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6560-50-P 

ENVIRONMENTAL PROTECTION AGENCY 

40 CFR Parts 51, 52, 70 and 71 

[EPA-HQ-OAR-2009-0517; FRL- ] 

RIN 2060-AR10 

Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule Step 3, GHG 

Plantwide Applicability Limitations and GHG Synthetic Minor Limitations 

AGENCY: Environmental Protection Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: This proposal concerns the third step (Step 3) in the EPA’s Tailoring Rule. We are 

proposing to maintain the applicability thresholds for greenhouse gas (GHG)-emitting sources at the 

current levels. We are also proposing two streamlining approaches, which will improve the 

administration of GHG Prevention of Significant Deterioration (PSD) and title V permitting programs. 

The first proposal addresses the implementation of GHG plantwide applicability limitations (PALs). We 

propose to allow permitting authorities to issue GHG PALs on either a mass-basis (tpy) or a carbon 

dioxide equivalent (CO2e)-basis and to allow PALs to be used as an alternative approach for 

determining whether a project is a major modification and whether GHG emissions are subject to 

regulation. The second proposal would create the regulatory authority for the EPA to issue synthetic 

minor limitations for GHGs in areas subject to a GHG PSD Federal Implementation Plan (FIP). We also 

discuss our progress in evaluating the suitability of other streamlining approaches and solicit further 

comment. DATES: Comments must be received on or before [INSERT DATE 45 DAYS AFTER 

PUBLICATION IN THE FEDERAL REGISTER]. 

Public Hearing. Two public hearing will be held on March XX, 2012, and March XX, 2012. For 

additional instructions on the two public hearings, go to the SUPPLEMENTARY INFORMATION 

section of this document. 
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ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2009–0517, by one 

of the following methods: 

 Http://www.regulations.gov: Follow the online instructions for submitting comments. 

 Email: a-and-r-docket@epa.gov. Attention Docket ID No. EPA–HQ–OAR–2009–0517. 

 Fax: (202) 566-9744. 

 Mail: Attention Docket ID No. EPA–HQ–OAR–2009–0517, Air and Radiation Docket and 

Information Center, Mailcode: 2822T, U.S. Environmental Protection Agency, 1200 

Pennsylvania Avenue, NW, Washington, D.C. 20460. Please include a total of two copies. In 

addition, please mail a copy of your comments on the information collection provisions to 

the Office of Information and Regulatory Affairs, Office of Management and Budget, Attn: 

Desk Officer for EPA, 725 17th Street, NW, Washington, D.C. 20503. 

 Hand Delivery: Air and Radiation Docket and Information Center, EPA/DC, EPA West, 

Room 3334, 1301 Constitution Avenue, NW, Washington, D.C. 20004, Attention Docket ID 

No. EPA–HQ–OAR–2009–0517. Such deliveries are only accepted during the Docket 

Center’s normal hours of operation, and special arrangements should be made for deliveries 

of boxed information. 

 Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-2009–0517. The EPA’s 

policy is that all comments received will be included in the public docket without change and may be 

made available online at www.regulations.gov, including any personal information provided, unless the 

comment includes information claimed to be Confidential Business Information (CBI) or other 

information whose disclosure is restricted by statute. Do not submit information that you consider to be 

CBI or otherwise protected through www.regulations.gov or email. The www.regulations.gov website is 

an “anonymous access” system, which means the EPA will not know your identity or contact 

information unless you provide it in the body of your comment. If you send an email comment directly 
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to the EPA without going through www.regulations.gov your email address will be automatically 

captured and included as part of the comment that is placed in the public docket and made available on 

the Internet. If you submit an electronic comment, the EPA recommends that you include your name and 

other contact information in the body of your comment and with any disk or CD-ROM you submit. If 

the EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, 

the EPA may not be able to consider your comment. Electronic files should avoid the use of special 

characters, any form of encryption, and be free of any defects or viruses. For additional instructions on 

submitting comments, go to section I.C of the SUPPLEMENTARY INFORMATION section of this 

document. 

 Docket: All documents in the docket are listed in the www.regulations.gov index. Although 

listed in the index, some information is not publicly available, e.g., CBI or other information whose 

disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly 

available only in hard copy. Publicly available docket materials are available either electronically in 

www.regulations.gov or in hard copy at the Air and Radiation Docket and Information Center, EPA/DC, 

EPA West, Room 3334, 1301 Constitution Avenue, NW, Washington, D.C. The Public Reading Room 

is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone 

number for the Public Reading Room is (202) 566-1744, and the telephone number for the Air and 

Radiation Docket and Information Center is (202) 566-1742. 

 Public Hearing: Two public hearings will be held on this proposed rule. The March XX, 2012, 

hearing will be held at the _________________, Washington, DC _____; phone number ___________. 

The March XX, 2012, hearing will be held at the __________________Chicago, IL _____; phone 

number _______________. Both public hearings will convene at 10:00 a.m. and continue until 7:00 

p.m. (local time) or later, if necessary, depending on the number of speakers wishing to participate. The 

EPA will make every effort to accommodate all speakers that arrive and register before 7:00 p.m. A 
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lunch break is scheduled from 12:30 p.m. until 2:00 p.m. during both hearings. The EPA website for the 

rulemaking, which includes the proposal and information about the public hearings, can be found at: 

www.epa.gov/nsr. 

FOR FURTHER INFORMATION CONTACT: Michael S. Brooks, Air Quality Policy Division, 

Office of Air Quality Planning and Standards (C504-05), Environmental Protection Agency, Research 

Triangle Park, North Carolina 27711; telephone number (919) 541-3539; fax number (919) 541-5509; 

email address: brooks.michaels@epa.gov. To register to speak, attend or for information pertaining to 

the public hearings on this document, contact Ms. Pamela S. Long, Air Quality Policy Division, Office 

of Air Quality Planning and Standards (C504-01), Environmental Protection Agency, Research Triangle 

Park, North Carolina 27711; telephone number (919) 541-0641; fax number (919) 541-5509; email 

address: long.pam@epa.gov. 

SUPPLEMENTARY INFORMATION: 

 The information in this Supplementary Information section of this preamble is organized as 

follows: 

I. General Information

A. Does this action apply to me?

B. Where can I get a copy of this document and other related information?

C. What should I consider as I prepare my comments for the EPA?

1. Submitting CBI

2. Tips for Preparing Your Comments

D. How can I find information about the public hearing?

E. What acronyms, abbreviations and units are used in this preamble?

II. Overview of the Proposed Rule

III. Background

A. Statutory and Regulatory Background for PSD and Title V

B. How has the Tailoring Rule addressed GHG emissions under PSD and Title V?

C. In the Tailoring Rule, what commitments did the EPA make for Step 3?

D. In the Tailoring Rule, what plan did the EPA announce for developing streamlining 

measures?

E. In the Tailoring Rule, what commitments did the EPA make for subsequent action?

IV. Available Information on GHG Permitting

A. GHG Permitting Activity to Date

B. Consultations with States

C. Additional Technical Support for the Step 3 Rule
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V. Proposed Step 3 Rule

A. Overview

B. Have states had adequate time to ramp up their resources?

C. What is the ability of permitting authorities to issue timely permits?

D. Has the EPA developed streamlining methods?

E. Limited Benefit from Lowering Thresholds in Step 3

F. Conclusion

VI. Streamlining for PSD and Title V Permitting of GHGs

A. Plantwide Applicability Limitations for GHGs

1. What is the EPA Proposing?

2. What is a PAL?

3. Why are we proposing to amend the regulations?

4. Options for Allowing GHG-Only Sources to Obtain a GHG PAL

5. Extending PALs to GHGs on a CO2e Basis, and Using PALs To Determine Whether GHG 

Emissions Are “Subject to Regulation”

6. Can a GHG source that already has a mass-based GHG PAL obtain a CO2e-based PAL once 

we issue final changes to the PAL rules?

7. How whould we change the regulatory provisions to implement PALs for GHG-only major 

sources?

B. Synthetic Minor Source Permitting Authority for GHGs

1. What is the EPA proposing?

2. What is synthetic minor limitation, and what is its function?

3. What is a “subject to regulation” limitation?

4. Why does the EPA need authority to issue synthetic minor source permits?

5. What are the benefits to a federal GHG synthetic minor permit program?

6. What is the legal rationale for EPA’s GHG synthetic minor source permitting authority?

7. What changes would EPA make to the PSD regulations to allow EPA to issue GHG synthetic 

minor permits?

C. Redefining Potential to Emit and Source Category Specific PTE

D. General Permitting for GHGs

1. What is a general permit?

2. What is the legal authority for general permits? 

3. Have the states used general permits?

4. What steps has the EPA made toward developing general permits?

5. General Permits and Title V

E. Presumptive BACT for GHGs

1. Definition of BACT

2. What is presumptive BACT?

3. How the EPA Could Consider Implementing Presumptive BACT

4. Possible Impediments to Presumptive BACT

F. Title V Empty Permits

VII. Request for Comment

A. Solicitation of Comment on Proposed Step 3

1. General

2. Call for Additional Information Concerning State Burdens

B. Solicitation of Comment on Streamlining Techniques

1. Plantwide Applicability Limitations for GHGs

2. Synthetic Minor Source Permitting Authority for GHGs
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3. Redefining PTE and Source Category Specific PTE

4. General Permits for GHGs

5. Presumptive BACT for GHGs 

 6. Empty Permits 

VIII. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: 

Improving Regulation and Regulatory Review

B. Paperwork Reduction Act

C. Regulatory Flexibility Act

D. Unfunded Mandates Reform Act

E. Executive Order 13132: Federalism

F. Executive Order 13175: Consultation and Coordination with Indian Tribal Governments

G. Executive Order 13045: Protection of Children from Environmental Health and Safety Risks

H. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution or 

Use

I. National Technology Transfer and Advancement Act

J. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority 

Populations and Low-Income Populations

K. Determination under Section 307(d)

IX. Statutory Authority

I. General Information 

A. Does this action apply to me?

 Entities affected by this action include sources in all sectors of the economy, including 

commercial and residential sources. Entities potentially affected by this action also include states, local 

permitting authorities and tribal authorities. The majority of categories and entities potentially affected 

by this action are expected to be in the following groups: 

Industry Group NAICSa

Agriculture, fishing, and hunting ................... 11 

Mining ............................................................ 21 

Utilities (electric, natural gas, other 

systems).................................................... 2211, 2212, 2213 

Manufacturing (food, beverages, tobacco, 

textiles, leather) ........................................ 311, 312, 313, 314, 315, 316 

Wood product, paper manufacturing ............. 321, 322 

Petroleum and coal products 

manufacturing. ......................................... 32411, 32412, 32419 

Chemical manufacturing. ............................... 3251, 3252, 3253,3254, 3255, 3256,3259 

Rubber product manufacturing ...................... 3261, 3262 

Miscellaneous chemical products .................. 32552, 32592, 32591, 325182, 32551 
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Nonmetallic mineral product manufacturing . 3271, 3272, 3273, 3274, 3279 

Primary and fabricated metal 

manufacturing .......................................... 3311, 3312, 3313, 3314, 3315, 3321, 3322, 3323, 3324, 

3325, 3326, 3327, 3328, 3329 

Machinery manufacturing .............................. 3331, 3332, 3333, 3334, 3335, 3336, 3339 

Computer and electronic products 

manufacturing .......................................... 3341, 3342, 3343, 3344, 3345, 4446 

Electrical equipment, appliance, and 

component manufacturing ....................... 3351, 3352, 3353, 3359 

Transportation equipment manufacturing ...... 3361, 3362, 3363, 3364, 3365, 3366, 3366, 3369 

Furniture and related product 

manufacturing .......................................... 3371, 3372, 3379 

Miscellaneous manufacturing ........................ 3391, 3399 

Waste management and remediation ............. 5622, 5629 

Hospitals/Nursing and residential care 

facilities .................................................... 6221, 6231, 6232,6233, 6239 

Personal and laundry services ........................ 8122, 8123 

Residential/private households ...................... 8141 

Non-Residential (Commercial) ...................... Not available. Codes only exist for private households, 

construction and leasing/sales industries. a

 North American Industry Classification System. 

B. Where can I get a copy of this document and other related information?

 In addition to being available in the docket, an electronic copy of this proposed rule will also be 

available on the World Wide Web. Following signature by the EPA Administrator, a copy of this 

proposed rule will be posted in the regulations and standards section of our New Source Review (NSR) 

website, under Regulations & Standards, at http://www.epa.gov/nsr. 

C. What should I consider as I prepare my comments for the EPA?

1. Submitting CBI 

 Do not submit this information to the EPA through www.regulations.gov or email. Clearly mark 

the part or all of the information that you claim to be CBI. For CBI information in a disk or CD ROM 

that you mail to the EPA, mark the outside of the disk or CD ROM as CBI and then identify 

electronically within the disk or CD ROM the specific information that is claimed as CBI. In addition to 

one complete version of the comment that includes information claimed as CBI, a copy of the comment 
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that does not contain the information claimed as CBI must be submitted for inclusion in the public 

docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 

CFR Part 2. Send or deliver information identified as CBI only to the following address: Roberto 

Morales, OAQPS Document Control Officer (C404-02), Environmental Protection Agency, Research 

Triangle Park, NC 27711, Attention Docket ID No. EPA-HQ-OAR-2009–0517. 

2. Tips for Preparing Your Comments 

When submitting comments, remember to: 

 Identify the rulemaking by docket number and other identifying information (subject 

heading, Federal Register date and page number). 

 Follow directions – The agency may ask you to respond to specific questions or organize 

comments by referencing a Code of Federal Regulations (CFR) part or section number. 

 Explain why you agree or disagree; suggest alternatives and substitute language for your 

requested changes. 

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

 If you estimate potential costs or burdens, explain how you arrived at your estimate in 

sufficient detail to allow for it to be reproduced. 

 Provide specific examples to illustrate your concerns, and suggest alternatives. 

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

 Make sure to submit your comments by the comment period deadline identified. 

D. How can I find information about the public hearing?

 Persons interested in presenting oral testimony should contact Ms. Pamela Long, Air Quality 

Policy Division (C504-01), Environmental Protection Agency, Research Triangle Park, NC 27711; 

telephone number (919) 541-0641 or email long.pam@epa.gov at least 2 days in advance of the public 

hearings. Persons interested in attending the public hearings should also contact Ms. Long to verify the 
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time, date and location of the hearing. The public hearings will provide interested parties the opportunity 

to present data, views or arguments concerning these proposed rules.

E. What acronyms, abbreviations and units are used in this preamble?

 The following acronyms, abbreviations and units are used in this preamble: 

AFUE 

BACT 

Annual Fuel Utilization Efficiency 

Best Available Control Technology 

CAA or Act Clean Air Act 

CFR 

CH4

Code of Federal Regulations 

Methane 

CO2 Carbon Dioxide 

CO2e Carbon Dioxide Equivalent 

DOE 

EPA 

U.S. Department of Energy 

U.S. Environmental Protection Agency 

ECOS 

FIP 

Environmental Council of the States 

Federal Implementation Plan 

FR 

GHG 

Federal Register 

Greenhouse Gas 

GP 

GWP 

General Permit 

Global Warming Potential 

HFCs Hydrofluorocarbons 

ICR Information Collection Request 

LDVR Light-Duty Vehicle Rule 

N2O Nitrous Oxide 

NAAQS National Ambient Air Quality Standard 

NACAA 

NRDC 

NSR 

National Association of Clean Air Agencies 

Natural Resources Defense Council 

New Source Review 

NTTAA National Technology Transfer and Advancement Act 

OMB Office of Management and Budget 

PAL 

PFCs 

Plantwide Applicability Limitation 

Perfluorocarbons 

PSD Prevention of Significant Deterioration 

PTE Potential to Emit 

RFA Regulatory Flexibility Act 

SBA Small Business Administration 

SF6 Sulfur Hexafluoride

SIP State Implementation Plan 

SNPR Supplemental Notice of Proposed Rulemaking 

TSD Technical Support Document 

tpy Tons Per Year 

UMRA Unfunded Mandates Reform Act 

II. Overview of the Proposed Rule
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 In the Tailoring Rule,1

 we included an enforceable commitment to propose or solicit comment on 

what we call Step 3 of the process for phasing in, or tailoring, the applicability thresholds at which GHG 

emission sources are subject to the Clean Air Act (CAA or “the Act”) PSD and title V permitting 

requirements. We also stated in that rule that we would lower the Tailoring Rule thresholds only after 

we determined that the states have had enough time to develop the necessary infrastructure and increase 

their GHG permitting expertise and capacity to efficiently manage the expected increase in 

administrative burden, and only after we had the opportunity to expedite GHG permit issuance through 

streamlining measures. In addition, in the Tailoring Rule, we committed to complete action on the Step 

3 rulemaking by July 1, 2012, and to make the Step 3 rule effective on July 1, 2013. In the short period 

of time since the EPA promulgated the Tailoring Rule, the states and we have made progress in GHG 

permitting capacity and streamlining in some areas, but not enough to justify lowering the thresholds at 

this time. As a result, in this rulemaking, we propose to maintain Step 3 of the Tailoring Rule at current 

levels. 

 In section III of this proposal, we discuss background information, including the potential 

numbers of permit actions, amounts of GHG emissions, and administrative costs of permit actions for 

the sources that are potentially subject to GHG permitting for Step 3. 

In section IV, we discuss the available information regarding the impact that GHG permitting is 

having on permitting authorities. In section V, we discuss our proposal to maintain the current 

applicability requirements for GHG PSD and title V permitting at the levels established under Steps 1 

and 2 of the Tailoring Rule, which we generally refer to as the 100,000/75,000 levels. Our basis for 

maintaining the current applicability requirements stems from the Tailoring Rule itself, in which we 

determined that with the Step 1 and 2 thresholds, permitting authorities would be required to handle a 

 

1

 “Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule; Final Rule,” 75 

FR 31,514 (June 3, 2010) (the Tailoring Rule). 
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large number of GHG permitting actions that would impose significant administrative burdens on the 

permitting authorities, and that lowering those thresholds in Step 3 would bring in more permitting 

actions that in turn would add more burden. Accordingly, we stated we would lower the GHG thresholds 

only if certain criteria were met. The criteria are: (i) the development of what we call streamlining 

measures that would make GHG permitting more efficient, (ii) whether permitting authorities had the 

time needed to ramp up their resources, and (iii) the ability of sources to meet the requirements of the 

PSD program and the permitting authorities’ ability to issue timely permits.2 Information currently 

available indicates that the permitting authorities are not significantly better positioned now to process 

more GHG permits than they were at the time we promulgated Steps 1 and 2 in the Tailoring Rule. We 

also note that lowering the thresholds to include the relatively low-emitting sources currently under 

consideration for Step 3 would result in a very small addition to the amount of GHG emissions subject 

to permitting requirements while potentially adding thousands of sources to the permitting process. For 

these reasons, we propose in Step 3 to maintain, and not lower, the current applicability thresholds. 

As we committed to do in the Tailoring Rule, we have been exploring a variety of approaches 

that could be used to streamline PSD and title V permitting for sources of GHGs. In section VI, we 

discuss streamlining techniques with the potential to make the PSD and title V permitting programs 

more efficient to administer for GHG-emitting sources, and propose two streamlining techniques. In 

section VI.A, we propose to add provisions to the PSD regulations at 40 CFR 51.166 and 52.21 to better 

address PALs for GHGs. More specifically, we propose regulatory changes to implement GHG PALs on 

either a mass-basis (tpy) or a CO2e-basis, including for existing sources that are not yet currently major 

for any regulated NSR pollutants and are not major sources because of their GHG emissions, and we 

also propose allowing PALs to be used as an alternative approach for determining both whether a project 

is a major modification and whether GHG emissions are subject to regulation. In section VI.B, we 

 

2

 75 FR 31559. 
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propose to add provisions to the PSD regulations at 40 CFR 52.21 to create GHG synthetic minor source 

permitting authority, in areas subject to a GHG PSD FIP. In doing so, we propose changes to create the 

regulatory authority for the EPA to issue synthetic minor limitations for GHG emissions to allow 

sources to restrict emissions below the PSD applicability thresholds. A synthetic minor limit may also 

allow sources to restrict emissions below the title V permitting applicability threshold on a source-wide 

basis. We also request comment on whether any states with approved SIPs lack authority to issue GHG 

synthetic minor limitations. 

In the rest of section VI, we discuss our progress in evaluating the suitability of other 

streamlining options and request further comment, for the purposes of both PSD and title V permitting, 

on potential-to-emit calculations and the use of general permits; and for PSD permitting, on the use of 

presumptive best available control technology (BACT).

In section VII, we solicit comment on the full range of topics discussed in this proposal. In 

addition, we call for additional information from states as to their current and expected air permit 

budgets as well as their current and expected future levels of permitting based on the current thresholds 

and the possibility of lower thresholds in the future. 

III. Background

 This section describes key aspects of the background for this rulemaking. For other background 

information, such as a description of GHGs and their sources, the regulatory backdrop to the Tailoring 

Rule, and the EPA’s GHG PSD and title V programs, see the Tailoring Rule, the related actions that the 

EPA took shortly before finalizing the Tailoring Rule,3

 and the GHG PSD and title V implementation 

 

3

 “Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the 

Clean Air Act,” 74 FR 66,496 (December 15, 2009) (the Endangerment and Cause-or-Contribute 

Findings); “Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel 

Economy Standards; Final Rule,” 75 FR 25,324 (May 7, 2010) (the Light-duty Vehicle Rule); 

“Interpretation of Regulations that Determine Pollutants Covered by Clean Air Act Permitting 

Programs,” 75 FR 17,004 (April 2, 2010) (the Timing Decision or the Johnson Memo Reconsideration). 
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rules that we call the GHG PSD SIP Call and GHG FIP,4

 as well as the GHG PSD and title V Narrowing 

Rules.5

 For purposes of this proposal, we assume that the reader is familiar with the above-referenced 

materials. In the following paragraphs we provide a brief summary of key statutory and regulatory 

background for the PSD permit and title V programs. 

A. Statutory and Regulatory Background for PSD and Title V

Under the CAA, PSD applies to any “major emitting facility” that commences construction or 

undertakes a “modification.” The Act defines “major emitting facility” as a stationary source that emits 

any air pollutant in the amount of at least 100 or 250 tpy on a mass basis, depending on the source 

category. The Act also defines “modification” as any physical or operational change that “increases the 

amount” of any air pollutant emitted by the source. CAA section 165(a), 169(1), 169(2)(C), 111(a)(4). 

Under the CAA, title V applies to a “major source,” which is defined to include any stationary source 

that is a “major stationary source” under section 302 of the Act. CAA §501(2). Under section 302, a 

“major stationary source” is defined as any stationary facility or source of air pollutants which directly 

emits, or has the potential to emit, 100 tpy or more of any air pollutant. CAA §302(j). The EPA’s 

regulations implement these requirements, though they use different terminology. Under the regulations, 

PSD applies to any “major stationary source” that commences construction or undertakes a “major 

modification.” 40 CFR 51.166(a)(7)(i)-(ii). The regulations define a “major stationary source” as a 

 

4

 “Action to Ensure Authority to Issue Permits under the Prevention of Significant Deterioration 

Program to Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP Call—

Final Rule,” 75 FR 77,698 (December 13, 2010) (the GHG PSD SIP Call); “Action to Ensure Authority 

to Issue Permits Under the Prevention of Significant Deterioration Program to Sources of Greenhouse 

Gas Emissions: Federal Implementation Plan; Final Rule,” 75 FR 82246 (December 30, 2010) (the 

GHG PSD SIP Call FIP). 

5

 “Limitation of Approval of Prevention of Significant Deterioration Provisions Concerning Greenhouse 

Gas Emitting Sources in State Implementation Plans; Final Rule,” 75 FR 82535 (December 30, 2010) 

(the PSD Narrowing Rule); “Action to Ensure Authority to Implement Title V Permitting Programs 

Under the Greenhouse Gas Tailoring Rule; Final Rule,” 75 FR 82254 (December 30, 2010) (the Title V 

Narrowing Rule). 
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stationary source that emits, depending on the source category, at least 100 or 250 tpy, on a mass basis, 

of a “regulated NSR pollutant.” 40 CFR 51.166(b)(1)(i)(a)-(b). A “major modification” is defined as any 

physical or operational change that would result in a “significant emissions increase” and a “significant 

net emissions increase” of “a regulated NSR pollutant” from the major stationary source. 40 CFR 

51.166(b)(2)(i). A “significant emissions increase” is defined as “an increase in emissions that is 

significant ... for that pollutant.” 40 CFR 51.166(b)(39). The term “significant” is defined as a specified 

number for certain listed regulated NSR pollutants and zero for any non-listed pollutants. 40 CFR 

51.166(b)(23)(i)-(ii). A “significant net emissions increase” refers to emissions increases net of 

emissions decreases. 40 CFR 51.166(b)(3). A “regulated NSR pollutant[]” is defined as any of the 

following: (i) in general, any pollutant subject to a NAAQS, (ii) any pollutant subject to a new source 

standard of performance under CAA §111, (iii) any of a certain type of stratospheric ozone depleting 

substances, or (iv) “[a]ny pollutant that otherwise is subject to regulation under the Act.” 40 CFR 

51.166(b)(49)(i)-(iv). The title V regulations define a “major source” in 40 CFR 70.2. 

In the Tailoring Rule, the EPA promulgated, for the first time, a regulatory definition of the term 

“subject to regulation” for purposes of the PSD regulations, and include that term, as defined, in the title 

V regulations. Under the Tailoring Rule regulations, a pollutant is “subject to regulation” if, in general, 

the pollutant is subject to actual control of the quantity of emissions. E.g., 40 CFR 51.166(b)(48), 40 

CFR 70.2. In addition, the Tailoring Rule also provides a special rule for GHGs, which provides that 

GHGs become pollutants “subject to regulation,” and therefore subject to PSD and title V, if they meet 

the following two-step phase-in thresholds. Step 1 applies the applicable requirements of PSD, including 

the BACT requirement to projects that increase net GHG emissions by the applicable threshold (75,000 

tpy CO2e) provided these projects would be subject to PSD anyway by significantly increasing 

emissions of at least one non-GHG pollutant. Under Step 1, for the title V program, only sources with 

current title V permits for non-GHG pollutants will have to address GHGs. Step 2 then expands the 
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program by phasing in additional large sources of GHG emissions that are not already subject to PSD or 

title V permitting requirements due to non-GHG emissions. In Step 2, PSD and title V requirements will 

apply to new sources that emit, or have the potential to emit, at least 100,000 tpy CO2e. For existing 

sources, Step 2 applies title V requirements to existing sources that emit, or have the potential to emit, 

100,000 tpy CO2e and that are not already subject to title V requirements, and also applies PSD 

requirements to those sources that emit, or have the potential to emit, 100,000 tpy CO2e and undertake a 

modification that increases net emissions by at least 75,000 tpy CO2e. See 75 FR 31516. In the Tailoring 

Rule, the EPA explained that “we selected the ‘subject to regulation’ mechanism” as the legal 

mechanism for establishing the phase-in thresholds because we had received information that states 

could more expeditiously adopt those thresholds through that mechanism. The EPA added that “our 

action in this rulemaking [in establishing the phase-in thresholds] should be interpreted to rely on any of 

several legal mechanisms to accomplish this result ... [including] revising the meaning of several terms 

in the [PSD] definition [ provisions].” 75 FR 31582. 

B. How does the Tailoring Rule address GHG emissions under PSD and Title V?6

 In the Tailoring Rule, the EPA explained that the rulemaking was necessary because without it, 

the CAA PSD preconstruction review permitting program and the title V operating permit program 

would, under a literal reading of those provisions, apply to all stationary sources that emit or have the 

potential to emit more than 100 or 250 tpy of GHGs beginning on January 2, 2011. This was the date 

when the EPA’s recently promulgated Light Duty Vehicle Rule (LDVR) took effect, imposing control 

requirements for the first time on carbon dioxide (CO2) and other GHGs, thereby making them subject 

to regulation and triggering the PSD and title V permitting requirements. Therefore, a source owner 

proposing to construct any new major source that would emit or have the potential to emit at or higher 

 

6

 We include this discussion of the Tailoring Rule for background purposes only. We do not reopen for 

comment any of the determinations made in the Tailoring Rule or our rationale for them. 
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than the 100/250 tpy applicability levels (and which therefore may be referred to as a “major” source) or 

modify any existing major source in a way that would increase GHG emissions, would need to obtain a 

permit under the PSD program that addresses these emissions before construction or modification could 

begin. Similarly, title V would apply to a new or existing GHG source exceeding the 100 tpy 

applicability threshold in the Act. 

 In the Tailoring Rule, we further explained that under these circumstances, and in the absence of 

streamlining methods, state and local permitting authorities would be burdened by the need to issue PSD 

permits to tens of thousands of small sources and to issue title V permits to millions of small sources. 

These extraordinary numbers of permit applications are orders of magnitude greater than the current 

inventory of annual applications and would vastly exceed the current administrative resources of the 

permitting authorities. Permit gridlock would result with the permitting authorities able to issue only a 

tiny fraction of the permits requested. 

 In the Tailoring Rule, we further explained that “[t]hese impacts ... are so severe that they bring 

the judicial doctrines of ‘absurd results,’ ‘administrative necessity,’ and ‘one-step-at-a-time’ into the 

Chevron two-step analytical framework for statutes administered by agencies.” Tailoring Rule, 75 FR at 

31517. We further explained that on the basis of this legal interpretation, we would phase-in the 

applicability of PSD and title V to GHG-emitting sources so that those requirements would apply “at 

least to the largest sources initially, at least to as many more sources as possible and as promptly as 

possible over time ... and at least to a certain point.” Id. In the Tailoring Rule, we went on to promulgate 

the first two steps of the phase-in program, which we call Steps 1 and 2, and we made commitments for 

subsequent action. 

 In the Tailoring Rule, we closely reviewed the numbers of additional permitting actions for 

GHG-emitting sources, and the resulting administrative burdens, that would occur at various permitting 

thresholds. For example, we estimated the following permitting burdens associated with the Step 1 and 
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Step 2 thresholds: 

Step 1:

Number of sources subject to PSD and title V permitting: 

Additional workload hours PSD program: 

Additional workload hours title V program: 

the same 

34,000 at a cost of $3 million 

27,468 at a cost of $1 million 

 

Step 2:

Number of additional sources subject to PSD permitting: 2 new sources, 915 modified sources 

Additional workload hours PSD program: 310,655 at a cost of $24 million 

Number of additional sources subject to title V permitting: 190 sources for each of the first 3 

years 

Additional workload hours title V program: 141,322 at a cost of $7 million 

 

75 FR 31541. 

We further estimated that the combined additional PSD and title V permitting burdens 

due to Steps 1 and 2 would, on an annual basis, mean a 42 percent increase in costs over the 

current PSD and title V program. 75 FR 31540, Table V-1. 

C. In the Tailoring Rule, what commitments did the EPA make for Step 3? 

 In the Tailoring Rule, we noted that “following implementation of the first phase of PSD and 

title V applicability to GHG sources, generally at the [proposed] threshold, additional action would be 

required over time to assure full compliance with the statute.” 75 FR 31571. Accordingly, we included 

in the Tailoring Rule an enforceable commitment to issue a notice of proposed rulemaking in which we 

would propose or solicit comment on a third step of the phase-in, which we call Step 3. We committed 

to complete Step 3 by July 1, 2012, and to make Step 3 effective by July 1, 2013. We committed to 

solicit comment on lowering the thresholds, so that more sources would be subject to PSD and title V 

requirements, 40 CFR 52.22(b)(1), 40 CFR 70.12(b)(1), but we did not commit to either propose or 
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finalize lower thresholds. We further stated that in light of the administrative burdens, we would not, in 

Step 3, lower the thresholds below the 50,000/50,000 tpy CO2e levels. 

 In the Tailoring Rule, we recognized that lowering the thresholds in Step 3, and thereby bringing 

more sources into PSD and title V permitting, would mean that the permitting authorities would confront 

even greater administrative burdens. For example, we estimated that lowering the thresholds to the 

50,000/50,000 level would increase administrative costs by 40 percent above administrative costs 

associated with Step 2.7 Accordingly, we explained that whether we could lower the thresholds in Step 3 

depended on (i) whether the EPA could develop streamlining measures, (ii) the time that permitting 

authorities need to ramp up their resources, and (iii) sources’ abilities to meet the requirements of the 

PSD program and permitting authorities’ ability to issue timely permits. 75 FR 31524. We elaborated: 

(2) Criteria for Establishing Phase-in Schedule 

The specific phase-in schedule under the tailoring approach will depend on 

several things. The first is our progress in developing streamlining methods that will 

render the permitting authority workload more manageable by taking some sources off 

the table (through regulations or guidance interpreting “potential to emit”), and by 

allowing for more efficient permit processing (through general permits and presumptive 

BACT). At the same time, streamlining techniques will lower permitting costs to sources 

or even eliminate some sources’ obligations to obtain permits altogether. The second is 

the time that permitting authorities need to ramp up their resources in an orderly and 

efficient manner to manage the additional workload. The third is information we have as 

to the sources’ abilities to meet the requirements of the PSD program and the permitting 

authorities’ ability to process permits in a timely fashion. That information will be based 

on the real-world experience the permitting authorities will accumulate as they proceed to 

process permit application for the larger GHG sources. 

Thus, under our present approach, we will develop streamlining techniques, we 

expect the permitting authorities to ramp up resources in response to the additional 

demands placed upon them in the first two steps, and we will gather real worldinformation about the GHG permitting process; and based on all that, we will address 

expanding the PSD program in a step-by-step fashion to include more sources over time. 

We intend to follow this process to establish ... the PSD applicability thresholds .... 

 

75 FR 31559. With respect to the third criterion, we note that in the Tailoring Rule, we made clear that 

sources’ abilities to meet the requirements of the PSD and title V programs depend at least in part on the 

 

7

 75 FR 31540 (Table V-1). 
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ability of the states to develop, as part of the state programs, outreach and educational efforts to facilitate 

source compliance. Accordingly, for present purposes, we think this component concerning sources may 

be examined by a review of the states’ progress in developing state GHG permitting programs. We also 

note that permitting authorities’ abilities to issue timely GHG permits may be measured by the extent of 

any permitting backlog, and depend in large part on the permitting authorities’ development of expertise. 

In this rulemaking, we seek information from the states as to their ability to issue timely permits, 

including data concerning their backlog, but we also are examining, more broadly, the states’ progress in 

developing expertise in GHG permitting. 

D. In the Tailoring Rule, what plan did the EPA announce for developing streamlining measures? 

In the Tailoring Rule, we announced a plan to explore streamlining techniques that could make 

the permitting programs more efficient to administer for GHGs, and that therefore could allow 

expanding those programs to smaller sources. Streamlining techniques to be evaluated include: 1) 

defining PTE for various source categories, 2) establishing source category emission limits for 

presumptive BACT, 3) establishing general permits and permits-by-rule, 4) establishing a process for 

electronic permitting, and 5) establishing a process for lean techniques for more efficient permitting 

processes. We believe that these techniques have the potential to streamline the PSD and title V 

permitting programs for GHGs to “allow the expeditious expansion of PSD and title V applicability to 

more GHG-emitting sources while protecting those sources and the permitting authorities from undue 

expenses.” 75 FR 31526. 

While we intend to move forward and develop streamlining approaches, we also stated in the 

Tailoring Rule that we did not expect to develop and implement any of these prior to Step 2. We also 

stated in the rule that several of these streamlining approaches will take several years to develop, 

requiring separate rulemaking both at the federal level, and then through state and local processes. We, 

nonetheless, committed to explore a number of possible streamlining actions prior to the Step 3 
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rulemaking. 

 In addition, with respect to title V, in the Tailoring Rule we noted that commenters on the 

proposal for that rule stated that the EPA should apply the title V program only to sources that are 

subject to applicable requirements, so that sources should not be required to hold “empty permits” (e.g., 

permits issued to a source that is not subject to any applicable requirement for any pollutant). In the 

Tailoring Rule, we recognized that not requiring sources to hold such “empty permits” is a potential 

means for relieving title V permitting burdens. [75 FR 31566.] We also stated that – 

 We need to gather more information concerning the potential number and utility 

of “empty permits” for GHG sources, in light of the fact that the need for requirements in 

title V permits will vary based on the requirements of each SIP, and the fact that some 

SIPs contain broadly applicable requirements. 

 

75 FR 31566. We added that in the Step 3 rulemaking, “we may consider whether to limit title V 

applicability to GHG sources in order to minimize the number of GHG sources with ‘empty’ permits.” 

Tailoring Rule, 75 FR 31567. 

E. In the Tailoring Rule, what commitments did the EPA make for subsequent action? 

 In addition, in the Tailoring Rule, we established an enforceable commitment that we will (i) 

complete a study by April 30, 2015, to evaluate the status of PSD and title V permitting for GHGemitting sources, including progress in developing streamlining techniques; and (ii) complete further 

rulemaking based on that study by April 30, 2016, to address the permitting of smaller sources. That 

rulemaking may also consider additional permanent exclusions based on the “absurd results” doctrine, 

where applicable. 

 In the Tailoring Rule, we also included a provision assuring that no source with emissions or 

potential to emit below 50,000 tpy CO2e, and no modification resulting in an increase and a net GHG 

increases of less than 50,000 tpy CO2e, would be subject to PSD or title V permitting before April 30, 

2016. We included this provision on the basis of our conclusion that the administrative burdens that 

would accompany permitting sources below the 50,000 tpy threshold would be so great that it would be 
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impossible to administer the permit programs for these sources until at least 2016, even with the 

streamlining actions that the EPA may be able to develop, and the increases in permitting resources that 

we reasonably expect the permitting authorities to acquire. 

IV. Available Information on GHG Permitting 

 To support this Step 3 rulemaking, the EPA has gathered additional information on the impact 

that GHG permitting is having on permitting authorities at the current threshold levels and the potential 

impact that would result from a reduction in the GHG permitting thresholds to levels as low as 50,000 

tpy CO2e. Section IV.A discusses the actual permitting that has occurred since January 1, 2011. Section 

IV.B discusses information gathered through preliminary consultations with eight state PSD permitting 

authorities, as well as, experience garnered from the EPA regional offices that are the PSD permitting 

authorities for certain states.8

 Section IV.C presents information from an analysis of the number of 

existing and new sources that would be potentially major sources of GHGs at a range of thresholds 

between the current level of 100,000 tpy CO2e and 50,000 tpy CO2e. 

A. GHG Permitting Activity to Date

As of December 1, 2011, the EPA and state permitting authorities had issued 18 PSD permits 

with GHG requirements. We also estimate that as of that date, the EPA and state permitting authorities 

had received an additional 50 GHG PSD permit applications. The types of source categories for which 

permitting authorities have issued GHG permits include: biofuel production, cement plants, electric 

generating units, lime production facilities, outer continental shelf exploration, pulp and paper mills, and 

refineries. Eleven states and three EPA regions issued these permits. In most cases, no permitting 

authority issued a permit for the same source category more than once. We discuss in section V the 

extent to which these permitting actions have provided information relevant to Step 3. 

 

8

 In the title V program, the responsible permitting agency is referred to as the “permitting authority,” 

while in the PSD program, this entity is referred to as the “reviewing authority.” We use the two terms 

interchangeably in this preamble. 
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B. Consultations with States

 To obtain additional information on the current status of GHG permitting based on the 

implementation of Step 1 and Step 2 and the potential impact of reducing the GHG thresholds in Step 3, 

we consulted with eight state permitting authorities – Iowa, Louisiana, Michigan, New Jersey, North 

Carolina, Pennsylvania, South Dakota and Utah – all of which have experience with GHG permitting, 

and which represent a cross-section of state programs geographically and in terms of population and 

types of sources. In addition, we reviewed the experience of the EPA regional offices that act as PSD 

permitting authorities in state jurisdictions: Region 4, which issues PSD permits for GHG emissions in 

Florida and for all regulated pollutant emissions from outer continental shelf sources in the eastern 

portion of the Gulf of Mexico; Region 6, which issues PSD permits for GHG emissions in Arkansas and 

Texas; and Region 9, which issues PSD permits for all regulated pollutants in many of the local air 

quality management districts in California. For additional information concerning responses to the 

survey, please refer to the Docket ID No. EPA-HQ-OAR-2009-0517. 

 These states and regional offices confirm that they have not yet experienced the increase in the 

number of major source permitting actions that was predicted to result from the implementation of Step 

1 and Step 2. They generally do not believe that 2011 has been representative of the permitting burdens 

that they expect will ultimately occur under the current Tailoring Rule. 

 In addition, the states confirmed that to this point, they have not been able to build up their GHG 

permitting infrastructure. For example the permitting activity to date has provided limited, if any, 

opportunity to build internal capacity to handle GHG permitting for a diverse set of sources or more 

efficiency for any particular source category. Similarly, the lack of permitting experience greatly 

diminished the opportunity to develop meaningful streamlining approaches to address GHG permitting. 

As a result, states indicated that they have made little or no progress in implementing streamlining 

measures, and have not adopted any such measures specifically to address GHGs. 
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C. Additional Technical Support for the Step 3 Rule

To support the decision-making process for this Step 3 rule, the EPA carried out an analysis to 

estimate the number of facilities that would exceed different GHG emissions threshold levels.9 This 

analysis built upon analysis the EPA included in the Tailoring Rule to support the threshold decisions in 

that action.10 In the Tailoring Rule analysis, the EPA evaluated eight different PTE thresholds between 

100 and 100,000 tpy CO2e, including 50,000 tons per year. For this Step 3 analysis, the EPA evaluated 

nine additional thresholds between 50,000 and 100,000 tpy CO2e in 5,000 tpy increments (that is, 55,000 

through 95,000 tpy CO2e). The EPA considered stationary sources in the following sectors: 

 Electricity Generation (facilities with fossil fuel-fired electric generating units); 

 Industrial sources (14 subcategories of industries with process and combustion GHG emissions); 

 Energy (oil and gas extraction, transport, and processing; underground coal mining); 

 Waste Treatment (landfills and municipal solid waste incinerators); 

 Agriculture (stationary fuel combustion); 

 Commercial (stationary fuel combustion); and 

 Residential (stationary fuel combustion). 

For each sector, the analysis estimated the number of sources that would become major sources for 

GHGs at each of the different threshold levels and the number of new major sources projected to be 

added each year. The study found that at a Step 3 major source threshold of 50,000 tpy CO2e, 

approximately 4,650 additional sources would become major sources of GHGs (increasing from 5,326 at 

100,000 tpy CO2e, to 9,980 at 50,000 tpy). About half of these would be in the “unspecified industrial 

stationary combustion” subcategory of industrial facilities; 16 percent in the waste treatment sector, 

 

9

 See Technical Support Document “Summary of Methodology and Data Used to Evaluate Resource 

Requirements at Alternative Greenhouse Gas (GHG) Permitting Thresholds” (December 2011). 

10 See “Technical Support Document for Greenhouse Gas Emissions Thresholds Evaluation,” March 29, 

2010, Docket No. EPA-HQ-OAR-2009-0517-19158. 
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landfill subcategory; 14 percent in the energy sector, oil and gas subcategory; 12 percent in the 

commercial/stationary fuel combustion sector; 4 percent in the electricity generation sector and the 

remaining 4 percent scattered among the remaining sectors and industrial subcategories. At a threshold 

of 80,000 tpy CO2e the number of commercial sources that become major sources of GHGs significantly 

increases and at a threshold of 55,000 tpy CO2e, some multi-family residential sources become major 

sources. The analysis found that no sources in the agricultural or single family residential categories 

would become major sources of GHGs at a threshold of 50,000 tpy CO2e. Note that this analysis did not 

differentiate between sources that become major only because of the source’s GHGs emissions from 

sources that that are already major for one or more other pollutants. 

The EPA’s analysis identified sources that would become subject to permitting requirements 

because of GHG emissions alone.11 Based on this analysis, we estimate that a reduction from the current 

Step 2 threshold to 50,000 tpy CO2e would result in nearly 3,000 sources becoming major sources due to 

their GHG emissions alone (increasing from 552 sources at 100,000 tpy CO2e, to 3,539 at 50,000 tpy). 

In addition, we estimate that 1,014 additional modifications would be subject to PSD permitting based 

on GHG emissions at 50,000/50,000 tpy CO2e versus the Step 2 thresholds of 100,000/75,000 

(increasing from 917 per year to 1,931). 

In addition to determining the amount of potential additional permit actions associated with the 

various thresholds, the EPA also determined the administrative burdens associated with those actions. 

To do so, the EPA relied on the same per-permit administrative cost figures used in the Tailoring Rule 

for both PSD and title V permitting, for both commercial/residential sources and industrial sources, as 

well as for both new construction and modifications.12 The EPA also determined the amount of GHG 

 

11 See “Summary of Methodology and Data Used to Evaluate Resource Requirements at Alternative 

Greenhouse Gas (GHG) Permitting Thresholds,” December 2011. 

12 We note that none of the challenges to the Tailoring Rule have addressed these burden estimates; we 

have not revisited them for purposes of this rule, nor are we are re-opening them for comment. 
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stationary source emissions associated with the sources potentially affected by the various thresholds. 

To determine the impacts of lowering the thresholds in Step 3, the EPA compared the amounts of 

administrative costs and GHG inventory covered at the various cut-points to the amounts at the 

100,000/75,000 Step 2 levels.13 For example, with respect to the PSD administrative costs, as we stated 

in the Tailoring Rule, 75 FR 31540 (Table V-1), at the 100,000/75,000 Step 2 levels, we expect annual 

PSD permitting actions for GHG-emitting sources to include 242 newly constructed sources and 1,365 

modifications ( 917 for GHG emissions alone plus 448 for anyway sources) and we expect that these 

PSD GHG permitting actions would increase permitting authority administrative burdens by 42 percent 

above existing total air permitting burdens (including permitting for conventional (i.e., non-GHG 

pollutants under Tailoring Rule Step 1), because these actions would trigger permitting requirements for 

both PSD and title V. In total, we estimate the facilities meeting the Step 2 major source applicability 

thresholds account for approximately 67 percent of the total national stationary source GHG emissions. 

At the 50,000/50,000 levels, the EPA estimates annual PSD permitting actions involving GHG-emitting 

sources to include 243 newly constructed sources and 2,379 modifications (1 more newly constructed 

source and 1,014 more modifications than at the 100,000/75,000 level). While the EPA estimates these 

GHG permitting actions to increase permitting authority administrative burdens by 40 percent above the 

total burdens at Step 2 levels (and 99% above the administrative burdens without GHG permitting), we 

estimate the facilities meeting these major source applicability thresholds to account for approximately 

70 percent of total national stationary source GHG emissions, just three percent more than currently 

covered under Step 2. For a more complete description of the EPA’s analysis and an explanation, see the 

Technical Support Document titled, “Summary of Methodology and Data Used to Evaluate Resource 

 

13 This level refers to new sources as well as existing sources that are not “anyway” sources and that 

emit, or have the potential to emit, at least 100,000 tpy CO2e, as well as existing sources that emit or 

have the potential to emit at least 100,000 tpy CO2e and that undertake a modification that increases net 

emissions of GHGs by at least 75,000 tpy CO2e. 
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Requirements at Alternative Greenhouse Gas (GHG) Permitting Thresholds” (December 2011). 

V. Proposed Step 3 Rule

A. Overview

The Tailoring Rule’s phase-in approach is based on data concerning the numbers of GHG 

permitting actions the permitting authorities would have to undertake and the costs of those actions – 

both absolute and in comparison to their current budgets – at various different thresholds for the 

applicability of PSD and title V to GHG-emitting sources. In the Tailoring Rule, we began the phase-in 

by establishing Steps 1 and 2, which applied PSD and title V to “anyway” sources and sources emitting 

GHGs at the 100,000/75,000 tpy CO2e level. To do so, we determined that permitting authorities could 

handle the hundreds of additional permitting actions that would occur under Steps 1 and 2, even though 

the authorities’ administrative costs would increase by 42 percent over their then-current administrative 

costs for both PSD and title V programs. 

The present rulemaking represents the fulfillment of our commitment in the Tailoring Rule to 

undertake Step 3 of the GHG PSD and title V phase-in process. At this time we believe state permitting 

authorities have not had sufficient time and opportunity to develop the necessary infrastructure and 

increase their GHG permitting expertise and capacity, which makes it administratively infeasible to 

apply PSD and title V permitting requirements to additional sources. Accordingly, we are proposing to 

leave the applicability thresholds for GHGs unchanged. 

In the Tailoring Rule, we committed to undertake future rulemaking, including this Step 3 

rulemaking, to examine whether we could lower the thresholds to, potentially, as low as 50,000/50,000, 

and thereby apply PSD and title V to more sources. We recognized that lowering the thresholds would 

add more administrative costs on top of those added by Steps 1 and 2, and as a result, we stated that 

whether and when we would lower the thresholds would depend on the pace at which the EPA and 

permitting authorities could develop streamlining measures to expedite permit program administration 
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and permitting authorities could hire and train staff, as well as gain experience with GHG permitting. 

Specifically, we indicated that further phase-in of GHG applicability would depend on three criteria: (i) 

whether the EPA could develop streamlining measures, (ii) the time that permitting authorities need to 

ramp up their resources, and (iii) sources’ abilities to meet the requirements of the PSD program and 

permitting authorities’ abilities to issue timely permits. 

As described in the following, the states and the EPA have made some progress in these areas. 

For example, the states have issued some GHG permits and we are proposing streamlining measures in 

this rulemaking. However, neither the states nor the EPA have had the opportunity to make significant 

progress in these areas. First, the states have had only limited experience in GHG permitting and 

therefore have not had the opportunity to develop significant expertise. The main reasons for this are the 

unexpectedly low number of PSD permit applications submitted to date and the short amount of time 

since GHG permitting began. Second, the states have not been able to develop their GHG permitting 

infrastructure – e.g., hiring additional personnel, establishing policies and conducting outreach programs 

to sources unfamiliar with the permitting process – largely because their permitting resources have not 

increased and, in fact, in some cases have decreased and may decrease further in the near future. 

Similarly, for title V, applications for title V permits are not generally due until a year after title V 

becomes applicable to a source. Thus, for Step 2 title V sources, permit applications are generally not 

due until July 1, 2012, and states have not gained title V permitting experience. Third, we have not had 

the opportunity to develop significant streamlining approaches, largely because, as we stated in the 

Tailoring Rule, certain streamlining approaches require a longer process. Because of these reasons and 

following the criteria, described in the Tailoring Rule, we are establishing Step 3 at the current levels. 

The following discusses these criteria, beginning with the ability of states to ramp up and build 

infrastructure, and notes the states’ and our experience with GHG permitting to date under the current 

Step 1 and Step 2 applicability thresholds. We also address the additional two criteria noted above and 
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the environmental benefits potentially associated with any further reduction in the GHG PSD permitting 

thresholds. 

B. Have states had adequate time to ramp up their resources?

A criterion that we described in the Tailoring Rule for whether to lower the thresholds in Step 3 

was whether the permitting authorities could increase their resources. As discussed previously in the 

background section, we stated in the Tailoring Rule that we expected Steps 1 and 2 to result in an 

increase in PSD permits for new construction and modifications and in title V permits. We estimated 

that Steps 1 and 2 would result in a 42 percent increase in administrative burdens for permitting 

authorities. We expected that some increase in state permitting resources would be needed to 

accommodate, at least in part, those new demands. 

As noted, to this point states have not been confronted with the amount of GHG permit 

applications that we had expected in the Tailoring Rule for Steps 1 and 2. We expect that this situation 

will be short-lived, and that the pace of permitting will pick up. Thus, it is prudent for states to continue 

to plan on confronting additional administrative demands expected as part of Steps 1 and 2. As 

discussed in the following, they have confronted other administrative burdens as well and if the 

thresholds are lowered in Step 3, they will confront still more administrative burdens. Importantly, based 

on our consultations with a limited number of states, we do not believe that states have had the 

opportunity to obtain the necessary resources and to develop their infrastructure to accommodate the 

level of permitting expected in Steps 1 and 2. 

In addition, an August 2011 report by the Environmental Council of the States (ECOS)14

emphasizes the continued need for additional resources before full implementation of the program can 

begin. It also notes that permitting authorities expect workloads to double or triple as a result of 

 

14 S. Brown, A. Fishman, “The Status of State Environmental Agency Budgets, 2009-2011,” Steven 

Brown, Executive Director, and Adam Fishman, Intern. 
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applications for synthetic minor limits to sources who wish to avoid GHG permitting. 

Further, as quantified in the Tailoring Rule, lowering the thresholds would increase those 

burdens. We have estimated that lowering the thresholds to 60,000/60,000 would increase administrative 

burdens by 20 percent above the total burdens at Step 2 levels (and 40 percent above the pre-GHG 

permitting burdens). As noted above, lowering them to 50,000/50,000 would increase administrative 

burdens by 40 percent above the total burdens at Step 2 levels (and 99 percent above the pre-GHG 

permitting burdens). As we discussed in the Tailoring Rule, lowering applicability thresholds would 

trigger requirements for more sources that never before have been regulated under the PSD and title V 

permitting programs. As a result, permitting agencies will need to conduct an education and outreach 

program to raise awareness and understanding of the regulatory requirements for these smaller sources. 

Absent this outreach effort, we believe that many sources will not understand, and perhaps may not even 

be aware of, their new regulatory obligations. 

Finally, we note that certain procedural aspects of the GHG permitting process have proved to be 

more resource- and time-intensive for states than anticipated at the time of the Tailoring Rule. In the 

final Tailoring Rule, we finalized the applicability thresholds within the definition of “subject to 

regulation,” instead of within the “major stationary source” definition. We made this change in 

regulatory approach because we received information indicating that many states could adopt the 

applicable thresholds through a regulatory interpretation of the term “subject to regulation,” instead of a 

SIP revision.15 Since finalizing the Tailoring Rule, we discovered that in fact, very few states were able 

to adopt the applicable thresholds by interpretation alone, and instead needed SIP revisions to be able to 

 

15 As discussed in the preamble to the final Tailoring Rule (75 FR 31581), we participated in 

teleconferences with 1 local and 6 state agency permitting authorities on this topic, and they generally 

agreed that this approach would better facilitate state incorporation of the limitations in the final rule. 

We therefore concluded that it was likely that the state rules were sufficiently open-ended to apply 

EPA’s approach by interpretation (although some states might elect to pursue rulemaking in addition to 

or instead of interpretation). 
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regulate GHGs under their approved PSD programs at the levels of the final Tailoring Rule. Moreover, 

some states were obliged to invoke emergency procedures to expedite revision of their state laws. This 

unexpected, additional state process required for adopting the Tailoring Rule thresholds may have 

delayed some states in developing their permitting program infrastructure. 

By the same token, for title V programs, we believed that many states could adopt the Tailoring 

Rule thresholds through a regulatory interpretation of the term “subject to regulation,” and that this 

approach would allow permitting authorities to implement title V for GHGs quickly with little 

rulemaking burden. However, as it has happened, most states need to change the state laws and/or 

regulations governing their title V programs to be able to permit GHGs at the Tailoring Rule threshold 

levels. In fact, it turned out that only 5 state programs and numerous local districts in California, did not 

need to enact program revisions. 

In the Tailoring Rule, we expected that over time, permitting authorities would have the 

opportunity to increase their resources to allow them to process more GHG permit applications in a 

timely fashion. To this point, we see little evidence that permitting authorities could increase resources 

and, in fact, permitting authorities generally are facing fewer resources. Reductions in state 

environmental agency budgets are fully consistent with the overall reductions in state budgets recently 

seen in the United States. 

The August 2010 ECOS report, noted previously,16 concluded that state budgets decreased by an 

average of approximately $21 million per state from 2009 to 2011. On June 28, 2011, the National 

Association of Clean Air Agencies (NACAA) sent a letter to the U.S. House of Representatives 

detailing the status of 40 state and local air quality agencies.17 The NACAA letter indicates that 80 

 

16 “The Status of State Environmental Agency Budgets, 2009-2011,” p. 3. 

17 S. William Becker to Honorable Michael Simpson, Chairman Subcommittee on Interior, 

Environment, and Related Agencies, and Honorable James Moran Ranking Member, Subcommittee on 

Interior, Environment, and Related Agencies 
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percent of air agencies experienced a decline in staffing levels in the last 4 years. Over the years 2008-

2010, the average loss of staff per agency was 16.7 percent. In addition to staffing losses, 48 percent of 

air agencies experienced furloughs, and the majority faced significant declines in budgets. These 

cutbacks resulted in curtailing core air program activities including permit issuance, and education and 

outreach programs. In our recent consultations with states most confirmed that they have seen their 

budgets and staffs reduced in recent years as the states have responded to the economic downturn and 

budget shortfalls. For the previously described reasons, states have not had the opportunity to build 

capacity and resources to handle GHG permitting. Accordingly, this criterion of state resources supports 

maintaining the current thresholds. 

C. What is the ability of permitting authorities to issue timely permits?

The second criterion we address is whether permitting authorities have the ability to issue timely 

permits based on efficiencies resulting from GHG permitting implementation experience.18 In describing 

this criterion in the Tailoring Rule, we expected that permitting authorities, by acting on the anticipated 

volume of GHG PSD permit actions, would have the opportunity to establish efficient methods for 

resolving issues and processing permits, including developing expertise within their staff. This would 

allow them to achieve efficiencies that, in turn, would create capacity for processing more GHG permit 

applications. Thus, with this criterion, we based our commitment to complete the Step 3 rulemaking in 

part on the assumption that Steps 1 and 2 would provide us with the necessary information to determine 

whether and when it has become possible for states to administer GHG permitting programs for 

additional sources. This has not yet happened. 

 While we recognize that we have not yet completed a full year of implementation for Steps 1 and 

2, GHG permit applications are fewer than we had expected. As of December 1, 2011, the EPA and state 

 

18 As noted above, this criterion may be measured by the period of time permitting authorities need to 

issue permits, and it also encompasses the sources’ ability to meet GHG permitting requirements 
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permitting authorities have issued only 18 GHG PSD permits. As noted, these 18 permit actions have 

been spread among 11 states and the EPA. Almost all of the states have issued only one GHG permit, 

and only Michigan has issued as many as three permits. This activity has simply been too limited to 

allow States to build internal capacity to handle GHG permitting for a diverse set of sources, to develop 

more efficient techniques for permitting any particular source category, or to develop streamlining 

approaches to address GHG permitting. In our consultations with the states, some have confirmed that 

they have not been able to build up their GHG permitting infrastructure. However, they generally have 

added that they do not believe that 2011 has been representative of the permitting burdens that they 

expect will ultimately occur under the current Tailoring Rule. In sum, the states’ experiences to date do 

not provide a basis for us to conclude that permitting authorities in fact have the ability to issue timely 

permits based on GHG permitting experience thus far.

D. Has the EPA developed streamlining methods?

In the final Tailoring Rule, we indicated that implementation of permit streamlining approaches 

would assist permitting authorities by removing some sources from the permit program, or allowing 

more efficient processing of applications. As we indicated in the final Tailoring Rule, however, we 

expected it would take several years for the EPA to develop and for States to gain authority to 

implement effective streamlining methods. We did not anticipate that streamlining approaches would be 

available by the time of the Step 3 rulemaking. We also note that in the previously described 

consultations, the states reported that they have made little progress in implementing streamlining 

measures, and none have adopted measures specifically to address GHGs. This information is consistent 

with EPA’s estimate, in general, that it would take at least 3 years for EPA to develop, and for states to 

adopt and implement streamlining methods, so that sufficient progress on streamlining would likely not 

occur before the Step 3 rulemaking deadline. 

We are proposing requirements for PALs and synthetic minor limitations for sources, and these 
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also constitute streamlining methods that can be expected to free up administrative resources. However, 

these methods will not be available in time to enhance the state’s ability to manage the GHG permitting 

programs during Step 3. The benefits of a PAL will not be seen until the States adopt these requirements 

into their SIPs and sources apply for and receive permits that reflect PALs. For the previously-described 

reasons, although we are making progress in developing streamlining measures, the current status of 

streamlining measures supports maintaining the thresholds for Step 3. 

In addition, as noted, we are continuing to consider other streamlining approaches, including 

limits on potential-to-emit, general permits, and presumptive BACT. For the most part, these other 

streamlining methods even if further developed, would have limited benefit for improving permitting 

administration for the source categories currently subject to GHG PSD permitting or that are under 

consideration for Step 3. We discuss our progress in developing these other streamlining methods, and 

their limited utility for Step 3, in section VI. This rulemaking provides a good opportunity to provide the 

EPA with input on additional streamlining ideas for implementation of the GHG permitting programs. 

More specifically, in section VII.B we request comment on other potential streamlining techniques that 

may hold promise to reduce PSD and/or title V permitting burden for sources of GHGs and permitting 

authorities. 

E. Limited Benefit from Lowering Thresholds in Step 3

 The fact that PSD would apply to the great bulk of GHG emissions at the Tailoring Rule 

thresholds was a factor in our decision to establish the thresholds at the 100,000/75,000 levels. For the 

current rulemaking, we have conducted further analysis, which shows that reducing the thresholds in 

Step 3 to as low as 60,000/60,000 would bring within the potential ambit of the PSD program less than 

an additional 1 percent of all GHG emissions from all stationary sources above the statutory thresholds 

while potentially adding a significant number of sources into the permitting programs. This is because of 

the large amount of GHG emissions that come from very large sources, coupled with the relatively small 
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create significant administrative burdens on permitting authorities. We stated that we would lower the 

thresholds, and thereby create additional administrative burdens, only after: (i) we had the opportunity to 

develop efficiencies in GHG permitting through streamlining measures; (ii) the states had the 

opportunity to build up their GHG permitting infrastructure and to develop GHG permitting expertise; 

and (iii) sources have the ability to meet the requirements of the PSD program and permitting authorities 

have the ability to issue timely permits. These things have not happened, as the preceding discussion has 

made clear. As a result, consistent with the commitment we made in the Tailoring Rule, lowering the 

thresholds is not feasible at this time. 

Importantly, we consider the relative lull in permit activity to be temporary, and we expect that 

the pace of permit applications will increase. In fact, it is difficult to predict whether the increase in 

permit activity under Step 2 will occur incrementally or rapidly. If it occurs rapidly, it would be 

particularly burdensome for states. As a result, even a modest increase in permitting burden that could 

result from lowering thresholds in Step 3 could overwhelm state permitting capacity and result in 

substantial delays in processing permit applications. 

All told, these considerations support maintaining the Tailoring Rule thresholds through Step 3. 

Additional time is required to develop streamlining measures to expedite permit program administration, 

and permitting authorities need additional time to secure resources, hire and train staff, and gain 

experience with GHG permitting before we move toward full implementation of the program. 

Accordingly and consistent with our Tailoring Rule commitment, we propose to maintain the thresholds 

of 100,000/75,000 tpy CO2e. 

We note that maintaining PSD and title V applicability for GHG sources at the current thresholds 

for Step 3 does not have implications for whether we will lower the thresholds in Step 4 or afterwards. 

Our actions in Step 4 will depend on our evaluation of the criteria and other factors described above. If 

those criteria and other factors point in the direction of lowering the thresholds, we will do so, and we 
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will lower them to whatever level indicated. A decision not to lower the thresholds in Step 3 does not 

foreclose a decision to lower them in Step 4. 

VI. Streamlining for PSD and Title V Permitting of GHGs

In the Tailoring Rule, the EPA committed to explore streamlining measures as an integral part of 

the phase-in approach to permitting requirements for GHG emissions under PSD and title V. 

Streamlining techniques would allow permitting authorities to be more efficient in administering their 

GHG permit programs by reducing the overall resources required to administer the PSD permitting 

program now and in the future. By implementing effective streamlining techniques permitting 

authorities could move more rapidly toward regulating a larger set of GHG sources. In the Tailoring 

Rule, we identified potential streamlining options. We also acknowledged that it will take us several 

years to develop, and for states to gain authority to implement effective streamlining methods. We 

committed to continue to explore the identified options, and to request comment on these and any 

additional streamlining approaches in the Step 3 rulemaking. 

Today, we propose to adopt two regulations: one that streamlines the PSD permit program, and 

one that potentially streamlines both the PSD and the title V permit program. The first regulation 

expands the existing PAL provisions to allow reviewing authorities to establish GHG PALs on either a 

mass-basis (tpy) or a CO2e-basis, including for existing sources that are not yet GHG major sources, and 

allows PALs to be used as an alternative approach for determining both whether a project is a major 

modification and whether GHG emissions are subject to regulation. The second regulation establishes a 

mechanism that allows individual sources to obtain synthetic minor limitations (potential to emit (PTE) 

limitations) for GHG emissions in areas subject to a GHG PSD FIP. 

We previously had not identified PALs as a viable streamlining technique. Since we finalized the 

Tailoring Rule, we recognized that the existing PAL regulation has limited value for GHG sources, and 

that revising the current PAL regulations to address the unique applicability aspects associated with 
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GHGs could streamline PSD permitting for more sources and make PALs for GHGs more useful for all 

source categories. Specifically, by amending the regulations, we hope to encourage greater use of GHG 

PALs, which in turn would encourage sources to reduce existing GHG emissions through efficiency 

improvements and other measures to maximize the operational flexibility provided by the PAL. 

In contrast, our proposed Tailoring Rule discussed the synthetic minor - PTE mechanism we now 

propose, but expressed concerns that this approach might overwhelm permitting authorities based on the 

sheer number of sources that could apply for individual synthetic minor permits. Since finalizing the 

Tailoring Rule, we have continued to evaluate this. We have concluded that offering a mechanism to 

establish PTE limits for individual sources provides environmental benefit, and helps streamline the 

PSD and title V permit programs, at least in the short term. 

Accordingly, today we propose to amend the federal PSD regulations to create authority for (i) 

reviewing and permitting authorities to issue PALs to major and potentially-major GHG stationary 

sources on either a mass-basis or a CO2e basis and also to allow such PALs to be used as an alternative 

approach for determining whether a project is a major modification and subject to regulation for GHGs 

by amending regulations in 40 CFR 51.166 and 52.21, and (ii) federal reviewing authorities to issue 

GHG synthetic minor permits by amending regulations in 40 CFR 52.21. We also discuss our progress 

in evaluating the suitability of other streamlining options that we identified in the final Tailoring Rule 

including: 

(1) Defining PTE for various source categories, 

(2) Establishing emission limits for various source categories that constitute presumptive BACT, 

(3) Establishing procedures for use of general permits. 

Although we propose two streamlining regulations on a more rapid schedule than we originally 

envisioned, we do not project that these approaches will provide a sufficient reduction in the immediate 

permit workload to justify a decrease from the Step 1 and Step 2 applicability levels. The PAL rule, in 
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fact, may increase the immediate short term workload by requiring development of PAL provisions and 

potential SIP revisions, as well as gaining experience in issuing PALs, but will reduce the long term 

workload on reviewing authorities and sources. The GHG synthetic minor permit program will reduce 

the short term workload by providing a less burdensome permitting process, and it may allow some 

sources to avoid PSD and title V permitting at the current Step 1 and Step 2 applicability levels. We 

believe that these streamlining regulations will offer advantages to industry, permitting authorities and 

the environment. They will provide operational flexibility to sources and will also provide incentives for 

sources to install good emission control systems to maximize operational flexibility. These streamlining 

regulations also help build GHG permitting capacity, because both regulations still require the reviewing 

authority to gain an understanding of GHG emissions for the individual source in context of establishing 

appropriate emission limitations and monitoring, recordkeeping and reporting requirements. 

Accordingly, we believe implementation of both regulations should decrease overall administrative 

burdens and thus could enable us to reduce the GHG applicability thresholds at some time in the future. 

The following discussion outlines our two streamlining proposals, and then discusses the 

viability of other streamlining options. 

A. Plantwide Applicability Limitations for GHGs 

1. What is the EPA proposing? 

Our proposal intends to provide reviewing authorities with the authority to issue GHG PALs to 

sources at which GHG emissions could become subject to regulation, and which then must undertake a 

major modification NSR applicability determination. We provide a summary of several approaches for 

amending the regulatory language to implement a GHG PALs program, and request comment on 

possible changes to the regulations, any of which we may finalize. 

We propose three changes to the existing PSD regulations in 40 CFR 51.166 and 52.21. These 

changes allow reviewing authorities to issue PALs to both existing major and potentially major GHG 
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stationary sources on either a mass-basis or a CO2e basis and to allow GHG PALs to be used as an 

alternative approach for determining whether a project is a major modification and subject to regulation 

for GHGs. The proposed changes would continue to protect the environment from adverse impacts from 

projects that would increase emissions. The changes would also streamline GHG preconstruction 

permitting as part of our overall efforts to tailor the PSD applicability provisions to include regulation of 

GHG emissions. 

Specifically, we propose to amend the regulations to allow reviewing authorities to (1) issue 

PALs to GHG-only sources19; (2) issue either a mass-based (tpy) or a CO2e-based PAL to a particular 

source; and (3) allow compliance with a GHG PAL to be used as an alternative applicability approach 

for determining whether a project is a major modification and subject to regulation20 for GHGs. We 

believe these changes are appropriate to enable the use of PALs for GHG, given the unique 

characteristics of GHGs and the subject to regulation applicability approach adopted for GHGs in the 

Tailoring Rule. We request comment on each aspect of this proposal. 

2. What is a PAL? 

Under the EPA’s regulations, a PAL is an emissions limitation expressed in tons per year for a 

pollutant that is enforceable as a practical matter and is established source-wide in accordance with 

specific criteria.21 PALs are voluntary in the sense that sources may, but are not required, to apply for a 

PAL, and whether to issue a PAL to particular source is at the discretion of the reviewing authority. 

PALs offer an alternative method for determining major NSR applicability. If the overall emissions at a 

 

19 A GHG-only source is a source that emits or has the potential to emit 100/250 tpy GHG on a massbasis, and emits or has the potential to emit 100,000 tons per year of CO2e or more, but does not emit or 

have the potential to emit any other regulated NSR pollutant at or above the applicable major source 

threshold. 

20 For an explanation of “subject to regulation,” see the background section in the Tailoring Rule at 75 

FR 31516. 

21 40 CFR 52.21(aa)(2)(v). 
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source remain below the PAL level, the source can make changes at the source that do not trigger major 

NSR. This allows sources to respond rapidly to market conditions, while assuring there is no adverse 

impact to the environment from the change. A PAL also results in significant environmental benefit, by 

providing the community with an understanding of the long-term emissions impact from a facility, 

preventing emissions creep (i.e., a series of unrelated individual emissions increases that are below 

major NSR applicability thresholds), and requiring enhanced monitoring, recordkeeping and reporting to 

demonstrate compliance with the PAL. 

3. Why are we proposing to amend the regulations? 

The EPA reads its current PAL and PSD regulations as restricting permitting authorities from 

issuing certain kinds of GHG PALs. The current regulations restrict sources that can obtain GHG PALs 

to existing major stationary sources and do not allow sources to rely on the PAL’s emissions limitation 

in determining whether GHG emissions are subject to regulation because they are not identified as an 

approved methodology for determining if GHG are “subject to regulation”. 

We also interpret our current regulations to allow reviewing authorities to issue PALs only to 

existing major stationary sources.22 The PSD provisions generally define a “major stationary source” as 

a stationary source which emits or has the potential to emit 100 or 250 tpy or more of a regulated NSR 

pollutant, depending on the type of source.23 A GHG-only source is a source that emits or has the 

potential to emit 100/250 tpy GHG on a mass-basis, and emits or has the potential to emit 100,000 tons 

per year of CO2e or more, but does not emit or have the potential to emit any other regulated NSR 

pollutant at or above the applicable major source threshold.24 A GHG-only source is a minor source for 

purposes of PSD, and only becomes major for PSD when it undertakes a change that increases GHG 

 

22 40 CFR 52.21(aa)(1). 

23 40 CFR 52.21(b)(1)(i)(a)-(b).

24 For the purpose of this rule, we term such sources “GHG-only sources.” 
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emissions by at least 75,000 tpy CO2e. This means that at this time, for GHGs, reviewing authorities 

using the federal PAL provisions can only issue a PAL to a GHG-only source when the source proposes 

to undertake such a change, because this is the only time when the source is a major stationary source.25

As a result, GHG-only sources may not currently use the alternate major NSR applicability provisions 

provided by a PAL in the same way that existing major stationary source of other regulated NSR 

pollutants may. Instead, GHG-only sources must wait to obtain a PAL until they actually propose to 

make a change that qualifies the source as a major stationary source under the PSD program.26 

Moreover, because the definition of modification is based on changes in emissions of regulated 

NSR pollutants on a mass basis, and PALs are currently designed as an alternative for this 

determination, but not specified as an alternative in the definition of “subject to regulation,” any PAL 

established by the EPA under our current regulations can only be mass-based. This means that GHG 

sources cannot rely on the same metric of GHG emissions to determine whether a change causes GHG 

emissions to be subject to regulation, as the source relies on to determine whether a change results in a 

major modification. Thus, under the current regulations, sources using the PAL provisions must still 

monitor both metrics to ultimately determine whether a change triggers major NSR review. 

We believe changing the regulations to remove these restrictions will provide sources with 

additional operational flexibility, and reduce GHG workload burdens on reviewing authorities by 

decreasing the number of PSD permit applications reviewing authorities must process for these sources 

over the long term. Providing an option that allows a source to use a GHG PAL will help streamline the 

major NSR permitting program and provide more operational flexibility to sources. Being able to 

establish a PAL would provide planning certainty to sources, and would relieve the current time pressure 

 

25 40 CFR 52.21(b)(49)(v)(b). 

26 Because an anyway source emits or has the potential to emit another regulated NSR pollutant in 

amounts at or above the major source thresholds, it is a major stationary source, and it may apply for a 

PAL for its GHG emissions on a mass basis at any time under the current regulations as long as it 

otherwise qualifies (e.g., has sufficient emissions data to establish a PAL). 
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to issue a PAL permit concurrent with authorization for a planned major modification which could 

potentially delay that project. We also believe that compliance with a GHG PAL generally assures that 

the environment remains protected from adverse air impacts resulting from changes a source undertakes 

in compliance with such a PAL, regardless of which metric is specified to measure GHG emissions in 

that PAL, because emissions cannot exceed this pre-established level without further review. PALs also 

provide an incentive for a source to minimize GHG emissions increases from future projects. 

Finally, the EPA did not promulgate a mass-based significant emissions rate for GHG emissions 

in the final Tailoring Rule. Instead, we included an emissions increase applicability threshold of 75,000 

tpy CO2e within the subject to regulation definition. Consequently, the lack of a mass-based significant 

emissions rate reduces the operational flexibility that can be provided under a mass-based GHG PAL. A 

significant rate is an applicability threshold for modifications based on a rate of emissions increase 

below which the emissions increase is not a major modification, and at or above which the emissions 

increase triggers major NSR applicability. In the absence of a specific significant rate, the significant 

rate for GHG emissions equals any emissions increase. Under the current PAL rules, a reviewing 

authority may add an amount equal to the significant rate for a pollutant to the baseline actual emissions 

to establish the PAL level on a mass basis. Thus, if a reviewing authority establishes a mass-based GHG 

PAL, under our current interpretation of the regulations, the PAL may not include any margin above the 

baseline actual emissions for emissions growth. Absent this margin, a GHG PAL provides less 

flexibility to a source when compared to PALs for other regulated NSR pollutants. The proposed rules 

provides GHG PAL sources with the same kind of flexibility sources currently have for other regulated 

NSR pollutants by allowing sources to establish a CO2e-based PAL using the 75,000 tpy CO2e 

applicability threshold for GHGs. A reviewing authority could add the 75,000 tpy CO2e to a source’s 

CO2e baseline actual emissions to establish the PAL level, because the Tailoring Rule established 

75,000 tpy CO2e as the appropriate rate of emissions increase for the GHG applicability threshold. 
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Changing the regulations will also have the effect of streamlining future major NSR applicability 

determinations for sources that choose a CO2e PAL, by eliminating the need to evaluate GHG emissions 

on a mass basis for major NSR applicability as long as the source is complying with the CO2e PAL, 

because a CO2e PAL can function to assure both that GHG emissions are not subject to regulation, and 

that a change does not trigger a major modification. 

In sum, we believe that the current PAL regulations are inconsistent with the outcome achieved 

when the PAL rules are applied to regulated NSR pollutants other than GHGs, and therefore are overly 

restrictive with respect to GHG-only sources. Accordingly, we are proposing to amend the major NSR 

regulations and PAL rules to allow reviewing authorities to (1) issue PALs to GHG-only sources; (2) 

issue either a mass-based (tpy) or a CO2e-based PAL to a particular source; (3) allow CO2e-based PALs 

to include the 75,000 tpy CO2e rate of emissions increase applicability threshold; and (4) allow 

compliance with a GHG PAL to be used as an alternative applicability approach for determining both 

whether a project is a major modification and whether GHG emissions are subject to regulation. 

Provided a source complies with a GHG PAL, GHG emissions at the source will not be “subject to 

regulation,” and a project at the source will not result in a major modification. We request comment on 

each one of these proposals. 

As noted previously, in the Tailoring Rule, although the EPA amended the definition of “subject 

to regulation” to establish a level of GHG emissions that a source must meet, on both a source and 

project basis, before GHGs will be considered an NSR regulated pollutant for PSD permitting purposes, 

the EPA also made clear that its action had the same substantive effect, and should be treated, as having 

revised other components of the definition of “major stationary source” to achieve the same effect. Even 

so, because in the Tailoring Rule it was the “subject to regulation” provision that the EPA chose to 

incorporate the phase-in thresholds, in this proposal concerning PALs, the EPA is continuing to focus on 
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the “subject to regulation” provision as the codification of the Tailoring Rule requirements, to be 

consistent with the approach in the Tailoring Rule. 

4. Options for Allowing GHG-Only Sources to Obtain a GHG PAL 

We request comment on two approaches for regulating GHG-only sources under a PAL. We call 

the first approach the Major Source Opt-in Approach. This approach is consistent with the current 

restriction that only allows reviewing authorities to issue PALs to existing major stationary sources, but 

the approach would provide GHG-only sources the ability to become existing major stationary sources. 

A GHG-only source could become a major stationary source by agreeing to be considered an existing 

major stationary source, without having a specific qualifying project that increases CO2e emissions at 

the source by at least 75,000 tpy CO2e. 

We call the second approach the Minor Source Approach. In contrast to the Major Source Opt-in 

approach, under the Minor Source Approach a GHG-only source would remain a minor source, and a 

reviewing authorities could issue GHG PALs to the GHG-only sources without requiring the source to 

become an existing major stationary source. 

Under the Major Source Opt-in Approach, we would amend the regulations to allow any existing 

stationary source that emits or has the potential to emit GHGs in amounts above the first part of the 

“subject to regulation” applicability threshold (currently 100,000 tpy CO2e) and above the 100/250 tpy 

major stationary source threshold, to submit an application for a PAL, in which the source agrees to be 

considered an existing major stationary source for GHG emissions. As long as the source complies with 

the GHG PAL, it would not trigger the PSD permitting requirements for GHGs for any project, but the 

regulations would continue to require the source to evaluate whether the change triggers PSD 

applicability for other regulated NSR pollutants in the attainment or unclassifiable area. This is because 

PSD applies whenever a major stationary source undertakes a project that results in both a significant 

emissions increase and a significant net emissions increase of any regulated NSR pollutant. 
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The EPA believes that allowing GHG-only sources to opt into major stationary source status is 

consistent with the Act. But for the Tailoring Rule, GHG-only sources qualify as “major emitting 

facilities,” because such sources emit or have the potential to emit 100 or 250 tpy GHG. Thus, these 

sources fall within the statutory scope of sources that, absent the Tailoring Rule, we would have 

authority to regulate for purposes of PSD. Although we took a limited interpretation of how to exercise 

this authority through the Tailoring Rule, we believe that the Major Source Opt-in Approach is 

consistent with the Tailoring Rule’s schedule for further phasing-in additional GHG sources into the 

PSD permitting program. 

In the final Tailoring Rule, we indicated that we would base our decision to include additional 

sources in the GHG permitting programs on an assessment of three criteria. These criteria are (i) 

whether the EPA could develop streamlining measures, (ii) the time that permitting authorities need to 

ramp up their resources, and (iii) sources’ abilities to meet the requirements of the PSD program and 

permitting authorities’ ability to issue timely permits. Each of these criteria supports expanding the PSD 

permit program to include a source that opts into the GHG PAL regulatory structure. First, while the 

Major Source Opt-in Approach has the potential to increase the total number of GHG major stationary 

sources, it does so in a manner that decreases the long-term permitting burden for both the source and 

the reviewing authority. This is because the source would likely require fewer permit actions over the 

life of a PAL. Thus, the Major Source Opt-in approach streamlines the PSD permitting program, which 

will assist permitting authorities when the EPA regulates additional GHG sources under the PSD 

program. Second, permitting authorities can gain valuable experience in issuing PAL permits that can 

build staff expertise. This, in turn, helps permitting authorities’ efforts to ramp up their PSD permitting 

programs in a more timely and efficient manner. Third, sources demonstrate an ability to comply with 

major stationary source permitting requirements by voluntarily seeking a PAL under the Major Source 

Opt-in provisions. If a source could not comply, then it would not seek a GHG PAL. Moreover, 
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reviewing authorities likely would only agree to issue a PAL if they believe they have the necessary 

resources to issue the PAL(s), and doing so would not detrimentally affect their obligations to otherwise 

issue timely permits. In sum, if a source opts-into the program, and a reviewing authority agrees to 

permit the source, then we believe these sources are properly brought within the PSD permitting 

program. 

Under the Major Source Opt-in Approach, a source could also choose to establish PALs for its 

non-GHG regulated NSR pollutants to better manage applicability for all pollutants at the source, 

including those regulated NSR pollutants for which the source is not major. Under this approach, the 

source will continue to be considered a major source under PSD and title V at the expiration of the PAL. 

If the source is subject to the federal PSD program for GHG emissions, and to a state SIP-approved PSD 

program for its non-GHG regulated NSR pollutants, then whether a source can apply for, and receive, a 

PAL for its non-GHG regulated NSR pollutants will be governed by the applicable SIP-approved 

regulations and the state reviewing authority. Neither the EPA, nor its delegated authority, would issue 

PALs for non-GHG regulated NSR pollutants under 40 CFR 52.21, unless a FIP would govern PSD 

applicability for that pollutant. As with the current PAL regulations, the ultimate decision to issue a PAL 

remains with the reviewing authority. 

We are concerned, however, about the potential impact on reviewing authorities of allowing 

GHG-only sources to obtain PALs for all their regulated NSR pollutants, as this could cause a shortterm increase in regulatory burden on permitting authorities at a time when they are ramping up their 

programs to address other GHG major stationary sources. We request comment on this aspect of the 

Major Source Opt-in Approach and welcome suggestions for refining the approach to address concerns 

with short-term workload burdens for permitting authorities. 

Under the Minor Source Approach, we would amend the regulations to allow a GHG-only 

source to submit an application for a GHG PAL, and would also allow the source to maintain its minor 
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source status. A GHG-only source that complies with its GHG PAL will not trigger PSD permitting 

requirements for GHGs, but could trigger PSD for other regulated NSR pollutant if it undertakes a 

change that increases emissions by a “major” amount for any non-GHG regulated pollutant. See 40 CFR 

51.166 (b)(1)(i)(c). That is, this approach would authorize permitting authorities to use the PAL program 

for minor sources only to regulate GHG emissions. 

Moreover, under the Tailoring Rule existing minor sources that emit only GHGs, but no other 

regulated pollutants in major amounts, must determine whether any project will result in GHG emissions 

that are subject to regulation (on a CO2e basis), and correspondingly will also result in a major 

modification (on a mass basis). Because GHG-only sources must undertake these determinations for any 

change, even those that would not make the source major for GHGs, we believe that extension of the 

PAL program to these sources through the Minor Source Approach is consistent with the purposes and 

design of the PAL program - to allow use of a PAL as an alternate major modification applicability 

approach. 

Issuing PALs to GHG-only sources that remain minor sources does not conflict with the basis for 

the current PAL rules. When we promulgated the PAL rules in 2002 (67 FR 80186), we limited the 

application of the PAL provisions to existing major stationary sources only. We included this provision 

based on our decision to limit PALs to sources that had historical emissions through which the 

reviewing authority could establish a baseline actual emissions level. New major stationary sources do 

not have historical actual emissions from which a reviewing authority can establish an actuals PAL, and 

so we declined to include these sources in the actuals PAL program. 

When we originally promulgated the PAL rules, we also chose not to extend the PAL program to 

minor (source) NSR permit programs, because PALs are an alternate major NSR applicability provision 

to determine whether a project results in a major modification, and we did not believe the program 

would be useful to minor sources. At that time, the rules generally required only existing major 
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stationary sources to undertake a major modification applicability analysis to determine whether a 

change triggers PSD review.27 Given the unique “subject to regulation” PSD applicability requirement 

for GHGs, wherein an existing source that emits major amounts of GHGs is a major stationary source 

only at the time it proposes to undertake a project that will result in an emissions increase of 75,000 tpy 

CO2e or more, we do not believe that extending the PAL provisions to GHG-only sources runs afoul of 

the reasoning we provided when initially limiting the PAL program to existing major stationary sources. 

As explained previously, we propose to limit the Minor Source approach to allow reviewing 

authorities to establish PALs only for GHG emissions, and not for other regulated NSR pollutants for 

which the source remains a minor source. Because the GHG-only source remains a minor source (absent 

any other PSD-triggering change) and, generally, will not trigger a major modification applicability 

analysis for increases in other regulated NSR pollutants, we believe it unnecessary to extend the PAL 

authority under this approach to other pollutants. Moreover we recognize that extending the PAL 

program in that way could place a burden on permitting authorities and redirect resources needed to 

issue permits to other GHG major stationary sources. 

The Minor Source Approach is consistent with the CAA in that it regulates sources that but for 

the Tailoring Rule would be major stationary sources based on the mass of their GHG emissions. This 

approach is also consistent with our Tailoring Rule principles. But unlike the Major Source Opt-in 

Approach, which defines the scope of pollutants included in the PAL based on an individual permitting 

authority’s discretion and ability to regulate a given source, under the Minor Source Approach, the EPA 

has determined that the scope of the program is limited only to a source’s GHG emissions. Again, as 

with the Major Source Opt-in Approach, the Minor Source Approach fulfills our streamlining goals by 

bringing more sources into the major NSR permitting provisions, in a manner that best manages 

 

27 The provisions in 40 CFR 51.166(b)(3)(iii) illustrate an exception to this general rule but we did not 

contemplate that exception in creating the PAL rules in 2002. 
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reviewing authorities’ long-term permit burden. 

We request comment on both the Major Source Opt-in Approach and the Minor Source 

Approach. We also request comment on whether we should finalize both approaches. That is, sources 

would have the ability, consistent with the ultimate decision of its reviewing authority, either to opt into 

major stationary source status and establish PALs for all pollutants, or to maintain minor source status 

and obtain a PAL for GHG emissions only. 

5. Extending PALs to GHGs on a CO2e Basis and Using PALs To Determine Whether GHG 

Emissions Are “Subject to Regulation” 

Currently, the EPA reads the PAL regulations to allow reviewing authorities to establish a GHG 

PAL only on a mass basis. Today we propose to allow reviewing authorities to establish GHG PALs on 

either a mass basis or a CO2e basis. More specifically, we propose to allow reviewing authorities to 

establish a CO2e-based GHG PAL by adding up to an amount equal to the second part of the “subject to 

regulation” applicability threshold (e.g., 75,000 CO2e) to the source’s baseline actual emissions. We also 

propose to allow GHG PALs, either on a mass basis or a CO2e basis, to serve as an alternate 

applicability approach for determining whether GHG emissions are subject to regulation. That is, rather 

than applying the emissions increase tests (significant emissions increase and significant net emissions 

increase) currently contained in the “subject to regulation” definition, a source could demonstrate that 

GHG emissions are not “subject to regulation” by complying with a GHG PAL. Compliance with a 

GHG PAL would be used as an alternative applicability approach for determining that the source neither 

causes GHG emissions to be subject to regulation, nor causes the GHG source to have a major 

modification. 

We further believe that it is necessary to allow the alternative applicability provision to be 

included in “subject to regulation” determinations for GHG PALs, because failing to do so would negate 

the flexibility gained by creating a GHG PAL. This is because sources would still be required to monitor 
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individual emissions changes using the procedures in 40 CFR 52.21(a)(2)(iv) to determine whether a 

source triggers the subject to regulation definition. These procedures rely on an emissions-unit-byemissions-unit analysis, and a shorter contemporaneous period to measure emissions changes compared 

to a PAL. We believe that the enhanced recordkeeping, reporting and monitoring burdens of a PAL, and 

the environmental benefits resulting from a PAL, warrant extension of the alternate applicability 

provisions to subject to regulation determinations to assure that the PAL provides the intended flexibility 

to sources. 

When we proposed the Tailoring Rule, we proposed to include applicability thresholds within the 

definitions of major stationary source and major modification, based on tpy emissions of CO2e. We also 

proposed to establish a CO2e-based significant emissions rate. In the final rule, we changed our 

regulatory approach and instead included these applicability thresholds within the “subject to regulation” 

definition, and we did not revise the definition of significant to include a CO2e-based emissions rate. We 

did so, in part, because we intended this change in regulatory structure to facilitate more rapid adoption 

of the rules by reviewing authorities. Nonetheless, we intended the definition of “subject to regulation” 

to function in tandem with the definitions of “major stationary source” and “major modification” to 

determine whether a given project triggers PSD preconstruction permit requirements. That is, if a source 

emits GHG emissions at a level that causes the emissions to become “subject to regulation,” that same 

level of emissions increase will likely cause the source to be a major stationary source and trigger PSD 

requirements as a major modification. Accordingly, since the 75,000 CO2e applicability threshold 

contained in the second part of the “subject to regulation” definition works in tandem with the “major 

modification” provision to determine whether major NSR applies we are proposing that a CO2e-based 

GHG PAL can be established by adding up to an amount equal to 75,000 CO2e to the source’s baseline 

actual emissions as this is the appropriate applicability threshold for CO2e tpy GHG. 

 In our proposed Tailoring Rule, we noted that, in rare instances, there may be an exception to 
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this general principle, if a source emits very small amounts of a particular non-CO2 GHG that carries a 

very large GWP. 74 FR 55330. We noted our concern that the proposed rule could cause sources, whose 

mass emissions do not meet the major stationary source tpy threshold, to nonetheless be regulated under 

the permit programs. When we finalized the Tailoring Rule using the subject to regulation approach, we 

resolved this concern by retaining both a mass-based threshold and a CO2e-based threshold. Our intent 

in retaining both thresholds was to assure that no source was subject to PSD that would not otherwise 

meet the statutory criteria for treatment as a major stationary source. 

Ironically, this same regulatory structure creates the opposite effect for sources operating under a 

GHG PAL. Instead of providing GHG PAL sources with the ability to use either threshold to show that 

they are not a major stationary sources and that major NSR does not apply, sources must monitor both 

thresholds to prove this outcome under the current rules. This is because a mass-based GHG PAL cannot 

assure that there is no increase in CO2e tpy GHG. Expanding the GHG PAL program to allow GHG 

PALs to be used as an alternative applicability provision for both the major modification and “subject to 

regulation” determinations resolves this dual threshold issue. We also believe that we may properly 

allow GHG PALs to be expressed on either a mass or CO2e-basis, because, in essence, we intended the 

subject to regulation determination to be functionally equivalent to making a major modification 

applicability determination for GHG sources. We resolve our previous concern that relying on a single 

metric might lead to over-inclusion of sources that do not meet the statutory threshold for the PSD 

program by limiting the GHG PALs program to GHG-only sources, which are defined as those sources 

that, by definition, meet the 100/250 tpy major stationary source threshold. We request comment on all 

aspects of this proposal. 

6. Can a GHG source that already has a mass-based GHG PAL obtain a CO2e-based PAL once we 

issue final changes to the PAL rules? 

We are proposing to add transition provisions to the PAL regulations that would allow a GHG 
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source that has a mass-based GHG PAL to convert to a CO2e-based GHG PAL once, at the source’s 

option, and if agreed to by the reviewing authority. We intended these provisions to provide integrity to 

the PAL provisions, and assure that sources avoid casually opting out of the PAL program, rather than 

go through the rigorous procedures for increasing the level of the PAL. 

The current PAL regulations do not contain specific provisions for dissolving an established 

PAL during the PAL term, but contain provisions for when a PAL expires. It is inappropriate to apply 

these rigorous procedures to sources that would have elected to seek a CO2e-based PAL in lieu of a 

mass-based PAL, had such an option been available. We propose to include regulatory language that the 

expiration of PAL provisions do not apply when a source elects to convert from a mass-based GHG 

PAL to a CO2e-based PAL. Instead, a source could transition to a CO2e-based PAL and the permitting 

authority could dissolve the mass-based PAL without retaining the mass-based PAL level as a restriction 

on allowable emissions. 

We also propose to include provisions that allow the mass-based GHG PAL to be converted to a 

CO2e-based GHG PAL in the middle of the PAL effective period. Under the transition provision, the 

reviewing authority would propose to dissolve the existing mass-based PAL permit at the time it 

proposes the new CO2e-based PAL permit for public comment. The reviewing authority would establish 

the new CO2e-based GHG PAL following the standard procedures (10-year lookback for baseline actual 

emissions, 10 year PAL effective period, etc.) in the current PAL regulations. Once a final CO2e-based 

PAL permit is issued, the permitting authority may also finalize its proposed action to dissolve the massbased PAL permit and remove any applicable requirements from the title V permit following the 

appropriate title V procedures. This would, in essence, create a new PAL and establish a new 10 year 

term. 

We also propose to allow a reviewing authority to use a slightly different procedure for this 

conversion from the standard PAL procedures. If the baseline actual emissions period the reviewing 
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authority used to establish the mass-based GHG PAL is no longer within the 10 year lookback period 

currently available to the source, then the transition provisions would allow that source a one-time 

conversion of a mass-based GHG PAL to a CO2e-based GHG PAL using the same baseline actual 

emissions period used to establish the mass-based GHG PAL. The new PAL effective period would be 

the remainder of the mass-based GHG PAL’s effective period. For example, if a reviewing authority 

issued a mass-based GHG PAL to a source that became effective in 2011, that PAL’s effective period 

runs for 10 years through 2021. If the same source converts that mass-based GHG PAL to a CO2e-based 

PAL in 2014, and elects to use the expired, mass-based GHG PALs baseline actual emissions years, then 

the CO2e-based GHG PAL would be effective for the remaining 7 years of the mass-based GHG’s PAL 

effective period. 

 We request comment on these procedures for converting a mass-based GHG PAL to a CO2ebased GHG PAL. Specifically, we request comment on whether there are existing mass-based GHG 

PALs for which transition provisions are needed. More specifically, should we allow such a transition, 

or should we decline to provide transition provisions. If we decline to provide a transition should we 

instead require sources either to maintain both PALs, or require the sources to comply with a source 

wide emissions cap equal to the PAL level that functions as a synthetic minor limitation? We also 

request comment on whether we should provide a temporary transition provision to allow sources to 

convert from the mass-based GHG PAL to the CO2e-based GHG PAL only for a limited time after the 

effective date of the regulatory changes, or whether the procedures should remain available for the 

duration of the PAL provisions. Specifically, we request comment on whether there are implications for 

major NSR compliance if sources are allowed to switch from a mass-based PAL to CO2e-based PAL at 

any time, or whether providing the option for the duration of the program could encourage certain types 

of environmentally preferable projects. 

7. How would we change the regulatory provisions to implement PALs for GHG-only major 
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sources? 

To implement our proposed changes, we would revise a number of existing regulatory 

provisions, depending on the specific approach selected. Under the Major Source Opt-in Approach, we 

propose to change the definition of major stationary source to add a paragraph that defines Major Source 

Opt-in GHG-only sources as major stationary sources. Under the Minor Source Approach, we propose 

to revise the applicability paragraph for the PAL provisions at 40 CFR 52.21(aa)(1) to include GHGonly sources. 

In addition, under the Major Source Opt-in Approach, we propose to revise the PAL Permit 

Application Requirements provisions and Contents of the PAL Permit provisions to include provisions 

for opting into existing major stationary source status. 

Under either approach, we would: (1) revise the PAL rules to add transition provisions for 

converting from a mass-based PAL to a CO2e-based PAL including revisions to the PAL expiration 

provisions; (2) add a paragraph to the “subject to regulation” definition and the PAL applicability 

section to indicate that a source that complies with a GHG PAL is not subject to regulation for GHG 

emissions; (3) allow CO2e-based PALs to include the 75,000 tpy CO2e rate of emissions increase 

applicability threshold by adding this amount to a source’s baseline actual emissions; and (4) revise the 

definition of PAL and PAL pollutant to include CO2e as a metric of GHG emissions. 

B. Synthetic Minor Source Permitting Authority for GHGs 

1. What is the EPA proposing? 

 We are proposing to create synthetic minor permit authority, within the existing federal PSD 

regulations in 40 CFR 52.21, for the purpose of issuing “subject to regulation” synthetic minor permit 

limitations on a CO2e basis for GHGs. We are also proposing to amend the federal minor NSR program 

in Indian country for the purpose of issuing synthetic minor permit limitations for GHGs. These 

regulatory changes would allow certain sources or projects that might otherwise be required to obtain a 
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GHG PSD permit, pursuant to 40 CFR 52.21, to obtain a “subject to regulation” limitation that restricts 

the source’s GHG emissions below the “subject to regulation” threshold(s). That is, for sources located 

in a jurisdiction in which the federal PSD permitting program applies, we propose a mechanism that 

would allow the EPA, or its delegated agent, to issue a permit containing synthetic minor limitations for 

GHGs to any source that emits or has the potential to emit GHGs above the applicable subject to 

regulation thresholds and that voluntarily requests a restriction on its PTE. Although we would establish 

this program using our PSD permitting authority, a synthetic minor permit limitation issued under this 

authority could also effectively limit the source’s GHG PTE for purposes of title V applicability. As a 

general matter, we believe that synthetic minor limits for GHGs should be available as an option for 

sources that would prefer to take a legally and practicably enforceable limitation on GHG emissions in 

order to avoid major source permitting requirements. We believe that many state and local permitting 

authorities will already have mechanisms in place to issue such GHG synthetic minor limits to sources 

that request them, including title V permitting programs, state minor source permitting programs, or 

federally enforceable state operating permit programs. Nonetheless, we request comment on whether 

permitting authorities implementing SIP-approved PSD permitting programs lack mechanisms to create 

synthetic minor limitations for GHGs, and if so, how that gap in permitting authority or mechanism 

could best be filled. 

It is important to note that we only propose to issue synthetic minor permits for GHG emissions, 

not for other regulated NSR pollutants, and we will only do so for sources located in areas where the 

EPA is the GHG permitting authority (including areas subject to a GHG FIP). These synthetic minor 

permits would also be available where the federal PSD program is implemented by a state permitting 

authority under a delegation agreement because delegated states issue PSD permits on behalf of the EPA 

in those areas under 40 CFR 52.21. We, however, are not proposing to issue synthetic minor source 

limits for non-GHG pollutants under this rule. States and some tribes operate minor source permitting 
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programs that cover these other pollutants, and the EPA also operates a minor source permitting 

program in Indian country. If a source wishes to obtain a synthetic minor limit for any other pollutant, it 

should seek that limit under the applicable minor source program. 

The EPA has long recognized synthetic minor permits as a way to restrict a source’s PTE and 

thus avoid major source NSR and title V permitting requirements. 28 While we discussed the use of 

synthetic minor permits for establishing PTE restrictions on GHG emissions in our proposed Tailoring 

Rule, we expressed concerns that establishing GHG synthetic minor limitations in individual permits 

could overwhelm reviewing and permitting authorities based on the sheer number of sources that we 

anticipated would apply for PSD permits. Thus, we proposed to focus our attention on developing 

category specific approaches for limiting PTE. 

Since finalizing the Tailoring Rule, we reconsidered this conclusion, and now believe that 

establishing synthetic minor limitations for individual sources could increase permitting authorities’ 

capacity to regulate GHG emissions by providing experience in addressing emissions limitations, and 

monitoring, recordkeeping and reporting requirements specific to GHG emissions. We also believe that 

it would lead to an overall reduction of permitting burden in that synthetic minor permits generally 

require fewer administrative resources than full PSD permitting and title V permitting, to which these 

sources could otherwise be subject. 

Moreover, streamlining ideas often result from repeat experiences. After issuing permits that 

share common features, a reviewing or permitting authority might formulate new ideas for effective 

streamlining techniques. We now believe that issuing synthetic minor permits is a key component of our 

overall efforts to gain experience in permitting GHG sources to phase additional sources into the GHG 

 

28 See, e.g., Guidance on Limiting Potential to Emit in New Source Permitting (June 13, 1989); 

Guidance an Enforceability Requirements for Limiting Potential to Emit through SIP and §112 Rules 

and General Permits (Jan. 25, 1995). The rules proposed here for limiting potential to emit should be 

read in light of our extensive prior guidance on this issue. 
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program, because it can help manage sources currently subject to the program and help identify 

opportunities for further streamlining the GHG permitting programs. Moreover, allowing sources to 

obtain a synthetic minor limitation, in lieu of triggering major NSR requirements, encourages sources to 

effectively minimize project emissions through efficiency improvements or other measures such that the 

total GHG emissions to the environment from the project are lower than might otherwise occur. 

We acknowledge that other mechanisms may currently exist to establish synthetic minor 

limitations for GHGs. We do not intend today’s proposal to supplant or supersede other available 

mechanisms for creating synthetic minor limitations. Rather, our intent is to ensure that we are able to 

issue GHG synthetic minor limits in the areas subject to the federal PSD permitting program for GHGs 

to avoid a potential gap in synthetic minor permitting authority and to ensure that we are able to 

efficiently manage our administrative resources for the federal PSD program. Notwithstanding today’s 

proposal, we encourage States to use appropriate existing mechanisms, or to create new authority if 

needed, to issue synthetic minor limitations for GHGs. 

2. What is synthetic minor limitation, and what is its function? 

A synthetic minor limitation is a legally and practicably enforceable restriction that a source 

voluntarily seeks to avoid major stationary source requirements, such as the PSD or title V permitting 

programs. Synthetic minor limitations allow sources to avoid these permit programs in two ways. First, a 

reviewing or permitting authority can issue a synthetic minor limitation to assure that a stationary source 

does not emit above the major stationary source threshold, and therefore, that the stationary source 

remains a minor source for either one or both permit programs. Second, a reviewing or permitting 

authority can issue a synthetic minor limitation to assure that emissions increases from a project remain 

below the relevant significant rate for a specific regulated NSR pollutant. 

As we explained in the Background Section, our regulations define a “major stationary source” 

for purposes of PSD as a stationary source that emits, or has a potential to emit, at least 100 tpy, if the 
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source is in one of 28 listed source categories, or, if the source is not, then at least 250 tpy, of a regulated 

NSR pollutant. CAA section 169. A “major stationary source” for title V includes sources that emit or 

have the potential to emit above 100 tpy or more of any air pollutant subject to regulation. CAA sections 

501, 302.29 We refer to these 100 or 250 tpy amounts as the major source applicability thresholds. These 

thresholds are computed on a mass-basis for each regulated NSR pollutant or title V air pollutant. 

Because the definition of major stationary source relies, in large part on, a source’s “potential to 

emit,” the definition of “potential to emit” is extremely important in determining the applicability of 

PSD and title V for a particular source. The PSD regulations define PTE as: 

the maximum capacity of a stationary source to emit a pollutant under its physical and 

operational design. Any physical or operational limitation on the capacity of the source to emit a 

pollutant, including air pollution control equipment and restrictions on hours of operation or on 

the type or amount of fuel combusted, stored or processed, shall be treated as part of its design if 

the limitation or the effect it would have on emissions is federally enforceable.30 

40 CFR 52.21(b)(4), 51.165(a)(1)(iii), 51.166(b)(4). The title V regulations are similar. 40 CFR 70.2. 

If a source has no practicably enforceable emissions limitations that restrict the amount of a 

pollutant the source may emit, and the source has no restrictions on its capacity utilization or hours of 

operation, we require the source to use its highest expected emissions rate and “assume operation at 

maximum design or achievable capacity (whichever is higher) and continuous operation (8760 hours per 

year)” to compute its potential to emit.31 Thus, if a source will actually emit below its maximum 

capacity to emit, a synthetic minor limitation can play an integral role in limiting the source’s PTE to a 

 

29 As explained in the Tailoring Rule, while the statutory provision addresses any air pollutant, we have 

historically applied the PSD and title V programs only to pollutants subject to regulation. 

30 40 CFR 52.21(b)(4). Following two court decisions, National Mining Association v. EPA, 59 F.3d 

1351 (D.C. Cir.1995) and Chemical Manufacturers Ass'n v. EPA, No. 89-1514 (D.C. Cir.1995), we 

clarified that the term “federally enforceable” should be read to mean “federally enforceable or legally 

and practicably enforceable by a state or local air pollution control agency.” Release of Interim Policy 

on Federal Enforceability of Limitations on Potential to Emit, at 3 (Jan. 22, 1996). 

31 See Memo from Terrell E. Hunt, Associate Enforcement Counsel Air Enforcement Division Office 

of Enforcement and Compliance Monitoring, and John S. Seitz, Director Stationary Source Compliance 

Division Office of Air Quality Planning and Standards, June 13, 1989. 
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level below this maximum level. If the source accepts legally and practicably enforceable limits and 

requirements sufficient to limit its PTE, that source can be treated as a minor source, rather than a major 

source, for purposes of our regulations. 

Synthetic minor limitations are also important for determining whether a project will result in an 

emissions increase that exceeds the significant rate for a regulated NSR pollutant, thus triggering PSD 

permitting requirements. While the significant rate for GHGs is currently zero tpy, thus making this type 

of synthetic minor limit less practical for GHG sources, the methods used to determine such emission 

increases are applicable to GHGs because they are also used to determine whether GHGs are “subject to 

regulation.” To compute whether a project will result in a “significant emissions increase” under the 

federal PSD regulations, a source has the option of using either “projected actual emissions,” or PTE to 

estimate post-change emissions. A source opting to use PTE can reduce the amount of its PTE by 

accepting legally and practicably enforceable limitations on its operations. To compute whether a project 

will result in a “significant net emissions increase,” a source must compute emissions increases from 

projects that occur during the contemporaneous period. A creditable emissions increase is computed by 

comparing “baseline actual emissions” to the unit’s post-change PTE. A permitting authority can use a 

synthetic minor limitation to limit an emissions unit’s post-change PTE to reduce the amount of 

emissions increase that is creditable in a net emissions increase analysis. In computing a creditable 

emissions decrease, a source may only take credit for an emissions decrease that is legally and 

practicably enforceable. Thus a reviewing authority can use a synthetic minor limitation to create a 

creditable emissions reduction. 40 CFR 52.21(b)(3)(vi)(b). 

We call any permit used to restrict a source’s PTE below either the major stationary source 

threshold or below the significant rate a “synthetic minor permit.” We call a source that accepts 

limitations on its operations a “synthetic minor source.” This is in contrast to a “true” or “natural minor” 

source, which is a source whose PTE remains below the threshold without any additional restrictions on 
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the source. Again, because the major stationary source threshold and significant rate are mass-based for 

all non-GHG regulated NSR pollutants and title V air pollutants, synthetic minor limitations, 

historically, have reduced a source’s mass emissions. 

3. What is a “subject to regulation” limitation? 

A “subject to regulation” synthetic minor limitation is unique to the GHG permitting programs. 

Instead of allowing a source to avoid the PSD or title V permit programs by establishing PTE limitations 

that reduce tpy mass emissions, a “subject to regulation” limitation reduces CO2e-based GHG emissions. 

This unique type of limit is specific to GHGs, because of the unique way in which the EPA regulated 

GHG emissions through the Tailoring Rule. 

As we explained in the Background Section, a source must meet two applicability requirements 

to trigger PSD permitting requirements for GHGs: 1) it must emit GHGs in amounts – calculated on a 

CO2e basis – that make GHGs “subject to regulation”32, and 2) it must also emit GHGs in amounts – 

calculated on a mass basis – that qualify as a major stationary source (e.g., 100 or 250 tpy) and, if 

relevant, qualify as a major modification (e.g., net emissions increase of more than 0 tpy). For title V, 

GHGs are “subject to regulation” at a stationary source that emits or has the potential to emit 100,000 

tpy CO2e. A “subject to regulation” limitation prevents a source from emitting GHGs in amounts that 

exceed the relevant “subject to regulation” applicability threshold that we established in the final 

Tailoring Rule. Accordingly, just like other synthetic minor limitations, a source that complies with a 

“subject to regulation” limitation can avoid triggering PSD or title V GHG permitting requirements. 

As noted previously, in the Tailoring Rule, although the EPA amended the definition of “subject 

to regulation” to establish a level of GHG emissions that a source must meet, on both a source and 

project basis, before GHGs will be considered an NSR regulated pollutant for PSD permitting purposes, 

the EPA also made clear that its action had the same substantive effect, and should be treated, as having 

 

32 Previously in this preamble we refer to the two-step phase-in thresholds 75 FR 31516. 
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revised other components of the definition of “major stationary source” to achieve the same effect. Even 

so, because in the Tailoring Rule it was the “subject to regulation” provision that the EPA chose to 

incorporate the phase-in thresholds, in this proposal concerning PALs, EPA is continuing to focus on the 

“subject to regulation” provision as the codification of the Tailoring Rule requirements, to be consistent 

with the approach in Tailoring Rule. 

Like the major stationary source applicability threshold, the “subject to regulation” threshold 

relies on the concept of PTE. And like the major modification significant rate, the subject to regulation 

threshold also relies on PTE to compute changes in GHG emissions at the source. Accordingly, the EPA 

proposes to create new regulatory language to affirm the EPA’s and other reviewing and permitting 

authorities’ ability to establish limitations on a source that prevent a source from emitting GHG 

emissions above subject to regulation thresholds on a source-wide basis or for individual modifications. 

Because we are not proposing to amend the regulatory definition of PTE, consistent with the 

EPA’s current policy, we will recognize legally and practicably enforceable restrictions for determining 

whether a source’s PTE is below the subject to regulation threshold and for determining whether an 

individual modification is below the subject to regulation threshold. As with limitations on “potential to 

emit” in traditional synthetic minor permits under our current policy, these restrictions need not be 

federally enforceable as long as they are enforceable by the permitting authority.33

4. Why does the EPA need authority to issue synthetic minor source permits? 

In general, the EPA does not have a federal permitting program for minor sources. Although the 

EPA recently finalized a minor NSR permitting program for Indian country, that program did not affect 

permitting outside of Indian country or include regulation of GHG emissions.34 The EPA is now the 

 

33 We may alter this policy in final response to address the Courts’ decisions in National Mining 

Association v. EPA, 59 F.3d 1351 (D.C. Cir.1995) and Chemical Manufacturers Ass'n v. EPA, No. 89-

1514 (D.C. Cir.1995). 

34 See 76 FR 38748 (2011) (promulgating Tribal minor source rule). 
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GHG permitting authority in areas subject to a PSD FIP, including Indian country, but does not have a 

generally applicable minor source permitting program that the EPA can use to restrict GHG PTE for 

sources that might want to request voluntary limitations to avoid PSD permitting for GHGs.35 In these 

areas it is not clear whether sources will be able to obtain synthetic minor limits for GHGs from states or 

local permitting authorities through other permitting mechanisms, or through any other cognizable 

mechanisms for establishing a synthetic minor limit. Without a federal synthetic minor permitting 

program for GHGs, a source that would be subject to PSD permitting requirements because of a 

project’s potential GHG emissions, but that would be willing to reduce emissions from the source or 

project to avoid those requirements, might not have a viable permit mechanism for committing to these 

emissions reductions and making them enforceable. Thus, we are proposing to fill this gap in federal 

regulatory authority, because we believe doing so is important to our GHG phase-in efforts and 

permitting authorities’ ability to manage their GHG permit workload (including our ability to efficiently 

issue GHG permits), and because we believe that synthetic minor limitations for GHGs can result in 

increased environmental benefit. 

We believe that synthetic minor limits for GHGs provide a valuable mechanism to help manage 

GHG permitting burden and potentially reduce GHG emissions, and that such limits should generally be 

available as an option for sources that would prefer to take a legally and practicably enforceable 

limitation on GHG emissions in order to avoid major source permitting requirements. Before the 

Tailoring Rule, state and local reviewing authorities predominantly issued synthetic minor permits to 

 

35 The EPA recently increased the number of areas in which it is the PSD permitting authority. On 

December 30, 2010, the EPA imposed a partial PSD FIP for GHGs in some jurisdictions in the Action to 

Ensure Authority to Issue Permits Under the Prevention of Significant Deterioration Program to Sources 

of Greenhouse Gas Emissions: Federal Implementation Plan. Once that FIP became effective, the EPA 

became the GHG PSD permitting authority for seven states: Arizona: Both Pinal County and Rest of 

State (excluding Maricopa County, Pima County, and Indian Country), Arkansas, Florida, Idaho, 

Kansas, Oregon, and Wyoming. In addition, the EPA has long been the PSD permitting authority in a 

few other states, in Indian country, and in some areas of the Outer Continental Shelf. 
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sources, even when the EPA was the permitting authority for the PSD permits. State and local agencies 

used their SIP-approved minor NSR permit authority, or in some instances their Part 70 permit authority 

or their federally enforceable state operating permit program, to issue permits to a source that requested 

synthetic minor permit restrictions. Recently, the EPA assumed GHG PSD permitting authority for a 

number of jurisdictions.36 In many of these jurisdictions, as well as jurisdictions in which the EPA has 

long been the PSD permitting authority, state, local and tribal agencies may lack mechanisms to create 

restrictions on a source’s potential to emit GHG emissions. This could occur if their minor NSR 

program regulations do not include GHG emissions or perhaps if it only includes GHG emissions on a 

mass basis, and if they do not have any other legal mechanism under which they could issue a synthetic 

minor limit for GHGs. As we noted in the proposed Tailoring Rule, states may but are not required to 

regulate GHG emissions through their minor NSR programs. Accordingly, if a gap in minor NSR 

permitting authority exists it may continue to exist. On the other hand, these states may have other 

viable mechanisms for issuing synthetic minor limits for GHGs, which might alleviate the potential 

synthetic minor permitting gap. 

To better understand the extent of state, local, and tribal authorities’ synthetic minor GHG 

permitting authority, we request comment on whether there is a minor source permitting gap in areas 

subject to EPA permitting authority for PSD permits for GHG. For each state in which the EPA is the 

GHG PSD permitting authority, we request information on the states’ current efforts to interpret or 

amend their minor NSR permit authority to include GHG emissions, and on other mechanisms that may 

be available to create synthetic minor limitations on a source’s GHG emissions. If there is a gap in either 

permitting authority or available mechanisms for issuing synthetic minor permits for GHGs, we request 

input on how that gap could best be filled. We are also requesting comment on whether there are 

sufficient permitting mechanisms and permitting authority to create GHG synthetic minor limitations in 

 

36 See FN 33 above. 
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areas subject to a SIP-approved PSD permit program for GHGs. If a gap exists outside of federal GHG 

PSD permitting areas, we request suggestions for ways to address that gap. 

5. What are the benefits to a federal GHG synthetic minor permit program? 

A federal GHG synthetic minor permit program will increase EPA’s GHG permitting capacity 

and provide valuable knowledge and experience that the EPA can use to develop effective streamlining 

methods that assist in the EPA’s phase-in of the GHG PSD and title V permit programs to statutory 

levels. It will also assist the EPA in managing the GHG permit workload for sources already potentially 

subject to permitting at existing applicability thresholds, and may result in enhanced environmental 

protection compared to permitting a source as a major source through PSD and/or title V. 

We believe that creating federal authority to issue synthetic minor permits to restrict a source’s 

GHG PTE will decrease the long term permit burden on the EPA (and eventually reviewing and 

permitting authorities if they assume the role for PSD and/or title V permit issuance) by allowing 

sources to avoid PSD permitting when their actual emissions will not exceed the major source 

applicability threshold and the subject to regulation thresholds. In addition, such federal authority could 

reduce state and federal title V permitting burdens, because a PTE limit may be structured in such a way 

that it also allows a source to avoid the need to undergo title V permitting. We believe that the cost and 

level of burden for sources applying for a synthetic minor permit, and for permitting authorities to issue 

the permit, are generally far lower than issuing either a PSD permit or a title V permit. We request 

information about permitting authorities’ and sources’ experiences in this regard. 

Moreover, the ability to apply for synthetic minor permits can result in greater environmental 

benefits than those obtained through a PSD permit, because it creates an incentive for sources to reduce 

emissions to levels below the applicability thresholds. For example, to accommodate a need for an 

increase in capacity, suppose a source has the option of either modifying an old, inefficient existing 

emissions unit to increase its capacity, or adding a new, high efficiency, lower emitting emissions unit. 
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Under the federal PSD regulations, the post-change emissions for a new emissions unit are equal to that 

unit’s PTE, while the source may use the projected actual emissions to estimate post-change emissions 

for the existing emissions unit. Suppose the source only operates 16 hours a day. If the source modifies 

an existing emissions unit, it may project its emissions using the anticipated 16 hours of operation. In 

contrast, unless the source can obtain a legally and practicably enforceable restriction on its hours of 

operation, to determine its PTE, it must calculate emissions for the new emissions unit assuming a full 

day (24 hours) of operation. As a result, PSD may be triggered for the addition of the new emissions 

unit, while PSD may not be triggered for the modification of the existing unit. Depending on the cost of 

emissions controls, and the delay in obtaining the preconstruction permit, the source may chose to 

modify its existing emissions unit, rather than install the environmentally preferable new emissions unit 

if it cannot obtain a PTE limit. Providing the EPA the ability to issue synthetic minor permits for GHG 

emissions gives the EPA a tool to avoid this outcome. 

Finally, because we believe that synthetic minor permits generally require fewer administrative 

resources than full PSD permitting, establishing this synthetic minor program allows permitting 

authorities to focus greater resources on larger sources that, for whatever reason, cannot or do not want 

to restrict the emissions to lower levels. 

Accordingly, for all the reasons described here, as part of the EPA’s effort to phase-in the 

permitting requirements for GHGs, the EPA proposes to add authority to issue synthetic minor permits 

to sources for which the EPA, or its delegated agent, is the GHG PSD permitting authority. We propose 

to add the authority to issue CO2e-based synthetic minor permits to sources whose potential emissions 

are above the statutory major source threshold (i.e., 100 or 250 tpy GHG) on a mass basis or the subject 

to regulation thresholds on a CO2e basis. 

We request comment on our conclusion that a federal synthetic minor permit program will assist 

in the EPA’s efforts to phase-in the GHG permit program and efficiently manage its GHG permitting 
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resources. We also request comment on our conclusion that synthetic minor permits can achieve 

enhanced environmental protection. 

We also note that a synthetic minor limit on GHG emissions could further reduce administrative 

burdens under the title V permitting program for two reasons. First, as long as the title V GHG 

applicability threshold is equal to or higher than the PSD threshold, any synthetic minor limit that 

establishes GHG emissions below the PSD threshold would also prevent such sources from becoming 

title V sources based on their PSD major source status and/or applicable PSD requirements for GHGs. 

Second, if the synthetic minor permit restricts GHGs below the subject to regulation threshold for title 

V, such sources would not qualify as title V sources because of their GHG emissions alone. Of course, if 

such a source qualifies as a title V source based on their emissions of a non-GHG pollutant or based on 

title V applicable requirements, that source would still be required to comply with those title V 

obligations, regardless of the synthetic minor limit for GHGs. 

6. What is the legal rationale for EPA’s GHG synthetic minor source permitting authority? 

Our authority to issue GHG synthetic minor permits arises from the fact that, but for the 

Tailoring Rule, the sources eligible for this type of permit would qualify as “major emitting facilities” 

under CAA section 169 because they emit or have the potential to emit more than 100 or 250 tpy GHGs 

on a mass basis, depending on the source category. As a result, we interpret CAA section 165 to convey 

to PSD permitting authorities, including the EPA, the legal authority to issue preconstruction permits to 

these sources. We note that we do not expect that sources at or near the 100/250 tpy levels would seek 

such permits at this time, since such sources are unlikely to trigger PSD under the current applicability 

tests. Instead, we expect that larger sources would avail themselves of this option. 

Although CAA § 165 by its terms authorizes the EPA to issue permits to major sources, and 

sources to whom we issue a GHG synthetic minor source permit are, in many instances, not major 

sources, we propose that under the present circumstances, CAA § 165 authorizes the EPA to issue these 
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permits. As noted, these sources would be major sources but for the Tailoring Rule, and as explained in 

that rule, the administrative burden associated with immediately implementing the PSD program at 

statutory levels for GHGs would have crippled the program. Thus, we decided to tailor the program and 

phase-in the permitting requirements to ensure that the PSD permitting program would be administrable 

for GHGs. Similar to the approach in the Tailoring Rule, we view the GHG synthetic minor program as 

another tool to help ensure that the PSD program for GHGs can be administered in an effective and 

efficient manner. Because the GHG synthetic minor program will have those effects, CAA § 165 may be 

read to authorize it. CAA § 301(a)(1), which authorizes the Administrator “to prescribe such regulations 

as are necessary to carry out his functions under [the CAA],” provides additional authority. 

7. What changes would EPA make to the PSD regulations to allow EPA to issue GHG synthetic 

minor permits? 

We are proposing to change both the federal PSD permitting program in 40 CFR 52.21 and the 

federal minor NSR program in Indian country in 40 CFR Part 49. For the federal PSD permitting 

program, we propose to add a new section to the existing PSD regulations. In this section we would 

adopt permit requirements similar to the requirements we established in Indian country in 40 CFR Part 

49, most particularly at 40 CFR 49.158. These requirements would include permit application and 

permit content requirements, as well as requirements for monitoring, recordkeeping and reporting, and 

public participation. We request comment on what would need to be amended in the Part 49 provisions 

to establish a GHG synthetic minor permitting program in 40 CFR 52.21, and on any additional 

provisions that might be required. In addition, we request comment on the appropriate procedures for 

administrative review. Finally, we would also amend the existing regulations in Part 49 to ensure that we 

have synthetic minor permitting authority for GHG sources located in Indian country. Amending our 

existing minor source authority for Indian country to add GHG synthetic minor authority would retain 

all synthetic minor authorities for Indian country within one rule. We believe this would be easier for 
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sources in Indian country to implement, but we request comment on whether we should instead limit the 

proposed changes to only 40 CFR 52.21. 

C. Redefining Potential to Emit and Source Category Specific PTE 

 This section discusses our current thinking on developing category specific PTE rules or 

guidance and requests comment on the appropriate categories and requirements. In addition we are also 

exploring a novel approach that would provide an individual source, in any of multiple source 

categories, a way to obtain streamlined, as well as legally and practicably enforceable restrictions, on the 

source’s hours of operation. We outline and request comment on a potential approach for creating such a 

rule; however, we do not intend to finalize this approach in this rulemaking. 

As explained in the Tailoring Rule, because the PSD and title V applicability are based on PTE, 

rather than on actual emissions, they could sweep enormous numbers of sources into the PSD and title V 

programs even though those sources’ actual emissions are far below the applicability thresholds. For 

example, sources that operate for only part of the year, but that have no legally and practicably 

enforceable limitation on their operating hours, must calculate their PTE on the basis of the amount of 

emissions that would result if those sources did operate, and therefore emit, on a year-round basis (8760 

hours per year). Our proposed synthetic minor rule would give sources the option to accept legally and 

practicably enforceable limits on their operations by, for example, agreeing to limit the hours the sources 

operate and complying with recordkeeping, monitoring, and reporting requirements to ensure that these 

limits are enforceable as a practical matter. As we have explained, the issuance of synthetic minor 

permits to individual sources benefits the GHG phase-in program, but we would like to continue to 

explore methods that can reduce the number of individual permits a reviewing or permitting authority 

need to issue. Therefore, in addition to individual minor source permitting, we continue to explore 

adopting, or encouraging state permitting authorities to adopt, rules for source categories that we expect 

include large numbers of sources whose actual GHG emissions are well below applicability thresholds, 
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but which, absent legally and practicably enforceable limitations, have PTE above those thresholds. 

As we noted in our proposed Tailoring Rule, the first step necessary to develop a source specific 

PTE regulation or guidance is to identify source categories that are generally conducive to a streamlined 

PTE approach. 74 FR 55321. In selecting one or more source categories, one consideration is how to 

address the possibility that the GHG applicability thresholds could change in the future. Today, we have 

more information on sources with a potential to emit 100,000 tpy or more CO2e, and may be better 

situated to propose a source category specific PTE rule for a one of these source categories, in the nearer 

term. We have less information about smaller sources, and developing a PTE rule will require 

significant additional information collection, and technical analysis. 

 Source category PTE rules or guidance continue to offer the opportunity for reducing 

administrative and permitting burden related to sources of all sizes. We are broadly soliciting 

information on source categories with sources at all levels of emissions, ranging from sources with 

actual emissions below the PSD and title V statutory thresholds to those that are just below the Steps 1 

and 2 thresholds or the thresholds under consideration for this rulemaking. Therefore, we request 

comment on all source categories that would be candidates for creation of a PTE-specific rule or 

guidance. Candidates include source categories that currently have PTE substantially higher than their 

actual emissions, so that, if we were to revise the thresholds to fall below their PTE but remain above 

their actual emissions, a rule or guidance that adjusted how sources in those source categories calculate 

PTE could allow them to fall below the revised thresholds. For instance, we request comment on the 

usefulness of a PTE regulation for natural gas fired boilers that use a limited amount of fuel. As another 

example, we solicit comment on whether this approach might be useful for sources whose only 

emissions units are metered, natural-gas fired units with actual GHG emissions below the relevant 

applicability thresholds, which because of their metering are able to track and determine their GHG 

emissions on a continuous basis. This option would essentially allow sources to determine PTE with 
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reference to their actual emissions based on actual fuel use. Conceptually, this option would likely be 

available for such metered sources that have historically always had emissions below the applicability 

thresholds and that will maintain and operate their meters on a going-forward basis. For such sources, 

actual GHG emissions can be continuously determined by monitoring their fuel use so that they remain 

below the applicability thresholds, as well as comply with recordkeeping and reporting requirements. 

For any source category identified in comments, we specifically solicit information on how the 

source category should be defined, typical hours of operation over a year and whether those vary by, for 

example, season, production cycle, or over a day, and information on typical emissions. We specifically 

request input on what sorts of GHG-emitting source categories may only operate seasonally or otherwise 

have a limited production time -- e.g., limited number of shifts, operate only during day-time hours, 

operate only in the evenings, or emit emissions only from heating during winter months -- or have 

physical restrictions on their operations that might make them well suited for a PTE rule or guidance. 

We request comment on the time period that reflects these sources’ maximum historical operations, 

which we could use to establish, whether through guidance or rulemaking, the PTE for sources in those 

source categories. We also solicit comment on what type of documentation would be necessary to 

demonstrate that sources in a source category have a history of limited operations. For example, would it 

suffice for sources to demonstrate a 5 or 10 year history of limited actual hours of operation? Suppose a 

representative set of sources in a source category has records documenting that they operated only two, 

8-hour shifts at their facilities for the past 10 years, and that when workers are not working, emissions 

units are not running. Alternatively, suppose a representative set of sources in a source category has 

records that show that they only operate during summer months, and that the longest they have operated 

in the summer is for 4 months. In such circumstances, could the EPA interpret, through guidance or 

rulemaking, PTE for sources in that source category to reflect that maximum level of actual operation? 

We are also exploring the development of a streamlined method that reduces the permitting 
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burden for sources that have historically operated with reduced hours of operations and are willing to 

accept an hourly limit at or below the maximum level of historical operation. The purpose of such a rule 

would be to create a legal mechanism by which sources in at least certain types of source categories 

could take legally and practicably enforceable limits on hours of operation without having to go through 

the more burdensome process of obtaining individual synthetic minor permits. Rather, we contemplate 

that under such an approach, a source would report and document its historical maximum hours of 

operation to EPA in some way, and accept a legally and practicably enforceable limit to operate at or 

below that level, along with obligations designed to ensure enforceability, such as recordkeeping, 

reporting, and monitoring requirements. 

In order to develop our thinking on this new approach, we are asking for comment on several 

specific issues. We request comment on whether such a rule would be helpful to permitting authorities 

in reducing GHG permit burden. In addition, we request comment on whether hours of operation is an 

operating parameter that does not need source specific limitations to assure compliance. Have permitting 

authorities included hours of operation restrictions in numerous synthetic minor permits? What success 

or difficulties have permitting authorities experienced in enforcing hours of operation restrictions 

through synthetic minor permits? Have terms and conditions of such permits been uniform within or 

between source categories? 

 Additionally, we are requesting input on whether such a rule should target specific source 

categories, or be made broadly available to all source categories, and on what types of GHG-emitting 

source categories may only operate seasonally or have a limited production time. We request comment 

on the appropriate structure and requirements for such a rule. What sorts of application requirements, 

permit limits, and recordkeeping, monitoring, and reporting have permitting authorities required for such 

hourly limits? What time period adequately reflects maximum historical operations, for purposes of 

determining a restriction on future operations? 
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We also request comment on mechanisms the rule should provide to ensure that the source does 

not exceed any limitation on hours of operations that it agrees to accept. Finally, we request comment on 

whether such a process can be rigorous enough to maintain the necessary integrity in PTE calculations, 

and made legally and practicably enforceable through reporting, monitoring, and ongoing recordkeeping 

requirements, but streamlined when compared to the burden of issuing and obtaining an individual 

synthetic minor permit. 

Again, we are just requesting comment in this action on the idea of developing a rule to 

voluntarily restrict hours of operation across multiple source categories and we are not proposing a 

specific rule at this time. If, after reviewing comments, we determine that this is a viable approach for 

streamlining GHG permitting, we may proceed to propose a specific rule in the future. 

D. General Permitting for GHGs 

1. What is a general permit? 

A general permit is a permit that the permitting authority adopts once and then applies identically 

to each source that requests coverage and meets the specific eligibility requirements. General permits are 

best suited for the regulation of sources that perform the same or similar operations, emit similar air 

pollutants and are subject to the same limitations, standards and requirements. General permits are a 

mechanism that provides for greater efficiency in issuing required permits, thereby saving costs to both 

the source and the permitting authority. 

As noted in the following, some states have programs that authorize general permits. These 

programs show very clearly that there are benefits to using general permits. The issuance process for the 

permit is relatively simple and streamlined. The applicable requirements for these sources have already 

been identified for the applicant in both the application and the permit. The applicant knows, prior to 

application submittal, what conditions the permit will contain. In addition, public review is simplified. 

The public review process for general permits occurs before the general permit is finalized, rather than 
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on a permit by permit basis. 

In the context of GHG, the issuance of PSD or title V general permits would promote more 

efficient treatment of GHG-emitting sources that would be subject to permitting, and allow the 

expeditious expansion to more GHG-emitting sources while protecting those sources and the permitting 

authorities from undue burden. 

2. What is the Legal Authority for General Permits? 

The CAA gives the EPA the authority in section 504(d) to issue general permits for title V 

sources, and the EPA has regulations in place to create general permits for title V sources. Although 

there is no provision in the CAA that expressly authorizes the use of general permits in the PSD 

program, the D.C. Circuit, in the Alabama Power case, recognized that “[c]onsiderations of 

administrative necessity may be a basis for finding implied authority for an administrative approach not 

explicitly provided in the statute” and expressly identified general permits as an alternative to the 

exemptions that were at issue in that case. See 636 F.2d at 360. Further, courts have recognized the 

EPA’s authority to use general permits under section 402 of the Clean Water Act without an express 

provision authorizing such general permits. Environmental Defense Center v. EPA, 344 F.3d 832, 853 

(9th Cir. 2003) (“General permitting has long been recognized as a lawful means of authorizing 

discharges.”) (citing NRDC. v. Costle., 568 F.2d 1369, 1381 (D.C. Cir. 1977)); NRDC v. Train., 396 F. 

Supp. 1393, 1402 (D.D.C. 1975) (The EPA has “substantial discretion to use administrative devices, 

such as area permits, to make EPA’s burden manageable.”). 

3. Have the states used general permits? 

Many states have taken advantage of the ability to use general permits. In reviewing state 

programs, we have found that though the concepts are similar, the structure and content of the various 

programs is quite diverse. For example, the New Jersey Department of Environmental Protection 
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(NJDEP) has developed a general permit program (GP-017)37 that allows for the construction, 

installation, reconstruction, modification and operation of boilers and heaters less than 5 MMBTU/hour. 

NJDEP defines a general permit as a pre-approved permit and certificate which applies to a specific 

class of significant sources. By issuing a general permit, NJDEP indicates that it approves the activities 

authorized by the general permit, provided that the owner or operator of the source registers with the 

Department and meets the requirements of the general permit. If a source belongs to a class of sources 

which qualify for a general permit and the owner or operator of the source registers for the general 

permit, the registration satisfies the requirements of NJAC 7:27-8.338 for a permit and certificate. 

Ohio’s Division of Air Pollution Control (DAPC) also has developed model general permits-tointall and model general permits-to-install and operate for select sources in Ohio. The regulations for 

general permits can be found in OAC Rule 3745-31-29. Ohio states that a general permit is the same as 

any permit-to-install or permits-to-install and to operate that DAPC issues; the only difference is that all 

the terms and conditions of the permit have been developed in advance. This is referred to as the "model 

general permit." Potential applicants can review the model general permit qualifying criteria, terms and 

conditions, and if they believe they qualify, they can complete the application and sign the qualifying 

criteria document. The DAPC will review the applicants’ information to confirm that they meet the 

qualifications, and then issue the general permit to the applicants. 

4. What steps has the EPA made toward developing general permits? 

In the context of streamlining the permitting process for GHGs, the EPA is considering various 

methods for developing general permits. As a procedural matter, the EPA is evaluating the possibility of 

 

37 http://www.state.nj.us/dep/aqpp/downloads/gp17.pdf.

38 The permittee shall not construct, reconstruct, install, or modify a significant source or control 

apparatus serving the significant source without first obtaining a preconstruction permit under N.J.A.C. 

7:27-8. [N.J.A.C. 7:27-8.3(a)] 

The permittee shall not operate (nor cause to be operated) a significant source or control apparatus 

serving the significant source without a valid operating certificate. [N.J.A.C. 7:27-8.3(b)] 
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proposing an enabling rule to enable the development of PSD general permits for GHG emitting sources. 

This rule would enable the EPA to create and implement PSD general permits for GHG emissions only 

for selected source or emissions unit categories. The enabling rule would lay out the basic foundation for 

general permits. It would identify the general provisions that would be found in all EPA-issued general 

permits, the criteria and process for establishing a general permit, and discuss the rationale and legal 

basis for a PSD general permit for GHGs. The enabling rule would also establish the process for the 

creation of general permits for the EPA’s use where the EPA is the GHG permitting authority and define 

mechanisms by which states could leverage federal general permits to streamline the permitting 

processes for sources that would trigger PSD for only their emissions of GHGs. 

We are also considering the overall criteria for determining the source or emissions unit 

categories for which we may develop the first general permits. Our initial inclination, on which we 

solicit comment, is that we should focus first on GHG-only sources, that is, GHG-emitting sources that 

do not emit non-GHGs in amounts that would be subject to PSD requirements. This is because 

complying with PSD for non-GHG pollutants involves analyses and demonstrations, such as a 

requirement that the source demonstrate that the proposed project will not cause or contribute to a 

violation of any NAAQS, which inherently are facility and location specific. For GHGs, BACT is the 

primary substantive PSD permitting requirement, and we believe that BACT can more readily be 

established for a source or emissions unit category, thus making the general permit approach feasible for 

sources and modifications that are major only due to GHG emissions. 

We are considering what source and/or emissions unit categories would be good candidates for 

the first general permits. Even though natural gas-fired boilers range from large high performance 

boilers for industrial applications to small commercial and residential units for space heating and hot 

water, sources for which the only or predominant source of GHG emissions are boilers may be good 

candidates for PSD GHG general permits. Because boilers are widely used throughout industrial and 
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commercial source categories, and can readily be categorized by design, purpose, efficiency and 

emissions, they present opportunities for significant streamlining through the use of general permits and 

thereby reductions in administrative burden from PSD permitting. Because the controls for GHGs on 

natural gas-fired boilers are sufficiently uniform, it seems possible to identify standardized control 

requirements to include in a general permit without significantly compromising environmental 

protection. 

Even so, it is unclear whether a general permit rule, for boilers or other emissions units, would be 

a productive streamlining method for the source categories and projects affected by this Step 3 

rulemaking. In many cases, boilers or other equipment located at a source or involved in a project will 

emit non-GHG pollutants in amounts great enough to trigger other significant CAA requirements such 

as minor NSR, NESHAP and/or NSPS, diminishing the streamlining utility of a PSD general permit for 

GHG only. We are also mindful that implementation of a general permit program would likely involve 

regulatory action and a SIP revision at the state or local permitting authority level, which in and of itself 

imposes administrative costs, and the limited benefits of a general permit program for the source 

categories and projects potentially covered in this Step 3 rulemaking could be offset by the 

administrative costs of the SIP revision process. Although we are concerned that GHG general permits 

for boilers and other common emissions unit categories may not provide enough streamlining value for 

the source categories affected by this Step 3 rulemaking, we believe such permits may have significant 

value when we consider smaller sources, especially those with no other emissions units or non-GHG 

pollutants emitted at significant levels. We are also considering how to incorporate a general permit for 

GHGs into existing state permitting programs. We are mindful that reviewing agencies generally have 

construction permitting processes that address all applicable requirements, including minor NSR and 

major NSR/PSD in an integrated fashion. It would be important to structure the general permit program 

so as to avoid complicating or conflicting with established permitting processes. 
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We are also considering further questions, including: (1) Should general permits be available to 

greenfield sources?; (2) When issuing a general permit for a project/modification what do we do with 

pollutants other than GHGs?; (3) Can general permits be utilized for projects at any major source or only 

at sources major only for GHGs?; (4) Are general permits available to both new and modified units?” 

(5) “Are general permits mandatory or optional for states?; (6) What is the process for establishing 

general permits?; (7) Should states or the public be able to request that the EPA propose general permits 

for source categories and emissions units, and if so, what is the process for this type of request?; (8) 

What should the public participation procedures be?; (9) What is the approval or denial process for 

sources to use a general permit?; (10) What would BACT for a general permit look like?; (11) How 

would BACT be established?; (12) How would BACT be updated?; (13) What are the Endangered 

Species Act and environmental justice implications of the general permit?; (14) Should there be a 

periodic review of the general permit’s provisions, and if so, what would it look like?, and (15) Could 

we develop a process for states to incorporate a general permit program into their SIPs in a way that 

minimizes the administrative costs of the SIP revision process? 

We commit to continue to explore the possibility of general permits by reviewing information 

that we expect to receive in response to this proposal and the information gathered by permitting 

authorities through the implementation of GHG permitting. We believe that establishing general permits 

will require collection of significant category-specific data for various source and emission unit types as 

well as those that have heretofore generally not been regulated by the CAA (e.g., small furnaces, water 

heaters, etc.), which could take a significant amount of resources and time. 

We request comment on, in addition to the issues described previously, possible sources and 

source categories that may benefit from general permits, if such permits were only created for 

addressing GHG emissions, as a streamlining method to assist in the phase-in of GHG permitting. We 

request comment on the appropriate approach for public review, in particular whether public review of 
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individual uses of a PSD general permit can be satisfied through public participation in the development 

of the general permit itself or whether each individual use of the PSD general permit requires public 

participation. We also request comment on whether such a program should be a required minimum 

element for SIP approved PSD programs, as relevant. 

5. General Permits and Title V 

We expect many of the issues related to PSD general permits would also be relevant for title V 

general permits. For example, we would expect title V general permits to be most useful for GHG 

sources that trigger title V applicability due to boilers, but where sources are subject to other 

requirements, such as NSR, NESHAP and/or NSPS, the utility of general permits may be limited. 

We request comment on experience with title V general permits issued by state and local 

permitting authorities, including whether permitting authorities have altered application requirements 

pursuant to 40 CFR 70.6(d)(2), and other means of ensuring that general permits met the goals of title V 

for streamlined procedures and assuring compliance. Finally, we request comment on whether such a 

program should be a required minimum element for state Part 70 title V programs, as relevant. 

E. Presumptive BACT for GHGs 

1. Definition of BACT 

 The Act defines BACT as: 

... an emission limitation based on the maximum degree of reduction of each pollutant 

subject to regulation under this Act emitted from or which results from any major 

emitting facility, which the permitting authority, on a case-by-case basis, taking into 

account energy, environmental, and economic impacts and other costs, determines is 

achievable for such facility through application of production processes and available 

methods, systems, and techniques, including fuel cleaning, clean fuels, or treatment or 

innovative fuel combustion techniques for control of each such pollutant. In no event 

shall application of “best available control technology” result in emissions of any 

pollutant which will exceed the emissions allowed by any applicable standard established 

pursuant to section 111 or 112 or this Act. Emissions from any source utilizing clean 

fuels, or any other means, to comply with this paragraph shall not be allowed to increase 

above levels that would have been required under this paragraph as it existed prior to 

enactment of the Clean Air Act Amendments of 1990. 
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CAA section 169(3). 

 Performing case-by-case BACT determinations can be complicated, resource-intensive and timeconsuming. In brief, the top-down BACT process calls for all available control technologies for a given 

pollutant to be identified and ranked in descending order of control effectiveness. The highest-ranked 

(“top”) option(s) should be established as BACT unless the permit applicant demonstrates to the 

satisfaction of the permitting authority that technical considerations, or energy, environmental, or 

economic impacts justify a conclusion that the top-ranked technology is not “achievable” in that case. If 

the most effective control strategy is eliminated in this fashion, then the next most effective alternative 

should be evaluated, and so on, until an option is selected as BACT. This analysis should be conducted 

for each regulated NSR pollutant that is subject to the BACT requirement in a given case. The EPA has 

broken down this analytical process into the following five steps. 

 Step 1: Identify all available control technologies. 

 Step 2: Eliminate technically infeasible options. 

 Step 3: Rank remaining control technologies. 

 Step 4: Evaluate most effective controls and document results. 

 Step 5: Select BACT. 

2. What is presumptive BACT? 

 Presumptive BACT is a potential streamlining approach that involves the development of a 

standardized BACT for certain emissions units. Presumptive BACT would create ways for specific 

categories of permitted emissions units to move from a system under which determinations are made on 

individual permits on a case-by-case basis, to one where BACT is determined for common types of 

equipment, which could be applied to individual permits with little to no additional revision or analysis. 

In general, the EPA believes that presumptive BACT could be implemented on a broad basis for specific 

emissions units where there are well defined and similar types of emissions units, uniformity in 
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process/emissions unit design and function, and well defined GHG control technologies. Reviewing 

agencies could adopt presumptive BACT, possibly including model permit language and monitoring, 

reporting and recordkeeping requirements, to streamline the BACT analysis for GHGs within their own 

established permitting process. 

 The EPA has previously introduced the concept of presumptive BACT to streamline permitting 

for desulfurization projects at refineries as well as in other instances,39 and some state permitting 

authorities have adopted similar approaches.40 Based on our understanding of the types of sources that 

will become subject to PSD if GHG emissions are regulated at levels below the thresholds currently 

contained in the Tailoring Rule, we believe the presumptive BACT process could offer significant 

streamlining benefits. Such streamlining benefits would arise because many of the sources that would 

become subject to BACT at lower GHG emission levels will likely have very similar emissions 

producing equipment, and we believe there would be little variation across sources with respect to the 

cost, energy and environmental considerations in the BACT decision. 

 As discussed in the following, the EPA has expressed interest in soliciting comments on the 

potential use of presumptive BACT for GHG permitting. It should be understood that presumptive 

BACT would be only an optional means to streamline the top-down BACT process by pre-evaluating 

what could constitute BACT for specific categories of similarly-situated emissions units. It should also 

be understood that this would only be available to address the GHG emissions from those units, and that 

the pre-construction permitting process would not be affected in any other way. 

Presumptive BACT would add another option for sources to achieve BACT requirements and 

 

39 See Memorandum, "BACT and LAER for Emissions of Nitrogen Oxides and Volatile Organic 

Compounds at Tier 2/Gasoline Sulfur Refinery Projects," from John S. Seitz, Director, Office of Air 

Quality Planning and Standards, to Regional Air Division Directors (January 19, 2001). 

40 For example, Wyoming has a minor source permitting program that includes a BACT analysis, and 

they use a presumptive BACT process for issuing minor source permits to a particular source category—

oil and gas production facilities. See Permitting Guidance for Oil and Gas Production Facilities, 

Wyoming Dept. of Environmental Quality, Air Quality Division (August 2007 revision). 
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provides additional benefits for the source and the permitting authority through streamlining of the 

permit process. In actual implementation, the choice of a presumptive BACT option would reduce 

burdens currently associated with conducting individualized, top-down BACT analyses for each source 

requiring a PSD permit. Nonetheless, there are several considerations to explore before we can 

implement a presumptive BACT approach including the role of presumptive BACT in a case-by-case 

decision framework, the role and timing of public review, and preserving BACT’s technology-forcing 

role within a presumptive BACT framework. 

3. How the EPA Could Consider Implementing Presumptive BACT 

 As noted previously, the CAA requirement for BACT, found in section 165(a)(4), mandates that 

BACT determinations be made for each regulated pollutant on a "case-by-case basis." Accordingly, the 

EPA would like to develop a process that benefits from the efficiencies that presumptive BACT would 

provide while allowing for issuance of individual PSD permits. In the proposed Tailoring Rule, the EPA 

discussed potential options to explore presumptive BACT as an alternative to the current case-by-case 

nature of conventional BACT. In that discussion and in subsequent consideration by the agency, two 

potential ways in which to implement a presumptive BACT program have emerged: as an alternative 

method of completing a BACT analysis in an individual permitting action or as a way to eliminate the 

need for an individualized BACT analysis for all permits in a particular category. 

 The first approach would develop, through notice-and-comment rulemaking or through 

permitting guidance, a presumptive BACT level for sources in a particular source category that 

subsequently could be applied and assessed in individual permitting actions. Under such an approach, 

while the top-down analysis for an individual permit would be fulfilled by a request to include the 

presumptive BACT limit, there would still be an opportunity for permitting authorities and the public to 

examine individual permits to assess whether there are significant case-specific energy, economic, 

and/or environmental impacts that would require adjustment of the presumed limit for that particular 
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source. This form of presumptive BACT would create a rebuttable presumption that the emissions 

covered by the particular source’s BACT limit will, in fact, be controlled to the maximum degree that 

can be achieved. This presumption shifts the burden to the permitting authority or other interested 

parties to produce credible evidence that the application of presumptive BACT to that particular source 

would not comply with BACT requirements. If credible evidence were produced, then the source would 

either be required to produce evidence sufficient to show that the presumption is the best achievable 

control technology or to conduct an individualized top-down BACT analysis. 

 While such an approach could streamline the BACT determination process to some extent, we 

are concerned that those streamlining benefits could be negated given the prospect that such presumptive 

BACT determinations would, as a result of permitting authority review and public comment, still have 

to be reviewed for numerous individual sources. Accordingly, the EPA has also considered a system in 

which presumptive BACT levels for a specific category of emissions units would be developed through 

notice-and-comment rulemaking but then applied to individual sources in that category without 

requiring permitting authorities to individualize the BACT determination or allowing for public 

comment on whether presumptive BACT levels should apply to an individual source. While, as noted in 

the following, some have argued that such an approach would not strictly adhere to the individual caseby-case BACT determinations envisioned in the CAA, even if that is the case, maintaining case-specific 

BACT determinations may well be impractical given the significant increase in new sources that would 

likely be brought into the PSD program when GHG permitting thresholds are reduced. Moreover, the 

D.C. Circuit, in the Alabama Power case previously discussed, stated that courts "frequently uphold 

streamlined agency [regulatory] approaches or procedures where the conventional course, typically caseby-case determinations, would, as a practical matter, prevent the agency from carrying out the mission 

assigned to it by Congress." 636 F.2d at 358. The Court recognized that such non-individualized 

streamlining measures may be needed when time or personnel constraints or other practical 
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considerations "would make it impossible for the agency to carry out its mandate." See id. at 359. A 

presumptive BACT approach that does not require individualized, source-specific determinations could 

well be an important tool to allow the EPA, state and local permitting authorities to carry out the PSD 

program in as timely and efficient manner as necessary to promote (rather than hinder) control of GHG 

emissions from the many new, small source categories that would be required to have PSD permits 

based on their GHG emissions. This approach would preserve opportunities for public participation by 

taking comment during the determination of presumptive BACT levels for a source category. Although 

here too, some have argued that this type of presumptive BACT approach, one that does not require 

individualized, source-specific determinations, would depart from a literal application of the statutory 

requirements for BACT, even if that is the case, it may nevertheless remain closer to the congressional 

intent for the PSD program in so far as it would reduce administrative burdens in each permitting action, 

thus allowing more overall sources to become subject to a PSD permitting program that moves 

applicability thresholds closer to the statutory levels. 

 We received many comments on presumptive BACT during the public comment period for the 

Tailoring Rule. Many commenters supported the concept of presumptive BACT as a means to 

streamline PSD permitting. Some noted that it would promote consistency in BACT determinations as 

various permitting authorities gain experience with GHG permitting. Some suggested that it would be 

useful for common combustion sources, and at least one indicated that it would be particularly justified 

for natural gas-fired equipment. Several included recommendations for specific industrial sectors. A 

number of the supportive commenters also recommended that the source have the option to use 

presumptive BACT or to conduct a case-by-case BACT determination. 

 Some commenters opposed presumptive BACT. A few indicated that it would not be flexible 

enough to take into account source-specific factors. Others asserted that it is contrary to the requirements 

of the Act for a case-by-case BACT determination and opportunity for public review. Some noted that it 
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would dampen the technology-forcing role of BACT, and at least one suggested a periodic update not 

less than every 5 years. 

 The EPA requests comment on the possible approaches to presumptive BACT discussed 

previously. We request comment on whether the first approach, where each use of presumptive BACT 

would be subject to permitting authority review and public comment, would offer significant 

streamlining value. We also request comment on our legal authority to implement each approach, 

particularly on the applicability of Alabama Power principles to the second approach, which does not 

authorize individualized, source-specific determinations. 

4. Possible Impediments to Presumptive BACT 

 a. Public comment processes for presumptive BACT

 The provision of effective and meaningful opportunities for public comment on BACT 

determinations is an important element of air permitting process provided for in the CAA. In the context 

of the two presumptive BACT approaches explained previously, the EPA or a state agency could 

provide opportunity for public participation either in individual permitting actions to allow the public to 

rebut the presumption that a pre-determined BACT limit applies to the specific source under 

consideration, or in determining the presumptive BACT levels for a source category. The EPA requests 

comment on the public participation approaches that would be appropriate to support presumptive 

BACT determinations. For example, is it sufficient to provide for public review and comment only 

during the rulemaking to establish a presumptive BACT level or does the case-by-case nature of BACT 

require comment for individual permitting actions? Even if we follow the approach of establishing a 

presumptive BACT limit through notice-and-comment rulemaking and limiting public input on 

individual permitting actions, are there circumstances in which public comment might also be warranted 

for those individual permitting actions the presumptive BACT limit? If so, what are they? If we follow 

the approach of allowing public input on individual permitting actions that use presumptive BACT, are 
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there ways in which the public comment might be limited to recognize more streamlining benefits? 

 b. General permits 

The EPA is particularly interested to consider pursuing presumptive BACT as a streamlining 

approach in cases where there would be similar BACT outcomes in multiple permits due to similar 

source characteristics and available control options. General permits, which are discussed in the 

previous section, provide one context to implement this. General permits are particularly useful in 

situations where source operations are highly consistent and relatively simple across a source category. 

General permits typically work best where sources in the category are subject to the same applicable air 

regulatory requirements, including those associated with criteria pollutant and air toxics regulatory 

programs. 

 We are particularly interested to consider opportunities to develop presumptive BACT options to 

complement potential general permitting approaches addressing GHGs. In the absence of a presumptive 

BACT approach, general permits addressing GHGs may have limited streamlining value in light of caseby-case conventional BACT determination needs. Accordingly, we request comment on opportunities 

for using presumptive BACT approaches in the context of general permits. In addition, we request 

comment on potential source categories or types of emission units that may be particularly well-suited 

for a general permit and presumptive BACT approach due to similarities in source characteristics and 

available GHG control options. We also request comment on whether presumptive BACT approaches 

for GHGs should be considered for source categories and types of emission units that may not be 

feasible to address using a general permit approach. 

c. Updating of presumptive BACT

 In general, case-by-case BACT determinations allow for the continual evolution of BACT 

requirements over time and are generally referred to as “technology forcing,” in so much as available 

controls identified in prior permits are considered in each subsequent BACT determination and the 
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specific facts of subsequent actions may support application of a top-ranked control technology that was 

eliminated in prior actions. However, the EPA recognizes that application of presumptive BACT to a 

category of sources over many permitting decisions may diminish the technology forcing effects of 

PSD. Updating of BACT is an important concept to consider in the context of developing a presumptive 

BACT option, and the EPA is interested in options that would help maintain advances in control 

technologies. 

 As previously explained, the conventional top-down BACT process incorporates continual 

updating of the BACT for each type of emission unit through the analysis that occurs to ensure that the 

most current BACT is used. To provide streamlining opportunities, the presumptive BACT process 

would likely need to incorporate some form of updating mechanism to ensure that the BACT remains 

current over time. We have identified several different approaches by which such updating could be 

accomplished. One approach would be for the EPA or a state agency to periodically review and consider 

updates to the presumptive BACT option established for a certain source category or type of emission 

unit. For example, there could be a requirement to update presumptive BACT on a set time interval 

(such as every 3 or 5 years). 

Another approach could be to link a presumptive BACT determination to a standard established 

through some respected standard-setting programs so that the presumptive BACT level would 

automatically update periodically in conjunction with updating process already used in established 

standard-setting programs, as discussed in the following examples. One option would be for the EPA or 

a state agency to set presumptive BACT at the same levels used in equipment energy efficiency 

standards established by government agencies or other respected standard-setting bodies. For example, 

the U.S. Department of Energy (DOE), pursuant to the Energy Policy and Conservation Act, 
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promulgates energy efficiency standards for industrial and commercial boilers.41 These periodicallyupdated equipment energy efficiency standards could be used as the basis for presumptive BACT in 

cases where such standards exist. Similarly, it may be appropriate to use ENERGY STAR equipment 

certification as a basis for presumptive BACT. Whereas appliance and equipment energy efficiency 

standards usually provide the “ground floor” requirements for performance of new energy consuming 

equipment, ENERGY STAR certification specifications establish minimum performance requirements 

for high-efficiency, lower emissions equipment within selected product categories. The ENERGY 

STAR program, administered by the EPA in partnership with the DOE, establishes voluntary product 

and equipment energy efficiency specifications for certain products and equipment in an effort to 

transform the market for manufactured goods by expanding the availability and visibility of energyefficient products. Commercial and residential products can earn the ENERGY STAR label by meeting 

the energy efficiency requirements set forth in ENERGY STAR product specifications. 

 Accordingly, ENERGY STAR equipment specifications include energy efficiency performance 

requirements that exceed DOE appliance and equipment standards. For example, to qualify for 

ENERGY STAR certification, residential boilers must have annual fuel utilization efficiency (AFUE) 

ratings of 85 percent or greater.42 This compares with DOE boiler energy efficiency standards 

established in 2007 that range from 80 to 83 percent.43

 The EPA requests comment on approaches for ensuring that presumptive BACT options are 

periodically reviewed and refreshed. We also request comments on the feasibility and potential 

configuration of approaches that connect presumptive BACT to equipment energy efficiency standards 

 

41 http://www1.eere.energy.gov/buildings/appliance_standards/residential/furnaces_boilers.html. 

42

http://www.energystar.gov/index.cfm?fuseaction=find_a_product.showProductGroup&pgw_code=BO 

43http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/furnaces_boilers/furnaces

_fr_111907.pdf. 
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or certifications or other external factors. In particular, it would be helpful to receive comments on the 

role DOE industrial equipment and appliance energy efficiency standards and/or ENERGY STAR 

certification for industrial and commercial equipment play in the context of presumptive BACT. In 

addition to the specific comments requested previously, the EPA seeks overall comments on the use of 

presumptive BACT, including suggestions for how such limits could be established, updated and used 

consistently within the requirements of the CAA, including requirements for a top-down, case-by-case 

BACT determination process. The EPA invites comments on whether presumptive BACT options 

should be advanced through rulemaking or through guidance. Comments would also be useful regarding 

considerations that should affect whether presumptive BACT approaches could be used to address only 

existing units or new units. The EPA also encourages comments on the respective roles of state, local 

and tribal air agencies relative to that of the EPA in establishing presumptive BACT options. 

F. Title V Empty Permits

 In the Tailoring Rule, we identified a possible exclusion for “empty permits” as a potential 

means for alleviating the potential burden of title V permitting for GHG sources. In the Tailoring Rule 

we described an “empty permit” as “a permit issued to a source that is not subject to any applicable 

requirement for any pollutant.”44 Empty permits may occur because the applicability for title V is in part 

based on major source status, yet there may not be any applicable requirements that apply. Since the 

principal purpose of title V is to collect the requirements applicable to the source and assure compliance 

with those requirements it is unclear whether Congress intended sources, particularly smaller sources, to 

be subject to title V permitting if there are no applicable requirements for the source. The EPA solicits 

comments on whether we may, and should, interpret title V as not requiring permits for sources that are 

not subject to any applicable requirements (as defined in 40 CFR 70.2). The EPA also solicits comments 

 

44 Empty permits are different from “hollow permits.” A “hollow permit” is a permit for a GHG major 

source that does not contain requirements for GHG emissions, but which contains other applicable 

requirements for pollutants for which the source is not major. 
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on whether the EPA could adopt such an interpretation through guidance, an interpretative rule (without 

notice and comment), or only through notice and comment rulemaking, and whether states would, or 

should, be required to submit program revisions to the EPA for approval in order to exclude such 

sources from title V permitting. 

In the Tailoring Rule, the EPA noted that we anticipated very few if any “empty permits” as a 

result of Step 2. However, there remains significant uncertainty as to the number of “empty permits” that 

would exist if the Tailoring Rule thresholds were significantly lowered. The EPA believes that several 

SIPs contain generally applicable requirements for sources that would constitute “applicable 

requirements” for many sources that would become subject to title V solely as a result of GHG 

emissions if the thresholds were significantly lowered. We noted in the final Tailoring Rule that: 

We need to gather more information concerning the potential number and utility of 

“empty permits” for GHG sources, in light of the fact that the need for requirements in 

title V permits will vary based on the requirements of each SIP, and the fact that some 

SIPs contain broadly applicable requirements. 

Tailoring Rule, 75 FR 31566. Thus, we solicit comments, particularly from states on these issues. For 

example: 

 What, if any, SIP requirements would be applicable to sources that would become subject to title 

V permitting solely as a result of emitting GHG in excess of a lower threshold? 

 What number (or proportion) of sources potentially subject to title V would be expected to have 

no applicable requirements under the SIP or other CAA programs? 

 Is there a threshold below which the number of empty permits would increase significantly, as a 

result of a corresponding threshold in applicability of SIP requirements? 

VII. Request for Comment 

 We have requested comment throughout this preamble on many aspects of the GHG permitting 

program and our proposed rulemaking. In this section, we provide a summary of the issues on which we 
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are requesting comment and refer the reader to the preceding sections for our requests on more specific 

points. 

A. Solicitation of Comment on Proposed Step 3

1. General 

 We solicit comment on all issues described previously in section V of this preamble. In particular 

we solicit comment from the states as to their current and expected air permit budgets as well as their 

current and expected future levels of permitting. 

In addition, we solicit comment on promulgating lower GHGs thresholds for PSD applicability 

and on promulgating lower GHGs thresholds at any levels we have analyzed in this rulemaking for PSD 

and title V applicability. Commenters advocating lower thresholds should support their position with 

data demonstrating that the permitting authorities have developed the capacity to handle the current and 

future permitting volume under the existing thresholds, and will be able to handle the additional 

permitting volume, in a timely manner, that would be required at reduced thresholds. Commenters 

should also be able to support their positions with data demonstrating that sources have the ability to 

meet the requirements of the PSD program. 

 We note that in this rulemaking, we are not re-opening or soliciting comment on the Tailoring 

Rule’s decision to phase in the thresholds, to begin with the Steps 1 and 2 levels, or the legal or policy 

basis for the Tailoring Rule. By the same token, as noted previously in section V, in this rulemaking, we 

are relying on the same methodology used in the Tailoring Rule to calculate administrative burdens, and 

we are not re-opening that methodology or soliciting comment on it.45 We are simply proposing action 

and soliciting comment on Step 3 of the phase-in approach. 

2. Call for Additional Information Concerning State Burdens 

 

45 Although the Tailoring Rule has been challenged in the U.S. Court of Appeals for the D.C. Circuit, no 

party has challenged this methodology. 
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 As stated in the Tailoring Rule, the EPA is committed to tailoring the applicability criteria that 

determine which GHG emission sources become subject to the PSD and title V programs of the CAA. 

The following questions are structured to help the EPA best assess the status of GHG permitting 

programs based on the three criteria outlined in the Tailoring Rule, which forms the basis for this action. 

We request states submit responses to the following questions to the appropriate EPA Regional 

Administrator within 45 days after the date of publication of this proposal in the Federal Register. 

General Permitting Burden/Resources

1. Does your state currently have the necessary resources (funding and staff) to run the PSD and 

title V permitting program as they exist today? 

a. If your state is strained for resources please describe the reasons for it? Please list all that 

apply and provide a short description of the problem providing specific information 

where possible (i.e., budget cuts of 10 percent during the last year; hiring freeze; loss 3 

FTE in last two years). 

i. GHG Permitting 

ii. Other Permitting Issues (SO2, NO2, etc) 

iii. Budget cuts 

iv. Lack of personnel 

v. Other (please specify) 

2. If permitting activity were to increase to levels closer to those originally anticipated in the 

Tailoring Rule46, would your state have the necessary resources to manage the increased 

workload? 

a. If not, please estimate the level of additional resources (funding and staff) your state 

would require to handle the increased burden. 

 

46 See 75 FR 31540. 
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3. In providing perspective on the PSD program, consider the following scenarios where your 

annual number of PSD permitting activity were to increase by 10, 20, 30, 50, 100, and 200 

permit actions per year (both new permit applications and modifications included) due to the 

potential lowering of the current GHG applicability thresholds. When assessing the resources to 

permit these sources, consider that many of the newly permitted GHG sources under this scenario 

would likely consist of commercial and small industrial sources whose primary GHG emissions 

units are small, similarly configured combustion units: 

a. How many more full-time employees (FTEs) would your program need to address each 

of these potential permitting activity increases (i.e., 10, 20, 30, 50, 100, and 200 permit 

actions per year) in PSD due to GHGs and still meet current PSD permit processing 

times? 

b. How many additional dollars annually to your staffing budget would these additional 

FTEs equate to? 

4. How has GHG permitting affected the permitting process in your state? Please consider the areas 

listed below and provide specific estimates of the impact GHG permitting has had on your 

program where possible (i.e., responded to 10 percent more permitting questions than usual). 

a. Number of source meetings. 

b. Number of daily permitting questions. 

c. Number of incomplete permit applications. 

d. Training for permitting staff to understand the GHG permitting process. 

e. Is your staff unsure of how and when to permit GHG sources? 

5. For states where PSD permits for GHG have been issued, how was the burden (monetary and 

man-hours) compared to a typical non-GHG permit? Please provide an estimate where possible 

(i.e., an additional 20 hours). 
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6. In providing perspective on the title V program, consider the following scenarios where your 

annual number of title V permitting activity were to increase by 10, 20, 30, 50, 100, and 200 

permit actions per year (both new permit applications and modifications included) due to the 

potential lowering of the current GHG applicability thresholds. When assessing the resources to 

permit these sources, consider that many of the newly permitted GHG sources under this scenario 

would likely consist of commercial and small industrial sources whose primary GHG emissions 

units are small, similarly configured combustion units: 

a. How many more full-time employees (FTEs) would your program need to address each 

of these potential permitting activity increases (i.e., 10, 20, 30, 50, 100, and 200 permit 

actions per year) in title V due to GHGs and still meet current title V permit processing 

times? 

b. How many additional dollars annually to your staffing budget would these additional 

FTEs equate to? 

7. Does your state have an active outreach initiative and the resources necessary to reach out to 

smaller sources that may not be aware of their obligation to apply for title V or PSD permits due 

to GHGs? 

a. If the GHG permitting thresholds were lowered resulting in additional sources being 

subject to the PSD and title V permitting programs, how would this affect such initiative? 

Please be specific about the level of resources necessary where possible. 

8. Have the GHG requirements created or added to a backlog of unissued permits? 

a. If so, by what amount? 

9. Has your state modified its title V fees to cover GHG permitting needs? If not, would your state 

need to do so if additional sources (i.e., 10, 20, 30, 50, 100, and 200 actions per year) were added 

to the permitting programs as a result of lowered thresholds? 
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Streamlining Specific Questions 

1. Is your state processing applications through any electronic permitting measures? If not do you 

plan on implementing an type of electronic permitting? 

2. Has your state implemented LEAN techniques to streamline the permitting process? If so, how 

has this improved the efficiency for permitting actions? If not, do you plan on doing this in the 

future? 

3. Is your state considering any other permitting streamlining technique to help improve the 

efficiency and reduce the burden associated with permitting of GHG sources? Please list all 

streamlining techniques under consideration and the expected implementation timelines. 

B. Solicitation of Comment on Streamlining Techniques

 In section VI of this preamble, we discuss a range of streamlining techniques for GHG 

permitting. In this action we propose rulemaking to implement two of these techniques at this time 

concerning PALs for GHGs and creation of federal synthetic minor source permits for GHGs. For the 

other techniques, we present information on the techniques but propose no rulemaking at this time. We 

request comment on all these potential streamlining techniques, as discussed in section VII and in the 

following sections. More broadly, we request comment on other approaches to streamlining that may 

hold promise to reduce PSD and/or title V permitting burden for sources of GHGs and permitting 

authorities. Please include as much detail as possible on how such an approach would work, the amount 

of burden reduction that could be achieved, the specific legal authority the EPA should rely upon for 

implementing the approach, and whether EPA rulemaking would be required for implementation. 

1. Plantwide Applicability Limitations for GHGs 

 We request comment on our proposal to undertake rulemaking at this time to provide a more 

flexible approach for GHG PALs. We further request comment on which option we should pursue for 

this rulemaking, the Major Source Opt-in Approach or the Minor Source Approach, and on how, 
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specifically, we should revise our rules to implement the preferred approach. In our discussion of, and 

rationale for, GHG PALs in section VI.A of this preamble, we requested comment on many specific, 

related issues. We again request comment on those issues here. 

2. Synthetic Minor Source Permitting Authority for GHGs 

 We request comment on our proposal to create synthetic minor permit authority, within the 

existing federal PSD regulations, for the purpose of issuing synthetic minor permit limitations for 

GHGs. In addition, we request comment on our legal authority for implementing such a program. 

Finally, we again request comment on other specific, related issues on which we requested comment in 

the discussion of synthetic minor permit authority in section VI.B of this preamble. 

3. Redefining PTE and Source Category Specific PTE 

 We request comment on the discussion in this proposal of our current thinking on developing 

category specific PTE rules or guidance, and on categories for which such a rule or guidance would be 

appropriate. We also request comment on creating a rule that would allow a source to use historical 

hours of operation in determining an emissions unit’s PTE. In addition, we request comment on the 

other specific, related issues that we discussed and on which we requested comment in the discussion of 

approaches to PTE in section VI.C of this preamble. 

4. General Permits for GHGs 

 We request comment on the idea of developing a rule that would allow use of general permits for 

GHG sources, and on possible sources and source categories that may benefit from general permits. We 

also request information on the experience of state and local permitting authorities with the use of 

general permits and their potential applicability to GHG sources. In addition, we request comment on 

the other specific, related issues that we discussed and on which we requested comment in the 

discussion of general permits in section VI.D of this preamble. 

5. Presumptive BACT for GHGs 
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 We request comment on the concept of developing presumptive BACT for sources of GHGs, and 

on possible source categories and emissions units that may be promising candidates for this approach. 

We request comment on how and when to update presumptive BACT determinations, on the use of 

presumptive BACT for general permits, and on the appropriate public participation for the development 

and application of presumptive BACT. In addition, we request comment on the other specific, related 

issues that we discussed and on which we requested comment in the discussion of presumptive BACT in 

section VI.E of this preamble. 

6. Title V Empty Permits 

We request comment on the extent to which SIPs contain requirements that would be applicable 

to sources that would be subject to title V solely as a result of emissions of GHGs below the current 

thresholds established by the Tailoring Rule, and whether a significant number of sources would have 

empty permits at different thresholds. We also solicit comment on whether the EPA can, and should, 

interpret the title V as not requiring “empty permits,” and if so whether state program revisions, 

approved by the EPA, would, or should, be necessary to exclude such sources from title V permit 

requirements. In addition, we request comment on the other specific, related issues that we discussed 

and on which we requested comment in the discussion of empty permits in section VI.F of this 

preamble. 

VIII. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: 

Improving Regulation and Regulatory Review

 Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is a “significant 

regulatory action” because it raises novel legal or policy issues. Accordingly, the EPA submitted this 

action to the OMB for review under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011) 

and any changes made in response to OMB recommendations have been documented in the docket for 
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this action. 

 This proposed Step 3 of the Tailoring Rule would continue the phased-in approach begun in 

Steps 1 and 2. However, we have determined that it would not be appropriate at this time to expand the 

universe of large sources of GHG emissions that must comply with permitting requirements under the 

Act, and the proposed rule would not reduce the GHG applicability thresholds or bring more sources 

into the PSD or title V programs. Thus, the proposed rule would not impose any costs on sources of 

GHGs to obtain permits or on permitting authorities to issue permits. 

B. Paperwork Reduction Act

 This action does not impose any new information collection burden. The proposed rule would 

not change the existing GHG permitting thresholds, and therefore would not impose any additional 

burden on sources to obtain PSD or title V permits or on permitting authorities to issue such permits. 

The proposed provisions for GHG PALs and synthetic minor source permitting authority would have the 

effect of reducing permitting burden in that the burden associated with obtaining or issuing a PAL 

permit or synthetic minor permit would be more than offset through avoiding subsequent PSD 

permitting actions with greater associated burden. However the OMB has previously approved the 

information collection requirements contained in the existing regulations for the NSR and title V 

programs under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and has assigned 

OMB control number 2060-0003 to the NSR program and OMB control numbers 2060-0243 and 2060-

0336 to the title V program (40 CFR Part 70 and Part 71 components, respectively). The OMB control 

numbers for EPA's regulations in 40 CFR are listed in 40 CFR Part 9. 

C. Regulatory Flexibility Act

 The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory 

flexibility analysis of any rule subject to notice and comment rulemaking requirements under the 

Administrative Procedures Act or any other statute unless the agency certifies that the rule will not have 
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a significant economic impact on a substantial number of small entities. Small entities include small 

businesses, small organizations and small governmental jurisdictions. 

 For purposes of assessing the impacts of this proposed action on small entities, small entity is 

defined as: (1) a small business that is a small industrial entity as defined in the U.S. Small Business 

Administration (SBA) size standards (see 13 CFR 121.201); (2) a small governmental jurisdiction that is 

a government of a city, county, town, school district or special district with a population of less than 

50,000; or (3) a small organization that is any not-for-profit enterprise that is independently owned and 

operated and is not dominant in its field. 

 After considering the economic impacts of this proposed action on small entities, I certify that 

this proposed action will not have a significant economic impact on a substantial number of small 

entities. In determining whether a rule has a significant economic impact on a substantial number of 

small entities, the impact of concern is any significant adverse economic impact on small entities, since 

the primary purpose of the regulatory flexibility analysis is to identify and address regulatory 

alternatives “which minimize any significant economic impact of the rule on small entities.” 5 U.S.C. 

603 and 604. Thus, an agency may certify that a rule will not have a significant economic impact on a 

substantial number of small entities if the rule relieves regulatory burden, or otherwise has a positive 

economic effect, on all of the small entities subject to the rule. 

 The proposed rule would not change the existing GHG permitting thresholds, and therefore 

would not impose any additional burden on any sources (including small entities) to obtain PSD or title 

V permits or on any permitting authorities (including small entities, if any) to issue such permits. The 

proposed provisions for GHG PALs and synthetic minor source permitting authority would have the 

effect of reducing permitting burden on all entities, including small entities, in that the burden associated 

with obtaining or issuing a PAL permit or synthetic minor permit would be more than offset through 

avoiding subsequent PSD permitting actions with greater associated burden. We have therefore 
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concluded that this proposed rule will be neutral or relieve the regulatory burden for all affected small 

entities. We continue to be interested in the potential impacts of the proposed rule on small entities and 

welcome comments on issues related to such impacts. In addition while we propose to maintain the 

current thresholds in this rulemaking, we also solicit comment on lowering the thresholds. If we receive 

information that persuades us that we should take action to lower the thresholds, we will at that time 

reassess the applicability of the requirements of the Regulatory Flexibility Act. 

D. Unfunded Mandates Reform Act

 This rule does not contain a federal mandate that may result in expenditures of $100 million or 

more for state, local and tribal governments, in the aggregate, or the private sector in any 1 year. The 

proposed rule would not change the existing GHG permitting thresholds, and therefore would not 

impose any additional burden on sources to obtain PSD or title V permits or on permitting authorities to 

issue such permits. The proposed provisions for GHG PALs and synthetic minor source permitting 

authority would have the effect of reducing permitting burden in that the burden associated with 

obtaining or issuing a PAL permit or synthetic minor permit would be more than offset through avoiding 

subsequent PSD permitting actions with greater associated burden. Thus, this rule is not subject to the 

requirements of sections 202 or 205 of UMRA. 

 This rule is also not subject to the requirements of section 203 of UMRA because it contains no 

regulatory requirements that might significantly or uniquely affect small governments. As noted 

previously, the effect of the proposed rule would be neutral or relieve regulatory burden.

E. Executive Order 13132: Federalism

 This proposed rule does not have federalism implications. It will not have substantial direct 

effects on the states, on the relationship between the national government and the states or on the 

distribution of power and responsibilities among the various levels of government, as specified in 

Executive Order 13132. This proposed rule would maintain the existing structure of the PSD and title V 
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programs and would not, therefore, affect the relationship between the national government and the 

states or the distribution of power and responsibilities among the various levels of government. In 

addition, the proposed rule would not change the existing GHG permitting thresholds, and therefore 

would not impose any additional burden on state permitting authorities to issue PSD or title V permits or 

such permits. The proposed provisions for GHG PALs and synthetic minor source permitting authority 

would have the effect of reducing permitting burden in that the burden associated with issuing a PAL 

permit or synthetic minor permit would be more than offset through avoiding subsequent PSD 

permitting actions with greater associated burden. 

 In the spirit of Executive Order 13132, and consistent with EPA policy to promote 

communications between the EPA and state and local governments, the EPA specifically solicits 

comment on this proposed rule from state and local officials. 

F. Executive Order 13175: Consultation and Coordination with Indian Tribal Governments

 This action does not have tribal implications. There are no tribal authorities currently issuing 

major NSR permits, one tribe is implementing a title V program based on a delegation agreement under 

40 CFR Part 71 and one tribe has recently obtained approval of title V program under 40 CFR Part 70. 

However, the proposed rule would not change the existing GHG permitting thresholds, and therefore 

would not impose any additional burden on sources to obtain PSD or title V permits or on permitting 

authorities to issue such permits. The proposed provisions for GHG PALs and synthetic minor source 

permitting authority would have the effect of reducing permitting burden in that the burden associated 

with obtaining or issuing a PAL permit or synthetic minor permit would be more than offset through 

avoiding subsequent PSD permitting actions with greater associated burden. 

 Although Executive Order 13175 does not apply to this proposed rule, the EPA specifically 

solicits additional comment on this proposed action from tribal officials. 

G. Executive Order 13045: Protection of Children from Environmental Health and Safety Risks
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 The EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying only to 

those regulatory actions that concern health or safety risks, such that the analysis required under section 

5-501 of the Executive Order has the potential to influence the regulation. This action is not subject to 

Executive Order 13045 because it does not establish an environmental standard intended to mitigate 

health or safety risks. 

H. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution or Use 

 This action is not a “significant energy action” as defined in Executive Order 13211 (66 FR 

28355, May 22, 2001), because it is not likely to have a significant adverse effect on the supply, 

distribution or use of energy. Further, we have concluded that this rule is not likely to have any adverse 

energy effects because this action would not create any new requirements for sources in the energy 

supply, distribution or use sectors. 

I. National Technology Transfer and Advancement Act

 Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), 

Public Law No. 104-113, 12(d) (15 U.S.C. 272 note) directs the EPA to use voluntary consensus 

standards in its regulatory activities unless to do so would be inconsistent with applicable law or 

otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials 

specifications, test methods, sampling procedures and business practices) that are developed or adopted 

by voluntary consensus standards bodies. The NTTAA directs the EPA to provide Congress, through the 

OMB, explanations when the agency decides not to use available and applicable voluntary consensus 

standards. 

 This proposed rulemaking does not involve technical standards. Therefore, the EPA did not 

consider the use of any voluntary consensus standards. 

J. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority 

Populations and Low-Income Populations
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 Executive Order 12898 (59 FR 7629, February 16, 1994) establishes federal executive policy on 

environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and 

permitted by law, to make environmental justice part of their mission by identifying and addressing, as 

appropriate, disproportionately high and adverse human health or environmental effects of their 

programs, policies and activities on minority populations and low-income populations in the United 

States. 

 The EPA has determined that this proposed rule will not have disproportionately high and 

adverse human health or environmental effects on minority or low-income populations because it does 

not affect the level of protection provided to human health or the environment. The proposed rule would 

not change the existing GHG permitting thresholds, and therefore would not affect the universe of 

sources subject to permitting. 

K. Determination under Section 307(d)

 Pursuant to sections 307(d)(1)(J) and 307(d)(1)(V) of the CAA, the Administrator determines 

that this action is subject to the provisions of section 307(d). Section 307(d)(1)(J) specifies that the 

provisions of section 307(d) apply to “promulgation or revision of regulations under [part] C of title I 

(pertaining to prevention of significant deterioration of air quality and protection of visibility).” This 

section clearly subjects the portions of this action that pertain to PSD to the provisions of section 307(d). 

Section 307(d)(1)(V) provides that the provisions of section 307(d) apply to “such other actions as the 

Administrator may determine.” Pursuant to this section, the Administrator determines that the portions 

of this action that pertain to title V are subject to the provisions of section 307(d). This determination 

allows for uniform treatment for all aspects of this action. 

IX. Statutory Authority

 The statutory authority for this action is provided by sections 101, 111, 114, 116 and 301 of the 

CAA as amended (42 U.S.C. 7401, 7411, 7414, 7416 and 7601). 
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List of Subjects 

40 CFR Part 51 

 Environmental protection, Administrative practice and procedure, Air pollution control, Carbon 

dioxide, Carbon dioxide equivalents, Greenhouse gases, Hydrofluorocarbons, Intergovernmental 

relations, Methane, Nitrous oxide, Perfluorocarbons, Reporting and recordkeeping requirements, Sulfur 

hexafluoride. 

40 CFR Part 52 

 Environmental protection, Administrative practice and procedure, Air pollution control, Carbon 

dioxide, Carbon dioxide equivalents, Greenhouse gases, Hydrofluorocarbons, Intergovernmental 

relations, Methane, Nitrous oxide, Perfluorocarbons, Reporting and recordkeeping requirements, Sulfur 

hexafluoride. 

40 CFR Part 70 

 Environmental protection, Administrative practice and procedure, Air pollution control, Carbon 

dioxide, Carbon dioxide equivalents, Greenhouse gases, Hydrofluorocarbons, Intergovernmental 

relations, Methane, Nitrous oxide, Perfluorocarbons, Reporting and recordkeeping requirements, Sulfur 

hexafluoride. 

 
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EO12866_Tailoring Rule Step 3_2060-AR10_Proposal_FRN_20120202 

Page 104 of 104 

Page 105 of 105 - Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring 

Rule Step 3, Including GHG Plantwide Applicability Limitations and GHG Synthetic Minor 

Limitations 

40 CFR Part 71 

 Environmental protection, Administrative practice and procedure, Air pollution control, Carbon 

dioxide, Carbon dioxide equivalents, Greenhouse gases, Hydrofluorocarbons, Methane, Nitrous oxide, 

Perfluorocarbons, Reporting and recordkeeping requirements, Sulfur hexafluoride. 

___________________________________________ 

Dated: 

___________________________________________ 

Lisa P. Jackson, 

Administrator.