title V and NSR PSD Permitting Programs. Such action will 

avoid the consequences of dual permitting by EPA and DENR which could significantly slow the 

issuance of permits and modifications which would increases costs to North Carolina businesses. 

Response:

No rule change required. 

SUMMARY OF COMMENTS AND RESPONSES

Comments Response

Blue Ridge Environmental 

Defense League does not 

want biomass fuels to be 

exempted from regulation 

under this rule. 

Facilities with GHG emissions from biomass fuels are exempted 

when emissions fail to exceed the GHG tailoring thresholds in 

similar manner to other facilities with other fuels. 

No change in rule 

EPA requests clarification 

the reference to the version 

of the Code of Federal 

Regulation. 

Revised paragraph (n) as follows: 

Except for 40 CFR 81.334, the The version of the CFR

incorporated in this Rule is that published in the Federal Register as 

of June 3, 2010 and effective August 2, 2010 and does not include 

any subsequent amendments or editions to the referenced material. 

MCIC wants North 

Carolina businesses to be 

held to the same program 

as other states so as to 

remain competitive if a 

court of competent 

jurisdiction stays 

North Carolina has state-adopted rules for its PSD and 

Nonattainment NSR programs, which do not include any 

subsequent amendments or editions to the referenced material. A 

stay or vacatur of the federal tailoring rule has no immediate effect 

on North Carolina’s rule. If the federal tailoring rule is stayed or 

vacated, then North Carolina will evaluate its position and take 

appropriate action. No change in rule. 

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requirements of the federal 

GHG tailoring rule. 

Comments Response

Dominion Resources 

Services – Supports the 

expeditious promulgation 

of North Carolina proposed 

regulatory revisions to 

include greenhouse gases 

in Title V and NSR PSD 

Permitting Programs. Such 

action will avoid dual 

permitting and uncertainty 

if not adopted in timely 

manner. 

No change in rule. 

CONCLUSION

Four persons commented on the rules that were published in the North Carolina Register and 

taken to public hearing. Minor rule changes will be made to the proposed rule amendments as a 

result of the hearing comments and our responses. 

HEARING OFFICER'S RECOMMENDATION

The Hearing Officer recommends that the proposed amendments as presented in Chapter II of 

this hearing report be adopted by the Environmental Management Commission. 

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15A NCAC 02D .0544 is adopted with changes as published in 25:04 NCR 415-416 as follows: 

15A NCAC 02D .0544 PREVENTION OF SIGNIFICANT DETERIORATION REQUIREMENTS FOR 

GREENHOUSE GASES 

(a) The purpose of this Rule is to implement a program for the prevention of significant deterioration of air quality for 

greenhouse gases as required by 40 CFR 51.166. For purposes of greenhouse gases, the provisions of this Rule shall 

apply rather than the provisions of Rule .0530 of this Section. For all other regulated NSR pollutants, the provisions of 

Rule .0530 of this Section apply. 

(b) For the purposes of this Rule, the definitions contained in 40 CFR 51.166(b) and 40 CFR 51.301 shall apply except 

the definition of "baseline actual emissions." "Baseline actual emissions" means the rate of emissions, in tons per year, 

of a regulated new source review (NSR) pollutant, as determined in accordance with Subparagraphs (1) through (3) of 

this Paragraph: 

(1) For an existing emissions unit, baseline actual emissions means the average rate, in tons per year, at 

which the emissions unit actually emitted the pollutant during any consecutive 24-month period selected by the 

owner or operator within the 5-year period immediately preceding the date that a complete permit application is 

received by the Division for a permit required under this Rule. The Director shall allow a different time period, 

not to exceed 10 years immediately preceding the date that a complete permit application is received by the 

Division, if the owner or operator demonstrates that it is more representative of normal source operation. For the 

purpose of determining baseline actual emissions, the following shall apply: 

(A) The average rate shall include fugitive emissions to the extent quantifiable, and emissions 

associated with startups, shutdowns, and malfunctions; 

(B) The average rate shall be adjusted downward to exclude any non-compliant emissions that 

occurred while the source was operating above any emission limitation that was legally 

enforceable during the consecutive 24-month period; 

(C) For an existing emission unit (other than an electric utility steam generating unit), the average 

rate shall be adjusted downward to exclude any emissions that would have exceeded an 

emission limitation with which the major stationary source must currently comply. However, 

if the State has taken credit in an attainment demonstration or maintenance plan consistent 

with the requirements of 40 CFR 51.165(a)(3)(ii)(G) for an emission limitation that is part of 

a maximum achievable control technology standard that the Administrator proposed or 

promulgated under part 63 of the Code of Federal Regulations, the baseline actual emissions 

shall be adjusted to account for such emission reductions; 

(D) For an electric utility steam generating unit, the average rate shall be adjusted downward to 

reflect any emissions reductions under G. S. 143-215.107D and for which cost recovery is 

sought pursuant to G. S. 62-133.6; 

(E) For a regulated NSR pollutant, when a project involves multiple emissions units, only one 

consecutive 24-month period shall be used to determine the baseline actual emissions for all 

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the emissions units being changed. A different consecutive 24-month period for each 

regulated NSR pollutant can be used for each regulated NSR pollutant; and 

(F) The average rate shall not be based on any consecutive 24-month period for which there is 

inadequate information for determining annual emissions, in tons per year, and for adjusting 

this amount if required by Parts (B) and (C) of this Subparagraph. 

(2) For a new emissions unit, the baseline actual emissions for purposes of determining the emissions 

increase that will result from the initial construction and operation of such unit shall equal zero; and 

thereafter, for all other purposes, shall equal the unit's potential to emit. 

(3) For a plantwide applicability limit (PAL) for a stationary source, the baseline actual emissions shall be 

calculated for existing emissions units in accordance with the procedures contained in Subparagraph 

(1) of this Paragraph and for a new emissions unit in accordance with the procedures contained in 

Subparagraph (2) of this Paragraph. 

(c) In the definition of "net emissions increase," the reasonable period specified in 40 CFR 51.166(b)(3)(ii) shall be 

seven years. 

(d) The limitation specified in 40 CFR 51.166(b)(15)(ii) shall not apply. 

(e) Major stationary sources and major modifications shall comply with the requirements contained in 40 CFR 51.166(i) 

and (a)(7) and by extension in 40 CFR 51.166(j) through (o) and (w). The transition provisions allowed by 40 CFR 52.21 

(i)(11)(i) and (ii) and (m)(1)(vii) and (viii) are hereby adopted under this Rule. The minimum requirements described in 

the portions of 40 CFR 51.166 referenced in this Paragraph are hereby adopted as the requirements to be used under this 

Rule, except as otherwise provided in this Rule. Wherever the language of the portions of 40 CFR 51.166 referenced in 

this Paragraph speaks of the "plan," the requirements described therein shall apply to the source to which they pertain, 

except as otherwise provided in this Rule. Whenever the portions of 40 CFR 51.166 referenced in this Paragraph provide 

that the State plan may exempt or not apply certain requirements in certain circumstances, those exemptions and 

provisions of nonapplicability are also hereby adopted under this Rule. However, this provision shall not be interpreted 

so as to limit information that may be requested from the owner or operator by the Director as specified in 40 CFR 

51.166(n)(2). 

(f) 40 CFR 51.166(w)(10)(iv)(a) is changed to read: "If the emissions level calculated in accordance with Paragraph 

(w)(6) of this Section is equal to or greater than 80 percent of the PAL [plant wide applicability limit] level, the Director 

shall renew the PAL at the same level." 40 CFR 51.166(w)(10)(iv)(b) is not incorporated by reference. 

(g) 15A NCAC 02Q .0102 and .0302 are not applicable to any source to which this Rule applies. The owner or operator 

of the sources to which this Rule applies shall apply for and receive a permit as required in 15A NCAC 02Q .0300 or 

.0500. 

(h) When a particular source or modification becomes a major stationary source or major modification solely by virtue of 

a relaxation in any enforceable limitation which was established after August 7, 1980, on the capacity of the source or 

modification to emit a pollutant, such as a restriction on hours of operation, then the provisions of this Rule shall apply to 

the source or modification as though construction had not yet begun on the source or modification. 

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(i) The provisions of 40 CFR 52.21(r)(2) regarding the period of validity of approval to construct are incorporated by 

reference except that the term "Administrator" is replaced with "Director". 

(j) Permits may be issued based on innovative control technology as set forth in 40 CFR 51.166(s)(1) if the requirements 

of 40 CFR 51.166(s)(2) have been met, subject to the condition of 40 CFR 51.166(s)(3), and with the allowance set forth 

in 40 CFR 51.166(s)(4). 

(k) A permit application subject to this Rule shall be processed in accordance with the procedures and requirements of 

40 CFR 51.166(q). Within 30 days of receipt of the application, applicants shall be notified if the application is complete 

as to initial information submitted. Commencement of construction before full prevention of significant deterioration 

approval is obtained constitutes a violation of this Rule. 

(l) Approval of an application with regard to the requirements of this Rule shall not relieve the owner or operator of the 

responsibility to comply fully with applicable provisions of other rules of this Subchapter or Subchapter 02Q of this Title 

and any other requirements under local, state, or federal law. 

(m) If the owner or operator of a source is using projected actual emissions to avoid applicability of prevention of 

significant deterioration requirements, the owner or operator shall notify the Director of the modification before 

beginning actual construction. The notification shall include: 

(1) a description of the project; 

(2) identification of sources whose emissions could be affected by the project; 

(3) the calculated projected actual emissions and an explanation of how the projected actual emissions 

were calculated, including identification of emissions excluded by 40 CFR 51.166(b)(40)(ii)(c); 

(4) the calculated baseline actual emissions and an explanation of how the baseline actual emissions were 

calculated; and 

(5) any netting calculations if applicable. 

If upon reviewing the notification, the Director finds that the project will cause a prevention of significant deterioration 

evaluation, then the Director shall notify the owner or operator of his findings. The owner or operator shall not make the 

modification until it has received a permit issued pursuant to this Rule. If a permit revision is not required pursuant to this

Rule, the owner or operator shall maintain records of annual emissions in tons per year, on a calendar year basis related 

to the modifications for 10 years following resumption of regular operations after the change if the project involves 

increasing the emissions unit's design capacity or its potential to emit the regulated NSR pollutant; otherwise these 

records shall be maintained for five years following resumption of regular operations after the change. The owner or 

operator shall submit a report to the Director within 60 days after the end of each year during which these records must 

be generated. The report shall contain the items listed in 40 CFR 51.166(r)(6)(v)(a) through (c). The owner or operator 

shall make the information documented and maintained under this Paragraph available to the Director or the general 

public pursuant to the requirements in 40 CFR 70.4(b)(3)(viii). 

(n) The references to the Code of Federal Regulations (CFR) in this Rule are incorporated by reference unless a specific 

35 reference states otherwise. Except for 40 CFR 81.334, the The version of the CFR incorporated in this Rule is that 

36 published in the Federal Register as of June 3, 2010 and effective August 2, 2010 and does not include any subsequent 

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amendments or editions to the referenced material. This Rule is applicable as of its effective date in accordance with 40 

CFR 51.166(b)(48) and (b)(49)(iv) and (v). 

History Note: Authority G.S. 143-215.3(a)(1); 143-215.107(a)(3); 143-215.107(a)(5); 143-215.107(a)(7); 143-

215.108(b); 150B-21.6; 

Eff. January 2, 2011. 

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CHAPTER III 

REPORT OF PROCEEDINGS 

Introduction 

The Department of Environmental and Natural Resources, Division of Air Quality, held a public 

hearing on August 31, 2010, at 6:00 P.M., at DENR – Division of Air Quality Annex Training 

Room (AQ 526) 2728 Capital Blvd., Raleigh, NC 27604. 

The hearing considered the proposed amendments to Rules 15A NCAC 02D .0544. 

 The proposed effective date for these rules is projected to be January 2, 2010. 

A public notice announcing this hearing was mailed to each person on the official mailing list for 

rule-making hearings. The public notice was also published in the North Carolina Register at 

least 20 days before the public hearing and in the Charlotte Observer, the Wilmington Star News, 

the Asheville Citizen Times, the Winston Salem Journal, and the Raleigh News and Observer at 

least 30 days prior to the public hearing. 

Transcripts of the August 31, 2010 hearings has not been prepared; however, an audio recording 

of each proceeding will be kept on file with the Division of Air Quality for one year from the 

date of the final actions by the Environmental Management Commission. 

A list of those attending the hearing as follows: 

Hearing Officer: Mr. Les Hall, member of the Environmental Management Commission 

Staff Members at the August 31, 2010, Raleigh hearing: 

Ms. Joelle Burleson, DAQ, DENR 

 Mr. Patrick Knowlson, DAQ, DENR 

Mr. Glenn Sappie, DAQ, DENR 

Mr. Tom Mather, DAQ, DENR 

Members of the General Public at the August 31, Raleigh hearing: 

David Mickey, Blue Ridge Environmental Defense League 

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CHAPTER IV 

EXHIBITS 

EXHIBIT PAGE

Proposed Regulations as Published in the Public Notice and Presented at the Hearing IV-2 

Hearing Officer Comments at the Public Hearing IV-6 

 

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IV-2 

TITLE 15A – DEPARTMENT OF ENVIRONMENT AND 

NATURAL RESOURCES 

Notice is hereby given in accordance with G.S. 150B-21.2 that 

the Environmental Management Commission intends to adopt 

the rule cited as 15A NCAC 02D .0544 and amend the rules 

cited as 15A NCAC 02D .0530-.0531. 

Proposed Effective Date: January 2, 2011 

Public Hearing: 

Date: August 31, 2010 

Time: 7:00 p.m. 

Location: Division of Air Quality, 2728 Capital Blvd., Air 

Quality Annex Training Room (AQ-526), Raleigh, NC 27604 

Reason for Proposed Action: Hearing 1: ... 

 Hearing 2: The purpose of the proposed adoption of 15A 

NCAC 02D .0544 is to incorporate Prevention of Significant 

Deterioration tailoring provisions for greenhouse gases. 

Procedure by which a person can object to the agency on a 

proposed rule: If you have any objections to the proposed 

rules, please mail a letter including your specific reasons to: 

Ms. Joelle Burleson, Division of Air Quality, 1641 Mail Service 

Center, Raleigh, NC 27699-1641.

Comments may be submitted to: Joelle Burleson, Division of 

Air Quality, 1641 Mail Service Center, Raleigh, NC 27699-

1641; phone (919) 733-1474; fax (919) 715-7476; email 

joelle.burleson@ncdenr.gov 

Comment period ends: October 15, 2010 

Procedure for Subjecting a Proposed Rule to Legislative 

Review: If an objection is not resolved prior to the adoption of 

the rule, a person may also submit written objections to the 

Rules Review Commission after the adoption of the Rule. If the 

Rules Review Commission receives written and signed 

objections after the adoption of the Rule in accordance with G.S. 

150B-21.3(b2) from 10 or more persons clearly requesting 

review by the legislature and the Rules Review Commission 

approves the rule, the rule will become effective as provided in 

G.S. 150B-21.3(b1). The Commission will receive written 

objections until 5:00 p.m. on the day following the day the 

Commission approves the rule. The Commission will receive 

those objections by mail, delivery service, hand delivery, or 

facsimile transmission. If you have any further questions 

concerning the submission of objections to the Commission, 

please call a Commission staff attorney at 919-431-3000. 

Fiscal Impact: A copy of the fiscal note can be obtained 

from the agency.

 State 

 Local 

 Substantial Economic Impact (>$3,000,000) 

 None 

Fiscal Note posted at: 

http://www.osbm.state.nc.us/files/pdf_files/DENR07292010.pdf

15A NCAC 02D .0544 

CHAPTER 02 - ENVIRONMENTAL MANAGEMENT 

COMMISSION 

SUBCHAPTER 02D - AIR POLLUTION CONTROL 

REQUIREMENTS 

SECTION .0500 - EMISSION CONTROL STANDARDS 

NOTE: Text shown in italics reflects proposed changes which 

were published in 24:17 NCR 1509-11. However, due to word 

processor issues, proposed changes to Paragraph (v) were not 

correctly reflected in that version, but are correctly reflected in 

this proposed version. 15A NCAC 02D .0544 AS PUBLISHED 

IN 25:04 NCR 415-416 AS FOLLOWS: 

15A NCAC 02D .0544 is proposed for adoption as follows: 

15A NCAC 02D .0544 PREVENTION OF SIGNIFICANT 

DETERIORATION 

REQUIREMENTS FOR 

GREENHOUSE GASES 

(a) The purpose of this Rule is to implement a program for the 

prevention of significant deterioration of air quality for 

greenhouse gases as required by 40 CFR 51.166. For purposes of 

greenhouse gases, the provisions of this Rule shall apply rather 

than the provisions of Rule .0530 of this Section. For all other 

regulated NSR pollutants, the provisions of Rule .0530 of this 

Section apply.

(b) For the purposes of this Rule, the definitions contained in 40 

CFR 51.166(b) and 40 CFR 51.301 shall apply except the 

definition of "baseline actual emissions." "Baseline actual 

emissions" means the rate of emissions, in tons per year, of a 

regulated new source review (NSR) pollutant, as determined in 

accordance with Subparagraphs (1) through (3) of this 

Paragraph:

(1) For an existing emissions unit, baseline actual 

emissions means the average rate, in tons per year, at 

which the emissions unit actually emitted the pollutant 

during any consecutive 24-month period selected by the 

owner or operator within the 5-year period immediately 

preceding the date that a complete permit application is 

received by the Division for a permit required under 

this Rule. The Director shall allow a different time 

period, not to exceed 10 years immediately preceding 

the date that a complete permit application is received 

by the Division, if the owner or operator demonstrates 

that it is more representative of normal source 

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operation. For the purpose of determining baseline 

actual emissions, the following shall apply:

(A) The average rate shall include 

fugitive emissions to the extent 

quantifiable, and emissions associated 

with startups, shutdowns, and 

malfunctions;

(B) The average rate shall be adjusted 

downward to exclude any noncompliant emissions that occurred 

while the source was operating above 

any emission limitation that was 

legally enforceable during the 

consecutive 24-month period; 

(C) For an existing emission unit (other 

than an electric utility steam 

generating unit), the average rate 

shall be adjusted downward to 

exclude any emissions that would 

have exceeded an emission limitation 

with which the major stationary 

source must currently comply. 

However, if the State has taken credit 

in an attainment demonstration or 

maintenance plan consistent with the 

requirements of 40 CFR 

51.165(a)(3)(ii)(G) for an emission 

limitation that is part of a maximum 

achievable control technology 

standard that the Administrator 

proposed or promulgated under part 

63 of the Code of Federal 

Regulations, the baseline actual 

emissions shall be adjusted to account 

for such emission reductions;

(D) For an electric utility steam 

generating unit, the average rate shall 

be adjusted downward to reflect any 

emissions reductions under G. S. 143-

215.107D and for which cost 

recovery is sought pursuant to G. S. 

62-133.6;

(E) For a regulated NSR pollutant, when 

a project involves multiple emissions 

units, only one consecutive 24-month 

period shall be used to determine the 

baseline actual emissions for all the 

emissions units being changed. A 

different consecutive 24-month 

period for each regulated NSR 

pollutant can be used for each 

regulated NSR pollutant; and

(F) The average rate shall not be based on 

any consecutive 24-month period for 

which there is inadequate information 

for determining annual emissions, in 

tons per year, and for adjusting this 

amount if required by Parts (B) and 

(C) of this Subparagraph.

(2) For a new emissions unit, the baseline actual 

emissions for purposes of determining the 

emissions increase that will result from the 

initial construction and operation of such unit 

shall equal zero; and thereafter, for all other 

purposes, shall equal the unit's potential to 

emit.

(3) For a plantwide applicability limit (PAL) for a 

stationary source, the baseline actual emissions 

shall be calculated for existing emissions units 

in accordance with the procedures contained in 

Subparagraph (1) of this Paragraph and for a 

new emissions unit in accordance with the 

procedures contained in Subparagraph (2) of 

this Paragraph.

(c) In the definition of "net emissions increase," the reasonable 

period specified in 40 CFR 51.166(b)(3)(ii) shall be seven years. 

(d) The limitation specified in 40 CFR 51.166(b)(15)(ii) shall 

not apply.

(e) Major stationary sources and major modifications shall 

comply with the requirements contained in 40 CFR 51.166(i) 

and (a)(7) and by extension in 40 CFR 51.166(j) through (o) and 

(w). The transition provisions allowed by 40 CFR 52.21 

(i)(11)(i) and (ii) and (m)(1)(vii) and (viii) are hereby adopted 

under this Rule. The minimum requirements described in the 

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IV-4 

portions of 40 CFR 51.166 referenced in this Paragraph are 

hereby adopted as the requirements to be used under this Rule, 

except as otherwise provided in this Rule. Wherever the 

language of the portions of 40 CFR 51.166 referenced in this 

Paragraph speaks of the "plan," the requirements described 

therein shall apply to the source to which they pertain, except as 

otherwise provided in this Rule. Whenever the portions of 40 

CFR 51.166 referenced in this Paragraph provide that the State 

plan may exempt or not apply certain requirements in certain 

circumstances, those exemptions and provisions of 

nonapplicability are also hereby adopted under this Rule. 

However, this provision shall not be interpreted so as to limit 

information that may be requested from the owner or operator by 

the Director as specified in 40 CFR 51.166(n)(2).

(f) 40 CFR 51.166(w)(10)(iv)(a) is changed to read: "If the 

emissions level calculated in accordance with Paragraph (w)(6) 

of this Section is equal to or greater than 80 percent of the PAL 

[plant wide applicability limit] level, the Director shall renew the 

PAL at the same level." 40 CFR 51.166(w)(10)(iv)(b) is not 

incorporated by reference.

(g) 15A NCAC 02Q .0102 and .0302 are not applicable to any 

source to which this Rule applies. The owner or operator of the 

sources to which this Rule applies shall apply for and receive a 

permit as required in 15A NCAC 02Q .0300 or .0500.

(h) When a particular source or modification becomes a major 

stationary source or major modification solely by virtue of a 

relaxation in any enforceable limitation which was established 

after August 7, 1980, on the capacity of the source or 

modification to emit a pollutant, such as a restriction on hours of 

operation, then the provisions of this Rule shall apply to the 

source or modification as though construction had not yet begun 

on the source or modification.

(i) The provisions of 40 CFR 52.21(r)(2) regarding the period of 

validity of approval to construct are incorporated by reference 

except that the term "Administrator" is replaced with "Director".

(j) Permits may be issued based on innovative control 

technology as set forth in 40 CFR 51.166(s)(1) if the 

requirements of 40 CFR 51.166(s)(2) have been met, subject to 

the condition of 40 CFR 51.166(s)(3), and with the allowance set 

forth in 40 CFR 51.166(s)(4). 

(k) A permit application subject to this Rule shall be processed 

in accordance with the procedures and requirements of 40 CFR 

51.166(q). Within 30 days of receipt of the application, 

applicants shall be notified if the application is complete as to 

initial information submitted. Commencement of construction 

before full prevention of significant deterioration approval is 

obtained constitutes a violation of this Rule.

(l) Approval of an application with regard to the requirements of 

this Rule shall not relieve the owner or operator of the 

responsibility to comply fully with applicable provisions of other 

rules of this Subchapter or Subchapter 02Q of this Title and any 

other requirements under local, state, or federal law.

(m) If the owner or operator of a source is using projected actual 

emissions to avoid applicability of prevention of significant 

deterioration requirements, the owner or operator shall notify the 

Director of the modification before beginning actual 

construction. The notification shall include:

(1) a description of the project; 

(2) identification of sources whose emissions 

could be affected by the project; 

(3) the calculated projected actual emissions and 

an explanation of how the projected actual 

emissions were calculated, including 

identification of emissions excluded by 40 

CFR 51.166(b)(40)(ii)(c);

(4) the calculated baseline actual emissions and an 

explanation of how the baseline actual 

emissions were calculated; and

(5) any netting calculations if applicable.

If upon reviewing the notification, the Director finds that the 

project will cause a prevention of significant deterioration 

evaluation, then the Director shall notify the owner or operator 

of his findings. The owner or operator shall not make the 

modification until it has received a permit issued pursuant to this 

Rule. If a permit revision is not required pursuant to this Rule,

the owner or operator shall maintain records of annual emissions 

in tons per year, on a calendar year basis related to the 

modifications for 10 years following resumption of regular 

operations after the change if the project involves increasing the 

emissions unit's design capacity or its potential to emit the 

regulated NSR pollutant; otherwise these records shall be 

maintained for five years following resumption of regular 

operations after the change. The owner or operator shall submit a 

report to the Director within 60 days after the end of each year 

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IV-5 

during which these records must be generated. The report shall 

contain the items listed in 40 CFR 51.166(r)(6)(v)(a) through (c). 

The owner or operator shall make the information documented 

and maintained under this Paragraph available to the Director or 

the general public pursuant to the requirements in 40 CFR 

70.4(b)(3)(viii).

(n) The references to the Code of Federal Regulations (CFR) in 

this Rule are incorporated by reference unless a specific 

reference states otherwise. Except for 40 CFR 81.334, the 

version of the CFR incorporated in this Rule is that as of June 3, 

2010 and does not include any subsequent amendments or 

editions to the referenced material. This Rule is applicable as of 

its effective date in accordance with 40 CFR 51.166(b)(48) and 

(b)(49)(iv) and (v).

History Note: Authority G.S. 143-215.3(a)(1); 143-

215.107(a)(3); 143-215.107(a)(5); 143-

215.107(a)(7); 143-215.108(b); 150B-21.6; 

Eff. January 2, 2011. 

* * * * * * * * * * * * * * * * * * * * 

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IV-6 

Hearing Officer's Suggested Hearing Comments 

INTRODUCTION

[Hearing officer]: 

 Good evening ladies and gentlemen. My name is Les Hall. I am a member of the North Carolina 

Environmental Management Commission. My role as hearing officer is to listen to all relevant 

comment on these proceedings and report them to the full commission. Sitting with me is Ms. Joelle 

Burleson. She is with the North Carolina Division of Air Quality, Planning Section. 

 Some of the staff from the Division of Air Quality are here to assist. Ms. Burleson, please introduce 

the staff present. 

[Ms. Burleson] (Introduces staff) 

[Hearing officer]: 

 This evening we are conducting two hearings. During Hearing 1, we will take comments 

concerning amendments to 15A NCAC 02D .0530, Prevention of Significant Deterioration or PSD, 

and 02D .0531, Sources in Nonattainment Areas, to incorporate particulate matter with a diameter of 

2.5 microns or less (fine particulate) as a National Ambient Air Quality Standard (NAAQS) pollutant. 

The amendments also include modified language regarding notification of federal land managers of 

PSD permit applications. During Hearing 2, we will take comments concerning adoption of 15A 

NCAC 02D .0544, Prevention of Significant Deterioration Requirements for Greenhouse Gases (or 

GHGs), to incorporate PSD tailoring provisions for greenhouse gases. These hearings will be held 

according to the North Carolina Administrative Procedures Act. The public notice for these hearings 

has been advertised in the North Carolina Register and five newspapers in the state. Notice has been 

sent to those on the official DAQ mailing list. I will enter the public notice and the proposed 

amendments and adoptions into the hearing record without reading them at this time. 

 Any person desiring to comment is requested to submit a written statement for inclusion into the 

hearing record. Once called to speak, please come to the podium and state your name clearly, identify 

the rule or rules you are commenting on, and whom you represent. 

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[HEARING 1]: 

--------------------------------------------------------------------------------------------------------

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IV-8 

[HEARING 2]: 

 I will now open the second hearing and take relevant comments on adoption of 15A NCAC 02D 

.0544, Prevention of Significant Deterioration Requirements for Greenhouse Gases. 

 On May 13, 2010 the U.S. Environmental Protection Agency Administrator signed the final 

Greenhouse Gas Tailoring Rule and published it in the Federal Register on June 2, 2010. The effective 

date of the rule is August 2, 2010. 

 GHGs are emitted in much greater mass than conventional pollutants. At the current PSD and 

Title V applicability levels of GHG emissions (100 tpy for Title V and 250 or 100 tons per year for 

PSD depending on source category), numerous sources, including many small sources that would not 

otherwise be required to hold air quality permits, would be required to be permitted for GHG 

emissions. Recognizing that tailoring of the PSD and Title V permitting programs is necessary to 

provide a common sense approach to GHG regulation that effectively balances the burdens on both 

the permitting authorities and the regulated community, EPA developed a tailoring rule. 

 Under the final federal regulation, EPA defines the terms “subject to regulation”, “greenhouse 

gases”, “CO2 equivalent emissions”, “emissions increase” and “significant” and establishes related 

thresholds, and amends the definition of “major source” relative to GHGs. The final federal tailoring 

rule regulates permitting of sources of GHG emissions in two steps. In the first step, new major 

stationary sources of a regulated new source review (NSR) pollutant other than GHG that also have 

the potential to emit or will emit GHG emissions at 75,000 tons per year (tpy) CO2e or greater, and 

existing major stationary sources of non-GHGs that have an emissions increase of a regulated NSR 

pollutant and an emissions increase of CO2e of 75,000 tons per year or more are required to undergo 

PSD review and to obtain Title V permits. In step two, new stationary sources that will emit or have 

the potential to emit 100,000 tpy CO2e, and at existing stationary sources that emit or have the 

potential to emit 100,000 tpy CO2e, modifications that will result in an emission increase of 75,000 

tpy CO2e or more are required to undergo PSD review and to obtain Title V permits. Under the final 

federal regulation, EPA considers GHGs subject to regulation beginning January 2, 2011 when the 

Light Duty Vehicle GHG rule requirements take effect. 

 North Carolina has its own approved PSD program and does not automatically pick up the 

federal tailoring provisions. Rulemaking is necessary to specifically incorporate GHG as a regulated 

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IV-9 

pollutant and to implement tailoring provisions to allow DAQ to efficiently and effectively implement 

its PSD and Title V permitting programs. The proposed rule adds tailoring provisions to the state rules 

by incorporating by reference the June 3, 2010 federal GHG Tailoring Rule provisions. 

-------------------------------------------------------------------------------------------------------- 

 [Hearing officer]: Optional Time Limit 

 Many people have requested to speak at this hearing. Due to time constraints, speakers’ 

presentations will be limited to ___ minutes. Speakers are requested to submit a written statement by 

the close of the comment period for inclusion into the hearing record. 

-------------------------------------------------------------------------------------------------------- 

[hearing officer]: 

I will now take any comments that you may have. 

[SPEAKERS] 

 

[hearing officer]: 

Is there anyone else who would like to comment? If there are no more comments, then this hearing is 

closed. The hearing record will remain open until October 15, 2010, for additional written comments. 

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. 

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V-1 

CHAPTER V 

COMMENTS DURING THE COMMENT PERIOD 

Four comments were received for the rules in this hearing report during the comment period. 

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VI-1 

CHAPTER VI 

INDEX OF ATTACHMENTS 

ATTACHMENTS PAGE

1. Federal Greenhouse Gas Tailoring Rule Economic Analysis VI-2 

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VI-2 

ECONOMIC ANALYSIS

Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule

I. Basic Information 

Contact Information 

1. Division of Air Quality File Number (492) 

2. Analyst: Glenn Sappie, Economist II 

Glenn.Sappie@ncdenr.gov

3. Office DENR, Air Quality Planning, Rule Development 

Branch 

4. Phone 919/733-1468 

5. Comments to Agency Contact Joelle Burleson, 919/733-1474 

Joelle.Burleson@ncdenr.gov

6. Title of the Proposed Rule Prevention of Significant Deterioration and Title V 

Greenhouse Gas Tailoring Rule 

7. Rule Citations 15A NCAC 02D .0544 

8. Brief Description of the Proposed Rule 

Changes 

Adopt Federal Greenhouse Gas Tailoring guidance 

from the Federal Register Notice on June 3, 2010. 

75 FR 31514 

9. Rule Category Division 1 – Regulatory Behavior 

10. Authorizing Statute G.S. 143-215.3(a)(1); 143-215.107(a)(3); 143-

215.107(a)(5); 143-215.107(a)(7); 143-215.108(b); 

150B-21.6; 

Screening Analysis 

Rule Actions General Statute Yes 

or 

No

10. Federal Law Certification Required - Does the proposed rule purport 

to implement a federal law requiring a certification statement by the 

rulemaking coordinator? 

NCGS 150B-21(f)(1) No 

11. Temporary Rules - Does this rule meet the criteria listed relating to 

temporary rules? 

NCGS 150B-21.1 No 

12. Emergency Rules - Does this rule meet the criteria relating to 

emergency rules? 

NCGS 150B-21.1(a) No 

13. Establishes or Increases Fees - Is the agency required to complied 

with the requirements of G.S. 12-3.1? 

NCGS 150B-12-3.1 

NCGS 150B-21.3(c1) 

No 

14. State Funds - Does the proposed rule require the expenditure or 

distribution of funds subject to the Executive Budget Act, Article 1 of 

Chapter 143? 

NCGS 150B-21.4(a) Yes 

15. NC DOT Analysis - Does the proposed rule affect NC DOT 

environmental permitting that will result in an increased cost? 

NCGS 150B-21.4(a1) No 

16. Local Government Unit Funds - Does the proposed rule affect the 

expenditures or revenues of a unit of local government? 

NCGS 150B-21.4(b) Yes 

17. Substantial Economic Impact Analysis - Federal Rule Exemption - 

Does this rule meet the criterion of Federal Exemption?

NCGS 150B21.4(b1) Yes 

18. Technical Change - Are only technical changes being incorporated 

such that public notice and rulemaking hearings are not required?

NCGS 150B-21.5 No 

19. Repeal of Regulatory Deadwood - Is the rule obsolete? NCGS 150B-2(1b) 

NCGS 150B-21.5(b) 

No 

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VI-3 

II. Executive Summary 

EPA is tailoring the applicability criteria that determine which stationary sources and modification projects become 

subject to permitting requirements for greenhouse gas (GHG) emissions under the Prevention of Significant 

Deterioration (PSD) and Title V programs of the Clean Air Act (CAA). This rulemaking is necessary because 

without it PSD and Title V requirements would apply, as of January 2, 2011, at the 100 or 250 tons per year (tpy) 

levels provided under the CAA, greatly increasing the number of required permits, imposing undue costs on small 

sources, overwhelming the resources of permitting authorities, and severely impairing the functioning of the 

programs. EPA is relieving these resource burdens by phasing in the applicability of these programs to GHG 

sources, starting with the largest GHG emitters. This rule establishes two initial steps of the phase-in. The rule also 

commits the agency to take certain actions on future steps addressing smaller sources, but excludes certain smaller 

sources from PSD and Title V permitting for GHG emissions until at least April 30, 2016. 

The Clean Air Act's current thresholds for regulating "conventional pollutants" like lead, sulfur dioxide and nitrogen 

dioxide are 100 or 250 tons a year. But while those thresholds are appropriate for those pollutants, EPA says, they 

are not feasible for greenhouse gases, which are emitted in much larger quantities. EPA's rule, which referenced in 

the proposed rule for adoption, "tailors" permitting programs to limit the number of facilities that would be required 

to obtain New Source Review and Title V operating permits based on their greenhouse gas emissions. EPA said the 

threshold would cover power plants, refineries and other large industrial plants while exempting smaller sources like 

farms, restaurants, schools and other facilities. 

Beginning January 2011, facilities that must already obtain New Source Review permits for other pollutants will be 

required to include greenhouse gases in their permits if they increase their emissions of the gases by at least 75,000 

tons of carbon dioxide equivalent per year. 

On July 1, 2011, EPA will extend the requirements to new construction projects that emit at least 100,000 tons of 

greenhouse gases and existing facilities that increase their emissions by at least 75,000 tons per year, even if they do 

not exceed thresholds for other pollutants. Sources that emit at least 100,000 tons of greenhouse gases per year will 

also be required to account for greenhouse gas emissions in their Title V operating permits starting next July. 

New and upgraded facilities that are subject to the requirements will be required to install the "best available control 

technology" to control their greenhouse gas emissions. EPA is preparing to issue guidance for industries about how 

it will define that standard. 

In summary, this proposed rule adoption is expected to cause substantial economic impacts of as defined in 

Administrative Procedures Act in NC § 150B-21.4. Total annual cost savings of this rule adoption are estimated to 

be $1,833,000,000 during the 5-year period of this analysis; these are “substantial” economic impacts resulting from 

these rule adoptions due to these estimates of burden relief. The estimated annual burden relief for greenhouse gas 

(GHG) emitting sources is $1,294,300,000. The remaining $538,750,000 is the total estimated burden relief for 

North Carolina permitting authorities. 

There is an unknown number of State owned facilities among the parties affected by this burden relief. There are 

facilities, such as landfills, that are owned by a unit of local government among the affected parties. They incur 

similar cost saving occur above the baseline due to the rule adoption. 

Population weighted annual cost savings of $453,840,000 due to regulatory burden relief affect the Division of Air 

Quality (DAQ), which is the state agency that implements these rules. The remaining permitting authority costs 

savings are distributed among the three local air programs in North Carolina (weighted by population). This 

estimated annual burden relief was $13,240,000 for the Western North Carolina Regional Air Quality Agency; 

$20,620,000 for Forsyth County Environmental Affairs Department, and $51,050,000 for Mecklenburg County Air 

Quality. 

There are related small business impacts due to the regulatory relief that is proposed. This rule adoption will not 

affect environmental permitting of North Carolina Department of Transportation projects. Economic impacts due to 

regulatory burden relief are expected to occur to units of local government, counties and municipalities are among 

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the interested parties to this rule adoption. Due to their potential interest, this rule adoption is deemed to be 

significant as defined by fiscal note preparation guidance issued by the Office of State Budget and Management 

(OSBM). Under NCGS 150B-21.4(b1) this rule adoption does not meets the criterion for federal 

exemption.

This analysis does not touch on the costs related to GHG that some of the sources with potential emission above the 

threshold would still incur since it is not this particular rule adoption that would make sources subject to GHG 

permit requirements. Greenhouse gases become regulated in North Carolina in January 2011 due to the reference in 

the state PSD rule (15A NCAC 02D .0530) to the federal PSD regulation that requires permitting for any pollutant 

subject to regulation under the Clean Air Act. 

III. Background 

Congress, through the definition of “major emitting facility,” applied the PSD program to include “any source that 

emits, or has the potential to emit, one hundred (or, depending on the source category two hundred fifty) tons per 

year or more of any air pollutant.” In addition, Congress, through the definition of “modification,” applied the PSD 

program to include “any physical change in, or change in the method of operation of, a stationary source which 

increases the amount of any air pollutant emitted by such source or which results in the emission of any air pollutant 

not previously emitted.” Similarly, Congress, through the definition of “major source,” specified that the Title V 

program includes “any stationary facility or source of air pollutants which directly emits, or has the potential to emit, 

one hundred tons per year or more of any air pollutant.” EPA, through long-established regulatory action, in the case 

of PSD, and long-established guidance, in the case of Title V, has interpreted these definitions narrowly so that they 

apply only with respect to air pollutants that are subject to regulation under the CAA. 

Applying these definitions by their terms, as interpreted narrowly by EPA, to GHG sources at the present time 

would mean that the PSD and Title V programs would apply to an extraordinarily large number of small sources. 

The sources would incur unduly high compliance costs, and permitting authorities would face overwhelming 

administrative burdens. Without the proposed state rule adoption, DAQ would be required to regulate these sources 

at the 100/250 tpy threshold. 

Under the current interpretation of the PSD applicability provision, EPA’s recent promulgation of the Light Duty 

Vehicle Rule (LDVR) will trigger the applicability of PSD for GHG sources at the 100/250 tpy threshold levels as of 

January 2, 2011. This is because PSD applicability hinges on the definition of “major emitting facility,” which, 

under EPA’s long-standing narrowing interpretation, but absent further tailoring, applies PSD to sources of any air 

pollutant subject that is subject to regulation under another provision of the CAA. EPA’s promulgation of the LDVR 

means that GHGs will become subject to regulation on the date that the rule takes effect, which will be January 2, 

2011. 

But absent tailoring, the January 2, 2011 trigger date for GHG PSD applicability will subject an extraordinarily large 

number of sources in North Carolina, more than 2,400 to PSD each year, an increase of almost 300-fold. And the 

great majority of these new sources will be small commercial or residential sources. EPA believes this result is 

contrary to congressional intent for the PSD program, and in fact would severely undermine what Congress sought 

to accomplish with the program. Rather, the definitions of “major emitting facility” and “modification” should be 

tailored so that they applies to GHG sources on a phased-in basis, with the largest sources first, as we describe in 

this rule. 

But absent tailoring, the January 2, 2011 trigger date for GHG PSD applicability will see an extraordinarily large 

number of sources in NC - 136,800 (some 6.1 million nationally) - become subject to Title V over the first three 

years, an increase of over 400-fold over the 330 (14,700 nationally) sources that currently are subject to Title V. The 

great majority of these will be small commercial or residential sources. To derive an annual estimate of the avoided 

costs due to the federal GHG tailoring rule thresholds, EPA assumed that one third, about 2.2 million, of these new 

Title V sources would receive regulatory burden relief. North Carolina’s 4.75% share of national manufacturing, 

according to measures of gross domestic product (GDP), was used to scale these national estimates. In North 

Carolina annual burden relief was assumed for 3,400 industrial Title V permits and 41,700 Commercial/Residential 

Title V permits, along with 2,900 permit revisions due to GHG. 

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VI-5 

The Clean Air Act has a provision to collect fees that are sufficient to operate the Title V permitting program. But 

those fees cannot resolve all resource problems that permitting authorities will have, for several reasons. Permitting 

authorities will likely be constrained as to the rate in which they can increase fees in light of the costs to sources. As 

indicated below in section VII, at least at the outset of the program before streamlining techniques have been 

developed, a literal application of the Title V applicability provisions to GHG sources would, on average, cost each 

industrial source $46,500 and each commercial or residential source $23,000 to complete the permit application and 

$1,700 for permit revisions for GHG; and it would cost each permitting authority, on average, $20,000 to process 

the industrial source permit and $10,000 to process the commercial or residential source permit, and $1,900 for 

permit revisions for GHG. Particularly in light of the high costs to sources of applying for a permit, it is not likely 

that permitting authorities would be able to pass on to the sources in the form of fees the entirety of the permitting 

authorities’ own high costs for processing those permits, at least not right away. Even to the extent it would be 

possible to raise permit fees, permitting authorities would have to undergo a process to assess, impose, and collect 

those fees, and then hire and train personnel. 

On the PSD side, annual permit applications would increase by over 300-fold, from around 8 to about 2,400; while 

annual costs to the permitting authorities would increase more than 100-fold, to over $48 million; and the permitting 

authorities would need to hire, train, and manage many permit engineers. For Title V, total permit applications 

would increase by over 400-fold, from 330 currently to more than 48,000; costs to the permitting authorities would 

otherwise increase by $490 million annually. 

EPA Final GHG Tailoring Rule

On May 13, 2010, EPA set greenhouse gas (GHG) emissions thresholds to define when permits under the New 

Source Review Prevention Significant Deterioration (PSD) and Title V Operating Permit programs are required for 

new and existing industrial facilities. For additional information relied upon in this analysis, see EPA documents 

below: 

• Fact Sheet (PDF) (6pp, 33k) 

• Final Rule (PDF) (515pp, 688k) 

• Timeline Outlining Permitting Steps under the Tailoring Rule (PDF) (1pg, 79k) 

• Summary of Clean Air Act Permitting Burdens With and Without the Tailoring Rule (PDF) (2pp, 445k) 

• Regulatory Impact Analysis (PDF) (230pp, 866k) 

For EPA's Interpretation of Regulations that Determine Pollutants Covered By Federal Prevention of Significant 

Deterioration (PSD) Permit Program, see: 

Johnson Memo: psd_interpretive_memo_12.18.08 

Reconsideration of Interpretation of Regulations that Determine Pollutants Covered

IV. Description of Proposed Rule Adoption 

 

15A NCAC 02D .0544 (see Appendix A) is proposed for adoption to reflect Greenhouse Gas Tailoring provisions 

from the Federal Register Notice of May 13, 2010 into the State’s PSD program.

V. Motivation for Rule Modifications 

NC DAQ is one of many state permitting agencies that manages SIP-approved programs that 

were developed through state rule-making processes to establish the 100/250 tpy threshold for 

pollutants subject to regulations under PSD and Title V. Until our state rule is modified, these 

major source thresholds will remain at the 100/250 tpy level for GHGs and any source with the 

potential to emit (PTE) greater than this amount will be subject to NSR. In addition, major 

modifications to these sources that lead to any increase in any NSR regulated pollutant would 

trigger review under PSD, provided the increase is greater than the significance level. For 

regulated GHGs, the significance level would be an increase greater than 0 tpy. With the 

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significance level for PSD major modifications being “zero”, it will be nearly impossible to issue 

any permits in a timely manner. This will result in a permit back log, delayed construction, and 

immediate impact to the state’s economy. Until NC amends its state rules to increase the major 

source thresholds for PSD and Title V programs to be consistent with the Federal rule the current 

statutory thresholds will apply and the administrative burden that EPA has taken action to avoid 

will be realized. As discussed later, NC DAQ has plans to address this shortfall through policy 

memorandum and temporary rule making. However, this will require time and careful execution 

of key administrative hurdles. 

In summary, if the GHG Tailoring Rule is stayed or vacated by the courts, or sufficient time is 

not allowed for states to change their rules, our workload will increase exponentially at a time 

when state government is experiencing severe budget challenges. The effect on the 

overwhelming universe of stationary sources subject to GHG permitting requirements could be 

dramatic, particularly for small businesses and previously unregulated sources. 

In 2008, NC DAQ managed Title V operating permits for 314 major sources, 747 synthetic 

minor sources, and 1,801 small sources. DAQ believes that nearly all of the currently permitted 

sources would trigger the 100/250 tpy threshold making them all major sources. 

The statutory threshold will also bring in a large number of currently un-permitted sources. For 

example, DAQ expects that hundreds of landfills, some that are currently closed, would be 

affected; including sites with municipal waste, industrial waste, and hazardous waste. Since 

EPA has not specified the methodology for determining applicability, very old landfills would be 

subject to regulation. Issuing new Title V permits to these sites would prove to be difficult 

because many of these sites are abandoned, have no clear owner/operator, and waste 

characterization information is not available. The 100/250 tpy threshold would also bring in a 

large number of multi-unit residential/commercial buildings, small businesses, government 

operations, etc. Our analysis of office buildings occupied by our department indicates that 11 

out of 200 buildings with combustion systems (6%) have the PTE greater than 250 tpy. 

For landfills alone, our preliminary estimates suggest that currently active landfills possibly have 

the potential to emit greater than 75,000 tpy. In addition, our consultation with a landfill 

industry representative indicates that several hundred in-active landfills may have the potential to 

emit greater than the proposed threshold. Although many of these inactive sites may qualify to 

take operating limits, it is unclear how NC DAQ would issue permits with unclear owners and 

operators. For other unpermitted sources such as commercial office buildings, warehouses, 

small industries, and wastewater treatment facilities, DAQ does not have the necessary 

information to determine impacts of the Tailoring Rule. Since EPA has not specified if source 

categories other than the 25 identified in the Mandatory Reporting Rule are used to determine 

emission potentials, DAQ suspect many sites will be affected by the rule when emissions from 

insignificant sources (space heaters, emergency generators) and fugitive losses (refrigerant leaks) 

are accounted for. Of the 200 buildings occupied by DENR with on-site combustion systems, 

few, if any, buildings have the potential to emit greater than 75,000 tpy, so most likely their 

applicability is excluded under the proposed rule. All of these buildings have the flexibility to 

take operating limits. 

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VI-7 

In 2008, NC DAQ issued 6 PSD permits. If the threshold were to remain at 100/250 tpy, any 

facility with a PTE greater than this amount would trigger NSR if they made a modification that 

led to an increase greater than the significance level (0 tpy). This increase would result from the 

addition or modification of any combustion equipment at all major, synthetic minor, and small 

sources. DAQ estimates that 184 NSR actions would be required for currently permitted 

sources. This number is significantly higher than the number of NSR actions without GHGs (6 

in the same year). 

For unpermitted sources, the number of PSD actions required could reach 2,400. We recognize 

that the actions required by this absurdly large number of affected sources will be minimized by 

the proposed increase in the significance level to 75,000 tpy. This would result in small sources 

being excluded from PSD evaluations although they may have PTE greater than 100/250 tpy. 

This approach still creates significant initial burden on agencies to develop and implement 

administrative procedures for affected sources. 

 

At the 75,000 tpy thresholds, we estimate 28 new NSR actions for Title V sources and 96 

additional permit actions for synthetic minor and small sources. When operating limits are taken 

by synthetic minor and small sources, 10 NSR actions are estimated. We are unable to quantify 

the number of NSR actions for currently unpermitted sources across the economy sector. Based 

on earlier discussion related to landfills, it is reasonable to assume that all 75-115 landfills 

requiring new Title V permits may require NSR actions as these sites make major modifications 

to accommodate new waste volumes. 

VI. Uncertainties in Estimation 

The limitation and uncertainties discussion in EPA’s regulatory impact analysis for the GHG Tailoring rule (see 

Appendix B) describes the regulatory baseline and the huge regulatory relief afforded by these rule adoptions to 

Tailor the GHG applicability threshold by specifically addressing the definition of “subject to regulation” in regards 

to six greenhouse gases. There is no precise manner to estimate the magnitude of facilities that may experience 

avoided cost that this rule adoption provides, because of the nature of baseline requirements as related to individual 

facility permitting decisions with respect to modification and the future attainment status of all NSR pollutants with 

national ambient air quality standards (NAAQS). Generally, EPA’s national estimates for industrial GHG sources 

were scaled by North Carolina’s share of gross domestic product (GDP) that represent 4.75% of US Manufacturing. 

This scaling factor is applied because GHG emissions are highly correlated with fossil fuel combustion associated 

with manufacturing. For comparison purposes, total annual burden relief estimates are reduced by $152 million by 

using a scaling factor of 2.8% for North Carolina’s share of US GDP for all industrial output. Industrial GHG source 

emissions are highly correlated with fossil fuel combustion. The North Carolina burden relief fraction for 

commercial and residential GHG sources was estimated based on being 2.1% of US GDP for Real estate, rental and 

leasing. 

Without the tailoring rule approximately 136,800 North Carolina facilities (over six million facilities nationally) 

could need permits over the next three years when EPA's greenhouse gas standards for automobiles take effect on 

January 2, 2011, making greenhouse gases officially "subject to regulation" under the Clean Air Act EPA will 

complete another rulemaking by July 1, 2012, taking comment on phasing in additional sources and whether certain 

small sources can be permanently excluded from permitting requirements. Such a rulemaking would not require 

permitting for sources that emit less than 50,000 tons of greenhouse gases annually. No sources that emit less than 

50,000 tons per year will be subject to permitting requirements until at least April 30, 2016, according to the federal 

rule. 

EPA established in May 2010 the first two phases of their phase-in approach, which they refer to as Steps 1 and 2. 

EPA also commits to a subsequent rulemaking in which they will propose or solicit comment on establishing a 

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VI-8 

further phase-in, that is, a Step 3, which would apply PSD and Title V to additional sources, effective July 1, 2013. 

Although EPA commits to propose or solicit comment on lower thresholds and to take final action on that proposal 

by July 1, 2012, EPA cannot, at present, commit to promulgate lower thresholds. It will not be until the Step 3 

rulemaking itself that EPA will gather and analyze data and receive comments that determine whether EPA will 

have basis for promulgating lower thresholds. The proposed rule adoption contains no specific sunset date, therefore 

the burden relief identified in this economic analysis is assumed to continue until any subsequent rulemaking by 

EPA that would finalize an alternate approach. If that occurs DAQ will prepare any required fiscal analysis as 

required by the Administrative Procedures Act. 

Given the uncertainties related to EPA’s phase-in of the permit requirement applicability, the estimates in section 

VII below may not be pure cost avoidance, at least not for all sources. If the source is required to get a permit at a 

later date, the cost savings will come solely from postponing permitting costs (reporting, recordkeeping, etc.) and 

perhaps from cheaper control technology in the future. Since EPA is considering further rulemaking to lower the 

threshold, the estimates below may prove to be high. 

VII. Estimating Cost Savings 

The EPA estimated national level costs saving associated with the federal GHG Tailoring rule due to regulatory 

burden relief. Avoided permitting cost estimates for permitting authorities and sources were calculated based on 

information obtained from the April 2007 Information Collection Request for State Operating Permit Regulations. 

This analysis used the EPA assumption that commercial/residential sources that exceed the major source threshold 

due to GHG emissions will not likely have as substantial applicable permitting cost requirements as industrial 

sources. EPA assumed that permits for such sources will require only one half the time to prepare and issue as those 

for industrial sources, which have applicable requirements in addition to GHG. Therefore, it is estimated that new 

commercial/residential permits require 50 percent of the time needed for new industrial permits, or 214 hours 

compared to 428 hours for permitting authorities. For significant revisions and permit renewals, it is assumed that 

incorporating GHG information adds 40 hours, or an additional 10 percent to the current updating and processing 

time. 

Table 1, Greenhouse Gas Tailoring Rule – GHG Source Regulatory Relief, provides an estimate of North Carolina’s 

share of this regulatory relief to US sources of greenhouse gases. Regulatory impacts from burden relief according 

to EPA national estimates were scaled by a factor according to North Carolina portion of gross domestic product 

(GDP) for manufacturing (4.75%) or real estate, rental and leasing (2.1%). Total cost savings from Step 2 of this 

GHG source regulatory relief is estimated to be $1,294,300,000 annually. 

The benefits associated with avoided cost of compliance for BACT for these sources is not included in these 

estimates due to a lack of available data. The estimated avoided burden or reporting and recordkeeping cost that 

would occur absent this rule for new industrial sources to obtain permits is estimated to be $84,500 for a modifying 

PSD industrial source and $59,000 for a modifying commercial or multi-family residential source. New PSD 

sources will also be required to obtain a Title V permit increasing these costs to about $131,000 per permit for new 

industrial sources ($84,500 for PSD permit and $46,500 for Title V) and to $82,000 per permit for new commercial 

or residential sources ($59,000 for PSD permit and $23,000 for Title V). Note the Title V costs for these new PSD 

sources have been included in Title V estimates. New and modifying sources in North Carolina avoid approximately 

$172 million annually in PSD permitting costs with this rule under the phase-in Step 2 threshold. 

Avoided Information Collection Costs Associated with the PSD Program 

This proposed rulemaking will impact expenditure of State and local government funds in terms of the permitting 

authorities’ burden relief of nearly $539 million. There are an unknown number of facilities that are owned by the 

State of North Carolina; their burden relief is included in Table 1. There is no good manner to refine these State 

totals. These rule adoptions will not affect the environmental permitting of any North Carolina Department of 

Transportation projects. Similarly, there are an unknown number be facilities that are owned by units of local 

government, or federally owned facilities that will experience related economic impacts due to expected burden 

relief. 

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VI-9 

Table 1. Greenhouse Gas Tailoring Rule – Annual GHG Source Regulatory Relief 

GHG Source 

Regulatory 

Relief

Average 

Cost 

Saving per 

Permit 

(2007$)

Scale 

Factor 

NC/US 

(%)

Number 

of NC 

Permits

Total Annual 

NC Cost 

Savings

Number 

of US 

Permits

Total Annual US 

Cost Savings

Title V:

New Industrial $46,500 4.75% 3,400 $158,100,000 71,657 $3,332,100,000

New 

Commercial/ 

Residential $23,000 2.10% 41,700 $959,100,000 1,985,930 $45,676,400,000

Permit 

Revisions Due 

to GHG $1,700 4.75% 2,900 $4,900,000 60,921 $103,600,000

Subtotal Title 

V Permits 48,000 $1,122,100,000 2,118,508 $49,112,100,000

PSD Permits:

New Industrial $84,500 4.75% 1,200 $101,400,000 25,174 $2,127,200,000

New 

Commercial 

/Residential $59,000 2.10% 1,200 $70,800,000 55,505 $3,274,800,000

Subtotal PSD 

Permits 2,400 $172,200,000 80,679 $5,402,000,000

Total 

Permitting 

Authority Cost 

Savings 50,400 $1,294,300,000 2,199,187 $54,514,100,000

This rulemaking limits the new sources requiring PSD permits for Step 1 to those that would be required to comply 

with PSD for non-GHG emissions. For modifying sources, the significance level requiring permits is 75,000 or 

greater tpy CO2e PTE. In Step 2 of the phase-in period, the threshold becomes 100,000 tpy CO2e PTE or greater for 

new sources and the significance level for modifying sources remains at 75,000 or greater tpy CO2e. 

Burden estimates for the PSD program permitting authorities are calculated based on listed values obtained from 

EPA’s Information Collection Request for Prevention of Significant Deterioration and Nonattainment New Source 

Review August 2008. State and local permitting authorities are estimated to expend about $24,000 per permit to 

process a new GHG industrial PSD permit and $16,200 per permit for a new commercial or residential PSD permit. 

It is assumed that permit preparation and issuance for commercial/residential permits require less time to prepare 

and issue than industrial source permits since commercial/residential sources would likely be somewhat less 

complex in terms of numbers and types of emission sources and control requirements. Estimates obtained are 

additional burden and costs to those currently experienced by permitting authorities and sources if the proposed rule 

were not to go into effect. 

Table 2, Regulatory Burden Relief for all Permitting Authorities in North Carolina, assigns cost saving based on 

estimated efforts that would have been needed to administer the enormous additional workload on thousands of 

permitting actions. 

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VI-10 

Table 2. Annual Regulatory Relief for Permitting Authorities in North Carolina 

Permitting 

Authority 

Regulatory 

Relief

Average 

Cost 

Saving 

per 

Permit 

(2007$)

Scale 

Factor 

NC/US 

(%)

Number 

of NC 

Permits

Total NC Cost 

Savings

Number 

of US 

Permits

Total US Cost 

Savings

Title V:

New Industrial $20,000 4.75% 3,400 $68,000,000 71,657 $1,433,100,000

New 

Commercial/ 

Residential $10,000 2.10% 41,700 $417,000,000 1,985,930 $19,859,300,000

Permit 

Revisions Due 

to GHG $1,900 4.75% 2,900 $5,500,000 60,921 $115,700,000

Subtotal Title 

V Permits 48,000 $490,500,000 2,118,508 $21,408,100,000

PSD Permits:

New Industrial $24,000 4.75% 1,200 $28,800,000 25,174 $604,200,000

New 

Commercial 

/Residential $16,200 2.10% 1,200 $19,400,000 55,505 $899,200,000

Subtotal PSD 

Permits 2,400 $48,200,000 80,679 $1,503,400,000

Total 

Permitting 

Authority Cost 

Savings 50,400 $538,700,000 2,199,187 $22,911,500,000

Notes: Regulatory impact from burden relief according to EPA national Step 2 estimates were scaled by a factor 

according to North Carolina portion of gross domestic product (GDP) for manufacturing (4.75%) or real estate, 

rental and leasing (2.1%). Total cost savings values were rounded to nearest $100,000. 

EPA described the type of work that the permitting authorities would need to do for these GHG-emitting sources as 

follows. Note at the outset that the permitting authorities’ workload is greater for sources newly subject to Title V 

than for existing sources that seek a revised or renewed permit. 

As EPA noted in the preamble to the final federal GHG Tailoring Rule: 

“The permits for the 6 million new sources would need to include any requirements for non-GHGs that 

may apply to the source, such as provisions of an applicable SIP. For any such requirements, permitting 

authorities would also need to develop terms addressing the various compliance assurance requirements of 

title V, including monitoring, deviation reporting, six-month monitoring reports, and annual compliance 

certifications. 

Adding to the burden described above would be the burden to add GHG terms to the 14,700 existing title V 

permits. While, in general, existing title V permits would not immediately need to be revised or reopened to 

incorporate GHG (because as noted above, there are generally not applicable requirements for GHGs that 

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VI-11 

apply to such sources), permitting authorities may face burdens to update existing title V permits for GHG 

under two possible scenarios: (1) EPA promulgates or approves any applicable requirements for GHGs that 

would apply to such a source, which would generally require a permit reopening or renewal application, or 

(2) the source makes a change that would result in an applicable requirement for GHGs to newly apply to 

the source, such as PSD review, which would generally require an application for a permit revision. 

Permitting authorities will also need to process permit renewal applications, generally on a five-year cycle, 

and such renewals would need to assure that the permit properly addresses GHG. Finally they would have 

to process title V applications for new sources, including all the PSD sources previously discussed. 

As with PSD, we have quantified the extent of the administrative problem that would result in workload 

hours and cost on the basis of information concerning hours and costs for processing existing title V 

permits. However, more than 97 percent of these new sources would be commercial and residential 

sources. For permitting authorities, the average new commercial or residential permit would require 43 

hours to process, which is 10 percent of the time needed for the average new industrial permit For an 

average existing permit, which permitting authorities would need to process through procedures for 

significant revisions and permit renewals, adding GHG emissions to the permit would result in, we 

estimate, 9 additional hours of processing time, which is 10 percent of the amount of time currently 

necessary for processing existing permits.” 

Table 3 estimates the State’s cost savings that represents DAQ’s fraction of permitting authorities’ burden relief due 

to this rule adoption, using a population-based scaling factor of about 84 percent. 

Table 3. Regulatory burden relief for the Division of Air Quality 

Permitting Authority Regulatory Relief

Average 

Cost Saving 

per Permit 

(2007$)

Scale 

Factor: 

Rest of 

NC (%)

Number 

of DAQ 

Permits

Division of Air 

Quality Cost 

Savings

Title V:

New Industrial $20,000 84.23% 2,870 $57,400,000

New Commercial/ Residential $10,000 84.23% 35,120 $351,200,000

Permit Revisions Due to GHG $1,900 84.23% 2,440 $4,640,000

Subtotal Title V Permits 40,430 $413,240,000

PSD Permits:

New Industrial $24,000 84.23% 1,010 $24,240,000

New Commercial /Residential $16,200 84.23% 1,010 $16,360,000

Subtotal PSD Permits 2,020 $40,600,000

Total Permitting Authority Cost Savings 42,450 $453,840,000

Notes: North Carolina’s fraction of US Step 2 estimated regulatory relief for permitting authorities was proportioned 

based on population. After accounting for the three local air programs, the rest of NC contained about 84% of the 

population under the permitting authority of the Division of Air Quality. 

There are three local air program counties in North Carolina that were consulted. They also expect burden relief to 

their agency’s administrative costs due to this rule adoption. These local programs adopt the state rules “by 

reference” that are nearly identical to the State of North Carolina’s air quality rules, but they are at least as strict. 

The local program areas may contain source that are interested in this rule adoption. Tables 4-6 estimate the burden 

relief for the three local air quality programs’ permitting authorities due to adoption of this rule. These estimates 

represent the portion of the population of North Carolina under the local air quality program’s permitting authority. 

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VI-12 

Table 4. Western North Carolina Regional Air Quality Agency – Burden Relief 

Permitting Authority Regulatory Relief

Average 

Cost Saving 

per Permit 

(2007$)

Scale 

Factor: 

Buncombe 

/ NC (%)

Number 

of 

WNC 

Permits

WNCRAQA

Buncombe 

County Cost 

Savings

Title V:

New Industrial $20,000 2.47% 80 $1,600,000

New Commercial/ Residential $10,000 2.47% 1,030 $10,300,000

Permit Revisions Due to GHG $1,900 2.47% 70 $130,000

Subtotal Title V Permits 1,180 $12,030,000

PSD Permits:

New Industrial $24,000 2.47% 30 $720,000

New Commercial /Residential $16,200 2.47% 30 $490,000

Subtotal PSD Permits 60 $1,210,000

Total Permitting Authority Cost Savings 1,240 $13,240,000

Notes: North Carolina’s fraction of US estimated Step 2 regulatory relief for permitting authorities was proportioned 

based on population. There is about 2.5% of the North Carolina population under the permitting authority of the 

Western North Carolina Regional Air Quality Agency. 

Table 5. Forsyth County Environmental Affairs Department – Burden Relief 

Permitting Authority Regulatory Relief

Average 

Cost Saving 

per Permit 

(2007$)

Scale 

Factor: 

Forsyth / 

NC 

Number 

of NC 

Permits

Forsyth County 

Cost Savings

Title V:

New Industrial $20,000 3.79% 130 $2,600,000

New Commercial/ Residential $10,000 3.79% 1,580 $15,800,000

Permit Revisions Due to GHG $1,900 3.79% 110 $210,000

Subtotal Title V Permits 1,820 $18,610,000

PSD Permits:

New Industrial $24,000 3.79% 50 $1,200,000

New Commercial /Residential $16,200 3.79% 50 $810,000

Subtotal PSD Permits 100 $2,010,000

Total Permitting Authority Cost Savings 1,920 $20,620,000

Notes: North Carolina’s fraction of US estimated Step2 regulatory relief for permitting authorities was proportioned 

based on population. There is about 3.8% of the North Carolina population under the permitting authority of the 

Forsyth County Environmental Affairs Department. 

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VI-13 

Table 6. Mecklenburg County Air Quality Cost Savings – Burden Relief 

Permitting Authority Regulatory Relief

Average 

Cost Saving 

per Permit 

(2007$)

Scale 

Factor: 

County / 

NC (%)

Number 

of NC 

Permits

Mecklenburg 

County Air 

Quality Cost 

Savings

Title V:

New Industrial $20,000 9.51% 320 $6,400,000

New Commercial/ Residential $10,000 9.51% 3,970 $39,700,000

Permit Revisions Due to GHG $1,900 9.51% 280 $530,000

Subtotal Title V Permits 4,570 $46,630,000

PSD Permits:

New Industrial $24,000 9.51% 110 $2,640,000

New Commercial /Residential $16,200 9.51% 110 $1,780,000

Subtotal PSD Permits 220 $4,420,000

Total Permitting Authority Cost Savings 4,790 $51,050,000

Notes: North Carolina’s fraction of US estimated Step 2 regulatory relief for permitting authorities was proportioned 

based on population. There is about 9.5% of the North Carolina population under the permitting authority of 

Mecklenburg County Air Quality. 

VIII. Costs to Affected Parties 

The regulatory baseline for this analysis depends on the current PSD rules 15A NCAC 02D .0530, Prevention of 

Significant Deterioration. The version of the Code of Federal Regulations incorporated in that Rule was that as of 

June 13, 2007 and does not include any subsequent amendments or editions to the referenced material. 

Private Sector Costs 

While this rule adoption would provide regulatory relief for sources and permitting authorities, it also would result 

in foregone environmental and health benefits from increasing the threshold for GHG emissions. Below is an 

excerpt from EPA’s Regulatory Impact Analysis regarding the foregone benefits: 

“... there is also a social cost imposed by [the regulatory burden] relief because this rule may forego some 

of the possible benefits associated with title V and PSD programs for sources of GHG emissions below 

Step 1 and 2 phase-in thresholds but above the statutory 100/250 tpy levels. These benefits are those 

attributed to title V and PSD permitting programs in general. These benefits are based on the relevance of 

these programs to policymaking, transparency issues, and market efficiency and, therefore, are very 

difficult to quantify and monetize. For title V, they include the benefits of improved compliance with CAA 

requirements that stem from (1) improved clarity regarding applicability of requirements; (2) discovery and 

required correction of noncompliance prior to receiving a permit; (3) improving monitoring, recordkeeping, 

and reporting concerning compliance status; (4) self-certification of compliance with applicable 

requirements initially and annually, and prompt reporting of deviations from permit requirements; (5) 

enhanced opportunity for the public to understand and monitor sources’ compliance obligations; and (6) 

improved ability of EPA, permitting authorities, and the public to enforce CAA requirements. 

However, it is important to remember that a title V permit does not add new requirements for pollution 

control itself but rather collects all of a facility’s applicable requirements under the CAA in one permit. 

Therefore, the compliance benefits above are less when title V permits contain few or no CAA applicable 

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VI-14 

requirements. During the first two steps of this phase-in period, EPA expects that the vast majority of 

sources excluded from title V would be sources that have no CAA applicable requirements for GHG 

emissions and few or no requirements for other pollutants because their emissions of those pollutants are so 

small. For this reason, although it is extremely difficult to measure the degree of improved compliance, if 

any, that would be foregone or to quantify the social costs that would be imposed, we expect that they 

would be negligible.”

IX. Summary of Benefits to Affected Parties 

Under Step 1 of the phase-in, major sources of GHG that would otherwise be required to obtain an operating permit 

due to emissions of non-GHG pollutants are required to include GHG in permit requests. During this period, sources 

other than those obtaining permits for non-GHG pollutants will experience regulatory relief. Under Step 2, sources 

below 100,000 tpy CO2 e PTE will experience regulatory relief, while sources above this threshold will be required 

to obtain operating permits. 

State and local permitting authorities will also benefit from this rule by avoiding the administrative burden of 

processing over 136,800 Title V operating permits for small industrial, commercial, and residential sources of GHG 

over the next three years. 

State Funds 

An unknown number of State owned facilities are among the affected parties. There are substantial costs saving 

above the baseline to Division of Air Quality, which is the state agency that implements these rules. This rule 

adoption will not affect environmental permitting by the North Carolina Department of Transportation (NCDOT) 

projects and no NCDOT funds will be expended as a result of this rulemaking. 

Units of Local Government Funds 

There are landfill facilities that are owned by a unit of local government among the interested parties, and there are 

economic impacts due to burden relief from the rule adoption. There are cost savings above the baseline to all of the 

three local air programs in North Carolina, which are the agencies that implement their rules. 

Private Sector 

Estimated private sector cost savings of $1,294,300,000 are detailed in Table 1. The cost identified is related to 

permit preparation, engineering review and analysis. Actual control technologies are not included, but for example 

purposes, when a facility is required to install air pollution control devices, such control costs are estimated to vary 

from $186,000 to $1.36 million in baseline capital costs. The annual costs were updated to 2007 dollars using 

current estimates for unit costs and labor rates. Baseline annual operating costs range from approximately $23,000 

to $347,000 per year and include monitoring, testing, recordkeeping and reporting. The private sector is expected to 

experience economic impacts due to regulatory relief relative to baseline requirements. The source for which the 

permit requirement is essentially postponed for a few years, the control costs mentioned above would still occur, but 

at a later point. 

There is a permit fee structure in place to collect funds by the State of North Carolina to administer the Title V 

program. If a Title V facility is located in an area classified as nonattainment, then it pays $3,500 in annual permit 

fees. Plus there are additional permit application fees that are applicable to Title V for either PSD or NSR/NAA 

currently set at $13,488. When both Title V PSD and NSR/NAA apply this additional permit application fee 

increases to $26,235. Discussion of these additional fees is included to provide a sense of the location consequence 

to an existing facility or a potential new facility with regard to attainment status of the NAAQS. These fees are set to 

offset the additional effort by the permitting agency to process and review such sources. It is not possible to predict 

the number of facilities that may someday be affected by a change in attainment status or where it may occur. 

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VI-15 

X. Conclusion

EPA suggests that by this use of the tailoring rule the number of affected facilities and administrative burden will 

drop throughout the country due to how EPA will define what level of GHG emissions are “subject to regulation”. 

Local governments will realize cost savings as a result of this rule adoption. The Division of Air Quality is the 

State’s primary implementing agency for the existing rules and there are substantial additional cost savings due to 

the proposed rule adoption. Implementation costs by DAQ are not expected to change. There are not any economic 

impacts related to the permitting of the NC Department of Transportation projects.

Over the five-year period of this analysis, the rule adoption avoids many costs to the State of North Carolina, and 

units of local government. There are no additional private sector compliance expenditures for facilities that were 

identified as “anyway”, because these continued to exceed the upper thresholds of those GHG emissions that will 

continue to be required to address the GHG emissions. However, there are a large group of facilities that will be 

relieved of their baseline regulatory burden by this rule adoption to the definition that raised the threshold of GHG 

which are “subject to regulation”. The proposed rule adoption brings about substantial “avoided costs” for many 

affected parties, substantial economic impacts as defined in the Administrative Procedures Act in NC §150B-21.4 in 

Fiscal notes on rules. These cost savings impacts through avoided costs are also considered significant based on 

policy guidance from the Office of State Budget and Management (OSBM) regarding review and approval of the 

economic analysis of rules. 

EPA estimated reporting and recordkeeping cost for new industrial sources to obtain permits is estimated to be 

$84,500 for a modifying PSD industrial source and $59,000 for a modifying commercial or multi-family residential 

source. New PSD sources required to obtain a permit increasing these permitting authority costs to $24,000 per 

permit for new industrial sources and to $16,200 per permit for new commercial or multi-family residential sources. 

EPA estimated the cost each industrial source at $46,500 and each commercial or residential source at $23,000 to 

complete the NSR permit application and $1,700 make permit revisions to add GHG required actions; and it would 

cost each permitting authority, on average, $20,000 to process the industrial source permit and $10,000 to process 

the commercial or residential source permit, and $1,900 for permit revisions for GHG. The cost of compliance for 

BACT for these sources was not included in these estimates due to a lack of available data. This omission tends to 

reduce the avoided cost estimates. 

The total estimated North Carolina permitting authority burden relief is $538,700,000. Population weighted cost 

savings of $453,840,000 affect the Division of Air Quality (DAQ), which is the state agency that implements these 

rules. The remaining permitting authority costs savings are distributed among the three local air programs in North 

Carolina. This estimated burden relief was $13,240,000 for the Western North Carolina Regional Air Quality 

Agency; $20,620,000 for Forsyth County Environmental Affairs Department, and $51,050,000 for Mecklenburg 

County Air Quality.

The estimated annual burden relief for greenhouse gas (GHG) emitting sources is $1,294,300,000. There is an 

unknown number of State owned facilities among the parties affected by this burden relief. There are facilities, such 

as landfills, that are owned by a unit of local government among the affected parties. They realize similar cost 

savings due to the regulatory burden relief offered by this rule adoption. 

In summary, this proposed rule adoption is expected to cause substantial economic impacts of as defined in 

Administrative Procedures Act in NC § 150B-21.4. Total estimated annual cost saving associated with this rule 

adoption is $1,833,000,000 during the 5-year period of this analysis; these are “substantial” economic impacts 

resulting from these rule adoptions due to these estimates of burden relief and avoided costs. 

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VI-16 

Appendix A – Proposed Rule Text 

15A NCAC 02D .0544 is proposed for adoption as follows: 

15A NCAC 02D .0544 PREVENTION OF SIGNIFICANT DETERIORATION REQUIREMENTS FOR 

GREENHOUSE GASES 

(a) The purpose of this Rule is to implement a program for the prevention of significant deterioration of air 

quality for greenhouse gases as required by 40 CFR 51.166. For purposes of greenhouse gases the 

provisions of this Rule shall apply rather than the provisions of Rule .0530 of this Section. For all other 

regulated NSR pollutants the provisions of Rule .0530 of this Section apply. 

(b) For the purposes of this Rule the definitions contained in 40 CFR 51.166(b) and 40 CFR 51.301 shall 

apply except the definition of "baseline actual emissions." 

(1) "Baseline actual emissions" means the rate of emissions, in tons per year, of a regulated new 

source review (NSR) pollutant, as determined in accordance with Parts (A) through (C) of this 

Subparagraph: 

(A) For an existing emissions unit, baseline actual emissions means the average rate, in tons 

per year, at which the emissions unit actually emitted the pollutant during any 

consecutive 24- month period selected by the owner or operator within the 5-year period 

immediately preceding the date that a complete permit application is received by the 

Division for a permit required under this Rule. The Director shall allow a different time 

period, not to exceed 10 years immediately preceding the date that a complete permit 

application is received by the Division, if the owner or operator demonstrates that it is 

more representative of normal source operation. For the purpose of determining baseline 

actual emissions, the following shall apply: 

(i) The average rate shall include fugitive emissions to the extent quantifiable, and 

emissions associated with startups, shutdowns, and malfunctions. 

(ii) The average rate shall be adjusted downward to exclude any non-compliant 

emissions that occurred while the source was operating above any emission 

limitation that was legally enforceable during the consecutive 24-month period. 

(iii) For an existing emission unit (other than an electric utility steam generating unit), the 

average rate shall be adjusted downward to exclude any emissions that would have 

exceeded an emission limitation with which the major stationary source must 

currently comply. However, if the State has taken credit in an attainment 

demonstration or maintenance plan consistent with the requirements of 40 CFR 

51.165(a)(3)(ii)(G) for an emission limitation that is part of a maximum achievable 

control technology standard that the Administrator proposed or promulgated under 

part 63 of the Code of Federal Regulations, the baseline actual emissions shall be 

adjusted to account for such emission reductions. 

(iv) For an electric utility steam generating unit, the average rate shall be adjusted 

downward to reflect any emissions reductions under G. S. 143-215.107D and for 

which cost recovery is sought pursuant to G. S. 62-133.6. 

(v) For a regulated NSR pollutant, when a project involves multiple emissions units, only 

one consecutive 24-month period shall be used to determine the baseline actual 

emissions for all the emissions units being changed. A different consecutive 24-

month period for each regulated NSR pollutant can be used for each regulated NSR 

pollutant. 

(vi) The average rate shall not be based on any consecutive 24-month period for which 

there is inadequate information for determining annual emissions, in tons per year, 

and for adjusting this amount if required by Subparts (ii) and (iii) of this Part. 

(B) For a new emissions unit, the baseline actual emissions for purposes of determining the 

emissions increase that will result from the initial construction and operation of such unit 

shall equal zero; and thereafter, for all other purposes, shall equal the unit's potential to 

emit. 

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(C) For a plantwide applicability limit (PAL) for a stationary source, the baseline actual 

emissions shall be calculated for existing emissions units in accordance with the 

procedures contained in Part (A) of this Subparagraph, and for a new emissions unit in 

accordance with the procedures contained in Part (B) of this Subparagraph. 

(2) In the definition of "net emissions increase," the reasonable period specified in 40 CFR 

51.166(b)(3)(ii) shall be seven years. 

(3) The limitation specified in 40 CFR 51.166(b)(15)(ii) shall not apply. 

(c) Major stationary sources and major modifications shall comply with the requirements contained in 40 

CFR 51.166(i) and (a)(7) and by extension in 40 CFR 51.166(j) through (o) and (w). The transition 

provisions allowed by 40 CFR 52.21 (i)(11)(i) and (ii) and (m)(1)(vii) and (viii) are hereby adopted under 

this Rule. The minimum requirements described in the portions of 40 CFR 51.166 referenced in this 

Paragraph are hereby adopted as the requirements to be used under this Rule, except as otherwise 

provided in this Rule. Wherever the language of the portions of 40 CFR 51.166 referenced in this 

Paragraph speaks of the "plan," the requirements described therein shall apply to the source to which 

they pertain, except as otherwise provided in this Rule. Whenever the portions of 40 CFR 51.166 

referenced in this Paragraph provide that the State plan may exempt or not apply certain requirements in 

certain circumstances, those exemptions and provisions of nonapplicability are also hereby adopted 

under this Rule. However, this provision shall not be interpreted so as to limit information that may be 

requested from the owner or operator by the Director as specified in 40 CFR 51.166(n)(2). 

(d) 40 CFR 51.166(w)(10)(iv)(a) is changed to read: "If the emissions level calculated in accordance with 

Paragraph (w)(6) of this Section is equal to or greater than 80 percent of the PAL [plant wide applicability 

limit] level, the Director shall renew the PAL at the same level." 40 CFR 51.166(w)(10)(iv)(b) is not 

incorporated by reference. 

(e) 15A NCAC 02Q .0102 and .0302 are not applicable to any source to which this Rule applies. The 

owner or operator of the sources to which this Rule applies shall apply for and receive a permit as 

required in 15A NCAC 02Q .0300 or .0500. 

(f) When a particular source or modification becomes a major stationary source or major modification 

solely by virtue of a relaxation in any enforceable limitation which was established after August 7, 1980, 

on the capacity of the source or modification to emit a pollutant, such as a restriction on hours of 

operation, then the provisions of this Rule shall apply to the source or modification as though construction 

had not yet begun on the source or modification. 

(g) The provisions of 40 CFR 52.21(r)(2) regarding the period of validity of approval to construct are 

incorporated by reference except that the term "Administrator" is replaced with "Director". 

(h) Permits may be issued on the basis of innovative control technology as set forth in 40 CFR 

51.166(s)(1) if the requirements of 40 CFR 51.166(s)(2) have been met, subject to the condition of 40 

CFR 51.166(s)(3), and with the allowance set forth in 40 CFR 51.166(s)(4). 

(i) A permit application subject to this Rule shall be processed in accordance with the procedures and 

requirements of 40 CFR 51.166(q). Within 30 days of receipt of the application, applicants shall be 

notified if the application is complete as to initial information submitted. Commencement of construction 

before full prevention of significant deterioration approval is obtained constitutes a violation of this Rule. 

(j) Approval of an application with regard to the requirements of this Rule shall not relieve the owner or 

operator of the responsibility to comply fully with applicable provisions of other rules of this Subchapter or 

Subchapter 02Q of this Title and any other requirements under local, state, or federal law. 

(k) If the owner or operator of a source is using projected actual emissions to avoid applicability of 

prevention of significant deterioration requirements, the owner or operator shall notify the Director of the 

modification before beginning actual construction. The notification shall include: 

(1) a description of the project, 

(2) identification of sources whose emissions could be affected by the project, 

(3) the calculated projected actual emissions and an explanation of how the projected actual 

emissions were calculated, including identification of emissions excluded by 40 CFR 

51.166(b)(40)(ii)(c), 

(4) the calculated baseline actual emissions and an explanation of how the baseline actual 

emissions were calculated, and 

(5) any netting calculations if applicable. 

If upon reviewing the notification, the Director finds that the project will cause a prevention of significant 

deterioration evaluation, then the Director shall notify the owner or operator of his findings. The owner or 

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operator shall not make the modification until it has received a permit issued pursuant to this Rule. If a 

permit revision is not required pursuant to this rule, the owner or operator shall maintain records of annual 

emissions in tons per year, on a calendar year basis related to the modifications for 10 years following 

resumption of regular operations after the change if the project involves increasing the emissions unit's 

design capacity or its potential to emit the regulated NSR pollutant; otherwise these records shall be 

maintained for five years following resumption of regular operations after the change. The owner or 

operator shall submit a report to the Director within 60 days after the end of each year during which these 

records must 

be generated. The report shall contain the items listed in 40 CFR 51.166(r)(6)(v)(a) through (c). The 

owner or operator shall make the information documented and maintained under this Paragraph available 

to the Director or the general public pursuant to the requirements in 40 CFR 70.4(b)(3)(viii). 

(l) The references to the Code of Federal Regulations (CFR) in this Rule are incorporated by reference 

unless a specific reference states otherwise. Except for 40 CFR 81.334, the version of the CFR 

incorporated in this Rule is that as of June 3, 2010 and does not include any subsequent amendments or 

editions to the referenced material. This Rule is applicable as of its effective date in accordance with 40 

CFR 51.166(b)(48) and (b)(49)(iv) and (v). 

History Note: Authority G.S. 143-215.3(a)(1); 143-215.107(a)(3); 143-215.107(a)(5); 143-215.107(a)(7); 

143-215.108(b); 150B-21.6; 

Eff. January 2, 2011.

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Appendix B – EPA Regulatory Impact Analysis for the Final Prevention of Significant Deterioration and 

Title V Greenhouse Gas Tailoring Rule 

Section 8. Limitations and Uncertainties 

“The benefits, costs and economic impacts estimated in this RIA are subject to limitations and uncertainties. The 

benefits of this rule are the regulatory relief provided to small sources of GHG and permitting authorities. 

Regulatory relief estimates are provided for the final rule on an annual basis as well as for the full phase-in period. 

The following sections identifies benefits or avoided permitting costs, based upon the best data available regarding 

sources affected and burden cost estimates, however they are subject to uncertainties. 

Benefit Estimate Limitations and Uncertainties 

Uncertainties exist in the affected source counts at used to estimate regulatory relief due to the absence of a 

comprehensive data set of facility-level GHG emissions across all sectors on which to base the number of facilities 

subject to title V and PSD permitting at the proposed regulatory thresholds. These affected source counts are 

multiplied by the permit burden cost estimates to derive the benefits (regulatory relief) estimates for the rule. 

Specific uncertainties in the estimates of affected sources, burden estimates and other limitations of the benefits 

analysis are discussed below. 

a. Uncertainties in Estimates of Affected Sources 

In order to estimate the number of facilities that exceed a given GHG threshold (such as a 100 or 250 tpy CO2e 

emission threshold for baseline analysis), it is necessary to have emissions inventory data at the facility or building 

level, including, and particularly for lower threshold scenarios, numerous small sources in the residential and 

commercial sectors (e.g., apartment buildings and office buildings). Historically, however, EPA has not collected 

sector-wide, facility-level information for GHG emissions under the CAA (with the exception of information from 

electric generating units required to report CO2 emissions under the Acid Rain Program reporting requirements). To 

date, national EPA inventories of GHG sources have primarily focused on ‘top-down’ estimates of GHG emissions 

from sectors and sources, and not facility level estimates. As a result, many of the uncertainties described here result 

from the absence of a comprehensive data set of facility-level GHG emissions across all sectors. 

For residential, commercial, and smaller manufacturing operations, EPA’s current analysis relies on sample facility 

datasets and ‘top-down’ sector data (e.g., national fuel consumption statistics and/or building characteristics). There 

are inherent uncertainties in developing source counts from the allocation of these nationally aggregated statistics. 

The allocation factors we used, based on U.S. Energy Information Administration statistical sampling procedures 

and energy consumption statistics, are likely the best available to estimate the population of residential, commercial, 

and small manufacturing sources exceeding different GHG thresholds. 

However, uncertainties may result in either overestimating or underestimating GHG emissions for a given individual 

facility. It is worth noting that our estimates for the largest GHG emitting sources, such as electric utilities and 

refineries, are derived from bottom-up calculations of individual facility/building emissions so that there is increased 

certainty in evaluating and comparing the facility counts at the higher GHG threshold scenarios where residential 

and commercial sources are not highly affected. Although there are different levels of uncertainty in our facility 

level estimates across sectors, we do believe that the data are sufficiently robust to use in the aggregate to assess 

national permitting level impacts. 

EPA’s estimate of affected sources is based on their potential to emit emissions, as opposed to actual emission 

levels. PTE is defined as the maximum capacity of a stationary source to emit a pollutant under its physical and 

operational design, including certain legal limitations, for example, on emissions or hours of operation. PSD and 

Title V programs both use PTE for defining and identifying major sources. Although we have attempted to identify 

reasonable adjustments to account for PTE in our methodology, there are significant uncertainties in our PTE-based 

estimates, particularly for the commercial, residential and small manufacturing sectors that have not traditionally 

been subject to any form of air permitting. In practice, for example, for the residential sector and for many of the 

facilities in the commercial sector, where CO2 emissions are primarily due to space heating/appliance usage, the 

combustion units are not likely to be used constantly at their maximum rated capacity because heating is not needed 

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year-round and heating systems have thermostats. However, for our analysis we do assume full PTE-based estimates 

for the residential and commercial sectors, using PTE adjustment factors of 10 and 6.6, respectively to adjust actual 

emissions to PTE level. Absent industry specific data, for small manufacturing source categories we assume a PTE 

adjustment factor of 2; individual manufacturing facilities may operate their combustion equipment at levels above 

and below this capacity utilization rate, but we believe this PTE adjustment reflects a reasonable average rate across 

the variety of small manufacturing facilities included in the threshold analysis. Ultimately, the number of sources 

brought into either the PSD or Title V programs due solely to their PTE would depend on how EPA interprets PTE 

for various types of emitting equipment (e.g., space-heating furnaces in residential and commercial buildings), and 

the extent to which streamlined mechanisms are made available for sources to obtain legal limits on their PTE so 

that the programs are not applicable. No such decisions or interpretations have been made at this point and, as 

mentioned in the preamble, they will require significant time to develop. As a result, our threshold analysis 

uniformly assumes that no PTE limits are in place for any of the affected sectors, which may likely be the case in the 

immediate stages of GHG permitting for affected sources. 

There is significant uncertainty in both our modification rate for newly major GHG sources and in our estimate of 

modification activity at existing major sources that will become subject to PSD review for GHG emission increases. 

The general uncertainty results from predicting not only how many major sources will undergo physical or 

operational changes in any given year, but also which of those changes would result in GHG emissions increases 

that would exceed a proposed GHG significance level. First, information is not available across sectors and source 

categories on the types and numbers of specific physical and operational changes that would result in GHG 

emissions increases in amounts that can be estimated and that therefore can be compared to various GHG emissions 

significance levels. Second, there is uncertainty in how many project modifications will occur within any given year 

because decisions on these projects are driven by facility- and sector-based growth patterns and business planning 

decisions. Lastly, some source categories and units that emit GHGs have not previously been subject to any type of 

permitting or reporting requirements; as a result, for these sources, there is very little historical record for use in 

estimating the number and types of projects that would occur at these sources and, in turn, establish an appropriate 

significance level for GHGs. 

b. Uncertainties in Permitting Costs 

The permit burden cost estimates that are multiplied by the source counts to derive the benefits of the rule are also 

subject to uncertainty. As noted Attachment C to the RIA, the primary reference sources for our estimate of burden 

hours and costs for permitting GHGs are the most recent ICRs for the PSD and title V programs. There a number of 

uncertainties introduced in using these references for costing GHG permitting activities. First, we are assuming that 

the average, conventional pollutant per-permit costs will be similar for GHGs. We do recognize the likelihood that 

residential and commercial permits would be simpler and have a lower per-permit burden than traditional industrial 

sources, and have made adjustments for this: however, for industrial sources we assume per-permit costs on par with 

what are estimated in the latest ICRs for PSD and title V programs. There is uncertainty in applying these averages, 

ICR based costs to GHG permitting, even for industrial sources, because there is no historical track record for 

permitting these GHG sources and thus any cost efficiencies that have been realized over the years for conventional 

pollutant permitting, and thus reflected in the current ICRs, may not be initially realized for GHG permitting. For 

example, we assume the same public hearing estimate as included in the ICR for current PSD permits (i.e., that 1 in 

50 major PSD permits require a hearing)—for GHG sources this number may be higher initially if there ends up 

being significantly more public interest in these permits. We do believe overall, however, that larger facilities, 

especially those affected at higher threshold levels, will have had sufficient permitting experience such that out ICRbased costs should reasonably reflect the added burden of including GHGs. 

As mentioned above, in our burden scenario analyses we do discount the ICR-based per permit costs for residential 

and commercial sources to reflect what we believe will generally be simpler permits, involving primarily uniform 

combustion type equipment. For PSD we discount the per-permit cost by 30%, and for title V we discount the perpermit cost by 50%. There is significant uncertainty in these estimated discounts since we have no track record for 

permitting these smaller commercial and residential sources. However, we do believe that, based solely on the type 

and uniformity of the GHG emission units that would be subject to permitting at these facilities under lower GHG 

threshold scenarios, that average per-permit costs would be less than those currently experienced by more complex 

industrial facilities, with numerous emission units, for currently regulated pollutants. 

c. Additional uncertainties and limitations of the benefits analysis 

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Current avoided permitting cost or regulatory relief estimates also do not include the avoided costs to comply with 

PSD BACT requirements due to lack of available data. This omission will tend to reduce the amount of regulatory 

relief that smaller sources of GHG reported in this RIA will experience during the phase-in period. In addition to the 

avoided BACT costs we are unable to quantify, there are likely general economic costs associated with requiring 

permitting for these smaller sources of GHG. Numerous public comments on the proposed rule spoke to the 

economic burden permitting would place on sources above the actual costs to obtain a permit. These costs might 

include delays or impediments to entering a new market or to expand existing facilities to accommodate economic 

growth. These avoided costs might be viewed as additional costs of doing business or barriers to entry for these 

smaller sources of GHG. The avoided economic costs of these possible additional costs or barriers to doing business 

have not been considered in the regulatory relief estimates provided for this final rule due to lack of available 

information on the nature and value of such avoided impacts. If such avoided cost estimates were available, these 

estimates would tend to increase the regulatory relief burden reported for the final rule. 

For the multiple year regulatory relief estimates, we assume that the annual estimates can be extrapolated to multiple 

years without adjustment. This presumes that permitting activity would be constant over time. It is quite possible 

that permit activity for these smaller sources may grow over time with economic growth and will likely vary from 

year to year due to differences in business activity. However, we do not have sufficient information about these 

year-to-year variations nor expected growth in permitting to develop more precise estimates. 

Given the uncertainty in the annual relief estimates and the short time frame analyzed (five years), we feel it 

reasonable to not consider these potential yearly fluctuations for the phase-in period. Consideration of growth in 

permits over time would tend to increase the regulatory relief estimates reported for the final rule. 

In a similar manner, we do not discount the phase-in regulatory relief to the present in this final report. Since the 

analytical time period evaluated varies from annual up to five years, we feel this is a reasonable approach. 

Discounting the regulatory relief estimates to present values would tend to lower the present value total amount of 

regulatory relief reported. 

Social Cost Limitations and Uncertainties 

The social costs of this rule are the foregone environmental benefits that might occur during the phase-in period 

absent this rulemaking. This subject is discussed in Section 4 of the RIA. We are unable to estimate the PSD BACT 

requirements that would likely occur for the smaller sources of GHG at this time. Because BACT is a case-by-case 

decision and evolves over time, because we do not at this time have historical experience with the available controls 

for small-source GHG emissions, and because of the inherent uncertainty in describing the types of sources that 

would have triggered BACT absent this rule, we cannot quantify the emission reductions that might be feasible or 

the associated pollution control costs. For this reason, the social costs of this rule are discussed qualitatively in this 

RIA. 

Economic Impact Limitations and Uncertainties 

As previously discussed there is uncertainty in the estimates of sources affected by this final rule and the permitting 

burden costs used to estimate the benefits (regulatory relief) of this rule. These uncertainties also affect the 

economic impact analysis conducted. In the economic impact analysis, we compare the avoided permit burden cost 

estimates to average industry revenues in order to gauge the magnitude of regulatory relief for affected sources. We 

used average industry revenue, and average firm revenue estimates by firm size to estimate avoided cost-to-sales 

ratios due to lack of data specific to the sources actually obtaining regulatory relief. The actual benefits to individual 

firms affected by this rule may differ from industry averages.”

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VII-1 

Chapter VII 

The following documentation of filing and notification is incorporated as part of this hearing record and is 

maintained on file: 

1. ENR 101 Internal Approval Form. 

2. Submission for Notice Form and material submitted to the Office of Administrative 

Hearings. 

3. The public notice as it appears in The North Carolina Register Volume 25, Issue 04, 

pages 415-416. 

4. Letters to newspapers requesting that the public notice be published. 

5. Affidavits of Publication from newspaper. 

6. Memorandum transmitting hearing notice and proposal to regional offices for public 

inspection. 

7. Memorandum transmitting hearing notice and proposal to local programs. 

8. Letter notifying EPA of hearing. 

9. Submission of Filing Forms and material filed with Office of Administrative Hearings. 

 10. Letter transmitting hearing record to EPA. 

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